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.

USEPA Finds No Systemic Contamination of Drinking Water from Hydraulic Fracturing

Posted on June 23, 2015 by Chester Babst

On June 4, 2015, the U.S. Environmental Protection Agency released a draft “Assessment of the Potential Impacts of Hydraulic Fracturing for Oil and Gas on Drinking Water Resources,” which finds no evidence that hydraulic fracturing activities have led to widespread, systemic impacts on drinking water supplies.  According to the draft assessment, between 2000 and 2013, there were an estimated 9.4 million people living within one mile of a well that was hydraulically fractured.  The draft assessment supports the assertion that state agencies, as the primary regulator of oil and gas development in the United States, are effectively governing hydraulic fracturing activities by the industry.  

Initially announced by USEPA in March 2010, the study has a broad scope.  USEPA reviewed each stage of the “hydraulic fracturing water cycle” – including water acquisition, chemical mixing, well injection, flowback and produced water recapture, and wastewater treatment and disposal – to assess for any widespread, systemic impacts on the quality or quantity of drinking water resources.  The agency also used an expanded definition of drinking water resources that includes currently undrinkable saline aquifers that might be desalinated for consumptive use in the future.  

Although the draft assessment acknowledged that hydraulic fracturing could potentially contaminate drinking water resources, USEPA found that the actual occurrences of such impacts were “small compared to the number of hydraulically fractured wells.”  The risks related to hydraulic fracturing activities identified in the draft assessment included:  water withdrawal in times of low availability; spills of fracturing fluids and produced water; fracturing directly into underground drinking water resources; below ground migration of liquids and gases; and inadequate treatment and discharge of wastewater.  

The draft assessment noted that the primary means of disposing of wastewater from hydraulic fracturing activities conducted in the United States is underground injection wells.  However, one notable exception to this finding is in the Marcellus shale play, where USEPA found that most wastewater is reused by industry.  The high percentage of reuse and recycling of wastewater in the Marcellus shale play is a practice that industry has long asserted is a valuable means of reducing the amount of freshwater needed for well development activities.

USEPA is expected to publish a final assessment after the completion of a notice and comment period, which is currently open and concludes on August 28, 2015, and a review of the draft assessment by the Science Advisory Board Hydraulic Fracturing Research Advisory Panel.  The Panel has scheduled a public meeting to conduct a review of the draft assessment from October 28 to October 30, 2015, and teleconferences to discuss the draft assessment on September 30, October 1, and October 19, 2015.

Startup, Shutdown and Malfunction – The Saga Continues

Posted on June 19, 2015 by Carolyn Brown

On June 12, 2015, EPA’s final rule calling for 35 states and the District of Columbia to revise their regulations on excess emissions during startup, shutdown and malfunction was published.  This rulemaking saga dates back to a June 30, 2011 petition filed by the Sierra Club.  The vast majority of these regulations have been part of State Implementation Plans (SIPs) since the 1970s or early 1980s.  As EPA sets out in the rule, the question of how to deal with emissions during startup, shutdown and malfunction (SSM) has also been the subject of guidance issued in 1982, 1983, 1999, 2001, and now 2015.  This is a tough issue.

EPA  found that a majority of the states have regulations that impermissibly allow a source to assert affirmative defenses to avoid a determination that excess emissions due to SSM events are violations of the Clean Air Act.  Similarly, EPA also concluded that regulations providing discretion to the state agency to determine whether excess emissions are violations are improper.  Because such provisions deprive EPA or citizens of the ability to pursue enforcement action, EPA concludes the provisions are impermissible.  The preamble also points out that broad SSM exclusions under state law would effectively allow state agencies to usurp the authority given to the federal courts by Congress to enforce SIPs and determine penalties.  In response to concerns voiced by the regulated community, EPA emphasizes that sources can assert any common law or statutory defenses they believe are supported by the circumstances when they get to court. 

With respect to startup and shutdown provisions, the rule reiterates that different emissions limitations can apply to particular modes of operation and the preamble discusses the use of work practice standards rather than numerical emission limitations.  EPA recommends seven criteria as appropriate considerations for States as they consider SIP revisions to address startup and shutdown provisions in response to the SIP Call.  The criteria seem designed to encourage a series of source category-specific rules to replace regulatory provisions that apply to all types of emission sources.  However, EPA also emphasized that each state has discretion to determine the best means by which to make a revision so long as the revisions are consistent with the Clean Air Act.  It remains to be seen how states will choose to respond and the extent of administrative burden this process will impose on agency staff.   

Affected states have until November 22, 2016 to respond to the SIP Call.  Until EPA takes final action on the SIP submittals, the existing SIP provisions remain in effect.  SIP calls were issued for Maine, Rhode Island, New Jersey, Delaware, District of Columbia, Virginia, West Virginia, Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina, Tennessee, Illinois, Indiana, Michigan, Minnesota, Ohio, Arkansas, Louisiana, New Mexico, Oklahoma, Texas, Iowa, Kansas, Missouri, Colorado, Montana, North Dakota, South Dakota, Arizona, California, Alaska, and Washington.   

If Congress Wants to Limit EPA’s Discretion, Perhaps It Should Do a Better Job Legislating

Posted on June 5, 2015 by Seth Jaffe

Earlier this week, the D.C. Circuit Court of Appeals rejected both industry and environmental group petitions challenging EPA’s determination of what is a solid waste in the context of Clean Air Act standards for incinerators and other combustion units.  It wasn’t actually a difficult case, but it does provide a lesson for Congress.  When the technical nature of EPA’s decisions was layered on top of the fundamental deference given EPA’s interpretation of the statute under Chevron, the petitioners were never going to prevail:

We afford great deference to EPA’s determinations based on technical matters within its area of expertise.

Scrap_Tires

The crux of the environmental petitioners’ case was that certain of the materials, such as scrap tires, exempted by EPA from the definition of solid waste, are unambiguously “discarded” within the meaning of RCRA, so that EPA did not have discretion to exempt them.  Unfortunately, as the Court noted:

the term “discarded” is “marked by the kind of ambiguity demanding resolution by the agency’s delegated lawmaking powers.”

In other words, given the current state of decrepitude of the non-delegation doctrine, when Congress enacts legislation using words as vague as “discarded”, it is essentially telling EPA to figure out what Congress meant to say.  And when EPA does figure out what Congress meant to say, the Courts are not going to disturb EPA’s interpretation.

For those in Congress who don’t like the way EPA implements statutes for which it is responsible, they might learn a lesson from Pogo.

EPA/Corps Adopt “Waters of the U.S.” Rule: What’s Next?

Posted on May 28, 2015 by Rick Glick

Today EPA and the Army Corps of Engineers released a prepublication version of the final rule defining “waters of the United States,” the jurisdictional trigger under the Clean Water Act.  The term needs defining because the Act extends to navigable waters and adjacent wetlands, but it is often not clear how some streams or wetlands relate to a navigable waterway, and the Supreme Court has provided conflicting guidance. 

So, the agencies have attempted to clarify.  With the new definition they hope to reduce the number of case-by-case jurisdictional determinations and litigation, but they understand full well the controversial nature of the rule, having received over a million comments on the draft published on April 21, 2014.  In response, EPA and the Corps today also released a battery of public relations offerings —press release, fact sheets, blogs, op-ed pieces—to explain and defend the rule.  The controversy will not end here.

As previously reported in this space, the impetus for the rule is uncertainty created by a 2006 Supreme Court decision in Rapanos.  In that case, a 5-4 split Court held that the government had overstepped its authority, but failed to issue a majority opinion.  Instead, four justices, led by Justice Scalia, proposed a rule in essence requiring that the subject waters or wetlands be free flowing and obviously wet.  The concurring opinion by Justice Kennedy would instead look for a “signficant nexus” between a wetland and a navigable waterway.  The lower courts have struggled ever since to discern a clear jurisdictional definition.

At first glance, the final rule does not veer much from the draft.  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.  Although EPA and the Corps have declared that the rule does not represent a major policy shift, a diverse ACOEL writing team—made up of experts in academia, non-profit organizations, and private practice—had differing opinions.  Some saw a sea change in federal policy, while others believed the draft rule was simply a restatement of existing policy. 

Congress has been fulminating about government overreach since the draft rule was published.  On May 12, 2015 the House passed HR 1732, the Regulatory Integrity Protection Act, in an effort to block the final rule.  If the Senate passes the bill, Congress will need to muster the votes to override a certain presidential veto.

Although the purpose of the final rule is to provide some certainty as to the scope of Clean Water Act jurisdiction, it is highly likely to be challenged by industry groups in the courts.  That means years of litigation and appellate review across the country, ultimately landing once again before the Supreme Court.  Whether we get clarity this time from the Court remains to be seen.

EPA Is Not an Expert in Determining Electric System Reliability

Posted on May 7, 2015 by Seth Jaffe

The D.C. Circuit Court of Appeals just reversed and remanded EPA’s rule allowing backup generators to operate for up to 100 hours per year as necessary for demand response. It’s an important decision that could have lessons for EPA and the regulated community across a wide range of circumstances, including eventual challenges to EPA’s proposed GHG rule.

demand response

EPA said that the rule was necessary to allow demand response programs to succeed while maintaining grid reliability.  Commenters had argued that, by encouraging greater use of uncontrolled backup generators, EPA’s rule makes other generators less economic, thus creating a negative feedback loop, with less and less power generated by controlled units, resulting in greater and greater need for uncontrolled backup generators. Here’s what the Court concluded:

  1. EPA failed adequately to respond to the commenters’ arguments. Noting that “an agency must respond sufficiently to “enable [the court] to see what major issues of policy were ventilated,” the Court instead found that EPA “refused to engage with the commenters’ dynamic markets argument."
  2. To the extent EPA did respond, it was “self-contradictory”, arguing that it was not justifying the regulation on reliability grounds, even though the final rule said that it was based on reliability concerns.
  3. The 100-hour rule was based on faulty evidence. EPA relied on evidence that backup sources had to be available at least 60 hours to participate in a PJM “Emergency Load Response Program.”  However, PJM itself noted that this minimum does not apply to individual engines.
  4. Finally, and perhaps most importantly, while EPA justified the rule on reliability grounds, the Court stated that:

grid reliability is not a subject of the Clean Air Act and is not the province of EPA.

This last issue is the part of the opinion that could have some bearing on judicial review of EPA’s GHG rule.  The Court noted that there was no evidence that FERC or NERC had participated in the backup generator rule or provided comments to EPA.  When, during the course of the rulemaking, a commenter suggested that EPA work with FERC, this was EPA’s response:

the rulemaking’s purpose was to address emissions from the emergency engines “and to minimize such pollutants within the Agency’s authority under the CAA. It is not within the scope of this rulemaking to determine which resources are used for grid reliability, nor is it the responsibility of the EPA to decide which type of power is used to address emergency situations.”

This statement did not make the Court happy:

EPA cannot have it both ways it [sic] cannot simultaneously rely on reliability concerns and then brush off comments about those concerns as beyond its purview. EPA’s response to comments suggests that its 100-hour rule, to the extent that it impacts system reliability, is not “the product of agency expertise.”

And why is this relevant for the GHG rule?

First, because EPA had better consult with FERC and NERC, so that it can defend any statements it makes in the GHG rule about its impact, if any, on reliability.  Second, it’s clear that the court will not show deference to EPA’s conclusions about reliability, since that is not within the scope of EPA’s expertise.

Perhaps a Corps Jurisdictional Interpretation is Final Agency Action After All

Posted on April 16, 2015 by Seth Jaffe

After Sackett, the question on everyone’s mind was “How far does it go?”  The first test of that question was the decision by the 5th Circuit Court of Appeals – not known as a bastion of liberalism – in Belle Company v. Corps of Engineers, holding that a Corps jurisdictional determination is not final agency action subject to judicial review.  Late last week, however, in Hawkes Co. v. Corps of Engineers, the 8th Circuit disagreed, creating a circuit split.

As we noted at the time, the 5th Circuit decision in Belle focused on the differences between the Sacketts’ position facing an enforcement order and that of Belle Company facing a Corps JD.  As the 5th Circuit emphasized, the JD did not require Belle Company to do anything.  Nor did the JD expose Belle Company to penalties.  Nor did it prejudice Belle Company’s ability to obtain a permit.  Nor did it include a finding of a CWA violation.

The 8th Circuit took a different tack, focusing instead on the one great, glaring similarity between the enforcement order in Sackett and the JD in Hawkes Co. – in both cases, the Corps’ decision, as a practical matter, defined the property owner’s rights and ended the proceeding.

It’s not obvious to me that the Supreme Court will take the case, even with the circuit split.  I don’t think that the Court likes these cases.  On the other hand, it is obvious that the conservative wing of the court sees Sackett as a very important decision and there could well be four votes to decide the issue at this point.

If the Court does take the case, all bets are off.  I think that the 5th Circuit still has the better of the legal argument, and I expect that will be sufficient for all but the most ardent property rights advocates on the Court.  Whether there are five ardent property rights advocates on the Court is what remains to be seen.

Further Advice from Air Act Andy: What A Difference A Year – And a Broken Foot – Make

Posted on April 6, 2015 by Andrea Field

On March 25, 2015, the Supreme Court heard 90 minutes of argument in Michigan v. EPA, No. 14-46. Briefing and argument focused on one aspect of EPA’s Mercury and Air Toxic Standards (MATS) Rule: whether EPA unreasonably refused to consider costs in determining if it is appropriate to regulate hazardous pollutants emitted by electric utilities. If you were unable to attend the argument but want to know more about it than you can learn from the press reports, then this “Advice from Air Act Andy” column is for you.

Question: Based on questions asked by the Justices during argument, many predict this will be a 5-4 decision, with Justice Kennedy possibly casting the deciding vote. What do you think?

Air Act Andy: I will preface my answer with the disclosure that a year ago I told my client there was virtually no chance the Court would choose to hear the MATS case. With my prognostication credentials thus firmly established — and keeping in mind that it is unwise (and usually embarrassing) to predict what the Court will do based on the questions asked at oral argument — let me say only that I came away from the argument sensing a 4-3-2 split in the Court.  I leave it to you, gentle reader, to infer more.

Question: Did Justice Breyer and his clerks spend endless hours hypothesizing scenarios for how EPA might have taken costs into account in developing the MATS Rule?

Air Act Andy: Without speculating on how many hours Justice Breyer and his clerks spent thinking about this, I note that he arrived at argument armed with a long list of questions suggesting he was troubled by the idea that EPA might regulate hazardous air pollutant emissions from electric utilities without any consideration of costs. In particular, he asked whether costs had been, or could be, considered in the subcategorization of electric generating units, even if costs were not considered in EPA’s initial listing of those sources.

Question: What did the parties make of Justice Breyer’s focus on subcategorization?

Air Act Andy: I don’t have to speculate here. The government made enough of Justice Breyer’s questions that, one day after argument, the Solicitor General filed a letter with the Court to provide information relevant to “questions pertaining to how EPA assesses whether to establish subcategories of sources” under the pertinent provisions of the Clean Air Act.

Question: Isn’t it unusual to submit a post-argument letter to the Court?

Air Act Andy: The rules of the Court do not specifically cover this sort of filing, and only time will tell how helpful the filing was for the government. It is worth noting, though, that once General Verrilli filed his letter, other parties followed suit. In particular, petitioners’ counsel pointed the Court to specific language in the preamble to the final MATS Rule, 77 Fed. Reg. 9304, 9395 (Feb. 16, 2012), where EPA said it could not, and did not, consider costs during the subcategorization process:

Failing to demonstrate that coal-fired [electric generating units] are different based on emissions, the commenters turn to economic arguments, asserting that failing to subcategorize will impose an economic hardship on certain sources. Congress precluded consideration of costs in setting [technology standard] floors, and it is not appropriate to premise subcategorization on costs either.

Question: On a more personal note, was your trip to the Court less eventful than the last time you were there?

Air Act Andy: Ah, you are referring to my December 11, 2013 visit to the Court. On that snowy day, I arrived at the Court wearing a long, stylish gray cardigan sweater instead of a suit jacket. I was stopped by guards and politely told I would not be allowed to sit in the section reserved for members of the Supreme Court Bar unless I replaced my fashionable sweater with a suit jacket. Someone from the clerk’s office, acting like a fine restaurant’s maitre d’, swiftly provided me with a ladies suit jacket and allowed me into the courtroom. But when I returned to the Court last month to hear argument in Michigan v. EPA, I was not treated like a fashion felon. Instead, Court staff personally escorted me into the courtroom a half hour before anyone else from the public was allowed in the room, gave me a prime seat, and allowed me to sit quietly and take in the majesty of the room. 

Question: What is the reason for the different treatment?

Air Act Andy: Last month, I arrived wearing a foot cast instead of a gray cardigan. I had broken my foot the week before, and the Court’s wonderful staff gave me permission to arrive and get seated early.

Question: So, was it worth it to have a broken foot?

Air Act Andy: I wouldn’t recommend that you drop granite on your foot a week in advance of a trip to the Supreme Court, but being able to sit by myself in the courtroom for a half hour before others were admitted was pretty special.

The Clean Power Plan: NOT Exactly What the Statute Tells EPA To Do

Posted on April 3, 2015 by Richard G. Stoll

As most followers of this blog know, EPA proposed its “Clean Power Plan” for existing electric power plants under the Clean Air Act (CAA) in June 2014. And just this week (March 31), the Obama Administration with great fanfare submitted its 2025 greenhouse gas (GHG) emissions target to the United Nations for the international climate change convention.

The Administration pledged to reduce U.S. GHG emissions by 26-28% (below 2005 levels) by 2025, and the bulk of these reductions are supposed to come from the Plan.  But will the massive reductions EPA claims will result from the Plan ever occur?

Defending the legality of the Plan in an interview published in the March 31 Wall Street Journal, EPA Administrator Gina McCarthy claims she is “following the direction of the Supreme Court” and doing “exactly what the statute [CAA] tells us we’re supposed to do.”

Huh? While the Supreme Court has recognized EPA’s authority to regulate GHGs under the CAA, it most certainly has not given EPA the “direction” EPA is taking in its pending proposal. And neither has Congress.

EPA’s Plan would mandate a panoply of groundbreaking controls on energy supply and demand. It would force utilities to use natural gas rather than coal, ramp up renewable energy use (wind, solar), and impose mandates for reducing energy consumption. Yet the CAA provision for which EPA claims authority for all this (§111(d)) only authorizes EPA to impose “standards for emissions” upon “existing sources” of air pollution — such as power plants. The controls must also be “adequately demonstrated.” In the past EPA applied this authority faithfully to the statutory terms, so “sources” that emit pollution are limited to prescribed amounts of emissions.

While EPA’s proposal includes some real emission standards for air pollution sources (power plants), the vast majority of GHG reductions are to come from the energy supply/demand measures that have no basis in the text of the CAA. If you are compelled through these mandates to limit your dishwasher use to specified hours or pay higher rates, is your dishwasher an “existing source” of “air pollution” and are the hourly restrictions “emission standards”? And how can such novel approaches be “adequately demonstrated”?

The Administration tried but failed to obtain amendments to the CAA from Congress to address climate change. EPA’s Plan might have been authorized by that failed effort, and it might be authorized by future legislation. The Plan’s pioneering provisions might arguably reflect good public policy. But under the CAA as it now stands, EPA is not authorized to impose them.

As for “direction” from the Supreme Court? In its recent Utility Air Regulatory Group v. EPA opinion (June 23, 2014), the Court rejected EPA’s attempt to regulate GHGs by “tailoring” the unambiguous text of the statute. The Clean Power Plan doesn’t just “tailor” the terms of the statute — it attempts to weave new authority out of whole cloth.

EPA’s New Coal Combustion Residuals Rule: A 745-Page Deferral With a 12,400-Ton Surprise

Posted on March 16, 2015 by Richard G. Stoll

(Reproduced with permission from Daily Environment Report, den, 03/12/2015. Copyright 2015 by The Bureau of National Affairs, Inc. (800-372-1033) http://www.bna.com)

Another Environmental Protection Agency battle focusing on coal has recently ended—for now at least. While most recent coal warfare has been fought on Clean Air Act fronts, this battle was fought on the fields of the Resource Conservation and Recovery Act. The target is coal combustion residuals (CCR) generated by electric utilities.

The EPA’s CCR rule will soon be published in the Federal Register. It has been a long time coming. The flash point for the rulemaking—the Archduke Ferdinand moment—was the December, 2008 Tennessee Valley Authority (TVA) Kingston, Tennessee incident. TVA’s ash pond dike ruptured and millions of gallons of coal ash and water spilled into the surrounding waters and land.

The Kingston spill received extensive press coverage, and it occurred just a few weeks after President Barack Obama was elected. Obama had nominated Lisa Jackson to be his EPA Administrator, and at her Senate confirmation hearing in January 2009, Jackson committed to take aggressive regulatory action to minimize the chances of similar occurrences in the future.

The EPA first proposed the rule in 2010, and issued three supplemental notices along the way. In 2013, because it was starting to look as though the EPA would take forever to issue a final rule, both industry and public interest groups secured a ‘‘citizens suit’’ federal court order forcing a deadline.

Now that the rule is out, more battles are coming. In light of the intense and polarized advocacy during the rule’s development, both judicial review and attempts to amend RCRA are a virtual certainty. And remarkably, for the most pivotal issue of the battle, the EPA’s new rule simply kicks the can down the road—thus setting up a completely new round of rulemaking unless Congress intervenes...

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EPA Should End Its Embargo Practice

Posted on March 9, 2015 by Richard G. Stoll

It is popular to grouse about how long it takes EPA to issue a rule these days. When I was at EPA in its formative years, we often went from proposal to final in just a few months. There are many reasons why the trek to final rule signing has now become so time-consuming. To name just one, advocates on all sides increasingly file lengthy comments covering technical, economic, and legal issues. And reviewing courts increasingly require EPA to fully explain its basis and purpose in response to all those comments.

While these types of delays are understandable, another type of delay is not. I am speaking of the lag between the rule’s signing by the Administrator and its publication in the Federal Register. You would think this ministerial act (the Federal Register Director isn’t authorized to re-write EPA’s rules) should be accomplished in four or five days. It almost always was when I was at EPA, and today it often is for other agencies. And sometimes these days, EPA’s signed rules get published in a few days.

But there are many exceptions, and a great example is now before us. Administrator McCarthy signed the RCRA “coal combustion residue” (CCR) final rule on December 19, 2014. It has yet to hit the Federal Register, and EPA staff announced on a recent webconference that they “hoped” it would by late March or early April. Other recent examples come to mind. The signed-to-published lag time for EPA’s 2012 CAA Oil & Gas NSPS/NESHAP rule was 121 days. The lag time for EPA’s 2014 CAA NSPS greenhouse gas (GHG) proposed rule was 110 days. It now looks like the RCRA CCR Rule will break 100.

What in the world is going on during these lengthy lag times? EPA staff will tell you that a document with numerous charts, tables, and graphs bamboozles the Federal Register people – even though the CFR has been replete with charts, tables and graphs for decades. EPA staff will also tell you (as they have for the CCR Rule) that they are fixing “typos.” But with 21st century software, can catching and correcting typos possibly take 100 days or more?

So why grouse about this? I am not suggesting that EPA staff might be making substantive, consequential changes to a final rule after the Administrator signs it. EPA does place the final rule on its Website immediately after the document is signed, so any “corrections” in the Federal Register version can be detected by a careful review. (It would be nice – for transparency’s sake – if EPA would make a practice of releasing a red-line showing exactly which “corrections” were made to the signed version during the 100+ days.)

And I am not grousing about the Federal Register publication delays per se. What bothers me is EPA’s frequent practice of refusing to release critical documents supporting the final rule – for instance, the Response to Comment (RTC) document – until the day the rule hits the Federal Register. It is this embargo – coupled with a long signed-to-published lag time – that hurts. During the recent webconference for the RCRA CCR Rule, for instance, EPA staffers made clear that the RTC and other support documents would not be released until the “hoped for” publication in late March or April.

For an agency (and Administration) that touts “transparency” at every turn, I cannot understand why EPA engages in this embargo practice. And sometimes (but not often enough), EPA does release these support documents before the rule is published in the Federal Register – so there is obviously no legal barrier to such a release.

Why should anyone care about such an embargo? As soon as a final rule is released, regulated entities often need to go into high gear to prepare for compliance. In these preparations, they need to be able to understand and interpret the rule’s provisions, many of which are often unclear or ambiguous. EPA’s RTC often provides interpretations and guidance far more lucidly than the rule’s preamble. One good example: in the RTC to EPA’s 2013 CAA “CISWI” rule, EPA provided a key interpretation of what types of activities would be deemed a “modification” triggering new source status. This interpretation appeared nowhere in the rule’s preamble and could hardly have been divined from the regulatory language. It is plainly unfair and contrary to principles of good government to hide this kind of interpretation from regulated parties for 100+ days when they are preparing for compliance.

Moreover, parties on all sides of a rulemaking (industry and public interest groups) need to begin evaluating judicial review options and theories as soon as they can after a final rule is signed. Why should they have to wait 100+ days for critical documents that are essential to their evaluation?

So dear EPA: PLEASE start releasing your RTC and other supporting documents at the same time you release your signed rule!

No Competitors In My Backyard?

Posted on March 2, 2015 by Seth Jaffe

In Paradise Lost, John Milton wrote that “easy is the descent into Hell, for it is paved with good intentions.”  

road to hell

A modern environmental lawyer might say that the road to waste, inefficiency, and obstruction is paved with good intentions.  Nowhere is that more apparent than with citizen suit provisions, as was demonstrated in the decision earlier this week in Nucor Steel-Arkansas v. Big River Steel.

Big River Steel obtained a permit from the Arkansas Department of Environmental Quality to construct a steel mill in Mississippi County, Arkansas.  Nucor owns an existing steel mill in – you guessed it – Mississippi County, Arkansas.  Nucor brought a host of claims in various forums (Sorry; I’m not a Latin scholar and cannot bring myself to say “fora”) in an effort to derail the Big River Steel project.  It appealed the permit in Arkansas courts.  It also petitioned EPA to object to the permit.

Finally – the subject of this case – it brought a citizens’ suit under the Clean Air Act alleging that the permit did not comport with various CAA provisions addressing permitting.  The Court rightly dismissed the complaint, basically on the ground that the suit was simply an improper collateral attack on the air permit.  The 5th and 9th Circuits have reached similar conclusions in similar circumstances.

The point here, however, is that clients don’t want to win law suits; they want to build projects.  Even unsuccessful litigation can tie projects up in knots, jeopardizing project financing or causing a project to miss a development window.

The road to hell is paved with the pleadings of bogus citizen suits.

Managing “Online” Info Impacts Agency Resources

Posted on February 26, 2015 by Irma S. Russell

The internet and social media have changed our lives in subtle and not-so-subtle ways.  Many of these changes are good.  Agencies offer an amazing array of information about their work and achievements on environmental issues.  Environmental NGOs and law firms provide websites and electronic newsletters with breaking news and hot topics in the environmental arena, catching our attention and educating us on important developments.  So today, everything seems to be just a click away.  (When was Ginger Rogers born anyway? And when did she and Fred star in Top Hat?  When will the EPA and the Corps finalize the “waters of the U.S. rule”?)  At any rate, information on environmental law and environmental issues is available faster than most of us would have dreamed when we began practice, and this on-demand on-line information is helpful.

Nevertheless, generally there are costs associated with benefits, and downsides as well as upsides to developments.  The sheer volume of information available online can be overwhelming.  Online research often leads to more questions and more research, creating confusion similar to a discovery response providing too many boxes of documents.  Managing and using voluminous and rapid-fire information can be difficult.  Moreover, the online and always “on” orientation can create heightened expectations – both by the public and clients.  The general sense has become that anything can be found online in an instant. (How many movies did Fred and Ginger make together anyway?) 

The goal of transparent government means agencies (including federal, state, and local agencies) make substantial information available on the internet.  The Freedom of Information Act of 1966 (FOIA) is by no means the only -- or even the primary -- tool for gaining information about the government.  The Federal Register provides a wealth of information.  Created in 1935, 44 U.S.C. § 1501, et seq. (2012), the Register now provides online access to virtually all agency decisions.  Additionally, numerous websites offer information on agency programs, processes, and enforcement actions, all without the need of filing a FOIA request.  For example, the U.S. Environmental Protection Agency (EPA) website provides scientific information relevant to environmental statutes, and extensive information on regulatory initiatives.  See, e.g., Environmental Protection Agency, Climate Change Science.  The EPA also gives specific guidance on how to submit a FOIA request.  See Environmental Protection Agency, Freedom of Information Act (FOIA).

Agencies invest substantial resources in the internet generally and social media in particular.  Necessarily the commitment to online access involves a cost, both in terms of expenditures and agency resources.  Recently EPA began using blast emails to get its message to the public on particular initiatives and to poll the public about environmental protection measures.  See, e.g., Thunderclap; Thunderclap, I Choose Clean Water, (Sept. 29, 2014) (showing EPA as organizer of the Thunderclap poll).

A dramatic recent example of the use of social media is found in the proposed rule on the “waters of the United States” (often referred to as “WOTUS”).  In April 2014, the EPA and the U.S. Army Corps of Engineers (Corps) published a proposed jurisdictional rule on waters of the United States for notice and comment.  The rationale of the proposed rule rests in significant part on the principles articulated by Justice Kennedy in his concurring opinion in SWANCC and asserts jurisdiction (by category under the rule) based on a determination that the nexus, alone or in combination with similarly situated waters in the region, is significant based on data, science, the CWA, and case law.  ACOEL and many other organizations and individuals commented on this important rule.  For a full exploration of the commenting process on the proposed WOTUS rule, see the article Social Media: Changing the Landscape of Rulemaking, by Nina Hart, Elisabeth Ulmer, and Lynn White, which will appear in the summer edition of Natural Resources & EnvironmentThe article reports on the increased use of social media in the rule making process, the dramatic number of comments submitted on the high-profile and contentious issue of classifying waters of the U.S., and the difficulties for the agencies in trying to respond to so many comments.  

While the difficulty of limited agency resources is nothing new, recent news coverage highlights the issue in the modern context of tight budgets. An example is found in the disappointing pace of EPA delay on the important work of listing toxic substances (showing EPA’s work of assessment of toxic chemicals has fallen below the pace set by the Bush administration). 

This is not to say that the burden of evaluating comments in one office of EPA is the cause of the shortfall on toxic chemical assessment in another.  Moreover, the difficulties of setting agency priorities and allocating scarce enforcement resources are new to no one.  Nevertheless, he challenges for EPA and other agencies in using the tools of the online age, including social media, are real.  As a practical matter, agencies need to give serious thought to reinventing government in the sense of using the technological tools to manage the growing flood of information.  Significant study will be required for agencies to fulfill the mission of educating and informing the public, managing data, and taking input seriously, all while meeting their statutory missions.  

Dancing in Jackboots

Posted on January 9, 2015 by Steve McKinney

While Congress designed CERCLA to enhance EPA’s ability to respond to hazardous contamination, the statute requires a level of cooperation between federal and state authorities for certain CERCLA activities, including the NPL listing process.  But like parents forcing middle-schoolers to dance in etiquette class, Congress’s efforts to make EPA coordinate with States often begins with squabbles over who leads and ends with squashed toes. 

So how much state involvement is required under CERCLA?  More than you might think.  For example, CERCLA section 121(f) states that EPA must provide “for substantial and meaningful involvement” by each State in the “initiation, development, and selection of remedial actions to be undertaken in that State.”  This includes state involvement in decisions whether to perform preliminary assessments and site inspections, allocation of responsibility for hazardous ranking system scoring, negotiations with potentially responsible parties, and participation in long-term planning processes for sites within the State.  CERCLA section 104(c)(3) mandates that before EPA can provide a Superfund remedial action in a particular State, the State must provide EPA with specified assurances in writing.  Those assurances include the State’s agreeing to undertake “all future maintenance of the removal and remedial actions provided for the expected life of such actions” and paying “10 per centum of the costs of the remedial action, including all future maintenance.”  These statutory provisions are confirmed and enhanced by EPA’s own regulations.  See, e.g., 40 C.F.R. 300.500; id. at 300.510.  Further, two EPA guidance memoranda outline a process “to include State input in NPL listing decisions” and to resolve disputes “in cases where [an EPA] Regional Office . . . recommends proposing or placing a site on the [NPL], but the State . . . opposes listing the site.”  See Memo. from Elliot P. Laws, Asst. Admin. EPA Off. of Solid Waste and Emergency Response (“OSWER”), to EPA Reg. Admins., at 1 (Nov 14, 1996); Memo. from Timothy Fields, Jr., Asst. Admin. OSWER, to EPA Reg. Admins., at 1 (July 5, 1997) (Fields Memo.).  This policy requires EPA regional offices to “determine the position of the State on sites that EPA is considering for NPL listing . . . as early in the site assessment process as practical,” to “work closely with the State to try to resolve [any] issue[s],” and to provide the State with “the opportunity to present its opposing position in writing” before EPA Headquarters “decide[s] whether to pursue NPL listing.”  Fields Memo. at 2. 

EPA has historically taken these laws, rules, and guidance to heart, consciously trying to avoid stepping on state feet in the NPL listing process.  Of the over 200 sites that EPA has proposed for listing since 1995, only the Fox River Site in Wisconsin was proposed over state opposition—and that listing was never finalized.   EPA’s deference makes sense considering that a failure to obtain state assurances generally means EPA cannot access the Superfund to finance its remedial activities.  Unfortunately, there are signs EPA’s cooperative approach may be changing.  EPA recently proposed the 35th Avenue site in Birmingham, Alabama, for NPL listing without Alabama’s concurrence.  While EPA claims state support for the listing (79 Fed. Reg. 56,538, 56,544 (Sept. 22, 2014)), the rulemaking docket contains letters of opposition from both the Alabama Department of Environmental Management and the Alabama Attorney General.  Alabama has made clear that it has no ability to fund any remedial efforts at the site, and has no intention of providing any of the required assurances.  Moreover, EPA did not follow its own guidance regarding the “nonconcurrence” dispute.  In short, while EPA and Alabama are facing one another, EPA may have shown up to this dance wearing jackboots.