Biting Less Than They Can Chew

Posted on June 26, 2014 by Kenneth Warren

The National Environmental Policy Act (NEPA) requires federal agencies to evaluate the environmental effects of their proposed actions.  When a proposed action may cause significant environmental impacts, NEPA requires the agency to prepare an environmental impact statement that evaluates alternatives including measures to avoid or mitigate impacts.  The agency may not divide a single project into separate bites and find that each in isolation would not have a significant environmental impact.  Instead, regulations issued by the Council on Environmental Quality require the agency’s environmental review to encompass connected actions and similar actions.

In Delaware Riverkeeper Network v. FERC, Texas Eastern Pipeline Company sought certificates of public convenience from the Federal Energy Regulatory Commission (FERC) authorizing construction and operation of the Northeast Upgrade Project, one of four projects to improve the Eastern Leg of a natural gas pipeline known as the 300 Line.  FERC evaluated the Northeast Upgrade project separately from the others on the ground that each project was designed to provide natural gas to different customers pursuant to different contracts within different time frames.  FERC concluded that the potential environmental impacts were not significant and terminated its evaluation by issuing a finding of no significant impact.  Environmental organizations petitioned for review of the FERC action on the ground that the four pipeline projects were interrelated and cumulatively would, in their view, clear hundreds of forest acres, fragment habitat and adversely impact wetlands and groundwater in significant ways.  

On review, the Court of Appeals for the District of Columbia held that FERC’s segmented environmental review failed to meet NEPA’s requirements.  The Court reasoned that all four projects involved the construction of a single, physically interdependent pipeline, were undertaken in a close time frame and were financially interdependent.  No customer was a customer of a single pipeline segment and no logical justification existed for the choice of where one project ended and the next began.  Accordingly, the Court remanded the case to FERC to review the pipeline project as a whole, including its cumulative impacts.

FERC now faces the daunting task of determining how to implement the Court’s holding in other situations.  To be sure, in many cases FERC will be able to readily ascertain whether projects involving a single pipeline are physically, financially and temporally interdependent.  But in some areas of the country, transmission pipelines are being installed contemporaneously with natural gas wells, gathering lines physically connecting these wells to the transmission pipelines, and supporting roads, impoundments and other infrastructure.  Whether these arguably related projects are sufficiently connected or similar to trigger joint NEPA review may turn on whether they involve different ownership, distinct functions, separate financing and customers and clear physical divisions.  Resolving these questions may be no easy task, and even then does not necessarily determine whether a full environmental impact statement must be prepared.  When performing an environmental assessment of multiple projects together, FERC may still conclude that the environmental effects are insignificant.  With so many steps in the analysis that may be controversial, a new wave of NEPA challenges is likely on the horizon.

One postscript for practitioners before the D.C. Circuit.  In a punchy concurring opinion, Judge Silberman expressed his dismay at the submission of a brief “laden with obscure acronyms.”  For those of us in the environmental bar for whom use of acronyms has become second nature, beware.  

The answer is blowin' in the wind: Offshore wind projects moving on up

Posted on June 25, 2014 by Jeff Thaler

After sifting first through 70 proposals and then six finalists from all over the United States, on May 7, 2014 the Department of Energy announced the selection of three offshore wind demonstration projects to receive up to $47 million each over the next four years to deploy grid-connected systems in federal and state waters by 2017. The projects – located off the coasts of New Jersey, Oregon and Virginia – prevailed over project proposals from Maine, Ohio and Texas.

The Energy Department estimates offshore wind could produce more than the combined generating capacity of all U.S. electric power plants if all of the resources in state and federal waters were developed. More than 70 percent of the nation’s electricity consumption occurs in the 28 coastal states -- where most Americans live. Offshore wind resources are conveniently located near these coastal populations. Wind turbines off coastlines generally use shorter transmission lines to connect to the power grid than many common sources of electricity. Moreover, offshore winds are typically stronger during the day, allowing for a more stable and efficient production of energy when consumer demand is at its peak.

At the present time, the only offshore wind project generating electricity and connected to the grid is off of Castine, Maine; I have been legal counsel for the permitting and other project requirements.  UMaine's VolturnUS project is a 65-foot-tall floating offshore wind turbine prototype launched last summer and connected to the transmission system on June 13, 2013, making it the first grid-connected offshore wind turbine in North America. The turbine is 1:8th the geometric scale of a 6-megawatt (MW), 423-foot rotor diameter design. It has been operating extremely well in all kinds of weather and sea conditions for almost a full year. For a photo of the turbine, see a previous ACOEL blog post,

The three projects selected are required to deploy offshore wind installations in U.S. waters, connected to the grid, by 2017:

·  Fishermen’s Energy proposes five 5-megawatt direct-drive wind turbines approximately three miles off the coast of Atlantic City, New Jersey. The project would be built in relatively shallow waters, with the foundations installed into the seabed, similar to the proposed Cape Wind (Massachusetts) and Deepwater (Rhode Island) projects.

·  Principle Power will install five 6-megawatt direct-drive wind turbines approximately 18 miles off the coast of Coos Bay, Oregon, using a semi-submersible floating foundation to be installed in water more than 1,000 feet deep.  More than 60 percent of U.S. offshore wind resources are found in deep waters, including the entirety of the West Coast and much of the East Coast, especially New England.

·  Dominion Virginia Power will install two 6-megawatt direct-drive wind turbines 26 miles off the coast of Virginia Beach, using a foundation to be installed  in relatively shallow waters into the seabed, like Fishermen’s.

The DOE also announced that the proposals from the University of Maine and from the Lake Erie Energy Development Corporation “offered additional innovative approaches that, with additional engineering and design, will further enhance the properties of American offshore wind technology options. This includes concrete semi-submersible foundations as well as monopile foundations designed to reduce ice loading.” The Department has indicated that these two projects were selected to be alternates, and each will receive $3 million over the next year to, as with the three selected projects, bring their engineering and design work from the current 50% level to 100% completion. You can learn more at the Wind Program’s Offshore Wind Web page.

MY PRACTICE IN TRUST?

Posted on June 24, 2014 by George von Stamwitz

The $5.15 billion Tronox environmental settlement in April impressed many of us with the challenge of monetizing decades of real and perceived environmental risk.  It called to mind the even larger $9 billion ASARCO bankruptcy in 2009.  With almost $15 billion in trust between just two environmental bankruptcies, it seems that environmental practitioners are putting on their bankruptcy hats with increasing frequency.  What has flown under the radar is growing importance of trusts to the life of an environmental lawyer dealing with remediation.

These massive bankruptcy cases monetizing future environmental risk merely shed light on the fact that mergers, acquisitions and real estate transactions have increasingly been utilizing trusts to deal with long term liability.  Virtually every liability assumption (a/k/s risk transfer) transaction results in a trust or escrow account.  The environmental lawyer may be reasonably inquiring at this point, “Why does this matter to me; we have trust lawyers, after all?” The answer is that the language of the trust is really like a state of the art consent decree governing a remediation.  The critical questions of remediation goals, cessation of active remedy, dispute resolution, default, insurance, remedy takeover, penalties, bonus payments for success etc., need to be designed into the trust.

In addition to the environmental design issues, there are a host of related legal issues to consider: May our client write off financial reserves after creation of the trust?  Are payments to the trust deductible when made?  How should trust assets be invested? How much control of disbursement is allowable to a donor and still reap tax and accounting benefits?

The tax code recognizes two types of trusts: (1) a Qualified Settlement Fund (QSF)and (2) an Environmental Remediation Trust (ERT).  While QSFs are limited to claims that involve settlements with regulators, ERTs provide many of the same tax advantages as QSFs but apply to a broader set of circumstances.  

One of the joys of the environmental practice is the intersection between environmental practice and many other areas of law.  The intersection of remediation projects with the law of trusts is large and growing.

Oklahoma Rattled by Earthquake Warning

Posted on June 23, 2014 by Mark Walker

            On May 2, 2014, the U.S. Geological Survey and the Oklahoma Geological Survey issued a Joint Statement advising residents that the rate of earthquakes in Oklahoma had increased by 50% in the last seven months  - “significantly increasing the chance for a damaging magnitude 5.5 or greater quake in central Oklahoma.”  This is the first such advisory for a state east of the Rockies.

            The Joint Statement was accompanied by the following graph which illustrates the dramatic rise in Oklahoma earthquake activity:

            What accounts for this increase?  The USGS’s statistical analysis indicated that the increase did “not seem to be due to typical random fluctuations in natural seismicity rates.”  Instead, the “analysis suggests that a likely contributing factor to the increase in earthquakes is triggering by waste water injected into deep geologic formations.” 

            In November, 2013, the Groundwater Protection Council issued a White Paper summarizing its special session on “Assessing & Managing Risk of Induced Seismicity by Underground Injection.”  The paper notes that there are approximately 150,000 UIC Class II permitted injection wells in the U.S., about half of which are disposal wells that inject into non-producing formations.  Yet the number or felt earthquakes suspected to be associated with waste water disposal is very small (the White Paper focused on 8 examples), meaning induced seismicity from waste water disposal is “quite rare.”  The concern seems to be focused around deep well injection into non-sedimentary basement rock or disposal in close proximity to critically stressed faults.

            Earlier this year 14 Arkansas families filed lawsuits against two energy companies alleging that waste water disposal caused earthquake “swarms” in Arkansas in 2010 and 2011 which injured the plaintiffs’ property.  Those swarms resulted in the plugging of several disposal wells and the imposition of a regulatory moratorium on new Class II disposal wells near the Guy-Greenbrier Fault.

            The Oklahoma Geological Survey has developed a draft set of best practices for siting injection wells which seek to avoid placement of injection wells near known faults and injection into deep basement rock.  The Oklahoma Corporation Commission is supporting research and the expansion of the network of Oklahoma seismic monitoring stations, and is following a stoplight approach to permitting new disposal wells which evaluates risk on a site-by-site basis.

 

P.S.      While writing this I experienced two earthquakes (4.3 and 2.7 magnitude) at my home in Edmond, Oklahoma, within a one hour span.  There have been seventeen earthquakes in Edmond within the past 8 days.

EPA’s RDA Math: 3 + 9 ≠ 1

Posted on June 20, 2014 by David Van Slyke

In a surprising turn of events, on March 12, 2014 EPA Regions 1, 3 and 9 each simultaneously but separately responded, and each in a somewhat different way, to three virtually identical NGO petitions asking those Regions to use their Clean Water Act (“CWA”) Residual Designation Authority (“RDA”) to require that stormwater discharges from impervious surfaces at existing commercial, industrial and institutional (“CII”) sites be permitted under CWA Section 402.  The three petitions were filed in July 2013 by several different and somewhat overlapping consortia of environmental organizations.

The three Regions’ responses were all signed by their respective Regional administrators, each was worded differently, and each included a somewhat similar -- yet somewhat different --explanatory enclosure that detailed the basis of each respective Region’s response.

EPA Region 3’s response is a flat out denial of the petition, citing existing tools and programs already in place to address stormwater pollution (e.g., MS4 permits, TMDL implementation and strong state programs).  The enclosure with the Regional Administrator’s letter denying the petition also states that “Region III declines to begin a process for categorical designation of discharges from CII sites to impaired waters since … the data supplied by the Petitioners to support the exercise of RDA is insufficient.”  The enclosure does note that if the existing programs ultimately do not meet their objectives, alternate tools, including RDA, will need to be considered.

Similarly, EPA Region 9’s response “declines to make a Region-wide designation of the sources” in the petition specific to Region 9.  That response also concludes in the enclosure that “we currently have insufficient information to support a Region-wide designation” of the CII sites specified in the petition, “that effective programs are already in place that address the majority of the sites identified in the petition,” and that the Region will keep designation in their toolbag as they “continue to evaluate currently unregulated sources of stormwater runoff.”

However, Region 1’s response states that it “is neither granting the petition … nor is it denying the petition.”  Instead, the Region is going to evaluate individual watersheds in its six states to look at the nature and extent of impairment caused by stormwater, and then “to determine whether and the extent to which exercise of RDA is appropriate.”

Given the identical language in certain portions of all three of the Regional response enclosures (e.g., Statutory and Regulatory Background; Petition Review Criteria), it is clear that EPA Headquarters was in the thick of the discussions regarding the responses to these three RDA petitions.  However, the apparent autonomy afforded each Region in determining how to deal with the issue is remarkable, and the discussions ultimately may have centered (as they often do at EPA HQ) on resource allocations nationally and within each Region. 

The responses of Regions 3 and 9 imply that their current respective paths, with time, will get results without diverting resources.  EPA Region 1 appears to more fully embrace RDA as a near-term viable tool to more aggressively control stormwater runoff from CII sites.  Apparently, the New England regulators’ successful experience with the Long Creek Watershed RDA and their efforts relative to the RDA process for the Charles River has only whetted their appetite for further candidate areas at which to employ this model to address impaired stormwater. 

Whether the NGOs will seek judicial relief from the denial of their Petitions, whether the states in the USA’s upper right hand corner will be supportive of EPA New England’s continued utilization of this tool, as well as how this issue ultimately will be played by EPA HQ, is fuzzy math.

Imposing Repose: The Supreme Court Limits CERCLA § 309

Posted on June 19, 2014 by Michael Wall

On June 9th, the Supreme Court ruled, in CTS Corp. v. Waldburger, that § 309 of CERCLA does not preempt state statutes of repose. Section 309 requires state statutes of limitations for injuries from hazardous substances releases to run from the date the plaintiff knew or should have known of the injury caused by the release. But in CTS, the Court held that state statutes of repose are not statutes of limitations, and are not governed by section 309.

That conclusion was hardly self-evident. While section 309 explicitly applies to statutes of limitation, and does not specifically mention statutes of repose, the later have often been understood as a species of the former. When section 309 was enacted, Black’s Law Dictionary explained that “Statutes of limitations are statutes of repose.” Congress itself often referred to statutes of repose as “statutes of limitation.” And the very year after Congress enacted section 309, the Supreme Court itself described application of a two-year state statute of limitations as “wholly consistent with . . . the general purposes of statutes of repose.” The meaning of these terms has diverged in more recent years, but that divergence was not well-established when Congress enacted section 309.

The Court’s conclusion that Congress recognized a clear distinction between statutes of limitation and statutes of repose thus required the Court to assume that Congress used these terms with more precision in section 309 than Congress had done on other occasions, with more precision than (and in conflict with) the then-current edition of Black’s, and with more precision then the Supreme Court itself used the terms a year later. It is not often that this Court holds Congress’s legal acumen in such high regard.

The Court’s lead argument for why Congress did understand this distinction was that page 256 of the Section 301(e) Study Group Report—an expert report submitted to Congress and referenced in the Conference Committee Report—distinguished between these terms. This is surprising analysis. The CTS majority includes avowed skeptics of relying on traditional legislative history. Those justices might previously have been expected to be even more skeptical of attempts to discern congressional intent from statements buried in expert reports referenced by traditional legislative history. Not so, it seems—or at least, not so for this one opinion.

But does the Study Group Report even make the same distinction as the Court? The report recommends that:

"states . . . remove unreasonable procedural and other barriers to recovery in court action for personal injuries resulting from exposure to hazardous waste, including rules relating to the time of accrual of actions."

The Report then recommends that “all states that have not already done so, clearly adopt the rule that an action accrues when the plaintiff discovers or should have discovered the injury or disease and its cause.” That is what Congress effectively did—albeit for the states—in section 309. The Report then states: “This Recommendation is intended also to cover the repeal of statutes of repose which, in a number of states have the same effect as some statutes of limitation.”

This sentence, the Court concludes, shows that Congress must have known that a law that preempts state statutes of limitation would not also preempt state statutes of repose. But is it not at least as likely that any Member of Congress who actually read page 256 of the Study Group Report would have thought that adopting the discovery rule for all states would “also … cover the repeal of statutes of repose”?

Justice Scalia once wrote that “Congress can enact foolish statutes as well as wise ones, and it is not for the courts to decide which is which and rewrite the former.” Reading CTS Corp., one cannot escape the notion that the Court was willing to stretch its usual interpretive rules in order to apply what it considered a wise result to an arguably ambiguous statute. It did so in the apparent service of the policy of repose. But the holding will bring little peace in a state with a statute of repose to individuals who learn, years too late, that they or their children have been sickened by contaminants that a government agency or business released long ago.

Government Bullies? Not So Much

Posted on June 18, 2014 by David Uhlmann

It has been more than 30 years since EPA hired its first criminal investigators, but questions remain about when environmental violations will result in criminal charges.  Critics frequently portray environmental crime as a poster child of “over-criminalization” with a recent example Senator Rand Paul in his book Government Bullies:  How Everyday Americans Are Being Harassed, Abused, and Imprisoned by the Feds.

To address these concerns, I have suggested that prosecutors should limit criminal charges to violations that involve one or more of the following aggravating factors: (1) significant environmental harm or public health effects; (2) deceptive or misleading conduct; (3) operating outside the regulatory system; or (4) repetitive violations. By doing so, prosecutors would focus on violations that undermine pollution prevention efforts and avoid targeting defendants who committed technical violations or were acting in good faith.

I subsequently developed the Environmental Crimes Project to determine how often the aggravating factors I identified were present in criminal prosecutions. With the assistance of 120 students at the University of Michigan Law School, I analyzed all defendants charged in federal court with pollution crime or related Title 18 offenses from 2005-2010. We examined court documents for over 600 cases involving nearly 900 defendants to create a comprehensive database of environmental prosecutions.

Our research revealed that prosecutors charged violations involving aggravating factors in 96% of environmental criminal prosecutions from 2005-2010. More than three-quarters of the violations involved repetitive conduct, and nearly two-thirds involved deceptive or misleading conduct. Moreover, we found that 74% of the defendants engaged in conduct that involved multiple aggravating factors. And, for 96% of the defendants with multiple aggravating factors, one of the first three factors (harm, deceptive conduct, or operating outside the regulatory system) was present along with repetitiveness.

These findings support at least three significant conclusions. First, in exercising their charging discretion, prosecutors almost always focus on violations that include one or more of the aggravating factors. Second, violations that do not include one of those aggravating factors are not likely to be prosecuted criminally. Third, prosecutors are most likely to bring criminal charges for violations that involve both one of the first three factors and repetitiveness—and are less likely to bring criminal charges if that relationship is absent.

I plan to update my research with data from 2011-2012 and to examine a representative sample of civil cases using the same criteria. But my research already should provide greater clarity about the role of environmental criminal enforcement and reduce uncertainty in the regulated community about which environmental violations might lead to criminal charges.  My research also suggests that prosecutors are exercising their discretion reasonably under the environmental laws and should lessen concerns about over-criminalization of environmental violations.

For more, please see David M. Uhlmann, Prosecutorial Discretion and Environmental Crime, 38 HARV. ENVTL. L. REV. 159 (2014).

Who Owns Riverbeds? Putting Matters on Equal Footing.

Posted on June 17, 2014 by H. Thomas Wells Jr.

            The ownership of riverbeds can be an important question when development of minerals (coal, oil and gas, etc.) includes lands on which there are non-tidal surface streams.  Under what is called the “equal footing doctrine”, each State owns the beds of all streams that were “navigable in fact” at the time that particular State entered the Union, or streams that were “tidal”, or subject to the ebb and flow of the tide.

            Thus, claims of ownership of riverbeds of non-tidal streams depend upon the condition of the stream at the time of statehood, and upon the type of boats that were commonly used for commerce at that time.  This becomes more of a historical research project than a legal analysis.

            For example, in one recent case, involving Montana’s ownership claims to some streambeds, Justice Kennedy relied on the notes and letters of William Clark and Meriwether Lewis (of the famed Lewis and Clark Expedition) in ruling on the ownership claims.  Montana, which was attempting to collect some $40 million in rent from the operator of hydroelectric dams, lost because Lewis’ and Clark’s notes showed there were five waterfalls, including one of over 80 feet, which required them to traverse overland via portage before finally putting their boats back in the water.  Because of the need for portage around the waterfalls, the stream segments in question were not “navigable in fact”.

If you are involved in any matter involving the title to riverbeds, because of the equal footing doctrine, you need to be equally adept at historical, as well as legal, research.

Kids Get Their Day in Court on Climate Change

Posted on June 16, 2014 by Rick Glick

On June 11, the Oregon Court of Appeals held that two teens are entitled to a judicial declaration of whether there exists a “public trust” obligation in state officials to “protect the State’s atmosphere as well as the water, land, fishery, and wildlife resources from the impacts of climate change.”  In Chernaik v. Kitzhaber, the court reversed the trial judge’s dismissal of the case and remanded for a decision on the merits.

This case is one of dozens brought in the name of kids across the country to force government to act more aggressively to combat climate change.  The young activists—with a little help from the environmental advocacy groups Crag Law Center, Center for Biological Diversity and Western Environmental Law Center—argued that the state has displayed a frustrating lack of urgency:  “I don’t want to live in a wasteland caused by climate change,” Olivia Chernaik told the Eugene Register-Guard.

Who could argue with that?  As it happens, no one did at this stage of the proceedings.  Rather, the case turned on whether a judiciable controversy exists under the Uniform Declaratory Judgments ActPlaintiffs asked for a declaration that a public trust obligation exists and that Oregon officials have violated that trust by not preventing climate change, and they asked for an injunction to reduce greenhouse gas emissions by a prescribed amount, which plaintiffs characterize as the “best available science.”  The state countered that such declarations could not lead to practical relief by the court, and that if they did, the court would be intruding on the legislature’s prerogative to determine whether current policies are adequate and what additional measures may be needed. 

The court rejected the state’s arguments, holding that such declarations could stand on their own, which would lead the legislature to take appropriate steps without an injunction.  In other words, the kids should get their day in court to show that a fiduciary duty exists under the public trust doctrine to protect against climate change and which duty the state has failed to properly discharge.

The public trust doctrine stems from English common law, which states that some resources are so central to the well-being of citizens that they cannot be freely alienated and must be protected.  The doctrine was adopted by the U. S. Supreme Court in its 1892 decision Illinois Central Railway v. Illinois, which held that the state could not convey outright title to a substantial segment of the Chicago lakefront. 

Many such cases followed, but in 1983 the influential California Supreme Court, in National Audubon Society v. Superior Court, extended the doctrine to overlay ongoing public trust obligations to limit vested water rights.  In that case, the issue was whether the state must act to limit the Los Angeles Department of Water and Power’s appropriation of water from tributaries to Mono Lake in the face of declining lake levels.

The expansive reading given the public trust doctrine by the California Supreme Court sets the stage for court imposition of regulatory controls to protect the environment.  When the Chernaik case is restarted by the trial judge on remand, we will see if Oregon courts will pick up the baton. 

Doing so could mean big problems for the state, and perhaps lead to unintended consequences.  It would be one thing for the court to order the state to do more to limit greenhouse gas emissions, and another to force the state to find the funds.  In a zero sum budget process, which other essential programs would need to be cut?  And do we want state court judges prescribing and monitoring remedial measures?  Despite the slow pace and inefficiency of the legislative process, wouldn’t we prefer our elected leaders to develop the complex and coordinated suite of measures to address climate change? 

My guess is the courts won’t go there.  But to Olivia Chernaik and co-plaintiff Kelsey Juliana, congratulations on your win and for elevating climate change on the state’s agenda.

New Developments in Conservation Easements

Posted on June 16, 2014 by Philip Tabas

Conservation easements have a long been an effective tool for private efforts to protect land in the United States. But we may not be aware that there is a growing private lands conservation movement in other countries. Conservationists in those counties are adapting the conservation easement as we know it here in the United States to conservation needs in their jurisdictions. Two recent examples highlight this growing trend, one in Micronesia and one in Chile.

As you will recall, a conservation easement is a legally binding agreement between a landowner and the easement holder whereby the landowner agrees to limit the use of his or her property to protect outdoor recreation, natural habitats, open spaces, scenic areas, or historic lands and buildings. Easements have been on the rise in the United States since the 1980s because of important federal and state income tax, federal estate tax, and local property tax benefits that are available to donors of conservation easements.  Easements are usually a less expensive conservation approach than government acquisition, ownership, or land use regulation.

Conservation Easement in Micronesia

One conservation-minded family and a state agency in the small island of Kosrae State in Micronesia has just recently recorded the first conservation easement outside of the Americas and in a form that other Micronesian countries and even the United States could model.

Once a United States Trust Territory, Kosrae is one of three states that comprise the independent nation known as the Federated States of Micronesia (FSM). Its legal system is based on the United States legal system. Kosrae’s Attorney General issued an opinion that a conservation easement is a legally viable option for land protection in Kosrae, analogizing to legal principles established in the United States.

This particular conservation easement is designed to permanently protect a rare freshwater swamp forest comprised primarily of the ”ka” tree. The entire forest, named Yela, comprises approximately 400 acres and is the largest remaining ”ka” forest in the world. The undeveloped valley forest has been and will continue to be used for traditional harvests. Eels, nuts, wild pigs, and taro leaves for underground ovens or “ums” are gathered there. The easement will prevent development on the property.

The Yela deal is innovative not only because it introduces a new conservation tool to the region but it is “a new and improved” version of that tool from which states in the United States could benefit. Instead of the grantor who signs the easement sale agreement solely benefitting from the sale proceeds, as is often the case in the United States, the family in this case has invested that income into a trust fund managed by the Micronesia Conservation Trust and from which the family will derive payments over time.

The Kosraean conservation easement deal is being eyed by both Micronesians and other Pacific Islands because, unlike an outright government purchase of the land, the conservation easement model will accommodate the needs of traditional land uses and generational changes while compensating the owners for keeping the land in its natural state.

Conservation Easement in Chile

The largest and third ever conservation easement was recently created in Chile between The Nature Conservancy as the owner of the 123,000 acre Valdivian Coastal Reserve and Fundación de Conservación (FORECOS), a land trust in Chile. FORECOS will hold a conservation easement over nearly all of the acreage comprising the Valdivian Coastal Reserve, one of the world’s last temperate rainforests. To be enforceable under Chilean law, this easement is structured as an easement appurtenant. TNC will give FORECOS fee title to a small parcel of Valdivian acreage to serve as the ‘benefitted’ parcel of land which will be protected by a reciprocal easement held by the Conservancy.

The Reserve is one of the last intact temperate rainforests along the Valdivian Coastal Mountain Range. It is home to outstanding examples of endemic flora and fauna species, including two of the world’s longest living tree species, the alerce — which can live for more than 3,600 years — and the olivillo — which can live up to 400 years — as well as to numerous imperiled species of mammals, birds, reptiles, amphibians, and fish. The Reserve also contains an important marine coastal ecosystem of scrubland, coastal dune, sandy beaches and rocky coasts. In addition, there are eight river basins and five estuary systems within the Reserve that support numerous globally threatened species of plant and animal life.

At the same time that this easement was created, the Chilean Congress is continuing to consider the Derecho Real de Conservacion (DRC) legislation, which would establish a legal framework to enable the easier use of conservation easements in gross  for conservation in Chile (by removing the need for the appurtenancy requirement). The completion of this first Chilean conservation easement may encourage the enactment of the legislation. This legislation, along with a proposed Unified Donations Law that will provide tax incentives for conservation donations and make donating to conservation non-profits easier in Chile, has received strong backing from many community and political leaders in Chile.

Easements have also been used in conservation projects in Australia (there called “conservation covenants”), Canada, Guatemala, Costa Rica, and Mexico.  While these two most recent examples of conservation easements may differ in detail, they both represent the beginnings of what are likely to be increasingly noteworthy initiatives in countries other than the United States to find and develop new conservation tools to address the needs of both conservation and compatible community development.

If what goes underground doesn’t stay underground, what then?

Posted on June 13, 2014 by Todd D. True

If it’s wastewater from a treatment plant pumped into injection wells and it ends up in the ocean, you need an NPDES permit under the Clean Water Act.  At least that’s the conclusion from the U.S. District Court for the District of Hawaii in Hawai’i Wildlife Fund v. County of Maui, decided May 30, 2014.

            In Hawai’i Wildlife Fund, a case in which my colleague David Henkin in our Honolulu office represented the plaintiffs, the Court considered the following facts:  The County of Maui operates a wastewater treatment plant located about a half mile from the ocean that pumps millions of gallons of treated wastewater into several injection wells each day.  Within the last few years, EPA and others performed a tracer dye study because of concern that much of this wastewater was migrating through a groundwater aquifer and emerging in the ocean off the coast of Maui through seeps and springs.  The results of this study confirmed that, for a number of the injection wells, this was the case, even though it took several weeks for the dye to move from the wells into the ocean through the groundwater aquifer.  Based on other information, the County apparently had been aware since 1991 that its wastewater discharges were reaching the ocean.  Plaintiffs, Hawai’i Wildlife Fund and others, brought a citizens suit under the Clean Water Act asserting that because the County wastewater treatment facility had no NPDES permit, the discharge of wastewater into the ocean via the injection wells and groundwater was an illegal, unpermitted discharge.

U.S. District Court Judge Susan Mollway agreed and granted the plaintiffs summary judgment.  The Court was not deterred by the County’s argument that it had an application for an NPDES permit pending with the State or other preliminary matters.  Instead the Court observed that “the only area of dispute between the parties is whether the discharges into the aquifer beneath the facility constitute a discharge into ‘navigable waters[,]’” the operative language of the Clean Water Act in this case.

On this point, the Court turned to the Supreme Court’s Rapanos decision and concluded that waters regulated by the CWA are broader than waters that are “navigable-in-fact,” hardly a controversial conclusion.  The Court then went on to conclude that “liability [for an unpermitted discharge] arises [under the CWA] even if the groundwater . . . is not itself protected by the [Act] as long as the groundwater is a conduit through which the pollutants are reaching [the ocean].”  As the Court observed, “[t]here is nothing inherent about groundwater conveyances and surface water conveyances that requires distinguishing between these conduits under the [CWA].”  In the Court’s view, as long as the groundwater served as a conveyance for pollutants that reached navigable waters, liability for an unpermitted discharge would attach.

The Court also concluded that liability for an unpermitted discharge arose under an alternative test which the parties drew from the Ninth Circuit’s post-Rapanos decision in Northern Cal. River Watch v. City of Healdsburg, even though the Court expressed skepticism about the applicability of this test where groundwater is involved.  Under this alternative test, because there was a clearly discernible nexus, i.e., the groundwater aquifer, between the County’s discharge of pollutants into injection wells and its subsequent emergence in the ocean, and because the discharge of pollutants to the ocean significantly affected the “physical, biological, and chemical integrity” of the ocean in the area of the seeps and springs through which the discharge emerged, liability for an unpermitted discharge also would attach.

Next up: civil penalties and remedy.

Pulling the Plug on Greenhouse Gas Emissions

Posted on June 12, 2014 by Robert Wyman

Buoyed by favorable recent Supreme Court and DC Circuit decisions recognizing EPA’s broad discretion under the Clean Air Act, on Monday, June 2, EPA scaled new heights of legal adventurism by proposing the Clean Power Plan, a greenhouse gas reduction program for the power sector that would compel states to implement supply- and demand-side energy strategies.  EPA projects that its proposal would achieve approximately a 30% reduction from 2005 levels by 2030.

EPA’s action is under section 111(d) of the Clean Air Act, a little-utilized section that authorizes EPA to set emission guidelines for states to regulate listed source categories whose emissions are not regulated under either the Act’s criteria pollutant program under section 108 or the hazardous air pollutant program of section 112.  The College recently prepared an excellent overview of section 111 authority for the Environmental Council of the States (ECOS).

Certain aspects of EPA’s proposal are worth noting.  First, in stark contrast to prior stationary source rules, EPA seeks to harness the entire energy system, not just efforts at individual sources.  The bulk of the proposed emission reductions will come not from the minor expected heat rate improvements at individual electric generating units (EGUs)(EPA’s first “building block”), but from directing states to increase generation at natural gas plants and renewables while reducing electricity demand.  Three of EPA’s four “building blocks”  thus address emission reductions that are outside the control of EGUs, the listed source category.  Consistent with this approach, EPA proposes a portfolio enforcement approach by which states would be authorized to oblige entities other than the affected source for the reductions in building blocks two through four.  The proposal calls for an overall state energy plan, not just for implementing emission reduction opportunities available to individual sources.

Second, the proposal does not establish common performance standards, but sets highly-variable standards for each state based on EPA’s assessment of the state’s individual capacity to reduce emissions under each of the four building blocks.  EPA clearly listened to state pre-proposal input regarding material differences in each state’s EGU portfolio, its capacity to harness wind and solar generating technologies and other state differences.

Although the proposal’s projected benefits reflect an estimated 30% emission reduction from 2005 levels, EPA actually uses 2012 as the baseline for measuring a state’s starting carbon intensity.  Because EPA sets each state’s interim and future carbon intensity targets based on the state’s capacity for reducing, shifting or avoiding EGU emissions, it is not surprising that the proposal does not provide any state with early action credit in the traditional sense.  Some states are further along on their individual progress lines, but as currently designed the proposal does not allow any state to monetize its early reductions nor to avoid future progress based on its prior actions.  This means that some states will be expected to do more than others for the foreseeable future.  And, unless a true early action mechanism is included in EPA’s final rule, some states, such as California, may continue to incur net energy costs higher than their neighbors.

Several commenters have noted the material legal risk that EPA takes with this proposal.  Among the many expected challenges will be that EPA cannot regulate EGUs under section 111(d) because the House version of that section precludes such regulation if the source category already has been listed under section 112.  The proposal also could be challenged for including in the “best system of emission reduction” (BSER) emission reductions outside the control of the source and for obliging the state and entities other than EGUs to achieve such reductions.  EPA argues in its proposal that it can require states to consider any measure that has the effect of reducing EGU emissions (i.e., an “effects” or “ends” test), but some will argue that section 111 only allows EPA to require those emission reduction options (i.e., “means”) available to the EGU itself.

Should EPA fail to finalize one or both of its section 111(b) new and modified/reconstructed unit proposals, then it may be challenged for a failure to finalize the prerequisite 111(b) rule.  Other challenges could relate to an alleged failure properly to subcategorize facilities and for stepping beyond its emission reduction role to, in essence, regulate a state’s energy policy.

EPA has left some important design issues unresolved.  EPA strongly encourages interstate cooperation, including the use of emissions trading, but it leaves the actual shape of such linkages undefined.  Similarly unresolved is the question of how states can interact if they act alone.  Given the regional nature of power markets and the fact that emission reductions occurring in one state often result from investment (on either the supply or demand side) in another, states and companies will need to know the ground rules for adjudicating potentially-conflicting claims for state plan credit and company compliance credit.  EPA seeks comment on these and other critical issues.

For those interested, a more substantive analysis of the proposal can be found here.

Chicken Little…and Falling Skies?

Posted on June 10, 2014 by David Tripp

On March 27, 2014, the U.S. Fish and Wildlife Service announced its intention to list the Lesser Prairie Chicken (Tympanuchus Pallidicinctus) as a threatened species under the Endangered Species Act. The diminutive LPC is a member of the grouse family, shorter than its close cousin the Greater Prairie Chicken by about one inch. Known for its colorful garb and ritualistic mating dances (jokingly referred to by one biologist as "Spring Break for Chickens"), the LPC population and habitat have declined significantly over the last decade in five states, according to surveys by FSW and state agencies.

Prior to the FWS listing, a voluntary LPC Range-Wide Conservation Plan was proposed by the fish and wildlife agencies of Texas, Oklahoma, Kansas, Colorado and New Mexico. These agencies of the five states with LPC habitat created the Western Area Fish and Wildlife Authority, or WAFWA. Two days before the FWS listing, WAFWA announced that 32 oil and gas, power transmission, and wind energy companies had committed to enroll more than 3.6 million acres in its LPC range-wide conservation plan, providing about $21 million for habitat conservation over 3 years. Despite this effort by WAFWA, the FWS listing went forward.

Is the sky falling for landowners and other parties operating in the LPC habitat areas designated by FWS? Clearly there will be limitations on land use; particularly in the high-priority areas where surveys have shown the presence of "leks" where the LPC gather to mate, or other areas of primary habitat activity. Companies in oil and gas, pipeline, electric transmission, wind energy and other sectors can enroll in the WAFWA program, pay a one-time fee and follow guidelines to minimize unavoidable impacts on the LPC and its habitat.

By participation in the WAWFA range-wide plan, these enrolled companies become a party to a Candidate Conservation Agreement with Assurances. This CCAA provides for protection for "incidental take" of the LPC or its habitat which may occur during operations, including emergency repairs to pipelines, electric transmission lines or similar activities.

However, for "Little Guy" or "Mom and Pop" operations, the picture is not so clear. A ranch or farm operation or a small, independent oil and gas producer or developer may face the need for individual permits from FWS or enrollment in the Natural Resources Conservation Service LPC Initiative. Protective assurances may be given in return for per-acre fees of up to $2.25/acre for oil and gas operations, and in the example of ranch operations, NRCS terms may limit grazing by cattle to no more than once in each five years.

Concerns over these land use limitations and the uncertainty regarding FWS penalties and enforcement policies for incidental take of the LPC or its habitat leave many small farm and ranch operators or oil and gas companies feeling they are under surveillance by mysterious forces, subject to sanctions they do not fully understand, with little power to resist. As a result, some oil and gas companies are abandoning plans to develop existing leases within the habitat areas and are not seeking new leases. Even oil and gas companies who are enrolled in the Rangewide Plan are struggling to understand how to operate moving forward. Land values will be impacted in the habitat areas when ranchers and farmers can find safer ground outside the LPC boundaries. While the LPC and its habitat now are better protected, it is not without cost and anxiety for humans living in the same area.

BP Tightens its Grip on the Deepwater Horizon Checkbook

Posted on June 9, 2014 by Jarred Taylor

BP Exploration and Production, Inc. (“BP”) was recently dealt another blow in its fight to reinterpret its multibillion dollar settlement for economic and property losses arising from the 2010 Deepwater Horizon disaster when the Fifth Circuit refused to rehear BP’s appeal of a prior district court ruling on “causation nexus” requirements in the agreement.  In December 2013, U.S. District Court Judge Carl Barbier ruled that individuals and businesses do not have to prove that they were directly harmed by the oil spill in order to get paid under the terms of the settlement agreement.

In 2012, nearly two years after the spill, BP reached a settlement with the Plaintiffs’ Steering Committee (which acts on behalf of individual and business plaintiffs in the multi-district litigation proceedings) to resolve hundreds of thousands of private economic, property damage, and medical claims stemming from the Deepwater Horizon explosion and oil spill.  BP has disputed many of the economic and property damage claims brought pursuant to the settlement agreement.  BP argues that the claims administrator was incorrectly interpreting the meaning of the settlement agreement, particularly with respect to whether or not a claimant must submit evidence that its losses were directly caused by the spill.

Judge Barbier, who is presiding over the multidistrict litigation stemming from the Deepwater Horizon disaster, ruled that the settlement agreement did not contain a causation requirement beyond the revenue and related tests set out in the agreement, opening BP’s checkbook to economic loss claimants who may not be able to trace the cause of their damages back to the 2010 disaster.  BP already had revised its original $7.8 billion estimate of its potential costs under the settlement agreement up to about $9.2 billion.  Later, as it began challenging economic loss claims, BP proclaimed it could no longer provide a reliable estimate of the ultimate cost of the deal.   

BP appealed the district court’s ruling to the Fifth Circuit Court of Appeals, claiming in December that it had to pay hundreds of millions of dollars to businesses and individuals that exaggerated losses from the disaster.  The Fifth Circuit affirmed the district court’s ruling in March 2014, and on May 19, declined to rehear BP’s appeal. In a strongly worded dissent joined by two other justices, though, Judge Edith Clement argued that the district court’s rulings would “funnel BP’s cash into the pockets of undeserving non-victims” of the 2010 spill, adding that the appeals court had made itself “party to this fraud” by rejecting BP’s arguments. Judge Clement concluded that “another court surely must resolve this.” BP clearly agrees and has vowed to appeal its case to the U.S. Supreme Court, declaring that “no company would agree to pay for losses that it did not cause, and BP certainly did not when it entered into this settlement.” 

Ted Olsen, BP’s lead attorney, said in a 60 Minutes segment in May that the company would take its argument “as far as it is necessary to go to make sure that this settlement agreement is construed properly.” The New Orleans Times-Picayune reports that some experts following the case expect that the Supreme Court will not take up the case, but suspect that BP’s true motive may not be to win on appeal, but to simply prolong the litigation and delay paying claims. The Fifth Circuit lifted its stay on payout of settlement claims, and the Supreme Court just rejected BP’s request that the Supreme Court reimpose the stay pending filing and disposition of its petition for writ of certiorari. 

Meanwhile, in the midst of its attempt to walk back from the economic and property loss settlement it negotiated and—at the time—happily agreed to, BP rejected a $147 million claim from the National Oceanic and Atmospheric Administration (“NOAA”) demanding additional funds to conduct its ongoing Natural Resource Damage Assessment (“NRDA”) activities related to the Deepwater Horizon oil spill. NRDA is the process created by the Oil Pollution Act (“OPA”) and its implementing regulations that authorizes natural resources Trustees to assess injuries to natural resources caused by oil spills and spill response activities, and to restore the injured resources. OPA requires that the party or parties responsible for the oil spill pay for the reasonable costs incurred by the Trustees to carry out the NRDA and restoration. 

Last July, NOAA submitted a claim to BP for the estimated costs of NRDA activities that NOAA planned to implement in 2014. NOAA’s claim includes $2.2 million for research on the recovery of coastal wetlands, more than $10 million to remedy damage to dolphin and whale habitat, and $22 million for oyster habitat restoration. The Financial Times (free subscription required) reports that BP rejected the majority of NOAA’s requests, saying it was concerned by “the lack of visibility and accountability” in the process, and the unwillingness of the Deepwater Horizon NRDA Trustees (a handful of U.S. federal agencies and five Gulf Coast state governments) “to engage in technical discussions of the substantive issues.” The Financial Times reports that “BP said it had paid for work that was not done or done properly, been double-billed for the same study, and not been allowed to see research findings that it had been told would be shared”—evidence BP argues could be used at the trial over civil penalties to show that ecological damages from the spill are much less than once feared. 

According to an April 30 report on BP’s website, BP has already paid nearly $1.5 billion to federal and state government agencies for spill response, NRDA activities, and other claims related to the Deepwater Horizon spill, and over $11 billion to individuals and businesses. I need to disclose, too, that my firm is assisting several claimants to the BP settlement fund.

EPA Meets Regional Uniformity Requirement – the Hard Way

Posted on June 3, 2014 by Robert Wyman

On Friday, in a case argued by my colleague, Greg Garre and briefed by Leslie Ritts, the D.C. Circuit decided a closely watched case construing the EPA’s “regional uniformity” requirement under the Clean Air Act (CAA.)  The court declared the agency’s directive to regional offices outside the Sixth Circuit to ignore a 2012 Sixth Circuit decision interpreting the CAA’s “single source” requirements as inconsistent with EPA’s uniformity requirement. The decision brings to light an important component of the CAA’s nationwide scheme.

Under the CAA, any “major source” of pollution is subject to certain heightened requirements.  EPA regulations provide that multiple pollutant-emitting activities will be considered together for purposes of the “major source” analysis if they are—among other things—“adjacent.”  But EPA has, in recent years at least, given “adjacent” an expansive and atextual meaning, concluding that even facilities separated by considerable physical distance should be deemed “adjacent” as long as they are “functionally interrelated.” 

In 2012, the Sixth Circuit in Summit Petroleum Corp. v. EPA held that EPA’s interpretation was “unreasonable and contrary to the plain meaning of the term ‘adjacent.’”  The EPA opted not to seek Supreme Court review of the Sixth Circuit’s ruling.  A few months after the Summit decision, however, EPA circulated a directive to the Regional Air Directors informing them that the agency would abide by the Sixth Circuit’s decision within the Sixth Circuit, but that “[o]utside the [Sixth] Circuit, at this time, the EPA does not intend to change its longstanding practice of considering interrelatedness in the EPA permitting actions.”

The National Environmental Development Association’s Clean Air Project (NEDA/CAP), an industry group, filed a petition for review in the D.C. Circuit, challenging the EPA’s “Summit Directive” as contrary to the statute and EPA’s own regulations.  NEDA/CAP explained that EPA’s Directive would impermissibly place NEDA/CAP members operating outside of the Sixth Circuit at a competitive disadvantage, subject to a more onerous permitting regime than their peers operating within the Sixth Circuit’s jurisdiction.  That disparity between regions, NEDA/CAP explained, was inconsistent with the CAA’s requirement that EPA assure “uniformity in the criteria, procedures, and policies applied by the various regions,” 42 U. S. C. § 7601(a)(2), as well as EPA regulations that similarly require inter-regional uniformity.

On Friday, the D.C. Circuit issued a decision agreeing with NEDA/CAP in National Environmental Development Association’s Clean Air Project v. EPA. Rejecting EPA arguments that the policy could only be challenged in the context of a discrete stationary source permit application, the Court held that NEDA/CAP’s blanket challenge to the EPA’s creation of two different permitting regimes across the country could be challenged today because of the competitive disadvantages it created for companies operating in different parts of the country.  

On the merits, the Court concluded that maintaining a standard in the Sixth Circuit different from the one applied elsewhere in the country was inconsistent with the agency’s regulatory commitment to national uniformity.  The Court recognized that an agency is ordinarily free, under the doctrine of “intercircuit nonacquiescence,” to refuse to follow a circuit court’s holding outside that court’s jurisdiction.  Here, however, the Court held that EPA’s own regulations required it to “respond to the Summit Petroleum decision in a manner that eliminated regional inconsistency, not preserved it.”  Finding that the agency’s “current regulations preclude EPA’s inter-circuit nonacquiescence in this instance,” the Court vacated the directive.

The decision is noteworthy in a number of respects.  Not only does the decision roundly reject EPA’s threshold objections to NEDA/CAP’s petition (standing, finality, and ripeness), but it appears to represent the first time a court has applied EPA’s uniformity regulations to invalidate a rule.  The decision therefore puts a light on an important component of the CAA’s nationwide enforcement scheme—the “regional uniformity” requirement.    

The New York State Budget (FY 2014/2015): How Did the Environment Fare?

Posted on May 23, 2014 by Gail Port

Recently, Governor Cuomo and the NY State Legislative leaders struck a $140 billion budget deal for FY 2014-2015. Historically, the budget process in New York is messy (sometimes very messy), protracted (with the budget often being late, sometimes very late) and largely plays out behind-the-scenes among the “three men in the room” (Governor Cuomo, Speaker Silver and Senate Co-Leader Dean Skelos).  Nevertheless, the FY 2014/2015 budget was passed on time this year and without too much background noise.  

How did the environment fare you ask? That might depend on who you ask.  Parks advocates were declaring victory and applauding the infusion of $92.5 million in park capital funds, (which the State Senate initially had rejected) for repairs and restoration at New York’s state parks and historic sites.  This is the third year of robust capital funding for parks after several years of severe cuts in parks funding, although Park state officials had identified more than $1 billion of required park rehabilitation projects across the state.  On the environmental front, notwithstanding some modest successes in the budget process, the environmental community largely believes the new budget falls short when it comes to protecting the environment, making New York more sustainable and preparing New Yorkers for the challenges of climate change.  Moreover, many of the so-called advocacy successes were, in reality, merely successful efforts to beat down some pretty bad ideas.

Here are some of the highlights:

1. The Environmental Protection Fund (the “EPF”):  The EPF was established in 1993 to fund environmental projects that protect the NYS environment and enhance communities, including in the areas of open space (such as purchasing land for the NYS Forest Preserve), parks, recreation, historic preservation and restoration, habitat restoration, farmland conservation and solid waste management (including upgrading of municipal sewage treatment plants).  The EPF, which once stood at $255 million but suffered deep cuts during the recession when it was raided to support the State’s General Fund,  was increased in the FY 2014/2015 budget to $162 million, a $9 million increase over last year’s funding level, continuing the progress toward restoring the EPF. The environmental community had sought an increase to $200 million.

2. Brownfields Clean-up Program:  No consensus was reached among the Assembly, Senate and Governor during the budget process on the needed reforms to the Brownfield Clean-up Program (“BCP”) and extension of the BCP tax credits deadline.  Unless the Legislature and Governor can agree on a bill before the end of the legislative session in mid-June, the program will expire at the end of 2015.  Negotiations are continuing on a compromise bill and there are at least 4 competing proposals currently on the table.

3. Reauthorization of the State Superfund Program:  The budget agreement did not include new funding for the State’s Superfund program.  It is hoped that this issue will be taken up along with a BCP bill and funding.

4. Clean Energy:   Proposals from the Assembly and Senate to divert to the General Fund up to $218 million from the New York State Energy Research and Development Authority (“NYSERDA”) budget, which supports clean energy projects, energy-related job creation and greenhouse gas emissions reduction, were defeated.

5. Pesticides:  The Governor had proposed to significantly gut the Pesticide Sales and Use Reporting Law. The Senate refused to go along with the Governor’s proposals, whereas the Assembly proposed to modernize the law.  No consensus was reached so the law remains in effect.

6. Diesel Emissions Reduction Act (“DERA”):  The Governor and Assembly acquiesced to the Senate’s desire to delay the deadline for compliance with New York’s DERA by one year.  Accordingly, the State now has until the end of 2015 to bring the State’s fleet into compliance with the Act.

7. Mass Transit/the Metropolitan Transportation Authority:  The final budget diverts $30 million in funds dedicated for mass transit to pay State debt, a disappointing loss at a time of record mass transit ridership. 

Overall, one might characterize the final budget as being good for the environment mostly because of what it did not accomplish than for what ultimately was included in the FY 2014/2-15 budget.

Virgin Petroleum Product Quandary in Rhode Island

Posted on May 22, 2014 by Richard Sherman

A case working its way through the Rhode Island state court system, Power Test Realty Co. Ltd. Partnership v. Sullivan, No. PC 10-0404 (R.I. Super. Ct. Feb. 19, 2013), poses a dilemma regarding the obligation to remediate releases of virgin petroleum product.

Under the Rhode Island equivalent of CERCLA, virgin petroleum product is exempt from the definition of hazardous substances. R.I.G.L. 23-19.14-3(c), (i). Releases of virgin petroleum product are therefore not subject to the imposition of joint, several, strict and retroactive liability. One would accordingly expect that any obligation to remediate virgin petroleum product releases would be based on causation. Rhode Island oil pollution statutes and regulations appear to impose liability based on causation only.

Nevertheless, the Rhode Island Department of Environmental Management and the Rhode Island Superior Court have taken the position that (1) the obligation of a current landowner to remediate a release of virgin petroleum product that occurred before acquisition of title arises on the theory that the term “discharge” under the state oil pollution statute includes “leaching” and (2) leaching of pre-acquisition petroleum product into the groundwater constitutes a passive and continuing discharge for which the current landowner is liable to remediate.

The Superior Court held that causation is irrelevant under the state oil pollution control statute and regulations. This ruling clearly contradicts the intent of the legislature to carve out virgin petroleum product from a no-fault liability scheme.

This case of first impression is now before the Rhode Island Supreme Court on a writ of certiorari, Docket No. SU-13-0076. Practitioners await with interest how the Court will work its way through this issue. Stand by for some tortured reasoning if the Superior Court ruling is upheld.

What is this NY Green Bank?

Posted on May 21, 2014 by Eileen Millett

With a heap of fanfare, in mid-February, New York’s Governor Cuomo announced that the NY Green Bank is open for business.  Cuomo began ramping up his clean energy policy last summer, with the appointment of Richard Kauffman, as New York’s chairman of energy and finance, and Chair of the New York State Energy Research and Development Authority (NYSERDA).  Kauffman was the former U.S. Energy Secretary Steven Chu’s senior advisor on clean energy finance.  NY’s energy and finance chair is making it clear that government subsidies alone have not been successful in creating a robust clean energy marketplace.  Kauffman believes that government could encourage the development of private sector capital markets by helping to foster a demand for a low carbon economy.  The creation of new Green Banks could lead to permanent, steady and reliable financing for clean energy efficiency projects, and create clean-energy jobs along the way.  It’s a win- win for everyone, ensuring a low carbon future and building long-term economic prosperity.  New York is not alone, the United Kingdom has a national Green Investment Bank, and in the U.S., Connecticut, Vermont and Hawaii, have Green banks.  New York expects that NY Green Bank will advance the state’s clean energy objectives. 

Established in June 2011, Connecticut’s Clean Energy Investment Authority was the first state green bank, the first of its kind in the country.  On the federal level, the Green Bank Act of 2014 was first introduced in April, in the U.S. House of Representatives by Congressman Chris Van Hollen of Maryland, and Senator Chris Murphy of Connecticut introduced a companion bill in the Senate, as well.  In 2009 a bill passed the House, but not the Senate.  The Green Bank Act of 2014 would establish a Federal Green Bank with a maximum capitalization of $50 billion from Green Bonds and the authority to co-fund the creation of state-level Green Banks with a low-interest loan of up to $500 million. The legislation provides for the Green Bank to be supported with $10 billion in “Green Bonds” issued by the Treasury; it will have a 20 year charter and will be able to acquire another $40 billion from Green Bonds.  Passing the Green Bank Act of 2014 would give all states the option to receive funds from the federal government to assist with financing on a local level and to encourage the movement to a clean energy future.  This appears to be yet another arena where the states will take the lead and eventually the federal government will follow.

NY Green Bank is a state sponsored investment funding institution created to attract private funds for the financing of clean energy projects.  Mainly, it is a public-private financing institution having the authority to raise capital through various means ― including issuing bonds, selling equity, legislative appropriations, and dedicating utility regulatory funds ― for the purpose of supporting clean energy and energy efficiency projects.  NY Green Bank got started with an initial capitalization of $218.5 million, financed with $165.6 million of uncommitted funds raised through clean energy surcharges on the State’s investor owned utility customers, or idle clean energy ratepayer funds, combined with $52.9 million in auction proceeds from emission allowances sales from the Regional Greenhouse Gas Initiative (RGGI). The $218. 5 is meant to be a first step in capitalizing the $1 billion NY Green Bank initiative announced by the governor in his 2013 State of the State address.  

NY Green Bank is a division of the NYSERDA, a public benefit corporation aimed at helping New York State meet its energy goals: reducing energy consumption, promoting the use of renewable energy sources, and protecting the environment.  Globally, we have seen natural gas and renewables gaining ground at the expense of crude oil and coal.  

On April 10, I had the pleasure of hearing Alfred Griffin, the President of the Green Bank, and Greg Hale, Senior Advisor to the Chairman of Energy and Finance Office of the Governor of NY, speak at a roundtable sponsored by Environmental Entrepreneurs (E2).  They explained that NY Green Bank was created in December 2013, when a Public Service Commission (PSC) order, provided for its initial capitalization.  The order was issued in response to a petition filed by NYSERDA seeking clean energy funds.  Griffin and Hale see the $1 billion dollar investment fund as breaking down barriers for projects that are currently neglected.  NY Green Bank, however, is not there to provide operating capital, it is there for project capital.  They are seeking credit worthy projects and looking to promote standardization.  These types of clean energy projects will be a bridge to private markets, eventually not requiring any public subsidy, and ultimately becoming sustainable.   NY Green Bank will need impactful deals to demonstrate market success.  In the clean tech space, investors are setting investment targets for private equity activity.  Residential rooftops are among the type of projects being considered.  The bank, for example, would work with a private partner to seed investment in a solar power company for solar panel construction at a specific site.   The money would be directed for the panels not salaries or operating expenses.  Given the global makeup of energy consumption, energy investors here and abroad are looking to leverage growth opportunities to decide where to invest growing dollars to take advantage of shifts in the energy market.  New York state, although, not first, is situated right where it should be. 

Welcome to the Mad-Hatter’s Tea Party: Resource Economics and Ground Water Contamination

Posted on May 20, 2014 by Donald Stever

The old adage, jokingly told by my college Economics 101 prof, that “economics is not a science but rather a black art”, is amply borne out by disputes between warring factions of resource economists that are playing out in ground water contamination natural resource damages litigation in New Jersey, Puerto Rico, and elsewhere. The issue:  how to value contaminated ground water. So far, the few courts that have actually looked at this issue have been skeptical of the “creative” economics propounded largely by the plaintiff bar.

In one corner, we have the classical economists, usually retained by the defendants’ bar, who argue that ground water must be valued based on the impairment of an economic use, such as potable fresh water that could otherwise be consumed or ground water that could otherwise be used for crop irrigation or for industrial process uses. They call this “use value.” Let’s say that we have a facility that contaminates ground water that is naturally salty, does not meet the federal SDWA secondary drinking water standards, and is not migrating beneath anybody else’s property, or generally any ground water that is not impacting any offsite user. These economists argue that this water should not be valued for its loss as potential drinking water or other uses and thus the cost of replacing it should not be considered, leaving the monetary resource value of this water to be zero. 

In the other corner we have the “creative” guys, typically retained by plaintiffs. They advance several theories upon which to predicate large monetary values for contaminated, but unused and unusable, ground water. Here are three:

Benefits Transfer: Under this theory, clean ground water has an inherent “value” to people, called by its proponents “existence value” and thus whether it is used or not, or anybody suffers actual harm or not, is irrelevant. The proponents of this theory rely on several, mostly old, studies in which groups of people were asked what they would pay to have assurance that their own ground water supply would be free of contamination. For example, would they contribute to the cost to construct a treatment facility? These economists then use an algorithm to calculate a per-gallon “value” of the contaminated ground water using the monetary values derived from those studies. This approach ignores real-world concepts of economic value, substituting for it a sort of fictional “gestalt” value.

Resource Equivalency Analysis: This approach borrows from techniques appropriately used to value damaged wetlands or plant or animal habitat. Its proponents also assume that ground water has inherent economic (“existence”) value. They first calculate the volume of contaminated groundwater over time, and attempt to determine what it would cost to purchase an amount of land sufficient to “protect” an equivalent volume of ground water elsewhere in perpetuity. Although this approach works for habitats, it has all kinds of problems when applied to ground water. For example, in one recent case the economist’s “equivalent” resource was a fresh water aquifer, which he was projecting as equivalent to a saline portion of the same aquifer, ignoring the fundamental meaning of the word “equivalency.”  Additionally, protecting ground water resources by preserving land also provides extraneous environmental benefits — such as providing habitat — which the theory seems to ignore. Furthermore, it is very difficult to determine appropriate land values.

Wasteful Use:  This is my favorite. In a pending litigation, a plaintiff economist named Kevin Boyle asserted that extracting contaminated seaside ground water from beneath an industrial facility, treating it to remove contaminants pursuant to a RCRA corrective action permit, and discharging the treated water to the ocean, constitutes a “wasteful use” of the extracted ground water. His argument was premised on returning the treated water to the aquifer and thus making it available for use, instead of discharging the water to the ocean. But the aquifer in question was naturally salty, on the edge of the ocean, naturally flowed out under the ocean, and the recharge area would have been entirely within the property of the industrial defendant.  He calculated his “wasteful use” value as the per gallon rack price of an equivalent volume of desalinated water sold to the public by the local water utility.

Stay tuned, sports fans. Surely more to come.

Don’t Even Try to Bring THAT Kind of Regulatory Takings Case

Posted on May 16, 2014 by Margaret (Peggy) N. Strand

In 2012 and 2013, the Supreme Court issued several decisions recognizing claims for regulatory takings that observers believed might indicate a shift toward greater protection of private property rights. In Arkansas Game and Fish Comm’n v. United States, 568 U.S. ___ (No. 11-597, Dec. 4, 2012), the Supreme Court upheld a claim for a temporary taking based on flooding associated with a Corps of Engineers project, discussed here. And in Horne v. Department of Agriculture, 569 U.S. ___ (No. 12-123, June 10, 2013), under very unusual circumstances, the Supreme Court allowed the takings claim to be presented as a defense to government regulatory action. The 2013 decision in Koontz v. St. Johns River Water Management District, 570 U.S. ___ (No. 11-1447, June 25, 2013), concerned mitigation requirements associated with land development in Florida, discussed here and here. Shift in judicial approach to greater protection of property rights? Maybe not. 

During the same time period, the Court of Appeals for the Federal Circuit held that a landowner could not claim a taking arising out of denial by the Corps of an application for approval of a wetland mitigation bank. Hearts Bluff Game Ranch, Inc. v. United States, 669 F.3d 1326 (Fed. Cir. 2012). This lesser-known decision addresses a fundamental aspect of takings law — what is the property interest that is protected by the takings clause? Apparently it matters whether you have a permit denial (and can seek compensation) or a denial of a government approval of a benefit (which confers no compensable property right). 

A wetlands mitigation bank is a property where wetlands have been enhanced or restored or otherwise improved. The mitigation bank credits generated by those efforts are available as compensatory mitigation for impacts authorized under Corps permits issued under Section 404 of the Clean Water Act. Unlike dredge or fill of wetlands or streams that require a Section 404 permit, the mitigation bank is not approved by permit. Rather, under regulations, the mitigation bank is reviewed by the Corps, EPA and other federal and state agencies, known as the Interagency Review Team (IRT). Subject to IRT review, the Corps and the mitigation banker sign a Mitigation Banking Instrument (MBI) that approves the mitigation bank. The MBI contains terms such as the size and nature of the wetland enhancement or restoration that will occur on the bank property. The MBI also establishes the credits for the bank, i.e., the marketable element that can be sold to a wetland permit applicant who needs to provide compensatory mitigation. 

Despite this seemingly complicated process, the situation can be simplified in this way:  Mr. Black, owner of Blackacre, wants to fill wetlands on his property to build homes. Mr. Black must obtain a Section 404 permit from the Corps and likely will need mitigation to offset what he fills. Ms. White, owner of Whiteacre, wants to restore and enhance wetlands on her property, and use that enhancement as a basis to offer credits for wetland compensation to those who need to mitigate their impacts to wetlands, like Mr. Black. Ms. White needs to go through the mitigation banking regulatory process for her approvals. Her MBI will authorize the planned “ecological development” of her property. 

Comparing the Hearts Bluff decision to more standard regulatory takings law, if Mr. Black’s application for a permit is denied, he may be able to sue the United States for compensation for the taking of his property. If Ms. White’s application for approval of the mitigation bank is denied, the Federal Circuit says she has no compensable property interest. 

Hearts Bluff sought approval for a 4000 acre mitigation bank in Texas. The land was located where the planned Marvin Nichols Reservoir might be sited, a proposed reservoir that has a long history in Texas. Hearts Bluff also sued in state court. After consulting with the state and evaluating the potential site, the Corps denied the application for mitigation bank approval, citing reasons that do not appear in the takings decisions. 

Any regulatory takings claim faces a number of hurdles. What is unusual about Hearts Bluff is that the court held that the company had no “cognizable property interest.” 

The Federal Circuit focused on its two-part test for evaluating takings claims.  “First, as a threshold matter, the court determines whether the claimant has identified a cognizable Fifth Amendment property interest that is asserted to be the subject of the taking. . . .Second, if the court concludes that a cognizable property interest exists, it determines whether that property interest was ‘taken.’” Id. at 1329. The court stopped at step one, finding that there was no property interest. 

The court adopted the government’s position that Hearts Bluff “was never entitled to operate a mitigation bank solely by virtue of its ownership of the land and that it did not have a property right in access to the mitigation banking program because the program is entirely a creature of the government and subject to pervasive and discretionary government control.” Id. at 1330. The mitigation banking program, said the court, “is run exclusively by the Corps, subject to its pervasive control, and no landowner can develop a mitigation bank absent Corps approval. Mitigation banking in its entirety would not exist without the enabling government regulations. Under our precedent, therefore, the Corps’ discretionary denial of access into the Corps program cannot be a cognizable property interest.” Id. at 1331.  

The court relied on precedent where the claimant owned property but not the particular right to use the property as it asserted. For example, in Air Pegasus of D.C., Inc. v. United States, 424 F.3d 1206 (Fed. Cir. 2005), the court had held that a helicopter operator had no takings claim when a federal “flight restriction” essentially destroyed its business. There are not many cases in this area, and many of them deal with personal property, rather than real property. These decisions do not turn on the distinction between a government permit and a government benefit, but rather delve into whether the claimant’s property carried with it the right to pursue the particular “end goal.”

In short, while Hearts Bluff certainly owned the real property, its ability to “develop” it as a mitigation bank was not a “right” that could be taken by the Corps’ denial of its application. It was not such a right because the government essentially created the end use (mitigation banking). 

It’s been a long time since my law school days, but the “bundle of sticks” that I was taught constitute real property rights should include the right to seek governmental approval for the owner’s preferred uses, regardless of whether the government program is new, old, established by regulations, or described in a statute.  The government does not always commit a taking by denying such uses, but it is troubling that property rights should depend on which government program is involved.

Beware the Specter of Debarment

Posted on May 8, 2014 by Tom Sansonetti

Debarment is the process whereby the federal government can permanently prevent a company from doing business with the federal government or suspend a company from doing business with the federal government for a period of years.  The debarment process has been available for decades to the United States to be used against companies or persons whom the government believes are untrustworthy. For instance, removal from EPA’s list of violating facilities requires agency evaluation of corporate attitude. But the Obama Administration has broadened the scope of the process to potentially ensnare many an unsuspecting entity.

The debarment process as it currently exists has resulted in the following scenarios:

A. An oil company in the Rocky Mountain region settled a regulatory violation with the Department of the Interior’s Bureau of Land Management and as part of the agreement paid a substantial seven figure fine and adopted new procedures designed to prevent a reoccurrence of the violation and a two-year period of probation.  Imagine the surprise of the company’s managers and in-house lawyers when eighteen months after the settlement was executed, they received a Notice of Debarment for a three-year period preventing the use of their federal leases requiring new permits.

B. A wind farm owner that was convicted for killing bald eagles discovered that the company could not sell future electricity production to a federal facility.

C. An oil and gas company that pleaded guilty to a Clean Water Act spill faced debarment from being able to bid on federal oil and gas leases for five years.

Companies or persons found to be in violation of civil or criminal statutes or departmental regulations are subject to debarment.  While in egregious cases debarments can be perpetual, most debarments are for a period of three to nine years.  Debarments do not affect a company’s current government contracts, but do affect renewals of those contracts or the need for new permits on federal lands.  The debarments are company-wide.  Consequently, the above-mentioned wind farm owner also could not sell its electricity produced from its coal fired power plants to federal facilities.

Debarment proceedings are administered by the various Offices of Debarment, located within each cabinet department, with the closest responsibility for enforcing the law that was violated.  Thus, the Department of the Interior’s Office of Debarment (staffed by the Inspector General’s personnel) handles violations of fish and wildlife, public lands and Indian law.  Environmental Protection Agency lawyers in the grants and debarment program handle debarment proceedings authorized by Section 508 of the Clean Water Act or Section 306 of the Clean Air Act.

Upon the entry of a federal court judgment or consent decree a representative of the Department of Justice, often an Assistant United States Attorney, forwards the document to the appropriate cabinet department’s Office of Debarment.  The government deems debarment proceedings to be separate from the underlying litigation.  Agreements to avoid debarment may not be a condition of any plea bargain or consent decree.  Adverse outcomes after executive branch debarment hearings may be appealed to a federal district court under deferential Administrative Procedures Act standards. 

Anadarko Petroleum Agrees to $5.15 Billion Settlement for Environmental Cleanup Claims

Posted on May 7, 2014 by Donald Shandy

Anadarko Petroleum Corporation (“Anadarko”) and its Kerr-McGee unit, which Anadarko purchased in 2006, has entered into a settlement agreement with the United States, whereby Anadarko/Kerr-McGee agreed to pay $5.15 billion for a vast array of environmental clean-ups around the country.  The settlement represents the largest environmental enforcement recovery on record by the Department of Justice.  

The settlement stems from the bankruptcy of Tronox, a spinoff company created by Kerr-McGee for its chemical operations in 2006.  When Tronox declared bankruptcy in 2009, the United States and co-plaintiff Anadarko Litigation Trust (a litigation trust created to pursue Tronox’s claims on behalf of its environmental and torts creditors) asserted fraudulent conveyance allegations against Anadarko and Kerr-McGee, along with certain of its affiliates.  In December 2013, the U.S. Bankruptcy Court for the Southern District of New York found that the historic Kerr-McGee fraudulently conveyed assets to the “new” Kerr-McGee (a new corporate entity with the same name), leaving its legacy environmental liabilities behind in the old company (renamed Tronox and spun off as a separate company), with the intent to evade its debts —including liabilities for environmental clean-up at numerous sites across the country.   The court stated that “there can be no dispute that Kerr–McGee acted to free substantially all its assets … from 85 years of environmental and tort liabilities.”  In re Tronox Inc., 503 B.R. 239, 280 (Bankr. S.D.N.Y. 2013).  

Under the terms of the settlement agreement, the litigation trust and Anadarko/Kerr-McGee mutually agree to release all claims against each other.  Additionally, the United States government and Anadarko/Kerr-McGee have provided mutual covenants not to sue. 

  As a result of the settlement agreement, it is anticipated that the funds will be allocated to a number of clean-ups, which will include:

$1.1 billion paid to a trust charged with cleaning up contaminated sites around the county, including the Kerr- McGee Superfund Site in Columbus, Mississippi

$1.1 billion paid to a trust responsible for cleaning up a former chemical manufacturing site in Nevada that contaminated Lake Mead

Approximately $985 million paid to the U.S. Environmental Protection Agency (EPA) to fund the clean-up of approximately 50 abandoned uranium mines on land of the Navajo Nation 

Around $224 million paid to the EPA for clean-up of thorium contamination at the Welsbach Superfund Site in Gloucester, New Jersey

CSK Tribes to Acquire Kerr Dam in Montana

Posted on May 5, 2014 by Irma S. Russell

Last month, after 30 years of negotiations between the parties, an arbitration decision set the price to be paid by the Confederated Salish Kootenai Tribes (CSK) to PPL Montana to acquire the Kerr Dam.  The tribes expect the dam -- the first major hydroelectric facility owned by a tribal entity -- will serve as a driver for economic development for tribal members, residents of the Flathead Reservation, and the surrounding area.  The dam will operate under the same licensing requirements applicable to PPL Montana and will sell energy generated by the dam on the open market.  The dam has the generating capacity of 194 megawatts, standing at 205 feet high and 541 feet long.

After considering arguments by the tribes and PPL Montana, a panel of the American Arbitration Association set $18,289,798 as the price to be paid by the CSK to acquire the dam.  This price includes $16.5 million for the existing plant and $1.7 million for required environmental mitigation and was the original price agreed to by the parties in a negotiated deal in 1985.  The tribes had argued to the panel that $14.7 million would be a fair price while PPL Montana maintained the tribes should pay close to $50 million for the dam. 

The arbitration decision is a culmination of a long history of the construction and operation of the dam.  Negotiation for purchase has been going on since 1984 when the 50-year lease terminated.  Understanding the debates surrounding the dam requires some explanation.  In 1934 a subsidiary of the Montana Power Company began construction on the Kerr Dam on tribal lands on the Flathead River despite opposition from members of the Flathead Indian Reservation.  In 1938 the construction was completed and named after the then CEO of Montana Power Co., Frank Kerr.  The construction financing for the project included a 50-year term lease that provided for lease payments to the tribes for the dam, which is located on tribal lands and uses tribal resources.  

The arbitration decision indicated that the purchase can occur after September 5, 2015.  Energy Keepers, a federally chartered corporation owned by the tribes is expected to tender the purchase money early in September 2015.  The CSK Tribes hopes to develop the dam as a self-sustaining energy source for the tribes as well as a revenue source.  The Tribal Council is expected to choose a new name for the dam after the transfer.  

In 2011 the tribes competed for and received a federal grant, which was available for energy projects. The grant money funded a feasibility study to assess energy efficiency improvement projects and to implement energy conservation measures in existing tribal facilities.  The grant funding also supported the development of an organizational structure to acquire the dam. 

Not all tribal members supported acquisition of the dam.  The arbitration process ran from February 3 to March 3, and some tribal members have objected that lack of notice means that public comment should be allowed at this time.  Additionally, some tribal members have noted in the media the need for caution in going forward.  For example, some have emphasized that, after the purchase, the dam will no longer be a taxable asset and tax support for schools in the area will be lost or will need to be funded from other sources.  Preparation for the transition to tribal ownership has begun, and the tribes are working with current employees at the dam who are tribal members and searching for engineers and information technology employees.

Pioneering Environmental Law: Remembering David Sive (1922-2014)

Posted on May 2, 2014 by Nicholas Robinson

Before environmental law existed, David Sive knew that the law could protect forests and fields, abate pollution of air and water, and restore the quality that humans expected from their ambient environments.  He fashioned legal arguments and remedies where others saw none.  His commitment to building a field of environmental law is exemplary, not just historically, but because we shall all need to emulate his approach as we cope with the legal challenges accompanying the disruptions accompanying climate change.

David Sive learned to love nature by hiking and rambling from parks in New York City to the wilderness of the Catskill and Adirondack Mountains.  He carried Thoreau’s Walden into battle in World War II in Europe, and read William Wordsworth and the Lake poets while recuperating from wounds in hospitals in England.  He had a mature concept of the ethics of nature long before he began to practice environmental law.

His early cases were defensive.  He defended Central Park in Manhattan from the incursion of a restaurant. He rallied the Sierra Club to support a motley citizens’ movement that sought to protect Storm King Mountain from becoming a massive site for generating hydro-electricity on the Hudson River.  Scenic Hudson Preservation Conference v. Federal Power Commission [FPC] (2d Cir. 1965), would become the bell-weather decision that inaugurated contemporary environmental law.  The case was based on the multiple use concepts of the Progressive Era’s Federal Power Act.  The FPC (now FERC), had ignored all multiple uses but the one Con Edison advanced.  When the Court of Appeals for the Second Circuit held that citizens had the right to judicial review to require the FPC to study alternative ways to obtain electricity, as well as competing uses for the site, the court laid the basis for what would become Section 102(2)(c) of the National Environmental Policy Act (NEPA).

When Consolidated Edison Company decided to build a huge hydroelectric power plant on Storm King, the northern portal to the great fiord of the Hudson River Highlands, citizens and local governments were appalled.  This was no “NIMBY” response.  Con Ed had forgotten that these fabled Highlands inspired the Hudson River School of landscape painting.  This artistic rendering of nature in turn inspired the birth of America’s conservation movement of the late 19th century.  The Hudson also instrumental to the historic birth of this nation; here the patriots’ control of the Highlands had kept the British from uniting their forces, and here soldiers from across the colonies assembled above Storm King for their final encampment as George Washington demobilized his victorious Army.  The Army’s West Point Military Academy overlooks the River and Storm King.  

David Sive and Alfred Forsythe formed the Atlantic Chapter in the early 1960s, despite heated opposition from Californians who worried the Club would be stretched too thin by allowing a chapter on the eastern seaboard.  David Sive chaired the Chapter, whose Conservation Committee debated issues from Maine to Florida.  He represented the Sierra Club, pro bono, in its intervention in the Storm King case, and other citizens brought their worries about misguided government projects or decisions to him. 

David Sive represented similar grassroots community interests in Citizens Committee for the Hudson Valley v. Volpe (SDNY 1969), affirmed (2d Cir. 1970).  Transportation Secretary Volpe had approved siting a super-highway in the Hudson River adjacent to the shore in Tarrytown and Sleepy Hollow, to accommodate Governor Nelson Rockefeller’s proposal to connect his Hudson estate to the nearby Tappan Zee Bridge.  Without the benefit of NEPA or any other environmental statutes, which would be enacted beginning in the 1970s, and relying upon a slender but critical provision of a late 19th century navigation law, after a full trial in the US District Court for the Southern District of New York, David Sive prevailed against the State and federal defendants.  He won major victories on procedure, granting standing to sue, and on substance, a ruling that the government acted ultra vires.  David Sive saved the beaches, parks and marinas of the Hudson shore.

Public interest litigation to safeguard the environment was born in these cases.  Public outrage about pollution and degradation of nature was widespread.  In September 1969, the Conservation Foundation convened a conference on “Law and the Environment,” at Airlie House near Warrenton, Virginia.  David Sive was prominent among participants.  His essential argument was that “environmental law” needed to exist. 

On December 1, 1970, Congress enacted the NEPA, creating the world’s first Environmental Impact Assessment procedures and establishing the President’s Council on Environmental Quality (CEQ).  The CEQ named a Legal Advisory Committee to recommend how agencies should implement NEPA chaired by US Attorney Whitney North Seymour, Jr. (SDNY).  This Committee persuaded CEQ to issue its NEPA “guidelines” on the recommendation of this Committee.  That year launched the “golden age” of NEPA litigation.  Courts everywhere began to hear citizen suits to protect the environment.

David Sive went on to represent citizens in several NEPA cases, winning rulings of first impression.  In 1984, he reorganized his law firm, Sive Paget & Riesel, to specialize in the practice of environmental law.  From the 1970s forward, NEPA allowed proactive suits, no longer the primarily defensive ones of the 1960s. “Citizen suits” were authorized in the Clean Air Act, Clean Water Act and other statutes. 

David Sive knew that without widespread support among the bar and public, these pioneering legal measures might not suffice.  He became a founder of the Natural Resources Defense Council (NRDC), which became one of the nation’s pre-eminent champions of public environmental rights before the courts.  To continue the Airlie House conference precedent, he institutionalized the established professional study of environmental law, as a discipline, through creation of the Environmental Law Institute (ELI).  With ALI-ABA (now ALI-CLE) he launched nationwide continuing legal education courses to education thousands of lawyers in environmental law, a field that did not exist when they attended law school.  He devoted an active decade to teaching law students in environmental law, as a professor at Pace Law School in New York.

This month, the Intergovernmental Panel on Climate Change (IPCC) released the second part of its Fifth Assessment Report.  The IPCC summaries of peer-reviewed scientific investigation suggest that law will confront problems even more challenging than those that David Sive addressed.  New legal theories and remedial initiatives will be needed that do not exist today.  The wisdom of ecologist Aldo Leopold can inform the next generation.  Globally, others carry on David Sive’s role, such Attorney Tony Oposa in the Philippines or M. C. Mehta in India.  The law can cope with rising sea levels, adaptation to new rainfall patterns, and other indices of climate change, but it will take individual commitment to think deeply about environmental justice in order to muster the courage to think and act tomorrow as David Sive did yesterday.

What's Up with Ethanol Prices?

Posted on April 30, 2014 by Eileen Millett

Ethanol prices appear to be on the rise.  Weather and an increase in exports appear to be responsible for the uptick. The reason for the reported jump in ethanol prices has to do with turbulent winter weather and increasing United States (U.S.) exports, largely to Brazil.  Ethanol has wide usage in both countries.  The Renewable Fuels Association reported that for 2011, the U.S. and Brazil accounted for 87% of the world’s ethanol fuel production.  Some U.S. ethanol plants have stopped production in part because of droughts that have ravaged much of the nation’s crops and pushed commodity prices so high that ethanol has become too expensive to produce. 

Bioethanol produced from fermentation of carbohydrates in sweet and starchy crops like sugar cane and corn,  has gained in popularity as concerns about energy security and rising oil prices have become more acute.  Ethanol fuel, an alcohol derivative, is a renewable motor fuel that is used as a biofuel additive for gasoline.  Most cars in the U.S. today run on blends of up to 10% ethanol.  Today’s typical fuel pump blend, E10, is 10% ethanol and 90% gasoline.  Backed by government subsidies and mandates, ethanol plants rose in the Corn Belt, generating a new market for crops and billions of dollars in revenue for producers of this corn based fuel blend.  Generally, oil companies have opposed using higher concentrations of ethanol, and have tried to get Congress to change federal rules so that we use less ethanol.   

The U.S. EPA (EPA) has not been immune to the ethanol crunch crisis.  Last November, EPA proposed slashing the corn ethanol mandate to 13.01 billion gallons this year, down from 14.4 billion gallon requirement outlined by federal statute.  After already proposing to reduce the corn ethanol mandate, this year, on March 27, in a congressional hearing, U.S. EPA Administrator, Gina McCarthy defended the proposal, citing “infrastructure challenges and the inability at this point to achieve the levels of ethanol that are in the law.”   The U.S. EPA is the agency charged with the responsibility for developing and implementing regulations to ensure that fuel contains a minimum amount of renewable fuel.  Together with many stakeholders, EPA developed the Renewable Fuel Standard (RFS) program, and in 2005, the Energy Policy Act (EPAct) created the first RFS program. The program established the first renewable fuel volume mandate in the United States. 

The RFS program sets forth a phase-in for renewable fuel volumes beginning with 9 billion gallons in 2008 and ending at 36 billion gallons in 2022.  As required under EPAct, the original RFS program (RFS1) required 7.5 billion gallons of renewable- fuel to be blended into gasoline by 2012.  The EPA proposed reduction in the mandate would have significantly affected this year’s corn demand.  In October 2013, the Renewable Fuels Association reported that the proposed 1.4 billion gallon reduction in the ethanol mandate would reduce corn demand by 500 million bushels, and result in a reduction in corn prices.  

However, with the recent rise in corn prices, there is speculation that U.S. EPA could be reversing course.  If U.S. EPA backtracks on its plans there could be more drift in corn prices.  Ethanol prices are not merely dependent on what action U.S. EPA choses to undertake.  On the federal level, the United States Department of Agriculture (USDA) conducts a large amount of research regarding ethanol production in the United States. Much of this research is targeted toward the effect of ethanol production on domestic food markets.  So the oil industry, food companies and livestock sector will all be strong voices to determine what’s up with ethanol prices.  As yet, there is no final rule from U.S. EPA.