House of Representatives Subcommittee Cites New Study to Highlight Potential Costs of EPA’s Proposed Greenhouse Gas Rule

(Federal GHG regulations) Permanent link
 
On October 17, 2014, the Energy and Power Subcommittee for the United States House of Representatives released an announcement that EPA’s Clean Power Plan Proposal could cost more than $366 billion based on a new industry-sponsored study by NERA Economics (“NERA”) on the potential impacts of EPA’s proposal on the affordability and reliability of electricity in the United States. While this study conflicts with some other studies on these issues, the subcommittee announcement indicates that the House is continuing to pay close attention to the reported costs of the proposed rule.  

The Energy and Power Subcommittee has been conducting oversight hearings of EPA’s Clean Power Plan Proposal, including a June 19, 2014, hearing with EPA, a July 29, 2014, hearing with the Federal Energy Regulatory Commission, and a September 9, 2014, hearing with state energy and environmental regulators. For more information about these hearings, please see this previous post. Now, the subcommittee is highlighting the findings of an October 2014 study done by NERA Economics which released a study for a number of industry groups. 

Energy and Power Subcommittee Chairman Ed Whitfield’s criticized EPA’s proposed rule, stating that “[t]his new study confirms what we already know: EPA’s power plan is unaffordable and unworkable, and will devastate local communities and households struggling to keep the lights on. American consumers will be forced to pay a high price tag for a plan that will have no real effect on the climate.” The congressman argued that “[i]nstead of finding ways to make energy more expensive and less reliable, we should be working to improve energy affordability and access.”

The subcommittee announcement focused on a few particular findings of the NERA report:
  • The total costs of EPA’s Clean Power Plan Proposal could total $366 billion or more over a 15-year period.
  • Under the Clean Power Plan Proposal consumers and businesses could face costs of $41 billion or more annually.
  • The Clean Power Plan Proposal would cause electricity rates to increase an average of 12% to 17% nationwide, and some states could face price increases over 20%.
  • The Clean Power Plan Proposal could result in the shut-down of 45,000 megawatts or more of coal-based electricity.
The third point is in tension with what some other studies have found. As discussed in this previous post, a separate report by the Analysis Group highlights the important role that states will play in determining the ultimate costs and benefits to consumers resulting from the implementation of EPA’s Clean Power Plan Proposal.

The final point highlights a concern that others have also raised about the loss of electric generating power. As noted in this previous post, the United States Government Accountability Office (“GAO”) has also issued a report finding that “power companies now plan to retire a greater percentage of coal-fueled generating capacity” than previously anticipated. The GAO study reports that about 13 percent of the 2012 coal-fueled generating capacity has either been retired since 2012 or is planned for retirement by 2025.

Posted by Corinne Snow at 10/29/2014 12:05 PM

EPA Releases Clean Power Plan Proposal for Territories and Indian Country

(Federal GHG regulations) Permanent link
 
This afternoon, EPA released a supplemental proposal to the Clean Power Plan, setting forth its proposed implementation of the Plan in U.S. Territories and Indian Country. The proposal sets forth specific goals for Puerto Rico, Guam, and the three areas of Indian Country that contain affected electricity generation units (“EGUs”). In general, EPA’s proposal follows its building blocks approach, which we have previously described in detail, with some modifications for the Territories and Indian Country.

Modifications to the building blocks

In general, EPA’s proposal seeks to apply the four building blocks from its proposal for the states to Territories and Indian Country.  However, because of the unique features of these areas, some modifications are proposed.
  • Building Block 1 – Improve Heat Rate at Coal-Fired Plants: EPA notes that neither Guam nor the Fort Mojave Tribe lands have affected coal-fired EGUs, so the application of building block 1 will not require emission reductions.
  • Building Block 2 – Increase Utilization of NGCC Units:  EPA notes that applying the methodology of building block 2 will not result in emissions reductions for Guam on areas in Indian Country because there is no NGCC capacity available to redispatch.
  • Building Block 3 – Increase use of Renewable Energy and Preserve Nuclear Capacity:  EPA proposed a 9% renewable energy growth factor for the Territories and a 6% growth factor for Tribal Lands. However, because there is no baseline renewable capacity in the Territories or Indian Country, multiplying these growth factors by a baseline of zero results in no emissions reductions. 
    • For territories, EPA proposes a set of emission limits using the actual renewable energy baseline and a co-proposal that would set the baseline renewable energy amount at 0.37 percent of total electricity generation, an amount consistent with the lowest value amongst the 50 states.
    • For Indian Country, EPA notes that energy produced on tribal lands far exceeds consumption, and therefore applying the same renewable energy target may not be appropriate.  EPA is seeking comment on applying the approach proposed for the territories as well as other approaches to the application of building block 3 in Indian Country.
  • Building Block 4 – Demand Side Energy Efficiency: Because sales of electricity in Indian Country are small compared to generation, EPA notes that the application of building block 4 will result in very few emissions reductions
EPA’s Proposed Goals

Based on the adjustments above, EPA proposes the following goals for the Territories and Indian Country.

Proposed Goals for the Territories (lbs CO2/MWh)
Area Goal using actual RE baseline Goal using 50 state minimum RE baseline
2020 2030 2020 2030
Guam 1,733 1,586 1,708 1,556
Puerto Rico 1,470 1,413 1,459 1,399


Proposed Goals for Indian Country (lbs CO2/MWh)
Area Goal using actual RE baseline
2020 2030
Lands of Fort Mojave Tribe 856 855
Lands of Navajo Nation 1,991 1,989
Lands of the Ute Tribe of the Unitah and Ouray Reservation 2,000 1,988

It is important to note that EPA’s proposal states that it does not expect any additional emissions reductions in Indian Country as a result of its proposed goals under the Clean Power Plan.  EPA notes that in order to comply with Regional Haze requirements, the Navajo Nation will be shutting down three units at the Four Corners Power Plant and one unit at the Navajo Generating Station, which will mean that the Navajo Nation will meet its proposed goal without further action.

EPA also developed and is accepting comment on an alternative set of goals that reflect a less stringent application of the building blocks and would require compliance by 2025.

Implementation

EPA’s proposal concludes that Territories are to be treated like the states because of the way the term “state” is defined in the Clean Air Act.  As a result, the Puerto Rico and Guam will be required to create their own implementation plans.  For Indian Country, the Tribal Authority Rule permits the tribes to ask to be treated as states and submit their own plans.  If a tribe does not apply to be treated as a state for the purposes of 111(d) or EPA does not grant the treatment of the tribe as a state, EPA will be charged with crafting the implementation plan for the state.

EPA is also seeking comment on an implementation issue that has been raised by both the Navajo Nation and several states without affected EGUs.  That is, whether states or areas that do not have obligations under the Clean Power Plan can participate in multistate plans and offer renewable energy or demand side efficiency measures to contribute to the reductions required by other states in the multistate plan.

EPA is also seeking comment on the treatment of renewable energy from foreign jurisdictions under state plans.

Posted by Margaret Peloso at 10/28/2014 8:00 PM

Texas Alters SIP for Stationary GHG Sources Based on Supreme Court Decision

(Federal GHG regulations, Litigation) Permanent link
 
On October 1, 2014, the Texas Commission on Environmental Quality (“TCEQ”) submitted a revised state implementation plan (“SIP”) to the Environmental Protection Agency (“EPA”) for approval. As explained in a previous post, TCEQ initially adopted rules that would allow it to authorize greenhouse gas (“GHG”) emissions under its Prevention of Significant Deterioration (“PSD”) permit program on March 26, 2014. TCEQ is now asking that the EPA approve certain revisions to those rules in light of the Supreme Court’s June 2014 ruling in Utility Air Regulatory Group v. EPA.

In UARG v. EPA, the Court held the EPA lacks authority under the Clean Air Act (“CAA”) to require sources to obtain PSD or Title V permits based solely on GHG emissions. Instead, EPA at most has the authority to adopt rules that require best available control technology (“BACT”) reviews for GHG emissions if it is a so-called ‘anyway’ source, one that is already a major source of a conventional air pollutant subject to regulation under the PSD program. TCEQ had previously submitted a SIP would have regulated both ‘anyway sources’ and sources that would be major sources under EPA’s PSD permitting program due to their GHG emissions alone. In its letter accompanying the submittal, TCEQ explained, “Based on the UARG v. EPA opinion, non-anyway sources are not subject to PSD permitting, and, accordingly, the portions of the rules that govern only that type of source are not appropriate or necessary for a SIP.” 

At the same time — and as explained in greater detail in the preceding post — Texas is taking the position in litigation pending before the D.C. Circuit that coverage of both anyway and non-anyway sources is unlawful unless and until EPA sets new “de minimis” thresholds as required by the Supreme Court in UARG v. EPA. In UARG, the Supreme Court made clear that EPA can only require an ‘anyway’ source to undergo GHG BACT reviews if it emits more than a de minimis amount of GHGs. EPA has yet to set that threshold. As such, Texas (and many other petitioners) argue that EPA does not have the authority to compel permit reviews of GHGs unless and until it issues a rule establishing the de minimis threshold and gives states three years to amend their SIPs to incorporate the new requirements. 

Observers expect EPA to approve Texas’ revised SIP and withdraw the FIP that has been in place since 2011 relatively quickly, because EPA can most likely do so without going through another notice-and-comment period. Once approved, TCEQ will regain full legal authority of PSD permitting within the State (EPA Region 6 has overseen all GHG permitting there since 2011). The practical impact if the D.C. Circuit opts to reverse its earlier ruling in Texas v. EPA is less clear, but EPA has until November 3, 2014 to respond to the petition for rehearing.

Posted by Lauren Sidner at 10/20/2014 10:40 AM

States and Industry Groups ask Appellate Court to Reconsider Greenhouse Gas Permitting Decision

(Federal GHG regulations, Litigation) Permanent link
 
On September 22, Texas, Wyoming, and several industry groups (“Petitioners”)* asked the U.S. Court of Appeals for the D.C. Circuit to rehear and reverse its earlier ruling upholding EPA’s takeover of the states’ greenhouse gas (“GHG”) permit programs. The Petitioners argue that the previous ruling should be reconsidered in light of a subsequent Supreme Court decision on EPA’s GHG permitting powers. On the same day, SIP/FIP Advocacy Group filed a separate petition for en banc review by the entire D.C. Circuit. On October 6, 2014, the court consolidated these petitions into a single case and requested a response from EPA and the intervenor parties. As noted in this previous post, EPA has already released a memo explaining that further action from the D.C. Circuit is required to either vacate or remand the portions of their GHG rules that are inconsistent with the Supreme Court’s decision.

Background
Ordinarily, the Clean Air Act (“CAA”) delegates air permitting authority to the states. States submit implementation plans (“SIPs”) to EPA, and once EPA approves these plans, then the States take the primary role in ensuring that sources within their borders comply with the SIP’s requirements. EPA began to regulate GHG emitted by mobile sources, and reasoned that this “Tailpipe Rule” then triggered an obligation to also regulate GHG emissions of stationary sources under the CAA’s “Prevention of Significant Deterioration” (“PSD”) and Title V programs. A number of states, however, did not include provisions to regulate stationary GHG sources in their SIPs. In response, EPA issued a final rulemaking on December 13, 2010 requiring those thirteen states to submit SIPs that included permitting requirements for stationary sources that emitted GHGs under the PSD program. EPA gave the states until December 22, 2010 to submit revised SIPs, including GHG regulations. A few days later, on December 29, 2010, EPA made “findings of failure” when several states did not submit amended SIPs, and determined that there was a need for “error correction” as to Texas’s SIP. As a result, EPA imposed federal implementation plans (“FIPs”) regulating GHG emissions in all of the states that were the subjects of EPA’s findings of failure or error correction rules. Under the FIP, EPA, rather than the states, is the permitting authority.

In 2012, many states and industry groups challenged EPA’s GHG rulemaking in Coalition for Responsible Regulation, Inc. v. EPA, 684 F.3d 102 (D.C. Cir. 2012). In that case, the D.C. Circuit concluded that the petitioners did not have standing to challenge EPA’s rulemaking because the PSD permitting requirements are self-executing with respect to newly regulated pollutants, including GHGs. As a result, the panel concluded that it was the CAA, rather than EPA’s rulemaking, that injured petitioners by requiring GHG permitting immediately. After the entire D.C. Circuit declined to hear that case en banc, the petitioners sought and received review from the United States Supreme Court in Utility Air Regulatory Group v. EPA, 134 S. Ct. 2427 (2014) (“UARG”).

As described in this previous post, the Supreme Court made several key holdings in UARG. First, the Court held that the Act “neither compels nor permits EPA to adopt an interpretation of the Act requiring a source to obtain a PSD or Title V permit on the sole basis of its potential greenhouse-gas emissions.” The Court thus rejected EPA’s position that GHGs must be regulated as air pollutants under the PSD and Title V programs. Instead, the Court said that the PSD and Title V permitting requirements only apply to pollutants emitted in quantities that enable EPA to regulate them at the statutory thresholds, not pollutants such as GHGs that are emitted in such vast quantities that their inclusion in those programs would render them unworkable as written. The Court stated that EPA could interpret the CAA to allow for regulation of GHG emissions from sources already subject to regulation under the PSD and Title V program due to their emissions of criteria pollutants.

The Petition
In light of the Supreme Court’s decision in UARG, the Petitioners are asking the same three-judge panel on the D.C. Circuit to reconsider their previous decision. Petitioners argue that the D.C. Circuit’s previous decision conflicts with UARG for several reasons. First, while the D.C. Circuit’s decision in Coalition for Responsible Regulation held that the CAA automatically triggered regulation of GHGs under the PSD program, the Supreme Court held that this was not the case. As a result, the Petitioners argue that EPA’s rulemaking caused their injury, and that they therefore have standing to challenge that rulemaking. Petitioners reason that because EPA lacked the authority to compel permits based on GHG emissions, it lacked authority to compel the states to include such permitting requirement in their SIPs.

Second, the Petitioners note that under the Supreme Court’s decision, EPA must undertake a new rulemaking before it may regulate GHGs under the PSD provisions of the CAA. The Petitioners argue that the CAA and accompanying regulations then provide states three years to revise their SIPs before EPA could issue a FIP and take away a state’s permitting authority. The Petitioners assert that until EPA has completed that rulemaking, and three years have passed, EPA has no authority to require states to regulate GHGs under the PSD program.

The D.C. Circuit panel has the discretion to decide whether or not it will grant Petitioners’ request and rehear the case. Respondents and intervenors have filed unopposed requests for additional time to respond to the petitions, which the D.C. Circuit has not yet granted.

*Disclosure: Vinson & Elkins represents one of the Petitioners, Coalition for Responsible Regulation, Inc.

Posted by Corinne Snow at 10/17/2014 10:21 AM

EPA May Forgo Creating Refinery-Specific GHG New Source Performance Standards

(Federal GHG regulations, Litigation) Permanent link
 
In December 2010 EPA entered into two settlement agreements to address greenhouse gas emissions (“GHGs”) from two sources: electric generating units (“EGUs”) and refineries. While EPA has proposed rules to regulate GHG emissions from both new and existing EGUs, it has yet to issue a proposed rule to similarly address emissions from refineries. Recent comments from EPA Administrator Gina McCarthy suggest that EPA may entirely forgo issuing a GHG-specific new source performance standard (“NSPS”) for refineries.

Section 111 of the Clean Air Act allows EPA to develop emissions standards — known as NSPS — for specific categories of stationary sources. The NSPS apply to new and modified facilities in specific source categories. In August 2008, the Natural Resources Defense Council and other organizations and states petitioned EPA to reconsider a June 2008 decision not to set CO2 and methane NSPS for refineries. These groups also filed suit in the United States Court of Appeals for the D.C. Circuit challenging EPA’s failure to address GHGs through NSPS. In December 2009, EPA agreed to reconsider its decision to not regulate GHGs.

On December 21, 2010, EPA entered into a settlement agreement to address GHGs from refineries. As part of the agreement, EPA “commit[ed] to resolve the issues raised in an August 25, 2008 petition for reconsideration of the refinery NSPS.” EPA agreed to a timeline where it would propose regulations to address those issues by December 10, 2011, and finalize regulations by November 10, 2012. Both deadlines have lapsed.

Now it appears that EPA may not create a NSPS to address GHGs from refineries. During a September 26, 2014, briefing Administrator McCarthy said EPA is not currently drafting a GHG NSPS for refineries. Instead, the agency may be able to reduce refinery GHG emissions through regulations of other air pollutants, including toxic air emissions and volatile organic compounds (“VOCs”). On May 15, 2014, EPA issued a proposed rule that would place additional emission control requirements on storage tanks, flares and coking units at petroleum refineries. Administrator McCarthy said that EPA’s proposed requirements would tighten up the flaring process at refineries and address other possible leakage problems. While these rules would not directly regulate methane emissions from refineries, the new controls could help reduce those emissions. This is significant because methane is the second most prevalent GHG emitted in the U.S. from human activities. According to EPA, the comparative impact of methane on climate change is over 20 times greater than CO2 over a 100-year period. EPA estimates that natural gas and petroleum systems account for 29% of methane emissions. 

According to reports, McCarthy indicated that if the rule proposed on May 15, 2014, sufficiently reduces GHGs, there may be no need to develop a separate NSPS for GHG emissions from refineries. As described in this previous e-lert, EPA took a similar approach in creating VOC standards related to methane from hydraulic fracturing operations.

Posted by Corinne Snow at 10/15/2014 0:00 PM

GAO Report Shows More Coal-Fueled Power Plants Are Retiring Than Previously Projected

(Federal GHG regulations) Permanent link
 

In August 2014 the United States Government Accountability Office (“GAO”) issued a report finding that “power companies now plan to retire a greater percentage of coal-fueled generating capacity and retrofit less capacity with environmental controls than the estimates GAO reported in July 2012.” In 2012 GAO estimated that coal-plant capacity would drop between 2 percent and 12 percent as the result of retiring plants. The new GAO study reports that a much higher percentage than previously anticipated — about 13 percent of the 2012 coal-fueled generating capacity — has either been retired since 2012 or is planned for retirement by 2025.

In its previous study, GAO had estimated that about 102,000 megawatts (“MW”) of power would be retrofitted to reduce sulfur dioxide, nitrogen oxides, or particulate matter emissions. Instead, it now appears that only about 70,000 MW of generating capacity will be retrofitted between 2012 and 2025. About 91 percent of those anticipated retrofits have already occurred since 2012, or are planned for completion by the end of 2017. The retrofitted units tend to be larger than the retiring facilities, and are geographically concentrated in Illinois, Indiana, Kansas and Texas.

Instead of retrofitting, companies are opting instead to retire coal-fueled units. Since the GAO’s 2012 report, 100 coal-fueled generating units (accounting for 14,887 MW) have been retired. According to GAO, these retiring units tend to be “older, smaller, more polluting and not used extensively.” The units are also disproportionately concentrated in Ohio (14 percent), Pennsylvania (11 percent), Kentucky (7 percent), and West Virginia (6 percent). GAO now anticipates that another 50,000 MW worth of capacity will be retired by 2020. According to GAO, this is a significantly higher rate of retirements than has occurred in the past.

GAO’s report points to a number of factors that could account for this higher rate of retirement. One factor could be the additional environmental regulations placed on coal-fueled units since 2012. Since then, EPA has issued four regulations that impact coal-fueled plants: (1) Cross-State Air Pollution Rule (“CSAPR”); (2) Mercury and Air Toxics Standards (“MATS”); (3) Cooling Water Intake Structures regulation; and (4) Disposal of Coal Combustion Residuals from Electric Utilities regulation (“CCR”). Currently, MATS is the only one of these four regulations that has taken effect; the other three regulations have either been in active litigation or have undetermined regulatory compliance periods. Even though not all of the environmental regulations are currently in effect, they may nonetheless accelerate unit retirements. As the GAO report explains, power companies may not want to invest in retrofitting units with environmental controls for those units that they expect to retire soon for other reasons. The new GAO report also points to economic factors, such as relatively low natural gas prices, increasing prices for coal, and low expected growth in demand for electricity.

Back in 2012 coal power accounted for just over a third of the electric generation. As states prepare to respond to EPA’s Clean Power Plan Proposal, they will need to take into account this accelerated rate of retirement for coal-fueled electric generating units. For more information about the state plans for meeting EPA’s Clean Power Plan Proposal, see this previous post.

Posted by Corinne Snow at 10/08/2014 1:00 PM

Federal Court Vacates Three Agency Approvals for Failing to Disclose the Project’s Climate Change Impacts

(Federal GHG regulations, Litigation) Permanent link
 
On September 11, 2014, a federal district court judge in the District of Colorado vacated three interrelated federal approvals that together allowed on-the-ground mining exploration activities in part of the North Fork Valley, Colorado. The court held that the approvals were invalid because the Forest Service and Bureau of Land Management (the agencies) failed to adequately disclose the Greenhouse Gas (GHG) emissions that would result from those activities in the environmental impact statement created for the approvals.

In High Country Conservation Advocates, et al. v. United States Forest Service, several environmental organizations sought judicial review of three interrelated agency decisions. Specifically, the organizations argued that the environmental impact statement performed by the agencies before reaching these decisions did not satisfy the National Environmental Policy Act (NEPA). Before undertaking a federal action, such as issuing an approval or a permit, NEPA requires federal agencies to analyze the possible environmental impacts of their decision. The environmental plaintiffs in High Country Conservation Advocates argued that as part of this review, the agencies had to disclose the GHG emissions that would result from the approvals.

On June 27 the district court agreed and ruled the agencies failed to comply with NEPA because the “agencies failed to disclose the social, environmental, and economic impacts of GHG emissions” resulting from the approvals.

The court’s more recent decision focused on the appropriate remedy and concluded that vacatur was the most suitable solution because “NEPA’s goals of deliberative, non-arbitrary decision-making would seem best served by the agencies approaching these actions with a clean slate.” The court did “not find that equitable considerations tip the scales in favor of a temporary injunction” reasoning that “vacation will best serve the deliberative process mandated by NEPA.”

As more courts reach similar holdings, federal agencies will need to conduct a detailed and specific analysis of a project’s climate change impacts as part of the NEPA environmental impact statement. These requirements might also apply to an earlier part of the NEPA review process, when an agency performs an environmental assessment to determine whether a federal action will have a significant environmental impact. As discussed in this previous post, the Council on Environmental Quality (CEQ) recently denied a 2008 petition seeking rulemaking to include climate-specific provisions in CEQ’s NEPA regulations. The CEQ’s denial and this district court decision together leave open questions about the specific contours of climate change analysis required in the NEPA review process, and create litigation risks for future federal actions subject to NEPA review.

While uncertainty remains, here are a couple of key take-aways from the court’s two decisions:

1. Environmental groups have standing to challenge an agency action under NEPA based on the project’s indirect GHG emissions, even when the plaintiffs are alleging an injury separate from climate change impacts.

Standing requires that the plaintiff have a concrete injury. In this case, the plaintiffs’ alleged injury was the loss of recreational use to the land if bulldozing began. The court noted that “plaintiffs admittedly cannot draw such a line between the alleged deficiency and the particular harm they face,” but nonetheless held that they had standing to challenge the lack of GHG disclosures. Indeed, the court went so far as to say that “plaintiffs have standing to challenge the [agency approval] even if their argument that the rule failed to adequately analyze climate change impacts does not share a nexus with the concrete injury to their recreational interests.” (emphasis added).

2. The NEPA environmental impact statement must disclose the effects of a project’s GHG emissions, even if those effects are an indirect result of the project.

The court explained that the agencies’ approvals “made it possible . . . to recover nearby coal on adjacent public and private lands that otherwise would have been permanently bypassed. The fact that this additional coal might now be recoverable and might be developed, while not a direct impact of the [approval], is nonetheless a foreseeable indirect impact of the approval” and therefore must be analyzed and disclosed.”

3. Both the Forrest Services and Bureau of Land Management accepted that NEPA requires an analysis of a project’s indirect GHG emissions.

The court noted that “[t]he agencies apparently do not dispute that they are required to analyze the indirect effects of GHG emissions in some fashion, but they contend that their general discussion of the effects of global climate change was sufficient under NEPA.”

4. General explanations of a project’s climate change impacts will not suffice.

The agencies argued that they could not quantify the increased methane emissions that would foreseeably result from one of the approvals. The court was skeptical of the agencies’ claim that the methane emissions were too speculative to calculate, given the level of analysis that the agencies were able to perform on the economic impacts of the approval. As a result, “the decision to forgo calculating the reasonably foreseeable GHG emissions associated with [one of the approvals] was arbitrary in light of the agencies’ apparent ability to perform such calculations and their decision to include a detailed economic analysis of the benefits associated with the rule.”

Even disclosing the amount of emissions is not always enough. The agencies qualified the amount of emissions for one of the approvals relative to the state and national emissions, and gave a general discussion of the impacts of global warming in the environmental impact statement. The court found this insufficient, because the agencies did not discuss the impacts caused by emissions from this specific project. The court also identified the social cost of carbon protocol as the proper tool for the agencies to use in this analysis.

5. If an environmental impact statement includes project benefits, it must also include costs.

The environmental impact statement at issue in this case described the anticipated economic benefits of mining coal from adjacent lands. The court reasoned that “[e]ven though NEPA does not require a cost-benefit analysis, it was nonetheless arbitrary and capricious to quantify the benefits of the [approvals] and then explain that a similar analysis of the costs was impossible when such an analysis was in fact possible and was included in an earlier draft [environmental impact statement].”

6. The environmental impact statement cannot rely on speculations about future mitigation.

The agencies argued that new technology might reduce carbon emissions from future coal combustion. The court was not persuaded, explaining that “[t]he agenc[ies] cannot rely on unsupported assumptions that future mitigation technologies will be adopted.”

7. The environmental impact statement cannot assume that the project will not impact climate change because global energy demands will necessarily result in consumption.

The agencies argued that coal is a fungible commodity, and that even if it wasn’t mined from this specific project, it would nonetheless be mined and burnt elsewhere, which would result in identical GHG emissions. The court rejected the agencies’ logic, noting that the Eighth Circuit has already called a similar argument “illogical at best.”1

Conclusion

NEPA is a purely procedural statute that does not mandate any particular outcome. These recent rulings could nonetheless slow down federal projects and make them more costly by requiring that agencies to perform more detailed climate change analyses. As the court’s decisions demonstrate, NEPA challenges have the power to hold up projects in litigation, or force an agency to go back and perform additional work before a project can go forward.

1 Citing Mid States Coalition for Progress v. Surface Transportation Board, 345 F.3d 520, 549 (8th Cir. 2003).

Posted by Corinne Snow at 10/2/2014 5:12 PM






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