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

Following EPA’s decision last week to scrap its reconsideration of the 2008 ozone National Ambient Air Quality Standard, the parties to the litigation challenging the 2008 standard are back in court. This week, EPA submitted a brief to the Court of Appeals, which was pretty much a six-page version of Roseanne Roseannadanna’s “Never mind.” After telling the Court for years that it should defer to EPA’s reconsideration process – a decision on which was always just around the corner, until EPA decided it wasn’t – EPA has now told the Court that it is time to brief the merits of the challenges to the 2008 standard of 0.075 ppm.

As I noted last week, EPA has already made the argument that the Court of Appeals does not have jurisdiction in this case. If that argument fails, I cannot wait to see what argument EPA will make on the merits. The Clean Air Science Advisory Committee said that 0.075 ppm was not sufficiently stringent, the Court of Appeals has said that EPA cannot willy-nilly ignore CASAC, and EPA itself pretty much said in 2010 that the standard cannot be any higher than 0.070 ppm. I don’t envy the DOJ lawyers who will be writing that brief.

The problem for the environmental group challengers is whether there is any practical remedy at this point. The Court cannot promulgate its own NAAQS. All it can really do is impose a schedule on EPA to correct the 2008 standard. It doesn’t take much analysis to conclude that there is likely no reasonable deadline the Court could impose that would result in a new ozone standard any earlier than the 2013 date towards which EPA is already pointing. I foresee some awkward moments for the DOJ lawyers and some very firm finger-wagging by the Court, to the effect of “We really, really expect you to issue a new standard in 2013.”

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Yesterday, in commenting on the court battle over EPA’s reconsideration of the ozone NAAQS, I said that I would be surprised if EPA doesn’t issue the new standard within six months. Oops. My bad. Today, President Obama directed EPA to give up on the reconsideration effort. It’s difficult not to be cynical about the White House decision. As much as I admire Cass Sunstein, his letter to EPA providing the basis for the White House decision is not persuasive. Basically, it makes two points. 

First, EPA has to review the NAAQS every five years. Since this cycle began in 2008, EPA would have to review any new standard in 2013. Therefore, why bother? Why not just wait until 2013? The problem with that argument is that the review of the NAAQS is extremely complicated and cumbersome. It’s always going to take much of the five-year cycle. Sunstein’s argument, pushed to its logical conclusion, could result in the NAAQS never being updated, because, by the time EPA is ready to act, it will be so near the time for the next review that the decision would always be deferred to the next round.

The second argument is that the Administration has implemented a number of major initiatives to improve air quality, many of which will reduce ozone in the atmosphere. That’s certainly true, but the real answer to that is, so what? Setting the NAAQS is not a regulatory action; it is merely EPA’s statement as to how high ozone concentrations can get before ozone poses a risk. Regulatory actions may follow from that, but they’re distinguishable. If some of the other actions EPA has taken will reduce ozone levels, that’s not a reason to stop the reconsideration process. In fact, that only suggests that additional regulatory actions necessary to comply with the standard won’t be as expensive as they might otherwise have been, because prior regulatory efforts will have already achieved part of the necessary reductions.

I may have been wrong about EPA’s issuance of a new ozone standard, but I’ll nonetheless go out on a limb and make another prediction – it won’t be long before the environmental petitioners return to the Court of Appeals and request that the Court order EPA not only to continue with the reconsideration process, but to issue a new standard asap. Alternatively, they can go back and simply revive their challenge to the Bush administration standard of 0.075 ppm. If they can get the court to conclude that a standard above 0.070 ppm (or even lower) is arbitrary and capricious, we may still see a lower standard. 

If I were really cynical, I might conclude that that is in fact the Administration’s hoped-for outcome. That way, they get the lower standard, but without the political heat, because they can blame it on the court.

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This week, EPA filed a brief with the D.C. Circuit Court of Appeals, arguing that, notwithstanding its fourth delay in issuing a decision on its reconsideration of the NAAQS for ozone, the court cannot and should not order EPA to issue a decision. Industry shouldn’t get too excited, however. In the same brief, EPA telegraphed pretty clearly, consistent with its 2010 proposed rule, that it remains on track to significantly decrease the ozone standard from the 0.075 ppm standard promulgated by the Bush administration in 2008.

As most readers know, the Bush standard was higher than that suggested by EPA’s own Clean Air Science Advisory Committee, or CASAC. In a parallel case, the D.C. Circuit found EPA’s fine particulate standard arbitrary and capricious, largely because it had ignored CASAC’s recommendations. Given the decision in the fine particulate case, and, presumably, the Obama administration’s own views on the appropriate standard, it is not surprising that EPA embarked on a reconsideration effort, rather than trying to defend the Bush standard.

In January 2010, EPA proposed that the standard should be in a range from 0.060 ppm to 0.070 ppm. However, notwithstanding CASAC’s views, the new standard remains hugely controversial and EPA has had difficulty in finalizing the rule. EPA missed an August 2010 deadline to publish a final rule, and then an October 2010 target, and then a December 31, 2010 target, and then a July 29, 2011 target. When EPA, after missing the most recent target, would not even give a date, but instead only informed the court and the parties that a final rule would be issued "shortly", the environmental petitioners, including the American Lung Association, asked the court to order EPA to issue the final rule.

EPA’s opposition is straightforward. First, it argues that the Court of Appeals has no jurisdiction over citizen claims that EPA is late in issuing such rules. Second, EPA claims that it has been “diligent” in its reconsideration effort and that the final rule will indeed be issued “shortly.” 

It’s difficult to avoid the conclusion that EPA was, to put it mildly, overoptimistic in its reports to the court regarding how long the reconsideration process would take. They should have known better. That being said, I wouldn’t be surprised if the Court continues to give EPA at least some more time to reach a decision. After all, the court cannot issue a standard itself. What would surprise me would be if EPA does not manage to issue the new standard sometime in the next six months or so. They’ve been boxed in by CASAC and any standard above 0.070 ppm would probably be found to be arbitrary and capricious. 

The ever-reliable internet attributes the “wheels of justice” quote to Sun Tzu. No matter how slowly it grinds, EPA is going to have to issue a rule at some point. It would be best to get it out as far in advance of the election as possible. Moving from Sun Tzu to Shakespeare, “if it were done when 'tis done, then 'twere well It were done quickly.” 

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Earlier this week, I posted about the dire prospects for climate change legislation following the fall elections. The alternative to legislation has always been regulation under existing Clean Air Act authority, so it’s appropriate as a follow-up to briefly examine the pressures on EPA as it moves forward with its stationary source GHG regulations. Two headlines from the trade press today brought home just what a tightrope EPA is walking.

The first headline, from the Daily Environment Report, was to the effect that a “Ban on New Source Construction [Is] Possible In States Without Greenhouse Gas Permitting.” Specifically, Raj Rao, of EPA's Office of Air Quality Planning and Standards, said states that have not taken steps to implement permitting requirements by Jan. 2 could face the construction ban.

The second headline might be described as a corollary of the first. Today’s GreenWire notes that “New rules spark bipartisan fury in midterm elections.” Well, duh. Is it any surprise that in the face of continuing unemployment near 10%, regulations that even EPA acknowledges might result in construction bans in some states would be a topic of debate in congressional elections? In fact, the GreenWire piece was not even primarily about the GHG regulations and made no mention of the potential construction ban. It was largely about other EPA rules, such as the boiler MACT rule.

I have a certain amount of sympathy for EPA on this one. As I’ve noted previously, to a certain extent, EPA is just doing its job. On GHGs, it really has no choice but to regulate. While I have doubts about the legality of the Tailoring Rule, the alternative is only more onerous. The boiler MACT rule is another matter – and is complicated enough to warrant several posts of its own. However, EPA’s options are limited given the stringent provisions Congress itself wrote – and a Republican President signed into law. On conventional pollutants, the science is driving EPA towards lower and lower NAAQS, and more stringent rules on emitters follow like night follows the day.

Just so my friends in the regulated community don’t think I’ve gone soft, I will point out that it is at the least disingenuous for Administrator Lisa Jackson to say, as she was quoted in GreenWire, that:

The Clean Air Act does not place our need to increase employment in conflict with our needs to protect public health.

Somehow, that message has never gotten to the EPA and DOJ lawyers briefing appeals of EPA regulations, where those opposing the regulations say that they are uneconomic, while EPA's invariable rejoinder is that the Clean Air Act doesn't allow for the consideration of the cost of regulations in deciding how stringently to regulate.

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In 1972, Christopher Stone published his seminal book “Should Trees Have Standing?” That same year, Justice Douglas posed essentially the same question in his dissent in Sierra Club v. Morton, in which he argued that inanimate objects should have standing “to sue for their own preservation.”

I hadn’t thought of this for some time, but was reminded of the issue by an article in GreenWire this week, reporting on a study which has concluded that kudzu, an invasive species which is, one might say rhetorically, taking over the southeastern United States, increases NO_x levels and thus leads to the formation of ground-level ozone. Indeed, the study concluded that if kudzu does in fact take over – to the point where it covers all non-urban, non-agricultural soil – the number of areas exceeding the ozone NAAQS would increase by more than one-third.

Now, what’s the point of this other than the opportunity for a snappy headline? Perhaps nothing. I love a snappy headline. On the other hand, the report does serve as a useful reminder that environmental science and policy are really complicated. I do not use this complexity to suggest that the government should not act in the face of uncertainty, but I do believe that it can serve as a useful reminder of the limits of our knowledge and the appropriateness of a prudent caution before we assume we know all the answers. 

At a practical level, can EPA set up an offset program that would allow new sources of NO_x to move forward if they remove a certain number of acres of kudzu? After all, no one likes kudzu, anyway.

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Last week, I posted about improvements in air quality since 1990. It’s a good thing air quality is improving, because, at the same time, the science keeps suggesting that ever lower pollutant levels pose risks to public health. The latest news was EPA’s draft review of the appropriate level at which to set the National Ambient Air Quality Standard for particulate matter.

EPA most recently revised the PM standard in 2006, setting it at 15 ug/m³, notwithstanding the staff recommendation to set the standard at between 13 ug/m³ and 14 ug/m³. As I have discussed, EPA’s decision was struck down by the D.C. Circuit Court of Appeals, because EPA could not justify its departure from the scientific recommendations it has received.

Now, the draft Policy Assessment has concluded that the 15 ug/m³ is not sufficiently stringent. The draft suggested two ranges for potential revised standards:

Annual standard of between 12 and 13 ug/m³; 24-hour standard of 30 to 35 ug/m³

Annual standard of between 10 and 11 ug/m³; 24-hour standard of 25 to 30 ug/m³

A more stringent PM standard is going to have significant implications. These include:

1.         Strengthening the logic for three pollutant legislation. First, the health effects described in the Policy Assessment suggest the need for such legislation, because the targets of three pollutant legislation are among the big contributors to PM emissions. Second, in order to meet a more stringent standard, reductions of the sort contemplated in three pollutant legislation are going to be necessary.

2.         It may be simply a restatement of the first point, but the pressure on old fossil fuel plants, particularly old coal plants, is only going to increase as a result of the Policy Assessment. In this context, it is noteworthy that, at a seminar on Friday, Gina McCarthy, EPA’s Assistant Administrator for Air and Radiation, in discussing the number of rules EPA is obligated to issue in the next 12-18 months, indicated her sense that the biggest impact on GHG emissions might not result from EPA’s tailoring rule and direct regulation of GHGs, but would instead result from the secondary effect from the full panoply of traditional pollutant regulations on EPA’s docket. In other words, once EPA is done with new CAIR regulations, MACT rules, and SIP revisions following a more stringent PM standard, the economics of old coal plants will be such as to force switching to more climate-friendly energy sources, even aside from direct GHG regulation.

I think that Gina is probably right, and I’m particularly appreciative that she is able to take the long view. In the short run, coal remains cheap. Moreover, traditional control technologies for SO₂ and NO_x require energy, increase station service, and thus actually do not help with GHG reductions. Nonetheless, if one does take the long view, more stringent traditional regulation, including that resulting from more stringent PM standards, will increase the cost of fossil fuels and help drive the economy towards energy sources that are more climate friendly.

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As we noted a few weeks ago, EPA has proposed lowering the NAAQS to a range of from 0.060 ppm – 0.070 ppm. Earlier this week, EPA’s Clean Air Science Advisory Committee, or CASAC, met and endorsed EPA’s proposed range. Some CASAC members did express concern about EPA’s proposed secondary seasonal standard, intended to protect crops and forests. However, overall, the CASAC seal of approval is pretty much the end of this argument.

It is important to recall how we got here. CASAC already endorsed the 0.060 ppm – 0.070 range several years ago, before EPA’s last ozone standard was issued. It was EPA’s refusal to follow the CASAC recommendations, and instead propose a 0.075 ppm standard, which led to litigation challenging the standard and the current controversy. 

It is difficult to overstate the weight given the CASAC’s views. Indeed, EPA’s fine particulate standard was vacated in significant part because EPA failed to follow CASAC’s recommendations.

Thus, a standard that does not comport with CASAC’s recommendations would likely be rejected by the courts as arbitrary and capricious. However, I suspect that CASAC’s influence also runs the other way. Assuming that EPA does indeed promulgate a revised NAAQS in the 0.060 ppm – 0.070 ppm range, and assuming that industrial interests challenge the new standard, it will be very difficult to establish that the new standard is arbitrary and capricious if it has been endorsed by CASAC. 

As I noted in connection with the fine particulate standard, it’s not obvious to me that this is a good thing. Depending on whose ox is being gored, anyone can get up on a soapbox and say that they want science to be free of politics. However, these are really policy decisions. It’s one thing to acknowledge that these are complicated issues and we thus have to allow Congress to delegate its authority to the EPA administrator. It’s another effectively to delegate the decision further to the CASAC, which is about as obscure an acronym body as we have. Do we really want standards which will result in compliance costs in at least the tens of billions of dollars being made by groups which truly are not accountable in any meaningful way?

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As I noted on Friday, EPA has proposed to revise the NAAQS for ozone to a range of from 0.060-0.070 ppm, a reduction from the 0.075 ppm standard promulgated in 2008 by the Bush administration.  EPA’s analysis of the available date indicates that 650 counties – out of 675 counties which have ozone monitors – would be in violation of a 0.060 ppm standard. For those counting, that’s more than 96% of all counties in nonattainment. Even if the standard were set at 0.070 ppm, 515 counties would be in non-attainment.

In fact, EPA estimates that, even by 2020, 203 counties would remain in nonattainment at 0.060 ppm and 99 counties would be in nonattainment at 0.070 ppm. EPA’s estimate is that the cost to comply with a 0.060 standard would be $52B to $90B per year in 2020. I confess that I have not reviewed the rule closely enough to know exactly what that means, given EPA’s prediction that more than 30% of all counties would not be in compliance at that time. We’re going to spend $52B to $90B per year to comply with the standard – and still not meet the standard?

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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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EPA announced this week that it was granting a petition for reconsideration of the final National Ambient Air Quality Standards for lead, specifically the portion requiring monitoring of lead emissions near certain sources. The petition was brought in January by a number of environmental organizations and groups concerned about childhood lead poisoning. 

The existing lead monitoring requirements were finalized in October 2008, at the same time that EPA tightened the national air quality standards for lead for the first time in 30 years. EPA reports that the revised standards are 10 times more stringent than the previous standards and require states to place monitors near sources that emit one or more tons of lead a year. They also require a monitor to be operated in each of the 101 urban areas with populations greater than 500,000 to gather information on the general population’s exposure to lead in air.

As part of the reconsideration, EPA will evaluate whether additional monitoring near industrial sources and in urban areas is warranted. EPA notes in its fact sheet that it is not reconsidering the lead standards, and that implementation of those standards and the existing monitoring requirements will move ahead on schedule.  States are required to make recommendations for areas to be designated attainment, nonattainment, or unclassifiable by October 2009.

If EPA decides to revise the lead monitoring requirements later this summer, it would issue a final rule in the spring of next year, following public review and comment.

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

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

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

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

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

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

Is anyone in Congress listening?

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

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

Irreparable harm discussion – a few noteworthy aspects here

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

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

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

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

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

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

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

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The batting average of the Bush administration EPA in appeals of its regulatory proposals may now have dropped below the proverbial Mendoza line. This week, the Court of Appeals for the District of Columbia remanded a substantial part of EPA’s particulate rule. That the Bush administration could achieve results where the Mendoza line is even a close metaphor is a testament to just how low its stock has fallen in the courts.

The case itself is important for a number of reasons, but is too lengthy for detailed analysis here. Highlights include:

• First, the basic holding: the court remanded EPA’s primary annual standard for PM_2.5, because EPA did not justify that the 15 ug/m³ standard was sufficient to protect public health with an adequate margin of safety. Second, the court also remanded EPA’s determination of the secondary, public welfare, standard for PM_2.5.
• The court gave great weight to the role of the Clean Air Science Advisory Committee (CASAC) and staff recommendations in the regulatory process. After this decision, EPA is going to think twice about choosing a regulatory course difference than that recommended by CASAC and staff. On balance, I think that this is a bad thing and more evidence of the collateral damage from the extreme positions taken by the Bush administration. After all, while the Clean Air Act sets some boundaries, these are ultimately policy decisions that should be made by the President and his or her chosen staff, not by a committee no one’s heard of or low-level staff.
• Unlike the chaos created when the court vacated the CAIR regulations, the court appears to have learned its lesson. This time around, the court remanded the rule, but left the standard in place for now.
• The court’s decision to remand the public welfare standard will have implications for current efforts to implement the its Regional Haze Rule. The extent to which this decision throws Haze Rule implementation back to the drawing board may not be known for some time.

How many more cases can the Bush administration lose after it’s already out of office? At least one. Greenwire reports today about speculation that this decision means that the EPA rules regarding the nitrogen oxide NAAQS may also be in trouble.

The interesting question in all this is the extent to which the abysmal record of the Bush EPA in defending its decisions in the courts will damage EPA’s credibility and thus result in a long-term weakening of the deference given EPA by the courts. At this point, my assumption is that, in the long run, these cases will be seen as an aberration and courts will resume their prior practice of granting EPA substantial deference. Of course, whether that is a good thing or not is a separate question.

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