On May 25, 2023, the Supreme Court issued its long-awaited decision in Sackett v. Environmental Protection Agency, which significantly narrowed the Clean Water Act’s (“CWA”) test for determining whether wetlands are protected “waters of the United States” and the federal permitting requirements for development projects in covered wetlands areas.

The Court’s Ruling

The Supreme Court’s ruling has two basic parts:

1. It adopts Justice Scalia’s plurality opinion in Rapanos v.…

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[This is the third post in our Hydrogen Blog Series. Read the first post here and the second post here]

One of the biggest hurdles for clean hydrogen is high costs.  The Department of Energy graph below says it all.  Today, a kilogram of hydrogen produced by electrolysis costs around $5 to $7. … More

After weeks of hints and leaks, yesterday morning (May 11, 2023), EPA proposed a new rule regulating emissions from power plants. The proposed rule would apply to new and existing gas plants and existing coal plants—new coal plants are separately regulated—and promises to significantly cut carbon and other harmful air pollutant emissions from fossil plants over the next two decades and beyond.

EPA’s accompanying Fact Sheet spells out the proposed rule’s emissions reductions estimates:

EPA has evaluated the emissions reductions,… More

Yesterday, the Biden-Harris administration outlined in a fact sheet its priorities for permitting reform to accelerate the build-out of America’s energy infrastructure “faster, safer, and cleaner.” The fact sheet provides an endorsement of the Building American Energy Security Act of 2023, establishes several major objectives for permitting reform, provides several recommendations to streamline federal permitting processes, and urges Congress to include the objectives and recommendations as part of bipartisan permitting reform legislation.… More

[This is the second post in our Hydrogen Blog Series. Read the first post here.]

In the first post, I alluded to the technical issues hydrogen developers are considering. Here we’ll look at how hydrogen is produced and what it will be used for.

How is hydrogen produced today?… More

Earlier this week, the Supreme Court accepted cert. in Lopez Bright Enterprises v. Raimondo, which presents a straightforward challenge to the continuing viability of Chevron.  The question presented was: 

Whether the Court should overrule Chevron or at least clarify that statutory silence concerning controversial powers expressly but narrowly granted elsewhere in the statute does not constitute an ambiguity requiring deference to the agency.

It’s noteworthy that the Court did not grant cert. on the question whether, under Chevron, the agency interpretation of the relevant statute was reasonable.  That makes it pretty clear that the court wants to get at the merits of Chevron itself.  With Chevron in play, there are several issues to note:

• First, if you have an interest, this is the case in which to submit or join an amicus brief.
• Second, it’s worth remembering that, just 40 years ago, Chevron was not controversial. The decision was unanimous.
• Third, what’s sauce for the goose is also sauce for the gander. The Trump administration relied on Chevron to support a number of questionable efforts at statutory interpretation.
• Fourth, while Justices such as Gorsuch are clearly not friends of the administrative state, I think that the attack on Chevron is as much an attack on Congress as it is on the executive branch. It is an attempt to stop Congress from legislating general principles at a high level, while leaving the executive to fill in the details.  This has been the dominant mode of legislative drafting for some time and it has very clearly been intentional on Congress’s part.  Is it really the role of SCOTUS to say that Congress cannot legislate this way?

While this is not intended to be a post on the merits of Chevron, I will say this.  The attack on Chevron is really an attack on modernity itself.  The world has gotten much more complicated, and SCOTUS just doesn’t like that.

Time will tell regarding how SCOTUS’s efforts to return us to a simpler era work out.

On April 13, 2023, the Commissioners of the Nuclear Regulatory Commission (NRC) voted to approve a proposal that will accelerate the commercialization of fusion energy in the United States.  Specifically, the NRC determined that fusion energy be regulated under the Nuclear Regulatory Commission’s byproduct material framework contained in 10 C.F.R. Part 30, “Rules of General Applicability to Domestic Licensing of Byproduct Material.”

Part 30 requires general or specific licenses to manufacture,… More

We’re launching this blog series to help readers keep pace with the fast-moving world of clean hydrogen.  Each week or so we’ll post an article on different legal, regulatory, and technical opportunities and challenges facing companies who are developing or exploring clean hydrogen projects.

We need a comprehensive approach to tackling climate change, one that targets all sectors of the economy.  Wind, solar, and electric vehicles are undoubtedly important,… More

On Monday, the 9^th Circuit Court of Appeals held that the City of Berkeley ordinance entitled “Prohibition of Natural Gas Infrastructure in New Buildings” was preempted by the Energy Policy and Conservation Act.  The relevant language in the EPCA provides as follows: 

no State regulation concerning the energy efficiency, energy use, or water use of such covered product shall be effective with respect to such product.

There are a number of exemptions and other details, but that’s the core.

Berkeley and a number of amici (including the United States, which supported Berkeley) argued that the preclusion of gas hookups is not the same thing as regulating the energy efficiency of the actual product itself.  I’m not going to get into the merits, other than to note that, based on the following, I don’t expect any hardcore mathematicians among my readers to sympathize with the City’s arguments:

Berkeley’s main contention is that its Ordinance doesn’t regulate “energy use” because it bans natural gas rather than prescribes an affirmative “quantity of energy.” While Berkeley concedes that a prohibition on natural gas infrastructure reduces the energy consumed by natural gas appliances in new buildings to “zero,” it argues that “zero” is not a “quantity” and so the Ordinance is not an “energy use” regulation. But that defies the ordinary meaning of “quantity.”

I will note, however, that, if the 9^th Circuit decision is adopted by other Circuit Courts or by the Supreme Court, it is difficult to see how other natural gas bans could survive a preemption challenge.  This case is not about specific facts related to the language of the Berkeley ordinance.  It is a decision on a facial challenge to the ordinance, in which the Court said that a ban on new natural gas connections is preempted by the EPCA.

Thus, if the 9^th Circuit holding is the law, then other state or local bans are going to be preempted as well.  FWIW, I can imagine other Circuit courts disagreeing with the 9^th Circuit.  In that case, I’d expect SCOTUS to take up what would be a pretty clear Circuit split.  And I’ve given up predicting what SCOTUS will do.  There are a number of conservative SCOTUS justices who might be generally expected to want to preserve local authority, so I am not certain that SCOTUS would find the bans to be preempted.  For those who just can’t get enough of preemption jurisprudence, I suggest that they read Judge O’Scannlain’s concurrence, which is pretty much a cris de coeur, begging SCOTUS to bring some clarity to the law of preemption.

Yesterday, the Bureau of Land Management announced that it has given final approval to the TransWest Express transmission line, a 732-mile project that will move electricity from a large wind farm in Wyoming to an interconnection point near Las Vegas.  Most of the electrons will ultimately provide power to California. 

According to EnergyWire (subscription required), the notice to proceed was issued a mere 18 years after the project was first initiated.  Suffice it to say that that’s a long time.  TransWest estimates project completion by the end of 2028.  That would mean that it will have taken 23 years from initiation to completion.  If the same timeline were applied to projects initiated today, such projects will start moving power in 2046.  Given that more and more states have ambitious goals to decarbonize the electric grid earlier than that, and that we can’t decarbonize the grid without expanding transmission, something’s got to give.

The Administration’s efforts to accelerate the permitting of such projects are laudable, but more is needed and it will require cooperation among parties that don’t seem able to cooperate at this point.  Transmission should be an apple pie issue.  It supports economic development, not just climate mitigation.  This would seem to be a “can’t we all just get along” kind of issue.

And with that, I will just close with two issues that, if not actually ironic, are at least notable.  First, just to exemplify how the current system has really affected how everyone thinks about these issues, is a quote in the GreenWire story from Vijay Satyal at Western Resource Advocates.

Can we reduce a 15-year process to something like 10 years or eight years or less?

I like that “or less” at the end, because is there anyone who can look at our current situation and think that a 10-year or 8-year review process would be a good outcome?  I think we need to aim for something faster than 8-10 years.

Second, I cannot resist noting that the TransWest Express will carry power from a 600-turbine wind project located in, of all places, Carbon County, Wyoming.

If that’s not ironic, it’s at the very least a very sweet coincidence.

On Thursday, the Office of Management and Budget released proposed revisions to “Circular A-4”.  It also released a separate preamble, explaining its thinking and asking for comment on certain identified issues.

Circular A-4 is almost certainly the most important document that most people have never heard of, since it governs how federal agencies conduct cost-benefit analysis of potential federal actions.  The proposal is not a massive rewrite of Circular A-4, but it would make a number of important changes.  Here are some highlights.

• It would lower the discount rate. There’s some nuance to this, but generally speaking, the most commonly used discount rate will be 1.7%.  Given that regulations’ costs are generally incurred early and benefits often accrue over time, the change will significantly improve the benefit/cost ratio for many regulations.
• With respect to federal actions – think climate change regulation – the impacts of which will be felt intergenerationally, the revisions would reemphasize that it is appropriate to use a lower discount rate to evaluate the impacts of such actions. I have to confess that it has always seemed ironic to me that current (and prior) generations got to benefit from the economic activity that caused climate change, and also get to decide how valuable it is to future generations to take actions to fix the mess that we all made.
• It makes clear that OMB considers it appropriate to weight the impacts of federal actions differently for different groups, particularly lower income groups. This is not just consistent with the Administration’s emphasis on equity issues; it also has considerable support in academic economics literature.
• Finally, in what I assume is an effort to get around arguments regarding whether the “co-benefits” of regulations should be considered in cost-benefit analysis, OMB proposes to eliminate the phrase “ancillary benefits and countervailing costs” and instead refer simply to “additional benefits and costs.” This seems appropriate to me.  After all, a person paying for a regulation, as well as a person benefitting from a regulation, doesn’t care whether the benefit – or cost – is “direct” or “ancillary”.

I should note that the Circular does not spend much time on lofty philosophical principles.  It is a very technical document.  For those who want to comment, this is a full employment for economists issue; it’s not for lay people.  And don’t wait to hire your economist; comments are due in 60 days, on June 5, 2023.

Today, the 5^th Circuit Court of Appeals dismissed for lack of standing claims by a number of states challenging the Biden Administration’s Interim Estimates of the Social Cost of Carbon.  The Court had telegraphed this outcome last spring when it vacated a District Court injunction against use of the Interim Estimates, noting that:

The Government Defendants are likely to succeed on the merits because the Plaintiff States lack standing.

Indeed.  The Court’s opinion today basically just fleshes out last year’s simple statement.

Plaintiffs’ allegations of “injury in fact” rely on a chain of hypotheticals: federal agencies may (or may not) premise their actions on the Interim Estimates in a manner that may (or may not) burden the States. Such injuries do not flow from the Interim Estimates but instead from potential future regulations, i.e., final rules that are subject to their own legislated avenues of scrutiny, dialogue, and judicial review on an appropriately developed record.

As I noted last spring, the “fun” begins when an agency promulgates a regulation based at least in part on the Interim Estimates (or a final SCC, once promulgated).  Interestingly, that case arguably is already pending before the District of Columbia Court of Appeals, in Texas v. EPA, which challenges EPA’s most recent motor vehicle emissions standards.  The plaintiff states in that case argue that EPA’s misplaced reliance on the Interim Estimates wildly skewed EPA’s cost-benefit analysis in support of the rule.

And, wouldn’t you know it, EPA’s first argument in defense of the states’ claims is that the states don’t have standing.  As the 5^th Circuit noted in yesterday’s decision, “A panoply of reasons can underlie a regulation, and agencies are required to dictate and publicly report such reasons.”  And EPA is free to argue, perhaps successfully, perhaps not, that whatever injuries Texas may have suffered as a result of the motor vehicle emissions standards were not caused by the Interim Estimates.

It’s also worth noting that the panel in yesterday’s decision included two Republican appointees, one appointed by President Trump.  After all, all sorts of folks, of varying political persuasions, have occasion to challenge federal regulations of various kinds.

Those applauding today’s decision might do well to remember that what is sauce for the gander is also sauce for the goose.

Last week, Inside EPA (subscription required) reported that the Clean Air Science Advisory Committee has pretty much agreed that the National Ambient Air Quality Standards for ozone must be made more stringent.  Apparently, the panel is looking at recommending that the primary standard be reduced from 70 ppb to a range of 55-60 ppb.  CASAC is also recommending a reduction in the secondary standard. 

I’ve blogged numerous times about the role that CASAC recommendations play in judicial review of EPA’s decisions concerning setting the NAAQS.  The short version is that setting the NAAQS – any NAAQS – at a level consistent with CASAC’s recommendations is both a necessary and sufficient condition to surviving judicial review.  In other words, if the NAAQS set by EPA is consistent with the CASAC recommendation, EPA’s rule will be affirmed.  If EPA’s NAAQS is not consistent with CASAC’s recommendation, EPA will lose.

This is not a hard and fast rule.  Neither the Supreme Court nor the District of Columbia Court of Appeals has ever said explicitly that consistency with CASAC is either necessary or sufficient.  Still, it’s hard to read the decisions in cases challenging EPA NAAQS decisions without coming to the conclusion that the CASAC recommendation at the very least ways heavily on the scales of justice.

CASAC’s likely recommendation is going to pose significant problems for EPA.  First, if CASAC recommends a range of 55 ppb to 60 ppb, that would be a significant decrease, making a decision to stick at 70 ppb really awkward.

Secondly, in case you hadn’t figured this out, the stakes are high.  The cost of attaining a standard at or below 60 ppb would be substantial.  There isn’t much doubt that the GOP is already preparing to attack Democratic candidates for continuing to support job-killing regulations.  Of course, they won’t mention in their ads that none other that Justice Scalia, in his opinion in Whitman v. American Trucking Associations, wrote that:

The text of § 109(b), interpreted in its statutory and historical context and with appreciation for its importance to the CAA as a whole, unambiguously bars cost considerations from the NAAQS-setting process, and thus ends the matter for us as well as the EPA.

A cynic might suggest that this is why EPA has stated that it does not expect to finalize its decision whether to retain the current ozone NAAQS or instead to revise it until December 2024.

Of course, cynicism is unhealthy and unhelpful and I don’t believe in it.

The scope of suits available to private citizens under the Clean Water Act is not unlimited.  A Federal District Court in Massachusetts recently made that clear in dismissing a citizen suit filed by the Conservation Law Foundation against the Massachusetts Water Resources Authority, which operates Boston’s Deer Island Sewage Treatment Plant, the second largest treatment plant in the country.  (Full disclosure: I represented the MWRA in that suit.) The Court rejected CLF’s claims that the MWRA was required to take enforcement action against every industrial user that discharged to the MWRA’s sewer system in violation of pretreatment regulations.… More

On February 10, 2023, the Public Land Preservation Act (PLPA), Chapter 274 of the Acts of 2022, (M.G.L. Ch. 3 §5A), went into effect.  It both codifies existing practices and creates new obligations that public entities in the Commonwealth must follow to dispose or change the use of interests in land protected by Article 97 of the Massachusetts Constitution.

Article 97 provides:

The people shall have the right to clean air and water,… More