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 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.
June 4, 2010
In response to the oil spill from the Deepwater Horizon well and drilling rig in the Gulf of Mexico, the White House Council on Environmental Quality (“CEQ”) announced on May 17, 2010 that it would conduct a thirty-day review of the U.S. Department of Interior, Minerals Management Service’s (“MMS”) environmental polices for oil and gas exploration and development in the Outer Continental Shelf. CEQ has primary authority for implementing the National Environmental Policy Act (“NEPA”) and may review and require that agencies revise their policies if they do not fully comply with NEPA. 40 C.F.R. § 1507.3. CEQ stated that the review will “be holistic, i.e., from leasing decisions to drilling and production.” 75 Fed. Reg. 29996, 29996 (May 28, 2010).
MMS implements a four-stage process for oil and gas development, which includes: “(1) [p]reparing a nationwide 5-year oil and gas development program, (2) planning for and holding a specific lease sale, (3) approving a company’s exploration plan, and (4) approving a company’s development and production plan.” 75 Fed. Reg. at 29996. The agency must consider NEPA’s requirements during each stage. However, MMS has also promulgated regulations defining certain “categorical exclusions,” or categories of actions for which the agency found not to have a significant effect on the environment, and therefore, an individual environmental review is not prepared.
In April 2007, MMS developed a multi-sale environmental impact statement (“EIS”) for lease sales in the Outer Continental Shelf, which included the Deepwater Horizon project. Based on an environmental assessment under the multi-lease sale EIS, MMS determined that the Deepwater Horizon project fit within the following categorical exclusion:
Approval of an offshore lease or unit exploration. [sic] development/production plan or a Development Operation Coordination Document in the central or western Gulf of Mexico (30 CFR 250.2) except those proposing facilities: (1) In areas of high seismic risk or seismicity, relatively untested deep water, or remote areas, or (2) within the boundary of a proposed or established marine sanctuary, and/or within or near the boundary of a proposed or established wildlife refuge or areas of high biological sensitivity; or (3) in areas of hazardous natural bottom conditions; or (4) utilizing new or unusual technology.
516 DM 15.4(C)(10).
Because of this determination, MMS did not analyze the potential significant adverse environmental impacts of the Deepwater Horizon project.
As part of its review, CEQ is requesting public comment on current MMS NEPA practices, policies, and procedures relating to oil and gas exploration and development in the Outer Continental Shelf. Specifically, CEQ is requesting input on the following issues:
- Whether substantive issues exist and how those issues should be analyzed during the NEPA process.
- Whether the current permitting process and NEPA submissions allow for comprehensive evaluation of all relevant issues.
- Whether using categorical exclusions has been effective for oil and gas activities in the Outer Continental Shelf.
- Whether MMS’s use of Categorical Exclusion Review has been an effective tool for reducing paperwork without compromising necessary review under NEPA.
- Whether public engagement has been a part of MMS NEPA practice, particularly with respect to categorical exclusions.
- What resources are available to federal, tribal, state, and local government agencies to participate in MMS NEPA reviews.
Comments should be submitted “as soon as possible” because CEQ’s review ends June 17. 75 Fed. Reg. at 29997.
April 29, 2010
On April 28, 2010, Secretary of the Interior Ken Salazar approved Cape Wind Associates, LLC’s proposed $1 billion, 130-turbine wind farm off the coast of Cape Cod in Nantucket Sound, about five miles from the nearest shoreline. The project, when constructed, would be the first wind energy project on the Outer Continental Shelf, and would generate enough energy to power more than 200,000 homes in Massachusetts. The scale of the project is significant; it would cover approximately 25 square miles, and the tip of the highest blade of each turbine would reach 440 feet above the surface of the water.
Supporters, including the Sierra Club and Greenpeace, argue that the project would provide a clean, renewable source of energy and hundreds of construction jobs, and would decrease the region’s reliance on fossil fuels and benefit the environment by lowering emissions of greenhouse gases.
Opponents have focused on negative impacts to natural beauty and the surrounding area’s historic landmarks. In addition, they claim that infrastructure improvements will result in sharply increased costs over those for conventional power. The Wampanoag tribe, which requires unobstructed views of the sunrise for sacred ceremonies, has announced that it will challenge the project for violations of tribal rights.
In response to concerns expressed during the consultations with tribes and the Advisory Council on Historic Preservation, the Department of the Interior (“DOI”) required the developer to change the design and configuration of the wind farm to mitigate potential visual and historic impacts.
This is not the final hurdle that this project must clear, however. The Federal Aviation Administration has yet to make a final determination on the project and the developer has not yet entered into a contract with the local utility, National Grid, to carry the power. Nine state and local permits are being appealed in the courts, and nearly a dozen parties have filed notices of intention to sue for violations of various environmental laws and regulations.
Despite the remaining steps before construction may begin, DOI’s approval of the Cape Wind project is seen as a positive sign for several other proposed offshore wind projects along the eastern seaboard. Each project will face its own complex federal, state and local permitting issues, but DOI’s action on Cape Wind will likely provide valuable political momentum to other proposed offshore wind projects.
Read the full DOI press release here.
April 28, 2010
On Friday, April 23, the New York State Department of Environmental Conservation (“NYSDEC”) announced that it would exclude the New York City and Syracuse drinking water watersheds from its Final Supplemental Generic Environmental Impact Statement (“FSGEIS”) concerning natural gas development in the Marcellus Shale. Unless and until NYSDEC creates a separate Generic Environmental Impact Statement applicable to the New York City and Syracuse watersheds, each permit application to drill for gas in these areas must be accompanied by a site-specific Environmental Impact Statement (“EIS”). Because an EIS can be lengthy, complicated, and costly—especially if contested in litigation—DEC’s position may discourage gas companies from drilling in these watersheds; some accounts have characterized NYSDEC’s decision as a de-facto ban on drilling in these areas. However, the regulatory limbo imposed on the New York City and Syracuse watershed areas is not permanent; according to the Associated Press, “[t]he DEC and the state Health Department will work with Syracuse, New York City and communities within the watersheds to develop special restrictions for drilling companies seeking permits in the watershed.”
NYSDEC’s decision reflects the competing demands it faces with respect to natural gas development in New York state. The New York City watershed supplies drinking water to over nine million people; the Syracuse watershed supplies roughly 200,000 people. Due to the high quality of this water, both cities are exempt from federal regulations requiring drinking water filtration. Environmentalists and city officials have consistently called for a state ban on natural gas development in the watershed areas in order to protect drinking water sources. However, NYSDEC Commissioner Alexander “Pete” Grannis has expressed concern that an outright ban on drilling in these areas, much of which is privately owned, could give rise to takings claims from property owners deprived of potentially lucrative leasing opportunities.
NYSDEC’s compromise, which was announced without an official written statement, may lower the temperature of the debate surrounding gas production in the Marcellus Shale. It remains to be seen whether the Department’s present action will ultimately result in a solution that is both politically and environmentally tenable.
April 15, 2010
A recent decision of the New York State Department of Environmental Conservation (“NYSDEC”) highlights the growing tension between a renewed national interest in nuclear energy and established principles of environmental protection. Last week, NYSDEC staff denied Entergy Nuclear Operations (“Entergy”) a water quality certification necessary for the continued operation of Indian Point Units 2 and 3 (collectively “Indian Point”), located in Buchanan, New York. As part of its license renewal application with the Nuclear Regulatory Commission (Indian Point’s licenses expire in 2013 and 2015), Entergy, the plant’s operator, applied for a Water Quality Certificate (“WQC”) pursuant to Section 401 of the Clean Water Act. In a letter dated April 2, 2010, NYSDEC informed Entergy that it would not issue a WQC because Indian Point’s activities violated state water quality standards and the Clean Water Act. Without the WQC, the Nuclear Regulatory Commission cannot renew the licenses.
NYSDEC’s decision focused on Indian Point’s cooling water intake structures, which draw up to 2.5 billion gallons of water daily from the Hudson River. It based its denial on the “significant adverse impact upon aquatic organisms” caused by these structures, on the leakage of radioactive material into the river, and thermal discharges into the river. The Hudson River’s cold water is critical to the steam-powered process, triggered by the heat of nuclear reactions, that generates electricity.
Since the power plant’s inception, fish and other organisms have been killed or injured by the operation of the cooling water intake structures. The structures use “once through” technology to draw in vast quantities of water – containing fish and organisms, which are discharged back to the river after the water is used. Larger organisms, such as fish, are “impinged,” or crushed against the cooling water intake structures as they are sucked against the machinery. Smaller organisms, such as eggs, plankton and larvae, are “entrained,” or drawn into the cooling water intake structures, where they are injured or killed. In its application for a WQC, Entergy proposed the continued use of once-through technology, combined with the use of cylindrical wedge-wire screens to reduce impingement and entrainment.
NYSDEC determined that Entergy’s proposal did not represent the “best technology available for minimizing adverse environmental impact,” a standard required by New York regulations, 6 NYCRR § 704.5, and the Clean Water Act, CWA § 316(b), 33 U.S.C. § 1326(b). NYSDEC stated that the “closed-cycle” cooling system, which recycles cooling water within the plant, represented the best technology to minimize entrainment and impingement and was “available” to Entergy despite being expensive to implement. In contrast, NYSDEC determined that the addition of cylindrical wedge-wire screens to once-through intake structures not a “reasonable alternative intake technology” because it would only “reduce adverse environmental impacts;” it would not “minimize” them. Specifically, NYSDEC stated that the utility of the proposed screening technology was not proven at a facility using as much water as Indian Point, and, according to available studies, would not result in sufficient reduction in entrainment.
In addition to its determinations under the “best technology available” standard, NYSDEC also stated that the Indian Point’s once-through cooling water intake structures do, and would continue to, result in the unlawful “taking,” or harm, to the shortnosed sturgeon (a New York endangered species) and the Atlantic sturgeon (a federally protected species) under state and federal law. Finally, the dangers posed to fish by impingement and entrainment, thermal discharges, and radioactive leakages would also render the water surrounding Indian Point unsuitable for its designated best purpose under state law – secondary contact recreation and fishing. See 6 NYCRR § 701.11.
Industry, environmentalists, and regulators have battled over the environmental damage caused by Indian Point’s once-through cooling system for the nearly four decades since the plant opened. NYSDEC’s denial letter recites the complex history of the statutory, regulatory, and advocacy factors which resulted in Indian Point’s continued use of once-through cooling technology in the face of state and federal “best technology available” requirements. By specifically endorsing closed-cycle cooling technology as “available” and “feasible” and rejecting Entergy’s proposed alternative as environmentally inadequate, NYSDEC underscored that it does not interpret its cooling water intake regulations as grounds for traditional cost-benefit analysis. In contrast, EPA regulations interpreting CWA § 316(b), 40 CFR § 125.90 – 125.99, are influenced by cost-benefit analysis; they allow less expensive alternatives to closed-cycle technology and allow the agency to issue variances based on cost-benefit analysis. Last year, in Entergy v. Riverkeeper, 129 S. Ct. 1498 (2009), a divided Supreme Court upheld these regulations. While the Court held that § 316(b) does not bar EPA from using cost-benefit analysis, it noted that the statute does not require cost-benefit analysis, either.
NYSDEC’s decision has not caused Indian Point’s immediate shutdown because Indian Point’s current operating licenses have not yet expired. Furthermore, Entergy may appeal the decision administratively by requesting a hearing within 30 days. According to the New York Times, Entergy may lobby Congress to repeal the Nuclear Regulatory Commission’s requirement that licensees hold a state water quality certificate. The result for Entergy and Indian Point will likely have national repercussions in light of the Obama Administration’s greater emphasis on nuclear energy as a non-fossil fuel source of electricity.
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.
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