Is Cap and Trade Really "Dead"?

By: Brandon Wells, Staff Member

Over the past year, a major hot button issue that has enraged and divided those in the coal industry and those working for environmental protection is the cap-and-trade legislation debate. Cap-and-Trade essentially involves setting the limits at which power plants and other polluters can send emissions into the air, and at the same time creating a trading market for those plants to trade emission limits.

Proponents of cap-and-trade see the bill as an economic solution to the issue of greenhouse gas emissions and pollutants, allowing trading to properly reflect demand and to influence participants to lower their greenhouse gas emissions. The bill will also force participants to invest more in pollution control, enabling them to sell unused credits.

The coal industry basically sees the bill as nothing more than another regulation being imposed on an industry that is already prone to an extreme amount of regulation. Cap-and-trade is a threat to the coal industry because it has the possibility to greatly lower the demand for coal, greatly affecting energy prices, especially in places where coal makes energy costs very low. Since plants must lower their pollution, they will be very cautious and may take less coal and take more costly, cleaner forms of energy. They may also invest more heavily in pollution control. Both of these costs will be passed on to the ultimate consumer, raising energy costs for all.

But as of just last month, Senator Lindsey Graham, a leader in getting cap-and-trade legislation passed has declared the bill "dead." Darren Samuelsohn, G

raham's Cap-And-Trade Pronouncement Reframes Hill Debate,

The New York Times, March 3, 2010

available at

http://www.nytimes.com/gwire/2010/03/03/03greenwire-grahams-cap-and-trade-pronouncement-reframes-h-19532.html

.

Senator Graham claims himself that his statements were only meant to stir debate, and they certainly have. Some are now worried that the United States is moving in a radical direction when it comes to climate change, and are moving away from the cap and trade legislation.

Id.

Others are not necessarily convinced that anything has changed and that cap and trade is cap and trade no matter what you call it.

Id.

It remains to be seen this coming year whether or not cap-and-trade or some other form of climate legislation will make it through Congress. But what do you think? Is Cap-and-trade really "dead?"

Legislature approached with differing slot machine plans for Horse Industry

By: Tara Hester, Staff Member

Disclaimer: The following post reflects the views of the author and not that necessarily of

KJEANRL

.

Governor Beshear's slot plan was not received well by the House or Senate. House Speaker Greg Stub filed a competing plan shortly after receiving Beshear's, which would spend the tax revenue from slots on a massive school construction program, instead of helping to erase the shortfall in the next two years budget, as Beshear had proposed. Janet Patton,

Beshear Slots Plan Gets Tepid Reception

, Lexington- Herald Leader Jan. 21, 2010, available at

http://www.kentucky.com/2010/01/21/1104634/beshear-slots-plan-gets-tepid.html

(last April 2, 2010). House Democrats have caucused to get support for Beshear's proposal, which would allow racetracks to add electronic slots under existing lottery laws.

Id.

However, although no official vote was taken, it appears that there was not much sentiment in favor of Beshear's bill, with one Representative calling the plan "delusional".

Id.

Stumbo said of his own competing bill "over a billion dollars worth of construction… best thing we could do for the budget is create jobs all over the state".

Id.

Stumbo said in his bill anticipates that 400-500 million in state tax revenues will be collected from slots over the next two years when all facilities are fully up and running.

Id.

Beshear said temporary slots could be up and running within six months, and projected 295 million in tax revenues for the first 18 months of slots.

Id.

Beshear's plan also takes into account the new casino's in Ohio, which is estimated to cut revenues at Turfway Park by 40%.

Id.

The horse industry seems to be very supportive of Beshear's and Stumbo's proposals, in a large part because the horse industry is facing significant competitive challenges.

Id.

However, while seemingly supporting both Beshear and Stumbo's bills, many in the horse industry are willing to talk with others proposing plans in an effort to help the struggling industry, and it seems that slots may be the best way to do this.

Id.

Statutory Interpretation and the Chevron Test in Citizens Coal Council v. Norton: A Problem of Administrative Law in the Context of Environmental Policy

Article By: Erin G. McKenzie; JNREL Vol. 18, No. 2

Abstract By: Bryan Henley, Staff Member

Passed in 1977, the Surface Mining Control and Reclamation Act (SMCRA) set forth a new federal regulation system on coal mining. As evidenced by its name, the SMCRA is designed to regulate surface mining, which it does by creating a federal agency, the Office of Surface Mining (OSM). This agency's role is to oversee state regulation of mining by assuring compliance with federal standards. These federal standards, also laid out in the SMCRA, proscribe "surface coal mining operations" in national parks and other similar areas. However, what happens if underground mining affects the surface? Subsistence is a term that describes some of the effects that underground mining can have of the surface land above the mine; but is it regulated by this statute? The answer is not as forthcoming as one might hope.

The SMRCA, through its original text and amendments, was possibly subject to two alternative interpretations. In Citizen's Coal Council v. Norton, the federal courts were forced to confront this conflict and determine if the language of the statute generally prohibited subsistence. Citizen's Coal Council v. Norton, 330 F.3d 478 (D.C. Cir. 2003). The Secretary of the Interior (and National Mining Assoc., an intervening defendant) interpreted the statute to indicate that the subsistence was not within the scope of the SMRCA , and thus underground mining was permissible in the protected areas where surface mining was not. Citizen's Coal Council, argued that this interpretation was arbitrary and capricious, therefore an inappropriate administrative action under the Administrative Procedures Act. Resolution depended upon the court's application of the Chevron test.

The Chevron test provides a framework for a court to analyze an administrative agency's interpretation of a statute. The test first requires the court to analyze if the statute is clear. If the statute is clear, then it is followed. If the statute is not clear, then the agency's interpretation is afforded deference and the court upholds that interpretation as long as it is reasonable. The district court granted summary judgment, finding that the statue was clear and denied underground mining in protected areas. The appellate court reversed, holding that the statute was unclear but that the agency's interpretation was reasonable. What should be a conceptually simple test was applied to directly opposite results by these courts. This highlights the difficultly of applying the Chevron test. In her article, Erin G. McKenzie analyzes the problems in applying this test and its possible effects such an inconsistency may have on the coal industry.

EPA Announces Settlements with Glass and Cement Makers

By: Derek Leslie, Staff Member

In late January, the EPA announced that Saint-Gobain Containers, Inc., a glass manufacturer, and Lafarge North America, Inc., a cement manufacturer, both agreed to multi-million dollar settlements. The settlements, which cover fifteen glass manufacturing plants and thirteen Portland cement manufacturing plants, represent the first major EPA action since announcing a renewed focus on improving compliance among industries that emit significant amounts of air pollution. Under the settlements, the companies are required to install new pollution control upgrades, accept enforceable emission limits, and pay substantial civil penalties.

In the complaint, filed concurrently with the settlement statement, the EPA alleged the companies had violated new source permit provisions under the Clean Air Act ("CAA"). The CAA requires major sources of air pollution to obtain a permit before modifying the facilities in a way that would significantly increase the emissions of pollutants. CAA permits limit these emissions for specific pollutants at a particular facility. As part of the settlement, Saint-Gobain has agreed to install pollution control equipment totaling an estimated $112 million in order to reduce emissions of NOx, SO2, and particulate matter (PM) by approximately 6,000 tons each year. Additionally, they have agreed to pay a $2.25 million civil penalty, split between the federal government, ten states, and two regulatory agencies. Similarly, Lafarge has agreed to pay a $5 million civil penalty, and spend an estimated $170 million installing and implementing control technologies to curb NOx emissions by 9,000 tons each year and SO2 by more than 26,000 tons per year at their cement plants.

These settlements are an example of more rigorous EPA oversight over CAA emissions, and indicate that the EPA will be enforcing the act more aggressively, pushing NSPS permitting beyond the paradigmatic regulated industries. Indeed, Ignacia Moreno, Assistant Attorney General for the Justice Department's Environment and Natural Resources Division in the announcement suggested, "Enforcing the Clean Air Act's new source review program is a priority, not just in the coal-fired power plant industry, but also in industries like cement and glass manufacturing that have been identified as major sources of pollution. Companies in these industries should strongly consider the benefits of these types of settlements as we intend to aggressively enforce compliance with the law."

Source: United States Announces Two Major Clean Air Act New Source Review Settlements at 28 Industrial Plants Nationwide, January 21, 2010, http://yosemite.epa.gov/opa/admpress.nsf/0/3CCB6EBF63B522AF852576B2006439B7

EPA & NAFTA: Tensions Rise When Trade With Mexico Threatens United States’ Environmental Regulations

Comment By: Melissa Logan, JNREL Vol. 19, No. 1

Abstract By: Alex Torres, Staff Member

This comment examines the nexus between the protectionist goals of the EPA and their interaction with other departments and agencies within the federal government. Specifically addressed are the regulations promulgated by the Department of Transportation (DOT) and Federal Motor Carrier Safety Administration (FMCSA), pursuant to Presidential order. The regulations in question provided for the permitting of Mexico-domiciled trucks to operate in the United States, pursuant to the goals of the North American Free Trade Agreement (NAFTA).

The Bus Regulatory Reform Act of 1982 had the practical effect of restricting the entering of Mexico-domiciled trucks into the United States, with the consequent effect of burdening trade between the United States and Mexico, in order to comply with the goals of NAFTA. However, in 2001 then President George W. Bush indicated his intent to modify the Bus Regulatory Reform Act. The lifting of the moratorium on Mexico-domiciled trucks was to take place upon the creation of pertinent safety regulations by the DOT and FMSCA.

In the landmark case Department of Transportation v. Public Citizen, 541 U.S. 752 (2004), the Supreme Court rejected the contention that the FMSCA was required to prepare an Environmental Impact Statement (EIS) that detailed the environmental impacts of their regulations. Specifically, the National Environmental Policy Act of 1969 requires that an EIS be prepared for "major Federal actions significantly affecting the . . . human environment." The trial court divided this consideration into two questions: causality and severity. While the trial court found both, the Supreme Court held that there was insufficient causal connection between the implementation of the regulations and the alleged environmental harm, notably the pulmonary danger resulting from increased diesel smog levels due to increased traffic.

The Court is quick to point out that a mere assertion of "but for" causality is insufficient to satisfy the causality requirement. Rather the Court looks to NEPA and applies the "rule of reason" to determine if there is a strong causal relationship between "the environmental result and the suspected cause." Ultimately, the Court sides with the arguments of the DOT, that the effect of increased traffic, and thus pollution, is the result of the Presidential order (and thus Congress in granting such power), not the creation of regulations defining the boundaries of safety.

Here the DOT and FMCSA are bound by law to create these safety regulations, and according to the Court, the regulations they do create have no causative relation to the environmental harm. Any connection between the harms and the regulations are correlative and incidental, but not causative. Thus the Court determines that there would be no "overall usefulness" in preparing an EIS as the FMSCA and DOT lacked the authority to utilize such findings in the discharge of its duties and alter the moratorium instituted by President Bush.

How Effective will the Proposed Plan to Facilitate Domestic Drilling for Offshore Oil Be?

By: Andrew Leung, Staff Member

Disclaimer: The following post reflects the views of the author and not necessarily that of KJEANRL.

Environmental preservationists and proponents of developmental interests have been engaged in an ongoing struggle to influence American policy to facilitate the adoption and spread of their respective agendas. Environmental preservationists often wish to proscribe or severely curtail any human activities with the potential to have a significant adverse impact on the environment. The environmentalist stance necessarily defaults to a position in opposition to intrusive, irreversible changes to our environment, such as the destructive harvesting of natural resources whose reserves take millions of years to regenerate.

Developmentalists, in the form of corporations peddling natural resources, are diametrically opposed to the environmentalists' stance. Their mentality to exploit natural resources as quickly as possible allows company coffers to be filled at the cost of environmental security. Each time a coal mine is opened or an oil well drilled the probability of toxic contamination rises greatly. Oil and coal magnates would argue that they serve an essential function to society, that they mobilize the world populace. While this is indisputably true, it is just another way for such companies to add to the pollution carelessly being released.

A recent plan to permit offshore prospecting and drilling for oil and natural gas announced by President Obama seems in direct contrast with an environmentalist agenda. The plan "would allow drilling along the Atlantic coastline, the eastern Gulf of Mexico and the north coast of Alaska." John M. Broder, Obama Oil Drilling Plan Draws Critics, New York Times, March 31, 2010, available athttp://www.nytimes.com/2010/04/01/science/earth/01energy.html?pagewanted=1.

While the President's proposal has enraged environmental interest groups, oil companies are pushing for more concessions. One would think that the 167 million acres of the Atlantic Ocean from which a moratorium on exploration has been lifted should suffice to appease oil companies. However, they push for more pristine environment to taint, specifically drilling rights to the pristine Bristol Bay in Alaska. It seems the oil companies have already decided the fate of the 130 million acres of Alaskan water to be made eligible for exploration and drilling.

One might argue that the entire oil debate is a matter of politics, as many environmentalists seem to be Democrats while Republicans draw support from coal and oil companies. However, this is not the case. In actuality, the dispute over permitting offshore drilling is a matter of numbers. President Obama concedes that Americans use approximately 20% of the world's oil supply while possessing only 2% of the world's reserves within its territorial limits. John M. Broder, Obama Oil Drilling Plan Draws Critics, New York Times, March 31, 2010, available athttp://www.nytimes.com/2010/04/01/science/earth/01energy.html?pagewanted=1. Even if the oil companies are permitted to run roughshod over environmental policy and harvest every drop of oil within the United States' jurisdiction – as seems to be their unstated goal – it would not be enough to satiate the American thirst.

Tribal Environmental Sovereignty: Culturally Appropriate Protection or Paternalism?

Article By: Anna Fleder and Darren J. Ranco, JNREL Vol. 19, No. 1

Abstract BY: Anthony Cash, Staff Member

According to popular conceptions in the United States, Native American culture is closely tied to the earth and, therefore, environmental awareness. Thus, it will come to most with little surprise that an examination of cases concerning Native Americans' tribal rights to regulate environmental issues within the Federal system would be illustrative of the larger issues confronting tribal sovereignty. By analyzing the issues and the direction of the court's ruling in Albuquerque v. Browner, 97 F.3d 415 (10th Cir. 1996), as compared to other recent decisions delineating the place of Native American tribes within the complex environmental regulatory scheme of the United States, one can see the possible solutions to problems posed by the tribal attempts at environmental regulation that affect non-tribal lands and people.

The decision in Browner, was made possible by the 1987 amendments to the Clean Water Act. These amendments allowed states to exercise a certain amount of authority in determining water quality standards and allowed for Native American tribes to be treated as states for certain purposes including the determination of water quality standards. In determining these standards for a five-mile long portion of the Rio Grande, the Pueblo of Isleta Indian Reservation adopted provisions more restrictive than New Mexico. The EPA's enforcement of these standards resulted in serious restrictions being impose on a waste water plant located near Albuquerque. The Tenth Circuit's decision in Browner ultimately sided with the Isleta Pueblo on every issue.

This was clearly a victory for the environment as it enabled tribes to regulate the amount of pollution entering waters which flowed through their lands, but Browner's impact on tribal sovereignty is not so clear. On one hand, Browner did allow tribal authorities to exert power over non-tribal peoples and land. On the other hand, Browner puts tribes in the position of becoming subservient to the Federal government in order to gain control over their own water quality standards. In essence, this puts the tribes in the position of semi-sovereign nations. Thus, tribal sovereignty is threatened at the same time that it is advance.

Browner, makes one thing very clear if tribes are to advance their interests and maintain cultural independence, then they must be willing to engage with the federal government in legal actions. But what legal actions and how to balance the need of tribal sovereignty against the need for cross-cultural dialogue and participation must be determined by the tribe involved on a case by case basis.

Evidentiary Uses for Environmental Agency Inspection Reports in Kentucky: The Dangers Posed by KRE 803(8)

Note By: Henry L. Stephens, Jr., JNREL Vol. 18, No. 2

Abstract By: Mattea Van Zee, Staff Member

The Natural Resources and Environmental Protection Cabinet (NREPC) was created by the Kentucky General Assembly with the aim to protect the natural resources of the Commonwealth. This Cabinet produces Inspection Reports (IRs) and Notices of Violations (NOVs) to communicate to those jurisdictions under its authority the statutory and regulatory provisions. These reports and notices are issued solely within the discretion of the NREPC based upon the nature of the violation. Prater v. Cabinet for Human Resources, 954 S.W.2d 954 (Ky. 1997) explains the seminal differences between KRE 803(6) and KRE 803(8). With this case as a starting ground, Kentucky courts are urged to harmonize these evidence rules to perform judicial scrutiny on the validity of opinions contained in documents such as those produced by NREPC.

The use of IRs and NOVs has the potential to be powerful and dangerous when admitted into evidence without the physical testimony of the author. This outcome is inevitable if either KRE 803(6) or KRE 803(8) is utilized in the admissibility of the documents. Prater indicated that in cases where public agency documents contain opinions and conclusions of agency inspectors, the documents would not be admitted in their entirety due to the insufficient qualifications that fail to meet the status of expert opinions. It remains unanswered as to whether IRs, NOVs, and other agency documents would be admissible via KRE 803(8) in third party litigation where the agency is not a party. Courts should take heed that this particular provision may serve as an open door to the admission of "expert" opinions conveyed by public officials who may have relied on third party hearsay statements. Instead, admissibility should be sought through FRE 803(6) to prevent this outcome.

Differences also arise in the qualification of these reports as factual findings v. factual allegations. As factual allegations, the statements would not be precluded under FRE 803(8). Additionally, with the lack of expert opinion, FRE 803(6) will not provide a route to admissibility. Those attempting to have this type of evidence excluded should not only argue that there is a lack of factual findings, but also that the statements fail to meet trustworthiness standards. For admissibility in third party actions where the agency is not a party, there still remains a viable option under FRE 803(8) for the admission of conclusions or opinions based on factual investigations if the requirement of trustworthiness requirement is met. Practitioners should assume that there will be a liberal interpretation of factual findings.

Daubert v. Merill Dow Pharmaceuticals, 113 S.Ct. 2786 (1993) provides a newer framework for courts to determine the admissibility of these so-called expert opinions. The Kentucky Supreme Court has adopted this framework in FRE 702 analysis. The trial judge is required to satisfy himself of the expertise, credentials, and rationality of the expert's conclusions. Courts should also consider the weigh of depriving the jury from weighing the credibility of the witness when the testimony comes from an agent's report.

Sierra Club v. EPA: Is Changing the American Rule for Attorneys’ Fees Unamerican? The Debate on Congressional Fee-Shifting Statutes

Comment By: Kelly L. Jones, JNREL Vol. 18, No. 2

Abstract By: Zach Greer, Staff Member

The traditional American rule for awarding attorneys' fees to litigants is that "the prevailing litigant is ordinarily not entitled to collect a reasonable attorneys' fee from the loser." Alyeska Pipeline Serv. Co. v. Wilderness Soc'y, 421 U.S. 240, 247 (1975). This rule's rationale is rooted in fairness, meaning that a defendant should not be financially responsible for a plaintiff's unsuccessful lawsuit. Ruckelshaus v. Sierra Club, 463 U.S. 680, 685 (1983). However, there are currently more than 150 congressional fee-shifting statutes (i.e., exceptions) that do not adhere to the American rule. Ruckelshaus, 463 U.S. at 684.

This comment focuses on environmental fee-shifting statutes (e.g., Clean Air Act) that permit courts to award attorneys' fees "whenever appropriate." Loggerhead Turtle v. Volusia County, 307 F.3d 1318, 1322-23 (11th Cir. 2002). More specifically, Ms. Jones analyzes a crucial United States Court of Appeals for the District of Columbia Circuit opinion, Sierra Club v. EPA, 322 F.3d 718 (D.C. Cir. 2003), and discusses this opinion's significance and its impact on congressional fee-shifting statutes and their viability.

In Sierra, the court held that the catalyst theory, "plaintiffs can recover attorneys' fees if they 'obtain, through settlement or otherwise, substantial relief prior to adjudication on the merits,'" still applied to the Clean Air Act ("CAA"). Sierra Club, 322 F.3d at 719. Guided by a prior United States Supreme Court case, the Sierra Court reasoned that "Congress found it necessary to explicitly state that the term appropriate 'extended' to suits that forced defendants to abandon illegal conduct, although without a formal court order." Sierra, 322 F.3d at 722. At least with regard to the CAA, the Sierra Court resurrected the catalyst theory and permitted courts to award attorneys' fees based upon fee-shifting statutes that contained the language "whenever appropriate." Id. at 719.

Through her analysis, Ms. Jones shows how practical and advantageous the catalyst theory for awarding attorneys' fees is and further argues that this theory, combined with citizen suits that are encouraged by these congressional fee-shifting statutes, "ensure environmental compliance."