Carbon Dioxide

Report on Carbon Capture and Storage from the House

February 20, 2014 22:37
by J. Wylie Donald

Would an 80% premium steer you away from an energy source that was low-carbon, naturally abundant in the United States, not subject to the vicissitudes of weather, incapable of nuclear meltdown and accompanied by a well-established infrastructure?  Suppose the premium was only 40%?

Hearings last week before the House Energy and Commerce Committee’s Subcommittee on Oversight and Investigation explored that topic in connection with the development of carbon capture and storage technology. In prepared remarks Dr. Julio Friedmann, Deputy Assistant Secretary for Clean Coal with the Department of Energy, delivered an update on the status of CCS.

Coal fuels approximately 40% of the nation's energy needs.  "Because it is abundant, the clean and efficient use of coal is a key part of President Obama's all-of-the-above energy strategy."  A central component of the President's program is the Clean Coal Research Program, which " is designed to enhance [the nation's] energy security and reduce environmental concerns over the future use of coal by developing a portfolio of cutting-edge clean coal technologies."  To accomplish this the Department of Energy is focusing on research to capture carbon dioxide directly from the fuel stream (pre-combustion), from the stack gas (post-combustion) and from combustion in nearly pure oxygen (oxy-combustion, which yields nearly pure CO2 and water, which are easily separated). 

Dr. Friedmann went on to discuss the Regional Carbon Sequestration Partnerships, which are investigating the viability of CCS projects in a variety of circumstances.  "Together, the Partnerships form a network of capability, knowledge, and infrastructure that will help enable geologic storage technology to play a role in the clean energy economy. They represent regions encompassing 97 percent of coal-fired CO2 emissions, 97 percent of industrial CO2 emissions, 96 percent of the total land mass, and essentially all the geologic storage sites that can potentially be available for geologic carbon storage.”

Last, Dr. Friedmann addressed the commercialization of CCS.  This has two components:  the operation of CCS facilities, and the utilization of the captured CO2.  The idea behind utilization in activities such as enhanced oil recovery and algae production is to "provide a technology bridge" which can smooth the  " transition to the deployment of the large-scale, stand-alone geologic sequestration operations that will ultimately be needed to achieve the much larger emissions reductions required ..."  As for those operations, Dr. Friedmann acknowledged dozens of projects, including 5 he listed by name, where CCS is being tested in commercial environments.

But the real interest of the committee, at least as reported in the trade press, was in cost. As reported  in Power and Power Engineering International,  Dr. Friedman  advised that implementing CCS "looks something like a 70% or 80% increase on the wholesale price of electricity."  Second generation technologies could cut that in half. But half is still a 40% increase.

Some might pull the plug on CCS right now.  If it is going to raise the price by 40%, that is simply too much.  To our mind, however, that is antediluvian thinking.  Regulation of carbon dioxide emissions is already happening. Climate change is not taking a wait-and-see approach. Inexorably the earth warms, the oceans rise, the world of yesterday is not the world of tomorrow. CCS has a place at the energy banquet. 

Further, before turning off CCS, it is useful to consider the costs of the alternatives.  The Energy Information Administration has calculated the "levelized" cost of various energy sources. "Levelized cost is often cited as a convenient summary measure of the overall competiveness of different generating technologies. It represents the per-kilowatthour cost (in real dollars) of building and operating a generating plant over an assumed financial life and duty cycle."  Two things relevant here come out of the EIA table.  First, among dispatchable power (i.e., power that can respond when it is needed), with or without CCS, the most cost-effective power source is natural gas.  Second, when non-dispatchable power is included, even with CCS, coal is more cost-effective than offshore wind and both photovoltaic and thermal solar. 

In other words, if the issue is solely cost, coal loses to natural gas and the effect of CCS does not change the outcome.  If the issues are non-cost values, then coal with CCS comes to the table with green credentials, high power density, dispatchable output, good jobs, national security bona fides, and installed infrastructure, many of which coal's renewable competition cannot match. 

Carbon Dioxide | Regulation | Utilities

The Top 6 at 12: Highlights of the Top Climate Change Legal Stories in the Second Half of 2013

January 1, 2014 00:01
by J. Wylie Donald

2013 has drawn to a close; here is our take on the top six climate change legal stories in the last six months.
 
1.  Climate Change Assessments - Blockbuster legislation may have been evaded once more but that has not stopped those in the trenches. Assessments of climate change risk are becoming more routine. For example, the September 2013 Record of Decision for the Gowanus Canal Superfund Site required assessment of “periods of high rainfall, including future rainfall increases that may result from climate change” in implementing certain aspects of the cleanup remedy.  Another example was provided by the Department of Housing and Urban Development, which in November required in its second round of community block grants for disaster relief that prospective grantees consider in their Comprehensive Risk Analysis “a broad range of information and best available data, including forward-looking analyses of risks to infrastructure sectors from climate change and other hazards, such as the Northeast United States Regional Climate Trends and Scenarios from the U.S. National Climate Assessment, the Sea Level Rise Tool for Sandy Recovery, or comparable peer-reviewed information."  Even the Nuclear Regulatory Commission looked at climate change with regard to its September draft generic environmental impact statement for the long-term continued storage of spent nuclear fuel. 

2.  Low Carbon Fuel Standards - In Rocky Mountain Farmers Union v. Corey the Ninth Circuit reversed several district court rulings limiting under the “dormant Commerce clause” the California Air Resources Board’s Low Carbon Fuel Standard.  Although the Commerce clause of the Constitution, U.S. Const., art. I, § 8, cl. 3. “does not explicitly control the several states,” it "has long been understood to have a ‘negative’ aspect that denies the States the power unjustifiably to discriminate against or burden the interstate flow of articles of commerce.’” Rocky Mountain at 31 (citation omitted). California’s Low Carbon Fuel Standard supported carbon dioxide emission reduction “by reducing the carbon intensity [i.e., the amount of carbon dioxide emitted per unit of energy produced] of transportation fuels that are burned in California.”  It thus potentially burdened producers of ethanol in the Midwest and petroleum producers outside California, but that did not matter.  Specifically, the court held that the LCFS was not facially impermissibly discriminatory in favor of ethanol, was not improperly extraterritorial and did not discriminate against petroleum fuels.  Accordingly, California is still on its path to a reduction in the carbon intensity of its fuels by 10% by 2020, as mandated by the 2006 Global Warming Solutions Act.

3.  The Cost of the Grid - On November 14, the Arizona Corporation Commission ruled that Arizona's net metering program should spread the cost of maintaining a reliable grid among all of Arizona Public Service's customers, including its rooftop solar customers. Up to that point rooftop solar customers were paid for the electricity they provided to the grid at retail rates, without any adjustment for the cost of the grid. The Commission concluded that this resulted in a "cost shift" from customers that were paying for the grid, to rooftop solar customers, who weren't.  APS put on a good case demonstrating that rooftop solar customers were substantially benefitting from the grid by drawing power at night, during cloudy weather and during the periods of daylight when solar power production did not exceed the customer's needs. Many have criticized solar power as unfairly subsidized. In Arizona at least, one of those subsidies is being addressed.

4.  New Carbon Dioxide Emission Standards - Following over 2.5 million comments, EPA rescinded its proposed rule governing carbon dioxide emissions from new coal-fired power plants.  In its place it proposed on September 20 a rule setting CO2 emission standards for new large natural gas power plants (1,000 lbs/MW-hr), new small natural gas power plants (1,100 lbs/MW-hr), and new coal-fired power plants (1,100 lbs/MW-hr).  From our perspective, the most significant facet of this new rule is that it actually will apply to plants that are being built.  The withdrawn proposed rule only applied to new coal plants, which EPA concluded would not be built anyway before 2030.  Equally significant, as pointed out in EPA’s news release  on the proposal, is that “EPA has initiated outreach to a wide variety of stakeholders that will help inform the development of emission guidelines for existing power plants.”

5.  The Fifth Assessment Report of the Intergovernmental Panel on Climate Change – The IPCC’s Working Group I issued The Physical Science Basis, its part of the Fifth Assessment Report.  Working Groups II and III will publish in 2014.  Among other things WG I concluded:  "Unequivocal evidence from in situ observations and ice core records shows that the atmospheric concentrations of important greenhouse gases such as carbon dioxide, methane, and nitrous oxides have increased over the last few centuries."  "The temperature measurements in the oceans show a continuing increase in the heat content of the oceans.  Analyses based on measurements of the Earth's radiative budget suggest a small positive energy imbalance that serves to increase the global heat content of the Earth system.  Observations from satellites and in situ measurements show a trend of significant reductions in the mass balance of most land ice masses and in Arctic sea ice. The ocean's uptake of carbon dioxide is having a significant effect on the chemistry of sea water."  But if one remains skeptical, this consensus view of the world’s leading climate scientists should not cause one alarm, the climate change skeptics have not thrown in the towel.  For example, according to one website, “climate science as proclaimed by the IPCC is a morass where what is scientific knowledge cannot be easily separated from speculation and what is wrong.”  One won't find seafarers plying the Northern Sea Route in the skeptic camp, however.  Russia logged a record year of transits in 2013 (over 200), up from just 4 in 2010. 

6.  Climate Change Liability Lawsuits - For the first time since 2005, when Comer v. Nationwide Mutual Insurance was filed, there is no climate change liability lawsuit on the docket anywhere. All have been defeated. Comer was the last to succumb, with its opportunity to file a petition for certiorari expiring on or about August 14.  The IPCC Fifth Assessment establishes climate change is not going away, but we will have to wait to see if anyone is going to attempt to make someone pay for it.

Carbon Dioxide | Climate Change | Regulation | Solar Energy | Utilities | Year in Review

EPA Excludes Carbon Dioxide Waste Streams from RCRA - A (Very Small) Step Forward for CCS

December 26, 2013 09:42
by J. Wylie Donald

The Congress may be dysfunctional but the administrative agencies are still moving the ball.  A case in point is last week’s Christmas present from EPA to the carbon capture and storage community.  On December 17 EPA issued its final rule, Hazardous Waste Management System: Conditional Exclusion for Carbon Dioxide (CO2) Streams in Geologic Sequestration Activities.  In so doing, EPA provided “regulatory clarity to help facilitate the implementation of [CCS] technology in a safe and responsible way.”

Carbon capture and storage is a technology with three distinct steps: 

1. “the capture and compression of the CO2 stream from fossil-fuel power plants or other industrial sources,”
2. ”[the transportation of] the CO2 stream (usually in pipelines as a supercritical fluid) to an on-site or off-site location,” and
3. “inject[ion] underground for purposes of sequestration.”

The new rule addressed the third element.  The rule had been foreshadowed by a 2010 recommendation from the government’s Interagency Task Force on Carbon Capture and Storage.  The Task Force, instituted by President Obama, “was charged with proposing a plan to overcome the barriers to the widespread, cost-effective deployment of CCS within ten years,” and in its report assessed the progress and impediments to developing carbon capture and storage as a viable technology to combat climate change.  Among other things, the Task Force recommended that EPA ““propose a Resource Conservation and Recovery Act (RCRA) applicability rule for CO2 that is captured from an emission source for purposes of sequestration.”  The goal was a final rule by 2011.  EPA was only two years late, which in the current climate should probably be considered timely.

Carbon dioxide is not a listed RCRA waste.  Nevertheless there was concern that substances derived from the source materials and the capture process could render the carbon dioxide stream a characteristic RCRA hazardous waste.  Accordingly, RCRA regulations potentially applied.  EPA concluded, however, that RCRA regulation was not necessary because the stream being injected already was being regulated by Department of Transportation requirements for pipeline operations and EPA permitting requirements for underground injection in UIC Class VI injection wells.  “[E]limination of exposure routes through these requirements, which are implemented through a [Safe Drinking Water Act] UIC permit, will ensure protection of human health and the environment such that RCRA subtitle C regulation would be duplicative and unnecessary.” “The UIC Class VI requirements are designed to ensure that the CO2 streams (which may include low concentrations of hazardous constituents) remain isolated in the injection zone and confined by confining zones in an appropriate, well-characterized geologic setting that is continuously monitored to ensure that the CO2 streams remain in the injection zone. “

Thus, advocates for CCS should be heartened that EPA has removed a potential impediment to deployment of CCS.  But the realities of CCS implementation may make all this for naught.  The Task Force report notes that ”the incremental costs of new coal-fired plants with CCS relative to new conventional coal-fired plants typically range from $60 to $95 per tonne of CO2 avoided.”  With no federal program limiting CO2 emissions, the incentive to incur such costs is vanishingly small.  EPA acknowledges this in its comments:  “based upon current market conditions and the existing regulatory framework (i.e., lack of Federal legislation), it appears unlikely that there would be any significant expansion in CCS management for CO2 over the next several years.”   Simply stated, lack of RCRA regulation is not going to be the trigger that unleashes  a wave of CCS projects.

Carbon Dioxide | Regulation

Whatever Happened to State Law Carbon Dioxide Liability Claims? Still No Music After Bell

October 27, 2013 10:30
by J. Wylie Donald

“Therefore, the Court declines to assert supplemental jurisdiction over the remaining state law claims which are dismissed without prejudice to their presentation in a state court action.”  So ends the last analytical paragraph in Native Village of Kivalina v. ExxonMobil Corp., 663 F. Supp. 2d 863 (N.D. Cal. 2009).  Thus, while plaintiffs’ federal common law carbon-dioxide-liability claims were extinguished on standing and political question grounds, state law claims could go forward should the plaintiffs choose to re-file.  Then, the Supreme Court decided American Electric Power Co., Inc. v. Connecticut564 U.S. __ (2011), and held a set of different plaintiffs’ federal common law claims were displaced by the Clean Air Act.  The Court specifically declined to rule on state law claims of the type at issue in Kivalina:  “None of the parties have briefed preemption or otherwise addressed the availability of a claim under state nuisance law. We therefore leave the matter open for consideration on remand.”

Last fall we relied on Bell v. Cheswick Generating Station, 903 F. Supp. 2d 314 (W.D. Pa. 2012), out of the Western District of Pennsylvania as support for the proposition that state law nuisance claims were futile – preemption by the Clean Air Act doomed such claims.  The Third Circuit's recent review, while reversing the trial court, has not upended our conclusion.

In Bell, 1500 neighbors of the 570 megawatt coal-fired Cheswick Generating Station operated by GenOn Power Midwest, L.P. became annoyed by ash and other contaminants allegedly settling on their property.  And so they brought a class action under Pennsylvania state tort law.  GenOn defended based on the comprehensive regulation of the Clean Air Act, which, it was asserted, preempted state law tort claims; the trial court agreed.

On appeal, however, broad preemption by the Clean Air Act was not accepted.  The Court of Appeals acknowledged the comprehensive program established by the Act.  But it also recognized that Congress had specifically provided for a citizens suit provision, 42 U.S.C. § 7604, and that the Act contained two "savings" clauses.  The first, the "citizen suit savings clause," provided:   "Nothing in this section shall restrict any right which any person (or class of persons) may have under any statute or common law to seek enforcement of any emission standard or limitation or to seek any other relief (including relief against the Administrator or a State agency)."  42 U.S.C. § 7604(e).  The second, the "states' rights savings clause," stated:  "Except as otherwise provided ... nothing in this chapter shall preclude or deny the right of any State or political subdivision thereof to adopt or enforce (1) any standard or limitation respecting emissions of air pollutants or (2) any requirement respecting control or abatement of air pollution ...."  42 U.S.C. § 7416.  Read together, a more restrictive state law could be enforced in a citizen suit.

This idea was consistent with the Cheswick Generating Station's permit:   "Nothing in this permit shall be construed as impairing any right or remedy now existing or hereafter created in equity, common law or statutory law with respect to air pollution, nor shall any court be deprived of such jurisdiction for the reason that such air pollution constitutes a violation of this permit."  

Could a citizen suit successfully address the ill-placed ash and contaminants?  The trial court said "no":  “Based on the extensive and comprehensive regulations promulgated by the administrative bodies which govern air emissions from electrical generation facilities, the Court finds and rules that to permit the common law claims would be inconsistent with the dictates of the Clean Air Act.”  But the Third Circuit said "yes." 

Its primary authority was the Supreme Court's 1987 decision in International Paper Co. v. Ouellette, 479 U.S. 481 (1987), a Clean Water Act case where Vermont plaintiffs asserted a (Vermont) common law nuisance suit in Vermont state court, where the pollution originated from a  New York facility.  To quote: 

The Ouellette Court found that the Clean Water Act's savings clauses clearly preserved some state law tort actions, but that the text of the clauses did not provide a definitive answer to the question of whether suits based on the law of the affected state were preempted. 479 U.S. at 492, 497. However, it found definitively that "nothing in the [Clean Water Act] bars aggrieved individuals from bringing a nuisance claim pursuant to the laws of the source State." Id. at 497 (emphasis in original). The Court reasoned that, "[b]y its terms the Clean Water Act allows States . . . to impose higher standards on their own point sources," and "this authority may include the right to impose higher common-law as well as higher statutory restrictions." Id. (internal citation omitted). The Court acknowledged that a source state's "nuisance law may impose separate standards and thus create some tension with the permit system," but explained that this "would not frustrate the goals of the Clean Water Act," because "a source only is required to look to a single additional authority, whose rules should be relatively predictable." Id. at 498-99. Thus, a suit by Vermont citizens would not be preempted if brought under the law of New York, the source state.

But, GenOn argued, the Clean Water Act and its savings clauses are distinguishable from the Clean Air Act and its savings clauses.  Not so said the court; "a textual comparison of the two savings clauses at issue demonstrates there is no meaningful difference between them."  Accordingly, the Bell plaintiffs, who brought suit as “Pennsylvania residents under Pennsylvania law against a source of pollution located in Pennsylvania,” were not preempted.

Now let’s return again to Kivalina.  The concurring opinion laid out the rule:   “Kivalina may pursue whatever remedies it may have under state law to the extent their claims are not preempted.”  Bell limits those claims.  Where Alaska natives sue in California a collection of greenhouse gas emitters from around the country, they would appear not to satisfy the requirement of emission-source-state-law-applies unless they are arguing that the nuisance rules of a score of jurisdictions must be considered.  In which case, their case falls apart for improper joinder.  And if they attempt to sue in multiple jurisdictions, they only amplify a fundamental flaw in their approach.  Whomever they sue has only contributed a tiny fraction of global greenhouse gases in either volume or over time and thus could not be the proximate cause of the Kivalina plaintiffs’ loss.  See Comer v Murphy Oil USA, Inc., 839 F. Supp. 2d 84 (S.D. Miss. 2012) ("[t]he assertion that the defendants’ emissions combined over a period of decades or centuries with other natural and man-made gases to cause or strengthen a hurricane and damage personal property is precisely the type of remote, improbable, and extraordinary occurrence that is excluded from liability.") 

Carbon dioxide liability plaintiffs may attempt to rely on the Third Circuit's decision in Bell to attempt to revive their litigation fortunes.  From our perspective, such attempts still won't ring the bell. 

Carbon Dioxide | Climate Change Litigation | Supreme Court

How is the Government Shutdown the Same as Climate Change? How is it Different?

October 6, 2013 21:52
by J. Wylie Donald

If you read this blog for tips on how to advance your practice, or protect your employer from surprises, or keep your job (which may be the same thing), stop reading. Today is for introspection and evaluation.

We went off this weekend to western Maryland to go camping. Two things struck us. The 15 Mile Creek Campground on the C&O Canal run by the National Park Service was closed. The sign said "Due to Emergency Conditions."  We suppose it is an emergency when the richest nation in the world puts itself in a position where people have to consider whether it will default. A colleague described the Congress as a rudderless ship manned by fourth graders. We could find no points of disagreement. Our own view is:  you pay the mortgage. Period.

The other point burned into our consciousness was the temperature:  88 degrees in October.  We slept on top of the sleeping bag. We know that a hot night or two is indicative of nothing. Indeed, this was not even a record. But we are troubled by these anecdotal events, that in their totality match up with what the scientists are saying.

And as those two thoughts came together, we wondered about how they would play on SNL or with Jay Leno or Conan. "How are the government shutdown and climate change the same?"  "They both will end." "How are they different?"  "Only one will end in our lifetime." 

We leave it to you to sort out which is which.  If it helps, the last time the government shut down was in 1995-96; the last time carbon dioxide was at 400 ppm was 3 million years ago.

 

Carbon Dioxide | Climate Change

New Mexico Court Refuses to Take Steps to Apply Public Trust Doctrine to the Atmosphere

August 22, 2013 09:13
by J. Wylie Donald

By J. Wylie Donald and Patrick Reilly

Two years ago, we observed a potentially startling development in climate change litigation: “On Monday, May 4, [2011] in state courts across the nation lawyers representing children and young adults filed (and apparently will continue to file) suits seeking to compel State governments to recognize the application of the public trust doctrine to greenhouse gas emissions and to take action to abate those emissions.” These lawsuits were coordinated by two groups, Our Children’s Trust and Kids vs. Global Warming, and sought to apply the Public Trust Doctrine to the atmosphere. At the time, we pointed out that there were a host of issues to be resolved before these lawsuits could be successful. And so far, although the Public Trust Doctrine is now recognized in some jurisdictions as applying to the atmosphere, not one suit has been successfully concluded.  Recently, the New Mexico suit, although it survived a motion to dismiss, joined its unsuccessful brethren when the District Court granted a motion for summary judgment against the plaintiffs. 

In the case, Sanders-Reed v. Martinez, seventeen-year-old Aklilah Sanders-Reed sued New Mexico and Susana Martinez in her official capacity as governor for breaching their duty to uphold the public trust with respect to greenhouse gas emissions into the atmosphere. Asserting that “courts have emphasized the flexibility of the [public trust] doctrine to meet changing societal concerns,” Sanders-Reed and her lawyers argued in their complaint that “Governor Martinez has failed to use her authority for the protection of the atmosphere, a valuable public trust resource that belongs to present and future generations of New Mexico citizens.” Plaintiffs effectively hoped that, by applying the Public Trust Doctrine to the atmosphere, the state judiciary could order stricter greenhouse gas regulations.

In her June 26th, 2013 Order on Summary Judgment (attached), the Honorable Sarah M. Singleton noted the gravity of such a decision: “I think that in applying this Doctrine … the Supreme Court would allow the judicial branch to bypass the political process if there was an indication that the political process had gone astray.”  Citing an earlier case in Hawaii, Judge Singleton went on to conclude that, “the State may compromise public rights in the resource only when the decision is made with a level of openness, diligence, and foresight that is commensurate with the high priorities that the rights command under the laws of the state.”

With these conclusions in mind, the Court opined that even if the Public Trust Doctrine does apply to the atmosphere, invoking it to protect the atmosphere would stand at odds with New Mexico’s record of doing so legislatively.

The question is whether or not the State is ignoring its role in protecting the environment or the atmosphere. The State’s not ignoring it, it just disagrees with what the Plaintiff thinks is needed. So the State, in my opinion, has acted on this.

Now, is there the possibility under the Public Trust Doctrine that the State’s action could be so wrongheaded as to invoke the Public Trust Doctrine? I  suppose that in rare circumstances, it could. But I believe that before a court should jump in to apply a doctrine like the Public Trust Doctrine, there should be some showing that the process was tainted or that the public was foreclosed from pursuing the issue. That is not the case here.

Judge Singleton went on to explain that, by virtue of the state Environmental Impact Board’s public decision-making process, plaintiffs had not been denied their chance to participate in its findings on greenhouse gas emissions. She then asserted that regulation of greenhouse gas emissions is, “a political decision, not a Court decision,” before granting summary judgment.  With that decision, Sanders-Reed’s attempt to curtail New Mexico’s greenhouse gas emissions fell short at the trial court. But an appeal was filed on July 24th so it may not be over yet. (We note that Our Children’s Trust plaintiffs have a busy appellate docket.  Following losses at  the trial or intermediate appellate court, appeals are pending in Alaska, Oregon, and Washington also have pending appeals of litigation.  Losses on appeals in Arizona and Minnesota have not been further appealed.  They have appeals of regulatory petitions pending in TexasIowa, and Pennsylvania.)

As stated in Arizona Center for Law in the Public Interest v. Hassell, and repeated earlier this spring in the Arizona OCT appeal, Butler v. Brewer, "as an attribute of federalism, each state must develop its own jurisprudence for the administration of the lands it holds in public trust."  Our Children’s Trust may have extended that rule to the “administration of the [atmospheric resources held] in public trust”, but so far that has had no effect. 

20130704 Order on Summary Judgment (Sanders-Reed v. Martinez).pdf (410.72 kb)

Carbon Dioxide | Climate Change | Climate Change Litigation | Greenhouse Gases

'Deferral Rule' is Derailed - Biogenic Greenhouse Gas Emitters Stand By to Be Regulated

July 19, 2013 09:27
by J. Wylie Donald

The greenhouse gas rule you’ve never heard of, the Deferral Rule, was shot down (barely) by the D.C. Circuit last week.  See Center for Biological Diversity v. Environmental Protection Agency, No. 11-1101 (D.C. Cir., July 12, 2013).   The opinion offers a wonderful primer on greenhouse gas rulemaking and describes the Timing Rule, the Tailpipe Rule and the Tailoring Rule.  It also explains in great detail numerous doctrines concerning agency rulemaking.  And it balances on the edge of a knife.  There is an opinion (Tatel, J.).  There is a concurring opinion (Kavanaugh, J.) that joins the opinion but goes even further, and which additionally states that “I believe, contrary to this Circuit’s precedent, that the PSD statute does not cover carbon dioxide.”  Opinion at 24.  And last, there is a detailed dissent (Henderson, J.) that addresses the arguments of the opinion to good effect.  If one is looking for definitive guidance this opinion will not suffice.

Even without the Court’s decision, the rule would have died a year from now anyway.  The rule we are talking about is found at 76 Fed. Reg. 43,490, Deferral for CO2 Emissions From Bioenergy and Other Biogenic Sources Under the Prevention of Significant Deterioration (PSD) and Title V Programs.  To those less tied to formality, it is the Deferral Rule.  Under the Deferral Rule, EPA delayed for three years regulation as stationary sources under the Clean Air Act emitters of “biogenic”  carbon dioxide while it further assessed the subject.  Biogenic CO2, is biologically derived CO2, as opposed to CO2 derived from fossil fuels.  It includes emissions from burning landfill methane, combustion of municipal biologically derived solid waste, fermentation processes for ethanol manufacturing and the burning of biomass. 

Biogenic CO2 is not discernably different in the atmosphere from that derived from fossil fuels.  Its difference lies in its context.  Biogenic CO2, when considered over time, may have a neutral or even reducing effect on total CO2 emissions because, for example, while the burning of biomass releases CO2, the growing of biomass pulls CO2 out of the atmosphere and sequesters it.  On the whole, facilities burning biomass might actually result in less CO2 emissions.  The purpose of the Deferral Rule was to permit EPA to spend some more time studying biogenic CO2 so as to avoid issuing regulations that accomplished little.

In its rulemaking EPA offered three doctrines as justifications for its rule:  the de minimis, one-step-at-a-time, and administrative necessity doctrines.  The de minimis doctrine allows an administrative agency to grant regulatory exemptions ”when the burdens of regulation yield a gain of trivial or no value.”  Opinion at 13.  The one-step-at-a-time doctrine allows an agency to proceed in a “piecemeal fashion.”  Id.  And the administrative necessity doctrine allows an agency to “avoid implementing a statute by showing that attainment of the statutory objectives is impossible.” Id. at 15-16.  The absurd results rule, which EPA set forth in its brief, rejects the interpretation of a statute that would produce an absurd result.  Id. at 17. 

The Court rejected all four theories.  The de minimis doctrine only applied to permanent exemptions, as the EPA conceded.  Id. at 13. Accordingly, it did not apply.  The dissent disagreed.  It saw the exception as available, particularly when the statute “expressly does not regulate “minor” sources that cause little harm because they release below-threshold levels of pollutants.”  Id. at 35.

Application of the one-step-at-a-time doctrine was found to be arbitrary and capricious because EPA did not set out how it intended to achieve the statutory goal:  “We simply have no idea what EPA believes constitutes ‘full compliance’ with the statute.  In other words, the Deferral Rule is one step towards … what?  Without a clear answer to that question, EPA has no basis for invoking the one-step-at-a-time doctrine.”  Id. at 15.  The dissent was not buying:  “just as EPA proceeded gradually in regulating GHGs under the Tailoring Rule, EPA has delayed its regulation of a specific GHG via the Deferral Rule.  The fact that EPA is required to take action does not preclude it from phasing in the action using the step-at-a-time method.”  Id. at 33.

The Court found fault with the administrative necessity theory because EPA did not explore what the Court referred to as the “middle-ground option,” requiring permitting except where the source took steps to reduce its biogenic CO2 emissions.  Because EPA had an “obligation to adopt the narrowest exemption possible, it should have explained why it rejected an option that would have reduced emissions from sources the Deferral Rule permanently exempts.”  Id. at 16-17. 

Last, there was the absurd results rule, which EPA sought to apply “because ‘emissions of CO2 derived from certain forms of biomass may not only fail to endanger public health and welfare, but in fact may benefit the public by reducing the net emissions of CO2,’ …[and] it would run afoul of congressional intent to regulate them.” Id. at 17-18. The Court found, however, that EPA did not utilize this rule in its rulemaking, notwithstanding passing references.  Simply put, “[t]hese passing references [fell] far short of satisfying EPA’s ‘fundamental’ obligation to ‘set forth the reasons for its actions.’”  Id. at 18.

The concurrence, as noted above, did not believe CO2 was even regulated by the statute.  But that had been previously decided to the contrary and “that’s water over the dam in this Court.”  Id. at 25.  As to the issue before him, that answer was easy:  “EPA simply lacks statutory authority to distinguish biogenic carbon dioxide from other forms of carbon dioxide.”  Id. at 21.  In sum, EPA was required to address emissions of CO2 and there was no part of the statute that allowed “EPA to exempt  … emissions of a covered air pollutant just because the effects of those sources’ emissions on the atmosphere might be offset in some other way.”  Id. at 22. 

The last point raised by the dissent, in our view, sums up the entire case:  what was the point?  The dissent would have dismissed because the case was not ripe.  First, it needed to be fit for review.  The rule was temporary and by July 2014 EPA would either have let the rule expire or issued a new rule, one that the petitioners might like, but certainly one that would have been informed by the additional three years of research.  Id. at 38.  Second, deferring decision would work no real hardship to petitioners.  Only one facility had been identified as being able to avoid permitting as a result of the Deferral Rule.  The dissent pointed out that the facility enjoyed no more than the previous status quo:  “the hardship of which the petitioners complain is hyperbolically overblown.  The Deferral Rule does not deregulate scores of polluters.  Instead, it temporarily maintains the theretofore long-time status quo for a limited number of stationary sources that – until July 1, 2011 – had never been subject to regulation as a major source under PSD.”  Id. at 42.

In our view, substantively, this decision accomplished little.  A rule that was going to expire next year, expires this year.  Parties seeking to rely on a decision by esteemed arbiters of the law find the arbiters completely at odds with one another.  But that may be the true significance of Center for Biological Diversity.  Notwithstanding that “the task of dealing with global warming is urgent and important at the national and international level,” id. at 25, consistency of approach is by no means assured in any arena, including the courts.

Carbon Dioxide | Carbon Emissions | Greenhouse Gases | Regulation

Top 6 at 6: Highlights of the Top Climate Change Stories in the First Half of 2013

July 1, 2013 00:01
by J. Wylie Donald

Another six months have passed and it is time for our semi-annual look at climate change and its intersection with the law.  Here are some highlights of the last six months:

1.  The Administration’s Focus.  After months of silence in the 2012 presidential campaign, President Obama rejuvenated his administration’s commitment to addressing climate change.  We heard in his inaugural address:   “We will respond to the threat of climate change, knowing that the failure to do so would betray our children and future generations. Some may still deny the overwhelming judgment of science, but none can avoid the devastating impact of raging fires and crippling drought and more powerful storms.”  He carried this forward in his State of the Union address less than a month later: “I urge this Congress to get together, pursue a bipartisan, market-based solution to climate change, like the one John McCain and Joe Lieberman worked on together a few years ago.  But if Congress won’t act soon to protect future generations, I will.  (Applause.)  I will direct my Cabinet to come up with executive actions we can take, now and in the future, to reduce pollution, prepare our communities for the consequences of climate change, and speed the transition to more sustainable sources of energy.”     And in a speech this past Tuesday the promises took another step toward reality when the President outlined his “climate action plan.” 

Recognizing the logjam in Congress, the Administration's plan is based on authority the executive branch already has. The salient points include:  1) further restrictions on powerplant greenhouse gas emissions (notably addressing coal); 2) promotion of resilience and adaptation with respect to weather-related calamities; 3) additional permitting of renewable energy facilities on public lands; and 4) engagement in the international arena on climate change such as working out a global free trade agreement on clean energy technologies.   The goal is a reduction of U.S. greenhouse gas emissions by 17%.  The Wall Street Journal called these “sweeping climate policies.”  We will see; with no new authority, Gina McCarthy’s nomination to head EPA held up, and the bounty of natural gas unleashed by fracking, greenhouse gas reduction may be achieved by the market, see Leveraging Natural Gas to Reduce Greenhouse Gas Emissions,  not governmental efforts.  

2. 400 PPM.  On May 9, Mauna Loa Observatory of NOAA’s Earth System Research Laboratory reported that the average weekly value of atmospheric carbon dioxide at the observatory had reached 400 ppm, a level unsurpassed in 3 million years.  The world collectively ignored the number, treating it more like an insignificant decimal, 0.0004, which it was (a decimal, not insignificant).  We don’t think anyone will dispute that there are three ways to interpret this number:  it’s bad, it’s good, it’s neither.  Climate scientists are unanimous that it’s bad.  There is nothing saying it’s good.  Which means the justification for not taking action on climate change is that the ever increasing levels, and the ever increasing rate of accumulation, of carbon dioxide in the atmosphere (see the graphs by the observatory), are of no consequence.  US Airways will probably side with the climate scientists - it canceled 18 flights as a result of the record-breaking temperatures in the southwest this past weekend. 

As a footnote, we note that Mauna Loa’s number is an average, and is subject to refinement.  As it turned out, the 400 ppm number was refined a few weeks later to 399.89.  

3.  Free Trade.  In 2009 Ontario enacted its Green Energy Act to promote renewable energy in the province.  One approach is the adoption of a feed-in tariff (mandatory above-market rates for electricity derived from renewable resources).  This had successfully been pioneered in Germany.  Ontario legislators also saw the opportunity to spur job growth by giving subsidies to businesses that sourced their wind turbines and solar panels in Ontario (i.e., “domestic content”).

Japan jumped on this protectionism immediately and sought consultations with Canada under the General Agreement on Tariffs and Trade and the World Trade Organization. The consultations were ineffective and Japan requested a panel to hear the dispute concerning Ontario’s “domestic content requirements," with which renewable energy generators were required to comply "in the design and construction of electricity generation facilities in order to qualify for guaranteed prices” under the feed-in tariff program.

Last December the panel ruled in favor of Japan on the domestic content requirements. Canada appealed and this May the appellate panel affirmed. Ontario's energy minister has confirmed that Ontario will abide by the WTO decision and revise its Green Energy Act.   We conclude that free trade remains colorblind.

4. Climate Change Liability Lawsuits.  For seven years now, the first wave of climate change liability lawsuits have roiled the legal waters.  It bears remembering that in October 2009, the plaintiffs in these cases rode the crest of the wave.  The Second Circuit had reversed the trial court’s dismissal in Connecticut v. American Electric Power (AEP), and the Fifth Circuit likewise overturned the Southern District of Mississippi’s dismissal of Comer v. Murphy Oil USA.  Plaintiffs had standing; the political question doctrine did not apply.

Things have gone badly for the plaintiffs since.  All readers of this blog know of the Supreme Court’s decision in AEP, stifling the plaintiffs’ case under the doctrine of displacement.  This year two more decisions confirmed the Judicial Branch’s hostility to these claims.  Comer made it back to the Fifth Circuit, where dismissal was summarily affirmed on the doctrine of res judicata.  And the last of the original quadriga, Native Village of Kivalina v. ExxonMobil Corp., found its petition for certiorari denied in April,  thus leaving the Ninth Circuit’s affirmance of dismissal unchanged.

The only reed left for the plaintiffs is the granting of a petition for certiorari in Comer, a prospect we deem unlikely, if only because the appeal would be based on a purely procedural question of little likelihood of being repeated and of little relevance to the larger climate change issues.

5.  Ursus Maritimus.  On March 1 the D.C. Circuit in In re Polar Bear Endangered Species Act Litigation  affirmed the district court’s dismissal of challenges to the Fish and Wildlife Service’s designation of the polar bear as threatened under the Endangered Species Act because “due to the effects of global climate change, the polar bear is likely to become an endangered species and face the threat of extinction within the foreseeable future.” The polar bear’s friends (environmental groups) sought to have the bear listed as “endangered.”  Ursus maritimus’s less-than-friends (the State of Alaska and hunting groups), urged that no listing was appropriate.  The standard in such reviews is relatively simple:  “Our principal responsibility here is to determine, in light of the record considered by the agency, whether the Listing Rule is a product of reasoned decisionmaking.”  The Court found that it was, holding specifically the the Listing Rule rests on a three-part thesis: the polar bear is dependent upon sea ice for its survival; sea ice is declining; and climatic changes have and will continue to dramatically reduce the extent and quality of Arctic sea ice to a degree sufficiently grave to jeopardize polar bear populations. See Listing Rule, 73 Fed. Reg. at 28,212. No part of this thesis is disputed and we find that FWS’s conclusion – that the polar bear is threatened within the meaning of the ESA – is reasonable and adequately supported by the record.”

As arctic resource development progresses as the ice retreats, the polar bear's Endangered Species Act listing is sure to take on larger significance, both as a model for the preservation of other arctic species, and as a tool to block development.

6.  Compressed Natural Gas (CNG). On June 13 the Fifth Circuit affirmed the district court's decision in Association of Taxicab Operators USA v. City of Dallas. In the case the local taxicab organization challenged a city ordinance that allowed CNG-fueled taxicabs “head-of-the-line” privileges at Love Field in downtown Dallas. Plaintiff's theory was that section 209(a) of the Clean Air Act, which prohibits states and their political subdivisions from adopting emission standards for motor vehicles, preempted the ordinance either directly or by implication. The Fifth Circuit did not agree. Traditional police powers of the state were preserved to the state by section 209(d) of the Clean Air Act. More importantly, an ordinance granting head-of-the-line privileges, on its face did not set an emission standard, as required by the statute.  As to any implied preemption, the ordinance may have influenced taxicab operators to alter their behavior, but it did not compel them to do so. Less than 7% of Dallas's taxicabs served Love Field and the only place CNG cabs had head-of-the-line privileges was at Love Field; there were plenty of other places for gasoline powered cabs to pick up fares. Accordingly implied preemption did not apply either. 

One of our themes in a world beset by climate change is that there will be winners and there will be losers. Little did taxicab operators know they would be both.

The Tar Sands Debate Comes to Delaware

June 25, 2013 11:49
by Jameson Tweedie

Across the country, environmental organizations have made the transport and processing of crude oil from the tar sands of Alberta, Canada a focal point in their efforts to reduce carbon emissions, citing higher carbon emissions of oil from the tar sands (although that assertion is disputed).  The proposed Keystone XL pipeline currently being reviewed by the State Department is perhaps the most visible example of this fight, with numerous environmental organizations lining up to oppose it (for example, the Sierra Club, the Natural Resources Defense Council, 350.org and others), with some advocating civil disobedience in their efforts to defeat the pipeline.  (Slightly less high profile is the Northern Gateway pipeline – which would transport crude from Alberta through British Colombia to the west coast for overseas export – now opposed by the government of British Columbia.)  While the Keystone XL debate may not directly impact Delaware, it appears the focus on tar sands crude, and the controversy that seems to follow it, has arrived in Delaware in what might otherwise have been considered an economic success story:  PBF Energy’s Delaware City Refinery.

The Delaware City Refinery was shuttered in 2009, but after being purchased by PBF Energy in 2010 – reportedly after significant personal effort by Governor Jack Markell – the Refinery reopened bringing hundreds of jobs back to the state.  According to PBF, the Delaware City Refinery is “one of the largest and most complex refineries on the East Coast” and employs more than 400 full time employees.  (For comparison, the Delaware City and nearby Paulsboro, N.J. Refineries can process a combined total of 370,000 barrels per day; the Keystone XL pipeline would carry up to 830,000 barrels per day.)  The Refinery, however, has encountered a laundry list of headlines in recent months, including a violation notice from the Department of Natural Resources and Environmental Control (DNREC) for unauthorized releases of 527,000 pounds of sulfur dioxide, complaints from nearby residents after a separate incident with the Refinery’s pollution control system “sent dark smoke billowing from a stack at the plant,” and disputes about the significantly expanded rail car delivery of crude oil, including tar sands crude, to the Refinery.  The expansion of the Refinery’s rail yard in particular met with significant environmental opposition because of the use of Canadian tar sands crude to supply the Refinery, and the subsequent shipment by barge of such crude up the Delaware River to PBF’s nearby Paulsboro, New Jersey refinery. 

The most recent disputes are over the facility’s air emissions permits.  One permit process, for the Refinery's Title V permit, included the expected, if unexpectedly high, profile:  Those in support, including a rally of hundreds of refinery workers and supporters before the public DNREC hearing; those in opposition, including an opposing rally by groups opposing the permit; and the DNREC hearing, moved into a larger venue to accommodate the unusually large crowd and reportedly attended by nearly 100 police officers.   The issue is pending before DNREC.  Following the roughly contemporaneous issuance of another permit (PDF), the Air Pollution Control permit for the Marine Vapor Recovery System at the Refinery, however, the Delaware Chapter of the Sierra Club and the Delaware Audubon Society filed challenges to DNREC’s permit with the state’s Environmental Appeals Board (PDF) and with the Coastal Zone Industrial Control Board (PDF) based in part on assertions that the permit violates Delaware’s Coastal Zone Act.  (The Sierra Club and Audubon Society are represented by the Widener University Environmental Law Clinic, which is also representing the Sierra Club in a currently pending appeal (PDF at 2) to the Delaware Supreme Court of another decision relating to interpretation of the Coastal Zone Act.)

Delaware’s Coastal Zone Act (7 Del. C. sec. 7001, et. seq.) was signed into law in 1971 and, as its name suggests, prohibits certain land uses within a zone along Delaware’s coast.  The Act, however, grandfathered in certain activities already occurring within the coastal zone.  Of particular relevance to the Sierra Club’s and Audubon Society’s appeal is the Act’s prohibition on “offshore gas, liquid or solid bulk product transfer facilities” (except those grandfathered in as “nonconforming uses” already occurring in 1971).  See 7. Del. C. sec. 7003.  The appeal, in part, asserts that the Refinery’s expanded rail yard and barge shipment system is a bulk product transfer facility and therefore impermissible under the Coastal Zone Act.  Alternatively, if the operation is otherwise a grandfathered nonconforming use, the appeal asserts that the crude oil transfer is nonetheless impermissible due to the expansion of the refinery’s footprint outside of the permissible grandfathered footprint established in 1971.  The Coastal Zone Industrial Control Board has scheduled a public hearing on the appeal of the Marine Vapor Recovery System permit for July 16, 2013.

Adding a slight flavor of intrigue to the dispute is a recent report by the Wilmington News Journal that DNREC issued the permit despite warnings to DNREC from the Delaware Attorney General’s Office that the permit may violate the Coastal Zone Act.  According to the News Journal’s report, “Gov. Jack Markell and top state environmental officials have apparently snubbed and suppressed a warning from state attorneys about possible regulatory violations at the Delaware City Refinery, opting instead to seek outside legal guidance on contested changes at the 210,000 barrel per day plant.”  The News Journal, citing unnamed state officials, reported that the Attorney General’s Office had provided DNREC with a memorandum providing a “detailed list of the refinery’s potential Coastal Zone Act conflicts,” apparently including the refinery’s expanded rail yard and the barge shipments to PBF's Paulsboro Refinery.   

Regardless of the News Journal’s report, however, the dispute serves as a reminder of the nationwide stage on which the climate change debate, and by proxy the fight over Canadian tar sands crude, is now fought.   

 

Carbon Dioxide | Carbon Emissions | Climate Change

Fracking Zoning Case Seeks Review by New York's Highest Court

June 8, 2013 17:27
by J. Wylie Donald


Columbia Law School convened a panel on hydraulic fracturing ("fracking") yesterday. One of the subtopics was its effect on climate change mitigation.

Professor Michael Gerrard laid out the pluses and minuses. On the plus side:  burning natural gas yields about one-half the amount of carbon dioxide as burning coal for the same amount of energy. This has been demonstrated by the 9% drop in United States CO2 emissions in the 5 years from 2007 to 2011.  Confirming Professor Gerard's statistics is a recent report by the Center for Climate Energy Solutions, Leveraging Natural Gas to Reduce Greenhouse Gas Emissions. On the minus side:  natural gas is composed in substantial part of methane, a much more potent greenhouse gas than carbon dioxide, and methane leakage occurs in the production, processing and distribution of natural gas; the low price of natural gas depresses the market for nuclear, solar, wind and other greenhouse-gas-free energy sources; and natural gas greenhouse gas emissions, while better than coal, are still greenhouse gas emissions. 

Theoretically, one could assess scientifically this fracking algebra. But, as might be imagined, the future of fracking is not likely to be determined based on a balancing of pluses and minuses. Politics will be central and for the moment those politics are distinctly local.  Fracking's future in many places hinges on the ability of local zoning authorities to zone fracking out of the local community.  On Tuesday, the New York Court of Appeals was asked to join this fray, when fracking supporters filed a petition for review.  In the case, In re Norse Energy, a panel of the Appellate Division considered a local zoning ordinance that banned "all activities related to the exploration for, and the production or storage of, natural gas and petroleum." Petitioner Norse Energy argued the ordinance was preempted by the express terms of ECL 23-0303 of New York's Oil, Gas and Solution Mining Law, which provides that "[t]he provisions of this article shall supersede all local laws or ordinances relating to the regulation of the oil, gas and solution mining industries; but shall not supersede local government jurisdiction over local roads or the rights of local governments under the real property tax law."  The panel concluded that this language was meant to address the details of mining, but did not reach the traditional power of a community over land use.  Accordingly, there was no express preemption.  The court further found that there was no implied preemption either.

In our view, reasonable minds could differ.  But also in our view, the Appellate Division decision does not matter yet; it would have been appealed by whichever side lost. 

The Court of Appeals, if it takes the case, will have to engage in statutory construction.  We cannot read the tea leaves there.  We hope, however, that the Court keeps the future in mind.   More than 170 municipalities in New York have enacted some sort of limitation on fracking within their borders.  The Oil, Gas and Solution Mining Law forbids activities that lead to "waste," defined to include:   "The locating, spacing, drilling, equipping, operating, or producing  of  any  oil  or  gas well or wells in a manner which causes or tends to  cause reduction in the quantity of oil  or  gas  ultimately  recoverable from  a  pool  under  prudent  and proper operations, or which causes or  tends to cause unnecessary or excessive surface loss or  destruction  of oil or gas."   A patchwork of municipalities with zoning ordinances barring fracking, will be physically juxtaposed with a patchwork of municipalities permitting fracking.  After some time, proponents undoubtedly will have the technical data to support the conclusion that "waste" is occurring and with those facts will return to seek enforcement of a statute forbidding regulation of the "locating ... of any oil or gas well" that causes "reduction in the quantity of oil or gas ultimately recoverable."  The Court should consider how its decision now will affect that future situation  (unless, of course, New York's legislature acts first).

Carbon Dioxide | Carbon Emissions | Regulation


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