September 2, 2010
On August 16, the White House Council on Environmental Quality (“CEQ”) issued a report (“CEQ Report”) summarizing the findings of a thirty-day review of the U.S. Department of Interior (“DOI”) Minerals Management Service’s (“MMS”)[1] environmental polices for oil and gas exploration and development in the Outer Continental Shelf (“OCS”). CEQ found that MMS’s reliance on the “tiering process” (where prior programmatic environmental reviews are incorporated into later site-specific analyses) was not transparent and led to confusion and concern regarding whether MMS sufficiently evaluated and disclosed environmental impacts. CEQ stated that in order for information from one level of review to be effectively included in subsequent reviews, assumptions made by MMS must be independently tested by other agencies, and site-specific environmental impacts should also be evaluated.
The report presents seven recommendations “to promote robust and transparent implementation of the National Environmental Policy Act (NEPA) practices, procedures, and policies.” (CEQ Report at 4.) BOEM, the successor agency to MMS, has committed to using these recommendations as guideposts to reform its NEPA policies and practice.
CEQ’s recommendations to BOEM are:
- Perform careful and comprehensive NEPA review of individual deepwater exploration, operation, development, production, and decommissioning activities, including site-specific information where appropriate.
- Track and take into account all mitigation commitments made in NEPA and decision documents that are relied upon in determining the significance of environmental impacts, from the initial Programmatic EIS through site-specific NEPA analyses and decision.
- Ensure that NEPA analyses fully inform and align with substantive decisions at all relevant decision points; that subsequent analyses accurately reflect and carry forward relevant underlying data; and that those analyses will be fully available to the public.
- Ensure that NEPA documents provide decisionmakers with a robust analysis of reasonably foreseeable impacts, including an analysis of reasonably foreseeable impacts associated with low probability catastrophic spills for oil and gas activities on the OCS.
- Review the use of categorical exclusions for OCS oil and gas exploration and development in light of the increasing levels of complexity and risk and the consequent potential environmental impacts associated with deepwater drilling. Determine whether to revise these categorical exclusions.
- Continue to seek amendments to the Outer Continental Shelf Lands Act to eliminate the 30-day decisional timeframe for approval of submitted Exploration Plans.
- Consider supplementing existing NEPA practices, procedures, and analyses to reflect changed assumptions and environmental conditions, due to circumstances surrounding the BP Oil Spill.
CEQ also solicited public comments to assist its review of MMS’s environmental policies and practices. Among the thirty comments that CEQ received are those stating that Environmental Impact Statements (“EIS”) should be prepared with a greater level of specificity, and individual lease sales should require an EIS that comprehensively evaluates all stages of OCS activity; that categorical exclusions have not been applied appropriately, and their use has enabled MMS to avoid further analyses and public participation at every stage of oil and gas development; and that procedures for oil and gas development should be published as rules, rather than guidelines, not guidelines to ensure compliance.
The CEQ Report details the review process used by MMS prior to undergoing reform, linking to the environmental documents that the agency relied on in authorizing activities in the OCS. Additionally, it identifies the BP oil spill as significant new information that likely requires MMS (now BOEM) to reevaluate the conclusions it reached in prior NEPA reviews, environmental analyses and studies.
Following the release of the CEQ Report, Secretary of the Interior Ken Salazar and BOEM Director Michael R. Bromwich announced that the DOI will undertake a comprehensive review of its NEPA policies and use of categorical exclusions for offshore oil and gas development activities. During this review, BOEM will restrict its use of categorical exclusions to activities involving “limited environmental risk.” Development activities that potentially involve significant environmental risk, and which previously fell within a categorical exclusion, will need individual environmental assessments. A notice of this comprehensive review will be published in the Federal Register. BOEM stated that its new approach to NEPA will take into account the CEQ Report’s recommendations.
BOEM Director Bromwich’s August 16 memo regarding the use of categorical exclusions in the Gulf of Mexico region is available here.
[1] MMS is undergoing reform and reorganization and has been renamed the Bureau of Ocean Energy Management, Regulation and Enforcement (“BOEM”).
August 26, 2010
In a significant and surprising development, on August 24 the Solicitor General of the United States filed a brief in the Supreme Court asserting that a groundbreaking climate change decision by the Second Circuit Court of Appeals should be vacated and remanded for further consideration.
The brief, submitted on behalf of the Tennessee Valley Authority (“TVA”), a defendant in the Second Circuit case, Connecticut v. American Electric Power Co., 582 F.3d 309 (2d Cir. 2009), forcefully asserts that:
- as a matter of judicial self-restraint (under non-constitutional prudential standing doctrine), federal courts should decline to hear cases alleging that global warming creates a common law nuisance because “courts – when no statute is in place to provide guidance – are simply not well-suited to balance the various interests of, and the burdens to be borne by, the many entities, groups and sectors of the economy that, although not parties to the litigation, would be affected by a grievance that spans the globe,” and
- the predicate for the Second Circuit’s decision, that common law nuisance claims had not been displaced by EPA action, is “no longer true” because “EPA has now taken final action that, as of January 2, 2011, makes carbon dioxide subject to regulation under the [Clean Air] Act.”
In his brief, the Solicitor General requests that the Supreme Court grant the writ of certiorari, vacate the judgment of the Second Circuit, and remand the case for further proceedings to consider these issues.
The Solicitor General’s brief parts ways to a certain extent from arguments advanced by power companies in their petition for Supreme Court review, but nonetheless forcefully advances a number of arguments against using common law nuisance actions to reduce greenhouse gas emissions through case-by-case adjudication. The brief will likely take many in the climate law community by surprise, because the federal government has been perceived recently as an advocate for stronger climate regulation, and the threat of nuisance litigation may help spur legislative and/or regulatory action. One advocate reacted to the filing by stating that he felt like he’d been stabbed in the back. Some of the more powerful statements in the Solicitor General’s brief include:
- The medium that transmits injury to potential plaintiffs is literally the Earth’s atmosphere – making it impossible to consider the sort of focused and more geographically limited effects characteristic of traditional nuisance suits targeted at particular nearby sources of water or air pollution.
- Courts should not “sit as arbiters of scientific and technology-related disputes” and as “de facto regulators of power plants and other sources of pollution.”
- Public nuisance cases involving climate change are ill-suited to judicial resolution because they “present a unique confluence of a vast category of potential plaintiffs who may sue any among a vast category of potential defendants by alleging that their actions affected the entire Earth.”
The state, municipal and land trust plaintiffs can be expected to mount significant arguments against Supreme Court review and in favor of the Second Circuit’s decision. We will provide an update after those filings have been lodged.
- A copy of the brief may be accessed here (pdf)
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.
August 5, 2010
As a result of tax law provisions enacted as part of the latest New York State budget, participants in the New York State Brownfield Program who are eligible for tax credits will be required to defer credits over $2M. The Budget adopted late Tuesday (August 3, 2010) added sections 33 and 34 to the New York Tax Law, which provide for a deferral of numerous New York State tax credits, including those provided by the Brownfield Cleanup Program (“BCP”). Section 33 provides that cumulative tax credits in excess of $2 million dollars, taking into account all affected credits, will be subject to the deferral. The deferral will apply to credits that could otherwise have been claimed in tax years 2010, 2011, and 2012. While Section 34 provides that credits can be claimed beginning in tax year 2013, such payments will be without interest. Deferred refundable tax credits such as the BCP credits may be applied by claiming 50 percent of the deferred balance in tax year 2013, 75 percent of the remaining deferred refundable credit balance in tax year 2014, and the balance of the refundable credit balance in tax year 2015. The deferral affects all three categories of BCP tax credits: redevelopment, remediated brownfield real property, and environmental insurance.
Taxpayers who are subject to the deferral for multiple categories of tax credits—not just BCP credits—must allocate the $2 million not subject to deferral pro rata based on the relationship that each category of tax credit bears to the total credits that the taxpayer would otherwise have been entitled to claim.
The legislature did not act on any of the other pending proposals that had been advanced, including proposals to cap credits retroactively, restrict the eligibility to obtain qualified tangible property credits, and impose a 50% tax deferral on BCP and other tax credits.
August 2, 2010
In a July 21 email to wildlife stakeholders, the New York State Department of Environmental Conservation (“DEC”) announced that draft revisions to the State Endangered Species Act (“ESA”) Regulations, 6 N.Y.C.R.R. Part 182, pursuant to Article 11 of the Environmental Conservation Law (“ECL”), were ready for public review and comment and would be published in the State Register, Environmental Notice Bulletin, and on DEC’s website on August 4.
If promulgated as proposed, the State ESA regulations will be significantly changed. Several sections have been added, including how DEC will list endangered and threatened species and species of special concern; requirements for recovery and restoration plans; requests for determination whether a specific action is subject to Part 182; and penalties and enforcement for violations. The most significant changes are the new sections regarding “incidental take permits.” The draft regulations define “incidental take” as “any taking of a species listed as endangered or threatened in Part 182.5 and otherwise prohibited by section 11-0535 of the [ECL] that is incidental to, and not the intended purpose of, an otherwise lawful activity.” Proposed 6 N.Y.C.R.R. § 182.2(k). “Take” or “taking” would be defined as “pursuing, shooting, hunting, killing, capturing, trapping, snaring and netting of any species listed as endangered or threatened in this Part, and all lesser acts such as disturbing, harrying or worrying.” Id. § 182.2(y). This proposed definition is similar to the definition of “take” under the federal ESA, where it is defined as “to harass, harm, pursue, hunt, shoot, wound, kill, trap, capture, or collect, or to attempt to engage in any such conduct.” 16 U.S.C. § 1532(19).
The proposed regulations state that “any activity that is likely to result in the take or a taking of any species listed as endangered or threatened in this Part as determined by the [DEC] . . .” must be done pursuant to an incidental take permit. Proposed 6 N.Y.C.R..R § 182.11. The permit application will have to include a mitigation plan and implementation agreement, an analysis of whether being issued the permit would jeopardize the continued existence of the species’ population, a description of ways to modify the project to minimize or completely avoid a take of the species, and a certification statement, in addition to describing the proposed project and its potential impacts to the listed species.
Significantly, the applicant will have to demonstrate that measures taken pursuant to the mitigation plan will result in “a net conservation benefit to the listed species,” which is defined as:
[A] successful enhancement of the species’ overall population or contribution to the recovery of the species within New York. To be classified as a net conservation benefit, the enhancement or contribution must benefit the affected species listed as endangered or threatened in this Part or its habitat to a greater degree than if the applicant’s proposed activity were not undertaken.
Id. § 182.2(o). Based on recently issued State ESA Permits, a net conservation benefit most likely may be demonstrated by measures to set aside critical habitat or create new habitat for the listed species, depending on the species affected. Applicants also must include a monitoring plan and a description and guarantee of how the plan will be funded. For example, the applicant may post a performance bond that will cover habitat monitoring costs.
An applicant’s permit application will also have to identify involved persons, the timeline for implementing the plan (which will become the permit term), specify the source of funding, and be signed by all involved persons. DEC will issue an incidental take permit if it determines that any taking will be incidental to, and not the purpose of, the proposed activity, and there will be a net conservation benefit to the species. The Department will base its decision “upon the best scientific and other information that is reasonably available to [DEC].” Id. § 182.12.
These new regulations, as evidenced by the recently issued ESA permits, will add a regulatory hurdle to projects proposed in areas where there may be a take of a listed endangered or threatened species. Developers previously addressed a project’s potential impacts to such species during the State Environmental Quality Review Act (“SEQRA”) process. Now, they will have to go through two processes – a SEQRA review process and a separate ESA permitting process. This independent permitting jurisdiction means that DEC now will be a SEQRA “involved agency.” This means DEC will have formal commenting authority, and may even claim “lead agency” status in certain matters, potentially displacing local town or village boards, and driving the entire SEQRA review process. Regardless, unless the project’s mitigation measures result in a net conservation benefit to the listed species, as opposed to just minimizing any potential adverse impacts under SEQRA, DEC will not have legal authority to issue a State ESA Permit.
As we stated previously, when planning a project, developers should try to ensure that any potential impacts to listed species are considered and avoided in a manner consistent with DEC’s regulations.
Update (August 4, 2010):
Today, DEC published its proposed ESA regulations. DEC will accept comments from August 4 – September 20, 2010. Comments may be submitted via email to: Proposed Rulemaking Part 182 – Endangered and Threatened Species of Fish and Wildlife; Species of Special Concern or by mail to:
Dan Rosenblatt
New York State Department of Environmental Conservation
628 Broadway
Albany, New York 12233-4750
For additional information on submitting comments:
July 28, 2010
On June 28, 2010, a coalition of environmental groups[1] (“Petitioners”) filed an Article 78 Petition (“Petition”) in court challenging the New York State Department of Environmental Conservation’s (“NYSDEC”) April 2010 issuance of a State Pollution Discharge Elimination System (“SPDES”) General Permit that sets forth requirements applicable to municipal separate storm sewer systems (“MS4s”).[2] The General Permit authorizes discharges of stormwater from “small MS4s,” those municipal storm water systems serving communities with a population between 10,000 to 100,000 people.[3] New York regulates MS4s via its SPDES program, which implements the Clean Water Act (“CWA”) pursuant to delegated authority.[4]
In New York a permit is required for stormwater discharges (i.e., runoff over land or impervious surfaces into water bodies) from MS4s and the permit must include “controls to reduce the discharge of pollutants to the maximum extent practicable.” 33 U.S.C. § 1342(p)(3)(B). For small MS4s, one such control is the development and implementation of a Storm Water Management Plan (“SWMP”).
Petitioners challenged the 2010 MS4 General Permit, alleging it fails to achieve state water quality standards because it would allow stormwater pollution to continue at existing levels instead of reducing pollution. Petitioners alleged four causes of action:
- NYSDEC’s issuance of the General Permit was unlawful because it does not require MS4s to reduce their discharges of pollutants to the “maximum extent practicable.” Petitioners alleged that NYSDEC’s reliance on the State Stormwater Management Design Manual’s technical standards for post-construction stormwater is unlawful because that manual is outdated, and does not sufficiently reduce pollutant discharges to the “maximum extent practicable.” Additionally, Petitioners alleged that the General Permit authorization of an optional “banking and credit system” – allowing off-site stormwater pollution reductions to satisfy on-site requirements – would “violate the CWA’s mandate that post-construction stormwater discharges from new development and redevelopment be reduced to the maximum extent practicable” because the banking and credit system is not limited to instances where on-site compliance is impracticable. (Petition, ¶¶ 65-69.)
- NYSDEC issuance of the General Permit was unlawful because it does not ensure compliance with State total maximum daily loads (“TMDL”) (a kind of pollution loading allocation) for water bodies where MS4 discharges contribute to violations of the water body’s water quality standards. Petitioners alleged that the General Permit does not include limitations necessary to meet water quality standards, does not implement a TMDL wasteload allocation, and does not include a compliance schedule ensuring that permittees will achieve compliance with water quality standards “within the shortest reasonable time” if permittees cannot immediately comply with water quality standards. Additionally, Petitioners alleged that the General Permit does not ensure that sufficient measures will be taken to meet pollution reduction targets set for bodies of water that the State has prioritized for cleanup (e.g., Long Island Sound). (Petition, ¶¶ 71-78.)
- NYSDEC issuance of the General Permit was unlawful because it does not “include requirements to take samples and measurements representative of the quantity and character of the monitored discharge” as required by State and federal law. (Petition, ¶¶ 80-81.)
- Because the General Permit authorizes MS4s to develop their own effluent limitations (including SWMPs and a banking and credit system), which “are not subject to substantive DEC review and approval, public comment to DEC, and/or the opportunity for a hearing before a hearing [sic] before DEC,” Petitioners allege the permit creates a scheme of self regulation prohibited by the Clean Water Act. (Petition, ¶¶ 83-90.)
As a practical matter this challenge to the MS4 General Permit could have State-wide impacts, as the MS4 General Permit applies to MS4 municipalities across New York State—not just those on Long Island Sound. If successful, this litigation could ultimately result in significant new pollution control mandates for already financially strapped municipalities. Enhanced requirements for pollution reduction in TMDL watersheds could mean reduced development opportunities in those MS4 communities, some of which are already struggling with a shrinking tax base.
[1] Natural Resources Defense Council, Riverkeeper, Waterkeeper Alliance, Soundkeeper, Save the Sound, Peconic Baykeeper, Hudson-Raritan Baykeeper, and Hackensack Riverkeeper.
[2] GP-0-10-002, effective May 1, 2010. An MS4 is a conveyance or system of conveyances owned or operated by a State, municipality, association, public body (including special districts under State law), Indian tribe or authorized Indian tribal organization, or designated and approved management agency that discharges into waters of the United States; which is “designed or used for collecting or conveying storm water;” and is not a combined sewer or part of a Publicly Owned Treatment Works. 40 C.F.R. § 122.26(b)(8).
[3] NYSDEC classifies all MS4s as small MS4s except for those in New York City. (Petition, ¶ 46.)
[4] The CWA prohibits the discharge of pollutants to surface waters unless the discharge is pursuant to a National Pollutant Discharge Elimination System (“NPDES”) permit. 33 U.S.C. § 1342. In New York, NYSDEC has assumed MS4 permitting authority through the State Pollutant Discharge Elimination System (“SPDES”) General Permit program. See ECL §§ 17-0801 et seq.
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