Environmental Issues and The Republican Majority

Expectations are running high among some that the incoming Republican majority in both Houses of Congress will act to change or eliminate various environmental regulations and statutory provisions that they claim harm the economy. Interest groups are extending these efforts to enlist State officials in opposing these regulations at that level and, for his part, President Obama has indicated an intent to use his veto authority in an effort to prevent major changes in regulation and policy.

One of the foremost issues of concern on the part of many Republicans is the proposal to limit carbon pollution from coal-fired power plants. In mid-December, 99 House members sent a letter to the President asking that he direct EPA to withdraw its proposed Clean Power Plan rule. (House letter). Similarly, various conservative groups have contacted State legislators and other elected officials calling on them to resist the Plan in any way possible. (The Hill). The States have substantial authorities for the implementation of air pollution control regulations under the federal Clean Air Act, just as they do with the implementation of other major federal environmental statute.

However, there are some indications that these position may not be quite as unified across the Republican leadership as first thought. For example, a recent interview given by Senator James Inhofe of Oklahoma to the Tulsa World indicates that initial efforts may focus elsewhere. Senator Inhofe, a leading denier of climate change science, will become the Chairman of the Environment and Public Works Committee the Senate’s key environmental committee. Yet, he indicated in the interview that initial focus of his chairmanship of would be on transportation and infrastructure. (Tulsa World). Also of interest, a recent poll conducted jointly by the Associated Press-NOR Center for Public Affairs Research and Yale University indicates that, while 6 in 10 Americans support regulation of carbon dioxide pollution, fully half of persons identifying themselves as Republicans hold the same position. (StarTribune). Even if the Republican majority eventually pushes substantial legislation through both Houses to affect environmental issues, including climate change, President Obama has promised a veto. (ABC Report).

While it seems clear that environmental issues will be at the forefront of Congressional debate in the upcoming Congress, it is not so clear how far this may go, or in exactly what direction. As we have seen before, exercising the powers of leadership often imposes restraints that are not in place when campaigning for leadership positions.

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.

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.

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.



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.

Boiler or Incinerator and Secondary Materials that are Solid (Not Hazardous) Wastes

It’s almost never easy to fathom federal environmental regulations and this held true when a set of regulations was recently issued by the U.S. EPA.  On December 20, 2012, the Agency issued a series of rules, primarily under the Clean Air Act, to address emissions from sources generally classified as boilers or incinerators.  Part of the regulatory package also included revisions to standards and procedures enacted under authority of the Resource Conservation and Recovery Act (“RCRA”) that will determine whether non-hazardous secondary materials constitute waste when burned in such units.

The waste issue associated with these units is a part of a long-standing effort by the EPA in order to characterize various secondary materials as being either wastes or non-waste fuels.  The determination is aided by the recent rule regarding Non-hazardous Secondary Materials (“NHSM” for the acronymically inclined), which refines existing RCRA rules defining a solid waste, and which effectively serves to determine whether a unit would be regulated by applicable standards for boilers or as an incinerator.  If the combustion material is considered to be a waste under the NHSM rule, the burning unit will be characterized as an incinerator and regulated as a Commercial and Industrial Solid Waste Incinerator (“CISWI”).   Other rules in the package impose emission standards and operating requirements for CISWIs and for various classifications of boilers.  Boilers classed as major sources of emissions will be required to meet the accompanying Major Source Boiler MACT (Maximum Achievable Control Technology).  Those classified as “area sources” are also affected, but have somewhat different standards under a separate MACT standard.

Finally, the compliance deadlines, along with the rules applicable to these separate units, will be different.  As a requirement, major source boilers will need to be in compliance in early 2016, while smaller, area-source boilers have an initial compliance date of March 21, 2014. In order to achieve compliance standards, the right to request an additional year is available.  With respect to incinerators, there are a couple of factors that could apply which are dependent on EPA action, but the latest compliance deadline is anticipated to be in 2018.

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.

5th Circuit SIP Decision May Have Broader Applicability

On August 13, the Fifth Circuit Court of Appeals issued its decision in State of Texas v. EPA, No. 10-60614 (5th Cir. Aug. 13, 2012), affirming Texas’s State Implementation Plan (SIP) allowing for “flexible permits.” Under Texas’s Flexible Permit Program, a facility may make modifications without agency review so long as aggregate emissions do not exceed an emissions cap for the facility. The case could have broader implications across the country, if other courts adopt the Fifth Circuit’s reasoning to allow increased flexibility in state air permitting programs. In this case, the Court determined that if a SIP meets the statutory criteria of the Clean Air Act, then the EPA must approve the SIP.  Rejection based on non-statutory preferences is not allowed.

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.