Natural Resource Damages - Why Not a Cooperative Restoration Approach?

Posted on December 7, 2009 by Susan Cooke

There’s lots of talk among environmental lawyers these days about how to litigate Natural Resource Damage (NRD) claims, but relatively little discussion of  how those claims can be settled through restoration projects. The latter approach deserves more attention.

Last year the Department of Interior (DOI) issued amendments to its NRD assessment regulations to focus on resource restoration through the use of cost/benefit methodologies.  Those methodologies compare losses from resource injury to the gains expected from restoration actions. Under the amended regulations they have been expanded to include habitat and resource equivalency analyses for measuring resource losses used in determining the value of project benefits, which value is in turn needed to compensate for the damaged resource. See 73 Fed. Reg. 57259-57268 (Oct.2, 2008). 

A project restoration approach can be very attractive from a monetary standpoint. Past experience has shown that the benefits to be achieved from restoration projects can be significantly greater than their cost, with the cost/benefit ratio often being 1:5 and sometimes even greater. 

 

A good example of this favorable cost/benefit ratio is the NRD settlement reached with some of the Potentially Responsible Parties (PRPs) at the Hylebos Waterway portion of the Commencement Bay Superfund site in Tacoma, Washington. As noted in an article appearing in the Summer 2009 issue of the ABA’s Natural Resources & Environment publication authored by Suzanne Lacampagne and Jeffrey Miller, the NRD trustees determined that those PRPs could settle their NRD liability for a cash payment of $13.5 million. Alternatively, they could underwrite restoration projects that provide an equivalent monetary benefit. The PRPs chose the latter route, expending about one sixth of the amount required for a cash settlement.

Of course, before the restoration projects were completed, the Hylebos PRPs faced the prospect of potential cost overruns. If concern about additional expenditures in the future is of paramount importance, or if there is a need to close out all liabilities in the near term, then an NRD credit strategy may make the most sense. Such an approach involves the purchase, or a commitment to purchase, NRD credits equivalent to the value of the damaged resource once the NRD trustees have certified the validity and transferability of those credits.

This approach is being implemented at the Duwamish River Superfund site in Seattle, Washington, where the city is leasing out parcels of its property along the river that are in need of restoration to a company that will carry out the restoration work and sell NRD credits to PRPs interested in settling their NRD liability. The Seattle mayor’s announcement of the restoration project and credit approach can be found here.  

A link to the protocol entered into by the NRD trustees and the company carrying out the restoration projects can be found here as well.

One interesting feature of the Duwamish River restoration effort is the willingness of NRD trustees to consider settlement of a PRP’s NRD liability prior to completion of the remediation effort. See, e.g., discussion at p. 7 of the inventory of properties for the Lower Duwamish River Habitat Restoration Plan prepared by the Port of Seattle.  

A related feature of that willingness to consider settlement is that restoration activities will begin earlier in the process, while cleanup is still underway. This in turn can lead to more cost effective cleanup and restoration activities, as both categories of actions can be formulated and coordinated contemporaneously for maximum benefit.

Another example of a comprehensive settlement approach encompassing both remediation and restoration activities is set forth in the consent decree for the West Site/Hows Corner Superfund site in Plymouth, Maine. As memorialized in Appendix H of that decree, the settling PRPs have addressed their NRD liability through a restoration project, i.e., acquisition of property to be held and maintained by the state government as wildlife habitat. The consent decree with its appendices and the November 19, 2009 Federal Register notice of the settlement at pp. 59991-59992 can be found here.

In addition to the cost/benefit and related timing issues just mentioned, two other favorable aspects of the restoration project approach are the positive publicity that can be generated in the local community upon implementation of such a project and the cost savings associated with earlier resolution of NRD liability. With all these attributes in its favor, and with increasing experience in using the new equivalency methodologies and implementing projects based on their numbers, the restoration project approach may yet achieve the attention it deserves.

When Does The Rivers and Harbors Act of 1899 Trump the Clean Water Act?

Posted on December 3, 2009 by Karen Aldridge Crawford

 

United States v. Milner, Nos. 05-35802, -36126, 39 ELR 20232 (9th Cir. Oct. 9, 2009)

 

In a suit brought by the United States against homeowners for common law trespass to tidelands held in trust for a Native American tribe, the Ninth Circuit held that waterfront homeowners who built shoreline defense structures on this property are liable for common law trespass and for violating the Rivers and Harbors Appropriations Act of 1899 (RHA).  

 

 Between 1963 and 1988, the homeowners leased the tidelands from the tribe, giving them the right to erect shore defense structures on the tidelands. After the lease expired, the homeowners refused to remove the structures or enter into a new lease agreement. The homeowners argued that they cannot be liable for trespass, despite the movement of the tideland boundary, because their structures were lawfully built on the homeowners' property landward of the mean high water (MHW) line.  

 

 The court disagreed.  Under common law, however, the boundary between the tidelands and the uplands is ambulatory, changing when the water body shifts course or changes in volume. Because both the upland and tideland owners have a vested right to gains from the ambulation of the boundary, the homeowners cannot permanently fix the property boundary, thereby depriving the tribe of tidelands that they would otherwise gain. And although the structures may have been legal as they were initially erected, the court found that this is not a defense against the trespass action nor does it justify denying the tribe land that would otherwise accrue to them.  

 

The court also determined the homeowners are liable under the RHA because they have maintained at least part of their shore defense structures below the MHW line and because the structures alter the course, location, condition, or capacity of a navigable U.S. water. Addressing whether the homeowners had also violated the Clean Water Act (CWA), the court held that it was unclear from the evidence whether the high tide line actually reached the area where the homeowners discharged fill material during their maintenance of the structures. The court emphasized that although the jurisdictional reach of the CWA is generally broader than that of the RHA, the RHA is concerned with preventing obstructions, whereas the CWA is focused on discharges into water. Since the two laws serve different purposes, their regulatory powers will diverge in some circumstances, such as this one. 

EPA ISSUES FINAL RULE ON CONSTRUCTION SITE WATER POLLUTION

Posted on December 2, 2009 by John Crawford

by

 

John Crawford, Michael Caples and Gary Rikard

 

 

 

On November 23, 2009, EPA finalized technology-based effluent guidelines that are likely to have a significant impact on the construction industry.   The new regulation applicable to the Construction and Development Point Source Category is found at 40 C.F.R. Part 450 and imposes both non-numeric standards and, for the first time, numeric standards designed to reduce the discharge of pollutants to stormwater.         

 

According to EPA, construction site owners and operators are the largest group of dischargers under NPDES permits.   Despite existing requirements (see 40 C.F.R. 122.26 and similar state regulations) pertaining to “stormwater associated with industrial activity” which regulates discharges from construction sites that disturb one acre or more, EPA believes additional standards are necessary. The new rule requires construction site owners to monitor, report, and comply with effluent limitations guidelines (ELG) and new source performance standards (NSPS) set by EPA. EPA plans to implement the rule in phases over a four-year period.   While states with delegated NPDES programs are governed by MOUs with EPA which normally require new regulations to be adopted within one year of EPA adoption, it appears that the new standards will not have to be incorporated by states until existing stormwater construction general permits expire; thus, some states may have up to six years to incorporate the new standards into their general permits.

 

In non-delegated states, effective in February 2010, all construction site owners and operators must meet non-numeric effluent guidelines set by EPA. Beginning in August 2011, the rule will require construction site owners and operators of projects on twenty (20) or more acres to monitor discharges and comply with numeric effluent guidelines on turbidity to be determined by EPA. By February 2014, construction site owners and operators of projects on as few as ten (10) acres will fall subject to the regulation.

 

EPA’s new regulation largely affects the construction and development industry. According to EPA, the new rule requires compliance of an estimated 82,000 civil engineering, residential, and commercial construction firms. Former EPA Region 4 Regional Administrator Jimmy Palmer says, “These new rules for controlling stormwater runoff from construction sites trace back to 2002, in the Bush administration.  As with the entire federal stormwater program, this is another add-on to state wastewater permit requirements under Section 402 of the Clean Water Act.  The most serious impacts of these new rules are the costs of obtaining individual permits when they are required; very significant additional project costs for tighter best management practices, new control measures, and monitoring in order to comply with permit conditions; and dramatically increased enforcement actions, especially in cases where permits are required.”

"Fast-Tracking" of Solar Development Not a Bypass of Environmental Review

Posted on November 20, 2009 by Linda Bullen

On June 29, 2009, Department of the Interior (DOI) Secretary Ken Salazar announced several initiatives to aid development of solar energy facilities on federal lands in the Western U.S. Working with Western leaders, the DOI initiative would:

 

  • Designate prime zones for utility-scale solar development
  • Open new Bureau of Land Management (BLM) offices to facilitate permit processing
  • Expedite project proposals. 

Twenty-four tracts of BLM land were designated as Solar Energy Study Areas, upon which projects of 10 megawatts or greater would, under this initiative, be eligible for priority processing. This “priority processing” is commonly referred to as “fast-tracking.” In early November 2009, Secretary Salazar announced the fast-tracking of six renewable energy facilities located on federal land in the State of California. 

 

Fast-tracking is not intended to circumvent any environmental or other process, but rather to facilitate the identified projects identified by the federal agencies involved (most commonly the BLM), giving priority to those that are marked as fast-tracked projects. Nevertheless, several fast-tracked projects, and fast-tracking in general, has come under criticism by some members of the environmental community and others.

 

This criticism is misplaced to the extent that it suggests that fast-tracked projects are not subject to the same rigorous scrutiny as non-fast-tracked projects. Every utility-scale project on federally-owned land is subject to review under the National Environmental Policy Act (“NEPA”). NEPA mandates thorough review of all environmental aspects of any utility-scale energy project on federal land. 

 

The NEPA process does not allow for “short cuts” or circumvention of any part of the process on projects upon which NEPA applies. Accordingly, fast-tracking of renewable projects does not result in a less meticulous or careful environmental review, just an expedited one. Efficiency does not equate to inadequacy, and such criticisms are misplaced.

Kentucky Action on PM 2.5

Posted on November 19, 2009 by Carolyn Brown

As has been reported, EPA granted in part petitions to object to the merged PSD construction/Title V operating permit issued by the Kentucky Division for Air Quality for the addition of a 750 MW pulverized coal-fired boiler at the Trimble County facility owned by Louisville Gas & Electric Company (LG&E). EPA’s action occurred more than three years after the proposed permit and final PSD determination authorizing construction to commence. One ground for the grant of the petition was that the state permitting record did not contain adequate justification of use of the PM10 program as a surrogate for PM2.5 for PSD analysis.

 

Following submittal of additional information by LG&E, Kentucky issued its preliminary determination that many have argued was an attempt to regulate by Title V objection rather than by rulemaking.   Regardless, the Division for Air Quality determined that use of the PM10 Surrogate Policy has been shown to be reasonable for the Trimble County project. In short, DAQ concurred with LG&E that there was a lack of test data regarding the particle size distribution of the particulate matter for the combination of controls on the unit and noted that the control train was state of the art. DAQ also noted that PM2.5 is always a subset of PM10 and that PM10 BACT analyses implicitly include consideration of reductions of PM2.5 emissions. After considering the elements of the control train, DAQ concluded that there were “no known base technologies available” for a PC Boiler that would provide additional reduction of PM2.5

 

LG&E also addressed fugitive emission sources, the emergency generator and cooling tower in its submittal to demonstrate that use of PM10 as a surrogate was reasonable. Although a Class II Cumulative PM2.5 NAAQS analysis was not conducted, LG&E provided information from modeling exercises to further support its position that it was reasonable to rely on the PM10 surrogate policy. DAQ noted that in the absence of a final rule on significant impact levels for PM2.5, a PM2.5 emissions inventory and regulatory dispersion modeling system, it was not possible to conduct a cumulative PM2.5 NAAQS analysis. 

Kentucky Action on PM 2.5

Posted on November 19, 2009 by Carolyn Brown

As has been reported, EPA granted in part petitions to object to the merged PSD construction/Title V operating permit issued by the Kentucky Division for Air Quality for the addition of a 750 MW pulverized coal-fired boiler at the Trimble County facility owned by Louisville Gas & Electric Company (LG&E). EPA’s action occurred more than three years after the proposed permit and final PSD determination authorizing construction to commence. One ground for the grant of the petition was that the state permitting record did not contain adequate justification of use of the PM10 program as a surrogate for PM2.5 for PSD analysis.

 

Following submittal of additional information by LG&E, Kentucky issued its preliminary determination that many have argued was an attempt to regulate by Title V objection rather than by rulemaking.   Regardless, the Division for Air Quality determined that use of the PM10 Surrogate Policy has been shown to be reasonable for the Trimble County project. In short, DAQ concurred with LG&E that there was a lack of test data regarding the particle size distribution of the particulate matter for the combination of controls on the unit and noted that the control train was state of the art. DAQ also noted that PM2.5 is always a subset of PM10 and that PM10 BACT analyses implicitly include consideration of reductions of PM2.5 emissions. After considering the elements of the control train, DAQ concluded that there were “no known base technologies available” for a PC Boiler that would provide additional reduction of PM2.5

 

LG&E also addressed fugitive emission sources, the emergency generator and cooling tower in its submittal to demonstrate that use of PM10 as a surrogate was reasonable. Although a Class II Cumulative PM2.5 NAAQS analysis was not conducted, LG&E provided information from modeling exercises to further support its position that it was reasonable to rely on the PM10 surrogate policy. DAQ noted that in the absence of a final rule on significant impact levels for PM2.5, a PM2.5 emissions inventory and regulatory dispersion modeling system, it was not possible to conduct a cumulative PM2.5 NAAQS analysis. 

EPA Tries to Silence Employees Who (Weakly) Criticize Cap-And-Trade

Posted on November 11, 2009 by Rodney Brown, Jr.

Obama’s EPA finds itself embroiled in a controversy that recalls the Bush Administration: trying to control what the agency’s employees can say about climate change. Today’s controversy is more limited, and more nuanced, than earlier ones. EPA is no longer asking its employees to deny that climate change exists. Instead, EPA has asked two of its attorneys to stop identifying themselves as EPA experts when they publicly criticize a cap-and-trade system for regulating greenhouse gases. Still, I wonder why EPA cares.

EPA previously allowed the attorneys to criticize cap-and-trade as private citizens. The two wrote letters and opinion pieces claiming cap-and-trade doesn’t work, primarily because companies can buy “offsets” that allow them to continue operations without reducing their emissions. They claim a carbon tax would work better than cap-and-trade.

Their writings have not had much effect on the debate in Congress and elsewhere. So the two recently switched from the written word to YouTube, posting a carefully produced video in which they more assertively cite their EPA credentials and experience to justify their critique of cap-and-trade. And as Grist recently noted, EPA took the bait.

EPA should stop worrying about the two attorneys. The two fail to recognize that cap-and-trade works fine when it’s done right. In fact, EPA itself runs one of the most successful cap-and-trade programs in the world. Several years ago, EPA needed to reduce smog in the eastern US. Instead of using typical command-and-control regulations, EPA created the NOx Budget Trading Program. Just last month, EPA released a report on the results achieved by that program. According to EPA, “summertime NOx emissions from power plants and large industrial sources were down by 62 percent compared to year 2000 levels and 75 percent lower than in 1990.”

And the emitters were able to achieve these reductions at a lower cost by trading with other emitters who had cheaper options for compliance. Smithsonian magazine reported a recent estimate that businesses paid only $3 billion to achieve emission reductions that would have cost them $25 billion under traditional command-and-control regulation.

The two attorneys don’t even need to worry about companies finding ways to avoid compliance with the system. Last year, only two emitters failed to comply out of 2,568, even then by only a modest amount. This is not a system full of loopholes.

Finally, the two attorneys ignore the fact that their own agency, under the Obama administration, will get to write the rules for how companies comply with a carbon cap-and-trade system. Both the Waxman-Markey and Boxer-Kerry bills require EPA to write rules regulating how companies can use “offsets” to comply with the system. Surely the agency can write rules that make this cap-and-trade system work as well as the NOx system the agency already runs.

And one more thing: As Grist reports, many experts think that the alternative — a carbon tax — may not achieve the emission reductions we need. We can only guess what carbon price might lead to the right amount of emission reductions. We’ll get the tax revenues we predict, but not necessarily the carbon reductions.

So the two attorneys should lighten up on their criticisms. But even if they don’t, EPA should stop worrying about them so much.

Environmental Review for Genetically Engineered Crops

Posted on November 11, 2009 by Andrew Brown

For some genetically engineered (GE) crops, the fields may be quiet, but the courtrooms have been busy. On October 22, Monsanto, Forage Genetics International, and two alfalfa farmers filed a U.S. Supreme Court cert petition to reverse a permanent nationwide injunction that prevents GE alfalfa from being sold or planted. On September 21, a federal court in California held an Environmental Impact Statement (EIS) is required for the deregulation of GE sugar beets. The permanent injunction on alfalfa and the recent decision for sugar beets could result in many lost years where farmers are unable to grow these weed-resistant crops. (For disclosure: my firm, Dorsey & Whitney LLP represented Forage Genetics in this case, and I was lead counsel.)

 

Alfalfa

            The U.S. Supreme Court petitioners are challenging a nationwide injunction against Roundup Ready alfalfa that prevents its use and sale until the government performs an EIS.   On February 13, 2007, the District Court held that the Animal and Plant Health Inspection Service’s (APHIS) environmental assessment was inadequate because it failed to explain why the possibility of cross-pollination of conventional and organic alfalfa with Roundup Ready alfalfa was not itself a “significant harmful impact” on the environment. On this basis, the court ordered APHIS to prepare a full EIS. The decision to require an EIS was not challenged on appeal, but APHIS, Monsanto (who owns the intellectual property rights to Roundup Ready alfalfa), Forage Genetics (the exclusive developer of Roundup Ready alfalfa) and three alfalfa growers appealed the court’s order which stopped the commercial use of Roundup Ready alfalfa until the EIS was prepared. The appellants argued the injunction was too broad, the district had effectively exempted the NEPA plaintiffs from showing irreparable harm to obtain the injunctive relief (only requiring the “possibility” of harm), and that the injunctive relief had been granted without an evidentiary hearing although there were genuinely disputed issues of fact and an evidentiary hearing had been requested.    

            The petitioners argue the Ninth Circuit misapplied the recent Supreme Court decision in Winter v. NRDC, 129 S.Ct. 365 (2008),which held a district court may not enter an injunction for a National Environmental Policy Act (NEPA) violation broader than necessary to prevent a likelihood of “irreparable harm” pending the government’s preparation of an EIS. Following this reasoning, petitioners argue the Ninth Circuit’s concern over the mere possibility of cross-pollination cannot be reconciled with Winter’s holding that irreparable harm must be likely. Petitioners also argue the Ninth Circuit erred in upholding an injunction sought to remedy a NEPA violation without first conducting an evidentiary hearing on genuinely disputed facts.

            The issue of cross-pollination has become an increasingly important topic for the world of GE crops. According to the cert petition, cross-pollination can occur only if two fields produce flowers simultaneously and pollen is transferred between them. However, debates regarding isolation zones and whether farmers should fence-in or fence-out have not been resolved and are intensifying. The Roundup Ready alfalfa has been genetically engineered to be resistant to Roundup, a broad-spectrum agricultural herbicide that controls nearly every weed species in alfalfa crops.  

Sugar Beets

            The Northern District of California, the same district court that decided the alfalfa case, ruled on September 21 that the government failed to require an EIS on GE Roundup Ready sugar beets. Center for Food Safety v. Vilsack, No. C 08-00484 (N.D. Cal. 2009). The plaintiffs sued after APHIS decided to unconditionally deregulate the sugar beets and allow them into U.S. agriculture. Over 95% of the U.S. sugar beet crop is now engineered to resist herbicide, so the effect of the District Court’s ruling could be extensive.

            Once again, the District Court expressed its concern about the possibility of cross-pollination. Although APHIS, after conducting an environmental assessment, determined the likelihood of cross-pollination to organic fields is “unlikely,” the District Court found the “potential elimination of farmer’s choice to grow non-genetically engineered crops, or a consumer’s choice to eat non-genetically engineered food” does have a “significant effect” on the environment because of the long distances pollen can travel by wind. The Court held APHIS did not demonstrate a “hard look” at this issue as required by NEPA.

            The District Court planned a case management conference on October 30 to determine the remedies phase of the case. In addition to the original parties, other growers, sugar processors and seed companies like Monsanto were expected to be allowed to take part in the remedy phase. The results of the case management conference have not yet been published.

The Future of GE Crops

            According to an October NY Times article, Agriculture Secretary Tom Vilsack is preparing for a drastic rethinking of the country’s polices for GE crops. The Department of Agriculture is planning to update its regulations this spring to create a better way for GE and conventional crops to coexist. Vilsack stated “[y]ou know, I think [regulations for GE are] an evolving process, which is why we’re doing this and probably should have done it more than 20 years ago.”

            The Department of Agriculture will have a lot to tackle in the upcoming months when creating new policies for GE crops, which are widely used throughout the country. The NY Times reported 95% of sugar beets, 90% of soy and cotton crops, and 85% of the corn crop utilize GE seeds. Whether the agency creates rules that compliment or correct the recent court rulings will be an important question, especially for farmers with sugar beets or alfalfa in their fields.

The October 8, 2009, New York Times article is available here.

(I would like to express my appreciation to Valerie Paula, an associate at Dorsey & Whitney LLP, for her assistance in preparing this note.)

Another Corner Heard From: Portland (Oregon) Releases a New Climate Action Plan

Posted on November 4, 2009 by Seth Jaffe

Last week, the City of Portland, Oregon (together with Multnomah County) released an updated Climate Action Plan. The Plan presents a number of aggressive goals and targets, with ultimate goals of GHG reductions of 40% by 2030 and 80% by 2050.

The details of the Plan are obviously only relevant to those in the Portland area, but for those anticipating what regulation might look like in California, Massachusetts, and other states that have enacted or will soon enacted some version of a Global Warming Solutions Act, the Plan provides a helpful catalogue of the types of changes that might be sought. Therefore, a quick summary of some of the 2030 goals seems warranted

Reduce energy use from existing buildings by 20%-25%

All new buildings – and homes -- should have zero net GHG emissions. 

Reduce VMT by 30% from 2008 levels

Recover 90% of all waste generated

Reduce consumption of carbon-intensive foods

Expand “urban forest canopy” to cover one-third of Portland

Reduce emissions from City and County operations by 50% from 1990 levels

What’s my take? I have two immediate reactions. First, if any further evidence were needed that attaining significant GHG emission reductions is going to involve major social and economic changes, this is certainly it. 

Second, and perhaps more importantly, this Plan, and others like it, have to constitute a heavy thumb on the side of the scale arguing for comprehensive federal legislation. In the past, I’ve argued that federal legislation would be preferable to a patchwork made up of EPA regulation under existing Clean Air Act authority, public nuisance litigation, and state and regional initiatives. To that list, we can now add comprehensive local regulation. I don’t mean to be too sanguine about the ability of federal legislation to harmonize this entire process; the existing bills would not preempt most state, regional, and local regulations (other than cap-and-trade programs). Nonetheless, delays in federal enactment can only contribute to the proliferation of state, regional, and local programs, some of which may be beneficial, but many of which will be inefficient, contradictory, or both.

Another Corner Heard From: Portland (Oregon) Releases a New Climate Action Plan

Posted on November 4, 2009 by Seth Jaffe

Last week, the City of Portland, Oregon (together with Multnomah County) released an updated Climate Action Plan. The Plan presents a number of aggressive goals and targets, with ultimate goals of GHG reductions of 40% by 2030 and 80% by 2050.

The details of the Plan are obviously only relevant to those in the Portland area, but for those anticipating what regulation might look like in California, Massachusetts, and other states that have enacted or will soon enacted some version of a Global Warming Solutions Act, the Plan provides a helpful catalogue of the types of changes that might be sought. Therefore, a quick summary of some of the 2030 goals seems warranted

Reduce energy use from existing buildings by 20%-25%

All new buildings – and homes -- should have zero net GHG emissions. 

Reduce VMT by 30% from 2008 levels

Recover 90% of all waste generated

Reduce consumption of carbon-intensive foods

Expand “urban forest canopy” to cover one-third of Portland

Reduce emissions from City and County operations by 50% from 1990 levels

What’s my take? I have two immediate reactions. First, if any further evidence were needed that attaining significant GHG emission reductions is going to involve major social and economic changes, this is certainly it. 

Second, and perhaps more importantly, this Plan, and others like it, have to constitute a heavy thumb on the side of the scale arguing for comprehensive federal legislation. In the past, I’ve argued that federal legislation would be preferable to a patchwork made up of EPA regulation under existing Clean Air Act authority, public nuisance litigation, and state and regional initiatives. To that list, we can now add comprehensive local regulation. I don’t mean to be too sanguine about the ability of federal legislation to harmonize this entire process; the existing bills would not preempt most state, regional, and local regulations (other than cap-and-trade programs). Nonetheless, delays in federal enactment can only contribute to the proliferation of state, regional, and local programs, some of which may be beneficial, but many of which will be inefficient, contradictory, or both.

Another Corner Heard From: Portland (Oregon) Releases a New Climate Action Plan

Posted on November 4, 2009 by Seth Jaffe

Last week, the City of Portland, Oregon (together with Multnomah County) released an updated Climate Action Plan. The Plan presents a number of aggressive goals and targets, with ultimate goals of GHG reductions of 40% by 2030 and 80% by 2050.

The details of the Plan are obviously only relevant to those in the Portland area, but for those anticipating what regulation might look like in California, Massachusetts, and other states that have enacted or will soon enacted some version of a Global Warming Solutions Act, the Plan provides a helpful catalogue of the types of changes that might be sought. Therefore, a quick summary of some of the 2030 goals seems warranted

Reduce energy use from existing buildings by 20%-25%

All new buildings – and homes -- should have zero net GHG emissions. 

Reduce VMT by 30% from 2008 levels

Recover 90% of all waste generated

Reduce consumption of carbon-intensive foods

Expand “urban forest canopy” to cover one-third of Portland

Reduce emissions from City and County operations by 50% from 1990 levels

What’s my take? I have two immediate reactions. First, if any further evidence were needed that attaining significant GHG emission reductions is going to involve major social and economic changes, this is certainly it. 

Second, and perhaps more importantly, this Plan, and others like it, have to constitute a heavy thumb on the side of the scale arguing for comprehensive federal legislation. In the past, I’ve argued that federal legislation would be preferable to a patchwork made up of EPA regulation under existing Clean Air Act authority, public nuisance litigation, and state and regional initiatives. To that list, we can now add comprehensive local regulation. I don’t mean to be too sanguine about the ability of federal legislation to harmonize this entire process; the existing bills would not preempt most state, regional, and local regulations (other than cap-and-trade programs). Nonetheless, delays in federal enactment can only contribute to the proliferation of state, regional, and local programs, some of which may be beneficial, but many of which will be inefficient, contradictory, or both.

PCB-Containing Caulk: How Old Is Your Building?

Posted on November 3, 2009 by Linda Bochert

The U.S. Environmental Protection Agency (EPA) has found evidence that buildings constructed or renovated between 1950 and 1978 may have PCBs at high levels in caulk around windows and door frames, between masonry columns and in other building materials. Congress banned the manufacture and most uses of PCBs in 1976.

 

On September 25, 2009, EPA issued general guidance to communities as well as specific guidance to help school administrators and teachers reduce the risk of PCB exposure to children, and to assist contractors renovating buildings with suspect caulk.

 

Although EPA has generated specific guidance for school administrators and teachers, all buildings constructed during this time period may have PCB-containing caulk. EPA’s guidance helps to identify the extent of potential risks and to determine if mitigation steps are needed. EPA will work directly with building owners and administrators facing serious problems to help develop a practical approach to reduce exposures and prioritize caulk removal. 

 

EPA has also identified several unresolved scientific issues that must be better understood to determine the magnitude of the issue and to develop the best long-term solutions. As a result, EPA will conduct new research to better understand the risks posed by PCB-containing caulk. EPA plans to use these research findings to make additional recommendations to further minimize exposure and generate an action plan for caulk removal.

 

While the materials EPA released identify the issue of PCB-containing caulk as a concern, the agency advises there is insufficient information concerning the scope or severity of the issue to provide property owners and school administrators with very concrete advice about next steps.  Unfortunately, this can only leave both property owners and school administrators wondering, "just how big a concern is this and how should I respond?" Like lead paint, asbestos, mold, indoor air quality and other types of building hazards, PCBs can be added to the list of risks that real estate professionals and lawyers will have to address in building transactions.

 

For more information, contact EPA’s toll free hotline at 1-888-835-5372 or the EPA website located at: http://www.epa.gov/pcbsincaulk.

PROPOSED LONGLEAF FACILITY KEEPS MOVING FORWARD

Posted on November 2, 2009 by Patricia Barmeyer

Over persistent objections from the Sierra Club and a local environmental group, LS Power’s proposed new coal-fired power plant in southwest Georgia continues to make its way through the permitting and appeals process. Correcting the stunning reversal of the permit by the Superior Court on multiple grounds, the Georgia Court of Appeals overturned the Superior Court in most respects, and the Georgia Supreme Court has declined to hear the case.

 

            In May 2007 LS Power obtained a Prevention of Significant Deterioration (“PSD”) permit from Georgia EPD to construct and operate a 1200 MW pulverized coal-fired power plant, the Longleaf Energy Station. Shortly after issuance of the permit, the Sierra Club and a local environmental group filed a seventeen-count petition for administrative review. The petition contained many of the same challenges that Sierra Club has raised in other coal-fired power plant permit appeals all around the country, including the claim that the permit should have contained an emissions limitation for CO2. A state administrative law judge dismissed a number of these counts as a matter of law; the remaining counts were resolved against petitioners after a 21-day evidentiary hearing. The petitioners appealed the ALJ’s decision on six grounds, and in June of 2008, a Fulton County Superior Court judge ruled in favor of petitioners on all six grounds. The Superior Court’s decision was widely-touted by the Sierra Club, and it received national attention, as it was the first court in the country to hold that the Clean Air Act required PSD permits to include an emissions limitation for CO2

 

The business community in Georgia rallied to support Longleaf’s efforts to persuade the appellate court in Georgia to reverse the Superior Court holding, and over 100 business entities signed on to an amicus brief urging reversal. On July 7, 2009, the Georgia Court of Appeals reversed the Superior Court on five of the six grounds before the Court. Longleaf Energy Associates, LLC, et al. v. Friends of the Chattahoochee, Inc., et al., Nos. A09A0387 & A09A0388, 2009 WL 1929192 (Ga. Ct. App. July 7, 2009). 

 

            Most notably, the Court of Appeals squarely rejected the claim that the Clean Air Act requires an emissions limitation for CO2 in a PSD permit. The Georgia Court of Appeals held that while CO2 may be a pollutant under the Clean Air Act, it is not currently a pollutant “subject to regulation” under the Act because there are no regulations that limit or otherwise control CO2 emissions. The Court’s decision is consistent with former EPA Administrator Stephen Johnson’s December 18, 2008 memorandum which outlined EPA’s official position on this issue in response to the Environmental Appeals Board’s decision in In re: Deseret Power Electric Coop., PSD Appeal No. 07-03 (E.A.B. Nov. 13, 2008). See http://www.epa.gov/nsr/guidance.html. EPA’s new Administrator, Lisa Jackson, is currently reconsidering the Johnson memorandum but has declined to stay the effectiveness of that memorandum during her review. See id. While recent activity both at EPA and in Congress indicate that the treatment of CO2 in the context of PSD permitting may soon be changed, the Georgia Court of Appeals’ decision confirms that, at least for now, the law does not require an emissions limitation for CO2 in PSD permits. 

 

            The Court of Appeals likewise rejected the other substantive claims raised by the petitioners. The Court held that EPD was not required to consider integrated gasification combined cycle (“IGCC”) — a type of power plant in which coal is converted into a synthetic gas and that gas is then burned in a combustion turbine to produce electricity — as part of its best available control technology (“BACT”) analysis for the Longleaf facility. The Court reaffirmed a principle that many administrative tribunals and courts have previously recognized: the required scope of a BACT analysis does not extend to those pollution control technologies that would redefine the proposed source. In the case of IGCC, the Court relied on the undisputed physical and chemical differences between an IGCC power plant and the pulverized coal-fired power plant that Longleaf proposed to build to conclude that IGCC could not be applied to the Longleaf facility without redefining the proposed source. 

 

            The Court of Appeals also rejected petitioners’ challenge to the air dispersion modeling for fine particulate matter, or PM2.5. EPD and Longleaf utilized PM10 modeling as a surrogate for PM2.5 to demonstrate compliance with the PM2.5 National Ambient Air Quality Standard. The Court reasoned that at the time Longleaf’s final permit was issued, this surrogate approach was the only approved method of conducting PM2.5 modeling for purposes of PSD permitting. 

 

            On September 28, 2009, a unanimous Georgia Supreme Court denied Sierra Club’s petition for a writ of certiorari, clearing the way for the parties to proceed with a remand limited to the ALJ’s standard of review. Sierra Club has since moved for reconsideration of that denial, and a decision on that motion is expected soon. For now, however, coal project developers can look to the recent Longleaf decision as an example of a court that has properly refused to preempt the deliberations in EPA and Congress concerning the future of coal-fired power plant permitting.

Applying Clean Air Act Permit Requirements to Stationary Sources of Greenhouse Gases

Posted on October 27, 2009 by Chester Babst

I.          Introduction

 

            On September 15, 2009, EPA announced a proposed rule to regulate greenhouse gases (“GHG”) from light-duty vehicles. EPA estimates that the light-duty vehicle GHG regulation could become final as early as the first quarter of 2010, at which time carbon dioxide and the other specified GHG would become air pollutants “subject to regulation” under the Prevention of Significant Deterioration (“PSD”) and Title V permit programs.

 

            The Clean Air Act (“CAA”) “major source” applicability threshold for both permit programs is 100 or 250 tons per year (“tpy”) of any regulated pollutant, depending upon the type of facility. EPA recognized that applying these traditional thresholds to GHG could “overwhelm” permitting authorities and subject the newly expanded regulated community to increased uncertainty, delay, and costs.

 

            In response to these concerns, EPA issued a proposed rule on September 30, 2009 to address how CAA permitting requirements will be applied to stationary sources of GHG emissions. The “Tailoring Rule” would provide temporary relief for some sources, but ultimately leaves the regulated community with the same degree of uncertainty while creating additional legal issues.

 

II.         Litigation Risks

 

            Although EPA acknowledges the significant legal issues associated with agency action to change the statutory “major source” thresholds from 100/250 tpy to 25,000 tpy, it relies on a principle that administration agencies must interpret statutes in a way that avoids absurd results and a principle that administrative necessity can sometimes justify an agency’s plan to implement a statute. Having to rely on these principles as a source of its authority seems only to strengthen the argument that the CAA was not enacted to address GHG, but that is another issue that will be “teed up” by the Tailoring Rule.

 

            Because of the uncertainty regarding EPA’s authority to change the statutory thresholds, the regulated community faces the potential for citizen suits to challenge proposed projects and leaves uncertain the issues of permitting, timing, and cost. As environmental practitioners, we must be sure clients understand these uncertainties as they evaluate any plan to construct or modify their facilities.

 

III.       Permit Delay

 

            Although the Tailoring Rule would dramatically reduce the number of sources initially impacted by application of the PSD and Title V programs to stationary sources of GHG, EPA estimates that PSD permit applications will increase by approximately 100 applications per year, and sources subject to Title V will increase by 3,000. On a percentage basis, these estimates represent significant increases and will further burden permitting authorities at a time when many state agencies are facing or will face meaningful budget reductions (e.g., Pennsylvania’s recently announced 27% budget cut for the Department of Environmental Protection). At a minimum, these added permitting burdens will increase delays in obtaining necessary permits and thereby create additional uncertainty for businesses wishing to grow or modernize their facilities.

 

IV.       Best Available Control Technology for Stationary Sources of GHG

 

            Stationary sources of GHG subject to PSD will be required to install best available control technology (“BACT”). BACT for sources of currently regulated pollutants has developed over the years, so the regulated community, in most cases, has an ability to estimate the potential cost of controls. To the contrary, BACT for stationary sources of GHG is a complete unknown. While some have argued that efficiency improvements should qualify for BACT, others have insisted that traditional add-on emissions control technology is required. Once again, this debate results in cost uncertainty for any project affected by the PSD program and further frustrates business planning.

 

V.        Conclusion

 

            The Tailoring Rule does little to address significant problems and issues that will flow from the application of the PSD and Title V permit programs to stationary sources of GHG. The significant uncertainties created by EPA’s path to regulate GHG under the CAA will likely affect the timing and cost of future permitting. Environmental practitioners must be prepared to communicate these consequences to clients as they plan for the future.

Connecticut v. AEP Decision Supports Public Nuisance Actions Aimed at GHGs

Posted on October 23, 2009 by Gregory Sharp

In Connecticut v. AEP, the Second Circuit upheld the right of state and municipal governments and private land preservation groups to pursue public nuisance claims against electric generating facilities with significant greenhouse gas emissions (GHGs), including those operated by TVA,. The plaintiffs alleged that facilities operated by five of the six defendants were the largest emitters of carbon dioxide in the country and among the largest in the world.

 

A recent ACOEL blog by Bob Wyman and Mike Romey touched on the decision in the context of the similar issues raised in the Fifth Circuit’s Comer decision and the Northern District of California’s decision in Kivalina. This blog will focus on some of the specific issues raised in the AEP decision.

 

 

 

The 139 page opinion exhaustively analyzes the numerous issues raised in the appeal, which was taken by the plaintiffs from a dismissal of their complaints by the District Court. The trial court held that the claims were non-justiciable as raising political questions.

The Second Circuit held that the district court erred in dismissing the complaints on political question grounds, that all of the plaintiffs have standing , that the federal common law of nuisance governs their claims, that plaintiffs have stated claims under the federal common law of nuisance, that the claims have not been displaced by Congressional action, and that the TVA’s alternate grounds for dismissal were without merit.

 

The decision turns in large part on the Supreme Court’s landmark “one man, one vote” decision in Baker v. Carr in 1962, which laid out six factors for determining when a complaint raises a non-justiciable political question based on the separation of powers doctrine.

 

One of the central issues was whether the federal common law was inapplicable because Congress had displaced common law rights through legislative action. On the displacement issue, the Second Circuit relied in part on Milwaukee I&II, noting that if Congress does not adopt statutes which cover a plaintiff’s claims and provide a remedy for them, then the plaintiff is free to bring its claims under the federal common law of nuisance. The Second Circuit concluded that Congress had not done so with respect to GHGs.

 

The Court concluded that all plaintiffs satisfied the injury in fact test for federal standing. The states alleged current injury from an increase in carbon dioxide levels that has caused rising temperatures and climate change resulting in reduced snowpack and related harms. The states also alleged future catastrophic injuries from continued increases in temperature, including a catastrophic change in climate when a tipping point is reached.

 

The land trusts alleged no current injury, but alleged future injuries and increased risk of harm. The Court found these injuries constitute “special injuries” to the land trust plaintiffs’ property interests, which are different in kind from injuries sustained by the general public.

In its conclusion, the Court found that, as to air pollution, and GHGs in particular, this case fits the same niche occupied by Milwaukee I with respect to water pollution. Paraphrasing the concluding words of Milwaukee I, the opinion notes: “’It may happen that new federal laws and new federal regulations may in time pre-empt the field of federal common law of nuisance. But until that comes to pass, federal courts will be empowered to appraise the equities of the suits alleging creation of a public nuisance’ by greenhouse gases.”

 

In an interesting footnote, the decision notes that Justice Sonia Sotomayor was originally a member of the panel, but was elevated to the Supreme Court in August, so the appeal was determined by the remaining two members of the panel.

 

As with the recent 5th Circuit decision in Comer, the decision can be expected to increase pressure on Congress to act to develop a comprehensive greenhouse gas emission regulatory program, unless the Supreme Court reverses before Congress acts.

TWO NEW GHG NUISANCE CASES GO DIFFERENT DIRECTIONS

Posted on October 20, 2009 by Robert Wyman

Following on last month's Second Circuit decision in Connecticut v. AEP, two recent climate change decisions show that the federal courts continue to grapple with whether to allow nuisance suits against emitters of Greenhouse Gases (GHGs). It will likely take some time -- and a trip to the Supreme Court -- before this area of the law is settled. 

 Just last week in Comer v. Murphy Oil, the Fifth Circuit gave the green light to a class action brought by property owners along the Mississippi Gulf Coast against oil and chemical companies and utilities. Plaintiffs' alleged that GHG emissions from the defendants' operations contributed to global warming, heated the oceans, raised sea levels and made Hurricane Katrina stronger than it would have been. The court held that the plaintiffs had Article III standing to assert state law nuisance and trespass claims for the resulting damage to their property and that the political question doctrine did not apply to this "ordinary tort suit."

 

On September 30 the Northern California district court hearing Native Village of Kivalina v. ExxonMobil went the other way and granted the defendants' motion to dismiss. The court found that the Eskimo village who brought the suit could not establish that the threat to its existence from rising sea levels was "fairly traceable"

to the defendants' GHG emissions and thus lacked standing. The court also found that the plaintiffs' federal common law nuisance suit intruded on the separate political branches as it "seeks to impose liability and damages on a scale unlike any prior environmental pollution case . . . ."

Both cases cited AEP, where the Court rejected similar standing and political question challenges and allowed the plaintiffs, including eight states, to sue a group of electric power companies. The Fifth circuit lauded AEP's "careful analysis" of the political question doctrine and sharply criticized the AEP trial court's "serious error of law." Judge Saundra Brown Anderson's decision in Kivalina, on the other hand, found little to like in the AEP decision: "neither Plaintiffs nor AEP offers any guidance as to precisely what judicially discoverable and manageable standards are to be employed in resolving the claims at issue."

So what can we take away from this trio of cases?

The appellate courts are clearly more comfortable with taking these cases than the trial courts. In each of these three cases, the District courts dismissed the suits. Odds are good that the Ninth Circuit in Kivalina will agree with her sister circuits making it a clean sweep.

Cases like Comer which assert state common law claims in diversity and seek only damages for past conduct are bound to run into less trouble than cases like AEP and Kivalina which assert federal common law claims and seek to enjoin future emissions OR ALLEGE potential future injury.

The latter cases more directly call into question the limits of the power of the federal judiciary to make common law, the traceability of the harm to the defendants' emissions and the prerogatives of the legislative and federal branches and their ability to displace federal common law. On the other hand, state common law claims seeking damages for past injury are, as the Comer court said, just "'ordinary tort suits." The court applies easily discernable state law and is not asked to promulgate emissions standards.

It is worth remembering that the issues the courts in AEP, Comer and Kivalina grappled with are issues that are specific to the federal courts -- federal common law, Article III standing, and federal separation of powers. It remains to be seen whether plaintiffs will assert these same cases in the state courts and avoid the uncertainty that will continue to exist in the federal system for some time.

However interesting the procedural issues presented by these cases might be, they are nothing in comparison to the complex and difficult issues presented by the merits of these cases. Liability, causation and damages still must be proven.

Finally, the green light given to the federal judiciary by the Second and Fifth Circuits, combined with the EPA's recent steps to regulate GHGs under the Clean Air Act, will place additional pressure on Congress and the relevant stakeholders to pass a comprehensive climate change law. If not, federal courts (and juries) could soon be in the business of climate change regulation.

 

Authored by: Robert Wyman and Michael Romey of Latham & Watkins, LLP

EPA Issues a New Policy on Superfund Negotiations: Time For Another Rant?

Posted on October 19, 2009 by Seth Jaffe

Late last week, Elliott Gilberg, Acting Director of EPA’s Office of Site Remediation Enforcement (OSRE) issued an Interim Policy on Managing the Duration of Remedial Design/Remedial Action Negotiations. Members of the regulated community may not be surprised by the contents of the memo, but they certainly will not be pleased. In brief, the memorandum fundamentally makes two points:

EPA wants to shorten the duration of RD/RA negotiation

EPA is going to use the heavy hammer of unilateral administrative orders, or UAOs, to keep PRPs’ feet to the fire and ensure that negotiations move quickly.

PRPs will likely agree that shortening the duration of negotiations would be a good outcome in the abstract – but achieving it by greater use of UAOs? I don’t think so.

I can only wonder if EPA has even considered the impact of the Burlington Northern decision here. Is this a perverse reaction from EPA? A metaphorical throwing down the gauntlet to PRPs? It certainly feels that way.

I have a different suggestion, if EPA truly wants to shorten negotiations. First, acknowledge Burlington Northern and compromise on the merits in those great majority of cases where there are legitimate divisibility arguments. Second, stop acting like the last bastion of command and control regulation. Set cleanup standards and then, to the maximum extent permitted by existing law, let PRPs clean up to those standards, without micromanaging every detail of the cleanup process.

Essential Ingredients For Risk Transfer on Display in N.J.

Posted on October 15, 2009 by George von Stamwitz

Last month, Missouri based Environmental Liability Transfer (ELT) purchased a heavily contaminated site from Asarco in Perth Amboy, New Jersey. Due to bankruptcy court deadlines, the transaction was put together and closed in less than 90 days. The 70-acre site was a challenging candidate for risk transfer due to the perpetual nature of the risk. However, the transaction had the following essential components of a successful environmental risk transfer:

  1. a buyer (ELT) that was willing to take long term risk, beyond the term of environmental insurance;
  2.  a sophisticated seller that was facing an unattractive monetization of the remediation risk, in this instance an estimation proceeding in bankruptcy court. Monetization is a often also caused by regulatory financial assurance requirements and in the context of mergers and acquisitions;
  3. an active remedy of modest duration (in this instance stabilization of residuals and containment) that is defined with sufficient technical and regulatory certainty that partial collateralization of ELT's indemnity by "cost cap" insurance (in this case by Zurich) is practicable.

            As mergers and acquisitions return from hibernation and financial assurance requirements become more stringent after the demise of several major corporations, interest in risk transfer is sure to grow. Not every deal is a good candidate, but those transactions that have the factors described above are worth considering to achieve a favorable, short term monetization of environmental risk.

GHG Regulation under the Existing CAA: Coming Soon to a [Large] Stationary Source Near You

Posted on October 7, 2009 by Seth Jaffe

On Thursday, EPA issued its long-awaited proposed rule describing how thresholds would be set for regulation of GHG sources under the existing Clean Air Act PSD authority. Having waded through the 416-page proposal, I’m torn between the appropriate Shakespeare quotes to describe it: “Much ado about nothing” or “Methinks thou dost protest too much.”

First, notwithstanding its length, the proposal is quite limited in scope. In essence, it has three parts:

Establishment of an applicability threshold for PSD and Title V purposes of 25,000 tons per year of CO2e.

Establishment of a PSD significance level of from 10,000 tpy CO2e and 25,000 CO2e.

Development over the next five years of means to streamline GHG regulation of sources greater than the current statutory levels of 100-250 tpy.

Basically, EPA’s position is that, once it begins to regulate GHGs as a pollutant by promulgating its mobile source rule – expected next spring – stationary source regulation under the PSD and Title V programs follow automatically. Thus, the issue for EPA at this point is not whether to regulate stationary sources, but how to do so without the entire program grinding to a halt.

Here’s where the protestation comes in. Most of the proposal is devoted to explaining EPA’s reliance of the doctrines of “absurd results” and “administrative necessity” to justify exclusion of sources that would seem to be categorically included by the explicit language of the statute. Members of the regulated community will understand the irony in EPA’s extensive discussion regarding how the purpose of the PSD program is to achieve environmental protection and economic development – and that this latter purpose would be jeopardized by regulation of sources at the 100/250 tpy threshold. I don’t think we will ever again see EPA devote this many pages to a description of its concern about economic growth.

I’m not going to predict here whether EPA will win any challenge to the higher thresholds. Certainly, the absurd results doctrine argument is the stronger of the two. It is noteworthy that the four leading environmental cases EPA cites in support of its administrative necessity argument, while acknowledging the existence of the doctrine, all went against EPA.

More relevant still is the question of who would in fact challenge this regulation and what would be the result even if the challenge succeeded. Following the debacle that resulted from vacation of the CAIR rule, what is the likelihood that a successful challenge would result in vacation of the rule in its entirety? Isn’t it more likely that the rule would stay in effect as to the large sources, with the remanding the case to EPA to promulgate rules governing smaller sources? In fact, that’s what EPA is already doing, which is probably EPA’s strongest practical argument in support of the rule.

Public comments will be due 60 days from Federal Register promulgation and there are some issues that the regulated community should consider. These include the significance threshold, and suggestions regarding how to streamline the program for smaller sources. EPA has proposed some interesting ideas, including presumptive BACT determinations and general permits. 

Bottom line? Large sources better get ready to comply. Smaller sources, take a deep breath and count your blessings – for now. 

GHG Regulation under the Existing CAA: Coming Soon to a [Large] Stationary Source Near You

Posted on October 7, 2009 by Seth Jaffe

On Thursday, EPA issued its long-awaited proposed rule describing how thresholds would be set for regulation of GHG sources under the existing Clean Air Act PSD authority. Having waded through the 416-page proposal, I’m torn between the appropriate Shakespeare quotes to describe it: “Much ado about nothing” or “Methinks thou dost protest too much.”

First, notwithstanding its length, the proposal is quite limited in scope. In essence, it has three parts:

Establishment of an applicability threshold for PSD and Title V purposes of 25,000 tons per year of CO2e.

Establishment of a PSD significance level of from 10,000 tpy CO2e and 25,000 CO2e.

Development over the next five years of means to streamline GHG regulation of sources greater than the current statutory levels of 100-250 tpy.

Basically, EPA’s position is that, once it begins to regulate GHGs as a pollutant by promulgating its mobile source rule – expected next spring – stationary source regulation under the PSD and Title V programs follow automatically. Thus, the issue for EPA at this point is not whether to regulate stationary sources, but how to do so without the entire program grinding to a halt.

Here’s where the protestation comes in. Most of the proposal is devoted to explaining EPA’s reliance of the doctrines of “absurd results” and “administrative necessity” to justify exclusion of sources that would seem to be categorically included by the explicit language of the statute. Members of the regulated community will understand the irony in EPA’s extensive discussion regarding how the purpose of the PSD program is to achieve environmental protection and economic development – and that this latter purpose would be jeopardized by regulation of sources at the 100/250 tpy threshold. I don’t think we will ever again see EPA devote this many pages to a description of its concern about economic growth.

I’m not going to predict here whether EPA will win any challenge to the higher thresholds. Certainly, the absurd results doctrine argument is the stronger of the two. It is noteworthy that the four leading environmental cases EPA cites in support of its administrative necessity argument, while acknowledging the existence of the doctrine, all went against EPA.

More relevant still is the question of who would in fact challenge this regulation and what would be the result even if the challenge succeeded. Following the debacle that resulted from vacation of the CAIR rule, what is the likelihood that a successful challenge would result in vacation of the rule in its entirety? Isn’t it more likely that the rule would stay in effect as to the large sources, with the remanding the case to EPA to promulgate rules governing smaller sources? In fact, that’s what EPA is already doing, which is probably EPA’s strongest practical argument in support of the rule.

Public comments will be due 60 days from Federal Register promulgation and there are some issues that the regulated community should consider. These include the significance threshold, and suggestions regarding how to streamline the program for smaller sources. EPA has proposed some interesting ideas, including presumptive BACT determinations and general permits. 

Bottom line? Large sources better get ready to comply. Smaller sources, take a deep breath and count your blessings – for now. 

GHG Regulation under the Existing CAA: Coming Soon to a [Large] Stationary Source Near You

Posted on October 7, 2009 by Seth Jaffe

On Thursday, EPA issued its long-awaited proposed rule describing how thresholds would be set for regulation of GHG sources under the existing Clean Air Act PSD authority. Having waded through the 416-page proposal, I’m torn between the appropriate Shakespeare quotes to describe it: “Much ado about nothing” or “Methinks thou dost protest too much.”

First, notwithstanding its length, the proposal is quite limited in scope. In essence, it has three parts:

Establishment of an applicability threshold for PSD and Title V purposes of 25,000 tons per year of CO2e.

Establishment of a PSD significance level of from 10,000 tpy CO2e and 25,000 CO2e.

Development over the next five years of means to streamline GHG regulation of sources greater than the current statutory levels of 100-250 tpy.

Basically, EPA’s position is that, once it begins to regulate GHGs as a pollutant by promulgating its mobile source rule – expected next spring – stationary source regulation under the PSD and Title V programs follow automatically. Thus, the issue for EPA at this point is not whether to regulate stationary sources, but how to do so without the entire program grinding to a halt.

Here’s where the protestation comes in. Most of the proposal is devoted to explaining EPA’s reliance of the doctrines of “absurd results” and “administrative necessity” to justify exclusion of sources that would seem to be categorically included by the explicit language of the statute. Members of the regulated community will understand the irony in EPA’s extensive discussion regarding how the purpose of the PSD program is to achieve environmental protection and economic development – and that this latter purpose would be jeopardized by regulation of sources at the 100/250 tpy threshold. I don’t think we will ever again see EPA devote this many pages to a description of its concern about economic growth.

I’m not going to predict here whether EPA will win any challenge to the higher thresholds. Certainly, the absurd results doctrine argument is the stronger of the two. It is noteworthy that the four leading environmental cases EPA cites in support of its administrative necessity argument, while acknowledging the existence of the doctrine, all went against EPA.

More relevant still is the question of who would in fact challenge this regulation and what would be the result even if the challenge succeeded. Following the debacle that resulted from vacation of the CAIR rule, what is the likelihood that a successful challenge would result in vacation of the rule in its entirety? Isn’t it more likely that the rule would stay in effect as to the large sources, with the remanding the case to EPA to promulgate rules governing smaller sources? In fact, that’s what EPA is already doing, which is probably EPA’s strongest practical argument in support of the rule.

Public comments will be due 60 days from Federal Register promulgation and there are some issues that the regulated community should consider. These include the significance threshold, and suggestions regarding how to streamline the program for smaller sources. EPA has proposed some interesting ideas, including presumptive BACT determinations and general permits. 

Bottom line? Large sources better get ready to comply. Smaller sources, take a deep breath and count your blessings – for now. 

Power Point Presentations from the 2009 Annual Meeting in Maine

Posted on October 6, 2009 by Rachael Bunday

Climate Change Update

Panelists: Michael Gerrard, Jeffrey Thaler, Linda Bullen, John Cruden

Moderator: Karen Crawford

 

Climate Change Legislation and Regulation

Panelists: Carol Dinkins, Bradley Marten, Stephen Ramsey

Moderator: David Farer

Power Point Presentations from the 2009 Annual Meeting in Maine

Posted on October 6, 2009 by Rachael Bunday

Climate Change Update

Panelists: Michael Gerrard, Jeffrey Thaler, Linda Bullen, John Cruden

Moderator: Karen Crawford

 

Climate Change Legislation and Regulation

Panelists: Carol Dinkins, Bradley Marten, Stephen Ramsey

Moderator: David Farer

It's Here: EPA's Final Mandatory GHG Reporting Rule

Posted on September 25, 2009 by Mary Ellen Ternes

On April 14, 2009, I alerted you to EPA’s proposed Mandatory GHG Reporting rule on April 10, 2009.  And while we are still waiting for EPA’s Endangerment Finding, and new energy legislation may not see the Senate floor in 2009, we do have a final GHG rule. On September 22, 2009, EPA Administrator Jackson signed the final Mandatory Greenhouse Gas Reporting Rule. This rule should be published in the Federal Register soon, so that it becomes effective before January 1, 2010. The rule imposes monitoring requirements beginning January 1, 2010, and reporting by impacted facilities and other entities by March 31, 2011.

 

With this rule, EPA is requiring reporting of Greenhouse Gas (“GHG”) emissions by specified GHG emission source categories that exceed 25,000 metric tons of carbon dioxide (“MTCO2”), or varying amounts of several other GHG representing equivalent amounts of emissions based upon their “global warming potential,” referred to as “CO2e.” The rule also requires emissions reporting from suppliers of fuels and industrial gases, as well as mobile source (vehicle) manufacturers. EPA finds its authority for this rule in the Clean Air Act, Sections 114 and 208. The GHGs tracked by the rule include carbon dioxide (CO2), methane (CH4), nitrous oxide (N20), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulfur hexafluoride (SF6) and other fluorinated compounds. Those familiar with the annual Inventory of United States GHG Emissions and Sinks will recognize the sources and GHGs tracked by this rule.

 

Generally, the final rule is not significantly changed from the proposed rule. However, several source categories were reserved. Thus, this final rule does not currently require reporting of the following source categories: electronics manufacturing, ethanol production, fluorinated GHG production, food processing, industrial landfills, magnesium production, oil and natural gas systems, SF6 from electrical equipment, underground coal mines, wastewater treatment, suppliers of coal.

 

Additionally, there are several important revisions. In response to significant objections to the “once in, always in” approach for reporting requirements, EPA also included provisions allowing exit from the program upon reduction of GHG emissions below certain thresholds. Specifically, if a facility decreases its emissions below 25,000 metric tons of CO2e per year for five years in a row, or decreases its emissions below 15,000 metric tons of CO2e per year for three years in a row, the facility can apply to exit the program. Facilities can also cease reporting if they shut down GHG-emitting processes or operations.

 

In response to concern about lack of adequate preparation time, EPA added a provision allowing the use of best available monitoring methods for the initial quarter of 2010, rather than the required monitoring methods. Impacted facilities needing a longer period of time to install necessary monitoring equipment can request an extension beyond March 2010, but not beyond 2010. EPA has also modified monitoring options, changed monitoring locations and allowed use of calculations rather than monitoring to lessen the monitoring burden.

All environmental practitioners will need to become familiar with the requirements of this rule due to its broad applicability. EPA has committed to posting guidance for each subpart and conducting training. EPA has even posted an “applicability tool” computer software program to assist in applicability determinations. This guidance cannot be available soon enough. Clients need to determine applicability and prepare for implementation immediately.

Statute of Limitations: Don't Miss Your CERCLA Deadline

Posted on September 14, 2009 by Earl Phillips

Overview       

There are three avenues of recovery under CERCLA - a contribution action and two types of cost recovery actions. These cost recovery actions are based on either the plaintiff’s “removal” of the hazardous substances or “remediation” efforts at the site. Each of these avenues has an independent statute of limitations provision.  Thus, whether the statute of limitations period has been triggered will depend on how an action is characterized, i.e. whether the action constitutes a contribution action, a cost recovery removal action, or a cost recovery remedial action. While there are various state-specific causes of action related to environmental contamination in Connecticut, this article is confined to the statute of limitations for CERCLA cost recovery and contribution claims. 

 

Analysis         

            Contribution Claim

           

            The statute of limitations analysis related to contribution claims is thankfully quite straight forward. Under CERCLA Section 113, these claims must be brought within three years of a civil action under Section 106 or 107, a CERCLA administrative order, or a judicially approved settlement with respect to costs or damages.  42 U.S.C. § 9613(g)(3). While questions may arise as to what may constitute a CERCLA “administrative order” or whether a “judicially approved settlement” must reference Section 106 or 107, we leave those discussions for another article.

 

            Cost Recovery Claim

 

 

            The analysis of what constitutes a viable cost recovery claim, whether it is removal or remedial, and when the statute of limitations is first triggered is more intricate. First, it is important to note that certain actions performed on a site may not trigger the statute of limitations period.   “[T]here are some cases in which work on a site is neither a remedial nor a removal action, but rather constitutes ‘preliminary’ or ‘interim’ measures that do not trigger the statute of limitations . . ..” Yankee Gas Servs. Co. v. UGI Utils., Inc., 2009 U.S. Dist. LEXIS 44282, *117 (D. Conn. May 22, 2009). While caselaw on what constitutes a preliminary remedy, as opposed to a permanent remedy, is limited, at least one court has determined that “evaluation, sampling, surveying and measuring” do not constitute the initiation of physical on-site construction because “these activities [do] not constitute ‘construction.’” Schaefer v. Town of Victor, 457 F.3d 188, 204 (2d Cir. 2006)(quoting United States v. Findett Corp., 220 F.3d 842, 848 (8th Cir. 2000)).

 

            Beyond this, the characterization of a cost recovery action as either removal or remedial is crucial to determining whether an action to recover response costs is time-barred because there are different statute of limitations periods for a removal action and a remedial action. The statute of limitations for recovery of costs related to removal actions is three years after the completion of the removal action, whereas the limitations period for recovery of costs related to remedial actions is six years after the initiation of physical on-site construction of the remediationAlthough there is a lack of clarity as to what constitutes a removal verses a remedial action, removal actions have generally been construed as “time-sensitive responses to public health threats . . ..”[1] Remedial actions, in contrast, are often described as “permanent remedies to threats for which an urgent response is not warranted.”[2]

 

             Assuming for this discussion that the efforts undertaken at a site are beyond preliminary, there is inconsistency as to whether the statute of limitations for remedial actions would only run after a final Remedial Action Plan (RAP) has been approved for the site. One court in the Ninth Circuit, for example, concluded that initiation of physical on-site construction of the remedial action “can only occur after the final remedial action plan is adopted, and that . . . the statute of limitations, therefore, could not have begun to run until the final remedial action was approved . . ..” Cal. v. Neville Chem. Co., 358 F.3d 661, 671 (9th Cir. 2004).  The Second Circuit, however, has rejected such a bright line rule and determined that the statute of limitations can be triggered without a final RAP, if the action is “consistent with a permanent remedy.” Schaefer v. Town of Victor, 457 F.3d 188, 205 (2d Cir. 2006). 

 

            Compounding the important distinction between removal and remedial actions is variability within the courts in determining the initial trigger for the statute of limitations period. Some courts apply a statute of limitations to an entire site after remediation commences on one portion of the site, while others look to multiple statute of limitations at a single property. See Colorado v. Sunoco, 337 F.3d 1233 (10th Cir. 2003) contra U.S. v. Manzo, 2006 U.S. Dist. LEXIS 70860 (D.N.J. Sept. 29, 2006). While the Second Circuit has not spoken on this issue, a recent District of Connecticut case has adopted the opinion that “there can be only one removal and one remedial action per facility, regardless of the number of phases in which the clean-up occurs.” Yankee Gas Servs. Co. v. UGI Utils., Inc., 2009 U.S. Dist. LEXIS 44282 (D. Conn. May 22, 2009)(emphasis added).  Should a court adopt a one site, one action approach, the statute of limitations would be triggered by the first removal or remedial action at the site.  Id.; see also Colorado v. Sunoco   Thus, it is important to evaluate what actions have occurred at your facility and whether those actions would be considered “removal” or “remedial” to ensure the statute of limitations for a cost recovery action does not run., 337 F.3d 1233 (10th Cir. 2003).

 

At Robinson & Cole, we have environmental attorneys who have broad experience representing clients in CERCLA actions and the prosecution or defense of other environmental claims. We stand ready to apply this experience and insight to your specific needs. If you would like to discuss statute of limitations concerns, or broader environmental issues, please contact any of the attorneys in our Environmental and Utilities Practice Group. 

 

Earl Phillips                                           W. Richard Smith                                 Lauren Vinokur

(860) 275-8220                                   (860) 275- 8218                                  (860) 275-8341

ephillips@rc.com                                  wrsmith@rc.com                                  lvinokur@rc.com



[1] United States v. W.R. Grace & Co., 429 F.3d 1224, 1228 (9th Cir. 2005); see also OBG Tech. Servs. v. Northrop Grumman Space & Mission Sys. Corp., 503 F. Supp. 2d 490, 524 (D. Conn. 2007)(“[w]hether . . .actions are properly characterized as remedial or removal actions is a question of law for the Court to decide”); Geraghty & Miller, Inc. v. Conoco Inc., 234 F.3d 917, 926 (5th Cir. 2000)(“the CERCLA definitions [of removal and remedial action] are expansive enough that certain activities may well be covered by both…[and] the cases on this issue tend to be highly fact-specific . . ..”)

[2] United States v. W.R. Grace & Co., 429 F.3d 1224, 1228 (9th Cir. 2005); see also W.R. Grace & Co. v. Zotos Int'l, Inc., 559 F.3d 85, 92 (2d Cir. 2009). Under 42 U.S.C. § 9601(24) a remedial action “includes, but is not limited to, such actions at the location of the release as storage, confinement, perimeter protection using dikes, trenches, or ditches, clay cover, neutralization, cleanup of released hazardous substances and associated contaminated materials, recycling or reuse, diversion, destruction, segregation of reactive wastes, dredging or excavations, repair or replacement of leaking containers, collection of leachate and runoff, on-site treatment or incineration, provision of alternative water supplies, and any monitoring reasonably required to assure that such actions protect the public health and welfare and the environment.”