Law and the Environment : Environmental Lawyer & Attorney : Foley Hoag Law Firm : Boston, Washington D.C.

Last year, I analogized PRP efforts to have CERCLA’s unilateral administrative order provisions declared unconstitutional to Chevy Chase’s repeated announcements during the first year of Saturday Night Live that Francisco Franco was still dead. Eventually, that joke wore out. With yesterday’s decision by the D. C. Circuit Court of Appeals, in General Electric v. Jackson, upholding EPA’s UAO authority, these legal challenges may be similarly about to wear out. 

The analysis in GE v. Jackson is pretty straightforward. EPA may not obtain fines or treble damages if a PRP defies a UAO unless the agency goes to court and the court concludes that the PRP is in fact liable under CERCLA and that none of the statutory defenses apply. Because PRPs thus have a “pre-deprivation” remedy, there is no due process violation. At a formal level, that’s hard to dispute. The formal pre-deprivation remedy and the absence of a circuit split make it unlikely that the Supreme Court will have any interest in hearing this case.

GE’s most cogent argument, to me, is that, as a practical matter, the deck is so heavily stacked in EPA’s favor that it really is very difficult for PRPs to take advantage of the due process rights that CERCLA provides. The Court gave this argument short shrift, noting that, out of 1,638 recent UAOs, PRPs had refused to comply with 75, or 4.6%. However, we do not know the details underlying these data. Many of these 75 non-complying PRPs could simply be deadbeats, rather than viable PRPs who considered themselves not liable or had reason to believe that EPA’s remedy was arbitrary and capricious. 

There are limits to the use of anecdotal evidence, but does anyone who has a lot of CERCLA experience really deny that the coercion faced by PRPs is extreme? This is why liberal friends of mine who consider themselves environmentalists, but who aren’t lawyers and don’t know how CERCLA works, are often shocked when I describe some of these cases – in an unbiased way, of course – and ask how CERCLA can be constitutional.

My own sense is that the D.C. Circuit decision is probably right as a matter of constitutional law. Not every law that is unfair is unconstitutional. I certainly think that CERCLA’s UAO provisions are unfair. I also think that they are bad law, masquerading as “polluter pays” provisions. However, to the extent one can really even speak about Congressional intent given the haphazard way CERCLA was drafted, Section 106, as interpreted in GE v. Jackson, is pretty clearly what Congress intended and, for now, it’s the law. 

Francisco Franco is still dead, and so are constitutional challenges to EPA's UAO authority under CERCLA.

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When we blogged about the Mandatory Greenhouse Gas Reporting Program regulations last fall, we noted that the EPA had excluded from the final regulations emission source categories such as wastewater treatment plants and underground coal mines that were initially included in the draft rules.  No longer. Yesterday, EPA finalized regulations requiring an estimated 680 facilities in the four sectors of underground coal mines, industrial wastewater treatment systems, industrial waste landfills and magnesium production facilities to begin collecting emissions data on January 1, 2011, and submit their first annual report in March 2012. Despite being few in number, these facilities, which primarily emit methane, are responsible for about 1% of national greenhouse gas emissions.  As in the existing reporting rules, 40 CFR Part 98, these businesses are required to report their emissions to EPA if they emit 25,000 metric tons CO₂ equivalents or more per year.  

The final rule also clarifies EPA’s decisions on the remaining categories: EPA will exclude ethanol production and food processing from distinct subparts requiring reporting, as well as suppliers of coal (at least for now).  However, these types of facilities are still required to report emissions under other subparts of the rule, if they meet the reporting threshold of 25,000 metric tons CO_2e per year. In addition, now that EPA has made final decisions on "all outstanding source categories and subparts" from last year's draft rule, additional sectors can only be added through new rulemaking.

EPA also released proposed rules reflecting what data submitted by facilities under the greenhouse gas reporting program will be released to the public and what will be withheld as confidential business information. EPA hopes to have these rules in place before the 10,000 facilities that produce about 85% of the nation’s emissions submit their first reports in March 2011. 

As you may recall, the greenhouse gas reporting rules require both direct emitters and suppliers of fuels and industrial gases to report.   For the “direct emitters,” EPA proposes to release information such as the facility name and physical address, emissions, methodology and data used to calculate the emissions, and test and calibration methods, but withhold as confidential business information data on production, throughput, or raw materials that are not inputs to the emissions equations. As the emissions reported by the suppliers of fuels and industrial gases are not emissions from their own facilities, but potential emissions from the eventual use of their products, the individual companies' reports are less important than the overall figures.  As such, EPA proposes a balancing approach – making sector-by-sector determinations and releasing data about emissions only when it would not cause substantial harm to the businesses’ competitive position. (Specifics on how data will be treated are available here.)   Comments are due 60 days after the proposed rules are published in the federal register.

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Yesterday, the Supreme Court issued its decision in Monsanto v. Geertson Seed Farms, the big NEPA case before the Court this term. The District Court had struck down the decision by the Animal and Plant Health Inspection Service to completely deregulate roundup ready alfalfa (RRA). That decision was not actually under appeal. The appeal concerned only the scope of the injunction issued by the District Court, which precluded APHIS from issuing any kind of deregulation decision without completing an Environmental Impact Report (EIS) and similarly issued a nationwide injunction against planting of RRA alfalfa prior to completion of an EIS. The District Court decision had been upheld by the Ninth Circuit Court of Appeals.

The Supreme Court reversed, and vacated the injunction. I’ve got to say, Supreme Court decisions in environmental cases have often puzzled me in recent years, but it is difficult to read this one and not feel its inevitability and obviousness. This case really shouldn’t be news. The Court decided in Winter v. Natural Resources Defense Council (the Navy sonar training case) that the standard for injunctions in NEPA cases is not any different from that in any other case. In other words, injunctions are not automatic – or even presumed – in NEPA cases. Instead, the party seeking the injunction must satisfy the traditional four-factor test in order to obtain relief.

In Monsanto, the Court simply put the final nail in the coffin of the idea NEPA is somehow different. Citing to cases suggesting that the standard may be more lenient under NEPA, the Court yesterday said that:

The statements quoted above appear to presume that an injunction is the proper remedy for a NEPA violation except in unusual circumstances. No such thumb on the scales is warranted. … It is not enough for a court considering a request for injunctive relief to ask whether there is a good reason why an injunction should not issue; rather, a court must determine that an injunction should issue under the traditional four-factor test….

Here, the Court concluded that an injunction prohibiting even partial deregulation of RRA was overbroad. Moreover, because no one challenged the District Court decision striking down APHIS’s original deregulation decision, those opposing use of RRA will have another opportunity to go to court and seek an injunction in the future, should APHIS again try to deregulate RRA without having first complied with NEPA.

The lesson? If you want an injunction for a NEPA violation, you better be able to demonstrate that the balance of equities and the public interest are on your side.

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Two seemingly unrelated reports last week serve as a reminder that coal remains very much under siege. First, Earthjustice, on behalf of a number of environmental organizations, filed a petition with EPA under § 111 of the Clean Air Act requesting that EPA identify coal mines as an emissions source and, consequently, establish new source performance standards for coal mine emissions of methane and several other categories of pollutants. 

Second, as Daily Environment reported, the Army Corps of Engineers suspended use of Nationwide Permit 21 for the six states in the Appalachian region, covering Kentucky, Ohio, Pennsylvania, Tennessee, Virginia, and West Virginia. The decision means that, at least for now, mountaintop removal mining operations in these states will have to apply for and obtain individual Clean Water Act permits, rather than relying on the Nationwide permit.

Other significant regulatory actions affecting the long-term economics of coal include EPA’s decision to tighten regulation of coal combustion residuals, whether through identification of CCR as a hazardous waste or through regulation under RCRA subtitle D – with the current betting being on listing of CCR as a hazardous waste, and EPA’s Tailoring Rule, which will focus initial regulation of GHG emissions on large stationary sources, the most obvious of which are large coal-fired power plants.

All of these actions are nominally independent, but if anyone thinks that at least the NGOs such as the Center for Biological Diversity and Earthjustice don’t see these as related actions the cumulative goal of which is to end use of coal, they’re just not paying attention. Does Lisa Jackson feel the same way? I doubt she’ll ever tell us, but I think I know the answer.

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Yesterday, the Supreme Court decided, 8-0, in Stop the Beach Renourishment v. Florida Department of Environmental Protection, that a Florida law which allows the State DEP to fill in submerged land (owned, under Florida law, by the State), and then to cut off the littoral owners’ rights to accretion of the beach front without paying compensation, was not a taking requiring compensation under the 5^th Amendment. The decision was fairly easy, even for the property rights wing of the court, because it concluded that Florida law had always provided for such a result, so that the action by the DEP did not change the private owners’ preexisting rights.

However, the decision masks both continuing deep divisions on the Court concerning Takings Clause issues and confusion, if not incoherence, in the Justices' thinking.  As I noted when the Court took the case, the Court in Lucas distinguished state regulatory action limiting owners’ use of the property from “restrictions that background principles of the State’s law of property and nuisance already place upon land ownership.” I think it's a specious distinction. We used to regulate by common law of nuisance. Now we regulate by statute and regulation. Why should the common law be treated differently by the Supreme Court for Takings Clause purposes than statutes or regulations? 

In yesterday’s decision, four members of the Court answered this question. It turns out, according to Justices Scalia, Alioto, Roberts, and Thomas, that judicial changes to the common law may also subject the government to a regulatory takings claim. The reason? It is that, according to Justice Scalia, “the Constitution was adopted in an era when courts had no power to ‘change’ the common law.” News to me. I hadn’t realized that there was a halcyon day when the common law was fixed and perfect. Thus, it turns out, common law restrictions on property avoid the taking label only if they existed as of the time of the Constitution.

Justices Kennedy, Sotomayor, Breyer, and Ginsburg concurred in the judgment (Stevens did not participate), but stated that it was premature to try to determine when judicial decisions might provide grounds for a takings claim. Justice Kennedy did emphasize that the plain language of the Takings Clause does not address what are now known as regulatory takings: 

The Framers most likely viewed this Clause as applying only to physical appropriation pursuant to the power of eminent domain.

Of course, Justice Kennedy is right on this score – a point somehow ignored by Justice Scalia in his originalist approach to constitutional interpretation. 

I normally represent private property owners and there are certainly times when, it appears to me, the government tries to achieve what might be noble objectives on the backs of private owners, simply because it doesn’t want to bear the cost.  Nonetheless, I think that this issue isn’t that complicated and the proper resolution would eliminate most takings claims. If a private use of land unreasonably imposes costs on neighbors or the public, then that use can be restricted, either by courts or by regulatory agencies, without payment of compensation. That type of regulation simply isn’t a taking. And, yes, the definition of “unreasonable” may change over time. That’s life in the big city – or the beachfront. Get over it.

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It may be time to learn a new acronym.  The 10 RGGI states, plus Pennsylvania and Washington DC have banded together to create the Transportation and Climate Initiative (TCI) -- a group that has pledged to create a plan to address the estimated 30% of greenhouse gas emissions on the eastern seaboard caused by the transportation sector. 

In a Declaration of Intent released Wednesday, the leaders of the environmental, transportation and energy agencies of Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont and Washington DC, pledged to develop and implement a three-year work plan that outlines how the region can cut greenhouse gases from vehicles and improve efficiency of regional transportation systems.   The TCI builds on RGGI (which does not itself regulate fuels or transportation, but began the states' collaborative efforts on the issue of greenhouse gas emissions) and the 11-states' low carbon fuel memorandum of understanding signed in December.

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Product stewardship is definitely in vogue. The Daily Environment Report has just noted that the United State Conference of Mayors has adopted a resolution calling for “Extended Producer Responsibility For Products.” I understand the arguments in favor of product stewardship. From an economic point of view, the disposal costs associated with products and product packaging can be seen as an externality. Internalizing those costs would give manufacturers and distributors incentives to minimize those costs, through reduced packaging or changes in design/manufacturing that would reduce the costs associated with product disposal.

Nonetheless, I’m skeptical of the USCM resolution and wonder about how “producer responsibility” will actually get implemented on the ground. The USCM resolution describes the “costs paid by local governments to manage products,” traditionally seen as a core governmental function, to be “in effect, subsidies to the producers of hazardous products and of products designed for disposal.” Language like this might reasonably lead one to conclude that the Mayors’ concern isn’t product stewardship, but just reducing local DPW budgets.

Taxes on the cost of disposal might cause manufacturers to change their processes to reduce the amount of waste associated with the end of their products’ life, but what if the most efficient way to handle such waste is still through centralized collection and disposal by municipalities? Perhaps one of my more informed readers will tell me how product stewardship can be operationalized to provide the appropriate incentives on manufacturers to reduce the life-cycle cost of their products while still leaving the handling and disposal of waste products where they can still be performed most efficiently. 

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EPA held a public hearing this week on its proposed MACT standards for industrial boilers. The issue may not be as sexy as climate change, but it’s an important rule and not just for those operating industrial boilers. For example, the cement industry has burned 50 million tires – including steel belts – according to its own data. EPA wants to classify such tires as a solid waste, rather than a fuel, which would subject cement kilns to incinerators standards. This has the Rubber Manufacturers Association up in arms. (Query: Does the Michelin Man have arms?)

Industry representatives say that the standards simply can’t be met, arguing that EPA cherry-picked the best performance for different air contaminants across a range of facilities, but ignored data showing that no facilities can actually meet all of the standards. According to the Daily Environment Report, Matthew Todd of the American Petroleum Institute described the proposal as “Franken-MACT.”

I suspect that EPA is going to be very skeptical of these claims. Rightly or wrongly, EPA’s view is that industry tends to cry wolf regarding the feasibility of complying with new regulatory standards. In any case, EPA also tends to think of technology-forcing as part of its mission. Time will tell on this one, regarding both EPA’s willingness to meet industry at least part way and industry’s ability to comply with the standards.

The tire issue, which is merely one example, also calls to mind EPA’s current debate regarding regulation of coal combustion residuals. How does EPA balance what it regards as fidelity to statutory requirements with the need to encourage beneficial and economic reuse of what would otherwise be waste materials? At this point, EPA’s thumb appears to be on the regulatory side of the scale, rather than the reuse side. Not surprising, but not necessarily encouraging. 

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A week after the Senate’s rejection of the Murkowki resolution last week, where does climate change stand in Congress? The defeat of the resolution is not the end for those who don’t want EPA to regulate under existing authority. Senator Rockefeller hopes to get to the floor a bill that would delay EPA regulation of stationary sources for at least two years, but keep in place the mobile source compromise reached last year. Rockefeller has stated that he hopes to get the votes of some Senators who opposed Murkowski’s resolution.

What about cap-and-trade legislation? Notwithstanding the President’s stated commitment to getting it passed, it’s not obvious that the votes are there. Senator Lieberman, one of the sponsors, is now saying that the bill deserves a debate, notwithstanding the absence of 60 votes. Not exactly an encouraging prognosis for those who want legislation to be enacted.

I’ve got to say, it looks as though paralysis remains the word of the day. The Senate may be the world’s greatest deliberative body, but with respect to climate change, it’s difficult to see anything other than sound and fury, signifying nothing, for the near term. 

And that’s two Shakespeare quotes in one month.

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In the Regional Greenhouse Gas Initiative's (RGGI) eighth auction of CO₂ credits on June 9th, the clearing prices were the lowest yet – $1.88 for 2009-2011 credits and the auction floor of $1.86 for 2012-2014 allowances.  Despite these low prices, the auctions still brought in some $80 million.  In total, cumulative RGGI proceeds to be used by the 10 participating states for renewable energy, energy efficiency and low-income energy assistance programs now total $662.8 million.

RGGI's announcement of the auction results highlights some of the specific programs in which the states have invested, and the returns we are already seeing from these investments.  For example, in Connecticut, electric and gas energy efficiency programs, funded in part by RGGI proceeds, are producing more than $4 for every $1 invested.  New York reports a return greater than 8 to 1 for its investments in renewable energy systems.  And the predictions are even larger:  Massachusetts reports that energy efficiency programs, funded in part by RGGI, will generate roughly $6 billion in consumer energy savings in Massachusetts over the next 3 years. 

On the whole, the RGGI states are investing around 60% of the proceeds from the auctions in energy efficiency.  Energy efficiency measures such as building retrofits, heating system replacements and appliance upgrades are predicted to shave 20 to 30% off consumers' utility bills over the next few years. States are also investing in large-scale renewable energy development as well as programs to deploy distributed generation, such as solar energy and hot water systems on  homes, schools, and businesses.

Although participation and prices were both down for this second auction of 2010, all 2010 vintage and 2013 vintage allowances available for purchase were sold – a change from the previous two auctions, in which supply for allowances to be used in the 2012-2014 compliance period outpaced demand.   Perhaps due to the drop in the number of entities participating, electric generators subject to RGGI purchased 92% of the 2010 vintage allowances – up from 85% in March's auction – and 100% of the 2013 vintage allowances.

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As you might have heard, late yesterday afternoon, the Senate voted 53-47 to reject a procedural motion that would have allowed a vote on Senator Murkowski's disapproval resolution: a long-winded way of saying that, for now, the EPA maintains its authority and scientific finding that greenhouse gases endanger public health and welfare. 

As Seth noted a few weeks ago, the political dynamics of this vote are complex, bringing together strange bedfellows and inviting interesting predictions about what happens next.  On the one hand, environmental groups are claiming victory in the resolution's failure, which breaks down pretty closely along party lines: all 41 Republicans and six Democrats voted in favor.  On the other hand, some moderate Democrats who voted against the resolution are now rallying behind another bill that would restrict EPA's authority.  That bill, which would create a two-year delay for implementation of EPA climate rules for stationary sources was introduced in March by Senator Rockefeller of West Virginia, who himself voted in favor of the Murkowski resolution.

To further add to the strangeness, it's the narrowness of the vote that is being lauded by Senate Majority Leader Reid, who told reporters after the vote, "it's obvious people want some rules and regulations."

But what rules and regulations do they want?  That's the real question of the hour.  Perhaps after next week's full Democratic caucus, we'll have a better idea, at least about what rules and regulations might be likely to come to a floor vote.

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Last week, EPA released its Clean Watersheds Needs Survey 2008 Report to Congress. I have three immediate reactions to the Report. The first is that there are a lot of needs out there. The Report’s bottom line is that there is currently an expected shortfall of $298 billion over the next 20 years for clean water infrastructure. As Congress turns from short-term stimulus spending to long-term concerns about the deficit, it’s difficult to see Congress being eager to hear National Association of Clean Water Agencies Executive Director Ken Kirk say that

the federal government must become a long-term partner in developing a sustainable funding mechanism to address the growing infrastructure funding gap.

My second reaction is that I’m skeptical of these numbers. I don’t doubt the big picture funding gap, but it’s clear in a quick review that different states report these numbers differently. For example, as readers of this blog know, both EPA and Massachusetts DEP are making big pushes to increase stormwater regulation in Massachusetts. However, the Report states that, while Massachusetts has almost an overall $8 billion shortfall, its stormwater needs are only $41 million. The Report further states that Massachusetts needs literally zero money for stormwater conveyance infrastructure and only $22 million for treatment systems. Pennsylvania, on the other hand, apparently needs $6 billion for stormwater infrastructure. 

As much as I love my adopted state, I’m doubtful that Massachusetts is that far ahead of Pennsylvania. I sure hope that, before spending decisions are made, someone takes a closer look at these numbers.

My third reaction is one of fear, particularly on the stormwater front. Nationally, the overall shortfall associated with stormwater is nearly $43 billion. We’ve already seen in Massachusetts efforts to push stormwater compliance costs onto private landowners. With that sort of shortfall, the pressure to do so can only increase, particularly as local governments are starved for revenue. 

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With work on financial reform almost complete, Senator Dodd announced this week that his remaining legislative priority is the enactment of the Livable Communities Act, S. 1619. There is a companion house bill, H.R. 4690. A hearing on the Senate bill will be held tomorrow.

It’s hard to be against livable communities and I may just be getting crotchety, but this legislation seems some combination of pointless and misguided. The legislative findings discuss traffic congestion, the percentage of oil used for transportation and CO₂ generated from transportation, and the need to encourage and sustain compact development and historical town centers.  And we’re going to solve this – or even make a dent – by making grants to “micropolitan” statistical areas? I don’t think so.

I agree that sprawl is a problem. I support transit-oriented development. However, there are reasons why we see development where we sit it in the United States. People still like the freedom and flexibility of personal automobile use. If we think that all that driving causes externalities – and I do – I’ve got two words for you: carbon tax. Until we make people internalize the cost of their living choices, they will continue to make those same choices and money spent on encouraging livable communities will be largely wasted. If we can’t summon the political will to tax carbon, we shouldn’t pretend that we’re solving the problem by spending money on micropolitan areas.

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Last Friday, the Court of Appeals for the 5^th Circuit issued an order – boggling the minds of lawyers and non-lawyers alike – dismissing the plaintiffs' appeal in Comer v. Murphy Oil, one of the climate change nuisance cases. As the order and dissents make clear, it’s quite a set of circumstances. The District Court dismissed the case. A panel of the 5^th Circuit reversed. A request to rehear the case en banc was made. Seven out of 16 judges recused themselves. Of the nine remaining judges, six voted to rehear the case en banc. 

Three months later, one of the nine judges who voted on the en banc petition recused herself, leaving only eight – or half – of the judges. After requesting and receiving letter briefs from the parties, five of the remaining eight judges concluded that the last recusal deprived the Court of Appeals of a quorum, which means that the Court cannot hear or decide the appeal. Since the Court had already determined that, pursuant to its rules, the original panel decision was vacated when the decision to hear the case en banc was made, there is now no Court of Appeals decision; nor will there ever be one. The District Court decision dismissing the case, which had been reversed by the panel, is now in effect again, and the plaintiffs’ only remedy is a Supreme Court appeal.

As readers of this blog know, I’m not a believer in climate change nuisance litigation. As a formal matter, I think plaintiffs probably lack standing in these cases. As a practical matter, nuisance litigation is not the right way to regulate GHG emissions. However, I have to admit that I find the order breathtaking. The plaintiffs have a formal statutory right of appeal. As Judge Dennis pointed out in a scathing dissent,

federal courts lack the authority to abstain from the exercise of jurisdiction that has been conferred…. Just as courts have an “absolute duty … to hear and decide cases within their jurisdiction, [] litigants have a corresponding due process right to have their cases decided when they are properly before the federal courts.”

I’ll spare you the details, but Judge Dennis provided several different practical solutions that the Court could have utilized to hear the case.

My initial reaction is that this will slow Supreme Court review of this issue. The 5^th Circuit was likely to affirm the District Court decision, which would have created a split with the Second Circuit. The order issued last week means that there is no circuit split at this point. While the plaintiffs can appeal the order to the Supreme Court. even if the Supreme Court were to reverse the order, it would only be to order the 5^th Circuit to hear the appeal on the merits. If the 5^th Circuit is to hear the case, it’s years away at this point. 

Jarndyce v. Jarndyce, anyone?

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