April 19, 2011
On April 19, 2011, the U.S. Supreme Court heard oral arguments in American Electric Power v. Connecticut, a highly anticipated case that will determine whether states and land trusts may pursue reductions in power plant greenhouse gas (GHG) emissions under a federal common law public nuisance theory. The Supreme Court is reviewing a 2009 Second Circuit decision that found no jurisdictional bar to the climate change tort suit.
At oral argument, the Supreme Court justices focused largely on whether legislative and regulatory action on climate change had displaced federal common law remedies and whether the federal courts were competent to make the policy determinations required for the states’ desired injunction, lines of questioning that could present obstacles for the state plaintiffs. Justice Ginsburg, who joined a prior Supreme Court decision holding that the Environmental Protection Agency (EPA) could regulate GHGs under the Clean Air Act, noted skeptically that “the relief [the states are] seeking seems … to set up a district judge, who does not have the resources, the expertise, as a kind of super EPA.”
In what may be a silver lining for the plaintiffs, the industry defendants acknowledged that a decision under Article III standing or displacement grounds could allow future plaintiffs to pursue similar relief in state courts under state common law theories. Of course, any such challenges would be subject to potential standing and preemption constraints. As explained in a prior post, the Obama Administration also argued for reversal of the Second Circuit decision on behalf of defendant Tennessee Valley Authority, albeit on different grounds than the other defendants.
New York Solicitor General Barbara D. Underwood argued the case on behalf of the states and land trusts. Justice Sotomayor, who sat on the Second Circuit panel that originally heard the case but was nominated to the Supreme Court before the appellate court’s decision, has recused herself from the Supreme Court’s review and did not participate in the oral argument.
March 17, 2011
On March 16, 2011, the Environmental Protection Agency (“EPA”) proposed long-anticipated limits on power plant emissions of mercury and other hazardous air pollutants (“HAPs”) under Section 112 of the Clean Air Act (“CAA”). Along with recent emissions standards for industrial and commercial boilers and a new proposal for power plant GHG controls due out in July, EPA is undertaking a series of major CAA rulemakings at the same time its authority under that statute is facing legal and legislative attacks.
EPA’s latest rule would establish the first nationwide standards for power plant emissions of mercury, arsenic and other HAPs, with numeric limits based upon “maximum available control technology” as required under the 1990 CAA Amendments. The George W. Bush administration attempted to create a cap-and-trade program for power plant mercury emissions, which the D.C. Circuit Court of Appeals struck down in 2008. EPA’s new proposal would reduce mercury from approximately 525 coal and oil-fired power plants by 91 percent once fully implemented, and it covers a range of other pollutants that were not regulated under the Bush-era mercury rule.
Last month, under the pressure of a court deadline, EPA also finalized new emissions regulations for more than 200,000 industrial, commercial, and institutional boilers, covering sources ranging from power plants and refineries to apartment buildings and hospitals. Owners of smaller boilers with a heat input capacity of less than 10 million Btu per hour will not need to install new pollution controls, but are instead required to perform and document biennial boiler “tune-ups.” Moreover, while EPA released its boiler regulations pursuant to its judicially-imposed deadline, it simultaneously announced that it is formally reconsidering parts of those rules and that further changes may be forthcoming.
Finally, under a settlement with New York and other states, cities and non-profit organizations, EPA committed to proposing New Source Performance Standards (“NSPS”) for power plant greenhouse gas emissions (“GHG”) by July 26, 2011. The EPA is currently holding listening sessions to solicit input for that proposal, although legislation recently passed by the House Energy and Commerce Committee would preempt this and other EPA efforts to regulate GHG emissions under the CAA.
EPA’s upcoming NSPS proposal may also factor into a pending case before the Supreme Court, which will determine whether a coalition of states and land trusts may sue power plants to compel GHG reductions under a public nuisance theory. Responding to arguments that recent EPA climate regulations had displaced federal common law remedies, this week the state plaintiffs conceded that implementation of NSPS covering power plants GHG emissions would bar their suit, but argued that until such rules were finalized the case should be returned to the lower court and stayed pending EPA’s regulatory decision. Oral arguments in American Electric Power v. Connecticut are scheduled for April 19, 2011.
March 1, 2011
 On March 1, 2011, the Environmental Protection Agency (“EPA”) announced its plans to postpone the upcoming deadline for mandatory reporting of greenhouse gas (“GHG”) emissions, which is currently scheduled for the end of this month. EPA has not set a revised deadline, though the agency reported that it “is in the process of finalizing a user friendly online electronic reporting platform,” which it plans to unveil this summer.
EPA’s GHG Reporting Program arose out of a provision in the Consolidated Appropriations Act of 2008, requiring “mandatory reporting of greenhouse gas emissions above appropriate thresholds in all sectors of the economy of the United States.” EPA first proposed reporting requirements in March 2009 and finalized its initial regulations six months later, on October 30, 2009. Since then, the agency has issued a series of regulations expanding and clarifying the scope of reporting for various industries and activities, such as the mandatory disclosure of reporting facilities’ co-generation power units.
The GHG Reporting Program primarily covers GHG-emitting facilities, fossil fuel suppliers, and industrial gas suppliers whose aggregate GHG emissions exceed 25,000 metric tons carbon-dioxide equivalent (CO2e) per year, though facilities in certain emissions intensive source categories (e.g., cement manufacturing and petroleum refining) are universally covered. EPA has projected that the rule would cover approximately 10,000 sources, which are collectively responsible for 85-90 percent of total U.S. GHG emissions.
Covered facilities were required to begin monitoring their GHG emissions on January 1, 2010, and the deadline for their first annual reports was set to be March 31, 2011. EPA plans to make much of the data it collects publicly available, and the reported information is expected to inform recent and forthcoming efforts to regulate stationary source GHG emissions under the Clean Air Act. Earlier this year, EPA began phasing in the first GHG permitting requirements for certain new and modified major stationary sources, and the agency is legally obligated to propose GHG New Source Performance Standards (“NSPS”) for power plants by July 26, 2011.
EPA still plans to publish data submitted under the GHG Reporting Program “later this year,” though it is not clear when facilities will have to report their 2010 emissions. Instead, the agency promised to provide additional information on its deadline changes over the coming weeks.
EPA’s recent announcement comes on the heels of a Congressional vote which cast further uncertainty over the future of the agency’s suite of GHG regulations. On February 18, 2011, the House of Representatives passed a seven-month budget “continuing resolution” that would largely de-fund EPA’s GHG reporting registry and prevent EPA from spending any funds to implement its stationary source GHG regulations. The Senate has not taken up that bill, however, and the House has since passed a two week stop-gap resolution without the GHG provisions.
For more information on EPA’s GHG Reporting Rule and other climate-related initiatives, contact Jeffrey Gracer.
November 12, 2010
In anticipation of new greenhouse gas (“GHG”) restrictions set to take effect on January 2, 2011, the Environmental Protection Agency (“EPA”) released guidance on the GHG permitting determinations for new and modified power plants, industrial facilities, and other stationary sources.
The guidance is directed at regulated entities and state agencies, which have been delegated authority to implement the permitting provisions of the Clean Air Act. Next year, New York and most other states will begin to phase in GHG regulations for certain new and modified stationary sources. The EPA plans to take over GHG permitting in those states that refuse to adopt the GHG rules or are not prepared to do so.
A “tailoring” regulation finalized by EPA last June raised the emissions threshold for the new GHG limits. From January 2 through June 30, 2011, the regulations only cover stationary sources whose construction or modification would increase annual GHG emissions by at least 75,000 tons of carbon-dioxide equivalent and would also trigger the Clean Air Act’s Prevention of Significant Deterioration provisions for other pollutants. Starting in July, construction or modification that increases annual GHG emissions by at least 100,000 tons of carbon-dioxide equivalent could also trigger GHG control requirements.
EPA’s new guidance adopts a flexible interpretation of the “best available control technology” requirements for GHGs. While supporting the consideration of add-on technologies like carbon capture and sequestration systems, the agency acknowledges that such technologies present “significant logistical hurdles” that may render them inappropriate at the present time (GHG Guidance, p. 38). Control technologies are also most commonly selected based on the permit applicant’s primary purpose or objective, so the Clean Air Act would typically not require an applicant for a coal-fired power plant to switch to a less carbon-intensive fuel (e.g. natural gas or renewable energy) (id. at 29).
Instead, sources that trigger the GHG permitting requirements are more likely to be required to implement energy efficiency improvements, which are promoted throughout EPA’s guidance. For instance, EPA notes that “an applicant proposing to build a new facility that will generate its own energy with a boiler could also consider ways to optimize the thermal efficiency of a new heat exchanger that uses the steam from the new boiler” (id. at 32). Other options for GHG reductions include the use of certain types of biomass or implementation of a source-wide Environmental Management System.
The new guidance may impact sources not directly covered by the new GHG controls. With respect to permitting decisions for other pollutants, EPA instructs applicants and authorities to “consider how the control strategies under consideration may affect GHG emissions,” and certain control technologies may be rejected in part based on their projected contribution to climate change (id. at 42).
As implementation of its GHG regulations draws closer, however, EPA’s efforts are facing serious legal and legislative challenges. Suits pending in the D.C. Circuit seek to overturn several EPA rules regulating GHGs under the Clean Air Act, including the tailoring rule. In the Senate, meanwhile, a legislative proposal would delay EPA’s stationary source regulations for another two years.
August 24, 2010
On August 2nd, five electric power companies[1] filed a Petition for Certiorari with the Supreme Court, seeking review of a Second Circuit decision holding that power companies can be sued for creating a public nuisance by emitting greenhouse gases. The litigation began in 2004, when eight states, along with the City of New York and several private land trusts, brought an action against the nation’s five largest coal-burning power companies,[2] alleging that their greenhouse gas emissions create a nuisance by contributing to global warming. The Southern District of New York dismissed the case on the grounds that it posed non-justiciable political questions. Connecticut v. American Electric Power Co., 406 F.Supp.2d 265 (S.D.N.Y. 2005). The plaintiffs appealed, and on September 21, 2009, the Second Circuit issued an opinion reversing the case’s dismissal. Connecticut v. American Electric Power Co., 582 F.3d 309 (2d Cir. 2009). A more detailed analysis of the Second Circuit’s opinion can be found in an earlier SPR blog post.
Key issues raised in the petition to the U.S. Supreme Court by the power companies include:
- The national importance of resolving whether greenhouse gases can or should be regulated by the courts on a case-by-case basis;
- Whether court decisions are precluded by new federal regulations governing greenhouse gas emissions that were not in place at the time of the Second Circuit’s decision, such as EPA/NHTSA’s joint emissions standards for vehicles and EPA’s greenhouse gas Tailoring Rule for stationary sources;
- The prospect of a proliferation of cases seeking damages for alleged injuries caused by multiple defendants’ contribution to climate change;
- Whether plaintiffs have legal standing to sue;
- Whether the Second Circuit was justified in deviating from other recent federal court decisions in which common law claims against greenhouse gas emitters have been dismissed, such as California v. General Motors Corp., 2007 WL 2726871 (N.D. Cal. 2007); Native Village of Kivalina v. ExxonMobil Corp., 663 F.Supp.2d 863 (N.D. Cal. 2009) (appeal pending); Comer v. Murphy Oil USA, 2007 WL 6942285 (S.D. Miss. 2007), appeal dismissed for technical reasons, 585 F.3d 855 (5th Cir. 2009);
- Whether a court-imposed emissions cap requires policy decisions that are not within the proper province of the courts; and
- Whether the Second Circuit’s decision represents an unwarranted extension of the Supreme Court’s decision in Massachusetts v. EPA, 549 U.S. 497 (2007).
We will provide an update when the papers opposing Supreme Court review have been filed.
For more information on emerging climate change law and policy, contact Jeff Gracer.
[1] The petitioners are American Electric Power Company, Inc., its subsidiary American Electric Power Service Corporation, Duke Energy, Southern Company, and Xcel Energy.
[2] The named plaintiffs were American Electric Power Company, Inc., its subsidiary American Electric Power Service Corporation, Cinergy Corporation (since merged into Duke Energy), Southern Company, Xcel Energy, and the Tennessee Valley Authority.
August 10, 2010
On July 26th, the Fourth Circuit Court of Appeals dismissed a lawsuit brought by the State of North Carolina against the Tennessee Valley Authority (“TVA”) alleging that interstate air emissions from TVA power plants create a public nuisance. The dismissal set aside an injunction that would have required the installation of more than a billion dollars worth of emissions control technologies at four TVA plants in Alabama and Tennessee. North Carolina v. TVA, — F.3d —, 2010 WL 2891572 (4th Cir. Jul. 26, 2010).
The Fourth Circuit rejected the use of “vague public nuisance standards” to address activities that are expressly permitted and extensively regulated under the Clean Air Act. It stressed the potential for chaos among states resulting from a patchwork of nuisance injunctions and for disruption of expectations and reliance interests of those actors that have complied with the Act’s requirements. However, the Court refrained from completely preempting the field of air emissions regulation, noting that the Clean Air Act’s savings clause may allow for certain common law nuisance claims.
Citing principles of federalism, the Fourth Circuit also criticized the district court’s decision for its application of North Carolina law extraterritorially to TVA plants located in Alabama and Tennessee by crafting an injunction that relied on the emissions standards of a North Carolina state law. The three-judge panel highlighted the remedies that remain available to North Carolina, including the Clean Air Act’s Section 126 petition process, the comment period for State Implementation Plans, judicial review of EPA actions, as well as citizen suit remedies under the Clean Air Act.
While the precedential impact of the opinion is yet unclear, the participation of the attorneys general of sixteen other states, including New York’s Andrew Cuomo, in an amicus brief supporting the authority of states to bring public nuisance actions to abate interstate pollution signals the importance of the issue. Although the Fourth Circuit’s decision did not involve claims relating to greenhouse gas emissions, a recent petition for certiorari challenging the Second Circuit’s common law nuisance findings with respect to greenhouse gas emissions cited North Carolina v. TVA as evidence that comprehensive regulation under the Clean Air Act can displace federal common law nuisance claims. Connecticut v. American Electric Power Co., 582 F.3d 309 (2d Cir. 2009), petition for cert. filed, No. 10- (U.S. Aug. 2, 2010). This issue will continue to percolate in the courts unless and until it is resolved by the Supreme Court.
July 28, 2010
On July 6, 2010, the U.S. Environmental Protection Agency (“EPA”) announced a proposed rule to address air emissions that cross state lines and contribute to ozone and particulate matter pollution in the eastern half of the country. Many areas in the northeast cannot meet National Ambient Air Quality Standards (“NAAQS”) because of pollution from upwind states.[1] The rule would create Federal Implementation Plans (“FIPs”) to reduce sulfur dioxide (SO2) and nitrogen oxide (NOx) emissions from electric power plants in 32 states through a combination of direct abatement standards and a limited voluntary “cap-and-trade” emissions permit trading program.
Once adopted, the proposed rule will replace the 2005 Clean Air Interstate Rule (“CAIR”), which required states to develop State Implementation Plans (“SIPs”) to address interstate transport of SO2 and NOx.[2] CAIR allowed states to opt into a voluntary cap-and-trade program.[3] In a 2008 decision and subsequent decision on rehearing,[4] the D.C. Circuit remanded CAIR to EPA, holding the rule unlawful but declining to vacate it during the period of the agency’s reconsideration.
The basis of the court’s objections was that CAIR’s permit trading program did not contain absolute emissions limits for individual sources, and so could technically allow individual sources in upwind states to increase emissions by buying enough emissions allowances. The court found that this system violated the CAA, which requires SIPs to contain “adequate measures” prohibiting sources from “contribut[ing] significantly to nonattainment in … any other State …” or “interfere[ing] with the maintenance of” NAAQSs.
The newly proposed EPA rule aims to remedy these flaws. It relies on state-specific data to identify each state’s contribution to nonattainment or interference with NAAQSs maintenance in other states and uses this information to create a state-wide emissions budget and an enforceable FIP designed to reduce emissions in the state below that budget. States will have the option of replacing these FIPs with SIPs that achieve the same emissions reduction goals.[5] Within this framework, the rule allows trading of emissions allowances within each state, as well as limited interstate trading.
In addition to this primary proposal, EPA has also requested comment on two alternative schemes. Under the first alternative, interstate trading of emissions allowances would be prohibited, although trading among power plants within states would continue. Under the third option, emissions trading would be replaced completely with emissions rate limits.
The final rule, if it survives legal challenges, could have substantial impacts on air quality and also impose significant costs on industry. EPA estimates that its preferred approach would have annual health and welfare benefits amounting to $120-290 billion in 2014, including the prevention of 14,000 to 36,000 premature deaths, at an annual cost of compliance of $2.8 billion. The rule represents a central element of EPA’s wider effort to reduce ozone and particulate matter pollution in the eastern U.S., as evidenced by EPA’s recent adoption of more stringent SO2 and NOx standards.
EPA will be receiving public comment on each of the three proposed versions of the Air Transport Rule for 60 days following its publication in the Federal Register. Three public hearing will be conducted following the comment period, in locations to be announced in the Federal Register notice.
Dan Mach is a summer associate at Sive, Paget & Riesel, P.C.
[1] Factsheet, EPA, Proposed Transport Rule Would Reduce Interstate Transport of Ozone and Fine Particle Pollution, at 1 (July 6, 2010). See CAA 109(a), 42 U.S.C. § 7409(a).
[2] 70 Fed. Reg. 25,162 (May 12, 2005).
[3] EPA, Clean Air Interstate Rule: Basic Information, http://www.epa.gov/cair/basic.html (last visited July 16, 2010).
[4] North Carolina v. EPA, 531 F.3d 896 (D.C. Cir. 2008).
[5] EPA, Proposed Air Transport Rule, at 14.
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