Last week, we wrote about an audit that MassDEP is conducting of previously closed sites to look for high concentrations of TCE in soils and groundwater. The intent of the audit is to address potential vapor intrusion. The EPA has been paying attention to VI as well, and last Wednesday proposed to add vapor intrusion as a factor to be considered when evaluating the hazards posted by a contaminated site. The rulemaking would make vapor intrusion a… More
Yesterday, the White House released a fact sheet describing its efforts to create a “21st Century Clean Transportation System”. There’s a lot of interesting material in the plan, but all the headlines have been on the President’s inclusion of a $10/barrel tax on oil in his FY2017 budget as a means of paying for the various improvements contained in the plan.
The fact sheet doesn’t use the words “carbon tax” and it emphasizes the purposes for which the tax revenue will be used, rather than the idea of internalizing the externalities associated with consumption of oil. Moreover, it’s obviously not economy-wide; it’s not a tax on all sources of carbon utilized in the economy.
Nonetheless, it’s a tax. On carbon. Sounds like a carbon tax to me. Which of course is why the GOP legislative leadership announced that the tax would be DOA on Capitol Hill. Plus ça change, plus c’est la même chose.
At a recent meeting of the Massachusetts Department of Environmental Protection’s Waste Site Cleanup Advisory Committee, MassDEP announced that it will soon begin the process of contacting owners of previously closed sites where the available data suggest that trichloroethylene (TCE) levels may be problematic. Back in June of 2014, MassDEP promulgated rules updating its standards to reflect the most recent USEPA toxicity values. MassDEP updated its imminent hazard standards for TCE exposure in indoor air and simultaneously updated its MCP Method 1 soil and groundwater standards and reportable concentrations… More
Earlier this week, the “Public Health and Environmental Petitioners” challenging EPA’s decision not to reduce the ozone standard below 0.070 ppm filed their “Non-Binding Statement of Issues.” My crystal ball still tells me that the most likely outcome is that the Court of Appeals upholds EPA’s 0.070 ppm standard.
I do think that the Public Health and Environmental Petitioners have a better case than Murray Energy (which filed its Statement of Issues late last year). Given that the Clean Air Science Advisory Committee pretty clearly concluded that there are adverse health impacts below 0.070 ppm, the Public Health and Environmental Petitioners certainly have a credible argument for a lower standard, though I thought EPA did a pretty good job in the final rule insulating itself from challenges on that flank. As to Murray Energy and the other industry and state challengers, I just don’t think that the background argument is going to get them anywhere.
Students of history know that fighting a two front war is a hazard to be avoided. According to the L.A. Times, however, that is precisely the dilemma that now faces Exxon Mobil: dual investigations from attorneys general on each coast of the United States.
Several sources are reporting that California Attorney General Kamala Harris’ office is examining what Exxon knew about the science of climate change compared with what the company told investors. The investigation was reportedly launched some time ago after published reports claimed that the company knew about the risks of climate change for decades while simultaneously funding a public relations campaign to discredit the underlying science. These same reports prompted New York Attorney General Eric Schneiderman to consider whether Exxon committed fraud under New York’s controversial Martin Act in November 2015 (see our discussion of that investigation here).
The California Attorney General’s office has not confirmed the nature or existence of any investigation. Exxon has steadfastly rejected all assertions that it suppressed climate change research. The list of inquisitors nevertheless may continue to grow. Presidential candidates Hillary Clinton, Bernie Sanders and Martin O’Malley have each called for the U.S. Department of Justice to initiate its own investigation.
On Tuesday, insurance giant AIG announced a major restructuring designed to make it a “more profitable and focused insurer.” Apparently as a result of these efforts to streamline and slim down, AIG has begun notifying holders of its Pollution Legal Liability insurance that it will no longer be underwriting new policies. Existing policies will be honored, but renewal will not be available. AIG will reportedly continue to write Contractors Pollution Liability and Environmental and General Liability Exposure policies.
Entities seek Pollution… More
On December 4, 2015, President Obama signed into law the Fixing America’s Surface Transportation (FAST) Act—a five-year, $305-billion transportation authorization and spending bill. The FAST Act largely focuses on funding highways and other transit infrastructure, but, interestingly, it also contains provisions overhauling the environmental review of infrastructure projects under the National Environmental Policy Act (NEPA).
For example, the FAST Act requires agencies to coordinate their environmental reviews of transportation projects to avoid duplication and accelerate the review process. In addition, the Act expands agencies’ ability to apply categorical… More
The Supreme Court today affirmed FERC’s Order No. 745, which required that demand response resources be treated the same as generation resources when participating in wholesale electricity markets. I’m feeling vindicated, because the post-oral argument prognosticators said that it looked bad for FERC, but I always thought that FERC had the stronger argument.
As I noted after the D.C. Circuit struck down Order No. 745, good policy was clear here; the law simply had to catch up to good policy. This was actually an implicit theme of Justice Kagan’s remarkably lucid and readable majority opinion. As she noted repeatedly, pretty much everyone thinks that demand response can play an important role in making energy markets more efficient, lowering prices (and improving environmental outcomes by reducing emissions).
No one taking part in the rulemaking process—not even EPSA—seriously challenged that account. Even as he objected to FERC’s compensation formula, Commissioner Moeller noted the unanimity of opinion as to demand response’s value: “[N]owhere did I review any comment or hear any testimony that questioned the benefit of having demand response resources participate in the organized wholesale energy markets. On this point, there is no debate.”
I’m sorry to sound naïve, but if everyone agrees about the “benefit of having demand response resources participate in the organized wholesale energy markets”, then isn’t it the role of the law to facilitate that policy? In this context, I note that Chief Justice Roberts joined the majority opinion, and I wonder whether, for him, this case is like King v. Burwell, in which he upheld key provisions of the Affordable Care Act, basically on the ground that it just plain doesn’t make sense to interpret a statute in a way that everyone agrees undermines the statute’s objectives.
The same is certainly true here. In the Energy Policy Act of 2005, Congress:
declared as “the policy of the United States” that such demand response “shall be encouraged.”
In the same vein, Justice Kagan noted that states cannot regulate demand response bids:
A State could not oversee offers, made in a wholesale market operator’s auction, that help to set wholesale prices. Any effort of that kind would be preempted.
So we have a situation in which everyone agrees that demand response helps the efficient functioning of wholesale electricity markets. Congress has stated that encouraging demand response is federal policy. And, if FERC cannot regulate demand response, then no one can.
Perhaps Justice Roberts came to the conclusion that, on these facts, it just plain wouldn’t make sense to restrict FERC’s authority. Kagan and Roberts, striking a blow for common sense.
Earlier this week, Massachusetts released its updated Massachusetts Clean Energy and Climate Plan for 2020. The headline for the press release was “Massachusetts on Track to Meet 25% Greenhouse Gas Reduction Target for 2020”. The slightly more nuanced version is that we can do it, but only with a large dose of Canadian hydropower.
While that’s the main take-away, it really is a useful report, with a lot of important information. Here are some highlights:
- The “dominant source of emissions reductions [to date] came from the electric sector.”
- Emissions from transportation have barely budged, because vehicle miles traveled have gone up, even as mileage has improved. As a result, the mobile combustion percentage share of GHG emissions has risen from 32.3% to 41%. It’s going to be a slog to move those numbers significantly.
- Going forward, the Report states that the two most significant sources of further reductions up through the 2020 target are “additional clean electricity”, which EOEEA Secretary Beaton’s cover letter makes clear largely means imported hydroelectric power, and vehicle GHG emissions standards.
What I find most interesting is that there isn’t anything in the report that looks like cost-effectiveness analysis, comparing what types of controls would allow the Commonwealth to reach to 2020 target at minimum cost. At a certain level, that’s what the import of hydropower is about. However, as I noted a few months ago, it’s not totally clear that the all-in cost of hydropower is as low as it seems. At the very least, there has been no really hard look at the most cost-effective way of attaining the GWSA goals.
The absence of cost-effectiveness analysis points in another direction. If we had an economy-wide cap-and-trade system, we wouldn’t need cost-effectiveness analysis, because the market would do that analysis for us.
Markets have their uses.
Last month, I went out on a limb and predicted that the D.C. Circuit Court of Appeals would not stay the CPP. Today, the Court vindicated my faith in judicial rationality and refused to grant a stay. In a brief order, the Court simply stated that “Petitioners have not satisfied the stringent requirements for a stay pending court review.”
The Court did expedite briefing, requiring all briefs to be filed by late April. Those of you wondering how the Court could possibly absorb all of the complex issues involved in the
appeal will be interested to know that the Court scheduled argument for June 2, but advised the parties to reserve June 3 as well “in the event argument cannot be concluded on June 2nd.”
This one’s going to be a marathon.
Conservatives sometimes talk about lawless, i.e., liberal, judges. Let me tell you a story about Judge Robert Clive Jones, who presided over the United States v. Estate of E. Wayne Hage, until the 9th Circuit this week reversed several of his decisions and instructed the Chief Judge to assign the case to a new judge on remand.
Wayne Hage grazed cattle on federal land in Nevada. In 1993, BLM denied his grazing permit renewal application. Hage continued to graze on federal land. The government sued, bringing claims that Hage grazed without a permit and trespassed on federal land. Open and shut, right? The government thought so and brought a summary judgment motion.
Judge Jones denied summary judgment invited the Hages to bring a counterclaim. His view was that, because the Hages had water rights, that gave them an easement to graze on federal land – notwithstanding that that precise question had already been addressed and rejected by the courts. The 9th Circuit easily disposed of the easement argument.
It then turned to the counterclaim invited by Judge Jones. First, the Court noted that the Hages’s counterclaim regarding the denial of the grazing permit renewal was slightly late, since it was a mere 22 years since denial occurred. The 9th circuit then also rejected the notion that the government’s lawsuit itself was “final action” subject to a counterclaim. As the 9th Circuit stated, “[t]here is no support for the district court’s conclusion that the filing of this action could give rise to an APA claim.”
Judge Jones did cite one case in support of his position, but in doing so, he somehow forget to cite that part of the case that contradicted his position.
Finally, the 9th Circuit instructed that the case be sent to a different judge on remand. It turns out that this judge does not hide his unwillingness to provide equal justice to the government. Here’s a sampling of the judge’s statements:
Your insistence upon a trespass violation, unwillful —your arbitrary determination of unwillfulness [sic: willfulness] is undoubtedly going to fail in this court (said to the government before the trial even started).
You have a court that’s very receptive and sympathetic to your claim (said to the Hages).
The government has been all too ready in the history of Nevada to impair otherwise suspected and substantiated rights of landowners.
As the 9th Circuit put it with commendable understatement:
The judge’s statements in this case reflect both pre-judgment of the merits and bias against the federal agencies.
Impeachment? Not going to happen, but I’ll go out on a limb and suggest that a 9th Circuit order barring him from presiding over any case involving the federal government would be perfectly reasonable.
In a very interesting article, Michael Burger of the Sabin Center and his co-authors suggest that, following the Paris climate agreement, § 115 of the Clean Air Act provides authority for EPA to develop economy-wide GHG emissions reduction regulations that would be more comprehensive and efficient than EPA’s current industry-specific approach. And what, you may ask, is § 115? Even the most dedicated “airhead” has probably never worked with it.
Section 115 provides that, where EPA determines that emissions from the US are endangering public health or welfare in a foreign country, it may require SIP revisions sufficient to eliminate the endangerment – but only so long as there is “reciprocity”, i.e., the foreign country:
has given the United States essentially the same rights with respect to the prevention or control of air pollution occurring in that country as is given that country by this section.
I love the idea. An economy-wide regime would be much more efficient. I wish that the argument made sense to me, but it does not.
The authors state that a global treaty could provide reciprocity, but then argue that “less binding commitments, including political commitments, should also suffice.” Thus, they conclude, the “Intended Nationally Determined Contributions”, or INDCs, which are the basis of the Paris Agreement, can provide reciprocity. Can you say “ipse dixit“?
They provide no precedent for this, because, as they acknowledge, § 115 has never been used. EPA started to use it once, and the authors provide two letters from then-Administrator Costle, suggesting that legally binding reciprocity is not required. However, EPA dropped the plan and the two letters were not finally agency action and were never subject to judicial review. Otherwise, the argument simply seems to be that EPA can cloak itself in Chevron deference and that that is the end of the story.
Sorry, I don’t buy it. We’re talking about the law here. I think most judges would interpret the word “reciprocity” in a statute to mean something that is legally-binding; otherwise, it doesn’t mean anything. I don’t think it’s even a close enough question that Chevron deference will get EPA over the finish line.
The illogic of the authors’ argument seems to me to be demonstrated by their own words, when they argue reciprocity can’t mean a legally binding agreement, because that would mean that the foreign nations would be able to go to court to ensure that the US also meets its commitments under the Paris agreement, and the US would never allow that. But that’s precisely the point! Because there is no treaty, and the US would not let other nations try to enforce the US commitments under Paris, we cannot enforce theirs, and there is no reciprocity.
I wish it were otherwise.
When EPA assesses the costs and benefits of environmental regulations, it typically looks at direct health impacts resulting from exposure to pollutants. According to a recent National Bureau of Economic Research working paper by Evan Herrnstadt and Erich Muehlegger, EPA may need to start assessing the costs of another set of pollution impacts – violent crime. In Air Pollution and Criminal Activity: Evidence From Chicago Microdata, Herrnstadt and Muehlegger conclude that exposure to air pollution increases violent crime.
It’s a fascinating article. The simple summary is that Herrnstadt and Muehlegger looked at local crime data in Chicago and compared crime rates upwind and downwind of the major interstates in Chicago. They found that:
The downwind side of interstates experience 2.2 percent more violent crimes than when the wind is blowing in the opposite direction.
That may not seem like a lot, but it adds up to a substantial amount of additional crime. While the authors only did “back-of-the-envelope” estimates of the cost of the additional crime, it certainly seems potentially substantial enough for EPA to consider in its cost-benefit analyses.
The work is fairly intricate and too complicated to explain here. (It’s also been more than 30 years since I performed a regression analysis.) However, they seem to have made some fairly rigorous efforts to control for the obvious important factors. It will be interesting to see if this result is replicated elsewhere. I wouldn’t be surprised if it is.
Next time you are out for a walk on a hot sunny summer day and you are feeling annoyed and short-tempered, consider that it may not just be the heat (or the humidity), it may also be the pollution.
It is well-known that the “economic benefit of noncompliance” is one of the factors to be evaluated in setting penalties under the Clean Water Act. Thus, it is not surprising that, after an oil spill at Citgo’s facility in Lake Charles, Louisiana, the 5th Circuit Court of Appeals was unhappy when the District Court “did not quantify the economic gain to Citgo, finding it virtually impossible to do so given the evidence.” The 5th Circuit directed the District Court to “consider its analysis of the [penalty] factors afresh after making a reasonable approximately of economic benefit.”
Determining the economic benefit of noncompliance can be difficult in these types of cases. A court must create a hypothetical new history, determining what would have been sufficient to prevent the spill, as well as figuring out what those actions would have cost at the time. However, it’s certainly no more difficult than many other decisions judges must make in the course of their days on the bench. If there’s any lesson for practitioners here, it’s got to be to put on a clear and comprehensive case and make it as easy as possible for the judge to accept your analysis.
The more interesting part of the case may be that, on remand, the judge accepted EPA’s estimate of the economic benefit to Citgo of noncompliance — $91.7 million. The District Court also concluded that Citgo had been grossly negligent, although it was pretty much told to do so by the 5th Circuit, which stated that:
In our view, though, almost winning a highly risky gamble with the environment does not much affect the egregiousness of having been gambling in the first place.
Nonetheless, notwithstanding an economic benefit of noncompliance $91.7 million and a finding of gross negligence, the Court imposed a penalty of $81 million. In other words, based on the Court’s own findings, Citgo made an economically rational choice by not complying with the Clean Water Act.
It will be interesting to see what message the regulated community ultimately takes from the case.
There has been a lot of scholarly discussion in recent years about the importance of putting a price on natural resources. The pricing issue has been particularly in the limelight in connection with the drought in the western United States. Indeed, it seems fairly self-evident that, if we give away a scarce resource, people will consume too much of it.
I suppose, then, that we should not be surprised that we have already been one-upped on this issue by the Chinese. According to Tuesday’s New York Times, diners at a restaurant in Zhangjiagang, near Shanghai, have to pay a fee for the right to breath clean air.
Of course, the pricing mechanism seems flawed, since the diners are paying a fixed cost, rather than the marginal cost, but markets have to start somewhere!