March 26, 2010
A district court in Illinois delivered a partial defeat to the Justice Department’s Clean Air Act enforcement efforts earlier this month. United States v. Midwest Generation, LLC, — F. Supp. 2d —, 2010 WL 889986 (N.D. Ill. Mar. 9, 2010). On a motion to dismiss, the court granted defendant power company Midwest Generation, LLC’s request to dismiss the nine counts of the government’s 38-count complaint—brought by the DOJ and the State of Illinois—that charged the company with violations of the prevention of significant deterioration (“PSD”) provisions of the Act and its implementing regulations that relate to construction and modification of facilities.
The government argued that Midwest’s operation of multiple coal-fired power plants that had been modified by their previous owner without PSD pre-construction permits constituted a continuing violation of PSD requirements. The court rejected the government’s theory and held that, based on a plain reading of the Clean Air Act, the violation of the PSD requirement that a source owner obtain a permit before commencing construction or modification of a major emitting facility occurs only at the time of plant construction or modification, and does not apply to the subsequent operation of a facility.
Because the court found no continuing violation, it also dismissed the counts charging violation of PSD provisions as time-barred under the federal five-year statute of limitations to the extent that such counts sought civil penalties as opposed to equitable relief. The court declined to dismiss in its entirety the one count that alleged actual plant modification by Midwest, preserving the government’s ability to seek injunctive relief to the extent it can prove that Midwest’s modification violated the Clean Air Act.
While a purchaser of a facility that has been modified in violation of the PSD pre-construction permit requirements may not be held liable for a continuing violation, the court’s decision does not hinder the government’s ability to enforce operational requirements such as emissions limits or Title V permit provisions. The motion to dismiss left unresolved the government’s other twenty-eight claims that allege violation of Illinois’ opacity standards and of certain Title V provisions. With respect to these claims, the government has sought both civil penalties and injunctive relief requiring defendant to apply for and/or amend its applications for permits that conform with Illinois opacity and particulate matter limitations and with the Title V program. The government may also have the authority to order the facility to comply with BACT requirements that would have applied had the modifications been subjected to pre-construction PSD review. Therefore, prospective purchasers of such facilities would be well-advised to include compliance with applicable permitting and regulatory requirements as part of their due diligence.
A number of environmental groups intervened on behalf of the government, but limited the allegations of their complaint to Midwest’s violations of opacity standards.
March 18, 2010
On March 15, the International Code Council (“ICC”), with cooperation from the American Institute of Architects and ASTM International, released a draft International Green Construction Code, Public Version 1.0 (the “Code”) that once finalized will provide a model code for the regulation of the construction of new and existing commercial buildings. ICC, which develops residential and commercial building codes used by most U.S. states and municipalities, sees the Code as a baseline to be integrated into and complement local codes, and to be used as an overlay to other ICC Codes. The model code notably provides “jurisdictional electives” that “allow customization of the code beyond its baseline provisions to address local priorities and conditions.”
The draft model Code’s emphasis is on building performance, and includes a requirement for building system performance verification and building owner education to ensure that the best energy-efficient practices are followed. It establishes minimum requirements related to conserving energy, natural resources, and materials, employing renewable energy technologies to improve indoor and outdoor air quality, and developing building operations and maintenance. A sample ordinance is included for local governments to adopt.
The recently released New York City Greener Greater Buildings Plan, which included four energy conservation and efficiency bills signed by Mayor Bloomberg, may complement the Code. However, the Code, once finalized and adopted, will likely provide a more expansive regulatory baseline for green construction.
The Code is open to public comment until May 14, and the final version is expected to be released in the beginning of 2012. The initial public version may be used by jurisdictions nationally and internationally until the final version is published.
The Code, and directions on submitting comments, are available here.
March 11, 2010
Last week, Senator Charles Schumer (D-NY) introduced legislation that would restrict the flow of federal stimulus funds for clean energy projects to those meeting certain standards for the provision of domestic benefits. According to Schumer’s press release, this bill, the American Renewable Energy Jobs Act (S. 3069), “would require that aid flow only to clean-energy projects that rely on materials manufactured in the United States and create the bulk of jobs here at home, rather than overseas.” The bill is a response to a report issued by the Investigative Reporting Workshop at American University, which stated that 79 percent of the $2 billion in stimulus grants issued for clean energy projects have so far gone to foreign companies. The bill also responds to a controversial proposal by a US-China joint venture to apply for $450 in stimulus funds to create a wind farm in West Texas.
The U.S. wind energy industry has strongly opposed Schumer’s bill. In a statement issued last week, the American Wind Energy Association criticized the study relied on by the bill as “deeply flawed” and argued that the bill itself would put American jobs at risk. This week, wind energy lobbyists have urged Washington lawmakers to oppose the bill and create a federal mandate that utilities generate some power from renewable sources.
March 8, 2010
On February 18, 2010, the Council on Environmental Quality (“CEQ”) released a long-anticipated draft guidance document addressing how the effects of climate change and greenhouse gas (“GHG”) emissions should be analyzed under the National Environmental Policy Act (NEPA).
The CEQ guidance stresses that NEPA “demands informed, realistic governmental decision making.” Accordingly, the guidance instructs federal agencies to include a discussion of climate change within the scope of its NEPA analysis when an analysis of the direct and indirect of GHG emissions from proposed actions “may provide meaningful information to decision makers and the public.”
To put some meat on the bones of its overarching standard for “meaningful information”, the guidance deems projected direct annual CO2-equivalent GHG emissions from a proposed action of 25,000 metric tons or more “an indicator that a quantitative or qualitative assessment may be meaningful to decision makers and the public.”
However, the 25,000 metric ton figure is not a firm standard. The guidance makes clear that impacts from long-term projects with emissions below 25,000 metric tons annually may also warrant analysis. The Guidance goes on to list a number of technical documents that can assist agencies in quantifying GHG emissions for the purpose of a NEPA review. The Guidance also states expressly that the 25,000 ton standard should not be seen as an indicator of the significance of potential impacts of an action.
Apart from GHG emission, the Guidance also provides that, when appropriate, agencies should consider the potential effects of climate change on, or in combination with, a proposed action. According to the Guidance, climate change effects should be considered in the analysis of projects designed for long-term utility and located in climate-change vulnerable areas. It states that as such “the observed and projected effects of climate change that warrant consideration are most appropriately described as part of the current and future state of the proposed action’s ‘affected environment.’” The Guidance emphasizes that, in light of the uncertainties associated with climate change predictions, in considering the future effects of climate change, monitoring programs should be considered for inclusion in NEPA decision documents.
The draft Guidance specifically does not address what climate-change related impacts rise to the level of “significance” – thus requiring the preparation of an EIS. Rather, it seems to assume that agencies will analyze climate change within whatever NEPA document is otherwise being prepared for an action. However, CEQ has asked for comment on whether the final Guidance should address significance.
The Guidance attempts to strike a balance between requiring an assessment of GHG emissions and climate change impacts within the scope of NEPA review where it would be meaningful, while limiting the scope of such review so it does not run afoul of the “rule of reason,” the principle that agencies should focus on the usefulness of the potential information to the decision making process when determining the scope of its NEPA review. To that end, CEQ makes clear that agencies should use the NEPA scoping process “to set reasonable spatial and temporal boundaries” on any GHG assessment and, most importantly, “focus on aspects of climate change that may lead to changes in the impacts, sustainability, vulnerability and design of the proposed action and alternative courses of action.” It is clear that CEQ is not looking for wholly academic discussions of climate change in NEPA EAs and EISs, and also does not want a discourse on “wholly speculative effects.” Rather, the Guidance favors a discussion of GHG emissions and climate change in a manner where it could meaningfully impact the decision making process subject to the NEPA review, such as cases where the NEPA review could be used “to reduce vulnerability to climate change impacts, adapt to changes in our environment, and mitigate the impacts of Federal agency actions that are exacerbated by climate change.” In that vein, the Guidance emphasizes the importance of comparing the climate change-related effects of various project alternatives.
Thus, the emphasis of the Guidance is precisely where it should be – to provide information and analysis consistent with NEPA’s “rule of reason.” Of course, like most things NEPA, the devil is in the details. While this draft Guidance document, when finalized, will provide some useful broad overarching principles to determine the scope of any GHG/climate change analysis, as well as some specific tools to assist agencies in conducting that analysis, it will be left to the agencies – and ultimately the federal courts – to grapple with these issues in the context of the myriad federal actions with the potential to cause GHG/climate change impacts or that are potentially vulnerable to climate change impacts.
CEQ will receive public comment on the guidance documents for 90 days. The guidance documents and instructions for submitting comments are available here: www.whitehouse.gov/ceq/initiatives/nepa.
March 5, 2010
The Court of Appeals for the Second Circuit recently issued a decision in Niagara Mohawk Power Corp. v. Chevron U.S.A., Inc., — F.3d —-, 2010 WL 626064 (2d Cir. Feb. 24, 2010), another in a series of cases that attempt to chart the contours of liability of potentially responsible parties (“PRPs”) under CERCLA. Following its cleanup of a contaminated site along the Hudson River under an administrative consent order with the New York State Department of Environmental Conservation (“DEC”), Niagara Mohawk Power Corp. (“Niagara”), itself a PRP, commenced a cost recovery and contribution action against other PRPs.
The District Court ruled that Niagara could not seek contribution costs under Section 113(f)(3)(B) of CERCLA because DEC did not have the authority to resolve CERCLA liability without a specific agreement with the EPA and, thus, the administrative consent order did not resolve Niagara’s CERCLA liability. The Second Circuit reversed this ruling, holding that Niagara could maintain a contribution action against former owners and operators of the site pursuant to §113(f)(3)(B).
Section 113(f)(3)(B) allows a party to seek contribution from other PRPs when the party “has resolved its liability to the United States or a state for some or all of a response action in an administrative or judicially approved settlement.” Because Niagara had administratively settled its CERCLA claims with the DEC, the court concluded that §113(f)(3)(B) provided the proper mechanism for Niagara’s claims; settlement of claims with the federal government or express federal approval of the state administrative settlement was not required. In addition, the court held that because Niagara’s claims fit squarely within the requirements of §113(f)(3)(B), to allow Niagara to proceed with a cost recovery action under §107(a) would be inappropriate. This ruling should clarify that a DEC administrative consent order is sufficient to permit the settling party to bring a CERCLA contribution action.
The District Court granted summary judgment in favor of certain defendants on the grounds that Niagara had failed to raise a genuine issue of material fact as to whether hazardous substances had been released on defendants’ properties. Defendants had argued that Niagara’s failure to identify evidence that they had caused any release of hazardous substances entitled them to summary judgment. The Second Circuit reversed, holding that a party seeking contribution need not establish the precise amount of hazardous material discharged to demonstrate PRP liability and to move its CERCLA claims past the summary judgment stage; application of this standard will make it more difficult for PRPs to exit a litigation by moving for summary judgment. Whether the amount of hazardous waste deposited by a particular PRP is minimal does not erase liability, but presents an issue for appropriation of costs.
Former site owner Chevron, one of the defendants seeking summary judgment, argued that it could not be held liable for Niagara’s costs because it never engaged in any activities that could have produced manufactured gas production waste—the type of waste Niagara was required to remediate under the consent order. The Second Circuit held, however, that because Niagara was required to investigate and identify all hazardous waste, it could seek contribution for Chevron’s share of the investigation costs.
The Second Circuit also overruled the District Court’s finding that a genuine issue of material fact existed as to whether Niagara’s cleanup was consistent with the National Contingency Plan (“NCP”). Noting the presumption that actions undertaken by the government are consistent with the NCP, the court held that a PRP could establish consistence by conducting a response action under the monitoring and ultimate approval of a state environmental agency. Niagara’s adherence to the DEC consent order established the cleanup’s NCP consistency.
March 2, 2010
The US Environmental Protection Agency today announced that it has decided to add the Gowanus Canal in Brooklyn, NY to the National Priorities List, which will render the canal a Superfund site under the federal Superfund statute, the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”).