Air Feed

FY2016 EPA Budget Proposal

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By E. Lynn Grayson

 

EPA Administrator Gina McCarthy recently testified before the Senate Environment and Public Works Committee regarding EPA's proposed 2016 fiscal year budget. EPA's 2016 fiscal year from October 1, 2015 through September 30, 2016. EPA is seeking an increase of $453M over the FY2015 budget to $8.6B proposed in FY2016.

FY2016 budget highlights include funding to address:

1.     Making a visible difference in communities across the country—efforts focused on coordination with other federal agencies, states, tribes and stakeholders to provide community support for needed assistance and support for capacity building, planning, and implementation of environmental protection programs;

2.    Addressing climate change and improving air quality—actions to reduce climate change and support the President's Climate Action Plan including new proposed funding for greenhouse gases through commonsense standards, guidelines and voluntary programs;

3.    Protecting the Nation's Waters—focus on to ensure waterways are clean and drinking water is safe because there are far reaching effects when rivers, lakes and oceans become polluted;

4.    Taking steps to improve chemical facility safety—support to improve the safety and security of chemical facilities and reduce the risks of hazardous chemicals to facility workers and operators, communities and responders;

5.    Protecting our lands—continued work to cleanup hazardous and nonhazardous wastes that can migrate to air, groundwater and surface water and soils;

6.    Ensuring the safety of chemicals and preventing pollution—expand chemical safety programs and enhance quality, accessibility and usefulness of information about commercial chemicals and pesticides;

7.    Continuing EPA's commitment to innovative research & development—R&D efforts to address the interplay between air quality, climate change, water quality, healthy communities and chemical safety;

8.    Supporting state and tribal partners—new funds for categorical grants and setting the bar for continuing partnership efforts with states and tribes;

9.    Maintaining a forward looking and adaptive EPA—emphasis on physical footprint including space optimization and essential renovations of laboratories throughout the U.S.; and,

10.    Reducing and eliminating programs—elimination of programs that have served their purpose and accomplished their mission for a cost savings of $44M.

For more information on the proposed budget, visit http://www2.epa.gov/planandbudget/fy2016.


Criminal Asbestos Case Against Tennessee Salvage Company

Grayson_Lynn_COLORBy E. Lynn Grayson

 

U.S. District Judge Ronnie Greer sentenced five people to prison terms in federal court in Greeneville, Tennessee, this week for conspiring to commit Clean Air Act offenses in connection with the illegal removal and disposal of asbestos-containing materials at the former Liberty Fibers Plant in Hamblen County, Tennessee, the Justice Department announced. A&E Salvage had purchased the plant out of bankruptcy in order to salvage metals which remained in the plant after it ceased operations.

U.S. District Judge Greer sentenced Mark Sawyer, 55, of Morristown, Tennessee, a former manager of A&E Salvage, to the statutory maximum of five years in prison, to be followed by two years of supervised release. A&E Salvage manager Newell Lynn Smith, 59, of Miami, Florida, was sentenced to 37 months and two years of supervised release. A&E Salvage Manager Eric Gruenberg, 50, of Lebanon, Tennessee, received a 28-month sentence. Armida, 56, and Milto DiSanti, 54, of Miami, Florida, each received sentences of six months in prison, to be followed by six months of home confinement. The judge ordered all the defendants to pay restitution of more than $10.3 million, which will be returned to Environmental Protection Agency's (EPA) Superfund, which was used to clean up the plant site contamination.

According to court documents, all the defendants pleaded guilty to one criminal felony count for conspiring to violate the Clean Air Act's "work practice standards" salient to the proper stripping, bagging, removal and disposal of asbestos. According to the EPA, the individuals engaged in a multi-year scheme in which substantial amounts of regulated asbestos containing materials were removed the former Liberty Fibers plant without removing all asbestos prior to demolition and stripping, bagging, removing and disposing of such asbestos in illegal manners and without providing workers the necessary protective equipment. 

While managing asbestos in renovations and demolition projects can be challenging from an environmental and worker safety perspective, there clearly is a right way to do it and a wrong way. This case serves as a good reminder that taking shortcuts to save time and/or money has significant consequences.


Environmental Groups Sue Over Applicability of TRI Data

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By E. Lynn Grayson

 

A recent lawsuit filed by 10 environmental groups against EPA alleges that EPCRA Section 313 Toxic Release Inventory (TRI) reporting should apply to oil and gas extraction companies. The environmental groups want TRI data regulatory requirements about releases to the environment to apply to oil drilling and exploration, hydraulic fracturing and natural gas processing activities.

According to the lawsuit recently filed in the U.S. District Court for the District of Columbia, EPA conducted rulemaking in the 1996-1997 time frame to consider adding other industry sectors to the list of facilities required to complete TRI reporting. At that time, EPA concluded that "oil and gas extraction classified in SIC code 13 is believed to conduct significant management activities that involve EPCRA Section 313 chemicals." EPA did not regulate the oil and gas industry following these earlier rulemaking efforts and for that reason, in 2012, environmental groups petitioned EPA to initiate rulemaking to add the oil and gas industry to TRI reporting requirements. The lawsuit alleges that EPA has not responded to that petition.

The environmental groups also allege that 127 tons of hazardous air pollutants are released by the oil and gas industry annually as well as other releases to the environment through discharges to surface waters, contamination of groundwater, underground injection and disposal in landfills. The lawsuit contends that regulation of the oil and gas industry is even more important today given the expansion of hydraulic fracturing and  horizontal drilling.

The environmental groups bringing the lawsuit include the: Environmental Integrity Project, Center for Effective Government, Chesapeake Climate Action Network, Citizens for Pennsylvania's Future, Clean Air Council, Delaware Riverkeeper Network, Natural Resources Defense Council, Responsible Drilling Alliance, and Texas Campaign for the Environment.

The oil and gas industry has concluded that TRI requirements never were intended to cover such facilities given the few employees typically involved in these operations and the multitude of other regulations applicable to the oil and gas industry. They also look to the 1996-1997 rulemaking effort but with a different recollection recalling that EPA confirmed at that time that "…This industry group is unique in that it may have related activities located over significantly large geographic areas. While together these activities may involve the management of significant quantities of EPCRA section 313 chemicals in addition to requiring significant employee involvement, taken at the smallest unit (individual well), neither the employee nor the chemical thresholds are likely to be met." Industry advocates have criticized these environmental groups, and particularly the Environmental Integrity Project, for attempting to manipulate data in order to oppose oil and gas development and seeking to impose additional regulatory requirements on an industry already heavily regulated.

The TRI program is an expansive regulatory initiative that mandates annual reporting obligations for certain facilities that fall within specific industry sectors, have 10 or more full time employees and manufacture or process 25,000 pounds of toxic chemicals subject to EPCRA Section 313 or otherwise use 10,000 pounds of these same chemicals in any given year. It is typically the case that  many of the oil and gas extraction operations would not meet these reporting thresholds as previously concluded by EPA. It appears, however, that this issue may be debated once again in the context of this case.


Texas Petrochemical Refinery Achieves Reasoned Victory Against Clean Air Act Citizen Suit

Bandza_Alexander_COLORBy  Alexander J. Bandza

 

ExxonMobil Corp. (Exxon) operates a refinery complex in Baytown, Texas, which is the largest petroleum and petrochemical complex in the U.S.  This Complex is governed by Title V operating permits issued by the Texas Commission on Environmental Quality (TCEQ).  In a 2010 citizen lawsuit, Environmental Texas Citizen Lobby Inc. and the Sierra Club alleged that, since 2005, equipment breakdowns, malfunctions and other non-routine incidents at the Complex caused illegal emissions of benzene, hydrogen chlorides, sulfur dioxide, hydrogen sulfide, carbon monoxide, and other substances.  Plaintiffs sought $641 million in damages.  On December 17, 2014, the District Court declined to impose any penalty, finding that the $1.4 million penalty and stipulation on future corrective action that Exxon previously agreed to with TCEQ was sufficient.

The case illustrates that a proactive EHS effort can pay real dividends in defending against citizen suits or enforcement actions, even if the number of violations are not in the company’s favor.  By way of background, all parties stipulated to Exxon’s indications of noncompliance, described as:

  •  241 “reportable emissions events” (i.e., those events “that release greater than a certain threshold quantity of pollutants” and are reported to TCEQ);
  • 3,735 “recordable emissions events” (i.e., those events “that release less than the aforementioned threshold quantity of pollutants” but are not reported to TCEQ); and
  • 901 Title V deviations.

TCEQ investigates all reportable emissions events.  After investigating, TCEQ assessed about $1.1 million in penalties against Exxon, and Harris County assessed about $0.3 million in penalties.  Furthermore, in 2012, TCEQ and Exxon entered into an agreed enforcement order, which stipulated penalties for future reportable emissions events and mandated four environmental improvement projects.  The projects would cost about $20 million.

Finding as a threshold matter that not all of Plaintiffs’ counts were actionable, the court declined to assess penalties for any of Plaintiffs’ remaining counts.  The Court was not persuaded that the number of events and deviations meant anything: “Despite good practices, it is not possible to operate any facility—especially one as complex as the Complex—in a manner that eliminates all Events and Deviations.”  Rather, the Court was persuaded that Exxon’s efforts to conduct an internal investigation and implement corrective actions after every discovery of a potential non-compliance event, which conformed to or exceeded industry practice, meant that Exxon “made good faith efforts to comply with the CAA.”  Furthermore, the Court was not persuaded that the violations were serious or lengthy in duration, nor was it persuaded that Exxon gained any economic benefit from non-compliance.  The Court entered judgment for Defendants.

The findings of fact are available here.


Another Criminal Conviction Under the Migratory Bird Treaty Act for Wind Farms

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By E. Lynn Grayson

 

PacifiCorp Energy has agreed to pay $2.5 million to settle charges arising from bird deaths at two of its wind farms located in Wyoming. PacifiCorp pled guilty in Wyoming federal court to two misdemeanor violations of the Migratory Bird Treaty Act and was sentenced to five years' probation. The company also agreed to institute a compliance program to prevent bird deaths at the utility's four commercial wind farms in Wyoming.

According to allegations, the company failed to make all reasonable efforts to build projects in a way that would avoid risk of bird deaths by collision with turbine blades consistent with guidance finalized by the Fish & Wildlife Service in 2012. The Migratory Bird Treaty Act violations were charged following discovery of the carcasses of 38 golden eagles and 336 other protected birds at the company's Seven Mile Hill and Glenrock/Rolling Hills wind farms in Carbon and Converse counties.

This is the second prosecution of wind farm owners and operators under the Migratory Bird Treaty Act. Duke Energy was convicted last year in similar charges flowing from bird deaths at two of its wind farms also located in Wyoming. See "First Criminal Conviction Under the Migratory Bird Treaty Act for Wind Farm" blog we posted on November 26, 2013.

These are very troubling cases that pit environmentalists against clean energy advocates. While wind farm energy is highly sought after in the U.S., it is clear there is an increased scrutiny on the utilities that operate these wind projects to ensure that construction, design and operation of these wind farms are protective of birds. In many ways, this seems like an almost impossible achievement for companies.


Governor Quinn Nixes Illinois Statute of Repose for Construction Asbestos Claims

Siros_Steven_COLORBy Steven M. Siros

 

In one of his last acts on the way out of office, Governor Quinn gave what some describe as a "big Christmas gift for the plaintiffs' bar" when he signed into law a bill that exempts construction-related asbestos personal injury claims from Illinois' ten-year statute of repose. SB 2221 was targeted at plaintiffs suffering from mesothelioma, a form of lung cancer with a long latency period. The bill will go into effect on June 1, 2015.

The bill was opposed by pro-business groups which argued that the bill only further reinforced Illinois' reputation for having an abusive legal climate. According to Illinois Lawsuit Abuse Watch, Madison County, Illinois is home to a quarter of the nation's asbestos litigation and this bill will certainly enable additional asbestos litigation. On the other hand, the bill's sponsors contend that the bill levels the playing field for those suffering from mesothelioma, a disease for which the symptoms may not present themselves for more than 20 years after exposure. Please click here to see a copy of the bill that was signed into law by Governor Quinn.


Illinois Approves Fracking Rules

Essig_Genevieve_COLORBy Genevieve J. Essig

 

Following up on a previous post, in which we noted that, nearly a year after filing its first draft, the Illinois Department of Natural Resources (IDNR) had filed revised rules implementing the Hydraulic Fracturing Regulatory Act (225 ILCS 732) with the Illinois’ Joint Committee on Administrative Rules (JCAR), we report that JCAR has approved these proposed regulations.  In September JCAR had extended the Second Notice period for the rulemaking for an additional 45 days, but it finally approved the rules yesterday.  The final version of rules may now be filed with the Secretary of State for publication in the Illinois Register.


US EPA Finalizes Hydrochlorofluorocarbon Consumption and Production Allowances for 2015 to 2019

Bandza_Alexander_COLORBy Alexander J. Bandza

 

On Tuesday, October 28, 2014, the US EPA published its final rule that adjusts the allowance system for the consumption and production of hydrochlorofluorocarbons (HCFCs) for years 2015 to 2019.  The rule was promulgated pursuant to the Clean Air Act, certain sections of which ensure that the United States meets its obligations under the Montreal Protocol on Substances that Deplete the Ozone Layer (Protocol).  Under the Protocol and its amendments, all developed countries are subject to caps on their consumption and production of HCFCs.  These countries must achieve a certain percentage of progress towards the total phaseout of production and consumption of HCFCs by certain dates.

Under yesterday's rule, the US EPA issued allowances for four HCFCs and implemented a  de minimis exemption for use of existing inventory of HCFC-225ca/cb and HCFC-124.  Allowances for each of the four HCFCs are as follows:

  • HCFC-22.  For consumption, the US EPA allocated about 10,000 MT in 2015 with an annual decrease of about 2,000 MT per year until its phase-out in 2020. For production, EPA allocated about 28,000 MT each year.  Under existing regulations, HCFC-22 production and consumption are zero in 2020.
  • HCFC-123.  For consumption, EPA allocated about 2,000 MT per year through 2019.  EPA also allowed for continued use of HCFC-123 in nonresidential streaming fire suppression applications.
  • HCFC-124.  For consumption and production, EPA allocated 200 MT per year through 2019.
  • HCFC-142b.  For consumption an production, EPA allocated 35 MT in 2015 with an annual decrease of 5 MT per year.  Under existing regulations, HCFC-142b allowances for production and consumption are zero in 2020.

For HCFC-225ca/cb, the US EPA allocated zero percent of the baseline for production and consumption.  However, the US EPA finalized a de minimis exemption to allow any person with HCFC-225ca/cb in inventory prior to January 1, 2015, to use that material as a solvent.  The US EPA also finalized a de minimis exemption to allow any person with HCFC-124 in inventory prior to January 1, 2015, to use that material as a sterilant for biological indicators.

The rule becomes effective on January 1, 2015.  The full rule can be found here.


Companies Leading the Charge on Carbon Pricing

Siros_Steven_COLORBy Steven M. Siros

 

While it is unlikely that the 113th Congress will take any action on climate change (especially not in advance of the November 2014 elections), many major public companies aren't waiting for Congressional action and are instead proactively beginning to factor internal carbon pricing into their business decisions. According to a new report issued by the CDP, 29 major companies in the United States already incorporate a carbon price into their business planning and risk management strategies. Of the 2,100 companies surveyed throughout the world, 638 companies have disclosed that regulations related to carbon pricing (cap-and-trade & carbon taxes) present opportunities for their businesses (although companies in heavy emitting countries and industries continue to report that they feel competitively disadvantaged by carbon pricing). Moreover, 500 of these surveyed companies reported that they are already regulated and price carbon through global carbon markets. Nearly a fifth of these are U.S.-based companies.

Another interesting observation that can be gleaned from the CDP report is the significant variability in the price that companies are setting per ton of carbon. For example, in North America, the price per ton ranges from $8-$80; in Europe, the price per ton ranges between $15-$324. The variability can be explained, at least in part, on the regulatory regime where those companies are operating. For example, companies operating in California are estimating carbon prices on the basis of California's cap and trade program which prices carbon at between $14-$15 per metric ton. Companies that primarily operate in Europe rely more upon Europe's Emissions Trading Scheme, although the current price per metric ton under the EU ETS (£6 per metric ton) is significantly lower than the above-referenced range so these companies are obviously projecting a higher price per ton in the future.

During last week's United Nations Climate Summit, many governments and companies also expressed support for establishing a price for carbon emissions. The World Bank identified many countries, states, provinces and cities, as well as over 1,000 businesses and investors that were in favor of carbon pricing. The CDP report noted that "[c]ompanies in the US and worldwide are already advanced in their use of carbon pricing. They are ahead of their governments in planning for climate change risks, costs and opportunities. These companies want, and are calling for, clear pricing and regulatory certainty to help them plan their climate-related investments, and they want to see more certain, internationally linked carbon markets."

Regardless of what side of the climate change debate one embraces, what is clear is that the business community has already made a decision to incorporate climate change related risks into its business strategy decision making. For those of us that represent the business community, it probably would be a good idea to get on the train or be left at the station.


EPA May Garnish Wage Without Court Approval

Grayson_Lynn_COLORBy E. Lynn Grayson

 

EPA recently announced it plans to take final action later this year to authorize collection of non-tax debts by garnishing wages which may occur without a court order. Public comments submitted to date on EPA's proposed action express concern that the Agency may be exceeding its authority and that such actions may deprive individuals of their due process rights.

The EPA has claimed this new authority by citing the Debt Collection Improvement Act of 1996, which gives all federal agencies the power to conduct administrative wage garnishment, provided that the agency allows for hearings at which debtors can challenge the amount or the terms of a repayment schedule. Administrative Wage Garnishment (AWG) would apply only after EPA attempts to collect delinquent debts and after Treasury attempts to collect delinquent debts through other means. The agency would provide notice "prior to any action," giving the debtor the opportunity to "review, contest or enter into a repayment agreement."

EPA's proposal has been actively opposed by a number of watch dog and industry organizations. In addition, members of the House and Senate have argued that the proposed action is an improper expansion of EPA authority and many note it could hurt public impressions of EPA.

EPA's response has been that the Agency is proposing to do what 30 other federal agencies have done and what Congress directly empowered all agencies to do: collect debts owed to the federal government in a responsible and fair way.

EPA's proposed rule to amend its claims collection standards to include AWG can be viewed at 79 Fed. Reg. 37,704.

The amount EPA has collected in fines has increased since President Obama took office with $252M received in 2012, up from $96M in 2009. As Dan Goldbeck of the American Action Forum appropriately noted ". . . the order is certainly controversial and is a strong reminder that even a few pages of the Federal Register can pack serious administrative consequences."