DC Appeals Court Upholds EPA’s Greenhouse Gas Rules

Timothy J. Lundgren of Varnum LLP recently had an article regarding EPA’s Greenhouse Gas Rules, published in The National Law Review:
Varnum LLP

The U.S. Court of Appeals, D.C. Circuit, upheld the EPA’s greenhouse gas (GHG) regulations against a challenge brought by business interests and the attorney generals of a number of states seeking relief from EPA’s new GHG regulations. As a result, EPA’s GHG regulations remain effective, and PSD and Title V permits must continue to include BACT limits on GHG emissions. Barring a reversal by the Supreme Court (which seems unlikely at this point) or action by Congress, the inexorable processes of the CAA will likely lead to further and more restrictive regulation of GHGs by EPA going forward.

The regulations grow out of an earlier case decided at the Supreme Court, in 2007,Massachusetts v. EPA, which determined that GHGs are an “air pollutant” for purposes of the Clean Air Act, and so are subject to regulation. Since that 2007 decision, the EPA has taken a number of steps related to GHG regulation, including issuing an Endangerment Finding (that GHGs may “reasonably be anticipated to endanger public health or welfare”), setting emission standards for cars and light trucks (the “Tailpipe Rule”), and establishing construction and operating permits for major stationary sources of GHGs. These permits would require implementation of the best available control technology (“BACT”) to limit GHG emissions.

The various Petitioners raised numerous substantive and procedural challenges to EPA’s findings, including claims that the bases for EPA’s Endangerment Finding and Tailpipe Rule were improper, that the scientific record was inadequate or improperly addressed, and that the requirements of the Administrative Procedures Act (“APA”) had not been met during the development of these regulations, among other claims. The court upheld EPA’s review of and reliance on the scientific record it had compiled, as well as its compliance with the APA. The court also rejected challenges to major source permitting requirements, largely based on the statutory language of the Clean Air Act. Given the court’s heavy reliance on the Clean Air Act and the Supreme Court’s 2007 decision, a reversal seems unlikely without some change in direction by the high court.

© 2012 Varnum LLP

Air Quality Alert: EPA Proposes Stricter Particulate Matter Standard

An article by Environmental Law Department of Barnes & Thornburg LLPAir Quality Alert: EPA Proposes Stricter Particulate Matter Standard, was featured in The National Law Review:

On June 15, 2012, U.S. EPA proposed stricter standards to the National Ambient Air Quality Standards (NAAQS) under the Clean Air Act for fine particulate matter. The proposed rule, which is the result of a lawsuit in the U.S. Court of Appeals in the Washington D.C Circuit brought by environmental groups and certain states, proposes to tighten the annual standard for particulate matter under 2.5 microns (PM 2.5) from 15 micrograms per cubic meter (ug/m3) (the 2006 standard) to between 12 and 13 ug/m3. The rule also proposes a new separate standard for improving visibility in urban areas of either 28 to 30 “deciviews,” a measurement of visibility. The proposed rule and “fact sheets” provided by the Agency make clear that EPA is not proposing a change to the existing 24-hour and secondary standards for fine and course particulate matter set in 2006.

EPA claims that the new standard will come at an annual cost of between $2.9 million and $69 million (depending upon a final standard of 12 or 13 ug/m3), but claims these costs are outweighed by alleged health benefits of $220 million to $5.9 billion. EPA is also claiming that all but six counties in the United States should be able to meet the new standards without additional action. However, San Bernadino and Riverside Counties in California, Santa Cruz County in Arizona, Wayne County in Michigan, Jefferson County in Alabama, and Lincoln County in Montana – are all expected to need to reduce fine particulate emissions to attain the new standards.

Under state and federal Clean Air Act regulations, counties that are out of attainment with the NAAQs can be subject to special “Retro-active Control Technology” (RACT) requirements, and new sources of fine particulate emissions will need to obtain “offsets” prior to construction among other requirements.

In addition to the new proposed standards, EPA is also proposing changes to monitoring requirements for fine particulate matter including the addition of fine particulate ambient air monitors especially along urban highways.

EPA’s proposed rule comes during an election year and is expected to draw broad criticism from Republicans and industry groups. Environmental groups are already praising the new proposed lower standards. The new proposed rule has not yet been published in the Federal Register. Comments on the new proposed rule are due within 63 days of publication in the Federal Register and can be submitted through http://www.regulations.gov. The proposed rule and related fact sheets can be viewed at http://www.epa.gov/pm/actions.html.

© 2012 BARNES & THORNBURG LLP

Federal Court Approves Plan to Drill Off Alaska’s North Shore

GT Law

On May 25, the Ninth Circuit Court of Appeals issued adecision upholding theBureau of Ocean Energy Management’s (BOEM) approval of Shell Oil Company’s plan for exploratory drilling in Alaska’s Chukchi Sea. Two Alaskan Inupiat groups and ten environmental groups, including Greenpeace and the Sierra Club, brought the appeal challenging BOEM’s August 2011 approval of the drilling plans. The environmental groups claimed that BOEM erred in approving the plan because (1) the plan did not adequately inform BOEM about its oil spill response plan, and (2) the seven-paragraph description of the well-capping stack and the containment systems was incomplete. However, the court deferred to BOEM’s technical expertise in evaluating the adequacy of the oil spill response plan and found that BOEM had complied with applicable statutes and regulations in approving the plan.

The court’s deference to BOEM’s approval of well-capping technology is significant because it opens a gateway through which other drilling efforts in the Arctic can get approval. Well-capping, the same technology that BP used in containing the Deepwater Horizon spill, had never before been approved for use in Alaska or in Arctic drilling conditions. The opinion also marks a victory for Shell, which has been trying to get approval for the exploratory drilling project since 2005, when Shell purchased a lease portion in Alaska’s continental shelf from the Minerals Management Service.

Other appeals are still pending in the Ninth Circuit, including one challenging the approval of federal air quality permits for the project. Unless that litigation disrupts the project, the Chukchi Sea drilling operations will commence early next month.

From Chelsae Johansen, summer associate, of GT Tampa:

©2012 Greenberg Traurig, LLP

Dept of Energy Liable for $150 Million Because It Has Not Built a Nuclear Waste Facility

GT Law

On May 18, in Yankee Atomic Elec Co. v. United States, the Federal Circuit affirmed a damages judgment of $142.6 million, and added $17.0 million to the judgment by granting a cross-appeal, in a breach of contract action against the government arising from the Department of Energy’s failure to remove spent nuclear fuel from three reactor sites in New England.  The decision came in three consolidated cases from among the 55 that have been filed in the Court of Federal Claims as a result of DOE’s breach of contracts it has with all nuclear utility companies under which the agency was required to begin removing spent fuel from reactor sites in 1998.  Due to chronic delays with the DOE program, including controversy over the proposed Yucca Mountain, Nevada, repository DOE has never commenced any performance.  The utilities have therefore been required to license and construct on-site storage facilities for the nuclear waste, the substantial cost of which constitutes the bulk of the damages claimed in the breach of contract actions.

Beginning in 2004 the government began settling some of these contract cases, and in recent years the pace of settlements has increased following utility victories on most contested issues.  Settlements to date are estimated to exceed $2 billion, and only about 20 of the contract cases remain pending.  However, separate litigation has arisen in the D.C. Circuit over DOE’s proposal to formally cancel work on the Yucca Mountain repository, and also seeking to relieve the utilities of the obligation to pay ongoing fees to DOE under the spent fuel contracts, fees that collectively cost the industry about $750 million per year.

Yankee Atomic was the first of these spent fuel damages cases filed, in 1998, and GT lawyers have represented Yankee Atomic as well as the other two companies involved in the May 18 decision, Connecticut Yankee Atomic Power Company and Maine Yankee Atomic Power Company, throughout the litigation, which has involved two trials and three appeals.

For the Legal Times of Washington’s take on this opinion, click here.

©2012 Greenberg Traurig, LLP

FERC Rules on Several Core Reliability Compliance Issues: New Orders Address Cybersecurity, Registration, and Contingency Planning

The National Law Review published an article recently by Stephen M. SpinaJ. Daniel Skees, and John D. McGrane of Morgan, Lewis & Bockius LLP regarding New FERC Rules on Reliability Compliance:

At FERC’s open meeting on April 19, 2012, FERC approved several orders addressing core aspects of Reliability Standards compliance, including cybersecurity Reliability Standards, compliance registration, and contingency planning issues. The newly approved cybsersecurity Reliability Standards significantly increase the scope of facilities subject to those requirements, the compliance registration decisions clarify the jurisdictional boundary between distribution and transmission facilities, and the planning orders represent a rejection of NERC’s approach to planning for firm load loss following a single contingency.

Cybersecurity: FERC Approves Version 4 CIP Reliability Standards

In Order No. 761, FERC approved Version 4 of the Critical Infrastructure Protection (CIP) Reliability Standards. Under Version 4, the risk-based assessment methodology previously used to identify the Critical Assets that must be protected under the CIP Reliability Standards is replaced with a list of “bright-line” criteria for identifying Critical Assets, contained in Attachment 1 to CIP-002-4. These criteria, FERC concluded, “will offer an increase in the overall protection for bulk electric system components that clearly require protection, including control centers.” In the order, FERC established a deadline of March 31, 2013, for NERC to submit the Version 5 CIP Reliability Standards, which will address the remaining directives from Order No. 706, in which FERC approved the original CIP Reliability Standards. The project site for the Version 5 CIP Reliability Standards is located online.

Compliance Registration: FERC Addresses Distribution/Transmission Distinction

In City of Holland, 139 FERC ¶ 61, 055 (2012), FERC rejected the City of Holland, Michigan, Board of Public Works’ appeal of NERC’s decision to register the City of Holland as a Transmission Owner and Transmission Operator. In reaching this decision, FERC rejected the City of Holland’s assertion that its facilities are distribution facilities, and therefore not part of the definition of “Bulk Electric System” and not subject to registration. FERC explained that the City of Holland’s facilities perform a transmission function, transporting power from the City of Holland’s generation facilities or importing power from other sources over high-voltage lines before stepping the voltage down for distribution to end users. In reaching this decision, FERC also thought it relevant that the facilities at issue do not serve load from a single transmission source, can experience bi-directional flows, and are above the voltage level generally considered distribution voltage.

Commissioner Cheryl A. LaFleur dissented on the grounds that this order depends on the fundamental, yet unsettled question of what facilities are considered “local distribution” under Section 215 of the Federal Power Act (FPA) and therefore outside of FERC’s jurisdiction. As explained in Commissioner LaFleur’s dissent, FERC has in the past identified the criteria for identifying local distribution facilities under Section 201(b) of the FPA, which uses language identical to Section 215, but FERC chose not to apply the Section 201(b) criteria in addressing the City of Holland’s appeal. Commissioner LaFleur asserted that if FERC believes that Congress intended to create different classes of local distribution facilities, FERC has the “burden of demonstrating that this is a reasonable interpretation of the statute.”

In U.S. Department of Energy, Portsmouth/Paducah Project Office, 139 FERC ¶ 61,054 (2012), FERC granted the Portsmouth/Paducah Project Office’s appeal of its registration as a Load-Serving Entity (LSE). FERC had previously remanded this registration, and in ruling on NERC’s subsequent decision upholding the registration, concluded that NERC had failed to support registration as an LSE because NERC had not shown that the lessees and contractors working at the Portsmouth/Paducah Project Office are separate end-use customers to whom the Portsmouth/Paducah Project Office provides electricity. FERC explained that the Ohio Valley Electric Corporation, which sells to the Portsmouth/Paducah Project Office under a state retail tariff, is the appropriate LSE.

Contingency Planning: FERC Demands Stringent Criteria for Planned Load Loss Following a Single Contingency

In Order No. 762, FERC rejected NERC’s proposed revisions to “Note b” in TPL-002-0b, which explains when a Transmission Planner or Planning Authority can plan for the interruption of firm load to meet system reliability requirements following a single contingency. Under NERC’s proposal, these entities could plan for load shedding following a single contingency so long as they documented such planning and considered alternative solutions in an open and transparent stakeholder process. FERC concluded that the proposal failed to satisfy FERC’s earlier directives on this issue and did not present an “equally effective and efficient alternative.” According to FERC, the proposed Note b process “is vague, potentially unenforceable and may lack safeguards to produce consistent results.” The parameters for the proposed stakeholder process, FERC concluded, do not provide a meaningful limitation on the ability to curtail firm load following a single contingency. Furthermore, the conditions under which such interruptions are appropriate remain undefined, threatening the basic system performance objectives of the NERC Transmission Planning Reliability Standards, risking system reliability.

In Transmission Planning Reliability Standards, Notice of Proposed Rulemaking, 139 FERC ¶ 61,059 (2012), FERC proposed to remand NERC’s proposal to combine the four current Transmission Planning Reliability Standards into a single new standard, TPL-001-2. According to FERC, footnote 12 to Table 1 in this proposed standard, which governs planning for the interruption of firm load following a single contingency, presents the same concerns as the Note b issues that led FERC to reject a similar proposal in Order No. 762 (described above). This footnote, which only requires a documented plan developed through an open and transparent stakeholder process that considers alternatives, does not define the parameters governing the decision to plan for the loss of firm load following a single contingency. While FERC noted several improvements in the standard, because of concerns with footnote 12, FERC proposed to find that TPL-001-2 does not meet the statutory criteria for approval. Comments will be due 60 days after the Notice of Proposed Rulemaking is published in the Federal Register. In the Notice of Proposed Rulemaking, FERC requested comments on several transmission planning issues in addition to the core concern regarding planned load curtailments.

Copyright © 2012 by Morgan, Lewis & Bockius LLP

More Wisconsin DNR Permit Streamlining: Piers, General Navigable Waterway Permits, and Environmental Permit Notice Procedures — Governor Walker Signs 2011 Wisconsin Act 167

On April 2, 2012, Governor Walker signed into law 2011 Wisconsin Act 167 (the Act), the latest legislative effort to streamline the Wisconsin Department of Natural Resources (DNR) permitting process. The Act’s primary focus is on the substance and procedures of navigable waterway permitting under Wis. Stat. ch. 30, especially piers, with additional revisions to the public notice procedures of the air, wastewater, solid and hazardous waste, and remedial action statutes.

The revisions made by the Act take effect on August 1, 2012 for all but a few of the pier provisions which are effective immediately upon publication (noted below).[1]

A. Chapter 30 Navigable Waterway Permitting

These amendments fall into four broad categories: piers, grading permit exemptions, general permits and individual permits.

1. Piers

The DNR’s regulation of piers on navigable waterways has been a matter of controversy and legislative attention for many years. Act 167 is the latest installment.

In 2004, Wisconsin enacted a major legislative reform package called the “Jobs Creation Act”, making significant revisions to the sections of Wis. Stat. ch. 30 that govern permits for activities affecting navigable waterways. The Jobs Creation Act formalized three permit categories: exemptions, general permits, and individual permits; and established related time frames, hearing and appeal procedures. To implement these legislative directives, the DNR embarked on a major rulemaking effort to adopt general permits and establish the criteria and procedures for issuance of individual permits. Significant revisions to the rule addressing piers, NR 326, were proposed but not enacted with the remainder of the rules due to public controversy over the proposed revisions. See our Client Alert on the Jobs Creation Act.

The DNR continued its efforts to revise and update NR 326 with respect to piers and pier standards, but to no avail. Ultimately, the Legislature stepped in and enacted 2007 Wisconsin Act 204, resolving the debate by exempting smaller piers from the need to obtain a permit and creating a cut-off date and pier registration process for larger piers. These larger piers could also be exempt from the permit requirement if they were placed before February 6, 2004 (i.e., they were “grandfathered”) and registered with the DNR by April 1, 2011. 2011 Wisconsin Act 25 subsequently extended the registration date to April 1, 2012.

Effective immediately,[2] Act 167 has eliminated the February 6, 2004 “grandfathering” date and the entire pier registration process for the larger piers.[3]The existing exemption for smaller piers is maintained with minor clarifying revisions to the language.

As a result of Act 167, the following piers are exempt from the requirement to obtain a permit:

  1. The pier meets the following criteria:

a. No more than 6’ wide and extends no further than to a point where the water is 3’ deep or deep enough to moor a boat;

b. No more than two boat slips for the first 50’ of riparian owner’s shoreline footage and no more than one boat slip for each additional 50’ of footage; and

c. A loading platform may be more than 6’ wide if the surface area of the platform is no more than 200 sq. ft.[4]

  1. The pier does not meet the criteria listed under sub. 1, but is an existing pier (i.e., was placed on the bed of the waterway before April 17, 2012[5]) regardless of whether or not it has been registered, UNLESS:

a. The DNR notified the riparian owner before April 17, 2012[6] that the pier is “detrimental to the public interest”; or

b. The pier “interferes with the riparian rights of other riparian owners.”[7]

Further, the DNR is prohibited from taking enforcement action against the riparian owner of any pier if the DNR issued either a permit or a written authorization for the pier and the pier is in compliance with that permit or authorization,[8] and a pier owner may relocate or reconfigure the pier so long as the pier is not enlarged.[9]

2. Grading permit exemption

Act 167 has also eliminated the need to obtain duplicative state permits to move dirt on the bank of a navigable waterway. Wis. Stat. s. 30.19 regulates grading activities on the waterway bank. Wis. Stat. ch. 283 regulates the management of stormwater from land disturbing activities (e.g., construction). Both of these provisions are directed at protecting water quality from dirt that is disturbed and can run off as a result of site work.

Effective August 1, 2012, land grading activity on the bank of a navigable waterway is exempt from the requirement to obtain a s. 30.19 permit if it is authorized by a stormwater discharge permit issued under s. 283.33. If the land grading is authorized by a county permit issued under its shoreland zoning ordinance, it is similarly exempt from the requirement to obtain an s. 30.19 grading permit from the DNR.[10]

3. General permits

If a regulated project or activity is not exempt from the requirement to obtain a permit, it must be authorized by either a general permit or an individual permit. General permits are written to cover any number of projects or activities that can meet a standardized set of criteria, whereas an individual permit is written specifically for that project. As a result, general permits are ultimately time savers. Changes made in Act 167 maximize the DNR’s authority to issue general permits under ch. 30 and streamline the process for doing so.

The Act maximizes the DNR’s authority to issue general permits by expanding the universe of activities for which the DNR can issue general permits to include any activity regulated under ch. 30.[11] The Act streamlines the process for doing so by exempting general permits from the definition of “rule”,[12] eliminating the lengthy and cumbersome procedure for adopting rules, and replacing that procedure with a public comment period and a newly-created legislative committee review process.[13]

Any general permit must contain requirements and conditions that assure the activity being authorized “will cause only minimal adverse environmental impacts, will not materially interfere with navigation, and will not have an adverse impact on the riparian property rights of adjacent riparian owners.”[14]

Once a general permit is issued, the process works like this: If you believe your activity meets the eligibility criteria you apply to the DNR for “coverage” under the general permit no less than 30 days before beginning the activity. If the DNR does not request more information or otherwise inform you that your activity does not qualify for the general permit within that 30-day period, the activity is considered authorized and you are legally free to proceed. The DNR may make one request for additional information during that 30-day time period; if the DNR does so, the time it takes you to provide that information is added to the 30 days the DNR has to respond to your application.[15]

Once issued, a general permit is valid for five years. Regardless of the expiration date of a general permit, an activity authorized under a general permit remains authorized for five years from the date of coverage or until it is complete, whichever occurs first. The DNR is authorized to renew, modify and revoke general permits following the same procedures used to issue the general permit initially.[16]

The net effect of these revisions is to invest the time initially in developing and issuing the general permits so that as many activities as possible can be authorized using these streamlined procedures. For activities that don’t meet the general permit criteria, an individual permit option remains available.

4. Individual permits

Act 167 makes a few revisions to the procedures for issuance of individual permits, also designed to tighten up the timelines. The primary revisions conform these procedures to the procedures included in the recently-enacted Wetlands Reform Bill (2011 Wisconsin Act 118) so that the procedures for navigable waterway permits issued under ch. 30 and for wetland water quality permits issued under ch. 281 are the same.

Here is how it all works:[17]

a. Within 30 days of receipt of the individual permit application, the DNR determines if the application is complete/incomplete:

  • If complete, THE DNR notifies the applicant and the date of that notification becomes the “date of closure”; the date of closure drives subsequent deadlines as described below.
  • If incomplete, the DNR notifies the applicant of the deficiency/ies within the same 30-day time period; the DNR is limited to one request for additional information within the same 30-day time period; within 10 days of receipt of the requested information, the DNR notifies the applicant if the application is complete/incomplete (if still incomplete, the DNR and applicant can agree to additional information the applicant will provide); the date of this second notification becomes the date of closure.
  • If the DNR fails to meet this 30-day or 10-day time period, the date of closure becomes the last day of either the 30-day or 10-day time period.

b. Within 15 days of the date of closure, the DNR issues the public notice of pending application.

  • The notice may include notice of a public hearing if the applicant requests it.
  • If not, any member of the public may request a public hearing within 20 days of issuance of the public notice; or with or without a request, the DNR may decide to hold a public hearing if it determines “there is significant public interest” to do so.
  • The DNR must issue a public notice of the hearing within 15 days of receipt of a hearing request or its own decision to hold a hearing; the public comment period closes 10 days after the hearing is held.

c. Within 20 days after the public comment period has ended if a hearing is held, or within 30 days after the public comment period has ended if no hearing is held, the DNR issues its decision to either issue or deny the permit.

d. If the DNR fails to comply with these time periods, the permit is considered to be issued and the activity may proceed, although the DNR may impose terms and conditions on the permit “that are consistent with the applicant’s basic proposal.”[18]

The DNR’s decision to issue or deny the permit is subject to challenge in either or both an administrative contested case hearing under ch. 30 and judicial review under ch. 227. The ch. 30 contested case procedures were significantly revamped in the Jobs Creation Act (2003 Wisconsin Act 118). Those procedures remain intact under Act 167[19] and are summarized in our Client Alert on the Jobs Creation Act.

B. Public Notice Procedures for Ch. 30 and Other Environmental Statutes

Act 167 also brings the DNR’s public notice procedures into the digital age by requiring the DNR to:

  1. Create an electronic notification system to provide public notice;[20]
  2. Post public notices on the DNR website;[21]
  3. Post on the DNR website any navigability determinations DNR makes – which may be relied upon;[22]
  4. Post (to the greatest extent possible) the current status of any application for a permit under chs. 30, 281 to 285, or 289 to 299, and any hearings scheduled on the application.[23]

Importantly, the Act also specifies that the date on which the DNR first posts the public notice on its website is the date the notice is considered to be issued, for purposes of permits to be issued under ch. 30,[24] Wisconsin Pollutant Discharge Elimination Systerm permits to be issued under ch. 283,[25] air construction and operation permits to be issued under ch. 285,[26] solid and hazardous waste facility approvals to be issued under chs. 289 and 291,[27] and remedial actions to be authorized under ch. 292.[28]

C. Other revisions

  1. Act 167 makes other revisions which address:
  2. Repair of boathouses[29]
  3. Expedited procedures for approval of low hazard dams[30]
  4. Bridge standards[31]
  5. Use of air dispersion modeling for minor source determination[32]

The DNR staff will use the time between now and August 1 to create application forms, internal procedures and guidance, and otherwise prepare to implement these statutory directives. For more information, please contact the author of this client alert.



[1] Section 131 of the Act provides that the Act is effective on the first day of the forth month after publication, with the exception of certain provisions involving piers which become effective the day after publication. Publication is expected to be April 16, 2012. Thus the majority of the Act will be effective August 1; those limited pier provisions are expected to be effective on April 17, 2012.

[2] See Endnote 1

[3] s. 30.12(1k)(b) as amended

[4] s. 30.12(1g)(f)

[5] See Endnote 1

[6] See Endnote 1

[7] s. 30.12(1k)(b)1m. and 2.

[8] s. 30.12(1k)(cm)

[9] s. 30.12(1k)(e)2.

[10] s. 30.19(1m)(f) and (g)

[11] s. 30.206(1)(am)

[12] s. 227.01(13)(rt)

[13] s. 30.206(5m)

[14] s. 30.206(1)(am)

[15] s. 30.206(3)(a)

[16] s. 30.206(1)(b)

[17] s. 30.208(2)-(4)

[18] s. 30.208(2)(d)

[19] s. 30.209

[20] s. 30.206(2b)(a)

[21] s. 30.206(2b)(a)

[22] s. 30.102(1)

[23] s. 30.102(2), 299.l7

[24] s. 30.206(2b), 30.208(5)(bm)

[25] s. 283.39(lm), 283.63(1)(a)

[26] s. 285.61(5)(c), 285.62(3)(c)

[27] s. 289.25(3), 289.41(1m)(g)1., 291.87(3)

[28] s. 292.31(3)(f)

[29] s. 30.121

[30] s. 31.12(5)

[31] s. 84.01(23)

[32] s. 285.63(11)

© MICHAEL BEST & FRIEDRICH LLP

U.S. Announces Innovative Clean Air Agreement For Industrial Flares With Marathon Petroleum Company

Recently The National Law Review published an article by the U.S. Environmental Protection Agency regarding a New Clean Air Agreement:

The U.S. Environmental Protection Agency (EPA) and the Department of Justice today announced an innovative environmental agreement with Ohio-based Marathon Petroleum Company that already has significantly reduced air pollution from all six of the company’s petroleum refineries. In a first for the refining industry, Marathon has agreed to state-of-the-art controls on combustion devices known as flares and to a cap on the volume of waste gas it will send to its flares. When fully implemented, the agreement is expected to reduce harmful air pollution by approximately 5,400 tons per year and result in future cost savings for the company.

“Today’s agreement will result in cleaner air for communities across the South and Midwest,” said Cynthia Giles, assistant administrator for EPA’s Office of Enforcement and Compliance Assurance. “By working with EPA, Marathon helped advance new approaches that reduce air pollution and improve efficiency at its refineries and provide the U.S. with new knowledge to bring similar improvements in air quality to other communities across the nation.”

“This agreement is a great victory for the environment and will result in cleaner and healthier air for the benefit of communities across the country in Illinois, Kentucky, Louisiana, Michigan, Ohio and Texas,” said Ignacia S. Moreno, assistant attorney general for the Environment and Natural Resources Division of the Department of Justice. “By spurring corporate ingenuity, this settlement will dramatically reduce emissions from all 22 flares at Marathon’s six refineries.”

The settlement is part of EPA’s national effort to reduce air pollution from refinery, petrochemical and chemical flares. A flare is a mechanical device, ordinarily elevated high off the ground, used to combust waste gases. The more waste gas a company sends to a flare, the more pollution occurs. The less efficient a flare is in burning waste gas, the more pollution occurs. EPA wants companies to flare less, and when they do flare, to fully combust the harmful chemicals found in the waste gas.

A consent decree filed today in the U.S. District Court in Detroit resolves Marathon’s alleged violations of the Clean Air Act. As part of the effort to reach this agreement, Marathon, under the direction and oversight of EPA, spent more than $2.4 million to develop and conduct pioneering combustion efficiency testing of flares and to advance the understanding of the relationship between flare operating parameters and flare combustion efficiency.

In addition, beginning in 2009, Marathon installed equipment, such as flow monitors and gas chromatographs, to improve the combustion efficiency of its flares. To date, Marathon has spent approximately $45 million on this equipment and projects, and plans to spend an additional $6.5 million. Marathon also will spend an as yet undetermined sum to comply with the flaring caps required in the consent decree.

At the same time, Marathon indicates that the equipment it already has installed is saving it approximately $5 million per year through reduced steam usage and product recovery. Marathon also projects additional savings through the operation of the equipment to be installed in the future.

From 2008 to the end of 2011, the controls Marathon installed eliminated approximately 4720 tons per year of volatile organic compounds (VOCs) and 110 tons per year of hazardous air pollutants (HAPs) from the air. An additional 530 tons per year of VOCs and 30 tons per year of HAPs are projected to be eliminated in the future.

Under the agreement, Marathon will also implement a project at its Detroit refinery to remove another 15 tons per year of VOCs and another one ton per year of benzene from the air. At an estimated cost of $2.2 million, Marathon will install controls on numerous sludge handling tanks and equipment.

Marathon’s six refineries are located in: Robinson, Ill.; Catlettsburg, Ky.; Garyville, La.; Detroit; Canton, Ohio; and Texas City, Texas. Together, the refineries have a capacity of more than 1.15 million barrels per day.

Marathon, headquartered in Findlay, Ohio, will pay a civil penalty of $460,000 to the United States.

The consent decree is subject to a 30-day public comment period and final court approval.

More about the settlement: http://www.epa.gov/compliance/resources/cases/civil/caa/marathonrefining.html

More about EPA’s civil enforcement of the Clean Air Act: http://www.epa.gov/compliance/civil/caa/index.html

More about EPA’s refinery initiative: http://www.epa.gov/compliance/resources/cases/civil/caa/oil/

© Copyright 2012 United States Environmental Protection Agency

Supreme Court Broadens the Types of Federal Agency Actions That Can Be Challenged in Court

Recently an article by Jerry Stouck and David B. Weinstein of Greenberg Traurig, LLP regarding the  Types of Federal Agency Actions that can be Challenged in Court was published in The National Law Review:

GT Law

The Supreme Court recently held, in Sackett v. Environmental Protection Agency, that “compliance orders” unilaterally issued by the EPA, which the agency contended were informal directives not subject to judicial review, qualify as “final” agency actions that can be challenged in court under the Administrative Procedure Act (APA). The decision is not limited to EPA compliance orders, although many hundreds of those are issued each year, which now will be subject to judicial review. Sackett applies more broadly because it expands the types of federal agency actions that will be deemed final, and thus subject to judicial challenge, under the APA. Any agency action that has coercive legal effect, and no established avenue for agency-level review, is now potentially challengeable under Sackett.

The APA authorizes federal courts to enjoin or set aside agency action that is arbitrary, capricious, or contrary to law, and to compel agency action unlawfully withheld or unreasonably delayed. In any such case, however, it is a jurisdictional requirement that the agency action be “final.” The rationale is that courts should not interfere with ongoing agency decision-making. Such finality is relatively clear when a party challenges a regulation or an order resulting from formal agency adjudications (e.g., license or permit proceedings). But most actions of federal regulatory agencies fall into neither category, and instead constitute what practitioners call “informal” agency adjudication. EPA compliance orders are in that category; they do not result from any well-defined agency proceeding. So are many other types of agency directives and procedures.

Sackett involved a couple who, in the course of developing a residential lot they owned into a home site, filled in part of the lot with dirt and rock. Unbeknownst to the Sacketts, their lot contained wetlands that the EPA considered to be within federal regulatory jurisdiction under the Clean Water Act (CWA). If that were true, the Sacketts could not lawfully fill the wetlands without a federal permit. The EPA issued a compliance order containing “Findings and Conclusions” that the lot did in fact contain wetlands subject to EPA jurisdiction. The order also directed the Sacketts to restore the lot in accordance with an EPA work plan and to provide EPA with access to the lot and to records concerning conditions at the lot.

The Sacketts, who believed their lot did not contain wetlands subject to the CWA, requested a hearing before the EPA, which the agency refused to provide. The Sacketts then filed suit, but the lower courts dismissed it, finding that the compliance order did not qualify as final agency action under the APA. Thus, the Sacketts were unable to initiate a judicial proceeding to resolve the dispute over whether their wetlands were subject to the CWA. But if the EPA later went to court to enforce its compliance order, the government contended that statutory per-day penalties owing from the Sacketts would double, and that obtaining a necessary permit would be more onerous under applicable regulations. In essence, therefore, the EPA compliance order was coercive — if the Sacketts “voluntarily” complied with the order, they would avoid the double penalties and the additional permitting requirements.

That coercive effect was central to the Supreme Court’s reasoning in holding that the compliance order was a final agency action, subject to judicial review. The coercive effect of the EPA compliance order in Sackett is also what makes the decision potentially applicable to other, similarly-coercive agency directives and procedures. Under the test articulated by the Court in a 1997 decision, Bennett v. Spear, agency action is “final” for APA purposes if it both “determines rights and obligations” and marks the “consummation” of the agency’s decision-making process. The Court in Sackett found the former requirement satisfied because “legal consequences” flowed from the compliance order, i.e., the doubling of the statutory penalties and tightening of the wetlands permitting requirements. The government contended, however, that even though the EPA refused the Sacketts’ request for a hearing, the compliance order was not the end of the Agency’s decision-making process. The government pointed to a portion of the order that invited the Sacketts to “engage in informal discussion” with the EPA regarding the order’s terms and requirements and/or any allegations in the order that they believed to be inaccurate. The Court rejected this argument, and found the compliance order sufficiently final, because it conferred no “entitlement” to further Agency review. The Court concluded that the “mere possibility” that an agency might reconsider as a result of informal discussions “does not suffice to make an otherwise final agency action nonfinal.”

Underlying the Sackett decision is a concern, expressly noted by the Court, that agencies should not be allowed to “strong-arm . . . regulated parties into ‘voluntary compliance’ without the opportunity for judicial review.” When regulated parties face such strong-arming at the hands of federal agencies they should now consider whether, pursuant to Sackett, judicial redress is available under the APA.

©2012 Greenberg Traurig, LLP

USEPA Proposes to Retain Current GHG Thresholds in Step 3 of the Tailoring Rule

Recently an article by Energy and Public Utilities Group of Schiff Hardin LLP regarding the USEPA’s GHG Thresholds appeared in The National Law Review:

As the D.C. Court of Appeals heard an unprecedented two days of oral argument on challenges to USEPA’s suite of greenhouse gas (“GHG”) regulations, USEPA issued an advance copy of yet another GHG regulation-the third step of its GHG permit Tailoring Rule (“Proposed Step 3 Rule”). Advance copy of Docket No. EPA-HQ-OAR-2009-0517 available at www.epa.gov/nsr/ghgdocs/TRStep3_Proposal_FRN.pdf. Proposed Step 3 retains the current GHG permitting thresholds for the Prevention of Significant Deterioration (“PSD”) and Title V Operating Permit Programs under the Clean Air Act (“CAA”). The proposal is consistent with USEPA’s phased-in approach to tailor the requirements of the CAA to apply to only the largest emitters. In so doing, USEPA recognizes that state agencies are not ready to handle a bigger permitting program.

In 2010, USEPA committed to complete action on a Step 3 rulemaking by July 1, 2012, and to make Step 3 effective on July 1, 2013. Steps 1 and 2 of the Tailoring Rule were promulgated in May 2010, applying only to the largest sources of GHG emissions. In that rule, USEPA stated that it would take comment and consider whether to include smaller sources or lower the trigger for applicability in Step 3. In the Proposed Step 3 Rule, USEPA determined that “the permitting authorities are not significantly better positioned now” to process more GHG permits than they were in May 2010, so USEPA proposes to retain the current applicability thresholds promulgated under Steps 1 and 2.

The thresholds for determining GHG PSD applicability are as follows:

  • Step One:
    • Starting January 2, 2011, GHGs must be addressed in Title V permits for all sources that are otherwise subject to Title V permitting requirements based on their emissions of non-GHG pollutants.
    • In addition, PSD requirements apply to GHGs for projects that increase net GHG emissions by at least 75,000 tons per year (“tpy”) carbon dioxide equivalent (“CO2e”), but only for projects that are “major modifications” as a result of an increase in emissions of a regulated, non-GHG pollutant.
  • Step Two:
    • Starting July 1, 2011, some stationary sources that would not otherwise require Title V or PSD permits require such permits solely as a result of emitting GHGs.
    • Stationary sources that emit or have the potential to emit at least 100,000 tpy CO2e (and 100 tpy GHGs on a mass basis) are subject to Title V permitting requirements.
    • Stationary sources that emit or have the potential to emit at least 100,000 tpy CO2e (and 100 or 250 tpy GHGs on a mass basis, depending on the source) constitute “major stationary sources” under the PSD regulations. New stationary sources over the 100,000 tpy CO2e threshold are subject to PSD requirements for their GHG emissions. In addition, projects that increase net GHG emissions by at least 75,000 tpy CO2e are “major modifications” (assuming other elements are met and no exclusions apply), whether or not those projects would constitute “major modifications” based on an increase of any other pollutant.

USEPA also proposed two changes to streamline the permitting program under Step 3.

The first is to extend the use of the plantwide applicability limit (“PAL”) to GHG permitting. The source would apply for a PAL that would apply to the entire source rather than specific emissions points. This alteration would allow facilities to alter emissions units without triggering new permitting requirements, provided that emissions levels do not exceed the PAL. The added flexibility allows companies to respond to changing market conditions while streamlining permitting.

The second change would create the regulatory authority for USEPA to issue synthetic minor permits for GHGs where the agency is the PSD permitting authority. Under this approach, a GHG source could agree to an enforceable GHG emissions limit set below a level that would trigger PSD permitting requirements. Such a limit might be an hourly or daily fuel consumption limit, for example. USEPA proposes to give itself and its designated agents the ability to issue synthetic minor permits for GHG and potential GHG emitters. USEPA stated that many state and local permitting authorities already have the ability to issue such synthetic minor permits.

The proposal solicits comments on whether streamlined approaches could be appropriate for some source categories and requests that commenters provide detailed proposals for those source categories. For example, general permits could be considered for some. USEPA solicits comments on which source categories would be candidates for the creation for a Potential to Emit (“PTE”) specific rule or guidance; input on whether such a rule should target specific source categories or be made broadly available; and comments on the appropriate structure and requirements for such a rule.

The proposal requests comment on a number of other PSD program concepts, including permitting burden on state agencies, presumptive BACT and “empty” Title V permits. The proposal has not yet been published in the Federal Register but USEPA states that the comment period for the Proposed Step 3 Rule will end on April 20, 2012. A public hearing will be held on March 20, 2012 in Arlington, Virginia.

This brief summary does not address the many permitting decision nuances and requested comments reflected in the agency action, so careful reading of the proposed rule is suggested. For more information about the Tailoring Rule, please see our prior updates: “USEPA Issues Final Tailoring Rule” and“Greenhouse Gas Reporting and Permitting Deadlines in 2011”.

© 2012 Schiff Hardin LLP

Increasing Offshore Wind Projects: A Focus on Regulatory Authority

I. Introduction: The Rise of Offshore Wind Projects

Meeting the challenges of environmental sustainability and climate control will require unprecedented advances in the global energy market through regulatory consistency, policy incentives, and economic integration.  Energy conservation and environmental preservation are important to all human welfare.  The current energy structure, on a global level, has contributed significantly to the drastic climate fluctuations as well as environmental destruction.  Now that the impacts of fossil fuel consumption have become significant, a diversified energy structure is needed to ensure sustainability.[i]  The United States needs to become more invested in alternative renewable energy sources in order to curb the impacts caused from fossil fuel consumption which include: environmental degradation, pollution, death, exhaustion, depletion, etc.

The energy demand in the United States as well as the rest of the world will continue to increase with industrialization, advancements in technology and population growth.  While energy consumption rates skyrocket to never-before-seen heights, access to fossil fuels becomes more difficult and more expensive.  Global development and energy demands will continue as newly industrialized countries become competitive with developed countries, and yet the global arena lacks an authoritative body to manage our precious fossil fuels.  The United States should not hesitate in decreasing its dependency on fossil fuels and increasing renewable energy development.

As a result of rising concerns about energy prices, supply uncertainties, and adverse environmental impacts, the United States has taken a new approach to its energy structure by working towards developing renewable energies and generating more energy from domestic sources, while trying to lessen the environmental impacts.[ii]  This approach calls for a cohesive system of agency regulation and management to streamline the permitting process for alternative renewable energy resources, especially offshore wind projects.

The potential energy generation from offshore, renewable resources is substantial and implementation is essential for environmental sustainability and responsible environmental resource management.[iii]  For example, an offshore turbine is capable of producing fifty percent more electricity than an onshore turbine of the same size because offshore winds are stronger and more constant. [iv] The potential for U.S. offshore wind electricity is estimated to be more than 900,000 megawatts, a figure equal to the United States’ current production capacity.[v]  The public needs to become educated on environmental impacts caused by fossil fuel consumption and the potential for renewable resources to mitigate those impacts.  In turn, the public needs to pressure those agencies responsible for energy production to promote consistent and dependable methods for permitting renewable energy resource development.

In April 2010, the BP oil spill, the largest accidental oil spill in American history, caused irreparable damage to the water supply, marine wildlife and the entire ecosystem of the Gulf of Mexico.  The actual damage caused by exploiting fossil fuel resources, in addition to the potential risks and unpredictable long-term impacts, provides sufficient motivation to move in the direction of promoting renewable energy resources, which pose relatively zero risks.[vi]  However the current national energy structure is exactly the opposite.  Renewable energy projects coming online are sadly minimal and the United States and other nations continue to pursue fossil fuel projects.

Part II discusses how the United States has delegated jurisdiction over the ocean to various agencies and provides an overview of the conflicts that exist among agencies with regard to jurisdiction over the ocean.  Part III provides a case specific analysis of the permitting process for an offshore wind project and the difficulty of satisfying the requirements of the environmental review process.  This section also suggests that the federal government should create new legislation for managing offshore wind projects, as well as for other renewable energy resources.  Finally, Part IV offers recommendations that the federal government and the public should pursue initiatives and existing practices in the fossil fuel arena to be applied to the renewable energy arena, as to protect the health and economic stability of the United States.

II. Regulatory Background of Offshore Management – Jurisdictional Conflict Among Agencies

In 1945, President Truman proclaimed that the United States had jurisdiction and control over the U.S. Continental Shelf and the natural resources on the shelf and of the subsoil.[vii]  Enacted in 1953, the SLA gave coastal states jurisdiction and control over the sea and the submerged lands, extending three nautical miles seaward from the coastline.[viii]  However, SLA reserved the federal rights to “commerce, navigation, national defense, and international affairs.”[ix]  OCSLA, enacted shortly after SLA, codified the Truman Proclamation and delegated to the Secretary of the Interior authority over exploration and development on the Outer Continental Shelf (OCS), submerged lands seaward from each states’ territory.[x]  It is now established law that the seabed of the ocean beyond three miles from the shore and on the OCS is within U.S. territorial water and under exclusive federal jurisdiction.[xi]  The OCSLA, delegated authority to the Department of the Interior to issue oil and gas leases, but it did not delegate authority over renewable energy development on the OCS.[xii]

Over the last decade, the delegation of federal authority to manage environmental regulations and oversee the development of offshore projects has created confusion among several agencies.  Prior to 2005, the Army Corps of Engineers (Corps) was responsible for permitting offshore wind projects pursuant to the Rivers and Harbors Act.[xiii]  However, under the Energy Policy Act of 2005, the Secretary of the Interior was given the power to grant leases, easements, and rights-of-way on the Outer Continental Shelf (OCS) for renewable energies.[xiv]  In 2006, the Secretary of the Interior delegated its authority to the DOI’s Mineral Management Service (MMS).[xv]  The Corps, however, retained its authority over permitting offshore projects.[xvi]

In response to confusion between MMS and the Corps as to who had exclusive authority over offshore renewable energy projects, the DOI and the Federal Energy Regulatory Commission (FERC) signed a Memorandum of Understanding (MOU) that gave MMS exclusive jurisdiction over offshore wind energy projects on the OCS.[xvii]  The MOU charged MMS with conducting environmental reviews and ensuring that offshore wind projects comply with other federal agency requirements, including requirements under NEPA.[xviii]

The CEQ is charged with specific duties to carry out NEPA’s standards, including the duty to suggest, “national policies to foster…environmental quality to meet…goals of the Nation.”[xix]  Under NEPA, federal agencies such as MMS are required to submit to CEQ a statement detailing any potential environmental impacts of any “major Federal actions significantly affecting the quality of the human environment.”[xx]

The Energy Policy Act of 2005 authorized the Department of the Interior (DOI) to issue leases, easements, or right-of-ways for alternative energy projects on the OCS.  Prior to 2005, MMS had been responsible for managing oil, natural gas, and other resource activities on OCS lands.  Under the Energy Policy Act of 2005, MMS became respo­­­nsible for managing alternative energy-related activities, including renewable resources, on OCS lands.[xxi]  MMS became the lead agency to coordinate the permitting process, and to monitor and regulate alternative energy production.[xxii]  MMS is charged with ensuring that projects are in conformity with NEPA before permits are issued.  Therefore MMS and its predecessors must comply with NEPA when considering applications, such as the Cape Wind application discussed below.[xxiii]

The statement detailing environmental impacts, required by the CEQ, can take the form of an environmental impact statement (EIS),[xxiv]a thorough assessment of the environmental impacts, or an environmental assessment (EA),[xxv]which is more conciseimpact statement.  The EIS must include: (1) the environmental impacts of the proposed action, (2) alternatives to the proposed action; and (3) “any irreversible and irretrievable commitments of resources which would be involved in the proposed action should it be implemented.”[xxvi]  MMS recognizes that offshore wind projects will significantly affect the human environment, therefore requiring an EIS instead of an EA.[xxvii]

MMS published the Renewable Energy and Alternative Uses of Existing Facilities on the Outer Continental Shelf (Rules),[xxviii]which requires two additional environmental reviews before MMS issues a commercial lease for an offshore wind project.[xxix]  Under the Rules, a lessee is required to submit a Site Assessment Plan (SAP) before conducting a site assessment and then was required to submit a Construction and Operations Plan (COP) before beginning construction.[xxx]  Both the SAP and the COP must undergo a NEPA review.[xxxi]  After the SAP is approved, a five-year site assessment term begins, during which the lessee assesses the potential impacts of the project’s activities and prepares the COP.[xxxii]

However to reduce the review time, MMS decided that the SAP and COP could be submitted simultaneously.[xxxiii]  If the SAP introduces additional information not included in the initial EIS, a second environmental review is required.[xxxiv]  Another environmental review is required when the COP is submitted.[xxxv] MMS, initiated an interim policy to make the environmental review more efficient, under which resource data collection facilities “could be considered and authorized for installation and operation on the OCS before promulgation of final rules.”[xxxvi]

The Rules for permitting offshore wind projects were unsurprisingly similar to the regulatory process for oil and gas leasing since MMS was the lead agency for both.[xxxvii]  The Rules allowed for leasing of commercial development on the OCS, and allowed for the issance of right-of-ways and right-of-use easements necessary to support renewable energy projects.[xxxviii]  Commercial leases enable the lessee to deliver power by including the right to a project easement, allowing the lessee to install transmission cables.[xxxix]  The Rules also require environmental reviews to be consistent with the CZMA.[xl]  The CZMA was enacted, “to preserve, protect, develop, and where possible, to restore or enhance, the resources of the Nation’s coastal zone.”[xli]  Congress gave states the authority to establish management programs, in accordance with CZMA, to oversee the development of offshore projects in and adjacent to the state’s territorial lands.[xlii]  However a project may be exempt from the state’s program if it serves national interests and is consistent with the CZMA.[xliii]

In an effort to streamline the environmental review process, that has substantially prolonged, or completely stopped, some energy development programs, on June 18, 2010, MMS was reorganized and renamed the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE).[xliv]  BOEMRE met with the same challenges of the environmental review process as MMS, and its response yielded similar deficiencies.  As a result, the federal agency was reorganized again.  On October 1, 2011, BOEMRE was replaced by the Bureau of Ocean Energy Management (BOEM) and the Bureau of Safety and Environmental Enforcement (BSEE).[xlv]  BOEM is now responsible for the environmental review process and for managing responsible development of offshore resources other than oil and gas.[xlvi] BSEE is responsible for the oversight of offshore oil and gas operations.[xlvii]  BOEM consolidates all relevant information that developers of offshore wind projects must consider when applying for lease permits and complying with the steps necessary to begin construction.[xlviii]

III. Cape Wind

Cape Wind Associates, LLC (Cape) began its consistently-obstacle-ridden journey to develop a wind energy plant on Horseshoe Shoal in Nantucket Sound, Massachusetts, in November 2001.  Cape filed a permit application with the Corps to construct a scientific measurement device station (SMDS) to monitor and assess the potential impacts of the wind farm.[xlix]  The U.S. Court of Appeals for the First Circuit upheld the Corps’ regulatory authority to permit Cape’s construction of the SMDS, which would collect data for five years.[l]  The Corps issued a permit to Cape under section 10 of the Rivers and Harbors Act of 1899, 33 U.S.C. § 401, for the construction of the SMDS after determining that the project posed no threat to marine and avian life and that it would aid navigation.[li]

In addition to the permit, the Corps issued an EA and a Finding of No Significant Impact (“FONSI”) pursuant to NEPA requirements.[lii]  The United States Court of Appeals for the First Circuit affirmed the district court’s decision that the Corps’ did not violate its authority in issuing the permit for the SMDS.[liii]  Once Cape tackled the hurdle of getting the first permit, the State of Massachusetts added more challenges, prolonging the project and risking Cape Wind’s financial stability.

After the Corps granted the permit, Massachusetts, represented by Ten Taxpayers Citizen Group, et al., challenged the issuance of the permit claiming the state rather than the federal government had jurisdiction over the project.[liv]  However, the United States Court of Appeals for the First Circuit affirmed the district court’s dismissal of the complaint on the basis that the project fell under federal jurisdiction and Massachusetts statutes were therefore inapplicable to the Cape’s project.[lv]  The court recognized the general rule that rights to offshore seabeds are reserved to the federal government as an incident of national sovereignty.[lvi]

On November 21, 2002 Cape submitted a separate application to the Corps for a permit to construct and operate an offshore wind energy plant.  Cape planned to install and operate of 170 offshore wind turbine generators (WTGs) to generate up to 420 megawatts (MW) of renewable energy.[lvii]  The Corps determined that an EIS was required for the project, the first proposal of its kind in the United States at the time. Subsequent to the EIS, construction of the project was intended to start in 2004.[lviii]  The EIS was to include an assessment of alternatives to the project, including: the no action alternative; alternative wind park locations, including offshore versus upland; submerged cable route alternatives; alternative landfall and overland cable route locations, and alternative connections to a transmission line.[lix]

Also included in the EIS were “analyses of impacts associated with construction, operation, maintenance and decommissioning of the WTGs on resources.”[lx]  The Corps recognized that the EIS should also include analyses of the projects with regards to the Endangered Species Act of 1973, the Magnuson-Stevens Fishery Conservation and Management Act, the National Historic Preservation Act of 1966, the Fish and Wildlife Coordination Act of 1958, CZMA, CWA, the Rivers and Harbors Act of 1899, the OCSLS, and applicable Executive Orders.[lxi]

However, when MMS became responsible for the environmental review process in 2005, it assumed authority over the Cape project.  Therefore Cape became subject to a new review under MMS that was practically governed by the same principles as the review undertaken by the Corps.  MMS assumed lead federal responsibility and initiated its own independent environmental review pursuant to NEPA.  Therefore that which was accomplished in the first four years of the permitting process became practically irrelevant and Cape was pushed back to where it started in 2001.  It was not until May 2006 that MMS announced its Notice of Intent (NOI) to prepare an EIS for the Cape project.[lxii]  The EIS was to include all that which was required under the Corps review well as analyses of avian species, marine mammals, shellfish resources, essential fish habitat, commercial and recreational fisheries, air and water quality, visual impact, noise assessment, alternative sites, marine archeological and cultural resources, air and sea navigation, local meteorological conditions, sediment transport patterns, local geological conditions, and economic impacts.[lxiii]

In addition to requiring the EIS, MMS invited participation by cooperative agencies and commenced a 45-day comment period, pursuant to NEPA, to allow “Federal, State, tribal, and local governments and other interested parties to aid the MMS in determining the significant issues, potential alternatives, and mitigating measures to be analyzed in the EIS and the possible need for additional information.”[lxiv]  MMS invited qualified government entities to inquire about cooperating agency status for the Cape Wind EIS.[lxv]  However those cooperating agencies’ input neither enlarges nor diminishes the final decision-making authority of any other agency involved in the NEPA process.[lxvi]  Unqualified agencies could still comment during the normal public input phases of the NEPA/EIS process.  MMS announced that alternatives to the proposal would be considered in the EIS.[lxvii]

MMS published the Cape Wind draft EIS in January 2008 and the final EIS and in 2009, MMS announced the release of the Final Environmental Impact Statement (FEIS) for the Cape project, noting that it had “assessed the physical, biological, and social/human impacts of the proposed project and 13 alternatives.”[lxviii] In 2010, MMS announced its Notice of Availability of an Environmental Assessment and Draft Finding of No New Significant Impact (FONNSI) for Public Review and Comment for the Cape project.[lxix]  On April 28, 2010, the Department of Interior announced the availability of the Record of Decision (ROD) for the Cape Wind Project.[lxx]  With the ROD, Cape’s future was the brightest it had since it had overcome many obstacles, and yet the project was challenged again in 2010. But again, the Supreme Court of Massachusetts upheld the project for satisfying its requirements and meeting applicable standards.[lxxi]  Since the project was at its final stages when MMS was reformed into BOEMRE and then subsequently BOEM, Cape did not have to undergo additional reviews but continues to face criticism, even after construction began.

Construction of the offshore wind plant finally commenced in 2011.[lxxii]  The project is still being challenged for failing to meet certain requirements under NEPA and other environmentally protective provisions.  From start to finish Cape has had to endure a decade of challenges in dealing with regulatory inconsistency, jurisdictional conflicts, and from proponents claiming to promote environmental protection.  Not many investors would be attracted to a project that needed at least ten years before completion, not to mention the additional time needed to make a return on the investment.  It is hard to reconcile the goals of those challenging a renewable energy project as being concerned with environmental protection with the fact that no fossil fuel project has faced such challenges to delay construction for a decade.  It would seem more logical that proponents claiming to promote environmental protection would be supportive of renewable energy production and would focus their efforts on delaying fossil fuel production, such as offshore oil rigs that have the potential for a blow out that would devastate the marine life and surrounding environments as witnessed by the BP oil spill.

IV. Progressive Policy Initiatives Need to Progress

With the reorganization and restructuring of the controlling agencies, the environmental review process need not be met with similar obstacles apparent throughout history.  The United States Department of Energy (DOE) recognizes a potential for wind energy to contribute 20% of United States electricity by 2030, if significant obstacles are overcome.[lxxiii] These obstacles include: 1) improving turbine technology, 2) changing transmission systems to deliver the energy to the grid system, 3) expanding markets to purchase and use it, 4) policy development and 4) environmental regulation. [lxxiv]  Concentrated, domestic wind energy has enormous potential to supply electricity, but its maximum effectiveness has only occurred in localized areas such as Nantucket Sound because of wind patterns and jurisdictional battles.  Recent advanced technological enhancements have improved performance and the industry is gaining some momentum but the governmental agencies need to make substantial changes.

Recognizing the difficult nature of the environmental review process, BOEMRE introduced the “Smart from the Start” wind energy initiative, to identify suitable areas for wind energy projects on the OCS.[lxxv]  The two primary purposes of the initiative are to 1) provide decision makers with the most current data, by calling for public and expert inputs, and 2) to streamline the issuance of leases and approval of site assessment activities, in accordance with the DOI and CEQ regulations implementing the provisions of NEPA.[lxxvi]  Another purpose of the initiative is to identify areas that are most suitable for offshore wind energy projects.[lxxvii] The initiative “focuses on the identification and refinement of areas on the OCS that are most suitable for renewable energy development,” and “utilizes coordinated environmental studies, large-scale planning processes, and expedited review processes within these areas to achieve an efficient and responsible renewable energy leasing process.”[lxxviii]

If the initiative is successful, it should reduce the time, expense, and energy required to complete the environmental review requirements while still promoting environmentally safe activities.  Initiatives such as this should be pursued in order to provide developers with efficiency and success, while providing the nation with a more diverse energy scheme and loosening the nation’s dependency on fossil fuel resources.  This goal is countered by the Energy Policy Act of 2005.  The Act is dedicated to supporting oil and gas production by providing incentives to developers, but the Act neglects to give wind energy equal support.[lxxix]  There are other provisions, though not as supportive as those for the fossil fuels, dedicated to geothermal and hydroelectric energy.[lxxx]  However there should be specific details under the act, or a similar act, supporting wind energy production, which is the largest contributor of electricity among the renewable energies.  Wind energy should be given the same initiatives, if not more, than fossil fuels.

The DOE established the Federal Energy Management Program (FEMP) to help federal agencies obtain funding for energy efficiency, renewable energy, water conservation, and greenhouse gas (GHG) management projects.[lxxxi]  The DOE recognized the risk of federal energy projects temporarily stopping or completely stopping because Congressional appropriations, alone, were insufficient to fund federal energy project needs’ to meet federal requirements.[lxxxii] Additional funding options include energy savings performance contracts (ESPCs), utility energy service contracts (UESCs), power purchase agreements (PPAs), and energy incentive programs.[lxxxiii]  However in constructing a scenario where federal contributions would be feasible for the future, the DOE neglected to compare the scenarios for renewable energy projects to fossil fuel energy plans and neglected to lay out an action plan which would benefit the renewable energy market.[lxxxiv]  The DOE, through the FEMP, should extend ESPCs, UESCs and PPAs to potential renewable energy projects such as Cape to foster the development and production of sites so that renewable energy markets can become competitive with fossil fuel markets and in turn attract investors and establishing a perpetual cycle leading to a diversified national energy structure.


Special Thanks to Eric Hull.

[i]Jared Wiesner, A Grassroots Vehicle for Sustainable Energy: The Conservation Reserve Program & Renewable Energy, 31 WM. & MARY ENVTL. L. & POL’Y REV. 571, 588(2006).

[ii]ENERGYEFFICIENCY ANDRENEWABLE ENERGY, U.S.DEP’T OF ENERGY, 20% WIND ENERGY BY 2030: EXECUTIVESUMMARY 1(May 2008), available athttp://www1.eere.energy.gov/wind/pdfs/42864.pdf.

[iii]W. MUSIAL & S.BUTTERFIELD, FUTURE FOR OFFSHORE WIND ENERGY IN THE UNITED STATES 7 (National Renewable Energy Laboratory 2006), available at http://www.nrel.gov/docs/fy04osti/36313.pdf.

[iv]Bent Ole Gram Mortensen, International Experiences of Wind Energy, 2 ENVTL. & ENERGY L. & POL’Y J. 179, 207 (2008).

[v]Supra note 6.

[vi]Potential risks for wind projects include: visual obstructions, noise obstructions, frequency and flight obstructions, placement in marine and avian habitats, cleanup if a wind turbine falls over or into waters, etc.

[vii]Proclamation No. 2667, 3 C.F.R. 40 (1945).

[viii]43 U.S. §§ 1301-1315 (2011).

[ix]Id. § 1314(a).

[x]Id. § 1331-1356.

[xi]Ten Taxpayer Citizens Group v. Cape Wind Associates, LLC, 373 F.3d 183 (1st Cir. 2004) (citing 420 U.S. 515, 522); see also 43 U.S.C. §§ 1301, 1331(a).

[xii]43 U.S.C.§ 1337(a).

[xiii]ADAM VANN, CONG. RESEARCH SERV., RL 32658, WIND ENERGY: OFFSHORE PERMITTING 5 (2008), available athttp://www.cnie.org/NLE/crs/abstract.cfm?NLEid=254; 33 U.S.C. §§ 407-687.

[xiv]43 U.S.C. § l337(p)(l) (2011) (“The Secretary … may grant a lease, easement, or right-of-way on the outer Continental Shelf.. . if those activities .. (C) produce or support production, transportation, or transmission of energy from sources other than oil and gas.”).

[xv]Renewable Energy and Alternate Uses of Existing Facilities on the Outer Continental Shelf, 74 FR 19638-01.

[xvi]43 U.S.C. § l337(p)(9). (“Nothing in this subsection displaces, supersedes, limits, or modifies the jurisdiction, responsibility, or authority of any Federal or State agency under any other Federal law”).

[xvii]See Memorandum of Understanding Between the U.S. Department of the Interior and the Fed. Energy Regulatory Comm’n (Apr. 9, 2009), available athttp://boemre.gov/regcompliance/MOU/PDFs/DOI_FERC_MOU.pdf.

[xviii]Id.

[xix]42 U.S.C.A. § 4344 (2011).

[xx]Id. at § 4332.

[xxi]Outer Continental Shelf, Headquarters, Cape Wind Offshore Wind Development 2007, 71 FR 30693-01.

[xxii]Id.

[xxiii]Outer Continental Shelf, Headquarters, Cape Wind Offshore Wind Development 2007, 71 FR 30693-01.

[xxiv]An EIS is “a detailed written statement as required by section 102(2)(C) of [NEPA].” 40 C.F.R. § 1508.11(2010).

[xxv]An EA is “a concise public document for which a Federal agency is responsible that serves to: (1) [b]riefly provide sufficient evidence and analysis for determining whether to prepare an environmental impact statement or a finding of no significant impact[;] (2) [a]id an agency’s compliance with the Act when no environmental impact statement is necessary[;] [and] (3) [f]acilitate preparation of a statement when one is necessary.” Id. § 1508.9(a).

[xxvi]42 U.S.C. § 4332(2)(C).

[xxvii]Id.

[xxviii]Supra note 38.

[xxix]Id. at 19,685-6 (“We chose this approach for a commercial lease because there are two distinct phases for commercial development for renewable energy projects: (1) A site assessment phase, where a lessee may install a meteorological or marine data collection facility to assess renewable energy resources; and (2) a generation of power phase, which includes construction, operations, and decommissioning.”)

[xxx]See 30 C.F.R.285.611 (2010) (describing NEPA information required to be submitted in conjunction with SAP); 30 C.F.R. §285.646 (describing NEPA information required to be submitted in conjunction with COP).

[xxxi]Preamble to the Rules, supra note 21, at 19670.

[xxxii]Peter J. Schaumberg & Angela F. Colamaria, Siting Reneable Enargy Projects on the Outer Continental Shelf: Spin, Baby, Spin!, 14 Roger Williams U. L. Rev. 624, 634-35 (2009).

[xxxiii]Supra note 54.

[xxxiv]Id, at 19690.

[xxxv]Id.

[xxxvi]Request for Information and Nominations of Areas for Leases Authorizing Alternative Energy Resource Assessment and Technology Testing Activities Pursuant to Subsection 8(p) of the Outer Continental Shelf Lands Act, as Amended. 72 F.R. 62674 (2007).

[xxxvii]Stephanie Showalter & Terra Bowling, Offshore Renewable Energy Regulatory Primer (Nat’l Sea Grant L. Center), July 2009, at I, available athttp://nsglc.olemiss.edu/offshore.pdf.

[xxxviii]Preamble to the Rules, supra note 21, at 19647.

[xxxix]Id.

[xl]Id. at 19691tbl.2.

[xli]16 U.S.C. § 1452(1) (2011).

[xlii]Id. § 1451(i)-(m).

[xliii]Id. § 1456(d).

[xliv]U.S. Dep’t of the Interior, Change of the Name of the Minerals Management Service to the Bureau of Ocean Energy Management, Regulation, and Enforcement, Order No. 3302 (June 18, 2010) available athttp://www.doi.gov/deepwaterhorizon/loader.cfm?csModule=security/getfile&PageID=35872.

[xlv]30 C.F.R. § 585.100 (“The Secretary of the Interior delegated to the Bureau of Ocean Energy Management (BOEM) the authority to regulate activities under section 388(a) of the EPAct. These regulations specifically apply to activities that: (a) Produce or support production, transportation, or transmission of energy from sources other than oil and gas; or (b) Use, for energy-related purposes or for other authorized marine-related purposes, facilities currently or previously used for activities authorized under the OCS Lands Act.”).

[xlvi]The Reorganization of the Former MMS. The Bureau of Ocean Energy Management. 2011. Available at http://boem.gov/About-BOEM/Reorganization/Reorganization.aspx.

[xlvii]Id.

[xlviii]Id. § 585.102.

[xlix]Alliance To Protect Nantucket Sound, Inc. v. U.S. Dept. of Army, 288 F. Supp. 2d 64, 78 (D. Mass. 2003) aff’d, 398 F.3d 105 (1st Cir. 2005).

[l]Id. at 66-78.

[li]Ten Taxpayers Citizen Group v. Cape Wind Associates, LLC, 278 F.Supp.2d 98, 99 (D. Mass. 2003).

[lii]Supra note 72.

[liii]Alliance To Protect Nantucket Sound, Inc. v. U.S. Dept. of Army, 398 F.3d 105, 115 (1st Cir. 2005).

[liv]Id.

[lv]Ten Taxpayer Citizens Group v. Cape Wind Associates, LLC, 373 F.3d 183, 185 (1st Cir. 2004).

[lvi]Id. at 188-89.

[lvii]Intent To Prepare a Draft Environmental Impact Statement (DEIS) for Proposed Cape Wind Energy Project, Nantucket Sound and Yarmouth, MA Application for Corps Section 10/404 Individual Permit, 67 FR 4414-01; compare with Outer Continental Shelf, Headquarters, Cape Wind Offshore Wind Development 2007, 71 FR 30693-01 (stating the proposal was for 130 WTGs generating approximately 454 MW).

[lviii]Id.

[lix]Id.

[lx]Id. (Resources included: recreational and commercial boating and fishing activities, endangered marine mammals and reptiles, birds, aviation, benthic habitat, aesthetics, cultural resources, radio and television frequencies, ocean current.)

[lxi]Intent To Prepare a Draft Environmental Impact Statement (DEIS) for Proposed Cape Wind Energy Project, Nantucket Sound and Yarmouth, MA Application for Corps Section 10/404 Individual Permit, 67 FR 4414-01 (“To the fullest extent possible, the EIS will be integrated with analyses and consultation required by the Endangered Species Act of 1973, as amended (Pub. L. 93-205; 16 U.S.C. 1531, et seq.); the Magnuson-Stevens Fishery Conservation and Management Act, as amended (Pub. L. 94-265; 16 U.S.C. 1801, et seq.), the National Historic Preservation Act of 1966, as amended (Pub. L. 89-655; 16 U.S.C. 470, et seq.); the Fish and Wildlife Coordination Act of 1958, as amended (Pub. L. 85-624; 16 U.S.C. 661, et seq.); the Coastal Zone Management Act of 1972, as amended (Pub. L. 92-583; 16 U.S.C. 1451, et seq.); and the Clean Water Act of 1977, as amended (Pub. L. 92-500; 33 U.S.C. 1251, et seq.), Section 10 of the Rivers and Harbors Act of 1899, 33 U.S.C. 403 et seq.); the Outer Continental Shelf Lands Act (Pub. L. 95-372; 43 U.S.C. 1333(e))”).

[lxii]Continental Shelf, Headquarters, Cape Wind Offshore Wind Development 2007, 71 FR 30693-01.

[lxiii]Cape Wind: America’s First Offshore Wind Farm on Nantucket Sound. 2011.Available at http://www.capewind.org/article72.htm.

[lxiv] Continental Shelf, Headquarters, Cape Wind Offshore Wind Development 2007, 71 FR 30694. (In 2006, the Cooperating Agencies on the Cape Wind project EIS included: United States Fish and Wildlife Service, Cape Cod Commission, United States Department of Energy, United States Coast Guard, United States Department of the Interior/Office of Environmental Policy and Compliance, Wampanoag Tribe of Gay Head, Federal Aviation Administration, Massachusetts Coastal Zone Management, Massachusetts Environmental Policy Act Office, National Oceans and Atmospheric Association/National Marine Fisheries Service, United States Environmental Protection Agency, United States Army Corps of Engineers.)

[lxv]Id. Under guidelines from CEQ, qualified agencies and governments are those with “jurisdiction by law or special expertise.”

[lxvi]Id.

[lxvii]Id.

[lxviii]Environmental Assessment Prepared for Proposed Cape Wind Energy Project in Nantucket Sound, MA, 75 FR 10500-01.

[lxix]Id.

[lxx]Id.

[lxxi]See ALLIANCE TO PROTECT NANTUCKET SOUND, INC., et al., Town of Barnstable, and Cape Cod Commission, Petitioners, v. ENERGY FACILITIES SITING BOARD, Department of Environmental Protection, Cape Wind Associates, LLC, et al., Respondents; Town of Barnstable and Cape Cod Commission, Plaintiffs-Appellants, v. Massachusetts Energy Facilities Siting Board, and Cape Wind Associates, LLC, Defendants-Appellees., 2010 WL 3612847 (Mass.).

[lxxii]America’s First Offshore Wind Farm on Nantucket Sound: The true cost of electricity. December, 2011. Available at http://www.capewind.org/article32.htm.

[lxxiii]Id.

[lxxiv]Id.

[lxxv]Commercial Wind Lease Issuance and Site Characterization Activities on the Atlantic Outer Continental Shelf (OCS) Offshore Rhode Island and Massachusetts, 76 FR 51391-01.

[lxxvi]Id.

[lxxvii]Id.

[lxxviii]Id.

[lxxix]42 U.S.C. §§ 15902-15912 (2011).

[lxxx]42 U.S.C. §§ 15872, 15881 (2011).

[lxxxi]ENERGY EFFICIENCY AND RENEWABLE ENERGY, U.S. DEP’T OF ENERGY, FEDERAL ENERGY MANAGEMENT PROGRAM (July 2011), available athttp://www.nrel.gov/docs/fy11osti/52085.pdf. DOE SCIENTIFIC AND TECHNICAL INFORMATION, Alternative Financing for Energy Efficiency and Renewable Energy: Quick Guide (May 1, 2009). Available athttp://www.nrel.gov/docs/fy11osti/52085.pdf.

[lxxxii]Id.

[lxxxiii]Id.

[lxxxiv]Id.

© 2012 Kiboni Yarling