Thursday, February 25, 2016

Daniels and Grow Sun on Externality Entrepreneurism

Professors Lisa Grow Sun and Brigham Daniels recently posted the latest draft of their recent article, Externality Entrepreneurism, on SSRN. This article builds on an earlier article, Mirrored Externalities, that they published in the Notre Dame Law Review in 2014. In Mirrored Externalities, Grow Sun and Daniels highlighted the fact that “negative externalities are the inverse—the mirror image—of the positive externalities.” For example, preserving a wetland can be described as creating positive externalities, such as water filtration and flood control; conversely, destroying the wetland can be characterized as creating inverse negative externalities: poorer water quality and increased flooding. The reason that mirrored externalities matter is “the framing of externalities has profound effects on both the way we think about and process externalities and on our politics and policy development.” Emphasizing negative externalities, for example, may suggest the appropriateness of particular types of policy solutions (like fines and regulation) and may trigger loss aversion in a way that positive externalities do not.

In Externality Entrepreneurism, they expand their consideration of the framing of externalities, examining a variety of ways that externality arguments can be employed to drive legal and social change. The abstract of their paper is as follows:

The way that economists have taught us to think about externalities—asking us to identify, measure, and internalize them—while useful, has created a substantial blind spot. According to economic thinking, the law ought to incentivize or force those who create externalities to internalize them. Yet, internalizing externalities is just one way of many that externalities shape law and politics: legal and political actors frequently employ externalities to galvanize or oppose change by strategically identifying, selecting, framing, and promoting externalities. These actors exaggerate and highlight different externalities with the aim of capturing the attention of individuals, the media, networks of interest groups, and ultimately legal and political decisionmakers. We call those who use externalities this way “externality entrepreneurs.” Externality entrepreneurism is prevalent in all levels and branches of government and in almost every area of law and policy, yet it is completely unexplored in existing scholarship. This Article seeks to remedy that neglect and begin the broader conversation about this vitally important lens. Because externality entrepreneurism is so ubiquitous and universal, understanding it is critical not only for those who wish to create change in our political and legal institutions but also for those who wish to more fully understand and evaluate the mechanisms by which such change occurs.

I highly recommend both of these thoughtful and insightful pieces on how important the framing of externalities/internalizing environmental costs and benefits is to modern policy development.

- Blake Hudson

February 25, 2016 | Permalink | Comments (0)

Wednesday, February 24, 2016

The Latest on Koontz v. St. Johns: State Supreme Court Declines to Review Appellate Decision on Remand in Key Takings Case

This past week, the Florida Supreme Court denied a petition for certiorari in the long-running takings case of Koontz v. St. John’s River Water Management District. The denial lets stand an appellate decision on remand from the U.S. Supreme Court that presents significant obstacles for state efforts to protect the environment and regulate land uses. 

To re-cap, in 1972 Koontz bought a 15-acre lot consistently predominantly of wetlands.  Two decades later, the state proposed conditions allegedly aimed at mitigating the wetland impacts of a shopping mall that Koontz sought permission to build on the property.  Koontz scoffed at the proposed conditions.  In a rather confusing back-and-forth, the state withdrew those conditions and denied the requested permit, before reconsidering and unconditionally granting that permit.  Despite having the permit in hand, Koontz continued to press his claim that the originally proposed conditions amounted to an unconstitutional taking for which he was due compensation.

In 2009, a state appellate panel determined that Koontz was entitled to $477,000 in takings compensation for the property’s lost rental value over the period of time between the denial of his development application and the issuance of the permit in light of the fact that the initially proposed conditions did not comport with the heightened scrutiny discussed in the Supreme Court’s conveniently-rhyming Nollan and Dolan decisions. (Together, these cases require the state—as the defendant—to prove that some unspecified class of permit conditions bear an “essential nexus” to and are in “rough proportionality” with the proposed development’s impacts to avoid having to pay takings compensation.)

In 2013, the U.S. Supreme Court confirmed that, where a governmental entity (i) proposes certain permit conditions but (ii) later withdraws those proposed conditions and (iii) makes a decision to approve or deny the requested permit, those temporarily proposed conditions are subject to the heightened scrutiny of Nollan and Dolan.

The Supreme Court’s decision describes Koontz as presenting a dispute that fits within Nollan and Dolan’s “special application” of the Court’s unconstitutional conditions jurisprudence. This description is peculiar for, among other reasons, the Court stated that “nothing has been taken” from Koontz because he never had to comply with any untoward permit conditions. Further complicating matters, the Court did not discuss what remedy, if any, might be available to a claimant who successfully argues that a proposed condition does not pass Nollan and Dolan muster, stating that “[b]ecause [Koontz] brought his claim pursuant to a state law cause of action, the Court has no occasion to discuss what remedies might be available for a Nollan/Dolan unconstitutional conditions violation either here or in other cases.”

Yet on remand in June of 2014, the state appellate court summarily concluded by a 2-1 vote that its earlier decision awarding “just compensation” for a “taking” was “entirely consistent” with the Supreme Court’s decision.  It, therefore, “reaffirm[ed]” its compensation award for lost rents over the period of time between the denial of Koontz’s original development application and the issuance of the permit.

The dissenting judge saw the remand as presenting the question of whether a damage award was appropriate under a state statute for action that represents an “unreasonable exercise of the state’s police power constituting a taking without just compensation.” With the Supreme Court having confirmed that no taking occurred, she contended that the case could only be decided summarily in favor of the state. At minimum, though, she would have requested additional briefing.

Last week, nearly two years after the appellate court’s decision on remand, the Florida Supreme Court denied the state’s petition for certiorari. The state has not yet announced whether it will ask the U.S. Supreme Court to take up the case a second time. 

The implications for environmental protection and land use controls are potentially significant should the Florida appellate court decision stand, especially if that decision proves influential as other states’ courts begin to wrestle with the vagaries of the U.S. Supreme Court’s decision in Koontz.

Until the 1980s, it was largely understood that the state need not pay compensation for property later found to be taken by a regulatory action if the state repealed that regulatory action immediately upon the takings finding. Yet in its 1987 decision in First English, the Supreme Court concluded that “where the government’s activities have already worked a taking of all use of property, no subsequent action by the government can relieve it of the duty to provide compensation for the period during which the taking was effective.”

There is broad agreement that First English’s holding requiring compensation in these instances has a chilling effect on government regulation.  The appellate decision on remand in Koontz seemingly works to expand First English’s retroactive takings compensation principle to at least some government communications made during pre-decisional negotiation sessions and subjects such communications to the heightened scrutiny of Nollan and Dolan.

There are a number of courses that government entities could take in this confusing and chilling post-Koontz world, all of which admittedly come with their own shortcomings and risks.  Sean Nolon posed several here, and I added to Sean’s list here. It may be fodder for future empirical work to determine which of these approaches—and the assuredly many other approaches that are not discussed in these essays—the myriad state and municipal entities adopt moving forward. 

Tim Mulvaney

Guest blogger Tim Mulvaney is a Professor of Law at Texas A&M University School of Law.  He can be reached at  [email protected].

February 24, 2016 | Permalink | Comments (0)

Monday, February 22, 2016

Reverse Us, Please: The Sixth Circuit and WOTUS Jurisdiction

The United States Court of Appeals for the Sixth Circuit just released on opinion retaining jurisdiction in the litigation challenging the joint EPA/Army Corps Clean Water Rule, also often known as the Waters-of-the-United States (or WOTUS) rule.  The question before the court was whether the Clean Water Act assigned jurisdiction over challenges to the rule to the courts of appeals or to federal district courts.  Many of the rule's challengers wanted their claims in district court, or so they argued; the federal government sought to keep the case in the Sixth Circuit.  Today, the feds prevailed; the Sixth Circuit held that jurisdiction should remain at the appellate level.

It reached that conclusion with very little agreement or enthusiasm.  The case produced three opinions, with two concurring in the retention of jurisdiction, but not on the rationale, and one dissenting.  All three judges agreed that the best reading of the statute would have assigned jurisdiction to the federal district courts.  But two of the three judges believed that binding judicial precedent foreclosed that reading of the statute.  That resulted in statements like this, all from the judges who ruled in favor of appellate jurisdiction, and thus for the federal agency defendants.

Judge McKeague:

-"On its face, the Agencies' argument is not compelling."

-"While [the challengers'] plain arguments are not without facial appeal, we are hardly at liberty to ignore the consistent body of case law that has sprung from that language in encounters with the real world...  Were we arguing on a blank slate, the argument would be more persuasive, but we're not."

Judge Griffin:

- "I concur in the judgment... only because I am required to follow our precedentially-binding decision...

- "In my view, it is illogical and unreasonable to read the text of either [of the Clean Water Act jurisidictional provisions at issue] as creating jurisdiction in the courts of appeals for these issues."

That kind of language seems an awful lot like an invitation for Supreme Court (or en banc) review.  But will that invitation to the Court be granted?  For two reasons, I suspect it might not.  

The first is that there might not be a cert petition.  The petitioners who "lost" on this motion might have decided that they're actually quite happy to stick with the Sixth Circuit, where they've drawn a conservative panel--a panel, in fact, that already has stayed the rule.  Their only advantage to a cert petition might be to draw out the litigation a little longer, and thus to potentially lengthen the stay.  And the Department of Justice isn't exactly likely to appeal when it just won.

The second reason is that the Supreme Court might not have any interest in granting cert.  The issue here is specific to one statute.  There isn't a circuit split.  And the issue probably wouldn't strike the justices as very interesting or important.  Indeed, the one Justice whose interest a cert petition might have piqued would have been Justice Scalia, who I think would have been rather offended at the non-literal readings prior courts had given to the statutory text in question.  And Justice Scalia, of course, has passed away.

So the case may very well continue forward in the Sixth Circuit, heard by a panel of judges that would have unanimously dismissed the challenges, and would have let those challenges proceed instead in federal district court, had they believed governing judicial precedent allowed that option.

- Dave Owen


February 22, 2016 | Permalink | Comments (2)

Wednesday, February 17, 2016

The Clean Power Plan, the Supreme Court's Stay, and Irreparable Harm

Last week, the Supreme Court controversially stayed implementation of the Clean Power Plan (CPP), the cornerstone of the Obama Administration’s climate policy, while twenty-nine states proceed with litigation against it. The CPP targets greenhouse gas emissions from power plants, which account for about a third of all U.S. carbon emissions. The rule is designed to reduce emissions from coal-fired plants, the dirtiest form of energy production, through a mix of stricter limits on existing plants, measures to increase energy efficiency, and other mechanisms that encourage producers to shift from coal to cleaner renewables and natural gas.

The CPP provides for substantial flexibility in how reduction targets may be attained within states, allowing states to choose among various options proposed in the rule, to come up with their own proposals, or to opt for federal regulation in lieu of state oversight. Nevertheless, generators heavily invested in coal argue that implementation will require expensive changes.

It therefore surprised no one that states with the most coal-dependent economies, and with political leadership most sympathetic to the coal industry, are challenging the CPP in court. They argue, among other things, that EPA is unauthorized to regulate power plants this way, that the standards imposed by the rule did not take fair account of the costs of implementation, and that the final rule was insufficiently related to the proposed rule on which the public provided comment. Eighteen other states are supporting the rule, together with environmental groups and some power companies (including utilities in some states that are challenging the rule). Proponents contend that federal environmental laws have always targeted energy production, a primary source of regulated pollutants, and that the CPP legitimately follows from established legal authority, the regulatory record, and the proposed rule.

EPA always knew the CPP would be litigated, and so the lawsuits came as no surprise. But the Court’s move to stay the rule—before the issues had even been aired in open court—has apparently surprised everyone. The one-page order made no judgment on the merits of the case, but it suspends implementation of the rule while the litigation runs its full course, a process expected to take at least eighteen months. The Court split along ideological lines in issuing the stay, with the five more conservative justices voting for the stay over opposition by the four more liberal justices. Just weeks earlier, the D.C. Circuit declined to issue the plaintiffs’ requested stay, following uniformly applied federal judicial norms—until now.

The Supreme Court has never before blocked implementation of a generally applicable regulation before its merits have been considered by a federal appeals court, so the stay has provoked a vociferous response. Supporters of the CPP excoriate the move as “unprecedented” while opponents hail it as “historic.” Undue judicial activism may be in the eye of the beholder, but most agree that the stay does not bode well for the future treatment of the CPP before the Court. Such an unusual move cannot help but send signals that at least five of the justices are skeptical of at least parts of the rule.

The CPP is the Obama Administration’s last and best effort to take on the super-wicked problem of climate change, and its ambition responds appropriately to the magnitude of the challenge. All of us will benefit from sensible climate policy in the long run, but as with all regulatory changes, there will be winners and losers in the short run—and the losers are passionately defending their interests in the litigation at hand. They are entitled to do so, and the courts must give their arguments the most serious consideration.

Nevertheless, the Court’s novel stay raises concerns of a different order. It represents another move by the Roberts Court to shift power toward the judiciary on matters that relate not to individual constitutional rights—where judicial prowess necessarily overtakes the majoritarian tendencies of the political branches—but to the complex allocation of costs and benefits within a comprehensive regulatory program, where judicial capacity is easily eclipsed by legislative and executive competence. The three branches of government specialize in answering very different legal questions, and conservative-leaning courts like the Roberts Court are usually quick to remind us that broad-brush public policymaking is not a judicial task.

The CPP, for example, makes sophisticated choices about responsibly balancing the potential harms of regulating and not regulating harmful pollutants, and how to structure regulatory obligations to maximize health benefits while minimizing economic harms—all after exhaustively accounting for public input on the proposed rule. If the justices nevertheless find legal infirmity after carefully engaging all evidence and arguments, it is their duty to reject it. But when the Court breaks with its own norms to block the President’s capstone climate initiative for the remainder of his final term—before meaningful judicial review of the merits—perhaps that approaches the boundaries of appropriate use of its own authority. If it does not invite pause about the constitutional separation of powers, it at least gives cause to reflect on the lessons of the Lochner era (in which the Court struck down state economic regulations of which the majority disapproved).

Opponents of the CPP argue that the stay is legitimately unprecedented because the CPP is itself unprecedented—asserting a wide range of authority that is both proven and untested, prompting deliberation of legal questions with which the Court has not previously engaged. Yet most litigation reaching the Supreme Court raises novel questions of law; if not, they would be easily resolved in the lower courts. Claims that a pre-litigation stay was required to prevent irreparable harm are also overblown, because the CPP was designed to phase changes in gradually, giving states producers and ample time to move forward and adjust at a measured pace. States had until 2018 to submit plans for compliance—well after this litigation is expected to conclude—and until 2025 to begin showing actual progress.

The irreparable harm with which we must now contend is to the fragile international consensus on sustainable climate governance. In signaling such strong skepticism toward the CPP, the stay could irreparably damage the global community’s efforts by weakening the very U.S. leadership that led to the historic climate accord reached in Paris just two months earlier. On December 12, 2015, breaking through decades of stalled progress, 195 nations pledged to work together on forestalling the catastrophic effects of a warming climate. While the agreement itself did not guarantee the needed results, it established a critical framework for global collaboration that, many hoped, would further spur world financial and energy markets toward investment in carbon-neutral renewables and away from fossil fuels.

President Obama helped inspire the participation of other nations by assuring them that the U.S. would honor its own commitments under the agreement, and the CPP was the centerpiece of this effort. Now, all who relied on U.S. assurances before making their own commitments must be deeply unsettled. Even though the CPP may yet emerge wholly or mostly unscathed in litigation, as many experts predict it should, the damage to post-Paris momentum could already have been done. Without even reaching the merits of the case, the Supreme Court has thus cast doubt on the entire prospect of U.S. compliance with the Paris accord—and with it, doubt on compliance by other nations as well.

In this way, the stay could cause irreparable harm not only to countless U.S. citizens affected by domestic climate policy, but to the hundreds of millions of the world’s most vulnerable people—none of whom are represented in these proceedings—who are at risk from sea-level rise, hurricanes, drought, and fires associated with climate change.

(Pause here for somber reflection… for an appropriately long and somber time.)

Okay: that’s the depressing, glass-half-empty view of what has happened this week. Resisting the urge to just hide under the covers, let me now suggest a more hopeful alternative. The Court has undeniably, inexplicably dealt a blow to the CPP in the short term. But in the long term, perhaps it is not the death knell for the underlying elements of the plan, for U.S. compliance with the Paris accord, and for continued momentum for a global response to the climate crisis.

The CPP was designed to nudge U.S. energy markets away from its path-dependence on fossil fuels and toward sources that impose fewer harmful externalities on human health and the environment. But that path is changing anyway, as both market and environmental forces operate to shift energy production toward renewables. In some parts of the country, wind energy is now cost competitive with natural gas. In places like West Texas, solar photovoltaic is now cost competitive with gas. Extending beneficial tax treatment to renewables that oil and gas have long enjoyed would move them toward economies of scale more quickly, but the trends suggest that low-carbon energy sources will make economic sense even without regulatory incentives.

As low-carbon sources become increasingly economically competitive, many states will continue to follow important elements of the CPP even if the Supreme Court ultimately rejects it. More than half the states have already established well-developed renewable portfolio standards—requirements that a certain percentage of their electricity must come from renewable energy sources—and they will likely continue to implement them regardless of the Court’s conclusion. Most states in the Northeast are already on track to comply with the CPP. Ongoing progress in energy efficiency will further cut carbon emissions, even without changes in production.

Moreover, even if the CPP struggles in court, carbon emissions from power plants will still be regulated under the Clean Air Act. Why? None other than the Supreme Court required it in Massachusetts v. EPA, which famously held that the Clean Air Act requires EPA to regulate greenhouse gases. Other air pollution rules, such as the Mercury and Air Toxics Standards that limit the emission of hazardous pollutants, will likely prevent new coal plants from coming online. Indeed, few, if any, new plants have been built in recent years.

Finally, it’s important to remember that while half the states have lined up against the CPP, most of the remaining half stand with it. Even some of the states opposing the rule are politically split—such as Colorado, where the attorney general opposes the plan, but the governor endorses it. There remains substantial support for the CPP, and a growing list of experts have publicly argued that it should survive judicial review on the merits, notwithstanding the Court’s apparent skepticism. So while the future of the CPP is uncertain, it is certainly not over. Only time will tell, and although time is not on our side, we can make the most of it by keeping on the path to cleaner energy as best we can while the litigation plays out.

--Erin Ryan

--Erin Ryan is Professor of Law at the Florida State University School of Law.  A version of this essay first appeared on Feb. 17, 2016, on the American Constitution Society Blog. Hannah Wiseman contributed invaluable sources and inspiration to this essay.

February 17, 2016 | Permalink | Comments (0)

Tuesday, February 16, 2016

The Des Moines Tile Line Discharge Case

A lawsuit recently filed in federal district court in the Northern District of Iowa aims to bring more agricultural pollution under Clean Water Act control. Board of Water Works Trustees of the City of Des Moines, Iowa v. Sac County Board of Supervisors, No. 5:15-CV-04020 (N.D. Ia., filed March 16, 2015). The suit claims that discharges from subsurface “tile” drainage lines are “point sources” of pollution, which require CWA permits.

No one denies that Iowa, like most agricultural states, faces significant water quality issues.  The state’s 2014 impaired waters list contains 574 waterbodies not meeting water quality standards, a 260% increase from the 159 waters on the 1998 list.  In addition, phosphorus and nitrogren from upper Mississippi river states like Iowa contribute significantly to the hypoxia problem in the Gulf of Mexico. 

Much of this water quality problem can be traced to agriculture, the 90,000 farms that comprise over 86% of Iowa’s land base.  Iowa regularly ranks first or second in the nation in the production of hogs, corn, and eggs.  Hogs produce nutrient-rich manure, which is then used to fertilize nitrogen-hungry corn, which in turn is used to feed the pigs. 

A beautiful symbiotic relationship, except that the increasing concentration of farm animals and the conversion of marginal lands into corn production means that a lot of nitrogen and phosphorus ends up in Iowa lakes and rivers. Increased nitrogen use has exacerbated the nutrient problem.  In 1970, American farmers used 7.5 million tons of nitrogen per year.  By 2011, nitrogen use had increased 70%, to 12.8 million tons.

Yet, almost all of this pollution is currently beyond the reach of the Clean Water Act, classified as “nonpoint” runoff.  For example, recent studies indicate that 90% of the nitrogen and 66% of the phosphorus that Iowa contributes to the Gulf hypoxia problem comes from “nonpoint” sources.

The Des Moines Water Works (DMWW), which provides drinking water for half a million people in central Iowa, has taken action to bring more of this runoff under CWA control.  DMWW draws its water primarily from the Raccoon River, which regularly exceeds the nitrate standard of 10 mg/liter.  As a result, DMWW has installed what it calls the world’s largest nitrate removal system, which costs $7000/day to operate.  In addition, the equipment will need to be replaced soon, at an estimated cost of $76 to $183 million. 

The TMDL study for the Raccoon River concluded that 90% of the nitrates were coming from what it classified as nonpoint sources, largely agriculture.  While some of that is surface runoff, a large percentage of the land in that area is drained by subsurface tile lines – large PVC pipes that channel water from under cropland.  In some areas upstream of the DMWW, over 75% of the land mass is drained by tile lines.

The DMWW lawsuit, filed last March, alleges that these tile lines are “point sources” of water pollution, which therefore need permits under the CWA.  There is little question that the tile lines are “pipes,” which meet the statutory definition, and that they convey pollution to nearby navigable waters. 

The sticking point is the CWA’s exemption for “agricultural stormwater discharge.”  The DMWW lawsuit alleges that the tile lines transport polluted groundwater, rather than surface water, and therefore do not discharge stormwater at all.  Experts can testify that the purpose of the tile lines is to lower the water table, thereby extending the root zone of crops.

DMWW did not sue individual farmers; instead the suit is against three upstream counties, which constitute drainage districts under Iowa state law and therefore have control over the tile lines.  If DMWW is successful, the Iowa Department of Natural Resources would be required to issue permits, with some form of effluent limitations, to the drainage districts.  Effluent limitations might be based on buffer strips or wetlands or even wood-chip bioreactors, all of which reduce nitrate loads. 

The lawsuit also includes state law claims seeking monetary damages and injunctive relief, based on nuisance or negligence, in addition to several constitutional law claims.  In January, U.S. District Judge Mark Bennett certified four questions of state law to the Iowa Supreme Court, mainly concerning whether the drainage districts, as creatures of state law, enjoy immunity from the state law claims. 

Trial is now set for August, although the certification of state law questions may eventually require a continuance.

In a state dominated by agriculture, the lawsuit has been extremely controversial. One rural state senator urged farmers to boycott the capital city, and Governor Terry Branstad opined that “Des Moines has declared war on rural Iowa.”  The Governor and some farm groups believe that the state’s 2013 Nutrient Reduction Strategy should be given more time to work.  Critics maintain that the Strategy, which relies on voluntary efforts, is woefully underfunded and will therefore never achieve significant progress. The state legislature is considering schemes to increase funding for water quality, but the chances of forestalling the lawsuit are slim.

In a larger sense, the DMWW lawsuit is the latest in a series of attempts to bring agricultural pollution sources under greater regulatory control.  In 1994, the C.A.R.E. v. Southview Farm, 34 F.3d 114 (2d Cir. 1994) began this series, by holding that the runoff of manure spread by a dairy farm could constitute a CWA point source.  More recently, in Alt v. E.P.A., 758 F.3d 588 (4th Cir. 2014), the Fourth Circuit rejected EPA’s attempt to bring polluted discharges from a poultry operation within CWA point source control.   In January 2015, the Eastern District of Washington found that a large dairy operation’s manure, stored in lagoons and applied on fields, could be “solid waste” under the Resource Conservation and Recovery Act. Comm. Ass’n for Rest. of the Env’t, Inc. v. Cow Palace, LLC, 80 F. Supp. 3d 1180 (E.D. Wash. 2015).

All of these lawsuits, however, attempt to apply 1970s laws, written when the family farm dominated agriculture, to pollution associated with modern industrialized agriculture.  Until Congress or state legislatures deal with agricultural pollution head on, we can anticipate further attempts to make the old statutes respond as well as they can to our modern water pollution problems.

- Jerry Anderson

Guest blogger Jerry Anderson is the Richard M. and Anita Calkins Distinguished Professor of Law at Drake University Law School.  He also published a longer piece on this case in the Environmental Litigation and Toxic Torts Committee Newsletter, Vol. 17, No. 2, February 2016, by the American Bar Association.

February 16, 2016 | Permalink | Comments (0)

Monday, February 8, 2016

What the New Adverse Modification Rule Doesn't Do

The Endangered Species Act prohibits federal agencies from authorizing, funding, or carrying out activities likely to result in adverse modification of critical habitat.  That sounds like a powerful prohibition, but for years, figuring out what counts as adverse modification has been a challenge.  One of the most vexing questions has been whether small increments of habitat degradation qualify as adverse modifications—and, if they do not, how to draw a principled distinction between those incremental changes that qualify as adverse modification and those that do not. 

Last week, the United States and Fish and Wildlife Service and the National Marine Fisheries Service took what could have been a significant step toward resolving this question; they released a long-awaited regulation that defines adverse modification.  But in two key ways, the new regulation falls short of answering critical habitat’s crucial questions.

The new regulatory text is as follows:

Destruction of adverse modification means a direct or indirect alteration that appreciably diminishes the value of critical habitat for the conservation of a listed species.  Such alterations include, but are not limited to, those that alter the physical or biological features essential to the conservation of the species or significantly delay the development of such features.

The first big issue with that language is that it doesn’t clarify much about what counts as adverse modification.  The key word here, of course, is “appreciably.”  It’s a classic lawyer’s wiggle word: flexible enough to mean anything between “not very much at all” and “kind of a lot.”  In the preamble, the agencies add a little more specificity.  Appreciably, in their view, means something similar to considerable, which means something akin to noticeable, which sounds more like a pretty low standard.  But the agencies go on to explain that not just any discernable adverse change in habitat quality will qualify as adverse modification, and they also explain that what counts as appreciable will be judged while looking at the critical habitat area as a whole, not just the specific action area.  That’s likely to make a difference; things generally look smaller when one views them from farther away.

In addition to leaving the adverse modification standard fairly fuzzy, the new regulations also retain a curious paradox in the agencies’ treatment of cumulative impacts.  Many species are imperiled by the incremental whittling away of their habitats, and that raises a question: if a small change is part of a larger trend, and that larger trend of habitat modification clearly poses problems for the species, does each contributing increment count as adverse modification (or jeopardy, which is the other major prohibition in section 7 of the ESA)?  Does that cumulative trend even affect the calculus?  As other commentators have noted, the services have struggled with these questions as well, often adopting approaches that left species with little protection from cumulative habitat loss.

The new regulations don’t fix that problem.  Instead, the preamble clearly states that while the services will look at all of a species habitat when judging whether habitat modifications count as appreciable, they will only look within the action area when assessing cumulative impacts.  That means a biological opinion could quite plausibly decline to find adverse modification because a species has a relatively wide range, even if similar actions are degrading species habitat across that range.  If the basic goal is to protect species, that doesn’t make much sense.  The approach, if followed carefully, would mean assuming that range-wide trends will make up for local increments of degradation, while avoiding the analyses that would often prove that assumption false.

This isn’t just a hypothetical concern.  The old regulatory language used similar words and allowed similar flexibility, and standard practices therefore aren’t likely to change.  In a 2012 study, I took a close look at those practices, and I found that the services were routinely declining to find adverse modification even for projects that would (a) make habitat worse in the action area; and (b) contribute to a range-wide trend of habitat degradation.  Their reasoning, usually, was that the project-specific change, when viewed at a landscape scale, was too small to count. 

So what could the services have done differently?  These are tricky issues, and it’s much easier to take pot shots than to come up with a better alternative.  Any critic also ought to acknowledge that the services do strive, in almost every consultation process, to change projects in ways that protect species, and that they do so in the face of often-intense political opposition.  But even with these challenges, I do think there are possibilities. 

The problems with cumulative impact analyses ought to be the easier fix.  It would take a little more work, but the services could take into account range-wide trends when they perform such analyses.  The thresholds problem is harder.  But one intriguing possibility (which the services, for now, have declined to pursue) would be to use recovery plans to set default thresholds for what counts as an appreciable adverse modification.  Those thresholds could be set at a level sufficiently protective to ensure against cumulative degradation of species habitat, and thus could link decisions on individual projects into larger plans for the conservation of species.  That, in turn, would mean turning recovery plans from documents of aspiration into documents of regulation, which the services are hesitant to do.  But if the services are going to come up with a principled distinction between modifications that really are adverse and those that are too small to count, establishing a link to conservation planning seems like a sensible way to start.

- Dave Owen

February 8, 2016 | Permalink | Comments (0)

Wednesday, February 3, 2016

The Florida Fracking Bill

Many of you have likely heard that Florida is slowly moving toward allowing hydraulic fracturing (“fracking”) within the state.  The debate began when a company from Texas drilled a horizontal well in Collier County, Florida, into the Lower Sunniland shale formation.  In December 2014 the company conducted what was called a “workover operation” on the well.  This workover operation involved “stimulating” the rock formation around the well so that it would produce more oil and gas than would be produced if the well was simply drilled laterally through the rock.  Specifically, after drilling the well the company perforated the casing (lining) in the part of the well in the rock formation from which oil and gas would be produced and then injected acid down the well; the acid traveled out of the perforations and into the rock, thus releasing oil and gas.  Some people call this technique fracturing, although others would simply call it acidizing. The more traditional form of hydraulic fracturing or “fracking” now common in the United States—the slick water technique—is different.  It involves injecting water and chemicals down a well at very high pressure.

When the company conducted the workover operation in late 2013, all that was required under Florida law was to timely notify the state Department of Environmental Protection that the company was going to complete the workover operation—a requirement that the company followed.  The timing of the operation was not ideal, however, in terms of giving the DEP time to inspect the well and watch the operation.  The company, after briefly delaying the operation to give the DEP a bit more time, began the workover operation on December 30, 2013.  The company continued the operation through January 1, 2014.  In the midst of the operation the DEP issued a Cease and Desist order.  (See p. 15 of the hyperlink.)  The company and the DEP later agreed to a Consent Order, in which the company committed to: pay a civil fine of $20,000 and an additional $5,000 to cover DEP investigation costs; provide material safety data sheets describing all materials used in the Workover Operation; identify the total volume of water used in the operation; describe the storage capacity that the company maintained on site for the flowback water that came out of the well after the workover; and retain a third-party expert to assess whether there was likely a violation of groundwater quality standards, among other promises.

More recently, a company from Dallas, Texas, announced that it wanted to begin exploratory work to identify potential oil resources underlying Calhoun and Gulf Counties in North Florida.  The Collier County incident and more recent proposals for further exploration triggered increased legislative attention to oil and gas drilling and fracturing in the state.  Numerous local governments have promulgated ordinances encouraging bans on fracturing (see, e.g., Broward County’s resolution), and the state legislature has now entered the fray.  A proposed chemical disclosure bill for fracking has been kicking around in the Florida Legislature for several years, but the bill never passed.  This year, things look different.  Last week the Florida House approved a bill that would allow hydraulic fracturing in the state, although only after the state Department of Environmental Protection completes a study of the impacts, writes rules addressing fracturing, and the legislature approves those rules.  Under the bill, the DEP would be required to report its findings to the Governor and state legislature by June 30, 2017, and the study would have to be peer reviewed.  The DEP would have to adopt fracturing rules by March 1, 2018. Other important aspects of the bill include local preemption, in which local governments would be permitted to “enforce zoning or land use requirements” that affect oil and gas production and related activities but could not “effectively prohibit, or inordinately burden” these activities, and a requirement for disclosing fracturing chemicals through FracFocus.

It is difficult to tell how the bill compares to other state fracturing laws because the study has yet to be completed, and the regulations are yet to be written.  The bill is somewhat promising from a risk prevention perspective in that it would place a moratorium on fracturing until the study and regulations are complete—a practice similar to that followed by New York and Maryland before those states banned or placed a moratorium on fracturing.  But the study required by the legislature would not force the DEP to consider the many surface impacts of fracturing—focusing instead primarily on groundwater (and not necessarily on surface spills that can also impact groundwater).  Further, if the DEP in its study only followed the requirements of the proposed bill, the study would not thoroughly address issues such as waste disposal, air pollution, truck traffic, and public health impacts.  Further, many Florida voters seem to prefer to simply ban fracturing in the state in light of the importance of natural resources and tourism here, and in light of the fact that we don’t appear to have abundant oil and gas resources as compared to many other states.  In other words, it’s not clear whether the majority of voters believes that the potential financial and environmental costs of expanded oil and gas development in Florida would be outweighed by the benefits of the somewhat meager production that would likely result. 

Hannah Wiseman

Hannah Wiseman is the Attorney's Title Professor at the Florida State University College of Law.

February 3, 2016 | Permalink | Comments (0)