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

I’ve been waiting to write this headline ever since the SJC took this case. Today, the SJC issued its long-awaited decision in Moot v. Department of Environmental Protection. For those of you who pay attention to where the waters ebbeth and floweth – or at least where they ebbed and flowed in 1641 – you know that this is the second time that Moot has been before the SJC.

After the SJC struck down MassDEP regulations which provided that landlocked tidelands did not need a license under Chapter 91, as the Commonwealth’s waterways statute is now known, the Legislature took a shot at fixing what would have been a major problem by passing new legislation specifically excluding landlocked tidelands from the need to obtain a license. 

Moot challenged the legislation, arguing that it completely relinquished all of the Commonwealth’s rights in private tidelands, without making the findings necessary to justify such a relinquishment. The SJC did not agree. The Court concluded that the Commonwealth has preserved its rights in landlocked tidelands, and noted that projects subject to MEPA must address project impacts on the Commonwealth’s tideland rights. In essence, the Court concluded that the oversight provided by MEPA was sufficient to demonstrate that the Commonwealth could and would still enforce its rights in landlocked tidelands. Since those rights are still protected, the Court concluded, the Legislature had authority to exclude landlocked tidelands from the need to obtain a license under Chapter 91. 

This is clearly the right result. The only question in my mind is the gymnastics that the Court had to go through to get there. The Court may have concluded that the Commonwealth has not relinquished all of its rights in landlocked tidelands, but does anyone think that the MEPA process will ever result in developers being required to make changes to their projects to protect those rights? I sure hope not. Certainly, the first developer forced to do anything different as a result of that process is not going to be a happy camper. It would have been cleaner for the SJC to acknowledge that the Legislature was effectively relinquishing the public’s rights in landlocked tidelands and to affirm that act. Nonetheless, this decision pretty much did what was needed and a large number of landowners – not just the developers defending this case – are breathing a lot easier this afternoon.

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Massachusetts has an “anti-SLAPP” statute (as do 26 other states at this point, apparently). The law protects “petitioning”, by precluding litigation targeting petitioning, providing an early motion to dismiss, and awarding attorneys’ fees to defendants where a court finds that the defendants were indeed engaged in petitioning activity.

Yesterday, the Massachusetts Appeals Court struck a blow for reason when it determined, in Brice Estates v. Smith, that a trespass is not protected petitioning activity. Those of you outside Massachusetts may be wondering why we needed a court case to tell us this. Those of you inside Massachusetts, particularly in the development community, know where this is headed.

Brice Estates involved a real estate developer, looking to build a large residential subdivision. Low and behold an abutter observed a four-toed salamander – a species protected under the Massachusetts Endangered Species Act. Of course, the developer shouldn’t have been surprised, because developers of projects with significant opposition often learn of mysterious discoveries of endangered species at the project location.

The only aspect of this case that was different was that a specifically identified person was known to have gone onto the developer’s property – thus providing the basis for a trespass claim. The Court of Appeals made clear that, while notifying the authorities of the presence of the salamander was protected petitioning activity, the trespass itself was not. Moreover, the court also made clear that, even if the reason why the owner filed suit was the protected petitioning activity, the owner may still bring the action with respect to the non-protected activity.

Time will tell whether the lesson to NIMBY types is “no shenanigans” or “don’t get caught.”

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To date, the only circuit courts that have reviewed public nuisance claims related to climate change, the Second Circuit, in American Electric Power, and the Fifth Circuit, in Comer v. Murphy Oil, have ruled that such suits can proceed. However, last week the Court of Appeals for the Fifth Circuit decided to hear Comer v. Murphy Oil en banc, which certainly has to give the plaintiffs pause. While I am not fully versed in this issue, a quick glance at the web indicates that statistical analysis confirms one’s naïve assumption, i.e., that a full appellate court often decides to hear a case en banc because a majority thinks that the panel got it wrong.

As I noted when the original decision was issued, even under liberal standing rules, which suggest that the plaintiffs’ harm can be “traced” to the defendant as long as the defendant’s conduct “contributed” to the harm, it’s going to be very difficult for plaintiffs, particularly under the Supreme Court’s new pleading rules, to argue that, for example, Murphy Oil “contributed” to the harm caused by Katrina. If the Fifth Circuit sitting en banc affirms the District Court dismissal in Murphy v. Comer, we could be headed back to the Supreme Court on climate change, since that would set up a conflict between the Second and Fifth Circuits.

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Yesterday, EPA Administrator Jackson issued a letter to Senator Jay Rockefeller responding to certain questions regarding EPA regulation of GHGs under existing Clean Air Act authority, including promulgation of the so-called “Tailoring Rule”, describing how stationary source regulation under the existing PSD program would be phased-in once GHGs are subject to regulation. Here are the highlights:

EPA still expects to promulgate the Tailoring Rule by April 2010.

The GHG permitting threshold will be “substantially higher than the 25,000-ton limit that EPA originally proposed.”

No permits will be required until 2011. Initially, only facilities otherwise subject to CAA permitting will be required to obtain permits. The smallest facilities will not be subject to GHG permitting before 2016.

You can talk all you want about global warming, but it seems to me as though it’s EPA that’s feeling the heat. EPA has clearly heard the threats of a Congressional resolution barring EPA regulation of GHGs under existing authority. The reaction from Congress is all the evidence one needs. Both Senators Rockefeller and Murkowski praised the letter. While neither indicated that the letter would be sufficient to stop them from pursuing Congressional action, it might be enough to peel off some fence-sitters who might otherwise have felt compelled to support the legislation.

What does EPA’s statement of intent mean for various law suits swirling around this issue?

I don’t see any impact on litigation against the Endangerment Finding; it will still proceed and it will still lose.

The likelihood of law suits from environmental groups alleging that EPA is shirking its responsibilities under the CAA has certainly increased. Moreover, while EPA has a lot of discretion, I could imagine courts saying to EPA:  “Nice try, but the CAA doesn’t give you the kind of flexibility you have asserted in the Tailoring Rule. Only Congress can provide that flexibility by amending the CAA.” In this respect, the situation is similar to litigation over the CAIR regulations, which pretty much everyone liked, but which were struck down because the approach EPA took in the CAIR rule wasn’t consistent with the CAA.

Finally, any kind of regulation by EPA will provide an additional defense to private nuisance litigation. As I have previously noted, one question raised by the nuisance law suits is whether EPA has regulated GHG in a manner sufficient to “displace” the common law of nuisance. In this respect, the sort of program described yesterday by Administrator Jackson may be the best possible outcome for the regulated community, because it will narrow EPA regulations while providing a ground to preclude nuisance litigation.

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The grand total is 16 separate challenges to EPA’s endangerment finding, according to Greenwire. I’m not one of those lawyers who regularly bash the legal profession. I still recall my law school professor, Henry Hansmann, stating that the role of lawyers is in fact to be transaction-cost minimizers, and I think that that is largely true. That being said, I am certainly wondering what all of this litigation is about.

The endangerment finding is basically a scientific determination. As I have previously noted, EPA discretion in this area is substantial and the likelihood that a court would reverse EPA’s scientific determination seems about as close to zero as possible. Apparently, some of the law suits do not attack the underlying scientific underpinnings of the determination, but instead attack EPA’s procedures for carrying it out or the expected regulatory and thus economic implications of the finding. If possible, these seem even less likely to succeed.

Finally, before we get to the merits of either of these arguments, there are substantial standing questions, given that the endangerment finding itself imposes no regulatory requirements on any of the plaintiffs.

It is more likely that these law suits are tactical in nature, filed as part of the broader battle to stop EPA from using existing Clean Air Act authority to regulate GHGs. I support that battle in that I agree that regulation under existing authority will be a nightmare. However, I think it’s a losing battle and I don’t see the litigation challenging the endangerment finding as likely to help in any case.

Hope springs eternal, I suppose.

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Earlier this week, the Southeastern Legal Foundation filed a petition for review of the EPA Endangerment Finding with the District of Columbia Court of Appeals. It’s not really surprising that someone filed suit, but the list of plaintiffs is interesting – though more for who is not on it than who is. There is not a single Fortune 500 company on the list of plaintiffs. Whether that speaks to the larger corporations doubting the merits of the challenge or simply making a strategic decision that it is not worth it to be associated with the litigation, I leave for them to say.

I will say that the likelihood that this challenge succeeds is vanishingly small. Ever since Ethyl Corporation v. EPA, courts have given EPA extraordinarily broad discretion when regulating on “the frontiers of scientific knowledge.” Whatever concerns dissenters may have about climate change science, I think it is pretty clear that EPA has a stronger record to support the Endangerment Finding than it had in Ethyl Corporation.

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I have never been a fan of specialized courts, but I have to admit that the Massachusetts Supreme Judicial Court’s MEPA jurisprudence is strong evidence for the other side. It’s almost hard to describe how badly the SJC has mangled MEPA. The most recent example is yesterday’s decision in Town of Canton v. Commissioner of the Massachusetts Highway Department. (Requisite disclaimer – this firm represented the Town of Canton in the case.)

In Canton, the SJC ruled that a party bringing suit to challenge the adequacy of the Certificate issued by the Secretary of Energy and Environmental Affairs an on EIR must do so within 30 days following issuance of the first permit issued to the project under review – even if the plaintiff doesn’t care about that permit. For example, in Canton, the case was dismissed because suit was not brought within 30 days of issuance of a sewer connection permit, even though Canton’s complaint was that the EIR did not adequately address traffic issues and the Highway Department had not yet acted on the necessary traffic approvals.

The basis for the decision is a plain language reading of the statute – 30 days of the first permit means 30 days. However, the Court’s policy logic is exactly backward. The SJC stated that it is necessary to adhere to the strict 30 day rule in order to make challenges to projects efficient and not unduly delay them. I fear that the development community will not be happy with the results of this case, however. The purpose of MEPA is consultative. Get all the information out there and make sure that the agency considers it before issuing approvals. The import of Canton, however, is to short-circuit the review process. The next time this fact pattern appears, plaintiffs will be forced to bring suit, without even giving the Highway Department a chance to get it right. How does encouraging litigation before it is known even to be necessary help citizen plaintiffs, developers, or agencies?

In fairness to this Court, while I think that they got the decision wrong, it is at least understandable given prior SJC MEPA jurisprudence. The problem is that the SJC began getting MEPA wrong in the Cummings and Enos cases, and they haven’t stopped since. The notion that parties challenging the adequacy of an EIR cannot sue the EEA Secretary – the person that approved the EIR – is just nuts. Put Enos and Cummings together with Canton and here’s the result, taking the agencies in play in the Canton case. 

1.         EEA approves an EIR

2.         DEP issues sewer connection permit

3.         Highway Department issues traffic approvals.

Where has the SJC left us? The citizen plaintiffs care about 1 and 3, and not 2, but suit is triggered when 2 happens, even though the plaintiffs don’t yet know whether the Highway Department will do the right thing or not.

Here’s another scenario likely to happen with some frequency. EEA secretary approves EIR. Citizen plaintiff believes that endangered species analysis was deficient. As is often the case, however, the Division of Fisheries and Wildlife takes some time to issue the needed permit. DEP, however, issues an unrelated permit. Once more, action by DEP triggers a need to sue, even though the plaintiff cares about the Secretary’s approval of the EIR and the DFW take permit, which hasn’t yet been issued – and may never be issued.

Which is going to come first, a legislative fix, the SJC revising the whole structure of MEPA jurisprudence, or hell freezing over?

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On Wednesday, EPA released a proposal to reduce the primary National Ambient Air Quality Standard for ground-level ozone from the 0.075 ppm standard set by the Bush administration in 2008 to a range of from 0.060-0.070 ppm. EPA also proposed to set a secondary standard intended to protect sensitive ecological areas, such as forests and parks.

As almost everyone knows, the 2008 standard was, to put it mildly, controversial from the start. The proposal today was based on recommendations made to EPA by its science advisors prior to the 2008 rulemaking. Following apparent intervention from the White House, then EPA Administrator Stephen Johnson set the primary standard above the scientific recommendation and declined to promulgate a secondary standard. Not surprisingly, a number of environmental organizations and public heath groups sued EPA over the failure to promulgate a new NAAQS consistent with the scientific recommendations.

Given that the Supreme Court already ruled, in Whitman v. American Trucking Associations, that EPA may not consider cost in setting NAAQS (and given the Bush EPA record before appellate courts), the 2008 standards always had “arbitrary and capricious” written all over them, so it’s no surprise that the Obama administration revisited the issue. Nonetheless, it is worth noting that, unlike most of EPA’s rules, the projected benefits of this rule may not even exceed the costs.  According to EPA, the benefits of the rule would range from $13B to $100B, while the costs are projected to range from $19B to $90B.  Not much of a net benefit, it seems to me.  (I'm still waiting for Cass Sunstein to ride to the rescue of cost-benefit analysis in this administration.)

EPA expects to finalize the rule by August 31. Then the rubber really hits the road – when states have to revise SIPs in order to meet the new standards.

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Shortly before the holidays, EPA Administrator Jackson issued an Order in response to a challenge to a combined Title V / PSD permit issued by the Kentucky Division for Air Quality to an Integrated Gasification Combined Cycle, or IGCC, plant. The Order upheld the challenge, in part, on the ground that neither the permittee nor KDAQ had adequately justified why the BACT analysis for the facility did not include consideration of full-time use of natural gas notwithstanding that the plant is an IGCC facility. 

The Order may not be shocking in today’s environment – all meanings of that word intended – but the lengths to which the Order goes to avoid its own logical consequences shows just what a departure this decision is from established practice concerning BACT. BACT analyses have traditionally involved the proverbial “top-down” look at technologies that can be used to control emissions from a proposed facility. In other words, EPA takes the proposal as a given, and then asks what the best available control technology is for that facility. 

In EPA’s own words – from its New Source Review Workshop Manual (long the Bible for BACT analysis):

Historically, EPA has not considered the BACT requirement as a means to redefine the design of the source when considering available control alternatives. For example, applicants proposing to construct a coal-fired electric generator, have not been required by EPA as part of a BACT analysis to consider building a natural gas-fired electric turbine although the turbine may be inherently less polluting per unit product (in this case electricity).

Apt example, don’t you think? (In case you are wondering, EPA’s decision does not discuss or refer to this text from the NSR Manual.)

What was the basis for EPA’s decision here? Largely, it is that the IGCC facility will be designed to burn natural gas as well as syngas and the permittee specifically stated that it planned to combust natural gas during a 6-12 month startup period. On these facts, EPA concluded that the permittee and KDAQ had to do a better job explaining why full-time use of natural gas should be considered “to redefine the design of the source.”

As noted above, EPA went to great lengths to minimize the scope of the decision. It states that the Order:

should in no way be interpreted as EPA expressing a policy preference for construction of natural-gas fired facilities over IGCC facilities.

should not be interpreted to establish or imply an EPA position that PSD permitting authorities should conclude … that BACT for a proposed electricity generating unit is … natural gas.

does not conclude that it is not possible or permissible for the permit applicant … to develop a rationale which shows that firing exclusively with natural gas would “redefine the source.”

EPA does not intend to discourage applicants that propose to construct an IGCC facility from seeking to hedge the risk of investing in … IGCC technology by proposing … utilizing natural gas for some period….

Methinks EPA doth protest too much. If I may say so, this is a freakin’ IGCC facility. Isn’t it obvious that one doesn’t plan or build an IGCC facility if one plans to burn natural gas? Don’t you think that EPA could have taken administrative notice of what IGCC technology is?

All of EPA’s protestations about the Order’s limits may be designed to mollify IGCC supporters, but what does its rationale mean for all of the existing facilities – coal and oil – that are already capable of firing on natural gas? Next time they are subject to NSR/PSD review, must they evaluate the possibility of switching completely to natural gas? As I’ve said here before, yikes!

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On Tuesday, District Judge Roger Titus issued an injunction against the construction of the Beech Ridge Energy wind project – 122 wind turbines along 23 miles of Appalachian ridgelines – unless the project can obtain an incidental take permit, or ITP, under the Endangered Species Act. Judge Titus concluded, after a four-day trial, that operation of the turbines would cause a “take” of the endangered Indiana Bat. 

I’m not going to get into the details of the decision, though it certainly does not seem crazy on its face. I am going to go on a rant that there has to be a better way.

Those of us who are old enough to have gotten interested in policy in the 1970s will recall TANSTAAFL – there ain’t no such thing as a free lunch. Appalachian ridgeline turbines kill Indiana Bats. Offshore wind turbines kill sea birds or spoil pristine views. Remember when everyone thought that hydroelectric power was the “clean” energy? Dams kill fish and alter ecosystems. Nuclear power creates long-lasting wastes. I probably don’t need to explain the costs of coal. TANSTAAFL.

Today, people look to solar, and geothermal, and tidal power. I don’t know about you, but while I’m open to persuasion, my default assumption is that geothermal and tidal power could bring changes to complex systems that we really don’t begin to understand. Maybe solar has no environmental costs, but I wouldn’t bet on it. TANSTAAFL.

In a world where everything has costs, we need to find a way to balance those costs to achieve societal objectives. Maybe the harm to the Indiana Bat would be so great that the Beech Ridge Energy project is not worth it. Maybe not. Either way, does anyone think that the ESA provides a mechanism to make that judgment? Of course not; it’s not designed to do so. It’s designed to protect the bats.

We really need an overarching statute that allows the government to assess the unavoidable trade-offs, because there ain’t no such thing as a free lunch, and decide which projects should move forward. Lest my environmentalist friends think that I want to be able to give developers a blank check, I can only say, no, no, no. I’m agnostic on the outcomes, but I’m quite certain that the approach I advocate would only make thorough (which is not to say slow) review under NEPA and related statutes more important. Decision-makers can’t balance the costs and benefits of different projects unless they have a thorough understanding of what those costs and benefits are.

TANSTAAFL.

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Yesterday, EPA released its effluent guidelines for construction sites. The guidelines establish the first national standard containing numeric limitations on stormwater discharges. The final standard imposed is 280 nephelometric turbidity units. It will apply to all construction sites greater than 20 acres in size as of 18 months following the effective date of the regulations (which will be 60 days after Federal Register promulgation) and sites larger than 10 acres 4 years after the effective date.

As expected, EPA did not take NRDC and Waterkeeper Alliance up on their suggestion that EPA impose post-construction controls. However, since EPA has already signaled that its long-term plan is to impose stormwater controls beyond the current universe of industry and construction sites, it seems at this point that broader stormwater regulation by EPA is more a question of when than whether.

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Two more decisions were released last week concerning whether nuisance claims could be brought with respect to harm alleged to have resulted from private conduct contributing to climate change. First, in Village of Kivalina v. ExxonMobil Corporation, the District Court dismissed nuisance claims. Second, in Comer v. Murphy Oil, the Fifth Circuit Court of Appeals reversed a District Court dismissal of nuisance claims related to damage resulting from Hurricane Katrina.

Village of Kivalina first. In this case, an Inupiat Eskimo village claimed that global climate change traceable to the defendants has essentially made their village uninhabitable. Notably and, I think, shrewdly, they did not seek injunctive relief, but sought only damages related to the cost of relocating the village. The District Court concluded both that the law suit raised non-justiciable political questions and that the plaintiffs did not have standing, because their harm was not fairly traceable to the defendants’ conduct.

The Fifth Circuit wasn’t buying either of these arguments in Comer v. Murphy Oil. To the Fifth Circuit, like the Second, in the American Electric Power case, the complexity of the underlying proof is not sufficient to render these types of cases non-justiciable. The cases involve tort claims; courts resolve tort claims – pretty much, end of story. I’ve got to say, from my lowly perch, that I think that the Second and Fifth Circuits got it right here. It’s easy to say that it would be better for Congress to deal with climate change than state legislatures or, as here, courts. However, that’s not that same as courts declining to exercise jurisdiction. I’d be surprised if the political question argument  has any real legs.

Standing is a different matter. I still think that both the traceability and redressability elements of standing are problematic. Plaintiffs in both Village of Kivalina and Comer v. Murphy Oil solved the redressability issue by seeking only damages, and not injunctive relief. Both the Second and Fifth Circuits noted that traceability, as a standing issue, necessitates only that the plaintiffs allege that the defendants’ conduct “contributes to” the plaintiffs’ injuries. This is not a stringent test. However, in light of the recent Supreme Court decision in Ashcroft v. Iqbal, I could imagine some courts looking askance at the types of allegations made in these complaints, even at a pleading stage.

On balance, what these cases tell me is that some of these cases are actually likely to be litigated all the way through to trial. Notwithstanding the potentially huge recoveries, it seems here that the cost to the defendants of paying out anything more than nominal damages would be high, and the prospects of successful defense of these claims are still reasonably good. That’s a recipe for trial, as far as I can tell.

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On Monday, the Court of Appeals for the 2^nd Circuit finally issued a decision in Connecticut v. American Electric Power Company, reversing the District Court decision which had dismissed this public nuisance law suit against six large generating companies. The decision is notable in a number of different respects and may have far-reaching implications

·  Standing. Following Massachusetts v. EPA, it is not really surprising that the plaintiffs were able to establish that they have suffered injuries sufficient to provide standing. The more questionable point is redressability. The Court acknowledged that it must be “likely” that the injury will be redressed by a favorable decision. The Court’s response to this issue was that the plaintiffs need not demonstrate that a favorable decision will eliminate the injury, only that it will provide some measure of relief. Even so, could plaintiffs really prove that even elimination of all CO₂ emissions by the defendants would have any impact on climate change? I’m extremely skeptical. The Court did note that there is a “lowered bar for standing” at the pleading stage, so we may see more of this issue as the case proceeds.

·  Displacement. Connecticut v. American Electric Power, unlike the North Carolina v. TVA case decided in January, is basically premised on federal common law of public nuisance. However, federal common law only exists in the absence of legislation addressing the same issues and is subject to “displacement” by such legislation. Following Massachusetts v. EPA, there is no doubt that the CAA provides authority to regulate GHG. What, therefore, is the role of federal public nuisance claims at this point? The Court’s ruling here left defendants alive to argue this issue another day. The Court noted that EPA has not yet issued a final endangerment finding and certainly has not issued regulations limiting GHG emissions from stationary sources. Thus, the problem complained of by plaintiffs “has not been thoroughly addressed by the CAA.” In other words, if either Waxman-Markey passes or EPA moves forward with regulations on its own, defendants may have another crack at dismissing Connecticut v. American Electric Power. 

·  Nuisance Claims in Other Contexts. In tandem with North Carolina v. TVA, this case certainly puts new life into nuisance as a potentially important arrow in the quiver for environmental plaintiffs. As we noted in January, the TVA decision left room for nuisance claims even where National Ambient Air Quality Standards have been attained. This leaves substantial room for nuisance claims in a variety of contexts, as long as underlying legislation hasn’t specifically preempted such claims

·  Prospects for Federal Climate Change Legislation. We have already discussed the choice between regulation by EPA and comprehensive federal cap-and-trade legislation. Now it appears that this dilemma has three horns, not just two. Which would generators prefer? Waxman-Markey or judicial injunctions following nuisance litigation?

It’s a lot to consider.

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On Tuesday, EPA announced its intention to issue new effluent guidelines for the Steam Electric Power Generating industry by sometime in 2012. The announcement follows an EPA study in 2008 which indicated that toxic metals, particularly those collected as part of flue gas desulfurization processes, can pose a problem in facility effluent. EPA’s announcement is not particularly surprising, given the ongoing study and given that EPA has not revised the guidelines since 1982. Indeed, notwithstanding EPA’s announcement, Environmental Integrity Project, Defenders of Wildlife and Sierra Club announced that they would still sue EPA over its failure to timely update the guidelines.

There are two reasons why this announcement is significant beyond just its implications for effluent discharges from these facilities. First, it’s hard to see EPA’s announcement – and the threat of NGO litigation – as anything other than another bullet aimed squarely at the coal industry. From climate change, to attacks on mountaintop removal, to the reaction to the TVA spill, to this effort to make the effluent guidelines more stringent, there is no doubt that coal is in the cross-hairs at the moment. If there are any doubters concerning this point, Duke Energy CEO Jim Rogers isn’t among them. He was quoted in this morning’s Energy & Environment Daily as saying that it is at least possible to envision a world in 2050 “where coal is not in the equation.”

The other reason why this announcement is significant is that it raises fairly squarely the question regarding the very structure of our current regulatory system.  It’s not really any more than happenstance and political convenience that we regulate different environmental media differently. In this context, it is noteworthy that EPA’s Science Advisory Board just recommended that EPA consider setting multi-pollutant standards under the Clean Air Act, rather than regulating each pollutant separately. Theoretically, that’s good as far as it goes, but it doesn’t really solve the problem of the balkanization of EPA’s different regulatory programs.  In the long run, EPA’s regulatory efforts would be much more cost-effective – and would probably garner much more public support – if they were rationally based on an overall assessment of risk, across pollutants and across media.

I’m not holding my breath.

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Justice Potter Stewart famously said, with respect to obscenity, that “I know it when I see it.” I fear that the test for what constitutes an imminent and substantial endangerment under RCRA is no clearer than Justice Stewart’s subjective test regarding obscenity.

This week, in a decision that is good news for RCRA defendants, Judge Illlston, of the Northern District of California, ruled, in West Coast Home Builders v. Aventis Cropscience USA,  that risks posed by potential future vapor intrusion into buildings from a groundwater plume could not be “imminent and substantial” where no development has yet occurred on the property that is the subject of the litigation. The court was interpreting the Supreme Court’s statement in Meghrig v. KFC Western, to the effect that RCRA “implies that there must be a threat which is present now, although the impact of the threat may not be felt until later.”

Although Judge Illston’s interpretation of Meghrig seems right, other RCRA cases have been allowed to proceed, even though the relationship between the contamination and the exposure have often been equally attenuated. It seems that the court liked the simplicity of a black-letter rule that risks associated with conditions not yet in place can never be imminent.  I am not confident this case will provide much clarity, but even if it only establishes a bright line rule in one narrow corner of the "imminent and substantial endangerment" landscape, that's better than the prior morass.

A developer might reasonably respond to this decision by arguing that such a ruling means that the development will never happen, because no one will finance such a project without knowing that the potential vapor intrusion risk will be addressed. (And a court might respond by saying that that is a problem for Congress to solve, not the courts.)

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Although not breaking any new ground, a decision from the Massachusetts Appeals Court last week provides a helpful summary of the discretion typically given to MassDEP in making permitting decisions. In Healer v. Department of Environmental Protection, abutters to a proposed wastewater treatment facility in Falmouth sued MassDEP, claiming that the groundwater discharge from the leach field associated with the facility would damage drinking water supplies and nearby wetlands. The Court affirmed the MassDEP Commissioner’s rejection of the abutters’ challenge.

As the Court noted

the “applicable standard of review is “highly deferential to the agency” and requires the reviewing court to accord “due weight to the experience, technical competence, and specialized knowledge of the agency, as well as to the discretionary authority conferred upon it…. We give deference to the decision of an agency interpreting its own regulations … [and] do not intrude lightly within the agency’s area of expertise, as long as the regulations are interpreted with reference to their purpose and to the purpose and design of the controlling statute.”

As if that were not enough of a nod towards agency deference, the Court also noted, in the context of the plaintiffs’’ challenge to the monitoring requirements imposed in the permit, that

The Legislature “has chosen to put into the hands of an expert administrative agency the decision making regarding complex issues of environmental … science…, and has allowed the agency considerable discretion in determining monitoring of applicable parameters in order to carry out its duty….

Finally, the Court made at least one statement about the plaintiffs’ affirmative case that is sure to be cited by MassDEP and permittees in future citizen suits. In rejecting the plaintiffs’ argument that toxic household chemicals might cause environmental damage, the Court stated that the “regulations do not require the department to establish permit conditions based on the plaintiffs’ speculative concerns.”

So, what’s the upshot of Healer? It certainly confirms that, as a general matter, courts are not going to reverse agency decisions unless they seem really off-the-wall.  On the other hand, it remains true that MassDEP does not always win and my own jaded view is that courts remain willing to reverse MassDEP, even when deference would require that the court affirm the agency, if the agency decision somehow rubs the court the wrong way.

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In an important decision yesterday, the Massachusetts Supreme Judicial Court ruled that the operator facility participating in the renewable portfolio standard program did not have standing to challenge a state decision authorizing other facilities to participate in the RPS program. The decision may have broad implications regarding when businesses may challenge the issuance of permits or other approvals to competitors in Massachusetts.

In Indeck Maine Energy v. Commissioner of Energy Resources, the plaintiffs operated biomass facilities which were authorized to sell renewable energy credits. When the Department of Energy Resources authorized two other biomass facilities to sell RPS credits, plaintiffs sued.

As the SJC noted up front, to establish standing, a plaintiff must “allege an injury within the area of concern of the statute or regulatory scheme under which the injurious action has occurred.” At least in Massachusetts, an injury from business competition does not confer standing. However, prior cases held that this rule “does not apply … to competitors in a regulated industry.” The question is thus: What does it mean to be in a regulated industry?

After analyzing the purpose of the RPS statute and its prior cases on this issue, the court came to a relatively simple conclusion:

The question of standing in the context of competitive injury turns not simply on whether an industry is regulated, but rather on how that industry is regulative. The common threat present in the cases in which standing has been found is regulatory schemes that contemplated some form of protection of the competitive interests of the respective plaintiffs.

Accordingly, if an industry is regulated in such a way that it can be said that the protection of competitors is within the regulatory scheme’s area of concern, such a competitor alleging harm deriving from business competition would have standing to sue.

Applying the rule here, the SJC concluded that the plaintiffs did not have standing, because the Legislature “did not seek to protect and thereby confer standing to sue on existing competitors, thereby creating a barrier to market entry.” In other words, a business does not have standing to challenge an approval issued to a competitor unless the very purpose of the regulatory scheme was to protect the competitive position of the plaintiff.

This decision has potentially significant impacts on other permitting regimes, such as those implemented by MassDEP.  Following Indeck, a business harmed by the issuance of an environmental permit issued to a competitor will not have standing to challenge the permit, because it is not the purpose of any of the environmental permitting regimes to create barriers to market entry.

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Construction and development companies praying for an economic recovery next year have something else to worry about: pending new EPA regulations regarding stormwater discharges from construction activities – and claims from environmental groups that EPA’s proposal isn’t stringent enough.

EPA issued a proposal on November 28, 2008. That proposal is complex, but the aspect of it that has received the most attention is the requirement that certain construction sites greater than 30 acres meet numerical turbidity limits (specifically, 13 nephelometric turbidity units (NTUs), which I had to include in this post just because it sounds so cool). Developers have opposed the numeric limits; the National Association of Home Builders estimates that the cost to comply would be $15,000 to $45,000 per acre.

On the other hand, the NRDC and Waterkeeper Alliance have threatened to sue EPA if EPA does not revise the propose rule to include post-construction controls as part of the rule. EPA has stated that it is not planning to do so. It’s not obvious that NRDC and Waterkeeper Alliance have the better of this specific debate, but the argument regarding post-construction controls is similar to the ongoing discussion in Massachusetts and elsewhere regarding the need for ongoing stormwater controls at properties other than industrial facilities that are already regulated.

The issue is not going to go away.  EPA is under a deadline to issue the rule by December 1, 2009.

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Last Friday, in NRDC v. EPA, the Court of Appeals for the D.C. Circuit struck down parts of EPA’s Phase 2 rule for achieving compliance with the ozone NAAQS. The most important part of the ruling was the Court’s conclusion that EPA could not rely on compliance with the NO_x SIP Call to satisfy the requirement that sources in an ozone nonattainment area demonstrate achievement of reasonably available control technology, or RACT. The basis for the decision was the Court’s conclusion that the plain language of the relevant portions of the CAA did not allow use of a cap-and-trade program to substitute for the source-specific compliance requirements imposed by the statute.

In this case, § 172(c)(1) of the CAA “requires that nonattainment areas achieve ‘such reductions in emissions from existing sources in the area’ as can be achieved by the adoption of RACT.” For the Court, this was simple and dispositive.

Thus, the RACT requirement calls for reductions in emissions from sources in the area; reductions from sources outside the nonattainment area do not satisfy the requirement.

In other words, a cap and trade program won’t do, if it allows sources to avoid explicit statutory requirements. There is nothing in the Act that precludes layering a cap-and-trade program on top of RACT requirements – but that would defeat the purpose of the cap-and-trade program, which is to allow emissions reductions to be made wherever they can be achieved most cost-effectively. To require minimum reductions at all facilities precludes such cost-effective decisions.

Frankly, while I’m a fan of cap-and-trade programs, the decision is neither unreasonable nor surprising, after the decision in North Carolina v. EPA striking down the parallel provision in the Clean Air Interstate Rule. As courts like to say (especially when Supreme Court confirmation hearings are under way), their job is not to make good policy; it is to interpret and enforce the law. If Congress wants to expand the role of cap-and-trade programs, it knows how to do so.

Of course, the elephant in the room is climate change legislation. If Congress does not enact a bill, North Carolina v. EPA and NRDC v. EPA circumscribe EPA’s discretion in implementing a cap-and-trade program for greenhouse gases under existing law.  I take the point made by Administrator Jackson and environmentalists that, if no one wants to regulate churches and schools, then EPA can probably figure out a way to do so.  However, exercise of such discretion is not the same as promulgating rules that will ensure that those facilities which are the subject of regulation have the flexibility to reduce greenhouse gas emissions in the most cost-effective manner possible.  

Is anyone in Congress listening?

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Earlier this week, the Georgia Court of Appeals reversed a decision of the Superior Court in Georgia that would have required Longleaf Energy Associates, developer of a coal-fired power plant, to perform a BACT analysis of CO₂ emissions control technologies in order to obtain an air quality permit for construction of the plant. The case is a reprise of the Deseret Power case regarding a coal-fired plant in Utah.

The court in Longleaf Energy concluded that CO₂ is not yet a regulated pollutant under the CAA, and thus that no BACT analysis is required. There were several bases for this conclusion:

The “Johnson Memo,” issued in response to Deseret Power, has not been withdrawn by EPA, though it is under reconsideration. Even EPA’s proposed endangerment finding for CO₂ noted that such a finding would not make CO₂ a regulated pollutant under the CAA.

As discussed in the Johnson Memo, neither the CAA nor any existing EPA regulations impose emissions limitations on CO₂.

Such a finding would “preempt” Congressional and EPA decision-making on the issue and impose standards in Georgia to which facilities outside of Georgia would not be subject.

The Longleaf Energy decision is a perfectly reasonable interpretation of the CAA – but it’s not the only plausible interpretation. I mention this in order to highlight a point I have made previously. As members of Congress and stakeholders consider the costs and benefits of federal climate change legislation, they have to consider the alternative. Most people, including me, have framed the question as a comparison of the legislative option with regulation by EPA under existing authority. This is largely correct, but misses two points. First, it’s going to take EPA some time to promulgate regulations. In the meantime, there will be more Deseret Power and Longleaf Energy decisions and there is no reason to be confident that such decisions will be consistent or even reconcilable. Second, even after EPA issues regulations, the Longleaf case gives me pause as to whether such regulations would be effective in creating any kind of uniform national interpretation of these issues.

There is just no question that, in the absence of federal legislation, the resulting patchwork of regulations and federal and state decisions concerning the regulation of CO₂ and other GHGs is going to be a big mess.

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In an interesting case, the Court of Appeals for the First Circuit this week vacated most of a preliminary injunction issued by a federal judge in Puerto Rico, because, the Court concluded, the lower court had wrongly, and without doing so explicitly, converted a PI hearing into a hearing on the merits.

In Sanchez v. Esso, a gasoline station operator brought RCRA citizen suit claims against Esso, which supplied gasoline to the station, and which actually was the owner of the USTs in which the gasoline was stored. Plaintiffs requested a PI requiring Esso both to assess and to remediate the contamination resulting from leaks in the tanks. After the District Court issued the PI, Esso sought interlocutory relief.  The Court of Appeals vacated most of the injunction.

As the Court of Appeals noted:

[w]hen a trial court ‘disposes of a case on the merits after a preliminary-injunction hearing … it is likely that one or more of the parties will not present their entire case….  Therefore, it is ordinarily improper to decide a case solely on such a basis. 

Reviewing the District Court proceedings, the Court of Appeals pointed to District Court’s statement that the Esso “appear[ed] to be in continuous violation” of the applicable regulations.  Moreover, following issuance of the injunction, Esso had asked the District Court to require the plaintiffs to post a bond.  The District Court denied the request on the ground that:

"'the grant of the preliminary injunction carried[d] no risk of monetary loss" for Esso in the face of the "documented" contamination resulting from Esso’s "violation of regulatory safeguards."

The District Court also made statements to the effect that the only issue going forward was the “extent” of Esso’s liability.

The Court of Appeals concluded that it was “inescapable” that the District Court pre-judged Esso’s ultimate liability.  Aside from the District Court’s conclusory statements about liability, the District Court also failed to address the traditional factors required for issuance of a PI.  This was “a clear error of law.”

It is unclear what impact this case will have. However, RCRA, like most environmental statutes, has an element of strict liability.  The strict liability nature of these statutes often makes it too easy for courts – and perhaps regulators at times? – simply to assume that a defendant is liable, without worrying about the sometimes messy process of discovery and the taking of evidence.  Sanchez v. Esso thus serves as a welcome reminder that even in a world of strict liability, a defendant remains entitled to his day in court.

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Last week, Judge Larry McKinney issued an order requiring to shut down three coal-fired generating units at its Wabash Station facility by no later than September 30, 2009. The decision actually struck me as a thoughtful analysis of injunctive relief issues in a situation where a violation of NSR regulations had already been proven. Although the decision has gotten most press for the order shutting down the units, it covers a number of issues important to injunctive relief situations, and there are some nuggets which are potentially useful to generators; it is not a one-sided decision. Here are some highlights:

The shut-down order – although significant, is not as earth-shattering as it seems. Cinergy gave the judge little choice by testifying that it would not be economic to install pollution controls on the units, given their age and size. The fight was thus about when, not whether, the units would be shut down. The judge was clearly annoyed that, following the liability finding, Cinergy had seemingly taken no action to plan for a shut-down. The judge, in response to reliability concerns, did allow the units to operate through the summer of 2009.

Irreparable harm discussion – a few noteworthy aspects here

The court relied on modeling which demonstrated that Wabash emissions contributed to PM_2.5 levels downwind

The court noted that contributions of “just a few tenths of a ug“ can be significant when an area is on the border between compliance and noncompliance.

Like the court in the TVA injunctive relief case we posted about earlier this year, the court specifically noted that adverse health affects can occur at levels below the NAAQS

The court rejected the plaintiffs’ argument that acid deposition and mercury emissions from Wabash had caused irreparable harm, concluding “that Plaintiffs did not provide sufficient nexus between the relevant excess emissions and the negative … effects. 

In a win for generators, the court rejected the plaintiffs’ position that BACT for NO_x emissions in 1989 was SCR technology. This is an important issue, because EPA and the states will sometimes try to take the position that unproven technologies are nonetheless BACT. The decision squarely rejects that argument.

Surrender of SO₂ allowances. The court required Cinergy to surrender SO₂ allowances equal to the excess emissions from the May 2008 jury verdict to the time the units are shut-down. However, it is important to note that the Plaintiffs had requested that the court order Cinergy to install BACT on larger units at the Station that had not violated NSR rules. The court rejected that argument, noting that the Plaintiffs’ proposal “does not bear an equitable relationship to the degree and kind of harm it is intended to remedy …. Imposition of such a remedy is punitive in nature.”

In sum, although the decision is important, it is not surprising in context. Indeed, the finding on BACT, which was favorable to Cinergy, may have the most precedential significance.

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 As we mentioned yesterday, the discussion draft of the Waxman-Markey “American Clean Energy and Security Act of 2009” which was released on Tuesday is notable both for what it includes and the significant portions it leaves to be decided at a later date. 

In summary, the bill contains four titles:

1) a “clean energy” title, which promotes renewable energy through a portfolio standard of 6% in 2012 rising to 25% by 2025, additional funding for carbon capture and sequestration, a low-carbon transportation fuel standard, and authorization for federal agencies to enter into long-term contracts with renewable energy providers;

2) an “energy efficiency” title, which calls for a nationwide building efficiency code, and directs EPA to set emission standards for locomotives, marine vessels and non-road sources;

3) a “global warming” title, which specifies that greenhouse gases are not to be treated as criteria pollutants or regulated in new source review under the Clean Air Act (the authorities currently viewed to be EPA’s best tools in regulating greenhouse gases), lays out up to 83% cuts in greenhouse gas emissions from 2005 levels by 2050 and creates the framework for a cap-and-trade auction system to be overseen in part by FERC, but does not specify how allowances would be allocated or auctioned, nor how auction proceeds would be spent, other than giving a portion to preventing international deforestation; and

4) a “transitioning” title which establishes a new council within NOAA to prepare an adaptation plan and fund, but does not provide details on where the funds come from, and lays out various programs creating release valves to be triggered by increasing prices, but again withholds critical details, such as how the programs will provide assistance to consumers.

After the jump, we provide more detail about Title 3, the Global Warming section.

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The Empire Strikes Back? Revenge on the NIMBYs? Whatever you want to call it, the U.S. Chamber of Commerce now has a great new web site, called Project No Project, which lists energy projects which have been stalled by local opposition.  The site lists project by state and by type, and explains the status of the project, who the opponents are, and what its prospects seem to be.

It is good to see the Chamber join the digital age and adopt some of the methods of those on the other side of these battles.

Of course, one person’s NIMBY is another’s abomination.  As this story was reported in ClimateWire on Monday, Glenn Wattley, CEO of the Alliance to Preserve Nantucket Sound – the leading opponent of the Cape Wind project – disputed the notion that the group’s opposition to Cape Wind resulted from the NIMBY phenomenon.  Isn’t it amazing that project opponents almost always acknowledge that NIMBYism exists, but always deny that their opposition to the project they are fighting is motivated by NIMBYism?

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Greenwire reported yesterday that EPA plans to issue its endangerment finding on emissions of greenhouses gases, in response to Massachusetts v. EPA, by the end of April. Greenwire also released EPA’s internal presentation regarding its recommendation to the Administrator.

Although EPA’s anticipated decision is not a surprise, it is still noteworthy. Among the highlights:

• The finding will conclude that greenhouse gas emissions endanger public health (the proposed endangerment finding that the Bush administration EPA had prepared, but then withdrew, was limited to public welfare issues.
• The finding will apparently note that there are environmental justice implications associated with climate change. This is particularly interesting, given that there is also concern that there are equity issues associated with the likely responses to climate change – Warren Buffett this week described a cap-and-trade plan has as a “regressive tax.”
• EPA’s preferred option at this point is to base the endangerment finding on identifying the entire group of GHG as the “air pollutants” that cause the endangerment. One specific rationale is that doing so will facilitate flexibility in setting standards for these pollutants. In other words, if GHG are grouped together, EPA will be able to propose a regulatory program that will allow netting and offsets among the different GHGs. 

Other than the nod to regulatory flexibility provided by grouping GHGs, EPA has not tipped its hand regarding the nature of any regulatory regime for GHGs, let alone when it might be able to propose and finalize such regulations. Doing so remains a gargantuan task. 

Moreover, while EPA is clearly committed to addressing this issue, if one believes the statements of Congressional committee chairs to the effect that climate change legislation will get done promptly, there is a certain logic to waiting for such direct legislative authority. On the other hand, fear of what EPA may do remains part of the calculus on Capital Hill, so EPA may decide to move forward aggressively with regulatory development under current Clean Air Act authority simply in order to keep pressure on Congress. 

It’s going to be a busy – and interesting – year.

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In December, I posted about the decision in Canton v. Paiewonsky, in which Judge Fabricant held that a party seeking to challenge the certificate of the Secretary of Energy and Environmental Affairs approving an Environmental Impact Report must do so within 30 days of issuance of the first permit for a project – even if the plaintiff’s concerns about the project are totally unrelated to that permit and the plaintiff would not be harmed by issuance of the permit. As before, I’ll provide the disclaimer that this firm represents the plaintiff in the Canton case.

That acknowledgment aside, it is difficult to read today’s Appeals Court opinion in Hertz v. Secretary of the Executive Office of Energy and Environmental Affairs as saying anything other than that Judge Fabricant got it wrong. Hertz is technically not even a decision about MEPA. The plaintiffs in Hertz challenged an amendment to a municipal harbor plan. The Appeals Court ruled that they did not have standing, notwithstanding that they abutted the property that was the subject of the amendment to the plan, because they did not suffer a particularized harm that was protected by the municipal harbor plan process.

What is most interesting about the decision in Hertz is that, even though it is not a MEPA case, the Court’s analysis focused on the Supreme Judicial Court decision in Enos v. Secretary of Environmental Affairs – which is a MEPA decision and which is the case on which the Town of Canton relied for the argument its suit was timely. Reading the opinion in Hertz together with Enos, the conclusion seems clear that, had Canton sued to challenge the adequacy of the EIR upon issuance of the first permit issued to the project, Canton’s inability to allege that the issuance of the permit would cause it to suffer particularized harm would have meant that the suit would have been dismissed for lack of standing. That being the case, the statute of limitations cannot begin to run on issuance of the first permit; the statute of limitations has to begin to run on issuance of the permit about which the plaintiff is complaining, because only then has the plaintiff suffered a harm sufficient to provide it with standing to sue.

We’ll see what the SJC does with the appeal in Canton, but it still seems here that the better reading of the MEPA statute is that the statute of limitations for a suit challenging a certificate on an EIR must begin to run when the permit that is the subject of the plaintiff’s concern is issued, rather than when the first permit is issued, regardless of whether the plaintiff has any concerns about that first permit.

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We posted recently about the revival of EPA’s NSR enforcement program. Now, yet another shoe has dropped. The Center for Biological Diversity has announced the creation of the Climate Law Institute, the purpose of which is to use citizen law suits under existing laws to advance regulations intended to address climate change. The press release states that the Institute has $17 million in funding with which to pursue its mission.  

While that mission will focus on climate change, as its name implies, it will not be limited to litigation under the Clean Air Act. It was the CBD which led the litigation resulting in the listing of the Polar Bear under the Endangered Species Act.  The Institute indicates that, in addition to the Clean Air Act, the ESA, NEPA, and the Clean Water Act may all be utilized as part of its overall litigation strategy.  

Among other specific targets identified in the press release, the Institute states that it aims to prevent the construction of any new coal-fired power plants and to phase out existing coal plants as quickly as possible.

Unless EPA moves very quickly across a number of fronts – which may well happen – it looks as though we’re going to see a lot of climate-related litigation in the near future.

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Attorneys who have litigated citizen suits under RCRA have often wondered if there is any possible risk that would not qualify as an “imminent and substantial endangerment,” thus subjecting the person who “contributed” to such endangerment to liability under RCRA.

In Scotchtown Holdings v. Town of Goshen, the District Court for the Southern District of New York earlier this month established at least some outer parameters for this seemingly boundless phrase. In Scotchtown Holdings, the owner of land allegedly contaminated by the defendant’s use of sodium chloride – also known as salt to the uninitiated – caused groundwater contamination that precluded development of the plaintiff’s property for residential use.

The court granted the defendant’s motion to dismiss on the ground that, because the property had not already been developed – and because the contamination meant that it would not be developed – there was no imminent and substantial endangerment.

It may be that this decision is obvious and unremarkable. It is certainly distinguishable from cases where at least a potential future exposure exists if no cleanup were to occur and current land uses remain unchanged.  In Scotchtown Holdings, no exposure would occur unless land use were to change.  Nonetheless, for those of us who thought that the presence of contamination almost meant that an imminent and substantial endangerment existed, QED, the decision is a breath of fresh air.

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