MATS, Take Two: EPA Still Supports the Rule (And EPA Is Correct)

Late last week, EPA issued a Supplemental Finding, concluding that it is still “appropriate and necessary” to regulate hazardous air pollutants from coal- and oil-fired electric generating units.  The Supplemental Finding was necessary after the Supreme Court ruled earlier this year that EPA’s original decision to regulate HAP emissions from EGUs was flawed because EPA did not consider costs in making the decision.  Is the Supplemental Finding enough to ensure that the Mercury and Air Toxics rule mercuryis upheld this time around?  Time will tell, but it should be.

EPA actually provided a separate Legal Memorandum in support of the Supplemental Finding.  It makes interesting reading and it should be persuasive to any court that still takes Chevron seriously.  Basically, EPA has reviewed the benefits of the rule and found that they are sufficient to justify the costs that would result from regulating HAP emissions from EGUs.  Here are the highlights.

  • EPA is not required to conduct a formal cost-benefit analysis and, indeed, it would not be possible for EPA to do so. As EPA notes, what the Supreme Court required was that EPA take costs into account at the listing stage, before it has even written the regulations.  At this point in EPA’s analysis, there is no specific set of standards on the table and we therefore cannot know with any certainty either the costs or the benefits of the ultimate rule.  Of course, this argument also suggests that the dissent was correct in Michigan v. EPA, but that’s beside the point at this late date.
  • Even if EPA were required to conduct a cost benefit analysis, the benefits, including non-monetized benefits and ancillary benefits, justify the costs. Here, EPA attempts – successfully, I think – to hoist its critics on their own petard.  Critics complain that most of EPA’s benefits are “co-benefits” – reductions in emissions of non-hazardous particulates that will result from the rule.  However, as EPA notes, the entire reason we are in this mess is that Congress told EPA not to regulate EGU HAP emissions until it had studied whether the acid rain program would itself reduce HAP emissions sufficiently so that separate listing of EGUs as a HAP emissions source would be unnecessary.  In other words, EPA was supposed to take into account the co-benefits of acid rain regulation in deciding whether to regulate HAP emissions.  Is EPA not barred from considering the converse – whether HAP regulation would itself have ancillary benefits?  I don’t think so.

EPA should thus win this case, but that doesn’t mean I’m happy with the agency.  EPA refused to monetize all of the benefits of the rule and referred to “the known limitations on the Agency’s ability to monetize HAP-specific benefits.”  What are these limitations?  Assuming the rule survives, it will in fact result in certain costs.  It will also result in certain benefits.  Call me simplistic, but to me, by definition, we as a society would then be saying that the benefits of the rule exceed the costs.  We are thus implicitly monetizing the benefits of the rule simply by deciding to promulgate it.

Oh well, someday EPA and the environmental community will have their “Nixon in China” moment and embrace rigorous cost-benefit and cost-effectiveness analysis.  Until that happens, I’ll just have to keep ranting periodically.

Some Hard Truths About Addressing Climate Change

Yesterday’s Boston Globe had an op-ed by Joshua Goldstein and Steven Pinker concerning some “Inconvenient truths for the environmental movement.”  I’m sorry to say that I agree with pretty much every word of it.  Why am I sorry?  Because Goldstein and Pinker make clear – even though they don’t mention his name – that the Pope was completely wrong in his prescription for addressing climate change.  How so?  It’s really pretty straightforward.

People want more economic development, not less.  They want more markets, not less.  It may be that some wealthy societies could still have a relatively smooth transition to renewable fuels without sacrificing economic growth.  Unfortunately, that’s not where we have to address the demand for fossil fuels.  We have to do so in China and India and other developing countries.  I’m sorry, but I’ve seen the projected demand for fossil fuels outside the US and Europe and it’s not pretty.  Anyone who thinks that we can quickly and easily eliminate fossil fuel use in those countries and still allow them the economic growth that their citizens demand is delusional.

Which brings us to Goldstein’s and Pinker’s second inconvenient truth; nuclear power has to be a large part of the solution.  And I’m afraid that’s probably the end of the conversation for many of my environmental friends, so I’ll cut this short.

I’m still an optimist.  I believe that we can still solve climate change.  We can do so however, with more use of markets, not less.  And we must do so with more economic growth, not less, because the rest of the world won’t be satisfied with less.


Washington Has A Public Trust Obligation to Address Climate Change — So What?

Last week, a trial judge in Washington State, in Foster v. Washington Department of Ecology, ruled that the Public Trust Doctrine requires the State of Washington to address climate change more aggressively.  Greenwire’s headline for its story on the decision was “Kids declare victory in Wash. warming lawsuit.”  I’m here to throw a little cold water on all the excitement.  Why?

  • First, the Public Trust Doctrine, which dates back to the Emperor Justinian, Mosaic_of_Justinianus_I_-_Basilica_San_Vitale_(Ravenna) (1)generally asserts public ownership of – and a fiduciary duty with respect to – land below the high water mark.  It protects the public interest in the shoreline.  The court in Foster did not extend the public trust to include the atmosphere.  Instead, it concluded that, because climate change will affect the shoreline, it implicates the state’s traditional public trust obligations.  I don’t believe, for example, that Wyoming has a shoreline, so this argument won’t succeed there.
  • Second, it is necessary to belabor the obvious and note that the Court actually denied the plaintiffs’ petition because the Department of Ecology is already working on regulations to tighten its greenhouse gas emissions rules.  While the plaintiffs may count that as a victory in itself, the Court emphasized in three different places in its opinion that it cannot direct the content of the Department’s regulations.  As the Court stated:

Now that Ecology has commenced rulemaking to establish greenhouse [sic] emission standards taking into account science and [sic] well as economic, social and political considerations, it cannot be found to be acting arbitrarily or capriciously.

If the Department of Ecology can take into account “economic, social and political considerations”, it is difficult to know what standards would ever fail so vague a test as the arbitrary and capricious standard.

As I’ve noted previously, at some point, there may be a tidal wave of public trust litigation.  If that happens, this case may be seen in retrospect as the harbinger of that tidal wave.  However, as I sit here today, Foster seems as likely to be a minor ripple, soon forgotten and leaving no trace, as it is an early warning of a tsunami.

What Success Means For COP21

If you want to know what how a rational optimist defines success for COP21, cop21-label_reduit_transparenttake a look at Rob Stavins’s latest post.  Here’s his “Paris Scorecard” for what success will look like:

  • Include approximately 90% of global emissions in the set of INDCs that are submitted and part of the Paris Agreement (compared with 14% in the current commitment period of the Kyoto Protocol). This will definitely be achieved.
  • Establish credible reporting and transparency requirements. It is likely that this will be achieved.
  • Begin to set up a system to finance climate adaptation (and mitigation) — the famous $100 billion commitment.  This is likely to be achieved.
  • Agree to return to negotiations periodically, to revisit the ambition and structure of the INDCs. It is likely this will be achieved.
  • Put aside unproductive disagreements, such as on so-called “loss and damage,” which looks to rich countries like unlimited liability for bad weather events in developing countries. Another unproductive disagreement is the insistence by some parties that the INDCs themselves be binding under international law. This would probably mean that the Paris Agreement would require Senate ratification in the United States, which means that the United States would not be a party to the Agreement.

I agree with Rob’s assessment.  Hope springs eternal.

Coming Soon to a Project Near You: Advance Compensation

Earlier this month, the White House released a Presidential Memorandum on “Mitigating Impacts on Natural Resources from Development and Encouraging Related Private Investment.”  mitigationsignIf that portentous title isn’t enough to make developers quiver in their boots, how about this first line?

We all have a moral obligation to the next generation to leave America’s natural resources in better condition than when we inherited them.

From this beginning, the PM goes on to make clear that federal agencies have an obligation to avoid and mitigate the potential adverse impacts of projects that they either implement or permit.  More specifically,

  • “Agencies’ mitigation policies should establish a net benefit goal or, at a minimum a no net loss goal…”, and
  • “Agencies should give preference to advance compensation mechanisms that are likely to achieve clearly defined environmental performance standards prior to the harmful impacts of a project.”

There has been significant gnashing of teeth in the development community and complaints about executive overreach in connection with the issuance of the PM.  I think that those complaints are off the mark, because the PM is very careful to state that its provisions all apply only “to the extent permitted by each agency’s legal authorities.”

Even with that acknowledgement, this is a potentially far-reaching order.  It may not quite be a full employment act for environmental consultants and land planners, but, depending on how it’s implemented, it could come pretty close.

Does the Impact of Climate Change on Financial Markets Have Anything In Common with Same-Sex Marriage?

A few months ago, I asked whether climate change nuisance and public trust litigation might have something in common with litigation challenging bans on same-sex marriage.  The idea was that both types of litigation seemed hopeless at the start and received very frosty receptions from the courts.  However, in the case of same-sex marriage, plaintiffs kept plugging away and, much sooner than most people expected, a tipping point was reached.  All of a sudden, it was the opponents’ position that seemed absurd.

Climate change is obviously some years behind; it certainly hasn’t reached the tipping point.  I don’t know if it ever will.  It might not.

Regardless, I was reminded of the tipping point concept in this context by the release this week by the Cambridge Institute for Sustainability Leadership of “Unhedgeable risk”, Unhedgeable_Riska study of how financial markets will respond to the long-term impacts of climate change.  Modeling the response of different portfolios, the study concluded that:

Factors, including climate change policy, technological change, asset stranding, weather events and longer term physical impacts may lead to financial tipping points for which investors are not presently prepared.

This research shows that changing asset allocations among various asset classes and regions, combined with investing in sectors exhibiting low climate risk, can offset only half of the negative impacts on financial portfolios brought about by climate change. Climate change thus entails “unhedgeable risk” for investment portfolios.

I’m not a financial analyst, but it doesn’t sounds good to me.

When Is A Discharge to Groundwater a Discharge to a Water of the United States?

The Clean Water Act regulates discharges of pollutants to waters of the United States.  That term is not understood to include groundwater.  The Sierra Club was unhappy about alleged discharges to groundwater from coal ash disposal facilities at the Chesapeake Energy Center power plant.  chesapeake-energy-center-aerial-highres-RESIZEDThe plant had a solid waste permit for the disposal facilities under Virginia law and, one can at least infer, was in compliance with the solid waste permit.

What’s a creative environmental lawyer to do?

Allege that the groundwater is merely a “conduit” to surface water and, voila, we have a citizen’s suit under the CWA.  This is not the first time that plaintiffs have sought to bring discharges to groundwater within the ambit of the CWA.  To date, all three courts of appeal that have reviewed the issue have concluded that the CWA does not regulate discharges to groundwater, even if the groundwater ultimately enters surface waters.  However, last week, in Sierra Club v. Virginia Electric and Power Company, the Eastern District of Virginia became the seventh district court to hold that such discharges to groundwater are subject to jurisdiction under the CWA.

The court in Sierra Club contains, as far as I can tell, literally no analysis supporting its conclusion; it merely recites that:

Plaintiff has pleaded with sufficient particularity to survive a motion to dismiss….

Sorry, I’m not buying it.  I’ll note here that the Massachusetts Department of Environmental Protection – and I’ll bet that MassDEP is not alone among regulatory agencies – takes the position that all groundwater ultimately discharges to surface water.  Thus, if the holding in Sierra Club is correct, that would mean that all discharges to groundwater would be subject to CWA jurisdiction – even though groundwater is not a water of the United States.

Don’t you think that, if that were what Congress had intended, it would have said so a little more clearly?

Perhaps the Clean Air Act Really Doesn’t Preempt State Common Law Remedies

This week, the 6th Circuit Court of Appeals held, in Merrick v. Diageo Americas Supply, that the Clean Air Act does not preempt source state common law remedies seeking to control air pollution – even where the defendant is in compliance with CAA requirements.  The 6th Circuit joins the 3rd Circuit, which reached the same conclusion in Bell v. Cheswick in 2013.  Merrick involved allegations that emissions from the defendant’s whiskey distillery caused “whiskey fungus” to grow on the plaintiffs’ property.  These facts are not really relevant to the decision, but Whiskey fungus sounds cool and it justifies me including a picture of the fungus.1906_FF_Angelshare_DH_57889_Wahl_MG_0186_alt3

When Bell v. Cheswick was decided, I ranted – as I sometimes do – that the decision was not just wrong, but “willfully wrong”.  However, bloggers, like judges, as my partner Robby Sanoff recently noted, can sometimes change their mind.  The decision in Merrick has persuaded me that, however wrong Congress may have been to do so, it did not preempt source state common law claims.  The CAA preserves the rights of states to adopt “any requirement respecting control or abatement of air pollution”.  As Merrick demonstrates, there is substantial jurisprudence to the effect that “any requirement” includes requirements imposed under state common law.

Good law. Still terrible policy, however.  Why?

Let’s assume that the CAA requires a facility to limit its emissions to X.  The problem with allowing nuisance actions even where the facility’s emissions are below X is that the facilities have no way of knowing in advance what kind of nuisance claims might be brought and what emissions standard will result.  It many cases, a facility might not even use the same technology to attain a standard of 0.5X as it would to attain X.  Does it really seem reasonable to require a facility to go back to the drawing board, completely wasting the costs incurred to attain X, so that it can install the new technology and attain the 0.5X standard required to avoid nuisance liability?

The CAA is not a well-written statute (though of course it pales in comparison to CERCLA).  If I were king, the CAA would include some kind of market-based system to control GHG emissions.  It would impose more stringent limits on traditional pollutants, also subject to a trading regime.  The quid pro quo for generators would be the elimination of PSD/NSR for facility modifications and preemption of state law claims.

Any takers?

EPA To Rename OSWER: How About “The Office That Should Be Eliminated As Soon As Possible”?

According to the Daily Environment Report (subscription required), EPA is going to change the name of the Office of Solid Waste and Emergency Response to the Office of Land and Emergency Management.  What a grand name; surely it is an improvement.

I don’t think that this quite rises to the level of rearranging deck chairs on the Titanic titanic(though I certainly have clients who would not object if OSWER sank without a trace), but one does get the sense of a bureaucracy beginning the long, hard, slog of trying to figure out how to perpetuate its existence as Superfund – mercifully – begins to fade away.

It’s probably a vain hope, but mightn’t EPA determine instead how to reallocate those functions of OSWER that need to continue, but actually try to figure out a way to shrink this element of the bureaucracy, instead of repurposing it?

What Do Opponents of the Clean Power Plan and the Oklahoma Sooners Have In Common?

So the Clean Power Plan has been published in the Federal Register.  For those who cannot get enough, you can find all of the important materials, including EPA’s Technical Support Documents, on EPA’s web site for the CPP.

Not surprisingly, given the number of suits brought before the CPP was even finalized, opponents were literally lining up at the courthouse steps to be the first to sue.  West Virginia apparently won the race and is the named plaintiff in the main petition filed so far. Sooners

Perhaps because Oklahoma has been one of the most persistent, and vocal, opponents of the CPP, this called to mind the origin of the Sooner State’s nickname – which seems particularly apt, since Oklahoma was one of the states that couldn’t wait for the rule to be promulgated to sue.

Oklahoma is not actually among the plaintiffs in the West Virginia suit.  Oklahoma filed its own petition today.  One wonders whether Oklahoma was banished from playing with the other states as a result of its impatience.  Unlikely, since most of those in the West Virginia suit also filed early, but it did call to mind that other famous event in the history of the west, as recorded in Blazing Saddles.

CERCLA Remains Ridiculous: A Remedy In Operation For 18 Years Is “Short Term”

Far too frequently, we are reminded just how hard judges must work to save CERCLA from itself.  The decision last week in California River Watch v. Fluor Corporation is the most recent compelling example.

Fluor Corporation has been performing response actions at a site, including operating a soil vapor extraction system, since no later than 1997.  Fluor’s remedial action plan was not approved until 2011 and a modified RAP was approved in 2014.

As readers here will know, CERCLA provides that claims based on removal actions must be brought within three years of completion of the removal action, while claims based on remedial actions must be brought within six years of commencement of on-site construction.  The question in California River Watch was of course whether Fluor’s treatment system was a removal action or a remedial action.  The jurisprudential answer here was easy – 9th Circuit precedent holds that, by definition, a remedial action cannot start until after the RAP has been approved; thus, what Fluor was doing could not have been a remedial action.

I’ll also acknowledge that there are good policy reasons why claims such as Fluor’s should not be barred.

I get all that.  Still, as the Court acknowledged:

Removal actions are typically described as “time sensitive responses to public threats. …  “Removal refers to short-term action taken to halt the immediate risks posed by hazardous wastes.”

Given the 9th Circuit precedent, my only complaint with the court here is its failure even to acknowledge the irony in finding that a treatment system that has been in operation for 18 years qualifies as “short term”.  We can all bemoan the extent that the words of the statute have to be tortured in order to achieve desired policy outcomes.

It’s worth noting that the Second Circuit, in New York State Electric and Gas Corporation v. FirstEnergy Corporation and New York v. Next Millenium Realty, has navigated an alternative – and perhaps less ironic – route to accomplish this same result, by distinguishing removal actions, not as short term measures, but as measures that do not effect a permanent elimination of the source of contamination.

(And, yes, I know that this is the second post in a week which has required an irony alert.  Occupational hazard, I think.)

While The Outcome In the Lower Fox River Case Continues to Change, The Legal Standard For Apportionment Is The Same

In 1832, Abraham Lincoln said that ” it is better to be only sometimes right, than at all times wrong, so soon as I discover my opinions to be erroneous, I shall be ready to renounce them.”  Judge Greisbach of Eastern District of Wisconsin apparently lives by this credo and once again has reversed himself in the  Fox River PCB Superfund litigation.   The history of Judge Greisbach’s readiness to renounce his opinions is catalogued in a string of my blog posts.  In 2012, the first blog post noted how Judge Greisbach had initially rejected the argument that apportionment in a Superfund case could be based solely on the volume of PCBs that NCR Corp had contributed to a portion of the lower Fox River.  In 2014, a second blog post explained that the Seventh Circuit had reversed Judge Greisbach on that issue and remanded the matter for a determination if there was sufficient evidence of NCR’s volumetric contribution to permit apportionment.  A third post in May of 2015 reported how Judge Greisbach had ruled that NCR was entittled to apportionment.  Earlier this week, however, Judge Greisbach reversed himself once again, this time holding that the expert evidence on which he based his May 2015 decision was not reliable.

While it’s easy to get lost in all the changes of fortune suffered by the parties in the Lower Fox River case, the important point is that this case has clarified that, following the Supreme Court’s decision in Burlington Northern, a PRP is entitled to establish its right to apportionment merely by proving what its volumentric contribution was.  Although the law has evolved differently, I think Judge Greisbach’s first opinion was the best statement of what the law on apportionment should be since it seems doubtful that contamination at a site really can be divisible merely by knowing what volumes of waste were contributed by a party.

The Sixth Circuit Stays the Waters of the United States Rule: Just a Plain Vanilla Preliminary Injunction — Not!

Today, the Sixth Circuit Court of Appeals issued a nationwide stay against implementation of the “Waters of the United States” rule.  The case is so weird, alice in wonderlandin so many ways, that I don’t even think I can count them.  Here are a few.

  • The Court stayed the case, even though, as the dissent pointed out, there is question whether it even has jurisdiction to hear the appeal. How can it issue a stay if it does not have jurisdiction?  If the Court was so worried about the implications of the case, why couldn’t it simply have established an accelerated schedule for deciding the jurisdictional issues.
  • The plaintiffs – obviously – selected the forum, but now appear more interested in having the case heard in the district courts. Nonetheless, they argued that the Court of Appeals should stay the rule, even as they questioned the jurisdiction that they first invoked.
  • EPA and the Corps argued in all of the district court cases that the district courts should not hear challenges to the rule, because the challenge should be heard in consolidated proceedings before the 6th Circuit – in other words, in this case. Nonetheless, EPA argued that the Court should not rule on the stay request, because there is legitimate question concerning the court’s jurisdiction.
  • The Court granted the injunction on the basis that there is a substantial possibility – not even a substantial probability – that the plaintiffs will succeed on the merits. I think you could find linguists, not to mention Vegas oddsmakers, who might equate a “substantial possibility” to something on the order of 20%-30%.  Since when is that enough to procure an injunction?
  • The Court also acknowledged that the plaintiffs would not suffer irreparable harm if the WOTUS rule were left in place pending litigation. Since when do courts issue injunctions because there is a substantial possibility that that the plaintiffs will prevail and in the face of a finding that they will suffer no irreparable harm if the remedy is deferred until a decision on the merits?
  • The Court’s discussion as to why the plaintiffs had a “substantial possibility” of success on the merits focused in large part on EPA’s decision in the final rule to include distance limitations on jurisdiction. However, those limitations largely restrict EPA’s authority.  In other words, those are the parts of the rule that the plaintiffs like; it is the environmental NGOs who are unhappy with the distance limitations.  So plaintiffs may prevail in a challenge to the rule because EPA and the Corps added provisions to make it more palatable to them?

I still think that EPA successfully wrote a rule to address Justice Kennedy’s “significant nexus” concurrence in Rapanos, but I’m beginning to feel that the litigants and the court have all fallen down the rabbit hole.  Or, as Lewis Carroll said:

we’re all mad here.