Posted on August 24, 2015
Amid the controversy around the just released EPA Clean Power Plan rule, the impacts of climate change are becoming apparent with a proliferation of heat waves, droughts, floods, wildfires and other extreme weather events and trends, both in the U.S. and globally. While many climate scientists (and world governments in the 2010 Cancun Agreements) have agreed that it is necessary to limit average global temperature rise to 2 degrees Celsius to avoid potentially catastrophic and irreversible effects of climate change, the impacts we’re now witnessing result from a temperature rise of just under 1 degree C. We are currently on a trajectory toward a 3 to 4 degree (or more) increase, which has sobering implications.
In preparation for the COP 21 negotiations in Paris, world governments are engaged in a “bottom up” process of submitting proposed national emission reduction pledges poetically called Intended Nationally Determined Contributions (INDCs). These are not expected to get us to a 2 degree future, but will hopefully form the basis for an international agreement that sets the world on a path toward that target or something close.
The U.S. INDC calls for reducing our emissions by 26-28 percent below 2005 levels by 2025, which will require additional measures beyond those currently proposed or in place (including the EPA Clean Power Plan, CAFÉ and truck efficiency standards, methane and HFC controls). All of these measures are controversial and under attack from various quarters. As the world’s second largest emitter, the U.S. must implement credible and effective emission reduction strategies to convince other major emitters in the developing world (China, India, et al) to control their emissions and to help avoid the worst effects of climate change.
Solving climate change clearly poses huge challenges, but it also presents huge economic opportunities. As highlighted in Ceres’ 2014 Clean Trillion report, International Energy Agency analyses show that the world needs an average of more than $1 trillion in additional annual investment in clean energy technologies (renewable energy, energy efficiency, efficient transport, etc.) beyond 2012 levels of about $250 billion. This creates a massive need for capital, and presents a huge economic and investment opportunity to finance the necessary low carbon, clean energy economy.
A global transition to a low carbon economy is in progress and accelerating, but too slowly. Policies that put a meaningful price on carbon emissions and eliminate fossil fuel subsidies are needed to scale up clean energy investment. Fortunately there is growing business and investor support for such actions, as evidenced by the Global Investor Statement on Climate Change and recent letters from more than 350 companies supporting EPA’s Clean Power Plan. More such voices are needed to make the business and political case for solving climate change, before it is too late.
Posted on August 20, 2015
For those of you who, like me, are becoming more confident as the years go by that you have “seen it all” in the field of environmental law, this strange current event will change your mind.
California’s oil and gas production industry has been on a roll for the past decade. Aided by the price of crude oil in the $100 per barrel range and new technologies, including hydraulic fracturing among others, industry has increased production from previously written-off reservoirs. During this time, the California Division of Oil, Gas and Geothermal Resources (“DOGGR”) has been the lead agency for that industry, issuing the key environmental permits for its regular operations. Those include the underground injection permits that allow the industry to take the wastewater typically produced along with crude oil from subsurface production zones and reinject it underground into other water bearing zones. For nearly thirty years, the issuance of such permits proceeded without major interruption or controversy, but as of the start of this year all that changed.
The story begins in 1982 with California’s application for primacy to implement the Underground Injection Control (“UIC”) program of the federal Safe Drinking Water Act. Historically, in California most crude oil producing formations are comprised of over 90% water. Produced water, generally of poor quality, has been disposed as Class II wastes through underground injection wells often located near the production wells. California’s application for UIC primacy identified those underground aquifers where injection of produced water from oil and gas production was already taking place. These aquifers were exempt from the prohibition on underground injection of Class II wastes either because they contained greater than 3,000 mg/l of total dissolved solids (“TDS”) and as a result were considered to be unfit as drinking water, or they contained less than 3,000 TDS but met stringent standards of the UIC program.
In a memorandum of agreement (“MOA”) between US EPA and DOGGR executed in September 1982, the two agencies memorialized their agreement to allow DOGGR to implement the federal UIC program in California. A list of both exempt and non-exempt aquifers is attached to the MOA. Just a few months later, in December 1982 a second version of the MOA was circulated that transferred 11 of the aquifers from the non-exempt list to the exempt list. Then, in one of the stranger administrative developments I’ve seen, the September 1982 signature page was affixed to the end of the changed MOA and attachment. Thus, there were two MOAs – MOA1 drafted and executed in September 1982 and MOA2 apparently drafted and agreed upon in December 1982, both using the same signature page from September. The 11 aquifers that went from non-exempt aquifers into which there could be no Class II discharge to exempt aquifers allowed to receive Class II discharges included some of the more critical subsurface aquifers used by the oil and gas industry.
As a result of the 1982 MOAs and the transfer of the administration of the UIC program to DOGGR, California’s oil and gas industry was able to secure a much closer (geographically and philosophically) regulatory agency. UIC permits have been routinely issued to oil and gas producers for injection into exempt aquifers – as recognized in MOA2. Today there are approximately 50,000 produced water and enhanced recovery oil and gas injection wells in California. The oil and gas industry has invested hundreds of millions, more likely billions, of dollars in infrastructure and hardware for these wells based in substantial part on the authorizations in their DOGGR permits.
Now we come to the punchline and the strange situation we find ourselves in today.
Beginning in about 2012, US EPA took a hard look at DOGGR’s implementation of the UIC program and concluded that DOGGR may have issued UIC permits for injection into underground formations that either were not, or should not have been, exempt under the standards set forth in the UIC program. That audit culminated this year in a series of letters issued by both EPA and DOGGR setting forth an ad hoc program to re-evaluate many of the underground formations that had been treated as exempt by DOGGR for decades, including the 11 aquifers that had been “switched” from non-exempt to exempt status by MOA2. EPA and DOGGR contend that industry must prove that some of these long-held exempt aquifers really qualify for their exemptions, even though industry received permits from DOGGR based upon the 1982 MOA. This complete reversal of long-held assumptions has caused a substantial amount of angst and uncertainty in the industry.
But perhaps the most astonishing development is the publication of analyses of the validity of the two competing MOAs for the 11 aquifers that appeared on the California EPA website and the dissemination of the competing MOAs on the DOGGR website. In a March 2, 2015 memorandum authored by Matthew Rodriguez, the Secretary of Cal EPA, the strange procedural history of the competing MOAs, with identical signature pages, is detailed and includes a relatively candid admission that “DOGGR and U.S. EPA agreed to exempt the 11 aquifers, but may not have followed regulatory procedures.”
Cal EPA and DOGGR seem to agree that they assumed and treated the 11 aquifers as exempt for 30 years and that MOA2 appears to be the real, and final, MOA. However, US EPA has not issued a final opinion on that issue and continues to leave open the prospect that the 11 aquifers, among others, were never somehow officially exempt under the UIC. They have even adopted a moniker for the 11 and calling them the “11 historically-exempt aquifers.”
The final conclusion to this story is yet to be written. Assuming that re-consideration of the status of the exempt aquifers does not result in the removal of their exemption, then it may not be necessary to determine what legal significance the competing MOAs enjoy, or which one is “right.” But if EPA or DOGGR change the status of aquifers from exempt to non-exempt, their actions may shut down injection operations, thereby imperiling ongoing oil and gas operations. In that event, one or more of the affected industry companies may challenge the validity of MOA1 and seek to compel validation of MOA2.
If that happens, then as an oil and gas industry lawyer, I’m hoping that as between the twin MOAs, MOA2 is Pollux and MOA1 is Castor.
Posted on August 10, 2015
Last year I published an article in Bloomberg BNA entitled “Protection of Judicial Review Watered Down in D.C. Circuit.” I focused on a recent D.C. Circuit ruling (UARG) I hoped would “turn out to be an unfollowed – and eventually forgotten – glitch.” The effect of the “glitch” is to delay interminably judicial review of final Clean Air Act (“CAA”) rule provisions that EPA never hinted might be included in a final rule – even though the un-foreshadowed provisions go into full force and effect.
The Court’s judges must have missed that BNA edition, because they have followed the same rationale at least twice more now – in their Mexichem opinion of May, 2015 and their “Transport Rule” (EME Homer) decision last week.
This regrettable situation arises from the Court’s new interpretation of a CAA provision (§307(d)(7)(B)) which is quoted in full in my BNA article. It begins with the hornbook proposition that you can’t attack a rule’s provision on judicial review on grounds that were not raised during the comment period. It then provides for a process known as a “petition for reconsideration.” If a party can show that it could not have raised an argument during the comment period, EPA must conduct a “reconsideration” process. EPA’s actions in response to the petition are then subject to judicial review. This provision has often been used where EPA supports a final rule with facts or rationale not included in the record when the public comment period was open.
Now consider the following hypothetical. Assume EPA proposes a CAA rule requiring boilers to install a certain type of control device. EPA’s final rule drops the control requirement and simply prohibits boilers from combusting coal, effective two years from the final rule’s issuance. EPA’s proposal never mentioned coal prohibition as an option, and no one suggested it in their comments. So most would assume that boiler owners could then file D.C. Circuit petitions for review and have slam-dunk arguments for vacatur.
As shown in my BNA article, the D.C. Circuit has on many occasions (as recently as December, 2013) done just that. But since then, EPA and DOJ lawyers have advanced what I think is a ludicrous position: when a party believes a final CAA rule provision was issued in violation of notice-and-comment requirements, it cannot pursue judicial review on that issue unless and until it first files a petition under §307(d)(7)(B) and waits for EPA to take final action on that petition.
Unfortunately, the D.C. Circuit has bought this position three times now. Here is how the D.C. Circuit summarized the point in EME Homer last week:
[P]etitioners argue that EPA violated the Clean Air Act’s notice and comment requirements by significantly amending the Rule between the proposed and final versions without providing additional opportunity for notice and comment. Because that argument is an objection to the notice and comment process itself, petitioners obviously did not and could not have raised it during the period for public comment. Under Subsection 7607(d)(7)(B), however, the only appropriate path for petitioners to raise this issue is through an initial petition for reconsideration to EPA.
Note the opinion in effect concedes just how absurd this is. The petitioners “obviously did not and could not” have raised this objection. How can one object to EPA’s failure to propose something that EPA failed to propose?
EPA almost always delays action on §307(d)(7)(B) petitions for years so in the hypothetical above, the coal prohibition would go into effect before judicial review could even begin. Boiler owners would either have to shut down operations or convert to non-coal burning facilities, at which point judicial review would become pointless. The effect: EPA stops coal burning at boilers by declining to propose such a requirement in the first place!
If you think EPA or the D.C. Circuit would out of fairness suspend application of rules in such situations, see the examples to the contrary in my BNA article and read the Mexichem opinion. If you think I am exaggerating about how long it takes for a §307(d)(7)(B) petition to be processed, see the examples in my BNA article. And consider that in last week’s EME Homer opinion, the Court concluded its discussion above by noting that at least one party had filed such a petition but that EPA had not yet acted upon it. That petition was filed in 2011.
Posted on August 7, 2015
Earlier this year, I posted in this blog a discussion of EPA’s 35 year – and still unfinished – journey toward full implementation of the financial assurance (“FA”) mandate of CERCLA Section 108(b). Section 108(b) obligates EPA to identify “classes of facilities” that will be required to demonstrate financial ability to respond to future releases of hazardous substances and to promulgate rules establishing those FA requirements. Inexplicably, Section 108(b) remained dormant for 28 years. Litigation initiated by NGOs in 2009 and 2010 prompted the agency to identify the hardrock mining and several other industries as priority targets for regulation. The task of developing the FA requirements for those industries, however, remained a work-in-progress.
Ever vigilant, environmental advocacy groups filed a Petition for Writ of Mandamus in August 2014 taking EPA to task for its delays and inaction. The theme of the litigation is that (1) Section 108(b) is a critical component of CERCLA’s overall scheme, (2) EPA’s failure to issue FA rules has resulted in cleanup delays, funding shortfalls and increased public health risks, and (3) EPA’s inaction cannot be justified by competing priorities within the agency. In May of this year, the D.C. Circuit Court of Appeals issued an order requiring EPA to expedite implementation of Section 108(b) to the greatest extent possible, update its rulemaking schedule for the identified industries, and disclose to the litigants the regulatory “framework” for the hardrock mining industry, which EPA acknowledged had been completed. EPA’s website suggests that it will publish the hardrock mining rule in August 2016.
In short—the more things change, the more they stay the same. Perhaps the low priority assigned to this CERCLA provision suggests that the cleanup response track-record of even the priority industries may not justify a need to regulate under Section 108(b) - a process that will involve complex issues with significant financial consequences. Nevertheless, Section 108(b) remains the law of the land. Congress must either follow-through with its periodic efforts to amend Section 108(b) or EPA must finish this long journey. No benefit inures to the public, affected industries or the agency from the existing uncertainties and delays.
EPA’s foot-dragging in implementing Section 108(b) is in contrast with its recent action emphasizing FA as an enforcement priority in CERCLA settlement agreements and UAOs. The agency’s April 2015 Guidance to Regional Counsel is touted as the first comprehensive document issued by EPA to assist with the development of FA requirements and provide transparency in the use of its Superfund authority. Space limitations do not permit a detailed review of this 22 page guidance, which includes modified model FA language and sample documents. Some take-aways from a first read of the guidance:
- The Guidance does not address future Section 108(b) requirements.
- It is suggested that the EPA Regions have flexibility to include or exclude certain FA mechanisms at specific sites, BUT headquarters consultation and approval is often necessary.
- The financial test and corporate guaranty mechanisms are perceived by EPA as having a higher risk of not achieving FA objectives and imposing increased administrative burdens on the Agency; therefore, it is suggested that those mechanisms should be used with caution.
- The Guidance recognizes the complications arising at sites involving numerous, dissimilar PRPs, with a preference for requiring jointly-funded versus separate FA mechanisms.
- The Guidance emphasizes the need for agency diligence in the ongoing evaluation of site conditions and costs, with increases in the initial FA amount to be required as appropriate.
- Practical considerations for evaluating the financial test and guaranty FA options are addressed in an appendix.
Notwithstanding suggestions of flexibility in the use of FA tools on a site-by-site basis, this comprehensive new guidance does not appear to include much good news for the settling PRP. In fact, EPA’s stated concerns on the use of the financial test, corporate guaranty and insurance policy FA mechanisms could further complicate an already contentious issue in CERCLA settlement negotiations. What impact the guidance may have on FA negotiations as new sites arise, of course, remains to be seen.
Posted on August 5, 2015
On June 23, 2015, a Superior Court judge in Seattle ordered the Washington State Department of Ecology to reconsider its decision denying a petition for rulemaking on climate change issues. Ecology had earlier decided to deny the petition and instead wait to see if the international community makes progress at the upcoming Paris climate talks. The judge, however, found Ecology’s reasoning inadequate and was especially put off by Ecology’s decision to wait for the outcome of the conference of the parties scheduled to take place in December, 2015 in Paris. The judge ordered Ecology to reconsider its decision, and to report back to the court by August 7. The court presumably hopes the parties will engage in settlement negotiations in the meantime.
A group of eight young people filed the petition for rulemaking in 2014. As the judge noted, they are “[f]rustrated by an historical lack of political will to respond adequately to the increasingly urgent and dire acceleration of global warming.” Their petition asked Ecology to adopt a proposed rule recommending to the Legislature that it update the state’s existing 2007 climate change statute to reflect the most recent science on greenhouse gas reductions. (The most recent science calls for larger reductions than does the statute.)
More important, the petition does not specify particular actions Ecology should take. Instead, it tells Ecology to achieve the reductions science calls for by using all its statutory authorities. This might include new rulemaking under the Clean Air Act, new permits under all Ecology’s programs, broader use of Ecology’s land use and EIS authorities, and perhaps more.
It’s notable that this decision came just two days before a similar one in the Netherlands that John Dernbach discussed July 21 in his blog post.
Looks as though judges all over the world are getting tired of waiting on the other branches of government.
Posted on August 3, 2015
In the latest chapter of Homer’s Odyssey, the DC Circuit, on remand from the Supreme Court, determined that EPA had exceeded its statutory authority by imposing uniform emissions reductions under the Transport Rule also known as the Cross-State Air Pollution Rule. On July 28, 2015, the DC Circuit held in EME Homer City Generation, L.P v. EPA that the 2014 sulfur dioxide (SO2) emissions budgets for Alabama, Georgia, South Carolina, and Texas, as well as the 2014 ozone-season nitrogen oxide (NOx) budgets for Florida, Maryland, New Jersey, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Texas, Virginia, and West Virginia are invalid. The court remanded without vacatur to EPA for reconsideration.
A brief history of Homer’s voyage so far.
In 2011, EPA promulgated the Transport Rule to address emissions from upwind States that contribute to nonattainment of National Ambient Air Quality Standards (NAAQS) in a downwind State under the Clean Air Act’s “good neighbor provision”. 42 U.S.C. Sec. 7410(a)(2)(D)(i). Upwind States challenged the Rule, contending that it would lead to over-control of emissions in the upwind States. The Rule imposed uniform pollution reductions on upwind States regardless of the actual amount of pollution that individual upwind States contributed to the downwind States.
In 2012, the DC Circuit considered these over-control challenges, agreed with the petitioners, and vacated the Rule. See EME Homer City Generation, L.P. v. EPA, 696 F/3d 7 (D.C. Cir. 2012).
On review, the Supreme Court reversed, holding that the potential for over-control did not require invalidation of the Rule on its face. To address potential over-control in an upwind State, the Court recognized that requiring emissions reductions by more than is necessary to achieve attainment in every downwind State to which it is linked would be impermissible. The Court explicitly authorized an upwind State to contest the emissions reductions under the Rule through “particularized, as-applied challenges.” EPA v. EME Homer City Generation, L.P., 134 S.Ct. 1584 (2014).
On remand, the DC Circuit considered the “as-applied challenges” as informed by the Supreme Court decision. The DC Circuit evaluated the challenges by determining whether a downwind location would still attain its NAAQS if linked upwind States were subject to less stringent emissions limits. Based on the record, the Court determined that EPA’s uniform cost thresholds have required States to reduce pollutants beyond the point necessary to achieve downwind attainment, which violated the Supreme Court’s clear mandate.
Although invalidating the 2014 emissions budgets, the DC Circuit remanded without vacatur. The Court stated that on remand, the parties may provide new evidence, data, or calculations for EPA to consider in establishing emissions budgets.
What will be the next chapter in this Odyssey? What effect will the decision have on the emissions trading market developed around the 2014 emissions budget? Will there be further appeals? How and when will EPA reconsider the emissions budgets?
The voyage is not over!
Posted on July 31, 2015
Anyone who reads this blog must have seen the explosion of reports in the trade press that EPA ignored significant criticism from the Army Corps of Engineers in promulgating its Waters of the United States rule. (For a useful summary of the rule and an analysis of some of the legal issues that might be raised in potential litigation, see Susan Cooke’s post from earlier this month.) I have not seen the memoranda, but, based on the press reports, it appears that EPA ignored criticism both that it was too stringent in some areas and that it was not sufficiently stringent in others. If EPA’s purpose wasn’t simply to make the rule more – or less – stringent, why did it ignore the Corps and try to bury the disagreement?
How about hubris?
I noted earlier this year and as far back as 2010, EPA’s tendency towards self-righteousness. I also pointed out how counterproductive that self-righteousness is; it makes it more difficult for EPA to achieve its goals. While I still think that EPA is self-righteous, hubris seems the apt description today.
Posted on July 30, 2015
The College’s International Pro Bono “China Project” reports a very interesting speaking opportunity in Xian, China.
1. Speaking at the All China Lawyers’ Association Annual Training Conference
This speaking opportunity will be for one Fellow to address the All-China Lawyers Association’s annual training session. ACLA is the official professional association for lawyers (the rough equivalent of the American Bar Association) of the People's Republic of China. It was founded in July 1986. All lawyers of China are members of ACLA.
ACLA Director Zhou Saijun reports that the national lawyer training has been scheduled on October 17 and 18, in Xian. These dates conflict with the ACOEL annual meeting in New York, but we have no ability to change the date. On the other hand, we have spoken with officers of the ACOEL and they agree that the opportunity is for just one Fellow, so overall attendance at the annual meeting will not be materially affected. The involved Fellow would accept this opportunity with the College’s full endorsement.
ACLA Director Saijun will forward the detailed agenda for the ACLA conference when the eventually complete it. But, as usual, they hope that the
“…. ACOEL speaker could introduce general US attorney system, environmental law and regulations, as well as how lawyer can play important role in the field of environment, energy and resource law. The topics for this annual training focus on lawyer’s role on oversea investment (relevant to Chinese international development strategy called one road one belt ), on enforcement of environmental law and how lawyer can serve PPP, etc.”.
As usual, we will ask ACLA/NRDC to confirm that they will reimburse the speaker for round trip coach airfare and other reasonable travel expenses. We imagine that the speaker may wish to extend his/her trip a day or more to see Xian’s famous terracotta warriors.
2. To Be Considered for the Opportunity
If you wish to be considered for this opportunity, please promptly send Jim Bruen (email@example.com) a copy of your current curriculum vita. Jim will also answer any questions. He will send all vitae received on or before 5:00 pm PST August 12 to ACLA/NRDC so that they may promptly select the Fellow who they feel best meets their needs as speaker. The selected Fellow will then contact Wu Qi and Grace Gao of NRDC/Beijing to coordinate travel and other arrangements.
Don’t miss this fascinating opportunity.
Posted on July 28, 2015
ACOEL Fellow John Cruden, head of DOJ’s Environment and Natural Resources Division, recently gave this speech to the ABA Litigation Section on the current direction of federal environmental enforcement efforts. The speech focuses on efforts to coordinate with and leverage local, state, regional and international partners.
Posted on July 24, 2015
On July 6, in American Farm Bureau Federation v. EPA, a Clean Water Act case involving important issues of first impression, the U.S. Court of Appeals for the Third Circuit upheld the Chesapeake Bay Watershed Total Maximum Daily Load (TMDL) – the largest and most complex TMDL ever issued. This watershed covers 64,000 square miles in parts of Maryland, Virginia, Pennsylvania, Delaware, West Virginia, New York, and the District of Columbia. Its population is 17 million and growing.
Under Clean Water Act Section 303(d), when a water body is not meeting water quality standards, a TMDL must be developed, typically by the state, subject to EPA approval. It specifies the maximum amount of a pollutant that can be discharged to the water body and still meet water quality standards. Under Section 303(e), the TMDL becomes part of a state’s “continuing planning process,” which specifies the measures the state will take to bring the impaired water body into compliance. This plan is designed by the state, with EPA oversight, but EPA has no authority to implement the plan. In addition, the Act does not define a TMDL or spell out exactly what EPA may do to assure achievement of the water quality standards if the plan is not adhered to.
The Chesapeake Bay TMDL was issued by EPA in December, 2010. It was the culmination of over 25 years of unsuccessful efforts by the Bay states and EPA to stem the increasing discharges of nitrogen, phosphorus and sediment which were damaging the water quality of the Bay, causing losses of blue crabs, oysters, and other aquatic organisms – including notably those at the base of the food chain, and impairing a number of uses: commercial, recreational and aesthetic. Because of the interstate nature of the pollution and the complex scientific issues involved, in 2006 the Bay states asked EPA to take the lead in drafting a watershed-wide TMDL, in consultation with them and the public, which EPA did.
In prior blogsI have described the substance and background of the Bay TMDL, the district court decision upholding it and the issues raised on appeal and the large number of amicus briefs from across the country on both sides. In American Farm Bureau Federation, appellants claimed that EPA exceeded its statutory authority by (1) establishing not just the maximum daily and annual loadings of nitrogen, phosphorus and sediment, but also waste load allocations to a number of permitted point sources and load allocations to “sectors” of nonpoint sources (such as agricultural and urban stormwater), (2) specifying target dates for compliance (60% of the necessary measures in place by 2017, and the rest by 2025) and (3) requiring “reasonable assurance” by each state that it is making progress with its plan, to be reviewed at two-year intervals for which “milestones” were to be established.
While the TMDL was in development, interim action has involved an iterative process in which each state developed a “watershed implementation plan” to eventually bring its part of the Bay watershed into compliance, with input from county and local government entities and the private sector. EPA has conducted regular reviews and advised states of any shortcomings. This advice is then discussed, with the states having the final say on implementation measures.
With this background, the Third Circuit first considered the jurisdictional issues of standing and ripeness, which had not been raised by the parties. The court held, as many other courts have, that a TMDL is not a regulation but an “informational tool” which gets implemented when permits are issued or other regulatory measures are taken. If it is not currently impacting anyone, who can have standing to challenge it? The court found that while the TMDL is not itself enforceable, where a petitioner can demonstrate a high likelihood that it will be affected by the implementation that will follow, it has standing. This test was met by the farm community represented by the Farm Bureau. The court then held that the TMDL was ripe for review because it was a purely legal dispute on a well-developed record, and hardship would result to the parties if the merits were not addressed. As the court put it: “If there is something wrong with the TMDL, it is better to know now than later.”
Because the statute neither defines a TMDL nor sets out what EPA must or might do if satisfactory implementation is not undertaken by a state, the court concluded that Chevron deference was warranted so long as EPA’s actions were reasonable and consistent with the purposes of the Act – in this case to substantially improve the quality of the nation’s waters. The court stated, citing extensive case law, that often Congress legislates in broad terms, leaving to the agency the task of filling in the “gaps” based on its expertise and evolving experience. The court then noted that EPA has had regulations in place defining a TMDL as the sum of the loadings from point and nonpoint sources to a water body for over 20 years, they had never been challenged, and had been discussed by numerous courts. The court held this definition reasonable. It further held that since a TMDL is an informational tool, EPA acted reasonably in including loading allocations to point sources and categories of nonpoint sources, especially in light of the interstate nature of the TMDL and the complexity of moving thousands of sources towards compliance with water quality standards.
The court also held that EPA did not err in prescribing target dates (which are hortatory but not enforceable) because Congress clearly intended that water quality standards be achieved with reasonable promptness. Similarly it held that EPA acted within its authority in requiring “reasonable assurance” from the states that they are taking appropriate measures leading to achievement of water quality standards. The court further held that none of EPA’s actions illegally impinged on the rights of the states to make the detailed choices as to which sources to regulate, and how stringently, to achieve the TMDL loadings. Nor did EPA intrude improperly into matters of local land use regulation, which is traditionally the province of the states.
As a result, all of the cleanup and restoration measures being taken throughout the watershed based on the TMDL can continue to go forward, now that the foundation on which they are based is secure. In addition, this decision, by resolving a number of key issues, will provide valuable guidance to practitioners across the country.
Posted on July 21, 2015
On June 25, 2015, The Hague District Court in the Netherlands issued an order and opinion requiring the Netherlands to reduce its greenhouse gas emissions by 25 percent below 1990 levels by 2020. This level is more ambitious than the 17 percent reduction goal to which the Dutch government has currently committed. The case, Urgenda Foundation v. State of the Netherlands suggests what courts may be willing to do when government policy lags behind what climate science indicates is needed.
Urgenda sued the government in tort under the Dutch Civil Code on behalf of itself and 886 individuals, claiming among other things that “the State is in breach of its duty of care for taking insufficient measures to prevent dangerous climate change.” For U.S. lawyers, accustomed to limited governmental tort liability under federal and state law, the breadth of this claim may be startling. But it was also novel, though less so, to the court, which explained that this legal issue “has never before been answered in Dutch proceedings.”
Although the state has considerable discretion in policy making for climate change, the court said, that discretion is constrained by both the U.N. Framework Convention on Climate Change and the Treaty on the Functioning of the European Union (TFEU). Objectives and principles of the Climate Change Convention and the TFEU that constrain Dutch discretion, the court said, include “protection of the climate system, for the benefit of current and future generations, based on fairness;” the precautionary principle, and consideration of “available scientific and technical information.”
Urgenda’s case was based on numerous scientific reports, including the 2007 report of the Intergovernmental Panel on Climate Change (IPCC), which said that Annex I countries (including both the Netherlands and the United States), need to reduce their greenhouse gas emissions by 25-40 percent below 1990 levels by 2020, and 80-95 percent below 1990 levels by 2050, to limit the global temperature increase to 2.0 degrees Celsius. Parties to the Convention on Climate Change have agreed that a temperature increase above that level (equivalent to 3.6 degrees Fahrenheit) would be dangerous.
After analyzing multiple factors relevant to the appropriate duty of care, the court concluded that the state “has acted negligently and therefore unlawfully towards Urgenda by starting from a reduction target for 2020 of less than 25% percent compared to the year 1990.” It ordered a 25 percent reduction, saying there are “insufficient grounds for the lower limit” of a 40% reduction from 1990 levels specified in the 2007 IPCC report.
Although the case was decided under Dutch legal rules that are quite different from our own, and may be appealed, it has significance to U.S. lawyers. First, it shows great respect for climate change science, describing IPCC and other scientific reports in considerable detail. The case therefore underscores the important role that courts can play in affirming the validity of climate change science.
Second, the court’s willingness to interpret domestic law in ways consistent with international commitments, including those in the Convention on Climate Change as well as the commitment to keep warming to 2.0 degrees Celsius, raises an interesting and important question about whether U.S. domestic laws related to climate change also should be interpreted in ways consistent with international commitments. U.S. courts have often held that statutes should be construed in a manner consistent with treaties and other international obligations.
Finally, the decision indicates the value of judicial intervention as a way of forcing governments and businesses to do more than they are doing. Additional legal support for such cases was provided, in March 2015, by the issuance of the Oslo Principles on Global Climate Change Obligations. These principles were developed by a group of legal experts from around the world. The central idea is that “[s]tates and enterprises must take measures, based on” the precautionary principle, “to ensure that the global average surface temperature increase never exceeds pre-industrial temperature by more than 2 degrees Celsius.” Many sources of local, national, and international law support these principles, the experts said, including “international human rights law, environmental law and tort law.”
According to a report issued on July 16, 2015 by the American Meteorological Society, 2014 was the warmest year on record. As the effects of climate change intensify, there may be more such litigation, and decisions like this could become more common.
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.