EPA’s Rules Related to Carbon Emissions and Climate Change Prompt A New Focus By The Opposition

EPA’s new rules for limiting emissions of carbon dioxide for both existing power plants and proposed plants have prompted at least two substantive reports by public policy institutes focusing on the economic aspects of the proposals. The Beacon Hill Institute at Suffolk University and The Heritage Foundation have recently published reports that estimate the potential costs, particularly in terms of jobs, associated with the adoption of these regulations. These reports can be viewed here (Beacon Hill) and (Heritage Foundation).

The Heritage Foundation report has apparently generated the greatest interest due to its effort to detail the number of jobs that the regulations may cost each state. Thus, a recent article on www.al.com covering several Alabama news sources, noted that the regulations may cost Alabama as many as 10,700 jobs or about 4.14% of the State’s manufacturing employment. (Wake Up Call al.com 2/20/15 ). Overall, the Heritage Foundation estimates that over a half million manufacturing jobs will be lost nationwide

Although the very issue of climate change continues to have prominent deniers, the arguments put forth by those who oppose climate change regulations seem to be edging away from absolute denial of the science supporting the fact of any change in the earth’s average temperature and towards the potential economic and social impacts of the issue. Until fairly recently, there has been a vocal group of individuals with scientific credentials who openly rejected the scientific basis for the position that the world’s climate is warming. As scientists have moved to a general consensus that the problem is real, the argument has generally moved from outright denial that the earth’s temperatures are rising to one that questions the cause. Many who originally denied that there was any climate change now acknowledge that temperatures are increasing, but argue that the cause is primarily the result of a natural climate cycle and not the result of human activity such as through the combustion of coal. Even that debate tends to be between scientists and senior policy-makers. These recent studies may indicate a further shift towards more practical aspects of climate change issues: the impacts of the various regulatory proposals the situation has prompted. Regardless of whether the estimates of costs, particularly in jobs, are valid, the fear of the loss of jobs in significant numbers seems much more likely to raise concerns on the part of the general public than has a debate between scientists.

 

Fracking: To Ban Or Not To Ban?

The process of hydraulic fracturing (also known simply as “fracking”) continues to divide the public and public policymakers, even as resulting lower natural gas prices have encouraged industries, including many power plants, to convert from coal-fired boilers as one means as coping with coming limitations on the emissions of carbon monoxide.

Local concerns about fracking activity have their origin in concern about pollution of drinking water sources. Those concerns have now expanded to include concerns about the management of fracking fluid wastes and the possibility that the activity may prompt localized seismic activity. For example, scientists at the Universities of Miami and Ohio have asserted that fracking activity prompted localized earthquakes in a part of the state. (Ohio earthquakes).

A number of anti-fracking proposals were on state and local ballots this past year and many of them were adopted. (Local measures). And New York recently imposed a fracking ban by executive action, prompting suggestions that there may be similar actions in other states. (National Geographic).

At least part of the Obama Administration is arguing against such localized bans. Interior Secretary Sally Jewel recently criticized the bans stating that they prompt confusion for the oil and natural gas industries. (The Hill). She acknowledged the need for more scientific research, but in the interim, will rely on scientists at the U.S. Geological Survey to help guide her decisions about allowing fracking on federal lands. Ultimately, she believes it would be better to have uniform regulations for the activity. The Administration is, in fact, pursuing a set of regulations that would direct fracking activities on federal lands, but these have been pending for almost a year. (White House reviewing fracking rules). And EPA initiated a scientific study of fracking in 2011 with the intention of providing a final report last year. That report is yet to be issued. (EPA Fracking Study)

If broader regulation covering activities in the industry, both on federal lands and non-federal lands, is coming, the Administration may need to move promptly if it hopes to get out ahead of local action.

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.

New Year Brings New Coal Ash Regulations and New Legislative Proposals

December 19, 2014 marked the deadline for the Environmental Protection Agency (EPA) to announce its final decision regarding a new regulatory scheme for coal ash disposal (Coal Combustion Residuals or CCR). The new regulations are to focus on the disposal of coal ash.

The pressure for new regulations began mounting after the rupture of a Tennessee power plant in 2008 which sent over 1 billion gallons of coal ash into nearby Tennessee rivers. Subsequently, on February 2, 2014, a Duke Energy plant released approximately 39,000 tons of coal ash into the Dan River in North Carolina.

During the lead up to the EPA decision, interest groups have been battling over whether coal ash should be categorized as solid non-hazardous waste or hazardous material. This ongoing battle will likely foreshadow legislative arguments we can expect in 2015.

In the past, Representative, David McKinley of West Virginia and Senator John Hoeven of North Dakota both have been active in introducing legislation allowing states to regulate coal ash as non-hazardous waste. Additionally, Senator James Inhofe, the incoming chairman of the Senate Committee on Environment and Public Works has stated that states have “responsibly and effectively managed coal ash” without federal intervention.

Further, Inhofe has stated, “[i]n the new Congress, my colleagues and I will intently review the impacts this rule could have to our economy and electricity reliability as well as highlight how states are leading the way on properly disposing and recycling coal ash.” See Sean Cockerham, EPA rules on coal ash may disappoint environmentalists, buoy industry, ColumbusLedger-Enquirer (Dec. 17, 2014). Following his re-election, Majority leader Mitch McConnell stated that he feels a “deep responsibility” to stop the EPA from regulating carbon emissions at coal-burning power plants. McConnell said his top priority is “to try to do whatever I can to get the EPA reined in.” See Sam Youngman, McConnell: If Rand Paul runs for president, ‘he’ll be able to count on me’, Lexington Herald-Leader (Nov. 6, 2014).

EPA Updates Rule for Site Assessments to Address the Innocent Landowner Defense

On October 6, 2014, the Environmental Protection Agency (“EPA”) adopted a final rule which will eventually eliminate one of the two recognized ASTM International standards to conduct environmental site assessments, which were designed  to comply with EPA’s “All Appropriate Inquires Rule” (“AAI”). Complying with the AAI rule is required to claim protection from CERCLA (Superfund) liability as a bona fide prospective purchaser, contiguous property owner, or innocent landowner.  Effective October 6, 2015, ASTM International’s Standard E1527-05 will not be recognized as complying with the AAI rule. The ASTM standard updated in 2013 (ASTM E1527-13 “Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessments Process) will be the recognized ASTM standard that will comply with the AAI Rule. Although the change does not become effective until October 6, 2015, it is advisable to follow the E1527-13 standard now.

Current Ethanol Blending Mandate Generates Interesting Opponents and Forces Delay

An increasingly pitched battle between business and agricultural interests over the blending of ethanol in gasoline has turned its focus to EPA’s rulemaking mandate which sets the minimum volume of renewable fuel sold annually in the U.S.  This Renewable Fuel Standard (RFS) has drawn significant attention because opponents of the use of ethanol in gasoline and diesel fuels believe that there is little if any likelihood of congressional action in the near term.  The EPA has proposed to reduce the volume of ethanol that must be blended into gasoline this year, while keeping the biodiesel mandate the same.  The subsequent comment period saw EPA  flooded with comments causing the Agency to delay a final decision setting the standard for the year.

According to a recent article in The Hill, the American Petroleum Institute is spearheading an effort ultimately intended to secure a congressional change to the RFS, which requires oil refiners to mix ethanol and other renewables into their gasolines and other vehicle fuels.  This mandate is implemented through EPA’s annual rulemaking establishing a volume of renewable fuel that must be produced for the coming year.  The current mandate is for 16.55 billion gallons for ethanol and biodiesel.  Interestingly, the API has attracted a range of advocacy groups in support of its position including the American Motorcyclists Association, the National Chicken Council, the National Council of Chain Restaurants, and the Environmental Working Group in support of an effort to scrap the corn-based ethanol requirement entirely.  For various reasons these groups oppose the use of ethanol primarily either because of its believed adverse impacts on engines and fuel systems, or its effect in driving up costs of food production.  The Environmental Working Group also asserts that the process increases carbon dioxide emissions because ethanol-based fuel additives have higher CO2 emissions than conventional gasoline.

By contrast, the National Corn Growers Association (NCGA) supports an increase in the mandated level, and the Association has criticized EPA for its delay in issuing the 2014 standard.  As explained in the farm and rural policy newsletter Agri-Pulse, EPA received over 350,000 comments on the issue and this has slowed its response, a situation that is hurting the ethanol industry according to the NCGA.

The law creating the Standard requires EPA to set an annual limit in November for the coming year, although EPA frequently misses this deadline.  The problem is compounded this year by the large number of comments.  While the Agency moved its target date for a final proposed rule from June to late July, none has been issued.  And White House adviser John Podesta told Senate Democrats last week that the administration plans to raise the 2014 level for biodiesel before making it final.

Regardless of how the issue was resolved by EPA’s annual rulemaking, it appears that forces are coming together in a concerted effort to eliminate or substantially reduce the requirement for renewables in gasoline.

Recent Projects Indicate Opportunities for Redevelopment of Brownfields

Our firm has recently represented clients in two projects associated with brownfields that may signal an increased willingness on the part of regulatory authorities to facilitate redevelopment of contaminated properties.  As individuals and companies around the nation began to reassess the impacts of sprawl, the ability to redevelop brownfield properties provides an opportunity to make these properties productive to the benefit of the new owner directly and the community generally.

One project involved the redevelopment of a portion of an abandoned automobile manufacturing site.  This former General Motors property had been placed in a trust along with other properties as a part of the bankruptcy proceeding that restructured GM.  The properties were reassessed and generally cleaned up using funds from a trust and are now being made available for evaluation by prospective purchasers.  Most of the properties have existing infrastructure and access and, from an environmental perspective, many have been remediated  to industrial use standards. More to the point, regulatory officials seem inclined to actively encourage and facilitate redevelopment, in part by providing prospective purchasers with assurances that they will not be liable for existing contamination.  Many of these properties are being remediated under an EPA lead, and EPA can be moved to act promptly on requests from prospective purchasers for assurances about the limitation of liability.  Thus, after some negotiation, we were able to obtain a “comfort letter” from the EPA Regional Office that focused on the particular property in question and provided the type of assurance generally now allowed under the Bona Fide Prospective Purchaser Status set out in the Federal Superfund (“Comprehensive Environmental Response Compensation and Liability Act”).  The process can move fairly quickly with concerted effort, and we were able to obtain both an initial letter and a follow-up clarification in a matter of days.  The attention such requests receive demonstrates the apparent willingness of the Agency to facilitate redevelopment, which, in turn, not only facilitates the initial decision about acquisition, it also speeds development schedules if acquisition is pursued.

Another example involves actions by state agencies regarding the redevelopment of properties that may be affected by RCRA (hazardous waste) permits and investigations.  Increasingly, as properties regulated by RCRA requirements begin to change hands, one issue that could impede redevelopment is the applicability of RCRA to entire properties if there are RCRA permitted units such as landfills on any portion of the property.   The effect of this has tended to inhibit redevelopment of portions of such properties under state brownfields programs because many of them are, by statute, not applicable to sites that are subject to RCRA permits or ongoing remediation activity.

However, as demonstrated by a recent project we assisted with, state agencies are willing to revisit this policy and have, in particular situations, allowed such sites to be divided in a manner that separates the areas specifically subject to RCRA permits or related activity from the remaining portion to the property.  In our case, that remaining portion of the property was then able to be qualified under the state brownfields program thereby providing a prospective purchaser the benefit of statutory limitations on liability for existing contamination.  We have been directly involved in one such project, and others are under consideration.  I would emphasize that this approach is in an early phase, and there remains some disagreement among regulators about some important details.  While the states have led the effort, EPA has tended toward the position that any portion of a property regulated under RCRA must remain within that regulatory sphere, and thus could not be segregated for the benefit of redevelopment under a brownfields program.  Nonetheless, EPA has not moved to prevent such interpretations at the State level.

While the regulatory setting seems to be evolving, including some continuing discussions between EPA and the states, these examples are encouraging for the prospect of redeveloping brownfields and will, hopefully, give renewed vigor to such efforts.

EPA, Army Corps of Engineers Propose Rule Clarifying Clean Water Act Jurisdiction

On March 25, the US Environmental Protection Agency and U.S. Army Corps of Engineers released a proposed rule to clarify Clean Water Act jurisdiction over streams and wetlands by re-defining “Waters of the United States” in light of a series of Supreme Court decisions wrestling with the issue of whether a particular water body (e.g., “isolated wetlands,” man-made ditches and the like) were subject to regulation under the Clean Water Act.

The proposed rule seeks to clarify regulation over upstream waters and to increase efficiency in determining coverage of the Clean Water Act (“jurisdictional determinations”). A public comment period will run for 90 days following publication of the proposed rule.

Under the proposed rule, most seasonal and rain-dependent streams, and wetlands near rivers and streams will be protected. Jurisdiction over other types of waters be evaluated by a case specific analysis of whether the connection is or is not significant, and constituents now have opportunity to comment on the Act’s application to geographically unique waters, and to recommend the addition of categories of waters that should be regulated without case specific analysis.

For a copy of the proposed rule and other information, please visit the Environmental Protection Agency.

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 Issues Carbon Capture and Injection Regulations

In mid-December, the U.S. Environmental Protection Agency issued final rules that the Agency said are intended to facilitate the management of carbon dioxide gas that is required to be captured from electric power plants.  Summaries of the regulations and links to them can be found here and here.  The rules are intended to support rules on carbon pollution standards for new power plants, which were published earlier this year in draft form and have not yet become final.  Those draft regulations have been criticized for a number of reasons, including an assertion by industry that they cannot be implemented without the use of underground carbon sequestration, a technology which it is argued has not yet been proven to be effective.  Carbon injection has been used to rejuvenate oil fields once the natural pressure in those fields has diminished as a result of the removal of large volumes of oil, but the process has not been fully implemented simply for the purpose of sequestering CO2 beneath the ground’s surface.  Moreover, there are arguments that existing regulations governing hazardous waste management and ground water contamination might otherwise thwart the process or at least make it too cumbersome.

The recent EPA regulations seek to remove some of these obstacles by exempting the  gas from regulation as a hazardous waste when it is injected into Class VI wells approved for geological sequestration.  EPA had earlier issued rules using its authority under the Safe Drinking Water Act to facilitate such deep injection.  The recent rule clarifies that the carbon-dioxide-containing materials are exempt from regulation as a hazardous waste intended for disposal.  Finally, the rule was accompanied by draft guidance from EPA suggesting a regulatory method to transition Class II wells currently used for oil and gas development into Class VI wells for carbon sequestration.

While these new rules may remove some objections to the Agency’s overall approach to CO2 regulation, they are not likely to resolve underlying concerns about the cost of carbon sequestration and the uncertainties associated with the process itself.  And it appears that it is those issues which must be resolved before carbon capture can become viable.

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 Finalizes Revisions to Clean Air Standards for Stationary Engines

On January 15, 2013, the U.S. Environmental Protection Agency (EPA) finalized revisions to standards to reduce air pollution from stationary engines that generate electricity and power equipment at industrial, agricultural, oil and gas production, power generation and other facilities.

The final amendments to the 2010 “National Emission Standards for Hazardous Air Pollutants for Reciprocating Internal Combustion Engines (RICE)” reflect new technical information submitted by stakeholders after the 2010 standards were issued.

According to EPA, the final amendments include monitoring and compliance options for certain large spark ignition (generally natural gas-fueled) stationary reciprocating internal combustion engines, management practices for a subset of existing spark ignition stationary reciprocating internal combustion engines in populated areas, and alternative testing options for such engines in sparsely populated areas. The final amendments also establish management practices for existing compression ignition engines on offshore vessels.

Further, the final amendments establish limits on the hours that stationary emergency engines may be used for emergency demand response and establishing fuel and reporting requirements for certain emergency engines used for emergency demand response, and correct certain minor technical or editing errors in the current regulations for stationary reciprocating internal combustion engines.

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.