Energy and Environment Monitor

Supreme Court to Review Apportionment of Liability Under CERCLA and “Arranger” Liability

     The United States Supreme Court has agreed to review a decision by a panel of the United States Court of Appeals for the Ninth Circuit which, while recognizing the concept of apportioning liability among PRPs under CERCLA, adopts a test which is almost impossible to satisfy.  The panel’s opinion also imposes “arranger” liability on the seller of hazardous substances which are leaked into the environment prior to use.  Burlington Northern & Santa Fe Ry. Co. v. United States, (revised op. at 520 F.3d 918 (9^th Cir. 2008). 

     The CERCLA site at issue was an agricultural chemical storage and distribution facility in California operated by Brown & Bryant, Inc. (“B&B”) beginning in 1960.  In 1975, B&B began leasing an adjacent parcel of land from two railroad companies.  From its facility, B&B sold products produced by various manufacturers including two soil fumigants produced by Shell Oil Company.  Shell delivered these fumigants to B&B “F.O.B. Destination” via common carrier trucks where the contents were transferred to B&B storage tanks.  The transfer process frequently resulted in spills.

     Eventually, the USEPA and the California Department of Toxic Substances Control (“DTSC”) began to remedy the contamination on the B&B site pursuant to clean-up authority under CERCLA.  In 1991, the EPA ordered the railroads to take specific preventative steps on the railroad parcel. However, none of the contamination requiring immediate remediation was on the railroad property.  In 1996, EPA and DTSC filed actions against B&B, the railroads and Shell for reimbursement of their investigation and clean-up costs.

     The district court held the railroads liable as owners of the facility at the time of the disposal.  42 U.S.C. § 9607(a)(1), (2).  Shell was held liable as a “person who arranged for disposal . . . of hazardous substances”.  42. U.S.C. § 9607(a)(3)  The district court went on to apportion the railroads’ liability based on the percentage of the overall site they owned, the portion of time that the railroads leased the parcel to B&B and the fraction of hazardous products attributable to the railroads’ parcel.  The calculation was then increased by 50 percent to arrive at a total liability of nine percent.  The district court approximated the percentage of leakage from various activities attributable to Shell and multiplied them together to arrive at a six percent share of liability for Shell.  B&B was assigned 100 percent joint and several liability despite being insolvent.  EPA and DTSC appealed the court’s apportionment arguing that the railroads’ and Shell’s liability was joint and several.  Shell cross-appealed the district court’s holding that it was liable as “an arranger”.

     On the issue of apportionment, the panel recognized that CERCLA is silent as to whether the liability imposed on PRPs is joint and several or may be apportioned.  The court determined that it would follow the general principle that liability is joint and several when the harm is indivisible and, following the lead of other circuit courts, apportionment is available for divisible harms at the CERCLA liability stage.  After extensive discussion on the Restatement (Second) of Torts treatment apportioned liability, the panel determined that there was a two-part test for apportionment.  The first part of the test is a question of law:  whether the particular harm at issue is theoretically capable of apportionment.  The second is a factual question:  whether there is sufficient evidence to establish a reasonable basis for apportionment of liability.  The first test requires a de novo review of the lower court decision.  The second test is a review under the clear error rule.  According to the panel, the first test was satisfied because the railroads leased the adjacent parcel to B&B for only part of the time that B&B’s operations were occurring and only part of the toxic substances were stored on the railroads’ parcel. 

     However, the panel was not persuaded by the district court’s apportionment formula mentioned above was adequately supported by the evidence.  Despite the fact that the Restatement and other decisions appear to support using factors like those relied on by the district court as a reasonable basis for apportionment, that the panel imposed a test which appears to require “adequate records detailing the amount of leakage attributable and the activities on the railroad parcel, how that leakage traveled to and contaminated the soil and groundwater under the facility and the cost of cleaning up that contamination”.  In effect, the panel imposes a test which would be almost impossible to meet.  The panel justified this result based on “CERCLA’s expansive statutory liabilities”.  However, the panel was not asked to determine whether the railroads were liable, but whether liability could be apportioned – an issue not addressed by CERCLA.

     As the question of Shell’s liability as an arranger, the panel cited a number of factors which caused it to conclude that Shell was an arranger such as:  Shell chose the common carrier, Shell required the use of large storage tanks by B&B, Shell provided a rebate for improvements of B&B’s storage tanks, Shell would reduce the purchase price in an amount that the district court concluded was linked to loss from leakage and Shell distributed a manual to ensure B&B’s tanks were operated in accordance with Shell’s safety instructions.  However, the panel did not explain how these factors demonstrated that Shell had control over the process that created the waste a factor the Ninth Circuit had previously held constituted a crucial element of arranger liability in U.S. v. Shell Oil Co., 294 F.2d 1045 (9^th Cir. 2002).

    This article was authored by James R. Snyder, Jackson Kelly PLLC. For more information on the author see here.

RGGI Holds First Mandatory Carbon Auction in the U.S.

     The Regional Greenhouse Gas Initiative (RGGI), the first mandatory, market-based carbon dioxide emissions (COS) reduction program in the United States, held its first auction of CO2 emissions permits on September 25, 2008.  RGGI sold nearly 12.6 million CO2 permits to 59 participants at a clearing price of $3.07 each. Participants included members of the energy, financial, and environmental sectors.  Each permit will allow its holder to emit up to a ton of carbon dioxide.  A total quantity of 51,761,000 allowances was demanded at the auction, over four times the quantity available for sale.

            New York, New Jersey, New Hampshire and Delaware, which represent 55 percent of the allowances to be traded under RGGI, did not offer permits at this inaugural auction because of regulatory delays.  However, all ten states will offer allowances in the next auction on December 17, 2008.  Quarterly auctions will continue to take place through 2011.

           RGGI regulates 233 electricity generating plants throughout the Northeast and Mid-Atlantic regions. Regulated power plants will be able to use a CO2 allowance issued by any of the participating states to demonstrate compliance with the state program governing their facility.  Two three-year compliance periods, meant to stabilize emissions, will begin on January 1, 2009 and continue through 2014. The cap, now set at 188 million tons of CO2 per year, will be reduced 2.5 percent annually between 2015 and 2018 for a 10 percent total reduction. However, because of mild weather, a slowing economy, and utilities companies in the northeast shifting from higher-carbon fuels to lower-carbon ones like natural gas, it is estimated that actual CO2 emissions may not approach the level of the cap. In 2006, the most recent year for which there is complete data, CO2 emissions in the region totaled only 164.5 million tons.

RGGI is composed of individual CO2 Budget Trading Programs in each of the ten participating states. The states of Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, and Vermont are signatory states to the RGGI agreement.  Pennsylvania, a major coal producer, participates as an observer.  These ten programs are implemented through state regulations, based on a RGGI Model Rule, and are linked through CO2 allowance reciprocity. Taken together, the ten individual state programs function as a single regional compliance market for carbon emissions.

Many of the energy companies which participated in the auction have expressed their concern with fact that the program is regional, not national.  Lack of Federal regulation in this area has already led to the formation of multiple interstate compacts.  On September 23, 2008 the Western Climate Initiative (WCI), consisting of the U.S. states of Arizona, California, Montana, New Mexico, Oregon, Utah, and Washington, and the Canadian provinces of British Columbia, Manitoba, Ontario, and Quebec, unveiled a draft of its cap-and-trade program set to begin in 2012.  Observers states to WCI include Alaska, Colorado, Idaho, Kansas, Nevada, Wyoming, the Canadian province of Saskatchewan, and the Mexican states of Baja California, Chihuahua, Coahuila, Nuevo Leon, Sonora and Tamaulipas.

A similar cap-and-trade program is in the early stages of development amongst the members of the Midwestern Governors Association (MGA).  The Midwestern Greenhouse Gas Accord (MGGA) is a regional agreement similar to RGGI.  Signatories to MGGA are the U.S. states of Minnesota, Wisconsin, Illinois, Iowa, Michigan, Kansas, and the Canadian Province of Manitoba.  Observer states include Indiana, Ohio, and South Dakota.  MGGA was the fourth tier of the MGA Energy Security and Climate Stewardship Summit Platform, signed on November 15, 2007.

     This article was co-authored by Kevin McGuire and Mary Beth Naumann, Jackson Kelly PLLC. For more information on the authors see (McGuire) here and (Naumann) here. 

EPA Announces Revised Ambient Lead Standard

On October 16, 2008, EPA announced a final rule making the ambient lead standard 10 times more stringent. The new primary and secondary standards are 0.15µ/m³. The old standard was 1.5µ/m³.

In making its announcement, EPA said “With these stronger standards a new generation of Americans are being protected from harmful lead emissions.” This is the first change in ambient lead standards in more than 30 years. EPA noted that the new standards were the subject of a “thorough review of the science on lead, advice from the Clean Air Scientific Advisory Committee, and consideration of public comments.”

Significantly, EPA has concluded that the existing network of ambient lead monitors is “not sufficient to determine whether many areas of the country would meet the revised standards” and said that it is “redesigning the nation’s lead monitoring network, which is necessary for the agency to assess compliance with the new standard.” If additional monitors are deployed, more nonattainment areas may be identified.

Under the Clean Air Act, EPA must now designate nonattainment areas under the new standards no later than October of 2011. States will then have five years to meet the new standards after designations take effect.

This article was authored by Skipp Kropp, Jackson Kelly PLLC. For more information on the author see here.

EPA’S Petroleum Brownfields Action Plan

In October, 2008, EPA published its Petroleum Brownfields Action Plan: Promoting Revitalization and Sustainability.  The Plan is based upon EPA’s recognition that petroleum contaminated sites present unique challenges in that they are typically small and widely dispersed and present unique problems in terms of clean-up and development. 

                        Petroleum-contaminated properties first became eligible for Brownfields treatment in 2002 with the Small Business Liability Relief and Brownfields Revitalization Act.  At that time, the law called for 25% of the funds appropriated to EPA for activities under CERCLA to be used to characterize, assess and remediate petroleum brownfields.  The program is jointly managed by two EPA offices – the Office of Brownfields and Land Revitalization and the Office of Underground Storage Tanks.  The barriers recognized by EPA included small site size (impacting the site’s marketability) and liability concerns associated with site redevelopment involving unique assessment and clean-up approaches for petroleum contamination.  EPA listed four initiatives in the plan with action items implementing each initiative.  The initiatives are as follows: 

INITIATIVE 1 - Bolster Communication and Outreach to Petroleum Brownfields Stakeholders. 

            The action items under Initiative 1 are:

            Action 1.1       To define and communicate the objectives of the petroleum brownfields program.

            Action 1.2       Consolidate the resources and tools available to promote assessment clean-up and sustainable reuse of petroleum brownfields and develop on-line strategies.

·        EPA plans to establish a comprehensive website to identify and promote broader use of tools and resources to support petroleum brownfields.

            Action 1.3       Prepare a petroleum brownfields redevelopment options catalogue.

·        This catalogue will describe examples of successful redevelopment of former petroleum-affected brownfields including sustainable or “green” cleanup and reuse strategies.

            Action 1.4       Explore and promote a recognition program.

·        EPA will promote an external awards program to recognize outstanding efforts in the cleanup and redevelopment of petroleum brownfields.

INITIATIVE 2 – Provide Targeted Support to State, Tribal, and Local Governments 

            The action items under Initiative 2 are:

            Action 2.1       More clearly identify the Regional EPA representative who will serve as a point of contact within the Agency as well as to outside stakeholders.

·        EPA will identify a single point of contact in each of its regions to connect stakeholders with appropriate experts and resources.

            Action 2.2       Explore opportunities under EPA’s Technical Assistance to Brownfields (TAB) grants and associated consulting teams to assist local and Regional petroleum brownfields efforts.

            Action 2.3       Assist state, tribal, and local governments in developing voluntary inventories of petroleum brownfields.

·        EPA will develop a best practices guide to assist communities who want to develop petroleum brownfields inventories. 

            Action 2.4       Provide technical support for geographic initiatives.

·        EPA plans to pursue a geographic pilot project similar to other pilots undertaken by Regions and states (e.g. Route 66, Historic Highway). 

INITIATIVE 3 – Explore and Evaluate Policies to Facilitate Increased Petroleum Brownfields Site Revitalization

            The action items under Initiative 3 are:

            Action 3.1       Maximize grant flexibility and effectiveness.

·        EPA will attempt to reduce the burden on petroleum brownfields grant applicants.  Currently applicable criteria require that the site be relatively low risk and that there be no viable responsible party.  EPA recognizes these requirements can be burdensome and it will attempt to reduce that burden consistent with statutory requirements.

            Action 3.2       Seek burden reduction in the administration of the 25 percent set-aside for petroleum brownfields grants.

·        EPA will attempt to minimize the administrative and paperwork burdens in applying the 25 percent petroleum set-aside at sites where there is both petroleum and non-petroleum contamination.

            Action 3.3       Explore implementation of a multi-purpose grant for Brownfields.

·        EPA recognizes that grants that are used for activities related to the assessment and cleanup of multiple substances would make cleanup and revitalization projects more viable.  However, it also recognizes that differing statutory eligibility and cross-sharing requirements and the need to account separately for expenditures at sites with petroleum and other hazardous substances will pose a significant challenge to a multiple substances approach.

INITIATIVE 4 – Forge Partnerships to Promote Investment In and the Sustainable Reuse of Petroleum Brownfields

            The action items under Initiative 4 are:

            Action 4.1       Promote sustainability and sustainable practices at petroleum brownfields.

            Action 4.2       Launch and support the “Petroleum Brownfields to Open Space Project” program.

·        EPA proposes to collaborate with wildlife organizations, local regulators and others to promote transformation of petroleum brownfields into small pocket parks and wildlife preserves.

            Action 4.3       Support the reuse of petroleum brownfields by small business owners.

·        EPA will develop a partnership with the Small Business Administration to promote the reuse of petroleum brownfields.

            Action 4.4       Pilot and promote more optimal petroleum brownfields cleanup techniques.

·        EPA will seek a public/private partnership to explore techniques for efficiently assessing, cleaning up and monitoring petroleum impacted properties.

            Action 4.5       Work with the EPA Office of Site Remediation Enforcement (OSRE) to promote the ER3 initiative.

            Action 4.6       Promote petroleum property deal flow sessions.

·        EPA proposes to cooperate with and provide technical assistance to non-governmental organizations that sponsor forums for presenting individual or multiple properties for potential redevelopment.  EPA hopes that these sessions will build a network of petroleum property owners and potential end-users.

     This article was authored by James R. Snyder, Jackson Kelly PLLC. For more information on the author see here.

The CO2 Injection Program and Legal Issues Concerning CO2 Injection

Back in September, I mentioned that, on July 25, 2008, EPA unveiled the proposed regulations to govern the underground injection and storage of carbon dioxide.  See 73 Fed. Reg. 43492 (July 25, 2008)(available at http://www.epa.gov/fedrgstr/EPA-WATER/2008/July/Day-25/w16626.pdf) (lasted accessed Oct. 16, 2008).  EPA is currently accepting public comment on the proposed regulations until November 24, 2008. Although I previously provided a brief overview of the proposed regulatory framework, this post provides a more detailed look at the proposed carbon injection program and some of the issues it raises.  The proposed regulations include several components.  (1) Geologic Characterization---owners or operators must provide detailed maps and information regarding the receiving zone, including maps of local geology, overburden and subsurface material, rock strength and factures, and fluid pressures within the cap rock.  (2) Area of Review---operators must provide information regarding wells that penetrate the injection zone.  (3) Injection Well Construction---the well must be cased and cemented to prevent escape of fluids.  (4) Well Operation---injection pressure must be limited to avoid fractures in the confining zone.  (5) Mechanical Integrity---operators must demonstrate the internal and mechanical integrity of their system every five years; this includes a radioactive tracer survey of the bottom-hole cement every 5 years.  (6) Monitoring---operators must monitor the nature of the injected fluids, injection pressure, flow rate, and the quality of the ground water and report semi-annually.  (7) Well Plugging---operators must ensure that the well is in a state of static equilibrium and plugged using approved methods.  (8) Financial Responsibility---owners or operators would be required to demonstrate financial responsibility for corrective action such as well plugging, post-injection site care, site closure, and emergency and/or remedial response actions. 

Carbon injection raises many additional legal issues beyond mere compliance with federal regulations.  For instance, CO2 itself is not listed as a hazardous substance under CERCLA, but the CO2 stream may contain other substances such as mercury that are hazardous substances or the constituents of the CO2 stream could react with groundwater to produce listed hazardous substances such as sulfuric acid. Thus, whether or not there is a ‘‘hazardous substance’’ that may result in CERCLA liability from a sequestration facility depends entirely on the make-up of the specific CO2 stream and of the environmental media (e.g., soil, groundwater) in which it is stored.  Additionally, the instigation of a carbon dioxide sequestration program may also present dilemmas from a land use/property law standpoint.  Would civil damages be available in the case of CO2 migrating into the sub-surface strata of another's property?  Although the courts have obviously not addressed this scenario in the context of CO2 injection, when water and gases are pumped into the ground artificially, adjoining landowners may be able to recover on a theory of subsurface trespass and private nuisance.  However, this recovery is typically limited in that the adjoining landowner must prove damage before liability will be imposed.  This necessity of damage stems from the property maxim of the Rule of Reasonable Use: a person may use his property in any lawful manner, except that he/she may not use his/her property so as to injure a neighbor.  While courts disagree whether liability will be imposed, and the outcomes tend to be fact-specific, the instigation of a carbon sequestration program could result in litigation at the very least. 

This article was authored by Chris M. Hunter, Jackson Kelly PLLC. For more information on the author see here.

Cleaning Up and Reusing the Abandoned Corner Gas Station

     On October 14, 2008, U.S. EPA announced an action plan for promoting the cleanup and reuse of abandoned corner gas stations and other sites contaminated with petroleum.  The action plan is called “Petroleum Brownfields Action Plan:  Promoting Revitalization and Sustainability”.  The plan presents four strategic initiatives to achieve the Agency’s goals of cleaning up and reusing petroleum-contaminated brownfield sites.  The four initiatives are: (1) bolster communication and outreach to petroleum brownfields stakeholders; (2) provide targeted support to state, tribal, and local governments; (3) explore and evaluate policies to facilitate increased petroleum brownfields site revitalization; and (4) forge partnerships to promote investment in and the sustainable reuse of petroleum brownfields.  Each of the four initiatives has specific action items.

     U.S. EPA’s petroleum brownfields program is jointly managed by two U.S. EPA offices: the Office of Brownfields and Land Revitalization (OBLR), which has overseen the Brownfields program since its inception, and the Office of Underground Storage Tanks (OUST), which promotes the cleanup of leaking underground storage tank (LUST) sites.  U.S. EPA’s petroleum brownfields program began in 2002 when Congress enacted the Small Business Liability Relief and Brownfields Revitalization Act (“Brownfields Law”).  Under the Brownfields Law, petroleum-contaminated sites were eligible for the U.S. EPA Brownfields Program for the first time but Congress mandated that 25 percent of the funds appropriated to U.S. EPA for activities authorized under CERCLA §104(k) be used to characterize, assess, and remediate petroleum brownfields.  Although intended to boost petroleum cleanups, the statutory requirements have presented challenges for the cleanup of petroleum brownfields. 

     The 25 percent set-aside for petroleum-contaminated sites has created some administrative burdens for both applicants and U.S. EPA, including requiring difficult judgments when a site contains both petroleum and hazardous substance contamination and creating paperwork burdens.   For example, the current eligibility criteria for petroleum grants set forth in CERCLA §101(39)(D) require applicants to work with their State and U.S. EPA Regional staffs to verify that a site is “relatively low risk” and that “there is no viable responsible party.”  These criteria require risk levels to be compared with other petroleum-contaminated sites and require the grant applicant and staff to investigate a site’s ownership and history and potentially responsible parties.  If brownfields grants allowed for activities ranging from assessment to cleanup and allowed multiple substances to be addressed, this would streamline the process and make petroleum sites more viable as cleanup and revitalization projects.   By addressing these issues, U.S. EPA’s action plan attempts to bolster cleanups and reuse of the abandoned corner gas station and other petroleum-contaminated brownfields.

     Under the first initiative (i.e., bolstering communication and outreach to petroleum brownfields stakeholders), U.S. EPA’s plan identifies four action items.  These action items include defining and communicating the objectives of the petroleum brownfields program via brochures, fact sheets, reports, web site content, success stories, and newsletters; developing an online clearinghouse of resources and tools available to promote the assessment, cleanup, and sustainable reuse of petroleum brownfields; preparing a catalogue of petroleum brownfields redevelopment options that will describe examples of successful redevelopment on former petroleum brownfields, including sustainable or “green” cleanup and reuse strategies, and that will include details on public and private financing strategies used for interim and permanent redevelopment options; and exploring and promoting a recognition program.

     To achieve the second initiative (i.e., providing targeted support to state, tribal and local governments, U.S. EPA lists in its plan four action items. There will be a single U.S. EPA point of contact within each of its ten Regions.  U.S. EPA will explore opportunities under its Technical Assistance to Brownfields (TAB) grants and associated consulting teams to assist local and Regional petroleum brownfield efforts.  The Agency will assist in developing voluntary inventories of petroleum brownfields, and provide technical support for geographic initiatives, such as targeted economic development areas, enterprise zones, environmental justice, and other areas of special focus that provide opportunities to enhance the revitalization of petroleum brownfields.

     For the third initiative (i.e., exploring and evaluating policies to facilitate increased petroleum brownfields site revitalization), U.S. EPA promises to maximize grant flexibility and effectiveness by exploring new and innovative ways to reduce the burden on petroleum grant applicants to the extent consistent with the statutory requirements.  U.S. EPA will also seek burden reduction in the administration of the 25 percent set-aside for petroleum brownfields grants, and the Agency will also explore implementation of a multi-purpose grant for brownfields.  This action item will pose significant challenges due to differing statutory eligibility and cost share requirements for assessment and cleanup grants as well as the need to account separately for expenditures at petroleum and hazardous substance sites.

     Under the fourth initiative (i.e., forging partnerships to promote investment in and the sustainable reuse of petroleum brownfields), U.S. EPA identifies six action items.  U.S. EPA will promote sustainability and sustainable practices at petroleum brownfields, such as biofuels service stations and hybrid or electric vehicle recharging centers; launch and support the “Petroleum Brownfields To Open Space Projects” Program for the transformation of petroleum brownfields into small neighborhood pocket parks and wildlife habitat preserves; support the reuse of petroleum brownfields by small business owners by developing a partnership with the Small Business Administration to foster the reuse of petroleum sites; pilot and promote more optimal petroleum brownfields cleanup techniques; work with the U.S. EPA Office of Site Remediation Enforcement to promote the Environmentally Responsible Reuse and Redevelopment (ER3) initiative; and promote petroleum property deal flow sessions among current property owners, developers, potential future users, and other interested parties.

     U.S. EPA’s action plan will involve numerous stakeholders.  The Agency expects implementation of the action plan to take place over the next three years and to increase the cleanup and revitalization of petroleum-contaminated brownfields.  For additional information on U.S. EPA’s Petroleum Brownfields Action Plan and the assessment, cleanup, and revitalization of petroleum brownfields, contact Gale Lea Rubrecht at 304-340-1200 or galelea@jacksonkelly.com.

    

    This article was authored by Gale Lea Rubrecht, Jackson Kelly PLLC. For more information on the author see here.

Crow Tribe Plans New Coal-to-Liquids Plant

     On July 28, 2008, the State of West Virginia announced the planned construction of the nation’s first modern coal-to-liquids (CTL) plant in the state’s Northern Panhandle. On October 23, 2008, West Virginia learned some bad news – the planned Northern Panhandle CTL plant would not be built due to current difficulties in the credit markets and downward movement in the energy markets.

    

     However, other US CTL projects are proceeding -- Rentech, Inc.'s Mingo County, WV project, and SES projects in Mississippi and North Dakota. Another interesting CTL project involves the Crow Tribe in Montana, which plans to build and operate a new CTL plant.

    

     The 12,000 member Crow Tribe in Montana has signed a 50-year development deal with Australian-American Energy Co., a subsidiary of Australian Energy Company, to build a $7 billion plant to convert coal into liquid diesel fuel.  It would be among the first such projects in the nation. The plant will be called “Many Stars” and would employ up to 4,000 during construction, and employ 900 people in its mining and fuel-conversion operations.  It initially would produce 50,000 barrels a day of diesel and other fuels. Future expansions of the Many Stars plant could eventually increase production to as much as 125,000 barrels of fuel a day.

    

     Coal for the project would come from a mine yet to be developed by the tribe on the reservation, located just southeast of Billings. The Crow reservation sits atop some of the nation's largest coal reserves -- an estimated 9 billion tons of recoverable coal. Approximately one ton of coal would be needed for every barrel of fuel produced by the plant.

    

     The agreement will provide the Crow Tribe with up to 50 percent of profits from the plant after investors in the project recoup their costs. Total proceeds to the tribe are projected to be up to $100 million a year for the first phase of fuels production, and could eventually top $1 billion annually -- sums that dwarf the Crow's current annual budget of about $26 million.

    

     The project design calls for capturing CO2 for geo-sequestration and supply to enhanced-oil recovery projects to both provide an environmentally responsible project and further create additional energy opportunities in otherwise declining regional oil fields. The CTL plant will be in operation for as long as 50 years.

    

     Located in Big Horn County on more than 2.2 million acres, the Crow Reservation is one of the poorest areas in Montana, with chronically high unemployment plaguing the tribe’s members, at about 47 percent unemployment at the end of 2007.

    

     Crow Tribe Chairman Carl Venne expects environmental groups and other outsiders to oppose the project, but he says he and his tribe are prepared to do battle with anyone standing in the way of alleviating the Crows’ living conditions.

    

     “People have to realize this is one of the poorest counties in the whole nation,” said Venne. “It means we will become self-sufficient as a tribe.”

     To learn more about the Many Stars CTL plant in Montana, see the following web sites:

http://manystarsctl.com/

http://www.ausenergyco.com.au/

http://www.heartland.org/policybot/results.html?articleid=24038

http://www.helenair.com/articles/2007/12/08/montana/a09120807_01.txt

http://bizmt.com/energyaccomp.asp

Information about the cancellation of the planned West Virginia CTL plant is located at The State Journal web site:  http://statejournal.com/story.cfm?func=viewstory&storyid=46267

     This article was excerpted from Environment & Climate News, The State Journal and other public sources of information, and was authored by Rick Wilson, Acacia Environmental Group LLC. For more information on the author see here.

Court Rejects Rule Prohibiting Roads in Designated Areas

     The United States District Court (D. Wy.) recently addressed (Wyoming v US Department of Agriculture 07CV17B) the State of Wyoming's challenge to the adoption of the Roadless Area Conservation Final Rule ("Roadless Rule"), 66 Fed. Reg. 3244-3272 (Jan. 12, 2001), which was promulgated by the United States Department of Agriculture and the United States Forest Service.  The Roadless Rule prohibits road construction, road reconstruction, and timber harvesting in inventoried roadless areas, and is applicable on a nationwide basis.  The Roadless Rule affects 58.5 million acres, which is approximately 31 percent of National Forest System lands.

     The Court found that the Roadless Rule was promulgated in violation of the National Environmental Policy Act and the Wilderness Act, which required that it be set aside.  The Court noted that the Wilderness Act's purpose is to prescribe the procedure for designation of wilderness areas and to divest that authority from the Department of Agriculture.  The Court found the designation of 58.5 million acres as "roadless areas" to be a "thinly veiled attempt to designate' wilderness areas' in violation of the clear and unambiguous process established by the Wilderness Act for such designation."  The Order Granting Plaintiff's Motion for Declaratory Judgment and Injunctive Relief is attached.

     This article was authored by Kristi J. Livedalen, Jackson Kelly PLLC. For more information on the author see here.

West Virginia Environmental Quality Board Rules

e  By order dated October 23, 2007, the West Virginia Environmental Quality Board reversed WVDEP’s application of the 5-mile rule for manganese to a Jacks Branch Coal Company NPDES permit.  The order effectively reinstates the prior technology-based limits of 2.0 mo. av/4.0 daily max. in lieu of a water-quality based limit of 1.0 mg/l.  The opinion is notable for the EQB’s willingness to apply common sense and to apply the manganese standard flexibly so that it does not work unintended results.

BACKGROUND

     Manganese has proven an intractable treatment and regulatory problem for the coal industry in West Virginia.  In the 1970s, USEPA established technology-based NPDES permit limits for the coal industry.  These included limits of 2.0 mg/l as a monthly average and 4.0 as a daily maximum for manganese discharges.  In the 1980s and much of the 1990s, West Virginia also maintained a manganese water quality standard of 1.0 mg/l for streams supporting both aquatic life uses and serving as drinking water supplies.  The same regulations provided that all waters would be presumed to support aquatic life uses, but would not be considered to serve as drinking water supplies unless they actually supported that use.  Because the coal industry is forced to use in-stream ponds to control its sediment and because even when it does not use in-stream ponds the receiving streams have little dilution capacity, the application of a 1.0 mg/l in-stream standard caused WVDEP to lower effluent limits for manganese in many cases from the 2.0/4.0 mg/l imposed by the technology-based standards to 1.0 mg/l.  This increased both water treatment and pond cleaning costs at many mines.  In addition, it required some operators to increase the pH in their treatment systems to 10.0 or higher and to use two-stage treatment simply to avoid re-dissolving aluminum in the effluent.

     Because there was no federally recommended aquatic life criterion for manganese and because increasing evidence showed that the coal industry’s treatment of manganese to meet a 1.0 mg/l permit limit threatened to cause more harm than good, the State dropped its aquatic life criterion for manganese altogether, based largely on the work of Tiff Hilton.  Coal operators thought that they would soon return to technology-based limits.  Soon after, however, WVDEP claimed that it was required to presume that all waters serve as drinking water supplies in addition to supporting aquatic life.  Because the manganese criterion for drinking water is also 1.0 mg/l, WVDEP continued to apply limits based on that standard.  Later, to accommodate the industry without backing off its treatment of all waters as drinking waters, WVDEP issued the so-called 5-mile rule for manganese, which considers a stream to be a drinking water only in the 5 miles upstream of a known water intake. 

JACKS BRANCH PERMIT APPEAL

     Jacks Branch discharges into tributaries of the Kanawha River a short distance upstream of their confluence with the Kanawha.  The points of discharge are less than 5 miles upstream of a public water intake on the Kanawha.  The discharges are from an inactive mine that had technology-based limits applied to it for years.  Then, in a renewal, WVDEP applied the so-called 5-mile rule in a manner that lowered the existing limits to 1.0 mg/l. 

     The drinking water criterion for manganese applies within the 5-mile zone upstream of a drinking water intake.  Here, the tributaries into which Jack Branch discharges do not and cannot serve as drinking water sources, and no amount of manganese discharged from the mining operations into them could have caused the concentration of manganese to exceed 1.0 mg/l in the Kanawha River.  Nonetheless, WVDEP imposed a water-quality based limit of 1.0 mg/l because it measures the 5-mile zone upstream not only in the main stem of the stream serving the drinking water use, but also upstream into all tributaries.   

     Here, the EQB reversed because in these unique circumstances it made little sense to impose additional costs on Jacks Branch to meet the new limit.  The decision is notable for the flexibility the EQB applied to the 5-mile rule—something WVDEP was unwilling to do.  To WVDEP’s credit, though, it did agree to submit this matter to the Board on a set of stipulated facts. 

    

     This article was authored by Robert G. McLusky, Jackson Kelly PLLC. For more information on the author see here.

Appalachian Power Company’s New Green Pricing Option Program

     American Electric Power’s (“AEP”) subsidiary, Appalachian Power (“Appalachian”), began its green energy offering to customers in West Virginia two weeks ago. Green energy is electricity generated by renewable energy sources such as the sun, wind, water and organic matter. The resources are replenished by nature and are a cleaner source of energy. In West Virginia, customers have the opportunity to purchase "blocks" of green energy, which will be acquired from these sources. Each block is equivalent to 100 kilowatt-hours of renewable electricity.

     For a customer to purchase green energy, they must participate in the green pricing option. This is a program that allows Appalachian Power and Wheeling Power customers, on a voluntary basis, to support the development of renewable energy resources. The Green Pricing Option offers customers an opportunity to make an environmental difference by supporting the company's purchase of Renewable Energy Certificates (RECs). A REC represents the environmental attributes that are created when electricity is generated using renewable resources instead of using fossil fuel sources such as coal, oil, and natural gas. Customers will essentially purchase RECs from the company and retire them from future use. By purchasing these Renewable Energy Certificates, a customer encourages and helps sustain renewable power.

     Residential customers may elect to purchase a minimum of 2 blocks and up to a maximum of 50 blocks at a cost of $1.50 for each block. For example, if a customer purchases two blocks of green energy, that customer's bill would increase by $3.00 each month. The typical residential customer uses an average of 1,000 kilowatt-hours of electricity a month so purchasing 10 blocks of green energy would match that usage. Each green energy block will add $1.50 to a customer’s bill each month, as long as that customer participates in the program. The cost to purchase green energy blocks is in addition to a customer’s regular monthly electric bill, and will be reflected as a separate line item on the bill.

      In order to supply green energy to West Virginia customers, Appalachian has contracted for 75 megawatts of energy from the Camp Grove Wind Farm in central Illinois and 100 megawatts from the Fowler Ridge Wind Farm in western Indiana. Appalachian already purchases power from Summersville Hydro in West Virginia, and has plans to buy from the Beech Ridge Wind Energy project in Greenbrier County when it is finished.

      This article was authored by Donnie L. Adkins, Jackson Kelly PLLC. For more information on the author see here.