Posted on December 14, 2012
All of us know that enforcement of the Clean Air Act’s (CAA) proscriptions against pollutant air emissions is premised on the concept of Acooperative federalism. We know that the CAA’s policy development and enforcement regime is based upon a division of state and federal regulatory responsibility. Stated simply, the concept is that the federal government, through the EPA, sets standards for permissible emissions of substances affecting ambient air quality while individual states retain responsibility for implementing programs to enforce these standards.
The States’ implementation mechanisms are aptly titled State Implementation Plans or SIPs. SIPs are employed to demonstrate that federal and state air pollution regulations will allow counties in a particular state to meet federally mandated ambient air quality standards (NAAQS). The SIP process approval results in pollution control requirements which govern and often times unduly complicate compliance efforts of state regulators. They can also increase compliance costs borne by the regulated community. One aspect of that conundrum is the fact that when States fail to meet deadlines for attaining these standards, the regulators themselves can face sanctions from EPA and even suits by the public. Litigation and its costs complicate matters further.
As some regulators in Pennsylvania recently observed . . . [T]he current aggressive schedules for NAAQS reviews, State Implementation Plan (SIP) development and promulgation of Maximum Achievable Control Technology (MACT) standards are significant problems. Taken together, these inefficiencies are a resource drain on EPA, the states, the regulated community and the economy as a whole. The messy situation described in this quote is the subject of this blog.
The turbulence inherent in this divided relationship has escalated in recent times fraying the long-standing statutory regulatory compact between the federal government and the States.
An instructive example of the conflict of enforcement concept and reality engendered by the CAA’s cooperative federalism scheme was clearly highlighted in the recent case WildEarth Guardians v. Jackson. This case dealt with EPA’s delays in approving SIPs or pollution control plans affecting discharges of fine particulate matter or PM2.5. The plaintiffs in Wild Earth alleged that EPA failed to take final action under section 110(k)(2) and (3) of the CAA to approve SIP submittals in twenty (20) states meeting applicable requirements respecting the 2006 PM2.5NAAQS.
In 2006, the U.S. Court of Appeals for the District of Columbia had found that EPA’s PM2.5 NAAQS had to change because it failed to adequately protect human health. A change in this NAAQS required a change in States SIPs. SIPs were proposed but languished at EPA. Five years later, the plaintiffs in Wild Earth alleged that . . . [W]ithout infrastructure plans, citizens are not afforded full protection against the harmful effects of PM2.5 while seeking declaratory and injunctive relief.
Shortly after the suit was filed the plaintiffs and the EPA entered into a settlement. A consent decree called for the EPA to approve or disapprove SIP submittals for the 2006 PM2.5 standard as early as September 12, 2012 for some of the states involved and as late as February 13, 2013 for others. The Consent Decree was entered and the case dismissed in May of 2012. Case closed and compliance efforts back on track?
Unfortunately, many of the underlying issues raised in Wild Earth, specifically, the lack of cooperation between the States and the federal government on implementation of the PM2.5 NAAQS have raged on unabated. For example, eleven (11) states sued the EPA over the agency’s alleged failure to promulgate final NAAQS for PM2.5. In New York v. Jackson the plaintiffs are seeking a declaration that EPA is in violation of Section 109(d)(1) requesting that EPA review, propose and promulgate a new PM2.5 NAAQS. On June 14, 2012, EPA announced a proposal to strengthen the NAAQS PM2.5. Almost simultaneously, the D.C. Circuit issued an order refusing to set a schedule for EPA to issue a new PM2.5 NAAQS. Am.Farm Bureau v. EPA.
These developments will inevitably spawn additional delays in PM2.5 related SIP modifications and EPA approvals. That is the point of these comments on this small corner of CAA regulation and enforcement. Is the cooperative federalism underpinning of the CAA still workable? Can court’s recognize and respect the concept when regulatory policy, administrative lethargy and real human health concerns collide? These comments and observations have focused on the PM2.5 issue mainly because it has come up in some recent work in our office.
Without doubt other and more far-reaching examples of regulatory and judicial “turbulence abound, i.e., the raging fight over the EPA’s Cross State Air Pollution Rule (CSAPR). In a dissenting opinion on the CSAPR case, on the concept of cooperative federalism, Judge Rogers had this to say. . . [T] he result is an unsettling of the consistent precedent of this court strictly enforcing jurisdictional limits, a redesign of Congress’s vision of cooperative federalism between the states and the federal government in implementing the Clean Air Act based on the court’s own notions of absurdity and logic that are unsupported by a factual record, and a trampling on this court’s precedent on which the Environmental Protection Agency was entitled to rely . . . . Whew!
So what are CAA practitioners to make of the mess Judge Rogers eloquently describes? This blog entry offers no practical guidance for those laboring for an aggrieved client nor laments a bad result impairing enforcement prerogatives of the regulators. Instead, I only point out that it may be time for a concerted effort to step back and reconsider whether the CAA’s cooperative federalism’s bifurcation of rule promulgation and enforcement continues to make scientific, policy or common sense in today’s world.
Posted on December 12, 2012
The regulation of vapor intrusion is becoming more prevalent on both the federal and state level. In addition, although not strictly required as part of a Phase I ESA under ASTM 05 and AAI, many consultants take the position that this issue must be addressed at this first level of environmental due diligence.
One of the troubling issues at the state level is whether background concentrations should be taken into account in the establishment of indoor air quality standards. Many household products and building materials contain or release VOCs. However, not all states take background concentrations into account in the regulation of vapor intrusion.
EPA is expected to release its own vapor intrusion guidelines shortly. EPA appears to acknowledge the importance of background data in the process of formulating its guidelines. It remains to be seen whether such guidelines will impose stricter standards than those on the state level.
Posted on November 30, 2012
The following post is essentially a sequel to this morning’s post, which was originally intended to be posted in September.
Last week, EPA announced that it had reached yet one more – its 24th – settlement under as a result of its NSR enforcement initiative. This time, it was Louisiana Generating’s Big Cajun II plant, in New Roads, Louisiana. By now, the contours are familiar, including a penalty of $14 million and injunctive relief estimated to cost approximately $250 million. Changes will include:
- Installation of SNCR (not SCR) on all units to control NOx.
- Installation of dry sorbent injection as a short term SO2 reduction measure
- Retirement, refueling, repowering, or retrofitting of Unit 1 in the long-term
- Refueling of Unit 2 to natural gas
- Limitations on sulfur content
- Plant-wide limits on SO2 emissions
- Installation of electrostatic precipitators to control PM on units 1 and 3
It sure sounds great. EPA estimates reductions of 20,000 tpy in SO2 emissions and 3,000 tpy in NOx emissions. Still, I question the value of this settlement in the big picture. I sense some double-counting here. EPA is predicting significant reductions in emissions as a result of its industry-wide rules, including the transport rule (last known as CSAPR, but presumably awaiting a new acronym for its replacement) and the air toxics rule.
Add to that the cost pressures on coal resulting from the lower natural gas prices caused by the fracking boom, and it is quite possible that Louisiana Generating would have ended up in the same place even absent a settlement. Throw in concerns about whether individual units were in fact violating the rather ambiguous NSR provisions or were engaging in what they truly considered routine maintenance, and the obvious economic issues raised by trying to implement command and control regulations on a plant-by-plant basis pursuant to litigation, rather than through nationwide market-based caps, and I say again that, to me, the NSR program is still spinach, and I say, to heck with it.
Posted on November 30, 2012
This past September, in United States v. Louisiana Generating, EPA won a ruling regarding what type of projects fall within the routine maintenance, repair or replacement exception from the rule that facility modifications are subject to PSD/NSR requirements. The decision is thorough in that it carefully reviews the so-called “WEPCO Factors” – the nature, extent, purpose, frequency, and cost of the work, and applied them to the work at issue in this case, i.e., reheater replacements.
Notwithstanding the thoroughness of the court’s analysis, I don’t find it completely convincing. As the court acknowledged, while all of the WEPCO factors are relevant, the crux of the issue is whether, in order to qualify for the exception, maintenance work must be routine for the units at issue, or only routine in the industry. In other words, should the question be whether all similar generating units at some point in their life undergo reheater replacement, or whether each individual unit in question must undergo reheater replacement multiple times in order for such work to be considered routine.
Personally, I think that the former is probably the better interpretation. Of course, as the decision discussed, since the regulations are not crystal-clear, EPA has significant discretion in interpreting its own regulations, and EPA takes the position that maintenance work must be routine with respect to individual units to qualify for the exception. End of story, no? No. The problem is that EPA does not have discretion to change its interpretation whenever it feels like doing so. In 1992, EPA stated, in a preamble to NSR regulation revisions, that
EPA is today clarifying that the determination of whether the repair or replacement of a particular item of equipment is “routine” under the NSR regulations, while made on a case-by-case basis, must be based on the evaluation of whether that type of equipment has been repaired or replaced by sources within the relevant industrial category.
The court in Louisiana Generating acknowledged that this language favored Louisiana Generating’s position that one must look to whether a maintenance activity is routine in the industry, rather than routine with respect to the individual units in question. However, the court then did not discuss this issue in evaluating the WEPCO factors, and separately found that no reasonable jury could conclude that the project was routine.
I don’t think that this issue is going to be finally resolved at least until a number of appellate courts have had an opportunity to review it and I could imagine it ultimately making its way to the Supreme Court.
As I have previously noted, while I tend to side with the defendants in these cases, I think that the larger point is that these types of arguments are borderline silly. More than anything else, they illustrate that the entire NSR/PSD program is fundamentally flawed. Instead of such outdated technology-based regulation, power plant emissions should be regulated pursuant to trading programs that allow needed emissions reductions to be attained in the most cost-effective way possible. I still dream of a grand bargain which would lower emissions limits, utilize trading to attain them, and completely eliminate the NSR/PSD program. Where is the radical center in Congress when one needs it?
Posted on November 29, 2012
Author's Note: I wrote this piece at the request of my firm earlier this year. It appeared in the "Diversity Blog" on our firm's website around "earth Day" in April, 2012. After attending the ACOEL Annual Meeting in Washington, D.C. this past week, I know that many other College Fellows share my sentiments about the field we have been fortunate enough to practice law in during our careers.
I have been practicing environmental law at Quarles & Brady (in Milwaukee WI), in one form or another, since I joined the firm as a brand new attorney in 1977. Charlie Kamps was kind enough to be my mentor in the early days, and he gave me many opportunities to work with him on Clean Air Act issues. Over the years, I have been heavily involved in virtually all aspects of environmental law, but my work under the federal Clean Air Act became a real specialty. Among colleagues around the country who specialize in this area of the law, we often (somewhat sarcastically) refer to ourselves as "Air-Heads."
Working in environmental law has been very exciting. When I started out, Charlie and I were really the only two attorneys in the firm who devoted most of our practice time to environmental law. [There were many others in the firm who handled environmental litigation cases, such as the important Illinois v. Milwaukee Clean Water Act case which Quarles & Brady won in the U.S. Supreme Court in 1981. But those lawyers did not normally do environmental work on a day-to-day basis for a large number of firm clients.] In the early 1980's, the environmental practice area exploded with the passage of the federal Superfund Law and its eventual impact on virtually all corporate transactions, lending work and real estate ventures. Quarles & Brady's Environmental Practice Group grew to nearly thirty lawyers (in seven offices and four states) by the late 1990's.
For most of those years (from 1986 to 2007), I rode the wild, environmental-law-growth "roller coaster" as Chair of the firm's Environmental Law Group. At the same time, I was involved in many high stakes cases and transactions. Most of my work centered on air permitting and in defending Clean Air Act enforcement cases. I grew accustomed to living my professional life going at 100 mph on a regular basis. The issues were complex and novel, and I derived immense satisfaction from helping to steer difficult matters to a successful resolution.
The real stakes in environmental law could not be more important -- the protection of human health and welfare and the safeguarding of our natural resources for future generations. Many people think that it should be relatively easy to do all that -- just "follow the law." However, our environmental laws do not give precise directions on how this is to be accomplished. The laws set overall goals and prescribe processes by which those goals are to be achieved. But most often, the real requirements of our environmental statutes must be worked out on a case-by-case basis. This requires a complicated balancing of scientific, economic, engineering, legal and political factors. It is this balancing process which I have found exhilarating to be involved in throughout my career.
I am grateful for the opportunity to be involved in this important work. It has given meaning and a sense of real accomplishment to my professional life.
Posted on November 16, 2012
Massachusetts’ ambitious plan to address greenhouse gas emissions on a state-wide basis attracted private money last month to measure its success and costs. Boston-based Barr Foundation’s grant of $230,000 will establish a “performance management tool” to track and measure the success of initiatives undertaken under Massachusetts’ Global Warming Solutions Act (“GWSA”). Supporters expect it to “serve as a national and regional model that other states can adopt to analyze” their own greenhouse gas reduction efforts. The GWSA, enacted in 2008, requires extremely ambitious reductions in greenhouse gas emissions within Massachusetts in the coming decades: an 80% emissions reduction goal by 2050 and 10-25% by 2020 from a 1990 emissions baseline The act directed the Secretary of Energy and Environmental Affairs to set the 2020 reductions and adopt a plan for achieving them.
The planning and regulatory documents issued since enactment recognize that the success of a single state’s effort to address the causes of climate change cannot be measured by the impact of its own reductions in greenhouse gas emissions in effecting changes in the global climate. The effect will simply be too small to measure. Instead, the state’s plan touts the beneficial effects of spurring economic development through the encouragement of green energy and other high tech businesses, the reduction of localized pollution, and the stabilization of energy prices. The success of the program in “bending the curve” of rising greenhouse gas emissions, however, rests entirely on its ability to serve as an example to other political entities – states mainly but, ultimately, geopolitical entities through broader global participation.
In December 2010, the Secretary of Energy and Environmental Affairs released the Massachusetts Clean Energy and Climate Plan for 2020 setting the reduction target at 25% below 1990 baseline. The Executive Summary summarizes reductions anticipated from existing and expected programs (table at page 6). Policies relating to Buildings (9.8% or more than one third of the 25% reduction), Electricity (7.7%) and Transportation (7.6%) account for the vast majority of the reductions. Within each sector, reductions are characterized as either “Existing Policy” (e.g., Federal and California vehicle efficiency and GHC standards – 2.6% reduction), “Expanded Policy” (e.g., advanced building energy codes – 1.6% reduction), or “New Policy” (e.g., Green DOT, the Massachusetts’ transportation agencies fulfillment of their sustainability commitment – 1.2% reduction). The Barr Foundation’s grant will help create the “dashboard” that presumably will take into account the likelihood of adoption of new programs or the expansion of existing ones and the ultimate efficacy of any of the programs, as it tracks the progress of the Massachusetts program.
Efforts to track the success of the Massachusetts program will build on the work done by MassINC, a Boston-based “independent think tank” that earlier this year released a book-length report titled “Rising to the Challenge/Assessing the Massachusetts Response to Climate Change.” This very thoughtful work looks specifically at Massachusetts’ progress to date and likely future success in emission reductions in various sectors; it provides useful capsule descriptions of other state’s programs and of regional and foreign initiatives. And it discusses the crucial issue of the economic costs and benefits of the program, as that will be a prime determinant of the program’s ability to be a role model for other jurisdictions.
The MassINC report recognizes that data on the subject of economic costs and benefits are subject to extremely complex and differing interpretations. The report notes there is general agreement in Massachusetts that “it is desirable to reduce greenhouse gases and develop clean energy [,] it is more difficult to reach consensus when the subject turns to the cost of addressing climate change ….” Id. at 75. Nonetheless, a convincing explanation of the specific costs and benefits of various courses of action is a necessary component of any successful program because the ultimate effectiveness of a state’s program rests on its attractiveness as a model for other jurisdictions – including those with different views of the appropriate tradeoffs between environmental protection and economic development.
Posted on November 16, 2012
Sunday’s New York Times had an op-ed piece by Cass Sunstein, recently departed head of the Office of Information and Regulatory Affairs, advocating for sensible measures to address global climate change. Sunstein’s argument is that
"Economists of diverse viewpoints concur that if the international community entered into a sensible agreement to reduce greenhouse gas emissions, the economic benefits would greatly outweigh the costs."
I don’t disagree with anything he says; I only wonder whether anyone is paying attention. On one hand, while Sunstein notes that President Obama supports cost-benefit analysis, Democrats in Congress – and many environmentalists – have long been skeptical, treating environmental questions as moral issues that should not be subject to something as crass as cost-benefit analysis.
Republicans used to support cost-benefit analysis. Indeed, Sunstein opens the op-ed with a discussion of the Reagan administration’s support of the Montreal Protocol on ozone-depleting chemicals. However, for the past ten years or so, Republicans have abandoned cost-benefit analysis for something much simpler – cost analysis. Today, if regulations cost too much – whatever that means – then they are “job-killers” and thus bad, even if the benefits exceed costs, sometimes by several multiples.
Maybe four years at MIT brainwashed me into blind acceptance of quantitative analysis, but this stuff doesn’t seem that hard to me. It is profoundly depressing that a significant number of environmentalists look only to the benefits of environmental regulation, while a similar percentage of conservatives now only look at its costs.
Somehow, we’ve got to get the twain to meet.
Posted on November 12, 2012
Those environmental lawyers who had a two- or three-day “vacation” due to Hurricane Sandy now return to the office to face a workload that will in many cases be trebled. First, there’s the work you didn’t get to when your office was closed and now has to be finished post-haste. Second, there’s the work that you would have been doing the next few days had there been no hurricane. And third, there’s the urgent work that you now have to help your clients assess new issues that are present precisely because of the storm.
Wind and water mobilize even structures, equipment and materials that were always meant to be stationary. Storage tanks, waste ponds, drums, hazardous materials and other previously contained environmental hazards have now been released, flooded, or overtopped, often releasing reportable quantities of material. Clients will need to quickly assess the nature and magnitude of releases at and from their facilities to determine their environmental obligations.
The prudent environmental lawyer will immediately begin working with clients to determine whether there are spills and releases that must be reported to federal, state and local environmental agencies. Potential liabilities may depend upon whether under the applicable laws “Act of God” is or is not a defense. Surprisingly, a major hurricane is not, in the eyes (pun intended) of some agencies interpreting some statutes, an Act of God. Clients also need to verify that their pollution control systems – wastewater treatment, air pollution, etc. – are functioning correctly post-storm, even if there were no reportable releases during the storm.
Clients are undoubtedly attuned to the need to submit insurance claims for business interruption and damage to their own property, but now is a good time to begin surveying what kinds of claims might be coming from neighbors and others damaged by releases from the client’s facility. This is particularly so given that we are nearing year-end and many policies no longer have “tails” for notices of claims received after the policy year has run.
Posted on October 17, 2012
By Deborah Jennings and Andrew Schatz
If California regulators approve a proposed AES combined-cycle natural gas-fired peaking power plant, it could blur the standard for Best Available Control Technology (BACT) for greenhouse gas (GHG) emissions from gas-fired electric generating facilities. EPA expressly excluded simple cycle peaking units from its recently proposed New Source Performance Standards (NSPS) for GHGs because combined cycle units, which are GHG lower-emitting, were presumed not to be useable as peakers. By virtue of AES’s proposed combined-cycle peaking plant, EPA may be moved to change its view. Low-emitting combined cycle may set the BACT standard for future, gas-fired peaking units as a result.
AES is proposing to use a combined-cycle system in a peaking capacity at its Huntington Beach Energy Project (HBEP) in Huntington Beach, California. See AES Southland Development, LLC, BACT Determination for the Huntington Beach Energy Project (June 2012). The HBEP will consist of two combined cycle power blocks with a net capacity of 939 MW to be used for peaking and supplying local capacity. AES’s proposal to use combined-cycle for a peaking unit is notable because typically peakers have been simple cycle systems. The combined-cycle system is more efficient than simple cycle systems and has lower GHG emission rates. Whereas simple cycle systems combust natural gas to generate electricity, combined cycle-systems also capture lost heat from the combustion process to generate additional electricity through a steam turbine (i.e. a heat recovery steam generator). Accordingly, BACT for GHG emissions at the HBEP project results in an GHG emissions rate of 1,082 pounds of CO2 per megawatt-hour (lbs CO2/MWh). In contrast, a recent BACT determination for the simple cycle “peaking” power plant at the Pio Pico Energy Center in San Diego was 1,181 lbs CO2/MWh.
Regulatory agencies have struggled to determine what constitutes GHG BACT for natural gas (and other fossil-fuel) fired power plants. Regulatory authorities have declined to require natural gas-fired power plant projects to consider GHG lower emitting combined-cycle technologies in a BACT analysis. For example, in June 2012, Wisconsin authorities declined EPA Region V’s request to consider the use of combined-cycle gas turbines in a GHG permit for a wastewater utility fuelled by landfill gas.
EPA has sent conflicting signals on the issue. In the past, EPA has suggested from time to time that combined cycle be considered in the BACT analysis for natural gas plants. However, in drafting its New Source Performance Standards (NSPS) for GHG Emissions for New Stationary Sources: Electric Utility Generating Units (EGUs), EPA concluded that it cannot require proposed simple cycle facilities to meet the NSPS designed for combined-cycle natural gas facilities based on functional differences in peaking plants. 77 Fed. Reg. 22392 (April 13, 2012).
Specifically, EPA declined to include simple cycle facilities as an affected source in the proposed 40 CFR part 60, subpart TTTT for GHG emissions from new facilities governing combined-cycle plants and coal-fired plants. Id. at 22411. In its NSPS proposal, EPA required new fossil fuel-fired EGUs greater than 25 MW to meet an output-based standard of 1,000 lb CO2/MWh, representing the performance of widely used natural gas combined cycle technology. Id. at 22392. (Interestingly, in setting the NSPS at 1,000 lb CO2/MWh, EPA proposes a more stringent threshold for GHG emissions from new facilities than even HBEP). In choosing to exclude simple-cycle facilities from this standard, EPA reasoned that unlike combined-cycle plants (which are typically designed to provide baseload power and are able to emit CO2 at similar levels), simple-cycle plants are typically designed to provide peaking power, operate less, and “it would be much more expensive to lower their emission profile to that of a combined cycle power plant.” Id. at 22411.
In proposing a relatively lower emitting combined-cycle for a peaking unit, the AES project casts doubt on EPA’s conclusion that simple cycle is different. Accordingly, EPA may come to impose combined-cycle BACT limits on future natural gas combustion peaking facilities.
Posted on September 17, 2012
Companies who wrestle with whether their various air pollution-emitting operations must be grouped together for Title V permitting purposes have received some assistance from a recent Sixth Circuit opinion. In Summit Petroleum Corporation v. U.S. EPA, 2012 FED App. 0248P (6th Cir.), the court curtailed EPA’s expansive interpretation of a “single source” under the Clean Air Act.
By rule, operations belong to a single source if they: (1) possess the same SIC codes; (2) are located on contiguous or adjacent land; and (3) are under common control. See 40 C.F.R. § 52.21(b)(5), (6). In addition, by policy, EPA has expanded the definition of “single source” to include not only the facilities that meet these three criteria, but also those facilities that provide support to an adjacent central operation. See Preamble to the August 7, 1980 final Prevention of Significant Deterioration (PSD) regulations, 45 FR 52676; Preamble to Revised Part 51 and Part 70, Draft, February 18, 1998. And, EPA has taken a “functional” approach to the term “adjacent,” such that these support facilities need not even physically adjoin the main facility. For example, EPA considered two aluminum smelter facilities adjacent, despite their 3.4 mile separation, due to the extensive truck traffic between the two properties. See Letter from Steven C. Riva, U.S. EPA, to Robert Lenney, Alcoa Inc., Mar. 9, 2009. See also Letter from Pamela Blakely, U.S. EPA, to Don Sutton, Illinois EPA, re: General Dynamics, Ordinance & Tactical Systems, Inc., Mar. 14, 2006 (several plants considered a single source, despite their 8-mile separation, because they met a “common sense notion of a plant”).
Therefore, when EPA recently considered whether Summit Petroleum Corporation’s gas wells and associated flares should be considered a single source with its gas sweetening plant, EPA did not find it dispositive that several of the wells were located over a mile from the plant and were separated by other intervening properties. Instead, EPA noted that the wells and the plant were highly interdependent and under Summit’s common ownership. As a result, the wells and plant met the “common sense” notion of a single facility. See Letter from Cheryl Newton, U.S. EPA, to Scott Huber, Summit Petroleum Corporation, Oct. 18, 2010.
Summit challenged EPA’s single source determination, and the Sixth Circuit vacated that determination in Summit Petroleum Corporation v. U.S. EPA. The court found it “unreasonable and contrary to the plain meaning of the term ‘adjacent’” that EPA equated “functional relatedness” with “physical adjacency.” Id., at *2. The court ordered EPA to use instead the “ordinary, i.e., physical and geographical” meaning of the word “adjacent.” Id.
This decision will affect long-standing EPA policy and practice in making single source determinations. As the Director of EPA’s Region VIII Air Program noted, there is “no evidence that any EPA office has ever attempted to indicate a specific distance for ‘adjacent’ on anything other than a case-by-case basis.” See Letter from Richard Long, U.S. EPA, to Lynn Menlove, Utah Division of Air Quality, “Response to Request for Guidance in Defining Adjacent with Respect to Source Aggregation,” May 21, 1998, citing 45 Fed. Reg. 52,676, 52,695 (August 7, 1980) (“EPA is unable to say precisely at this point how far apart activities must be in order to be treated separately. The Agency can answer that question only through case-by-case determinations.”). Therefore, companies with “functional” single-source determinations should consider whether the recent Sixth Circuit decision could impact their status under the Title V program.
Posted on September 13, 2012
One company may own a variety of “functionally related” facilities that are located on various contiguous and non-contiguous parcels of land, spread out over many square miles. May all those “functionally related” facilities be considered “adjacent” and thus deemed to be one single major stationary source for Clean Air Act Title V permitting purposes?
A Court of Appeals recently weighed in on this issue. On August 7, 2012, the Sixth Circuit vacated EPA’s determination that Summit Petroleum Corporation’s natural gas sweetening plant and gas production wells located in a 43-square mile area near the plant were “adjacent” and thus could be aggregated to determine whether they are a single major stationary source for Title V permit purposes. Summit Petroleum Corp. v. EPA, 2012 WL 3181429 (6th Cir., Aug. 7, 2012). The majority held that EPA’s position that “functionally related” facilities can be considered adjacent is contrary to the plain meaning of the term “adjacent,” which implies a physical and geographical relationship rather than a functional relationship. The court also found EPA’s interpretation to be inconsistent with the regulatory history of Title V and prior EPA guidance. The case was remanded to EPA for a reassessment with the instruction that Summit’s activities can be aggregated “only if they are located on physically contiguous or adjacent properties.”
Posted on September 6, 2012
Federal and state regulators have, over the years, frequently received complaints about odor. Because the problem is a common one -- and because the origins of environmental law lie, in part, in the common law of public nuisance -- one might think we would have developed a consistent, practical way of regulating odor. We haven’t. No federal laws address odor, and the various state laws and rules addressing odor are a hodge-podge of not fully-considered ideas.
This is likely due in part to the subjective nature of odor: one person’s stench may be another person’s sweet smell of success. More importantly, though, there is no commonly accepted way of quantifying or measuring odor. If you cannot define something precisely and cannot agree on how to measure it, it necessarily follows that you will have a hard time regulating it. There have been attempts to use odor measurement technologies including the scentometer or field olfactometer, but they ultimately rely on subjective human olfactory assessment. While some states allow them as a guide, it does not appear that any statutory or regulatory scheme has adopted their use, and in fact, some states legislatures have adopted resolutions prohibiting their agencies from using such technologies for enforcement purposes.
So what is a regulator to do? Consider the efforts made by one state, my beloved Commonwealth. Virginia has tried to cram the square peg of odor into the round hole of the Best Available Control Technology (“BACT”) requirement of the Clean Air Act’s prevention of significant deterioration of air quality (“PSD”) preconstruction permitting program. Applying the BACT process to odor may have sounded like a good idea back in the day when the PSD rules were first adopted and BACT was a sexy new acronym, but implementation of the BACT approach for odor has not been easy.
At the outset, there is the difficulty that the BACT process applies only to things that are “pollutants” under the Clean Air Act. Not everything that regulators want to regulate under the Clean Air Act, however, is considered a “pollutant” under the Act. (If you doubt this, recall that it took many years of agency action and litigation and decisions by the United States Courts of Appeals and the Supreme Court before it was generally accepted that carbon dioxide is a pollutant under the Clean Air Act.) And so it is with odor, which is defined by Webster’s Dictionary as “a quality of something that stimulates the olfactory nerves or the stimulation itself. In short, odor is definitely not a “typical” Clean Air Act pollutant. (Interestingly, certain substances that are pollutants, also carry the name “aromatic” if they also happen to be organic compounds with a cyclical structure, but I digress.)
Even if one can accept that “odor” is a “pollutant,” though, can the BACT process be applied to it? Not really. ”Best available control technology” means “an emission limitation based on the maximum degree of reduction of [a pollutant . . .] which the permitting authority . . . , taking into account energy, environmental, and economic impacts and other costs, determines is achievable . . . .” Clean Air Act § 169(3). And typically BACT is determined through a top-down approach, i.e., one starts with the most stringent emission limitation theoretically achievable and then moves down from there only if the various costs of that approach are too high. How can such an approach work for odor, though, when we do not have a unit measure for odor, much less a quantitative scale for objectionable scent. Without such a measure or scale, it is effectively impossible to evaluate whether the environmental, economic or energy costs of reducing odor are reasonable or cost-effective.
So, if my beloved Commonwealth doesn’t now have the answer, let me cast my net more broadly and ask if anyone knows of a good practical scheme for regulating odor.
Posted on August 30, 2012
On August 13, 2012, the United States Court of Appeals for the Fifth Circuit held that the Environmental Protection Agency’s (EPA) disapproval of the Texas Flexible Permit Program (TFPP) had been arbitrary and capricious, an abuse of discretion, not in accordance with law, and unsubstantiated by substantial evidence on the record taken as a whole. Accordingly, the Fifth Circuit granted the petition for review, vacated EPA’s disapproval of the Texas plan and remanded the matter to EPA.
The TFPP, a Minor new source review (NSR) permit program, had been submitted to EPA in November 1994 as a revision to the Texas State Implementation Plan (SIP). The TFPP authorized modifications to existing facilities without additional regulatory review provided the emissions increase would not exceed an aggregate limit specified in the permit.
Despite the mandate in the Clean Air Act (CAA) that EPA approve or disapprove a SIP revision within eighteen months of its submission, EPA failed to make a determination on the TFPP for more than sixteen years. By the time that EPA announced its disapproval, the State of Texas had issued approximately 140 permits under the TFPP. And despite the excessive delay in announcing its disapproval of the TFPP, EPA found time to promptly notify flexible permit holders in Texas that their facilities were operating without a SIP-approved air permit and that they were risking federal sanctions unless SIP-approved air permits, requiring current Best Available Control Technology, were obtained.
The State of Texas and ten industry and business groups subsequently filed suit challenging EPA’s disapproval, which had been based on three primary arguments: 1) the program might allow major sources to evade major NSR; 2) the provisions for monitoring, recordkeeping and reporting (MRR) are inadequate, and 3) the methodology for calculating permit emissions caps lacks clarity and is not replicable. Two of the justices on the 3-judge panel court rejected each of EPA’s contentions, with the third justice dissenting.
The majority rejected EPA’s contention that the TFPP allowed major sources to evade Major NSR because the TFPP includes three rules that affirmatively require compliance with Major NSR, and EPA could not identify a single provision in the CAA or the CAA implementing regulations that empowered EPA to disapprove a SIP that did not also contain an express negative statement that the Minor NSR permit could not be used to evade Major NSR. Further the court noted that in its briefings, EPA had conceded that language explicitly prohibiting circumvention of the Major NSR requirements is not ordinarily a minimum NSR SIP program element. 75 Fed. Reg. at 41,318-19.
The majority also rejected EPA’s contention that the TFPP allowed the Texas Commission on Environmental Quality executive director too much discretion in determining MRR requirements in a Minor NSR permit and that this amount of discretion is contrary to EPA policy. The court found that EPA could not identify an independent and authoritative standard in the CAA or its implementing regulations that required MRR requirements to be specified in a SIP, rather than based on the size, needs, and type of facility authorized in a Minor NSR permit. In addition, the court found that EPA failed to identify the purported policy of disfavoring “director discretion” in any comments that EPA submitted to the State of Texas on the TFPP regulations or in EPA’s disapproval of the requested Texas SIP revision. Thus, the court held that the purported policy is not in the record on which the court must review EPA’s disapproval under the APA. Although not a factor in its decision, the majority also noted that “other recent EPA action tends to not only undercut the assertion of such a policy but also to give the impression that EPA invented this policy for the sole purpose of disapproving Texas’ proposal.”
Finally, the majority rejected all of the arguments EPA gave for finding the TFPP to be deficient. Among other things, the court concluded that EPA could not identify a single provision in the CAA or EPA’s Minor NSR regulations that requires a state to specify the method of calculating emissions caps or to demonstrate replicability in its SIP or as a condition of approval of a state’s Minor NSR program. Similar to its comments on EPA’s second contention, the majority also noted that EPA appears to have adopted the third test solely for application to the TFPP.
Due to the uncertain status of the TFPP and the risk of federal enforcement, most flexible permit holders requested that the flexible permits be altered to reflect that the authorization meets the air permitting requirements already in the EPA-approved Texas SIP. Thus, EPA succeeded in gutting a Minor NSR permit program that it had wrongly disapproved, but it did not achieve any substantive changes in permit requirements. Although the majority vacated EPA’s disapproval of the TFPP and remanded the matter to the agency, EPA is not likely to act and facilities in Texas are not likely to decide on whether to pursue new flexible permits until after the November election.
Posted on August 29, 2012
The Cross-State Air Pollution Rule (Transport Rule) [76 Fed. Reg. 48208] adopted by EPA in mid-2011 -- requires sources in the eastern U.S. to reduce their emissions substantially. Numerous states and industry groups challenged the rule in the D.C. Circuit, and many of the petitioners asked the court to stay the rule pending litigation. One motions panel of the court stayed the Transport Rule in late 2011, and then a subsequent panel directed that all briefing in the case be completed -- and oral argument be held -- within approximately 100 days after the stay was issued.
That the case was put on such a tight briefing schedule led many litigants to speculate that the court wanted to resolve the case quickly and would issue its decision within 60 days of the April 13, 2012 oral argument. When mid-June came and went with no decision, many of those same litigants then predicted the decision would come by mid-July so as not to interfere with the judges’ summer vacations. In support of their mid-July prediction, they also claimed that the head of EPA’s Air Office, Gina McCarthy, agreed with them. In early July, Ms. McCarthy had indeed told some state regulators that the court would issue its decision on Friday, July 13, but she had quickly added that her prediction should not be taken too seriously because she had been wrongly predicting the imminent issuance of the decision for the past thirty days. Nonetheless, several in the media reported her prediction as gospel, prompting all involved to stay glued to the D.C. Circuit’s website on Friday, July 13.
As one of those waiting for the court to issue its opinion on the Transport Rule, I was reminded of a similar waiting game in which I was involved in 1997. In May of that year, I had argued a case before a three-judge panel in the Fourth Circuit, where I had found one judge to be sympathetic to my argument, one judge to be antagonistic (but nicely so, because this was the Fourth Circuit after all), and the third judge to be a cipher. As soon as oral argument ended, my client started bombarding me daily with the same question: when would the court issue its decision? I couldn’t answer that question (no matter how often I was asked), but I thought retired Fourth Circuit Judge James Marshall Sprouse might have insights into the court’s decision-making process. He had been gracious enough – and patient enough -- to help me prepare for oral argument in my case (and to help me persuade the client to eliminate some of the more bombastic points from the argument).
Gamely consulting his crystal ball and taking into account that the case had been argued so late in the term, Judge Sprouse suggested that (1) if there was no dissent, then the court might issue its decision by the end of July; (2) if one judge dissented, then there might be a delay of another one to two months; and (3) if each of the three judges wrote a separate opinion or if one of the jurists was trying to be Solomon-esque -- finding areas of agreement and areas of disagreement with each of the other two judges on the panel -- then there might not be a decision until well into the fall. Judge Sprouse was spot on in my case: the decision -- which fell into Category 3 -- was issued in late October 1997.
Back to the present now. The D.C. Circuit issued its decision on the Transport Rule on August 21, 2012. In an opinion by Judge Brett Kavanaugh, joined by Judge Thomas Griffith, the court held that the Transport Rule exceeds EPA’s statutory authority in two respects, by (1) requiring upwind states to reduce emissions by more than their own significant contributions to nonattainment in other states, and (2) failing to allow states the initial opportunity to implement the emission reductions required by the Transport Rule. Judge Rogers wrote a stinging dissent.
I leave it to my ACOEL colleague Dave Flannery and his more detailed description of the decision below. I will add only that although Judge Sprouse passed away eight years ago, the timing of the decision was just what he might have predicted.
Posted on August 28, 2012
EPA was handed a setback in its efforts to establish aggressive controls on the energy industry in general, and the electric power industry in particular, when the D.C. Circuit issued its August 21, 2012 decision vacating the Cross-State Air Pollution Rule (CSAPR). EME Homer City Generation LP v. EPA, Case. No. 11-1302.
Significantly, the D.C. Circuit’s order not only vacated and remanded CSAPR, but also directed EPA to continue administering the previously-in-effect Clean Air Interstate Rule (CAIR) pending the promulgation of a valid replacement for CSAPR.
In a 2 to 1 decision, the court ruled that CSAPR exceeded EPA’s authority in two areas:
a. CSAPR impermissibly required upwind states to reduce more than their “significant contribution” to downwind non-attainment; and
b. CSAPR deprived upwind states of the initial opportunity to implement any required emission reductions by immediately imposing a Federal Implementation Plan.
Significantly, the opinion of the court sets forth a roadmap for the development of a CSAPR replacement rule. This is accomplished by the court’s establishing “several red lines that cabin EPA’s authority.” In many cases the court offers specific examples of the types of calculations that EPA would have to make in order to determine permissible emission reductions. These “red lines” and example calculations are summarized below:
1. EPA cannot force an upwind state to reduce more than its own contribution to a downwind state minus what level EPA determines to be insignificant.
Example: If 3 units were set at the level of insignificance and an upwind state’s contribution to nonattainment in a downwind state is 30 units, then the most reduction that could be required of the upwind state would be 27.
2. EPA’s authority to force reductions on upwind states ends at the point where the downwind state achieves attainment.
3. The extent to which an upwind state’s contribution is significant depends on the relative contribution to nonattainment of other upwind states. The obligation to reduce emissions in the upwind states must be allocated “in proportion to the size of their contributions to downwind non-attainment.”
Example 1: Assume that the relevant national ambient air quality standard (NAAQS) is 100 units, that the ambient level of the at-issue pollutant in downwind state A is 150 units, and that state A is contributing 90 units to that overall concentration. Assume also that three upwind states are each contributing 20 units to the total ambient concentration in downwind state A. Under those circumstances, downwind state A is entitled to at most 50 units of relief -- with the 3 upwind states each contributing 16 2/3 units.
Example 2: If the scenario in Example 1 were changed only to the extent that the upwind states contributed 10, 20 and 30 units respectively, the upwind states would be obligated to reduce their contributions by 8 1/3, 16 2/3 and 25 units, respectively.
Example 3: If the air quality measurement in Example 1 was 180 units and downwind state A contributed 120 of those units, with 3 upwind states contributing 20 units each, then downwind state A is entitled to at most 60 units of relief to be distributed proportionately among the upwind states.
4. EPA may consider costs, but only to further lower an individual state’s emission reduction obligation. EPA may do this in a way that benefits some upwind states more than others. The objective of reducing the control obligation of an upwind state would be to prevent exorbitant costs from being imposed on certain upwind states.
5. EPA must ensure that the combined obligations of the various upwind states do not produce more control than necessary for the downwind state to achieve the NAAQS.
Example: If state A reduces 5,000 tons of NOx to achieve its largest downwind emission reduction obligation while state B reduces 2,000 tons for the same purpose, and if EPA modeling then shows that “all downwind non-attainment” would be resolved if the combined reduction of the two states were 10% lower, then EPA would be obligated to reduce the emissions reduction obligation of the upwind states by 10%.
The court’s ultimate holding on this aspect of the CSAPR decision is:
States are obligated to prohibit only those “amounts” of pollution “which will . . . contribute significantly” to downwind attainment problems – and no more. Because the Transport Rule exceeds those limits, and indeed does not really try to meet those requirements, it cannot stand.
Even as EPA considers its next steps in the wake of the decision, states and regulated sources will begin to focus on how to develop and implement a program to address interstate air quality that satisfies the new ground rules that have been established by the court.
Posted on August 27, 2012
In split decisions over a two-week period on entirely different Clean Air Act issues, three different Circuits refused to give deference to EPA interpretations.
The merits of the three decisions – concerning the latitude States have in designing "minor" new source permitting programs approvable in their State Implementation Plans, the attributes that make a source "major" for Clean Air Act permitting purposes, and the limits on EPA's authority to manage emissions transported from one State to another – are far reaching and significant on many levels. One interesting common thread underlying the merits is how the three different Circuits approached the doctrine of deference.
In Texas v. EPA, No. 10-60614 (5th Cir., Aug. 13, 2012), the Fifth Circuit vacated EPA's disapproval of a State Implementation Plan revision Texas submitted to make its Minor New Source Review rules more flexible (by using a "bubble" concept for reducing the types of minor changes needing separate preconstruction permits). The Court dismissed EPA's position that the Texas rules conflicted with EPA's policy against State Implementation Plan provisions that allow "director discretion." The majority concluded "[t]here is, in fact, no independent and authoritative standard in the CAA or its implementing regulations requiring that a state director's discretion be cabined in the way that the EPA suggests" and "[t]therefore, the EPA's insistence on some undefined limit on a director's discretion is . . . based on a standard that the CAA does not empower EPA to enforce."
In Summit Petroleum Corp. v. U.S. EPA, Nos. 09-4348 and 10-4572 (6th Cir., Aug. 7, 2012), the Sixth Circuit vacated EPA's determination that, because they are "functionally related," natural gas production wells are "adjacent" to the gas processing plant to which the output of the wells is pipelined. The practical consequence is that if the wells and the plant are "adjacent," their potential emissions would be aggregated and would exceed the threshold level requiring a Title V permit, whereas if they are not "adjacent," they would be separately subject to less onerous "minor" source permitting requirements. The Court relied upon the dictionary definition, etymology, and case law on the meaning of "adjacent" to conclude that "adjacency is purely physical and geographical." The Court wrote "we apply no deference in our review of EPA's interpretation of ['adjacent']" since the word is "unambiguous," and "we hold that the EPA has interpreted its own regulatory term in a manner unreasonably inconsistent with its plain meaning . . .."
In EME Homer City Generation v. EPA, No. 11-1302 (D.C. Cir., August 21, 2012), the D.C. Circuit vacated EPA's Cross-State Air Pollution Rule (CSAPR), also known as the Transport Rule, requiring 28 States to curtail sulfur dioxide and nitrogen oxide emissions from one State deemed by EPA to "contribute significantly to nonattainment" of National Ambient Air Quality Standards for ozone or fine particulate matter in another State, or to "interfere with maintenance" of such standards in another State. The Court held that the way in which EPA quantified allowable emissions from the various States exceeded the Agency's statutory authority, and that EPA's preemptive implementation of State Implementation Plan requirements was "incompatible with the basic text and structure of the Clean Air Act" and contrary to the "first-implementer role" reserved for the States by the Act. The Court concluded that EPA's interpretation of the "good neighbor" provision – one of more than 20 State Implementation Plan requirements in Section 110(a)(2) of the Act – offended the principle that Congress does not "hide elephants in mouseholes" (citing the Supreme Court's 2001 decision in Whitman v. American Trucking Ass'ns). EPA's interpretation of its authority to promulgate Federal Implementation Plans before giving the States an opportunity to submit State Implementation Plans after EPA determined the level of "good neighbor" emission reductions required was rejected on both step 1 and step 2 Chevron grounds.
Three swallows do not a summer make, but if Courts continue to delve more deeply into the merits of EPA decisionmaking under the Clean Air Act and similar statutes in this era of Congressional gridlock, the consequences could be profound for supporters and opponents of EPA actions.
Posted on August 14, 2012
On Friday, in Texas v. EPA, the 5th Circuit Court of Appeals vacated EPA’s decision rejecting Texas’s SIP revisions that would have implemented (and did implement, for 16 years) a Flexible Permit Program for minor NSR sources. While genuflecting at the altar of deference to agency decisionmaking, the Court concluded that EPA’s rejection was not based on either EPA factual determinations or on its interpretation of federal, as opposed to state, law. The Court also concluded that EPA had not in fact relied on the reasons given in its briefs, and refused to defer to EPA’s “post hoc rationalizations.” The Court thus gave essentially no deference to EPA’s decision.
The interesting part of the decision was the dissent by Judge Patrick Higginbotham, a Reagan appointee. Judge Higginbotham took the majority to task for “not faithfully applying the deferential arbitrary and capricious standard.” He then persuasively demonstrated why the Texas program, as written, did violate the Clean Air Act.
After dismantling the majority’s logic, he then addressed the practical heart of the case – EPA’s 16-year delay in rejecting the SIP revisions. While criticizing EPA for the delay, Judge Higginbotham pointed out that there is a statutory remedy for EPA’s failure to rule on the revisions – a suit under section 7604(a)(2) of the CAA – a remedy never pursued by Texas.
What’s important about this case is that is an excellent example of why judicial restraint is so often “more honor’d in the breach than the observance.” (It’s been a while since I’ve quoted Shakespeare.) When a federal agency unwinds state policy after a sixteen-year delay, it’s very tempting for courts to engage in judicial activism, if that’s what it takes to go upside the agency’s head. The harder course, requiring more discipline, is to remain true the ideal of judicial restraint – that a court is not to substitute its judgment for an agency acting pursuant to an act of Congress. Therefore, Judge Higginbotham’s conclusion seemed worth note:
"As so often with political debate in search of a legal forum, its utility lies largely in pleasure of expression. Angst over perceived federal intrusion into state affairs ought be eased by the reality that laws enacted by Congress are laws of the States. Congress passed the Clean Air Act and made it enforceable by the EPA. The State was represented in that decision by two senators and its thirty-two other elected members of Congress. It also bears mentioning that its former governor was resident in the White House for eight of the years in passage here. The Clean Air Act is not foreign law. I dissent."
Posted on August 7, 2012
On July 30, the United States Court of Appeals for the Fifth Circuit Court of Appeals handed down an opinion finding that EPA was within its authority to approve in part and to disapprove in part the most recent revisions to the state implementation plan (“SIP”) that Texas submitted to EPA in 2006 [Luminant Generation Co. LLC v. EPA, No. 10-60934 (5th Cir. July 20, 2012)]. EPA's action, effective on January 10, 2011, allowed an affirmative defense for unplanned startup, shutdown, and malfunction (“SSM”) events, but it disapproved the portion of the SIP revision providing an affirmative defense against civil penalties for planned SSM events.
Several groups of Environmental Petitioners (including the Environmental Integrity Project, Sierra Club, Environmental Texas Citizen Lobby, Citizens for Environmental Justice, Texas Environmental Justice Advocacy Services, Air Alliance Houston, and Community In-Power and Development Association) challenged EPA’s partial approval of that part of the SIP which created an affirmative defense for unplanned SSM events. The State of Texas and several Industry Petitioners and Intervenors (Luminant Generation Company, Sandow Power Company, Big Brown Power Company, Oak Grove Management Company, Texas Oil & Gas Association, Texas Association of Business, Texas Association of Manufacturers, and Texas Chemical Council) challenged that part of EPA’s action which disapproved the creation of an affirmative defense against civil penalties for planned SSM events.
A three-judge panel of the Fifth Circuit determined that EPA's decision was valid unless "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." Applying that standard of review and citing myriad cases upholding the premise that a state is afforded "broad authority to determine the methods and particular control strategies [it] will use to achieve the statutory requirements," including consistency with the Clean Air Act and the attainment and maintenance of NAAQS of the Act, (referenced throughout the opinion as Chevron deference), the court found the EPA's administrative decision-making process had been "consistently formal and deliberative prior to and during its promulgation of final rules under the Act." In particular, the court cited the reasoning EPA set forth in the final rule to explain its decision approving the portion of the state's SIP which "squarely adheres to its past policy guidance" and observed that EPA’s decision was "the result of a formal and deliberative decision-making process." The court also found that the EPA's interpretation of the Clean Air Act was based on a permissible construction of the statute because the agency found: (1) the affirmative defense for unplanned SSM activity was narrowly tailored; (2) the affirmative defense did not interfere with the Act's requirement that a SIP's emission limitations be continuous or with the state's ability to enforce emission limitations; and (3) the affirmative defense did not interfere with any other applicable requirement of the Act, including the attainment of national ambient air quality standards (NAAQS). The court was not persuaded by Environmental Petitioners' arguments, in part because the wording of the affirmative defense excludes all emissions that could "cause or contribute to an exceedance of the NAAQS, PSD increments, or a condition of air pollution" and thereby was not inconsistent with EPA's past policy and guidance, referencing a 1999 Memorandum of Steven A. Herman relating to excess emissions during SSM events.
In evaluating the state’s and Industry Petitioners' arguments, the court – after applying virtually the same analysis and criteria – found that EPA had not been arbitrary or capricious in disapproving an affirmative defense for planned SSM events. In reaching that conclusion, the court relied in large part on the premise that such events and excess emissions from such events were "avoidable." Further, in upholding the disapproval and denying Texas’s and Industry Petitioners’ request for relief, the court observed that EPA's reasons provided for the disapproval "conform to minimal standards of rationality."
Posted on July 30, 2012
Based on a doctrine going back to Roman times – the “Public Trust Doctrine,” a consortium of national and state environmental organizations have brought a series of lawsuits, naming minors as plaintiffs, seeking declarations that federal and state governments have an independent, fiduciary responsibility to protect the quality of air as a public natural resource and to do so by regulating GHGs. Though generally unsuccessful, they have obtained two recent rulings that have lent some credence to their efforts. These rulings raise fundamental questions regarding the bases for government regulation to protect the environment.
On July 9, 2012, a Travis County district court judge, in response to the plea to the jurisdiction of the Defendant Texas Commission on Environmental Quality (TCEQ), found that the agency’s “conclusion that the public trust doctrine is exclusively limited to the conservation of water is legally invalid.” Bonser-Lain v. Texas Commission on Environmental Quality, Case No. D-1-GN-11-002194 (201st Dist. Ct., Travis County, Tex.). According to the court, the doctrine includes all the natural resources of the state. The court, however, also found that the agency’s refusal to exercise its authority, based on current litigation by TCEQ against EPA regarding the ability of EPA to regulate GHGs, was a reasonable exercise of discretion. The plaintiffs had filed a petition for rulemaking with the agency, which the agency had denied, that would have required, among other things, that GHG emissions from fossil fuels be frozen at 2012 levels and that a plan be developed to implement the corresponding reductions.
On June 29, 2012, a New Mexico district court judge, without much explanation, denied in part that state’s motion to dismiss a similar lawsuit, which sought a declaration that the state had failed to comply with its public trust obligation to protect the atmosphere. Sanders-Reed v. Martinez, Case No. D-101-CV-2011-01514 (Santa Fe County First Judicial District Court, NM). The court’s ruling allowed the law suit to go forward.
This series of suits and the decisions in these two cases raise fundamental questions about the bases for governmental regulation to protect the environment. First, should the atmosphere be considered a public trust resource? Although air is included in the definition of a natural resource under Superfund, it is different than other natural resources, e.g., land, fish, wildlife, biota, water, groundwater, and drinking water supplies, in that it is not something that can be captured and conserved or its use managed. Even assuming air is properly categorized as a public trust resource, should an independent common law duty be imposed on states requiring them to take action to protect it? As a practical matter, all states do have extensive regulatory schemes to protect air quality. What additional benefit does the imposition of a common law duty create? If a duty is to be imposed, should it be translated into specific requirements to compel a specific result, and, if so, based on what guidance. Are the specifics of air quality protection better left to federal and state legislatures and the agencies that implement their legislation? Finally, with regard to GHG emissions, in addition to concerns about identifying appropriate requirements, are they better managed on the federal and international level because, unlike traditional air pollutants, their impact is global rather than regional? These questions all appear to be political ones, better handled in forums other than the courts.
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Posted on July 18, 2012
Yesterday, in American Petroleum Institute v. EPA, the D.C. Circuit Court of Appeals affirmed EPA’s revisions to the National Ambient Air Quality Standard for NOx. The revisions adopted, for the first time, an hourly NAAQS for NOx, in addition to the annual standard.
API made a number of assertions that EPA had been arbitrary and capricious in its review of the scientific evidence concerning potential short-term impacts. The most important were EPA’s reliance, in part, on a study which had not been the subject of peer review, and EPA's alleged failure to consider a study suggesting that short-term impacts had not been demonstrated.
The Court rejected both complaints. With respect to the first, API asserted that EPA violated its own requirements when it relied on an internal analysis that had not been peer-reviewed. The Court’s response was short, but certainly not sweet:
Perhaps the API should have had its brief peer-reviewed. In quoting the EPA’s Review Plan, the API omits the first and most relevant word of the following sentence: “Generally, only information that has undergone scientific peer review … will be considered.” Of course, “generally” here indicates the practice in question will not invariably be followed. A bad start for the petitioners.
To which I can only say, ouch. Significantly, the Court noted that EPA did have its internal analysis reviewed by the Clean Air Scientific Advisory Committee, and it stated that review by CASAC qualifies as peer review.
Regarding the second claim, the Court concluded that EPA had considered the skeptical study. Moreover, EPA gave reasons why it rejected the conclusions of the study. This was enough for the Court.
I have previously pointed out that the Court’s review of EPA’s NAAQS in recent years has pretty much made the CASAC the final arbiter of the validity of EPA NAAQS promulgations. If EPA’s decision is supported by CASAC’s review – as it was here – EPA’s NAAQS will be affirmed. If, on the other hand, as was the case with EPA’s PM2.5 NAAQS, EPA promulgates an NAAQS that ignores CASAC advice, EPA’s standard is not likely to survive judicial review.
Yesterday’s decision only confirms this analysis. CASAC did not merely review the one paper that API had challenged; it proposed a short-term standard that was similar to and certainly consistent with the standard that EPA ultimately adopted. I’m not sure that Congress meant to delegate to CASAC the determination whether NAAQS adopted by EPA are arbitrary and capricious, but I think that that is where we are today.
To which API can only say, ouch.
Posted on June 29, 2012
The body of caselaw rejecting climate change tort claims seeking judicially-imposed restrictions on greenhouse gas emissions, which I reviewed in a prior post on January 3, 2012, continues to grow. That post predicted that (i) none of these suits were likely to succeed, given the U.S. Supreme Court’s holding last year in Connecticut et al. v. American Electric Power Co. et al. (“AEP”) that common law “nuisance” claims seeking such restrictions are displaced by the Clean Air Act, but nevertheless (ii) plaintiffs would continue to repackage and pursue the claims in different courts under different common law labels. Both predications have proved accurate.
Two of the cases summarized in that post, Comer et al. v. Murphy Oil USA et al. and Alec L. et al. v. Jackson et al., have since been dismissed by the presiding district courts. In Comer, where a group of Mississippi landowners sued scores of national electric utilities and other companies for damages caused by Hurricane Katrina, claiming that the defendants’ greenhouse gas emissions constituted a common law “nuisance,” the court held that the claims were preempted by the Clean Air Act and, further, that they presented non-justiciable political questions and plaintiffs lacked standing. In Alec L., where a group of plaintiffs sued several federal agencies under the “public trust” doctrine, seeking an order mandating greenhouse gas regulations, the court likewise held that the claims could not be recognized as a matter of federal law and, in any event, would be displaced by the Clean Air Act. A third case, Native Village of Kivalina v. ExxonMobil Corp. et al., remains pending before the Ninth Circuit, following the district court’s dismissal of the complaint on grounds that the “nuisance” claims were non-justiciable and plaintiffs lacked standing.
In addition, “public trust” claims have now been filed in nearly all fifty states. Some of these take the form, like Alec L., of common law tort litigation, with non-profit groups and individuals suing state officials and agencies in state courts, seeking injunctive orders directing the promulgation of greenhouse gas regulations. Several of these cases have already been dismissed, including in Alaska and Oregon (both on political question and justiciability grounds); none has proceeded past the pleading stage. Other claims take the form of administrative petitions, asking the relevant state agencies to issue greenhouse has regulations. Many of these petitions, in more than 30 states so far, have already been denied; none has been granted.
The unanimous rejection of these claims should presumably, at some time, begin to deter the filing of further climate change litigation. But that tipping point does not seem yet to have occurred. At least for the immediate future, it appears likely that plaintiffs will continue to use – and, to many minds, distort – the common law tort system to pursue the political goal of greenhouse gas regulation.
Posted on June 28, 2012
Late in the fall of 2011, the California Air Resources Board adopted its groundbreaking cap-and-trade rules (CTR) for greenhouse gasses. ARB faced stiff headwinds at every step. This month, one lingering legal tempest subsided while a new legal gale appeared on the horizon. Each involves novel environmental justice claims and could snuff out CTR and similar programs in other states.
First, balmier breezes for CTR: in a decision filed June 19, 2012, the California Court of Appeals rejected a 2009 mandamus petition filed by the Association of Irritated Residents (AIR) and other groups and upheld ARB’s climate plan under the “California Global Warming Solutions Act of 2006” (Cal. Health & Safety Code §38500 et seq., also known as “AB 32”). The court recognized the magnitude of ARB’s challenge under AB 32 and held: “After reviewing the record before us, we are satisfied that the [ARB] has approached its difficult task in conformity with [AB 32], and that the [GHG] measures that it has recommended reflect the exercise of sound judgment based upon substantial evidence. Further research and experience likely will suggest modifications to the blueprint drawn in the [ARB] scoping plan, but the plan‘s adoption in 2009 was in no respect arbitrary or capricious.” (p. 22).
In its 2009 mandamus petition, AIR et al. had challenged ARB’s overall plan to implement AB32, partly on the grounds that the plan’s CTR element did not adequately protect already overburdened local communities. The petitioners preferred “direct regulation” of GHGs at sources, another major element of ARB’s plan. They asserted that the full benefits of AB 32 to communities surrounding major sources could only be obtained by controlling GHG emissions at each GHG source, rather than by adopting the CTR. CTR would allow GHG sources to acquire and trade GHG allowances and/or GHG offsets resulting from GHG reductions in other communities, states, provinces or countries.
Now, a new tempest: earlier this month, AIR et al. filed a new complaint with EPA under title VI of the federal Civil Rights Act alleging that ARB had discriminated against African/American, Latino and Asian/Pacific Islander residents throughout California by adopting and implementing CTR. The title 6 complainants ask EPA to require, as a condition of continuing to provide federal financial assistance to ARB, that ARB reverse its decision to approve the CTR and adopt less discriminatory alternatives. It is impossible to say how or when EPA will respond.
Forecast: ARB will continue to try to implement CTR on schedule in spite of all legal flurries.
A lot is at stake now. Under the CTR, ARB plans to conduct its first auction of GHG allowances in November of this year, which could raise tens of millions of dollars. Starting January 1, 2013, refineries, power plants and other major GHG sources throughout California must properly account for all of their GHG emissions and later surrender qualifying GHG allowances and/or GHG offsets to ARB for every ton of GHGs emitted during the first compliance period (2013-14). Later this month, ARB plans to link its CTR to a similar program in the Canadian Province of Québec. Please see the June 11, 2012 ARB Notice.
But all regulated and other interested parties are left with new questions about how these legal winds may affect:
• The willingness of regulated companies and GHG traders to bid tens of millions or more for GHG allowances at ARB auctions.
• The willingness of other states to adopt cap-and-trade programs and link them to the ARB CTR. U.S. states are now vulnerable to federal title VI complaints as soon as they adopt their own cap-and-trade programs.
• The ability of ARB to contain the costs of AB 32 and minimize leakage by adopting the CTR and linking it to other cap-and-trade programs, as provided by AB 32.
• The continued ability of California to maintain its own climate program and achieve its climate goals.
It surely looks like more westerlies are approaching the CTR on the legal radar.
Posted on June 7, 2012
Last week, the District Court for the District of Columbia dismissed the so-called “public trust” climate change law suit. I will certainly give the plaintiffs in these cases credit for both originality and persistence. Legal merit and good public policy are another matter.
In any case, the plaintiffs sued EPA and various other federal agencies, seeking a finding that the agencies have failed adequately to protect a public trust asset, also known as the atmosphere, from climate change. The plaintiffs requested an injunction requiring that the agencies take actions necessary to reduce CO2 emissions by 6% yearly, beginning in 2013.
It did not take the Court long to dismiss plaintiffs’ arguments – and the case. The Court’s opinion has two critical holdings. First, since there can be no diversity action against the United States, the plaintiffs do not have access to federal courts unless there is a federal question. However, as the Court noted, the public trust doctrine is a creature of state law; there is no federal public trust doctrine.
Secondly, the Court concluded that, even if there ever had been a federal public trust doctrine, any such doctrine has been displaced by the federal Clean Air Act. Here, the Court relied squarely on the Supreme Court’s recent decision in American Electric Power v. Connecticut. The plaintiffs here tried to limit AEP to displacement of public nuisance claims, but the Court was having none of it, pointing out that AEP clearly stated that it was not federal public nuisance claims that were displaced by the CAA, but federal common law claims generally that were displaced.
Moreover, notwithstanding the plaintiffs’ creativity, the Court noted that:
"The question at issue in the Amer. Elec. Power Co. case is not appreciably different from the question presented here—whether a federal court may make determinations regarding to what extent carbon-dioxide emissions should be reduced, and thereafter order federal agencies to effectuate a policy of its own making. The Amer. Elec. Power. Co. opinion expressed concern that the plaintiffs in that case were seeking to have federal courts, in the first instance, determine what amount of carbon-dioxide emissions is unreasonable and what level of reduction is practical, feasible and economically viable."
And that really is the issue. Even if one believes that the government should be taking more aggressive action on climate change – and I certainly am among those who think it should be doing so – having the courts decide what level of reductions are necessary, and by when, is nuts. It’s just not a way to make public policy on the most complex environmental issue of our time.
Back to the drawing board for citizen plaintiffs. I can’t wait to see what they come up with next.
Posted on April 17, 2012
On February 28 and 29, 2012, the U.S. Court of Appeals for the District of Columbia Circuit heard oral argument in Coalition for Responsible Regulation v. EPA, No. 09-1322 et. al., consolidated challenges to the U.S. Environmental Protection Agency (EPA) ’s greenhouse gas (GHG) regulations. These regulations are being challenged by a coalition of industry groups and some states (the Coalition). The Coalition argues that the EPA does not have the authority to regulate GHGs from stationary sources under the Clean Air Act (CAA)’s Prevention of Significant Deterioration (PSD) permitting program without Congress amending the law.
The Coalition is asking the Court to vacate EPA’s rules regulating greenhouse gases, including the so-called Tailpipe and Tailoring Rules, on the grounds that they are contrary to the Clean Air Act and deviate from the explicit emission permitting thresholds in the CAA. As Peter Keisler, a lawyer for the National Association of Manufacturers (NAM) argued, “the agency crossed the line from stationary interpretation to statutory revision” and violated the law by raising the emissions thresholds far above those provided for by Congress in the CAA in order to avoid issuance of an unmanageable number of PSD permits in the short term .
The PSD program applies to new major sources or major modifications at existing sources for pollutants where the area the source is located is in attainment or unclassifiable with the National Ambient Air Quality Standards (NAAQS). As Keisler explained to the court, 83% of the GHG emissions from stationary sources would be regulated if EPA addressed greenhouse gas emissions solely in permits for the larger sources already subject to PSD requirements based on their emissions of criteria pollutants.
As Keisler then explained, under EPA’s Tailoring Rule which requires permits based solely on greenhouse gas emissions, 86% of the GHG emissions from stationary sources would be regulated – “a very tiny increment of difference, but a huge difference” in the number of sources that would now be regulated. And this increment of difference between 83% to 86% would translate into stationary sources never before regulated and now required to meet all PSD requirements, including implementation of costly best available control technology (BACT).
A decision by the Court is expected this summer.
Having participated in oral argument preparation and having observed both days of the oral arguments, it is my impression that the NAM arguments against EPA's Tailoring Rule provide the Coalition with the best chance for victory. NAM’s sound interpretation of the CAA and Congressional intent, coupled with the "avoidance of absurd results" doctrine, would blunt EPA's quantum leap through the CAA to create non-statutory GHG emission thresholds capturing only an additional 3% of stationary sources that were previously unregulated and would now have to bear crippling air pollution control costs for no real environmental benefit. This is the real absurdity of EPA's Tailoring Rule that I hope the court's decision will remedy.
Posted on April 13, 2012
By Daniel Riesel and Vicki Shiah, Sive Paget & Riesel, PC
On March 27, the U.S. Environmental Protection Agency proposed a rule limiting carbon dioxide (“CO2”) emissions
from new power plants fired by fossil fuels such as coal or natural gas. The rule applies to new fossil fuel-fired electric utility generating units in the continental United States; they do not apply to existing units or new “transitional” units that already have received preconstruction air emission permits and that start construction within 12 months of the proposed rule’s publication in the Federal Register.
Covered power plants would be required to meet an output-based standard of 1,000 pounds of CO2 per megawatt-hour. This standard favors natural gas over coal. EPA states that “[n]ew natural gas combined cycle power plant units should be able to meet the proposed standard
without add-on controls.” By contrast, coal-fired power plants would not be able to meet this standard without carbon capture and storage technology
, which is still under development and is expected to be quite costly – though EPA expects that the cost of such technology will decrease over time.
It is not clear whether the proposed regulation will have a significant effect on the energy industry, as the standard appears to reinforce current trends rather than require radical changes. In the preamble
to the proposed rule, EPA notes that, at present, “the industry generally is not building” coal-fired power plants and is not expected to do so “for the foreseeable future,” while natural gas is becoming more common as an energy source. According to EPA, the 1,000 lb/MWh standard is already being met by 95% of natural gas-fired combined cycle power plants that commenced operation between 2006 and 2010.
The proposed rule (a New Source Performance Standard
under Section 111 of the Clean Air Act) results from a settlement
between EPA and a group of states and environmental groups. These plaintiffs sued EPA in opposition to the agency’s refusal, in 2006, to establish greenhouse gas emission standards for new and modified power plants. EPA was required to revisit this decision in the aftermath of the U.S. Supreme Court’s landmark decision in Massachusetts v. EPA,
which affirmed EPA’s statutory authority under the Clean Air Act to regulate greenhouse gas emissions.
Under the settlement
giving rise to the standard proposed last week, EPA had also agreed to establish CO2 emissions guidelines for existing fossil fuel power plants. EPA has yet to propose such standards, and the time frame for its doing so is uncertain; EPA Administrator Lisa Jackson recently stated
, "[w]e don't have plans to address existing plants."
The full text of the proposed rule is available here
. Public comments are being accepted under Docket ID No. EPA‐HQ‐OAR‐2011‐0660 at www.regulations.gov
for 60 days after the proposed rule’s publication in the Federal Register.