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

After the death of Waxman-Markey, and given the current political climate, cap and trade is the Legislation Which Shall Not Be Named. Instead, there is discussion of either a renewable electricity standard (RES) or clean electricity standard (CES), and the talking points for supporters concern energy security and the growth of a clean energy economy, not climate change (also known as the Reality Which Shall Not Be Named). 

Either an RES or an CES would spur use of alternatives to fossil fuels in electricity generation and would lead to decreases in CO₂ emissions. However, as a report issued yesterday by the Congressional Budget Office highlighted, neither an RES nor a CES could reduce carbon emissions in as cost-effective a manner as could a cap and trade system. Moreover, a cap and trade program would ensure a certain level of GHG reductions, while the GHG impact of any particular RES or CES program would be uncertain.

I still don't understand how a market-based regulatory approach that originally had to be sold to skeptical environmentalists because it was seen as a "license to pollute" has become the poster child for government overreaching. 

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The fight about guidance and rules is in the news again. Yesterday, EPA finalized its guidance on Clean Water Act permitting with respect to mountaintop mining. As most of our readers know, EPA issued Interim Guidance in April 2010. In January 2011, in National Mining Association v. Jackson, Judge Reggie Walton, while denying plaintiff’s preliminary injunction, signaled that he thought that EPA’s Interim Guidance probably was a legislative rule that should have gone through notice and comment rule-making.

Judge Walton’s decision did not deter EPA, which finalized the guidance without significant changes. As the Legal Planet blog – a supporter of the guidance – noted, “the only differences between the interim guidance and this final one are cosmetic.” What are the nature of those cosmetic changes? They emphasize the flexible, non-binding nature of the guidance, hoping to fare better in the next round of judicial review than the agency did in defending the Interim Guidance. 

EPA reiterates that this guidance is guidance and not a rule. The CWA provisions and supporting regulations described in this document contain the legally and practically binding requirements. This guidance does not substitute for those provisions or regulations and is not itself a regulation. It does not impose legally or practically binding requirements on EPA, the Corps, or the regulated community, and may not apply to a particular situation depending on the circumstances. Any decisions regarding a particular permit will be based on the facts relevant to that permit and will be evaluated in accordance with the applicable statutes, regulations, and case law. Interested persons are always free to raise questions regarding the recommendations in this guidance in a particular situation. EPA will consider whether or not the recommendations or interpretations in this guidance are appropriate in each situation based on the statutes, regulations, and case law. The use of language such as “recommend,” “may,” “should,” and “can” is intended to describe agency policies and recommendations, while the use of mandatory terminology such as “must” and “required” refers to existing requirements under the CWA, its implementing regulations, and relevant case law.

The real trick about guidance is that it is not what EPA says in the document that matters; it is how EPA actually utilizes the guidance in practice. It is in some respects similar to the distinction between a facial constitutional challenge to a regulation and an “as applied” challenge. If EPA actually implements this document as a guide to its decision-making, then it is guidance. If EPA line staff implement it by rote, then it’s a rule. In other words, if it walks like a duck, it’s a duck, even if it does not talk like one.

Time will tell whether the courts believe EPA’s protestations that this really is just guidance. Time will also tell whether EPA implements this as guidance or implements it as a rule.

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What is it with Texans and light bulbs lately?  The gradual increase in energy efficiency requirements of light bulbs required under the Energy Independence and Security Act of 2007 survived Congressman Joe Barton’s (R-Texas) challenge last week when the Better Use of Light Bulbs (BULB) Act, which would have repealed the standards, failed to pass the House by a vote of 233-193.  But on Friday, an amendment attacking the same requirements, introduced by another Republican Texan, Michael Burgess (representing my old hometown), was added to the House bill governing the Department of Energy’s 2012 fiscal budget. The amendment strips funding for enforcement of these standards, but is unlikely to survive the Senate’s consideration of HR 2354 (which also funds the Army Corps of Engineers and the Interior Department Water Programs).  

The challenged provisions in the 2007 energy law require manufacturers to make new bulbs that use approximately 27% less electricity by 2014. That’s all.  As reported in recent stories, manufacturers rose to the challenge, already putting incandescent bulbs into stores that are 30% more efficient than the traditional models and sell for only slightly more.  Such bulbs will save the average family – including Texans – about $100 per year.  What’s more, the lighting industry supports the new standards.

The recent supposed controversy over an energy efficiency measure that easily passed Congress with wide bipartisan support, was signed into law four years ago by President Bush (yet another Texan), and now bears the support of not only environmentalists and consumer groups but also the regulated industry itself, is more than a bit surprising, even in today's highly partisan Congress.

But not as surprising as what’s going on in Texas itself. In late June, Governor Rick Perry signed into law HB2510, a bill that overrides the federal mandate for incandescent bulbs made and sold in Texas, so long as they have “Made in Texas” clearly stamped on them.   The law requires the attorney general to defend citizens of Texas from prosecution by the federal government for manufacturing or selling such light bulbs in the state. It is difficult to see how the Texas legislation could survive constitutional challenge, though the bill analysis prepared for state legislators states that,  “whatever the outcome, protecting the rights of Texas manufacturers is well worth the constitutional fight.” 

Which begs the question: are there actually any manufacturers of incandescent light bulbs in Texas?  As it turns out, No.  But there are LED light bulb manufacturers.

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Last week, AEP announced that it was putting on hold its plans to develop commercial scale carbon capture and storage technology at its Mountaineer plant in New Haven, West Virginia. As explanation, AEP cited the uncertain status of U.S. climate policy. More specifically, AEP CEO Michael Morris noted that it is difficult to get regulatory approval to recover CCS capital costs until GHG reductions are required. 

Well, duh. 

It’s understandable that, in a world where putting a price on carbon emissions has become The Policy Which Shall Not Be Named, those who are trying to move technology forward look to other policy instruments, such as federal grants or subsidies, or tax provisions. A robust clean energy standard would provide increased incentives for technologies covered by the standard, but it is hardly the most efficient approach economically.

To this simple country lawyer’s mind, it’s not really that complicated. I can’t expect those who doubt the reality of climate change to support climate policy. For those who do, at some point we’ve got to recognize that there is no way to reduce carbon emissions, protect industry, and hold consumers harmless. The whole point is that carbon emissions are a negative externality – a cost that no one has been paying. Until we make someone pay those costs, its unrealistic to think that we can really encourage the technologies we need to develop to reduce carbon emissions.

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Last week, in Center for Biological Diversity v. EPA, Judge Henry Kennedy reminded us that, in thinking about whether the existing Clean Air Act requires EPA to address climate change, the actual words of the statute matter. The scope of the climate problem does not obviate the need to parse individual provisions of the CAA and Massachusetts v. EPA did not resolve all issues. 

CBD petitioned EPA to regulate GHG emissions from nonroad engines and vehicles, under § 213 of the CAA, and from aircraft engines, under § 231 of the CAA. EPA did issue advanced notices of proposed rulemakings in response to the petitions, but CBD sued, arguing that EPA has not gone far enough. 

The court rejected CBD’s claims regarding nonroad engines, because § 213 provides only that

If the Administrator determines that any emissions not referred to in [a prior paragraph] from new nonroad engines or vehicles significantly contribute to air pollution which may reasonably be anticipated to endanger public health or welfare, the Administrator may promulgate (and from time to time revise) such regulations as the Administrator deems appropriate . . . .

To the court, the “if” and “may” language, combined with the overall structure of § 213, mandates a conclusion that EPA does not have an obligation to make an endangerment finding with regard to nonroad engines. Even so, as the court noted, EPA does have an obligation to respond fully to CBD’s petition, and EPA’s ultimate action on the petition will itself be subject to judicial review.

With respect to the petition under § 231 regarding airplane engines, the different language of that section compelled a different conclusion.  

The Administrator shall, from time to time, issue proposed emission standards applicable to the emission of any air pollutant from any class or classes of aircraft engines which in his judgment causes, or contributes to, air pollution which may reasonably be anticipated to endanger public health or welfare.

Again looking at the specific language of the statute, including the use of the mandatory “shall,” the court concluded that EPA cannot refuse to make endangerment findings.

The simple lesson from the case? The specific language of the statute matters. The bigger lesson? Unless Congress acts, the courts are going to be requiring EPA to take action with respect to GHG emissions under existing CAA authority. 

We’re thus left in the same bind we’ve been in since Waxman-Markey collapsed. EPA does not have the authority that it and the environmental community want and it cannot regulate GHG efficiently. At the same time, EPA does have authority that conservatives wish it did not have. True climate skeptics may never be convinced, but it still seems that a deal should be possible among environmentalists and conservatives who acknowledge the reality of climate change.

Hope springs eternal.

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Yesterday, EPA finalized the Cross-State Air Pollution Rule, or CSAPR, which was the Transport Rule, which had been the Clean Air Interstate Rule. (EPA must have decided that CSAPR results in a more mellifluous acronym.)

The rule is almost too big to describe, except in its broadest terms. EPA has provided a summary of costs and benefits, but even EPA’s summary does not really explain how the rule will be implemented.

The rough numbers at least give some idea of the scope of the rule and the problem it is addressing. EPA estimates that the rule will reduce SO₂ emissions by 73% from 2005 levels starting in 2012 and will reduce NO_x emissions by 54%. These reductions will eliminate more than 10,000 premature deaths annually, according to EPA’s analysis. Total monetized economic benefits are up to $280 billion annually. EPA estimates annual compliance costs to be only $800 million, though that does not include $1.6 billion in annual costs already being incurred to comply with CAIR. Nonetheless, EPA is going to be able to show any court reviewing this rule an extremely favorable cost-benefit analysis.

I’d be shocked if this rule doesn’t survive judicial review, assuming it is challenged. The D.C. Circuit opinion striking down CAIR pretty much told EPA what to do – it has to implement a rule that ensures that each state meets its own emissions limit. EPA has done that, allowing basically free trading within states, and allowing interstate trading – so long as each state lives within its cap. Given the requirements of the Clean Air Act, it’s hard to see how EPA isn’t required – let alone permitted – to issue at least something very like this rule.

The irony is that the Republicans in Congress who oppose all of EPA’s rules – Representative Mike Simpson (R. ID.) called EPA the “scariest agency in the federal government” – had it in their power to allow EPA to regulate in a more cost-effective manner. Three pollutant legislation that would have allowed interstate trading was on the table in 2009 and 2010. It even had some Republican support. However, now the approach seems to be that it’s better to oppose all environmental legislation, even if that includes legislation that would be unambiguously better than what’s on the books today. 

Oh, well.

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For those of you who left early for the holiday weekend (You know who you are – and more power to you!), I thought I would note that EPA issued a final rule on Friday, deferring application of the Tailoring rule to biomass facilities for three years. The deferral responds to a petition from the National Alliance of Forest Owners. NAFO asserted that

there is near-universal recognition that CO2 emitted from combustion of fuels derived from biomass should be excluded from GHG regulations because production and combustion of such fuels do not increase atmospheric CO2 levels. 

Of course, EPA received comment suggesting that this may not uniformly be the case and that “the use of certain types of biomass as fuel could increase atmospheric CO₂ levels.” EPA’s bottom line? 

The net atmospheric impact of biogenic CO₂ emissions is complex enough that further consideration of this important issue is warranted.

EPA did not specifically mention what is known as the Manomet Report, which served as the basis for the decision by Massachusetts not to grant renewable energy credits, or RECs, for many biomass projects. Nonetheless, it remains notable that EPA made the deferral decision in order to avoid putting a major roadblock in the industry’s way, while Massachusetts refuses to call most biomass renewable – thus putting a major roadblock in the industry’s way. 

I understand federalism (I think). I don’t see RGGI and other state or regional GHG regulatory efforts as inconsistent with federal policy and they can provide some useful lessons. However, I don’t see any federalism advantage here. These policies are simply working at cross-purposes in an area where uniformity should certainly be the goal.

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