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

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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The uncertainty surrounding EPA regulation of GHG emissions under existing Clean Air Act authority was driven home for me last week when the same conference resulted in two diametrically opposed headlines in the trade press. Regarding a forum held by the International Emissions Trading Association, the Daily Environmental Reporter headline was “Existing Law Too Inflexible to Accommodate Market-Based Emissions Cuts, Executives Say.” Over at ClimateWire, the headline was “Some Companies Want EPA to Establish a CO2 Cap-and-trade System.” 

Of course, in fairness to the two publications, both headlines are true – and that’s the problem with the current EPA efforts. Notwithstanding current efforts in Congress to preclude EPA regulations, the endangerment finding seems almost certain to withstand legal challenge. Thus, GHGs will be regulated. Almost everyone wants that regulation to be in the form of a cap-and-trade program, but the last time EPA tried that without explicit Congressional authority, it was shot down in the courts. This may be why the Daily Environment Report story indicated that Vickie Patton of EDF had “pleaded” with executives to support cap-and-trade legislation.

At this point, the most likely near-term outcome appears to be no federal cap-and-trade legislation, and a stripped-down EPA regulatory program that would only apply to really large emitters, so that the inefficiencies inherent in the facility-specific BACT approach won’t appear too unreasonable, because the only people complaining about it will be some very unpopular polluters and all of my economist friends.

Or, as the Stones might have said in their more cynical moments:  Not only can’t you get what you want, but you can’t even get what you need.

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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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Late last week, the CEQ issued its long-awaited draft Guidance on how to factor climate change into NEPA reviews. CEQ explicitly stated the draft is not effective at this time. CEQ will take comment for 90 days and “intends to expeditiously issue this Guidance in final form” after close of the comment period. Assuming CEQ does so, it will join several states, including California, New York, and Massachusetts, which already require that climate change be addressed in their state NEPA analogues.

The draft is very limited in scope at this point; CEQ may have decided that what is most important is simply the statement that climate change is real, it matters, and it therefore must be taken into account under NEPA. For example, CEQ proposes a threshold a 25,000 tpy of direct emissions CO₂e for NEPA applicability. The Guidance does not propose to apply this threshold to indirect emissions, “the analysis of which must be bounded by limits of feasibility.” Shocking recognition of what’s actually possible.

There are some tidbits that will nonetheless give pause to those who expect to be subject to this Guidance. First, the Guidance does discuss the need to consider the cumulative effects of GHG emissions. This is not surprising, given that NEPA already requires consideration of cumulative impacts outside the GHG context, but since all GHG impacts are cumulative, it is of particular importance here. Second, the Guidance also notes that project planners must consider the impact of climate change on projects, as well as the impact of projects on climate change. The example given in the Guidance is a plan for transportation infrastructure on a barrier island. The Guidance also suggests a longer-term time horizon than may have been used in the past. The example here is that of an industrial process drawing water from a source that relies on snow pack that is expected to decrease as a result of climate change.

As noted above, CEQ spends a lot of effort making the case that the Guidance is not a radical document. The phrase “rule of reason” is used no less than four times in the draft Guidance – and it feels like more. Nonetheless, I doubt opponents will be satisfied. I suspect that they – like the CEQ itself – believe that the fact of the document is more important than its immediate requirements.

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Given the stories this week of continuing efforts in Congress to preclude EPA from regulating GHGs under existing Clean Air Act authority, I couldn’t resist this headline. 

The first story is that three House members, including two Democrats (House Agriculture Committee Chair Collin Peterson and Missouri Rep. Ike Skelton) have followed the lead of the Senate – where there are also Democratic sponsors – and introduced legislation preventing EPA regulation. According to Representative Skelton, the bill would “get the EPA under control.”

In light of the efforts in Congress, it just seemed too perfect not to note that EPA’s Assistant Administrator for Air, Gina McCarthy – never one to mince words – was quoted in GreenWire today as saying that

We are furiously ensuring that we get the light-duty vehicle out and ready in March…. There is no hesitation about that. It will be happening.

I don’t doubt that EPA is working furiously to get the rule done, particularly since President Obama has acknowledged that a cap-and-trade bill might not get passed this year. Whether EPA is actually furious, I don’t know. It does appear that some members of Congress may be furious in March if EPA goes ahead and issues the rule. Stay tuned.

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The U.S. Securities and Exchange Commission (SEC) issued interpretive guidance yesterday which requires publicly traded companies to consider the impacts of climate change – both the physical damage it could cause, as well as the economic impacts of domestic and international greenhouse gas emissions-reduction rules – and disclose those risks to investors. As we noted when discussing the potential for this announcement in October, the disclosure requirements are likely to affect companies in a wide range of industries. 

In its press release announcing this decision, the SEC said that this interpretive guidance neither creates new legal requirements nor modifies existing ones; rather, SEC guidance is intended to provide consistency among issuers in their disclosure to shareholders of bottom-line risks and consequences. The guidance will cover:

• Risk Factors
• Description of the Business
• Legal Proceedings
• Management’s Discussion and Analysis

The interpretive release will be published in the Federal Register and posted on the SEC’s website. The press release summarizes the key points as these:

• Impact of Legislation and Regulation: When considering potential disclosure obligations, companies should determine whether the impact of existing laws and regulations regarding climate change is material. In some cases, companies should also evaluate the potential impact of pending legislation and regulation related to environmental issues and climate change.
• Impact of International Accords: Companies should consider, and disclose if material, the risks related to or effects upon their business of international accords and treaties relating to climate change.
• Indirect Consequences of Regulation or Business Trends: Legal, technological, political and scientific developments regarding climate change may create both new opportunities and new risks for companies. For example, a company may face decreased demand for goods that produce significant greenhouse gas emissions, or increased demand for goods that result in lower emissions than competing products. Companies should consider the actual or potential indirect consequences they may face due to climate change-related regulatory or business trends.
• Physical Impacts of Climate Change: Companies should also evaluate for disclosure purposes the actual and potential material impact of environmental matters on their business. It is not entirely clear what the SEC means by this, although one example might be agricultural risks associate with altered climate trends that appear to have reduced or increased annual rainfall in particular locales.

When the interpretive release is available, we will provide you with full information. It is likely that pressure from shareholder groups on this issue will continue (here, for instance, is CERES' statement), given that cap-and-trade legislation appears bogged down in Congress and that the prospects for EPA regulation under the Clean Air Act are unclear.

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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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Those of us who advise clients regarding compliance with environmental regulations have often been in the awkward position of agreeing with clients that the agency position is, shall we say, misguided, yet at the same time advising against legal challenge, because the judicial review deck is stacked so heavily in favor of the agency. (In another time or place, one might ask why this is so.)

Nevertheless, occasionally, the agency loses and, when it does, that loss can be instructive. Yesterday, the Massachusetts Supreme Judicial Court ruled that MassDEP may not impose conditions on registrations under the Water Management Act without first promulgating regulations to guide its discretion in imposing such conditions.

Under the WMA, withdrawals existing as of the date of Act were grandfathered and persons with such withdrawals are allowed to maintain them by registering the withdrawal with MassDEP. Such registrations must be renewed periodically, but MassDEP may not reduce the size of the withdrawal. (New or increased withdrawals, on the other hand, require a permit and are subject to more stringent regulation.)

In the last round of registration renewals, MassDEP began imposing conditions on the registrations in order to increase water conservation. However, while the statute authorizes MassDEP to impose conditions on permits, similar language does not exist with respect to registrations. 

The SJC spent some time discussing MassDEP’s authority to promulgate regulations that would impose conservation requirements on registrants, but made clear that the plain language of the statute did not seem to authorize MassDEP to impose conditions on registrants absent regulations.

What’s the lesson here? With respect to the WMA, it’s “no shortcuts.” If MassDEP wants to impose conservation requirements on registrants, it must do so pursuant to validly promulgated regulations. What’s the broader lesson? Challenging the agency may be an uphill battle, but legislative language does matter and, where the language is clear, the courts will – at least sometimes – enforce it.

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Last week, I reported on a decision by EPA Administrator Jackson, in an appeal from a permit issued by the Kentucky Division of Air Quality, to the effect that the developer of an Integrated Gasification Combined Cycle (IGCC) plant, which converts coal to gas for combustion, had to consider use of natural gas as BACT, because the plant already had plans to use natural gas as a startup and backup fuel.

This week, Administrator Jackson went one step further – granting an objection to a permit for a traditional coal plant in Arkansas on the ground that it did not consider IGCC as BACT. As with the Kentucky decision, the issue in the Arkansas case was whether requiring IGCC would be to “redefine” the source. Also as with the Kentucky decision, the Administrator ruled that, while requiring consideration of IGCC as BACT might be to redefine the source, neither the permittee nor the Arkansas Department of Environmental Quality had built a record sufficient to make that conclusion.

As David Bookbinder of the Sierra Club succinctly put it in Greenwire: "Control technology for conventional coal is IGCC and control technology for IGCC is natural gas." In short, the way to control emissions from a coal plant is to burn natural gas instead. 

I think that Bookbinder is exactly right concerning the import of the two decisions. I also think that the result is nuts. Can anyone say with a straight face that they really believe that this approach is consistent with the statutory intent? As I noted last week, EPA didn’t think so when they wrote in the New Source Review Workshop Manual that

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).

I also think that this is what happens when the agency ties itself into knots to reach a certain result based on statutory language written in another time for another purpose. Might there be a lesson in this for EPA’s efforts to regulate GHG utilizing existing CAA authority?

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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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Earlier this week, Energy & Environmental Affairs Secretary Ian Bowles announced the release of the nation’s first ocean management plan. The plan is similar, but not identical to, the draft plan issued last July. Here are the highlights

A Prohibited Area off the coast of the Cape Cod National Seashore, where most uses will be – you guessed it – prohibited

Multi-Use Areas, constituting approximately two-thirds of the planning area, where uses will be permitted if they comply with stringent standards for protecting marine resources

Renewable Energy Areas, where commercial- and community-scale wind projects have been found to be appropriate.

One significant element of the final plan, and one highlighted in Secretary Bowles’s press release, is that, where projects are proposed in areas including sensitive marine resources, it will be presumed that an alternative project outside the resource area would be less environmentally damaging. Project proponents would have to meet a balancing test, demonstrating that the project has public benefits which outweigh the detriment to the resource.

It’s going to take some time to digest the entire plan. However, most of the nation outside Houston has accepted the concept of zoning on land for almost 100 years – and land-based zoning affects private property. It’s difficult to argue with the concept that the Commonwealth should plan for resources – state waters – that it does own. In addition, having a defined framework for reviewing proposals to utilize state waters should help remove some of the uncertainty associated with the current ad hoc review that necessarily occurs in the absence of a plan. 

Deerin Babb-Brott – time to take a well-earned vacation!

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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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As most of my Massachusetts readers know, on Friday, Secretary of Energy and Environmental Affairs Ian Bowles and DEP Commissioner Laurie Burt announced that Massachusetts would retain its moratorium on new construction or expansion of municipal waste combustors. Although the overall outcome is not really a surprise from this administration, a few points are worth noting.

The announcement says nothing about new technologies, such as plasma arc gasification. Arguably, such a technology is not “incineration” or “combustion,” so we’ll have to see whether the administration remains open to such alternatives to traditional incineration.

The administration emphasized that it is committed to decreasing the volume of the waste stream and noted some specific initiatives that it intends to pursue:

Comprehensive producer responsibility legislation for discarded electronics – The announcement did not refer to any specific legislation (see here for a helpful table summarizing the current state of e-waste legislation nationwide, including in MA), but the administration is clearly going to be pushing for some kind of E-waste bill.

Expansion of the bottle bill to cover water and sports drinks. Since I have joined those who consider bottled water use a pet peeve, I can’t complain about this one.

Finally, the Secretary stated that he had directed DEP to cease permitting any use of construction and demolition, or C&D, waste as fuel in any energy facility until a comprehensive review can be completed.  The announcement specifically called out the Palmer Renewable Energy facility as being affected by the halt.

It is clear that the current economy is not discouraging the Patrick administration from its aggressive environmental agenda.

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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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As anyone not hiding under a rock has by now probably realized, EPA officially announced Monday that it has concluded that GHG from human activity threaten public health and the environment. Since the announcement was not exactly a surprise, the question remains what impact it will have.

In the short run, the timing certainly seems intended to coincide with the Copenhagen talks and help to demonstrate to other nations that the U.S. is taking concrete steps to address climate change. We’ll see shortly how successful the endangerment finding is in that respect.

Since I spend most of my time down in the trenches, I’m more concerned with the impact of the endangerment finding on the domestic front. There are really three fronts here:

Litigation – If there was any suspense regarding whether anyone would challenge the endangerment finding, such suspense was quickly relieved by an announcement from the Competitive Enterprise Institute that it would indeed sue. CEI’s press release stated that the global warming “models are about to sink under the growing weight of evidence that they are fabrications.” Uphill battle barely begins to describe the likelihood that CEI wins that case.

Prospects for Cap-and-Trade Legislation – Notwithstanding Administrator Jackson’s protestations to the contrary, it’s hard not to see the announcement as a further prod to Congress to get moving, particularly since the Administration keeps saying that it would prefer enactment of a cap-and-trade bill. Even so, however, some members of Congress indicated that the announcement would have little impact, because the endangerment finding was expected and thus adds little new.

EPA Development of Regulations – EPA is moving forward with regulatory development, though Administrator Jackson gave no time line for when stationary source regulations would be promulgated. There was an indication that EPA would issue BACT guidance in advance of issuing NSR regulations. Notwithstanding the promise of BACT guidance, it appears that states are not ready for the brave new world of using the NSR program to regulate GHGs. ClimateWire reported that Bill Becker, executive director of the National Association of Clean Air Agencies, believes that states will have hard time getting ready to process stationary source permits by March.

I actually found the biggest take-away from the announcement to be the Administrator’s statement that she wanted EPA regulations that would be complementary to new legislation. "I don't believe this is an either-or proposition," ClimateWire reported her saying. 

Uh-oh. 

I thought that the deal had always been that legislation would substitute for regulation under the existing CAA. Otherwise, what do the administration’s statements that it would prefer legislation to regulation mean?   I’m having difficulty imagining a world with both a cap-and-trade program and NSR regulation of GHGs.

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According to a report released last week by Environment America, power plants were responsible for 42% of the CO₂ emitted in the United States in 2007, substantially more than any other sector, including transportation. What’s the explanation? Largely, it’s the age of the United States power plants. The report, based on EPA data, states that 73% of power plant CO₂ emissions came from plants operating since prior to 1980.

What’s the solution to this problem, in the absence of cap-and-trade legislation enacting? EPA’s already told us, and we shouldn’t be surprised – promulgation of EPA’s “Tailoring Rule,” subjecting existing facilities emitting more than 25,000 tons per year of CO_2e to EPA’s New Source Review program.

And what’s the problem with this solution? To a significant degree, it’s that it is the NSR program that got us in this mess in the first place. As my friend Rob Stavins has noted, regulatory programs – such as NSR – that impose different requirements based on the age of a facility, known in the lingo as “vintage-differentiated regulations” or “VDR”, not surprisingly lead to the perverse result that older, more-polluting, facilities stay in service longer than if regulations were imposed in an even-handed manner on different vintages of facilities.  In other words, we have the NSR program to thank for the situation described in the Environment America report.

Can anyone doubt, therefore, that application of NSR rules to GHGs will cause those who own such facilities to try to operate them as long as possible without implementing any “modifications” that would trigger application of NSR? Moreover, can anyone doubt that application of NSR rules to new facilities would give old facilities a further cost advantage? Sure, EPA can try to tighten the NSR rules and continue to pursue NSR enforcement cases in order to discourage existing facilities from disguising “life-extension” projects as routine maintenance. However, it’s still a jury-rigged system at best. After all, the program is called New Source Review for a reason.

I’m just a poor country lawyer, but I still think that a cap-and-trade program is a better solution for all sides. Add a traditional three-pollutant piece to it, trade that for elimination of the NSR program in its entirety, and you’d really have something. 

Still dreaming, I know.

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As I discussed last week, in response to the current dire state fiscal outlook, Massachusetts Secretary of Energy & Environmental Affairs Ian Bowles announced, pursuant to a request from Governor Patrick, a search for “options for departmental reorganization and consolidation, streamlined operations and procedures, and new models for doing the public's business.” Given that Secretary Bowles has invited public assistance, it should not be too surprising that some folks have stepped up to the plate, so I thought I would share submittals that I have seen. 

Recently, both NAIOP and the Environmental League of Massachusetts have made suggestions to Secretary Bowles. Before going further, I should note that I need to be a little more circumspect here that I might normally be, because I do advise NAIOP on regulatory reform issues and I’m on the board of ELM. Since that is the case, you’re going to get more summary and less commentary than you otherwise might. That being said, here goes.

The NAIOP letter was much more detailed. I think that the regulated community sees this as an opportunity to push for regulatory reform efforts that it truly believes benefit both the regulated community and EEA. The benefits to EEA are precisely those that were the subject of the Governor’s request to his cabinet – by increasing use of general permits, privatizing more audit-type functions, and reducing the number of unnecessary, i.e., not statutorily-mandated regulations and guidance documents, EEA and MassDEP can operate more leanly and conserve precious resources. These types of changes may have a sympathetic audience at EEA, but they are very difficult to implement, because the environmental community is so skeptical of these types of programs. The current budget problems may provide a rare opportunity to advance this part of the regulated community’s agenda.

ELM’s letter was much more limited in its scope. It largely provides the rationale for limiting cuts to EEA departments. I think that this largely reflects a “where you stand depends on where you sit” phenomenon. NAIOP sees the budget problem and the Secretary’s invitation as an opportunity; ELM and other environmental NGOs see it as an exercise in damage control. ELM’s position is understandable and defensible. It is true that DEP, at least, took what many see as disproportionate cuts during the last budget crisis.

If I may mix my metaphors, I’m an optimist, so I sit in the half-full glass, and I thus stand squarely in favor of seizing this opportunity for thoughtful regulatory reform. The budget crisis is obviously a major headache for EEA and its departments. However, many of the suggestions NAIOP has made are good public policy that would maintain – or increase – environmental protection, while allowing the agencies to accomplish this important goal with fewer resources.

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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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On the be careful what you wish for front, Massachusetts Energy and Environment Secretary Ian Bowles announced yesterday an effort to examine “options for changes in administrative structures and programs to meet environmental goals in light of budget challenges.” The announcement identifies three separate areas of investigation:

Public-Private Partnerships – This makes a lot of sense, but, based on the announcement, seems to be too narrowly focused. The announcement indicates that the review will focus on management of properties owned by the Department of Conservation and Recreation. However, we shouldn’t just be looking at whether to let Disney sponsor the Freedom Trail. For example, I am on the board of the Corporate Wetlands Restoration Partnership, a public-private partnership that leverages private money to assist publicly funded wetlands restoration projects. Surely, there are other, similar opportunities to enlist the private sector in in financing EEA programs.

New Regulatory Models – Here is where the rubber meets the road for most of us attorneys and our clients. The announcement mentions MassDEP’s very successful privatization of our state Superfund program, Chapter 21E, and asks whether there are other opportunities for similar innovations. Some thoughts:

Greater use of general permits.

Other opportunities to privatize, such as inspections and audit functions. Naysayers will raise concerns about the independence of third-party inspections, but it’s a false dichotomy to contrast a world of perfect inspections by DEP with a system of private inspections. Audits and inspections would occur with much greater regularity if regulated facilities were required to pay a third party to audit their facilities every year.  Wouldn't that be a good thing?

Greater consistency in agency decision-making. I don’t think that EEA or DEP realize the costs imposed by their failed efforts to rein in street level bureaucrats who have their own ideas as to what good policy is.

Spend less time writing new guidance and let qualified professionals exercise their professional judgment without wasting precious agency time questioning whether a regulated entity used the proper font in its latest submittal (sorry, rhetorical excess alert).

Reorganization/Consolidation of State Agencies

Secretary Bowles, Commissioner Burt, and others involved should be commended for undertaking this effort. It would be great if the current budget crisis could be turned into a real opportunity for reform. As I’ve said on other occasions, this should be a Nixon-in-China moment for regulatory reform. 

Carpe diem.

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Last week, the City of Portland, Oregon (together with Multnomah County) released an updated Climate Action Plan. The Plan presents a number of aggressive goals and targets, with ultimate goals of GHG reductions of 40% by 2030 and 80% by 2050.

The details of the Plan are obviously only relevant to those in the Portland area, but for those anticipating what regulation might look like in California, Massachusetts, and other states that have enacted or will soon enacted some version of a Global Warming Solutions Act, the Plan provides a helpful catalogue of the types of changes that might be sought. Therefore, a quick summary of some of the 2030 goals seems warranted

Reduce energy use from existing buildings by 20%-25%

All new buildings – and homes -- should have zero net GHG emissions. 

Reduce VMT by 30% from 2008 levels

Recover 90% of all waste generated

Reduce consumption of carbon-intensive foods

Expand “urban forest canopy” to cover one-third of Portland

Reduce emissions from City and County operations by 50% from 1990 levels

What’s my take? I have two immediate reactions. First, if any further evidence were needed that attaining significant GHG emission reductions is going to involve major social and economic changes, this is certainly it. 

Second, and perhaps more importantly, this Plan, and others like it, have to constitute a heavy thumb on the side of the scale arguing for comprehensive federal legislation. In the past, I’ve argued that federal legislation would be preferable to a patchwork made up of EPA regulation under existing Clean Air Act authority, public nuisance litigation, and state and regional initiatives. To that list, we can now add comprehensive local regulation. I don’t mean to be too sanguine about the ability of federal legislation to harmonize this entire process; the existing bills would not preempt most state, regional, and local regulations (other than cap-and-trade programs). Nonetheless, delays in federal enactment can only contribute to the proliferation of state, regional, and local programs, some of which may be beneficial, but many of which will be inefficient, contradictory, or both.

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Public and private developers spend a lot of time talking about NIMBY, or Not In My Backyard. With the increasing number of coastal development projects, ranging from wind farms to LNG facilities to plans for casinos, we should perhaps be talking about another acronym: NIMO, or Not In My Ocean. Yesterday, a decision from the First Circuit Court of Appeals in Weaver's Cove LNG v. Rhode Island Coastal Resources Management Council gave some hope that NIMO will not mean that states can simply squelch development of ocean resources.

Weaver’s Cove, as originally proposed in 2003, was to be an LNG terminal  located up the Taunton River, in Fall River, Massachusetts. To address safety and related concerns, the proposal has been moved off-shore.

The only element of the project that is subject to the jurisdiction of Rhode Island authorities is dredging that would be necessary in Rhode Island waters. That dredging requires a federal consistency determination by the Rhode Island Coastal Resources Management Council, or CRMC. In addition, Rhode Island state law requires that the CRMC provide a license to the project, known as an Assent. Here, the CRMC refused to provide either the federal consistency determination or the state law Assent. Weaver’s Cove LNG sued, won in the District Court, and won again yesterday at the Court of Appeals.

The facts of the case are complicated and the Court limited the decision as far as it could to the case-specific facts. Nonetheless, there are two points to be gleaned from the decision that may be of broader import

The Coastal Zone Management Act contains a provision, specifically intended to prevent states from frustrating the purposes of the CZMA, which provides that, if a state fails to act on a consistency request within six months, the state’s concurrence is “conclusively presumed.” Here, Rhode Island argued that the clock hadn’t begun to run, because Weavers’ Cove hadn’t provided all of the information necessary for CRMC to make a consistency finding. The Court didn’t buy it. Again, the facts here won’t translate to other cases, but what will transfer is the Court’s refusal simply to accept Rhode Island’s request that the Court defer to a state agency’s interpretation of its own law. Calling the CRMC’s interpretation of Rhode Island law “untenable” and “clearly erroneous,” the Court rejected it and held that, because of the CRMC’s failure to act, consistency would indeed be “conclusively presumed.”

Perhaps even more significantly, the Court concluded that the Rhode Island law which would require that the CRMC issue an Assent before the project could move forward is preempted by the Natural Gas Act (NGA). While the Court did not find that the NGA explicitly preempted Rhode Island law or that it occupied the field, it did conclude that, in this case, state law conflicted with the NGA. 

Notwithstanding the Court’s efforts to limit its preemption holding, I think it will provide grist for preemption arguments in other cases, as will its reluctance to defer to state agency interpretation of state law, where such deference might create obstacles to the accomplishment of federal objectives.

It’s too much to say that this decision represents the end of NIMO. However, it’s also difficult to see this as totally abstracted from an awareness by the Court of the delays experienced by the Cape Wind project. We’ve got to figure out a way to get to an answer more quickly. The answer my be “no” to some projects, but it shouldn’t take six years to get an answer.

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A few weeks ago, we noted EPA’s release of its long-awaited “Tailoring Rule,” specifying how EPA would apply its PSD program under existing Clean Air Act authority to greenhouse gases, once they definitively become a regulated pollutant under the CAA some time next spring. Today, the proposed rule was published in the Federal Register. Comments are due December 28.

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Waxman-Markey. Boxer-Kerry. Public nuisance litigation. EPA regulation under existing authority. What’s next in the arsenal of weapons against climate change? How about including climate change impacts in reviews under NEPA?

In February 2008, the International Center for Technology Assessment, the Natural Resources Defense Council, and the Sierra Club petitioned the CEQ to “clarify” its regulations to require the assessment of potential climate change impacts in environmental reviews performed under NEPA. CEQ has not yet formally responded to the petition, but that hasn’t stopped noted environmentalist Senator James Inhofe (R. Okla.) from weighing in preemptively. Calling NEPA a “bedrock environmental statute,” Senator Inhofe has informed Nancy Sutley, CEQ Chairwoman, that NEPA “is not an appropriate tool to set global climate change policy.” It’s not obvious to me why a bedrock environmental statute shouldn’t be used to address the impacts of climate change.

In any case, whether Senator Inhofe is correct or not, it seems likely that CEQ will eventually take some action, whether by guidance or regulation, to require inclusion of climate change assessments into NEPA reviews. Moreover, this is yet another area of climate change policy in which the federal government will be following the laboratories of democracy, the states, rather than leading. As we have previously reported, a number of states, including California, Massachusetts, and New York, already require GHG assessments in reviews under their state NEPA analogues.

Going forward, those planning large projects, whether the projects are public or private and whether they are state or federal, should expect to have to assess the climate change impacts, including whether alternatives to the project are available that would have reduced climate change impacts.

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On Thursday, EPA issued its long-awaited proposed rule describing how thresholds would be set for regulation of GHG sources under the existing Clean Air Act PSD authority. Having waded through the 416-page proposal, I’m torn between the appropriate Shakespeare quotes to describe it: “Much ado about nothing” or “Methinks thou dost protest too much.”

First, notwithstanding its length, the proposal is quite limited in scope. In essence, it has three parts:

Establishment of an applicability threshold for PSD and Title V purposes of 25,000 tons per year of CO₂e.

Establishment of a PSD significance level of from 10,000 tpy CO₂e and 25,000 CO₂e.

Development over the next five years of means to streamline GHG regulation of sources greater than the current statutory levels of 100-250 tpy.

Basically, EPA’s position is that, once it begins to regulate GHGs as a pollutant by promulgating its mobile source rule – expected next spring – stationary source regulation under the PSD and Title V programs follow automatically. Thus, the issue for EPA at this point is not whether to regulate stationary sources, but how to do so without the entire program grinding to a halt.

Here’s where the protestation comes in. Most of the proposal is devoted to explaining EPA’s reliance of the doctrines of “absurd results” and “administrative necessity” to justify exclusion of sources that would seem to be categorically included by the explicit language of the statute. Members of the regulated community will understand the irony in EPA’s extensive discussion regarding how the purpose of the PSD program is to achieve environmental protection and economic development – and that this latter purpose would be jeopardized by regulation of sources at the 100/250 tpy threshold. I don’t think we will ever again see EPA devote this many pages to a description of its concern about economic growth.

I’m not going to predict here whether EPA will win any challenge to the higher thresholds. Certainly, the absurd results doctrine argument is the stronger of the two. It is noteworthy that the four leading environmental cases EPA cites in support of its administrative necessity argument, while acknowledging the existence of the doctrine, all went against EPA.

More relevant still is the question of who would in fact challenge this regulation and what would be the result even if the challenge succeeded. Following the debacle that resulted from vacation of the CAIR rule, what is the likelihood that a successful challenge would result in vacation of the rule in its entirety? Isn’t it more likely that the rule would stay in effect as to the large sources, with the court remanding the case to EPA to promulgate rules governing smaller sources? In fact, that’s what EPA is already doing, which is probably EPA’s strongest practical argument in support of the rule.

Public comments will be due 60 days from Federal Register promulgation and there are some issues that the regulated community should consider. These include the significance threshold, and suggestions regarding how to streamline the program for smaller sources. EPA has proposed some interesting ideas, including presumptive BACT determinations and general permits. 

Bottom line? Large sources better get ready to comply. Smaller sources, take a deep breath and count your blessings – for now. 

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As BNA reported this morning, at yesterday's Conference of New England Governors and Eastern Canadian Premiers in New Brunswick, the six New England governors adopted The New England Governors' Renewable Energy Blueprint.  Through this plan, the governors of Maine, Massachusetts, Connecticut, New Hampshire, Rhode Island and Vermont agreed to speed regional development of renewable energy by coordinating state reviews of proposed interstate transmission lines and synchronizing solicitation and decisions on power procurement and long-term energy contracts.  The blueprint calls for states to hold joint hearings and coordinate decisions when appropriate, but even using common applications and timelines could have a significant impact on how long the siting process takes.  

The blueprint is based on conclusions reached in a study conducted by ISO-New England, called the Renewable Scenario Development Analysis, which concluded that there is a large quantity of untapped renewable resources in the New England region, including more than 10,000 MW of on-shore and off-shore wind power potential, but that such resources could not easily be developed without coordination between the states on siting transmission.

The blueprint also discusses the option of New England states tapping into renewable energy sources located in Canada and calls for a state-federal partnership in which the federal government uses regional plans as guidance for interconnection-wide analysis and federally-funded renewable energy infrastructure development.  It will be interesting to see the impact that such regional developments have on the national level.

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In another sign that the NSR program is alive and well under the Obama administration, the United States (together with the State of Illinois, filed suit Thursday against Midwest Generation, alleging violations of NSR requirements at six coal-fired power plants. Although the action is not too surprising, given that the Bush EPA had issued a notice of violation to Midwest Generation in 2007, it remains noteworthy. Each new prosecution serves to remind generators that failure to comply with NSR rules can lead to significant costs.

Of course, that in terrorem effect on other generators is precisely what the administration and environmental groups want. Unfortunately, for those of us who believe that the NSR program is an incredibly wasteful way to reduce air pollution, such litigation only detracts from efforts to make air pollution control regulations more cost-effective.

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According to an article by BNA published this morning, EPA may soon act to apply the prevention of significant deterioration (PSD) provisions of the Clean Air Act to facilities that emit more than 25,000 tons of carbon dioxide annually.  Presumably, EPA's action is either an effort to exert leverage on Congress to pass pending climate change legislation or to ensure that GHG are regulated in the event that legislation doesn't pass -- or both.  

Under the Clean Air Act, PSD applies to major new sources, which are defined by their emissions level -- for pollutants in identified industrial sources categories, the threshold is 100 tons per year, while for others it is 250 tons per year.  Assuming that EPA moves forward with its its proposed endangerment finding, the default assumption (and the doomsday scenario presented by the Chamber of Commerce) would be that all GHG sources greater than 250 tons or 100 tons, depending on the source, would be subject to PSD regulations.

As an example, per the General Reporting Protocol's conversion factors, burning only 265.3 tons of coal or 1,173 barrels of fuel oil would produce 250 tons of CO₂.  However, the 25,000 ton threshold is the same used by the EPA in the endangerment finding and its proposed mandatory reporting regulations, so seems likely to be applied here as well.

As we previously noted, the EPA's official current position on this point is still the memorandum issued December 18th by former EPA Administrator Stephen Johnson, which said that since CO₂ is not a regulated pollutant under the Clean Air Act, PSD does not apply.  However, current EPA Administrator Lisa Jackson issued a letter on February 17 stating that the agency will reconsider this position. 

As noted in the BNA article, there is reason to question EPA's authority to exempt small GHG sources from PSD requirements once GHG are found to be pollutants which endanger public health and the environment.  Moreover, EPA's record in defending creative interpretations of the Clean Air Act -- even where they are generally supported, such as in the CAIR regulations -- has not been sterling.  

The entire debate is likely to get messier before it is resolved. 

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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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As most readers know, Massachusetts and California have been leading the pack in requiring analysis of greenhouse gas impacts in connection with reviews of new development. Now, New York State is catching up. This week, the Department of Environmental Conservation, or DEC, released its Policy on Assessing Energy Use and Greenhouse Gas Emissions in Environmental Impact Statements. The policy is certainly similar to the Massachusetts Greenhouse Gas Emissions Policy and Protocol. Nonetheless, the DEC Policy has a few items worth noting.

DEC has provided that, with respect to indirect GHG emissions from: (1) off-site energy generation and (2) vehicle trips, a project proponent may avoid the need to provide a quantitative analysis of these issues if he/she can demonstrate to DEC that the project already “has minimized emissions to the maximum extent practicable.” This opt-out is similar to one provided in the Massachusetts GHG policy, except that the MA policy requires that the developer commit in advance to GHG reductions that are variously described as “exceptional” and “extraordinary.”

The DEC Policy includes specific provisions governing assessment of methane emissions from landfills. It requires use of site specific information, together with EPA’s Climate Leaders Greenhouse Gas Inventory Protocol, Direct Emissions from Municipal Solid Waste Landfilling module (October 2004).

Even aside from the provisions addressing landfill emissions, the Policy requires an assessment of emissions from waste generation and management. This is not required by the MA policy.

Like Massachusetts, the DEC Policy requires that “priority and preference” be given to on-site mitigation measures. Off-site mitigation can be considered, but only after DEC staff have considered the “completeness” of on-site mitigation.

There is no doubt that requiring an assessment of the GHG impacts of new development is a trend at this point – and one that is only going to accelerate. As federal legislation or regulation under existing CAA authority becomes a reality, and as more states start to pass their own version of a Global Warming Solutions Act, as California and Massachusetts have already done, squeezing the maximum GHG reductions out of new development is going to become an imperative. At some point, GHG review may become similar to offset programs in non-attainment areas. New developments are going to have to be as efficient as possible – and may also have to purchase offsets to make such new developments climate neutral.  

Time will tell, but it’s often much easier to go after new development than to try to squeeze emissions reductions out of existing facilities. The result is that increasingly stringent mitigation requirements seem inevitable.

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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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This week, the Massachusetts Executive Office of Environmental Affairs announced release of the draft Ocean Management Plan, developed pursuant to the Oceans Act of 2008. The draft Plan has gotten most press for its identification of specific areas for off-shore wind energy development – as well as its prohibition of wind farms in other areas, including the area of the proposed Buzzards Bay wind farm. EOEEA Secretary Ian Bowles was quoted as saying that Buzzards Bay is too crowded and sensitive for the development of large-scale wind farms.

The Plan is about much more than wind farms, however. It really is zoning brought off-shore. There are areas where certain uses are prohibited, areas in which uses are encouraged, and other areas that will be subject to performance standards to determine whether specific uses should be allowed. Where uses are at least conceptually allowed, there will be provisions to protect sensitive areas, including a provision that requires proponents of uses in such areas to “avoid, or demonstrate that there is no less damaging practicable alternative, or demonstrate that data does not accurately characterize the resource or use.”

The Plan is important for several reasons:

The breadth of its application

The effort to integrate ocean planning with the Commonwealth’s climate change agenda

Its potential precedential effect on other states and nascent federal ocean zoning efforts

Public hearings on the Plan will be held in September, though they have not yet been scheduled. Even in advance of the hearings, comments on the Plan can be submitted here. The schedule calls for the final Plan to be issued by December 31, 2009.

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For those who missed it, just a quick note that EPA has once more extended the date by which subject facilities need to prepare or amend SPCC plans to comply with the latest revisions to the applicable regulations. The original compliance date was February 3, 2009; this marks the third time EPA has extended the date.

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As we previously noted, last fall Massachusetts proposed sweeping new regulations designed to reduce phosphorus discharges in stormwater. In response to a very large number of comments, MassDEP is taking a second look at the regulations, though the bookies in Las Vegas are laying odds against there being any significant changes made when the regulations reappear.

Now Maryland is also getting into the act, although it is taking a slightly different approach. Under a statute enacted in 2007, developers in Maryland must incorporate the concept of “environmental site design” into their plans. ESD means

using small-scale stormwater management practices, nonstructural techniques, and better site planning to mimic natural hydrologic runoff characteristics and minimize the impact of land development on water resources.

The Maryland statute will be enforced by counties and municipalities. Therefore, the Maryland Department of the Environment has released a Model Stormwater Management Ordinance for use by local governments in implementing the statute.

As one of the contentious issues in the Massachusetts debate has been when redevelopment would subject a property to the requirements of the regulations, it is notable that the Maryland ordinance defines redevelopment as

any construction, alteration, or improvement performed on sites where existing land use is commercial, industrial, institutional, or multifamily residential and existing site impervious area exceeds 40 percent. [Emphasis added.]

To that, I can only say, uh-oh.

One final note on stormwater – Oregon just enacted legislation limiting the phosphorus content of certain soaps.  This is not significant in its own right. However, in Massachusetts, many of the comments from developers and industrial interests noted that the types of stormwater controls proposed by MassDEP may not be the most cost-effective way to reduce nutrient loading to water bodies, and specifically suggested that programs targeted at consumers using products containing nutrients might be a better way to attack the problem in the first instance.

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I know it’s hard to believe, but some of you may not have realized that today is World Oceans Day. In connection with World Oceans Day, Senator Jay Rockefeller has written a letter to the White House in support of the concept of “ocean zoning.” Senator Rockefeller will also be holding hearings on the issue tomorrow. Among those testifying will be Deerin Babb-Brott, who is the Assistant Secretary in the Massachusetts Executive Office of Environmental Affairs and is in charge of Massachusetts’ first in the nation ocean zoning effort.

The Massachusetts effort is based on the Oceans Act of 2008, which called for development of a comprehensive ocean management plan. In other words, ocean zoning. Since enactment of the Act, EOEEA has been working on developing the required plan, with assistance from the Ocean Advisory Commission, which was created by the Act to help guide EOEEA’s development of the plan. The plan has yet to issue and, based on recent documents from EOEEA, it may be some time before the final plan sees the light of day.

Notwithstanding the complexities of the issue – or perhaps because of them – Senator Rockefeller apparently believes that federal ocean zoning would be appropriate. He may be right. Issues such as renewable energy and deepwater aquaculture may be of local concern, but do we really want a patchwork of local laws and regulations dictating policy on issues of broad national concern?  If we go that route, it won’t be very long before there is a yet more complicated set of exemptions and preemptions.

I’m sure that Deerin will not be advocating federal preemption of local ocean zoning efforts, but there is a part of me that hopes that Deerin’s testimony is so effective that he talks himself out of a job.

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Apparently in an effort to demonstrate to Congress that coal states also support greenhouse gas regulation, the Midwestern Greenhouse Gas Reduction Accord last week released draft design recommendations for a GHG program. Several facets of this announcement are interesting:

1.                   The Waxman-Markey bill would basically preclude the MGGRA from implementing its program.

2.                   If the point of the effort is to demonstrate to Congress that coal states indeed do support GHG regulation, they might be more successful if they had managed to bring Indiana and Ohio into the fold.

3.                   The program as tentatively proposed would include a cap-and-tax approach, in which, like other cap-and-trade models, GHG emitters would need allowances for each ton of CO_2e that they emit. However, they would also have to pay a fee, suggested to be in the range of $2-$4/ton of CO_2e, for each allowance.

It’s difficult to imagine the MGGRA approach going anywhere at this point, but I don’t want to be too dismissive. Like potential EPA regulation under existing CAA authority, the threat of yet another regional program has to add to the weight of issues pushing fence-sitting members of Congress towards a willingness to support a federal program.

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Laura Rome of Epsilon has helpfully reminded me that the maturity of a regulatory program is also relevant to whether an agency should proceed by guidance or regulation.  With newer programs that remain in flux, the flexibility inherent in guidance – and the easier amendment process for guidance – counsels in favor of guidance rather than regulation.

Laura’s comment also reminded me that, a few years ago, NAIOP was sufficiently concerned about MassDEP’s use of guidance as an end-run around the formality of the regulatory process that it submitted to MassDEP suggested “Guidance on Guidance.”  The overarching principles contained in the NAIOP proposal are helpful reminders regarding the uses and limitations of guidance documents.

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There are not too many areas of environmental law where practice intersects frequently with academic theory. One such area is whether agencies should use notice and comment rule-making any time they want to set forth policy or whether they should instead be permitted to use flexible guidance documents. The real issue from the practitioner’s point of view is the extent to which use of guidance permits street level bureaucracy a degree of unfettered discretion that is truly scary. Like Judge Roy Bean, these bureaucrats are the law West of the Pecos – or at least outside agency headquarters. The flip side of the debate is the notion that modern environmental law is simply too complicated to specify all rules through notice and comment rule-making. Agencies need, as a practical matter, the flexibility to operate through informal guidance.

The debate is illustrated by two D.C. Circuit Court of Appeals decisions. First, in Appalachian Power v. EPA, issued in 2001, the Court struck down EPA use of a guidance document. The Court nicely summarized the issue:

The phenomenon we see in this case is familiar. Congress passes a broadly worded statute. The agency follows with regulations containing broad language, open-ended phrases, ambiguous standards and the like. Then as years pass, the agency issues circulars or guidance or memoranda, explaining, interpreting, defining and often expanding the commands in the regulations. One guidance document may yield another and then another and so on. Several words in a regulation may spawn hundreds of pages of text as the agency offers more and more detail regarding what its regulations demand of regulated entities. Law is made, without notice and comment, without public participation, and without publication in the Federal Register or the Code of Federal Regulations. … The agency may also think there is another advantage--immunizing its lawmaking from judicial review.

The Court dismissed EPA’s contention that the document was not binding, and said this in response to EPA’s reference to its boilerplate statement that the guidance created no rights: 

“[R]ights” may not be created but “obligations” certainly are…. The entire Guidance, from beginning to end – except the last paragraph – reads like a ukase.

Haven't all our clients felt what it is like to be under agency ukase?

Unfortunately for those who liked the outcome in Appalachian Power, it seems to have been the high-water mark for those wanting to circumscribe agency use of guidance. More recently, the D.C. Circuit refused to review EPA guidance as though it were a rule. In Cement Kiln Recycling Coalition v. EPA, responding to an Appalachian Power-type challenge, the Court concluded that EPA had not treated the guidance at issue as binding and noted that, in response to Appalachian Power, EPA had edited the guidance to make it look less binding. The Cement Kiln plaintiffs thought this was evidence of subterfuge; the Court did not buy it. The Court did acknowledge that an agency assertion that guidance is non-binding “will not make it so where there is evidence —or practice – to the contrary."

The immediate context for this post is efforts by the Massachusetts Environmental Policy Act, or MEPA, office to take a second look at its greenhouse gas (GHG) policy in light of the legislative passage of the Global Warming Solutions Act. The work group (of which I am a member) reviewing this issue has been considering whether it is better to leave aspects of the policy as guidance or whether to put them in regulation.

As you can probably tell from the start of this post, my gut reaction is always to make the agency put its rules into notice and comment regulation. I’ve had too many experiences of street level bureaucrats who take advantage of the “flexibility” of agency guidance documents to become their own version of Roy Bean.

However, my friend Sam Mygatt, whose judgment I trust, has strongly endorsed the approach of leaving many of these issues to guidance. After puzzling over this for some time – How could Sam be right and I be wrong? – I realized what the answer is:

The size of the bureaucracy matters. 

The rules -- or guidance -- at issue here are promulgated by the MEPA office.  This is also the agency Sam deals with most frequently (he did run it at one time, after all). The MEPA office has a handful of reviewers. The consultants, such as Sam, who have large MEPA practices deal with the MEPA reviewers repeatedly. They are able to build relationships of confidence and trust; it is very difficult for these reviewers to see Sam as the devil, merely looking to desecrate the environment to benefit his client. 

Larger bureaucracies are different. Street level bureaucrats have inherently more autonomy in larger bureaucracies. Moreover, while we may all get to know some staffers at DEP or EPA, it is impossible to build the same type of relationships as is possible with the MEPA office.

At a casual empirical level, this distinction seems to have substantial force. For smaller bureaucracies, stick with guidance; with larger bureaucracies, make them issues rules.

Your take?

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We have previously posted about EPA’s efforts to roll back regulatory changes made by the Bush Administration, particularly with respect to the NSR program. There is no question that the roll-back continues. This week, EPA announced it would review three separate NSR rules promulgated by the Bush administration. These include:

The “reasonable possibility” rule, which identified when major sources must keep records even if a contemplated change is not expected to trigger NSR review

The fugitive emissions rule, which limited by source category when fugitive emissions must be taken into account in determining NSR applicability

The PM_2.5 rule, which included provisions regarding submittal of state implementation plans, or SIPs, for PM _2.5 compliance. One particular issue of concern is the provision which deferred until 2011 the date by when states must account for emissions of gases, emitted from coal-fired power plants, which may condense to form PM _2.5.

In a narrow way, EPA’s decision to revisit these rules will likely lead to lower emissions of air pollutants subject to NSR in some cases.  At a broader level, these reviews ignore the fundamental problems with the NSR program and whether the NSR program is a dinosaur of command and control regulation that is not a cost-effective of achieving emissions reductions.

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This morning, EPA issued a proposed finding that greenhouse gasses contribute to air pollution and may endanger public health or welfare. The proposed finding comes almost exactly two years after the Supreme Court, in Massachusetts v. EPA, ordered the agency to examine whether emissions linked to climate change should be curbed under the Clean Air Act, and marks a major shift in the federal government's approach to global warming.

The finding, which now moves to a 60-day public comment period, identifies the six greenhouse gases that pose a potential threat as a set, a tactic which we discussed the potential impact of a few weeks ago. 

Overall, the proposed finding is very similar to the language released in March. It concludes that “in both magnitude and probability, climate change is an enormous problem. The greenhouse gases that are responsible for it endanger public health and welfare within the meaning of the Clean Air Act.”

Some interesting highlights of the finding include:

• Environmental justice: As the EPA press release states, “in proposing the finding, Administrator Jackson took into account the disproportionate impact climate change has on the health of certain segments of the population, such as the poor, the very young, the elderly, those already in poor health, the disabled, those living alone and/or indigenous populations dependent on one or a few resources.”
• National Security: As the EPA press release phrased it, “Escalating violence in destabilized regions can be incited and fomented by an increasing scarcity of resources – including water. This lack of resources, driven by climate change patterns, then drives massive migration to more stabilized regions of the world.” 
• Vehicles: By including a "cause or contribute" finding for cars, the proposed finding implies that not only are greenhouse gases dangerous in general, but that such emissions from cars and trucks are reasonably likely to contribute to climate change

The finding does not include any proposed regulations.  However, while release of the finding is a huge development, it still seems likely that the Obama Administration will hold off on regulations in favor of a legislative solution. As the Washington Post reported today, at the Aspen Environment Forum last month, Administrator Jackson emphasized that "the best solution, and I believe this in my heart, is to work with Congress to form and pass comprehensive legislation to deal with climate change.” 

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In an statement this week likely to send chills down the spine of developers, EPA Administrator Jackson called on Congress to provide a clearer definition of wetlands subject to permitting authority under the Clean Water Act. As most readers know, the 2006 Supreme Court decision in Rapanos v. United States narrowed the scope of regulatory jurisdiction over wetlands. Unfortunately, the absence of a majority decision in Rapanos means that, at this point, no one knows quite how much narrower. I think that most observers at least triangulate around Justice Kennedy’s concurring opinion, which stated that waters or wetlands with a “significant nexus” to waters that are navigable in fact should be subject to regulation. However, uncertainty abounds.

Uncertainty imposes significant costs on regulated entities (not to mention EPA and the Army Corps of Engineers). Therefore, a statutory fix that simply eliminated uncertainty would probably be welcomed by the regulated community. Of course, the devil is in the details. If the uncertainty is eliminated by subjecting any land that is ever wet to the CWA, such legislation would probably not be welcomed by developers.  Jackson’s statement that “I believe that the country benefits from something broader rather than narrower” is not likely to assuage developers’ concerns.

Time will tell whether compromise is possible in order to eliminate uncertainty that benefits no one.

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As many readers of this blog will have already learned, the Supreme Court issued its long-awaited decision in Entergy v. Riverkeeper yesterday. The Court reversed the Second Circuit Court of Appeals and held that EPA was within its authority to consider cost-benefit analysis in setting standards for cooling water intake structures under § 316(b) of the Clean Water Act.

I’m definitely getting on my soapbox here, but this should not be news and it should not be controversial – though I certainly realize that it is. If current conditions tell us anything, it is that resources are not infinite. The irony here is that it is environmentalists who tend to make this point most frequently. Unfortunately, they don’t like to acknowledge that, because resources are not infinite, cost-benefit decisions get made implicitly, even when EPA does not utilize cost-benefit analysis in its regulations.

When I was just a poor Superfund lawyer, I attended a public meeting in Somersworth, New Hampshire, as local residents tried in vain to persuade EPA that they could save more lives by installing traffic signals and hiring public safety personnel than by spending millions of dollars cleaning up an old landfill to the nth degree. The simple truth is that when we force regulated industries to incur costs without regard to the associated benefits, other spending gets displaced. It may be better to have power plant owners spend money on closed cycle cooling than on worker health benefits or, God forbid, payments to shareholders, but let’s make the decision honestly and not ignore the trade-offs.

I still don’t understand why the debate can’t be about how fairly to define costs and benefits. There are serious issues here, but there’s certainly no free lunch. I posted recently about my disappointment regarding early indications that the Obama administration will not be a friend to common sense regulatory reform. The same issues arise here. The Obama administration, because of its undoubted credibility, could advance the cause of cost-benefit analysis and cost-effectiveness analysis. I fear it is not going to happen.

For the same reason, it’s quite possible that the Riverkeeper decision may be much ado about nothing. Riverkeeper holds that EPA may consider costs and benefits, but does not require it. Environmentalists are already clamoring for EPA to rewrite the 316(b) rules and I wouldn’t be surprised if the agency does so.

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This week, the practice of mountaintop removal – chopping the tops off mountains in order extract the coal – received two blows: one from EPA and one from Congress. First, EPA offices Region 3 and Region 4 announced that they plans to assess the Central Appalachia Mining's Big Branch project in Pike County, Ky., and the Highland Mining Company's Reylas mine in Logan County, W.Va., before permits are issued for those projects. 

Although the broad brush is important here, so are some of the details. First, both letters raise concerns about the cumulative impacts of multiple mountaintop removal projects. Second, the Region 3 letter raises the possibility that EPA might use its authority under section 404(c) of the Clean Water Act to prohibit issuance of the required permit, noting that the “extensive cumulative and other impacts give this proposed project high potential” for action under § 404(c).  

The second blow was the introduction in Congress of legislation that would prohibit mountaintop removal. Of course, introduction doesn’t guarantee passage, but it does seem notable that one of the two sponsors is Lamar Alexander, both a Republican and a Senator from a coal mining state. Senator Alexander’s support suggests that a tipping point may have been reached on this issue.

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As we noted previously, in the face of efforts to include language in the stimulus bill exempting stimulus projects from the requirements of NEPA, Senator Boxer proposed what you can describe either as a compromise or a fig leaf. Section 1609 of the bill provides that NEPA reviews will be expedited and resources will be devoted to facilitate such expedited reviews. According to the Environmental Reporter today, CEQ is going to be providing guidance to federal agencies on how to conduct such expedited reviews.

Despite my normal skepticism about agency guidance documents, such guidance would almost certainly be welcome in these circumstances. Agencies are obviously going to be under a lot of pressure to get the stimulus money out the door and CEQ is not going to want to be in the position taking the blame for being an obstacle. I am therefore hopeful that the guidance will indeed help facilitate these projects. If citizen suits are brought challenging the NEPA review for any particular project, CEQ’s interpretation of what’s acceptable should receive Chevron deference, thus likely insulating agency decisions resulting from following procedures promulgated by CEQ pursuant to § 1609. 

In related news, new CEQ Chair Nancy Sutley has said that she wants “higher-level policymakers” to be more involved in NEPA reviews at their agencies than they have been in the past. If such early involvement is used to identify and resolve issues before they become problems, then who would not be pleased at this initiative? On the other hand, if such involvement is a mechanism for CEQ to have greater influence on agency decision-making, then I would be less sure of the benefits and more worried that politically sensitive agency decisions will just get bogged down, without any corresponding improvement in the quality of agency decision-making.

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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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The next Bush-era rule to be tossed overboard may be a big one, namely EPA's hands-off stance on regulation of CO₂ for PSD purposes.   EPA  Administrator Lisa Jackson said today in a letter to the Sierra Club that the agency would grant the group's petition seeking reconsideration of former Administrator Johnson's December 18th memo which described why EPA should not regulate CO₂ emissions from new coal-fired plants.  Although EPA did not stay the effectiveness of the Johnson memo, the letter emphasizes that the memo does not bind States issuing permits under their own State Implementation Plans, and cautions other PSD permitting authorities against assuming that the Johnson memo is the final word on interpreting the Clean Air Act requirements.  EPA will take public comment on concerns raised over the Johnson memo and the appeals board's decision, and plans to publish a notice of proposed rulemaking soon.

As we previously noted, the new administration was likely to be saddled with the decision of whether CO₂ emissions must play a part in PSD decisions, given the Deseret Power decision that the Clean Air Act was ambiguous on whether the EPA must impose a BACT limit for CO₂.   Now it looks like the Obama administration may take the issue on soon.

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While a lot of attention has been paid to whether EPA would reverse the Bush EPA decision denying California’s petition to regulate greenhouse gas emissions from mobile sources,  it is now clear even outside the climate change arena that life at EPA is going to be substantially different under the current administration.  As if evidence were really needed for that proposition, EPA announced this week that it was putting on hold the NSR aggregation rule that EPA had promulgated on January 15, 2009.

The rule, which had been long sought by industry, would have provided that nominally separate projects would only have to be combined – aggregated for NSR/PSD purposes – if  they are “substantially related.” It also would have created a rebuttable presumption that projects more than three years apart are not substantially related. Responding to a request from NRDC and the OMB memo asking agencies to look closely at rules promulgated before the transition but not yet effective, EPA concluded that the rule raises “substantial questions of law and policy.” Therefore, EPA postponed the effective date of the rule until May 18, 2009 and also announced that it was formally reconsidering the rule in response to the NRDC petition.

To those in industry, the aggregation rule was not a radical anti-environmental roll-back of environmental protection standards.  Rather, it was more of a common-sense approach towards making the NSR program simpler and clearer.  It is one of my pet peeves with the prior administration, however, that it gave regulatory reform a bad name.  

In any case, I feel as though I should open a pool regarding what will be the next Bush-era rule to be tossed overboard.  We surely won’t have to wait long for it to happen.

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It looks as though Massachusetts is going to at least try to avoid having lengthy environmental reviews create obstacles to spending its share of the federal stimulus package. A draft report prepared by the Commonwealth’s Permitting Task Force makes several recommendations which, if implemented, would indeed help to ensure that the money can get out the door and the shovels in the ground. Highlights include:

·                     Allowing projects to proceed, at their own risk, during permit appeals.

·                     Providing that appeals related to any stimulus projects would be heard in the permit session of the Land Court.

·                     Exempting stimulus projects from federal review. This echoes a suggestion previously made by Governor Schwarzenegger and by at least one Republican Senator. The Senate has already rejected it. As described in the Task Force report, the exemption would be limited to projects where the only basis for federal review is federal funding. There would be no general exemption from federal permitting requirements. Unlike Governor Schwarzenegger, the Task Force is not recommending that MEPA, the state environmental review statute, be waived for stimulus projects.

·                     Efforts to bring the Massachusetts Historic Commission to the table – MHC declined to participate in the Permitting Task Force

·                     Creation of permits by rule for certain types of projects in order to avoid delays resulting from individual permit applications/reviews

Time will tell whether the Commonwealth adopts any or all of these recommendations. This is only a draft report at this point. Time will also tell regarding the stimulus effort itself and efforts in Congress to smooth out the environmental review process. 

In any case, these common-sense recommendations could only help

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I have posted a few times recently about the tension between environmental regulation and economic development, particularly in the context of current efforts at devising a stimulus package in Congress. Yesterday, Congress rejected an amendment to the stimulus bill, offered by Senator John Barrasso (R-Wyo.), which would have required NEPA reviews to be completed within 270 days for projects funded through the stimulus. Projects not reviewed during this time period would have been constructively approved, i.e., the absence of NEPA review during the 270-day period would have resulted in a determination that the project had no significant impact.

Instead, Congress approved a competing amendment offered by Senator Boxer, which simply requires that NEPA reviews be completed as expeditiously as possible. Senator Barrasso went on record thanking Senator Boxer for at least introducing her amendment recognizing the importance of expedited review.  Nonetheless, the proof will be in the pudding when highway projects – or other projects in the stimulus bill that might have significant environmental opposition – attempt to run the NEPA gauntlet.

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In addition to our post yesterday and the items highlighted in the New York Times Green.Inc blog on the difficulties facing new and existing coal-fired power plants this week, the Environmental Protection Agency and the Department of Justice have launched what they call a new national crackdown targeting coal-fired plants that violate the Clean Air Act.

As the first piece of this campaign, the agencies filed suit on Wednesday against a Kansas power plant for PSD violations dating back to 1994, and following a notice of violation issued to the plant owners in January 2004.   

EPA and DOJ  had been criticized for not pursuing new cases against power plants during the Bush administration, but it looks as though efforts to take on the coal industry are ramping up again.

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The EPA and DOJ announced yesterday that Kentucky Utilities (KU), a coal-fired electric utility, has agreed to spend approximately $135 million on pollution controls to resolve violations of the Clean Air Act New Source Review program.  KU will also pay a $1.4 million civil penalty plus $3 million in implementing supplemental environmental projects, or SEPs.  Finally, KU will also surrender over 50,000 SO₂ allowances shortly after entry of the consent decree, and annually surrender any excess NOx allowances resulting from the installation of pollution control equipment.   

The consent decree, which covers one of the three coal-fired electric generating units at the E.W. Brown plant in Mercer County, Kentucky, requires KU to meet the most stringent limit for nitrogen oxide (NOx) emissions ever imposed in a federal settlement with a coal-fired power plant.  According to the EPA's fact sheet, the new pollution control equipment will reduced combined emissions of SO₂ and NOx by more than 31,000 tons per year to just 10% of the 2007 emission levels.  KU has also agreed to install controls to reduce particulate matter emissions by approximately 1,000 tons per year.

Notably, one of the SEPs provides for KU to contribute $1.8 million towards a $7 million carbon capture and sequestration pilot project led by the University of Kentucky.

This Consent Decree is the sixteenth judicial settlement in the series of cases begun in 1999 against 32 plants in 10 states to bring the power plant industry into full compliance with the NSR and PSD requirements of the Clean Air Act.  It shows that although these cases have been around for a while, the EPA and DOJ are still focused on enforcement for NSR violations.

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While Congress considers climate change regulations, and states pursue regional cap and trade plans, it becomes apparent that the number of different ways to regulate carbon emissions is limited only by the creativity of those doing the regulating. Last week, the Minnesota Public Utilities Commission (PUC) issued a certificate of need for the construction of transmission lines necessary to carry power from a new coal-fired plant, known as Big Stone II, to be built in South Dakota.

The certificate of need includes several provisions affecting CO₂ emissions by the utilities. It requires that an older coal plant be closed by 2018 (though of course there is an exception if the plant is needed). The new plant must be constructed to be “carbon capture retrofit ready.” Finally, and most notably, the certificate provides that Otter Tail Power, which is one of the utilities building the new plant and which, because it is located in Minnesota, is subject to the jurisdiction of the Minnesota PUC, may not recover CO₂ emission control costs from the ratepayers to the extent those costs exceed $26/ton.

In fact, at this point, $26/ton seems like a high number. Environmental advocates had sought complete rejection of the certificate of need request and are not happy about the $26/ton cap. Nonetheless, the important story here is not the level at which the cap is set in this case. The important feature is the imposition of the cap as part of the certificate of need process. 

Today $26/ton. Tomorrow, who knows? Departments of public utilities could be the next front in the climate change battle.

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RGGI, Inc. announced today that its third auction of CO₂ allowances will be held on March 18, 2009, and will offer allowances from all ten states participating in RGGI -- Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island and Vermont. The sealed bid format and the reserve price of $1.86 remain the same as the previous two auctions, but one big change is in the works.

New for this auction:  the participating states will offer approximately 2.2 million allowances from vintage 2012, in addition to the 31.5 million CO₂ allowances from 2009. These 2.2 million allowances from 2012 comprise about 5% of that year's cap, and will be sold in a separate, but parallel offering from the 2009 allowances.  The offerings occur simultaneously from 9 AM to 1 PM on March 18, a bidding window that is 1 hour longer than in previous auctions. 

The sale of 2012 allowances could offer an interesting insight into how bidders perceive the future of carbon cap and trade and RGGI itself. Will the 2012 allowances go for a higher price than the 2009 vintage? On one hand, since RGGI allowances may be banked without limitation into future years, a 2009 allowance is arguably the most valuable of them all.  On the other hand, 2012 allowances are our first taste of allowances within RGGI's second three-year compliance period (2012-2015), a period which spans 2015, the first year that the RGGI cap decreases by 2.5%.  Then there’s the question of RGGI’s future amid federal legislation. We might have a national cap-and-trade system by 2012, or some other system entirely, and it might (or might not) allow for the exchange of RGGI allowances.

We shall see. RGGI, Inc. plans to announce the results of the third auction on March 20.

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It’s now de rigueur to say that there is no conflict between a healthy economy and a healthy environment. President-elect Obama said so himself as recently as December 15, when he introduced members of his environmental and energy team. Certainly, in a perfect world, where information is free and everyone agrees on the economic value to be placed on protecting environmental interests, that would be true as a matter of definition.

Unfortunately, we live in the real world and in the real world, there are often trade-offs to be made between economic growth and environmental protection. This critical tension was brought home last week, when news broke that Governor Schwarzenegger was seeking to expedite, and have the authority to waive, certain environmental reviews for infrastructure projects deemed critical to economic stimulus efforts. Among other authorities, Governor Schwarzenegger – who has been a leading figure in state efforts to fight climate change – wants to exempt a dozen highway projects from environmental reviews and to create a three person “super-Cabinet” that would have authority to waive environmental reviews on other projects. He has also suggested that federal NEPA review be waived for any project funded as part of a federal stimulus package.

Environmentalists, of course, are having none of it. Tina Andolina, of the California Planning and Conservation League, called the Governor’s plan’s “ridiculous.” But are they? Anyone involved in any kind of development project, whether highway or mass transit or power generating – or even schools or low income housing – knows that environmental reviews can slow such projects by months or even years. In fairness to the environmental review process, that’s part of the purpose – to make certain that projects aren’t developed without careful consideration of their impacts.

However, everyone seems to agree that we are in the midst of an extraordinary time. President-elect Obama has himself said that prompt economic stimulus is critical, in order to avoid an even worse economic crisis. A substantial part of the stimulus plan is for infrastructure projects that every thinking person must acknowledge could conceivably have adverse environmental impacts. What if it simply isn’t possible both to thoroughly assess those impacts and get the projects started sufficiently quickly to have the stimulus that everyone agrees is needed?

Given the dire state of the economy, I’d certainly err on the side of facilitating projects, but I’m sure that some of my readers would disagree. 

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Last week, I posted about the Pollard decision, which made clear that local boards to not have unlimited discretion to ignore evidence provided by project proponents. This week, the shoe is on the other foot, so to speak. In Macero v. MacDonald, the Massachusetts Appeals Court reversed a decision in favor of a project opponent, on essentially the same analysis as that in Pollard.

In Macero, the developer sought a variance from state and local septic system regulations. The developer provided some information from a professional. However, the local Board of Health did not, apparently, formally review that information, and its decision did not include specific findings that the standards for the variance had been met. As the Appeals Court stated, “the authority of the board is broad…. However, competent judicial review … is … rendered difficult if not impossible by the lack of specific findings and rationale for the agency decision.”

The lesson here? Even if the board is on your side, make sure that they take the time to dot all their i’s and cross all their t’s.

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A recent Superior Court decision may significantly affect how appeals are conducted in MEPA cases. In Canton v. Paiewonsky, Judge Fabricant ruled that Canton’s challenge to the MEPA certificate for the Westwood Station project was filed too late, because it was not filed within 30 days of the issuance of the first permit issued to the project, even though the first permit had nothing to do with the basis for Canton’s challenge to the MEPA certificate.

First, a bit of disclosure: this firm represents the Town of Canton in this case. Nonetheless, I truly believe that, unless I were representing Westwood Station, I would think that this decision is plainly wrong and will have several adverse consequences, even if we had no connection to the case.

The basis for the decision is the language in the MEPA statute, which provides that an action to challenge a MEPA certificate “shall commence no later than thirty days following the first issuance of a permit or grant of financial assistance by an agency.” The court concluded that this language is plain on its face – end of inquiry.

Canton made two arguments.  The Court gave them both short shrift. Canton noted that the first permit, a beneficial use determination, or BUD, by MassDEP, was not the subject of public notice, so the limitations period almost certainly would run before any member of the public were aware that it had even started. The court’s solution was simple, if totally unrealistic and impractical – “properly timed public records requests.”

Canton’s second argument was that it had no basis to sue on issuance of the BUD, because it had no concerns about the BUD, which was irrelevant to Canton’s claims that the MEPA certificate was flawed. In other words, Canton suffered no injury from issuance of the BUD, so it had no standing to sue. Canton’s concerns were largely about traffic issues. The Court largely ignored the case law cited by Canton, on the ground that those cases did not address the statute of limitations issue explicitly.

Interestingly, the Highway Department did not join in Westwood Station’s motion to dismiss, perhaps because the Department realized that, outside the four corners of this case, the decision does no one any good. First, with respect to the notice issue, resource-constrained state permitting agencies will certainly have to respond to many more public records requests. As a practical matter, even with more requests, it will be impossible for interested parties to know about all the approvals issued to development projects.

Even developers, aside from Westwood Station, will not benefit from this decision, because the result will be to force potential challengers into court early, increasing transaction costs and potentially making amicable resolution of development challenges more difficult. The court’s willingness to ignore the real ripeness issue will require project proponents to bring suit on issuance of the first approval, even if negotiations are still proceeding on the approval that really matters.

Sometimes a plain reading is not quite as plain as a judge thinks it is.

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As we previously noted, the recent Environmental Appeals Board decision in the Deseret Power matter raised the possibility that CO₂ and other greenhouse gases need to be considered in PSD reviews. On December 18, EPA Administrator Stephen Johnson issued an interpretation which concluded that GHG still do not need to be considered in PSD reviews.

Senator Boxer, not always known for her restraint, has already asked Attorney General Mukasey to reverse the interpretation, calling it “illegal.” Illegal or not, I’d guess that Senator Boxer will get her wish soon after January 20.

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Developers and others who appear before local boards know what an uphill battle it is to challenge decisions of those boards. After all, there’s a reason for the existence of the phrase “You can’t fight City Hall.” Of course, it’s never a good idea to fight City Hall unless you absolutely have to do so, but a recent decision from the Massachusetts Appeals Court gives some hope to those forced into that position by a board taking an extreme position.

In Pollard v. Conservation Commission of Norfolk, the local conservation commission, acting under its local wetlands bylaw, rejected a request for an order of conditions – a permit, to those of you outside Massachusetts – on the ground that the developer had not met its burden of demonstrating that the proposed work would not adversely affect a resource area. The developer had submitted a report by a consultant, in which the consultant opined that the project would not adversely affect the resource area and would comply with the bylaw.

The only evidence in the record before the commission was the report from the developer’s consultant. The commission took no other evidence. Instead, the commission simply concluded that the expert’s report was not credible. Since the developer had the burden of demonstrating compliance with the bylaw, the commission concluded that this was a sufficient ground on which to reject the permit application. 

The Appeals Court concluded otherwise.

While noting that the commission was not required to credit the developer’s expert, even though uncontradicted, the Appeals Court concluded that the commission was required to provide a basis for its rejection of the expert, noting that “evidence of a party having the burden of proof may not be disbelieved without an explicit and objectively adequate reason.” Since the commission had made no effort, either in its decision or in court, to explain its rejection of the expert opinion, the Court had no way to determine whether the commission “decision was arrived at with fairness and without predisposition.”

Developers cannot necessarily take this decision to the bank. As long as local boards provide some reasoned basis for their decision, a successful challenge will remain a long shot. However, where a local board truly ignores available evidence, there is some hope that courts will ensure that reason prevails.

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Demonstrating that the recent announcement of new stormwater controls for the Charles River in Massachusetts were not an aberration, EPA, joining with the Maine DEP, announced last Friday that it will be imposing new stormwater regulations for discharges into Long Creek, which ultimately flows into Casco Bay.

Responding to petitions from the Conservation Law Foundation, EPA has exercised its Residual Designation Authority under its NPDES permitting regulations.

The new designation can be found on EPA’s website. Notably, the new program will apply to impervious surfaces larger than one acre. This is a smaller area than is currently proposed for the Charles River. EPA estimates that regulating impervious surfaces one acre and up will place 90% of all impervious area in the Long Creek watershed under NPDES jurisdiction.

Owners of properties in other degraded watersheds, you may be next on the list.

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In October 2007, the Massachusetts MEPA office issued its Greenhouse Gas (“GHG”) Policy, requiring certain limited categories of projects subject to MEPA to assess the GHG impacts of those projects and include mitigation of those impacts in the environmental impact review. In short, projects with obvious traffic or air emissions impacts were subject to the policy.

On August 8, 2008, Governor Patrick signed the Global Warming Solutions Act of 2008. Among other provisions, the Act provided specific statutory authority for the MEPA GHG Policy and provided that greenhouse gas emissions should be addressed in any state permits.

As a result of this change, the MEPA office has revised the MEPA GHG Policy to require that any project that will require an Environmental Impact Report must comply with the GHG Policy. This revision to the jurisdiction of the policy will be applicable to any project proponent who files an Environmental Notification Form after the February 2, 2009 MEPA filing deadline. The Secretary has retained discretion to require compliance with the GHG Policy for any Notice of Project Change filed after the February 2, 2009 filing deadline. For your convenience, the MEPA office has provided a summary of the changes to the policy.

Let the fun begin.

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Although some of you may think that the regulatory agencies are now all climate change all the time, Massachusetts DEP has demonstrated that there is still life in some more traditional aspects of environmental regulation. MassDEP has just proposed sweeping new stormwater regulations that would go far beyond the traditional EPA model of regulating construction sites and stormwater discharges from industrial facilities.

DEP’s proposal is far too detailed for a blog post. For those interested in this issue, take a look at the client alert we issued, which hits the big issues. One big-picture item to note: There certainly seems to be something of a competition brewing between EPA and DEP regarding regulations of stormwater. 

Anyone who has at least 5 – and perhaps at least 2 – acres of impervious surface should certainly consider commenting on the regulations when they are formally issued for public comment.

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In Massachusetts v. EPA, the Supreme Court concluded that greenhouse gases, including CO₂, are “air pollutants,” the it left (barely) open the question whether CO₂ is “subject to regulation” under the Clean Air Act (“CAA”). 

Following Massachusetts v. EPA, there have been a number of cases in which advocates of climate change regulation have sought to require EPA to regulate CO₂ as a pollutant. One of those cases, In re Deseret Power Electric Cooperative, was just decided by the EPA Environmental Appeals Board. In Deseret Power, the Sierra Club had challenged issuance of a PSD permit issued by EPA Region 8 which would have allowed Deseret Power to construct a coal-fired power plant near Bonanza Utah. The basis for the challenge was the failure of EPA to impose a best available control technology, or BACT, limit on CO₂ emissions.

Notwithstanding the decision in Massachusetts v. EPA, EPA took the position that it historically had not interpreted the term “subject to regulation under the Act” to include CO₂. Moreover, it claimed in Deseret Power that it did not have authority to impose a BACT limit on CO₂ emissions. The EAB firmly rejected EPA’s position that it did not have authority to impose BACT limits on CO₂. However, the EAB also rejected the Sierra Club’s argument that EPA was required to impose compliance with BACT for CO_2.  In fact, the EAB concluded that “the statute is not so clear and unequivocal as to preclude Agency interpretation of the phrase ‘subject to regulation under this act,’ and therefore the statute does not dictate whether the Agency must impose a BACT limit for CO₂.”

So where does the Deseret Power decision leave the regulation of CO₂ under the CAA?  Probably pretty much where it was before the decision was issued – that is, right in the lap of the new administration. However, if I were a betting man, I would certainly be reluctant to back new ventures that involve significant CO₂ emissions unless the developer has a plan for addressing CO₂ emissions.

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Can a party found liable of violating the Clean Air Act's New Source Review provisions be required to reduce future pollution more to mitigate emissions caused by past violations?  According to a recent U.S. District Court decision, maybe.

In U.S. v. Cinergy Corp., S.D. Ind., No. 99-1693, decided October 14, 2008, the first court to rule on whether retroactive, as opposed to prospective relief, is available under Section 113 of the Clean Air Act found that the court does have the authority to grant such relief.  Although the court stopped short of ordering this relief (procedurally, this opinion was a denial of the defendants' summary judgment motion), the court held in sweeping language that nothing in the Clean Air Act limits the full range of equitable relief that courts can order.

This recent ruling relies heavily on a 1946 U.S. Supreme Court decision, Porter v. Warner Holding Co., 328 U.S. 395, 398 (1946), in which the Supreme Court held that when a court's equitable jurisdiction is invoked by a statute, "all the inherent equitable powers of the District Court are available for the proper and complete exercise of that jurisdiction," unless the law by "clear and valid legislative command" or "necessary and inescapable inference" has restricted the court's equitable powers.

In Cinergy Corp., the district court said its equitable powers were invoked by the phrasing of Section 113 of the Clean Air Act which gives a court, "jurisdiction to restrain [a] violation [of the Clean Air Act], to require compliance, assess [a] civil penalty, to collect any fees owed the United States... and to award any other appropriate relief."   Applying this rule, the court determined that it would have the authority to require the three defendants to take appropriate actions that remedy, mitigate and offset harms to the public and the environment caused by their proven violations of the Clean Air Act.

In this particular enforcement suit, three companies -- Cinergy Corp. (now part of Duke Energy Corp.), PSI Energy Corp., and the Cincinnati Gas & Electric Co. -- were found liable in May of long-term violations of the New Source Review requirements in their operation of a power plant in West Terre Haute, Indiana. The US requested in their filings that the court impose specific measures to reduce pollution beyond what is required for prospective compliance, in order to make up for the nearly two decades of illegal pollution caused by the plant. 

A trial on remedies is expected to begin in February, 2009.

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It’s not really a surprise, but the nation’s financial woes have begun to affect state government. On Wednesday, Governor Deval Patrick announced a set of wide-ranging budget cuts, intended to save more than $1 Billion. The cuts were made necessary by a steep drop in tax revenue and predictions that the drop will continue for the rest of the state fiscal year. The Governor’s stated intention is to avoid cuts in local aid and education funding and this announcement did avoid any cuts in these areas.

Therefore, it is not surprising that agencies such as the Executive Office of Energy and Environmental Affairs and the Department of Environmental Protection have had to make cuts, though the Governor apparently did take into account the severity of the cuts made at DEP during the last downturn, and spared DEP more than what might have been expected.

One area where the cuts may be felt is in the speed of environmental permitting and responsiveness to the regulated community. Among the cuts at DEP are $100,000 from the Clean Air Operating Permit and Compliance Program and $45,000 from the Hazardous Waste Cleanup Program. Although Governor Patrick has frequently trumpeted his goal of having DEP and other permitting agency respond “at the speed of business,” such cuts cannot help but slow down DEP’s ability to respond to permit applications and other filings by businesses.

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