Posted on April 18, 2014
Appalling environmental conditions that have accompanied China’s rapid growth have been described on Chinese social media as “postapocalyptic,” “terrifying,” and “beyond belief.” During the last year, air pollution in several Chinese cities became so horrendous at times that road travel, schools, construction projects, and airports temporarily were shut down. Epidemiologists estimate that 1.2 million Chinese die prematurely each year from exposure to air pollution. Due to widespread water pollution, tap water is not safe to drink, even in luxury hotels. Pollution is estimated to cost the Chinese economy more than 3.5% of gross domestic product annually.
Rising public demand to clean up the environment has caught the attention of China’s Communist Party leadership. In an address at the opening of the annual session of the National People’s Congress (NPC) last month, Chinese Premier Li Keqiang declared “war on pollution.” Chinese authorities agree that enforcement is the number one problem with their environmental laws. Bie Tao, Deputy Director General of Policies and Regulations of MEP, cited estimates that half of all regulated facilities in China violate the law and that pollution in China would be 70% less than it currently is if polluters were in full compliance with the law.
Problems with enforcement of China’s environmental laws run deep. China’s regulatory system is highly decentralized with the nation’s Ministry of Environmental Protection (MEP) less than a fiftieth the size of the U.S. EPA for a country with more than three times as many people than the U.S. Enforcement problems are compounded by local corruption, small penalties for violations, the lack of an independent judiciary and the absence of a long tradition of respect for the rule of law.
As Chinese authorities struggle to increase the enforceability of their environmental laws, two ACOEL members were given an unusual opportunity last month to peak into a window on the NPC’s legislative processes. On March 19, James A. Holtkamp and I were invited to appear before the Legislative Affairs Commission of the NPC’s Standing Committee in Beijing along with David Pettit, a senior attorney with the Los Angeles office of the Natural Resources Defense Council (NRDC). Billed as a “Green Dialogue,” the event was an extraordinary effort to obtain U.S. expert input to help resolve disagreements within the NPC on proposed amendments to make China’s basic Environmental Protection Law more enforceable.
Representatives of the NPC’s Standing Committee and MEP presented us with six sets of questions concerning U.S. enforcement procedures and policies. Many were directed at understanding how penalties for environmental violations are determined in the U.S. A proposal to provide that maximum fines for environmental violations in China be calculated in part based on the number of days the violation has occurred was one issue that had created disagreement within the NPC. We noted that this has become a fundamental principle of U.S. pollution control law and that it provides a powerful incentive for violators promptly to stop and correct violations. We emphasized the importance of monitoring and reporting requirements in environmental permits. We also suggested that China should consider adopting a policy that enforcement actions should recoup at least the economic benefit of the violation to ensure that companies do not profit from their violations. This has been EPA’s long-standing policy and there appears to be some interest in adopting such a policy in China.
Chinese authorities are moving toward requiring greater transparency from polluters. Beginning on January 1, 2014, they mandated that China’s 15,000 largest companies provide the public with continuous data concerning their air and water emissions, something that would have been unthinkable just a few short years ago. By opening up a “Green Dialogue” on U.S. enforcement practices, China’s legislators are exhibiting a healthy appetite for entertaining new ideas to improve the effectiveness of their environmental laws. Our U.S. expert panel consisting of an industry practitioner, a public interest lawyer, and an academic apparently proved to be a persuasive coalition for we have learned that many of our recommendations are being incorporated into the new draft of China’s basic Environmental Law.
Posted on April 14, 2014
Last week, in response to shareholder requests that it disclose information regarding how climate change might affect it in the future, ExxonMobil released two reports, one titled Energy and Climate, and one titled Energy and Carbon – Managing the Risks. They actually make fascinating reading and seem to represent a new tack by ExxonMobil in its battle with those seeking aggressive action on climate change.
The reports do not deny the reality of climate change. Indeed, the reports acknowledge climate change, acknowledge the need for both mitigation and adaptation, acknowledge a need to reduce fossil fuel use (at some point), acknowledge the need to set a price on carbon, and acknowledge that ExxonMobil in fact already is making future planning decisions utilizing an internal “proxy” price on carbon that is as high as $80/ton of CO2 in the future.
The reaction of the shareholder activists who pushed for the disclosures? They are not happy. Why not?
Because ExxonMobil has said explicitly that it doesn’t believe that there will be sufficient worldwide pressure – meaning government regulations imposing very high carbon prices – to reduce fossil fuel use sufficiently quickly enough to limit global temperature rise to 2 degrees Celsius. It also does not believe that worldwide carbon regulation will leave it with any “stranded assets.”
I understand the moral case against fossil fuel use. Personally, however, I’d rather rely on a carbon price that provides the appropriate incentives to get the reductions in CO2 emissions that we need to mitigate climate change. On that score, sadly, it’s not obvious to me at this point that ExxonMobil’s analysis of likely outcomes is actually wrong.
My biggest complaint with the reports is the refusal to recognize that markets react dynamically to new regulatory requirements. The history of big regulatory programs is that they pretty much always cost less than the predictions made before the regulations are implemented. The lesson then is that the current projections of energy cost increases resulting from a high cost of carbon are likely to be overestimated.
Time will tell. At least I hope so.
Posted on March 31, 2014
Quarles & Brady recently represented Wisconsin Energy Corporation and Wisconsin Electric Power Company (doing business as "We Energies") in the construction and commencement of operation of a $250 million biomass-fueled co-generation plant. The project is located at Domtar Corporation's paper mill facility in Rothschild, Wisconsin. Wood, waste wood and sawdust are now being be used to produce 50 megawatts of electricity. The new co-generation project also supports Domtar's sustainable papermaking operations.
The new facility adds another technology to We Energies' renewable energy portfolio. That portfolio includes the 145 megawatt (MW) Blue Sky Green Field Wind Energy Center in Fond du Lac County and the 162 MW Glacier Hills Wind Park in Columbia County. Under Wisconsin law, utilities must use renewable energy to meet 10 percent of the electricity needs of their retail customers by the year 2015. With the start of commercial operation of the Rothschild biomass plant, We Energies estimates that it now has secured enough renewable energy to remain in compliance with the state mandate through 2022. Together, We Energies' three renewable energy operations are capable of delivering nearly 360 MW of renewable energy, enough to supply approximately 120,000 homes.
The Rothschild biomass project created approximately 400 construction jobs and 150 permanent jobs in the surrounding community. This includes independent wood suppliers and haulers from northern and central Wisconsin who are now securing waste wood for the project. We Energies appeared in proceedings before the Public Service Commission of Wisconsin in support of the Company's application for a Certificate of Authority for approval for the biomass plant. The Company filed an application for an air permit and other environmental approvals for the project, including the preparation of environmental assessments in support of the regulatory decisions.
The air permit for the project was issued on March 28, 2011. We Energies obtained one of the first PSD BACT (Prevention of Significant Deterioration - Best Available Control Technology) determinations for this project for Greenhouse Gas (GHG) emissions in the U.S. under EPA's GHG Tailoring Rule. The Company worked with the Wisconsin Department of Natural Resources (DNR) in developing a novel case-by-case Maximum Available Control Technology (MACT) determination for the biomass boiler under the Section 112 (hazardous air pollutant) provisions of the federal Clean Air Act. The permit was challenged by several environmental groups. The Company prevailed in the permit appeal process. The appeal was dismissed on the merits by the Marathon County Circuit Court in October, 2011. The facility started commercial operation on November 8, 2013.
Posted on February 13, 2014
A former federal district judge was fond of telling his law clerks that Fifth Circuit Court of Appeals opinions were like the Old Testament. “You can find something there to support about any proposition you want.” The January 31, 2014 release of the State Department’s Final Supplemental Environmental Impact Statement for the Keystone XL Pipeline Project brought Judge Roberts’ words to mind.
The Keystone XL Pipeline Project backers tout the report’s conclusion that because the Canadian tar sands oil will be developed with or without the construction of the pipeline, it will not “significantly exacerbate the effects of carbon pollution” (to use the President’s avowed standards for pipeline permit approval). On the other hand, pipeline opponents point to the fact the report does not specifically address the project’s greenhouse gas emissions. Both are valid points, but the gist of the report appears to be the project has finally cleared its environmental hurdle.
That said, other hurdles remain. While this long-awaited environmental impact statement is an important step in the process, it is just that, a step. Ultimately, the final decision on the pipeline permit will involve something more akin to the common standard for law firm attorney compensation, the so-called “all factors considered” standard. In this instance, that decision will involve economic and national and international political concerns, as well as how the project affects U.S. and international climate policy.
With the issuance of the report, the 90-day interagency consultation period begins. Once EPA, and the Departments of Energy, Defense, Transportation, Justice, Interior, Commerce, and Homeland Security weigh in, the Secretary of State will at some point make to President Obama a permit recommendation. The President, of course, has the final say.
Stay tuned; the project appears to have cleared another hurdle, but the five year and counting race is far from over.
Posted on February 11, 2014
Last week, EPA released its second external review draft of an updated Policy Assessment on the national ambient air quality standard for ozone. It also released updated draft risk and exposure assessments. To no one’s surprise, the new drafts confirm support for lowering the ozone NAAQS from 75 ppb to a range of 60 ppb to 70 ppb.
Why is this not a surprise? Because, as I noted some time ago, the prior draft policy assessment also supported a NAAQS in the range of 60 ppb to 70 ppb. Moreover, the Clean Air Science Advisory Committee weighed in on the prior draft, supporting a standard in the 60 ppb to 70 ppb range. In fact, before getting cold feet, CASAC had indicated that the data would support a standard below 60 ppb.
Courts’ deference to CASAC determinations on these issues is pretty well established. It seems clear that EPA has to lower the NAAQS to at most 70 ppb in order to survive judicial review. It’s not even obvious that 70 ppb would stick, though that will be clearer after CASAC has reviewed this most recent draft Policy Assessment.
The other significant question is when EPA will actually issue the new standard. After all, EPA was prepared to issue a new standard in 2011 or early 2012, when the White House put the proverbial kibosh on EPA’s plans. Will EPA somehow manage to delay issuance of the new standard until after the November elections? Now that the Super Bowl is over, I think that the Vegas bookies are putting their money on after.
Posted on December 30, 2013
On the eve of the December 10, 2013 oral argument before the U.S. Supreme Court in the litigation involving the Cross State Air Pollution Rule, nine Northeast states – Connecticut Delaware, Maryland, Massachusetts, New Hampshire, New York, Pennsylvania, Rhode Island and Vermont (Petitioners) – filed with EPA a petition under Section 176A of the Clean Air Act. Section 176A, a product of the 1990 Clean Air Act Amendments, allows EPA to establish, by rule, a transport region whenever the Administrator has reason to believe that the interstate transport of pollutants from one or more states contributes significantly to a violation of a NAAQS in another state or states.
Petitioners’ Section 176A petition seeks to expand the Northeast Ozone Transport Region (OTR) to include the states of Illinois, Indiana, Kentucky, Michigan, North Carolina, Ohio, Tennessee, Virginia and West Virginia. To review a copy of the petition click here. It alleges that the targeted upwind states have failed to fulfill all Clean Air Act requirements because their air pollution control programs do not require the installation of controls as stringent as required by the OTR and because air pollution from the upwind states is transported into the OTR, thus contributing to violations of the 2008 National Ambient Air Quality Standard for ozone within the OTR states. The Petitioners hope that the petition, if granted, will subject the targeted states to more stringent requirements in the form of revised State Implementation Plans for VOC and NOx emissions, including but not limited to additional requirements for enhanced Inspection and Maintenance of mobile sources, nonattainment New Source Review, and Reasonably Available Control Technology. Those opposed to Petitioners’ action question the technical basis for the petition, noting that it relies so heavily on data published no more recently than 2005. The Administrator of USEPA has 18 months to approve or disapprove of the petition.
The December 2013 Section 176A petition is the latest in a series of actions under the Clean Air Act to address interstate transport issues related to ozone in the Northeast. Many will recall that similar petitions were filed under Section 126 of the Clean Air Act in the late 1990’s even as USEPA was developing the NOx SIP Call. That rulemaking was followed by the Clean Air Interstate Rule and then by the Cross State Air Pollution Rule.
The Cross State Air Pollution Rule, which was struck down by the Court of Appeals for the District of Columbia in August of 2012, sought to address transport concerns by imposing additional pollution control requirements on coal fired power plants in the eastern half of the country. The Court of Appeals held that USEPA didn’t give states enough time to devise their own emissions reduction plans and did not limit the fix to each state’s “significant contribution” to the overall problem. It is that rule that is currently before the U.S. Supreme Court and is the subject of a recent article written by Andrea Field. To review a copy of that article click here.
Posted on December 13, 2013
December 10, 2013 was a banner day in Clean Air Act jurisprudence. On that date, the Supreme Court – which has heard only 19 environmental law cases in the past decade – set aside 90 minutes for argument concerning EPA’s Cross-State Air Pollution Rule (CSAPR). And at virtually the same time, just a short distance away, the D.C. Circuit was hearing challenges to major portions of EPA’s Mercury and Air Toxic Standards (MATS) Rule. If you were unable to attend either argument but want to know more about the arguments than you can learn from the press reports, then this “Advice from Air Act Andy” column is for you.
Question: Based on questions asked by the Justices in the CSAPR argument, the press is predicting that the Supreme Court is going to reverse the D.C. Circuit’s vacatur and remand of CSAPR. What do you think?
Air Act Andy: I learned years ago (in an earlier case involving interstate transport of pollution under the Clean Air Act) that it is unwise (and ultimately embarrassing) to predict what a court will do based on the questions asked at oral argument. That is particularly true of the December 10, 2013 CSAPR argument in the Supreme Court, where the vast majority of the Justices’ questions focused on what role costs should or may play in the drafting of a rule designed to address the interstate transport of air pollution. Admittedly, many of the Justices seemed to be on the same costs-can-play-a-role-in-this-kind-of-rulemaking band wagon; however, the cost issue was not a key part of the D.C. Circuit’s decision. (Indeed, some would say it wasn’t an issue at all in the D.C. Circuit.) Because the Court spent so much time on the cost issue and asked so few questions about the other bases for the D.C. Circuit’s vacatur of CSAPR, it would be foolhardy to predict what the Court will decide on those other crucial issues (including the so-called FIP/SIP issue and over-control issue).
Question: Was the CSAPR argument chocked full of analogies?
Air Act Andy: Indeed, it was. Malcolm Stewart (counsel for the government and apparently a basketball player) used a slew of basketball analogies to describe the concept of “significant contribution.” There were also charitable giving analogies, a pin-the-tail on the donkey analogy (from Justice Scalia), a shooting-and-stabbing the victim analogy (from Chief Justice Roberts), and an extended cow and sheep grazing analogy (from Justice Breyer).
Question: Did the Court take an exercise break in the midst of argument?
Air Act Andy: Yes. After Mr. Stewart’s argument, Chief Justice Roberts announced a “30 second break” during which several of the Justices stood up and did a limited round of Musical Chairs, but without removing any chairs.
Question: Did a lawyer from Texas admit to being an agnostic?
Air Act Andy: Kind of. On the issue of the role that costs should play in interstate transport rules, Texas’s Solicitor General said that the states “are remaining agnostic.”
Question: It has been my experience that the D.C. Circuit initially imposes strict time limits on oral advocates, but it then routinely lets those presenting argument take extra time to address issues of interest to the court. In the MATS case, the court gave the advocates much more time than usual to present their arguments. In exchange for giving advocates more time up front, did the court insist that advocates sit down when the red light went on?
Air Act Andy: That is not how it played out. Chief Judge Garland (who sat on the panel along with Judge Rogers and Judge Kavanaugh), told counsel at the outset that the court would keep to the pre-allotted two hours designated for all 12 arguing attorneys, but – in fact – the MATS argument lasted three hours. The panel peppered petitioners’ counsel and EPA’s counsel with questions, digging into several technical arguments with a fine-toothed comb of the record. Not one petitioners’ counsel had any time left for rebuttal.
Question: I heard that the courtroom had an explosive feel. Is that true?
Air Act Andy: Ah, perhaps you are referring to the moment when Judge Garland’s heavy binder of materials crashed to the floor near the beginning of EPA counsel’s remarks during the first of three phases of the argument. Unflappable as always, though, Judge Garland just told counsel to “Go ahead.” “Don’t mind us,” Judge Kavanaugh added.
Question: What is the appropriate dress for the Supreme Court?
Air Act Andy: I am so glad you asked this question. Based on what I saw people wearing on December 10, I would have said that “appropriate dress” is wearing anything that is black, charcoal gray, or navy blue. Having returned to the Court the next day to hear a colleague of mine argue a case, though, I must now amend my answer. When I arrived at the Court on December 11, wearing a long stylish gray cardigan sweater instead of a suit jacket, I was stopped by guards and politely told I would not be allowed to sit in the section reserved for members of the Supreme Court Bar unless I replaced my fashionable sweater with a suit jacket. Someone from the clerk’s office then graciously provided me with a nice-fitting ladies suit jacket with a label indicating that the jacket was from the “Lady Executive Signature Collection.” This is something Air Act Andy will keep in mind for the next visit to the Supreme Court – which will likely be in February 2014, when the Court is scheduled to hear argument on EPA’s greenhouse gas rules.
Posted on December 5, 2013
For the first time, the Office of Management and Budget ("OMB") is soliciting public comment on the Social Cost of Carbon ("SCC"). The SCC is a series of published values that represent the monetary impacts of marginal reductions in carbon emissions reductions, which are to be used by federal agencies when conducting cost-benefit analysis for rulemaking activities.
First published in 2010, the SCC is prepared by an interagency working group and is based upon three different integrated assessment models that project the economic impacts of climate change. The 2010 document setting for the SCC called for periodic review and update of the SCC as the science and economic understanding of climate change improves over time. The SCC values were updated in November of 2013 and have been increased to reflect improvements in the underlying integrated assessment models, including incorporation of the projected costs of sea level rise. Although OMB guidance directs that regulatory cost-benefit analyses should normally focus upon domestic costs and benefits, the SCC is a measure of the global benefits that are projected to result from marginal reductions in GHG emissions. The interagency working group concluded that the use of a global measure for carbon was appropriate because greenhouse gas emissions create a global externality, and the United States cannot resolve the projected impacts of climate change acting alone.
OMB is seeking public comment on the technical support document that explains how the SCC is set and specifically requests comment on (i) the selection of the integrated assessment models, (ii) how the distribution of SCC estimates should be used in regulatory impact analyses, and (iii) the strengths and limitations of the overall approach. The SCC is likely to be increasingly important as EPA proceeds with rulemaking activities to regulate greenhouse gas emissions from various sources. In fact, EPA employs the SCC in the regulatory impact analysis for the currently-pending proposal for New Source Performance Standards for power plants. The public comment period on the SCC runs through January 27, 2014.
Posted on December 3, 2013
On November 21, 2013 the Delaware Supreme Court issued a final ruling on an appeal closing out a long saga of litigation over the scientific evidence proffered in support claims of birth defects among children born to workers in the semiconductor manufacturing industry. In Tumlinson v. Advanced Micro Devices, the Supreme Court affirmed the trial court’s decision to exclude the plaintiffs’ key medical causation expert on Daubert grounds and thus dismissed one of the lead cases advancing the theory that working in so-called “clean rooms,” used for semiconductor wafer manufacturing, is unhealthy and can lead to birth defects in the offspring of such workers.
Wendolyn Tumlinson, one of the two adult plaintiffs, had worked at an AMD manufacturing site in San Antonio, Texas and her son was born with several birth defects, including anal atresia and stenosis, neurogenic bladder, renal agenesis/hypoplasia, imperforate anus and colo-vesicular fistula. The other adult plaintiff was married to Anthony Ontiveros who had worked at an AMD semiconductor manufacturing site in Austin, Texas and her daughter was born with several birth defects, including pulmonic stenosis, congenital pulmonary valve atresia, ventricular septal defect, right pulmonary hypoplasia, lower limb reduction defects, and situs inversus with dextrocardia. Each mother claimed that the exposures to chemicals in clean rooms were the cause of their child’s birth defects.
Plaintiffs filed their complaint on July 11, 2008 and for the next two years the parties engaged in discovery and motion practice. In December 2010, AMD moved to exclude the expert opinion of the plaintiffs’ expert, Dr. Linda Frazier, claiming it was unreliable and not relevant under Delaware Rule of Evidence 702. In April 2011, the trial court held a four-day Daubert-type evidentiary hearing to evaluate the admissibility of Dr. Frazier’s testimony and concluded that because her methodology was inadequate to establish causation under Texas substantive law (including the Texas’ courts’ interpretation of Daubert), it accordingly failed to satisfy Delaware procedural law and was excluded. As a result of the exclusion, judgment was entered for defendant AMD.
On appeal, the Delaware Supreme Court (there is no intermediate appellate court in Delaware), first remanded the case to the trial court with direction to determine the reliability of Dr. Frazier’s opinion under Delaware (as opposed to Texas) law. This time the trial court evaluated the reliability of Dr. Frazier’s testimony under the US Supreme Court’s decision in Daubert v. Merrell Dow Pharmaceuticals case principles as interpreted under Delaware law, and found Dr. Frazier’s opinion failed to meet that standard.
The Delaware Supreme Court then evaluated the trial court’s second decision and affirmed its conclusion. It focused on, among other things, Dr. Frazier’s failure to base her opinion on studies that were specific to (1) the clean room chemicals the parents were exposed to, and (2) the specific birth defect outcomes the plaintiff children suffered from. It also found that neither Dr. Frazier’s methodology for evaluating the medical literature, nor her conclusions, were peer reviewed or had appeared in any peer reviewed journals. It rejected an argument by plaintiffs that an affidavit submitted by other experts retained by the plaintiffs that “endorsed” Dr. Frazier’s opinion sufficed as a peer review. Further, the Court was critical of the expert’s opinion because it was not consistent with her research and writing outside of the pure litigation context.
As a result of this decision, the Tumlinson case is likely over (the deadline for the plaintiffs to seek en banc review by the Delaware Supreme Court is December 2, 2013). The decision may have a significant impact on the multiple other, nearly identical cases pending in Delaware against most of the major semiconductor manufacturers, as well as similar cases pending in many other state court jurisdictions.
Posted on October 4, 2013
EPA is still working the kinks out of its New Source Performance Standards (NSPS) for the Oil and Natural Gas Sector, i.e., 40 C.F.R. 60 Subpart OOOO, referred to by many as the “Oil and Gas NSPS” and by some as simply “Quad O”. EPA first published the proposed Oil and Gas NSPS on August 23, 2011, in conjunction with proposed revisions to three other air regulations affecting various segments of oil and natural gas operations. The proposal prompted more than 150,000 public comments and kindled a national discussion on emissions at natural gas well sites. The final Oil and Gas NSPS rule was published in August 2012. Although the rule is most famous for establishing the first federal air standards for hydraulically-fractured natural gas wells, the rule also set significant volatile organic compound (VOC) standards for “storage vessels” used by the oil and natural gas industries.
Several stakeholders responded to the August 2012 rulemaking by filing petitions for administrative reconsideration of the Oil and Gas NSPS. On April 12, 2013, EPA published a notice granting reconsideration for a number of issues and proposing revisions to the storage vessel standards, in particular. Evidently, EPA significantly underestimated the number of storage vessels coming online in the field when it developed the August 2012 final rule, which required individual storage tanks with VOC emissions of 6 tons or more per year to achieve at least 95% reduction in VOC emissions. Tanks are commonly used at natural gas well sites, for example, to store condensate, crude oil, and produced water. In light of an updated tank estimate, EPA recognized that additional time would be needed for manufacturers to produce a sufficient number of VOC control devices.
Most recently, on September 23, 2013, EPA published final revisions to the storage vessel requirements in the 2012 Oil and Gas NSPS. Per the revised rule, which was immediately effective, an individual tank may be considered an affected facility if its construction, modification or reconstruction commenced after August 23, 2011; it has potential VOC emissions of 6 tons or more per year; and it contains crude oil, condensate, intermediate hydrocarbon liquids, or produced water. EPA made a number of important adjustments in the revised rule, chief among them an extension of the compliance date to give tank owners and operators more time to purchase and install controls. For the so-called “Group 1” storage vessels (which were constructed, modified or reconstructed between the August 2011 original proposal and the April 2013 proposal), the deadline to control VOC emissions is now April 15, 2015. For “Group 2” storage vessels (i.e., vessels that come online after April 12, 2013), the compliance deadline is April 15, 2014. Notably, pursuant to the revised Oil and Gas NSPS, operators only have until October 15, 2013 to estimate potential VOC emissions of Group 1 storage vessels for purposes of determining whether the rule applies.
Meanwhile, the agency is continuing to evaluate other issues raised in the reconsideration petitions that were submitted in response to the August 2012 rulemaking. EPA has stated in the past that it intends to address the remaining issues by the end of 2014.
Posted on September 27, 2013
Last spring, my colleague Robby Sanoff complained on our firm’s blog about the problem resulting from appellate courts’ refusal to give appropriate discretion to district judges in performing their gatekeeping function under Daubert. As Robby put it:
"The difference between “shaky but admissible” and unreliable and inadmissible evidence would seem to be entirely in the eye of the beholder."
Robby will not be pleased by last’s week’s decision by the 11th Circuit Court of Appeals in United States v. Alabama Power, reversing a district court order excluding EPA’s expert testimony in support of its NSR enforcement action against Alabama Power. The Court majority performed an extensive review of the testimony provided in the Daubert hearing below, and concluded that the district court’s decision was clearly erroneous. (For those of you concerned with the merits of these cases, the question was whether EPA’s model, which clearly applied to determinations of emissions increases for baseload plants, could be applied as well to cycling plants generally and the plants at issue in the case in particular.)
The case is particularly interesting because Judge Hodges, taking Robby’s view, dissented. As Judge Hodges noted, prior to the Supreme Court decision in General Electric v. Joiner, appellate courts did not grant significant discretion to district courts in exclusion rulings. However, Joiner made clear that the abuse of discretion standard applies even in outcome-determinative exclusion rulings.
Next, Judge Hodges noted that, in Daubert rulings, there should be a “heavy thumb – really a thumb and a finger or two – that is put on the district court’s side of the scale.” He then rehearsed the actual statistics on Daubert reversals in the 11th Circuit: 3 reversals out of 54 cases.
Finally, Judge Hodges conducted a brief review of evidence tending to support the district court’s conclusion and determined that its decision was not “a clear error in judgment.” Concluding that a different result might be appropriate if review were de novo, Judge Hodges quoted Daubert itself:
"We recognize that, in practice, a gatekeeping role for the judge, no matter how flexible, inevitably on occasion will prevent the jury from learning of authentic insights and innovations. That, nevertheless, is the balance that is struck by Rules of Evidence designed not for the exhaustive search for cosmic understanding but for the particularized resolution of legal disputes."
Decisions such as this have to be discouraging to district court judges, as Robby noted. It’s worth pointing at that Judge Hodges is actually a district court judge, sitting on the court of appeals by designation. It seems fitting that the district judge on the panel would be the judge vainly trying to protect the discretion of district judges in Daubert matters.
Posted on August 28, 2013
A recent post from Mary Ellen Ternes characterized the August 23, 2013 decision in EME Homer City Generation as another blow to EPA’s ability to enforce against long ago violations of the requirement to obtain New Source Review.
The Third Circuit’s decision certainly is a blow to EPA’s NSR enforcement initiative, but not nearly a knock-out.
First, the decision depended on the fact that neither the Clean Air Act or Pennsylvania’s EPA-enforceable State Implementation Plan expressly requires a major source to operate in compliance with the results of a New Source Review. But some states do have that requirement in their EPA-enforceable SIPs, as the Third Circuit recognized in distinguishing other cases. In such states, major sources that did not go through NSR as allegedly required at the time of construction or modification should still anticipate potential EPA enforcement via the SIP.
Second, even where it is not illegal to operate in compliance with NSR, the question is still open whether the government may obtain injunctive relief anyway. In United States v. United States Steel Company (N.D. Indiana), the Court held on August 21, 2013 that no penalties could be imposed at law because there is no federally enforceable requirement in Indiana to operate in accordance with the results of an NSR. Yet the Court went on to hold that the United States still can seek injunctive relief against a plant that allegedly violated the NSR requirement. The Court reasoned that because the sovereign is not subject to laches, the government remains able to invoke the Court’s equitable powers and to seek an injunction to correct the violation.
On to the Seventh Circuit?
Posted on August 27, 2013
Followers of this Blog will not be at all surprised with the Third Circuit’s August 22, 2013 ruling denying EPA’s requested CAA New Source Review enforcement relief against former and current owners of the grandfathered and allegedly subsequently modified power plant that has been called “one of the largest air pollution sources in the nation.” Former and current owners of such aging power plants caught in EPA’s NSR national enforcement initiative are reassured with the Third Circuit’s finding that text of the Clean Air Act does not authorize injunctive relief for wholly past PSD violations, even if that violation causes ongoing harm.
Having lost its battle for the Cross-State Air Pollution Rule (CSAPR, or the Transport Rule) in August 2012, EPA was dealt another blow with United States v. EME Homer City Generation, in which the Third Circuit upheld the District Court’s 2011 dismissal of the government’s claims.
In 2011, the District Court for the Western District of Pennsylvania agreed with the current and former owners of the power plant that EPA had no authority to hold either party liable for alleged PSD violations arising from purported modifications to their grandfathered power plant. In reaching defendants’ bases for dismissal, the District Court reviewed the permit actions approved by air permitting authorities in 1991, 1994, 1995 and 1996, which EPA alleged with Notices of Violation in 2008 (against the current owner) and 2010 (against current and former owners), to have triggered PSD, and which caused the current Title V permit to be incomplete. The Court’s holding that the PSD violations constituted singular, separate failures by the former owner rather than ongoing failures meant that EPA was outside the five year statute of limitations, allowing no civil penalties against the former and current owners. Moreover, the District Court held EPA was left with no injunctive relief against the current owner because they were in no position to apply for a PSD permit prior to their acquisition of the plant in 1998, and thus could not have violated PSD.
The District Court separately addressed EPA’s claims of injunctive relief against the former owner, recognizing the ongoing higher SO2 emissions that occurred without the benefit of an historic PSD permit. The District Court was unwilling to reach a broad conclusion regarding its authority to award injunctive relief under the PSD program, but given that the former owners no longer owned or operated the plant, and therefore no longer violate PSD, held that there was no plausible basis for granting the rare and extraordinary remedy of injunctive relief, despite the higher emissions occurring the absence of BACT, which the court characterized as a present consequence of a one-time violation.
Upon review, the Third Circuit rejected EPA’s arguments that the current owners violated PSD by operating the plant without BACT with a simple, “no,” pursuant to the plain text of 42 USC 7475(a) which references merely “construction” and “modification,” not “operation, ” relying on U.S. v. Midwest Generation and Sierra Club v. Otter Tail Power Co., adopting the positions of the Seventh and Eighth Circuits that “even though the preconstruction permitting process may establish obligations which continue to govern a facility’s operation after construction, that does not necessarily mean that such parameters are enforceable independent of the permitting process,” and thoroughly refuting EPA’s arguments that PSD could somehow result in ongoing operational requirements outside the PSD permitting process.
Likewise, the Third Circuit rejected EPA’s proposed injunctive relief, which would have required the former owners to install BACT or purchase emission credits and retire them, affirming the District Court’s decision on narrower grounds. Specifically, the Third Circuit held that the text of the Clean Air Act does not authorize an injunction against former owners and operators for a wholly past PSD violation, even if that violation causes ongoing harm.
Hopefully, this Third Circuit decision, along with the Seventh and Eighth Circuit decisions relied upon therein, will signal a substantive end to EPA’s NSR/PSD Enforcement Initiative for similarly situated historic grandfathered power plants and their former and current owners. But, we may have to wait out EPA’s hard headed circuit by circuit enforcement approach. See e.g., EPA’s December 21, 2013 enforcement memorandum, “Applicability of the Summit Decision to EPA Title V and NSR Source Determinations,” following the Sixth Circuit’s Summit Petroleum Corp. v. EPA et al.
Posted on August 5, 2013
Enforcement with a Flair
EPA has seen the smoke.
This certainly is no joke.
Benzene is a neighborhood scare,
With upsets going to the flare.
On July 10, the Department of Justice and EPA announced the lodging of a consent decree with Shell Oil Company to resolve alleged Clean Air Act violations at Shell’s refinery and chemical plant in Deer Park Texas. This agreement represents the fourth “refinery flare consent decree” in the past year. More are expected.
Shell will spend $115 million to control emissions from flares and other processes, and will pay a $2.6 million civil penalty. EPA alleged that Shell was improperly operating its flaring devices resulting in excessive emissions of benzene and other hazardous air pollutants. Shell will spend $100 million to reduce flare emissions.
These flare consent decrees represent a new chapter in EPA’s national Petroleum Refinery Initiative (“PRI”), which, beginning in 2000, resulted in the entry of 31 settlements covering 107 refineries in 32 states, affecting 90% of the domestic refining capacity. EPA did address refinery flares as one of the marquee issues in PRI consent decrees – compliance with the New Source Performance Standards (“NSPS”) for Petroleum Refineries.
EPA is now pushing the envelope to impose “regulatory requirements plus.” Through an enforcement alert in August of last year, EPA warned industry that there were significant issues with flare efficiency and excessive emissions. EPA Enforcement Alert: EPA Enforcement Targets Flaring Efficiency Violations.
What is EPA doing? What is the basis of this Petroleum Refinery Initiative 2.0 and the imposition of “regulatory requirements plus”?
EPA bases this new initiative on the “general duty” requirements. NSPS requires that at all times owners and operators should operate and maintain a facility or source consistent with “good air pollution control practices.” In addition, Section 112r of the CAA requires owners and operators to maintain a safe facility by taking such steps as are necessary to prevent releases of hazardous air pollutants (“HAP”), and to minimize the consequences of accidental releases which do occur. Accordingly, with no threshold amount, any release of a listed HAP (e.g. benzene) that could have been prevented violates this general duty. If a flare smokes, there must be a violation.
This general duty is used to require control measures that go beyond those specified in the regulations. The consent decrees include conditions addressing flare combustion efficiency limits incorporating automated controls with complex and expensive monitoring systems, flaring caps for individual flares and the overall refinery, and flare gas recovery systems for individual flares.
The enforcement train has left the station. Who will be next in line? How much will the ticket cost? Are there rulemaking or other actions that may be taken to slowdown or stop the train? Flares are not unique to petroleum refineries and petrochemical plants (e.g. flaring in oil and gas production facilities). Will EPA provide other industries the opportunity to go for a train ride?
Posted on July 31, 2013
On Friday, July 19, the Court of Appeals for the 10th Circuit, in Oklahoma v. EPA, affirmed EPA’s rejection of Oklahoma’s state implementation plan setting forth its determination of the Best Available Retrofit Technology, or BART, to address regional haze. The Court also affirmed EPA’s promulgation of a federal implementation plan in place of the Oklahoma SIP. While rehearsing the Clean Air Act’s “cooperative federalism” approach, the Court seemed more focused on deference to EPA’s technical assessment of the SIP than on any obligation by EPA to cooperate with states.
"Given that the statute mandates that the EPA must ensure SIPs comply with the statute, we fail to see how the EPA would be without the authority to review BART determinations for compliance with the guidelines.
While the legislative history may evidence an intent to prevent the EPA from directly making those BART decisions, it does not necessarily evidence an intent to deprive the EPA of any authority to ensure that these BART decisions comply with the statute."
Judge Kelly dissented. As he noted, while the courts normally grant deference to EPA’s decisions, such deference is appropriately limited where “EPA rejected Oklahoma’s evidentiary support with no clear evidence of its own to support its contrary conclusion.” Judge Kelly also noted that, even in a statute relying substantially on state implementation, the amount of power given to the states to implement the regional haze program is particularly evident.
I don’t know whether Oklahoma will seeking rehearing en banc. (It’s difficult to imagine that the Supreme Court would be interested in hearing this case.) I do know that cooperation is in the eye of the beholder.
Posted on July 10, 2013
In April of 2013 the Arkansas legislature put an end to the ad hoc policy of implementing the NAAQS through stationary source permitting based upon source specific NAAQS modeling. The Arkansas legislature did not need a crystal ball to predict the chaos that was about to occur when the new NAAQS (PM2.5, one hour SO2 and one hour NO2) were swept into the existing Arkansas regulatory program. Arkansas’ environmental agency, the Arkansas Department of Environmental Quality (ADEQ) has relied upon its stationary source permitting program to implement the NAAQS for years, as opposed to relying upon state implementation plan (SIP) development. ADEQ has required every permit applicant to submit air dispersion modeling, and thereby demonstrate that the source will not cause a NAAQS violation. By comparison, EPA generally requires only PSD permit applicants to submit NAAQS dispersion modeling, and requires the states to otherwise address NAAQS compliance through their SIPs.
When Arkansas’ SIP permit procedures were last updated in 2000, minor (non-Title V) sources, and “minor modifications” at major sources were not required to undertake NAAQS modeling. Arkansas’ policies regarding NAAQS modeling were generally in sync with the Clean Air Act and most other states. Over the ensuing years regulatory creep expanded Arkansas’ NAAQS modeling program to the point that nearly every stationary source permit application was involved. ADEQ permit engineers required NAAQS dispersion modeling for minor sources, for minor mods at major sources, and then for any permit renewal—even no change renewals, “just to make sure that the source is still OK.” For example, a facility that had operated in full permit compliance for decades, without any modifications, could face permit renewal problems for no reason other than background conditions or recent meteorological data changed the NAAQS modeling results. Suffice to say this development was unpopular, making permitting expensive, time consuming, and uncertain.
The uncertainty was predicted to become chaos in September of 2012 when ADEQ proposed to drop the new NAAQS into its existing SIP. ADEQ’s “plan” was that the new NAAQS would also be implemented through stationary source permitting, including ADEQ’s expansive NAAQS modeling policies. Of particular concern is the PM2.5 standard, which, at 12 ug/cm3, is already near or exceeded by the background levels measured at the majority of the ambient monitoring stations throughout the state—background that is rarely, if ever, the result of any stationary source activity, but more likely the result of rural road dust and other non-stationary sources.
It became apparent to the regulated community that each permit review following adoption of the new NAAQS would generate ad hoc findings of modeled exceedances of the new NAAQS. By implementing the NAAQS through stationary source permitting rather than SIP planning, ADEQ eliminated any evaluation of regional cause and effect, and precluded any consideration of comprehensive solutions that involve all contributing sources. Under ADEQ’s “plan,” the unwitting permit applicant is forced to stand alone and face the consequences of a failed NAAQS modeling exercise. Concerns raised by the regulated community fell on deaf ears.
The Arkansas legislature stepped in, and in April of 2013 it enacted Act 1302, which required ADEQ to stop “protecting the NAAQS” by requiring stationary source permit applicants to undertake dispersion modeling, except in enumerated circumstances. Act 1302 prohibits ADEQ from using modeling for stationary source permit decisions or requiring retrofit pollution control technology. With the exception of PSD and other limited situations, dispersion modeling can only be used when there is a source or pollutant-specific SIP requirement. The Clean Air Act requires states to develop a SIP “for maintenance and protection of the NAAQS,” and Act 1302 requires ADEQ to implement the NAAQS as required by the Clean Air Act. The legislature did not neuter the agency’s efforts to protect clean air (which was the agency’s unsuccessful lobbying position). The legislature just said quit implementing the NAAQS through ad hoc permit decisions based on source specific air dispersion modeling. The legislature told ADEQ to use its ambient monitoring network, area modeling, and other tools to evaluate NAAQS compliance, and where non-attainment occurs, do the comprehensive planning that is required by the Clean Air Act to address it. Act 1302 was carefully drafted to compliment the Clean Air Act, and serves as a good model for any state facing similar NAAQS implementation issues.
During the two months since Act 1302 has been the law in Arkansas the agency has gone through some needed growing pains. The proposed rulemaking to enact the new NAAQS in Arkansas is being re-evaluated in light of the requirements of Act 1302. Much of the regulatory creep that occurred over the past decade has been curtailed, such that minor sources, minor modifications and no change permit renewals are no longer being required to submit dispersion modeling or demonstrate NAAQS compliance.
There is nothing like the heavy hand of the legislature to bring reason back into agency decision making. It appears that ADEQ now recognizes (much like most other states) that modeling has its limitations, and these minor stationary source projects are not causing, nor are they likely to cause any NAAQS problems. There is still a lot of work to be done as the new NAAQS are adopted, and real SIP planning commences. But sometimes it takes a pre-emptive strike to get the process started on the right track.
Posted on July 3, 2013
On June 13, 2013, U.S. EPA announced its enforcement priorities for the next three years. Among other things, the Agency decided to continue its ill-fated, 15-year old "New Source Review (NSR) Enforcement Initiative." This effort has targeted coal-fired power plants and other large manufacturing facilities for alleged violations of the Clean Air Act. The allegations often pertain to projects which were implemented over twenty and thirty years ago.
Not surprisingly, EPA has not fared very well in the courts with cases like this. The Agency has run into problems, including: 1) statute of limitations concerning projects completed more than five years before legal action has been commenced; 2) successor liability issues when the current owner/operator of a facility did not own or operate the facility when a targeted project was undertaken; and 3) serious evidentiary questions as to whether a decades-old project caused the requisite actual air emissions increase which triggers the requirements for NSR review under the Clean Air Act. See generally "EPA's Utility Enforcement Initiative: The MetED Decision May Pose Problems for Plaintiffs," BNA Daily Environment Report, June 13, 2013; U.S. v. Midwest Generation, LLC, 694 F. Supp. 2d 999 (N.D. Ill. 2010), appeal pending in 7th Circuit Court of Appeals.
A recent notice of violation illustrates some of the unfairness and waste of resources connected with EPA's NSR Enforcement Initiative. EPA issued the notice in 2012. It alleged a number of NSR violations against the owner/operator of a manufacturing facility (not a utility). One of the allegations pertained to a change made at that facility in 1982. Since 1982, the ownership of the facility has changed four times. The current owner has been targeted in EPA's enforcement action. Records regarding the 1982 project are scant, and the personnel involved in the work in 1982 are all either long-retired or deceased.
To make matters worse, EPA had received the available information about the 1982 project in 1999 from the party who owned the facility at that time. This was done in response to a Section 114 Information Request issued by EPA. That owner heard nothing further from EPA about any of the projects covered in the 1999 inquiry.
In 2011, EPA issued a new Section 114 Information Request to the current owner who had acquired the facility in 2006. The request covered projects that occurred after 1999, but it also covered projects which were done prior to 1999, including the 1982 project discussed above.
A reasonable person could ask: 1) Why did EPA wait for 13 years to allege a NSR violation regarding the 1982 project when the Agency was given information about it in 1999? 2) Why is EPA taking action now on a change made at the facility over thirty years ago? 3) Why is EPA targeting the owner who acquired the facility in 2006 -- some seven years after EPA was first given information about the 1982 project? 4) Has EPA considered that the current owner/operator of the facility is four times removed from the owner/operator who implemented the change in 1982?
Substantial amounts of money and countless hours of valuable employee time have been expended by the current owner in dealing with EPA on this case. Both the money and the time could have been better utilized in helping to keep the facility competitive in a very challenging global marketplace.
EPA should consider whether the continuation of the NSR Enforcement Initiative is justified with respect to projects that occurred decades ago. With most of these cases, fair-minded decision-makers at EPA will find that "Enough is Enough!"
Posted on June 25, 2013
Congress said EPA and the States are partners in implementing the Clean Air Act. It’s simple: EPA sets pollutant-by-pollutant standards for clean air (NAAQS) and each State develops and implements a state-specific plan to meet and maintain those NAAQS. Each partner is well-positioned and equipped to perform its assignment and Congress included appropriate “carrots and sticks” in the Act to ensure that both do their job. The Supreme Court has extolled Congress’s partnership approach and EPA routinely professes its deep appreciation of its State partners and their important role. So wassup with EPA suddenly demanding that thirty-six States delete rules about excess emissions during startup, shutdown and malfunction (SSM) that have been EPA-approved for 30 to 40 years?
On February 22, in response to a 2011 petition by Sierra Club, EPA proposed to “call” thirty-six state implementation plans (SIPs) because they contain affirmative defense, exemption, or director’s discretion rules for excess emissions during periods of SSM. EPA’s previous approval of the offending rules wasn’t even a speedbump. EPA also rejected any obligation to connect the offending rules with air pollution problems in the affected States. EPA’s legal position on how the States should enforce their CAA permits was enough to shuck the partnership and impose the federal will. And EPA didn’t even ask nicely. State requests for information about EPA’s consideration of their SIPs were ignored and States were given 30 days to comment on a proposal EPA took more than a year to develop. EPA gave its State partners another 45 days only after more than a dozen State Attorneys General jointly asked for more time and the Senate Committee considering the new Administrator’s confirmation made the same request.
When comments were filed on May 13, thirty affected States filed comments; none of them supported EPA’s proposed call of their SIP. Not even EPA’s regular supporters on issues like tougher NAAQS thought EPA’s dictation was a good idea. Complaints from EPA’s partners ranged from being wrongfully excluded from EPA’s evaluation of their SIP to EPA trampling on the States’ planning and implementation responsibilities to EPA creating a lot of work that could have been avoided if EPA had just talked to them. No amount of spin can make this look good for state–federal relationships.
So why? Well, Sierra Club did ask for it. Maybe because an obvious compliance impact is on emission limits with continuous monitoring and short averaging times like opacity. And maybe because coal-fired power plants always have opacity limits and deleting common excess emission rules will set those sources up for widespread enforcement litigation. Or, maybe the States and the previous EPAs had it wrong for all these years and someone finally straightened everyone else out. Like so many conundrums of this type, it might take some judges to give us the answer.
Pursuant to a settlement agreement with Sierra Club, EPA must finalize the SSM SIP Call by August 27, 2013.
Posted on June 20, 2013
Enacted in May 2009, New Jersey’s “Site Remediation Reform Act”, N.J.S.A. 58:10C-1, et seq. (“SRRA” or “Act”) was heralded by the State’s Department of Environmental Protection (“NJDEP”) as a “new world order” for the State’s site remediation regulation. Four years later, its imposition remains a “work in progress”.
Belatedly following Massachusetts’ lead, the Act largely privatized site remediation by placing most decisions, including the ultimate provision of final remediation approval, in the hands of state-licensed professionals, called “Licensed Site Remediation Professionals” (“LSRPs”). It replaced NJDEP’s former “command and control” approval process, which tended toward extreme micro-management of each case. Instead, LSRPs are supposed to use their professional judgment in effecting remediation.
Interestingly, much of the impetus for the SRRA came chiefly from the Government, compelled by its enormous backlog of unresolved cases: it was not unusual for remedial reports to languish on NJDEP desks, awaiting action, for years. Moreover, NJDEP had little or no knowledge of many sites on its “known contaminated site list” which numbered anywhere from 10,000 to 15,000 (the fact that that number was unclear was itself troublesome). Indeed, one of the precipitating causes of the Act was a vapor intrusion case in which it was belatedly discovered, in 2006, that a child day care center had been built, and was operating, on a site which formerly housed a thermometer factory. This site should have been (but was not) cleaned up under the State’s ISRA law when the factory closed in 1994. The site had been classified as one of “low” concern, so it was not inspected by NJDEP until twelve years after such closure. The discovery of these circumstances caused public consternation, followed by litigation and, ultimately, legislation.
Although the environmental consultant community enthusiastically welcomed the new law (almost immediately dubbed the “environmental consultant right to work act”), individual LSRPs continue to have difficulty weaning themselves away from the “security blanket” of prior department approval of their actions. These fears are understandably heightened by the statutorily enjoined random audit of at least ten percent of LSRPs annually by the LSRP Licensing Board and the Department’s separate ability to audit final remediation approvals, (called “Response Action Outcomes”, or “RAOs”), for up to three years after issuance.
Partly in response to the LSRPs’ expressed need for some certainty, NJDEP has been steadily adding to the scope and detail of various technical guidance documents, the most recent one of which is its “Vapor Intrusion Technical Guidance (Version 3.1)" issued in March of this year. At 184 pages, with appendices, this guidance (“VI Guidance”) is nearly twice as long as the next-largest NJDEP “guidance document” and far longer than similar VI guidance issued by authorities in neighboring states. Indeed, its length is nearly that of OSWER’s External “Review Draft” “Final Guidance for Assessing and Mitigating the Vapor Intrusion Pathway from Subsurface Sources to Indoor Air”, whose issuance it preceded by about a month. Predictably, the two documents do not exactly mesh seamlessly.
The prescriptive nature of the VI Guidance is equal to its heft and seemingly contrary to the Act’s proclaimed conferring of discretionary judgment upon LSRPs. More troublesome is the fact that the various detailed dictates to LSRPs in the VI Guidance have been translated into a welter of forms that must be filed by the LSRP at various points in the VI remedial process. These new forms –which are apt to change with some frequency – are all “machine readable” and, in light of the draw-down of experienced NJDEP personnel caused by government cutbacks and natural attrition, are increasingly reviewed by machines, rather than experienced personnel, at least in the first instance. This seems likely to produce an exaltation of form over substance that does little to foster actual remediation. Moreover, departures from the VI Guidance must be supported by the LSRP’s explanation of rationale under a pre-SRRA regulation entitled “Variance from Technical Requirements”. Few such “variances” were ever permitted under this regulation in the past. The fact that such “departures” may be substantively reviewed by NJDEP only after the final RAO is issued and, if denied, would result in the RAO’s invalidation, creates an added “chilling effect” on an LSRP’s consideration of any such deviation, however warranted. And, while NJDEP personnel continue to be available to LSRPs for consultation and advice, it is unclear what effect, if any, reliance on such advice would have in any subsequent audit of an RAO.
It may be that the VI Guidance is sui generis and that its overly doctrinaire approach will not be followed by NJDEP in other areas of remediation. If not, the “new world order” of the SRRA may morph into something that looks very much like NJDEP’s “ancien regime”. Or maybe I just have a case of the vapors.
Posted on June 3, 2013
Four votes. That is the number of votes required to grant a Supreme Court petition for a writ of certiorari. And because that is the same number of Justices who dissented from the Court’s landmark 2007 ruling in Massachusetts v. EPA, EPA has reason to worry over the summer.
Pending before the Court are nine petitions seeking review of a wide ranging set of challenges to EPA’s regulation of greenhouse gas emissions from new motor vehicles and new stationary sources. Petitioners include most every significant part of American industry, 14 States, and numerous political leaders. Some petitions, consistent with Judge Brett Kavanaugh’s dissent from the D.C. Circuit’s denial of rehearing en banc in Coalition for Responsible Regulation v. U.S. EPA, are strategically narrow; they ask the Court to review only a relatively narrow issue regarding the applicability of the Clean Air Act’s Prevention of Significant Deterioration Program to greenhouse gas emissions. Others, by asking the Court to overturn EPA’s determination that greenhouse gas emissions from new motor vehicles endanger public health and welfare seek, as a practical matter, to topple the Obama Administration’s effort to address global climate change in the absence of new federal legislation. But a few of the petitions jettison even any pretense of modesty by directly asking, consistent with D.C. Circuit Judge Janice Rogers Brown’s blistering dissent from en banc denial, the Court to do no less than overrule Massachusetts v. EPA.
The Solicitor General and other respondents (including 18 States) will no doubt oppose cert on all issues in their responsive filings this summer. They have nontrivial arguments, especially given the serious questions they can raise concerning the Article III standing of petitioners to raise the particular legal claims that would likely otherwise have the most force on the merits. But EPA is likely to be less concerned with whether review is granted than, if granted, on what issues. The legal stakes for some issues raised are far less consequential than they are for others, which are quite enormous.
Any cert grants will likely be announced in late September, shortly before October’s “First Monday” to allow for expedited briefing and argument as early as January 2014 and more likely in February. Otherwise, all petitions will be denied on that First Monday. It will be a long summer’s wait for all parties.
Posted on May 9, 2013
The world’s biggest carbon permit market was left in disarray after the European Parliament on April 16, 2013 rejected an emergency plan that would have forced companies to pay more for polluting.
Permits are a key part of the EU Bloc’s cap-and-trade plan to tackle global warming. The European Parliament rejected a proposal to reduce the short-term supply of carbon permits as a way of pushing up the price. At the launch of permits in 2005, the cost of a permit was nearly €30 for each ton of carbon emitted. Following the vote on April 16, 2013, the price plummeted to a little over €2.5 a ton.
Making matters worse, following the vote, the European Parliament’s Environment Committee coordinators failed to set a date for a vote on an amended version.
Not only is the collapse of the cornerstone of its climate policy an embarrassment to the EU, but its failure resonates in other areas of the world. Australia has fixed a carbon price of $23 a ton until moving to a floating market price following the EU model in 2015. But, that is being reconsidered. The EU situation, coupled with the U. S. Senate’s rejection on March 22, 2013 of a bill to impose a fee on carbon, means that the Obama Administration will have an uphill battle for any future proposals for a fee or tax on carbon emissions.
Posted on May 3, 2013
After being taken to task by states and its own Inspector General for lack of final guidance on Vapor Intrusion, EPA has just released draft guidance documents for hazardous substances and petroleum products for comment. The guidance documents are already generating discussion on the blogosphere, with comments due to EPA by May 24th. Below are some of the issues EPA will have to address for its guidance for hazardous substances, and those of us addressing vapor intrusion for our clients.
Will the guidance collapse under its own weight? EPA’s recommended framework relies upon collecting and evaluating multiple lines of evidence to support risk management decisions, detailed investigation of vapor intrusion including rigorous data quality objectives and recognition of seasonal/temporal variability in levels, consideration of options for building mitigation and subsurface remediation, decisions on how institutional controls can be crafted and monitored, and how the public will be involved. The practical question is how much evidence and process is enough for a rational decision, and how costly and time-consuming an evaluation effort is justified? Rarely are actions taken quickly in the CERCLA or RCRA world, but if there are risks, then they should be acted upon, and applying the guidance in other contexts will be challenging. There already appears to be a consensus that EPA’s approach will be costly, and give vapor intrusion a life of its own in remedial decision-making. EPA will have to address this issue, or find its guidance bypassed or ignored, given the need for timely decisions.
Should we all buy stock in fan manufacturers and makers of synthetic vapor barriers? EPA offers (only on page 125 of 143) the question of weighing relative costs of characterization vs. engineered exposure controls. If EPA guidance is followed, the cost of implementing the guidance will at times greatly exceed the cost of engineering controls. Clients want the deal “done” and are not likely to wait for a lengthy deliberative process.
What role will EPA acknowledge for OSHA standards? EPA proposes guidance for residential and non-residential buildings, but as a practical daily matter, there are separate standards and approaches for workplace and non-workplace scenarios. EPA doesn’t directly address that issue in the 2013 guidance, even though the Agency had helpful statements in its 2002 proposal. The issue gets even more complicated given the unsurprising obligation to consider potential future land uses. If the default scenario is residential use, will the workplace vs. non-workplace distinction disappear?
Déjà vu all over again? Yogi Berra may have been commenting on repeats of the Mickey Mantle/Roger Maris back-to-back home runs, but it is pretty clear we will be reopening sites that may have had vapor intrusion issues, and assessing old sites at which the issue was never raised, or addressed following different procedures. EPA settled the question in November 2012 for CERCLA five-year reviews by declaring vapor intrusion a mandatory topic, and plans to adopt final Hazard Ranking System amendments for vapor intrusion. The guidance document applies to RCRA sites as well, but EPA knows that the guidance will surely find application at many types of sites where volatile chemicals may have been present. Although the document is limited to CERCLA/RCRA guidance, its general purpose is to be helpful, and EPA should probably re-emphasize that not only are all sites different, the recommended framework may not even be practical when applied through other state programs. At risk of over-generalizing, practitioners have learned to recognize the advantages of not following CERCLA and RCRA approaches.
EPA will receive many comments, and there is some cleanup work to be done on the guidance documents, but look for the final documents to be completed in months, not years.
Thanks to Jeff Carnahan, LPG, EnviroForensics, for sharing with me his expertise on vapor intrusion. However, the thoughts expressed here are solely mine.
Posted on April 29, 2013
On September 14, 2011, I posted a blog piece that was entitled “A Tug of War: How Can the State Satisfy Its Burden of Proof?” This posting discussed the diametrically opposed decisions of an Ohio trial court and an appeals court on the important issue of the kind of evidence necessary to prove a violation of an air emission limitation in an operating permit. This closely watched case in Ohio eventually reached the Ohio Supreme Court, which finally announced its decision on December 6, 2012.
In State ex rel. Ohio Attorney General v. Shelly Holding Co. the Ohio Supreme Court sided with the appellate court and ruled that the civil penalty calculation started on the date of the violation, as demonstrated by the failure of a stack test, and continued until the permitted source demonstrated compliance with the emission limitations. Over the objections of Shelly and several industry amicus filings, the Ohio Supreme Court concluded that the state enforcement agency need not prove that the facility was operating out of compliance for each intervening day; such noncompliance can be presumed.
The issue arose, in part, because Shelly failed stack tests that were conducted under unrealistic, maximum-possible conditions when in fact day-to-day operations were likely to generate lower emissions. The state argued that Shelly should have discontinued operations until a subsequent stack test successfully demonstrated adherence to the permit’s emission limitations. Alternatively, the air pollution source could apply for and receive a new permit with different limits, or it could make intervening facility modifications that would enable it to pass the stack test. Shelly felt that it was improper to presume that the facility would exceed its emission limits unless the state makes a prima facie showing that the violation is likely to be ongoing or continuing.
After concluding that the burden is on the violator to prove by a preponderance of the evidence that there were intervening days on which no violation occurred or that the violation was not continuing in nature, the Ohio Supreme Court found no constitutional problem with extending the penalty to those subsequent days after the failed stack test. Thus, in Ohio, the beginning date for calculating a civil penalty for an air pollution control violation is the first date of demonstrated non-compliance (the failed stack test) and continues, even at lower operating rates, until the facility demonstrates a return to compliance.
While this decision arose in the context of an air permit, the State of Ohio is likely to cite it in other programs, such as NPDES permits.
Posted on April 12, 2013
The August 21, 2012 decision of the D.C. Circuit Court in EME Homer City Generation LP v. EPA, Case No. 11-1302, not only vacated the Cross State Air Pollution Rule (CSAPR), it also provided a detailed framework (including the math) for how future plans should be developed by States to implement national ambient air quality standards (NAAQS) through the “good neighbor” provisions of the Clean Air Act. This case has already been the subject of various posts to this Blog. This article will provide an update of activities that have occurred in recent weeks as state and federal agencies, NGOs and the regulated community respond to the decision and its implications for implementing the various NAAQS (past, present and future).
Let me begin by noting that on March 29, 2013, EPA and various environmental organizations filed for a writ of certiorari with the U.S. Supreme Court. Even as EPA was filing for such a writ, EPA has scheduled two meetings this month with states to obtain input on technical and policy decisions. In these meetings, EPA is offering its interpretation of the court decision and its views about various options that exist for conducting the required analyses through the shared responsibility of EPA and the states.
Finally, the Midwest Ozone Group (MOG), a coalition of electric power generation interests, has developed a position statement on how the court opinion might be implemented including the identification of the following seven rules taken from the court opinion.
1. Basic rule - An upwind State’s obligation is limited to its own significant contribution and it cannot be directed to reduce emissions to account for any other factors impacting a downwind State’s nonattainment.
2. Proportionality of Downwind States - A downwind State is responsible for above-NAAQS amounts that are not attributable to significant contributions from upwind States.
3. Proportionality of Upwind States - The ratio of an individual upwind State contribution to the total contribution of all upwind States should be used as scalar to determine how the total upwind contribution is allocated among upwind States.
4. The Role of Costs - EPA may reduce some or all of the obligations of upwind States to avoid the imposition of unreasonable costs.
5. Insignificance - Once contributions are determined, a State is not required to address more than that contribution amount minus the significance threshold.
6. NAAQS Attainment - Once an area meets the NAAQS, no additional upwind emission reductions are required.
7. Over-Control - When multiple downwind areas are concerned, reductions associated with one downwind area should be reviewed in other areas to ensure unnecessary over control is not achieved
The full position statement can be found here.
The MOG position statement is accompanied by a presentation prepared by Alpine Geophysics which applies an example set of modeling data to these rules to illustrate how the rules might be applied as well as the significant technical and policy questions that remain. The Alpine Geophysics presentation can be found here.
Posted on February 13, 2013
The current Clean Air Act retains the premise in the Clean Air Act of 1963 that "the prevention and control of air pollution at its source is the primary responsibility of States and local governments." Among the many balancing acts embedded in the text of the Clean Air Act, the balance between federal and State prerogatives is one of the more challenging.
Over time, the accumulation of requirements, and the multiplication of more requirements at a faster and faster pace, puts strains on the Clean Air Act's ideal of "cooperative federalism." In the present era of divided government and increasing political polarization, tensions between EPA and the States, and between certain States, are on the rise. For example, EPA has been sued by some States to force more aggressive regulation of greenhouse gas emissions, and by other States to force less aggressive regulation of criteria pollutants that cross State boundaries. The "turbulence inherent in [the Clean Air Act's] divided relationship" was noted in William Session's December 14, 2012 post.
While sharp contrasts on energy policy get most of the publicity, it is the small things – the finer details of regulation of sources classified as "minor" or "insignificant" under the statute and regulations – that account for a disproportionate share of the friction with regard to federal versus State prerogatives. Tensions over State discretion – particularly with regard to environmentally inconsequential mandates, land use, and small businesses – are not new to the Clean Air Act. Soon after her transition from head of the Florida Department of Environmental Regulation to Administrator of EPA twenty years ago, Carol Browner said:
When I worked at the state level, I was constantly faced with rigid rules that made doing something 100 times more difficult and expensive than it needed to be. It makes no sense to have a program that raises costs while doing nothing to reduce environmental threats.
A new Association of Air Pollution Control Agencies, launched in January 2013, holds promise for enhancing the State-federal partnership basic to the design of the Clean Air Act. The primary goals of the new association are to help the States assist each other in carrying out their responsibilities under the Clean Air Act, and to better understand EPA requirements as they evolve.
The AAPCA selected Battelle Memorial Institute, the world's largest non-profit research and development organization, to provide technical assistance and organization and staffing support. The initial seventeen participants in the AAPCA are: Alabama, Florida, Indiana, Kentucky, Louisiana, Mississippi, Nebraska, New Mexico, Nevada, North Dakota, Ohio, Pennsylvania, Tennessee, Texas, Virginia, West Virginia, and Wyoming. If the new AAPCA improves the technical proficiency of State air pollution control agencies, and increases the level of cooperation and collaboration between EPA and State air agencies, it will well serve the design of Congress and the interests of the nation.