More Than (You Thought) You Ever Wanted To Know About Waters Of The United States

Over the past few months, I worked with a number of colleagues from the American College of Environmental Lawyers to provide the Environmental Council of the States with a balanced review of the history and background of how the term “waters of the United States” rapanos-cartoonhas been defined and interpreted under the Clean Water Act. In announcing the release of the memorandum, Dick Pedersen, President of ECOS, thanked “those members of ACOEL who spent significant time and effort developing this comprehensive memorandum.”

To which I can only add, that’s for darn sure. There is a reason this stuff is so controversial. It’s really difficult to develop a comprehensive and neutral explanation of the sometimes inscrutable judicial opinions in this area. I was honored to work with a truly distinguished group of lawyers to develop the memorandum. It really is everything you ever wanted to know about WOTUS. Enjoy.

Some PURPA Qualifying Facilities are More Qualified Than Others

In a fascinating decision last week, a divided panel of the 5th Circuit Court of Appeals held that the Texas Public Utilities Commission had authority to limit the universe of “Qualifying Facilities” under the Public Utilities Regulatory Policies Act which can choose to enter into a “legally enforceable obligation” requiring a utilities to purchase power from a renewable energy producer. The decision could be a big problem for wind power facilities in jurisdictions less than fully hospitable to renewable energy.

FERC’s rules implementing PURPA provide in part that:

Each qualifying facility shall have the option either:

(1) To provide energy as the qualifying facility determines such energy to be available for such purchases, in which case the rates for such purchases shall be based on the purchasing utility’s avoided costs calculated at the time of delivery; or
(2) To provide energy or capacity pursuant to a legally enforceable obligation for the delivery of energy or capacity over a specified term.

The Texas PUC, however, issued a rule stating that only Qualifying Facilities which could provide “firm power” were entitled to enter into a “legally enforceable obligation.” The majority concluded that nothing in the FERC rules precluded Texas from promulgating its limiting regulation. The dissent, not surprisingly, noted that the regulation provides that “each qualifying facility” is eligible to enter into such obligations. As the dissent also noted, the use of the word “each” in a context such as this, generally means “every.”

It is important to note that the Texas PUC did not take the position that wind facilities per se cannot supply “firm power.” However, the reality is that an obligation to do so makes it much more difficult for wind facilities to utilize the “legally enforceable obligation” option that PURPA appears to provide qualifying facilities.

I don’t foresee en banc review here and Supreme Court review would be a reach, since the case turns so much on the specifics of the Texas PUC approach, but I think that the dissent’s plain language interpretation of the FERC rule might appeal to the Supremes if they were ever to have an opportunity to review it.

Be Careful With Pollution Insurance Coverage Disclosures – How Conditions Actually Disclosed Were Deemed Not Disclosed

A Massachusetts company learned the hard way that you need to pay close attention to policy endorsements when you negotiate them. In Market Forge Industries, Inc. v. Indian Harbor Insurance Company, the Appeals Court of Massachusetts held, in an unpublished decision, that a Pollution and Remediation Legal Liability Policy did not cover the costs of cleaning up certain pollution because the “Pollution Conditions” were not specifically listed in the “Known Conditions” endorsement. This despite the fact that the policy was intended to cover known pollution conditions and the policyholder had… More

EPA Proposes to Eliminate Affirmative Defenses for Excess Emissions During Startups, Shutdowns, or Malfunctions — Get Ready for Some Citizen Suits

This past April, the D.C. Circuit struck down the part of EPA’s cement kiln rule that would have provided an affirmative defense to civil penalties for excess emissions resulting from unavoidable malfunctions. As we noted at the time, that decision clearly had implications beyond the cement kiln rule.

Those implications were made more concrete this week when EPA issued a supplemental notice of proposed rulemaking in which it proposed to rescind its policy allowing affirmative defenses to penalties for excess emissions during startup, shutdown, or malfunction events. Moreover, EPA proposes to reject SSM affirmative defenses in existing SIPs.

EPA’s rationale is pretty straightforward:

The EPA acknowledges that its SSM Policy since the 1999 SSM Guidance has interpreted the CAA in such a way that states could in effect alter the jurisdiction of federal courts to assess monetary penalties under certain conditions through creation of affirmative defenses. In other words, even though Congress explicitly empowered federal courts to assess monetary penalties for a CAA violation, an affirmative defense could, contrary to the statute, limit the ability of a court to do so. The EPA believes that the court’s decision in NRDC v. EPA compels the Agency to reevaluate its interpretation of the CAA and its proposed action on the Petition concerning affirmative defense provisions in SIPs.

Although there has already been criticism that EPA went farther than NRDC v. EPA requires, and that EPA could have preserved some affirmative defenses, I don’t see EPA significantly changing this proposal when it goes final, and I’d certainly expect the new interpretation to survive judicial review.

EPA’s proposal states that, as a result of the new interpretation:

some sources may be required by the state to, or may have strong business reasons to, modify their physical equipment or operating practices. These changes could be aimed at improving the effectiveness of the emission control systems when operating as designed during startup and shutdown, increasing the durability of components to reduce the occurrence of malfunctions, and/or improving monitoring systems to detect and manage malfunctions promptly.

Ya think?


NPDES Permits Are Construed Narrowly Against the Permittee

In July, we noted that the Clean Water Act’s permit shield defense would be construed narrowly, applying only where a permittee had clearly disclosed that the relevant pollutant to the agency.  This week, in Alaska Community Action on Toxics v. Aurora Energy Services, the 9th Circuit Court of Appeals treated the stormwater general permit in a similar manner, rejecting the defendants’ arguments that periodic discharges of coal from their coal-loading facility SewardCoalFacilitywere authorized under the stormwater general permit.

To the Court, this was a straightforward, plain meaning interpretation of a regulation (general permits are considered rulemaking):

In Part, the General Permit states: “You must eliminate nonstormwater discharges not authorized by an NPDES permit. See Part 1.2.3 for a list of non-stormwater discharges authorized by this permit.” The referenced section (which is actually Part 1.1.3) lists eleven categories of non-stormwater discharge which are “the non-stormwater discharges authorized under this permit.” None of these categories cover defendants’ coal discharge.

The permittees pointed to sections of the general permit that were “superfluous” if the quoted section truly barred all stormwater discharges not listed in Part 1.1.3. However, while the Court recognized this superfluity, it concluded that “our analysis here is controlled by the plain text of Part, which prohibits defendants’ discharges.”

The Court also noted that a separate permit shield analysis yields the same result. Since the permit shield only applies where the permittee “complies with the permit’s express terms,” no shield is available.

As has always been the case, the permit shield is valuable, but narrow.

Economic Development Is Not an Unqualified Environmental Evil (In Case You Didn’t Know)

I do not want to suggest that most environmentalists are Luddites or that the environmental movement is opposed to economic development. Indeed, hardly a speech is made today that does not tout the economic benefits of environmental protection. Less focus is given, however, to the environmental benefits of economic development.

I therefore thought it worth noting that, according to a recent study published in Environmental Science and Technology, more than 40% of trash disposal world-wide is accomplished through open-air burning. open-air burningIt should be no surprise that the greatest emissions from open-air burning come from developing countries, including China, India, Brazil, Mexico, Pakistan, and Turkey. The flip side, of course, is that wealthier countries can afford the regulatory systems that prevent such open-air burning and consequent emissions.

‘Nuf said.

How Low Will They Go? A Lower Ozone NAAQS Begins to Have An Air of Inevitability

On Friday, EPA released its “Policy Assessment for the Review of the Ozone Ozone_Molecule_FormulaNational Ambient Air Quality Standards.” EPA staff concluded:

that it is appropriate in this review to consider a revised primary O3 standard level within the range of 70 ppb to 60 ppb. A standard set within this range would result in important improvements in public protection, compared to the current standard, and could reasonably be judged to provide an appropriate degree of public health protection.

As staff noted, the Clean Air Science Advisory Committee made the same recommendation. I therefore think it’s game over for the current standard. Whatever the politics surrounding the ozone NAAQS, I just don’t think that a decision by EPA to retain the current standard would survive judicial review.

The real question, then, is how low EPA will actually go. Both CASAC and staff hedged their bets by recommending a range of 70 ppb to 60 ppb. Basically, a standard of 70 ppb would appear to provide a “margin of safety” for all impacts other than “the lowest exposure concentration demonstrated to result in lung function decrements and pulmonary inflammation (i.e., 60 ppb).”

It’s worth noting that, if Gina McCarthy wants to use lung function decrements as the basis for the NAAQS, even 60 ppb may not be enough, because it provides no margin of safety. Thus, if I were forced to bet, I’d predict a new NAAQS at 70 ppb. I don’t think it will save EPA from criticism on the right, but it’s a reasonable balancing act.

Yes, Virginia, It Is Possible To Win A Fee Award Against An Environmental NGO

Last week, Judge Walter Smith, Jr., ordered the Sierra Club to pay more than six million dollars – yes, you read that correctly – to Energy Future Holdings and Luminant Generation, after finding that the Sierra Club’s Clean Air Act citizen suit against them concerning the Big Brown big-brown-coal-plant(great name for a coal-fired facility!) plant was “frivolous, unreasonable, or groundless.”

The Sierra Club had avoided a motion to dismiss, which in the long run was a disaster, because the defendants incurred millions of dollars in discovery and expert witness fees. What were the key factors leading to the fee award?

• Sierra Club could not make out a prima facie case of a particulate matter emissions violation

• Sierra Club knew that the Big Brown permit exempted it from PM deviations during maintenance, startup, or shutdown

• Sierra Club had one standing witness, who could not demonstrate any causation or injury.

• Sierra Club refuse to dismiss Energy Future Holdings from the case, even though it knew that EFH had no role in the ownership or operations of Big Brown.

• The Texas Commission on Environmental Quality found no violations at Big Brown. I doubt if, on its own, that would provide a basis for a fee award against an NGO. After all, the point of the citizen suit provisions is to allow citizens to supplement agency enforcement. However, Sierra Club apparently admitted that it did not analyze or investigate the TCEQ reports.

Ultimately, the court gave the defendants 100% of their fees, other than denying a conditional request for appellate fees. Notably, the Court agreed that the CAA is complex and requires expert counsel, thus justifying use of counsel outside the “home market.”

In Texas, at least, NGOs appear to face some risk if they act on the assumption that, because they are saving the world, they can do no wrong.

What Triggers Excess Coverage In An Environmental Case: Not Necessarily the Payment of the Full Underlying Policy Limits

More and more excess insurers are taking the position that a policyholder which settles with primary or low level excess insurers for less than the full amount of the policy limits has waived its right to obtain coverage from any of the high level excess insurers.   A Texas appellate court recently rejected this position in Plantation Pipe Line Company v. Highlands Insurance Company in Receivership.  There, the policyholder had expended over $18 million to clean up a contaminated site in North Carolina.  Because the policyholder had settled with the lower level insurers and recovered less than the full $8 million in… More

CERCLA’s Three Year Statute of Limitations for Contribution Applies To Non-CERCLA Settlements

Parties which settle environmental liability in a judicially approved settlement have three years from the date of that settlement in which to seek contribution even if the settlement is not a CERCLA settlement.  That is the holding in a recent federal case in Montana, ASARCO LLC v. Atlantic Richfield Company.  There, ASARCO had entered into a 1998 consent decree under RCRA and the Clean Water Act to remediate a contaminated site that for over a century had been used as a lead smelting facility.  In 2005 ASARCO filed for bankruptcy and in 2009 entered into a new settlement, this time said to… More

EPA Refuses to Amend Its Backup Generator Rule: Demand Response Breathes Easier

Last Friday, EPA published notice that it would not be revising its regulations on backup generators in response to three petitions for reconsideration it had received after it promulgated its final rule in January 2013. The rule had sparked controversy, because EPA allowed backup generators to operate for up to 100 hours a year, though EPA did require use of ultra-low sulfur diesel fuel beginning in January 2015.

There were three major issues in the petitions. EPA’s responses addressed them as follows:

• The timing of the requirement to utilize ULSD. EPA rejected arguments that ULSD is already sufficiently available to require its use immediately.

• The timing and required information for reporting with respect to emergency engines. EPA rejected the request to move up the reporting, finding that it would be unduly burdensome.

• Criteria for operation in non-emergency situations. EPA rejected arguments that its criteria for allowing such operation were “too indistinct and expansive.”

As we had previously noted, EPA had a difficult balancing act here. It has clearly concluded that, with use of ULSD, backup engines provide sufficient benefit in assisting demand response – the very purpose of which is to reduce emissions by substituting reduced demand for increased supply – to warrant allowing increased use of these otherwise less efficient engines.

You Can’t Estop the Government — Even When It Wants to Be Estopped

Last week, 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.

law is an ass

EPA Publishes Final 316(b) Rule: Flexibility for Generators Means Litigation By Environmental Groups

Last Friday, EPA finally published its § 316(b) rule in the Federal Register. As we noted in May, the rule is more significant for what it does not do – require closed cycle cooling – than for what it does.  impinged_herring_732

Indeed, the rule provides a lot of flexibility for generators. It allows several different options for compliance with the impingement requirements. The entrainment requirements, which apply to facilities using 125 million gallons of water per day, will be based on site-specific analyses.

Of course, this very flexibility has… More

Importance of Judicial Approval of CERCLA Settlements

Before a Superfund settlement becomes enforceable, it must be reviewed by a federal court to confirm that it is fair, reasonable, and consistent with CERCLA’s objectives.  This judicial review is at the heart of CERCLA’s settlement process.  Since Superfund settlements provide broad protection to settling parties, judicial approval provides the necessary and exclusive procedural mechanism  to vouchsafe that a proposed settlement is in the interest of the public as well as all  other parties.

Two recent appellate decisions underscore the central role of judicial review in Superfund settlements.   In ASARCO, LLC v. Union Pacific Railroad Company, the Eighth Circuit ruled that the owner of a contaminated site which… More

It’s Really Difficult to Site a Highway in a Refuge

In an important decision last week, the 4th Circuit Court of Appeals made clear just how high the hurdles are in the way of building highways in wildlife refuges. The decision in Defenders of Wildlife v. North Carolina DOT sent the Federal Highway Administration and the North Carolina DOT back to the drawing board in their efforts to find a solution to transportation problems on Hatteras Island.  bonner-4

After a multi-year planning process that reviewed multiple options, FHWA and NCDOT together decided on a plan to replace the Bonner Bridge, which… More