The Answer is Blowin’ in the FAMGs

Posted on February 19, 2019 by Charles F. Becker

It is well known that Des Moines is, among other things, the most popular city for millennial home buyers and, according to Forbes, the fifth best place for businesses and careers.  However, these accolades are not the reason for Facebook, Apple, Microsoft and Google (“FAMG”) choosing to invest billions of dollars in data centers in the Des Moines area. They are building here because they want to be able to say they are “green” – their services are powered by renewable energy. They can say that because Iowa is the third largest producer of wind energy in the country.

FAMG seem to recognize two fundamental truths: 1) Customers want to purchase from green companies, and 2) renewable energy is cost effective and goes a long way to satisfying #1. In short, environmental awareness means profits.

A 2018 study from Deloitte Resources provides some interesting insights:

1.      69% of businesses said customers are demanding more environmentally considerate solutions – up 7% from one year earlier;

2.      70%  said customers are demanding businesses procure at least some of their energy from renewable resources – up 9% from a year earlier; and

3.      79% of businesses actively promote their environmental efforts to their customers – up 5% from a year earlier.

When you combine these statistics with polling that shows 75% of adults ages 18 to 29 say wind and solar power should be a “more important priority” than fossil fuels, the message is clear – satisfied customers mean more green (both environmentally and monetarily).

Moreover, giving customers what they want also makes economic sense.  Wind and solar power have received a lot of attention, and made a lot of progress, over the past fifteen years.  As a result, the cost of renewable energy is dropping so fast that by 2020 it will be a cheaper source of power than fossil fuels.  At the same time costs are dropping, coal-fired power plants are concluding their life cycle.  In 2018, 42% of the coal-fired power stations worldwide were running at a loss.  By 2030, that number will be 96%. 

In the very near future, it won’t really matter whether businesses want to tout their green credentials by saying they use renewable energy because a least cost power system without coal is an “economic inevitability.” The early adopters are just taking credit (and customers) for what’s coming.

Despite the numbers, the President and a significant number of conservative politicians are doing everything they can to deny climate change, promote coal and increase the cost of renewable energy.  The question is why?  Certainly the politicians recognize that businesses (i.e. donors) are moving away from coal, so the answer must be something else.  Turns out, it’s mostly perspective.

Studies done by the Pew Research Center found that Democratic support for renewable energy is based primarily on environmental protection (it is good for mother earth).  Conservative Republicans reject it because it runs counter to a need to support more coal mining/fracking and because environmental solutions do more harm than good.  This Republican viewpoint, however, is not universally held.  A growing number of Republicans support renewable energy and do so on the basis that it promotes self-sufficiency and is a financially wise decision.  When couched in these terms, Republicans have not only been able to switch positions, but have successfully challenged the President’s position on renewable energy and been elected.  

My point to all this is not to extol the superiority of Des Moines as a city or to praise the environmental impacts of renewable energy. It is to say that perhaps Democrats have been going about the promotion of renewable energy all wrong.  Forget chest beating and yelling “everyone must be green.”  That is a position not everyone believes and using it means the people you want to persuade have already stopped listening.  Instead, talk about how renewable energy reduces costs, promotes self-sufficiency and is what consumers and businesses want.  The side benefit of environmental protection shouldn’t even be mentioned. 

There’s nothing wrong with telling someone what they want to hear . . . if it’s true.

A LAWYER’S GUIDE TO ADDRESSING CLIMATE DISRUPTION

Posted on February 14, 2019 by John C. Dernbach

Co-authored by Michael B. Gerard

Recent scientific reports by the U.S. Global Change Research Program and the Intergovernmental Panel on Climate Change depict the present and future consequences of climate disruption in increasingly urgent terms.  At the same time, according to a new poll, record numbers of Americans believe that climate change is real, that it is human caused, and that it affects them personally. 

But there is good news.  It is possible for the U.S. to dramatically reduce greenhouse gas emissions.  We also have the legal tools to do the job—more legal tools, and a greater variety of tools, than we may have imagined. 

In 2014 and 2015, the Deep Decarbonization Pathways Project (DDPP)  published a technical report and a policy report on deep decarbonization in the United States—reducing U.S. greenhouse emissions by at least 80% by 2050.  The DDPP is a global effort to assess the technological and economic feasibility of deep decarbonization in 16 countries representing 74% of the world’s greenhouse gas emissions.

The U.S. reports conclude that “it is technically feasible” for this country to reduce its greenhouse gas emissions by 80% from 1990 levels by 2050.  They also conclude that the cost of this effort would only be one percent of U.S. gross domestic product, not including the many benefits that would come from doing so.   

Enormous changes would be required to achieve this level of reduction, the reports said.  The U.S. would more than double the efficiency with which energy is used.  Nearly all electricity would be carbon free or use carbon capture and sequestration.  Electricity production would also need to double because gasoline and diesel fuel for transportation, and oil and natural gas used for space heating and cooling and water heating, would be mostly replaced by electricity.  

These reports do not, however, discuss what legal tools would be necessary to achieve these outcomes.  In response, in late 2015, we began planning an edited volume to comprehensively analyze and explain the various laws that could be employed, building on the DDPP reports. The resulting book, Legal Pathways to Deep Decarbonization in the United States is being published by the Environmental Law Institute Press in March.  You can order a copy here.  In 35 chapters authored by 59 experts, adding up to 1,200 pages, the book identifies more than 1,000 federal, state, local, and private legal tools for deep decarbonization.   

To get the key messages of the book to the broadest possible audience, ELI has also published a Summary and Key Recommendations volume.  This book includes a thumbnail summary of each chapter, key recommendations by chapter, and a separate listing of recommendations organized by actor.  You can download this book here without charge.

Legal Pathways describes a dozen different types of legal tools.  As explained in greater detail here, these are not just the usual suspects (additional regulation, market-leveraging approaches, tradable permits or allowances), but also reduction or removal of legal barriers to clean energy and removal of incentives for fossil fuel use.  They also include information/persuasion, facilities and operations, infrastructure development, research and development, insurance, property rights, and social equity.  The wide range of types of legal tools provides great opportunity for building consensus.  One particularly important category, for example, is reduction or removal of legal barriers.

The book is thus a playbook for deep decarbonization.  In fact, various legal tools could be designed and combined to achieve quicker and deeper reductions than 80% by 2050, and even negative overall emissions.

This book is also a resource for lawyers because the laws it describes need to be proposed, drafted, and implemented on behalf of a wide variety of clients in many contexts.  The many types of tools also make clear that a variety of lawyers are important in this effort, including not only energy and environmental lawyers, but also finance, corporate, municipal, procurement, contracting, real estate, and other types of lawyers.

While both the scale and complexity of deep decarbonization are enormous, the book has a simple message: deep decarbonization is achievable in the United States using laws that exist or could be enacted. These legal tools can be employed with significant economic, social, environmental, and national security benefits.

Toward that end, we are launching a project to turn the recommendations into legal language—drafting federal and state statutes and regulations, model ordinances, guidance documents, transactional agreements, and the like.  We are well aware that a great many lawyers are already doing this kind of work, and that many more are feeling the need to respond to the challenges that climate disruption imposes.  We welcome lawyers from all backgrounds to join in our effort, and plan to work with ACOEL as well.  If you are interested, please contact us.

Acronymic Acrobatics: Why Poly- and Perfluoroalkyl Substances (PFAS) are becoming a Problem For All States

Posted on February 13, 2019 by Tom Burack

In an age in which the names of chemicals are so complicated that even scientists refer to them by acronyms, an entire class of manmade chemicals created to improve human lives is now in the midst of performing an acrobatic stunt, back-flipping from being the darling of industrial and consumer products to being the contaminants that are now the nemesis of many communities: Poly- and Perfluoroalkyl Substances -- commonly referred to as “PFAS” – are also coming to be recognized as something else with the same acronym, namely a “Problem For All States”.  Due to their unique chemical properties and the growing public demands for timely regulatory response actions at the local level in the absence of definitive federal leadership, PFAS compounds can be expected to remain a Problem For All States for many decades to come.

Chemical engineers, starting in the 1940s, made some remarkable discoveries: the combination of carbon and fluorine atoms into long-chained synthetic organic molecules results in compounds that variously can repel oil, water, grease or stains, resist high temperatures, and reduce friction.  These properties, combined with high durability, made these newfound PFAS compounds ideal for innumerable industrial and consumer purposes. For example, some of the most commonly used PFAS are: perfluorooctanoic acid (PFOA), as a repellent coating for textiles, paper products and cookware; and, perfluorooctanesulfonic acid (PFOS), in fire-fighting foams, carpet treatments, and mist suppressants in metal plating operations.  As a broad class, there are approximately 3,000 different PFAS compounds, some of which are precursors to other PFAS compounds, and various of which may co-occur with each other. Commonly known household products containing or made with PFAS compounds have included DuPont’s Teflon®, 3M’s ScotchGard®, and Gore’s Gore-Tex®, to name but a few. Unfortunately, some of the most commonly used PFAS compounds are also highly persistent, mobile, and non-biodegradable.  Consequently, worldwide production and uses of PFAS have resulted in their nearly ubiquitous presence throughout the environment, including in soils, sediments, surface and groundwater.

Moreover, because they can also bioaccumulate, PFAS compounds can be found in animals and humans in parts per billion (ppb) concentrations. Laboratory studies of PFAS health impacts on animals point toward elevated cholesterol levels, low infant birth weights, immune system effects, cancer (PFOA), and thyroid hormone disruption (PFOS).  While peer-reviewed human epidemiological studies of PFAS exposure have been less numerous or definitive to date, when combined with the laboratory animal studies there have been sufficient data to support the establishment of Lifetime Health Advisories for PFOA and PFOS by the US EPA in 2016 and the promulgation of regulatory limits to protect drinking water supplies by a growing number of states.

In the United States, the first health and environmental concerns arose in connection with PFAS manufacturing facilities and their waste disposal practices in West Virginia and Ohio in the late 1990’s and in Minnesota in the early 2000’s.  Between 2000 and 2002, 3M voluntarily agreed to phase out the further manufacture of most long-chain PFAS compounds, and DuPont and other US manufacturers followed suit. Today, under a set of Significant New Use Rules (SNURs) promulgated by the US EPA under the Toxic Substances Control Act (TSCA), most long-chain PFAS are allowed to be used or imported only for limited purposes and in select industries or applications.  Further restrictions have been proposed and shorter chain PFAS compounds are increasingly being used as substitutes, but even these may present significant environmental and public health concerns, as illustrated by the ongoing GenX contamination situation in the Cape Fear Watershed of North Carolina. (See, e.g., https://www.northcarolinahealthnews.org/2017/08/17/genx-pollution-what-happened-when/)

Ever-more sensitive laboratory technology can now detect PFAS at parts per trillion (ppt) concentrations, and it’s become evident that the more than five decades of unregulated use of PFAS has left an indelible signature in landfills, wastewater, waterways, and communities far and wide. To date, the New Hampshire Department of Environmental Services has amassed perhaps the largest single dataset on PFAS contamination in groundwater, surface water and soils of any state: roughly 6,000 samples from some 3,500 locations.  This continuously growing dataset already shows some noteworthy trends: sampling of 429 public water supply wells found that 7 (1.6%) contained PFOA or PFOS above 70 ppt (the US EPA LHA value which NH adopted as its groundwater cleanup standard); but NH has now proposed to lower its standard for PFOA to 38 ppt, which once all of NH’s public water systems have been sampled is likely to put another 16 or so in noncompliance.  More than 50% of the existing known contaminated industrial sites sampled so far in NH contain elevated levels of PFAS.  Every NH landfill leachate system sampled to date has a PFAS signature, and the monitoring wells around the older closed but unlined landfills indicate 46% exceed the groundwater standards.  Fire stations and training sites are also potential sources, as are municipal wastewater treatment plants, biosolids storage and application sites, car washes, airports (military and civilian), and a wide variety of other operations. Typical contamination vectors include not only historical releases directly to soils, groundwater or surface waters, but also atmospheric deposition resulting from airborne emissions of PFAS that subsequently contaminate other media, including groundwater.

Due to the combination of their durability, persistence, mobility, multiple possible release mechanisms, and extremely low detection limits, the simple reality is that if you look for PFAS in the environment you will find them.  The corollary is that if you haven’t found them, you’re probably not looking in the right places. While some public officials may believe that PFAS are not a problem in their states or regions, the public and elected officials – sensitized by the story of lead contamination in the water supply of Flint, Michigan – are asking questions, demanding answers, and expecting action. In 2018, the US EPA held a “national summit” on PFAS contamination and announced that it would consider whether to establish public drinking water standards, Maximum Contaminant Levels (MCLs), for some PFAS, and whether to list certain PFAS compounds as hazardous substances under CERCLA.  More recently, EPA officials have indicated that MCLs for PFAS are unlikely, but that EPA is considering broader use of its emergency administrative order authority under Section 1431(a) of the Safe Drinking Water Act to address PFAS contamination situations on a site-by-site basis. In the meantime, members of Congress have introduced bipartisan legislation to require US EPA to list all PFAS compounds as CERCLA hazardous substances and a growing number are joining a bipartisan Congressional PFAS Task Force.

The most consequential regulatory action, however, has been at the state level, which is where considerably more future action should be expected.  As of January 2019, at least eight states had adopted or proposed guidance values or regulations setting acceptable concentrations of various PFAS compounds in groundwater, drinking water, surface water, or soil, including Alaska, Colorado, Michigan, Minnesota, New Hampshire, New Jersey, New York and Vermont.  This list is expanding rapidly, as is the list of state legislatures that have regulated or are considering regulating the use of PFAS compounds, including California, Michigan, Minnesota, North Carolina, New Hampshire, New York, Pennsylvania, Rhode Island, Vermont and Washington.  The Environmental Council of States (ECOS), the national, nonpartisan, nonprofit association of state and territorial environmental agency leaders, has established a PFAS workgroup, and its research arm, the Environmental Research Institute of the States (ERIS) has a large and active technical team that has published a number of fact sheets on PFAS through the Interstate Technology Regulatory Council (ITRC). 

Regulatory strategies and cleanup standards for the same compounds often differ from state to state: for example, in Vermont the groundwater standard is 20 ppt for PFOA and PFOS individually or in combination, while in New Hampshire the standard for PFOA and PFOS individually or in combination is 70 ppt, and a proposed rule would lower the individual standard for PFOA to 38 ppt.  The process of setting health-based regulatory standards varies greatly by jurisdiction, and different standards are typically attributable to differences in which toxicity data are selected and how they are interpreted, differences in toxicity factors (i.e., multipliers or margins of safety), how animal test results are extrapolated to humans, exposure assumptions, life stage used, and sources of exposure (drinking water versus non-drinking water).  Should EPA choose not to adopt MCLs for PFAS compounds, it’s likely that more and more states will find themselves weighing these and other variables as they set their own regulatory standards and seek to explain why they may be either higher or lower than those of their neighboring states.

Because they are ubiquitous, PFAS compounds present a set of challenges that every state will ultimately need to quantify and regulate, all the while communicating with the public, the regulated community and elected officials about the steps they’re taking and why their approach is an appropriately protective risk management strategy.  The lack of a comprehensive national regulatory approach and federal standards for PFAS compounds makes the problem all the more challenging for states, as they will forever need to justify their own approach in comparison with those of other states.  All of which suggests that PFAS are, and for the foreseeable future will remain, a Problem For All States.

Enforcement vs. Education: What the Evolving Role of Forest Rangers and the Government Shutdown Might Teach Us About Environmental Management

Posted on February 12, 2019 by Edward A. Hogan

Two recent, and apparently unrelated, newspaper articles should cause us to focus upon the appropriate balance between law enforcement and education in environmental management.

The first article described a number of deliberate acts of vandalism in National Parks during the recent federal government shutdown.   In the absence of park staff, illegal off-road driving was reported in several National Parks.  In Joshua Tree National Park, delicate and ancient Joshua trees were kicked and Christmas lights strung on others.

The second article reported on a recent proposal to reclassify state civil service job titles.  While on its face it appeared routine, it has resurrected some persistent concerns with the public perception of environmental and natural resource protection. The New York State Department of Environmental Conservation (“NYSDEC”) has requested the New York State Department of Civil Services reclassify its 134 Forest Rangers into the Environmental Conservation Police Officer(“ECO”) title.  Both Forest Rangers and ECOs work within the NYSDEC Office of Public Protection:  the Forest Rangers in the Division of Forest Protection and the 330 ECOs in the Division of Law Enforcement.  Both Divisions were established in the late 19th century:  forest rangers were originally known as fire wardens and ECOs as fish and game protectors. 

While still having the traditional responsibility for prevention and suppression of wildland fires, Forest Rangers are now also charged with organizing and conducting wildland search and rescue operations.  ECOs have had their role of enforcing fish and wildlife laws expanded to include air, land and water quality violations.   Both Forest Rangers and ECOS must complete the same 26-week basic training and are sworn police officers, authorized to enforce all state laws.

While the civil service reclassification has been described as a title upgrade for the Forest Rangers, which would result in a small increase in initial salary, NYSDEC emphasized that it is not a merger of the two Divisions but, rather, a move to ensure that the Divisions are treated equally in the civil service system.  While generally supported by the environmental community, there are those who express lingering concerns with the gradual degradation of public’s attitude towards Forest Rangers and the potential impact on their effectiveness in educating the back country recreational (hiking, whitewater rafting, rock and ice climbing, etc.) community.  As retired Forest Ranger Pete Fish lamented, before becoming sworn police officers and thus always armed, their image was not so closely associated with being police officers: “We used to drive around in these red trucks.  We had a good reputation.  People would wave at us.  Everyone loved a ranger. Once we started driving around in the green trucks like the cops, there was a difference in attitude toward us from the public”.  

As attorneys dealing with the full range of environmental laws, we focus on significant policy issues.  But the most frequent encounter most citizens have with the application of environmental and natural resource laws is at the state level, with front-line staff, and in the recreational context.  Thus, the public’s perception of, and support for, environmental laws is greatly influenced by their experience in the context of recreation use of natural places, and thus their perceptions should be as important to us as they are to retired Ranger Pete Fish.

Each state (and the federal government) has a broad range of natural resource and environmental issues it addresses:  fish and game enforcement, forest fire prevention and suppression, wildland search and rescue, back country recreationalist education, and environmental quality enforcement.   How they organized and staffed these tasks has, and will be, influenced by the evolution of those programs, their historical experience and present and future needs.   

So, what is the right balance of education and enforcement in wildland recreation?  Police officers or ranger-educators?  Or both?

Are the recent incidents in the National Parks evidence that as a society we have failed in our education role and that management of wildlands are better addressed by an enforcement-based approach?

In contrast to the several vandalism incidents that have occurred, there have also been hundreds of volunteers keeping the National Parks open during the government shutdown.  These volunteers were spending their time and their own money hauling out trash and keeping toilets cleaned and stocked with supplies.  Perhaps education has been successful after all.

How Would Your Parents Like This Report Card: The 2018 Chesapeake Bay Health Score Drops to D+ as Massive Rains Increase Pollution

Posted on February 11, 2019 by Lee DeHihns

The Chesapeake Bay Foundation (CBF) released the 2018 State of the Bay Report on January 7, 2019 and the overall grade was not good.  The Bay scored 33 on a scale of 100. The 2018 score is down a point from the last report issued in 2016.  CBF President Bill Baker put as positive a spin as he could on the D+ score saying, “What does it all mean? The summer of 2018 is a stark reminder that the Bay’s recovery is fragile.  We have a long way to go, especially as climate change intensifies.  And, the federal government could significantly undermine our progress by rolling back regulations that would have resulted in nitrogen reductions to the Chesapeake Bay.”

The news is sad for the 18 million people who live in the Chesapeake Bay watershed, which has been struggling to deal with the elusive lack of control over the major pollution source to the Bay: non-point pollution, which was increased by the massive rainfall in 2018.  The report says that such extraordinary weather conditions are consistent with the more frequent and severe storms that climate models predict for the region in the future, meaning that it may only become more challenging to put the Bay’s predominantly non-point sources of pollution in check. 

On a positive note, in June 2018, researchers from the University of Maryland Center for Environmental Science measured continued improvements in the health of the Chesapeake Bay, according to their 2017 Chesapeake Bay Report Card, finding that, “[w]hile the overall grade of “C” has remained the same since 2012, this marks the first year that experts have seen what they call a ‘statistically significant’ positive trend. This suggests that the positive improvements in the grade of the Bay are the result of real progress rather than chance.”  The CBF report reaches a similar conclusion in stating, “[d]espite these effects, there are signs that the Bay is more resilient and better able to cope with extreme weather.  For instance, in August, scientists observed that the underwater grass beds on the Susquehanna flats remained robust and dense, despite the summer’s severe storms.”

The efforts to both protect and restore the Chesapeake Bay are almost as old as EPA, according to the Chesapeake Bay Program, a regional partnership that includes EPA.  According to the Program’s website, the Chesapeake Bay was the first estuary in the nation targeted by Congress for restoration and protection: “In the late 1970s, U.S. Senator Charles “Mac” Mathias (R-Md.) sponsored a Congressionally funded $27 million, five-year study to analyze the Bay’s rapid loss of wildlife and aquatic life. The study, which was published in the early 1980s, identified excess nutrient pollution as the main source of the Bay's degradation. These initial research findings led to the formation of the Chesapeake Bay Program as the means to restore the Bay.”

It is quite obvious that leadership for protecting the Bay must come from local resources and decisions.  The EPA FY 2019 Budget requested a 90% drop in funding from FY 2018 for its Chesapeake Bay Program.  The change cut more than $65 million [OK]  in funds and almost 40 FTE, leaving only about $7.3 million, with the following inadequate justification provided to Congress on the budget submission: “This program change reduces funding for the Chesapeake Bay Program. Remaining resources will support critical activities in water quality monitoring.” 

Just as parents who may wonder why their child got a low grade, at first blaming the school system or teacher, before looking at the child and/or their parental oversight, the solution to protecting the Chesapeake Bay demands action by many players.  Because of the interstate nature of the sources of pollution to the Bay, a greater role from EPA has always been necessary.  Moreover, because land use management is the primary way to address nonpoint source pollution, the primary responsibility rests on the States in the Bay’s watershed. 

We should be shocked that, in 2018, the Bay’s grade is a D+.  In passing the Clean Water Act in October 1972, Congress, in Section 101, 33 U.S.C. 1251, established the Declaration of Goals and Policy for our nation’s waters.  The Acts set two deadlines which have long since passed “(a) (1) it is the national goal that the discharge of pollutants into the navigable waters be eliminated by 1985; (2) it is the national goal that wherever attainable, an interim goal of water quality which provides for the protection and propagation of fish, shellfish, and wildlife and provides for recreation in and on the water be achieved by July 1, 1983”.   If a child failed to advance beyond the first grade with a D+ in 1983, then that child would be 36 now and still living at home.

In a sense we are all parents when it comes to protecting the Bay.  The reduction in federal tax dollars will not yield a better system; nor can it be accepted as an excuse for not doing the right thing for the Bay.  States and other partners must fill the gap.

THE TAX MAN COMETH

Posted on February 5, 2019 by Donald Shandy

The 2017 Tax Cuts and Jobs Act (“Act”) has injected considerable confusion into environmental administrative and judicial settlements.

Since 1969, Section 162(f) of the Internal Revenue Code has not permitted the deduction of fines and penalties.  This would include fines and penalties related to environmental settlements including Supplemental Environmental Projects (SEPs).

Prior to the Act, Section 162(f) allowed deductions of “ordinary and necessary” business expenses related to environmental litigation and settlements.  New Section 162(f) permits deductions for expenses “constituting restitution” (e.g. remediation) or costs “paid to come into compliance with law.”  To qualify as restitution/remediation, two requirements must be met:

1.      The amount that is dedicated to restitution must be set forth in a settlement agreement or court order; and

2.      The governmental agency must prepare and file with the IRS and provide the taxpayer a 1099-series form stating the deductible amounts paid by the taxpayer.

It seems fairly clear that cash penalties and SEPs undertaken in lieu of a cash penalty are not deductible.  However, it is far less clear how remediation activities pursuant to CERCLA or RCRA should be addressed.  For example, how should remediation expenses be addressed where a settlement or court order was entered into prior to the effective date of the Act, but the costs are not incurred (paid for) until after the effective date of the Act?  Problematic case specific-issues under the new law seem almost endless. 

To date, the Treasury Department has not provided any guidance related to this issue.  Practitioners should be very careful when negotiating settlements with administrative agencies or entering into judicial orders.  Absent government guidance, careful drafting and execution of settlements and orders, there is a real possibility of an IRS audit or even a tax court case down the road.