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.

The IOGCC Issues Its Model Program For The Geologic Sequestration of CO2

Posted on November 27, 2008 by David Flannery

 On September 25, 2007, the Interstate Oil and Gas Compact Commission (IOGCC) issued its model program for the storage of carbon dioxide in geologic formations. The full text of the model program can be found here.

          OVERVIEW - Even though USEPA has announced that it will undertake the development of regulatory program for such activities under the Safe Drinking Water Act, the IOGCC model program is premised on the belief that the regulation of CO2 geological storage should be left to regulation by the states, rather than USEPA. Equally significant is the IOGCC view that the storage of CO2 in geological formations should be viewed as the storage of a commodity - not waste disposal. While the IOGCC proposes its CCS program in anticipation of a national program that would constrain the emission of CO2 to the atmosphere, the IOGCC avoids making recommendations about how CO2 should be constrained.

          PROPERTY RIGHTS - The model program provides that an applicant for any such project should acquire the property rights to use pore space in the geologic formation for storage. While much of the IOGCC’s model program addresses the need to acquire property rights through negotiation, eminent domain or unitization of oil and gas rights, the model program specifically states that the IOGCC is less concerned about what mechanism is used to acquire those rights and is more concerned that all necessary property rights be acquired by valid, subsisting and applicable state law. The IOGCC goes on to recognize that states might develop alternative mechanisms to acquire property rights, such as adapting the concept of the forced unitization of oil and gas industry rights to other property interests. An applicant must demonstrate that a good-faith effort has been made to obtain the consent of a major of owners "having property interest affected by the storage facility." The program provides for an applicant to have the power of eminent domain and provides that an applicant will be deemed to have necessary property rights to the extent that the applicant has initiated unitization or eminent domain proceedings and have thereby gained the right a of access to the property.

          COVERED FACILITIES - The definition of "storage facility", includes the reservoir, wells and related surface facilities but apparently not pipelines used to transport carbon dioxide from capture facilities to the storage and injection site. The IOGCC has stated its intent to consider over the next year, how its model program might best be expanded to include pipelines.

          LIABILITY RELEASE - Following completion of the project an operator would be obligated to monitor the project to assure its integrity. At the completion of that period, title to the facility would be transferred to the state and the operator and all generators of CO2 injected would be released for all regulatory liability and any posted performance bonds would also be released. Over the next year, the IOGCC has stated that it will consider the possibility of expanding the liability release to include common law tort liability. As part of the inducement for a state to allow liability transfer, the program establishes a trust fund which would assess a fee on each ton of CO2 injected. The trust fund provides the financial resources for the state to take title to project at the end of its operating life.

          COOPERATIVE AGREEMENTS - Cooperative agreements are authorized for use in connection with projects that extend beyond state boundaries.

          EOR PROJECTS - Enhanced Oil Recovery projects are not covered by the model program, although agencies are encouraged to develop rules on how enhanced recovery operations would be converted to carbon dioxide storage projects.

          PERMIT REQUIREMENTS - The program provides detailed requirements for completing an application for approval of a CCS project. Among other things maps accompanying a permit application would be required to identify existing oil and gas and coal mining operations. Public notice is completed upon mailing. The agency shall issue a permit to drill and operate once it has completed a review of the application. The permit would expire within twelve months from the date of issuance if the permitted well had not been drilled or converted. The program also sets forth detailed well operational standards, including requirements for safety plans, leak detection, and corrosion monitoring and prevention.

This article was authored by David M. Flannery, Jackson Kelly PLLC. For more information on the author see here.

SALMON WARS IN THE PACIFIC NORTHWEST

Posted on November 24, 2008 by Kevin Beaton

Each year thousands of salmon and steelhead protected under the Endangered Species Act (“ESA”) migrate up and down the Columbia River and its tributaries and into the Pacific Ocean as part of the species’ cycle of life. Seemingly, each year armies of lawyers migrate to federal court to argue whether the federal government is carrying out its obligations to protect these species under the ESA. “As part of the modern cycle of life in the Columbia River system, each year brings litigation to the federal courts of the Northwest over the operation of the Federal Columbia River System (“FRCPS”) and, in particular, the effects of system operation on the anadromous salmon and steelhead protected by the Endangered Species Act.” National Wildlife Federation v. National Marine Fisheries Service, 422 F.3d 782 (9th Cir. 2005).

            2008 is no exception as the National Wildlife Federation, the state of Oregon and the Nez Perce Tribe have again filed a lawsuit in the United States District Court of Oregon against the federal government for allegedly failing to carry out their obligations under the ESA in the operation of the FRCPS. The precipitating event for the 2008 lawsuit, is a 2008 Biological Opinion authored by NOAA Fisheries pursuant to Section 7 of the ESA opining that if the action agencies, the U.S. Army Corps of Engineers (“COE”) and U.S. Bureau of Reclamation (“BOR”) carry out a comprehensive reasonable and prudent alternative (“RPA”) then jeopardy to the listed species and adverse modification to critical habitat will be avoided.

 

The portion of the FRCPS that is at issue in the 2008 litigation is a series of fourteen (14) federal hydropower dams authorized by Congress on the Columbia and Lower Snake Rivers which are operated by the COE and BOR. Congress has directed that the dams are for multiple uses including providing power to the Northwest, irrigation, transportation, recreation, flood control and protection of fish. The stakes are high in the litigation, if some of the dams are substantially modified, or breached as some Plaintiffs are advocating, industries, rate-payers and communities reliant upon the multiple uses of the FRCPS will be significantly affected. Thirteen separate salmon and steelhead species that live out a portion of their life cycle in the Columbia River and its tributaries have been listed as endangered or threatened under the ESA.

            The federal government’s attempt to operate the FRCPS in compliance with ESA has been mired in litigation for some 15 years. The science and the law surrounding the FRCPS’ compliance with the ESA is complex. Like 2008, the precipitating event for past litigation has been a § 7 consultation between NOAA fisheries and the COE and BOR and a Biological Opinion (BiOp) and Incidental Take Statement. In recent litigation the federal government has not fared well. For example the 2000 BiOp found that the FRCPS operation did jeopardize certain listed species but that jeopardy could be avoided if off-site mitigation and hatchery initiatives were implemented. The court found the 2000 BiOp was invalid as NOAA could not rely upon off-site and non-federal actions that were not reasonably certain to occur as an RPA. See NWF v. NMFS, 254 F.Supp. 2d 1196 (D.Or 2003).

            The federal government tried again with a 2004 BiOP which found no jeopardy to listed species and no adverse modification to critical habitat. The 2004 BiOp was different from prior BiOps in so far as NOAA Fisheries attempted to segregate the effects of the existence of the 14 dams from the operation of the dams claiming that only the operation of the dams was discretionary and subject to Section 7 consultation. The lower Court struck down the 2004 BiOp on a variety of grounds finding that NOAA improperly separated the existence and operation of the dams in their § 7 consultation, NOAA did not properly take into consideration how the operation of the dams would affect recovery of the listed species and their critical habitat and that the actions relied upon were too uncertain to occur. The Ninth Circuit affirmed the lower Court decision in its entirety. See National Wildlife Federation v. National Marine Fisheries Service, 524 F.3d 917 (9th Cir. 2008). The Ninth Circuit did note that in considering the affect of the agency action on the potential recovery of the species in connection with a Section 7 consultation, NOAA Fisheries did not have to first develop a recovery plan consistent with the requirements of Section 4(f) of the ESA.

            While the appeal was pending before the Ninth Circuit, NOAA Fisheries under some prodding from the lower Court embarked upon an unprecedented collaboration with the four affected states (Washington, Oregon, Idaho and Montana) and eight Indian tribes to reach consensus on the appropriate methodologies to evaluate the effects of the FRCPS on listed species, operational modifications focusing on each of the listed species and hundreds of millions of dollars in funding commitments to the Tribes to carry out mitigation. In developing the 2008 BiOp and RPA, NOAA Fisheries also adopted a “trending to recovery standard” in order to fulfill the directive from the Court concerning the evaluation of survival and “recovery” in a Section 7 consultation. The 2008 BiOp finds that operation of the FRCPS for the next ten (10) years with implementation of the comprehensive RPA will avoid jeopardy to the thirteen species, avoid adverse modification to critical habitat and future recovery of the protected species will not be compromised by implementation of the RPA.

            The Plaintiffs quickly challenged the 2008 BiOp arguing it is legally and technically flawed and more of the same. The federal defendants, a trade association, three states (Washington, Idaho and Montana) and one Tribe argue that based on Court directives the 2008 BiOp got it right this time. The Defendants argue that Plaintiffs challenge is nothing more than a disagreement on the science and that the court should defer to NOAA Fisheries on these issues. Of interest to Clean Water Act attorneys, one of the Plaintiffs (“NWF”) argues that the incidental take statement (“ITS”) issued as part of the 2008 BiOp is equivalent to a “permit” under § 401 of the Clean Water Act and therefore requires water quality certification from the states. If the Plaintiff prevails on this novel theory, it means that potentially four states and three Tribes would need to issue a 401 certification that the ITS will comply with state and tribal water quality standards before the ITS would go into effect.

            A preliminary injunction and summary judgment hearings are set in January 2009. If the Court finds that the disputes surrounding 2008 BiOp are basically scientific disputes a recent Ninth Circuit case could be beneficial to the federal defendants. See, Lands Council v. McNair, 537 F.2d 981 (9th Cir. 2008). In Lands Council, the court noted that federal courts should defer to the scientific judgments of a federal agency when reviewing agency action under the Administrative Act Procedures. Stay tuned to the outcome of this litigation to see if the “cycle of life” of litigation in FRCPS continues or takes a breather to give the federal government, the states and tribes a breather to implement the 2008 BiOp.

EMERGING CLIMATE CHANGE ISSUES: Impacts on Disclosure Obligations of U.S. Public Companies

Posted on November 14, 2008 by Patricia Barmeyer

 Public companies are feeling pressure to make disclosure of the risks posed by climate change. The SEC has to date declined to issue any climate change-specific guidance, but existing SEC regulations are broad enough to require disclosure, if the information would be important to the “reasonable investor.” Investors and shareholders are increasingly vocal about their desire to have that information.

            In the absence of SEC action, New York Attorney General Cuomo has used state law to obtain settlements from Xcel Energy and Dynegy that require specific disclosures regarding the financial risks from probable climate change regulation and from the physical impacts of climate change. Even more significant is the pressure coming from major purchasers. Wal-Mart, for example, is requiring all its suppliers to report on their GHG emissions and their strategies to reduce their carbon footprints. 

            The timing, scope and details of the anticipated national program to regulate GHG emissions are still unknown, making it difficult to predict the risks and implications of climate change and its regulation for any individual company, However, even in the face of these uncertainties, disclosure is increasingly the norm, rather than the exception. All public companies need to be analyzing the risks posed by climate change and, depending on the business, should be considering disclosure of those risks in their public filings.

To read the article in its entirety, please click here.

A FIRST GLIMPSE OF THE ENVIRONMENTAL AGENDA OF THE OBAMA PRESIDENCY

Posted on November 10, 2008 by Larry Ausherman

It has been a long time since an environmental issue attracted some serious attention in a presidential campaign. This is the year, and climate change is the issue. From his campaign to his election night reference to a "planet in peril", President-Elect Obama has focused on climate change. There are a few other environmental issues to watch as well.

 

Climate Change

            The issue of climate change overshadowed other environmental issues in this election, in part because it is directly linked to other high priorities of the new administration. Goals of creating 5 million green-collar jobs and a focus on renewable energy and energy conservation enlarge the profile of climate change initiatives. For example, on the Obama-Biden website, the topics of environment and energy are grouped together as one, and the initiatives of each are related. 

 

            Green house gases reduction is an important goal for President-Elect Obama. The goal to reduce greenhouse gases has many parts, but imposing an economy-wide cap and trade system is the centerpiece of the policy. The plan would require that all credits be purchased at auction by industry. Costs to purchase credits could be enormous.

 

            In addition to domestic commitments to climate change initiatives, Obama supports "re-engaging" with the United Nations and the creation of a Global Energy Forum that includes the G8+5 Nations . The initial steps of his international policy may come soon when Obama's representatives will likely visit the climate change talks in Poznan, Poland this December.

           

            The broadening Democratic majority in Congress favors Obama's climate change agenda. In addition to Democratic gains in the House and the Senate, the League of Conservation Voters reports that seven of its 2008 "dirty dozen" legislators were defeated in the 2008 election. Among environmental groups, hopes are high for the new presidency.

 

            But because Obama's objectives require heavy investment in renewable energy, regulatory compliance, and clean technology, they face difficult hurdles. High deficits and the global financial crisis challenge the ability of the federal government to spend, the capacity of private markets to invest, and the resilience of the U.S. economy and industry to weather increased costs of regulation. Great investment would be required for meeting goals for clean coal technology, biofuel development, renewable energy, and energy efficiency.

 

Other Environmental Issues

            Here are some of the other environmental issues to watch.

 

            CERCLA issues have not received great attention so far. However, Obama has suggested reinstitution of the tax on industry to pay for orphaned sites and has emphasized the concept of "polluter pays".

 

            For many years, changes to the General Mining Law of 1872 to impose royalty and/or additional regulation have been proposed and defeated. Although mining law reform has not been a significant part of the presidential campaign, the chances for its passage in the more Democratic congress has increased.

           

            Obama's past opposition to offshore drilling weakened a bit this year in the Senate as a result of a compromised effort. Obama would support offshore exploration in areas already set aside for it, but his opposition to ANWAR remains firm.

 

            It is unclear what priority the Obama administration will place on biodiversity and the Endangered Species Act. Biodiversity has received little attention in the campaign, but the campaign has opposed lessening of ESA consultation requirements.

Cut the Sprawl, Cut the Warming

Posted on October 7, 2008 by Jeff Thaler

For years, while Washington slept, most of the serious work on climate change has occurred in the states, and no state has worked harder than California. The latest example of California’s originality is a new law — the nation’s first — intended to reduce greenhouse gas emissions by curbing urban sprawl and cutting back the time people have to spend in their automobiles.

Passenger vehicles are the biggest single source of carbon dioxide in California, producing nearly one-third of the total. Meanwhile, the number of miles driven in California has increased 50 percent faster than the rate of population growth, largely because people have to drive greater distances in their daily lives.

The new law has many moving parts, but the basic sequence is straightforward. The state’s Air Resources Board will determine the level of emissions produced by cars and light trucks, including S.U.V.’s, in each of California’s 17 metropolitan planning areas. Emissions-reduction goals for 2020 and 2035 would be assigned to each area. Local governments would then devise strategies for housing development, road-building and other land uses to shorten travel distances, reduce driving and meet the new targets.

One obvious solution would be to change zoning laws so developers can build new housing closer to where people work. Another is to improve mass transit — in woefully short supply in California — so commuters don’t have to rely so much on cars.

The bill contains significant incentives, including the promise of substantial federal and state money to regions whose plans pass muster. In addition, and with the consent of the environmental community, the state will relax various environmental rules to allow “infill” — higher-density land use in or near cities and towns.

The bill’s architect, State Senator Darrell Steinberg, worked closely with developers and environmental groups like the Natural Resources Defense Council. The measure is the latest in a string of initiatives from the California Legislature, including a 2002 law that would greatly reduce carbon emissions from automobiles, and a 2006 law requiring that one-fifth of California’s energy come from wind and other renewable sources.

Given California’s size, these and other initiatives will help reduce global greenhouse gas emissions. Even more progress would be made if others follow. New York and 15 other states have already said they will adopt California’s automobile emissions standards when the federal government gives them the green light — which the Bush administration has stubbornly refused to do.

There is, of course, no substitute for federal action or for American global leadership on climate change, both of which the next president will have to deliver.

Cut the Sprawl, Cut the Warming

Posted on October 7, 2008 by Jeff Thaler

For years, while Washington slept, most of the serious work on climate change has occurred in the states, and no state has worked harder than California. The latest example of California’s originality is a new law — the nation’s first — intended to reduce greenhouse gas emissions by curbing urban sprawl and cutting back the time people have to spend in their automobiles.

Passenger vehicles are the biggest single source of carbon dioxide in California, producing nearly one-third of the total. Meanwhile, the number of miles driven in California has increased 50 percent faster than the rate of population growth, largely because people have to drive greater distances in their daily lives.

The new law has many moving parts, but the basic sequence is straightforward. The state’s Air Resources Board will determine the level of emissions produced by cars and light trucks, including S.U.V.’s, in each of California’s 17 metropolitan planning areas. Emissions-reduction goals for 2020 and 2035 would be assigned to each area. Local governments would then devise strategies for housing development, road-building and other land uses to shorten travel distances, reduce driving and meet the new targets.

One obvious solution would be to change zoning laws so developers can build new housing closer to where people work. Another is to improve mass transit — in woefully short supply in California — so commuters don’t have to rely so much on cars.

The bill contains significant incentives, including the promise of substantial federal and state money to regions whose plans pass muster. In addition, and with the consent of the environmental community, the state will relax various environmental rules to allow “infill” — higher-density land use in or near cities and towns.

The bill’s architect, State Senator Darrell Steinberg, worked closely with developers and environmental groups like the Natural Resources Defense Council. The measure is the latest in a string of initiatives from the California Legislature, including a 2002 law that would greatly reduce carbon emissions from automobiles, and a 2006 law requiring that one-fifth of California’s energy come from wind and other renewable sources.

Given California’s size, these and other initiatives will help reduce global greenhouse gas emissions. Even more progress would be made if others follow. New York and 15 other states have already said they will adopt California’s automobile emissions standards when the federal government gives them the green light — which the Bush administration has stubbornly refused to do.

There is, of course, no substitute for federal action or for American global leadership on climate change, both of which the next president will have to deliver.

Supreme Court to Open its 2009 Term

Posted on October 2, 2008 by Theodore Garrett

As is its custom, the Supreme Court will open its 2009 Term next Monday, the first Monday in October. In anticipation of that event, the Court held its first conference of the Term this Monday, and yesterday issued orders from that conference. The court granted two certs of note.

Nos. 07-1601, Burlington Northern & Santa Fe Railway Co. v. United States and 07-1607, Shell Oil Co. v. United States, present the question of whether owners of land subject to environmental cleanup may be held jointly and severally liable under CERCLA.

No. 07-1410, United States v. Navajo Nation, involves the government's fiduciary responsibility to Indian tribes relating to mining rights on tribal land. In 2003, the Court held that there were no enforceable fiduciary duties under federal statutes relating to mineral leasing. But on remand, the Federal Circuit held that the government breached duties under the common law of trust and the Indian Tucker Act. The Supreme Court will consider whether its prior ruling foreclosed the court of appeals' decision, and if not, whether the court was correct to hold the government liable as a matter of law for $600 million to the tribes under those sources of law.

First Regional Greenhouse Gas Initiative Auction Results: Massachusetts Gets $13.3 Million

Posted on September 30, 2008 by Seth Jaffe

The operators of the Regional Greenhouse Gas Initiative, or RGGI Inc., announced yesterday that all of the 12,565,387 CO2 allowances offered for sale in the first RGGI auction on September 25, 2008 were purchased at $3.07 per allowance. This is above the auction reserve price of $1.86 per allowance, and below recent prices on the Chicago Climate Futures Exchange. See RGGI Inc.'s press release here.

RGGI did not announce the names of the winning bidders, but noted that there were 59 participants in the auction, all from the "energy, financial and environmental sectors." In total, the bidders sought to purchase more than 51 million allowances, or approximately four times as many as were offered. The auction was administered by World Energy Solutions, Inc., and RGGI also retained an independent market monitor, Potomac Economics, to oversee the auction. Potomac Economics stated that most of the allowances were purchased by "compliance entities or their affiliates." See the Potomac Economics release here.

Massachusetts' share of the RGGI allowance proceeds came to approximately $13.3 million. In a press release issued yesterday, Governor Patrick confirmed the commitment in the Green Communities Act to use the RGGI funds for energy efficiency programs that will help individuals and municipalities address energy challenges.

Specifically, the $13.3 million in proceeds from the first auction will be allocated in the following ways:

  • $3.5 million for utility-administered energy efficiency programs, primarily funding the DPU's $7 million program to work with electric and natural gas utilities to expand their consumer energy efficiency programs
  • $5 million for start-up of the Green Communities Program, created by the Green Communities Act
  • $4.3 million for additional energy efficiency efforts this winter, subject to the report of the Winter Energy Costs Task Force which is due in early October
  • $500,000 for administrative and vendor costs associated with Massachusetts' participation in RGGI and the allowance auctions

The next auction is currently scheduled to be held on December 17, 2008.

Offshore Wind Farm in the Mid-Atlantic - Will Delaware Be the First State of Offshore Wind?

Posted on September 29, 2008 by Robert Whetzel

The nation’s first offshore wind farm may soon be built off the coast of Delaware. Although climate change and clean energy issues were part of the debate over this project, the Delaware wind farm project finds its origins in energy reliability and price stability legislation. 

In 2006, consumer energy prices in Delaware increased dramatically, following the State’s deregulation of electricity generation. As part of the deregulation process, a three year freeze had been placed on energy rate increases in Delaware. When the freeze expired, energy prices across the United States were spiraling upward and rates in Delaware were adjusted to market prices. The result was a significant increase in consumer electricity prices, with the attendant public outcry and legislative demand for reform.

 

 In an attempt to stabilize prices, the Delaware General Assembly enacted the Electric Utility Retail Customer Supply Act of 2006. The Act established a bidding process for long-term purchase power agreements, and directed Delmarva Power & Light Company (“Delmarva Power”), the State’s largest electricity service territory provider, to solicit bids for such an agreement. The legislation also mandated an integrated resource planning process in order to ensure the availability of sufficient and reliable resources over time to meet customers' needs at a minimal cost. 

 

The Delaware legislation required Delmarva Power to issue a request for proposals ("RFP") for the construction of new generation resources within Delaware along with a proposed output contract for a term of no less than 10 years and no more than 25 years. The Delaware Public Service Commission (the “PSC”) and the Delaware Energy Office were tasked with ensuring that the RFP elicited and recognized the value of proposals that: (a) utilized new or innovative baseload technologies; (b) provided long-term environmental benefits to the state; (c) had existing fuel and transmission infrastructure; (d) promoted fuel diversity; (e) supported or improved reliability; and (f) utilized existing brownfield or industrial sites. The PSC, the Director of the Office of Management and Budget, the Controller General, and the Energy Office (the "State Agencies") were tasked with evaluating the bids and determining whether to approve one or more of them. 

Three bids were submitted in response to the RFP: one for an offshore wind farm, one for a combined cycle gas turbine, and one for a coal-fired integrated gasification combined cycle ("IGCC") unit. After evaluation of the bids, both Delmarva Power and an independent consultant concluded that none of the bids met the evaluation criteria because, among other things, each of them proposed prices that were projected to be above market when the new generation facilities went on-line. The State Agencies, however, fashioned a hybrid energy supply approach, and directed Delmarva Power to negotiate for a long-term agreement for wind power with Bluewater Wind, LLC (“Bluewater”) and, concurrently, for an agreement with another generator to provide back-up power. These negotiations were to take place under the oversight of an independent third-party, who would be responsible for reporting to the State Agencies on the parties’ efforts to negotiate the agreements. 

Delmarva Power and the bidders were unable to negotiate concurrent agreements for the wind farm and the “backup” generation source. The State Agencies next directed Delmarva Power and Bluewater to negotiate a final agreement for the wind farm. When the deadline for a this agreement was reached in December 2007, the parties had not agreed upon many important terms, relating to the capacity, price, and risk for the project. After reviewing the status of negotiations, the PSC staff recommended approval of the proposed terms with the condition that the cost of the wind farm be spread over all of Delmarva Power’s customer base. The PSC staff also recommended that legislation be pursued that allocated the costs of the wind farm across all energy consumers in Delaware. At that point, the State Agencies tabled the matter because there was not a consensus to approve the agreement. 

The Delaware legislature then became involved in considering the wind farm power agreement, and conducted legislative hearings regarding the agreement and alternative energy technology and market trends. A legislative committee ultimately concluded that, while wind generation should be a significant component of the State’s electricity supply portfolio, Delaware citizens should not assume the large risk or pay the large premium contemplated in the (then) proposed wind farm agreement. This conclusion was not without opposition in the legislature.

During May and June, 2008, renewed negotiations took place between Delmarva Power and Bluewater, under the ever-present threat of further regulatory or legislative action. Ultimately an agreement was reached for the purchase of power and renewable energy credits (“RECs”) from the wind farm by Delmarva Power. This agreement coincided with legislation in the State that enabled the cost of the wind farm to be spread across all of Delmarva Power’s customer base, not just residential consumers and small businesses, and that substantially increased the value attached to the RECs for the wind farm. Under the agreement, Delmarva Power will purchase energy from the wind farm equal to the amount generated by a 200 MW nameplate facility (approximately 50 percent less than in the proposed December 2007 agreement.) The wind farm, however, may produce three times this capacity (i.e., up to 600 MW), and may secure additional customers for its power. The final agreement also provides termination rights to Bluewater, including termination based upon the content of final regulations to be promulgated by the Department of the Interior with respect to the permitting and siting of offshore wind farms. 

The Department of the Interior proposed regulations on July 9, 2008, and comments were due by September 8, 2008. The American Wind Energy Association, of which Bluewater is a member, submitted comments arguing against a provision that would require developers to pay 2 percent of their operating revenue to the government. Bluewater has stated that such a provision will not be a “deal killer” for the Delaware project, but has also recognized as problematic the impending expiration of federal renewable energy subsidies.

EPA IN THE DC CIRCUIT - WHERE HAS ALL THE DEFERENCE GONE?

Posted on September 23, 2008 by Linda Bochert
  • June 2007: DC Circuit Hands EPA and Industry Two Defeats:  Court Rejects EPA MACT Air Rules for Commercial and Industrial Boilers and Plywood and Composite Wood Products
  • February and July 2008: DC Circuit to EPA: Multi-Pollutant Strategy for Interstate Clean Air Fails to Meet Clean Air Act Requirements

Several recent cases have raised the following question in my mind: can EPA win an air case in the DC Circuit?

They teach us in law school that governmental agencies can expect a reasonable degree of deference from a reviewing court when exercising statutory authority to develop regulations to implement Congressional directives. States and entities subject to EPA’s regulations need something to rely on, and expect EPA and the Courts to provide some degree of predictability and certainty in the application of the regulations. Yet deference is nowhere to be found in the DC Circuit’s recent reviews of several EPA regulations implementing the Clean Air Act (CAA). And in each of the cases discussed below, the Court opted for the most dramatic remedy – vacatur of the offending rule.

These decisions can be sliced and diced from a variety of perspectives. At the least I think they raise vexing concerns about deference and choice of remedy. What do you think – are these the trend or the anomalies? Is this a real concern or much ado about nothing?

 

Here are my examples:

 1. June 2007: Commercial and Industrial Boiler MACT Rules

On June 8, 2007, in Natural Resources Defense Council v. EPA, No. 04-1385 (D.C. Cir. June 8, 2007) (NRDC I) the DC Circuit struck down two EPA rules setting air toxics limitations for commercial and industrial boilers and solid waste incinerators: National Emission Standards for Hazardous Air Pollutants for Industrial, Commercial, and Institutional Boilers and Process Heaters (Boilers Rule) and Standards of Performance for New Stationary Sources and Emission Guidelines for Existing Sources: Commercial and Industrial Solid Waste Incineration Units (CISWI Definitions Rule).

At issue were the emission standards for hazardous air pollutants (HAPs) emitted from commercial and industrial solid waste incinerators and industrial boilers and the appropriate setting of the Maximum Achievable Control Technology (MACT) standard.

The challenge was brought by environmental petitioners Natural Resources Defense Council, Sierra Club, and the Environmental Integrity Project. The Court agreed with them that EPA had impermissibly narrowed the definition of “commercial or industrial waste” in the CISWI Definitions Rule in violation of the plain language of section 129 of the Clean Air Act. Because the Boilers Rule was dependent on that same definition, both rules were rejected by the Court. EPA and industry representatives, including the Coalition for Responsible Waste Incineration, Utility Air Regulatory Group, and Utility Solid Waste Activities Group, contended that EPA’s definition was within the agency’s discretion, but the Court was not persuaded.

 

2. June 2007: Plywood and Composite Wood Products MACT Rules

On June 19, 2007, the DC Circuit dealt a second blow in a challenge to EPA’s rules to regulate HAPs from processing plywood and composite wood products (PCWP). Also named Natural Resources Defense Council v. EPA, No. 04-1323 (D.C. Cir. June 19, 2007) (NRDC II), this case was also brought by the Natural Resources Defense Council, Sierra Club and the Environmental Integrity Project against EPA. EPA was supported by industry groups, including the American Forest and Paper Association.

The two rules involved in this case were the National Emission Standards for Hazardous Air Pollutants: Plywood and Composite Wood Products (2004 Rule) and the National Emission Standards for Hazardous Air Pollutants: Plywood and Composite Wood Products; List of Hazardous Air Pollutants, Lesser Quantity Designations, Source Category List (2006 Rule), with the primary challenge to the 2006 Rule. Example of operations regulated by these rules include sawmills with lumber kilns, hardwood and softwood plywood and veneer plants, particleboard/fibreboard and other reconstituted wood product plants, and engineered wood product plants.

Once again, the issue was the appropriate MACT standard. In this case the pivotal elements were EPA’s decisions in the 2004 Rule to create a “low-risk subcategory” and in the 2006 Rule to extend the compliance deadline from October 2007 to October 2008.

 

3. February 2008: Clean Air Mercury Rule (CAMR)

On February 8, 2008, the DC Circuit struck down CAMR in New Jersey v. EPA, No. 05-1097 (D.C. Cir. Feb. 8, 2008). CAMR was the result of EPA’s decision to remove oil and coal-fired electric utility steam generating units (EGUs) from the list of sources of hazardous air pollutants (HAPs) and instead regulate mercury emissions from these EGUs through a cap-and-trade program similar to the Clean Air Interstate Rule (CAIR).

In response, New Jersey, and several other states, municipal governments and environmental groups, challenged CAMR claiming that EPA had no authority to delist the EGUs without providing a “specific finding” under section 112(c)(9) of the CAA. Because EPA did not make this specific finding, the Petitioners claimed that not only was the delisting invalid, but CAMR was also flawed because it was based upon this delisting decision. The DC Circuit agreed with the Petitioners, vacating both the delisting rule and CAMR.

 

4. July 2008: Clean Air Interstate Rule (CAIR)

On July 11, 2008, the D.C. Circuit vacated CAIR in North Carolina v. EPA, No. 05-1244 (D.C. Cir. July 11, 2008).

The multi-party challenge to CAIR was brought by the state of North Carolina, several electric utilities (SO2 Petitioners), specific electric utilities in Texas, Florida and Minnesota, one municipality, and the Florida Association of Electric Utilities (FAEU). The electric utilities in Texas, Florida and Minnesota challenged CAIR’s applicability to them because of their location and emissions amounts. North Carolina, the SO2 Petitioners, and FAEU brought substantive challenges to the regulation, claiming that EPA did not have the discretion to act as it did, or it did so unreasonably.

The Court agreed with North Carolina and the SO2 Petitioners, holding that CAIR failed to meet the requirements of the CAA and finding “EPA’s approach – regionwide caps with no state-specific quantitative contribution determinations or emissions requirements – is fundamentally flawed.”

 Is vacatur the best remedy?

 In all four of these cases, the Court chose to vacate rather than remand the rules. The dissent in the CISWI/Boilers Rules case unsuccessfully argued that remand without vacating the rules was preferable“[b]ecause the rules would ensure greater protection to public health and the environment during the time EPA will need to develop and promulgate new rules.” The majority was unpersuaded and preferred no rules at all. Is that really the best option for the environment?

And the language the Court uses implies more than a lack of deference. In vacating CAIR, a decision described as “unexpected” by both proponents and opponents, the Court described the rule as “fundamentally flawed” and directed EPA to “redo its analysis from the ground up.” In vacating CAMR, the Court characterized EPA as “deploy[ing] the logic of the Queen of Hearts.” What’s going on here?

EPA IN THE DC CIRCUIT - WHERE HAS ALL THE DEFERENCE GONE?

Posted on September 23, 2008 by Linda Bochert
  • June 2007: DC Circuit Hands EPA and Industry Two Defeats:  Court Rejects EPA MACT Air Rules for Commercial and Industrial Boilers and Plywood and Composite Wood Products
  • February and July 2008: DC Circuit to EPA: Multi-Pollutant Strategy for Interstate Clean Air Fails to Meet Clean Air Act Requirements

Several recent cases have raised the following question in my mind: can EPA win an air case in the DC Circuit?

They teach us in law school that governmental agencies can expect a reasonable degree of deference from a reviewing court when exercising statutory authority to develop regulations to implement Congressional directives. States and entities subject to EPA’s regulations need something to rely on, and expect EPA and the Courts to provide some degree of predictability and certainty in the application of the regulations. Yet deference is nowhere to be found in the DC Circuit’s recent reviews of several EPA regulations implementing the Clean Air Act (CAA). And in each of the cases discussed below, the Court opted for the most dramatic remedy – vacatur of the offending rule.

These decisions can be sliced and diced from a variety of perspectives. At the least I think they raise vexing concerns about deference and choice of remedy. What do you think – are these the trend or the anomalies? Is this a real concern or much ado about nothing?

 

Here are my examples:

 1. June 2007: Commercial and Industrial Boiler MACT Rules

On June 8, 2007, in Natural Resources Defense Council v. EPA, No. 04-1385 (D.C. Cir. June 8, 2007) (NRDC I) the DC Circuit struck down two EPA rules setting air toxics limitations for commercial and industrial boilers and solid waste incinerators: National Emission Standards for Hazardous Air Pollutants for Industrial, Commercial, and Institutional Boilers and Process Heaters (Boilers Rule) and Standards of Performance for New Stationary Sources and Emission Guidelines for Existing Sources: Commercial and Industrial Solid Waste Incineration Units (CISWI Definitions Rule).

At issue were the emission standards for hazardous air pollutants (HAPs) emitted from commercial and industrial solid waste incinerators and industrial boilers and the appropriate setting of the Maximum Achievable Control Technology (MACT) standard.

The challenge was brought by environmental petitioners Natural Resources Defense Council, Sierra Club, and the Environmental Integrity Project. The Court agreed with them that EPA had impermissibly narrowed the definition of “commercial or industrial waste” in the CISWI Definitions Rule in violation of the plain language of section 129 of the Clean Air Act. Because the Boilers Rule was dependent on that same definition, both rules were rejected by the Court. EPA and industry representatives, including the Coalition for Responsible Waste Incineration, Utility Air Regulatory Group, and Utility Solid Waste Activities Group, contended that EPA’s definition was within the agency’s discretion, but the Court was not persuaded.

 

2. June 2007: Plywood and Composite Wood Products MACT Rules

On June 19, 2007, the DC Circuit dealt a second blow in a challenge to EPA’s rules to regulate HAPs from processing plywood and composite wood products (PCWP). Also named Natural Resources Defense Council v. EPA, No. 04-1323 (D.C. Cir. June 19, 2007) (NRDC II), this case was also brought by the Natural Resources Defense Council, Sierra Club and the Environmental Integrity Project against EPA. EPA was supported by industry groups, including the American Forest and Paper Association.

The two rules involved in this case were the National Emission Standards for Hazardous Air Pollutants: Plywood and Composite Wood Products (2004 Rule) and the National Emission Standards for Hazardous Air Pollutants: Plywood and Composite Wood Products; List of Hazardous Air Pollutants, Lesser Quantity Designations, Source Category List (2006 Rule), with the primary challenge to the 2006 Rule. Example of operations regulated by these rules include sawmills with lumber kilns, hardwood and softwood plywood and veneer plants, particleboard/fibreboard and other reconstituted wood product plants, and engineered wood product plants.

Once again, the issue was the appropriate MACT standard. In this case the pivotal elements were EPA’s decisions in the 2004 Rule to create a “low-risk subcategory” and in the 2006 Rule to extend the compliance deadline from October 2007 to October 2008.

 

3. February 2008: Clean Air Mercury Rule (CAMR)

On February 8, 2008, the DC Circuit struck down CAMR in New Jersey v. EPA, No. 05-1097 (D.C. Cir. Feb. 8, 2008). CAMR was the result of EPA’s decision to remove oil and coal-fired electric utility steam generating units (EGUs) from the list of sources of hazardous air pollutants (HAPs) and instead regulate mercury emissions from these EGUs through a cap-and-trade program similar to the Clean Air Interstate Rule (CAIR).

In response, New Jersey, and several other states, municipal governments and environmental groups, challenged CAMR claiming that EPA had no authority to delist the EGUs without providing a “specific finding” under section 112(c)(9) of the CAA. Because EPA did not make this specific finding, the Petitioners claimed that not only was the delisting invalid, but CAMR was also flawed because it was based upon this delisting decision. The DC Circuit agreed with the Petitioners, vacating both the delisting rule and CAMR.

 

4. July 2008: Clean Air Interstate Rule (CAIR)

On July 11, 2008, the D.C. Circuit vacated CAIR in North Carolina v. EPA, No. 05-1244 (D.C. Cir. July 11, 2008).

The multi-party challenge to CAIR was brought by the state of North Carolina, several electric utilities (SO2 Petitioners), specific electric utilities in Texas, Florida and Minnesota, one municipality, and the Florida Association of Electric Utilities (FAEU). The electric utilities in Texas, Florida and Minnesota challenged CAIR’s applicability to them because of their location and emissions amounts. North Carolina, the SO2 Petitioners, and FAEU brought substantive challenges to the regulation, claiming that EPA did not have the discretion to act as it did, or it did so unreasonably.

The Court agreed with North Carolina and the SO2 Petitioners, holding that CAIR failed to meet the requirements of the CAA and finding “EPA’s approach – regionwide caps with no state-specific quantitative contribution determinations or emissions requirements – is fundamentally flawed.”

 Is vacatur the best remedy?

 In all four of these cases, the Court chose to vacate rather than remand the rules. The dissent in the CISWI/Boilers Rules case unsuccessfully argued that remand without vacating the rules was preferable“[b]ecause the rules would ensure greater protection to public health and the environment during the time EPA will need to develop and promulgate new rules.” The majority was unpersuaded and preferred no rules at all. Is that really the best option for the environment?

And the language the Court uses implies more than a lack of deference. In vacating CAIR, a decision described as “unexpected” by both proponents and opponents, the Court described the rule as “fundamentally flawed” and directed EPA to “redo its analysis from the ground up.” In vacating CAMR, the Court characterized EPA as “deploy[ing] the logic of the Queen of Hearts.” What’s going on here?

Global Warming Litigation Heating up - Village of Kivalina Lawsuit

Posted on August 21, 2008 by Mark Walker

As the debate regarding the contribution of anthropogenic greenhouse gases to global warming continues, some parties are taking their concerns directly to the courts. Perhaps the latest in the growing number of global warming lawsuits is the Native Village of Kivalina, Alaska v. ExxonMobil, et al., Case No. CV-08-1138, in the United States District Court for the Northern District of California, San Francisco Division.

THE VILLAGE OF KIVALINA

The Village of Kivalina is located in northwest Alaska about 120 miles from the Arctic circle. The Village is comprised of roughly 1.9 square miles of land which lies on the tip of a barrier island which separates the Chukchi Sea and a lagoon on the mainland side. There are 399 residents of Kivalina, 97% of whom are Native Alaskans referred to as "Inupiat" Eskimos, meaning "the people."

THE PROBLEM

With claims presaged by Al Gore's "An Inconvenient Truth", Kivalina claims that global warming has caused the melting of Arctic sea ice which formerly protected the Village from winter storms. Without the protective ice, the Village claims that storms have caused massive erosion, leaving "houses and buildings in imminent danger of falling into the sea." The Village contends that, "if the entire village is not relocated soon, the village will be destroyed." Governmental estimates of the cost to relocate run as high as $400 million –roughly $1 million per resident.

THE DEFENDANTS

The defendants are 9 oil and gas companies, 14 electric generation companies and 1 coal company. Kivalina contends that the defendants are among the largest emitters of greenhouse gases in the United States, and that the defendants "are responsible for a substantial portion of the greenhouse gases in the atmosphere that have caused global warming." The Village is pursuing a public nuisance theory.

CONSPIRACY CLAIMS

With allegations that are indeed carbon copied from the "Science Fraud" chapter in "An Inconvenient Truth", Kivalina claims that eight of the defendants have engaged in a civil conspiracy to generate misinformation and propaganda to create doubt as to whether global warming is occurring and, if so, whether man-made emissions are to blame. The Village claims that the alleged co-conspirators have used "front groups, fake citizens organizations, and bogus scientific bodies" to generate the alleged misinformation and doubt.

MOTIONS TO DISMISS

The Kivalina lawsuit is in its early stages, however, the defendants have filed motions to dismiss claiming, inter alia, that (1) the plaintiffs cannot pursue a federal common law nuisance claim because such claim is available only to States seeking injunctive relief and because the Clean Air Act displaces the authority of the courts to regulate nationwide greenhouse gas emissions and global warming; and (2) the plaintiffs' conspiracy claims are not independent torts, but are derivative of their underlying nuisance claims and should fail along with the nuisance claims. 

POLITICAL QUESTION DOCTRINE

Similar lawsuits have previously been dismissed on the grounds of lack of standing and non-justiciability under the political question doctrine. See Comer, et al. v. Murphy Oil, et al., Case No. 1:05-cv-00436-LTS-RHW, in the United States District Court for the Southern District of Mississippi, dismissal currently on appeal to the Fifth Circuit Court of Appeals (Appeal No. 07-60756); State of California v. General Motors, et al., Case No. C-06-05755-MJJ, in the United States District Court for the Northern District of California, dismissal currently on appeal to the Ninth Circuit Court of Appeals (Appeal No. 07-16908). In Comer the plaintiffs blamed Hurricane Katrina on global warming and on 8 oil companies, 31 coal companies and 4 chemical companies that allegedly contributed to global warming. 

So far, the courts appear to be of the view that the responsibility for developing a comprehensive global warming policy which balances the interests of reducing air pollution and its social costs with the corresponding harm to economic development and its attendant social costs is a political question which is reserved for the political branches of government, and that such policies should not be developed on an ad hoc basis by the courts. Kivalina is once again testing the resolve of the courts to stay out of the global warming debate until Congress and/or the EPA establish clear policies regarding man-made greenhouse gas emissions.

To view a copy of the Kivalina Complaint, click here.

For more information on the author, click here.