Posted on April 29, 2016
In January TransCanada sued the Obama Administration over its denial of a permit for the Keystone XL pipeline to cross the US-Canada border. In its lawsuit TransCanada asserts that the President exceeded his executive authority and usurped Congress’ constitutional power to regulate commerce.
The lawsuit, filed in federal court in Houston, Texas, comes after TransCanada spent seven years mired in the administrative process. TransCanada’s complaint recounts the key events of those seven years as follows.
In 2008 TransCanada was granted a border crossing permit for Keystone I, so there is already a Keystone pipeline that crosses the US-Canada border in North Dakota. The State Department raised no objections regarding GHG emissions in connection with that permit. In 2009, then Secretary of State Clinton granted a cross-border permit to Enbridge for its Alberta Clipper pipeline, concluding that GHG emissions were not a basis for denying a border crossing permit.
In 2008, seeking to expand capacity, TransCanada applied for a second US-Canada border crossing permit for the Keystone XL project. The permit application covered a 1.2 mile section of pipe that was part of a broader 1,700-mile pipeline project, most of which was to be located in the United States.
Following this application, the State Department issued a series of draft and final environmental impact statements that found minimal GHG impacts. Nevertheless, in November 2011 the State Department announced it could not make a final determination until an alternative route through Nebraska was selected.
In December 2011 Congress passed an act that required the President to grant the permit to TransCanada within 60 days or report to Congress why the President did not believe the pipeline crossing served the national interest. In January 2012 President Obama directed the Secretary of State to deny the permit on the ground that 60 days was insufficient time. Secretary Clinton denied the permit but indicated that a renewed application would be considered. In May 2012 TransCanada submitted a renewed application.
Following this second application the State Department issued another series of EISs which found that the project would not substantially increase GHG emissions. In early 2015, Congress passed the Keystone Pipeline Approval Act, which authorized the Keystone XL project without any further action or approval by the President. President Obama vetoed the Act and Congress was unable to override the veto.
In November 2015, Secretary Kerry denied the renewed application. The Record of Decision found that the pipeline would advance the national interest by providing added energy security and economic benefits, and furthering the United States’ relationship with Canada. The ROD also found that GHG emissions might actually increase without the pipeline because the crude oil would otherwise be transported by rail and tankers. Nevertheless, the Secretary concluded that the pipeline did not serve the national interest because it “would undermine U.S. climate leadership and thereby have an adverse impact on encouraging other States to combat climate change” in advance of the December 2015 Paris climate negotiations.
It is with the backdrop of these events that TransCanada challenged the President’s authority to regulate international pipeline border crossings.
Where does the President derive the authority to regulate international pipeline crossings, and particularly on the basis of the United States’ symbolic leadership role on climate change? The President relies upon Executive Order 13337, under which the President delegated authority to the Secretary of State to deny border crossings that do not “serve the national interest”. But because the Constitution gives Congress the power to regulate commerce, where does the President derive the power to delegate to the Secretary of State in the first place, particularly since Congress has never delegated the authority to regulate such border crossings to the President?
TransCanada’s complaint discusses the various U.S. Supreme Court decisions which address the President’s power to act in areas otherwise reserved to Congress but where Congress has not yet acted. These cases hold that the President does have power to act in such circumstances, but also hold that the President’s authority can be revoked at any time by Congress by simply expressing its contrary will. TransCanada argues that Congress expressed such contrary will when it passed the Keystone Pipeline Approval Act, thereby depriving the President of authority to take further action.
On April 1 the Obama Administration filed a Motion to Dismiss, arguing that the President’s powers over foreign affairs and as Commander-in-Chief provide sufficient independent constitutional authority to regulate pipeline border crossings. In addition, the Administration argues that, because the Keystone Pipeline Approval Act never became law, it provides no basis to challenge the President’s decision. The Natural Resources Defense Council, Friends of the Earth, Texas Environmental Advocacy Services, Community In-Power and Development Association and Center for Biological Diversity recently filed an Amicus Brief.
The outcome of this environmental controversy will depend not on statutory interpretation or common law but on fundamental concepts of separation of powers. The sometimes murky line between Presidential and Congressional authority will be tested here.
Posted on April 28, 2016
In auto racing, the black flag is the ultimate sanction, signaling that a competitor has been disqualified and has to leave the race. That’s what happened to EPA recently, when it withdrew a controversial proposed rule to “clarify” that the Clean Air Act prohibits converting a certified vehicle for racing.
Merits aside, EPA’s start-and-stop performance is an excellent example of notice-and-comment rulemaking gone wrong. The original proposal appeared last July, a brief passage buried in the middle of a 629-page proposed rule on greenhouse gas emissions for medium- and heavy-duty engines and vehicles – hardly the place where one would look for a rule directed at race cars. See 80 Fed.Reg. 40137, 40527, 40552 (July 13, 2016). As should have been expected, EPA’s pronouncement that the Clean Air Act flatly prohibits converting emission-certified vehicles for competition went unnoticed for months. It wasn’t until late December, nearly three months after the close of the comment period, that SEMA (the Specialty Equipment Market Association, the trade group representing the motor vehicle aftermarket industry) discovered the proposed rule.
That’s when the yellow flag came out. SEMA and its members blasted EPA’s interpretation as reversing a decades-old policy that allowed the race-conversion market to flourish, and for hiding the proposal in an inapplicable rule. EPA’s response was to hold to its interpretation and to post SEMA’s comment letter in a “notice of data availability” so that others could comment – not on EPA’s proposal, but on SEMA’s letter. 81 Fed.Reg. 10822 (March 2, 2016).
SEMA stepped up the pressure with a White House petition that quickly garnered more than 150,000 signatures. Then came a letter to EPA from seven state attorneys general, and bills in both the House and Senate (brilliantly named the Recognizing the Protection of Motorsports Act, or “RPM”) to reverse EPA’s interpretation and codify the race exemption in the Clean Air Act.
On April 15, EPA hit the brakes, announcing that it was withdrawing its proposal. www.epa.gov/otaq/climate/regs-heavy-duty.htm. EPA stated that it never meant to change its policy towards “dedicated competition vehicles,” but admitted that its “attempt to clarify led to confusion.” EPA voiced its support for “motorsports and its contributions to the American economy and communities all across the country.
The checkered flag came out, but EPA had already pulled into the pits.
Posted on April 27, 2016
This week, the Federal Highway Administration issued a Noticed of Proposed Rulemaking to promulgate performance measures to be used in evaluating federal funding of transportation projects. The requirement for performance measures stems from the Moving Ahead for Progress in the 21st Century Act, aka MAP-21. MAP-21 requires the FHWA to establish performance standards in 12 categories, one of which is “on-road mobile source emissions.”
The NPRM addresses this criterion, focusing largely on emissions of criteria pollutants. However, buried in the 423-page NPRM is a six-page section labeled “Consideration of a Greenhouse Gas Emissions Measure.”
And thus the FHWA drops a bomb that could revolutionize federal funding of transportation projects. It’s important to note that this may not happen. If the next President is Republican, it certainly won’t. Even if the FHWA goes forward, there would be legal challenges to its authority to use GHG as part of the performance measures.
If it does go forward though, it really would be revolutionary. As the NPRM states, transportation sources are rapidly increasing as a source of GHG emissions:
GHG emissions from on-road sources represent approximately 23 percent of economy-wide GHGs, but have accounted for more than two-thirds of the net increase in total U.S. GHGs since 1990.
The enormity of both the challenges facing the FHWA in attempting to establish a performance measure for GHG emissions and the potential impact implementation of a GHG performance measure would have is reflected in some of the 13 questions that FHWA posed for comment:
- Should the measure be limited to emissions coming from the tailpipe, or should it consider emissions generated upstream in the life cycle of the vehicle operations?
- Should CO2 emissions performance be estimated based on gasoline and diesel fuel sales, system use (vehicle miles traveled), or other surrogates?
- Would a performance measure on CO2 emissions help to improve transparency and to realign incentives such that State DOTs and MPOs are better positioned to meet national climate change goals?
- How long would it take for transportation agencies to implement such a measure?
Welcome to the brave new world of integrated planning to manage GHG emissions in a critical sector of our economy.
Posted on April 26, 2016
Two legal rules frequently come into play in environmental tort cases that are difficult to reconcile: the rule allowing recovery for emotional distress damages without physical injury if someone is found to be in the “zone of danger,” and the rule not allowing recovery for mere fear of a future injury.
Normally, recovery for emotional distress (sometimes called mental anguish) requires the plaintiff to suffer some actual physical injury, however slight. But one exception allows someone who is in the “zone of danger” to recover despite the lack of any physical injury. Usually, the danger must be an immediate physical injury. For example, one case allowed recovery for emotional distress under a “zone of danger” theory for the driver at whom a gun was pointed, but not for the passenger in the same car. Another case allowed recovery to someone who had to escape his burning home, and then watched it burn to the ground, but not for someone who merely saw his house burning when he returned from work. Yet another case allowed recovery for floodwaters entering a home because the floodwaters were infested with snakes. Presumably, without the snakes, there could have been no recovery for emotional distress for the flood.
How does this “zone of danger” rule square with claims in environmental tort cases? Many courts do not allow recovery for a mere fear of an injury in the future, or so-called “cancerphobia” cases. Despite this rule, can one recover for emotional distress in, for example, an air pollution case, arguing that the plaintiff is in the “zone of danger” despite no present physical injury?
Plaintiffs in environmental tort cases, such as flooding, air pollution, and others, have indeed been asserting “zone of danger” theories to avoid the physical injury rule, and are asking juries to award them emotional distress or mental anguish damages. These claims must walk a fine line, since most courts do not allow recovery for mere fear of future injury. Where is that line drawn in an environmental tort case? For example, since presumably any amount of air pollution is bad for one’s lungs, is mere exposure to air pollution enough to recover for mental anguish for worrying about one’s self or one’s children? Or is this argument simply an end run around the ban on recovery for fear of future injury? Courts will have to draw lines in these environmental tort cases, and the lines they draw may not all be bright or easy to see.
Posted on April 20, 2016
Last month when the Ocean County, NJ challenge to the New Jersey Department of Environmental Protection’s (“NJDEP”) authority to implement dunes for shore protection was dismissed, I wrote that the decision could very well be precedential for similar challenges in other New Jersey counties.
And so it was. In a 65-page opinion, Superior Court Judge Julio Mendez also upheld the DEP’s authority to construct dunes in the City of Margate (Atlantic County) as being neither “arbitrary or capricious” nor an “abuse of power.” The opinion recognized the US Army Corps of Engineers’ (“Corps”) 6-year study and the need to be better prepared for coastal storms such as Hurricane Sandy in 2012. With this ruling – absent an appeal – the DEP will proceed to obtain the necessary easements through the eminent domain process (a prior attempt to do so via an administrative order having failed) with the appropriate compensation paid to the affected beachfront owners.
Judge Mendez acknowledged that the dunes on the oceanfront would not resolve flooding concerns to the bayfront properties nor obviate some protection afforded by seawalls and bulkheads. Interestingly, he found that the dunes in the adjacent City of Ventnor had not only protected Ventnor’s beaches but also expanded the beaches in Margate, and that the dunes in Margate would be protective of its coastal properties and was therefore not arbitrary or capricious.
Posted on April 19, 2016
Last month, while New Jersey Superior Court Judge Julio Mendez was considering Margate’s challenge to the authority of the New Jersey Department of Environmental Protection (“DEP”) to condemn City-owned lots on which to build dunes, New Jersey Superior Court Judge Marlene Lynch Ford dismissed a similar challenge by 28 oceanfront property owners in Ocean County, NJ.
In her decision, she ruled that (1) DEP’s condemnation activities were authorized to “protect the state’s fragile coastal system and [afford] public access” and (2) the taking of the requisite coastal acreage to do so was as a lawful use of that authority, provided that the eminent domain process of compensating affected property owner was followed, which she found to be the case in this instance.
Although it would appear likely that this decision should have significant precedential effect on the other pending challenges, it should be pointed out that the theory in other cases includes not only a challenge to DEP’s authority, but the reasonableness of constructing dunes on the beachfront as opposed to other “shore protection projects.” In fact, although she dismissed the challenge to DEP’s authority to condemn, Judge Ford granted a hearing to other homeowners who claim that DEP acted arbitrarily because their sea walls eliminated the need for dunes.
And so, although the authority of DEP to use eminent domain for shore protection would appear to be judicially blessed, the manner in which it is does so remains subject to challenge.
So, as always, stay tuned.
Posted on April 18, 2016
As reported by Seth Jaffe in this space, a federal magistrate judge in Oregon has kept alive the dreams of a group of young plaintiffs—aided by environmental advocacy groups—to compel government action against climate change. Like a similar case brought by the same plaintiffs a few years ago in state court, discussed below, the federal case seeks a declaration that government inaction violates the public trust. But in the federal case, plaintiffs added claims that their constitutional rights to life, liberty and property also are being violated.
The judge denied the government’s motion to dismiss on the basis that the matter is a political question better left to Congress. Magistrate Judge Thomas M. Coffin reasoned that the pleadings were adequate on their face and that the substantive issues raised by the defendants should await motions for summary judgment or trial. Still, the judge gave hope to the plaintiffs, which, I think will be short lived. Climate change is simply too big, diffuse and complex an issue for the courts to try to fashion a remedy around.
This same group of plaintiffs has had mixed success in pursuing its objectives at the state level. In June 2014 I posted about the Oregon Court of Appeals reversing and remanding a trial court’s dismissal of a similar claim against the state. The appellate court concluded that the plaintiffs were entitled to a determination whether the atmosphere is a public trust resource and whether Oregon state government had breached its fiduciary responsibility by not adequately protecting it. On remand, Lane County Circuit Court Judge Karsten H. Rasmussen granted the state summary judgment and dismissed the suit with prejudice. The case is now again pending before the Court of Appeals.
In his 19-page opinion, Judge Rasmussen concluded that the public trust does not extend to the atmosphere. The contours of the public trust are a matter of state common law, and Oregon law ties the public trust to title and restraints on alienation. The court concluded that there could be no title in the atmosphere and therefore public trust fiduciary obligations do not exist. The court also noted that traditional public trust resources, such as submerged lands, are exhaustible, which under Oregon law confers a fiduciary responsibility on the state. While the atmosphere may be altered or even damaged, the court found that it is not exhaustible.
The court added the following thought, which I think will guide the U.S. District Court when it hears the current case:
The Plaintiffs effectively ask the Court to do away with the Legislature entirely on the issue of GHG emissions on the theory that the Legislature is not doing enough. If "not doing enough" were the standard for judicial action, individual judges would regularly be asked to substitute their individual judgment for the collective judgment of the Legislature, which strikes this Court as a singularly bad and undemocratic idea.
Watch this space for further developments in Oregon state and federal courts.
Posted on April 14, 2016
In the CERCLA world, the low hanging fruit has largely been picked. Long gone are the days of the run-of-the-mill $3M RI/FS leading up to a $30M RD/RA. We are getting to the tough stuff now – the megasites – and all the difficult issues related to PRP involvement in RD/RA (whether via consent decree settlement or compliance with a UAO) are on steroids.
One of those more difficult issues in the context of multi-party megasites relates to financial assurance (“FA”) requirements in RD/RA UAOs and consent decrees. The 29-page April 2015 EPA FA Guidance, while helpful on some levels, is remarkably thin (2 paragraphs) when it comes to dealing with multi-party sites. And in a breathtaking understatement, especially with regard to big-ticket sites, EPA notes in the guidance that “FA matters can get complicated with multi-PRP-led cleanups….”
Recently, added pressure has been placed on the Agency in this area as a result of a March 31, 2016 EPA Inspector General report stating that “[d]ata quality deficiencies and a lack of internal controls prevent the EPA from properly overseeing and managing its financial assurance program for RCRA and CERCLA.” In particular, EPA’s OIG analysis indicates (among other things) that there are 128 CERCLA sites with no (or expired) financial assurance in place and the estimated cleanup costs for those sites is over $3.7B.
As Proposed Plans and RODs continue to roll out from the Agency with billion-dollar-plus price tags – typically related to multi-party contaminated sediment sites – the difficulty of up-front funding of these hugely expensive remedies becomes obvious. PRPs at multi-party sites will have varying abilities and business desires to up-front fund liquid FA mechanisms, and while some entities will prefer (and be able) to provide assurance by a financial test or corporate guarantee, many will not.
And EPA’s willingness to deal with multiple mechanisms (either different mechanisms from multiple parties or multiple mechanisms from a PRP group) is limited. In fact, the use of multiple financial assurance mechanisms is discouraged under the 2015 FA Guidance. Further, the September 2014 Model Remedial Design / Remedial Action Consent Decree along with the September 2015 Model Unilateral Order for Remedial Design / Remedial Action specifically state that while PRPs may use multiple mechanisms, this can only occur with liquid mechanisms – trust funds, surety bonds guaranteeing payment or letters of credit. Interestingly, the 2014 Model CD also allows the use of insurance policies, indicating that the Agency’s thinking about the liquidity of insurance policies has evolved.
The viability of financial assurances is not simply an EPA-driven issue. Given the multi-decade cleanup process and huge stakes involved at CERCLA megasites, and with the overlay of joint and several liability, PRPs need to be thinking carefully about the financial viability of their co-PRPs when entering into CDs or PRP agreements to perform under a UAO. And regardless of how EPA ultimately decides to deal with this issue at megasites, PRPs no doubt will be pushing each other to ensure long-term equitable responsibility for meeting their FA obligations at this new breed of Superfund sites.
Posted on April 13, 2016
Late last week, Magistrate Judge Thomas Coffin concluded that the most recent public trust case, which seeks an injunction requiring the United States to take actions to reduce atmospheric CO2 concentrations to 350 parts per million by 2100, should not be dismissed.
The complaint here is similar to, but broader than, others of its ilk. As we noted previously, at least one federal court has already held that there is no public trust in the atmosphere. Perhaps in response to that case, the plaintiffs here appear to have focused their arguments on the government’s public trust responsibilities with respect to various waters of the United States, though the opinion does not make clear precisely what the complaint alleges to be the subject of the public trust obligation.
The plaintiffs not only allege that the United States has violated its public trust obligations, but that that violation in turn constitutes a violation of the plaintiffs’ substantive due process rights. Magistrate Judge Coffin takes pains to make clear that this is only about a motion to dismiss, but I still think he got it wrong.
Indeed, I think that Magistrate Judge Coffin ignored that well known latin maxim: “Oportet te quasi ludens loqui.” (Which is how the on-line translator I used translated “You must be joking.” I hereby disclaim any warranty that this is even close to correct.)
Call me old-fashioned, but I believe in judicial restraint. And that applies to everyone. Traditionally, conservatives have accused liberals of judicial activism. To my totally objective mind, in recent years at least, it is the conservative judges who could more fairly be called activist. For one case, at least, the shoe seems to be back on its original foot. I just cannot see this decision standing. The District Judge should reject Magistrate Judge Coffin’s Findings and Recommendation. If he or she doesn’t, this case is sufficiently novel and important to warrant interlocutory appeal, and the 9th Circuit should reverse. And if that doesn’t happen, it will be up to the eight (oops, I meant nine) members of the Supreme Court to get it right. One of them surely will.
Posted on April 5, 2016
More than 40 years after the Corps and EPA first adopted regulations to define their jurisdiction over the discharge of dredged and fill materials into waters of the United States under Section 404 of the Clean Water Act, the agencies find themselves mired in litigation over the Clean Water Rule, their most recent attempt at rulemaking on the issue. 80 Fed. Reg. 37054 (June 29, 2015). The Clean Water Rule seeks to address issues raised by the Supreme Court’s decision in the Rapanos case. Challenges to the Clean Water Rule have been filed in eight Courts of Appeal and ten District Courts. Not only is there disagreement over the substance of the rule, there is disagreement over which court or courts have jurisdiction to review challenges to the rule. This disagreement pushes the resolution of the substantive issue far to the future.
It is discouraging to have this kind of uncertainty over a major piece of environmental legislation. While some people may see benefit in uncertainty, the lack of clarity on which court has jurisdiction needlessly wastes time and money that could be put to better use. Especially if the eventual ruling is that District Courts have jurisdiction, questions about the validity of the Clean Water Rule will linger for years.
To address the procedural issue, the Congress should pass legislation to specify a single court to hear all challenges to the Clean Water Rule. Under other laws, such as the Surface Mining Control and Reclamation Act, the Congress had the wisdom to specify clearly a single court with authority to review agency regulations--the Federal District Court for the District of Columbia. Similarly, Section 307(b) of the Clean Air Act gives the Court of [Appeals for the District of Columbia exclusive jurisdiction over challenges to regulations of national effect. Judicial review using a single court to review all challenges is orderly and efficient. By contrast, the flurry of lawsuits challenging the EPA and Corps new Clean Water Act regulations is costing the parties millions of dollars just to figure out which court (or courts) should review the challenges to the regulations. Is it too much to ask to have the Congress end the procedural jousting and specify a single court for judicial review?
Posted on April 4, 2016
With increasing recognition of the value of water across the globe, in 2008 eight U.S. states and two Canadian provinces established the Great Lakes and St. Lawrence River Basin Sustainable Water Resources Management Agreement, and the states created a parallel compact on the U.S. side approved by the U.S. Congress. The primary purpose of the Agreement and Compact is to prohibit diversions of water outside the basin, with very limited exceptions. The first real application for an exception to the Agreement and Compact is under consideration by the Regional Body created under the Agreement and the Compact Council created under the Compact. This is receiving much attention and close scrutiny in the U.S. and Canada because many feel it will set the course for many future applications.
The city of Waukesha, Wisconsin, sits just outside the basin in Waukesha County, which straddles the basin line. Waukesha has a problem: the aquifer it uses is contaminated with naturally occurring radium, and beyond that, the city has concerns about its capacity to serve future needs. As a result, Waukesha has applied for an exception to the Agreement and Compact to withdraw up to 10.1 million gallons per day from Lake Michigan, which would be used, treated, and returned to the Lake through the Root River.
Communities, like Waukesha, that are located in counties straddling the water divide line can ask for water diversions from the Great Lakes, governed by strict rules. The key provisions of the exception standard under the Compact and Agreement that Waukesha must meet are:
- The Water shall be used solely for the Public Water Supply Purposes of the Community within a Straddling County that is without adequate supplies of potable water;
- There is no reasonable water supply alternative within the basin in which the community is located, including conservation of existing water supplies;
- Caution shall be used in determining whether or not the Proposal meets the conditions for this Exception. This Exception should not be authorized unless it can be shown that it will not endanger the integrity of the Basin Ecosystem;
There is little dispute that the amount of water taken by Waukesha from Lake Michigan will have any impact on the Lake, especially since all of the water not consumed in Waukesha will be returned, with a small supplement of water from outside the basin to replace the consumed water. The concern is over the precedent it would set for straddling communities and counties all around the basin in Canada and the U.S. and the potential cumulative effect. The real question is whether these three portions of the exception standard are met.
The key word in the first standard noted above for review of the application is “Community,” which is defined in the Compact as “any incorporated city, town or the equivalent thereof, that is located outside the Basin but wholly within a County that lies partly within the Basin and that is not a Straddling Community.” Waukesha’s application indicates that the water will go to a “service area” that goes beyond the boundaries of the City to several towns and unincorporated areas in Waukesha County. They add that they are required by State law to provide water to the service area. Opponents of the application assert that a “service area” is not a “community” within the meaning of the Compact and on those grounds alone, should be denied. Waukesha asserts that the Compact contemplated the “service area” as a “community.” A definition this broad would open the door to areas well beyond the intent of the Compact’s limited exception to the prohibition of diversions.
In the second element of the exception standard, the availability of a “reasonable water supply alternative” is another consideration. Waukesha argues that treatment alternatives are not appropriate and that getting water from Lake Michigan is the best alternative. Opponents argue that there are reasonable alternatives, and that the nearby communities of Brookfield and Pewaukee are utilizing treatment for radium successfully now. They add that the standard is “reasonable,” and that it does not need to be the best alternative, even though treatment for radium may well be the best.
The third element of the standard highlighted is that the diversion will not endanger the integrity of the Basin Ecosystem. The return flow from Waukesha to Lake Michigan is through the Root River. Under the terms of the Compact, as well as State and Federal Law, the discharge must meet all the terms of a permit. Waukesha argues that this protects the Root River and will even improve it. Opponents say that the volume and thermal component, as well as unregulated contaminants such as pharmaceuticals, microbeads, phosphorus and others, will jeopardize the integrity of the Root River. In the summer months, the effluent from Waukesha could be up to 80% of the flow of the River.
Beyond the three elements of the exception standard, there is a question of precedent with this being the first application for an exception to the prohibition against diversions under the Compact and Agreement. Waukesha claims that it meets the exception standard, and that only other straddling communities and counties around the basin might benefit from approval. Opponents claim that the exception standard must be applied strictly because there are so many straddling counties and communities across the eight Great Lakes states and two Canadian provinces that could qualify for exceptions. Furthermore, they argue that jurisdictions outside the straddling counties and communities will be watching closely for an opening to broaden the exceptions to the Compact.
The Regional Body of the eight states and two provinces will meet April 21 and 22, 2016 to make a recommendation on the application to the Compact Council consisting of just the eight states, which will meet in June. It will require a unanimous vote of the Compact Council to approve the application. The decision has implications well beyond Waukesha’s application, and could chart the course for future attempts to divert water from the Great Lakes and St. Lawrence.
Posted on March 28, 2016
On February 9, 2016, the Supreme Court issued a stay of U.S. EPA's Clean Power Plan (“CPP” or "Power Plan,” 80 Fed. Reg. 64,662, October 23, 2015) for reducing CO2 emissions from existing fossil-fueled electric generating units. The Court's action was unprecedented because challenges to the Power Plan by 27 states and numerous utility, business, and labor parties were still being heard before the U.S. Court of Appeals for the D.C. Circuit. West Virginia et al. v. EPA, DC Cir. No. 15-1363. The stay will remain in effect until the conclusion of all litigation against the rule.
Among the core legal arguments against the Power Plan is EPA's reliance on "outside-the-fence" measures to reduce CO2 emissions. Section 111(d) of the Clean Act calls for EPA to set guidelines for states reflecting a standard of performance for "sources" based on the "Best System of Emission Reduction" ("BSER") that has been “adequately demonstrated.” EPA defined BSER to include emission reduction actions that could be taken throughout the electric grid, such as limiting generation from coal units while increasing the output of existing natural gas combined-cycle units, and increasing reliance on new renewable energy sources. The data reviewed below show that the standard of performance established for coal-based generating units based on this BSER, 1,305 lbs. CO2/MWh, is not achievable in practice by any conventional coal unit.
The Power Plan also calls for efficiency improvements at coal units that could reduce CO2 emissions. By adjusting units’ past heat rate data, EPA estimated that potential heat rate improvements of 2.1% to 4.3% were achievable for each of three regions in the U.S. See 80 Fed. Reg. at 64,789. However, implementing these "inside-the-fence" measures would result in less than 100,000 tons of emission reductions - about two/tenths of one percent - of the overall 413-415 million ton CO2 emission reduction from base case levels projected to result from full implementation of the rule by 2030. See, EPA Tech. Sup. Doc., State Goal Computation, Table 5 (extrapolated to 48-state basis), Aug. 2015; CPP Reg. Impact Analysis at Table 3-5.
An "inside-the-fence" analysis
EPA's methods for measuring the potential emission reductions achievable through efficiency improvements did not take into account the effects of different coal types on CO2 emissions. Such "subcategorization" is specifically authorized by Section 111 of the Clean Air Act. This post seeks to open a line of inquiry into an alternative approach to achieving CO2 emission reductions based on the emission characteristics of the best-performing units in the coal fleet and taking into account differences in coal type.
A statistical analysis of CO2 emissions from coal plants was performed using the DOE/NETL 2007 coal plant public data base. This data base contains detailed coal type and emissions control and performance data for 2005. The objectives of the analysis were twofold:
1) To determine whether plants burning different grades of coal (bituminous, subbituminous, and lignite) have sufficiently different emission rates measured in pounds of CO2/MWh to consider subcategorization by coal type; and
2) To assess the potential CO2 emission reductions associated with applying a standard of performance based on the best-performing units in each coal category.
The NETL data base was sorted to identify coal-fired units likely to remain in operation after implementation of EPA's 2012 Mercury and Air Toxics Standards (MATS) rule (77 Fed. Reg. 9,304, February 16, 2012). Three screening criteria were applied: unit capacity of 400 MW or greater, current age of 50 years or less, and heat rate of 9,000 BTU/kWh or higher, typical of the performance of conventional pulverized coal boilers.
This sort produced 272 units, totaling 176.7 Gigawatts (GW) of capacity, grouped as follows:
·141 bituminous units, totaling 94.0 GW, with an average emission rate of 2,055 lbs. CO2/MWh;
·110 subbituminous units, totaling 69.5 GW, with an average emission rate of 2,214 lbs. CO2/MWh; and
·21 lignite units, totaling 13.1 GW, with an average emission rate of 2,425 lbs. CO2/MWh.
The total generating capacity represented by these 272 units is comparable to EPA’s projection of 174 to 183 GW of coal capacity remaining in service in 2030, following full implementation of the Power Plan. See, EPA CPP Reg. Impact Analysis at Table 3-12.
Regression analyses performed on the three plant groups assesses the relationship between heat rate (the independent variable) and CO2 emissions per MWh of generation (the dependent variable.) The results are summarized in Chart 1 for all 272 sampled units. The linear regression trend line confirms a moderate positive association between plant heat rate and CO2 emissions (i.e., units with lower heat rates tend to have lower CO2 emissions per MWh, and vice versa.)
Differences among the three coal types measured in average CO2 emission rates per MWh support subcategorization by coal type. As shown in Table 1, the sampled lignite units have an average CO2 emission rate 13% above the sample mean, and 18% above the average for bituminous coal units. The average emission rate of bituminous units is 4% below the sample mean, while subbituminous coals have an average rate 3% above the sample mean.
These differences among coal types could justify subcategorization similar to EPA’s MATS rule. MATS provides separate mercury emission limits for low-BTU lignite coals compared with the standard set for bituminous and subbituminous coals (defined by EPA as coals with a heat content of 8,300 lbs. of CO2 per million BTU, or greater.) See, 77 Fed. Reg. 9,304, 9,379.
Illustrative emission rate calculations
The three sample coal groups were analyzed for average CO2/MWh emission rates by quintile (i.e., lowest 20% emitting units, next lowest 20% emitting units, etc.) Results of this subcategorization analysis are summarized in Table 1. Assigning the average emission rate in CO2/MWh for the best-performing 20% units of each group of units to the other four quintiles (an approach similar to that prescribed by Congress for section 112 “MACT” standards) reduces the allowed emission rates for each subgroup, and the indicated levels of CO2 emissions measured in tons.
The overall reduction of CO2 emissions for the three coal types is 117 million tons based on 2005 emission rates and tonnages. These data reflect NOx control retrofits in response to EPA’s 1998 NOx SIP Call, as well as scrubbers and other controls applied to meet CAA Title IV acid rain control limits. However, the data do not reflect additional retrofit control technologies added in response to the 2005 Clean Air Interstate Rule, as well as state laws and consent decrees. The additional parasitic load associated with add-on controls would increase average heat rates (BTUs per kWh) by reducing net plant generation and increasing CO2 emission rates per MWh.
Additional research and applications
Additional analyses using more recent data are needed to assess the CO2 emission effects of retrofit controls applied since 2005, including those deployed in response to the MATS rule. This research could include additional subcategorization analyses based on metrics such as boiler age, size, and type.
If subcategorization by coal type or other criteria were applied to determine standards of performance for existing fossil-based generating units, states should be provided with flexible implementation mechanisms such as emissions trading and averaging "outside the fence." This would ensure that emission reduction targets could be achieved in a cost-effective manner, without mandating unachievable or uneconomic emission limits for specific units.
The findings of this preliminary analysis are also relevant to the determination of New Source Performance Standards (NSPS) in light of the substantial CO2 emission rate differences among different coal types. EPA chose not to subcategorize by coal type in its NSPS rulemaking under Section 111(b), and issued a uniform performance standard for coal-based generation units of 1,400 lbs. CO2/MWh. Based on the sample unit data, meeting this standard implies a 42% reduction of CO2 emissions from lignite coals, and a 32% reduction for bituminous coals. Petitions for review of this standard also have been filed before the D.C. Circuit. North Dakota et al. v. EPA, DC Cir. No. 15-1381.
*The author is an attorney in private practice (firstname.lastname@example.org) who has specialized in Clean Air Act legislation and regulation since 1980. The coal quality and statistical regression data presented in this post were provided by the author to U.S. EPA staff in the pre-proposal stage of the development of the Clean Power Plan. The analysis set forth here is offered without prejudice to any legal positions by state or non-state petitioners before the D.C. Circuit in West Virginia et al. v. EPA or North Dakota, et al. v. EPA.
Table 1. Summary of CO2 Emission Rates and Potential Reductions by Coal Type for
272 Unit Sample (176,679 MW) Assuming All Units
Meet Top-20% Average Emission Rate of Each Coal Type
Avg. Lbs. CO2/MWh
Avg. Lbs. CO2/MWh Top 20% of Units
Pct. Diff. vs. 2005 Avg.
2005 CO2 Emissions (Mil. Tons)
CO2 Emissions @ Top-20% Rate
Chart 1. Regression Analysis of All 272 Coal Units,
Lbs. CO2/MWh vs. Heat Rate BTU/KWh
Posted on March 25, 2016
Third Party Auditing may not be the first choice of the estimated 12,000 companies covered by the Clean Air Act Risk Management Plan (RMP) rule. Many of these companies are not traditional "stationary sources" of air emissions, but are warehouses and other facilities that process or repackage chemical products containing toxic or flammable substances. Third Party Auditing is coming to those companies under EPA's proposed RMP rulemaking announced on March 14, 2016, when they have an accidental or "near miss" of a release involving an RMP-regulated chemical.
Why Third Party Auditing? Is it a good thing or a bad thing? It can be a good thing, depending on how the Audit is structured and implemented,. There are several recent judicial consent decrees containing Third Party Audit requirements that are being implemented successfully. EPA's new rule will require Third Party Auditing when there has been a fire, explosion, release or near release of chemicals. Experience with Third Party Audits shows that a well-designed audit protocol with emphasis on improved internal company environmental tracking and management systems can actually create efficiencies in product logistics and cost control.
Some brand-name companies such as PepsiCo use voluntary Third Party Audits to highlight independent audit programs and results:
In 2013, all company-owned plants were assessed against PepsiCo’s global Health and Safety program and, following completion of the audit, each plant developed an improvement action plan. In addition, 65 plants are OHSAS 18001-certified by independent consultants, and 31 facilities in the United States are part of the Occupational Safety and Health Administration Voluntary Protection Program, the industry standard for health and safety.
Is Third Party Auditing Under EPA's New Rule An Expansion of Existing RMP Requirements? Yes. Companies subject to RMP already are required to periodically review their risk plans and update terms each five years, or earlier, when conditions change. Most companies follow that practice. However, EPA cites the 2013 West Fertilizer explosion in West, Texas as one example of the ineffectiveness of existing RMP regulations to prevent a fire and explosion where RMP chemicals are stored or handled. From the West case and others, EPA sees a need for additional strengthening of the RMP rules.
Third party auditing as an enforcement compliance tool is becoming more common. The U.S. v. Tyson Foods Consent Decree (2014) required an independent third party auditor to investigate equipment processes and safety issues. The third party auditor was to evaluate ammonia refrigerant systems at 23 plants in four states, and report directly to EPA on the findings of discrepancies or violations. In addition to RMP requirements, other recent EPA and Department of Justice enforcement cases require injunctive relief in the form of Third Party Audits on RMP and General Duty Clause (GDC) compliance.
How Does the General Duty Clause Become Involved in Third Party Auditing? EPA's RMP amendments occur at a time when interpretation of the CAA Sec. 112(r) GDC by EPA also subjects each stationary source to audit and enforcement based on chemicals in storage. The GDC interpretation does not rely only on the presence of regulated quantities of Extremely Hazardous Substances at a facility and is not limited to enforcement of RMP requirements. GDC requirements focus on unsafe conditions at a facility, and the compliance thresholds arise from potentially applicable regulations, electrical, fire and explosion advisories by the National Fire Protection Association, American Petroleum Institute, American Chemistry Council, industry practice and other health, safety or environmental authorities. Any fire, explosion or injury incident, the reporting of a near miss that might have resulted in catastrophic damage or injury, or an inspector's subjective audit finding of the presence of dangerous conditions from an audit or after-the-fact review may trigger an EPA demand for a Third Party Audit.
Risky Business or Not? Increased use of Third Party Auditors will be required if EPA's proposed changes to the RMP rules are adopted Owners and operators will be required to engage and pay for the services of Independent Auditors when a release of a reportable quantity of regulated chemicals has occurred, or the facility has had a "near miss" incident that might have caused a catastrophic release. Manufacturers in the chemical, paper and oil/coal categories must also undertake a root cause failure analysis, and additional reporting on process hazard analysis following a release or near miss. But under those circumstances, companies facing a demand for a Third Party Audit can take the opportunity to investigate improved process safety, product management and internal management systems, all of which will result in reduced environmental and health risks, and overall cost savings.
Action Items? Get Out and Vote!
Proponents and Opponents of EPA's proposed changes to the RMP rules and requirements for Third Party Auditing can register their position on EPA's rulemaking docket. The deadline for comments is May 13, 2016.
Posted on March 23, 2016
The limited liability form of corporate organization generally offers small businesses the favorable tax treatment of a sole proprietorship or partnership, along with protection from personal liability, up to a point. That protection in Connecticut is far from bullet-proof when it comes to liability for environmental harms. Business people acquiring potentially contaminated property should ask: If I create a Limited Liability Company to take title to the property, will I be protected from personal liability for a clean-up? In Connecticut, the answer ranges from “no” to, at best, “it depends.” This is counter-intuitive to clients who believe they are protected by Connecticut’s Limited Liability Company statute which provides generally that a member of an LLC is not liable for the obligations of the LLC. See Conn. Gen. Stat. § 34-133 & 134.
The core of the conflict lies in language in the environmental statutes and case law from the state’s courts. Contrary to the tenor of the LLC enabling statutes, Connecticut’s pollution control statutes were amended in 1995 to include specifically a member of an LLC in the definition of a “person” subject to the issuance of a pollution abatement order. See Conn. Gen. Stat. § 22a-123.
In addition, the Connecticut Supreme Court in 2001 adopted the “responsible corporate officer doctrine” holding that a corporate officer whose conduct has a responsible relationship to a violation may be held liable for abatement of the violation through an order from the state environmental agency. See BEC Corp. v. Dept. of Environmental Protection.
In December, 2015, the Connecticut Appellate Court applied the responsible corporate officer doctrine to the sole member of an LLC finding her personally liable for pre-existing contamination at property acquired by the LLC which she created knowing the contamination was present. See Vorlon Holding, LLC, et al. v. Commissioner of Energy and Environmental Protection.
The risk of personal liability for owners of small businesses contemplating acquisition of environmentally challenged property increases the likelihood that these properties will become, or remain, unproductive “brownfields.” Fortunately, the legislature has created mechanisms within the last few years to provide funding for site assessments without liability attaching and tools to limit liability to potential purchasers who can meet the legislative requirements.
A more detailed discussion of the evolution of the responsible corporate officer doctrine in the federal courts and its application in Connecticut courts in environmental cases is available in an article by John R. Bashaw and Mary Mintel Miller.
Posted on March 17, 2016
In a highly unusual case that has led to a near unanimous call for legislative change by environmental lawyers in Connecticut, a Superior Court judge ruled that the Connecticut Department of Energy & Environmental Protection (“DEEP”) can unilaterally revoke a consent order that it negotiated with a company requiring the investigation of a contaminated site. The lawsuit was initially brought by DEEP, among other reasons, to enforce the consent order. However, after the defendant filed a counterclaim against DEEP alleging that the department had not acted reasonably and breached the order, the department unilaterally revoked the order and moved to dismiss the counterclaim. The court held that the state statute that authorizes the department to issue, modify, or revoke orders, allows the department to revoke consent orders.
Although the state agency may have had good reason to revoke the consent order in this case to help it improve its position in the litigation, that decision undermines the public policy in favor of encouraging negotiated settlements in environmental matters. Most environmental consent orders are carefully negotiated, with give and take on each side. If a private party knows that the environmental agency can simply revoke a consent order at any time, why would that party make concessions to resolve a dispute through an administrative order on consent?
The U.S. Supreme Court in United States v. ITT Continental Baking Company long ago recognized that administrative consent orders and judicial consent decrees are in the nature of contracts and should be construed basically as contracts. Therefore, the federal courts typically place a heavy burden on a party seeking to modify a consent decree. Even the Connecticut court which ruled that DEEP can unilaterally revoke consent orders questioned the wisdom of such authority.
It remains to be seen whether the Connecticut state legislature will clarify that the state environmental department lacks the authority to unilaterally withdraw from an agreement that it negotiated. A bill, S.B. 431, was recently proposed by the Judiciary Committee of the State General Assembly to reverse the Superior Court decision. The general assembly has until May 4, 2016, when the session ends, to pass such legislation. If the legislation does not pass, and DEEP retains such authority, it is likely to find it much more difficult to settle administrative orders on consent in Connecticut.
Posted on March 16, 2016
Federal tax policy greatly influences the donation of conservation easements and thus the contribution to habitat and natural resources that such easements provide. Recently enacted and proposed federal changes go in two somewhat opposite directions on this important tool for environmental protection .
The Good News: Enhanced tax benefits for conservation easement gifts made permanent: After a number of years of temporary extensions, Congress passed and the President signed in December, 2015 a permanent extension of the enhanced Federal income tax benefits for gifts of conservation easements. Enacted in Section 111 of Division Q of the “Protecting Americans from Tax Hikes Act of 2015” (PATH Act) (P.L. 114-113, 12/18/2015) this now permanent tax incentive provides a cost-effective way to help private landowners protect much more land through the use of conservation easements. Since 2006 when the provision was first established, it has helped landowners conserve more than 2 million acres of America’s most important natural, scenic and open lands and historic resources. Considered by many to be the most important conservation legislation in 20 years, the tax incentive:
- Raises the deduction a donor can take for donating a conservation easement from 30 percent to 50 percent of his or her adjusted gross income in any year;
- Allows qualifying farmers and ranchers to deduct the value of the donated easement up to 100 percent of their income; and
- Extends the carry-over period for a donor to take the easement tax deductions from 5 to 15 years beyond the tax year that the gift was made.
These changes apply to easement donations made at any time in 2015 and to all donations made after that. This will be a powerful tool to enable modest-income donors to receive greater financial benefit and thereby encourage them to donate a very valuable conservation easement on their property.
The (Sort of) Bad News: President's budget proposes major changes to conservation easement deductions: Released on February 9, 2016, the President's budget blueprint for Fiscal Year 2017 contains proposals to modify the now-permanent tax deduction for donations of land conservation easements. Although these are only proposals at this time, should they be enacted it is generally considered that they would significantly constrain land conservation efforts. The proposals are:
- Increasing the standards for being a “qualified conservation organization.” This replaces the four current “conservation purposes” for deductible easements with one: that any easement must be pursuant to a clearly delineated federal, state or tribal conservation policy and yields a significant public benefit.
- Making land trusts liable for any misreporting of the conservation purpose, public benefits and fair market value of an easement by the donor.
- Requiring additional reporting to IRS and public disclosure of easement purposes and valuations.
- Eliminating deductions for easements on golf courses.
- Prohibiting deductions for historic building easements attributable to the development potential above the existing profile of the building.
- A proposal for a new “pilot program” in which an interagency federal board distributes tax credits to land trusts, with the land trusts then allocating them to donors based on the importance of the easement for the mission of the land trust.
Although the Obama Administration has been supportive of land conservation generally, it has sought for a number of years to make changes in the tax administration of conservation easement deductions to place a greater burden on land trusts to police the conservation merits and proper valuation of easements. None of these items currently have support outside the Treasury Department however, and therefore are unlikely to be acted on by the current House of Representatives or Senate in the near future. Stay tuned to see if the balance of burdens and benefits on conservation easements sees major changes.
Posted on March 10, 2016
The law is full of fine distinctions. Today’s example? A divided 10th Circuit panel affirmed dismissal of the Sierra Club’s citizen suit claims against Oklahoma Gas and Electric concerning alleged PSD violations at OG&E’s Muskogee plant because the Sierra Club did not sue within five years of the commencement of construction – even though Sierra Club did sue within five years of the completion of construction.
I have not seen any other cases present this issue so squarely. For the majority, the decision was relatively easy. Because the CAA has no limitations provisions, the default five-year limitations period set forth at 28 USC § 2462 applies. Section 2462 provides that suits must be brought “within five years from the date when the claim first accrued.” That “first accrued” language was Sierra Club’s downfall. The court decided that a claim “first accrues” when a plaintiff has a right to bring a claim. In the PSD context, that is when a defendant commences construction or modification without a permit. Because the Sierra Club did not file within five years after OG&E commenced construction, the complaint was late.
Not so fast, argued the dissent. As the dissent rightly noted, the CAA does not make commencing construction or modification without a required PSD permit a violation; it makes “the construction or modification of any source” without a permit a violation. Thus, the dissent argued, OG&E was still “constructing” its project without a permit during a period less than five years before Sierra Club brought suit and was still in violation, so the suit was timely.
I should note that, whether the dissent is correct or not, it did rightly distinguish two other cases, United States v. Midwest Generation and United States v. EME Homer City Generation, which have been cited in opposition to “continuing violation” theories. As the dissent emphasized, those cases concerned whether operation of the modified facility, after construction was complete, constituted continuing violations. The dissent agreed that post-construction operations cannot effectively toll the statute of limitations. However, that is a different question than whether continuing construction keeps the limitations period open. Indeed, the EME Homer City decision specifically contemplated the possibility that:
"the maximum daily fine accrues each day the owner or operator spends modifying or constructing the facility – from the beginning of construction to the end of construction."
That sounds like a basis for new claims accruing each day, thus triggering a new limitations period. I think that this case is a close question. However, as interested as the Supreme Court seems to be in the CAA these days, I don’t see it taking this case, and certainly not before there is a circuit split on the issue.
What is impossible to determine is what caused the Sierra Club to wait. Why take the chance? It does seem a self-inflicted wound either way.
(Very quickly, I’ll note that the majority also dismissed Sierra Club’s injunctive relief claims under the concurrent remedies doctrine. That’s an important issue, but not a difficult or interesting one, at least where the government is not a party.)
Posted on March 8, 2016
For many of us, the only “drone” we knew of growing up probably was that boring, monotonous lecture late on a sunny afternoon. Or if you were expert in biology, you would have known that a “drone” is a stingless male bee whose sole job is not to gather nectar or pollen, but to mate with the queen. Today, however, everyone over the age of 5 knows that drones are a hot gift item, anything that flies without a pilot onboard but controlled remotely. A “drone”, in government parlance, is generally termed a UAV (Unmanned Aerial Vehicle), or a UAS (Unmanned Aerial System) -- which is a UAV, plus the ground-based controls.
UAVs have spawned a wide range of legal and regulatory issues, including not only Federal Aviation Administration (FAA) licensing but significant privacy, tort and property rights matters. Given the existing and potential use of UAV-collected information about environmental conditions, the next big fight in environmental enforcement will be the admissibility of UAV-collected evidence. Many may not know of the growing use of, and potentially expanding realm for, drones in the environmental arena. The World Wildlife Fund has been using UAVs for several years for such disparate activities as 1) monitoring prairie dog colonies for potential habitat for one of North America’s most endangered mammals, the black-footed ferret. 2) undertaking surveillance activities to reduce poaching of elephants and rhinos in Africa and Asia, and 3) monitoring the three main species of marine turtles in Suriname to combat poaching of their eggs. Likewise, the Nature Conservancy has tested drones to monitor the sandhill crane population in the U.S. And a new NGO, Conservation Drones, has been working with groups all over the “developing tropics to use UAVs for conservation.”
It is not a big leap from use of UAVs for wildlife conservation purposes, to enforcement efforts against unlawful pollution of waterways and illegal logging. For example, a drone can obtain imagery of discoloration suggestive of discharges of hazardous substances; can detect differences in water temperature using thermal sensors to detect illegal discharges; can film illegal mining or deforestation activities; or can even collect small volume water samples from remote areas. But in the US, if one of your clients is the target of such surveillance, is the evidence admissible in an enforcement proceeding?
The answer is—maybe. It depends. The type of answers clients hate to receive from their trusted legal counsel. It is beyond the scope of this post to discuss all of the ongoing machinations of the Federal Aviation Administration as it attempts to develop final rules for the commercial (non-hobby) operation of UAVs. But while the federal government attempts to preempt the field, States have stepped in and, in conflicting ways, attempted to respond to the growing drone game. In 2015, 45 states considered 168 drone bills, and 20 states enacted legislation. In some states, use of a drone over the private property of another person, without prior consent, could result in criminal or civil prosecution or damage claims—even if the drone is used for the environmentally beneficial uses described above. Thus, one must become familiar with her or his state’s laws, as well as monitor the ongoing FAA and Congressional activities, to best effectively prepare and advise clients on this brave new world.
China currently is using UAVs to track excessive air and water pollution is China. In one city with 40,000 sources of industrial pollution and 900 industrial parks, drones are using “high-resolution digital cameras, infrared and laser scanners, and magnetometers…. Some UAVs are also fitted with an infrared thermal imaging unit that shows the operation of facilities at night.” How this information will be used in China remains to be seen.
At home in the US drones are going to fuel more and more back-and-forth legal maneuvers of environmental regulators and NGOs against companies and their lawyers. The gathering and use of drone-generated information may be as intense a fight as the sport use of the UAVs themselves. To get a preview of that emerging arena, check out the more recent “Flight Club” aka Game of Drones—the “bad boys” who want to be the next big sports league. Coming soon to a screen near you.
Posted on March 7, 2016
A recent BBC report about the enormous Aliso Canyon Gas Storage Facility gas well leak in California caught my eye. It compared the huge volume of methane emitted from this leak to other greenhouse gas sources, including tons of methane emitted by a large number of cows. Cows? A 2006 United Nations’ Food and Agricultural Organization report claims that the livestock sector, most of which is comprised of cattle, “generates more greenhouse gas emissions as measured in CO2 equivalent – 18 percent – than transport.” According to a Danish study, the average cow produces enough methane per year to do the same greenhouse damage as four tons of carbon dioxide. EPA’s Inventory of U.S. Greenhouse Gas Emissions and Sinks contains a statement that, on a global basis the Agriculture sector is the primary source of methane emissions.
This got me thinking about industries and lifestyles as yet largely untouched by the need to address global climate change. Agriculture, including ranching, may be a mainstay of the US economy but we can no longer ignore its impacts on the planet. It is not environmental elitism to require farting cows – a fertile source of humor - be given serious attention in the climate change debate.
Throughout the history of environmental regulatory legislation and enforcement in the United States, conventional agriculture has, by and large, been given a pass. For example, section 404 F of the Clean Water Act exempts from the requirement to obtain a permit the discharge of dredged or fill material into waters of the United States discharges from “normal farming … ranching activities”, from “construction or maintenance of farm or stock pond or irrigation ditches”, and, with some limitations, from construction of “farm roads”. In large commercial agricultural operations “normal” farming activities are of a large industrial scale. Non-point source runoff of pesticide and fertilizer residues from huge farming operations is largely ignored and where farming activities are regulated, such as storm water discharges from concentrated animal feeding operations, regulation is largely by general permits instead of individual permits. Spreading of manure on open fields is, by and large, unregulated. It took EPA nearly forty years to impose regulatory requirements to protect farm workers from exposure to herbicides and other pesticides used in large agricultural operations. Do we see a pattern here? Quite clearly the large commercial agricultural sector has enjoyed a not inconsiderable status of environmental regulatory laissez faire for a very long time.
This brings me back to the farting cows. Bovine source methane emissions are not presently regulated under the Clean Air Act. While cows are mobile, the Supreme Court clearly didn’t have livestock in mind when it addressed greenhouse gas emissions from mobile sources in Massachusetts v. EPA, and at present EPA is having great difficulty justifying regulation of even conventional stationary sources of greenhouse gasses. Nevertheless, if the governments that signed the recent Paris Accords remain serious about reducing the precursors of global warming it would seem that they, including the USA, must deal with the bovine methane problem. Quite clearly individual point source emission controls are not the answer to controlling the emission of methane from cows. Collecting the emissions under a roof for rooftop capture and treatment as has been advocated by environmental advocates is not only impractical given the nature of ranching in the US, but attempts to do so would pit environmental regulators against animal rights advocates who argue strenuously and effectively that sequestering animals in tight containments is inhumane treatment.
The only means of reducing this source of greenhouse gas is to reduce the global dependence on meat and cow milk as a primary source of protein in the human diet, that is, significantly reduce the global population of cattle. This will require a far more significant human cultural re-adaptation than will be required to reduce greenhouse gas emissions from transportation and industrial greenhouse gas sources. That being said, there is yet another reason why such a cultural change is necessary. There is simply not enough land on the planet to sustain a meat and cow milk consuming culture as we have now with even the current global population of humans. I don’t have enough space in this blog post to give you the numbers, but suffice it to say that beef and milk are among the most inefficient sources of protein in terms of the number of acres of land required to sustain a single cow. Sorry, all you lovers of good cheese and a great steak, it looks like you are part of the climate change equation.
Posted on March 4, 2016
The United States Environmental Protection Agency recently modernized its implementation of its two primary self-disclosure incentive policies – the Audit Policy and the Small Business Compliance Policy – by creating a centralized, web-based “eDisclosure” portal to receive and automatically process regulated entities’ self-disclosed civil violations of environmental law. The Audit Policy and Small Business Compliance Policy provide penalty mitigation and other incentives for large and small businesses that discover, promptly disclose and expeditiously correct environmental violations and take steps to prevent future violations. According to EPA, the automated eDisclosure system will make the processing of more routine voluntary disclosures faster and more efficient, and save time and resources for both regulated entities and EPA. Nonetheless, while efficiency is desirable for both public and private parties, potential users of the new system should bear in mind that self-disclosure of a violation to EPA should be undertaken with the assistance of experienced environmental consultants and legal counsel.
In the future, all self-disclosed civil violations (except for disclosures under EPA’s New Owner Policy) must be made through the eDisclosure portal. Entities that disclose potential violations through the portal may qualify for one of two types of automated treatment, Category 1 or Category 2. Category 1 disclosure is available only for minor violations of the Emergency Planning and Community Right-to-Know Act (“EPCRA”). For Category 1 disclosures, the eDisclosure system automatically issues an electronic Notice of Determination (“eNOD”) confirming that the violations have been resolved with no assessment of civil penalties, on the condition that the certified eDisclosure is accurate and complete.
Category 2 Disclosures include all non-EPCRA violations, EPCRA violations where the entity can certify compliance with all of the Audit Policy’s nine conditions except that the method of violation discovery was systematic, violations of CERCLA § 103/EPCRA § 304’s chemical release reporting requirements, and EPCRA violations with ”significant economic benefit” (as defined by EPA). For these disclosures, the eDisclosure system automatically issues an electronic Acknowledgement Letter confirming EPA’s receipt of the disclosure and promising that EPA will make a determination regarding eligibility for penalty mitigation if and when it considers taking an enforcement action for environmental violations.
EPA stated in its December 9, 2015 Federal Register notice announcing the launch of the eDisclosure portal that it “is not modifying the substantive conditions in its Audit Policy or Small Business Compliance Policy.” However, anyone considering using the eDisclosure portal to self-report a civil violation of environmental law needs to be aware that EPA has significantly changed its longstanding approach to responding to Freedom of Information Act (“FOIA”) requests for such disclosures.
Since 1997, EPA has deemed resolved voluntary disclosures under the Audit Policy and Small Business Compliance Policy publicly releasable under FOIA. The agency will continue to take this approach to Category 1 disclosures submitted through the eDisclosure portal. Specifically, it will grant FOIA requests for eNODs issued for Category 1 disclosures in most cases.
However, EPA’s handling of unresolved voluntary disclosures will shift 180 degrees going forward. Until now, EPA has generally withheld unresolved disclosures pursuant to FOIA’s “law enforcement proceeding” exemption, Exemption 7(A). This exemption protects from disclosure “records or information compiled for law enforcement purposes, but only to the extent that the production of such law enforcement records or information (A) could reasonably be expected to interfere with enforcement proceedings ….” Now, simultaneous with its implementation of the eDisclosure portal, EPA has eliminated its practice of withholding unresolved disclosures and replaced it with a presumption in favor of releasing regulated entities’ voluntary disclosure information to the public. In responding to FOIA requests for individual unresolved disclosures, EPA now will determine on a case-by-case basis whether it “reasonably foresees that release would harm an interest protected by a FOIA exemption.” In doing so, it will aim “to be as accommodating as possible in responding to such requests,” with the result that it “generally expects to make Category 1 and Category 2 disclosures publicly available within a relatively short period of time after their receipt.”
As the agency explains it, this policy shift is consistent with the 2009 memoranda from President Barack Obama and Attorney General Eric Holder in favor of federal government transparency. Nonetheless, it could reduce the perceived benefits of the Audit Policy and Small Business Compliance Policy for some in the regulated community and provide a disincentive to self-report. Moreover, at least one commentator has suggested that EPA’s new willingness to release information in response to FOIA requests may “fuel… private attorney general litigations.” This could be particularly problematic where EPA releases disclosure information through a FOIA request before it has determined whether in fact the business in question is eligible for penalty mitigation or will not be a target of enforcement action. Although EPA is trying to reassure the regulated community that this policy change will not result in more citizen suits, potential eDisclosure portal users are legitimately concerned about such arguably premature releases of disclosure information, and should carefully evaluate their circumstances before making any disclosure, especially under Category 2.
The potential for the release of unresolved disclosures to cause harm to eDisclosure users could be further exacerbated as an unintended result of the expansion of intergovernmental data exchanges such as the Environmental Information Exchange Network, a partnership of states, territories, tribes and EPA working to provide increased access to high-quality environmental data.
In sum, by introducing the eDisclosure system, EPA has streamlined the self-disclosure process for certain environmental violations, which likely will reduce the time and expense involved in making such disclosures. However, EPA has not provided any additional detail or direction for businesses to use in determining whether a specific violation meets the substantive criteria of the Audit Policy or Small Business Compliance Policy. This determination – and the ultimate decision of whether disclosure will be beneficial – should be made with careful consideration of the relevant facts and applicable law, under the guidance of knowledgeable environmental consultants and legal counsel..
Posted on March 2, 2016
This is a reposting – the earlier post incorrectly omitted Prof. Jody Freeman’s name as a co-author. Richard Lazarus is also a co-author.
State Reactions to the Stay
Now that the Supreme Court has stayed the Clean Power Plan, States are in the process of deciding whether or not to proceed with implementation planning, and if so, at what pace to do so. The situation is still in flux. States like Pennsylvania, Virginia, Washington State, California, and most of the northeastern states that are part of the Regional Greenhouse Gas Initiative, have all said they will continue planning. Others, like Texas, Kentucky and West Virginia, have declared they will stop. EPA’s official count shows eighteen States as having halted efforts, with nine still deciding, and thirty still working: http://www.eenews.net/interactive/clean_power_plan#planning_status_chart. Even official statements from the States are somewhat misleading, however: some States that have announced a suspension of compliance planning, like New Jersey, are still sending officials to compliance meetings.
Still, there is a risk that, on net, momentum will slow, at least until the legal challenge to the CPP is resolved. That process could take more than two years.
Maintaining Momentum Through “No Regrets” Policies
During that time, anything that can be done to maintain momentum on CPP implementation and related policies that will promote clean energy (regardless of whether the rule eventually is upheld) should be supported, with a priority given to helping States pursue “no regrets” policies that will serve their interests whatever the outcome of the litigation. There are a variety of things States and utilities can do now to address shorter term Clean Air Act obligations, such as regional haze, National Ambient Air Quality Standards, or cross-state air pollution, that also would set them up nicely for CPP compliance should the rule be upheld.
Implications of Justice Scalia’s death
The D.C. Circuit will hear argument on the CPP in June 2016, and is expected to rule on the merits expeditiously, likely by fall of 2016. The panel is viewed as more favorable toward EPA than not, although certainly not a sure thing: Judge Rogers is seen as the most sympathetic to EPA, Judge Srinivasan is seen as at least open to the government’s arguments, while Judge Henderson is seen as hostile to the rule.
If this panel were to uphold the rule, and the Supreme Court were to remain without a confirmed ninth Justice, it is possible that the Supreme Court could split 4-4, which would normally result in an order affirming the lower court decision. However, there is also a chance that if there were a 4-4 split in a case of this importance and one that would decide the issue once and for all, the Chief Justice would not be content to issue such an order and would instead hold the case over for re-hearing once a ninth Justice is confirmed. If that ninth Justice were appointed by a new Democratic president, the rule’s prospects of being upheld likely would increase; if appointed by a new Republican president, prospects could be the same as they would have been with Justice Scalia on the court. That would require Justice Kennedy, the likely swing vote, to be persuaded by the government to vote to uphold the rule.
There is another interesting wrinkle: the D.C. Circuit panel could change. Judge Srinivasan has been identified as a potential Supreme Court nominee. If he were nominated, he would likely withdraw from pending cases not yet argued in order to prepare for (theoretical) hearings. But then, of course, a new judge would be lotteried in to fill his place, perhaps changing the balance of the panel. One might think this risk worth taking, since Judge Srinivasan in theory would wind up on the Supreme Court, where he might cast the deciding vote in this (and many other) cases. Yet even if Judge Srinivasan were confirmed, he would be recused from the CPP case because of his earlier participation on the D.C. Circuit panel that denied the stay, so the Court would remain at eight Justices for purposes of this case. Again, this would leave the prospect of a 4-4 tie affirming the decision below (and perhaps affirming a decision to strike down the rule).
Next Steps and Timing of Litigation
Whatever the composition of the D.C. Circuit panel, however, and whatever it decides, the losing parties might seek en banc review in the D.C. Circuit. The State and industry challengers would be almost certain to do so, because delay favors their side. This is because the Supreme Court took the unusual step of staying the rule not just until the D.C. Circuit rules on the merits, but for longer: until the Supreme Court either denies certiorari or grants review and decides the case. Delay means the Stay remains in force, which means the deadline for filing compliance plans keeps being pushed off, which means momentum slows, which favors those opposed to the CPP. En banc review is rarely granted, however, and the D.C. Circuit may be reluctant to further delay things by providing it when the Supreme Court has already associated itself with the case (by granting the Stay and making it all but certain review will be granted).
What all of this means is that the earliest the Supreme Court could decide the case--given the time necessary for the cert petition, briefing, argument and deliberation--is likely to be June 2017, and the latest the Court is likely to decide the case is June 2018. That means the Stay could remain in place for more than two years.
The fate of the CPP is clearly in the hands of the Supreme Court, which, with an open seat, is clearly in the hands of the President--and most likely the next president.
Implications for a New Administration
If the Court ultimately upholds the rule, a new president could still withdraw it and replace it with something else, or choose to implement it as-is. A new president might even bargain with a new Congress over suspending the rule in exchange for a more comprehensive economy-wide approach to greenhouse gas regulation, whether a carbon tax or a cap-and-trade approach, or something else. And if the Court, newly constituted, strikes down the Clean Power Plan, a new president would have to decide on Plan B.
EPA has thus far been mum about possible Plan Bs, but obvious options include a narrower interpretation of “best system” that would regulate power plants within the so-called "fence-line" only, relying exclusively on what the rule refers to as "building block 1.” EPA might be able to set a fairly stringent standard based on this building block alone, although doing so might, ironically, leave utilities far less flexibility to use alternative means of compliance than they would have using the agency’s current approach. EPA might also examine the Clean Air Act for other provisions capable of regulating existing power plant emissions, such as section 115, or even set a NAAQS for greenhouse gases--options that have been discussed before and rejected by the agency, but which could always be revisited.
Posted on February 24, 2016
The Department of the Interior’s Bureau of Indian Affairs (BIA) has promulgated new regulations involving the original procurement and renewal of Right-of-Ways (ROW) on tribal and allottee lands which take effect on March 22, 2016. These new rules will replace those in place since 1947, creating a series of significant problems. This post lists the problems and suggests a legislative solution.
1) Majority Consent of Life Estate Heirs is Needed for ROW to be Granted or Renewed
The new rules limit the length of a ROW to 20 years. The ROWs are not subject to state or local laws, and the new rules impose consent and approval requirements that do not appear in the current regulations. Under the current law, voluntary agreements could be struck between tribes, allottees, and a company, so long as the BIA Regional Director approved the deal. The BIA would approve if a majority of the allottee landowners consented and the amounts of money paid for the ROW were not less than the fair market value (FMV) of the allotment parcel. Under the new rules, however, the company must obtain a majority consent for the original ROW or renewal thereof, not only from the living life estate allottees, but from their heirs as well. This presents a huge obstacle, as companies will now have to find each of the heirs and then attempt to bargain with them individually. Under the current rules, if agreement could not be reached, then the company was free to use a 1907 statute to condemn the allottee land but never the tribal land.
2) Life Estate Holders Can Withdraw Previously Granted Consents
In two separate New Mexico ROW cases involving Western Refining’s pipeline and Public Service of New Mexico’s (PNM) overhead wires, the companies both originally obtained the written consent of a majority of the life estate holders who were paid fair market value for their consent. However, upon the BIA Regional Director finding a lack of a majority of heirs consenting, certain life estate holders informed the BIA that they were “unconsenting” in order to hold out for better compensation, even though they had cashed the original checks. Because the BIA allowed the holdouts’ action of “unconsenting” to stand, the companies lost their majority consent of life estate holders. Attorneys for the life estate holders are now suing PNM for trespass in federal court in Albuquerque.
3) Fair Market Value Has Become a Floor in Negotiations Rather Than an Appraisal Standard
Since the 1947 statute came into existence, the fair market value (FMV), as determined by BIA-qualified appraisers, of the allotment acreage to be crossed by the pipeline served as the negotiation basis between the company and individual allottees. The allottees, knowing that their land could be condemned under the 1907 statute dealing with ROWs, often bargained for a payment that was two or three times FMV. However, under the new regulations, FMV is a starting point, non-binding and irrelevant to an allottee who believes that the sky is the limit when dealing with large corporations.
4) The Condemnation Alternative is Under Attack Due to Tribal Ownership of Undivided Interests in Allotments
In the Public Service of New Mexico federal district court litigation, PNM sued the allottees of several allotments under the New Mexico condemnation statutes after failing to obtain the consent of a majority of life estate heirs for a 20-year renewal. The federal judge dismissed the condemnation lawsuit, because recently deceased allottees left their interests to the Navajo Nation. Even though those interests amounted to less than 1% of the entire allotment, the court labeled that interest tribal land, recognized the Navajo Nation’s sovereign immunity from suit, declared the Navajo Nation an indispensable party, and dismissed the lawsuit. PNM is appealing the dismissal to the Tenth Circuit. Without the ability to condemn, pipelines will be left only with choice of either paying ransom under the 1947 statute or facing allottee trespass actions.
Western Refining has also filed a condemnation suit against the unconsenting allottees under the New Mexico condemnation statutes. The case is before a different judge than the PNM case and is currently stayed pending a decision from the Interior Board of Indian Appeals on the majority consent of heirs issue.
The best solution to the four problems above requires the active involvement of the Legislative Branch.
Utilizing its plenary authority concerning tribal issues, Congress should pass amendments to the 1907 and 1947 statutes or create new legislation supplanting the current law that:
- Eliminates the need for heirs to consent
- Eliminates the ability of consenters to unconsent once consideration is paid
- Re-establishes the sufficiency of fair market value as the basis for the compensation to be paid
- Guarantees the right of pipeline owners to condemn allottee land regardless of partial tribal ownership
Nothing less than the free flow of energy-oriented interstate commerce is at stake.
Posted on February 22, 2016
In my last blog entry, I advocated for the amendment of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) to eliminate the bar on pre-enforcement review as one step toward improving the investigation and cleanup of sediment sites. In this entry, I propose that the U.S. Environmental Protection Agency (EPA) and potentially responsible parties (PRPs) significantly revise the dispute resolution process for EPA Administrative Settlement Agreements and Orders on Consent (“ASAOCs”) to require the resolution of disputes by neutral third parties unaffiliated with EPA or an affected PRP.
The goal of sediment remediation is to protect public health and the environment through prompt and cost-effective remedial action. Unfortunately, this goal has not been met at many sediment sites. At some sites, neither the public nor the PRPs have been served by investigations that have unnecessarily taken decades and wastefed hundreds of millions of dollars to undertake. EPA’s selection of remedies at many sites has been delayed and has not resulted in the selection of protective and cost-effective remedies.
Most sediment cleanups are performed in accordance with consent decrees, which appropriately vest dispute resolution authority in federal district court judges. In contrast, most sediment investigations are conducted under ASAOCs, which vest dispute resolution authority in EPA personnel. While many at EPA with responsibility for dispute resolution have the best of intentions and seek to be objective, the fact that they work for EPA, often supervise the EPA staff who made the decision leading to the dispute, and are often steeped in EPA practices renders most of them unable to serve in a truly independent role. To ensure fairer dispute resolution, ASAOCs should instead vest dispute resolution authority in neutral third parties with no affiliation with either EPA or the PRPs subject to the ASAOC. This would require the amendment of existing ASAOCs and the insertion of new dispute resolution language, which differs from EPA’s model language, in ASAOCs that have not yet been signed.
Additionally, while the dispute resolution official should be deferential to EPA, he or she should not rubber-stamp agency decisions, as currently is often the case. Where investigations have been mired in years of inaction, an independent dispute resolver with a fresh perspective may determine that EPA has sufficient data to make informed cleanup decisions and could compel agency action. At other sites where EPA is requiring PRPs to prepare feasibility studies advocating for remedies that almost certainly will fail, it is essential that a neutral decision-maker act independently to ensure that feasible remedies are selected.
EPA will resist any effort to revise its approach to dispute resolution, and it may require the intervention of elected officials or others to compel such a change. The public, EPA, and affected PRPs would all benefit from it.
Posted on February 22, 2016
As a private practitioner and former trial attorney at the U.S. Department of Justice, I have advocated for timely and cost-effective cleanups that protect public health and the environment. Unfortunately, only a minority of cleanups under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) have met these criteria. Of the many impediments to the thorough, prompt and cost-effective remediation of contaminated sites, and sediment sites in particular, one of the most significant is CERCLA’s bar on pre-enforcement review of the U.S. Environmental Protection Agency’s (EPA) remedial decisions. To promote more effective and timely cleanups of sediment sites, I suggest that CERCLA be amended to eliminate the current bar on pre-enforcement review. By allowing potentially responsible parties (PRPs) to seek and obtain judicial review of EPA decisions or failures to make decisions, more progress would likely be made on more sites.
CERCLA Section 113(h) states that, with limited exceptions, “No Federal court shall have jurisdiction … to review any challenges to removal or remedial action selected under section 9604 of this title, or to review any order issued under section 9606(a) of this title ….” 42 U.S.C. § 9613(h). Despite many challenges, courts have generally upheld the validity of this provision. As a result, PRPs typically cannot challenge EPA's decisions unless EPA has sought to compel performance under an enforcement order or if EPA is acting under a consent decree. As the “opportunity” for challenge may not come until years after EPA has made its cleanup decision, most PRPs are not willing to face the risk of losing a remedy challenge and the potential imposition of treble damages.
CERCLA should be amended to allow parties to challenge agency action or inaction at other times in the process, such as during the preparation of remedial investigations and feasibility studies. At many sediment sites, EPA has delayed remediation and required parties to incur hundreds of millions of dollars during investigations. If PRPs had the opportunity to obtain judicial review of agency action and inaction earlier in the process, they could seek to compel the agency to act in a way that is consistent with CERCLA’s requirements.
Having worked at the Department of Justice when CERCLA Section 113(h) was drafted, I recall my colleagues stating at the time that a bar on pre-enforcement review was necessary to avoid the challenges of having a non-expert federal judge address complex scientific questions and to prevent PRPs from tying up EPA in litigation. I offer three suggestions in response to these concerns. First, if a federal judge were confronted with a particularly complex issue, the court could appoint a special master to handle the proceedings. Second, to encourage PRPs to seek prompt resolutions, a CERCLA amendment could require PRPs to fully comply with an agency’s directives pending resolution of the judicial dispute and impose a penalty on those parties whose challenge of agency action was unsuccessful. Third, agencies could seek an expedited hearing of disputed issues.
While it is very unlikely that Congress would consider a CERCLA amendment to address only this issue, PRPs should raise this issue the next time amendments are being considered. It will succeed only through the concerted efforts of advocates who seek more and better cleanups and those who seek prompt and reasonable government decision-making.
Posted on February 19, 2016
Amid the finger-pointing, forced resignations, and mea culpas, a question has hovered over the Flint water crisis. What did staff at the Flint water plant say before the switch to Flint River water?
For months, Michigan’s governor Rick Snyder and the Michigan Department of Environmental Quality have admitted mistakes but never quite explained why Flint switched from Lake Huron water to Flint River water without prior pilot studies. Critics assailed the saving-costs-at-the-expense-of-the-public-health attitude. Apologists apologized and promised remedial measures. But until last weekend, we did not know what the engineers and technicians who operate the Flint water plant thought of the switch.
On February 13, the Detroit Free Press reported that the Flint water lab supervisor questioned the switch. One week before the grandiose public ceremony celebrating the new era for Flint, the lab supervisor told DEQ he needed time to train staff and update monitoring to be ready to use Flint River water. He complained that higher-ups seemed to have their own agenda.
Like many members of this College, I have spent my career fighting the regulator attitude that “we’re the government experts—trust us” and being dismayed when courts blindly defer to an agency. But when faced with a choice, should we believe agency staff, or politicians and their flappers (see Gulliver’s Travels)? We should start by considering the views of the technical folks who take seriously their jobs to protect publichealth. We might get better policy.
From the Detroit Free Press, February 18, 2016