EPA’s Greenhouse Gas Regulation Dodges a Bullet

Posted on November 22, 2013 by Leslie Carothers

Commentary on the Supreme Court’s grant of certiorari in the greenhouse gas case has addressed the question taken for review:  whether EPA permissibly decided that regulating motor vehicle greenhouse gas emissions triggered permitting regulations for stationary sources like power plants. (See Garrett and Buente blogs).  This is an interesting question of statutory interpretation, but it may be more important that the Court declined to review EPA’s fundamental finding that greenhouse gases “may reasonably be anticipated to endanger public health or welfare.”  The D.C. Circuit panel in the case agreed with EPA that the scientific evidence amply supported action under the precautionary standard of endangerment which  allowed the agency to act in the face of scientific uncertainty and without a complete  quantification of risks, costs, and benefits of regulation.  Relying on its 1976 decision upholding EPA’s regulation of lead additives in gasoline under the same part of the Clean Air Act, the D.C. Circuit panel had no difficulty concluding that EPA had made the case for control of greenhouse gases from motor vehicles as a precautionary rule.  This holding and its reasoning will be important support to EPA as the agency moves forward with the more complex and costly initiative to set emission standards for power plants.  Electric generating plants contributed over 38% of U.S. CO2 emissions in 2012, with coal-fired plants accounting for nearly three quarters of those emissions. 

Some observers may have dismissed the possibility of Supreme Court review of the endangerment finding considering the strength and complexity of the scientific evidence.  However, a Court that has eviscerated federal campaign finance and voting rights law, disregarding congressional intent and its own precedents, can’t be counted on to defer to a science-based EPA decision just because the overwhelming majority of scientists endorses the agency’s conclusions.  Some of the justices may well agree with Judge Janice Rogers Brown’s vigorous dissent from the D.C. Circuit’s vote to deny rehearing en banc of the panel decision.  Invoking memories of living near Los Angeles in the seventies when smog hid the mountain views, Judge Brown argued that the Clean Air Act is aimed at “inhaled” pollution of the type that kills people and not pollution that harms public health or welfare less directly through impairment of natural resources like water resources or crops by climate change—harm, as she put it, coming “at the end of a long speculative chain.” Though mistaken in her interpretation of the Clean Air Act, Judge Brown’s opinion illustrates the challenge of educating both the courts and the public on the more complex chains of causation involved in defining harm from ecological damage and less traditional pollutants.  Her opinion is a good reminder that advocates of regulation to safeguard  ecological resources, including our climate,  have work to do to build greater understanding of profoundly serious risks.

New ASTM E1527-13 Standard for Phase I ESA

Posted on November 11, 2013 by Thomas Lavender

On November 6, 2013, the American Society for Testing and Materials (ASTM) issued the revised version of the ASTM E1527 Standard for Phase I Environmental Site Assessments.  The new standard supersedes the prior 2005 standard, which had been deemed to satisfy EPA’s “all appropriate inquiry” rules.    EPA has expects to confirm whether the new standard is compliant by the end of 2013.

The 2013 amendment to ASTM E1527 provides clarification on the definitions of Recognized Environmental Condition and Historical Recognized Environmental Condition.  The amendment also includes a new term, Controlled Recognized Environmental Condition, and addresses the potential assessment for Vapor Migration Risk.  The amendment further clarifies requirements for the requisite regulatory file review and includes updates to User responsibilities under the standard.  The EPA has summarized the updates and changes from the E1527-05 standard in a document in the EPA docket.  (See Amendment to Standards and Practices for All Appropriate inquiry.)

Cooling Water Intake Rules – Will This Turkey Arrive for the Holidays?

Posted on November 7, 2013 by Molly Cagle

Quoting our colleague Philip Ahrens, “We shall see” indeed.

Invoking force majeure due to the 16-day government shutdown, EPA has again (for the third time) delayed the issuance of the Clean Water Act 316(b) rules past the November 4, 2013 deadline most recently agreed to in its settlement with Riverkeeper.  It remains to be seen if EPA will deliver the 316(b) rules on November 20, 2013 – just in time for a little light reading over your turkey dinner – or seek a further extension with Riverkeeper.  EPA and environmentalists are now in talks for a new deadline, so you can probably head home to enjoy your  turkey and sides at Thanksgiving without toting home a Federal Register package to disrupt your holiday.

Advocates for a more stringent set of rules appear to have used the latest delay to secure political support from a group of House Democrats that recently encouraged EPA Administrator Gina McCarthy to require power plants and other industrial facilities to install closed-cycle cooling water technologies not just to save local ecosystems, but also to respond to climate change.  According to the elected officials, “Closed-cycle cooling structures would ensure greater energy grid security and reduce ecological harm in a warming world.”  That’s a pretty incredible statement all around given that, although the cooling water intake rules have been embroiled in a multi-decade-long saga of regulations and litigation about entrainment and impingement of fish, they have never been about a meaningful assessment of the ecological impact of various entrainment and impingement rates in various types of water bodies.  In fact, the proposed rule completely failed to take into account significant variations in different types of waterbodies.

Given the proposed 316(b) rules, EPA is unlikely to jump on the closed-cycle cooling bandwagon and abandon a more flexible approach.  The Democratic Congressmen say in their letter that flexibility unfairly burdens state environmental protection agencies.  Environmentalist say that the flexible approach will bring more litigation because the proposed approach is not lawful.  Industry groups continue to prefer flexibility as it allows them options such as upgraded screens, barrier nets, reduced intake velocity, fish return systems – technologies that would lead to reduced impingement and entrainment but cost far less than retrofitting plants with cooling towers and other high-energy technologies.  So industry too remains primed for challenge.  At stake is the potential for hundreds of millions of dollars of upgrades for an ill-defined environmental benefit.  

While it’s anyone’s guess when the rules will come out, it does seem reasonable to predict that whenever they emerge, the lawsuits will follow.

Grant of Certiorari in Greenhouse Gas Regulation Litigation: Limited But Important

Posted on October 30, 2013 by David Buente

Of the 21 separate questions presented in the 9 petitions for writ of certiorari filed in the U.S. Supreme Court in Utility Air Regulatory Group et al. v. Environmental Protection Agency et al., challenging nearly every aspect of the Environmental Protection Agency’s recent greenhouse gas regulations—from the initial “endangerment” finding to the restriction on motor vehicle emissions to the stationary-source permitting requirements—the Court granted review of only a single issue:  “[w]hether [EPA’s] regulation of greenhouse gas emissions from new motor vehicles triggered permitting requirements under the Clean Air Act for stationary sources that emit greenhouse gases.”  Several commentators have interpreted this decision (reported in a prior post by Theodore Garrett) as an implicit affirmation of EPA’s regulatory regime, insofar as the Court chose not to address some of the broader challenges to the agency’s basic authority to regulate greenhouse gas emissions under the Clean Air Act.  But, whatever implications might be drawn from the Court’s decision not to grant review of certain issues, far more telling is the Court’s deliberate rewriting of the question presented, narrowly tailored to address the validity of the stationary-source permitting regulations.

Those regulations rest on an exceedingly questionable interpretation of the Clean Air Act.  The stationary-source provisions of the Act require any industrial facility that emits an “air pollutant” in “major” amounts—defined by the statute as 250 or more tons of the pollutant per year—to obtain pre-construction and operating permits from the local permitting authority.  42 U.S.C. § 7475.  EPA acknowledges that it would be “absurd” to apply these provisions by their terms to sources of greenhouse gas emissions, since nearly every business in the country (including even small commercial enterprises and residential facilities) emit greenhouse gases at more than 250 tons per year, and the agency can offer no reason why the statute should not be interpreted instead to apply only to the large industrial facilities that emit “major” amounts of a pollutant otherwise subject to regulation under the permitting provisions—i.e., one of the so-called “criteria pollutants” for which a national ambient air quality standard has been issued.  Nevertheless, EPA has interpreted the statute to apply to sources of greenhouse gas emissions and, to address the acknowledged “absurd results” created thereby, has decided that for these purposes the threshold for a “major” emissions source should be increased from 250 tons per year—as stated in the statute—by 400-fold, to 100,000 tons per year.  The agency has, in other words, literally rewritten the express terms of the statute in order to justify its preferred interpretation.

The dissenting judges in the D.C. Circuit severely criticized the result.  That is most likely the reason the Supreme Court granted review of the case, to correct the agency’s  interpretation of the Act and ensure that neither EPA nor other agencies attempt to redo legislative power in this way in the future.  Whether or not the limited nature of the certiorari grant can be viewed as an approval of EPA’s authority to regulate greenhouse gases from mobile sources, it almost certainly reflects suspicion—if not disapproval—of the agency’s stationary-source regulations.  The definitive answer should come by June 2014, when the Court is expected to rule. 

Coase: the passing of a legend in law and economics

Posted on September 23, 2013 by Rodney Brown

The legal profession lost a giant earlier this month when Ronald H. Coase passed away Sept. 2nd. You may know Coase as the economist who framed the Coase Theorem and won the 1991 Nobel Prize in Economic Science. But you may not know that Coase spent his career at a law school, not in an economics department. Or that several of his key economic insights have as much relevance for the law as they do for economics.

Coase wrote his first influential paper, The Nature of the Firm, in 1937. In it, he announced the concept of transaction costs, the notion that people must incur costs simply to participate in supposedly free market. After he recognized that it takes time and resources for someone to gather information to make a deal in the marketplace, and even more to bargain for the deal and to police and enforce it, Coase hit on the then-radical idea that people will organize themselves into firms or corporations only if it will reduce their individual transaction costs. The firm, in other words, exists because it incurs lower transaction costs to handle certain kinds of dealings.  This explains why companies grow into large, complicated behemoths, and also why they outsource functions when the external market begins to do the same job with lower transaction costs.

Transaction costs are important for all lawyers to consider, but Coase’s next big work is particularly significant to environmental lawyers. His 1960 The Problem of Social Costs introduced the idea that relatively free markets could allocate resources more efficiently than any regulatory system. Even more boldly, Coase showed that, if you assume no transaction costs, a free market reaches the most efficient result no matter how society’s property rights may be distributed initially. A polluter given the complete right to do so will pollute only as much as is socially useful, because otherwise his neighbors will pool their money to buy him out.

Interestingly, Coase never liked his idea as applied to the real world. He knew that assuming no transaction costs was big and unrealistic. In real life, there are transaction costs everywhere, as his 1960 paper noted:

This would seem particularly likely when, as is normally the case with the smoke nuisance, a large number of people are involved and in which therefore the costs of handling the problem through the market or the firm may be high.

When there are transaction costs, the market will not find the most efficient result, and it will end up imposing externalities on others. Coase felt that government regulation or taxation would often be needed to fix this problem.

So in the end, Coase was an empiricist: look carefully at each situation and decide based on the facts, not ideology, whether market forces or government action will work better. We should all raise a toast in his memory.

NB: To see more of Coase’s delightful way of thinking about the world, read this 1997 interview of him at The Ronald Coase Institute’s website.

Environmental Regulation and the Rhode Island Business Climate: Governor Chaffee Tries To Fix It

Posted on August 15, 2013 by Richard Sherman

The business climate in Rhode Island is viewed by many observers as unpromising at best and dismal at worst. The reasons are too numerous to articulate here, but at least there is an effort now being made that may contribute to an improvement in such climate.

The administration of Governor Chafee is undertaking a significant effort not only to review and revise the myriad of environmental regulations that burden the regulated business community, but also to make efforts to revise the state environmental regulatory scheme to pre-empt conflicting local regulations and ordinances that inhibit the permitting and licensing process and otherwise discourage the growth of businesses of varying sizes.  The initial report includes findings and recommendations across the bureaucracy, but specifically addresses the Department of Environmental Management.  

While budgetary constraints may impact the speed with which such reform is undertaken and implemented, desperate times call for desperate measures. Hopefully, we will see some improvement in the relatively near future.

Cooperative Federalism? We Don’t Need No Stinkin Cooperative Federalism

Posted on July 31, 2013 by Seth Jaffe

On Friday, July 19, the Court of Appeals for the 10th Circuit, in Oklahoma v. EPA, affirmed EPA’s rejection of Oklahoma’s state implementation plan setting forth its determination of the Best Available Retrofit Technology, or BART, to address regional haze.  The Court also affirmed EPA’s promulgation of a federal implementation plan in place of the Oklahoma SIP.  While rehearsing the Clean Air Act’s “cooperative federalism” approach, the Court seemed more focused on deference to EPA’s technical assessment of the SIP than on any obligation by EPA to cooperate with states.

"Given that the statute mandates that the EPA must ensure SIPs comply with the statute, we fail to see how the EPA would be without the authority to review BART determinations for compliance with the guidelines.
                                                            ***
While the legislative history may evidence an intent to prevent the EPA from directly making those BART decisions, it does not necessarily evidence an intent to deprive the EPA of any authority to ensure that these BART decisions comply with the statute."

Judge Kelly dissented.  As he noted, while the courts normally grant deference to EPA’s decisions, such deference is appropriately limited where “EPA rejected Oklahoma’s evidentiary support with no clear evidence of its own to support its contrary conclusion.”  Judge Kelly also noted that, even in a statute relying substantially on state implementation, the amount of power given to the states to implement the regional haze program is particularly evident.

I don’t know whether Oklahoma will seeking rehearing en banc.  (It’s difficult to imagine that the Supreme Court would be interested in hearing this case.)  I do know that cooperation is in the eye of the beholder.

Taking the Fifth on the Fifth’s Taking Clause

Posted on June 26, 2013 by Robert M Olian

…nor shall private property be taken for public use, without just compensation.

Everyone understands the Fifth Amendment’s takings clause to mean, at a minimum, the government cannot force the transfer of private property to the government even for a manifestly governmental purpose (e.g. a highway right of way, or a new airport runway), without compensating the property owner.

Tuesday’s Supreme Court decision in Koontz v. St. John’s River Water Management District is the latest in a series of Supreme Court rulings to extend the protections of the Takings Clause beyond the obvious governmental requisitioning of private property. That’s “latest,” not “last”.

Nollan v. California Coastal Commission (1987) and Dolan v. City of Tigard (1994), combine to set forth the Court’s requirements for an “essential nexus” and “rough proportionality” between conditions on land use development and the government’s underlying objectives in the permit scheme to which the property owner is subjected. Absent either nexus or proportionality, a taking has occurred, and the Takings Clause requires that the property owner get “just compensation.” So far, so good.

The facts in Koontz are to some extent irrelevant; indeed the Court’s opinion expressly disowned any determination of the merits of his particular claim for compensation. Depending on whose brief you read, Koontz wanted to develop some wetlands property but the Water Management District refused to approve his project as proposed and put forth some mitigation options that were either “extortionate demands” or “helpful suggestions”, one of which consisted of Koontz spending money to improve public lands remote from his own property. Koontz took umbrage and sued under Florida state law.  The trial court found for Koontz on the basis of Nollan-Dolan, and the intermediate state appellate court affirmed.

The Florida Supreme Court reversed for two reasons: first, it held the Nollan-Dolan standard does not apply to denial of a permit; and second, it held the standard does not apply to a requirement for the payment of money, as opposed to the impairment of a specific piece of property.

Every Justice agreed that the Florida Supreme Court got the first part wrong; that is, they all agreed the Takings Clause applies to permit denials as well as permit approvals. The majority and dissent parted ways with respect to the second question, however, with the majority again holding that Florida got it wrong and that excluding monetary exactions would allow permitting agencies to improperly circumvent the Nollan-Dolan requirements.

Now, one can agree or disagree with the majority, but the decision hardly shocks the conscience. What the decision holds is far less important than what remains to be decided in future cases:

1.    How concrete and specific must a demanded concession be to give rise to liability under Nollan and Dolan?
2.    What happens if a permitting authority merely says, “Denied, come back with something better,” and makes no other demand?
3.    Where will the line be drawn to prevent countless local land use decisions from becoming federal cases?

On these points, the majority took the Fifth.

Partners?

Posted on June 25, 2013 by Steve McKinney

Congress said EPA and the States are partners in implementing the Clean Air Act.  It’s simple: EPA sets pollutant-by-pollutant standards for clean air (NAAQS) and each State develops and implements a state-specific plan to meet and maintain those NAAQS.  Each partner is well-positioned and equipped to perform its assignment and Congress included appropriate “carrots and sticks” in the Act to ensure that both do their job.  The Supreme Court has extolled Congress’s partnership approach and EPA routinely professes its deep appreciation of its State partners and their important role.  So wassup with EPA suddenly demanding that thirty-six States delete rules about excess emissions during startup, shutdown and malfunction (SSM) that have been EPA-approved for 30 to 40 years?

On February 22, in response to a 2011 petition by Sierra Club, EPA proposed to “call” thirty-six state implementation plans (SIPs) because they contain affirmative defense, exemption, or director’s  discretion rules for excess emissions during periods of SSM. EPA’s previous approval of the offending rules wasn’t even a speedbump.  EPA also rejected any obligation to connect the offending rules with air pollution problems in the affected States.  EPA’s legal position on how the States should enforce their CAA permits was enough to shuck the partnership and impose the federal will.  And EPA didn’t even ask nicely.  State requests for information about EPA’s consideration of their SIPs were ignored and States were given 30 days to comment on a proposal EPA took more than a year to develop.  EPA gave its State partners another 45 days only after more than a dozen State Attorneys General jointly asked for more time and the Senate Committee considering the new Administrator’s confirmation made the same request.

When comments were filed on May 13, thirty affected States filed comments; none of them supported EPA’s proposed call of their SIP.  Not even EPA’s regular supporters on issues like tougher NAAQS thought EPA’s dictation was a good idea.  Complaints from EPA’s partners ranged from being wrongfully excluded from EPA’s evaluation of their SIP to EPA trampling on the States’ planning and implementation responsibilities to EPA creating a lot of work that could have been avoided if EPA had just talked to them.  No amount of spin can make this look good for state–federal relationships.

So why?  Well, Sierra Club did ask for it.  Maybe because an obvious compliance impact is on emission limits with continuous monitoring and short averaging times like opacity.  And maybe because coal-fired power plants always have opacity limits and deleting common excess emission rules will set those sources up for widespread enforcement litigation.  Or, maybe the States and the previous EPAs had it wrong for all these years and someone finally straightened everyone else out.  Like so many conundrums of this type, it might take some judges to give us the answer.

Pursuant to a settlement agreement with Sierra Club, EPA must finalize the SSM SIP Call by August 27, 2013.

A Case of the Vapors – Does New Jersey’s Newest Vapor Intrusion Technical Guidance Foreshadow a Return to the “Old Days” of Environmental Regulation in New Jersey?

Posted on June 20, 2013 by Kenneth Mack

Enacted in May 2009, New Jersey’s “Site Remediation Reform Act”, N.J.S.A. 58:10C-1, et seq. (“SRRA” or “Act”) was heralded by the State’s Department of Environmental Protection (“NJDEP”) as a “new world order” for the State’s site remediation regulation.  Four years later, its imposition remains a “work in progress”.

Belatedly following Massachusetts’ lead, the Act largely privatized site remediation by placing most decisions, including the ultimate provision of final remediation approval, in the hands of state-licensed professionals, called “Licensed Site Remediation Professionals” (“LSRPs”).  It replaced NJDEP’s former “command and control” approval process, which tended toward extreme micro-management of each case.  Instead, LSRPs are supposed to use their professional judgment in effecting remediation.

Interestingly, much of the impetus for the SRRA came chiefly from the Government, compelled by its enormous backlog of unresolved cases: it was not unusual for remedial reports to languish on NJDEP desks, awaiting action, for years.  Moreover, NJDEP had little or no knowledge of many sites on its “known contaminated site list” which numbered anywhere from 10,000 to 15,000 (the fact that that number was unclear was itself troublesome).  Indeed, one of the precipitating causes of the Act was a vapor intrusion case in which it was belatedly discovered, in 2006, that a child day care center had been built, and was operating, on a site which formerly housed a thermometer factory.  This site should have been (but was not) cleaned up under the State’s ISRA law when the factory closed in 1994.  The site had been classified as one of “low” concern, so it was not inspected by NJDEP until twelve years after such closure.  The discovery of these circumstances caused public consternation, followed by litigation and, ultimately, legislation. 

Although the environmental consultant community enthusiastically welcomed the new law (almost immediately dubbed the “environmental consultant right to work act”), individual LSRPs continue to have difficulty weaning themselves away from the “security blanket” of prior department approval of their actions.  These fears are understandably heightened by the statutorily enjoined random audit of at least ten percent of LSRPs annually by the LSRP Licensing Board and the Department’s separate ability to audit final remediation approvals, (called “Response Action Outcomes”, or “RAOs”), for up to three years after issuance. 

Partly in response to the LSRPs’ expressed need for some certainty, NJDEP has been steadily adding to the scope and detail of various technical guidance documents, the most recent one of which is its “Vapor Intrusion Technical Guidance (Version 3.1)" issued in March of this year. At 184 pages, with appendices, this guidance (“VI Guidance”) is nearly twice as long as the next-largest NJDEP “guidance document” and far longer than similar VI guidance issued by authorities in neighboring states.  Indeed, its length is nearly that of OSWER’s External “Review Draft” “Final Guidance for Assessing and Mitigating the Vapor Intrusion Pathway from Subsurface Sources to Indoor Air”, whose issuance it preceded by about a month.  Predictably,  the two documents do not exactly mesh seamlessly. 

The prescriptive nature of the VI Guidance is equal to its heft and seemingly contrary to the Act’s proclaimed conferring of discretionary judgment upon LSRPs.  More troublesome is the fact that the various detailed dictates to LSRPs in the VI Guidance have been translated into a welter of forms that must be filed by the LSRP at various points in the VI remedial process.  These new forms –which are apt to change with some frequency – are all “machine readable” and, in light of the draw-down of experienced NJDEP personnel caused by government cutbacks and natural attrition, are increasingly reviewed by machines, rather than experienced personnel, at least in the first instance.  This seems likely to produce an exaltation of form over substance that does little to foster actual remediation.  Moreover, departures from the VI Guidance must be supported by the LSRP’s explanation of rationale under a pre-SRRA regulation entitled “Variance from Technical Requirements”.  Few such “variances” were ever permitted under this regulation in the past.  The fact that such “departures” may be substantively reviewed by NJDEP only after the final RAO is issued and, if denied, would result in the RAO’s invalidation, creates an added “chilling effect” on an LSRP’s consideration of any such deviation, however warranted.  And, while NJDEP personnel continue to be available to LSRPs for consultation and advice, it is unclear what effect, if any, reliance on such advice would have in any subsequent audit of an RAO. 

It may be that the VI Guidance is sui generis and that its overly doctrinaire approach will not be followed by NJDEP in other areas of remediation.  If not, the “new world order” of the SRRA may morph into something that looks very much like NJDEP’s  “ancien regime”.  Or maybe I just have a case of the vapors.

I Believe in Environmental Regulation, But….

Posted on June 10, 2013 by Seth Jaffe

I believe in governmental environmental regulation.  We have a complicated world and it is not surprising that many activities, including those generating greenhouse gases, cause negative externalities.  At the same time, however, I have spent more than 25 years representing regulated entities in negotiations with government regulators and it is impossible to do such work without obtaining an appreciation for the very significant costs that bureaucracies impose.

With all due respect – cue the upcoming diss – to my many friends in government, the absence of market discipline or the ability to fire nonpolitical bureaucrats often leads to street level bureaucrats operating under a law of their own devising.  Moreover, if a complex economy causes externalities requiring regulation, that same complexity should cause regulators to pause before imposing or revising complicated regulatory regimes.  Unintended consequences abound.

The genesis of these musings was the confluence of a number of otherwise unrelated recent regulatory developments.  The most significant was headline in the Daily Environment Report earlier this week noting that “EPA [is] Still Unable to Provide Time Frame For Revising Definition of Solid Waste Rule.”  RCRA is the perfect example. No one can really quarrel with the need for hazardous waste regulation, in order to prevent the creation of more Superfund sites.  However, if we’re still fighting over the definition of something as basic as solid waste more than 30 years after the inception of the program and EPA’s most recent efforts to update the definition remain fruitless after about five years of effort, then we have to acknowledge some serious implementation problems where the rubber is trying to hit the road.

I’ll also provide two recent examples from my home state of Massachusetts.  MassDEP has been engaged in a serious regulatory reform effort, which has earned deserved praise.  However, as NAIOP has recently noted in comments on the draft proposal to revise the Massachusetts Contingency Plan, MassDEP’s proposed Active Existing Pathway Elimination Measure Permit is “so cumbersome that it is not clear that a PRP or redeveloper would want to seek such a permit.”  This calls to mind MassDEP’s reclaimed water regulations, which were intended to encourage water reuse, but are so cumbersome that no one is applying for the permits.

Thus, the final caution.  The MassDEP example is extremely common – and extremely troubling.  Regulator gets great idea for innovative program. Prior to implementation, concerns are raised about what happens if….  More effort is put into avoiding the perceived downsides than in actually making the program work.  Program ends up being worse than nothing.

I believe in environmental regulation, but…

Will Supreme Court Accept Challenges to Obama Climate Change Authority?

Posted on June 3, 2013 by Richard Lazarus

Four votes.  That is the number of votes required to grant a Supreme Court petition for a writ of certiorari.  And because that is the same number of Justices who dissented from the Court’s landmark 2007 ruling in Massachusetts v. EPA, EPA has reason to worry over the summer.

Pending before the Court are nine petitions seeking review of a wide ranging set of challenges to EPA’s regulation of greenhouse gas emissions from new motor vehicles and new stationary sources.  Petitioners include most every significant part of American industry, 14 States, and numerous political leaders.  Some petitions, consistent with Judge Brett Kavanaugh’s dissent from the D.C. Circuit’s denial of rehearing en banc in Coalition for Responsible Regulation v. U.S. EPA, are strategically narrow; they ask the Court to review only a relatively narrow issue regarding the applicability of the Clean Air Act’s Prevention of Significant Deterioration Program to greenhouse gas emissions. Others, by asking the Court to overturn EPA’s determination that greenhouse gas emissions from new motor vehicles endanger public health and welfare seek, as a practical matter, to topple   the Obama Administration’s effort to address global climate change in the absence of new federal legislation.  But a few of the petitions jettison even any pretense of modesty by directly asking, consistent with D.C. Circuit Judge Janice Rogers Brown’s blistering dissent from en banc denial, the Court to do no less than overrule Massachusetts v. EPA.

The Solicitor General and other respondents (including 18 States) will no doubt oppose cert on all issues in their responsive filings this summer.  They have nontrivial arguments, especially given the serious questions they can raise concerning the Article III standing of petitioners to raise the particular legal claims that would likely otherwise have the most force on the merits.  But EPA is likely to be less concerned with whether review is granted than, if granted, on what issues.  The legal stakes for some issues raised are far less consequential than they are for others, which are quite enormous.

Any cert grants will likely be announced in late September, shortly before October’s “First Monday” to allow for expedited briefing and argument as early as January 2014 and more likely in February. Otherwise, all petitions will be denied on that First Monday.  It will be a long summer’s wait for all parties.

Surprise, Surprise, Surprise: An Agency Cannot Revise Regulations In a Consent Decree

Posted on May 22, 2013 by Seth Jaffe

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."

Well, yeah.

.

Decommissioning Power Plants: A Process Without a Standard Regulatory Framework

Posted on May 7, 2013 by Pamela Giblin

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.

Can We Please Talk About Outcomes For A Change???

Posted on April 22, 2013 by Rick Glick

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.”

Alaska Courts Clarify Application of Antidegradation Procedures

Posted on April 8, 2013 by Eric Fjelstad

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.

Regulatory Lag and Trying to Plan Our Energy Future

Posted on April 3, 2013 by E. Donald Elliott

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.

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

Posted on March 26, 2013 by Seth Jaffe

On Monday, EPA lost another battle in the war over guidance.  In Iowa League of Cities v. EPA, the 8th Circuit Court of Appeals vacated two letters that EPA had sent to Senator Charles Grassley concerning biological mixing zones and bypass of secondary treatment units at POTWs (also referred to as “blending”, because the POTWs blend wastewater that has not be subject to biological secondary treatment with wastewater that has, prior to discharge).  The Court concluded that both letters constituted promulgation by EPA of effluent limits under the Clean Water Act and that they constituted legislative, rather than interpretive rules (I refuse to refer to “interpretative” rules; sorry).  As a result, the Court vacated the letters due to EPA’s failure to follow notice and comment requirements applicable to promulgation of legislative rules.  Finally, the Court concluded that a duly promulgated rule concerning biological mixing zones might be valid under Chevron, but that a rule barring bypasses of secondary treatment would exceed EPA’s authority under the Clean Water Act.

In first determining whether the letters constituted “promulgation” of an effluent standard, the Court looked to whether the letters were binding on the regulated community.  Relying in part on Appalachian Power Co., the Court concluded that the letters were binding:

If an agency acts as if a document issued at headquarters is controlling in the field, if it treats the document in the same manner as it treats a legislative rule, if it bases enforcement actions on the policies or interpretations formulated in the document, if it leads private parties or State permitting authorities to believe that it will declare permits invalid unless they comply with the terms of the document, then the agency’s document is for all practical purposes “binding.”

As the Court noted with respect to the mixing zone issue, the “letter instructs state permitting authorities to reject certain permit applications, regardless of the state’s water quality standards.”  With respect to the bypass issue, EPA stated that “it will insist State and local authorities comply with” a never-issued policy that precludes the types of bypass at issue.  To try to suggest that words such as “insist” are not binding did not go over well with the Court.  “Just as it did in Appalachian Power, the EPA dissembles by describing the contested policy as subject to change.”

After concluding that the letters constituted promulgation of effluent standards, the Court went on to conclude that the letters constituted legislative, rather than interpretive, rules, and thus were subject to notice and comment rulemaking.  The following is the key paragraph for those of us attempting to beat back the kudzu that is EPA’s reliance on such informal guidance as a substitute for notice and comment rulemaking:

Identifying where a contested rule lies on the sometimes murky spectrum between legislative rules and interpretative rules can be a difficult task, but it is not just an exercise in hair-splitting formalism. As agencies expand on the often broad language of their enabling statutes by issuing layer upon layer of guidance documents and interpretive memoranda, formerly flexible strata may ossify into rule-like rigidity. An agency potentially can avoid judicial review through the tyranny of small decisions. Notice and comment procedures secure the values of government transparency and public participation, compelling us to agree with the suggestion that “[t]he APA’s notice and comment exemptions must be narrowly construed.”

“Layer upon layer of guidance.”  The “tyranny of small decisions.”  I couldn’t have said it better myself.

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

Posted on March 22, 2013 by Seth Jaffe

On Wednesday, in Decker v. Northwest Environmental Defense Center, the Supreme Court ruled that runoff from logging roads does not constitute a discharge from a point source that requires an NPDES permit.  The decision upholds EPA’s interpretation of its own regulations and overturns – what a surprise! – a 9th Circuit decision which had held that permits were necessary for logging runoff.

While EPA got the result that it wanted here, the decision may come back to haunt it in the long run.  The decision was largely based on what is commonly known as Auer deference, the rule that courts will defer to an agency’s interpretation of its own regulations unless that interpretation is “plainly erroneous or inconsistent with the regulation.” After a thorough review of the various relevant regulations and a dip or two into the Oxford American Dictionary, and after noting that the agency’s interpretation need not be “the best one”, the Court found EPA’s interpretation “permissible.”

So, why should EPA be concerned?  Justice Scalia, at his most curmudgeonly, dissented on the ground that Auer should be overturned because it grants too much authority to agencies.  Justice Scalia rejected out of hand what I would have thought would be the simplest and most obvious defense of Auer:  that if courts defer to agency interpretation of statutes under Chevron, shouldn’t they, a fortiori, defer to agency interpretation of the agency’s own rules?  Apparently not.  To Justice Scalia, Chevron deference merely allocates to agencies, rather than courts, the primary duty of interpreting statutes, but allowing agencies to interpret their own regulations has the dangerous result of concentrating both the writing and interpretation function in one branch of government.

I don’t buy it, but it’s important to note that, while Justice Scalia was the sole dissenter, Justice Roberts wrote a concurring opinion, joined by Justice Alito, stating that, while Decker was not the proper case to reassess Auer (a cynic might say that Justice Roberts reached that conclusion because EPA was aligned with industrial interests, rather than the environmental NGOs, in Decker), they were both open to reviewing Auer in the proper case.

Sounds like three votes to me.  Somewhat surprisingly, Justice Thomas joined neither the concurrence nor the dissent.  Justice Kennedy wrote the majority opinion, so he clearly still believes in Auer.  Without Kennedy and with Thomas a cypher at this point, the votes to revisit Auer may not be there.  In any case, it is worth noting that Justice Breyer, who is Justice Scalia’s frequent sparring partner on administrative law issues, took no part in the decision.  I look forward to his spirited defense of Auer when the time comes.

New Changes to CISWI Final Rule Reflect EPA’s Response to Comments from the Regulated Community

Posted on March 21, 2013 by Karen Crawford

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.

French Government Requires Annual Reporting of Nanoparticles

Posted on March 12, 2013 by Leslie Carothers

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.

Hydraulic Fracturing Fluid Balancing Act: Disclosure Versus Protection of Trade Secrets

Posted on March 7, 2013 by Linda Bullen

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.

Coal Ash Rulemaking

Posted on February 21, 2013 by Andrew Brown

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. 

FRACKING FRACAS IN A LOCAL LABYRINTH

Posted on February 19, 2013 by David Buente

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.

Would You Like Some Unintended Consequences With That Tea?

Posted on February 6, 2013 by Linda Benfield

Wisconsin has a proud tradition of strong political opinions.  Recent Tea-Party backed legislation in Wisconsin limiting the power of government will be interesting to follow as the consequences play out, particularly in the environmental arena. 

In March 2011, Wisconsin’s then-new Republican Governor Scott Walker and the Republican legislature passed the Wisconsin Budget Repair Bill, the state law that famously limits the collective-bargaining rights of public employees. Following that, the legislature passed 2011 Wisconsin Act 21, which includes a “limited government” provision that prohibits any “agency [from] implement[ing] or enforc[ing] any standard, requirement, or threshold, including as a term or condition of any license issued by the agency, unless that standard, requirement, or threshold is explicitly required or explicitly permitted by statute or by a rule that has been promulgated in accordance with [state law].” 

This will play out in a number of ways.  Like other state environmental agencies, the Wisconsin Department of Natural Resources (“WDNR”) relies significantly on guidance documents to implement otherwise complex programs. A number of issues are addressed only in WDNR guidance, not in explicit regulations.  These include sediment cleanup standards; references to “sediment” were intentionally removed from the state soil cleanup standards.  This not only affects state cleanup programs, but also raises issues as to whether the state sediment cleanup standards can be “applicable or relevant and appropriate requirements” under the Comprehensive Environmental Response, Compensation and Liability Act.  Similarly, the WDNR’s vapor intrusion sampling, analysis and remediation protocols are contained only in state and federal guidance documents. 

Recently, the U.S. EPA chose language in a proposed SIP denial that adds fuel to some permitting arguments.  In 2008, U.S. EPA required revisions to State Implementation Plans (“SIPs”) with respect to PM2.5 permitting; Wisconsin made regulatory changes, and requested SIP approval in 2011.  On December 18, 2012, the U.S. EPA proposed disapproval of the SIP revision.  77 Fed. Reg. 74817 (2012).  According to U.S. EPA, Wisconsin’s submission is deficient because the Wisconsin regulations do not “explicitly” define the condensable component of PM10 and PM2.5 emissions, and do not “explicitly” identify SO2 and NOx as precursors to PM2.5.  The U.S. EPA’s disapproval language gives the Wisconsin Department of Natural Resources the usual additional work to propose and finalize regulatory changes to address the deficiency, but it also gives regulated sources an additional argument that the WDNR lacks the authority to regulate condensable particulate matter and PM2.5  precursors.