"We All Let the Citizens of Flint Down"

Posted on February 4, 2016 by Alexandra Dapolito Dunn

With busloads of concerned citizens from Flint and nearby cities gathered around the Rayburn House Office Building on February 3, environmental regulators and science experts appeared before the U.S. House Committee on Oversight and Government Reform (Committee) to give testimony regarding lead contamination in Flint, Michigan’s public drinking water.  As detailed in this recent NPR podcast, well worth the 40 minute listen, between 6,000 and 12,000 children are estimated to have elevated blood lead levels following the City’s drinking water source change from Detroit water to water from the Flint River in 2014. 

How could a crisis like this have happened? While at first water policy groups were quick to highlight the nation’s aging water infrastructure and investment gap – EPA’s most recent estimate is that $384 billion is needed to assure safe drinking water from 2013 to 2030 – and certainly lead pipes to homes in older communities is a costly replacement problem – at the root of Flint was classic government dysfunction combined with assessments of safety that make sense to regulators but perhaps not to everyday people. At the hearing Joel Beauvais, acting Assistant Administrator for the U.S. Environmental Protection Agency’s Office of Water faced questions from Committee members about the Agency’s delayed response to the situation, while the Michigan Department of Environmental Quality’s acting Director Keith Creagh was to explain why state officials did not act to address contamination immediately. Both officials attributed the crisis to breakdown in communication between the agencies that inhibited officials’ swift action. What happened in Flint “was avoidable and should have never happened,” according to Beauvais; while Creagh’s testimony stated that “[w]e all share responsibility in the Flint water crisis, whether it’s the city, the state, or the federal government… We all let the citizens of Flint down.”

The hearing ultimately took on a forward look, noting a reaffirmed commitment to protecting public health. “We do have clear standards. We do have clear accountability, so we have a clear path forward, said Creagh. “We are working in conjunction with the city, the state and federal government to ensure it doesn’t happen again.”  Beauvais noted “it is imperative that Michigan, other states, EPA and drinking water system owners and operators nationwide work together and take steps to ensure that this never happens again.”

EPA and Michigan state and local officials are now in non-stop mode to ensure that prompt, concerted efforts are taken to address public health hazards. Members of Congress are introducing bills to fund Flint’s systems and to aid the affected citizens.  Even philanthropic groups are stepping in.  EPA’s Inspector General is doing a deep dive into the Agency’s response, Michigan Governor Snyder is seeking answers, and even the Federal Bureau of Investigation is looking into criminal aspects of the matter. Flint’s drinking water will get better – and yet the affected population may never fully recover from their excessive lead exposures.  

The #FlintWaterCrisis is a sober reminder of the need to keep the nexus between environmental quality regulation and public health protection very tight.  As professionals in the environmental field, we cannot fear having frank conversations in the open about risks – and the importance of taking precautionary steps – when human health is at issue.  

EPA Has Surprisingly Broad Authority to Regulate GHGs

Posted on January 28, 2016 by Michael Gerrard

Our friend Seth Jaffe wrote a very interesting blog on January 20, “Does the Paris Agreement Provide EPA With Authority Under the CAA to Impose Economy-Wide GHG Controls? Count Me Skeptical.”  It took issue with a paper that I co-authored with several other colleagues in academia in which we argue that Section 115 of the Clean Air Act provides the EPA with broad authority to implement a multi-state, multi-source, multi-gas regulatory system to reduce greenhouse gases.  

The blog post agreed with our paper that it would be great if Section 115 provided this authority because it means EPA could implement an efficient, flexible, cross-sectoral approach to reducing greenhouse gases (GHGs).

However, Seth questioned our conclusion that Section 115 provides such authority because, in his view, courts are likely to conclude the “reciprocity” requirement in Section 115 could not be satisfied by the nonbinding emissions reduction commitments countries made in the Intended Nationally Determined Contributions (INDCs) they submitted for the Paris agreement concluded at the United Nations climate conference in December.  In the words of blog post, “I think most judges would interpret the word ‘reciprocity’ in a statute to mean something that is legally-binding; otherwise, it doesn’t mean anything.”  For several reasons, we disagree.

First, a reviewing court does not need to interpret what the word “reciprocity” means in Section 115, because Congress has explicitly defined it.  Reciprocity is the title of Section 115(c), which provides:

"This section shall apply only to a foreign country which the Administrator determines has given the United States essentially the same rights with respect to the prevention or control of air pollution occurring in that country as is given that country by this section."

The only right given to a foreign country by Section 115 is a provision in Section 115(b) that states a foreign country affected by air pollution originating in the U.S. “shall be invited to appear at any public hearing” associated with the revision of a relevant portion of the state implementation plan to address the pollutant.  In short, Section 115 specifies that reciprocity means the foreign countries in question need to have given the U.S. “essentially the same rights” as are given by Section 115, and the only right provided in Section 115 is the procedural right to appear at a hearing. 

Understanding the legislative history helps explain why the focus of the reciprocity requirement is on a procedural right.  As we explain in detail in the paper, Section 115 was a procedural provision when it was first enacted in 1965:  if pollution from the U.S. was endangering other countries, the other countries had a right to participate in abatement conferences where potential responses would be discussed, not a right to insist on actual emission reductions.  Although Congress amended the provision in the 1977 Clean Air Amendments to replace the abatement conference with federal and state action through the Section 110 state implementation plan process, the reciprocity language in Section 115(c) was not changed, leaving it with its procedural test.     

Second, we note in our paper that the Paris agreement contains a new set of procedures through which countries that join the agreement will be able to review and provide input on each other’s respective emissions reductions plans.  To the extent a court might conclude that such procedural rights must be "legally binding," then the Paris agreement satisfies that test because although the emission reduction targets themselves that were submitted in the INDCs will not be legally enforceable by other countries, the procedural elements of the Paris agreement will be binding international law.  

We note in the paper that although Paris provides a strong basis to satisfy Section 115 reciprocity, that reciprocity could also be satisfied by other international arrangements that the United States has with a variety of countries, particularly Mexico and Canada, the EU, and China.

Third, the blog post does not engage the issue of procedural reciprocity; rather it focuses on a substantive view of reciprocity (i.e. that reciprocity requires that other countries are actually reducing emissions of GHGs) and asserts that substantive reciprocity requirement could not be met by the internationally non-binding commitments made in the INDCs.  Although we believe that the correct reading of Section 115 is that it only requires procedural reciprocity, we recognize that a court could conclude that Section 115 also implicitly includes a substantive reciprocity requirement.  In the first instance, we noted that this requirement might be met by the international law principle sic utere tuo ut alienum non laedus, which directs nations to avoid causing significant injuries to the environment of other nations, most recently explained in the International Court of Justice’s Pulp Mills case.  

The author skips over this element to focus his skepticism that the reciprocity requirement could be satisfied by non-binding commitments in the INDCs.  But actually the U.S. and other countries have made reciprocally non-binding commitments in their INDCs.  That is, the U.S. has made an international political commitment to reduce emissions a certain amount, and has received essentially the same rights in the non-binding international commitments from other countries to reduce emissions.  

Someone could argue that the U.S. INDC may be non-binding, but Section 115 is domestic law in the U.S. and substantive reciprocity cannot exist unless other countries also have domestic laws requiring emission reductions.  If this is the test, however, it can also be met.  In fact, the INDCs submitted by other countries identified the binding domestic laws through which the INDCs would be implemented.  We did not focus on this aspect in our paper, but some examples are: (1) the United States identified the Clean Air Act and other laws and regulations “relevant to implementation” of the U.S. commitment; (2) China identified the measures that had been incorporated into domestic law and regulation through previous five-year plans, and outlined a variety of policies and strategies that would be incorporated into subsequent five-year plans to implement their emissions commitment; and (3) the EU noted that the necessary legislation to implement its target was being introduced to the EU parliament in 2015 and 2016.  Therefore, if “legally binding” domestic laws are required to find reciprocity under Section 115, EPA could reasonably examine the legally binding provisions in other countries’ domestic systems to find that reciprocity.

To summarize, our view is that Section 115 likely requires only procedural reciprocity.  If a court concluded Section 115 required substantive reciprocity, then EPA could reasonably find that requirement met through the reciprocal political commitments that the U.S. and other countries made in Paris as well as through the binding domestic laws and regulations in the U.S. and other countries that will implement the commitments.

We look forward to further dialog on this topic, which we think is an important part of unlocking this powerful, untapped tool that the EPA possesses to design an efficient and flexible system to reduce GHGs.

Does the Paris Agreement Provide EPA With Authority Under the CAA To Impose Economy-Wide GHG Controls? Count Me Skeptical

Posted on January 20, 2016 by Seth Jaffe

In a very interesting article, Michael Burger of the Sabin Center and his co-authors suggest that, following the Paris climate agreement, § 115 of the Clean Air Act provides authority for EPA to develop economy-wide GHG emissions reduction regulations that would be more comprehensive and efficient than EPA’s current industry-specific approach.  And what, you may ask, is § 115?  Even the most dedicated “airhead” has probably never worked with it.

Section 115 provides that, where EPA determines that emissions from the US are endangering public health or welfare in a foreign country, it may require SIP revisions sufficient to eliminate the endangerment – but only so long as there is “reciprocity”, i.e., the foreign country:

"has given the United States essentially the same rights with respect to the prevention or control of air pollution occurring in that country as is given that country by this section."

I love the idea.  An economy-wide regime would be much more efficient.  I wish that the argument made sense to me, but it does not.

The authors state that a global treaty could provide reciprocity, but then argue that “less binding commitments, including political commitments, should also suffice.”  Thus, they conclude, the “Intended Nationally Determined Contributions”, or INDCs, which are the basis of the Paris Agreement, can provide reciprocity.  Can you say “ipse dixit“?

They provide no precedent for this, because, as they acknowledge, § 115 has never been used.  EPA started to use it once, and the authors provide two letters from then-Administrator Costle, suggesting that legally binding reciprocity is not required.  However, EPA dropped the plan and the two letters were not finally agency action and were never subject to judicial review.  Otherwise, the arguments simply seems to be that EPA can cloak itself in Chevron deference and that that is the end of the story.

Sorry, I don’t buy it.  We’re talking about the law here.  I think most judges would interpret the word “reciprocity” in a statute to mean something that is legally-binding; otherwise, it doesn’t mean anything.  I don’t think it’s even a close enough question that Chevron deference will get EPA over the finish line.

The illogic of the authors’ argument seems to me to be demonstrated by their own words, when they argue reciprocity can’t mean a legally binding agreement, because that would mean that the foreign nations would be able to go to court to ensure that the US also meets its commitments under the Paris agreement, and the US would never allow that.  But that’s precisely the point!  Because there is no treaty, and the US would not let other nations try to enforce the US commitments under Paris, we cannot enforce theirs, and there is no reciprocity.

I wish it were otherwise.

ipse dixit

After 15 Years, EPA Finally Moves to Ban Brain-Damaging Pesticide Chlorpyrifos

Posted on December 4, 2015 by Peter Lehner

Nearly 15 years have passed since the EPA effectively banned the residential use of the pesticide chlorpyrifos (often marketed under the name Dursban), which causes brain damage in children. Kids were exposed at home when they played on pesticide-treated rugs, or hugged pets wearing flea collars containing chlorpyrifos. Yet the agency’s decision left farmworkers and children in rural areas unprotected, as chlorpyrifos was still allowed in agriculture (often marketed under the name Lorsban). This organophosphate pesticide was, and still is, one of the most widely used in agriculture.

Last month, after a decision by the 9th Circuit Court of Appeals that called the EPA's delay "egregious," the EPA at last proposed to ban most agricultural uses of this toxic pesticide.  If the ban on food use applications is finalized -- and it will surely be fought by the agricultural industry-- it will be a major victory for public health and farm communities.

Back in 2007, Earthjustice (which under full disclosure is my employer) began legal action to protect children, farmworkers, and rural communities from chlorpyrifos. Despite the clear evidence of harm, more than five million pounds of toxic chlorpyrifos were still being sprayed every year on soybeans, fruit and nut orchards, and other crops, putting hundreds of thousands of people at risk of exposure. Farmworkers who handled chlorpyrifos, even with safety gear, had been poisoned. (The new farmworker protection standards, which required more vigilant training and monitoring, among other things, should reduce such harms.)  Their children risked exposure at home, as chemicals can linger on clothing. Not only farmworker communities, but anyone living downwind of farms could be exposed when the wind carried the toxic spray into their neighborhoods. Community monitoring even found chlorpyrifos in schoolyards. 

The EPA was failing to protect children from pesticide drift; nor did the agency recognize the growing body of peer-reviewed, published research that found children exposed to the pesticide in the womb had serious brain impairments, including lower IQs and attention deficit disorder.

Over the next nine years, the EPA repeatedly missed deadlines to respond to the petition, and it relied on a questionable exposure model created by Dow, the manufacturer of the pesticide. (In 1995, Dow was fined $732,000 by the EPA for concealing more than 200 reports of poisoning related to chlorpyrifos.)

Only in response to multiple lawsuits, and a court decision that set a mandatory deadline for response, did the EPA at last take action. The public comment process and the finalization of the rule still remain, but at least the process has started. This is a great step forward. Moreover, the EPA is also reviewing all organophosphate pesticides, which are used in the United States and worldwide on a wide variety of crops from corn to cotton to nuts. The decision on chlorpyrifos should set a strong example. 

Petitioner Beware: A Shift in Industry Standing Doctrine in the D.C. Circuit

Posted on November 17, 2015 by Ray Ludwiszewski

In a string of recent decisions, the U.S. Court of Appeals for the District of Columbia Circuit appears to be shifting away from the long-standing general presumption that standing is self-evident for target entities  of a regulatory program — Coalition for Responsible Regulation, Inc. v. EPA, Grocery Manufacturers Ass’n v. EPA, Alliance of Automobile Manufacturers v. EPA, and Delta Construction Company v. EPA.  

In Coalition for Responsible Regulation v. EPA, the D.C. Circuit held industry had “failed to establish that the [Greenhouse Gas] Rules caused them ‘injury in fact,’ [or that] injury … could be redressed by the Rules’ vacatur.” The court found that although “Industry Petitioners contend[ed] that they are injured because they are subject to regulation of [GHGs],” they lacked standing because several aspects of “the … Rules … actually mitigate Petitioners’ purported injuries.”

In Grocery Manufacturers and Alliance of Automobile Manufacturers, EPA decisions concerning the ethanol regulatory program were challenged by a multitude of trade groups – automakers, oil companies, food suppliers – each claiming  its  members were harmed by the regulations.  In twin decisions separated by over two years, the D.C. Circuit held  none of this broad universe of industry petitioners had standing to challenge EPA’s actions.   

In Delta Construction Company v. EPA, the D.C. Circuit held all petitioners lacked standing to seek remand of EPA’s Greenhouse Gas (“GHG”) emission standards for heavy-duty trucks.  Some Petitioners had attacked the Rule because the emission standards would drive up the price of the trucks they purchased; another Petitioner alleged the rule made its products—modified diesel engines to run on vegetable oil —“economically infeasible.”  The Court found the Purchaser Petitioners’ standing failed on both the causation and redressibility prongs of the standing test.  The Manufacturer Petitioner was determined not to fall within the “zone of interests” intended to be protected by the Clean Air Act. 

These four D. C. Circuit rulings all found technical defects in the industry petitioners’ standing.  They may signal a lasting shift away from the basic  assumption that a regulated industry has standing to challenge regulations aimed at its activities.  

Given this new, strict scrutiny of industry standing, practitioners would be well advised not to take for granted the standing of their clients.  In the docketing statement for a regulatory challenge, industry counsel should substantively focus on the “brief statement of the basis for the … petitioner’s claim of standing” and reference materials in “the administrative record supporting the claim of standing.”

EPA To Rename OSWER: How About “The Office That Should Be Eliminated As Soon As Possible”?

Posted on November 2, 2015 by Seth Jaffe

According to the Daily Environment Report (subscription required), EPA is going to change the name of the Office of Solid Waste and Emergency Response to the Office of Land and Emergency Management.  What a grand name; surely it is an improvement.

I don’t think that this quite rises to the level of rearranging deck chairs on the Titanic (though I certainly have clients who would not object if OSWER sank without a trace), but one does get the sense of a bureaucracy beginning the long, hard, slog of trying to figure out how to perpetuate its existence as Superfund – mercifully – begins to fade away.

It’s probably a vain hope, but mightn’t EPA determine instead how to reallocate those functions of OSWER that need to continue, but actually try to figure out a way to shrink this element of the bureaucracy, instead of repurposing it?

titanic

EPA RELEASES FRAMEWORK FOR FUTURE CERCLA 108(b) FINANCIAL RESPONSIBILITY RULEMAKING

Posted on October 26, 2015 by Ronald R. Janke

The Environmental Protection Agency has released a framework for its future financial responsibility rulemaking under CERCLA 108(b).  Although this framework states EPA’s current thinking only in general terms, this document represents the clearest public statement of the agency’s intentions since it announced its intention to develop such rules for hardrock mining facilities in 2009.  This framework also informs of EPA’s intentions toward other classes of facilities in future rulemakings under this authority.  This framework appeared as part of a court filing on August 31, 2015 and was the subject of an EPA webinar on September 29, 2015.

EPA states that the regulatory approach it is considering has five foundational components. First, the universe of facilities to be regulated are hardrock mines and “primary processing activities located at or near the mine site that are under the same operational control as the mine.”  Second, the flow of funds from the financial responsibility instrument to the CERCLA would supplement existing CERCLA sources of funding, as EPA intends to use its existing CERCLA enforcement processes first to clean up sites.  Third, the scope and amount of financial responsibility would consist of three components: (1) response costs, calculated based on a model being developed by EPA to reflect the primary site conditions; (2) a fixed amount for natural resource damages and (3) a fixed amount for health assessment costs.

Fourth, EPA does not intend to preempt state, tribal and local government mining and reclamation closure requirements.  EPA intends to avoid preemption under CERCLA 114(d) by adopting financial responsibility requirements that are “in connection with liability for a release of a hazardous substance” in contrast to “many” state regulatory requirements designed to assure compliance with reclamation and closure requirements.  Fifth, EPA likewise intends that its CERCLA financial responsibility requirements will be distinct from federal closure and reclamation bonding requirements imposed by other federal agencies under other laws with jurisdiction over mining on federal lands.

The morsel of information provided in EPA’s framework leaves interested parties hungry for more information by what is left unsaid.  Particular concerns are the response cost model and its inputs and the path that EPA intends to tread around the multitude of existing financial assurance mechanisms that already apply to hardrock mining to avoid duplication and preemption.  In this regard, EPA could not have picked a more difficult place to begin drafting CERCLA 108(b) rules than for this industry, which has in place many and extensive financial assurances governing the impact of its operations.

What Do Opponents of the Clean Power Plan and the Oklahoma Sooners Have In Common?

Posted on October 23, 2015 by Seth Jaffe

So the Clean Power Plan has been published in the Federal Register.  For those who cannot get enough, you can find all of the important materials, including EPA’s Technical Support Documents, on EPA’s web site for the CPP. 

Not surprisingly, given the number of suits brought before the CPP was even finalized, opponents were literally lining up at the courthouse steps to be the first to sue.  West Virginia apparently won the race and is the named plaintiff in the main petition filed so far. 

Perhaps because Oklahoma has been one of the most persistent, and vocal, opponents of the CPP, this called to mind the origin of the Sooner State’s nickname – which seems particularly apt, since Oklahoma was one of the states that couldn’t wait for the rule to be promulgated to sue.

Sooners

Oklahoma is not actually among the plaintiffs in the West Virginia suit.  Oklahoma filed its own petition today.  One wonders whether Oklahoma was banished from playing with the other states as a result of its impatience.  Unlikely, since most of those in the West Virginia suit also filed early, but it did call to mind that other famous event in the history of the west, as recorded in Blazing Saddles.

EPA Proposes Changes to Hazardous Waste Generator Rules and a new Management of Hazardous Waste Pharmaceuticals Rule – One Step Forward, One Step Back?

Posted on October 12, 2015 by Kenneth Gray

The U.S. Environmental Protection Agency (EPA) is proposing two new hazardous waste rules that EPA believes will strengthen environmental protection and reduce regulatory burdens.  The first is an update to the hazardous waste generator rules; the second is a new set of management standards for hazardous waste pharmaceuticals. 

These proposed rules have had a long gestation, and the generator proposals have been decades in the making.  Both proposed rules were signed by EPA on August 31, 2015 and will be published in the Federal Register for public comment within the next few weeks.  

While touted as providing needed flexibility, the rules are far from simple.  The axiom of environmental regulation holds true: complex rules only become more complex over time.

Hazardous Waste Generators

The proposed updates to the Hazardous Waste Generator Rules include more than 60 changes. Among the more notable changes is EPA’s proposal to allow a waste generator to avoid changes in generator status when generating larger amounts of waste only occasionally, provided the episodic waste is properly managed and additional notifications are submitted.  In addition, the rules would explicitly allow a conditionally exempt small quantity generator facility to send hazardous waste to a large quantity generator facility under common control.  In this case, a company could transfer waste from one of its locations to another.  That sounds logical, but there are “strings attached” to both proposals in the form of additional requirements or conditions for access. 

There are numerous other changes proposed, or highlighted for comment, some of which are likely to make waste management and compliance more complicated.  These provisions include:

  • New provisions on documenting waste determinations
  • Regular reporting by Small Quantity Generators
  • Additional labelling of containers for contents and hazards
  • Longer record keeping period for inspection logs
  • Required arrangements with responders (not just attempts)
  • Additional procedures for closure
  • Additional training for employees at Satellite Accumulation Areas 

These proposed changes are sure to provoke comments and controversy. In several of these areas, there will be more “opportunities for environmental excellence” (also commonly referred to as opportunities for violations).

Hazardous Waste Pharmaceuticals

The newly proposed Hazardous Waste Pharmaceuticals Rule includes a tailored, sector specific set of regulations for the management of hazardous waste pharmaceuticals by “Health Care Facilities” (including pharmacies) and “Reverse Distributors” (businesses that accept the return of pharmaceuticals). The rule would only apply to pharmaceuticals that already meet the definition of RCRA hazardous waste and that are generated by health care facilities.  However, for the first time, “Reverse Distributors” would be regulated under hazardous waste rules.

EPA is not proposing to change the list of pharmaceutical wastes that are considered hazardous wastes, with the exception of possible changes to address low-concentration nicotine products.  The Agency is also generally requesting comment on what criteria it might use to identify new pharmaceutical wastes.  The Agency abandoned its 2008 proposal that would have added new pharmaceuticals and applied new universal waste standards.  In fact, EPA has announced that universal waste management is prohibited.

Although already prohibited under most circumstances, EPA is adopting an explicit ban on flushing pharmaceuticals down the sink and toilet.  The Agency estimates that this will prevent the flushing of more than 6,400 tons of hazardous waste pharmaceuticals annually.  (Really? That seems pretty high…)  

EPA hopes that the new rule will make hazardous waste management easier for health care professionals by removing the traditional manufacturing-based hazardous waste generator requirements and instead providing a new set of regulations that are “designed to be workable in a health care setting.”  The Agency was sympathetic to the view that the existing hazardous waste rules were viewed as complex and difficult to comply with in a health care setting.  (Gee, haven’t all generators reached that conclusion for their industries?)  While these may be simplified as compared to existing hazardous waste rules, complying with the management standards will still require effort and diligence.  

The pre-publication versions are available on EPA’s website:

http://www2.epa.gov/hwgenerators/pre-publication-version-hazardous-waste-generator-improvements-proposed-rule

http://www2.epa.gov/hwgenerators/pre-publication-copy-management-standards-hazardous-waste-pharmaceuticals-proposed-rule

Curiouser and Curiouser: Sixth Circuit Not Sure of Jurisdiction but Stays WOTUS Rule Anyway

Posted on October 9, 2015 by Rick Glick

Does this make sense to you?  Eighteen states petitioned the Sixth Circuit to challenge the new rule adopted by EPA and the Corps of Engineers defining “waters of the United States” under the Clean Water Act.  Then the petitioners move the court to dismiss their own petition for lack of subject matter jurisdiction, but at the same time request a stay of the rule.  And then, the court acknowledges it may not have jurisdiction but issues the stay anyway!  That is exactly what Sixth Circuit did in the case published today.  

This case is among many seeking to block the rule.  The Clean Water Act confers original jurisdiction upon the circuit courts for challenges to “effluent limitations or other limitations.”  But as reported earlier in this space, thirteen states convinced a federal district judge in North Dakota that he had jurisdiction because the WOTUS rule is merely definitional, and neither an effluent nor other limitation. 

The court concluded that petitioners have a good chance at prevailing on the merits, that the rule exceeds “guidance” given by the Supreme Court in extending CWA jurisdiction too broadly.  The court also indicated that the final rule may have strayed too far from the notice given in the proposed rule in its definitions of jurisdictional waters.

The majority was not troubled by the fact the parties are still briefing subject matter jurisdiction, finding that it had plenty of authority to preserve the status quo pending a jurisdictional determination.  The dissent took the view that the proper sequence is to first decide jurisdiction, then decide on a national stay of a rule years in the making.  Pants first, then shoes.

Did the majority consider the situation an emergency that required immediate action?  No, the court found that petitioners were not persuasive that irreparable harm would occur without a stay, but neither could the court find any harm with freezing implementation of the rule.  The reasoning seems to be that we’ve muddled through so far, let’s take a step back and consider all the implications before implementation. 

Why do the states prefer to go after the rule in the district courts instead of the circuit courts of appeal?  Maybe they believe they can forum shop to find conservative judges and build a favorable body of case law before appealing.  Or maybe they believe they can more directly attack the science underlying the rule or otherwise augment the administrative record.  Whatever the reasons, the ultimate return of this issue to the Supreme Court will be delayed and the law dealing with regulation of wetland fills will remain as confused as ever.

A Brief Rant on Cost-Effectiveness Analysis

Posted on October 2, 2015 by Seth Jaffe

On September 29, 2015, the 3rd Circuit Court of Appeals remanded EPA’s approval of Pennsylvania’s regional haze SIP.  Although I think that the decision was important and largely unobjectionable, it did get one issue wrong, and it happens to be an issue near and dear to my heart – cost-effectiveness analysis.  I am regularly surprised by the number of people who oppose its use and the number of people who just plain don’t get it.  The 3rd Circuit (and EPA and the plaintiffs) fall into the latter category in this case.

The issue here was what metric to use in measuring the cost-effectiveness of technologies intended to reduce regional haze.  Since this case involves compliance with a rule intended to reduce haze, I would have thought it self-evident that cost-effectiveness would be measured by the dollars spent divided by the amount of haze reduced.  Silly me.

For those of you who don’t know, there is a measure of visibility; it is known as a “deciview.”  Pennsylvania, to its credit, indeed measured cost-effectiveness on a dollars/deciview metric.  The plaintiffs argued that cost-effectiveness should be measured on the basis of dollars/ton of pollutant removed.  EPA waffled, first agreeing with the plaintiffs, but then concluding that, while its guidelines call for $/ton, it is acceptable to use $/dv.  The Court, following the rule of decision that it must evaluate EPA’s decision based on the reasoning used in the rule, rather than on a rationale first provided in litigation, concluded that, because EPA’s own guidelines found the $/dv metric to be “flawed”, EPA’s approval of the $/dv metric was unjustified and must be remanded.

I am not sure I can count the ways this was screwed up, but let me put it simply.  If we’re assessing cost effectiveness, and we have a measure of the outcomes we care about, we should use it.  To use a proxy – emissions – instead of the actual outcome the rule is intended to affect – visibility – is just plain nuts.

And I have to add that, not only did the Court get this 180 degrees wrong, but it did not even seem to be aware of just how bizarre it is to reject the metric that actually measures the outcomes the rule is trying to achieve.

Chicken Little Cannot Compare to the Opponents of the Clean Power Plan

Posted on September 10, 2015 by Seth Jaffe

On Wednesday, the D.C. Circuit Court of Appeals dismissed the latest effort to stay EPA’s Clean Power Plan before it has even been promulgated in the Federal Register.  The Court simply stated that “petitioners have not satisfied the stringent standards that apply to petitions for extraordinary writs that seek to stay agency action.”

Really?  Tell me something I did not know.

I’m sorry.  The CPP is a far-ranging rule.  There are strong legal arguments against its validity.  Those arguments may prevail.  I see it as about a 50/50 bet.  This I do know, however.  The sky isn’t falling. The sky won’t fall, even for West Virginia, if the rule is affirmed and implemented. Those opposed to regulation have made these arguments from time immemorial – certainly no later than when Caesar tried to regulate the amount of lead in Roman goblets.  And if I’ve got that one wrong, at least no later than Ethyl Corporation v. EPA, when opponents of EPA’s rulemaking on leaded gasoline thought that the rule would mean the end of western civilization.

I’m not naïve.  I understand that these arguments are political as well as legal.  I just think that opponents of EPA rulemaking undermine their own political position in the long run by repeatedly predicting catastrophe, even though catastrophe never arrives.

sky is falling

Whole Lot of Craziness Going On

Posted on September 2, 2015 by Richard G. Stoll

A whole lot of craziness is going on in federal district and appellate courts all over the country right now.  About what?  About judicial review of EPA’s recent “WOTUS” rule under the Clean Water Act (CWA).  So I can avoid wheel re-invention, see the very recent ACOEL blogs by Seth Jaffe and Rick Glick.

So what’s the problem?  You might find a lot to hate about the Clean Air Act, the Resource Conservation Act, the Safe Drinking Water Act, and I could name a few others, but at least they all have one good thing going for them:  they all provide in a crystal clear manner that judicial review of EPA’s national rules under those statutes will lie exclusively with the D.C. Circuit.  No ifs, ands, buts, or maybes.

For reasons I have never understood (and I have been trying since the 1970s), Congress in its infinite wisdom chose a different path in the CWA.  In Section 509, they listed seven types of actions that must be reviewed in a federal Court of Appeal (not necessarily the D.C. Circuit) and left any other type of action to be reviewed initially in federal district court.

Over the years, a lot of mixed case law has developed regarding EPA’s CWA rules that don’t fit neatly within one of the seven types of actions Section 509 has specified for Court of Appeals review.  Quite predictably, as reflected in Seth’s and Rick’s recent blogs, three district courts last week reached conflicting results over whether WOTUS fits within the seven types.  In its WOTUS preamble, EPA included a discussion about confusion in the courts over the issue and took no position on whether WOTUS should initially be reviewed in a district court or Court of Appeals.

So how crazy is this:  right now, we have (1) a ruling from one district court judge in North Dakota finding he has jurisdiction and enjoining EPA from enforcing WOTUS; (2) a statement from EPA saying the agency will honor his injunction only in the 13 States that were plaintiffs in that action; (3) an order from that judge directing the parties to brief the issue of whether EPA has authority to honor his ruling in only those states; (4) decisions from two other federal district judges holding WOTUS judicial review must be brought only in a Court of Appeals; (5) numerous cases filed in several circuit Courts of Appeals that have been transferred (at least for now) to the 6th Circuit; (6) an almost certain EPA appeal to the 8th Circuit in attempt to reverse the North Dakota judge’s injunction; and (7) WOTUS review cases filed in numerous other federal district courts by lots of parties with various motions still pending.

This is early September, and I can’t imagine how this won’t get a lot crazier over the next few months.  Congress in its infinite wisdom!

First Blood: North Dakota Federal Court Strikes WOTUS Rule

Posted on August 31, 2015 by Rick Glick

With so many challenges filed in so many venues to EPA’s Waters of the United States or WOTUS rule, it seemed inevitable that some plaintiffs somewhere would find a sympathetic court.  And so it is that thirteen states found U. S. District Judge Ralph R. Erickson to preliminarily enjoin the “exceptionally expansive view” of the government’s reach under the Clean Water Act.

This case is interesting from a couple of perspectives.  First, Congress conferred original jurisdiction for challenges to EPA “effluent limitations or other limitations” and for permit decisions upon the Circuit Courts of Appeal.  In the past two days, district court judges in West Virginia and Georgia concluded they lacked jurisdiction over challenges to the WOTUS rule on that basis.  Judge Erickson, however, did not feel so constrained. 

The judge found that the WOTUS rule is simply definitional, and neither an effluent limitation nor an “other limitation” on states’ discretion.  Further, the judge found that the rule “has at best an attenuated connection to any permitting process.”   The conclusion states’ discretion is not affected is a bit odd in that the judge later concludes that the state plaintiffs satisfied all the criteria for a preliminary injunction, including irreparable harm caused by the rule. 

Second, Judge Erickson plays on an internecine dispute between EPA and the Army Corps of Engineers in an unusual way.   In my first sentence I refer to the WOTUS rule as EPA’s, although the rule was jointly adopted by EPA and the Corps.  However, recently leaked internal government memoranda indicate that the Corps disavows much of the technical support and policy choices underlying the rule.  Judge Erickson obliquely references these memoranda and seems to rely on them to conclude that plaintiffs are likely to succeed on the merits of their challenge. 

Typically, courts are loathe to rely on internal documents of uncertain provenance, as they prefer to leave the government room to openly discuss policies under development without fear its deliberations would be disclosed.  But in this case, Judge Erickson notes that he has not been presented with the full record for the WOTUS rulemaking, and so felt justified in citing the Corps memos. 

As Seth Jaffe has observed, it seems likely that Judge Erickson’s jurisdictional determination will not stand, and his reliance on the confidential exchanges between the Corps and EPA is a little disturbing.  However, his order highlights EPA’s poor management of this rulemaking, which has led to challenges from states, property rights advocates and environmentalists—a kind of anti-EPA trifecta. 

As previously noted, EPA released its draft WOTUS rule before the work of the Science Advisory Board was complete, thus raising questions as to the rule’s scientific objectivity.  Then EPA seemingly disregarded the technical concerns raised by its rulemaking partner, the Corps.  Any WOTUS rulemaking would be controversial, but EPA has unnecessarily raised the bar for public acceptance.

Two Days, Three Decisions, One Big Mess: Welcome to Judicial Review of the Waters of the United States Rule

Posted on August 28, 2015 by Seth Jaffe

On Wednesday, Judge Irene Keeley of the Northern District of West Virginia held that district courts do not have jurisdiction to hear challenges to EPA’s rule defining waters of the United States, because courts of appeal have original jurisdiction over “any effluent limitation or other limitation.”  Yesterday, Judge Lisa Wood of the Southern District of Georgia agreed.

Later yesterday, Judge Ralph Erickson of the District of North Dakota disagreed.  Finding that a definitional rule is not an effluent limitation and is not any “other limitation”, because it “places no new burden or requirements on the States”, Judge Erickson concluded that the district courts do have jurisdiction.  Addressing the merits, Judge Erickson concluded the states were likely to prevail, and would suffer irreparable harm in the absence of an injunction.  He thus enjoined enforcement of the rule in the 13 states involved in the case before him.

I’ll go out on a limb and assert that Judge Erickson’s decision is not likely to survive.  Why not?

  • Both the Georgia and West Virginia opinions cogently explain why the WOTUS rule is an “other limitation under existing CWA cases.
  • Judge Erickson was clearly trying to have his cake and eat it, too. It is, to put it mildly, internally inconsistent for Judge Erickson to conclude that he had jurisdiction to hear the case, because the “rule places no new burden or requirements on the States”, while ruling on the merits that the States will suffer irreparable harm if the rule goes into effect.  If they will suffer harm, it is precisely because the rule will limit them in new ways – which is pretty much what his own opinion says. 
  • As Judge Keeley noted, providing consolidated jurisdiction over all challenges to the rule in one court of appeals furthers

“the congressional goal of ensuring prompt resolution of challenges to EPA’s actions.”  That scheme would be undermined by … a “patchwork quilt” of district court rulings.

Based on these three decisions in just the last two days, it would seem that truer words were never spoken.

 

Ruminations on the Transition to a Low Carbon Economy

Posted on August 24, 2015 by Christopher Davis

Amid the controversy around the just released EPA Clean Power Plan rule, the impacts of climate change are becoming apparent with a proliferation of heat waves, droughts, floods, wildfires and other extreme weather events and trends, both in the U.S. and globally.  While many climate scientists (and world governments in the 2010 Cancun Agreements) have agreed that it is necessary to limit average global temperature rise to 2 degrees Celsius to avoid potentially catastrophic and irreversible effects of climate change, the impacts we’re now witnessing result from a temperature rise of just under 1 degree C. We are currently on a trajectory toward a 3 to 4 degree (or more) increase, which has sobering implications.

In preparation for the COP 21 negotiations in Paris, world governments are engaged in a “bottom up” process of submitting proposed national emission reduction pledges poetically called Intended Nationally Determined Contributions (INDCs).  These are not expected to get us to a 2 degree future, but will hopefully form the basis for an international agreement that sets the world on a path toward that target or something close.

The U.S. INDC calls for reducing our emissions by 26-28 percent below 2005 levels by 2025, which will require additional measures beyond those currently proposed or in place (including the EPA Clean Power Plan, CAFÉ and truck efficiency standards, methane and HFC controls). All of these measures are controversial and under attack from various quarters. As the world’s second largest emitter, the U.S. must implement credible and effective emission reduction strategies to convince other major emitters in the developing world (China, India, et al) to control their emissions and to help avoid the worst effects of climate change.

Solving climate change clearly poses huge challenges, but it also presents huge economic opportunities. As highlighted in Ceres’ 2014 Clean Trillion report, International Energy Agency analyses show that the world needs an average of more than $1 trillion in additional annual investment in clean energy technologies (renewable energy, energy efficiency, efficient transport, etc.) beyond 2012 levels of about $250 billion. This creates a massive need for capital, and presents a huge economic and investment opportunity to finance the necessary low carbon, clean energy economy.

A global transition to a low carbon economy is in progress and accelerating, but too slowly.  Policies that put a meaningful price on carbon emissions and eliminate fossil fuel subsidies are needed to scale up clean energy investment. Fortunately there is growing business and investor support for such actions, as evidenced by the Global Investor Statement on Climate Change and recent letters from more than 350 companies supporting EPA’s Clean Power Plan. More such voices are needed to make the business and political case for solving climate change, before it is too late.

Castor and Pollux – the Strange Case of the Twin MOAs between EPA and California’s DOGGR

Posted on August 20, 2015 by Patrick Dennis

For those of you who, like me, are becoming more confident as the years go by that you have “seen it all” in the field of environmental law, this strange current event will change your mind.

California’s oil and gas production industry has been on a roll for the past decade.  Aided by the price of crude oil in the $100 per barrel range and new technologies, including hydraulic fracturing among others, industry has increased production from previously written-off reservoirs.  During this time, the California Division of Oil, Gas and Geothermal Resources (“DOGGR”) has been the lead agency for that industry, issuing the key environmental permits for its regular operations.  Those include the underground injection permits that allow the industry to take the wastewater typically produced along with crude oil from subsurface production zones and reinject it underground into other water bearing zones.  For nearly thirty years, the issuance of such permits proceeded without major interruption or controversy, but as of the start of this year all that changed.

The story begins in 1982 with California’s application for primacy to implement the Underground Injection Control (“UIC”) program of the federal Safe Drinking Water Act.  Historically, in California most crude oil producing formations are comprised of over 90% water.  Produced water, generally of poor quality, has been disposed as Class II wastes through underground injection wells often located near the production wells.  California’s application for UIC primacy identified those underground aquifers where injection of produced water from oil and gas production was already taking place.  These aquifers were exempt from the prohibition on underground injection of Class II wastes either because they contained greater than 3,000 mg/l of total dissolved solids (“TDS”) and as a result were considered to be unfit as drinking water, or they contained less than 3,000 TDS but met stringent standards of the UIC program.

In a memorandum of agreement (“MOA”) between US EPA and DOGGR executed in September 1982, the two agencies memorialized their agreement to allow DOGGR to implement the federal UIC program in California.  A list of both exempt and non-exempt aquifers is attached to the MOA.  Just a few months later, in December 1982 a second version of the MOA was circulated that transferred 11 of the aquifers from the non-exempt list to the exempt list.  Then, in one of the stranger administrative developments I’ve seen, the September 1982 signature page was affixed to the end of the changed MOA and attachment.  Thus, there were two MOAs – MOA1 drafted and executed in September 1982 and MOA2 apparently drafted and agreed upon in December 1982,  both using the same signature page from September.  The 11 aquifers that went from non-exempt aquifers into which there could be no Class II discharge to exempt aquifers allowed to receive Class II discharges included some of the more critical subsurface aquifers used by the oil and gas industry.                  

As a result of the 1982 MOAs and the transfer of the administration of the UIC program to DOGGR, California’s oil and gas industry was able to secure a much closer (geographically and philosophically) regulatory agency.  UIC permits have been routinely issued to oil and gas producers for injection into exempt aquifers – as recognized in MOA2.  Today there are approximately 50,000 produced water and enhanced recovery oil and gas injection wells in California.  The oil and gas industry has invested hundreds of millions, more likely billions, of dollars in infrastructure and hardware for these wells based in substantial part on the authorizations in their DOGGR permits.

Now we come to the punchline and the strange situation we find ourselves in today. 

Beginning in about 2012, US EPA took a hard look at DOGGR’s implementation of the UIC program and concluded that DOGGR may have issued UIC permits for injection into underground formations that either were not, or should not have been, exempt under the standards set forth in the UIC program. That audit culminated this year in a series of letters issued by both EPA and DOGGR setting forth an ad hoc program to re-evaluate many of the underground formations that had been treated as exempt by DOGGR for decades, including the 11 aquifers that had been “switched” from non-exempt to exempt status by MOA2.  EPA and DOGGR contend that industry must prove that some of these long-held exempt aquifers really qualify for their exemptions, even though industry received permits from DOGGR based upon the 1982 MOA.  This complete reversal of long-held assumptions has caused a substantial amount of angst and uncertainty in the industry.

But perhaps the most astonishing development is the publication of analyses of the validity of the two competing MOAs for the 11 aquifers that appeared on the California EPA website and the dissemination of the competing MOAs on the DOGGR website.  In a March 2, 2015 memorandum authored by Matthew Rodriguez, the Secretary of Cal EPA, the strange procedural history of the competing MOAs, with identical signature pages, is detailed and includes a relatively candid admission that “DOGGR and U.S. EPA agreed to exempt the 11 aquifers, but may not have followed regulatory procedures.” 

Cal EPA and DOGGR seem to agree that they assumed and treated the 11 aquifers as exempt for 30 years and that MOA2 appears to be the real, and final, MOA.  However, US EPA has not issued a final opinion on that issue and continues to leave open the prospect that the 11 aquifers, among others, were never somehow officially exempt under the UIC.  They have even adopted a moniker for the 11 and calling them the “11 historically-exempt aquifers.”  

The final conclusion to this story is yet to be written.  Assuming that re-consideration of the  status of the exempt aquifers does not result in the removal of their exemption, then it may not be necessary to determine what legal significance the competing MOAs enjoy, or which one is “right.”  But if EPA or DOGGR change the status of aquifers from exempt to non-exempt, their actions may shut down injection operations, thereby imperiling ongoing oil and gas operations.  In that event, one or more of the affected industry companies may challenge the validity of MOA1 and seek to compel validation of MOA2.

If that happens, then as an oil and gas industry lawyer, I’m hoping that as between the twin MOAs, MOA2 is Pollux[1] and MOA1 is Castor.                            

 


   [1]   For those unfamiliar with Greek mythology, Pollux and Castor were twins with ambiguous parentage, but only Pollux was immortal and Castor was not.  

The D.C. Circuit Does It Again! Why Should EPA Even Bother to Propose CAA Rules?

Posted on August 10, 2015 by Richard G. Stoll

Last year I published an article in Bloomberg BNA entitled “Protection of Judicial Review Watered Down in D.C. Circuit.”  I focused on a recent D.C. Circuit ruling (UARG) I hoped would “turn out to be an unfollowed – and eventually forgotten – glitch.”  The effect of the “glitch” is to delay interminably judicial review of final Clean Air Act (“CAA”) rule provisions that EPA never hinted might be included in a final rule – even though the un-foreshadowed provisions go into full force and effect.

            The Court’s judges must have missed that BNA edition, because they have followed the same rationale at least twice more now – in their Mexichem opinion of May, 2015 and their “Transport Rule” (EME Homer) decision last week.

            This regrettable situation arises from the Court’s new interpretation of a CAA provision (§307(d)(7)(B)) which is quoted in full in my BNA article.  It begins with the hornbook proposition that you can’t attack a rule’s provision on judicial review on grounds that were not raised during the comment period.  It then provides for a process known as a “petition for reconsideration.”  If a party can show that it could not have raised an argument during the comment period, EPA must conduct a “reconsideration” process.  EPA’s actions in response to the petition are then subject to judicial review.  This provision has often been used where EPA supports a final rule with facts or rationale not included in the record when the public comment period was open.

Now consider the following hypothetical.  Assume EPA proposes a CAA rule requiring boilers to install a certain type of control device.  EPA’s final rule drops the control requirement and simply prohibits boilers from combusting coal, effective two years from the final rule’s issuance.  EPA’s proposal never mentioned coal prohibition as an option, and no one suggested it in their comments.  So most would assume that boiler owners could then file D.C. Circuit petitions for review and have slam-dunk arguments for vacatur.

As shown in my BNA article, the D.C. Circuit has on many occasions (as recently as December, 2013) done just that.  But since then, EPA and DOJ lawyers have advanced what I think is a ludicrous position: when a party believes a final CAA rule provision was issued in violation of notice-and-comment requirements, it cannot pursue judicial review on that issue unless and until it first files a petition under §307(d)(7)(B) and waits for EPA to take final action on that petition. 

Unfortunately, the D.C. Circuit has bought this position three times now.  Here is how the D.C. Circuit summarized the point in EME Homer last week:

[P]etitioners argue that EPA violated the Clean Air Act’s notice and comment requirements by significantly amending the Rule between the proposed and final versions without providing additional opportunity for notice and comment. Because that argument is an objection to the notice and comment process itself, petitioners obviously did not and could not have raised it during the period for public comment. Under Subsection 7607(d)(7)(B), however, the only appropriate path for petitioners to raise this issue is through an initial petition for reconsideration to EPA.

Note the opinion in effect concedes just how absurd this is.  The petitioners “obviously did not and could not” have raised this objection.  How can one object to EPA’s failure to propose something that EPA failed to propose?

EPA almost always delays action on §307(d)(7)(B) petitions for years so in the hypothetical above, the coal prohibition would go into effect before judicial review could even begin.  Boiler owners would either have to shut down operations or convert to non-coal burning facilities, at which point judicial review would become pointless.  The effect:  EPA stops coal burning at boilers by declining to propose such a requirement in the first place!

If you think EPA or the D.C. Circuit would out of fairness suspend application of rules in such situations, see the examples to the contrary in my BNA article and read the Mexichem opinion.  If you think I am exaggerating about how long it takes for a §307(d)(7)(B) petition to be processed, see the examples in my BNA article.  And consider that in last week’s EME Homer opinion, the Court concluded its discussion above by noting that at least one party had filed such a petition but that EPA had not yet acted upon it.  That petition was filed in 2011.

CERCLA Financial Assurance Update: Section 108(b) Remains Stalled, But New EPA Guidance for Settlement Agreements and UAOs

Posted on August 7, 2015 by Charles Efflandt

Earlier this year, I posted in this blog a discussion of EPA’s 35 year – and still unfinished – journey toward full implementation of the financial assurance (“FA”) mandate of CERCLA Section 108(b). Section 108(b) obligates EPA to identify “classes of facilities” that will be required to demonstrate financial ability to respond to future releases of hazardous substances and to promulgate rules establishing those FA requirements. Inexplicably, Section 108(b) remained dormant for 28 years. Litigation initiated by NGOs in 2009 and 2010 prompted the agency to identify the hardrock mining and several other industries as priority targets for regulation. The task of developing the FA requirements for those industries, however, remained a work-in-progress.

Ever vigilant, environmental advocacy groups filed a Petition for Writ of Mandamus in August 2014 taking EPA to task for its delays and inaction. The theme of the litigation is that (1) Section 108(b) is a critical component of CERCLA’s overall scheme, (2) EPA’s failure to issue FA rules has resulted in cleanup delays, funding shortfalls and increased public health risks, and (3) EPA’s inaction cannot be justified by competing priorities within the agency. In May of this year, the D.C. Circuit Court of Appeals issued an order requiring EPA to expedite implementation of Section 108(b) to the greatest extent possible, update its rulemaking schedule for the identified industries, and disclose to the litigants the regulatory “framework” for the hardrock mining industry, which EPA acknowledged had been completed. EPA’s website suggests that it will publish the hardrock mining rule in August 2016.

In short—the more things change, the more they stay the same. Perhaps the low priority assigned to this CERCLA provision suggests that the cleanup response track-record of even the priority industries may not justify a need to regulate under Section 108(b) - a process that will involve complex issues with significant financial consequences. Nevertheless, Section 108(b) remains the law of the land. Congress must either follow-through with its periodic efforts to amend Section 108(b) or EPA must finish this long journey. No benefit inures to the public, affected industries or the agency from the existing uncertainties and delays.

EPA’s foot-dragging in implementing Section 108(b) is in contrast with its recent action emphasizing FA as an enforcement priority in CERCLA settlement agreements and UAOs. The agency’s April 2015 Guidance to Regional Counsel is touted as the first comprehensive document issued by EPA to assist with the development of FA requirements and provide transparency in the use of its Superfund authority. Space limitations do not permit a detailed review of this 22 page guidance, which includes modified model FA language and sample documents. Some take-aways from a first read of the guidance:

  • The Guidance does not address future Section 108(b) requirements.
  • It is suggested that the EPA Regions have flexibility to include or exclude certain FA mechanisms at specific sites, BUT headquarters consultation and approval is often necessary.
  • The financial test and corporate guaranty mechanisms are perceived by EPA as having a higher risk of not achieving FA objectives and imposing increased administrative burdens on the Agency; therefore, it is suggested that those mechanisms should be used with caution.
  • The Guidance recognizes the complications arising at sites involving numerous, dissimilar PRPs, with a preference for requiring jointly-funded versus separate FA mechanisms.
  • The Guidance emphasizes the need for agency diligence in the ongoing evaluation of site conditions and costs, with increases in the initial FA amount to be required as appropriate.
  • Practical considerations for evaluating the financial test and guaranty FA options are addressed in an appendix.

Notwithstanding suggestions of flexibility in the use of FA tools on a site-by-site basis, this comprehensive new guidance does not appear to include much good news for the settling PRP. In fact, EPA’s stated concerns on the use of the financial test, corporate guaranty and insurance policy FA mechanisms could further complicate an already contentious issue in CERCLA settlement negotiations. What impact the guidance may have on FA negotiations as new sites arise, of course, remains to be seen.

EPA Hubris, July 2015 Edition

Posted on July 31, 2015 by Seth Jaffe

Anyone who reads this blog must have seen the explosion of reports in the trade press that EPA ignored significant criticism from the Army Corps of Engineers in promulgating its Waters of the United States rule. (For a useful summary of the rule and an analysis of some of the legal issues that might be raised in potential litigation, see Susan Cooke’s post from earlier this month.)  I have not seen the memoranda, but, based on the press reports, it appears that EPA ignored criticism both that it was too stringent in some areas and that it was not sufficiently stringent in others.  If EPA’s purpose wasn’t simply to make the rule more – or less – stringent, why did it ignore the Corps and try to bury the disagreement?

How about hubris?

I noted earlier this year and as far back as 2010, EPA’s tendency towards self-righteousness.  I also pointed out how counterproductive that self-righteousness is; it makes it more difficult for EPA to achieve its goals.  While I still think that EPA is self-righteous, hubris seems the apt description today.

IT’S BEEN A LONG TIME COMING… 27 Year Old RCRA Underground Storage Tank Rules Get a Facelift

Posted on July 20, 2015 by Karen Crawford

I remember as though it were yesterday when the Underground Storage Tank (UST) regulations were finalized in 1988, requiring owners and operators to register existing as well as new tanks, then ensure prevention, detection and remediation of releases into the environment.   Owners and operators were also required to perform release detection inspections and demonstrate financial responsibility for cleaning up releases.   New tanks were required to meet certain design, construction and installation requirements aimed at preventing releases.  While technology for meeting those requirements has evolved over the ensuing 27 years, no significant regulatory changes have been implemented – that is, until this week. 

Many owners and operators decided to pull or close USTs in lieu of meeting those regulatory requirements but, because certain tanks are underground for safety reasons, that was not always a viable alternative.  Because I was new to private practice and saw an opportunity, I set out to become the “Queen of USTs" in the Carolinas.  These days, I still help clients on remediation projects involving releases from USTs and review due diligence reports on real estate where USTs are or have been used, but it has been a long time since I gave a speech or wrote an article about UST regulation. 

On July 15, 2015, EPA promulgated a final rule modifying the 1988 UST regulations implementing requirements for secondary containment and operator training applicable to both new and existing USTs, implementing key provisions of the Energy Policy Act of 2005 (which modified Subtitle I of the Solid Waste Disposal Act) and fulfill objectives in EPA’s August 2006 UST Tribal Strategy ensuring parity in program implementation among states, territories and in Indian country.  Citing two peer-reviewed but unpublished studies of causes for releases from USTs, along with statistics showing there are still as many as 6000 releases from USTs discovered each year, and touting development of new, the 2015 changes to the original regulations are aimed at ensuring the USTs are still working as intended, by focusing on operation, maintenance and training requirements. 

While certain waste water treatment facility and nuclear power facility partial or complete deferrals are continued, this regulation removes deferrals set forth in 1988 for field-constructed tanks, airport hydrant fuel distribution systems that meet the UST definition, and UST systems storing fuel solely for use by emergency power generators.  Hospitals, airports, communications providers and utilities should particularly take note of these changes.

This blog would grow to an article if it addressed in detail all of the technical requirements of this 117-page regulation, but there are some that take effect immediately and require attention.  For example, regulations disallowing flow restrictors in vent lines to meet the overfill prevention requirement at new installations, and also triggered when an existing flow restrictor is replaced, apply immediately on the effective date of this final regulation, July 15, 2015.  Also, testing following a repair is required on the effective date of the regulation.  Most of the other implementation deadlines for notification, testing, inspection, recordkeeping, demonstrations of financial responsibility compatibility and required technology upgrades are set at three years after the effective date of the final 2015 UST regulation or July 15, 2018. 

There is one exception to the deadline for compliance being either immediately or in 3 years.  The secondary containment requirement is implemented for all new UST systems 180 days after the effective date of the rule, and tanks and piping installed or replaced after April 11, 2016 must be secondarily contained and use interstitial monitoring per the regulation.  EPA explains that 180 days allows owners and operators to adapt plans for new systems.       

Training of owners and operators (definitions for three classes are set out in this regulation) must be completed within the three years after the effective date of this regulation.   EPA explained that requirements for implementing walkthrough inspections and release detection equipment testing were adjusted to correspond to the training deadline so inspectors and testers will better understand what to look for.  Apparently, many of the deadlines and implementation requirements were adjusted by EPA in response to comments on the proposed rule.

Conversely, in response to comments regarding the potential costs on small business owners, EPA responded that it carefully considered such potential impacts of the proposal; EPA declined to implement recommendations of a small business advocacy review panel under the Regulatory Flexibility Act as some commenters suggested.  Finally, while EPA’s final rule allows records to be maintained on paper or electronically, in keeping with the move to electronic filings and submittals, the agency encourages owners and operators to maintain electronic records to “simplify compliance” and utilize “21st century technology tools.”

Deference to EPA on the Wane?

Posted on July 13, 2015 by Renee Cipriano

The Supreme Court’s latest opinion in an environmental rule challenge, this to the Mercury and Air Toxics Standard, or MATS, raises more questions than it answers.  As discussed on this blog site (see here, here and here,) the Court in Michigan v. EPA held that EPA had not reasonably considered costs when determining to regulate power plant mercury emissions.  EPA must factor cost into its initial determination that it is “appropriate and necessary” to regulate hazardous pollutants from power plants.  The Court passed no judgment on whether EPA can meet that burden. 

At the heart of the issue was Congress’ acknowledgement that the 1990 Clean Air Act Amendments would subject power plants to numerous controls to reduce sulfur dioxide, nitrogen oxides, and particulates.  Section 112 of the Act requires EPA to regulate power plants if “regulation is appropriate and necessary after considering the results of the study.”  Congress further acknowledged that these measures also might reduce hazardous air pollutants, and that no one knew at the time whether additional controls would be required to protect human health from air toxics emitted by power plants. 

To determine that, EPA was required to conduct a study.  In 1998, EPA’s study concluded that regulation of coal and oil fired power plants was “appropriate and necessary.”  EPA reaffirmed this finding in 2012, noting that mercury and other hazardous air pollutants were “appropriate” to regulate because they posed a risk to human health and the environment and that controls were available to reduce the pollutants.  EPA found that it was “necessary” to regulate because other pollutant emission limits and requirements did not eliminate the risks. 

The Court, in a 5-4 decision written by Justice Scalia, analyzed EPA’s action through the Chevron deference standard, determining that “EPA strayed far beyond those bounds when it read §7412(n)(1) to mean that it could ignore cost when deciding whether to regulate power plants.”  Ultimately, the Court held that “Chevron allows agencies to choose among competing reasonable interpretations of a statute; it does not license interpretive gerrymanders under which an agency keeps parts of statutory context it likes while throwing away parts it does not.”  Id. at 9.

The Court went on to reject EPA’s contention that it need not factor cost into its initial determination to regulate because the agency must take cost into consideration when later determining how much to regulate.  The Court colorfully remarked that:  “By EPA’s logic, someone could decide whether it is ‘appropriate’ to buy a Ferrari without thinking about cost, because he plans to think about cost later when deciding whether to upgrade the sound system.” The Court’s strong language cautioning EPA to use “reasoned decision making” and not “gerrymander” statutory requirements should give EPA pause as it is set to promulgate greenhouse gas reduction measures for power plants in its Clean Power Plan this summer.  Numerous comments filed in the so-called Clean Power Plan rulemaking docket have charged EPA with overstepping its statutory boundaries, and the Court seems to be signaling its disfavor of such action.

Since the decision, speculation as to whether and how EPA will fix MATS has been rampant. 

  • Will EPA abandon MATS completely, requesting vacatur?  Not likely.  In public remarks and testimony before a Congressional subcommittee during the week of July 6, Administrator Gina McCarthy cited the health benefits already achieved by the rule, indicating the agency would not back down.
  • Can EPA fix the rule based on the current administrative record?  Some believe that EPA can simply re-jigger its existing analysis and logic, fronting the cost issue in the “appropriate and necessary” finding, perhaps calling this a “technical amendment” to the rule. 
  • Will EPA seek a stay of the existing rule while it recalculates costs and re-proposes the rule?  Because the rule went into effect in April 2015, companies already have installed a range of controls from activated carbon injection to installation of flue gas desulfurization equipment.  Each type of control has costs and benefits, as well as impact on other pollutants.  Many of these controls may remain operational to comply with other CAA requirements; therefore, a stay may have disproportionate impacts on industry members as some cease to operate controls and others continue to operate them.
  • But could EPA’s re-proposal result in even more stringent emission limits?   Absolutely.  Would EPA be wise to lower the standards further?  Given the cost and disruption caused by MATS so far, absolutely not.
  • And how will any of these possibilities affect the “already regulated” argument that will be used to attack the Clean Power Plan?  Section 111(d), the basis for the Clean Power Plan, prohibits regulation (whether of the source or the pollutant remains to be decided) if a Section 112 standard exists.  So if MATS goes away, does the legal basis for the Clean Power Plan become stronger?

How the ongoing, never-ending EPA effort to achieve hazardous pollutant reductions from power plants will play out remains to be seen.  The Supreme Court’s close reading of the directives contained in the statute, coupled with its references to balanced costs and benefits, leaves the impression that any rule with wide reach better be well-reasoned and justified.  No doubt EPA is taking notice. 

Water, Water, Everywhere - and not a Drop Unlitigated

Posted on July 10, 2015 by Susan Cooke

The U.S. EPA and Army Corps of Engineers have designated July 13 as the official issuance date for purposes of judicial review of their Final Rule defining the scope of “waters of the United States” or “WOTUS” under the federal Clean Water Act.  However, a number of lawsuits have already been filed, including four separate actions brought on behalf of a total of 27 states and a fifth action filed by Murray Energy Corp., a privately held coal mining company.

The lawsuits seek to overturn the Final Rule on several grounds that include:

  • Usurpation of state authority over intrastate waters in violation of the Constitution’s Commerce Clause and Tenth Amendment
  • violation of the federal Administrative Procedures Act (APA) due to the Final Rule’s allegedly unlawful expansion of federal powers granted under the federal Clean Water Act, as well the arbitrary and capricious nature of the rulemaking;
  • violation of the APA’s requirement to provide notice and opportunity for comment on proposed rulemakings, and to properly respond to comments made during the comment period; and
  • violation of the National Environmental Policy Act’s requirement to prepare an environmental impact statement for a major federal action significantly affecting the quality of the human environment.  

The object of all this attention is a long expected – and expansive – WOTUS interpretation adopted by EPA and the Corps.  As reported on this blog site, the rule is controversial; the draft generated over one million comments.  For a comprehensive analysis of the draft rule, including the cases leading up to the rule, see the American College of Environmental Lawyers report for the Environmental Council of the States.  

The Final Rule, which does not change much from the draft, is intended to provide more certainty regarding what is and is not subject to the Clean Water Act’s Section 402 and 404 permitting provisions and its Section 311 oil spill prevention and response provisions so as to reduce case-by-case determinations of applicability.  Despite the inclusion of a number of definitions and exclusions, it is doubtful that this goal has been achieved, given the number of new situations where a “significant nexus” determination must be made.

The significant nexus inquiry finds its genesis in Justice Kennedy’s concurring opinion in Rapanos v. United States where Justice Scalia wrote the plurality opinion.  According to Justice Kennedy’s opinion, wetlands adjacent to navigable waterways are waters of the United States based on a “reasonable inference of ecologic interconnection” in accordance with the Supreme Court’s 1985 opinion in United States v. Riverside Bayview Homes.  However, isolated wetlands or wetlands adjacent to a non-navigable tributary, either alone or in combination with similarly situated lands in the region, [must] significantly affect the chemical, physical, and biological integrity of other covered waters more readily understood as navigable” in order to fall within the purview of the Clean Water Act.  Rejecting a bright-line test, Justice Kennedy noted that a “mere hydrologic connection should not suffice in all cases” as it “may be too insubstantial . . . to establish the required nexus with navigable waters as traditionally understood.”

The Final Rule broadly defines “tributaries” and “adjacent waters” and classifies them as “per se” jurisdictional waters, along with waters used in interstate or foreign commerce, interstate waters and wetlands, territorial seas, and impoundments of such waters.  It also identifies a number of other waters (prairie potholes, Carolina bays and Delmarva bays, pocosins, western vernal pools, and Texas coastal prairies) as navigable waters if they meet the significant nexus test which involves consideration of a number of factors identified in a compilation of peer reviewed scientific reports assembled by EPA.  

All of the complaints reference the Supreme Court’s Rapanos decision, as well as the Court’s 2001 decision in Solid Waste Agency of Northern Cook County v. U.S. Army Corps of Engineers, regarding what constitutes a “navigable water”.  In particular, they claim that the Final Rule goes well beyond the limits set forth in those decisions, including Justice Kennedy’s “significant nexus” test in Rapanos.  Some of the complaints provide pretty convincing arguments on the latter point, and so another “wave” of litigation can be expected.  Given that the litigation now extends back 30 years, a paraphrase of that old adage about water – and litigation - being everywhere seems right “on course”.

WILL POWER PLANT HAZARDOUS AIR POLLUTION SURVIVE MICHIGAN V. EPA?

Posted on July 8, 2015 by Leslie Carothers

Twenty-five years in the making, the Environmental Protection Agency’s regulations to reduce emissions of mercury and other hazardous air pollutants (HAPS) from power plants recently ran aground in the Supreme Court.  As discussed in this blog site last week, (see here and here,) the majority opinion by Justice Scalia in Michigan v. EPA held that EPA erred in failing to consider cost when it made the threshold statutory finding that listing of power plants for regulation was “appropriate” under a special provision for power plants in the hazardous pollutant sections of the Clean Air Act. 

The dissenters, in an opinion by Justice Kagan, disagreed that costs had to be considered at the initial listing stage.  She contended that costs were properly addressed when specific standards and requirements were developed for various source categories in the course of the normal rulemaking process, and emphasized that a final cost-benefit analysis was conducted to evaluate and support the decisions made. 

Although Justice Scalia was at pains to say that the Court was not specifying the details of the cost analysis required, the majority was plainly troubled by the agency’s findings that the benefits of the mercury controls alone were valued at an annual value of only  $4-6 million compared to an annual cost of $9.6 billion.  However, mercury was not the only HAP controlled by the rule, and the co-benefits of incidental removal of other toxic fine particulate pollutants were estimated at $36-90 billion in EPA’s cost-benefit analysis.  Those big numbers reflect robust scientific evidence of the incidence of illness and death caused by particulate emissions. 

The majority did not address whether such co-benefits could be relied upon in a determination that the cost of the power plant rules was “appropriate.“ The D.C. Circuit will have to define the terms of EPA’s redo of the cost analysis.  We are likely to hear more about counting of co-benefits in cost benefit comparisons, an issue also presented in EPA’s proposed Clean Power Rule for power plant greenhouse gas emissions.  Reducing carbon emissions also reduces particulate emissions even more, and the monetized benefits of that effect exceed the harder to estimate benefits achieved in slowing global warming. 

Public Health and Environmental Consequences of the Decision

Despite the Supreme Court’s action, commentators on both sides of the issues agree that major benefits of the regulation will not be lost.  A trade publication estimated in May that half of the power plants subject to the rule have already installed the required emission control technology to meet multiple EPA air pollution rules, in addition to the hazardous pollutant rule.   Another 200 plants given an extra year to comply are installing and testing equipment.  Several dozen plants accounting for only 1% of industry capacity reportedly are the remaining uncontrolled sources that will continue to operate without controls or plans to install them until the Michigan case is concluded. 

Many companies that have complied with the rules are doubtless disappointed to see the perennial “free riders” get another reprieve; some intervened on EPA’s side in the Michigan case to complain about unfair competition from uncontrolled plants.  But the majority of power plants, to their credit, are already delivering the public health and environmental benefits of the rule for the community.  

Citizens unhappy with the continuing failure to regulate old coal plants may wish to support the divestment movement, recently joined by Georgetown University, in dumping coal company securities.  The day Michigan v. EPA was decided, the stock of three major coal producers rose about 10%.  If the price jump holds, now looks like a good time to sell.

Can the Majority and the Dissent Both Be Wrong? The Supreme Court Remands the MATS Rule

Posted on June 30, 2015 by Seth Jaffe

In Jonathan Cannon’s excellent post on Monday’s Supreme Court decision in Michigan v. EPA, he noted that the majority and the minority aren’t actually that far apart in their views on whether EPA must consider costs in this rulemaking.  I have a slightly different take:  They may not be that far apart, but they’re both wrong.  

In fact, the issue in Michigan v. EPA seems so simple that the MATS rule could have been affirmed in a two-page opinion.  Judge Scalia notes that the word “appropriate” – on which the entire 44 pages of the majority, concurring, and dissenting opinions focus – is “capacious”.   I agree.  If so, and if Chevron means anything, “appropriate” is surely capacious enough to allow for an interpretation that does not include cost considerations.  That should have been the end of the case.

I do feel compelled to note, however, that Justice Kagan’s dissent also got it wrong, in at least three ways:

  • I think she’s flat wrong to suggest that, because the MATS “floor” is based on the top 12% of facilities already in operation, that means that establishment of the floor already takes cost into account. As Justice Scalia cogently notes, those existing facilities may well have been under their own regulatory duress – a duress that may not have considered cost.
  • Justice Kagan confuses cost-benefit analysis and cost-effectiveness analysis. For any given goal sought by EPA, the various options provided by the MATS rule may allow power generators to attain the goal in the most cost-effective means possible, but if even the most cost-effective approach were to yield $10B in costs and $10M in benefits, that would fail the cost-benefit test for most people.
  • Finally, and most importantly, Justice Kagan got the consequences wrong. Instead of suggesting, as she did, that the majority decision,
 "deprives the American public of the pollution control measures that the responsible Agency, acting well within its delegated authority, found would save many, many lives,"  
she should have made the point that the majority decision will have no impact on EPA or the MATS rule.  The Supreme Court did not vacate the rule; it merely remanded the rule to the Court of Appeals.  Justice Kagan’s position should have been that EPA still has sufficient discretion, even on the existing record, to defend the MATS rule within the confines of the majority opinion.  Instead, Justice Kagan gave ammunition to those who oppose the rule, by suggesting that it cannot be saved.

A pox on both their houses.