Insights

On February 27, 2021, the Interagency Working Group on Social Cost of Greenhouse Gases (Working Group) published interim values for the Social Cost of Carbon (S-CO2), Social Cost of Nitrous Oxide (S-N2O) and Social Cost of Methane (S-CH4) (collectively referred to as the Social Costs of Greenhouse Gases (S-GHG)). As we predicted in our prior client alert, the Working Group reinstated the values that had been established for these parameters immediately before the Trump Administration disbanded the Working Group in 2017. To that end, for 2021 the Working Group set S-CO2 at $51 a ton, S-N2O at $18000 a ton and S-CH4 at $1500 based on a 3% discount rate. These rates will replace the Trump Administration’s calculation of the Social Cost of Carbon, which included values as low as $1 based on a 7% discount rate. The new figure will be used on an interim basis while a Working Group readies the final values, which are expected in early 2022.

Potentially the most consequential, yet least noticed, part of President Biden’s Day 1 Executive Order on Protecting Public Health and the Environment and Restoring Science to Tackle Climate Change (Jan. 20, 2021) (“EO 13990”) is the directive to re-establish the Interagency Working Group on the Social Cost of Greenhouse Gases (“Working Group”), which President Trump disbanded during his administration.  See E.O. 13990, Sec. 5.  One of the Working Group’s primary mandates is to calculate what is referred to as the “Social Cost of Carbon,” which measures the cost to society of emitting one additional ton of carbon dioxide into the atmosphere.  These include the costs associated with sea level rise and extreme weather events, and adverse effects on water and agricultural resources and human health.  Section 5 directs the Working Group to publish an interim Social Cost of Carbon within 30 days of the date of the Executive Order, and to publish a final value by January 2022.  (The Executive Order also directs the Working Group to publish Social Costs for two other global warming chemicals, i.e., nitrous oxide and methane.)  The Working Group has not yet published the interim value, but it doesn’t take a clairvoyant to predict at least interim reinstatement of the values used by the Obama Administration.  One signal is the Council on Environmental Quality’s decision to rescind the Trump Administration’s “Draft National Environmental Policy Act Guidance on Consideration of Greenhouse Gas Emissions” and directive that until a replacement is adopted “agencies should consider all available tools and resources in assessing GHG emissions and climate change effects of their proposed actions, including, as appropriate and relevant, the 2016 GHG Guidance.”  (86 Fed. Reg. 10252.)

In a case that may be remembered more for its dicta than its holding, Communities for a Better Environment v. South Coast Air Quality Management District, ____ Cal. App. 5th ___ (April 7, 2020) (Second District), provides a helpful and practical guide on how lead agencies should affix the “baseline” in California Environmental Quality Act (CEQA) cases. 

Many businesses face mounting disruption and, in some cases, temporary shutdown as a consequence of the ongoing coronavirus (COVID-19) pandemic. As owners and operators confront these challenges, they face the added challenge of continuing to satisfy applicable federal, state, and local environmental laws and regulations. Unprecedented obstacles to maintaining routine compliance include, for example, the lack of staff to collect water samples, the inability to obtain physical signatures of documents such as air permits and compliance reports, and difficulty constructing, repairing, upgrading, and maintaining emissions controls and monitoring systems because of disruptions to the supply chain or work force.

On June 19, 2019, EPA signed the final Affordable Clean Energy (ACE) Rule, addressing the emission of carbon dioxide and other greenhouse gases (GHGs) from coal-fired power plants. The ACE Rule both repeals and replaces the Obama administration’s Clean Power Plan (CPP), which had also addressed GHG emissions from power plants, but went much further than the ACE Rule in several important ways. In the ACE Rule, EPA disavows many aspects of the CPP, finding them to be beyond EPA’s statutory authority under the Clean Air Act (CAA or “Act”). The ACE Rule sets forth a much more limited view of EPA’s authority to require emission reductions from existing sources in a regulated source category. If accepted by the courts, EPA’s arguments in support of the ACE Rule could have profound implications not only for power plant GHG regulation but also for other types of sources and pollutants.

On Friday, the U.S. Environmental Protection Agency (EPA or “the Agency”) released the pre-publication version of its final rule expanding summer use of E15 and implementing new—though significantly scaled back—provisions affecting Renewable Identification Numbers (RINs) reporting and disclosure. (RINs are used to demonstrate compliance with the Renewable Fuel Standard (RFS)). Both actions could have an impact on fuel and RIN markets in the near term given that E15 provisions are effective May 30th and RIN provisions are to be effective 30 days following Federal Register publication of the rule. New disclosure and reporting requirements kick in on January 1, 2020. Key aspects of the final rule can be summarized as follows:

Through a letter made public earlier this month, the U.S. Government Accountability Office (GAO) accepted a joint request made by Senators Jack Reed (D-RI, Ranking Member of the Committee on Armed Services) and Elizabeth Warren (D-MA) to perform an investigation of “potential threats to national security resulting from the impacts of climate change on defense contractors and the defense supply chain . . . .” The GAO review marks just the latest example of the mounting scrutiny of potential threats to the security of defense contractors and their supply chains, and has the potential to break new ground in the government’s growing efforts to require increasingly heightened levels of oversight on supply chain security by merging such oversight with one of the most politically charged issues of the day.

Making good on Administrator Wheeler’s promises to Congress earlier this year, EPA published in today’s Federal Register its long-awaited proposal that could have the effect of expanding summer use of E15, and that could change regulations affecting Renewable Identification Numbers (RINs) used to comply with the annual Renewable Fuel Standard. 84 Fed. Reg. 10,584 (Mar. 21, 2019). Those proposals can be summarized as follows:

The U.S. Senate voted 52 to 46 today to confirm Scott Pruitt as the new Administrator of the Environmental Protection Agency. Pruitt is an attorney by trade and until his confirmation had served as the Attorney General of Oklahoma since 2010. Prior to his tenure as Attorney General, Pruitt served for several years in the Oklahoma State Senate.

On August 18, the U.S. Court of Appeals for the Fifth Circuit denied rehearing and upheld its May decision rejecting a district court’s ruling that had denied most of plaintiffs’ Clean Air Act (CAA) enforcement claims and refused to award any civil penalties or injunctive relief. In Environment Texas Citizen Lobby, Inc. v. ExxonMobil Corp., a case involving thousands of alleged CAA violations from Exxon’s operation of a refinery and two petrochemical plants in Texas, the Fifth Circuit held that the district court erred in its assessment of Exxon’s liability by conflating two distinct, but overlapping, claims of permit violations and by taking an overly restrictive view of what constitutes “repeated” or “ongoing” violations under the CAA’s citizen suit provision. The Fifth Circuit also found that the district court abused its discretion when analyzing three of the Act’s civil penalty factors (economic benefit of noncompliance; duration of the violation; and seriousness of the violation). The extensive and detailed decision breaks some new ground on these topics and should be reviewed by those subject to CAA citizen enforcement.

Late last week, the Oregon Department of Environmental Quality (DEQ) announced an expansive and unprecedented effort to conduct inspections (including “surprise” inspections) of over 300 facilities located in the state that will concentrate initially on emissions of chromium and eight other metals (arsenic, cadmium, cobalt, lead, manganese, nickel, and selenium). This initiative followed a letter exchange with the U.S. Environmental Protection Agency (EPA) that indicated two glass manufacturing facilities located in Oregon could be subject to hazardous air pollutant (HAP) regulations.

On October 1, the EPA issued its revised national ambient air quality standards (NAAQS) for ground-level ozone (O3), lowering both the primary and secondary standards to 70 parts per billion (ppb), down from the 75 ppb standard in effect since 2008. The rule is contentious and is already under fire both from segments of industry and states that believe the standard is too stringent, and environmental and public health groups that insist it is too weak. The rule is all but certain to be challenged in the D.C. Circuit, most likely from both sides, once the rule is published in the Federal Register, likely in a matter of weeks.

The U.S. Environmental Protection Agency (EPA) yesterday released a package comprising two highly anticipated final rules and one proposed rule regulating carbon dioxide (CO2) emissions from the electric power sector. Long touted as a major priority for the Obama Administration, the rules reflect the Administration's ambitious but untested approach to addressing climate change and mitigating CO2 emissions under section 111 of the Clean Air Act (the "Act").  

On July 28, 2015, a unanimous panel of the United States Court of Appeals for the District of Columbia Circuit (D.C. Circuit) remanded the Cross-State Air Pollution Rule (CSAPR) to the Environmental Protection Agency (EPA) after finding that the rule impermissibly over-controlled sulfur dioxide (SO2) and nitrogen oxide (NOx) emissions in 14 states. Specifically, the D.C. Circuit held that the 2014 SO2 emission budgets for Texas, Alabama, Georgia, and South Carolina and the 2014 ozone-season NOx budgets for Florida, Maryland, New Jersey, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Texas, Virginia, and West Virginia were invalid on an "as-applied" basis. The court ruled that EPA's "uniform cost" approach to determining the individual states' emission reduction obligations resulted in emission reductions in excess of what each of the identified states was obligated to achieve to avoid contributing to nonattainment in every other state to which its emissions are linked.

The U.S. Environmental Protection Agency (EPA) must consider costs in deciding whether to regulate air toxics from fossil fuel-fired power plants. So held a sharply divided Supreme Court Monday in Michigan v. EPA, Nos. 14-46, 14-47, 14-49. In a win for industry and a significant blow to EPA, Justice Scalia, writing for a five-justice majority, reversed the decision of the D.C. Circuit and remanded EPA's Mercury and Air Toxics Standards (MATS) to that court for further proceedings consistent with the Court's opinion. The Court held that the Clean Air Act's (CAA) use of the term "appropriate and necessary" is so "capacious" and "all-encompassing" that ignoring costs was patently unreasonable. 

On June 10, the Environmental Protection Agency (EPA) took preliminary steps to regulate greenhouse gas (GHG) emissions from the aviation sector under section 231 of the Clean Air Act (CAA). First, EPA proposed to determine that (i) GHG concentrations in the atmosphere endanger the public health and welfare of current and future generations, and (ii) GHG emissions from certain classes of aircraft engines contribute to that endangerment. If finalized, these would be EPA's second formal "endangerment finding" following EPA's 2009 endangerment finding under CAA section 202(a) for new motor vehicles.

On Wednesday, March 25, the United States Supreme Court heard argument in Michigan v. EPA, Nos. 14-46, 14-47, 14-49. At issue is EPA's Mercury and Air Toxics Standards (MATS) rule, which establishes limits for mercury and other hazardous air pollutant (HAP) emissions from coal-fired and oil-fired power plants. The Court's review comes at a pivotal time for the electric utility sector, which faces an April 16, 2015 regulatory compliance deadline subject to certain opportunities for extension.

On November 26, EPA Administrator Gina McCarthy signed a proposed rule to revise national ambient air quality standards (NAAQS) for ozone. The current ozone standard, finalized in 2008, is 75 parts per billion (ppb) and the standard applies to both health-based (primary) NAAQS and welfare-based (secondary) NAAQS. EPA is proposing to revise the primary standard to 65 to 70 ppb and to revise the secondary standard, either by setting the level consistent with the primary standard, or by establishing a separate secondary standard based on a different metric than the primary standard.

On July 2, 2014, EPA Administrator Gina McCarthy signed a final rule to make several modifications to the Renewable Fuel Standard (RFS) program (40 CFR Part 80, Subpart M) as well as other small changes to federal fuel standards and requirements.

On June 23, 2014, the U.S. Supreme Court held that the Clean Air Act (CAA) precludes the U.S. Environmental Protection Agency (EPA) from subjecting sources to Prevention of Significant Deterioration (PSD) and Title V permitting exclusively based on greenhouse gas (GHG) emissions. Utility Air Regulatory Group v. Environmental Protection Agency, et al.1