EPA endangerment finding and petition for review - the court battle over GHG regulation begins
On December 23, 2009, a Petition for Review was filed in the U.S. Court of Appeals for the D.C. Circuit challenging the US Environmental Protection Agency’s (USEPA) final action and its December 7, 2009 findings that: 1) new motor vehicles and engines cause or contribute to greenhouse gases; and 2) greenhouse gases in the atmosphere threaten public health and welfare of current and future generations. (Endangerment and Cause or Contribute Findings for Greenhouse Gases under Section 202(a) of the Clean Air Act).
Many of the same companies that filed the Petition are part of a coalition of companies and trade associations that submitted over 133 pages of comments in late June 2009 challenging the Proposed Rule for USEPA’s findings. The coalition questioned the process USEPA used to support its Findings. In addition the coalition asserted that USEPA relied primarily on synthesis reports published by the Intergovernmental Panel on Climate Change (IPCC) and U.S. Climate Change Program – not on underlying science and data. The coalition believes the synthesis reports are insufficient, uncertain, and inadequate to support the findings regarding manmade greenhouse gases and global warming. The coalition also asserted that USEPA did not consider evidence from scientists that disagree that all or most of the climate change that has occurred in the last few centuries is due to human causes.
The timing of the Coalition’s June comments and Petition For Review is worth noting in light of the fact that the USEPA findings came out just before the United Nations Climate Change Conference in Copenhagen (held on December 7th through the 18th), just after the November 23 disclosure that data had been taken from the Climatic Research Unit (CRU) of University of East Anglia and the October 2009 petition filing by the Competitive Enterprise Institute (CEI) to reopen the proceedings for the EPA’s Proposed Findings because the CEI was concerned about evidence concerning the destruction of data at the CRU. Lastly while the USEPA denied the CEI’s request, the CRU is now in the process of doing an internal review and expects results of its review in Spring 2010. CRU stated that the purpose of the review is to determine whether there is any evidence of the manipulation or suppression of data, which is at odds with acceptable scientific practice and may therefore call into question any of the research outcomes.
Given all of the above, it is likely that the comments by coalition of companies mentioned above, the CEI, and others (including OMB) will likely be a road map of the issues that will be addressed in the Petition motions to be filed in February 2010. Clearly, the battle in the courts over how to regulate greenhouse gases is just beginning.
Regional Greenhouse Gas Initiative (RGGI) litigation settled
The New York State Energy Research and Development Authority (NYSERDA), New York State Department of Environmental Conservation (DEC) and New York State Public Service Commission have announced a settlement of Indeck Energy’s challenge to the legality of the RGGI. Indeck and others contended that the RGGI system of auctioning emission allowances puts companies who are locked into long term contracts at a serious disadvantage and challenged New York’s authority to implement RGGI. This litigation and settlement highlight the kinds of issues likely to arise as companies face the prospect and costs of current and future regulatory programs focused on long-term reduction of greenhouse gas emissions.
On December 23rd, a consent decree, approved by all parties to the Indeck litigation, was lodged with the court in which the lawsuit was pending. The New York Attorney General’s Office will receive public comments on the decree until January 29, 2010. After consideration of the public comments, New York will decide whether to move for judicial entry of the consent decree.
Under the decree, Con Edison would pay the cost of additional allowances that Indeck and other parties would need through the end of their long term contracts. DEC “committed in the Consent Decree to maintain the LTC set-aside account under the DEC Rule at 1.5 million allowances annually through 2016.” In addition, the Public Service Commission “agreed to consider approval of a tariff amendment allowing Con Edison to pass through the costs of purchasing allowances [estimated at $2.6 million a year] to its ratepayers.” The settlement announcement suggests the pass through will ultimately be rate neutral because “NYSERDA has agreed in the Consent Decree to use a portion of the RGGI proceeds to fund energy efficiency programs in Con Edison’s rate territory, which such funds will be commensurate with the costs associated with Con Edison’s payment of allowance costs. . .”
EPA makes endangerment finding for greenhouse gases
In a bold move that attempts to force the Senate’s hand on climate change legislation, the U.S. EPA today announced a final rule that regulates greenhouse gases as an air “pollutant” under the federal Clean Air Act. In announcing the rule, Administrator Lisa Jackson justified the rule by stating that there is an overwhelming amount of scientific studies and evidence showing that greenhouse gas emissions are “deteriorating the natural balance in our atmosphere and hurting our climate.” EPA's decision to regulate greenhouse gases as a pollutant, however, has the potential to spin out of control, triggering other areas of the Clean Air Act, such as Prevention of Significant Deterioration and New Source Review standards, which could delay thousands of new construction projects nationally by imposing time-consuming and stringent permit requirements at a time of near historic unemployment.
In its 284-page final rule, EPA made the much disputed “endangerment” finding that current and projected concentrations of the mix of six key greenhouse gases -- carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulfur hexafluoride (SF6) -- in the atmosphere threaten the public health and welfare of current and future generations. EPA also finalized its “cause or contribute” determination under the Clean Air Act for greenhouse gases from new motor vehicles and motor vehicle engines by finding that these sources contribute to the atmospheric concentrations of greenhouse gases and hence to the threat of climate change. The final rule may be challenged in the U.S. Court of Appeals for the District of Columbia within 60 days of publication in the Federal Register.
EPA’s final rule is certain to pressure the Senate to act on climate-change legislation. The House of Representatives already passed the American Clean Energy and Security Act ("ACES," H.R. 2454, Waxman-Markey) bill by a very narrow margin in June, but the outcome in the Senate is uncertain with a number of Democrats and Republicans from key energy states opposed.
Environmental advocates challenge permit for Centralia coal plant
On November 2, EarthJustice filed a petition asking the EPA to block the renewal of an air pollution permit for TransAlta Corporation’s coal-burning power plant in Centralia, Washington. The Southwest Clean Air Agency (“SWCAA”) had renewed the permit on September 17, and on September 28, the Sierra Club and other likeminded groups appealed the renewal. The November 2 petition alleges violations of the federal Clean Air Act and state pollution laws. In particular, the petitioners oppose the permit because it does not contain emissions limits for greenhouse gases or mercury, and because it does not require the best controls for regional haze-pollution.
TransAlta Corporation bought the Centralia coal-burning plant in 2000. In efforts to reduce emissions, TransAlta invested in $200 million worth of “scrubbers.” However, the plant continued to offend environmental groups, as it was a primary source of carbon dioxide, mercury, and nitrogen oxide emissions. The petition claims that these emissions constitute air contaminants that are detrimental to human health and welfare, property, and business. In particular, the petitioners contend that the SWCAA has failed to provide for the control of carbon dioxide and mercury emissions, failed to provide for adequate control of nitrogen oxide emissions, and failed to require Reasonably Available Control Technology to control carbon dioxide and mercury emissions. The petitioners also claim that the permit does not adequately protect against haze-pollution over Mount Rainier, the Olympic and North Cascades National Parks, and other forest, wilderness, and recreational areas. These areas are designated Class I areas under the Clean Air Act.
The petitioners, which include the Sierra Club, National Parks Conservation Association, and Northwest Environmental Defense Center, also object to the permit because it does not integrate the terms of a settlement agreement reached in September 2009 between TransAlta and the Washington Department of Ecology. The agreement is a result of mediation over air quality disputes between the two entities. The key points of the agreement are TransAlta’s goals of: 1) decreasing nitrous oxide emissions by 20%; and 2) implementing technology to control and monitor mercury emissions. Although the petitioners would like this agreement to be part of the renewed permit, they also claim that the agreement itself is inadequate. On November 9, the last day of the public comment period on the agreement, they filed a letter seeking heightened restrictions, including a 90% (rather than 50%) reduction in mercury emissions.
Coal-fired plants are becoming an increasingly salient issue in climate law. The EPA has recently sided with environmental groups to block permits that fail to adequately address greenhouse gas emissions, but it remains to be seen whether this will become a common outcome in court.
US Chamber of Commerce, National Automobile Dealers Association Seek Review of EPA Decision Allowing States to Regulate Emissions
The US Chamber of Commerce and National Automobile Dealers Association (NADA) have filed a petition seeking review of the EPA’s decision to allow states to regulate automobile emissions. In a Nonbinding Statement of Issues filed Oct. 13, 2009, the two groups outlined the questions to be addressed by the United States Court of Appeals for the District of Columbia Circuit in their lawsuit challenging the EPA’s decision to grant California’s request for a waiver of federal Clean Air Act preemption. The waiver allows California to regulate vehicle emissions and other states to adopt those regulations. A decision adverse to the EPA would limit the ability of individual states to regulate greenhouse gas emissions but does not implicate EPA’s efforts to set national emissions standards. However, some industry watchers predict that this is just the beginning of a “hurricane of lawsuits” challenging climate-related regulations. New York and 16 other states have recently filed a motion to intervene on the side of the EPA.
Chamber of Commerce and NADA Challenge
In its challenge to the EPA decision to grant the waiver to California, the Chamber and the NADA raised six issues for the Court to decide:
- Whether the EPA erred in reconsidering and reversing the denial of California’s request to waive preemption for its greenhouse gas emission standards under Section 209(b);
- Whether the EPA erred in concluding that the California determination that its own gas emissions standards satisfy the Clean Air Act’s “protectiveness” standard was not arbitrary and capricious;
- Whether the EPA erred in not denying California’s waiver request because California did not meet the requirement of showing that its standards were needed to meet compelling and extraordinary conditions;
- Whether the EPA erred in not denying California’s waiver request because it was inconsistent with Section 202(a) of the Clean Air Act [which addresses “Emission standards for new motor vehicles or new motor vehicle engines”];
- Whether the EPA complied with procedural requirements of the Clean Air Act and Administrative Procedure Act in reversing its earlier decision; and
- Whether California is precluded from obtaining a preemption waiver for its greenhouse gas emission standards under the Energy Policy and Conservation Act of 1975.
States, Environmental Groups Intervene in Support of EPA
Seventeen states, led by New York, have moved to intervene in the lawsuit on the side of EPA. The other states are Arizona, Connecticut, Delaware, Illinois, Iowa, Maine, Maryland, Minnesota, New Jersey, New Mexico, Oregon, Rhode Island, Vermont, Washington, Florida, and Pennsylvania. The South Coast Air Quality Management District (California) also filed a separate motion to intervene in support of EPA and Administrator Jackson, as did the environmental organizations Environmental Defense Fund, Natural Resources Defense Council, the Sierra Club, and Environment California.
There has been no substantive briefing, but the EPA has filed a motion seeking an extension from the usual 30 days to respond to 90 days due to the complexity of the issues. The EPA previously stated that the decision to grant the waiver followed the law and was based on a comprehensive analysis of the science and that it is confident the courts will uphold the decision.
National Regulations
Earlier this year, the Obama administration reached consensus with the big three American automobile manufacturers on national regulation of greenhouse gas emissions from vehicles. On May 19, 2009, at a Rose Garden ceremony filled with representatives of major automobile manufacturers worldwide, President Obama announced that the EPA and National Highway Traffic Safety Administration will propose greenhouse gas emissions limits for cars and light trucks for model years 2012-16. The only way to reduce certain emissions is to increase fuel efficiency. Accordingly, the Administration’s proposal will require an average fuel economy standard of 35.5 mpg by 2016.
Then, on June 30, 2009, the EPA announced that it was reversing its decision under the Bush administration to deny California’s request for a waiver under the Clean Air Act. By reversing its decision and granting the waiver, the EPA is permitting California to enforce its own emission regulations. Fifteen states have already adopted the California plan. After 2011, compliance with the anticipated national regulations would satisfy the California standards, so assuming the national regulations are finalized in time, the waiver effectively allows states to impose regulations applicable to the model years 2009-2011. However, California could also impose more stringent restrictions after 2016.
The Chamber opposes such regulation because of the heavy burden it predicts will be placed on US businesses, and has previously attempted to slow or derail EPA regulation of greenhouse gas emissions under the Clean Air Act. The Chamber sought a hearing regarding the EPA’s decision to regulate GHGs under the CAA, and stirred controversy by characterizing the proposed hearing as a “Scopes monkey trial” on climate science. Some members have canceled their membership in the Chamber because of disagreement with the Chamber’s position on regulation of greenhouse gases. Meanwhile, advocates of increased regulation of greenhouse gas emissions have also excoriated the Chamber’s position on EPA regulations. Whatever their position, stakeholders on all sides of the issue will be closely watching the outcome of this lawsuit.
Kivalina global warming litigation dismissed on political question grounds
In a carefully watched case in the Northern District of California, Judge Saundra Brown Armstrong has issued a ruling dismissing the Kivalina climate change lawsuit on grounds that: (1) it raises a non-justiciable political question, and (2) plaintiffs lack Article III standing. In so doing, Judge Brown rejected the recent Second Circuit analysis in Connecticut v. American Electric Power Co., which held that the political question doctrine did not bar nuisance claims against major greenhouse gas emitters.
In the Kivalina case, the Native Village of Kivalina, Alaska filed suit against two dozen energy companies, attempting to recover at least $400 million in damages for public nuisance related to emissions of greenhouse gases that Plaintiffs alleged contributed to global warming and caused the sea level to rise, destroying parts of the village. In addition to the public nuisance claim, Plaintiffs also included novel conspiracy allegations, claiming that the defendants conspired to mislead the public about the causes and effects of global warming through industry-sponsored trade groups.
The Village of Kivalina, located in northwest Alaska, comprises about 1.9 miles and has approximately 399 residents. In this lawsuit, the villagers alleged that global warming caused the melting of Arctic sea ice which formerly protected the village from winter storms, and that the increased pace of the melting ice has caused erosion. The plaintiffs contend that, "if the entire village is not relocated soon, the village will be destroyed." Their complaint alleged that 24 oil, gas and power companies substantially caused this global warming and the resulting damage to the village. Plaintiffs sought hundreds of millions of dollars in damages to compensate the villagers and relocate the village.
On the political question issue, the Court considered the Second Circuit’s recent decision in AEP, which reversed a district court opinion dismissing a similar climate change suit on political grounds. The Second Circuit concluded that political question doctrine did not bar nuisance-based climate change litigation, given the judiciary’s history of dealing with “new and complex problems.” In the Kivalina decision, Judge Armstrong bluntly responded: “This court is not so sanguine. While such principles may provide sufficient guidance in some novel cases, this is not one of them.”
The Kivalina Court went carefully through each of the factors set forth in Baker v Carr, 369 U.S. 186 (1962), which establishes the standard for determining when an issue presents a non-justiciable “political question” that is best left to the executive and/or legislative branches of government.
The Court noted that the cases relied on to support plaintiffs’ claims involved a “discrete number of ‘polluters’ that were identified as causing a specific injury to a specific area.” In contrast, the Kivalina “global warming claim is based on the emission of greenhouse gases from innumerable sources located throughout the world and affecting the entire planet and its atmosphere.” (Emphasis in original.)
The Court also distinguished global warming claims from other nuisance claims based on the long chain of disconnected events from emission to alleged harm (a chain of events that would pose a significant hurdle for plaintiffs on causation where, as in AEP, the initial claims survive a motion to dismiss):
“[T]he harm from global warming involves a series of events disconnected from the discharge itself. In a global warming scenario, emitted greenhouse gases combine with other gases in the atmosphere which in turn results in the planet retaining heat, which in turn causes the ice caps to melt and the oceans to rise, which in turn causes the Arctic sea ice to melt, which in turn allegedly renders Kivalina vulnerable to erosion and deterioration resulting from winter storms.”
At bottom, the Court was unable to discern “judicially discoverable and manageable standards” to apply to plaintiffs’ claims, and noted that AEP, despite its holding, provided no guidance in this area. The Court concluded that “the allocation of fault—and cost—of global warming is a matter appropriately left for determination by the executive or legislative branch in the first instance.”
The Court separately found that plaintiffs lacked Article III standing given the “attenuated sequence of events” alleged in the complaint, and the inability to trace harm to a particular defendant’s emissions. The Court reasoned that, in this context, a discharge standing alone is insufficient to create a fairly traceable injury for Article III purposes.
The decision will likely be appealed to the Ninth Circuit Court of Appeals. Meanwhile, we still await a Fifth Circuit ruling in the appeal of the dismissal on justiciability grounds in Comer v. Murphy Oil, as well as the next steps in the AEP case following the Second Circuit’s reversal.
Public Citizen lawsuit seeks to require Texas Commission on Environmental Quality to regulate greenhouse gases
On Tuesday, the environmental group Public Citizen filed a lawsuit against the Texas Commission on Environmental Quality (“TCEQ”) seeking to require it to regulate carbon dioxide and other greenhouse gases. The lawsuit is believed to be the broadest attempt so far to force a state to control greenhouse gases through the permits granted by a state for power plants, refineries, factors, and similar industrial facilities. Public Citizen’s filing is most likely timed to coincide with Congress’ consideration of landmark climate change legislation and the December 2009 United Nations Climate Change Conference in Copenhagen.
Public Citizen’s complaint contains arguments similar to those successfully advanced in the 2007 Supreme Court decision Massachusetts v. EPA, in which the Court found that greenhouse gases, including carbon dioxide are air pollutants covered by the Clean Air Act and that the Administrator was required to determine whether emissions of greenhouse gases cause or contribute to air pollution which may reasonably be anticipated to endanger public health or welfare. The Public Citizen complaint makes additional arguments based on Texas law. For example, while the Texas Clean Air Act says the TCEQ shall regulate contaminants that threaten public health, safety and welfare “by all practical and economically feasible methods,” Public Citizen alleges that during permit disputes Texas rules bar any discussion of carbon dioxide or global warming and “block the collection of information about CO2 emissions in Texas – which are immense, increasing, and dangerous.”
Texas was poised as a prime target for Public Citizen as it apparently tops the list of states in man-made greenhouse gas emissions and would rank seventh in the world, if it were a separate country. Additionally, Texas Governor Rick Perry has hotly opposed regulating CO2 or other greenhouse gases either at the state or national level.
A ruling requiring regulation of carbon dioxide and other greenhouse gases would likely immediately impact ongoing disputes over new coal-burning power plants, the largest industrial source of CO2 in Texas.
According to Public Citizen, opponents to new coal-burning power plants in Texas have repeatedly been barred from raising legal arguments about the proposed plants’ CO2 emissions, with state administrative judges citing the lack of state or federal regulations. “The time has come for the TCEQ to take its head out of the sand and begin the process to regulate CO2 emissions from Texas sources. Because the agency will not do so on its own, we are seeking to have a Texas court order it to do so,” said Tom “Smitty” Smith, director of Public Citizen’s Texas office.
Petition asks EPA to regulate GHG emissions from "factory farms" under Clean Air Act
The Humane Society and a coalition of other environmental groups have filed a petition with the Environmental Protection Agency (EPA) that seeks to classify factory farms as a source of greenhouse gases and regulate them accordingly under the Clean Air Act. Petitioners allege that concentrated animal feeding operations (CAFOs) emit excessive amounts of methane and nitrous oxide, both greenhouse gases. According to the petitioners, these emissions are the result of farm animals being raised in small spaces in increasingly large numbers at a few facilities.
The environmental groups allege that reducing emissions of major pollutants from these CAFOs can improve human health, reduce suffering of farm animals, protect habitat for wildlife, and reduce the effects of climate change and other environmental problems. The petition contends that regulating air pollution from CAFOs will create an incentive for new CAFOs to reduce emissions through alternate means of production. A report by the Food and Agriculture Organization of the United Nations (FAO) found that animal farms were responsible for contributing 18 percent of all greenhouse gas emissions—more than even the transport sector.
Currently the EPA does not require that CAFOs meet any emissions standards under the Clean Air Act. However, some scientific surveys, including the US Inventory Report adopted by the EPA, establish that CAFOs meet the standards for regulation under section 111 of the Clean Air Act as a source that causes or contributes significantly to air pollution. Despite this evidence, agriculture maintains a strong constituency in Congress, including House Agriculture Chairman Collin Peterson (D-Minn.), who has been vocal about the need to exempt farms from new climate change legislation.
In addition the the Humane Society, petitioners include the Association of Irritated Residents; Center on Race, Poverty and the Environment; Clean Air Task Force; Dairy Education Alliance; El Comité para el Bienestar de Earlimart; Environmental Integrity Project; Friends of the Earth; and Waterkeeper Alliance.
US State Department sued over permit approval for "Alberta Clipper" tar sands oil pipeline
Four environmental and Native American advocacy groups have filed suit challenging the US State Department’s August approval of Enbridge Energy’s plans to build the Alberta Clipper tar sands pipeline. The pipeline would pump 450,000 barrels of tar sands oil per day from northern Alberta to Superior, Wisconsin for refining. In their complaint, the plaintiff groups claim that the State Department and the U.S. Army Corps of Engineers violated the US National Environmental Policy Act (NEPA) by failing to adequately analyze the indirect and cumulative impacts of the proposed pipeline. They further argue that the State Department’s approval was unconstitutional because Congress has not fully delegated its authority to regulate pipelines to the Executive Branch. Plaintiffs have requested preliminary and permanent injunctions to halt the construction of the pipeline.
The Alberta Clipper pipeline is planned to stretch 384 miles in the United States, running through Minnesota’s Chippewa National Forest and its Leech Lake tribal lands. Plaintiffs allege that the construction would impact over 200 water bodies and would destroy more than 1,200 acres of upland forested lands, more than 650 acres of open lands, and more than 1,300 acres of wetlands.
By approving the pipeline, the plaintiff groups allege that the State Department is overlooking the serious environmental, climate, and human health impacts of tar sands oil, the production of which results in three times more greenhouse gas emissions than that of conventional crude oil. Tar sands oil also contains eleven times more sulfur and nickel, six times more nitrogen, and five times more lead than conventional oil. Plaintiffs claim the approval decision is a departure from the Obama administration’s commitment to clean energy.
"This project will lock our nation into a dirty energy infrastructure for decades to come," said Sierra Club Executive Director Carl Pope. "Instead of increasing our reliance on oil and piping in pollution, the State Department should support clean, American energy and the jobs that come with it."
The complaint was filed on September 3, 2009 in the US District Court for Northern California. The suit names Secretary of State Hillary Clinton, Deputy Secretary James Steinberg and the US Army Corps of Engineers as Defendants. The plaintiff groups are The Indigenous Environmental Network, Minnesota Center for Environmental Advocacy, National Wildlife Federation and the Sierra Club. Plaintiffs are represented by the non-profit law firm Earthjustice.
Second Circuit reversal in Connecticut v. American Electric Power enables significant climate change litigation to proceed
In a long-awaited decision, the US Court of Appeals for the Second Circuit has reversed the district court's decision in Connecticut v. American Electric Power Co. (“AEP”), a public nuisance lawsuit filed by eight state attorneys general, the City of New York, and three land trusts against six electric power companies based on greenhouse gas emissions. District Court Judge Loretta Preska originally dismissed the lawsuit on the grounds that it presented non-justiciable political questions, finding that the case required “identification and balancing of economic, environmental, foreign policy, and national security interests” of a “transcendently legislative nature.”
The unanimous two-judge ruling (more on that below) vacated and remanded Judge Preska’s ruling, holding – in a hefty 139 pages – that:
“(1) Plaintiff-Appellants’ claims do not present non-justiciable political questions; (2) Plaintiffs-Appellants have standing to bring their claims; (3) Plaintiffs-Appellants state claims under the federal common law of nuisance; (4) Plaintiffs-Appellants’ claims are not displaced; and (5) the discretionary function exception does not provide Defendant-Appellee Tennessee Valley Authority with immunity from suit.”
The appeal was argued on June 7, 2006 before a three-judge panel that included then-Second Circuit Judge Sonia Sotomayor. The long delay in ruling emerged as a potential issue during Judge Sotomayor’s confirmation process. The decision notes that “[t]he Honorable Sonia Sotomayor, originally a member of the panel, was elevated to the Supreme Court on August 8, 2009. The two remaining members of the panel [Judges McLaughlin and Hall], who are in agreement, have determined the matter.”
In reversing the district court decision, the Second Circuit stated:
“Nowhere in their complaints do plaintiffs ask the court to fashion a comprehensive and far-reaching solution to global climate change, a task that arguably falls within the purview of the political branches. Instead, they seek to limit emissions from six domestic coal-fired electricity plants on the ground that such emissions constitute a public nuisance that they allege has caused, is causing and will continue to cause them injury.”
Plaintiffs complaint seeks abatement of defendant’s carbon dioxide emissions on the grounds that those emissions contribute to global warming, which, plaintiffs allege, constitutes a “public nuisance.” Further analysis of this significant ruling will be posted on the Global Climate Law Blog later today. Prior posts pertaining to this case can be accessed here.
Lawsuit targeting Dominion Virginia coal-fired power plant forces revised permit, but GHG emissions challenge unsuccessful
A recent victory for environmental activists in a lawsuit against Dominion Virginia Power may turn out to be less significant than it first appeared. The case, filed in Richmond Circuit Court by the Wise Energy for Virginia Coalition, challenged the Maximum Achievable Control Technology (MACT) permit granted to Dominion. The permit was to allow the construction of a coal-fired power plant in southwest Virginia. While the court invalidated the permit on the grounds that it allowed an escape hatch based on cost and feasibility in the mercury emission limits, the portions of the permit relating to greenhouse gas emissions, which were also challenged in the complaint, were found valid by the court. Subsequent to the ruling, on September 2, 2009, the Virginia Department of Environmental Quality approved an amended air permit for the plant, including stringent new mercury emissions limits without the objectionable escape hatch.
While lawsuits by environmental advocates have successfully delayed or derailed plans to construct new coal-fired power plants on several occasions recently, Dominion spokesman Dan Genest explained that they have no intention of abandoning plans to build the power plant in question, and noted that the recent decision, “upholds virtually all of the conditions in both air permits, which may be the most stringent in the country.” Key to continued building plans, the court upheld the Prevention of Significant Deterioration (PSD) permit which regulates conventional pollutants such as carbon dioxide and soot. This permit was sustained despite the coalition’s claim that the plant will emit 5.4 million tons of carbon dioxide yearly, an amount roughly equal to the annual carbon output of all of the cars in the metro Richmond area.
According to Cale Jaffe, an attorney for Southern Environmental Law Center, the mercury limit in the revised permit has been reduced from 72 pounds of mercury emissions per year, to just 4.5 pounds per year – a 94% reduction. Dominion Generation CEO David A. Christian said he thought the air permit might be “the toughest ever issued.”
Lawsuit alleges California's cap-and-trade plan fails to minimize GHG emissions
A lawsuit by several environmental advocacy groups against the California Air Resources Board (CARB) (09-509562) continues to wend its way through the San Francisco Superior Court, with a scheduled hearing on the Environmental Defense Fund’s motion to file an intervening complaint being the next step in the litigation. The complaint alleges that the agency’s plan fails to minimize greenhouse gas emissions and protect vulnerable communities, which contravenes the Global Warming Solutions Act of 2006 (AB 32). The complaint also alleges violations of the California Environmental Quality Act (CEQA).
The lawsuit has garnered significant attention because of its focus on an emissions trading program proposed by the agency. The lawsuit could be viewed as foreshadowing similar challenges to federally implemented cap-and-trade programs. Even if cap-and-trade and similar programs win the approval of mainstream environmental activists, they can still face major legal challenges by smaller groups.
The Association of Irritated Residents and similar groups allege that CARB chose an emissions trading program on the basis of political feasibility, and ignored data suggesting such programs do not reduce emissions and do not improve air quality. They also claim that CARB has failed to meet procedural review and public participation standards required under California law.
CARB has strongly disputed the allegations: according to CARB Chairman Mary D. Nichols, “Our process for developing the Scoping Plan was unprecedented in its openness and transparency, including many opportunities for substantive comment and interaction as the plan went through the draft process and through the final adoption.” She also noted that “Ironically, some of the plaintiffs sit on ARB's Environmental Justice Advisory Committee (established by AB 32) and enjoyed unparalleled access to ARB staff and board members throughout the plan preparation.” Nichols expressed concern over an attack on the emissions trading program in its early stages, writing, “Now is the time to begin focusing on mechanisms to assure that the program is designed to assure that the communities that are most negatively impacted by industrial pollution receive a proportionately greater share of the benefits, including direct co-benefits from cleanup of existing sources.”
Tennessee Valley Authority ordered by EPA to revise permit for coal-fired plant
The US Environmental Protection Agency has sided with environmental groups, including the Sierra Club and the Center for Biological Diversity, and ruled that a permit for a Tennessee Valley Authority coal-fired plant in Drakesboro, Kentucky failed to account for air pollution (specifically the greenhouse gas nitrogen oxide) in violation of the Clean Air Act. Parties have until October 9 to seek judicial review of the EPA’s order, or state regulators will have until October 27, 2009 to submit a revised permit in response.
In EPA Administrator Lisa P. Jackson’s order, she found that the permit issued by Kentucky’s Division for Air Quality for the 2,273 MW Paradise Fossil Fuel Plant failed to require pollution controls and monitoring for nitrogen oxide pollution. Specifically, in requiring the TVA to submit a revised permit application, Jackson said the current permit did not (1) include proper analysis for the plant's three boilers for NOX when making upgrades; (2) require adequate monitoring systems for opacity and NOX; or (3) provide adequate monitoring from soot emissions from the coal washing and handling.
However, on four other claims Jackson sided with Kentucky’s Division for Air Quality and TVA finding that the permit (1) should not require year-round operation of the selective catalytic reduction system and (2) should not include case-by-case determination of the maximum achievable pollution control technologies for several boilers.
According to TVA, the Paradise plant generates 14 billion kilowatt-hours of electricity a year, enough to supply more than 930,000 homes. By 2010, TVA estimates it will spend about $6 billion on emissions controls at its fossil-fuel plants to ensure that this power supply is generated as cleanly as possible, consistent with efficiency.
The Clean Air Act allows parties to seek judicial review of the order within 60 days of publication in the Federal Register. The notice of the final order was published in the Federal Register on August 10, 2009.
NYU Law School sponsors cap-and-trade petition; proposes market-based approach to controlling motor vehicle emissions
The Institute for Policy Integrity (IPI), a nonprofit advocacy think-tank organization at NYU School of Law, has filed a petition for rulemaking with Lisa P. Jackson, the Administrator of the EPA. The petition proposes a cap-and-trade system to control greenhouse gas emissions from fuels used in the transportation sector. The petition is apparently the first to address emissions from motor fuels. The comprehensive proposal encompasses emissions from motor vehicles, non-road vehicles, and aircraft. IPI emphasizes the benefit of a market-based approach to emissions control, as opposed to a “command-and-control” system. The petition reflects the IPI’s lengthy April 2009 report that assessed the EPA’s options for regulating greenhouse gas emissions.
IPI claims that EPA’s response is mandatory under Massachusetts v. EPA, in which the Supreme Court held that 1) greenhouse gases are “air pollutants”; 2) in responding to a petition, EPA responses must have “reasoned justification” or must “conform to the authorizing statute”; and 3) “The harms associated with climate change are serious and well recognized.”
In its petition, IPI requests that the EPA first, make a positive endangerment finding, and second, propose and finalize regulations, pursuant to its “ample authority” under the Clean Air Act, in particular Sections 211 (motor vehicles) and 231 (aircraft). Notably, the EPA recently proposed such a finding for emissions from new motor vehicles.
The IPI espouses a system that creates market-based incentives that allow the market to naturally find the most cost-efficient way to reduce emissions. Because a command-and-control system would prescribe the particular conduct for many actors, IPI claims that this would impose costly requirements on the transportation sector. However, cap-and-trade would allow businesses to adhere to the Clean Air Act, while finding ways to comply at the lowest possible cost. IPI also notes the transparency of this system, and the possible benefits for international trade. A key feature of the proposed system is that allowances are auctioned off, as opposed to a permit give-away system. In short, the emissions cap will raise the cost of fuel, which will send a price signal to conserve and switch to cleaner fuels. According to IPI, the revenues from auctions will offset the price increase, prevent harm to the middle class, and avoid windfall corporate profits.
IPI emphasizes that this comprehensive approach will prevent the EPA from addressing individual petitions piecemeal. Also, IPI warns of a “collision course” with Congress, noting that Congress will likely pass broad cap-and-trade legislation that would supersede any command-and-control mechanisms that EPA creates. In fact, on June 26, the House passed the American Clean Energy and Security Act of 2009 (ACES), which establishes a cap-and-trade system for stationary sources. The IPI therefore claims that its proposed regulations would prevent EPA from wasting time and resources on new command-and-control regulatory measures.
Climate change and corporate responsibility: are there long-term financial incentives for environmental reform?
The Canadian Institute of Chartered Accountants (“CICA”), through its Risk Management and Governance Board, has commissioned a briefing entitled “Climate Change Briefing: Questions for Directors to Ask”. The stated purpose is to “increase awareness among Canadian directors about the business impacts and related governance issues resulting from climate change.” The result is a guide that focuses on business strategy, risk management, and structure.
The briefing addresses five major areas for director improvement: understanding of business issues; influence on risk management and strategy; impact on financial performance; external communications and disclosures; and the adequacy of information systems and internal controls. For each of the sections, the briefing provides relevant questions for directors to ask themselves regarding their business.
One area that warrants emphasis is the idea that, for businesses that are faring poorly in the current economy, cutting back is not necessarily the answer. In fact, scaling back environmental reforms in the short run may lead to larger costs in the long run. Therefore, the CICA advocates investing now in changes such as waste reduction and energy efficiency. The thought is that these changes will lead to greater performance and shareholder value in the future.
The briefing also discusses business response to government regulations. The CICA notes that government regulations put “a price on carbon,” so businesses must ensure reliability of information such as greenhouse gas emissions. The briefing describes “adaptation” and “mitigation” measures, the latter of which requires management to reduce greenhouse gas emissions that are attributable to its products. This issue of tracking the climate impact of particular products most recently came to light when Wal-Mart announced its “sustainable products index” initiative, which requires suppliers to provide information about the environmental impacts of their products.
The CICA briefing recognizes that climate change creates reputational and financial issues for businesses, and is “inextricably linked” to concerns such as shareholder value. The briefing is geared toward maintaining the support of “corporate stakeholders,” which range from investors to customers, communities, and governments. However, it is impossible to predict when companies can expect to see the success of forward-looking investments. Therefore, businesses are going to have to balance surviving the economic downturn and the risk of investing in future success.
Despite lack of regulation, power plant permit applicant voluntarily agrees to limit greenhouse gases
On June 23, 2009, the Bay Area Air Quality Management District (BAAQMD) released for public comment a revised draft Clean Air Act permit for the Russell City Energy Center power plant, which – apparently for the first time ever – includes limits on the emission of greenhouse gases. Taking on what some might consider an unnecessary legal obligation, Calpine Corporation, majority owner of the plant to be built in Hayward, CA, agreed to limit heat input and mass emissions of carbon dioxide (CO2), methane (CH4), and nitrous oxide (N2O), expressed as “CO2-equivelents” (CO2E).
In a written statement, Calpine’s president and CEO states that “The combined-cycle technology allows us to commit to lower emissions while increasing efficiency – meaning we use less natural gas and emit fewer greenhouse gases while delivering more power to our customers and ultimately the American consumer.” This may well reflect Calpine’s “long-term commitment to environmental stewardship,” but a strong case can also be made that Calpine simply made a smart business decision by recognizing that the Environmental Appeals Board will no longer pass on any power plant permit that fails to limit greenhouse gas emissions.
The permitting of a power plant has for decades been an expensive, time-consuming, and extremely uncertain endeavor. Recent developments in administrative law, legislative proposals, growing public concerns about global climate issues, and a new administration have combined to create a sea of change. This may well explain why a large, sophisticated power generator would voluntarily assume unprecedented regulatory obligations.
New power plants must obtain a Clean Air Act permit under the EPA’s “prevention of significant deterioration” (PSD) rulemaking. PSD requires that “best available control technology” (BACT) be applied to control emission of air pollutants. In recent years the environmental community has attempted to require permitting authorities to limit greenhouse gas emissions under PSD permits. As part of this effort, in November 2008, the Environmental Appeals Board (EAB) reviewed the appeal of a PSD permit issued by the EPA, Region 8 in In re: Deseret Power Electric Cooperative. In Deseret, the Sierra Club argued that Region 8 had erred by failing to apply BACT to CO2 emissions from the permit granted for a waste-coal-fired electric generating unit proposed for a power plant near Bonanza, Utah. Asserting that the US Supreme Court had determined that CO2 was an “air pollutant” within the meaning of the Clean Air Act in Massachusetts v. EPA, the Sierra Club argued that the power plant permit violated the requirement to include a BACT emissions limit for “each pollutant subject to regulation under the Clean Air Act.” In a dense decision, the EAB determined that Region 8 was not bound by prior agency interpretations of PSD regulations, and on that basis remanded the permit so that Region 8 could develop a record for the decision to not apply BACT requirements to CO2 emissions. The EAB suggested, however, that it would be best if the EPA provided overarching guidance, rather than require each PSD permitting authority to consider anew the question whether greenhouse gas emissions required regulation in the context of discrete PSD applications.
In response to Deseret, a month before President Obama’s inauguration, the EPA issued a memorandum entitled “Interpretation of Regulations that Determine Pollutants Covered by Federal Prevention of Significant Deterioration (PSD) Permit Program” (the “PSD Memo”). In the PSD Memo, the outgoing Administrator of the EPA determined that air pollutants, like CO2, that had only been subject to monitoring and reporting requirements should not be considered in the PSD program. Moreover, although noting the substantial public interest in global climate issues, by framing the PSD Memo as an “interpretation,” the Administrator avoided the public participation process that rulemaking requires.
The environmental community promptly sought reconsideration of the PSD Memo and, shortly after President Obama’s inauguration, the EPA’s new Administrator granted reconsideration and opened the issue to public comment. At the same time, however, the EPA “decline[d] to take action to stay the effectiveness of the [PSD Memo] at this time.” In doing so, Lisa Jackson, the Obama administration’s new head of EPA, emphasized that the PSD Memo did not bind any state permitting authorities that issue permits under State Implementation Plans and that, in light of the grant of reconsideration, “other PSD permitting authorities should not assume that the [PSD Memo] is the final word on the appropriate interpretation of Clean Air Act requirements.”
Two subsequent events are worth noting: On April 17, 2009, the EPA released for public comment the Proposed Endangerment and Cause or Contribute Findings for Greenhouse Gases under Section 202(a) of the Clean Air Act, in which it proposed finding that greenhouse gases are air pollutants subject to regulation under the provisions that govern motor vehicle emissions. The EPA emphasized, however, that its endangerment finding proposal, “as well as any final action in the future, would not itself impose any requirements on industry or other entities. An endangerment finding under one provision of the Clean Air Act would not by itself automatically trigger regulation under the entire Act.” In other words, simply because the EPA intends to regulate vehicle emissions of greenhouse gases does not mean that stationary source emissions of greenhouse gases will be regulated under the Clean Air Act. Nevertheless, several weeks later the EPA voluntarily asked the EAB to remand a permit for the Desert Rock Energy Facility in New Mexico so that it could apply BACT to greenhouse gas emissions.
Against this rather complicated background, Calpine’s decision to voluntarily agree to limit greenhouse gas emissions makes sense, as it had already decided to employ the most energy efficient, commercially available generating technology that would meet the power generating needs of the project. Doing so, however, is apparently unprecedented: According to BAAQMD, “no facility the Air District is aware of has ever been subject to an enforceable BACT limit on its emissions of greenhouse gases; nor has any facility, to the Air District’s knowledge, been subject to an enforceable limitation on its efficiency (heat rate per kW-hr of power output).”
One might expect such environmental gains to moderate the opposition of the environmental community. Not so: Opposition to the proposed Russell City Energy Center remains undeterred. According to Brian Bateman, BAAQMD’s Director of Engineering, the Air District expects the final permit will be appealed to the EAB. For environmentalists, one major remaining concern is the level of NOX emissions. Even if an EAB appeal failed to remand a final permit for NOX emissions limits, the delay could be enough to ensure that pending legislation – which in its present form requires major stationary sources of NOX to obtain offsets – would apply. In such an uncertain regulatory and economic climate, the one certainty that seems to exist is opposition to new power plants.
American Clean Energy and Security Act (H.R. 2454) passed by House
“To create clean energy jobs, achieve energy independence, reduce global warming pollution and transition to a clean energy economy.” Bill # H.R.2454
Today the House of Representatives debated and passed (219-212) the American Clean Energy and Security Act of 2009 (H.R. 2454, ACES), which is intended to radically redefine the way the United States uses and pays for energy. The Waxman-Markey climate change legislation centers on a renewable electricity standard, encouraging the use of renewable energy, and a cap-and-trade policy. The bill establishes a cap-and-trade system regulating carbon dioxide emissions, in which emitters will be allowed a certain allotment of permits and will be able to sell unused permits or buy more as needed.
Highlights of the American Clean Energy & Security Act include:
- Targets reduction of greenhouse gases by 17 % from 2005 levels by 2020 and 83 % by 2050 through cap-and-trade;
- Caps emissions from major industrial sources, including power plants, factories, refineries and electricity and natural gas distributors.
- Emissions from agriculture not capped.
- Places limits on carbon dioxide emissions from fossil fuel use, and six other greenhouse gases;
- Includes offset allowances to permit companies to meet emissions targets by investing in things such as tree planting and forest protection;
- Requires electric utilities to produce at least 12% of power from renewable sources such wind and solar by 2020; requiring as much as 8% in energy efficiency savings;
- Imposes stricter performance standards on new coal-fired power plants and provides $1 billion a year to fund carbon capture for such plants;
- Requires new buildings to be 30% more energy-efficient by 2012 and 50% more efficient by 2016;
- Provides for energy rebates for consumers and credits to low-income households (intended to offset anticipated increases in energy costs).
To build broader support for the bill, its chief sponsors, Democratic Representatives Henry Waxman (D-CA) and Edward Markey (D-MA), agreed during the past month to reduce the bill’s environmental mandates and increase aid to greenhouse gas emitters, including coal-fired power plants in order to help companies meet the measure’s emission regulations.
The House rejected Rep. Randy Forbes' (R-VA) substitute bill amendment, the only Republican amendment to clear the Rules Committee. Had the amendment passed, it would have replaced the current version of the bill with Forbes' proposals for the US to reach 50% energy independence in 10 years and 100% in 20 years.
Check back later with www.GlobalClimateLaw.com for additional updates and analysis.
Desert Rock power plant owner challenges EPA request to remand permit in order to consider requiring technology to control GHG emissions
On June 11, 2009 owners of the Desert Rock Energy Facility – a new 1500 megawatt coal-fired power plant on the Navajo Nation tribal reservation in New Mexico – argued to the EPA Administrative Appeals Board that the agency will violate the Clean Air Act if it is allowed to consider requiring the plant to use low-carbon-dioxide gasification technology.
On April 27, 2009, the EPA asked the Environmental Appeals Board (EAB) for a voluntary remand of the permit in order to provide the EPA an opportunity to consider requiring integrated gasification combined cycle technology (IGCC) as best available control technology (BACT) at the Desert Rock plant. Specifically, the EPA has said that it is reconsidering the Bush administration's stance that the Clean Air Act’s prevention of significant deterioration (PSD) provisions do not apply to greenhouse gas emissions. According to Desert Rock, the EPA’s remand request violates Section 165(c) of the Clean Air Act, which requires the EPA to grant or deny a PSD permit within a year of filing the permit request by the applicant. Also, EPA regulations (40 C.F.R. Part 124) prohibit EPA from withdrawing a permit after the EAB has granted a petition for review.
The EPA originally issued a permit for the Desert Rock facility on July 31, 2008 – just one day before the deadline negotiated between the EPA and Desert Rock due to litigation over the EPA’s delay. Under the Bush administration, the EPA did not consider carbon dioxide emissions under PSD, which requires new and modified plants that increase emissions to use BACT to control emissions. Under the Obama administration, however, the EPA is seeking to regulate greenhouse gas emissions via the Clean Air Act, including consideration of greenhouse gas emissions under PSD.
Proponents of the EPA’s request to remand the permit argue that the EPA should be allowed to take back the permit and consider it in light of the new information regarding IGCC and the agency’s new approach to PSD and controlling carbon dioxide emissions. Environmental groups also have argued to the EAB that Desert Rock's lawsuit regarding alleged delay in issuing the PSD permit forced the EPA to issue the permit before the review was complete.
Those in favor of reinstating Desert Rock’s permit counter that the EPA’s ability to rescind a previously issued permit under these circumstances has serious ramifications. On June 11, 2009, Desert Rock filed its opposition to the EPA’s voluntary remand. “The matter now before the Board is unprecedented,” argued Desert Rock Energy Co. in its brief filed with the EAB. “Although it arises in the context of a challenge to a Clean Air Act permit, the Board's decision in this case will reflect on the integrity of EPA as an institution and its respect for basic notions of fairness and due process.”
Desert Rock argues that the EPA is trying to apply rules that do not yet exist to a permit that has previously been issued, which it describes as arbitrary and capricious. As such, Desert Rock argues that the EPA is seeking to bind Desert Rock today to the prospective change in the agency’s energy policy of tomorrow. And according to Desert Rock, the EPA is seeking to change long-standing agency positions without public notice and comment. Finally, Desert Rock asserts that if the EAB grants the EPA’s request for a voluntary remand of the permit, it would effectively be withdrawing Desert Rock's PSD permit without hearing or review, in violation of due process.
In addition to the EPA’s reputation, the due process concerns, and the potential Clean Air Act violations, Desert Rock is concerned about the financial investment and economic risk to the Navajo people. Argued the power plant’s owner, “At immediate stake are the millions of dollars already invested in the Desert Rock Project, hundreds of millions of dollars in revenue and thousands of jobs for the Navajos, and a reliable source of energy for an area of the country that desperately needs it.”
On June 22, 2009, the appeals board issued an order granting the EPA’s request to file a reply brief to Desert Rock’s June 11th opposition. The EPA’s reply is due to the appeals board no later than June 29, 2009.
Sotomayor climate change case just one of three stalled global warming appeals
In January we commented on three pending appeals with significant implications for tort-based climate litigation. In Friday’s National Law Journal, Marcia Coyle notes that Supreme Court Nominee Sonia Sotomayor is the presiding judge on the Second Circuit panel that heard the appeal in Connecticut v. American Electric Power Co., Inc. (AEP). In AEP, District Court Judge Loretta Preska dismissed the public nuisance case brought by 8 state attorneys general against 5 power companies based on the companies’ greenhouse gas emissions. The court held that the case was non-justiciable because it required “identification and balancing of economic, environmental, foreign policy, and national security interests” of a “transcendently legislative nature.”
Judge Sotomayor’s Second Circuit panel heard oral argument in AEP in June 2006. While Coyle’s NLJ article described the wait for a decision as a “mystery,” it is noteworthy that appellate decisions are also long awaited in Comer v. Murphy Oil Co. and California v. General Motors Corp., both of which also involved lower court dismissals on political question grounds (among others).
Comer is a putative class action against insurance, oil, coal and chemical companies in which plaintiffs alleged that emissions contributed to climate change and thus magnified adverse weather events, including Hurricane Katrina. Comer was docketed in the Fifth Circuit (07-60756) in September 2007 and the appeal was argued on November 3, 2008.
In California v. General Motors, California sued six of the major automakers for allegedly “creating, and contributing to, an alleged public nuisance – global warming.” The district court dismissed the case in September 2007. The appeal was docketed in October in the Ninth Circuit (07-16908) in October 2007. Briefing was completed in August 2008 and oral argument was scheduled for May 8, 2009, but California requested a six month continuance of the argument which was granted on April 6, 2009.
Links to the decisions and appellate briefs in AEP, Comer and General Motors can be found in our earlier post on pending appeals.
In the time these cases have been pending, we have seen a Supreme Court decision that considered EPA’s authority to regulate greenhouse gas emissions, a change in administrations, a changing legislative and regulatory landscape on climate issues (including a proposed EPA endangerment finding), and a change in US involvement in international climate discussions. But with all this change, the “identification and balancing of economic, environmental, foreign policy, and national security interests” described by Judge Preska still looms on a global scale.
California court rules Wal-Mart's failure to consider greenhouse gas impact significant renders environmental impact report inadequate
Wal-Mart’s plans to build a “supercenter” near Joshua Tree National Park have been put on hold pending revisions of the Environmental Impact Report (EIR) submitted by the company. In a lawsuit filed by the Center for Biological Diversity (CBD), a California Superior Court Judge last week ruled that Wal-Mart’s EIR was inadequate because it failed to consider the greenhouse gases (GHGs) that the project will generate as a significant environmental impact. The ruling prevents Wal-Mart from proceeding with its plans unless and until the lead agency (the City Council of the Town of Yucca Valley, CA) revises the EIR to include a discussion of GHG impacts and mitigation measures.
The ruling is notable for several reasons:
First, it reflects a growing willingness of judges to consider the potential cumulative environmental impacts of building-related GHGs, even though such impacts are not localized and may have a time-lag of decades. As a result, courts are concluding that the potential for significant adverse impact on the environment must be addressed under laws, like CEQA, that require comprehensive environmental impact study by an agency with jurisdiction to approve project entitlements. The California Attorney General’s web site summarizes much of the political and regulatory activity in California about this movement.
Second, the ruling reflects increasingly active efforts by state attorneys general and public interest groups, such as the CBD to pressure local agencies to include mitigation of GHGs in the land-use permit process. In Ann Arbor, Michigan, for example, the mayor and city council were recently notified of a potential lawsuit by the Great Lakes Environmental Law Center and National Resources Defense Council (NRDC) challenging the city’s plans for an underground parking garage under the Michigan Environmental Policy Act (MEPA).
Third, it is further evidence that concerns about global climate change have become, and are becoming more and more mainstream in litigation.
Consultants, attorneys, and project sponsors should recognize that in more and more jurisdictions a proactive approach to GHG emissions and carbon footprint mitigation measures may be a critical factor in avoiding project delay. A project sponsor that is not prepared to address these issues may provide an attractive unifying issue for project opponents – and generate unnecessary bad publicity – even under current economic conditions.
It is ironic that Wal-Mart, which has been widely praised for being a leading proponent of the corporate sustainability movement, was tagged in this case for “ben[ding] over backwards to avoid incorporating cost-effective features like solar panels to reduce its carbon footprint,” according to the press release issued by the CBD. Project sponsors that are willing to address sustainability issues, including GHG impacts, at the outset of the entitlement process will have a greater likelihood of obtaining approvals without incurring the costs and delays associated with litigation.
CBD lawsuit challenges Obama's new fuel economy standards
The Obama administration recently announced new fuel economy standards, which would push average fuel economy requirements to 27.3 mpg for all vehicles. This represents only a 7% increase from 2010. Under the new regulations, passenger cars would have to reach 30.2 mpg and light trucks 24.1 mpg. This modest change was not enough for environmental group the Center for Biological Diversity (CBD), which has challenged the requirements by filing a lawsuit against the National Highway Traffic Safety Administration (NHTSA) and the Department of Transportation in federal court.
CBD has asked the Ninth Circuit to find that the administration violated the Energy Policy and Conservation Act which requires that miles-per-gallon standards be set at the maximum feasible level. The CBD alleges that the Obama rule is much lower than current standards in Europe, Japan, China, and other countries, and is thus clearly not at the maximum feasible level.
According to the CBD, the standards are actually weaker than those proposed in 2008 by the Bush Administration. The lawsuit alleges that Obama administration officials used the same mathematical formula as the Bush administration and minimized the cost of carbon emissions. As a result of this decision, the Department of Transportation found that increasing gas mileage, to the extent now technologically and economically practical, would not reduce global warming. The transportation sector currently accounts for about one third of US greenhouse gas emissions.
Kassie Siegel, the director of the organization’s climate law project, stated, “These low standards, which ignore greenhouse gas emissions and the climate crisis, are illogical, illegal, and very disappointing from a president who has promised to make the United States a leader in the fight against global warming.” Deborah Sivas, director of the Environmental Law Clinic at Stanford Law School, who is representing the Center in the case, further commented, “The Obama standards keep the US in last place when it comes to fuel economy. This lawsuit will force the administration to live up to its promise to lead the way in technological innovation and greenhouse gas reductions.”
The current lawsuit echoes one brought in 2007 by the CBD that challenged the Bush administration’s 2006 fuel economy standards. The group was victorious in that lawsuit, in which the Ninth Circuit held that the Bush administration's fuel standards were invalid for light trucks and SUVs for the 2008 through 2011 model years.
EPA's Proposed new National Renewable Fuel Standard (RFS-2) - the end of corn-based ethanol?
*Co-authored with Amy Garber.
The Obama Administration proposed new standards for biofuels this week, triggering a searing debate between ethanol supporters and the Environmental Protection Agency (EPA) over the scientific assumptions on how to consider the effect of indirect land use changes when evaluating greenhouse gas (GHG) reductions from biofuels. If finalized, the rule could cost the grain ethanol industry billions and ultimately give advanced biofuels a clear economic lead over biofuels produced from corn and other grain.
On May 4, EPA released its proposed revision to the National Renewable Fuel Standard (RFS-2) that establishes new volume requirements for biofuels which must be used in transportation fuels each year to meet the requirements of the 2007 Energy Independence and Security Act (EISA). Included for the first time in an RFS rulemaking is EPA’s required estimate of the “life-cycle greenhouse gas emissions” that various classes of biofuels (renewable fuel, advanced biofuel, biomass-based biofuel and cellulosic biofuel) emit from production through end use. These lifecycle estimates are economically vital to biofuel producers because the RFS-2 volume mandates can be met only through the use of those renewable fuels that meet lifecycle GHG reduction thresholds when compared to the baseline lifecycle emission of petroleum fuels. At controversy is the particular impact that EPA’s proposal will have on the production of grain-based ethanol. The RFS-2 proposes that because of international indirect land use changes corn and other grain ethanol produce weak GHG emission reductions, particularly when compared with second-generation biofuels.
The dispute arises over whether using corn-based ethanol will have a deleterious effect on carbon emissions. In estimating emissions EPA has calculated indirect emissions from international “land-use” changes due to the impact of domestic corn based ethanol production on US food production. According to EPA, these impacts will cause increased GHG impacts due to the destruction of forests and savannahs in countries like Brazil for crop production. Thus, EPA’s concept of indirect land-use analysis foresees higher domestic food prices, destruction of rainforests to create more food, and consequently, more carbon dioxide released. EPA is not the only governmental entity to rely on indirect land-use analysis to regulate GHG emissions. California has taken the lead in implementing a new low carbon fuel standard, based on the indirect land-use analysis, which the ethanol industry says already makes it difficult to sell grain-based ethanol in the state.
Ethanol supporters are fighting back. During hearings yesterday in the House Subcommittee on Conservation, Credit, Energy and Research lawmakers from both parties lashed out at the proposed rule saying it would hinder development of a biofuel industry. Notably, Rep. Collin Petersen (D-Minn), Chairman of the House Agriculture Committee, commenting on the EPA action declared that he would no longer support climate legislation “because I don’t trust anybody anymore.” Gen. Wesley Clark (Ret), Co-Chairman of Growth Energy, an ethanol trade group, said “We don’t think the theory of indirect land use will hold up” – “It’s unfairly applied only to ethanol.”
Meanwhile, other scientific studies counter EPA’s analysis. One large study suggests that these indirect effects are not as large as the EPA and California are making them out to be. A recent study by AIR, Inc. demonstrates that the indirect land-use affects of corn-based ethanol are negligible. The Renewable Fuels Association (RFA) estimates that without using the “unproven assumptions” of international land use changes, corn ethanol provides a 61% reduction of GHG emissions when compared with petroleum fuels.
The Obama Administration appears to be playing “good cop/bad cop” with corn ethanol. On the one hand, President Obama formally announced Tuesday the formation of a “Biofuels Interagency Working Group” within the Administration “in order to shepherd our Nation’s development of this important industry…” On the other hand, EPA has provided the proverbial slap in the face to the grain ethanol industry through its international land use change approach to assessing indirect GHG emissions. The Administration’s position is probably best inferred from Administrator Lisa Jackson’s statement in announcing the RFS-2 proposed rule when she referred to corn ethanol as only a “bridge to the next generation of biofuels.” In making this statement, she may be merely echoing the sentiment of financial analysts. The Washington Post reported on Wednesday that the global chief of asset management for Deutsch Bank referring to corn ethanol stated that “converting photosynthesis into transport fuel is very inefficient…the world has moved on.”
EPA has provided a 60-day comment – period from the date of Federal Register publication on the RFS-2 rulemaking proposal.
Energy companies settle Clean Air Act claims by agreeing to spend $6M on pollution reducing technology
Six energy companies have agreed to spend nearly $6.4 million to install pollution reducing technology to settle claims that they violated the Clean Air Act. Lawyers with the Department of Justice filed the proposed consent decrees with the federal district court in Salt Lake City on Friday, April 17th. While not admitting to any Clean Air Act violations, the companies also agreed to pay a combined $632,000 in civil penalties.
The companies, Bill Barrett Corp.; Miller, Dyer & Co.; Whiting Oil and Gas Corp.; Wind River Corp.; XTO Energy Inc.; and Dominion Exploration and Production, Inc., operate natural gas production facilities including wellheads, pipelines, and compressor stations on remote parts of the Uintah and Ouray Indian Reservations in Utah. According to complaints filed by the Justice Department concurrently with the proposed consent decrees, the companies violated the CAA by exceeding emissions standards for hazardous air pollutants, failing to monitor and report those emissions, and failing to obtain proper permits in connection with their natural gas production operations.
The EPA estimates that the pollution control technology mandated by the settlements will reduce air pollution by more than 1,300 tons per year including a reduction in greenhouse gases equivalent to taking 7,600 cars off the road. The EPA also claims that the settlement will conserve enough natural gas to heat approximately 1,080 homes annually.
According to a spokesman for the Justice Department’s Environmental and Natural Resources Division, the settlements “not only obtain compliance with the law and control emission sources, but will reduce greenhouse gas emissions and bring more natural gas to the marketplace.”
The consent decrees will be subject to a 30 day public comment period before they are finalized. Proposed Consent Decree, 74 Fed. Reg. 19,984 (Apr. 30, 2009).
EPA seeks remand of Desert Rock coal fired power plant permit to consider gasification technology as BACT
Despite granting a permit for the proposed Desert Rock coal fired power plant in New Mexico less than a year ago, the US Environmental Protection Agency (“EPA”) recently moved its Environmental Appeals Board (“EAB”) to remand the permit to allow the EPA to reevaluate its decision. In particular, the EPA wants to consider requiring the plant, which would be built by Desert Rock Energy Co., to use low-carbon dioxide gasification technology. The technology gasifies coal before it is burned, resulting in lower carbon dioxide emissions than conventional coal burning technology.
The EPA’s move appears to be the latest example of a shift in policy at the agency regarding carbon dioxide emissions. The EPA under the Bush administration did not generally seek to regulate carbon dioxide. Indeed, the EPA refused to consider the plant’s potential carbon dioxide emissions during the original permitting process last year. The EPA under the Obama administration, on the other hand, has been actively seeking to regulate greenhouse gases such as carbon dioxide. In the future, the EPA is expected to reverse its former policy on power plants such as the proposed Desert Rock plant and require them to consider carbon dioxide emissions as part of their prevention of significant deterioration (“PSD”) permit applications.
Proponents of the proposed Desert Rock power plant on the Navajo Indian Reservation in northwestern New Mexico claim it will generate $50 million a year in revenue and bring badly needed jobs to a reservation that faces massive unemployment rates. Opponents of the Desert Rock plant, including environmental groups and the state of New Mexico, have argued that the plant, which would be the third coal fired power plant in the region, will damage the region’s air quality and the health of its residents.
The EPA’s request is also the latest in a series of setbacks for proposed coal fired power plants across the country. Earlier this year, under pressure from environmental groups, the Southern Montana Electric Generation & Transportation Cooperative announced that it would not build a coal fired power plant as planned. Instead it now plans to build a natural gas fired plant along with a few wind towers. In Kansas, Sunflower Electric Power Corp. has taken to the courts to fight the state’s denial of its application for an air quality permit for two coal-fired plants in western Kansas.
California passes Schwarzenegger's Low Carbon Fuel Standard
On Thursday California Air Resources Board (“CARB”) adopted a regulation implementing Governor Schwarzenegger's Low Carbon Fuel Standard (“LCFS”) making it the first state in the nation to mandate carbon-based reductions in transportation fuels. This “new low-carb” standard hopes to officially slash from California’s diet the greenhouse gas emissions blamed for climate change. Specifically, the new standard is expected to significantly reduce the state’s carbon emissions waistline by trimming California transportation fuels by 10% and replacing 20% of the petroleum fuels burned by California cars by the year 2020. The new low-carbon standard was recently proposed as part of the implementation of the California Global Warming Solutions Act (AB 32).
Said CARB Chairman Mary Nichols after the vote, “The new standard means we can begin to break our century-old dependence on petroleum and provide California with greater energy security.”
The passage of the Low Carbon Fuel Standard is being touted by CARB as good not only for the environment, but for California’s economy as well. Said Nichols, “(This) will be a boon to the state's economy and public health — it reduces air pollution, creates new jobs and continues California's leadership in the fight against global warming.” CARB projects that 25+ new biofuel facilities will be required to produce the estimated 1.5 billion gallons of biofuel needed, and will create 3,000+ new California jobs, mostly in the state’s rural regions.
California is joining private sector and federal investment to provide funding for projects developing and deploying low carbon fuels. For example, the California Energy Commission’s Alternative and Renewable Fuel and Vehicle Technology Program, will provide some $120 million dollars per year over seven years to deploy the cleanest fuels and vehicles. California investors and developers of alternative fuels are poised to benefit greatly according to Bob Epstein, co-founder of Environmental Entrepreneurs, whose 500-member California business organization supported the new standard. Transportation fuel is “a multibillion-dollar market in California that is currently exclusively owned by the oil companies, and they're going to lose their exclusive franchise,” said Epstein.
The “new low-carb” fuel standard could impact the Obama Administration’s ever evolving plan regarding the overall transportation industry. Said Nichols, “By changing the way we think about fuels and requiring them all to be lower carbon, I think we are now finally creating an opportunity for other types of advanced transportation to compete on a level playing field.”
Obviously, not everyone is pleased with the regulation’s passage. Businesses and oil industry critics warn that research is incomplete and that the Board’s adoption of the new standard could lead to higher costs borne by consumers in an already troubling economy. Bob Dinneen, President and CEO of the Renewable Fuels Association expressed disappointment and found the Board's decision premature, but said he “remains confident that the formation of the expert work group will result in a more balanced and fair assessment of the indirect greenhouse gas effects of all fuels.” According to RFA, “Adopting this standard sets a dangerous precedent about the application of unproven science to industries across the country. This standard is based on flawed analysis and selectively enforced penalties against biofuels only. In unfairly penalizing ethanol, ARB is relegating California to more petroleum use as biofuels are the only viable alternative liquid fuel.”
Catherine Reheis-Boyd, executive director of the Western States Petroleum Association lobbying group, which did not support the new regulation, argues that currently there are not enough biofuels available to meet the demands of the new regulation. In this regard, petroleum producers did get one major concession: they will be permitted to gradually reduce the carbon content of their fuels over several years to reach the 10-percent reduction.
Obama administration ups the ante for climate change legislation by proposing regulation of greenhouse gases under the Clean Air Act
The US Environmental Protection Agency (EPA) made a game-changing move last Friday in the policy debate over climate change. EPA declared in a proposed rule released on April 17 that greenhouse gases endanger human health and welfare and that greenhouse gas emissions from new motor vehicles and new motor vehicle engines contribute to climate change. The proposal is the Obama Administration’s response to the 2007 US Supreme Court decision in Massachusetts v. EPA, wherein the Court held that greenhouse gases are “air pollutants” under the Clean Air Act and remanded the matter to EPA to set forth a reasoned explanation for its decision as to whether to regulate greenhouse gasses.
In its rulemaking proposal, EPA answered the Supreme Court ruling by providing the Administration’s rationale for regulating greenhouse gases: that climate change is the “unambiguous result of human [greenhouse gas] emissions” and that the “observed” adverse effects of climate change include degraded air quality, greater sea level rise, increased drought, and harm agriculture, wildlife and ecosystems. If the proposal becomes a final rule, EPA would define “air pollution” to include “the mix of six key directly emitted and long lived greenhouse gases: carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydroflurocarbons (HFCs), perflurocarbons (PFCs), and sulfur hexafluoride (SF6).”
By taking the administrative route to regulate greenhouse gases through the existing Clean Air Act, the Administration is gambling in high stakes poker. Similar endangerment language to Section 202 (a) is present in many other sections of the Clean Air Act including Section 108 (NAAQS), Section 111 (NSPS), Section112 (NESHAP), Section 213 (Non-road vehicle emissions) and Section 231 (Aircraft emissions). The proposed endangerment finding could well lead to a cascade of unintended regulation that includes a presumption of an endangerment finding under multiple provisions of the Clean Air Act, a corresponding duty to regulate new and existing stationary sources, and a duty to permit greenhouse emissions from as many as a million or more new sources including numerous construction projects selected to be built pursuant to the Stimulus Package. This would create what Rep. John Dingell (D-Mich.), a 30 year veteran of Clean Air Act legislation, has called "a glorious mess."
EPA provides for a sixty (60) day public comment period on its legal, scientific and policy choices and has scheduled two public hearings, one to be held May 18 in Arlington, VA and the other to be held May 21 in Seattle, WA. Among EPA’s legal and policy choices ripe for public comment are:
- Determination that the Section 202 (a) requires EPA to protect public health and welfare and that the Administrator cannot “wait until harm has occurred but instead must be ready to take regulatory action to prevent harm before it occurs.”
- Determination that EPA must “exercise judgment by weighing risks… and making reasonable projections of future trends and possibilities.”
- Determination that the “Administrator is to consider the cumulative impact of sources of a pollutant … and is not to look at the risks attributable to a single source or class of sources.”
- Determination that the “Administrator is to consider risks to all parts of our population, including those who are at greater risk for…increased susceptibility to adverse health effects.”
- The proposal interprets Section 202 (a) as requiring that emissions from a source need only contribute to air pollution, not that “emissions from any one sector or group of sources are the sole or even the major part of an air pollution problem.”
EPA’s proposal also rejects certain comments submitted in response to the Bush Administration’s July 30, 2008 Advanced Notice of Proposed Rulemaking (ANPR) on the regulation of greenhouse gases. For example, EPA rejected one industry group’s contention that EPA is limited to considering only those impacts that can be traced to the amount of air pollution directly attributable to the greenhouse gases emitted by new motor vehicles and engines. The proposal also rejects the arguments of another ANPR commenter that no “endangerment” or “contribution” finding is permissible unless the standard imposing emissions reductions would “effectively mitigate” the impacts underlying the endangerment finding. By rejecting these arguments, EPA is contending in the proposal that the endangerment finding stands separately from whether greenhouse gases contribute to climate change.
The Administration obviously believes that its proposal to regulate greenhouse gases under the Clean Air Act will motivate Congress into legislative action on climate change. The maneuver will surely lead to a test of political will that in the end could either spawn thoughtful, common sense climate change legislation that balances environmental protection with economic realities of our time or it could result in the “glorious mess” that Rep. Dingell has warned against. Stay tuned!
EPA proposed reporting requirements for greenhouse gases seen as a precursor to GHG controls
Co-authored with Tara Kowalski.
On March 10, 2009, EPA proposed a comprehensive national greenhouse gas (“GHG”) emission reporting requirement, which was hailed as potentially serving as “the basis for a federal cap on the buildup of carbon dioxide and other gases linked to global warming.” The proposed GHG reporting requirement would apply to certain suppliers of fossil fuel and industrial chemicals; manufacturers of motor vehicles and engines; and sources annually emitting at least the global warming potential (GWP) equivalent of 25,000 metric tons of carbon dioxide. The reporting requirement would affect approximately 13,000 facilities (which EPA claims account for 85 to 90 percent of the nation’s greenhouse gas output) spanning a broad range of industries, including chemical, cement, iron and steel production; electricity generation; vehicle, engine, and electronics manufacturing; and food processing and wastewater treatment facilities. EPA estimates that compliance with the GHG reporting requirements would cost the private sector $160 million for the first year, and $127 million annually thereafter.
The proposed rule has been viewed as a precursor to GHG controls and a possible glimpse into the structure of President Obama’s cap-and-trade program. In the proposed rule preamble, the Agency stated that the annual reporting requirement “would provide comprehensive and accurate data which would inform future [policy] …. includ[ing] research and development initiatives, economic incentives, new or expanded voluntary programs, adaptation strategies, emission standards, a carbon tax, or a cap-and-trade program.”
Under the proposed rule, the annual emission report would be signed by a designated representative of the owner or operator, certifying under penalty of law that the report has been prepared in accordance with the requirements of the rule, and would include: 1) total facility emissions in metric tons of CO2 aggregated for all source categories; 2) total emissions in metric tons of CO2 aggregated for all supply categories; 3) emissions from each source category and supply category expressed in metric tons of each GHG; 4) onsite electricity generation in kilowatt-hours; 5) total pounds of synthetic fertilizer produced and total nitrogen contained in the fertilizer; and 6) any additional information, including unit – or process-level emissions, activity data (e.g., fuel use, feedstock inputs), or quality assurance/quality control data that are specified in an applicable subpart.
The rule would apply to the emission of what the Agency described as the “major GHGs”: (1) carbon dioxide (CO2); (2) methane (CH4); (3) hydrofluorocarbons (HFCs); (4) nitrous oxide (N2O); (5) perfluorocarbons (PFCs); (6) sulfur hexafluoride (SF6); and (7) other “fluorinated compounds” (e.g., HFEs (hydrofluoroethers) and NF3 (nitrogen fluoride)).
Facilities would start collecting data on January 1, 2010, submit the first report on March 31, 2011, and maintain certain data records for five years. The reporting requirement would apply to GHG emitters (reporting per facility), GHG and fossil fuel suppliers (reporting at the corporation level), and vehicle and engine manufacturers (also reporting at the corporation level). Facility emissions would be monitored and calculated – at varying levels of exactitude and complexity – using sector-specific, tiered methodologies.
Some question the effect this rule will have on small businesses. EPA officials say most small businesses would fall below the threshold and would not be required to report. However, the rule names specific source categories (e.g., aluminum, ammonia, cement, electronics, lime, petrochemical, petroleum refining, certain underground coal mines, manufacturers of engines and municipal landfills) that are covered by mandatory reporting regardless of whether they exceed the threshold. Others criticize the rule for “double counting” by applying the reporting requirement to both upstream and downstream sources of GHG emissions.
Federal register publication of the proposed rule and preamble – slated to occur in the near term under Docket ID No. EPA-HQ-OAR-2008-0508 – will mark both the start of a 60-day public comment period as well as three public hearings: April 6 and 7 (Washington DC), April 16 (Sacramento, California) regarding the rulemaking.
EPA proposes GHG endangerment finding; briefing document states greenhouse gas emissions endanger human health and welfare
According to numerous reports, the US EPA proposed an "endangerment finding" on greenhouse gas emissions ("GHGs") to the White House last Friday. The substance of the finding has not officially been made public; however, according to reports from Reuters, the White House Office of Management and Budget showed EPA sent a proposed rule for an "Endangerment Finding for Greenhouse Gases under the Clean Air Act" and such a finding is only sent to the White House when EPA determines that human health and welfare are threatened. The finding could have broad implications, primarily triggering regulation of GHGs, including CO2, under the Clean Air Act. An internal EPA document (“Proposed Endangerment Finding for GHGs in Response to Mass. v. EPA: Guidance-Option Selection Briefing”), widely circulated earlier this month, suggests that the endangerment finding likely concludes that GHGs endanger both public health and welfare, potentially prompting nationwide regulation of GHGs.
In April 2007, the Supreme Court concluded in Massachusetts v. EPA that EPA has the authority to regulate GHGs under the Clean Air Act if they cause or contribute to air pollution that may reasonably be anticipated to endanger public health or welfare. According to a representative of the US Chamber of Commerce, regulation of CO2 would enlarge the regulated community from about 15,000 entities to 1.5 million entities.
The internal EPA document suggests that EPA Administrator Lisa Jackson will sign the proposal on April 16, which will be followed by a 60-day public comment period and two public hearings.
Section 115 of the Clean Air Act urged as vehicle for greenhouse gas control
A former Bush EPA General Counsel has urged regulation of greenhouse gases under a rarely used 1977 amendment to the Clean Air Act entitled “International air pollution” (Section 115). Writing in the March 9 issue of the BNA Daily Environment Report, Roger Martella and Matthew Paulson state that “Section 115 could provide an effective, flexible, economically reasonable, and legally supportable tool” and advise EPA to take a “much harder look” at this section before deciding to regulate greenhouse gases elsewhere under the Clean Air Act.
Section 115 of the Clean Air Act requires EPA to provide notice to the states to revise their State Implementation Plans (SIPs) if EPA concludes, based upon receipt of a study from a duly constituted international agency, that air pollutants “emitted in the United States cause or contribute to air pollution which may reasonably be anticipated to endanger public health or welfare in a foreign country…” The authors argue that the Intergovernmental Panel on Climate Change is a proper international agency and that their report entitled: Climate Change 2007: Mitigation, Contribution of Working Group III to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change satisfies the statutory prerequisite of an international report.
If EPA were going to regulate greenhouse gases under the Clean Air Act, Section 115 offers several practical benefits. First, an endangerment finding under Section 115 for greenhouse gases would not automatically implicate other onerous sections of the Clean Air Act. This is because of the unique Section 115 endangerment finding – an endangerment outside of the United States. However, an endangerment finding within the United States is required if EPA were to regulate greenhouse gases under any other relevant section of the Clean Air Act. A domestic endangerment finding made under any relevant section of the Clean Air Act other than Section 115 could have the effect of imposing an overwhelming cascade of serious regulatory consequences under other sections of the Clean Air Act. For example, regulating greenhouse gases under Section 109 (National Ambient Quality Standard) would require an endangerment finding and could require Prevention of Significant Deterioration permitting for all major sources in an attainment area. This would stifle project development at a time when policymakers are attempting to stimulate the economy. In fact, Martella and Paulson cite a US Chamber of Commerce study that estimates that more that one million sources could become newly subject to the Clean Air Act requirements based upon greenhouse gas emissions.
Other practical benefits include regulatory flexibility that is commensurate with the international nature of air pollution. The rigidity and specific command and control requirements that accompanies a domestic endangerment finding under the Clean Air Act do not make other provisions of the Clean Air Act suitable for regulating greenhouse gases. Section 115 would allow states to provide flexible solutions with federal oversight and approval required and would allow international input. As summed up by the authors, “Section 115 provides significant flexibility in crafting programs to achieve greenhouse gas emissions reduction while also allowing for consideration of international efforts to combat this global challenge.” As the policy debate rages over whether new legislative or existing tools are best to combat climate change, these authors have brought a creative idea to the debate.
Highwood coal-fired power plant suspended in favor of natural gas
In a sign of the changing times, a group of Montana electric utilities for the first time has suspended plans to build a coal-fired power plant in favor of immediate plans to build a natural gas power plant that would emit fewer greenhouse gases. The Southern Montana Electric Generation & Transmission Cooperative (“SME”) early last week announced that it would halt plans to build its $900 million 250-megawatt coal-fired Highwood Generating Station. Instead, construction will continue with a different fuelbase: natural gas. SME has decided to build a 120-megawatt natural gas-fired power plant in addition to a few wind towers in place of the coal-fired plant.
The announcement comes on the heels of several years of opposition to the project on the grounds that the proposed coal-fired plant would emit too much climate changing greenhouse gases and fine particulate. Environmental groups such as the Montana Environmental Information Center and Earthjustice filed multiple lawsuits challenging the permitting of the project, the rezoning of the site where the proposed project is to occur, and even the funding of the project by the federal government.
Tim Gregori, SME’s General Manager and CEO explained that the proposed coal-fired plant had been considerably delayed by the opposition from environmental groups and that there is an “immediate need for base load electric generation” that needs to be addressed. The new plans will ensure that energy will be available in 2011 and also allow SME additional time to sort through the regulatory uncertainty of the new federal leadership.
Environmental groups view SME’s change of fuelbase as directly related to the new administration in Washington. President Obama has pledged to reduce greenhouse gas emissions 80% by the year 2050. This includes ensuring that utilities turn to cleaner and renewable sources of energy like natural gas and wind. Environmental groups are optimistic that other proposed coal fired power plants like Sunflower in Kansas and Desert Rock in New Mexico will soon follow SME’s lead.
Obama appointees include dedicated climate change advisors
All indications are that addressing climate change will be a top priority for the Obama Administration. In addition to reversing the previous administration’s course on the issue of state-level GHG emissions standards, President Obama has also made a statement by appointing numerous advisors with backgrounds in climate change, including several persons appointed to posts specifically related to climate change. These staffing choices reinforce the policy actions taken by the administration in its first weeks in office. Taken as a whole, all signs point to increased regulation of GHG emissions and other activities related to climate change – either through new national legislation, federal waivers for regulation at state/regional levels, or application of existing federal legislation (such as ESA and NEPA) to the climate change arena. The challenge for Obama’s climate team (discussed below) will be balancing the interests of environmental advocates concerned about climate change, and the interests of corporations concerned about increased operational expenses in a slumping economy.
- Obama’s energy secretary, Steven Chu, is an advocate of reducing carbon emissions and foraying into alternate energy sources. Mr. Chu received a Nobel Prize for his work on super cooled atoms. As energy secretary, he will be in charge of the United States’ nuclear weapons stockpile, and will update the nationwide electric power system.
- Nancy Sutley is the new head of the White House Council on Environmental Quality. As Los Angeles’ deputy mayor for energy and the environment, she implemented construction rules to maximize energy efficiency, and she has been at the forefront of California’s climate change legislation.
- Todd Stern, the new Special Envoy on Climate Change, coordinated the Clinton Initiative on Global Climate Change from 1997-1999, and negotiated in the major global discussions at Kyoto and Buenos Aires. His goals include transforming the country to a low-carbon energy base, and freeing the US from dependence on foreign oil.
- Lisa Jackson, who led President Obama’s transition team, will serve as the new head of the US Environmental Protection Agency (EPA). She previously served as head of the Department of Environmental Protection of New Jersey, and served for almost two decades as a top EPA enforcement officer. Among her accomplishments in New Jersey were her support of an energy efficiency investment stimulus plan, and a “Master Plan” for cutting energy use. She also established the Regional Greenhouse Gas Initiative (RGGI) to reduce carbon emission from power plants. Ms. Jackson also has a strong scientific background – she earned a Masters in chemical engineering.
- Ms. Jackson, in turn, has named former Georgetown Law Professor Lisa Heinzerling, who authored the winning brief in the landmark Massachusetts v. EPA climate change lawsuit, as her chief climate change advisor.
- Another key Obama appointment, Carol Browner, will be the “Energy Csar”, which means she will coordinate energy and climate policy. She was the head of the EPA under President Clinton, and her most recent position was head of the Audubon board. She is known for her innovative ways of finding low-cost solutions to problems. Because she has much support from members of Congress such as Nancy Pelosi and Barbara Boxer, she may be spending much time on the Hill trying to implement new environmental policies.
- Other appointments include Henry Waxman as chairman of the House Energy and Commerce Committee, and Bill Richardson* as head of the Department of Commerce. Richardson will be charged with overseeing the National Oceanic and Atmospheric Administration (NOAA), which could have implications for international oceanic issues. John Holdren will serve as director of the White House Office of Science and Technology Policy. Deemed an expert in climate change, he is also a Harvard physicist. Last, Jane Lubchenco will be the head of NOAA.
*Update: Bill Richardson nomination has been withdrawn due to federal investigation of contract awarded to campaign contributor.
EPA to reconsider California emissions waiver request
On Friday, the US Environmental Protection Agency formally agreed to reconsider California's request for a waiver from the Clean Air Act -- specifically, the state's request for authority to impose its own state regulations on vehicles in an effort to reduce greenhouse gas emissions. One of President Barack Obama's first actions when he took office included signing an order requesting that the EPA reconsider the Bush Administration's rejection of California's request. New EPA Administrator Lisa Jackson signed the notice on Friday officially reopening the comment period on California's waiver request. Jackson said the Clean Air Act gives EPA the authority to allow California to adopt its own emissions standards for motor vehicles due to the seriousness of the state's air pollution challenges. However, automobile manufacturers prefer a single, uniform standard, as opposed to different standards in different states or regions.
The Clean Air Act Section 209 – State Standards states that the waiver should be granted unless the EPA finds that California:
- was arbitrary and capricious in its finding that its standards are in the aggregate at least as protective of public health and welfare as applicable federal standards;
- does not need such standards to meet compelling and extraordinary conditions; or
- has proposed standards not consistent with Section 202(a) of the Clean Air Act.
The public comment period on the waiver request will last 60 days and will close on April 6, 2009. There also will be a public hearing on March 5 held by EPA.
Environmental group sues Bureau of Land Management for failing to consider greenhouse gas emissions in granting oil and gas leases
The Western Environmental Law Center (“WELC”) has filed suit in New Mexico federal court against the Bureau of Land Management (“BLM”), alleging that the agency’s 2008 grant of 92 oil and gas leases in New Mexico violated federal law by failing to address greenhouse gas emissions. The complaint also alleges that the Bureau failed to adopt policies designed to make drilling more efficient. This lawsuit, along with a similar complaint filed by WELC in Montana in December, is among the first to use greenhouse gas emissions as a basis for challenging oil and gas leases in the west. Named plaintiffs in the suit are Amigos Bravos, the Natural Resources Defense Council (NRDC), and members of the Oil and Gas Accountability Project.
WELC argues in its complaint that the agency’s grants of the leases were improper under the Federal Land Policy and Management Act (“FLPMA”), the Mineral Leasing Act (“MLA”), the National Environmental Policy Act (“NEPA”) and the Department of the Interior’s Secretarial Order 3226 (January 19, 2001). The citizen group plaintiffs base their standing to sue on the alleged impairment of their use and enjoyment of lands affected by the leases.
The complaint alleges that oil and gas exploration and operations release greenhouse gases on many fronts, including vented gases from machines, gasoline processing, and coal beds, gases released during transport and refining of oil and gas, and heat and electricity generation. The complaint suggests that gas released from these sources could cause the greenhouse gas concentration in New Mexico to reach a tipping point, a point at which global warming would start to accelerate at a rate beyond human control.
The WELC complaint seeks both declaratory and injunctive relief. It asks that the district court suspend, enjoin or void the leases until the Bureau of Land Management achieves full compliance with the applicable federal law. The complaint also asks that fees and costs be awarded to the plaintiffs.
Indeck Energy files lawsuit challenging New York's authority to implement RGGI
Indeck Energy has filed suit against several New York state agencies over their participation in the Regional Greenhouse Gas Initiative (RGGI), a carbon trading system between 10 Northeastern states designed to limit greenhouse gas emissions by power plants. Indeck Energy is the owner of Indeck-Corinth Generating Station, a combined-cycle natural gas plant in upstate New York. RGGI began its first compliance period on January 1, 2009. The Indeck lawsuit alleges that the agencies did not have authority from the New York legislature to implement the system. The complaint further alleges that the multi-state RGGI compact is unconstitutional without Congressional authorization. The complaint names Governor David Paterson, the New York State Department of Environmental Conservation, the New York State Energy Research and Development Authority, and the New York State Public Service Commission as defendants.
According to Indeck, regulations implemented pursuant to the RGGI would essentially impose an unauthorized tax on it. Under RGGI, power plants must buy permits or allowances to cover the amount of carbon they produce. Furthermore, Indeck alleges, it would not have a fair opportunity to recover its costs. Indeck contends that because the RGGI regulations target clean, low-emitting stations with onerous costs, the net result would be to actually increase emissions.
In a statement released to the press, Indeck’s President Gerald F. DeNotto claimed, “The regulations arbitrarily discriminate against a few electric generators that are bound by long-term fixed price contracts.” Furthermore, he contends that “New York’s version of RGGI levies a ‘RGGI tax’ on electric generators.” According to DeNotto, this leaves Indeck’s Corinth plant with “a heavy cost of the allowance tax, and no opportunity to recover it.” These claims echo statements made by DeNotto in public comment hearings regarding RGGI implementing regulations in 2007.
Environmental groups and the New York state agencies named in the complaint have begun to respond quickly to Indeck’s allegations. According to Peter Iwanowicz, director of the Office of Climate Change in New York’s Department of Environmental Conservation, Indeck’s claims are without merit. Iwanowicz claims that his department adopted the RGGI pursuant to authority the legislature had previously provided. As to the issue of the constitutionality of the multi-state compact, Iwanowicz denied that was an issue, noting that each state in the RGGI adopted separate regulations and maintained full sovereignty. State government watchdog group Environmental Advocates of New York (EANY) also issued two statements objecting to Indeck’s claims. Among other statements, EANY notes that the two-year public process to finalize RGGI regulations already resulted in a 1.5 million ton set aside for power plants in long term contracts.
New Jersey publishes draft plan for reducing greenhouse gas emissions
On December 15, the New Jersey Department of Environmental Protection (NJDEP) published for public comment an ambitious plan to reduce greenhouse gas emissions to 1990 levels by 2020, followed by a further reduction of emissions to 80% below 2006 levels by 2050. The draft entitled “Global Warming Response Act Recommendations Report” was authorized by the New Jersey Global Warming Response Act of 2007. The plan emphasizes three core programs – the New Jersey Energy Master Plan, the Regional Greenhouse Gas Initiative and the New Jersey Low Emissions Vehicle program – to deal with the largest green house gas producing sectors: transportation and energy.
The Energy Master Plan establishes a strategy for reducing carbon emissions and energy through investment in renewable energy, requiring adherence to green building guidelines for new construction, establishing fossil fuel throughput standards for electrical generating units, requiring flaring at non-new source performing standards landfills, developing agricultural practices to reduce green house gases, and numerous other recommendations.
The plan targets emissions from on-road gasoline vehicles, on-road diesel vehicles, aviation, marine vessels, railroad and other transportation sources. The report notes that these sources were responsible for about 36% of New Jersey green house gas emissions in 2004. According to the report, on-road gasoline consumption represents the vast majority of those emissions. To reduce emissions in the transportation sector, the report relies heavily upon New Jersey’s Low Emissions Vehicle (LEV) program, which became effective on January 1, 2009, and is modeled after California’s LEV program. Among other requirements, the state’s LEV program requires all sales of new vehicles after January 1 to be California certified.
The plan further relies upon the Regional Greenhouse Gas Initiative which is a cap and trade program among ten Mid-Atlantic and Northeast states to reduce carbon output from power plants. New Jersey participated in the December 17 auction.
The most controversial elements of the plan involve attainment of the 2050 goals. To achieve these reductions, New Jersey plans aggressive action in the key sectors where the greatest GHG emissions reductions can be gained over the long term including: Land Use Planning and Transportation; Terrestrial Carbon Sequestration; Energy Efficiency and Renewable Energy; and New Technologies and Markets. The supporting recommendations include limiting the growth of vehicle miles traveled, between now and 2020, to a rate of growth of no more than 1% per year, holding greenhouse gas emissions from on-road transportation to a total of no more than 40 MMT by 2020, ensuring that over the next 15 years that all vehicle miles traveled are “green” requiring at least 33 miles/gallon and limiting 90% of development to areas already served public infrastructure.
The state will host six meetings in January to solicit public comment on the plan.
Lawsuit against mega-dairy in California's Central Valley seeks to reduce greenhouse gases
On October 15, 2008, the Center for Biological Diversity and California Rural Legal Assistance filed a lawsuit challenging the failure to consider global warming impacts in conducting the environmental review of a mega-dairy in the Central Valley of California. This is the latest in a series of actions focusing on the environmental review process under the California Environmental Quality Act (CEQA), which requires public agencies to consider the environmental impacts of a proposed project before approving it. In the case of greenhouse gas emissions, several suits have claimed that CEQA requires identification of a project’s emissions, and if they are significant, may require the agency to impose mitigation measures to lower the project’s carbon footprint.
The new lawsuit asserts that the San Joaquin Valley Unified Air Pollution District failed to properly consider the global warming and human health impacts of a mega-dairy with 6,120 animals when it conducted its project review under CEQA. Mega-dairies produce large amounts of greenhouse gas emissions, including methane, ozone precursors, particulate pollution, hydrogen sulfide, and ammonia. The lawsuit contends that the mega-dairy project’s impacts were ignored or down-played.
New and expanding dairies, poultry houses, and other agricultural operations in the Central Valley have been targeted by environmental groups in recent years, once they lost their exempt status from Clean Air Act permitting requirements. Agencies reviewing permits and other approvals for such facilities are struggling to define which impacts are potentially “significant” impacts under CEQA. In Senate Bill 97, a companion bill to the California Global Warming Solutions Act (“AB 32”), the California legislature required the Office of Planning and Research (“OPR”) to develop draft CEQA guidelines “for the mitigation of greenhouse gas emissions or the effects of greenhouse gas emissions” by July 1, 2009 [link to Joanne Lichtman’s ClimateBlog posting on this], but no regulations are currently available to assist the public agencies in conducting their reviews. Air pollution agency officials belonging to the California Air Pollution Control Officers’ Association (“CAPCOA”) have published a non-binding white paper to assist local governments in conducting these reviews.
Industry lawsuit challenges three-word "Alaska Gap" of Department of Interior rule
Regional Causation Will Be a Key Question
On the same day that it determined under the Endangered Species Act that polar bears were threatened, the Interior Department published an Interim Final Special Rule which in essence provides that, “except in Alaska,” greenhouse gas emitting activities are exempt from the requirement that a Fish and Wildlife Service (FWS) permit be obtained where there may be an “incidental taking" of the threatened species. Five industry groups – American Petroleum Institute, U.S. Chamber of Commerce, National Mining Association and the National Association of Manufacturers – just filed a lawsuit (American Petroleum Institute, et al. v. Kempthorne, et al.) in the United District Court for the District of Columbia challenging that three word exception.
While these groups generally support the interim rule, they challenge the logic behind the Alaska exception given EPA (and other) conclusions that regional emissions do not directly cause regional climate impacts. An excerpt from the complaint (paragraphs 5 and 6) summarizes the lawsuit:
Under the ESA and its accompanying regulations, the “threatened species” designation presumptively triggers Section 9 of the ESA, which would require an FWS permit for activities that constitute an “incidental taking” of the designated species. FWS, however, also determined that climate change is a worldwide phenomenon, resulting from the combination of greenhouse gas emissions across the globe. Accordingly, FWS determined that neither climate change, nor any effect of climate change, can be traced to particular activities in particular locations. On that basis, FWS accompanied its Listing Rule with the 4(d) Rule, which generally exempts greenhouse gas emitting activities from Section 9 requirements to which they might otherwise be subject. . . .
But in sharp contradiction with FWS’s own determination that climate-change-based effects on polar bears cannot be traced to emission activities in any particular location, the 4(d) Rule excludes Alaska from the Section 9 exemption. The Alaska Gap thus exposed Alaska operations to increased permitting burdens and/or the risk of enforcement by Government authorities and citizen suits – risks that operations elsewhere in the United Sates do not face and that are contrary to FWS’s own determinations about the nature and effects of global climate change
The lawsuit will likely draw on support from FWS’s own words, including statements like the following contained in a May 14, 2008 FWS memorandum regarding Expectations for Consultations that Would Emit Greenhouse Gases:
GHG that are projected to be emitted from a facility would not, in and of themselves trigger section 7 consultation for a particular action unless it is established that the emissions from the proposed action cause an indirect effect to listed species or critical habitat. To constitute an indirect effect, the impact to the species must be later in time, must be caused by the proposed action, and must be reasonably certain to occur. The best scientific data available today do not allow us . . . to draw a causal connection between GHG emissions from a given facility and effects posed to listed species or their habitats, nor are there sufficient data to establish that such impacts are reasonably certain to occur.
Unlike public nuisance cases filed to date, where early dismissals on political question and standing grounds prevented the lawsuits from reaching the critical, and complex, issues relating to causation, this litigation should put the question of causation directly into play, requiring an analysis of whether greenhouse gas emissions can be isolated and evaluated on a such a localized basis.
