Posted on September 29, 2016
When RGGI was first implemented, I heard Ian Bowles, then Secretary of Energy and Environmental Affairs in Massachusetts, say more than once that the purpose of RGGI wasn’t really to reduce greenhouse gas emissions or jump start the clean energy economy. Instead, the goal was much more modest; it was simply to demonstrate that a trading regime could work. The RGGI states were to serve as a model, to be the laboratory of a GHG allowance system. The hope was certainly that RGGI would succeed its way into obsolescence. Surely, by 2016, there would be a federal statutory basis for GHG regulation.
It’s now September 2016 and a federal statutory basis for a GHG trading system remains a seemingly distant hope (this post is definitely not about the Clean Power Plan). We may still be waiting, but we do at least have substantial data from the laboratory that is RGGI. In fact, yesterday, RGGI released its analysis of The Investment of RGGI Proceeds through 2014. Some highlights:
- Power sector GHG emissions have decreased by more than 45% since 2005, while regional GDP has increased by about 8%.
- The total value of RGGI investments reached $1.37 billion through 2014.
- Energy efficiency has taken up 58% of RGGI investment. The report states that the expected return is $3.62 billion in lifetime energy bill savings.
- Clean and renewable energy make up 13% of investments, with an expected return of $836 million in lifetime energy bill savings.
One can quibble with these numbers. They don’t really provide a reliable comparison to what would have happened in the absence of RGGI. Nonetheless, it’s pretty clear that RGGI does work. We can reduce GHG emissions without giving up on economic growth, and we can use the regulatory process to move our energy economy where it needs to be.
Now, if someone could just figure out a way to make RGGI obsolete, that would be true success.
Posted on September 21, 2016
On Monday, EPA promulgated amendments to its “Exceptional Events” Rule. The rule is important, particularly in the Western states, and most particularly in connection with EPA’s latest iteration of the ozone NAAQS. EPA’s most significant revision was to eliminate the requirement that state air agencies demonstrate that, “but for” the exceptional event, the state or relevant area would have complied with the applicable NAAQS. The change is important for two reasons. First, on the merits, EPA noted that:
"the “but for” criterion has often been interpreted as implying the need for a strict quantitative analysis to show a single value … of the estimated air quality impact from the event. As a result, some air agencies began using burdensome approaches to provide quantitative analyses in their exceptional events demonstrations to show that the event in question was a “but for” cause of a NAAQS exceedance or violation in the sense that without the event, the exceedance or violation would not have occurred. In many cases, the “but for” role of a single source or event is difficult to determine with certainty and it is more often the case that the impact of emissions from events and other sources cannot be separately quantified and distinguished."
I think that EPA got this exactly right. As tort professors have always known, how a burden of proof is allocated is often outcome-determinative.
Which brings me to the second reason why the change is important – at least to me. Just hearing the words “but for” causation triggers an uncontrollable wave of nostalgia. In 1996, my client, New England Telephone, was awarded summary judgment in a CERCLA contribution case. It was then the first – and may still be the only – case in which a defendant who admittedly sent hazardous substances to a site was awarded summary judgment on the ground that its wastes had not caused the incurrence of any response costs.
I like to think that NET prevailed due to the fine lawyering of its counsel, but I have always known in my heart of hearts that the identity of the judge may have had something to do with the result. The case was heard by Robert Keeton, distinguished judge, Harvard Law professor and – importantly – one of the authors of Prosser and Keeton on Torts.
At the summary judgment hearing, Judge Keeton did not want to hear from me, even though it was my motion. He did not really even want to hear from the plaintiffs’ counsel. Instead, he launched into an approximately 30-minute lecture on the role of causation in tort law, including, of course, a discussion of “but for” causation. When he finished the discussion from Prosser and Keeton about the so-called “Minnesota fire cases”, Judge Keeton paused, looked up, smiled broadly, and said: “I wrote that part.”
It was the best summary judgment argument I ever gave. I never said a word.
Posted on September 8, 2016
Ever since EPA began considering how BACT analysis would be applied to greenhouse gas emissions, there has been concern that EPA would use its BACT authority to “redefine the source” – with the particular concern that BACT for a coal plant would now be to burn natural gas instead. In Helping Hands Tools v. EPA, the 9th Circuit Court of Appeals this week gave some protection to biomass plants from such redefinition of the source. However, other types of facilities will get no comfort from the decision.
Helping Hands Tools involved a challenge to a PSD permit issued to Sierra Pacific for a cogeneration plant to be located at one of its existing lumber mills. Under EPA’s BACT Guidance, Sierra Pacific stated that the purpose of the CoGen plant was to use wood waste from the mill and nearby facilities to generate electricity and heat. Relying in part on the 7th Circuit decision in Sierra Club v. EPA, which held that it would impermissibly redefine the source to require a mine-mouth coal generating plant to consider different fuels in its BACT analysis, the 9th Circuit found that EPA was reasonable in determining that, because a fundamental purpose of the CoGen plant was to burn wood waste, it would impermissibly redefine the source to require Sierra Pacific to consider solar power as part of its BACT analysis.
Importantly, the Court also rejected the plaintiffs’ request that Sierra Pacific consider greater use of natural gas. The Court concluded that very limited use of natural gas for the purposes of startup, shutdown, and flame stabilization did not undermine the fundamental purpose to burn wood waste. This is critical to source-located biomass facilities, because EPA’s GHG Permitting Guidance specifically says that greater use of an existing fuel should be considered in the BACT analysis:
"unless it can be demonstrated that such an option would disrupt the applicant’s basic business purpose for the proposed facility."
Unfortunately, the language of the decision appears to me to give EPA substantial leeway in future BACT analyses to redefine the source in other cases. It seems to me that, building on the 7th Circuit decision, the Court has simply created an exception to potential source redefinition in circumstances where the location of the facility justifies a very narrow fuel selection. If a coal plant intends to burn coal from the mine next door, ok. If a lumber mill intends to burn its own wood waste, ok. Otherwise, however, all bets are off.
What is particularly troubling was the Court’s acknowledgement that the GHG BACT guidance is vague, and its deference to EPA’s application of its own vague guidance. This is precisely the concern I noted when the Guidance was first issued. Time will tell, but I foresee some fairly extreme BACT determinations being blessed by some very deferential courts.
Posted on September 2, 2016
Do air emissions of pollutants constitute a “disposal” under the federal hazardous waste laws? The Ninth Circuit said “no” in Pakootas, et al. v. Teck Cominco Metals, Ltd. based upon its reading of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA or Superfund). The decision both sets important precedent and showcases the judicial process to discern legislative intent when a statute’s plain language is stressed by an unusual fact pattern. If air pollutants can create CERCLA disposals, then emissions from any stationary or mobile source, including animal emissions of methane (which is considered a pollutant subject to CERCLA by EPA), may be the basis of cleanup liability.
The decision involves a smelter located just north of the border with British Columbia. An earlier decision in that case held that a foreign-based facility can be liable under CERCLA for slag discharges into a river running to the United States. Plaintiffs then alleged the facility arranged for disposal by emitting hazardous air contaminants which were carried by the wind and deposited in Washington State. The district court denied a motion to dismiss and certified the matter for immediate appellate review.
Reading the plain language of CERCLA, the Ninth Circuit found that “a reasonable enough construction” of the law would be that the facility “arranged for disposal” of its air pollutants. No legislative history or EPA rules shed light on this subject. However, the Court concluded it was not writing on a blank slate. Noting that CERCLA incorporates the definition of “disposal” from the Resource Conservation and Recovery Act (RCRA), the Court cited its prior decision in Ctr. for Cmty. Action and Envtl. Justice v. BNSF Rwy. Co., which held that diesel particulate emissions “transported by wind and air currents onto the land and water” did not constitute “disposal” of waste within the meaning of RCRA. To be a disposal, the solid or hazardous waste must first be placed into or on any land or water and thereafter be emitted into the air. The Court also cited its en banc decision in Carson Harbor Vill., Ltd. v. Unocal Corp., holding that passive migration was not a disposal under CERCLA.
The Court thereby found that arranging for “disposal” did not include arranging for air “emissions.” This interpretation of “disposal” was largely consistent with CERCLA’s overall statutory scheme. The Court expressed concern that plaintiffs’ more expansive reading would stretch CERCLA liability beyond the bounds of reason. “[I]f ‘aerial depositions’ are accepted as ‘disposals,’” the Court said, “‘disposal’ would be a never-ending process, essentially eliminating the innocent landowner defense.”
The Court did not discuss in detail the statutory interplay with the Clean Air Act, which regulates air emissions under a complex regulatory and permit scheme. Under CERCLA, federally permitted releases are excluded from liability. But because air permits often specify the control equipment parameters rather than an emission limit, a CERCLA plaintiff may allege that the mere existence of a permit does not provide a blanket immunity from liability and the facility would remain liable for any releases that were not expressly permitted, exceeded the limitations of the permit, or occurred at a time when there was no permit. The Court in passing did note its skepticism that the federally permitted “release” exception evidenced any Congressional intent regarding the meaning of “disposal.”
The Ninth Circuit is the highest court to exclude air emissions from the reach of CERCLA and RCRA. The Court’s citation to Carson Harbor does not provide an exact analogy since a passive landowner has not “arranged” for the initial release of hazardous substances, as compared to the smelter operations which result in air emissions. But the Court’s unwillingness to create potentially unlimited CERCLA liability for air emissions is compelling. Under CERCLA, liability is strict, joint and several and retroactive. Air emissions are widely transported and dispersed in relatively small concentrations by large numbers of potential sources, making CERCLA liability findings and allocations difficult if not impossible.
The Court thereby divined Congress’ intent to make CERCLA’s scheme workable, apart from a literal reading of its text. For judges to “repair” statutory language in this way is controversial. The decision is reminiscent of the U.S. Supreme Court holding that the Obama health care plan provides tax credits to millions of people who purchase insurance from a federal marketplace, even though the statute only provides credits for those who purchase from marketplaces “established by the state.” According to Justice Roberts, that was the only way the law would work, and despite the plain wording in the statute, “Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them.” CERCLA also is not a model of clarity, and the Ninth Circuit similarly incorporated practicality as a factor in discerning Congress’ intent to avoid overreaching in assigning liability for the cleanup of toxic chemical releases.
Posted on August 3, 2016
The Environmental Protection Agency is expected to announce its final Cross State Air Pollution Rule (CSAPR) update by the end of summer 2016. But does the update account for the fact that several new regulatory programs that could significantly improve downwind air quality?
In his posts of August 3, 2015and April 30, 2014, ACOEL Fellow Paul Seals likened the voyage of the interstate transport of air pollutants to “Homer’s Odyssey”. He promised us all that the D.C. Circuit decision of June 24, 2015, in the case of EME Homer City Generation, L.P., v. EPA, concerning the CSAPR would not end the voyage of interstate transport – and indeed it has not.
Critical to the development of a rule to address the interstate transport of air pollutants is that the rule not call for emission reductions that are more than necessary to achieve attainment in every downwind state. EPA’s 2017 deadline for attaining the 2008 ozone National Ambient Air Quality Standard (NAAQS) invites the question of what the ozone air quality is likely to be in 2017. EPA’s proposed CSAPR Updateidentified only 4 monitors in the East that it predicted to be in non-attainment with the 2008 ozone NAAQS in 2017.
EPA’s prediction of 2017 air quality, however, did not take into account several new regulatory programs that are either on-the-books or on-the-way. These programs are certain to continue to improve ozone air quality in the East. Among the more significant of these programs are:
- Pennsylvania Reasonably Available Control Technology (RACT) II;
- Ozone Transport Commission Model Rules;
- Connecticut RACT;
- New York High Energy Demand Day (HEDD) controls; and
- Connecticut High Energy Demand Day (HEDD) controls
To illustrate the significance of this point, Alpine Geophysics modeled the impact of only a portion of the Pennsylvania RACT II program on ozone concentrations at the nonattainment monitors downwind of Pennsylvania identified by in the CSAPR proposal. The following results from the Alpine Geophysics report illustrate that even one of these new programs is likely to significantly improve ozone air quality at the critical monitors in the East:
EPA Nonattainment Monitors
Ozone Improvement needed (ppb)
Ozone Improvement Achieved By PA RACT Alone
|Connecticut Fairfield (90013007)
|Connecticut Fairfield (90019003)
|Connecticut New Havens (90019003)
Such improvement - related to only one of the unaddressed programs - raises the question about whether all of the EPA identified nonattainment monitors will, in fact, be in attainment with the 2008 ozone NAAQS when these on-the-books and on-the-way programs are implemented in 2017, even without the CSAPR update.
The answer to this question, and to the merit of any new transport rule, lies with additional air quality modeling of these programs. When EPA announces its final rule on the CSAPR update by the end of summer, we will see whether the agency has taken account of these additional programs and see the future direction of this on-going odyssey.
Posted on August 2, 2016
On Friday, the D.C. Circuit largely upheld EPA’s Boiler MACT rule. The industry challenges were a complete washout. The environmental petitioners won one significant victory and a number of smaller ones.
The environmental petitioners’ one significant victory is important. EPA included within relevant subcategories any source that burns a fuel containing at least 10% of the “subcategory-defining fuel.” However, for defining MACT, EPA included only those sources that burn fuel containing at 90% of the subcategory-defining fuel for existing sources, and 100% for new sources. The Court rejected this approach.
"The CAA, however, demands that source subcategories take the bitter with the sweet. Section 7412 mandates, without ambiguity, that the EPA set the MACT floor at the level achieved by the best performing source, or the average of the best performing sources, in a subcategory. It thus follows that if the EPA includes a source in a subcategory, it must take into account that source’s emissions levels in setting the MACT floor."
Which brings me to my big take-away from this decision. Chevron lives. By my count, The Court cited Chevron 30 times. Chevron pervades the decision. Even in the one big issue that EPA lost, the Court’s decision was based not on a rejection of EPA’s interpretation of an ambiguous provision under step 2 of Chevron, but on a plain meaning interpretation of § 112. EPA defined what a source is, but it then refused to calculate MACT based upon the performance of all of the sources in a given subcategory. The statute simply did not allow EPA that leeway.
Other than EPA’s attempt to avoid taking “the bitter with the sweet”, however, the Court’s deference – by three Republican appointees – to EPA’s technical decisions was notable. Not every case is the Clean Power Plan. Where EPA is not really pushing the boundaries, I don’t see the Supreme Court weakening Chevron any time soon.
Posted on July 12, 2016
Events this year have made me wonder how important a corporation’s reputation is to its officers, customers and shareholders. One example is Exxon’s climate travails with the New York Attorney General and other state AGs along with their much publicized climate laced 2016 annual shareholder meeting in May.
In the Harvard Business Review on April 3, 2015, Allen Freed and Dave Ulrich stated “in recent years, investors have learned that defining the market value of a firm cannot just be based on finances. GAAP and FASB standards require financial reporting of earnings, cash flow, and profitability – all measures that investors have traditionally examined. But recently, these financial outcomes have been found to predict only about 50% of a firm’s market value.”
Their conclusion is bolstered by another Harvard Business Review article on April 28, 2010 when Ron Ashkenas said “nobody knows how much a reputation is really worth, although many would say that it’s priceless. The one thing we do know, however, is that once a reputation is tarnished, it takes a lot of hard work, and a long period of time, to regain its luster.”
The Telegraph in January, 2016 said that “the total value of corporate reputation for all UK-listed companies topped £1.7 trillion at the close of last year. The recent emissions scandal wiped some €20bn (£15bn) off the value of Volkswagen in the weeks following the revelations.” How much more loss will come from the June 28, 2016 Volkswagen AG’s $14.7 billion settlement with the U.S. government and consumers. Deputy Attorney General Sally Yates said the settlement is only a “significant first step” toward holding Volkswagen accountable for its actions. “Let me be clear: It is by no means the last step.” Civil lawsuits and criminal investigations are still pending.
Fortune Magazine March 1, 2016 in a story headlined “Bitter Sweets” said that “for a decade and a half, the big chocolate makers have promised to end child labor in their industry—and have spent tens of millions of dollars in the effort. But as of the latest estimate, 2.1 million West African children still do the dangerous and physically taxing work of harvesting cocoa. What will it take to fix the problem?”
The main company engaged in the cocoa industry is Nestlé. Fortune went on to state “the multinational chocolate makers are heavily dependent on West Africa. More than 70% of the world’s cocoa is grown in the region, and the vast majority of that supply comes from two countries: Ivory Coast and Ghana, which together produce 60% of the global total. The two nations have a combined GDP of around $73 billion, according to the World Bank—or significantly less than Nestlé’s $100 billion in sales last year. The price of cocoa surged 13% in 2015 even as prices for most raw materials were dropping. Meanwhile the average farmer in each country still lives well below the international poverty line.”
In its defense Nestlé’s website states “Nestlé opposes all forms of child exploitation. We are committed to preventing and eliminating child labour in our supply chain, working with stakeholders to develop and implement meaningful solutions. We conduct comprehensive monitoring, implement remediation activities and provide targeted support to local communities.”
How one gauges and/or measures reputation is uncertain, but eating prunes and driving an electric vehicle would seem like a good first step.
Posted on June 17, 2016
If you needed any further proof that energylaw is very complicated, Wednesday’s decision in North Dakota v. Heydinger should convince you. The judgment is simple – the 8th Circuit Court of Appeals struck down a Minnesota statute which provides in part that:
"no person shall . . . (2) import or commit to import from outside the state power from a new large energy facility that would contribute to statewide power sector carbon dioxide emissions; or (3) enter into a new long-term power purchase agreement that would increase statewide power sector carbon dioxide emissions."
Why, you ask?
- The panel opinion, by Judge Loken, stated that the Minnesota statute violates the dormant Commerce Clause, by regulating purely “extraterritorial” economic activity.
- Judge Murphy, in the first concurrence, disagreed with Judge Loken’s conclusion that the statute violates the dormant Commerce Clause, but joined the judgment, because she concluded that the statute is preempted by the Federal Power Act.
- Judge Colloton, in the second concurrence, agreed with Judge Murphy that the statute does not violate the dormant clause, but also concurred in the judgment. Judge Colloton concluded that, to the extent that the “statute bans wholesale sales of electric energy in interstate commerce,” it is preempted by the Federal Power Act. However, Judge Colloton wrote separately, because he at least partially disagrees with Judge Murphy (as well as with Judge Loken) and does not believe that the Minnesota statute constitutes a complete ban on wholesale sales of energy that increase CO2 emissions. However, Judge Colloton concluded that, to the extent that the statute is not preempted by the Federal Power Act, it is preempted by the Clean Air Act.
Is that sufficiently clear?
I do feel compelled to add two final notes. First, I don’t understand why Judge Loken wrote the panel opinion, when his rationale did not command a majority. Indeed, as Judge Colloton pointed out, the Court should not even have reached the constitutional issue, since a panel majority existed that was prepared to strike down the Minnesota statute on statutory grounds. (Preemption is considered a statutory, not a constitutional, rationale.)
Second, don’t analogize the electric energy transmission to the flow of water in a pipe, at least before Judge Murphy. Here’s your electricity and magnetism primer for the day, courtesy of the Judge.
"In the electricity transmission system, individual electrons do not actually “flow” in the same sense as water in a pipe. Rather, the electrons oscillate in place, and it is electric energy which is transmitted through the propagation of an electromagnetic wave.
Certainly brought me back to course 8.02 at MIT. Not one of my favorites.
Posted on May 23, 2016
On Tuesday, the Supreme Judicial Court of Massachusetts (SJC) ruled that MassDEP had violated the Global Warming Solutions Act by failing
"To promulgate regulations that address multiple sources or categories of sources of greenhouse gas emissions, impose a limit on emissions that may be released, limit the aggregate emissions released from each group of regulated sources or categories of sources, set emissions limits for each year, and set limits that decline on an annual basis."
The SJC gets the final word, so I won’t spend much time explaining why the SJC got it wrong, though I will note that to suggest that the legislature’s use of the phrase “desired level” of GHG emissions unambiguously requires MassDEP to establish hard targets was at best overenthusiastic.
The bigger question at this point is what the decision means. First, it’s clear that MassDEP must establish hard declining emissions limits for more than one, but less than all, categories of GHG emitting sources.
Second, MassDEP must promulgate regulations that limit total emissions – not emission rates.
Third, the regulations must truly control Massachusetts sources. The SJC specifically found that RGGI doesn’t satisfy the GWSA requirement, in part because Massachusetts sources can purchase allowances from out of state facilities.
But where does this leave MassDEP? In a deep hole, for sure. Unless it wants to ditch RGGI, it can’t regulate power generation, because the type of program that the SJC said is required would simply be incompatible with RGGI.
How about mobile sources? They are the largest growing source of GHG emissions. Unfortunately, we come back to the SJC’s injunction that MassDEP must regulate total emissions, not emission rates. You tell me how MassDEP is going to issue regulations setting a cap on mobile source emissions.
The only obvious candidates I see are buildings and industrial sources other than power generation.
I don’t envy MassDEP – and the nature of the task only emphasizes the extent of the SJC’s overreach here – but I said I wouldn’t get into that.
Posted on April 27, 2016
This week, the Federal Highway Administration issued a Noticed of Proposed Rulemaking to promulgate performance measures to be used in evaluating federal funding of transportation projects. The requirement for performance measures stems from the Moving Ahead for Progress in the 21st Century Act, aka MAP-21. MAP-21 requires the FHWA to establish performance standards in 12 categories, one of which is “on-road mobile source emissions.”
The NPRM addresses this criterion, focusing largely on emissions of criteria pollutants. However, buried in the 423-page NPRM is a six-page section labeled “Consideration of a Greenhouse Gas Emissions Measure.”
And thus the FHWA drops a bomb that could revolutionize federal funding of transportation projects. It’s important to note that this may not happen. If the next President is Republican, it certainly won’t. Even if the FHWA goes forward, there would be legal challenges to its authority to use GHG as part of the performance measures.
If it does go forward though, it really would be revolutionary. As the NPRM states, transportation sources are rapidly increasing as a source of GHG emissions:
GHG emissions from on-road sources represent approximately 23 percent of economy-wide GHGs, but have accounted for more than two-thirds of the net increase in total U.S. GHGs since 1990.
The enormity of both the challenges facing the FHWA in attempting to establish a performance measure for GHG emissions and the potential impact implementation of a GHG performance measure would have is reflected in some of the 13 questions that FHWA posed for comment:
- Should the measure be limited to emissions coming from the tailpipe, or should it consider emissions generated upstream in the life cycle of the vehicle operations?
- Should CO2 emissions performance be estimated based on gasoline and diesel fuel sales, system use (vehicle miles traveled), or other surrogates?
- Would a performance measure on CO2 emissions help to improve transparency and to realign incentives such that State DOTs and MPOs are better positioned to meet national climate change goals?
- How long would it take for transportation agencies to implement such a measure?
Welcome to the brave new world of integrated planning to manage GHG emissions in a critical sector of our economy.
Posted on April 26, 2016
Two legal rules frequently come into play in environmental tort cases that are difficult to reconcile: the rule allowing recovery for emotional distress damages without physical injury if someone is found to be in the “zone of danger,” and the rule not allowing recovery for mere fear of a future injury.
Normally, recovery for emotional distress (sometimes called mental anguish) requires the plaintiff to suffer some actual physical injury, however slight. But one exception allows someone who is in the “zone of danger” to recover despite the lack of any physical injury. Usually, the danger must be an immediate physical injury. For example, one case allowed recovery for emotional distress under a “zone of danger” theory for the driver at whom a gun was pointed, but not for the passenger in the same car. Another case allowed recovery to someone who had to escape his burning home, and then watched it burn to the ground, but not for someone who merely saw his house burning when he returned from work. Yet another case allowed recovery for floodwaters entering a home because the floodwaters were infested with snakes. Presumably, without the snakes, there could have been no recovery for emotional distress for the flood.
How does this “zone of danger” rule square with claims in environmental tort cases? Many courts do not allow recovery for a mere fear of an injury in the future, or so-called “cancerphobia” cases. Despite this rule, can one recover for emotional distress in, for example, an air pollution case, arguing that the plaintiff is in the “zone of danger” despite no present physical injury?
Plaintiffs in environmental tort cases, such as flooding, air pollution, and others, have indeed been asserting “zone of danger” theories to avoid the physical injury rule, and are asking juries to award them emotional distress or mental anguish damages. These claims must walk a fine line, since most courts do not allow recovery for mere fear of future injury. Where is that line drawn in an environmental tort case? For example, since presumably any amount of air pollution is bad for one’s lungs, is mere exposure to air pollution enough to recover for mental anguish for worrying about one’s self or one’s children? Or is this argument simply an end run around the ban on recovery for fear of future injury? Courts will have to draw lines in these environmental tort cases, and the lines they draw may not all be bright or easy to see.
Posted on April 18, 2016
As reported by Seth Jaffe in this space, a federal magistrate judge in Oregon has kept alive the dreams of a group of young plaintiffs—aided by environmental advocacy groups—to compel government action against climate change. Like a similar case brought by the same plaintiffs a few years ago in state court, discussed below, the federal case seeks a declaration that government inaction violates the public trust. But in the federal case, plaintiffs added claims that their constitutional rights to life, liberty and property also are being violated.
The judge denied the government’s motion to dismiss on the basis that the matter is a political question better left to Congress. Magistrate Judge Thomas M. Coffin reasoned that the pleadings were adequate on their face and that the substantive issues raised by the defendants should await motions for summary judgment or trial. Still, the judge gave hope to the plaintiffs, which, I think will be short lived. Climate change is simply too big, diffuse and complex an issue for the courts to try to fashion a remedy around.
This same group of plaintiffs has had mixed success in pursuing its objectives at the state level. In June 2014 I posted about the Oregon Court of Appeals reversing and remanding a trial court’s dismissal of a similar claim against the state. The appellate court concluded that the plaintiffs were entitled to a determination whether the atmosphere is a public trust resource and whether Oregon state government had breached its fiduciary responsibility by not adequately protecting it. On remand, Lane County Circuit Court Judge Karsten H. Rasmussen granted the state summary judgment and dismissed the suit with prejudice. The case is now again pending before the Court of Appeals.
In his 19-page opinion, Judge Rasmussen concluded that the public trust does not extend to the atmosphere. The contours of the public trust are a matter of state common law, and Oregon law ties the public trust to title and restraints on alienation. The court concluded that there could be no title in the atmosphere and therefore public trust fiduciary obligations do not exist. The court also noted that traditional public trust resources, such as submerged lands, are exhaustible, which under Oregon law confers a fiduciary responsibility on the state. While the atmosphere may be altered or even damaged, the court found that it is not exhaustible.
The court added the following thought, which I think will guide the U.S. District Court when it hears the current case:
The Plaintiffs effectively ask the Court to do away with the Legislature entirely on the issue of GHG emissions on the theory that the Legislature is not doing enough. If "not doing enough" were the standard for judicial action, individual judges would regularly be asked to substitute their individual judgment for the collective judgment of the Legislature, which strikes this Court as a singularly bad and undemocratic idea.
Watch this space for further developments in Oregon state and federal courts.
Posted on April 13, 2016
Late last week, Magistrate Judge Thomas Coffin concluded that the most recent public trust case, which seeks an injunction requiring the United States to take actions to reduce atmospheric CO2 concentrations to 350 parts per million by 2100, should not be dismissed.
The complaint here is similar to, but broader than, others of its ilk. As we noted previously, at least one federal court has already held that there is no public trust in the atmosphere. Perhaps in response to that case, the plaintiffs here appear to have focused their arguments on the government’s public trust responsibilities with respect to various waters of the United States, though the opinion does not make clear precisely what the complaint alleges to be the subject of the public trust obligation.
The plaintiffs not only allege that the United States has violated its public trust obligations, but that that violation in turn constitutes a violation of the plaintiffs’ substantive due process rights. Magistrate Judge Coffin takes pains to make clear that this is only about a motion to dismiss, but I still think he got it wrong.
Indeed, I think that Magistrate Judge Coffin ignored that well known latin maxim: “Oportet te quasi ludens loqui.” (Which is how the on-line translator I used translated “You must be joking.” I hereby disclaim any warranty that this is even close to correct.)
Call me old-fashioned, but I believe in judicial restraint. And that applies to everyone. Traditionally, conservatives have accused liberals of judicial activism. To my totally objective mind, in recent years at least, it is the conservative judges who could more fairly be called activist. For one case, at least, the shoe seems to be back on its original foot. I just cannot see this decision standing. The District Judge should reject Magistrate Judge Coffin’s Findings and Recommendation. If he or she doesn’t, this case is sufficiently novel and important to warrant interlocutory appeal, and the 9th Circuit should reverse. And if that doesn’t happen, it will be up to the eight (oops, I meant nine) members of the Supreme Court to get it right. One of them surely will.
Posted on March 10, 2016
The law is full of fine distinctions. Today’s example? A divided 10th Circuit panel affirmed dismissal of the Sierra Club’s citizen suit claims against Oklahoma Gas and Electric concerning alleged PSD violations at OG&E’s Muskogee plant because the Sierra Club did not sue within five years of the commencement of construction – even though Sierra Club did sue within five years of the completion of construction.
I have not seen any other cases present this issue so squarely. For the majority, the decision was relatively easy. Because the CAA has no limitations provisions, the default five-year limitations period set forth at 28 USC § 2462 applies. Section 2462 provides that suits must be brought “within five years from the date when the claim first accrued.” That “first accrued” language was Sierra Club’s downfall. The court decided that a claim “first accrues” when a plaintiff has a right to bring a claim. In the PSD context, that is when a defendant commences construction or modification without a permit. Because the Sierra Club did not file within five years after OG&E commenced construction, the complaint was late.
Not so fast, argued the dissent. As the dissent rightly noted, the CAA does not make commencing construction or modification without a required PSD permit a violation; it makes “the construction or modification of any source” without a permit a violation. Thus, the dissent argued, OG&E was still “constructing” its project without a permit during a period less than five years before Sierra Club brought suit and was still in violation, so the suit was timely.
I should note that, whether the dissent is correct or not, it did rightly distinguish two other cases, United States v. Midwest Generation and United States v. EME Homer City Generation, which have been cited in opposition to “continuing violation” theories. As the dissent emphasized, those cases concerned whether operation of the modified facility, after construction was complete, constituted continuing violations. The dissent agreed that post-construction operations cannot effectively toll the statute of limitations. However, that is a different question than whether continuing construction keeps the limitations period open. Indeed, the EME Homer City decision specifically contemplated the possibility that:
"the maximum daily fine accrues each day the owner or operator spends modifying or constructing the facility – from the beginning of construction to the end of construction."
That sounds like a basis for new claims accruing each day, thus triggering a new limitations period. I think that this case is a close question. However, as interested as the Supreme Court seems to be in the CAA these days, I don’t see it taking this case, and certainly not before there is a circuit split on the issue.
What is impossible to determine is what caused the Sierra Club to wait. Why take the chance? It does seem a self-inflicted wound either way.
(Very quickly, I’ll note that the majority also dismissed Sierra Club’s injunctive relief claims under the concurrent remedies doctrine. That’s an important issue, but not a difficult or interesting one, at least where the government is not a party.)
Posted on March 2, 2016
This is a reposting – the earlier post incorrectly omitted Prof. Jody Freeman’s name as a co-author. Richard Lazarus is also a co-author.
State Reactions to the Stay
Now that the Supreme Court has stayed the Clean Power Plan, States are in the process of deciding whether or not to proceed with implementation planning, and if so, at what pace to do so. The situation is still in flux. States like Pennsylvania, Virginia, Washington State, California, and most of the northeastern states that are part of the Regional Greenhouse Gas Initiative, have all said they will continue planning. Others, like Texas, Kentucky and West Virginia, have declared they will stop. EPA’s official count shows eighteen States as having halted efforts, with nine still deciding, and thirty still working: http://www.eenews.net/interactive/clean_power_plan#planning_status_chart. Even official statements from the States are somewhat misleading, however: some States that have announced a suspension of compliance planning, like New Jersey, are still sending officials to compliance meetings.
Still, there is a risk that, on net, momentum will slow, at least until the legal challenge to the CPP is resolved. That process could take more than two years.
Maintaining Momentum Through “No Regrets” Policies
During that time, anything that can be done to maintain momentum on CPP implementation and related policies that will promote clean energy (regardless of whether the rule eventually is upheld) should be supported, with a priority given to helping States pursue “no regrets” policies that will serve their interests whatever the outcome of the litigation. There are a variety of things States and utilities can do now to address shorter term Clean Air Act obligations, such as regional haze, National Ambient Air Quality Standards, or cross-state air pollution, that also would set them up nicely for CPP compliance should the rule be upheld.
Implications of Justice Scalia’s death
The D.C. Circuit will hear argument on the CPP in June 2016, and is expected to rule on the merits expeditiously, likely by fall of 2016. The panel is viewed as more favorable toward EPA than not, although certainly not a sure thing: Judge Rogers is seen as the most sympathetic to EPA, Judge Srinivasan is seen as at least open to the government’s arguments, while Judge Henderson is seen as hostile to the rule.
If this panel were to uphold the rule, and the Supreme Court were to remain without a confirmed ninth Justice, it is possible that the Supreme Court could split 4-4, which would normally result in an order affirming the lower court decision. However, there is also a chance that if there were a 4-4 split in a case of this importance and one that would decide the issue once and for all, the Chief Justice would not be content to issue such an order and would instead hold the case over for re-hearing once a ninth Justice is confirmed. If that ninth Justice were appointed by a new Democratic president, the rule’s prospects of being upheld likely would increase; if appointed by a new Republican president, prospects could be the same as they would have been with Justice Scalia on the court. That would require Justice Kennedy, the likely swing vote, to be persuaded by the government to vote to uphold the rule.
There is another interesting wrinkle: the D.C. Circuit panel could change. Judge Srinivasan has been identified as a potential Supreme Court nominee. If he were nominated, he would likely withdraw from pending cases not yet argued in order to prepare for (theoretical) hearings. But then, of course, a new judge would be lotteried in to fill his place, perhaps changing the balance of the panel. One might think this risk worth taking, since Judge Srinivasan in theory would wind up on the Supreme Court, where he might cast the deciding vote in this (and many other) cases. Yet even if Judge Srinivasan were confirmed, he would be recused from the CPP case because of his earlier participation on the D.C. Circuit panel that denied the stay, so the Court would remain at eight Justices for purposes of this case. Again, this would leave the prospect of a 4-4 tie affirming the decision below (and perhaps affirming a decision to strike down the rule).
Next Steps and Timing of Litigation
Whatever the composition of the D.C. Circuit panel, however, and whatever it decides, the losing parties might seek en banc review in the D.C. Circuit. The State and industry challengers would be almost certain to do so, because delay favors their side. This is because the Supreme Court took the unusual step of staying the rule not just until the D.C. Circuit rules on the merits, but for longer: until the Supreme Court either denies certiorari or grants review and decides the case. Delay means the Stay remains in force, which means the deadline for filing compliance plans keeps being pushed off, which means momentum slows, which favors those opposed to the CPP. En banc review is rarely granted, however, and the D.C. Circuit may be reluctant to further delay things by providing it when the Supreme Court has already associated itself with the case (by granting the Stay and making it all but certain review will be granted).
What all of this means is that the earliest the Supreme Court could decide the case--given the time necessary for the cert petition, briefing, argument and deliberation--is likely to be June 2017, and the latest the Court is likely to decide the case is June 2018. That means the Stay could remain in place for more than two years.
The fate of the CPP is clearly in the hands of the Supreme Court, which, with an open seat, is clearly in the hands of the President--and most likely the next president.
Implications for a New Administration
If the Court ultimately upholds the rule, a new president could still withdraw it and replace it with something else, or choose to implement it as-is. A new president might even bargain with a new Congress over suspending the rule in exchange for a more comprehensive economy-wide approach to greenhouse gas regulation, whether a carbon tax or a cap-and-trade approach, or something else. And if the Court, newly constituted, strikes down the Clean Power Plan, a new president would have to decide on Plan B.
EPA has thus far been mum about possible Plan Bs, but obvious options include a narrower interpretation of “best system” that would regulate power plants within the so-called "fence-line" only, relying exclusively on what the rule refers to as "building block 1.” EPA might be able to set a fairly stringent standard based on this building block alone, although doing so might, ironically, leave utilities far less flexibility to use alternative means of compliance than they would have using the agency’s current approach. EPA might also examine the Clean Air Act for other provisions capable of regulating existing power plant emissions, such as section 115, or even set a NAAQS for greenhouse gases--options that have been discussed before and rejected by the agency, but which could always be revisited.
Posted on February 12, 2016
The Supreme Court's unexplained stay of the clean power plan was "one of the most environmentally harmful judicial actions of all time," writes Michael Gerrard of Columbia Law School in a recent, excellent blog. Rather than venting outrage, Gerrard quickly moves on to explain that the Clean Power Plan isn’t the only way to cut carbon pollution.
Ramping up efforts like fuel efficiency standards for cars and trucks, and building efficiency standards, he notes, will also help reduce carbon pollution. Gerrard mentions a couple of points about agriculture, but often, this sector is overlooked when it comes to climate solutions. It’s worth taking a closer look at some of the opportunities to reduce climate pollution from our food system.
Food waste is the second largest component of most landfills. As it rots, it releases methane, a potent greenhouse gas. A recent report by the UN Conference on Trade and Development estimates that 2 percent to 4 percent of all manmade climate pollution arises simply from food rotting in landfills.
Keeping food waste out of landfills can help reduce methane pollution. Massachusetts, California, Connecticut, Rhode Island, Vermont, and some cities have enacted laws to manage organic waste disposal in landfills. The idea is to create incentives to reduce food waste and divert it to other purposes, such as animal feed or composting. Instead of being thrown away and becoming a source of pollution, this “waste” can be put to good use. Landfill gas collection systems can be further incentivized. And the nascent effort to reduce food waste from businesses and households can be significantly ramped up.
Another major source of greenhouse gases is the over application of fertilizer. Excess nitrogen fertilizer causes two big problems. The first is water pollution. Nitrogen that isn’t taken up by crops runs off farms and enters larger waterways, where it stimulates the growth of algae and creates “dead zones” deprived of oxygen. The second, and less frequently discussed issue, is the volatilization of nitrogen into nitrous oxide, a greenhouse gas about 300 times more potent than CO2. The IPCC estimates that 12 percent of all non-CO2 greenhouse gas emissions come from synthetic fertilizer application.
A number of techniques can reduce these emissions while also providing a cost benefit to farmers. Farm policies could encourage practices like cover cropping, which reduces the need for fertilizer by making soils more rich and fertile. Crop rotations can do the same, yet current crop insurance programs actually discourage the use of these practices. Precision application technologies for fertilizers are getting ever better, but their uptake on farms is slow.
Manure from animals, and the "enteric emissions" from cattle (more commonly thought of as belching) are two more significant sources of climate pollution. Enteric fermentation alone may account for as much as 40 percent of all non-CO2 greenhouse gas emissions, according to the IPCC. Changes in diet might help with these emissions, but this is an area that needs more research.
Some of the emissions from manure can be captured if manure lagoons were covered and better managed. As it stands, these pits are only slightly regulated and are major sources of water pollution sources as well as odor nuisances. An even better practice is to raise cows on rotating pastures, where their waste can enhance soils and help store carbon. And, of course, if Americans did shift to a diet lower in red meat, as per the recommendation of the Dietary Guidelines Advisory Committee, we could further reduce climate pollution from cattle.
Agriculture is one of our nation's most important economic sectors, and is especially vulnerable to the extreme weather impacts of climate change. Its product -- food -- is critical not only for our economy, but is an integral and uniquely personal part of our everyday lives. When we think about how to address climate change, it makes sense to think about food and agriculture. The food we choose to produce, and how we produce it, use it, and dispose of it, all have an impact on climate pollution—and therefore have the potential to become climate solutions.
Posted on February 11, 2016
I am a terrible predictor of what cases the Supreme Court will hear and what the Court will decide on those matters it chooses to hear. For example, I wrongly predicted that the Supreme Court would never consider reviewing the D.C. Circuit’s decisions in cases involving other recent EPA regulations, but the Supreme Court chose to hear those cases, which led to its decisions in Utility Air Regulatory Group v. EPA and Michigan v. EPA. And if asked to guess whether the Court would issue a stay of EPA’s Clean Power Plan under section 111(d) of the Clean Air Act, I might well have said that the odds were greatly against that happening – despite the merits of the arguments being raised by those seeking the stay.
Perhaps, though, my poor predictive abilities are the result of my looking at each case in isolation instead of looking at them in combination and considering whether the Supreme Court’s February 9, 2016 stay decision is an outgrowth of the combined knowledge gained by the Court in its recent reviews of those other Clean Air Act cases. Specifically, as pointed out by State Petitioners in their briefs in support of a stay of the Clean Power Plan (see here and here,) EPA has touted its Plan as being one that will completely transform the way energy is created and delivered in this country even though – argued State Petitioners – the plain statutory language (of Clean Air Act section 111(d)) does not authorize such Agency action, and the approach of the Clean Power Plan is at odds with EPA’s 45-year history of implementing section 111(d). Maybe such claims struck a chord with the Court, which – in UARG – told EPA that the Agency cannot make “decisions of vast ‘economic and political significance’” under a long-extant statute, like the Clean Air Act, without “clear congressional authorization.”
And then there was Michigan, where the Court determined that EPA had proceeded unlawfully in adopting another extensive and expensive Clean Air Act regulatory program. State Petitioners in the Clean Power Plan litigation made sure that the Court was aware that by the time the Court issued its decision in Michigan – a case where the underlying rule was not stayed during the pendency of litigation – the affected parties had spent billions of dollars to meet the terms of the underlying, un-stayed rule. In other words, justice delayed in Michigan was justice denied.
None of this is to say what the Court will or will not do if and when it reviews arguments on the lawfulness of the Clean Power Plan. I make no predictions on that. But I believe the Court acted appropriately in calling for the completion of litigation before requiring affected parties to make the massive, unprecedented, costly, and transformative changes to the energy industry that the Clean Power Plan demands.
Posted on February 10, 2016
Yesterday, the Supreme Court stayed EPA’s Clean Power Plan rule. No matter how much EPA and DOJ proclaim that this says nothing about the ultimate results on the merits, the CPP is on very shaky ground at this point.
Everyone, supporters and opponents alike (and yours truly), thought that there was no possibility that the Court would grant a stay. And it is precisely because a Supreme Court stay of a rule pending judicial review is such an “extraordinary” – to use DOJ’s own word – form of relief that one has to conclude that five justices have decided that the rule must go.
This isn’t just a preliminary injunction; it’s a preliminary injunction on steroids. First, everyone seems to acknowledge that it’s unprecedented for the Supreme Court to stay a rule pending judicial review. Second, the standards in DOJ’s own brief make pretty clear that a stay will only issue if the Court is pretty convinced on the merits. Finally, it’s worth noting that the Court implied that it does not even trust the Court of Appeals, because the stay will remain in force, even if the D.C. Circuit affirms the rule. The stay will only terminate either: (1) if the Court of Appeals upholds the CPP and the Supreme Court denies certiorari or (2) if the order is upheld and the Supreme Court also upholds it.
Back to the drawing board for EPA. Perhaps § 115 of the Clean Air provides a way out!
Posted on February 1, 2016
New York participates in the cap-and-trade system operated by 9 northeastern and mid-atlantic states known as the Regional Greenhouse Gas Initiative that limits carbon dioxide (CO2) emissions from fossil-fuel burning power plants. These plants must purchase allowances at auction for each ton of CO2 they emit. An efficient gas-fired plant that produces 225 MWs of electricity emits approximately 1.2 million tons of CO2 a year.
During the adoption process for New York’s final RGGI rule in 2008, power generators predicted serious adverse consequences. These included increased electricity costs for consumers, added operating costs for generators who would never recoup all CO2 allowance costs from the sale of electricity, and concerns about longer term energy transactions due to the uncertainty of allowance prices.
In comments on a draft RGGI rule, generators requested the State to establish a price cap of $0.75 on the cost of a CO2 allowance to protect consumers from significant price increases and a sunset provision in the event a federal cap-and-trade program were established. The generators also expressed concern about the lack of available control technology for CO2 emissions.
Fast forward: at the last allowance auction in December 2015, the cost of a CO2 allowance was $7.50. New York generators purchased almost 6 million allowances reaping revenue of more than $44 million for the New York RGGI fund. At the previous auction in September, almost 10 million allowances were purchased at a cost of $59 million. Despite these high allowance costs, the lights are still on in New York. According to data published by the New York State Energy Research and Development Authority, updated as of January 16, the monthly average retail prices of electricity in the residential, commercial and industrial sectors have decreased between 2008 and 2015, attributable to the success of energy conservation and efficiency programs, the availability of more renewable energy, and the low price of natural gas and oil.
CO2 emissions from the power sector have decreased by more than 40% in the RGGI states since 2009 due to reductions in the regional CO2 cap. New York has been a significant contributor to those reductions. Revenue from the program of over $1 billion has been invested by the RGGI states in energy conservation and efficiency efforts, clean and renewable energy, direct bill assistance to households and greenhouse gas abatement. Importantly, RGGI also has the potential to assist states in meeting the CO2 reduction goals in EPA’s Climate Action Plan.
However, a report issued on January 20, 2016 by Synapse Energy Economics and the Sierra Club, entitled The RGGI Opportunity, states that RGGI's current requirements are not enough to get the RGGI states to their climate goals in 2030 and beyond (40% reduction in carbon pollution from 1990 levels) and it encourages more energy efficiency programs, increased levels of wind and solar projects, and adding 10 million battery electric vehicles, all of which will result in job creation.
The RGGI program has been a clear revenue and greenhouse gas reduction success, but there is potential in New York for RGGI funds to be diverted to the general fund. This last occurred in 2015 when the legislature approved a budget that moved $41 million of RGGI revenue to the general fund to be used for other environmental programs. Environmentalists considered this action a threat to the program. Since RGGI was adopted by executive action, not by statute as was the case in the other RGGI states, the environmentalists’ view is that RGGI funds can only be used for program purposes. The 2015 transfer of RGGI funds to the general fund could subject the program to challenge as a tax on electricity levied without the legislature’s approval. In contrast, the State’s 2016 budget does not include a raid on RGGI funds.
Would similar cap-and-trade programs work as well in other regions of the country? Yes, but the political will to establish such programs will depend in part on a region’s fuel mix. Since coal-fired power plants emit almost twice as much CO2 as gas-fired plants, the allowance costs for coal plants will be higher, thereby increasing the cost of the electricity they produce and making such facilities less competitive in regions that also have more efficient facilities. That said, if the programs’ revenues are pumped into energy conservation and efficiency programs, consumers could use and pay for less electricity.
Posted on January 28, 2016
Our friend Seth Jaffe wrote a very interesting blog on January 20, “Does the Paris Agreement Provide EPA With Authority Under the CAA to Impose Economy-Wide GHG Controls? Count Me Skeptical.” It took issue with a paper that I co-authored with several other colleagues in academia in which we argue that Section 115 of the Clean Air Act provides the EPA with broad authority to implement a multi-state, multi-source, multi-gas regulatory system to reduce greenhouse gases.
The blog post agreed with our paper that it would be great if Section 115 provided this authority because it means EPA could implement an efficient, flexible, cross-sectoral approach to reducing greenhouse gases (GHGs).
However, Seth questioned our conclusion that Section 115 provides such authority because, in his view, courts are likely to conclude the “reciprocity” requirement in Section 115 could not be satisfied by the nonbinding emissions reduction commitments countries made in the Intended Nationally Determined Contributions (INDCs) they submitted for the Paris agreement concluded at the United Nations climate conference in December. In the words of blog post, “I think most judges would interpret the word ‘reciprocity’ in a statute to mean something that is legally-binding; otherwise, it doesn’t mean anything.” For several reasons, we disagree.
First, a reviewing court does not need to interpret what the word “reciprocity” means in Section 115, because Congress has explicitly defined it. Reciprocity is the title of Section 115(c), which provides:
"This section shall apply only to a foreign country which the Administrator determines has given the United States essentially the same rights with respect to the prevention or control of air pollution occurring in that country as is given that country by this section."
The only right given to a foreign country by Section 115 is a provision in Section 115(b) that states a foreign country affected by air pollution originating in the U.S. “shall be invited to appear at any public hearing” associated with the revision of a relevant portion of the state implementation plan to address the pollutant. In short, Section 115 specifies that reciprocity means the foreign countries in question need to have given the U.S. “essentially the same rights” as are given by Section 115, and the only right provided in Section 115 is the procedural right to appear at a hearing.
Understanding the legislative history helps explain why the focus of the reciprocity requirement is on a procedural right. As we explain in detail in the paper, Section 115 was a procedural provision when it was first enacted in 1965: if pollution from the U.S. was endangering other countries, the other countries had a right to participate in abatement conferences where potential responses would be discussed, not a right to insist on actual emission reductions. Although Congress amended the provision in the 1977 Clean Air Amendments to replace the abatement conference with federal and state action through the Section 110 state implementation plan process, the reciprocity language in Section 115(c) was not changed, leaving it with its procedural test.
Second, we note in our paper that the Paris agreement contains a new set of procedures through which countries that join the agreement will be able to review and provide input on each other’s respective emissions reductions plans. To the extent a court might conclude that such procedural rights must be "legally binding," then the Paris agreement satisfies that test because although the emission reduction targets themselves that were submitted in the INDCs will not be legally enforceable by other countries, the procedural elements of the Paris agreement will be binding international law.
We note in the paper that although Paris provides a strong basis to satisfy Section 115 reciprocity, that reciprocity could also be satisfied by other international arrangements that the United States has with a variety of countries, particularly Mexico and Canada, the EU, and China.
Third, the blog post does not engage the issue of procedural reciprocity; rather it focuses on a substantive view of reciprocity (i.e. that reciprocity requires that other countries are actually reducing emissions of GHGs) and asserts that substantive reciprocity requirement could not be met by the internationally non-binding commitments made in the INDCs. Although we believe that the correct reading of Section 115 is that it only requires procedural reciprocity, we recognize that a court could conclude that Section 115 also implicitly includes a substantive reciprocity requirement. In the first instance, we noted that this requirement might be met by the international law principle sic utere tuo ut alienum non laedus, which directs nations to avoid causing significant injuries to the environment of other nations, most recently explained in the International Court of Justice’s Pulp Mills case.
The author skips over this element to focus his skepticism that the reciprocity requirement could be satisfied by non-binding commitments in the INDCs. But actually the U.S. and other countries have made reciprocally non-binding commitments in their INDCs. That is, the U.S. has made an international political commitment to reduce emissions a certain amount, and has received essentially the same rights in the non-binding international commitments from other countries to reduce emissions.
Someone could argue that the U.S. INDC may be non-binding, but Section 115 is domestic law in the U.S. and substantive reciprocity cannot exist unless other countries also have domestic laws requiring emission reductions. If this is the test, however, it can also be met. In fact, the INDCs submitted by other countries identified the binding domestic laws through which the INDCs would be implemented. We did not focus on this aspect in our paper, but some examples are: (1) the United States identified the Clean Air Act and other laws and regulations “relevant to implementation” of the U.S. commitment; (2) China identified the measures that had been incorporated into domestic law and regulation through previous five-year plans, and outlined a variety of policies and strategies that would be incorporated into subsequent five-year plans to implement their emissions commitment; and (3) the EU noted that the necessary legislation to implement its target was being introduced to the EU parliament in 2015 and 2016. Therefore, if “legally binding” domestic laws are required to find reciprocity under Section 115, EPA could reasonably examine the legally binding provisions in other countries’ domestic systems to find that reciprocity.
To summarize, our view is that Section 115 likely requires only procedural reciprocity. If a court concluded Section 115 required substantive reciprocity, then EPA could reasonably find that requirement met through the reciprocal political commitments that the U.S. and other countries made in Paris as well as through the binding domestic laws and regulations in the U.S. and other countries that will implement the commitments.
We look forward to further dialog on this topic, which we think is an important part of unlocking this powerful, untapped tool that the EPA possesses to design an efficient and flexible system to reduce GHGs.
Posted on January 20, 2016
In a very interesting article, Michael Burger of the Sabin Center and his co-authors suggest that, following the Paris climate agreement, § 115 of the Clean Air Act provides authority for EPA to develop economy-wide GHG emissions reduction regulations that would be more comprehensive and efficient than EPA’s current industry-specific approach. And what, you may ask, is § 115? Even the most dedicated “airhead” has probably never worked with it.
Section 115 provides that, where EPA determines that emissions from the US are endangering public health or welfare in a foreign country, it may require SIP revisions sufficient to eliminate the endangerment – but only so long as there is “reciprocity”, i.e., the foreign country:
"has given the United States essentially the same rights with respect to the prevention or control of air pollution occurring in that country as is given that country by this section."
I love the idea. An economy-wide regime would be much more efficient. I wish that the argument made sense to me, but it does not.
The authors state that a global treaty could provide reciprocity, but then argue that “less binding commitments, including political commitments, should also suffice.” Thus, they conclude, the “Intended Nationally Determined Contributions”, or INDCs, which are the basis of the Paris Agreement, can provide reciprocity. Can you say “ipse dixit“?
They provide no precedent for this, because, as they acknowledge, § 115 has never been used. EPA started to use it once, and the authors provide two letters from then-Administrator Costle, suggesting that legally binding reciprocity is not required. However, EPA dropped the plan and the two letters were not finally agency action and were never subject to judicial review. Otherwise, the arguments simply seems to be that EPA can cloak itself in Chevron deference and that that is the end of the story.
Sorry, I don’t buy it. We’re talking about the law here. I think most judges would interpret the word “reciprocity” in a statute to mean something that is legally-binding; otherwise, it doesn’t mean anything. I don’t think it’s even a close enough question that Chevron deference will get EPA over the finish line.
The illogic of the authors’ argument seems to me to be demonstrated by their own words, when they argue reciprocity can’t mean a legally binding agreement, because that would mean that the foreign nations would be able to go to court to ensure that the US also meets its commitments under the Paris agreement, and the US would never allow that. But that’s precisely the point! Because there is no treaty, and the US would not let other nations try to enforce the US commitments under Paris, we cannot enforce theirs, and there is no reciprocity.
I wish it were otherwise.
Posted on January 8, 2016
The Wisconsin Department of Natural Resources (WDNR) is finalizing guidance documents which will simplify how air permit applicants demonstrate that their emissions do not cause or contribute to exceedances of the PM2.5 National Ambient Air Quality Standards (NAAQS). This guidance is based upon a technical analysis showing that direct emissions of PM2.5 from most stationary sources do not meaningfully contribute to ambient concentrations of PM2.5. Building on this conclusion, WDNR will no longer require air dispersion modeling to be performed for PM2.5 when issuing most air permits. This novel state approach to PM2.5 regulation should adopted by other jurisdictions.
As EPA shifts its focus to regulating smaller forms of PM, the chemistry associated with these smaller pollutants has added to the complication of regulation. With respect to PM2.5, it is a pollutant emitted directly by certain emission sources (e.g., combustion processes) and is also formed secondarily in the atmosphere by the chemical interaction of precursor pollutants (NOx, SO2, ammonia). To date, states have generally implemented air permitting policies that simplify these complications. For example, states may assume that a percentage of a source’s PM10emissions consist of PM2.5 or that direct emissions of PM2.5 have the potential to significantly contribute to ambient concentrations of PM2.5. These generalities and assumptions have presented problems for stationary sources, especially when performing the air dispersion modeling attendant to receiving an air permit.
Recognizing these problems, WDNR undertook its own technical analysis which concludes that dispersion modeling of direct PM2.5emissions does not provide information useful for understanding the impact of those emissions on ambient air quality. WDNR found that direct, industrial stationary source PM2.5 emissions do not correlate with the ambient concentrations of PM2.5 in the atmosphere around a stationary source. Rather, PM2.5 exhibits characteristics more like a regional pollutant influenced by the emissions from numerous sources dispersed throughout a broad geographic region. Using this premise, WDNR will be restricting the circumstances when PM2.5 air dispersion modeling will be required when issuing air permits and the instance where sources will be subjected to PM2.5 emission limitations.
In this draft guidance, WDNR proposes to no longer require estimating PM2.5 emissions from fugitive dust sources, mechanical handling systems, grain handling operations or other low temperature PM sources. Rather, PM2.5 emission estimates will only be required for combustion and high temperature industrial processes that directly emit significant amounts of PM2.5. For these high temperature sources, WDNR will use a “weight of evidence” approach to conclude that direct emissions of PM2.5 do not cause or exacerbate a violation of the PM2.5 NAAQS or increments in ambient air. This will greatly simplify the manner in which air permit applicants must calculate PM2.5 emissions from a project, significantly limit the circumstances in which PM2.5 modeling must be performed as part of a permit application and restrict the instances in which PM2.5 emission limitations must be included in air permits.
Posted on December 9, 2015
I have never understood why 43 states – including the great Commonwealth of Massachusetts – have independent elected attorneys general. I’m sure my new colleague, former Massachusetts Attorney General Martha Coakley, would disagree with me, but I just don’t think that the value of having an AG independent of the Governor is worth the lack of policy consistency. Exhibit A to my argument is the current dispute in Colorado between Governor John Hickenlooper and Attorney General Cynthia Coffman concerning EPA’s Clean Power Plan. What’s the problem?
Hickenlooper supports the CPP; Coffman opposes it. Indeed, Coffman does not just oppose it; on behalf of the State of Colorado, she’s joined the litigation seeking to stop the rule. Excuse me, but shouldn’t the Governor speak for the citizens of Colorado on such matters? Absent some kind of conflict of interest requiring independent counsel, the Governor has to be the boss. I’m sure most citizens see it that way; it would be nice if reality mirrored perception.
I’d assume that the Colorado Governor has authority to retain separate counsel – and I hope my friends in Colorado will tell me if I’m wrong. I’d love to see Governor Hickenlooper retain his own counsel and intervene in the litigation on the side of EPA. What would the Court do if Colorado appeared on both sides of the V?
Posted on October 23, 2015
So the Clean Power Plan has been published in the Federal Register. For those who cannot get enough, you can find all of the important materials, including EPA’s Technical Support Documents, on EPA’s web site for the CPP.
Not surprisingly, given the number of suits brought before the CPP was even finalized, opponents were literally lining up at the courthouse steps to be the first to sue. West Virginia apparently won the race and is the named plaintiff in the main petition filed so far.
Perhaps because Oklahoma has been one of the most persistent, and vocal, opponents of the CPP, this called to mind the origin of the Sooner State’s nickname – which seems particularly apt, since Oklahoma was one of the states that couldn’t wait for the rule to be promulgated to sue.
Oklahoma is not actually among the plaintiffs in the West Virginia suit. Oklahoma filed its own petition today. One wonders whether Oklahoma was banished from playing with the other states as a result of its impatience. Unlikely, since most of those in the West Virginia suit also filed early, but it did call to mind that other famous event in the history of the west, as recorded in Blazing Saddles.
Posted on October 14, 2015
Many organizations have announced voluntary greenhouse gas emission reduction goals by which they aim to reduce their emissions of greenhouse gases despite the absence of any legal requirement to do so. Meeting these goals implicates the concept of additionality when the goals are to be met, in part, through off-site actions, such as the purchase of carbon offsets, retirement of renewable energy credits, or construction of off-site renewable energy projects. The concept of additionality seems simple: in principle, emission reductions attributable to an organization’s actions should only be recognized or “counted” if such reductions are more than what would have been achieved absent the action. Applying the concept of additionality in the real-world, however, is complicated. Perhaps unnecessarily so?
First, the “proof” of additionality required by many of the certifying bodies can be confusing and conflicting. For the faint of heart, the concern about proof discourages any action other than the purchase of “certified” paper offsets. A second, confounding problem results from the greening of the grid itself. Emissions have been falling for many organizations simply because the electricity they procure from the grid is becoming less carbon intensive. How to square these emission reductions with the concept of additionality leads one to question how the concept of additionality should be applied to voluntary emission reduction goals.
In the context of regulated organizations, the idea of additionality makes sense. Organizations that must comply with a regulatory scheme to reduce their emissions of greenhouse gases should not be allowed to claim credit for off-site actions if such actions do not, in fact, lower emissions beyond what they would have been absent the organization’s actions. No organization (regulated or unregulated) wants to waste money paying for off-site actions that do not in fact lower emissions. Establishing that a particular organization’s action will, in fact, lower emissions more than would have occurred absent that organization’s action turns out to be much more difficult than it at first appears given the multiplicity of variables that come into play: who else might be inclined to take the same action? When? For what reason? Is the action occurring in an area governed by a renewable portfolio standard or not? Many different criteria are used by regulatory agencies and voluntary verification programs. Three examples are helpful.
The California Air Resources Board treats emission reductions as “additional” if they exceed what would be required by law or regulation and if they exceed what would “otherwise occur in a conservative business-as-usual scenario.” 17 CCR § 95802(a)(4). The American College & University Presidents' Climate Commitment (“ACUPCC”) replaces “conservative business-as-usual” with “reasonable and realistic business-as-usual.” The Verified Carbon Standard adds a requirement that the reductions are additional only if they would not have occurred “but for” the offsite organization’s investment. These different definitions have real consequences for the types of offset projects (i.e., emission reductions) qualifying as “additional.” Energy efficiency projects at a school in an economically disadvantaged city might count as additional under ACUPCC’s definition because the schools are unlikely to undertake the energy efficiency measures themselves. In contrast, such measures are unlikely to count as additional under the Verified Carbon Standard definition because the schools would save money from the efficiency measures if undertaken by themselves.
For unsophisticated organizations with limited resources, using the most conservative criteria for additionality that have been developed by other parties, whether regulatory agencies or voluntary verification programs, makes sense – emission reductions are assured and at minimal transactional cost to the organization. For more sophisticated organizations with resources to experiment and innovate, strict adherence to conservative additionality criteria can be counterproductive. Many large municipalities, large research universities and corporations have the in-house capacity to invest in bold and innovative experiments and to assess whether a given project or investment is in fact reducing emissions. Organizations such as these could use their in-house talent and money to develop creative, bold, innovative and novel projects that could reduce emissions, but will they do so if such projects might fail a strict additionality test? At a university, such projects have the added benefit of complementing the core mission to teach, research, and demonstrate ideas that others beyond the university could leverage. Should an organization abstain from pursuing such projects simply because they would fail a strict additionality test, which the organization is not legally obligated to apply? Should we re-think the circumstances in which strict observance with additionality is necessary to avoid a public relations nightmare (i.e. being accused of not really meeting the voluntary goal)?
The application of additionality in the context of voluntary goals is also complicated by the fact that the electric grid itself is becoming greener. Most organizations include in their greenhouse gas emission calculation the emissions resulting from their electricity consumption. Many organizations first announced their voluntary emission reduction goals five to ten years ago when few predicted that the electric grid would become significantly greener so fast. Here in Massachusetts, largely because of the increased use of natural gas, the electric grid now emits 20% less carbon dioxide per MWh consumed than it did ten years ago. That means that an organization in Massachusetts that has not taken any action designed to reduce its emissions will nevertheless have lowered its emissions by consuming electricity from the local grid. Crediting such emission reductions towards a voluntary goal is in tension with the concept of additionality because the reductions occurred without the need for the organization to take any action designed to reduce its emissions.
Hence, the greening of the grid should cause an organization to re-think the nature of its voluntary emission reduction goal: is the goal simply an accounting objective that can be met by actions external to the organization, such as the greening of the grid by electric utilities, or is it a a bigger, perhaps even moral, commitment to undertake a minimum level of effort to reduce emissions in addition to those resulting from the greening of the grid? If the former, an organization committed to a voluntary goal can celebrate that the utilities have made its commitment cheaper to attain. If the latter, perhaps an organization should make its goal even more stringent to avoid taking credit for emission reductions achieved by others. Is this second approach more consistent with the concept of additionality? Should we applaud an organization that is not required by law to make any emission reductions but that purchases some carbon offsets and declares it has accomplished its voluntary goal of emission reductions? Should we applaud an organization that designs, invests in or otherwise makes an effort to create a project that actually achieves emission reductions even though it is possible that someone somewhere might also have the same idea and be willing to make the same investment?
I do not pretend to have the answers to these questions. But, I do know that many organizations that have set voluntary goals are grappling with these questions now, and others will face them in the future. I welcome your comments.