To no one’s surprise, the New Year has brought a continuation of the Bonanza Wars that began in 2007.

Last Tuesday, the Sierra Club, joined by a number of other environmental organizations, filed a petition asking EPA Administrator Stephen P. Johnson to reconsider a memo he issued last month to regional administrators purporting to “interpret” relevant statutory language in a manner that does not require the imposition of limits on CO₂ emissions in a Prevention of Significant Deterioration (PSD) permit for “major emitting facilities,” including coal-fired power plants. Among other things, the petition claims the memo violates the “Bonanza” ruling issued in November by the EPA’s Environmental Appeals Board.

To quickly recap, in August 2007, EPA Region 8 awarded Deseret Electric Power Cooperative a PSD permit to build a new coal-fired electric generating unit at its existing Bonanza Power Plant in southern Utah, without requiring the company to limit CO₂ emissions from the plant. In Bonanza Wars Episode I (“The CO₂ Menace”), the Sierra Club filed a petition with the Environmental Appeals Board (EAB), arguing that the PSD permit should have required the application of Best Available Control Technology (BACT) to limit CO₂ emissions. The Clean Air Act (CAA) requires that PSD permits impose emissions limits on each pollutant “subject to regulation” under the Act, and the Sierra Club argued that CO₂ is a pollutant “subject to regulation” because it is subject to “monitoring and reporting” requirements under the CAA. The EPA disagreed, claiming that it had always interpreted the phrase “subject to regulation” as meaning subject to regulations that require actual control of emissions.

In a headline-making ruling and a significant victory for the Sierra Club, the EAB on Nov. 13 rejected the EPA’s assertion that it had historically interpreted “subject to regulation” in the manner it claimed and sent the Bonanza permit back to Region 8 with instructions to “reconsider whether or not to impose a CO₂ BACT limit in light of the [EPA’s] discretion to interpret, consistent with the CAA, what constitutes a ‘pollutant subject to regulation under [the CAA].’” Significantly, the Board invited the Agency to refrain from making this decision in the context of a single PSD permitting proceeding; according to the EAB:

The Board recognizes that this is an issue of national scope that has implications far beyond this individual permitting proceeding. The Board suggests that the Region consider whether interested persons, as well as the Agency, would be better served by the Agency addressing the interpretation of the phrase “subject to regulation under this Act” in the context of an action of nationwide scope, rather than through this specific permitting proceeding….

On remand, the Region shall reconsider whether or not to impose a CO₂ BACT limit in the Permit. In doing so, the Region shall develop an adequate record for its decision, including reopening the record for public comment

(Emphasis added.)

In Episode II of the Bonanza Wars (“The Administrator Strikes Back”), Johnson responded to the EAB’s ruling with a memo “interpreting” the phrase “pollutant subject to regulation” for purposes of the PSD permitting process as excluding pollutants “for which EPA regulations only require monitoring or reporting” and only including a pollutant “subject to either a provision in the Clean Air Act or regulation adopted by EPA under the Clean Air Act that requires actual control of emissions of that pollutant.” The memo was sent to regional administrators on Dec. 18, and a “Notice of Issuance” of Johnson’s interpretation was published in the Federal Register on Dec. 31, prompting the Sierra Club to immediately file the petition for reconsideration (Bonanza Wars Episode III, “A New Hope”).

In its petition, the Sierra Club argues, among other things, that Johnson’s memo blatantly violated the EAB’s instructions that the EPA reopen the record for public comment in reconsidering its position on imposing CO₂ BACT limits in PSD permits. According to the petition:

The EAB – the final agency decision-maker as to PSD permits – has already addressed whether a notice and comment process is required for EPA to change its position regarding the appropriate scope of analysis in PSD permits, and concluded that it is…. EPA simply cannot excuse itself from its legal obligation to pursue additional notice and comment before finalizing a change to its PSD regulations merely by seeking to adopt its new interpretation of the Act through an “interpretive rule”.

The petition also argues that Johnson’s memo is “impermissible as a matter of law, because it was issued in violation of the procedural requirements of the Administrative Procedures Act…and the Clean Air Act…, it directly conflicts with prior agency actions and interpretations, and it purports to establish an interpretation of the Act that conflicts with the plain language of the statute.”

The EPA has not yet responded to the petition. As always, stay tuned to Warming Law for an update on the next episode of The Bonanza Wars.

Shortly before Thanksgiving, when the Bush Administration was caught drumming up opposition to action on global warming, we here at Warming Law urged them to take a vacation. They didn’t listen, as documented by the “guidance” issued last week on the Bonanza permit.

Maybe they just need an example, so we here at Warming Law are going to show them how it’s done by going dark until January 5th.  Happy Holidays to all!  (Except for any mischievous mice at the EPA trying to further muck up climate policy – they should be happy with big lumps of coal!)

Last month, Warming Law reported that the EPA’s Environmental Appeals Board (EAB), which describes itself as “the final Agency decisionmaker on administrative appeals under all major environmental statutes that the Agency administers,” issued a ruling that EPA’s Region 8 had improperly refused to require limits on CO₂ emissions in a permit issued for the proposed “Bonanza” coal-fired power plant in southern Utah.

In response to a petition filed in October 2007 by the Sierra Club, the EAB remanded the Bonanza permit back to Region 8 and ordered the Region to “reconsider whether or not to impose a CO₂ BACT limit in the Permit.” In doing so, the Board added, “the Region shall develop an adequate record for its decision, including reopening the record for public comment.”

Late yesterday, outgoing EPA Administrator Stephen Johnson responded to this ruling with a 20-page memo to EPA regional administrators interpreting relevant statutory language in a manner that does not require the imposition of limits on CO₂ emissions in a Prevention of Significant Deterioration (PSD) permit for “major emitting facilities,” including coal-fired power plants. Under the Clean Air Act, PSD permits must impose BACT emissions limits on each pollutant “subject to regulation” under the Act. In the Bonanza proceeding, the Sierra Club argued that the phrase “subject to regulation” encompassed CO₂, because CO₂ is subject to monitoring and reporting requirements.  However, the EPA argued that the phrase is limited to pollutants subject to regulations “that require actual control of emissions” of those pollutants. In its ruling, the Board concluded that the phrase “subject to regulation” is ambiguous.

Johnson’s Dec. 18 memo attempts to address this ambiguity, interpreting the phrase “subject to regulation” to “exclude pollutants for which EPA regulations only require monitoring or reporting but to include each pollutant subject to either a provision in the Clean Air Act or regulation adopted by the EPA under the Clean Air Act that requires actual control of emissions of that pollutant.” Johnson claims that his memo was “not intended to supersede the Board’s decision” but rather to “build on it” and relieve individual EPA regional administrators “of the burden of resolving an issue which affects the entire national permitting program.”

Johnson’s memo has triggered a firestorm of frustration among environmentalists, as well as the following sharp response from Rep. Ed Markey (D-MA), Chairman of the House Select Committee on Energy Independence and Global Warming:

Instead of being caretakers for the next administration and the planet, President Bush and the EPA are making sure that polluters are getting their needs taken care of before January 20.… This new, illegal ruling, along with many other midnight rulemakings, continues a stunning pattern of disregard for the law, the planet, and for the change Americans say they want in our energy and environmental policies.

As we head into the New Year, it seems certain that the long-running Bonanza controversy will not end with Johnson’s memo. Stay tuned.

Cow Flatulence Causing Trouble

The WSJ has caught wind of a gassy controversy among American farmers.

The American Farm Bureau Association, apparently egged on by the Bush Administration, has informed its members that the EPA is threatening to levy taxes on cows due to the animals’ methane-emitting “digestive processes,” as part of the agency’s proposed efforts to regulate greenhouse gases under the Clean Air Act.

Though according to the Journal, the EPA’s Advanced Notice of Proposed Rulemaking “only briefly suggested that livestock would be subject to regulation,” many farmers apparently are afraid they will soon face devastating economic consequences from regulation and/or taxation of their cows.

Not to worry, however.  Both the EPA and our very own Captain Climate, Sierra Club chief climate attorney David Bookbinder, assured the WSJ that no such cow tax is imminent under any proposed regulation under the Clean Air Act.

Kansas Coal Plant Dispute Headed to State Supreme Court

A Kansas administrative officer has denied Sunflower Electric Corporation’s appeal seeking to overturn state Secretary of Health and Environment Rod Bremby’s famous decision last fall to deny the company a permit to build the Holcomb coal-fired power plant expansion due to global warming concerns.   Sunflower will now take its appeal before the Kansas Supreme Court, reports the Kansas Liberty.

In November, Sunflower filed a lawsuit in federal court against Gov. Kathleen Sebelius, Lt. Gov. Mark Parkinson, and Secretary Bremby, accusing the state officials of violating the company’s Constitutional right to equal protection, as well as its right to conduct interstate commerce.  On Dec. 2, Sebelius and her co-defendants filed a motion to dismiss and a motion to stay the case, citing (among other things) Sunflower’s ongoing civil and administrative appeals at the state level.

Meanwhile, there are rumblings among Kansas lawmakers that the state legislature may try again to pass a bill granting Sunflower its permit in the 2009 session, even though such a bill was passed and vetoed three times during the prior session.  Sunflower’s multi-pronged battle to obtain a permit thus continues in state court, federal court, and the state legislature. Stay tuned.

Bush Administration Weakens Protections for the Polar Bear

Last week, the Washington Post reported that the Department of Interior had announced it was limiting protections for the polar bear – only recently listed as “threatened” under the Endangered Species Act (ESA) – so “the bears’ protected status could not be used to block activities such as oil and gas development outside their Alaska habitat.”  The action is the latest by the Bush Administration seeking to resist or weaken species protection when it interferes with oil development or national climate policy. (Ahem, we mean the lack thereof.) As recently reported on Warming Law, the polar bear is one of several marine animals for which the Center for Biological Diversity has sought endangered status, on the grounds that the animals are being seriously threatened by oil development and global warming.

Also last week, the Department announced it was finalizing a widely-criticized alteration to the way it administers the ESA, “enabling other government agencies to decide on their own whether a project would harm an imperiled species without an independent scientific review.”

In more warming news (no pun intended) the Center for Biological Diversity announced a small legal victory on Monday.  Following a court order resulting from a lawsuit filed by the Center, the U.S. Fish and Wildlife Service (FWS) has proposed designating more than 5,800 square miles of southern Alaska as “critical habitat” for the newly-“endangered” sea otter.  Under an agreement between the Center and the FWS, reached last spring, designation of the critical habitat must be finalized by October 2009.

by David Bookbinder, Chief Climate Counsel at the Sierra Club. The views expressed here are his own.

There are no doubt many lessons to be learned from the failure of the Congressional auto bailout bill, but one in particular stands out. The December 8 “Discussion Draft” included a provision that would have required recipients of the bailout funds to drop their legal challenges to California’s vehicle greenhouse gas standards. A laudable goal, but a flawed mechanism.

Obviously, the most effective way to get rid of the four auto industry suits over these standards (and not just take out the plaintiffs who happen to need federal money to stay afloat) is to amend the Energy Policy and Conservation Act (EPCA), and make it explicit that California vehicle emissions standards are not preempted by, and do not conflict with, EPCA. Three federal courts have already reached this conclusion, but still the industry soldiers on; codifying these decisions via a single sentence would get rid of the pending cases and eliminate the threat of future ones.

For a variety of reasons, the draft bill instead contained the “if you take this money you can’t sue over those standards” language. And that was a mistake. Not a political mistake – the citizens of the 15 states that have adopted these standards should hardly be asked to pay the auto companies for the privilege of being sued – but a public policy mistake, and possibly a Constitutional one as well. Conditioning receipt of government money on surrendering any First Amendment right is dicey enough; conditioning it specifically on surrendering the right to go to court to challenge government actions, including the constitutionality of government actions, is a really, really bad idea. In the waning days of the Bush Administration and its deranged notions of the Omnipotent and Infallible Presidency, the last thing we should be doing is restricting access to the courts, especially restrictions on claims that government has overstepped its legal authority.

Ironically, Detroit probably would not have contested the constitutionality of this provision when it was deployed against them in court; if that was the price that had to be paid for survival, so be it. Q.E.D.: nothing illustrates the danger of such a provision better than a situation where a potential litigant is too dependent on the goodwill of the federal government to even challenge the constitutionality of such a law, thus letting both the gag law itself, as well as the underlying case, go unexamined by federal courts.

In other words, far better to fix the law through the legislative process than to deny anyone – including those clueless bozos from Detroit – the right to seek review of that law, and by that denial itself compound potential legal mistakes.

And for a more erudite discussion of the constitutional implications of such restrictions, Captain Climate says check out Legal Services Corp. v. Velazquez, 531 U.S. 533 (2001).

Yesterday brought bad and good news in the battle over the EPA waiver that will allow California and at least 15 other states to enforce stricter auto emissions standards.

As part of its last gasp efforts to thwart meaningful restriction of greenhouse gas emissions, the Bush Administration successfully eliminated from the auto bailout bill, passed Wednesday night by the House, a requirement that the auto industry drop all legal challenges to vehicle emissions regulations.

An earlier draft of the bill, released on Tuesday, had contained the following provision:

(g) WITHDRAWAL FROM CERTAIN ACTIONS.—The terms of any financial assistance under this Act shall prohibit the eligible automobile manufacturer from participating in, pursuing, funding, or supporting in any way, any legal challenge (existing or contemplated) to State laws concerning greenhouse gas emission standards.

This provision would have required aid recipients (namely Chrysler and General Motors) to withdraw support from four ongoing challenges to the California Clean Cars program in federal courts.

However, following negotiations with the White House, House Democrats abandoned this provision, and passed the $14 billion auto industry bailout bill without it 237 votes to 170. This means that if the bailout is approved by the Senate, automakers may soon be accepting $14 billion in taxpayer money – and using that money to fund existing and likely additional lawsuits against more than a dozen states, tenaciously challenging widely-adopted regulations that would require the companies to manufacture more fuel-efficient, climate-friendly vehicles.

So, what’s the good news?

Well, yesterday we also learned that President-elect Obama has selected a shining environmental team that ought to be able to quickly take positive steps to deal with global warming. In addition to selecting Lisa Jackson, as EPA Administrator (to replace the hapless Stephen Johnson) and, Nobel Prize-winning physicist Dr. Steven Chu as Secretary of Energy), Obama has tapped former Clinton EPA Administrator Carol Browner to be his very own “energy czarina.” As the WSJ observes:

With the appointments and nominations, Mr. Obama is signaling his seriousness about combating climate change by curbing emissions of greenhouse gases and spending heavily to boost energy efficiency and promote renewable energy….

The choice of Ms. Browner is particularly significant because the new post is expected to coordinate the many federal agencies that have a hand in energy policy. Ms. Browner has said publicly that the next president’s priority should be to direct the EPA to reconsider the decision by President George W. Bush’s current administrator, Stephen Johnson, to deny California a waiver from the Clean Air Act that would have allowed the state to regulate greenhouse-gas emissions from automobiles. The auto industry and the United Auto Workers union have aggressively opposed such state-level controls.

While the precise scope of Carol Browner’s responsibilities has not yet been specified, what is certain is that Browner’s arrival bodes extremely well for the future of California’s waiver, for stricter auto emissions standards across the country, and for genuine progress on combating climate change at the federal level. Hello, Carol Browner!

Last week marked an important milestone in one of the nation’s longest-running and highest-profile legal disputes. The LA Times reported this weekend that the victims of the Exxon Valdez oil spill have begun receiving the first payments of punitive damages – nearly two decades after the infamous accident destroyed their livelihoods.

The details of the case are well known. In 1989, the oil tanker Exxon Valdez, under the command of a captain with a record of alcohol abuse, ran into a reef off the Alaskan coastline, dumping 11 million gallons of crude oil into Prince William Sound and devastating its fragile and pristine ecosystem. More than 32,000 commercial fisherman and Alaskan natives filed a class action suit against Exxon Shipping Co. for its negligence, and in 1994, they were awarded $287 million in compensatory damages and $5 billion in punitive damages by an Anchorage jury. Exxon spent 14 years appealing this decision, during which time nearly 6,000 of the plaintiffs passed away.

In 2006, on its third hearing of the case, the Ninth Circuit reduced the plaintiffs’ punitive damages award to $2.5 billion, citing newly-clarified Supreme Court decisions concerning the ratio of punitive to compensatory damages, as well as Exxon’s efforts to clean up the Sound. Still not satisfied, Exxon petitioned the Supreme Court to reconsider the amount, asking the Court to address among other things whether maritime law even permits an award of punitive damages against a corporation for employee misdeeds

The Supreme Court held that punitive damages were permitted in addition to compensatory damages under maritime law, but only on a 1:1 ratio. It therefore vacated the Ninth Circuit’s ruling and reset the maximum punitive damages to $507.5 million, a sum that would take Exxon less than a week to earn based on reports that in 2007, the oil giant earned profits at a rate of nearly $1300 per second.

As CAC President Doug Kendall explained after the Supreme Court’s ruling, the decision to dramatically slash the amount of punitive damages that Exxon was required to pay was an affront to progressive values of equal justice and corporate accountability:

The Court’s reduction of punitive damages in Exxon Shipping Co. v. Baker is a nakedly activist decision that pulls its standard for limiting damages out of thin air, demonstrates hostility to the role of Congress, and continues a pattern of ignoring the Framers’ views on the importance of civil juries. Progressives would do well to treat this decision with resounding scorn, and highlight it as a textbook example of why the Supreme Court matters…

The Court crafts a 1:1 ratio between compensatory and punitive damages based on his own calculation of what ought to be reasonable rather than any actual law or precedent. This is judicial lawmaking at its worst, and it deprives maritime law trial judges and juries of their long-standing power and responsibility to determine the appropriate remedy for reckless corporate behavior.

As Justice Stevens notes in a pointed dissent, the Court cannot identify a single state court in the entire country that has adopted the Court’s 1:1 ratio. Stevens also explains that the majority ignores the will of Congress, which deliberately chose not to restrict the availability of punitive damages in this context.

The Supreme Court’s ruling fixed the maximum amount of punitive damages, and in August, Exxon agreed to pay three-quarters of that $507.5 million, resulting in the first round of payments last week.

However, even now, the legal battle is not over. Exxon has continued to challenge the plaintiffs’ claims that it owes $488 million in interest on the punitive damages. The plaintiffs have argued that Exxon should have to pay 5.9% interest on the final damages, dating back to the original 1996 district court ruling, a claim Exxon disputes on the grounds that the lower courts did not award interest, and that the deterrent effect of punitive damages will be achieved without awarding interest to the plaintiffs. The Supreme Court has sent that issue back to the Ninth Circuit, where it is set to be argued next Monday.

In the meantime, the quiet arrival of the first punitive damages settlement checks is hardly a victory for the victims of the accident. The payments have arrived in a year of intense national debate surrounding domestic oil production and rapidly-expanding development of the Alaskan North Slope, little of which has focused on the failure of justice and corporate accountability that has followed the country’s most notorious oil spill. The payments also arrive just one month after Exxon Mobil posted the highest quarterly profits in the history of American business. As the LA Times recounts, the plaintiffs’ economic suffering has long since been compounded by utter disillusionment: after nearly two decades of seemingly-endless litigation, the prospect of appropriate damages for their extraordinary loss has all but disappeared.