State Climate Suits Really, Really, Belong in State Court When They Allege Misleading Statements To Investors

On Thursday, there was yet another opinion addressing whether state and local climate suits belong in state or federal court.  This time, Judge William Young issued an opinion explaining his March bench decision to remand Massachusetts’ case against ExxonMobil to state court. 

The Massachusetts case for remand was easier than in the cases seeking a remedy for climate change.  The Massachusetts case does not make nuisance claims or seek a substantive remedy for the impacts of climate change.  It is limited to claims that ExxonMobil deceived investors in Massachusetts by knowingly misrepresenting the science of climate change and the impacts of that science on ExxonMobil’s share price.  As Judge Young noted:

the Commonwealth wants “to hold ExxonMobil accountable for misleading the state’s investors and consumers.” No one doubts that this task falls within the core of a state’s responsibility. States routinely enforce consumer protection and securities laws alongside the federal government.

Contrary to ExxonMobil’s caricature of the complaint, the Commonwealth’s allegations do not require any forays into foreign relations or national energy policy. It alleges only corporate fraud.

Whatever one may think of the merits of the Commonwealth’s claims, or even whether the Commonwealth’s suit was motivated by broader issues related to climate change, Judge Young got this one right.  It’s a consumer fraud case brought under state law and is not subject to removal to federal court based on the allegations in the complaint.

It’s Not Looking Good For Nationwide Permit 12

Yesterday, the 9th Circuit Court of Appeals refused the appellants’ request for a partial stay of the injunction recently issued against use of the Army Corps Nationwide Permit 12 for oil and gas pipeline projects.  The upshot is that use of Nationwide Permit 12 is prohibited for oil and gas pipelines until the Court of Appeals hears and decides the appeal.

The order contains more bad news for the Trump administration, the developers of Keystone XL, and the other energy companies that rely on Nationwide Permit 12.  The Court’s Order wasn’t based simply on the balance of harms.  The Court stated that:

Appellants have not demonstrated a sufficient likelihood of success on the merits and probability of irreparable harm to warrant a stay pending appeal.

That doesn’t bode well.

California Climate Nuisance Cases Will Also Be Heard In State Court (I Think)

The 9th Circuit Court of Appeals has issued two rulings that, combined with the recent 4th Circuit ruling in the Baltimore case, makes it more likely that state and local public nuisance climate cases will be heard in state courts, rather than federal courts.  The two California cases got to the 9th Circuit via different routes.

San Mateo v. Chevron is on all fours with the recent 4th Circuit decision.  As in Baltimore, the defendants in San Mateo removed to federal court, but the federal judge remanded to state court.  The defendants appealed the remand, but the removal statute is very clear that, except in limited circumstances pretty obviously not in play here, even plainly wrong remand orders are not reviewable by courts of appeal.  Moreover, since the 9th Circuit and the 4th Circuit agreed, there is no circuit split to tempt SCOTUS.  Although a circuit split is still possible given pending cases in other circuits, it seems likely that, where a federal judge remands a case to state court, the case will be heard in state court.

City of Oakland was different.  There, the federal judge found that there was federal jurisdiction, refused to remand, and then dismissed under Rule 12.  The 9th Circuit disagreed, concluding that the complaint did not create federal question jurisdiction.  It’s a rather deft decision (joined by a Trump appointee, I feel compelled to note).  The 9th Circuit had already concluded, following the SCOTUS decision in AEP, that there is no federal common law of nuisance to be applied to climate change cases.  As a result, the Court basically hoisted the defendants on their own petard.  If there is no federal common law of nuisance, how can state complaints alleging violations of state nuisance law create federal question jurisdiction?  There’s more to the opinion, but that’s the crux.

Defendants still can hold out some hope.  They had raised a variety of federal question arguments that the district court did not address in its original opinion.  Therefore, the 9th Circuit remanded so that the district court could address them.  Stay tuned for round 2.  In the meantime, the San Mateo case should start moving forward.

Sage Grouse Habitat Still Gets Priority in BLM Leasing Decisions

Last week, Chief Judge Brian Morris of the Federal District Court for the District of Montana vacated an “Instruction Memorandum” issued by BLM in 2018 – and also vacated numerous oil and gas leases issued in reliance on the 2018 IM.  The 2018 IM changed the way BLM interpreted land management plans issued by BLM in 2015 in order to preserve sage grouse habitat, and avoid the necessity for listing the sage grouse as endangered under the ESA.

The short version is that the 2015 plans required BLM to prioritize for leasing land that is not sage grouse habitat.  The 2018 IM required BLM to give priority to land that is not sage grouse habitat only when BLM has a backlog of potential leasing sites to review.  BLM provided no explanation for the change in how it addressed prioritization.  The Court was, of course, aware that the BLM changes resulted from President’s Trump’s drive to expand oil and gas leasing on federal lands.  Its response was short and to the point:

“Faster and easier lease sales,” at the expense of potentially imperiling the habitat of a species on the brink of listing under the ESA, falls short.

Interestingly, given the push by conservatives to decrease the deference given to agency interpretation of their own rules, BLM sought deference to its interpretation of the 2015 plan.  Here, too, the Court gave short shrift to BLM:

Courts do not defer to agency interpretations of a management plan that prove inconsistent with the plain language of the plan.

Finally, and perhaps most importantly, the Court vacated both the IM and the leases, notwithstanding BLM’s request that the Court remand without vacatur.

The Court sees no reason to leave the 2018 IM in place. BLM’s errors undercut the very reason that the 2015 Plans created a priority requirement in the first place and prevent BLM from fulfilling that requirement’s goals. As for the lease sales, the errors here occurred at the beginning of the oil and gas lease sale process, infecting everything that followed.

That paragraph could serve as a fitting epitaph for this Administration’s overall effort to undo the entire environmental regulatory structure put in place since 1970.

Has President Trump Just Limited Enforcement To Willful Violations?

On Tuesday, President Trump issued an Executive Order on Regulatory Relief to Support Economic Recovery.  I’ll leave to others a discussion of the provisions telling agencies to look for more regulations to roll back.  I’m in general agreement with commenters who have said that those provisions don’t add much to Trump’s prior deregulatory efforts and are likely to face mostly the same reception in the courts as prior efforts.

Instead, I want to focus on this provision:

The heads of all agencies shall consider whether to formulate, and make public, policies of enforcement discretion that, as permitted by law and as appropriate in the context of particular statutory and regulatory programs and the policy considerations identified in section 1 of this order, decline enforcement against persons and entities that have attempted in reasonable good faith to comply with applicable statutory and regulatory standards, including those persons and entities acting in conformity with a pre-enforcement ruling.

I hate to give the President too much credit, but this may be the most significant deregulatory measure he’s taken.  As far as I can tell, Trump is telling agencies that they should only take enforcement action against persons who willfully violate environmental laws.  It is true that the President only tells agencies to “consider” policies “consistent with law,” but I think we all know what President Trump means when he tells agencies to consider cutting regulated entities a break.

Because this provision involves the exercise of agency enforcement discretion, it will be much harder to challenge in court.  Certainly, written policies saying that an entire agency will always exercise enforcement discretion to prosecute only willful violations, even in the case of statutes that plainly provide for strict liability, might cause raised eyebrows among judges, but if the agencies actually care about the outcome and draft the policies carefully, they might well withstand judicial review.

My advice to my clients, and I mean this in all seriousness, is pretty simple.  Take steps to carefully document your good faith efforts at compliance – and keep a copy of this EO in your back pocket at all times.

More Evidence About Methane Emissions From Fracking

Earlier this month, I reported on a study showing that methane emissions from Permian Basin fracking operations were quite high.  Since that study acknowledged that there are reasons to think that methane emissions from the Permian Basin may be higher than from fracking elsewhere, it seemed worth noting that an EDF study published last week indicated that methane emissions from oil and gas wells in Pennsylvania (from both fracked wells and conventional wells) are 16 times greater than what has been reported to the Pennsylvania DEP.  That’s a lot of methane.

I don’t know whether these results have been validated.  However, according to EnergyWire (subscription required), “David Spigelmyer, president of the Marcellus Shale Coalition oil and gas industry group, said operators have every incentive to capture and market natural gas, especially in the current, ‘historic’ low price environment.”  That doesn’t sound like a denial to me.  I don’t even understand it.  Don’t operators have more incentive to capture and market methane when prices are high, rather than low?

In any case, the study only reemphasizes my original point – it’s important to accurately account for the life cycle GHG impacts of any kind of product or process, but particularly when the very purpose of the process is to extract GHG.

It’s the Life Cycle Impacts, Stupid

It is generally understood that the shift from coal to gas has helped, at least in the short run, to reduce emissions of greenhouse gases.  It is certainly true that combustion of natural gas releases less CO2 per unit of energy than combustion of coal.  Unfortunately, that’s not the entire answer.  A recent study published in Science Advances indicates that 3.7% of natural gas produced in the Permian Basin ends up in the atmosphere. Given methane’s global warming potential, that’s a significant number.

I don’t know whether further investigation will confirm that number, and methane losses in the Permian Basin may be higher than elsewhere due to the lack of sufficient infrastructure to move the gas to markets.  Regardless, though, the study reminds us that what matters are cumulative impacts, both direct and indirect.  The cost of coal includes the GHG emissions – and other environmental degradation – from mining, as well as from combustion.  Even beneficial technologies aren’t exempt.  Comparisons of electric vehicles to internal combustion vehicles have to include the costs associated with the mining and production of rare earth metals used in electric vehicles.

In other words, it’s all about the life cycle, stupid.  Unfortunately, our environmental protection regulatory system is not organized to provide life cycle analyses.  Impacts are cabined by media-based regulatory requirements.  NEPA and its state analogs are the closest we have to a method to incorporate life cycle assessments.  Unfortunately, anyone who has followed recent litigation to require BOEM and FERC to assess indirect impacts of mineral leases, pipelines, and the like, knows what a blunt instrument NEPA is, even if it’s better than nothing.

I wish I had a solution.  For now, all I can say is that we have to keep doing the science while continuing to work to make government legislation and regulation reflect the knowledge that science provides. That would be, one might say, a breath of fresh air.

EPA’s Science Advisory Committee Policy Fails Judicial Review 101 — Does EPA Even Care?

Earlier this week, the D.C. Circuit Court of Appeals became the latest court to reject EPA’s position that its decision to bar scientists receiving grants from EPA from serving on its advisory panels was not subject to judicial review.  The D.C. Circuit went farther than the First Circuit; it went to the merits and found that EPA’s policy was arbitrary and capricious under the Administrative Procedure Act.

The decision should not come as a surprise.  Once the new EPA policy was found subject to judicial review, the outcome was obvious.  It was not just that EPA’s new policy was unreasonable; it was that EPA provided no reasoned argument at all to justify its rejection of the Office of Government Ethics rules which state that a scientist may obtain agency grants and still provide independent advice to the agency on an advisory panel.

As the Court noted:

although agencies remain “free to change their existing policies,” they still must “provide a reasoned explanation for the change.”

As stupid as I think the new EPA policy is, I believe that I could have created a record that would have allowed the policy to survive judicial review.  That the agency did not do so is only more confirmation of my position that this administration cares more about ammunition for its twitter feed than it does about actually governing.

SCOTUS Gets One Right: Discharges To Groundwater Require Permits, But Only If They Are the Functional Equivalent of a Direct Discharge to Surface Water

The Supreme Court ruled today that discharges to groundwater are subject to the permitting requirements of the Clean Water Act, but only where the “discharge is the functional equivalent of a direct discharge from the point source into navigable waters.”

I don’t often say this about Supreme Court environmental decisions, but I think that the Court got it exactly right.

The apparent dilemma for the Court was that, on one hand, the CWA pretty clearly focuses on surface water discharges, largely leaving groundwater to the states. On the other hand, excluding all groundwater discharges from the CWA would create a massive loophole that could not have been intended by Congress.  Justice Breyer, the Court’s preeminent administrative law scholar, solved it elegantly and simply.

First, he addressed why the CWA must address at least some discharges to groundwater.  As he noted, the “bright line” rule sought by the respondent (and the Trump administration) would allow a person currently discharging to surface waters to cut the pipe off so that the discharge now occurred 10 feet short of surface water, thus avoiding CWA jurisdiction.  Justice Breyer found this untenable.

We do not see how Congress could have intended to create such a large and obvious loophole in one of the key regulatory innovations of the Clean Water Act.

And I love that one of his clerks found a case from 1824

rejecting an interpretation that would facilitate “evasion of the law”.

The other side of the dilemma was how to prevent the loophole without subjecting all or almost all groundwater discharges to CWA coverage.  The 9th Circuit approach was to apply the CWA to any groundwater discharge where the surface water pollution is “fairly traceable” to the groundwater discharge.  This was far too broad for SCOTUS to swallow.  Justice Breyer’s solution?

We hold that the statute requires a permit when there is a direct discharge from a point source into navigable waters or when there is the functional equivalent of a direct discharge.

Why didn’t I think of that?  And for those of you who think that this formulation is too vague, aside from asking rhetorically what would be a better definition, I’ll note that Justice Breyer included a list of seven factors that courts may use in determining whether a groundwater discharge is the functional equivalent of a direct discharge.

Resolving this issue may not be rocket science, but it’s a difficult legal issue that has evaded resolution for years.  Kudos to Justice Breyer for finding a workable middle ground that avoids eviscerating the statute without subjecting untold number of groundwater discharges to CWA jurisdiction.

Well done!

EPA’s MACT Rule; Some Benefits Are More Equal Than Others

Last week, EPA formally revised the cost-benefit analysis for its rule limiting the emissions of hazardous air pollutants from coal-fired power plants.  The rule jettisons consideration of so-called “co-benefits,” in this case, the benefits from the reduction in emissions of PM2.5 that result from limits on mercury emissions.  The very idea of excluding consideration of co-benefits is just plain incoherent.

I’ve spent my career defending cost-benefit analysis to many of my environmentalist friends.  I have to concede that this rule is Exhibit A for their case. People who die as a result of emissions don’t care whether it’s the mercury or the PM2.5 that kills them.  If the implementation of cost-benefit analysis can be gamed to eliminate consideration of benefits because they are the wrong kind of benefits, then one has to wonder about the entire exercise. 

Here’s the simple version.  EPA has an obligation to assess limits on emissions of HAPs from coal-fired power plants.  It should consider all benefits of a particular rule and all costs.  Seems correct to me.  Why is that so difficult?

And, by the way, the existence of these co-benefits suggests that the current PM2.5 NAAQS may not be sufficiently protective – but I’ve covered that one elsewhere.

It’s Still Good to Be King; SCOTUS Continues to Interpret CERCLA In Ways Unrecognizable to Practitioners

I have previously discussed how nice it must be for Supreme Court justices to reach judicial decisions from on high, without getting their collective hands dirty worrying about the practical consequences of their decisions.  The same has always been true with respect to SCOTUS decisions concerning CERCLA, which has seemed far simpler to SCOTUS than to us poor lawyers who have to actually make it work.

Exhibit A for this argument is the latest SCOTUS Superfund decision.  The Court today ruled that Superfund does not strip Montana courts of jurisdiction over cases seeking “restoration damages,” – which means here the authority to require additional cleanup, above and beyond what EPA has identified as the necessary and appropriate remedy under CERCLA.  However, the Court also ruled that the landowners who want to impose this additional remedy are PRPs and must get EPA’s approval before they can pursue any specific restoration damages remedy.

I still wish Superfund were as easy as SCOTUS seems to think.  Here are my quick reactions to the decision.

First, property owners who don’t qualify for the “contiguous property owner” defense are PRPs.  That’s going to make PRP Groups much more interesting!

Second, the impact on property owners’ use of their property could be substantial.  The Court deflected those concerns by noting that:

While broad, the Act’s definition of remedial action does not reach so far as to cover planting a garden, installing a lawn sprinkler, or digging a sandbox.

Practitioners know that remedies often preclude residential gardens, precisely because they can cause significant exposures.  What impact will this case have on those types of decisions?

Most importantly, how will EPA handle this case on remand and any other cases that follow this one?  The disputes regarding such “additional” remedies will be fierce.  There are arguments in the Montana case that the landowner remedy truly is inconsistent with EPA’s remedy.  However, there will be some cases where such restoration remedies may not be inconsistent with EPA’s remedy, but instead may be purely additive.

The simple answer is that such remedies must not be cost-effective; otherwise EPA would have selected them in the first instance.  I suspect that that will be this Administration’s default position.  However, the world is rarely so black and white and cost-effectiveness is in the eye of the beholder.  This issue could get really ugly.

It appears that, once again, Superfund is the gift to lawyers that keeps on giving.

New SMART Program Regulations Double Size of SMART Program to 3,200 MW, Impose Storage Requirement and Make Community Solar and Other Changes

by Adam Wade and Ethan Severance

On April 14, 2020, the Massachusetts Department of Energy Resources (“DOER”) filed emergency regulations for the Solar Massachusetts Renewable Target (“SMART”) Program. A redline showing the additions to 225 CMR 20 is available here: MA DOER 225 CMR 20 Emergency Regulations 4.15.20. As emergency regulations, these changes went into effect Wednesday, April 16, 2020. DOER plans to hold a virtual public hearing on the new regulations on May 22,… More

EPA Remains the “Anti-Environmental Protection Agency”; Wheeler Refuses to Tighten the PM 2.5 NAAQS

After more than three years of ignoring science whenever it does not support this Administration’s preferred outcomes, the issue of the future of science in environmental regulation has now been well and truly joined.  Yesterday, Administrator Wheeler, disagreeing with the recommendation of EPA’s own staff, announced that EPA is proposing to retain the current National Ambient Air Quality Standard for PM2.5 of 12 ug/m3, notwithstanding substantial evidence that PM2.5 poses significant risks even below 10 ug/m3

In the long-gone days prior to January 2017, this would be short and easy.  The Clean Air Science Advisory Committee would have said that the current standard is not protective.  NGOs and states would have sued, the D.C. Circuit would have vacated EPA’s decision, and even a right-leaning Supreme Court probably would not have thought it necessary to hear a further appeal.

Now, however, the Chair of CASAC doesn’t believe that epidemiology provides a basis for setting NAAQS and CASAC recommended keeping the current standard.  What happens when EPA’s owns science advisors don’t believe in science?  And what happens when the most outcome-based Supreme Court in living memory lies in wait?

I truly don’t know.  I suspect that the D.C. Circuit, depending upon the panel, might still find a decision to keep the current standard to be arbitrary and capricious, but I would not count on the Supreme Court affirming that decision.

In the meantime, I am curious about Administrator Wheeler.  Does he really believe what he is saying or does he just not care that this decision will fairly directly lead to thousands of additional deaths?  As EPA’s proposed rule acknowledges, NAAQS are standards,

the attainment and maintenance of which in the judgment of the Administrator, based on such criteria and allowing an adequate margin of safety, are requisite to protect the public health.

Greenwire reports that Administrator Wheeler told reporters that “there’s still a lot of uncertainty” surrounding the research supporting the lower PM2.5 NAAQS.  Of course, since the statutory standard requires “an adequate margin of safety,” one would have thought that the uncertainty supports more stringent standards, rather than less stringent ones. Indeed, ever since Ethyl Corp. v. EPA, courts have been clear that EPA must be prepared to regulate even in the face of uncertainty if it is to fulfill its mission to protect the public.

I may not be able to predict what the courts will do, but I’m confident that history will not treat this Administration kindly.  Over time, there is little doubt that the evidence against PM2.5 is only going to grow stronger.  However, by the time a future administration acts on that accumulated weight of data, thousands of people will have died needlessly.

Well done, Mr. Wheeler.

Lies, Damn Lies, and Statistics: How the COVID-19 Crisis Highlights Our Misuse of Data

As I was reading the latest statistics regarding the spread of COVID-19, I became frustrated.  My frustration stemmed not just from the fact that we are unprepared despite repeated warnings, but also from the way our elected officials and their teams present (and the media reports) the data.  Having practiced environmental law for over thirty years and observed countless instances of data misuse and misinterpretation, I am not surprised, but I am disappointed.… More

Can Cooperation Save the Monarch Butterfly?

In another (shocking) piece of good news from the Trump Administration, the Fish & Wildlife Service last week announced a major agreement for the recovery of the monarch butterfly.  The agreement will be implemented by the University of Illinois – Chicago and will involve the participation of dozens of companies in the energy and transportation sectors.

The key to the agreement is the Candidate Conservation Agreement with Assurance.  In return for the obligations the companies assume to preserve habitat, they get the assurance that, should FWS determine that listing of the monarch butterfly as endangered is necessary, they will not be subject to any additional requirements.

Lest the administration try to argue at some point that this agreement demonstrates that the harsh provisions of the ESA are not necessary and that species recovery can be accomplished by wholly voluntary actions by landowners, it should be obvious that the carrot of the CCAA only works because the alternative that landowners face would be the stick of the take provisions of the ESA should the monarch be listed.  The energy and infrastructure companies participating in this agreement made a simple dollars and cents decision that the costs of compliance with the CCAA are a fair trade-off to avoid the uncertainty and cost associated with compliance with an ESA listing.

Nonetheless, full credit to all the parties who made this happen, including the FWS.  (Now, let’s see if FWS takes the next step and lists the monarch under the ESA!)