Posted on July 20, 2015
I remember as though it were yesterday when the Underground Storage Tank (UST) regulations were finalized in 1988, requiring owners and operators to register existing as well as new tanks, then ensure prevention, detection and remediation of releases into the environment. Owners and operators were also required to perform release detection inspections and demonstrate financial responsibility for cleaning up releases. New tanks were required to meet certain design, construction and installation requirements aimed at preventing releases. While technology for meeting those requirements has evolved over the ensuing 27 years, no significant regulatory changes have been implemented – that is, until this week.
Many owners and operators decided to pull or close USTs in lieu of meeting those regulatory requirements but, because certain tanks are underground for safety reasons, that was not always a viable alternative. Because I was new to private practice and saw an opportunity, I set out to become the “Queen of USTs" in the Carolinas. These days, I still help clients on remediation projects involving releases from USTs and review due diligence reports on real estate where USTs are or have been used, but it has been a long time since I gave a speech or wrote an article about UST regulation.
On July 15, 2015, EPA promulgated a final rule modifying the 1988 UST regulations implementing requirements for secondary containment and operator training applicable to both new and existing USTs, implementing key provisions of the Energy Policy Act of 2005 (which modified Subtitle I of the Solid Waste Disposal Act) and fulfill objectives in EPA’s August 2006 UST Tribal Strategy ensuring parity in program implementation among states, territories and in Indian country. Citing two peer-reviewed but unpublished studies of causes for releases from USTs, along with statistics showing there are still as many as 6000 releases from USTs discovered each year, and touting development of new, the 2015 changes to the original regulations are aimed at ensuring the USTs are still working as intended, by focusing on operation, maintenance and training requirements.
While certain waste water treatment facility and nuclear power facility partial or complete deferrals are continued, this regulation removes deferrals set forth in 1988 for field-constructed tanks, airport hydrant fuel distribution systems that meet the UST definition, and UST systems storing fuel solely for use by emergency power generators. Hospitals, airports, communications providers and utilities should particularly take note of these changes.
This blog would grow to an article if it addressed in detail all of the technical requirements of this 117-page regulation, but there are some that take effect immediately and require attention. For example, regulations disallowing flow restrictors in vent lines to meet the overfill prevention requirement at new installations, and also triggered when an existing flow restrictor is replaced, apply immediately on the effective date of this final regulation, July 15, 2015. Also, testing following a repair is required on the effective date of the regulation. Most of the other implementation deadlines for notification, testing, inspection, recordkeeping, demonstrations of financial responsibility compatibility and required technology upgrades are set at three years after the effective date of the final 2015 UST regulation or July 15, 2018.
There is one exception to the deadline for compliance being either immediately or in 3 years. The secondary containment requirement is implemented for all new UST systems 180 days after the effective date of the rule, and tanks and piping installed or replaced after April 11, 2016 must be secondarily contained and use interstitial monitoring per the regulation. EPA explains that 180 days allows owners and operators to adapt plans for new systems.
Training of owners and operators (definitions for three classes are set out in this regulation) must be completed within the three years after the effective date of this regulation. EPA explained that requirements for implementing walkthrough inspections and release detection equipment testing were adjusted to correspond to the training deadline so inspectors and testers will better understand what to look for. Apparently, many of the deadlines and implementation requirements were adjusted by EPA in response to comments on the proposed rule.
Conversely, in response to comments regarding the potential costs on small business owners, EPA responded that it carefully considered such potential impacts of the proposal; EPA declined to implement recommendations of a small business advocacy review panel under the Regulatory Flexibility Act as some commenters suggested. Finally, while EPA’s final rule allows records to be maintained on paper or electronically, in keeping with the move to electronic filings and submittals, the agency encourages owners and operators to maintain electronic records to “simplify compliance” and utilize “21st century technology tools.”
Posted on July 16, 2015
On Monday July 13, 2015, the 10th Circuit Court of Appeals held that Colorado’s mandate that the state’s biggest utilities get 30 percent of their power supplies from renewable resources is legal, rejecting a dormant commerce clause challenge. In the case of Energy and Environment Legal Institute v. Joshua Epel et al, decision, Judge Gorsuch began the unanimous decision in an unusually clear, direct and non-traditional style; the opening paragraph says it all:
Can Colorado’s renewable energy mandate survive an encounter with the most dormant doctrine in dormant commerce clause jurisprudence? State law requires electricity generators to ensure that 20% of the electricity they sell to Colorado consumers comes from renewable sources. Under the law, too, this number will rise over time. It may be that Colorado’s scheme will require Coloradans to pay more for electricity, but that’s a cost they are apparently happy to bear for the ballot initiative proposing the renewable energy mandate passed with overwhelming support. So what does this policy choice by Coloradans affecting Colorado energy consumption preferences and Colorado consumer prices have to do with the United States Constitution and its provisions regarding interstate commerce? The Energy and Environment Legal Institute points out that Colorado consumers receive their electricity from an interconnected grid serving eleven states and portions of Canada and Mexico. Because electricity can go anywhere on the grid and come from anywhere on the grid, and because Colorado is a net importer of electricity, Colorado’s renewable energy mandate effectively means some out-of-state coal producers, like an EELI member, will lose business with out-of-state utilities who feed their power onto the grid. And this harm to out-of-state coal producers, EELI says, amounts to a violation of one of the three branches of dormant commerce clause jurisprudence.
In the end, the district court disagreed with EELI’s assessment and so must we.
Posted on July 13, 2015
The Supreme Court’s latest opinion in an environmental rule challenge, this to the Mercury and Air Toxics Standard, or MATS, raises more questions than it answers. As discussed on this blog site (see here, here and here,) the Court in Michigan v. EPA held that EPA had not reasonably considered costs when determining to regulate power plant mercury emissions. EPA must factor cost into its initial determination that it is “appropriate and necessary” to regulate hazardous pollutants from power plants. The Court passed no judgment on whether EPA can meet that burden.
At the heart of the issue was Congress’ acknowledgement that the 1990 Clean Air Act Amendments would subject power plants to numerous controls to reduce sulfur dioxide, nitrogen oxides, and particulates. Section 112 of the Act requires EPA to regulate power plants if “regulation is appropriate and necessary after considering the results of the study.” Congress further acknowledged that these measures also might reduce hazardous air pollutants, and that no one knew at the time whether additional controls would be required to protect human health from air toxics emitted by power plants.
To determine that, EPA was required to conduct a study. In 1998, EPA’s study concluded that regulation of coal and oil fired power plants was “appropriate and necessary.” EPA reaffirmed this finding in 2012, noting that mercury and other hazardous air pollutants were “appropriate” to regulate because they posed a risk to human health and the environment and that controls were available to reduce the pollutants. EPA found that it was “necessary” to regulate because other pollutant emission limits and requirements did not eliminate the risks.
The Court, in a 5-4 decision written by Justice Scalia, analyzed EPA’s action through the Chevron deference standard, determining that “EPA strayed far beyond those bounds when it read §7412(n)(1) to mean that it could ignore cost when deciding whether to regulate power plants.” Ultimately, the Court held that “Chevron allows agencies to choose among competing reasonable interpretations of a statute; it does not license interpretive gerrymanders under which an agency keeps parts of statutory context it likes while throwing away parts it does not.” Id. at 9.
The Court went on to reject EPA’s contention that it need not factor cost into its initial determination to regulate because the agency must take cost into consideration when later determining how much to regulate. The Court colorfully remarked that: “By EPA’s logic, someone could decide whether it is ‘appropriate’ to buy a Ferrari without thinking about cost, because he plans to think about cost later when deciding whether to upgrade the sound system.” The Court’s strong language cautioning EPA to use “reasoned decision making” and not “gerrymander” statutory requirements should give EPA pause as it is set to promulgate greenhouse gas reduction measures for power plants in its Clean Power Plan this summer. Numerous comments filed in the so-called Clean Power Plan rulemaking docket have charged EPA with overstepping its statutory boundaries, and the Court seems to be signaling its disfavor of such action.
Since the decision, speculation as to whether and how EPA will fix MATS has been rampant.
- Will EPA abandon MATS completely, requesting vacatur? Not likely. In public remarks and testimony before a Congressional subcommittee during the week of July 6, Administrator Gina McCarthy cited the health benefits already achieved by the rule, indicating the agency would not back down.
- Can EPA fix the rule based on the current administrative record? Some believe that EPA can simply re-jigger its existing analysis and logic, fronting the cost issue in the “appropriate and necessary” finding, perhaps calling this a “technical amendment” to the rule.
- Will EPA seek a stay of the existing rule while it recalculates costs and re-proposes the rule? Because the rule went into effect in April 2015, companies already have installed a range of controls from activated carbon injection to installation of flue gas desulfurization equipment. Each type of control has costs and benefits, as well as impact on other pollutants. Many of these controls may remain operational to comply with other CAA requirements; therefore, a stay may have disproportionate impacts on industry members as some cease to operate controls and others continue to operate them.
- But could EPA’s re-proposal result in even more stringent emission limits? Absolutely. Would EPA be wise to lower the standards further? Given the cost and disruption caused by MATS so far, absolutely not.
- And how will any of these possibilities affect the “already regulated” argument that will be used to attack the Clean Power Plan? Section 111(d), the basis for the Clean Power Plan, prohibits regulation (whether of the source or the pollutant remains to be decided) if a Section 112 standard exists. So if MATS goes away, does the legal basis for the Clean Power Plan become stronger?
How the ongoing, never-ending EPA effort to achieve hazardous pollutant reductions from power plants will play out remains to be seen. The Supreme Court’s close reading of the directives contained in the statute, coupled with its references to balanced costs and benefits, leaves the impression that any rule with wide reach better be well-reasoned and justified. No doubt EPA is taking notice.
Posted on July 10, 2015
The U.S. EPA and Army Corps of Engineers have designated July 13 as the official issuance date for purposes of judicial review of their Final Rule defining the scope of “waters of the United States” or “WOTUS” under the federal Clean Water Act. However, a number of lawsuits have already been filed, including four separate actions brought on behalf of a total of 27 states and a fifth action filed by Murray Energy Corp., a privately held coal mining company.
The lawsuits seek to overturn the Final Rule on several grounds that include:
- Usurpation of state authority over intrastate waters in violation of the Constitution’s Commerce Clause and Tenth Amendment
- violation of the federal Administrative Procedures Act (APA) due to the Final Rule’s allegedly unlawful expansion of federal powers granted under the federal Clean Water Act, as well the arbitrary and capricious nature of the rulemaking;
- violation of the APA’s requirement to provide notice and opportunity for comment on proposed rulemakings, and to properly respond to comments made during the comment period; and
- violation of the National Environmental Policy Act’s requirement to prepare an environmental impact statement for a major federal action significantly affecting the quality of the human environment.
The object of all this attention is a long expected – and expansive – WOTUS interpretation adopted by EPA and the Corps. As reported on this blog site, the rule is controversial; the draft generated over one million comments. For a comprehensive analysis of the draft rule, including the cases leading up to the rule, see the American College of Environmental Lawyers reportfor the Environmental Council of the States.
The Final Rule, which does not change much from the draft, is intended to provide more certainty regarding what is and is not subject to the Clean Water Act’s Section 402 and 404 permitting provisions and its Section 311 oil spill prevention and response provisions so as to reduce case-by-case determinations of applicability. Despite the inclusion of a number of definitions and exclusions, it is doubtful that this goal has been achieved, given the number of new situations where a “significant nexus” determination must be made.
The significant nexus inquiry finds its genesis in Justice Kennedy’s concurring opinion in Rapanos v. United States where Justice Scalia wrote the plurality opinion. According to Justice Kennedy’s opinion, wetlands adjacent to navigable waterways are waters of the United States based on a “reasonable inference of ecologic interconnection” in accordance with the Supreme Court’s 1985 opinion in United States v. Riverside Bayview Homes. However, isolated wetlands or wetlands adjacent to a non-navigable tributary, either alone or in combination with similarly situated lands in the region, [must] significantly affect the chemical, physical, and biological integrity of other covered waters more readily understood as navigable” in order to fall within the purview of the Clean Water Act. Rejecting a bright-line test, Justice Kennedy noted that a “mere hydrologic connection should not suffice in all cases” as it “may be too insubstantial . . . to establish the required nexus with navigable waters as traditionally understood.”
The Final Rule broadly defines “tributaries” and “adjacent waters” and classifies them as “per se” jurisdictional waters, along with waters used in interstate or foreign commerce, interstate waters and wetlands, territorial seas, and impoundments of such waters. It also identifies a number of other waters (prairie potholes, Carolina bays and Delmarva bays, pocosins, western vernal pools, and Texas coastal prairies) as navigable waters if they meet the significant nexus test which involves consideration of a number of factors identified in a compilation of peer reviewed scientific reports assembled by EPA.
All of the complaints reference the Supreme Court’s Rapanosdecision, as well as the Court’s 2001 decision in Solid Waste Agency of Northern Cook County v. U.S. Army Corps of Engineers, regarding what constitutes a “navigable water”. In particular, they claim that the Final Rule goes well beyond the limits set forth in those decisions, including Justice Kennedy’s “significant nexus” test in Rapanos. Some of the complaints provide pretty convincing arguments on the latter point, and so another “wave” of litigation can be expected. Given that the litigation now extends back 30 years, a paraphrase of that old adage about water – and litigation - being everywhere seems right “on course”.
Posted on July 8, 2015
Twenty-five years in the making, the Environmental Protection Agency’s regulations to reduce emissions of mercury and other hazardous air pollutants (HAPS) from power plants recently ran aground in the Supreme Court. As discussed in this blog site last week, (see here and here,) the majority opinion by Justice Scalia in Michigan v. EPAheld that EPA erred in failing to consider cost when it made the threshold statutory finding that listing of power plants for regulation was “appropriate” under a special provision for power plants in the hazardous pollutant sections of the Clean Air Act.
The dissenters, in an opinion by Justice Kagan, disagreed that costs had to be considered at the initial listing stage. She contended that costs were properly addressed when specific standards and requirements were developed for various source categories in the course of the normal rulemaking process, and emphasized that a final cost-benefit analysis was conducted to evaluate and support the decisions made.
Although Justice Scalia was at pains to say that the Court was not specifying the details of the cost analysis required, the majority was plainly troubled by the agency’s findings that the benefits of the mercury controls alone were valued at an annual value of only $4-6 million compared to an annual cost of $9.6 billion. However, mercury was not the only HAP controlled by the rule, and the co-benefits of incidental removal of other toxic fine particulate pollutants were estimated at $36-90 billion in EPA’s cost-benefit analysis. Those big numbers reflect robust scientific evidence of the incidence of illness and death caused by particulate emissions.
The majority did not address whether such co-benefits could be relied upon in a determination that the cost of the power plant rules was “appropriate.“ The D.C. Circuit will have to define the terms of EPA’s redo of the cost analysis. We are likely to hear more about counting of co-benefits in cost benefit comparisons, an issue also presented in EPA’s proposed Clean Power Rule for power plant greenhouse gas emissions. Reducing carbon emissions also reduces particulate emissions even more, and the monetized benefits of that effect exceed the harder to estimate benefits achieved in slowing global warming.
Public Health and Environmental Consequences of the Decision
Despite the Supreme Court’s action, commentators on both sides of the issues agree that major benefits of the regulation will not be lost. A trade publication estimated in May that half of the power plants subject to the rule have already installed the required emission control technology to meet multiple EPA air pollution rules, in addition to the hazardous pollutant rule. Another 200 plants given an extra year to comply are installing and testing equipment. Several dozen plants accounting for only 1% of industry capacity reportedly are the remaining uncontrolled sources that will continue to operate without controls or plans to install them until the Michigan case is concluded.
Many companies that have complied with the rules are doubtless disappointed to see the perennial “free riders” get another reprieve; some intervened on EPA’s side in the Michigan case to complain about unfair competition from uncontrolled plants. But the majority of power plants, to their credit, are already delivering the public health and environmental benefits of the rule for the community.
Citizens unhappy with the continuing failure to regulate old coal plants may wish to support the divestment movement, recently joined by Georgetown University, in dumping coal company securities. The day Michigan v. EPA was decided, the stock of three major coal producers rose about 10%. If the price jump holds, now looks like a good time to sell.
Posted on July 7, 2015
Since he's much in the news these days, I thought I'd share this story about an encounter of Donald Trump with the Clean Water Act.
Back in 1919, Eugene Meyer (a chairman of the Federal Reserve, the first president of the World Bank, publisher of the Washington Post, and father of Katherine Graham) built a palatial mansion on a 230-acre property in Westchester County, New York (about 40 miles north of New York City) known as Seven Springs. Eventually the property fell into disuse, and in 1996 Trump bought it so that he could build a luxury golf course there, with the mansion as the clubhouse. The land straddled the extremely affluent towns of Bedford, North Castle and New Castle, so those towns' zoning approval was needed. It was adjacent to Byram Lake, which serves as the drinking water reservoir for the much less affluent Village of Mount Kisco. More than one-third of its population is Hispanic.
Crabgrass and dandelions, of course, would be utterly unacceptable at a Trump golf course, so the plan involved the considerable application of pesticides. Mount Kisco became very concerned that the stormwater runoff from the golf course flowing into Byram Lake would contaminate their drinking water. They hired me as their environmental counsel to see if Trump's plan could be stopped. Since none of the golf course was in Mount Kisco, the village had no direct authority. The town of New Castle gave Trump a hard time over traffic impacts, and he decided to give up plans to use that corner of the site for his project. Bedford and North Castle don't rely on Byram Lake for their water and weren't so concerned about the pesticides.
A close reading of the appendices to the environmental impact statement (when laid against state regulations) revealed that pesticide levels in the runoff could exceed drinking water standards under certain scenarios. Trump proposed to address this problem through a novel technology called "linear adsorption systems" that would involve a carbon filtration unit at each of the 18 holes. The land would be graded so that the runoff went into these filtration units, which were supposed to remove the pesticides and discharge clean water into Byram Lake.
No such system had ever been built before, and we didn't know if it would work. We wanted it tested first. A local citizens group made up buttons saying "We're Not Trump's Guinea Pigs," with a drawing of a guinea pig and a red slash through it. The golf course didn't seem to require any state approvals, but I was able to convince the state environmental department that capturing the runoff, treating it, and discharging it through pipes had the effect of converting a sheet flow into point sources, requiring NPDES permits for each discharge point. This afforded us the opportunity to get a public hearing before the state regulators (in which we packed a high school auditorium with Mount Kisco residents worried about their drinking water), and then an adjudicatory hearing at which we pressed the need for a pilot test of the treatment system.
The hearing led to a decision that a pilot test was needed. We then entered into protracted administrative adjudication over the parameters of the pilot test.
All this went on for eight years. Finally, in 2004, Trump gave up the idea of the golf course and decided instead to build a small number of large single-family homes. That residential project involved far less use of pesticides than a golf course, and Mount Kisco was satisfied with it. The NY Daily News covered the story with the headline, "Trump 'Fires' Plan for New Golf Course Over Community Pesticide Concerns."
The local approval process for the homes took many more years, and was punctuated by litigation with the Nature Conservancy over an access easement. Trump now has his approvals but construction of the homes has not yet begun. The property has been mostly idle during all this time, except that in 2009 he rented a portion of the land to some tenants from the Middle East, until it turned out that the tenants planned to erect tents to be used by Muammar el-Quaddafi while he was In New York for a United Nations meeting. When Bedford learned of this, they issued a stop work order because one can't erect a tent in Bedford without a permit, and Quaddafi never visited.
In the end, the environmental impact review process and the Clean Water Act did their jobs, the people of Mount Kisco still enjoy clean drinking water, and the occasional dandelion still pokes its head through the grass. And, notwithstanding all of this, Donald Trump tells us that he is still really, really rich.
Posted on July 1, 2015
There are exciting developments in the College’s pro bono projects for Cuba, China and East Africa. This is our updated report.
With permission of the Executive Committee, the College has applied for a license to work in Cuba from the United States Department of the Treasury’s Office of Foreign Assets Control (“OFAC”). OFAC has replied by assigning the College a case number (an important development since we now have access to a Treasury Department case officer to help us) and noting that the College’s potential activities might (or might not) qualify for one of the 12 exceptions to the requirement for an OFAC license. We can either take our chances by proceeding with work and keeping careful records of our activities while awaiting a potential audit or apply for a specific opinion or license for a specifically described project. The pro bono program will work further with the Executive Committee to determine the nature and timing of our potential work in Cuba, but we regard this as a very promising path forward for the program.
Notwithstanding the May 26 press coverage of the proposed new Chinese legislation declaring that Western non-profits are no longer welcome in China (describing them as “potential enemies of the state”), our program continues to go forward with opportunities to work there. Zhou Saijun, the Director of Environment and Energy Committee under All China Lawyers Association has confirmed that ACLA will continue to cooperate with ACOEL and NRDC for its annual lawyer training. This event will take place in Xian in September 2015. There will be an opportunity for a College Fellow to speak at the training session. We will know shortly the proposed date and topic for the speech. As usual, we will ask those interested to submit their curricula vitae to me for transmission to the ACLA. They will select the Fellow they feel is most suited to their needs.
Xian, as you may well know, is the site of the famous, and once-buried, terracotta warriors and their terracotta horses. It should be on everyone’s bucket list.
3. East Africa
Coordinating the legal and political clients for work in East Africa has been challenging. But within the month, I hope to circulate a survey to solicit expressions of interest for work on East African environmental issues. I will do what I can to get our African contacts to pick up the pace.
In the interim, please call me at 415.954.4430 if you desire further information.
Posted on June 30, 2015
In Jonathan Cannon’s excellent post on Monday’s Supreme Court decision in Michigan v. EPA, he noted that the majority and the minority aren’t actually that far apart in their views on whether EPA must consider costs in this rulemaking. I have a slightly different take: They may not be that far apart, but they’re both wrong.
In fact, the issue in Michigan v. EPA seems so simple that the MATS rule could have been affirmed in a two-page opinion. Judge Scalia notes that the word “appropriate” – on which the entire 44 pages of the majority, concurring, and dissenting opinions focus – is “capacious”. I agree. If so, and if Chevron means anything, “appropriate” is surely capacious enough to allow for an interpretation that does not include cost considerations. That should have been the end of the case.
I do feel compelled to note, however, that Justice Kagan’s dissent also got it wrong, in at least three ways:
- I think she’s flat wrong to suggest that, because the MATS “floor” is based on the top 12% of facilities already in operation, that means that establishment of the floor already takes cost into account. As Justice Scalia cogently notes, those existing facilities may well have been under their own regulatory duress – a duress that may not have considered cost.
- Justice Kagan confuses cost-benefit analysis and cost-effectiveness analysis. For any given goal sought by EPA, the various options provided by the MATS rule may allow power generators to attain the goal in the most cost-effective means possible, but if even the most cost-effective approach were to yield $10B in costs and $10M in benefits, that would fail the cost-benefit test for most people.
- Finally, and most importantly, Justice Kagan got the consequences wrong. Instead of suggesting, as she did, that the majority decision,
"deprives the American public of the pollution control measures that the responsible Agency, acting well within its delegated authority, found would save many, many lives,"
she should have made the point that the majority decision will have no impact on EPA or the MATS rule. The Supreme Court did not vacate the rule; it merely remanded the rule to the Court of Appeals. Justice Kagan’s position should have been that EPA still has sufficient discretion, even on the existing record, to defend the MATS rule within the confines of the majority opinion. Instead, Justice Kagan gave ammunition to those who oppose the rule, by suggesting that it cannot be saved.
A pox on both their houses.
Posted on June 30, 2015
In Michigan v. EPA yesterday the Supreme Court held, 5-4, that EPA unreasonably declined to consider costs in deciding to regulate emissions of hazardous air pollutants (HAPs) from electric power plants. At issue was the Agency’s interpretation of the Clean Air Act’s “appropriate and necessary” threshold for regulating emissions from power plants under Section 112. The industry and state petitioners argued that the Agency could not reasonably interpret the phrase as excluding consideration of costs, whereas EPA contended that it could limit consideration of costs to a later phase of the regulatory process – i.e., the setting of emissions standards.
In Environment in the Balance: The Green Movement and the Supreme Court, I describe the competing cultural paradigms that orient us on environmental issues – paradigms immediately recognizable to anyone who works in environmental law and policy. On the one hand, the new ecological model emphasizes the interconnectedness and fragility of natural systems and the importance of collective restraint in protecting those systems. (Pope Francis’ Laudato Si embodies this model.) On the other, the dominant social paradigm emphasizes individualism, entrepreneurial effort, and economic growth. The postures of the justices in the Court’s environmental cases often reflect the influence of these paradigms. Conservatives such as Chief Justice Roberts and Justices Scalia, Thomas and Alito tend to align in environmental cases with the dominant paradigm; liberals such as Justices Ginsburg, Kagan and Sotomayor with the ecological. In the middle are Justice Kennedy, a conservative who has nevertheless been responsive to the ecological model in important cases, and Justice Breyer, a liberal who has expressed concern about extending environmental protections regardless of costs, as in his separate opinions in Whitman v. American Trucking Associations, Inc. and Entergy Corp. v. Riverkeeper, Inc.
Consistent with these alignments, Michigan v. EPA revealed divergent responses among the justices to the economic burdens of environmental regulation. Breyer held with his pro-environmentalist colleagues; Kennedy swung this time with the anti-regulatory faction; and the other justices lined up predictably according to their preferred worldviews. But the divergence was less than it might have been, and the competing opinions reflected common ground among the justices on the importance of considering costs in environmental regulation to avoid “disproportionate outcomes.”
Justice Scalia’s opinion for the Court argued that “reasonable regulation ordinarily requires paying attention to the advantages and disadvantages [i.e., costs] of agency decisions.” (Scalia pointedly cites Breyer’s concurring opinion in Entergy here.) Against a backdrop of the potential for burdensome and inefficient regulation, “appropriate and necessary” could not reasonably be read “as an invitation to ignore costs.” That the agency did prepare and consider a cost-benefit analysis in the standard-setting phase did not salvage the validity of the threshold determination. Costs were relevant at both stages. As he did in his opinion for the Court in Entergy, Justice Scalia walked back the potentially expansive holding in American Trucking, which ruled that the Clean Air Act prevented consideration of costs in setting National Ambient Air Quality Standards; that decision, he wrote, stands only for “the modest principle” that EPA is not allowed to consider costs where Congress has used language that excludes them.
Justice Kagan’s dissent (joined by Justices Ginsburg, Breyer and Sotomayor) agreed with the majority that rational regulation is generally not cost-blind: “absent a contrary indication from Congress” regulatory agencies must take costs into account. But she differed from the Court in arguing that EPA’s consideration of costs in the standard-setting phase satisfied the requisites of reasonableness. EPA’s cost-benefit analysis for the standards showed that the benefits (including the co-benefits of further reductions in particulate matter emissions) outweighed the costs by a factor of three to nine – a reasonable return indeed.
Michigan v. EPA suggests a presumption, adhered to unanimously by the Court, that where Congress has not specifically addressed consideration of costs, agencies are required to consider them, because it would be unreasonable for them not to. Only where Congress has evidenced its intent to preclude consideration of costs (the narrow niche to which American Trucking is now confined) are agencies free to ignore them. Apart from the specific issues in the case, this is a significant development in the Court’s approach to regulatory review. With both factions presuming that costs should be considered, the issue was not whether but when.
Posted on June 29, 2015
Recent events have me pondering this question.
Most notably, in two court decisions last week, courts ordered the State of Washington and the government of the Netherlands to take more aggressive action against climate change. In the Washington case, in response to a complaint from eight teenagers, a trial court judge has ordered the Washington Department of Ecology to reconsider a petition filed by the teenagers requesting reductions in GHG emissions. Similarly, in the Netherlands, a court ordered the government to reduce GHG emissions by 25% within five years. The Dutch case was brought under human rights and tort law, not under existing Dutch environmental laws.
I have been very skeptical of the use of nuisance-type litigation to require more aggressive government regulatory efforts. I still think comprehensive market-based regulation is the best approach. However, in the absence of aggressive action in the United States and world-wide, these suits are going to increase in number.
So, how are they similar to the same-sex marriage issue? First, as noted in Obergefell, courts were initially – and for some time – not just unfriendly to litigation efforts in support of same-sex marriage, they were positively dismissive. Second, there is the gradual increase over time in the litigation.
Next, there is also the change over time in the scientific understanding of the issues. While same-sex marriage has always been, on both sides, primarily a moral issue, it would be wrong to ignore the role that an increasing understanding of the genetics of sexual preference has played in the debate. Similarly, the move towards an overwhelming weight of evidence, not just that climate change is occurring, but that it is anthropogenic, has obviously been important to the climate change debate.
Finally, while the moral issues in same sex marriage may seem to distinguish it from the climate issue, the recent papal encyclical makes clear that there are moral aspects to the climate change debate as well.
I have no crystal ball. I do not know whether we are going to see a groundswell, and then, perhaps, a tidal wave that will somehow overcome the gridlock in United States and world politics on climate change. There are differences in the two issues, most obviously in the short-run economic costs of addressing climate change. Nonetheless, I do know that it wouldn’t surprise me if the tidal wave comes, and relatively soon.
Posted on June 26, 2015
Storms, strong winds and tornados usher in spring in Oklahoma. Home to 38 federally recognized Indian Tribes, feathers often fly at Oklahoma graduations. A few high schools each spring face off with Native American students, families, or tribal leaders over a graduating Native American student’s request to wear her sacred eagle feather on her graduation cap during commencement.
The eagle feather symbolizes strength, nobility, courage, perseverance, respect and wisdom. Leaders and elders only gift eagle fathers in times of great achievement. For Native American students, receiving an eagle feather or plume in honor of graduation can be as important as the diploma. Native American students incorporate the eagle feather or plume into their graduation regalia by attaching it to their graduation cap or tassel, thereby expressing both religious and cultural beliefs and honoring their Native American heritage.
What has this got to do with environmental law? Well, as this Oklahoma spring blew in with two lawsuits about eagle feathers at graduation, I began to wonder -- where do these eagle feathers awarded to students come from? After all, the Bald and Golden Eagle Protection Act forbids anyone from "taking" bald or golden eagles or their parts. The Act punishes anyone who takes, possesses, sells, purchases, barters, offers to sell, purchase or barter, transports, exports or imports a bald or golden eagle. Punishment includes large fines and imprisonment and applies whether the eagle is alive or dead, or the collector is absconding with an entire bird, part of the bird, an egg or a nest.
So what is a tribal leader in need of eagle feathers to do? In recognition of the significance of eagle feathers to Native Americans, the U.S. Fish and Wildlife Service (USFWS) established the National Eagle Repository at the Rocky Mountain Arsenal National Wildlife Refuge in Denver, Colorado. The Repository provides Native Americans with the feathers of golden and bald eagles for ceremonial purposes.
But wait, it’s not as easy as that. The Repository collects, processes, and ships about 1,000 dead bald and golden eagles each year. Electrocution, vehicle collisions, unlawful shooting and trapping, and natural causes are the usual culprits in eagle deaths, so the condition of the eagle feathers is not always perfect. Only enrolled members of federally recognized tribes can obtain a permit to obtain eagles or eagle parts for religious purposes. Approximately 95% of the orders are for whole eagles. With 566 Federally recognized tribes nationally, the large demand and the limited supply force applicants to wait more than 3 years for a whole bird eagle order to be filled. Currently, there are over 5,000 people on the waiting list for the approximately 1000 eagles the Repository receives each year.
Not everyone settles for eagle feathers from the Repository. In 2005, a fellow named Winslow Friday, a member of the Northern Arapaho Tribe of Wyoming shot a bald eagle within the Wind River Reservation for use in the tribe’s traditional religious Sun Dance ceremony. Unfortunately, Mr. Friday had no permit and was ultimately fined after losing a challenge to his penalty under the Religious Freedom Restoration Act.
The story doesn’t stop there. The Wind River Reservation, created in 1968, is home to both the Northern Arapaho Tribe and the Eastern Shoshone Tribe. Mr. Friday’s self-help effort having failed, the Northern Arapaho Tribe still needed eagles for use in their Sun Dance ceremony. So the Tribe applied for a permit to take two eagles each year on the Wind River Reservation.
But it’s a long road to an eagle take permit. Two years after the Arapahos applied for the permit, their co-habitants of the Wind River Reservation opposed the take of eagles on the reservation, claiming that allowing an enemy of the tribe to kill sacred eagles goes against Shoshone traditions, values, morals, heritage, and freedoms. Ultimately, however, the USFWS awarded the first federal eagle take permit to the Arapaho Tribe on condition that the take not occur on the Wind River Reservation. The Arapaho Tribe filed suit challenging that permit restriction. Judge Alan Johnson, of the United States District Court of the District of Wyoming issued an order on March 12, 2015 granting in part the Arapaho Tribe’s motion for summary judgment on Free Exercise grounds, and remanding the matter for reconsideration by the USFWS in light of the Court’s Order. See Northern Arapaho Tribe v. Daniel M. Ashe, Director, United States Fish and Wildlife Service, Case No. 2:11-CV-00347 Document 93 Opinion and Order Granting in Part and Denying in Part Plaintiffs’ Motion for Summary Judgment on Remaining Claims and Opinion and Order Granting in Part and Denying in Part Defendants’ Cross-Motion for Summary Judgment on Plaintiffs’ Remaining Claims (March 12, 2015). The Northern Arapaho Tribe’s religious quest through an eagle take permit continues.
My Oklahoma-spring curiosity led me to the conclusion that eagle feathers aren’t just blown in on the wind – eagles and eagle feathers are hard to come by even for those who lawfully possess them. Any student fortunate enough to be awarded a sacred eagle feather for graduation is truly graced.
Posted on June 24, 2015
The State of Texas took swift action to block a municipality seeking to limit fracking. In response to a 59 to 41% vote of its citizens, in November 2014, the City of Denton adopted an ordinance banning the well completion activity of hydraulic fracturing or fracking, which involves the high pressure injection of water, with proppants and small amounts of chemicals, into tight formations thousands of feet below surface to create and prop open fractures that facilitate the flow of oil and gas.
Hours after the ordinance’s adoption, the Texas General Land Office and Texas Oil & Gas Association filed suit in Denton County district court, seeking to declare the ban invalid. They argued that the ordinance intruded on powers granted by the legislature to the Railroad Commission of Texas and the Texas Commission on Environmental Quality and thus was preempted by state law. On May 18, 2015, before the court could rule on the law suit, Texas Governor Greg Abbott signed into law House Bill 40, which removes the authority of Denton and all other Texas municipalities to regulate not only fracking, but also all other oil and gas operations. On June 17, 2015, in recognition of House Bill 40, Denton’s City Council voted to amend its ordinance by repealing it in its entirety.
In seeking to reconcile the interests of those concerned with state government intruding on local rule with the interests of mineral owners and their lessees concerned with intrusive governmental restrictions on the use of their property, House Bill 40’s approach arguably was solomonesque. In just 3 pages, the bill allowed cities, under certain circumstances, to regulate above ground activities related to oil and gas operations, but barred them from regulating oil and gas operations per se, reserving that regulation to the state.
House Bill 40 declares that oil and gas activities are subject to the exclusive jurisdiction of the state, but clarifies that municipalities may adopt an ordinance that regulates above ground activities related to oil and gas operations, including ordinances governing fire and emergency response, traffic, lights, or noise, or imposing reasonable setback requirements. The statute requires, however, that such an ordinance be “commercially reasonable,” not effectively prohibit an “oil and gas operation” conducted by a reasonably prudent operator, and not otherwise be preempted by state or federal law. The statute defines the quoted terms. It also creates a presumption that an ordinance is considered prima facie to be commercially reasonable if it has been in effect for 5-years and has allowed oil and gas operations to continue during that period.
The stated concerns of the Denton ordinance generally related not to fracking, but rather to the above ground impacts of the oil and gas activities it facilitated, that is, things like traffic, lights, noise, and safety concerns. The Denton ordinance did express concern with the potential for contamination of drinking water aquifers, but studies, including EPA’s recently released draft assessment on fracking, generally have shown that concern to be related more to oil and gas activities generally than to the subsurface migration of contaminants associated with fracking per se.
Even in fossil energy friendly Texas, fracking can be controversial. The new state statute allows municipalities to address above ground effects related to oil and gas operations, subject to certain limits to be more fully fleshed out, but reserves to the state the power to regulate oil and gas operations per se. This approach preserves local authority over things that arguably mattered most to the citizens of Denton, while preserving regulation of oil and gas development by the agencies that have historically regulated them.
Posted on June 23, 2015
On June 4, 2015, the U.S. Environmental Protection Agency released a draft “Assessment of the Potential Impacts of Hydraulic Fracturing for Oil and Gas on Drinking Water Resources,” which finds no evidence that hydraulic fracturing activities have led to widespread, systemic impacts on drinking water supplies. According to the draft assessment, between 2000 and 2013, there were an estimated 9.4 million people living within one mile of a well that was hydraulically fractured. The draft assessment supports the assertion that state agencies, as the primary regulator of oil and gas development in the United States, are effectively governing hydraulic fracturing activities by the industry.
Initially announced by USEPA in March 2010, the study has a broad scope. USEPA reviewed each stage of the “hydraulic fracturing water cycle” – including water acquisition, chemical mixing, well injection, flowback and produced water recapture, and wastewater treatment and disposal – to assess for any widespread, systemic impacts on the quality or quantity of drinking water resources. The agency also used an expanded definition of drinking water resources that includes currently undrinkable saline aquifers that might be desalinated for consumptive use in the future.
Although the draft assessment acknowledged that hydraulic fracturing could potentially contaminate drinking water resources, USEPA found that the actual occurrences of such impacts were “small compared to the number of hydraulically fractured wells.” The risks related to hydraulic fracturing activities identified in the draft assessment included: water withdrawal in times of low availability; spills of fracturing fluids and produced water; fracturing directly into underground drinking water resources; below ground migration of liquids and gases; and inadequate treatment and discharge of wastewater.
The draft assessment noted that the primary means of disposing of wastewater from hydraulic fracturing activities conducted in the United States is underground injection wells. However, one notable exception to this finding is in the Marcellus shale play, where USEPA found that most wastewater is reused by industry. The high percentage of reuse and recycling of wastewater in the Marcellus shale play is a practice that industry has long asserted is a valuable means of reducing the amount of freshwater needed for well development activities.
USEPA is expected to publish a final assessment after the completion of a notice and comment period, which is currently open and concludes on August 28, 2015, and a review of the draft assessment by the Science Advisory Board Hydraulic Fracturing Research Advisory Panel. The Panel has scheduled a public meeting to conduct a review of the draft assessment from October 28 to October 30, 2015, and teleconferences to discuss the draft assessment on September 30, October 1, and October 19, 2015.
Posted on June 19, 2015
On June 12, 2015, EPA’s final rule calling for 35 states and the District of Columbia to revise their regulations on excess emissions during startup, shutdown and malfunction was published. This rulemaking saga dates back to a June 30, 2011 petition filed by the Sierra Club. The vast majority of these regulations have been part of State Implementation Plans (SIPs) since the 1970s or early 1980s. As EPA sets out in the rule, the question of how to deal with emissions during startup, shutdown and malfunction (SSM) has also been the subject of guidance issued in 1982, 1983, 1999, 2001, and now 2015. This is a tough issue.
EPA found that a majority of the states have regulations that impermissibly allow a source to assert affirmative defenses to avoid a determination that excess emissions due to SSM events are violations of the Clean Air Act. Similarly, EPA also concluded that regulations providing discretion to the state agency to determine whether excess emissions are violations are improper. Because such provisions deprive EPA or citizens of the ability to pursue enforcement action, EPA concludes the provisions are impermissible. The preamble also points out that broad SSM exclusions under state law would effectively allow state agencies to usurp the authority given to the federal courts by Congress to enforce SIPs and determine penalties. In response to concerns voiced by the regulated community, EPA emphasizes that sources can assert any common law or statutory defenses they believe are supported by the circumstances when they get to court.
With respect to startup and shutdown provisions, the rule reiterates that different emissions limitations can apply to particular modes of operation and the preamble discusses the use of work practice standards rather than numerical emission limitations. EPA recommends seven criteria as appropriate considerations for States as they consider SIP revisions to address startup and shutdown provisions in response to the SIP Call. The criteria seem designed to encourage a series of source category-specific rules to replace regulatory provisions that apply to all types of emission sources. However, EPA also emphasized that each state has discretion to determine the best means by which to make a revision so long as the revisions are consistent with the Clean Air Act. It remains to be seen how states will choose to respond and the extent of administrative burden this process will impose on agency staff.
Affected states have until November 22, 2016 to respond to the SIP Call. Until EPA takes final action on the SIP submittals, the existing SIP provisions remain in effect. SIP calls were issued for Maine, Rhode Island, New Jersey, Delaware, District of Columbia, Virginia, West Virginia, Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina, Tennessee, Illinois, Indiana, Michigan, Minnesota, Ohio, Arkansas, Louisiana, New Mexico, Oklahoma, Texas, Iowa, Kansas, Missouri, Colorado, Montana, North Dakota, South Dakota, Arizona, California, Alaska, and Washington.
Posted on June 8, 2015
On May 5, 2015, the Wisconsin Department of Administration (WDOA) released its Preliminary Determination that compliance with the Wisconsin water quality-based effluent limitations (WQBEL) for phosphorus will cause “substantial and widespread adverse social and economic impacts on a statewide basis”, thus providing the foundation for availability of a statewide multi-discharger variance (MDV).
What brought this on?
In posts in 2011 and 2013, I described Wisconsin’s phosphorus reduction rule, including its compliance options of water quality trading and adaptive management. Recognizing that these innovative compliance alternatives to traditional construction are not viable for all dischargers, in 2014 Wisconsin enacted legislation to authorize a statewide MDV for those dischargers that cannot meet the WQBEL for phosphorus without a major facility upgrade. Under the MDV, a point source will have more time to meet its phosphorus limitations. However, during the extended period, they will be obligated to either implement nonpoint source reductions or to provide funding to counties to implement existing, but seriously underfunded, nonpoint source reduction programs. The expectation is that most permittees will choose to fund their local county. At $50/pound for the difference between the actual pounds of phosphorus discharged and the target value of 0.2 mg/L, we are talking about real money.
The MDV legislation required the WDOA, in consultation with the Wisconsin Department of Natural Resources (WDNR), to conduct a study to:
“determine whether attaining the water quality standard for phosphorus . . . through compliance with water quality based effluent limitations by point sources that cannot achieve compliance without major facility upgrades is not feasible because it would cause substantial and widespread adverse social and economic impacts on a statewide basis.”
Based on work conducted by ARCADIS, The University of Massachusetts Donohue Institute, and Sycamore Advisors, consultants to WDOA and WDNR, the Preliminary Determination concludes that, without this variance:
· “almost 600 Wisconsin businesses will be impacted as they continue to work their way out of the recession”
· Wisconsin communities will experience a minimum cost of “$3.4 billion in capital expenditures which will rise to nearly $7 billion when accounting for interest” to meet increased capital costs
· Annual operations and maintenance (O&M) cost of $405 million along with debt service will “equate to $708 million annually”
· In 2025 when the full impact of the costs will be felt, statewide impacts will result in:
o 4,517 fewer jobs
o $283.3 million in foregone wages
o $616.6 million reduction in gross state product
o 11,000 fewer Wisconsin residents
A hearing on the Preliminary Determination was held on May 12, and written comments are due by June 11. The next step is for WDNR to submit a request to the United States Environmental Protection Agency (USEPA) to approve the MDV for phosphorus for Wisconsin. Once implementation of the MDV begins, much-needed nonpoint source funding can begin to flow.
Additional relevant documents are accessible via the WDNR website.
Posted on June 5, 2015
Earlier this week, the D.C. Circuit Court of Appeals rejected both industry and environmental group petitions challenging EPA’s determination of what is a solid waste in the context of Clean Air Act standards for incinerators and other combustion units. It wasn’t actually a difficult case, but it does provide a lesson for Congress. When the technical nature of EPA’s decisions was layered on top of the fundamental deference given EPA’s interpretation of the statute under Chevron, the petitioners were never going to prevail:
We afford great deference to EPA’s determinations based on technical matters within its area of expertise.
The crux of the environmental petitioners’ case was that certain of the materials, such as scrap tires, exempted by EPA from the definition of solid waste, are unambiguously “discarded” within the meaning of RCRA, so that EPA did not have discretion to exempt them. Unfortunately, as the Court noted:
the term “discarded” is “marked by the kind of ambiguity demanding resolution by the agency’s delegated lawmaking powers.”
In other words, given the current state of decrepitude of the non-delegation doctrine, when Congress enacts legislation using words as vague as “discarded”, it is essentially telling EPA to figure out what Congress meant to say. And when EPA does figure out what Congress meant to say, the Courts are not going to disturb EPA’s interpretation.
For those in Congress who don’t like the way EPA implements statutes for which it is responsible, they might learn a lesson from Pogo.
Posted on June 1, 2015
Vatican officials have confirmed that a Papal encyclical will be released in June. The encyclical, which is the official proclamation of the Catholic church on a particular issue, will address the environment. According to the Vatican’s spokesman, Frederico Lombardi, Pope Francis believes that the proclamation will act as a “moral barometer” and will help “shape the discussion” at the climate summit in Paris (COP21) scheduled to be held at the end of 2015.
Although the encyclical has not yet been released, there is little question that it will take a strong position that environmental protection is a moral and religious issue and will likely acknowledge that climate change is, in fact, caused by human activity. As a precursor to the publication, a Vatican meeting was held on climate, energy and ecology. The meeting was a collective of religious leaders, environmentalists, and scientists, among others. On April 28, 2015, the group issued the “Declaration of Religious Leaders, Political Leaders, Business Leaders, Scientists and Development Practitioners:”
We, the undersigned, have assembled at the Pontifical Academies of Sciences and Social Sciences to address the challenges of human-induced climate change, extreme poverty, and social marginalization, including human trafficking, in the context of sustainable development. . . . We have considered the overwhelming scientific evidence regarding human-induced climate change, the loss of biodiversity, and the vulnerabilities of the poor to economic, social, and environmental shocks.
In the face of the emergencies of human-induced climate change, social exclusion, and extreme poverty, we join together to declare that:
Human-induced climate change is a scientific reality, and its decisive mitigation is a moral and religious imperative for humanity; . . .
The world should take note that the climate summit in Paris later this year (COP21) may be the last effective opportunity to negotiate arrangements that keep human-induced warming below 2-degrees C, and aim to stay well below 2-degree C for safety, yet the current trajectory may well reach a devastating 4-degrees C or higher; . . .
Given the timing of the Vatican meeting, it seems probable that Pope Francis’s upcoming encyclical, with its teachings for 1.2 billion Roman Catholics in the world, will have a significant impact. While many will be excited to see its contents, there are some that will likely be less than thrilled – including more than a few of the 40 or 50 candidates for President (I may have added a few of the fringe candidates) as well as some members of Congress. Whether the candidate is the extreme “climate-change-does-not-exist” or the more moderate “environmental-regulation-is-not-a-pressing-issue,” the encyclical is going to be a real problem. Recent polling indicates, for example, that environmental issues do not show up in the top ten priorities for Republican voters. But is any politician really going to disregard the Pope? And since 25% of the members of Congress identify as Catholic Republicans, the presidential candidates are not going to be alone in their dilemma.
I make a point of this only because I live in Iowa and the migration of presidential candidates has already begun. You can’t turn right at a corner without hitting a candidate, and between now and February 2nd (the Iowa caucuses) it is going to get much, much worse. If the Vatican could just wait until February 3rd or 4th, all of Iowa would be greatly appreciative. New Hampshire might not be thrilled, but that’s a risk we would be willing to take.
Religion, to varying degrees based on the country, has always had an impact on politics. In the United States, history and the Constitution have tried to separate them, but with little success. One thing is certain, at least during the last six months of 2015, we are all going to hear a lot more about environmental imperatives, moral obligations and political priorities.
Posted on May 28, 2015
Today EPA and the Army Corps of Engineers released a prepublication version of the final rule defining “waters of the United States,” the jurisdictional trigger under the Clean Water Act. The term needs defining because the Act extends to navigable waters and adjacent wetlands, but it is often not clear how some streams or wetlands relate to a navigable waterway, and the Supreme Court has provided conflicting guidance.
So, the agencies have attempted to clarify. With the new definition they hope to reduce the number of case-by-case jurisdictional determinations and litigation, but they understand full well the controversial nature of the rule, having received over a million comments on the draftpublished on April 21, 2014. In response, EPA and the Corps today also released a battery of public relations offerings—press release, fact sheets, blogs, op-ed pieces—to explain and defend the rule. The controversy will not end here.
As previously reportedin this space, the impetus for the rule is uncertainty created by a 2006 Supreme Court decision in Rapanos. In that case, a 5-4 split Court held that the government had overstepped its authority, but failed to issue a majority opinion. Instead, four justices, led by Justice Scalia, proposed a rule in essence requiring that the subject waters or wetlands be free flowing and obviously wet. The concurring opinion by Justice Kennedy would instead look for a “signficant nexus” between a wetland and a navigable waterway. The lower courts have struggled ever since to discern a clear jurisdictional definition.
At first glance, the final rule does not veer much from the draft. For a comprehensive analysis of the draft rule, including the cases leading up to the rule, see the American College of Environmental Lawyers reportfor the Environmental Council of the States. Although EPA and the Corps have declared that the rule does not represent a major policy shift, a diverse ACOEL writing team—made up of experts in academia, non-profit organizations, and private practice—had differing opinions. Some saw a sea change in federal policy, while others believed the draft rule was simply a restatement of existing policy.
Congress has been fulminating about government overreach since the draft rule was published. On May 12, 2015 the House passed HR 1732, the Regulatory Integrity Protection Act, in an effort to block the final rule. If the Senate passes the bill, Congress will need to muster the votes to override a certain presidential veto.
Although the purpose of the final rule is to provide some certainty as to the scope of Clean Water Act jurisdiction, it is highly likely to be challenged by industry groups in the courts. That means years of litigation and appellate review across the country, ultimately landing once again before the Supreme Court. Whether we get clarity this time from the Court remains to be seen.
Posted on May 7, 2015
The D.C. Circuit Court of Appeals just reversed and remanded EPA’s rule allowing backup generators to operate for up to 100 hours per year as necessary for demand response. It’s an important decision that could have lessons for EPA and the regulated community across a wide range of circumstances, including eventual challenges to EPA’s proposed GHG rule.
EPA said that the rule was necessary to allow demand response programs to succeed while maintaining grid reliability. Commenters had argued that, by encouraging greater use of uncontrolled backup generators, EPA’s rule makes other generators less economic, thus creating a negative feedback loop, with less and less power generated by controlled units, resulting in greater and greater need for uncontrolled backup generators. Here’s what the Court concluded:
- EPA failed adequately to respond to the commenters’ arguments. Noting that “an agency must respond sufficiently to “enable [the court] to see what major issues of policy were ventilated,” the Court instead found that EPA “refused to engage with the commenters’ dynamic markets argument."
- To the extent EPA did respond, it was “self-contradictory”, arguing that it was not justifying the regulation on reliability grounds, even though the final rule said that it was based on reliability concerns.
- The 100-hour rule was based on faulty evidence. EPA relied on evidence that backup sources had to be available at least 60 hours to participate in a PJM “Emergency Load Response Program.” However, PJM itself noted that this minimum does not apply to individual engines.
- Finally, and perhaps most importantly, while EPA justified the rule on reliability grounds, the Court stated that:
grid reliability is not a subject of the Clean Air Act and is not the province of EPA.
This last issue is the part of the opinion that could have some bearing on judicial review of EPA’s GHG rule. The Court noted that there was no evidence that FERC or NERC had participated in the backup generator rule or provided comments to EPA. When, during the course of the rulemaking, a commenter suggested that EPA work with FERC, this was EPA’s response:
the rulemaking’s purpose was to address emissions from the emergency engines “and to minimize such pollutants within the Agency’s authority under the CAA. It is not within the scope of this rulemaking to determine which resources are used for grid reliability, nor is it the responsibility of the EPA to decide which type of power is used to address emergency situations.”
This statement did not make the Court happy:
EPA cannot have it both ways it [sic] cannot simultaneously rely on reliability concerns and then brush off comments about those concerns as beyond its purview. EPA’s response to comments suggests that its 100-hour rule, to the extent that it impacts system reliability, is not “the product of agency expertise.”
And why is this relevant for the GHG rule?
First, because EPA had better consult with FERC and NERC, so that it can defend any statements it makes in the GHG rule about its impact, if any, on reliability. Second, it’s clear that the court will not show deference to EPA’s conclusions about reliability, since that is not within the scope of EPA’s expertise.
Posted on May 6, 2015
When selecting best management practices (BMPs) to protect streams during and following construction, riparian buffers are often considered the most effective option. These permanently vegetated areas alongside waterbodies can capture, infiltrate and control stormwater flow, filter contaminants, stabilize stream banks and otherwise help protect and restore waterbodies and the ecological functions they support. Recognizing the particular importance of riparian buffers located adjacent to exceptional value and high quality waters designated for special protection, the Pennsylvania Department of Environmental Protection (PADEP), like many other state environmental regulatory agencies, adopted regulations prohibiting earth disturbance activity within 150 feet of a special protection waterbody. The regulations further required a property developer to protect or establish a riparian forest buffer under certain circumstances where waters in the project’s watershed fail to attain their designated uses.
And then along came the Pennsylvania legislature. Faced with objections from homebuilders and other developers to restrictions on use of their properties, the legislature enacted Act 162 of 2014 to provide developers with additional options. Under Act 162, a developer who requires an NPDES stormwater construction permit may disturb land within 150 feet of a special protection waterbody if it implements BMPs “substantially equivalent” to a riparian buffer or a riparian forest buffer. If the earth disturbance would occur in a special protection watershed within 100 feet of a surface water, the developer must also offset any reduction of the total square footage of the buffer zone that would have been utilized as a BMP with a replacement buffer. The replacement buffer must be created in the same drainage area as the disturbed buffer and be as close as feasible to the area of disturbance at a ratio of one-to-one.
In response to the passage of Act 162, PADEP recently published interim final guidances on equivalency demonstration and offsetting. The equivalency demonstration guidance requires each developer disturbing earth within 150 feet of a special protection water to implement BMPs that reduce loadings of pollutants including total suspended solids, total phosphorous and nitrate. In addition, the developer must show that its BMPs are functionally equivalent to a riparian buffer or forested buffer by providing, among others, habit for wildlife and vegetation, flood attenuation, channel stability and support of aquatic food webs. Under the buffer offsetting guidance, a replacement buffer should be composed of native, diverse tree and shrub vegetation and preferably be installed at a location that receives runoff with characteristics similar to or more degraded than the runoff that the replaced buffer would have encountered.
While many regulatory regimes afford environmental agencies discretion to grant waivers and exceptions to buffer protection requirements, Pennsylvania has by statute granted developers the option of using substantially equivalent BMPs, supplemented where necessary by offsetting. PADEP has drafted guidances with stringent criteria for demonstrating equivalency and offsetting, but the guidances have yet to be finalized let alone judicially reviewed. Experience in administering Act 162 will reveal whether, under PADEP’s watchful eye, equivalency and offsetting can uniformly serve as effective substitutes for a prohibition on development near special protection waters. In the meanwhile, some healthy skepticism is in order.
Posted on May 1, 2015
Oklahoma has quietly earned the dubious distinction of earthquake capital of the Lower 48, having surpassed California last year. In 2014, Oklahoma had 585 earthquakes of magnitude 3.0 or higher compared to California’s 180. The cause of this dramatic rise in seismic activity, and whether it is induced by human activity, particularly by oil and gas operations, has been the subject of much discussion and scientific study.
When I last blogged about this subject (June 2014) the U.S. Geological Survey (USGS) and the Oklahoma Geological Survey (OGS) had just issued a joint warning of the increased risk of a M5.5 or greater earthquake in central Oklahoma, stating that the science suggests that a “likely contributing factor” to the increase in earthquakes is injection of oilfield wastewater into deep geologic formations. Despite several sensational articles implying that industry has exercised undue influence over the OGS and its scientific conclusions, on April 21, 2015, the OGS issued a statement in which it reiterated the view that “the primary suspected source of triggered seismicity is…from the injection/disposal of water associated with oil and gas production…the OGS considers it very likely that the majority of recent earthquakes…are triggered by the injection of produced water in disposal wells . . . .”
On April 23, 2015, the USGS released a new report which again noted the connection between earthquakes and certain deep disposal wells, but concluded that, “induced seismicity does not occur near every disposal well, so it is important that we continue to study and learn more about how these earthquakes are generated…These changes may be related to oil and gas exploration activity but they also may depend on physical processes, which are poorly understood…many questions remain”.
As the science develops, the Oklahoma Corporation Commission (OCC), which regulates oil and gas wastewater disposal wells in Oklahoma under the SDWA Underground Injection Control program, has taken an aggressive approach. The OCC has identified “areas of interest”, which are areas within 10 kilometers of any earthquake swarm. Eight areas of interest encompassing approximately 112 square miles have been identified. On March 12, 2015, the OCC sent letters to operators who dispose of oilfield wastewater into the deep Arbuckle formation within these areas of interest directing that they provide information from which it can be determined whether such disposal is in communication with the underlying crystalline basement rock. If it is, the OCC is requiring that disposal into the Arbuckle be discontinued. Failure to produce the information results in immediate curtailment of disposal by 50%.
With the downturn in crude oil prices, most companies have dramatically cut back on drilling and completing new wells. This downturn itself may provide a scientific opportunity to see if reduced oilfield activity produces fewer earthquakes in Oklahoma.
Posted on April 29, 2015
A plaintiff seeking to characterize a business transaction as “disposal” under CERCLA may now feel like a polar bear looking for a patch of thick ice.
On March 20, 2015, a divided panel on the Fourth Circuit Court of Appeals, in Consolidation Coal Co. v. Ga. Power Co., affirmed a District Court's ruling holding that transformer sales did not evidence an intent on to dispose of hazardous materials, and therefore did not support a finding of “arranger liability” under “CERCLA” even when words like “scrapping” and “disposal” were used. Looking to the framework of the Supreme Court’s 2009 ruling in Burlington Northern Burlington Northern and Santa Fe Railway Co. v. United States and the Fourth Circuit’s 1998 ruling in Pneumo Abex Corp. v. High Point, Thomasville & Denton Railroad Co., the 2-1 majority held that while a party who sells a product that contains hazardous substances also “‘intends’ to rid itself of that hazardous substance in some metaphysical sense… [an] intent to sell a product that happens to contain a hazardous substance is not equivalent to intent to dispose of a hazardous substance under CERCLA.” Rather, in the court’s words, “there must be something more.”
Georgia Power, a major Georgia electrical utility that supplies power to most of Georgia, sold used electrical transformers containing PCBs to Ward Transformer Company. Ward repaired and rebuilt used transformers for resale. In the process, Ward’s Raleigh, North Carolina, facility became contaminated with PCBs. After the Ward site was added to the National Priorities list, Consolidated Coal Company and another company bore most of the cleanup costs as PRPs under CERCLA, spending approximately $17 million each in cleanup costs.
Any attorney who has ever tried or been involved with a CERCLA case knows that Georgia Power, given these facts, looks like a prime target to sue for contribution.
In their appeal to the Fourth Circuit Court of Appeals, Consolidated Coal argued the District Court improperly considered the low value of the used transformers and Ward’s ability to profit from their resale. This, Consolidated Coal contended, overlooks the possibility that Georgia Power had a “dual intent” to make money from the sales of transformers and thus had an intent to dispose of the hazardous materials as an arranger. Thus, according to Consolidated Coal, Georgia Power’s “secondary motive” for the transformer sales -- to dispose of PCBs –- was sufficient to create arranger liability under CERCLA.
The Court concluded that there was no direct or substantial evidence that Georgia Power intended, “even in part,” to arrange for disposal. Furthermore, the use of the words “scrapping” or “disposal” in Georgia Power’s documents had “limited bearing” on their intent to “dispose” of transformers as the word is construed in CERCLA, let alone the PCBs within those transformers. The Court was also not swayed by the fact that the transformers were sold in lots and that some of the transformers were partially disassembled, or that old oil was required to be removed from the transformer as part of the reconditioning process. According to the Court, all Georgia Power did was to sell its transformers to the highest bidder.
While these cases remain fact sensitive, the trend lines suggest CERCLA plaintiffs alleging “disposal” may be on thin ice.
Posted on April 28, 2015
On April 15 of this year, I thought about the following quote:
"Taxes are what we pay for civilized society."
--Oliver Wendell Holmes Jr.
U.S. Supreme Court Justice
And then I reminisced a bit.
My career as a federal tax lawyer was very brief. About 25-30 years ago, I represented a client which thought it was paying too much in "Superfund" taxes. These taxes are levied on companies which manufacture and produce chemicals. The money is then used by U.S. EPA and others to fund hazardous waste disposal site clean-ups.
I certainly was not a tax lawyer. But one of our senior partners who was in charge of managing work for a chemical company client needed help. He was an excellent tax lawyer, but he said he knew nothing about Superfund taxation. Since I was doing a lot of Superfund clean-up work at the time, I drew the short straw for arguing the merits of this matter before the IRS.
I can't remember now whether the company had a good legal basis for contesting the tax. It might have had something to do with the fact that the client company recycled some amount of used chemicals into making new product. Thus, the Company believed, some of the same chemicals were taxed twice -- once when they were originally manufactured and then again when they were recycled into new product. I do remember that the client's top management thought that the Superfund tax on chemical production in general was very "unfair." [The client never got to the point of considering the "fairness" of the strict, retroactive, joint and several liability regime for generators under the Superfund Law.]
The Company President and I went out to Washington to discuss the merits of our case with officials of the IRS and the Treasury Department. We got out of our cab in front of the Internal Revenue Service Building on Constitution Avenue one bright sunny morning in April. I looked up at the imposing building. Emblazoned in granite across the top of the building was the above quote from Justice Holmes.
I turned to my client and asked him to look up and read the quote. Then I said, "Jon, this is why we are not probably going to win our case here today." And we didn't.
The Company was not interested in pursuing a judicial appeal. So ended my career as a tax lawyer.
Posted on April 16, 2015
After Sackett, the question on everyone’s mind was “How far does it go?” The first test of that question was the decision by the 5th Circuit Court of Appeals – not known as a bastion of liberalism – in Belle Company v. Corps of Engineers, holding that a Corps jurisdictional determination is not final agency action subject to judicial review. Late last week, however, in Hawkes Co. v. Corps of Engineers, the 8th Circuit disagreed, creating a circuit split.
As we noted at the time, the 5th Circuit decision in Belle focused on the differences between the Sacketts’ position facing an enforcement order and that of Belle Company facing a Corps JD. As the 5th Circuit emphasized, the JD did not require Belle Company to do anything. Nor did the JD expose Belle Company to penalties. Nor did it prejudice Belle Company’s ability to obtain a permit. Nor did it include a finding of a CWA violation.
The 8th Circuit took a different tack, focusing instead on the one great, glaring similarity between the enforcement order in Sackett and the JD in Hawkes Co. – in both cases, the Corps’ decision, as a practical matter, defined the property owner’s rights and ended the proceeding.
It’s not obvious to me that the Supreme Court will take the case, even with the circuit split. I don’t think that the Court likes these cases. On the other hand, it is obvious that the conservative wing of the court sees Sackett as a very important decision and there could well be four votes to decide the issue at this point.
If the Court does take the case, all bets are off. I think that the 5th Circuit still has the better of the legal argument, and I expect that will be sufficient for all but the most ardent property rights advocates on the Court. Whether there are five ardent property rights advocates on the Court is what remains to be seen.
Posted on April 8, 2015
What is your favorite place on Earth. The beach. The mountains. A hiking trail to a waterfall. A river or lake. People are drawn to water, mountains, and forests. Being in nature switches off the analytic left brain, turns on the creative right brain, and activates the heart and body. Experiencing the environment is like mindful meditation.
What is the biggest challenge the world faces? Controlling technology. Curing diseases. Making the world safer. Preventing a nuclear disaster. Overcoming poverty. Preventing another economic depression. Reducing illiteracy. We can address many of these social problems. However. we cannot control nature. We have to learn to live with nature. If we cannot learn to live with nature. we will destroy the earth and ourselves.
Sea levels are rising faster and glaciers are melting more rapidly now than in 1950. Hurricane Katrina and Super Storm Sandy are powerful reminders that man cannot control nature. Record snowfalls in the northeast shut down many activities in 2014 and 2015. California is in a prolonged drought.
In the 1970’s, America’s concern for the earth led Republicans and Democrats to create the laws and regulations which are universally recognized as the most successful environmental laws in the United States. Other countries used these laws as models. These laws include the 1970 Clean Air Act, the 1972 Clean Water Act and the 1976 hazardous waste law. Richard Nixon created EPA in 1970. April 22, 1970 was the first Earth Day.
The Clean Air, Clean Water and hazardous waste laws are still used to limit the discharge of pollution into the environment. However, science has discovered new environmental problems and sources of pollution which require amendments to the 1970’s laws or new regulations.
Congress will not amend the 1970’s laws to give EPA the authority to control new sources of pollution. Congress opposes new regulations proposed by EPA. Many legislators contend that additional pollution controls will bankrupt American industry because other countries can make cheaper products since their industries do not have to pay for pollution controls.
What motivated Congress to create the Clean Air, Clean Water and hazardous waste laws in the 1970s? I believe that powerful images of environmental crises captured in photographs touched everyone, regardless of their political party. (1) The Cuyahoga River catching fire near Cleveland in 1969. (2) Chattanooga air pollution so dark that headlights were necessary to see at noon on a sunny day. (3) Containers leaking hazardous waste into the Valley of the Drums in Kentucky.
Has our concern for the earth disappeared? No. Businesses and citizens are finding sustainable solutions to environmental problems. Recycling saves money. Businesses and citizens will not buy unhealthy products. Consumers want utilities to use nature’s energy: sun, wind and water. Local farms and gardens provide more of our food.
Americans are still concerned about the earth. Scientists tell us that emissions from cars cause air pollution which prevents children from playing outside on hot sunny days in Atlanta, Houston and Los Angeles. Runoff from cities and farms causes pollution which makes some rivers unsafe for swimming. Why have our concerns and new scientific discoveries not led Congress to take actions to address today’s most serious environmental issues? How can we educate our leaders and generate the consensus that leads to support of new pollution controls. What are the actions, the events and the pictures that will motivate Americans to find the common understanding needed to agree on new laws and regulations.
Environmental lawyers can save the earth. Why and How?
Environmental lawyers care about the environment. We may fight about how clean is clean. We may disagree on how stringent an air or water discharge standard must be. But we all want to reduce pollution to levels that protect human health and the environment and are cost effective.
(1) Education – Environmental lawyers representing industry, EPA, states and environmental non-profits learn the relevant scientific facts and applicable laws. Environmental lawyers can teach clients, legislators, agency officials, judges and the public.
Education is critical to reaching agreement on action to protect the environment.
(2) Advocacy – Environmental lawyers are trained to marshal the facts and law and advocate for change in legislatures and courts. Environmental lawyers are experts in relevancy and advocacy.
(3) Facilitated Agreements – Environmental lawyers representing industry, government and environmental advocacy groups regularly resolve environmental disputes without litigation or soon after litigation is commenced.
Environmental lawyers know that litigation is a last resort. Environmental lawyers can teach their clients that a mediated settlement is superior to giving up control of the outcome to a judge.
(4) Alternative Dispute Resolution – When the operator of a hazardous waste site cannot clean up the site, the parties who sent waste to the site must clean it up. Environmental lawyers created a mediation process which enables each company to agree on a percentage of the cleanup cost without lengthy litigation. The mediation process enables the companies to clean up hazardous waste sites faster and cheaper than EPA.
(5) Cleanup of Contaminated Property - In the 1980’s, environmental lawyers created the “Brownfield” process in which a natural biological solution is used to clean up contaminated property so that it can be used again. The private sector taught EPA that waste sites could be reused rather than abandoned.
(6) Private Sector Cleanup – Legislators and EPA set the pollution standards. However, environmental lawyers and the private sector can clean up pollution faster and cheaper that any governmental agency.
(7) Aid To Other Countries – Congress is concerned that new environmental regulations will be so expensive that U.S. businesses will not be able to compete with other countries who continue to pollute. China is often used as an example. Lawyers from the American College of Environmental Lawyers (ACOEL) have given free legal advice to the Chinese government on how to eliminate pollution through use of daily fines, a concept that was fundamental to enforcement of the 1970’s Clean Air and Clean Water laws. Chinese companies are spending money on pollution control. American industry will not be at a competitive disadvantage in pricing its products.
(8) White Papers – In 2014, ACOEL lawyers prepared “White Papers” explaining the facts and law on proposed EPA water and air regulations. Lawyers representing all views worked together on the White Papers. The White Papers educate. They do not advocate. State environmental agencies have praised these White Papers.
Can Environmental Lawyers Save the Earth? Yes we can. We need to continue educating our children, our citizens, and our leaders in business, government, and nonprofits. The 1970s environmental laws and regulations can be amended to save the earth.