Posted on July 1, 2015
There are exciting developments in the College’s pro bono projects for Cuba, China and East Africa. This is our updated report.
With permission of the Executive Committee, the College has applied for a license to work in Cuba from the United States Department of the Treasury’s Office of Foreign Assets Control (“OFAC”). OFAC has replied by assigning the College a case number (an important development since we now have access to a Treasury Department case officer to help us) and noting that the College’s potential activities might (or might not) qualify for one of the 12 exceptions to the requirement for an OFAC license. We can either take our chances by proceeding with work and keeping careful records of our activities while awaiting a potential audit or apply for a specific opinion or license for a specifically described project. The pro bono program will work further with the Executive Committee to determine the nature and timing of our potential work in Cuba, but we regard this as a very promising path forward for the program.
Notwithstanding the May 26 press coverage of the proposed new Chinese legislation declaring that Western non-profits are no longer welcome in China (describing them as “potential enemies of the state”), our program continues to go forward with opportunities to work there. Zhou Saijun, the Director of Environment and Energy Committee under All China Lawyers Association has confirmed that ACLA will continue to cooperate with ACOEL and NRDC for its annual lawyer training. This event will take place in Xian in September 2015. There will be an opportunity for a College Fellow to speak at the training session. We will know shortly the proposed date and topic for the speech. As usual, we will ask those interested to submit their curricula vitae to me for transmission to the ACLA. They will select the Fellow they feel is most suited to their needs.
Xian, as you may well know, is the site of the famous, and once-buried, terracotta warriors and their terracotta horses. It should be on everyone’s bucket list.
3. East Africa
Coordinating the legal and political clients for work in East Africa has been challenging. But within the month, I hope to circulate a survey to solicit expressions of interest for work on East African environmental issues. I will do what I can to get our African contacts to pick up the pace.
In the interim, please call me at 415.954.4430 if you desire further information.
Posted on June 30, 2015
In Jonathan Cannon’s excellent post on Monday’s Supreme Court decision in Michigan v. EPA, he noted that the majority and the minority aren’t actually that far apart in their views on whether EPA must consider costs in this rulemaking. I have a slightly different take: They may not be that far apart, but they’re both wrong.
In fact, the issue in Michigan v. EPA seems so simple that the MATS rule could have been affirmed in a two-page opinion. Judge Scalia notes that the word “appropriate” – on which the entire 44 pages of the majority, concurring, and dissenting opinions focus – is “capacious”. I agree. If so, and if Chevron means anything, “appropriate” is surely capacious enough to allow for an interpretation that does not include cost considerations. That should have been the end of the case.
I do feel compelled to note, however, that Justice Kagan’s dissent also got it wrong, in at least three ways:
- I think she’s flat wrong to suggest that, because the MATS “floor” is based on the top 12% of facilities already in operation, that means that establishment of the floor already takes cost into account. As Justice Scalia cogently notes, those existing facilities may well have been under their own regulatory duress – a duress that may not have considered cost.
- Justice Kagan confuses cost-benefit analysis and cost-effectiveness analysis. For any given goal sought by EPA, the various options provided by the MATS rule may allow power generators to attain the goal in the most cost-effective means possible, but if even the most cost-effective approach were to yield $10B in costs and $10M in benefits, that would fail the cost-benefit test for most people.
- Finally, and most importantly, Justice Kagan got the consequences wrong. Instead of suggesting, as she did, that the majority decision,
"deprives the American public of the pollution control measures that the responsible Agency, acting well within its delegated authority, found would save many, many lives,"
she should have made the point that the majority decision will have no impact on EPA or the MATS rule. The Supreme Court did not vacate the rule; it merely remanded the rule to the Court of Appeals. Justice Kagan’s position should have been that EPA still has sufficient discretion, even on the existing record, to defend the MATS rule within the confines of the majority opinion. Instead, Justice Kagan gave ammunition to those who oppose the rule, by suggesting that it cannot be saved.
A pox on both their houses.
Posted on June 30, 2015
In Michigan v. EPA yesterday the Supreme Court held, 5-4, that EPA unreasonably declined to consider costs in deciding to regulate emissions of hazardous air pollutants (HAPs) from electric power plants. At issue was the Agency’s interpretation of the Clean Air Act’s “appropriate and necessary” threshold for regulating emissions from power plants under Section 112. The industry and state petitioners argued that the Agency could not reasonably interpret the phrase as excluding consideration of costs, whereas EPA contended that it could limit consideration of costs to a later phase of the regulatory process – i.e., the setting of emissions standards.
In Environment in the Balance: The Green Movement and the Supreme Court, I describe the competing cultural paradigms that orient us on environmental issues – paradigms immediately recognizable to anyone who works in environmental law and policy. On the one hand, the new ecological model emphasizes the interconnectedness and fragility of natural systems and the importance of collective restraint in protecting those systems. (Pope Francis’ Laudato Si embodies this model.) On the other, the dominant social paradigm emphasizes individualism, entrepreneurial effort, and economic growth. The postures of the justices in the Court’s environmental cases often reflect the influence of these paradigms. Conservatives such as Chief Justice Roberts and Justices Scalia, Thomas and Alito tend to align in environmental cases with the dominant paradigm; liberals such as Justices Ginsburg, Kagan and Sotomayor with the ecological. In the middle are Justice Kennedy, a conservative who has nevertheless been responsive to the ecological model in important cases, and Justice Breyer, a liberal who has expressed concern about extending environmental protections regardless of costs, as in his separate opinions in Whitman v. American Trucking Associations, Inc. and Entergy Corp. v. Riverkeeper, Inc.
Consistent with these alignments, Michigan v. EPA revealed divergent responses among the justices to the economic burdens of environmental regulation. Breyer held with his pro-environmentalist colleagues; Kennedy swung this time with the anti-regulatory faction; and the other justices lined up predictably according to their preferred worldviews. But the divergence was less than it might have been, and the competing opinions reflected common ground among the justices on the importance of considering costs in environmental regulation to avoid “disproportionate outcomes.”
Justice Scalia’s opinion for the Court argued that “reasonable regulation ordinarily requires paying attention to the advantages and disadvantages [i.e., costs] of agency decisions.” (Scalia pointedly cites Breyer’s concurring opinion in Entergy here.) Against a backdrop of the potential for burdensome and inefficient regulation, “appropriate and necessary” could not reasonably be read “as an invitation to ignore costs.” That the agency did prepare and consider a cost-benefit analysis in the standard-setting phase did not salvage the validity of the threshold determination. Costs were relevant at both stages. As he did in his opinion for the Court in Entergy, Justice Scalia walked back the potentially expansive holding in American Trucking, which ruled that the Clean Air Act prevented consideration of costs in setting National Ambient Air Quality Standards; that decision, he wrote, stands only for “the modest principle” that EPA is not allowed to consider costs where Congress has used language that excludes them.
Justice Kagan’s dissent (joined by Justices Ginsburg, Breyer and Sotomayor) agreed with the majority that rational regulation is generally not cost-blind: “absent a contrary indication from Congress” regulatory agencies must take costs into account. But she differed from the Court in arguing that EPA’s consideration of costs in the standard-setting phase satisfied the requisites of reasonableness. EPA’s cost-benefit analysis for the standards showed that the benefits (including the co-benefits of further reductions in particulate matter emissions) outweighed the costs by a factor of three to nine – a reasonable return indeed.
Michigan v. EPA suggests a presumption, adhered to unanimously by the Court, that where Congress has not specifically addressed consideration of costs, agencies are required to consider them, because it would be unreasonable for them not to. Only where Congress has evidenced its intent to preclude consideration of costs (the narrow niche to which American Trucking is now confined) are agencies free to ignore them. Apart from the specific issues in the case, this is a significant development in the Court’s approach to regulatory review. With both factions presuming that costs should be considered, the issue was not whether but when.
Posted on June 29, 2015
Recent events have me pondering this question.
Most notably, in two court decisions last week, courts ordered the State of Washington and the government of the Netherlands to take more aggressive action against climate change. In the Washington case, in response to a complaint from eight teenagers, a trial court judge has ordered the Washington Department of Ecology to reconsider a petition filed by the teenagers requesting reductions in GHG emissions. Similarly, in the Netherlands, a court ordered the government to reduce GHG emissions by 25% within five years. The Dutch case was brought under human rights and tort law, not under existing Dutch environmental laws.
I have been very skeptical of the use of nuisance-type litigation to require more aggressive government regulatory efforts. I still think comprehensive market-based regulation is the best approach. However, in the absence of aggressive action in the United States and world-wide, these suits are going to increase in number.
So, how are they similar to the same-sex marriage issue? First, as noted in Obergefell, courts were initially – and for some time – not just unfriendly to litigation efforts in support of same-sex marriage, they were positively dismissive. Second, there is the gradual increase over time in the litigation.
Next, there is also the change over time in the scientific understanding of the issues. While same-sex marriage has always been, on both sides, primarily a moral issue, it would be wrong to ignore the role that an increasing understanding of the genetics of sexual preference has played in the debate. Similarly, the move towards an overwhelming weight of evidence, not just that climate change is occurring, but that it is anthropogenic, has obviously been important to the climate change debate.
Finally, while the moral issues in same sex marriage may seem to distinguish it from the climate issue, the recent papal encyclical makes clear that there are moral aspects to the climate change debate as well.
I have no crystal ball. I do not know whether we are going to see a groundswell, and then, perhaps, a tidal wave that will somehow overcome the gridlock in United States and world politics on climate change. There are differences in the two issues, most obviously in the short-run economic costs of addressing climate change. Nonetheless, I do know that it wouldn’t surprise me if the tidal wave comes, and relatively soon.
Posted on June 26, 2015
Storms, strong winds and tornados usher in spring in Oklahoma. Home to 38 federally recognized Indian Tribes, feathers often fly at Oklahoma graduations. A few high schools each spring face off with Native American students, families, or tribal leaders over a graduating Native American student’s request to wear her sacred eagle feather on her graduation cap during commencement.
The eagle feather symbolizes strength, nobility, courage, perseverance, respect and wisdom. Leaders and elders only gift eagle fathers in times of great achievement. For Native American students, receiving an eagle feather or plume in honor of graduation can be as important as the diploma. Native American students incorporate the eagle feather or plume into their graduation regalia by attaching it to their graduation cap or tassel, thereby expressing both religious and cultural beliefs and honoring their Native American heritage.
What has this got to do with environmental law? Well, as this Oklahoma spring blew in with two lawsuits about eagle feathers at graduation, I began to wonder -- where do these eagle feathers awarded to students come from? After all, the Bald and Golden Eagle Protection Act forbids anyone from "taking" bald or golden eagles or their parts. The Act punishes anyone who takes, possesses, sells, purchases, barters, offers to sell, purchase or barter, transports, exports or imports a bald or golden eagle. Punishment includes large fines and imprisonment and applies whether the eagle is alive or dead, or the collector is absconding with an entire bird, part of the bird, an egg or a nest.
So what is a tribal leader in need of eagle feathers to do? In recognition of the significance of eagle feathers to Native Americans, the U.S. Fish and Wildlife Service (USFWS) established the National Eagle Repository at the Rocky Mountain Arsenal National Wildlife Refuge in Denver, Colorado. The Repository provides Native Americans with the feathers of golden and bald eagles for ceremonial purposes.
But wait, it’s not as easy as that. The Repository collects, processes, and ships about 1,000 dead bald and golden eagles each year. Electrocution, vehicle collisions, unlawful shooting and trapping, and natural causes are the usual culprits in eagle deaths, so the condition of the eagle feathers is not always perfect. Only enrolled members of federally recognized tribes can obtain a permit to obtain eagles or eagle parts for religious purposes. Approximately 95% of the orders are for whole eagles. With 566 Federally recognized tribes nationally, the large demand and the limited supply force applicants to wait more than 3 years for a whole bird eagle order to be filled. Currently, there are over 5,000 people on the waiting list for the approximately 1000 eagles the Repository receives each year.
Not everyone settles for eagle feathers from the Repository. In 2005, a fellow named Winslow Friday, a member of the Northern Arapaho Tribe of Wyoming shot a bald eagle within the Wind River Reservation for use in the tribe’s traditional religious Sun Dance ceremony. Unfortunately, Mr. Friday had no permit and was ultimately fined after losing a challenge to his penalty under the Religious Freedom Restoration Act.
The story doesn’t stop there. The Wind River Reservation, created in 1968, is home to both the Northern Arapaho Tribe and the Eastern Shoshone Tribe. Mr. Friday’s self-help effort having failed, the Northern Arapaho Tribe still needed eagles for use in their Sun Dance ceremony. So the Tribe applied for a permit to take two eagles each year on the Wind River Reservation.
But it’s a long road to an eagle take permit. Two years after the Arapahos applied for the permit, their co-habitants of the Wind River Reservation opposed the take of eagles on the reservation, claiming that allowing an enemy of the tribe to kill sacred eagles goes against Shoshone traditions, values, morals, heritage, and freedoms. Ultimately, however, the USFWS awarded the first federal eagle take permit to the Arapaho Tribe on condition that the take not occur on the Wind River Reservation. The Arapaho Tribe filed suit challenging that permit restriction. Judge Alan Johnson, of the United States District Court of the District of Wyoming issued an order on March 12, 2015 granting in part the Arapaho Tribe’s motion for summary judgment on Free Exercise grounds, and remanding the matter for reconsideration by the USFWS in light of the Court’s Order. See Northern Arapaho Tribe v. Daniel M. Ashe, Director, United States Fish and Wildlife Service, Case No. 2:11-CV-00347 Document 93 Opinion and Order Granting in Part and Denying in Part Plaintiffs’ Motion for Summary Judgment on Remaining Claims and Opinion and Order Granting in Part and Denying in Part Defendants’ Cross-Motion for Summary Judgment on Plaintiffs’ Remaining Claims (March 12, 2015). The Northern Arapaho Tribe’s religious quest through an eagle take permit continues.
My Oklahoma-spring curiosity led me to the conclusion that eagle feathers aren’t just blown in on the wind – eagles and eagle feathers are hard to come by even for those who lawfully possess them. Any student fortunate enough to be awarded a sacred eagle feather for graduation is truly graced.
Posted on June 24, 2015
The State of Texas took swift action to block a municipality seeking to limit fracking. In response to a 59 to 41% vote of its citizens, in November 2014, the City of Denton adopted an ordinance banning the well completion activity of hydraulic fracturing or fracking, which involves the high pressure injection of water, with proppants and small amounts of chemicals, into tight formations thousands of feet below surface to create and prop open fractures that facilitate the flow of oil and gas.
Hours after the ordinance’s adoption, the Texas General Land Office and Texas Oil & Gas Association filed suit in Denton County district court, seeking to declare the ban invalid. They argued that the ordinance intruded on powers granted by the legislature to the Railroad Commission of Texas and the Texas Commission on Environmental Quality and thus was preempted by state law. On May 18, 2015, before the court could rule on the law suit, Texas Governor Greg Abbott signed into law House Bill 40, which removes the authority of Denton and all other Texas municipalities to regulate not only fracking, but also all other oil and gas operations. On June 17, 2015, in recognition of House Bill 40, Denton’s City Council voted to amend its ordinance by repealing it in its entirety.
In seeking to reconcile the interests of those concerned with state government intruding on local rule with the interests of mineral owners and their lessees concerned with intrusive governmental restrictions on the use of their property, House Bill 40’s approach arguably was solomonesque. In just 3 pages, the bill allowed cities, under certain circumstances, to regulate above ground activities related to oil and gas operations, but barred them from regulating oil and gas operations per se, reserving that regulation to the state.
House Bill 40 declares that oil and gas activities are subject to the exclusive jurisdiction of the state, but clarifies that municipalities may adopt an ordinance that regulates above ground activities related to oil and gas operations, including ordinances governing fire and emergency response, traffic, lights, or noise, or imposing reasonable setback requirements. The statute requires, however, that such an ordinance be “commercially reasonable,” not effectively prohibit an “oil and gas operation” conducted by a reasonably prudent operator, and not otherwise be preempted by state or federal law. The statute defines the quoted terms. It also creates a presumption that an ordinance is considered prima facie to be commercially reasonable if it has been in effect for 5-years and has allowed oil and gas operations to continue during that period.
The stated concerns of the Denton ordinance generally related not to fracking, but rather to the above ground impacts of the oil and gas activities it facilitated, that is, things like traffic, lights, noise, and safety concerns. The Denton ordinance did express concern with the potential for contamination of drinking water aquifers, but studies, including EPA’s recently released draft assessment on fracking, generally have shown that concern to be related more to oil and gas activities generally than to the subsurface migration of contaminants associated with fracking per se.
Even in fossil energy friendly Texas, fracking can be controversial. The new state statute allows municipalities to address above ground effects related to oil and gas operations, subject to certain limits to be more fully fleshed out, but reserves to the state the power to regulate oil and gas operations per se. This approach preserves local authority over things that arguably mattered most to the citizens of Denton, while preserving regulation of oil and gas development by the agencies that have historically regulated them.
Posted on June 23, 2015
On June 4, 2015, the U.S. Environmental Protection Agency released a draft “Assessment of the Potential Impacts of Hydraulic Fracturing for Oil and Gas on Drinking Water Resources,” which finds no evidence that hydraulic fracturing activities have led to widespread, systemic impacts on drinking water supplies. According to the draft assessment, between 2000 and 2013, there were an estimated 9.4 million people living within one mile of a well that was hydraulically fractured. The draft assessment supports the assertion that state agencies, as the primary regulator of oil and gas development in the United States, are effectively governing hydraulic fracturing activities by the industry.
Initially announced by USEPA in March 2010, the study has a broad scope. USEPA reviewed each stage of the “hydraulic fracturing water cycle” – including water acquisition, chemical mixing, well injection, flowback and produced water recapture, and wastewater treatment and disposal – to assess for any widespread, systemic impacts on the quality or quantity of drinking water resources. The agency also used an expanded definition of drinking water resources that includes currently undrinkable saline aquifers that might be desalinated for consumptive use in the future.
Although the draft assessment acknowledged that hydraulic fracturing could potentially contaminate drinking water resources, USEPA found that the actual occurrences of such impacts were “small compared to the number of hydraulically fractured wells.” The risks related to hydraulic fracturing activities identified in the draft assessment included: water withdrawal in times of low availability; spills of fracturing fluids and produced water; fracturing directly into underground drinking water resources; below ground migration of liquids and gases; and inadequate treatment and discharge of wastewater.
The draft assessment noted that the primary means of disposing of wastewater from hydraulic fracturing activities conducted in the United States is underground injection wells. However, one notable exception to this finding is in the Marcellus shale play, where USEPA found that most wastewater is reused by industry. The high percentage of reuse and recycling of wastewater in the Marcellus shale play is a practice that industry has long asserted is a valuable means of reducing the amount of freshwater needed for well development activities.
USEPA is expected to publish a final assessment after the completion of a notice and comment period, which is currently open and concludes on August 28, 2015, and a review of the draft assessment by the Science Advisory Board Hydraulic Fracturing Research Advisory Panel. The Panel has scheduled a public meeting to conduct a review of the draft assessment from October 28 to October 30, 2015, and teleconferences to discuss the draft assessment on September 30, October 1, and October 19, 2015.
Posted on June 19, 2015
On June 12, 2015, EPA’s final rule calling for 35 states and the District of Columbia to revise their regulations on excess emissions during startup, shutdown and malfunction was published. This rulemaking saga dates back to a June 30, 2011 petition filed by the Sierra Club. The vast majority of these regulations have been part of State Implementation Plans (SIPs) since the 1970s or early 1980s. As EPA sets out in the rule, the question of how to deal with emissions during startup, shutdown and malfunction (SSM) has also been the subject of guidance issued in 1982, 1983, 1999, 2001, and now 2015. This is a tough issue.
EPA found that a majority of the states have regulations that impermissibly allow a source to assert affirmative defenses to avoid a determination that excess emissions due to SSM events are violations of the Clean Air Act. Similarly, EPA also concluded that regulations providing discretion to the state agency to determine whether excess emissions are violations are improper. Because such provisions deprive EPA or citizens of the ability to pursue enforcement action, EPA concludes the provisions are impermissible. The preamble also points out that broad SSM exclusions under state law would effectively allow state agencies to usurp the authority given to the federal courts by Congress to enforce SIPs and determine penalties. In response to concerns voiced by the regulated community, EPA emphasizes that sources can assert any common law or statutory defenses they believe are supported by the circumstances when they get to court.
With respect to startup and shutdown provisions, the rule reiterates that different emissions limitations can apply to particular modes of operation and the preamble discusses the use of work practice standards rather than numerical emission limitations. EPA recommends seven criteria as appropriate considerations for States as they consider SIP revisions to address startup and shutdown provisions in response to the SIP Call. The criteria seem designed to encourage a series of source category-specific rules to replace regulatory provisions that apply to all types of emission sources. However, EPA also emphasized that each state has discretion to determine the best means by which to make a revision so long as the revisions are consistent with the Clean Air Act. It remains to be seen how states will choose to respond and the extent of administrative burden this process will impose on agency staff.
Affected states have until November 22, 2016 to respond to the SIP Call. Until EPA takes final action on the SIP submittals, the existing SIP provisions remain in effect. SIP calls were issued for Maine, Rhode Island, New Jersey, Delaware, District of Columbia, Virginia, West Virginia, Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina, Tennessee, Illinois, Indiana, Michigan, Minnesota, Ohio, Arkansas, Louisiana, New Mexico, Oklahoma, Texas, Iowa, Kansas, Missouri, Colorado, Montana, North Dakota, South Dakota, Arizona, California, Alaska, and Washington.
Posted on June 8, 2015
On May 5, 2015, the Wisconsin Department of Administration (WDOA) released its Preliminary Determination that compliance with the Wisconsin water quality-based effluent limitations (WQBEL) for phosphorus will cause “substantial and widespread adverse social and economic impacts on a statewide basis”, thus providing the foundation for availability of a statewide multi-discharger variance (MDV).
What brought this on?
In posts in 2011 and 2013, I described Wisconsin’s phosphorus reduction rule, including its compliance options of water quality trading and adaptive management. Recognizing that these innovative compliance alternatives to traditional construction are not viable for all dischargers, in 2014 Wisconsin enacted legislation to authorize a statewide MDV for those dischargers that cannot meet the WQBEL for phosphorus without a major facility upgrade. Under the MDV, a point source will have more time to meet its phosphorus limitations. However, during the extended period, they will be obligated to either implement nonpoint source reductions or to provide funding to counties to implement existing, but seriously underfunded, nonpoint source reduction programs. The expectation is that most permittees will choose to fund their local county. At $50/pound for the difference between the actual pounds of phosphorus discharged and the target value of 0.2 mg/L, we are talking about real money.
The MDV legislation required the WDOA, in consultation with the Wisconsin Department of Natural Resources (WDNR), to conduct a study to:
“determine whether attaining the water quality standard for phosphorus . . . through compliance with water quality based effluent limitations by point sources that cannot achieve compliance without major facility upgrades is not feasible because it would cause substantial and widespread adverse social and economic impacts on a statewide basis.”
Based on work conducted by ARCADIS, The University of Massachusetts Donohue Institute, and Sycamore Advisors, consultants to WDOA and WDNR, the Preliminary Determination concludes that, without this variance:
· “almost 600 Wisconsin businesses will be impacted as they continue to work their way out of the recession”
· Wisconsin communities will experience a minimum cost of “$3.4 billion in capital expenditures which will rise to nearly $7 billion when accounting for interest” to meet increased capital costs
· Annual operations and maintenance (O&M) cost of $405 million along with debt service will “equate to $708 million annually”
· In 2025 when the full impact of the costs will be felt, statewide impacts will result in:
o 4,517 fewer jobs
o $283.3 million in foregone wages
o $616.6 million reduction in gross state product
o 11,000 fewer Wisconsin residents
A hearing on the Preliminary Determination was held on May 12, and written comments are due by June 11. The next step is for WDNR to submit a request to the United States Environmental Protection Agency (USEPA) to approve the MDV for phosphorus for Wisconsin. Once implementation of the MDV begins, much-needed nonpoint source funding can begin to flow.
Additional relevant documents are accessible via the WDNR website.
Posted on June 5, 2015
Earlier this week, the D.C. Circuit Court of Appeals rejected both industry and environmental group petitions challenging EPA’s determination of what is a solid waste in the context of Clean Air Act standards for incinerators and other combustion units. It wasn’t actually a difficult case, but it does provide a lesson for Congress. When the technical nature of EPA’s decisions was layered on top of the fundamental deference given EPA’s interpretation of the statute under Chevron, the petitioners were never going to prevail:
We afford great deference to EPA’s determinations based on technical matters within its area of expertise.
The crux of the environmental petitioners’ case was that certain of the materials, such as scrap tires, exempted by EPA from the definition of solid waste, are unambiguously “discarded” within the meaning of RCRA, so that EPA did not have discretion to exempt them. Unfortunately, as the Court noted:
the term “discarded” is “marked by the kind of ambiguity demanding resolution by the agency’s delegated lawmaking powers.”
In other words, given the current state of decrepitude of the non-delegation doctrine, when Congress enacts legislation using words as vague as “discarded”, it is essentially telling EPA to figure out what Congress meant to say. And when EPA does figure out what Congress meant to say, the Courts are not going to disturb EPA’s interpretation.
For those in Congress who don’t like the way EPA implements statutes for which it is responsible, they might learn a lesson from Pogo.
Posted on June 1, 2015
Vatican officials have confirmed that a Papal encyclical will be released in June. The encyclical, which is the official proclamation of the Catholic church on a particular issue, will address the environment. According to the Vatican’s spokesman, Frederico Lombardi, Pope Francis believes that the proclamation will act as a “moral barometer” and will help “shape the discussion” at the climate summit in Paris (COP21) scheduled to be held at the end of 2015.
Although the encyclical has not yet been released, there is little question that it will take a strong position that environmental protection is a moral and religious issue and will likely acknowledge that climate change is, in fact, caused by human activity. As a precursor to the publication, a Vatican meeting was held on climate, energy and ecology. The meeting was a collective of religious leaders, environmentalists, and scientists, among others. On April 28, 2015, the group issued the “Declaration of Religious Leaders, Political Leaders, Business Leaders, Scientists and Development Practitioners:”
We, the undersigned, have assembled at the Pontifical Academies of Sciences and Social Sciences to address the challenges of human-induced climate change, extreme poverty, and social marginalization, including human trafficking, in the context of sustainable development. . . . We have considered the overwhelming scientific evidence regarding human-induced climate change, the loss of biodiversity, and the vulnerabilities of the poor to economic, social, and environmental shocks.
In the face of the emergencies of human-induced climate change, social exclusion, and extreme poverty, we join together to declare that:
Human-induced climate change is a scientific reality, and its decisive mitigation is a moral and religious imperative for humanity; . . .
The world should take note that the climate summit in Paris later this year (COP21) may be the last effective opportunity to negotiate arrangements that keep human-induced warming below 2-degrees C, and aim to stay well below 2-degree C for safety, yet the current trajectory may well reach a devastating 4-degrees C or higher; . . .
Given the timing of the Vatican meeting, it seems probable that Pope Francis’s upcoming encyclical, with its teachings for 1.2 billion Roman Catholics in the world, will have a significant impact. While many will be excited to see its contents, there are some that will likely be less than thrilled – including more than a few of the 40 or 50 candidates for President (I may have added a few of the fringe candidates) as well as some members of Congress. Whether the candidate is the extreme “climate-change-does-not-exist” or the more moderate “environmental-regulation-is-not-a-pressing-issue,” the encyclical is going to be a real problem. Recent polling indicates, for example, that environmental issues do not show up in the top ten priorities for Republican voters. But is any politician really going to disregard the Pope? And since 25% of the members of Congress identify as Catholic Republicans, the presidential candidates are not going to be alone in their dilemma.
I make a point of this only because I live in Iowa and the migration of presidential candidates has already begun. You can’t turn right at a corner without hitting a candidate, and between now and February 2nd (the Iowa caucuses) it is going to get much, much worse. If the Vatican could just wait until February 3rd or 4th, all of Iowa would be greatly appreciative. New Hampshire might not be thrilled, but that’s a risk we would be willing to take.
Religion, to varying degrees based on the country, has always had an impact on politics. In the United States, history and the Constitution have tried to separate them, but with little success. One thing is certain, at least during the last six months of 2015, we are all going to hear a lot more about environmental imperatives, moral obligations and political priorities.
Posted on May 28, 2015
Today EPA and the Army Corps of Engineers released a prepublication version of the final rule defining “waters of the United States,” the jurisdictional trigger under the Clean Water Act. The term needs defining because the Act extends to navigable waters and adjacent wetlands, but it is often not clear how some streams or wetlands relate to a navigable waterway, and the Supreme Court has provided conflicting guidance.
So, the agencies have attempted to clarify. With the new definition they hope to reduce the number of case-by-case jurisdictional determinations and litigation, but they understand full well the controversial nature of the rule, having received over a million comments on the draftpublished on April 21, 2014. In response, EPA and the Corps today also released a battery of public relations offerings—press release, fact sheets, blogs, op-ed pieces—to explain and defend the rule. The controversy will not end here.
As previously reportedin this space, the impetus for the rule is uncertainty created by a 2006 Supreme Court decision in Rapanos. In that case, a 5-4 split Court held that the government had overstepped its authority, but failed to issue a majority opinion. Instead, four justices, led by Justice Scalia, proposed a rule in essence requiring that the subject waters or wetlands be free flowing and obviously wet. The concurring opinion by Justice Kennedy would instead look for a “signficant nexus” between a wetland and a navigable waterway. The lower courts have struggled ever since to discern a clear jurisdictional definition.
At first glance, the final rule does not veer much from the draft. For a comprehensive analysis of the draft rule, including the cases leading up to the rule, see the American College of Environmental Lawyers reportfor the Environmental Council of the States. Although EPA and the Corps have declared that the rule does not represent a major policy shift, a diverse ACOEL writing team—made up of experts in academia, non-profit organizations, and private practice—had differing opinions. Some saw a sea change in federal policy, while others believed the draft rule was simply a restatement of existing policy.
Congress has been fulminating about government overreach since the draft rule was published. On May 12, 2015 the House passed HR 1732, the Regulatory Integrity Protection Act, in an effort to block the final rule. If the Senate passes the bill, Congress will need to muster the votes to override a certain presidential veto.
Although the purpose of the final rule is to provide some certainty as to the scope of Clean Water Act jurisdiction, it is highly likely to be challenged by industry groups in the courts. That means years of litigation and appellate review across the country, ultimately landing once again before the Supreme Court. Whether we get clarity this time from the Court remains to be seen.
Posted on May 7, 2015
The D.C. Circuit Court of Appeals just reversed and remanded EPA’s rule allowing backup generators to operate for up to 100 hours per year as necessary for demand response. It’s an important decision that could have lessons for EPA and the regulated community across a wide range of circumstances, including eventual challenges to EPA’s proposed GHG rule.
EPA said that the rule was necessary to allow demand response programs to succeed while maintaining grid reliability. Commenters had argued that, by encouraging greater use of uncontrolled backup generators, EPA’s rule makes other generators less economic, thus creating a negative feedback loop, with less and less power generated by controlled units, resulting in greater and greater need for uncontrolled backup generators. Here’s what the Court concluded:
- EPA failed adequately to respond to the commenters’ arguments. Noting that “an agency must respond sufficiently to “enable [the court] to see what major issues of policy were ventilated,” the Court instead found that EPA “refused to engage with the commenters’ dynamic markets argument."
- To the extent EPA did respond, it was “self-contradictory”, arguing that it was not justifying the regulation on reliability grounds, even though the final rule said that it was based on reliability concerns.
- The 100-hour rule was based on faulty evidence. EPA relied on evidence that backup sources had to be available at least 60 hours to participate in a PJM “Emergency Load Response Program.” However, PJM itself noted that this minimum does not apply to individual engines.
- Finally, and perhaps most importantly, while EPA justified the rule on reliability grounds, the Court stated that:
grid reliability is not a subject of the Clean Air Act and is not the province of EPA.
This last issue is the part of the opinion that could have some bearing on judicial review of EPA’s GHG rule. The Court noted that there was no evidence that FERC or NERC had participated in the backup generator rule or provided comments to EPA. When, during the course of the rulemaking, a commenter suggested that EPA work with FERC, this was EPA’s response:
the rulemaking’s purpose was to address emissions from the emergency engines “and to minimize such pollutants within the Agency’s authority under the CAA. It is not within the scope of this rulemaking to determine which resources are used for grid reliability, nor is it the responsibility of the EPA to decide which type of power is used to address emergency situations.”
This statement did not make the Court happy:
EPA cannot have it both ways it [sic] cannot simultaneously rely on reliability concerns and then brush off comments about those concerns as beyond its purview. EPA’s response to comments suggests that its 100-hour rule, to the extent that it impacts system reliability, is not “the product of agency expertise.”
And why is this relevant for the GHG rule?
First, because EPA had better consult with FERC and NERC, so that it can defend any statements it makes in the GHG rule about its impact, if any, on reliability. Second, it’s clear that the court will not show deference to EPA’s conclusions about reliability, since that is not within the scope of EPA’s expertise.
Posted on May 6, 2015
When selecting best management practices (BMPs) to protect streams during and following construction, riparian buffers are often considered the most effective option. These permanently vegetated areas alongside waterbodies can capture, infiltrate and control stormwater flow, filter contaminants, stabilize stream banks and otherwise help protect and restore waterbodies and the ecological functions they support. Recognizing the particular importance of riparian buffers located adjacent to exceptional value and high quality waters designated for special protection, the Pennsylvania Department of Environmental Protection (PADEP), like many other state environmental regulatory agencies, adopted regulations prohibiting earth disturbance activity within 150 feet of a special protection waterbody. The regulations further required a property developer to protect or establish a riparian forest buffer under certain circumstances where waters in the project’s watershed fail to attain their designated uses.
And then along came the Pennsylvania legislature. Faced with objections from homebuilders and other developers to restrictions on use of their properties, the legislature enacted Act 162 of 2014 to provide developers with additional options. Under Act 162, a developer who requires an NPDES stormwater construction permit may disturb land within 150 feet of a special protection waterbody if it implements BMPs “substantially equivalent” to a riparian buffer or a riparian forest buffer. If the earth disturbance would occur in a special protection watershed within 100 feet of a surface water, the developer must also offset any reduction of the total square footage of the buffer zone that would have been utilized as a BMP with a replacement buffer. The replacement buffer must be created in the same drainage area as the disturbed buffer and be as close as feasible to the area of disturbance at a ratio of one-to-one.
In response to the passage of Act 162, PADEP recently published interim final guidances on equivalency demonstration and offsetting. The equivalency demonstration guidance requires each developer disturbing earth within 150 feet of a special protection water to implement BMPs that reduce loadings of pollutants including total suspended solids, total phosphorous and nitrate. In addition, the developer must show that its BMPs are functionally equivalent to a riparian buffer or forested buffer by providing, among others, habit for wildlife and vegetation, flood attenuation, channel stability and support of aquatic food webs. Under the buffer offsetting guidance, a replacement buffer should be composed of native, diverse tree and shrub vegetation and preferably be installed at a location that receives runoff with characteristics similar to or more degraded than the runoff that the replaced buffer would have encountered.
While many regulatory regimes afford environmental agencies discretion to grant waivers and exceptions to buffer protection requirements, Pennsylvania has by statute granted developers the option of using substantially equivalent BMPs, supplemented where necessary by offsetting. PADEP has drafted guidances with stringent criteria for demonstrating equivalency and offsetting, but the guidances have yet to be finalized let alone judicially reviewed. Experience in administering Act 162 will reveal whether, under PADEP’s watchful eye, equivalency and offsetting can uniformly serve as effective substitutes for a prohibition on development near special protection waters. In the meanwhile, some healthy skepticism is in order.
Posted on May 1, 2015
Oklahoma has quietly earned the dubious distinction of earthquake capital of the Lower 48, having surpassed California last year. In 2014, Oklahoma had 585 earthquakes of magnitude 3.0 or higher compared to California’s 180. The cause of this dramatic rise in seismic activity, and whether it is induced by human activity, particularly by oil and gas operations, has been the subject of much discussion and scientific study.
When I last blogged about this subject (June 2014) the U.S. Geological Survey (USGS) and the Oklahoma Geological Survey (OGS) had just issued a joint warning of the increased risk of a M5.5 or greater earthquake in central Oklahoma, stating that the science suggests that a “likely contributing factor” to the increase in earthquakes is injection of oilfield wastewater into deep geologic formations. Despite several sensational articles implying that industry has exercised undue influence over the OGS and its scientific conclusions, on April 21, 2015, the OGS issued a statement in which it reiterated the view that “the primary suspected source of triggered seismicity is…from the injection/disposal of water associated with oil and gas production…the OGS considers it very likely that the majority of recent earthquakes…are triggered by the injection of produced water in disposal wells . . . .”
On April 23, 2015, the USGS released a new report which again noted the connection between earthquakes and certain deep disposal wells, but concluded that, “induced seismicity does not occur near every disposal well, so it is important that we continue to study and learn more about how these earthquakes are generated…These changes may be related to oil and gas exploration activity but they also may depend on physical processes, which are poorly understood…many questions remain”.
As the science develops, the Oklahoma Corporation Commission (OCC), which regulates oil and gas wastewater disposal wells in Oklahoma under the SDWA Underground Injection Control program, has taken an aggressive approach. The OCC has identified “areas of interest”, which are areas within 10 kilometers of any earthquake swarm. Eight areas of interest encompassing approximately 112 square miles have been identified. On March 12, 2015, the OCC sent letters to operators who dispose of oilfield wastewater into the deep Arbuckle formation within these areas of interest directing that they provide information from which it can be determined whether such disposal is in communication with the underlying crystalline basement rock. If it is, the OCC is requiring that disposal into the Arbuckle be discontinued. Failure to produce the information results in immediate curtailment of disposal by 50%.
With the downturn in crude oil prices, most companies have dramatically cut back on drilling and completing new wells. This downturn itself may provide a scientific opportunity to see if reduced oilfield activity produces fewer earthquakes in Oklahoma.
Posted on April 29, 2015
A plaintiff seeking to characterize a business transaction as “disposal” under CERCLA may now feel like a polar bear looking for a patch of thick ice.
On March 20, 2015, a divided panel on the Fourth Circuit Court of Appeals, in Consolidation Coal Co. v. Ga. Power Co., affirmed a District Court's ruling holding that transformer sales did not evidence an intent on to dispose of hazardous materials, and therefore did not support a finding of “arranger liability” under “CERCLA” even when words like “scrapping” and “disposal” were used. Looking to the framework of the Supreme Court’s 2009 ruling in Burlington Northern Burlington Northern and Santa Fe Railway Co. v. United States and the Fourth Circuit’s 1998 ruling in Pneumo Abex Corp. v. High Point, Thomasville & Denton Railroad Co., the 2-1 majority held that while a party who sells a product that contains hazardous substances also “‘intends’ to rid itself of that hazardous substance in some metaphysical sense… [an] intent to sell a product that happens to contain a hazardous substance is not equivalent to intent to dispose of a hazardous substance under CERCLA.” Rather, in the court’s words, “there must be something more.”
Georgia Power, a major Georgia electrical utility that supplies power to most of Georgia, sold used electrical transformers containing PCBs to Ward Transformer Company. Ward repaired and rebuilt used transformers for resale. In the process, Ward’s Raleigh, North Carolina, facility became contaminated with PCBs. After the Ward site was added to the National Priorities list, Consolidated Coal Company and another company bore most of the cleanup costs as PRPs under CERCLA, spending approximately $17 million each in cleanup costs.
Any attorney who has ever tried or been involved with a CERCLA case knows that Georgia Power, given these facts, looks like a prime target to sue for contribution.
In their appeal to the Fourth Circuit Court of Appeals, Consolidated Coal argued the District Court improperly considered the low value of the used transformers and Ward’s ability to profit from their resale. This, Consolidated Coal contended, overlooks the possibility that Georgia Power had a “dual intent” to make money from the sales of transformers and thus had an intent to dispose of the hazardous materials as an arranger. Thus, according to Consolidated Coal, Georgia Power’s “secondary motive” for the transformer sales -- to dispose of PCBs –- was sufficient to create arranger liability under CERCLA.
The Court concluded that there was no direct or substantial evidence that Georgia Power intended, “even in part,” to arrange for disposal. Furthermore, the use of the words “scrapping” or “disposal” in Georgia Power’s documents had “limited bearing” on their intent to “dispose” of transformers as the word is construed in CERCLA, let alone the PCBs within those transformers. The Court was also not swayed by the fact that the transformers were sold in lots and that some of the transformers were partially disassembled, or that old oil was required to be removed from the transformer as part of the reconditioning process. According to the Court, all Georgia Power did was to sell its transformers to the highest bidder.
While these cases remain fact sensitive, the trend lines suggest CERCLA plaintiffs alleging “disposal” may be on thin ice.
Posted on April 28, 2015
On April 15 of this year, I thought about the following quote:
"Taxes are what we pay for civilized society."
--Oliver Wendell Holmes Jr.
U.S. Supreme Court Justice
And then I reminisced a bit.
My career as a federal tax lawyer was very brief. About 25-30 years ago, I represented a client which thought it was paying too much in "Superfund" taxes. These taxes are levied on companies which manufacture and produce chemicals. The money is then used by U.S. EPA and others to fund hazardous waste disposal site clean-ups.
I certainly was not a tax lawyer. But one of our senior partners who was in charge of managing work for a chemical company client needed help. He was an excellent tax lawyer, but he said he knew nothing about Superfund taxation. Since I was doing a lot of Superfund clean-up work at the time, I drew the short straw for arguing the merits of this matter before the IRS.
I can't remember now whether the company had a good legal basis for contesting the tax. It might have had something to do with the fact that the client company recycled some amount of used chemicals into making new product. Thus, the Company believed, some of the same chemicals were taxed twice -- once when they were originally manufactured and then again when they were recycled into new product. I do remember that the client's top management thought that the Superfund tax on chemical production in general was very "unfair." [The client never got to the point of considering the "fairness" of the strict, retroactive, joint and several liability regime for generators under the Superfund Law.]
The Company President and I went out to Washington to discuss the merits of our case with officials of the IRS and the Treasury Department. We got out of our cab in front of the Internal Revenue Service Building on Constitution Avenue one bright sunny morning in April. I looked up at the imposing building. Emblazoned in granite across the top of the building was the above quote from Justice Holmes.
I turned to my client and asked him to look up and read the quote. Then I said, "Jon, this is why we are not probably going to win our case here today." And we didn't.
The Company was not interested in pursuing a judicial appeal. So ended my career as a tax lawyer.
Posted on April 16, 2015
After Sackett, the question on everyone’s mind was “How far does it go?” The first test of that question was the decision by the 5th Circuit Court of Appeals – not known as a bastion of liberalism – in Belle Company v. Corps of Engineers, holding that a Corps jurisdictional determination is not final agency action subject to judicial review. Late last week, however, in Hawkes Co. v. Corps of Engineers, the 8th Circuit disagreed, creating a circuit split.
As we noted at the time, the 5th Circuit decision in Belle focused on the differences between the Sacketts’ position facing an enforcement order and that of Belle Company facing a Corps JD. As the 5th Circuit emphasized, the JD did not require Belle Company to do anything. Nor did the JD expose Belle Company to penalties. Nor did it prejudice Belle Company’s ability to obtain a permit. Nor did it include a finding of a CWA violation.
The 8th Circuit took a different tack, focusing instead on the one great, glaring similarity between the enforcement order in Sackett and the JD in Hawkes Co. – in both cases, the Corps’ decision, as a practical matter, defined the property owner’s rights and ended the proceeding.
It’s not obvious to me that the Supreme Court will take the case, even with the circuit split. I don’t think that the Court likes these cases. On the other hand, it is obvious that the conservative wing of the court sees Sackett as a very important decision and there could well be four votes to decide the issue at this point.
If the Court does take the case, all bets are off. I think that the 5th Circuit still has the better of the legal argument, and I expect that will be sufficient for all but the most ardent property rights advocates on the Court. Whether there are five ardent property rights advocates on the Court is what remains to be seen.
Posted on April 8, 2015
What is your favorite place on Earth. The beach. The mountains. A hiking trail to a waterfall. A river or lake. People are drawn to water, mountains, and forests. Being in nature switches off the analytic left brain, turns on the creative right brain, and activates the heart and body. Experiencing the environment is like mindful meditation.
What is the biggest challenge the world faces? Controlling technology. Curing diseases. Making the world safer. Preventing a nuclear disaster. Overcoming poverty. Preventing another economic depression. Reducing illiteracy. We can address many of these social problems. However. we cannot control nature. We have to learn to live with nature. If we cannot learn to live with nature. we will destroy the earth and ourselves.
Sea levels are rising faster and glaciers are melting more rapidly now than in 1950. Hurricane Katrina and Super Storm Sandy are powerful reminders that man cannot control nature. Record snowfalls in the northeast shut down many activities in 2014 and 2015. California is in a prolonged drought.
In the 1970’s, America’s concern for the earth led Republicans and Democrats to create the laws and regulations which are universally recognized as the most successful environmental laws in the United States. Other countries used these laws as models. These laws include the 1970 Clean Air Act, the 1972 Clean Water Act and the 1976 hazardous waste law. Richard Nixon created EPA in 1970. April 22, 1970 was the first Earth Day.
The Clean Air, Clean Water and hazardous waste laws are still used to limit the discharge of pollution into the environment. However, science has discovered new environmental problems and sources of pollution which require amendments to the 1970’s laws or new regulations.
Congress will not amend the 1970’s laws to give EPA the authority to control new sources of pollution. Congress opposes new regulations proposed by EPA. Many legislators contend that additional pollution controls will bankrupt American industry because other countries can make cheaper products since their industries do not have to pay for pollution controls.
What motivated Congress to create the Clean Air, Clean Water and hazardous waste laws in the 1970s? I believe that powerful images of environmental crises captured in photographs touched everyone, regardless of their political party. (1) The Cuyahoga River catching fire near Cleveland in 1969. (2) Chattanooga air pollution so dark that headlights were necessary to see at noon on a sunny day. (3) Containers leaking hazardous waste into the Valley of the Drums in Kentucky.
Has our concern for the earth disappeared? No. Businesses and citizens are finding sustainable solutions to environmental problems. Recycling saves money. Businesses and citizens will not buy unhealthy products. Consumers want utilities to use nature’s energy: sun, wind and water. Local farms and gardens provide more of our food.
Americans are still concerned about the earth. Scientists tell us that emissions from cars cause air pollution which prevents children from playing outside on hot sunny days in Atlanta, Houston and Los Angeles. Runoff from cities and farms causes pollution which makes some rivers unsafe for swimming. Why have our concerns and new scientific discoveries not led Congress to take actions to address today’s most serious environmental issues? How can we educate our leaders and generate the consensus that leads to support of new pollution controls. What are the actions, the events and the pictures that will motivate Americans to find the common understanding needed to agree on new laws and regulations.
Environmental lawyers can save the earth. Why and How?
Environmental lawyers care about the environment. We may fight about how clean is clean. We may disagree on how stringent an air or water discharge standard must be. But we all want to reduce pollution to levels that protect human health and the environment and are cost effective.
(1) Education – Environmental lawyers representing industry, EPA, states and environmental non-profits learn the relevant scientific facts and applicable laws. Environmental lawyers can teach clients, legislators, agency officials, judges and the public.
Education is critical to reaching agreement on action to protect the environment.
(2) Advocacy – Environmental lawyers are trained to marshal the facts and law and advocate for change in legislatures and courts. Environmental lawyers are experts in relevancy and advocacy.
(3) Facilitated Agreements – Environmental lawyers representing industry, government and environmental advocacy groups regularly resolve environmental disputes without litigation or soon after litigation is commenced.
Environmental lawyers know that litigation is a last resort. Environmental lawyers can teach their clients that a mediated settlement is superior to giving up control of the outcome to a judge.
(4) Alternative Dispute Resolution – When the operator of a hazardous waste site cannot clean up the site, the parties who sent waste to the site must clean it up. Environmental lawyers created a mediation process which enables each company to agree on a percentage of the cleanup cost without lengthy litigation. The mediation process enables the companies to clean up hazardous waste sites faster and cheaper than EPA.
(5) Cleanup of Contaminated Property - In the 1980’s, environmental lawyers created the “Brownfield” process in which a natural biological solution is used to clean up contaminated property so that it can be used again. The private sector taught EPA that waste sites could be reused rather than abandoned.
(6) Private Sector Cleanup – Legislators and EPA set the pollution standards. However, environmental lawyers and the private sector can clean up pollution faster and cheaper that any governmental agency.
(7) Aid To Other Countries – Congress is concerned that new environmental regulations will be so expensive that U.S. businesses will not be able to compete with other countries who continue to pollute. China is often used as an example. Lawyers from the American College of Environmental Lawyers (ACOEL) have given free legal advice to the Chinese government on how to eliminate pollution through use of daily fines, a concept that was fundamental to enforcement of the 1970’s Clean Air and Clean Water laws. Chinese companies are spending money on pollution control. American industry will not be at a competitive disadvantage in pricing its products.
(8) White Papers – In 2014, ACOEL lawyers prepared “White Papers” explaining the facts and law on proposed EPA water and air regulations. Lawyers representing all views worked together on the White Papers. The White Papers educate. They do not advocate. State environmental agencies have praised these White Papers.
Can Environmental Lawyers Save the Earth? Yes we can. We need to continue educating our children, our citizens, and our leaders in business, government, and nonprofits. The 1970s environmental laws and regulations can be amended to save the earth.
Posted on April 6, 2015
On March 25, 2015, the Supreme Court heard 90 minutes of argument in Michigan v. EPA, No. 14-46. Briefing and argument focused on one aspect of EPA’s Mercury and Air Toxic Standards (MATS) Rule: whether EPA unreasonably refused to consider costs in determining if it is appropriate to regulate hazardous pollutants emitted by electric utilities. If you were unable to attend the argument but want to know more about it than you can learn from the press reports, then this “Advice from Air Act Andy” column is for you.
Question: Based on questions asked by the Justices during argument, many predict this will be a 5-4 decision, with Justice Kennedy possibly casting the deciding vote. What do you think?
Air Act Andy: I will preface my answer with the disclosure that a year ago I told my client there was virtually no chance the Court would choose to hear the MATS case. With my prognostication credentials thus firmly established — and keeping in mind that it is unwise (and usually embarrassing) to predict what the Court will do based on the questions asked at oral argument — let me say only that I came away from the argument sensing a 4-3-2 split in the Court. I leave it to you, gentle reader, to infer more.
Question: Did Justice Breyer and his clerks spend endless hours hypothesizing scenarios for how EPA might have taken costs into account in developing the MATS Rule?
Air Act Andy: Without speculating on how many hours Justice Breyer and his clerks spent thinking about this, I note that he arrived at argument armed with a long list of questions suggesting he was troubled by the idea that EPA might regulate hazardous air pollutant emissions from electric utilities without any consideration of costs. In particular, he asked whether costs had been, or could be, considered in the subcategorization of electric generating units, even if costs were not considered in EPA’s initial listing of those sources.
Question: What did the parties make of Justice Breyer’s focus on subcategorization?
Air Act Andy: I don’t have to speculate here. The government made enough of Justice Breyer’s questions that, one day after argument, the Solicitor General filed a letter with the Court to provide information relevant to “questions pertaining to how EPA assesses whether to establish subcategories of sources” under the pertinent provisions of the Clean Air Act.
Question: Isn’t it unusual to submit a post-argument letter to the Court?
Air Act Andy: The rules of the Court do not specifically cover this sort of filing, and only time will tell how helpful the filing was for the government. It is worth noting, though, that once General Verrilli filed his letter, other parties followed suit. In particular, petitioners’ counsel pointed the Court to specific language in the preamble to the final MATS Rule, 77 Fed. Reg. 9304, 9395 (Feb. 16, 2012), where EPA said it could not, and did not, consider costs during the subcategorization process:
Failing to demonstrate that coal-fired [electric generating units] are different based on emissions, the commenters turn to economic arguments, asserting that failing to subcategorize will impose an economic hardship on certain sources. Congress precluded consideration of costs in setting [technology standard] floors, and it is not appropriate to premise subcategorization on costs either.
Question: On a more personal note, was your trip to the Court less eventful than the last time you were there?
Air Act Andy: Ah, you are referring to my December 11, 2013 visit to the Court. On that snowy day, I arrived at the Court wearing a long, stylish gray cardigan sweater instead of a suit jacket. I was stopped by guards and politely told I would not be allowed to sit in the section reserved for members of the Supreme Court Bar unless I replaced my fashionable sweater with a suit jacket. Someone from the clerk’s office, acting like a fine restaurant’s maitre d’, swiftly provided me with a ladies suit jacket and allowed me into the courtroom. But when I returned to the Court last month to hear argument in Michigan v. EPA, I was not treated like a fashion felon. Instead, Court staff personally escorted me into the courtroom a half hour before anyone else from the public was allowed in the room, gave me a prime seat, and allowed me to sit quietly and take in the majesty of the room.
Question: What is the reason for the different treatment?
Air Act Andy: Last month, I arrived wearing a foot cast instead of a gray cardigan. I had broken my foot the week before, and the Court’s wonderful staff gave me permission to arrive and get seated early.
Question: So, was it worth it to have a broken foot?
Air Act Andy: I wouldn’t recommend that you drop granite on your foot a week in advance of a trip to the Supreme Court, but being able to sit by myself in the courtroom for a half hour before others were admitted was pretty special.
Posted on April 3, 2015
As most followers of this blog know, EPA proposed its “Clean Power Plan” for existing electric power plants under the Clean Air Act (CAA) in June 2014. And just this week (March 31), the Obama Administration with great fanfare submitted its 2025 greenhouse gas (GHG) emissions target to the United Nations for the international climate change convention.
The Administration pledged to reduce U.S. GHG emissions by 26-28% (below 2005 levels) by 2025, and the bulk of these reductions are supposed to come from the Plan. But will the massive reductions EPA claims will result from the Plan ever occur?
Defending the legality of the Plan in an interview published in the March 31 Wall Street Journal, EPA Administrator Gina McCarthy claims she is “following the direction of the Supreme Court” and doing “exactly what the statute [CAA] tells us we’re supposed to do.”
Huh? While the Supreme Court has recognized EPA’s authority to regulate GHGs under the CAA, it most certainly has not given EPA the “direction” EPA is taking in its pending proposal. And neither has Congress.
EPA’s Plan would mandate a panoply of groundbreaking controls on energy supply and demand. It would force utilities to use natural gas rather than coal, ramp up renewable energy use (wind, solar), and impose mandates for reducing energy consumption. Yet the CAA provision for which EPA claims authority for all this (§111(d)) only authorizes EPA to impose “standards for emissions” upon “existing sources” of air pollution — such as power plants. The controls must also be “adequately demonstrated.” In the past EPA applied this authority faithfully to the statutory terms, so “sources” that emit pollution are limited to prescribed amounts of emissions.
While EPA’s proposal includes some real emission standards for air pollution sources (power plants), the vast majority of GHG reductions are to come from the energy supply/demand measures that have no basis in the text of the CAA. If you are compelled through these mandates to limit your dishwasher use to specified hours or pay higher rates, is your dishwasher an “existing source” of “air pollution” and are the hourly restrictions “emission standards”? And how can such novel approaches be “adequately demonstrated”?
The Administration tried but failed to obtain amendments to the CAA from Congress to address climate change. EPA’s Plan might have been authorized by that failed effort, and it might be authorized by future legislation. The Plan’s pioneering provisions might arguably reflect good public policy. But under the CAA as it now stands, EPA is not authorized to impose them.
As for “direction” from the Supreme Court? In its recent Utility Air Regulatory Group v. EPA opinion (June 23, 2014), the Court rejected EPA’s attempt to regulate GHGs by “tailoring” the unambiguous text of the statute. The Clean Power Plan doesn’t just “tailor” the terms of the statute — it attempts to weave new authority out of whole cloth.
Posted on April 1, 2015
In February 2015, the states of Connecticut, Massachusetts and Rhode Island announced their intent to seek new large-scale clean-energy projects through a multi-state procurement process. According to the draft Request for Proposal (RFP) the “essential purpose” of this procurement is to “identify any projects that offer the potential for the Procuring States to meet their clean energy goals in a cost-effective manner that brings additional regional benefits.” The draft RFP seeks bids for the delivery of Class I renewable energy projects (i.e. solar, wind, biomass, fuel cells in Connecticut, and some hydroelectric) through power purchase agreements, combined power purchase agreements and transmission upgrades, or transmission projects with clean energy delivery commitments. Because each state has different procurement laws and different definitions of “renewable energy”, the draft RFP notes that contracts for any selected projects must be negotiated with the relevant electric distribution companies (EDC) and approved in accordance with applicable state and federal laws.
To encourage the generation of renewable energy, many states have adopted Renewable Portfolio Standards (RPS) to require electric distribution companies and retail electric suppliers to include an increasing percentage of renewable energy in their mix of generation resources. Unfortunately, the RPS alone seems insufficient to encourage the development of enough renewable energy resources to address the renewable energy and climate change policies of the states. Therefore, the three New England states, as well as others, are experimenting with different methods to incentivize renewable energy generation. Given the substantial capital requirements for constructing new electric generating facilities and the need for an assured revenue stream, long-term power purchase agreements are increasingly being used to encourage the construction of new energy resources. The RFP to be issued by the three New England states seeks to attract new large scale renewable energy projects by offering successful bidders long-term energy contracts.
One question raised by this new approach to encourage the construction of reasonably-priced renewable energy resources is whether federal law preempts the states from contracting for large wholesale electric generation, despite independent state policies designed to encourage the development of more renewable energy resources. This issue has been raised in several recent federal lawsuits.
Last year, both the Fourth and Third Circuit Courts of Appeals concluded that state programs awarding long term contracts to new electric generating facilities were preempted by the Federal Power Act. In PPL EnergyPlus, LLC v. Nazarian, 753 F.3d 467 (4th Cir. 2014), the Fourth Circuit held that a fixed, twenty-year energy contract for a new Maryland generating facility was preempted by federal law. Using an RFP process, Maryland selected a company to build a power plant and sell its energy and capacity on the federal interstate wholesale market. Under the approved contract, the winning project was eligible for payments from the local EDC that amounted to the difference between the price paid in the interstate market and the amount approved in its EDC contract. The Fourth Circuit concluded that the Maryland law was field preempted because it functionally sets the rate that the generator receives for sales in the interstate energy market, an area within the exclusive jurisdiction of FERC.
Similarly, the Third Circuit, in PPL EnergyPlus, LLC v. Solomon, 766 F.3d 241 (3d Cir. 2014), held that federal law preempted a New Jersey statute under which the state solicited and awarded bids for new electric generating capacity using long-term energy capacity agreements. The Third Circuit, however, acknowledged that states have a role to play in energy markets, and stated that not every state program that has an effect on interstate electric rates will be preempted. The court explained that states may utilize measures that subsidize generators without being preempted, as long as such subsidies do not essentially set wholesale prices.
In 2013, Connecticut solicited proposals for large scale renewable energy through an RFP process. That solicitation resulted in the selection of a 250 MW wind project in Maine and a 20 MW solar project in Connecticut. Both projects were awarded long term power purchase agreements for the energy produced by these projects. A disappointed bidder, Allco Finance Limited, filed suit alleging preemption, following Nazarian and Solomon. On December 10, 2014, the district court dismissed the case, finding that a disappointed bidder lacks standing. Allco Finance, Ltd. v. Klee. Nevertheless, the court ruled on the merits. The district court concluded that the state RFP process was not preempted, rejecting Allco’s argument that the state-approved contracts set the wholesale price for energy produced by the successful bidders. The court ruled that the effect of the Connecticut program on the interstate market was at most indirect and would cause no market distortion. Allco has appealed the district court’s decision to the Second Circuit.
The use of an RFP process to encourage the development of renewable energy projects through the award of long term energy contracts is an effective way to procure lower cost renewable generation. The Connecticut Z-REC program, which awards long term Renewable Energy Credit (“REC”) contracts, has proven to be successful in driving down the cost of solar renewable energy credits from small (less than 1 MW) solar projects. In light of the federal preemption obstacles in awarding long-term wholesale electricity contracts, another approach may be to support large scale renewables by procuring long term contracts for RECs and allowing the energy price to be set by the interstate markets. Since a REC represents the renewable attribute of electricity, and not the energy itself, such procurement should avoid the preemption issues identified by the Third and Fourth Circuits. This may provide a path forward for states to pursue their clean energy goals by incentivizing larger scale renewable resources.
Posted on March 31, 2015
Way back around the turn of the decade from the ‘70s to the ‘80s I was invited by the International Joint Commission to attend a conference in Montreal to discuss whether the Canadians should adopt a statute similar to the Toxics Substances Control Act of 1976 (“TSCA”). The IJC is a largely advisory US-Canadian body whose primary area of interest is the Great Lakes. Also on that delegation was the principal author of the text of TSCA, Clarence (“Terry”) Davies. I did not win many friends on that trip when I argued that TSCA took the wrong approach to regulating chemicals in the stream of commerce and in the environment primarily because it used an inappropriate cost-benefit premised standard of review. I also argued that TSCA’s standards were simultaneously too vague and too complex. I suggested that the Canadians start afresh.
In the years following, Congress ignored repeated calls for significant amendment or replacement of TSCA, including a chorus of suggestions that it be replaced by a statute resembling the European Community’s chemical regulatory regime, REACH. In the meantime, EPA soldiered along, trying to make the best of enforcing an antiquated and fundamentally flawed regulatory statute.
Now after all these years we have two competing bills in the Senate, each of which purports to “reform” TSCA. On the one hand we have S.697, the “Frank R. Lautenberg Chemical Safety for the 21st Century Act”, an allegedly “bipartisan” effort co-sponsored by Senators Mark Udall (D-N.M.) and David Vitter (R-La.), the first hearing on which was held on March 18th. And from another corner, we have S.725, the “Alan Reinstein and Trevor Schaefer Toxic Chemical Protection Act”, co-sponsored by Senators Barbara Boxer (D-Calif.) and Ed Markey (D.Mass.). At about 175 legislative pages, these bills aren’t capable of being thoroughly analyzed in a blog.
The Udall bill is tepidly supported by the chemical industry and by at least one environmental group, the Environmental Defense Fund. It is opposed by some other environmental and public safety advocacy groups. It would pre-empt state chemical regulatory programs like California’s Proposition 65 and other state-run chemical regulatory programs in California and Washington. The Boxer bill, predictably, because its principal sponsor is from California, preserves state programs. Both bills in one degree or another attempt to address the core problems with TSCA by changing the standard of review to a risk-based standard, overhauling and strengthening EPA’s information gathering authority on hazard, exposure and use data, and prioritizing chemicals for review. The Udall bill throws a bone to the chemical industry by exempting a wide variety of chemicals considered to be of low exposure potential or low risk.
I confess that, although I am not a policy wonk, I have an interest in these bills partly because if either — or a significant element of either — is enacted into law I will have to re-write an entire chapter of The Law of Chemical Regulation and Hazardous Waste. My guess is that, given Congress’s track record of doing little or nothing over the last few years, I won’t have to worry about getting writer’s cramp any time soon.
Posted on March 30, 2015
It may come as a surprise that people fight over water in soggy Oregon and Washington. To be sure, we have not experienced the same level of conflict over competing water needs as our neighbors in the southwest, but in fact the conflicts are there and the stakes are high.
Most senior water rights in the Pacific Northwest are held by agriculture, whereas the growth in demand for water is occurring in the municipal and industrial sectors . . . and at last check, fish still need flowing streams. Add to that dynamic a declining hydrograph due to climate change, and the table is set for confrontation.
Two recent cases in the Oregon Court of Appeals and a case in the Washington Supreme Court that address municipal water rights illustrate the point. A more complete discussion of these cases is in the current issue of The Water Report.
The Oregon cases arise from a 2005 statute providing special rules for extensions of time to complete development of municipal water supplies. The caption for both cases is WaterWatch of Oregon v. Water Resources Department, but one involves the City of Cottage Grove and the other a group of Clackamas River water providers. The 2005 statute provides that for the first municipal extension granted after enactment of the statute, “fish persistence” conditions must be applied to the “undeveloped portion” of the city’s water system.
By the time Cottage Grove’s extension application was considered, the city had completed work on its water system. The Oregon Water Resources Department found no “undeveloped portion” and therefore imposed no fish persistence requirements. The court overturned the extension, finding that the fish conditions must relate back to the previous extension in 1999.
The Oregon Supreme Court initially accepted review of the case, but then without explanation declared that review was “improvidently” granted and dismissed it. Thus, the case stands; legislative corrections may be forthcoming. For the moment, Cottage Grove and other similarly situated public water providers may have less water than they previously thought due to fish flow curtailments and may incur unbudgeted additional public expense.
In the Clackamas case, the court found the “fish persistence” conditions were inadequate because OWRD failed to articulate how the conditions actually protected fish. The case is now back before OWRD for further proceedings.
In Cornelius v. Washington State University, the Supreme Court came to a happier conclusion for public water providers. The issue was whether university groundwater rights identified as for “domestic” purposes were entitled to special protections afforded only to municipal purposes. The Court unequivocally held they are.
The economies of our region depend on the courts getting it right with respect to municipal water supplies. Washington public water providers can rest easier than their counterparts in Oregon after their state courts’ recent pronouncements.
Posted on March 25, 2015
Those who have tried to keep up with the development of environmental law into the second decade of the 21st century will not be surprised, as others may be, by the attention now focused on reuse of soil. Uncounted millions of cubic yards of soil are moved each year in the New England region alone. Until very recently, in the absence of contamination above regulatory remediation standards, the excavation and reuse of soils was not subject to any environmental regulation at all.
Now with the pace of national economic activity rising, soil reuse is drawing the focused attention of State regulators in the northeast region and across the nation. EBC Nov 6, 2014 program. In particular, New Hampshire, Massachusetts, Connecticut and Vermont are all currently considering how to regulate soil reuse. In 2014, Massachusetts adopted a requirement for the development of a soil reuse policy by June 2015 and that effort is well underway.
While New Hampshire relies on a broad definition of “contamination,” it recognizes it lacks explicit legal authority to develop a full blown regulatory program for reuse of “mildly contaminated” soil. The current definition of contamination reaches, by its terms, any non-naturally occurring, regulated contaminant “that has the potential to adversely affect human health or the environment.” N.H. Env-Or 602.07.
In these circumstances, New Hampshire is currently regulating on a case by case basis, limiting receiving sites to soils that do not exceed natural background levels. Solid waste regulation can be avoided by an agency waiver, or reuse can be approved with an acceptable soil management plan and soil testing protocol. The New Hampshire agency is making efforts to respond to approval requests rapidly enough to avoid frustrating market driven transactions. It recognizes, as other regulators do, that construction projects may otherwise be forced to send lightly contaminated soil to landfills, depriving the region of essential landfill capacity, while increasing construction costs for little, if any, environmental benefit. For example, both New Hampshire and Massachusetts have recognized that unreclaimed gravel pits and quarries present potential hazards and risks of their own. They can be attractive nuisances that claim the lives of those who try to use them unwisely for recreation year after year and they can become repositories for discarded materials including stolen or abandoned vehicles. In short, they can be a locus of a range of community problems, if unattended. Rather than pay to send lightly contaminated soils to landfills, a better and more beneficial use could be found.
The States considering such new programs recognize that their efforts to impose environmental regulation on such a substantial volume of previously unregulated activity could well have unintended and unnecessary adverse consequences for both small and large scale redevelopment projects just as the economy is gaining strength. It must be undertaken in a manner that will not exacerbate other very significant potential problems. They are coordinating among themselves the planning and development of such regulation and giving serious consideration to designing methods that will likely bear the simplicity and efficiency of general permits. Legislative action will no doubt be necessary to authorize these new programs.
There is little question that as economic activity continues to increase, the States must establish consistent criteria setting forth the standards to be used in determining where mildly contaminated soils generated at construction projects and other developments can be disposed of at subsurface locations. Municipalities and the regulated community need to be educated about this process and engage with the regulators to ensure that the final standards are well-understood, easily implementable, and adequately ensure the environment is protected.