Posted on April 8, 2014
On March 28, 2014, a federal district court vacated EPA’s “Water Transfer Rule,” which had sought to clarify EPA’s position that transfers of water between navigable bodies of water do not require NPDES permits. See Catskill Mountains Chapter of Trout Unlimited, Inc. v. United States Environmental Protection Agency (SDNY, 3/28/2014). The Water Transfer Rule, codified at 40 CFR § 122.3(i), was the presumptive culmination of a long and meandering trail of EPA regulatory interpretation, guidance memoranda and judicial opinions, including a trip to the United States Supreme Court in the case of South Florida Water Management District v. Miccosukee Tribe of Indians, 541 U.S. 95 (2004).
The Catskill ruling is notable in several respects. First, it came from a district court. After the Supreme Court ruled, in Decker v. Northwest Environmental Defense Center, that district courts, rather than appellate courts, have jurisdiction in certain situations to review such regulations -- even if the suits are brought years after the rules were promulgated, the Eleventh Circuit held in Friends of the Everglades v. EPA that it lacked original jurisdiction over a challenge to the water transfer rulemaking, a ruling that the Supreme Court declined to review.
Second, the district court did not stay its ruling pending appeal, though appeal is a virtual certainty. Thus, the permit status of various water transferors who relied on the rule (irrigation districts, dam operators, water utilities, etc.) is now in limbo until a higher court reviews the Catskill decision or EPA promulgates a temporary fix. Any such fix, by the way, may be hard to come by in light of the district court’s expressed views about EPA’s misinterpretation of Congressional intent.
Third, the opinion contains language about the definition of “navigable waters” that does not quite align with EPA’s and the Corps’ imminent release of a Notice of Proposed Rulemaking addressing that very definition.
At this time, then, the only certainty is that litigation over the Water Transfer Rule will continue to flow.
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 March 24, 2014
While the world waits for the Supreme Court to decide whether EPA can regulate greenhouse gas (GHG) emissions from stationary sources under the Clean Air Act, EPA and state permitting authorities have moved ahead to issue GHG permits. Some of those permits are encountering legal challenges. The Sierra Club and citizen activists are challenging permits issued by EPA Regions as insufficiently stringent, and urging EPA to use its Prevention of Significant Deterioration (PSD) permitting authority to require greater use of solar energy and carbon capture and sequestration (CCS) at new facilities.
So far, EPA’s Environmental Appeals Board has rejected two citizen challenges to GHG PSD permits issued by EPA Regions. On March 14, 2014, the Board denied the Sierra Club’s petition for review of a GHG permit issued by Region 6 for a new natural gas-fired power plant in Harlingen, Texas. In re La Paloma Energy Center, LLC. (Those of you who follow events in Texas will recall that EPA is currently running the GHG permitting program in that state, but has proposed to approve the state’s application to assume responsibility for that program.) The Board rejected Sierra Club’s arguments that the permit’s GHG emission limits were not stringent enough to meet BACT standards and that Region 6 should have required La Paloma to consider adding a solar energy component to its power plant. The Board cautioned, however, that there is no “automatic BACT off-ramp” for solar energy alternatives, and emphasized that permitting authorities must consider suggestions for adding solar energy components at new facilities on a case-specific basis.
In 2012 the Board rejected similar arguments by citizen activists who urged Region 9 to use its PSD permitting authority to require a new hybrid (gas-solar) power plant in California to reduce GHG emissions by increasing its planned solar generation capacity. In re City of Palmdale. The proposed plant was to be fueled primarily by natural gas, with a modest (10%) solar power component to satisfy California renewable energy requirements. The decisions in both City of Palmdale and La Paloma relied heavily on the Regions’ findings that there was insufficient space at the project sites to accommodate the solar power generation capacity that the petitioners were advocating.
The Palmdale decision also upheld Region 9’s rejection of CCS as a BACT requirement for that facility based on cost considerations. The estimated annual cost of CCS would have been twice the project cost (annualized over 20 years) in that case. Sierra Club has renewed the debate over the affordability of CCS in a new PSD permit appeal that is currently pending before the Board. In re ExxonMobil Chemical Company Baytown Olefins Plant. Region 6 rejected the CCS option in this case based on a finding that the cost would be disproportionately high. Stay tuned for a Board decision in the next few months . . .
*Any views expressed herein are the views of the author and do not necessarily reflect the views of the U.S. Environmental Protection Agency or the United States.
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 January 6, 2014
The Office of Surface Mining Reclamation and Enforcement (OSM) announced an important policy decision on August 20, 2013, clarifying the circumstances under which a coal mining permit can be terminated due to the permittee’s failure to commence mining operations. Under Section 506(c) of the Surface Mining Control and Reclamation Act (SMCRA), a surface coal mining permit “shall terminate” if the permittee has not commenced coal mining within three years of the issuance of the permit. The statute provides for extensions upon a “showing” that extensions are necessary for specified reasons, including for “reasons beyond the control of the permittee.” The statute and its counterparts in the approved SMCRA states, however, do not clearly indicate when a failure to mine will be deemed “beyond the control of the permittee.” Thus, many state permitting agencies and permittees have lacked sufficient guidance on whether permits could terminate automatically with no notice to the permittee and whether extensions had to be in writing or could be obtained through verbal discussions alone. And this, in turn, forced some permit-holders to review paperwork and interview employees -- in some cases from many years ago -- to determine if needed extension had been sought from regulators.
The drama came to an end in August when OSM reversed the position of a West Virginia OSM regional office, clarifying that SMCRA permits do not terminate automatically. Citing the line of cases disfavoring “automatic forfeitures,” OSM indicated that a coal mining permit remains valid, even if not used, unless and until the permitting authority takes an affirmative action to terminate it. The decision provides much-needed clarity to permittees -- reportedly hundreds -- facing uncertainty on this front. The battle continues, however, because environmental organizations recently filed suit in federal courts in West Virginia and Washington, D.C., arguing that OSM’s policy clarification constitutes an illegal rule that was issued in violation of the Administrative Procedures Act and SMCRA. Stay tuned.
Posted on October 30, 2013
Of the 21 separate questions presented in the 9 petitions for writ of certiorari filed in the U.S. Supreme Court in Utility Air Regulatory Group et al. v. Environmental Protection Agency et al., challenging nearly every aspect of the Environmental Protection Agency’s recent greenhouse gas regulations—from the initial “endangerment” finding to the restriction on motor vehicle emissions to the stationary-source permitting requirements—the Court granted review of only a single issue: “[w]hether [EPA’s] regulation of greenhouse gas emissions from new motor vehicles triggered permitting requirements under the Clean Air Act for stationary sources that emit greenhouse gases.” Several commentators have interpreted this decision (reported in a prior post by Theodore Garrett) as an implicit affirmation of EPA’s regulatory regime, insofar as the Court chose not to address some of the broader challenges to the agency’s basic authority to regulate greenhouse gas emissions under the Clean Air Act. But, whatever implications might be drawn from the Court’s decision not to grant review of certain issues, far more telling is the Court’s deliberate rewriting of the question presented, narrowly tailored to address the validity of the stationary-source permitting regulations.
Those regulations rest on an exceedingly questionable interpretation of the Clean Air Act. The stationary-source provisions of the Act require any industrial facility that emits an “air pollutant” in “major” amounts—defined by the statute as 250 or more tons of the pollutant per year—to obtain pre-construction and operating permits from the local permitting authority. 42 U.S.C. § 7475. EPA acknowledges that it would be “absurd” to apply these provisions by their terms to sources of greenhouse gas emissions, since nearly every business in the country (including even small commercial enterprises and residential facilities) emit greenhouse gases at more than 250 tons per year, and the agency can offer no reason why the statute should not be interpreted instead to apply only to the large industrial facilities that emit “major” amounts of a pollutant otherwise subject to regulation under the permitting provisions—i.e., one of the so-called “criteria pollutants” for which a national ambient air quality standard has been issued. Nevertheless, EPA has interpreted the statute to apply to sources of greenhouse gas emissions and, to address the acknowledged “absurd results” created thereby, has decided that for these purposes the threshold for a “major” emissions source should be increased from 250 tons per year—as stated in the statute—by 400-fold, to 100,000 tons per year. The agency has, in other words, literally rewritten the express terms of the statute in order to justify its preferred interpretation.
The dissenting judges in the D.C. Circuit severely criticized the result. That is most likely the reason the Supreme Court granted review of the case, to correct the agency’s interpretation of the Act and ensure that neither EPA nor other agencies attempt to redo legislative power in this way in the future. Whether or not the limited nature of the certiorari grant can be viewed as an approval of EPA’s authority to regulate greenhouse gases from mobile sources, it almost certainly reflects suspicion—if not disapproval—of the agency’s stationary-source regulations. The definitive answer should come by June 2014, when the Court is expected to rule.
Posted on September 13, 2013
The world’s largest source of surface fresh water is surrounded by a number of nuclear plants that have been generating power and waste for well over 30 years. Although the region has had the benefit of the power, it also has the legacy of low, medium, and high level waste that has been accumulating at these plants over the years. There is great concern over this situation because the lakes are the source of drinking water for over 30 million people.
Currently, Ontario Power Generation (OPG) has a proposal for a deep geologic repository (DGR) for low and intermediate level radioactive waste at their Bruce Nuclear facility near Kincardine, Ontario. The waste comes from the Bruce facility, as well as OPG’s Darlington and Pickering plants. It is currently stored above ground The DGR would be 680 meters below the surface of the ground and about one kilometer from the shores of Lake Huron. Kincardine offered to serve as a host community for the DGR, and no other potential sites have been considered. There has been extensive outreach in the Kincardine area over the past 10 years about the proposal, and some limited amount in Michigan. Only recently has the broader Great Lakes community become aware of the proposal and some significant concerns have been raised, primarily the proximity to Lake Huron and the lack of consideration of other sites. In addition, there is concern that this would be a precedent for more disposal sites for not only low and medium level waste, but also the high level waste from spent fuel. The proposal is under review by a Joint Review Panel formed by the Canadian Nuclear Safety Commission and the Canadian Environmental Assessment Agency.
Although OPG has done extensive engineering and geological work, the fundamental question is whether a disposal site should be located so close to one of the Great Lakes, the source of drinking water for over 30 million people. Also, should just one site be considered for something as significant as this? Some have argued that there should be no more nuclear plants on the Great Lakes until an acceptable disposal solution has been found. The reason the nuclear plants are there in the first place is the abundance of available cooling water. It seems ironic that the convenience of locating the disposal site next to the plant to limit transportation of the waste, also results in the waste staying close to Lake Huron. We should be able to do much better than this in the 21st Century.
Posted on September 4, 2013
There has been a flood (no pun of course) of new stories this month about rising sea levels, acidifying oceans, drought-driven wildfires, and extreme weather events in the U.S. and globally. At the same time, with the official release of the eagerly-awaited Fifth Assessment Report of the Intergovernmental Panel on Climate Change due in several weeks, leaks of a draft portion of the Report are coming out in the media, indicating increasing confidence in the underlying science and in a substantial human role in warming, primarily as a result of burning fossil fuels. Additionally, as reported in the N.Y. Times, it appears that the draft projects that sea level could rise by only about 10 inches by 2100 under the “most “optimistic” scenario. But “at the other extreme,” with emissions continuing to swiftly increase, “sea-level rise could be expected to rise at least 21 inches and might increase a bit more than three feet” by the end of this century—which “would endanger many of the world’s great cities — among them New York, London, Shanghai, Venice, Sydney, Australia, Miami, and New Orleans.” Some believe that the FAR will still understate the likely forthcoming climate disruptions.
Coincidentally (or not?), those of you who still subscribe to the National Geographic Magazine would have seen in August a cover story entitled “Rising Seas”, which leads off with questions a panel of ACOEL members will (coincidentally?) in part be addressing at our Annual Meeting in Boston: “As the planet warms, the sea rises. Coastlines flood. What will we protect? What will we abandon? How will we face the danger of rising seas?” . And rising sea levels are especially of relevance to any ACOEL member living in a state on the Atlantic coast, because sea levels have been rising three to four times more rapidly off the Atlantic Coast than the global average, according to a recent study. For those of you living between the coasts, the San Francisco water supply and Yosemite National Park are both threatened by an out-of-control wildfire, while the western United States are experiencing significant drought.
And while forests burn and seas warm, acidify, and rise, one good news story was the recent launching in Maine of the first grid-connected floating wind turbine outside of Europe.
It also is the first concrete-composite floating wind turbine in the world, using advanced material systems with a unique floating hull and tower design. The 65 ft tall turbine prototype is a one-eight-scale version of a 6 MW, 423 ft rotor diameter design. Currently being developed by the University of Maine and beginning preliminary environmental and permitting work, Maine Aqua Ventus I had been selected by the Department of Energy early this year out of 70 competing proposals as one of 7 winners of $4 million in initial funding. The project is now a finalist for an additional $46.6 million in funding. This project is critical, because floating offshore wind energy projects have the potential to generate large quantities of pollutant-free electricity near many of the world’s major population centers (but far enough away, in water depths up to 400’, to not be visible from shore), and thus to help reduce the ongoing and projected economic, health, and environmental damages from climate change. Wind speeds over water also are stronger and more consistent than over land, and have a gross potential generating capacity four times greater than the nation’s present electric capacity.
(Full disclosure: I am legal counsel for the project)
Posted on August 23, 2013
The Columbia and Snake River federal network of dams, and the abundance of low cost electricity it produces, has long been the cornerstone of the Pacific Northwest manufacturing economy. It has also supported another industry—the legions of lawyers fighting over the environmental effects. The latest iteration is an attack brought by Columbia Riverkeepers against the Army Corps of Engineers for oily discharges from the dams.
Riverkeepers filed lawsuits in U. S. District Courts in both Oregon and Washington alleging that oils released from the dams are discharges of pollutants for which a National Pollutant Discharge Elimination System (NPDES) permit is required under the Clean Water Act (CWA). The oils are used for lubricating turbine equipment, which Riverkeepers allege are released every day through spillways and penstocks at Bonneville, John Day, McNary, Ice Harbor and other federal dams. The suits seek declaratory and injunctive relief, mandating that the Corps secure NPDES permits.
Oily discharges are common among hydroelectric facilities. For the most part these are minor releases, though the complaint does allege a spill of 1,500 gallons of transformer oil containing PCBs from the Ice Harbor Dam on the Snake. Most privately owned dams in the region operate under general permits encompassing the small-volume releases. A few have NPDES permits.
As I have noted in prior blogs, courts have held that dams are “nonpoint” sources of pollution, which do not require a NPDES permit. These holdings were in the context of dams merely passing through pollution flowing into reservoirs from upstream sources, as opposed to adding pollutants. However, there have been cases where the discharge below the dam was not simply a pass through, and the court found a permit was required.
In relation to the ongoing litigation over the dams’ effect on salmon spawning, rearing and, migration, the Riverkeepers case will not likely have a significant effect on Corps operations. Even if the suit is successful, oily discharges can be managed, if not wholly eliminated. These cases should settle.
Posted on August 21, 2013
Since one of the objectives of the ACOEL blog is to promote thought and discussion, I have decided to plunge in with abandon. Hopefully the objective of promoting discourse will be met.
We all have reconciled ourselves to the fact that environmental advocacy has become very politicized on all portions of the political spectrum—so much so, that environmental advocacy oftentimes morphs into political/partisan advocacy. In the last several years we have seen environmental advocacy reach a new level. I leave it to the reader to decide whether that level is high or low. I have my point of view, and I suspect the reader will see that soon enough.
Two projects, one proposed, and one still only in the realm of “contemplation” serve as lightning rods for this new form of environmental advocacy: the Keystone XL Pipeline project and the potential Pebble Mine. Keystone XL formally has been proposed. The Pebble Mine has yet to have a permit application submitted but nonetheless is the subject of protracted and unique opposition.
It is becoming increasingly common to witness the advocacy relating to the Keystone XL Pipeline project—unprecedented in both its breadth and emotional intensity--from proponents and opponents alike. Proponents have tended to follow the more traditional advocacy approach of published opinion pieces and structured meetings and association support. The opposition has been much less traditional. Certainly there has been a history of focused opposition to some projects viewed by some as adversely impacting the environment, but those have been very focused locally or at most regionally. We all recall “tree sitters” opposing harvesting of redwood timber. Street theatre is not uncommon. Here in Michigan I have seen an individual dressed up as a skeleton in opposition to use of a school built on an abandoned municipal landfill, or dressed up as a fish in opposition to a proposed hard rock mine. The call for civil disobedience in opposition to Keystone XL goes well beyond street theatre, however. It is something that has not been seen, at least in my memory, since the days of the Civil Rights and Vietnam War protests. Lost in all of the demonizing of the development of hydrocarbons in Alberta, Canada’s northern reaches (called “oil sands” by proponents and “tar sands” by opponents) is the fundamental impact that a denial of the Presidential Permit necessary to construct the pipeline will have on the diplomatic relationship between Canada and the United States. The failure to issue a permit thus far has contributed substantially to a reconsideration of Canadian policy goals and economic development. No longer is the Canadian policy as focused and U.S.-centric as it once was. Canada is reevaluating the degree to which it can continue to trust its southern neighbor. It is not a stretch of the imagination to read the tone and tenor of the “policy” discussion and advocacy antics as being officious. An offer to “help” with the evaluation of the climate change risk of the bitumen production and methods of amelioration, while perhaps well-intentioned, certainly is capable of being seen as sanctimonious, or even arrogant. The old images of the “ugly capitalist”, and the “ugly American” are being supplemented by images of the “ugly environmentalist.” The increasingly strident nature of the anti-Keystone advocacy ignores or dismisses broader foreign policy considerations.
Now, if that is not enough to get discussion going, I don’t know what is. But, on the off chance that there is need for more encouragement, let me raise one other advocacy project: the contemplated Pebble Mine located in the Bristol Bay, Alaska, watershed. Pebble Mine may not be as well-known nationally as Keystone XL, but some NGOs are trying to make certain that it does become known—and opposed. If Pebble is known for anything, it is that it is the subject of an environmental assessment being undertaken by U.S. EPA, in advance of any permit application having been filed and without any proposed mining plan having been developed. Now Pebble has a major mail order retailer using its customer-based mailing list vigorously and bluntly to oppose the Pebble project. Within the last several weeks I received a “fly fishing” catalogue from this company, a company from which I have purchased products for well over 30 years. I started seeing full-page advertisements opposed to Pebble in the interior of its catalogues within the last year. This most recent mailing is the first time I received a catalogue whose cover was emblazoned with the words “Pebble Mine” inside a red circle with a slash through it and the admonition to “JOIN THE FIGHT” at the company’s website.
In an age where social issues are increasingly being highlighted in commercial advertisements, perhaps I have been lulled into thinking that subtlety makes such advertising acceptable. There is nothing subtle about this fly fishing catalogue’s assault on a mining project. Opposition to mining in sulfide ore bodies appears to have become a focal point for the leadership of this company.
This is a free country and we all enjoy freedom of speech. The ultimate power, of course, is to take one’s business elsewhere, but I just found this to be a rather unique “in your face” form of environmental advocacy. If I want to receive environmental advocacy—from any quarter, I will ask for it. If I wish to purchase goods and get on a mailing list for that purpose, I expect to get future mailings about similar products. I do not expect—or authorize—use of my name and address to receive decidedly political advertising nor biased social commentary. I know how and where to get plenty of that in a setting where it is both thoughtful and analytical. Combining a commercial catalogue with a political advertisement, or rather turning a catalogue into a political advertisement, crosses the line. Perhaps it is a line that we as a society are willing to tolerate in this age of political intolerance. We will see.
Now, let the discussion begin.
Posted on August 16, 2013
Ever since the shock of the oil embargo in 1973 we have been a nation in search of a comprehensive, sound energy policy. It was only a year later, in response to the proposal by Aristotle Onassis to locate an oil refinery on the coast of New Hampshire, that the New Hampshire Legislature adopted the first version of the State’s energy facility siting law.
Today, New Hampshire’s siting law, representing a balance of the need to develop new energy facilities with appropriate protection of the environment, preempts local authority and requires each project to undergo a rigorous comprehensive, consolidated evaluation before a panel of high-ranking State officials from the several different departments having jurisdiction over all the relevant permits. To obtain all State permits and a Certificate from the siting committee, the applicant must be prepared to present the project in a consolidated process, subject to formal discovery, at an adjudicative hearing before the committee. Interested parties and municipalities may intervene and the Attorney General appoints Public Counsel for the case to represent the broad public interest. To take positions in the broad public interest, Public Counsel is charged with the responsibility to represent the interests of the public as a whole, and not simply the narrower positions adopted by intervening parties. To discharge this responsibility, which derives directly from that of the Attorney General in all other cases, the Public Counsel must take positions that balance the public interest in developing new, diversified energy facilities and the need to take into account environmental regulation.
This highly structured, energy facility permitting process is significant regionally and nationally because its standards tend to drive the design of interstate facilities. Current energy policy and its direction may be discerned from trends reflected in the written decisions of the siting committee over time. Other states may be developing approaches to these issues.
Beginning in the late 1990s, a steady stream of energy projects have been presented to the committee. Until the mid-2000s, the majority of those projects involved fossil fuel generation, and in particular natural gas generating stations and transmission lines. As public policy, driven by concerns for global warming, has put increasing emphasis on renewable energy sources, there has been a significant increase in proposals to construct wind energy facilities. What is most striking from this perspective is that no energy project was rejected until 2013, although some facilities were subject to hundreds of conditions in their certificate.
This year, a proposed 30 megawatt wind farm in Antrim was rejected on its “aesthetics”, an indisputably highly subjective standard in search of criteria that will avoid arbitrary and capricious adjudications. Three previous wind power projects have all been approved with essentially the same characteristics, but for the first time the committee, at the urging of public counsel, has declined to approve the project rather than setting forth criteria and conditions that would bring essential predictability to this important technological advance in energy production.
The region and the nation will be well served by a steady expansion in the number of renewable energy projects, and this opportunity has the attention of large, even international, experienced and capable developers. Does the rejection of the Antrim project, despite public support, on the basis of the objections of special interests actively supported by public counsel risk a slowing down or abandonment by developers to the detriment of the region’s public interest in a diversified energy portfolio? Is it coincidence that a wind energy project was rejected recently in Maine, also on highly subjective grounds of aesthetics, a case that was referenced in the New Hampshire proceedings? And shouldn’t we ask whether advancing wind turbine technology is something we find in most places attractive, when it represents a great benefit to the environment and the public interest?
These cases bear watching. The New Hampshire case appears to be headed to the State Supreme Court. Will it turn out that these developments represent a turning away from favorable conditions promoting wind energy, so that wind energy development will decline in the years ahead? For environmentally sound economic development in this region and elsewhere we should hope not.
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 June 26, 2013
…nor shall private property be taken for public use, without just compensation.
Everyone understands the Fifth Amendment’s takings clause to mean, at a minimum, the government cannot force the transfer of private property to the government even for a manifestly governmental purpose (e.g. a highway right of way, or a new airport runway), without compensating the property owner.
Tuesday’s Supreme Court decision in Koontz v. St. John’s River Water Management District is the latest in a series of Supreme Court rulings to extend the protections of the Takings Clause beyond the obvious governmental requisitioning of private property. That’s “latest,” not “last”.
Nollan v. California Coastal Commission (1987) and Dolan v. City of Tigard (1994), combine to set forth the Court’s requirements for an “essential nexus” and “rough proportionality” between conditions on land use development and the government’s underlying objectives in the permit scheme to which the property owner is subjected. Absent either nexus or proportionality, a taking has occurred, and the Takings Clause requires that the property owner get “just compensation.” So far, so good.
The facts in Koontz are to some extent irrelevant; indeed the Court’s opinion expressly disowned any determination of the merits of his particular claim for compensation. Depending on whose brief you read, Koontz wanted to develop some wetlands property but the Water Management District refused to approve his project as proposed and put forth some mitigation options that were either “extortionate demands” or “helpful suggestions”, one of which consisted of Koontz spending money to improve public lands remote from his own property. Koontz took umbrage and sued under Florida state law. The trial court found for Koontz on the basis of Nollan-Dolan, and the intermediate state appellate court affirmed.
The Florida Supreme Court reversed for two reasons: first, it held the Nollan-Dolan standard does not apply to denial of a permit; and second, it held the standard does not apply to a requirement for the payment of money, as opposed to the impairment of a specific piece of property.
Every Justice agreed that the Florida Supreme Court got the first part wrong; that is, they all agreed the Takings Clause applies to permit denials as well as permit approvals. The majority and dissent parted ways with respect to the second question, however, with the majority again holding that Florida got it wrong and that excluding monetary exactions would allow permitting agencies to improperly circumvent the Nollan-Dolan requirements.
Now, one can agree or disagree with the majority, but the decision hardly shocks the conscience. What the decision holds is far less important than what remains to be decided in future cases:
1. How concrete and specific must a demanded concession be to give rise to liability under Nollan and Dolan?
2. What happens if a permitting authority merely says, “Denied, come back with something better,” and makes no other demand?
3. Where will the line be drawn to prevent countless local land use decisions from becoming federal cases?
On these points, the majority took the Fifth.
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 4, 2013
With the 20th anniversary of Executive Order 12898 soon approaching, EPA has been planning on extensively incorporating “environmental justice” into its permitting processes. This executive order required all federal agencies to address disproportionately adverse human health or environmental effects of their programs, policies, and activities on minority and low-income populations in the U.S.
To that end, nearly two years ago, EPA issued “Plan EJ 2014” as a roadmap – not as a rule – to implement the executive order throughout the agency. Specifically, Plan EJ 2014 formally introduced EPA’s priorities of promoting increased public participation in the permitting process and considering more stringent permit conditions. In February of this year, EPA selected two case studies that highlight the agency’s approach to achieving these permitting priorities.
The first case study involved a recent Prevention of Significant Deterioration (PSD) permit for the Pioneer Valley Energy Center, a power plant expected to generate up to 431 MW in Westfield, Massachusetts. From the developers’ filing of the permit application in November 2008 through EPA’s issuing of the final permit in April 2012, Region 1 incorporated what it has described as environmental justice into this permitting process by providing enhanced public engagement opportunities and including more stringent conditions in the permit. These stricter conditions were aimed at limiting the applicant’s ability to burn ultra-low sulfur diesel for testing of its emergency generator when air quality would already be diminished.
The second case study involved a National Pollutant Discharge Elimination System (NPDES) general permit for oil and gas exploration in Cook Inlet, Alaska. Even as this permit has evolved over time, now with federal and state authority split, the subject conditions have been based on environmental justice considerations dating back to 2006-2007. In the permit’s 2007 iteration, Region 10 incorporated environmental justice into this permitting process by collecting and considering tribal traditional knowledge about the effects of development and by imposing more restrictive permit conditions. These conditions imposed new monitoring requirements, extended the area where discharges were prohibited for all sources from 1,000 to 4,000 meters from sensitive coastal areas, and explicitly did not authorize several types of drilling discharges for new sources.
There are two striking facets of these case studies. First, even as EPA found no disproportionate adverse effect on minority populations, low-income populations, or tribal populations, EPA still included somewhat more restrictive permit conditions based upon environmental justice considerations. Second, the imposed conditions do not appear to be particularly onerous – perhaps explaining why the permittees did not challenge the additional restrictions. Opinions vary as to the impact of these “EJ conditions” on the permitting process, as EPA likely could have imposed these restrictions under existing statutes and regulations without any reference to environmental justice.
Nevertheless, EPA seems to be testing the limits of its authority and telegraphing its intent to continue these efforts. Consequently, practitioners and permit applicants should be wary of EPA seeking to impose potentially unnecessary conditions based upon environmental justice.
Posted on May 21, 2013
Climate tort plaintiffs cannot catch a break in the Fifth Circuit Court of Appeals. In a May 14, 2013, decision, the Fifth Circuit found—once again—that a group of Mississippi Gulf Coast property owners is barred from suing energy companies for tortiously emitting greenhouse gases (“GHGs”).
The case, Ned Comer, et al. v. Murphy Oil USA, et al., has a long and twisting history. At one point the case was widely viewed as in the vanguard of a handful of cases with the potential to radically realign the legal framework under which companies emit GHGs.
Comer was originally filed in the Southern District of Mississippi in 2005. Plaintiff coastal property owners alleged that the defendant companies’ emissions exacerbated climate change, which intensified Hurricane Katrina, which in turn damaged the plaintiffs’ property. Invoking the federal courts’ diversity jurisdiction, the plaintiffs sought compensatory and punitive damages, asserting state law claims of nuisance, trespass, and negligence, among other claims. The district court dismissed the claims on the grounds that the plaintiffs lacked standing and that the matter was not justiciable under the political question doctrine.
In November 2009, a Fifth Circuit panel reversed, in part, the district court’s dismissal of the claims. The Fifth Circuit panel found that plaintiffs had standing to bring the state law claims, which the court found did not present political questions.
The Fifth Circuit panel’s decision came in the wake of the Second Circuit’s precedent-setting September 2009 decision in State of Connecticut, et al. v. American Electric Power Company Inc., et al., in which the Second Circuit recognized the validity of federal common law public nuisance claims challenging the emission of GHGs, found that a number of states and private environmental groups had standing to press such claims, and rejected the argument that the claims are nonjusticiable. Together, these cases were viewed as potentially ushering in a new era in which companies emitting GHGs would need to contend not just with EPA’s regulations but also with common law climate tort claims seeking injunctive relief or money damages.
The new era was not to be. As to Comer, before the panel opinion’s mandate issued, a majority of the Fifth Circuit’s active, unrecused judges voted to rehear the case en banc. Under Fifth Circuit rules at the time, this vacated the panel opinion reversing the district court’s dismissal. Before the Fifth Circuit reheard the case en banc, however, another Fifth Circuit judge was recused, leaving the court with only eight active, unrecused judges. Five of the remaining eight judges then determined that, with the additional recusal, the court lacked a quorum to proceed, and the judges issued in May 2010 an order dismissing the plaintiffs’ appeal from the district court’s decision for lack of a quorum.
Plaintiffs petitioned the Supreme Court, seeking review of the Fifth’s Circuit dismissal of their appeal. The Supreme Court denied the petition in January 2011, at which point one might have expected the case to be over.
However, the same group of property owners proceeded to file a new complaint in May 2011 alleging many of the same nuisance, trespass, and negligence claims against the same energy company defendants. The District Court again dismissed the claims, finding them to be barred by res judicata and the applicable statute of limitations, and also to fail to establish proximate causation and be preempted by the Clean Air Act. In addition, as it had in Comer I, the court found that the plaintiffs lacked standing and that the claims raised nonjusticiable political questions.
The Fifth Circuit’s May 2013 decision in Comer II upholds the district court’s dismissal of the climate tort claims. The Fifth Circuit agreed the case is barred by res judicata, and did not address the district court’s other grounds for dismissal. Despite the procedural quirks of Comer I, the Fifth Circuit found the district court’s decision in that case to represent a final judgment, never modified on appeal. In addition, the Fifth Circuit found the district court’s final judgment to be on the merits because it adjudicated the jurisdictional issues of standing and justiciability.
Fall of 2009 may turn out to have been an apogee of sorts for climate tort claims. In June 2011, the Supreme Court issued a decision in Connecticut v. American Electric Power, holding that the Clean Air Act and the EPA actions it authorizes displace any federal common law right to seek abatement of GHG emissions. Climate tort plaintiffs in a third case, Native Village of Kivalina v. Exxon Mobil Corp., et al., were also on the losing end of a September 2012 Ninth Circuit panel decision which found the plaintiffs’ claims that climate change would result in erosion and flooding of the island where they live to be a matter that should be left to the legislative and executive branches of government. The Kivalina plaintiffs petitioned the Supreme Court in February for a writ of certiorari.
As GHG levels in the atmosphere approach their highest levels in hundreds of thousands of years or longer, the prospects for new legislative or executive branch action are uncertain. Although California recently implemented an economy-wide GHG cap and trade scheme, which began imposing compliance obligations earlier this year, that program is being challenged in the courts and there appears to be little appetite for comprehensive federal climate change legislation. EPA proposed in April 2012 a GHG performance standard for new power plants pursuant to its Clean Air Act authority, but the timing for action with respect to existing power plants and other emitting sectors is unclear. In light of the uncertainty on the regulatory and legislative fronts, and given the massive alleged harms involved, it may be too early to say if the climate tort is essentially finished or will in the future be resuscitated in a new and more potent guise.
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 7, 2013
The confluence of aggressive new EPA regulations targeted at coal-fired power plants and low natural gas prices has made the decommissioning of older coal-fired plants substantially more likely in the coming years. Decommissioning a plant does not occur within a specific regulatory framework. In many cases, unless there is a suspected public health threat, potential environmental conditions at the plant do not have to be reported to government agencies. For that reason environmental remediation of a plant site is often addressed in the property sale and redevelopment process.
But the shut down and decommissioning of power plants nonetheless has significant regulatory implications, and the reality is that analysis of regulatory obligations and advance planning, including a proactive strategy for interacting with agencies and other stakeholders, is essential. Understanding obligations requires review of existing permits and the underlying regulatory landscape. And that landscape may shift under your feet – for example, new regulations for coal combustion residuals on the horizon may implicate the closure of certain waste management units.
The regulatory landscape may also provide opportunities to maximize value. There are a wide variety of emission credit programs that vary by jurisdiction. Identifying and capturing emission credits brings value to the table. Similarly, water rights, to the extent they are marketable in a particular jurisdiction, could be a source of revenue.
On the practical front, laying out a smooth decommissioning path through careful planning may help avoid stoking the fire of agency, local or public ire. The agency may have a formal role to play depending on the permit conditions or applicable regulations, but there may also be extensive agency oversight exercised through pursuit of enforcement actions. Particularly where community interest is high, local, state or federal agencies may have a heightened interest and enforcement provides them an avenue for involvement in the site that might not otherwise exist. So it is important to recognize the key stakeholders early and to understand how their interest may translate to pressure on an agency to leverage any violations.
If the site is one with good redevelopment potential, finding and working with a credible and savvy purchaser may keep the focus on the end game and allow for appropriate risk-based standards to be deployed against a more concrete vision for the future of the site. Once there is a well-developed understanding of the regulatory obligations associated with the particular plant and the overall objective for the site after decommissioning, it may be the moment to reach out to the state and federal agencies, and perhaps key stakeholders, with early, accurate and contextualized information.
Because there is not a standard regulatory framework to apply, experience over the coming years as plants come offline will be telling – it is that experience that will provide useful frameworks for up front, comprehensive analysis and strategic outreach for a smooth path through decommissioning.
Posted on May 1, 2013
On April 23, a panel of the D.C. Circuit unanimously held in Mingo Logan Coal Co. v. EPA that the Clean Water Act gives EPA the authority to withdraw permits previously granted under section 404 of the Act. The case emerged from EPA’s determination that the discharge of mining waste from the Spruce No. 1 mine in West Virginia into certain streams and tributaries would have an unacceptable adverse effect on environmental resources. Based on this determination, EPA withdrew the Army Corps of Engineers’ prior specification of these streams and tributaries as disposal sites for the waste from mountaintop removal.
Several features of the case are striking. First, the decision has obvious – and obviously important – implications for the ongoing debate over mountaintop removal and its irredeemable environmental impacts. No longer can the argument be made that a permit, once issued, gives the permittee the power, in perpetuity, to blast the tops off of mountains and dump them into streams.
Second, the decision rested, for the most part, on a single word: “whenever.” The Clean Water Act states that the Administrator of the EPA may withdraw the specification of a disposal site for dredge-and-fill material “whenever” she determines that it will have an “unacceptable adverse impact” on certain environmental resources. The court took Congress, literally, at its word, and held that “whenever” means whenever – that is, even if EPA finds unacceptable adverse impacts after a permit has issued, the agency has the authority to pull the permit.
Third, as if to make certain its own holding is unambiguous, too, the court five times stated that the Clean Water Act unambiguously authorizes EPA to withdraw permits after they are issued. EPA’s current interpretation of the Act is thus not changeable by a future administration.
Should permittees fear that “whenever” will become wherever? It is worth remembering that EPA’s decision on the Spruce No. 1 mine was the first time EPA had – ever! – withdrawn a previously issued permit, in the 40-year history of the Clean Water Act. Whether EPA will be emboldened by this decision, or will continue to mostly allow existing permits to stand, remains to be seen.
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 March 26, 2013
On Monday, EPA lost another battle in the war over guidance. In Iowa League of Cities v. EPA, the 8th Circuit Court of Appeals vacated two letters that EPA had sent to Senator Charles Grassley concerning biological mixing zones and bypass of secondary treatment units at POTWs (also referred to as “blending”, because the POTWs blend wastewater that has not be subject to biological secondary treatment with wastewater that has, prior to discharge). The Court concluded that both letters constituted promulgation by EPA of effluent limits under the Clean Water Act and that they constituted legislative, rather than interpretive rules (I refuse to refer to “interpretative” rules; sorry). As a result, the Court vacated the letters due to EPA’s failure to follow notice and comment requirements applicable to promulgation of legislative rules. Finally, the Court concluded that a duly promulgated rule concerning biological mixing zones might be valid under Chevron, but that a rule barring bypasses of secondary treatment would exceed EPA’s authority under the Clean Water Act.
In first determining whether the letters constituted “promulgation” of an effluent standard, the Court looked to whether the letters were binding on the regulated community. Relying in part on Appalachian Power Co., the Court concluded that the letters were binding:
If an agency acts as if a document issued at headquarters is controlling in the field, if it treats the document in the same manner as it treats a legislative rule, if it bases enforcement actions on the policies or interpretations formulated in the document, if it leads private parties or State permitting authorities to believe that it will declare permits invalid unless they comply with the terms of the document, then the agency’s document is for all practical purposes “binding.”
As the Court noted with respect to the mixing zone issue, the “letter instructs state permitting authorities to reject certain permit applications, regardless of the state’s water quality standards.” With respect to the bypass issue, EPA stated that “it will insist State and local authorities comply with” a never-issued policy that precludes the types of bypass at issue. To try to suggest that words such as “insist” are not binding did not go over well with the Court. “Just as it did in Appalachian Power, the EPA dissembles by describing the contested policy as subject to change.”
After concluding that the letters constituted promulgation of effluent standards, the Court went on to conclude that the letters constituted legislative, rather than interpretive, rules, and thus were subject to notice and comment rulemaking. The following is the key paragraph for those of us attempting to beat back the kudzu that is EPA’s reliance on such informal guidance as a substitute for notice and comment rulemaking:
Identifying where a contested rule lies on the sometimes murky spectrum between legislative rules and interpretative rules can be a difficult task, but it is not just an exercise in hair-splitting formalism. As agencies expand on the often broad language of their enabling statutes by issuing layer upon layer of guidance documents and interpretive memoranda, formerly flexible strata may ossify into rule-like rigidity. An agency potentially can avoid judicial review through the tyranny of small decisions. Notice and comment procedures secure the values of government transparency and public participation, compelling us to agree with the suggestion that “[t]he APA’s notice and comment exemptions must be narrowly construed.”
“Layer upon layer of guidance.” The “tyranny of small decisions.” I couldn’t have said it better myself.
Posted on March 22, 2013
On Wednesday, in Decker v. Northwest Environmental Defense Center, the Supreme Court ruled that runoff from logging roads does not constitute a discharge from a point source that requires an NPDES permit. The decision upholds EPA’s interpretation of its own regulations and overturns – what a surprise! – a 9th Circuit decision which had held that permits were necessary for logging runoff.
While EPA got the result that it wanted here, the decision may come back to haunt it in the long run. The decision was largely based on what is commonly known as Auer deference, the rule that courts will defer to an agency’s interpretation of its own regulations unless that interpretation is “plainly erroneous or inconsistent with the regulation.” After a thorough review of the various relevant regulations and a dip or two into the Oxford American Dictionary, and after noting that the agency’s interpretation need not be “the best one”, the Court found EPA’s interpretation “permissible.”
So, why should EPA be concerned? Justice Scalia, at his most curmudgeonly, dissented on the ground that Auer should be overturned because it grants too much authority to agencies. Justice Scalia rejected out of hand what I would have thought would be the simplest and most obvious defense of Auer: that if courts defer to agency interpretation of statutes under Chevron, shouldn’t they, a fortiori, defer to agency interpretation of the agency’s own rules? Apparently not. To Justice Scalia, Chevron deference merely allocates to agencies, rather than courts, the primary duty of interpreting statutes, but allowing agencies to interpret their own regulations has the dangerous result of concentrating both the writing and interpretation function in one branch of government.
I don’t buy it, but it’s important to note that, while Justice Scalia was the sole dissenter, Justice Roberts wrote a concurring opinion, joined by Justice Alito, stating that, while Decker was not the proper case to reassess Auer (a cynic might say that Justice Roberts reached that conclusion because EPA was aligned with industrial interests, rather than the environmental NGOs, in Decker), they were both open to reviewing Auer in the proper case.
Sounds like three votes to me. Somewhat surprisingly, Justice Thomas joined neither the concurrence nor the dissent. Justice Kennedy wrote the majority opinion, so he clearly still believes in Auer. Without Kennedy and with Thomas a cypher at this point, the votes to revisit Auer may not be there. In any case, it is worth noting that Justice Breyer, who is Justice Scalia’s frequent sparring partner on administrative law issues, took no part in the decision. I look forward to his spirited defense of Auer when the time comes.
Posted on February 12, 2013
In December 2010, the Wisconsin Department of Natural Resources (WDNR) put into place new rules to control phosphorus discharges. Adaptive management is one of four compliance options allowed under these new rules. But what is “adaptive management”?
WDNR developed adaptive management to provide permittees with a less expensive, more flexible compliance option, and describes adaptive management this way:
“a phosphorus compliance option that allows point and nonpoint sources (e.g., agricultural producers, storm water utilities, developers) to work together to improve water quality in those waters not meeting phosphorus water quality standards. This option recognizes that the excess phosphorus accumulating in our lakes and rivers comes from a variety of sources, and that reductions in both point and nonpoint sources are frequently needed to achieve water quality goals. By working in their watershed with landowners, municipalities, and counties to target sources of phosphorus runoff, point sources can minimize their overall investment while helping achieve compliance with water quality-based criteria and improve water quality.”
To be “eligible” to use adaptive management, a permittee must discharge to a water body that is exceeding its in-stream phosphorus criteria on which at least 50% of the total phosphorus loading comes from nonpoint sources, and would have to implement filtration or an equivalent technology to meet the new phosphorus limit. Unlike water quality trading, which measures compliance with an end-of-pipe effluent limitation, the adaptive management permittee must meet an in-stream concentration of acceptable phosphorus. Under adaptive management, the phosphorus in the effluent may be reduced over a longer period of time – in some instances, up to several WPDES Permit cycles – as compared to water quality trading which requires the credits to be generated before the permit is issued. The job of identifying and finding partners falls to the permittee; WDNR does not intend to act as a broker to identify and bring prospective partners together.
An innovative alternative that seeks a watershed approach to control phosphorus, encourages nontraditional partnerships and cooperation between point and nonpoint sources, tries to provide flexibility in timing and doesn’t rely on the traditional and expensive construction of new treatment facilities – how’s it going so far?
For much of industry, forging such partnerships with other regulated and unregulated sources is unfamiliar territory and relying on those other entities to fulfill their commitments when the industrial permittee is the one that must demonstrate compliance is too uncertain to be acceptable. Many municipalities are more comfortable with partnerships of this sort, but the early experience of one environmentally proactive municipality has demonstrated the enormous amount of time and effort required to take on the role of “champion”, educate and engage other partners in the watershed. Agricultural interests are initially skeptical – concerned with the potential of taking land out of production. The environmental advocacy community reaction is mixed. One ENGO is actively working with the municipality to educate and engage partners and has written a guidance document on how to do adaptive management. Another ENGO has filed suit against WDNR over WPDES Permits issued with adaptive management compliance schedules in them, reinforcing the reluctance of industrial and municipal permittees to commit to this approach. And after approving WDNR’s rules in the first instance, EPA now takes such a strict reading of the rules that the intended flexibility may become illusory.
WDNR management is listening to all of this and seeking ways to adjust the implementation of “adaptive management” to respond to these very practical concerns. No good deed goes unpunished.
Posted on February 6, 2013
Wisconsin has a proud tradition of strong political opinions. Recent Tea-Party backed legislation in Wisconsin limiting the power of government will be interesting to follow as the consequences play out, particularly in the environmental arena.
In March 2011, Wisconsin’s then-new Republican Governor Scott Walker and the Republican legislature passed the Wisconsin Budget Repair Bill, the state law that famously limits the collective-bargaining rights of public employees. Following that, the legislature passed 2011 Wisconsin Act 21, which includes a “limited government” provision that prohibits any “agency [from] implement[ing] or enforc[ing] any standard, requirement, or threshold, including as a term or condition of any license issued by the agency, unless that standard, requirement, or threshold is explicitly required or explicitly permitted by statute or by a rule that has been promulgated in accordance with [state law].”
This will play out in a number of ways. Like other state environmental agencies, the Wisconsin Department of Natural Resources (“WDNR”) relies significantly on guidance documents to implement otherwise complex programs. A number of issues are addressed only in WDNR guidance, not in explicit regulations. These include sediment cleanup standards; references to “sediment” were intentionally removed from the state soil cleanup standards. This not only affects state cleanup programs, but also raises issues as to whether the state sediment cleanup standards can be “applicable or relevant and appropriate requirements” under the Comprehensive Environmental Response, Compensation and Liability Act. Similarly, the WDNR’s vapor intrusion sampling, analysis and remediation protocols are contained only in state and federal guidance documents.
Recently, the U.S. EPA chose language in a proposed SIP denial that adds fuel to some permitting arguments. In 2008, U.S. EPA required revisions to State Implementation Plans (“SIPs”) with respect to PM2.5 permitting; Wisconsin made regulatory changes, and requested SIP approval in 2011. On December 18, 2012, the U.S. EPA proposed disapproval of the SIP revision. 77 Fed. Reg. 74817 (2012). According to U.S. EPA, Wisconsin’s submission is deficient because the Wisconsin regulations do not “explicitly” define the condensable component of PM10 and PM2.5 emissions, and do not “explicitly” identify SO2 and NOx as precursors to PM2.5. The U.S. EPA’s disapproval language gives the Wisconsin Department of Natural Resources the usual additional work to propose and finalize regulatory changes to address the deficiency, but it also gives regulated sources an additional argument that the WDNR lacks the authority to regulate condensable particulate matter and PM2.5 precursors.