FERC Remains An Independent Agency

In January, FERC rejected Secretary Perry’s proposal to compensate generators who maintain a 90-day supply of fuel on-site – a proposal widely seen as an attempt to prop up struggling coal and nuclear generators.  Not willing to take no for an answer, the Administration has recently floated the idea of using authority under the Federal Power Act and the Defense Production Act to require power purchases from coal and nuclear plans in order to address the national security emergency apparently resulting from the threatened shutdown of these facilities.

According to a report from E&E News (subscription required), at a Senate hearing yesterday, Senator Martin Heinrich asked all of the FERC commissioners the following question:

Do any of you believe that in the wholesale power markets we’re facing an actual national security emergency?

Commissioner LaFleur stated that she did not.  Senator Heinrich then asked if any of the remaining commissioners would answer yes.  None of them responded.  I’m sure that the silent pause made great political theater.

I am shocked to discover that FERC is not persuaded that national security requires interference in the power markets.

New Senate Bill in Massachusetts Provides Opportunities for Renewable Resources

Yesterday, June 7, 2018, the Massachusetts the Ways and Means Committee released S2545, “An Act to promote a clean energy future.” The far-reaching bill has the potential to provide new opportunities for renewable resources and in so doing, may also affect the competitive markets in the region. Among other things, the bill would:

  • establish new interim greenhouse gas (GHG) reduction limits;
  • require the development of an energy storage system target program;
  • allow for the procurement of an additional 5,000 MW of off-shore wind;
  • potentially allow for additional procurements of clean energy;
  • eliminate net metering caps for solar facilities; and
  • clarify the circumstances under which distribution companies can impose demand charges on new solar customers.

With respect to GHG emissions, the bill calls for a reduction of “between 35 per cent and 45 percent below the 1990 emissions level” by 2030 and a reduction of “between 55 percent and 65 percent” by 2040. To meet these goals, the bill requires the participation of the transportation, commercial and residential sectors under “market-based compliance” means as redefined in the legislation.

The bill also establishes a new energy storage target program that would deliver up to 2,000 MW of energy storage by January 1, 2025. The bill expressly allows for direct ownership of energy storage systems by distribution companies.

Finally, the bill would authorize the solicitation of up to an additional 5,000 MW of off-shore wind under the Section 83C procurement process. In addition, the legislation leaves open the possibility the additional solicitation of an unspecified amount of new clean energy resources in addition to the 9.45 million megawatt hours currently authorized under the 83D procurement process.

The bill will be heard on the floor of the Senate next week. Proposed amendments to the bill are due by 5:00 on Monday, June 11.  In light of the number of interests affected in the energy, transportation, and building sectors, we can expect the debate to be lively.

EPA Must Produce Any Agency Records Supporting Administrator Pruitt’s Statement that Human Activity Is Not the Largest Contributor to Climate Change

Last Friday, EPA was ordered to produce documents, in response to a FOIA request, on which Administrator Pruitt relied in stating on CNBC that: “I would not agree that [carbon dioxide] is a primary contributor to the global warming that we see,” and “there’s a tremendous disagreement about of [sic] the impact” of “human activity on the climate.”

I’ve done a fair number of FOIA requests in my time.  The request here was about as plain and simple – and clear – as it is possible to be.  The extent to which the government contorted the request in order to make it seem impossible to answer did not sit well with the Court.  Here’s the request as modified by the plaintiffs.  They sought:

(1) agency records that Administrator Pruitt relied upon to support his statements in his CNBC interview,” and “(2) any EPA documents, studies, reports, or guidance material that support the conclusion that human activity is not the largest factor driving global climate change.

EPA objected to the request in part on the basis that it was an improper interrogatory that required the EPA to take a position on the climate change debate.  To which the Court stated that “this hyperbolic objection strays far afield from the actual text of both parts of the FOIA request.”

EPA also argued that the request was vague, asking “how is one to even know precisely what documents one relies on forming one’s beliefs.”  Yikes.  And what is the definition of “is,” Mr. Administrator?

I loved the Court’s response.

Particularly troubling is the apparent premise of this agency challenge to the FOIA request, namely: that the evidentiary basis for a policy or factual statement by an agency head, including about the scientific factors contributing to climate change, is inherently unknowable. Such a premise runs directly counter to “an axiom of administrative law that an agency’s explanation of the basis for its decision must include ‘a rational connection between the facts found and the choice made.  EPA’s strained attempt to raise an epistemological smokescreen will not work here to evade its obligations under the FOIA.”

Epistemological smokescreen.  Humph.

Nor was the Court done.  Responding to EPA’s objection to having to take a position on climate change, the Court trenchantly noted that:

EPA’s apparent concern about taking a position on climate change is puzzling since EPA has already taken a public position on the causes of climate change.

The bottom line?  EPA must complete a search for responsive documents by July 2, 2018, promptly disclose responsive documents, and explain any withholding by July 11, 2018.

This is not the first case under this Administration where I’ve thought how blessed I am that I’m not at DOJ and in the position of having to defend the indefensible from EPA.

The Science Advisory Board Appears to Think that Its Job Is Still to Give EPA Independent Advice

I’ve posted a lot over the years about the role of EPA’s Science Advisory Board in judicial review of agency decisions.  The short version is that, on scientific questions, EPA’s going to be on thin ice if its regulatory decisions are inconsistent with SAB advice.  Recently, I’ve speculated on the level of deference that EPA will get on scientific issues if it starts to ignore scientific consensus.  Last week, these two strains began to weave together, as the SAB decided to review of number of EPA proposals, including efforts to relax CAFE standards and EPA’s proposal to restrict the use of “secret science.”   

The decision follows release of a memorandum prepared by an SAB work group recommending full SAB review of several proposals.  The work group review was highly critical of certain of the proposals.  For example, on the so-called “Glider Kit” proposal, the work group memo stated that:

The scientific and technical statements in the proposed rule, and the scope of analyses in the proposed rule, are dubious and highly questionable.

Although EPA claims that the proposed rule hinges on “legal authority,” the proposed rule is clearly predicated on various scientific and technical claims that are of unknown or dubious merit, including a study cited by EPA that has since been withdrawn by its performing organization.

That does seem a mite problematic to me.

I don’t think that environmentalists or those who simply believe in good science should be dancing in the street quite yet, but it is evidence that the SAB, even following removal of a number of members and installation of new members thought to be friendly to the administration’s agenda, remains at least somewhat independent of agency leadership.  I do think that EPA is going to have great difficulty in defending these rules if the SAB ultimately finds that they are not scientifically sound.

Massachusetts Selects Vineyard Wind In 83C RFP

The Evaluation Team in Massachusetts’ Section 83C Offshore Wind Generation request for proposals (“RFP”) for long term contracts for offshore wind has announced that our client Vineyard Wind was named the winning bidder in the RFP for an offshore wind project to be built off the coast of Martha’s Vineyard.  The project will include approximately 800 megawatts of offshore wind energy generation as well as a generator lead line connection. … More

Has the Horse Already Left the Barn? FERC Tries to Limit Review of Climate Impacts

Last week, FERC rejected arguments that the Environmental Assessment for the New Market Project should have considered upstream and downstream climate impacts.  It also announced as policy that it would not in the future analyze:

the upstream production and downstream use[s] of natural gas [that] are not cumulative or indirect impacts of the proposed pipeline project, and consequently are outside the scope of our NEPA analysis.

The decision was made in the shadow of Sierra Club v. FERC, in which the D.C. Circuit required such analyses with respect to the Sabal Trail pipeline.  FERC distinguished Sierra Club v. FERC on the grounds that the New Market Project involves only compressor stations, both the suppliers and end users of the gas are unknown, and any climate impacts are too speculative.  The decision states that:

providing a broad analysis based on generalized assumptions rather than reasonably specific information does not meaningfully inform the Commission’s project-specific review.

Commissioners LaFleur and Glick both dissented, arguing that the decision was inconsistent with Sierra Club v. FERC.  Commissioner Glick had this to say:

Adding capacity has the potential to “spur demand” and, for that reason, an agency conducting a NEPA review must, at the very least, examine the effects that an expansion of pipeline capacity might have on production and consumption.  Indeed, if a proposed pipeline neither increases the supply of natural gas available to consumers nor decreases the price that those consumers would pay, it is hard to imagine why that pipeline would be “needed” in the first place.

To which I can only say, touché.

What the FERC decision and the dissents really illustrate is that one person’s “reasonably foreseeable” is another person’s “speculation.”  This issue is not going to go away.

Just How Arbitrary Does EPA Have to Be to Be Arbitrary and Capricious?

Last Friday, the D.C. Circuit Court of Appeals vacated EPA’s rule adding the West Vermont Drinking Water Contamination Site to the National Priorities List, finding EPA’s decision to be arbitrary and capricious and not supported by substantial evidence.  As the opinion makes clear, EPA has to work pretty hard to lose these cases.

Why did EPA lose?

The critical issue was whether the overburden and bedrock aquifers beneath the site were directly connected.  EPA said that they were.  However, the petitioners pointed to cross-sections in the record that showed a confining layer existed between the bedrock and overburden aquifers.  More importantly, the record showed that EPA did not even attempt to explain why the cross-sections did not undermine its determination.  That’s a no-no.  As the Court noted:

It was arbitrary and capricious for EPA to rely on portions of studies in the record that support its position, while ignoring cross sections in those studies that do not. … Although EPA ‘is not required to discuss every item of fact or opinion included in the submissions it receives in response to a Notice of Proposed Rulemaking, it must respond to those comments which, if true, would require a change in the proposed rule.’

Counsel from DOJ tried to repair the damage in the litigation, to which the Court replied that:

These arguments come too late. We may only uphold a rule “on the basis articulated by the agency” in the rule making record.

Lesson for EPA?  Don’t ignore comments in the record – and don’t count on your lawyers to fill in the gaps.

Lesson for potential petitioners?  Make sure that the record looks as good as possible – and focus like a laser beam on EPA failures to respond to your evidence.

And who knew that there was a band called The Substantial Evidence?

Lake Erie and the Limits Of Cooperative Federalism in the Age of Trump

Last month, a decision in a case involving the Lake Erie toxic algae blooms demonstrated some “issues” concerning the nature of cooperative federalism.  Such blooms have been a problem for some time and pretty much everyone knows about the 2014 bloom, which left Toledo without water for several days.

Notwithstanding what pretty much everyone who can read or watch the news already knew, Ohio EPA refused to “assemble and evaluate all existing and readily available water quality-related data and information” concerning Lake Erie.  To make a long story short, Ohio EPA provided information about shoreline issues only and refused to provided information about open waters.  Why not?

Ohio EPA believed that assessment and listing of the open waters under the CWA should be led by the U.S. EPA in consultation with the states.

Indeed, after some back and forth with EPA, Ohio EPA dismissed the idea that it should “develop its own standards as ‘absurd.’”

Although it’s fair to say that the Obama EPA did not exactly hold Ohio EPA’s feet to the fire, the situation indeed became “absurd” after the Trump administration took office.  I’ll skip the particulars and simply point out that Judge Carr, summarizing EPA’s defense of the citizens’ suit brought in an attempt to require US EPA to bring Ohio EPA to heel, referred to the “whiff of bad faith” in EPA’s handling of the case.

And what does this all have to do with cooperative federalism?  I previously noted, in the context of a dispute between Texas and EPA over SIP requirements, that cooperative federalism “requires two willing parties.”

But what if the two parties – in this case US EPA and Ohio EPA – are cooperating to ignore the requirements of the statute.  It may be cooperative and it may be a form of federalism, but it’s not exactly consistent with the Clean Water Act that Congress enacted.

At least in red states, I doubt that this is the last whiff of bad faith we’re going to see.

Massachusetts Supreme Judicial Court: Attorney General’s Exxon Investigation Can Proceed

On April 13, 2018, Massachusetts’ highest court ended a significant chapter in Exxon’s long-running dispute with Attorney General Maura Healey. In 2015, Healey issued a Civil Investigative Demand regarding Exxon’s knowledge of the effects of fossil fuels on climate change.  Exxon then undertook what a federal judge in New York last month called “a sprawling litigation involving four different judges, at least three lawsuits, innumerable motions and a huge waste of the [New York and Massachusetts] AGs’ time and money.”  (You can read a full analysis of that decision by my colleague Seth Jaffe here.)  Exxon’s actions in Massachusetts’ courts have been mercifully compact, involving only one hearing in Superior Court and one hearing at the SJC (which had taken the appeal directly on its own motion).  The outcome is unsurprising, but the SJC’s opinion is worth analyzing as a loud and clear statement to would-be challengers of CIDs: they face a daunting task.

Massachusetts’ long arm statute allows out-of-state entities to be brought into court if they have sufficient ties to the state.  Exxon alleged its ties were insufficient, citing a franchise agreement with roughly three-hundred Exxon-branded gas stations in Massachusetts but no direct business in the Commonwealth.  The SJC, citing Exxon’s ability to control advertising of its products in the franchise agreement, held that Exxon’s contacts were enough, particularly because the AG’s apparent theory of liability rests in part on advertising.  Exxon also argued that the CID was overbroad as to scope and time.  Invoking the AG’s authority to investigate potential violations of the law, the SJC brushed aside these arguments with little discussion.

The SJC also analyzed Exxon’s allegations of AG bias, the centerpiece of Exxon’s case in New York and, prior to the transfer of the case, Texas.  Exxon argued that statements by AG Healey at a March 2016 press conference disqualified the AG as a neutral prosecutor.  The SJC’s rejection of Exxon’s argument, though brief, is important.  “As an elected official,” the SJC wrote, “it is reasonable that she routinely informs her constituents of the nature of her investigation.”  Such “inform[ing]” is not evidence of bias, but rather part of the inherently political prioritization of issues and investigations.  An elected AG must inform prospective voters of her priorities for law enforcement.

Though the beginning of the “sprawling litigation” over the investigation is over, we anticipate that Exxon’s war will continue as the AG proceeds with the investigation in earnest.

Another Ruling that Discharges to Groundwater May Be Subject to the Clean Water Act

Last week, the 4th Circuit Court of Appeals – not the most liberal court in the land – joined the 9th Circuit in ruling that discharges from a point source to groundwater can be subject to the Clean Water Act.  The decisions follow a number of district court cases to the same effect.  It’s hard to deny the trend at this point.  

I’ve always been skeptical of these cases, largely because it’s fairly obvious that groundwater is not a “Water of the United States” and pretty much all groundwater discharges to surface water eventually, so it’s hard to know where CWA jurisdiction would end.  Nonetheless, I think that the 4th Circuit decision is the most persuasive argument I’ve seen to date, and I’m beginning to believe that the 4th and 9th Circuit position might actually survive Supreme Court review, though that’s by no means certain.

A few points about the 4th Circuit decision are worth noting.  First, the decision shrewdly coopts Justice Scalia in support of the proposition that discharges from a point source can be subject to CWA jurisdiction, even if not directly to navigable waters:

Justice Scalia observed that “[t]he Act does not forbid the ‘addition of any pollutant directly to navigable waters from any point source,’ but rather the ‘addition of any pollutant to navigable waters.’”

Second, like the 9th Circuit and the District Court decision in Tennessee Clean Water Network v. TVA, the 4th Circuit made clear that not all discharges to groundwater are subject to the CWA.  Noting that the discharge before it was only 1,000 feet from a navigable water, the 4th Circuit held that:

a plaintiff must allege a direct hydrological connection between ground water and navigable waters in order to state a claim under the CWA for a discharge of a pollutant that passes through ground water.

It is still not obvious to me what the statutory basis for this interpretation is, but it at least provides a limiting principle, even if a somewhat vague one.

Finally, I note that the 4th Circuit decision contains an additional important holding.  It concluded that the plaintiffs adequately alleged a continuing violation – a prerequisite to a CWA citizens suit – by asserting that contaminated groundwater continues to leach into navigable waters, notwithstanding that Kinder Morgan had already stopped the leak from the pipeline.  If discharges to groundwater are subject to the CWA, then it could be very important that a violation may continue even after the release from the point source has ended, so long as migrating contamination continues to reach a navigable water.

Green Guide Annual Review: Environmental False Advertising in 2017/2018

Earth Day is coming up on April 22, and you may be looking to capture some environmentally-minded consumers with nifty green-themed advertising campaigns. But before you do, remember that the Federal Trade Commission (“FTC”) monitors environmentally-themed marketing for potentially deceptive claims, and evaluates their compliance with Section 5 of the FTC Act by reference to the “Green Guides.”

The Green Guides, located at 16 C.F.R. § 260, are a series of FTC guidelines initially promulgated in 1992 and most recently updated in 2012, the object of which is to help marketers avoid FTC actions by ensuring that environmental advertising is not deceptive. The Green Guides are also used by the National Advertising Division of the Better Business Bureau, a self-regulatory mechanism for the advertising industry, before which the veracity of green marketing claims are often challenged.

The Green Guides contain specific advice as to many common environmental marketing buzzwords, such as “recyclable” and “renewable.” They also prohibit unqualified “general environmental benefit claims.” For example, calling a product “eco-friendly” without saying why it is eco-friendly is considered a deceptive general environmental benefit claim because the term can reasonably mean a lot of different things to a lot of different consumers (recyclable, carbon-neutral, sustainable, compostable, organic, etc.); unless you can substantiate that all of those potential meanings are true, which is unlikely, the FTC may find that your ad is deceptive.

To help you sort through the FTC requirements for environmental marketing and keep up with the latest developments, here is our second annual review of disputes involving the Green Guides.  The cases featured here were all resolved since the last Earth Day.  You can see last year’s 2016/2017 review here.

“100% Certified Compostable”

One of the Kauai Coffee Company’s mantras is: “Don’t trash the Earth with your coffee. Brew & Renew.”  Kauai offers a “100% certified compostable” single-serve coffee product which features a soft mesh-like net, thus cutting down on the landfill waste created by the traditional single serve “K-Cup” design.

Pursuant to Section 260.7 of the Green Guides, you can only call a product compostable if (a) it will break down in a safe and timely manner in a home compost pile or (b) it is accompanied by qualifying language explaining that the product cannot be composted at home and that the appropriate composting facilities are not available in most places where the item is sold. Kauai coffee included the appropriate qualifying language on its product right next to the word “compostable,” where Kauai disclosed that the product is only “Compostable in industrial facilities. Check locally, as these do not exist in many communities. Not suitable for backyard composting.”

However that disclaimer was absent or not prominent in some of Kauai’s online promotions and in an AARP Magazine advertisement. These ads were challenged by NAD, which found that the use of the word “compostable” without any qualifying disclaimer language could create the false implication that the product was also safely compostable at home.  NAD recommended that Kauai discontinue or modify these claims, and Kauai agreed. In re Kauai Coffee Company, LLCCase No. 6078 (NAD May 5, 2017).

The “Green Safety Shield”

Last December, the FTC approved a final consent order against Moonlight Slumber, a manufacturer of baby mattresses. The FTC administrative complaint charged that the company violated Section 5 by making false claims that its “organic” and “eco-friendly plant-based”   mattresses had earned the “Green Safety Shield.”

Green Guide Section 260.6 states that it is deceptive to misrepresent, directly or by implication, that a product has been endorsed or certified by an independent third party. Here, according to the FTC, the “Green Safety Shield” was presented to the public as if it were a third party certification, an impression supported by the company’s website: if you clicked the “Green Safety Shield” on the  website, you’d see a message telling you that the shield was “not just a marketing tool” but a “promise” that the produce went through “third party laboratory testing.” But in fact, the “Green Safety Shield” did not represent a certification from a third party; it was simply a made-up logo that Moonlight Slumber bestowed upon itself.

The final consent order prohibits Moonlight Slumber from further misleading certifications. The order also prohibits further misleading statements using the terms “organic” (which is not addressed by the Green Guides) and “plant-based” (which is indirectly addressed in Section 260.16 of the Green Guides as potentially implying the inclusion of renewable materials). In re Moonlight Slumber, LLC, Docket No. C-4634 (FTC Dec. 11, 2017).

“Made of Recycled Material”

Olivet International takes post-consumer products like plastic flower pots and transforms this “steady stream of post-consumer resin” into “food safe” products like pet food containers, which it advertises as “made of recycled material” without any further qualification.  According to Section 260.13 of the Green Guides, marketers can only make unqualified claims of recycled content if the entire product or package, excluding minor incidental components, is made from recycled material. Thus, from the point of view of the Green Guides, a “made of recycled material” claim implies that a product was made entirely from recycled material, which was not true in the case of the pet food containers. In fact, Olivet discontinued this unqualified claim on its own before any formal dispute arose, and instead began claiming that its product contained “a minimum of 25% recycled material.”

Competitor Van Ness Plastic brought a complaint before NAD anyway, alleging that even the “25%” claim could not be substantiated. Van Ness argued that this number did not include lids and latches, which it opined were most likely made of virgin material because of their uniformity of color. However Olivet was able to show that its lids and latches were actually created out of 100% recycled polypropylene resin made from post-use plastic buckets and lids that had been discarded by Walmart bakeries.  Therefore, NAD found that Olivet had substantiated its “25%” claim.

NAD also found that Olivet’s “food safe” claim was supported, based on a no objection letter from the FDA addressing Olivet’s ability to process recycled plastic, and other evidence that the virgin resin used in the remaining portion of the product was food safe. Van Ness Plastic Molding Company, Inc. v. Olivet International, Inc.Case No. 6149 (NAD January 22, 2018).

“Plant-Based” Ingredients

A putative class action was filed last year in the Northern District of California, alleging that Babyganics wipes were advertised as made from “plant-based ingredients,” when in fact they were made at least in part from polyester. Although the counts of the complaint arose out of California consumer protection and false advertising law, the assertion of deceptiveness was based in part on the premise that the “plant-based” claims violated the Green Guides. Specifically, the plaintiff asserted that the claims violated the General Principles, Section 260.3, because the lack of any qualifying language (e.g., the percentage that is plant-based; if the claim applies to the package and/or product; etc.) creates a misleading impression about whether the product is environmentally friendly. The plaintiff also alleged that the claim violated Section 260.16, because the term “plant-based” falsely implies that the product is made only from renewable materials.

Babyganics argued (in a motion to dismiss) that the use of the term “plant-based” alone did not mean it was making environmental benefit claims or that the matter was within the scope of the Green Guides, and further noted that the packaging contains plenty of indications that not all the ingredients are made from plants (further supported by the warning “Do Not Flush”).  The plaintiff voluntarily dismissed the matter before the Court could rule on the motion. Machlan v. S.C. Johnson & Son, Inc.Case No. 3:17-cv-02442 (SDNY).

“Free Of” VOC

Last year, the FTC focused on the paint industry, and settled claims against four companies that were making various environmental claims in their advertising. Among the claims alleged were that the paints were advertised as “free of VOC” or containing “zero VOC,” that is, volatile organic compounds (carbon-containing compounds that evaporate at room temperature and can be harmful to humans and the environment).

Section 260.9 of the Green Guides prohibits misrepresentations about whether a product is “free of, or does not contain or use, a substance.” Here, the paint companies made various claims about the lack of VOC and other emissions, and stated that this lack made the products safe for babies, children and pregnant women. However, the FTC alleged that the companies had no evidence to support these claims.

In addition, two of the companies had affixed to their products what allegedly appeared to be third party certifications of environmental friendliness (the “Eco-Assurance Logo” and the “Green Promise seal”), but which were in fact merely titles the companies had awarded to themselves. Information about all four cases is available here.

“The Ultimate in Sustainability”

Nestle Nutrition complained to NAD about Beech-Nut’s claim that its glass containers were “the ultimate in sustainability.” Nestle argued that this was a general environmental benefit claim without qualification, and thus prohibited by the Green Guides; as noted above, Section 260.4 provides that broad terms like “sustainable” are capable of conveying a wide range of reasonable meanings, and that marketers using those terms are responsible for substantiating all of these meanings, unless the term is qualified with language that explains which meaning was intended (e.g., that it is recyclable, that it is carbon neutral, that it is biodegradable, etc.).

Here, although other parts of the ad referred to the recyclability of glass, NAD found that the “sustainability” claim stood by itself independent of other claims and was unqualified by any explanatory language. Thus, NAD recommended that Beech-Nut discontinue the advertisements in question. Nestle Nutrition USA, Inc. v. Beech-Nut Nutrition CompanyCase No. 6070 (NAD April 4, 2017).

How Much Deference Will EPA Get On Its CAFE Standards Decision?

There’s been a lot of discussion regarding EPA’s decision to withdraw EPA’s Mid-term Evaluation of Greenhouse Gas Emissions for Model Year 2022-2025 Light-duty Vehicles. After pondering for a while, my question is how much deference courts will give to EPA’s decision.

I’ve previously speculated about whether the typical deference to agency decisions might eventually lose its luster, not because conservative judges hate Chevron, but simply because courts might get tired of agencies under this Administration abusing their discretion.

Contrary to the statements in the withdrawal decision, the Obama Mid-term Evaluation was exhaustive.  The withdrawal decision itself, on the other hand, was, as far as I can tell, based largely just on what scientists might objectively describe in jargon as “bitching and moaning” by the auto industry. 

I’ve also previously noted that, in the history of major environmental rules going back to the 1970s, the evidence shows that every single rule has cost less than estimated prior to implementation.  And that’s less than EPA’s estimates of compliance, not just less than industry’s estimates, which have routinely been wildly high.  The reason is that compliance cost estimates never fully account for the ability of the market to respond efficiently to the new standards.

There is some question as to whether the recent withdrawal decision even constitutes final agency action, but the courts will get a crack at this at some point and I am waiting with bated breath to see how they respond.

BLM Loses Another One: Resource Management Plans for Coal Leasing Areas Are Sent Back to the Drawing Board

Late last month, Judge Brian Morris granted summary judgment to plaintiffs on three claims alleging that the environmental impact analysis supported BLM’s Resource Management Plans for managing coal leases in the Powder River Basis were flawed.  It’s a very thoughtful decision.  Judge Morris rejected three of plaintiffs’ claims and did not provide the injunctive relief that they sought.  Nonetheless, it’s an important setback for BLM and further evidence that courts are going to require more of BLM in assessing climate impacts associated with energy resource development.

The plaintiffs had to get over two significant hurdles just to get in the game.  One was BLM’s argument that plaintiffs’ concerns could all be addressed in the context of individual leasing decisions; there was, BLM argued, essentially no harm flowing from approval of the RMPs.  The Court rejected that argument – rightly, I think.  The problem is that it essentially proves too much, making the entire planning process irrelevant.  If the RMPs miss essential elements of the analysis, shouldn’t those flaws be addressed at the planning level, rather than in the context of each individual leasing decision?

Second, the land at issue is already potentially open to development.  The BLM argued that it had no obligation to assess alternatives that would change the status quo.  Judge Morris gave this argument short shrift, noting that:

Plaintiffs’ alleged injury stems from Federal Defendants’ decision to keep these lands open to potential development. This outcome represents the type of injury “contemplated by Congress” in drafting NEPA.

The three claims granted by Judge Morris were:

  • Inadequate consideration of alternatives.  The EISs only looked at alternatives that maintained the same acreage for leasing as is currently available.  The Court concluded that “Climate change concerns presented a reasonable basis for BLM to conduct a new coal-screening and to consider adopting an RMP that foreclosed coal extraction in additional areas.”
  • Consideration of Climate Change.  The Court concluded that indirect and downstream impacts of coal extraction were sufficiently foreseeable to “permit a ‘productive analysis’ of” those impacts.
  • Improper assessment of the global warming potential associated with methane releases.

The Court refused to vacate BLM’s Record of Decision.  Instead, it ordered the parties to try to develop a joint response to the Order.  Absent that, the parties will submit briefs on the appropriate remedy.  In the meantime, the Court has issued an injunction requiring BLM to perform the analyses described in the Order in any individual leasing decisions that are made before the RMP environmental analysis are revised.

A fairly Solomonic decision, if I do say so.

ExxonMobil’s AG Claims Are Dismissed — What a Shock!

Yesterday, Judge Valerie Caproni dismissed claims brought by ExxonMobil against New York Attorney General Schneiderman and Massachusetts Attorney General Healey.  Boiled down to their essence, ExxonMobil’s claims were that investigations by Schneiderman and Healey into the possibility that ExxonMobil had committed fraud by misleading investors regarding the risks that climate change poses to ExxonMobil’s business were politically motivated and in bad faith.

The decision was not difficult.  ExxonMobil pretty much assumed its conclusion and then simply alleged as ipse dixit that statements by the AG’s were proof of that conclusion.  Thus, the case falls squarely under the Supreme Court decisions in Iqbal and Twombly – pounding the table very loudly does not convert speculation into the type of assertion that can survive a motion to dismiss.

Quoting a number of relevant paragraphs from the complaint or proposed amended complaint, the Court simply noted that:

It is not possible to infer an improper purpose from any of these comments; none of which supports Exxon’s allegation that the NYAG is pursuing an investigation even though the NYAG does not believe that Exxon may have committed fraud.

My only complaint with the opinion was that it did not clearly distinguish between the possibility that the AGs had a political motive and the requirement that ExxonMobil prove bad faith.  Exxon’s evidence was basically that the investigation was politically driven.  However, there’s nothing per se wrong with that, so long as the AGs do believe that ExxonMobil may have committed fraud.  The two are not inconsistent and in fact the most weight ExxonMobil’s complaint can bear is that the investigation was politically motivated but that the AGs do truly believe that ExxonMobil may have committed fraud.

Scheiderman and Healey are both elected officials.  Elected officials are supposed to be political and supposed to respond to constituents.  There’s nothing wrong with that.  There’s actually a lot of case law to that effect in the § 1983 context.  Subjects of an AG investigation can’t bring claims based on allegations that an AG was politically motivated.  They have to allege that the AG doesn’t actually believe that he/she has a case.  ExxonMobil did not come close to asserting that here and the case was properly dismissed.

Shooting Fish In a Barrel: EPA Loses Another Regulatory Delay Case

On Wednesday, EPA lost yet another regulatory delay case.  After the Obama EPA promulgated rules updating requirements concerning certification and use of “restricted use pesticides” in January 2017, the Trump EPA purported to delay the rule’s implementation date five separate times.  According to the Court, EPA provided no notice and opportunity to comment on four of those occasions; once, they provided a four-day (yes, four) comment period.

EPA’s primary defense of the delay was that the plaintiffs did not have standing.  However, the plaintiffs included a farmworkers union, which submitted evidence that their members work with restricted use pesticides and have suffered harm as a result of currently inadequate training and safety measures.  That was more than enough for the Court.

On the merits, the best EPA’s lawyers could do was argue that it had no obligation to provide an opportunity for notice and comment, because the “good cause” exception applied.  You can almost hear the Judge laughing at this argument.

The good cause, exception, however, is extraordinarily narrow and is reserved for situations where delay would do real harm. A new administration’s simple desire to have time to review, and possibly revise or repeal, its predecessor’s regulations falls short of this exacting standard. Cf. Clean Air Council, 862 F.3d at 9 (“Agencies obviously have broad discretion to reconsider a regulation at any time. To do so, however, they must comply with the [APA], including its requirements for notice and comment.”).

This administration just keeps proving my point.  They care more about burnishing their anti-regulation credentials than they do about actually reforming any regulations.