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HELR Volume 39, Issue 2 Available Online!

We are pleased to present our online readership with Issue 2 of the 39th Volume of the Harvard Environmental Law Review.

The latest issue of ELR begins with a detailed examination of the interagency consultation process under the Endangered Species Act, which empowers the Fish and Wildlife Service and the National Marine Fisheries Service to review other federal agencies’ decisions to ensure they will not jeopardize endangered species. As Prof. Travis Brandon explains, the lack of public comment in interagency consultations means that the Services are likely to get a skewed view of the potential harm created by federal agency action, a fact which courts should take into account when reviewing their decisions under the ESA.

39.2 also includes several articles analyzing legal issues surrounding climate-change policy, just in time for the UNFCCC negotiations in Paris this December. Prof. Arden Rowell describes the rise of regulatory analyses which justify agency regulation by referencing the global cost of carbon emissions, rather than limiting themselves to domestic considerations. As California continues to pass first-of-its-kind legislation intended to internalize the cost of carbon emissions in fuel production, Prof. Jeffrey Schmitt proposes a new test to determine whether such laws have an unconstitutional extraterritorial effect. Turning to the utilities sector, Shelly Welton, the former Deputy Director of Columbia’s Center for Climate Change Law, discusses the failure of the Federal Energy Regulatory Commission to promote innovation in energy efficiency, storage, demand response, and distributed generation. And Prof. David Wirth argues that the President has substantial power to join and implement a multilateral treaty on climate action, such as might come out of the Paris conference, without congressional action.

Finally, this issue includes a Comment on CTS Corp. v. Waldburger from Michael Barclay, who graduated from HLS this year and has served as an article editor for ELR.  In CTS Corp., the Supreme Court ruled that CERCLA, which preempts statutes of limitation,  does not also preempt statutes of repose. (Statutes of repose bar suits brought too long after a defendant’s last act, rather than turning on the plaintiff’s discovery of harm, as statutes of limitation do.) The Comment discusses the case’s practical and legal consequences, particularly as regard plaintiffs who could be barred from suing under CERCLA or similar laws because the harm from an environmental pollutant took too long to manifest.

What, Me Worry? Comforting Thoughts on the Clean Power Plan, Part I

Electricity - EisenThis summer, the Environmental Protection Agency (“EPA”) is expected to promulgate the final version of its Clean Power Plan, a set of regulations aimed at decreasing the carbon dioxide (“CO2”) emissions of U.S. power plants to 30% below 2005 levels over the next 15 years. Critics have argued that the plan oversteps the bounds of EPA’s power to regulate air pollution. In this two-part post, David Baake ’14, a former editor and writer for ELR, argues that the Clean Power Plan is well within EPA’s regulatory authority. This part addresses the impact of some worrying dicta in the recently decided Utility Air Regulatory Group v. EPA.

Opponents of the Clean Power Plan have seized upon a passage from the Supreme Court’s opinion in Utility Air Regulatory Group v. EPA (“UARG”) to support their contention that the Clean Power Plan exceeds EPA’s authority under the Clean Air Act. The relevant passage states:

When an agency claims to discover in a long-extant statute an unheralded power to regulate a significant portion of the American economy, we typically greet its announcement with a measure of skepticism. We expect Congress to speak clearly if it wishes to assign to an agency decisions of vast economic and political significance (134 S.Ct 2427, 2444).

According to one commentator, this statement “appears to speak directly to EPA’s proposal to regulate demand-side energy efficiency” under the Clean Power Plan, given that the Clean Power Plan is “exponentially broader in reach” than the Prevention of Significant Deterioration (“PSD”) program at issue in UARG.

The assertion that UARG raises questions about the legality of the Clean Power Plan rests on a misunderstanding of what the Clean Power Plan actually proposes to do. The Clean Power Plan does not propose to regulate demand-side energy efficiency or renewable energy; it proposes to regulate power plants. To be sure, the Plan’s emission targets are based in part on the assumption that power plants will be able to contract with third parties to implement renewable energy and energy efficiency activities. But the Plan does not regulate these third parties, any more than an emission guideline based on the availability of a particular pollution control technology could be said to regulate the manufacturer of the technology. The Clean Power Plan gives third parties the opportunity, but not the obligation, to contract with regulated entities to help reduce their pollution. In that respect, the Plan is no different from any other emission standard, such as that in Sierra Club v. Costle, where the D.C. Circuit allowed an EPA regulation which assumed that utilities would contract with coal suppliers to ensure compliance.

Properly understood, then, the Clean Power Plan does not implicate any of the questions that were at issue in UARG. In UARG, the Court concluded that EPA’s interpretation of the PSD statute represented an unreasonable assertion of authority “to regulate a significant portion of the American economy” because this interpretation would impose pollution control requirements on “millions of small sources” never before regulated under the Clean Air Act (134 S.Ct. at 2446). By contrast, the Clean Power Plan regulates a “relative handful” (2443) of sources belonging to a source category that has been regulated more extensively than any other under the Clean Air Act. Even assuming that “Congress must speak clearly if it wishes to assign to an agency decisions of vast economic and political significance” and that the regulation of power plants’ carbon dioxide emissions implicates a question of “vast economic and political significance” (2444), it is beyond dispute that Congress has “clearly” granted EPA authority to regulate existing power-plant CO2 emissions: the Supreme Court held precisely that in its 2011 decision in American Electric Power v. Connecticut, and even pointed out that 111(d) was “most relevant” to the question of regulating CO2 in power plants (131 S. Ct. 2526, 2530). Ultimately, then, the contention that UARG casts doubt upon EPA’s authority to promulgate the Clean Power Plan is unpersuasive.

Did this post pique your interest in the Clean Power Plan? Come back to our blog next week for the second part, which will address the (in)famous “elephant in a mousehole” argument. In the meantime, check out the Symposium in our latest issue for more analysis of UARG and what it means for EPA’s  111(d) authority.

Wallach v. Town of Dryden and Local Control of Hydraulic Fracturing

By Carter Hall—November 20, 2014 at 11:03 a.m.

jay_easementOn June 30 of this year the Court of Appeals of New York issued its final ruling in Wallach v. Town of Dryden, holding that municipalities in New York State have the authority to exclude hydraulic fracturing from their borders through zoning.[1] Although the case hinged upon the interpretation of a New York statute with no reach beyond the state’s borders, the Town of Dryden decision has significance for supporters and opponents of hydraulic fracturing throughout the country as a sign that local governments may erect serious barriers to the controversial practice even in the absence of stringent Federal or state regulation.

Dryden, a town of less than 15,000 people located outside of Ithaca, New York, prohibits all “industrial” development within town borders through its zoning code.[2] In August 2011 the town amended its zoning ordinance to specify that all activities related to oil and gas extraction are included in this general prohibition on industrial development.[3] Anschutz Exploration Corporation, an energy company that held leases to oil and gas rights on several Dryden properties, sued the town in New York State court in September 2011, arguing that New York’s Oil, Gas and Solution Mining Law (“OGSL”)[4] preempted the amendment. Dryden prevailed on a motion for summary judgment, which was affirmed by state appellate court; the case reached New York’s highest court in summer 2014.[5]

The legal issue in the case was whether OGSL’s supersession clause, which states that the OGSL supersedes all “local laws or ordinances relating to the regulation of the oil, gas and solution mining industries,”[6] prevented towns like Dryden from passing zoning ordinances that exclude hydraulic fracturing. To answer this question, the Court of Appeals engaged in a straightforward exercise in statutory interpretation. Examining the plain language, statutory scheme, and legislative history of the law, the Court concluded that the supersession clause was intended to prevent municipalities from directly regulating oil and gas development—i.e., imposing specific technical and operational requirements on drillers.[7] Finding no indication that the OGSL was intended to curtail towns’ traditional home rule authority to enact zoning ordinances, the Court held that Dryden’s zoning amendment is not precluded under the supersession clause and affirmed the intermediate appellate court’s decision.[8]

The Court of Appeals decision vindicated hydraulic fracturing bans and moratoria enacted in Dryden and 179 other municipalities, with an additional 86 municipalities considering similar measures as of October 9, 2014. Many of these towns are underlain by the Marcellus Shale formation—estimated to be the largest natural gas reserves of any formation in the United States—and in the long run these ordinances could permanently place large quantities of natural gas beyond the reach of extractors. However, the Town of Dryden did not have the immediate effect of halting any ongoing hydraulic fracturing operations. New York State has had a de facto moratorium on the practice for six years, with Governor Andrew Cuomo’s administration refusing to permit any drilling until a study examining its health impacts is completed. Accordingly, no hydraulic fracturing was actually underway in New York State throughout the Town of Dryden litigation. Of course, if the moratorium is ever lifted, the decision will have real practical effect on the ability of energy companies to exploit New York’s natural gas reserves.

Because Town of Dryden was a state court decision hinging a narrow question of interpretation of a state statute, it has no legal effect beyond New York’s borders. However, the symbolic significance of Dryden’s victory reaches nationwide. Mary Anne Sumne, Dryden’s town supervisor, has expressed hopes for the decision’s impact beyond New York’s borders: “I hope our victory serves as an inspiration to people in Pennsylvania, Ohio, Texas, Colorado, New Mexico, Florida, North Carolina, California and elsewhere who are also trying to do what’s right for their own communities.”

The ability of towns in these states and others to restrict hydraulic fracturing will depend upon the interaction between state-specific home rule jurisprudence and natural resource laws, but Dryden’s high-profile victory has encouraged towns that have enacted similar ordinances from Hawaii to California to Texas. With the national politicians of both political parties largely in support of hydraulic fracturing and state-level governments varying dramatically in their oil and gas extraction regulations, local control efforts such as Dryden’s present one of the most formidable obstacles to the controversial practice.

[1] Wallach v. Town of Dryden, 23 N.Y.3d 728, 739 (2014), reargument denied, No. 2014-867, 2014 WL 5366261 (N.Y. Oct. 16, 2014).
[2] Id. at 739-40.
[3] Id. at 740.
[4] Id.
[5] Wallach, 23 N.Y. at 741.
[6]N.Y. Envtl. Conserv. Law § 23-0303(2) (McKinney).
[7] SeeWallach, 23 N.Y. at 750.
[8] Id. at 753-54.

Upholding Clean Energy in Colorado—and Hopefully Beyond

McNishBy Samantha Caravello—November 17 at 7:26 a.m.

Acting as laboratories for energy policy, some states have been much more effective than the federal government in promoting renewable energy development, often through the enactment of Renewable Portfolio Standards (“RPS”). RPSs require electricity-selling companies to generate a minimum percentage of their electricity from renewable sources. These minimum targets generally increase over time, growing clean energy development and decreasing reliance on fossil fuels. RPSs are currently in place in 29 states and the District of Columbia, but a number of these state policies have been targeted by legal challenges.

Earlier this year, the pro-free market group Energy and Environment Legal Institute (“EELI”) filed a lawsuit challenging Colorado’s Renewable Energy Standard (“RES”), which was approved by Colorado voters in a 2004 ballot initiative and subsequently codified into state law. The RES creates a “Renewables Quota” for electricity retail utilities, requiring them to “generate, or cause to be generated, electricity from eligible energy resources” in specified amounts.[1]

In the lawsuit, Energy and Environment Legal Institute v. Epel (“EELI”),[2] EELI claimed that the Renewables Quota violates the dormant Commerce Clause, which is a doctrine that courts have implied from Constitution’s Commerce Clause. The dormant Commerce Clause prohibits states from unlawfully burdening or discriminating against interstate commerce. In the Tenth Circuit, there are three ways a statute may violate this doctrine: first, if it clearly discriminates against interstate commerce in favor of intrastate commerce; second, if it has the practical effect of regulating wholly outside the state; and third, if it imposes a burden on out-of-state commerce which is excessive in relation to the local benefits it creates.[3] Plaintiffs’ complaint focused on the second potential violation, alleging that the Renewables Quota improperly regulates wholly extraterritorial commerce.[4]

In May, the federal district court for the District of Colorado ruled in favor of state defendants and intervening environmental and renewable energy organizations and upheld the validity of the Colorado law. The court rejected plaintiffs’ extraterritoriality claims, concluding that the RES regulates only Colorado entities and those extraterritorial entities that choose to do business with Colorado entities.[5] The RES does not require out-of-state entities to do business in any particular manner, but simply determines whether energy purchased from an out-of-state generator will count towards a Colorado utility’s Renewables Quota.[6] Concluding that this did not amount to extraterritorial regulation, the court granted summary judgment in favor of defendant Colorado and intervening environmental and renewable energy organizations.[7]

This decision was a success for clean energy—Colorado’s renewable energy sector is growing, jobs are being created, and public opinion supports the RPS. Unsurprisingly, though, plaintiffs appealed the decision to the Tenth Circuit Court of Appeals. In briefs filed over the past few months, plaintiffs argued that the district court improperly relied on a “factually inapposite, nonbinding case” from the Ninth Circuit instead of a Minnesota federal district court case that would have been more favorable to the plaintiff-appellants. The state and nonprofit respondents in the EELI case argue—convincingly, in my opinion—that plaintiffs have this wrong. (Not to mention that neither the Minnesota nor the Ninth Circuit case is binding on the District of Colorado or the Tenth Circuit.)

In the Ninth Circuit case, Rocky Mountain Farmers Union v. Corey,[8] that court upheld California’s Low Carbon Fuel Standard (LCFS). Although the LCFS encouraged out-of-state entities to offer low carbon ethanol that would allow them access to the California market, the court determined that because there was no requirement for an out-of-state entity to meet particular standards, there was no extraterritorial regulation. In the District of Minnesota case, North Dakota v. Heydinger,[9] that court considered a Minnesota statute prohibiting the importation of electric power that would increase statewide carbon dioxide emissions, and it concluded that the statute did impermissibly regulate wholly out-of-state commerce. As the court held in EELI, the Colorado RES regulates only the Colorado market and affects out-of-state entities only insofar as they choose to respond to RES-created incentives. This feature makes the Colorado RES more similar to the California LCFS than to the Minnesota prohibition.

Both EELI and Heydinger are currently on appeal, and the outcome of these cases may impact similar challenges in other states and determine the likelihood of Supreme Court review on this issue. In June, the Supreme Court declined to hear Rocky Mountain Farmers Union,[10] leaving California’s LCFS in place, and perhaps indicating an unwillingness to decide whether state renewable energy incentives violate the dormant commerce clause. Or perhaps the Court, flooded with petitions warning of economic disaster due to environmental regulations, is just waiting until more circuit courts have spoken—and split—on the issue. Depending on how EELI and Heydinger turn out, these cases could provide sufficient reason for the Supreme Court to get involved. Given the states’ innovative leadership in this arena and Congress’s inability to take comprehensive action on climate and energy policy, the fate of Colorado’s RES may have significant implications for clean energy in this country.

UPDATE: The Tenth Circuit has scheduled oral argument for EELI v. Epel for January 21, 2015.

Harvard Law School’s Environmental Policy Initiative is tracking these cases and more at the State Power Project. The author relied on the State Power Project website to find some of the case briefs cited in this blog.

[1] Colo. Rev. Stat. Ann. § 40-2-124 (West 2013).
[2] No. 11–cv–00859–WJM–BNB, 2014 WL 1874977 (D. Colo. May 9, 2014).
[3] Id. at *3.
[4] Id.
[5] Id. at *6.
[6] Id.
[7] See id. at *7. The court also granted summary judgment for defendants on their claims that the RES does not discriminate against interstate commerce, id. at *5, and does not improperly burden interstate commerce relative to local benefits, id. at 9. The court concluded that plaintiffs had failed to show any burden imposed by the RES on interstate commerce. Id.
[8] Rocky Mountain Farmers Union v. Corey, 730 F.3d 1070 (9th Cir. 2013), reh’g en banc denied, 740 F.3d 507 (9th Cir. 2014), and cert. denied, 134 S. Ct. 2875 (2014).
[9] No. 11–cv–3232 (SRN/SER), 2014 WL 1612331 (D. Minn. Apr. 18, 2014).
[10] Rocky Mountain Farmers Union v. Corey, 134 S. Ct. 2875 (2014).