EPA Loses Another Battle in the War Over Guidance: The Eighth Circuit Vacates EPA Policies on Mixing Zones and Bypasses

Posted on March 26, 2013 by Seth Jaffe

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.

Logging Road Runoff Does Not Require an NPDES Permit: The Supreme Court (For Now) Defers to EPA’s Interpretation of Its Own Regulations

Posted on March 22, 2013 by Seth Jaffe

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.

Adaptive Management -- Wisconsin’s Innovative Approach to Phosphorus Discharges

Posted on February 12, 2013 by Linda Bochert

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. 

Would You Like Some Unintended Consequences With That Tea?

Posted on February 6, 2013 by Linda Benfield

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.

The Georgia Court of Appeals clarifies the antidegradation rule, at least in Georgia

Posted on February 5, 2013 by Patricia Barmeyer

The Clean Water Act’s antidegradation rule has been a fertile ground for dispute and litigation in Georgia, as elsewhere.  A recent decision by the Georgia Court of Appeals, Upper Chattahoochee Riverkeeper, Inc. v. Forsyth County, 734 S.E 2d 242 (Ga. App. 2012), has interpreted the Georgia version of the Rule and provided some clarity for POTWs and others seeking NPDES effluent limits. 

Georgia’s Antideg Rule is identical to the federal rule and provides that in the case of a proposed discharge to high quality waters, that quality shall be maintained unless allowing lower water quality is “necessary to accommodate important economic or social development,” and water quality to protect existing uses is assured.

The Rule is not a model of clarity, to say the least, and has been subject to varying interpretations.  EPA has chosen not to provide more specific direction and has, on multiple occasions, reiterated that it is up to the States to decide how to interpret and apply the Antideg Rule, through each State’s implementation procedures.  

Georgia EPD’s implementation procedures interpret the rule to require a determination whether the proposed new or expanded discharge is “necessary to accommodate important economic or social development….”  If it is determined the discharge is “necessary,” that is, that a no-discharge alternative is not economically feasible, then EPD proceeds to consider the application and to impose permit conditions based on the applicable technology-based standards and in-stream water quality standards. 

In contrast, the environmental groups, and an Administrative Law Judge, have taken the position that the Antideg Rule requires EPD to consider whether “allowing the lower water quality resulting from the permitted discharge is actually necessary.”  That reading led the ALJ to conclude that, without regard to cost or benefit, the permit limits for the POTW must be set at the lowest level that is technologically feasible, so long as the permittee can afford it.  As interpreted by the ALJ, the antidegradation analysis would be not just the beginning of the analysis of a proposed new discharge, but also the end point.  According to that view, the antideg analysis would ask, not just whether the discharge is justified, but also, what is the lowest limit that is feasible.  Application of the Antideg Rule in this fashion would short-circuit all considerations of in-stream water quality standards and technology-based limits.  It would eliminate any distinction between POTWs and industrial facilities -- they both would have to meet the lowest limit that is technologically feasible that they can afford.

The Georgia Court of Appeals has now agreed with EPD’s reading of the Antideg Rule.  The  court held the rule requires only a determination whether lower water quality generally is necessary to accommodate economic or social development, not a permit-specific analysis of whether the exact effluent limits in the permit are necessary.  The opponents to the permit have asked the Georgia Supreme Court to take up the issue; a decision on the petition for certiorari is expected by mid-2013.

What the Cluck?! Wastewater Discharge Permits for Air Pollutants?!

Posted on February 1, 2013 by Patricia Finn Braddock

Rose Acre Farms, Inc. et al. vs. NC Department of Environment and Natural Resources, et al., decided January 4, 2013

On January 4, 2013, a North Carolina court held that an egg production facility could be required to obtain a National Pollutant Discharge Elimination System (NPDES) permit solely on the basis that feathers and dust carrying ammonia nitrogen and fecal coliform, expelled from henhouses by ventilation fans, can be “pollutants” from a point source for which an NPDES permit is required if those pollutants reach waters of the State.  This is a case of first impression in which a court held that the impact of air emissions on water bodies could be regulated under the Clean Water Act (CWA).

North Carolina egg producer Rose Acre Farms (RAF) appealed a decision by the NC Department of Water Quality (DWQ) that an NPDES Permit renewal required stringent new BMPs on the grounds that: 1) the DWQ had no authority to require an NPDES permit for a “no discharge” facility; and 2) even if DWQ had authority to require an NPDES permit, the DWQ had no authority to impose new BMPs because: a) the feathers, dust and litter expelled into the air from ventilation fans are not “pollutants” as defined in 33 U.S.C. §1362(6); and b) even if ammonia nitrogen, total inorganic nitrogen, total phosphorus and fecal coliform associated with the feathers, dust and litter are “pollutants” that enter waters of the State, that activity would be exempt under the agricultural storm water discharge exemption in 33 U.S.C. §1362(14).

The Court held that ammonia nitrogen and fecal coliform carried by feathers and dust expelled by ventilation fans in the henhouses are “biological materials”, a term included in the definition of a “pollutant” in the CWA.  In addition, the Court relied on EPA guidance letters to determine that feathers, dust and litter expelled from a henhouse by ventilation fans are discharges from a point source that could reach waters of the State.  Finally, the Court held that the agricultural storm water discharge exemption in 33 U.S.C. §1362(14) applies only to land application in accordance with site specific nutrient management practices and does not apply to pollutants from feathers, manure, litter or dust that are expelled from the RAF henhouses but are not entrained in irrigation water.

If courts in other jurisdictions follow suit, other sources of air emissions with the potential to reach a receiving water, such as power plants and industrial facilities, may be required to address the impacts of their emissions on those receiving waters in future NPDES permits, independent of required air permits.

NJDEP’S WAIVER RULE

Posted on January 16, 2013 by William L. Warren

Introduction

The concept of a “Waiver Rule” to be promulgated by the New Jersey Department of Environmental Protection (“NJDEP” or “Department”) created both excitement within the New Jersey regulated community and consternation among environmental groups.  Business and development interests saw a Waiver Rule as a long overdue attempt by NJDEP to bring some flexibility into the State’s environmental regulatory experience.  Environmentalists were convinced the Waiver Rule concept would open the door for polluters and greedy developers to complete an end run around New Jersey’s complex environmental statutory and regulatory scheme.  A coalition of environmental and conservation groups initiated litigation challenging the adoption of the Waiver Rule.  The environmentalists argued their case against the validity of the Waiver Rule before a three-judge appellate panel on January 14.  In response to this argument, representatives of the business community told the court that a common sense approach to environmental regulation in New Jersey, as embodied in the Waiver Rule, is needed to spur economic development.  It is likely this issue will end up before the New Jersey Supreme Court.

The Waiver Rule, N.J.A.C. 7:1B, became reality in response to Governor Chris Christie’s Executive Order No. 2, which attempted to instill “common sense principles” into the governing of New Jersey.  Executive Order No. 2 and the Waiver Rule promised a better environmental regulatory climate to improve the State’s economy. 

Will the Waiver Rule, effective as of August 1, 2012, actually make a difference?  In its first five months, the Waiver Rule does not yet seem worthy of the regulated community’s early enthusiasm or the trepidation of the environmental groups.  To date, NJDEP has still not approved a waiver under the Waiver Rule and, according to NJDEP’s Office of Permit Coordination & Environmental Review, only fourteen waiver applications have been accepted for review by NJDEP since August 1st.

NJDEP’s philosophy on the implementation of the Waiver Rule may well be embodied in N.J.A.C. 7:1B-1.1(b) which states:  “[i]t is not the purpose of this chapter to allow for the routine circumvention of any Department rule.”  The NJDEP guidance makes clear that application of the Waiver Rule will be limited.  Only NJDEP (and not any Licensed Site Remediation Professional) is allowed to grant a waiver under the Waiver Rule.  Will NJDEP ever get to “yes” on a waiver application?  Time will tell.

CLICK HERE TO READ FULL ARTICLE

SUPREMES CONFIRM NO DISCHARGE PERMIT NEEDED FOR POLLUTED WATER TRANSFERS WITHIN SAME RIVER

Posted on January 10, 2013 by Richard Glick

On January 8, 2013, the U. S. Supreme Court unanimously held that flow from an improved portion of a waterway into an unimproved portion of the same waterway—even if polluted—does not qualify as “discharge of pollutants” under the Clean Water Act (CWA).  Although this case arises in the context of a municipal separate storm sewer system (MS4), it has major implications for dam owners everywhere.  The case reaffirms evolving doctrine that dams are not point sources requiring National Pollutant Discharge Elimination (NPDES) permits per Section 402 of the CWA.

In Los Angeles County Flood Control District v. Natural Resources Defense Council, environmental groups brought a CWA citizen suit against the District for violating the terms of the District’s NPDES permit to operate the MS4 facilities.  It was undisputed that water quality standards had repeatedly been exceeded for a range of pollutants, as measured at the District’s monitoring stations in the Los Angeles and San Gabriel Rivers.  The District collected storm water in concrete channels before discharging back to the river, and the monitoring stations were within the concrete channels.  It was also undisputed that many other upstream parties contributed to the contamination.  

Plaintiffs argued that since the monitoring stations were within the control of the District, the District had responsibility for meeting standards.  But that was not the issue for the Court.  Instead, the Court focused on whether a “discharge of pollutants” occurs when polluted water flows from one portion of a river, through an engineered improvement, and then back again to the same river.  The Court answered in the negative, citing its 2004 decision in South Fla. Water Management Dist., v Miccosukee Tribe.  In Miccosukee, the Court held that pumping polluted water from one part of a water body to another part of the same water body is not a discharge of pollutants.

This decision should come as welcome news to dam and hydroelectric plant owners.  Prior to Miccosukee and now LA County, the federal Courts of Appeal simply deferred to EPA judgment as to whether a dam could be said to “add” pollutants originating upstream when it passes them through penstocks or spillways to the river below.  The Supreme Court, however, has firmly established a rule of law that CWA Section 402 is implicated only where the upstream and downstream river segments are “meaningfully distinct water bodies,” a condition that will rarely exist for in-river dams.

MONTANA SUPREME COURT REJECTS CONSTITUTIONAL CHALLENGE TO LARGE STATE COAL LEASE

Posted on January 2, 2013 by Stephen R. Brown

Montana’s state constitution contains what is arguably the most stringent environmental protection clause of any state.  Article II, Section 3 of the Montana Constitution guarantees all persons “the right to a clean and healthful environment.”  This provision is paired with Article IX, Section 1, which says the “state and each person shall maintain and improve a clean and healthful environment in Montana for present and future generations.”  Although these clauses have been in the state constitution since 1972, they rarely have been applied by the Montana Supreme Court to invalidate legislation, overturn state action or to provide a private remedy.  In October, 2012, the Montana Supreme Court rejected the latest attempt to apply these provisions.

Montana is a coal-rich state.  The State of Montana owns significant quantities of this coal.  The State Land Board controls the leasing of state-owned coal.  In 2010, the land board approved a massive lease to Arch Coal.  Montana received an $85 million bonus payment for this lease. 

In addition to the environmental-protection provisions of the state constitution, Montana has a state environmental policy act, structured similarly to the National Environmental Policy Act (NEPA).  The Montana Environmental Policy Act (MEPA) contains a number of exemptions from environmental review that would otherwise be required.  One of these provisions exempts the land board from the obligation to undertake environmental review at the leasing stage, so long as a lease contains a provision stating that actual mining is subject to further environmental permitting.  The land board relied on this exemption to issue leases to Arch Coal without first undertaking MEPA review.

Several environmental groups challenged the land board’s leasing action, arguing that the application of the MEPA exemption violated the Montana Constitution on an as applied basis.  They argued that the leasing decision opened the door to the mining and burning of large quantities of coal without environmental review.  A state district court found that mining and burning coal could exacerbate global climate change, which in turn could adversely affect water, air and agriculture in Montana.  Based on this finding, the district court declined to dismiss the case, but it also refused to grant summary judgment to the NGO plaintiffs on the constitutional claim.  The district court concluded that the State retained sufficient environmental protection mechanisms at the mine permitting stage to meet its constitutional obligations.

The NGO plaintiffs appealed the case to the Montana Supreme Court.  In Northern Plains Resource Council v. Montana Board of Land Commissioners,  the Supreme Court upheld the district court and rejected the constitutional challenge.  Although the Supreme Court confirmed the fundamental right to a clean and healthful environment and acknowledged potential global climate change implications of further coal development, the Court held that it was not required to apply a strict scrutiny analysis to the statutory exemption from MEPA.  The Court concluded that “the act of leasing” did not interfere with the exercise of a fundamental right requiring “demonstration of a compelling State interest.”  Instead, the Court applied a “rational basis” test to conclude that the potential for additional environmental review at the permitting stage was sufficient.  On that basis, the Supreme Court held that the exemption from MEPA review did not violate the Montana Constitution.

New Hampshire's Great Bay, Nitrogen, and the Limits of Technology

Posted on December 26, 2012 by Gregory H. Smith

As the Clean Water Act celebrates its 40th anniversary, it has ignited a controversy in New Hampshire with potentially hundreds of millions of dollars at stake.  In the law’s early days,  publicly owned treatment works (“POTWs”), mandated and financed in large part with federal funds, were viewed as the “good guys” in the national effort to restore quality in receiving water bodies into which raw sewage was being discharged.  That view of POTWs seems to have changed in New Hampshire, at least as relates to the State’s largest saltwater estuary; the Great Bay.  Faced with the potential need to finance significant POTW upgrades or reconstruction, New Hampshire POTWs are challenging EPA’s permitting decisions in the courts, through administrative channels and in the press.

As we know, POTWs are regulated through National Pollutant Discharge Elimination System (“NPDES”) permits that monitor and control a variety of effluent criteria.  Interestingly, however, New Hampshire was and remains one of the few states that has not obtained authority to issue new and renewed NPDES permits.  Because of this status as a non-delegated state, dischargers in New Hampshire with expiring permits must apply to the federal government for renewal.  As environmental regulation has progressed, however, and as federal funds have diminished or disappeared, POTWs and the towns and sewer districts that operate them have found themselves opposed to the EPA’s efforts to impose stricter standards  to address pollutants that were not of primary concern when the POTWs were constructed and initially permitted.

In New Hampshire, this is seen vividly in NPDES renewal efforts EPA is undertaking for several POTWs that discharge under expired and expiring permits, directly or indirectly, into the Great Bay estuary located on the State’s coast.  Once a rich habitat for oysters, eel grass and other sea life, Great Bay is now stressed by a variety of factors including both point and non-point discharges as well as other environmental factors.   At the heart of the controversy  in New Hampshire is EPA’s intention to reduce effluent limitations for nitrogen to as low as three parts per million (the limits of technology) in order to ameliorate nitrogen related problems in Great Bay.  From the municipalities and POTWs perspective, the costs to comply with these new lower limits are exorbitant.  One widely cited study estimates that, for the Great Bay estuary POTWs to comply with the new nitrogen limit, it will cost in excess of one half billion dollars in capital,operation and maintenance expenses.  Those costs will, of course, be passed along to a relatively small population of ratepayers. 

A coalition of communities with affected POTWs has joined forces in response, proposing “adaptive management programs” combining somewhat lower discharge limits with comprehensive non-point controls aimed together at achieving EPA’s stated goals.  It is unclear at this time whether those efforts will be successful.  The coalition communities certainly have in mind the experiences in Chesapeake Bay, or closer to home in neighboring and similarly non-delegated Massachusetts, where EPA is using its  Residual Designation Authority (“RDA”) to require permits in the Charles River watershed.  EPA has been public with its view that the Charles River RDA program may become a model for watersheds elsewhere in New England and nationwide.  It is thought that an adaptive management program as proposed by New Hampshire’s coalition communities would obviate the need to utilize RDA for Great Bay, but that issue remains to be addressed in the future.

Getting serious on climate change and reforming regulatory review of clean energy projects

Posted on December 19, 2012 by Jeff Thaler

The attached article will be published in the upcoming issue of the Lewis & Clark Law School Environmental Law Review.  The article is among the first to integrate current climate change science, particularly ongoing impacts and predicted impacts, with a detailed roadmap for substantial reform of our environmental processes for reviewing proposed renewable energy projects.
 
Most existing articles either focus only on climate science or on minor modifications to the regulatory system. Using offshore wind power as a case study, this article demonstrates how, in an increasingly carbon-constrained world, our existing environmental laws and regulatory process no longer achieve their underlying goals of long-term ecosystem conservation. To the contrary, these laws and regulations are supporting a system with increasing greenhouse gas emissions that is annually costing trillions of dollars.

We have little time left to create a practical path to achieving an 80% reduction in greenhouse gases by 2050—with failure resulting in average global temperatures rising more than the internationally-agreed targeted ceiling of 2°C. After examining the obstacles confronting a potential developer of offshore wind, this article clearly lays out why and how the existing regulatory process should be quickly reformed so that offshore wind and other clean renewable energy sources can help us escape the escalating consequences of our carbon-intensive economic system.

EPA Notches Another NSR Settlement: Is This The Most Successful Program That Shouldn’t Exist?

Posted on November 30, 2012 by Seth Jaffe

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.

EPA Wins an NSR Case: “Routine” Pretty Much Means Routine for the Unit

Posted on November 30, 2012 by Seth Jaffe

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?

COURTS FRIENDLIER TO EPA IN CLEAN WATER ACT CONTEXT THAN CLEAN AIR ACT?

Posted on September 19, 2012 by Rick Glick

In his blog post of August 27, Rob Brubaker reported on three cases in which the courts refused to grant deference to EPA decisions under the agency’s Clean Air Act authority.  EPA has fared a bit better in two recent Clean Water Act cases.

In Upper Blackstone Water Pollution Abatement District v. EPA case, the issue was whether EPA properly issued a stringent NPDES permit renewal to a sanitary district to control excessive nitrogen and phosphorus loading.  The First Circuit Court of Appeals rejected the district’s argument that EPA should have waited until the district could complete its modeling effort, even though the model did not seem close to ready, and that EPA did not apply the best science.  The court declined to conduct a de novo review of EPA’s scientific analysis, limiting its inquiry to whether EPA followed the appropriate administrative process, based its decision on record evidence and clearly articulated its reasoning. So long as the criteria imposed are within the “zone of reasonableness”, the court will not strike it down.

Interestingly, the Upper Blackstone court also rejected the district’s argument that the new permit is improper because even with stricter criteria, it would not be sufficient to correct the eutrophication problem in the watershed.  The court set that aside, noting that the CWA contemplates multiple sources of contamination and no one party is responsible for cleaning up the river. 

The Upper Blackstone case is consistent with the U. S. District Court’s decision in the Northwest Environmental Advocates v. EPA, which I discussed in my March 23 post.  In the latter case, the court upheld EPA’s approval of Oregon’s numeric temperature standards, deferring to the EPA’s scientific expertise.  It took issue with the narrative Natural Conditions Criteria because it was so broad that the court concluded it supplanted numeric standards.  The court left the door open for the Oregon Department of Environmental Quality to rewrite the narrative standard for EPA review, based on the agencies’ own review of the science and a good explanation in support of the standard. 

It appears the theme running through three Clean Air Act cases cited in the Brubaker post is that the reviewing court found no authority supporting EPA’s action, or that EPA’s interpretation defied the plain meaning of the statute.  In the Clean Water Act cases, EPA overreaching on the Upper Blackstone permit or approval of Oregon water quality standards was not at issue.  The focus instead was on whether EPA demonstrated it properly considered the best science available under the authority it had, and then explained how it got to its decision.  In that context, EPA and state regulatory agencies will win more than they lose.

Themes in Recent Changes to Offshore Oil and Gas Regulations

Posted on September 18, 2012 by Pamela Giblin

By Pam Giblin and Amber MacIver, Baker Botts L.L.P.

The regulatory landscape for the offshore oil and gas industry has been subject to rapid change in the two years following the Macondo Incident in the Gulf of Mexico.1   Two primary themes have emerged in the new and revised regulations:  (1) increased agency oversight, and (2) requirements for third party certification.  The regulations are relatively recent, but operators can expect to feel the impacts over the next year.

Increase Agency Involvement
The Mineral Management Service (MMS) oversaw many of the revenue collection, leasing, permitting and enforcement functions for the offshore industry prior to the Macondo Incident.  Following that event, the MMS was restructured into separate agencies in part to enable increased agency involvement and oversight.2  The three new agencies are:

(i)    the Bureau of Ocean Energy Management (BOEM), which has the leasing functions;
(ii)    the Bureau of Safety and Environmental Enforcement (BSEE), which has responsibilities for permitting and enforcement; and
(iii)    the Office of Natural Resources Revenue (ONRR), which has revenue collection.

The new agencies, and in particular BSEE and ONRR, have demonstrated a trend of increased agency involvement.  With respect to the ONRR, in just the past year, it has issued penalties that represent an increase in excess of three times the previous yearly average under MMS.3   This increased enforcement is a trend we expect to continue.
 
BSEE’s increased oversight is seen in the numerous regulations it has issued in the past two years.  Many of those new rules require additional agency intervention in offshore oil and gas operations.  For example, Section 250.456(j) of the Drilling Safety Rule requires that before an operator may switch from heavy to light drilling fluid, the operator must receive approval from BSEE.  The Workplace Safety on Safety and Environmental Management Systems (SEMS) rule requires operators to submit their self-audit plans to BSEE for review, BSEE may make changes to the plan, and it has the option to participate in the audit.4   In addition to formal changes in the regulations, both the former director of BSEE and the current director have indicated a potential shift in enforcement policy that would add contractors to the scope of BSEE’s enforcement actions, contrary to former MMS policy, further expanding the agency’s oversight of the industry.  We have not seen an example of this yet, but would expect that contractors could see enforcement in the near future.

These changes, among others, illustrate a trend of increased agency oversight of the offshore oil and gas industry.  It is a trend we expect to see continue at least during the next year.

Third Party Certification
BSEE has issued new regulations and amended others, adding dozens of new rules and requirements for offshore oil and gas operations.  The trend that runs through many of these changes is a requirement for certification by a third party.  For example, the Drilling Safety Rule requires that operators have a professional engineer independently certify that the casing and cementing program is appropriate for the purpose for which it is intended under expected wellbore pressure.5    Although the current SEMS rule allows for self-audits to be conducted either by designated qualified personnel (DQP) or third party auditors, the proposed SEMS II rule would eliminate the option to use DQP, requiring all self-audits to be performed by independent third party auditors.6

The likely outcome of the changes that result from these two overarching themes, increased agency involvement and third party certification, is additional enforcement and red tape.  Operators may face difficulty in scheduling operations when they have to rely on outside parties to certify their work or agency approval to make changes.  Enforcement actions are likely to increase as agency oversight increases.  Operations that have not been subject to scrutiny in the past are likely to face additional hurdles and possibly enforcement under the new regulations.  Offshore oil and gas operators need to closely follow the evolving regulatory scheme to stay in compliance with the rules and avoid costly enforcement actions.

      1The “Macondo Incident” refers to the April 20, 2010 explosion from the Deepwater Horizon drilling rig, in the Macondo prospect, Mississippi Canyon Block 252. 
      2See DOI Secretarial Order No. 3299 (May 19, 2010) (issued in May 2010 and gave the Assistant Secretary- Land and Minerals Management and the Assistant Secretary -- Policy, Management and Budget 30 days to develop a schedule to implement the Order).
     3See, e.g. ONRR Press Release, April 30, 2012, http://www.onrr.gov/about/pdfdocs/20120430.pdf, last visited July 9, 2012 ($1.9 million civil penalty against Cabot alleging inaccurate records); ONRR Press Release, March 29, 2012, http://www.onrr.gov/about/pdfdocs/20120329.pdf, last visited July 9, 2012 ($1.7 million civil penalty against Merrion for late royalty payments); ONRR Press Release, July 11, 2012, http://www.onrr.gov/about/pdfdocs/20120711.pdf, last visited August 30, 2012 ($1.2 million civil penalty against QEP resources for  maintenance of inaccurate reports).
     430 C.F.R. § 250.1920(b).
     530 C.F.R. §§ 250.418(h), 250.420(a)(6).
     676 Fed. Reg. 56683 (Sept. 14, 2011).

Scope of the Single Source Doctrine

Posted on September 17, 2012 by Richard Horder

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.

Defining a Stationary Source: How Much Aggregation is Too Much Aggregation?

Posted on September 13, 2012 by Theodore Garrett

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.”

A VIEW FROM TEXAS: FIFTH CIRCUIT VACATES EPA DISAPPROVAL OF TEXAS FLEXIBLE PERMIT PROGRAM

Posted on August 30, 2012 by Patricia Finn Braddock

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.

Judicial Activism and Judicial Restraint: The 5th Circuit Vacates EPA's Disapproval of Texas SIP Revisions Concerning Minor Sources

Posted on August 14, 2012 by Seth Jaffe

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."

Muddling Through: Clean Water Act Edition

Posted on March 1, 2011 by Seth Jaffe

Previously, I discussed EPA’s efforts to “muddle through” on climate change in the absence of comprehensive legislation. This week, I think it’s the Clean Water Act’s turn. If there were any regulatory situation which required some serious muddling through at the moment, interpretation of the Supreme Court’s Rapanos decision almost is a match for the current climate mess. As most of my readers know, Rapanos was a 4-1-4 decision which left EPA, the Corps, developers and environmentalists fairly equally perplexed

Most stakeholders have assumed that Kennedy’s concurring opinion, requiring a “significant nexus” between wetlands and traditional navigable waters before those wetlands are subject to jurisdiction under the CWA, is the law of the land at this point. That is the approach adopted in the Rapanos Guidance issued by EPA and the Corps in 2007. 

A recent decision by the 4th Circuit Court of Appeals, in Precon Development Corporation v. Army Corps of Engineers, illustrates just how muddled post-Rapanos interpretation has become. The decision in Precon – reversing the District Court – found that the Corps had not built a record sufficient to establish that the wetlands which Precon sought to develop were jurisdictional under the CWA. 

There were two technical issues in Precon. Precon lost what one might have thought would be the more significant issue – the Corps’ finding that, although only 4.8 acres were really at issue in this case, and Precon’s entire development includes 166 acres of wetlands, 448 acres of “similarly situated” wetlands would be examined for a substantial nexus to navigable waters. Precon ultimately won, however, because the Court concluded that the Corps’ record did not contain enough physical evidence to support its determination that a significant nexus exists between the 448 wetland acres and the downstream navigable water. 

The Court’s conclusion raised two issues of broad concern to stakeholders. First, the Court granted little deference to EPA’s conclusion on the significant nexus issue. The Corps argued that its conclusion that there was a significant nexus between the site wetlands and the downstream navigable waters was a factual conclusion. However, the Court concluded that the significant nexus determination was not factual. The Court stated that:

The question is instead whether the Corps’ findings were adequate to support the ultimate conclusion that a significant nexus exists. This legal determination is essentially now a matter of statutory construction, as Justice Kennedy established that a “significant nexus” is a statutory requirement for bringing wetlands adjacent to non-navigable tributaries within the CWA’s definition of “navigable waters.”

Well, this is certainly a nice question of administrative law. The significant nexus issue may now be the ultimate legal question. Nonetheless, I would guess that most wetlands scientists and hydrologists would say that this is largely a factual question. Even if the agency is applying its judgment to answer that question, it’s the type of judgment that requires technical expertise – expertise to which courts have traditionally deferred.

The second of the Court’s important pronouncements was that it would not give the EPA/Corps Rapanos Guidance deference under Chevron. Why not?

Because – although it could – the Corps has not adopted an interpretation of “navigable waters” that incorporates this concept through notice-and-comment rulemaking, but instead has interpreted the term only in a non-binding guidance document.”

Isn’t it timely, then, that EPA and the Corps sent a draft new Rapanos guidance to OMB in December, and GOP leadership in the House is proposing language in a continuing resolution that would preclude EPA from using any funds “to implement, administer, or enforce a change to a rule or guidance document pertaining to the definition of waters under the jurisdiction of the Federal Water Pollution Control Act (33 U.S.C. 1251).” Perhaps EPA and the Corps should take half a loaf. Why not agree to shelve the guidance and instead proceed with notice-and-comment rulemaking to clarify Rapanos? At least then the Courts might grant EPA and the Corps more deference in implementation.  It’s already been almost five years since Rapanos was issued. EPA and the Corps can hardly argue that it’s necessary to go the guidance route because they don’t have the time to proceed through the full regulatory process.

Enough muddling through. Take the time to do it right and issue regulations. Then, maybe the muddle will abate. (Can one abate a muddle?)

Should We Go Nuclear - Again?

Posted on November 29, 2010 by Rodney Brown, Jr.

The US hasn't licensed a new nuclear power plant in a quarter-century. Most people have forgotten the plants even exist – but they might be coming back. In the last couple of years, the Nuclear Regulatory Commission has received more than twenty new plant applications.

Are we ready to go nuclear again?

 

 

The US has about 100 nuclear plants in operation today, generating around 20% of the nation's electricity. Most plants were built in the 1960s and 1970s, and will need to be replaced before too long. Far more plants have been built abroad, and many of them will need to be replaced too.

 

 

Replacing worn-out nuclear plants with new ones is very controversial, at least in the US. Our colleague, Michael Gerrard, will explore the controversy by hosting a debate on nuclear power at Columbia Law School on Monday, November 29th from 7 to 9 PM. The debate will be webcast live, and a video will be posted on the website of the Center for Climate Change Law. Contact Ashley Rossi at arossi@law.columbia.edu for more info.

 

 

In the meantime, how can we learn what to believe — and what not to? Fortunately, in 2007 the Keystone Center conducted a "joint fact-finding" to identify facts upon which people with different policy goals could absolutely agree. The participants came from all over, ranging from utilities like Exelon and Entergy to environmental groups like Environmental Defense and the Natural Resources Defense Council. They may continue to disagree on the values implicit in their various policy goals. But it turns out that they can agree on a foundation of facts.

 

 

For example, all agreed nuclear power is in fact a low-carbon energy source that can help fight climate change. They also agreed that the global nuclear industry would in fact need to embark on a massive construction program if nuclear power is to provide even 1 gigatonne of carbon reductions (equal to just one "wedge" from the famous Sokolow & Pacala climate stabilization wedges. Here's the specific factual finding:

 

"The NJFF participants agree that to build enough nuclear capacity to achieve the carbon reductions of a Pacala/Socolow wedge (1 GtC/year or 700 net GWe nuclear power; 1,070 total GWe) would require the industry to return immediately to the most rapid period of growth experienced in the past (1981-90) and sustain this rate of growth for 50 years."

 

On another point, the participants agreed that nuclear power probably would cost between 8 and 11 cents per kilowatt/hour (kW/h) delivered to the grid. This compares to current natural gas costs of about 5 to 6 cents per kW/h. (Wind power's costs fall somewhere in between.)

 

 

On the controversial topic of using new technologies to "reprocess" nuclear fuel, participants agreed it wasn’t likely to prove economically viable:

 

"No commercial reprocessing of nuclear fuel is currently undertaken in the U.S. The NJFF group agrees that while reprocessing of commercial spent fuel has been pursued for several decades in Europe, overall fuel cycle economics have not supported a change in the U.S. from a “once-through” fuel cycle. Furthermore, the long-term availability of uranium at reasonable cost suggests that reprocessing of spent fuel will not be cost-effective in the foreseeable future. A closed fuel cycle with any type of separations program will still require a geologic repository for long-term management of waste streams."

 

Agreement on all the true facts might make it easier to resolve the debate over nuclear power's role in our energy future. To learn more about them download the Keystone Center's executive summary or the report in full.

Another Corner Heard From: Portland (Oregon) Releases a New Climate Action Plan

Posted on November 4, 2010 by Seth Jaffe

Last week, the City of Portland, Oregon (together with Multnomah County) released an updated Climate Action Plan. The Plan presents a number of aggressive goals and targets, with ultimate goals of GHG reductions of 40% by 2030 and 80% by 2050.

The details of the Plan are obviously only relevant to those in the Portland area, but for those anticipating what regulation might look like in California, Massachusetts, and other states that have enacted or will soon enacted some version of a Global Warming Solutions Act, the Plan provides a helpful catalogue of the types of changes that might be sought. Therefore, a quick summary of some of the 2030 goals seems warranted

Reduce energy use from existing buildings by 20%-25%

All new buildings – and homes -- should have zero net GHG emissions. 

Reduce VMT by 30% from 2008 levels

Recover 90% of all waste generated

Reduce consumption of carbon-intensive foods

Expand “urban forest canopy” to cover one-third of Portland

Reduce emissions from City and County operations by 50% from 1990 levels

What’s my take? I have two immediate reactions. First, if any further evidence were needed that attaining significant GHG emission reductions is going to involve major social and economic changes, this is certainly it. 

Second, and perhaps more importantly, this Plan, and others like it, have to constitute a heavy thumb on the side of the scale arguing for comprehensive federal legislation. In the past, I’ve argued that federal legislation would be preferable to a patchwork made up of EPA regulation under existing Clean Air Act authority, public nuisance litigation, and state and regional initiatives. To that list, we can now add comprehensive local regulation. I don’t mean to be too sanguine about the ability of federal legislation to harmonize this entire process; the existing bills would not preempt most state, regional, and local regulations (other than cap-and-trade programs). Nonetheless, delays in federal enactment can only contribute to the proliferation of state, regional, and local programs, some of which may be beneficial, but many of which will be inefficient, contradictory, or both.

The Deck is Still Stacked in the Government's Favor -- Is This A Good Thing?

Posted on July 22, 2010 by Seth Jaffe

Last week, in City of Pittsfield v. EPA, the First Circuit Court of Appeals affirmed denial of a petition by the City of Pittsfield seeking review of an NPDES permit issued by EPA. The case makes no new law and, by itself, is not particularly remarkable.  Cases on NPDES permit appeals have held for some time that a permittee appealing an NPDES permit must set forth in detail in its petition basically every conceivable claim or argument that they might want to assert. Pretty much no detail is too small. The City of Pittsfield failed to do this, instead relying on their prior comments on the draft permit. Not good enough, said the Court. 

For some reason, reading the decision brought to mind another recent appellate decision, General Electric v. Jackson, in which the D.C. Circuit laid to rest arguments that EPA’s unilateral order authority under § 106 of CERCLA is unconstitutional. As I noted in commenting on that decision, it too was unremarkable by itself and fully consistent with prior case law on the subject.

What do these two cases have in common? To me, they are evidence that, while the government can over-reach and does lose some cases, the deck remains stacked overwhelmingly in the government’s favor. The power of the government as regulator is awesome to behold. Looking at the GE case first, does anyone really deny that EPA’s § 106 order authority is extremely coercive? Looking at the Pittsfield case, doesn’t it seem odd that a party appealing a permit has to identify with particularity every single nit that they might want to pick with the permit? Even after the Supreme Court’s recent decisions tightening pleading standards, the pleading burden on a permit appellant remains much more substantial than on any other type of litigant.

Why should this be so? Why is it that the government doesn’t lose when it’s wrong, but only when it’s crazy wrong? 

Just askin’.

A Combined Superfund and Stormwater Rant

Posted on July 7, 2010 by Seth Jaffe

Sometimes, the practice of environmental law just takes my breath away. A decision issued earlier last month in United States v. Washington DOT was about as stunning as it gets. Ruling on cross-motions for summary judgment, Judge Robert Bryan held that the Washington State Department of Transportation had “arranged” for the disposal of hazardous substances within the meaning of CERCLA by designing state highways with stormwater collection and drainage structures, where those drainage structures ultimately deposited stormwater containing hazardous substances into Commencement Bay -- now, a Superfund site -- in Tacoma, Washington.  

I’m sorry, but if that doesn’t make you sit up and take notice, then you’re just too jaded. Under this logic, isn’t everyone who constructs a parking lot potentially liable for the hazardous substances that run off in stormwater sheet flow? 

For those who aren’t aware, phosphorus, the stormwater contaminant du jour, is a listed hazardous substance under Superfund. Maybe EPA doesn’t need to bother with new stormwater regulatory programs. Instead, it can just issue notices of responsibility to everyone whose discharge of phosphorus has contributed to contamination of a river or lake.

The Court denied both parties’ motions for summary judgment regarding whether the discharges of contaminated stormwater were federally permitted releases. Since the Washington DOT had an NPDES permit, it argued that it was not liable under § 107(j) of CERCLA. However, as the Court noted, even if the DOT might otherwise have a defense, if any of the releases occurred before the permit issued – almost certain, except in the case of newer roads – or if any discharges violated the permit, then the Washington DOT would still be liable and would have the burden of establishing a divisibility defense. 

If one were a conspiracy theorist, one might wonder if EPA were using this case to gently encourage the regulated community to support its recent efforts to expand its stormwater regulatory program. Certainly, few members of the regulated community would rather defend Superfund litigation than comply with a stormwater permit.

You can’t make this stuff up.

EPA's Roll-Back of Bush-Era Rules Appears to Begin in Earnest

Posted on February 13, 2010 by Seth Jaffe

While a lot of attention has been paid to whether EPA would reverse the Bush EPA decision denying California’s petition to regulate greenhouse gas emissions from mobile sources,  it is now clear even outside the climate change arena that life at EPA is going to be substantially different under the current administration.  As if evidence were really needed for that proposition, EPA announced this week that it was putting on hold the NSR aggregation rule that EPA had promulgated on January 15, 2009.

The rule, which had been long sought by industry, would have provided that nominally separate projects would only have to be combined – aggregated for NSR/PSD purposes – if  they are “substantially related.” It also would have created a rebuttable presumption that projects more than three years apart are not substantially related. Responding to a request from NRDC and the OMB memo asking agencies to look closely at rules promulgated before the transition but not yet effective, EPA concluded that the rule raises “substantial questions of law and policy.” Therefore, EPA postponed the effective date of the rule until May 18, 2009 and also announced that it was formally reconsidering the rule in response to the NRDC petition.

To those in industry, the aggregation rule was not a radical anti-environmental roll-back of environmental protection standards.  Rather, it was more of a common-sense approach towards making the NSR program simpler and clearer.  It is one of my pet peeves with the prior administration, however, that it gave regulatory reform a bad name.  

In any case, I feel as though I should open a pool regarding what will be the next Bush-era rule to be tossed overboard.  We surely won’t have to wait long for it to happen.