Trump Administration Executive Order Proposes to Rescind Obama Climate Rules and Policies

On March 28, 2017, President Trump issued his long-awaited Executive Order that targets the principle climate change related rules and guidance of the Obama Administration. The express rationale and the title of the Executive Order is “promoting energy independence and economic growth”. The linchpin of the Order is to rescind regulations that “unduly burden the development of domestic energy resources beyond the degree necessary to protect the public interest or otherwise comply with the law”.

Notably absent from the Order is any discussion of environmental protection and climate change, other than a passing recognition of the need to protect clean air and clean water, “while also respecting the proper roles of the Congress and the States concerning these matters in our constitutional republic.” It is fairly predictable that this Executive Order will not have an immediate effect on energy independence and economic growth, if that means ‘ending the war on coal’, chiefly because of the reality that the energy sector has moved well beyond coal as a primary fuel for producing electricity because it needs long-term certainty and stability, because the US is more energy independent than it ever was, particularly due to the hydraulic fracking revolution, and because the attempt to rescind the “Clean Power Plan” rules will go on for years.

The Executive Order is sweeping and goes well beyond the Clean Power Plan to include, for example, proposed rescission of the Obama Administration’s regulations on fracking on federal lands, lifting of the ban on coal mine leasing on public lands, disbanding of the Interagency Working Group on Social Cost of Greenhouse Gases (IWG) and withdrawal of all of its technical reports, and revocation of numerous policies, reports and memoranda. Certain actions covered in the Order are immediate, e.g. the rescission of the CEQ Final Climate Change Guidance (NEPA). Other actions may take years to accomplish, e.g. the direction to suspend, revise or rescind both the Clean Power Plan Rule (applicable to existing coal-fired and gas-fired electric generation plants) and the Standards of Performance for Greenhouse Gas Emissions from New, Modified, and Reconstructed Stationary Sources: Electric Utility Generating Units. The reason is the certainty of protracted lawsuits that will be brought by states, cities, renewable energy companies and private citizens against the Administration to challenge its actions. Further, the attempt to rescind such rules will be subject to the standards for judicial review of federal administrative actions: whether or not the action is in compliance with applicable law and whether or not it is arbitrary and capricious.

In light of the Supreme Court opinion in Massachusetts v. EPA (carbon dioxide is an “air pollutant” under the federal Clean Air Act) and EPA’s subsequent Endangerment Finding regarding CO2 and other greenhouse gas emissions, it will not be an easy task for the Administration to successfully defend its action. Further, even if the CEQ Final Climate Change Guidance is rescinded, an agency that does not sufficiently analyze the likely greenhouse gas impacts of a proposed major federal action under NEPA will find itself on thin ice in defending that action in court.

Finally, even if this Executive Order is ultimately successful in reversing the federal government’s rules and policies regarding climate change, it cannot prevent the states from enacting and enforcing their own laws and regulations regarding greenhouse gas reductions.
Conclusion

The Executive Order is a bold stroke and will undoubtedly have some significant and immediate consequences. However, the timing of its impact on the Clean Power Plan, the New Source Performance Standards for the electric generation industry and other final climate related regulations is harder to predict because of the expected litigation to come. (Since the Clean Power Plan was stayed by the Supreme Court, further delay due to litigation over its proposed repeal does not change the status quo). Further, in light of the hydraulic fracturing revolution that has led to lower prices for natural gas than coal, because most utilities have already begun moving beyond coal to natural gas, wind, solar and other diverse and less carbon intense resources, and since the U.S. is a net exporter of coal and is increasingly less reliant on imports of oil and gas, the Executive Order’s predicted impacts on energy independence and economic development appear overly optimistic.

Kenneth A. Reich, Esq., founder and principal of Kenneth Reich Law, LLC, is an experienced environmental and energy lawyer who formerly served as a trial attorney, then assistant chief of the Environmental Enforcement Section, US Department of Justice, before re-entering private practice. He writes and speaks frequently on national environmental and energy issues and teaches as a part-time adjunct at the Boston University School of Law.  

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President-elect Trump Will Face Substantial Obstacles in Attempting to Roll Back Environmental Regulation and Enforcement

Here is a close look at some key environmental programs and the incoming Administration’s likely options and obstacles.

Clean Power Plan
The Clean Power Plan (“CPP”), a final EPA regulation that requires states to reduce existing power plant greenhouse gas air emissions, has been challenged in the federal Court of Appeals for the DC Circuit and stayed by the Supreme Court. It is likely the incoming Administration will look at some of the following options to rescind CPP:
1. It cannot unilaterally rescind or modify CPP since the regulation is final, thus requiring EPA to go through a formal notice and comment process. Such proposal would be vigorously opposed by a significant number of governmental and private parties and the procedural process could take years.
2. It could request the DC Circuit to stay the litigation. However, the state, municipal and other intervenors on EPA’s side would certainly oppose such a move and it is difficult to predict how the DC Circuit would rule.
3. If the DC Circuit issues a decision prior to the inauguration, the losing side would certainly seek review in the Supreme Court and it is not clear if the EPA and DOJ could prevent the Court from taking and hearing the case if other parties in the case sought to pursue the appeal.
4. Defunding the program might succeed, but doesn’t blunt the efforts numerous states are already making to develop their CPP plans.

Clean Water Act Final Rule and Clarifying “Waters of the United States”
Like the Clean Power Plan, this Obama Administration final regulation defining “waters of the United States” that are subject to federal regulation has been challenged and stayed. If the new Administration attempts to repeal this final regulation, it will face the same hurdles discussed above.

         Paris Climate Change Agreement
The means by which and the timing of the United States’ possible withdrawal from this Agreement are beyond the scope of this Op Ed, but putting aside major domestic and foreign opposition, one clear response to the United States’ withdrawal could be other countries also seeking to withdraw, which would be a significant blow to achieving necessary progress on slowing climate change. Alternatively, Russia, China and India would remain the biggest players in the realm of climate change, leaving the U.S. out in the cold.

Federal Enforcement
Theoretically the Department of Justice could try to delay enforcing federal environmental laws and regulations, particularly if its enforcement budget were cut, but this would be a clear violation of the President’s mandate to uphold the laws. Moreover, this was not the case under President Reagan where the Department ramped up to enforce the newly enacted Superfund Act, as well as continuing to prosecute pollution cases under other statutes. Priorities with a new Administration may be different, but line lawyers in the DOJ still have a job to do.

State Enforcement
Even if the federal government retreats in various areas, a large number of states will continue to enforce or pass their own environmental laws and regulations and will continue to develop carbon emission reduction plans under the now-stayed CPP or state mandates. In general, the federal government cannot legally prevent states from passing and enforcing environmental protection laws that are stricter than federal law-a new manifestation of “states’ rights”.

Private Enforcement
Most of the significant federal environmental statutes have citizens suit provisions that allow private citizens to sue entities alleged to have violated the law when the federal government or state fail to take timely action and to collect attorneys fees. Look for an abundance of these suits.

Conclusion
Americans have consistently expressed strong support for clean air and water and many power suppliers and alternative energy companies have invested heavily in clean energy. Attempts to roll back environmental laws and retreat from climate change programs could well face substantial legal and political obstacles.

Kenneth A. Reich, Esq.

Kenneth A. Reich, principal of the law firm, Kenneth Reich Law, LLC, is an experienced environmental and energy lawyer with a national practice. He was a trial lawyer, then Assistant Chief of the Environmental Enforcement Section of the U.S. Department of Justice from 1979-86. He speaks and writes frequently on environmental and energy law issues. He is an adjunct faculty at the Boston University School of Law where he teaches environmental law and other courses. He is a trained mediator. He also has a separate strategic consulting services company.

 

MA Highest Court Quashes State’s Attempt to Allow Electric Power Suppliers to Fund Increased Gas Pipeline Capacity Via Passthroughs to Ratepayers

In a decision dated August 17, 2016, the Supreme Judicial Court of Massachusetts vacated an order of the Massachusetts Department of Public Utilities (MDU) which would have had the effect of subsidizing, via a pass-through to ratepayers, the cost to electric energy suppliers of developing increased natural gas pipeline capacity into the state.  This was also a big win for plaintiff ENGIE Gas & LNG LLC (formerly GDF Suez Gas NA LLC), a major importer of LNG. See 

https://1.next.westlaw.com/Document/I41144b53646211e6a807ad48145ed9f1/View/FullText.html?navigationPath=Search%2Fv3%2Fsearch%2Fresults%2Fnavigation%2Fi0ad7052400000156bab7d9de70f5423e%3FNav=CASE%26fragmentIdentifier=I41144b53646211e6a807ad4814
MDU saw a problem in the limited availability of natural gas pipeline capacity for gas-fired electric generation and attempted to solve that problem through an expansive reading of Massachusetts law. MDU would have permitted electric power companies to sign long-term contracts, typically 20 years, with natural gas suppliers to permit the suppliers to secure funding for new pipeline construction.  MDU also saw that the electricity producers wouldn’t be willing to take on the risk of those contracts and authorized the electric generators to pass the cost of the pipeline capacity through to consumers.

ENGIE has an LNG import facility in Massachusetts.  Because of the competitive threat the MDU order posed to ENGIE’s business, it sued to overturn the order. An interesting twist is that the independently elected Attorney General of Massachusetts, a Democrat (the Governor is Republican), filed an amicus brief in the case also urging vacation of the MDU decision, in part because the Attorney General had already taken the public position that Massachusetts did not need more gas pipeline capacity and should look to renewable sources of energy to meet future electric energy demand.  

Now the ball is back in the Legislature to consider whether to amend the law to authorize the subsidy program that the MDU proposed.  But the SJC decision also keeps very much alive the issue whether there is a natural gas capacity problem, leading to higher electric energy prices, that cannot be resolved without additional gas pipelines, or whether new sources of alternative energy, wind, solar, hydropower, plus LNG, can meet the State’s electric energy demand. 
Kenneth A. Reich, Esq., Principal, Kenneth Reich Law, LLC

Steve Kalish, Esq.

August 2016

Note:  This article may be considered legal advertising in some jurisdictions.

©KennethA.Reich 2016

A New Era in Climate Change?

Kenneth A. Reich, Esquire
Kenneth Reich Law, LLC

December 2015

Is This a New Era in Climate Change Policy?

As a tumultuous year in U.S. energy and environmental policy comes to an end, the Paris Climate Accord was signed. Will it save the world from the reasonably foreseeable results of Climate Change or is it simply an inadequate agreement with no teeth?  I think the answers are ‘hopefully, with some further tweaking’, and ‘no’.  The goals set in the Accord are, according to many scientists, much too modest to avoid a catastrophic rise in temperatures.  Yet it is the first time in history that nearly 200 countries, including China and India, have signed any type of agreement, much less an agreement to do something as important and complex as address Climate Change.   And the Accord does establish a framework for monitoring the progress of each of the signers in achieving their individual goals,  5 year reviews to consider additional reduction targets, and a commitment by developed nations to provide substantial monetary assistance to the undeveloped nations in order to allow them to leap frog the Industrial Revolution and move quickly to a renewables based energy system.  Although there is no overall enforcement mechanism, the worldwide recognition that Climate Change is a major problem is a train that has left the station and a combination of public pressure (including the refusal of ordinary citizens to tolerate persistent air pollution (see China)), recognition by the financial and energy markets that fossil fuel cannot be the predominant energy source of the future and the new worldwide opportunities for clean investments spawned by this Accord should keep that train moving forward. Provided that the largest greenhouse gas emitters—the U.S., China and India—don’t back out of the Accord or fail to follow through in good faith with their own emission reduction goals and that the developed world does not default on its pledge to give substantial assistance to the undeveloped nations, the Accord is very likely to usher in a new energy era much less dependent on fossil fuels and much more dependent on renewables and energy conservation/efficiency.  While low cost, high emitting coal will be the energy source of choice for much of the developing world in the near term and the U.S. will struggle with the politics and issues of moving to a less carbon intensive energy system, including the need to assist workers who depend on the coal economy for their livelihood and to support states and localities that must adjust to the economic reality of a different energy mix, there are billions to be made by whichever company invents the most efficient and least expensive system to capture and sequester carbon and by the developers of new renewable technologies.  Already fracking, for all of its environmental and seismic risks that need to be addressed, is a national game changer in producing abundant supplies of low cost natural gas as a competitor to coal and oil.   Not too far from the horizon is the magic bullet energy storage device that will make wind and solar even more viable.  Also, let’s not forget zero emissions nuclear energy.

As we bid goodbye to what has been an awful year in many respects, may the Climate Accord and the spirit of cooperation exhibited in Paris inspire us all to confront, with intelligence, compassion and renewed determination, the tremendous problems we face as citizens of a small, populous planet. Best of the holidays to all!  Ken

Recent Federal and State Court Decisions Cast Doubt on Whether State Nuisance Claims Are Preempted by the Clean Air Act

Kenneth A. Reich, Esq. Kenneth Reich Law, LLC

Recent Federal and State Court Decisions Hold that Sources with Clean Air Permits Mav Be Subiect to State Nuisance Law Claims

Hiding behind all of the buzz about President Obama’s rejection of the Keystone Pipeline project permit, the multiple appeals to the Clean Power Plan final rule and to the final EPA/ Corps of Engineers Rule defining “waters of the United States” are a series of recent federal and state court decisions that may have far more importance to the regulated community in the long term. These cases hold that state nuisance and other tort claims against power plants and other major sources of air emissions are not preempted by the federal Clean Air Act. This is an issue that the Supreme Court specifically left open in its 2011 decision in American Electric Power v. Conn. (“AEP”).

In AEP the Supreme Court held that the Clean Air Act displaces (preempts) claims under the federal common law of nuisance, but it expressly refused to decide whether state nuisance claims are also preempted. The Federal Court of Appeals for the 6th Circuit recently answered this question by holding that state nuisance and tort claims against sources of air emissions are not preempted by the federal Clean Air Act. Little v. Louisville Gas and Electric, decided November 2, 2015, 2015 WL 6646984 and Merrick v. Diageo Americas Supply, Inc., Nov. 2, 2015, 2015 WL 6646818. Little involved a power plant, Merrick involved a whisky distillery. In each case a group of homeowners brought state private and public nuisance actions against the sources alleging that dust and fumes from the plants was coating their properties, reducing the market value, threatening health, etc. The 6th Circuit, relying on the Supreme Court’s decision in Int’l Paper Co. v. Ouellette that source state nuisance remedies (as opposed to claims under the law of an affected state) were not preempted by the federal Clean Water Act and on identical language in each Act preserving state remedies, denied the defendants’ motions to dismiss.

In light of Ouellette and prior decisions by federal appeals courts from the second, third and filth circuits and the supreme court of Iowa that the Clean Air Act does not preempt state nuisance claims, the recent 6th Circuit decision is not surprising. However, as of the date of this blog, the Supreme Court has not answered its own question in AEP.

Another issue that has not been given much attention in the recent caselaw is the effect of the so-called permit shield under the Clean Air Act. The permit shield protects sources with federally enforceable Clean Air permits from suits brought under any federal and state laws that are listed in the permit. See 42 U.S.C. 7661c. It is difficult to reconcile the supposed protection of the permit shield with these recent non-preemption decisions.

The bottom line takeaway: Unless the Supreme Court reverses the recent lower court caselaw trend, sources of air emissions that hold federally enforceable Clean Air permits are not immune from state law nuisance and tort claims based on the law of the source state. However, bringing a suit and winning it are very different things. If the source has good controls to mitigate or eliminate odors, dust and other “nuisances” and/or if the source is located in an industrial area where it is difficult for the plaintiffs to prove that the source caused the alleged nuisance, the suits may ultimately fail. Unfortunately this is modest comfort to sources that have spent hundreds of millions of dollars to comply with their air permits and with new federal regulations.

Copyright KennethReich2015

Kenneth A. Reich of Kenneth Reich Law, LLC concentrates his practice in environmental law and energy law, including both transactions and litigation. He also provides strategic regulatory consulting. For more information, please see his website at www kennethreichlaw com.

Note: This blog is not intended to convey legal advice and the reader should consult a lawyer with the relevant legal experience for specific legal advice. Also, this blog may be considered legal advertising in some jurisdictions.

Supreme Court Strikes Down EPA Power Sector Rule

Supreme Court strikes Down EPA’s Mact Rule for the Power Sector

On June 29, 2015, In a 5-4 decision (J. Scalia) the Supreme Court invalidated EPA’s Clean Air Act MACT rule setting hazardous air pollution standards (including mercury) for the power sector on the grounds that EPA should have taken costs in account when it initially decided to list the power sector as a source.  See full opinion here.

The Clean Air Act subjects major sources of hazardous air pollutants to regulation, culminating in promulgation of source specific technological standards (“MACT”). However, the Act deferred similar regulation of power plants, requiring EPA first to study the health impacts from the power sector to determine if listing was “appropriate and necessary”.  Based on the study, EPA decided to list power plants as a source of hazardous air pollutants, but did not expressly consider costs in this listing decision, the same procedure it used when listing other major sources.  Although EPA argued that following the decision to list the power sector as a source it took a number of additional regulatory actions in which it expressly  took costs into account, J. Scalia wrote that EPA could not “gerrymander” its decision-making and defer consideration of costs since Congress intended to treat the power sector differently from other major sources of hazardous air pollutants.

J. Kagan’s lengthy dissent took the majority to task for ignoring the big picture, i.e. that EPA took costs into consideration at many stages of the complex regulatory process involving power plants.  For instance, EPA divided the power plant sector into subcategories, e.g. different types of coal-fired plants, oil plants, gas plants, such that a plant in one subcategory did not need to meet the standard met by the top 12% of plants in another subcategory (the statutory emissions standard).  J. Kagan also took issue with the majority’s comparison of costs, i.e. 9 billion of costs vs. a few millions of benefits, as erroneous since the ultimate cost-benefit analysis found that the benefits were between 3-9 times the costs. Further, she pointed out that the majority ignored the Congressional rationale for deferring the power sector’s inclusion in the MACT program pending a health effects study: not to treat the power industry differently than other major sources of hazardous air emissions, but to give EPA time to study whether existing regulation of the power industry would yield the same benefits as the MACT regulations.  Additionally, J. Kagan wrote that the language in issue:  “appropriate and necessary”, was ambiguous and that the Court should have deferred to EPA’s interpretation pursuant to the well-established Chevron doctrine.  J. Kagan concluded that the majority’s decision “deprives the Agency of the latitude Congress gave it to design an emissions-setting process sensibly accounting for costs and benefits alike.  And the result is a decision that deprives the American public of a pollution control measure that the responsible Agency acting well within its delegated authority, found would save many, many lives.”

The practical impact of the decision is limited since many power suppliers have already begun to install  technology to meet the MACT standard and there are few plans to install/retrofit coal plants.  However, this decision is potentially significant to the extent it signals a willingness by a majority of the Court to disregard Chevron deference to an agency’s interpretation of the statutes it administers where the stakes are high, as they usually are in challenges to EPA rulemaking.  Note that J. Thomas’ separate concurrence specifically called for an end to the Chevron doctrine.  The decision also is significant because the majority appears to have ignored its own precedent that where the Clean Air Act does not expressly require EPA to consider costs in rulemakings, it need not.

While EPA has generally fared well recently in the Supreme Court, the question is whether this decision (and a partial defeat by EPA in the UARG case last term) indicates a new trend or is just a reflection of the specific facts of this case.

For further information, please contact the author at kreich@kennethreichlaw.com or 781-608-7267.

Kenneth A. Reich, Esq. July 2015 Kenneth Reich 2015 ©, All Rights Reserved

EPA/ARMY CORPS Issue Long Awaited Final Rule Defining “Waters of the United States”

       On May 27, 2015, the EPA and the Army Corps of Engineers issued a final Rule defining “waters of the United States” (“WUS”) for purposes of the federal Clean Water Act. Click here for the final Rule.

       The Rule provides needed clarity to the definition of WUS, whose coverage has been made muddy by a trio of recent Supreme Court cases, culminating in the plurality opinion in Rapanos v. United States, 547 US 715 (2006). The bottom line for practitioners and for their clients is that the EPA has established some bright line tests for what are and are not considered WUS, but still leaves it to the Army Corps, EPA and the States to determine on a case by case basis the close calls. Call it clarity with a large asterisk.

       NOTE that the Rule and Preamble are more than 250 pages and defy easy summarization. This blog article highlights the key points one needs to know about the significance of the Rule, but a close reading of the Rule is necessary for anyone attempting to make decisions or give advice regarding its content.

          A. The Rule clarifies that the following bodies of water are jurisdictional WUS by rule:

          1. traditional navigable waters

          2. interstate waters

          3. territorial seas

          4. impoundments of jurisdictional waters

          5. tributaries

          6. adjacent waters

       The Rule provides helpful details on the definition of these terms in order to eliminate ambiguity present in the proposed rule.

          B. The Rule categorically excludes the following waters from being classified as WUS:

          1. already exempted waters like agricultural drainage and previously created farmlands

          2. groundwater, about which there had been some dispute

          C. The Rule provides that all other waters are to be evaluated on a case by case basis to determine if they meet the “significant nexus” test. “Significant nexus” is essentially defined as it was by J. Kennedy in his concurrence in Rapanos: whether a water has the potential to impact the “chemical, physical and biological integrity of [jurisdictional waters]”. Where the connection is “speculative or insubstantial” there is no significant nexus.

       In order to narrow the scope of waters that will need to undergo a case by case analysis, the Rule sets forth some bright line tests and guidelines.

Conclusion

       The purpose of the Rule was to attempt to bring clarity to this decidedly murky area of law for the benefit of farmers, developers, landowners and a myriad of other parties affected by the definition of the term WUS. The Rule largely accomplishes its purpose, although it still leaves a number of situations to case by case determination. Hopefully the EPA and the Army Corps will issue guidance or further rules to narrow the universe of situations in which a case by case determination is necessary. Whether the Rule went too far or not far enough is in the eye of the beholder and will be inevitably decided by the courts.

Kenneth A. Reich, Esq.

June 2015

*This blog article does not constitute and should not be interpreted as legal advice related to a specific issue arising under or impacted by the Rule. Readers are cautioned to consult a lawyer with significant experience in the field for specific legal advice regarding the coverage of the Rule.