EPA Releases Annual Environmental Enforcement Results

December 18, 2014, marked the release of the U.S. Environmental Protection Agency’s (EPA) annual environmental enforcement and compliance results. See News Release, U.S. Environmental Protection Agency, EPA Announces 2014 Annual Environmental Enforcement Results (Dec. 18, 2014). According to the EPA, its enforcement actions in 2014 required businesses across the country to invest more than $9.7 billion in regulatory compliance and equipment. Additionally, EPA collected a total of $163 million in combined federal administrative, civil judicial penalties, and criminal fines. Annual results showed a reduction of 141 million pounds of air pollutants, including 6.7 million pounds of air toxins, 337 million pounds of water pollutants, and 856 million cubic yards of contaminated water clean-up.

The release highlights EPA’s growing focus on enforcement of larger cases with greater impact. In the first of three notably large cases this year, EPA obtained a large settlement with the number one metallurgical coal supplier in the United States. Pursuant to the settlement agreement the company will invest $200 million to install and operate wastewater treatment facilities near coal mining operations in five states. Additionally, the company agreed to provide system-wide upgrades to assist in the reduction of coal mine pollution.

In November, the EPA reached a settlement agreement with two major auto manufacturers for an estimated $100 million for violations of the Clean Air Act based on the sale of more than 1 million vehicles with emissions collectively totaling 4.75 million metric tons of greenhouse gases.

On November 10, 2014, EPA obtained a settlement whereby the company agreed to pay more than $5.15 billion into a litigation trust (with $4.475 billion going to the trust’s environmental beneficiaries and $605 million going to its torts beneficiaries). According to the EPA, this case allowed EPA to close the year with its largest recovery for the cleanup of environmental contamination in history and the largest bankruptcy award the EPA has ever received for environmental claims and liabilities.

Supreme Court Upholds Greenhouse Gas Emmission Limits for Large Industries, but Implementation Questions Remain

On Monday, June 22, the U.S. Supreme Court issued a much anticipated decision in Utility Air Regulatory Group v. Environmental Protection Agency (slip opinion) where it  affirmed EPA’s authority to impose limits for greenhouse gas (GHG) emissions by major emissions sources that are otherwise required to have a Clean Air Act permit for conventional pollutants.  At the same time, the Court rejected the Agency’s assertion that it has the authority to impose GHG emission limits on facilities independent of any other obligation those facilities may have to obtain permits.  Thus, EPA (and the States) may impose GHG limits in permits required by rules intended to Prevent Significant Deterioration (PSD) of air quality, but the Agency cannot require permits based solely on GHG emissions or for facilities that do not have other emissions above threshold levels.

Several years ago, the Supreme Court provided a method for regulating greenhouse gases  under the Clean Air Act (CAA). Massachusetts v. Environmental Protection Agency. (2007) (slip opinion). That decision provided that the Agency can classify greenhouse gases as air pollutants and regulate them if it made a determination that they constitute a danger to human health or the environment.  EPA subsequently made such an endangerment finding and then proceeded with the rulemaking challenged by the Utility Air Regulatory Group and others.  The basic issue in the recent case centered on the fact that the CAA contains very specific thresholds that trigger permitting obligations for air pollutants, those being either one hundred (100) tons per year or two hundred fifty (250) tons per year depending on the type of industry.  Since greenhouse gases are emitted in volumes much larger than the criteria pollutants regulated under the CAA (commonly: carbon monoxide, sulfur dioxide, oxides of nitrogen, ozone, lead and particulate matter), the use of such comparatively low statutory numbers would impose regulatory obligations on millions of sources that are not currently required to have permits.  Thus, EPA sought to impose much higher permit trigger thresholds for GHG in a process it called tailoring.  The Court rejected the tailoring concept outright.  However, it held that the Agency could accomplish essentially the same purpose by limiting the regulation of greenhouse gases to facilities that would be required to obtain a permit under the PSD program anyway.  Thus, EPA effectively ended up with a comparable regulatory field, but with the Court using a much different method.

A number of questions remain with respect to this approach, and EPA will have to provide some guidance or instruction about its interpretation of the decision and its authorities going forward.  Perhaps the most significant of these questions is the thresholds at which greenhouse gases will be regulated under the PSD program.  Currently, there is disagreement about whether the thresholds established in EPA’s disapproved tailoring rule remain effective for application to PSD permits, or whether EPA must repromulgate those or new thresholds.  While EPA is expected to provide guidance on this in the near future, the contention surrounding greenhouse gas regulation would indicate that this aspect of the requirements is also likely to face significant challenges.

Federal Court of Appeals Strikes Down A Portion of the EPA’s Rule Limiting a Court’s Authority for Imposing Civil Fines for Equipment Failures

Federal Court of Appeals strikes down a portion of the EPA’s rule limiting a Court’s authority for imposing civil fines for equipment failures.  While upholding portions of EPA’s new  rules for air toxic emissions for cement kilns, in a ruling dated April 16th the District of Columbia Court of Appeals struck down the provision that limited the Federal Courts from imposing civil penalties involving citizen suits for violations of the Clean Air Act for unavoidable equipment malfunctions. The Federal Courts previous 2008 decision  finding unlawful  EPA’s earlier  attempt to “exempt” compliance with emissions standards during equipment startups, shutdowns and malfunctions,  is now joined with this recent decision to strip the new EPA rule of providing the opportunity to claim an affirmative defense for malfunctions.  Commentators have opined that this ruling will cause EPA to consider removing similar affirmative defenses from other rules which may apply to power plants and boilers. The obvious ramification of this ruling is that the applicable industries may face citizen suits for unavoidable and unintended  violations of emission standards with no particular guidance given to the Federal Courts on how to deal with those equipment malfunctions.

Supreme Court Upholds EPA Rule Limiting Cross-State Pollution

The Supreme Court handed the Obama administration a victory on Tuesday, April 29, 2014, when it injected new life into an Environmental Protection Agency rule targeting air pollution that drifts across state borders.

EPA struggled for many years to carry out a Clean Air Act directive to protect downwind states from pollution generated in other states (the “Good Neighbor Provision”).  In 2011, EPA enacted a set of rules regulating pollutants generated from coal-fired plants that drift across state lines (the “Transport Rule”).  The Transport Rule established a program for allocation of emission reductions among upwind states to improve air quality in polluted downwind areas.  The Transport Rule applies in large part to pollutants generated in 28 Midwestern and Appalachian states and drifting to the East Coast.  A coalition of industry groups and upwind states challenged the EPA’s Transport Rule and prevailed in the lower courts.

In a 6-to-2 ruling, the Supreme Court reversed the D.C. Circuit Court and upheld EPA’s authority to regulate air pollutants that drift across state lines.  The Court noted that the Clean Air Act’s Good Neighbor Provision delegates authority to EPA to determine how to allocate among multiple contributing upwind states responsibility for a downwind state’s pollution.  The Court concluded that EPA’s Transport Rule was a permissible construction of the Clear Air Act’s Good Neighbor Provision. The Court further held that eliminating amounts of pollution that could cost-effectively be reduced was an efficient and equitable solution to the allocation problem Congress’s Good Neighbor Provision required EPA to address.

EPA administrator Gina McCarthy hailed the decision as a “resounding victory for public health and a key component of EPA’s efforts to make sure all Americans have clean air to breath.”  Opponents of the Transport Rule denounced the decision and believe EPA’s application and enforcement of the Transport Rule will drive up energy costs and will threaten energy sector jobs.

Georgia Court of Appeals Upholds Class Certification in Air Pollution Case

The Georgia Court of Appeals,  on July 16, issued its opinion affirming the Effingham County Superior Court’s decision to certify a class consisting of the owners of properties neighboring Georgia-Pacific’s Savannah River Mill in Rincon. Plaintiffs, owners of four of the neighboring properties, argued that the mill releases hydrogen sulfide gas onto their properties and sought class certification to include properties located within a mile of the mill. Plaintiffs brought claims for nuisance, trespass, and negligence in connection with fumes created in connection with the mill’s wastewater treatment process.

In so holding, the Court of Appeals majority found that the proposed class is too large to handle by joinder, that the common questions of law or fact prevail over individualized questions relative to individual properties, and that the claims raised by the proposed class would be common.

A three-judge dissent questioned whether plaintiffs had established that the mill’s hydrogen sulfide releases actually affected each property included in the class and concluded that fact-intensive inquiries related to the scope of injuries at each property would render the case too unwieldy to manage as a class action.

Georgia-Pacific has indicated that it will seek a review by the Georgia Supreme Court.

The case is Georgia-Pacific v. Ratner, No. A13A0455.

For more information on environmental law topics, please contact one of the Burr & Forman team members for assistance. We are happy to answer any questions or concerns you may have.

Tier 3 Standards Public Comment Period Extended to July 1, 2013

EPA has extended the public comment period on its proposed Tier 3 Motor Vehicle Emission and Fuel Standards from June 13, 2013 to July 1, 2013.  The May 29, 2013 Federal Register notice announcing the extension can be found here:

PROPOSED RULES

Control of Air Pollution from Motor Vehicles: Tier 3 Motor Vehicle Emission and Fuel Standards, 32223

http://www.gpo.gov/fdsys/pkg/FR-2013-05-29/html/2013-12749.htm

http://www.gpo.gov/fdsys/pkg/FR-2013-05-29/pdf/2013-12749.pdf.

 

For more information on environmental law topics, please contact one of the Burr & Forman team members for assistance. We are happy to answer any questions or concerns you may have.

 

American Lung Association’s Report “State of the Air 2013″ Shows Overall Improvement, But Still Problems for Some Cities in the Southeast

The American Lung Association recently issued a Report entitled, “State of the Air 2013,” which looks at levels of ground-level ozone and particle pollution across the United States for the period 2009-2011.  The Report uses data collected by States, tribes and federal agencies from local air monitoring devices.  A variety of information about the Report can be found here.

The Report notes that stronger standards for pollutants and sources of pollution have reduced ozone and particulant pollution over the past few decades.  From 1970, just before the enactment of regulatory controls under the Clean Air Act, to 2011, overall aggregate emissions of the six common pollutants regulated by the Federal Clean Air have been reduced by about 68%.  At the same time, energy consumption, population and vehicle miles traveled, as well as the gross domestic product have increased substantially.  Thus, the Clean Air Act and other efforts are having a positive impact.  However, the findings show that approximately 42% of the people in the United States (131.8 million) live where pollution levels are often dangerous to breathe.

The Report also indicates that the category of most polluted cities generally include cities primarily on the west coast and across the Midwest.  However, four such cities in the top 25 are in the southeast:  Birmingham, Atlanta, Macon-Warner Robins, and Charlotte.

For more information on environmental law topics, please contact one of the Burr & Forman team members for assistance. We are happy to answer any questions or concerns you may have.

EPA Permitting Regulations Vacated—Project Delays Expected

The recent decision in Sierra Club v. EPA, 705 F.3d 458 (D.C. Cir. 2013) vacated all of EPA’s rules on Significant Monitoring Concentrations (“SMCs”), as well as some (the Prevention of Significant Deterioration (“PSD”) portion) of the Significant Impact Levels (“SILs”) for Particulate Matter in air emissions measuring 2.5 micrometers in diameter or smaller (“PM2.5”).  As a result permit applicants have fewer screening tools available when seeking exemption from analysis and monitoring requirements under the Clean Air Act (“Act”).

A.   Background for the Act, NAAQS, SIPs and PSD

The Act requires EPA to set National Ambient Air Quality Standards (“NAAQS”) for harmful pollutants at levels necessary to protect public health and welfare.  Under the Act, EPA must designate areas as attainment, nonattainment, or unclassifiable for each NAAQS. States have primary responsibility for implementing the NAAQS, and must submit a state implementation plan (“SIP”) specifying how the State will achieve and maintain compliance. See how your state is classified here or view the NAAQS Historical Standards for more information.

In 1977, Congress amended the Act to add Prevention of Significant Deterioration (“PSD”) provisions to protect the air quality in national parks and similar areas of special scenic or recreational value, and in areas where pollution was within the NAAQS, while assuring economic growth consistent with such protection.  When Congress enacted the PSD provisions, it established maximum allowable increases over baseline concentrations—also known as “increments”—for certain pollutants.  For other pollutants, Congress delegated to EPA the task of promulgating PSD regulations. For pollutants that the EPA began regulating after Congress enacted the PSD provisions, which includes PM2.5, the EPA must promulgate PSD regulations within two years of establishing the NAAQS for that pollutant.

The PSD provisions also establish requirements for preconstruction review and permitting of new or modified sources of air pollution. Subsection 165(a) lists the requirements that a permit applicant must meet before starting construction, which include acquiring a PSD permit for the facility. Specifically, the applicant must demonstrate that emissions from construction or operation will not cause or contribute to any violations of the increment more than once per year, or to any violation of the NAAQS ever.

In order to make the demonstration required under Section 165(a), the applicant for a PSD permit must conduct an analysis of the ambient air quality at the proposed site and in areas that may be affected by emissions from the facility for the relevant pollutants.  This analysis must include continuous air quality monitoring data gathered to determine whether the facility will exceed either the increments or the NAAQS.  The Act further mandates that this data be collected for a year before the date the applicant applies for a permit unless a State, in accordance with EPA regulations, determines that a complete and adequate analysis for such purposes may be accomplished in a shorter time period.  The results of the analysis must be made available to the public at the time of the public hearing on the application for a PSD permit.

The Act requires States to address the PSD provisions in their SIPs. EPA has promulgated extensive regulations setting forth requirements and guidelines on how SIPs are to implement the PSD provisions.  For States without an EPA-approved SIP, EPA has promulgated separate regulations implementing the PSD provisions. Visit this link to see your state’s SIP status.

 B. Background for PM2.5, SILs, and SMCs

In 1997, EPA revised its NAAQS to include standards for PM2.5 , and in 2006 it revised the PM2.5 NAAQS,  In 2007, EPA proposed a rule establishing increments for PM2.5.  In the rulemaking at issue in the Sierra case, EPA also proposed two screening tools that would exempt a permit applicant from some of the air quality analysis and monitoring required under the Act and regulations: significant impact levels (“SILs”) and significant monitoring concentrations (“SMCs”).

1.    Significant Impact Levels (“SILs”)

In the SIL rule for PM2.5, EPA defined a numeric value of the impact a proposed major source or modification may have on the NAAQS or PSD increment.  This numerical value, measured in micrograms per meter cubed (μg/m 3), is the level of ambient impact below which EPA considers a source to have an insignificant effect on ambient air quality.  According to the rule, “a source that demonstrates its impact does not exceed a SIL at the relevant location is not required to conduct more extensive air quality analysis or modeling to demonstrate that its emissions, in combination with the emissions of other sources in the vicinity, will not cause or contribute to a violation of the NAAQS at that location,” an analysis EPA terms the cumulative impact analysis or the cumulative air quality analysis.

2.    Significant Monitoring Concentration (“SMCs”)

In 1980, EPA adopted regulations that exempt sources from preconstruction monitoring requirements, if the source can demonstrate that its ambient air impact is less than a value known as the SMC.  In the rule establishing a SMC for PM2.5, EPA explained that “[i]f a source can show through modeling of its emissions alone that its impacts are less than the corresponding SMC, there is little to be gained by requiring that source to collect additional monitoring data on PM2.5 emissions to establish background concentrations for further analysis.”  EPA proposed different methodologies for establishing a value for the SMC.

 C.   Basis for Rulemaking

In the final rule issued on October 10, 2010, EPA adopted and set values for both SILs and SMCs for PM2.5.   The legal basis it relied on was Alabama Power Co. v. Costle, 636 F.2d 323 (D.C.Cir.1979), which held that an administrative agency’s de minimis authority to establish categorical exemptions from statutory commands may be permissible as an exercise of agency power, when it is inherent in the statutory scheme, and such authority would permit overlooking circumstances that in context may fairly be considered de minimis. Further, unless Congress has been extraordinarily rigid, there is likely a basis for an implication of de minimis authority to provide exemption when the burdens of regulation yield a gain of trivial or no value.   But that implied authority does not apply to situations where the regulatory function does provide benefits, in the sense of furthering the regulatory objectives, but the agency concludes that the acknowledged benefits are exceeded by the costs.  Applying this de minimis authority, EPA explained that when a source’s ambient impact does not exceed the SIL or SMC— i.e., is de minimis—it considers additional analysis and modeling to yield information of trivial or no value with respect to the impact of the proposed source or modification.

In adopting the SMCs, EPA emphasized that it retained discretion to determine when it may be appropriate to exempt a proposed new major source or modification from the ambient monitoring data requirements under the PSD rules.

Unlike the PSD regulations, the new source review and permitting regulation did not use the SILs to exempt a source from conducting a cumulative air quality analysis. Instead, it states that a proposed source or modification will be considered to cause a violation of a NAAQS when that source or modification would, at a minimum, exceed the SIL in any area that does not or would not meet the applicable NAAQS.

 

Conclusion

Faced with the Sierra Club’s argument that the agency exceeded its de minimis authority in promulgating the SILs for PSDs, EPA conceded that the regulation was flawed and requested the vacatur and remand.  The discretionary distinction between the rules was critical, with the court ultimately vacating the SILs for PSD regulations because they allowed permitting authorities to automatically exempt sources without showing the facility will not cause or contribute to a violation of NAAQSs.  The SILs for new source review and permitting were allowed to stand because they did not allow the permitting authorities to grant discretionary exemptions.

Likewise, in vacating EPA’s SMCs for PM2.5, the Court found that EPA did not have de minimis authority because Congress was “extraordinarily rigid” in mandating preconstruction air quality monitoring.  The Court read the Act as a mandate that a PSD permit applicant undertake preconstruction monitoring.  Instructive in it’s analysis was Congress’s use of the word “shall” in each sentence and that Congress provided only one exception to the monitoring requirement—a shorter monitoring period, suggesting that no other exceptions were intended.  The court also rejected EPA’s argument that there is a virtual presumption of inherent agency authority to grant de minimis exceptions, noting its circularity.  Even if a virtual presumption existed, that presumption is rebutted by an extraordinarily rigid statutory mandate.  The Court further noted that the exemption would frustrate Congress’s intent that monitoring results be made available to the public at the time of the hearing for the PSD permit.  A permitting authority cannot know if there is a violation of a NAAQS or an increment unless preconstruction monitoring establishes the existing ambient concentrations of PM2.5.  Finally, to allow EPA to retain (and delegate to the State) discretion on when such an exemption would apply allows the authorities to engage in impermissible cost-benefit analysis, which was expressly rejected in Alabama Power, absent a Congressional grant of such authority under a fair reading of the specific statute, considering its aims and legislative history.

This decision will likely slow down the permitting process for new major sources and modifications.  Applicants are advised to begin the process early and engage competent counsel to assist.

For more information on environmental law topics, please contact one of the Burr & Forman team members for assistance. We are happy to answer any questions or concerns you may have.

Air Pollution Control Costs Have Economic Benefits

The costs of reducing air emissions, at least particulates, appears to be justified according to research cited during a recent lecture by environmental economist C. Arden Pope, III, a professor at Brigham Young University.  An article from the Pittsburgh Post-Gazette reports Dr. Pope recounted epidemiological and scientific studies demonstrating the health and economic benefits of air pollution control regulation.  Pope was speaking as part of the distinguished lecturer series at Pittsburgh Carnegie Mellon University, and he reminded the audience of early work done Lester B. Lave at Carnegie Mellon during the 1970s.  Lave’s work was considered very controversial at the time, particularly in heavily industrialized Pittsburgh where Carnegie Mellon is located.  Dr. Pope noted that the benefits of air emissions control regulations have since been documented in numerous studies.  Pope’s own work in Utah describing the economic impacts of large quantities of particulate matter was also controversial following a study completed and published in the late 1980s.  There, as well, further studies confirmed that Pope’s conclusions were accurate.

While recent enhancements to air regulations remain controversial, it bears pausing to remember that similar controversy accompanied earlier iterations of air pollution controls.  And that those controls have had measurable benefits.

For more information on environmental law topics, please contact one of the Burr & Forman team members for assistance. We are happy to answer any questions or concerns you may have.

EPA Confirms Uncertainty Over Timing Of Final Coal Ash Rule

Previously, we referenced an article in Bloomberg BNA reporting on an interview with an EPA representative who indicated that the Agency could not provide a definitive timeline for promulgating final regulations on the management of coal ash generated by power plants. EPA has now more formally confirmed this uncertainty.  Recently, in announcing projected publication dates for a wide range of rules in various stages of development, EPA effectively acknowledged that there is no target date for the final rule. This is also reflected on EPA’s web page which tracks the history of the rule’s development.

Finally in consolidated litigation brought by various interest groups seeking to force the agency to issue a final rule (Appalachian Voices, et al v. EPA, D.C., DKT No. 1:12-cv-00523 RDW), the Agency recently acknowledged that it may be the end of the year before a final rule is announced.

For more information on environmental law topics, please contact one of the Burr & Forman team members for assistance. We are happy to answer any questions or concerns you may have.