Posted on June 30, 2015
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.
Posted on June 23, 2015
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.
Posted on June 19, 2015
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.
Posted on June 5, 2015
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.
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.
Posted on May 28, 2015
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 draftpublished 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 reportedin 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 reportfor 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.
Posted on May 7, 2015
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.
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:
- 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."
- 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.
- 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.
- 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.
Posted on April 16, 2015
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.
Posted on April 6, 2015
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.
Posted on April 3, 2015
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.
Posted on March 16, 2015
(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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Posted on March 9, 2015
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!
Posted on March 2, 2015
In Paradise Lost, John Milton wrote that “easy is the descent into Hell, for it is paved with good intentions.”
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.
Posted on February 26, 2015
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 & Environment. The 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.
Posted on January 9, 2015
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.
Posted on January 5, 2015
If you want a sense of emerging developments likely to impact the business community it is important to keep an eye on pronouncements from EPA’s Office of Enforcement and Compliance (OECA). OECA is the “lead” for EPA’s Next Gen compliance initiative, which will continue to set enforcement priorities as it rolls out through 2015. Next Gen is far from perfect and severely underfunded, but since its principles provide the guideposts for compliance policy, being well informed provides an important edge in compliance situations.
For years EPA has been calling on federal and state enforcement managers to develop approaches that go beyond traditional single facility inspections and enforcement. EPA took the lead in its FY 2014 National Program Manager’s Guidance OECA by announcing the Next Generation Compliance Initiative.
Next Gen focuses on five areas:
1. Designing and drafting regulations and permits that are simpler and easier to implement.
2. Using advanced emissions/pollutant detection technology so that regulated entities, government, and the public have prompt access to monitoring data concerning environmental conditions (as well as potential violations).
3. Electronic submission of permit applications and monitoring data.
4. Prompt web-posting of traditional compliance data, and presenting information obtained from advanced emission monitoring and electronic reporting (so-called big data sets) to the public.
5. Developing data analytics to guide enforcement activities.
EPA kicked off Next Gen in style. A major policy statement appeared in the September-October 2013 issue of ELI’s Environmental Forum. The Next Gen strategy was reaffirmed in OECA’s FY 2015 national program manager’s guidance; in numerous interviews and public statements by senior EPA officials and in a compliance plan announced in October 2014. These efforts are continuing. Indeed, George Washington Law School will convene the latest in a series of events focusing on Next Gen compliance on March 26 and 27, 2015. The symposium will address the role of advanced monitoring in environmental compliance and enforcement. In addition, OECA staff have presented a number of Next Gen workshops to state officials.
Despite EPA’s roll-out efforts, Next Gen has had critics who find the initiative too vague to be helpful. The Government Accountability Office found that OECA lacks a strategic plan to implement the initiative. In addition, Next Gen does little to reward good behavior. In fact, Next Gen ignores positive feed-back as a driver of improved compliance.
While increased use of technology and public disclosure sound great, it remains to be seen how OECA will implement Next Gen in practice. Nevertheless, whether Next Gen has staying power or not, there are several themes that need to be considered:
1. OECA’s focus on improved transparency and community participation is here to stay and enhanced community outreach will increasingly find its way into EPA (and state) regulations. To keep pace, the regulated community needs to continuously rethink how to use media (new and old) to inform and engage stakeholders, especially members of vulnerable communities.
2. EPA and delegated states will continue to experiment with ‘innovative enforcement strategies’ using advanced monitoring and data analytics and that rely less upon traditional inspections; self-reporting and tips. Industry should look for opportunities to provide input to these efforts.
3. Monitoring data is now a public resource, easily shared and routinely subjected to new uses. Therefore, rigorous quality assurance and quality control is essential at every step of the data collection and reporting cycle. Use of software that flags inconsistent results or mathematically impossible outcomes (like EPA’s Greenhouse Gas Reporting Tool) should be dramatically expanded.
4. E-reporting cannot be a one-way street based simply on replacing paper reports with electronic submissions. OECA needs to provide guidance and support so that regulators can invest resources and develop policies that ensure that they can use e-reporting to provide relevant compliance assistance in real time.
We’ll need to wait and see whether OECA’s Next Gen Initiative will play a major role in shaping future environmental enforcement. In the meantime, OECA’s framework for achieving more effective compliance can serve as a guide for advanced companies to refine their environmental management systems while helping to focus enforcement efforts on the worst performers.
Posted on December 30, 2014
You’ll have to turn to more traditional holiday reading because EPA’s methane reduction strategy for the oil and gas industry won’t be available until next year. On March 28, 2014, the White House released its Strategy to Reduce Methane Emissions and instructed EPA to develop a comprehensive plan to reduce methane emissions from landfills, coal mines, agricultural operations, and the oil and gas industry. The White House further directed EPA to address oil and gas sector methane emissions by building on the emission reduction successes of existing regulations and voluntary programs.
EPA responded to this directive by publishing five white papers on methane emission sources in the oil and gas sector in April 2014, and requesting peer review and comment on each. The white papers address methane and volatile organic compound (VOC) emission mitigation techniques for: compressors, hydraulically fractured oil well completions and associated gas from ongoing production, equipment fugitive leaks, liquids unloading, and pneumatic devices.
Contemporaneously, EPA proposed enhancements to its long-standing and successful voluntary program for methane emission reductions—the Natural Gas STAR Program. EPA initiated the Natural Gas STAR program in 1993 to encourage voluntary methane emission reductions in the oil and gas sector through the application of cost-effective technologies and improved work practices.
EPA seeks to enhance the existing voluntary program with 17 “Gas STAR Gold” methane reduction protocols and a heightened recognition incentive for participating companies. There is a proposed Gas STAR Gold protocol for each of the source activities addressed by a technical white paper, with the exception of methane emissions from well completions following hydraulic fracturing. Other proposed Gold STAR protocols address methane emissions associated with casinghead gas, flares, glycol dehydrators, hydrocarbon storage tanks, and pipelines.
To achieve Gas STAR Gold status, a participating company must certify that at least one of its facilities has implemented all applicable Gold STAR protocols. Companies with at least 90% of their facilities implementing all applicable Gold STAR protocols achieve “Gas STAR Platinum” status.
While few doubt that EPA will pursue methane emission reductions via a regulatory framework, it is speculation only whether EPA’s approach will consist of methane reductions as: (1) a co-benefit of regulations aimed at VOC emissions; (2) direct regulation of methane emissions; or (3) a combination of these approaches. Regardless of the regulatory direction EPA takes, expanded and enhanced voluntary measures will certainly be part of its comprehensive strategy for reduced methane emissions.
EPA’s next step will be to announce the type of regulatory framework necessary to achieve White House goals, and explain how voluntary efforts fit into that framework. Although EPA aimed to announce that planned strategy by the end of the year, recent reports indicate that a January 2015 announcement is more realistic. It looks like we will have to look elsewhere for our leisure holiday reading. (Thanks are due to Karen Blakemore in our Baton Rouge office for all that is good and useful in this post.)
Posted on December 12, 2014
Even before the Republican sweep of the mid-term elections in November 2014, working for the Federal Government in general and EPA in particular has not been – shall we say – always “fun” for the typical federal employee. Regardless of the party in power, federal employees always play the whipping boy (or girl) for any politician trying to make a point. When your agency is in the lead on making headline-grabbing news that enflame the core on the right and the left, such as with EPA, the invective target is placed squarely on that Agency, and by extension, its employees.
For many of the last dozen years, EPA has been accused of being a job-killer on one hand and indifferent to the health impacts of pollution on the other. More recently it has become the poster child for supposed incompetence when it comes to the basic tenets of good management by keeping porn-watchers, phony spies, and “healthy-but-still-on-medical leave” personnel on the payroll. It has seen its staffing cut by almost 15%.
Of EPA’s 14 Senate-confirmed positions, six are held by career employees in an “acting” capacity; and two are simply vacant. Senior agency officials point to employee morale as their primary management concern. With expectations of an increase in Washington gridlock and an accompanying increase in oversight hearings likely on the full panoply of Agency programs, the next two years will be particularly hard on EPA.
While some might simply say “oh pity the poor EPA employee”, I believe there will be a practical impact on companies because of this gridlock and “fed-bashing”. In addition to personnel reductions already in place, over 30% of the approximately two million civilian Federal workers are eligible for retirement.
This could result in a severe “brain drain” as employee morale continues to plummet in the face of constant Congressional investigations, criticism and budget cuts. This also will result in seasoned and experienced personnel being replaced by younger and significantly less experienced employees.
Highly regulated companies usually have anywhere from dozens to thousands of weekly contacts with their Federal regulators, usually for routine operating, permitting and approval questions and approvals. As experienced personnel are replaced by those who are less experienced, or in many instances not replaced at all, these routine business activities will increasingly be subject to delays which may ultimately have serious impacts on the company.
Company estimates for a major capital improvement could be off by months and millions of dollars if an experienced Agency permit writer retires and is either not replaced or is replaced by someone totally unfamiliar with either the program under which the permit is written or the company’s operations. In this respect the gridlock between Congress and the President has a more granular and underappreciated impact on such a company than merely being the grist for the Sunday news shows’ debates on Washington DC’s dysfunctional approach to government.
Posted on November 13, 2014
So the new Congress will be controlled by the GOP. The House and Senate will consider various bills to rein in EPA authority. Here’s one relatively modest suggestion for congressional consideration: amend CERCLA to limit EPA’s authority to recover oversight costs.
How many of us in the private sector have been in meetings with EPA where EPA had more technical people in attendance than the PRPs who were performing the remedy? How many of us have had clients receive oversight cost bills where the total amount of the oversight costs approached the amount spent on actually performing the remedy? How many us have had oversight requests that have turned response actions into research projects? All of this for a program that EPA’s own analyses always show to be at the bottom of the barrel when it comes to actual risks to the public.
Here’s the proposal. I’m not suggesting that EPA have no authority to recover oversight costs. Just limit it to 10% of the response costs incurred to actually design and implement the remedy. Make it 15% if you want to be generous.
Mitch McConnell, are you listening?
Posted on October 3, 2014
The Blog Calendar Gods directed me to post something on September 16, 2014, which just happens to be the 40th anniversary of the date that I first started to practice law. Not wanting that coincidence to go to waste, I decided to look back 40 years, to a time when the practice of environmental law was far less complex – or, at least, the things that EPA then published in the Federal Register were a lot shorter.
On September 16, 1974, EPA’s rules and notices took up less than four pages in the Federal Register and consisted of a notice of receipt of applications for pesticide registration under the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA); a correction to one line of a previously-published notice of proposed rulemaking under the Clean Water Act; and the approval of a compliance schedule under the State of Kansas’ state implementation plan. The entire Federal Register on that date was only 104 pages long.
Fast forward 40 years. EPA’s fairly typical Federal Register postings on September 16, 2014, include – as was the case 40 years ago – rulemaking proposals and notices under the Clean Air Act, Clean Water Act, and FIFRA; however, the September 16, 2014 proposals and notices from EPA take up more than 125 pages of the Federal Register, and a typical edition of the Federal Register these days is well over 300 pages long. I could complain that EPA did not celebrate my anniversary with the publication of a splashy huge new rule in the Federal Register – but I think many of my clients would consider that to be a good thing.
Perhaps the most significant change over the past 40 years, though, is to the overall length and complexity of the rules that are now appear in volume 40 of the Code of Federal Regulations. (There is that number “40” again.) In 1974, 40 C.F.R. – the volume of the code containing most of EPA’s regulations – was about 2000 pages long. In the decades following that time, 40 C.F.R. has steadily increased in size (and complexity). In 1984, it was approximately 5,800 pages long; by 1993, it topped 11,000 pages; and in 2012, there were over 25,000 pages of regulations in 40 C.F.R.
For those of you wondering what else was going on 40 years ago (outside of the practice of environmental law), let me share the following tidbits from September 16, 1974. The big news that day was President Ford’s announcement of his “Program for the Return of Vietnam Era Draft Evaders and Military Deserters.” In addition, on that day, BART began operations in the Bay area, Bob Dylan recorded Blood on the Tracks, the Royal Canadian Mounted Police swore-in their first female recruits, and Joe Namath was on the cover of Sports Illustrated (he was shown rehabbing his battered knees, hoping to play one more season in his $250,000-per-year contract with the New York Jets). Also, if I had stopped cutting my hair 40 years ago today, my golden locks would be more than six yards longer than they are today.
I will be thinking about all of this as I lift my glass this evening and toast all of you and begin year 41.
Posted on September 23, 2014
Financial responsibility is a familiar environmental law concept. Many of us have negotiated financial assurance provisions in site consent agreements. RCRA’s closure and post-closure financial responsibility requirements at treatment, storage and disposal (TSD) facilities are well-established. Financial responsibility obligations are also a component of many other federal and state environmental programs.
I suspect, however, that few practitioners are aware of a CERCLA financial responsibility provision that has been in existence since the Act’s inception. CERCLA Section 108(b) mandates that the President identify classes of facilities that will be required to demonstrate a financial ability to cleanup releases of hazardous substances. These facilities will be obligated to provide evidence of financial responsibility that is consistent with the degree and duration of the risks associated with their production, handling, treatment, storage and disposal of hazardous substances. The requirements of Section 108(b) are intended to assure availability of funds should the businesses go bankrupt or otherwise become financially unable to conduct future environmental response actions.
Section 108(b) generally imposes two regulatory tasks on EPA: Identify the classes of facilities for which financial responsibility requirements will be developed and promulgate regulations establishing those requirements. For twenty-eight years, EPA deferred breathing regulatory life into Section 108(b). EPA’s inattention to Section 108(b) ceased to be an option in 2008. Litigation commenced by the Sierra Club and others resulted in a federal court order requiring EPA to identify industries that would be first in line for Section 108(b) rulemaking. EPA determined in 2009 that the hard rock mining industry would be its first priority. In early 2010, EPA published advance notice of its intent to regulate additional classes of Section 108(b) facilities: chemical manufacturing, petroleum and coal products manufacturing and the electric power generation, transmission and distribution industry.
Although deadlines have come and gone, to date no financial responsibility rules have been proposed. Nevertheless, the lifeless form of Section 108(b) has finally begun to stir. EPA advised Senate lawmakers in June of this year that financial responsibility requirements for the hard rock mining industry would be issued by 2016. In the meantime, the NGOs remain ever vigilant. Armed with data indicating that, particularly during the recent recession, taxpayers and disadvantaged communities suffered the adverse consequences of EPA’s inaction, environmental advocacy groups filed a Petition for Writ of Mandamus demanding that the agency promptly comply with Section 108(b)’s rulemaking requirements. In contrast, many industry groups contended that the Section 108(b) rulemaking being developed is based on a flawed analysis of potential risk and ignores the impact of existing state and federal financial responsibility laws and regulations that have achieved most of the objectives of Section 108(b). Legislation introduced in the House of Representatives in 2013, generally supported by the affected industries, included significant amendments to CERCLA Sections 108(b) and 114(d).
Whether you believe that Section 108(b) is outdated and unnecessary, or that immediate and comprehensive implementation of its mandates is of paramount importance, I would submit that EPA’s seemingly cautious approach to Section 108(b) rulemaking is justifiable. Considering the financial consequences, the identification of target industries must be based on a careful and comprehensive evaluation of the actual risks associated with a particular industry’s handling of hazardous substances and the historic “track-record” of that industry’s ability to financially respond to releases. The extent to which existing federal and state financial assurance programs address the identified risks must also be carefully scrutinized to avoid unnecessary cost and duplication. EPA’s selection of acceptable financial assurance mechanisms is also of critical importance. Elimination of the so-called “financial test” method, for example, may impact the capacity of financial and credit markets to provide the necessary financial assurance and adversely affect global competitiveness.
Future rulemaking that is based on a thorough and defensible analysis of actual risk and is limited to filling in any gaps in existing financial assurance programs will best serve the public, the environment and the regulated community.
Posted on August 25, 2014
On August 12th, the 9th Circuit Court of Appeals issued a decision that arguably explains everything from why the Tea Party exists to why otherwise calm and sane executives suddenly lose all their hair. Perhaps most astounding, the decision is clearly correct. Perhaps the law is an ass.
In 2008, Avenal Power submitted an application to EPA for a PSD permit to construct a new 600 MW natural gas-fired power plant in Avenal, California. Although section 165(c) of the Clean Air Act requires EPA to act on such applications within one year, EPA failed to do so.
Subsequently, and before EPA ever did issue a permit, EPA revised the National Ambient Air Quality Standard for NOx. Avenal Power apparently could demonstrate that emissions from the new plant would comply with the old NAAQS, but could not demonstrate that it would not cause an exceedance of the new NAAQS. After some waffling, EPA took the position that it could grandfather the permit application and review it under the prior NAAQS. Citizen groups appealed and the Court of Appeals held that EPA had no authority to grandfather the application.
To the Court, this was a simple application of Step 1 of Chevron. The Court concluded that sections 165(a)(3) and (4) and 110(j) of the CAA unambiguously require EPA to apply the NAAQS in effect at the time a permit is issued. Thus, EPA has no discretion to grandfather permit applications, even though EPA was required by law to issue a permit decision at a time when more lenient requirements were in effect.
I think that the Court’s decision is clearly right on the law. The statutory language seems unambiguous. But what did the Court have to say to those who feel that the result is inequitable, because Avenal was legally entitled to a decision in one year, and would have obtained its permit if EPA had acted timely? Pretty much, tough luck:
Finally, EPA relies heavily on the argument that the equities weigh in favor of Avenal Power. In short, we agree. Avenal Power filed its application over six years ago, and endeavored to work with EPA for years, even after filing suit, to obtain a final decision. But however regrettable EPA’s treatment of Avenal Power has been, we simply cannot disregard the plain language of the Clean Air Act, or overlook the reason why an applicant must comply with revised and newly stringent standards —that is, “to protect and enhance the quality of the Nation’s air resources so as to promote the public health and welfare and the productive capacity of its population.” Honoring the statute’s plain language and overriding purpose, we must send EPA and Avenal Power back to the drawing board. (Emphasis added.)
In other words, EPA screwed up, and Avenal Power got screwed. Imagine having to explain that to your client.
Posted on July 10, 2014
Last Monday June 23, it was the Supreme Court’s turn in the UARG case to decide whether EPA could “tailor” its climate policy to fit the PSD and operating permit programs in the current Clean Air Act. Both the Court and EPA faced the issue without any precise guidance from the missing branch: Congress.
As a result, yet another court – the DC Circuit – must next consider the proper remedy in the UARG case and, if past DC Circuit decisions are a sound guide, remand the matter back to EPA to take action consistent with the courts’ decisions. The DC Circuit will almost certainly not tell EPA what it can do, nor should it tell EPA how to exercise its remaining substantial discretion. The courts are only telling EPA what it cannot do in certain respects. Thus, the courts’ guidance to EPA is limited.
EPA will retain considerable discretion when it tries again to regulate GHG emissions from major stationary sources and major stationary source modifications under titles 1 and 5 of the Clean Air Act. EPA has loads of options, as many commenters pointed out during the prior EPA rulemaking. The options may fit the current Clean Air Act to varying degrees. In the words of the Supreme Court in the June 23 UARG decision, though, “Even under Chevron’s deferential framework, agencies must operate ‘within the bounds of reasonable interpretation.’” (J. Scalia for the Court, slip opinion at p. 16)
EPA may try to avoid options that would be most vulnerable to challenge under the principles expressed by the Court in the UARG opinion. One Court majority held that EPA lacked authority to “tailor” the Act’s numerical thresholds governing the PSD and operating permit programs. A different Court majority upheld EPA’s BACT rules for GHGs. Some commenters will undoubtedly urge EPA to continue its drive towards regulating GHGs under titles 1 and 5 of the current Clean Air Act. But, EPA should re-solicit the broadest public comment and carefully consider all options, as the Supreme Court requires under the Chevron standard of judicial review. After all, there will be a national election in 2016 and there will be a new Administration with its own views on the options. If the current Administration wishes to leave a lasting legacy in this area, it would be well advised to act on the basis of the most solid record and adopt moderate, fully vetted polices that can survive. As retiring Congressman John Dingell recently said in a farewell speech held by the National Press Club in Washington, D.C., “Compromise is an honorable word."
Congress is very unlikely to provide any additional guidance in this area any time soon, though. The nation will miss some basic policy decisions and compromises, such as:
• Should the PSD and operating permit programs apply to GHGs? How?
• Which sources should be covered? When? With a phase-in? Tied to what?
• In the PSD program, can and should BACT work the same way for GHGs as for criteria pollutants?
• In the operating permit program, when should sources have to add GHG provisions (since there aren’t yet any substantive requirements for the operating permits to pick up)?
• What substantive requirement should EPA develop and for which sources? When? E.g., should EPA set GHG emissions standards or other requirements for power plants and other source categories under section 111(d) of the Act, as EPA recently proposed?
• What role(s) should state and local agencies and programs play?
In the 1990 Clean Air Act amendments, Congress resolved issues like these in the Act itself. The leading precedent is title 4 – acid rain – where Congress even allocated emissions of SO2 by individual numbered electric power generators in named powerplants in named states. Both houses and both parties held hands and made this deal under the Capitol dome – a deal which has resulted in a stunning and stable policy success. The acid rain deal largely avoided the dilemmas that EPA and the courts now face in dealing with stationary source permitting under titles 1 and 5 of the Clean Air Act. It seems most likely that whatever EPA does next under the current Clean Air Act will be challenged vigorously in court – again and again – until Congress can once again come together under the dome.
Posted on June 27, 2014
Having unleashed EPA rulemaking of unprecedented scale in Massachusetts v. EPA (holding GHGs are “air pollutants” under the Clean Air Act (CAA) that EPA must regulate upon finding “endangerment”) and having further acknowledged EPA’s GHG authority in AEP v. Connecticut (holding CAA displaces federal nuisance common law), early this week in Utility Air Regulatory Group v. Environmental Protection Agency et al., the Supreme Court started the inevitable process of reining in the Agency’s exercise of its potentially boundless GHG authority under a statute designed for regulation of conventional air pollutants. Although interpretive gymnastics would be required whatever direction it took, the Court decided in a fractured decision that the CAA’s preconstruction Prevention of Significant Deterioration (PSD) and Title V operating permit programs allow EPA to impose Best Available Control Technology (BACT) for GHGs only when a source has triggered these programs “anyway” due to its conventional criteria pollutant emissions.
The consolidated cases below challenged a full basket of major EPA GHG rulemakings, including EPA’s endangerment finding, motor vehicle regulations (the Tailpipe Rule) and stationary source permitting rules. But the Court granted certiorari on only one question - whether EPA permissibly determined that its regulation of greenhouse gas emissions from new motor vehicles under one part of the Act triggered permitting requirements under the Act for stationary sources that emit greenhouse gases under another part of the Act. The Court rejected EPA’s PSD and Title V Triggering and Tailoring Rules, leaving intact only the ancillary BACT review of a source’s non-de minimis GHG emissions when a source otherwise undergoes PSD review for conventional pollutants.
The PSD program requires a permit to construct or modify a “major emitting facility”—defined as any stationary source with the potential to emit 250 tons per year of “any air pollutant” or 100 tons per year for certain types of sources—in areas where the PSD program applies. To qualify for a permit, the facility must, among other things, comply with emissions limitations that reflect BACT for “each pollutant subject to regulation under” the CAA. Title V requires a comprehensive operating permit to operate any “major source”—defined as any stationary source with the potential to emit 100 tons per year of “any air pollutant”—wherever located.
Recognizing that applying these thresholds to GHGs would result in permitting for numerous small sources, such as schools, hospitals and even large homes, EPA promulgated the so-called Tailoring Rule with special thresholds for GHGs that would apply in addition to the statutory thresholds and said that it would revisit whether to continue applying these special thresholds after five years, during which time it would study the feasibility of extending permitting to the small sources per the statutory thresholds. Under Step 1 of the Tailoring Rule, commencing January 2, 2011 (the effective date for its Tailpipe Rule), it obligated sources already required to obtain permits under the PSD program or Title V (so-called “anyway” sources) to comply with BACT for GHGs if they emitted at least 75,000 tons per year (tpy) of carbon dioxide equivalent (CO2e) units. Then, under Step 2, commencing July 1, 2011, it obligated sources with the potential to emit at least 100,000 tpy of CO2e to obtain permits under the PSD program and Title V for construction and operation, and sources with the potential to emit at least 75,000 tpy of CO2e to obtain permits under the PSD program for modifications. These higher thresholds were needed on a temporary basis, according to the EPA, because the number of permit applications would otherwise grow by several orders of magnitude, exceeding the agency’s administrative resources and subjecting to the major permit programs sources that Congress clearly did not intend to cover. EPA’s Tailoring Rule also contemplated a Step 3 where GHG permitting would apply to additional sources as well as a five year study on how to extend the program to remaining sources per the statutory thresholds.
Writing for the Court, Justice Scalia, joined by Justices Roberts, Kennedy, Thomas, and Alito, concluded that EPA’s legal interpretation that the PSD and Title V programs were triggered once EPA regulated GHGs under the mobile source program not only is not compelled, but moreover, simply is not reasonable. He reasoned that the “air pollutants encompassed by the Act-wide definition as interpreted in Massachusetts” are not the same “air pollutants referred to in the permit-requiring provisions” at issue. This is so because EPA has routinely given “air pollutant” in the permit-requiring provisions a narrower, context-driven meaning. The same five justices also concluded that EPA is not permitted to augment with additional thresholds – even temporarily, as EPA claimed – the 100 tpy and 250 tpy statutorily-defined thresholds for triggering the PSD program and Title V permitting requirements. He writes that the need for such an adjustment simply demonstrates that the PSD program and Title V were never intended to be expanded in this way, and adds that the EPA does not have the power to “rewrit[e] unambiguous statutory terms” such as the statutorily-defined numerical thresholds for applying the PSD program and Title V.
Justice Scalia, joined in this part by Justices Roberts, Kennedy, Ginsberg, Breyer, Sotomayor, and Kagan, then determined that the EPA reasonably interpreted the CAA to require that those new and modified sources already subject to PSD permitting due to their potential to emit conventional criteria pollutants also must comply with BACT for GHGs. In this context, he emphasizes that the statutory language – once permitting already has been triggered – requiring BACT “for each pollutant subject to regulation under this chapter” contextually leaves less room for interpretations that could limit BACT to a smaller set of pollutants, in contrast to the triggering “any air pollutant” language, which must be read contextually in a more limited manner. Additionally, he argues that applying BACT to greenhouse gases “is not so disastrously unworkable, and need not result in such a dramatic expansion of agency authority, as to convince us that EPA’s interpretation is unreasonable.”
Justice Breyer concurred in part and dissented in part, joined by Justices Ginsburg, Sotomayor, and Kagan. He joins the Court’s opinion as to the application of BACT to greenhouse gases, but asserts that the EPA is also permitted to interpret the CAA so as to trigger permitting requirements for stationary sources that emit an adjusted threshold level of greenhouse gases. Justice Alito concurred in part and dissented in part, joined by Justice Thomas. He argues that neither the EPA’s interpretation of provisions triggering permitting requirements nor its interpretation regarding BACT is permissible.
The Court’s decision to require independent PSD and BACT applicability before subjecting sources to BACT for GHG emissions squares fully with significant industry input to EPA early in its discussion of stationary source permitting. Our National Climate Coalition, for example, urged EPA to embrace such an interpretation in our 2009 Tailoring Rule comments and 2010 PSD White Paper.
Although this decision does not directly affect EPA’s authority to regulate stationary source GHG emissions by establishing New (or Existing) Source Performance Standards under section 111 of the Act, it portends significant challenges for the agency’s recent §111(d) proposal. Most notable are the several statements in the 5-4 portion of Justice Scalia’s opinion in which he cautions the agency not to “rewrite clear statutory terms to suit its own sense of how the statute should operate.” In articulating the Court’s test for whether an agency interpretation of ambiguous terms is reasonable, he stresses that an interpretation is less likely be viewed as reasonable to the extent it:
brings about an enormous and transformative expansion in EPA’s regulatory authority without clear congressional authorization. When an agency claims to discover in a long-extant statute an unheralded power to regulate a ‘significant portion of the American economy,’ [cite omitted], we typically greet its announcement with a measure of skepticism. We expect Congress to speak clearly if it wishes to assign to an agency decisions of vast ‘economic and political significance.’
This portion of the Court’s ruling will likely figure prominently in the Court’s inevitable review of the agency’s §111(d) proposal. It thus may behoove EPA to consider in its final rulemaking approaches that bring the existing source program somewhat closer to its traditional rulemakings under that section.
Posted on June 18, 2014
It has been more than 30 years since EPA hired its first criminal investigators, but questions remain about when environmental violations will result in criminal charges. Critics frequently portray environmental crime as a poster child of “over-criminalization” with a recent example Senator Rand Paul in his book Government Bullies: How Everyday Americans Are Being Harassed, Abused, and Imprisoned by the Feds.
To address these concerns, I have suggested that prosecutors should limit criminal charges to violations that involve one or more of the following aggravating factors: (1) significant environmental harm or public health effects; (2) deceptive or misleading conduct; (3) operating outside the regulatory system; or (4) repetitive violations. By doing so, prosecutors would focus on violations that undermine pollution prevention efforts and avoid targeting defendants who committed technical violations or were acting in good faith.
I subsequently developed the Environmental Crimes Project to determine how often the aggravating factors I identified were present in criminal prosecutions. With the assistance of 120 students at the University of Michigan Law School, I analyzed all defendants charged in federal court with pollution crime or related Title 18 offenses from 2005-2010. We examined court documents for over 600 cases involving nearly 900 defendants to create a comprehensive database of environmental prosecutions.
Our research revealed that prosecutors charged violations involving aggravating factors in 96% of environmental criminal prosecutions from 2005-2010. More than three-quarters of the violations involved repetitive conduct, and nearly two-thirds involved deceptive or misleading conduct. Moreover, we found that 74% of the defendants engaged in conduct that involved multiple aggravating factors. And, for 96% of the defendants with multiple aggravating factors, one of the first three factors (harm, deceptive conduct, or operating outside the regulatory system) was present along with repetitiveness.
These findings support at least three significant conclusions. First, in exercising their charging discretion, prosecutors almost always focus on violations that include one or more of the aggravating factors. Second, violations that do not include one of those aggravating factors are not likely to be prosecuted criminally. Third, prosecutors are most likely to bring criminal charges for violations that involve both one of the first three factors and repetitiveness—and are less likely to bring criminal charges if that relationship is absent.
I plan to update my research with data from 2011-2012 and to examine a representative sample of civil cases using the same criteria. But my research already should provide greater clarity about the role of environmental criminal enforcement and reduce uncertainty in the regulated community about which environmental violations might lead to criminal charges. My research also suggests that prosecutors are exercising their discretion reasonably under the environmental laws and should lessen concerns about over-criminalization of environmental violations.
For more, please see David M. Uhlmann, Prosecutorial Discretion and Environmental Crime, 38 HARV. ENVTL. L. REV. 159 (2014).
Posted on June 13, 2014
If it’s wastewater from a treatment plant pumped into injection wells and it ends up in the ocean, you need an NPDES permit under the Clean Water Act. At least that’s the conclusion from the U.S. District Court for the District of Hawaii in Hawai’i Wildlife Fund v. County of Maui, decided May 30, 2014.
In Hawai’i Wildlife Fund, a case in which my colleague David Henkin in our Honolulu office represented the plaintiffs, the Court considered the following facts: The County of Maui operates a wastewater treatment plant located about a half mile from the ocean that pumps millions of gallons of treated wastewater into several injection wells each day. Within the last few years, EPA and others performed a tracer dye study because of concern that much of this wastewater was migrating through a groundwater aquifer and emerging in the ocean off the coast of Maui through seeps and springs. The results of this study confirmed that, for a number of the injection wells, this was the case, even though it took several weeks for the dye to move from the wells into the ocean through the groundwater aquifer. Based on other information, the County apparently had been aware since 1991 that its wastewater discharges were reaching the ocean. Plaintiffs, Hawai’i Wildlife Fund and others, brought a citizens suit under the Clean Water Act asserting that because the County wastewater treatment facility had no NPDES permit, the discharge of wastewater into the ocean via the injection wells and groundwater was an illegal, unpermitted discharge.
U.S. District Court Judge Susan Mollway agreed and granted the plaintiffs summary judgment. The Court was not deterred by the County’s argument that it had an application for an NPDES permit pending with the State or other preliminary matters. Instead the Court observed that “the only area of dispute between the parties is whether the discharges into the aquifer beneath the facility constitute a discharge into ‘navigable waters[,]’” the operative language of the Clean Water Act in this case.
On this point, the Court turned to the Supreme Court’s Rapanos decision and concluded that waters regulated by the CWA are broader than waters that are “navigable-in-fact,” hardly a controversial conclusion. The Court then went on to conclude that “liability [for an unpermitted discharge] arises [under the CWA] even if the groundwater . . . is not itself protected by the [Act] as long as the groundwater is a conduit through which the pollutants are reaching [the ocean].” As the Court observed, “[t]here is nothing inherent about groundwater conveyances and surface water conveyances that requires distinguishing between these conduits under the [CWA].” In the Court’s view, as long as the groundwater served as a conveyance for pollutants that reached navigable waters, liability for an unpermitted discharge would attach.
The Court also concluded that liability for an unpermitted discharge arose under an alternative test which the parties drew from the Ninth Circuit’s post-Rapanos decision in Northern Cal. River Watch v. City of Healdsburg, even though the Court expressed skepticism about the applicability of this test where groundwater is involved. Under this alternative test, because there was a clearly discernible nexus, i.e., the groundwater aquifer, between the County’s discharge of pollutants into injection wells and its subsequent emergence in the ocean, and because the discharge of pollutants to the ocean significantly affected the “physical, biological, and chemical integrity” of the ocean in the area of the seeps and springs through which the discharge emerged, liability for an unpermitted discharge also would attach.
Next up: civil penalties and remedy.