Category: Environmental Law

Four Themes from the National Climate Assessment that May Impact Your Business Strategy

As climate change is integrated more and more into the planning of corporate opportunities and risks, the Fourth National Climate Assessment released last week may be a valuable resource to assess how climate change may impact your business strategy on the horizon.

The assessment, which outlines potential region-by-region impacts from climate change, can be used as a tool to assist companies in understanding the range of possible climate impact. Drafted by experts within the federal government and led by the National Oceanic and Atmospheric Administration (NOAA), the report provides a summary of the science and modeling used to predict changes in the United States’ climate over the next century, including providing certain economic impact assessments and estimates.

Four modeled scenarios with varying ranges of temperature increases were used in the assessment and impacts were qualified by confidence ranges and likelihood of the suggested impacts. The report discusses population changes, economic changes, and geographic changes that may result from climate change.

Containing a massive amount of both elementary and highly sophisticated information and model results, the assessment may prove to be extremely useful to both public and private companies to plan business growth and opportunities and to identify risks to current business models. The data may be specific enough to identify potential mitigation and adaptation actions for specific facilities to consider implementing.

Four Highlighted Themes

The following themes are indicative of those found throughout the assessment.

  1. “Climate change creates new risks and exacerbates existing vulnerabilities in communities across the United States, presenting growing challenges to human health and safety, quality of life, and the rate of economic growth.” Summary Finding No. 1.

  2. “Without substantial and sustained global mitigation and regional adaptation efforts, climate change is expected to cause growing losses to American infrastructure and property and impede the rate of economic growth over this century.” Summary Finding No. 2.

  3. “Climate change affects the natural, built, and social systems we rely on individually and through their connection to one another. These interconnected systems are increasingly vulnerable to cascading impacts that are often difficult to predict, threatening essential services within and beyond the Nation’s borders.” Summary Finding No. 3.

  4. “Impacts from climate change on extreme weather and climate-related events, air quality, and the transmission of disease through insects and pests, food, and water increasingly threaten the health and well-being of the American people, particularly populations that are already vulnerable.” Summary Finding No. 6.

Midwest Adaptation and Mitigation

According to the report, while climate change might be easier to highlight on the coasts, the Midwest may also experience costs related to increased heat and precipitation events. The report indicates that the Midwest may experience a significant increase in the number of 100 degree days, with Chicago experiencing as many at 60 days per year by the end of this century. This extreme heat may increase mortality, affect transportation, or affect the ability of workers in outdoor jobs or spaces without temperature controls. With near-term planning and adaptation, however, the report notes that many of these impacts can be minimized.

The report highlights that higher heat and precipitation may affect farming and yields, but that adaptation and mitigation can help. For example, the assessment notes that adding buffer zones at agricultural farm fields in the Midwest can minimize damage and soil loss caused by extreme precipitation events.

Other actionable insights from the report directed to the Midwest include:

  • Promoting biodiversity can minimize the impacts of an increasing insect population and diseases that strike a particular species of plants or humans.

  • Planned development growth can decrease habitat and biodiversity loss as well as control storm-related damage.

  • Planned development and agricultural land use can impede the further degradation of the Great Lakes, which is experiencing higher temperatures, lower amounts of winter ice and earlier temperature stratification. These temperature changes may also impact manufacturing facilities that use water from the Great Lakes.

Overall, the assessment recommends adoption of mitigation and adaptation plans in the near future to avoid the most deleterious effects of climate change.

© 2018 Schiff Hardin LLP

ARTICLE BY

Jane E. Montgomery
Schiff Hardin LLP

U.S. Court of Appeals for the Fourth Circuit’s Decision to Vacate Mountain Valley Pipeline Nationwide Permit

On November 27, 2018, the U.S. Court of Appeals for the Fourth Circuit issued the most recent in a series of decisions from various courts affecting the federal permitting and construction of interstate pipelines. Sierra Club v. U.S. Army Corps of Engineers, No. 18-1173 (4th Cir. Nov. 27, 2018). In this instance, the Circuit held that the U.S. Army Corps of Engineers violated the Clean Water Act when it verified that construction of the Mountain Valley Pipeline project could proceed pursuant to Nationwide Permit 12 in the State of West Virginia.[1] This decision will have an impact on the flexibility of federal and state agencies when it comes to permitting projects under the Clean Water Act Nationwide Permit program.

The Mountain Valley Pipeline project is a 304-mile natural gas pipeline proposed to run through West Virginia and Virginia. Earlier this year, the Corps had reinstated its verification that the project met the requirements of Nationwide Permit 12 – a general permit that provides authorization for certain discharges associated with the construction of linear energy infrastructure. The Circuit vacated the Corps’ verification in its entirety, leaving the project with no authorization under the Clean Water Act.

Unlike many decisions where the issue is the Corps’ own process in promulgating the Nationwide Permit in the first instance or the Corps’ assessment of whether a specific project falls within the federal parameters of the Nationwide Permit, this matter turned on whether the Corps properly incorporated the State’s conditions into its verification and whether the State itself followed the required Clean Water Act process.

In order to use a Nationwide Permit promulgated by the Corps, a project proponent must provide the Federal permitting agency a Section 401 water quality certification from the State (or other permitting agency with jurisdiction over the water) in which the regulated discharge originates, unless the Federal permitting agency determines that the certification requirement has been waived. The State certification and its conditions then become part of the federal Nationwide Permit. With respect to Nationwide Permit 12, the State of West Virginia had issued a general certification that imposed, after public notice and comment, certain special conditions on projects seeking authorization under Nationwide Permit 12 beyond what the Corps required. Two of these special conditions were at issue in this case:

  • Special Condition A, which requires an individual state water quality certification for certain projects including those involving construction of pipelines equal to or greater than 36 inches in diameter or if crossing waters regulated under Section 10 of the Rivers and Harbors Act; and

  • Special Condition C, which requires that individual stream crossings be completed in a continuous manner within 72 hours in certain conditions.

Pursuant to these Special Conditions, in order to seek authorization under Nationwide Permit 12, Mountain Valley Pipeline was expected to obtain an individual water quality certification and to complete stream crossings within 72 hours. However, West Virginia purported to “waive” its requirement that the pipeline obtain an individual water quality certification following a series of challenges to West Virginia’s individual water quality certification, and the Corps replaced Special Condition C with an alternate condition that the Corps found to be more protective of water quality with the apparent concurrence of the State.

The Fourth Circuit held: (1) the Corps’ verification violated Section 401 of the Clean Water Act because Section 401 unambiguously requires the Corps to incorporate the State’s certification with its special conditions in the federal verification without modification; and (2) Section 401 does not allow a state to waive its special conditions without public notice and comment, meaning that the project proponent remained subject to the condition requiring that it apply for an individual state water quality certification and, therefore, the Corps’ own verification was invalid.

In reaching these conclusions, the Circuit noted that “the Corps’ interpretation would radically empower it to unilaterally set aside state certification conditions as well as undermine the system of cooperative federalism upon which the Clean Water Act is premised.” Sierra Club, No. 18-1173 at *22. With respect to the State’s action purporting to waive its special condition, the Circuit explained that “[a]llowing West Virginia to revoke, on a case-specific basis, conditions imposed in its certification of a nationwide permit would impermissibly allow the state to circumvent [the CWA’s] explicit requirement that state permit certifications satisfy notice requirements.” Id. at *31.

Assuming this decision stands, the upshot is that both the Corps and the States (at least within the Fourth Circuit) will have less flexibility in how projects are permitted when a State has issued a general water quality certification with specific conditions. The Corps will need to require that the terms of such certifications are strictly followed in order to make decisions that comply with the Clean Water Act.

[1] The Circuit’s November 27, 2018 decision supports and expands upon the Circuit’s October 2, 2018 decision to vacate the Corps’ verification on more limited grounds.  Sierra Club v. U.S. Army Corps of Engineers, No. 18-1173 (4th Cir. Oct. 2, 2018).

© 2018 Bracewell LLP
This post was written by Ann D. Navaro and Christine G. Wyman of Bracewell LLP.

EPA Proposes to Clarify Areas Excluded from Clean Air Act’s Definition of “Ambient Air”

The U.S. Environmental Protection Agency (EPA) recently proposed a revised policy to clarify what constitutes “ambient air” under the Clean Air Act, which will directly affect what areas stationary sources of air emissions must model to determine the effect of their facilities on air quality. The revised policy will most notably affect sources that have to model air quality around their facilities to demonstrate compliance with National Ambient Air Quality Standards (NAAQS), as well as sources applying for air construction permits under the EPA’s Prevention of Significant Deterioration (PSD) permitting program.

Under current EPA regulations, ambient air is broadly defined as the portion of the atmosphere (external to buildings), that the general public has access. Areas where access is not available are not “ambient.” Sources are often required under the NAAQS and the EPA’s PSD program to model facility impacts on ambient air. Thus, excluding areas from “ambient air” eliminates the need to model emissions impacts on those areas.

Through various guidance documents and letters, the EPA’s historic policy has been to only exclude those areas from the definition of ambient air that are (1) owned or under the control of the source and (2) not accessible by the public due to some physical barrier (like a fence). This policy was rooted in the EPA’s interpretation of the definition of ambient air under 40 CFR §50.1(e), rather than explicit regulatory language.

The EPA now believes that its prior characterization that “physical barriers” must exist to exclude an area as ambient air is unnecessarily limiting. Under the EPA’s revised draft policy, a source may use various “measures,” not limited to mere “physical barriers,” to preclude public access. As a result, non-ambient air can include areas subject to video surveillance, signage, security patrols, or other measures provided that the measures “provide reasonable assurance that the general public will not have access.”

What does the EPA’s revised policy mean for stationary sources if implemented as proposed?

  1. Sources will have additional flexibility to determine what areas must be modeled for air quality analyses;
  2. The EPA’s proposed interpretation is a change in policy rather than a change in regulation, meaning that sources should still consider how their respective state or local permitting authorities interpret the meaning of ambient air;
  3. The draft policy appears to address only measures that a source can implement to preclude public access (e.g. install signs or physically patrol the area), as opposed to other physical conditions beyond fences that might already exist to preclude public access, such as roadways – this may be addressed in the final version of the EPA’s policy.

The EPA is accepting comments on its “Draft Revised Policy on Exclusions from ‘Ambient Air’” through December 21, 2018.

 

© 2018 Schiff Hardin LLP
This post was written by David M. Loring of Schiff Hardin LLP.

New Report Reveals Sources of Foodborne Illnesses

  • On November 9, 2018, the Interagency Food Safety Analytics Collaborations (IFSAC) released a report on foodborne illnesses caused by four pathogens. The data in the report, titled, “Foodborne illness source attribution estimates for 2016 for Salmonella, Escherichia coli O157, Listeria monocytogenes, and Campylobacter using multi-year outbreak surveillance data, United States,” came from 1,255 foodborne disease outbreaks that occurred from 1998 through 2016. According to the report:
    • Salmonella illnesses came from a wide variety of foods;
    • E. coli O157 illnesses were most often linked to Vegetable Row Crops (such as leafy greens) and Beef;
    • Listeria monocytogenes illnesses were most often linked to Dairy products and Fruits; and
    • Campylobacter illnesses were most often linked to Chicken after removing Dairy outbreaks from the estimates.
  • The analysis to develop the report involved a method developed by IFSAC to estimate foodborne illness source attribution (see our blog on IFSAC research on how to categorize foods linked to foodborne disease outbreaks). IFSAC includes the Centers for Disease Control and Prevention (CDC), the U.S. Food and Drug Administration (FDA), and the U.S. Department of Agriculture’s Food Safety and Inspection Service (USDA-FSIS).
  • Each year in the United States, foodborne disease caused by known pathogens results in an estimated 9 million people becoming sick, 56,000 hospitalizations, and 1,300 deaths, according to the report. The pathogens in the report were chosen because of the frequency or severity of the illnesses they cause. CDC estimates that, combined, the four pathogens cause 1.9 million foodborne illnesses in the United States each year. The four pathogens also were selected because targeted interventions can have a major impact in reducing foodborne illness caused by these pathogens.
© 2018 Keller and Heckman LLP

Army Corps Issues Guidance for Dam and Culvert Removal Credits

The Army Corps of Engineers recently issued a Regulatory Guidance Letter (RGL) that sets out factors that should be considered by district engineers when determining the amount of mitigation credits that may be allowed for removal of dams or other structures in rivers and streams. These mitigation credits may be used or sold as compensatory mitigation required by Army Corps permits issued for projects that result in impacts to waters of the United States.

There are approximately 14,000 dams in New England, many of which were built in the 19th century, and thousands of undersized or poorly designed culverts. These dams and culverts impair river and stream values. The Corps’ mitigation credit RGL is significant because, in the past, when a dam was removed or culvert replaced the positive environmental effects were not easily quantified. Further complicating the mitigation credit analysis is the fact that dam removal or culvert replacement sometimes results in short-term wetland loss.

The new RGL describes specific considerations for making credit determinations. Further, the RGL makes it clear that wetland loss resulting from dam removal will not require compensatory mitigation. Perhaps most importantly, the RGL gives district engineers latitude to determine the number of mitigation credits produced and to consider local conditions in their determinations, although they will still prefer on-site and in-kind mitigation (meaning, to mitigate impacts that occur nearby and are of the same type as the mitigation project, e.g., fish passage credits could be used for fish passage impacts).

For owners that have been considering removing dams or other in-water structures, this guidance may offer opportunities, but we should caution that those opportunities are constrained by limited availability of mitigation banks and the effort needed to create one, by the need for close coordination and agreement with any available in lieu fee programs, and by limited availability of in-kind permittee-responsible mitigation needs. If those constraints can be overcome, the RGL will allow the long-term value of the removal to be considered and more consistently credited and monetized through mitigation banks or in-lieu fee programs or, if such programs are not available, for the dam owner’s own mitigation responsibilities.

 

©2018 Pierce Atwood LLP. All rights reserved.

Congress Enacts Legislation to Promote New Hydropower Development

On October 23, 2018, President Trump signed into law the America’s Water Infrastructure Act of 2018 (AWIA), S. 3021, a comprehensive water resources bill that includes provisions specifically targeted to promote new hydropower development.  The AWIA includes a package of hydropower bills that were previously approved by the U.S. House or Senate.  These include bills to promote new hydropower development at non-powered dams, new closed-loop pumped storage hydropower, new hydropower at qualifying conduit facilities, as well as longer preliminary permit terms and start of construction deadlines for new projects.  The legislation also provides incentives for redevelopment and modernization at existing projects during the license term.

BACKGROUND

Each individual bill that comprises the AWIA has been pending before Congress in one form or another for several years.  Certain of these provisions were included in the comprehensive energy bill that failed to pass at the end of 2016.  Since then, the bills have each been individually reintroduced before Congress and followed individual tracks.  They were only recently combined into the AWIA bill.  The bill passed the Senate by unanimous consent on September 4, 2018.  It passed the House by a vote of 99-1 on October 10, 2018, with Congressman Mike Lee of Utah as the sole dissenting vote.

THE AWIA

The AWIA is composed of five major categories of hydropower reform: (1) extending preliminary permit terms and start of construction deadlines for new construction projects; (2) promoting new, small conduit hydropower facilities; (3) promoting hydropower development at existing nonpowered dams; (4) promoting development of closed-loop pumped storage projects; and (5) incentivizing investments and modernization projects at existing hydropower facilities.

First, the AWIA amends the Federal Power Act (FPA) to authorize the Federal Energy Regulatory Commission (FERC) to issue preliminary permits for up to four years, instead of the previous three-year limit.  The legislation also authorizes FERC to extend a preliminary permit once for no more than four years, as opposed to the previous two years.  This increases the total possible preliminary permit term from the current limit of five years to a possible eight years.  The AWIA also codifies FERC’s current practice of issuing a new preliminary permit after the expiration of a permit under extraordinary circumstances.  With regard to newly licensed projects, the AWIA authorizes FERC to extend the time a licensee has to commence construction under a license for up to eight years beyond the two years allotted under the license.  Prior to enactment of the AWIA, FERC could extend the license once for no more than two years.  This increases the total possible time to commence construction of a newly licensed project from four years to 10.  These changes should facilitate developers’ ability to take projects from feasibility investigation to project completion without the recurring fear of expiring permits and frequent need for special legislation to extend license construction deadlines.

The AWIA also amends FERC’s current policy on the collection of annual charges for new projects.  Under current regulations, private licensees of unconstructed projects must begin paying annual charges on the date by which they are required to commence construction, or if that deadline is extended, no later than four years after the issuance date of the license (i.e., no later than four years after license issuance).  The legislation changes this policy to provide that annual charges for unconstructed projects commence at the later of (1) the date by which the licensee is required to commence construction, or (2) the date of any extension of the construction commencement deadline.  Because FERC is now authorized under the AWIA to extend the commence construction deadline for up to eight years, this provision of the legislation delays the start of annual charges up to 10 years after license issuance.  These provisions of the AWIA do not distinguish between private licensees and state and municipal licensees, who under current regulations are not required to start paying annual charges until the commencement of project operations.  However, the language appears to permit commencement of annual charges at a later date, allowing FERC to preserve its current regulations on the timing of annual charges paid by state and municipal licensees.

Second, the AWIA directs FERC to issue a rule establishing an expedited process for licensing non-federal hydropower projects at certain existing nonpowered dams.  In establishing this expedited process, the legislation requires FERC to convene an interagency task force with appropriate federal and state agencies and Indian tribes to establish licensing procedures that, to the extent practicable, ensure that such projects will not result in any material change to the storage, release, or flow operations of the nonpowered dam.  This appears aimed at ensuring, if possible, that federal licensing will not result in impairment of dams for their existing nonpower purposes such as irrigation and water supply.  Qualifying projects must not have been previously authorized for hydropower and must use for generation the withdrawals, diversions, releases, or flows from an existing dam, dike, embankment, or other barrier that is or was operated for the control, release, or distribution of water for agricultural, municipal, navigational, industrial, commercial, environmental, recreational, aesthetic, drinking water, or flood control purposes.  Qualifying projects also must not propose to materially change the operations of the nonpowered dam.  The expedited licensing process would result in an order not later than two years after receipt of a completed license application.  The AWIA also directs FERC and the Secretaries of the Army, the Interior, and Agriculture, within 12 months, to develop a list of existing nonpowered federal dams with the greatest potential for non-federal hydropower development.  The Secretary must provide the list to Congress and make it available to the public.

Third, the AWIA directs FERC to issue a rule establishing an expedited process for licensing closed-loop pumped storage projects.  Like the provisions for expedited licensing of projects at existing nonpowered dams, the legislation requires FERC to convene an interagency task force to coordinate the regulatory authorizations required to construct and operate closed-loop pumped storage projects.  Although leaving to FERC to develop a definition for “closed-loop pumped storage,” qualifying pumped storage projects must cause little to no change to existing surface and groundwater flows and uses and be unlikely to adversely affect species listed as threatened or endangered under the Endangered Species Act.  This would appear to narrow the class of qualifying projects considerably.  An expedited licensing process would result in an order not later than two years after receipt of a completed license application.  The AWIA also directs FERC to hold a workshop to explore potential opportunities for development of closed-loop pumped storage projects at abandoned mine sites and provide guidance to assist applicants for such projects.

Fourth, the AWIA amends the FPA with respect to the criteria and process to qualify as a qualifying conduit hydropower facility.  Under the 2013 Hydropower Regulatory Efficiency Act, certain hydropower facilities located on non-federally owned conduits with installed capacity of up to 5 megawatts (MW) are not required to be licensed or exempted by FERC.  The AWIA increases the size limitation to 40 MW for such facilities.  It also reduces the time for FERC to make a qualifying conduit determination decision from 45 to 30 days after an entity files a notice of intent to construct such a facility.

Fifth, the AWIA directs FERC, when determining the term of a new license for an existing project, to give equal weight to project-related investments by the licensee under the existing license, including rehabilitation or replacement of major equipment, and investments proposed under the new license.  This is a modification to FERC’s license term policy issued in 2017, which exempts all “maintenance measures” from consideration toward a new license term.  The AWIA allows a licensee to seek a determination from FERC, within 60 days, on whether any planned, ongoing, or completed investment would be considered by FERC in determining a new license term.

IMPLICATIONS

The hydropower provisions included in the AWIA bill are a meaningful first step in modernizing the hydropower licensing process.  They are intended to generate renewed interest in new hydropower by allowing licensees more time and certainty to secure required approvals and financing for new projects, which was a challenging feat under current deadlines.  While the majority of the provisions in the AWIA are intended to promote new hydropower development, Congress also sought to promote major modernization and rehabilitation projects at existing hydropower projects by ensuring that the investments in such projects are rewarded in the term of a new license.

The AWIA does not include a number of other hydropower relicensing reforms that were included in the bipartisan Senate energy bill in 2016.  These include provisions: (1) designating FERC as lead agency for coordinating federal authorizations from all agencies needed to develop a project; (2) authorizing FERC to refer agency disputes to the Council on Environmental Quality; (3) requiring resource agencies to give equal consideration to developmental and non-developmental values when imposing mandatory conditions or prescriptions; and (4) expanding the definition of renewable energy for federal programs to include all forms of hydropower.  Unless these reforms are passed in the lame duck session, they must be reconsidered in the new 116th Congress beginning in 2019.

 

© 2018 Van Ness Feldman LLP
This post was written by Sharon White and Michael A. Swiger of Van Ness Feldman LLP.

EPA Proposes Affordable Clean Energy Rule

On August 21, 2018, the Environmental Protection Agency (EPA) issued a proposed rule pursuant to section 111(d) of the Clean Air Act (CAA) that would establish emission guidelines for states to develop plans to limit carbon dioxide (CO2) emissions from existing fossil-fired power plants.  The proposed Affordable Clean Energy (ACE) rule would replace the 2015 Clean Power Plan (CPP), which EPA is proposing to repeal (in a separate rulemaking) on the grounds that the CPP exceeded the agency’s authority under the CAA.

Core elements of the proposed ACE rule include: (1) a determination of the best system of emission reduction (BSER) for CO2 emissions from coal-fired power plants; (2) a list of “candidate technologies” states can use when setting CO2 performance standards for affected plants; (3) a new preliminary applicability test for determining whether a physical or operational change made to a power plant may be a “major modification” triggering New Source Review (NSR); and (4) new implementing regulations for establishing emission guidelines under CAA section 111(d).

Section 111(d)

EPA is proposing the ACE rule pursuant to section 111(d) of the CAA.  This section directs EPA to promulgate regulations establishing a federal-state process for setting standards of performance limiting emissions from existing sources for pollutants not otherwise regulated in other specified sections of the CAA.  Implementing section 111(d) is a three-step process.  First, EPA issues a “guideline” for states to use in developing compliance plans that include standards of performance for stationary sources within a particular source category.  The guideline identifies what EPA determines is the BSER for the relevant sources within the source category.  Second, each state submits a plan to EPA that includes standards of performance for the covered sources in the state.  Third, EPA approves or disapproves of the state plans.  If a state fails to submit an approvable plan, the CAA requires EPA to impose a federal plan.

Proposed BSER Determination

EPA is proposing to define BSER for CO2 emissions from existing coal-fired power plants as heat-rate efficiency improvements based on a range of “candidate technologies.”  This “inside the fence” BSER determination reflects a different approach than what was used in the CPP.  The CPP determined the BSER for power plants based on reductions achievable not only through inside-the-fence measures such as heat rate improvements but also through shifting of generation from higher-emitting to lower-emitting or zero-emitting plants.  As noted above, EPA has proposed to find that such an “outside-the-fence” approach to determining BSER exceeds the agency’s authority under the CAA.

EPA has identified a list of the “most impactful” heat rate improvement measures.  EPA is proposing that this list serve as the “candidate technologies” or “checklist” of BSER technologies, equipment upgrades, and best operating and maintenance practices for coal-fired power plants.  These candidate technologies are:

  • Neural Network/Intelligent Sootblowers

  • Boiler Feed Pumps

  • Air Heater and Duct Leakage Control

  • Variable Frequency Drives

  • Blade Path Upgrade (Steam Turbine)

  • Redesign/Replace Economizer

  • Improved Operating and Maintenance Practices

States would consider the above technologies in establishing standards of performance for existing coal-fired power plants.  EPA is proposing that performance standards will set a specific allowable emission rate expressed on a pound CO2 per MWH-gross rate for each affected unit based on the application of the appropriate candidate BSER technologies to each unit.

EPA explains in the proposed rule that it does not have sufficient information to make a BSER determination with respect to heat rate improvements at natural gas-fired simple‑cycle turbines or combined cycle turbines.  The agency is soliciting comment on this issue.  Previously, EPA determined that heat rate improvement measures at natural gas‑fired combustion turbines would not be considered BSER because such measures cannot provide meaningful reductions at reasonable cost.

State Compliance Plans

The proposed rule would provide each state with broad discretion in establishing specific performance standards for particular plants.  The proposal also allows state plans to rely on emission averaging and trading among affected coal‑fired units at a particular plant.  However, EPA has proposed that state plans should not be allowed to incorporate averaging and trading among different plants, such as a state-wide or interstate cap-and-trade program.  Nor will any credit be given for CO2 emissions reductions achieved through increased generation of renewable energy or gas-fired generation not covered under the section 111(d) regulatory program.  The proposed rule explains that such an approach would be inconsistent with EPA’s proposed “inside-the-fence” interpretation of BSER under section 111.

Permitting Under NSR Program

EPA is proposing revisions to the NSR permitting program to make it easier for power plants to adopt heat rate improvements without triggering NSR obligations.  The NSR program is a preconstruction permitting program.  An NSR permit is required not only before construction of a new major stationary source; it is also required before modifying an existing major source if the modification will result in a significant emissions increase of any NSR-regulated pollutant.  Projects that cause a significant increase in annual emissions may trigger onerous NSR permitting requirements, which include installation of state-of-art emission control technologies, prescriptive air quality modeling, and extensive public notice and comment procedures.

To avoid widespread triggering of NSR permitting requirements from heat rate improvement projects undertaken by affected coal‑fired plants, EPA is proposing to amend the NSR regulations to include an hourly emissions increase test.  Under the proposed revisions, a non-excluded physical or operational change to an electricity generating unit would only trigger NSR if the change resulted in an increase in the unit’s maximum hourly emissions rate under procedures proposed in the ACE rule, as well as a significant emission increase in annual emissions under the current NSR regulations.

As drafted, the proposed maximum hourly emission increase test would be available to any electricity generating unit, including natural gas-fired units that would not be subject to regulation under section 111(d).

States with approved NSR programs would have the option but would not be required to adopt the hourly emission increase test ultimately promulgated as part of the NSR provisions in their SIPs.  For those states with delegated NSR programs that are acting on behalf of EPA, the NSR permitting process would have to include any changes that are ultimately made to the federal NSR provisions as they would be administering the federal program.

EPA is proposing that the potential revisions to the NSR permitting program are severable from the rest of the ACE rule.

Implementing Regulations for Emission Guidelines under Section 111(d)

The proposal revises the general implementing regulations for section 111(d) that govern how EPA issues emission guidelines, and how and when states develop and submit their plans.  These changes would apply for all future section 111(d) rules.  Proposed changes include the following:

  • Timing:  The proposal updates timing requirements regarding submission of state plans and EPA action on those state plans.

    • State submissions:  EPA is proposing to provide states three years to develop state plans.  The existing implementing regulations provide nine months.

    • EPA action:  The proposal would allow EPA 12 months to act on a complete state plan submittal.  The existing implementing regulations provide four months.

    • Federal plan:  The proposal would allow EPA two years to issue a federal plan after a finding of a state’s failure to submit an approvable plan.  The existing implementing regulations provide six months.

  • Criteria for state plans:  The proposal has completeness criteria for state plans that include administrative materials and technical support for state implementation of the plan.  EPA would have six months to determine completeness and would make that determination by comparing the state’s submission against the completeness criteria.

  • Variance provisions:  The proposal provides greater flexibility to states to adopt plans that include variances from the EPA guidelines that will allow, among other things, states to take into account the remaining useful life of the unit and other relevant factors in establishing a performance standard for a particular affected unit.

Next Steps

EPA will take comment on the proposal for 60 days after publication in the Federal Register and will hold at least one public hearing.  Depending on the exact date of Federal Register publication, this means comments will be due to EPA sometime in late October 2018.

Impacts of EPA Proposal

According to EPA, the proposed ACE rule would reduce the compliance burden by up to $400 million per year when compared to the CPP.  EPA estimates that the ACE rule could reduce overall 2030 CO2 emissions by up to 1.5% from projected levels without the CPP.

 

© 2018 Van Ness Feldman LLP
This post was written by Kyle W. Danish and Stephen C. Fotis  of Van Ness Feldman LLP.

California Commercial Building Owners Required to Submit Energy Use Disclosures by June 1, 2018

AB 802, California’s energy use disclosure law, requires owners of commercial buildings containing more than 50,000 square feet to report their energy performance by June 1, 2018. Building owners who have missed the June 1, 2018, reporting deadline are urged to report as soon as possible. The California Energy Commission (CEC) has the authority to issue fines for noncompliance, after allowing a period of 30 days to correct a violation.

Assembly Bill 802 (AB 802)

AB 802 replaced the State’s prior energy use disclosure law, AB 1103, which had required building owners to make disclosures regarding a building’s energy use at the time of a sale, lease, or finance. (View our previous alert.)

Unlike AB 1103, energy use disclosures are no longer tied to transactions under AB 802. Instead, AB 802 directs the CEC to create an annual, statewide building energy use benchmarking and public disclosure program for (1) all commercial buildings containing over 50,000 square feet gross building area, and (2) all multifamily complexes with 17 or more tenant units that are direct billed for energy.

AB 802 requires annual energy consumption reports from each building. Building owners must authorize their utility provider to record and upload their building’s energy data to EPA’s Portfolio Manager, a free reporting tool provided by the United States EPA that allows building owners to compare their building’s energy efficiency with similar buildings.

Compliance Requirements

Owners of buildings in California that have a gross floor area of 50,000 square feet or greater are required to benchmark their energy performance annually, and report the results to the CEC per the following schedule:

  • For disclosable buildings with no residential utility accounts, reporting is due by June 1, 2018, and annually thereafter.

  • For disclosable buildings with 17 or more residential utility accounts, reporting is due by June 1, 2019, and annually thereafter.

AB 802 also requires that energy utilities provide building-level energy use data to building owners, owners’ agents, and operators upon request for buildings with no residential utility accounts and for buildings with five or more utility accounts. The CEC will publicly disclose some of the reported information beginning in 2019 for buildings with no residential utility accounts, and 2020 for buildings with residential utility accounts.

Implications for Owners of Buildings in Cities with Existing Programs

The cities of San Francisco, Berkeley, and Los Angeles already have local benchmarking and public disclosure programs whose requirements exceed those of the state program. Per the state regulations, a local jurisdiction may request that the CEC provide an exemption from the state reporting requirement for buildings located in the local jurisdiction. If the exemption is approved, the owners of buildings in that jurisdiction may report to the local jurisdiction only, and will not be required to report to the CEC.

 

© 2010-2018 Allen Matkins Leck Gamble Mallory & Natsis LLP

Water, Water, Everywhere: The Clean Water Act

If it isn’t already, water should be on your mind this year.  The excitement of Scituate storm surge and coastal flooding aside, the region – and the U.S. as a whole – is facing a slew of legal developments that may change how citizens, businesses, and governments operate under the federal Clean Water Act and similar state programs.  In particular, the scope of Clean Water Act jurisdiction is in play following a pair of Supreme Court decisions, as is the potential delegation of permitting authority to Massachusetts and New Hampshire, two of only four states in which the EPA administers permitting under the National Pollutant Discharge Elimination System (NPDES).

Clean Water Act Jurisdiction

Since well before Samuel Taylor Coleridge penned those famous lines in the Rime of the Ancient Mariner – “Water, water, every where, / Nor any drop to drink” – people have worried about access to clean water.  It makes sense, then, that the Clean Water Act is one of our oldest environmental laws, with its origins in the Rivers and Harbors Act of 1899.  The Rivers and Harbors Act – the nation’s very first environmental law – imposed the first “dredge and fill” requirements, made it illegal to dam rivers without federal approval, and prohibited the discharge of “any refuse  matter  of  any  kind  or  description” into “any  navigable  water  of  the  United  States, or  into  any  tributary  of  any  navigable  water.”

The Federal Water Pollution Control Act of 1948, with major amendments in 1961, 1966, 1970, 1972, 1977, and 1987, largely superseded the Rivers and Harbors Act and resulted in what we know today as the federal Clean Water Act (CWA).  And although today’s statute is very different from its 1899 precursor, one thing has remained constant: an intense and lasting fight over the scope and jurisdiction of federal regulation.  Federal CWA jurisdiction is premised on the Commerce Clause of the U.S. Constitution, and prohibits (without a permit) “dredge and fill” activities and the discharge of pollutants into “navigable waters,” which the CWA defines as “the waters of the United States.”  But what, exactly, are “waters of the United States”?

The 1870 Supreme Court decision in The Daniel Ball held that waterways were subject to federal jurisdiction if they were “navigable in fact.”  But what has never been clear is the extent to which non-navigable waters, like certain tributaries to navigable waters or wetlands, constitute “waters of the United States” such that they are subject to federal regulation.

The Supreme Court Punts (Again)

The 2006 Supreme Court decision in Rapanos v. United States represented a key turning point in CWA jurisdiction, holding that certain remote wetlands are not subject to CWA jurisdiction.  But the decision was badly fractured, with no majority of justices agreeing on a single standard for determining what, exactly, constitute “waters of the United States” such that the CWA applies.  Minor chaos ensued, as regulators and courts applied varying interpretations of Rapanos in permitting decisions and enforcement actions.

In 2015, the Obama administration attempted to clarify the scope of CWA jurisdiction by promulgating a rule known as the “Waters of the United States” (or “WOTUS”) rule that attempted to define exactly which waters were regulated by the CWA.  That rule, which was based on Justice Anthony Kennedy’s “significant nexus” test in the Rapanos decision, was quickly challenged by 31 states, numerous industries, and landowner groups.  At bottom, challengers argued that the WOTUS rule represented significant federal overreach and extended CWA jurisdiction well beyond what the Commerce Clause allows. The numerous appeals were consolidated into a single Sixth Circuit case, National Association of Manufacturers v. Department of Defense (NAM), and in late 2015 the Sixth Circuit stayed the WOTUS rule pending resolution of legal challenges.

But on January 22, 2018, the Supreme Court unanimously held that federal District Courts – not appellate courts – have jurisdiction over challenges to the WOTUS rule.  While the CWA generally requires challenges to CWA rules to be brought in district courts, there are seven situations where courts of appeal have jurisdiction.  In this case, the government argued that the challenge should be heard in the courts of appeal, under CWA Sections 1369(b)(1)(E)-(F) which allow appellate courts to hear cases related to the approval of certain effluent limits or permits, respectively.  Petitioners, on the other hand, maintained that the case should be heard in federal district court in the first instance.  In a procedural victory for the petitioners, the Supreme Court held that the WOTUS rule does not qualify for direct appellate review under CWA Sections 1369(b)(1)(E)-(F).  Following this decision, future challenges to the WOTUS rule will be brought in federal district courts, potentially with divergent outcomes around the country.  Appeals of those decisions will move to the courts of appeals, where there is yet again the possibility for inconsistency.  The upshot is a longer litigation timeline – and continued jurisdictional uncertainty – before the Supreme Court will have another chance to address the appropriate scope of CWA jurisdiction.

In the meantime, the Trump administration is working on a replacement rule for the WOTUS rule that is likely to apply the less expansive jurisdictional test described by Justice Antonin Scalia in Rapanos.  Under that interpretation, only tributaries that are “relatively permanent, standing or flowing bodies of water,” and only wetlands with a continuous surface connection to a “water of the United States” are themselves “waters of the United States” subject to CWA jurisdiction.  And on February 6, 2018, EPA and the Army Corps of Engineers promulgated a rule delaying implementation of the WOTUS rule until February, 2020.  That action preserves the Rapanos status quo (such as it is) until EPA can craft a new rule.  Ultimately, it is likely that any WOTUS replacement rule will be challenged, and the Supreme Court will then have a chance to revisit its decision in Rapanos and redefine federal jurisdiction under the CWA, a process that could easily extend past 2020.

Defer much?

On February 26, 2018, the Supreme Court weighed in again on the Clean Water Act, this time by refusing to take up a challenge to a 2017 decision by the Second Circuit that upheld a 2008 EPA rule exempting water transfers from CWA permitting requirements.  Water transfers happen when water from one waterbody is diverted into another waterbody, such as diverting a stream into a nearby lake or reservoir. Drinking water systems have conducted water transfers for decades, and EPA has never required NPDES permitting for such transfers.  But in 2008, in response to pressure by environmental groups to require NPDES permits for water transfers, EPA adopted the Water Transfers Rule expressly exempting such transfers from NPDES permitting.

Environmentalists and states challenged the Water Transfers Rule, arguing that moving water from one waterbody to another requires a permit if the “donor” water contains pollutants that would have the effect of degrading the receiving water.  Both the Obama and Trump administrations defended the rule, arguing that it preserved long-standing practice and was justified by EPA’s ability to interpret CWA requirements.  Ultimately, the Second Circuit deferred to EPA and allowed the rule to stand.  In turn, the February 26 decision by the Supreme Court allows the Second Circuit decision to stand, thereby affirming the validity of the Water Transfers Rule.  The case was widely seen as a test for Justice Neil Gorsuch, who has expressed hostility to the deference doctrine and EPA regulations alike.  By declining to hear the case, the Court has deferred that test for another day.

Who’s in Charge?

Under a process known as “delegation,” states may assume permitting and other authority under the CWA.  To-date, 46 states have received such delegation from EPA, and all but Massachusetts, New Hampshire, Idaho, and New Mexico now administer their own NPDES permitting programs.  In the absence of delegation, EPA manages the Clean Water Act and NPDES program in those four states, which often overlap and may duplicate separate state law requirements.

New Hampshire is currently evaluating whether to seek CWA delegation from EPA, and has established a legislative commission to explore its options.  And as we have previously reported, Massachusetts has explored CWA delegation in the past, but those efforts largely fizzled out.  But both of these efforts may have new life: the EPA, under Administrator Pruitt, is very focused on “cooperative federalism” and with EPA seeking to slash its budgets, CWA delegation is likely on EPA’s radar as an action item over the next several years.  And, in late 2017, MassDEP Commissioner Martin Suuberg expressed strong support for CWA delegation, as has Governor Baker.  Whether delegation will become a reality for Massachusetts or New Hampshire is anyone’s guess, but regardless of the outcome 2018 is shaping up to be an interesting year for water law.

 

© 2018 Beveridge & Diamond PC
This post was written by Brook J. Detterman of Beveridge & Diamond PC.

EPA Issued Proposed Rule to Add Hazardous Waste Aerosol Cans to Universal Wastes Regulated under RCRA

On March 6, 2018, the U.S. Environmental Protection Agency (EPA) issued a proposed rule (pre-publication version available here) to add hazardous waste aerosol cans to the category of universal wastes regulated under the federal Resource Conservation and Recovery Act (RCRA) regulations (Title 40 of the C.F.R., Part 273), entitled Increasing Recycling: Adding Aerosol Cans to the Universal Waste Regulations.  EPA cites as authority for this change Sections 2002(a), 3001, 3002, 3004, and 3006 of the Solid Waste Disposal Act, as amended by RCRA, as amended by the Hazardous and Solid Waste Amendments Act (HSWA).  EPA states the streamlined Universal Waste regulations are expected to:

  • Ease regulatory burdens on retail stores and other establishments that discard aerosol cans by providing a clean, protective system for managing discarded aerosol cans;
  • Promote the collection and recycling of aerosol cans;
  • Encourage the development of municipal and commercial programs to reduce the quantity of these wastes going to municipal solid waste landfills or combustors; and
  • Result in an annual cost savings of $3.0 million to $63.3 million.

As aerosol cans are “widely used for dispensing a broad range of products” including pesticides, the proposed rule may have implications for chemical companies that create and distribute pesticide products marketed in aerosol cans.  Hazardous waste aerosol cans that contain pesticides are also subject to Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) requirements, including compliance with the instructions on the product label.  Under 40 C.F.R. Section 156.78, a flammability label statement is required for pressurized pesticide product products that states “Do not puncture or incinerate container,” but EPA’s 2004 determination (that will be posted to Docket No. EPA-HQ-OLEM-2017-0463 on www.regulations.gov for this proposed rule) allows for the puncturing of cans.  The proposed rule states:

  • EPA issued a determination that puncturing aerosol pesticide containers is consistent with the purposes of FIFRA and is therefore lawful pursuant to FIFRA section 2(ee)(6) provided that the following conditions are met:
    • The puncturing of the container is performed by a person who, as a general part of his or her profession, performs recycling and/or disposal activities;
    • The puncturing is conducted using a device specifically designed to safely puncture aerosol cans and effectively contain the residual contents and any emissions thereof; and
    • The puncturing, waste collection, and disposal, are conducted in compliance with all applicable federal, state and local waste (solid and hazardous waste) and occupational safety and health laws and regulations.
  • EPA anticipates that this 2004 FIFRA determination would not be affected by the proposed addition of hazardous waste aerosol cans to the universal waste rules.

Comments will be due 60 days after the proposed rule’s publication in the Federal Register.

 

©2018 Bergeson & Campbell, P.C.
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