Oregon as Center of Green Energy?

Posted on February 23, 2009 by Richard Glick

 By: Rick Glick and David Blasher of Davis Wright Tremaine, LLP

Many postings on this site have featured local and regional climate change policy initiatives. Oregon is no exception, but at the center of Governor Ted Kulongoski’s climate change strategy is making the state a hub of green technology development. Thus, the Governor seeks to combine greenhouse gas reductions with economic recovery. To that end, the state has used tax and other incentives to lure foreign clean technology investment to the state. Early signs are positive. The German solar cell company Solar World has recently taken over a stilled chip fabrication plant in the Portland suburbs and Sanyo is opening a solar cell facility in Salem. Vestas American Wind Technology, the largest manufacturer of wind turbines in the world, has announced plans to construct a 400,000 to 600,000 headquarters building near downtown Portland. As Governor Kulongoski declared in his 2009 State of the State address, “There is a green revolution stirring in America, and Oregon is the beating heart of that revolution.” 

 

To this end, the Governor is jockeying Oregon into a favorable position with President Obama's agenda of creating jobs that foster and incorporate sustainable energy projects. In order to maximize funds that Oregon will receive from the federal stimulus package, the Governor has established a state council called the Oregon Way Advisory Group. The Group is comprised of private business leaders and public officials who have an interest in developing sustainable energy proposals that will highlight Oregon’s green expertise. The Governor believes that by developing innovative projects to encourage job creation in green technologies, Oregon will have a leg up in the race for stimulus cash. “This approach will ensure that Oregon remains a leader in the green revolution,” the Governor said.

 

The Governor has proposed a legislative package for the current session that will address green energy and climate issues. Central among the Governor’s endeavors is an expansion of the Business Energy Tax Credit in order to attract new green industries to Oregon. The new green bills in the legislature include the following:

 

·        SB 80 will establish a cap-and-trade system to reduce greenhouse emissions by encouraging innovation and efficiency among Oregon’s industries. 

 

·        SB 79 is designed to increase energy efficiency in buildings by giving performance certificates to business to enable them to monitor efficiency in new and remodeled buildings. The ambitious goal is to reach zero net emissions by 2030, and in so doing, set Oregon as a leader in creating green building techniques.

 

·        SB 168 encourages energy independence of the state government by allowing energy efficiency projects on state lands and buildings, thus helping the state government to operate entirely on renewable power.

 

·        SB 201 is designed to provide an additional $4 million to weatherize and retrofit the homes of 400 low-income families each year, cutting energy costs for families by an average of $314 a year.   

 

·        SB 603 would stop Oregon from building any new dirty coal power plants and would require new power sources to be at least as clean as natural gas plants. 

 

·        HB 2120 will reflect the priority of providing more transportation choices for Oregonians in order to reduce emissions and traffic, to improve health, and to cut gas costs. 

 

·        HB 2121 will encourage the development of solar energy by directing the PUC to integrate up to 17 megawatts of solar energy into Oregon's electricity mix. Oregon launched the nation’s first solar highway at the I-5/I-205 interchange last year. Using Oregon manufacturers for the solar panels and emerging small Oregon businesses to install the solar system will supply jobs and renewable energy today and into the future.

 

·        HB 2180 would create an Oregon Renewable Energy Fund to provide grants to smaller community renewable energy projects. This bill also seeks to expand the Business Energy Tax Credit to provide a fifty percent tax credit for large-scale energy efficiency investments by businesses. The bill will also encourage sustainable bioenergy such as biofuels that do not compete with good supplies. Finally, HB 2180 will give the Oregon Department of Energy the flexibility to adjust tax credit incentives to encourage the development of the next generation of low and zero emission vehicles.

 

·        HB 2181 will give local governments bonding authority to provide loans to residential and business energy efficiency projects.

 

·        HB 2186 authorizes the citizen-comprised Environmental Quality Commission to develop reduction strategies including a low carbon fuel standard and restrictions on the unnecessary idling of trucks and commercial vehicles.

 

Governor Kulongoski views the current economic crisis as an opportunity to embrace sustainable energy projects that will make Oregon a leader in the future of green industries. As the Governor put it, “My message should be unmistakable – and it is the same message I conveyed to business and government leaders in Japan and China: Oregon is open for business. Especially green business.”

EPA's Roll-Back of Bush-Era Rules Appears to Begin in Earnest

Posted on February 13, 2009 by Seth Jaffe

While a lot of attention has been paid to whether EPA would reverse the Bush EPA decision denying California’s petition to regulate greenhouse gas emissions from mobile sources,  it is now clear even outside the climate change arena that life at EPA is going to be substantially different under the current administration.  As if evidence were really needed for that proposition, EPA announced this week that it was putting on hold the NSR aggregation rule that EPA had promulgated on January 15, 2009.

The rule, which had been long sought by industry, would have provided that nominally separate projects would only have to be combined – aggregated for NSR/PSD purposes – if  they are “substantially related.” It also would have created a rebuttable presumption that projects more than three years apart are not substantially related. Responding to a request from NRDC and the OMB memo asking agencies to look closely at rules promulgated before the transition but not yet effective, EPA concluded that the rule raises “substantial questions of law and policy.” Therefore, EPA postponed the effective date of the rule until May 18, 2009 and also announced that it was formally reconsidering the rule in response to the NRDC petition.

To those in industry, the aggregation rule was not a radical anti-environmental roll-back of environmental protection standards.  Rather, it was more of a common-sense approach towards making the NSR program simpler and clearer.  It is one of my pet peeves with the prior administration, however, that it gave regulatory reform a bad name.  

In any case, I feel as though I should open a pool regarding what will be the next Bush-era rule to be tossed overboard.  We surely won’t have to wait long for it to happen.

UNITED STATES NEEDS TO GET ON BOARD IN 2009 WITH THE ONE-WATT INITIATIVE

Posted on February 9, 2009 by Stephen E. Herrmann

TAKE ACTION ON PHANTOM LOADS:

 

The One-Watt Initiative is a fairly simple regulatory program proposed for eliminating unnecessary electricity losses from electronic equipment in standby mode, known as phantom loads. The European Union, Canada, Korea, Japan and China have all taken action. The United States needs to step up to action through the federal government or the states. President Obama's administration should be urged by all of us to adopt a policy in 2009. Because of the diverse pressures on the Federal government, simultaneous pressure should be exerted on all states to adopt the One-Watt policy.

 

WHAT IS THE STANDBY POWER PROBLEM:

Chances are that even environmental lawyers ignore the high energy costs of “phantom load.” But, now is the time to get regulation started.

Phantom load is the electricity consumed by a device when it is turned OFF.[1] Devices that have a phantom load are sometimes referred to as “vampires.”   For example, a television consumes electricity as it waits for the “on” button on the remote to be hit. Heavy phantom load users include the “power brick” adaptors that charge or operate cell phones, laptop computers, cordless drills, answering machines, radios, incheck printers and many other residential devices. These adapters are actually small transfers, turning AC electricity from the wall outlet into the DC electricity for use by the device. While one of these devices may only consume a small amount of power (e.g., 3-20 watts), a dozen or so of them running simultaneously and continuously, consume a significant amount of energy. What is worse is that even when not charging the cell phone or the battery for the cordless drill, that AC adapter may continue to consume power just because it is plugged into the wall.

 

HOW LARGE IS THE PHANTOM LOAD:

In the United States, the phantom load make up about six percent of the total, and around ten percent of residential consumption. 

As the United States Department of Energy stated: 

“Many appliances continue to draw a small of power when they are switched off. These “phantom” loads occur in most appliances that use electricity, such as VCRs, televisions, stereos, computers and kitchen appliances. In the average home, 75% of electricity used to power home electronics is consumed while the products are turned off. This can be avoided by unplugging the appliance or using the power strip and using the switch on the power strip to cut all power to the appliance.”

The British Government’s 2006 Energy Review found that standby modes on electric devices accounted for 8% of all British domestic power consumption. A similar study in France in 2000 found that standby power accounted for 7% of total residential consumption. Further studies have come to similar conclusions in other developed countries, including the Netherlands, Australia and Japan. Some countries estimates the proportion of consumption due to standby power as high as 13% in some countries. 

 

one-watt initiative:

The One-Watt Initiative is an energy saving proposal by the International Energy Agency to reduce standby power in all appliances to just one watt. The One-Watt Initiative was launched by the IEA in 1999 to promote, through international cooperation, that by 2010, all new appliances sold in the world would only use one watt in standby mode. On July, 2005, at the Gleneagles Summit in Scotland, the G8 countries signed an endorsement to, among other things, "promote the application of the IEA's 1 Watt Initiative". It is estimated that, if implemented, leaking electricity would be cut by as much as 75% when the existing stock of appliances is replaced. Further savings would occur as the number of vampire appliances increase.

 

INTERNATIONAL PROGRESS ON THE ONE-WATT PLAN:

An international group of experts was assembled to define standby power and establish a common test procedure. An internationally sanctioned definition and test procedure was adopted by the International Electrotechnical Commission (IEC 62301).

On January 9, 2009, the European Commission adopted a regulation laying down energy efficiency requirements, which is intended to cut the standby electricity consumption by almost 75% by 2020. As of 2010, the standby power consumption of new products has to be less than one watt or two watts. These values will be lowered in 2013 to 0.5 watt and one watt, which is close to the levels achievable with the best available technology.

NR Canada by Regulation is proposing that the Tier 1 energy efficiency performance standards for certain standby power will apply to products manufactured after June 1, 2009. The effective date for the Tier 2 standards will be applied to products manufactured after June 1, 2011.

Both South Korea and Australia have introduced the one watt benchmark in all new electrical devices, and according to the IEA, other countries, notably Japan and China, have undertaken “strong measures” to reduce standby power use. 

 

one-watt initiative in the united states:

So far the United States government's only action has been Executive Order 13221 signed by President George W. Bush in 2001. The Executive Committee states that every governmental agency “when it purchases commercially-available, off-the-shelf products that use external standby power devices, or that contain an internal standby power function, shall purchase products that use no more than one watt in a standby power-consuming mode.”

The State of California currently has an Appliance Efficiency Regulation which includes standby power limits for three consumer audio and video equipment categories (compact audio products, televisions and DVD players and recorders). A few other states have announced intentions to follow the California regulations for standby power limits but have not done so.

 

CONCLUSION:

This is an excellent issue to be pushed by any environmental group or generally concerned citizens. With the backing it has internationally, lobbying should garner little resistance. The United States or individual states should take action in 2009.



[1] There are issues about a definition for standby power. However, for purposes of general regulations, standby power is the lowest level of electricity consumed by appliances, which cannot be switched off (influenced) by the user, and may persist for an indefinite time when an appliance is connected to its main electricity supply.

UNITED STATES NEEDS TO GET ON BOARD IN 2009 WITH THE ONE-WATT INITIATIVE

Posted on February 9, 2009 by Stephen E. Herrmann

TAKE ACTION ON PHANTOM LOADS:

 

The One-Watt Initiative is a fairly simple regulatory program proposed for eliminating unnecessary electricity losses from electronic equipment in standby mode, known as phantom loads. The European Union, Canada, Korea, Japan and China have all taken action. The United States needs to step up to action through the federal government or the states. President Obama's administration should be urged by all of us to adopt a policy in 2009. Because of the diverse pressures on the Federal government, simultaneous pressure should be exerted on all states to adopt the One-Watt policy.

 

WHAT IS THE STANDBY POWER PROBLEM:

Chances are that even environmental lawyers ignore the high energy costs of “phantom load.” But, now is the time to get regulation started.

Phantom load is the electricity consumed by a device when it is turned OFF.[1] Devices that have a phantom load are sometimes referred to as “vampires.”   For example, a television consumes electricity as it waits for the “on” button on the remote to be hit. Heavy phantom load users include the “power brick” adaptors that charge or operate cell phones, laptop computers, cordless drills, answering machines, radios, incheck printers and many other residential devices. These adapters are actually small transfers, turning AC electricity from the wall outlet into the DC electricity for use by the device. While one of these devices may only consume a small amount of power (e.g., 3-20 watts), a dozen or so of them running simultaneously and continuously, consume a significant amount of energy. What is worse is that even when not charging the cell phone or the battery for the cordless drill, that AC adapter may continue to consume power just because it is plugged into the wall.

 

HOW LARGE IS THE PHANTOM LOAD:

In the United States, the phantom load make up about six percent of the total, and around ten percent of residential consumption. 

As the United States Department of Energy stated: 

“Many appliances continue to draw a small of power when they are switched off. These “phantom” loads occur in most appliances that use electricity, such as VCRs, televisions, stereos, computers and kitchen appliances. In the average home, 75% of electricity used to power home electronics is consumed while the products are turned off. This can be avoided by unplugging the appliance or using the power strip and using the switch on the power strip to cut all power to the appliance.”

The British Government’s 2006 Energy Review found that standby modes on electric devices accounted for 8% of all British domestic power consumption. A similar study in France in 2000 found that standby power accounted for 7% of total residential consumption. Further studies have come to similar conclusions in other developed countries, including the Netherlands, Australia and Japan. Some countries estimates the proportion of consumption due to standby power as high as 13% in some countries. 

 

one-watt initiative:

The One-Watt Initiative is an energy saving proposal by the International Energy Agency to reduce standby power in all appliances to just one watt. The One-Watt Initiative was launched by the IEA in 1999 to promote, through international cooperation, that by 2010, all new appliances sold in the world would only use one watt in standby mode. On July, 2005, at the Gleneagles Summit in Scotland, the G8 countries signed an endorsement to, among other things, "promote the application of the IEA's 1 Watt Initiative". It is estimated that, if implemented, leaking electricity would be cut by as much as 75% when the existing stock of appliances is replaced. Further savings would occur as the number of vampire appliances increase.

 

INTERNATIONAL PROGRESS ON THE ONE-WATT PLAN:

An international group of experts was assembled to define standby power and establish a common test procedure. An internationally sanctioned definition and test procedure was adopted by the International Electrotechnical Commission (IEC 62301).

On January 9, 2009, the European Commission adopted a regulation laying down energy efficiency requirements, which is intended to cut the standby electricity consumption by almost 75% by 2020. As of 2010, the standby power consumption of new products has to be less than one watt or two watts. These values will be lowered in 2013 to 0.5 watt and one watt, which is close to the levels achievable with the best available technology.

NR Canada by Regulation is proposing that the Tier 1 energy efficiency performance standards for certain standby power will apply to products manufactured after June 1, 2009. The effective date for the Tier 2 standards will be applied to products manufactured after June 1, 2011.

Both South Korea and Australia have introduced the one watt benchmark in all new electrical devices, and according to the IEA, other countries, notably Japan and China, have undertaken “strong measures” to reduce standby power use. 

 

one-watt initiative in the united states:

So far the United States government's only action has been Executive Order 13221 signed by President George W. Bush in 2001. The Executive Committee states that every governmental agency “when it purchases commercially-available, off-the-shelf products that use external standby power devices, or that contain an internal standby power function, shall purchase products that use no more than one watt in a standby power-consuming mode.”

The State of California currently has an Appliance Efficiency Regulation which includes standby power limits for three consumer audio and video equipment categories (compact audio products, televisions and DVD players and recorders). A few other states have announced intentions to follow the California regulations for standby power limits but have not done so.

 

CONCLUSION:

This is an excellent issue to be pushed by any environmental group or generally concerned citizens. With the backing it has internationally, lobbying should garner little resistance. The United States or individual states should take action in 2009.



[1] There are issues about a definition for standby power. However, for purposes of general regulations, standby power is the lowest level of electricity consumed by appliances, which cannot be switched off (influenced) by the user, and may persist for an indefinite time when an appliance is connected to its main electricity supply.

Certification Board Adopts Standards for Environmental Auditing and Program Design

Posted on February 6, 2009 by Ridgway Hall

In December, 2008, the Board of Environmental, Health and Safety Auditor Certifications (BEAC) issued its Performance and Program Standards for the Professional Practice of Environmental, Health and Safety Auditing. BEAC is the largest organization which certifies the competence of EHS auditors based on a written test and experience. These standards codify existing “best practices” in the EH&S auditing profession and the design and implementation of auditing programs. They should be particularly helpful to those of us who work with companies to develop compliance assurance programs.

 

Background

            Ever since Congress passed Sarbanes-Oxley in 2002, business entities requesting environmental, health and safety (EHS) compliance audits have had a stronger need for confidence that the audit reports are complete, accurate and reliable. Recall that SOXA Section 302(a) requires that the “Principal executive officer or officers and the principal financial officer or officers . . . certify in each annual or quarterly report” that, based on the officers’ knowledge, the report does not contain any untrue statement of material fact or omit any material facts and that the officers have designed and maintained internal controls to ensure that material information relating to the company is provided to them.

            The field of environmental auditing—more broadly EHS auditing—began informally in the late 1970s in response to the wave of complex environmental legislation and regulations which carried up to $25,000 per day for violations. Environmental engineering firms and some law firms offered to assist companies in carrying out compliance audits. Once familiarity with the relevant regulations was demonstrated by the auditors, companies did not bother to require any third-party verification of their qualifications, or ask if there were any “standards” they followed. This has also been true for the related field of environmental site assessments performed as part of the due diligence in a commercial acquisition. However, perhaps as a sign of the times, when EPA codified its “All Appropriate Inquiry” rule providing protection against  Superfund liability for innocent landowners, bona fide purchasers and contiguous landowners in 2005 (40 C.F.R. Part 312), it included minimum qualifications requirements for an “environmental professional” in terms of education and experience.

            Three years ago the Board of Environmental, Health & Safety Auditor Certifications (BEAC) asked its four-person Standards Board, on which I serve, to review its very slender 1999 standards for auditors and audit programs and design a new set of standards consistent with the current needs and state of the art. The rewrite was completed in December following more than a year of public and peer review and comments on drafts. The new standards are currently being printed and information on them will soon be available at the BEAC web site: www.beac.org.

            The New BEAC Standards

            The purpose of the BEAC auditing standards is to provide auditors and audit program designers with minimum and broadly worded “standards”. These can be relied on by any auditor or business entity who wants to represent that their audit was conducted, or program designed, consistent with BEAC standards. Our purpose was to codify “best practices” which have been widely in use for a number of years, not to try to push the envelope. Furthermore, the standards are flexible and broadly worded, recognizing that audit assignments come in many sizes and shapes. Similarly, entities designing an internal auditing program come in different sizes and shapes and vary widely in their needs.

            The standards are organized into four main sections addressing (1) independence, (2) due professional care (qualifications), (3) performance of audit work, and (4) audit program design. Following the text of the standards themselves in each section there is “guidance” designed to provide practical tips on how to get the job done. The following paragraphs summarize briefly the key elements of each section.

            Section 1 requires that auditors must be objective and independent of the activities they audit, free of any conflict of interest. Similarly, an audit program should be designed to ensure that the auditors are independent, that they are not pressured or influenced by entities which they audit, and that they report their results directly to senior management.

            Section 2 requires that auditors must have adequate qualifications, skills and experience appropriate to the nature of the task they will be performing.  The standards spell out the specifics. An anticipated benefit to an auditor is that if he or she carries out an audit in compliance with the standards, that should be a presumptive defense to a malpractice claim in the event that an apparent violation was allegedly missed during the audit. The auditing program requirements include responsibility to ensure auditor competence and proper supervision.

            With respect to Performance of Audit Work, the standards address the planning and scoping phase, preparation, field work and reporting. This includes general requirements for document review, personnel interviews, site inspections and “any other appropriate procedure for the gathering, evaluation and recording of information relevant to the scope and objective of the audit.” An audit report is then normally prepared which sets forth each finding of noncompliance. Reporting procedures should ensure that the reports are accurate and complete. Experienced environmental auditors should find all of this familiar and reassuring.

            With respect to the Audit Program design, the standards require that program goals, objectives and scope be defined in a written charter adopted and published by senior management. Subjects such as the scope of the audit program, frequency of audits and procedures to ensure auditor competency are included. Periodic management review is required to be sure that the audit program is carrying out the company’s objectives and has adequate resources in terms of personnel and funding.

            The content of the program standards draws on EPA’s “Elements of Effective Environmental Auditing Programs” (published initially in 1986 and reaffirmed in 1994), Justice Department policies describing effective environmental compliance programs, and elements of the ISO-14001 standards, among other sources.

Conclusion

            This has necessarily been the briefest of overviews—hardly a comprehensive discussion. No one is required to adopt or follow these new standards. However, hopefully they will provide guidance and reassurance both to EHS auditors and those who design and operate compliance assurance programs and want to “get it right.”

 

© Ridgway M. Hall, Jr. 2009

A Quick Economic Stimulus Meets a Slow Environmental Process - Are NEPA Waivers Needed to Reach Energy Independence?

Posted on January 30, 2009 by Bradley Marten

President Obama has pressed Congress this week to enact an economic stimulus package that would “double our capacity to generate alternative sources of energy like wind, solar, and biofuels . . . and build a new electricity grid that lay down more than 3,000 miles of transmission lines to convey this new energy from coast to coast.”[i] On Wednesday, January 28, 2009, the House passed the American Recovery and Reinvestment Act of 2009 (H.R. 1), which contains nearly $15 billion in capital investments and loan guarantees for renewable energy projects and new electric transmission lines, and $18.5 billion for energy efficiency programs.  The Administration’s stated goal is to spend this money in the next 18 months. This may be possible for the energy efficiency projects such as weatherizing homes and government buildings.  But for dozens of new wind farms and thousands of miles of transmission lines, it is not, and a good part of the reason is that those projects have yet to undergo environmental review or receive necessary permits.



[i] These remarks came in the President’s first weekly address, which was delivered on Saturday, January 24, 2009. The address can be viewed at this link.

 

Typically, siting a transmission line, wind farm, or other major energy facility involves obtaining a long list of environmental permits, each of which has a review process that can be used by opponents of the project to delay and sometimes defeat it. Moving infrastructure projects forward quickly will only be possible if Congress and the Administration speed up the environmental review and permitting process.  

In a January 26, 2009, report, the Congressional Budget Office estimates that it will take up to seven years to spend the money that H.R. 1 dedicated to expanding alternative energy. Experience teaches that this estimate may be overly conservative. For example, the Arrowhead-Weston Transmission Project, a 220 mile transmission line from Wisconsin to Minnesota, took nine years to permit and construct, even though all but 50 miles of it were in existing transmission line corridors. Southern California Edison’s Tehachapi Transmission Project, a 250 mile transmission project to deliver electricity generated from wind farms in Southern California, took over 10 years to design, permit, and begin construction. Indeed, portions of the project are still undergoing environmental review by the U.S. Forest Service and others.

Recently, California Governor Arnold Schwarzenegger requested up to $44 billion for transportation, energy and water projects in California, claiming that these projects will create as many as 800,000 new jobs.  Knowing that traditional environmental review would slow short-term job creation, Governor Schwarzenegger asked the Obama Administration to “waive or greatly streamline National Environmental Protection Act requirements consistent with our statutory proposals to modify the California Environment Quality Act for transportation projects.”

The proposal drew immediately fire from environmental groups. In a January 13, 2009, letter to House and Senate Democratic leaders, the Environmental Defense Fund, the Natural Resources Defense Council, the League of Conservation Voters and Environment California called Governor Schwarzenegger’s proposal “unproductive and harmful” to the federal debate over reviving the economy.  “Inevitably, in the course of congressional consideration, special interests will assert that we cannot afford the NEPA process in a time of national urgency,” they said.  “The truth is that we cannot afford that kind of leap-before-you-look rashness.” 

The new Administration must navigate this tension – quickly addressing the economic crisis while maintaining the integrity of the environmental review process. Doing so will require identifying ways that environmental review and permitting can be streamlined and modernized, alongside the infrastructure system.  We ought to be able to get wind farms and bridges and light rail built in a time frame that provides the short-term stimulus our economy needs, and also allow for sufficient environmental review to make sure our resources are protected.   This article lays out some of the options the new Administration may wish to consider as it seeks to balance job creation with environmental stewardship.

Approaches for Streamlining the Environmental Review Process

Use Existing Provisions Allowing Temporary Waivers

 

Many environmental regulatory statutes contain waivers of applicable requirements in response to natural disasters or other emergency conditions.  For example, the Stafford Disaster Relief and Emergency Assistance Act authorizes NEPA waivers to facilitate prompt responses to natural disasters.[1]  Similarly, the White House Council of Environmental Quality (CEQ) is authorized to approve “alternative arrangements” allowing federal agencies to modify or limit NEPA review in response to natural disasters.[2]  Other federal environmental laws with emergency response provisions include the Clean Water Act[3] and CERCLA.[4]

In response to Hurricane Katrina, CEQ approved expedited NEPA review procedures for certain U.S. Army Corps of Engineers flood control projects.  EPA temporarily waived certain Clean Water Act, Clean Air Act, and other environmental regulations in Katrina’s wake.  Both Louisiana and Mississippi issued similar emergency administrative orders, temporarily suspending certain environmental regulations to facilitate clearing hurricane debris and other emergency response actions.

Waivers Based on Grounds of National Security

In 2002, after the Natural Resources Defense Council obtained a preliminary injunction halting the U.S. Navy’s use of a low-frequency, active, surveillance towed array sonar system,[5] President Bush issued a “Presidential Exemption from the Coastal Zone Management Act,”[6] in order to “ensure effective and timely training of the United States naval forces in anti-submarine warfare using mid-frequency active sonar.”  The Presidential exemption allowed the Navy to train and certify strike groups capable of deployment “in support of world-wide operational and combat activities, which are essential to national security.”

The United States Supreme Court upheld the President’s action, finding that the public interest in adequately training the Navy’s antisubmarine forces “plainly outweighs” conservationists’ interests in studying marine mammals that may be injured by sonar exercises.[7]

Legislative Exemptions for Specific Projects

 

Congress has also periodically either limited or exempted review under NEPA and other environmental statutes for specific projects or categories of projects.  For example, the Energy Policy Act of 2005 modified the environmental compliance requirements for a broad range of energy-related projects.  The modified environmental compliance measures included:

  • Establishing a rebuttable presumption that certain oil and gas projects conducted on federal land are categorically exempted from NEPA review (§ 390);
  • Exempting hydraulic fracturing in aid of oil, gas, and geothermal energy extraction from certain requirements in the Safe Drinking Water Act (§ 322);
  • Exempting oil and gas exploration, production, and transportation construction projects from the Clean Water Act’s construction stormwater regulations (§ 323);
  • Requiring EPA and federal land management agencies in Western states to develop a pilot project to expedite environmental review and permitting under NEPA, the ESA, the Clean Water Act, and other federal statutes (§ 365);
  • Expediting the permitting process for natural gas facilities located on federal lands (§ 366); and
  • Shortening the time frame for appealing permitting decisions under the Coastal Zone Management Act (§ 381).

Congress has also exempted or provided limited NEPA review for other projects, for example:

·        The TransAlaska Pipeline was exempted from NEPA review after completion of the initial EIS (43 U.S.C. § 1625(d));

·        Certain actions taken pursuant to the Clean Air Act are exempted from NEPA review (15 U.S.C. § 793(c)(1));

·        Department of Energy decisions to grant or deny exemptions from regulations governing fuel use at coal-fired power plants are exempted from NEPA review (42 U.S.C. § 8473);

·        For certain retrievable radioactive waste storage projects, an Environmental Assessment (as opposed to an EIS) constitutes sufficient compliance with NEPA (42 U.S.C. § 10155(c)(2)(A));

·        Alternate environmental review procedures have been established for determining surface transportation rights-of-way in the Arctic National Preserve (42 U.S.C. § 410hh(4)(d); and

·        Certain Department of Housing and Urban Development funding decisions are exempt from NEPA review, based on certification of compliance with state and local laws (42 U.S.C. § 3547(2)).

Using Streamlined Environmental Review to Address Economic Conditions

 

While legislative, regulatory, and executive precedent exists for either waiving or limiting environmental review, those precedents have rarely been used to justify waiving environmental review on the grounds of an economic crisis.[8]  But precedent exists for using “alternative arrangements” for environmental review in response to economic concerns.  In 1980, after General Motors threatened to build a new manufacturing facility outside the city limits unless the city cleared and delivered an appropriate site for the facility, the City of Detroit declared a state of emergency based on an economic crisis.  In September 1980, CEQ approved an “alternative arrangement” under NEPA allowing the Department of Housing and Urban Development to release loan guarantee funds prior to the completion of NEPA review.[9]

The challenge for the new Administration and Congress is to strike a balance between expediting environmental review while maintaining sufficient oversight to prevent bad decision making.  Options to achieve that goal include: (1) expediting funding for “shovel ready” projects which already have undergone federal and state environmental review and obtained necessary permits; (2) using programmatic environmental review of project categories that would obviate the need for project-specific (and often redundant) environmental reviews; (3) providing limited exemptions or streamlined environmental review for specific categories of projects; and (4) limiting judicial review of final agency approvals for projects funded by the stimulus bill, while providing for oversight, review, and approval by CEQ.

For more information, please contact Bradley Marten



[1] See 42 U.S.C. § 5159.

[2] 40 CFR § 1506.11.

[3] Under 40 CFR § 122.3, the President or an agency acting with delegated Presidential authority may grant a waiver of the NPDES requirement if necessary to address substantial threats to public health or welfare. EPA invoked this exception in response to Hurricane Katrina. Another exception is 40 CFR § 122.41(n), which allows a wavier in the event of an “upset,” which is the temporary failure to comply with NPDES permit conditions based on factors that are beyond the reasonable control of an operator, for example, a power failure or a large spill of contaminants into a collection and treatment system.

[4] CERCLA provides the President and EPA with broad authority and flexibility to undertake response actions whenever there is a release or threatened release of a hazardous substance which presents an imminent and substantial danger. See 40 CFR § 300.400(e)(1).

[5] See NRDC v. Evans, 232 F. Supp.2d 1003 (N.D. Cal. 2002) (for more information on this decision, see Colleen C. Karpinsky, A Whale of a Tale: The Sea of Controversy Surrounding the Marine Mammal Protection Act and the U.S. Navy’s Proposed Use of the SURTASS-LFA Sonar System, 12 Penn St. Envtl. L. Rev. 389 (2004)).

[6] Per its terms, the Presidential Exemption was based on the “Constitution and the laws of the United States, including section 1456(c)(1)(B) of title 16, United States Code.”

[7] Winters v. Natural Resources Defense Council, Inc., 555 U.S. ___, 129 S. Ct. 365 (2008).

[8] While NEPA allows agencies to allow “alternative arrangements” suspending or modifying environmental review, CEQ regulations limit their applicability to “actions necessary to control the immediate impact of the emergency.” 40 CFR § 1506.11 (emphasis supplied).

[9] Although the full NEPA review was eventually completed, the “alternative arrangement” allowed HUD and the city to expedite project activities in response to an economic crisis. The facts of the Detroit “alternative arrangement” are summarized at Crosby v. Little, 512 F. Supp. 1363 (E.D. Mich. 1981).

More Clean Water Act Citizen Suits on the Way?

Posted on January 20, 2009 by Fournier J. Gale, III

At least in the Southeast, the popularity of Clean Water Act citizen suits has waxed and waned over the course of the Act’s 37 year history. However, our firm’s environmental practice group began to see a renewed interest in citizen suits a couple of years ago, and a recent decision by the Eleventh Circuit Court of Appeals may lead to an even greater resurgence.

 

In Black Warrior Riverkeeper, Inc. v. Cherokee Mining, LLC, the Eleventh Circuit held that a citizen suit may proceed against a defendant for alleged violations of the Clean Water Act despite the state environmental agency’s commencing an administrative enforcement action before the citizen suit was filed. 548 F.3d 986 (11th Cir. 2008). Riverkeeper, an environmental organization supporting the preservation of the Black Warrior River watershed in Alabama, filed suit in 2007 against Cherokee Mining, an owner and operator of two coal mines in northern Alabama, for alleged illegal discharges to navigable waters in violation of the company’s permit. Pursuant to the Act, Riverkeeper first sent Cherokee Mining a “60-day notice letter,” notifying the company of its intent to file suit in federal court. The state environmental agency then commenced enforcement by issuing an administrative consent order, and Riverkeeper filed its suit in the Northern District of Alabama shortly thereafter.

 

            Cherokee Mining filed a Motion to Dismiss Riverkeeper’s suit for lack of subject matter jurisdiction under Section 309 of the Act which precludes citizen suites when a state agency has commenced and is diligently prosecuting an administrative enforcement action against a defendant. Riverkeeper responded by pointing to what until now has been a largely overlooked provision in Section 309 stating that the citizen suit bar does not apply to actions filed after a citizen gives its notice of intent to sue prior to commencement of an administrative enforcement action and the citizen actually files suit “before the 120th day after the date on which such notice is given.” 33 U.S.C. § 1319(6)(B)(ii). Based on language found elsewhere in Section 309, Cherokee Mining argued that this 120-day exception only applies to federal, not state, administrative enforcement actions. The district court rejected this argument and held that Riverkeeper’s suit could go forward because it met the Act’s notice of intent to sue requirements. Holding that Cherokee Mining’s interpretation of the statute “was an extremely cramped and narrow reading of the ordinary and plain meaning of the relevant language” in the Act, the Eleventh Circuit affirmed the district court’s decision. Cherokee Mining petitioned the Court for panel or en banc rehearing, and the petition was denied on January 8, 2009. There has been no word yet as to whether Cherokee Mining plans to appeal the case to the U.S. Supreme Court.

 

            Until now, no Circuit Court has ever addressed the 120-day rule on which Riverkeeper successfully relied as an exception to the bar on citizen suits filed after the commencement of state administrative enforcement actions. Prior to the Eleventh Circuit’s decision, state agencies routinely initiated successful administrative enforcement actions once notified of a citizen suit, and the citizen either did not file suit or had their case dismissed pursuant to Section 309 of the Act.  Certainly for companies operating in Alabama, Georgia, and Florida, the rules have now changed. Entities faced with both a citizen suit and state administrative enforcement action have a much lower incentive for resolving the matter by coming into compliance and paying state penalties when they may be required to later pay citizens’ attorneys fees and Clean Water Act statutory penalties (up to $32,500 per day per violation) or even be required to comply with court-ordered injunctive relief that may be at odds with whatever the state would have required. Because state environmental agencies recognize the dilemma regulated entities face as a result of this decision, states are also going to have to alter their strategies in dealing with potential noncompliance of clean water regulations by industry. Because administrative consent decrees will be less palatable to regulated entities, the state will have to weigh whether or not to go to the added expense (in terms of dollars and resources) of filing a lawsuit in state court.

 

            This state of affairs is not likely to go unnoticed by citizen groups throughout the country. As counsel for Riverkeeper stated after the Court issued its opinion—“this changes everything.” With the increase in “60-day notice” letters we’ve seen being sent to entities just in Alabama in the last few months, it’s hard to disagree.

 

For more information, a copy of the Eleventh Circuit’s decision can be found at http://www.ca11.uscourts.gov/opinions/ops/200810810.pdf

Superfund Liability and Apportionment - Burlington Northern v. United States

Posted on January 20, 2009 by Theodore Garrett

Although the Superfund statute is now 28 years old, basic issues of liability and apportionment of liability remain unresolved. This term, the U.S. Supreme Court will decide a case with broad implications for CERCLA liability, Nos. 07-1601 and 07-1607, Burlington Northern v. United States. These consolidated cases, which will be argued early in 2009, raise important issues concerning the circumstances under liability is divisible and the scope of “arranger” liability under CERCLA.  If the Ninth Circuit’s approach is upheld, the heightened evidentiary standards may impose a difficult hurdle on parties to prove reasonable apportionment of liability. The Ninth Circuit’s approach to “arranger” liability is of concern to entities that sell chemicals or other products in the ordinary course of business. The allocation of risk and provisions for insurance and best practices to avoid spills in contracts between suppliers and common carriers may need to be reviewed in light of the Supreme Court’s opinion in this case. 

 

Although the Superfund statute is now 28 years old, basic issues of liability and apportionment of liability remain unresolved. This term, the U.S. Supreme Court will decide a case with broad implications for CERCLA liability, Nos. 07-1601 and 07-1607, Burlington Northern v. United States. These consolidated cases, which will be argued early in 2009, raise important issues concerning the circumstances under liability is divisible and the scope of “arranger” liability under CERCLA.  If the Ninth Circuit’s approach is upheld, the heightened evidentiary standards may impose a difficult hurdle on parties to prove reasonable apportionment of liability. The Ninth Circuit’s approach to “arranger” liability is of concern to entities that sell chemicals or other products in the ordinary course of business. The allocation of risk and provisions for insurance and best practices to avoid spills in contracts between suppliers and common carriers may need to be reviewed in light of the Supreme Court’s opinion in this case. 

 

                                    Background

A now-defunct company, Brown & Bryant, Inc. (B&B), owned and operated a facility at which chemicals were stored and distributed. The B&B operations were conducted in part on land owned by two railroad companies. Some of the chemicals used by B&B were supplied and delivered by Shell Oil Company. The U.S. Environmental Protection Agency (EPA) and the State of California’s Department of Toxic Substances Control (DTSC) brought suit under CERCLA to recover their response costs.

 

In 1996, the EPA and the State filed CERCLA actions against B&B, the Railroads, and Shell for reimbursement of their investigation and cleanup costs.   The district court, after a twenty-seven day bench trial, issued a detailed, 191-page decision holding the Railroads liable under CERCLA § 9607(a) as owners of the facility and as persons who “at the time of disposal of any hazardous substance owned or operated any facility at which such hazardous substances were disposed of.”  Shell was held liable under CERCLA § 9607(a)(3)as a “person who ... arranged for disposal ... of hazardous substances.”  

 

The district court found that the harm to the site was capable of apportionment.  The parties had not provided arguments concerning apportionment, leaving the district court to independently perform the equitable apportionment analysis. For the Railroads, the district court multiplied three proportions: (1) the percentage of the overall site that was owned by the Railroads, 19.1%; (2) the percentage of time that the Railroads leased the parcel in relation to B&B’s total operations, 45%; and (3) the fraction of hazardous products attributable to the Railroad parcel, 66%. This calculation resulted in a determination of 6% liability.  To account for any “calculation errors,” the district court assumed 50% error and raised the Railroads’ proportion of the total liability to 9%. For Shell, the district court approximated the volume of spills of Shell’s product attributable to Shell, and set Shell’s proportion of the total liability at 6%. 

 

The State and EPA appealed the district court’s judgment.  Shell cross-appealed the finding that it was liable as an “arranger” under CERCLA. The federal district court held the Railroads and Shell liable for a minor portion of the total cleanup costs. The agencies appealed. A panel of the Ninth Circuit affirmed the portion of the judgment that imposed liability on Shell as an arranger and reversed the portion of the judgment that declined to impose joint and several liability on the Railroads and Shell. 

 

The Supreme Court granted certiorari. The questions presented are whether the 9th Circuit correctly (1) affirmed the district court’s ruling that Shell is liable as an arranger and (2) reversed the district court’s apportionment of liability. The case is scheduled to be argued early in 2009.

 

                                    The Ninth Circuit’s Decision

 

A panel of the Ninth Circuit affirmed the portion of the judgment that imposed liability on Shell as an arranger and reversed the portion of the judgment that declined to impose joint and several liability on the Railroads and Shell, holding that petitioners did not satisfy their burden of proof on apportionment. United States v. Burlington Northern & Santa Fe Railway, 502 F.3d 781 (9th Cir. 2007), as amended 520 F.3d 918 (9th Cir. 2008). The amended opinion was issued to accompany a denial of en banc review, which prompted an unusual dissent by eight Ninth Circuit judges including the Chief Judge.

 

Apportionment of Liability. The Ninth Circuit notes that § 433A(1) of the Restatement allows for apportionment of damages where “(a) there are distinct harms or (b) there is a reasonable basis for determining the contribution of each cause to a single harm.” 520 F.3d at 934-35.  

On the facts presented, the court found no dispute on the first, purely legal question -- whether the harm is capable of apportionment, but held that the district court erred in finding that there was a “reasonable basis” apportioning the harm based on percentages of land area, time of ownership, and types of hazardous products.  The Ninth Circuit held that there was no evidence linking these factors to the proportion of leakage, contamination, or cleanup costs. 520 F.3d at 945-46. With respect to Shell, the Ninth Circuit similarly found that the evidence relied on by the district court was too speculative to determine the amount of leakage of Shell’s chemicals.  520 F.3d at 946-47.

 

“Arranger” Liability. The Ninth Circuit rejected Shell’s arguments that the district court applied the wrong legal standard in determining whether Shell was an “arranger.”  The Ninth Circuit held that the useful product cases do not apply in this case because “Shell arranged for delivery of the substances to the site by its subcontractors; was aware of, and to some degree dictated, the transfer arrangements; knew that some leakage was likely in the transfer process….” 520 F.3d at 950. The Ninth Circuit cited evidence that spills occurred every time the deliveries were made; that Shell arranged for delivery and chose the common carrier that transported its product to the site; that Shell changed its delivery process so as to require the use of large storage tanks, that Shell reduced the purchase price of the chemicals to reflect loss from leakage; and that Shell distributed a manual and created a checklist to ensure that the chemical tanks were operated in accordance with Shell’s safety instructions. 520 F.3d at 950-51.

 

The Dissent. The order denying the petition for rehearing en banc provoked a strong dissent by Judge Bea, joined in by seven judges including the Chief Judge. The dissent cites the detailed factual findings made by the district court and states: “If this evidence does not provide a ‘reasonable estimate’ for apportionment of liability, I do not see how -- short of ‘perfect information’ sufficient to trace every molecule of pollution to the landlord’s parcel -- apportionment could ever be possible under CERCLA.”  520 F.3d 953. The dissent was equally critical of the panel’s imposition of “arranger” liability on Shell, stating: “The panel’s imposition of arranger liability on a mere seller, which relinquished control over its products upon delivery and before spillage occurred, goes far beyond the statutory language and creates inter-and intra-circuit splits.” 520 F.3d 954.

 

Issues Before The Supreme Court

1. Apportionment of Liability.  Petitioner Burlington Northern argues that the Ninth Circuit’s analysis of apportionment departs from common-law principles, which allow for rough apportionment based on reasonable assumptions. The Ninth Circuit has pushed the “polluter pays” principle in CERCLA beyond all rational limits. Burlington argues that imposing joint and several liability in all but extraordinary cases, as the Ninth Circuit’s reasoning would dictate, would raise a multitude of constitutional problems, citing Eastern Enterprises v. Apfel, 524 U.S. 498 (1998).

 

The United States counters petitioners failed to even attempt to identify and prove a reasonable basis for apportionment and the Supreme Court should not relieve petitioners of the consequences of their litigation strategy. Further, the United States argues that a district court does not have the same “broad discretion” in determining whether and how liability should be apportioned. 

 

2. “Arranger” Liability.  Shell Oil Company argues that “arranger” liability may not be imposed on a manufacturer who merely sells and ships, by common carrier, a commercially useful product, transferring ownership and control to a purchaser who causes contamination involving that product.  Any inadvertent spillage that occurred was the result of the transfer of a useful product, thus Shell cannot be said to have arranged for the discard of waste. Shell did not own the chemicals at the time of any disposal. Shell also argues that a company should not be penalized for providing its customers with a safety manual and other information for the safe handling of its products.

 

The United States argues that Shell is liable because it entered into transactions that it knew would directly result in disposals of hazardous substances. The government’s brief emphasizes that Shell inserted itself over the transfer process by hiring the common carriers used for delivery and because the common carriers used equipment required by Shell. Lack of intent to dispose of a hazardous substance does not preclude arranger liability, the United States argues, where the arranger has advance knowledge of the disposal. 

 

                                    Conclusion

In cases where there is a significant orphan share, the failure to apportion liability may result in the imposition of liability for the entire cleanup cost on parties with minimal responsibility.  If the Ninth Circuit’s approach is upheld, the heightened evidentiary standards may impose a difficult hurdle on parties to prove reasonable apportionment. Alternatively, the Supreme Court might decide the issue on narrow grounds suggested by the United States, namely that petitioners failed to offer evidence concerning apportionment and thus did not meet their burden of proof.

The Ninth Circuit’s approach to “arranger” liability is of concern to entities that sell chemicals or other products in the ordinary course of business. Does every sale and delivery of a useful product potentially subject the supplier to CERCLA liability if leakage or spills occur? If not, how does one draw the line?  Should arranger liability attach only when the sole purpose of a transaction is for disposing a hazardous substance?  The allocation of risk and provisions for insurance and best practices to avoid spills in contracts between suppliers and common carriers may need to be reviewed in light of the Supreme Court’s opinion in this case. 

 

Theodore Garrett is a partner in the law firm Covington & Burling LLP in Washington, D.C. and is Co-Chair of the firm's environmental practice group. His practice involves major regulatory and enforcement issues and transactions, particularly involving air quality, water quality, hazardous waste, and natural resource damages. He has been lead industry counsel in numerous cases seeking judicial review of EPA air and water regulations and has represented clients in numerous Superfund matters. Mr. Garrett advises clients on compliance and related business issues and has been extensively involved in administrative proceedings and litigation, including Supreme Court cases. Mr. Garrett has spoken and written widely in the environmental area. He is the editor and principal author of The Environmental Law Manual and the RCRA Compliance Manual, and is a contributing author to Environmental Litigation and The Clean Water Act Handbook. Mr. Garrett served as a U.S. Supreme Court law clerk to Chief Justice Warren Burger.  He is past Chair of the ABA Section of Environment, Energy and Resources. Mr. Garrett was honored as the Environmental Lawyer of the Year 2008 by Who’s Who International.

 

Contact Information: tgarrett@cov.com or (202) 662-5398

MIDWEST GREENHOUSE GAS REDUCTION ACCORD RECOMMENDATIONS CONTINUE TO ADVANCE

Posted on January 20, 2009 by David Flannery

The Advisory Groups working on the Midwest Greenhouse Gas Reduction Accord and the Midwest Governor’s Association Platform met in Indianapolis on January 14 and 15, 2009 for the purpose of advancing the development of recommendations for a regional program to reduce greenhouse gases. While the program being developed contemplates a regional cap and trade program, much work is being focused on the development of complimentary policies that would be implemented outside the cap and trade program. 

 

            The December 2008 draft recommendations of the Advisory Group, calls for a cap and trade program that would be applied to all six greenhouse gases. Initially, the cap and trade program would apply to electricity generation and imports, industrial combustion sources, and industrial process sources for which there are credible measurement in monitoring protocols. In addition, transportation fuels are being considered for inclusion in the cap and trade program based on the results of economic modeling that is currently being performed. Heating fuels will be included in the second three year compliance period. 

 

Significantly, the cap and trade program would be applied both to electricity generated within the region and to electricity imported into the region. In the latter case, the point of regulation for the program would be entity that first delivers electricity into a participating jurisdiction for consumption in that jurisdiction. The Commerce Clause implications on such an approach have yet to be tested. 

            Allowances under the cap and trade program are proposed to be distributed for climate related purposes. Among the purposes that have been identified by the Advisory Group are: 

  • accelerating transformational investments; 
  • mitigating transitional adverse impacts of the program; and
  • addressing harmful impacts due to climate change.

Individual states would be called upon to make a determination as to whether allowances would be auctioned or allocated for free. 

 

            Offsets would be encouraged under the draft recommendations for entities not covered by the cap and trade program. The Advisory Committee has yet to determine how much of the cap could be met by offsets, although a range of 10-50% are being considered. The final value would be set once economic modeling data becomes available. Initially, offsets would be limited to those which occur within the states and provinces that elect to participate in the program. 

 

            Beyond the cap and trade program, the recommendations contemplate the development of complimentary measures that would reduce greenhouse gas emissions. These complimentary measures include, among other things:

  • energy efficiency; 
  • low carbon fuels; 
  • management of vehicle miles; 
  • biomass;
  • renewable electricity; 
  • transmission planning and siting; and
  • carbon capture and storage. 

These potential policies are now being evaluated with economic modeling. The Advisory Group received a report this week on the results of the modeling of the base or reference case. Efforts will not turn to modeling policy cases. It is anticipated that the policy cases to be modeled will include: 

·        the cap and trade program alone;  

·        the complimentary measures alone; and

·        the combination of the cap and trade program and complimentary measures. 

It is anticipated that the results of this modeling will be available by the time the Advisory Group meets in March at a date and location that have not yet been determined. 

Final recommendations are expected to be issued during the third quarter of 2009. 

 

For more information regarding these activities, visit www.midwesternaccord.org.

Environmental Site Assessment Flexibility or Further Complexity? EPA Adopts Forestland and Rural Property Phase I Standard Practice

Posted on January 16, 2009 by Charles Efflandt

On December 23, 2008, EPA issued a direct final rule amending the “All Appropriate Inquiries Rule” [Standards for Conducting All Appropriate Inquiry]by adopting ASTM International’s “Standard Practice for Environmental Site Assessment Process for Forestland or Rural Property” (ASTM E2247-08) [EPA Amendment to AAI Rule]. ASTM E2247-08 was published after EPA promulgated the All Appropriate Inquires (AAI) rule and is specifically tailored to conducting Phase I environmental site assessments of large tracts of rural and forestland property. EPA’s action incorporates the ASTM E2247-08 forestland and rural property assessment practices as a federal standard for establishing the AAI component of the bona fide prospective purchaser, contiguous property owner and innocent landowner defenses to CERCLA owner/operator liability.

 

The AAI Rule as originally promulgated referenced and recognized as compliant ASTM E1527-05, which provides practices for conducting AAI of commercial real estate. ASTM E2247-08 is a variant of the original standard that focuses on the environmental assessment of greater than 120 acres of forestland or rural property or property with a developed use of only managed forestland and/or agriculture. Users of the forestland and rural property Phase I practices are intended to include the forest industry, conservation organizations, natural resource industries and rural real estate professionals and lenders.

 

Although the Forestland or Rural Property Standard is over 40 pages in length, EPA admits that the differences between this standard and the standards incorporated in the original AAI Rule are few and relatively insignificant.

 

Generally, the forestland and rural property practices offer the “Environmental Professional” more options to satisfy the site reconnaissance component of the Phase I assessment to, in part, alleviate the burden of visually inspecting these large properties. Also, the 120 acres (or more) that qualify the property for this standard need not be contiguous, provided all parcels are part of the same transaction and have substantially the same land use. Minor differences in the “past and present owner/occupant” interview requirements also exist that take into account the nature and use of these properties.

 

Both the original Rule and ASTM E2247-08 require the Phase I “User” to search for environmental liens and collect other information reasonably ascertainable to the User. Although the original Rule does not mandate disclosure of this information to the Environmental Professional, ASTM E2247-08 requires that such information be disclosed.

 

ASTM E2247-08 also includes a more extensive list of potentially applicable historical records and offers guidance on “beyond scope” assessments particularly relevant to forestland and rural property such as endangered species and non-point source assessment considerations.

Conceptually, a modified Phase I assessment practice for large tracts of forestland and rural property makes sense. However, EPA’s recent amendment to the AAI Rule provides that a purchaser of forestland or rural property within the scope of ASTM E2247-08 need not use the practices in that standard. Rather, such purchasers may continue to follow the provisions of the original Rule and ASTM E1527-05.

 

That being the case, and given that the new forestland and rural property standard is in many respects more stringent than the original Rule, it is debatable whether this amendment of the Rule actually provides focus, efficiency and useful flexibility to the assessment of these types of properties or simply adds another layer of confusion and complexity for property purchasers and Environmental Professionals to evaluate.

On Financial Markets and Environmental Regulation

Posted on January 14, 2009 by Kevin Finto

I save the instructions for an item so I can try to figure out what is wrong when it breaks. Given the state of our financial markets, I went looking for the instructions. I couldn’t find a copy of Adam Smith’s nine hundred page, two volume set The Wealth of Nations, first published in 1776. I did; however, find the next best thing: P.J. O’Rourke’s On the Wealth of Nations, (Atlantic Monthly Press 2007), a concise 250 page explanation that is both informative and entertaining. In reading through O’Rourke’s summary, I noted that Smiths three principles that determine market behavior (i.e, pursuit of self interest, division of labor and freedom of trade) explain a lot about why the markets currently are frozen up. We have had perhaps too much of all three, and too much of a good thing rarely turns out well.  Being an environmental lawyer, it also struck me that unintended consequences of current environmental regulations might be at least in part responsible for our current financial situation.  Finally, given the change in administrations, it occurred to me that the interplay between the market economy and environmental regulation and policy will continue, so we need to be smart about it.  

 

Adam Smith identified three critical aspects of proper market function that have been called his “invisible hand.” The first is that people act in their own self interest. This is the basic motivation for capital investment, risk taking and human labor. The second is that we get more productivity and higher quality of life if there is a division of labor such that the people who are good at things do them and those that are not pay the people who are good to do them for them. Third, and the one most important to our discussion, is that the less regulation on trade among the people doing these specialized tasks, the better. Smith was, of course, most concerned about tariffs and their effect on international trade, but certainly any regulation imposes some friction on the markets.

This brings us to the question of how environmental regulation may have caused, at least in part, the current financial crisis. To make this point it is helpful to think of financial markets, which we want to be “fluid,” like a system of tanks and pipes in a waterworks.  Water is analogous to money in this example.  Adam Smith’s first principle, self interest, is a motivating force, like a pump in our system. The second principle, division of labor, is a set of pipes which are sized according to the amount of economic activity they carry (Wal-Mart is a bigger diameter pipe than say your local shoe repair shop). Regulations are analogous to valves that restrict flow in the system. 

 

Both water in a pipe and money in our financial markets follow the path of least resistance. Putting aside questions about excessive self interest (read greed) and excessive division of labor (read opaqueness or lack of accountability) which may have contributed to the financial meltdown, regulations played a role as well.   Just as valves can direct the flow of water in a system, regulations direct the flow of money in our economy. Traditional, capital intensive, economic multiplying investment opportunities, say in energy infrastructure or manufacturing facilities, have faced stringent regulation which imposed significant resistance to that investment opportunity -- small pipes with lots of valves. On the other hand, many financial investment vehicles offered little or no resistance; they were big pipes with no valves. Guess where the money flowed? 

 

            So what implications does this have for future environmental policy or regulation. With a change in parties in the adminstration, the old debate between those favoring market based regulation and those favoring command and control is rekindled. As the new administration considers economic stimulus packages and regulations on environmental impacts, it will be well served to understand that it is not only the absolute amount of regulation, but also the relative amount of regulation, on economic options can have a significant impact on the markets as well as unintended consequences. Moreover, while terms like “free market” and “markets forces” may be derogatory in some circles, the reality is that market-based environmental programs have worked so well. No one can seriously debate the success of the acid rain program far more productive than command and control regulations would have been in that situation.  The reason is that market-based programs rely on the same human nature that Adam Smith recognized in his first principle and that gets our entrepreneurial and creative juices flowing.  That is what is needed to solve economic and environmental problems.  Ignoring market concepts in environmental regulation only leads to unintended consequences, conflict and gridlock, which the markets and we can no longer afford.

The Role of States in Climate Change Regulation

Posted on January 14, 2009 by Roger Ferland

50 Ariz. L. Rev. 674-938 (2008)

 

            The primary function of the articles produced to date for this blog has been to alert colleagues of current developments of which they should be aware. This article’s purpose, however, is broader. There appear on occasion in law reviews and other publications valuable perspectives on law and policy issues in areas like climate change that are worthy of attention but might escape notice. The above-referenced symposium is such a document. In the spirit of full disclosure, it should be noted that the authors of the majority of the articles are law professors and consequently it is necessary to wade through a great deal of legal theory to glean the valuable nuggets of insight that are prevalent throughout the document.

 

The basis theme of the articles and commentaries is that states have a significant and critical role to play in the reduction of greenhouse gases (GHGs) even after the likely enactment of federal cap-and-trade legislation during the next two years. That role would not seem to be immediately apparent, particularly if EPA proceeds to fill those areas of regulation not covered by cap-and-trade legislation by maximizing the agency’s scope of regulation of GHG’s under the Clean Air Act. Indeed, several of the authors concede that, following national legislation, the climate benefits of state initiatives “would be so small as to be undetectable.” Nevertheless, the authors suggest that states and localities will continue to have a unique and important role to play, not so much in directly achieving reductions in GHGs through regulation, but by providing or encouraging the mechanisms to indirectly achieve those reductions. This facilitation role takes a number of forms:

  • State or local support of research and development of new renewable energy and innovative GHG control technologies through targeted subsidies and tax credits
  • Continuation and expansion of renewable portfolio standards imposed by state public utility regulatory bodies
  • State-level energy efficiency standards
  • Green building codes and certification systems
  • Gap-filling environmental regulation that forces the adoption or diffusion of existing technologies

            The articles also provide a comprehensive treatment of the potential legal barriers and drawbacks to state actions. One of those drawbacks that is discussed by several of the authors is the cost externalization produced by individual state initiatives. The most cited example of a cost externalization is the push by California and other states allied with California for automotive emission standards for GHGs. While California’s actions seem laudable on their face and it is likely that EPA will grant the waiver that California needs to enforce the standards, the cost of complying with the standards will ultimately be borne by the rest of the country even though they had no say in their adoption.

            The primary legal barriers to state action are preemption and its allied concept, the so-called dormant Commerce Clause. The range of legislation currently before Congress addresses preemption by either expressing a clear intent to broadly preempt state initiatives as far as GHG regulation or no preemption language thereby leaving it up to the federal courts to apply general principles of preemption to specific state actions. The authors tend to favor limiting the applicability of preemption, particularly when the state action does not directly impair the sale of allowances or does not directly impair the functioning of the other mechanisms necessary for a successful national cap-and-trade program. Thus, such state measures as renewable energy portfolio requirements, measures that encourage technological innovation or diffusion of existing technology and even product efficiency standards that are more restrictive than national standards, should not be subject to being invalidated because of preemption. Conversely, state restrictions on the sale or purchase of emissions allowances even as part of the direct regulation of GHG emissions would probably be preempted by federal legislation.

            A similar analysis is followed concerning the applicability of the dormant Commerce Clause to state climate change initiatives. A state’s regulations that directly discriminate between, for example, in-state and out-of-state electric utility companies, particularly if the effect of such discrimination was to interfere with the functioning of the national cap-and-trade program, would clearly run afoul of the dormant Commerce Clause. However, the range of state measures discussed in the articles would not seem to raise either dormant or general Commerce Clause issues, particularly if the national legislation, as seems likely, contains a savings clause like that in Section 116 of the Clean Air Act that explicitly allows states to adopt “standards or limitations” that are more stringent than federal standards or limitations.

            Obviously, the foregoing vastly oversimplifies what are a number of complex topics and their analyses, but it should provide enough of an overview of the content of the symposium to motivate interested parties to pursue the full benefit of its articles. As all of the authors note, it was the states, in the absence of federal action, that have been the leaders in GHG regulation and it is their initiative, experience and expertise that ensure that they will have a role and continued interest in addressing climate change even in the face of federal legislation.

The Role of States in Climate Change Regulation

Posted on January 14, 2009 by Roger Ferland

50 Ariz. L. Rev. 674-938 (2008)

 

            The primary function of the articles produced to date for this blog has been to alert colleagues of current developments of which they should be aware. This article’s purpose, however, is broader. There appear on occasion in law reviews and other publications valuable perspectives on law and policy issues in areas like climate change that are worthy of attention but might escape notice. The above-referenced symposium is such a document. In the spirit of full disclosure, it should be noted that the authors of the majority of the articles are law professors and consequently it is necessary to wade through a great deal of legal theory to glean the valuable nuggets of insight that are prevalent throughout the document.

 

The basis theme of the articles and commentaries is that states have a significant and critical role to play in the reduction of greenhouse gases (GHGs) even after the likely enactment of federal cap-and-trade legislation during the next two years. That role would not seem to be immediately apparent, particularly if EPA proceeds to fill those areas of regulation not covered by cap-and-trade legislation by maximizing the agency’s scope of regulation of GHG’s under the Clean Air Act. Indeed, several of the authors concede that, following national legislation, the climate benefits of state initiatives “would be so small as to be undetectable.” Nevertheless, the authors suggest that states and localities will continue to have a unique and important role to play, not so much in directly achieving reductions in GHGs through regulation, but by providing or encouraging the mechanisms to indirectly achieve those reductions. This facilitation role takes a number of forms:

  • State or local support of research and development of new renewable energy and innovative GHG control technologies through targeted subsidies and tax credits
  • Continuation and expansion of renewable portfolio standards imposed by state public utility regulatory bodies
  • State-level energy efficiency standards
  • Green building codes and certification systems
  • Gap-filling environmental regulation that forces the adoption or diffusion of existing technologies

            The articles also provide a comprehensive treatment of the potential legal barriers and drawbacks to state actions. One of those drawbacks that is discussed by several of the authors is the cost externalization produced by individual state initiatives. The most cited example of a cost externalization is the push by California and other states allied with California for automotive emission standards for GHGs. While California’s actions seem laudable on their face and it is likely that EPA will grant the waiver that California needs to enforce the standards, the cost of complying with the standards will ultimately be borne by the rest of the country even though they had no say in their adoption.

            The primary legal barriers to state action are preemption and its allied concept, the so-called dormant Commerce Clause. The range of legislation currently before Congress addresses preemption by either expressing a clear intent to broadly preempt state initiatives as far as GHG regulation or no preemption language thereby leaving it up to the federal courts to apply general principles of preemption to specific state actions. The authors tend to favor limiting the applicability of preemption, particularly when the state action does not directly impair the sale of allowances or does not directly impair the functioning of the other mechanisms necessary for a successful national cap-and-trade program. Thus, such state measures as renewable energy portfolio requirements, measures that encourage technological innovation or diffusion of existing technology and even product efficiency standards that are more restrictive than national standards, should not be subject to being invalidated because of preemption. Conversely, state restrictions on the sale or purchase of emissions allowances even as part of the direct regulation of GHG emissions would probably be preempted by federal legislation.

            A similar analysis is followed concerning the applicability of the dormant Commerce Clause to state climate change initiatives. A state’s regulations that directly discriminate between, for example, in-state and out-of-state electric utility companies, particularly if the effect of such discrimination was to interfere with the functioning of the national cap-and-trade program, would clearly run afoul of the dormant Commerce Clause. However, the range of state measures discussed in the articles would not seem to raise either dormant or general Commerce Clause issues, particularly if the national legislation, as seems likely, contains a savings clause like that in Section 116 of the Clean Air Act that explicitly allows states to adopt “standards or limitations” that are more stringent than federal standards or limitations.

            Obviously, the foregoing vastly oversimplifies what are a number of complex topics and their analyses, but it should provide enough of an overview of the content of the symposium to motivate interested parties to pursue the full benefit of its articles. As all of the authors note, it was the states, in the absence of federal action, that have been the leaders in GHG regulation and it is their initiative, experience and expertise that ensure that they will have a role and continued interest in addressing climate change even in the face of federal legislation.

An Update on AIG Environmental and the Current Environmental Insurance Market

Posted on January 6, 2009 by David Farer

Significant management changes announced this week by AIG Environmental, and further news in the wake of that announcement, may further impact the changing environmental insurance market. 

 

Joe Boren, longtime Chairman and CEO of AIG Environmental, and John O'Brien, President of the Company, have both resigned. On January 5, AIG Commercial Insurance issued a statement that Russ Johnston has been named President and CEO of AIG Environmental, and that Kim Hanna is now Executive VP and COO of the Company.

 

Over the past ten years, environmental insurance products have been utilized as a key component in many brownfield redevelopment projects and real estate transactions, and have become a common risk-reduction tool in the real estate and manufacturing sectors.

 

Most recently, the leading players in the environmental insurance market have been AIG Environmental, XL Environmental and Ace, with AIG most active in writing cost-cap and pollution legal liability ("PLL") policies for real estate transactions and brownfields projects. Zurich has also played an important role in the market, although historically the company has been particularly risk-adverse. Chubb has been writing PLL policies, but not cost-cap policies.

 

In recent months, however, Zurich has been indicating an enhanced interest in considering the underwriting of projects and transactions that they might previously have declined. Chubb has also expressed an interest in growing its PLL portfolio.

 

Additionally, in the aftermath of AIG's statement on the management changes, the Bermuda-based insurer Ironshore, Inc. announced on January 6 that Joe Boren and John O'Brien have joined a newly established Environmental Insurance division of Ironshore in New York City, with Boren as CEO and O'Brien as President.

 

The impact of AIG’s recent and highly publicized financial woes, and the ensuing reductions in the ratings of AIG's insurance companies, have generated a good deal of speculation about the future of AIG Environmental and whether the Company would maintain its aggressive underwriting of brownfields projects and real estate deals.

 

It is yet to be seen whether the financial problems of the parent company and   management-level changes at AIG Environmental are leading to an overall change in approach, but with XL and Ace still in the market, Zurich and Chubb expressing a greater interest in underwriting, and Ironshore opening a new environmental division with experienced management, there may be more options available to those seeking such policies, and greater competition on policy terms and pricing.

EPA Attempts to Increase Recycling by Redefining Solid Waste

Posted on December 31, 2008 by Karen Aldridge Crawford

73 Fed. Reg. 64668 (Oct. 30, 2008) to be codified at 40 C.F.R. 260-261

 

On October 30, 2008, the EPA revised the definition of solid waste to exclude certain recycled materials under RCRA. The purpose behind this change is twofold: first is to respond to a series of decisions by the U.S. Court of Appeals for the DC Circuit and second is to clarify the RCRA concept of "legitimate recycling."   The EPA estimates that 5600 facilities in 280 industries in 21 economic sectors may be affected by this revision and expects that the revision will encourage recycling of additional hazardous secondary materials. Exclusion of certain hazardous secondary materials from the definition based on how they are reclaimed should result in resource conservation, as well as cost savings to those who engage in beneficial recycling/reclamation in accord with the new rules.

 

Under the new rule, hazardous secondary materials that are legitimately reclaimed may be excluded from regulation as hazardous waste. The new rule excludes certain hazardous secondary materials, such as RCRA-listed sludges, listed by-products, and spent materials that are generated and legitimately reclaimed under the control of the generator. Only those hazardous secondary materials that are handled in non-land based units, e.g., tanks, containers, or containment buildings, are excluded. This exclusion does not apply to hazardous secondary materials that are inherently waste-like, that are used in a manner constituting disposal or used to produce products that are applied to or placed on the land, or that are burned to recover energy or used to produce a fuel or are otherwise contained in fuels. The following activities fall within the exclusion: recycling on-site at the generating facility, recycling off-site within the same company, and recycling through a tolling agreement. Additionally, the rule contains a petition procedure for a generator to obtain a non-waste determination that its recycled hazardous secondary material is not discarded, making it exempt from hazardous secondary materials regulation. Intermediate facilities and recyclers/reclaimers also must comply with provisions of the rule to receive and recycle/reclaim exempt hazardous secondary materials and must meet the financial assurance requirements. Generators who ship to such intermediate facilities or recyclers/reclaimers must make "reasonable efforts", as defined by the new rules, to ensure proper management and legitimate recycling of the exempt materials prior to shipping, and must document their investigatory efforts addressing specific issues defined in the new rules.

 

To be excluded from hazardous secondary materials regulation, the recycling of the hazardous secondary material must be legitimate. Legitimacy of the recycling relies on the following mandatory factors: (1) the hazardous secondary material provides a useful contribution to the recycling process or product and (2) the recycling process produces a valuable product or intermediate. The EPA will also consider two other factors, which are not mandatory: (1) the hazardous secondary material should be managed as a valuable commodity and (2) the final product of the recycling cannot contain significantly higher levels of hazardous constituents than are in analogous products.

 

The EPA received hundreds of comments on the long-awaited new rule (first proposed five years earlier), raising multiple issues, including the scope of the new rule and whether the EPA had the legal authority to make these changes. In particular, the EPA received many comments from environmental groups and the waste treatment and recycling industry regarding the EPA's authority to define when recyclable hazardous secondary materials are solid wastes and how. Other commenters argued that the EPA needed stronger conditions to protect human health and the environment before it could lawfully claim that excluded materials are not discarded. Additionally, the hazardous waste generating industry disputed the EPA's authority to promulgate the new rule, arguing that the EPA has no authority to regulate such recycling. 

 

The EPA also received extensive comments requesting that the scope of the rule be expanded to include hazardous secondary materials used in a manner constituting disposal and hazardous secondary materials burned for energy recovery. The EPA maintains, however, that these are outside the scope of the solid waste exclusion's focus on reclamation. 

 

Additionally, most states, the environmental community, and the waste management industry argued that all four of the legitimacy factors should be mandatory requirements for a recycling activity to be considered legitimate recycling. Industry, however, had some commenters who supported the proposed structure and others who preferred that the factors be balancing factors. The EPA compromised between the two approaches, instituting two mandatory requirements and two non-mandatory factors.

 

The revised "solid waste" definition provides opportunities to recycle hazardous secondary materials but also includes many details that regulated industries will need to be aware of and implement to ensure their recycling of hazardous secondary materials falls within the newly crafted exception to hazardous secondary materials regulation.

Can Clean Energy Save America?

Posted on December 29, 2008 by Christopher Davis

America, and our new President, face a daunting array of challenges as we close out 2008 and enter the New Year. These include a general economic meltdown, widespread job losses, a collapsing auto industry, unsustainable dependence on foreign oil, climate change and a protracted war in Iraq, among others. Many of these problems relate directly or indirectly to our production and consumption of energy.

The initial focus of the incoming Obama administration is rapid deployment of a massive economic recovery package. Early indications, including the President-elect’s post-election statements and his cabinet-level appointments, suggest that “green jobs” and “green infrastructure” are likely to play a prominent role in Mr. Obama’s efforts to restart the U.S. economy, as reflected in the Presidential transition website.  A number of commentators have talked of a “Green New Deal” as the key to revitalizing our economy. They may just be right.

 

From 2003 through the third quarter of 2008, private U.S. investment in “clean technologies” (mostly alternative energy-related) surged, totaling about $2.5 billion in 2007 and at least $3 billion in the first three quarters of 2008. However, due primarily to the credit crunch and unavailability of project financing for capital-intensive renewables projects such as wind farms, such investment sagged substantially in the fourth quarter. Despite considerable investor interest, many renewable energy projects have been put on hold. This is bad for both the economy and the environment.

There is much that the federal -- and state -- governments can do to help stimulate investment in clean energy, using both carrots (subsidies) and sticks (regulatory mandates). On the subsidy side, government loans or loan guarantees could do much to ease the credit crunch and facilitate the financing of renewables projects. Other tools include expanding tax credits, governmental procurement of renewable energy, increased federal research and development grants for clean energy technologies, etc. Potential mandates include a federal renewable portfolio standard for electric utilities, increased auto fuel efficiency standards, stronger building and appliance efficiency standards and regulation of greenhouse gas emissions via EPA rule or cap-and trade climate change legislation. Such measures could materially improve the economics of alternative energy production and boost efficient energy use.

Governmental and private sector investment in renewable energy and other “clean technologies – including wind, solar, geothermal and tidal power; advanced biofuels, “smart-grid” development, equipment efficiency, energy storage, green buildings, electric cars and “clean coal” technology – can do much to reinvigorate our economy, increase our energy security and reduce our greenhouse gas emissions. Such investment can also help to jump-start American innovation and entrepreneurship, reinvent our declining manufacturing sector, and improve our balance of payments through reduced oil imports and clean technology exports. Moreover, policies that promote sustainable energy production and consumption can help create a shared sense of national purpose to which everyone can contribute.

So can clean energy save America? We may soon get a chance to find out.

Can Clean Energy Save America?

Posted on December 29, 2008 by Christopher Davis

America, and our new President, face a daunting array of challenges as we close out 2008 and enter the New Year. These include a general economic meltdown, widespread job losses, a collapsing auto industry, unsustainable dependence on foreign oil, climate change and a protracted war in Iraq, among others. Many of these problems relate directly or indirectly to our production and consumption of energy.

The initial focus of the incoming Obama administration is rapid deployment of a massive economic recovery package. Early indications, including the President-elect’s post-election statements and his cabinet-level appointments, suggest that “green jobs” and “green infrastructure” are likely to play a prominent role in Mr. Obama’s efforts to restart the U.S. economy, as reflected in the Presidential transition website.  A number of commentators have talked of a “Green New Deal” as the key to revitalizing our economy. They may just be right.

 

From 2003 through the third quarter of 2008, private U.S. investment in “clean technologies” (mostly alternative energy-related) surged, totaling about $2.5 billion in 2007 and at least $3 billion in the first three quarters of 2008. However, due primarily to the credit crunch and unavailability of project financing for capital-intensive renewables projects such as wind farms, such investment sagged substantially in the fourth quarter. Despite considerable investor interest, many renewable energy projects have been put on hold. This is bad for both the economy and the environment.

There is much that the federal -- and state -- governments can do to help stimulate investment in clean energy, using both carrots (subsidies) and sticks (regulatory mandates). On the subsidy side, government loans or loan guarantees could do much to ease the credit crunch and facilitate the financing of renewables projects. Other tools include expanding tax credits, governmental procurement of renewable energy, increased federal research and development grants for clean energy technologies, etc. Potential mandates include a federal renewable portfolio standard for electric utilities, increased auto fuel efficiency standards, stronger building and appliance efficiency standards and regulation of greenhouse gas emissions via EPA rule or cap-and trade climate change legislation. Such measures could materially improve the economics of alternative energy production and boost efficient energy use.

Governmental and private sector investment in renewable energy and other “clean technologies – including wind, solar, geothermal and tidal power; advanced biofuels, “smart-grid” development, equipment efficiency, energy storage, green buildings, electric cars and “clean coal” technology – can do much to reinvigorate our economy, increase our energy security and reduce our greenhouse gas emissions. Such investment can also help to jump-start American innovation and entrepreneurship, reinvent our declining manufacturing sector, and improve our balance of payments through reduced oil imports and clean technology exports. Moreover, policies that promote sustainable energy production and consumption can help create a shared sense of national purpose to which everyone can contribute.

So can clean energy save America? We may soon get a chance to find out.

UPDATE ON NAAQS OZONE LITIGATION

Posted on December 18, 2008 by John Crawford

On March 27, 2008, the Environmental Protection Agency (EPA) announced the final Ozone NAAQS Rule which requires airborne concentrations of ozone to be lowered from 80 ppb (actually 84 ppb due to rounding allowances) to 75 ppb for both primary and secondary standards. Industrial and manufacturing groups balked at the more stringent standard, claiming it was unnecessary and would place an undue hindrance on economic development. In opposition to this viewpoint, environmental groups contend that the new standard fails to adequately protect human health and the environment and that the standard should be lower.

 

Not surprisingly, due to the contrasting views, the standard was challenged. Asserting that the Ozone NAAQS Rule was too stringent, the State of Mississippi filed a Petition for Review,  in Mississippi v. EPA, No. 08-1200 (D.C. Cir., filed May 23, 2008). Shortly thereafter, the Missouri Department of Natural Resources and a number of trade/industrial groups intervened on behalf of Mississippi. Environmental groups, led by the American Lung Association, Appalachian Mountain Club and Natural Resources Defense Council, also filed a challenge to the ozone standard in American Lung Association v. EPA, No. 08-1203 (D.C. Cir.) which was later consolidated with the Mississippi case.

 

The various arguments, both for and against the standard, have not yet been briefed. In fact, Harold Pizzetta, lead attorney for the State of Mississippi, has stated that the two sides have yet to come to an agreement on a briefing schedule, leading one to conclude that there is likely very little the two camps will agree on.  

 

The question as to why Mississippi led the charge/challenge against the new ozone standard is an interesting one. While current data suggest the new standard will have direct impacts on only 13 of Mississippi’s 82 counties, the counties impacted are among the leaders in the state’s economy. Among those Mississippi counties that would not meet the 75 ppb standard are DeSoto County, the state’s and one of the nation’s fast growing counties, and Jackson County, home to the state’s largest employer and numerous other manufacturing facilities. Mr. Pizzetta believes the cost of compliance with the standard – while specifically not a factor the Court may consider – provides justification for the state’s challenge.  Additionally, Pizzetta stated that scientific evidence suggests that the data used by EPA in setting the standard was flawed.   Moreover, Mississippi’s leaders believe the 75 ppb standard will be met in the short term if the Clean Air Interstate Rule (CAIR) is implemented. To that end, the state has joined with some of the same groups and entities that it opposes in the ozone litigation and requested that the D.C. Circuit stay the vacatur of CAIR.   

 

In opposition to Mississippi’s argument, the environmental groups will likely point to the work by the Clean Air Scientific Advisory Committee (CASAC) which recommended that the primary ozone standard be set within the range of 60 – 70 ppb.   In addition, it’s believed that EPA originally sought to set the standard within this range and was overruled by the White House.   Thus, EPA is left in a precarious situation in that the agency must justify why its standard is neither too strict nor too lenient.   The current view by a number of environmental litigators is that the current litigation will be decided on the scientific evidence and not on a constitutional argument, as the 1997 ozone NAAQS litigation was in the American Trucking case.

 

In regard to the actual timeframes for action set forth in the ozone rule, states must make initial designations of attainment/non-attainment by March 2009, with EPA making final designations by March 2010. Thereafter, State Implementation Plans (SIPs) must be submitted to EPA by 2013, with attainment to be achieved between 2014 and 2030, depending on severity. Based on the movement of the existing litigation, it’s doubtful a decision will be made prior to the time period set for final designations. Additionally, litigants do not believe the court will enter a stay of the new rule. 

 

As a result, states will be left with no choice but to make designations in conformity with the 75 ppb standard.

 

Article written by:   

            Gary Rikard

            Michael Caples

            Butler, Snow, O’Mara, Stevens & Cannada, PLLC

            P.O. Box 22567
            Jackson, MS 39225-2567

UPDATE ON NAAQS OZONE LITIGATION

Posted on December 18, 2008 by John Crawford

On March 27, 2008, the Environmental Protection Agency (EPA) announced the final Ozone NAAQS Rule which requires airborne concentrations of ozone to be lowered from 80 ppb (actually 84 ppb due to rounding allowances) to 75 ppb for both primary and secondary standards. Industrial and manufacturing groups balked at the more stringent standard, claiming it was unnecessary and would place an undue hindrance on economic development. In opposition to this viewpoint, environmental groups contend that the new standard fails to adequately protect human health and the environment and that the standard should be lower.

 

Not surprisingly, due to the contrasting views, the standard was challenged. Asserting that the Ozone NAAQS Rule was too stringent, the State of Mississippi filed a Petition for Review,  in Mississippi v. EPA, No. 08-1200 (D.C. Cir., filed May 23, 2008). Shortly thereafter, the Missouri Department of Natural Resources and a number of trade/industrial groups intervened on behalf of Mississippi. Environmental groups, led by the American Lung Association, Appalachian Mountain Club and Natural Resources Defense Council, also filed a challenge to the ozone standard in American Lung Association v. EPA, No. 08-1203 (D.C. Cir.) which was later consolidated with the Mississippi case.

 

The various arguments, both for and against the standard, have not yet been briefed. In fact, Harold Pizzetta, lead attorney for the State of Mississippi, has stated that the two sides have yet to come to an agreement on a briefing schedule, leading one to conclude that there is likely very little the two camps will agree on.  

 

The question as to why Mississippi led the charge/challenge against the new ozone standard is an interesting one. While current data suggest the new standard will have direct impacts on only 13 of Mississippi’s 82 counties, the counties impacted are among the leaders in the state’s economy. Among those Mississippi counties that would not meet the 75 ppb standard are DeSoto County, the state’s and one of the nation’s fast growing counties, and Jackson County, home to the state’s largest employer and numerous other manufacturing facilities. Mr. Pizzetta believes the cost of compliance with the standard – while specifically not a factor the Court may consider – provides justification for the state’s challenge.  Additionally, Pizzetta stated that scientific evidence suggests that the data used by EPA in setting the standard was flawed.   Moreover, Mississippi’s leaders believe the 75 ppb standard will be met in the short term if the Clean Air Interstate Rule (CAIR) is implemented. To that end, the state has joined with some of the same groups and entities that it opposes in the ozone litigation and requested that the D.C. Circuit stay the vacatur of CAIR.   

 

In opposition to Mississippi’s argument, the environmental groups will likely point to the work by the Clean Air Scientific Advisory Committee (CASAC) which recommended that the primary ozone standard be set within the range of 60 – 70 ppb.   In addition, it’s believed that EPA originally sought to set the standard within this range and was overruled by the White House.   Thus, EPA is left in a precarious situation in that the agency must justify why its standard is neither too strict nor too lenient.   The current view by a number of environmental litigators is that the current litigation will be decided on the scientific evidence and not on a constitutional argument, as the 1997 ozone NAAQS litigation was in the American Trucking case.

 

In regard to the actual timeframes for action set forth in the ozone rule, states must make initial designations of attainment/non-attainment by March 2009, with EPA making final designations by March 2010. Thereafter, State Implementation Plans (SIPs) must be submitted to EPA by 2013, with attainment to be achieved between 2014 and 2030, depending on severity. Based on the movement of the existing litigation, it’s doubtful a decision will be made prior to the time period set for final designations. Additionally, litigants do not believe the court will enter a stay of the new rule. 

 

As a result, states will be left with no choice but to make designations in conformity with the 75 ppb standard.

 

Article written by:   

            Gary Rikard

            Michael Caples

            Butler, Snow, O’Mara, Stevens & Cannada, PLLC

            P.O. Box 22567
            Jackson, MS 39225-2567

What to Watch in 2009: Carbon Credits Are a Hot "Commodity"

Posted on December 16, 2008 by Michèle Corash

2009 promises a fascinating year, in which carbon emissions – the newest environmental commodity – will continue to influence both world markets and world politics. The performance of the carbon market, and the emergence of new regulatory schemes to cap carbon, particularly in the U.S., is sure to be closely watched by many politicians, environmentalists, and players in the burgeoning carbon trading industry. While the carbon market’s outlook is healthy, how the U.S. enters it – whether it can find the political will for a national cap-and-trade system, and ensure that carbon emissions receive favorable domestic tax treatment – could mean the difference between the limelight or a bit part for the global carbon show.

 

Carbon emissions markets: strong value, strong growth

 

Despite the global economic tumult, recent reports by carbon market watchers such as New Carbon Finance[1] predict that the total value of carbon market trades will reach $116 billion by the end of 2008. This reflects a rise in both the volume of carbon emissions transacted (expected to grow 31% in 2008), and the value of carbon emission credits (projected to rise by 80% this year). What’s more, the carbon market compares well to other commodity markets: private investments in carbon funds represented 3.2% of all private commodity investments at the end of 2007.

 

The continued growth in value is linked to high prices for the two basic types of carbon commodities: European Union Allowances (EUAs), and Certified Emission Reductions (CERs). EUAs are the basic carbon emission unit currently traded in the European Union’s Emissions Trading System (EU ETS). EUAs account for 79% of all carbon trades, and their value has averaged $34 per ton through 2008.[2] For their part, CER trades represent 17% of the transacted value in the carbon market through October 2008.   

 

Momentum building in the United States for federal cap and trade

 

The widely anticipated initiation of a federal cap and trade system in the U.S., as has been openly called for by the incoming Obama administration, as well as many business and industry leaders, is expected to increase the volume and value of the carbon market exponentially. With the entry of the U.S., the global market could top $3 trillion by 2020. The strength of cap-and-trade, though, lies in its design, and the features built into a U.S. program in the coming months will be driven as much by recession-era politics as by tested economics and sound science.

 

Nevertheless, Obama’s environmental appointments are already writing “cap and trade” on the wall. Lisa Jackson, picked by President-elect Obama to head the Environmental Protection Agency, is board vice-president of the Regional Greenhouse Gas Initiative,[3] a consortium of ten states whose mandatory cap and trade system will hold its second allowances auction[4] on December 17, 2008. Within the White House itself, Carol Browner, an advocate of regulating carbon emissions who headed the EPA during the Clinton administration, is returning to a top federal environmental job with her appointment as Obama’s “climate czar.” 

 

Meanwhile, it may be up to Steven Chu,[5] Nobel prize-winning director of the Lawrence Berkeley National Laboratory and energy secretary nominee, to build bridges between climate scientists and those (including a sizable minority of members of Congress) who still believe that climate change is mostly a theory. Chu is being hailed[6] as a scientist, rather than a political appointee, in a position that could deeply affect the U.S.’s transition to a less carbon-intensive economy. Chu may use his position to subsidize more practically-applicable research into alternative energy forms. But at least as important will be his role in the politics of addressing climate change, where skepticism, fear of adverse economic impacts, and firmly rooted consumption habits are major challenges.

 

Where there is potential for profit, there is also potential for taxes

 

Without a carbon cap and trade program in place, questions still revolve around the nature of this new “commodity” and how it will be treated under the law. Considering the only certainties are death and taxes, it is safe to assume that even carbon credits will receive a visit from the tax man. So far, no statutory provisions or IRS authority have yet issued on the federal income tax treatment of the carbon credits. Gain or loss from the sale of the carbon credits, and amounts spent to acquire the carbon credits, is as yet undefined for federal income tax purposes.

Some predictions are possible, though. Under the sulfur dioxide emissions trading program[7] of the 1990 Clean Air Act, the IRS ruled[8] that the allocation of sulfur dioxide emissions credits do not result in gross income to electric utilities when issued. More recently, the IRS addressed the federal income tax treatment of gain from the sale of excess foreign carbon credits granted under the EU ETS. A June 2008 ruling held that because they were intangible property used in the foreign corporation's trade or business, gain from the sale of surplus carbon credits did not constitute “foreign personal holding company income” for purposes of the “controlled foreign corporation” rules of the Internal Revenue Code [9].  Apart from the caveat that the features of a federal program in the U.S. may differ from the EU ETS, this strongly suggests that carbon credits under a cap and trade program may be treated as intangible assets, giving rise to capital gain or loss rather than ordinary income or loss. If the projected trillion dollar market is realized, then the potential tax revenue will be, needless to say, worth watching.

With the specter of a multi-trillion dollar market, an ideological reversal in Washington, and the expiration of the Kyoto Protocol on the horizon, this new carbon commodity inevitably will become ensnared in the continuing debates over economic recovery. Regardless of the science, greenhouse gases will undoubtedly have an impact on 2009. 

 

This article was written by William Sloan and Rachel Peterson of Morrison & Foerster LLP's Cleantech practice group.

 


[1] Research by New Carbon Finance, at http://www.newcarbonfinance.com/.

[2] One EUA represents one ton of carbon dioxide-equivalent emissions; each of the 12,000 facilities that fall within the cap and trade system has been assigned an emissions cap, and must submit that number of allowances by the end of 2012. At the market’s most basic level, facilities whose emissions exceed the cap are trying to buy EUAs, and those whose emissions fall below it have EUAs to sell.

[8] Revenue Ruling 92-16, 1992-1 C.B. 13; see also Revenue Procedure 92-91, 1992-2 C.B. 503.

[9] Private Letter Ruling 200825009 (June 20, 2008).

 

2009 Annual Meeting - SAVE THE DATE!

Posted on December 15, 2008 by Rachael Bunday

The American College of Environmental Lawyers is planning its 2009 Annual Meeting for October 1-3 in Portland, Maine. A majority of the conference will be held at the Portland Regency Hotel (www.theregency.com). More information and an agenda to follow at a later date.

THE ROLE OF RENEWABLE ENERGY IN THE REDUCTION OF GREENHOUSE GASES

Posted on December 5, 2008 by Linda Bullen

Despite some early skepticism, the concept that carbon dioxide and other greenhouse gases contribute to global warming is now a widespread, if not universally accepted, belief. This link was acknowledged by the U.S. Supreme Court in Massachusetts v. Environmental Protection Agency, 127 S.Ct. 1438, 1446 (2007). With the recognition of this relationship has come an increased awareness of the role that traditional energy production facilities have played in global warming, which, in turn, has resulted in an increased interest in the development of renewable energy. 

 

            Renewable energy is energy which, by definition, is naturally replenished. The most commonly recognized forms of renewable energy are sunlight, wind, geothermal, water and biofuel/biomass sources. While lawmakers throughout the U.S. have passed legislation requiring that a percentage of electricity must be derived from renewable resources, the state of Nevada has been a leader in mandating that renewable energy be a made a significant part of electric provider's portfolios. In 1997, Nevada’s legislature passed into law in the state’s first “Renewable Portfolio Standard” which required that electric providers in the state acquire renewable electric generation or purchase renewable energy credits so that each utility had 1 percent of total consumption in renewables. In 2001, the standard was modified to require that, by the year 2013, 15 percent of electricity be derived from renewables.

 

            While renewable energy facilities are generally environmentally preferable to their fossil-fuel counterparts, they are not without their impacts to both the human and natural environments. For example, renewable energy sources are often less concentrated than fossil fuels, thereby requiring a significantly larger geographic footprint for renewable energy facilities. In addition, certain types of renewables have significant visual impact, and some renewable projects utilize other, sometimes precious, resources such as water.

 

            These impacts are, in the case of most large scale electrical generation projects, analyzed in the course of the environmental review process mandated by the National Environmental Policy Act (“NEPA”). NEPA requires not only analysis of the environmental impacts of proposed projects when such projects have a federal nexus and are deemed to have a significant impact on the environment, but also requires mitigation of such impacts or rejection of projects where the environmental impact is significant and cannot be adequately mitigated. 

 

            Development of renewable energy projects requires careful examination of science, law and public policy to ensure compliance with all applicable legal requirements and protection of the environment. The process is lengthy, costly, and at times contentious, but each completed project brings us closer to meeting the nation's energy needs without contributing to global warming.

Environmental Appeals Board Tees Up Carbon Dioxide Issue to Obama Administration

Posted on December 4, 2008 by Stephen M. Bruckner

In a decision that will have far-reaching implications for coal-fired power plants, EPA's Environmental Appeals Board ("EAB") ruled on November 14, 2008 that EPA's Region 8 must reconsider whether carbon dioxide ("CO2") is a regulated air pollutant covered by the Clear Air Act's Prevention of Significant Deterioration ("PSD") permitting program. Because there is so little time left for EPA to finalize its decision, the EAB's ruling effectively drops this hot button issue squarely on the doorstep of the incoming Obama administration.

 

            The procedural posture of this case is a bit unusual. Deseret Power Electric Cooperative ("Deseret") operates a coal-fired power plant, the Bonanza Power Plant, on the Uintah and Ourah Indian Reservation in Utah. Deseret wants to build a new waste-coal-fired plant at the same location. The new plant needs a "PSD permit" to regulate its emissions under the Clean Air Act. A PSD permit requires the installation of "Best Available Control Technology", or "BACT", for regulated pollutants.

 

            Most PSD permits are issued by state environmental agencies. However, because Deseret's power plant is located on an Indian reservation, EPA's Region 8 is the permitting authority. EPA issued the PSD permit to Deseret on August 30, 2007. The Sierra Club, which had submitted comments to EPA on the proposed permit, appealed the permitting decision to the Environmental Appeals Board. Sierra Club argued that the permit violated the Clean Air Act because the Act requires BACT for each pollutant "subject to regulation" under the Act. [Clean Air Act §§ 165(a)(4), 168(3); 42 U.S.C. §§ 7475(a)(4), 7478(3)].

 

            The EAB rejected the Sierra Club's argument. The EAB carefully reviewed the Supreme Court's landmark decision in Massachusetts v. EPA, 549 U.S. 497 (2007), which held that CO2 is within the Clean Air Act's definition of "air pollutant". The EAB noted that the Massachusetts decision did not address whether carbon dioxide is a pollutant "subject to regulation" under the Clean Air Act. The EAB therefore rejected the Sierra Club's argument that the phrase "subject to regulation" has a plain meaning that requires Region 8 to establish a CO2 limit in Deseret's permit.

 

            But that was pretty much the end of the good news for EPA and Deseret. In making its permit decision on CO2, EPA Region 8 relied on prior EPA interpretations addressing when a pollutant is considered to be "regulated". The EAB ruled that the reasons cited by Region 8 for its decision were not sufficient. The EAB then sent the case back to Region 8 to 'reconsider whether or not to impose a CO2 BACT limit in light of the Agency's discretion to interpret, consistent with the CAA [Clean Air Act], what constitutes a "pollutant subject to regulation under the Act."' [Deseret decision at p. 63]. Recognizing the potential impact of its ruling and of Region 8's further consideration, the EAB observed that because the issue "has implications far beyond this individual permitting proceeding", Region 8 should decide whether it would be better to address the matter in "an action of nationwide scope". [Deseret decision, pp. 63-64].

 

            Clearly, then, the Sierra Club was denied the clear victory it sought; namely, to require BACT for carbon dioxide in all coal-fired power plant PSD permits. On the other hand, Deseret and other electric utilities seeking PSD permits are left hanging as to whether CO2 will be a regulated pollutant under the PSD program. Although EPA probably wants to resolve this case before the expiration of President Bush's term, as a practical matter, it simply cannot get it done in little more than a month. Thus, the incoming Administration must squarely confront an issue that could shape the climate change debate and, ultimately, energy policy in this country. EPA most likely will take the hint from the EAB and handle the matter through "an action of nationwide scope". How it turns out is anyone's guess, but it is fair to say that the new EPA will have more climate change hawks in policy positions than the current Agency.

Environmental Appeals Board Tees Up Carbon Dioxide Issue to Obama Administration

Posted on December 4, 2008 by Stephen M. Bruckner

In a decision that will have far-reaching implications for coal-fired power plants, EPA's Environmental Appeals Board ("EAB") ruled on November 14, 2008 that EPA's Region 8 must reconsider whether carbon dioxide ("CO2") is a regulated air pollutant covered by the Clear Air Act's Prevention of Significant Deterioration ("PSD") permitting program. Because there is so little time left for EPA to finalize its decision, the EAB's ruling effectively drops this hot button issue squarely on the doorstep of the incoming Obama administration.

 

            The procedural posture of this case is a bit unusual. Deseret Power Electric Cooperative ("Deseret") operates a coal-fired power plant, the Bonanza Power Plant, on the Uintah and Ourah Indian Reservation in Utah. Deseret wants to build a new waste-coal-fired plant at the same location. The new plant needs a "PSD permit" to regulate its emissions under the Clean Air Act. A PSD permit requires the installation of "Best Available Control Technology", or "BACT", for regulated pollutants.

 

            Most PSD permits are issued by state environmental agencies. However, because Deseret's power plant is located on an Indian reservation, EPA's Region 8 is the permitting authority. EPA issued the PSD permit to Deseret on August 30, 2007. The Sierra Club, which had submitted comments to EPA on the proposed permit, appealed the permitting decision to the Environmental Appeals Board. Sierra Club argued that the permit violated the Clean Air Act because the Act requires BACT for each pollutant "subject to regulation" under the Act. [Clean Air Act §§ 165(a)(4), 168(3); 42 U.S.C. §§ 7475(a)(4), 7478(3)].

 

            The EAB rejected the Sierra Club's argument. The EAB carefully reviewed the Supreme Court's landmark decision in Massachusetts v. EPA, 549 U.S. 497 (2007), which held that CO2 is within the Clean Air Act's definition of "air pollutant". The EAB noted that the Massachusetts decision did not address whether carbon dioxide is a pollutant "subject to regulation" under the Clean Air Act. The EAB therefore rejected the Sierra Club's argument that the phrase "subject to regulation" has a plain meaning that requires Region 8 to establish a CO2 limit in Deseret's permit.

 

            But that was pretty much the end of the good news for EPA and Deseret. In making its permit decision on CO2, EPA Region 8 relied on prior EPA interpretations addressing when a pollutant is considered to be "regulated". The EAB ruled that the reasons cited by Region 8 for its decision were not sufficient. The EAB then sent the case back to Region 8 to 'reconsider whether or not to impose a CO2 BACT limit in light of the Agency's discretion to interpret, consistent with the CAA [Clean Air Act], what constitutes a "pollutant subject to regulation under the Act."' [Deseret decision at p. 63]. Recognizing the potential impact of its ruling and of Region 8's further consideration, the EAB observed that because the issue "has implications far beyond this individual permitting proceeding", Region 8 should decide whether it would be better to address the matter in "an action of nationwide scope". [Deseret decision, pp. 63-64].

 

            Clearly, then, the Sierra Club was denied the clear victory it sought; namely, to require BACT for carbon dioxide in all coal-fired power plant PSD permits. On the other hand, Deseret and other electric utilities seeking PSD permits are left hanging as to whether CO2 will be a regulated pollutant under the PSD program. Although EPA probably wants to resolve this case before the expiration of President Bush's term, as a practical matter, it simply cannot get it done in little more than a month. Thus, the incoming Administration must squarely confront an issue that could shape the climate change debate and, ultimately, energy policy in this country. EPA most likely will take the hint from the EAB and handle the matter through "an action of nationwide scope". How it turns out is anyone's guess, but it is fair to say that the new EPA will have more climate change hawks in policy positions than the current Agency.

Wind Power Project Permitting: Demonstrating a Need for Clean Power and Evaluating the Economic and Wildlife Impacts of Wind Farms

Posted on November 30, 2008 by Jeff Thaler

Al Gore wins the Nobel Peace Prize. “Climate Change” and “Global Warming” are now topics of daily news articles, web debates, and dinnertime conversations. Many states are not waiting for the federal government, and instead are undertaking initiatives to reduce greenhouse gas emissions. The most efficient and available clean energy source across the U.S. at this time – wind power – is drawing the attention not only of American energy companies and developers, but also from those around the world who seek to build wind farms in the U.S. Yet proposed wind projects, including one represented by this article’s author, still often face fierce local opposition from certain environmental groups claiming unreasonable biological, economic, or scenic impacts.            As with climate change, there has been a growing volume of objective empirical data over the past few years assessing not only the need for clean renewable energy, but also the economic and environmental benefits of such energy sources as wind power. This article can only briefly touch on some of the results, and guide the way for the reader to find additional detailed information and reports.

Model Wind Power Framework and the Need for Wind Power in 

Maine and New England

           In May 2007 Maine Governor John Baldacci created a Task Force on Wind Power Development in Maine to completely review and overhaul the regulatory process for review of proposed wind power projects. Although Maine has one of the largest on-and-off-shore wind resources in United States, it has very little installed wind capacity—only one wind farm with 42 MW of installed capacity from 28 turbines.[1]  The Task Force and interested parties have been compiling data and studies from across the country about all aspects of wind power development, and conducting hearings on the topics.[2]  Several consulting firms were retained by some environmental groups to prepare and recently present a model wind power framework for Maine and New England, including analysis of such data as regional renewable energy demand targets, on- and off-shore wind potential, a regional supply curve, and the likely or necessary quantities and locations of future wind power development over the next 20 years.[3]

            Presently, wind projects proposed in Maine’s rural areas (the “unorganized territories”) must demonstrate a need for the project in the community, area, and state.  Since the July 2006 developer hearing presentations coordinated by the author, proof of such need generally has focused upon not only the traditional benefits of tax payments and jobs, but also such factors as: (a) decreasing the state’s over-reliance on fossil fuels, thus reducing the cost and price volatility of electricity; (b) assisting the state in meeting its environmental targets to increase its renewable energy portfolio and reduce greenhouse gas emissions; and (c) providing health benefits to local and state residents by decreasing air pollution. Maine has the largest renewable portfolio standard in the country, and a recent law requiring an additional 10 percent of its energy to be generated from renewable energy sources by 2017.

Climate Change and Greenhouse Gas Initiatives

           Like many states, Maine has a Climate Action Plan. Maine has also implemented a greenhouse gas initiative by legislation and by entry into the Northeast’s Regional Greenhouse Gas Initiative (RGGI), which involves all states from Maine south to Maryland with the exception of Pennsylvania. The RGGI is a market-based cap and trade program designed to reduce carbon dioxide emissions from electric power plants. It will be fully launched on January 1, 2009, affecting electric plants generating more than 25 megawatts that were on-line before 1/1/05 and whose fuel inputs are 50 percent or more from coal, natural gas, or oil; for post-1/1/05 plants, RGGI applies if fossil fuel makes up 5 percent or more of the annual heat input. The RGGI goal is that by 2018, each state’s emissions budget will be 10 percent below its initial CO2 emissions. Reduced emissions

(through using clean, renewable energy like wind) help states meet their RGGI goals.[4]

            On a more global basis, Al Gore’s 2007 co-Nobel Laureate was the Intergovernmental Panel on Climate Change (IPCC), which has been busy issuing a number of detailed reports for several years. In November 2007 the IPCC issued its “Synthesis Report,” intended to create for policymakers a single unified picture of the science, impacts, and mitigation of climate change. The report reaffirms that global warming is a scientific fact; that it is largely caused by human activities; that without immediate intervention measures over this century, there will be many serious changes including more droughts and intense storms, sea level rise, and habitat loss; and that developing many more clean, renewable energy sources is a necessary step in the effort to avoid ecological catastrophes for our children’s and grandchildren’s generations.[5]

                                     

Climate Change Impacts on Maine and the Northeast

            Application of the IPCC’s research to Maine and the Northeast was recently completed in the form of The Northeast Climate Impacts Assessment (NECIA), a collaborative effort between the Union of Concerned Scientists (UCS) and a team of independent experts.[6]  Their peer-reviewed studies and predictions focused both on the region itself as a whole and on the individual Northeastern States, and warned of dramatic and damaging changes to our weather patterns, coastlines, forests, wildlife, public health, and lifestyles. As Maine’s DEP Commissioner said in response to the report: “Global warming is the largest threat facing our environment today. The ecological and human health impacts are potentially devastating to Maine’s character and quality of life.” The same could be said for the region, the country, and the world.

            The NECIA report on impacts on Maine’s forests, wildlife, and economy[7]

mirrors predictions made nine years earlier by the Environmental Protection Agency’s “Climate Change and Maine”.[8]  Sea level rise, changes in forest, bird, and pest species, and resultant economic dislocations to the forest products and other business sectors were predicted in 1998 and again in 2007—only now, the pace of climate change has been moving more rapidly than anyone expected.

Economic Impacts of Wind Farms

Although some opponents of wind power claim that turbine visibility will harm local tourism and property values, recent studies show neutral to positive impacts on tourism and no adverse effects on real estate markets. For example, a 2004-5 federal government report reviewed more than a dozen wind projects across the United States, from New England to the West Coast, and found that wind power has a positive effect on rural economies.[9] 

Likewise, many studies focusing on property values have shown no adverse effects on property values from wind farm development. For example:

  •  
    • A January 2007 report by a certified real estate appraisal firm focusing on property sales from 1998 to 2006 near two utility-sized Wisconsin wind farms found they caused no measurable differences to home values.[10]
    • An April 2006 Bard College study of a 20-turbine wind project in Madison County, New York analyzed 280 single-family residential sales from 1996 to 2005 within five miles of the turbines. There were “no measurable effects of windfarm visibility on property transaction values…even when concentrating on homes within a mile of the facility.”[11]

A 2003 study by the Renewable Energy Policy Project of 25,000 property sales within view of ten wind farms in seven states, including states in New England, concluded that “the statistical analysis does not support a contention that sales within the view shed of wind developments suffer or perform poorer than in a comparable region. For the great majority of projects in all three of the cases studied, the property values in the view shed actually go up faster than values in the comparable region.”[12]

Key Wildlife Impacts of Wind Farms

            In order to address concerns of regulatory agencies and wind power critics, many studies have been conducted on actual and potential impacts of wind farms on wildlife  (particularly migratory birds) and, more recently, bats. A summary of known avian collisions with wind turbines outside of California (which had older, more poorly-designed turbines) indicates a fatality rate of 1.83 per turbine per year.[13]   More recently, a study at the Maple Ridge Wind Farm in New York estimated fatalities of between 3-9 birds/turbine/season (season being about 125-152 days). [14]

            To compare approximately 2-4 birds/turbine/year with fatality events reported at other types of tall structures, such as tall communication towers and buildings, one can look at the following table to see that mortality at wind energy projects is many orders

of magnitude lower than mortality from these and other sources:[15]


Structure/Cause

Total Bird Fatalities

Vehicles

60-80 million

Buildings and windows

98-980 million

Power lines

10,000 – 174 million

Communications Towers

4-50 million

Agricultural Pesticides

67 million

Housecats

100 million

Wind Generation Facilities

10,000 – 40,000

There have been few studies on bat mortality. Most have focused on Virginia and West Virginia where there are more caves as well as largely deciduous forest habitats. Outside of a study at Searsburg, Vermont (P. Kerlinger 2002), which failed to document any bird or bat mortality, there are currently no published studies of bat mortality for wind power facilities in New England. For facilities located on temperate forest ridges in the Southeast and Mid-Atlantic, fatality rates range from 15.3 to 41.1 bats per megawatt (MW) of installed power, per year.[16]    Bat fatalities appeared to be greater at turbines nearer to wetlands (Jain et al 2007). Wind turbines on higher, more windy and sub-alpine ridgelines are expected to have far fewer bat fatalities.

The primary reason for very low rates of bird and bat mortality is that they migrate at altitudes wellabove the rotor-swept area. All post-2004, published (59) and unpublished (72) studies to date have consistently documented that birds and bats fly well above (i.e., 1000 to 2000 feet above) the turbine blades during migration periods.

Conclusions

Not only environmental lawyers, but all concerned decision-makers and citizens must confront the largest threat to our public’s environment, health, and property in decade: climate change from global warming due to greenhouse gas emissions. This century’s realities require prompt and decisive action on many fronts, only one of which is the expedited permitting and construction of clean, renewable, and indigenous sources of power for our homes and businesses. It is critical that we help advocate not only for individual projects, but also for modernized policy- and decision-making that balances traditional environmental wildlife concerns with the new threats to wildlife, forest,  coastal habitats, and our way of life. The need is urgent. The time is now.


[1] As of December 2007 there are three proposed wind farms that have received some regulatory review, totaling 243 MW. Studies suggest there is significantly more wind capacity developable in Maine, and of course many more times that across the United States.

[2]   The Task Force web site has a wealth of information, including a number of presentations, and is at: http://www.maine.gov/doc/mfs/windpower/summaries.shtml

[3] The October 30, 2007 presentation can be found at: http://www.maine.gov/doc/mfs/windpower/meeting_summaries/103007_summary_files/Grace_Wind_Task_Force_103007.pdf

[4] A recent presentation by Maine DEP Commissioner David Littell summarizing wind power and its

greenhouse gas and air quality benefits is at: ttp://www.maine.gov/doc/lurc/minutes/080107/Littellpresentation.pdf

[5] The general IPCC website is at:     http:www.ipcc.ch/   A summary of the Synthesis Report can be found at: http://www.ipcc.ch/pdf/assessment-report/ar4/syr/ar4_syr_spm.pdf     

[6]   For the NECIA report see:  

http://www.climatechoices.org/assets/documents/climatechoices/confronting-climate-change-in-the-u-s-northeast.pdf    For the NECIA link to specific reports in individual states, go to:   http://www.climatechoices.org/ne/resources_ne/nereport.html

[7] http://www.climatechoices.org/assets/documents/climatechoices/maine_necia.pdf   

[8] http://www.earthscape.org/r1/r1/epa06/MAINE.PDF

[9] “Analysis: Economic Impacts of Wind Applications in Rural Communities”, National Renewable Energy Laboratory and M. Pedden

[10] Poletti and Associates, Inc. Real Estate Study

[11] http://www.aceny.org/pdfs/misc/effects_windmill_vis_on_prop_values_hoen2006.pdf.

12http://www.crest.org/articles/static/1/binaries/wind_online_final.pdf)

 

[13] Erickson, W.P. et al, “Avian Collisions with Wind Turbines”, 2001.

[14] This study, by Jain et al., can be found at:

www.mapleridgewind.com/documents/06-25-07_MapleRidgeAnnualReport2006.pdf

[15] National Research Council, 2007, “Environmental Impacts of Wind Energy”, based upon Mid-Atlantic Highlands region, http://books.nap.edu/catalog.php?record_id=11935#toc; also see generally Erickson et al. 2001; Klem 1991; Pimental and Acquay 1992; Coleman and Temple 1993;

[16] Kunz et al. Frontiers in Ecology and the Environment Issue 6, Vol. 5: August 2007.