The United States’ Largest Wholesale Energy Provider Launches Blockchain-Based Pilot for Renewable Energy Markets
On April 18, 2018, the Corporate Environmental Lawyer published a blog entry discussing the growing use of Blockchain technology by startup companies seeking to connect populations without access to traditional electricity markets to electricity produced by distributed renewable energy systems. As discussed in that blog entry, proponents of Blockchain technology have asserted the platform’s built-in efficiencies would allow it to compete with traditional, utility-owned electrical grids, with one company going as far as setting up a “micro-grid” in Brooklyn, New York. It appears that the marriage between Blockchain and the electricity grid may be moving forward at an accelerated pace as the technology is now being examined and piloted by major utility operators.
PJM Interconnection (“PJM”), the United States’ largest power grid operator and market administrator serving over 65 million people from Chicago to Washington D.C., has announced its intention to test a Blockchain system that will allow clean-energy buyers and sellers to trade the renewable energy credits that wind and solar farms produce as they generate electricity. Working through its subsidiary—PJM Environmental Information Services—PJM has announced a partnership with Energy Web Foundation, a nonprofit entity with experience developing Blockchain platforms for smaller energy markets in Europe and Asia. The partnership hopes to rollout a pilot for the program by the end of the first quarter of 2018. “This collaboration between EWF and PJM-EIS is a major milestone for the adoption of advanced digital technologies in the energy sector,” said Hervé Touati, CEO of Energy Web Foundation. “We are excited to partner with a leader such as PJM-EIS.”
Blockchain, the technology that functions as a public ledger underpinning digital currency transactions, continues to be promoted as a key driver of growing renewable energy markets. At its core, the belief that Blockchain can spur renewable energy growth and disrupt current energy markets stems from the potential built-in efficiencies of the technology, which allow buyers and sellers of clean power to interact directly, without the need for a central coordinator. While the potential impact of Blockchain on future energy markets is still unknown, the successful use of the technology by PJM could represent a major milestone in the growth and development of the technology in the marketplace.
On October 23, 2018, President Trump signed into law America’s Water Infrastructure Act of 2018 which, in addition to authorizing federal funding for water infrastructure projects, also requires drinking water systems serving more than 3,300 people to test for unregulated contaminants pursuant to U.S. EPA’s Unregulated Contaminants Monitoring Rule (UCMR). Prior to this new law, only drinking water systems that served more than 10,000 people were required to monitor for unregulated contaminants. Contaminants covered by the UCMR include PFOA, PFOS, 1,2,3-TCP, hexavalent chromium and 1,4-dioxane. This new testing requirement, which goes into effect in 2021, is expected to add more than 5,000 drinking water systems to the list of systems that are required to test for these unregulated contaminants.
The challenge that continues to be faced by drinking water systems across the country is what to do if these contaminants are in fact found in the drinking water supply. As their name would imply, U.S. EPA has yet to set drinking standards for these contaminants although many states and local entities continue to enact a patchwork of regulatory requirements often without regard to the technical feasibility of treating these chemicals and/or the health risks actually posed by these chemicals. Unfortunately, until such time as U.S. EPA takes action to enact a federal standard, the regulated community will continue to be subject to this regulatory quagmire and now, with the new testing requirements, more drinking water systems will be forced to struggle with this issue without any clear regulatory guidance.
On November 5, 2018, the United States Supreme Court will hear oral arguments on a landmark case regarding the preemptive effect of the Atomic Energy Act of 1954 (the “Atomic Energy Act”) on a state’s regulation of uranium mining. The case, Virginia Uranium Inc. v. Warren, questions whether the Atomic Energy Act’s regulation of radiation safety standards extends to preempt a Virginia state law banning uranium mining within the borders of the state. The Virginia law dates back to the early 1980s, after the largest uranium deposit in the United States was discovered in Pittsylvania County, Virginia. In response to the discovery, the Virginia General Assembly asked the state’s Coal and Energy Commission to evaluate the potential safety effects of uranium mining, and enacted an indefinite ban on mining the deposit. The unharvested deposit is valued at up to $6 billion USD.
In 2007, the owners of the land, Virginia Uranium Inc., Cole Hill LLC and Bowen Minerals LLC, announced their intention to begin mining the deposit. After failing to convince the Virginia legislature to overturn its mining ban, the plaintiffs sought to challenge Virginia’s law as preempted under the Atomic Energy Act.
The Atomic Energy Act gives the federal Nuclear Regulatory Commission the sole power to regulate several steps in the production of nuclear fuel, including setting radiation safety standards for milling uranium ore and disposing of uranium waste byproducts. The Atomic Energy Act does not, however, directly regulate the mining of uranium on non-federal land.
According to the Plaintiffs/Petitioners, the Virginia ban is preempted by the Atomic Energy Act because the purpose and direct effect of Virginia’s law is to regulate radiation safety standards, which the Atomic Energy Act exclusively entrusted to the purview of the Nuclear Regulatory Commission. Predictably, the Virginia legislature has taken a much less expansive view of the law, arguing that the Atomic Energy Act only regulates uranium “after [uranium’s] removal from its place of deposit in nature.” Thus, according to the legislature, a state is free to regulate—or ban—the harvesting of uranium prior to its removal from the deposit.
The eventual resolution of the dispute will not only have a significant impact on the availability of American mined uranium, but may also potentially set the stage for the broader battle over states' rights brewing between the Trump administration and liberal states like California, which have looked to enact environmental laws in areas currently regulated by the federal government.
The Trump Administration has released its Fall 2018 Unified Agenda of Regulatory and Deregulatory Actions. This regulatory agenda “reports on the actions administrative agencies plan to issue in the near and long term [and] demonstrates this Administration’s ongoing commitment to fundamental regulatory reform and a reorientation toward reducing unnecessary regulatory burdens on the American people.”
According to the Trump Administration, the regulatory agenda reflects the following broad regulatory reform priorities:
- Advancing Regulatory Reform
- Public Notice of Regulatory Development
- Consistent Practice across the Federal Government
The EPA-specific regulatory agenda lists 148 regulatory actions in either the proposed rule stage or final rule stage, and provides information about the planned regulatory actions and the timing of those actions. Notable regulatory actions under consideration by EPA include:
- Revised Definition of “Waters of the United State”
- Notice of proposed rulemaking planned for October 2019; final rule planned for September 2019
- Definition of “Waters of the United States”–Recodification of Preexisting Rule
- Final rule planned for March 2019
- Clean Water Act Section 404(c) Regulatory Revision
- Notice of proposed rulemaking planned for June 2019
- National Primary Drinking Water Regulations for Lead and Copper: Regulatory Revisions
- Notice of proposed rulemaking planned for February 2019
- National Primary Drinking Water Regulations: Regulation of Perchlorate
- Notice of proposed rulemaking planned for October 2019; final rule planned for December 2019
- Emission Guidelines for Greenhouse Gas Emissions From Existing Electric Utility Generating Units; Revisions to Emission Guideline Implementing Regulations; Revisions to New Source Review Program (a/k/a The Affordable Clean Energy (ACE) rule to replace the Clean Power Plan)
- Final rule planned for March 2019
- TSCA Chemical Data Reporting Revisions and Small Manufacturer Definition Update for Reporting and Recordkeeping Requirements Under TSCA Section 8(a)
- Notice of proposed rulemaking planned for December 2018; final rule planned for October 2019
More information, and EPA's Statement of Priorities, can be found here.
Under the Trump Administration, EPA has expressed a renewed focus on the Superfund program and making sure that site cleanups operate optimally. In 2017, EPA established a Superfund Task Force, “to provide recommendations for improving and expediting site cleanups and promoting redevelopment.” The Superfund Task Force has made a number of recommendations, including recommending that EPA “Promote the Application of Adaptive Management at Complex Sites” and “Broaden the Use of Adaptive Management (AM) at Superfund Sites.”
According to the Superfund Task Force,
Adaptive Management is an approach used at large and/or complex sites that focuses limited resources on making informed decisions throughout the remedial process…Under an Adaptive Management strategy, Regions are encouraged to consider greater use of early and/or interim actions including use of removal authority or interim remedies, to address immediate risks, prevent source migration, and to return portions of sites to use pending more detailed evaluations on other parts of sites.
The Frank R. Lautenberg Chemical Safety for the 21st Century Act (a/k/a the TSCA Reform Act), signed into law in 2016, was a major overhaul of the 40-year-old chemical law, reforming how new and existing chemicals are evaluated and deemed “safe.” Since the law’s passage, EPA has completed determinations on 1,602 new chemical cases. EPA has also taken action to ban or restrict use of five existing chemicals, including trichloroethylene (TCE) and methylene chloride, which EPA found to pose heightened risks.
EPA has expended considerable resources over the past two year to fulfil these new review and evaluation requirements. EPA has now taken action to pass some of those costs down to the chemical industry in the form of fees authorized by the TSCA Reform Act.
On September 27, 2018, Acting EPA Administrator Wheeler signed the final Fees Rule, setting out the fees EPA will impose on industry to pay for the costly TSCA review process. The final rule will become effective one day after publication in the Federal Register, which is expected to happen in the next few days.
On September 13, 2018, the United States Environmental Protection Agency (“EPA”) took the final, unprecedented step of adding a contaminated site to the Superfund National Priorities List (“NPL”) based solely on the risk to human health posed by indoor air vapor intrusion at the site. The newly designated site, which consists of the former Rockwell International Wheel & Trim facility and its surrounding 76 acres (the “Site”), is located in Grenada, Mississippi. The Site has an extensive history. Beginning in 1966, the Rockwell facility operated as a wheel cover manufacturing and chrome plating plant. After chrome plating operations ceased in 2001, the facility was used for metal stamping until approximately 2007. According to EPA, the Site’s historic operations resulted in multiple releases of trichloroethene, toluene, and hexavalent chromium into the surrounding soil and adjacent wetland. However, EPA’s primary concern—and reason for listing the site—is the potential for airborne volatile organic compounds (“VOCs”) to enter the facility through cracks, joints, and other openings, resulting in contaminated indoor air. The potential for indoor air contamination appears to be of particular concern to EPA, given that nearly 400 individuals currently work within the facility.
The Site will now join a list of approximately 160 contaminated sites that have been federally designated as NPL sites. The NPL includes the nation’s most contaminated and/or dangerous hazardous waste sites. A contaminated site must be added to the NPL to become eligible for federal funding for permanent cleanup under the Comprehensive Environmental Response, Compensation, and Liability Act. While EPA’s decision to list the Site based on risks from indoor air contamination is unprecedented, the move is not all together surprising, given EPA’s recent rulemaking actions. In May 2017, EPA passed a final rule expanding the list of factors the agency is allowed to consider when designating NPL sites to specifically include risks to human health from impacted indoor air. In the preamble to the rule, EPA noted that it needed the authority to list sites on the basis of significant risk to human health from vapor intrusion contamination.
In contrast to EPA’s position, environmental consultants operating at the Site have strongly opposed the NPL designation. Several of the firms submitted comments on the final listing, asserting that EPA’s risk evaluation failed to take into account the Sub Slab Depressurization System (“SSDS”) installed at the facility in 2017, which subsequently reduced levels of VOCs in the indoor air to safe levels. However, EPA rejected these arguments, noting that even though the SSDS may protect workers from immediate threats, “it is not intended to address possible long-term remedial goals such as addressing the sources of the contamination below the building.”
EPA’s designation of the Site should alert potentially responsible parties that vapor intrusion issues may result in an increased chance of a site becoming listed on the NPL. In addition, parties relying on engineering controls to maintain compliant indoor air vapor levels should note the potential for EPA to deem such actions insufficient as long-term site remedies.
United Airlines became the first U.S. airline to publicly commit to reducing its greenhouse gas emissions (GHG) by 50% by 2050. In a press release issued on September 13, 2018, United Airlines explained that it would achieve that reduction by expanding its use of more sustainable biofuels and by relying on more fuel-efficient aircraft and implementing other operational changes to better conserve fuel. United Airlines' commitment to reduce GHG emissions by 50% by 2020 is consistent with reduction targets established by the International Air Transport Association in May 2018.
U.S. EPA has yet to regulate GHG emissions from aircraft in the United States, notwithstanding U.S. EPA’s July 25, 2016 endangerment finding for GHG emissions from aircraft and U.S. EPA’s Advanced Notice of Proposed Rulemaking contemplating adoption of the International Civil Aviation Organization’s (ICAO) aviation carbon emission design standards.
The decision by United Airlines is likely to be followed by other U.S. carriers that have international routes because those carriers will be subject to the ICAO standards when flying internationally.
Last week, the Santa Barbara County District Attorney and California Attorney General obtained guilty verdicts against Plains All American Pipeline, L.P. regarding the 2015 Refugio Oil Spill near Santa Barbara, CA. By way of background, on May 19, 2015, a pipeline operated by Plains to transport crude oil ruptured on shore just north of Refugio State Beach in Santa Barbara County, California, causing over 140,000 gallons of crude oil to be released from the pipeline, which spilled crude oil into the Pacific Ocean and across coastal beaches. At trial, testimony revealed that over 100,000 gallons of crude oil were never recovered.
Plains was convicted of one felony for unlawfully discharging oil into state waters and eight misdemeanors for the following: failing to timely call emergency response agencies; violating a county ordinance banning oil spills; and killing marine mammals, protected sea birds, and other sea life. Sentencing will be held on December 13, 2018.
According to a statement by California Attorney General Xavier Becerra, the verdict “should send a message: If you endanger our environment and wildlife, we will hold you accountable. At the California Department of Justice, we will continue prosecuting corporate negligence and willful ignorance to the fullest extent of the law.” (Emphasis added.)
As noted in Law360 (sub. req.), the verdict “underscore[s] the importance of pipeline companies taking their maintenance, inspection and compliance duties seriously, especially in states like California which have strict requirements and liability where knowledge or intent isn’t necessary to sustain criminal convictions.” Furthermore, the conviction specifically as to failure to notify emergency responders “underscores the importance of that duty and that companies must ensure their policies leave no room for error.” The relative rarity of criminal environmental convictions for corporations means this case is one to watch is it moves towards sentencing and/or appeals.
In a recently filed lawsuit in Cook County Circuit Court, the State of Illinois accused Trump International Hotel & Tower of violating multiple clean water laws and endangering fish and aquatic life in the Chicago River. The lawsuit, filed on August 13, 2018 by Illinois Attorney General Lisa Madigan, alleges that the Trump Tower’s water intake cooling system failed to comply with state and federal permit requirements, which are designed to limit the number of fish killed by the intake screens or sudden changes in pressure and temperature caused by the cooling system. The state’s lawsuit further alleges that the Trump Tower's National Pollutant Discharge Elimination System permit (“NPDES Permit”) expired on August 31, 2017, and that the building had been operating without a permit for nearly a year.
The 1,400 ft. skyscraper is one of the city’s largest users of river water. In order to cool the tower, the building, like most other buildings along the river, uses a water intake cooling system that siphons approximately 20 million gallons of water per day (“MGD”) from the Chicago River. After being utilized to cool the building, this water is subsequently pumped back into the river up to 35 degrees hotter than its original temperature. Because the building's intake system withdraws more than 2 MGD, the building must comply with regulations promulgated under Section 316(b) of the Clean Water Act (“CWA”). According to the attorney general’s lawsuit, these regulations required Trump Tower to document the efforts it has taken to minimize the impact of its intake system on the river’s fish and other aquatic life—actions which the lawsuit claims the building failed to complete. According to a Chicago Tribune article published in June 2018, Trump Tower is the only building relying on water from the Chicago River that has failed to document these efforts.
In May 2017, Trump Tower submitted a delayed application to renew its then expiring NPDES permit. Despite the building’s alleged failure to timely submit a permit renewal request, it appears the Illinois Environmental Protection Agency (“IEPA”) had been preparing to reissue the Trump Tower’s NPDES Permit as recently as last January. However, the agency changed course after several environmental groups threatened to sue prompting the agency to delay reissuance of the NPDES Permit.
Representatives of the Trump organization have responded to the lawsuit with criticism. “We are disappointed that the Illinois Attorney General would choose to file this suit considering such items are generally handled at the administrative level,” stated a representative for the Trump Organization. “One can only conclude that this decision was motivated by politics.”
Environmental groups responded positively to the lawsuit. The Illinois Chapter of the Sierra Club and Friends of the Chicago River, which had jointly announced their own plans to bring suit against Trump Tower last June, stated that they looked forward to assisting in the state’s lawsuit “to assure an outcome that addresses the permit violations, protects additional aquatic life from harm, and makes the river healthier for fish."
This is not the first time Attorney General Madigan has gone after Trump Tower for discharge violations. In 2012, the State sued Trump Tower for failing to obtain a permit for the same intake system. The 2012 lawsuit resulted in Trump Tower agreeing to pay $46,000 in fines and obtaining the proper permitting. In its most recent lawsuit, the State is seeking a preliminary and (after trial) permanent injunction to stop Trump Tower from using its cooling water intake system. In addition, the complaint seeks $10,000 in daily penalties. In an interesting twist, it appears that industry groups previously urged the Trump Administration’s Environmental Protection Agency to overhaul or eliminate the CWA’s cooling water intake rules, which industry groups described as “cumbersome.”
The presence of emerging contaminants such as perfluorinated chemicals (PFOS) and 1,4-dioxane in drinking water often make the headlines as sampling technologies become more sophisticated and these contaminants are being detected with increasing frequency in drinking water systems across the country. There has been a significant push to compel regulators to set regulatory standards and/or issue health advisories for these emerging contaminants, but the impact that these standards and health advisories have on drinking water systems cannot be ignored.
In reaction to media coverage of these emerging contaminants in drinking water supplies, state regulators have been at the front of the pack in trying to set what are often conflicting standards that may not always reflect the current state of science regarding these contaminants. These state regulations often fail to consider the difficulties that drinking water suppliers face in complying with these standards, especially in instances where there are not established treatment technologies that are capable of treating these contaminants in a cost-effective manner. In addition, when setting health advisories for various contaminants, U.S. EPA typically does not consider the effect of those advisories on drinking water providers. It is often the case, however, that these providers are pressured either by state regulators and/or the general public to ensure that the drinking water meets these health advisory levels, which are set without regard to whether cost-effective technologies exist that are capable of treating these emerging contaminants.
Beginning on June 30, 2018, EPA will launch its new Hazardous Waste Electronic Manifest (e-Manifest) System. EPA’s e-Manifest system is many years in the making and follows the 2012 Hazardous Waste Electronic Manifest Establishment Act, and two final rules issued by EPA in 2014 and 2017.
Beginning on June 30th, the following changes take effect:
- Facilities that receive hazardous waste that requires manifesting must submit manifests to EPA.
- EPA will charge receiving facilities for all paper and e-manifests (lower fees for e-manifests; higher fees for paper manifests).
- Generators, transporters and disposers of hazardous waste may transmit waste manifest data electronically through EPA’s e-Manifest system.
The new requirement for receiving facilities to submit all manifests to EPA is a big change. To assist industry in this transition, EPA recently announced that it would grant extra time for receiving facilities to submit paper manifests during the initial months after system launch.
On May 18, 2018, the Federal Energy Regulatory Commission (FERC) issued an order denying a rehearing request on FERC’s prior issuance of a certificate of public convenience and necessity for a natural gas pipeline project for Dominion Transmission. An environmental group had challenged that certificate, arguing in part that FERC failed to adequately consider the upstream and downstream impacts of the project. These upstream and downstream impacts, according to the environmental group, included greenhouse gas (GHG) emissions. FERC, on a party-line vote, concluded that the upstream and downstream GHG impacts of this particular project were not sufficiently causally connected to and/or the reasonable foreseeable effect of the project and therefore fell outside of the scope of the required NEPA analysis. FERC distinguished its holding with the decision in Sierra Club v. FERC, 867 F.3d 1357 (D.C. Cir. 2017) by noting that in that case, the pipeline project was delivering natural gas to identifiable gas-fired electric generating plants and therefore the downstream use of the gas was foreseeable.
The Delaware Riverkeeper Network sent a letter to FERC asking it to formally rescind its May 18 order, claiming that FERC’s decision was contrary to the requirements of NEPA. This letter, along with similar letters from other environmental groups, are likely precursors to legal challenges to FERC’s interpretation of its obligations under NEPA. Notwithstanding the positions being advanced by these environmental groups, FERC continues to review and approve pipeline projects without requiring a detailed analysis of GHG emissions as evidenced by FERC’s May 31 approval of the Okeechobee Lateral Project.
White House Cites National Security Concerns as Administration Moves to Save Coal and Nuclear Power Plants
A combination of stagnant power consumption growth and the rise of natural gas and renewable power sources has resulted in the displacement and potential closure of many older coal and nuclear power plants in the United States. According to the U.S. Energy Information Administration, since 2008, coal and nuclear energy have seen a continuous decline in their percentage of the nation’s total energy generation market. And in 2015, the closure of coal fueled power plants accounted for more than 80% of the nation’s retired energy generating capacity.
In an attempt to reverse these trends, President Donald Trump has ordered Energy Secretary Rick Perry to take “immediate action” to stem the closure of nuclear and coal power plants. In an official White House statement issued on June 1, 2018, the Trump Administration stated that “keeping America's energy grid and infrastructure strong and secure protects our national security… Unfortunately, impending retirements of fuel-secure power facilities are leading to a rapid depletion of a critical part of our nation's energy mix, and impacting the resilience of our power grid.”
The statement is not the first time the Administration has asserted that coal and nuclear plants are critical to national security. In January of this year, Mr. Perry presented a sweeping proposal to the Federal Energy Regulatory Commission (“FERC”), which requested subsidies for struggling coal and nuclear plants that were no longer able to operate profitably in the current energy markets. In presenting the proposal, Mr. Perry argued that coal and nuclear plants’ unique ability to store at least 90 days of fuel on-site made the energy sources critical to the reliability and stability of the United States’ energy markets. In a 5-0 decision, FERC rejected the Energy Secretary’s proposal, and casted doubt on Mr. Perry’s claims that energy markets would become vulnerable and unreliable without contributions from coal and nuclear power.
It appears the Trump Administration may now be seeking a more direct route to provide assistance to coal and nuclear power plants. According to Bloomberg, a draft memo from the Department of Energy (“DOE”) reveals that the agency is considering using its authority under Section 202(c) of the Federal Power Act and the Defense Production Act of 1950 to force regional grid operators to buy electricity from a list of coal and nuclear plants the department deems crucial to national security. The plan would require suppliers to purchase power from the plants for 24 months in order to starve off closures as the Administration works to provide a long-term solution. If the DOE plan is implemented, it is likely to face legal challenges from both utilities and environmental groups. Regardless of whether the DOE elects to pursue this strategy, it appears that the Trump Administration is focused on working to protect aging coal and nuclear plants.
A recent decision by the U.S. District Court for the District of Alaska rejected efforts by the Center for Biological Diversity (the “Center”) to challenge the constitutionality of the Congressional Review Act (CRA). The CRA, which was originally enacted in 1996, allows for Congressional disapproval of rules promulgated by administrative agencies under limited circumstances. Historically, the CRA had been used sporadically, but the current Congress has relied on the CRA on at least 16 occasions to roll back Obama administration regulations, and more CRA resolutions may be on the horizon.
In Center for Biological Diversity v. Zinke, the Center challenged the use of the CRA to invalidate a Department of Interior (DOI) rule which limited certain hunting and fishing practices on Alaskan National Wildlife Refuges. More specifically, the Center argued that the CRA unconstitutionally allowed Congress to alter DOI’s authority without using bicameralism and presentment to amend the underlying statutes that gave DOI its authority over the National Wildlife Refuges in Alaska. The Center also argued that the CRA’s prohibition on the issuance of a future rule in “substantially the same form” violates the separation of powers doctrine.
The district court dismissed the Center’s lawsuit, finding that “Public Law 115-20 was passed by both the House and the Senate and submitted to the President for approval as required by the CRA—which was also passed by both houses of Congress and signed into law by the President. Thus, the requirements of bicameralism and presentment are met and [the Center’s] separation of powers concerns fail to state a plausible claim for relief.” The court further noted that “[a]ny injury caused by DOI’s inability to promulgate a substantially similar rule, in the absence of any assertion that DOI would otherwise do so, is too speculative to constitute a concrete or imminent injury and is insufficient to confer Article III standing.” The court also noted that even if the Center could establish an “injury in fact,” the Center had not adequately alleged how invalidating the CRA would redress the Center’s alleged injuries.
Although the CRA remains in full force and effect, one might wonder whether it will retreat back into the shadows at least until the next administration. The conventional view had been that Congress only has 60 days after a rule takes effect to pass a CRA resolution disapproving it. However, lawmakers in Congress are advancing a more novel interpretation of the CRA to review (and potentially disapprove) older rules (and guidance). If a rule or guidance was not officially “submitted” to Congress for review (and many apparently have not officially been submitted), then the current administration could now submit them for review which would restart the 60-day clock. For example, in April, the Senate voted to disapprove a 2013 Consumer Financial Protection Bureau guidance on auto loan financing. The House has not yet taken action on the resolution. If, however, the guidance were to be disapproved under the CRA, then the effect of that disapproval is that the agency will be unable to enact a “substantially similar” rule or guidance. That is really the true power of the CRA, and word is that members of Congress are reviewing older rules and guidance that could be the target of a CRA resolution. Whether the CRA remains a powerful tool this far into the Trump administration remains to be seen, but one can expect that the Center’s constitutional challenge to the CRA is unlikely to be the last.
Congressman Morgan Griffith (R-VA) has introduced a discussion draft of a bill that proposes to revise the definition of “modification” in the Clean Air Act (CAA) to “clarify when a physical change in, or change in the method of operation of, a stationary source constitutes a modification or construction.”
Under current law, EPA determines whether a change at an existing facility is a “modification” that requires new source review (NSR) by looking at whether the change increases the annual emission rate of an air pollutant. Under Congressman Griffith’s proposal, a change at an existing facility will only be a “modification” if it results in an increase to the hourly emission rate of an air pollutant. This change is significant because it would enable facilities to make changes that would allow them to operate for longer hours, thus increasing annual emissions, as long as the hourly emissions don’t increase.
The proposed bill also makes clear that the term “modification” does not include changes to an existing stationary source that reduce the amount of any air pollutant or that are designed to restore, maintain, or improve the reliability or safety of the source.
At the May 16, 2018, Energy and Commerce Committee Subcommittee on the Environment hearing, William Wehrum, EPA Assistant Administrator for Air and Radiation, told the subcommittee that he strongly supported the proposed bill. The Democrats on the subcommittee opposed the proposal and ranking member Frank Pallone, Jr. (D-NJ) made a statement critical of the proposed bill:
On April 2, 2018, the Pennsylvania Superior Court issued a potentially groundbreaking decision by holding that trespass and conversion claims arising from hydraulic fracturing are not precluded by the rule of capture. In reaching this conclusion, the court found that the Southwestern Energy Production Company (“Southwestern”) may have committed trespass when it extracted natural gas located under neighboring properties by draining the gas through fissures created from hydrofracturing fluid. Such a holding was almost universally thought to be precluded by the rule of capture. The rule of capture, which can be traced back to 18th century fox hunting, has historically been applied to find that oil and gas companies cannot be held liable for “capturing” oil and gas that drain naturally from neighboring land as a result of legal extraction activities. In differentiating hydraulic fracking from traditional oil and gas extraction, the court focused on the fact that hydraulic fracking actually pumps fluid across property lines to open up non-natural fissures that allow the natural gas to seep back across the property to be extracted.
The potential impact of the Pennsylvania court’s decision has spurred high levels of concern from the greater fracking industry. On the same day that Southwestern filed an appeal requesting an en banc rehearing of the decision, seven separate industry trade groups filed leave with the court seeking permission to file amicus briefs urging the court to grant Southwestern the rehearing. One of these groups, the Marcellus Shale Coalition (“MSC”), is a collection of approximately 200 producers, midstream, and local supply-chain companies that produce more than 95% of the natural gas in Pennsylvania. The group has asserted that the April 2nd ruling interrupts well-established law and creates an “unprecedented form of tort liability” that threatens the entire industry. In a similar filing, the Pennsylvania Chamber of Business and Industry stressed that the decisions could have devastating effects on the industry and the economy of Pennsylvania. According to the American Petroleum Institute, the hydraulic fracking industry currently provides an estimated 322,600 jobs to Pennsylvania and contributes nearly $44.5 million in revenue to the state’s economy.
In Southwestern’s own appeal, the company echoed many of the concerns proclaimed by the industry. The company stressed that the decision would “unleash a torrent of speculative lawsuits” that could threaten the economic livelihood of the industry throughout the state. The company also characterized the April 2nd ruling as an impractical precedent for future decisions. Southwestern noted that the opinion would require courts and juries to speculate whether hydrofracturing fluid located miles below the surface ever moved onto neighboring property, which is a task the company portrayed as “a fool’s errand.”
The ultimate resolution of the matter has potentially far-reaching impacts on the U.S. energy markets. Behind Texas, Pennsylvania is the United States’ second largest producer of natural gas. The state generated 19 percent of the United States’ total output in 2017 and has seen steady gains in production output since 2010. Further, the decision raises questions about whether other state courts may adopt the logic of the Pennsylvania Superior Court and similarly hold that trespass and conversion claims against hydraulic fracking are not precluded by the historic rule of capture.
We will continue to track this case as it moves through the Pennsylvania courts.
In 2016, the world underwent its largest ever annual increase in renewable power by adding an estimated 161 gigawatts of capacity in renewable power generation. The increase stemmed from a world-wide investment of USD $240 billion in renewable energy, marking the seventh straight year that the world’s investment in renewable power sources topped $200 billion dollars. Despite the world’s growing investment in renewable power, an estimated 1.2 billion people still live without access to electricity. Individuals without electricity must supplement their energy needs through fuel based lighting and heating. Burning these sources is not only more expensive relative to many forms of renewable power, but also results in the release of toxic fumes and black carbon, which are major contributors to local air pollution and climate change.
Recent decisions from the Fourth and Ninth Circuits—finding that the Clean Water Act (“CWA”) could regulate discharges into groundwater that ultimately migrate into navigable waterways—may prompt U.S. EPA to revisit its position that the CWA applies to discharges from a “point source via ground water that has a direct hydrologic connection to surface water.” On April 12, 2018, the Fourth Circuit concluded that a release from pipeline that impacted groundwater that ultimately discharged to a nearby creek could trigger liability under the CWA. See Upstate Forever v. Kinder Morgan Energy Partners, L.P. (4th Cir. April 12, 2018). This decision follows on the heels of a Ninth Circuit decision affirming a district court's decision allowing a CWA citizen suit to proceed that alleged CWA violations associated with sanitary wastewater discharges through permitted underground injection wells that ultimately discharged into the ocean. See Hawai’i Wildlife Fund v. County of Maui (9th Cir. Feb. 1, 2018). Defendants are likely to seek Supreme Court review of both the Fourth and Ninth Circuit decisions.
Following the Ninth Circuit decision, on February 20, 2018, U.S. EPA issued a notice seeking comment by May 21, 2018 on whether it should review and potentially revise its previous positions on groundwater discharges; specifically, whether it is consistent with the CWA to subject discharges to jurisdictional surface waters via groundwater to CWA permitting. U.S. EPA also is seeking comment on whether some or all of such discharges are addressed adequately through other federal authorities, existing state statutory or regulatory programs, or through other existing federal regulations and permit programs. It will be interesting to see where U.S. EPA ultimately comes out on this issue; U.S. EPA filed an amicus brief urging the Ninth Circuit to affirm the district court's decision that discharges reaching navigable waters through groundwater are covered by the CWA. However, statements in U.S. EPA’s request for comments would seem to suggest that U.S. EPA is rethinking its position on this issue. We will continue to follow and provide updates as this process unfolds.
U.S. EPA Removes Portion of Former Refinery Site from NPL: Precursor to More Expedited CERCLA Cleanups?
After almost 30 years having been listed on the NPL, U.S. EPA has removed the surface portion of the 55-acre Pacific Coast Pipeline site from that distinctive list. Since being added to the NPL in 1989, more than 42,000 cubic yards of contaminated soils have been removed from the site and a multi-layer cap has been installed. The groundwater portion of the site will still remain on the NPL in order to address benzene and protect drinking water and agricultural wells.
One goal of EPA Administrator Pruitt’s Superfund Task Force was to improve and expedite site cleanups and accelerate full and partial deletions for sites that meet all applicable requirements. “The partial de-listing of the Pacific Coast Pipeline site is an example of EPA’s commitment to accelerate the remediation of contaminated sites and transform them into productive assets for the community,” said Pruitt.
Whether this partial NPL deletion is a precursor of U.S. EPA taking a more streamlined approach to CERCLA cleanups remains to be seen, but it would appear to be a step in the right direction.
NextEra Energy Resources LLC (“NextEra”), the largest generator of wind energy in North America, is currently locked in legal disputes with local townships over its new wind energy project, the “Tuscola Wind III Energy Center.” NextEra’s subsidiary, Tuscola Wind III LLC (“Tuscola”), plans to construct the 55 turbine wind farm across the Fairgrove, Almer, and Ellington Townships of Tuscola Country, Michigan. The project, if completed, will be the third wind farm constructed by NextEra in Tuscola County. The proposed $200 million dollar wind farm is projected to supply wind energy for up to 50,000 homes.
After reaching agreements with nearly 100 landowners to secure land for the project, Tuscola submitted a Special Land Use Permit (“SLUP”) to the local townships for construction and operation of the wind farm. However, two of the townships, Almer and Ellington, denied the permits and enacted one year moratoriums on the construction of wind farms. According to Tuscola, its permits were blocked by newly elected members of the Townships’ Boards who were affiliated with a regional anti-wind citizens advocacy group. The company alleged that the organization was engaged in a systematic effort to block the Tuscola project and that the group had used “tactics of intimidation, threats of lawsuits, referenda, and recalls . . . in an effort to prevent the development of wind projects.”
The company is now fighting back. In lawsuits filed in the Eastern District of Michigan, NextEra is seeking to have the Board of Trustees’ denial of the SLUP overturned. On November 3, 2017, the district court issued its first decision on the matter, affirming the denial of the SLUP by the Almer Township. The court found that the Township’s Board had properly denied the application after it determined that the purposed wind farm would violate Almer’s noise zoning ordinance. The court noted that although Almer’s noise ordinance was admittedly ambiguous, the Board should be provided deference to interpret the meaning of its own ordinance. Finding that the board’s interpretation of the ordinance was reasonable, the court elected not to overturn the decision.
On March 13, 2018, the district court reached a markedly different result in Tuscola’s parallel suit against the Ellington Township. Here, the District Court overturned the Ellington Township’s denial of the SLUP. Unlike the Almer Township Board, it appears Ellington’s Board refused to even consider the merits of Tuscola’s SLUP, and relied entirely on its newly enacted moratorium to block consideration of the application. The Court concluded that the township’s moratorium was an inappropriate suspension of its zoning ordinance, and was thus void. Therefore, the Board could no longer rely on the moratorium as a reason to refuse to consider the SLUP application. Left open by the decision was whether Ellington could successfully deny the SLUP on other grounds or what timeframe the township had to approve/deny the permit. Interestingly, the Ellington decision arrived exactly one day after the district court reaffirmed its earlier holding in the Almer case (Both decisions were authored by the same Judge).
Finally, in the newest twist, landowners of property proposed for the Tuscola Wind III site have now filed suit in Tuscola County Circuit Court seeking a court order to ouster the newly elected board members alleged to be part of the anti-wind organization. The ultimate resolution of Tuscola’s dispute may end up relying in part on the success of this new suit.
As we previously reported on here, the Trump Administration earlier this month proposed a $2.7 billion budget reduction for U.S. EPA. However, Congress has passed a spending bill that rejects reductions to both U.S. EPA and the Department of Energy. Trump signed the bill today.
As reported here, as to the U.S. EPA, Congress proposed holding the agency’s funding at $8.1 billion, even with the 2017 level.
And, at the DOE:
- $6.2 billion for the Department of Energy’s Office of Science, an $868-million jump from the 2017 level. Trump had sought to cut its budget to just under $4.5 billion.
- The omnibus includes an increase of nearly $1.5 billion in DOE clean energy funding, including a 14% increase to the renewable energy and efficiency office, and a 16% increase at the Advanced Research Projects Agency-Energy (ARPA-E). Trump had sought to cut the renewables office by 65% and eliminate ARPA-E.
- The Office of Fossil Energy would increase by 10%, the nuclear office by 19%, science office by 16%, and the energy office by 8%. The loan programs office would be preserved, as would funding for carbon capture and storage.
These avoided spending cuts and/or spending increases are an encouraging sign for environmentalists and other clean tech advocates.
In the Absence of Any Federal Movement, States Continue to Attempt to Legislate Carbon Rules or Taxes
As reported in Salon and Law360 (sub. req.), states, the “laboratories of democracy,” continue to attempt to experiment with legislation carbon rules or taxes. Washington and Oregon are the latest examples, although such efforts have so far failed. Washington’s proposal would have taxed carbon emissions, whereas Oregon’s proposal would have established a cap-and-trade program.
After the Washington tax bill failed, a coalition of environmental, community and labor groups filed a proposed citizens’ initiative that would put a price on carbon emissions. The proposal would charge $15 per metric ton of carbon content of fossil fuels and electricity sold or used in the state starting in 2020. It would increase by $2 a year in 2021 until the state meets its carbon emissions reduction goal for 2035.
As of February of this year, as reported in Law360 (sub. req.), 10 states have released bills to combat climate change and raise revenue by using the tax system, with some 30 different bills in play. According to this report, the range of carbon taxes are from $5-35/ton (bills in Vermont set the base rate at $5 per ton of carbon while bills in New York set it at $35 per ton).
These state-level efforts underscore the challenge of convincing the public and a broad base of stakeholders to act on a problem that Congress first tried to address over a decade ago, most famously through the McCain-Lieberman Climate Stewardship Act of 2003 and the Waxman-Markey American Clean Energy and Security Act of 2009. Interestingly, it may be this patchwork of state-level action that induces Congress to act sometime in the future.
On July 25, 2017, Environmental Protection Agency (“EPA”) administrator Scott Pruitt’s “Superfund Task Force” issued a final report revealing the Task Force’s recommendations for streamlining the remediation process of over 1,300 Superfund sites currently overseen by the EPA. The Task Force’s recommendations included a strong emphasis on facilitating the redevelopment of Superfund sites by encouraging private sector investment into future use of contaminated sites. The recommendations were subsequently adopted by Mr. Pruitt, who has repeatedly affirmed that a top priority of the administration is revamping the Superfund program. In the recent months, it appears EPA and the Trump administration have taken new steps to further the objective of pushing private redevelopment for Superfund Sites.
On January 17, 2018, EPA posted a “Superfund Redevelopment Focus List” consisting of thirty-one Superfund sites that the agency believes “pose the greatest expected redevelopment and commercial potential.” EPA claims that the identified sites have significant redevelopment potential based on previous outside interest, access to transportation corridors, high land values, and other development drivers. “EPA is more than a collaborative partner to remediate the nation’s most contaminated sites, we’re also working to successfully integrate Superfund sites back into communities across the country,” said EPA Administrator Scott Pruitt. “[The] redevelopment list incorporates Superfund sites ready to become catalysts for economic growth and revitalization.”
Along the same lines, President Donald Trump’s sweeping infrastructure proposal, released February 12, 2018, proposed an amendment to the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”) that would allow Superfund sites to access funding from the EPA’s Brownfield Program, which the administration believes could help stimulate redevelopment of the sites. The proposal further requests Congress pass an amendment to CERCLA that would allow EPA to enter into settlement agreements with potentially responsible parties to clean up and reuse Superfund sites without filing a consent decree or receiving approval from the Attorney General. The proposal claims that CERCLA’s limitations “hinder the cleanup and reuse of Superfund sites and contribute to delays in cleanups due to negotiations.”
Time will tell whether the administration’s strategy will be enough to entice new development into the Superfund sites. To follow the progress of EPA’s Superfund redevelopment efforts, visit EPA’s Superfund Redevelopment Initiative website here.
On Monday, March 5, 2018, EPA issued a report titled EPA Year in Review 2017-2018. The report contains an introductory letter from Administrator Pruitt, who states that he has been “hard at work enacting President Donald Trump’s agenda during [his] first year as EPA Administrator.” The report highlights accomplishments at EPA over the past year, with a focus on the roll back of regulations from the Obama Administration, such as the Clean Power Plan and the Waters of the United States Rule. Administrator Pruitt stated that “[i]n year one, EPA finalized 22 deregulatory actions, saving Americans more than $1 billion in regulatory costs.”
According to the report, Administrator Scott Pruitt set forth a “back-to-basics agenda” with three objectives:
- Refocusing the Agency back to its core mission
- Restoring power to the states through cooperative federalism
- Adhering to the rule of law and improving Agency processes
The report also identifies EPA’s “core mission” as “clean air, land, and water,” and argues that in recent years, “central responsibilities of the Agency took a backseat to ideological crusades, allowing some environmental threats – like cleaning up toxic land – to go unaddressed.” In light of these alleged lapses, EPA states that: