EPA Proposes CSAPR Update Rule Requiring Additional NOx Reductions in 23 States

On November 16, 2015, the United States EPA proposed updates to the Cross State Air Pollution Rule. These updates would require more stringent nitrogen oxide reductions from power plants in 23 states. EPA also proposes to address nitrogen oxide and sulfur dioxide requirements for 11 states whose original reduction requirements were remanded to EPA following recent court actions.

The Cross State Air Pollution Rule, better known as “CSAPR,” was originally promulgated in 2011 to force certain states to reduce emissions of nitrogen oxide (“NOx”) and sulfur dioxide (SO2) from power plants. EPA now proposes to update CSAPR to require 23 upwind states to further reduce ozone season NOx emissions, beginning in 2017, to ensure that downwind states can comply with the 2008 National Ambient Air Quality Standards (“NAAQS”) for ground-level ozone of 75 parts per billion (“ppb”).

NOx chemically reacts with volatile organic compounds in the presence of sunlight to create ground-level ozone. That reaction is most significant during the summer months, known as the ozone season. EPA proposes to impose federal implementation plans on states that do not have approved state implementation plans addressing the 2008 ozone NAAQS by the date that the CSAPR Update Rule goes into effect. In addition, EPA’s proposal attempts to address NOx budgets for 11 states whose budgets were remanded to EPA by a 2015 D.C. Circuit order, following a successful appeal of those budgets to the Supreme Court.

Further reductions may be required in the coming years. EPA recently promulgated a new and more stringent ozone NAAQS of 70 ppb, which is scheduled to go into effect on December 28, 2015. That standard is currently under review by the D.C. Circuit and is not addressed in this proposed rule. If and when that standard goes into effect, we can expect that EPA will propose another CSAPR update to further ratchet down emissions.

EPA will accept comments for 45 days after the proposed rule is published in the Federal Register. As of the time of this post, the rule has not been published. A public hearing for the proposed rule will be held on December 17, 2015 in Washington, DC. A pre-publication version of the rule can be viewed here.

FERC Terminates Proceeding Regarding Increased Reporting of Natural Gas Sales

On November 17, 2015, FERC issued an order terminating a proceeding (Docket No. RM13-1) in which it had issued a Notice of Inquiry (NOI) proposing to substantially increase the reporting requirements applicable to sellers that make certain types of wholesale sales of natural gas. The NOI was issued on November 15, 2012 and proposed to require entities making FERC-jurisdictional sales of natural gas to file reports, on a quarterly basis, regarding transactions that entail “next day” or “next month” physical delivery of gas. Continue Reading

Sixth Circuit Holds the CAA Does Not Preempt State Common Law Claims

On November 2, 2015, the Sixth Circuit held that the Clean Air Act does not preempt state law nuisance, trespass, and negligence claims.  Little, et al. v. Louisville Gas & Electric Co., PPL Corp., Case No. 14-6499 (Nov. 2, 2015); Merrick v. Diageo Americas Supply Inc., Case No. 14-6198 (Nov. 2, 2015).  In a class action lawsuit, the plaintiffs in Little v. LG&E alleged that dust from Louisville Gas and Electric Co.’s (LGE) Cane Run power plant contaminated their property and caused health problems.  Defendant LGE argued that the Clean Air Act (CAA) preempted the plaintiffs’ nuisance, trespass, and negligence claims.  LGE argued that the CAA preempts state common law air pollution claims because it gives the EPA the authority to set uniform air quality control standards across the country.  LGE further argued that the state common law claims conflict with the CAA’s methods for regulating emissions and that allowing those claims to proceed would disturb the balance among federal and state interests.  The district court disagreed.  LGE petitioned for interlocutory appeal and the district court certified the order for appeal. Continue Reading

Update on FERC Notice of Proposed Rulemaking (NOPR) Regarding RTO/ISO Collection of Uniform Organized Market Participant Data

This updates our September 28, 2015 report on FERC’s NOPR to require “market participants” in RTO and ISO organized electricity markets to obtain a Legal Entity Identifier (LEI), an alpha-numeric identifier issued through the Global LEI System, and to provide information regarding their “Connected Entities” to the RTO/ISO in which they operate.

Our September 28 report contains a detailed description of the NOPR.  To briefly recapitulate, the NOPR defines a market participant as any seller or buyer of services offered in those markets.  Continue Reading

Too Little, Too Late: State Agency’s Enforcement Action Does Not Bar Citizen Suit

On October 20, 2015, a district court held that a state enforcement action brought under the Clean Water Act (CWA) did not bar a citizen suit from proceeding against Duke Energy Carolinas, LLC (Duke Energy). Yadkin Riverkeeper, Inc. v. Duke Energy Carolinas, LLC, Case No. 1:14-cv-753 (M.D.N.C. Oct. 20, 2015).  For regulated industries, Yadkin Riverkeeper is a reminder that the diligent prosecution bar to citizen suits under federal environmental statutes is not absolute, and the existence of a government enforcement action alone may not be enough to bar a citizen suit. Continue Reading

Trio of Recent Cases Help Refine CERCLA Remedial Statute of Limitations

Three recent district court cases have refined the contours for timely bringing a remedial action under the Comprehensive Environmental Response Compensation and Liability Act (CERCLA).  In all three opinions, the courts rejected arguments that preliminary or investigative activities to determine the magnitude of contamination at Superfund sites necessarily triggers the six-year statute of limitations for remedial actions under 42 U.S.C. § 9613(g)(2). Continue Reading

EPA’s Clean Power Plan Published in the Federal Register

On October 23, 2015, EPA published the long-awaited Clean Power Plan in the Federal Register.  The published rules include the Existing Source Performance Standards and the New, Modified, and Reconstructed Source Performance Standards.  In those rules, EPA established carbon dioxide (CO2) emission performance rates representing the Best System of Emission Reduction (BSER) for existing, modified, and new fossil fuel-fired electric utility steam generating units and stationary combustion turbines, set state-specific CO2 goals reflecting the CO2 emission performance rates; and established guidelines for developing state implementation plans.  These rules will become effective December 22, 2015. Continue Reading

Judge Rejects NCR Fox River Divisibility Defense in Reconsideration

Yesterday, a judge in the Eastern District of Wisconsin reversed his own ruling and held that NCR Corporation’s liability for the cleanup of polychlorinated biphenyls (PCBs) at the Fox River Superfund Site was not subject to divisibility.  Last May, the court held that NCR had proven that the environmental harm in Operable Unit 4 of the Site was capable of apportionment and could be reasonably apportioned based on NCR Corporation’s contribution of PCBs to this area.  In its May decision, the court held NCR liable only for its portion of the costs and determined NCR was not jointly and severally liable for all the costs of cleaning up PCBs in Operable Unit 4 (OU4).  That ruling upheld NCR’s “divisibility defense” to joint and several liability.  After yesterday’s decision, however, NCR is once again jointly and severally liable for all cleanup costs at OU4. Continue Reading

FERC Order: Supply AMAs Are Exempt from Prohibition on Buy-Sells

On October 15, 2015, FERC issued a declaratory order stating that asset management agreements (AMAs) entered into by natural gas suppliers are exempt from the prohibition on buy-sell transactions (http://www.ferc.gov/whats-new/comm-meet/2015/101515/G-4.pdf).  The Commission issued the order in response to a request for declaratory order filed by Rice Energy Marketing, LLC, which asserted that the Commission’s previous orders regarding AMAs could be construed to exempt delivery AMAs from the buy-sell prohibition, but continue to apply that prohibition to supply AMAs. Continue Reading

Proposed Largest Natural Resource Damages Settlement in U.S. History

On October 5, 2015, the United States, BP Exploration and Production Inc. (BP), Alabama, Florida, Louisiana, Mississippi and Texas lodged a Consent Decree with the District Court for the Eastern District of Louisiana to resolve claims for federal civil penalties and natural resource damages (NRDs) related to the Deepwater Horizon drilling unit / Macando Well oil spill in the Gulf of Mexico. If approved, this would be the largest natural resource damage settlement in U.S. history.

The terms of this settlement, including credit for the prior early payment towards NRDs, provide a possible template for resolving natural resource claims. A link to the Consent Decree, is here.

The United States sued BP in December 2010 under the Clean Water Act (CWA) and the Oil Pollution Act, seeking removal costs, penalties and NRDs related to discharges of hydrocarbons and other substances from the Macando Well into the Gulf of Mexico. The litigation was divided into three phases. In the first phase, the court found that the discharge of oil was the result of BP’s gross negligence and willful misconduct within the meaning of Section 311(b)(7)D) of the CWA. In the second phase, the court found that for purposes of calculating the maximum civil penalty under the CWA, 3.19 million barrels of oil discharged from the Macando Well into the Gulf of Mexico. The third phase of trial related to the United States’ penalty claims. On October 5, 2015, prior to the court issuing a decision on the third phase of trial, the parties lodged the proposed Consent Decree with the court.

Under the terms of the proposed Consent Decree, BP must pay $5.5 billion, plus interest, in civil penalties. 80 percent of the civil penalties will be allocated to environmental restoration, economic recovery and tourism promotion in Alabama, Florida, Louisiana, Mississippi and Texas, while the rest will be paid to the Oil Spill Liability Trust Fund to support responses to oil spills. BP must also pay $8.1 billion in NRDs, which includes $1 billion that BP already committed to pay under a previous agreement. The NRD funds will be used by federal and state trustee agencies to meet agreed upon restoration goals in the Gulf of Mexico area. The settlement also includes payment of $350 million in NRD assessment costs, up to $700 million to address currently unknown natural resource conditions, and $250 million to reimburse the United States for spill response and other costs. BP also reached a separate agreement to pay $5.9 billion to resolve economic damages claims brought by state and local governments.

In addition to the payments, as injunctive relief, the Consent Decree will require BP to publicly post certain safety and ethics related information, including certain annual reports it is required to submit to the government, compliance-related information and findings of deficiencies by auditors. BP’s parent companies must also guarantee that all payments required under the Consent Decree will be made.

The government parties are accepting comments on the proposed Consent Decree through December 4, 2015, after which they will determine whether to seek the court’s approval of the Consent Decree.