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.

When Do EPA BACT Requirements "Redesign the Source"? Not When EPA Says They Don't

Posted on January 7, 2010 by Seth Jaffe

Shortly before the holidays, EPA Administrator Jackson issued an Order in response to a challenge to a combined Title V / PSD permit issued by the Kentucky Division for Air Quality to an Integrated Gasification Combined Cycle, or IGCC, plant. The Order upheld the challenge, in part, on the ground that neither the permittee nor KDAQ had adequately justified why the BACT analysis for the facility did not include consideration of full-time use of natural gas notwithstanding that the plant is an IGCC facility. 

The Order may not be shocking in today’s environment – all meanings of that word intended – but the lengths to which the Order goes to avoid its own logical consequences shows just what a departure this decision is from established practice concerning BACT. BACT analyses have traditionally involved the proverbial “top-down” look at technologies that can be used to control emissions from a proposed facility. In other words, EPA takes the proposal as a given, and then asks what the best available control technology is for that facility

In EPA’s own words – from its New Source Review Workshop Manual (long the Bible for BACT analysis):

Historically, EPA has not considered the BACT requirement as a means to redefine the design of the source when considering available control alternatives. For example, applicants proposing to construct a coal-fired electric generator, have not been required by EPA as part of a BACT analysis to consider building a natural gas-fired electric turbine although the turbine may be inherently less polluting per unit product (in this case electricity).

Apt example, don’t you think? (In case you are wondering, EPA’s decision does not discuss or refer to this text from the NSR Manual.)

What was the basis for EPA’s decision here? Largely, it is that the IGCC facility will be designed to burn natural gas as well as syngas and the permittee specifically stated that it planned to combust natural gas during a 6-12 month startup period. On these facts, EPA concluded that the permittee and KDAQ had to do a better job explaining why full-time use of natural gas should be considered “to redefine the design of the source.”

As noted above, EPA went to great lengths to minimize the scope of the decision. It states that the Order:

should in no way be interpreted as EPA expressing a policy preference for construction of natural-gas fired facilities over IGCC facilities.

should not be interpreted to establish or imply an EPA position that PSD permitting authorities should conclude … that BACT for a proposed electricity generating unit is … natural gas.

does not conclude that it is not possible or permissible for the permit applicant … to develop a rationale which shows that firing exclusively with natural gas would “redefine the source.”

EPA does not intend to discourage applicants that propose to construct an IGCC facility from seeking to hedge the risk of investing in … IGCC technology by proposing … utilizing natural gas for some period….

Methinks EPA doth protest too much. If I may say so, this is a freakin’ IGCC facility. Isn’t it obvious that one doesn’t plan or build an IGCC facility if one plans to burn natural gas? Don’t you think that EPA could have taken administrative notice of what IGCC technology is?

All of EPA’s protestations about the Order’s limits may be designed to mollify IGCC supporters, but what does its rationale mean for all of the existing facilities – coal and oil – that are already capable of firing on natural gas? Next time they are subject to NSR/PSD review, must they evaluate the possibility of switching completely to natural gas? As I’ve said here before, yikes!

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

Posted on November 4, 2009 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.

GHG Regulation under the Existing CAA: Coming Soon to a [Large] Stationary Source Near You

Posted on October 7, 2009 by Seth Jaffe

On Thursday, EPA issued its long-awaited proposed rule describing how thresholds would be set for regulation of GHG sources under the existing Clean Air Act PSD authority. Having waded through the 416-page proposal, I’m torn between the appropriate Shakespeare quotes to describe it: “Much ado about nothing” or “Methinks thou dost protest too much.”

First, notwithstanding its length, the proposal is quite limited in scope. In essence, it has three parts:

Establishment of an applicability threshold for PSD and Title V purposes of 25,000 tons per year of CO2e.

Establishment of a PSD significance level of from 10,000 tpy CO2e and 25,000 CO2e.

Development over the next five years of means to streamline GHG regulation of sources greater than the current statutory levels of 100-250 tpy.

Basically, EPA’s position is that, once it begins to regulate GHGs as a pollutant by promulgating its mobile source rule – expected next spring – stationary source regulation under the PSD and Title V programs follow automatically. Thus, the issue for EPA at this point is not whether to regulate stationary sources, but how to do so without the entire program grinding to a halt.

Here’s where the protestation comes in. Most of the proposal is devoted to explaining EPA’s reliance of the doctrines of “absurd results” and “administrative necessity” to justify exclusion of sources that would seem to be categorically included by the explicit language of the statute. Members of the regulated community will understand the irony in EPA’s extensive discussion regarding how the purpose of the PSD program is to achieve environmental protection and economic development – and that this latter purpose would be jeopardized by regulation of sources at the 100/250 tpy threshold. I don’t think we will ever again see EPA devote this many pages to a description of its concern about economic growth.

I’m not going to predict here whether EPA will win any challenge to the higher thresholds. Certainly, the absurd results doctrine argument is the stronger of the two. It is noteworthy that the four leading environmental cases EPA cites in support of its administrative necessity argument, while acknowledging the existence of the doctrine, all went against EPA.

More relevant still is the question of who would in fact challenge this regulation and what would be the result even if the challenge succeeded. Following the debacle that resulted from vacation of the CAIR rule, what is the likelihood that a successful challenge would result in vacation of the rule in its entirety? Isn’t it more likely that the rule would stay in effect as to the large sources, with the remanding the case to EPA to promulgate rules governing smaller sources? In fact, that’s what EPA is already doing, which is probably EPA’s strongest practical argument in support of the rule.

Public comments will be due 60 days from Federal Register promulgation and there are some issues that the regulated community should consider. These include the significance threshold, and suggestions regarding how to streamline the program for smaller sources. EPA has proposed some interesting ideas, including presumptive BACT determinations and general permits. 

Bottom line? Large sources better get ready to comply. Smaller sources, take a deep breath and count your blessings – for now. 

Clean Water Advocates and Industrial Sector Battle Over Connecticut's Industrial Stormwater Permit

Posted on March 23, 2009 by Gregory Sharp

By Gregory A. Sharp

Murtha Cullina LLP

March 23, 2009

 

The Connecticut Department of Environmental Protection (“DEP”) has proposed to revise and renew its General Permit for the Discharge of Stormwater Associated with Industrial Activity. The renewal has prompted environmental groups to seek enhanced notice and public participation requirements and has provoked the regulated community to seek an overhaul of the structure of the General Permit.

 

The previous General Permit was adopted in 2002, modified in 2003, and expired on September 30, 2007. It was unilaterally extended on October 1, 2007 and October 1, 2008 through March 31, 2008 without change by DEP to provide ongoing coverage to approximately 1,500 registrants. Companies in Connecticut with industrial SIC codes are required to register if they have a discharge of stormwater through a conveyance to waters of the United States, and are not otherwise exempt.

 

Connecticut’s Industrial Stormwater scheme historically was a one-size-fits-all general permit. It allowed eligible companies to authorize their stormwater discharges by filing a registration form, similar to the Notice of Intent in the federal program. The filing of the registration, along with a fee, conferred coverage under the permit, subject to its terms, unless the Commissioner requested an individual permit application.

 

The 2002 permit required the preparation and certification by a P.E. or C.H.H.M. of a stormwater pollution prevention plan (“SWPPP”), adherence to generic best management practices (“BMPs”), annual monitoring of stormwater discharges from qualifying storm events for an expansive list of chemical and physical parameters, including whole effluent toxicity, and a set of Target Values for the parameters based on the 80th percentile of the monitoring data collected in previous years.

 

Historically, the permit had not been particularly controversial, had been relatively easy for DEP to administer, and enabled the agency to develop a significant stormwater data base which it could sort by SIC Code and use to prioritize enforcement. Significant enforcement cases over the past 10 years focused on non-stormwater discharges, such as those from vehicle washing, which commingled with stormwater, or in some cases, discharged directly through stormwater systems.

 

During the summer of 2008, DEP announced that it would be revising the permit. It sought to update its 80th percentile Target Values to reflect the monitoring data acquired since the prior permit was adopted in 2002, and it proposed Action Levels at the 95th percentile of prior monitoring results which would require follow-up action by registrants to investigate the source of the exceedances and modify their BMPs and SWPPPs.

 

Two events conspired to radically change DEP’s approach to the General Permit renewal. On September 27, 2008, the U.S. Environmental Protection Agency (“EPA”) adopted its Multi-Sector General Permit for Stormwater Associated with Industrial Activity (73 FR 56372), and on October 8, 2008, the Connecticut Fund for the Environment and the Connecticut Soundkeeper, Inc. intervened in the DEP proceedings convened to renew the permit, and several industrial stakeholder organizations quickly joined the fray.

 

The environmental groups sought significant changes to the permit scheme arising from federal appellate decisions interpreting the Clean Water Act to require the opportunity for public notice and comment not only on the General Permit and its terms, but also on the individual discharger’s Notice of Intent and its proposed pollution control measures.

 

The leading case relied upon by the environmental intervenors is Environmental Defense Center, Inc. et al. vs. U. S. Environmental Protection Agency et al., 344 F. 3d 832 (9th Cir., 2003). In that case, environmental groups challenged the EPA’s Phase II regulations for municipal storm and sanitary sewers (“MS4s). The regulations authorized the use of general permits and required the use of BMPs identified in an NOI filed by the MS4 in seeking authorization under the general permit. Consistent with its prior practice, EPA did not require NOIs to be subject to public notice or public hearings.

 

The environmental petitioners challenged the rule, because it did not require EPA to review the content of the MS4 dischargers’ Notices of Intent and the substance of the stormwater controls adopted by the dischargers, and it did not contain requirements for public participation in the NPDES permitting process.

 

The Ninth Circuit remanded the rule on both counts. As to the review of the discharger’s individually proposed pollution control measures, the court, relying on Section 402 (p) of the Clean Water Act, 33 U.S.C. § 1342(p), held “stormwater management programs that are designed by regulated parties must, in every instance, be subject to meaningful review by an appropriate regulating entity to ensure that each such program reduces the discharge of pollutants to the maximum extent practicable.” Id. at 856.

 

As to the public participation aspects, the court held that, because it was the NOIs and accompanying documents, not the general permit itself, that contain the substantive information on pollution control measures to reduce discharges to the maximum extent practicable, if the Rule does not make NOIs available to the public or provide for public hearings on NOIs, the Rule violates the intent of the Act, as embodied in 33 U.S.C. § 1342 (a)(1) and (j).

 

Using this precedent the environmental groups in Connecticut challenged the DEP’s past practice of not publishing notice of registrations for the Industrial Stormwater Permit and not providing for public review of the site-specific SWPPPs mandated by the General Permit. In the most recent draft of the General Permit, the agency has agreed to publish notice on its website of registrations received each month, and provide a means by which the public can review the SWPPPs.

 

On the industry side, trade associations advocated for a Connecticut General Permit that would emulate the federal Multi-Sector permit. The advantage of the federal approach to industry was that EPA designated 29 industrial sectors and tailored its generic control measures and monitoring requirements to each sector. Although the EPA permit requires quarterly monitoring for sector specific “Benchmark” pollutants, the number of parameters measured is far less than Connecticut’s prior permit and does not include toxicity. The Benchmark concept incorporated in the permit requires those dischargers for which the average of four quarters of monitoring data exceed the Benchmark concentration to investigate the reasons for the exceedance and modify their control measures and SWPPP. For certain sectors, EPA also adopted enforceable effluent limitations.

 

On February 4, 2009, DEP issued a new proposed draft which adopts ten sectors modeled on the federal permit with semi-annual monitoring. The previously proposed “Action Levels” have become “Benchmarks” to track the federal language. DEP’s proposal retains the broad spectrum of parameters to be included in the monitoring program, including toxicity, but makes some sector specific adjustments. The toxicity monitoring requirement carries with it no Benchmark. The draft also adds annual monitoring for parameters for which receiving waters have been designated impaired or subject to Total Maximum Daily Load restrictions.

 

The Benchmark values for Copper, Lead and Zinc are based on Connecticut’s Water Quality Standards. The Benchmarks for remaining parameters (pH, O&G, COD, TSS, TPh, TKN, and NO3), are based on the 50th percentile of the previously acquired monitoring data. Industry has objected to the Benchmarks set at the 50th percentile as arbitrary (not water-quality based), overly stringent, and impossible for many sites to achieve.

 

The DEP is still taking comments, and expects to go to notice on a new proposal in April. In the meantime, the DEP has published notice that it intends to extend the 2002 General Permit once again until September 30, 2010, but it will require re-registration and a pro-rated fee of $300 for the October 1, 2007 to September 10, 2010 time period.

Clean Water Advocates and Industrial Sector Battle Over Connecticut's Industrial Stormwater Permit

Posted on March 23, 2009 by Gregory Sharp

By Gregory A. Sharp

Murtha Cullina LLP

March 23, 2009

 

The Connecticut Department of Environmental Protection (“DEP”) has proposed to revise and renew its General Permit for the Discharge of Stormwater Associated with Industrial Activity. The renewal has prompted environmental groups to seek enhanced notice and public participation requirements and has provoked the regulated community to seek an overhaul of the structure of the General Permit.

 

The previous General Permit was adopted in 2002, modified in 2003, and expired on September 30, 2007. It was unilaterally extended on October 1, 2007 and October 1, 2008 through March 31, 2008 without change by DEP to provide ongoing coverage to approximately 1,500 registrants. Companies in Connecticut with industrial SIC codes are required to register if they have a discharge of stormwater through a conveyance to waters of the United States, and are not otherwise exempt.

 

Connecticut’s Industrial Stormwater scheme historically was a one-size-fits-all general permit. It allowed eligible companies to authorize their stormwater discharges by filing a registration form, similar to the Notice of Intent in the federal program. The filing of the registration, along with a fee, conferred coverage under the permit, subject to its terms, unless the Commissioner requested an individual permit application.

 

The 2002 permit required the preparation and certification by a P.E. or C.H.H.M. of a stormwater pollution prevention plan (“SWPPP”), adherence to generic best management practices (“BMPs”), annual monitoring of stormwater discharges from qualifying storm events for an expansive list of chemical and physical parameters, including whole effluent toxicity, and a set of Target Values for the parameters based on the 80th percentile of the monitoring data collected in previous years.

 

Historically, the permit had not been particularly controversial, had been relatively easy for DEP to administer, and enabled the agency to develop a significant stormwater data base which it could sort by SIC Code and use to prioritize enforcement. Significant enforcement cases over the past 10 years focused on non-stormwater discharges, such as those from vehicle washing, which commingled with stormwater, or in some cases, discharged directly through stormwater systems.

 

During the summer of 2008, DEP announced that it would be revising the permit. It sought to update its 80th percentile Target Values to reflect the monitoring data acquired since the prior permit was adopted in 2002, and it proposed Action Levels at the 95th percentile of prior monitoring results which would require follow-up action by registrants to investigate the source of the exceedances and modify their BMPs and SWPPPs.

 

Two events conspired to radically change DEP’s approach to the General Permit renewal. On September 27, 2008, the U.S. Environmental Protection Agency (“EPA”) adopted its Multi-Sector General Permit for Stormwater Associated with Industrial Activity (73 FR 56372), and on October 8, 2008, the Connecticut Fund for the Environment and the Connecticut Soundkeeper, Inc. intervened in the DEP proceedings convened to renew the permit, and several industrial stakeholder organizations quickly joined the fray.

 

The environmental groups sought significant changes to the permit scheme arising from federal appellate decisions interpreting the Clean Water Act to require the opportunity for public notice and comment not only on the General Permit and its terms, but also on the individual discharger’s Notice of Intent and its proposed pollution control measures.

 

The leading case relied upon by the environmental intervenors is Environmental Defense Center, Inc. et al. vs. U. S. Environmental Protection Agency et al., 344 F. 3d 832 (9th Cir., 2003). In that case, environmental groups challenged the EPA’s Phase II regulations for municipal storm and sanitary sewers (“MS4s). The regulations authorized the use of general permits and required the use of BMPs identified in an NOI filed by the MS4 in seeking authorization under the general permit. Consistent with its prior practice, EPA did not require NOIs to be subject to public notice or public hearings.

 

The environmental petitioners challenged the rule, because it did not require EPA to review the content of the MS4 dischargers’ Notices of Intent and the substance of the stormwater controls adopted by the dischargers, and it did not contain requirements for public participation in the NPDES permitting process.

 

The Ninth Circuit remanded the rule on both counts. As to the review of the discharger’s individually proposed pollution control measures, the court, relying on Section 402 (p) of the Clean Water Act, 33 U.S.C. § 1342(p), held “stormwater management programs that are designed by regulated parties must, in every instance, be subject to meaningful review by an appropriate regulating entity to ensure that each such program reduces the discharge of pollutants to the maximum extent practicable.” Id. at 856.

 

As to the public participation aspects, the court held that, because it was the NOIs and accompanying documents, not the general permit itself, that contain the substantive information on pollution control measures to reduce discharges to the maximum extent practicable, if the Rule does not make NOIs available to the public or provide for public hearings on NOIs, the Rule violates the intent of the Act, as embodied in 33 U.S.C. § 1342 (a)(1) and (j).

 

Using this precedent the environmental groups in Connecticut challenged the DEP’s past practice of not publishing notice of registrations for the Industrial Stormwater Permit and not providing for public review of the site-specific SWPPPs mandated by the General Permit. In the most recent draft of the General Permit, the agency has agreed to publish notice on its website of registrations received each month, and provide a means by which the public can review the SWPPPs.

 

On the industry side, trade associations advocated for a Connecticut General Permit that would emulate the federal Multi-Sector permit. The advantage of the federal approach to industry was that EPA designated 29 industrial sectors and tailored its generic control measures and monitoring requirements to each sector. Although the EPA permit requires quarterly monitoring for sector specific “Benchmark” pollutants, the number of parameters measured is far less than Connecticut’s prior permit and does not include toxicity. The Benchmark concept incorporated in the permit requires those dischargers for which the average of four quarters of monitoring data exceed the Benchmark concentration to investigate the reasons for the exceedance and modify their control measures and SWPPP. For certain sectors, EPA also adopted enforceable effluent limitations.

 

On February 4, 2009, DEP issued a new proposed draft which adopts ten sectors modeled on the federal permit with semi-annual monitoring. The previously proposed “Action Levels” have become “Benchmarks” to track the federal language. DEP’s proposal retains the broad spectrum of parameters to be included in the monitoring program, including toxicity, but makes some sector specific adjustments. The toxicity monitoring requirement carries with it no Benchmark. The draft also adds annual monitoring for parameters for which receiving waters have been designated impaired or subject to Total Maximum Daily Load restrictions.

 

The Benchmark values for Copper, Lead and Zinc are based on Connecticut’s Water Quality Standards. The Benchmarks for remaining parameters (pH, O&G, COD, TSS, TPh, TKN, and NO3), are based on the 50th percentile of the previously acquired monitoring data. Industry has objected to the Benchmarks set at the 50th percentile as arbitrary (not water-quality based), overly stringent, and impossible for many sites to achieve.

 

The DEP is still taking comments, and expects to go to notice on a new proposal in April. In the meantime, the DEP has published notice that it intends to extend the 2002 General Permit once again until September 30, 2010, but it will require re-registration and a pro-rated fee of $300 for the October 1, 2007 to September 10, 2010 time period.

EPA CAFO RULE - RIGHTING ITS COURSE??

Posted on March 12, 2009 by Brian Rosenthal

Has the EPA gone far enough to overcome the successful Waterkeeper Alliance challenge to its CAFO Rule? 

 

In 2005, the 2nd Circuit Court of Appeals held EPA’s 2003 CAFO Rule exceeded its authority. The challenged rule required certain concentrated animal feeding operators to apply for an NPDES water permit or prove none was needed. The court held that having only a potential to discharge was not enough to require a permit. In 2008, the EPA revised its CAFO Rule, announced on November 20, 2008 at 73 Fed. Reg. 70,418 as “Revised National Pollutant Discharge Elimination System Permit Regulation and Effluent Limitations Guidelines for Concentrated Animal Feeding Operations in Response to the Waterkeeper Decision”-did it do enough to survive a challenge?

 

Now, only parties that discharge or propose to discharge must apply for an NPDES permit. In addition, a voluntary option is included for unpermitted CAFO’s to self certify that they do not meet the permitting standard. Agricultural stormwater continues to be exempt if litter is applied in compliance with a nutrient management plan. The states are just beginning to address how to implement the CAFO Rule.   

 

One head’s up is, a CAFO that proposes to discharge must apply for a permit as soon as it proposes to discharge. If it does not, it could have an unpermitted discharge and also be in violation of another requirement to seek permit coverage at the proposal date.  In other words, an unpermitted discharge could result in two violations. 

 

A proposal to discharge is based on either design, construction, operation or maintenance such that a discharge will occur. The certification procedure is now self-implementing with a certification statement being submitted by the farmer or operator. It is not subject to public comment or agency review. Obtaining a no discharge certification shifts the burden of proof to the agency on whether a proposal to discharge that should have been permitted occurred. In other words, if a party does not properly certify and has a discharge, it has the burden of proving that it did not propose to discharge in any enforcement action, which could lead to a double violation along with the unpermitted discharge. 

 

The EPA as part of the CAFO Rule has committed to work with the states and various states have begun sessions regarding the CAFO Rule and their state programs. Farmers and operators, however, fear unintended recordkeeping violations and EPA inspections upon registration.  Of course, to the extent they fall within the Rule, farmers or operators must apply.

Stay tuned for additional implementation issues and enforceability questions as the CAFO Rule becomes subjected to further scrutiny, in the consolidated challenge to it pending in the Fifth Circuit Court of Appeals.

Section 115 of the Clean Air Act - A Useful Tool for Climate Change?

Posted on February 25, 2009 by Angus Macbeth

We are not going to have Congressional action on a regime for reducing greenhouse gas emissions by the time EPA will feel compelled to respond to the Supreme Court's direction in the Massachusetts case and announce whether CO2 emissions endanger public health or welfare. If endangerment is found under Section 109 or 202 of the Act, it appears to lead to ambient air quality standards for CO2 which are then to be met through state implementation plans. By controlling the sources of CO2 within its borders, no state is likely to be able to reduce CO2 to whatever ambient level is established. This is the practical result of the fact that greenhouse gases are a global problem not a local or regional problem. Moreover, the regulation of CO2 under other portions of the Act will likely follow. Perhaps the chaos likely to ensue from following this course will push Congress to pass legislation addressing greenhouse gases. But relying on Congress to do the sensible thing may well be an imprudent course.

 

Why not try an endangerment finding under Section 115 of the Act instead? It addresses international air pollution which is what GHG emissions are. It calls for a determination of endangerment in a foreign country from sources in the United States. The determination is deemed a finding under Sec.110(a)(2)(H)(ii) of the Act; that finding may be that the relevant SIP is substantially inadequate to comply with the requirements of the Act but need not be that it is inadequate to attain the NAAQS. The affected foreign country must be invited to appear at public hearings on appropriate revision of the SIP and the United States must be given reciprocal rights by the foreign country. Making the determination and establishing reciprocity would take EPA into comparatively unfamiliar territory; starting GHG reduction through state action would follow the path that the US has already started down.

The advantages of this approach that I see are, first, that it deals with the GHG issue as a global, or at least an international, problem rather than as a local or regional one. Second, it gives the states the opportunity to proceed with cap-and-trade regimes which I think will, in some form, be the Congressional solution. Third, it may be able to avoid introducing GHG regulation into other CAA programs such as New Source Review which may be hard to untangle if and when a cap-and-trade regime is established.

The disadvantages are that it is certainly not a perfect fit with a national cap-and-trade or GHG emission tax scheme which I view as the most rational approaches that Congress might enact (though the rationality of a tax scheme is much greater than the likelihood that Congress would embrace it). If you favor command and control regulation and the complexity of New Source Review, this is not the solution for you. There are also risks in what the courts may do in interpreting Section 115 which has rarely been subjected to judicial scrutiny.

In sum, I suggest Section 115 as the best of the ill-fitting options which the Clean Air Act offers for a rational approach to reducing GHG emissions.  

Section 115 of the Clean Air Act - A Useful Tool for Climate Change?

Posted on February 25, 2009 by Angus Macbeth

We are not going to have Congressional action on a regime for reducing greenhouse gas emissions by the time EPA will feel compelled to respond to the Supreme Court's direction in the Massachusetts case and announce whether CO2 emissions endanger public health or welfare. If endangerment is found under Section 109 or 202 of the Act, it appears to lead to ambient air quality standards for CO2 which are then to be met through state implementation plans. By controlling the sources of CO2 within its borders, no state is likely to be able to reduce CO2 to whatever ambient level is established. This is the practical result of the fact that greenhouse gases are a global problem not a local or regional problem. Moreover, the regulation of CO2 under other portions of the Act will likely follow. Perhaps the chaos likely to ensue from following this course will push Congress to pass legislation addressing greenhouse gases. But relying on Congress to do the sensible thing may well be an imprudent course.

 

Why not try an endangerment finding under Section 115 of the Act instead? It addresses international air pollution which is what GHG emissions are. It calls for a determination of endangerment in a foreign country from sources in the United States. The determination is deemed a finding under Sec.110(a)(2)(H)(ii) of the Act; that finding may be that the relevant SIP is substantially inadequate to comply with the requirements of the Act but need not be that it is inadequate to attain the NAAQS. The affected foreign country must be invited to appear at public hearings on appropriate revision of the SIP and the United States must be given reciprocal rights by the foreign country. Making the determination and establishing reciprocity would take EPA into comparatively unfamiliar territory; starting GHG reduction through state action would follow the path that the US has already started down.

The advantages of this approach that I see are, first, that it deals with the GHG issue as a global, or at least an international, problem rather than as a local or regional one. Second, it gives the states the opportunity to proceed with cap-and-trade regimes which I think will, in some form, be the Congressional solution. Third, it may be able to avoid introducing GHG regulation into other CAA programs such as New Source Review which may be hard to untangle if and when a cap-and-trade regime is established.

The disadvantages are that it is certainly not a perfect fit with a national cap-and-trade or GHG emission tax scheme which I view as the most rational approaches that Congress might enact (though the rationality of a tax scheme is much greater than the likelihood that Congress would embrace it). If you favor command and control regulation and the complexity of New Source Review, this is not the solution for you. There are also risks in what the courts may do in interpreting Section 115 which has rarely been subjected to judicial scrutiny.

In sum, I suggest Section 115 as the best of the ill-fitting options which the Clean Air Act offers for a rational approach to reducing GHG emissions.  

Section 115 of the Clean Air Act - A Useful Tool for Climate Change?

Posted on February 25, 2009 by Angus Macbeth

We are not going to have Congressional action on a regime for reducing greenhouse gas emissions by the time EPA will feel compelled to respond to the Supreme Court's direction in the Massachusetts case and announce whether CO2 emissions endanger public health or welfare. If endangerment is found under Section 109 or 202 of the Act, it appears to lead to ambient air quality standards for CO2 which are then to be met through state implementation plans. By controlling the sources of CO2 within its borders, no state is likely to be able to reduce CO2 to whatever ambient level is established. This is the practical result of the fact that greenhouse gases are a global problem not a local or regional problem. Moreover, the regulation of CO2 under other portions of the Act will likely follow. Perhaps the chaos likely to ensue from following this course will push Congress to pass legislation addressing greenhouse gases. But relying on Congress to do the sensible thing may well be an imprudent course.

 

Why not try an endangerment finding under Section 115 of the Act instead? It addresses international air pollution which is what GHG emissions are. It calls for a determination of endangerment in a foreign country from sources in the United States. The determination is deemed a finding under Sec.110(a)(2)(H)(ii) of the Act; that finding may be that the relevant SIP is substantially inadequate to comply with the requirements of the Act but need not be that it is inadequate to attain the NAAQS. The affected foreign country must be invited to appear at public hearings on appropriate revision of the SIP and the United States must be given reciprocal rights by the foreign country. Making the determination and establishing reciprocity would take EPA into comparatively unfamiliar territory; starting GHG reduction through state action would follow the path that the US has already started down.

The advantages of this approach that I see are, first, that it deals with the GHG issue as a global, or at least an international, problem rather than as a local or regional one. Second, it gives the states the opportunity to proceed with cap-and-trade regimes which I think will, in some form, be the Congressional solution. Third, it may be able to avoid introducing GHG regulation into other CAA programs such as New Source Review which may be hard to untangle if and when a cap-and-trade regime is established.

The disadvantages are that it is certainly not a perfect fit with a national cap-and-trade or GHG emission tax scheme which I view as the most rational approaches that Congress might enact (though the rationality of a tax scheme is much greater than the likelihood that Congress would embrace it). If you favor command and control regulation and the complexity of New Source Review, this is not the solution for you. There are also risks in what the courts may do in interpreting Section 115 which has rarely been subjected to judicial scrutiny.

In sum, I suggest Section 115 as the best of the ill-fitting options which the Clean Air Act offers for a rational approach to reducing GHG emissions.  

UPDATE ON NAAQS OZONE LITIGATION

Posted on December 18, 2008 by John Crawford

On March 27, 2008, the Environmental Protection Agency (EPA) announced the final Ozone NAAQS Rule which requires airborne concentrations of ozone to be lowered from 80 ppb (actually 84 ppb due to rounding allowances) to 75 ppb for both primary and secondary standards. Industrial and manufacturing groups balked at the more stringent standard, claiming it was unnecessary and would place an undue hindrance on economic development. In opposition to this viewpoint, environmental groups contend that the new standard fails to adequately protect human health and the environment and that the standard should be lower.

 

Not surprisingly, due to the contrasting views, the standard was challenged. Asserting that the Ozone NAAQS Rule was too stringent, the State of Mississippi filed a Petition for Review,  in Mississippi v. EPA, No. 08-1200 (D.C. Cir., filed May 23, 2008). Shortly thereafter, the Missouri Department of Natural Resources and a number of trade/industrial groups intervened on behalf of Mississippi. Environmental groups, led by the American Lung Association, Appalachian Mountain Club and Natural Resources Defense Council, also filed a challenge to the ozone standard in American Lung Association v. EPA, No. 08-1203 (D.C. Cir.) which was later consolidated with the Mississippi case.

 

The various arguments, both for and against the standard, have not yet been briefed. In fact, Harold Pizzetta, lead attorney for the State of Mississippi, has stated that the two sides have yet to come to an agreement on a briefing schedule, leading one to conclude that there is likely very little the two camps will agree on.  

 

The question as to why Mississippi led the charge/challenge against the new ozone standard is an interesting one. While current data suggest the new standard will have direct impacts on only 13 of Mississippi’s 82 counties, the counties impacted are among the leaders in the state’s economy. Among those Mississippi counties that would not meet the 75 ppb standard are DeSoto County, the state’s and one of the nation’s fast growing counties, and Jackson County, home to the state’s largest employer and numerous other manufacturing facilities. Mr. Pizzetta believes the cost of compliance with the standard – while specifically not a factor the Court may consider – provides justification for the state’s challenge.  Additionally, Pizzetta stated that scientific evidence suggests that the data used by EPA in setting the standard was flawed.   Moreover, Mississippi’s leaders believe the 75 ppb standard will be met in the short term if the Clean Air Interstate Rule (CAIR) is implemented. To that end, the state has joined with some of the same groups and entities that it opposes in the ozone litigation and requested that the D.C. Circuit stay the vacatur of CAIR.   

 

In opposition to Mississippi’s argument, the environmental groups will likely point to the work by the Clean Air Scientific Advisory Committee (CASAC) which recommended that the primary ozone standard be set within the range of 60 – 70 ppb.   In addition, it’s believed that EPA originally sought to set the standard within this range and was overruled by the White House.   Thus, EPA is left in a precarious situation in that the agency must justify why its standard is neither too strict nor too lenient.   The current view by a number of environmental litigators is that the current litigation will be decided on the scientific evidence and not on a constitutional argument, as the 1997 ozone NAAQS litigation was in the American Trucking case.

 

In regard to the actual timeframes for action set forth in the ozone rule, states must make initial designations of attainment/non-attainment by March 2009, with EPA making final designations by March 2010. Thereafter, State Implementation Plans (SIPs) must be submitted to EPA by 2013, with attainment to be achieved between 2014 and 2030, depending on severity. Based on the movement of the existing litigation, it’s doubtful a decision will be made prior to the time period set for final designations. Additionally, litigants do not believe the court will enter a stay of the new rule. 

 

As a result, states will be left with no choice but to make designations in conformity with the 75 ppb standard.

 

Article written by:   

            Gary Rikard

            Michael Caples

            Butler, Snow, O’Mara, Stevens & Cannada, PLLC

            P.O. Box 22567
            Jackson, MS 39225-2567

Environmental Appeals Board Tees Up Carbon Dioxide Issue to Obama Administration

Posted on December 4, 2008 by Stephen M. Bruckner

In a decision that will have far-reaching implications for coal-fired power plants, EPA's Environmental Appeals Board ("EAB") ruled on November 14, 2008 that EPA's Region 8 must reconsider whether carbon dioxide ("CO2") is a regulated air pollutant covered by the Clear Air Act's Prevention of Significant Deterioration ("PSD") permitting program. Because there is so little time left for EPA to finalize its decision, the EAB's ruling effectively drops this hot button issue squarely on the doorstep of the incoming Obama administration.

 

            The procedural posture of this case is a bit unusual. Deseret Power Electric Cooperative ("Deseret") operates a coal-fired power plant, the Bonanza Power Plant, on the Uintah and Ourah Indian Reservation in Utah. Deseret wants to build a new waste-coal-fired plant at the same location. The new plant needs a "PSD permit" to regulate its emissions under the Clean Air Act. A PSD permit requires the installation of "Best Available Control Technology", or "BACT", for regulated pollutants.

 

            Most PSD permits are issued by state environmental agencies. However, because Deseret's power plant is located on an Indian reservation, EPA's Region 8 is the permitting authority. EPA issued the PSD permit to Deseret on August 30, 2007. The Sierra Club, which had submitted comments to EPA on the proposed permit, appealed the permitting decision to the Environmental Appeals Board. Sierra Club argued that the permit violated the Clean Air Act because the Act requires BACT for each pollutant "subject to regulation" under the Act. [Clean Air Act §§ 165(a)(4), 168(3); 42 U.S.C. §§ 7475(a)(4), 7478(3)].

 

            The EAB rejected the Sierra Club's argument. The EAB carefully reviewed the Supreme Court's landmark decision in Massachusetts v. EPA, 549 U.S. 497 (2007), which held that CO2 is within the Clean Air Act's definition of "air pollutant". The EAB noted that the Massachusetts decision did not address whether carbon dioxide is a pollutant "subject to regulation" under the Clean Air Act. The EAB therefore rejected the Sierra Club's argument that the phrase "subject to regulation" has a plain meaning that requires Region 8 to establish a CO2 limit in Deseret's permit.

 

            But that was pretty much the end of the good news for EPA and Deseret. In making its permit decision on CO2, EPA Region 8 relied on prior EPA interpretations addressing when a pollutant is considered to be "regulated". The EAB ruled that the reasons cited by Region 8 for its decision were not sufficient. The EAB then sent the case back to Region 8 to 'reconsider whether or not to impose a CO2 BACT limit in light of the Agency's discretion to interpret, consistent with the CAA [Clean Air Act], what constitutes a "pollutant subject to regulation under the Act."' [Deseret decision at p. 63]. Recognizing the potential impact of its ruling and of Region 8's further consideration, the EAB observed that because the issue "has implications far beyond this individual permitting proceeding", Region 8 should decide whether it would be better to address the matter in "an action of nationwide scope". [Deseret decision, pp. 63-64].

 

            Clearly, then, the Sierra Club was denied the clear victory it sought; namely, to require BACT for carbon dioxide in all coal-fired power plant PSD permits. On the other hand, Deseret and other electric utilities seeking PSD permits are left hanging as to whether CO2 will be a regulated pollutant under the PSD program. Although EPA probably wants to resolve this case before the expiration of President Bush's term, as a practical matter, it simply cannot get it done in little more than a month. Thus, the incoming Administration must squarely confront an issue that could shape the climate change debate and, ultimately, energy policy in this country. EPA most likely will take the hint from the EAB and handle the matter through "an action of nationwide scope". How it turns out is anyone's guess, but it is fair to say that the new EPA will have more climate change hawks in policy positions than the current Agency.

EPA IN THE DC CIRCUIT - WHERE HAS ALL THE DEFERENCE GONE?

Posted on September 23, 2008 by Linda Bochert
  • June 2007: DC Circuit Hands EPA and Industry Two Defeats:  Court Rejects EPA MACT Air Rules for Commercial and Industrial Boilers and Plywood and Composite Wood Products
  • February and July 2008: DC Circuit to EPA: Multi-Pollutant Strategy for Interstate Clean Air Fails to Meet Clean Air Act Requirements

Several recent cases have raised the following question in my mind: can EPA win an air case in the DC Circuit?

They teach us in law school that governmental agencies can expect a reasonable degree of deference from a reviewing court when exercising statutory authority to develop regulations to implement Congressional directives. States and entities subject to EPA’s regulations need something to rely on, and expect EPA and the Courts to provide some degree of predictability and certainty in the application of the regulations. Yet deference is nowhere to be found in the DC Circuit’s recent reviews of several EPA regulations implementing the Clean Air Act (CAA). And in each of the cases discussed below, the Court opted for the most dramatic remedy – vacatur of the offending rule.

These decisions can be sliced and diced from a variety of perspectives. At the least I think they raise vexing concerns about deference and choice of remedy. What do you think – are these the trend or the anomalies? Is this a real concern or much ado about nothing?

 

Here are my examples:

 1. June 2007: Commercial and Industrial Boiler MACT Rules

On June 8, 2007, in Natural Resources Defense Council v. EPA, No. 04-1385 (D.C. Cir. June 8, 2007) (NRDC I) the DC Circuit struck down two EPA rules setting air toxics limitations for commercial and industrial boilers and solid waste incinerators: National Emission Standards for Hazardous Air Pollutants for Industrial, Commercial, and Institutional Boilers and Process Heaters (Boilers Rule) and Standards of Performance for New Stationary Sources and Emission Guidelines for Existing Sources: Commercial and Industrial Solid Waste Incineration Units (CISWI Definitions Rule).

At issue were the emission standards for hazardous air pollutants (HAPs) emitted from commercial and industrial solid waste incinerators and industrial boilers and the appropriate setting of the Maximum Achievable Control Technology (MACT) standard.

The challenge was brought by environmental petitioners Natural Resources Defense Council, Sierra Club, and the Environmental Integrity Project. The Court agreed with them that EPA had impermissibly narrowed the definition of “commercial or industrial waste” in the CISWI Definitions Rule in violation of the plain language of section 129 of the Clean Air Act. Because the Boilers Rule was dependent on that same definition, both rules were rejected by the Court. EPA and industry representatives, including the Coalition for Responsible Waste Incineration, Utility Air Regulatory Group, and Utility Solid Waste Activities Group, contended that EPA’s definition was within the agency’s discretion, but the Court was not persuaded.

 

2. June 2007: Plywood and Composite Wood Products MACT Rules

On June 19, 2007, the DC Circuit dealt a second blow in a challenge to EPA’s rules to regulate HAPs from processing plywood and composite wood products (PCWP). Also named Natural Resources Defense Council v. EPA, No. 04-1323 (D.C. Cir. June 19, 2007) (NRDC II), this case was also brought by the Natural Resources Defense Council, Sierra Club and the Environmental Integrity Project against EPA. EPA was supported by industry groups, including the American Forest and Paper Association.

The two rules involved in this case were the National Emission Standards for Hazardous Air Pollutants: Plywood and Composite Wood Products (2004 Rule) and the National Emission Standards for Hazardous Air Pollutants: Plywood and Composite Wood Products; List of Hazardous Air Pollutants, Lesser Quantity Designations, Source Category List (2006 Rule), with the primary challenge to the 2006 Rule. Example of operations regulated by these rules include sawmills with lumber kilns, hardwood and softwood plywood and veneer plants, particleboard/fibreboard and other reconstituted wood product plants, and engineered wood product plants.

Once again, the issue was the appropriate MACT standard. In this case the pivotal elements were EPA’s decisions in the 2004 Rule to create a “low-risk subcategory” and in the 2006 Rule to extend the compliance deadline from October 2007 to October 2008.

 

3. February 2008: Clean Air Mercury Rule (CAMR)

On February 8, 2008, the DC Circuit struck down CAMR in New Jersey v. EPA, No. 05-1097 (D.C. Cir. Feb. 8, 2008). CAMR was the result of EPA’s decision to remove oil and coal-fired electric utility steam generating units (EGUs) from the list of sources of hazardous air pollutants (HAPs) and instead regulate mercury emissions from these EGUs through a cap-and-trade program similar to the Clean Air Interstate Rule (CAIR).

In response, New Jersey, and several other states, municipal governments and environmental groups, challenged CAMR claiming that EPA had no authority to delist the EGUs without providing a “specific finding” under section 112(c)(9) of the CAA. Because EPA did not make this specific finding, the Petitioners claimed that not only was the delisting invalid, but CAMR was also flawed because it was based upon this delisting decision. The DC Circuit agreed with the Petitioners, vacating both the delisting rule and CAMR.

 

4. July 2008: Clean Air Interstate Rule (CAIR)

On July 11, 2008, the D.C. Circuit vacated CAIR in North Carolina v. EPA, No. 05-1244 (D.C. Cir. July 11, 2008).

The multi-party challenge to CAIR was brought by the state of North Carolina, several electric utilities (SO2 Petitioners), specific electric utilities in Texas, Florida and Minnesota, one municipality, and the Florida Association of Electric Utilities (FAEU). The electric utilities in Texas, Florida and Minnesota challenged CAIR’s applicability to them because of their location and emissions amounts. North Carolina, the SO2 Petitioners, and FAEU brought substantive challenges to the regulation, claiming that EPA did not have the discretion to act as it did, or it did so unreasonably.

The Court agreed with North Carolina and the SO2 Petitioners, holding that CAIR failed to meet the requirements of the CAA and finding “EPA’s approach – regionwide caps with no state-specific quantitative contribution determinations or emissions requirements – is fundamentally flawed.”

 Is vacatur the best remedy?

 In all four of these cases, the Court chose to vacate rather than remand the rules. The dissent in the CISWI/Boilers Rules case unsuccessfully argued that remand without vacating the rules was preferable“[b]ecause the rules would ensure greater protection to public health and the environment during the time EPA will need to develop and promulgate new rules.” The majority was unpersuaded and preferred no rules at all. Is that really the best option for the environment?

And the language the Court uses implies more than a lack of deference. In vacating CAIR, a decision described as “unexpected” by both proponents and opponents, the Court described the rule as “fundamentally flawed” and directed EPA to “redo its analysis from the ground up.” In vacating CAMR, the Court characterized EPA as “deploy[ing] the logic of the Queen of Hearts.” What’s going on here?

Connecticut Department of Environmental Protection Submits RGGI Regulations for Legislative Approval

Posted on June 9, 2008 by Gregory Sharp

The Connecticut Department of Environmental Protection (“DEP”) has submitted for legislative approval regulations to control carbon dioxide (CO2) emissions and establish a CO2 emissions credit program.[i] The controversial regulations are designed to fulfill Connecticut’s commitment to the Regional Greenhouse Gas Initiative (“RGGI”), which establishes a CO2 emissions cap and trade program for power plants in nine Northeastern and Mid-Atlantic states.[ii] RGGI is designed to be a model for a broader, national market-driven program to establish a market value for greenhouse gas (“GHG”) emissions to provide incentives for reducing GHG emissions over the long term.

Carbon dioxide is the most significant GHG by volume. Unlike many other pollutants emitted by the combustion of fossil fuels, there are no commercially available control technologies to limit CO2 emissions. Therefore, programs to reduce GHG emissions focus on improving energy efficiency, reducing the use of fossil fuels through conservation efforts, and using renewable and alternative fuels.



[i]               Proposed Conn. Agencies Regs. § 22a-174-31 and 31a.

[ii]               Information about RGGI can be found at http://rggi.org.

The regulations impose a tonnage cap on CO2 emissions from large fossil fuel-fired electricity generating units in Connecticut. The initial tonnage cap is 10.7 million tons. The regulations seek to stabilize CO2 emissions from these units in 2009-2014, then reduce those emissions by 2.5% per year in 2015-2018 from the electric utility sector. The regulations allow allocation of emissions offsets to be used for compliance where real reduction of greenhouse gases are achieved outside the regulated utility sector. They require auctioning of CO2 allowances and the use of auction proceeds for consumer benefit or strategic energy purposes as required by Conn. Gen. Stat. § 22a-200c.Finally, the regulations require a demonstration of compliance every three years.

The regulations must be approved by the Legislative Regulations Review Committee of the General Assembly before they can become effective. Significant controversy surrounds several of the key provisions which have been opposed by companies with electric generating facilities in the state.

One concern is that the CO2 allowance costs will push the price of electricity up for consumers, despite industry investments in energy efficiency. Critics of the regulation advocate direct per kilowatt-hour rate relief, which is not provided in the proposed regulations.

A second problem for the electric generating companies is the Department’s refusal to limit auction participation to RGGI regulated sources – the owners and operators of fossil-fueled electric generating facilities. DEP fears that closed auctions might result in lower prices for carbon allowances, due to lessened competition. However, with no cap on auction allowance prices, the regulated entities fear that financial speculators may drive up the price of this new commodity. There is also a significant concern that environmental organizations could purchase these allowances and “retire” them by taking them off the market, driving up the price of the remaining carbon allowances and possibly creating a shortage. Historical data suggests that generators in Connecticut may need 94% of the available allowances in 2009 in order to operate at levels expected to meet demand.

Another significant issue is that the proposed Connecticut regulations provide no cap or ceiling on the auction price for the CO2 allowances. DEP estimates that the allowance price in 2009 will be approximately $2 per ton, increasing to $5 per ton in 2024. The allowance price will have a direct impact on electric rates.

The anticipated rate impact prompted Maine, New Hampshire, and New Jersey to establish cap mechanisms to protect consumers. Maine established a limit of $5 per ton, the highest price estimated by Connecticut DEP, beyond which auction proceeds would be applied to kilowatt-hour rebates to ratepayers. New Hampshire is establishing a $6 per ton rate cap, above which funds would be rebated to consumers, similar to the Maine auction provisions. New Jersey has mandated that if two consecutive regional auctions result in allowance prices above $7 per ton, an action plan must be developed for ratepayer relief.

Finally, the regulations provide that DEP will retain 7.5% of the funds realized from the auctions for administrative costs and programs to mitigate the impacts of climate change, despite the fact that the agency concedes that it only needs a quarter of this retainage to cover the administrative costs of the program.

The proposed regulations were submitted to the Regulations Review Committee on June 6, 2008. The Committee has 65 days to approve, recommend modifications, or reject the proposed regulations. Whether the regulations will be in place before the first RGGI auction scheduled in September remains to be seen. 

Gregory A. Sharp

Murtha Cullina LLP

Kansas Agency Denies Air Quality Construction Permit for Coal-Fired Generating Units Based Solely on Projected CO2 Emissions

Posted on February 19, 2008 by Charles Efflandt

On October 18, 2007, the head of the Kansas Department of Health and Environment (KDHE), Secretary Roderick Bremby, denied an air quality permit application for two proposed 700-megawatt coal-fired generating units to be constructed in Holcomb, Kansas. The application was submitted by Sunflower Electric Power Company as part of a planned $3.6 billion expansion of an existing facility. The Secretary’s decision to deny the permit was based solely on the projected carbon dioxide emissions from these units and the impact of such emissions on climate change. Carbon dioxide is not specifically regulated as an air pollutant in Kansas.

In announcing his decision, which rejected the recommendation of agency staff that the permit be granted, the Secretary stated “I believe it would be irresponsible to ignore emerging information about the contribution of carbon dioxide and other greenhouse gases to climate change and the potential harm to our environment and health if we do nothing.” The expanded facility was projected to release an estimated 11 million tons of carbon dioxide annually. The Secretary did not indicate at what level projected carbon dioxide emissions would, in his opinion, threaten human health and the environment. Thus, the Secretary left open the question of how other CO2 emitting facilities would be regulated in Kansas in the future. Although a number of states have entered into regional initiatives or enacted legislation designed to reduce greenhouse gas emissions over time, it is believed that KDHE’s outright denial of an air quality permit based solely on perceived “excessive” emissions of an unregulated greenhouse gas is a first in the nation.

The cited legal support for the decision is an opinion of the Kansas Attorney General that, notwithstanding specific statutes or rules regulating air emissions, K.S.A. 65-3012 gives KDHE the broad authority to take any permitting or other action deemed necessary should the Secretary make a factual determination that a particular emission constitutes an air pollutant and that such emissions threaten health or the environment. The “factual determination” supporting the Secretary’s conclusion that carbon dioxide is an air pollutant and that this particular facility’s projected carbon dioxide emissions would constitute a threat to health and the environment is not apparent from the permit denial decision.

On November 16, 2007, Sunflower Electric Power Corporation filed two lawsuits seeking to overturn KDHE’s permit denial decision challenging the legal authority for the agency’s decision.

Not surprisingly, the KDHE’s permit denial decision has generated substantial controversy. A media campaign was immediately launched by those opposing the KDHE’s decision. The theme of that campaign is that the Secretary’s claimed authority could logically be extended to other facilities and potentially other unregulated emissions to the general detriment of the state and its ability to attract and retain business.

In a subsequent action perceived as an attempt to diffuse this criticism, the Secretary announced the decision to approve an air quality permit for an ethanol plant, notwithstanding the facility’s carbon dioxide emissions. Although the projected CO2 emissions from the ethanol facility are substantially less than those of the proposed coal-fired generating plant, the KDHE’s approval of the ethanol plant permit did not elaborate on the specific factual and scientific bases for distinguishing the facilities. Thus, it remains unclear in Kansas what quantity of projected carbon dioxide emissions may exceed the unspecified level deemed by KDHE to constitute an unacceptable global warming threat.

State law-makers in both chambers of the legislature are presently considering several bills directed at the Secretary’s permit denial decision. Provisions of the various bills include legislation specifically “over-turning” the Secretary’s decision, the enactment of phased-in limitations on CO2 emissions with a “carbon tax” penalty for violators, and a variety of alternative energy incentives and requirements. Most of the bills being considered are being opposed by the governor and environmental groups as being hastily conceived and inadequate to meet the future health and regulatory challenges of greenhouse gas emissions in the state.

For more information please contact Charles Efflandt, practice group leader of the Environmental and Natural Resources team, Foulston Siefkin L.L.P., Wichita, Kansas http://www.foulston.com.