E2 Law Blog : Environmental Lawyers & Attorneys : Greenberg Traurig Law Firm : Climate Change, Energy Legislation

Is cap and trade now really, most sincerely dead?  Well, Politico is reporting "Senate Democrats pulled the plug on climate legislation Thursday, pushing the issue off into an uncertain future ahead of midterm elections where President Barack Obama’s party is girding for a drubbing."  

However, even if cap and trade is truly dead and buried this time, the fact is that much more aggressive CO2 regulations are on the way.  Expect EPA to accelerate its rule-making binge and give free rein to green ideologues, both in and outside of the agency.  Also, the "energy bill" promised by Reid likely will contain billions in subsidies and pay-outs to a variety of favored industries and players.  We expect to see a draft of the bill next week, and will analyze its terms, and the winners and losers, then.

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The Center for Environmental Innovation and Leadership (CEIL), has launched a new on-line community.  CEIL aims to connect government and military professionals with providers of green goods and services, all to promote compliance with Executive Order 13514, and the website looks like it will be a useful portal for those seeking government contracts.  Additionally, CEIL is presenting a "GovGreen Conference & Expo" here in Washington, DC November 9-10, 2010. Registration opens late July.  Check it out.

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The ever-useful Inside EPA reports, in a story titled "EPA Petitioned To Defend Data Underlying Key Regulatory Decisions" (subscription required), that numerous associations, businesses, and environmental advocacy groups have filed numerous petitions under the Data Quality Act (aka the "Information Quality Act") for correction of information disseminated by EPA and other administrative agencies in the wake of a recent D.C. Circuit case titled Prime Time v. Vilsack.  [Full disclosure - I was Prime Time's counsel and argued the case before the Court of Appeals]  The DQA directs the Office of Management and Budget (OMB) to issue government-wide guidelines that "provide policy and procedural guidance to Federal agencies for ensuring and maximizing the quality, objectivity, utility, and integrity of information (including statistical information) disseminated by Federal agencies".  Essentially, OMB mandates that agencies show their work, and base their statements, directives, and information on good, methodologically sound science and statistics. The guidelines may be found here.  

Contrary to the arguments made by both the Bush and Obama Administrations, Prime Time strongly suggests that agency actions (or lack thereof) are judicially reviewable.  Opponents of the DQA, argue, as the Justice Department did in Prime Time, that a decision by the Fourth Circuit in a case titled Salt Institute v. Leavitt  means the DQA creates no judicially enforceable rights.  [More full disclosure - I was also Salt Institute's counsel.]  The Fourth Circuit, however, ignored the DQA's plain language requiring agencies establish administrative mechanisms allowing "affected persons to seek and obtain correction of information maintained and disseminated by the agency that does not comply with the law."  By contrast, the D.C. Circuit gave effect to the DQA's plain language and thus refused to cite or adopt the Fourth Circuit's ruling.

On its face, judicial review of agency action on DQA petitions would seem to be very a very positive and useful thing, because it forces administrative agencies to take care and be sure their information and actions are based on sound, transparent, and defensible science and not politically skewed agendas.  Yet, those who favor activist agencies and extensive regulations are typically not DQA fans.  Some have even argued that information quality requirements are the "nemesis" of regulation.  This is hard to understand, for one would think that a law aimed at ensuring agencies get it right would garner support across the ideological divide, particularly with the federal government regulating so extensively.  But there it is.  

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David Mandelbaum of GT's Philadelphia office is a thoughtful and provocative commentator.  His first in a planned monthly series of environmental law columns for The Legal Intelligencer and Pennsylvania Law Weekly © appeared on July 6, and is titled "Drill, Baby, Drill?" (See 33 Pa. L. Weekly 655.)  In his column, David raises questions we've explored on this Blog in some depth: Is going slow or imposing a moratorium for new energy resources like unconventional natural gas actually a good idea? Does application of the "precautionary principle" make sense when the existing energy infrastructure relying primarily on coal and oil may be less sustainable environmentally or geopolitically?  His answers might surprise you.  Read the column here.  

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From our press release:

The beneficial effects of nanotechnology innovation on human health and the environment are the focus of a comprehensive report to be presented at the Nano Science and Technology Institute’s Nanotech Conference and Expo 2010 in Anaheim, CA, June 21-24, 2010....Nanotechnology may substantially improve the quality of both human life and the natural environment, according to the authors of the report: Chinh H. Pham, Chair of Greenberg Traurig’s Nanotechnology Practice; Reed D. Rubinstein, Shareholder in the Environmental and Administrative Law Practice at Greenberg Traurig in Washington, D.C.; Dr. Richard C. Pleus, Managing Director of Intertox; and Lynn Foster, CEO of BPT Pharmaceuticals, who was previously at Greenberg Traurig. The EHS risks of nanotechnology require additional study. However, initial indications are that these risks are generally remote, speculative, and manageable, according to the report. It is now available for download at Nanotechnology - Greenberg Traurig, LLP.

This is a good report. Go read it.

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This report sheds light on EPA's current thinking regarding the environmental risks associated with natural gas extraction in the Marcellus Shale, described by EPA as "the most expansive shale gas play in the U.S."   EPA's primary concerns seem to be disposal of the wastewater from hydraulic fracturing used to extract natural gas and disposal of potentially radioactive waste generated during the extraction process.  According to EPA,  "shales contain naturally occurring radioactive material (NORM)...The Marcellus Shale is considered to have elevated levels of  NORM."

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The EPA has just issued a Federal Register notice stating it will deny Confidential Business Information (CBI) claims for the identity of chemicals in health and safety studies filed under the Toxic Substances Control Act (TSCA), unless the chemical identity explicitly contains “process information” or discloses “mixture information.”  This follows on EPA's January announcement that it will generally deny confidentiality claims for the chemical identity in TSCA Section 8(e) reporting for chemicals already listed on the public portion of the TSCA Inventory.  

EPA's actions to limit TSCA CBI protection are consistent with the agency's stated policy of pushing TSCA authorities beyond traditional limits. The agency's legal justification for this action is thin.  However, the policy goal is clear: "EPA believes these actions will make more health and safety information available to the public and support an important mission of the Agency to promote public understanding of the potential risks posed by chemical substances in commerce."

The Notice may be found at 75 Fed. Reg. 29755.

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The EPA GHG Rule is 16 pages long, but it is accompanied by 499 pages of explanation and justification.  This is the EPA website link  to a copy of the rule, a fact sheet, and an implementation time line.  Here is a summary and a brief analysis based on a quick first read and an EPA telephone briefing.  

To begin with, EPA admits that the Clean Air Act PSD and title V requirements presumptively apply, as of January 2, 2011, at the 100 or 250 tons per year (tpy) levels of CO2 or its equivalent ("CO2e").  On its face, this means just about every business, restaurant, and apartment building in the country is theoretically subject to EPA permits and control.  (p.15).  Therefore,  ostensibly for reasons of administrative convenience, the agency is attempting to buy time by "tailoring" the GHG rule to phase in the permitting requirements.  Thus, the rule bites in stages.  

Step 1 - beginning January 2, 2011, facilities currently subject to Clean Air Act new source review (primarily power plants and refineries) and that also will emit or will have the potential to emit 75,000 tpy CO2e or more, and existing major stationary source for a regulated NSR pollutant that is not GHGs, and also will have an emissions increase of a regulated NSR pollutant, and an emissions increase of 75,000 tpy CO2e or more, are subject to EPA GHG regulation, including PSD.

Step 2 - beginning July 1, 2011, EPA phases in additional large sources of GHG emissions. New sources as well as existing sources not already subject to title V that emit, or have the potential to emit, at least 100,000 tpy CO2e will become subject to the PSD and title V requirements. In addition, sources that emit or have the potential to emit at least 100,000 tpy CO2e and that undertake a modification that increases net emissions of GHGs by at least 75,000 tpy CO2 will also be subject to PSD requirements.  EPA said on the briefing call this will capture at least 550 new facilities, "mainly" municipal landfills, plus 900 additional PSD permits.  

Step 3 – EPA will “solicit comment” on lower GHGs thresholds for PSD applicability and issue a small source rule by July 1, 2013.  EPA has promised not to regulate emitters of less than 50,000 tpy CO2e until this "small source" rule is final.

Step 4 - No later than April 30, 2015 EPA shall complete a study projecting the administrative burdens that remain with respect to all other sources.  EPA promises to issue a small sources rule no later than April 30, 2016.  EPA says "We cannot say at this point how close to the statutory thresholds we will eventually reach. Because this rule establishes only the first two phases of the tailoring approach, we do not find it necessary to answer these questions in this rule, and instead we expect to resolve them through future rulemaking."  It also reserves the right to "exempt" small sources from regulation altogether, based on findings of "absurd results" and "administrative necessity."  

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EPA's long-anticipated GHG emissions rule is out.  For the first six months of 2011, GHG PSD  requirements are limited to stationary sources that already must comply with its requirements for other pollutants.  These facilities will be required to include greenhouse gas emissions in their PSD permit if they increase those emissions by 75,000 tons per year.  Starting in July 2011, the tailoring rule will apply PSD requirements to new sources that emit more than 100,000 tons per year of carbon dioxide-equivalent and to modified sources that emit more than 75,000 tons per year.  

Expect environmental groups to sue because EPA's rule sets limits that are contrary to the plain language of the Clean Air Act.

More on this Rule to come.

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OMB has released its draft 2010 "Report To Congress on the Benefits and Costs of Federal Regulations and Unfunded Mandates on State, Local, and Tribal Entities". The Report examines the benefits and costs of major Federal regulations issued in FY2009 and summarizes the benefits and costs of major regulations issued during the previous ten years.  It also discusses regulatory impacts on State, local, and Tribal governments, small business, wages, and economic growth; offers recommendations for regulatory reform; updates how the Administration is implementing the Information Quality Act; and summarizes agency compliance with the Unfunded Mandates Reform Act. 

Interestingly, OMB is asking for comment on regulations that are ripe for change or repeal.  Persons adversely affected by federal regulations ought to grab this opportunity to put their concerns on the record.  Comments on the draft Report should be submitted at www.regulations.gov, Docket ID OMB-2010-0008.

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Sen. Frank Lautenberg (D.N.J) has introduced a bill to comprehensively reform the Toxic Substance Control Act of 1976 (TSCA).  Lautenberg's Bill is titled the Safe Chemicals Act of 2010.  The Bill is 169 pages long and demands careful analysis.  However, on a first reading it appears radical and impractical changes are being proposed.  For example: 

• The Bill discards TSCA's risk-based approach for the European "precautionary principle."   The Bill states all chemicals "[must] meet a risk-based safety standard that protects vulnerable and affected populations and the environment" and that companies "at all times, bear the burden of proving of proving" compliance with the "applicable safety standard."  
• The "safety standard" is "reasonable certainty of no harm," which in turn is defined as "a negligible risk of any adverse effect on the general population or a vulnerable population."  The term "negligible risk" is not defined.  "All" chemical substances in commerce must  meet this standard.  
• On the one hand, the Bill requires every safety standard compliance determination to be "supported by an assessment of risk conducted by an [EPA] employee or contractor..."  On the other hand, no risk assessment is required to deny compliance certification.  
• The Bill grants EPA  total and unfettered discretion.  It explicitly (and likely illegally) exempts EPA's determination that a company has failed to prove "safety" from judicial review.  EPA is judge, jury, and executioner.
• The Bill does not preempt more restrictive State requirements.
• The Bill expands EPA control over nanomaterials by doing away with the "molecular identity" test.
• The Bill does away with business confidentiality,  requiring all TSCA-related studies must be made public as part of a "registry of all health- and safety-related studies" and mandating disclosure to EPA "and the public...the sources of any funding used for the conduct or publication of the study received by the researchers who conducted the study."  

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Federal, state and local environmental regulators are increasing their efforts to regulate stormwater discharges from commercial properties, and are going beyond traditional regulatory approaches to do so.  For example, EPA recently announced a pilot permitting program for discharges to the Charles River in eastern Massachusetts that will require commercial property owners to reduce phosphorous levels in their stormwater discharges by 65 percent.  

EPA's initiative is a caution for commercial property owners nationwide. Check out the attached GT Alert by Hamilton Hackney of GT Boston for a complete analysis.

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The NNI's Third Report is out.  The environmental, health, and safety section calls for interagency coordination and identification of "plausible risks."    This is good policy and good science.  So why isn't EPA listening?  

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EPA today took action to aggressively advance the Administration's regulatory agenda and expand its control over the economy, despite Congress, and in defiance of the many lawsuits challenging the predicate endangerment determination.  EPA regulatory Notice is 115 pages long.  It is accompanied by a six page explanatory Fact Sheet.  The Notice is tremendously significant with far-reaching consequences and requires careful analysis.  What becomes immediately clear is that the Fact Sheet does not capture the economy-wide scope and ramifications of EPA's actions.  According to EPA, Clean Air Act PSD permit requirements for cars, light trucks and what EPA calls "larger emitting facilities", i.e., power plants, refineries, large office and apartment buildings, factories, and, if environmental groups are successful in their litigation strategy, potentially all other sources emitting more than 300 tons of CO2 a year, will be triggered in January 2011. 

More to follow in a couple days.

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EPA’s assault against nanotechnology seems to be getting serious.  The minutes of a recent EPA Scientific Advisory Panel (SAP) review of silver nanomaterials, commonly used due to their anti-microbial affect, seem to indicate EPA intends to slow down or even stop commercial use of this product. The SAP review comes against the backdrop of an ongoing campaign by anti-technology pressure groups to stop the use of silver and other nanomaterials. 

However, given the absence of evidence that these materials pose any meaningful human health or environmental risk, EPA's actions are difficult to understand.  To begin with, the SAP conceded an absence of data suggesting silver ions from silver nanomaterials behave differently than silver ions from any other source.  Yet, it assumed without data the rate of silver ion production, as well as the distribution of silver in tissue, “may differ substantially” between silver nanomaterials and other forms of silver.  As one industry group points out, these assumption are not well-founded.  Even so, the SAP concluded “most existing models are not appropriate for use with silver nanomaterials and will not accurately predict nanosilver exposure scenarios.” Significantly, the SAP used the absence of scientific data as justification for implementation of an onerous and costly testing regime that may deter FIFRA nanopesticide registrants.  

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The FY2011 Budget is out.  The numbers provide useful indications of key Obama Administration environmental and energy policies.   Highlights include an aggressive EPA rule-making agenda to control GHGs and more money for DOE 's renewable energy research but huge cuts in DOE's fossil fuel programs.

To begin with, the term "cap and trade", which was prominently featured in the FY2010 Budget (see for example page 21) is missing entirely from the FY2011 Budget.   The new and apparently improved euphemism for mandatory GHG emission controls is "comprehensive market-based policy that will reduce greenhouse gas emissions."  While the Administration has apparently jettisoned "cap and trade" as a political liability, it remains committed to regulating GHG emissions and has requested significant funding for EPA to do so through command and control regulations. The Administration allocates "$56 million– including $43 million in new funding – for the EPA and states to address climate change effectively through regulatory initiatives to control greenhouse gas emissions."   The budget is $25 million for states to regulate GHG emissions under the New Source Review and Title V operating permits programs, $7 million for New Source Performance Standards (NSPS) to regulate GHG emissions from major stationary sources, $6 million to implement the 2010 auto emissions rule and to develop regulations for large mobile sources, and $5 million to develop guidance regarding the best available practices and technologies to control GHG emissions through command and control permits.   My suggestion here that key Administration policymakers viewed GHG legislation as a mere side-show and were instead committed to administrative rule-makings seems to have been on the mark. 

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A new Federal climate change agency is announced.  The website is up and running.   Yet another Federal bureaucracy - what could be better?   

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The new Federal budget is out.  For starters, Superfund taxes are reinstated ($20 billion) and the cellulosic biofuel producer credit ($24 billion) appears to have been modified.  We'll have a more extensive analysis out shortly.

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As I noted here, EPA's leadership has targeted the nanotechnology industry for regulation.  The Agency's December Action Initiation List reflects this, stating EPA is developing a significant new use rule under TSCA section 5(a)(2) "for nanoscale materials."  The rule will require "persons who intend to manufacture, import, or process" nanomaterials to "notify EPA at least 90 days before commencing that activity" so EPA may "prohibit or limit that activity before it occurs" to prevent "unreasonable risk to human health or the environment." 

EPA's intentions, particularly given the massive methodological and data quality problems of nanomaterial risk assessment, need to be better understood.  Inter-agency coordination between EPA and the rest of the Federal Government on nanotechnology regulation should be a priority, yet it seems EPA is moving forward without substantive consultation.  As a first step, the industry should request more transparency from the Agency, especially with respect to the data it relies on to support this regulatory initiative.     

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The informative Texas Energy and Environmental Blog reports "At a briefing this morning with reporters from The Dallas Morning Newsand other outlets, White House senior advisor David Axelrod didn't list climate change as a top priority for 2010. (The list basically consisted of finding ways to create jobs and passing a major financial regulation bill.)" and asks "is climate change is still a priority for Team Obama?"

Well, it is, but not through legislation.  Instead, the Administration is acting by expanding Federal agency power and control.  For example, at the January 20 meeting of the US Conference of Mayors, EPA Administrator Lisa Jackson again made it clear EPA intends to control local land use for "sustainability," as we discussed here.  

What's happening in Congress is and probably always has been little more than a distraction to the Administration.  The real action is in the Federal bureaucracy, but almost no one is paying attention.   Team Obama wants "transformative change" to the economy, and has opted for agency rules over legislation to avoid the "distractions" of the legislative process - i.e., popular opposition (the Landrieu (D-La.)/Murkowski (R-Alaska) bipartisan effort to block EPA from regulating greenhouse gases under the Clean Air Act, health care, etc.)  Republican Scott Brown's stunning election will encourage Team Obama to accelerate its efforts on the agency front. They know rules and guidance once issued almost never die. 

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North Dakota's member of the House of Representatives, Democrat Earl Pomeroy, has introduced H.R. 4396, the "Save Our Energy Jobs Act", to prohibit EPA from regulating CO2.  

The Bill proposes to amend Section 302(g) of the Clean Air Act (42 U.S.C. 7602(g)) to read "The term `air pollutant' shall not include carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, or sulfur hexafluoride."   It also contains a "sense of Congress" provision providing (1) Congress did not intend to regulate greenhouse gases under the Clean Air Act.  (2) EPA should not regulate greenhouse gas emissions without explicit authority to do so. (3) GHG rules will significantly affect nearly all aspects of the US economy and should not be left to administrative rulemaking absent congressional action.  (4) Comprehensive GHG regulations must only be enacted--(A) at the direction of Congress; and (B) if Congress specifically intends such regulations to be implemented.

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The Southeastern Legal Foundation has filed a Petition for Reconsideration of the EPA's endangerment determination due to Climategate.  Although EPA likely will reject the Petition, it makes for interesting reading and provides a good foundation for future litigation.

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EPA, as a matter of express policy, has not yet made common cause with the NGOs that aim to stop nanotechnology.  But it seems the agency has definitely shifted course, aggressively interpreting its legal authorities to justify increased regulation of, and limits on, commercial nanotechnology use.

Recent remarks by Steve Owens, EPA's Assistant Administrator for the Office of Prevention, Pesticides and Toxic Substances, make it clear EPA will, if possible, circumvent TSCA to expand its authority over nanotechnology in order to regulate more aggressively. Owens said EPA will not wait for Congress to amend TSCA to provide the authority it seeks, instead, the agency will propose a reporting rule under TSCA section 8(a) "to require companies to report a range of information on nanoscale materials" and a test rule under TSCA section 4 requiring companies "to test several manufactured nanomaterials for health and environmental effects."  He also stated EPA's existing policy that a nanoscale substance with the same molecular identity as a substance listed on EPA’s TSCA Inventory is considered to be an existing chemical is under review, suggesting it likely will be changed.

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This post is courtesy of Cecily A. O'Regan, an IP lawyer in GT's Silicon Valley office.  Welcome Cecily!

The USPTO has announced a pilot program enabling applicants to have a patent application advanced out of turn for examination (thereby accelerating prosecution) for “green technology.” As anyone familiar with Patent Office backlogs will appreciate, this is particularly good news for start-up companies who may find financing easier with one or more patents further in the queue or (better yet) in hand. 

Under this new program applications pertaining to environmental quality, energy conservation, development of renewable energy resources, or greenhouse gas emission reduction are eligible to apply for accelerated examination. Of course, there is a catch - the USPTO will only accept the first 3,000 eligible petitions.  Thus, technology companies and entrepreneurs need to consult with patent counsel soooner, not later, to take advantage of this opportunity. 

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So, in the end, was the UN Copenhagen climate summit  nothing more than a good party  and a massive waste of hot air?  And what now for US businesses and consumers?  

It is, frankly, far too early to evaluate the potential long-term impact (or lack thereof) of the Copenhagen Accord.  It is evident the combination of a massive recession and concerns regarding the science used to justify stringent CO2 controls are having a legislative impact.  And it certainly seems carbon traders took a hit because Copenhagen is widely perceived to have been a bust.   But in the final analysis, it is EPA's endangerment finding, and not the Copenhagen Accord, that matters most for US businesses, consumers, and politicians. 

Here's why:  EPA's endangerment finding effectively triggers significant Clean Air Act regulatory requirements, and thereby places the fate of US businesses and consumers in the hands of the federal courts.  Absent Congressional action taking CO2 regulation away from EPA (and right now passage of climate change or energy policy legislation taking ownership of the CO2 issues is unlikely due to splits in the Democratic Party) there will be a muti-year torrent of litigation from environmentalists, business groups, and everyone in between challenging pretty much everything EPA chooses to do (or not do).  This means, in turn, that the courts will effectively make or break US energy policy and thereby shape the future of the US economy.  

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Joe R. Reeder is a 1970 West Point graduate, an Army Ranger, the 14th Undersecretary of the Army (Clinton Administration), and the past Chairman of the Panama Canal Commission's Board of Directors, among other things.  In a recent speech before dignitaries, officials, and industry leaders at a plenary session of the Watec 09 international energy and environmental conference and exhibition in Tel Aviv, Israel Mr. Reeder explained the U.S. national security imperative of clean energy.  Based on Lawrence Livermore Laboratory research, Reeder called for a dual program of advanced research and practical, incremental measures, including federal, state, and local legal reforms to speed development and deployment of an efficient advanced electrical grid and alternative energy systems, an open fuel standard for cars and trucks, and a full bore commitment to nuclear power.  Reeder used Patton's Third Army march through France during 1944 and the Arab oil embargo of 1973 to drive home the strategic importance of secure and reliable energy supply and the crippling consequences of dependency on foreign oil.

What with climate change legislation bogged down in the Senate, the growing scandal over the apparent manipulation and misrepresentation of data by pro-regulatory scientists dubbed "Climategate", and apparent public scepticism about the entire issue, perhaps it is time for clean energy advocates to stop worrying about "saving the world" and instead to start focusing on what's good for America. Asking "What Would Patton Do?" might be a good start indeed.  

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The push to leverage GHG regulation into federal control over local land use, transportation, and development is accelerating.  The new House transportation bill, titled the Surface Transportation Authorization Act of 2009, authorizes the EPA to establish "national transportation related" GHG "goals," and requires States to "develop [approved] surface transportation-related greenhouse gas emission" limits.  In other words,  States must sync local land use with EPA's GHG limits.   

EPA, in turn, has been hard at work developing the analytic tools needed to extend federal control.  For example, in 2008 EPA circulated for "peer review" a draft report assessing  "land-use scenarios consistent with climate change emission story lines" to better "model" the impact of population growth and land use on "climate change," on the premise that "climate change interacts with existing and future land uses, such as residential housing and roads."  This report, though technically not "final" signals clearly where EPA intends to go. 

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As the Wall Street Journal reports, the biofuel industry is, yet again, suffering tough times.  The National Biodiesel Board has released a report claiming the industry "could be expected to collapse" unless the federal biofuels tax credit expiring December 31, 2009 is renewed.  However, Congressional action is uncertain, even as state and local governments fail to mandate biodiesel use. The tepid support is due, in part, to the fact feedstocks are typically food crops, as opposed to sugar cane, castor plants or algae, meaning biofuels swap food for fuel. 

Help may be on the way, though.  First, the Department of Energy is aggressively funding feedstock alternatives to grain and corn including algae.   Second, the USDA Animal & Plant Health Inspection Service is considering a petition from Syngenta Seeds, Inc. to deregulate corn genetically engineered to produce a microbial enzyme that facilitates ethanol production. If APHIS grants the petition, then the GE corn and its progeny would no longer be regulated and could be planted without APHIS permits or oversight, obviating some of the "food v. fuel" concerns through increased yields.            

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