Dispatches From Carbon (Fantasy) Land

Greenwire (subscription required) reported today that the White House blocked testimony by Dr. Rod Schoonover of the State Department to the House Intelligence Committee on “The National Security Implications of Climate Change.”  This by itself might be unsurprising, if nonetheless depressing.  What’s truly amazing, however, is that Greenwire contains a link to the draft testimony, together with the NSC comments.

As regular readers of this blog have probably figured out, I at least try to find humor in almost everything.

I found no humor in the NSC comments on this testimony.  They were just plain terrifying.  Greenwire reported that NSC Senior Director William Happer was among those who provided comments.  Greenwire also reported that Mr. Happer is among those who think that carbon emissions are beneficial and that certainly seems to be consistent with the comments, which include the following:

This is not objective testimony at all.  It includes lots of climate-alarm propaganda that is not science at all.  I am embarrassed to have this go out on behalf of the Executive Branch.

For the past 30 years, funding for climate research … has welcomed research findings that support climate alarm….  So the information mentioned here is heavily biased toward alarm…..  A consensus of peer reviewed literature has nothing to do with truth.

Extreme high temperature records are not increasing.

“Tipping points” is a propaganda slogan designed to frighten the scientifically illiterate.

This testimony religiously assumes that any climate change will certainly be bad.  But this assumption is not based on science.

And I could go on.  It is basically a rehashing of every bit of made-up pseudo-science that climate skeptics have been throwing at the kitchen wall for years.  Unfortunately, it has stuck with our current President.  If this White House truly believes any of what is in the comments, then we are really all mad here.

Woe is WOTUS

When the Supreme Court decided that the district courts had jurisdiction over challenges to the Obama administration WOTUS rule, I described it as a victory of the “give me a break” doctrine of statutory interpretation over the “just plain nuts” theory.  I also noted that the Supreme Court had the luxury of ignoring the chaos that would ensue.

Whatever one may think of the merits of the competing theories, two district court decisions in the past week have made clear that it is, indeed, just plain nuts to have these cases before the district courts.

First up, Texas v. EPA, in which Judge George Hanks (an Obama appointee, no less) ruled that EPA and the Corps of Engineers had violated the Administrative Procedure Act in two ways by promulgating the 2015 Rule.  First, while the proposed rule had defined “adjacent waters” based hydrogeological criteria, the final rule used specific numerical distance criteria instead.  The Court concluded that the use of distance criteria was not sufficiently anticipated in the proposed rule and thus EPA violated the APA when it failed to take comment on the new approach.  Judge Hanks also concluded that the 2015 Rule violated the APA because the Agencies relied on what is known as the “Final Connectivity Report,” even though the comment period closed before the Final Connectivity Report was available.  As a result, Judge Hanks remanded the 2015 Rule to the Agencies “for proceedings consistent with this order.”  Of course, the Agencies have already announced that they intend to replace the 2015 Rule, so I think we all know what those proceedings will be.

Next up, Oklahoma v. EPA, in which Judge Claire Eagan (a Bush appointee, no less!), refused to issue a preliminary injunction against the enforcement of the 2015 Rule.  Simply put, Judge Eagan was not persuaded by any of the declarations submitted by the plaintiffs that they would suffer irreparable harm if the 2015 Rule were to remain in effect in Oklahoma.  She described them as “speculative.”  This was particularly troubling because:

the 2015 Rule has been in effect for varying periods of time since this case was filed, and the State can identify no evidence of an aggressive expansion of federal regulation of Oklahoma waters. … This case has been pending for nearly four years, and the Court would have anticipated a showing of substantial, actual harm in support of a motion for preliminary injunction.

We now have a situation where an Obama appointee has remanded the 2015 Rule and a Bush appointee has refused to enjoin its enforcement.  I do get some pleasure from these two judges upsetting preconceived notions in this partisan age about what judges do and how they decide.

Beyond that, however, I have no idea what these cases mean for the enforcement of the 2015 Rule.  I understand that this may all soon be moot, but in the meantime, it’s hard to defend this as a logical system of judicial review of agency action.  Indeed, I might even go so far as to say that it’s just plain nuts.

Louisiana Takes Adaptation Seriously — Evidence of a Tipping Point in Belief in Climate Change?

The public-private partnership Louisiana Strategies for Future Environments just released a report so stark in its conclusions that, were it not for all of the maps and figures its contains, one would have assumed that it had to be written in a blue state such as Massachusetts or California, rather than deep red Louisiana.  It’s sad that we’ve come to this point, but it does appear that Louisiana at least is taking the fact of climate change seriously.  (And unlike watered-down efforts in other red states, the LASAFE report does actually repeatedly use the phrase “climate change.”)

The language pulls no punches:

  • Statistics paint a grim picture.  4,120 square miles could be lost in the next 50 years.

  • Louisiana is in the midst of an existential crisis.

  • In some communities, conditions are likely to get worse before they get better.  For some, relocation will be the only viable option.

  • Adaptation must include a large-scale rethinking of where and how development takes place in the future – and also where and how it does not.

  • Louisiana is already experiencing a migratory shift as a result of flood risk. In short, those who move are often those with the financial means and social networks to do so, while in many cases, lower-income populations – those most vulnerable to severe impacts when disasters occur – remain behind and in locations more prone to significant flood risks.  (All emphases in original.)

The recommendations are also pretty dramatic.  Here are a few that caught my eye:

  • Align public funding and project prioritization to promote green infrastructure and stormwater management.

  • Develop zoning incentives to attract mixed-use development in low-risk areas.

  • Create an option buyout program for full-time residents in high-risk areas.

  • Encourage development that is informed by an understanding of the relationship between public health and the built environment.

The bottom line?  Climate change is real, it’s happening now, and it’s going to be catastrophic for Louisiana unless the state starts planning for it.  Moreover, the impacts will fall more heavily on those least able to handle them.

There is a lot in the report about how to adapt the economy as a whole to the realities of climate change – but nothing about the role that the oil and gas industry has played in creating the very problems that the report is trying to address.  Nonetheless, in the context of Louisiana politics, that’s a pretty small quibble.

It will be interesting to see what the leadership in Louisiana makes of – and does with – this report.  If the GOP retakes the Governorship, will this just get buried?  Time will tell — though time is short for Louisiana to start acting on these recommendations.

BLM Loses Another Case Regarding Energy Development on Federal Lands

Earlier this week, the 10th Circuit Court of Appeals partially reversed a district court decision, and ordered the Bureau of Land Management to vacate the NEPA approvals and permits it had issued authorizing the drilling of a number of fracked wells in the Mancos Shale, near Chaco Canyon in New Mexico.  The decision is not earthshattering – pun most definitely intended! – but there are a few features of note.  First, the Court actually affirmed most of the permit decisions, as a result of the “dramatic insufficiency of the record” provided by the plaintiffs.  Practice tip:

if “we are forced to venture a guess as to the merits of an argument or claim, even ‘an informed guess,’ we will summarily affirm the district court’s judgment.”

On the merits, the most significant point was the court’s rejection of industry arguments that BLM did not need to assess the cumulative impacts of all of the predicted wells, because no operator had actually proposed to drill them all.  In response, the Court noted that BLM had concluded in 2014 that it was “reasonably foreseeable” that the wells would be drilled.  As a result, BLM had to consider cumulative impacts, even if drilling all the wells was not imminent.

Cumulative impacts can result from individually minor but collectively significant actions taking place over a period of time.  (Emphasis in original.)

Finally, while the Court actually rejected the plaintiffs’ arguments that BLM had violated the National Historic Preservation Act, I was enchanted by the Court’s description of the NHPA as:

requiring government agencies to stop, look, and listen before proceeding when their action will affect national historical assets.

I don’t think I’ve previously had the opportunity to reference Elvis in this space.

Broken Record Department; EPA Loses Another Delay Case

On Monday, District Judge Haywood Gilliam imposed a schedule on EPA for review of state plans under EPA’s 2016 rule for emissions from municipal solid waste landfills.  The ruling is notable for two reasons.

Because EPA did not dispute that it had missed certain deadlines, its first line of defense wasn’t that it complied with the statute; it was that the states challenging EPA’s delay did not have standing.  Although this is not the first case interpreting state standing after Massachusetts v. EPA, I think it’s nonetheless important evidence of the scope that courts are likely to give to Massachusetts v. EPA in these types of cases.  As states become more and more active in challenging Trump administration climate rollbacks, the standing decision in Massachusetts v. EPA will assume ever greater importance.

The second important element of the decision is its discussion regarding what deadlines should be imposed on agencies when they miss statutory deadlines.  The Court actually was not as harsh towards EPA as it might have been and provided what might be considered some solace to the agency in noting that, however much a court might be annoyed at repeated agency delay, agency recalcitrance does not justify imposing deadlines that are not feasible.

On the other hand, the Court also made clear that agencies may not create infeasibility and then point to that infeasibility as grounds for further delay.

EPA seeks additional time to complete a nondiscretionary duty it failed to meet until ordered to act by the Court, because it faces other court orders to perform other unmet nondiscretionary duties. The Court finds EPA’s self-inflicted inconvenience, by itself, does not satisfy the “especially heavy” burden necessary to warrant more than six months to promulgate a federal plan.

You’ve got to admire EPA and its DOJ lawyers.  It takes a certain amount of chutzpah to miss deadline after deadline, and then to argue to a court that the agency needs more time to meet its obligations, because it’s so busy catching up to the other deadlines that it chose to ignore.

Whatever Happened to the Conservative Belief in Markets?

After receiving an analysis showing that shutting the Jim Bridger and Naughton coal-fired electric generating plants in Wyoming would save ratepayers money, PacificCorp, the owner of the plants, announced that it would shut the plants and the mines that supply them as early as 2022.  Mark Gordon, the Republican Governor of Wyoming is not happy.

According to Greenwire (subscription required), Gordon said that:

I will advocate for a positive path where this utility and others are part of developing solutions rather than destroying communities and delaying progress on meaningful technological advances that keeps coal as part of a diverse energy portfolio and also address climate change.  The potential for early retirements of some coal-fired power plants means we drift further away from finding solutions for reducing carbon emissions.  (Emphasis very much added.)

If we stop burning coal, we’ll never figure out how to reduce carbon.  Rats.  Why didn’t I think of that?

However, I’m not here to criticize Gordon for thinking that we need to burn coal in order to reduce CO2 emissions.  I’m here to criticize him for thinking that it is reasonable for the Republican-led government of Wyoming to criticize private companies for taking economically rational decisions to reduce costs for ratepayers.  Indeed, Wyoming has not just criticized PacificCorp.  Wyoming has apparently enacted legislation requiring a utility that wants to close a coal plant to search for a buyer.  It apparently also would require the utility to purchase electricity from such a new buyer, so long as it does not increase customer bills.

Since when did Republicans start second-guessing private sector economic decisions?  Conservatives should stop worrying about the green new deal and start worrying about socialism in Wyoming!

Eliminating a Moratorium Affecting 1.86 Billion Tons of Coal Is Final Agency Action

In 2016, DOI Secretarial Order 3338 imposed a moratorium on new coal leases on federal land until BLM prepared a programmatic environmental impact statement intended to address, among other issues, the impact of coal leasing on climate change.

Times do change.  In 2018, DOI Secretarial Order 3348 eliminated the moratorium and the requirement to prepare a PEIS.  Litigation ensued.

Last week, Judge Brian Morris ruled against DOI.  The key findings were that the 2018 Order constituted a “major federal action” that triggered NEPA and that it constituted “final agency action” sufficient to permit review under the Administrative Procedure Act.  Neither of these conclusions should be surprising.  Neither was really a difficult call.  It is worth noting that the Court – rightly, I think – concluded that the ending of the moratorium and the decision not to prepare a PEIS both constituted final agency action under the APA.

The case is simply another example of the Trump Administration needing material for tweets demonstrating to its supporters that it is taking decisive action while ignoring the legal niceties required to attain substantive ends.  It’s why I don’t think that Trump even cares about the substantive ends; he cares only about the tweets.

The evidence for that is found in the actual judge’s order.  Lest anyone think that this was some wild-eyed leftist judge, Judge Morris did not in fact order BLM to prepare a PEIS.  Indeed, he left open the possibility that BLM could simply do an Environmental Assessment and a Finding of No Significant Impact, so long as it provides a “convincing statement of reasons” why no EIS should be required.  How hard would it have been to go through that process, rather than have Secretary Zinke issue Order 3348?

Time will tell whether this administration cares enough to supply a convincing statement of reasons.

MassDEP Proposes to Ratchet Down PFAS Standards

On Friday, MassDEP proposed a number of revisions to the Massachusetts Contingency Plan, including reporting and cleanup standards for PFASThe proposed GW-1 standard, applicable to current and potential drinking water source areas, would be 20 parts per trillion for the sum of six PFAS compounds (PFDA, PFHpA, PFHxS, PFOA, PFOS, and PFNA) – significantly more stringent than the 70 ppt guideline for the sum of five PFAS compounds currently in effect.

Of course, the standards are less stringent where drinking water is not affected, but even some of those numbers are pretty low.  For example, the standard for S-3 soils, those that can be subject to activity and use limitations and would be unlikely to present significant exposures, would be 400 parts per billion.  How many sites in Massachusetts have soil concentrations of the six PFAS above 400 ppb?  Every landfill?  Every airport?  It’s got to be quite a number.  If these regulations are finalized, such facilities are going to have to do something about the PFAS, even if an AUL is in place, unless a Method 3 risk assessment yields some different results.

Who said Superfund was dead?

EPA Weighs In On Whether Discharges to Groundwater Can Be Subject to the CWA — You Won’t Be Surprised at the Answer

On Monday, EPA issued an Interpretive Statement concluding that point source discharges to groundwater are never subject to NPDES permitting requirements.  EPA did a good job marshalling its arguments – much better than this EPA has done in a number of similar situations.

I have previously noted the difficulties associated with regulating point source discharges to groundwater under the NPDES program, so I’m sympathetic to EPA’s argument.  For example, Massachusetts takes the position that all groundwater eventually discharges to surface water.  That would mean that all point source discharges to groundwater are subject to NDPES permitting.  That is pretty clearly not what Congress intended.

Some courts have tried to avoid this outcome by limiting the applicability of the NPDES program to discharges to groundwater that have a “direct hydrologic connection” to surface water.  However, that approach, while logically compelling, has no basis in the text of the Clean Water Act.

Nonetheless, I’m still troubled by EPA’s Interpretive Statement, which fails to come to grips with two related and totally plausible situations.

  • Facility one abuts a river and discharges to the river.  It needs a permit.  Facility two is next door to facility one and has a point source discharge to groundwater 25 feet from the River.  Evidence demonstrates conclusively that essentially all of the contaminants from Facility two’s discharge promptly reach the river.  Why should one facility need a permit, but not the other?
  • Facility A abuts a river and has a point source discharge to the river.  It doesn’t like conditions imposed in its NPDES permit renewal, so it replaces its point source discharge to the River with a point source discharge to abutting groundwater.  All the same contaminants continue to reach the River.  Can Facility A really avoid permitting in this way?

EPA ignored both of these hypotheticals.  Its position is that Congress intended that groundwater discharges should not be subject to NPDES requirements.  The implication is that, if Congress does not like the outcome of these hypotheticals, Congress can amend the Clean Water Act.

Count me among those not completely satisfied by that knowledge.

Yes, Virginia, Selling a Building Known to Contain PCBs Can Constitute An Arrangement for Disposal

Some cases just make you wonder what people were thinking.  I’m not  sure even Donald Trump would have tried to get away with what Dico, Inc., tried to get away with.

In 1994, EPA issued an administrative order, requiring Dico to address PCBs in insulation in buildings it owned in Des Moines, Iowa.  Without informing EPA, Dico sold the buildings.  Dico did not inform the buyer of the buildings about either the presence of PCBs or the EPA order.

When EPA sought recovery of costs incurred in addressing the contamination resulting from the building demolition – and punitive damages for violating the order – Dico had the temerity to defend the case on the ground that it was the sale of a useful product, rather than an arrangement for disposal.

Last week, the 8th Circuit Court of Appeals affirmed the District Court’s judgment imposing liability on Dico and awarding the United States its full costs of response and punitive damages equal to the costs of response.  These are among the key findings affirmed by the Court of Appeals:

  • Dico knew that the buyer would demolish the buildings.
  • The buildings were no longer commercially useful.
  • Dico did not advertise sale of the buildings or seek any other buyers.
  • Dico had reason to believe that the buyer would not discover the contamination.
  • The cost to remediate the PCBs far exceeded the purchase price.

I think that Dico got off lucky.  The court could easily have imposed the full treble damages allowed under CERCLA.  You do almost have to admire Dico’s unmitigated gall.  You don’t see anything quite that brazen very often.

Reason Number 42,659 For Putting a Price On Carbon

I don’t work in the oil and gas industry.  This lede from Bloomberg Environment (subscription required) may not be news to anyone in the industry, but it absolutely blew me away:

America’s hottest oil patch is producing so much natural gas that by the end of last year producers were burning off more than enough of the fuel to meet residential demand across the whole of Texas.

In short, oil companies are flaring more than 500 million cubic feet/day.  That can’t even compete with some other countries.  Russia apparently flares almost 20 billion cubic meters/year.

After stunned amazement, my next reaction was to wonder why any good engineer wouldn’t be horrified as such waste, even aside from the climate impacts.  Then I realized that engineers are practical people.  If there’s no economic cost to flaring, then it’s not waste to them.

That’s why this is reason number 42,659 for putting a price on carbon.  Methane combustion yields about 2.74 tons of CO2 per ton of methane, so it has an effective global warming potential of 2.74.  That means a carbon price of $40/ton of CO2 would be about $110/ton of methane.

At that price, would smart oil and gas engineers figure out ways to eliminate flaring?

Can You Say “Pyrrhic Victory”?

In 2008, EPA issued an administrative order to Chantell and Michael Sackett, requiring them to remove what EPA had concluded was illegally placed fill on their property in Northern Idaho.  Litigation followed, including a fairly well-known Supreme Court decision.

After the Supreme Court ruled that the Sacketts were entitled to appeal the administrative order, the case was remanded to the District Court.  On March 31, the Court granted the government’s summary judgment motion and upheld the original order.  The Sacketts’ property does include waters of the United States and the filling violated the Clean Water Act.

The decision was fairly straightforward and I think would be upheld under any likely definition of WOTUS, but I note the following:

  • Because the 2015 WOTUS rule is stayed in Idaho, the Court utilized the prior rule in adjudicating the case.
  • Based on the Army Corps’ 1987 Wetlands Delineation Manual, the Court easily concluded that EPA was not arbitrary and capricious in concluding that wetlands indicators were present on the Sacketts’ property.
  • The Court found that there was a “significant nexus” between the wetlands on the Sacketts’ property and Priest Lake, a traditional the navigable water.  (Following Rapanos, the 9th Circuit had adopted the Kennedy significant nexus test.)

Like many examples of lengthy, contentious, litigation, this case can be seen as a Pyrrhic victory for both sides.  While the Sacketts had deep-pocket support from the Pacific Legal Foundation and others, what they cared about was the ability to build a home on their property.  This decision means that they cannot do so, giving their famous Supreme Court win a decidedly Pyrrhic feel.

On the other hand, EPA prevented the Sacketts from building on their property, but the agency presumably cared more about being able to issue administrative orders that aren’t subject to pre-enforcement review.

They both lost what they cared about the most.  Litigation, thy name is irony.

Disposing of Coal Combustion Residuals Just Got Much More Expensive — At Least in North Carolina!

On Monday, the North Carolina Department of Environmental Quality issued determinations with respect to six Duke Energy coal plants, requiring that Duke close coal combustion residual surface impoundments at the plants by excavating and removing all coal ash from the impoundments.  DEQ did so notwithstanding that the impoundments all received “low-risk” classifications by DEQ.

According to Greenwire (subscription required), the directives will increase the cost of complying with CCR requirements at these plants by $4B-$5B.

Why did DEQ require Duke Energy to remove all coal ash from on-site impoundments?  Because it concluded that removing the coal ash “is more protective than leaving the material in place.”

Count me skeptical of DEQ’s conclusion.  First, do landfills qualified to take CCR in these volumes even exist?  We’re talking about a very substantial volume of waste.  Second, what about years of truck traffic to remove all the CCR and the environmental costs and nuisance impacts of that work?

The DEQ directives were based on state law provisions, so for now coal plant operators outside North Carolina have nothing to fear.  However, what happens if other states get the idea that replicating the North Carolina statutory requirements would be a good idea?  Then we might really find out how much capacity is required to move and redispose of all of the CCR currently in surface impoundments at coal plants in the United States.

I hear Yucca Mountain has some extra capacity.  I’m sure Nevada would love to have the nation’s CCR!

The Clean Peak Standard Starts to Take Shape

The Massachusetts Department of Energy Resources has released its Clean Peak Standard Straw Proposal, providing its thinking on the implementation of that part of An Act to Advance Clean Energy, from 2018.  As a reminder, the basic idea is that a “Qualified RPS Resource,” installed after January 1, 2019, may obtain “clean peak certificates” for energy generated during seasonal peaks.  Existing Qualified RPS Resources may obtain CPCs if they are paired with battery storage installed after January 1, 2019.

Here is DOER’s current position on some of the important issues to be resolved.

  • If existing Qualified RPS Resources seek to pair with new battery storage, the storage must be at least equal to 25% of the nameplate capacity of the resource.
  • Once qualified, all electricity delivered by the Qualified RPS Resource would be eligible to obtain CPCs
  • DOER has proposed definitions of the peak periods for each season
  • Qualified Resources will generate CPCs based on the average output during the peak period on any particular day
  • There will be multipliers, proposed by DOER at 3X, during summer and winter peaks.
  • DOER is proposing a separate, 15X multiplier, calculated after the fact, based on generation during the prior month’s actual peak hour
  • DOER is considering including a “resilience multiplier,” but none is proposed in the Straw Proposal

There’s a lot more to the proposal than this summary can encapsulate.  Comments are due April 12, 2019.

It certainly seems as though DOER is moving forward to meet its goal of promulgating the Clean Peak Standard by Q1 of 2020.  Just another state policy for ISO-NE to incorporate into the wholesale markets!

Second 83C Offshore Wind RFP Submitted to Massachusetts DPU for Approval

The Massachusetts electric distribution companies (“Distribution Companies”), together with the Massachusetts Department of Energy Resources, have asked the Massachusetts Department of Public Utilities to approve a second request for proposal(“RFP”) for long-term offshore wind contracts in accordance with Section 83C of the Green Communities Act (“83C”).  Pursuant to 83C, the Distribution Companies are authorized to solicit up to 1600MW of offshore wind energy generation in staggered rounds of procurements.  After the success of the first 83C solicitation last year resulting in the award of an 800MW contract to our client Vineyard Wind, the new RFP seeks to solicit the remaining 800MW of offshore wind energy generation currently authorized under the Act.  The new RFP as proposed would require submissions in August with the announcement of awards in November of this year.