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

One thing supporters of coal will be thankful for tomorrow is this week's announcement by the Environmental Protection Agency (EPA) that it has finalized two rules governing the underground sequestration of carbon dioxide.  Both rules are designed to support and facilitate the commercial development of safe, large-scale carbon capture and storage (CCS) technologies, perceived by many to be the best hope for the future use of coal.

The first rule creates a new "Class VI" injection well under EPA's Underground Injection Control Program through the the Safe Drinking Water Act.  Elements of the rule are based on the existing regulatory framework, but tailored to address the unique issues carbon dioxide can create, such as the fact that it floats and moves within subsurface formations, and corrodes its surroundings when combined with water.   Although CCS has been used on a smaller scale for years, such as to facilitate enhanced recovery of oil, the large volumes that are anticipated to be injected as part of a full-scale deployment of the technology present different issues entirely.

The rule provides guidance on some, but not all, of the areas highlighted as in need of further support in the August report of the Interagency Task Force on CCS.  For instance, the rule outlines characteristics for siting CCS wells, requirements for construction and operations, automatic shutoff systems.  It also provides a recommended 50-year monitoring program post-injection as well as clarifying financial responsibility requirements for emergencies, site closure and cleanup.  The rule also provides considerations for transitioning Class II permits for existing enhanced recovery wells to Class VI, based primarily on whether the primary purpose is assisting with the recovery of oil or long-term storage of the CO₂ itself.

The second rule finalizes the requirements for CCS ventures under the mandatory greenhouse gas reporting rule (Subparts RR and UU of 40 CFR Part 98).  The rule requires permit holders to create a plan to monitor, report and verify the amount of CO₂ sequestered, using a mass-balance approach, and could lay the groundwork for those captured tons to become valuable offsets under future policies.  The reporting requirement begins in 2011.

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As the holiday approaches, I am particularly thankful that I am not counsel to the Washington State DOT in United States v. Washington State DOT, a case that continues to make me want to take EPA, DOJ, and United States District Judge Robert Bryan by the neck and ask them what the heck are they thinking. 

In July, I posted about Judge Bryan’s decision holding that the Washington DOT “arranged” for the disposal of hazardous substances by designing and operating a highway drainage system that deposited highway runoff containing hazardous substances into what became the Commencement Bay Superfund Site. As I noted then, the logic of that decision is that every Clean Water Act stormwater problem is now potentially a Superfund claim and every highway department – and every private developer with a parking lot – potentially faces not just stormwater enforcement, but a Superfund cost recovery suit. 

Last week, Judge Bryan issued another decision regarding the DOT’s potential arranger liability. Although his earlier decision held that Washington DOT had arranged for the disposal of hazardous substances through the design of its highway drainage systems, the court had not actually found the DOT liable under § 107(a)(3) of CERCLA. The DOT argued that, even if it arranged for the disposal of hazardous substances, the United States hasn’t “established a connection between the hazardous substances found at the [DOT] Property and the response costs incurred at the [Superfund site].” 

Judge Bryan wasn’t buying it. Instead, Judge Bryan concluded that, where plaintiff can establish contamination at defendant’s property that is at least similar to contamination at the Superfund site, and can establish a “plausible migration pathway by which the contaminant could have traveled from the defendant’s facility to the plaintiff’s site,” plaintiff has met its burden. The burden then shifts to the defendant to create a genuine issue of fact regarding causation.

Judge Bryan further concluded that it is up to the trial court to determine when to consider divisibility and apportionment defenses, and noted that “it would be consistent with the purposes of CERCLA to first fix liability and then determine any divisibility/apportionment defense based on causation.”

In other words, design a stormwater drainage system that directs contamination towards an area that needs a cleanup, and you are in Superfund litigation up to your neck until the final verdict is rendered.

Thanks, but no thanks.

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Daily Environmental Report noted earlier this week that Bob Perciasepe, EPA Depute Administrator, has told the National Environmental Justice Advisory Council that environmental justice is the “largest remaining challenge” that EPA must address systematically. This is not particularly surprising, since Lisa Jackson has made EJ a priority.

However, I was left nearly speechless by the statement in Daily Environment Report that Perciasepe indicated that

Polluted communities are also not likely to be targeted for business investment, meaning those communities have limited economic opportunities in addition to disproportionate pollution burdens.”

Once again, I’m left wondering what planet EPA is from. Those in the private sector would be stunned by linking the need for EJ with the need for more economic development in poor communities. EJ can be a real issue. Where racial minorities suffer disproportionate burdens because of their race, everyone should be concerned.

At the same time, however, EPA has to realize that EJ requirements are far more likely to retard economic development than encourage it. Where EJ concerns prevent economic development because organized groups label them as LULUs, or Locally Unwanted Land Uses, that may be an EJ success, but it doesn’t contribute to economic development. We can’t wave a magic wand and make the private sector want to site a nice clean office park in a distressed area, just because the residents would prefer that to some slightly messier use.

Even where properties are already contaminated, my experience is that EJ concerns are more likely to discourage redevelopment than encourage it. Brownfields properties are challenging enough without an additional layer of EJ review. One would think that anyone cleaning up contaminated property for almost any kind of economic development would be welcomed by the communities surrounding such properties. However, EJ requirements too often scare aware Brownfields developers. Again, this may be an EJ victory and it may be what the communities want, but to suggest that systematic integration of EJ issues into EPA’s programs will increase economic development in poor communities is, to put it gently, wishful thinking.

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The cap in the nation's first mandatory cap-and-trade system is probably set too high.  As reported by ClimateWire this morning, it seems increasingly likely that participants in the Regional Greenhouse Gas Initiative (RGGI) will easily meet and beat RGGI's ultimate goal, even without any changes or reductions actually caused by the program.

RGGI's initial aim was to cut CO₂ emissions from large power plants in the 10-state region to 10% below 2005 levels by 2018.  This plan involved two stages: one with the cap stabilized at 180 million tons CO_2e from 2009-2014, and the second, from 2015-2018, with a cap declining by 2.5% each year.   However, in the two years that the program has been in action, emissions have already declined to 33% below 2005-levels.   Although the decline has been commonly attributed to the economic downturn, NYSERDA found that fuel switching by power suppliers from coal and petroleum to natural gas (cheaper than it was in 2005) has in fact had the greatest impact, contributing 31.2% of the decline. 

At a meeting on November 12, RGGI, stakeholders gathered to hear briefings on projections for future emissions, why the carbon footprint was overestimated thus far, and what changes need to be made to RGGI going forward.  Consultant IGF International reported that although emissions in the region are predicted to grow steadily into the future, they will stay well below RGGI's initial reduction target through 2030, even without additional reductions caused by the energy efficiency and renewable energy programs funded by RGGI itself.  Their data suggests that the RGGI cap would have to be tightened from 10% reductions by 2018 to 22% or higher, for the cap-and-trade system to have any impact at all. 

The RGGI member states are currently involved in evaluating the program, and could make changes to the cap, as well as the rest of the program, before the second compliance phase begins in 2012. It will be interesting to see what decisions they make over the next year.

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EPA has finally released it long-awaited PSD and Title V Permitting Guidance for Greenhouse Gases, also known as the GHG BACT Guidance. E&E News quoted Gina McCarthy as saying that GHG permitting would be “business as usual” and that the transition to issuing PSD permits for GHGs would be relatively smooth. 

Not.

It’s certainly true that the GHG BACT Guidance says nothing particularly new about how permitting agencies should perform BACT reviews. Giving credit where credit is due, I’ll complement EPA for using plain English and describing the basic BACT process about as cogently and concisely as I’ve seen. The BACT Guidance also heavily emphasizes the use of energy efficiency measures in attaining BACT for GHGs, as has been expected. That should provide at least some comfort to the regulated community.

Having praised the BACT Guidance, I’ll now do my best to bury it. I just don’t think anyone can truly say that it actually provides any guidance to either state permitting agencies or the regulated community regarding what in fact will constitute BACT. In fairness to EPA, I think that’s because they don’t know, but that’s hardly a comforting thought. It’s got to be worrisome to regulated facilities that they are now subject to a requirement to demonstrate BACT for GHG when they make a major modification at their facility and they simply don’t know what it will take to comply with the GHG requirements.

Take, for example, EPA’s discussion of when an agency requirement to evaluate a particular control option might be considered to “redefine the source.” The BACT Guidance discusses this issue for six pages, but provides what seems to me to be no guidance at all. The Guidance repeats the bromide that

EPA has recognized that a Step 1 list of options need not necessarily include inherently lower polluting processes that would fundamentally redefine the nature of the source proposed by the permit applicant. BACT should generally not be applied to regulate the applicant’s purpose or objective for the proposed facility.

However, the Guidance then ominously states that permitting agencies must

take a ‘hard look’ at the applicant’s proposed design in order to discern which design elements are inherent for the applicant’s purpose and which design elements may be changed to achieve pollutant emissions reductions without disrupting the applicant’s basic business purpose.

If that doesn't send chills down the spines of engineers everywhere, I don’t know what will.  Similarly, the guidance says that "EPA continues to believe that permitting authorities can show in most cases (my emphasis) that the option of using natural gas as a primary fuel would fundamentally redefine a coal-fired electric generating unit."  Unfortunately, the guidance then notes that where a power plant already combusts another fuel, such as for start-up purposes, it would be appropriate to evaluate whether use of that fuel might be BACT.

The Guidance is too long to summarize fully in a blog post, but I do want to leave you with one image, courtesy of EPA. In discussing the requirement to identify energy efficiency options, the Guidance helpfully states that not “every conceivable improvement that could marginally improve the energy efficiency of the new facility” need be listed. In making this concession, EPA cited to Sierra Club v. EPA, which “recognized the undesirability of making the BACT analysis into a ‘Sisyphean labor where there was always one more option to consider.’”

We can only hope that EPA and state permitting agencies really take those words to heart as this process unfolds. I’m not optimistic.

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Almost all – 46 – states have delegated programs under the Clean Water Act. One criterion that EPA must determine has been satisfied before approving delegation is that the state has the ability to "abate violations of the permit … including civil and criminal penalties and other ways and means of enforcement."

EPA’s regulations provide that this criterion will be met if :

State law allows an opportunity for judicial review that is the same as that available to obtain judicial review in federal court of a federally-issued NPDES permit. A State will not meet this standard if it narrowly restricts the class of persons who may challenge the approval or denial of permits….

With respect to citizen suits, this language seems fairly clear. As long as the state does not impose heightened standing requirements, the same opportunity for judicial review exists.

When EPA approved delegation of the NPDES program to Alaska, notwithstanding that Alaska has a version of the so-called “English Rule,” which requires that losing parties pay fees to the winners, various citizen groups challenged the delegation, on the ground that the Alaska fee shifting provision means that, as a practical matter, Alaska restricts access to the courts in ways not permitted under the CWA. Last week, in Akiak Native Community v. United States Environmental Protection Agency, the 9^th Circuit Court of Appeals upheld the delegation. 

I actually wish that the Court had gone further than it did. As noted above, I think that, in the absence of different standing requirements, there is a comparable “opportunity” for judicial review. Instead, the Court’s decision was more limited, holding only that, as a result of certain limits on Alaska’s application of the fee-shifting rule, the plaintiffs had not met their burden to establish that EPA’s decision was arbitrary and capricious. Indeed, the Court noted that EPA could potentially reverse the delegation if it later finds in practice that Alaska courts are applying the fee-shifting provisions in ways that discourage citizen plaintiffs.

I just want to know – what’s so bad about fee-shifting?

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I’ve always thought that implementation of EPA’s GHG rules for stationary sources was inevitable in the absence of climate change legislation. The Supreme Court told EPA that GHGs are a pollutant under the Clean Air Act. Given the decision in Massachusetts v. EPA, EPA’s subsequent regulatory moves have been pretty much unavoidable. 

Since the statute seems to mandate GHG regulation, only Congressional action could block the rules. While a House majority seemed plausible, even before the election, getting 60 votes in the Senate always seemed a much stiffer proposition. Moreover, one could always expect an Obama veto, if legislation precluding EPA’s rules somehow were to get through Congress. Now, I’m not so sure.

If it turns out that there are enough coal state Democrats to move the legislation through the Senate, and if the supporters keep attaching the legislation as a rider to bills that the Administration does want, it may become difficult at some point for Obama to continue to veto it. A more tantalizing possibility is that the GOP might use such legislation as a bargaining chip with Obama over energy legislation, agreeing to support energy legislation, but only if Obama agrees to a prohibition on EPA GHG rules for stationary sources. In that situation, would Obama throw the GHG rules under the bus? Now that’s an interesting scenario.

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Stop the presses: According to the Daily Environment Report, EPA’s director of the Office of Federal Activities, Susan Bromm, has acknowledged that concerns about climate change and environmental justice are “contributing to the size, cost, and time-consuming nature of environmental impact statements….” Nonetheless, Ms. Bromm apparently asserted that these "analyses do not have to be overwhelming,” and she blamed, at least in part, agencies which “overreact to the fear of litigation.”

Not surprisingly, a speaker on the same panel from DOT felt otherwise. According to Helen Serassio, an attorney at DOT:

We’ve gotten to the point where they’re kind of out of control.

Ya’ think?

The notion that agencies are overdoing environmental reviews under NEPA because they are unreasonably concerned with potential litigation would strike many as absurd. It’s so easy for a judge, who doesn’t want to be the one who approved a nuclear plant that later has some kind of disaster, to say that the EIS wasn’t sufficiently thorough. For any worst case analysis, there’s always something worse, and for any nervous judge, it’s just too easy to ask for that additional analysis.

What’s lost from the discussion is any perspective, any sense that compliance with NEPA costs money and that delay of important projects imposes its own set of costs. I’m a supporter of NEPA. The requirement to assess environmental consequences of federal decisions certainly improves those decisions. However, those reviews do come with costs attached and, from where I sit, the judicial thumb is firmly on the side of more review at this point, without regard to any kind of cost-benefit analysis. As Ms. Serassio said:

We’ve gotten to the point where they’re kind of out of control.

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 The world of greenhouse gas reporting just got a little more interesting. The Greenhouse Gas Protocol Initiative (a collaboration between the World Resources Institute and the World Business Council for Sustainable Development, and involving the participation of hundreds of companies around the world), released their draft Scope 3 Accounting and Reporting Protocol on November 5th for stakeholder review. The Scope 3 protocol takes the form of two documents – the Product Accounting & Reporting Standard and the Corporate Value Chain (Scope 3) Accounting and Reporting Standard. The two sets of calculations from the two guidance documents are designed to work in tandem, as shown in this figure from the reports.

Under the GHG Protocol, emissions attributable to a company are divided into 3 scopes: Scope 1) direct emissions from sources it owns or controls (like factory smokestacks and company-owned cars); Scope 2) emissions attributable to the electricity, heat and cooling the company consumes; and Scope 3) everything else.  Scope 3 includes both upstream activities like services and products purchased by the company; downstream activities such as the emissions from the consumer’s use and disposal of the company’s product; and related activities such as the leased building, investments, and even emissions from employees’ commuting and business travel. Not unsurprisingly, given the breadth of sources that can be included, Scope 3 emissions are the largest source of emissions for most companies and thus represent the largest opportunity for greenhouse gas reductions.

The previous GHG protocols, issued in 2004 and 2005, focused on Scopes 1 and 2, but highlighted the need for an additional protocol for Scope 3, which was “optional” for reporters.  Although some took on the challenge, Scope 3 emissions are the hardest for companies to reliably measure.

The point of the protocol is to make such measurements more reliable.  As the Corporate Value Chain report highlights, a comprehensive approach to corporate GHG emissions measurement, management and reporting that incorporates all 3 scopes of emissions would enable companies to focus on the most cost-effective or largest opportunities to reduce emissions within the full value chain, and lead to more sustainable decisions. The authors caution, however, that even with a Scope 3 standard, the protocols are not designed to support comparisons between companies’ emissions. They will aid, however, in simplifying and reducing the costs of taking on a Scope 3 inventory, and increasing consistency and transparency in GHG accounting and reporting.

The Product Standard report provides a generalized framework to support the company in quantifying and reporting the GHGs generated during a product's life cycle (regardless of what the product might be). The goal of the standard is to assist companies in making informed choices about the products they manufacture, sell, purchase and use.  Although the authors caution that the standard is not intended to support GHG accounting for the purposes of offsets (from reductions) or carbon neutrality, the protocol will aid in making reliable emissions-related information about a product available in the public domain -- such as the New Zealand wine that reports its own carbon footprint on the bottle.  Although primarily a sales gimmick at this point, as more information becomes available, consumers can make more informed and sustainable choices as well.

Comments on the draft protocol may be submitted through the GHG Protocol website here.

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Is mercury a local problem or not? For years, power plant operators have claimed that mercury deposition is really a global problem. Environmentalists have pointed to studies arguing that hot spots affected by local emissions do exist. This week, according to the Cape Cod Times, John Colman, a USGS researcher – hardly likely to be a shill for the power industry – is going to report results of a study showing that mercury accumulation in both soil samples and fish tissue are comparable in Cape Cod and the Olympic Peninsula in Washington. Given prevailing wind directions, it’s hard to find a local source for mercury on the Olympic Peninsula.

According to the Cape Cod Times, Mr. Colman said that "the idea that burning coal is screwing up fish all over the Northern Hemisphere is kind of terrifying.” And I’ll bet that the United States power generation industry finds it terrifying that it may have to make very substantial – and costly – reductions in mercury emissions even though US emissions are about 5% of the world total and may not have a significant impact on the US environment.

I’m not discounting the need for regulation in the United States. Mercury is a real toxin. However, it would also be wrong to ignore the global aspect. To regulate the US power generation industry because doing so will solve a significant public health and environmental problem is one matter. To regulate the US power generation industry because we have to send a signal to the world that we are willing to regulate ourselves in order to persuade China to control mercury from its own coal-fired power plants is another. When the state of our nation is such that businesses are looking to put “China-Free” labels on their products, it will not be easy to persuade a significant segment of the population to support costly mercury controls when there is evidence that a substantial part of the problem stems from cheap coal-fired energy in China that delivers a twofer – allowing China to make goods more cheaply, while exporting its mercury pollution downwind to the United States.

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