Energy and Environment Monitor

Kentucky Antidegradation Regulation reviewed by 6th Circuit Court of Appeals

     On September 3, 2008, the United States Court of Appeals for the Sixth Circuit issued its opinion in the appeal of the United States District Court for the Eastern District of Kentucky’s decision in Waterways Alliance v. Johnson.  The Sixth Circuit partially affirmed and partially reversed Judge Thomas Russell’s decision upholding the Environmental Protection Agency’s (“EPA”) approval of Kentucky’s new antidegradation regulations in response to a challenge by the Kentucky Waterways Alliance and others. 

     The Sixth Circuit upheld EPA’s approval of Kentucky’s methodology for designating high quality waters for purposes of antidegradation review.  The court further upheld Kentucky’s water body-by-water body approach to designating waters, and rejected the plaintiffs’ claims that Kentucky must follow a parameter-by-parameter approach to designation.  The court also upheld Kentucky’s exclusion of “impaired waters” from antidegradation review, even if those waters are only designated as impaired for one or a limited number of uses.  Finally, the Sixth Circuit rejected the plaintiffs’ claim that Kentucky’s designation of high quality waters has resulted in too few (by percentage) waters being designated.  The court stated that Kentucky’s designations are not to be evaluated based on the percentage of waters provided antidegradation protection, but rather upon their consistency with federal law – and the court found that Kentucky’s approach was consistent with federal law.

     On the other hand, the Sixth Circuit reversed Judge Russell’s approval of Kentucky’s alternative antidegradation implementation procedures for coal mining discharges and also struck down several “de minimis” exceptions to antidegradation review for high quality waters. 

     First, on the issue of Kentucky’s alternative antidegradation implementation procedures for coal mining discharges, EPA had concluded that Kentucky’s existing permitting procedures under SMCRA satisfied the federal requirements for antidegradation review, thereby obviating the need for a separate antidegradation review under Kentucky’s water quality regulations.  EPA based its conclusion, at least in part, on a letter the Commonwealth provided “interpreting” its existing regulations. 

     The Sixth Circuit held that this “interpretive” letter was actually an unauthorized amendment to Kentucky’s regulations, not just a clarification.  The court stated that use of such a letter (i) violated 33 U.S.C. § 1313(c)(3) because EPA should have required the state to amend its regulations and (ii) hindered public participation in the rule-making process.  Thus, the Sixth Circuit held that EPA’s approval was not consistent with the law and remanded the “exemption” to EPA for reconsideration.

     Second, the Sixth Circuit considered five of Kentucky’s “exemptions” from antidegradation review for high quality waters.  These five exemptions include discharges that do not increase pollutant loading by 20% or more; industrial discharges that emit pollutants at less than half the concentration authorized by a normal NPDES permit; domestic discharges that include certain specified limits; discharges under storm water permits; and discharges from concentrated animal feeding operations.  These exemptions were premised on the conclusion that each of these discharges is only a de minimis source of pollution and therefore does not require antidegradation review.  The Sixth Circuit, however, found that EPA’s decision document contained insufficient technical data and analysis to support EPA’s conclusion that each of these exempted discharges would result in only insignificant degradation to high quality waters.  It therefore remanded the rules to EPA to address that deficiency in its consideration of those exemptions.

     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. 

Lawsuit Pressures DOI to Fund Study on Surface/Groundwater Impacts of Coal Bed Methane Production

     The Sierra Club, Wild Earth Guardians  and Rocky Mountain Clean Air Action filed suite in federal District Court for the Northern District of California  in February 2008 to require the Department of Interior (DOI) to fulfill its obligation pursuant to the Energy Policy Act of 2005 (P L 109-58) §1811 to have the National Academy of Sciences to conduct a study of the effect of coal bed natural gas production on surface and groundwater resources, including groundwater aquifers, in Montana, Wyoming, Colorado, New Mexico, North Dakota and Utah and to report its findings to Congress. (Sierra Club et al. v. U.S. Department of the Interior et al.) 

     In their lawsuit the environmental groups asserted that the DOI's failure to fund the report deprived them of information guaranteed to the public by the statute and that if they had this information they would use it to educate the public about the impacts of coal bed methane exploration and extraction and to advocate for adoption of measures to reduce or mitigate those impacts.   Arguments concerning the standing of the environmental groups to bring the lawsuit based on their "informational injury" claim were pending in the federal District Court when the DOI announced that it had provided the National Academy of Science with a grant  to conduct a study of the impacts of coal bed methane production. All parties then agreed to dismiss the case as moot.

     This article was authored by Barbara D. Little, Jackson Kelly PLLC. For more information on the author see here.

Phase I Environmental Site Assessments All Appropriate Inquiry

Although the All Appropriate Inquiry (AAI) standard for Phase I Environmental Site Assessments has been around for two years now, many reports now being prepared in accordance with the AAI standard fall short of the current requirements.  Below is a list of provisions that became effective under the AAI standard.  If you are preparing or reviewing a report, the following issues must be identified in the report.

• Data Gaps – AAI requires more extensive documentation of data gaps – The Environmental Professional must identify data gaps, including the sources of information that were consulted to address the data gaps, for all required provision of AAI.  The Environmental Professional is required to comment on the significance of the data gaps with regard of the ability of Environmental Professional to identify conditions indicative of releases or threatened releases of hazardous substances.

• Research back first identified use or 1940, whichever is earlier.  Identify uses in 5 year intervals.  To establish the use, must use at least one of the following.

Aerial Photographs

Fire Insurance Maps

Property Tax Files

Recorded Land Title Records

USGS Topographic Maps

Local Street Directories

Building Department Records

Zoning/Land Use Records

If the fire insurance maps show the same parking garage between 1940 and 1960, the period in between does not need to be researched.

• The Phase I report is to be conducted/supervised by an “Environmental Professional”.  Although this is similar to the previous E 1527-00.  The AAI defines requirements for the Environmental Professional.  Requirements regarding training, experience and education are noted in the standard.

Environmental Professional statement is required in report, “[I, We] declare that, to the best of [my, our] professional knowledge and belief, [I, we] meet the definition of Environmental Professional as defined in §312.10 of 40 CFR Part 312…..”

 

• The shelf life of a Phase I is stated as one year.  All appropriate inquiries must be completed within one year, prior to acquisition of the property, HOWEVER, interviews, liens searches, records review and visual inspection must take place within 180 days. (Not 180 days from the date of the final report!) 

Relevant portions of the report (interviews, etc.) can be updated within the one year period in order to avoid reproduction of the entire report.

·        Interview with the owner and occupants is mandatory.

·        CERCLA landowner liability defense.  Standard E 1527-00 included petroleum products for liability protection.  New standard excludes petroleum products.

·        Either the purchaser or the Environmental Professional must conduct the search for Recorded Environmental Cleanup Liens.  If the search is performed by the prospective property owner and the results are not provided to the EP.  The lack of information to be identified as a data gap.

• Either the purchaser or the Environmental Professional must compare the purchase price of the property to the fair market value of the property, taking into consideration if the difference between the purchase price and the fair market value is due to the presence of releases or threatened releases of hazardous substances.  It is possible that the purchase price information may not be disclosed for business reasons.  This would be addressed as a data gap in the report.

• The report shall include one of the following statements:

“We have performed a Phase I Environmental Site Assessment in conformance with the scope and limitations of ASTM Practice E 1527 of [insert address or legal description], the property.  Any exceptions to, or deletions from, this practice are described in Section [  ] of this report.  This assessment has revealed no evidence of recognized environmental conditions in connection with the property,” or

“We have performed a Phase I Environmental Site Assessment in conformance with the scope and limitations of ASTM Practice E 1527 of [insert address or legal description], the property.  Any exceptions to, or deletions from, this practice are described in Section [  ] of this report.  This assessment has revealed no evidence of recognized environmental conditions in connection with the property except for the following:  (list).”

This article was authored by William Chambers, Acacia Environmental Group LLC. For more information on the author see here.

The Sewage Overflow Community Right-to-Know Act

     The Sewage Overflow Community Right-to-Know Act would provide a uniform, national standard for the monitoring, reporting, and public notification of municipal combined and santitary sewer overflows.  Under HR 2452, owners and operators of publicly owned treatment plants would have to implement plans to notify the public within 24 hours for cases in which the overflow could affect public health and notify public health officials of overflows that may "imminently and substantially" endanger human health.  The bill will next be going to the Senate.

     Link with the summary of HR 2452:  http://www.govtrack.us/congress/bill.xpd?bill=h110-2452

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

12 States Sue EPA for Failure to Stop Global Warming from Oil Refineries

     August 25, 2008 New York California, Connecticut, Delaware, Massachusetts, Maine, New Hampshire, New Mexico, Oregon, Rhode Island, Vermont, and Washington, as well as the District of Columbia and the City of New York filed suit in U.S. Court of Appeals for the D.C. Circuit against EPA for failure to issue New Source Performance Standards (NSPS), for controlling  greenhouse gas emissions from oil refineries, which the suit alleges account for about 15 percent of U.S. industrial emissions of carbon dioxide, the main greenhouse gas, as crude refineries burn oil in the production of  gasoline and jet fuel.

    The suit, led by New York Attorney General Andrew Cuomo, charges that the EPA violated the federal Clean Air Act by refusing to issue standards, based on the Supreme Court's ruling that EPA has the power to regulate greenhouse gases under the Clean Air Act. This suit augments other suits by coalitions of States against EPA to require the Agency to set standards for global warming emissions from power plants and to uphold the right of states to regulate pollution emissions from automobiles.

     This article was authored by Barbara D. Little, Jackson Kelly PLLC. For more information on the author see here.

Recent Carbon Capture & Storage Developments in Washington

     Sens. Kent Conrad (D-ND) and Orrin Hatch (R-UT) have introduced “The Carbon Reduction Technology Bridge Act” (S3208). The legislation has been designed to accelerate the development and deployment of advanced carbon capture and storage (CCS) technologies. In a letter, NMA President and CEO Kraig R. Naasz praised the legislation and said that the incentives will “accelerate the development of advanced clean coal technologies capable of decreasing carbon dioxide emissions while ensuring America’s future economic prosperity through the continued supply of abundant and affordable domestic energy.” The letter continued, “Most scientists agree it will take some time before advanced coal technologies become commercially available. As such, we are strongly encouraged by this bill’s emphasis on providing near term incentives to facilitate the development of carbon capture and storage capabilities.” NMA added that the bill establishes the necessary public/private partnerships “that will ultimately lead to CCS and other highly efficient coal technologies becoming commercially available.”

     The U.S. Department of Energy (DOE) will provide $36 million for 15 projects aimed at furthering the development of new and cost-effective technologies for the capture of carbon dioxide (CO2) from the existing fleet of coal-fired power plants. “Currently, the existing U.S. coal fleet accounts for over half of all electricity generated in this country,” U.S. Secretary of Energy Samuel W. Bodman said. “The projects announced today will combat climate change and help meet current and future energy needs by curbing CO2 emissions from existing coal-fired plants.” Capture and storage of CO2 is a key component of President Bush’s vision for a cleaner, more secure energy future. Since 2001, the Administration has invested more than $2.5 billion in clean coal research and development. The 15 projects will focus on five areas of interest for CO2 capture: membranes, solvents, sorbents, oxycombustion (flue gas purification and boiler development), and chemical looping. The announcement is part of DOE’s Office of Fossil Energy’s Innovations for Existing Plants (IEP) program, which is managed by the National Energy Technology Laboratory (NETL). The IEP program maintains a portfolio of research projects to address these and other environmental challenges faced by America’s existing fleet of coal-fired power plants.

     The EPA has also unveiled the proposed regulation to govern the underground injection and storage of carbon dioxide. EPA described the proposed regulation as creating “a consistent, national framework for the injection of carbon dioxide underground and protection of underground drinking water resources.” The rule would create a new class of injection wells under the authority of the Safe Drinking Water Act’s Underground Injection Control (UIC) program. The regulation applies to owners and operators of wells that will be used to inject carbon dioxide into the subsurface for the purpose of long-term storage. The proposed rule covers geologic site characterization to ensure that wells are appropriately cited, requires that wells be constructed using materials suitable for injection and in a manner that prevents fluid movement into unintended zones. The rule also calls for periodic revaluations of the area around injection wells and tests of the mechanical integrity of the injection well to ensure underground sources of drinking water are protected. The proposed rule contains provisions covering extended post injection monitoring and financial responsibility requirements to ensure that funds will be available for “well plugging, site care, closure and emergency and remedial response.”

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

EPA Utilizes its Veto Authority to Stop Corps' Yazoo Mississippii Flood Management Project

     Sept. 2, 2008, EPA announced its final decision to utilize its authoirty pursuant to 404 (c) of the Clean Water Act (CWA) to prohibit construction of the Corps of Engineers' Yazoo Pumps Project in the Mississippi Delta. Under CWA §404 (c) , EPA can prohibit, restrict, or deny using waters of the United States as a disposal site for fill material when it determines it will have an unacceptable effect on municipal water supplies, shellfish beds and fishery areas, wildlife, or recreational areas. EPA has used this §404(c) CWA authority only 11 times since the law was passed in 1972.

     The Yazoo Backwater Project is a federally funded Corps of Engineers' proposal first authorized in 1941, designed to reduce flooding in a 630,000 acre area in the State of Mississippi between the Mississippi and Yazoo Rivers. The primary component of the project, which was vetoed by the EPA, is a 14,000 cubic feet per second pumping station that would pump rainwater out of the South Delta during high water events on the Mississippi River.  The cost of the Yazoo Pumps Project would be more than $220 million for construction, with an annual operational cost of more than $2 million.  The Yazoo Backwater Area contains rich wetland and aquatic resources and serves as critical fish and wildlife habitat. EPA found that construction and operation of the proposed pumping station would adversely impact at least 67,000 acres of wetlands and other waters of the United States. EPA has determined that these impacts would result in unacceptable adverse effects on fishery areas and wildlife. While EPA states that it continues to support the goal of providing improved flood protection for the residents of the Mississippi Delta; it believes that the flood control objective can be accomplished consistent with ensuring effective protection for the area's valuable natural resources.

     This article was authored by Barbara D. Little, Jackson Kelly PLLC. For more information on the author see here.

In Re Methyl Tertiary Butyl Ether (MTBE”) Products Liability Litigation – The Commingled Product Theory

     In 2003/2004, fifty-nine (59) suits from across the country brought by municipalities, public services districts and other types of public water systems were joined in this multi-district litigation in the Southern District of New York.  These suits alleged that the plaintiffs’ wells had been contaminated with MTBE[1] from leaking underground storage tanks at retail gasoline outlets.  The defendants were makers of MTBE, refiners who added MTBE to their gasoline and retailers.  What started out as a promising case for the defendants on the issue of causation has turned into a series of defeats.

     Out of the vast numbers of original defendants, only a few remain.  Most of the major defendants having read the writing on the wall paid over $400 million and undertook certain remediation obligations to get out.  Many of the smaller defendants were voluntarily dismissed because they could not have caused the contamination.

     The remaining diehards, including Exxon Mobil and Lyondell Chemical and Equistar Chemical (makers of MTBE) were dealt another blow in May of this year when the district court refined its “commingled product theory” of liability.  2008 WL 2047611 (S.D.N.Y. May 13, 2008).  The commingled product theory is an “alternative” theory of liability which plaintiffs are allowed to rely on when they cannot prove that the conduct of a defendant is the proximate cause of their injury.

     In this case, the plaintiffs could not prove that the product of any of the defendants damaged their wells.  The plaintiffs in the phase of the case at issue were water suppliers in Suffolk County, New York.  As the district court noted, the plaintiffs faced two obstacles in attempting to prove causation.  First, in many instances, they could not identify the releases which contaminated their wells.  Second, it was impossible to determine the identity of the refiners of the gasoline and the manufacturers of the MTBE which contaminated the wells.

     The district court solved these problems for the plaintiffs by inventing the commingled product liability theory which it “developed to fit the particular facts of this case”.  The court reasoned that all of the gasoline sold in Suffolk County arrived at the New York Harber either on the Colonial Pipeline which originates from the Gulf Coast or on ships from domestic and overseas refiners.  Most of the gasoline that is shipped in the pipeline is designated as fungible which means that it is mixed with other refiners’ products of the same type.  When it arrives in New York Harbor, the gasoline is commingled with other gasoline and stored in large tanks at primary terminals.  It is later redirected to secondary terminals serving regional markets.  Gasoline arriving by ship is also mixed with other product at the primary and secondary terminals.  From the secondary terminals, it is shipped by truck to retail locations.

     Since each of the defendants had produced gasoline or MTBE which entered the New York Harbor by pipeline or ship, the district court concluded that sufficient evidence of causation existed to survive a summary judgment motion.  The court described the plaintiffs’ burden as follows:

when a plaintiff can prove that certain gaseous or liquid products . . . of many refiners were present in a completely commingled or blended state at the time and place that the risk of harm occurred, and the commingled products caused the plaintiff’s injury, each refiner or manufacturer is deemed to have caused the harm.

2008 WL 2047611 at 16.  The theory as described by the court makes sense because each refiner contributed to the harm.

     However, the theory as applied by the district court went much further.  As the court implicitly recognized, there was no assurance that the product was “completely” commingled or that each refiner contributed to the harm.  Based on the evidence, the district court determined that a jury could “conclude that most defendants’ gasoline contributed to contamination in at least some wells at some point”,  2008 WL 2047611 at 15, and there is a “good chance that many defendants, if not the majority, actually did cause plaintiffs’ injury”.  Id at 16.  Thus, liability is imposed not because the refiner’s product is part of the commingled product which caused the injury, but because it might have been. 

     Even though the refiners are allowed to avoid liability if they can prove their product could not have contributed to a particular injury, the court held that evidence that a refiner’s share of the MTBE gasoline shipped to New York was infinitesimal does not relieve it of liability.

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

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[1] MTBE is a gasoline additive.  It was first used in the 1980’s as an octane booster and later as an oxygenate to meet requirements of the Clean Air Act.

EPA Proposes Designations for the 2006 24-Hour PM2.5 Standard

     The U.S. Environmental Protection Agency (EPA) has notified States of modifications to their suggested designations for the 2006 24-hour PM_2.5 national ambient air quality standards (NAAQS) that EPA promulgated on September 21, 2006. (71 Fed. Reg. 61144; Oct. 17, 2006).  On August 19, 2008, EPA sent letters to States responding to their suggested designations for the 24-hour PM_2.5 standard.  The States made their suggested designations at the end of 2007. 

     West Virginia recommended that Kanawha and Putman Counties in the Charleston, WV MSA and Brooke and Hancock Counties in the Steubenville-Weirton, OH-WV MSA be designated nonattainment and that the rest of the State be designated attainment. In suggesting designations, West Virginia

adhered to its litigation position in the D.C. Circuit, Catawba County v. EPA, No.05-1064, challenging EPA’s designations for the 1997 PM_2.5 NAAQS.  West Virginiabased its designations for the 2006 PM NAAQS on metropolitan statistical area (MSA) boundaries and air quality monitoring data rather than EPA’s nine-factor directive that is the subject of the pending litigation. 

     EPA responded with 86 pages explaining its modifications to West Virginia’s designations.  In addition to West Virginia’s suggested designation, EPA intends to designate as nonattainment the following:  Cabell and Wayne Counties and part of Mason County in the Huntington-Ashland, WV-KY area, Monongalia County in the Morgantown, WV area, and Wood County and part of Pleasants County

in the Parkersburg, WV area.  EPA’s intended designations rely on 2005-2007 air quality monitoring data; where as West Virginia’s suggested designations relied on 2004-2006 air quality monitoring data.   

     Unlike the 1997 PM_2.5 designations, EPA did not establish a presumption for the minimum size of an area but instructed States to evaluate each area on a case-by-case basis for the 2006 PM_2.5 designations.  EPA expects nonattainment areas for the 2006 PM_2.5 standard to include counties with violating monitors and nearby counties that contribute to that violation.   EPA recommended that States consider using common boundaries for both the annual and 24-hour PM_2.5 standards.  EPA also recommended that States consider the same nine-factors that are being challenged in the pending litigation.  The nine-factors are:  emissions data; air quality data; population density; and degree of urbanization (including commercial development); traffic and commuting patterns; growth rates and patterns; meteorology (weather-transport patterns); geography-topography (mountain ranges or other air base and boundaries); jurisdictional boundaries (e.g., counties, air districts, reservations, metropolitan planning organization); and level of control of emission sources.  EPA’s explanation of how it applied these factors is more robust for the 2006 NAAQS than the 1997 NAAQS.  Indeed, EPA’s response to West Virginia consists of 86 pages.

     EPA will publish a notice of availability of its responses to States’ suggested designations and is inviting comment on its responses during a thirty-day comment period, starting with the date of publication of the notice of availability.  EPA did not provide notice and comment on its 1997 PM_2.5 designations or on its nine-factor test, and that lack of notice and comment is also an issue in the pending litigation.

EPA expects to make final designations by December 18, 2008.  States must submit their state implementation plans demonstrating how they will meet the 2006 PM_2.5 NAAQS by April 2012.  Nonattainment areas must achieve clean air by 2014 although EPA may grant extensions of up to five additional years in areas with more severe PM_2.5 air quality problems and where emission control measures are not available or feasible.  Nonattainment areas must implement “transportation conformity,” which requires local transportation and air quality officials to coordinate planning to ensure that transportation related emissions from projects, such as road construction, do not interfere with an area’s ability to reach the PM_2.5 NAAQS, within one year after an area is designated as nonattainment.  Nonattainment areas are also subject to new source review requirements one year after an area is designated as nonattainment.  New source review requires power plants and industrial facilities to undergo permitting for new construction and modifications and may include stricter controls.  This time line for implementation of the 2006 PM_2.5 NAAQS may be delayed in some areas, however, if the challenge to the 1997 PM_2.5 designations is successful.

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

Carbon Emission Cap and Trade Overview

    Carbon emissions cap and trading programs are an administrative approach used to control pollution by providing economic incentives for achieving reductions in the emissions of pollutants. There are six greenhouse gases that are generally identified with cap and trade programs: carbon dioxide, methane, nitrous dioxide, hydrofluorocarbons, perfluourocarbons, and sulfur hexafluoride.

     A cap and trade program is administered by a central authority (usually a government or international body) that sets a limit or cap on the amount of a pollutant that can be emitted. Companies or other groups are issued emission permits and are required to hold an equivalent number of allowances (or credits) which represent the right to emit a specific amount. The total amount of allowances and credits cannot exceed the cap, limiting total emissions to that level. Companies that need to increase their emissions must buy credits from those who pollute less. The transfer of allowances is referred to as a trade.

     In effect, the buyer is paying a charge for polluting, while the seller is being rewarded for having reduced emissions by more than was needed. Thus, in theory, those that can easily reduce emissions most cheaply will do so, achieving the pollution reduction at the lowest possible cost to society. Progressive programs lower the cap for emissions on an annual basis in order to achieve the ultimate objective of dramatically reducing the overall level of these gases emitted into the environment over time.

     The major players in the various cap and trade programs are brokers and traders, oil and gas companies, electricity companies, industries, agriculture producers, insurance and reinsurance providers, financial institutions, governments at all levels, aggregators for both carbon and renewable energy credits (“RECs”), hedge funds, private equity carbon funds & venture capital funds. These players participate in cap and trade programs throughout the world including the United States and Europe.

     For more information, you may consult the following emissions trading sources: Environmental Markets Association(www.environmentalmarkets.org), International Emissions Trading Association (www.ieta.org), Point Carbon (www.pointcarbon.com), Pew Center on Global Climate Change (www.pewclimate.org), Chicago Climate Exchange (www.chicagoclimateexchange.com), New Energy Finance (www.newenergyfinance.com).

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