What Happens When the Green New Deal Meets the Old Green Laws?

Posted on March 27, 2019 by JB Ruhl

Representative Alexandria Ocasio-Cortez and Senator Ed Markey made headlines when introducing the Green New Deal resolution to Congress. Within milliseconds, contesting waves of support and opposition flooded the news wires, social media, and blogs. Critics focused on the proposal’s perhaps overly hopeful (some say, delusional) absence of any accounting for the funding, political feasibility, and technological capacity needed to get to net zero greenhouse gas emissions by the Green New Deal’s target date of 2050 (some Green New Dealers advocate an even earlier date), especially under the other conditions they demand. After all, the Green New Deal movement is basically asking our nation to replace one national energy infrastructure with another, plus demanding that government also ensure social justice for present and future generations, provide millions of new jobs, install an awesomely sustainable economy, extend free health care, and the list goes on.

But let’s put all that aside. Let’s say we had a blueprint for the Green New Deal’s carbon goal and a whole lot of money to spend. The stark reality is that the Green New Deal is going to run smack dab into the wall of the Old Green Laws. I’m talking about the National Environmental Policy Act, the Endangered Species Act, Section 404 of the Clean Water Act, the National Historic Preservation Act, the Migratory Bird Treaty Act, the Clean Air Act, the…do I really need to keep going, because the list is really long.

What the Green New Deal movement simply does not seem to appreciate is that the nation’s existing energy infrastructure is a vast physical, social, and economic entity that has been defined in its geographic, technological, and economic dimensions largely by decades upon decades of lawsuits brought under those Old Green Laws by many of the interest groups now behind the Green New Deal. The infrastructure the New Green Deal envisions—particularly if it rules out hydropower and nuclear power—can’t just land where the existing fossil fuel energy infrastructure is located, as if we are just changing car tires. Wind power has to follow wind, and solar power has to follow the sun, and neither of those geographic footprints has much overlap with where the fossil fuel infrastructure is currently located. So, making the Green New Deal happen means putting vast new renewable energy production facilities on the landscape. And then, because our existing transmission grid is based on where fossil fuel generation occurs, which is generally not where solar and wind generation will occur, we’ll need to put new transmission lines on the landscape. Just looking at NEPA alone, it would take 25 years just to get the Environmental Impact Statements done and through the courts before the first shovel of dirt is moved!

To put it bluntly, this is going to be ugly. Environmental protection special interest groups already are attacking wind and solar energy projects around the nation, claiming they will kill too many bats, birds, and desert creatures. Yet, if you were to map out what would be needed to implement the Green New Deal, we’ll need to locate new wind and solar power generation infrastructure, and their transmission line infrastructure, on the landscape at a pace and scale unprecedented in our nation’s history. Believing that everyone will be behind that is naïve. Wherever this Green New Deal landscape transformation machine goes, it will face opposition by narrow-interest environmental groups, not-in-my-backyard landowners, states, local governments, and companies threatened by the new regime, and so on. To think otherwise is delusional. And their first weapon of choice is going to be the Old Green Laws. After all, look around and ask, what has for decades impeded and often stopped new fossil fuel infrastructure such as pipelines, processing facilities, and port facilities. It’s the Old Green Laws.

Looking into the Law 2050 future, the “green” interests that are promoting the New Green Deal sooner or later will have to come up with a convincing soundbite explanation for how they propose to comply with the Old Green Laws in a way and time frame that meets their 2050 deadline. Doing so without in some substantial ways relaxing the current Old Green Laws seems implausible, but relaxing any current regulations seems a nonstarter for Green New Deal politicians. In other words, the Green New Deal is between a rock and a hard place, and they can blame their predecessor “green” generations who designed and implemented the Old Green Laws that must be satisfied regardless of the climate virtues of the Green New Deal.

One can easily imagine that many industry and landowner special interest groups long pitted against the environmental protection special interest groups have grins on their faces, as the latter will seem to have been hoisted by their own petard. It is not hard to envision how the Green New Deal will splinter the environmental interest group universe—indeed, more than 600 groups recently signed a letter to Congress supporting the Green New Deal agenda, but a good number of leading national groups such as the Sierra Club and Audubon Society did not sign on.

There is perhaps a third path, however. To make its agenda complete, the Green New Deal could propose a new environmental law regime as well, one that does not tinker with the Old Green Laws and thus face the claim of “deregulation” or “backsliding.” The Green New Deal must acknowledge the environmental disruptions its infrastructure proposal will cause and design an environmental planning, assessment, permitting, and regulatory regime (perhaps even with--gasp!--market mechanisms like trading and taxes) built from scratch around concepts of resilience, adaptive management, and collaborative adaptive governance. This will mean dispensing with the Old Green Laws’ morass of comprehensive pre-decision studies and rounds of lawsuits. In short, the New Green Deal needs New Green Laws.

Clearing the Air on the International Emissions

Posted on March 26, 2019 by David Flannery

In an earlier posting, I noted the initial efforts of USEPA in addressing the international transport of air pollutants and the role those pollutants have in impacting air quality in the U.S. In the intervening months, several developments related to USEPA policy on international transport have occurred that are worth noting here.

While international transport is specifically addressed in Section 179(B) of the Clean Air Act, much of USEPA’s recent action has arisen in the context of the development of state implementation plans under Section 110(a)(2)(D) of the Clean Air Act. The D.C. Circuit has stated that “section 110(a)(2)(D)(i)(I) gives EPA no authority to force an upwind state to share the burden of reducing other upwind states’ emissions,” North Carolina, 531 F.3d at 921, thus raising the question about whether the Court would apply the same logic to emissions from another country.

On March 27, 2018, USEPA issued a guidance memorandum in which it set forth several flexibilities that states might consider as they developed their Good Neighbor implementation plans under Section 110(a)(2)(D)(i)(I). That memorandum (entitled “Information on the Interstate Transport State Implementation Plan Submissions for the 2015 Ozone National Ambient Air Quality Standards under Clean Air Act Section 110(a)(2)(D)(i)(I)," prepared by Peter Tsirigotis, March 27, 2018, noted that a number of non-U.S. sources contribute to nonattainment in the U.S. and it invited comments on how to account for international transport in the development of state programs.

On April 12, 2018 the President issued a memorandum in which he stated that “CAA provisions addressing international emissions confirm that EPA should consider fully those emissions in evaluating the good neighbor obligations” and that “the data suggest that removing the contribution of international anthropogenic emissions would further support EPA’s determination that no additional action by upwind sources is required to reach attainment by 2023” with respect to the 2008 ozone NAAQS. See Presidential Memorandum for the Administrator of the Environmental Protection Agency (Apr. 12, 2018)

On August 31, 2018 USEPA issued a summary of comments submitted with respect to its March 27, 2018 memorandum in which it noted that states submitting comments urged USEPA to offer guidance on three issues of greatest interest to them. These included (1) identifying maintenance monitors, (2) determining thresholds for significant contribution, and (3) accounting for international emissions.  Since that time USEPA has issued guidance addressing significant contribution and maintenance monitors, but has not yet issued a comparable guidance addressing international transport.

On the Federal Register of December 8, 2018, USEPA did, however, publish a final rule addressing the implementation of the 2015 ozone national ambient air quality standard. In the press release that accompanied the issuance of that rule the following comments were offered:

This final rule grants states the flexibilities they need to incorporate factors that are often outside their control, such as international air pollution, so they can meet the 2015 ozone standards and continue our nation’s tremendous clean air progress,” said EPA Acting Administrator Andrew Wheeler. “By working with states to provide greater regulatory certainty, we are helping them improve air quality, protect public health, and enhance economic growth.

As we move further into the year we will look for additional guidance addressing further the application of international emission to the submittal of state plans under the “Good Neighbor” provisions of Section 110(a)(2)(D) of the Clean Air Act.

Any Press Is Good Press

Posted on March 25, 2019 by Seth Jaffe

Last week, the Washington Post (subscription required) published an article about the Trump Administration’s inability to defend many of its policies in court. Yours truly was among those quoted. I liked the story and it was largely accurate, including its quotes from me, except that Fred Barbash stated that I had “been looking forward to deregulation under Trump.”  On that issue, I can only say that Fred and I had a misunderstanding, because I was never looking forward to deregulation under Trump.

Aside from the relatively unimportant and mildly humorous issue related to me maintaining credibility with a number of people whom I respect, I’m doing this post because that line highlights an important issue – there’s a significant difference between deregulation and regulatory reform. I think much of our environmental regulatory structure could benefit from reform, but I don’t question the benefits of environmental regulation and I don’t support “deregulation.”

Indeed, as the article demonstrates quite well, President Trump has shown no interest in regulatory reform.  He just wants to kill as many regulations as possible – or at least persuade his supporters that that’s what he wants to do.  Like so many things about this President, he doesn’t actually care about results as much as he cares what his supporters think about him – that’s one reason why the article is a valuable piece of reporting.

And that's also part of the reason why, as I said in the article, Trump has set regulatory reform back for years.  If we want widespread public support for regulation, we have to persuade people that regulations benefit them.  That’s why environmentalists shouldn't fear cost benefit analysis and cost-effectiveness analysis; we need economic analysis to demonstrate the benefits of regulation.  We have a President who thinks all regulations are bad, but who cares only about the cost of regulations, not their benefits.  As a result,  cost-benefit analysis and cost-effectiveness analysis get a bad name.

And that’s bad for everyone.

Lake Okeechobee: In the Eye of Another Storm

Posted on March 22, 2019 by Michelle Diffenderfer

Lake Okeechobee is the center of a storm again, politically speaking!

Lake Okeechobee is the largest natural freshwater lake in Florida, 730 square miles in size, with an average depth of only 9 feet, extending to five different counties. To give you some perspective on the size, Lake Okeechobee is the largest lake in the southeastern United States and the second largest lake contained entirely within the contiguous United States.  Lake Okeechobee can hold close to a trillion gallons of water.

Everyone loves and needs Lake Okeechobee for something, and over the past 130 years it has become a very heavily managed and manipulated heart of the Central and Southern Florida Flood Control Project (C&SF).  The diking and canal connections to the Lake were started initially in response to two devastating hurricanes in the 1920’s that killed thousands of people around the Lake.  As a result, a series of well meaning “improvements” began to Kissimmee River, Lake Okeechobee and the Everglades in order to protect human life and to provide for the development of South Florida for agricultural and residential uses. Today the C&SF project is managed by the United States Army Corps of Engineers (USACE) and the South Florida Water Management District (SFWMD).  They are charged with accomplishing a variety of congressionally authorized purposes which include public health and safety, flood control, navigation, water supply, enhancement of fish and wildlife, and recreation.

Lake Okeechobee as it exists today receives flows from the Upper Kissimmee Chain of Lakes by way of the Kissimmee River.  It discharges to the east through the St Lucie Canal to the St Lucie River and Estuary, into the Atlantic Ocean; to the west through the Caloosahatchee Canal to the Caloosahatchee River and Estuary into the Gulf of Mexico; and to the south through a series of canals to the Everglades Agricultural Area, the Lower East Coast canal system, three Water Conservation Areas and finally down to the remnant Everglades system.

Today, water levels and releases from the Lake are managed pursuant to a regulation schedule which is periodically updated by the USACE pursuant to a number of federal laws including the Water Resources Development Act (WRDA) and the National Environmental Protection Act (NEPA).  The USACE has just started scoping on what will be a three-year NEPA process to update the water regulation schedule for Lake Okeechobee.  The update of the schedule is typically a controversial affair because the process must take into account the often-competing interests of two Native American Tribes, agriculture, water utilities, developers, fishermen, boaters, and environmental groups.

This time around the work is starting up after a year of citizen protests, outrage, and national headlines about the summertime releases of water containing “blue-green algae” (cyanobacteria)  from the Lake to the Caloosahatchee and St Lucie Rivers out to the estuaries.  Blue-green algae grows in freshwater systems and typically feeds on nutrients like phosphorus and nitrogen.  The blue-green algae can release nerve and liver toxins which – when carried with the freshwater discharges to the estuaries – presents greater opportunity for negative impacts to humans, domestic animals, and wildlife, including sickness and even death.  If that was not enough fun for Florida this past year we have also been suffering through outbursts of “red tide” or algal blooms along the coast which has caused additional negative impacts to wildlife, humans, and their pets. A very active and vocal group of citizens who live along and enjoy the rivers and nearby beaches that were affected are now showing up at the USACE scoping meetings.  They are pushing for the Lake schedule to be modified so that the Lake is held at significantly lower levels year round in the hope that this will lead to less discharges into the estuaries. This has also caught the attention of our brand new Governor and the local Congressmen who represents the St Lucie River residents who are weighing in and asking the USACE to hold the Lake lower than it has ever been held before. 

We are in the midst of a perfect storm, with no happy endings in sight, but lots of busy lawyers!

Delaware – The First State in Sustainability?

Posted on March 21, 2019 by Robert Whetzel

Long known as the corporate capital of the United States, Delaware is home to over 50% of publicly-traded U.S. companies, and approximately 1.3 million legally incorporated or formed entities representing companies large and small. Businesses choose to organize under Delaware law for many reasons, including its well-developed body of corporate and alternative entity law, flexible and enabling corporate and alternative entity statutes, and highly regarded business courts. Until recently, Delaware law was largely silent on issues of sustainability as they relate to corporate and entity governance. In an effort to support the global sustainability efforts of its entities, the State of Delaware recently enacted first of its kind legislation creating a path for Delaware entities to adopt and implement sustainability standards in a rigorous, systematic and transparent manner.

On October 1, 2018, the Delaware Certification of Adoption of Transparency and Sustainability Standards Act (the “Delaware Sustainability Act” or “DSA”) took effect. The Delaware Sustainability Act establishes a voluntary program for Delaware entities to adopt sustainability standards and to report on sustainability performance with the Delaware Secretary of State. Entities that satisfy the DSA’s requirements receive a certificate from the Delaware Secretary of State indicating compliance with the DSA.

Although many companies have adopted sustainability standards, there is no universal framework for identifying, evaluating or comparing the implementation of sustainability standards.  By and large, businesses are free to adopt standards of varying scope with no common approach to reporting or performance evaluation. As a result, there are widely varying degrees of transparency in the adoption and implementation of sustainability standards. Delaware has attempted to change that model (at least for Delaware entities) by adopting the DSA, which requires participating entities to report publicly on their sustainability standards and performance and establishes a centralized, public database of sustainability reports that those entities have generated.

A Delaware entity may elect (but is not required) to become a reporting entity under the DSA. To do so, its governing body must adopt resolutions setting forth its sustainability standards and assessment measures, and file a statement to that effect with the Delaware Secretary of State. The DSA defines “standards” as the “principles, guidelines or standards” that the entity adopts to assess and report the impacts of its activities on society and the environment; those standards must be based on or derived from third-party criteria. The DSA does not mandate the specific sustainability standards that an entity should choose to adopt. Instead the entity is free to adopt standards developed by a third-party organization, including both governmental and NGO sources.  Once standards are adopted, a reporting entity must file an annual report with the Delaware Secretary of State containing a summary of the standards and assessment measures, actions taken to meet the standards, and a description of any additional efforts that will be taken to improve performance.

Delaware has a long-standing tradition of leadership in matters of corporate governance, and has now developed a framework for its corporate citizens to adopt best practices in governance and sustainability.  The DSA is entirely optional and voluntary, and it remains to be seen whether Delaware will become the First State in Sustainability.

Listen & Learn Next Tuesday — An ACOEL Webinar on Kisor v. Wilkie

Posted on March 21, 2019 by Allan Gates

Save the date.

On Tuesday, March 26th, Jeff Thaler and Sanne Knudsen will explain all you need to know about Kisor v. Wilkie, the SCOTUS case that will reexamine Auer deference to agency interpretations of their own regulations.

Jeff is one of fourteen law professors who filed an amicus brief in Kisor v. Wilkie; and Sanne has written authoritatively on Auer deference.  Jeff’s amicus brief and Sanne’s law review article are accessible here and here.

Jeff and Sanne’s webinar presentation is your opportunity to learn why Justice Scalia openly invited the Supreme Court to abandon his own majority opinion in Auer v Robbins, and to hear what SCOTUS reconsideration of Auer may portend for the future of Chevron.

Please join this ACOEL members-only webinar: 

            Tuesday, March 26th

            2:00 - 3:00 pm Eastern (11:00 am - Noon Pacific)

            Call In:  877-211-3621

            Participant Code:  9316435190

Jeff and Sanne’s webinar presentation will be followed the next day by oral argument in Kisor v. Wilkie before the Supreme Court.

Hoopa Valley Tribe v. FERC: When Does One Year Mean One Year?

Posted on March 19, 2019 by Rick Glick

As Seth Jaffe noted in this blog, on January 25, 2019, the U. S. Court of Appeals for the D. C. Circuit rendered a highly significant opinion with respect to state water quality certification under section 401 of the Clean Water Act (CWA).  In Hoopa Valley Tribe v. FERC, the court rejected the commonly used workaround of the one-year statutory limit on state action by allowing multiple cycles of withdrawal-and-resubmittal of applications, holding that the States of Oregon and California had waived their authority by acceding to this practice.  The attached article, just published in The Water Report, discusses the case and its implications in detail.

Section 401 provides that before a federal agency can approve a project that may result in a “discharge to the navigable waters” the applicant must obtain water quality certifications from the affected state.  However, the state is deemed to have waived its delegated authority under section 401 if it "fails or refuses to act on a request for certification, within a reasonable period of time (which shall not exceed one year) after receipt of such request."   

Determining the water quality effects and appropriate mitigation for hydroelectric facilities that have been in place for over half a century is a complex undertaking.  Additional study and data are often needed, which could take more than one year to complete.  Moreover, since relicensing brings out a myriad of stakeholders seeking an opportunity to influence the next license term, 401 issues are frequently addressed through multi-party settlement negotiations, which can also take a long time to resolve.  This has led state 401 agencies and applicants to enter into understandings under which the applicant would withdraw its application before the end of one year and then resubmit it to reset the clock.  Such withdrawal-and-resubmittal cycles have often stretched over a period of many years. 

The case arises under a settlement agreement between the States of California and Oregon, PacifiCorp and other stakeholders leading to eventual removal of PacifiCorp’s Klamath River hydroelectric projects.  Such removal requires FERC approval, and thus water quality certification by the two states. The parties contemplated that this process would take years to complete and agreed that each year PacifiCorp would withdraw and resubmit its 401 applications to avoid waiver, but the new annual applications would be unchanged from the previous ones.  The D. C. Circuit was plainly put off by this common practice, and it is clear that the particular facts of this case drove the outcome. 

The court’s holding has huge implications for owners of hydroelectric facilities going through the licensing or relicensing process at FERC.  In the attached article, I describe the decision, the context in which it was reached, and what it might mean for the FERC and section 401 processes going forward.

More litigation is likely to come.  Watch this space for updates.

How Carbon Pricing Could be Won or Lost in the West: Linked Cap and Trade Programs Proposed in the Pacific Coast States

Posted on March 14, 2019 by Kevin Poloncarz

On March 6, 2019, a bill was introduced in the Washington Senate, SB 5981, to establish a cap and trade program linked to the existing California-Québec program, which is implemented under the auspices of the Western Climate Initiative (WCI).  The bill mirrors many of the design elements from the California program, as amended pursuant to a 2017 law that authorizes its extension beyond 2020, and also borrows from legislation currently under consideration by the neighboring State of Oregon, HB 2020, which would establish a similar “cap and invest” program, also intended to be linked with the WCI jurisdictions. 

If both the Washington and Oregon bills were enacted, it would represent a significant step forward in the development of North American carbon markets and would help realize the original WCI vision of a broad, economy-wide trading program embracing a significant share of the North American economy.

The Washington bill contains many of the features of the California/WCI program, including:

  • Similar scope of covered entities and emissions thresholds, including for the “first jurisdictional deliverer” of imported electricity;
  • Three-year compliance periods with a requirement to surrender instruments amounting to at least 30 percent of the prior year’s emissions in the first two years of each period;
  • Auctions of allowances with a floor and ceiling price, an allowance price containment reserve, and free allocations to energy intensive/trade exposed entities; and
  • Authorization for covered entities to rely upon offset credits for a small portion of their compliance obligation, with a limitation on the number that can be sourced from projects that do not provide direct environmental benefits in the state.

Notable differences from the California program include a $200 automatic penalty (adjusted annually for inflation starting in 2025) for each compliance instrument that is not timely surrendered.  In California, the automatic penalty requires that a covered entity must surrender an additional three allowances for each instrument it fails to timely surrender. 

The Washington bill would also amend the state’s greenhouse gas reduction goals, requiring a 40 percent reduction below 1990 levels by 2035 and an 80 percent reduction below 1990 levels by 2050.  California has the same 2050 target.  For the mid-term target, a 2016 California law requires the same 40 percent reduction below 1990 levels, but by 2030, five years earlier than would be required under the Washington bill.  While the Oregon bill has the same 2050 target as both California and the Washington bill, it sets a mid-term target for Oregon of reducing emissions to 45 percent below 1990 levels by 2035.  These disparities among the mid-term targets pose some question regarding whether the programs are equivalently stringent, which is a requirement for linkage imposed by a 2012 California law.  California’s approval of linkage with Ontario (which has since cancelled its program) was premised upon an Ontario goal of reducing emissions to 37 percent below 1990 levels by 2030; so linkage clearly doesn’t require uniformity of goals.

The Washington bill would also exempt emissions from a coal-fired power plant in Centralia, Washington, which is subject to a prior agreement that it must shutdown by the end of 2025. That exemption, as well as an exemption in the Oregon bill for power exports from an in-state gas-fired power plant, could pose additional obstacles to linkage and be the subject of legal challenges.  The attorneys general of Montana and Wyoming featured a similar exemption that had appeared in a 2018 Washington carbon tax bill as a basis for asserting in a letter to Governor Inslee that application of the tax to imported electricity would be unlawful.    

Obstacles aside, linking the Pacific coast states’ market-based programs would fulfill a fundamental goal of a 2013 agreement between the three states and British Columbia.  Additionally, California’s implementation of its cap and trade program in isolation of other western jurisdictions has been observed to result in emissions “leakage” in the Energy Imbalance Market, as zero-carbon power elsewhere in the west is directed to California and then back-filled by higher-emitting generation.  In response, the 2018 bill establishing California’s state policy of supplying 100 percent of retail sales from renewable and zero-carbon resources by 2045 mandates that the transition to a zero-carbon electric system must not cause or contribute to emissions increases elsewhere in the western grid or allow for resource shuffling.  That could prove challenging in the absence of equivalent price signals in other jurisdictions.  For that reason alone, the motivation for California to pursue linkage could be even stronger than when the Western Climate Initiative was launched over a decade ago.

ANNOUNCING THIS ACADEMIC YEAR’S STEPHEN E. HERRMANN ENVIRONMENTAL WRITING AWARD COMPETITION

Posted on March 12, 2019 by JB Ruhl

The American College of Environmental Lawyers (“ACOEL”) announces its annual Stephen E. Herrmann Environmental Writing Award (“Herrmann Award”) for the 2018-19 academic year.  Stephen E. Herrmann is a distinguished, nationally recognized environmental lawyer. For some forty years, Mr. Herrmann has been a leader in the area of environmental law as a practitioner, teacher, and writer. The ACOEL honors his leadership in environmental law and his role in the formation of the ACOEL.

The ACOEL is a professional association of distinguished lawyers who practice in the field of environmental law. ACOEL Fellows come from the private bar, not for profit organizations, government, and law schools. Membership is by invitation. Fellows are recognized by their peers as preeminent in their field. The ACOEL is dedicated to maintaining and improving the ethical practice of environmental law, the administration of justice, and the development of environmental law at the state and federal levels. 


Eligibility: Student-edited law journals or equivalent publications published by accredited U.S. law schools are eligible annually to nominate one student-authored article, note, case comment, or essay either (1) published by the submitting law journal during the current academic year, or (2) scheduled for publication in the next academic year. The article should be selected for its ability to promote understanding of legal issues in the broad field of environmental law, including natural resources law and/or environmental or resources aspects of energy law. The article must have only one author, and the author may be a candidate for the J.D., LL.M., or S.J.D. degree.

Award: The Herrmann Award is a stipend of $3,500 to the author of the winning submission – whether an article, note, case comment, or essay – and $500 to the submitting law journal. The winner of the Herrmann Award will be invited to discuss his or her submission to the Fellows at the ACOEL Annual Meeting, which in 2019 will be held October 10-12 in Williamsburg, Virginia. 

Judging Criteria: The prize will be awarded to the author of a student article, note, case comment, or essay either (1) published by the submitting law journal during the current academic year, or (2) scheduled for publication in the next academic year, that in the judgment of the ACOEL best presents a current topic within the broad field of environmental law.  Submissions will be judged based on originality, quality of research, presentation and writing, and significance of contribution to the field of environmental law. Entries will be judged by the ACOEL Stephen E. Herrmann Award Committee. 

Submission Schedule and Guidelines: Please email one electronic copy of a submission to the Stephen E. Herrmann Environmental Writing Award, ACOEL, using same as the email “Subject” line, to Professor J.B. Ruhl at jb.ruhl@vanderbilt.edu. Entries must be received no later than June 10, 2019. Please include with your entry: (1) a cover letter or e-mail message stating the name of the submitting law journal, (2) email address(es) of author (with post-graduation email address if applicable), (3) year of author’s graduation, and (4) a statement that the submission was not written as part of paid employment. If you have questions, please contact J.B. Ruhl by email referencing the same subject to ensure a prompt response.

Does the Clean Water Act Cover Discharges to or Through Groundwater, Part III?

Posted on March 7, 2019 by David Buente

In both 2016 and 2017, I blogged to discuss a key Clean Water Act (“CWA”) jurisdictional issue:  whether the indirect discharge of pollutants into groundwater which is hydrologically connected to a surface water of the United States is regulated under the CWA.  At the time, the district courts were split on this issue, and the only courts of appeals to rule on this point (a Fifth Circuit opinion from 2001 and a Seventh Circuit opinion from 1994) got the issue right by rejecting CWA or Oil Pollution Act jurisdiction over such discharges.  Since then, the landscape has shifted dramatically.  In 2018 alone, three circuit courts weighed in on this topic in five decisions.  And, as noted on this blog last month, the Supreme Court recently granted a petition for certiorari in one of these cases, meaning that years of confusion will finally be resolved, in some fashion, by 2020. 

The first circuit court to issue an opinion in 2018 was the Ninth Circuit in February 2018, in Hawai’i Wildlife Fund v. County of Maui (the opinion was amended in March 2018).  That case addressed whether treated wastewater effluent which traveled from the County’s underground injection wells, through groundwater, into the nearby Pacific Ocean constituted discharges regulated under the CWA.  The Ninth Circuit held that the wastewater was a covered discharge since it came from a point source (the wells) and was “fairly traceable from the point source,” even if it did not make its way directly from the wells to the ocean. 

The next circuit to weigh in was the Fourth Circuit, in April 2018 in Upstate Forever v. Kinder Morgan Energy Partners, L.P.  This decision held that the movement of gasoline which resulted from a pipeline spill in 2014 and was allegedly still seeping through groundwater approximately 1000 feet into surface waters constituted a CWA discharge, since it originated from a point source (the pipeline rupture) and there was evidence of a “direct hydrological connection between [the] ground water and navigable waters….”  This decision in fact expands the CWA even further than the Maui opinion, because it held that the CWA covered discharges when the original release of pollutants from the point source has ceased, but the pollutants continue to travel diffusely through groundwater.  In a September 2018 decision, a different Fourth Circuit panel in Sierra Club v. Virginia Electric & Power Company acknowledged the Upstate Forever panel’s adoption of the direct hydrological connection theory but rejected liability on the grounds that the coal ash landfills and basins at issue were not point sources.   

Finally, on the same day in September 2018, the Sixth Circuit issued decisions in Kentucky Waterways Alliance v. Kentucky Utilities Company and in Tennessee Clean Water Network v. Tennessee Valley Authority.  Both cases dealt with alleged discharges through groundwater from coal ash basins to navigable waterways.  Contrary to the Fourth and Ninth Circuits (and in line with the earlier circuit court case law), the Sixth Circuit held that groundwater was not a point source and that these discharges are not regulated since they must be directly from the point source to a water of the United States.

Petitions for writs of certiorari before the Supreme Court have proceeded on similar timeframes in the Maui and Upstate Forever cases.  In each case, the petitioners filed their petitions in August 2018.  The Maui petition addressed the indirect discharge via groundwater issue and a fair notice question.  The Upstate Forever petition raised both the indirect discharge through groundwater issue and whether an ongoing violation for purposes of a CWA citizen suit occurs when the point source ceased discharging but pollutants are still reaching navigable waters via groundwater.  In December 2018, the Supreme Court, signaling interest in the cases, requested the Solicitor General to file an amicus brief in both cases by January 4, 2019, expressing the view of the United States.  In that amicus brief, the United States urged the Supreme Court only to accept the Maui case, and only on the groundwater discharge issue.  The United States’ rationale was that Maui presented the groundwater discharge issue more squarely, since the ongoing violation issue in Upstate Forever was a threshold concern.  The brief separately observed that EPA was planning to take action shortly in response to its February 2018 request for comment on the groundwater discharge issue. 

On February 19, 2019, the Supreme Court, adhering to the United States’ request, accepted only the Maui petition and only on the groundwater discharge question.  The Maui case will likely be the Supreme Court’s most seminal CWA decision in over a decade, since the split decision in Rapanos v. United States, 547 U.S. 715 (2006).  Industry should track this case closely, as its resolution will have an effect on everything from federal and citizen suit enforcement to National Pollutant Discharge Elimination System permit requirements.   

Loving that PFAS: Does EPA’s Valentine’s Day PFAS Action Plan Portend a Change of Heart?

Posted on March 6, 2019 by Tom Burack

In a February 13 blog, I focused on the substantial role that states are playing in addressing PFAS compounds, in no small measure because EPA has not to date fully asserted itself in the arena, making the acronym as much one about a “Problem for All States” as about Poly- and Perfluoroalkyl Substances.  The following day, with only limited advance notice, EPA released its “PFAS Action Plan,” a Valentine’s Day gift to all of those who have been waiting to see if EPA has much interest in spending more time, let alone falling in love, with these ubiquitous contaminants.

EPA’s plan, while comprehensive in scope, has met with mixed reviews, in no small measure because it remains unclear where this is all leading or how fast anything will happen, and whether EPA will ultimately embrace a substantial and decisive leadership role in addressing PFAS contamination across the country, or whether, in this age of cooperative federalism, it will stick more to developing the background science and largely leave the standard-setting, regulatory and enforcement actions to the States. The Plan itself includes a number of major components that focus variously on reducing future PFAS exposures, understanding PFAS toxicity as a basis for developing groundwater cleanup and drinking water standards, identifying and mitigating exposures, providing a regulatory and liability framework for cleanups (including possible Maximum Contaminant Level (“MCLs”), as well as TRI and CERCLA hazardous substance listings for PFOA and PFOS), furthering research on PFAS health effects, and improving risk communication and engagement capabilities.  Most of the planned actions are described as the next steps in various processes, not as end results or guaranteed outcomes.

For example, the Plan states that EPA will take the next step in deciding whether to issue MCL regulations for PFOA and PFOS by proposing a “regulatory determination,” which EPA says “provides the opportunity for the public to contribute to the information the EPA will consider relating to the regulation of PFAS in drinking water.”  EPA will publish a preliminary regulatory determination in the Federal Register, obtain public comment, and then decide whether or not to issue a National Public Drinking Water Regulation for either PFOA or PFOS.  In so doing, EPA will need to weigh three criteria: Whether PFOA or PFOS have an adverse effect on the health of persons; whether PFOA or PFOS occur or have a chance to occur in public water systems often enough and at levels of public health concern; and, whether, in the EPA Administrator’s sole judgment, regulation of PFOA or PFOS presents a meaningful opportunity for health risk reductions for persons served by public water systems.  (See https://www.epa.gov/dwregdev/how-epa-regulates-drinking-water-contaminants.)  While the answer to the first criterion is likely “yes,” to date the available data on occurrence have not been so compelling as to drive rapid EPA action and, accordingly, the Administrator’s ultimate judgment under the third criterion is far from predictable, and likely at least a year away.  The trade press reports a range of statements having been made by EPA leadership in recent weeks that may intimate where the agency’s heart will ultimately be on the subject, but until the next phase of the process has run its course, uncertainty will remain and states will, accordingly, continue to individually proceed to take their own responsive regulatory actions. 

And maybe this is just the way that things will or even should play out, because while EPA’s on-line cover page for its PFAS Action Plan asserts that the Agency is “taking a proactive, cross-agency approach to addressing PFAS,” it also acknowledges that the “key actions” will “help provide the necessary tools to assist states, tribes, and communities in addressing PFAS …”  Yes, EPA loves PFAS, but maybe its heart isn’t so committed that it would not also expect the states, tribes and communities to profess at least an equivalent fondness, if not an even greater passion, for regulating these chemicals and seeing to their cleanup.  Put differently, invoking the spirit of cooperative federalism, EPA’s message seems to be that the states and EPA have complementary ways of showing their love for emerging contaminants like PFAS, so there should be plenty of love to go around.

Dorothy’s Contaminated Slippers: Developing Brownfields in OZ

Posted on March 5, 2019 by James B. Witkin

The hottest topic of the past two years in the real estate development world has been the birth of the Opportunity Zone (“OZ”). A creature of the mammoth tax bill passed by Congress at the end of 2017 (the “Tax Cuts and Jobs Act”), the Opportunity Zone program provides potentially significant tax breaks for new investments in developments in certain economically-distressed communities. Accounting firms and law firms (including those of many ACOEL members) have produced blizzards of client alerts and set up OZ practice teams, to help clients benefit from the program, which some have estimated could amount to trillions of dollars.

The law provides for states to designate certain distressed areas as Qualified Opportunity Zones (each, a “QOZ”); almost 9,000 have now been established nationwide. A taxpayer who invests untaxed capital gains in a specialized investment fund (a “QOF”), which in turn invests in a property or business in a QOZ, can defer—and potentially receive a discount on—any tax ultimately owed on the invested gain. (Environmental lawyers will be happy to see that tax lawyers like acronyms as much as we do.)  And, if those funds are invested for 10 years, and other rules are followed, any post-acquisition gains may be free from tax. (Warning: there are lots of gray areas and potential pitfalls which your tax partners have identified—make sure you review those client alerts before investing.)

The Department of the Treasury issued proposed OZ regulations a few months ago. While the legal consensus seems to be that there are still many unanswered questions, the market appears to be moving forward full steam ahead. Google “Opportunity Fund” and you will see many sponsors eager to separate taxpayers from their untaxed capital gains.  OZ deals are working through the pipeline. I’ve heard practitioners opine with varying degrees of enthusiasm on the underlying deals which will, after all, provide the ultimate investment return.

So where is the environmental angle? While there is nothing in the OZ law that encourages investment in brownfields, there is also nothing that prohibits it.  More important, certain states provide various types of incentives for brownfield development.  Nothing (at least at the federal level) prohibits the layering of those incentives. The right project in the right location could benefit from the OZ federal income tax breaks, as well as state and local tax reductions and other benefits.

As an example, in various counties in Maryland, a project which has successfully completed the state Voluntary Cleanup Program (VCP) may be eligible for a five year property tax cut. If the property is also located in a state Enterprise Zone, the length of that period may extend to ten years and in certain counties the amount of the tax reduction increases.

There can be challenges combining these incentives--for example, reconciling the federal and state requirements concerning the length of time investments must be maintained, and satisfying the state rules on what constitutes a qualifying brownfields investment. Still, it appears that there may be opportunities for additional tax savings for properly structured brownfield developments in Opportunity Zones.

Supreme Court to Visit Maui

Posted on February 21, 2019 by Patrick A. Parenteau

As anticipated in an earlier post, the Supreme Court has granted review in County of Maui, Hawaii v. Hawai'i Wildlife Fund limited to the question “Whether the Clean Water Act (CWA) requires a permit when pollutants originate from a point source but are conveyed to navigable waters by a nonpoint source, such as groundwater.” The Court took no action on a related petition in Kinder Morgan Energy Partners, L.P. v. Upstate Forever involving groundwater contamination from a ruptured gas pipeline. The Court will presumably hold that petition pending the outcome in the Maui case.

As described in the Ninth Circuit decision, the County of Maui owns and operates four wells at a wastewater treatment plant that processes four million gallons of sewage per day. Treated wastewater is then injected via the County’s wells into the groundwater which flows directly into the Pacific Ocean. Approximately one out of every seven gallons of groundwater entering the ocean near the plant is comprised of effluent from the wells.

Both the District Court and the Ninth Circuit ruled that the wells were point sources, and that the injection of treated wastewater into the groundwater constituted a discharge subject to the permitting requirements of the CWA. Specifically, the Ninth Circuit held that “an indirect discharge from a point source to a navigable water suffices for CWA liability to attach.” The Ninth Circuit adopted a “fairly traceable” test for determining when a discharge via groundwater to navigable water would require a permit. As discussed in my earlier post, the court relied in part on Justice Scalia’s plurality opinion in Rapanosin support of this conclusion.

The Ninth Circuit expressly left for another day “the task of determining when, if ever, the connection between a point source and a navigable water is too tenuous to support liability under the CWA.”  

The Solicitor General supported the grant of certiorari in Maui (but not in Kinder Morgan) to resolve the split in the circuit courts on whether the CWA covers activities that cause pollutants to be conveyed through groundwater to waters of the United States.

Conventional wisdom suggests the Supreme Court is likely to reverse the Ninth Circuit. However, once the Justices (and their clerks) have had the opportunity to dig into the record, they may find that CWA regulation actually makes sense in this situation. Some of the key facts are these.

  • Maui originally considered an ocean outfall but opted for the less obvious injection wells located within a quarter mile of the shore.
  • A 2013 EPA dye tracer study confirmed that the treated effluent enters the Pacific Ocean at Kahekili Beach - - a popular surfing and snorkeling beach.
  • Monitoring has shown that nutrients, fecal coliform, and other pollutants in the effluent are impacting the reef and exposing the public to potential health risks at Kahekili. EPA studies have confirmed that reef productivity declined 44% over the time the system has been operating, and fecal coliform counts regularly exceed safe levels.
  • EPA Region 9 advised Maui it would need to obtain a discharge permit and communicated that to the Hawaii Department of Health, which failed to take any action. EPA was acting under its 40+ year-old policy that discharges through ground water with a “direct and immediate” hydrologic connection to surface waters (i.e., the ocean) require a permit.

EPA is now reviewing this policy and may well change its position, either by adopting an interpretive rule or issuing guidance in some form. The Agency will no doubt try to complete this process before the Court hears argument in the fall. Should EPA adopt an interpretation that groundwater can never be the “conduit” for conveying pollutants for point sources to waters of the United States, the next question will be whether that new interpretation is entitled to any deference. Given the skepticism that several Justices have shown towards a mechanical application of Chevron, it will be interesting to see how this all “sugars off” as we say in Vermont. 

We may soon get an answer to the question that the 9th Circuit ducked, namely when does the connection between a point source and a navigable water become too tenuous to support CWA liability.

What’s Going on with Keystone XL?

Posted on February 20, 2019 by Mark Walker

As one of his earliest executive actions, and following through on campaign promises, on January 24, 2017, President Trump signed an Executive Memorandum (EM) inviting TransCanada to resubmit its application for an international border crossing permit for the Keystone XL pipeline.  To facilitate prompt action, the EM directed the Secretary of State to make a final decision on the application within sixty days utilizing “to the maximum extent permitted by law” the State Department’s January 2014 Environmental Impact Statement (EIS).

On March 24, 2017, a Presidential border crossing permit was issued for Keystone XL based upon the findings in the 2014 EIS.  The Indigenous Environmental Network and others immediately appealed in federal court in Montana (Case 4:17-cv-00029-BMM, District of Montana, Great Falls Divisions) claiming, among other reasons, that the record of decision (ROD) failed to adequately explain why the State Department had reversed Obama’s denial of the permit in 2015 because approval of the pipeline “would undermine U.S. climate leadership.”

On November 8, 2018, Judge Brian Morris issued a 53-page order which enjoined further construction activities.  This was based in part on the Court’s finding that the 2017 ROD did not provide a “reasoned explanation” for its reversal in policy course.While acknowledging the Trump Administration’s authority to change policy and reverse course, the Court held that, “when reversing a policy after an election, an agency cannot simply discard prior factual findings without a reasoned explanation.” 

The 2017 ROD attempted to justify the shift in policy by finding that, since 2015 “there have been numerous developments related to global action to address climate change, including announcements by many countries to do so” and “a decision to approve [the] proposed Project would support U.S. priorities relating to energy security, economic development and infrastructure.”  The Court held that this was not sufficient because it failed to adequately explain why the climate change findings in the 2015 ROD were no longer applicable.  Quoting from a U.S. Supreme Court decision, the Court held, “an agency cannot simply disregard contrary or inconvenient factual determinations that it made in the past.”  

The Court also held that the use of the 2014 EIS violated NEPA in several respects, including: (1) it was based upon outdated oil market data (the 2014 EIS predicted $100 to $140 per barrel oil for the next 20 years); (2) it failed to evaluate the cumulative climate impacts from the Alberta Clipper pipeline; (3) it failed to complete the required cultural resources analysis; and (4) it was based on outdated information regarding the frequency of oil spills and, therefore, it also did not adequately assess the potential impact of oil spills on certain endangered species.

The Court’s order gives the Trump Administration the opportunity on remand to supplement the 2014 EIS to address the deficiencies and an opportunity to provide a reasoned explanation for its policy reversal.  The EIS supplementation will likely take several years to complete.  It looks like the Keystone XL border crossing permit is now into the next election cycle, and certainly more appeals will follow.

The Answer is Blowin’ in the FAMGs

Posted on February 19, 2019 by Charles F. Becker

It is well known that Des Moines is, among other things, the most popular city for millennial home buyers and, according to Forbes, the fifth best place for businesses and careers.  However, these accolades are not the reason for Facebook, Apple, Microsoft and Google (“FAMG”) choosing to invest billions of dollars in data centers in the Des Moines area. They are building here because they want to be able to say they are “green” – their services are powered by renewable energy. They can say that because Iowa is the third largest producer of wind energy in the country.

FAMG seem to recognize two fundamental truths: 1) Customers want to purchase from green companies, and 2) renewable energy is cost effective and goes a long way to satisfying #1. In short, environmental awareness means profits.

A 2018 study from Deloitte Resources provides some interesting insights:

1.      69% of businesses said customers are demanding more environmentally considerate solutions – up 7% from one year earlier;

2.      70%  said customers are demanding businesses procure at least some of their energy from renewable resources – up 9% from a year earlier; and

3.      79% of businesses actively promote their environmental efforts to their customers – up 5% from a year earlier.

When you combine these statistics with polling that shows 75% of adults ages 18 to 29 say wind and solar power should be a “more important priority” than fossil fuels, the message is clear – satisfied customers mean more green (both environmentally and monetarily).

Moreover, giving customers what they want also makes economic sense.  Wind and solar power have received a lot of attention, and made a lot of progress, over the past fifteen years.  As a result, the cost of renewable energy is dropping so fast that by 2020 it will be a cheaper source of power than fossil fuels.  At the same time costs are dropping, coal-fired power plants are concluding their life cycle.  In 2018, 42% of the coal-fired power stations worldwide were running at a loss.  By 2030, that number will be 96%. 

In the very near future, it won’t really matter whether businesses want to tout their green credentials by saying they use renewable energy because a least cost power system without coal is an “economic inevitability.” The early adopters are just taking credit (and customers) for what’s coming.

Despite the numbers, the President and a significant number of conservative politicians are doing everything they can to deny climate change, promote coal and increase the cost of renewable energy.  The question is why?  Certainly the politicians recognize that businesses (i.e. donors) are moving away from coal, so the answer must be something else.  Turns out, it’s mostly perspective.

Studies done by the Pew Research Center found that Democratic support for renewable energy is based primarily on environmental protection (it is good for mother earth).  Conservative Republicans reject it because it runs counter to a need to support more coal mining/fracking and because environmental solutions do more harm than good.  This Republican viewpoint, however, is not universally held.  A growing number of Republicans support renewable energy and do so on the basis that it promotes self-sufficiency and is a financially wise decision.  When couched in these terms, Republicans have not only been able to switch positions, but have successfully challenged the President’s position on renewable energy and been elected.  

My point to all this is not to extol the superiority of Des Moines as a city or to praise the environmental impacts of renewable energy. It is to say that perhaps Democrats have been going about the promotion of renewable energy all wrong.  Forget chest beating and yelling “everyone must be green.”  That is a position not everyone believes and using it means the people you want to persuade have already stopped listening.  Instead, talk about how renewable energy reduces costs, promotes self-sufficiency and is what consumers and businesses want.  The side benefit of environmental protection shouldn’t even be mentioned. 

There’s nothing wrong with telling someone what they want to hear . . . if it’s true.

A LAWYER’S GUIDE TO ADDRESSING CLIMATE DISRUPTION

Posted on February 14, 2019 by John C. Dernbach

Co-authored by Michael B. Gerard

Recent scientific reports by the U.S. Global Change Research Program and the Intergovernmental Panel on Climate Change depict the present and future consequences of climate disruption in increasingly urgent terms.  At the same time, according to a new poll, record numbers of Americans believe that climate change is real, that it is human caused, and that it affects them personally. 

But there is good news.  It is possible for the U.S. to dramatically reduce greenhouse gas emissions.  We also have the legal tools to do the job—more legal tools, and a greater variety of tools, than we may have imagined. 

In 2014 and 2015, the Deep Decarbonization Pathways Project (DDPP)  published a technical report and a policy report on deep decarbonization in the United States—reducing U.S. greenhouse emissions by at least 80% by 2050.  The DDPP is a global effort to assess the technological and economic feasibility of deep decarbonization in 16 countries representing 74% of the world’s greenhouse gas emissions.

The U.S. reports conclude that “it is technically feasible” for this country to reduce its greenhouse gas emissions by 80% from 1990 levels by 2050.  They also conclude that the cost of this effort would only be one percent of U.S. gross domestic product, not including the many benefits that would come from doing so.   

Enormous changes would be required to achieve this level of reduction, the reports said.  The U.S. would more than double the efficiency with which energy is used.  Nearly all electricity would be carbon free or use carbon capture and sequestration.  Electricity production would also need to double because gasoline and diesel fuel for transportation, and oil and natural gas used for space heating and cooling and water heating, would be mostly replaced by electricity.  

These reports do not, however, discuss what legal tools would be necessary to achieve these outcomes.  In response, in late 2015, we began planning an edited volume to comprehensively analyze and explain the various laws that could be employed, building on the DDPP reports. The resulting book, Legal Pathways to Deep Decarbonization in the United States is being published by the Environmental Law Institute Press in March.  You can order a copy here.  In 35 chapters authored by 59 experts, adding up to 1,200 pages, the book identifies more than 1,000 federal, state, local, and private legal tools for deep decarbonization.   

To get the key messages of the book to the broadest possible audience, ELI has also published a Summary and Key Recommendations volume.  This book includes a thumbnail summary of each chapter, key recommendations by chapter, and a separate listing of recommendations organized by actor.  You can download this book here without charge.

Legal Pathways describes a dozen different types of legal tools.  As explained in greater detail here, these are not just the usual suspects (additional regulation, market-leveraging approaches, tradable permits or allowances), but also reduction or removal of legal barriers to clean energy and removal of incentives for fossil fuel use.  They also include information/persuasion, facilities and operations, infrastructure development, research and development, insurance, property rights, and social equity.  The wide range of types of legal tools provides great opportunity for building consensus.  One particularly important category, for example, is reduction or removal of legal barriers.

The book is thus a playbook for deep decarbonization.  In fact, various legal tools could be designed and combined to achieve quicker and deeper reductions than 80% by 2050, and even negative overall emissions.

This book is also a resource for lawyers because the laws it describes need to be proposed, drafted, and implemented on behalf of a wide variety of clients in many contexts.  The many types of tools also make clear that a variety of lawyers are important in this effort, including not only energy and environmental lawyers, but also finance, corporate, municipal, procurement, contracting, real estate, and other types of lawyers.

While both the scale and complexity of deep decarbonization are enormous, the book has a simple message: deep decarbonization is achievable in the United States using laws that exist or could be enacted. These legal tools can be employed with significant economic, social, environmental, and national security benefits.

Toward that end, we are launching a project to turn the recommendations into legal language—drafting federal and state statutes and regulations, model ordinances, guidance documents, transactional agreements, and the like.  We are well aware that a great many lawyers are already doing this kind of work, and that many more are feeling the need to respond to the challenges that climate disruption imposes.  We welcome lawyers from all backgrounds to join in our effort, and plan to work with ACOEL as well.  If you are interested, please contact us.

Acronymic Acrobatics: Why Poly- and Perfluoroalkyl Substances (PFAS) are becoming a Problem For All States

Posted on February 13, 2019 by Tom Burack

In an age in which the names of chemicals are so complicated that even scientists refer to them by acronyms, an entire class of manmade chemicals created to improve human lives is now in the midst of performing an acrobatic stunt, back-flipping from being the darling of industrial and consumer products to being the contaminants that are now the nemesis of many communities: Poly- and Perfluoroalkyl Substances -- commonly referred to as “PFAS” – are also coming to be recognized as something else with the same acronym, namely a “Problem For All States”.  Due to their unique chemical properties and the growing public demands for timely regulatory response actions at the local level in the absence of definitive federal leadership, PFAS compounds can be expected to remain a Problem For All States for many decades to come.

Chemical engineers, starting in the 1940s, made some remarkable discoveries: the combination of carbon and fluorine atoms into long-chained synthetic organic molecules results in compounds that variously can repel oil, water, grease or stains, resist high temperatures, and reduce friction.  These properties, combined with high durability, made these newfound PFAS compounds ideal for innumerable industrial and consumer purposes. For example, some of the most commonly used PFAS are: perfluorooctanoic acid (PFOA), as a repellent coating for textiles, paper products and cookware; and, perfluorooctanesulfonic acid (PFOS), in fire-fighting foams, carpet treatments, and mist suppressants in metal plating operations.  As a broad class, there are approximately 3,000 different PFAS compounds, some of which are precursors to other PFAS compounds, and various of which may co-occur with each other. Commonly known household products containing or made with PFAS compounds have included DuPont’s Teflon®, 3M’s ScotchGard®, and Gore’s Gore-Tex®, to name but a few. Unfortunately, some of the most commonly used PFAS compounds are also highly persistent, mobile, and non-biodegradable.  Consequently, worldwide production and uses of PFAS have resulted in their nearly ubiquitous presence throughout the environment, including in soils, sediments, surface and groundwater.

Moreover, because they can also bioaccumulate, PFAS compounds can be found in animals and humans in parts per billion (ppb) concentrations. Laboratory studies of PFAS health impacts on animals point toward elevated cholesterol levels, low infant birth weights, immune system effects, cancer (PFOA), and thyroid hormone disruption (PFOS).  While peer-reviewed human epidemiological studies of PFAS exposure have been less numerous or definitive to date, when combined with the laboratory animal studies there have been sufficient data to support the establishment of Lifetime Health Advisories for PFOA and PFOS by the US EPA in 2016 and the promulgation of regulatory limits to protect drinking water supplies by a growing number of states.

In the United States, the first health and environmental concerns arose in connection with PFAS manufacturing facilities and their waste disposal practices in West Virginia and Ohio in the late 1990’s and in Minnesota in the early 2000’s.  Between 2000 and 2002, 3M voluntarily agreed to phase out the further manufacture of most long-chain PFAS compounds, and DuPont and other US manufacturers followed suit. Today, under a set of Significant New Use Rules (SNURs) promulgated by the US EPA under the Toxic Substances Control Act (TSCA), most long-chain PFAS are allowed to be used or imported only for limited purposes and in select industries or applications.  Further restrictions have been proposed and shorter chain PFAS compounds are increasingly being used as substitutes, but even these may present significant environmental and public health concerns, as illustrated by the ongoing GenX contamination situation in the Cape Fear Watershed of North Carolina. (See, e.g., https://www.northcarolinahealthnews.org/2017/08/17/genx-pollution-what-happened-when/)

Ever-more sensitive laboratory technology can now detect PFAS at parts per trillion (ppt) concentrations, and it’s become evident that the more than five decades of unregulated use of PFAS has left an indelible signature in landfills, wastewater, waterways, and communities far and wide. To date, the New Hampshire Department of Environmental Services has amassed perhaps the largest single dataset on PFAS contamination in groundwater, surface water and soils of any state: roughly 6,000 samples from some 3,500 locations.  This continuously growing dataset already shows some noteworthy trends: sampling of 429 public water supply wells found that 7 (1.6%) contained PFOA or PFOS above 70 ppt (the US EPA LHA value which NH adopted as its groundwater cleanup standard); but NH has now proposed to lower its standard for PFOA to 38 ppt, which once all of NH’s public water systems have been sampled is likely to put another 16 or so in noncompliance.  More than 50% of the existing known contaminated industrial sites sampled so far in NH contain elevated levels of PFAS.  Every NH landfill leachate system sampled to date has a PFAS signature, and the monitoring wells around the older closed but unlined landfills indicate 46% exceed the groundwater standards.  Fire stations and training sites are also potential sources, as are municipal wastewater treatment plants, biosolids storage and application sites, car washes, airports (military and civilian), and a wide variety of other operations. Typical contamination vectors include not only historical releases directly to soils, groundwater or surface waters, but also atmospheric deposition resulting from airborne emissions of PFAS that subsequently contaminate other media, including groundwater.

Due to the combination of their durability, persistence, mobility, multiple possible release mechanisms, and extremely low detection limits, the simple reality is that if you look for PFAS in the environment you will find them.  The corollary is that if you haven’t found them, you’re probably not looking in the right places. While some public officials may believe that PFAS are not a problem in their states or regions, the public and elected officials – sensitized by the story of lead contamination in the water supply of Flint, Michigan – are asking questions, demanding answers, and expecting action. In 2018, the US EPA held a “national summit” on PFAS contamination and announced that it would consider whether to establish public drinking water standards, Maximum Contaminant Levels (MCLs), for some PFAS, and whether to list certain PFAS compounds as hazardous substances under CERCLA.  More recently, EPA officials have indicated that MCLs for PFAS are unlikely, but that EPA is considering broader use of its emergency administrative order authority under Section 1431(a) of the Safe Drinking Water Act to address PFAS contamination situations on a site-by-site basis. In the meantime, members of Congress have introduced bipartisan legislation to require US EPA to list all PFAS compounds as CERCLA hazardous substances and a growing number are joining a bipartisan Congressional PFAS Task Force.

The most consequential regulatory action, however, has been at the state level, which is where considerably more future action should be expected.  As of January 2019, at least eight states had adopted or proposed guidance values or regulations setting acceptable concentrations of various PFAS compounds in groundwater, drinking water, surface water, or soil, including Alaska, Colorado, Michigan, Minnesota, New Hampshire, New Jersey, New York and Vermont.  This list is expanding rapidly, as is the list of state legislatures that have regulated or are considering regulating the use of PFAS compounds, including California, Michigan, Minnesota, North Carolina, New Hampshire, New York, Pennsylvania, Rhode Island, Vermont and Washington.  The Environmental Council of States (ECOS), the national, nonpartisan, nonprofit association of state and territorial environmental agency leaders, has established a PFAS workgroup, and its research arm, the Environmental Research Institute of the States (ERIS) has a large and active technical team that has published a number of fact sheets on PFAS through the Interstate Technology Regulatory Council (ITRC). 

Regulatory strategies and cleanup standards for the same compounds often differ from state to state: for example, in Vermont the groundwater standard is 20 ppt for PFOA and PFOS individually or in combination, while in New Hampshire the standard for PFOA and PFOS individually or in combination is 70 ppt, and a proposed rule would lower the individual standard for PFOA to 38 ppt.  The process of setting health-based regulatory standards varies greatly by jurisdiction, and different standards are typically attributable to differences in which toxicity data are selected and how they are interpreted, differences in toxicity factors (i.e., multipliers or margins of safety), how animal test results are extrapolated to humans, exposure assumptions, life stage used, and sources of exposure (drinking water versus non-drinking water).  Should EPA choose not to adopt MCLs for PFAS compounds, it’s likely that more and more states will find themselves weighing these and other variables as they set their own regulatory standards and seek to explain why they may be either higher or lower than those of their neighboring states.

Because they are ubiquitous, PFAS compounds present a set of challenges that every state will ultimately need to quantify and regulate, all the while communicating with the public, the regulated community and elected officials about the steps they’re taking and why their approach is an appropriately protective risk management strategy.  The lack of a comprehensive national regulatory approach and federal standards for PFAS compounds makes the problem all the more challenging for states, as they will forever need to justify their own approach in comparison with those of other states.  All of which suggests that PFAS are, and for the foreseeable future will remain, a Problem For All States.

Enforcement vs. Education: What the Evolving Role of Forest Rangers and the Government Shutdown Might Teach Us About Environmental Management

Posted on February 12, 2019 by Edward A. Hogan

Two recent, and apparently unrelated, newspaper articles should cause us to focus upon the appropriate balance between law enforcement and education in environmental management.

The first article described a number of deliberate acts of vandalism in National Parks during the recent federal government shutdown.   In the absence of park staff, illegal off-road driving was reported in several National Parks.  In Joshua Tree National Park, delicate and ancient Joshua trees were kicked and Christmas lights strung on others.

The second article reported on a recent proposal to reclassify state civil service job titles.  While on its face it appeared routine, it has resurrected some persistent concerns with the public perception of environmental and natural resource protection. The New York State Department of Environmental Conservation (“NYSDEC”) has requested the New York State Department of Civil Services reclassify its 134 Forest Rangers into the Environmental Conservation Police Officer(“ECO”) title.  Both Forest Rangers and ECOs work within the NYSDEC Office of Public Protection:  the Forest Rangers in the Division of Forest Protection and the 330 ECOs in the Division of Law Enforcement.  Both Divisions were established in the late 19th century:  forest rangers were originally known as fire wardens and ECOs as fish and game protectors. 

While still having the traditional responsibility for prevention and suppression of wildland fires, Forest Rangers are now also charged with organizing and conducting wildland search and rescue operations.  ECOs have had their role of enforcing fish and wildlife laws expanded to include air, land and water quality violations.   Both Forest Rangers and ECOS must complete the same 26-week basic training and are sworn police officers, authorized to enforce all state laws.

While the civil service reclassification has been described as a title upgrade for the Forest Rangers, which would result in a small increase in initial salary, NYSDEC emphasized that it is not a merger of the two Divisions but, rather, a move to ensure that the Divisions are treated equally in the civil service system.  While generally supported by the environmental community, there are those who express lingering concerns with the gradual degradation of public’s attitude towards Forest Rangers and the potential impact on their effectiveness in educating the back country recreational (hiking, whitewater rafting, rock and ice climbing, etc.) community.  As retired Forest Ranger Pete Fish lamented, before becoming sworn police officers and thus always armed, their image was not so closely associated with being police officers: “We used to drive around in these red trucks.  We had a good reputation.  People would wave at us.  Everyone loved a ranger. Once we started driving around in the green trucks like the cops, there was a difference in attitude toward us from the public”.  

As attorneys dealing with the full range of environmental laws, we focus on significant policy issues.  But the most frequent encounter most citizens have with the application of environmental and natural resource laws is at the state level, with front-line staff, and in the recreational context.  Thus, the public’s perception of, and support for, environmental laws is greatly influenced by their experience in the context of recreation use of natural places, and thus their perceptions should be as important to us as they are to retired Ranger Pete Fish.

Each state (and the federal government) has a broad range of natural resource and environmental issues it addresses:  fish and game enforcement, forest fire prevention and suppression, wildland search and rescue, back country recreationalist education, and environmental quality enforcement.   How they organized and staffed these tasks has, and will be, influenced by the evolution of those programs, their historical experience and present and future needs.   

So, what is the right balance of education and enforcement in wildland recreation?  Police officers or ranger-educators?  Or both?

Are the recent incidents in the National Parks evidence that as a society we have failed in our education role and that management of wildlands are better addressed by an enforcement-based approach?

In contrast to the several vandalism incidents that have occurred, there have also been hundreds of volunteers keeping the National Parks open during the government shutdown.  These volunteers were spending their time and their own money hauling out trash and keeping toilets cleaned and stocked with supplies.  Perhaps education has been successful after all.

How Would Your Parents Like This Report Card: The 2018 Chesapeake Bay Health Score Drops to D+ as Massive Rains Increase Pollution

Posted on February 11, 2019 by Lee DeHihns

The Chesapeake Bay Foundation (CBF) released the 2018 State of the Bay Report on January 7, 2019 and the overall grade was not good.  The Bay scored 33 on a scale of 100. The 2018 score is down a point from the last report issued in 2016.  CBF President Bill Baker put as positive a spin as he could on the D+ score saying, “What does it all mean? The summer of 2018 is a stark reminder that the Bay’s recovery is fragile.  We have a long way to go, especially as climate change intensifies.  And, the federal government could significantly undermine our progress by rolling back regulations that would have resulted in nitrogen reductions to the Chesapeake Bay.”

The news is sad for the 18 million people who live in the Chesapeake Bay watershed, which has been struggling to deal with the elusive lack of control over the major pollution source to the Bay: non-point pollution, which was increased by the massive rainfall in 2018.  The report says that such extraordinary weather conditions are consistent with the more frequent and severe storms that climate models predict for the region in the future, meaning that it may only become more challenging to put the Bay’s predominantly non-point sources of pollution in check. 

On a positive note, in June 2018, researchers from the University of Maryland Center for Environmental Science measured continued improvements in the health of the Chesapeake Bay, according to their 2017 Chesapeake Bay Report Card, finding that, “[w]hile the overall grade of “C” has remained the same since 2012, this marks the first year that experts have seen what they call a ‘statistically significant’ positive trend. This suggests that the positive improvements in the grade of the Bay are the result of real progress rather than chance.”  The CBF report reaches a similar conclusion in stating, “[d]espite these effects, there are signs that the Bay is more resilient and better able to cope with extreme weather.  For instance, in August, scientists observed that the underwater grass beds on the Susquehanna flats remained robust and dense, despite the summer’s severe storms.”

The efforts to both protect and restore the Chesapeake Bay are almost as old as EPA, according to the Chesapeake Bay Program, a regional partnership that includes EPA.  According to the Program’s website, the Chesapeake Bay was the first estuary in the nation targeted by Congress for restoration and protection: “In the late 1970s, U.S. Senator Charles “Mac” Mathias (R-Md.) sponsored a Congressionally funded $27 million, five-year study to analyze the Bay’s rapid loss of wildlife and aquatic life. The study, which was published in the early 1980s, identified excess nutrient pollution as the main source of the Bay's degradation. These initial research findings led to the formation of the Chesapeake Bay Program as the means to restore the Bay.”

It is quite obvious that leadership for protecting the Bay must come from local resources and decisions.  The EPA FY 2019 Budget requested a 90% drop in funding from FY 2018 for its Chesapeake Bay Program.  The change cut more than $65 million [OK]  in funds and almost 40 FTE, leaving only about $7.3 million, with the following inadequate justification provided to Congress on the budget submission: “This program change reduces funding for the Chesapeake Bay Program. Remaining resources will support critical activities in water quality monitoring.” 

Just as parents who may wonder why their child got a low grade, at first blaming the school system or teacher, before looking at the child and/or their parental oversight, the solution to protecting the Chesapeake Bay demands action by many players.  Because of the interstate nature of the sources of pollution to the Bay, a greater role from EPA has always been necessary.  Moreover, because land use management is the primary way to address nonpoint source pollution, the primary responsibility rests on the States in the Bay’s watershed. 

We should be shocked that, in 2018, the Bay’s grade is a D+.  In passing the Clean Water Act in October 1972, Congress, in Section 101, 33 U.S.C. 1251, established the Declaration of Goals and Policy for our nation’s waters.  The Acts set two deadlines which have long since passed “(a) (1) it is the national goal that the discharge of pollutants into the navigable waters be eliminated by 1985; (2) it is the national goal that wherever attainable, an interim goal of water quality which provides for the protection and propagation of fish, shellfish, and wildlife and provides for recreation in and on the water be achieved by July 1, 1983”.   If a child failed to advance beyond the first grade with a D+ in 1983, then that child would be 36 now and still living at home.

In a sense we are all parents when it comes to protecting the Bay.  The reduction in federal tax dollars will not yield a better system; nor can it be accepted as an excuse for not doing the right thing for the Bay.  States and other partners must fill the gap.

THE TAX MAN COMETH

Posted on February 5, 2019 by Donald Shandy

The 2017 Tax Cuts and Jobs Act (“Act”) has injected considerable confusion into environmental administrative and judicial settlements.

Since 1969, Section 162(f) of the Internal Revenue Code has not permitted the deduction of fines and penalties.  This would include fines and penalties related to environmental settlements including Supplemental Environmental Projects (SEPs).

Prior to the Act, Section 162(f) allowed deductions of “ordinary and necessary” business expenses related to environmental litigation and settlements.  New Section 162(f) permits deductions for expenses “constituting restitution” (e.g. remediation) or costs “paid to come into compliance with law.”  To qualify as restitution/remediation, two requirements must be met:

1.      The amount that is dedicated to restitution must be set forth in a settlement agreement or court order; and

2.      The governmental agency must prepare and file with the IRS and provide the taxpayer a 1099-series form stating the deductible amounts paid by the taxpayer.

It seems fairly clear that cash penalties and SEPs undertaken in lieu of a cash penalty are not deductible.  However, it is far less clear how remediation activities pursuant to CERCLA or RCRA should be addressed.  For example, how should remediation expenses be addressed where a settlement or court order was entered into prior to the effective date of the Act, but the costs are not incurred (paid for) until after the effective date of the Act?  Problematic case specific-issues under the new law seem almost endless. 

To date, the Treasury Department has not provided any guidance related to this issue.  Practitioners should be very careful when negotiating settlements with administrative agencies or entering into judicial orders.  Absent government guidance, careful drafting and execution of settlements and orders, there is a real possibility of an IRS audit or even a tax court case down the road.

The 2018 Farm Bill is surprisingly climate-conscious.

Posted on January 31, 2019 by Peter Lehner

Roughly every five years, Congress revises and renews the Farm Bill to fund our nation’s food security, nutrition, and farm conservation programs. The 2018 Farm Bill, which passed with large bipartisan majorities in both chambers, is surprisingly climate-conscious. Its successes will serve as a foundation upon which future more aggressive climate-smart farm policy can be built.

The Farm Bill’s climate change benefits stem from a number of provisions that incentivize more climate-friendly practices. For example, the Farm Bill’s federal crop insurance program will now allow — rather than discourage — greater use of cover crops, a practice that has well-proven climate and water quality benefits. This program, which is now the primary federal subsidy to industrial farming, has often inhibited the use of climate-friendly practices such as cover crops and longer crop rotations, while at the same time encouraging planting on marginal lands, which are better suited as habitat for wildlife, buffers for streams, and carbon sinks. The 2018 law takes steps to end these perverse incentives.

The Conservation title of the bill contains a number of programs that will help curb climate change. This title continues to provide about $6 billion annually to the Conservation Reserve Program, the Environmental Quality Incentives Program, and the Conservation Stewardship Program, all of which saw modest improvements in the 2018 Farm Bill. The changes to EQIP, which generally provides a 75 percent cost-share for installation of approved conservation measures, best illustrate how these traditional programs can pay climate and environmental dividends, with the added twist of garnering the support of fiscal conservatives.

EQIP data from USDA indicated that only 14 percent of EQIP funding went to conservation practices identified as producing the most environmental benefits. To turn the tide, the new law allows states to identify 10 highly effective conservation practices to be eligible for a greater financial incentive. Since climate change induced farm losses harm both the farmer and the taxpayer -- for example, climate-driven natural disasters in 2012 incurred $17.3 billion in crop insurance payments – shifting to more efficient practices is a sound fiscal move as well. 

The Bill also increases funding for organic farming and for a range of practices that help store carbon in the soil and emit fewer greenhouse gases. It also lowers the set-aside for EQIP funds for livestock operators from 60% to 50%, which is critical since livestock operations are responsible for about 80 percent of agriculture's climate change impact.   

CRP pays farmers to take environmentally sensitive land out of production for 10 to 15 years.  Because producers often bring their CRP acres back into production when the contract expires, releasing any carbon stored in the soil during the off years, the benefits are often only temporary.  The bill supports climate-friendly practices like riparian buffer and prairie strips and authorizes 30-year contracts on a pilot basis.  The law also provides a minimum number of acres to be enrolled in the program that targets the most environmentally sensitive lands and pays producers to establish tree and grass buffers along streams.  These water quality provisions both have a climate impact and create a precedent for more climate-change-focused amendments in the future.

Finally, the 2018 Farm Bill increases Conservation Stewardship Program payment levels for cover crops, resource-conserving crop rotations, and management-intensive rotational grazing – all of which reduce water pollution, help slow climate change, and help producers weather climate change.  It also establishes a soil health demonstration program, funded at $15 million, setting a good precedent for larger future action by the federal government and states.

The same provisions that fight climate change, will also encourage practices that protect the drinking water of millions. Industrial-scale agriculture — the large chemical-dependent monocultures where the same crop is planted year after year and the production of grain-fed animals in enormous enclosed facilities — is one of the largest sources of water pollution in the country, such as the dead zone in the Gulf of Mexico or the eutrophication of the Chesapeake Bay. This agricultural water pollution can render water unfit for further human use and impose significant drinking water treatment costs on thousands or millions of communities and homeowners, such as when Toledo had to shut its water supply due to algal toxins, or the nitrate contamination in thousands of drinking water wells that could cause “blue baby syndrome.”  As a result of the clear and present threat, Sen. Debbie Stabenow (D-MI), a lead negotiator of the final bill, was able to build bipartisan agreement to support practices that could reduce this pollution.

As a climate bonus, the 2018 Farm Bill also takes some steps to help reduce food waste, most of which now rots in landfills, releasing large amounts of methane.  The bill funds pilot projects in ten states to develop local composting and food waste reduction efforts and promotes the donation of agricultural commodities.  It also creates a Food Loss and Waste Reduction Liaison in the USDA to coordinate federal programs and clarifies liability protections for food donations, among other measures. 

This legislation comes at a critical moment, when our country must decide whether and how to deal with the dramatic warming of the planet. Two recent climate reports confirm that we must act on climate change quickly, and that the extreme weather climate scientists have been warning us about are here and will worsen in the years ahead.

Our agricultural activities are both contributors to and victims of the changing climate. At the same time that industrial agriculture releases tremendous amounts of greenhouse gases from excess fertilization, tillage, manure, and animal emissions, our farms and ranches are also particularly vulnerable to the floods, droughts, heat waves, pests, and other problems that climate change exacerbates. For example, the 2016 California drought resulted in over $600 million in economic loss; Hurricane Maria in 2017 devastated 80% of Puerto Rico’s agriculture and caused $780 million in losses; heat waves threaten both crops and farmworkers.  It’s to everyone’s benefit to help those who produce our food be ready for the changing weather. 

Moreover, farmers and ranchers are uniquely situated to help slow climate change simply by preparing for it. Sustainable farmers and ranchers around the country have repeatedly demonstrated that many farming practices can help both slow and withstand climate change. There are many practices that increase carbon stored in soil or that use natural systems to reduce chemical needs and thus lower greenhouse gas emissions. At the same time, they increase the amount of water the soil can absorb and enrich the fertility of the soil, thereby helping farmers endure worsening conditions. These same practices also reduce water pollution and save farmers money.

Given the scale and scope of the climate problem we face, more needs to be done in the next Farm Bill — indeed, much sooner — to accomplish the change needed in the agricultural sector so that it can produce sufficient nutritious food in more extreme weather without making climate change and other pollution worse. This won’t be easy given that the Farm Bureau, one of strongest voices shaping US agriculture policy, repeatedly and fiercely opposes any efforts to curb climate change, and the U.S. Department of Agriculture, as part of Donald Trump's administration, never mentions climate change. Yet, it’s necessary.

The 2018 Farm Bill, by lifting up practices known to have multiple environmental benefits, is a promising place to start.

TSCA Implementation is Proving to be Target Rich

Posted on January 30, 2019 by Lynn L. Bergeson

EPA has maintained a frantic pace implementing the Frank R. Lautenberg Chemical Safety for the 21st Century Act, the 2016 amendments to the Toxic Substances Control Act (TSCA).  Less publicized, but as significant, are the spate of judicial challenges occasioned by new TSCA. There are, as reported previously in this space, the ongoing challenges to the foundational TSCA “framework rules,” federal appellate challenges to the core TSCA rules brought under TSCA Section 19(a).  Newer actions under other TSCA provisions have been brought more recently.

On January 14, 2019, in the U.S. District Court for the District of Vermont, the Vermont Public Interest Group and others sued EPA under TSCA Section 20(a) to compel it to perform its “mandatory duty” to address the alleged imminent threat to human health posed by paint removal products containing methylene chloride. This is the first test of the scope of EPA’s mandatory duties under TSCA Sections 6(a) and 7.  Section 20(a) provides that “any person may commence a civil action … against the Administrator to compel the Administrator to perform any act or duty under this Act which is not discretionary.”  Plaintiffs allege that EPA has not performed its mandatory duty under TSCA Sections 6(a) (authorizing EPA to regulate substances that present an unreasonable risk of injury to health or the environment) and TSCA Section 7 (authorizing EPA to commence civil actions for seizure and/or relief of imminent hazards).  EPA proposed a rule in 2017 under TSCA Section 6 to prohibit the manufacture, processing, and distribution of methylene chloride for consumer and most types of commercial paint and coating removal.  Except for extending the comment period multiple times, no further action has been taken to issue the rule in final.

 

In another regulatory action, on December 21, 2018, EPA denied a TSCA Section 21 petition requesting that EPA amend the TSCA Chemical Data Reporting (CDR) rule to increase asbestos reporting, exclude asbestos from certain exemptions, and lift Confidential Business Information claims on asbestos information reported under the CDR rule.  Due to the government shutdown, the notice has not yet been published in the Federal Register, but EPA has posted a prepublication version.  It is unclear whether petitioners will appeal EPA’s decision, but chances are they will.

 

In another TSCA Section 21 denial action, litigation did follow.  In 2017, EPA denied a Section 21 petition requesting that EPA regulate under TSCA Section 6 the fluoridation of drinking water based on petitioners’ concern that ingestion of fluoride poses an unreasonable risk to humans.  EPA denied the petition and petitioners appealed.  On December 21, 2017, the U.S. District Court for the Northern District of California ruled that EPA had wrongly dismissed the petition based on EPA’s argument that petitioners were required to demonstrate under Section 21 that all conditions of use of fluoride posed an unreasonable risk, not just the fluoridation of drinking water.

For TSCA aficionados, the two Section 21 petitions raise a host of interesting TSCA issues beyond the scope of this blog.  These include, among others, EPA’s interpretation of “conditions of use,” a term new to TSCA since Lautenberg, and what standard of review applies under Section 21, whether de novo or review of the administrative record.  The key take-away here is that these actions reflect the commitment of EPA detractors to use TSCA Sections 19, 20, and 21, the courts, and every other means available to oppose the Administration’s TSCA implementation efforts.  When and how the courts will respond is unclear.  These cases will be closely watched, and more are expected.

Deadlines For Permit Issuance Are Double-Edged Swords

Posted on January 29, 2019 by Seth Jaffe

On Friday, the D.C. Circuit Court of Appeals ruled that applicants for licenses under the Federal Power Act may not reach private agreements with states to circumvent the FPA requirement that states act on water quality certification requests under § 401 of the Clean Water Act within one year.

The facts are important here and somewhat convoluted.  The short version is that PacifiCorp operates a number of dams on the Klamath River.  In 2010, PacifiCorp reached a settlement with California, Oregon, and a number of private parties – not including the Hoopa Valley Tribe, the plaintiff here – to decommission certain dams and relicense others.  However, the decommissioning was dependent on certain third party actions, including, apparently, federal funding.  Part of the settlement required California and Oregon to “hold in abeyance” their § 401 certificate reviews.  Specifically, each year, PacifiCorp:

sent a letter indicating withdrawal of its water quality certification request and resubmission of the very same . . . in the same one-page letter . . . for more than a decade.

The Court was not pleased.

Such an arrangement does not exploit a statutory loophole; it serves to circumvent a congressionally granted authority over the licensing, conditioning, and developing of a hydropower project. … There is no legal basis for recognition of an exception for an individual request made pursuant to a coordinated withdrawal-and-resubmission scheme, and we decline to recognize one that would so readily consume Congress’s generally applicable statutory limit.

The Court limited its holding to the facts of this case; it does not apply, for example, to applications that are substantively amended and resubmitted.  It only applies to what PacifiCorp and the states unabashedly did here – reach a private agreement to get around the explicit provisions of the statute.

Nonetheless, it’s an important decision.  Based on data reported in the opinion, it may have a significant impact on a number of FERC licensing proceedings, where similar agreements may also be in place.

The decision also highlights an issue with these types of permitting deadlines.  These provisions follow a fairly well-trod path.  Some agency is slow in responding to permit applications.  A legislature responds by demanding that approvals be issued within a certain period of time.  The regulated community is happy.  Then, life moves on and, in the real world, parties realize that, for one reason or another, strict adherence to the statutory deadline is infeasible, impractical, or just plain not in anyone’s best interest.  They thus do what creative people do – they find a way around the deadline that was supposed to be protecting them.  Or, they try to do so until a court says no, no, no.

Be careful what you wish for.

Wildfires and the Winds of Change

Posted on January 24, 2019 by R. Christopher Locke

Renewable energy sources have been rapidly deployed across the nation over the past decade.  In addition to state government mandates for addressing climate change, federal and state tax incentives and technological advances have spurred their growth, as have the reduced cost and improved efficiency of photovoltaic (PV) solar energy, wind turbines, and energy storage systems.

California has led the way with government-mandated renewable energy goals.  Under AB 32, enacted in 2006, the California Public Utilities Commission (CPUC) established a renewables portfolio standard (RPS) for retail sellers and goals of generating 33 percent of electricity from renewable energy sources by the end 2020 and 50 percent by the end of 2030.  Last year, Governor Brown signed SB 100, which stepped up the 2030 goal to 60 percent and added a new goal of 100 percent of electric power from carbon-free energy sources by the end of 2045.  Hawaii, a state that is “off the grid” and entirely dependent on its own generating capabilities, has similarly adopted the goal of generating 100 percent of its electricity from renewable sources by the end of 2045.;

States have also addressed the need to balance the grid through energy storage systems.  These systems can reduce or eliminate reliance on “peaker plants” and other fossil fuel sources when the sun is not shining and the wind is not blowing, and variable sources like solar and wind are producing little or no energy.  Once again, California has led the way.  Enacted in 2010, AB 2514 calls for 1.3 gigawatts of energy storage capacity from the state’s three large investor-owned utilities by 2020, and legislation adopted last year accelerates and expands the deployment of energy storage systems.

Other states across the nation have adopted similar mandates and incentives to promote the development of renewable energy and storage capacity.  And the low cost of PV solar itself provides a significant incentive.  In fact, a recent study by Lawrence Berkeley National Laboratory documented the geographic spread of new solar installations in 2017, with 40 percent being built in the southeastern states and another 17 percent in Texas alone.

Despite the current Administration’s withdrawal from the Paris Climate Accord and its support for fossil fuels, some recent federal actions have also addressed renewable energy and climate change.  Last year the Federal Energy Regulatory Commission (FERC) amended regulations to facilitate development and use of energy storage systems.  And earlier this month, House Speaker Pelosi re-established the Select Committee on Climate Change and appointed Representative Kathy Castor (D-FL) as Chair. 

Given the reduced costs of solar and wind energy systems, government mandates and support for renewable energy, technological advances, and success in expanding reliance on renewable sources and balancing the grid with energy storage systems, we seem on track toward achieving renewable energy goals in many states.  What could possibly go wrong?

Last week Pacific Gas & Electric (PG&E), announced that it would seek Chapter 11 bankruptcy protection from an estimated $30 billion in potential liability resulting from the horrific California wildfires of the past two years.  Ironically, the hotter, drier climate change-related conditions that contributed to these wildfires and affected PG&E’s potential liability could adversely impact attainment of California’s renewable energy goals to combat climate change.  Scenarios similar to the wildfire-related losses and liability for PG&E could be presented for electric utilities elsewhere in the nation due to severe storms, flooding, storm surge, and sea level rise.

Climate change –related losses, liabilities and bankruptcy proceeding for utilities could in turn affect existing long-term power purchase agreements (PPAs) for renewable sources, especially when combined with changes in demand, the declining cost of solar and wind, and changes in rate schedules.  Indeed, PPA rates have declined significantly over the past decade, providing impetus for potential renegotiation of such agreements.  In PG&E’s 2001 bankruptcy, the court took into account the need for continuation of essential services and left the existing PPAs largely in place.  If older PPAs are renegotiated or restructured, the parties and the court should recognize the need to preserve and promote the financial viability of the renewable energy industry.

In recent years, community choice aggregators (CCAs) have been created by some cities and counties and may provide opportunities to help stabilize power supplies that historically have been furnished almost exclusively by investor-owned utilities.  However, reliance remains on the utilities to maintain and control transmission and distribution networks, and there are some uncertainties about the long-term financial viability of CCAs.

Further government action may also help to stabilize energy supplies and commitments to renewable energy sources and goals.  Last year California passed SB 901, allowing PG&E to issue bonds, supported by increased rates, to cover losses and liabilities relating to the previous year’s wildfires.  And last week, Governor Newsom announced his intent to work with the legislature to find a solution that provides continued reliable electric power, addresses fire victims’ claims, and promotes California’s renewable energy goals.

Reducing potential impacts associated with climate-related risks will depend not only on pursuing programs and infrastructure to prevent and respond to wildfires and other climate-related events, but also on maintaining credit-worthy power purchasers and the financial viability of renewable energy project owners, developers, manufacturers, and suppliers.

In California this will require the support of, and coordination with, the CPUC, FERC, the legislature, the Governor, and the courts.  As noted in Liam Denning’s January 16 opinion in Bloomberg: Business News, the issues are “multi-dimensional” and the solution “will be a job not just for a judge but for the regulators and legislators, too.”

Nuclear Power and Preemption under the Atomic Energy Act: Is a New Era Dawning?

Posted on January 23, 2019 by Shane Swindle

The Supreme Court recently heard argument in Virginia Uranium, Inc. v. Warren, a case concerning the scope of preemption under the Atomic Energy Act (AEA).  Based on the questions several justices asked at argument, the Court could be poised to issue a ruling that would allow states to enact new constraints on the generation of nuclear power, even if motivated by nuclear safety concerns that fall squarely within the scope of AEA preemption.

Back in 1983, in Pacific Gas & Electric Co. v. State Energy Resources Conservation & Development Commission, the Supreme Court held that the Atomic Energy Act (“AEA”) “has occupied the entire field of nuclear safety concerns,” and that a state law that is “grounded in [radiological] safety concerns falls squarely within the prohibited field.” And a few years later, in English v. Gen. Elec. Co., the Court held that “the pre-empted field” under the AEA is defined, “in part, by . . .  the motivation behind state law[s],” and specifically whether those laws are animated by concerns regarding radiological safety.

Looking beyond the neutral language of state statutes and beyond the purposes put forward by state legislatures and regulators, lower federal courts have struck down a wide range of state statutes as preempted by the AEA. In Entergy Nuclear Vt. Yankee, LLC v. Shumlin, for example, the Second Circuit struck down a Vermont statute that required state legislative approval to build a nuclear power plant, even though the statute purported to regulate the generation, sale, and transmission of electric power. Noting that courts do not “blindly accept the articulated purpose . . . for preemption purposes,” the court considered “the legislative record” and found “references, almost too numerous to count, [that] reveal legislators’ radiological safety motivations and reflect their wish to empower the legislature to address their constituents’ fear of radiological risk, and belief that the plant was too unsafe to operate.”  Other circuit courts similarly have looked beyond facially-neutral statutory language to find statutes preempted in cases addressing transportation of spent nuclear fuel and storage of radioactive wastes.

This approach to preemption under the AEA may be about to change. The Supreme Court heard argument on November 5, 2018 in Virginia Uranium, Inc. v. Warren and will decide whether Virginia’s ban on uranium mining on private land is preempted by the AEA. As reported on the SCOTUSBlog, multiple justices questioned whether the Court should look beyond the language of the statute at issue to consider the legislature’s motivation.

The nuclear power industry already faces many obstacles to increasing generation of nuclear power. If the Supreme Court holds that courts may not look behind the language and stated purposes of state statutes, the nuclear industry may also face the prospect of non-uniform, checkerboard regulations across the country, as states use their newfound authority to preclude or sharply limit nuclear power production within their borders.