E2 Law Blog

EPA To Exercise Enforcement Discretion on Boiler MACT Deadlines

Caleb Holmes — Fri, 20 Jan 2012 14:43:20 -0500

On Wednesday, January 18^th, by letter to Senator Ron Wyden of Oregon, the EPA advised that it would exercise enforcement discretion with respect to the 2011 notification deadlines for existing boilers and incinerators that have passed while the EPA’s administrative stay of its March 2011 new rules has been pending. This step is being taken due to the January 9, 2012, decision of U.S. District Court Judge Paul Friedman which vacated the administrative stay, a decision I discussed in my previous post. After analyzing the court’s decision, EPA has stated that it will issue a “no action assurance letter” shortly that informs sources it will not enforce any of the notification requirements for new or existing boilers that arise under the 2011 rule. The EPA letter further states that it believes that noncompliance by existing sources with the 2011 rule “would be unlikely to warrant” civil enforcement action by third parties, but, in any event, such an action would require 60-days prior notice to EPA which would give EPA sufficient time to take further steps to address those impacts. With respect to new boilers and incinerators, the EPA concludes that there are no sources subject to requirements other than the notification obligations which now are being reconsidered. But EPA noted that, if it becomes aware of other permitting or compliance challenges for new sources as a result of the stay being vacated, EPA will issue a 90-day stay under the Clean Air Act or a longer stay under the Administrative Procedures Act (“APA”) consistent with the district court’s opinion on stays under the APA. Finally, the letter states that EPA recognizes that industry needs sufficient time to comply with these standards and that, subject to public comment, EPA intends to reset the “compliance clock” when it finalizes the rules which it reproposed last December.

Air Turbulence

Caleb Holmes — Wed, 18 Jan 2012 15:31:31 -0500

From Michael Cooke of GT Tampa:

EPA and the federal courts have been busy with air issues in December and January, and the results have created substantial uncertainty for sources planning compliance efforts. These actions include two new air toxics rules for electric utilities (the “Mercury and Air Toxics Standard,” or “MATS”), issued by EPA in mid-December; a federal district court order issued in early January 2012 that vacated and remanded the “Delay Notice” EPA had issued to postpone the effectiveness of the Major Source Boiler MACT and Commercial and Industrial Solid Waste Incineration (“CISWI”) unit standards ; and an order of the U.S. Court of Appeals for the D.C. Circuit staying the effectiveness of the final Cross-State Air Pollution Rule that was issued by EPA on August 8, 2011. These actions affect a wide range of stationary air sources, including cement kilns, electric generating units, solid waste incinerators, and numerous industrial, commercial and institutional boilers. Regulated entities, understandably, are struggling to assess the impacts of them and make appropriate compliance plans.

Electric Utility Air Toxics and NSPS Rules

The MATS, issued by EPA on December 16, 2011, includes a maximum achievable control technology standard (“MACT) and a new source performance standard (“NSPS”). The MACT applies, in general, to coal- and oil-fired electric generating units (“EGU”), requiring them to monitor and reduce the level of mercury (“Hg”) and other heavy metals, acid gases, SO2, NOx, and particulate matter in their emissions. It also incorporates work practice standards to address organic air toxics such as dioxin/furan. It will become effective 60 days after publication of the new rule in the Federal Register, which should occur by next March or April. Waste-to-energy EGUs (i.e., solid waste incinerators that are used to produce energy) generally are not subject to the MATS rule but are covered by the CISWI standards (see discussion below). Under MATS, existing sources will be required to comply with the new standards within three years, with the potential for two 1-year extensions. The EPA also issued a New Source Performance Standard that applies to new units built, modified or reconstructed after May 3, 2011. EPA estimates that 40 per cent of the coal-fired units covered by the rule do not have the advanced compliance controls contemplated for compliance. Grid reliability is a serious issue and challenges to the new rule are expected.

Order Vacating Delay Notice For Major Source Boiler MACT and CISWI

Just as the major source boiler MACT and CISWI were scheduled to become effective in May of last year, EPA issued a “Delay Notice” that postponed the effectiveness of the rules until the earlier of judicial review or EPA’s reconsideration of the rules could be completed. Although judicial review of the substantive challenges to the rules has been pending in the U.S. Court of Appeals since shortly after the rules were published, environmental petitioners subsequently filed challenges to the Delay Notice in federal district court. On January 9, 2012, after determining it had subject matter jurisdiction to hear the challenge, the U.S. District Court issued an order that vacated the Delay Notice and remanded it to EPA. The court held that EPA had acted arbitrarily in issuing what was, in effect, an administrative stay of the rule by not adequately addressing the traditional requirements for a stay. The effect of the vacatur order appears to activate the deadlines and requirements in the original rules. Adding to the uncertainty about applicable deadlines and standards, however, on December 23, 2011, the EPA had proposed revisions to the original standards. According to EPA, the reconsideration process is not expected to be completed until Spring 2012. This leaves regulated entities, which include more than 14,000 industrial boilers, as well as certain waste to energy and cement incinerators, guessing which standards ultimately will apply to their facilities and what immediate steps they need to take to ensure compliance with the existing rules. Although, from a purely legal perspective, the original standards (including notice requirements where deadlines already have passed) seem to apply now, from a practical perspective, some form of reconsidered standard is likely to prevail.

Stay of CSAPR

On December 30, 2011, the U.S. Court of Appeals issued a stay of the Cross State Air Pollution Rule that became final on October 7, 2011. The rule, which was designed to replace the Clean Air Interstate Rule promulgated in 2005 and which also applies to coal-fired EGUs, includes a January 1, 2012, compliance deadline for those states subject to SO2 and annual NOx reductions and an additional compliance date of May 1, 2012, for those states subject only to the ozone season NOx reductions. These were the same compliance dates that had been included in the proposed rule, but completion of the proposed rule had been delayed for a year, causing some affected entities to expect the dates to change. Do to the uncertainty created by the delay, some sources which had not already started to construct control projects they had planned for compliance purposes found it difficult to meet compliance requirements by the final deadlines. Moreover, both CAIR and CSAPR incorporate emissions trading programs to facilitate compliance with air emissions budgets, but the programs differ in certain respects in terms of the compliance caps and interstate trading that is permitted. Not surprisingly, the value of CSAPR credits dropped substantially once the stay was announced and some exchanges have delisted future sales of them for the time being .

Cement MACT Issues

Cement manufacturing facilities with incinerators that burn solid waste potentially are subject to CISWI rather than the Cement MACT that was issued in 2010. Although the Cement MACT is being litigated, and EPA is reconsidering certain aspects of it, the status of the CISWI rule and changes ultimately made to it could have a significant effect on the regulation of cement kilns. In the CISWI reconsideration proceeding, EPA is proposing to adjust emissions limits for waste-burning cement kilns (and for energy recovery units). EPA also is proposing revisions of the final rule that dealt with the types of non-hazardous secondary materials that can be burned in boilers or solid waste incinerators, classifying a number of secondary materials as non-waste when used as a fuel and allowing operators to request EPA to identify certain materials as non-waste fuels. Cement kilns need to track these issues carefully and consider commenting on the reconsidered rules. Comments must be received by February 21, 2012.

Next Steps

The final form of these various rules won’t be known for some time. Affected facilities--e.g., cement kilns, electric generating units, waste-to-energy units, commercial, industrial, and institutional facilities with boilers--need to track these developments carefully to analyze potential impacts on their compliance programs and make appropriate adjustments.

Declaratory Judgments Under Superfund

David Mandelbaum — Thu, 29 Dec 2011 11:54:40 -0500

Thirty years after enactment, lawyers and courts remain somewhat at sea over when declaratory judgments must be granted under the federal Superfund statute, when they may be granted, and when they should not be granted. Beginning from the Court of Appeals for the Second Circuit's December 19 decision in New York v. Solvent Chemical Co., No. 10-1026-cv(L), in this month's column in the Legal Intelligencer / Pennsylvania Law Weekly, I consider this confusing area. Declaratory Judgments and Superfund Eyed by 2nd Circuit, 34 Pa. L. Weekly 1184 (Dec. 27, 2011). To read the column, click here.

CEQ Issues Draft Guidance to Promote Efficient NEPA Environmental Reviews

Caleb Holmes — Fri, 16 Dec 2011 15:54:00 -0500

From Melissa Meirink of GT Denver:

The Council on Environmental Quality (CEQ) recently issued draft guidance designed to promote more efficient environmental reviews of projects subject to the National Environmental Policy Act (NEPA). NEPA is a procedural statute that requires federal agencies to consider the environmental impacts of their proposed actions before deciding to adopt a proposal or to take action. NEPA is triggered when there is a major federal action significantly affecting the quality of the human environment. Although the current NEPA-implementing regulations provide methods for preparing efficient and timely environmental reviews, the CEQ's proposed guidance will emphasize and clarify those methods. Specifically, the guidance outlines the following principles for agencies to follow when conducting a NEPA review:

NEPA encourages simple, straightforward, and concise reviews
The NEPA process should begin early and should be integrated into project planning
NEPA reviews should adopt, use, and incorporate existing documents and studies
Targeted scoping can assist to focus environmental reviews on appropriate issues
Agencies should develop expeditious timelines for environmental reviews
Agencies should respond to comments in proportion to the scope and scale of the environmental issues raised

In addition, the draft guidance clarifies that many provisions of the existing regulations referring to an environmental impact statement (EIS) can also apply to an environmental assessment (EA). The draft guidance also provides measures to eliminate duplication of efforts and to promote better interagency interaction.

The draft guidance would promote a clear and more streamlined environmental review process under NEPA that would benefit agencies, project proponents, and others interested in the NEPA process. The CEQ is accepting public comment on the draft guidance until January 27, 2012.

Pennsylvania Legislature Proposes Amendments to the Oil and Gas Act

David Mandelbaum — Tue, 29 Nov 2011 12:04:04 -0500

In this month's Pennsylvania Law Weekly / Legal Intelligencer column, I discuss Pennsylvania Senate Bill 1100 and Pennsylvania House Bill 1950. The bills, which implement many of the recommendations made by Pennsylvania Governor Tom Corbett's Marcellus Shale Advisory Commision, propose significant amendments to Pennsylvania's Oil and Gas Act intended to address Marcellus Shale gas development.

To read the column, click here.

U.S. Department of State to Delay Decision on Keystone XL Pipeline in Order to Assess Different Pathway Through Nebraska

Caleb Holmes — Mon, 14 Nov 2011 12:03:26 -0500

From Todd Sumner of GT Tallahassee:

On November 10, 2011, the U.S. State Department announced during a press briefing that it was delaying its decision on the proposed Keystone XL oil pipeline in order to assess other pathways through Nebraska. The 1700 mile crude oil pipeline which would run from the Alberta Oil Sands region in Canada and ultimately terminate at refineries along the Texas Gulf Coast would also traverse over the shallow water Ogallala aquifer in Nebraska's Sand Hills region.

While the State Department released the final Environmental Impact Statement for the proposed oil pipeline on August 26, 2011, since that time opposition to the proposed route has expanded including Nebraska Governor Dave Heineman (R) due to the proposed route over the Ogallala aquifer. The Nebraska Governor had already called a special session of the Nebraska legislature for the crafting of pipeline siting/approval legislation that will be further vetted during the week of November 14th. The State Department is now to be looking at alternative routes of the Keystone pipeline that would avoid or minimize impacts to the Nebraska Sand Hills region. The alternative pipeline route review will be conducted as a supplemental environmental impact statement and the State Department's final decision on the proposed pipeline is estimated to conclude sometime following the 2012 presidential election.

DRBC Releases Final Draft Regulations on Natural Gas Development

Caleb Holmes — Thu, 10 Nov 2011 17:27:09 -0500

From Adam Silverman of GT Philadelphia:

This week, the Delaware River Basin Commission (“DRBC”) released its final draft natural gas development regulations in anticipation of a final vote on whether the DRBC will adopt the regulations. The vote is scheduled for November 21, 2001. There is some reason to believe that the Commission vote may not be unanimous, which would be a rare occurrence. If adopted, the regulations will end a moratorium imposed on drilling for natural gas within the Delaware River watershed, which supplies water to Philadelphia and New York City. Since first introducing draft regulations in 2010, the DRBC received nearly 70,000 comments from the public, some of which were reportedly incorporated into subsequent drafts of the regulations.

The final draft regulations would permit the drilling of 300 wells within the watershed, provide setback requirements, and increase financial assurance requirements to, in certain cases, $5MM per well up to $25MM for multiple-well sites. State regulations will determine the construction and operation of individual wells and pads but water sources for well pads require approval by the DRBC. The regulations also limit the discharge and storage of wastewater and fracking fluid within the watershed. The DRBC plans to reassess the regulations after 18 months.

Several lawsuits have already been filed in connection with the DRBC’s attempt to regulate natural gas drilling, including a lawsuit filed by New York’s Attorney General and a lawsuit filed by the several environmental conservation organizations.

Among other things, the lawsuits seek compliance with federal environmental laws. If adopted, it is expected that the regulations themselves would be challenged.

The DRBC, which is comprised of one representative Commissioner from the federal government, Delaware, New Jersey, New York and Pennsylvania, is the agency responsible for protecting the waters of the Delaware River watershed under the Delaware River Basin Compact.

Recurring Issues With NSR and PSD Enforcement

David Mandelbaum — Mon, 31 Oct 2011 10:53:52 -0500

In this month's Pennsylvania Law Weekly / Legal Intelligencer column, I discuss United States v. EME Homer City Generation, No. 11-19 (W.D. Pa. Oct. 12, 2011), and Jackson v. EME Homer City Generation, No. 11-28 (W.D. Pa. Oct 13, 2011), and the recurring issues related to the enforcement of the Clean Air Act's new source review (NSR) and prevention of significant deterioration (PSD) programs.

To read the article, click here.

10th Circuit Upholds Sharp Restrictions of Clinton-Era Roadless Rule in Forests

Caleb Holmes — Tue, 25 Oct 2011 12:21:28 -0500

From Jeffrey Collier of GT West Palm Beach:

On October 21st, the U.S. Forest Service and environmental advocates successfully defended the Clinton administration's Roadless Area Conservation Rule ("Roadless Rule"), winning a decision by the U.S. Court of Appeals for the 10th Circuit requiring a district court to vacate its nationwide injunction against the rule. See Wyoming v. U.S. Dep't of Agriculture (USDA), No. 09-8075 (10th Cir. Oct. 21, 2011).

The state of Wyoming, with support from the Colorado Mining Association, had won a decision in the U.S. District Court for the District of Wyoming on claims that the Roadless Rule violated the Wilderness Act and the National Environmental Policy Act ("NEPA") by creating de facto wilderness areas and by doing so without following NEPA procedural requirements. The Roadless Rule eliminated prospects for almost any road construction on about 58.5 million acres of federal land.

The USDA, including the Forest Service, appealed to the 10th Circuit with support from environmental groups. The department argued that federal laws gave the Forest Service adequate discretion to bar road construction in national forests, and that the rule had been developed in conformity with NEPA requirements.

A three-judge panel of the appeals court ruled in favor of the Forest Service on all points. The appeals court said the Roadless Rule allowed the possibility of at least some road construction and some grazing and mining, which meant that it did not amount to a de facto creation of wilderness. The decision brings the 10th Circuit into agreement with the Ninth Circuit, which had rejected challenges to the Clinton administration's 2001 Roadless Rule. See Kootenai Tribe of Idaho v. Veneman, 313 F.3d 1094 (9th Cir. 2002). This decision will, for the time being, continue to limit access to federal wilderness lands for mining, drilling, timbering, and related uses.

Compare Minard Run Oil Co. v. USFS, Nos. 10-1265 and 10-2332, (3rd Cir. Sept. 20, 2011), in which the 3rd Circuit affirmed a preliminary injunction entered by the District Court prohibiting the U.S. Forest Service from making the completion of a multi-year, forest-wide Environmental Impact Study a condition for issuing Notices to Proceed to mineral owners seeking to drill for oil or gas. See also PAPCO, Inc. v. USFS, No. 08-253 (W.D. Penn. Aug. 30, 2011), in which the District Court for the Western District of Pennsylvania recently granted summary judgment in favor of PAPCO, holding that PAPCO is permitted the reasonable use of an easement to obtain its oil, gas and mineral rights in the Allegheny National Forest.

Pennsylvania DEP Issues Draft Guidance on the Aggregation of Air Sources

David Mandelbaum — Fri, 14 Oct 2011 11:29:16 -0500

As mentioned earlier, I recently dedicated my monthly column for the The Legal Intelligencer/Pennsylvania Law Weekly to an examination of two Pennsylvania Environmental Hearing Board appeals which address aggregation of air emission sources under the Clean Air Act and the Pennsylvania Air Pollution Control Act.

This week the Pennsylvania Department of Environmental Protection (PADEP) has issued draft technical guidance on this issue. PADEP's draft guidance addresses how to determine when two operations in the oil and gas business constitute a single "source" for purposes of regulation under the federal and state air statutes. Sources that emit more than a threshold amount of a pollutant (typically 250 tons/year for each pollutant) are subject to a somewhat onerous permitting requirement before being constructed or modified (that is, nonattainment new source review or Prevention of Significant Deterioration new source review).

The draft guidance interprets longstanding (but confusing) federal requirements that apply a three part test: two well pads, compressor stations, or processing plants constitute a single "source" if (a) they are in the same industry, (b) they are under common control, and (c) they are "contiguous" or "adjacent." The PADEP guidance focuses (properly) on whether two facilities in the natural gas industry under control of the same or related entities are "contiguous" or "adjacent." PADEP will not generally "daisy chain" facilities along a gathering system, nor will it allow the pipelines to establish contiguity. It will consider surface facilities as a single source if they are within a quarter-mile and more distant facilities as a single source on a case-by-case basis.

De Novo Review in the Pennsylvania Environmental Hearing Board

David Mandelbaum — Wed, 05 Oct 2011 13:40:50 -0500

In this month's Pennsylvania Law Weekly / Legal Intelligencer column, Sabrina Mizrachi and I consider the recent Pennsylvania Environmental Hearing Board (EHB) decision, Consol Pennsylvania Co. v. Department of Environmental Protection, EHB Docket No. 2010-030-R (Pa. Env. Hrg. Bd. Aug 26, 2011). We use Chief Judge Thomas W. Renwand's opinion as a chance to review the sometimes confusing jurisdictional and procedural principles of the EHB.

To read the article, click here.

Governor Corbett Outlines Plan for New Standards, Fees on Shale Drilling

Caleb Holmes — Tue, 04 Oct 2011 09:39:56 -0500

Pennsylvania Governor Tom Corbett announced that he will present a plan to the General Assembly that will implement numerous recommendations proposed by the Marcellus Shale Advisory Commission (Commission), including an impact fee on wells and more rigorous standards on hydraulic fracturing. The impact fee would subject each well to a fee of up to $40,000 in the first year, $30,000 in the second, $20,000 in the third, and $10,000 in the fourth through tenth year, adding up to a potential $160,000 per well. Seventy-five percent of the revenues collected from these fees would be distributed to the counties and municipalities in which drilling is taking place, with the vast majority of the remainder going to the Pennsylvania Department of Transportation for infrastructure and maintenance of roads in those same counties.

The proposed standards would increase well setback distances from wells and waterbodies, increase penalties and bond requirements, and expand gas operators' "presumed liability" for impairing water quality from 1,000 to 2,500.

Governor Corbett created the Commission by Executive Order in March in order to create a plan for developing the Marcellus Shale responsibly, and on July 22 the Commission issued its final report, which included 96 policy recommendations.

New York Issues Draft Fracking Regulations for Public Comment

Caleb Holmes — Mon, 03 Oct 2011 07:58:18 -0500

In July, the New York State Department of Environmental Conservation ("NYSDEC") released its draft Supplemental Generic Environmental Impact Statement ("SGEIS") on horizontal drilling. As we explained in more detail earlier, the draft SGEIS included draft regulations, which would impose "rigorous and effective controls" on hydraulic fracturing. In September, NYSDEC supplemented its SGEIS, adding mitigation measures addressing socioeconomic, community character, visual, noise and transportation impacts.

NYSDEC has now issued its draft regulations, which are the same as those released in July, for public comment. The public comment period will conclude December 12, and four public hearings are being held in November in Dansville, Binghamton, Sheldrake and New York City.

EPA Adopts Plan to Address Environmental Justice Issues

Caleb Holmes — Fri, 16 Sep 2011 10:31:45 -0500

From Samantha Corson of GT Philadelphia:

Seventeen years after President Clinton issued an Executive Order on the issue, The United State Environmental Protection Agency ("EPA") has returned to the issue of environmental justice with the adoption of Plan EJ 2014. Environmental justice is the moniker used to describe efforts to consider whether exposure to environmental risks are distributed evenly throughout society (and in particular, to ensure the fair treatment of low income, minority and indigenous populations). Through Plan EJ 2014, EPA intends to take community characteristics and demographics into account in its regulatory decision-making.

EPA takes pains to underscore that Plan EJ 2014 is not a rule or guidance document, but instead is a "strategy" to integrate environmental justice into EPA's activities. The vast majority of Plan EJ 2014 summarizes implementation plans for five "Cross-Agency Focus Areas" and four "Tools Development Areas." The Cross-Agency Focus Areas include strategies to incorporate environmental justice concerns into rulemaking, permitting, compliance and enforcement, support for community-based action groups and fostering administration-wide action on environmental justice. Plan EJ 2014 also explores scientific, legal, information management and financial "tools" that can be developed or refined to support EPA's efforts to evaluate and address environmental and health inequities among overburdened communities. Plan EJ 2014 concludes with a discussion of EPA's intention to support existing EPA programs that pursue environmental justice goals and the EPA's intention to improve its civil rights program.

We have seen past EPA efforts to formulate a cohesive strategy to address environmental justice issues. In the late 1990s EPA published a series of guidance documents intended to integrate environmental justice considerations into EPA assorted activities, including the Final Guidance for Consideration of Environmental Justice in Clean Air Act 309 Reviews (July 1999), Final Guidance for Incorporating Environmental Justice Concerns in EPA's NEPA Compliance Analysis (April 1998) and the Interim Guidance for Investigating Title VI Administrative Complaints Challenging Permits (February 1998). Such efforts were mostly stalled until EPA Administrator Lisa Jackson refocused on environmental justice as an Agency priority. Under Jackson's leadership, EPA published Interim Guidance on Considering Environmental Justice During the Development of an Action in July of 2010. The guidance outlines a step-by-step process to assist EPA staff in evaluating environmental justice considerations at key points in the rulemaking process. Finalization of this guidance is part of EPA's strategy outlined in Plan EJ 2014. EPA anticipates releasing the guidance in final form in December 2011. By 2014, EPA intends to mark the 20th anniversary of Clinton's Executive Order by making an assessment of its progress in achieving this objective as well as the other goals of Plan EJ 2014 in a report analyzing the Agency's efforts to achieve the specific objectives of the Plan and also more generally the Agency's efforts to make environmental justice an integral part of every decision.

President Obama Returns Ozone Rule to EPA

Caleb Holmes — Wed, 14 Sep 2011 16:16:09 -0500

From Julie Kendig of GT Orlando:

On Friday, September 2, 2011, Cass Sunstein, of the Executive Office of the President, Office of Management and Budget, returned the draft final rule, "Reconsideration of the 2008 Ozone Primary and Secondary National Ambient Air Quality Standards," to EPA with the statement that the President does not support finalizing the rule at this time. In his transmittal letter to EPA, Mr. Sunstein stated that the draft rule warrants reconsideration and emphasized three points. First, EPA is required to revisit the national ambient air quality standards in 2013 and the issuance of a new rule late in 2011 would be problematic because the standards are required to be revisited shortly thereafter. Second, the transmittal letter expressed concern that the currently proposed standards are based upon a review of scientific literature from 2006. Updated research is being performed which could better meet the requirements of Executive Order 13563 which states that our regulatory system "must be based on the best available science." Finally, the transmittal letter noted other recent rules promulgated by EPA to address air quality issues and quoted various executive orders regarding the regulatory system. Mr. Sunstein also described his general directive from the President to work with agencies to minimize regulatory costs and burdens.

Reaction to the decision to return the draft rule has been mixed. The U.S. Chamber of Commerce's CEO Thomas Donahue issued a statement including the following: “This an enormous victory for America’s job creators, the right decision by the President, and one that will help reduce the uncertainty facing businesses. It’s also a big first step in what needs to be a broader regulatory reform effort." The Sierra Club Executive Director and the Natural Resources Defense Counsel President, among other environmental group leaders, have issued statements critical of the decision.

Holders of TCEQ-Issued Permits Are Not Immune from Civil Liability

Caleb Holmes — Fri, 02 Sep 2011 17:21:32 -0500

From K.B. Battaglini of GT Houston:

The Texas Supreme Court, in resolving a conflict among Texas Courts of Appeal over whether state-issued permits immunize permit holders from civil liability, has held in FPL Farming Ltd. v. Environmental Processing Systems LC, No. 09-1010 (Tex. Sup. Ct. Aug. 26, 2011), that wastewater injection well permits issued by the Texas Commission on Environmental Quality (TCEQ) do not shield holders from civil liability.

Environmental Processing Systems (EPS) obtained a permit to drill and operate a wastewater injection well. FPL Farming sued EPS for trespass and negligence and seeking a permanent injunction, alleging that a waste plume was projected to migrate into the deep subsurface of the formation underlying FPL's property. A jury failed to find that a trespass had occurred, and a trial judge entered a take-nothing judgment against FPL. A Texas Court of Appeals considered the threshold question of whether FPL may pursue a trespass claim when TCEQ approved a permit allowing EPS to inject wastewater and the information before the TCEQ showed that EPS's waste plume was projected to migrate into the deep subsurface of the formation underlying FPL's property. The Court of Appeals concluded that EPS was shielded from civil tort liability, reasoning that no trespass occurs when fluids that were injected at deep levels are then alleged to have later migrated at those deep levels into the deep subsurface of nearby tracts. The Texas Supreme Court disagreed, finding the reasoning of the Court of Appeals to be inconsistent with the common law rule of the legal effect of an agency's permitting process, because a permit is a "negative pronouncement that grants no affirmative rights to a permittee" and that the Texas Injection Well Act (the policy and purpose of which it to maintain the quality of fresh water in the state) does not preempt civil actions. However, the Texas Supreme Court cautioned that "we do not decide today whether subsurface wastewater migration can constitute a trespass or whether it did so in this case."

IHS Report Says EPA Greenhouse Gas Formula Flawed

Caleb Holmes — Wed, 31 Aug 2011 18:09:50 -0500

From K.B. Battaglini of GT Houston:

Just weeks after EPA proposed new regulations to cut greenhouse gas emissions produced by natural gas drilling, a leading energy group issued a report claiming that EPA overestimated the amount of methane thought to be flared or vented from gas drilling operations. According to the report from IHS Cambridge Energy Research Associates (IHS CERA), EPA used out-of-context data sets and poor assumptions, and erroneously doubled its greenhouse gas estimates in 2010. Written by IHS CERA directors Mary Lashley Barcella, Samantha Gross and Surya Rajan, the report argues that upstream greenhouse gas emissions that appear to make the production of natural gas seem bad for the environment are based on a fundamentally flawed EPA formula. IHS CERA argues that EPA overstated both the problem and the effect of new regulations.

Governors Group Makes Recommendations To Administration for Bolstering U.S. Wind Industry Development

Caleb Holmes — Mon, 29 Aug 2011 13:10:46 -0500

From Todd Sumner of GT Tallahassee:

The Governors' Wind Energy Coalition (GWC) submitted a GWC Letter to President Obama (July 2011) which set forth a punch list of action items that the Administration should pursue in order to facilitate further development of the U.S. wind industry including the newly emerging offshore wind sector. The GWC, comprised of 24 governors (Democrats, Republicans, Independents), from diverse regions of the U.S., called for the Administration to extend for at least 7 years the production tax credit and the investment tax credit in order "to have a consistency in policy to support the continued development of and wind manufacturing in the United States." The GWC also emphasized other steps that should be taken by the Administration including :

- establish a combined intergovernmental state-federal task force on wind energy development;

- restore collaboration on wind deployment and expand technology development;

- improve siting collaboration;

- expedite the Deployment of Offshore Wind;

- identify transmission priorities for Power Marketing Administrations; and

- release completed DOE analytical information.

U.S. Geological Survey Releases New Assessment of Marcellus Gas

Caleb Holmes — Fri, 26 Aug 2011 15:57:59 -0500

From K.B. Battaglini of GT Houston:

The Marcellus Shale contains about 84 trillion cubic feet of recoverable natural gas, and 3.4 billion barrels of recoverable natural gas liquids, according to a just-released assessment by USGS of geological and engineering data. These estimates are significantly more than the last USGS assessment in 2002, which estimated 2 trillion cubic feet of natural gas and .01 billion barrels of natural gas liquids.

The new volumetric assessment must be tempered by legal and technical accessibility issues. In other words, it is not likely that all of the recoverable gas will be recovered.

In reporting on this development, the New York Times slanted the results by proclaiming in a headline that "Geologists Sharply Cut Estimate of Shale Gas." But the USGS did not cut its 2002 estimate, but rather increased it. Instead, the Times compared the USGS's volumetric assessment with a prior estimate made by the Energy Information Administration of 410 trillion cubic feet of natural gas. Upon learning of the just-released assessment by USGS, the EIA downgraded its prior estimate, saying "we consider the USGS to be the experts in this matter" and "they're geologists and we're not." So, rather than proclaiming that "Geologists" had cut their estimate, the Times headline should have stated that the "EIA downgraded its estimate based upon a geological assessment."

IRS Issues Final Regulations on Solid Waste Disposal Facilities

Caleb Holmes — Fri, 26 Aug 2011 15:46:38 -0500

On August 18, 2011, the Internal Revenue Service (IRS) issued final regulations regarding the types of facilities that qualify as "solid waste disposal facilities" under section 142(a)(6) of the Internal Revenue Code and therefore are eligible for financing with tax-exempt private activity bonds. In their GT Alert, Carla Young and Vanessa Albert Lowry examine the new regulations.