Supreme Court Overturns EPA Limits on Power Plants

On June 29, the United States Supreme Court nixed the United States Environmental Protection Agency’s 2012 Mercury and Air Toxics Standard, limiting emissions of mercury and other pollutants from power plants. The challengers argued that the $9.6 billion cost of complying with the standard outweighed the benefit of its application, and that EPA impermissibly failed to consider cost in deciding whether to regulate toxic emissions from power plants.

The Supreme Court held that EPA abused its discretion by ignoring cost, even under the deferential standard established in Chevron USA Inc. v. Natural Resources Defense Council, Inc. The Court held that in directing EPA to regulate power plants if it “finds such regulation is appropriate and necessary,” Section 112 of the Clean Air Act requires “at least some attention to cost.” Writing for the majority, Justice Scalia said, “One would not say that it is even rational, never mind ‘appropriate,’ to impose billions of dollars in economic costs in return for a few dollars in health or environmental benefits.”

EPA argued that it is not required to consider cost in the initial decision regarding whether to regulate power plants because it can consider cost when deciding on the extent of regulation. The Court rejected this argument, finding that “[c]ost may become relevant again at a later stage of the regulatory process, but that possibility does not establish its irrelevance at this stage.” The majority found that cost must be considered, but went on to say that it is within the agency’s discretion to consider how to evaluate costs, and even what constitutes a “cost.” The Court stated that cost “includes more than the expense of complying with regulations; any disadvantage could be termed a cost.”

--Kathryn Oehlschlager

For more information, contact Kathryn Oehlschlager at klo@bcltlaw.com or (415) 228-5458.

Ninth Circuit Rejects Environmental Groups’ RCRA Claims Against Railyard Operators

The Ninth Circuit has affirmed the dismissal of claims by environmental groups attempting to characterize air emissions from California railyards as “disposal” of waste under the Resource Conservation and Recovery Act (RCRA). 

In 2011, a coalition of environmental groups led by the NRDC filed a complaint in federal district court in Los Angeles alleging that particulate emissions associated with diesel locomotives at railyards in San Bernardino and Riverside Counties violated RCRA because those emissions constitute “disposal” of waste, and are therefore subject to the statute, which governs the disposal of solid and hazardous waste. The district court dismissed the plaintiffs’ complaint, concluding that the Clean Air Act, and not RCRA, applies to the emissions from the railyards.

The Ninth Circuit affirmed the district court’s dismissal in an opinion dated August 20, 2014. The court’s opinion cited the plain meaning of the RCRA statute—which excludes “emitting” from its definition of “disposal”—as well as the statute’s legislative history, which the court characterized as demonstrating an intent “to reduce the volume of waste that ends up in our nation's landfills.”

In reaching this conclusion, the court rejected the plaintiffs’ invitation to fill a “gap” in the statutory scheme for regulating air emissions from railyards, concluding that the particular emissions alleged to originate from the railyards are “indirect sources” of air pollutants that “fall entirely outside the ambit of federal regulation.”  The court did, however, note that diesel locomotives are regulated under EPA regulations implementing the 1990 amendments to the Clean Air Act, and that states may regulate indirect sources such as railyards through provisions of State Implementation Plans (SIPs) adopted under the Clean Air Act. 

The Ninth Circuit’s decision, Center for Community Action and Environmental Justice et al. v. BNSF Railway Co. et al., Case No. 12-56086, is available here.

-- Chris Jensen

For more information, contact Chris Jensen at (415) 228-5411 or cdj@bcltlaw.com.

Environmental Groups Petition EPA to Regulate Air Emissions from Oil and Gas Production and Fracking in Urban Areas

On Tuesday, May 13, 2014, a coalition of environmental organizations led by EarthJustice submitted a Petition to the United States Environmental Protection Agency calling for the regulation of air emissions associated with oil and gas wells, particularly fracking, under the federal Clean Air Act. The environmental groups allege that toxic pollutants emitted by these operations present health risks and that such health risks are increasing as fracking operations move closer to urbanized communities.

Due to the alleged risk to public health, the environmental groups:

urgently request[] EPA to exercise its authority under the Clean Air Act to list oil and gas wells (and associated equipment) located in the appropriate geographical areas as area sources, and set limits on hazardous air pollutant emissions from oil and gas wells and associated equipment in accordance with 42 U.S.C. §§ 7412(c), (d), (k), and (n)(4)(B).

The Petition also argues that EPA “has a responsibility under the Clean Air Act to protect people from the toxic air emissions [from oil and gas operations] nationwide, and under section 112(n)(4)B) it must do so.”

The Petition requests that EPA take two specific actions pursuant to the Clean Air Act:

1. Exercise its authority provided by the area source program of the Clean Air Act by listing oil and gas production wells (including fracking activities) as an area source. The Petition argues that the Clean Air allows regulation of “hazardous air pollutants from area sources [that] may individually, or in the aggregate, present significant risks to public health in urban areas,” that oil and gas activities can be properly classified as area sources, and that the Act provides authority to designate such area sources in metropolitan statistical areas (and/or consolidated metropolitan statistical areas) with a population in excess of one million; and
    
2. Set emissions standards for oil and gas production wells (and associated equipment) within the newly listed area source category in accordance with 42 U.S.C. §§ 7412(c)(2), 7412(d)(2)-(3), and 7412(k), that would require implementation of the “maximum achievable” degree of emission reduction.

Under the Clean Air Act, EPA is required to respond to the Petition. Although the Petition seeks a response within 180 days, the Clean Air Act imposes no specific deadline for EPA action.

There will almost certainly be future litigation over the issues raised in the Petition. The environmental groups that filed the Petition may sue EPA if the petition is denied, or if the Agency fails to act in response to the Petition. Alternatively, if EPA moves forward with some type of regulation of oil and gas production and fracking under the Clean Air Act, litigation would likely be brought by either environmental groups (claiming that the regulations are inadequate to protect human health), industry groups (challenging the basis and scope of any regulation of these activities), or both.

A copy of the petition is available here.

-- Tom Boer

For more information, contact Tom Boer at jtb@bcltlaw.com, or (415) 228-5413.

D.C. Circuit Rejects Another Clean Air Act Challenge, Upholds Fine Particulate Standard

The D.C. Circuit added to federal air quality regulators’ winning streak on Friday, upholding a 2013 rule that revises air quality standards for fine particulate matter.

The rule lowers the National Ambient Air Quality Standard (NAAQS) for fine particulate matter from 15.0 µg/m³ to 12.0 µg/m³, and also tightens monitoring requirements for particulate air pollution. Writing for a unanimous court, Judge Kavanaugh cited the “great deference” given to EPA’s evaluation of “competing bodies of scientific research” in rejecting the National Association of Manufacturer’s challenge to the revised  standard. The court also upheld revisions to the NAAQS that eliminate the use of “spatial averaging” of monitoring data to demonstrate compliance with the standard and require additional monitoring locations near heavily traveled roads in large metropolitan areas, as well as rejecting several procedural challenges to the sufficiency of EPA’s notice of the proposed rule and its response to industry comments.

The court’s decision is the latest in a string of cases in the D.C. Circuit (previously discussed here and here) and Supreme Court (discussed here) upholding EPA Clean Air Act rules. The common theme running through the majority decisions in each of these cases is the court’s willingness to defer to EPA’s technical expertise in setting air quality and emissions standard under the Clean Air Act.  EPA has achieved these positive judicial outcomes notwithstanding criticism that EPA at times requests technical deference to mask imperfections in the rule making process and that EPA staff lacks adequate industry-specific experience to be entitled to such deference.

The biggest test of judicial deference to EPA expertise in the field of air quality regulation is still to come, when the Supreme Court issues its ruling on a challenge to EPA’s “tailoring rule” for the regulation of greenhouse gas emissions from power plants and large industrial facilities. As Morgan Gilhuly and I have previously discussed in our commentary on the Supreme Court’s EPA v. EME Homer City Generation decision, proponents of the federal regulation of greenhouse gases hope that that these recent decisions foreshadow the outcome of the tailoring rule case. A decision in that case, Utility Air Regulatory Group v. EPA, No. 12-1146, is anticipated before the end of the current term in June.

The challenge to the fine particulate NAAQS was brought in National Manufactures Association v. EPA, No. 13-1069.  The court’s opinion is available here. 

-- Chris Jensen

For more information, please contact Chris Jensen at cdj@bcltlaw.com or (415) 228-5411.

Supreme Court Upholds EPA Interstate Air Pollution Regulations

The Supreme Court has upheld EPA regulations requiring reductions in SO2, NOx, and fine particle emissions in 28 states stretching from Texas to New York.

The regulations, known as the “Cross-State Air Pollution Rule” or “Transport Rule,” are intended to reduce interstate transport of air pollutants, and were enacted under the “Good Neighbor Provision” of the Clean Air Act, which requires states implementing federal Clean Air Act requirements to enact measures to avoid contributing “significantly” to nonattainment of air quality standards in other states. EPA adopted Federal Implementation Plans (FIPs) to meet the Good Neighbor Provision’s requirements after it concluded that the measures adopted  in the 28 State Implementation Plans (SIPs) at issue were inadequate.

The majority opinion, authored by Justice Ginsburg, concludes that EPA acted within its discretion in adopting a federal rule for cross-border pollution, and reverses a D.C. Circuit decision vacating the rule. Citing the plain meaning of the Clean Air Act, the Court rejects the argument that EPA was required to provide the states with an opportunity to revise their SIPs before adopting federal regulations. The Court also upholds EPA’s decision to take cost into account in allocating emissions reductions among upwind states. The majority opinion was authored by Justice Ginsburg and joined by Justices Roberts, Kennedy, Breyer, Sotomayor and Kagan. Justice Alito took no part in the consideration of the case. 

In his dissent, Justice Scalia (joined by Justice Thomas) argues that EPA abused its discretion by failing to give states an opportunity to modify their SIPs to meet the requirements of the Good Neighbor Provision before issuing federal implementation plans, and also took issue with EPA’s consideration of cost in setting emissions limits for upwind states, which he argues is prohibited by the plain language of the statute.

The lead case is EPA v. EME Homer City Generation, L.P., No. 12-1182.

-- Chris Jensen and Morgan Gilhuly

For more information, please contact Chris Jensen at cdj@bcltlaw.com, (415) 228-5411, or Morgan Gilhuly at rmg@bcltlaw.com, (415) 228-5460.

D.C. Circuit Upholds Most of Portland Cement MACT, Vacates “Unavoidable Malfunction” Defense

In a unanimous ruling issued earlier today, the D.C. Circuit largely upheld EPA regulations governing emissions of toxic air pollutants from Portland cement plants, while vacating a provision that created an affirmative defense for “unavoidable” equipment malfunctions.

The regulations, issued in February 2013, set limits for emissions of particulate matter, mercury, hydrochloric acid, and hydrocarbons from Portland cement manufacturing facilities. 

In rejecting several arguments advanced by environmental organizations challenging the regulations, the court held that EPA reasonably interpreted the Clean Air Act to allow the Agency to consider compliance costs in setting “beyond-the-floor” MACT limits for toxic air pollutants.  The court also rejected the argument that Section 112(d)(7) of the Clean Air Act should be interpreted as an anti-backsliding provision and held that EPA acted reasonably in extending the compliance date for all pollutants covered by the regulations when it revised the standard for particulate matter in the 2013 rule.

However, the court concluded that the creation of an affirmative defense for “unavoidable” equipment malfunctions exceeded EPA’s statutory authority.

The lead case is Natural Resources Defense Counsel v. EPA, Case No. 10-1371.

--Chris Jensen

For more information, contact Chris Jensen at cdj@bcltlaw.com, or (415) 228-5411.

Ninth Circuit Rejects Constitutional Challenge to California’s Low Carbon Fuel Standard

On September 18, the Ninth Circuit handed a major victory to the California’s program to control greenhouse gas emissions from transportation fuels, turning aside constitutional challenges to the program brought by ethanol and petroleum industry interests in Rocky Mountain Farmers Union v. Corey (No. 12-15131).

The case arose from rulings in two separate actions in the Eastern District of California involving California’s “Low Carbon Fuel Standard.” The Low Carbon Fuel Standard is intended to reduce greenhouse gas emissions attributable to the sale of transportation fuel in California by 10 percent by 2020.  To achieve this goal, the California Air Resources Board (CARB) set “carbon intensity” standards for different fuel feedstocks, which distinguished on a geographic basis among different ethanol sources and different categories of crude oil.  The district court found that the application of Low Carbon Fuel Standards to out-of-state ethanol and crude oil production violated the Dormant Commerce Clause of the U.S. Constitution by (1) facially discriminating against out-of-state ethanol, (2) impermissibly engaging in the extraterritorial regulation of ethanol produced outside of California, and (3) having the purpose and effect of discriminating against out-of-state crude oil production.

By a 2-1 vote, the Ninth Circuit reversed all three of these rulings.  In a strongly worded opinion, Judge Gould recognized California’s authority to “create a market that recognizes the harmful costs of products with high carbon intensity,” observing that “[t]he Commerce Clause does not protect Plaintiffs’ ability to make others pay for the hidden harms of their products merely because those products are shipped across state lines.”

The panel remanded to the district court with instructions to determine whether the Low Carbon Fuel Standard’s ethanol provisions have the purpose and effect of discriminating against interstate commerce, and if not, to apply the balancing test set forth in Pike v. Bruce Church, Inc., 397 U.S. 137 (1970).  The panel also instructed the district court to apply the Pike balancing test to the standard’s crude oil provisions.

The panel affirmed the district court’s holding that the provision of the federal Clean Air Act saving California’s motor vehicle emissions standards from preemption (Section 211(c)(4)(b)) does not authorize the Low Carbon Fuel Standard under the Commerce Clause.

--Chris Jensen and Morgan Gilhuly

For more information, please contact Chris Jensen, cdj@bcltlaw.com, (415) 228-5411, or Morgan Gilhuly, rmg@bcltlaw.com, (415) 228-5460.