The North Slope Is Really, Really, Getting Warmer. Drill, Baby, Drill

The Washington Post reported this week that Utqiagvik, Alaska (formerly known as Barrow), has gotten so warm, so fast, that NOAA’s computers can’t even believe it.  The data for Utqiagvik (that’s hard to type!) were so high that the computers determined it must be anomalous and pulled all of the data from Utqiagvik from the NOAA monthly climate report.  Only when scientists realized that Utqiagvik was completely missing from the report did they notice what had happened.

How hot does it have to get to get bounced by the computer?  How about average October temperatures 7.8 degrees warmer than in 2000?  Average November temperatures 6.9 degrees warmer than in 2000?  Likely culprit?  Melting sea ice means that less sunlight is reflected.  That’s one nasty negative feedback loop.

In the meantime, as I noted in October, Alaska Governor Bill Walker has concluded that Alaska needs more oil drilling (can you say “Open ANWR” three times fast?) in order to pay for climate change mitigation.  It’s apparent that Governor Walker has not read Faust.

Governor Walker, this one’s for you.

EPA Will NOT Second-Guess Generators’ Projections of Future Emissions Under the NSR Program

I’ve noted numerous times that the NSR program is incomprehensible gibberish.  These are scientific and objective comments.  The most recent example of this is the DTE litigation, in which a one-judge minority somehow ended up writing the opinion of the 6th Circuit Court of Appeals, allowing EPA enforcement claims against DTE Energy to continue.

The question in DTE Energy is whether EPA can second-guess a generator’s pre-construction prediction of future actual emissions and bring a claim for an NSR violation – even where post-project actual emissions did not show a significant net increase in emissions.  While the 6th Circuit said no second-guessing, it then allowed EPA to – you guessed it – second-guess DTE Energy’s projections.  (Does your head hurt yet?)

Now Scott Pruitt has leapt into the fray.  Last week, he issued a memorandum stating that:

When a source owner or operator performs a pre-project NSR applicability analysis in accordance with the calculation procedures in the regulations, and follows the applicable recordkeeping and notification requirements in the regulations, that owner or operator has met the pre-project source obligations of the regulations, unless there is clear error (e.g. the source applies the wrong significance threshold).  The EPA does not intend to substitute its judgement for that of the owner or operator by “second guessing” the owner or operator’s emissions projections.

So far, so good.  Of course, with this administration, it should not be a surprise that, even when they do something right, they get it wrong.  In classic regulation by guidance fashion, the Pruitt memorandum has a major caveat:

This document is not a rule or regulation, and the guidance it contains may not apply to a particular situation based upon the individual facts and circumstances.  This memorandum does not change or substitute for any law, regulation or other legally binding requirement and is not legally enforceable.  This memorandum is not final agency action, but merely clarifies the EPA’s current understanding regarding certain elements of the NSR regulations.

I’m sorry, but isn’t this just another example of making regulatory changes by guidance and pretending it isn’t so in order to avoid judicial review?  It’s precisely what this administration has said its against.  EPA’s interpretation of the NSR rule, until December 7, 2017, was that it had the right to second guess generators’ pre-construction projections of post-construction actual emissions.  Now, EPA is saying that it won’t do that.  This seems a fairly significant shift in policy to me.

EPA clearly does not want anyone second guessing its decision to second guess its policy on second guessing.

Attacking Invasive Species Requires Serious Measures — A Judicial Opinion with Beatles Annotations

Everyone knows what a problem invasive species can be.  Difficult problems require difficult solutions.  In a recent case decided by the 1st Circuit Court of Appeals, the scope of the government’s authority to address one invasive species – the Asian Longhorned Beetle – was made clear.

On the merits, the case was relatively simple.  In order to combat the ALB, the USDA removed numerous trees from plaintiff’s property without permission.  The Court concluded that the discretionary function exception to liability under the Federal Tort Claims Act barred plaintiff’s claims, holding that the USDA had no non-discretionary duty to seek a landowner’s consent prior to removing the trees.

The decision is particularly noteworthy for the opinion by Judge Bruce Selya – known for his occasionally whimsical approach to opinion-writing – in which each section is given the title of a Beatles’ song.  This seemed the least I could do in homage.

Norwegian Wood (It’s all about the wood)  

Come Together (Massachusetts DCR and USDA come together to fight the ALB)  

Here Comes the Sun (Plaintiff’s claim arises (bit of stretch, I’ll admit))  

The Long and Winding Road (The history of the claim) 

Her Majesty (The essentials of sovereign immunity)  

Tell Me Why (Why the FTCA claim fails)

Let It Be (The 1st Circuit lets the decision below stand)  

Climate risk? Credit risk! Moody’s Warns State and Local Governments

Earlier this week, Moody’s Investors Service announced issuance of a report (payment required) warning that:

the effects of climate change, including climbing global temperatures, and rising sea levels, are forecast to have an increasing economic impact on US state and local issuers. This will be a growing negative credit factor for issuers without sufficient adaptation and mitigation strategies.

In other words, if you are an issuer of state or local bonds in an area likely to be impacted by climate trends, and particularly if you are likely to be subject to “climate shocks” that “have sharp, immediate and observable impacts on an issuer’s infrastructure, economy and revenue base, and environment,” be prepared for a downgrade, unless you can demonstrate that you have taken appropriate actions to mitigate those impacts – even if the impacts may not occur until “a number of years in the future.”

Many cities and states are now moving aggressively to adapt to climate change.  Others, to date, have not been doing so.  Perhaps the threat of a downgrade might jump start adaptation among those who have thus far been laggards.

Texas Now Has More Wind Than Coal Capacity. So Far, Trump Has Not Saved Coal.

The Houston Chronicle reported yesterday that electric generation capacity from wind now exceeds that of coal in Texas.  That’s not even counting Vistra’s recent announcement that it intends to close three coal-fired plants.  

To those who might point out that wind is intermittent and it thus has lower capacity factors, the same Chronicle story reports at least one expert prediction that wind generation will exceed that of coal by 2019.

So far, President Trump has not succeeded in propping up coal.  No wonder Secretary Perry is trying to persuade FERC to do so.  What happened to not picking winners and losers?

In any case, the story is a welcome excuse to publicize one of my favorite haunting Jimmie Dale Gilmore songs (and, yes, I know it’s really a Joe Ely song.)

Significant Nexus Lives! (For Now, In the 9th Circuit)

On Monday, the 9th Circuit affirmed the conviction of a Joseph Robertson, Montana man who:

discharged dredged and fill material into the surrounding wetlands and an adjacent tributary, which flows to Cataract Creek. Cataract Creek is a tributary of the Boulder River, which in turn is a tributary of the Jefferson River—a traditionally navigable water of the United States.

This somewhat attenuated connection to a “traditionally navigable water” put the case in the crosshairs of those seeking to narrow the definition of “Waters of the United States.”  Robertson appealed on two grounds relevant to this larger debate.  First, he argued that there was no jurisdiction, because the wetlands were not WOTUS.  Second, claimed that he lacked fair warning of the scope of jurisdiction.

On the jurisdictional issue, the 9th Circuit had previously adopted, in Northern California River Watch v. City of Healdsburg, Justice Kennedy’s “significant nexus” test from his concurrence in Rapanos.  The Court here therefore spent more time analyzing the complex rules for how to determine what the “holding” is in a Supreme Court decision without a majority opinion.  Those fascinated by this topic can read more in the American College of Environmental Lawyer’s White Paper on the WOTUS issue.  Suffice it to say here that the 9th Circuit found no reason to upset its precedent adopting the “significant nexus” test.

As to the notice issue, important to the criminal conviction, but not relevant to the broader jurisdictional issues, the Court found that Robertson was on notice that he was working in Waters of the United States, because the 9th Circuit had decided City Of Healdsburg before Robertson began work on his property.  The Court might also have noted that Robertson was warned by EPA agents that his activities required permits under the CWA.  Sounds like fair warning to me.

The decision breaks no new ground, either in the 9th Circuit or elsewhere, but given the attention on the WOTUS jurisdictional issue, it’s worth noting that the 9th Circuit is still backing Justice Kennedy.  The real question at this point is whether Justice Kennedy still backs Justice Kennedy!

AG Sessions Speaks. No More Guidance. Make It So.

Last week, Attorney General Sessions sent a memorandum prohibiting the use of guidance in place of notice and comment rulemaking “when purporting to create rights or obligations binding on members of the public or the agency.”  Who can doubt that Scott Pruitt is jealously thinking that he should have been the first on this one?

The debate between guidance and regulation has long been a concern of mine, and I am generally supportive of the views expressed by the AG in the memorandum.  When a guidance document “reads like a ukase,” to quote from one of my favorite cases concerning the guidance/regulation debate, and when an agency implements guidance documents as though they are regulations, then something has gone seriously wrong.

However, the Sessions memo is a curious document, and its oddity goes to the heart of the dilemma in opposing guidance documents that function as regulations.  The memorandum has five bullet points intended to ensure that regulations no longer masquerade as guidance documents.  The problem?  Every single administration, Republican and Democratic, since the modern administrative state began in the New Deal, could say that it already complied with all of the Sessions memo requirements.

The problem with guidance documents isn’t how they’re drafted; it’s how they’re implemented.  No matter how much the AG wishes it weren’t so, street-level bureaucrats are always going to retain a lot of discretion in implementing the policies and programs for which they are responsible.  If they decide that it’s easier just to require compliance with a guidance document than to interpret it flexibly as was no doubt intended by those who wrote it, then it’s going to function as a regulation in the real world.

What can be done to avoid this outcome?  It would require senior managers making clear that they are not going to support their underlings when they take the easy way out and just tell the regulated community to comply with the guidance.  Perhaps the AG – and EPA – need to create a position called something like the “Guidance Ombudsman” (or woman), where members of the regulated community could take concerns about the implementation of guidance without fear of retribution.

Make it so.

Opposing NPDES Delegation to Massachusetts Is So 20th Century

On Tuesday, the Boston Globe joined most local environmental organizations in opposing delegation of the NPDES program to Massachusetts.  How wrong is this?  Let me count the ways.

  1. Donald Trump
  1. Even recognizing, as the Globe points out, that presidential administrations are only four years, does anyone seriously expect the federal EPA budget to be anything other than massively underfunded for the foreseeable future?
  1. The Globe says that the current arrangement, while “unusual,” has “worked.” Methinks that the Globe editorial staff has been taking too much advantage of marijuana legalization in Massachusetts.  Did they bother to ask – or did any of the environmental organizations bother to tell them – how long it currently takes EPA to renew NPDES permits in Massachusetts?  For permits of any complexity, delays of more than ten years are not uncommon.  The Globe’s definition of a program that works is different than mine.
  1. The Globe did not mention that MA is one of only three states – the other two being New Hampshire and Idaho – that don’t have NPDES delegation. This is the company we want to keep?  Blue states such as the entire west coast and the mid-Atlantic states manage to operate NPDES programs without kowtowing to polluters.  Why can’t we?
  1. The Globe’s editorial closes with the argument that turning

oversight of river pollution to the state brings polluters one step closer to their regulators, and that would be a mistake.

To which I can only say, how clueless can the Globe get?  The reason to support delegation is not that it’s a good idea in spite of “bringing polluters closer to regulators,” but precisely because it would bring polluters closer to regulators!  That’s why it’s a good idea.

I had thought that we were past the point in Massachusetts of casting the regulated community as the devil and the regulators as the angels.  Regulatory programs work best when the regulators and the polluters do know each other, and get to understand each other’s problems, and can work together for positive-sum results.  That’s why environmentalists should support NPDES delegation.

Opposition to delegation is simply an embarrassment.

Coming Soon to a Northeast or Mid-Atlantic State Near You: Regulations on Carbon Emissions From Transportation

Yesterday, eight states in the Transportation Climate Initiative issued a joint statement pledging to pursue regional solutions to GHG emissions from transportation.  The statement does not identify any specific policy options; instead it simply announced that they are “initiating a public conversation about these opportunities and challenges.”

Even if the statement doesn’t say so, what everyone is hearing from this announcement is simply this:  RGGI for transportation.

To give one an idea of the momentum that is finally building in support of regulation of transportation sector GHG emissions, one need look no further than the recent letter sent jointly by the New England Power Generators Association (our client), the NRDC, the Sierra Club, the Union of Concerned Scientists (also our client!), and the Acadia Center to four New England governors, requesting that they

develop and participate in a regional, market-based policy to address greenhouse gas emissions from the transportation sector.

If the letter seems at first blush to involve strange bedfellows, think again.  From NEPGA’s perspective, its members are reasonably sick and tired of being the only target of GHG emissions regulations – particularly given that electric generation now represents less than ½ the GHG emissions from transportation.  From the perspective of the environmental groups, they know that it will be literally impossible to meet targets of 80% reductions in GHG emissions by 2050 without very substantial reductions in emissions from transportation.

For too long, states focused on electric generation emissions to the exclusion of transportation for one reason only.  Transportation will be difficult.  Difficult is no longer an excuse.

It’s about time.

When Is a Discharge to Groundwater Subject to the Clean Water Act? Can You Say “Significant Nexus”?

Whether the Clean Water Act regulates discharges to groundwater has been a topic of significant debate.  At this point, there seems to be something of a trend in the cases towards concluding it does, but it remains true that all of the courts of appeal that have addressed the issue have concluded that it does not.  As I have noted, the problem with the “yes” answer is that pretty much all groundwater eventually discharges to surface water, making all such discharges subject to the CWA.  How can that be, given that groundwater is not considered to be “waters of the United States?”

Chief Judge Waverly Crenshaw recently addressed the issue in Tennessee Clean Water Network v. TVA.  Judge Crenshaw’s solution was creative – meaning he pretty much made it up out of whole cloth.  That doesn’t necessarily mean that it’s wrong, however.

The case involves coal ash management at the TVA’s Gallatin plant.  Some of the – unlined – ponds directly abut the Cumberland River.  The plaintiff citizen groups brought claims under the CWA, alleging that TVA was discharging pollutants to the River – via groundwater – without an NPDES permit.  They requested an injunction requiring that the TVA remove the coal ash from the ponds, at a cost of $2 billion.

Judge Crenshaw was frustrated by an absolutist position on either side.  Clearly, he does not think that any link between groundwater and surface water, no matter how attenuated, can be enough for jurisdiction to attach.  On the other hand, he was also trying to reckon with the specific case in front of him.  As he saw it, the Gallatin ash ponds were a complete environmental mess.  They immediately abut the Cumberland River, clearly a water of the United States.  Can the outcome really be different if the ponds discharge directly to the River than if they discharge to groundwater 10 feet from the River, where that groundwater then discharges to the river?

His solution?

the Court concludes that a cause of action based on an unauthorized point source discharge may be brought under the CWA based on discharges through groundwater, if the hydrologic connection between the source of the pollutants and navigable waters is direct, immediate, and can generally be traced.

I confess I like this solution, because it is practical and will generally yield reasonable results.  It avoids either effectively regulating all groundwater under the CWA or having to conclude that the CWA can’t reach situations such as the Gallatin ash ponds.

The problem?

There’s no textual support for this solution in the CWA.  To me, this test sounds a lot like Justice Kennedy’s “significant nexus” in Rapanos.  There too, his position received a lot of support at a practical level, while many commentators noticed that the CWA says nothing about a “significant nexus.”

We all know how well that’s worked out.

If the Apocalypse Approaches, But the Administration Ignores It, Will It Make a Sound?

Last week, the government released the Climate Science Special Report, the first volume of the Fourth National Climate Assessment.  It makes grim reading – or perhaps more accurately, grim reaper – reading.  Here’s what we might call the executive summary of the Executive Summary.  First, the bottom line:

This assessment concludes, based on extensive evidence, that it is extremely likely that human activities, especially emissions of greenhouse gases, are the dominant cause of the observed warming since the mid-20th century. For the warming over the last century, there is no convincing alternative explanation supported by the extent of the observational evidence.

In addition to warming, many other aspects of global climate are changing, primarily in response to human activities. Thousands of studies conducted by researchers around the world have documented changes in surface, atmospheric, and oceanic temperatures; melting glaciers; diminishing snow cover; shrinking sea ice; rising sea levels; ocean acidification; and increasing atmospheric water vapor.

And the highlights (or lowlights):

Global annually averaged surface air temperature has increased by about 1.8°F (1.0°C) over the last 115 years (1901–2016). This period is now the warmest in the history of modern civilization. 

global average sea level has risen by about 7–8 inches since 1900, with almost half (about 3 inches) of that rise occurring since 1993.

Heavy rainfall is increasing in intensity and frequency across the United States and globally.  

Heatwaves have become more frequent in the United States since the 1960s.

The incidence of large forest fires in the western United States and Alaska has increased since the early 1980s.

Since this recitation has something of the ten plagues about it, at this point, I’ll say “Dayenu!”

It’s certainly more than enough for me, but what about this administration?  I’m not going to begin to speculate on how the administration will go about ignoring the Report, though I’m confident that it will.  I’ll only add that, at the very least, this report makes abandonment of the endangerment finding by EPA even more infeasible than it already was.  When the government itself says that it is extremely likely that release of GHGs is the dominant cause of warming, it would seem to be the definition of arbitrary and capricious were the government somehow still to conclude that the endangerment finding should be withdrawn.

Of course, this is an administration that has already abandoned years of GOP support for cost-benefit analysis in favor of cost-only analysis, so nothing would really surprise me at this point.

Massachusetts Department of Public Utilities Investigates Issues Relating to Net Metering, Energy Storage, and Forward Capacity Market Participation

On October 3, 2017, the Massachusetts Department of Public Utilities (“DPU”) opened a new docket (D.P.U. 17-146) to investigate two issues: whether energy storage systems paired with net metering facilities are eligible for net metering and what should be done to clarify the rights of net metering facilities to participate in the Forward Capacity Market (“FCM”).

These issues have been percolating for years.  In fact, D.P.U. 17-146 follows directly from prior dockets in which the DPU avoided addressing these policy issues.

  • In June of 2015, SolarCity filed a petition for an advisory ruling on whether a project that combined solar generation and energy storage was eligible to net meter as a Class II net metering facility.  SolarCity resolved the issue underlying its petition outside of the DPU process and withdrew its petition before further proceedings took place. However, National Grid filed comments noting the importance of investigating the issue and urging DPU action.
  • In its recent rate case, National Grid initially proposed ratemaking treatment for the costs and proceeds associated with bidding the capacity of net metering facilities into the FCM.  However, the issue was not addressed because, in February of 2016, the DPU severed National Grid’s proposal from the rate case and reserved it for a future proceeding.
  • In July of 2016, Genbright petitioned the DPU for a declaratory order regarding net metering facilities’ rights to participate in the FCM and for clarification on the applicability of net metering regulations to energy storage projects.  Last month, the DPU suspended its review of that petition in order to open this new docket.
  • In May of this year, Tesla filed a petition for declaratory relief and an advisory ruling with respect to the eligibility of energy storage and solar facilities to net meter where (1) the solar net metering facility has a capacity of less than 60kW, (2) the battery storage charges only from the solar net metering facility, and (3) the battery storage does not export power to the grid.  The DPU issued a narrow advisory ruling, applicable to Tesla only, that such facilities “should be eligible to net meter,” but reserved broader policy issues for this new docket.

For now, the DPU is just seeking comments.  Comments on issues relating to the eligibility of energy storage systems to net meter are due on November 17, 2017, and comments on net metering facilities and the FCM are due on February 1, 2018.

Don’t underestimate this docket.  It reflects a frequent reality in clean energy policy: regulatory frameworks change more slowly than technology.  As the deployment of energy storage with renewable generation becomes more common, and as greater interest develops in accessing the FCM value associated with net metered systems, regulatory frameworks will need to adapt.  The comments received in this docket are likely to set the stage for future policy actions, and policymakers’ early decisions on these issues could have long-lasting consequences.

Sometimes Guidance Actually Provides Guidance

As regular readers know, the tension between guidance and regulation is one of my favorite topics.  My view is that, in general, guidance is too often used simply to avoid notice and comment rulemaking and that, once issued, it is treated by those implementing it in the agency street-level bureaucracy as though it were a rule.  Nonetheless, guidance is sometimes appropriate.  The recent decision in Sierra Club v. EPA is one of those cases.

In 2010, EPA issued guidance on how it would review particulate matter emissions resulting from transportation projects to ensure that the projects conform with state implementation plans for attaining compliance with the NAAQS for PM.  When EPA revised the guidance in 2015, the Sierra Club sued.

The decision is in two parts.  First, the Court ruled that the Sierra Club did not have standing to challenge the guidance with respect to PM2.5, because it had not shown that it would be harmed by implementation of the guidance with respect to PM2.5  The part of the decision that interests me, though, concerns PM10.  There, the Court concluded that the Sierra Club had standing, but found that issuance of the guidance was not final agency action subject to judicial review.  In other words, it was guidance, and not a rule. 

Why?  The key was simply this:  “On its face and as applied, the 2015 changes to the PM10 methodology are not binding.”

Contrary to petitioners’ assertions, this is not a case in which the guidance document signals that the agency “will not be open to considering approaches other than those prescribed” therein. We said of the guidance at issue in Appalachian Power Co. v. EPA, 208 F.3d 1015 (D.C. Cir. 2000), that “from beginning to end . . . [it] reads like a ukase. It commands, it requires, it orders, it dictates.” Id. at 1023. This is no ukase.

What’s really important is that the Court did not just take EPA’s word or rely on the disclaimer in the guidance.  Instead, it looked to how EPA had implemented the guidance in practice and found that EPA had used it flexibly and invited project sponsors to use methodologies other than those described in the guidance.

Score one for guidance.

It’s the Externalities, Stupid.

Last week, the Lancet Commission on pollution and public health (free registration required) released a study on the annual costs of pollution.  There’s bound to be argument about the specifics, but it’s difficult to argue with the conclusion that those costs are really, really, big.  The study estimates the annual global welfare loss due to pollution at $4 trillion – $6 trillion.  The Lancet says that this is more than 6% of global economic output.  It’s important to note that The Lancet treats “pollution” differently from climate change, so this study does not include losses related to climate change.

It’s also important to note the range of impacts – and some of the progress we’ve made in the developing world.  The study points out that the elimination of lead from gasoline has increased the IQ of American children born since 1980 by 2-5 points.  The economic gain just from this intelligence increase is estimated to be in the trillions of dollars since 1980.

One final point of emphasis:  while others may disagree, The Lancet very firmly takes the position that countries don’t have to get rich before they can address pollution issues.

To me, whether the study’s conclusions are right or not, its approach certainly is.  And it highlights one of the many weirdnesses of the current US administration.  An administration that should care about economics has simply ignored one of economics’ fundamental principles, that negative externalities create social welfare losses.  That’s why, for example, the Administration’s 2-for-1 Executive Order is so wrongheaded.  It pretends that externalities don’t exist and that regulations don’t have any benefits.

We can argue over the amount of benefit and make cases against regulations that cannot survive a rigorous cost-benefit analysis.  We can argue that even regulations whose benefits exceed their costs should also be subject to cost-effectiveness analysis.

But let’s not pretend that externalities don’t exist.  Social welfare losses from pollution may not be $6 trillion annually, but they’re pretty (expletive deleted) substantial.