Revisiting Rules: How Far Back Is Too Far Back?
Recently, while searching my bookshelves for a missing volume, I came upon a three-ringed binder of documents related to EPA’s 1980 PSD rules. Of particular interest to me were (1) my October 30, 1980 letter to then-EPA Administrator Douglas Costle asking that he clarify parts of those 1980 PSD rules, and (2) Administrator Costle’s letter responding to my inquiry. In his response, Administrator Costle assured me that the Agency would positively address my concerns in technical and conforming amendments that EPA was then preparing.
Any possible euphoria that I might have felt at the positive tone of Administrator Costle’s response was more than offset by the date of his letter: January 19, 1981, the day before Administrator Costle would be leaving EPA in advance of the inauguration of Ronald Reagan. Even early in my legal career almost thirty years ago, I knew I could not put much faith in the well-intentioned assurances of an outgoing EPA Administrator. The incoming Administrator would look at all pending issues with fresh eyes and might – or might not – decide to continue down the path laid out by Administrator Costle.
In fact, the incoming Reagan Administration decided to re-examine many of the actions taken by the Carter Administration in its waning days. Just as – 12 years later – the incoming Clinton Administration re-examined actions taken by the Bush (41) Administration as it left office; and 8 years after that, the new Bush (43) Administration re-thought actions of the departing Clinton Administration; and now -- 8 years later -- the Obama Administration is revisiting actions of the Bush Administration.
I do not here bemoan the fact that new administrations want to revisit the end-of-term decisions made by their predecessors. I ask, though, how far back in time should new administrations reach in their “revisitings”? We have come to expect incoming regulators to review rules that are still in proposed form and to pull back from publication rules that were only recently signed but have not yet been published in the Federal Register. We have also come to expect incoming administrations to look at rules that were published by a previous administration and are the subject of ongoing litigation so that new regulators can determine if they wish to continue to defend their predecessors’ rules or, instead, to re-examine those rules.
What happens, though, when a new administration reaches back to reexamine rules that have been on the books for many months or even years and that are in the midst of being implemented by the states and the regulated community? And what happens if the new administration wants to keep in place portions of a rule but wishes to scrap the remainder of the rule? This is happening now as EPA reconsiders the ozone ambient standard rule that was adopted by the Bush EPA early in 2008 and that is now the subject of litigation in the D.C. Circuit. No one would have been surprised if the new administration had asked the D.C. Circuit to remand the 2008 ozone standard rule so that EPA engage in a sped-up rulemaking to develop new/replacement ozone standards while continuing to implement the 2008 rule. Instead of doing that, though, EPA is essentially asking the D.C. Circuit to divide its ozone rule into pieces, thus allowing EPA to implement parts of the ozone rule while essentially trying to stay implementation of other parts of the regulation.
A new administration’s going back farther in time to “undo” programs currently being implemented -- and trying to stay portions of those programs while continuing to press for implementation of other parts of the programs -- is disruptive for both regulators and the regulated community. I hope that the D.C. Circuit recognizes this in the ozone ambient standard litigation and decides to impose a rational framework for this – and any new -- administration to follow as it goes down the well-trod path of trying to change a rule of its predecessors.
Obama Administration Environmental Initiatives & Priorities
A Special ACOEL Event
Obama Administration Environmental Initiatives and Policies
DAVID J. HAYES
Deputy Secretary, U.S. Department of the Interior
Interviewed by David B. Farer, Farer Fersko
Audio of Mr. Farer's interview of Mr. Hayes at the Department of Interior on July 14, 2009, with discussion topics focusing on Interior's priorities concerning climate change, renewable energy and water.
Running time: Approx. 45 min.
More than Indemnity?
Is an indemnity for a third party’s liabilities just an indemnity and not a right of direct action? Yes, says the District Court for the Eastern District of Pennsylvania because the indemnitor avoided words like “assume,” “become liable for,” or “assume all of the liabilities and obligations.”
Here, the United States argued the indemnitor had crossed the line of indemnity into the land of assumption. The federal government pointed to a settlement agreement where the indemnitor agreed to provide remediation required by “law, regulation, order, judgment, or settlement agreement.” Finding the question one of contractual intent, the court found the language to defend and hold harmless does not sound in assumption and is only triggered when an indemnitee suffers a claim or pays damages on a claim. Finding the agreement lacking in the standard words of assumption, the indemnitor prevailed by summary judgment. United States v. Sunoco, Inc. No. 05-633 (E.D. Pa. 2009).
EPA Clears the Way for Regulation of GHG
The Environmental Protection Agency has formally declared carbon dioxide and five other heat-trapping gases to be pollutants that threaten public health and welfare, setting in motion a process to regulate carbon dioxide and other gases associated with global warming. This announcement comes two years after the Supreme Court's decision in Massachusetts v. EPA. The Agency said the science supporting its so-called endangerment finding was "compelling and overwhelming." The ruling triggers a 60-day comment period before any proposed regulations governing emissions of greenhouse gases are published. Lisa P. Jackson, EPA's Administrator, said: "This finding confirms that greenhouse gas pollution is a serious problem now and for future generations.
Fortunately, it follows President Obama's call for a low-carbon economy and strong leadership in Congress on clean energy and climate legislation." EPA's announcement does not include specific targets for reducing greenhouse gases or new requirements for energy efficiency in vehicles, power plants or industry sources. Such new restrictions would be developed in subsequent rule-making or in legislation enacted by Congress. EPA's announcement stated that "[n]otwithstanding this required regulatory process, both President Obama and Administrator Jackson have repeatedly indicated their preference for comprehensive legislation to address this issue and create the framework for a clean energy economy."
Pres. Obama's DOJ Takes Second Shot at Citizen Suit Dismissal
Citizen suits in the environmental world are those filed in federal court under the authority Congress gave to a citizen to seek enforcement of the environmental laws, typically when the citizen believes the regulatory authority (i.e. EPA or a state agency) is not doing its job or has missed a violation.
Entire articles have been written about the efficacy of such suits, and their appropriateness in the face of an already-initiated governmental enforcement or cleanup action. Recent cases suggest the courts want to encourage, and not discourage, such filings, although one recent US Supreme Court decision found the citizens lacked standing because there was not an actual, live, dispute. Summers v. Earth Island Institute, __U.S.__(No. 07-463, March 3, 2009) (see ACOEL blog entry of March 4, 2009).
Continue Reading...Another RICE Crop: EPA Proposes Additional Rules for Stationary Reciprocating
On February 25, 2009, EPA proposed a new set of rules and rule revisions applicable to a broad universe of existing stationary reciprocating internal combustion engines (RICE). These engines are typically used for a variety of purposes at commercial and industrial facilities, such as providing back-up electricity and powering fire pumps. The proposed rule for existing engines would supplement (and in certain instances, modify) the 2004 and 2008 rules for new engines. Collectively, these rules address "hazardous air pollutants" (HAPs) and are formally known as the RICE National Emission Standards for Hazardous Air Pollutants (NESHAPs).
Continue Reading...New Requirements for Siting and Permitting in Connecticut
As of January 1, 2009, a party seeking to develop or expand certain facilities in Connecticut that require approval by the state Siting Council or the Department of Environmental Protection (DEP) must comply with significantly expanded public participation requirements before applying for or receiving approval from the Siting Council or DEP.
The new requirements arise from Public Act 08-94, An Act Concerning Environmental Justice Communities and the Storage of Asbestos-Containing Material (the "Act"), enacted in May 2008. The Act applies to certain proposed new or expanded facilities — including but not limited to a "major source" of air pollution under the federal Clean Air Act, certain electric generating facilities with a capacity of more than 10 megawatts, a sewage treatment plant with a capacity of more than 50 million gallons/day, and certain types of waste management facilities — that are located in an "environmental justice community." An "environmental justice community" is defined as either a U.S. census block group for which 30 percent or more of the population consists of low-income persons (income below 200 percent of the federal poverty level), or a Connecticut "distressed municipality," as defined by other state statutes relating to economic development.
Continue Reading...Priscilla Summers v. Earth Island Institute Supreme Court Decision
In a 5-4 decision, the Supreme Court held that environmentalists' lacked standing to challenge a Forest Service regulation limiting public involvement in timber sales decisions. Priscilla Summers v. Earth Island Institute, et al.,__U.S.__(No. 07-463, March 3, 2009). The decision found that respondents’ argument that they have standing because they suffered procedural injury—i.e., they have been denied the ability to file comments on some Forest Service actions—fails because such a deprivation without some concrete interest affected thereby is insufficient to create Article III standing. Justice Scalia, writing for the majority, stated "Accepting an intention to visit the National Forests as adequate to confer standing to challenge any Government action affecting any portion of those forests would be tantamount to eliminating the requirement of concrete, particularized injury in fact." The following is a link to the Court's opinion: http://www.supremecourtus.gov/opinions/08pdf/07-463.pdf
OBAMA AND THE ENVIRONMENT
As Lisa Jackson completes her first month as President Obama’s environmental chief, she is just scratching the surface on some of the myriad issues that will likely have impacts far beyond typical environmental concerns, for decades to come. There has to be some mixture of excitement and fear facing this new administration, as the challenges before it dwarf all of those in memory. That mixture will be especially prevalent at EPA. Usually in times like these — war, recession, high unemployment –— environmental issues can be expected to fade from the front pages. An EPA administrator would receive the old admonition to be seen and not heard. However, unlike past crises environmental issues are in the forefront — primarily in the form of climate change and energy. It is notable that when the government is lending billions of dollars to Citibank and debating the very existence of the big three automakers, one of the first actions of the incoming Obama administration has been to review EPA’s previous decision to deny California’s petition for a Clean Air Act waiver to allow it to regulate greenhouse gases from mobile sources.
Continue Reading...EPA's Roll-Back of Bush-Era Rules Appears to Begin in Earnest
While a lot of attention has been paid to whether EPA would reverse the Bush EPA decision denying California’s petition to regulate greenhouse gas emissions from mobile sources, it is now clear even outside the climate change arena that life at EPA is going to be substantially different under the current administration. As if evidence were really needed for that proposition, EPA announced this week that it was putting on hold the NSR aggregation rule that EPA had promulgated on January 15, 2009.
The rule, which had been long sought by industry, would have provided that nominally separate projects would only have to be combined – aggregated for NSR/PSD purposes – if they are “substantially related.” It also would have created a rebuttable presumption that projects more than three years apart are not substantially related. Responding to a request from NRDC and the OMB memo asking agencies to look closely at rules promulgated before the transition but not yet effective, EPA concluded that the rule raises “substantial questions of law and policy.” Therefore, EPA postponed the effective date of the rule until May 18, 2009 and also announced that it was formally reconsidering the rule in response to the NRDC petition.
To those in industry, the aggregation rule was not a radical anti-environmental roll-back of environmental protection standards. Rather, it was more of a common-sense approach towards making the NSR program simpler and clearer. It is one of my pet peeves with the prior administration, however, that it gave regulatory reform a bad name.
In any case, I feel as though I should open a pool regarding what will be the next Bush-era rule to be tossed overboard. We surely won’t have to wait long for it to happen.
An Update on AIG Environmental and the Current Environmental Insurance Market
Significant management changes announced this week by AIG Environmental, and further news in the wake of that announcement, may further impact the changing environmental insurance market.
Joe Boren, longtime Chairman and CEO of AIG Environmental, and John O'Brien, President of the Company, have both resigned. On January 5, AIG Commercial Insurance issued a statement that Russ Johnston has been named President and CEO of AIG Environmental, and that Kim Hanna is now Executive VP and COO of the Company.
Over the past ten years, environmental insurance products have been utilized as a key component in many brownfield redevelopment projects and real estate transactions, and have become a common risk-reduction tool in the real estate and manufacturing sectors.
Most recently, the leading players in the environmental insurance market have been AIG Environmental, XL Environmental and Ace, with AIG most active in writing cost-cap and pollution legal liability ("PLL") policies for real estate transactions and brownfields projects. Zurich has also played an important role in the market, although historically the company has been particularly risk-adverse. Chubb has been writing PLL policies, but not cost-cap policies.
In recent months, however, Zurich has been indicating an enhanced interest in considering the underwriting of projects and transactions that they might previously have declined. Chubb has also expressed an interest in growing its PLL portfolio.
Additionally, in the aftermath of AIG's statement on the management changes, the Bermuda-based insurer Ironshore, Inc. announced on January 6 that Joe Boren and John O'Brien have joined a newly established Environmental Insurance division of Ironshore in New York City, with Boren as CEO and O'Brien as President.
The impact of AIG’s recent and highly publicized financial woes, and the ensuing reductions in the ratings of AIG's insurance companies, have generated a good deal of speculation about the future of AIG Environmental and whether the Company would maintain its aggressive underwriting of brownfields projects and real estate deals.
It is yet to be seen whether the financial problems of the parent company and management-level changes at AIG Environmental are leading to an overall change in approach, but with XL and Ace still in the market, Zurich and Chubb expressing a greater interest in underwriting, and Ironshore opening a new environmental division with experienced management, there may be more options available to those seeking such policies, and greater competition on policy terms and pricing.
Supreme Court to Open its 2009 Term
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.
