New Rapanos Guidance Coming--Third Time's the Charm?

Posted on February 10, 2011 by Rick Glick

On December 20, the Environmental Protection Agency and the U. S. Army Corps of Engineers submitted draft guidance to the Office of Management and Budget to determine when wetlands are subject to regulation under the Clean Water Act. This will be the third attempt to provide guidance on implementing the conflicting standards announced by a fractured Supreme Court in Rapanos v. United States.


In an opinion written by Justice Scalia, a plurality of the Court declared that Clean Water Act jurisdiction extended only to wetlands of a semi-permanent nature that abut open water. This is a test that many wetlands, previously thought to be jurisdictional, would fail to meet. A concurring opinion offered by Justice Kennedy announced a wholly different standard: A water or wetland is jurisdictional if there is a “significant nexus” between the wetlands and navigable waters, focusing on whether there is “a reasonable inference of ecological connection” between the two. The dissent written by Justice Stevens and joined by three others, finds both tests wanting and suggests that jurisdiction is present when either is met.
 

Agencies and courts have since strained to reconcile these opposing views. EPA and the Corps have attempted to provide guidance on when and how to apply each test, the first in June 2007 and the second in December 2008. Courts have dutifully tried to discern clarity in the Court’s opinions and have given the joint agency guidance Skidmore deference, meaning they use the guidance to the extent it is persuasive. Considerable uncertainty remains in determining when permits are needed in many cases, causing obvious problems for the development community.
 

The Obama Administration favors a legislative fix, but Clean Water Act reform seems unlikely just now . . . or during my lifetime. There have been a lot of cases decided since the 2008 guidance was released, so the new guidance perhaps will distill that experience and give us something useful to work with. OMB review can take up to 90 days, so look for the guidance no later than the end of March.

Hydraulic Fracturing: The Media Campaign and Federal Initiatives

Posted on February 9, 2011 by Pamela Giblin

The natural gas boom generated by advances in drilling technology making economic production of unconventional resources like shale gas possible has generated increasing public attention as environmental advocacy groups and the media continue to attack the process and point to hydraulic fracturing as the cause of everything from natural methane migration to earthquakes. These dramatic allegations take center stage in the documentary, Gasland, by director Josh Fox. With its recent academy award nomination, Gasland continues to push hydraulic fracturing issues into the national and international spotlight.


Hydraulic fracturing is an oil and gas production service that involves injecting a mixture — comprised primarily of water and sand — into a targeted geologic formation at pressures sufficient to create small fractures in the rock thousands of feet below ground. These fractures are held open by the sand or other “proppants” used in the fracturing fluid and allow the natural gas to more effectively flow out from the hard rock formation and into the wellbore. Small concentrations of chemical additives are used in fracturing fluids in enhance the fluid performance. Hydraulic fracturing is only one part of the exploration, drilling and production process. It occurs after the well is drilled but before the well is completed and begins production. Hydraulic fracturing has been labeled the “technological key” to recovery of unconventional oil and gas resources like shale, coalbed methane and tight sands. Experts estimate that 90% of all oil and gas wells utilize hydraulic fracturing. Without hydraulic fracturing, efficient and economic development of the nation’s vast shale gas reserves would be impossible.
 

In the past few years, hydraulic fracturing has seemingly become the target for all environmental and health impacts associated with exploration and production activities. In response to heightened public concern — particularly fears that the fluid mixtures used in hydraulic fracturing could seep or migrate upward into underground sources of potable water — the federal government began taking steps to increase its oversight and regulation of the process. The last Congress introduced bills in both the House and Senate to enact the Fracturing Responsibility and Awareness of Chemicals Act  (the “FRAC Act”), which would have subjected hydraulic fracturing to federal regulation under the Safe Drinking Water Act Underground Injection Control (UIC) program and required full disclosure of chemicals used in hydraulic fracturing fluids. Whether proponents of the FRAC Act or other similar legislation will introduce such legislation in the 112th Congress remains unclear.


In the meantime, the U.S. Environmental Protection Agency (EPA) has taken several steps to increase its oversight of hydraulic fracturing. First, at the direction of Congress, EPA has initiated a study of hydraulic fracturing and drinking water resources. EPA recently announced its selection of experts for the study review panel, which notably excluded all experts nominated by industry or environmental advocacy groups, resulting in a purely academic review panel. The Agency plans to submit the draft study plan to the Science Advisory Board for peer review in early 2011 and expects to have initial study results by late 2012.


Second, the EPA announced by way of a website posting  that it would regulate hydraulic fracturing utilizing diesel additives under the Safe Drinking Water Act. The website posting indicated that “Any service company that performs hydraulic fracturing using diesel fuel must receive prior authorization from the UIC program. Injection wells receiving diesel fuel as a hydraulic fracturing additive will be considered Class II wells by the UIC program.” Industry groups have challenged the website posting as an improper rulemaking without notice or comment.


Most recently, on December 7, 2010, EPA issued an Emergency Administrative Order (the “Order”) to a natural gas company to take measures intended to mitigate methane contamination in drinking water supplies in Parker County, Texas, near Fort Worth, in the Barnett Shale area. According to the Order's cover letter, EPA "ha[d] data to indicate" that at least two private drinking water wells were impacted by methane contamination "directly related to oil and gas production facilities." The Order was an unprecedented use of the “imminent and substantial endangerment” authority the Agency has under Section 1431 of the Safe Drinking Water Act, 42 U.S.C. § 300(i) and has been followed by a January 2011 suit to enforce the Order and an appeal of the Order by the company. The Order was issued while a concurrent investigation of the matter is still pending before the state agency charged with oversight of oil and gas operations in Texas. The company has maintained that there is no connection between its operations and the methane detected in the water wells. The outcome of EPA’s exercise of authority in the case remains uncertain.


In the midst of heightened attention on hydraulic fracturing and drilling operations from the federal government, state governments have moved quickly to amend, promulgate, enact or revise state laws and regulations on hydraulic fracturing in order to preempt the need for any federal regulation of oil and gas production operations, which traditionally have been primarily governed by state law. For example, the New York State Department of Environmental Conservation (NYSDEC) is currently in the process of completing a “Supplemental Generic Environmental Impact Statement on the Oil, Gas and Solution Mining Regulatory Program: Well Permit Issuance for Horizontal Drilling and High-Volume Hydraulic Fracturing to Develop the Marcellus Shale and Other Low-Permeability Gas Reservoirs” (“SGEIS”). After receiving extensive public comment on the initial draft SGEIS, the NYSDEC was ordered by then-Governor Paterson to issue a revised draft SGEIS on or about June 1, 2011 and conduct an additional public comment period. In the interim, the NYSDEC has taken the position that it may not issue any permits for horizontal drilling or high-volume hydraulic fracturing until the SGEIS is finalized — creating a de facto moratorium on Marcellus Shale developments in New York. Other states have moved forward in efforts to update their existing oil and gas regulations to address key issues such as well construction standards and hydraulic fracturing chemical disclosure requirements.


Some regulators and environmental groups have begun to better understand the science involved in defining the risk of environmental impacts associated with hydraulic fracturing. With this understanding, they have shifted their focus away from the idea of subsurface upward migration of fracturing fluids to surface spill prevention and well construction requirements. Nevertheless, the media frenzy and NGO campaign against hydraulic fracturing remains strong and will continue to place the process and the oil and gas industry in both the public and regulatory spotlight.

ARE THE NAAQS AN OBSOLETE CONCEPT?

Posted on February 8, 2011 by Roger Ferland

* My thanks to Gary E. Marchant, J.D., Ph.D., Lincoln Professor of Emerging Technologies, Law & Ethics, Center for Law, Science & Innovation at Arizona State University. He is the brains behind this blog entry.

 

One of the founding principles of the Clean Air Act is the National Ambient Air Quality Standards or NAAQS. Attainment and preservation of the NAAQS is the goal of State Implementation Plans, the permit system is intended to protect the NAAQS and most of the technology-based emission limitations are for the control of NAAQS-based pollutants. However, several of the premises for setting the NAAQS are no longer either scientifically or legally supportable.

After almost forty years, the criteria for establishing the NAAQS are settled.

  • The level of the NAAQS must protect public health with "an adequate margin of safety."
  • In setting NAAQS, EPA cannot consider the cost or feasibility of achieving it.
  • The NAAQS must not only protect the general public, but also there must be an absence of adverse effects on "susceptible" or "sensitive" subgroups and individuals.
  • According to EPA, "susceptible" subgroups and individuals can be defined by:
    • Life stages, e.g., children, the elderly or pregnant women
    • Prior immune reactions
    • Disease state, e.g., asthmatics
    • Prior damage to cells or all systems
    • What is called "genetic polymorphism," the small, but significant percentage of the population who have genetic susceptibilities to certain toxins

 

The problem is that if EPA declares that the NAAQS must prevent adverse health impacts on this range of susceptible subgroups and individuals, the only level that can prevent adverse effects across the range is zero.

For the last three decades the achievement of no adverse clinical effects with an adequate margin of safety has caused the NAAQS to be set at lower and lower concentrations. Indeed, the controversy over a more and more stringent ozone NAAQS was heightened by a recent EPA study that showed decreased lung functions among even healthy individuals at 0.060 µ/m3. These, however, are only clinical adverse effects. If all toxcogenomic or gene expression changes that are indicative of a toxic response are considered, it is hard to justify any concentration but zero for the NAAQS. As EPA has acknowledged in criteria documents for the PM-10, lead, ozone and NOx NAAQS, genomic susceptibility plays an adverse role in responses to inhalation of these pollutants, particularly with respect to specific individuals or certain groups. For these individuals or groups there is no concentration of NAAQS pollutants that will guarantee an adequate margin of safety. For example, 100,000 Americans have a condition called an alpha-1 antitrypsin deficiency. People with this condition are predisposed to emphysema and other serious lung diseases from exposure to any level of smoke or dust. Similar genetic susceptibility to any level of certain pollutants above zero can be shown for a wide range of pollutants, individuals and genetically sensitive groups.

The point in all of this is that if we continue to require a no adverse effects with an adequate margin of safety as a minimum criterion for the NAAQS with no consideration of cost or practicable achievability, the inevitable result will eventually be a scientific train wreck.
 

I DON'T WANT TO SCARE YOU . . . BUT BE WARNED

Posted on February 7, 2011 by Stephen E. Herrmann

The Problem
In the world of environmental claims, there are numerous ways that a duty to preserve documents and particularly e-documents can arise before litigation is filed.


The Problem Becomes a Sanction
E-discovery sanctions have reached an all-time high after three decades of litigation over alleged discovery wrongdoing. “Sanctions motions and sanction awards for e-discovery violations have been trending every-upward for the last 10 years and have now reached historic highs,” according to a King & Spalding study published at 60 Duke Law Journal 789 (2010).


King & Spalding lawyers analyzed 401 cases before 2010 in which sanctions were sought and found 230 sanctions awarded, including often severe sanctions of case dismissal, adverse jury instructions and significant money awards. Sanctions of more than $5 million were ordered in five cases, and sanctions of $1 million or more were awarded in four others. Before 2009, the highest number of sanctions awarded against lawyers in a single year was five. However, 46 sanctions were awarded in 2009, the last year covered by the study.
 

Defendants and their lawyers were sanctioned for e-discovery violations nearly three times more often than plaintiffs. When sanctions were awarded, the most common misconduct was failure to preserve electronic evidence.


That is why prospective environmental litigants and their counsel must be aware of the issue. Even if the client does not realize that the duty to preserve has attached, and electronic information disappears, the client and its lawyers are subject to spoliation claims, and increasingly sanctions.
 

Pinpointing The Problem Is Not Easy
A duty to preserve represents a legal requirement to maintain relevant records for litigation. Hence, identifying the trigger of the duty to preserve is essential. The duty to preserve arises before a complaint is filed when a party reasonably should know that the evidence may be relevant to anticipated litigation. When that time occurs is anything but certain.


Unlike the paper world where documents are often maintained in central storage, in the electronic world, every employee is a file keeper. E-mails can disappear with the stroke of a key. A company’s records management system may provide for relatively short timeframes for e-mails in mailboxes to eliminate data clutter. Be aware that storage systems used for disaster recovery are periodically recycled.


So, when should environmental lawyers instruct their clients on preserving documents, and particularly e-documents, for litigation? It is not at all easy to pinpoint. But, the courts have made it increasingly clear through sanctions that lawyers must figure it out. Making it even tougher are the differing views among judges on such issues as:

 

  1. Can a prospective plaintiff or defendant have a duty to preserve if counsel has not been retained to explain the duty?
  2. Must a client’s lawyer have knowledge of a claim before a duty to preserve can be triggered?
  3. If an environmental agency is pursuing other entities in an industry but not your client, does that trigger a duty to preserve?
  4. Does a notice of violation sent by a regulatory agency represent “anticipation” of litigation.

Conclusion

I repeat -- In the world of environmental claims, there are numerous ways that a client’s duty to preserve documents, and particularly e-documents, can arise before litigation is actually filed.
 

Be careful out there!

GIVING PRPs THEIR DUE: GENERAL ELECTRIC'S DUE PROCESS CHALLENGE TO CERCLA UNILATERAL ADMINISTRATIVE ORDERS HEADS TO THE SUPREME COURT

Posted on February 1, 2011 by Donald Fowler

Over the past three decades, EPA has issued more than 1,700 CERCLA UAOs to roughly 5,400 PRPs ordering the performance of response actions at CERCLA sites costing in aggregate in excess of $5 billion. Only a small handful of those orders, however, have ever been challenged in court, and vanishingly few have been subject to any independent third party review whatsoever.
 

 

Why is that? Well, as even EPA might agree, it is not because the Agency is infallible. No, the reason for EPA’s essentially unreviewed exercise of its UAO authority is the CERCLA statute itself, which (a) by operation of Section 113(h), precludes any challenge to a UAO order until the ordered response action has been completed (typically many years later at an average cost of $4 million dollars) and (b) by operation of Sections 106 and 107, subjects any PRP who elects to defy a UAO to treble punitive damages and additional penalties of $37,500 per day, which accumulate until EPA, at its sole discretion, brings an enforcement action.
 

In this regard, CERCLA is an outlier in administrative law. Though instances are common where federal statutes give agencies the power to issue administrative orders, virtually every other comparable scheme affords recipients of such orders either a prior hearing or the prompt opportunity for independent review after the order is issued. CERCLA, of course, provides neither.

 


So what justifies this unusual approach? It has been suggested on occasion that due process must be dispensed with because UAOs are needed to address emergency conditions. They can only be issued, after all, where an imminent and substantial endangerment to public health or the environment is shown. There are two problems with that rationale, however. First, the courts have largely upheld EPA’s position that “imminent and substantial endangerment” doesn’t really mean “imminent” or “substantial” – there really is no site involving a hazardous substance and a release (actual or threatened) that doesn’t meet the statutory criteria for UAO issuance. Second, as EPA has conceded in litigation, the fact is that EPA doesn’t issue UAOs in true emergencies; in those circumstances, it does the work itself and seeks to recover its costs later.

 


Okay, so even if true emergencies are not implicated, it’s still the case that EPA has a need to act quickly and that allowing pre- (or prompt post-) issuance review would unduly impede cleanup of hazardous sites, right? Well, as it turns out, that’s not true, either. Analysis of EPA’s CERCLIS database reveals an average 8-year lag-time between identification of a site and issuance of a UAO and a 4-year lag between remedy selection and UAO issuance. Obviously, there’s plenty of time in the system for a little due process.

 


So why haven’t past procedural due process challenges to this UAO scheme (and there have been a number of them) succeeded? The courts that have rejected those challenges have commonly concluded that the challenging PRPs couldn’t show a pre-hearing deprivation of property, as is required to trigger Fifth Amendment protections. Those courts reasoned that a PRP could simply refuse to comply with and wait for EPA to sue to enforce the UAO, and in that event would suffer no pre-hearing deprivation of property since penalties and damages could only be awarded following a court hearing.

 


Though the conclusion is facially appealing, its fallacy is demonstrated by the record of the most recent constitutional challenge brought by GE. There, following extensive discovery from EPA and expert testimony on both sides, GE was able to demonstrate empirically that a PRP that elected to defy a UAO would be immediately punished by the equity and capital markets, which would recognize the massive contingent liability such defiance would create and account for it by lowering the PRP’s stock value and increasing its cost of financing, with consequent impacts on its ability to bid for new projects or to hire additional employees, among other things. Indeed, although he took issue with GE’s assessment of the magnitude of the impact, even EPA’s economic expert agreed that defiance would occasion such harmful effects and that they would be significant. And the District Court agreed, as well, that defiance would not avoid a deprivation of property, though it ultimately ruled against GE on the basis that the burden to EPA of providing hearings outweighed the private party interests favoring such hearings.

 


On appeal the D.C. Circuit rejected the district court’s finding of a pre-hearing property deprivation, however, and ruled instead that such harmful impacts did not involve constitutionally protected property rights and so dismissed GE’s constitutional challenge on that predicate ground without reaching the District Court’s balancing analysis. The potential implications of that holding – which GE believes is inconsistent with Supreme Court precedent – extend well beyond CERCLA confines, and so GE has sought certiorari review.  The government’s response to GE’s petition is due February 4.


Stay tuned.

USEPA Continues the Evolution of Its Clean Air Transport Rule

Posted on January 31, 2011 by David Flannery

EPA proposed its Clean Air Transport Rule (CATR) on August 2, 2010. The CATR would require extensive additional emissions controls on Electric Generating Units, or EGUs, in a 31 state area, purportedly for the purpose of attaining ozone and PM2.5 NAAQS and eliminating “significant contribution” to nonattainment (transport) from upwind states to downwind states.

 

The electric power industry submitted extensive comments on the CATR which provided EPA with new studies that demonstrate EPA’s failure to account for dramatic improvements in air quality in recent years and its failure to recognize future air quality improvement due to existing regulatory requirements. In particular, this data show that the proposed CATR ozone objectives can be achieved with no new controls beyond the existing regulatory requirements. The same study also concluded that PM2.5 objectives of the proposed CATR can be achieved with no new controls beyond the existing regulatory requirements, with the possible exception of additional local controls at the Allegheny County, PA and Brooke County, WV locations.

 


On January 7, 2011, EPA published its third Notice of Data Availability (NODA) with respect to CATR. The latest NODA provides data on potential allocation mechanisms and seeks comments on alternative approaches. EPA received numerous comments on allocation issues as a result of proposing the CATR. Following up on the comments, EPA analyzed allocation mechanisms for existing EGUs and is now providing data that it believes might support two alternative allocation mechanisms.
 

The two options include:

Option 1, which would allocate a state’s existing unit budget based on each unit’s proportionate share of the state’s total historic heat input. For each covered unit, annual heat input values for the baseline period of 2005 through 2009 would be identified using data reported to EPA or, where EPA data are unavailable, using data reported to the Energy Information Administration (EIA). For each unit, the three highest, non-zero annual heat input values within the 5-year baseline would be selected and averaged. 


Option 2, which would yield the same initial allocation pattern as Option 1 (based on historic heat input) but would then add a constraint (i.e., a limit on allocations) based on a unit’s reasonably foreseeable maximum emissions under the proposed Transport Rule trading programs. For those units with heat input-based allocations that would exceed historic emissions, this option would limit allocations so that the units would not be given allowances in excess of their reasonably foreseeable maximum emissions.

 


EPA is requesting comments through February 4, 2011 on the two allocation options and four other issues, including (1) the implications of the alternative allocation methodologies for the proposed assurance provisions; (2) an alternative approach to calculate allowance surrender requirements at the designated representative level for the assurance provisions; (3) a methodology for distributing allowances to new units that locate in Indian country within the Transport Rule region; and (4) possible options for states wishing to submit State Implementation Plans (SIPs) providing for state allocation of allowances in the Transport Rule trading programs. The NODA included references to state auctions of allowances in the description of acceptable options.

 


In other developments related to the transport rule, U.S. EPA announced in December 2010 that it needs until July 29, 2011, to complete the ozone NAAQS. With its second transport rule intended to implement this revise ozone standard, it is now uncertain as to when that proposal can be expected.

Regulatory Uncertainty and Structural Unemployment

Posted on January 26, 2011 by Kevin Finto
Almost every day we hear about the seemingly glacial pace of the current recovery and the unfortunate persistence of unemployment.  Some of the discourse has focused on regulatory uncertainty, more specifically, the numerous and amorphous dictates of health care and financial reform and whether they are a cause of structural unemployment.  Less often we hear similar concerns about EPA’s rule for green house gases.
 
 
            More pernicious to unemployment than these high profile government actions, however, are relatively small revisions to the law through agency actions on permits, orders and guidance, without the benefit of any rulemaking required by the Administrative Procedure Act (“APA”). This pattern of agency behavior creates not only uncertainty as to what the law is but also the perception, if not the real risk, that an agency might change the law at any time. This uncertainty inhibits the trust and confidence necessary for investment that create employment. A couple of recent examples illustrate this risk.
 
Particulate Matter Regulation
 
            Particulate matter has been regulated under the Clean Air Act since its inception. Over time, the regulated form or portion of the particulate matter has changed as EPA has focused on fine particulate and its potential for respiratory damage. In 1985 EPA issued regulations establishing National Ambient Air Quality Standards for PM10 (particulate matter with an aerodynamic diameter less than 10 microns).  Over time, EPA developed techniques for measurement, control, monitoring and modeling of PM10. In 1997, EPA defined a new pollutant, PM2.5 (particulate matter with an aerodynamic diameter les than 2.5 microns) and a new NAAQS for it. EPA recognized, however, that agencies and the regulated community lacked the “necessary tools to calculate emissions of PM2.5 and related precursors and project ambient air quality impacts.” and authorized use of PM10 as a surrogate for PM2.5.  This policy was affirmed in rulemakings in 2005 and 2008 (the latter established a transitional period through 2011 to direct regulation of PM2.5).
 
 
            A little over a year (and a change in Administrations) later, in the context of acting on a petition for an objection to a Title V permit for an individual power plant, EPA abruptly did an about face, declaring that “permit applicants and permitting authorities [must] determine whether PM10 is a reasonable surrogate for PM2.5 under the facts and circumstances of the specific permit at issue, and not proceed on a general presumption that PM10 is always a reasonable surrogate for PM2.5.” Remarkably, the Trimble Order provides no explanation whatsoever as to how the new “requirement” to conduct a case-by-case assessment overrides the transition rule for SIP-approved states established through notice and comment procedures in the PM2.5 NSR implementation rule. Moreover, the order fails to explain why the court opinions “that are properly read as limiting the use of PM10 as a surrogate” – all of which predated the 2008 PM2.5 NSR implementation rule somehow have greater force and effect now than they did at the time the transition policy was established in the implementation rule.
 
 
            EPA has vigorously insisted on the reasonableness analysis prescribed in the Trimble Order, regulated entities have been forced to attempt to comply with it and state agencies have enforced it. Clearly, EPA’s statements have the requisite practical binding effect to bring them under the purview of the APA. More importantly, this previously unknown requirement for a reasonableness analysis is not a trivial one, especially for projects that are in the middle of permitting, engineering design, financing or even construction. Attention must be diverted from making the project a reality to figuring out how to comply with a new requirement. Like so many recent pronouncements, in Trimble County, EPA made a policy pronouncement but provided no tools to implement it. That is a recipe for regulatory uncertainty leading to structural unemployment.
 
 
Prior Converted Croplands
 
            A more recent Corps decision regarding the treatment of prior converted croplands puts a finer point on the APA implications of rulemaking by permit, order or guidance. Under the Clean Water Act, a permit is required to discharge fill material to waters of the United States, including wetlands. In 1993, the Army Corps of Engineers, which administers the permit program issued a rule excluding prior converted croplands, i.e. lands that were drained to grow commodity crops prior to 1985, are not wetlands because they no longer exhibit the characteristics or serve the function of wetlands.   The only way for such lands to revert to Corps jurisdiction is for them to be abandoned as croplands and revert to their wetlands state. In July of 2009, the Jacksonville District Office of the Corps issued an “Issue Paper” in which it determined for the first time that prior converted cropland that is converted to non-agricultural uses are subject to Corps jurisdiction, regardless of there characteristics or function as wetlands. The Issue Paper, which was written in response to jurisdictional determinations for five limestone quarries, was sent to the Corps Headquarters for review and it was affirmed as agency policy. It was not, however, subject to notice and comment rulemaking.
 
 
            In a challenge brought by affected landowners, the United States District Court for the Southern District of Florida found that the Issue Paper was a rulemaking adopted without the required notice and comment under the APA and therefore was not valid.   The court explained that the rulemaking process was not a mere technicality because that procedure provided the agency with diverse public comment, accorded fairness to interested parties and allowed the development of record for judicial review. The Corps argued that the Issue Paper was a mere policy statement, but the court disagreed stating that it resulted in a shift in rules and a new binding norm regarding what the Corps considers wetlands from which district offices were not free to deviate in individual cases.
 
 
            Both Trimble County and New Hope Power Company reflect exactly the type of agency activity – the reversal of years of agency practice by a permit, order or guidance document and without a valid rulemaking – that creates regulatory uncertainty and structural unemployment. No matter how much private or stimulus money is thrown at it, no project can truly be “shovel ready” (i.e., fully designed, planned and financed) when there is no way to determine whether it complies with the law or whether the rules that apply to it will change while it is under construction. 

EPA Section 404 Guidance For Surface Mining In Jeopardy

Posted on January 25, 2011 by Theodore Garrett

On January 10, 2011, the US district court in DC ruled that the mining industry is likely to succeed in challenging EPA's interim April 1, 2010, guidance on Clean Water Act (CWA) §404 permitting for surface mining projects in Appalachia, but denied industry's motion for a preliminary injunction. The decision, in a lawsuit brought by the National Mining Association, illustrates the pitfalls of agency regulation by guidance. The court’s opinion accepts the industry's arguments that EPA likely violated the notice-and-comment requirements of the Administrative Procedure Act and that EPA’s June 11, 2009 Enhanced Coordination Process memorandum, which subjects coal mining related §404 permits to enhanced scrutiny, “encroached upon the role carved out for the states under the Clean Water Act” However, the court held that the industry has not demonstrated the certainness of imminence of industry losses and, further, why any economic losses resulting from permitting delays “cannot ultimately be recovered if and when the mining projects in question are permitted to proceed.” The court denied the government’s motion to dismiss and held that the case is ripe for a determination on the merits, because no factual developments would clarify the issues.

Michigan Makes Sweeping Changes In Its Environmental Response Act

Posted on January 19, 2011 by Jack Shumate

When Michigan adopted the Environmental Response Act in 1995, codifying numerous statutes into a comprehensive code, people throughout the United States hailed Part 201 as the most business-friendly environmental remediation statute in the country. Part 201 of the new Michigan Environmental Response Act (MERA) largely did away with status liability and made it possible for a new owner or occupant, through the use of a vehicle called a Baseline Environmental Assessment (BEA) to take title or occupancy of contaminated property free of liability so long as it did not exacerbate the situation or expose occupants of the property to undue risk.

Almost from the moment that MERA was enacted, staff of the Michigan Environmental Regulatory Agency began to adopt and implement regulations making it increasingly difficult to obtain an approved BEA for industrial, and some commercial, properties. Regulations such as the Draconian ones regulating groundwater-surfacewater interface and vapor intrusion discouraged the re-use and redevelopment of contaminated corporate properties. Some of the district offices of the Michigan Department of Environmental Quality (MDEQ) even went so far as to flatly refuse to even consider review of a draft BEA seeking approval for a new use of contaminated property if the new owner or occupant was likely to generate any contamination identical to pre-existing contamination.
 

The debate between MDEQ staff and environmental groups on one side and business interests on the other raged until late 2010, when a lame duck Legislature approved, and lame duck Governor signed, an amendatory act making significant changes in Part 201. Now, the statute - and, hopefully, the regulations implementing the revised statute - will bring the Michigan procedure much more closely in line with the Federal All Appropriate Inquiry rules. It is believed that this will encourage Brownfields redevelopment and badly needed business expansion in the state.

Attached is a brief summary prepared by The Dragun Corporation, environmental consultants, highlighting some of the most significant changes - and also pointing out a few potential pitfalls.

For further information contact Jack Shumate at shumate@butzel.com or 248.258.1405.

Preserving the Tallgrass Prairie in the Face of Stringent Air Quality Standards: The Flint Hills Smoke Management Plan

Posted on January 17, 2011 by Charles Efflandt

It is an environmental truism that increasingly stringent air quality standards can cause collateral damage – typically economic in nature. It is less common for such standards to directly impact preservation of a significant North American ecosystem.

Comprising a vast area in eastern Kansas and northeast Oklahoma, the Flint Hills ecosystem remains today the last unfragmented expanse of tallgrass prairie on the continent. Roughly two-thirds of all tallgrass prairie in North America is contained in the Flint Hills. The Flint Hills provide a unique ecosystem for numerous mammals, birds, reptiles and cattle (the surrogate for the bison that once roamed this area and that served as a keystone species in maintaining biodiversity). The U.S. Fish & Wildlife Service and The Nature Conservancy have both identified the Flint Hills as a priority conservation action site.

Fire is a critical ecological driver in the tallgrass prairie. Lightning is nature’s tool for this process of ecological renewal. The burning of large sections of the Flint Hills was practiced for centuries by Native Americans. In more modern times, controlled burning has been utilized by conservation agencies and organizations, as well as by ranchers, as an ecological and agricultural management tool. Tallgrass prairie preservation requires frequent burning to prevent the encroachment of woody species and maintain the integrity of the plant communities and wildlife habitat. From an agricultural perspective, the burning and renewal of the tallgrass has been shown to significantly increase the productivity of the rangeland for cattle ranching purposes.
 

Such frequent and widespread burning, however, creates health concerns. Air modeling has shown transport of PM and ozone precursors as far east as Tennessee during the burning season. Air pollutants from Flint Hills burning have also adversely impacted or threatened the NAAQS attainment status of areas in Kansas and Missouri. With more stringent ozone regulations imminent, this conflict between ecological preservation and compliance with air quality standards will be exacerbated.

A recent ACOEL posting suggested, in the climate change context, that the severe economic consequences of the traditional legislative/regulatory process can and should be mitigated through creative voluntary community effort. With the ecologically and agriculturally beneficial practice of tallgrass burning on a collision course with NAAQS attainment, such an approach was recently embraced by the U.S. EPA, Kansas Department of Health and Environment, conservation and agricultural organizations and academia. The December 2010 approval of the Flint Hills Smoke Management Plan was the result of over a year of collaborative effort by these stakeholders. The key elements of the Plan include:

  • A new website with a predictive plume modeling tool for public and private decision-making.
  • Development of fire management practices to mitigate adverse health consequences and NAAQS violations associated with controlled burning.
  • A comprehensive data collection effort to better characterize prairie burning and its consequences.
  • Proposed limited legal restrictions on open burning during critical time periods.
  • Extensive outreach and education efforts, including prescribed fire training programs, public-private information sharing, and media exposure.
  • A pilot project in the spring of 2011 in two Kansas counties to implement the predictive computer modeling and fire management practices.

The Plan has been attacked by certain environmental organizations as a “smoke screen” whose objective is to facilitate EPA exemption of burning from enforcement in order to maximize beef production. These critics discount the ecological motivation for the Plan and allege that it is unlikely to adequately protect public health. I would suggest that the Plan should not be viewed as the final answer. Rather, it should be considered a working document that will evolve as the results of modeling and data collection and level of voluntary implementation are evaluated. Time will tell the extent to which the Plan can be cited as further evidence of the power of voluntary, collaborative

California's New "Green Chemistry Initiative"

Posted on January 6, 2011 by Robert L. Falk

Manufacturers and retailers who import consumer products from overseas are facing a significant new challenge emerging from California. The State’s “Green Chemistry Initiative” has the goal of removing, reducing, or replacing potentially harmful chemicals in consumer products. Given that its market represents the world’s seventh largest economy, California’s Green Chemistry Initiative will likely have a significant impact upon the worldwide supply chains for these products.

 
California’s Green Chemistry Initiative was enacted on September 29, 2008, through two companion bills, Assembly Bill 1879 and Senate Bill 509. These statutes broadly describe a general structure for the law, with the details left to future regulations by the lead agency, the California Department of Toxic Substances Control (“DTSC”).DTSC released its most updated version of proposed implementing regulations on November 16, 2010. These consisted of requirements regarding:

  1. the prioritization of chemicals and products of high concern,
  2. requirements for an alternatives assessment process, and
  3. regulatory options for DTSC to exercise based on its review of such assessments, which may require a manufacture to reformulate a product or stop its sale in California.


Although the proposed regulations implementing the Green Chemistry Initiative were due to be finalized by January 1, 2011, given the impending swearing in of Jerry Brown as California’s new Governor, on December 23, 2010, the California Environmental Protection Agency stated that “substantive and valid concerns” had been raised by “industry, environmental groups, scientists, and legislative leaders,” such that the proposed regulations will be reviewed, and likely amended, by a “Green Ribbon Science Panel” before going into effect.


While the final shape of the regulations remains to be seen, the heart of DTSC’s draft scheme is likely to survive even if modified. Its key feature is an alternatives assessment requirement which mandates evaluation of the potential impacts of chemicals of concern in products and an identification of less toxic alternatives to reduce those impacts. This analysis must also consider how the product is manufactured and used; what happens to it after its useful life; and its other likely effects on health, the environment, and other resources throughout its life cycle. As drafted, the regulations ultimately would require the manufacturer to select and propose to DTSC the alternative it intends to implement and to provide DTSC with the rationale for the selection and a proposed timetable for implementation. The process by which DTSC reviews a manufacturer’s alternatives assessment and provides an approval is likely to be resource-intensive, requiring management of an enormous amount of detailed and potentially conflicting scientific information. At a time when California faces a large fiscal crisis, funding such a new and far reaching program may prove unrealistic; this funding gap may dictate a change in the proposed regulations. Notwithstanding the Green Ribbon Science Panel’s forthcoming review, all eyes will be on newly-inaugurated Governor Brown’s office to provide direction on the future of this program.


The California Legislature believed the Green Chemistry Initiative will lead to safer products, fewer exposures to potentially harmful chemicals, and a healthier environment. While these goals are laudable, as a practical matter, it remains to be seen whether the State’s plan for implementing this ambitious law will be successful or end up being crushed by its own weight.
 

"No More Business as Usual": A Preview of Climate Change and the California Environmental Quality Act in 2011

Posted on January 5, 2011 by Patrick Dennis

As goes California, so goes the rest of the nation? That could be the case with respect to climate change and the regulation of greenhouse gas (GHG) emissions. Climate change and the implications of California’s Global Warming Solutions Act of 2006 (also known as AB 32) continue to remain a topic of great debate and speculation nationwide, as well as in California. AB 32 recently survived an initiative challenge during California’s November 2010 election cycle, and deadlines established in AB 32 to meet greenhouse gas reduction goals continue to loom. Recently, Governor Arnold Schwarzenegger, who just left office a few days ago, gave remarks at a California Air Resources Board meeting and acknowledged the “great, great benefits” from the creation of green jobs and venture capital being provided to GHG reduction projects. However, the Governor’s excitement for the benefits of AB 32 and climate change initiatives were tempered by California’s economic reality. According to the Governor:

 


We have to be sensitive because it is an economic downturn and this Air Resources Board knows that they have to be sensitive. But we have to reach our goal by 2020, our reductions of 25 percent and we’ve got to go and have our 33 percent of renewables by 2020. There are no two ways about that.

 


So what does this mean as we look forward to 2011 with a new Governor and lingering fiscal issues?
 

One area of law where climate change is bound to remain an active topic of discussion, and likely litigation and regulatory development, is with respect to the California Environmental Quality Act (CEQA). At the time AB 32 was adopted, there was uncertainty about the type of greenhouse gas emissions analysis that would be required under CEQA, and opponents of development projects filed several lawsuits to challenge projects on that basis. The early California State superior court decisions after passage of AB 32 ran the gamut from not requiring climate change analysis or a discussion of AB 32 , to finding an environmental impact report inadequate for failing to make a meaningful attempt to determine the project’s effect on global warming simply because it was “speculative”. In 2007, California adopted SB 97, which directed the Governor’s Office of Planning and Research (OPR) to develop recommended amendments to the State CEQA Guidelines for addressing greenhouse gas emissions , with the goal of creating a coordinated policy – instead of a “piecemeal approach dictated by litigation .” The amendments became effective in March 2010.

 


Despite the adoption of the CEQA guidelines amendments, how state and local agencies should analyze and, when necessary, mitigate greenhouse gas emissions still remain somewhat of a mystery, because the amended guidelines and most local governing bodies have fallen short of providing a clear threshold as to what constitutes a significant impact under CEQA, and what should be done to mitigate the impact. However, what we can anticipate for 2011 is that project applicants must “do something” – business as usual (i.e. developing projects without evaluating and, as necessary, reducing GHG emissions) will likely not suffice. The amended guidelines have been adopted, models for quantifying GHG emissions are available, and state and local agencies such as the Attorney General’s Office ) and various air quality management districts have provided recommended mitigation measures and performance-based and numeric thresholds related to climate change. The California Court of Appeal also weighed in on the “do something” mantra in April 2010 in concluding that an environmental impact report was inadequate because it improperly deferred an evaluation of GHG mitigation measures. It held that, “[d]ifficulties caused by evolving technologies and scientific protocols do not justify a lead agency’s failure to meet its responsibilities under CEQA by not even attempting to formulate a legally adequate mitigation plan.”

 


All in all, with AB 32 left intact, the adoption of the new CEQA Guidelines, and the CARB regulatory package for implementation of AB 32 likely to be put in place, 2011 promises to be an active year in California’s legal and regulatory environment – one that the nation will continue to closely monitor as California takes the lead.

EPA Issues First Ever Numeric Nutrient Water Quality Criteria and Standards for Florida Lakes and Rivers

Posted on January 4, 2011 by Lee A. DeHihns, III

On November 15, 2010, EPA announced that it had issued final numeric nutrient water quality criteria (NNC) for lakes, rivers, streams and springs in Florida, marking the first time that EPA has set numerical nutrient standards for a state. EPA’s rationale for these standards is that excess loads of nitrogen and phosphorus, the most common nutrients found in water bodies, are one of the most prevalent causes of water quality impairment in the United States and that it is a “widespread, persistent, and growing problem.” The nutrient standards establish nutrient criteria for lakes and streams by requiring that total nitrogen (TN) and total phosphorus (TP) be no higher than set levels for five different watershed regions and three different classes of lakes. For lakes, EPA also set criteria for chlorophyll a.

 

EPA identified 193 point municipal and industrial dischargers that are potentially affected by the rule. For municipal entities, current annual average permit limits are 3.0 mg/l for TN and .1 mg/l for TP. EPA expects that municipalities will need to employ advanced biological nutrient removal (BNR) to meet the lower levels in the rule. EPA’s annual cost estimates to implement the rule are between $135 and 206 million. EPA states that the average homeowner will pay an estimated $40 to 71 annually in increased utility bills.
 

Two main concerns emerged in the commentary on the proposal. First, critics asserted that the science behind the proposal is not sound. For example, The Florida Department of Environmental Protection (FDEP), in its comments on EPA’s proposal, noted that “EPA stream criteria for protection of downstream estuaries were not scientifically valid, that EPA’s approach to the stream criteria is not appropriate, that some aspects of what EPA has done are not adequately protective of the environment, are not linked to biological response, and, (in particular for lakes) the EPA’s approach was too simplistic.”

 

Second, they assert that the costs are both too high and not proportionate to the environmental benefits that EPA is hoping to achieve. The Florida Water Environment Association Utility Counsel (FWEA) released a report which said that treatment costs to meet the new standards are estimated to be “between $4.2 and $6.7 billion, and the annual debt service, including incremental operating and maintenance costs, is expected to range from $430 million to $620 million per year. Typical increases in customer charges are expected to range from $570 to $990 per year.” Similarly, the Florida Water Quality Coalition stated that the “costs of the proposed federal NNC regulations far exceed the EPA estimates. If EPA enforces ‘end-of-pipe’ criteria (requiring all discharger effluent levels to be at or below the NNC), the total annual costs could range from $3.1 to $8.4 billion.”

 

This is, no doubt, one of the most significant acts that EPA has taken in the water quality standards field for quite some time, and even though the standards are being set for just one state, EPA has taken a giant step down the path to imposing numeric criteria in nationwide. There will be a lot of litigation (six law suits have already been filed challenging the regulations), political push-back and a lot of discussion about how these standards are going to be implemented, delaying the actual implementation for a period of time. While EPA has pushed the effective date of the rule to 15 months following promulgation in order to allow time to comply, even this delay will likely prove to be insufficient to resolve the many contested issues.

 

For those readers seeking more detail on these EPA’s regulations and their consequences, please see the Alston & Bird Environmental and Land Development Advisory titled "EPA Issues First Ever Numeric Nutrient Water Quality Criteria and Standards for Florida Lakes and Rivers" here.

Tailoring Rule Gets Further Alteration (or Nip and Tuck EPA Style)

Posted on December 30, 2010 by Karen Aldridge Crawford

On December 30, 2010, just days before the first Greenhouse Gas (GHG) regulations are to become effective, EPA issued another final rule to clarify and narrow the applicability of those regulations. 75 FR 82254 (12/30/10).

 

After reviewing the “60-day letters” received by EPA from most of the states, the agency realized its initial strategy for regulating GHG emissions was flawed in those states that had approved Title V permitting programs Those state programs were based on Clean Air Act and federal regulatory provisions in 40 CFR Parts 52 and/or 70 that established the threshold for major source determinations as 100 tons per year (tpy) for certain air pollutants subject to regulation, rather than the 100,000 tpy threshold on a carbon dioxide equivalent (CO2e) which EPA determined should apply to GHG emissions (the Tailoring Rule).

 

While some state laws and regulations were worded broadly enough to be consistent with the initial Tailoring Rule, many states would be required to modify their program to only regulate GHG emissions at the higher Tailoring Rule threshold upon the January 2. 2011 effective date of the new rule. Otherwise, those states’ programs would require regulation of GHG emissions at the original threshold of 100 tpy, which would inundate the states with many more permit applications than EPA’s regulations actually intended.

 

The provisions in both Part 52 and Part 70 applicable to the affected state programs are revised to read, “… EPA approves such provisions only to the extent they require permits for such sources where the source emits or has the potential to emit at least 100,000 tpy CO2e, as well as 100 tpy on a mass basis, as of July 1, 2011.” EPA has stated this language means that GHGs are regulated at 100,000 tpy and all other pollutants subject to regulation are regulated at the 100 tpy mass-based threshold.

 

It will be interesting to watch whether the courts’ interpret this additional “clarifying” language to be clear and legal.

Changes Coming In The Michigan Environmental Regulatory Authority

Posted on December 30, 2010 by Jack Shumate

Michigan’s Governor–elect Rick Snyder has announced that he intends to split the Michigan Department of Natural Resources (MDNR) into two departments – the MDNR and a Department of Environmental Quality (MDEQ) – after he takes office on January 2, 2011.

This will be the latest change in an oft – reorganized environmental enforcement structure in Michigan. The two functions were originally consolidated in the MDNR, but it was recognized that they were incompatible after the MDNR was forced to fine itself for dumping toxic substances into a river, resulting in a major sport fish kill. The current Governor, Jennifer Granholm, merged the two departments again in an effort to save money.

Details of how regulatory functions will be divided have not been announced but it may be anticipated that Governor-elect Snyder, a former corporate CEO, will favor a regulatory regime that seeks to encourage growth and development of business in the state.

For further information contact Jack D. Shumate at shumate@butzel.com.

Time for Climate Change Change?

Posted on December 29, 2010 by Linda Bullen

The climate change debate soldiers on, despite set-backs at the national level. The California Air Resources Board, for example, has released the first state level cap and trade proposal, which remained open for public comment until December 15, 2010. Despite a handful of such gallant efforts to address global warming through legislative means, few, if any, political attempts to address the issue have succeeded. Perhaps this is a reflection, as recent polls suggest, of a waning public belief, at least in some circles, that global warming is man-made. Equally likely, however, is wide spread economic distress, which takes immediate precedence in the lives of many.

 

Since pervasive legislative solutions to global climate change do not seem to be in the offing, perhaps the time is upon us to examine and adopt an approach to carbon emissions concerns which is scientifically effective and cost-effective alike. Rather than implementing grand political initiatives such as cap and trade, perhaps we should think about implementing measures which can be implemented by individuals and communities at the local level. Measures such as painting the roofs of buildings in hot climates white, implementation of passive solar heat collection in homes and businesses, lowering thermostats in the winter and carpooling can all be implemented inexpensively or can actually save money, while at the same time having the direct effect of reducing carbon emissions. Personally, I have always been a big proponent of the use of public transportation. It makes both economic and environmental sense and certainly reduces an individual's carbon footprint.

 

In short, there are measures which we, as individuals, and more collectively, as communities, can do which address climate change that can be effective yet would not have negative economic consequences. While such measures will never replace legislative solutions, they are a step in the right direction while we await the enactment of more comprehensive legislative responses.

Happy New Year? With the Advent of Greenhouse Gas Regulation Only Days Away, Many in Industry Might Prefer, Instead, to Turn Back the Clock

Posted on December 28, 2010 by John Crawford

By James R. Farrell

Butler, Snow, O’Mara, Stevens & Cannada, PLLC (www.butlersnow.com)

 

 

Regulation of greenhouse gas (GHG) emissions has become a reality. Although the Supreme Court’s 2007 ruling in Massachusetts v. EPA deserves much of the credit for EPA’s aggressive response to global warming, congressional inaction on comprehensive climate change legislation ultimately set in motion the agency-driven agenda that has led our country to an historic yet extremely controversial crossroads in environmental regulation. The Supreme Court’s conclusion that GHGs constitute air pollutants as defined by the Clean Air Act required EPA to determine whether GHG emissions from motor vehicles cause or contribute to climate change that is reasonably anticipated to endanger the public health or welfare; however, the Court’s requirement for regulatory action did not preclude the possibility of a legislative response.

 

 

Despite the dim prospects for comprehensive climate change legislation today in the wake of the turbulent 2010 mid-year elections, the political landscape appeared far more favorable little more than eighteen months ago. On June 26, 2009, the House had narrowly passed the American Clean Energy and Security Act of 2009 (the “Waxman-Markey Bill”) by a vote of 219-212. The Waxman-Markey Bill featured a cap and trade component to regulate GHG emissions, and the bill would have required a seventeen percent reduction in GHG emissions from 2005 levels by 2020 and an eighty percent reduction by 2050. 

 

 

In the Senate, Senators John Kerry (D-MA), Joseph Lieberman (I-CT), and Lindsay Graham (R-SC) had been hard at work on a comparable climate change bill dubbed the American Power Act. In early 2010, the bill appeared to have bipartisan support due in large part to its provision for expanded offshore drilling, an early and significant concession by the bill’s sponsors. But when the Deepwater Horizon exploded on April 20th, everything changed. As public outrage at the offshore drilling industry grew daily in response to the unprecedented magnitude of the oil spill, it triggered a proportional decrease in political will for comprehensive climate change legislation. By the time the American Power Act was introduced on May 12th, Senator Graham had already withdrawn his support insisting that the ongoing and more immediate threat posed by the Gulf oil spill had “made it extremely difficult for transformational legislation in the area of energy and climate to garner bipartisan support . . . .”

 

 

In the end, the legislative response to climate change that had once appeared likely – if not imminent – never materialized. In contrast, EPA has wasted no time since Massachusetts v. EPA engaging in regulation-making intended to address climate change. The culmination and cornerstone of this fervent EPA activity is EPA’s Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule (the “Tailoring Rule”), which will usher in a new and hotly contested era of GHG regulation on January 2, 2011. The Tailoring Rule’s phased-in approach to regulation means that the regulatory net it casts will gradually widen with time, initially targeting those stationary sources known to be the largest emitters of GHG emissions but eventually encompassing some smaller sources as well. 

 

 

Whether or not you’ll be ringing in the new year this year likely depends on your political persuasion. For many environmental groups who have lobbied tirelessly for greenhouse gas regulation, 2011 is a long-awaited (and soon to be much-celebrated) new year. For many in industry, however, 2011 is likely to be a year of nostalgia filled with no less than 365 opportunities to remember fondly the less regulated days of yesteryear. Happy New Year!

 

 

Butler, Snow, O’Mara, Stevens & Cannada, PLLC (www.butlersnow.com)

·        John A. Crawford

·        Michael D. Caples

·        James I. Palmer, Jr.

Chemical Disclosure - or my secret name's no secret any more

Posted on December 28, 2010 by Susan Cooke

Since passage of the Federal Insecticide, Fungicide, and Rodenticide Act in 1972, environmental statutes and regulations have sought to balance legislative mandates seeking disclosure of chemical identities and properties against trade secret protection concerns. This tension can be seen in the labeling of cosmetics, the submittal of test data under the Toxic Substances Control Act (“TSCA”), and the disclosure of chemical additives to fluids used for hydraulic fracturing. In all three situations, efforts to increase access to chemical identity information are likely to create further challenges to trade secret protection.

 

 

            On the cosmetics labeling and TSCA front, a bill introduced in the House of Representatives this past July, entitled the Safe Cosmetics Act of 2010, would have required cosmetics labels to identify the name of each ingredient in descending order of its “predominance”, with the same information provided for internet sales. Regardless of the type of sale, the ingredients would not be afforded trade secret protection. While the bill was not enacted, the concerns that kept it alive even in the waning days of the Congressional session may be a harbinger of a new version in the upcoming session.

 

 

            A bill to amend TSCA also filed in the House last July would have required a manufacturer to provide an upfront justification for any trade secret claim made in an information submittal under TSCA, with EPA required to evaluate the submittal within 60 days thereafter. While this bill did not pass either, EPA had previously announced its intention toreview chemical identity CBI claims in health and safety studies submitted under TSCA, and it subsequently proposed amendments to its TSCA regulations that would require upfront justification of a chemical identity claim. In addition, EPA has substantially increased the chemical information available on its Envirofacts database, and is now providing free access to its TSCA inventory of chemicals.

 

 

            Additives to hydraulic fracturing fluids have likewise been the subject of much attention, and have sparked initiatives in a number of states to require their disclosure. Beginning next year, Arkansas will require disclosure hydraulic fracturing fluids on a well by well basis, although allowing more generic disclosure of proprietary chemicals. The information will be publicly available for review on the website of the Arkansas Oil and Gas Commission. In Wyoming, the additives are reported to the staff of the state’s Oil and Gas Conservation Commission, rather than to the public, and the Commission has granted a number of requests for trade secret protection, although the requests themselves are matters of public record. 

 

 

            Colorado requires oil and gas drillers to keep an inventory of the chemical additives at the site of each well, with state regulators getting a copy of the inventory upon request. Pennsylvania requires material safety data sheets covering the fracing fluid materials to be included with each drilling plan submitted for approval, with the MSDS sheets made available to the landowner and to local government and emergency responders. Both Colorado and Pennsylvania are considering expansion of those requirements.

 

 

            In September EPA issued letters to nine companies engaged in hydraulic fracturing related activities seeking the identity of the fracing fluid additives and copies of studies about their health and environmental effects. All of the companies have now responded to the EPA request, with Halliburton establishing a public website to disclose information about those additives. In addition, a number of trade associations, including the American Petroleum Institute, have lent their support to a voluntary disclosure registry under development by the Groundwater Protection Council, which includes a number of state officials responsible for groundwater protection, and the Interstate Oil and Gas Compact Commission, with data to be disclosed on a well-by-well basis. 

 

 

            How efforts such as those just described will address trade secret issues remains to be seen, particularly given the concerns raised about potential contamination of drinking water supplies by fracing fluids. However, it appears that the day has passed when one could claim trade secret protection and provide support for that claim only when the information was actually requested. And the new riff on that old refrain sung by Johnny Mathis and Doris Day appears more likely to be that “my secret name’s no secret any more”.

IDAHO ADOPTS ANTI-DEGRADATION IMPLEMENTATION RULE

Posted on December 23, 2010 by Kevin Beaton

Last  month, the Idaho Department of Environmental Quality (IDEQ) adopted an anti-degradation implementation rule. The rule was adopted in response to a Clean Water Act citizen suit brought by an Idaho environmental group against EPA to force the agency to adopt such a rule for Idaho. Anti-degradation policies and an implementation plan are required as part of a state’s water quality standards under EPA’s Clean Water Act rules at 40 CFRR Part 131. Although Idaho had long ago adopted the required anti-degradation policy, the state had never formally adopted an implementation plan.

Anti-degradation policies are designed to protect existing uses in all waters known as “Tier I” waters, protection of certain “high quality” waters or “Tier II” waters from any lowering of water quality unless a proponent can demonstrate after full review by the state that such a lowering of water quality is economically justified and that all reasonable available pollution controls have been implemented. Putting together the information required for a full Tier II review can be costly, controversial and substantially delay or preclude the issuance of permits. For certain waters known as “Outstanding Resource Waters” or “Tier III” waters, no lowering of water quality is allowed.

Anti-degradation implementation procedures typically address such issues as what type of activities require anti-degradation reviews, which waters are subject to Tier I, Tier II and Tier III protections, whether anti-degradation applies to new or existing activities, how anti-degradation implementation addresses federal general permits such as storm water permits, whether certain activities are exempt from anti-degradation review because they are “insignificant” and the type of information that is required to be submitted as part of a Tier II review.

Idaho’s rule, which was subject to lengthy negotiations with stakeholders, generally followed the flexibility previously allowed by EPA Guidance and prior judicial decisions concerning anti-degradation implementation procedures. In identifying Tier II waters, Idaho adopted the “water body by water body” approach as opposed to the “parameter by parameter” approach and excluded most waters listed as impaired under Section 303(d) as candidates for Tier II waters. Idaho’s rule also confined anti-degradation reviews to new or increased discharges subject to NPDES Permits, Section 404 permits and hydroelectric facilities subject to certification under Section 401 of the Clean Water Act. Nonpoint sources were not required to undergo anti-degradation review. Also Idaho exempted certain new and increased discharges from anti-degradation review if they were deemed “insignificant.” For those interested in the Rule, it can be reviewed at IDEQ’s Web site. Also for those interested in the topic, EPA’s most definitive Guidance on what is required in a State’s anti-degradation implementation procedure can be found at EPA’s Advanced Notice of Proposed Rulemaking (ANPRM) at 63 Fed. Reg. 36741 (July 7, 1998).

Also some recent judicial decisions on the legality of States’ anti-degradation implementations procedures include Kentucky Waterways Alliance v. Johnson, 540 F.3d 466 (6th Cir. 2008); Ohio Valley Environmental Coalition, et al., v. USEPA, Memorandum Opinion and Order, August 29, 2003; Defenders of Wildlife v. U.S. Environ. Protec., 415 F.3d 1121 (10th Cir. 2005); and American Wildlands v. Browner, 260 F.3d 1192 (10th Cir. 2001).

Assuming that the Idaho Legislature approves the IDEQ rule (a requirement for all rules in Idaho), the rule will be submitted to EPA for approval early next year. Assuming EPA approves the rule, whether the environmental groups will challenge that approval remains to be seen. In the meantime, EPA has again taken a national interest in anti-degradation similar to its 1998 ANPRM, and took comment earlier this year on whether EPA rules on state anti-degradation implementation procedures need to be strengthened. At this time it is not known whether EPA will indeed make further efforts to change its anti-degradation rules. It would seem likely that the controversy and litigation associated with anti-degradation implementation procedures will continue.

Beware of "Impaired" Surface Water Designations

Posted on December 10, 2010 by Chester Babst

Is the act of adding a stream segment to the Clean Water Act section 303(d) list of impaired waters appealable? At least one Pennsylvania administrative law judge thinks not, as the mere publishing of the list creates no new duties on anyone. But the list is a discrete, final agency action that is predicate to direct administrative action. The science supporting the listing should be subject to challenge, just as are the specific load and waste allocations following the list.

Section 303(d) requires states to complete and submit a biennial Integrated Water Quality Monitoring and Assessment Report to the United States Environmental Protection Agency (“USEPA”) that lists all impaired surface waters in the state not able to support the specific uses of that water body (e.g., potable water supply uses), even after implementation of pollution control technologies and practices. Impairment status can have a significant impact on regulated entities that discharge into a designated water body.
 

As impaired, these state surface waters will require the development of a Total Maximum Daily Load (“TMDL”) to attain applicable water quality standards. A TMDL accounts for all point and non-point sources of the specified pollutant and it sets a cumulative pollutant load limit that applies to all dischargers, so as to prevent a violation of water quality standards. The USEPA and state agencies use TMDLs to compel best management practices and set discharge limits in National Pollutant Discharge Elimination System (“NPDES”) permits.

On April 3, 2010, the Pennsylvania Department of Environmental Protection (“Department”) published its draft 2010 Integrated Water Quality Monitoring and Assessment Report (“Draft Integrated Report”) for public comment. The Draft Integrated Report does not reveal how the Department reached the decision to designate a water body as being impaired, nor does the Department provide any supporting data for its designations. It is also unclear how pollutant loading allocations will be handled with respect to water bodies that extend into contiguous states.

Should a party wish to challenge an impairment designation, it is unclear when this agency action would be ripe for appeal. In a recent Pennsylvania Environmental Hearing Board case, an Administrative Law Judge offered his view of the process in dicta.

[A] state’s Section 303(d) list submitted to the EPA would not appear to be a final disposition of even what is on the list since, once submitted, it is for the EPA to pass upon the propriety of the list…. Even if the state’s listing as such of a waterway on the state’s Section 303(d) list were construed as a purely state action we still do not see that the state’s mere listing or de-listing of a waterway on the Section 303(d) list creates any immediate duties or liabilities which would be the key to appealability to the Board.

Telford Borough Authority, et al. v. DEP, EHB Docket No. 2010-111-K, slip op. at 7 (Opinion and Order issued September 7, 2010). Although providing insight into one judge’s view, whether a designation is ripe for appeal at the time a state submits a Section 303(d) list to EPA and/or at the time EPA approves or disapproves the list is still an open issue in Pennsylvania. It is also unclear whether a failure to perfect an appeal at either of these points in the process would affect appeal rights of individual sources at the time limitations are set in permits based upon the impairment designation. Given this uncertainty, an appeal of the designation is a prudent step for a source or group of sources that could ultimately be impacted by state actions designed to address the impaired status of a water body.

Because of the significant economic impacts associated with an impairment designation and the potential that such impacts could extend beyond state borders, it is important to monitor state and federal activities for designated water bodies and to consider the potential impact on your client and whether an appeal of the designation is necessary to protect your client’s rights and defenses.

Supreme Court grants cert in Connecticut v. AEP

Posted on December 7, 2010 by Michael Gerrard

The U.S. Supreme Court announced yesterday morning that it has granted certiorari in Connecticut v. American Electric Power, the case seeking an order compelling several electric utility companies to reduce their greenhouse gas emissions, based on common law nuisance theories. Justice Sotomayor recused herself; she had been on the Second Circuit panel that heard the argument below, though she had been promoted to the Supreme Court before the Second Circuit issued its ruling allowing the case to proceed.

Wisconsin DNR Seeks Additional Authority to Protect Against Adverse Impacts of Wind Projects

Posted on December 7, 2010 by Linda Bochert

 

WDNR has issued “Siting Guidelines” available here to help wind project developers site projects in ways that minimize impacts and will be revising its current “Bird and Bat Study Guidelines” to provide more comprehensive information.

 

The WDNR report was submitted in response to 2009 Wisconsin Act 40, which required the agency to determine if its “statutory authority is sufficient to adequately protect wildlife and the environment from any adverse effect from the siting, construction, or operation of wind energy systems.”

WDNR’s legislative agenda is in development. Whether the legislature will take up these recommendations is currently unknown. While WDNR's interest in more comprehensive authority is consistent with its view of its responsibilities, the risk for project proponents and developers is that it will create new grounds for project opponents to rely on to challenge siting decisions. For many the goal of alternative energy sources -- solar, wind, biomass -- is still only desirable when it isn't in their backyard.

 

 

In response to a legislative directive, the Wisconsin Department of Natural Resources (WDNR) in November submitted a report to the Wisconsin Legislature making four recommendations to enhance its authority to protect wildlife and natural resources from wind project impacts:

 

  1. require WDNR to prepare a formal “biological opinion” and require the Public Service Commission of Wisconsin (PSCW) to consider that opinion before PSCW approves a wind project; this opinion would 1) describe the potential impacts of the project to wildlife and natural resources; 2) identify potential conflicts with wildlife protection laws; 3) reach a conclusion as to whether the project has the potential to cause a significant adverse impact to habitat and fish and wildlife resources; and 4) reach a conclusion as to whether mitigation measures can be implemented to substantially reduce those impacts below the level of significance;
  2. require a wind project developer to obtain Incidental Take Permits or Authorizations under the Wisconsin Endangered Species Law (Wis. Stat. s. 29.604) before constructing a wind project; currently, developers are encouraged but not required to obtain such authorizations;
  3. expand the Wisconsin Endangered Species Law to protect endangered and threatened species habitat, to mirror the federal Endangered Species Act; currently, Wisconsin law only protects habitat if a direct take of a species will occur and an Incidental Take Permit or Authorization is required; and
  4. require easements for wind facilities to authorize access to those properties for the conduct of biological studies by developers, WDNR personnel and/or authorized agents.

 

These recommendations reflect WDNR’s view that its standard regulatory authorities over wetland and waterway impacts don’t reach the agency’s growing concerns about protecting wildlife and habitat from turbine siting and operation. Current WDNR authority addresses impacts to waterways and wetlands from project construction, and obligates developers to implement construction site erosion control. Threatened and endangered species are protected from intentional and incidental “takes”. WDNR has implemented this authority through consultation and use of general Incidental Take Permits and Authorizations. Violations of general wildlife protection laws (Wis. Stat. ss. 23.095(1g), 29.011(1) and 29.039) are subject to enforcement, but are limited to intentional taking by unlawful activities, and WDNR does not consider them generally applicable to construction or operation of state or locally approved wind projects.

Should We Go Nuclear - Again?

Posted on November 29, 2010 by Rodney Brown, Jr.

The US hasn't licensed a new nuclear power plant in a quarter-century. Most people have forgotten the plants even exist – but they might be coming back. In the last couple of years, the Nuclear Regulatory Commission has received more than twenty new plant applications.

Are we ready to go nuclear again?

 

 

The US has about 100 nuclear plants in operation today, generating around 20% of the nation's electricity. Most plants were built in the 1960s and 1970s, and will need to be replaced before too long. Far more plants have been built abroad, and many of them will need to be replaced too.

 

 

Replacing worn-out nuclear plants with new ones is very controversial, at least in the US. Our colleague, Michael Gerrard, will explore the controversy by hosting a debate on nuclear power at Columbia Law School on Monday, November 29th from 7 to 9 PM. The debate will be webcast live, and a video will be posted on the website of the Center for Climate Change Law. Contact Ashley Rossi at arossi@law.columbia.edu for more info.

 

 

In the meantime, how can we learn what to believe — and what not to? Fortunately, in 2007 the Keystone Center conducted a "joint fact-finding" to identify facts upon which people with different policy goals could absolutely agree. The participants came from all over, ranging from utilities like Exelon and Entergy to environmental groups like Environmental Defense and the Natural Resources Defense Council. They may continue to disagree on the values implicit in their various policy goals. But it turns out that they can agree on a foundation of facts.

 

 

For example, all agreed nuclear power is in fact a low-carbon energy source that can help fight climate change. They also agreed that the global nuclear industry would in fact need to embark on a massive construction program if nuclear power is to provide even 1 gigatonne of carbon reductions (equal to just one "wedge" from the famous Sokolow & Pacala climate stabilization wedges. Here's the specific factual finding:

 

"The NJFF participants agree that to build enough nuclear capacity to achieve the carbon reductions of a Pacala/Socolow wedge (1 GtC/year or 700 net GWe nuclear power; 1,070 total GWe) would require the industry to return immediately to the most rapid period of growth experienced in the past (1981-90) and sustain this rate of growth for 50 years."

 

On another point, the participants agreed that nuclear power probably would cost between 8 and 11 cents per kilowatt/hour (kW/h) delivered to the grid. This compares to current natural gas costs of about 5 to 6 cents per kW/h. (Wind power's costs fall somewhere in between.)

 

 

On the controversial topic of using new technologies to "reprocess" nuclear fuel, participants agreed it wasn’t likely to prove economically viable:

 

"No commercial reprocessing of nuclear fuel is currently undertaken in the U.S. The NJFF group agrees that while reprocessing of commercial spent fuel has been pursued for several decades in Europe, overall fuel cycle economics have not supported a change in the U.S. from a “once-through” fuel cycle. Furthermore, the long-term availability of uranium at reasonable cost suggests that reprocessing of spent fuel will not be cost-effective in the foreseeable future. A closed fuel cycle with any type of separations program will still require a geologic repository for long-term management of waste streams."

 

Agreement on all the true facts might make it easier to resolve the debate over nuclear power's role in our energy future. To learn more about them download the Keystone Center's executive summary or the report in full.

New Mexico Promulgates a Cap and Trade Rule

Posted on November 23, 2010 by Larry Ausherman

Earlier this month, the State of New Mexico adopted a rule designed to cap greenhouse gas (“GHG”) emissions in New Mexico and implement the State’s participation in a cap and trade market based on the design guidelines of the Western Climate Initiative (“WCI”). But it is too soon to tell how the New Mexico GHG rule will shake out. The future of cap and trade in New Mexico depends on many developments that range from the election of a new governor who will take office in January 2011, the fate of California’s cap and trade program, and the potential that the New Mexico GHG rulemaking will be appealed. An additional New Mexico only greenhouse gas cap and reduction proposal will also be considered by the New Mexico Environmental Improvement Board (“EIB”) in early December. 

 

 

            On November 2, 2010, after lengthy and contentious debate, EIB narrowly adopted the GHG rule that was proposed by the New Mexico Environment Department (“NMED”) last spring. The rule provides for a cap and trade program for certain GHG emissions in New Mexico that could start as early as 2012. The program would not be initiated without participation of other states with GHG emissions sufficient to provide a base of at least 100 million metric tons of CO2 equivalent emissions.  This requirement is designed to avoid the State’s implementing a trading program alone. For all practical purposes, because the trigger for implementation is a base of at least 100 million tons, the New Mexico cap and trade program will not be able to move forward without implementation of the California program. Of the 7 initial participating WCI states, only New Mexico and California are moving forward at this time to implement a cap and trade program.        

 

The New Mexico GHG rule would apply to about 63 large industrial facilities that emit GHGs in the State. The affected facilities include primarily power plants and large oil and gas operations. After the rule becomes effective, the affected facilities would be required to reduce emissions by 2% annually until 2020 or be required to acquire offset credits for emissions from other jurisdictions or external trading programs. The State would initially provide allocations for baseline emissions for those currently existing regulated facilities without charge.  

 

 

            Also in November, the EIB adopted mandatory reporting and verification rules. The rules require sources emitting more than 10,000 metric tons of CO2e emissions to report emissions. Those sources with greater than 25,000 metric tons of CO2 equivalent emissions are required to obtain third-party verification of emissions.   This rule is scheduled to go into effect on January 1, 2011, regardless of whether the cap and trade rule goes into effect. NMED estimates that 130 to 150 sources will be affected by the reporting rule. 

 

 

            Challenges to New Mexico’s GHG rule are likely. The margin of the EIB vote on the rule was narrow, four to three in favor. Moreover, on the day EIB adopted the rule, the New Mexico voters elected a new governor, Susanna Martinez. The Republican governor-elect’s campaign positions included opposition to WCI and the GHC initiatives of the current Democratic governor, Bill Richardson. It seems likely that the new GHC rule will not meet with favor in a Martinez administration. The change of administration is particularly important because to date, Governor Richardson’s support for New Mexico GHG initiatives has been critical to their adoption. New Mexico’s participation in WCI was initiated by Executive Order, and NMED’s efforts to implement the WCI cap and trade program in the state legislature have been unsuccessful. 

 

 

            In addition to the recently adopted GHC cap and trade and reporting and verification rules that were proposed by NMED, an additional petition by The New Energy Economy that would put a cap on GHG emissions in New Mexico is scheduled for decision by the EIB in early December. The New Energy Economy petition asks EIB to mandate that large facilities emitting greenhouse gases must reduce their emissions by 3% every year from 2010 levels, regardless of the development of a cap and trade market in the region.   If adopted, the program would sunset in 2020, and also be suspended in any year that a source begins reducing GHG emissions pursuant to a multi-jurisdictional or national GHG reduction program.

 

 

            The future will tell us which of the two votes taken on November 2 will prove most important. Some key opponents to the New Mexico GHC rule have expressed support for a federal cap and trade effort, but other very significant concerns remain, particularly regarding GHG proposals that are merely state or regional. In New Mexico, as in the rest of the country, the GHG trading market is far from open.

California Takes Dead Aim at Global Warming

Posted on November 22, 2010 by Jose R. Allen

One of the most striking campaign ads to hit the air waves during the run-up to the recent mid-term elections was the "Dead Aim" ad aired by Joe Manchin, the Senator-elect from West Virginia. The ad featured Manchin walking through an open field with a rifle cradled in his arms. He stops, deliberately loads a single cartridge into the firing chamber of the rifle, takes aim at a distant target and fires. The camera then zooms in on the target of Manchin's single, clean shot: a fictitious Senate bill titled, "Cap and Trade." The ad ends with Manchin staring directly into the camera and promising that, "I will take dead aim at the Cap and Trade bill because it is bad for West Virginia." 

 

 

In California voters were far more hospitable to climate change regulation in general and a cap-and-trade program in particular. Just days before California voters went to the polls to defeat a ballot initiative aimed at delaying implementation of California's landmark global warming law (AB 32), the California Air Resources Board (ARB) released for public comment proposed regulations to implement a state-wide cap-and-trade program. The cap-and-trade program would place an overall cap on the amount of GHG that can be emitted by all sources covered by the program. The ARB would then issue allowances equal to the cap to regulated sources. The cap would be gradually reduced between 2013 and 2020 to achieve the GHG gas emissions reduction target established by AB 32. Sources subject to the cap-and-trade program would have to reduce their GHG emissions to achieve their allocated emissions limits or use offset credits to satisfy a portion of their compliance obligations. 

 

 

What was used for target practice in a Senate campaign in West Virginia is used in California as the key part of the strategy to reduce GHG emissions. Only time will tell whether it will be open season on cap-and-trade programs or whether such programs are the wave of the future.