NOT IN MY BACK YARD! NEW YORK’S POWER PLANT SITING SOLUTION

Posted on September 22, 2011 by Stephen Herrmann

Recently Japan’s nuclear accident emphasized one important aspect of where to build power plants, and now the State of New York has adopted a new power plant siting law which could be a model for other states.


After not having a law on the books since 2003, New York has adopted a siting law and created a new panel to oversee the development of new power-generating facilities in the State.  The bill, called the Power New York Act, was adopted to rare applause of both environmentalists and business groups.  Efforts to establish a new siting law in New York had stalled over the years, thereby limiting the State’s ability to build new facilities and power sources including wind and solar.


Power New York Act of 2011 is a sweeping energy bill. Section 12 of the new law reauthorizes and modernizes Article X of the Public Service Law, which expired on January 1, 2003, governing the siting and approval of power plants in New York.  The new law hopefully will create a one-stop siting decision-maker.


The law establishes a new seven-person board to oversee the development of power plants in excess of 25 megawatts of energy, which would capture wind farms and even some battery-storage facilities.  The old law limited the board’s oversight to plants with more than 60 megawatts of power, which often left local communities to decide how to handle smaller projects.


The law creates and vests permitting authority with the New York State Board on Electric Generating Siting and the Environment.  The statute provides that two local residents will be part of the board for each proceeding.  The other five members of the board will be state officials.  The law also provides for “intervener funding” which will enable municipalities and other local parties to participate in all phases of the administrative review, including the mandated adjudicatory hearing.


The board is given authority to override local laws and ordinances if they are “unreasonably burdensome.”  Unless otherwise agreed by an applicant or extended due to a “material and substantial amendment to the application” or “extraordinary circumstances,” the board’s decisions must be rendered within a year of the application’s being deemed complete.


Article X overrides the New York State Environmental Quality Review Act which previously covered projects, and instead calls for several environmental analyses of a facility’s impacts.  These analyses include a “cumulative air quality analysis” that evaluates the combined effects from the proposed facility, other proposed sources and all existing sources; describes the demographics of the surrounding community; and sets out “reasonable and available” alternative locations.  It also requires the board to find that the project minimizes or avoids disproportionate impacts on the surrounding community.


The absence of a power plant siting law has been cited as an important reason why there has been scant development of power plants in New York in recent years, including alternative energy sources.  If the new law works in New York, it could become a model for other states.

Obtaining a New Permit for Discharge into an Impaired Waterbody With a TMDL—It is Not Impossible

Posted on September 19, 2011 by Charles Nestrud

Three South Arkansas industries and the City of El Dorado, Arkansas decided to remove their discharge from small ephemeral streams and construct a joint pipeline to carry their combined, treated effluent directly to the Ouachita River, a major river that flows through Arkansas into Louisiana.  Louisiana joined with neighbors and two environmental groups to oppose the “Joint Pipeline” NPDES permit.  In a 41-page opinion, the Arkansas Supreme Court rejected the challenges, and in the process provided some important interpretations of the Clean Water Act’s protections for impaired waterbodies and downstream states.


The Louisiana Environmental Action Network (LEAN) argued that a TMDL for mercury impairment in the Ouachita River basin did not allocate a mercury load for the joint pipeline; and therefore a new discharge permit with a mercury effluent limit was prohibited.  LEAN advocated a “0 mg/l” mercury limit based on 40 C.F.R. 122.4(i) which requires a demonstration of sufficient pollutant load allocations in a TMDL before a new discharge may be allowed.  Relying on Friends of Pinto Creek v. EPA, 504 F.3d 1007 (9th Cir. 2007), LEAN argued that load allocations in a TMDL are like tickets to a sold out performance.  Because the Ouachita River Basin TMDL did not provide a “ticket” (i.e. a load allocation) for the Joint Pipeline, LEAN argued that Arkansas could not authorize entry by the Joint Pipeline (i.e. no discharge of mercury could be permitted). 


The Arkansas Supreme Court focused on the first sentence of 40 C.F.R. 122.4(i) and Arkansas v. Oklahoma, 503 U.S.91 (1991) to reject LEAN’s “sold out performance” argument. The first sentence of 40 C.F.R. 122.4(i) prohibits new discharges that “will cause or contribute to the violation of water quality standards.”  Although the NPDES permit included a mercury limit that authorized mercury to be discharged, the permit limited mercury in the effluent to less than the water quality standard.  In other words, the Joint Pipeline effluent would have to be “cleaner” than the already impaired waterbody.   The Court stated that Arkansas v. Oklahoma had rejected the notion that new discharges were categorically banned from impaired waterbodies, and authorized a more flexible approach, especially for permits that authorize “the construction of new plants that would improve existing conditions.”


When a state issues an NPDES permit that requires effluent to meet the water quality standard, the effluent will always be cleaner than the impaired waterbody receiving stream.  Does the Arkansas Supreme Court opinion authorize any new permit into an impaired waterbody, so long as the water quality standard is protected?  That would be a broad reading of this opinion—perhaps too broad. 


In this case, the mercury in the Joint Pipeline effluent is a pass-through pollutant from the Ouachita River – the industrial participants use the mercury-impaired Ouachita River water as make up water, and that same water is returned to the Ouachita River as wastewater.  None of the pipeline participants add mercury through their operations.  EPA has authorized new discharges into impaired waterbodies under these circumstances through the Multi-Sector General Permit (73 Fed. Reg. 56572 at p. 56575 (Sept. 29, 2008)).  Limiting the opinion to a “pass through” of pollutants that originated in the impaired waterbody would be a narrow reading of this opinion—perhaps too narrow. 

 
The opinion clearly stands for the proposition that the existence of a TMDL does not serve as an outright ban on new sources. New sources can get a “ticket” to discharge into an impaired waterbody if the new source does not “cause or contribute to a water quality violation”—even if the TMDL does not specifically accommodate the new source.

NEW CROSS-STATE AIR TRADING RULE SCHEDULED TO BECOME EFFECTIVE IN OCTOBER

Posted on September 17, 2011 by Michael McCauley

On July 7, 2011, one year after the U.S. Environmental Protection Agency issued its proposed Clean Air Pollution Transport Rule, EPA released the final transport rule, now entitled the Cross-State Air Pollution Rule (CSAPR).  The CSAPR will become effective on October 7, 2011, 60 days after its publication in the Federal Register.  That is also the deadline for filing judicial challenges to the new rule.  One Petition for Judicial Review has already been filed in the D.C. Circuit Court of Appeals, and others are expected to be filed prior to October 7.

CSAPR will replace the Clean Air Interstate Rule (CAIR), which EPA promulgated in 2005.  The U.S. Court of Appeals for the D.C. Circuit vacated and remanded CAIR in July 2008.  However, in December 2008, the Court allowed CAIR to remain in place while EPA completed its remand rulemaking. 

CSAPR primarily addresses emissions from electric power plants in twenty-seven states located in the Eastern and Midwestern portions of the U.S.  The new rule generally requires covered, upwind states to reduce sulfur dioxide (SO2) and nitrogen oxide (NOx) emissions in order to enable downwind states to achieve or maintain compliance with the NAAQS for ozone and fine particulate matter (PM2.5).  CSAPR requires reductions of SO2 emissions, annual NOx emissions, and ozone-season NOx emissions.  A state may be subject to the reduction requirement for one or more of these types of emissions.  CSAPR establishes an emission budget and a variability limit for each state that is subject to an emission reduction requirement.  The budgets are established for two phases.  Phase I begins in 2012, and Phase II, under which more stringent state budgets apply, begins in 2014. 

Within the confines of the state budget, emission allowances will be allocated to covered sources.  Covered sources must comply with CSAPR by surrendering an allowance for each ton of SO2 or NOx emitted.  The sources are authorized to trade, bank, and utilize allowances issued under the relevant program.  However, as required by the D.C. Circuit decision, trading is only allowed within states; no interstate trading is permitted.

The states themselves will most likely play only a secondary role in the implementation of CSAPR.  EPA framed CSAPR as a federal implementation plan (FIP) program and set deadlines that generally do not allow enough time for each state to develop its own program to address interstate transport.  By taking these steps, EPA effectively preempted state discretion in determining how to meet at least the first phase of emission reduction obligations.  EPA decided to bypass the states because, in the Agency’s view, the states have arguably not met their Clean Air Act obligations with respect to implementing measures for achieving compliance with the 1997 ozone standard and the PM2.5 standards.  Concurrent with the issuance of CSAPR, EPA published a supplemental notice of proposed rulemaking which, if adopted, would include six additional states in the NOx ozone-season program.

While CSAPR’s structure and approach is generally consistent with the EPA’s preferred option under the 2010 CATR proposal, for many states, the final CSAPR rule is more stringent than the proposed CATR.  For example, the assurance provisions are effective starting in 2012 instead of 2014 as proposed in CATR.  In addition, the allowance surrender requirements under the assurance provisions have increased from one additional allowance per ton of emissions to two additional allowances.  NOx budgets for some states were reduced.

Electric power plants regulated under CAIR will be required to comply with the CAIR 2011 compliance requirements already in effect.  CSAPR will replace CAIR beginning in 2012.  EPA is currently developing federal implementation plans for each state covered by CSAPR to achieve the Phase I requirements in 2012.

Most power plants are expected to achieve the required emission reductions by operating existing air emission control equipment, utilizing low sulfur coal, or increasing electrical generation from cleaner generating units.  Some plants will be required to install new air quality control systems, such as low NOx burners or selective catalytic reduction (SCR) systems, scrubbers or dry sorbent injection capability.  CSAPR could lead to the retirement of some older, less efficient coal-fired units which have not already been upgraded with modern air quality control systems.

 

For further comments or questions, please contact Michael McCauley.

A TUG OF WAR: HOW CAN THE STATE SATISFY ITS BURDEN OF PROOF?

Posted on September 14, 2011 by Michael Hardy

There is ongoing litigation in an Ohio air pollution control enforcement case, which highlights the real world difficulties that arise from the regulatory requirement to test stack emissions under unrealistic, maximum, worst case conditions that do not correspond to day to day operations.  State ex rel. Ohio Attorney General v. The Shelly Holding Co., et. al., 191 Ohio App. 3d 421, 2010 – Ohio – 6526, 946 N.E. 2d 295.

Shelly owned a number of hot mix asphalt plants.  During stack tests to determine compliance with air pollution permit emission limitations,  several plants failed their tests.  Despite the failed tests, Shelly continued to operate those hot mix asphalt plants. The Ohio Environmental Protection Agency then brought an enforcement action, claiming that the continued operation of the plants after the failed tests constituted continuing violations even though the State had no monitoring data to prove that point.


The Trial Court rejected the State’s contention, stating that it was unwilling to infer a continued violation until Shelly successfully completed a subsequent stack test. “Simply put the Court does not find the requested inference to be reasonable given the fact that the State has the burden .  Further, the Court finds Shelly’s argument that a “stack test” does not represent normal operating conditions to be compelling.  Based on the foregoing, the Court will only consider the day of the “stack test” demonstrating excess emission to be evidence of a violation.” State ex rel. Ohio Attorney General v. The Shelly Holding Co., et. al. (Sept. 2, 2009), Franklin Cty. C. P. No. 07CVH07-9702.


The Court of Appeals of Ohio, Tenth Appellate District (which sits in Columbus, Ohio), reversed the Trial Court, stating that “…in determining the number of days each violation existed, the trial court should have concluded that the violation continued until the subsequent stack test determined that the plant no longer was violating the permit limitations.”  The Ohio Supreme Court has agreed to consider Shelly’s appeal of this ruling.  Shelly also has the amicus curiae support of  a number of trade organizations, including the Ohio Chamber of Commerce.

Arguing that the State has the burden of proof to demonstrate by a preponderance of the evidence each and every day of violation, Shelly seeks a ruling from the Ohio Supreme Court that would prohibit the State from showing, by mere inference, that there are ongoing violations of permits and regulations after a failed stack test.  Citing the record evidence that stack testing conditions are “snapshots” of operating conditions at the time of the test, typically “maximum, worst-case testing conditions,” Shelly claims there was undisputed evidence that those tests do not represent day-to-day operations. The State offered no evidence to show that stack test conditions are indicative of day-to-day operations.   Thus, Shelly argues, the proof of violation during a stack test does not necessarily show that the hot mix asphalt plant exceeded its permit limits during subsequent, more normal operations. Shelly also argued that the Tenth District incorrectly assumed that another stack test is the only way to show the reestablishment of compliance. Changes in operating conditions, restrictions on output or hours, and repairs may prove to be  easier corrections than awaiting another stack test that requires coordination with State schedules.  If a successful stack test is the only way to show compliance, the facility faces the Hobson’s Choice of shut down or, if it continues to operate, the possible inference of continuing violations (and fines).


In short, this case will be interesting to follow because it highlights the real world difficulties that arise from the regulatory requirement to test under unrealistic, maximum, worst case conditions that do not correspond to day to day operations.  While Shelly may be correct that it is improper to assume non-compliance during continuing, business normal operations after a failed stack test that proceeded under artificial conditions, there remains another difficult question for Shelly:  how to re-establish compliance in a mutually satisfactory way.  There is no doubt that the State regulatory authorities would balk at any ruling that would allow a regulated source unilaterally to change or curtail operations to attain compliance.

 

For questions and comments on this article, please contact Michael Hardy.

The National Environmental Policy Act: New Mexico District Court Dismisses Challenge to Nuclear Pit Facility Based on Doctrine of “Prudential Mootness”

Posted on September 13, 2011 by Thomas Hnasko

Thomas M. Hnasko

A federal district judge in New Mexico has dismissed the Los Alamos Study Group’s (the “Study Group’s”) complaint challenging the United States Department of Energy (“DOE”) and the National Nuclear Security Administration’s (“NNSA”) efforts to construct the new Chemistry and Metallurgy Research Replacement Nuclear Facility (“CMRR-NF”) at Los Alamos, New Mexico.


Despite evidence presented by the Study Group that the project had changed so dramatically since the original NEPA analyses, and that defendants had acknowledged in their draft Supplemental Environmental Impact Statement (“SEIS”) that the originally-approved CMRR-NF project could no longer be built, the federal court nonetheless held that the doctrine of “prudential mootness” supported dismissal of the NEPA challenge because defendants had allegedly changed their policies during the lawsuit and were now conducting a SEIS to rectify any NEPA deficiencies with the project.


The Study Group pointed out at the hearing on defendants’ Motion to Dismiss and the Study Group’s Motion for Preliminary Injunction that the eight-year old EIS did not consider, mention, or remotely authorize the existing project.  The evidence presented by the Study Group also demonstrated that defendants had issued final design contracts for their preferred alternative, that those contracts required the final detailed designs for the project to be “construction-ready,” and that defendants were considering no other alternatives to the massive venture.  Moreover, even the draft SEIS produced by the defendants at the hearing acknowledged that the original project, selected from an EIS prepared in 2003, could no longer be built because of seismic conditions and other geologic constraints, and would be discarded as a “no-action” alternative.


The project as originally conceived called for a pit facility to be built no deeper than 50-75 feet below grade.  Based on the criteria examined in 2003, the 2004 ROD stated that:  “The environmental impacts of the preferred alternative” will be “minimal” and “small.”  Since the 2004 ROD, however, the project has undergone substantial changes.  The original budget for the Nuclear Facility was estimated at $350-$550 million.  The CMRR-NF, as now proposed, has changed from a structure to be built to a depth of 50 feet, to a structure requiring an excavation to 125 feet, with the bottom 50-60 feet of the hole filled with concrete.  The concrete now needed is 375,000 cubic yards, up from 3,194 cubic yards as originally estimated.  This is more concrete than was used for the Big-I Interchange in Albuquerque, or for the Elephant Butte Dam in southern New Mexico.  The steel needed is now 18,539 tons, up from 242 tons.  That is roughly the equivalent of the Eifel Tower.  In short, the present iteration of the Nuclear Facility dwarfs the Manhattan Project and will be the largest construction project in the history of the state of New Mexico.


Despite these fundamental changes, the Department of Justice successfully persuaded the District Court that it remained open to alternatives and was not irrevocably committed to the present iteration of the Nuclear Facility.  According to DOJ attorneys, alternatives were being considered because DOE had not yet decided just how deep the hole should be, i.e., whether it should be 125 feet as reported, or whether it could be reduced to around 80 feet.  The Study Group’s counsel countered that this was not an examination of alternatives, but rather design modifications to a single, pre-determined alternative reached without NEPA support.


 The district court accepted the DOJ’s arguments and reasoned that defendants could continue with their present project so long as additional NEPA compliance was achieved after the fact and no physical construction on the project had yet occurred.  The Study Group has appealed to the Tenth Circuit Court of Appeals, where the primary issue will be whether a federal agency may implement a major federal action and avoid an injunction under NEPA by claiming that additional NEPA analyses, through the vehicle of a SEIS, somehow render the already-chosen project compliant with NEPA’s directive that detailed design or construction activities should not take place until an EIS examines viable alternatives and a  ROD authorizes the federal action.

Any questions or comments should be directed to Thomas M. Hnasko.

 

EPA Denies Petition for Nutrient Criteria Rulemaking for the Mississippi River Basin

Posted on September 7, 2011 by Ridgway Hall

On July 29, 2011, EPA denied a 2008 petition by thirteen environmental organizations to develop and promulgate numeric nutrient water quality criteria for any of the 50 states where such criteria do not exist, or at least promulgate such criteria for the Mississippi-Atchafalaya River Basin (MARB) and the Northern Gulf of Mexico (31 states) as well as total maximum daily loads (TMDLs) for nitrogen and phosphorus for the Mississippi River and its tributaries. 

EPA agreed that nitrogen and phosphorus pollution “presents a significant water quality problem facing our nation” which is damaging ecosystems and public health and causing significant adverse economic consequences.  However, EPA stated that its clear preference for addressing nutrient water quality problems is by working with states, other federal agencies (including USDA and USGS), and stakeholders at the regional and community levels, as it has been doing throughout the MARB for a number of years.


 In denying the petition, EPA placed substantial reliance on its March 16, 2011 memorandum entitled Working In Partnership With States To Address Phosphorus and Nitrogen Pollution Through Use of a Framework For State Nutrient Reductions (Framework Memo).

The Framework Memo was issued by Nancy Stoner, EPA’s Acting Assistant Administrator for Water, to EPA’s Regional Administrator, the Directors of all state and tribal water programs, and others. In her transmittal Memorandum she said  “The amount of nitrogen and phosphorus pollution entering our waters has escalated dramatically” over the past fifty years, due in particular to stormwater runoff, municipal wastewater discharges, agricultural livestock activities and row crop runoff. She added, "Nitrogen and phosphorus pollution has the potential to become one of the costliest and the most challenging environmental problems we face."  Stoner urged each region to use the Framework Memo to work closely with the states and “engage all sectors and parties" in a major effort to reduce this pollution, including development of numeric nutrient criteria based on scientific information at the local and watershed levels. 


The Framework Memo calls upon states to identify and prioritize watersheds where nitrogen and phosphorus loadings are significant and to set loading reduction goals based on best available information.  These include establishment of numeric criteria, TMDLs, reasonable timetables for achieving compliance with water quality standards and collaborative efforts to identify and implement best management practices (BMPs) to reduce the loadings.  No doubt to the chagrin of those who make a living by demonizing EPA as a heavy handed bureaucracy, the Framework Memo is quite deferential to the states, recognizing their lead role under the CWA in setting water quality standards and TMDLs. The Memo emphasizes collaboration, prioritized targeting of technical and financial assistance and the setting of “reasonable” milestones based on a consultative process involving all relevant stakeholders. 


If there is a flaw with the Framework Memo it is the absence of guidance to the regions on what to do when states fail to take reasonable measures to curb nutrient pollution.  One is left to guess at this based on a single sentence in the Stoner transmittal memo which states that EPA “will retain all its authorities under the Clean Water Act.”  By that she presumably means that if states consistently fail to set nutrient criteria, develop and implement TMDLs and require reasonable measures towards compliance, EPA may step in and do it for them, but only if all else has failed.


EPA’s  denial of the MARB petition seems reasonable because substantial activities had been accomplished or were in progress at the state and local level.  For example, EPA, USDA and USGS were already leading regional initiatives with state agencies to address nutrient problems in the Mississippi River Basin and the resulting oxygen-starved “dead zone” in the Gulf of Mexico.  The 31 MARB states have listed over 10,000 nutrient-related water quality impairments and developed over 5,000 nutrient-related TMDLs designed to achieve compliance with water quality standards.  Approximately 4,400 of these were developed by the states and 682 by EPA.  EPA cited extensive efforts at the state, local and watershed levels, including CWA Section 319 watershed plans to address nutrient issues.  While EPA noted that it had set federal numerical nutrient criteria for the State of Florida, its general policy has been to encourage states to do this in the first instance.


EPA’s July 29 decision letter and the Framework Memo, taken together, provide useful guidance for practitioners on how EPA plans to approach this complicated set of legal, technical, practical, and political issues in the future.

 

*  Ridge Hall is Vice Chair of the Chesapeake Legal Alliance and can be reached at ridgehall@gmail.com.

Nexus Under the N.J. Spill Compensation and Control Act

Posted on September 3, 2011 by William Hyatt

Many practitioners, along with the New Jersey Department of Environmental Protection, assumed, until recently, that the standard of liability under the New Jersey Spill Compensation and Control Act (Spill Act) was more liberal than the comparable standard under the federal analogue, CERCLA.  A recent decision of the Appellate Division of the New Jersey Superior Court, however, appears to have called that assumption into question.  New Jersey Department of Environmental Protection v. Dimant.

The case involved a fairly classic fact pattern in which PCE ground water contamination could have been caused by a number of different dry cleaning establishments.  The relevant provision of the Spill Act provides that “any person who has discharged a hazardous substance, or is in any way responsible for any hazardous substance, shall be strictly liable, jointly and severally, without regard to fault, for all cleanup and removal costs no matter by whom incurred.”  After a bench trial, the lower court ruled that the State “had not proved a nexus between a discharge by [the only remaining] defendant and the contamination” and dismissed the complaint.  The State sought to amend its complaint to assert direct claims against several third-party defendants, but the trial court ruled it was too late. 

 
 On appeal, the State argued that under the language of the Spill Act, “a direct causal connection between the discharge and the damages need not be established.”  In making this argument, the State relied on the language of CERCLA, which the State claimed “requires no direct causal connection between a defendant’s release or threatened release of hazardous substances and the plaintiff’s incurrence or response costs” and the earlier admonition of the State Supreme Court that even parties remotely responsible for causing contamination are liable under the Spill Act.  The Appellate Division found the State’s reliance on CERCLA to be “misplaced,” on the ground that CERCLA case law still requires a connection between a release of a hazardous substance and the incurrence of response costs.  The Court noted that Spill Act case law, up until then, had focused on the connection between the discharger and the offending discharge, and that “[a]lthough none of the Spill Act cases expressly state the necessity for further proving a ‘nexus’ between a discharge and damages resulting from the contaminated discharge, such a requirement is implicit in these holdings.”  The Court found support for that conclusion from the statutory definition of the term “discharge,” which “refers to resultant damage[s].”  The Court then held that “[a]s is plain from that definition, some nexus between the use or discharge of a substance and its contamination of the surrounding area is needed to support a finding of Spill Act liability.”

A subsequent Appellate Division decision followed the reasoning of Dimant. Voellinger v. Electro-Coatings, Inc.; See also, Magic Petroleum Corp. v. ExxonMobil Corp.

These decisions would appear to make it more challenging for the State to obtain liability judgments under the Spill Act, especially in those common cases where tracing the contamination back to its source is problematic.  That challenge is avoided under CERCLA, under which the government need only prove a nexus between the covered person and the facility from which there is a release, and a separate nexus between the release (not the covered person or the covered person’s hazardous substances) and the incurrence of response costs.