Majority Support for a Carbon Tax?

What are the politics of climate change?  A new poll done by Stanford University and Resources for the Future suggests that the public may be more ready to regulate carbon carbon taxthan has previously been thought.  When asked if “the federal government should or should not require companies to pay a tax to the government for every ton of greenhouse gases the companies put out,” 61% of respondents said yes.  That figure rose to 67% when the question was modified to provide for a revenue neutral tax the proceeds of which would be rebated through income tax reductions.

Fairly or not, Hillary Clinton has never been known for her boldness.  Wouldn’t it be interesting if she supported a carbon tax and made it major issue in the campaign?  Wouldn’t it be even more interesting if one of the GOP candidates did so?

Perhaps a Corps Jurisdictional Interpretation is Final Agency Action After All

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.

If MassDEP Cannot Promulgate New Regulations Absent Compliance with Executive Order 562, What About Guidance Documents?

For your humble blogger, Executive Order 562, recently issued by Governor Baker, is the gift that keeps on giving.  Receipt of a notice today regarding MassDEP’s consideration of its draft vapor intrusion guidance document made me realize that EO 562 does not, at least on its face, apply to the development of guidance documents.

Why does this matter?

Because the use of guidance in lieu of regulatory development is already a significant problem.  If agencies already are too quick to use guidance when they should be going through notice-and-comment rulemaking, precisely to avoid the burden of the regulatory process, imagine the impact that EO 562 could have.

Of course, I understand that guidance documents don’t have the force of law.  They do, however, have the force of the issuing agency behind them.  And we all know how street-level bureaucracy in an agency can ossify what was supposed to be flexible guidance, turning guidance into the worst of both worlds – a document that is treated as  binding by agency staff, but without either the clarity or procedural protections that regulations provide.

May we all live in interesting times.

EPA Really Has A Lot Of Discretion In Deciding Whether to Promulgate Water Quality Standards

When a number of citizen groups petitioned EPA to determine that it is necessary under the Clean Water Act to promulgate water quality standards for nutrient pollution in the Mississippi River Basin miss3and the Northern Gulf of Mexico, EPA did not decide to issue the standards.  It did not decide not to issue the standards.  It decided not to decide.  Litigation ensued.

Earlier this week, the 5th Circuit Court of Appeals, reversing the District Court, found that EPA has no obligation to make a so-called “necessity determination”, so long as:

it provides an adequate explanation, grounded in the statute, for why it has elected not to do so.

The Court thus remanded the case to the District Court to determine whether EPA’s explanation for its failure to decide was sufficiently “grounded in the statute.”  If I were the plaintiffs, I wouldn’t hold out too much hope, because the Court of Appeals made clear just how limited the District Court’s review must be:

In [deciding the case on remand], the district court must bear in mind several principles. First, the court applies the arbitrary and capricious standard of review set out in the APA. “As applied to refusals to initiate rulemakings, this standard is ‘at the high end of the range’ of deference,” and “such review is ‘extremely limited’ and ‘highly deferential.’” Second, in deciding whether the EPA appropriately declined to make a necessity decision, the district court’s review is limited to determining whether the EPA has “provide[d] some reasonable explanation as to why it cannot or will not exercise its discretion” to make a necessity determination. That explanation must be grounded in the statute.

In light of this highly deferential standard of review, the agency’s burden is slight. That is particularly true when the statute is as broadly written as section 1313(c)(4)(B). Moreover, when a statute sets out competing considerations, agencies are generally given discretion to choose how to best give effect to those mandates. Nonetheless, we leave it to the capable hands of the district court to determine in the first instance the propriety of the EPA’s actions.

It will take a bold District Court judge to find that EPA has not met the burden as described by the Court of Appeals.

Here’s Another Nice Mess: Executive Order 562 Claims Its First Victim

Last Friday, I posted about Governor Baker’s Executive Order 562, which requires cost-benefit analysis, cost effectiveness analysis – and more – before state agencies can promulgate regulations.  It took less than a week before it became clear that EO 562 has real teeth.  Yesterday, MassDEP sent out a one-paragraph notice delaying hearings on its proposed Clean Energy Standard, citing EO 562 as the reason:

MassDEP is postponing the hearings and comment period on the proposed Clean Energy Standard rule until it has completed the reviews required under the recent Executive Order 562.

It will be interesting to see if EO 562 comes back to bite the Baker administration in this instance.  I don’t think that there is an environmental economist around who would argue that the Clean Energy Standard is a more efficient way to attain the GHG reduction targets in the Global Warming Solutions Act than a carbon tax would be.  On its face, EO 562 does not limit an agency’s consideration of alternatives to those which are within its statutory authority.

What does the Baker administration do if MassDEP finds that some further restrictions on GHG emissions are necessary for the Commonwealth to meet the GWSA targets, but that a carbon tax is a better way to get there than the CES would be?

That would be a nice mess the EO would have gotten them into.

Allocating The Liability Shares of Settling PRPs Under CERCLA

Allocation of liability under CERCLA can get messy.  One particularly complex issue arises in a private cost recovery action where some but not all the PRPs have settled with the private party.  In contrast to a government cost recovery action, where CERCLA Section 113(f)(2) expressly provides that the response costs sought to be recovered by the government are reduced dollar-for-dollar by any settlement proceeds, CERCLA is silent with respect to the treatment of settlements in private party CERCLA claims.

That issue arose in Ameripride Serv v. Texas Eastern Overseas.  There, the Ninth Circuit held that, where a PRP had incurred cleanup costs and… More

There’s Undoubtedly A New Sheriff in Town in Massachusetts

I have never agreed with those in the environmental community who are opposed to cost-benefit and cost-effectiveness analysis.  Cost-effectiveness analysis just seems a no-brainer to me.  As to cost-benefit analysis, we do it implicitly every time we write a regulation, and I don’t understand the unwillingness to do so explicitly.

All of which serves as burying the lede to Executive Order 562, issued by Governor Baker governor-charlie-baker-300x450this week.  The order applies to both existing regulations and those proposed or to be proposed, and has several important elements:

  • Except as in compliance with the Order, all existing regulations must sunset as of March 31, 2016.
  • Only existing regulations mandated by law or “essential to the health, safety, environment or welfare of the Commonwealth’s citizens” may be retained or modified.
  • The regulation’s benefits must exceed its costs.
  • The regulations may not exceed federal requirements.
  • “Less restrictive and intrusive alternatives have been considered and found less desirable.” (This seems like an awkward formulation of a cost-effectiveness analysis; I hope that it is implemented basically to provide a requirement that the regulation simply be the most cost-effective alternative.)
  • The regulations do not “unduly and adversely affect Massachusetts citizens and customers of the Commonwealth, or the competitive environment in Massachusetts.”
  • All proposed regulations must now have a “business/competitiveness impact statement”.

Make no mistake, this is a far-reaching Order.  If honored according to its terms, it will severely hamper Massachusetts environmental regulators.  The key is that it does not simply require that regulations be justified under cost-benefit and cost-effectiveness criteria – which I would wholly support.

Even if a regulation’s benefits exceed its costs, and even if it is the most cost-effective approach to addressing the problem the regulation is meant to solve, it is still forbidden if it exceeds federal requirements or if it “unduly and adversely affects Massachusetts citizens.”  I don’t know what that means, but logic dictates that it means something more than cost-effectiveness and cost-benefit criteria, since those are required separately.

To me, the Order thus goes too far, though time will tell how it is interpreted, and whether the benefits of requiring cost-benefit and cost-effectiveness analysis outweigh the obstacles that the Order places in the way of beneficial regulations.

That’s what we need – a cost-benefit analysis of the Order itself!

NEPA Review — Still the Land of Deference

Last week, District Judge Ralph Beistline allowed the summary judgment motion filed by the United States Forest Service, and dismissed citizen claims challenging the Forest Service decision to approve an logging project in an old growth area in the Tongass National Forest tongass 2known as Big Thorne.  The case seems interesting because of the deference Judge Beistline showed to the Forest Service.  Reading between the lines of the record, my sense is that the Forest Service may not have gotten it right.  The point is that they were not so wrong as to warrant reversal.

All judges talk the deference talk; not all of them walk the deference walk.

It also seems to me that, based on my purely anecdotal sense of the cases, judges are more willing to defer to agency decision-making under NEPA than under other environmental statutes.  It’s certainly not an absolute; I’ve seen plenty of NEPA cases in which judges refused in practice to defer to the extent that their rhetoric would otherwise seem to have required.  Nonetheless, it would be interesting to know whether a systematic look would confirm my anecdotal assumption.

Arranger Liability for Sale of a Used Product: Standard of Metaphysics Or An Unstated Rule?

In Consolidated Coal Company v. Georgia Power Company,the Fourth Circuit recently applied the same four part test used by trial court(and blogged about here) to hold that the sale of a used product containing PCBs would not give rise to arranger liabiity under Section 107(a)(3) of CERCLA.  The appeals court reaffirmed the basic proposition that selling a used product that contains hazarous substances which eventually will be disposed is not sufficient to establish arranger liability:

Anytime an entity sells a product that contains a hazardous substance, it also ‘intends’ to rid itself of the hazardous substance in some metaphysical sense.  But intent to sell a product that happends to contain a hazardous substance is not equivalent to intent to dispose of a hazardous substance under CERCLA.  For arranger liability to attach, there has to be something more.

Precisely what beyond metaphysics is needed to establish arranger liability seems to be pretty metaphysical in the majority’s opinion: “The something more could be the seller’s ‘intentional steps,’ beyond what is inherent in the sale, to dispose of the hazardous waste.”  In the end, the majority says there must be a “fact-intensive” inquiry into the nature of the transactions.  Noting that a grant of summary judgment is rarely appropriate to resolve fact intensive issues such as intent, one of the appellate judges lodged a dissent.

In the end, after all the vague verbal formulations, the courts on this issue all seem to follow an unstated rule which I have recited before:  a party will be held liable if it sells a used product or waste that cannot be used or won’t be used as delivered without first causing the release of a hazardous substance.

What’s a Court to Do When An Agency Admits Error? Vacate? Remand?

In Black Warrior Riverkeeper v. ACOE, decided this week by the 11th Circuit Court of Appeals, the Court was faced with a quandary.  “On the eve of oral argument”, in a case challenging The Army Corps of Engineers Nationwide Permit 21, which allows certain surface coal mining activities without an individual permit, the Army Corps of Engineers informed the Court that it had significantly underestimated the acreage that would be affected by NWP 21.  Moreover, the Corps acknowledged that this error was sufficiently significant that it needed to revisit NWP 21. black warrior river

Thus, the Court had to remand the case so that the Corps could reassess NWP 21 on the correct factual baseline.  So far, so good.  However, this did not address whether the Court should vacate the rule pending the reassessment.  The Court concluded that, because it was possible that the Corps would determine that the error was harmless, it need not vacate the rule (though it did provide that the District Court could order vacatur if it determined that to be appropriate).

The problem is that the aspect of the rule being challenged was a grandfathering provision – The Corps had grandfathered surface mining activities that had already been covered by the prior version of NWP 21.  At the same time, the Corps had determined that, going forward, significant new limits had to be placed on the availability of NWP 21, due to the risk of environmental damage from surface mining.  Thus, the dissent was skeptical that, if the Corps had in fact determined that these activities can cause environmental damage, the Corps could still somehow reasonably determine that the grandfathered activities:

will cause only minimal adverse environmental effects when performed separately, and will have only minimal cumulative adverse effect on the environment.

Good question.  It will be interesting to see what the District Court and the Corps do in response to the remand.

Conservative Support for a Carbon Tax? Hope Springs Eternal

I have long thought that the best argument for market-based approaches to climate change scientists-clues-printmitigation was the clunkiness of the alternative.  However much time EPA has spent trying to make the GHG regulations efficient, no one can say that EPA’s proposal is elegant.

Although it is at best a dim glimmer of hope on the horizon, it was nonetheless comforting to see Jerry Taylor of the Libertarian Niskanen Center make “The Conservative Case for a Carbon Tax.”  While I don’t agree with every aspect of his proposal, and liberals will likely howl at some elements, it is certainly a principled approach and makes sense as something that could be the centerpiece of a grand bargain on climate change.

To me, it is the “compared to what” issue that is Taylor’s strongest argument, and I hope conservatives are listening.  This pretty much gets it:

Lawsuits might stop the regulations, but only for a time. The agency’s rulemaking is vulnerable to a number of legal challenges. But as long as the EPA’s endangerment finding stands, a successful challenge to the rules will just send the agency back to the drawing board, with new rules to follow. There’s no guarantee that the new rules will be an improvement over the old rules.

I would only add that this is particularly true given that it is the most market-oriented parts of the rules that seem on the shakiest legal foundation.

A market-based approach to climate change mitigation is not going to happen in this Congress, but I remain hopeful.

Is Injunctive Relief Available Against Former Owners? At Least One Judge Thinks So.

As we noted in 2013, two different Courts of Appeal had ruled that injunctive relief is not available in PSD/NSR enforcement cases against former owners.  Both United States v. Midwest Generation and United States v. EME Homer Generation held that, because the former owner no longer controls the site, courts cannot impose injunctive relief against them.  As the Court stated in EME Homer Generating:

with time travel yet to be discovered, it is impossible to “restrain” a violation that occurred twenty years ago. Likewise, courts cannot “require compliance” from defendants who are not currently violating the Clean Air Act and who cannot violate the Act in the future because they no longer own or operate the source.

However, in an opinion issued last month in United States v. Westvaco, Judge Marvin Garbis has found a way around this conundrum.  Since the point of the injunction is not per se to have controls on the facility, but to mitigate the harm caused by the excess emissions allegedly resulting from the failure to comply with PSD BACT requirements, Judge Garbis concluded that he may order the defendant former facility owner to buy and retire emission credits to counterbalance the harm caused by the facility’s historical excess emissions.

The Court did not impose an injunction, instead scheduling further proceedings to determine whether such an injunction is in fact feasible and, if so, what its scope should be.  However, it certainly appears that the Court will order such an injunction as long as the retirement of emission credits “bear[s] a reasonable relationship to the decree and kind of wrong it is intended to remedy.”

It’s not obvious to me that this works and I expect Westvaco to appeal any final judgment (assuming it does not seek and obtain the right to interlocutory appeal), but it’s certainly a creative approach that the government is likely to enthusiastically support, where the alternative is no relief at all.

RCRA Still Poses Some Interpretive Problems (To Put It Gently)

In a potentially significant opinion last week, in Little Hocking Water Association v. DuPont, Judge Algenon Marbley gave hope to citizen plaintiffs everywhere, with a remarkably expansive reading of the imminent and substantial endangerment language in RCRA’s citizen suit provision.  The decision covers a lot of ground, and is well worth reading (and, in fairness, Judge Marbley did reject some of plaintiffs’ claims).

The most significant holding was that DuPont’s emissions of perflourooctanoic acid, or C8, Teflon PFOA Edgar181 wiki comminto the air could constitute “disposal” of a “solid waste” that would subject DuPont to liability under RCRA.  Although Judge Marbley struggled mightily to distinguish it, his holding seems difficult to reconcile with the recent decision in Ctr. For Cmty. Action & Envtl. Justice v. BNSF R. Co., in which the 9th Circuit – that noted bastion of conservative environmental decisions – ruled that diesel emissions into the air did not constitute disposal of a solid waste.  I think that the 9th Circuit got it right, but Judge Marbley’s interpretation is not crazy within the scheme of RCRA and its jurisprudence.

That being said, I have three takeaways from this case:

  • Judge Marbley may not be crazy, but RCRA is. As I noted as recently as last December, it speaks volumes that, almost 50 years after its passage, we still don’t know what a solid waste is.
  • How many different statutes and causes of action do we need to provide? Don’t like Superfund?  Try RCRA.  Doesn’t work?  How about the Clean Air Act?  Statutory remedies aren’t sufficient?  Let’s resuscitate public and private nuisance doctrines.  Of course, one can always – like Judge Marbley here – fall back on the canon that remedial statutes are to be construed broadly.
  • And for a party in litigation, don’t ever forget rule number 1 – the Judge better like you. When the Judge starts citing statements by in-house counsel blasting their own client, you know you are in trouble, regardless of the technical merits:

Bernie and I have been unsuccessful in even engaging the clients in any meaningful discussion of the subject [of C8 emissions]. . . we continued to increase our emissions into the river in spite of internal commitments to reduce or eliminate the release of this chemical.

The business did not want to deal with this issue in the 1990s, and now it is in their face, and some are still clueless. Very poor leadership….

Talk about an uphill battle.

 

What’s a Significant Nexus? The Answer, My Friend, Is Flowin’ Through the Ditch.

Even assuming that the “significant nexus” test from Justice Kennedy’s concurring opinion in Rapanos defines waters of the United States subject to Clean Water Act jurisdiction, the question remains what establishes a significant nexus.  In a decision earlier this week, the 4th Circuit Court of Appeals provided some important guidance in answering this question.  The news is good for EPA and the Corps, not so good for developers.

The Court laid out four general precepts that apply to all cases:

  • Either qualitative or quantitative evidence may demonstration jurisdiction.  Here, the Court rejected the developer’s argument that, because the project involved only a tiny percentage of the watershed, the nexus simply could not be “significant” to the watershed.
  •  Expert evidence that the nexus is not “statistically significant” to the watershed “sets the bar too high, as purely qualitative evidence may satisfy the significant nexus test.”
  • While a court will assess the various different wetlands functions, “the ultimate inquiry is whether the collective effect of these functions is significant.”
  • Finally, since the purpose of the CWA is both to “restore and maintain” the nation’s waters, in a permitting context:

The Corps exercises its jurisdiction to prevent damage and thus cannot be expected to present evidence of the actual ecological impact of the wetlands on downstream waters.

The facts are too detailed for blog discussion.  The geographic nexus was this:  The project involved 4.8 acres of a 448 acre wetland.  The wetlands are adjacent to a 2,500 foot man-made ditch, which itself connects to the Saint Brides Ditch, which joins a small tributary, which ultimately reaches the Northwest River, northwest riverseven miles from the wetlands.  Sounds attenuated, no?

The court found the following two factors sufficient to demonstrate the required significant nexus:

1.  The ACOE actually obtained some flow data and the Court found that the Corps’ determination of a hydraulic connection was not arbitrary and capricious.

2.  The Corps’ found that the Northwest River has low dissolved oxygen levels and that the wetlands at issue trap nitrogen, which could otherwise worsen the problem.

QED.  The bottom line is that, as long as they do their job, EPA and the Corps are going to win most of these cases.

News Flash: Courts Still Defer to an Agency’s Interpretation of Its Own Rules

The Supreme Court today ruled that, when an agency revises its interpretive rules, it need not go through notice-and-comment rulemaking.  Although the decision, in Perez v. Mortgage Bankers Association, required the court to reverse a long-held line of D.C. Circuit cases, the decision was not difficult; it was, in fact, unanimous.  In short, the Administrative Procedure Act:

states that unless “notice or hearing is required by statute,” the Act’s notice-and-comment requirement “does not apply … to interpretative rules.”

It carves out no exception for revisions to interpretive rules.  Game over.

The truly interesting part of the case was in the concurring opinions.  Both Justices Scalia and Thomas, effectively joined by Justice Alito, argued that Supreme Court decisions giving deference to agencies’ interpretation of their own rules have no constitutional foundation and should be overruled.

This is not the first time that they have made these arguments.  As I noted previously, in Decker v. Northwest Environmental Defense Center, Chief Justice Roberts also suggested that it might be time to revisit what is generally known as Auer deference.  It is notable in Perez that the Chief Justice joined the Court’s opinion.  Absent a change in the make-up of the Court, I don’t see it revisiting Auer any time soon.

Otherwise, the most notable part of the case is a statement from Justice Thomas that, to me, already wins the metaphor of the year prize.  Justice Thomas’s argument against Auer deference, while couched in constitutional terms, is really a screed (parts of which I sympathize with) against the growth of rulemaking and the modern administrative state.  He laments the use of interpretive rules and the decline of formal notice-and-comment rulemaking, and the protections that are required:

Today, however, formal rulemaking is the Yeti Yeti-590x330of administrative law. There are isolated sightings of it in the ratemaking context, but elsewhere it proves elusive.

True dat.  It just doesn’t justify abandoning Auer deference in my book.