Cross-posted at WLF’s Forbes.com contributor page
With a budget profoundly in the red and an unemployment rate hovering around 10%, one would think that elected officials and citizens’ groups in California would be figuring out how to move forward development of the massive shale “play” shown here to the right — The Monterey Shale. But instead, the same crowd that bestowed such regulatory gems as Proposition 65 on California’s business environment is busily plotting how to kill this golden goose.
Three proposals are currently advancing in the state Assembly to prohibit hydraulic fracturing in California until various studies can be done to definitively establish that the six decade-old gas extraction technique is 100% safe. The proposals eschew the traditional risk-based U.S. regulatory approach and embrace the European style of precaution, which demands ex post proof of safety even where no current evidence reveals environmental or health harms. Not surprisingly, a who’s who of activist groups support the bills, led by the Center for Biological Diversity, which has an ongoing suit against the state regarding hydraulic fracturing regulations. Even California’s state law schools are pitching in, with UC-Berkeley’s Center for Law, Energy and the Environment releasing a well-timed “report” calling for more controls.
“Let’s study the issue” is a non-threatening euphemism activists and government use in place of the scarier actual outcome sought: let’s forestall the activity being studied for as long as possible. New York’s moratorium on natural gas extraction has been dragging on for five years, with no timetable for release of the state health commission’s study of fracking (“I will continue to work on this until I am comfortable” says the Commissioner). While celebrity activists (or fracktivists as California-based think tank The Breakthrough Institute calls them) like Mark Ruffalo applaud the ponderous New York delays, jobs and revenue flow to neighboring states like Pennsylvania. Have any of the California legislators supporting the Assembly bills seen what natural gas development has done to nearby North Dakota’s economy?
The emergence of natural gas as an abundant, more efficient source of domestic energy than coal threatens the environmental activist movement’s utopian vision of alternative fuels. So hydraulic fracturing must be stopped. One supporter of a California moratorium from 350.org was clear on this: “We need a dramatic shift off carbon-based fuel: coal, oil and also gas,” calling natural gas “at best a kind of fad diet.” The three organizations listed as “co-sponsors” of one California fracking bill, AB 1301 – Center for Biological Diversity, Clean Water Action, and Food & Water Watch – each support outright bans on hydraulic fracturing.
The debate is ongoing in California, and as we learned from last year’s battle over mandatory biotech food labeling, when the public is fully educated about the negative ramifications of feel-good proposals, the best outcome for Californians can be reached. Here’s hoping that the facts can battle their way through the hype and emotion, so reasoned decisions can be made.
Featured Expert Column
Allison D. Wood, Hunton & Williams LLP
Guidance documents and letters setting forth so-called “agency-policy” present unique challenges to industry, particularly in the context of permitting. Rather than undergo notice-and-comment rulemaking, which would be subject to judicial review, EPA has instead developed a practice of issuing “guidance”–often in the form of memoranda–that set forth requirements that EPA expects states and EPA regions to follow in issuing permits. The dilemma arises because courts often find that these documents cannot be challenged, and a permit applicant then faces an unpleasant choice: agree to permit conditions that may not be required by law to obtain the permit, or have the permit application denied and head into uncertain and expensive litigation. When the permit is critical for business operations, this really presents a Hobson’s Choice and almost all permit applicants capitulate and accept the terms.
The U.S. Court of Appeals for the Eighth Circuit recently offered some relief to those seeking to challenge guidance documents. In Iowa League of Cities v. EPA, some cities that owned wastewater treatment facilities challenged two EPA letters that responded to inquiries by Senator Charles Grassley about certain Clean Water Act (CWA) requirements for wastewater treatment facilities involving “bacteria mixing zones” and “blending.” The cities contended that EPA’s letters were new rules promulgated without notice-and-comment rulemaking in violation of the Administrative Procedure Act. EPA countered that the letters were merely agency guidance which the court lacked jurisdiction to review.
The court began by examining whether EPA’s act of sending the letters could be considered a “promulgation” of a rule under the CWA. The court adopted the three factor test set forth in Molycorp, Inc. v. EPA, 197 F.3d 543, 545 (D.C. Cir. 1999), for determining whether an agency action constitutes promulgation of a regulation: “(1) the Agency’s own characterization of the action; (2) whether the action was published in the Federal Register . . . .; and (3) whether the action has binding effects on private parties or the agency.” The court said that the third factor “should be the touchstone of our analysis,” because “plac[ing] any great weight on the first two . . . factors potentially could permit an agency to disguise its promulgations through superficial formality, regardless of the brute force of reality.” Continue reading
Cross-posted at WLF’s Forbes.com contributor site
The U.S. Court of Appeals for the Ninth Circuit has certainly earned its reputation as a circuit willing to push out the boundaries of environmental laws and regulations. Consider its June 1, 2012 en banc ruling in Karuk Tribe of Ca. v. U.S. Forest Service, where seven of the sitting eleven judges held that the Forest Service’s decision not to regulate low-level mining activity on public lands constituted an action under the Endangered Species Act, requiring the Service to consult with the Fish and Wildlife Service. In a dissent joined by three other judges, Judge Milan Smith began his opinion with an image and quote from Gulliver’s Travels, and wrote “decisions such as this one, and some other environmental cases recently handed down by our court undermine the rule of law, and make poor Gulliver’s situation seem fortunate.” On March 19, the Supreme Court regrettably denied review in Karuk Tribe.
We must, however, give the Ninth Circuit credit on its environmental rulings when it is due, and it’s earned some accolades with its April 3 Ecological Rights Foundation v. Pacific Gas & Elec. ruling. And despite the “citizen’s group” plaintiff’s loss, the decision is one that on this Earth Day, environmental advocates should be applauding as well.
The plaintiffs sued under the citizen suit provisions of the Clean Water Act (CWA) and the Resource Conversation and Recovery Act (RCRA), alleging that poles treated with pentachlorophenol (PCP) contributed “solid waste” to waters of the United States through stormwater runoff. In other words, when it rains, PCP washes off of the poles and enters various bodies of water. As the court noted, EPA has not decided whether to regulate utility poles as “point sources” of pollution under the CWA. Reviewing applicable judicial precedents, the 9th Circuit panel concluded that because neither the poles themselves nor their owners channel or collect the runoff, the plaintiffs had no claim under the CWA. Continue reading
As we’ve mentioned before, the EPA has been stepping up its focus on “environmental justice.” Recent evidence of EPA’s methods of EJ advocacy came with the quiet release of a draft policy paper concerning their enforcement of Title VI Civil Rights Act violations, entitled “Adversity and Compliance with Environmental Health-Based Thresholds.” (“Paper”) WLF has serious concerns regarding both the wisdom and propriety of the draft policy paper and has submitted comments urging its withdrawal.
As we outline in our comments, the proposed change in the method by which EPA will measure “adversity” is highly significant, yet the Paper fails to provide any meaningful explanation regarding why the change is being proposed. A persistent criticism among stakeholders regarding EPA enforcement of its Title VI regulations has been the agency’s failure to provide clear guidance regarding how it intends to carry out its enforcement responsibilities. Such guidance is necessary so that state regulators and targeted industries can take steps to ensure that they conform to the regulations.
Here’s a point-by-point summary of WLF’s comments:
The Draft Policy Paper on Adversity Is a Step in the Wrong Direction
- The Paper reduces the level of guidance when what is needed is more predictability
- The Paper does not reduce uncertainty among stakeholders by addressing what constitutes “significant adverse impact” or “significant disparate impact”
- The Paper proposes the elimination of the 2000 Draft Investigation Guidance’s NAAQS rebuttable presumption, the result of which would be increases in uncertainty by depriving stakeholders of the ability to predict in advance when environmental effects will be deemed “adverse”
- Proposed changes would only serve to put a thumb on the scale in favor of those raising Title VI challenges
The Draft Policy Paper Is Inconsistent with the Title VI Regulations
- The Paper focuses solely on recipients’ actual decisions to issue permits, rather than the “criteria or methods” associated with such decisions as is outlined by Title VI
- If EPA’s Office of Civil Rights is to be given authority to review permit decisions for disparate impact, then it must be done through changes to Title VI or EPA’s implementation of regulations
EPA Has Not Adhered to the APA’s Notice-and-Comment Requirements
- All proposed rules must be published in the Federal Registrar in accordance with APA standards
- The Paper is a proposed “rule” and not an “interpretive rule” because it seeks to eliminate an existing rule as well as expand the agency’s regulatory footprint
The Invalidity of Disparate Impact Regulations
- The Paper does not appreciate the substantial changes in judicial understanding of Title VI since EPA’s 2000 draft proposal
- Alexander v Sandoval and other decisions have held that Title VI regulations concerning disparate impacts are forbidden
- EPA should narrow, not broaden as the Paper proposes, the scope of their 2000 Draft Investigation Guidance in light of such developments
Photo from EPA’s “Plan EJ 2014 Progress Report”, page 14
Cross-posted at WLF’s Forbes.com contributor page
The Environmental Protection Agency has not been shy in its embrace and promotion of the “environmental justice” (EJ) movement. “Working for Environmental Justice” was one of seven priorities on EPA’s regulatory agenda last year. And its February “Plan EJ 2014 Progress Report,” full of loaded terms like “overburdened communities” and interspersed with photos like this one, reflects an “us vs. them” view of policy making and law enforcement, one that favors confrontation over seeking collaborative solutions. But EPA knows that reports and rhetoric alone won’t achieve “justice.” The Progress Report noted two proposed policy changes at EPA’s Office of Civil Rights, one of which could empower EPA to overturn state-level emissions permits that otherwise fully comply with federal law.
Disparate Impact Theory Background. During the 1990s, EPA adopted a very aggressive interpretation of a provision of the 1964 Civil Rights Act which applied to state use of federal funds, Title VI. State environmental regulators, to whom EPA delegates federal emissions permitting authority, could be accused of discrimination if the permits had a negative, disparate impact on “overburdened communities.” EPA formalized this theory into a “draft guidance” and EJ activists soon began filing Title VI complaints with the agency’s Office of Civil Rights. At the time, WLF, as well as others, argued that EPA lacked such authority and failed to follow administrative procedures.
EPA’s first ruling on a Title VI complaint in 1998 was quite pivotal. The agency presumed that no “adverse effect” (a key element in proving disparate impact) on minority or ethnic populations existed if the permitted entity (there, a steel mill in Michigan) would be in full compliance with the permit’s emissions limit. The EJ activists could not overcome that presumption, and EPA dismissed the complaint. EPA formalized that presumption in 2000 in a new draft guidance on Title VI complaints. Rebuffed by EPA, EJ activists tried to bring disparate impact lawsuits directly against state regulators, but courts ultimately ruled that no private right of action existed in Title VI. Continue reading
At a February 21 WLF Web Seminar, Sustainable “Green Advertising”: Implications of FTC’s Guidelines for Public, Private, and Self-Regulation, two private attorneys and a forestry trade association environmental expert offered a revealing tour through the provisions and pitfalls of the Federal Trade Commission’s (FTC) guidelines for “green advertising.” The Commission issued the third edition of its “Green Guides” in October 2012. The Guides inform FTC’s use of its “unfair advertising” authority under Section 5 of the FTC Act and are also specifically incorporated by reference in numerous state consumer protection acts, most prominently California’s.
The presenters at this hour-long program, which can be viewed for free by clicking the title above, were Crowell & Moring partner Christopher Cole and associate Natalia Medley, along with American Forest & Paper Association Senior Director of Energy and Environmental Policy Jerry Schwartz.
The speakers organized their remarks with a Powerpoint presentation, which is available visually to those who view the program. The slide deck is also available here.
Some of the interesting insights that you will hear from our speakers include:
- Products which may meet the thresholds required under federal environmental regulations to qualify as “non-toxic” may not be marketed as such under the Green Guides if trace amounts of toxic materials are present.
- The marketing of products as “non-toxic” or “free of” certain substances will likely be two of the most challenged practices under the guides. Those challenges will most likely be brought by companies against other companies, especially larger companies vs. smaller companies.
- The concept of “recycled content” was one of the most hotly contested during debate and discussion leading to the finalization of the Guides. For instance, textile and paper companies which utilize scraps of materials generated from production in further production cannot claim such products were made with “recycled content” because in the FTC’s mind, such usage is a routine industry practice.
- Class action plaintiffs’ lawyers might use the Green Guides as a baseline for filing private shareholder class action lawsuits challenging public companies’ “sustainability reports”.
Cross-posted at WLF’s Forbes.com contributor page
“We aren’t convinced Congress meant for the EPA to . . . let the wish be the father of the thought“.
With that wonderful turn of a phrase, Senior Judge Stephen Williams began another U.S. Court of Appeals for the D.C. Circuit opinion reminding the Environmental Protection Agency that Congress and its statutes place firm limits on EPA’s discretion and actions.
American Petroleum Institute v. EPA, released last Friday, arose from a “renewable fuel standard” (RFS) program under the Clean Air Act.We’ve commented on this program previously here at The Legal Pulse. Under the mandate, refiners would have to use an increasing amount of biofuels or face fines. Congress’ overarching purpose was to reduce greenhouse gas emissions, and broadly encourage biofuel technology. It singled out “cellulosic biofuel,” which, in 2007 when Congress adopted the program, was barely available on a commercial basis. Congress, the court noted in APA v. EPA, “assumed significant innovation,” but in the event that innovation didn’t occur, lawmakers tasked EPA with the job of projecting what would be available and adjusting the percentage requirement down based on that projection.
Congress, it seems, was far too optimistic about cellulosic fuel. EPA’s estimate for 2011 was around 9 million gallons, 491 million gallons short of Congress’s RFS mandate. API argued that EPA overestimated the available cellulosic fuel; the actual amount was zero. Despite the obvious shortfall in cellulosic fuel, EPA refused to reduce the total volume of biofuels required. API sued under the Administrative Procedures Act to have EPA’s determination vacated. Continue reading
As several news reports surrounding the resignation of Environmental Protection Agency Administrator Lisa Jackson noted (such as this Reuters story), the federal agency’s role in regulating hydraulic fracturing is one of many high stakes issues her replacement must address this year.
One fracking item left unaddressed is a petition filed by a coalition of activist groups with EPA last October. The activists want fracking-related emissions reported to the government’s “toxic release inventory” (TRI) under the Emergency Planning and Community Right to Know Act.
Activist groups like the Environmental Integrity Project (EIP), which leads the petitioning coalition, want us to believe that fracking is an unregulated activity desperately in need of federal control. In reality, the states have been actively regulating the industry for decades and continue to modify their rules to reflect recent developments.
In seeking to impose the Right to Know Act, the petitioners faced a major complication: the emissions from many of the fracking facilities would fall well below the Act’s reporting thresholds. The TRI initiative applies to facilities processing more than 25,000 pounds or using more than 10,000 pounds of one of the listed chemicals. Continue reading