EU Carbon Permits Cheaper Than A Cup of Starbuck’s Cappuccino!

Posted on May 9, 2013 by Stephen Herrmann

The world’s biggest carbon permit market was left in disarray after the European Parliament on April 16, 2013 rejected an emergency plan that would have forced companies to pay more for polluting.

Permits are a key part of the EU Bloc’s cap-and-trade plan to tackle global warming.  The European Parliament rejected a proposal to reduce the short-term supply of carbon permits as a way of pushing up the price.  At the launch of permits in 2005, the cost of a permit was nearly €30 for each ton of carbon emitted.  Following the vote on April 16, 2013, the price plummeted to a little over €2.5 a ton.

Making matters worse, following the vote, the European Parliament’s Environment Committee coordinators failed to set a date for a vote on an amended version.

Not only is the collapse of the cornerstone of its climate policy an embarrassment to the EU, but its failure resonates in other areas of the world.  Australia has fixed a carbon price of $23 a ton until moving to a floating market price following the EU model in 2015.  But, that is being reconsidered.  The EU situation, coupled with the U. S. Senate’s rejection on March 22, 2013 of a bill to impose a fee on carbon, means that the Obama Administration will have an uphill battle for any future proposals for a fee or tax on carbon emissions.

Game, Set, Match

Posted on April 29, 2013 by Michael Hardy

On September 14, 2011, I posted a blog piece that was entitled “A Tug of War: How Can the State Satisfy Its Burden of Proof?” This posting discussed the diametrically opposed decisions of an Ohio trial court and an appeals court on the important issue of the kind of evidence necessary to prove a violation of an air emission limitation in an operating permit.  This closely watched case in Ohio eventually reached the Ohio Supreme Court, which finally announced its decision on December 6, 2012.

In State ex rel. Ohio Attorney General v. Shelly Holding Co. the Ohio Supreme Court sided with the appellate court and ruled that the civil penalty calculation started on the date of the violation, as demonstrated by the failure of a stack test, and continued until the permitted source demonstrated compliance with the emission limitations.  Over the objections of Shelly and several industry amicus filings, the Ohio Supreme Court concluded that the state enforcement agency need not prove that the facility was operating out of compliance for each intervening day; such noncompliance can be presumed.

The issue arose, in part, because Shelly failed stack tests that were conducted under unrealistic, maximum-possible conditions when in fact day-to-day operations were likely to generate lower emissions.  The state argued that Shelly should have discontinued operations until a subsequent stack test successfully demonstrated adherence to the permit’s emission limitations.  Alternatively, the air pollution source could apply for and receive a new permit with different limits, or it could make intervening facility modifications that would enable it to pass the stack test.  Shelly felt that it was improper to presume that the facility would exceed its emission limits unless the state makes a prima facie showing that the violation is likely to be ongoing or continuing.

After concluding that the burden is on the violator to prove by a preponderance of the evidence that there were intervening days on which no violation occurred or that the violation was not continuing in nature, the Ohio Supreme Court found no constitutional problem with extending the penalty to those subsequent days after the failed stack test.  Thus, in Ohio, the beginning date for calculating a civil penalty for an air pollution control violation is the first date of demonstrated non-compliance (the failed stack test) and continues, even at lower operating rates, until the facility demonstrates a return to compliance.

While this decision arose in the context of an air permit, the State of Ohio is likely to cite it in other programs, such as NPDES permits.

Can’t We All Just Get Along? … Genuine Bipartisan Support Mustered For Climate Change Legislation

Posted on April 18, 2013 by Rodney Brown

You may know that Washington State Governor Jay Inslee is a climate champion, first as a long-serving member of Congress and now as Governor.  But you may not know that he just finished leading a bipartisan effort that succeeded in passing climate change legislation. 

His climate action bill passed the State House March 25th on a bipartisan 61 to 32 vote. The bill earlier passed the Republican-controlled State Senate on a 37 to 12 vote. And a few days ago it headed to Governor Inslee’s desk for a well-earned signature.
 
The bill commissions an independent evaluation of climate pollution reduction programs in other states and Canadian provinces, and of opportunities for new job-producing investments in Washington relating to cleaner energy and greater energy efficiency. Then it requires the Governor and legislative leaders to use that survey data to plot out together what set of policies will get the State to hit its climate pollution limits established by earlier legislation, including a greenhouse gas emission reduction to 1990 levels by the year 2020.

“The Governor’s climate action bill keeps our state in the game – requiring leaders to map out a strategy to grow our clean energy economy and reduce climate pollution,” said Joan Crooks, executive director of Washington Environmental Council.

And here — in sharp contrast to the other Washington — Republicans and conservative Democrats agreed.

Interstate Air Transport - The Next Steps

Posted on April 12, 2013 by David Flannery

The August 21, 2012 decision of the D.C. Circuit Court in EME Homer City Generation LP v. EPA, Case No. 11-1302, not only vacated the Cross State Air Pollution Rule (CSAPR), it also provided a detailed framework (including the math) for how future plans should be developed by States to implement national ambient air quality standards (NAAQS) through the “good neighbor” provisions of the Clean Air Act.  This case has already been the subject of various posts to this Blog.  This article will provide an update of activities that have occurred in recent weeks as state and federal agencies, NGOs and the regulated community respond to the decision and its implications for implementing the various NAAQS (past, present and future). 

Let me begin by noting that on March 29, 2013, EPA and various environmental organizations filed for a writ of certiorari with the U.S. Supreme Court. Even as EPA was filing for such a writ, EPA has scheduled two meetings this month with states to obtain input on technical and policy decisions. In these meetings, EPA is offering its interpretation of the court decision and its views about various options that exist for conducting the required analyses through the shared responsibility of EPA and the states. 

Finally, the Midwest Ozone Group (MOG), a coalition of electric power generation interests, has developed a position statement on how the court opinion might be implemented including the identification of the following seven rules taken from the court opinion. 

1.    Basic rule - An upwind State’s obligation is limited to its own significant contribution and it cannot be directed to reduce emissions to account for any other factors impacting a downwind State’s nonattainment.
2.    Proportionality of Downwind States - A downwind State is responsible for above-NAAQS amounts that are not attributable to significant contributions from upwind States.
3.    Proportionality of Upwind States - The ratio of an individual upwind State contribution to the total contribution of all upwind States should be used as scalar to determine how the total upwind contribution is allocated among upwind States.
4.    The Role of Costs - EPA may reduce some or all of the obligations of upwind States to avoid the imposition of unreasonable costs.
5.    Insignificance - Once contributions are determined, a State is not required to address more than that contribution amount minus the significance threshold. 
6.    NAAQS Attainment - Once an area meets the NAAQS, no additional upwind emission reductions are required.
7.    Over-Control - When multiple downwind areas are concerned, reductions associated with one downwind area should be reviewed in other areas to ensure unnecessary over control is not achieved

The full position statement can be found here.

The MOG position statement is accompanied by a presentation prepared by Alpine Geophysics which applies an example set of modeling data to these rules to illustrate how the rules might be applied as well as the significant technical and policy questions that remain.  The Alpine Geophysics presentation can be found here.

Offsets Against Carbon Taxes: Using Ercs For Greenhouse Gas Policy

Posted on April 11, 2013 by Jeffrey C. Fort

Climate Change and the deficit are at the top of the legislative and policy agenda for the country.  Some economists love the “carbon tax.”  Senators Sanders and Boxer recently proposed the Climate Protection Act of 2013 -- to impose a tax on fossil fuels and high carbon intensity products sold in the US.  Many in the popular press are now advocating for a carbon tax, to reduce the deficit and to provide for reductions in carbon emissions.

Rather than believe that a tax can create just the right mix of incentives and funds to promote de-carbonization measures, I would argue that the ability to offset ought to be included in any such measure.  Carbon offset credits are based on one of the most significant legislative changes in the 1977 Clean Air Amendments --the requirement to get Emission Reduction Credits.  While ERCs were limited to requirements for a new or modified major emitting facility in a “non-attainment area,” the principles of ERC of ERCs can be found in the documentation now known as “carbon offsets.”  Scores of methodologies or protocols are now recognized as scientifically valid for activities which are not required by law and which do not represent business as usual. The proof required to earn a valid carbon offset credits is considerable, at least as exacting than even what EPA requires for ERCs.  Because it is the regulated industry which chooses whether to use an offset or not, offset credits have another level of proof -- that of the end user - to satisfy.  And Innovation and entrepreneurs are characteristic of carbon offset credits.

Not only are carbon offsets a recognized cost containment tool in many GHG control programs, it allows different approaches to carbon reduction to compete against each other.  The most efficient and most effective will have the lower price; and hence be more attractive than other ways of reducing. And it will bring in sectors with GHG emissions which would not be reduced otherwise.  From livestock wastewater operations to improved forestry management, from rice cultivation practices to coal mine methane, emission reductions will occur which would not otherwise. A more detailed discussion of this topic can be found at www.Dentons.com.

New Changes to CISWI Final Rule Reflect EPA’s Response to Comments from the Regulated Community

Posted on March 21, 2013 by Karen Crawford

The EPA issued its long-awaited CISWI Rule in the Federal Register on February 7, 2013.  78 FR 9112.  The final rule, entitled “Commercial and Industrial Solid Waste Incineration Units; Reconsideration and Final Amendments; Non-Hazardous Secondary Materials That Are Solid Waste,” contains the provisions in EPA’s 2011 rule, vacated in January 2012, that EPA agreed to reconsider.  The 2011 final rule in turn superseded EPA’s 2000 CISWI rule.  The new CISWI Rule amends 40 CFR part 60 subparts CCCC and DDDD and part 241.  The amendments to 40 CFR part 60 subpart DDDD, along with certain incorporations by reference, were effective on the promulgation date; amendments to part 60 subpart CCCC are effective August 7, 2013, and those to 40 CFR part 241 are effective April 8, 2013.

In response to both the court’s vacatur of a Notice of Delay issued in 2011 and the numerous petitions for reconsideration and comments submitted by the regulated community and the public, the final rule includes three subcategories of ERUs (energy recovery units) and two subcategories for waste-burning kilns based on design-type differences, with separate carbon monoxide (CO) limits for the latter.  Certain limits were also revised based on comments regarding the CO span methodology and on incorporation of additional data.  The rule establishes stack testing and continuous monitoring requirements and allows for the use of  continuous emissions monitoring systems (CEMS), setting levels based on a 3 hour block or 30-day rolling average (depending on the parameter and subcategory of CISWI). 

The rule addresses and preserves a source’s choice to cease or start combusting solid waste at any time due to market conditions or other reasons, and to switch from one set of applicable emission standards to another pursuant to CAA section 112, thereby amending the original "once in always in" approach reflected in the earlier versions of this rule. This in turn will provide an incentive to the regulated community to continue operating incinerators.

The deadline for compliance with the CISWI Rule by existing sources depends primarily on when the state implementation plan incorporating the final rule is approved, with such approval required no later than five years after the February 7, 2013 Federal Register publication date.  The effective date for new source compliance is August 7, 2013 or the date of startup, whichever date is later.  New sources are defined as sources that began construction on or after June 4, 2010, or commenced reconstruction or modification after August 7, 2013.

SHOULDN’T WE BE WATCHING AFRICA’S ENERGY CONSUMPTION?

Posted on March 13, 2013 by Eileen Millett

We’ve all seen the head shaking over how energy conservation efforts in the United States are dwarfed by energy consumption increases in India and China.  But, what about Africa? 
 
The African continent, with close to 600 million people, 15% of the world’s population, now consumes about 3% of world energy production.  However, Africa’s energy picture is changing rapidly due to growing investment, upgraded infrastructure, and success in tackling corruption.  Africa always rich in natural resources, is expected to replace more basic energy sources with more efficient and environmentally friendly sources like oil and gas. However, huge areas in Africa — the Sudan, Uganda and even Kenya lack national electricity grid systems.  But improving infrastructure and abundant energy resources hold promise for the future. 

Most of Africa is not flicking a switch for lights, but instead is using matches to light a kerosene lamp or igniting a charcoal stove for heating or cooking.  This will continue for the foreseeable future, which means more tree-cutting for fuel, more wood burning, and thus, more harmful air emissions.  Using kerosene lanterns and charcoal stoves correlates directly with increased respiratory disease.  Unfortunately, environmental health and safety will, in the short term, take a back seat to the need to rely on fossil fuels.

Renewables?  Why shouldn’t a continent known for its hot sun be a natural for solar power?  In Africa, questions about reliability and the lack of trained personnel are being taken seriously.  So for the foreseeable future, the more likely result is that fossil fuels will increase, and renewables will take aback seat.  The developing world views energy/environment trade-offs as part of the price for advancement, particularly in nations where energy resources and infrastructure is so underdeveloped.  Opportunities are enormous, but so are the challenges and risks.  Africa’s test will be how much financing, regulation and environmental mitigation is needed to propel the continent forward. 

Will EPA Expand TRI to the Oil and Gas Extraction Sector?

Posted on March 1, 2013 by Molly Cagle

The Environmental Protection Agency (EPA) is planning a rulemaking to expand its Toxic Release Inventory (TRI) program in March 2013. Will the oil and gas extraction sector be included in the program’s expansion?

As part of the Emergency Planning and Community Right-to-Know Act (EPCRA), the TRI program gathers and makes public information about chemical and waste management activities at a wide variety of facilities. EPA touts TRI reporting as one mechanism to reduce the release of chemicals into the environment. It claims that the information gathered helps companies keep up with competitors’ efforts to reduce and recycle waste, and that the public dissemination of information can lead to citizen and EPA enforcement.

EPA considered including the oil and gas extraction sector in TRI in 1997, but decided against it due to technical issues in determining whether individual wells spread out over large geographic areas would be considered a “facility” under EPCRA. A petition filed by environmental groups claims these technical issues are resolved and points to the basin-level definition of facility in EPA’s greenhouse gas (GHG) reporting rule as an example of how oil and gas production operations can be aggregated. Meanwhile, the GHG reporting rule is still under administrative reconsideration and the definition of facility under that rule is a key point of contention between EPA and industry.

As recently as last week, EPA’s Inspector General “recommend[ed] that EPA develop and implement a comprehensive strategy for improving air emissions data for the oil and gas production sector.” If oil and gas production is included in TRI, how will it affect the sector? Will it be a way to get at chemical ingredients used in hydraulic fracturing that are otherwise protected from disclosure as trade secrets? Will the aggregation of data for TRI purposes spill over into air and waste permitting decisions? At a minimum, TRI would require industry to gather more information on chemicals, wastes and emissions and make it publicly available. Thus, industry should prepare for the corresponding public attention and regulation that may accompany TRI expansion.

Coal Ash Rulemaking

Posted on February 21, 2013 by Andrew Brown

In December 2008, a surface impoundment maintained by the Tennessee Valley Authority in Kingston, Tennessee failed and the coal combustion residuals (CCRs) stored in those impoundment flooded more than 300 acres of land and flowed into Emory and Clinch Rivers.  CCRs, often referred to as coal ash, are residues from the combustion of coal in power plants that are captured by scrubbers and other pollution control equipment.  CCRs are currently exempt wastes under RCRA but following the TVA spill EPA proposed to regulate coal ash for the first time. 
 
On June 21, 2010, EPA issued its proposed CCR rule.  The proposed regulation considers two options for the regulation of CCRs.  Under the first option, CCRs would be regulated as special wastes subject to nearly full regulation as hazardous wastes under RCRA Subtitle C.  If CCRs are regulated as “hazardous waste,” disposal will likely be required at specially-permitted, off-site hazardous waste disposal facilities.  Under the second option, CCRs would be regulated as solid waste under Subtitle D of RCRA.  Under this option, EPA is likely to establish national standards for surface impoundments and landfills.   If CCRs are regulated under Subtitle D, it is likely a composite liner, a leachate collection and removal system, and a leak detection system will need to be installed at existing ash ponds.
 
EPA has not yet taken final action on the proposed CCR rule and has been sued by an environmental group who seeks the issuance of the final rule.   In that case, Appalachian Voices v. Jackson, the Agency stated “EPA cannot at this time provide a well-informed judgment as to the specific amount of time that is needed to conclude its review and any necessary revisions of these regulations, and EPA therefore requests an opportunity, following further administrative proceedings, to provide this Court with supplemental briefing at a later date regarding final remedy.”  Two actions (I, II) were consolidated in the Appalachian Voices case. EPA has indicated that the final CCR rule is not likely to be issued before the fourth quarter 2013. 

Seventeen States Join a New Association of Air Pollution Control Agencies

Posted on February 13, 2013 by Robert Brubaker

The current Clean Air Act retains the premise in the Clean Air Act of 1963 that "the prevention and control of air pollution at its source is the primary responsibility of States and local governments."  Among the many balancing acts embedded in the text of the Clean Air Act, the balance between federal and State prerogatives is one of the more challenging. 

Over time, the accumulation of requirements, and the multiplication of more requirements at a faster and faster pace, puts strains on the Clean Air Act's ideal of "cooperative federalism."  In the present era of divided government and increasing political polarization, tensions between EPA and the States, and between certain States, are on the rise.  For example, EPA has been sued by some States to force more aggressive regulation of greenhouse gas emissions, and by other States to force less aggressive regulation of criteria pollutants that cross State boundaries.  The "turbulence inherent in [the Clean Air Act's] divided relationship" was noted in William Session's December 14, 2012 post

While sharp contrasts on energy policy get most of the publicity, it is the small things – the finer details of regulation of sources classified as "minor" or "insignificant" under the statute and regulations – that account for a disproportionate share of the friction with regard to federal versus State prerogatives.  Tensions over State discretion – particularly with regard to environmentally inconsequential mandates, land  use, and small businesses – are not new to the Clean Air Act.  Soon after her transition from head of the Florida Department of Environmental Regulation to Administrator of EPA twenty years ago, Carol Browner said:

When I worked at the state level, I was constantly faced with rigid rules that made doing something 100 times more difficult and expensive than it needed to be.  It makes no sense to have a program that raises costs while doing nothing to reduce environmental threats. 

A new Association of Air Pollution Control Agencies, launched in January 2013, holds promise for enhancing the State-federal partnership basic to the design of the Clean Air Act.  The primary goals of the new association are to help the States assist each other in carrying out their responsibilities under the Clean Air Act, and to better understand EPA requirements as they evolve.

The AAPCA selected Battelle Memorial Institute, the world's largest non-profit research and development organization, to provide technical assistance and organization and staffing support.  The initial seventeen participants in the AAPCA are:  Alabama, Florida, Indiana, Kentucky, Louisiana, Mississippi, Nebraska, New Mexico, Nevada, North Dakota, Ohio, Pennsylvania, Tennessee, Texas, Virginia, West Virginia, and Wyoming.  If the new AAPCA improves the technical proficiency of State air pollution control agencies, and increases the level of cooperation and collaboration between EPA and State air agencies, it will well serve the design of Congress and the interests of the nation.

Would You Like Some Unintended Consequences With That Tea?

Posted on February 6, 2013 by Linda Benfield

Wisconsin has a proud tradition of strong political opinions.  Recent Tea-Party backed legislation in Wisconsin limiting the power of government will be interesting to follow as the consequences play out, particularly in the environmental arena. 

In March 2011, Wisconsin’s then-new Republican Governor Scott Walker and the Republican legislature passed the Wisconsin Budget Repair Bill, the state law that famously limits the collective-bargaining rights of public employees. Following that, the legislature passed 2011 Wisconsin Act 21, which includes a “limited government” provision that prohibits any “agency [from] implement[ing] or enforc[ing] any standard, requirement, or threshold, including as a term or condition of any license issued by the agency, unless that standard, requirement, or threshold is explicitly required or explicitly permitted by statute or by a rule that has been promulgated in accordance with [state law].” 

This will play out in a number of ways.  Like other state environmental agencies, the Wisconsin Department of Natural Resources (“WDNR”) relies significantly on guidance documents to implement otherwise complex programs. A number of issues are addressed only in WDNR guidance, not in explicit regulations.  These include sediment cleanup standards; references to “sediment” were intentionally removed from the state soil cleanup standards.  This not only affects state cleanup programs, but also raises issues as to whether the state sediment cleanup standards can be “applicable or relevant and appropriate requirements” under the Comprehensive Environmental Response, Compensation and Liability Act.  Similarly, the WDNR’s vapor intrusion sampling, analysis and remediation protocols are contained only in state and federal guidance documents. 

Recently, the U.S. EPA chose language in a proposed SIP denial that adds fuel to some permitting arguments.  In 2008, U.S. EPA required revisions to State Implementation Plans (“SIPs”) with respect to PM2.5 permitting; Wisconsin made regulatory changes, and requested SIP approval in 2011.  On December 18, 2012, the U.S. EPA proposed disapproval of the SIP revision.  77 Fed. Reg. 74817 (2012).  According to U.S. EPA, Wisconsin’s submission is deficient because the Wisconsin regulations do not “explicitly” define the condensable component of PM10 and PM2.5 emissions, and do not “explicitly” identify SO2 and NOx as precursors to PM2.5.  The U.S. EPA’s disapproval language gives the Wisconsin Department of Natural Resources the usual additional work to propose and finalize regulatory changes to address the deficiency, but it also gives regulated sources an additional argument that the WDNR lacks the authority to regulate condensable particulate matter and PM2.5  precursors.

What the Cluck?! Wastewater Discharge Permits for Air Pollutants?!

Posted on February 1, 2013 by Patricia Finn Braddock

Rose Acre Farms, Inc. et al. vs. NC Department of Environment and Natural Resources, et al., decided January 4, 2013

On January 4, 2013, a North Carolina court held that an egg production facility could be required to obtain a National Pollutant Discharge Elimination System (NPDES) permit solely on the basis that feathers and dust carrying ammonia nitrogen and fecal coliform, expelled from henhouses by ventilation fans, can be “pollutants” from a point source for which an NPDES permit is required if those pollutants reach waters of the State.  This is a case of first impression in which a court held that the impact of air emissions on water bodies could be regulated under the Clean Water Act (CWA).

North Carolina egg producer Rose Acre Farms (RAF) appealed a decision by the NC Department of Water Quality (DWQ) that an NPDES Permit renewal required stringent new BMPs on the grounds that: 1) the DWQ had no authority to require an NPDES permit for a “no discharge” facility; and 2) even if DWQ had authority to require an NPDES permit, the DWQ had no authority to impose new BMPs because: a) the feathers, dust and litter expelled into the air from ventilation fans are not “pollutants” as defined in 33 U.S.C. §1362(6); and b) even if ammonia nitrogen, total inorganic nitrogen, total phosphorus and fecal coliform associated with the feathers, dust and litter are “pollutants” that enter waters of the State, that activity would be exempt under the agricultural storm water discharge exemption in 33 U.S.C. §1362(14).

The Court held that ammonia nitrogen and fecal coliform carried by feathers and dust expelled by ventilation fans in the henhouses are “biological materials”, a term included in the definition of a “pollutant” in the CWA.  In addition, the Court relied on EPA guidance letters to determine that feathers, dust and litter expelled from a henhouse by ventilation fans are discharges from a point source that could reach waters of the State.  Finally, the Court held that the agricultural storm water discharge exemption in 33 U.S.C. §1362(14) applies only to land application in accordance with site specific nutrient management practices and does not apply to pollutants from feathers, manure, litter or dust that are expelled from the RAF henhouses but are not entrained in irrigation water.

If courts in other jurisdictions follow suit, other sources of air emissions with the potential to reach a receiving water, such as power plants and industrial facilities, may be required to address the impacts of their emissions on those receiving waters in future NPDES permits, independent of required air permits.

GHG Offset Protocols Upheld in California

Posted on January 30, 2013 by Michael R. Barr

Four California GHG offset protocols survived an important court test last week in Citizens Climate Lobby et al vs. California Air Resources Board (Superior Court of California, County of San Francisco). 

In his January 25, 2013, Statement of Decision, Judge Goldsmith described GHG offsets:
“An offset credit represents a reduction of GHG emissions from an approved uncapped source …Each offset credit represents an emission reduction of one CO2e…  An uncapped source is an entity that is not regulated by the cap-and-trade program.  Not every reduction is eligible for offset credit.  Credits are only awarded to GHG emission reductions carried out pursuant to one of four Protocols promulgated by Respondent [CARB].”

So far, CARB has only approved GHG offset projects in four categories:
    1. Forest Projects
    2. Urban Forest Projects
    3. Livestock Projects
    4. Ozone Depleting Substance Projects

CARB also limited the locations of qualifying GHG offset projects and capped the amount of GHG offset credits entities could use to comply with the state’s GHG cap-and-trade program.

Last year, two environmental groups sued CARB in San Francisco Superior Court to block even this limited offset program, claiming that CARB’s approach to satisfying the “additionality” test for GHG offsets conflicted with the California Global Warming Solution Act of 2006 (aka “AB32”).  The court described the “additionality” test as follows:

“Additionality is the linchpin of an offset program.  A reduction is additional if it would not have occurred without the financial incentive provided by the offset credit.  Additionality is essential to the environmental integrity of an offset program because if reductions are not additional, then the cap-and-trade program will not reduce GHG emissions beyond what would have occurred anyway. . . .”

For its four GHG offset Protocols, CARB adopted a “standard-based approach,” relying on information about the additionality of categories of prospects.  The petitioners preferred that CARB evaluate each offset project’s additionality individually, project-by-project, based on site-specific data and parameters.

CARB vigorously defended its approach to additionality and its GHG offset Protocols in this case.  Several California utilities and coalitions intervened on CARB’s side.  Very significantly, the Environmental Defense Fund and the Nature Conservancy also sided with CARB in this case.

In his January 25 Statement of Decision Judge Goldsmith upheld CARB’s offset Protocols on all issues.  In particular, he found that:

    1. “… as to the Livestock Protocol, the Ozone Depleting Substances Protocol, the Urban Forests Protocol, and the U.S. Forests Protocol, that [CARB] has adequately considered all relevant factors and has demonstrated a rational connection between these factors, the policy implemented, and the purpose of the enabling statutes …the Protocols are not arbitrary and capricious.”
    2. “… Health and Safety Code section 38562, subdivision (d)(2) does not foreclose [CARB] from using standardized mechanisms [for additionality] and it is within the [CARB’s] legislatively delegated lawmaking authority to choose standardized mechanisms …”
    3. “… [CARB’s] use of standardized mechanisms is supported by evidence contained in the administrative record.”
    4. “… Petitioners have failed to demonstrate that the Legislature foreclosed the use of standardized additionality mechanisms or demonstrate that [CARB] acted arbitrarily or capriciously in promulgating additionality standards."

Prompted by CARB and the Intervenors, the court recognized the important roles that GHG offsets play in reducing the cost of GHG emission reductions and promoting innovation.  The court’s 34 page opinion thoroughly analyzes complex legal issues, including the “additionality” issue.  Along the way, the court also accepted CARB’s rejection of the Kyoto Protocols’ Clean Development Mechanism (“CDM”), finding as follows:

“The Court finds the factors which have rendered the CDM problematic in terms of administrative complexity, delay, and cost, to be highly persuasive in concluding that [CARB’s] rejection of the CDM project-by-project approach was justified programmatically and consistent with its legislative grant of discretion.” (Statement, p. 11)

This finding, and much of this court decision, may be of interest to climate practitioners here in the U.S. and overseas.

Pennsylvania Considers the Use of Mine Influenced Water in Oil and Natural Gas Operations: The First Step Toward a Potentially Economical and Environmentally Beneficial Practice

Posted on January 23, 2013 by Chester Babst

On January 9, 2013, the Pennsylvania Department of Environmental Protection (PADEP) issued a final White Paper addressing the use of “mine influenced water” (MIW) in oil and natural gas operations.  For purposes of the White Paper, MIW is characterized as “water contained in a mine pool or a surface discharge of water caused by mining activities that pollutes, or may create a threat of pollution to, waters of the Commonwealth” and “may also include surface waters that have been impacted by pollutional mine drainage.” The White Paper outlines (1) the process for reviewing proposals to utilize MIW, (2) options for storing MIW (i.e. impoundments, tanks, etc.) prior to being used for oil and natural gas well development, and (3) possible solutions to long-term liability issues.

PADEP Secretary Mike Krancer deemed the use of MIW as a “win” for Pennsylvania’s environment and economy.  According to PADEP, more than 300 million gallons of water are discharged from Pennsylvania mines each day.  The water discharged, after being introduced to sulfides and other minerals occurring naturally within the mine, can be harmful to the receiving streams.  The natural gas industry uses between 3-5 million gallons of fresh water, typically withdrawn from surface waters and groundwater sources, for each well completion operation.   MIW use provides natural gas companies an alternative source of water for hydraulic fracturing operations with the potential to both lessen the natural gas industry’s dependence on freshwater sources and divert polluted water from watersheds.  

While the use of MIW in natural gas production operations can be an economical and environmentally beneficial practice, certain issues, particularly long-term liability, may require additional regulatory or legislative action before the practice becomes a viable option for the natural gas industry.  For example, under the current interpretation of Pennsylvania’s Clean Streams Law, an operator’s act of pumping water from an abandoned mine pool could create a legal obligation to treat the resulting discharge.  PADEP’s White Paper suggests two options for reducing a MIW user’s long-term liability: 1) obtaining protection from civil liability by qualifying for a “water abatement project” under Pennsylvania’s Environmental Good Samaritan Act; and 2) entering into a Consent Order and Agreement with the state.  Unfortunately, neither of these options guarantees protection from all potential liabilities under federal and state law for conditions associated with abandoned mines.

Notwithstanding certain concepts that require further consideration, PADEP’s White Paper serves as a platform for Pennsylvania and other states to promote the responsible production of coal and natural gas and, at the same time, to address some of the environmental challenges associated with both.  It is hoped PADEP’s White Paper will stimulate discussions regarding the use of MIW for natural gas production in other states with large reserves of coal and natural gas like Ohio, West Virginia, and Wyoming.  With additional input from stakeholders across various states, anticipated environmental and economic benefits of this practice may become a reality.

Accotink Creek: Innovative TMDLs Down the (Storm) Drain?

Posted on January 11, 2013 by David Van Slyke

On January 3, 2013, an EPA-set TMDL for Accotink Creek (a Fairfax County, Virginia tributary of the Potomac River) was invalidated on the grounds EPA exceeded its statutory authority when it attempted to regulate, via the TMDL, a Clean Water Act pollutant – sediment – by instead regulating a surrogate non-pollutant – stormwater flow.  The opinion granted plaintiff’s motion for judgment on the pleadings; in a separate order Judge O’Grady vacated the Accotink Creek TMDL and remanded the matter to EPA for further consideration.

Utilizing the two-step Chevron statutory interpretation analysis, the court found the first of the two criteria had been met:  Congress had addressed in unambiguous language the precise question at issue “… and its answer is that EPA’s authority does not extend to establishing TMDLs for nonpollutants as surrogates for pollutants.”  While directly acknowledging he did not need to reach the second Chevron criterion (whether the agency’s reading of an ambiguous statute is “permissible”), Judge O’Grady nonetheless noted in some detail that “there is substantial reason to believe EPA’s motives go beyond ‘permissible gap-filling.’”

Based upon EPA’s own pleadings, the opinion notes it appears the Agency could have set a TMDL based upon the underlying problem – sediment in the creek – rather than pursuing a surrogate approach.
In recent years, EPA has been pursuing so-called “innovative” TMDLs in an attempt to address stormwater’s contribution to impaired watersheds.  In particular, those TMDLs purport to set load limits based upon various surrogate approaches, including such things as the percentage of impervious cover (“IC”) allowed in the impacted watershed, or (as with Accotink Creek) stormwater flow rates.  While the Accotink Creek TMDL was in EPA Region 3, New England’s Region 1 seems to be in the forefront of this approach and currently has at least three stormwater-source TMDLs in place (including two so-called IC-TMDLs), as well as others in development. 

Given the extensive resources EPA has invested in trying to manage stormwater impacts to impaired streams (see e.g., TMDLs to Stormwater Permits Handbook (Draft Nov 2008)), the Virginia Dept. of Transportation case is clearly a significant setback for the surrogate approach propounded by the Agency.  Whether the United States appeals the decision or retreats and re-evaluates its initiatives in this area is yet to be determined.  Whichever way EPA decides to go, communities dealing with impaired watersheds certainly will need to pay close attention.

SUPREMES CONFIRM NO DISCHARGE PERMIT NEEDED FOR POLLUTED WATER TRANSFERS WITHIN SAME RIVER

Posted on January 10, 2013 by Richard Glick

On January 8, 2013, the U. S. Supreme Court unanimously held that flow from an improved portion of a waterway into an unimproved portion of the same waterway—even if polluted—does not qualify as “discharge of pollutants” under the Clean Water Act (CWA).  Although this case arises in the context of a municipal separate storm sewer system (MS4), it has major implications for dam owners everywhere.  The case reaffirms evolving doctrine that dams are not point sources requiring National Pollutant Discharge Elimination (NPDES) permits per Section 402 of the CWA.

In Los Angeles County Flood Control District v. Natural Resources Defense Council, environmental groups brought a CWA citizen suit against the District for violating the terms of the District’s NPDES permit to operate the MS4 facilities.  It was undisputed that water quality standards had repeatedly been exceeded for a range of pollutants, as measured at the District’s monitoring stations in the Los Angeles and San Gabriel Rivers.  The District collected storm water in concrete channels before discharging back to the river, and the monitoring stations were within the concrete channels.  It was also undisputed that many other upstream parties contributed to the contamination.  

Plaintiffs argued that since the monitoring stations were within the control of the District, the District had responsibility for meeting standards.  But that was not the issue for the Court.  Instead, the Court focused on whether a “discharge of pollutants” occurs when polluted water flows from one portion of a river, through an engineered improvement, and then back again to the same river.  The Court answered in the negative, citing its 2004 decision in South Fla. Water Management Dist., v Miccosukee Tribe.  In Miccosukee, the Court held that pumping polluted water from one part of a water body to another part of the same water body is not a discharge of pollutants.

This decision should come as welcome news to dam and hydroelectric plant owners.  Prior to Miccosukee and now LA County, the federal Courts of Appeal simply deferred to EPA judgment as to whether a dam could be said to “add” pollutants originating upstream when it passes them through penstocks or spillways to the river below.  The Supreme Court, however, has firmly established a rule of law that CWA Section 402 is implicated only where the upstream and downstream river segments are “meaningfully distinct water bodies,” a condition that will rarely exist for in-river dams.

GREAT LAKES ECOSYSTEM INDICATORS

Posted on January 4, 2013 by David Ullrich

Tremendous progress has been made in protecting and restoring the environment over the past 40 years since the passage of major legislation at the federal, state, and provincial levels in the United States and Canada.  However, our skill at measuring that progress is somewhat limited, and we may not have the kind of information we need to judge the health of our ecosystems or the effectiveness of our programs.  There have been some good efforts on an international, national, state, and provincial basis to evaluate the state of the environment using certain indicators, but one area needing much more attention is the Great Lakes. 

Although there are many indicators monitored on a continuing basis in the Great Lakes, the real difficulty has been synthesizing the information in a way that puts officials in a position to communicate effectively with the public, policy makers, and managers about whether the Great Lakes are getting better, worse, or staying the same.  The International Joint Commission (IJC) initiated an effort recently through its Water Quality Board (WQB) and Science Advisory Board (SAB) to identify a limited number of core indicators for this freshwater resource.  What’s needed now is a consensus among the scientific and policy leaders on the Great Lakes on the “few indicators that tell us the most” about the waters.

It was not hard to tell the Great Lakes were in trouble when enough dead alewives washed up on its shores requiring front end loaders to remove them, the Cuyahoga River and other tributaries caught fire, and Lake Eric was declared “dead” because of massive algal blooms.  Many of these conditions on the Great Lakes led to both a public outcry and Congressional action in order to deal with the lakes’ water pollution and other environmental problems.  As programs were put in place to keep oil out of the rivers and reduce nutrient loadings to the lakes, significant visible improvements were seen.  The underlying data was available to support the observations, but the visible improvements plus much better fishing success told the story in an easily observable way. 

Things are much more complicated now.  When looking at the fundamental three legged stool  supporting the Great Lakes’ ecosystem, being the chemical, physical, biological integrity of the resource, it is not easy to gage.  With regard to chemicals, very low concentrations of legacy pollutants like PCBs and dioxins can cause serious problems.  Likewise, ongoing contamination from airborne deposition of mercury is a real concern.  New chemicals such as flame retardants are the next problem area with which to deal.  Invasive species such as the zebra and quagga mussels, the ever present sea lampreys, and the threat from the Asian carp are a constant problem for maintaining the biological balance in the system.  From a physical standpoint, expanding urbanization, suburban sprawl, and the manifestations of climate change are also adding tremendous pressure on the Great Lakes.  What’s needed is a core set of chemical, physical, and biological indicators of the health of the ecosystem and the effectiveness of the programs to protect and restore it.

Good progress is being made on this front.  After several months of work by some of the top Great Lakes’ scientists and policy makers, a group of just over twenty indicators has been preliminarily identified, with a smaller group as the core.   They include:
    Physical: Coastal wetlands, land cover, and tributary physical integrity
    Chemical: Nutrient concentrations and loadings, and persistent bio - accumulative toxics
    Biological: Lower food web productivity/health, fish species of interest, harmful and nuisance algae, aquatic invasive species

Much of the foundation for the work done recently comes from what is known as the State of the Lakes Ecosystem Conference (SOLEC), which is a large gathering, primarily of scientists, held every two years to review and evaluate a large number of Great Lakes’ indicators on the Great Lakes.

What needs to happen next is for the IJC first to adopt a set of core indicators as the ones that tell us the most about the resource, then inform the U.S. and Canadian governments of its findings.  Under the recently updated Great Lakes Water Quality Agreement, the parties are responsible for establishing ecosystem indicators for the Great Lakes.

With a set of core indicators, both countries will be in a much better position to communicate with the public, elected officials, and managers about the health of the ecosystem and the effectiveness of programs.  In addition, our governments will be in a position to make better choices about the allocation of increasingly scarce resources to maximize the return on investment for improving the health of the Great Lakes, the largest, surface freshwater system in the world.

UPDATE ON THE DEEPWATER HORIZON OIL SPILL AND RESTORATION OF THE GULF COAST ECOSYSTEM AND ECONOMY

Posted on December 28, 2012 by Jarred Taylor

By: Jarred O. Taylor II and Shannon K. Oldenburg

The Gulf Coast Ecosystem Restoration Council (the “Council”) held its first public meeting on December 11, 2012, in Mobile, Alabama, intended to introduce the Council to the public and to give the public feedback opportunity on the Council’s plans.  The Council, established by the Resources and Ecosystems Sustainability, Tourist Opportunities, and Revived Economies of the Gulf Coast States Act of 2012 (the “RESTORE Act”), is charged with developing and overseeing implementation of a comprehensive plan to help restore the ecosystem and economy of the Gulf Coast region in the wake of the Deepwater Horizon oil spill. 

The RESTORE Act will fund the Council’s work via a Trust Fund made up of 80 percent of all Clean Water Act administrative and civil penalties related to the oil spill:

• 35 percent of the money will be divided equally between the five Gulf States;
• 30 percent will be spent through the Council to implement a comprehensive plan;
• 30 percent will be used through States’ plans to address impacts from the oil spill;
• 2.5 percent will be used to create the Gulf Coast Ecosystem Restoration Science, Observation, Monitoring and Technology Program within the Department of Commerce’s National Oceanic and Atmospheric Administration (“NOAA”); and
• the remaining 2.5 percent will be used for Centers of Excellence Research grants, which will each focus on science, technology, and monitoring related to Gulf restoration.

Overarching themes of the comments from both the Council and the public in attendance at the meeting were that ideas for Gulf restoration should originate from the Gulf Coast, not from the federal government, and that the Gulf of Mexico Ecosystem Restoration Strategy developed by the Gulf Coast Ecosystem Restoration Task Force (“GCERTF”) should be used as a framework for the Council’s work.  To much approval from the audience, Rachel Jacobson, Principal Deputy Assistant Secretary for Fish and Wildlife and Parks, Department of the Interior (Ken Salazar’s designated representative on the Council), commented that the Council should incorporate the “four pillars” of the GCERTF strategy into the process and work of the Council in determining how the RESTORE Act funds should be distributed and used.  These four pillars are (1) restore and conserve habitat; (2) restore water quality; (3) replenish and protect living coastal and marine resources; and (4) enhance community resilience.  Notably, Jacobson and many of the other designated representatives to the Council served as members of the GCERTF and also act as Trustees for the Natural Resources Damage Assessment (“NRDA”) for the Deepwater Horizon oil spill.

The Council has only 180 days from passage of the RESTORE Act to publish: 1) procedures to assess whether programs and activities carried out under the Act are in compliance with the Act’s requirements; 2) auditing requirements for disbursing funds from the Trust Fund; and 3) procedures to identify and allocate funds for the expenses of administering the Trust Fund.  The Council will publish a “proposed plan” by the end of this year that will be the focus of public hearings in late January and early February 2013, likely to be in the style of the public “listening sessions” held by the GCERTF last year.  The Council also will release a “draft comprehensive plan” for restoration in Spring 2013, and publish a final plan on July 6, 2013, the anniversary of enactment of the RESTORE Act.

An incredible amount of work has already gone into Gulf restoration, but much work remains.  Only time will tell if these legislative acts and work will translate into true restoration in the Gulf area.

Looking Ahead to Obama’s Second Term – Thoughts on the Administration’s Environmental Agenda

Posted on December 14, 2012 by Daniel Riesel

Although the still-divided Congress is unlikely to pass significant new environmental legislation over the next four years, the second-term Obama administration has an opportunity to pursue its environmental agenda through the EPA with diminished fear of impacts on the next election. 

The current term saw a period of strong leadership at EPA, but there is a feeling that the agency has not allowed the other regulatory shoe to drop.  EPA stalled on several important regulations, as if anticipating the Romney complaint that excessive regulation was a cause of the recession. Having escaped the prospect of a president hostile to its mission, EPA is now prepared to roll out a queue of pending air pollution regulations in the coming weeks.  The regulations will include final national ambient air quality standards, revised power plant emission standards, and expanded boiler emission rules.   

Since the election, articles and opinion pieces have abounded that speculate on the Obama administration’s second-term approach to climate change. On November 12, 2012, the New York Times published an op-ed article suggesting that the administration could tackle both climate change and the recession by imposing a carbon tax.  A similar suggestion was made in the New Yorker on December 12, 2012.  This is undoubtedly a worthwhile concept, but it is probably a regulation too far.

The second Obama term could be an opportune time to revisit old chestnuts and resolve issues that have bedeviled both the regulated community and environmental advocates.  For example, the EPA and the Army Corps of Engineers have been muddling through a proposed guidance document that aims to clarify the Supreme Court’s murky definition of “waters of the United States” subject to EPA jurisdiction under the Clean Water Act. But why should EPA and the Corps issue mere guidance rather than promptly promulgate binding regulations, which are subject to judicial review?  As a result of adopting binding standards the agencies could gain, in addition to regulatory certainty, a strong basis to resist efforts to make the federal government the national waterfront rezoning authority.

Another stalled national environmental initiative that would benefit from robust leadership in the Obama II administration is EPA’s effort to update its regulations for industrial cooling water intake structures.  EPA proposed regulations, designed to protect aquatic organisms, have remained in draft form since March 2011; additional data has been collected and is being analyzed in the interim.  Pending final federal regulations, states have been left to adopt varying approaches to this important issue.

Finally, this period of relative freedom from election concerns might allow the administration to address a significant example of environmental unfairness, CERCLA’s scheme of sticking certain liable parties with the “orphan share” of environmental remediation costs that arise from contamination, generated over the last two centuries of industrial development, for which no financially solvent responsible party can be identified.  The orphan share is often laid at the doorstep of a financially solvent polluter that caused some, but not all, of the pollution at a Superfund site.  Fairness dictates that the public fund the orphan share, as opposed to the party that is prepared to step forward and clean up its own portion of the mess.  Perhaps such a policy might have a sobering effect on the members of the public who clamor for a return to pristine conditions, so long as they don’t have to pay for it.

COOPERATIVE FEDERALISM AND THE CLEAN AIR ACT ENCOUNTER TURBULENCE

Posted on December 14, 2012 by William Session

All of us know that enforcement of the Clean Air Act’s (CAA) proscriptions against pollutant air emissions is premised on the concept of Acooperative federalism.  We know that the CAA’s policy development and enforcement regime is based upon a division of state and federal regulatory responsibility.  Stated simply, the concept is that the federal government, through the EPA, sets standards for permissible emissions of substances affecting ambient air quality while individual states retain responsibility for implementing programs to enforce these standards. 

The States’ implementation mechanisms are aptly titled State Implementation Plans or SIPs.  SIPs are employed to demonstrate that federal and state air pollution regulations will allow counties in a particular state to meet federally mandated ambient air quality standards (NAAQS).  The SIP process approval results in pollution control requirements which govern and often times unduly complicate compliance efforts of state regulators.  They can also increase compliance costs borne by the regulated community.  One aspect of that conundrum is the fact that when States fail to meet deadlines for attaining these standards, the regulators themselves can face sanctions from EPA and even suits by the public.  Litigation and its costs complicate matters further.

As some regulators in Pennsylvania recently observed . . . [T]he current aggressive schedules for NAAQS reviews, State Implementation Plan (SIP) development and promulgation of Maximum Achievable Control Technology (MACT) standards are significant problems. Taken together, these inefficiencies are a resource drain on EPA, the states, the regulated community and the economy as a whole.  The messy situation described in this quote is the subject of this blog.

The turbulence inherent in this divided relationship has escalated in recent times fraying the long-standing statutory regulatory compact between the federal government and the States.   

An instructive example of the conflict of enforcement concept and reality engendered by the CAA’s cooperative federalism scheme was clearly highlighted in the recent case WildEarth Guardians v. Jackson.  This case dealt with EPA’s delays in approving SIPs or pollution control plans affecting discharges of fine particulate matter or PM2.5.  The plaintiffs in Wild Earth alleged that EPA failed to take final action under section 110(k)(2) and (3) of the CAA to approve SIP submittals in twenty (20) states meeting applicable requirements respecting the 2006 PM2.5NAAQS. 

In 2006, the U.S. Court of Appeals for the District of Columbia had found that EPA’s PM2.5 NAAQS had to change because it failed to adequately protect human health.  A change in this NAAQS required a change in States SIPs.  SIPs were proposed but languished at EPA.  Five years later, the plaintiffs in Wild Earth alleged that . . . [W]ithout infrastructure plans, citizens are not afforded full protection against the harmful effects of PM2.5 while seeking declaratory and injunctive relief.
 
Shortly after the suit was filed the plaintiffs and the EPA entered into a settlement. A consent decree called for the EPA to approve or disapprove SIP submittals for the 2006 PM2.5 standard as early as September 12, 2012 for some of the states involved and as late as February 13, 2013 for others.  The Consent Decree was entered and the case dismissed in May of 2012.  Case closed and compliance efforts back on track? 

Unfortunately, many of the underlying issues raised in Wild Earth, specifically, the lack of cooperation between the States and the federal government on implementation of the PM2.5 NAAQS have raged on unabated.  For example, eleven (11) states sued the EPA over the agency’s alleged failure to promulgate final NAAQS for PM2.5.  In New York v. Jackson the plaintiffs are seeking a declaration that EPA is in violation of Section 109(d)(1) requesting that EPA review, propose and promulgate a new PM2.5 NAAQS.  On June 14, 2012, EPA announced a proposal to strengthen the NAAQS PM2.5.  Almost simultaneously, the D.C. Circuit issued an order refusing to set a schedule for EPA to issue a new PM2.5 NAAQS. Am.Farm Bureau v. EPA.

These developments will inevitably spawn additional delays in PM2.5 related SIP modifications and EPA approvals. That is the point of these comments on this small corner of CAA regulation and enforcement.  Is the cooperative federalism underpinning of the CAA still workable?  Can court’s recognize and respect the concept when regulatory policy, administrative lethargy and real human health concerns collide? These comments and observations have focused on the PM2.5 issue mainly because it has come up in some recent work in our office. 

Without doubt other and more far-reaching examples of regulatory and judicial “turbulence abound, i.e., the raging fight over the EPA’s Cross State Air Pollution Rule (CSAPR).  In a dissenting opinion on the CSAPR case, on the concept of cooperative federalism, Judge Rogers had this to say. . . [T] he result is an unsettling of the consistent precedent of this court strictly enforcing jurisdictional limits, a redesign of Congress’s vision of cooperative federalism between the states and the federal government in implementing the Clean Air Act based on the court’s own notions of absurdity and logic that are unsupported by a factual record, and a trampling on this court’s precedent on which the Environmental Protection Agency was entitled to rely . . . .  Whew! 

So what are CAA practitioners to make of the mess Judge Rogers eloquently describes?  This blog entry offers no practical guidance for those laboring for an aggrieved client nor laments a bad result impairing enforcement prerogatives of the regulators.  Instead, I only point out that it may be time for a concerted effort to step back and reconsider whether the CAA’s cooperative federalism’s bifurcation of rule promulgation and enforcement continues to make scientific, policy or common sense in today’s world.

EPA Wins an NSR Case: “Routine” Pretty Much Means Routine for the Unit

Posted on November 30, 2012 by Seth Jaffe

This past September, in United States v. Louisiana Generating, EPA won a ruling regarding what type of projects fall within the routine maintenance, repair or replacement exception from the rule that facility modifications are subject to PSD/NSR requirements.  The decision is thorough in that it carefully reviews the so-called “WEPCO Factors” – the nature, extent, purpose, frequency, and cost of the work, and applied them to the work at issue in this case, i.e., reheater replacements.

Notwithstanding the thoroughness of the court’s analysis, I don’t find it completely convincing.  As the court acknowledged, while all of the WEPCO factors are relevant, the crux of the issue is whether, in order to qualify for the exception, maintenance work must be routine for the units at issue, or only routine in the industry.  In other words, should the question be whether all similar generating units at some point in their life undergo reheater replacement, or whether each individual unit in question must undergo reheater replacement multiple times in order for such work to be considered routine. 

Personally, I think that the former is probably the better interpretation.  Of course, as the decision discussed, since the regulations are not crystal-clear, EPA has significant discretion in interpreting its own regulations, and EPA takes the position that maintenance work must be routine with respect to individual units to qualify for the exception.  End of story, no?  No.  The problem is that EPA does not have discretion to change its interpretation whenever it feels like doing so.  In 1992, EPA stated, in a preamble to NSR regulation revisions, that

EPA is today clarifying that the determination of whether the repair or replacement of a particular item of equipment is “routine” under the NSR regulations, while made on a case-by-case basis, must be based on the evaluation of whether that type of equipment has been repaired or replaced by sources within the relevant industrial category.

The court in Louisiana Generating acknowledged that this language favored Louisiana Generating’s position that one must look to whether a maintenance activity is routine in the industry, rather than routine with respect to the individual units in question.  However, the court then did not discuss this issue in evaluating the WEPCO factors, and separately found that no reasonable jury could conclude that the project was routine.

I don’t think that this issue is going to be finally resolved at least until a number of appellate courts have had an opportunity to review it and I could imagine it ultimately making its way to the Supreme Court. 

As I have previously noted, while I tend to side with the defendants in these cases, I think that the larger point is that these types of arguments are borderline silly.  More than anything else, they illustrate that the entire NSR/PSD program is fundamentally flawed.  Instead of such outdated technology-based regulation, power plant emissions should be regulated pursuant to trading programs that allow needed emissions reductions to be attained in the most cost-effective way possible.  I still dream of a grand bargain which would lower emissions limits, utilize trading to attain them, and completely eliminate the NSR/PSD program.  Where is the radical center in Congress when one needs it?

EVALUATING THE SUCCESS OF STATE GREENHOUSE GAS REDUCTION PROGRAMS: THE COST OF IGNORING COSTS

Posted on November 16, 2012 by Stephen Leonard

Massachusetts’ ambitious plan to address greenhouse gas emissions on a state-wide basis attracted private money last month to measure its success and costs.  Boston-based Barr Foundation’s grant of $230,000 will establish a “performance management tool” to track and measure the success of initiatives undertaken under Massachusetts’ Global Warming Solutions Act (“GWSA”). Supporters expect it to “serve as a national and regional model that other states can adopt to analyze” their own greenhouse gas reduction efforts. The GWSA, enacted in 2008, requires extremely ambitious reductions in greenhouse gas emissions within Massachusetts in the coming decades: an 80% emissions reduction goal by 2050 and 10-25% by 2020 from a 1990 emissions baseline  The act directed the Secretary of Energy and Environmental Affairs to set the 2020 reductions and adopt a plan for achieving them.

The planning and regulatory documents issued since enactment recognize that the success of a single state’s effort to address the causes of climate change cannot be measured by the impact of its own reductions in greenhouse gas emissions in effecting changes in the global climate. The effect will simply be too small to measure.  Instead, the state’s plan touts the beneficial effects of spurring economic development through the encouragement of green energy and other high tech businesses, the reduction of localized pollution, and the stabilization of energy prices. The success of the program in “bending the curve” of rising greenhouse gas emissions, however, rests entirely on its ability to serve as an example to other political entities – states mainly but, ultimately, geopolitical entities through broader global participation.

In December 2010, the Secretary of Energy and Environmental Affairs released the Massachusetts Clean Energy and Climate Plan for 2020 setting the reduction target at 25% below 1990 baseline. The Executive Summary summarizes reductions anticipated from existing and expected programs (table at page 6).  Policies relating to Buildings (9.8% or more than one third of the 25% reduction), Electricity (7.7%) and Transportation (7.6%) account for the vast majority of the reductions.  Within each sector, reductions are characterized as either “Existing Policy” (e.g., Federal and California vehicle efficiency and GHC standards – 2.6% reduction), “Expanded Policy” (e.g., advanced building energy codes – 1.6% reduction), or “New Policy” (e.g., Green DOT, the Massachusetts’ transportation agencies fulfillment of their sustainability commitment – 1.2% reduction).  The Barr Foundation’s grant will help create the “dashboard” that presumably will take into account the likelihood of adoption of new programs or the expansion of existing ones and the ultimate efficacy of any of the programs, as it tracks the progress of the Massachusetts program.

Efforts to track the success of the Massachusetts program will build on the work done by MassINC, a Boston-based “independent think tank” that earlier this year released a book-length report titled “Rising to the Challenge/Assessing the Massachusetts Response to Climate Change.” This very thoughtful work looks specifically at Massachusetts’ progress to date and likely future success in emission reductions in various sectors; it provides useful capsule descriptions of other state’s programs and of regional and foreign initiatives. And it discusses the crucial issue of the economic costs and benefits of the program, as that will be a prime determinant of the program’s ability to be a role model for other jurisdictions. 

The MassINC report recognizes that data on the subject of economic costs and benefits are subject to extremely complex and differing interpretations.  The report notes there is general agreement in Massachusetts that “it is desirable to reduce greenhouse gases and develop clean energy [,] it is more difficult to reach consensus when the subject turns to the cost of addressing climate change ….”   Id. at 75.  Nonetheless, a convincing explanation of the specific costs and benefits of various courses of action is a necessary component of any successful program because the ultimate effectiveness of a state’s program rests on its attractiveness as a model for other jurisdictions – including those with different views of the appropriate tradeoffs between environmental protection and economic development.

Scope of the Single Source Doctrine

Posted on September 17, 2012 by Richard Horder

Companies who wrestle with whether their various air pollution-emitting operations must be grouped together for Title V permitting purposes have received some assistance from a recent Sixth Circuit opinion.  In Summit Petroleum Corporation v. U.S. EPA, 2012 FED App. 0248P (6th Cir.), the court curtailed EPA’s expansive interpretation of a “single source” under the Clean Air Act. 

By rule, operations belong to a single source if they: (1) possess the same SIC codes; (2) are located on contiguous or adjacent land; and (3) are under common control.  See 40 C.F.R. § 52.21(b)(5), (6).  In addition, by policy, EPA has expanded the definition of “single source” to include not only the facilities that meet these three criteria, but also those facilities that provide support to an adjacent central operation.  See Preamble to the August 7, 1980 final Prevention of Significant Deterioration (PSD) regulations, 45 FR 52676; Preamble to Revised Part 51 and Part 70, Draft, February 18, 1998.  And, EPA has taken a “functional” approach to the term “adjacent,” such that these support facilities need not even physically adjoin the main facility.  For example, EPA considered two aluminum smelter facilities adjacent, despite their 3.4 mile separation, due to the extensive truck traffic between the two properties.  See Letter from Steven C. Riva, U.S. EPA, to Robert Lenney, Alcoa Inc., Mar. 9, 2009.  See also Letter from Pamela Blakely, U.S. EPA, to Don Sutton, Illinois EPA, re: General Dynamics, Ordinance & Tactical Systems, Inc., Mar. 14, 2006 (several plants considered a single source, despite their 8-mile separation, because they met a “common sense notion of a plant”).

Therefore, when EPA recently considered whether Summit Petroleum Corporation’s gas wells and associated flares should be considered a single source with its gas sweetening plant, EPA did not find it dispositive that several of the wells were located over a mile from the plant and were separated by other intervening properties.  Instead, EPA noted that the wells and the plant were highly interdependent and under Summit’s common ownership.  As a result, the wells and plant met the “common sense” notion of a single facility.  See Letter from Cheryl Newton, U.S. EPA, to Scott Huber, Summit Petroleum Corporation, Oct. 18, 2010.

Summit challenged EPA’s single source determination, and the Sixth Circuit vacated that determination in Summit Petroleum Corporation v. U.S. EPA.  The court found it “unreasonable and contrary to the plain meaning of the term ‘adjacent’” that EPA equated “functional relatedness” with “physical adjacency.”  Id., at *2.  The court ordered EPA to use instead the “ordinary, i.e., physical and geographical” meaning of the word “adjacent.”  Id.

This decision will affect long-standing EPA policy and practice in making single source determinations.  As the Director of EPA’s Region VIII Air Program noted, there is “no evidence that any EPA office has ever attempted to indicate a specific distance for ‘adjacent’ on anything other than a case-by-case basis.”  See Letter from Richard Long, U.S. EPA, to Lynn Menlove, Utah Division of Air Quality, “Response to Request for Guidance in Defining Adjacent with Respect to Source Aggregation,” May 21, 1998, citing 45 Fed. Reg. 52,676, 52,695 (August 7, 1980) (“EPA is unable to say precisely at this point how far apart activities must be in order to be treated separately.  The Agency can answer that question only through case-by-case determinations.”).  Therefore, companies with “functional” single-source determinations should consider whether the recent Sixth Circuit decision could impact their status under the Title V program.

Odor Regulations Stink

Posted on September 6, 2012 by Kevin Finto

Federal and state regulators have, over the years, frequently received complaints about odor.  Because the problem is a common one -- and because the origins of environmental law lie, in part, in the common law of public nuisance -- one might think we would have developed a consistent, practical way of regulating odor.  We haven’t.  No federal laws address odor, and the  various state laws and rules addressing odor are a hodge-podge of not fully-considered  ideas. 

This is likely due in part to the subjective nature of odor:  one person’s stench may be another person’s sweet smell of success.  More importantly, though, there is no commonly accepted way of quantifying or measuring odor.  If you cannot define something precisely and cannot agree on how to measure it, it necessarily follows that you will have a hard time regulating it.    There have been attempts to use odor measurement technologies including the scentometer or field olfactometer, but they ultimately rely on subjective human olfactory assessment.  While some states allow them as a guide, it does not appear that any statutory or regulatory scheme has adopted their use, and in fact, some states legislatures have adopted resolutions prohibiting their agencies from using such technologies for enforcement purposes.

So what is a regulator to do?  Consider the efforts made by one state, my beloved Commonwealth.  Virginia has tried to cram the square peg of odor into the round hole of the Best Available Control Technology (“BACT”) requirement of the Clean Air Act’s prevention of significant deterioration of air quality (“PSD”) preconstruction permitting program.  Applying the BACT process to odor may have sounded like a good idea back in the day when the PSD rules were first adopted and BACT was a sexy new acronym, but implementation of the BACT approach for odor has not been easy. 

At the outset, there is the difficulty that the BACT process applies only to things that are “pollutants” under the Clean Air Act.  Not everything that regulators want to regulate under the Clean Air Act, however, is considered a “pollutant” under the Act.  (If you doubt this, recall that it took many years of agency action and litigation and decisions by the United States Courts of Appeals and the Supreme Court before it was generally accepted that carbon dioxide is a pollutant under the Clean Air Act.)  And so it is with odor, which is defined by Webster’s Dictionary as  “a quality of something that stimulates the olfactory nerves or the stimulation itself.  In short, odor is definitely not a “typical” Clean Air Act pollutant.  (Interestingly, certain substances that are pollutants, also carry the name “aromatic” if they also happen to be organic compounds with a cyclical structure, but I digress.) 

Even if one can accept that “odor” is a “pollutant,” though, can the BACT process be applied to it?  Not really.  ”Best available control technology” means “an emission limitation based on the maximum degree of reduction of [a pollutant . . .] which the permitting authority . . . , taking into account energy, environmental, and economic impacts and other costs, determines is achievable . . . .” Clean Air Act § 169(3).  And typically BACT is determined through a top-down approach, i.e., one starts with the most stringent emission limitation theoretically achievable and then moves down from there only if the various costs of that approach are too high.  How can such an approach work for odor, though, when we do not have a unit measure for odor, much less a quantitative scale for objectionable scent.  Without such a measure or scale, it is effectively impossible to evaluate whether the environmental, economic or energy costs of reducing odor are reasonable or cost-effective.

So, if my beloved Commonwealth doesn’t now have the answer, let me cast my net more broadly and ask if anyone knows of a good practical scheme for regulating odor.

Waiting for Godot . . . Oops! The Decision’s Finally Out

Posted on August 29, 2012 by Andrea Field

The Cross-State Air Pollution Rule (Transport Rule) [76 Fed. Reg. 48208] adopted by EPA in mid-2011 -- requires sources in the eastern U.S. to reduce their emissions substantially.  Numerous states and industry groups challenged the rule in the D.C. Circuit, and many of the petitioners asked the court to stay the rule pending litigation.  One motions panel of the court stayed the Transport Rule in late 2011, and then a subsequent panel directed that all briefing in the case be completed -- and oral argument be held -- within approximately 100 days after the stay was issued.     

That the case was put on such a tight briefing schedule led many litigants to speculate that the court wanted to resolve the case quickly and would issue its decision within 60 days of the April 13, 2012 oral argument.  When mid-June came and went with no decision, many of those same litigants then predicted the decision would come by mid-July so as not to interfere with the judges’ summer vacations.  In support of their mid-July prediction, they also claimed that the head of EPA’s Air Office, Gina McCarthy, agreed with them.  In early July, Ms. McCarthy had indeed told some state regulators that the court would issue its decision on Friday, July 13, but she had quickly added that her prediction should not be taken too seriously because she had been wrongly predicting the imminent issuance of the decision for the past thirty days.  Nonetheless, several in the media reported her prediction as gospel, prompting all involved to stay glued to the D.C. Circuit’s website on Friday, July 13. 

As one of those waiting for the court to issue its opinion on the Transport Rule, I was reminded of a similar waiting game in which I was involved in 1997.  In May of that year, I had argued a case before a three-judge panel in the Fourth Circuit, where I had found one judge to be sympathetic to my argument, one judge to be antagonistic (but nicely so, because this was the Fourth Circuit after all), and the third judge to be a cipher.  As soon as oral argument ended, my client started bombarding me daily with the same question:  when would the court issue its decision?  I couldn’t answer that question (no matter how often I was asked), but I thought retired Fourth Circuit Judge James Marshall Sprouse might have insights into the court’s decision-making process.  He had been gracious enough  – and patient enough -- to help me prepare for oral argument in my case (and to help me persuade the client to eliminate some of the more bombastic points from the argument).   

Gamely consulting his crystal ball and taking into account that the case had been argued so late in the term, Judge Sprouse suggested that (1) if there was no dissent, then the court might issue its decision by the end of July; (2) if one judge dissented, then there might be a delay of another one to two months; and (3) if each of the three judges wrote a separate opinion or if one of the jurists was trying to be Solomon-esque -- finding areas of agreement and areas of disagreement with each of the other two judges on the panel -- then there might not be a decision until well into the fall.  Judge Sprouse was spot on in my case:  the decision -- which fell into Category 3 -- was issued in late October 1997.

Back to the present now.  The D.C. Circuit issued its decision on the Transport Rule on August 21, 2012.  In an opinion by Judge Brett Kavanaugh, joined by Judge Thomas Griffith, the court held that the Transport Rule exceeds EPA’s statutory authority in two respects, by (1) requiring upwind states to reduce emissions by more than their own significant contributions to nonattainment in other states, and (2) failing to allow states the initial opportunity to implement the emission reductions required by the Transport Rule.  Judge Rogers wrote a stinging dissent.

I leave it to my ACOEL colleague Dave Flannery and his more detailed description of the decision below.  I will add only that although Judge Sprouse passed away eight years ago, the timing of the decision was just what he might have predicted.