New York Bans Fracking In New York: What Now?

Posted in Hydrofracking, New York

The wait is over in New York on fracking.  At a cabinet meeting today Governor Cuomo and his Commissioners of Health and Environmental Conservation announced that the long-awaited Final Supplemental Generic Environmental Impact Statement will be released and establish that HVHF cannot move forward in New York.  The decision document will be contained in what is known as a SEQRA Findings Statement, which can be released no less than ten days after the issuance of the SGEIS.

The decision was based on an assessment by the New York State Health Commissioner that there were too many unanswered questions about the health effects of fracking. The Health Commissioner likened fracking to second hand smoke in airplanes, an apparent suggestion that allowing it in parts of the state that support the activity has the potential to pollute the areas that seek to ban it.  No doubt there will be many who question the Health Department’s conclusion that this single industrial activity, unlike mining, underground gasoline tank storage, pesticide application and the like, cannot possibly be performed safely under any possible regulatory scheme. The New York State Department of Environmental Conservation Commissioner took a different tack from the Health Commissioner, noting that under Department of Environmental Conservation’s currently contemplated restrictions and local zoning bans only 37% of the State where the Marcellus Shale Play is located would have the potential to be drilled, and thus would not be the economic boon anticipated by some in the state.  In a state the size of New York, 37% of the shale play still represents millions of acres of potential land.

Given the substantial questions that this decision raises, Governor Cuomo was likely correct when he predicted that the State’s decision would result in numerous lawsuits.  The first would undoubtedly challenge the ultimate state decision, embodied in the SEQRA Findings, to ban HVHF.  However, given the scientific complexity of the issue and the deferential standard of review that courts apply in reviewing challenges to government decision making, the climb is likely going to be very steep for opponents of the ban to prevail in such a challenge.

Perhaps more interesting, and likely to play out over a longer period of time, would be challenges to the ban from landowners asserting that the decision amounts to an illegal confiscation by the state of their property interests, more commonly known as a regulatory taking under United States Supreme Court precedent.  New York has long been an inhospitable venue to regulatory takings claims, but the clear ban announced by the Governor today is likely to give landowners nothing to lose in commencing such challenges.  Critical issues in such challenges will be less about the wisdom of the ban and more about whether the action denies substantially all economically viable use to the property in question.  That question may hinge on whether the property rights in question consist of entire title to the property, or simply the mineral rights.

The disparate treatment of HVHF and other industrial activities raises other potential litigation issues. Proponents of HVHF may assert challenge on that basis. Opponents of other kinds of developmental assert that approvals should be withheld because the other activity is more risky than the prohibited HVHF. The more environmental risk assessment becomes disconnected from scientific rigor, the more risk to all activity in New York.

Stay tuned.

New York Bans High-Volume Hydraulic Fracturing

Posted in Hydrofracking, New York

After years of speculation, the New York State Governor announced at a cabinet meeting, with his health and environmental commissioner by his side, that New York would not authorize permitting for high-volume fracturing in New York because of unanswered scientific questions on the safety and health effects of the procedure.  Cuomo’s environmental commissioner, Joe Martens, also noted that given the proposed restrictions already under consideration that the activity would not likely be a major economic boost to the economy.  Pennsylvania has experienced a significant economic boom from allowing HVHF in areas directly adjacent to New York’s southern border.

 

EU Leaders to Cut Greenhouse Gas Emissions By 40% by 2030

Posted in Environment, Greenhouse Gas

Written by Aonghus Heatley

European Union (EU) leaders recently reached agreement to cut greenhouse gas emissions by at least 40 percent by 2030 as compared with 1990 levels. The leaders also agreed a binding, at the EU level, target to obtain at least 27 percent of the EU’s energy from renewable sources by 2030 and a voluntary target to cut energy use by at least 27 percent as against baseline levels. The agreement expanded the number of EU member states with emissions targets beyond 2020 from five to 28 – the entire EU bloc.

To achieve the agreement’s overall binding 40 percent reduction target, power companies and other industries covered by the EU’s Emissions Trading System (ETS) will be required to reduce their emissions by 43 percent compared with 2005 levels. Emissions from sectors outside the ETS, such as buildings and infrastructure, will be required to be reduced by 30 percent compared with 2005 levels. These headline EU level figures are to be translated into individual member state targets by 2021.

The United Kingdom government had a stated aim shared by a number of other member states, to ensure flexibility in the U.K. energy mix. The government appears to have achieved that goal. Under the agreement, member states will be able to de-carbonise in a manner of their choosing, for example by favouring, nuclear power over renewable energy.

In terms of the UK government’s response, Ed Davey, the UK’s Energy Secretary, described the agreement as being “good for consumers” as it would allow the UK to “decarbonise at the lowest possible cost using a diverse mix of technologies.” Mr Davey added that, for businesses, the agreement “provides the certainty they have been calling for to unlock billions in low carbon investment”.

The European Council’s outline of the agreement is available here.

Environmental Policy as Part of Integrated Overall Policy

Posted in Articles, Court Cases, Environment, Policy

Environmental quality is important, but it is just one set of the objectives of public policy.  Is it possible to think about the incentives set by environmental regulatory decisions and the outcomes they induce as part of a more integrated policy?

Perhaps not.

Consider Michigan v. EPA, No. 14-46 (U.S. Nov. 25, 2014).  Last month, the Supreme Court granted certiorari to consider whether EPA properly refused to consider cost in promulgating the “Utility MACT” regulation for fossil fuel-fired electricity generating units.  Why only cost?  Why not test whether a regulation expected to hasten the closure of older coal-fired power plants is consistent with overall public policy, or whether issues of redistributive justice or economic development counsel in favor of preserving those older units?

Or what about the effort to read the Pennsylvania Supreme Court’s Robinson Township decision to elevate environmental objectives over any others?

That is the subject of my column this month in the Pennsylvania Law Weekly.  Read Integrating Environmental Policy With Everything Else, 37 Pa. L. Weekly 1107 (Dec. 9, 2014), by clicking here.

DC Circuit Hears Oral Argument In Important Clean Air Act Case

Posted in Clean Water Act, EPA, Litigation

On December 3rd, the DC Circuit heard oral argument in a Clean Air Act case that may set important precedents for EPA’s “risk and technology reviews” of existing Clean Air Act emission standards.   National Association for Surface Finishing v. EPA involves a challenge to EPA’s revised chromium emission standards brought by Greenberg Traurig client National Association for Surface Finishing as well as several environmental groups.  Several key issues are at stake, including (1) whether EPA is obligated to conduct a completely new MACT analysis as part of an RTR review; (2) what constitutes a “development” in practices, processes or control technologies that can justify reducing emission standards; and (3) whether EPA may impose lower emission limits and thus a more “ample margin of safety” without finding that such lower limits are required to achieve an ample margin of safety.  The decision in this case could affect numerous RTR rulemakings that are currently in progress involving several industrial sectors.

Read more here.

Valuation of Distributed Solar

Posted in Energy, Renewables

Powering your home with clean energy generated from the solar panels on your roof and selling the excess energy to the utility are appealing prospects to those attuned to environmental, energy efficiency, and self-sufficiency considerations. It is not hard to see why solar distributed generation (“DG”) has moved into the social and political electricity spotlight over the past several years. Solar DG has energy value, the potential for reducing transmission costs and, under the right circumstances, capacity value. However, the best way to implement solar DG remains up for debate.

In many states, including Pennsylvania, a system of retail net metering is currently in place. Solar DG customers pay full retail value for all energy taken off the grid, pay nothing for energy or distribution when self-consuming energy produced on the premises, and are paid the fully delivered retail price for all energy exported into the system. Under the retail net metering system, subsidies of solar DG hosts result in increased costs borne either by the utilities or by customers who do not host solar DG systems. In practice, there is evidence of cost-shifting to non-solar DG residential customers, who are often less affluent than solar DG hosts.

In a paper published in this month’s edition of The Electricity Journal, co-authored with Ashley Brown (Boston), we examine the value of solar DG as compared to other renewable energy sources and proffer an alternative pricing schema that may incentivize solar and reflect its value, while limiting cost-shifting. To read Valuation of Distributed Solar: A Qualitative View, 27 The Electricity J. 10 27-48 (2014), click here

Join Us: Post-Election Update & Analysis Webinar Dec. 8th

Posted in Events
Post-Election Update and Analysis Webinar: Environmental and Energy Monday, December 8, 2014 12:30 p.m. – 1:30 p.m. (EST)

Greenberg Traurig is pleased to host a webinar on the impact of the mid-term election on the environmental and energy policy landscape during the 114th Congress. Please join us in this discussion of how the election could affect climate change policy and the future of conventional and alternative energy (including tax extenders), EPA’s greenhouse gas regulatory initiatives, and the Keystone Pipeline. Other environmental issues likely to receive Congressional attention include the regulatory status of coal ash, “modernizing” chemical regulation under the Toxic Substances Control Act, and the EPA/Corps of Engineers’ proposed definition of the “waters of the United States.”

Register now and submit a question in advance. Space is limited.

REGISTER   SUBMIT A QUESTION IN ADVANCE

Moderator:

Jerry Stouck, Shareholder and Chair of the Federal Regulatory and Administrative Law Practice

Presenters:

The Honorable Charles Bass*, Senior Director Former member of the U.S. House of Representatives for New Hampshire’s 2nd Congressional district

The Honorable Peter Hoekstra*, Senior Director Former U.S. Congressman from Michigan, serving nine terms including chairman of the House Permanent Select Committee on Intelligence

The Honorable Albert Wynn, Senior Director Former member of the U.S. House of Representatives, who represented Maryland’s 4th Congressional District and was a member of the Financial Services Committee

* Not admitted to the practice of law.

CONTACT US

Greenberg Traurig, LLP  |  Attorneys at Law  |  www.gtlaw.com

 

Regulatory Documents Can Be Contracts: The Wetlands Mitigation Bank Example

Posted in Federal Regulation

For the second time in a year, a wetlands mitigation bank “instrument” executed between a landowner and a federal agency has been held by a court to be a binding contract that could be enforced against the agency when it tried to alter the terms of the instrument to the detriment of the landowner/mitigation bank operator.  These rulings demonstrate that regulatory “approval” documents issued by federal agencies can rise to the level of binding contracts where the elements of contract formation are present.

On November 21, 2014, in Pioneer Reserve, LLC v. United States, the U.S. Court of Federal Claims agreed with that Court’s December 2013 ruling in a similar case that a document setting forth the terms and conditions governing Pioneer’s operation of wetland mitigation bank constitutes a contract with the U.S. Army Corps of Engineers, the terms of which the Corps was bound to honor.  The mitigation bank instrument executed by the parties provided for hundreds of mitigation credits, but the Corps later unilaterally reduced the number of credits to 16, which Pioneer claims cost it more than $12 million in lost revenues from sale of the mitigation credits.  The Court’s ruling allows Pioneer to proceed with its breach of contract claim seeking to recover those damages.

Under regulations administered by the Corps, Pioneer needed a permit to operate the mitigation bank, and in connection with its permit application Pioneer and the Corps negotiated the terms of the mitigation bank instrument and ultimately signed the document.  The Corps argued that the instrument reflected a mere “regulatory approval” of the mitigation bank, but the Court found that the elements of a binding contract with the government were present:  1) mutual intent to contract, 2) an exchange of consideration, 3) lack of ambiguity in offer and acceptance, and 4) authority of the Corps to bind the government in contract.  The Court rejected the Corps’ argument that it had nothing to exchange in return for its approval of the mitigation bank, concluding instead there was a bargained for exchange between the parties:  Pioneer promised to preserve certain wetlands for mitigation purposes, and in return the Corps agreed to award Pioneer credits which it could sell to third parties.  In the December 2013 case, Davis Wetlands Bank, LLC, the Court reached a similar conclusion for essentially the same reasons.

In many cases regulatory approvals, permits and licenses granted by federal agencies can be revised or even withdrawn without legal consequence.  But these two recent decisions show that in some cases, even though private parties negotiate with agencies in a regulatory context, the resulting agreements can be deemed binding contracts that can be enforced against the agencies.

EPA Delays Finalization of 2014 Renewable Fuel Standards

Posted in Energy, EPA, Renewables

Last Friday, November 21, the U.S. Environmental Protection Agency (“EPA”) said it will defer its 2014 applicable percentage standards under the Renewable Fuel Standard program. The proposed standards rule, issued by EPA in November 2013, requires U.S. refiners to add 15.2 billion gallons of renewable fuels to the nation’s fuel supply in 2014. EPA noted that it received myriad public comments to the proposed rule and, because of the “ongoing consideration of the issues presented by the commentators,” will not be able to issue the rule by the end of the year. In the interim, the Renewable Fuel Standard program remains the topic of heated debate, not only within the petroleum and ethanol industries, but on Capitol Hill. As it stands, the refining industry is not required to comply with the proposed rule but should anticipate complying once EPA takes final action. EPA noted that it will adjust reporting requirements to enable retroactive compliance.

For more information on the deferment of the proposed standards rule please see Notice of Delay in Issuing 2014 Standards for the Renewable Fuel Standard Program and EPA Puts Off 2014 Renewable Fuel Standard to 2015.

 

Maryland Proposes Contamination Reporting Rules Triggered by Concentration (not Quantity): Routine Transactional Due Diligence Could Pose a Problem

Posted in Brownfields

On October 31, the Maryland Department of the Environment (“MDE”) published a proposed regulation calling for reporting of hazardous substances found in the environment — that is, site contamination.  A routine investigation of real estate could trigger this obligation because the reporting thresholds would be concentrations of hazardous substances, not quantities.

Section 103 of the federal Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9603, requires a person in charge of a facility to report a release of more than a reportable quantity of a hazardous substance.  A “reportable quantity” is just that — a quantity.  40 C.F.R. pt. 302 sets out a reportable quantity for each listed hazardous substance in pounds and kilograms.  Thus, if one observes a release of a knowable or calculable mass of material, one may have a duty to report.  Just finding a few parts per million in a small sample of soil or a few parts per billion in a sample of groundwater, however, does not necessarily result in knowledge of (a) a release at any particular time or (b) the quantity released.

MDE would set reporting thresholds in concentrations.  So, a soil sample containing more milligrams per kilogram or a groundwater sample containing more micrograms per liter of the hazardous substance would trigger the requirement to report the analytical result to MDE.

“Responsible persons” would have the reporting obligation.  “Responsible persons” under section 7-201 of the Environment Article are essentially the familiar four categories of responsible persons under CERCLA:  current owners and operators, owners and operators at the time of disposal, arrangers, and transporters.  A seller of real estate who learned of a test result might have to report it.  The purchaser probably would not if the purchaser did not close the transaction; after the closing, of course, the purchaser would be a “responsible person.”

The rule proposal appears at 41 Md. Reg. 1337 (Oct. 31, 2014), and would amend COMAR 26.14.02.  You can read a copy here.

The proposed reporting thresholds are not published in the Maryland Register, but appear in a June 2014 guidance document posted on the MDE website here.

The comment period on this proposal closes on December 1, 2014.

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