Articles Posted in Litigation

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The  Court of Appeals for the D.C. Circuit determined that, under the Clean Air Act, the EPA lacked authority to stay implementation of a new rule on Greenhouse Gas (GHG) Emissions. In Clean Air Council v. Pruitt, the Court  found that the stay was arbitrary, capricious and in excess of the authority of the EPA Administrator.

In June 2016, the then EPA administrator issued a rule regarding leaks of methane and other oil and gas pollutants. The rule required,  among other things, an “initial monitoring survey” be conducted by June 3, 2017. In April, 2017 the new EPA administrator, Scott Pruit, issued a letter indicating the EPA would reconsider the rule and intended to issue a 90 day stay of the rule, as permitted under the Clean Air Act (CAA).  The required notice of reconsideration was published on June 5, 2017, two days after the initial monitoring was to have been completed. The notice provided for the following reconsideration and 90 day stay:

“…reconsideration on four aspects of the methane rule: (1) the decision to regulate low-production wells, (2) the process for proving compliance by “’alternative means,’” (3) the requirement that a professional engineer certify proper design of vent systems, and (4) the decision to exempt pneumatic pumps from regulation only if a professional engineer certified that it was “’technically infeasible’” to route such pumps “’to a control device or a process.’” 82 Fed. Reg. at 25,731–32. In addition, the notice “’stay[ed] the effectiveness of the fugitive emissions requirements, the standards for pneumatic pumps at well sites, and the certification by a professional engineer requirements’” for 90 days “’pending reconsideration.’” 82 Fed. Reg. at 25,732. The notice explained that the stay had gone into effect on June 2, 2017—that is, three days before the notice was published in the Federal Register. 82 Fed. Reg. at 25,731.”

However, on June 16, 2017 another notice was issued advising of the intent to reconsider the entire 2016 rule and to extend the stay for two years. After the suspension, several environmental groups brought the action seeking alternatively a stay or  vacating the actions of the EPA Administrator, on the grounds that the: “…EPA’s stay violates CAA section 307(d)(7)(B) because “’all of the issues Administrator Pruitt identified could have been, and actually were, raised (and extensively deliberated) during the comment period.’”

The EPA and industry parties argued that the stay and reconsideration was not a final agency action and therefore the Court lacked jurisdiction to review it. The Court concluded it does have jurisdiction due  to the nature of the action.

“…EPA has not only concluded that section 307(d)(7)(B) requires reconsideration, but it has also suspended the rule’s compliance deadlines. EPA’s stay, in other words, is essentially an order delaying the rule’s effective date, and this court has held that such orders are tantamount to amending or revoking a rule.”

The Court noted that, as the initial monitoring was to be completed by June 3 and repairs of leaks performed within thirty days of June 3, with potential penalties of non-compliance, “[t] he stay—which EPA made retroactive to one day before the June 3 compliance deadline—eliminates that threat, see 82 Fed. Reg. at 25,731, and thus relieves regulated parties of liability they would otherwise face.”

The Court went on to say that the EPA’s argument that the Court could impose a stay upon a regulation being imposed but could not prevent the EPA’s stay of a regulation, would have a “perverse result”. It further noted that the CAA provides specific criteria be met in order to permit the stay of a final rule. The test is ” that it was “’impracticable to raise’” an objection during the public comment period and the objection is “’of central relevance to the outcome of the rule.’” Only when these two conditions are met does the statute authorize the Administrator to stay a lawfully promulgated final rule.”

In addressing the EPA’s lack of authority to issue the stay in this instance the Court held:

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In reversals of previous positions taken by the Environmental Protection Administration (EPA), on April 28, 2017 the EPA announced that it took down information on climate change, previously placed on its Website, to “update” language. On the same date the EPA was also successful in having the U.S. Court of of Appeals for the District of Columbia Circuit  hold in abeyance an  action challenging Obama Era clean air regulations, while the EPA reviews the dismantling of those regulations.

On Friday the EPA issued a statement indicating:

“EPA.gov, the website for the United States Environmental Protection Agency, is undergoing changes that reflect the agency’s new direction under President Donald Trump and Administrator Scott Pruitt. The process, which involves updating language to reflect the approach of new leadership, is intended to ensure that the public can use the website to understand the agency’s current efforts. …The first page to be updated is a page reflecting President Trump’s Executive Order on Energy Independence, which calls for a review of the so-called Clean Power Plan. Language associated with the Clean Power Plan, written by the last administration, is out of date. Similarly, content related to climate and regulation is also being reviewed.”

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A bill has been submitted in Congress that if adopted will completely alter Federal energy policies and restrict or eliminate the ability of federal agencies to regulate activities that have potentially significant environmental impacts.. The so called “American Energy Renaissance Act of 2015” addresses everything from fracking, the Keystone XL Pipeline, drilling in the outer continental shelf, tribal lands and drilling for oil in Alaska to renewable fuel, the budget deficit and regulation of greenhouse gases.

The proposed act also restricts judicial review of actions pursuant to the bill, creates short statutes of limitation to seek judicial review, short periods for action by the applicable agencies to process permit applications and prohibits recovery of legal fees for challenges to actions.

While there are many aspects of the bill that would impact Climate Change policies, the sections below repealing renewable fuel standards,and preventing the EPA from adopting regulations that regulate greenhouse gases seem to be the provisions that most directly reject the concept of Climate Change. Moreover the bill proposes the “term ‘air pollutant’ does not include carbon dioxide, water vapor, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, or sulfur hexafluoride.”

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The U.S. Court of Appeals for the District of Columbia Circuit issued a decision this week rejecting a challenge to a series of EPA reguations aimed at curtailing GHG emissions from both vehicles and stationary sources. In Coalition for Responsible Regulation, Inc. v. Environmental Protection Agency, the Court summarized its decision as follows:

“Following the Supreme Court’s decision in Massachusetts v. EPA, 549 U.S. 497 (2007)-which clarified that greenhouse gases are an “air pollutant” subject to regulation under the Clean Air Act (CAA)-the Environmental Protection Agency promulgated a series of greenhouse gas-related rules. First, EPA issued an Endangerment Finding, in which it determined that greenhouse gases may “reasonably be anticipated to endanger public health or welfare.” See 42 U.S.C. § 7521(a)(1). Next, it issued the Tailpipe Rule, which set emission standards for cars and light trucks. Finally, EPA determined that the CAA requires major stationary sources of greenhouse gases to obtain construction and operating permits. But because immediate regulation of all such sources would result in overwhelming permitting burdens on permitting authorities and sources, EPA issued the Timing and Tailoring Rules, in which it determined that only the largest stationary sources would initially be subject to permitting requirements.

Petitioners, various states and industry groups, challenge all these rules, arguing that they are based on improper constructions of the CAA and are otherwise arbitrary and capricious. But for the reasons set forth below, we conclude: 1) the Endangerment Finding and Tailpipe Rule are neither arbitrary nor capricious; 2) EPA’s interpretation of the governing CAA provisions is unambiguously correct; and 3) no petitioner has standing to challenge the Timing and Tailoring Rules. We thus dismiss for lack of jurisdiction all petitions for review of the Timing and Tailoring Rules, and deny the remainder of the petitions.”

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Last week the Virginia Supreme Court upheld a lower court ruling that an insurance carrier had no liability to cover its insured in an action claiming the insured’s activities had contributed to damages resulting from the effects of climate change. In AES Corporation v Steadfast Insurance Co., the Virginia Supreme Court noted that the action resulted from a lawsuit by a Native Alaskan Village against several companies, including AES, claiming they damaged “the village by causing global warming through emission of greenhouse gases”.

In holding that the insurance policy did not provide coverage for the claims made against AES, the Court found:

“Under the CGL policies, Steadfast would not be liable because AES’s acts as alleged in the complaint were intentional and the consequences of those acts are alleged by Kivalina to be not merely foreseeable, but natural or probable. Where the harmful consequences of an act are alleged to have been not just possible, but the natural or probable consequences of an intentional act, choosing to perform the act deliberately, even if in ignorance of that fact, does not make the resulting injury an “accident” even when the complaint alleges that such action was negligent.

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The U.S. Supreme Court, in American Electric Power Company LLC v. Connecticut, held that the plaintiffs, which include several states and the City of New York, could not maintain their federal common law action against utility companies seeking to impose limitations on greenhouse gas emissions.

In summarizing the decision, Justice Ginsburg, writing for the majority, stated:

“We address in this opinion the question whether the plaintiffs (several States, the city of New York, and three private land trusts) can maintain federal common law public nuisance claims against carbon-dioxide emitters (four private power companies and the federal Tennessee Valley Authority). As relief, the plaintiffs ask for a decree setting carbon-dioxide emissions for each defendant at an initial cap, to be further reduced annually. The Clean Air Act and the Environmental Protection Agency action the Act authorizes, we hold, displace the claims the plaintiffs seek to pursue.”

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A series of lawsuits commenced, since the beginning of May, seek action by state and federal government on Climate Change, based upon the Public Trust Doctrine. A group called Our Children’s Trust, in conjunction with other groups, commenced an action in the U.S. District Court for the Northern District of California on May 4, 2011. It has also started actions in eleven states.

The Federal complaint states the basis for the claim as follows:

“The Public Trust Doctrine provides that our federal officials have a fiduciary duty to protect the atmosphere from the effects of human-induced global energy imbalance and to hold our country’s vital natural resources in trust for present and future generations of citizens. Our federal government may not manage the trust resource in a way that substantially impairs the public interest in a healthy atmosphere.”

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On Monday the Second Circuit Court of Appeals reinstated an action by eight states, the City of New York and three land trusts challenging the levels of carbon dioxide emissions by coal burning power plants under a theory of nuisance. In State of Connecticut v. American Electric Power Company, Inc. the plaintiffs claim that the carbon dioxide emissions from these coal burning plants contribute to global warming and should be ultimately reduced.

The basis for the claims was stated by the Court as:

“Plaintiffs claim that global warming, to which Defendants contribute as the “five largest emitters of carbon dioxide in the United States and . . . among the largest in the world,” Connecticut v. Am. Elec. Power Co., 406 F. Supp. 2d 265, 268 (S.D.N.Y.2005), by emitting 650 million tons per year of carbon dioxide, is causing and will continue to cause serious harms affecting human health and natural resources. They explain that carbon dioxide acts as a greenhouse gas that traps heat in the earth’s atmosphere, and that as a result of this trapped heat, the earth’s temperature has risen over the years and will continue to rise in the future.”

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New York’s Appellate Division (Fourth Department) issued a decision in early February, 2009 upholding a denial by the Town of Ellicottville of site plan and special permit approval to construct a cogeneration plant using wood chips as fuel, as part of a larger development proposal. In Matter of Laidlaw Energy and Environmental Inc. v Town of Ellicottville, the court found that the conclusion contained in the New York State Environmental Quality Review Act (SEQRA) findings that “serious increases in harmful emissions” from the plant would result in an “unacceptable adverse impact” was not arbitrary and should be upheld.

In what appears to be one of, if not, the first decision in New York to deny a land use approval due to concern over carbon emissions, the court has found that this is a proper consideration under SEQRA. Unfortunately, the decision goes into little detail about the findings or the issues posed. However, thanks to Daniel Spitzer, Esq. the partner at Hodgson Russ LLP, who successfully defended the decision, we were able to obtain a copy of the Town’s detailed SEQRA findings.

The findings focused on a number of issues but Greenhouse Gases (GHGs) and Carbon Dioxide were a focus in the analysis of the cogeneration plant, noting in part: “the issue of carbon neutrality is far more complicated, and while biomass plants can be carbon neutral, the Laidlaw proposal is neither carbon neutral when viewed locally or regionally, because the Laidlaw proposal is not coupled with a sustainable agricultural management program….Laidlaw is not planting new trees to take up the carbon. It is burning the dead or trimmed mature trees, meaning the fuel source will not absorb the carbon released in equal portions.” The findings also discuss attempts to have Laidlaw put together a sustainable agricultural management program in conjunction with the plant and the refusal of Laidlaw to implement such a plan.

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In a challenge to attempts by several north Texas cities to address climate change issues, cement manufacturer Ash Grove LLP has brought an action in the U.S. District Court for the Northern District of Texas. The lawsuit, which was filed on November 26, 2008, alleges that the local resolutions, favoring purchasing cement which is produced through a process which releases less pollution, violates both Texas contract bidding requirements and the constitutional rights of Ash Grove LLP.

According to the Dallas Morning News, Ash Grove is the only one of several cement manufacturers in the area which does not operate any “dry process kiln” for the manufacturing of cement, which is claimed to release less pollution. The attorneys for Ash Grove maintain that the resolutions adopted by Dallas, Plano, Arlington and Fort Worth “stifled competition.”

The potential impact of this suit on attempts by local governments to regulate purchasing in a manner which considers the effects of manufacturing processes on global warming are not yet clear.