Source: https://eem.jacksonkelly.com/2014/07/index.html
Timestamp: 2019-04-26 12:22:02+00:00

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In a July 24 memorandum, two EPA assistant administrators announced that following last month’s Supreme Court decision prohibiting EPA from imposing Clean Air Act permits solely for greenhouse gases (GHG), (drumroll) “EPA Will Follow the Law” (ta da!). Seriously, in a six page memorandum, the two assistant administrators explained to EPA Administrator McCarthy that EPA would not require either of two permits (Title V permit and a prevention of significant deterioration (PSD) permit) for either a new or existing source solely for their potential to emit GHG. For existing sources which already have such permits for other pollutants, or will be required to secure them for increases of such emissions, GHG limitations will still be imposed. The memorandum was a straightforward, and surprisingly clear, recitation of the Court’s decision.
The memo also explains those situations in which EPA will impose restrictions on GHG emissions. For currently permitted existing sources, EPA will restrict “GHG emissions if the source emits or has the potential to emit 75,000 tons per year (tpy) or more of GHG on a carbon dioxide equivalent (C02e) basis.” For modified sources, the EPA will apply PSD requirements to “GHG if the modification is otherwise subject to PSD for a pollutant other than GHG, and the modification results in a …net GHG emissions increase equal to or greater than 75,000 tpy C02e and greater than zero on a mass basis.” (June 24 Memorandum at 3). As an example, a coal mine which currently has no air quality permit need not seek one simply because it emits the GHG methane, from ventilation boreholes. If it has a thermal dryer which does have an air permit, the thermal dryer may also be regulated for methane emissions.
This conclusion does not mean that states cannot regulate such existing sources for GHG if an independent basis exists for doing so exclusively under state law (and EPA makes it clear that is intends to review this with state and local authorities). EPA cannot obligate the states to do so, however, under the programs (State Implementation Plans) by which they enforce the CAA within their boundaries.
The restrictions placed upon EPA by the Court’s UARG decision does not mean that the agency will abandon all work now underway on evaluating GHG permitting data. It will continue to evaluate GHG data for “the possible development and justification of an appropriate GHG significance (or ''de minimis") level for determining the application of PSD requirements to GHG in permitting” those sources which may lawfully be permitted for other pollutants. Likewise, biogenic sources of GHG, particularly methane, will continue to be evaluated notwithstanding EPA’s inability to impose permits solely for GHG for those sources. In fact, when one reviews a report released on Friday, July 25 by EPA’s Office of Inspector General on methane leakage from existing natural gas pipeline systems, it is obvious that EPA will be brooding deeply over the remaining years of the Obama Administration to regulate sources now made off-limits by the UARG decision.
Although EPA may not impose permits for GHG on sources not currently permitted, this adventure in environmental regulation is just beginning. Given the significant reductions that the states will need to impose on coal-fired power plants under EPA’s June 18 proposed rule, and the opportunity for the states to employ controls on other GHG sources as part of their strategies, there is every likelihood that creative GHG restrictions will be proposed in the coming months and years.
On June 2, 2014, EPA proposed a rule outlining the “Clean Power Plan”—what it called a “commonsense plan to cut carbon pollution from power plants.” The proposed rules would require existing power plants to reduce their carbon dioxide emissions 30% from 2005 levels by the year 2030. CO2 emissions have already been falling over the past decade, with the levels dropping 12% between 2005 and 2012 alone. See U.S. Energy Information Administration, Monthly Energy Review. This is the latest move in the Obama’s administration quest for overall greenhouse gas reductions; prior initiatives have focused on increased efficiency guidelines for the transportation sector and new restrictions on high-potency greenhouse gases such as hydrofluorocarbons and methane.
After EPA went public with its proposed rule, various states and industry groups voiced their concerns over what they claim are drastic and untenable policies.
The bill passed 29-19, and will now go to the floor for a vote by the full House. Despite this initial success, John Podesta, a Senior Advisor to the President, has said that Republican pushback to the President’s environmental agenda—such as this defunding bill—have a “zero percent chance” of working.
Then, on June 25, nine states joined together in support of the Murray suit, filing an amicus brief with the D.C. court. The attorneys general—spearheaded by West Virginia Attorney General Patrick Morrisey—bolstered Murray’s arguments that EPA’s proposed rule is illegal and violates “specific prohibitions” found in the Clean Air Act. The amicus brief further explains that EPA is relying on a drafting error to insert ambiguity into § 111(d) where none exists.
Prior to filing the brief, Morrisey sent a letter to EPA Administrator Gina McCarthy in which he voiced similar concerns and discussed that West Virginia would be “uniquely harmed” by the proposed rule.
The current proposed rule sets out new source performance standards for new and existing power sources under § 111(d) of the Clean Air Act. Section 111(d) is a unique provision that has only been used five times in the history of the CAA. Under § 111(d), the proposed rule tasks states with the primary role of setting up emission-reduction programs within EPA guidelines. EPA retains the authority to take over the program from the state if the state fails to achieve the guidelines. The proposed 30% reduction rate represents a nationwide target; there are then state-by-state mandatory targets and interim benchmarks to achieve, based on several state-specific criteria. Each state will be required to set up its own program to comply with its emissions budget.
According to Roger Martella, EPA’s former General Counsel, the computation of a state’s emission budget is based on four elements. The first factor presupposes that, as a baseline, all coal-fired power plants could be 6% more efficient. Then, EPA factored in what it determined was the state’s natural gas capabilities, meaning that states could essentially be penalized for not taking full advantage of transitioning to natural gas. Similarly, EPA also examined and factored in the state’s capability for employing alternative, “cleaner” forms of energy. Finally, EPA looked at the opportunity each state had to reduce the demand for energy. EPA used these factors to set each state’s emission budget.
Many aspects of the proposed rules have raised concerns, from the computation of the state budgets to EPA’s authority to promulgate such a rule.
The Fourth Circuit ruled on Friday (7/11/14) that the Clean Water Act’s (“CWA”) permit shield defense was unavailable to a permit holder who failed to comply with the permitting authority’s applicable disclosure requirements. See SAMS v. A&G Coal, No. 13-2050, available at http://www.ca4.uscourts.gov/Opinions/Published/132050.P.pdf. The Court framed the question as being whether A & G Coal Corporation (“A&G”) could assert a “permit shield” defense for discharges of selenium “when it failed to disclose the presence of this pollutant during the permit application process.” Under the limited set of facts before it, the Court held that the shield was unavailable. For additional discussion of the facts of the case, the lower court’s ruling, and the CWA “permit shield,” see http://eem.jacksonkelly.com/2014/06/fourth-circuit-considers-scope-of-cwa-permit-shield.html.
A&G operates a coal mine in Virginia that discharges selenium into a nearby stream. A&G applied for and received a National Pollution Discharge Elimination System (“NPDES”) permit from Virginia Department of Mines, Minerals, and Energy (“DMME”). The NPDES permit application requested water sampling for 15 specific constituents, including selenium. The application also asked whether the applicant knew of or had reason to believe its discharges would contain a number of specified pollutants, including selenium. A&G did not submit testing and left blank the portion of the application requesting whether selenium was present or absent. A&G’s NPDES permit, issued in 2010, did not limit or authorize the discharge of selenium.
Subsequent to permit issuance, Southern Appalachian Mountain Stewards (“Plaintiffs”) discovered selenium in A&G’s discharge. Shortly thereafter, Plaintiffs filed suit, alleging that A&G’s discharge of selenium constituted an unpermitted discharge in violation of Section 301 of the CWA. A&G raised the CWA’s “permit shield,” found at 33 U.S.C. §1342(k), as a defense. That section provides that discharges made in “compliance with a[n] [NPDES] permit” “shall be deemed compliance” with Section 301 for the purposes of the citizen suit provision of the Act. A&G argued that because the permitting agency chose not to include effluent limits for the discharge of selenium in its NPDES permit, compliance with the plain language of its permit protected it from liability for selenium discharges.
We therefore view the NPDES permit as shielding its holder from liability under the Clean Water Act as long as (1) the permit holder complies with the express terms of the permit and with the Clean Water Act's disclosure requirements and (2) the permit holder does not make a discharge of pollutants that was not within the reasonable contemplation of the permitting authority at the time the permit was issued.
Op. at p.12 citing Piney Run, 268 F.3d at 259.
The Court found that A&G failed to comply with the applicable disclosure requirements in two respects. First, the DMME’s NPDES application instructions “unequivocally” required submission selenium sampling as a part of the permit application. Second, the application asked whether A&G believed selenium was present or absent. A&G did not submit selenium sampling and did not check either the “present” or “absent” box. Accordingly, the Court could not find that A&G met the first prong of the Piney Run test.
Despite the deficiencies in its application, A&G argued that it satisfied the first prong of the Piney Run test. First, it argued that the application only required disclosure of selenium if the applicant knew or had reason to believe its effluent contained selenium. A&G argued that it did not have affirmative knowledge regarding the presence or absence of selenium; thus, it was proper to leave that portion of the application blank. The Court rejected this argument, finding that allowing such a defense would encourage a “willful blindness” from permit applicants. Moreover, the CWA places the burden of disclosure on the permit applicant.
Next, A&G attempted to rely upon EPA’s 1995 Revised Policy Statement on Scope of Discharge Authorization and Shield Associated with NPDES Permits. In its 1995 guidance, EPA stated that NPDES permits provided authorization for (1) pollutants specifically limited in the permit; (2) pollutants identified during the permitting process; and (3) “[p]ollutants not identified as present but which are constituents of wastestreams, operation or processes that were clearly identified in writing during the permit application process and contained in the administrative record….” According to A&G, its discharge of selenium fell under cover the permit shield because it disclosed to DMME the waste stream containing selenium, and DMME understood the general nature of its waste streams. The Court made short work of this argument, noting that “the [1995 guidance document] states very clearly that ‘[t]he availability of the section 402(k) permit shield is predicated upon the issuance of an NPDES permit and a permittee’s full compliance with all applicable application requirements, any additional informational requests made by the permit authority and any applicable notification requirements.’” Op. at p. 19, citing 1995 EPA Policy Statement at 2.
Due to A&G’s failure to satisfy the first prong the Piney Run test, the Court declined to address whether the discharge of selenium was within DMME’s reasonable contemplation. Ultimately, the Court’s decision should not have any impact upon the coal industry, as the Court did not erode the scope of the permit shield. Importantly, although it affirmed the lower court’s judgment, the Court did not endorse the lower court’s holding “that a permittee must have actually disclosed a pollutant in its permit application in order to avail itself of the permit shield as to that pollutant.” See Southern Appalachian Mountain Stewards v. A & G Coal Corp. WL 3814340, *16 (W.D.Va. 2013). This is critical, because adopting the lower court’s holding could have required permit applicants to sample for a countless number of known constituents that the CWA characterizes as pollutants in order to avail themselves of the shield. The Court declined to address this “slippery slope” scenario, noting that “[s]elenium is not just some obscure pollutant that might happen to show up in a discharger’s wastestream.” Op. at 18. Rather, selenium was one of fifteen pollutants for which the DMME’s NPDES application specifically required disclosure. Given the narrow focus of the Court’s opinion, the scope of Section 402(k)’s protections remains unchanged for permit holders who comply with the requisite disclosure requirements.
This article was authored by Christopher M. Hunter, Jackson Kelly PLLC. For more information, please contact Christopher M. Hunter, Robert G. McLusky or Kevin M. McGuire.
But Did EPA Really Gain Ground in Its Efforts to Regulate Conductivity?
Lawyers try to use words precisely, presumably to promote clarity and to avoid confusion and misunderstanding. Less charitably, we are regarded as splitting hairs. Former President Clinton’s deposition response to a question that depended upon the meaning of the word “is”, is a classic. Although the Supreme Court’s decision in National Labor Relations Board v. Noel Canning, (No. 12-1281, June 26, 2014), contains no lawyerly evasions similar to President Clinton’s, the Court did analyze the meaning of “the” in its opinion issued last week.
The Court delved into this lesson in grammar and context to decide if appointments made to the NLRB during a three-day intra-session recess were valid under the Constitution. They were not.
The exercise in construction is interesting, however, because it demonstrates how courts, examining the same language, can apply the same tests to reach diametrically opposite conclusions. For example, the Eastern District of Kentucky recently examined the meaning of “the” in M. L. Johnson Family Properties, LLC v. Jewell, (Civil No. 14-78-ART) to discern whether the language of 30 U.S.C. §1260(b)(6)(A) requires the consent of all surface owners or a minority or single owner if the surface of land over coal is to be removed in the course of surface mining. The district court quoted a District of Columbia Circuit Court decision as follows: “Unlike ‘a’ or ‘an,’ that definite article [i.e. “the”] suggests specificity.” Guess what case the district court quoted? Noel Canning v. National Labor Relations Board, 705 F.3d 490, 500(D.C.Cir. 2013), the case the Supreme Court reversed last week.
Now, the Supreme Court’s decision in Noel Canning is not a pronouncement on how articles in the English language must be interpreted. It does indicate, however, that the sole linguistic construction specified by the district court is not correct.
The district court’s decision in M. L. Johnson Family Properties, LLC portends a great disruption in how the Commonwealth of Kentucky has historically processed surface mining applications, and is wrong for some of the same reasons that the Supreme Court relied upon in deciding Noel Canning.
We can only hope that the Sixth Circuit will not be as inflexible in its grammatical constructions as the district court.
For more information about the M. L. Johnson Family Properties decision, contact Kevin McGuire in Jackson Kelly’s Lexington office, or Blair Gardner in Charleston.

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