Posted on May 22, 2013
In a decision that should not have come as a surprise to anyone, the 9th Circuit Court of Appeals ruled late last month, in Conservation Northwest v. Sherman, that the Bureau of Land Management and other agencies implementing the Northwest Forest Plan could not amend the NFP without complying with the procedural requirements of the Federal Land Policy Management Act. The rationale of the decision should apply far more broadly than just the FLPMA, however. It should apply to any action by any agency purporting to amend agency regulations that would otherwise be subject to procedural requirements, such as notice-and-comment rulemaking, without complying with those procedural protections.
The history of the case itself it tortuous and not really relevant here. The short version is that the agency defendants sought to resolve citizen litigation regarding the “Survey and Manage” provisions of the NFP by entering into a consent decree that would amend certain elements of Survey and Manage. It was uncontested that, if the agencies had sought to do so outside the context of litigation, they would have had to follow FLPMA requirements. The agencies – and the District Court which upheld entry of the consent decree – argued that, because approval of a consent decree is a “judicial act”, it is not subject to the FLPMA procedures.
I’ve got to say, that argument just seems like a non sequitur to me. In any case, the 9th Circuit rejected it, concluding that:
"a district court abuses its discretion when it enters a consent decree that permanently and substantially amends an agency rule that would have otherwise been subject to statutory rulemaking procedures."
Posted on May 7, 2013
The confluence of aggressive new EPA regulations targeted at coal-fired power plants and low natural gas prices has made the decommissioning of older coal-fired plants substantially more likely in the coming years. Decommissioning a plant does not occur within a specific regulatory framework. In many cases, unless there is a suspected public health threat, potential environmental conditions at the plant do not have to be reported to government agencies. For that reason environmental remediation of a plant site is often addressed in the property sale and redevelopment process.
But the shut down and decommissioning of power plants nonetheless has significant regulatory implications, and the reality is that analysis of regulatory obligations and advance planning, including a proactive strategy for interacting with agencies and other stakeholders, is essential. Understanding obligations requires review of existing permits and the underlying regulatory landscape. And that landscape may shift under your feet – for example, new regulations for coal combustion residuals on the horizon may implicate the closure of certain waste management units.
The regulatory landscape may also provide opportunities to maximize value. There are a wide variety of emission credit programs that vary by jurisdiction. Identifying and capturing emission credits brings value to the table. Similarly, water rights, to the extent they are marketable in a particular jurisdiction, could be a source of revenue.
On the practical front, laying out a smooth decommissioning path through careful planning may help avoid stoking the fire of agency, local or public ire. The agency may have a formal role to play depending on the permit conditions or applicable regulations, but there may also be extensive agency oversight exercised through pursuit of enforcement actions. Particularly where community interest is high, local, state or federal agencies may have a heightened interest and enforcement provides them an avenue for involvement in the site that might not otherwise exist. So it is important to recognize the key stakeholders early and to understand how their interest may translate to pressure on an agency to leverage any violations.
If the site is one with good redevelopment potential, finding and working with a credible and savvy purchaser may keep the focus on the end game and allow for appropriate risk-based standards to be deployed against a more concrete vision for the future of the site. Once there is a well-developed understanding of the regulatory obligations associated with the particular plant and the overall objective for the site after decommissioning, it may be the moment to reach out to the state and federal agencies, and perhaps key stakeholders, with early, accurate and contextualized information.
Because there is not a standard regulatory framework to apply, experience over the coming years as plants come offline will be telling – it is that experience that will provide useful frameworks for up front, comprehensive analysis and strategic outreach for a smooth path through decommissioning.
Posted on April 22, 2013
I get it that environmental groups place strict compliance with regulatory controls at a premium. After all, the standards are designed to be protective of the resource, and they are The Law, which must be obeyed.
But I sometimes find it dismaying when people conflate immediate, measured, and guaranteed compliance with ecological outcomes. They are not the same. I have been in settlement discussions in which I propose that we first come to agreement on what’s best for the resource, and then figure out how to make that fit into the regulatory framework, but have had few takers. The number is the number is the number.
A recent example arises in the context of water quality trading. EPA policy promotes alternative means of achieving regulatory compliance that promise environmental results at least as good as conventional, engineered approaches, and at lower cost. For example, if discharge water temperatures are the problem, riparian shade tree planting could substitute for mechanical chillers. Of course, measureable cooling would be deferred by many years while the trees grow, but the ancillary benefits of watershed restoration to habitat and ecosystem function are intuitive and compelling. This approach is supported by academia, government, and many in the NGO community. Some though are skeptical.
The City of Medford, Oregon, is embarking on a riparian vegetation approach to reduce temperatures at its wastewater treatment outfall, in full cooperation with Oregon DEQ. A regional NGO, Northwest Environmental Advocates, however, has raised objections. In a letter dated March 15, 2013, NEA asks EPA to examine DEQ’s implementation of the water quality trading policy with reference to Medford. NEA questions allowance of “credits” for watershed restoration work that upstream nonpoint sources would have to do anyway, and asserts that no credits should be allowed until the new trees actually yield shade.
The problem is that the upstream nonpoint sources are not obligated by law to restore riparian vegetation; they just need to adopt best management practices to avoid further degradation. More to the point, restoration of the watershed will simply not occur without the funding provided by a point source with a regulatory problem to solve, such as Medford. By denying the City credits, the incentive to use a watershed approach disappears. Similarly, if no credits are awarded until the trees are grown, funds that could go toward watershed restoration will be diverted to engineered controls on temperature. As DEQ Director Dick Pedersen so aptly puts it, “[i]f we ever build a chiller at the expense of ecosystems, we’ve failed.”
Posted on April 8, 2013
Courts in Alaska issued two decisions upholding agency practice in carrying out antidegradation review under the Clean Water Act. The federal court concluded that adoption of water quality standards does not, itself, require antidegradation review. In the second case, a state court concluded that guidance may be developed to implement antidegradation regulations and need not be promulgated as a regulation provided it does not contain substantive criteria.
In Native Village of Point Hope v. U.S. Environmental Protection Agency, Alaska native and environmental organizations challenged EPA's approval of the State of Alaska's adoption of a site-specific water quality criterion ("SSC") for total dissolved solids ("TDS"). The SSC was challenged on a number of grounds, including on the basis that neither the State of Alaska nor EPA analyzed the SSC under the relevant antidegradation policy. The issue before the U.S. District Court for Alaska was whether antidegradation review applied to the adoption of water quality standards ("WQS") or, conversely, only when WQS are translated into permits through effluent limitations. In a case of first impression in the federal courts, the court ruled for EPA, holding that agencies are not required to undertake antidegradation review for the adoption of WQS; the obligation is only triggered when a WQS is incorporated into a permit through effluent limitations.
In Alaska Center for the Environment v. State of Alaska, environmental organizations challenged the State of Alaska's adoption of antidegradation implementation procedures through guidance, arguing that the procedures should have been promulgated as regulations. As background, several NPDES permits in Alaska were withdrawn by EPA in the face of arguments from environmental organizations that the State of Alaska lacked antidegradation implementation procedures. To address this alleged deficiency, the State of Alaska developed a guidance document which EPA found was consistent with EPA's own antidegradation regulation. The primary issue in the litigation was whether the State of Alaska was required to promulgate the guidance in the form of a regulation or whether it was permissible rely upon guidance to implement its regulations. In a decision that turned largely on the State of Alaska's Administration Procedures Act, the court held that it was appropriate for the State to develop the guidance to implement its regulatory program, reasoning that the guidance did not add substantive requirements to existing regulations.
Posted on April 3, 2013
Two items hit my inbox on the same day:
(1) The U.S. is predicted to become the world's largest oil producer and North America to become a net petroleum-exporting region according to the International Energy Agency, and
(2) The Obama Administration is renewing its commitment to wean U.S. cars off of petroleum.
Some might argue that it makes sense to wean cars off petroleum even if we have a lot of it because of the threat of global climate change, but instead the stated justification was “to create jobs and help lower energy costs for middle class families.”
Then came the news that the operating unit of China's largest solar panel company, Suntech Power, recently filed for bankruptcy. Meanwhile, the Obama Administration proposes the creation of a $2 billion Energy Security Trust, funded by revenues from offshore oil leases matching those provided by the Chinese, to subsidize investments in this supposedly vital emerging field.
The disparity between such news and the government actions being taken started me questioning whether it is possible for governments to manage a field as dynamic and ever changing as future energy supplies. "Regulatory lag" has long been a familiar concept in utility rate regulation: by the time regulators get around to approving new rates, the situation has changed. And human beings are justly famous for "winning the last war": by the time that we understand something well enough to develop a broadly-shared consensus, the situation has changed.
This is nothing personal against the Obama Administration or support for renewable energy. I have been teaching a course at the Yale Law School this semester on the history of energy policy in the U.S. since World War II. A theme that runs throughout the course is how policies designed to manage energy supply, regardless of political outlook, lag as much as a decade or two behind the times. For example, Nixon's 1971 oil price freeze lasted until 1981; Eisenhower's 1959 oil import quotas lasted until 1973. In both instances, government policy did a lot of unnecessary harm because the energy supply situation changed much faster than government policies do.
I often wonder why environmental law and energy law are so different. One difference is that environmental problems tend to stand still (or get worse) long enough for us to mobilize the slow processes of government to solve them. We studied and debated acid rain for over a decade before the 1990 amendments to the Clean Air Act, which mandated a 50% reduction in sulfur dioxide emissions over the following decade. Energy markets change within months as new sources of supply and technologies come on line. It makes one wonder whether government policy will inevitably be a day late and a dollar short when it tries to manage future energy sources.
Posted on March 26, 2013
On Monday, EPA lost another battle in the war over guidance. In Iowa League of Cities v. EPA, the 8th Circuit Court of Appeals vacated two letters that EPA had sent to Senator Charles Grassley concerning biological mixing zones and bypass of secondary treatment units at POTWs (also referred to as “blending”, because the POTWs blend wastewater that has not be subject to biological secondary treatment with wastewater that has, prior to discharge). The Court concluded that both letters constituted promulgation by EPA of effluent limits under the Clean Water Act and that they constituted legislative, rather than interpretive rules (I refuse to refer to “interpretative” rules; sorry). As a result, the Court vacated the letters due to EPA’s failure to follow notice and comment requirements applicable to promulgation of legislative rules. Finally, the Court concluded that a duly promulgated rule concerning biological mixing zones might be valid under Chevron, but that a rule barring bypasses of secondary treatment would exceed EPA’s authority under the Clean Water Act.
In first determining whether the letters constituted “promulgation” of an effluent standard, the Court looked to whether the letters were binding on the regulated community. Relying in part on Appalachian Power Co., the Court concluded that the letters were binding:
If an agency acts as if a document issued at headquarters is controlling in the field, if it treats the document in the same manner as it treats a legislative rule, if it bases enforcement actions on the policies or interpretations formulated in the document, if it leads private parties or State permitting authorities to believe that it will declare permits invalid unless they comply with the terms of the document, then the agency’s document is for all practical purposes “binding.”
As the Court noted with respect to the mixing zone issue, the “letter instructs state permitting authorities to reject certain permit applications, regardless of the state’s water quality standards.” With respect to the bypass issue, EPA stated that “it will insist State and local authorities comply with” a never-issued policy that precludes the types of bypass at issue. To try to suggest that words such as “insist” are not binding did not go over well with the Court. “Just as it did in Appalachian Power, the EPA dissembles by describing the contested policy as subject to change.”
After concluding that the letters constituted promulgation of effluent standards, the Court went on to conclude that the letters constituted legislative, rather than interpretive, rules, and thus were subject to notice and comment rulemaking. The following is the key paragraph for those of us attempting to beat back the kudzu that is EPA’s reliance on such informal guidance as a substitute for notice and comment rulemaking:
Identifying where a contested rule lies on the sometimes murky spectrum between legislative rules and interpretative rules can be a difficult task, but it is not just an exercise in hair-splitting formalism. As agencies expand on the often broad language of their enabling statutes by issuing layer upon layer of guidance documents and interpretive memoranda, formerly flexible strata may ossify into rule-like rigidity. An agency potentially can avoid judicial review through the tyranny of small decisions. Notice and comment procedures secure the values of government transparency and public participation, compelling us to agree with the suggestion that “[t]he APA’s notice and comment exemptions must be narrowly construed.”
“Layer upon layer of guidance.” The “tyranny of small decisions.” I couldn’t have said it better myself.
Posted on March 22, 2013
On Wednesday, in Decker v. Northwest Environmental Defense Center, the Supreme Court ruled that runoff from logging roads does not constitute a discharge from a point source that requires an NPDES permit. The decision upholds EPA’s interpretation of its own regulations and overturns – what a surprise! – a 9th Circuit decision which had held that permits were necessary for logging runoff.
While EPA got the result that it wanted here, the decision may come back to haunt it in the long run. The decision was largely based on what is commonly known as Auer deference, the rule that courts will defer to an agency’s interpretation of its own regulations unless that interpretation is “plainly erroneous or inconsistent with the regulation.” After a thorough review of the various relevant regulations and a dip or two into the Oxford American Dictionary, and after noting that the agency’s interpretation need not be “the best one”, the Court found EPA’s interpretation “permissible.”
So, why should EPA be concerned? Justice Scalia, at his most curmudgeonly, dissented on the ground that Auer should be overturned because it grants too much authority to agencies. Justice Scalia rejected out of hand what I would have thought would be the simplest and most obvious defense of Auer: that if courts defer to agency interpretation of statutes under Chevron, shouldn’t they, a fortiori, defer to agency interpretation of the agency’s own rules? Apparently not. To Justice Scalia, Chevron deference merely allocates to agencies, rather than courts, the primary duty of interpreting statutes, but allowing agencies to interpret their own regulations has the dangerous result of concentrating both the writing and interpretation function in one branch of government.
I don’t buy it, but it’s important to note that, while Justice Scalia was the sole dissenter, Justice Roberts wrote a concurring opinion, joined by Justice Alito, stating that, while Decker was not the proper case to reassess Auer (a cynic might say that Justice Roberts reached that conclusion because EPA was aligned with industrial interests, rather than the environmental NGOs, in Decker), they were both open to reviewing Auer in the proper case.
Sounds like three votes to me. Somewhat surprisingly, Justice Thomas joined neither the concurrence nor the dissent. Justice Kennedy wrote the majority opinion, so he clearly still believes in Auer. Without Kennedy and with Thomas a cypher at this point, the votes to revisit Auer may not be there. In any case, it is worth noting that Justice Breyer, who is Justice Scalia’s frequent sparring partner on administrative law issues, took no part in the decision. I look forward to his spirited defense of Auer when the time comes.
Posted on March 21, 2013
The EPA issued its long-awaited CISWI Rule in the Federal Register on February 7, 2013. 78 FR 9112. The final rule, entitled “Commercial and Industrial Solid Waste Incineration Units; Reconsideration and Final Amendments; Non-Hazardous Secondary Materials That Are Solid Waste,” contains the provisions in EPA’s 2011 rule, vacated in January 2012, that EPA agreed to reconsider. The 2011 final rule in turn superseded EPA’s 2000 CISWI rule. The new CISWI Rule amends 40 CFR part 60 subparts CCCC and DDDD and part 241. The amendments to 40 CFR part 60 subpart DDDD, along with certain incorporations by reference, were effective on the promulgation date; amendments to part 60 subpart CCCC are effective August 7, 2013, and those to 40 CFR part 241 are effective April 8, 2013.
In response to both the court’s vacatur of a Notice of Delay issued in 2011 and the numerous petitions for reconsideration and comments submitted by the regulated community and the public, the final rule includes three subcategories of ERUs (energy recovery units) and two subcategories for waste-burning kilns based on design-type differences, with separate carbon monoxide (CO) limits for the latter. Certain limits were also revised based on comments regarding the CO span methodology and on incorporation of additional data. The rule establishes stack testing and continuous monitoring requirements and allows for the use of continuous emissions monitoring systems (CEMS), setting levels based on a 3 hour block or 30-day rolling average (depending on the parameter and subcategory of CISWI).
The rule addresses and preserves a source’s choice to cease or start combusting solid waste at any time due to market conditions or other reasons, and to switch from one set of applicable emission standards to another pursuant to CAA section 112, thereby amending the original "once in always in" approach reflected in the earlier versions of this rule. This in turn will provide an incentive to the regulated community to continue operating incinerators.
The deadline for compliance with the CISWI Rule by existing sources depends primarily on when the state implementation plan incorporating the final rule is approved, with such approval required no later than five years after the February 7, 2013 Federal Register publication date. The effective date for new source compliance is August 7, 2013 or the date of startup, whichever date is later. New sources are defined as sources that began construction on or after June 4, 2010, or commenced reconstruction or modification after August 7, 2013.
Posted on March 12, 2013
Over a year ago, I commented on the continuing discovery of new commercial uses for nanomaterials—particles at the scale of one billionth of a meter—and the continuing delay in developing better means of governmental oversight to manage any health and environmental risks. Since then, several new steps in regulatory oversight have been taken, most notably in Europe.
Here in the United States, EPA has employed the significant new use rule or SNUR under Section 5 of the Toxic Substances Control Act with respect to a number of nanomaterials undergoing premanufacture (PMN) review, its most recent pronouncement being the proposed application of SNURs to 14 carbon nanotube materials as published in the February 25, 2013 Federal Register. 78 Fed. Reg. 12684-12701. Such SNURs can impose restrictions and conditions on the production, import, and use of a pmn chemical containing nanomaterials. These requirements generally address worker protection and may also limit production unless releases to water are prevented or further testing of health or environmental impacts is performed. See, e.g. the December 28, 2011 proposed rule establishing SNURs for seven nanomaterials. 76 Fed.Reg. 81447-81462.
European regulators have traditionally been less reluctant to request chemical information or regulate chemical constituents than their U.S. counterparts. The European Union’s REACH law governing chemicals, both new and in use, illustrates the EU’s willingness to impose significant information reporting. The EU is also more inclined to require broader disclosure of information to the public in the form of product labeling, and the European Commission has set labeling requirements for the use of nanomaterials in food. The new rule, effective in 2014, adds a definition for “engineered nanomaterials” at Article 2(t), and Article 18.3 requires that all ingredients in the form of engineered nanomaterials be clearly indicated with the word “nano” in brackets after the ingredient name. Paragraph 25 of the rule’s preamble also notes the possibility that nanomaterial content will result in a “novel food” under the current rule generally known for its coverage of genetically modified organisms. (Revision of the novel food rule has been delayed by an interesting dispute over whether food from the offspring of cloned animals should be categorized as “novel.” Further delay is likely while EU regulators grapple with exotic equine ingredients.)
France has taken another step in the regulation of nanomaterials by adopting the first mandatory reporting scheme beginning in January 2013, with the initial annual report due May 1. The French decree (Decree No. 2012-232) requires manufacturers, importers, distributors, and research and development laboratories using quantities of 100 grams or more to submit an annual declaration identifying the quantity and use of substances with “nanoparticle status” under the EC’s definition set forth in the REACH (Registration, Evaluation, Authorization and Restriction of Chemical Substances) regulations. Companies exporting to France presumably will have to provide the information so that importers can comply with the new requirement.
Implementation of the French reporting program may well provide valuable information to U.S. regulators on whether and how a reporting rule can strengthen governmental oversight without unduly burdening commercial introduction of new and potentially beneficial materials.
Posted on March 7, 2013
One of the many controversies surrounding hydraulic fracturing involves the protection of trade secrets in an evolving regulatory environment hungry for more information about every aspect of operations. Regulators, litigants and the public press for disclosure of the composition of hydraulic fracturing fluids while manufacturers and operators resist full disclosure to protect proprietary formulas believed to be valuable secrets.
In a pre-rulemaking decision draft of hydraulic fracturing regulations released on December 18, 2012, California addressed the tension between protecting trade secrets and the public's right to obtain information under California's Public Records Act ("Act"). Under the draft regulations, operators are not required to disclose the chemical composition of hydraulic fracturing fluid prior to drilling. After fracking, operators must disclose the chemicals in their fracturing fluid by chemical family and by percent of the fluid. Disclosure of precise chemicals and formulas is not required. Operators must also provide contact information for the person or entity that possesses the information withheld as a trade secret.
The California draft regulations reflect a national trend. Alaska, however, bucks this trend with draft regulations released in December which require full disclosure of each fluid additive type by chemical name, CAS registry number and concentration. The issue is far from resolved and we can certainly expect more regulation and litigation.
Posted on February 21, 2013
In December 2008, a surface impoundment maintained by the Tennessee Valley Authority in Kingston, Tennessee failed and the coal combustion residuals (CCRs) stored in those impoundment flooded more than 300 acres of land and flowed into Emory and Clinch Rivers. CCRs, often referred to as coal ash, are residues from the combustion of coal in power plants that are captured by scrubbers and other pollution control equipment. CCRs are currently exempt wastes under RCRA but following the TVA spill EPA proposed to regulate coal ash for the first time.
On June 21, 2010, EPA issued its proposed CCR rule. The proposed regulation considers two options for the regulation of CCRs. Under the first option, CCRs would be regulated as special wastes subject to nearly full regulation as hazardous wastes under RCRA Subtitle C. If CCRs are regulated as “hazardous waste,” disposal will likely be required at specially-permitted, off-site hazardous waste disposal facilities. Under the second option, CCRs would be regulated as solid waste under Subtitle D of RCRA. Under this option, EPA is likely to establish national standards for surface impoundments and landfills. If CCRs are regulated under Subtitle D, it is likely a composite liner, a leachate collection and removal system, and a leak detection system will need to be installed at existing ash ponds.
EPA has not yet taken final action on the proposed CCR rule and has been sued by an environmental group who seeks the issuance of the final rule. In that case, Appalachian Voices v. Jackson, the Agency stated “EPA cannot at this time provide a well-informed judgment as to the specific amount of time that is needed to conclude its review and any necessary revisions of these regulations, and EPA therefore requests an opportunity, following further administrative proceedings, to provide this Court with supplemental briefing at a later date regarding final remedy.” Two actions (I, II) were consolidated in the Appalachian Voices case. EPA has indicated that the final CCR rule is not likely to be issued before the fourth quarter 2013.
Posted on February 19, 2013
Oil and gas development has traditionally been regulated by the states, and the majority of the states with viable shale reserves have adopted laws or regulations that directly address hydraulic fracturing. However, several local governments have responded to concerns over potential health and environmental impacts by banning hydraulic fracturing within their jurisdictions. To date, local bans have been enacted in Colorado, Maryland, New Jersey, New York, North Carolina, Ohio, Pennsylvania, and West Virginia. In several cases these local bans have been challenged as being preempted by comprehensive state regulation of oil and gas development. While there is very little appellate case law addressing the legality of local bans, two preemption cases are currently on appeal in New York. Norse Energy Corp. USA v. Town of Dryden, No. 2012-1015 (N.Y. App. Div.); Cooperstown Holstein Corp. v. Town of Middlefield, No. 2012-1010 (N.Y. App. Div.). In each case, the local trial court upheld a local ban on hydraulic fracturing, finding that preemption language in the state’s Oil, Gas, and Solution Mining Law (“OGSML”) did not apply to local land use regulations.
Appellant natural gas developers rely primarily on the OGSML’s preemption provision, arguing that its broad language was intended to preempt all local ordinances and regulations related to oil and gas development unless they are directed toward local roads or real property taxes. They also emphasize the broad scope of DEC’s oil and gas regulations which go beyond regulating how oil and gas development is conducted and also address spacing requirements and other limitations on where oil and gas development can occur. Thus, they assert that any local ordinance that limits where hydraulic fracturing can occur is superseded by the OGSML. The natural gas developers also argue that under implied preemption principles and New York’s constitutional limits on home rule authority, local governments cannot prohibit hydraulic fracturing because such regulations are in direct conflict with the OGSML’s provisions that dictate where oil and gas development can occur. Finally, the natural gas developers argue that the trial court’s reliance on supersedure provisions from other statutes was misplaced due to key differences in the language of the supersedure provisions as well as the relatively broader scope of DEC’s regulatory authority under the OGSML.
In contrast, the towns of Dryden and Middlefield assert that local prohibitions on hydraulic fracturing can be harmonized with the OGSML and its preemption provision. They argue that the local bans on hydraulic fracturing were not enacted for the purpose of regulating natural gas development, but instead are part of comprehensive land use plans designed to protect the public health, safety, and general welfare of the local community. Because the purpose of the prohibitions are not to “regulate” natural gas development, the towns contend that the prohibitions are not subject to the OGSML’s preemption provision. Instead, they argue that such local bans can be harmonized with the OGSML by limiting the OGSML’s well spacing and setback provisions to those areas where oil and gas development is otherwise permitted. Further, the towns argue that the trial court properly relied on earlier cases interpreting the supersedure provisions of the Mined Lands Reclamation Law (“MLRL”). The towns assert that the supersedure provisions in the MLRL and OGSML are substantially similar and, therefore, should be given similar effect. Thus, the towns assert that the prior cases that upheld local ordinances banning mining practices that were subject to regulation under the MLRL are binding precedent here.
Oral argument has been scheduled for March 21, 2013 and a final decision is not expected for several months, at the earliest. However, these cases will be closely watched in other jurisdictions where local bans on hydraulic fracturing have been enacted and where additional litigation is expected. Given the diversity among state laws addressing both home rule authority and oil and gas development, the legality of local bans on hydraulic fracturing is likely to remain a hotly debated issue for several years to come, particularly as oil and gas development using hydraulic fracturing continues to expand to new shale reserves around the country.
Posted on February 6, 2013
Wisconsin has a proud tradition of strong political opinions. Recent Tea-Party backed legislation in Wisconsin limiting the power of government will be interesting to follow as the consequences play out, particularly in the environmental arena.
In March 2011, Wisconsin’s then-new Republican Governor Scott Walker and the Republican legislature passed the Wisconsin Budget Repair Bill, the state law that famously limits the collective-bargaining rights of public employees. Following that, the legislature passed 2011 Wisconsin Act 21, which includes a “limited government” provision that prohibits any “agency [from] implement[ing] or enforc[ing] any standard, requirement, or threshold, including as a term or condition of any license issued by the agency, unless that standard, requirement, or threshold is explicitly required or explicitly permitted by statute or by a rule that has been promulgated in accordance with [state law].”
This will play out in a number of ways. Like other state environmental agencies, the Wisconsin Department of Natural Resources (“WDNR”) relies significantly on guidance documents to implement otherwise complex programs. A number of issues are addressed only in WDNR guidance, not in explicit regulations. These include sediment cleanup standards; references to “sediment” were intentionally removed from the state soil cleanup standards. This not only affects state cleanup programs, but also raises issues as to whether the state sediment cleanup standards can be “applicable or relevant and appropriate requirements” under the Comprehensive Environmental Response, Compensation and Liability Act. Similarly, the WDNR’s vapor intrusion sampling, analysis and remediation protocols are contained only in state and federal guidance documents.
Recently, the U.S. EPA chose language in a proposed SIP denial that adds fuel to some permitting arguments. In 2008, U.S. EPA required revisions to State Implementation Plans (“SIPs”) with respect to PM2.5 permitting; Wisconsin made regulatory changes, and requested SIP approval in 2011. On December 18, 2012, the U.S. EPA proposed disapproval of the SIP revision. 77 Fed. Reg. 74817 (2012). According to U.S. EPA, Wisconsin’s submission is deficient because the Wisconsin regulations do not “explicitly” define the condensable component of PM10 and PM2.5 emissions, and do not “explicitly” identify SO2 and NOx as precursors to PM2.5. The U.S. EPA’s disapproval language gives the Wisconsin Department of Natural Resources the usual additional work to propose and finalize regulatory changes to address the deficiency, but it also gives regulated sources an additional argument that the WDNR lacks the authority to regulate condensable particulate matter and PM2.5 precursors.
Posted on January 16, 2013
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.
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Posted on January 11, 2013
On January 3, 2013, an EPA-set TMDL for Accotink Creek (a Fairfax County, Virginia tributary of the Potomac River) was invalidated on the grounds EPA exceeded its statutory authority when it attempted to regulate, via the TMDL, a Clean Water Act pollutant – sediment – by instead regulating a surrogate non-pollutant – stormwater flow. The opinion granted plaintiff’s motion for judgment on the pleadings; in a separate order Judge O’Grady vacated the Accotink Creek TMDL and remanded the matter to EPA for further consideration.
Utilizing the two-step Chevron statutory interpretation analysis, the court found the first of the two criteria had been met: Congress had addressed in unambiguous language the precise question at issue “… and its answer is that EPA’s authority does not extend to establishing TMDLs for nonpollutants as surrogates for pollutants.” While directly acknowledging he did not need to reach the second Chevron criterion (whether the agency’s reading of an ambiguous statute is “permissible”), Judge O’Grady nonetheless noted in some detail that “there is substantial reason to believe EPA’s motives go beyond ‘permissible gap-filling.’”
Based upon EPA’s own pleadings, the opinion notes it appears the Agency could have set a TMDL based upon the underlying problem – sediment in the creek – rather than pursuing a surrogate approach.
In recent years, EPA has been pursuing so-called “innovative” TMDLs in an attempt to address stormwater’s contribution to impaired watersheds. In particular, those TMDLs purport to set load limits based upon various surrogate approaches, including such things as the percentage of impervious cover (“IC”) allowed in the impacted watershed, or (as with Accotink Creek) stormwater flow rates. While the Accotink Creek TMDL was in EPA Region 3, New England’s Region 1 seems to be in the forefront of this approach and currently has at least three stormwater-source TMDLs in place (including two so-called IC-TMDLs), as well as others in development.
Given the extensive resources EPA has invested in trying to manage stormwater impacts to impaired streams (see e.g., TMDLs to Stormwater Permits Handbook (Draft Nov 2008)), the Virginia Dept. of Transportation case is clearly a significant setback for the surrogate approach propounded by the Agency. Whether the United States appeals the decision or retreats and re-evaluates its initiatives in this area is yet to be determined. Whichever way EPA decides to go, communities dealing with impaired watersheds certainly will need to pay close attention.
Posted on January 7, 2013
Environmental practitioners and their clients have benefitted greatly from the EPA’s historic implementation of the EPA Audit Policy. Thus, the level of concern that has been expressed by environmental practitioners in response to EPA’s statements that the Audit Policy may not live through 2013 is not surprising. For background, see Linda Bochert’s posting, “Dear EPA: please don’t abandon your Audit Policy!”, and FY2013 OECA National Program Manager Guidance.
EPA has discussed the basis for its proposal to abandon the Audit Policy in terms of perceived decreasing utility, which creates difficulty in justifying the expense of implementation. The explanation goes something like this: with the maturity of the environmental programs, regulated industry knows that it needs to comply by now, thus the incentives provided by the Audit Policy are no longer necessary. Also, along with industry outgrowing the original purpose of the Policy, the cost of implementing the policy does not justify its continued implementation in this era of shrinking budgets, particularly given the relatively minor noncompliance events reported pursuant to the Audit Policy.
Has EPA really considered the entire calculus? And, assuming one buys into the external benefits provided by the continued implementation of the Audit Policy, given what’s at stake, isn’t it worth developing options for implementation that don’t impose the same level of staff investment?
Many believe that the Audit Policy has served a purpose far greater than the mere forgiveness of the gravity component of the reported noncompliance events. For many years, the EPA Audit Policy has provided regulated entities with a mechanism to conduct compliance audits with confidence that noncompliance issues can be corrected without fear of punitive enforcement action. The Audit Policy continues to serve this purpose, despite the maturity of the environmental programs, because the nature of regulated entities and industry sectors is so dynamic. Regulated entities are in a constant state of change, as are many EPA programs at any one time. EPA’s assertion that the EPA’s Audit Policy is no longer needed contemplates regulated entities and applicable regulations as static and monolithic bodies and does not recognize the constant state of change across industry sectors and within individual entities, particularly in response to new and modified regulations. Industry sectors also vary in their inherent levels of sophistication and adaptability to changing regulatory requirements, depending in large part upon the degree to which the industry has been pervasively regulated in the past. New regulations across an industry sector upset the equilibrium and demand new management models and compliance approaches, requiring a period of education, acquisition of staff, operational and cultural adaptation to the new requirements. Adaptation within industry sectors can be slowed when immediate demands are placed on sector resources for all entities in that sector simultaneously such as occurs with new industry sector-wide regulation, prioritizing rapid reaction to new regulation over comprehensive proactive compliance. In this regulatory environment, the Audit Policy continues to serve the same purpose as it always has, to encourage a culture of compliance in the dynamic landscape in which regulated entities operate.
To read more and provide your own input on how you believe EPA should approach the future of the EPA Audit Policy, click here.
Posted on January 2, 2013
An earlier post noted that adaptation to climate change is inevitable and is finally emerging as a priority for public policy. Long overshadowed by campaigns to prevent or slow global warming, federal and state initiatives and efforts by many professionals have resulted in efforts to start to collect data and promote serious planning for ocean rise and other effects of climate change.
Storm Sandy has more than reinforced that trend: it has established a much wider recognition that planning, design, engineering and regulatory decisions must incorporate the expected impacts of climate change and can no longer rely on historic weather and temperature conditions. That shift will have broad implications throughout the legal system, amounting to an emerging law of adaptation to climate change that is distinguishable from the emerging law of greenhouse gas controls.
As often is true, the legal academy is in the vanguard – there is a surge of law review articles and also a recent compilation published by the ABA.
For example, utility regulators have broad authority to require public service companies to prudently operate and maintain their systems. It is common for regulators to require emergency response plans, and, in some states, to impose significant penalties for overly delayed restoration of service after storm events.
Now, regulators are likely to require utilities also take account of changes because of global warming effects, not just based on historic conditions. Environmental groups recently petitioned NY regulators to so require.
But how exactly can this step be done? Modeling of the timing and extent of climate change effects can only produce broad ranges and generalities and are indefinite about effects at particular locations. What retrofitting is needed to assure reliable service to far future ratepayers and at what expense to current ratepayers? Ratepayers, regulators and utility stockholders will not reach agreement without significant dispute.
Existing zoning for flood plains should be modified to account for climate change. Making those changes will trigger large disputes as previously settled expectations are overturned. Until the rules are changed, are zoning bodies tied to outdated flood control maps incorporated into their regulations, or can they consider supplemental, updated information?
Environmental impact reviews for proposed projects typically address the effects of a project on the environment. Now must they consider the effects of the environment on the project? How? It will be litigated.
Also, as noted in an earlier post, the public trust doctrine might not serve to require regulatory agencies to regulate greenhouse gas emissions. But will it successfully undergird a state’s assertion of authority to regulate activities on or affecting lands subject to the public trust in order to account for changes and threats to shorelines? As beaches recede, will public trust lands start to incorporate currently private property?
The common law of property, too, will be affected. A landowner can lose title to land if it slowly disappears by reliction due to changes in a water body’s natural behavior, whereas a sudden loss by avulsion allows the landowner to keep title and restore the land. But what if the sudden loss is due to a storm event that is part of a slow rise in ocean levels?
Finally, at what point will it become clear that professionals must take account of global warming in designing structures or else experience risk of liability for unanticipated effects?
Posted on December 19, 2012
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.
Posted on December 14, 2012
Although the still-divided Congress is unlikely to pass significant new environmental legislation over the next four years, the second-term Obama administration has an opportunity to pursue its environmental agenda through the EPA with diminished fear of impacts on the next election.
The current term saw a period of strong leadership at EPA, but there is a feeling that the agency has not allowed the other regulatory shoe to drop. EPA stalled on several important regulations, as if anticipating the Romney complaint that excessive regulation was a cause of the recession. Having escaped the prospect of a president hostile to its mission, EPA is now prepared to roll out a queue of pending air pollution regulations in the coming weeks. The regulations will include final national ambient air quality standards, revised power plant emission standards, and expanded boiler emission rules.
Since the election, articles and opinion pieces have abounded that speculate on the Obama administration’s second-term approach to climate change. On November 12, 2012, the New York Times published an op-ed article suggesting that the administration could tackle both climate change and the recession by imposing a carbon tax. A similar suggestion was made in the New Yorker on December 12, 2012. This is undoubtedly a worthwhile concept, but it is probably a regulation too far.
The second Obama term could be an opportune time to revisit old chestnuts and resolve issues that have bedeviled both the regulated community and environmental advocates. For example, the EPA and the Army Corps of Engineers have been muddling through a proposed guidance document that aims to clarify the Supreme Court’s murky definition of “waters of the United States” subject to EPA jurisdiction under the Clean Water Act. But why should EPA and the Corps issue mere guidance rather than promptly promulgate binding regulations, which are subject to judicial review? As a result of adopting binding standards the agencies could gain, in addition to regulatory certainty, a strong basis to resist efforts to make the federal government the national waterfront rezoning authority.
Another stalled national environmental initiative that would benefit from robust leadership in the Obama II administration is EPA’s effort to update its regulations for industrial cooling water intake structures. EPA proposed regulations, designed to protect aquatic organisms, have remained in draft form since March 2011; additional data has been collected and is being analyzed in the interim. Pending final federal regulations, states have been left to adopt varying approaches to this important issue.
Finally, this period of relative freedom from election concerns might allow the administration to address a significant example of environmental unfairness, CERCLA’s scheme of sticking certain liable parties with the “orphan share” of environmental remediation costs that arise from contamination, generated over the last two centuries of industrial development, for which no financially solvent responsible party can be identified. The orphan share is often laid at the doorstep of a financially solvent polluter that caused some, but not all, of the pollution at a Superfund site. Fairness dictates that the public fund the orphan share, as opposed to the party that is prepared to step forward and clean up its own portion of the mess. Perhaps such a policy might have a sobering effect on the members of the public who clamor for a return to pristine conditions, so long as they don’t have to pay for it.
Posted on December 14, 2012
All of us know that enforcement of the Clean Air Act’s (CAA) proscriptions against pollutant air emissions is premised on the concept of Acooperative federalism. We know that the CAA’s policy development and enforcement regime is based upon a division of state and federal regulatory responsibility. Stated simply, the concept is that the federal government, through the EPA, sets standards for permissible emissions of substances affecting ambient air quality while individual states retain responsibility for implementing programs to enforce these standards.
The States’ implementation mechanisms are aptly titled State Implementation Plans or SIPs. SIPs are employed to demonstrate that federal and state air pollution regulations will allow counties in a particular state to meet federally mandated ambient air quality standards (NAAQS). The SIP process approval results in pollution control requirements which govern and often times unduly complicate compliance efforts of state regulators. They can also increase compliance costs borne by the regulated community. One aspect of that conundrum is the fact that when States fail to meet deadlines for attaining these standards, the regulators themselves can face sanctions from EPA and even suits by the public. Litigation and its costs complicate matters further.
As some regulators in Pennsylvania recently observed . . . [T]he current aggressive schedules for NAAQS reviews, State Implementation Plan (SIP) development and promulgation of Maximum Achievable Control Technology (MACT) standards are significant problems. Taken together, these inefficiencies are a resource drain on EPA, the states, the regulated community and the economy as a whole. The messy situation described in this quote is the subject of this blog.
The turbulence inherent in this divided relationship has escalated in recent times fraying the long-standing statutory regulatory compact between the federal government and the States.
An instructive example of the conflict of enforcement concept and reality engendered by the CAA’s cooperative federalism scheme was clearly highlighted in the recent case WildEarth Guardians v. Jackson. This case dealt with EPA’s delays in approving SIPs or pollution control plans affecting discharges of fine particulate matter or PM2.5. The plaintiffs in Wild Earth alleged that EPA failed to take final action under section 110(k)(2) and (3) of the CAA to approve SIP submittals in twenty (20) states meeting applicable requirements respecting the 2006 PM2.5NAAQS.
In 2006, the U.S. Court of Appeals for the District of Columbia had found that EPA’s PM2.5 NAAQS had to change because it failed to adequately protect human health. A change in this NAAQS required a change in States SIPs. SIPs were proposed but languished at EPA. Five years later, the plaintiffs in Wild Earth alleged that . . . [W]ithout infrastructure plans, citizens are not afforded full protection against the harmful effects of PM2.5 while seeking declaratory and injunctive relief.
Shortly after the suit was filed the plaintiffs and the EPA entered into a settlement. A consent decree called for the EPA to approve or disapprove SIP submittals for the 2006 PM2.5 standard as early as September 12, 2012 for some of the states involved and as late as February 13, 2013 for others. The Consent Decree was entered and the case dismissed in May of 2012. Case closed and compliance efforts back on track?
Unfortunately, many of the underlying issues raised in Wild Earth, specifically, the lack of cooperation between the States and the federal government on implementation of the PM2.5 NAAQS have raged on unabated. For example, eleven (11) states sued the EPA over the agency’s alleged failure to promulgate final NAAQS for PM2.5. In New York v. Jackson the plaintiffs are seeking a declaration that EPA is in violation of Section 109(d)(1) requesting that EPA review, propose and promulgate a new PM2.5 NAAQS. On June 14, 2012, EPA announced a proposal to strengthen the NAAQS PM2.5. Almost simultaneously, the D.C. Circuit issued an order refusing to set a schedule for EPA to issue a new PM2.5 NAAQS. Am.Farm Bureau v. EPA.
These developments will inevitably spawn additional delays in PM2.5 related SIP modifications and EPA approvals. That is the point of these comments on this small corner of CAA regulation and enforcement. Is the cooperative federalism underpinning of the CAA still workable? Can court’s recognize and respect the concept when regulatory policy, administrative lethargy and real human health concerns collide? These comments and observations have focused on the PM2.5 issue mainly because it has come up in some recent work in our office.
Without doubt other and more far-reaching examples of regulatory and judicial “turbulence abound, i.e., the raging fight over the EPA’s Cross State Air Pollution Rule (CSAPR). In a dissenting opinion on the CSAPR case, on the concept of cooperative federalism, Judge Rogers had this to say. . . [T] he result is an unsettling of the consistent precedent of this court strictly enforcing jurisdictional limits, a redesign of Congress’s vision of cooperative federalism between the states and the federal government in implementing the Clean Air Act based on the court’s own notions of absurdity and logic that are unsupported by a factual record, and a trampling on this court’s precedent on which the Environmental Protection Agency was entitled to rely . . . . Whew!
So what are CAA practitioners to make of the mess Judge Rogers eloquently describes? This blog entry offers no practical guidance for those laboring for an aggrieved client nor laments a bad result impairing enforcement prerogatives of the regulators. Instead, I only point out that it may be time for a concerted effort to step back and reconsider whether the CAA’s cooperative federalism’s bifurcation of rule promulgation and enforcement continues to make scientific, policy or common sense in today’s world.
Posted on December 12, 2012
The regulation of vapor intrusion is becoming more prevalent on both the federal and state level. In addition, although not strictly required as part of a Phase I ESA under ASTM 05 and AAI, many consultants take the position that this issue must be addressed at this first level of environmental due diligence.
One of the troubling issues at the state level is whether background concentrations should be taken into account in the establishment of indoor air quality standards. Many household products and building materials contain or release VOCs. However, not all states take background concentrations into account in the regulation of vapor intrusion.
EPA is expected to release its own vapor intrusion guidelines shortly. EPA appears to acknowledge the importance of background data in the process of formulating its guidelines. It remains to be seen whether such guidelines will impose stricter standards than those on the state level.
Posted on December 11, 2012
The song “Cool Water” was written and recorded in 1936 by Bob Nolan, an original member of the Sons of the Pioneers along with Len Slye, better known by his film name, Roy Rogers. “Cool Water” could be the theme song for Texas and other water-short western states. The Texas Water Development Board recently compiled “Water for Texas 2012 State Water Plan”. Quite simply, Texas does not have enough water to meet its current needs, much less its future needs, during periods of serious drought conditions. Texas is searching for cool, clear water.
Texas continues to grow. According to the Plan, the population of Texas is expected to increase 82 percent between 2010 and 2060, from 25.4 million to 46.3 million. Water needs are projected to increase by 22 percent, from 18 million acre-feet per year to 22 million acre feet per year in 2060. At the same time as water demand is rising, existing water supplies are diminishing by almost 2 million acre feet per year. Where will the additional water supplies be found to meet the identified needs?
The State Water Plan includes recommended water management strategies developed by regional planning groups, which include: conservation, drought management, conjunctive use of surface and groundwater, surface water reservoirs, aquifer storage, groundwater development, water reuse, desalination plants. In addition to addressing surface and groundwater water rights, water planners and users will need to confront the environmental implications of these strategies. What are the environmental regulatory constraints and impediments?
The implications and potential conflicts are far-reaching. We can all anticipate the obvious regulatory hurdles, contested procedures and property rights obstacles that projects to develop new surface reservoirs will confront. But what of other strategies like water conservation and reuse? Proposing water conservation (e.g. increased cooling water cycles) and reuse (e.g. use of treated municipal wastewater effluent) at a natural-gas fired power plant may threaten surface water quality as the total dissolved solids to be discharged are concentrated through these strategies. Also, what kinds of measures and alternatives under other environmental regulatory programs (e.g. Endangered Species Act) will need to be considered as these strategies are proposed?
The history of Texas is growth. To do nothing to meet its increasing water needs would result in staggering economic losses. Texas met the challenge after the drought of record in the 1950s. Texas will do it again! The question is: “how happy will the trails be?”
Posted on November 30, 2012
The following post is essentially a sequel to this morning’s post, which was originally intended to be posted in September.
Last week, EPA announced that it had reached yet one more – its 24th – settlement under as a result of its NSR enforcement initiative. This time, it was Louisiana Generating’s Big Cajun II plant, in New Roads, Louisiana. By now, the contours are familiar, including a penalty of $14 million and injunctive relief estimated to cost approximately $250 million. Changes will include:
- Installation of SNCR (not SCR) on all units to control NOx.
- Installation of dry sorbent injection as a short term SO2 reduction measure
- Retirement, refueling, repowering, or retrofitting of Unit 1 in the long-term
- Refueling of Unit 2 to natural gas
- Limitations on sulfur content
- Plant-wide limits on SO2 emissions
- Installation of electrostatic precipitators to control PM on units 1 and 3
It sure sounds great. EPA estimates reductions of 20,000 tpy in SO2 emissions and 3,000 tpy in NOx emissions. Still, I question the value of this settlement in the big picture. I sense some double-counting here. EPA is predicting significant reductions in emissions as a result of its industry-wide rules, including the transport rule (last known as CSAPR, but presumably awaiting a new acronym for its replacement) and the air toxics rule.
Add to that the cost pressures on coal resulting from the lower natural gas prices caused by the fracking boom, and it is quite possible that Louisiana Generating would have ended up in the same place even absent a settlement. Throw in concerns about whether individual units were in fact violating the rather ambiguous NSR provisions or were engaging in what they truly considered routine maintenance, and the obvious economic issues raised by trying to implement command and control regulations on a plant-by-plant basis pursuant to litigation, rather than through nationwide market-based caps, and I say again that, to me, the NSR program is still spinach, and I say, to heck with it.
Posted on November 30, 2012
This past September, in United States v. Louisiana Generating, EPA won a ruling regarding what type of projects fall within the routine maintenance, repair or replacement exception from the rule that facility modifications are subject to PSD/NSR requirements. The decision is thorough in that it carefully reviews the so-called “WEPCO Factors” – the nature, extent, purpose, frequency, and cost of the work, and applied them to the work at issue in this case, i.e., reheater replacements.
Notwithstanding the thoroughness of the court’s analysis, I don’t find it completely convincing. As the court acknowledged, while all of the WEPCO factors are relevant, the crux of the issue is whether, in order to qualify for the exception, maintenance work must be routine for the units at issue, or only routine in the industry. In other words, should the question be whether all similar generating units at some point in their life undergo reheater replacement, or whether each individual unit in question must undergo reheater replacement multiple times in order for such work to be considered routine.
Personally, I think that the former is probably the better interpretation. Of course, as the decision discussed, since the regulations are not crystal-clear, EPA has significant discretion in interpreting its own regulations, and EPA takes the position that maintenance work must be routine with respect to individual units to qualify for the exception. End of story, no? No. The problem is that EPA does not have discretion to change its interpretation whenever it feels like doing so. In 1992, EPA stated, in a preamble to NSR regulation revisions, that
EPA is today clarifying that the determination of whether the repair or replacement of a particular item of equipment is “routine” under the NSR regulations, while made on a case-by-case basis, must be based on the evaluation of whether that type of equipment has been repaired or replaced by sources within the relevant industrial category.
The court in Louisiana Generating acknowledged that this language favored Louisiana Generating’s position that one must look to whether a maintenance activity is routine in the industry, rather than routine with respect to the individual units in question. However, the court then did not discuss this issue in evaluating the WEPCO factors, and separately found that no reasonable jury could conclude that the project was routine.
I don’t think that this issue is going to be finally resolved at least until a number of appellate courts have had an opportunity to review it and I could imagine it ultimately making its way to the Supreme Court.
As I have previously noted, while I tend to side with the defendants in these cases, I think that the larger point is that these types of arguments are borderline silly. More than anything else, they illustrate that the entire NSR/PSD program is fundamentally flawed. Instead of such outdated technology-based regulation, power plant emissions should be regulated pursuant to trading programs that allow needed emissions reductions to be attained in the most cost-effective way possible. I still dream of a grand bargain which would lower emissions limits, utilize trading to attain them, and completely eliminate the NSR/PSD program. Where is the radical center in Congress when one needs it?
Posted on November 16, 2012
Massachusetts’ ambitious plan to address greenhouse gas emissions on a state-wide basis attracted private money last month to measure its success and costs. Boston-based Barr Foundation’s grant of $230,000 will establish a “performance management tool” to track and measure the success of initiatives undertaken under Massachusetts’ Global Warming Solutions Act (“GWSA”). Supporters expect it to “serve as a national and regional model that other states can adopt to analyze” their own greenhouse gas reduction efforts. The GWSA, enacted in 2008, requires extremely ambitious reductions in greenhouse gas emissions within Massachusetts in the coming decades: an 80% emissions reduction goal by 2050 and 10-25% by 2020 from a 1990 emissions baseline The act directed the Secretary of Energy and Environmental Affairs to set the 2020 reductions and adopt a plan for achieving them.
The planning and regulatory documents issued since enactment recognize that the success of a single state’s effort to address the causes of climate change cannot be measured by the impact of its own reductions in greenhouse gas emissions in effecting changes in the global climate. The effect will simply be too small to measure. Instead, the state’s plan touts the beneficial effects of spurring economic development through the encouragement of green energy and other high tech businesses, the reduction of localized pollution, and the stabilization of energy prices. The success of the program in “bending the curve” of rising greenhouse gas emissions, however, rests entirely on its ability to serve as an example to other political entities – states mainly but, ultimately, geopolitical entities through broader global participation.
In December 2010, the Secretary of Energy and Environmental Affairs released the Massachusetts Clean Energy and Climate Plan for 2020 setting the reduction target at 25% below 1990 baseline. The Executive Summary summarizes reductions anticipated from existing and expected programs (table at page 6). Policies relating to Buildings (9.8% or more than one third of the 25% reduction), Electricity (7.7%) and Transportation (7.6%) account for the vast majority of the reductions. Within each sector, reductions are characterized as either “Existing Policy” (e.g., Federal and California vehicle efficiency and GHC standards – 2.6% reduction), “Expanded Policy” (e.g., advanced building energy codes – 1.6% reduction), or “New Policy” (e.g., Green DOT, the Massachusetts’ transportation agencies fulfillment of their sustainability commitment – 1.2% reduction). The Barr Foundation’s grant will help create the “dashboard” that presumably will take into account the likelihood of adoption of new programs or the expansion of existing ones and the ultimate efficacy of any of the programs, as it tracks the progress of the Massachusetts program.
Efforts to track the success of the Massachusetts program will build on the work done by MassINC, a Boston-based “independent think tank” that earlier this year released a book-length report titled “Rising to the Challenge/Assessing the Massachusetts Response to Climate Change.” This very thoughtful work looks specifically at Massachusetts’ progress to date and likely future success in emission reductions in various sectors; it provides useful capsule descriptions of other state’s programs and of regional and foreign initiatives. And it discusses the crucial issue of the economic costs and benefits of the program, as that will be a prime determinant of the program’s ability to be a role model for other jurisdictions.
The MassINC report recognizes that data on the subject of economic costs and benefits are subject to extremely complex and differing interpretations. The report notes there is general agreement in Massachusetts that “it is desirable to reduce greenhouse gases and develop clean energy [,] it is more difficult to reach consensus when the subject turns to the cost of addressing climate change ….” Id. at 75. Nonetheless, a convincing explanation of the specific costs and benefits of various courses of action is a necessary component of any successful program because the ultimate effectiveness of a state’s program rests on its attractiveness as a model for other jurisdictions – including those with different views of the appropriate tradeoffs between environmental protection and economic development.