28 March 2018

Sidley Environmental Trends

Topics discussed this week include:

  • Administrator Pruitt releases new source review guidance memo, clarifying when emissions decreases are to be considered in the review process.
  • California federal judge orders remand to state court of climate-change-related state tort claims — creating split in district court.
  • Congress’s omnibus spending bill preserves the EPA budget and addresses other environmental issues such as pesticide funding and biomass emissions.
  • DC Circuit upholds Cross-State Air Pollution Rule as part of EPA’s regional haze rule.

Administrator Pruitt releases new source review (NSR) guidance memo, clarifying when emissions decreases are to be considered in the review process. On March 13, Environmental Protection Agency (EPA) Administrator Scott Pruitt released a guidance memorandum clarifying when an emissions decrease for a proposed project at an existing major stationary source will be considered during major modification applicability analysis for NSR review. As explained in this recent Sidley Update, according to the memo, any increases or any decreases of emissions from a project now may be considered in Step 1 of the NSR applicability process, not at Step 2 as some previous policy directives had indicated. Steps 1 and 2 of the applicability analysis are different; Step 1 reviews whether the proposed project, by itself, will result in an emissions increase. If the answer is yes, the analysis moves to Step 2, where regulators review the project to determine whether it will result in significant net emissions increases by examining contemporaneous emission increases and decreases. Depending on the answer, an owner or operator may need to apply for a new source review permit due to a major modification. Administrator Pruitt’s intention with this guidance memo is to further streamline the review process for projects at stationary sources.

California federal judge orders remand to state court of climate change-related state tort claims creating split in district court. On March 16, Judge Vince Chhabria of the U.S. District Court for the Northern District of California ordered a remand to state court of a trio of related cases that involve climate-change-related state law tort claims. This decision comes just weeks after Judge William Aslup, also in the Northern District, allowed similar cases involving similar claims to remain in federal district court. Judge Chhabria stayed his remand order for 42 days, pending appeal, and has allowed the parties to file briefs on the stay. Judge Chhabria held that because plaintiffs San Mateo and Marin Counties and the City of Imperial Beach had asserted state law public nuisance, trespass and negligent failure to warn claims, “federal common law” did not govern the action, which properly belongs in state court, relying on Supreme Court and Ninth Circuit case law. Judge Aslup, on the other hand, distinguished the same Supreme Court and Ninth Circuit decisions, finding the cases involved greenhouse gas emitters rather than greenhouse gas producers. Briefs on Judge Chhabria’s stay are due in the next two weeks.

Congress’s omnibus spending bill preserves the EPA budget and addresses other environmental issues such as pesticide funding and biomass emissions. On March 22, the United States Congress passed an omnibus spending bill later signed by the President. EPA’s budget largely preserves FY2017 EPA budget levels. This is a marked contrast to the budget proposed by President Donald Trump earlier in the year, which would have cut EPA funding by $2.5 billion in FY2019, representing a 23 percent reduction in the agency’s operating budget. In addition to generally preserving EPA’s budget, the spending bill also extended the Pesticide Registration Improvement Act (PRIA) applicability to September 30. The PRIA provides the framework for pesticide registration fee collection and also helps fund the Office of Pesticide Programs. The spending bill continued a trend in recent congressional spending bills by recognizing emissions from biomass material as “carbon neutral” and directing the EPA, Department of Energy and Department of Agriculture to fashion U.S. policy on biomass emissions consistent with this position.

DC Circuit upholds cross-state air pollution rule as part of EPA’s regional haze rule. On March 20, a three-judge panel for the United States District Court for the District of Columbia unanimously upheld a portion of EPA’s regional haze rule that allows states to treat compliance with the Cross-State Air Pollution Rule (CSAPR) as better-than-Best Available Retrofit Technology (BART) for states participating in CSAPR. The challenges to EPA’s CSAPR interpretation came from two sides — environmental nongovernmental organizations (eNGOs) and power companies joined by trade groups. The eNGOs asserted that EPA erred by comparing the wrong averages when it evaluated BART emissions modeling against CSAPR emissions. The court pointed to a previous opinion in which it upheld EPA’s CSAPR predecessor rule (the Clean Air Interstate Rule, or CAIR) and also found that “nothing in the Clean Air Act’s ‘reasonable progress’ language requires at least as much improvement at each and every individual area as BART itself would achieve.” Industry, on the other hand, argued that once EPA replaced CAIR with CSAPR, it effectively disapproved several state implementation plans (SIPs) that relied on CAIR as the operative better-than-BART standard. The court rejected these arguments, stating that CAIR is a defunct standard that cannot be resurrected and cannot be the basis for current SIP approval.

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