EPA Eliminates “But For” Causation From the Exceptional Events Rule: Tort Professors Everywhere Get Excited

On Monday, EPA promulgated amendments to its “Exceptional Events” Rule.  The rule is important, particularly in the Western states, and most particularly in connection with EPA’s latest iteration of the ozone NAAQS.  EPA’s most significant revision was to eliminate the requirement that state air agencies demonstrate that, “but for” the exceptional event, the state or relevant area would have complied with the applicable NAAQS.  The change is important for two reasons.  First, on the merits, EPA noted that:

the “but for” criterion has often been interpreted as implying the need for a strict quantitative analysis to show a single value … of the estimated air quality impact from the event. As a result, some air agencies began using burdensome approaches to provide quantitative analyses in their exceptional events demonstrations to show that the event in question was a “but for” cause of a NAAQS exceedance or violation in the sense that without the event, the exceedance or violation would not have occurred. In many cases, the “but for” role of a single source or event is difficult to determine with certainty and it is more often the case that the impact of emissions from events and other sources cannot be separately quantified and distinguished.

I think that EPA got this exactly right.  As tort professors have always known, how a burden of proof is allocated is often outcome-determinative.

Which brings me to the second reason why the change is important – at least to me.  Just hearing the words “but for” causation triggers an uncontrollable wave of nostalgia.  In 1996, my client, New England Telephone, was keetenroberternesttnawarded summary judgment in a CERCLA contribution case.  It was then the first – and may still be the only – case in which a defendant who admittedly sent hazardous substances to a site was awarded summary judgment on the ground that its wastes had not caused the incurrence of any response costs.

I like to think that NET prevailed due to the fine lawyering of its counsel, but I have always known in my heart of hearts that the identity of the judge may have had something to do with the result.  The case was heard by Robert Keeton, distinguished judge, Harvard Law professor and – importantly – one of the authors of Prosser and Keeton on Torts.

At the summary judgment hearing, Judge Keeton did not want to hear from me, even though it was my motion.  He did not really even want to hear from the plaintiffs’ counsel.  Instead, he launched into an approximately 30-minute lecture on the role of causation in tort law, including, of course, a discussion of “but for” causation.  When he finished the discussion from Prosser and Keeton about the so-called “Minnesota fire cases”, Judge Keeton paused, looked up, smiled broadly, and said:  “I wrote that part.”

It was the best summary judgment argument I ever gave.  I never said a word.

Governor Baker’s Executive Order on Change: Good News; Still Work To Be Done By MassDEP

Last Friday, Governor Baker issued Executive Order 569, “Establishing an Integrated Climate Change Strategy for the Commonwealth.”  tide-surgeEO 569 will advance climate policy in Massachusetts in a number of important ways.  It also leaves much to be accomplished by MassDEP.  Here are the highlights:

  • EOEEA and MassDOT are instructed to work with other New England and Northeastern states to develop regional policies to reduce GHG emissions from the transportation sector.
  • EOEEA and the Department of Public Safety must jointly develop a Climate Adaptation Plan within two years. The Plan will focus on what state agencies and municipalities need to do to adapt to climate change.
  • EOEEA and DPS must also develop a framework for state agencies and municipalities to assess their vulnerability to climate change.
  • MassDEP must promulgate regulations by August 11, 2017 to satisfy the Global Warming Solutions Act mandate, as interpreted by the SJC in the recent Kain decision, that would accomplish declining annual emissions from GHG sources. In doing so, MassDEP must consider:
    • Leaks from the natural gas distribution system
    • Changes to GHG permitting requirements
    • Reductions in transportation emissions, including the Commonwealth’s vehicle fleet
    • Gas insulated switchgear.

All of this is good.  Two elements of the EO are particularly noteworthy.  First, because Governor Baker was acting through Executive Order, the state Climate Plan does not do what the legislation passed by the Senate, but rejected by the House, during the last legislative session would have done – require that any future permits be conditioned on compliance with the Climate Plan.  One can hear the development community breathing a big sigh of relief.  Second, EO kicks a very large can down the road – though perhaps not as far down the road as MassDEP might have liked.  MassDEP has less than 11 months to draft, propose, take comment on, and finalize regulations to comply with Kain.

The requirement that MassDEP propose GWSA is particularly important to the regulated community.  The focus on leaks from the natural gas distribution system is shrewd.  Recent legislation had required utilities to identify such leaks, but was largely toothless on remedy.  Having DEP promulgate regulations is low-hanging fruit that will please pretty much everyone other than the utilities.  The requirement that MassDEP look at GHG reductions in the transportation sector is also important, but it bears emphasis that the EO focuses in particular on the Commonwealth’s vehicle fleet.  This may well be a recognition of the difficulty in promulgating regulations that would set declining annual limits on GHG emissions from private transportation.

All that’s left is to wish MassDEP a hearty “good luck”! in meeting the deadline in the EO.

Back to the Fracking Drawing Board for BLM? Fracking’s Risks Are Too Obvious to Ignore

Last week, Judge Michael Fitzgerald granted summary judgment to the plaintiffs in a citizen suit alleging that BLM’s usdoiblmEnvironmental Impact Statement prepared to address whether to open certain lands in California to mineral development was inadequate.  Judge Fitzgerald concluded that the EIS pretty much completely failed to address the potential risks of fracking and that, as a result, the EIS did not comply with NEPA.

Aside from three isolated and passing references to fracking in the RMP/FEIS, the 1,073-page document makes no mention of fracking at all, let alone a meaningful discussion to inform decisionmakers and the public of the attendant environmental concerns unique to fracking.

BLM made two arguments in response.  First, it asserted that there were other references “in the record as a whole.”  Judge Fitzgerald rejected this argument, because there was no evidence that BLM had met its obligation to “consider and analyze” the data – Judge Fitgerald’s emphasis.

BLM also argued that there was it was premature to analyze fracking impacts prior to any actual leasing decisions, because that analysis would necessarily be site- and project-specific.  Judge Fitzgerald’s rejection of this argument is the most important part of the decision, because this issue is commonplace in these types of decisions and will recur in other contexts, including those, such as offshore wind permitting, where the ultimate projects are generally considered much more environment-friendly than fracking.

Judge Fitzgerald first noted that there is no expectation that the EIS at this stage would provide a site- or project-specific level of analysis.  Instead, he stated:

[T]he purpose of an [EIS] is to evaluate the possibilities in light of current and contemplated plans and to produce an informed estimate of the environmental consequences …. Drafting an [EIS] necessarily involves some degree of forecasting.” (emphasis in original)). Uncertainty about which specific parcels and wells will employ fracking in the future does not obviate the necessity to evaluate the cumulative environmental consequences to the Bureau’s decision to open or maintain over one million acres of federal land in central California to oil and gas activities.

Fair enough, but the question still remains how much analysis is required at such a preliminary stage and how much deference the agency should have in answering that question.  As I noted in my post earlier this week regarding DOE’s and DOI’s National Offshore Wind Strategy, offshore wind isn’t going to flourish until developers have gained confidence that there is a reliable and well-defined regulatory process that will avoid 10 or 15 years of litigation.

Here’s hoping.

DOE and DOI Release the New National Offshore Wind Strategy: Perhaps Prosperity Is Finally Just Around the Corner

Last Friday, DOE and DOI issued an update of their National Offshore Wind Strategyoffshore-windIt’s a moderately aggressive strategy, seeking to deploy at least 86 gigawatts of offshore wind by 2050.  The report highlights both the significant opportunities and potential for growth and also some of the remaining potential roadblocks.

On the plus side:

  • The combination of fossil retirements and demand growth provide significant incentive for offshore wind development.
  • On a related point, the substitution of offshore wind for fossil generation, as a result of increased regulation, will have significant environmental benefits. Based on the government’s current estimate of the social cost of carbon, increased offshore wind generation could produce $50B in avoided costs.
  • Offshore wind could be cost competitive, at least in more expensive markets, by 2025.
  • In the longer term, offshore wind could reduce wholesale electricity prices. It can also help decrease transmission.

What are the remaining obstacles?  That’s a pretty simple summary.

  • Costs and technology risks are still too high.
  • Regulatory processes need to be standardized and confidence has to grow in a robust, yet bounded, regulatory process. As the report states:

Offshore wind developers, financiers, and power purchasers need confidence in a project’s ability to navigate regulatory and environmental compliance requirements in a predictable way.

In other words, no more Cape Wind debacles.  If developers think that they will be subject to a death by a thousand cuts – or even a few dozen law suits – it’s going to be a long time before offshore wind contributes any significant share of our generation supply.

 

A Lumber Mill Biomass CoGen Need Not Consider Other Fuels In Its BACT Analysis. Other Sources Should Be So Lucky.

Ever since EPA began considering how BACT analysis would be applied to greenhouse gas emissions, there has been concern that EPA would use its BACT authority to “redefine the source” – with the particular concern that BACT for a coal plant would now be to burn natural gas instead.  In Helping Hands Tools v. EPA, the 9th Circuit Court of Appeals this week gave some protection to biomass plants biomassfrom such redefinition of the source.  However, other types of facilities will get no comfort from the decision.

Helping Hands Tools involved a challenge to a PSD permit issued to Sierra Pacific for a cogeneration plant to be located at one of its existing lumber mills.  Under EPA’s BACT Guidance, Sierra Pacific stated that the purpose of the CoGen plant was to use wood waste from the mill and nearby facilities to generate electricity and heat. Relying in part on the 7th Circuit decision in Sierra Club v. EPA, which held that it would impermissibly redefine the source to require a mine-mouth coal generating plant to consider different fuels in its BACT analysis, the 9th Circuit found that EPA was reasonable in determining that, because a fundamental purpose of the CoGen plant was to burn wood waste, it would impermissibly redefine the source to require Sierra Pacific to consider solar power as part of its BACT analysis.

Importantly, the Court also rejected the plaintiffs’ request that Sierra Pacific consider greater use of natural gas.  The Court concluded that very limited use of natural gas for the purposes of startup, shutdown, and flame stabilization did not undermine the fundamental purpose to burn wood waste.  This is critical to source-located biomass facilities, because EPA’s GHG Permitting Guidance specifically says that greater use of an existing fuel should be considered in the BACT analysis:

unless it can be demonstrated that such an option would disrupt the applicant’s basic business purpose for the proposed facility.

Unfortunately, the language of the decision appears to me to give EPA substantial leeway in future BACT analyses to redefine the source in other cases.  It seems to me that, building on the 7th Circuit decision, the Court has simply created an exception to potential source redefinition in circumstances where the location of the facility justifies a very narrow fuel selection.  If a coal plant intends to burn coal from the mine next door, ok.  If a lumber mill intends to burn its own wood waste, ok.  Otherwise, however, all bets are off.

What is particularly troubling was the Court’s acknowledgement that the GHG BACT guidance is vague, and its deference to EPA’s application of its own vague guidance.  This is precisely the concern I noted when the Guidance was first issued.  Time will tell, but I foresee some fairly extreme BACT determinations being blessed by some very deferential courts.

I Hate Home Rule

Massachusetts is a Home Rule state (Commonwealth, actually, but that’s a separate issue).  Our 351 cities and towns can pretty much legislate as they please, so long as the local action is not preempted.  Our state Wetlands Protection Act specifically allows municipalities to enact their own wetlands bylaws.  The result?

Today, our Appeals Court rejected an appeal from a property owner, and instead affirmed the Wayland Conservation Commission’s conclusion that the owner’s property contains wetlands as defined under the Wayland bylaw, even though the property is apparently missing one key indicator of the presence of wetlands under federal and state wetlands regulations, i.e., hydric soils.  hydric-upland-soil-comparison

Because the Court deferred to the Commission’s interpretation of the bylaw and given also the deference bestowed by the courts on agency factual conclusions, I cannot complain that the decision was flawed.  I can, however, still ask why we need 351 different wetland bylaws.  Or why non-hydric soils with a lot of red maple and sheet flow several times a year warrant more protection in Wayland than in other locations.

Or why, if municipalities are creatures of the state (or Commonwealth!), they should be given so much independent legislative authority.  At least those on the states’ rights side of Federalism debates can point to the fact that states existed prior to adoption of the federal Constitution. Municipalities are different, however.  As the Supreme Court stated:

Municipal corporations are political subdivisions of the state, created as convenient agencies for exercise such of the governmental powers of the State as may be intrusted to them.

I suggest that we entrust (or intrust, as I guess we did in 1907) the exercise of too much regulatory authority to our municipalities.

Citizen Suits Remain a Potent Weapon

Although citizen groups have suffered some defeats in Clean Air Act cases in the NSR/PSD context recently, a decision last week in a different kind of CAA case is a reminder of just how powerful a weapon citizen suits can be, and just how difficult they can be to defend, even when the operator appears to have a good working relationship with the regulator.  In NRDC v. Illinois Power Resources, Judge Joe Billy McDade, awarded summary judgment to NRDC (and other plaintiffs) on the vast majority of the plaintiffs’ claims concerning the Illinois Power Resources Generating E.D. Edwards Power Plant.ED Edwards Although the decision relies in significant part on Illinois law, several issues are of more general interest.

  • The decision puts an exclamation point on the uphill battle defendants face in challenging citizen plaintiffs’ standing.  Once the Court noted that an “’identifiable trifle’ will be sufficient to establish injury-in-fact,” it was clear where the standing issue was headed.
  • The Court also made clear that affirmative defenses are likely to be narrowly construed.  Here, there were numerous occasions when the facility exceeded its opacity limit, which also presumptively results in particulate matter emissions violations.  The facility thought it had a defense based on the ability to show that it was in fact in compliance with its PM limits (which would also rebut the opacity violation allegations).  However, the Court required strict compliance with the terms of the defense in the IEPA regulations – and found that the facility did not strictly comply.
  • The Court rejected the facility’s “malfunction and breakdown” defense, for largely the same reason – failure to strictly comply with the requirements in its permit and the IEPA regulations.  In particular, the facility did not comply with the permit requirement to notify IEPA by telephone asap.  The facility argued that it had a “side-agreement” with IEPA that required it to report only opacity exceedances lasting more than 30 minutes.  The Court made short work of this argument:

Defendants’ attempt to rewrite the text of the Permit through informal agreement must be rejected.

If there’s one lesson from this case – other than not to spend money on attorneys’ fees to fight citizen standing – it’s this:  DON’T RELY ON SIDE-AGREEMENTS WITH REGULATORS.  It’s difficult enough to block citizen suits based on formal agreements with regulators.  Side-agreements are never going to do the trick.  I’ll go further.  It’s nearly impossible to estop the government, so you can’t even count on the side-agreement to prevent government enforcement.

The Arbitrary and Capricious Standard Remains Deferential: The Corps’ Nationwide Permit 21 Survives Review

Late last week, the 11th Circuit Court of Appeals rejected challenges to the Army Corps’ Nationwide Permit 21, which allows small surface mining projects to proceed without individual permits under § 404.  black-warrior-river

The plaintiffs argued that NWP 21 was arbitrary and capricious because the Corps imposed numeric limitations on new projects – and described those limitations as “necessary” to prevent more than minimal environmental harm – but did not impose those same numeric limitations on existing projects. For existing projects, however, NWP requires that the district engineer certify that activities under the permit “will result in minimal individual and cumulative adverse effects….”

I don’t think that the arbitrary and capricious standard was even necessary to affirm the Corps here.  As long as the Corps gets any discretion at all, the Court made the right call.  While it is true that NWP imposes numerical limits on new mines not applicable to existing mines, there are two good reasons for doing so.  First, because NWP 21 requires district engineer certification for existing projects, the grandfathering provision really becomes a kind of simplified individual permit.  District engineer review is not required for new mines, where the numerical criteria effectively substitute for individual review.  Moreover, as the Court noted, there is data on the environmental impacts of the existing mines, which the district engineer can review prior to providing the required certification under NWP 21.

The Corps made a perfectly reasonable call in distinguishing between new and existing surface mining projects.  The Court correctly deferred to the Corps’ approach.

The Social Cost of Carbon Passes Its First Judicial Test

Earlier this week, the 7th Circuit affirmed the Department of Energy’s new energy efficiency requirements for commercial refrigeration equipment.  This is a big deal in its own right, simply because the numbers are really large – according to DOE, the rule will save 2.89 quadrillion BTUs over the lifetime of equipment purchased under the rule.  It’s a reminder that energy efficiency remains a key to reducing carbon emissions.

Aside from the bottom line, the case is notable for two reasons, one fascinating to administrative lawyers and the other to climate policy wonks.  First up, the administrative lawyers.

As with my post from last week, the case is largely a 68-page recital of Chevron deference.  Unlike the D.C. Circuit’s affirmance of the Boiler MACT rule, the 7th Circuit only mentioned Chevron five times, but the case is all about deference to agency decisions that are not arbitrary and capricious.  One element of the deference here is noteworthy.  Plaintiffs challenged DOE’s engineering analysis, on the ground that DOE had not adequately validated its model against real-world data.  The Court rejected the challenge, stating that:

“That a model is limited or imperfect is not, in itself, a reason to remand agency decisions based upon it.”  Rather, we will remand only if the model “bears no rational relationship to the reality it purports to represent” or if the agency fails to provide a full analytical defense” when the model is challenged.

I think that most scientists would say that that is a pretty generous standard!

For the climate policy wonks, the big news is that the Court blessed DOE’s use of the administration’s determination of the “Social Cost of Carbon” scc-tablein determining the environmental benefits of the rule.  First, the Court concluded that DOE had authority to consider the SCC in formulating the rule.  Since DOE’s statutory authority requires it to consider “the need for national energy … conservation,” it was not a reach for the Court to agree with DOE that the potential environmental benefits of the rule are appropriately part of the calculus in determining the need for energy conservation.

The plaintiff also challenged DOE’s calculation of the SCC.  The Court pretty much rejected the claim out of hand, finding that DOE’s seemingly barebones response to comments was sufficient, and noting that DOE had referenced in its response various comments that had also supported DOE’s SCC values.

It’s not much to go on, but given the certainty of additional litigation involving the SCC, I’m sure that DOE – and EPA and environmentalists – are pleased to have survived this first hurdle.

A Foolish Consistency Is the Hobgoblin of Little Minds: So Said Emerson, So Says EPA

On Wednesday, EPA issued a final rule amending its “Regional Consistency Regulations.”  The new rule provides that EPA will only follow adverse judicial decisions in the areas of the country where such judicial decisions are applicable.  Emerson1859

Previously, EPA’s Clean Air Act regulations specifically required EPA to “assure fair and uniform application [of the CAA]  by all Regional Offices.” As I previously discussed, this regulation came back to haunt EPA in National Development Association’s Clean Air Project v. EPA, when the Court said that, while EPA might otherwise be free to engage in what is known as “intercircuit nonaquiescence”, EPA is bound by its own regulations, so that, at least under the CAA, it is required to follow adverse judicial decisions nationally, in order to maintain regional consistency.

I actually think EPA got this one right.  The law does not otherwise require EPA to follow an adverse 7th Circuit judicial decision outside the 7th Circuit.  Why should it voluntarily choose to do so?  Moreover, what if, after an adverse decision in one circuit, another circuit rules in favor of EPA?  How should it maintain consistency in such circumstances?

The regional consistency rule also seems relevant in light of the recent decision rejecting EPA’s disapproval of the Texas regional haze SIP.  EPA argued that the case should be heard in the D.C. Circuit, because it was of “national scope.”  The 5th Circuit disagreed.  It now turns out that EPA may have won by losing.  If the Texas SIP had been reviewed by the D.C. Circuit because it had nationwide scope, EPA would have been required to follow the Court’s ruling nationwide.  Under the new rule (assuming that it applies to decisions issued before the rule is finalized!), EPA may ignore the Texas SIP decision outside the 5th Circuit.

Massachusetts Legislature Enacts Significant Energy Bill in Support of Offshore Wind and Hydro Procurement, Storage and Transmission

windmill-181286_960_720559474_45240941

Late last night, the Massachusetts legislature enacted House Bill 4568, an act to promote energy diversity (the “Act”). Overall, the Act marks a compromise between the House’s original procurement-only legislation and the Senate’s more comprehensive “omnibus” bill. It is expected Massachusetts Governor Charlie Baker will sign the legislation shortly. After that, regulations will be required to be implemented and other regulatory actions will need to be taken by Massachusetts’ Department of Public Utilities, the Department of Energy Resources, the electric distribution companies and other agencies.

Here are some of the highlights of the Act and selected differences compared to the House and Senate’s prior standalone bills:

  • Offshore Wind: Distribution companies must jointly conduct competitive solicitations for the procurement of and enter into suitable long term contracts (with terms of between 15 and 20 years) for a nameplate capacity of approximately 1,600 MW by June 30, 2027 from eligible offshore wind power projects.
    • The Act splits the difference between the Senate’s offshore wind requirement of approximately 2,000 MW and the House’s vision for no less than 1,200MW.
    • The Act retains the House bill’s requirement that offshore wind facilities operate in a designated wind energy area under a federal lease, but added a requirement that such a lease must have been entered into as a result of a competitive process after January 1, 2012.
    • A first solicitation must occur not later than June 30, 2017; each solicitation must be for a minimum of 400 MW and each subsequent solicitation must occur within 24 months of the previous solicitation.
  • Hydro and Class I Renewables: Distribution companies must jointly conduct competitive solicitations and enter into suitable contracts for the procurement of 9,450,000 MWH of “clean energy generation” by December 31, 2022 from hydroelectric and new RPS eligible Class I renewable generation.
    • The Act largely blends the House and Senate definitions of “clean energy generation,” which is defined to permit participation by firm hydroelectric generation alone, Class I RPS eligible resources on their own, or Class I RPS eligible resources firmed with hydro.
    • The Act adopts the House’s lower MHW level for clean energy generation on a longer time frame compared to the Senate’s initial proposal for 12,450,000 MWH by December 31, 2018.
    • At least an initial solicitation under a staggered procurement schedule must occur prior to April 1, 2017.
  • Utility Remuneration: In the compromise, the legislature will provide an opportunity for distribution companies to receive “remuneration” of up to 2.75 percent of the annual payments under long term contracts for offshore wind energy and clean energy generation.

In addition to its headline procurement provisions, the Act implements other significant changes favoring energy storage projects, transmission, small scale hydroelectric generation, property-assessed clean energy bonds for commercial buildings (C-PACE), as well as utility ownership of transmission and energy storage assets, including the following:

  • Energy Storage: The Act includes significant provisions for energy storage.
    • Distribution companies will be permitted to own energy storage systems.
    • DPU regulations implementing the competitive procurement programs are required to allow offshore wind energy generation resources and clean energy generation “to be paired with energy storage systems.”
    • DOER is tasked with determining whether to establish targets for the procurement of energy storage resources by distribution companies.
    • DOER would determine the need for such a program prior to December 31, 2016 and would be required to adopt such targets by July 1, 2017.
    • Initial procurement targets would need to be met by January 1, 2020 and would be reevaluated not less than once every three years.
  • Transmission Costs: The Act adopts the Senate bill’s directive that the Department of Public Utilities (DPU) promulgate regulations requiring transmission costs to be included into bid proposals with the possibility of such costs being recovered under federal rates. The House’s version had merely permitted inclusion of such costs.
  • Small Hydro: Small hydro projects (with a nameplate capacity of 2 MW or less) will be permitted to participate in the state’s net metering program and to receive remuneration based on the “default” service rate under a “small hydro tariff.”
    • No more than 60MW of nameplate capacity may participate in the small hydro tariff under net metering for small hydro.
  • C-PACE: The Act adopts the House bill’s authorization for the Massachusetts Development Finance Agency (aka Mass Development) to implement a commercial property-assessed clean energy (C-PACE) financing mechanism and to issue PACE bonds.
    • The program will be open to any commercial or industrial property owned by any person other than a municipality or other governmental entity that meets applicable guidelines.

Several other provisions in the Senate bill were dropped or modified in the final Act:

  • The Act does not include a program from the Senate bill under which DOER would have been required to adopt an energy rating system for residential dwellings in which a home’s rating, along with its energy audit reports, would be disclosed prior to a sale.
  • The Act removes the Senate bill’s proposed doubling from one to two percent of the amount of renewable energy utilities must purchase under the RPS for compliance years after 2016.
  • The Act does not include the Senate bill’s proposals for creation of energy efficiency and renewable energy finance task forces or a requirement for DOER’s study of grid modernization.

Chevron Deference Lives! EPA’s Boiler Rule (Mostly) Survives Review

On Friday, the D.C. Circuit largely upheld EPA’s Boiler MACT rule.  boiler-mactThe industry challenges were a complete washout.  The environmental petitioners won one significant victory and a number of smaller ones.

The environmental petitioners’ one significant victory is important.  EPA included within relevant subcategories any source that burns a fuel containing at least 10% of the “subcategory-defining fuel.”  However, for defining MACT, EPA included only those sources that burn fuel containing at 90% of the subcategory-defining fuel for existing sources, and 100% for new sources.  The Court rejected this approach.

The CAA, however, demands that source subcategories take the bitter with the sweet. Section 7412 mandates, without ambiguity, that the EPA set the MACT floor at the level achieved by the best performing source, or the average of the best performing sources, in a subcategory. It thus follows that if the EPA includes a source in a subcategory, it must take into account that source’s emissions levels in setting the MACT floor.

Which brings me to my big take-away from this decision.  Chevron lives.  By my count, The Court cited Chevron 30 times.  Chevron pervades the decision.  Even in the one big issue that EPA lost, the Court’s decision was based not on a rejection of EPA’s interpretation of an ambiguous provision under step 2 of Chevron, but on a plain meaning interpretation of § 112.  EPA defined what a source is, but it then refused to calculate MACT based upon the performance of all of the sources in a given subcategory.  The statute simply did not allow EPA that leeway.

Other than EPA’s attempt to avoid taking “the bitter with the sweet”, however, the Court’s deference – by three Republican appointees – to EPA’s technical decisions was notable.  Not every case is the Clean Power Plan.  Where EPA is not really pushing the boundaries, I don’t see the Supreme Court weakening Chevron any time soon.

No Deference to State Settlements Under CERCLA? No Problem!

I will confess that I do enjoy being correct.  In 2014, the 9th Circuit Court of Appeals refused to defer to a state agency determination of the procedural and substantive fairness of a CERCLA consent decree.  procedural-fairness (1)Various parties and commentators promptly began, if I may say so, to run around like chickens with their heads cut off.  However, I remained calm.  I stated then:

I’m assuming that, on remand, the district court will engage in the required review and again approve the settlements.

On July 13, the District Court on remand did exactly that.  In a concise opinion, Judge Jorgenson ran through the established criteria used to establish procedural and substantive fairness and – properly – blessed the settlements.

The original 9th Circuit decision did no more than ensure that district courts would not rubber stamp state consent decrees under CERCLA.  This is a good outcome, one which did not impose any unreasonable burden either on state agencies or district courts.

Forecast is Hazy For EPA’s Regional Haze Oversight Authority

Earlier this month, the 5th Circuit Court of Appeals stayed EPA’s disapproval of the Texas and Oklahoma regional haze state implementation plans, as well as EPA’s promulgation of its own federal implementation plan.  The opinion is a thorough rejection of EPA’s decision.  Although this was only a stay order, I would rate EPA’s likelihood of ultimately prevailing on the merits as approximately zero.  There are a number of significant take-aways from the decision:

  • EPA’s assessment of regional haze SIPs is not generally of “nationwide scope or effect” and therefore will be subject to review in the court of appeals responsible for the state at issue, rather than in the D.C. Circuit.
  • EPA did not have authority to require Texas to “conduct a source-specific analysis.”
  • EPA could not impose emissions controls that would not even take effect until outside the time period covered by the SIPs at issue.  As the Court noted, the Regional Haze Rule itself requires states to:

consider . . . the emission reduction measures needed to achieve [the reasonable progress goal] for the period covered by the implementation plan

  • EPA failed to address adequately the reliability concerns raised by the plaintiffs.  Here, it is noteworthy that the Court refused to grant EPA any real deference, because EPA is an expert on environmental issues, but not on energy reliability.

I was disappointed that the Court concluded it did not have to address whether EPA’s decision to set a cost threshold on a $/ton basis rather than a $/deciview basis was flawed.  As I have previously ranted, the point of the regional haze rule is to increase visibility.  We have a measure of visibility – deciviews.  What possible justification is there for EPA to measure cost-effectiveness by using a proxy — $/ton of pollutant removed – when there is no need to use a proxy, because we have a measure of the actual goal we are seeking to attain?Sir_Henry_Raeburn_-_Portrait_of_Sir_Walter_Scott

There’s actually an answer to this question, which I had not realized until I read the decision.  It may be cynical, but it appears that EPA wants to use $/ton removed, because those tons removed help EPA attain other environmental benefits that are ancillary to the Regional Haze Rule goals, thus making the cost-effectiveness calculus look much more attractive.

Oh, what a tangled web we weave

When first we practice to deceive!

Three Strikes and Mingo Logan Is Out: The D.C. Circuit Affirms EPA Withdrawal of Approval of Mountaintop Removal Disposal Sites

In 2013, the D.C. Circuit affirmed EPA’s authority to withdrawal approval of mountaintop mining disposal sites, even after the Army Corps has issued a Section 404 permit.  In 2014, the District Court rejected Mingo Logan’s challenge to EPA decision on the merits, finding that EPA’s withdrawal was not arbitrary and capricious.  Finally, early this week, the D.C. Circuit affirmed the District Court, holding that EPA had adequately justified withdrawal in this case, concerning Mingo Logan’s Spruce Number 1 mine.  spruce mine

The primary focus of Mingo Logan’s challenge was that EPA had failed to consider the costs that Mingo Logan had incurred in reliance on permit issuance and, in particular, had failed to balance those costs against the harm EPA alleged would result from the fill activities.  The Court explicitly did not decide whether such cost considerations might ever be relevant.  Instead, it rejected Mingo Logan’s claim as forfeited, because Mingo Logan’s comments on the withdrawal proposal, its complaint challenging the withdrawal, and its briefs to the District Court in support of its challenge all failed to raise the cost balancing issue.  While Judge Kavanaugh dissented, I think that the Court plainly got this one right.

Mingo Logan’s second line of argument was that EPA may not reject a fill site based on water quality impacts downstream of the fill location, where the state has issued an NPDES permit under § 402 of the CWA.  The Court concluded that EPA did not “intrude on West Virginia’s authority to regulate water quality.”  Instead, EPA assessed whether discharging fill would produce “unacceptable adverse effect[s]” on wildlife.

Mingo Logan also argued that, once a permit is issued, EPA faces a heightened burdened to demonstrate that the disposal sites are unacceptable, and that EPA failed to meet that burden.  The Court did not explicitly address how high a burden EPA faces in these situations, because it concluded that EPA’s explanation was sufficient, regardless of the burden.  In particular, EPA noted that EPA did rely on new information obtained since the permit was issued, included information from the operation itself.

Game, set and match.

FWIW, it’s not obvious to me why a court would conclude that EPA must take reliance costs into account when it considers post-permit withdrawal.  The statute simply says EPA may withdraw a specification for a site:

whenever [the EPA Administrator] determines, after notice and opportunity for public hearings, that the discharge of such materials into such area [specified for disposal] will have an unacceptable adverse effect on municipal water supplies, shellfish beds and fishery areas (including spawning and breeding areas), wildlife, or recreational areas.

That does not look to me like the type of language Congress has traditionally used when requiring EPA to consider costs.

Finally, the court acknowledged that having disposal sites withdrawn after a permit has issued:

will perhaps inevitably leave a permittee feeling as if the rug has been pulled out from under it.

However, as the Court noted, “this power is one the Congress has authorized the EPA to exercise….”