Environmental Law Update

Volume 26 No. 4

Environmental Law Update Editor: Scott E. Hitch, Burr & Forman LLP, scott.hitch@burr.com.

Environmental Law Update provides information on developments in environmental law as they apply to property, trust, and estate matters. The editors of Probate & Property welcome information and suggestions from readers.

Department of Energy Releases Green Lease Library Web Site

The federal Department of Energy (DOE), together with industry partners including the Building Owners and Managers Association, the Rocky Mountain Institute, and the Natural Resources Defense Council, recently launched the Green Lease Library (available at www.greenleaselibrary.com) to provide a clearinghouse of information regarding “green leases.”

As described by DOE, “green leases (also known as aligned leases, high performance leases, or energy efficient leases) align the financial and energy incentives of building owners and tenants . . . to save money, conserve resources, and ensure the efficient operation of buildings.”

The intent of green leases is to provide incentives to tenants and landlords to promote energy savings. Green leases differ from gross and net leases. Gross leases provide no incentive to tenants to save energy because energy costs typically are based on square footage. Net leases do not provide landlords incentives to invest in building systems efficiencies because their tenants pay all operating expenses. Green leases, by contrast, seek to equitably align the costs and benefits of efficiency investments between building owners and tenants.

The Green Lease Library provides guidance for developing, negotiating, and implementing green leases, case studies on successful green leases, and sample green lease language and templates.

EPA Proposes Carbon Pollution Standard for New Power Plants

On March 27, 2012, the Environmental Protection Agency (EPA) proposed a “Carbon Pollution Standard for New Power Plants,” www.epa.gov/air/tribal/pdfs/carbonpollutionstan dardnewpowerplants032712-1030am.pdf. This rulemaking under the Clean Air Act would limit the amount of carbon pollution newly built power plants can emit. EPA’s proposal would not apply to plants currently operating or new permitted plants that begin construction over the next 12 months. EPA is accepting public comments on the proposed rule for 60 days.

The proposed rule would apply to fossil-fuel-fired electric generating units (EGUs), including fossil-fuel-fired boilers, integrated gasification combined cycle (IGCC) units, and stationary combined cycle turbine units that generate electricity for sale and are larger than 25 megawatts (MW). The proposed rule excludes existing units undergoing modifications to meet other air pollution standards, new units located in Hawaii and U.S. territories, and biomass-only combustion units.

EPA’s proposal would require new fossil-fuel-fired power plants to meet an output-based standard of 1,000 pounds of CO2 per megawatt-hour (lb CO2/MWh gross). EPA estimates that new natural gas combined cycle (NGCC) power plant units could meet the proposed standard without add-on controls and that new coal or petroleum coke-fired power plants could meet the standard through the use of technology to reduce carbon dioxide emissions, such as carbon capture and storage (CCS).

New power plants that use CCS would have the option to use a 30-year average of CO2 emissions to meet the proposed standard, rather than meeting the annual standard each year. Plants that install and operate CCS right away would have the flexibility to emit more CO2 in the early years as they learn how to best optimize the controls. A company could build a coal-fired plant and add CCS later. For example, a new power plant could emit more CO2 for the first 10 years and then emit less for the next 20 years, as long as the average of those emissions met the standard.

Supreme Court Allows Immediate Challenge to Clean Water Act Compliance Order

In a unanimous decision, the U.S. Supreme Court, in Sackett v. EPA, 132 S. Ct. 1367 (2012), recognized the right of property owners to challenge the basis for a Clean Water Act (CWA) compliance order alleging unlawful filling of wetlands. The Court ruled that targets of such orders need not wait until EPA files an enforcement suit but may bring judicial challenges immediately on receiving them. Before the decision in Sackett, the practice of circuit courts and EPA was first to require landowners to apply for a fill permit in order to challenge EPA’s assertion of jurisdiction, thus denying pre-judicial enforcement review of EPA compliance orders.

In Sackett, the property owners added fill to a portion of their two-thirds acre residential lot. EPA determined that a portion of the fill area was regulated wetlands, and in an administrative order required the property owners to remove the fill and restore the wetlands or face maximum statutory penalties. In its brief, EPA stated that such penalties could, in theory, amount to $75,000 per day ($37,500 for the CWA violations themselves and $37,500 per day for violating the order).

The property owners sued, arguing that EPA had incorrectly classified their property as a wetland and, therefore, that the compliance order was arbitrary and capricious. The district court and the Ninth Circuit Court of Appeals dismissed the case for lack of jurisdiction on the basis that the CWA precluded pre-enforcement review of compliance orders. On the due process challenge, the lower courts held that the pre-enforcement review limitation did not violate the Due Process Clause because the landowners could apply for a wetlands fill permit from the U.S. Army Corps of Engineers or ignore the order and challenge EPA’s wetlands determination in defense of a civil enforcement action.

In reversing the lower courts’ dismissals, the Supreme Court ruled that the compliance order was a “final agency action” reviewable in court under the Administrative Procedure Act (APA) because it determined the landowners’ legal obligations and provided EPA’s final determination of the scope of its jurisdiction. The Court also rejected EPA’s argument that landowners should first be required to apply for and challenge the denial of a wetlands fill permit and found no evidence in the legislative history or statutory language of the CWA to preclude the APA presumption of judicial review.

The Court did not decide whether the property should, in fact, be classified as jurisdictional wetlands, nor whether EPA’s compliance order exceeded the agency’s authority.

After Sackett, it is possible that lower courts could extend the Court’s decision to afford judicial review of other “interim” decision making under the CWA made outside the context of an enforcement action. An important example of such “interim” decision making is EPA’s jurisdictional determination regarding the size and location of regulated wetlands and waters of the United States. It may now be possible to directly challenge jurisdictional determinations before initiation of permit enforcement actions in court. The reasoning could also be extended to other federal environmental statutes, such as the Clean Air Act, the Resource Conservation and Recovery Act, the Toxic Substances Control Act, and the Federal Insecticide, Fungicide, and Rodenticide Act.

EPA Issues New Construction General Permit

On February 16, 2012, EPA finalized a new general permit for construction-related stormwater discharges, imposing several new requirements on sites regulated under the EPA general permit. The EPA general permit covers parts of 11 states, Indian Country, and U.S. territories. It is likely that states with direct delegated authority will incorporate provisions of the EPA general permit into their own regulations, as well.

Changes within the new general permit include:

  • Effluent Limitation Guidelines: EPA has replaced former numeric turbidity limits, which were withdrawn in response to methodology challenges, with narrative Effluent Limitations Guidelines (ELG) for construction sites, without numeric limits. EPA currently is assessing data in advance of proposing new numeric turbidity limits. EPA’s narrative requirements include:

—Erosion and Sediment Controls: natural buffers must be maintained around all surface waters;

—Soil Stabilization is required immediately when land disturbance ceases if it will not resume within 14 days.

—Discharges from dewatering are prohibited unless managed by appropriate controls.

  • Water Quality-Based Effluent Limits: More stringent requirements are provided for discharges into sediment and nutrient-impaired waters, including a strict stabilization timeline and more frequent site inspection requirements.
  • Analysis of Impacts on Endangered Species and Historic Resources: For the first time, EPA is requiring permittees to assess the potential for stormwater pollution to adversely impact endangered species and historic resources.

EPA Releases List of Top Energy Star Cities

On April 11, 2012, EPA released its annual list of U.S. metropolitan areas with the most Energy Star certified buildings for 2011. The list of 25 cities is headed by Los Angeles, Washington, D.C., Atlanta, Chicago, San Francisco, New York, Houston, Dallas, Riverside, California, and Boston. EPA’s analysis indicates that, by the end of 2011, the nearly 16,500 Energy Star certified buildings across America helped save nearly $2.3 billion in annual utility bills and prevented greenhouse gas emissions equal to emissions from the annual energy use of more than 1.5 million homes. The 2011 list is available at http://energystar.gov/topcities.

EPA studies suggest that energy use in commercial buildings accounts for about 20% of U.S. greenhouse gas emissions. Commercial buildings that earn EPA’s Energy Star designation perform in the top 25% of similar buildings nationwide. EPA reports that Energy Star certified buildings average 35% less energy usage and carbon dioxide emissions than typical buildings.


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