Bloomberg Targets Petrochemicals — How About Investing in Their Replacements?

I’ve written previously about the urgency associated with the problems caused by waste plastic.  However, there’s a big difference between me blogging about it and Michael Bloomberg opening his wallet to try to do something about it.  And the news this week was that Michael Bloomberg is putting $85 million into a new “Beyond Petrochemicals” campaign. 

What’s really interesting is that Bloomberg has taken a substantially different tack than most of those who have been trying to address the problem of plastic pollution.  The difference is apparent from the get-go; the campaign is not called “Beyond Plastics”; it’s called “Beyond Petrochemicals”.  The other significant difference is that it’s not focused on encouraging the circular economy or other efforts designed to address plastic pollution – other than to prevent the manufacture of plastics in the first place.

And although there is brief mention in the “four key pillars” of the campaign about regulations to reduce the demand for plastic products, the discussion of the need for the campaign is focused on two different issues:  (1) the climate impact from the use of fossil feedstocks and the operations of the manufacturing facilities and (2) the environmental impact from the release of traditional pollutants from these facilities, particularly in environmental justice communities.  The campaign notes that it is focused on stopping 120 projects located primarily in Texas, Louisiana, and the Ohio River Valley.

It is an interesting strategic choice by Bloomberg to focus on climate and environmental justice issues, rather than on the back-end impact of plastic pollution itself.  In modern regulatory lingo, the reduction in plastic pollution will just be a co-benefit of the campaign’s efforts to stop the construction or expansion of all these facilities.  I don’t know if this was part of the rationale behind the strategy, but it does allow the campaign to avoid having to discuss the convenience plastics deliver to consumers.

I still think that we’re going to have to do more than stop construction or expansion of petrochemical facilities.  Plastics are really convenient and provide some significant benefits; we’re going to have to find alternatives to plastics and incentivize investment in the technologies and the facilities that will ultimately deliver those alternatives.

The Senate Ratifies the Kigali Amendment: Is Bipartisan Climate Action Possible?

Earlier this week, the Senate ratified the Kigali Amendment to the Montreal Protocol.  The amendment, which has already been ratified by most other countries, will result in the phase-out of hydrofluorocarbons, a group of potent greenhouse gases.  Substantively, this is a big deal.  Estimates are that it will prevent about ½ a degree Celsius in global warming.  That’s a meaningful impact. 

Politically, it’s also important.  It shows both that international cooperation on climate issues is feasible, and that legislative action in the United States is feasible.  The vote was 69 to 27, and almost half of GOP senators supported it.

I agree that this is a major accomplishment and everyone should be celebrating.  I do feel compelled to note, however, that 20 years ago, the vote would probably have been 98 to 1, and the lone no vote would have been a senator who in a former life voted against Sandy Koufax or Derek Jeter getting into the Baseball Hall of Fame on the first ballot.

After all, John Kennedy, Senator from Louisiana, not exactly a liberal, was quoted in Bloomberg Environment and Energy (subscription required) as saying simply that:

There’s no reason not to support Kigali.

Shelley Moore Capito, from West Virginia, also not exactly a liberal, said that:

It will create jobs and open up markets for us.

The Chamber of Commerce, not exactly a liberal lobbying group, also supported the amendment, stating that it:

would enhance the competitiveness of U.S. manufacturers.

And yet, 27 Republicans opposed it.  It’s hard to come up with any explanation other than that they simply feel compelled to oppose any legislation that is supported by their opponents.  Think of it as the Groucho Marx view of life, as applied to the U.S. Congress.

IRA Side Deal on Permitting Raising Ire

In order to pass the Inflation Reduction Act (“Act”) last month, a deal was struck with Sen. Joe Manchin (D-WV) to create separate legislation to reform federal energy project permitting.  Now that the Act has been signed into law, Senate Democrats are making good on their promise but, as might be expected, not all parties are supportive.

The reforms (and funding necessary to effectuate them) are proposed to be included as part of a Continuing Resolution that must be passed to prevent a government shutdown beginning October 1.  … More

It’s Good to Be a Brownfield Site — As Long As It’s Not Too Brown

Tucked away in the recesses of the Inflation Reduction Act is a provision that reminds everyone why they love Superfund so much.  On its face, it’s simply an incentive for renewable energy development, giving an adder to the amount of the investment tax credit (ITC) or production tax credit (PTC) to which certain renewable energy projects would otherwise be entitled, if they are located in an “energy community”.  The adder for projects claiming the ITC can increase the ITC credit rate by as much as ten percentage points (e.g., a project with a base credit rate of 30% is increased to 40%).  The adder for projects claiming the PTC is an increase equal to 10% of the PTCs otherwise available.  The definition of energy community has multiple parts, but the key for today is simply this – any property meeting the definition of a “brownfield site” under CERCLA is considered an energy community.  The new adder only applies to projects placed in service on or after January 1, 2023.

Renewable energy developers are now busily trying to figure out whether target projects meet the definition.  Here’s where the fun starts.  It turns out that the common sense definition most people think of when they think about brownfield sites is not what Congress had in mind when it defined the term under CERCLA.  A brownfield site is indeed a property where redevelopment is more difficult because of the presence of historic contamination – but only if the contamination is relatively minor.

Here’s what renewable energy developers need to know to determine whether their property is a brownfield site and thus eligible for the IRA adder, or whether it’s just a piece of contaminated property.  The basic definition is reasonably clear:

The term “brownfield site” means real property, the expansion, redevelopment, or reuse of which may be complicated by the presence or potential presence of a hazardous substance, pollutant, or contaminant.

However, there are several different exclusions about which developers need to be aware.  The exclusions are lengthy and complicated, but can be conveniently placed into four categories.  Facilities in any of the categories are excluded from the definition of “brownfield site”.

  • Facilities that are actually federal superfund sites, including:
    • Sites on the National Priorities List (or proposed for listing)
    • Sites at which a removal action is occurring
    • Sites that are the subject of a court order, consent decree, or administrative order under CERCLA
  • Facilities that are otherwise subject to court orders, consent decrees, or administrative orders. (Maintaining CERCLA’s reputation for incoherent drafting, it is not clear whether the exclusion applies to any such orders or only orders issued pursuant to certain other federal environmental statutes, including the Resource Conservation and Recovery Act and the Clean Water Act.)  Fortunately, the language is written in the present tense, so at least it is clear that this exclusion only applies where such an order remains in effect.
  • Facilities “to which a permit has been issued by the United States or an authorized State” under RCRA, the CWA, the Toxic Substances Control Act, or the Safe Drinking Water Act.
  • Facilities subject to RCRA corrective action or at which there has been a PCB release subject to remediation under TSCA.

There are nuances, but these are the basics.  What’s important to understand is that, while developers need to carefully parse through these exclusions to see if they are entitled to the adder, there will remain a significant number of facilities where the exclusions are not applicable and the adder will be available.

EPA Proposes to List PFOA and PFOS as Hazardous Substances: What Could Possibly Go Wrong?

EPA announced today that it is proposing to list PFOA and PFAS as hazardous substances under CERCLA.  EPA appears to be sanguine about how the listing will play out in the real world.

EPA is focused on holding responsible those who have manufactured and released significant amounts of PFOA and PFOS into the environment. EPA will use enforcement discretion and other approaches to ensure fairness for minor parties who may have been inadvertently impacted by the contamination.

I’m less optimistic.  I should be clear that I have no problem with the listing decision itself.  There seems to be sufficient information to warrant listing.  My concern is simple.  CERCLA doesn’t work and it never has.  I have discussed CERCLA’s failings previously, but I can never resist trotting out this chestnut:

Vagueness, contradiction, and dissembling are familiar features of environmental statutes, but CERCLA is secure in its reputation as the worst drafted of the lot.

The relevant problem for this discussion is that CERCLA provides no basis for a rational assessment of how much cleanup is enough.  That’s going to come to the forefront in at least two ways for sites at which PFOA and/or PFOS are detected.

First, PFOA and PFOS are pretty much literally ubiquitous.  We’ll find out how true this is when detection methods improve to the point where they can be detected in the low parts per quadrillion range at which EPA’s recent health advisories say adverse effects can be found.  What do we do when it turns out that the United States is just one big Superfund site?

If EPA thinks that it can manage the issue through the hazard ranking system process, what happens when it starts to score sites using the same data that yielded a health advisory for PFOA of 4.0 parts per quadrillion.  How is EPA going to prioritize sites when there are neighbors everywhere legitimately concerned that there’s a site near their home with elevated levels of PFOA and PFOS?

And, by the way, does anyone who knows anything about Superfund think that EPA’s “enforcement discretion” will be sufficient – even if exercised with the wisdom of Solomon – to “protect “minor parties who may have been inadvertently impacted by the contamination”?

EPA has never been able to manage these issues under CERLCA and they are only going to get worse with PFAS.  Maybe the listing of PFOA and PFAS will be the straw that breaks the camel’s back.  And that might even be a good thing, if we had a functioning Congress that could take a reasonable look at CERCLA’s flaws and come up with something better.

Massachusetts to Require Disclosure of Energy Usage from Large Buildings

Lost amid the more high profile items in Massachusetts’ recently enacted Act Driving Clean Energy and Offshore Wind is a requirement that the Department of Energy Resources establish a program requiring large buildings across the Commonwealth to report energy usage on an annual basis.   The requirement goes into effect on July 1, 2024, but DOER has an additional year (until July 1, 2025) to draft implementing regulations and establish the parameters of the reporting program.   Once the program is up and running, the data will be made publicly available on DOER’s website on a building-by-building basis.  The law requires reporting for buildings with at least 20,000 sf of gross floor area, but DOER may lower that threshold by regulation.  The reporting burden falls on both building owners and distribution companies.

Building-specific energy usage data collection of this type is widely seen as laying the groundwork for future building decarbonization efforts, including the establishment of building emissions performance standards.   The cities of Boston and Cambridge (and most recently Chelsea) already have building energy disclosure ordinances, each of which require annual reporting of energy usage for large buildings (Boston and Chelsea at a threshold of 20,000 sf, Cambridge at 25,000 sf).  And Boston is now layering emission reduction requirements on top of those disclosures.

Seven years after passing its first building energy reporting and disclosure ordinance (now known as BERDO 1.0), Boston last fall passed a building emissions reduction and disclosure ordinance (known as BERDO 2.0).  Using the data gathered under the first ordinance for benchmarking, Boston has set declining emissions targets starting in 2025 with an end goal of net zero emissions for all large buildings by 2050.   While Boston is still working out the details, including how renewable energy credits and power purchase agreements will play into compliance, it is clearly headed down a path of building decarbonization (see our recent post on Boston’s efforts to ban fossil fuel hookups in new construction and major renovations).

So how will this play out for the regulated community in Massachusetts?  In response to concerns about the potential for conflicting reporting requirements at the local and state level, Boston has promised to work with DOER during the adoption of the statewide program to share expertise and lessons learned.  Time will tell whether the Commonwealth follows Boston’s lead and ultimately sets emissions reduction standards for the building sector as well.  Don’t bet against it.

IRA Incentives for Carbon Sequestration and Low Carbon Fuels

Yesterday, President Biden signed the Inflation Reduction Act, creating a law that contains the most significant climate-related incentives in U.S. history. In the few short weeks since the bill was introduced in the Senate, a flurry of economic activity has already begun, with entities already beginning to align their business practices to the incentives laid out in the bill.

Among the many programs enhanced or created by the legislation,… More

Coming soon to Massachusetts cities and towns: all electric buildings

As we’ve discussed before, multiple cities and towns in the Commonwealth of Massachusetts have tried to ban fossil fuel hookups for new buildings by zoning or other ordinance over the past few years.  But in July 2020, the Massachusetts Attorney General’s Municipal Law Unit struck down the first such ban that came across its desk as inconsistent with other state law.  As we noted then, in order for municipalities to restrict or ban fossil fuel connections,

[T]he 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.

“Crystal Ball / Glaskugel” by manoftaste.de is licensed under CC BY 2.0

It looks like our crystal ball was working!  While last week’s climate bill signed into law by Governor Baker did not impose statewide restrictions, it did provide a pathway for up to ten municipalities to ban fossil fuel hookups through zoning or ordinance, under a demonstration project managed by the Department of Energy Resources.

As the legislature, advocates, and the governor’s office weighed in on the scope of the pilot program, two issues generated significant disagreement:  (1) whether this was the right time to implement the program given that the grid is not yet sourced by mostly zero-carbon energy; and (2) how to ensure the program would not discourage the production of housing, including affordable housing.  Baker had pushed to delay implementation until 50% of the Commonwealth’s annual electricity consumption is generated from clean energy sources, and to exclude multi-family housing (along with hospitals, research laboratories, and health care facilities) from the municipal bans.  In the end, most of Baker’s proposed amendments to the program were rejected by the legislature.  But the final version does include certain protections for housing production, including a requirement that municipalities must meet the state’s 10% affordable housing requirements before they can participate in the program.

So what’s next?  Ten municipalities have already filed home rule petitions to enable them to participate in the program, including Brookline, whose first attempt at a fossil fuel ban was the subject of the Attorney General’s ruling two years ago. Yesterday, Boston’s Mayor Wu announced an intent to join the pilot program.  Although late to the game, Boston may be able to participate if the other municipalities are unable to meet the 10% affordability requirement.  The Department of Energy Resources will make the final determination as to which municipalities may participate and will produce an annual report analyzing impacts on emissions, building costs, operating costs, the number of building permits issued, and other matters.  Stay tuned to see what form these municipal bans end up taking and what impact they have.

The Inflation Reduction Act: Investments in Environmental Justice

The Biden administration has made it a priority to target environmental justice issues as part of the administration’s broader economic agenda. On August 7, the Senate passed the Inflation Reduction Act of 2022 (Act), which would provide about $369 billion to reduce greenhouse gas emissions to 40 percent below their 2005 levels by 2030 as well as reduce carbon emissions and invest in renewable energy. A small but potentially mighty component of the Act focuses on strengthening environmental justice.… More

NEPA Is Indeed Posing a Really Big Obstacle to Coal Mining On Public Lands

On Friday, I posted about a decision invalidating BLM Resource Manage Plans for failure to comply with NEPA.  My caption was “NEPA Is Still Going to Pose an Obstacle to Leasing Public Lands for Fossil Fuel Extraction.”  Little did I know how prescient I was, because later on Friday, Judge Brian Morris – the same judge who invalidated the RMPs – went farther and reinstated the moratorium on leasing of public lands for coal mining that had been implemented by then-Secretary Jewell in 2016. 

Once more, Judge Morris found DOI’s NEPA analysis inadequate.  When Secretary Zinke terminated the moratorium in 2017, litigation ensued and, in 2019, the Court ruled that the Zinke Order was subject to NEPA.  In response, DOI completed an environmental assessment and issued a finding of no significant impact with respect to the Zinke Order.

However, the EA only examined four specific leases that were directly affected by the original moratorium.  Furthermore, it assumed that the moratorium would have been terminated after three years, even absent the Zinke order.  Judge Morris was not pleased.

The EA did not take the “hard look” NEPA requires with respect to restarting the federal coal leasing program. Under NEPA, the “no action” alternative describes baseline conditions. These conditions reflect the “status quo” against which the impacts of the proposed action and its alternatives are to be measured. BLM improperly cabined its NEPA analysis for ending the coal leasing moratorium to the leases granted during the estimated PEIS timeline. BLM’s attempt to curtail the potential environmental impacts of lifting the moratorium, by failing to consider a potential alternative that provided a baseline of an indefinite moratorium, proves arbitrary and capricious.  (Emphasis added.)

And in case there was any lingering doubt about whether the Zinke Order was in fact likely to have a significant impact on the environment, Judge Morris noted that:

BLM had pending lease applications encompassing at least 1.8 billion tons of federal coal that would be mined from 28 mines across nine states at the time of the Zinke Order. BLM’s own analysis states that cumulative greenhouse gas emissions from the coal lease applications that were suspended under the Jewell Order would amount to more than one billion tons/year.

Time to chalk up DOI’s handling of the Zinke Order as just one more example of an administration that cared more about getting its press release out on twitter than it cared about providing any kind of sound legal basis for the actions that it took.

NEPA Is Still Going to Pose an Obstacle to Leasing Public Lands for Fossil Fuel Extraction

Earlier this month, Chief Judge  Brian Morris made clear that NEPA remains a powerful weapon against the leasing of public lands for fossil fuel extraction.  It’s déjà vu all over again for the projects at issue.  In 2018, Judge Morris ruled that two resource management plans (RMPs) prepared by the Bureau of Land Management concerning potential expansions of coal mines in Wyoming and Montana violated NEPA for a variety of reasons, including the failure:  (1) to consider alternatives the would involve reducing the amount of available coal and (2) to adequately assess environmental impacts resulting from the downstream combustion of the extracted coal.

After BLM revised the RMPs in 2019, plaintiffs sued again.  Once more, Judge Morris found that the RMPs violated MEPA, again for the same two reasons.

With respect to consideration of alternatives, Judge Morris found that BLM’s refusal to consider alternatives that preclude the expansion of existing mines violated NEPA.  BLM and Wyoming both argued that the so-called “multiple use” approach of the Federal Land Policy and Management Act precludes BLM from considering a no-leasing alternative.  Judge Morris disagreed.

Put simply, NEPA requires BLM to bookend its analysis by considering a no-future-leasing alternative and at least one alternative that further reduced leasing by reducing the potential for expansion.  FLPMA’s “multiple use” directive requires BLM to manage public lands and resources in a manner that “takes into account the long-term needs of future generations for renewable and nonrenewable resources [. . .] without permanent impairment of the productivity of the land.” Coal mining represents a potentially allowable use of public lands, but BLM is not required to lease public lands. The multiple use mandate does not bar BLM from considering a no leasing alternative for public lands.

In short, the need to balance different uses does not allow BLM to avoid assessing whether that balance may require an alternative that limits future fossil fuel extraction.

Judge Morris also faulted BLM for failing to consider the downstream impacts of coal combustion, including impacts not related to GHG emissions:

NEPA requires agencies to analyze “any adverse environmental impacts which cannot be avoided should the proposal be implemented.” These impacts include “direct” and “indirect” effects. Indirect effects are “caused by the action and are later in time or farther removed in distance, but are still reasonably foreseeable.” Without a full analysis of non-GHG downstream emissions, the EIS fails to “foster informed decision-making” required by NEPA.

In all of the recent discussions of Senator Manchin’s efforts to facilitate fossil fuel projects, it seems worth noting that, while procedural changes may help nibble around the edges of NEPA, absent meaningful substantive revisions to NEPA requirements, citizen suits will remain a powerful weapon against further development of fossil fuel resources on public lands.

Massachusetts Passes Climate Bill Focused on Clean Energy and Offshore Wind

Governor Baker signed the climate bill (H.5060), titled An Act Driving Clean Energy and Offshore Wind, into law on Thursday August 11, 2022. The act combines and modifies provisions from the House’s proposed offshore wind bill (H.4524) and the Senate’s proposed omnibus climate bill (S.2819). The legislation covers a wide range of policy changes focused on electrifying vehicles and transit, reducing fossil fuel connections in new construction,… More

Massachusetts Clean Energy Bill Turbocharges the Adoption of Zero Emission Vehicles and Clean Transportation

Based on numerous sources, Governor Baker has now signed an Act Driving Clean Energy and Offshore Wind.  This bill includes a number of key advancements for increased adoption of zero emission vehicles and clean transportation throughout the Commonwealth.  The law:

  1. Outlaws the sale of internal combustion vehicles by any dealership after January 1, 2035 by making it an unfair or deceptive act or practice under Chapter 93A;…
  2. More

Inflation Reduction Act Aims to Propel EV and Clean Fuel Vehicle Adoption

The Inflation Reduction Act looks to accelerate the adoption of clean vehicles by reforming the related tax credits in a number of key ways.  Specifically, the bill does the following.

  1. Eliminates the 200,000 clean vehicles sold quota per manufacturer.
    • Previously, Tesla, GM, and Toyota were all over the 200,000 vehicle threshold and thus ineligible for the tax credit.
  2. Preserves the existing up to $7,500 tax credit for new qualified vehicles including electric,…
  3. More

The Battle Over PFAS Continues to Heat Up. The Assessment of Costs and Benefits Remains Undone.

Last month, EPA issued interim health advisories for PFOA and PFOS that took many people’s breath away.  It is rather amazing how quickly we’ve moved from parts per billion past parts per trillion to the low parts per quadrillion range. 

At the same time, EPA issued a final health advisory for GenX compounds, setting the level at 10 parts per trillion.  Although the GenX advisory is roughly three orders of magnitude higher than that for PFOA or PFOS, it still had a seismic effect.  It’s important to remember that PFOA and PFOS have been phased out and that GenX was developed as a safer replacement.  Moreover, its importance in manufacturing cannot be overestimated.

The EPA health advisory prompted a law suit earlier this month by Chemours, which manufactures GenX.  In its petition to the 3rd Circuit Court of Appeals, Chemours emphasized the importance of its products:

Fluoropolymers are used in every car, airplane, and cellphone. They are also critical to maintaining the integrity and quality of the vast majority of prescription drugs; to producing medical equipment such as catheters, saline bags, and filtration devices for newborns; and to manufacturing computer chips.

Fluoropolymers are also necessary for the advancement of green technology: They are used to produce hydrogen from renewable sources and are at the heart of the hydrogen fuel cell. In sum, the responsible manufacturing of fluoropolymers in the United States is critical to furthering U.S. technology leadership; onshoring key industries (including semiconductor manufacturing); and enabling American supply chain resiliency and security.

EPA’s health concerns and Chemours’ economic concerns may be why, in reporting on the suit, Greenwire (subscription required) described the upcoming battle over PFAS as likely to be “ferocious”.  Nice word choice and probably not far off the mark.

I don’t really have a view about the substantive merits of the petition, but I’ll note two points.  First, health advisories have no regulatory impact and it’s not at all obvious that the issuance of the advisories constitute final agency action.

Second, and more importantly, the dispute over the health advisories points out a recurring weakness that we see in our environmental health statutes.  Health advisories are different from national ambient air quality standards, since NAAQS do have regulatory consequences.  However, they are similar in that EPA goes through a scientific process to determine the risks posed by some type of exposure to some type of chemical.  That process evaluates risk, but it does not address benefits.

Once the “standard” or “advisory” is published, real-world consequences follow – regardless of the formal legal impact.  And we still haven’t figured out a way to balance costs and benefits.

Sometimes, I despair that we ever will.  The ferocious battles will resume, but little will be resolved.  Déjà vu all over again.