Did the 5th Circuit Just Make Standing Much More Difficult?

Last week, the 5th Circuit Court of Appeals vacated a $20M penalty imposed on ExxonMobil for Clean Air Act violations at its Baytown facility, remanding the case for a more particularized review by the District Court regarding whether the plaintiffs have demonstrated that they have standing with respect to all of the violations committed by ExxonMobil.  The Court held that it is not enough to show that each of the claims in the complaint are traceable to ExxonMobil’s conduct.  Instead, the plaintiffs must demonstrate that they have suffered harm traceable to the violations committed by ExxonMobil.

As an initial matter, I think that the Court erred when it rejected the plaintiffs argument that the law of the case precluded the court from reexamining standing.  In the first go-round, the District Court declined to impose a penalty and 5th Circuit reversed.  This time around, the plaintiffs pointed out that, since standing is jurisdictional, the prior 5th Circuit panel must have made a finding that plaintiffs have standing.  The current panel concluded that this was too thin a read on which to make a law of the case finding.  To me, given the black letter nature of the rule that a Court must always determine that whether it has jurisdiction, even if not raised by the parties, the only way that the recent panel could rule against the plaintiffs was by concluding that the original panel had essentially committed judicial malpractice.  I would be loath to do so were I an appellate judge.

In any case, Inside EPA (subscription required) is now speculating as to how high the Court has “raised the bar” for standing.  The jury, as they say, is still out on that one.  The Court took great pains to emphasize that it was not requiring an individualized finding for every single violation.  For example, it noted that any violation resulting from flaring would support standing, because flaring is visible from outside the facility; plaintiffs need not provide that they actually witnessed any particular flaring event.

Overall, I think that the Court struck a reasonable balance.  It may be difficult to establish standing for some truly trivial violations, but plaintiffs here – and, more importantly, future plaintiffs – should be able to establish standing for any significant CAA violations.  Plaintiffs’ bigger concern has to be whether a 5th Circuit now heavily salted with Trump appointees might at some point take up the suggestion of the concurrence that the court in the right case should meet en banc and clean up the “mess” that is the 5th Circuit’s standing jurisprudence.

Until then, I think that environmental plaintiffs should treat this case as sui generis.  As I previously asserted, Baytown is just “too big to comply.”

It’s Not Impossible for EPA to Comply with the Good Neighbor Provisions of the Clean Air Act

On Tuesday, Judge John Koeltl ordered EPA to issue a final rule addressing its obligations under the Good Neighbor provisions of the Clean Air Act by no later than March 15, 2021. Two aspects of the decision are worth note.

The big issue in the case, once the Judge disposed of EPA’s jurisdictional arguments, was whether it is impossible for EPA to issue a final rule by the plaintiffs’ suggested date.  EPA argued that compliance by March 15, 2021 was legally “impossible.”  Judge Koeltl first noted that heavy burden on an agency in making an impossibility argument.  He then provided the coup de grace:

That burden is especially heavy where ‘the agency has failed to demonstrate any diligence whatever in discharging its statutory duty to promulgate regulations and has in fact ignored that duty for several years.

In other words, an agency cannot ignore its statutory obligations for years and thus create a condition of impossibility through its dereliction of its statutory duties.  Indeed, EPA’s conduct comes very near to Leo Rosten’s classic definition of chutzpah in “The Joys of Yiddish”:

that quality enshrined in a man who, having killed his mother and father, throws himself on the mercy of the court because he is an orphan.

The second important aspect of the case is EPA’s effort, chutzpah aside, to argue that uncertainty regarding emissions from sources other than electric generating units justifies EPA’s insistence that it needs more time before it can regulate.  As I noted in connection with a previous iteration of this dispute, it is EPA’s job – its statutory obligation – to regulate under uncertainty.  If it waited until it could eliminate uncertainty before regulating, it would never do anything – which may in fact be this administration’s ultimate objective, of course.

Governor Jim Justice and the Progress of Man

On Monday, Judge David Faber found Bluestone Coal Corporation liable for 1,904 days of violations of its discharge permit at the Red Fox Surface Mine.  All of the violations related to excessive discharges of selenium.  Bluestone’s defense, rejected for a second time by Judge Faber, was that the existence of a consent decree precluded the separate action for enforcement of the permit.  However, the permit and its specific discharge limit for selenium only came into effect after the entry of the consent decree.

Aside from the legal niceties of the law of diligent prosecution, to accumulate 1,904 days of violation after having entered into a consent decree certainly suggests a less than vigorous effort by Bluestone Coal to come into compliance with the CWA.  What really made this decision newsworthy, however, was that Bluestone Coal’s President is none other than Jim Justice, the Governor of West Virginia.  (And don’t ask me how it is that Governor Justice remains President of Bluestone Coal; all I know is that both the Governor’s web site and Dun & Bradstreet both seem to think that such is the case.)

For some strange reason, while the Governor’s web page highlights all the great things he’s done for his state, it does not mention poisoning the state’s waters through the discharge of excess selenium.

I’m not sure that this decision would have prompted a post from me, had it not been for the recent death of the great John Prine, who wrote these immortal words:

Then the coal company came with the world’s largest shovel
And they tortured the timber and stripped all the land
Well, they dug for their coal till the land was forsaken
Then they wrote it all down as the progress of man.

Massachusetts Attorney General Strikes Down First Municipal Fossil Fuel Ban

Just over a year ago, the city of Berkeley, California, became the first City in the United States to ban natural gas hookups in new buildings.  The trend of municipalities enacting fossil fuel bans, driven by a desire to reduce greenhouse gas emissions and combat climate change, has spread across California and a few other states and has now reached the east coast.  Yesterday, the Massachusetts Attorney General’s Municipal Law Unit struck down the first such municipal fossil fuel ban to come across its desk as inconsistent with the general laws of the Commonwealth.

In November 2019, Brookline, Massachusetts, approved a by-law that would prohibit the installation of oil and gas heating systems in new construction starting in 2021.  The bylaw would require heat, hot water, and appliances installed during new construction and major renovation to be all-electric, with certain exemptions.

The Attorney General found the bylaw to be in direct conflict with three uniform statewide regulatory schemes; the State Building Code; the Gas Code; and the Department of Public Utilities’ powers to comprehensively regulate the sale and distribution of natural gas in the Commonwealth.  (Full disclosure: my colleagues at Foley Hoag prepared a legal memo for submission to the Attorney General’s Office in support of preemption.)  The Attorney General found that both the Building Code and the Gas Code had express statutory goals of uniformity, while there was a fundamental state policy of ensuring uniform utility services to the public under G.L. c.164.  The Attorney General pointed to the example of identical projects proposed in Brookline and a neighboring municipality, each otherwise compliant with zoning and each proposing on-site fossil fuel infrastructure.  The project in the neighboring municipality would be entitled to a building permit, while the project in Brookline would not.

The Attorney General took care to distinguish the legal validity of the by-law from the laudable policy goals it sought to further.

If we were permitted to base our determination on policy considerations, we would approve the by-law. Much of the work of this Office reflects the Attorney General’s commitment to reducing greenhouse gas emissions and other dangerous pollution from fossil fuels, in the Commonwealth and beyond.

So, will this California trend fizzle and fade (like the pet rock) or be with us for the long haul (like blue jeans)?  Other municipalities in Massachusetts, including Cambridge and Newton, have been considering similar actions.  While the Attorney General’s Municipal Law Unit review is applicable only to by-laws enacted by towns (and not ordinances enacted by cities), the Attorney General’s decision would certainly make it harder for cities to defend such ordinances in court.  In Massachusetts, the answer for now seems to be that the legislature must move first.  Don’t be surprised if the next big piece of climate legislation to come out of the Massachusetts State House addresses the issue of municipal authority in this area – if it doesn’t directly impose statewide restrictions.

BLM Rescission of the Methane Waste Prevention Rule Has Been Vacated; Two Thoughts About the Implications

Last week, Judge Yvonne Gonzalez Rogers vacated BLM’s rescission of the 2016 methane “Waste Prevention Rule.”  Although Judge Rogers found many flaws in the rescission rule, I think that two are key. 

The first is the Court’s rejection, under Chevron, of BLM’s limitation of the definition of “waste” to economic waste.  I think that the Court’s holding is correct, but I don’t think it’s necessarily even a Chevron issue.

After Justice Gorsuch shocked many readers by holding that the plain language of the Civil Rights Act required protection of transgender people, environmental lawyers speculated whether Justice Gorsuch’s passion for plain language readings might benefit the environmental side in any pending environmental disputes.  I have questioned such hopes, but I think that the Waste Prevention Rule case may not be a bad candidate.  “Waste” may not be defined in the statute and there may be uncertainty in precisely what it does mean, but I don’t that there is any plausible understanding of the word that limits its meaning to “economic waste.”  Venting or flaring gas into the air, damaging the air without creating any benefits, has to fit within the definition of waste.

Justice Gorsuch, are you listening?

The second important issue is the Court’s rejection of BLM’s redefinition of the “social cost of methane.”  This is just one of many occasions in which the Trump administration has attempted to change Obama administration positions.  To date – and including this case – the Trump administration has had a difficult time enacting its policy preferences when those policies are interwoven with scientific questions.  Here, President Trump issued Executive Order 13783, which disbanded the Interagency Working Group and withdrew all of the documents created by the IWG, including its social cost of methane metric, which included global costs.  That metric had been intensively vetted and was subject to peer review.  In response to EO 13783, BLM withdrew the global social cost of carbon approach and replaced it within one that looked only at the domestic cost, an approach that was not subject to peer review and has been roundly criticized by economists.

Judge Rogers was not amused.

While Executive Order 13783 may have withdrawn the relevant technical support documents for political reasons, it did not and could not erase the scientific and economic facts that formed the foundation for that estimate—facts that BLM now ignores.  [T]he President did not alter by fiat what constitutes the best available science.  (My emphasis, because this may be the single best sentence written to date summarizing this administration’s approach to environmental regulation.)

Notwithstanding my views of this administration, I’m not so confident about this part of the opinion.  I can certainly imagine conservative judges concluding that whether the U.S. government should care about the global, as opposed to domestic, cost of methane is more of a policy choice than a scientific question.

There’s little doubt though, that this is not the last case in which courts are going to have to wrestle with this thorny problem.

California’s Agreement With Quebec Is Not Preempted — At Least For Now

Last week, Judge William Shubb of the U.S. District Court for the Eastern District of California ruled that the Agreement between California and Quebec to jointly operate a GHG cap-and-trade market did not violate either the Foreign Affairs Doctrine.  Judge Shubb had previously ruled that the Agreement did not violate either the Treaty Clause or the Compact Clause.

As before, I think Judge Shubb got it right, but I wouldn’t bet that the Supreme Court will agree, if it gets that far.  This one does seem to be on firmer ground, though.

The most interesting part of the decision was the Court’s discussion of field preemption.  In order to establish field preemption, case law requires that the United States demonstrate that California:

(1) has no serious claim to be addressing a traditional state responsibility and (2) intrudes on the federal government’s foreign affairs power.

The Court actually sided with the Trump Administration on the first part of the test, concluding that the Agreement with Quebec “extends beyond the area of traditional state responsibility.”  The Administration lost because it failed to demonstrate that the Agreement “intrudes on the foreign affairs power.”  It had argued that the Agreement diminishes the President’s power to “engage in international deal making on behalf of the United States,” claiming that the Agreement would make it difficult for the President to negotiate a “better deal” than the Paris Accord.  The Court pointed to case law supporting its conclusion that “hypothetical or speculative fears cannot support a finding that this state program has more than an incidental effect on foreign affairs.” 

One almost has to admire this administration.  It takes a certain amount of chutzpah to challenge the Agreement between California and Quebec on the ground that it interferes with the Administration’s ability to get a better deal than Paris, when there’s not even a hint of a scintilla of evidence that the Administration has any interest in doing so.

And for a pretty good non sequitur, check out this Atlantic article that’s the source of the accompanying graph.

The New NEPA Rules Are Final: Still Giving Regulatory Reform a Bad Name

CEQ has finalized revisions to the NEPA regulations.  I don’t have too much to add to my post on the proposed rule back in January.  NEPA needs reform.  These regulations, however, are not the reform NEPA needs.

The rule largely tracks the proposed rule.  It is worth noting, however, that, contrary to this administration’s frequently cavalier attitude toward judicial review, they have made a few tweaks to increase the likelihood that the rule will survive review.  I have two favorites.  First, the word “generally” in the sentence below did not appear in the proposed rule:

Effects should generally not be considered if they are remote in time, geographically remote, or the product of a lengthy causal chain.

CEQ’s explanation is that “there may occasionally be a circumstance where there is an effect that is remote in time, geographically remote, or the product of a lengthy causal chain is reasonably foreseeable.”

Can you say “climate change”?

Which brings me to CEQ’s second effort to survive judicial review.  As CEQ notes in the preamble, “commenters stated that agencies would no longer consider the impacts of a proposed action on climate change.”

I’m shocked, shocked, to think that anyone could see climate change denial as motivating any part of this rule.  In response to all of the misguided comments, CEQ clarified that:

The rule does not preclude consideration of the impacts of a proposed action on any particular aspect of the human environment. The analysis of the impacts on climate change will depend on the specific circumstances of the proposed action.

Only time will tell whether this “wink, wink, nudge, nudge” approach to elimination of climate concerns from NEPA will survive judicial review.

What is the Burden on States Petitioning EPA Under the Good Neighbor Provisions of the Clean Air Act?

Yesterday, the D.C.. Circuit Court of Appeals granted New York’s petition appealing EPA’s rejection of New York’s request under Section 126 of the Clean Air Act to require emissions reductions from upwind states alleged to be contributing to New York’s noncompliance with the ozone NAAQS.  The Court found that:

The EPA offered insufficient reasoning for the convoluted and seemingly unworkable showing it demanded of New York’s petition.

The critical issued is identified, if only in a negative way, by Judge Griffith’s concurrence, which is more of a roadmap for EPA in denying future Section 126 petitions than it is a concurrence.  Section 126 authorizes states to petition EPA to make a:

finding that any major source or group of stationary sources emits or would emit any air pollutant in violation of the prohibition of [the Good Neighbor Provision.]

Judge Griffith believes that Section 126 imposes a heavy burden on petitioner states to identify specific sources that “share a common attribute.”  He does not believe that New York’s petition met that burden.

The only feature shared by the sources in New York’s petition is that each emits more than 400 tons of nitrogen oxides per year. That arbitrary threshold captures both an Indiana power plant emitting more than 10,000 tons annually and a Virginia bottle factory emitting just 412 tons. If that’s enough to establish a “group,” the term is all but meaningless.

I think that Judge Griffiths is wrong and in a way that turns federalism upside down.  New York thinks that upwind sources of NOx are contributing to NAAQS violations in New York.  It identifies a “group” of facilities, those emitting more than 400 tons per year of NOx.  Why is that not enough?  Indeed, doesn’t it make more sense for the downwind state to identify the problem, leaving the upwind states to control their sources as they see fit?  I don’t think we even want the downwind states to “group” the offending upwind sources too finely.

As with many of our environmental statutes, sections 110 and 126 of the CAA are not a model of clarity and the deadlines written into the statute simply don’t work most of the time.  That does not justify putting a burden on downwind states that the statute does not explicitly provide.

Dakota Access Must Shut Down. Is It a Harbinger?

I don’t like to speculate, so I won’t say that July 6, 2020, was the beginning of the end of fossil fuel infrastructure in the United States.  I will say, with apologies to Judith Viorst, that it was a Terrible, Horrible, No Good, Very Bad Day. 

First came the news that even a recent Supreme Court win wasn’t enough to save the Atlantic Coast pipeline.  Delays, cost overruns, and continued litigation risk related to other outstanding challenges, caused Dominion Energy and Duke Energy to pull the plug, as it were, on the Atlantic Coast pipeline.  In fact, the discouragement at Dominion was sufficiently profound that Dominion is selling all of its gas pipeline assets to Berkshire Hathaway.

Then came the sledgehammer that may break the camel’s back – the decision by District Judge James Boasberg to vacate the Army Corps easement that allowed the Dakota Access pipeline to be built under Lake Oahe.  The owners must shut the pipeline down and empty it of oil within 30 days – and keep it that way until a full Environmental Impact Statement is prepared.

Judge Boasberg had already rejected the Corps argument that no EIS was required.  Now, he has rejected arguments from the owner and several states as amici that the economic disruption from a shutdown would be vast, making vacatur inappropriate.  The problem with this argument, as Judge Boasberg noted, is that it encourages project proponents and supportive agencies to make each project an effective fait accompli, thus undermining the utility of NEPA from the get-go.

When it comes to NEPA, it is better to ask for permission than forgiveness: if you can build first and consider environmental consequences later, NEPA’s action-forcing purpose loses its bite.

I can imagine a successful appeal of the vacatur order.  I can imagine other big pipeline projects moving forward, particularly if Trump is reelected.  I can also imagine historians in years to come identifying July 6, 2020, as the beginning of the end.

Will Evidence of Causality Be Enough to Change EPA’s Mind About the PM2.5 Standard?

There have been numerous studies that support a decrease in the current PM2.5 annual standard of 12 ug/m3.  EPA has nonetheless proposed to retain the current standard on the basis that there is too much uncertainty regarding whether those studies provide a basis for concluding that PM2.5 concentrations below the standard cause increased mortality.  As I have previously noted, the statutory provision requires that NAAQS be set with an “adequate margin of safety.”  That would seem to require EPA to resolve such uncertainty in favor of a more stringent standard.

Putting aside EPA’s interpretation of the statutory requirement, evidence continues to roll in.  Last week, Science Advances published a study which uses causal inference approaches to conclude that lowering the PM2.5 standard to 10 ug/m3 would save more than 143,000 lives over ten years.

Will EPA nonetheless still conclude that the current standard provides an adequate margin of safety?  If I were a betting man, I’d certainly put my money on EPA holding firm.  I will only add that the idea that EPA will not lower the standard just blows my mind.

Perhaps, Some Day, There Will Be a Carbon Tax

There are few people left, at least in my orbit, who don’t share the goal of prompt decarbonization of the economy.  The quaintly named $64,000 question ($64 trillion question?) is how we get from here to there.

Today, the New England Power Generators Association released a report prepared by Analysis Group that explains how an economy-wide price on carbon can help New England do just that.  (Full disclosure:  Foley Hoag has done work for NEPGA and my wife works at Analysis Group, though not on this project.)

As a long-time carbon tax supporter, I did not need to be sold, but the report still has some important conclusions.

  • A carbon price of $25-35/ton in 2025 and $55-70/ton in 2030-35 would be sufficient to put us on a path to meet our GHG reduction targets.
  • Electrification will reduce household energy costs such that, even including the price on carbon, such costs will be lower in 2035 than without electrification.
  • The only means to get on a pathway towards attaining region-wide carbon reduction goals is to combine “high electrification” with carbon pricing.
  • Existing fossil fuel generators will still be necessary for “at least the next one to two decades” for load management.

So, the way to get to a decarbonized economy in New England is to price carbon.  We still have to answer one more question:  how do we build sufficient support for pricing carbon that it becomes a political reality?

Woe Is WOTUS, Redux

Sometimes, history repeats itself.  Sometimes, that is not a good thing.

After the Obama WOTUS rule was promulgated in 2015, the challenges came fast and furious, and in multiple forums.  The Supreme Court, as I put it, adopted the “give me a break” theory over the “just plain nuts” theory, and ruled that challenges to the rule had to be heard in district courts. … More

Particulate Matter Experts Still Think that the PM2.5 NAAQS Should Be Lowered. Will The Courts Defer to Them Or to EPA?

Last week, the New England Journal of Medicine published The Need for a Tighter Particulate-Matter Air-Quality Standard, written by the Independent Particulate Matter Review Panel.  For those who don’t remember, the Review Panel used to be a sub-committee of EPA’s Clean Air Science Advisory Committee, until EPA Administrator Wheeler decided that CASAC did not need the specific advice that the Review Panel had to offer.

The review panel was not deterred.  The NEJM article largely mirrors the report they issued last October, which concluded that the current PM2.5 annual standard is not sufficiently protective.  The authors state that:

The estimated all-cause mortality from long-term exposure to PM2.5, calculated on the basis of the 2015 air quality adjusted to just meet the existing standards, ranges from 13,500 to 52,100 deaths annually.

Their recommendation remains that EPA should lower the standard to between 8 and 10 ug/m3, although they note that risks remain even at the low end of that range.

As I’ve noted previously, the relevant statutory provision is that the NAAQS must be requisite to protect public health “with an adequate margin of safety.”  I still don’t understand how EPA can conclude that the current PM2.5 NAAQS complies with the statute, even if there is uncertainty surrounding these mainstream conclusions.  What does “adequate margin of safety” mean other than that EPA must resolve uncertainties in favor of protection of public health?

The article poses this question about judicial review of EPA’s decision to leave the PM2.5 standard unchanged:

Federal courts have in the past given considerable deference to the Clean Air Scientific Advisory Committee regarding its scientific advice. Will the courts defer to a committee that has been arbitrarily and capriciously deprived of a particulate matter–specific expert panel? Or will the courts look elsewhere, such as to public comments from experts and input from the dismissed panel?

I asked the nearly identical question last April, when EPA’s proposal was released.  It remains the question of the day.  How much deference does EPA get when it ignores the recommendation of the overwhelming weight of mainstream science?

Massachusetts AG Petitions DPU to Investigate Gas Industry Future in Light of Commonwealth’s GHG Emissions Goals

On June 4, 2020, the Massachusetts Office of the Attorney General (AGO) filed a petition with the Department of Public Utilities (DPU) requesting that the DPU open an investigation “to assess the future of local gas distribution company (LDC) operations and planning in light of the Commonwealth’s legally binding statewide limit of net-zero greenhouse gas (GHG) emissions by 2050.” Citing Massachusetts’ Global Warming Solutions Act, and the Executive Office of Energy and Environmental Affairs’ Determination of Statewide Emissions Limit for 2020,… More

EPA’s New Cost-Benefit Rule — Are Both Sides Misrepresenting What It Says?

Last week, EPA released its proposed rule regarding Increasing Consistency and Transparency in Considering Benefits and Costs in the Clean Air Act Rulemaking ProcessAs much as I hate to give aid and comfort to this Administration, I have to say that the rule does not herald the end of western civilization.  The biggest controversy surrounding the rule is its impact on consideration of “co-benefits”.  Supporters of the rule are trumpeting its elimination of the consideration of co-benefits.  Opponents are pointing to that very same conclusion as evidence of how wrongheaded the rule is.

There’s only one problem with all the commentary.  I’ve read the rule three times and, as far as I can tell, it does not preclude consideration of co-benefits.  In fact, here’s what the proposed rule does say:

The key elements of a rigorous regulatory BCA include: 1) a statement of need; 2) an examination of regulatory options; and 3) to the extent feasible, an assessment of all benefits and costs of these regulatory options relative to the baseline (no action) scenario. (My emphasis.)

EPA proposes that, to the extent supported by the scientific criteria, as discussed above, as well as practicable in a given rulemaking, (1) BCAs will quantify all benefits; (2) BCAs will monetize all the benefits by following well-defined economic principles using well-established economic methods; and (3) BCAs will qualitatively characterize benefits that cannot be quantified or monetized. (My emphasis.)

So, why does everyone think that the rule would preclude assessment of co-benefits?  This is what the preamble does say:

Disaggregating benefits into those targeted and ancillary to the statutory objective of the regulation may cause the EPA to explore whether there may be more efficient, lawful and defensible, or otherwise appropriate ways of obtaining ancillary benefits, as they may be the primary target of an alternative regulation that may more efficiently address such pollutants, through a more flexible regulatory mechanism, better geographic focus, or other factors. This may be relevant when certain benefits are the result of changes in pollutants that the EPA regulates under a different section of the CAA or under another statute.

And from the proposed rule itself:

The Agency must, to the extent supported by scientific literature as well as practicable in a given rulemaking:

(i) Quantify all benefits.

***

(b) The Agency must provide an additional presentation in the preamble of the public health and welfare benefits that pertain to the specific objective (or objectives, as the case may be) of the CAA provision or provisions under which the rule is promulgated.

(1)This presentation must list the benefit categories arising from the environmental improvement that is targeted by the relevant statutory provision and report the monetized value to society of these benefits.

To me, there’s nothing wrong about this.  Where pollutants are regulated or potentially regulated under multiple programs, double counting (of both costs and benefits) is possible.  Disentangling the effects of one program from another is important.

I understand the concern that this administration will misuse the cost-benefit analysis.  However, I think that this EPA has already demonstrated that it does not need this rule to do so.

If I’ve missed something here, please do let me know.  If you just don’t trust cost-benefit analysis, however, then I don’t need to hear it (and your complaint is not really with this rule, but with 50 years of efforts by presidents of both parties to strengthen cost-benefit analysis).