DOE NOPR Faces Criticism But Remains on Fast-Track, with Initial Comments Due October 23

On September 28, 2017, Secretary of Energy Rick Perry sent a letter to FERC enclosing a Notice of Proposed Rulemaking(NOPR), which Secretary Perry asserts “requires the Commission-approved organized markets to develop and implement market rules that accurately price generation resources necessary to maintain the reliability and resiliency of our Nation’s electric grid.” Both the timing and substance of the proposal have been criticized by energy industry representatives, lawmakers, and current and former FERC commissioners, but the Commission has denied requests to extend the comment period on the proposal (see the notice here and analysis here), and acting Chairman Neil Chatterjee has recently confirmed that it will take some action within the 60-day timeline set by the NOPR.

Here’s a recap of some of the key developments to date:

  • August 23: DOE released the Staff Report to the Secretary on Electricity Markets and Reliability. Secretary Perry cites the report in arguing that there is an urgent need for FERC to take action to address reliability and resiliency, but critics of the NOPR have argued that the proposal is inconsistent (see examples here and here) with the report’s conclusions.
  • September 28: Secretary Perry submitted the NOPR, which would require Commission-approved ISO or RTOs to “establish a tariff that provides a just and reasonable rate [including pricing to ensure full compensation for “reliability, resiliency, and on-site fuel-assurance”] for the (A) purchase of electric energy from an eligible reliability and resiliency resource and (B) recovery of costs and a return on equity for such resource dispatched during grid operations.” A “grid reliability and resiliency resource” is an electric generation resource that, among other things, is able to provide essential energy and ancillary reliability services and has a 90-day fuel supply on site.
  • October 2: Eleven trade organizations filed a Joint Motion requesting that FERC allow for at least a 90-day period for initial comments and convene a technical conference prior to the comment deadline. On the same day, FERC issued a Notice Inviting Comments on the NOPR, and set an October 23 deadline for initial comments and a November 7 deadline for reply comments.  Critics also argued that the rule fails to demonstrate how it would improve resilience, and that it “would blow the market up.”
  • October 3: In response to the Notice, the energy trade organizations moved for an extension that would provide a 90-day initial and 45-day reply comment period. Representatives from some of those organizations, along with others from the energy sector, also testified at a House Committee on Energy and Commerce, Subcommittee on Energy, hearing on “Defining Reliability.” Views at the hearing were predictably split between natural gas, solar, and wind industry representatives, who opposed the NOPR, and coal, nuclear, and hydropower representatives, who expressed at least qualified support for the substance of the rule.
  • October 4: FERC issued a Request for Information, which poses 30 questions concerning, among other things, the need for reform, “grid reliability and resiliency resource” eligibility, the 90-day fuel supply requirement, rule implementation, and rate calculation.
  • October 5: Witnesses, including Dr. Joseph Bowring, PJM Independent Market Monitor, and Rebecca Tepper, Chair of the Consumer Liaison Group for ISO-NE and Chief of the Energy and Telecommunications Division in the Massachusetts Attorney General’s Office, testified at a House Subcommittee on Energy, hearing on consumer perspectives on improving the nation’s electricity markets. All six witnesses stated that they took issue with both the process and substance of the NOPR.
  • October 10: The Grid Resiliency Pricing Rule was published in the Federal Register. The published version of the rule adds language that limits its application to regions “with energy and capacity markets.”
  • October 11: FERC denied requests for extension of the NOPR comment period.
  • October 12: Secretary Perry testified at a hearing on the DOE’s “Missions and Management Priorities,” before the House Subcommittee on Energy.  He called the idea of a free market in electrical generation a “fallacy” where every state regulates the energy industry and stated that the proposal was a way to “kick-start” a conversation about grid resiliency and reliability.
  • October 13: Chairman Chatterjee explained that his goal is to “correct market deficiencies . . . in a legally defensible manner that doesn’t blow up the markets.” He also stated that FERC has “numerous tools at its disposal,” including issuing an advanced or superseding NOPR, extending the comment period, convening a technical conference, or issuing a final rule, to respond to the NOPR within 60 days.
  • October 16: Eleven Democratic Senators sent a letter to FERC “remind[ing] the Commission of its procedural and substantive obligations under the Administrative Procedure Act and Executive Order 12866,” noting several “inaccuracies and mischaracterizations” in Secretary Perry’s letter and the NOPR, and urging FERC to reject the rule.
  • October 19: Eight former FERC Commissioners filed comments arguing that the proposal would be a “significant step backward from the Commission’s long and bipartisan evolution to transparent, open, competitive wholesale markets,” and encouraging the Commission to modify the proposal or “initiate regional proceedings to examine resilience issues and consider the need for market rule changes.”
  • October 23: Initial comment deadline.

Pruitt Banishes “Sue and Settle” – A Solution In Search of a Problem?

EPA Administrator Scott Pruitt today issued a Directive prohibiting the practice of “sue and settle.”  He also issued a Memorandum to senior staff explaining in more detail some of the concerns about “sue and settle.”  They are two very strange documents.

As to the substance of how EPA will handle future citizen suit claims, there are some specific concrete steps which individuals and groups across the political spectrum actually can support.  These include:  (1) making more information available to the public about notices of intent to sue and filed complaints; (2) involvement of affected states; (3) maintenance of a data base of citizen suits; and (4) providing a public explanation and rationale for settlement of citizen suits; and (5) providing opportunities for public comment, even where not otherwise required by law.

So far, so good.  However, at a certain point, the Administrator seems to have gone off the rails.  First, one final substantive point – the Directive purports to forbid the payment of attorneys’ fees in any settlement, on the ground that, in a settlement, there is no “prevailing party.”  Of course, if a citizen’s group has a meritorious claim, why would it give up its claims to attorneys’ fees?

What’s really strange about the documents, though, is that they make no effort to demonstrate that there has been such a thing as “sue and settle.”  Instead, the Directive merely states that:

It has been reported, however, that EPA has previously sought to resolve lawsuits filed against it through consent decrees and settlement agreements that appeared to be the result of collusion with outside groups.

The Administrator pledges that the “days of this regulation through litigation, or ‘sue and settle’ are terminated.”

The Memorandum is even better, citing to the Federalist Papers and the correspondence of Thomas Jefferson.  I’m almost persuaded that this is the greatest threat to the American Way of Life since the fluoridation of water.  Far be it from me to compare the Administrator to General Jack D. Ripper, but this is what first came to my mind after reading these documents.  

SMART Moves to a New Forum: Massachusetts Department of Public Utilities to Consider a SMART Tariff

Stakeholders have been following the development of “SMART” as a successor to the SREC program in Massachusetts for more than a year.  (See our previous posts on the development process herehere, and here.)  As it stands, SMART reflects a determined effort by the Department of Energy Resources (“DOER”) to craft a program that balances multiple interests and sets a sustainable path for solar development in Massachusetts.  The result of that effort, as we’ve noted before, is complicated.

DOER finalized its SMART regulations in August after making some significant changes to the emergency version it filed in June.  (Among other changes, DOER raised the ceiling price for the competitive procurement that will set compensation rates, modified aspects of the procurement process, clarified some siting issues, and changed the way in which the value of “adders” – increased compensation based on location, off-taker, or facility characteristics – will decline over time.)

Despite their complexity, DOER’s regulations do not fully implement the SMART program.  While DOER’s regulations fastidiously set the levels of compensation for which various configurations of solar generation will be eligible (once an initial procurement sets a baseline rate from which other rates will be calculated), they leave the details of how that compensation will occur to the Department of Public Utilities (the “DPU”), which needs to approve a tariff to implement the program.

The action now moves to the DPU, where the Massachusetts electric distribution companies filed a proposed SMART tariff on September 12.  Many important aspects of the program will be hashed out in that proceeding.  In particular, the proceeding will determine how the SMART mechanism for transferring bill credits outside of net metering (referred to as an “Alternative On-bill Credit”) will function, an element of the program that may prove critical if net metering caps bar future projects from net metering.

Staying in DOER’s court: how to manage the transition from SRECs to SMART.  The Tariff proceeding at the DPU is likely to extend into the first half of 2018.  As we discussed back in March, DOER has guidelines in place that provide for reduced SREC factors for units based on size and the date a unit is authorized to interconnect.  Currently, SREC factors are set to decline for units over 25 kW DC that are not mechanically complete or authorized to interconnect as of March 31, 2018.

The DPU docketed the SMART tariff proceeding as D.P.U. 17-140 and put out a notice on October 3.  A public hearing will be held on Tuesday, October 24, and the Department is accepting written comments until that date.  The deadline for parties to intervene and participate in the evidentiary phase of the proceeding is October 19.

How Wrong Does a District Court Have to Be to Abuse Its Discretion?

The 9th Circuit Court of Appeals has reversed a District Court decision allocating 100% of CERCLA response costs at a San Diego Superfund site to TDY Holdings, which operated an aeronautical manufacturing plant from 1939 to 1999.  TDY has sought contribution from the United States, which was the source of the vast majority of TDY’s business, and which directed TDY to use certain hazardous substances, release of which caused the relevant contamination.

What makes the case so interesting was that the District Court had found that both TDY and the United States were liable parties, held a lengthy trial on the allocation issues, and made specific findings justifying its 100% allocation share to TDY.  The Court of Appeals repeatedly noted that its review was subject to an abuse of discretion standard, and acknowledged that the facts found by the District Court justified a significant allocation to TDY.

And yet, the Court of Appeals found the 100% allocation to be an abuse of discretion.  Why?  I’m not sure that the case really provides any answer, other than that 100% was just plain too much.

Surely that the US was by far the plant’s biggest customer could not by itself be a reason to require that the District Court allocate a non-zero share to the United States.  The only solid fact cited by the Court was that the United States required TDY to use two of the three hazardous substances that were released from the facility.  That was certainly the view of the concurrence, which went out of its way to make clear that the District Court, on remand, did not have to allocate a very large share to the United States.

I have often noted that facts matter and evidence matters.  Here, the concurrence includes this tantalizing statement:

As far as the record discloses, those are chemicals TDY might have chosen not to use if left to its own devices.

Really?  An aeronautical parts manufacturing plant operating from 1939-1999?  Would any such company not have used chlorinated solvents for parts cleaning and chromium for corrosion resistance?  Couldn’t the government have found an expert witness to testify that usage of these compounds was routine in the industry during this time?

And if such a witness had testified, would the Court of Appeals have affirmed the 100% allocation to TDY?

Court Rejects BLM’s Efforts to Unbalance the Scales of Justice

Yesterday, Magistrate Judge Elizabeth Laporte granted summary judgment to plaintiffs and vacated the Bureau of Land Management’s notice that it was postponing certain compliance dates contained in the Obama BLM rule governing methane emissions on federal lands.  If you’re a DOJ lawyer, it’s pretty clear your case is a dog when the Court enters summary judgment against you before you’ve even answered the complaint.

The case is pretty simple and the outcome should not be a surprise.  BLM based its postponement of the compliance deadlines on § 705 of the APA, which authorizes agencies to “postpone the effective date” of regulations “when justice so requires.”  However, every court that has looked at the issue has concluded that the plain words of the APA apply only to the “effective date” of a regulation and not to any “compliance date” contained within the regulation.

It seems clearly right to me.  For Chevron geeks out there, I’ll note that the Court stated that, because the APA is a procedural statute as to which BLM has no particular expertise, its interpretation of the APA is not entitled to Chevron deference – a conclusion which also seems right to me.

What particularly caught my eye about the decision was the Court’s discussion of the phrase, “when justice so requires.”  In a belt and suspenders bit of analysis, the Court also made findings that justice did not require postponement.  BLM’s argument was that justice required the postponement because otherwise the regulated community would have to incur compliance costs.  However, as the Court noted, “the Bureau entirely failed to consider the benefits of the Rule, such as decreased resource waste, air pollution, and enhanced public revenues.”  Indeed:  

If the words “justice so requires” are to mean anything, they must satisfy the fundamental understanding of justice: that it requires an impartial look at the balance struck between the two sides of the scale, as the iconic statue of the blindfolded goddess of justice holding the scales aloft depicts. Merely to look at only one side of the scales, whether solely the costs or solely the benefits, flunks this basic requirement. As the Supreme Court squarely held, an agency cannot ignore “an important aspect of the problem.” Without considering both the costs and the benefits of postponement of the compliance dates, the Bureau’s decision failed to take this “important aspect” of the problem into account and was therefore arbitrary.

I think I detect a theme here.  Some of you will remember that Foley Hoag filed an amicus brief on behalf of the Union of Concerned Scientists, supporting the challenge to President Trump’s “2-for-1” Executive Order.  We made pretty much the same arguments in that case that Magistrate Judge Laporte made here – minus the reference to the scales of justice.

Unless SCOTUS gets rid of all agency deference, the Trump Administration is going to get some deference as it tries to eliminate environmental regulations wherever it can find them.  However, if it continues to do so while looking solely at the costs of the regulations to the business community, while ignoring the benefits of the regulations, it’s still going to have an uphill battle on its hands.

First Electric Generation. Then Transportation. What About Buildings?

On Monday, EnergyWire (subscription required) reported that New York City Mayor Bill de Blasio has unveiled a plan to cap fossil fuel use in buildings in New York City.  (I haven’t seen the specific plan, but it is referenced in City’s overall plan, “1.5°C:  Aligning New York City with the Paris Climate Agreement,” that the City just released.)  The building plan is based on data gathered as a result of local ordinances requiring buildings with more than 25,000 square feet to report energy and water use.  EnergyWire quotes Office of Sustainability Direct Mark Chambers as saying the focus of the effort will be to move the lower performing buildings up to the average.

Of course, there are generally reasons why the worst performers are not the best performers.  Building owners will be interested to know the details of the City’s commitment to provide financing assistance to make the necessary efficiency upgrades.

As we reported in 2013, Boston has a similar benchmarking law.  At the time, the City was insistent that this was simply a reporting law – the idea being that the presence of an “MPG sticker” on a building would allow the market to work, as buyers and renters began to insist that buildings be more energy efficient.

When the Boston ordinance was proposed, I stated that:

Whether, at some point down the road, the City starts regulating energy use intensity is a question for another day.

I think that the day is arriving, and sooner than many people expected.

We’re Number 1! (And California Isn’t)

The American Council for an Energy-Efficient Economy just released its 2017 Energy Efficiency ScorecardAfter sharing the top spot with California in the 2016 Scorecard, Massachusetts is back where it belongs – alone at the top.

The ACEEE notes that Massachusetts offers “some of the most comprehensive services in the country, addressing a range of customers and building types.”  It also noted Massachusetts’ efforts to make energy more available to those with lower incomes, through its “Affordable Access to Clean and Efficient Energy Initiative.

Ball’s in your court California.  To paraphrase some lottery advertising, this is a contest where everyone wins — as long as you’re really in the game.

What the Frack Is Up With BLM’s Fracking Rule?

Last week, the 10th Circuit Court of Appeals dismissed as prudentially unripe appeals of last year’s District Court decision striking down BLM’s 2015 fracking rule.  The District Court ruled that BLM had no authority to issue the rule.  At the time, I thought that the District Court was on shaky ground.  So did BLM and various environmental groups.  They appealed.

Now, in a refrain being replayed in what seems like dozens of cases in multiple courtrooms, BLM moved to dismiss the appeals as unripe, because Secretary Zinke has announced his intention to rescind the fracking rule.

The Court concluded quite reasonably that there was not much point in litigating BLM’s authority to promulgate the 2015 rule when the current administration has already announced its intention to get rid of the rule.

Fair enough, but the Court then had to decide what to do about the District Court’s decision.  Noting the similarity to cases involving mootness, the Court stated that:

we generally vacate the district court’s judgment to prevent it “from spawning any legal consequences.”

The Court thus vacated the District Court decision and dismissed the underlying case.  That certainly prevents it from “spawning any legal consequences.”  It is now as though the case never happened and the District Court decision carries no weight.

Of course, there is one practical legal consequence to the Court of Appeals’ decision.  The 2015 fracking rule – the same one that lost in District Court and that Secretary Zinke has said he wants to rescind – is now, at least temporarily, back in effect.

Be careful what you wish for.

The Drumbeat Continues: Another Court Rejects an FEIR For Not Properly Considering Climate Change

Last week, the 10th Circuit Court of Appeals reversed and remanded a District Court decision approving a decision by the Bureau of Land Management to approve new leases on mines that account for 20% of U.S. coal production.  The decision is just the latest in a series of cases making clear that courts will not approve new – or renewed – energy production that does not appropriately address the impacts of a project on climate change.

Here, the Court held that BLM tripped up on a fairly basic issue – supply and demand.  In the EIS, BLM acknowledged that coal from Powder River Basin – the location of the mines at issue – was cheaper than other coal.  BLM nonetheless assumed that perfect substitutes for Powder River Basin coal exist somewhere that would be used without affecting the price of coal.

The BLM did not point to any information (other than its own unsupported statements) indicating that the national coal deficit of 230 million tons per year incurred under the no action alternative could be easily filled from elsewhere, or at a comparable price.

In fact, BLM acknowledged that coal demand may decline in response to an increase in price – duh!  It argued instead that overall demand for coal would still increase.  However, that argument misses the point.  The question is not whether demand is increasing, overall.  The question is what would be the difference in price if the leases were renewed as compared to if they were not.  It’s indisputable that a decision not to renew the leases, taking 20% of U.S. coal out of production, would increase prices, thus driving down demand, reducing use of coal, and thus reducing GHG emissions.

The Court’s bottom line?

Therefore, we hold that it was an abuse of discretion to rely on an economic assumption, which contradicted basic economic principles, as the basis for distinguishing between the no action alternative and the preferred alternative.

Score one for economics.

How Imminent Are the Impacts of Climate Change in Everett?

Yesterday, Judge Mark Wolf dismissed part of the Conservation Law Foundation’s claims in its litigation against ExxonMobil concerning ExxonMobil’s Everett Terminal facility.  The opinion is both interesting and pleasurably concise – a rare combination!

Judge Wolf found that CLF had credibly alleged that the Terminal is violating its NPDES permit.  Importantly, he also found that CLF stated that there is:

substantial risk” that severe weather events, such as storm surges, heavy rainfall, or flooding, will cause the terminal to discharge pollutants into those areas in the near future and while the Permit is in effect. Finally, plaintiff plausibly alleges that these actual and imminent harms are redressable by the court through an order that defendants comply with the Permit.

The judge parted ways with CLF, however, with respect to allegations the he found to be more speculative.  Specifically, he concluded that CLF:

does not have standing for injuries that allegedly will result from rises in sea level, or increases in the severity and frequency of storms and flooding, that will occur in the far future, such as in 2050 or 2100. Such potential harms are not “imminent” and the claims concerning them are not ripe for decision because, among other reasons, the Environmental Protection Agency may require changes to the Permit that will prevent the harms from occurring.

I do feel compelled to crow a little.  When the complaint was filed, I noted the likelihood that we’re going to start to see more of such cases.  I also noted that cases are concrete and the allegations in a complaint matter.  As I said then:

The complaint does refer to the new FEMA flood maps.  I think it’s a fair allegation to say, if true, that ExxonMobil’s SWPPP does not reflect current FEMA flood maps.  I also think that it’s a fair defense to say, if true, that ExxonMobil’s SWPPP does address current FEMA maps and that ExxonMobil has no obligation to prepare for some hypothetical next-generation FEMA flood maps.

It thus seems to me that all the allegations in the complaint about ExxonMobil’s research on climate change are irrelevant.  This isn’t a fraud law suit, or shouldn’t be.  More broadly, I can certainly imagine many other such suits being brought, but they’re going to have to be based on provable facts.

My views haven’t changed — and now I know Judge Wolf agrees with me!

If China Can Cap-and-Trade Auto Fuel, Why Can’t We?

Bloomberg reported earlier this week that:

China will soon unveil a mandatory cap-and-trade credit program for electric cars, starting the countdown for carmakers to be in compliance with stricter rules on emissions and fuel economy.

It’s pretty well known that China is not the world’s most transparent government.  Thus, I won’t fully believe until I see it.  On the other hand, it does seem pretty clear that China is intent on cracking down on motor vehicle pollution.  The article notes that China will be setting a deadline for a prohibition on sales of fossil-fueled powered cars.

All of which makes me ask:  If China can do it, why not us?

The Northeast already has RGGI.  Massachusetts just further tightened emissions on power plants.  All this notwithstanding that transportation now generates approximately twice the CO2 emissions as electric power generation.  When my clients in the generation biz ask me why they keep being targeted, notwithstanding that transportation and, to a lesser extent, buildings, have thus far largely been spared, I have a simple answer.

Electric generation may no longer be low-hanging fruit, but it’s still the lowest hanging fruit.  Transportation is hard and regulators will almost always take the easy way out.  Is that a legitimate excuse?  No.  If California can do it – and China can do it! – then we can do it.  More to the point, if we don’t do it, we’ll fail.  We might be able to reach 2020 GHG reduction targets solely on the back of electric generation, but we’re never going to make the 2050 target, or interim targets after 2020, if we don’t tackle the higher-hanging fruit.

To end on an optimistic note, the Statehouse News Service (subscription required) reported today that the Baker administration:

plans to tackle the thorny issue of extracting additional emission reductions from the transportation sector.

Let’s hope so.

Trump’s 2-For-1 Order: Still Arbitrary and Capricious After All These Months

In June, I posted about Foley’s brief in support of those challenging Executive Order 13771, the so-called “2 for 1” EO.  By ignoring the benefits of existing and proposed regulations, the Order ignores the purposes behind the legislation pursuant to which regulations are promulgated.  The Order is thus the definition of arbitrary and capricious.

Late last week, OMB issued a memorandum to executive agencies, requiring them to develop “Regulatory Cost Allowances” for FY 2018.  The memorandum is only one page.  In that one page, it uses the word “cost” 11 times.  The word “benefit” does not appear.

The memorandum notes that the purpose of the Order is to “lower regulatory burdens” and “to be prudent and financially responsible in the expenditure of funds, from both public and private sources.”

I hate to beat a dead horse, but one would have thought that the absolute size of the “regulatory burden” is not what’s relevant; what’s relevant is whether that regulatory burden is exceeded by the benefits of proposed regulations.  One would also have thought that requiring expenditures of private funds for regulatory compliance would be seen as “prudent” if those compliance costs are exceeded by the benefits.

Indeed, one would have thought – and I do still think – that seeking to lower regulatory compliance costs without regard to the benefits provided by government regulations is just plain crazy.

Silly me.

Cooperative Federalism Requires Cooperation From Both Sides

In 2011, the National Parks Conservation Association sued EPA for failure to enforce the regional haze requirements of the Clean Air Act.  EPA and the NPCA settled in 2012, establishing a schedule by when SIPs or FIPs had to be promulgated.  The only state remaining is Texas.  After several extensions, EPA is required to approve a SIP or promulgate a FIP by September 9, 2017.  You can hear the clock ticking.

On August 18, EPA moved unilaterally to extend the deadline to December 31, 2018.  The basis for the motion?

“policy changes legitimately instituted by the new administration led to a breakthrough in the relationship between EPA and Texas,” and that, through that new relationship, the Governor of Texas has made a “firm commitment” to “bring the full weight and resources of the State of Texas to bear” on the development of an approvable state implementation plan.

Judge Amy Berman Jackson was having none of it.  Last week, she denied the government’s motion.  As she concisely put it:

This is not the sort of significant change in circumstance that would warrant relief.

In other words, the cooperative federalism tango requires two willing parties — the federal government and the state involved. As the Court noted, Texas’s statutory obligation was in effect in 2007 and EPA informed Texas of its failure to comply with the SIP requirements in 2009.  “Texas has had ample time to develop, submit, and negotiate a compliant” SIP.

It takes two to tango.

What’s a Court to Do When EPA Misses a Statutory Deadline?

Earlier this week, a divided 9th Circuit Court of Appeals affirmed entry of a consent decree between the Sierra Club and EPA, resolving litigation over EPA’s failure to promulgate attainment designations for the sulfur dioxide NAAQS under the Clean Air Act.

I would have thought that entry of the settlement would be fairly straightforward.  EPA misses deadlines with some regularity.  Persons sue over such failures with some regularity.  EPA then agrees to schedules with some regularity.  Here, EPA agreed to a schedule – albeit one that purports to give it seven (7) extra years to make the required designations.  The Sierra Club, for its part, agreed not to sue EPA again over the designations, so long as EPA keeps to the schedule.

Several states objected, on three grounds.  First, they argued that the consent decree improperly disposed of their claims.  The short answer to this was that the decree does no such thing; the states are still free to litigate EPA’s failure to timely make the required designations.  Second, they argued that the decree imposes obligations on them, even though they are not a party to it.  However, as the majority noted, the obligations to which the states are subject are not as a result of the decree; they are the result of EPA’s so-called Data Requirements Rule, which EPA separately promulgated in order to obtain the information necessary to make the designations.

The final argument is the one on which I want to focus.  The states – and the dissent – argued that the decree was tantamount to judicial legislation, because, by giving its imprimatur to a seven-year delay, the Court effectively amended the statute.  I’m sorry, but I don’t see it.  The Court isn’t amending the statute; it’s recognizing reality.  Once EPA misses the deadline, it’s impossible to order EPA to go back and promulgate the designations timely.  Nor is it possible to issue an order requiring EPA to promulgate the designations instantly.

The argument does nonetheless raise an important issue of statutory interpretation.  When I was in law school, my then-Professor Guido Calabresi taught a course on his book A Common Law For The Age Of StatutesThe basic problem addressed by the book was that times change and legal requirements change.  Judges have authority to revise the common law if precedents no longer serve their purpose.  Judges, however, have no authority to amend statutes; they are effectively written in stone.

Amending statutes is supposed to be Congress’s right and responsibility.  However, it ignores reality to drop all statutory problems in Congress’s lap and blindly take the position that Congress can amend a statute if it so chooses.

We live in an increasingly complex world.  Some of the deadlines in the CAA are no longer practical, if they ever were.  I don’t think that the Court here amended the Clean Air Act, but it’s at least worth discussing whether allowing courts limited authority to do so would be such a bad idea.

The Arbitrary and Capricious Standard Remains in the Eye of the Beholder

In a very interesting – and extremely rare – case, Emhart Industries has successfully defended itself against a unilateral administrative order issued by EPA under CERCLA, on the ground that key decisions made by EPA were arbitrary and capricious.  The decision, concerning the Centredale Manor Restoration Project Superfund Site, is worth a read for CERCLA practitioners, even though it weighs in at 108 pages.

The decision’s length highlights the first important take-away:  the arbitrary and capricious standard is almost infinitely malleable.  Judges reach whatever decision seems reasonable and then justify it in one of two ways.  If a judge wants to support an agency, he recites the highly deferential standard required by arbitrary and capricious review.  If a judge wants to support the challenger, she recites the highly deferential standard, but then notes something along the lines of “deference is not abdication.”  In this case, Judge Smith chose the latter course.

While I’m sympathetic to Judge Smith’s responsibilities in assessing a large and complex record (and I’m always sympathetic to those challenging EPA’s often just plain silly remedial decisions), a 108-page decision is almost prima facie evidence that Judge Smith inquired more deeply into the record than the standard of review would generally warrant.

The second important take-away is on the merits.  Although Judge Smith affirmed many of EPA’s decisions, he rejected EPA’s conclusions on two related – and critically important – issues.  The basis for both decisions was his conclusion that the record did not provide adequate support for EPA’s conclusion that the source area at the site could be a drinking water supply.  That conclusion supported both EPA’s decision about groundwater cleanup standards and the need for a RCRC C cap of the source area.  Why did the Court disagree?  Because Judge Smith concluded that:

The evidence makes overwhelmingly clear that the Source Area groundwater is currently far too contaminated to provide a source of drinking water.

In other words, precisely because the operation of the site had led to so much contamination, EPA did not reasonably determine that the source area groundwater could be used as a drinking water supply.  I think that Judge Smith reached a fair conclusion, particularly since Superfund liability is general strict, i.e., without regard to fault, but it’s one that has to stick in EPA’s craw.  Moreover, given the precedential importance of this issue, I could see EPA appealing Judge Smith’s ruling – or at least I could have under any other administration.  Time will tell, in this case.

(Full disclosure:  Many years ago, Foley Hoag represented Centredale Manor in connection with the Site.  Centredale Manor settled early.  I can only say that our client is well out of it.  Judge Smith noted that the “Centredale Site is truly a litigation gift that keeps on giving.”!)