Energy & Environmental Law Blog

Energy & Environmental Law Blog

Analyzing the critical energy and environmental issues of the day

EPA/Corps Adopt “Waters of the U.S.” Rule: What’s Next?

Posted in EPA, Rulemakings

Today EPA and the Army Corps of Engineers released a prepublication version of the final rule defining “waters of the United States,” the jurisdictional trigger under the Clean Water Act.  The term needs defining because the Act extends to navigable waters and adjacent wetlands, but it is often not clear how some streams or wetlands relate to a navigable waterway, and the Supreme Court has provided conflicting guidance.

So, the agencies have attempted to clarify.  With the new definition they hope to reduce the number of case-by-case jurisdictional determinations and litigation, but they understand full well the controversial nature of the rule, having received over a million comments on the draft published on April 21, 2014.  In response, EPA and the Corps today also released a battery of public relations offerings—press release, fact sheets, blogs, op-ed pieces—to explain and defend the rule.  The controversy will not end here.

As previously reported in this space, the impetus for the rule is uncertainty created by a 2006 Supreme Court decision in Rapanos.  In that case, a 5-4 split Court held that the government had overstepped its authority, but failed to issue a majority opinion.  Instead, four justices, led by Justice Scalia, proposed a rule in essence requiring that the subject waters or wetlands be free flowing and obviously wet.  The concurring opinion by Justice Kennedy would instead look for a “signficant nexus” between a wetland and a navigable waterway.  The lower courts have struggled ever since to discern a clear jurisdictional definition.

At first glance, the final rule does not veer much from the draft.  For a comprehensive analysis of the draft rule, including the cases leading up to the rule, see the American College of Environmental Lawyers report for the Environmental Council of the States.  Although EPA and the Corps have declared that the rule does not represent a major policy shift, a diverse ACOEL writing team—made up of experts in academia, non-profit organizations, and private practice—had differing opinions.  Some saw a sea change in federal policy, while others believed the draft rule was simply a restatement of existing policy.

Congress has been fulminating about government overreach since the draft rule was published.  On May 12, 2015 the House passed HR 1732, the Regulatory Integrity Protection Act, in an effort to block the final rule.  If the Senate passes the bill, Congress will need to muster the votes to override a certain presidential veto.

Although the purpose of the final rule is to provide some certainty as to the scope of Clean Water Act jurisdiction, it is highly likely to be challenged by industry groups in the courts.  That means years of litigation and appellate review across the country, ultimately landing once again before the Supreme Court.  Whether we get clarity this time from the Court remains to be seen.

USFWS Launches New Regulatory Program Under the Migratory Bird Treaty Act

Posted in Environmental Quality, Renewables

The US Fish and Wildlife Service issued a Notice of Intent to prepare a Programmatic Environmental Impact Statement (PEIS) to evaluate the potential environmental impacts of an incidental take program under the Migratory Bird Treaty Act (MBTA).

The agency anticipates the development of general authorizations for particular industry sectors, focusing first on oil and gas production, communication towers, and electric transmission.  However, the agency stated it may develop additional general authorizations for other sectors, identifying specifically wind energy generation, a step that the American Bird Conservatory had petitioned the agency for earlier this year.

The notice of intent indicates the agency will also address the possibility of issuing individual permits and the expansion of existing efforts to work with industrial sectors to develop non-binding “best practices,” without providing protection for incidental take.

The MBTA is a criminal statute with extremely broad coverage – over 1000 bird species – and a very low bar for liability – essentially strict liability for misdemeanor violations.  In the past, the FWS has used its enforcement discretion to limit its actions to parties who have ignored efforts to reduce bird mortality, usually after warnings from the agency, and has only very recently applied the statute to wind farms.

This program, if implemented, would provide facility operators in these sectors with assurance against prosecution, but would also greatly expand the agency’s ability to obtain mitigation for the mortalities that occur. Given the potential impact, it is strongly in the interest of the affected industrial sectors to participate actively in the evaluation and development of the programs to assure that the operational and mitigation requirements are both effective and reasonable.

Court at the Fox River Site Opens Door to Superfund Divisibility

Posted in Natural Resources, Rulemakings

On May 19, a district court ruled that a company had established divisibility for its liability at a major downstream segment of the Fox River mega-site in Wisconsin, capping its liability for that segment at 28%. This same court had initially held that the company, NCR, was jointly and severally liable for PCB contamination at the site. This decision and the appellate court’s earlier reversal of the initial rejection of the divisibility argument signal that courts may be increasingly receptive to divisibility claims in Superfund actions.

In its prior ruling, the district court had applied a binary measure of harm based on remediation costs, and denied NCR’s motion seeking divisibility.  The 7th Circuit Court of Appeals upheld that ruling on an interim appeal, but later reversed itself and held that “harm” was a continuous measure of the resulting risk to health and the environment, which would vary with the amount of PCBs present, and not on the cost of remediation.

In the remand, noting that the appellate court had held that remediation costs would also be continuous, with costs higher in areas that were more toxic, the district court then held that it was reasonable to apply the harm percentages to the costs of remediation: “It requires no stretch of logic to conclude that NCR would also be responsible for a similar amount of the cleanup costs.”

Over the objections of the US, the district court defined “harm” as the volume of PCBs present in that segment of the Site, with NCR’s share limited to an estimate of the percentage of those PCBs that originated with NCR.  In accepting the percentage proposed by NCR, the court relied upon estimates offered in the earlier trial by an expert for another party that were admittedly inexact “ballpark” numbers, but were likely an overestimate of the actual NCR contribution.  Rejecting US arguments about the imprecision of the estimates, the court held that the numbers represented the expert’s “best estimate” and that the use of averages in determining the NCR contribution was appropriate, finding that the facts indicated that the NCR contribution in some areas was likely lower than average and in others may have been higher.  Describing the Supreme Court decision in Burlington Northern as seeming to “lower the bar” for the kinds of evidence needed for apportionment, the court held “It is reasonableness, not precision, that governs apportionment analysis.”

In the period since the Supreme Court issued its Burlington Northern decision, the United States has been steadfastly arguing that the law on apportionment had not changed, and it regularly pointed to favorable district court decisions, including the initial decisions adverse to NCR, to support that view.  With the appellate reversal and this decision on remand, that argument now has lost much of its force.  We can expect that responsible parties at Superfund sites will push courts and allocation mediators to walk through the door opened by the Supreme Court and seek fair apportionment.

Free Webinar: Bird Mortality and Renewable Energy Facilities

Posted in Natural Resources, Renewables
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You see the headlines regularly –wind farms and solar arrays kill birds and companies pay major fines. Bird mortality is an increasingly sensitive topic for energy companies and their facilities, with complex and widespread legal implications.

On June 2, Davis Wright Tremaine partner Gerald George  and Adrian Delnevo, PhD., CEO and Principal Scientist of Applied Ecological Solutions Inc. will be presenting a free webinar that will help you understand and manage the risks and problems, as well identify and evaluate the potential solutions. 1 Hour CLE Credit is pending.

To register, please click here.

For any questions, please contact Barrie Handy.

California State Water Resources Control Board Finalizes Rules for Desalination Plants

Posted in California, Natural Resources, Rulemakings, Water Law

As the drought continues across California, the State Water Resources Control Board (“SWRCB”) has adopted its first-ever requirements for desalination plants in the state. Desalination – a process of removing minerals from ocean water to produce fresh water for municipal uses – has not been widely used in California because it is expensive, energy-intensive, and the state traditionally has had access to great water resources such as the Colorado River and the Sierra Nevada snowpack.  But with recent improvements in desalination technology and rapidly declining water resources, coastal communities are looking at desalination plants as way to improve the stability and reliability of their future water supply.

On May 6, 2015, after five years of development, the SWRCB adopted an amendment to its Water Quality Control Plan for Ocean Waters focused specifically on desalination plants.  The amendments require the use of certain technology standards with respect to the intake of ocean water and the discharge of the leftover brine.  The rules require all new or expanded seawater desalination plants to use “the best available site, design, technology, and mitigation measures feasible to minimize intake and mortality of all forms of marine life.”

The new rules recommend, where feasible, the use of subsurface intake technology, which rely on pipes that are buried in the sea floor.  While surface-level intake pipes could potentially have a detrimental impact on marine life, subsurface intake appears to reduce this potential impact to near zero levels.  The SWRCB’s new rules allow the regional water boards to determine during the permitting process whether subsurface intake technology is feasible at a particular plant location.  Existing plants and plants that are already permitted, such as the massive desalination plant under construction in Carlsbad, California, are exempt from the subsurface intake requirements.

If the drought continues and the energy efficiency of desalination technology continues to improve, many Californian coastal communities could soon be getting much of their freshwater from the ocean.  Hopefully the SWRCB’s new rules help provide regulatory clarity to foster the development of such projects.

California Governor Aims to Reduce Emissions 40 Percent Below 1990 Levels by 2030

Posted in California, Climate Change

In an Executive Order issued yesterday, California Governor Jerry Brown set “a new interim statewide greenhouse gas emission reduction target to reduce greenhouse gas emissions to 40 percent below 1990 levels by 2030 is established in order to ensure California meets its target of reducing greenhouse gas emissions to 80 percent below 1990 levels by 2050.”

The first step in this process, not surprisingly, will be taken by the California Air Resources Board (CARB) where CARB is ordered to “update the Climate Change Scoping Plan to express the 2030 target in terms of million metric tons of carbon dioxide equivalent.”

The California Natural Resources Agency will then take the reins and identify a lead agency or group of agencies to lead climate adaptation strategies in various sectors.  Presumably, some combination of the California Energy Commission and the California Public Utilities Commission will lead the efforts in the energy sector.    We will stay tuned to the California Natural Resources Agency’s efforts to update its Safeguarding California strategic plan to meet the Executive Order and see what agencies take on the task.  A lot of responsibility for John Laird, the Secretary of the California Natural Resources Agency and former California Assemblyman!

Interestingly, the Executive Order explicitly includes all of the following sectors in its order to reduce greenhouse gas emissions:  water, energy, transportation, public health, agriculture, emergency services, forestry, biodiversity and habitat, and ocean and coastal resources.  That means a lot of California public agencies involved in this effort – many that have not traditionally focused on this issue.

Lead agencies in each sector must prepare an implementation plan by September 2015 and are due to report back to the California Natural Resources Agency with their respective actions by June 2016. For agencies like the California Public Utilities Commission with very formal and relatively lengthy processes, a September 2015 deadline will not give them a whole lot of time for a normal public stakeholder process.  And for agencies that have not dealt with this issue at all, the deadline doesn’t give them a whole lot of time to ramp up.

Stay tuned.

Long-Awaited California Residential Rate Design Reform Proposed at California Public Utilities Commission

Posted in California, Electric Power

On April 21, two Administrative Law Judges at the California Public Utilities Commission issued a long-anticipated proposed decision on residential rate design reform for the 3 large investor-owned utilities (IOUs) in California.  The long-term vision of the Proposed Decision is to prepare for widespread enrollment of residential customers in time-of-use (“TOU”) rate schedules with a default TOU rate structure beginning in 2019.

The 305-page Proposed Decision (not including exhibits) is the culmination of a contentious 3-year long effort to evaluate various proposed rate reforms aimed at taking advantage of the installation of advanced metering infrastructure (AMI), the increased prevalence of distributed generation, and a desire to encourage residential customers to conserve during peak use periods.

The 3 large IOUs currently have 5 tiers of rates (with a differential between the top and bottom tiers of upwards of 90%) – the proposed decision narrows the number of usage tiers to 2 (with only a 20% differential between the top and bottom tiers) and does not impose any fixed charges or default TOU rates until after the tiers have been consolidated and narrowed.    The idea for 2 tiers is to ensure “that low-usage customers should continue to pay a lower rate than high-usage customers.”  However, having only 2 flatter tiers may reduce some of the incentive for implementing distributed generation (i.e., limits a customer’s incentive to invest in distributed generation as a means to reduce their overall usage from the higher, more expensive tiers).

The proposed decision outlines some immediate steps to be taken by the IOUs:  1) consolidate the existing tiers and adjust low-income programs to reflect the consolidation; 2) implement a minimum bill for summer 2015; 3) institute a special outreach program to educate low-tier customers on no-cost and low-cost conservation measures; 4) promptly begin the process of improving rate comparison tools and education materials so that customers can more readily understand their energy bills; and 5) promptly begin designing TOU pilots.

The Proposed Decision did not take off the table the contentious issue of fixed charges, but delayed any implementation of a fixed charge until 2019 at the earliest.

We expect to see a great deal of lobbying for revisions to the Proposed Decision, and would not be surprised to see an Alternate Decision come out of one of the Commissioner’s offices.   The Proposed Decision is very unlikely to be the end of this story.  Stay tuned.

Non-Settling CERCLA Defendants Beware: Ninth Circuit Provides Lower Courts with Discretion to Allocate Liability Using Equitable Factors

Posted in CERCLA, Litigation, Rulemakings

There is a split of authority on how credits for settlements under the Comprehensive Response, Compensation and Liability Act (“CERCLA”) are allocated to non-settlors.  Some courts have applied the proportionate share approach, under the Uniform Comparative Fault Act (“UCFA”), and others have applied the pro tanto approach, under the Uniform Contribution Among Tortfeasors Act (“UCATA”).  In Ameripride Services Inc. v. Texas Eastern Overseas Inc, the Ninth Circuit declined to dictate that either approach is required and instead found the court has discretion to determine the most equitable method of account for settlements between private parties.

In making this finding, the Court focused on the lack of any statutory provision specifying how a settlement between potentially responsible parties (“PRPs”) should affect the liability of non-settling PRPs.  In contract, the Court noted the specific provisions of Section 9613(f)(2), which provides that a settlement agreement between the state or federal government and a PRP reduced the potential liability of the non-settling PRPs by the amount of the settlement, applying the UCATA pro tanto approach.  The Court concluded that the lack of any specific requirement in the statute for settlements involving only private PRPs indicates that Congress did not intend to impose a uniform requirement.  The Court directed the district court to “allocate response costs among liable parties using such equitable factors as the court determines are appropriate,” apparently leaving it up to the lower court to determine the most equitable method of accounting for prior settlement.

The Ninth Circuit’s decision in Ameripride adds to the uncertainty that PRPs face when litigating under CERCLA.  The case leaves complete discretion in the hands of the lower courts as to whether the UCFA or UCATA will be used to determine how settlements will be allocated.  How the lower courts will apply the equitable factors to make this decision remains to be seen.

Pacific Northwest Water Wars

Posted in Northwest, Water Law

It may come as a surprise that people fight over water in soggy Oregon and Washington.  To be sure, we have not experienced the same level of conflict over competing water needs as our neighbors in the southwest, but in fact the conflicts are there and the stakes are high.

Most senior water rights in the Pacific Northwest are held by agriculture, whereas the growth in demand for water is occurring in the municipal and industrial sectors . . . and at last check, fish still need flowing streams.  Add to that dynamic a declining hydrograph due to climate change, and the table is set for confrontation.

Two recent cases out of the Oregon Court of Appeals and one out of the Washington Supreme Court addressing municipal water rights illustrate the point.  A more complete discussion of these cases can be found in the attached article appearing in the current issue of The Water Report.

The Oregon cases arise from a 2005 law providing special rules for extensions of time to complete development of municipal water supplies.  The caption for both is WaterWatch of Oregon v. Water Resources Department, but one involves the City of Cottage Grove and the other a group of Clackamas River water providers.  The 2005 law provides that for the first municipal extension granted after enactment of the statute, “fish persistence” conditions must be applied to the undeveloped portion of the city’s water system.

By the time Cottage Grove’s extension application was considered, the city had completed work on its water system.  The Oregon Water Resources Department found no “undeveloped portion” and therefore imposed no fish persistence requirements.  The court overturned the extension, finding that the fish conditions must relate back to the previous extension in 1999.

The Oregon Supreme Court initially accepted review of the case, then without explanation declared that review was “improvidently” granted and dismissed it.  Thus, the case stands; legislative corrections may be forthcoming.  For the moment, Cottage Grove and other similarly situated public water providers may have less water than they thought due to fish flow curtailments and may incur unbudgeted additional public expense.

In the Clackamas case, the court found the “fish persistence” conditions were inadequate because OWRD failed to articulate how the conditions were actually protective of fish.  The case is now back before OWRD for further proceedings.

In Cornelius v. Washington State University, the Supreme Court came to a happier conclusion for public water providers.  The issue was whether university groundwater rights identified as for “domestic” purposes were entitled to special protections afforded only to municipal purposes.  The Court unequivocally held they are.

The economies of our region depend on the courts getting it right with respect to municipal water supplies.  Washington public water providers can rest easier than their counterparts in Oregon after their state courts’ recent pronouncements.

California Supreme Court’s CEQA Ruling Reaches Beyond Residential Development

Posted in California, Environmental Quality, NEPA, Rulemakings

On Monday March 2, the California Supreme Court handed down a decision allowing a Berkeley home builder to use an exemption from detailed environmental assessment under the California Environmental Quality Act (“CEQA”) in its proposed construction of a nearly 10,000 square foot residence in the Berkeley hills.  While the limited holding of the case relates to residential development’s use of CEQA exemptions, the analysis in the case is likely to have an impact on commercial development and infrastructure projects.

In Berkeley Hillside Preservation v. City of Berkeley, the issue involved whether the City of Berkeley had to require an Environmental Impact Report (“EIR”) prior to construction of a 6,500 square foot residence and 3,400 square foot garage in the Berkeley hills.  the Court of Appeals accepted the argument of those opposing the project, that, due to its size which was out of proportion to other residences and the instability of the hill to support a home of this size, an exception to the exemption should apply.  Specifically, opponents argued that there is a “reasonable possibility that the activity will have a significant effect on the environment due to unusual circumstances.” CEQA Guidelines section 15300.2(c).   The California Supreme Court reversed the Court of Appeal and determined that the residential exemption applies, and there were no applicable exceptions.

CEQA, the state analog to the National Environmental Policy Act or NEPA, requires certain projects to undergo an assessment of potential environmental impacts prior to approval.  The CEQA process can result in an exemption, a Negative Declaration, a Mitigated Negative Declaration (“MND”) or an EIR.  In this case, the City of Berkeley as the Lead Agency determined that this residential construction could commence without analyzing impacts under CEQA and no exceptions to that exemption were present.

The case and oral arguments focused on the term “unusual circumstances.”  The Court of Appeal had found that the existence of significant impacts was itself an usual circumstance.  The Supreme Court disagreed, as this determination would exist in all contested matters.  The Supreme Court held that it cannot be simply that there are impacts, but that the impacts must be “due to” the “unusual circumstances.” As a matter of statutory construction, the phrase “due to unusual circumstances” must be given attention, and not disregarded.  “Unusual Circumstances” have always been difficult to identify, and the nexus of those circumstances to the impacts must be demonstrated.  In practice, this determination will be made by the lead agency and both developers and objectors will use the advice from this case.  Project opponents will attempt to show early on that there are unusual circumstances in a project and that those unusual circumstances create significant environmental impacts. Project developers may consider having the permitting agency explicitly state there are no unusual circumstances, a finding which is not required on the face of CEQA.  And, in the case where there is a possibility of unusual circumstances creating significant impacts, a project developer may wish to skip the exemption and proceed directly to the MND or EIR stage, and not risk a challenge about the applicability of an exemption.  Under the regulations, an MND should take 6 months and an EIR should take a year, though both those timeframes are rarely met.  Nonetheless a developer may consider whether the opposition’s fight about CEQA analysis may eat up valuable time which might be spent analyzing the impacts.