Congress Seeks to Reverse EPA’s Utility Climate NSPS

Posted on February 29, 2012 by Deborah Jennings

By Deborah Jennings and Andrew Schatz

In the wake of expected Greenhouse Gas New Source Performance Standards (NSPS) for Electric Generating Units pursuant to Section 111 of the Clean Air Act, Congress has shown some early resistance.  On November 4, 2011, EPA submitted to the Office of Management and Budget (OMB) its proposed rule for regulatory review.  The proposed rule would require new and modified electric utilities to meet potentially stringent performance standards and emissions guidelines for greenhouse gases at a level that has been “adequately demonstrated” by existing technology.  42 U.S.C. § 7411(a)(1).  Although the stringency of such standards is uncertain, they could require installation of expensive technology controls for fossil fuel combustion power plants. 

In response, a group of 221 Congressmen submitted a letter on February 23, 2012 to OMB urging the White House to bar EPA from issuing its proposed NSPS rule.  The letter cited, among other things, concerns that the rules could require installation of costly technology, such as carbon-capture and storage, which they feared would increase electricity costs.  The 221 figure is significant, because it constitutes a majority of the House of Representatives, who along with the Senate, could pass a resolution overturning the rule (with Presidential approval or Congressional override of a veto) under the Congressional Review Act (CRA), 5 U.S.C. §§ 801-808.

Yet, history suggests it is very unlikely that Congress will reverse an EPA climate change regulation using the Congressional Review Act.  For starters, the CRA allows Congress to pass a disapproval resolution seeking to reverse a recently promulgated federal regulation by a simple majority vote (no filibusters) within 60 days of receiving the final rule or its date of publication in the federal register.  Thus, Congress has a very short-time frame to pass such resolutions in both the House and the Senate.  Moreover, the President can still veto the disapproval resolution.  At that point, Congress would need a two-thirds majority to override the veto.  In fact, Congress has only successfully used the CRA once, overturning a Department of Labor rulemaking on ergonomics passed in the waning days of the Clinton Administration. 

Such a scenario could shape up this time around.  EPA originally planned on issuing the proposed utility standards in July 2011 and the final standards in May 2012.  Since EPA has yet to issue its proposed rule, a final rule may not be expected until late 2012 or early 2013, at the conclusion of President Obama’s first term.

STATUTORY LIMITATIONS ON OHIO EPA’S ABILITY TO RECOVER COSTS

Posted on February 28, 2012 by Ronald R. Janke

A recent enforcement decision concluded the defendants did not have to pay response costs covered by an administrative consent order because the Ohio EPA lacked statutory authority to recover such costs.  The opinion affirmed the trial court’s denial of a claim for response costs  the Ohio EPA had incurred with respect to property owned by Mass Realty, which had failed to comply with an Ohio EPA administrative consent order it had signed when it acquired the property.  The order required Mass Realty to operate and maintain an existing groundwater gradient control system and to pay the Ohio EPA’s past and future response costs.  Mass Realty eventually failed to operate the system, and the Ohio EPA brought on enforcement action to impose civil penalties and to recover its response costs that had risen to about $116,000.

The appellate court denied the claim for response costs, which included “payroll costs, travel costs and enforcement-related costs” despite the fact the administrative consent order Mass Realty signed expressly obligated the company to pay response costs.  The order broadly defined the covered costs as “all costs including, but not limited to, payroll costs, contractor costs, travel costs, direct costs, indirect costs, legal and enforcement-related costs, oversight costs, laboratory costs, the costs of reviewing or developing plans, reports, and other items pursuant to these Orders, verifying the Work, or otherwise implementing or enforcing these Orders.”

Agreeing with Mass Realty’s argument that the Ohio EPA lacked statutory authority to collect the claimed response costs, the court concluded such costs were well beyond the scope of the statutory cost recovery provisions, which authorizes recovery of “the cost of investigation and measures performed, including costs for labor, materials and any contract services.” 

The court also rejected the Ohio EPA’s second statutory basis for issuing the order and recovering the costs pursuant thereto.  The agency noted Ohio law authorizes the agency to “enter into contracts or agreements” in furtherance of Ohio’s environmental statutes.  The court rejected this argument because it found the document that Mass Realty had signed was an order and not a contract or agreement within the meaning of the statute.  The court similarly rejected the Ohio EPA’s further arguments it could collect response costs either due to implied powers under other statutory authority or simply as a valid contract between two entities.  Noting the Ohio EPA “cannot extend its powers beyond those authorized by statute” and finding no statutory provision expressly authorizing the collection of the response costs, the court affirmed the trial court’s judgment.

Is the Era of “Enforceable Guidance” Coming to an End?

Posted on February 24, 2012 by William Hyatt

Typically, EPA guidance contains a “disclaimer” that it does not impose legally binding requirements and that the agency retains the discretion, on a case-by-case basis, to adopt different approaches.  In practice, however, EPA tends to require strict adherence to its guidance as though the guidance had been adopted as a binding regulation.  State regulatory agencies have followed the same or similar patterns.  The practice avoids the notice and comment protections of the Administrative Procedure Act and its state counterparts, denies access to the courts to challenge unlawful guidance, and creates uncertainty in the regulated community. Recently, however, New Jersey has signaled what may be the beginnings of a departure from that approach. 

In January, 2012, after years of advocacy by the regulated community, the New Jersey Legislature adopted Assembly Bill No. 2464, which prohibits the use of guidance documents that have not been adopted as rules, unless the guidance is posted on the agency’s website.  On January 17, 2012, Governor Christie signed A. 2464 into law.  P.L.2011, c.215 (N.J.S.A. 52:14B-3a).  Under the bill, even published guidance cannot impose new or additional requirements not spelled out in state or federal law or rules that the guidance is intended to clarify.  Most importantly, guidance not promulgated as a rule cannot be used as a substitute for state or federal law or rules for enforcement purposes.

This issue came to a head when the N.J. Department of Environmental Protection adopted rules implementing the recently enacted Site Remediation Reform Act, N.J.S.A. 58:10C-1 et seq. (SRRA), best known for creating a licensed site remediation professional program. The rules explicitly made NJDEP guidance enforceable.  That guidance, which contained a number of provisions the regulated community thought were extreme, had not undergone the notice and comment process required by the state APA. 

Now, NJDEP finds itself in an awkward position, having adopted rules which run counter to the newly adopted statute and having relied on the enforceability of its guidance to implement the SRRA.  As of this writing, the agency has not publicly disclosed how it intends to cope with this awkwardness.  It will be interesting to see whether Congress and the legislatures in other states follow the lead of A. 2464.

The Fate of Georgia EPD’s Antidegradation Policy is Muddier than Ever

Posted on February 23, 2012 by Richard Horder

Current federal law requires states to develop and adopt a statewide antidegradation policy to protect existing in-stream uses for high quality waters.  Georgia has done so under Rule 391-3-6-.03.  Georgia’s antidegradation policy describes what requirements must be met before the State issues a permit under the National Pollutant Discharge Elimination System (“NPDES”) and allows a wastewater point source (i.e. wastewater treatment plan) to discharge pollutants into surface waters.  However, in apparent response to the U.S. Environmental Protection Agency’s (“EPA”) potential revision of its requirements for state antidegradation policies and an Administrative Law Judge’s recent ruling, the Georgia Environmental Protection Division (“EPD”) published proposed amendments to its antidegradation policy in September 2011.

In its proposed amendments, EPD attempts to set out exactly when the antidegradation review process is triggered and what an applicant requesting a new or expanded point source discharge must demonstrate to obtain the permit.  EPD’s proposed rule and related guidelines explain the three basic steps as follows: (1) applicant may demonstrate that proposed discharge will not result in “significant lowering of water quality” (if satisfied, no antidegradation analysis is required); (2) if water quality is significantly lowered, applicant must demonstrate that discharge will accommodate important social or economic development; and (3) applicant must demonstrate that no reasonable alternatives exist that would provide the needed wastewater capacity without authorizing a new or expanded wastewater discharge into surface waters.  The key to this new procedure is the definition of “does not significantly lower water quality.”   Specifically, if the proposed discharge of a pollutant is 10% or less than the remaining assimilative capacity for that pollutant in the receiving stream, then the new discharge per se “does not significantly lower water quality” and no antidegradation analysis is required.  These amendments appear to respond to EPA’s concerns over EPD’s implementation of an antidegradation policy, and clearly appear to respond to the ALJ’s decision in Upper Chattahoochee Riverkeeper, Inc. v. Forsyth County, Georgia

In September 2010, Upper Chattahoochee Riverkeeper, Inc. (“UCR”) filed a petition challenging the issuance by EPD of an NPDES permit (“Permit”) authorizing Forsyth County to discharge 6 million gallons per day (“MGD”) of wastewater into the Chattachoochee River from the County’s existing waste water treatment facility and the new Shakerag facility.  The Permit set limits of 200 colony-forming units per 100 milliliters (“cfu/100mL”) and 0.3 milligrams per liter (“mg/L”) for fecal coliform bacteria and phosphorous, respectively.  UCR claimed that the Permit, specifically the expanded limits, threatened the present and future health of the Chattahoochee River without EPD having undertaken a proper study, modeling or antidegradation analysis to show that the degradation of the river was necessary to accommodate Forsyth County’s economic and social development. 

In a decision found later to be overreaching, the ALJ held that any lowering of water quality in the receiving water triggers an antidegradation review and such review must analyze both the technical and economic feasibility of any alternatives, as well as a no-discharge permit alternative.  The ALJ made this conclusion in part by referencing EPD’s failure to define certain terms and therefore the ALJ adopted the EPA’s guidelines.  More surprising, the ALJ also adopted the permit discharge limits suggested by UCR which were much lower than those in the original permit or even those allowed for recreational waters by Georgia’s Department of Natural Resources.  The ALJ then remanded the permit to the Director of EPD for reissuance with revised monthly discharge limits of 23 cfu/100mL for fecal coliform bacteria and 0.08 mg/L for total phosphorous.   

Forsyth County appealed to the Superior Court of Forsyth County which reversed the ALJ’s decision finding that the ALJ had exceeded her authority.  The Court concluded the ALJ could not create an enhanced review by wholesale adoption of EPA guidelines nor set specific effluent limits.  EPD’s recent proposed amendments state clearly that effluent limits cannot be set pursuant to an antidegradation analysis, but only by EPD pursuant to Rule 391-2-6-.06.  The Court remanded the matter to the ALJ, ordering the antidegradation review standard be applied as codified in EPD’s implementing procedures without reference to EPA guidance documents. 

However, the battle is not over as UCR has appealed this decision to the Georgia Court of Appeals. As of this writing, both parties have submitted their briefs for review and oral argument is yet to be set.  In light of EPD’s recent proposed amendments, this decision is one to watch as the appellate court’s holding could have a significant impact on restrictions in future NPDES permits.

The National Environmental Policy Act: The National Nuclear Safety Administration Reverses Course and Concedes the Existence of Reasonable Alternatives to the Proposed Six Billion Dollar Nuclear Pit Facility

Posted on February 22, 2012 by Thomas Hnasko

After dismissal of The Los Alamos Study Group’s (the “Study Group”) 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 – based on the absence of any Environmental Impact Statement (“EIS”) analyzing the facility and its alternatives – the Study Group appealed the decision to the United States Court of Appeals for the Tenth Circuit.  The Study Group claims on appeal that, regardless of promises by the federal defendants to conduct more NEPA paperwork, a major federal action cannot be implemented unless it has been analyzed in an applicable EIS and authorized by a record of decision (“ROD”).

In the Tenth Circuit, the federal defendants filed a motion to dismiss, claiming the appeal was moot because the federal defendants had issued, after the lower court’s decision, a Supplemental EIS (“SEIS”) authorizing the current CMRR-NF project.  The federal defendants stated in the SEIS that, although the original CMRR-NF as analyzed and authorized by a 2003 EIS and 2004 ROD could no longer be built due to significant changes and seismic conditions, this deficiency was cured by the 2011 SEIS authorizing the current iteration of the project.  The Study Group responded to the motion to dismiss by stating that, under NEPA, no federal project can be implemented unless and until an applicable EIS has been performed and no EIS, with an analysis of current alternatives, supported the current project.  The Tenth Circuit sided with the Study Group, denied the motion to dismiss, and directed the parties to proceed to briefing on the merits.  Briefing is now completed, and the matter awaits oral argument.

While the appeal was pending, the Study Group filed yet another suit against the federal defendants, challenging the continual implementation of the project and the absence of reasonable alternatives in the 2011 SEIS.  The federal defendants have answered the complaint in the second suit and the parties were in the process of negotiating pre-trial procedures, when the matter took an unusual turn.

On Monday, February 13, 2012, NNSA abruptly announced that it would be “deferring the construction of the Chemistry and Metallurgical Research Replacement (“CMRR”) facility and meeting plutonium requirements by using existing facilities in the nuclear complex.”  The use of existing facilities by NNSA is an alternative which the Study Group vigorously advocated in the lower court prior to dismissal of the first case, in the Tenth Circuit Court of Appeals, and also in the second suit.  The available facilities, as a reasonable alternative to the 2011-12 CMRR, include sharing workload with Lawrence Livermore National Laboratories and other plutonium-capable facilities.  Moreover, in the event additional storage is needed for plutonium or special nuclear materials, the Device Assembly Facility in Nevada remains available for that purpose.

Since NNSA’s adoption of the Study Group’s position, the relative legal positions of the parties are unclear.  Although NNSA has not abandoned the CMRR project altogether, it has stated the project will be deferred for at least five years (after FY 2013).  Such a deferral would mean CMRR would not be built until at least 2018, some fifteen years after the original 2003 EIS authorizing a much smaller version of the project, and at least seven years after the issuance of the 2011 SEIS seemingly ratifying the NNSA’s decision to build the $6 billion project.  Under these circumstances, the Study Group will likely argue that no further activity can be taken on any aspect of the CMRR facility based on an antiquated EIS that could not possibly consider the myriad alternatives existing today, and certainly not those that will exist in or after 2018.  In this regard, both cases appear ripe for a declaration that a fresh EIS must be performed, together with applicable scoping, prior to any commitment to a project that may or may not be built at some unspecified time in the future.

Obama Budget Would Cut Superfund by 6%: How About A New Approach?

Posted on February 17, 2012 by Seth Jaffe

According to a report in February 15’s Greenwire, President Obama’s proposed budget would reduce Superfund spending by 6%, from $565 million to $532 million.  I still don’t understand why Obama, particularly with Cass Sunstein still at OMB, hasn’t turned this problem into an opportunity.

I know I’ve flogged this one before, but a significant part of the explanation for the size of the Superfund budget is related to CERCLA’s status as the last bastion of command and control regulation.  Everyone who practices in this area could provide endless examples of the almost unbelievable extent of micromanaging indulged in by EPA and its consultants.  Even where EPA is recovering oversight costs, such an approach taxes the system. 

(And don’t we care about those unreasonable costs being passed on to PRPs?  Oops.  I forgot.  They’re the bad guys.  Don’t care if they incur needless costs.)

Several states have now successfully privatized their state superfund programs, saving both private and public sector funds, without any decrease in environmental protection.  Now’s the time for feds to seize the opportunity presented by the budget cuts to change the way federal cleanups get done.

Michigan Court Imposes New Duty to Disclose on Real Estate Agents

Posted on February 16, 2012 by Michael Hockley

In Alfiero v. Bertorelli, the Michigan Court of Appeals affirmed a jury verdict holding a real estate agent liable under a theory of silent fraud and negligent misrepresentation for the failure to disclose environmental contamination beneath an abandoned factory that was rehabilitated into condominiums.  This decision raises the duty of care for real estate agents in transactions involving property where there are known past environmental issues.

Plaintiffs sued both the seller and its agent after learning the condominium unit plaintiffs’ purchased had not been properly decontaminated, contrary to statements in a sales brochure and newspaper article the agent provided to plaintiffs in response to plaintiffs’ inquiry about the status of past environmental contamination at the property.  The real estate agent relied upon information provided by seller and argued that although a seller has a duty to disclose to a buyer, that duty does not extend to the seller’s agent, and the agent should not be liable for seller’s misrepresentations. 
 
The unit was located in a former factory that had been contaminated with trichloroethylene (“TCE”).  During the conversion of the factory into condominiums, a TCE vapor barrier was installed, but the site was never properly decontaminated.  Plaintiffs believed that the site had been properly cleaned up because of statements to that effect in the newspaper article and sales brochure provided to them by the real estate agent in response to buyers’ inquiries concerning past contamination.  Plaintiffs purchased the condominium in reliance on those representations without conducting independent due diligence. 

The appellate court ruled in favor of plaintiffs on the grounds of common law fraud or fraudulent misrepresentation, noting that the elements are (1) a false representation of a material fact with the intention of reliance by plaintiffs; (2) defendant knew the representation was false or was made with reckless disregard for its accuracy; and (3) plaintiff actually relied on the representation and suffered damages as a result. (M&D Inc. v. McConkey). The court further found silent fraud is essentially the same except it is based on the defendant withholding or suppressing a material fact that he or she was legally obligated to disclose rather than making an affirmative representation. 

Because both silent fraud and negligent misrepresentation require that a defendant owe a duty to the plaintiff, defendants argued that previous Michigan decisions did not impose on an agent a per se duty of disclosure to buyers and that such duty instead lies solely with the sellers.  The court held that although that is the general rule, when a buyer has expressed a concern about a particular statement, a duty to disclose may arise solely because of the buyer’s expressed interest or direct inquiry to the agent.  Defendants also argued there cannot be fraud if the party claiming to be defrauded had an independent means to determine the truth of the matter.  The court again acknowledged the general rule but held that it is not an absolute rule, stating it is “only applied where plaintiffs ‘were either presented with the information and chose to ignore it or had some indication that further inquiry was needed.’” 

The agents provided plaintiffs with a sales brochure stating that the site had been cleaned up.  When plaintiffs further inquired to the agents about the state of the cleanup, the agents referred plaintiff to a newspaper article reporting that the building had been decontaminated.  Based on those statements, the court found that plaintiffs had no duty of further inquiry and could reasonably rely upon information provided by the agent. 

Nevertheless, the court issued a comparative negligence instruction to the jury, and the jury determined that Plaintiffs’ decision not to obtain an environmental inspection knowing that there had been contamination in the past made Plaintiffs partially at fault. 

This decision reinforces the duties on both sides of a real estate transaction (1) to make adequate and accurate disclosures, on the part of the seller and its agents, and (2) to make reasonable environmental inquiries on the part of the buyer, notwithstanding seller’s statements.  Even though a real estate agent as a general proposition may not be responsible for the seller’s representations concerning a property’s environmental status, a duty is triggered when a buyer makes specific inquiry concerning a factual representation about the property and the agent provides additional information to buttress the seller’s representations. 

The lesson to be gleaned from this case is simple:  a seller’s agent should conduct his or her own due diligence concerning statements about the remediation of environmental contamination when the property has known or suspected past contamination.  Similarly, even for residential properties, buyers have an obligation either to conduct independent verification of seller’s statements concerning environmental conditions or to seek contractual representations and warranties from the seller concerning such conditions. 

BLM’s Balancing Act: Agency Extends Increased Pre-Listing Protection to Species, Raising Questions for Mineral Leaseholders

Posted on February 15, 2012 by Pamela Giblin

Recent actions taken by the Bureau of Land Management (BLM) to protect species on BLM-managed lands, before those species have been listed under the Endangered Species Act (ESA), raise questions about the evolution of BLM’s role in species protection and the impact this evolved role may have on minerals leasing and development on BLM-managed lands. 

BLM is charged, under the Federal Land Policy and Management Act of 1976, with developing Land Use Plans that make its public land and resources available under the principle of multiple-use, but at the same time, conserving special status species and their habitats.  The agency’s actions with respect to two species, the Greater Sage-Grouse and the Dunes Sagebrush Lizard, are indicative of BLM’s trajectory in how it intends to balance its roles as species-protector and minerals-manager on public lands.

A December 27, BLM-issued internal Instruction Memorandum (IM) provides interim management policies and procedures to protect the Greater Sage-Grouse on BLM-managed lands in the Western United States with the expressed goal of potentially avoiding an ESA listing.  The Greater-Sage Grouse is currently not protected under the ESA, its listing having been designated as “warranted but precluded” by the U.S. Fish and Wildlife Service (FWS) in March 2010.  The “warranted but precluded” listing decision concluded that existing regulatory mechanisms in the BLM’s Land Use Plans were inadequate to protect the species, which is found in up to 47 million acres of BLM-managed land. 

The December IM makes it clear the new guidelines apply to both proposed and existing leases.  The IM does recognize holders of existing mineral leases do have valid rights entitling them to certain development activities, but the guidance also indicates BLM will attempt to provide maximum protection to the Sage-Grouse within the bounds of those leases.  For example, for fluid mineral leases, the IM states BLM may issue written orders requiring “reasonably protective measures consistent with the lease terms.”  Further, when an existing leaseholder requires a new permit for minerals development, BLM plans to impose “reasonable” conditions in the permits that are likely to be more protective than the stipulations and restrictions currently identified in approved Land Use Plans.

BLM expressed a similar stance in the development of resource management plans in New Mexico to address the Dunes Sagebrush Lizard.  In that instance, BLM noted "holders of existing oil and gas leases have valid rights for development of their leases" but asserted in responses to public comment that BLM "can withhold approval of prospective well locations on existing leases" or address candidate species through existing lease stipulations. 

With FWS experiencing increasing backlogs in addressing ESA listing petitions, it seems likely there will be many more species that, like the Greater Sage-Grouse and the Dunes Sagebrush Lizard, are found to need habitat protection but cannot be allotted resources by FWS to do so.  If BLM continues to step in and afford protections on the level it has in the case of these two species, effects on minerals leasing in BLM-managed lands could be far reaching.  Minerals leaseholders on BLM lands should keep an eye on how far BLM ultimately stretches the bounds of existing mineral leases to protect the Greater Sage Grouse and Dunes Sagebrush Lizard, because BLM’s approach to these species may be indicative of a trend that will apply to many more species in the future.
     

Section 316(b) of the Clean Water Act – Cooling Water Intake Requirements

Posted on February 8, 2012 by Philip Ahrens

Section 316(b) of the Clean Water Act is a model of statutory simplicity:  “Any standard established pursuant to section 301 or section 306 of this Act and applicable to a point source shall require that the location, design, construction, and capacity of cooling water intake structures reflect the best technology available for minimizing adverse environmental impact.”  The effort by EPA to implement rules to interpret Section 316(b) approaches the opposite extreme.

The latest rulemaking effort began on April 20, 2011 when EPA published a proposed rule to protect fish from being killed at water intake structures that withdraw at least two million gallons of water per day from waters of the United States and use at least 25% of the water they withdraw exclusively for cooling purposes. 

Pursuant to a settlement agreement with the environmental group Riverkeeper and other organizations, EPA is required to issue the revised rule by July 27, 2012.  In the proposed rule, EPA agrees to impose flexible technology standards to deal with fish trapped against intake structures or drawn into cooling water systems.  The rule requires facilities to obtain an NPDES permit reflecting best available technology in the design, location and construction of cooling water intake structures to minimize impingement (trapping of fish against intake screens) and entrainment (drawing of fish into a cooling water system). 

The proposed rule has been attacked by the Natural Resources Defense Council and Riverkeeper, among other environmental groups.  The rule has also been criticized by industry.

On January 25, 2012, EPA submitted a draft notice of data availability that could lead to amendments of the proposed rule.  Notwithstanding the fact the rule has yet to be adopted and EPA has acknowledged the draft may be amended prior to adoption this summer, EPA staff in Region 1 have sent detailed  information requests to facilities in Maine concerning any cooling water intake structure at those facilities. 

Given the status of the 316(b) rulemaking, why EPA is requesting such information at this time is unclear.  Given the existence of the proposed rule, EPA’s acknowledgement that it may revise the proposed rule and the court-required issuance date of July 27, this rulemaking process bears close scrutiny.

IS IT SOMETHING IN THE AIR OR INSTEAD IN THE WATER? THE ROSE ACRE CASE

Posted on February 7, 2012 by Susan M. Franzetti

A rather surprising turn of events occurred recently in North Carolina, but the underlying reasons still remain unclear.  On January 11, 2012, the North Carolina Environmental Management Commission (“EMC”), by a 4-3 vote, vacated an Administrative Law Judge’s (“ALJ”) decision on summary judgment that the Rose Acre egg farm’s airborne ammonia emissions are not subject to regulation under, and do not require, a National Pollutant Discharge Elimination System (“NPDES”) permit.  The ALJ’s Decision and the parties’ pleadings are available here.The EMC remanded the matter back to the ALJ, August B. Elkins II, for a full evidentiary hearing.  Thus, the case raises anew the question of whether a discharge to air can constitute a point source discharge to navigable waters of the United States which requires a NPDES permit under the Clean Water Act,.  The answer may depend on whether such a discharge is found to remain “in the air” and not make its way by land “into the water.” 

On October 17, 2011, ALJ Elkin found that the Rose Acre facility does not discharge or have the potential to discharge process wastewater (or manure, litter) to navigable waters of the United States.  Judge Elkin’s relied on the March 2011 decision by the Firth Circuit Court of Appeals in National Pork Producers Council v. EPA, in which it held that the U.S. Environmental Protection Agency lacked the authority to require a NPDES permit for a facility that “proposes to discharge” or any facility that has not yet discharged into a navigable water of the United States.  Judge Elkin held that the DENR has no authority to require Rose Acre to obtain an NPDES Permit. 

Rose Acre is the site of 14 high-rise hen houses with a total of four million egg laying hens, located within the Tar-Pamlico River Basin in North Carolina.  Rose Acre operates what is called a “dry-litter facility” that does not directly discharge into any waters.  In 2009, before the Fifth Circuit’s decision in National Pork Producers Council that only CAFOs that actually discharge were required to secure a NPDES permit, Rose Acre applied for a NPDES permit.  The Division of Water Quality of the North Carolina Department of Environment and Natural Resources (“DENR”) issued a NPDES permit to Rose Acre, which included conditions requiring amendment of the facility’s Best Management Plan (“BMP”).  Rose Acre appealed, contending that it no longer needed an NPDES permit as well as challenging a number of the BMP conditions on the grounds that they exceeded the DENR’s regulatory authority.  The ALJ granted Rose Acre summary judgment.

Existing precedent supports the ALJ’s decision.  Both the Second and Tenth Circuit Court of Appeals have ruled that air emissions, even where there is atmospheric deposition into navigable waters, are not regulated by the Clean Water Act.  The Second Circuit so held in its 2000 decision in No Spray Coalition, Inc. v. City of New York, dealing with insecticide spray to eradicate mosquitoes.  In No Spray Coalition, the Second Circuit found that:
       While the trucks and helicopters used to spray insecticides may be point sources…they discharge the    insecticides into the atmosphere and not into navigable waters.  It would be stretching the language of the [Clean Water Act] well beyond the intent of Congress to hold that the de minimus incidental drift over navigable waters of a pesticide is a discharge from a point source into those waters. The fact that a pollutant might ultimately end up in navigable  waters as it courses through the environment does not make its use a violation of the Clean Water Act…To so hold would bring within the purview of the Clean Water Act every emission of smoke, exhaust fumes, or pesticides in New York City.

In 1997, the Tenth Circuit, in Chemical Weapons Working Group v. U.S. Department of the Army, refused to apply the Clean Water Act § 301(f) prohibition against disposal of chemical weapons into waters to smokestack emissions from a chemical weapons incinerator.  The Tenth Circuit emphasized the potential duplication of regulation by the Clean Air Act as well as finding that under § 301(f), Congress clearly intended to authorize the incineration of chemical weapons.  The Tenth Circuit also viewed the attempt to regulate stack emission under the Clean Water Act as contrary to plain old common sense.  (“Although Plaintiffs may be correct in arguing that an object may fly through the air and still be ‘discharged…into the navigable waters’ under the Clean Water Act, common sense dictates that [the] stack emission constitute discharges into the air – not water- are therefore beyond § 301(f) reach.”). 

Similarly, in American Canoe Assn. v. D.C. Water and Sewer Authority, the U.S. District Court for the District of Columbia rejected allegations that the D.C. Sewer Authority violated its NPDES permit by failing to install odor controlling carbon filters on sewer vents.  The court found that attempts to control sewer gas or hydrogen sulfide fumes emanating from sewers in a NPDES permit are “unrelated to the general purposes of the CWA” and unenforceable obligations. 

During oral argument on its challenge to the ALJ Elkin’s Rose Acre decision before a panel of the EMC, the DENR’s counsel appears to have successfully changed the focus of the legal inquiry from what’s in the air to what’s in the water?  In its Exceptions to the ALJ’s Entry of Summary Judgment, the DENR contended that it had not attempted to regulate airborne emissions of ammonia.  Instead, it now contends that Rose Acre does discharge to navigable waters, citing the fact that “with a rain event the feathers and dust from the ventilations fans at [Rose Acre] are flushed into a stormwater pond and then into waters of the State.  The DENR further relied upon the comparative results of surface water monitoring taken before and the Rose Acre hens were stocked, which showed higher levels of ammonia nitrogen, total inorganic nitrogen, phosphorus and fecal coliform in surface water.  Thus, the DENR took the position that although pollutants may initially be discharged “into the air,” if they wind up on the ground and then make their way to a regulated surface water, there is a “point source” discharge that is subject to regulation under the Clean Water Act. 

Rose Acre contends that the DENR’s argument is a post hoc rationalization, without any supporting, credible evidence, to defend its decision to issue the NPDES permit.  In this regard, Rose Acre notes that the ventilation fans in question “are pointed at a ninety degree angle away from a storm water retention pond that is located over one-fifth of a mile away.”  Judge Elkin found that the stormwater pond point source theory was unsupported by the record.  Relying on the holding in National Pork Producers Council that a CAFO is not required to apply for a NPDES permit until there is an “actual discharge into navigable waters to trigger the CWA’s requirements”, Rose Acre contends that the DENR has failed to present any proof of such a discharge. 

If the Rose Acre case proceeds to ruling after the ordered full evidentiary hearing, it will be worth watching to see whether the ultimate decision is based on what’s in the air or what’s in the water (and how it got there). 

LNG Import or Export—Should the Public Care Which?

Posted on February 6, 2012 by Richard Glick

Just a few years ago, the price of natural gas was high enough to encourage development of liquefied natural gas (LNG) import terminals to receive LNG from foreign gas producers and then “re-gassify” such gas before sending it to existing interstate pipelines.  Three such facilities were proposed in Oregon, after a failed attempt to site an LNG terminal in California.  The presumption had been that due to the high capital cost of the terminal and related pipeline, and because of market constraints, there would be but one terminal on the West Coast. 

That dynamic has shifted with discovery of abundant domestic shale gas deposits and attendant lowering of gas prices, and LNG terminal developers are thinking “export,” instead of import.  Should this change in the LNG business model matter to anyone?

Of the proposed Oregon projects, two remain: at the Port of Coos Bay and on the Skipanon Peninsula in Youngs Bay, at the mouth of the Columbia.  The projects have generated controversy, with opponents asserting public safety concerns (i.e. uncontrolled “blast zones”), harm to aquatic habitat, creation of a terrorist target, usurpation of land owner rights along the pipeline route, and all apparently with no benefit to Oregon because the gas may only be shipped to our evil sister to the south, California.  Of course, these are all issues that the FERC and state permitting reviews are designed to uncover, assess and prescribe mitigation for and those processes are incomplete.
 
Natural gas prices have come down to the point that an LNG import facility may no longer make sense.  On the other hand, demand for natural gas in Asia is high, particularly in Japan following the Fukushima nuclear disaster, which in turn raises prices.  Thus, the two remaining Oregon LNG projects are actively considering conversion to export facilities, and there is enough global demand—and plenty of surplus Canadian and U.S. natural gas—that more than one would be needed to make much of a dent in that surplus.  This result has enraged environmental activists, as though it is somehow unfair to change the economic model on which a proposed project is based.

There is nothing about a LNG export facility that is so different—either in form or impact on land or resources—such that it should affect how the public views LNG.  The two concepts have approximately the same footprints, and to the untrained observer, would look the same.  In the case of the Skipanon Peninsula project, tanks are the most prominent structures; import and export tanks are identical, except that an export facility would require only two, whereas an import terminal requires three.  The dock/pier arrangements for import or export facilities are identical.  The two concepts have very similar (and very limited) environmental impacts, all of which will be reviewed in detail in the various state and FERC regulatory processes.  In addition, an LNG export facility would provide four times as many construction jobs (about 10,000 man-years) and almost twice the amount of long-term employment originally anticipated from the project.  The project represents a $5 billion investment in a region with no apparent industrial development alternatives on the horizon, and with property tax rates right around 1%, such a project would infuse approximately $50 million in local annual tax assessments.

There are some who suggest allowing exports of LNG would raise domestic natural gas prices and thereby place the U.S. economy at a disadvantage.  But of course the U. S. participates in a global economy and gas prices are driven by global market conditions.  A commodity will find a market, seeking the highest prices available, wherever it originates.  The U. S. exports approximately 50 million metric tons of grain every year and that probably raises U.S. domestic food prices a little, but would anybody seriously argue that we should stop grain exports?

Markets will determine whether a shift to exporting LNG makes economic sense.  Environmental effects and other public interest issues related to an LNG export terminal and related pipeline projects should be judged on their merits by the federal and state agencies charged to do so. 

WHAT’S IN A LIST? Judicial Review of Agency Decisions Identifying Impaired Water Bodies

Posted on February 1, 2012 by Allan Gates

Section 303(d) of the Clean Water Act requires each state to identify all water body segments within the state that do not meet water quality standards.  The statute requires the states to submit a list of their impaired water body segments to EPA every two years for review and approval.  The decision to list as stream segment as impaired is important because it usually triggers a chain of regulatory consequences, beginning with the preparation of a Total Maximum Daily Load (“TMDL”) study and typically ending with significantly more stringent permit limits for point sources and more robust regulation of non-point sources.

Although the decision to add a stream segment to a state’s 303(d) list is undeniably important, there is significant uncertainty whether the decision is subject to judicial review.  An ACOEL blog entry reported in December 2011 on a Pennsylvania decision which questioned whether Pennsylvania’s issuance of its 303(d) list was an appealable agency action under state law.  Chester Babst, Beware of “Impaired” Surface Water Designations, posted December 10, 2010.

The federal courts of appeals are split on whether EPA’s decisions in reviewing a state 303(d) list are subject to judicial review.  The 8th Circuit has held that a private stakeholder challenge to EPA’s approval of a Missouri 303(d) list was premature and not justiciable because the addition of a segment to a 303(d) list, by itself, did not have any impact on the rights, duties, or property of private parties.   On the other hand, the 9th Circuit has held that a private party had alleged sufficient claims of present injury to have standing to challenge EPA’s approval of California’s 303(d) list. Even after the 9th Circuit’s decision, EPA argued on remand that the scope of judicial review should be narrow because EPA’s role in reviewing California’s 303(d) list was supposedly only one of limited oversight (“[EPA] note[s] that the 30-day limitation on [its] review process demonstrates that [its] ‘role is one of mere oversight’.”  The district court accepted this argument and rejected the challenge to EPA’s review on remand.

It must have been amusing for knowledgeable stakeholders and state water quality regulators to read EPA’s claim that its role is one of “mere oversight” that is strictly circumscribed by a 30-day time limit.   The practical experience of most states has been quite different.  In fact, EPA routinely runs months and even years past the 30-day limit on its review of state 303(d) lists, and it is not at all unusual for EPA to significantly alter the state’s submission, frequently with a supplemental factual record and the imposition of new impairment decisions generated out of whole cloth.

Normally one might think that identifying impaired stream segments would be a simple task of comparing the numbers in the monitoring results for a given stream segment to the relevant numeric water quality standards, and therefore questions of judicial review would rarely be relevant.  In practice, however, the decision to list a segment as impaired frequently can be problematic or even controversial.  To begin with, monitoring results are sometimes subject to questions regarding the adequacy and accuracy of the sampling and analysis.   In many instances the relevant water quality standard is expressed in a narrative rather than numeric form, and therefore the simple comparison of two numbers is replaced by an exercise in subjective judgment.  Even when the basic identification of an impaired segment has been made, there are still choices of priority and timing that can make a great deal of difference in how the impairment decision affects stakeholders.

Given the potential uncertainties that can attend a listing decision, and the gravity of the regulatory consequences that are set in motion by such a decision, it is unfortunate that EPA and some state agencies have displayed such resistance to any form of independent accountability for their decisions.