An "Inside the Fence" Analysis of CO2 Emissions from Fossil-Fueled Power Plants

Posted on March 28, 2016 by Eugene Trisko

On February 9, 2016, the Supreme Court issued a stay of U.S. EPA's Clean Power Plan (“CPP” or "Power Plan,” 80 Fed. Reg. 64,662, October 23, 2015) for reducing CO2 emissions from existing fossil-fueled electric generating units. The Court's action was unprecedented because challenges to the Power Plan by 27 states and numerous utility, business, and labor parties were still being heard before the U.S. Court of Appeals for the D.C. Circuit. West Virginia et al. v. EPA, DC Cir. No. 15-1363. The stay will remain in effect until the conclusion of all litigation against the rule. 

Among the core legal arguments against the Power Plan is EPA's reliance on "outside-the-fence" measures to reduce CO2 emissions. Section 111(d) of the Clean Act calls for EPA to set guidelines for states reflecting a standard of performance for "sources" based on the "Best System of Emission Reduction" ("BSER") that has been “adequately demonstrated.”  EPA defined BSER to include emission reduction actions that could be taken throughout the electric grid, such as limiting generation from coal units while increasing the output of existing natural gas combined-cycle units, and increasing reliance on new renewable energy sources. The data reviewed below show that the standard of performance established for coal-based generating units based on this BSER, 1,305 lbs. CO2/MWh, is not achievable in practice by any conventional coal unit. 

The Power Plan also calls for efficiency improvements at coal units that could reduce CO2 emissions. By adjusting units’ past heat rate data, EPA estimated that potential heat rate improvements of 2.1% to 4.3% were achievable for each of three regions in the U.S.  See 80 Fed. Reg. at 64,789. However, implementing these "inside-the-fence" measures would result in less than 100,000 tons of emission reductions - about two/tenths of one percent - of the overall 413-415 million ton CO2 emission reduction from base case levels projected to result from full implementation of the rule by 2030. See, EPA Tech. Sup. Doc., State Goal Computation, Table 5 (extrapolated to 48-state basis), Aug. 2015; CPP Reg. Impact Analysis at Table 3-5. 

An "inside-the-fence" analysis

EPA's methods for measuring the potential emission reductions achievable through efficiency improvements did not take into account the effects of different coal types on CO2 emissions.  Such "subcategorization" is specifically authorized by Section 111 of the Clean Air Act. This post seeks to open a line of inquiry into an alternative approach to achieving CO2 emission reductions based on the emission characteristics of the best-performing units in the coal fleet and taking into account differences in coal type.

A statistical analysis of CO2 emissions from coal plants was performed using the DOE/NETL 2007 coal plant public data base. This data base contains detailed coal type and emissions control and performance data for 2005. The objectives of the analysis were twofold:

1) To determine whether plants burning different grades of coal (bituminous, subbituminous, and lignite) have sufficiently different emission rates measured in pounds of CO2/MWh to consider subcategorization by coal type; and

2) To assess the potential CO2 emission reductions associated with applying a standard of performance based on the best-performing units in each coal category. 

The NETL data base was sorted to identify coal-fired units likely to remain in operation after implementation of EPA's 2012 Mercury and Air Toxics Standards (MATS) rule (77 Fed. Reg. 9,304, February 16, 2012).  Three screening criteria were applied: unit capacity of 400 MW or greater, current age of 50 years or less, and heat rate of 9,000 BTU/kWh or higher, typical of the performance of conventional pulverized coal boilers.

This sort produced 272 units, totaling 176.7 Gigawatts (GW) of capacity, grouped as follows:

·141 bituminous units, totaling 94.0 GW, with an average emission rate of 2,055 lbs. CO2/MWh;

·110 subbituminous units, totaling 69.5 GW, with an average emission rate of 2,214 lbs. CO2/MWh; and

·21 lignite units, totaling 13.1 GW, with an average emission rate of 2,425 lbs. CO2/MWh.

The total generating capacity represented by these 272 units is comparable to EPA’s projection of 174 to 183 GW of coal capacity remaining in service in 2030, following full implementation of the Power Plan. See, EPA CPP Reg. Impact Analysis at Table 3-12.

Regression analyses performed on the three plant groups assesses the relationship between heat rate (the independent variable) and CO2 emissions per MWh of generation (the dependent variable.) The results are summarized in Chart 1 for all 272 sampled units. The linear regression trend line confirms a moderate positive association between plant heat rate and CO2 emissions (i.e., units with lower heat rates tend to have lower CO2 emissions per MWh, and vice versa.)

Differences among the three coal types measured in average CO2 emission rates per MWh support subcategorization by coal type. As shown in Table 1, the sampled lignite units have an average CO2 emission rate 13% above the sample mean, and 18% above the average for bituminous coal units.  The average emission rate of bituminous units is 4% below the sample mean, while subbituminous coals have an average rate 3% above the sample mean. 

These differences among coal types could justify subcategorization similar to EPA’s MATS rule. MATS provides separate mercury emission limits for low-BTU lignite coals compared with the standard set for bituminous and subbituminous coals (defined by EPA as coals with a heat content of 8,300 lbs. of CO2 per million BTU, or greater.) See, 77 Fed. Reg. 9,304, 9,379.

Illustrative emission rate calculations

The three sample coal groups were analyzed for average CO2/MWh emission rates by quintile (i.e., lowest 20% emitting units, next lowest 20% emitting units, etc.)  Results of this subcategorization analysis are summarized in Table 1.  Assigning the average emission rate in CO2/MWh for the best-performing 20% units of each group of units to the other four quintiles (an approach similar to that prescribed by Congress for section 112 “MACT” standards) reduces the allowed emission rates for each subgroup, and the indicated levels of CO2 emissions measured in tons.

The overall reduction of CO2 emissions for the three coal types is 117 million tons based on 2005 emission rates and tonnages.  These data reflect NOx control retrofits in response to EPA’s 1998 NOx SIP Call, as well as scrubbers and other controls applied to meet CAA Title IV acid rain control limits. However, the data do not reflect additional retrofit control technologies added in response to the 2005 Clean Air Interstate Rule, as well as state laws and consent decrees.  The additional parasitic load associated with add-on controls would increase average heat rates (BTUs per kWh) by reducing net plant generation and increasing CO2 emission rates per MWh.

Additional research and applications

Additional analyses using more recent data are needed to assess the CO2 emission effects of retrofit controls applied since 2005, including those deployed in response to the MATS rule. This research could include additional subcategorization analyses based on metrics such as boiler age, size, and type.

If subcategorization by coal type or other criteria were applied to determine standards of performance for existing fossil-based generating units, states should be provided with flexible implementation mechanisms such as emissions trading and averaging "outside the fence." This would ensure that emission reduction targets could be achieved in a cost-effective manner, without mandating unachievable or uneconomic emission limits for specific units.

The findings of this preliminary analysis are also relevant to the determination of New Source Performance Standards (NSPS) in light of the substantial CO2 emission rate differences among different coal types. EPA chose not to subcategorize by coal type in its NSPS rulemaking under Section 111(b), and issued a uniform performance standard for coal-based generation units of 1,400 lbs. CO2/MWh.  Based on the sample unit data, meeting this standard implies a 42% reduction of CO2 emissions from lignite coals, and a 32% reduction for bituminous coals. Petitions for review of this standard also have been filed before the D.C. Circuit.  North Dakota et al. v. EPA, DC Cir. No. 15-1381.

_______

*The author is an attorney in private practice (emtrisko@earthlink.net) who has specialized in Clean Air Act legislation and regulation since 1980. The coal quality and statistical regression data presented in this post were provided by the author to U.S. EPA staff in the pre-proposal stage of the development of the Clean Power Plan. The analysis set forth here is offered without prejudice to any legal positions by state or non-state petitioners before the D.C. Circuit in West Virginia et al. v. EPA or North Dakota, et al. v. EPA.

 

Table 1.  Summary of CO2 Emission Rates and Potential Reductions by Coal Type for

272 Unit Sample (176,679 MW) Assuming All Units

Meet Top-20% Average Emission Rate of Each Coal Type

 

Avg. Lbs. CO2/MWh

2005

Avg. Lbs. CO2/MWh Top 20% of Units

Pct. Diff. vs. 2005 Avg.

2005 CO2 Emissions (Mil. Tons)

CO2 Emissions @ Top-20% Rate

(Mil.Tons)

CO2  Reduced

(Mil. Tons)

Bituminous

2,055

1,838

-11%

597.4

540.4

-57.0

Subbituminous

2,214

1,973

-11%

498.1

446.0

-52.1

Lignite

2,425

2,235

-8%

114.6

106.7

-7.9

Total

2,148

n.a.

-10%

1,2010.0

1,093.1

-117.0

 

 

Chart 1. Regression Analysis of All 272 Coal Units,

Lbs. CO2/MWh vs. Heat Rate BTU/KWh

Risky Business? Third Party Auditing, Risk Management Planning, And The General Duty Clause: Time to Vote!

Posted on March 25, 2016 by David Tripp

Third Party Auditing may not be the first choice of the estimated 12,000 companies covered by the Clean Air Act Risk Management Plan (RMP) rule. Many of these companies are not traditional "stationary sources" of air emissions, but are warehouses and other facilities that process or repackage chemical products containing toxic or flammable substances. Third Party Auditing is coming to those companies under EPA's proposed RMP rulemaking announced on March 14, 2016, when they have an accidental or "near miss" of a release involving an RMP-regulated chemical.

Why Third Party Auditing? Is it a good thing or a bad thing? It can be a good thing, depending on how the Audit is structured and implemented,. There are several recent judicial consent decrees containing Third Party Audit requirements that are being implemented successfully. EPA's new rule will require Third Party Auditing when there has been a fire, explosion, release or near release of chemicals. Experience with Third Party Audits shows that a well-designed audit protocol with emphasis on improved internal company environmental tracking and management systems can actually create efficiencies in product logistics and cost control.

Some brand-name companies such as PepsiCo use voluntary Third Party Audits to highlight independent audit programs and results:

In 2013, all company-owned plants were assessed against PepsiCo’s global Health and Safety program and, following completion of the audit, each plant developed an improvement action plan. In addition, 65 plants are OHSAS 18001-certified by independent consultants, and 31 facilities in the United States are part of the Occupational Safety and Health Administration Voluntary Protection Program, the industry standard for health and safety.

Is Third Party Auditing Under EPA's New Rule An Expansion of Existing RMP Requirements? Yes. Companies subject to RMP already are required to periodically review their risk plans and update terms each five years, or earlier, when conditions change. Most companies follow that practice. However, EPA cites the 2013 West Fertilizer explosion in West, Texas as one example of the ineffectiveness of existing RMP regulations to prevent a fire and explosion where RMP chemicals are stored or handled. From the West case and others, EPA sees a need for additional strengthening of the RMP rules.

Third party auditing as an enforcement compliance tool is becoming more common. The U.S. v. Tyson Foods Consent Decree (2014) required an independent third party auditor to investigate equipment processes and safety issues. The third party auditor was to evaluate ammonia refrigerant systems at 23 plants in four states, and report directly to EPA on the findings of discrepancies or violations. In addition to RMP requirements, other recent EPA and Department of Justice enforcement cases require injunctive relief in the form of Third Party Audits on RMP and General Duty Clause (GDC) compliance.

How Does the General Duty Clause Become Involved in Third Party Auditing? EPA's RMP amendments occur at a time when interpretation of the CAA Sec. 112(r) GDC by EPA also subjects each stationary source to audit and enforcement based on chemicals in storage. The GDC interpretation does not rely only on the presence of regulated quantities of Extremely Hazardous Substances at a facility and is not limited to enforcement of RMP requirements. GDC requirements focus on unsafe conditions at a facility, and the compliance thresholds arise from potentially applicable regulations, electrical, fire and explosion advisories by the National Fire Protection Association, American Petroleum Institute, American Chemistry Council, industry practice and other health, safety or environmental authorities. Any fire, explosion or injury incident, the reporting of a near miss that might have resulted in catastrophic damage or injury, or an inspector's subjective audit finding of the presence of dangerous conditions from an audit or after-the-fact review may trigger an EPA demand for a Third Party Audit.

Risky Business or Not? Increased use of Third Party Auditors will be required if EPA's proposed changes to the RMP rules are adopted Owners and operators will be required to engage and pay for the services of Independent Auditors when a release of a reportable quantity of regulated chemicals has occurred, or the facility has had a "near miss" incident that might have caused a catastrophic release. Manufacturers in the chemical, paper and oil/coal categories must also undertake a root cause failure analysis, and additional reporting on process hazard analysis following a release or near miss. But under those circumstances, companies facing a demand for a Third Party Audit can take the opportunity to investigate improved process safety, product management and internal management systems, all of which will result in reduced environmental and health risks, and overall cost savings.

Action Items? Get Out and Vote!
Proponents and Opponents of EPA's proposed changes to the RMP rules and requirements for Third Party Auditing can register their position on EPA's rulemaking docket. The deadline for comments is May 13, 2016.

The Limitations on Limited Liability for Environmental Harms for Members of Limited Liability Companies in Connecticut

Posted on March 23, 2016 by Gregory Sharp

The limited liability form of corporate organization generally offers small businesses the favorable tax treatment of a sole proprietorship or partnership, along with protection from personal liability, up to a point.  That protection in Connecticut is far from bullet-proof when it comes to liability for environmental harms.  Business people acquiring potentially contaminated property should ask: If I create a Limited Liability Company to take title to the property, will I be protected from personal liability for a clean-up?  In Connecticut, the answer ranges from “no” to, at best, “it depends.”  This is counter-intuitive to clients who believe they are protected by Connecticut’s Limited Liability Company statute which provides generally that a member of an LLC is not liable for the obligations of the LLC.  See Conn. Gen. Stat. § 34-133 & 134.

The core of the conflict lies in language in the environmental statutes and case law from the state’s courts.  Contrary to the tenor of the LLC enabling statutes, Connecticut’s pollution control statutes were amended in 1995 to include specifically a member of an LLC in the definition of a “person” subject to the issuance of a pollution abatement order.  See Conn. Gen. Stat. § 22a-123.

In addition, the Connecticut Supreme Court in 2001 adopted the “responsible corporate officer doctrine” holding that a corporate officer whose conduct has a responsible relationship to a violation may be held liable for abatement of the violation through an order from the state environmental agency.  See BEC Corp. v. Dept. of Environmental Protection.

In December, 2015, the Connecticut Appellate Court applied the responsible corporate officer doctrine to the sole member of an LLC finding her personally liable for pre-existing contamination at property acquired by the LLC which she created knowing the contamination was present.  See Vorlon Holding, LLC, et al. v. Commissioner of Energy and Environmental Protection.

The risk of personal liability for owners of small businesses contemplating acquisition of environmentally challenged property increases the likelihood that these properties will become, or remain, unproductive “brownfields.”  Fortunately, the legislature has created mechanisms within the last few years to provide funding for site assessments without liability attaching and tools to limit liability to potential purchasers who can meet the legislative requirements.

A more detailed discussion of the evolution of the responsible corporate officer doctrine in the federal courts and its application in Connecticut courts in environmental cases is available in an article by John R. Bashaw and Mary Mintel Miller.

Should Environmental Agencies be able to Revoke Consent Orders Unilaterally?

Posted on March 17, 2016 by Mark R. Sussman

In a highly unusual case that has led to a near unanimous call for legislative change by environmental lawyers in Connecticut, a Superior Court judge ruled that the Connecticut Department of Energy & Environmental Protection (“DEEP”) can unilaterally revoke a consent order that it negotiated with a company requiring the investigation of a contaminated site.  The lawsuit was initially brought by DEEP, among other reasons, to enforce the consent order.  However, after the defendant filed a counterclaim against DEEP alleging that the department had not acted reasonably and breached the order, the department unilaterally revoked the order and moved to dismiss the counterclaim.  The court held that the state statute that authorizes the department to issue, modify, or revoke orders, allows the department to revoke consent orders.  

Although the state agency may have had good reason to revoke the consent order in this case to help it improve its position in the litigation, that decision undermines the public policy in favor of encouraging negotiated settlements in environmental matters.  Most environmental consent orders are carefully negotiated, with give and take on each side.  If a private party knows that the environmental agency can simply revoke a consent order at any time, why would that party make concessions to resolve a dispute through an administrative order on consent?  

The U.S. Supreme Court in United States v. ITT Continental Baking Company long ago recognized that administrative consent orders and judicial consent decrees are in the nature of contracts and should be construed basically as contracts.  Therefore, the federal courts typically place a heavy burden on a party seeking to modify a consent decree.  Even the Connecticut court which ruled that DEEP can unilaterally revoke consent orders questioned the wisdom of such authority.

It remains to be seen whether the Connecticut state legislature will clarify that the state environmental department lacks the authority to unilaterally withdraw from an agreement that it negotiated.   A bill, S.B. 431, was recently proposed by the Judiciary Committee of the State General Assembly to reverse the Superior Court decision. The general assembly has until May 4, 2016, when the session ends, to pass such legislation.   If the legislation does not pass, and DEEP retains such authority, it is likely to find it much more difficult to settle administrative orders on consent in Connecticut.

Recent Developments in Federal Conservation Easements: the Good and (Sort of) Bad News

Posted on March 16, 2016 by Philip Tabas

Federal tax policy greatly influences the donation of conservation easements and thus the contribution to habitat and natural resources that such easements provide.  Recently enacted and proposed federal changes go in two somewhat opposite directions on this important tool for environmental protection .

The Good News: Enhanced tax benefits for conservation easement gifts made permanent: After a number of years of temporary extensions, Congress passed and the President signed in December, 2015 a permanent extension of the enhanced Federal income tax benefits for gifts of conservation easements. Enacted in Section 111 of Division Q of the “Protecting Americans from Tax Hikes Act of 2015” (PATH Act) (P.L. 114-113, 12/18/2015) this now permanent tax incentive provides a cost-effective way to help private landowners protect much more land through the use of conservation easements. Since 2006 when the provision was first established, it has helped landowners conserve more than 2 million acres of America’s most important natural, scenic and open lands and historic resources. Considered by many to be the most important conservation legislation in 20 years, the tax incentive: 

  • Raises the deduction a donor can take for donating a conservation easement from 30 percent to 50 percent of his or her adjusted gross income in any year;
  • Allows qualifying farmers and ranchers to deduct the value of the donated easement up to 100 percent of their income; and
  • Extends the carry-over period for a donor to take the easement tax deductions from 5 to 15 years beyond the tax year that the gift was made.

These changes apply to easement donations made at any time in 2015 and to all donations made after that. This will be a powerful tool to enable modest-income donors to receive greater financial benefit and thereby encourage them to donate a very valuable conservation easement on their property. 

The (Sort of) Bad News: President's budget proposes major changes to conservation easement deductions: Released on February 9, 2016, the President's budget blueprint for Fiscal Year 2017 contains proposals to modify the now-permanent tax deduction for donations of land conservation easements. Although these are only proposals at this time, should they be enacted it is generally considered that they would significantly constrain land conservation efforts. The proposals are:

  • Increasing the standards for being a “qualified conservation organization.” This replaces the four current “conservation purposes” for deductible easements with one: that any easement must be pursuant to a clearly delineated federal, state or tribal conservation policy and yields a significant public benefit.
  • Making land trusts liable for any misreporting of the conservation purpose, public benefits and fair market value of an easement by the donor.
  • Requiring additional reporting to IRS and public disclosure of easement purposes and valuations.
  • Eliminating deductions for easements on golf courses.
  • Prohibiting deductions for historic building easements attributable to the development potential above the existing profile of the building.
  • A proposal for a new “pilot program” in which an interagency federal board distributes tax credits to land trusts, with the land trusts then allocating them to donors based on the importance of the easement for the mission of the land trust.

Although the Obama Administration has been supportive of land conservation generally, it has sought for a number of years to make changes in the tax administration of conservation easement deductions to place a greater burden on land trusts to police the conservation merits and proper valuation of easements. None of these items currently have support outside the Treasury Department however, and therefore are unlikely to be acted on by the current House of Representatives or Senate in the near future.  Stay tuned to see if the balance of burdens and benefits on conservation easements sees major changes.

Okies from Muskogee 1; Sierra Club 0. Another NSR Case Goes Down on Statute of Limitations Grounds

Posted on March 10, 2016 by Seth Jaffe

The law is full of fine distinctions.  Today’s example?  A divided 10th Circuit panel affirmed dismissal of the Sierra Club’s citizen suit claims against Oklahoma Gas and Electric concerning alleged PSD violations at OG&E’s Muskogee plant muskogeebecause the Sierra Club did not sue within five years of the commencement of construction – even though Sierra Club did sue within five years of the completion of construction.

I have not seen any other cases present this issue so squarely.  For the majority, the decision was relatively easy.  Because the CAA has no limitations provisions, the default five-year limitations period set forth at 28 USC § 2462 applies.  Section 2462 provides that suits must be brought “within five years from the date when the claim first accrued.”  That “first accrued” language was Sierra Club’s downfall.  The court decided that a claim “first accrues” when a plaintiff has a right to bring a claim.  In the PSD context, that is when a defendant commences construction or modification without a permit.  Because the Sierra Club did not file within five years after OG&E commenced construction, the complaint was late.

Not so fast, argued the dissent. As the dissent rightly noted, the CAA does not make commencing construction or modification without a required PSD permit a violation; it makes “the construction or modification of any source” without a permit a violation.  Thus, the dissent argued, OG&E was still “constructing” its project without a permit during a period less than five years before Sierra Club brought suit and was still in violation, so the suit was timely.

I should note that, whether the dissent is correct or not, it did rightly distinguish two other cases, United States v. Midwest Generation and United States v. EME Homer City Generation, which have been cited in opposition to “continuing violation” theories.  As the dissent emphasized, those cases concerned whether operation of the modified facility, after construction was complete, constituted continuing violations.  The dissent agreed that post-construction operations cannot effectively toll the statute of limitations. However, that is a different question than whether continuing construction keeps the limitations period open.  Indeed, the EME Homer City decision specifically contemplated the possibility that:

"the maximum daily fine accrues each day the owner or operator spends modifying or constructing the facility – from the beginning of construction to the end of construction."

That sounds like a basis for new claims accruing each day, thus triggering a new limitations period.  I think that this case is a close question. However, as interested as the Supreme Court seems to be in the CAA these days, I don’t see it taking this case, and certainly not before there is a circuit split on the issue.

What is impossible to determine is what caused the Sierra Club to wait.  Why take the chance?  It does seem a self-inflicted wound either way.

(Very quickly, I’ll note that the majority also dismissed Sierra Club’s injunctive relief claims under the concurrent remedies doctrine.  That’s an important issue, but not a difficult or interesting one, at least where the government is not a party.)

Game Of Drones: The Future Of Environmental Enforcement and Monitoring Is Overhead

Posted on March 8, 2016 by Jeff Thaler

For many of us, the only “drone” we knew of growing up probably was that boring, monotonous lecture late on a sunny afternoon. Or if you were expert in biology, you would have known that a “drone” is a stingless male bee whose sole job is not to gather nectar or pollen, but to mate with the queen. Today, however, everyone over the age of 5 knows that drones are a hot gift item, anything that flies without a pilot onboard but controlled remotely. A “drone”, in government parlance, is generally termed a UAV (Unmanned Aerial Vehicle), or a UAS (Unmanned Aerial System) -- which is a UAV, plus the ground-based controls.

UAVs have spawned a wide range of legal and regulatory issues, including not only Federal Aviation Administration (FAA) licensing but significant privacy, tort and property rights matters.  Given the existing and potential use of UAV-collected information about environmental conditions, the next big fight in environmental enforcement will be the admissibility of UAV-collected evidence. Many may not know  of the growing use of, and potentially expanding realm for, drones in the environmental arena. The World Wildlife Fund has been using UAVs for several years for such disparate activities as 1) monitoring prairie dog colonies for potential habitat for one of North America’s most endangered mammals, the black-footed ferret. 2) undertaking surveillance activities to reduce poaching of elephants and rhinos in Africa and Asia, and 3) monitoring the three main species of marine turtles in Suriname to combat poaching of their eggs. Likewise, the Nature Conservancy has tested drones to monitor the sandhill crane population in the U.S.  And a new NGO, Conservation Drones, has been working with groups all over the “developing tropics to use UAVs for conservation.” 

It is not a big leap from use of UAVs for wildlife conservation purposes, to enforcement efforts against unlawful pollution of waterways and illegal logging. For example, a drone can obtain imagery of discoloration suggestive of discharges of hazardous substances; can detect differences in water temperature using thermal sensors to detect illegal discharges; can film illegal mining or deforestation activities; or can even collect small volume water samples from remote areas. But in the US, if one of your clients is the target of such surveillance, is the evidence admissible in an enforcement proceeding?

The answer is—maybe. It depends. The type of answers clients hate to receive from their trusted legal counsel. It is beyond the scope of this post to discuss all of the ongoing machinations of the Federal Aviation Administration as it attempts to develop final rules for the commercial (non-hobby) operation of UAVs. But while the federal government attempts to preempt the field, States have stepped in and, in conflicting ways, attempted to respond to the growing drone game. In 2015, 45 states considered 168 drone bills, and 20 states enacted legislation. In some states, use of a drone over the private property of another person, without prior consent, could result in criminal or civil prosecution or damage claims—even if the drone is used for the environmentally beneficial uses described above. Thus, one must become familiar with her or his state’s laws, as well as monitor the ongoing FAA and Congressional activities, to best effectively prepare and advise clients on this brave new world.

China currently is using  UAVs to track excessive air and water pollution is China. In one city with 40,000 sources of industrial pollution and 900 industrial parks, drones are using “high-resolution digital cameras, infrared and laser scanners, and magnetometers…. Some UAVs are also fitted with an infrared thermal imaging unit that shows the operation of facilities at night.” How this information will be used in China remains to be seen.

At home in the US drones are going to fuel more and more back-and-forth legal maneuvers of environmental regulators and NGOs against companies and their lawyers. The gathering and use of drone-generated information may be as intense a fight as the sport use of the UAVs themselves.  To get a preview of that emerging arena,  check out the more recent “Flight Club” aka Game of Drones—the “bad boys” who want to be the next big sports league. Coming soon to a screen near you.

Bovine Emission Source Category? Or… What to do About Farting Cows

Posted on March 7, 2016 by Donald Stever

A recent BBC report about the enormous Aliso Canyon Gas Storage Facility gas well leak in California caught my eye. It compared the huge volume of methane emitted from this leak to other greenhouse gas sources, including tons of methane emitted by a large number of cows. Cows? A 2006 United Nations’ Food and Agricultural Organization report claims that the livestock sector, most of which is comprised of cattle, “generates more greenhouse gas emissions as measured in CO2 equivalent – 18 percent – than transport.” According to a Danish study, the average cow produces enough methane per year to do the same greenhouse damage as four tons of carbon dioxide. EPA’s Inventory of U.S. Greenhouse Gas Emissions and Sinks contains a statement that, on a global basis the Agriculture sector is the primary source of methane emissions.

This got me thinking about industries and lifestyles as yet largely untouched by the need to address global climate change. Agriculture, including ranching, may be a mainstay of the US economy but we can no longer ignore its impacts on the planet. It is not environmental elitism to require farting cows – a fertile source of humor - be given serious attention in the climate change debate.

Throughout the history of environmental regulatory legislation and enforcement in the United States, conventional agriculture has, by and large, been given a pass. For example, section 404 F of the Clean Water Act exempts from the requirement to obtain a permit the discharge of dredged or fill material into waters of the United States discharges from “normal farming … ranching activities”, from “construction or maintenance of farm or stock pond or irrigation ditches”, and, with some limitations, from construction of “farm roads”. In large commercial agricultural operations “normal” farming activities are of a large industrial scale. Non-point source runoff of pesticide and fertilizer residues from huge farming operations is largely ignored and where farming activities are regulated, such as storm water discharges from concentrated animal feeding operations, regulation is largely by general permits instead of individual permits. Spreading of manure on open fields is, by and large, unregulated. It took EPA nearly forty years to impose regulatory requirements to protect farm workers from exposure to herbicides and other pesticides used in large agricultural operations. Do we see a pattern here? Quite clearly the large commercial agricultural sector has enjoyed a not inconsiderable status of environmental regulatory laissez faire for a very long time.

This brings me back to the farting cows. Bovine source methane emissions are not presently regulated under the Clean Air Act. While cows are mobile,  the Supreme Court clearly didn’t have livestock in mind when it addressed greenhouse gas emissions from mobile sources in Massachusetts v. EPA, and at present EPA is having great difficulty justifying  regulation of even conventional stationary sources of greenhouse gasses. Nevertheless, if the governments that signed the recent Paris Accords remain serious about reducing the precursors of global warming it would seem that they, including the USA, must deal with the bovine methane problem. Quite clearly individual point source emission controls are not the answer to controlling the emission of methane from cows. Collecting the emissions under a roof for rooftop capture and treatment as has been advocated by environmental advocates is not only impractical given the nature of ranching in the US, but attempts to do so would pit environmental regulators against animal rights advocates who argue strenuously and effectively that sequestering animals in tight containments is inhumane treatment.

The only means of reducing this source of greenhouse gas is to reduce the global dependence on meat and cow milk as a primary source of protein in the human diet, that is, significantly reduce the global population of cattle. This will require a far more significant human cultural re-adaptation than will be required to reduce greenhouse gas emissions from transportation and industrial greenhouse gas sources. That being said, there is yet another reason why such a cultural change is necessary. There is simply not enough land on the planet to sustain a meat and cow milk consuming culture as we have now with even the current global population of humans. I don’t have enough space in this blog post to give you the numbers, but suffice it to say that beef and milk are among the most inefficient sources of protein in terms of the number of acres of land required to sustain a single cow. Sorry, all you lovers of good cheese and a great steak, it looks like you are part of the climate change equation.

EPA Brings Self-Disclosure Process into 21st Century, Adding More Transparency

Posted on March 4, 2016 by Gregory H. Smith

The United States Environmental Protection Agency recently modernized its implementation of its two primary self-disclosure incentive policies – the Audit Policy and the Small Business Compliance Policy – by creating a centralized, web-based “eDisclosure” portal to receive and automatically process regulated entities’ self-disclosed civil violations of environmental law.  The Audit Policy and Small Business Compliance Policy provide penalty mitigation and other incentives for large and small businesses that discover, promptly disclose and expeditiously correct environmental violations and take steps to prevent future violations.  According to EPA, the automated eDisclosure system will make the processing of more routine voluntary disclosures faster and more efficient, and save time and resources for both regulated entities and EPA.  Nonetheless, while efficiency is desirable for both public and private parties, potential users of the new system should bear in mind that self-disclosure of a violation to EPA should be undertaken with the assistance of experienced environmental consultants and legal counsel.

In the future, all self-disclosed civil violations (except for disclosures under EPA’s New Owner Policy) must be made through the eDisclosure portal.  Entities that disclose potential violations through the portal may qualify for one of two types of automated treatment, Category 1 or Category 2.  Category 1 disclosure is available only for minor violations of the Emergency Planning and Community Right-to-Know Act (“EPCRA”).  For Category 1 disclosures, the eDisclosure system automatically issues an electronic Notice of Determination (“eNOD”) confirming that the violations have been resolved with no assessment of civil penalties, on the condition that the certified eDisclosure is accurate and complete. 

Category 2 Disclosures include all non-EPCRA violations, EPCRA violations where the entity can certify compliance with all of the Audit Policy’s nine conditions except that the method of violation discovery was systematic, violations of CERCLA § 103/EPCRA § 304’s chemical release reporting requirements, and EPCRA violations with ”significant economic benefit” (as defined by EPA).  For these disclosures, the eDisclosure system automatically issues an electronic Acknowledgement Letter confirming EPA’s receipt of the disclosure and promising that EPA will make a determination regarding eligibility for penalty mitigation if and when it considers taking an enforcement action for environmental violations. 

EPA stated in its December 9, 2015 Federal Register notice announcing the launch of the eDisclosure portal that it “is not modifying the substantive conditions in its Audit Policy or Small Business Compliance Policy.”  However, anyone considering using the eDisclosure portal to self-report a civil violation of environmental law needs to be aware that EPA has significantly changed its longstanding approach to responding to Freedom of Information Act (“FOIA”) requests for such disclosures.  

Since 1997, EPA has deemed resolved voluntary disclosures under the Audit Policy and Small Business Compliance Policy publicly releasable under FOIA.  The agency will continue to take this approach to Category 1 disclosures submitted through the eDisclosure portal.  Specifically, it will grant FOIA requests for eNODs issued for Category 1 disclosures in most cases.  

However, EPA’s handling of unresolved voluntary disclosures will shift 180 degrees going forward.  Until now, EPA has generally withheld unresolved disclosures pursuant to FOIA’s “law enforcement proceeding” exemption, Exemption 7(A).  This exemption protects from disclosure “records or information compiled for law enforcement purposes, but only to the extent that the production of such law enforcement records or information (A) could reasonably be expected to interfere with enforcement proceedings ….”  Now, simultaneous with its implementation of the eDisclosure portal, EPA has eliminated its practice of withholding unresolved disclosures and replaced it with a presumption in favor of releasing regulated entities’ voluntary disclosure information to the public.  In responding to FOIA requests for individual unresolved disclosures, EPA now will determine on a case-by-case basis whether it “reasonably foresees that release would harm an interest protected by a FOIA exemption.”  In doing so, it will aim “to be as accommodating as possible in responding to such requests,” with the result that it “generally expects to make Category 1 and Category 2 disclosures publicly available within a relatively short period of time after their receipt.”

As the agency explains it, this policy shift is consistent with the 2009 memoranda from President Barack Obama and Attorney General Eric Holder in favor of federal government transparency.  Nonetheless, it could reduce the perceived benefits of the Audit Policy and Small Business Compliance Policy for some in the regulated community and provide a disincentive to self-report.  Moreover, at least one commentator has suggested that  EPA’s new willingness to release information in response to FOIA requests may “fuel…  private attorney general litigations.”  This could be particularly problematic where EPA releases disclosure information through a FOIA request before it has determined whether in fact the business in question is eligible for penalty mitigation or will not be a target of enforcement action. Although EPA is trying to reassure the regulated community that this policy change will not result in more citizen suits, potential eDisclosure portal users are legitimately concerned about such arguably premature releases of disclosure information, and should carefully evaluate their circumstances before making any disclosure, especially under Category 2.

The potential for the release of unresolved disclosures to cause harm to eDisclosure users could be further exacerbated as an unintended result of the expansion of intergovernmental data exchanges such as the Environmental Information Exchange Network, a partnership of states, territories, tribes and EPA working to provide increased access to high-quality environmental data.  

In sum, by introducing the eDisclosure system, EPA has streamlined the self-disclosure process for certain environmental violations, which likely will reduce the time and expense involved in making such disclosures.  However, EPA has not provided any additional detail or direction for businesses to use in determining whether a specific violation meets the substantive criteria of the Audit Policy or Small Business Compliance Policy.  This determination – and the ultimate decision of whether disclosure will be beneficial – should be made with careful consideration of the relevant facts and applicable law, under the guidance of knowledgeable environmental consultants and legal counsel.. 

Update on the Clean Power Plan: The Knowns and Unknowns

Posted on March 2, 2016 by Jody Freeman

This is a reposting – the earlier post incorrectly omitted Prof. Jody Freeman’s name as a co-author. Richard Lazarus is also a co-author.

State Reactions to the Stay 

Now that the Supreme Court has stayed the Clean Power Plan, States are in the process of deciding whether or not to proceed with implementation planning, and if so, at what pace to do so. The situation is still in flux. States like Pennsylvania, Virginia, Washington State, California, and most of the northeastern states that are part of the Regional Greenhouse Gas Initiative, have all said they will continue planning. Others, like Texas, Kentucky and West Virginia, have declared they will stop. EPA’s official count shows eighteen States as having halted efforts, with nine still deciding, and thirty still working: http://www.eenews.net/interactive/clean_power_plan#planning_status_chart. Even official statements from the States are somewhat misleading, however: some States that have announced a suspension of compliance planning, like New Jersey, are still sending officials to compliance meetings. 

Still, there is a risk that, on net, momentum will slow, at least until the legal challenge to the CPP is resolved. That process could take more than two years.

Maintaining Momentum Through “No Regrets” Policies

During that time, anything that can be done to maintain momentum on CPP implementation and related policies that will promote clean energy (regardless of whether the rule eventually is upheld) should be supported, with a priority given to helping States pursue “no regrets” policies that will serve their interests whatever the outcome of the litigation. There are a variety of things States and utilities can do now to address shorter term Clean Air Act obligations, such as regional haze, National Ambient Air Quality Standards, or cross-state air pollution, that also would set them up nicely for CPP compliance should the rule be upheld. 

Implications of Justice Scalia’s death

The D.C. Circuit will hear argument on the CPP in June 2016, and is expected to rule on the merits expeditiously, likely by fall of 2016. The panel is viewed as more favorable toward EPA than not, although certainly not a sure thing: Judge Rogers is seen as the most sympathetic to EPA, Judge Srinivasan is seen as at least open to the government’s arguments, while Judge Henderson is seen as hostile to the rule. 

If this panel were to uphold the rule, and the Supreme Court were to remain without a confirmed ninth Justice, it is possible that the Supreme Court could split 4-4, which would normally result in an order affirming the lower court decision. However, there is also a chance that if there were a 4-4 split in a case of this importance and one that would decide the issue once and for all, the Chief Justice would not be content to issue such an order and would instead hold the case over for re-hearing once a ninth Justice is confirmed. If that ninth Justice were appointed by a new Democratic president, the rule’s prospects of being upheld likely would increase; if appointed by a new Republican president, prospects could be the same as they would have been with Justice Scalia on the court. That would require Justice Kennedy, the likely swing vote, to be persuaded by the government to vote to uphold the rule.

There is another interesting wrinkle: the D.C. Circuit panel could change. Judge Srinivasan has been identified as a potential Supreme Court nominee. If he were nominated, he would likely withdraw from pending cases not yet argued in order to prepare for (theoretical) hearings.  But then, of course, a new judge would be lotteried in to fill his place, perhaps changing the balance of the panel. One might think this risk worth taking, since Judge Srinivasan in theory would wind up on the Supreme Court, where he might cast the deciding vote in this (and many other) cases. Yet even if Judge Srinivasan were confirmed, he would be recused from the CPP case because of his earlier participation on the D.C. Circuit panel that denied the stay, so the Court would remain at eight Justices for purposes of this case. Again, this would leave the prospect of a 4-4 tie affirming the decision below (and perhaps affirming a decision to strike down the rule). 

Next Steps and Timing of Litigation

Whatever the composition of the D.C. Circuit panel, however, and whatever it decides, the losing parties might seek en banc review in the D.C. Circuit.  The State and industry challengers would be almost certain to do so, because delay favors their side. This is because the Supreme Court took the unusual step of staying the rule not just until the D.C. Circuit rules on the merits, but for longer: until the Supreme Court either denies certiorari or grants review and decides the case. Delay means the Stay remains in force, which means the deadline for filing compliance plans keeps being pushed off, which means momentum slows, which favors those opposed to the CPP. En banc review is rarely granted, however, and the D.C. Circuit may be reluctant to further delay things by providing it when the Supreme Court has already associated itself with the case (by granting the Stay and making it all but certain review will be granted). 

What all of this means is that the earliest the Supreme Court could decide the case--given the time necessary for the cert petition, briefing, argument and deliberation--is likely to be June 2017, and the latest the Court is likely to decide the case is June 2018. That means the Stay could remain in place for more than two years. 

The fate of the CPP is clearly in the hands of the Supreme Court, which, with an open seat, is clearly in the hands of the President--and most likely the next president. 

Implications for a New Administration

If the Court ultimately upholds the rule, a new president could still withdraw it and replace it with something else, or choose to implement it as-is. A new president might even bargain with a new Congress over suspending the rule in exchange for a more comprehensive economy-wide approach to greenhouse gas regulation, whether a carbon tax or a cap-and-trade approach, or something else. And if the Court, newly constituted, strikes down the Clean Power Plan, a new president would have to decide on Plan B. 

EPA has thus far been mum about possible Plan Bs, but obvious options include a narrower interpretation of “best system” that would regulate power plants within the so-called "fence-line" only, relying exclusively on what the rule refers to as "building block 1.” EPA might be able to set a fairly stringent standard based on this building block alone, although doing so might, ironically, leave utilities far less flexibility to use alternative means of compliance than they would have using the agency’s current approach. EPA might also examine the Clean Air Act for other provisions capable of regulating existing power plant emissions, such as section 115, or even set a NAAQS for greenhouse gases--options that have been discussed before and rejected by the agency, but which could always be revisited.