Source: http://climatelawyers.com/category/Carbon-Emissions.aspx?page=2
Timestamp: 2019-04-20 10:35:23+00:00

Document:
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.
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.
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.
No En Banc Appeal in Kivalina; So What's Next for Climate Change LItigation?
Tuesday EPA issued its proposed rule (see related post) concerning new source performance standards for greenhouse gas emissions for electric power plants. This all started when EPA refused to address greenhouse gas emissions coming out of cars. Cars to power plants. Some may be wondering how the camel got into this tent. The story begins of course with Massachusetts v. EPA, 549 U.S. 497 (2007), where the Supreme Court held that greenhouse gases emitted in automobile exhaust were "air pollutants" within the meaning of the Clean Air Act. This meant that EPA had to assess whether they caused or contributed to "air pollution which may reasonably be anticipated to endanger public health." 42 U.S.C. § 7521(a)(1). That assessment was completed in December 2009 and EPA concluded in the "Endangerment Finding" that "that six greenhouse gases taken in combination endanger both the public health and the public welfare of current and future generations." 74 Fed. Reg. 66,496 (Dec. 15, 2009). The Endangerment Finding did not impose any requirements, but it set the stage for regulation. In September 2009 EPA and the US Department of Transportation issued proposed rules to establish greenhouse gas emission standards for certain motor vehicles. The final rule was published on May 7, 2010 and went into effect on January 2, 2011. 75 Fed. Reg. 25324 (May 7, 2010). The camel's nose was in the tent. And with that, EPA now had the prerequisite to set greenhouse gas emissions limits elsewhere. At least that is EPA's position. In a nutshell, stationary sources that emit 250 tons per year of "pollutants" are subject to the Prevention of Significant Deterioration (PSD) program. One element of the PSD program is that Best Available Control Technology (BACT) analysis is required for "each pollutant subject to regulation" under the Clean Air Act. 42 U.S.C. 7475(a)(4). When the motor vehicle greenhouse gas regulation kicked in on January 2, 2011, greenhouse gases were subject to regulation, and therefore electric utilities emitting greenhouse gases were required to conduct a BACT analysis. All of the camel was in the tent. All of these regulations (and others) were challenged. Oral argument in those cases was heard before the D.C. Circuit at the end of February. The regulated community awaits; who knows what the camel is thinking.

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