Environmental Law.docx

Environmental Law I Economic and Non-Economic Perspectives a The economic perspective v Key concepts Tragedy of the Commons Garrett Hardin p vi Pollution under Coasian bargaining b Non-economic normative perspectives i Mark Sagoff Human-centered p ii Paul Taylor Nature-centered biocentric p II Risk Assessment and Risk Management a Policy Issues b Risk Assessment re cancer p c Risk Management p Lester Lave viii Cost-Benefit Valuing lives c Valuing non-life factors d Distribution of Environmental Risks p III Regulatory Tools a Command and control regulation p b Marketable permit schemes p - c Effluent fees pollution taxes p d Deposit-refund schemes p e Liability rules ex post p f Informational approaches IV Political Context for Environmental Regulation a Constitutional Limitations on Federal and State Power b Policy Arguments re Federal Regulation vs State Regulation Race to the bottom p Interjurisdictional externalities spillover Economies of scale Quasi-constitutional argument Public choice concerns Different regional preferences self-determination V The Clean Air Act a Criteria and hazardous pollutants b NAAQS p c SIPs State Implementation Plans d Federal Implementation Plans e New Source Performance Standards f Prevention of Significant Deterioration PSD p iv PSD permitting for new modified MEFs Major emitting facility MEF definition g Non-Attainment h New Source Review p ii New or modified source definition i Interstate provisions i Problem Upwind Pollution ----- Downwind States p ii Solutions Section tall stacks provision SIP Challenge via a D Section petition - Interstate pollution abatement SIP Call via k Alternative solutions for interstate air pollution iii Acid Deposition Marketable Permit Scheme p j NAAQS case study Lead p k Cases Cost-benefit under CAA l Mobile Sources p v Greenhouse Gas Regulation for Mobile Source CO Emissions m Hazardous air pollutants p VI The Clean Water Act ii Effluent limitations b The CWA v the CAA e Variances h Water Quality Standards i Total Maximum Daily Loads TMDLs p j Interstate Water Pollution VII HAZARDOUS SUBSTANCES RCRA and CERCLA a RCRA Resource Conservation and Recovery Act ex ante regulatory scheme b CERCLA Comprehensive Environmental Response Compensation and Liability ACT aka Superfund ex post regulatory scheme c Why have both regulatory schemes d PRPs Potentially Responsible parties a - g Extent of liability a h Joint and Several Liability i Divisibility of harms and contribution f j Defenses b k The Superfund n The Clean-Up Process p o Hamilton Viscusi article Land-Use Solutions p VIII The National Environmental Policy Act NEPA e C - Environmental Impact Statements EISs i Is the project a major federal action or proposal for legislation that significantly affects the human environment EIS required C Significant effect normally determined in reference to context and intensity CFR CEQ regulation To make a threshold determination of significance an agency must provide the public with notice and opportunity to comment Hanly v Kleindienst d Cir p IX The Endangered Species Act f Marketable Permit Scheme and Endangered Species Economic and Non-Economic Perspectives The economic perspective Normative goal of the economic perspective maximize social welfare Environmental regulations justified only if they increase welfare of benefitted parties more than they decrease welfare of burdened parties Goal isn t to reduce pollution to the lowest possible level eliminate adverse consequences of pollution etc but rather to maximize social welfare A reduction in pollution is socially advantageous only if it increases the welfare of the benefited parties more than it decreases the welfare of burdened parties Postive descriptive aspect divergence btwn polluter s private costs and the social costs imposed by his activity externalities e g steel producer s costs labor electricity raw materials etc compared to pollution If a polluter is not required to purchase goods like air clean water etc then others will bear the costs of his activities What are private costs Inputs labor iron energy etc What are social costs The pollution you emit into the air essentially you buy clean air This doesn t cost the polluter but it does cost someone Rational polluter will not self-regulate will produce through mix of inputs that maximizes profit External costs externalities Social object of regulation often described as internalizing this externality Attitudinal aspect Does not view pollution as morally wrong but rather as a natural result of the pursuit of self-interest by rational actors No moral valuation of pollution Not necessarily that economic perspective values free market over regulation Quarrel here is with the regulatory scheme that does not monetize this activity and internalize the externalities upon rational actors Why regulate Distributional adjustments Workplace context bargaining is possible w perfect information Correction of informational asymmetries Internalization of externalities Key concepts Tragedy of the Commons Garrett Hardin p Rational actors seek to maximize individual gain Increasing exploitation of a common resource has a concentrated benefit to the individual but only a diffuse cost Thus a rational actor will increase his exploitation Why don t they self-limit Risk of cheating Difficulty of enforcement How to enforce against participants in the agreement How to enforce against non-participants new-comers Problems of communication Three problems Free rider problem Strategic behavior Transaction costs Transaction costs may be higher than benefit one gets from agreement e g identifying interested parties negotiating with all involved parties and enforcing the agreement When would agreements be made thus where paradigmatic tragedy of the commons is less likely to occur When you can identify parties When you have repeat players When the set of parties is limited When the parties have social community relationships and have relatively-homogenous interests When you can price the good access to information When are resources not amenable to these types of agreements Ocean better example than Hardin s example how to enforce limits Solutions p and their problems Taxation How to valuate the tax How to enforce Where does the revenue go If unknown why would people support Privatization But there are resources that can t actually be privatized privatization incurs costs and not every resource may be sufficiently productive to justify that cost Also how is it allocated Will it be the most efficient distribution What if the animals are grazing animals that need the whole land Unitization cooperative approach problems include lots of infrastructure shirking free riding etc Government efforts to encourage cooperation e g enforcement mechanism Numerical constraints on the total number of animals allowed in the commons allocated by auction lottery queue first-come-first-serve merit or need or grandfathering Prisoner s Dilemma Two guilty prisoners Row and Column If neither confesses they will each get convicted of a minor crime w yr sentence If both confess each will get convicted of a more serious crime w yr sentence If one confesses and the other does not the confessor will get a yr sentence and the other will get a yr sentence Sentence Length No confession Column Confession Column No confession Row Confession Row If the prisoners act rationally both will confess even though each would be better off if neither confessed If Column assumes that Row has confessed Column will confess b c he will get less year Even if he assumes that Row has not confessed Column will still confess b c he will get less years So either way he individually is better off Application to Commons L maximum capacity re animals Cooperative strategy for herders is to each place L cattle on the land which will net u profit for each Non-cooperative over-grazing will result in u profit for each Non-cooperative under-grazing F grazes L and F grazes as much as he wants will net u loss for F and u profit for F Profit L Column unlimited Column L Row - unlimited Row - If the prisoners act rationally neither will limit even though each would be better off if they both limited If Column assumes that Row will not limit Column will not limit b c he will lose u Even if he assumes that Row will limit Column will still not limit b c he will get more unit of profit So either way he individually is better off Logic of Collective Action Public Goods Characteristics non-rival cannot be supplied to individual w o being supplied to a large number of others at the same time non-exclusive Examples on non-public goods A public park may be non-exclusive but may not be non-rival may be rival b c others in the park lessens my enjoyment A private country club is exclusive but not particularly rival Because individuals don t have incentives to create public goods such goods are most likely to suffer the tragedy of the commons and must be created by external interventions such as by the government Externalities Pollution under Coasian bargaining Reciprocity problem Coase views pollution not as harm caused by the factory to the laundry or harm caused by the confectioner to the doctor but as a reciprocal burden each imposes on the other Invariance claim It doesn t matter who the gov t gives the entitlement to or conversely who is liable the result will be the same Only invariance as to the level of pollution produced by the bargaining not who makes the payment Efficiency claim The result will be the efficient place maximizing social welfare Role of transaction costs These assumptions depend on no or sufficiently-low transaction costs Such costs are related to determining who needs information negotiating with all involved parties enforcing the agreement etc When transaction costs are considered a rearrangement of rights will occur theoretically when the increase in the value of production consequent upon the rearrangement the benefit is greater than the costs which would be involved in bringing it about i e net gain Example p If parties can bargain costlessly Units of emissions Factory s Pollution-Control Costs Laundry s Costs from Pollution increments of to get here from The lowest combined cost is at emissions If Laundry entitled to emissions the Factory would bargain up to emissions by paying for damages The payment would be more than the Laundry s cost to go up to emissions but less than which is minus already incurred by the Factory at emissions in return for the Laundry s agreement not to pursue its legal entitlement If Factory entitled to emissions the Laundry would bargain down to emissions more than but less than minus incurred at Distributional justice analysis If Laundry represents poor breathers social justice may favor the Factory But if the Laundry represents rich country clubbers and the Factory represents poor workers social justice could favor the Laundry Take-away Government needs to clearly define who is entitled needs to reduce transaction costs and needs to provide for enforcement Coase did not want the government to directly determine the optimum level via regulation tax etc Coase was anti-Peguvian which would impose a tax on the factor What was wrong with the Peguvian approach The gov t could get it wrong not knowing the costs affected parties have incentive to exaggerate or direct players and being biased by public choice problems or incentive to generate revenue by taxation Setting the tax at a nonoptimal level destroys the efficiency of bargaining Transition Economic perspectives are human-centered they only value animals and plants to the extent that such are valuable to humans Non-economic normative perspectives Mark Sagoff Human-centered p Government Interaction Economic regulation federal programs that set prices performance standards entry requirements schedules and so on in the railroad trucking securities telecommunications and other industries thought to be affected with a public interest involves the correction of market failures inefficiencies by independent agencies heads can only be removed for cause and focuses upon specific industries Economic regulation may correctly focus upon individuals as consumers Social regulation does not involve the correction of market failures involves executive agencies heads can be removed at the will of the President and focuses more broadly across the economy to achieve humane goals broad ethical and social objectives Social regulation should focus on individuals as citizens Problems Consider that different eras might view regulation as economic or social anti-trust laws were used in the s to keep small business around a social goal but now are used to keep prices low an economic goal price supports social We re a nation of farmers but it fits underneath the definition of economic How do we know that environmental regulation is social and not economic Historically the FCC statute was vague the FCC was charged to regulate in the public interest An economist would argue that environmental regulation seeks to reduce externalities Individual Roles As consumers people seek to maximize their self interests personal interests As citizens people seek to further other abstract goals public interests Example Sagoff s students as consumers would want a ski resort development in Mineral King Valley As citizens though the students would favor not developing the area Problems Sagoff is focusing only upon present use value of the land Option value involves the potential to use the resource later Existence value relates to resources that a person never uses but still assign some kind of value to In this case the students were placing a higher existence value upon the park than the use value of the ski resort Thus an economist would expect the result by looking at a broader range of values Sagoff s example of driving a dirty car but supporting government action against dirty cars relates to the free rider problem But this is an economically-rational decision His individual action will incur concentrated costs and minimal benefits but government action will incur distributed costs and greater benefits What level of pollution does Sagoff want to achieve Does he have a substantive standard that is more or less than the economic perspective Seemingly more protective but a deliberative political process could for example value jobs and corresponding pollution over pristine air Takeaway Deliberation is good Paul Taylor Nature-centered biocentric p Principles Self-defense can use deadly force if life is threatened and no alternative Proportionality basic interests trump non-basic interests Minimal harm if neither life nor basic interests at stake but still choose to harm another do so with goal of minimal harm Distributive justice if basic interests in conflict split the cost Restitutive justice if harm done make restitution Chart Non-human life at stake Non-human basic interests at stake Non-human non-basic interests at stake Human life at stake H a self-defense H a H a Human basic interests at stake H nH d H b proportionality Human non-basic interests at stake nH b proportionality nH b proportionality or at least c minimal harm Why minimal harm Cynical response political hedging because people will not be prepared to abide by proportionality Non-cynical response On a sliding scale higher moral agents desires trump lesser moral agents needs Singer Capacity to suffer p n Concerned about eating He would probably not support building a library over a wetland Not a sliding scale a being is either on one side of the line or not Not as protective of plants as Taylor seems to be Life Non-life paradox - Christopher Stone p n Humans sometimes value non-life-bearing landscapes over life-bearing lands Where does that preference come from It seems to contradict the life non-life dividing line that is often argued for Generally the non-economic perspective do not articulate substantive standards while the economic perspectives do which is why they are privileged over non-economic perspectives Such standards are necessary to affect practical application Risk Assessment and Risk Management Policy Issues Should RA be separate from RM Per William Ruckelshaus p this would decrease the political pressure placed upon non-political actors including scientists who engage in risk assessment Political decisions should not affect the risk assessment stage In order to effect this generic policies should be adopted that constrain individual assessor s discretion Problem Since scientists report to leaders who are appointed by politicians how will the scientists be insulated from political influence If Congress or another agency determines that a carcinogen must be regulated in a certain way then interest groups will seek to influence the risk assessment process Consider where one study indicates a substance is a carcinogen but another does not Who should decide whether to label it a carcinogen With a generic policy assessors may not be able to indicate differing weights of different studies and good decision making may be hampered How to resolve uncertainties in the risk assessment process see c and d above and ii below Lay perception vs expert perception Stephen Breyer p points out cognitive issues that affect lay perceptions of risk Perceived risks newer technologies flying in an airplane compared to riding in a car catastrophic events Should regulation address expert perceptions or lay perceptions Consider that the mis perceptions themselves may cause adverse health effects Studies have shown that the gov t tends to address areas of public concern more so than expert concern Risk Assessment re cancer p Hazard identification determination of whether an agent has adverse health effects Epidemiological population studies Attempt to establish associations between human exposure to a particular agent and the frequency of cancer among the human population Expensive and difficult method because sample sizes and data sets are inadequate such studies lack adequate control groups Cancer has a long latency period and exposure data is often complicated uncertain and poorly documented Most reliable studies involve signature carcinogens which cause unique and unusual types of tumors or very potent carcinogens as with catastrophic events Toxicological animal studies Animals are used because of their anatomical comparability to humans Exposed to high doses in order to obtain results before the animals die of natural causes Controversy as to applicability to low dose exposure in humans Start off with a maximum tolerated dose MTD and subsequent doses are fractions of that - MTD MTD Dose-response evaluation determination of how the likelihood of adverse health consequences is related to the level of agent exposure A response threshold is the dose below which no adverse effect occurs The population threshold represents the individual threshold of the most sensitive person in the population Non-carcinogens assumption of threshold level Goal of studies is often to find what that level is Work in bands so you start with a high concentration and work your way down LOAEL Lowest observable adverse effect level NOAEL No observable adverse effect level Threshold is somewhere between these NOAEL used as the threshold if you want a no-risk standard you add a margin of safety Carcinogens No-threshold model conservative protective decision assumption that any exposure risk Although low dosages are not tested due to drawbacks of animal research their corresponding level of health effects are extrapolated from the curve at high doses Least-squares regression to extend the line left Assumption that this is linear b c a linear curve is likely more protective than the actual curve though opinion is not unanimous How do we deal with margins of safety in these contexts confidence level as upper bound So the linear line is the MLE maximum likely estimate but you don t use this to regulate You use the upper confidence limit UCL which is typically but could be higher Policy decisions whether or not something will be treated as a threshold contaminant whether or not to use linear modeling how conservative to be with confidence levels and margins of safety Problems Risk assessors are inconsistent Risk managers must make decisions about how best to expend resources and multiplication of conservative assumptions makes the calculation of risk very imprecise Exposure assessment who is actually subject to what concentrations Aggregate population risk incidence For different exposure levels how many people are going to be affected Maximum Individual Risk MIR The person most affected by an increase in level of this compound whether due to their exposure level or their sensitivity If sensitivity is uniform which the EPA assumes due to lack of data then MIR Maximum Individual Exposure MIE Risk characterization final determination of the xx risk of death incremental risk incremental life risk of cancer due to a particular agent at a particular level of exposure Case The Benzene Case Industrial Un Dept AFL-CIO v Am Petroleum Inst U S p Facts OSHA lowered allowed limit of benzene in the workplace from ppm to ppm There was some evidence that risk existed between and ppm though it wasn t systematic OSHA shifted burden to industry and required them to prove that anything about was safe OSHA has a generic policy where carcinogens are considered no-threshold substances where no safe exposure level can be determined and the substances must be regulated at the lowest technologically-feasible level that will not cripple the industry Went to ppm because they believed that was the lowest feasible solution that would not destroy the industry Statute OSH Act occupational safety and health standard means a standard which requires conditions reasonably necessary or appropriate to provide safe or healthful employment and places of employment b standards dealing with toxic materials or harmful physical agents shall set the standard which most adequately assures to the extent feasible on the basis of the best available evidence that no employee will suffer material impairment of health Disposition Remanded back to OSHA Reasoning Stevens plurality OSHA provided no indication that it made a finding based upon scientific evidence that an exposure level above ppm posed a significant risk no dose-response evaluation Finding a significant risk is a threshold determination which needs to be made in order to proceed to application of b Notes The plurality relied upon but the dissent relied upon b Section is a definitional section and more generic while b is a substantive standard related to the particular type of substance at issue Rehnquist concurred holding the statute unconstitutional on non-delegation grounds If this position were taken seriously most environmental regulation would be unconstitutional No precedential effect since plurality not majority However cases after Benzene were able to survive Court scrutiny because OSHA quantified the risk with a dose-response evaluation For example a similar regulation was upheld in Pub Citizen Health Research Group v Tyson F d D C Cir p because OSHA used a dose-response curve to make its decision Although the Court required a seemingly-scientific rationale for Agency action as discussed above many policy decisions affect the risk assessment Risk Management p Lester Lave Market regulation e g setting minimum safety standards When market inefficiencies or imperfections e g incomplete information transaction costs externalities exist the government regulates in order to address the inefficiencies -- e g by taxing a relatively risky product so that the price accounts for the risks Market regulation will only work with voluntary transactions Example If the gov t sets minimum safety standards the cost of all automobiles increases and may increase beyond the cost that a poor person would negotiate in the absence of such standards Ignoring externalities such as danger to others or medical costs borne by others the gov t has less reason to regulate b c individuals presumably internalize their personal risks No-Risk Framework Example the Delaney Clause of the Food Drug and Cosmetic Act requires exposure to no additional or unnecessary risk Not actually implemented No-risk frameworks have evolved into negligible risk frameworks Technology-based standards Typically best available technology BAT standard with costs taken into account so as not to bankrupt an industry Benefit does not require a formal cost-benefit calculus Actually involves many implicit policy decisions due to uncertainty of economic effects and other factors In practice standards are not frequently updated due to bureaucratic inertia Popular view technology-based standards will be more stringent than standards set by cost-benefit analysis Revesz disagrees b c cba could lead to the conclusion that an industry is not worth its risks Furthermore an implicit cba occurs under the tbs framework regulators rarely impose standards that will come close to endangering the existence an industry b c of the uncertainty as to what cost level would be so endangering Risk-risk Direct Compare i risks from not using a tool vs ii risks that will result from using the tool e g a food additive that prevents botulism but is carcinogenic to consumers Countervailing benefits e g reduction of heart disease risk by taking aspirin for headaches are not accounted for even though countervailing risks are Indirect Consider also the attenuated risks associated with using an agent e g workplace hazards caused by production of a food additive reduction of risk to consumers leads to an increased risk to workers Countervailing risks may have been internalized e g by negotiation of hazard pay a risk premium which will affect how a regulatory scheme should address the risks Drawback Not truly a risk management framework b c does not provide guidance for how to decide whether or not to regulate only how to choose between different regulatory proposals Risk-benefit Allows for consideration of nonhealth effects Not clear how to determine value for lives or other risks Even though factors aren t valued explicitly decision makers will determine value implicitly and less transparently Cost-effectiveness Getting the most bang out of every buck Differs from cost-benefit b c cost-effectiveness just looks for least costly method Not truly a risk-management framework b c it does not answer the question of what is the optimal level of regulation Regulatory budget Sets a maximum economic effect for the economy as a whole with the goal of saving as many lives as possible given the limit Not truly a risk-management framework b c it may not allow an agency to determine the optimal level of regulation Cost-Benefit Attempts to quantify all costs and benefits such that they can be compared and net benefits can be maximized Valuing lives VSL value of statistical life really means the value of reducing one s chance of death Problem Does not account for future lives See p Methods of valuation Stated preference contingent valuation methodology CVM How much would you pay to reduce your risk of death Revealed preference e g wage differentials in risky workplaces What is the risk premium paid to endure certain risks attempting to control for other relevant factors not generally studies of carcinogenic risk due to difficulty of obtaining data b c people move around however environmental regulation focuses upon carcinogenic risk When workers have no real choice they are less likely to demand a wage premium People are less risk-averse than the general population so companies are less likely to need as much of a wage premium Valuing non-life factors Use values Option values potential for future use Existence values valuing a resource s existence even if no plan to use methodology needs to present consequences in order to be accurate Application of CBA EPA s temporary suspension of the use of certain pesticides under FIFRA relied upon a reasonable cost-benefit analysis as required by the statute EDF v EPA CBA under FIFRA p Conversely EPA s prohibition of asbestos under TSCA was not based upon a reasonable cost-benefit approach as required by statute Corrosion Proof Fittings v EPA asbestos CBA p Distribution of Environmental Risks p Distributional Issues Many individual regulations limit lifetime individual exposure but nothing limits the aggregate exposure combined effects of different agents Communities of color and poor are affected disproportionately by environmental risks more susceptible to health effects and more likely to be exposed to harms see p re Superfund But communities may choose certain risks see discussion p re Shintech Counter What about misperceptions of risk disproportionate political power or paternalistic concerns e g not allowing poor communities to accept inadequate or even any compensation in exchange for health risks Even a fair initial distribution could become unfair over time in the absence of a comprehensive wealth redistribution plan Market Dynamics Theory Vicki Been p Siting a LULU locally-undesirable land use can influence wealthier individuals to move out of a community and poorer individuals to move in to a community due to reduced value and cheaper options Studies have not addressed which came first the siting of the LULU or the people of color and the poor If the siting remedies would have to address housing discrimination poverty and free market dynamics How to determine what is a fair distribution p and p Pattern of distribution e g proportional burdens progressive burdens proportional probability of burdens or proportional compensation Perhaps concentration of LULUs is more optimal than distribution though and a proportional distribution would decrease overall welfare Cost-internalization Generators should pay full social cost How could this be implemented Process e g if procedure agreed upon ex ante then fair regardless of outcome But how to ensure process is fair and not influenced by disparate wealth Misperception that cba does not take into account distributional concerns although doing so is an operational difficulty Addressing distributional disparities through wealth distribution Many arguments re environmental distribution ultimately involve disproportionate wealth distribution Solution progressive taxation Critique p Wealth may not be the only disparity Just b c wealth life expectancy correlated not necessarily a causal link Legal Theories for Addressing Disproportionate Risks Equal Protection Clause of the U S Constitution p Elements persons similarly situated are treated differently and the defendants intended to discriminate Arlington Heights -factor test p Problem Discriminatory intent is nearly impossible to prove as demonstrated in E Bibb Twiggs Neighborhood Ass n v Macon-Bibb County Planning Zoning Comm n M D Ga p Civil Rights Act Title VI p Prohibits discrimination on the grounds of race color and national origin by any program or activity receiving Federal financial assistance Only enforceable by the EPA b c Supreme Court found no private right of action Alexander v Sandoval Civil Rights Act no private right p Takeaway The EPA is the important actor not Congress or the courts Executive Order p Not really had much effect especially compared to the cost-benefit EO Possible explanation The cost-benefit EO established an enforcement mechanism through OMB and OIRA EO applies to every agency and does not have a mechanism for enforcement State enforcement agencies and legislation Regulatory Tools Command and control regulation p Typically takes form of BAT best-available technology standards Set stricter limits on more prosperous industries those with less competition or fewer substitutes Best available technology best you can get w o destroying the industry may destroy individual firms BAT standards generally Equipment design standards Require a specific technology Performance standards Determine BAT and level of emissions if BAT were used but a company can use whatever method it wants to achieve the emissions level the usual statutory standard except where emissions cannot practically be measured Firms prefer Performance standards b c They provide more options A company can use BAT or can use something else including changing its production process Cost-benefit analysis may over-estimate cost of compliance due to this phenomenon of production-process change Companies don t have to wait for new technologies to be approved to use them Regulators prefer Design standards b c easier to set easier to enforce BAT standards are generally set w reference to input output so you actually have to be measuring a proportion Regulator does not measure every day Or performance standards b c design standards may require testing of emissions anyway to ensure proper implementation and use and performance standards encourage companies to be creative Comparing BAT regulation to Market Permit and Tax Scheme See Ackerman Stewart p No incentive to reduce pollution once the BAT standard is met Not only no incentive for firm to use it no incentive to do the R D to use more cost-effective measures Market permits solve this problem by encouraging companies to reduce pollution as long as doing so is cheaper than buying a permit Taxes solve this problem by encouraging companies to reduce pollution as long as doing so is cheaper than paying the tax Misallocation of pollution control burden ignoring variations among plants and industries thus wasting money it does not minimize aggregate costs by equalizing marginal costs the cost to reduce by one more unit of pollution Market permits solve this problem by allowing companies to pay the same price for the last unit of pollution the permit amount Taxes solve this problem by allowing companies to pay the same price for the last unit of pollution the tax amount Penalize successful and new products and processes New sources are not at risk of shutdown because they re economically healthier must run a lengthy gauntlet of approval processes which discourage investment place stricter reqs on successful businesses because they can bear them Provide a lot of points of legal vulnerability making it often more cost-effective to litigate than to comply Doesn t allow an agency to set intelligent regulatory priorities Marketable permit schemes p - How they work The regulator s role Defines the markets sets the aggregate pollution level Allocates initial permits Registers transactions Allocation Initial auction What s good about this Doesn t favor existing over future firms Most economists favor this b c it will probably have lower transaction costs Provides revenue Problem As with tax scheme what to do with the money Grandfather existing polluters but allow for trading Hurts later entrants Barrier to entry More politically palatable industry supports regulation b c it obtains a tradable property right Most common method b c of ii Major problem Creates incentive to pollute prior to allocation although this could be addressed by using historical levels from e g years ago Coasian analysis Doesn t matter where the entitlement is set if transaction costs are low The first unit sold what would the firm think about when deciding to sell a permit Cost of reducing pollution one unit Buyer Cost of reducing pollution versus cost of one-unit permit When will the trades end When the cost of reducing one unit more exceeds the cost you could get for the permit You re down to the more expensive ways of doing it Decreasing marginal utility w regard to pollution reduction Once you re at equilibrium amongst existing players what happens to change the market New producers enter Someone wants to increase output Deteriorating equipment Benefits of marketable permit schemes Level of pollution is set at a particular level the optimal level Incentive to innovate So long as the cost of developing new technology is less than the price of a permit it s worth doing It s almost like you get into the pollution-reduction industry Eliminate the information-processing tasks agencies face Wouldn t have to determine what the BAT was the business would do that Free up financial incentives and would raise money when permits are sold at auction Do away with failure to enforce Companies expectation of enforcement would influence the price that they pay for permits failure to enforce would leave to lower auction revenue therefore it would become a priority for the gov t to address Disadvantages of marketable permits What happens if non-industry players buy permits to retire them Input monopolies FTC gets involved Antitrust fiesta Not plausible that it would reach a level where the impact on the market would be significant Hot spots Example nine sources in a jurisdiction ambient standards each polluting ten units total units Then you go to marketable permits and they all get permits Trading occurs one firm has permits the others each have one Are we better off or worse off Costs have been minimized But it depends on the curve of the pollutant What if it s no-threshold If it s convex we re worse off because every unit added at the top dramatically increases harm If it s concave then the rise in harm comes early In a BAT w out ambient standards there could be hotspots but the claim is that marketable permit schemes exacerbate the problem So weakness in Ackerman Stewart argument is that it doesn t account for the disparate environmental impacts of this they want to do away with ambient effects as well Remedies for the hot spot problem Ambient standard overlay So trading area would have to be larger than attainment area Govt uses mathematical modeling to figure out impacts everywhere else of pollution at one point You could do this through a website Size of markets Market in units of environmental degradation p n Problem is that you have an impact at an infinite number of points Plus you have an impact in multiple markets This only matters for local pollutants where the effect is concentrated in the area where the pollutant is emitted Regional global pollutants different The moral dynamic W marketable permit schemes you can pollute a lot more you don t have to reduce at all so long as you can buy permits Are marketable permit schemes thus a morally undesirable license to pollute this is only an issue if you treat all pollution as a moral ill If the only bad pollution is overpollution then you don t have this problem Should environmental groups be able to buy and retire marketable permits p n Depends upon how the level of pollution allowed was set If agency tries to figure out the optimal level of pollution then allowing people to take them out of circulation damages the social calculus If someone tried to buy up all of them the danger is that the government would just issue more Risk to national productivity Effluent fees pollution taxes p Tax assessed per unit of pollution Has to be set at optimum level in order to achieve desired result optimal level of pollution Continuing inflation will erode costs and prices will have to be reset which is difficult Markets v taxes see Baumol Oates p If you want to hit a specific performance target then marketable permits can get you there easily But while the government may make guesses about the relationship between taxes and level of pollution you can t be sure with effluent fees Social welfare might not be maximized if the proper number of permits are not allocated polluters will pay too much b c the cost of compliance was underestimated or if the tax is not set at the right amount polluters will pay the tax and pollute more than they should if the tax is too low Taxes control price but not quantity permits control quantity but not price When a tax might be preferable When there are high transaction costs in trading permits In tax system you have to measure emissions create collection system etc Remember though that you ll have to measure emissions no matter what Experience w running tax systems hasn t been that great When you want to generate money for the government Do we want this to happen Presumably taxes would be lowered elsewhere Do you prefer the gov t to tax to internalize externalities as opposed to some other way You could do this by initial auction as well When the industry is cost-sensitive b c taxes will impose a known cost rather than unpredictable costs of a permit scheme When a market permit scheme might be preferable to a tax scheme When regulating a threshold pollutant If an industry is struggling In order to get support from existing firms you re going to have to do this in a way that doesn t impose initial costs When a tax scheme might generate large amounts of revenue which would create political difficulties in how to use the When geographic flexibility is desired Deposit-refund schemes p Combines tax at purchase and subsidy at return proper disposal Good in cases when it s very hard to enforce a disposal requirement like for batteries Why not just have a tax In the case of batteries a deposit-refund scheme can ensure that you re paying for proper disposal rather than amelioration You don t want to create a disincentive for using the battery but rather for disposing of it incorrectly Even if use is reduced disposal may still be inappropriate So why don t we have one for batteries Revesz believes the political will does not exist How do you set the optimal level of a deposit-refund scheme Issue of what upfront investment a purchaser can afford Poor and large families may be hardest hit Also concern for theft and counterfeiting exist How easy is it to return the item Think about an elderly woman in a th floor walkup Liability rules ex post p Incentive to reduce risk based on likely liability A negligence standard only transmits proper incentives if it s set at the right level Problem not all harm will produce a lawsuit Company may be out of business or insolvent If companies know they may become insolvent they will not be incentivized to internalize the externalities but companies don t usually plan to be insolvent On the other hand companies may declare dividends and put money in the hands of the shareholders in order to reduce money available for payment Law cannot get at this though it can get through to parent companies by piercing the veil Law in the US does not reach shareholders Harm doesn t show up for a long time no signature disease collective action issues causation problem etc Causation difficulties Probabilistic liability proportional causation above a certain threshold Market-share liability Timing statutes of limitations and how they are construed Should statute begin to run at the time of the discovery of the harm more modern rule or at the time of exposure traditional rule Poor incentives for litigation free-rider-type problem - high costs low individual benefits Addressed by class action suits Choosing between regulatory vs liability schemes p Information Private actors have better information than regulatory authorities about an activity s risk liability preferable Judgment-proof problem Actors causing risk are likely to have insufficient assets regulatory Effectiveness of remedy Low probability of lawsuits despite harm regulatory Consider administrative costs likely to favor liability p Addressing solvency issues You may be able to pierce their corporate veil if they re organized this way but they usually aren t However not all companies are going to be willing to operate under the structural constraints necessary to protect themselves from liability in this way Signaling long-term presence not everyone s willing to go bankrupt Insurance You can mandate insurance or you can just depend on the market although the market may not exist Bond This is requiring in some circumstances for hazardous waste companies Informational approaches What is the best context for using informational approaches as opposed to something else When the employee user consumer would be able to avoid the harm with proper warning When the consumer would be able to rationally choose among different levels of risk because the increased risk would be worthwhile to them in certain circumstances Honor people s risk preferences within a certain range Problem is that people ignore warnings Construction of appropriate warnings Political Context for Environmental Regulation Constitutional Limitations on Federal and State Power Limitations on Federal Power The commerce clause U S Const art I power t o regulate Commerce among the several States is very broad but has outer limits United States v Lopez U S p The Tenth Amendment reserves nonenumerated powers for the states The powers not delegated to the United States by the Constitution nor prohibited by it to the States are reserved to the States respectively or to the people As a result Congress can encourage states to regulate a particular field or a particular way but cannot require the states to do so New York v United States federal objective state means U S p Facts Congress sought to encourage states to take care of their low-level radioactive waste via i economic incentives ii access incentives and iii a take title provision The State of N Y sought declaratory judgment that the statute violated the th Am The suit was dismissed in favor of the federal gov t Affirmed on appeal but partially reversed by the Supreme Court Holding The take title provision violates the th Amendment b c it requires states to regulate in one of two particular ways which individually would be improper Reasoning Because space in radioactive waste disposal facilities is frequently sold by residents of one state to residents of another the Commerce Clause allows regulation of the interstate market in waste disposal Notes The federal gov t has figured out how to avoid the problem of NY v US by allowing states a choice of regulating or not Even though the federal gov t will step in in some vague unspecified way if states do not regulate this is still a choice that states can make The Eleventh Amendment grants sovereign immunity to the states The Judicial power of the United States shall not be construed to extend to any suit in law or equity commenced or prosecuted against one of the United States by Citizens of another State or by Citizens or Subjects of any Foreign State The Supreme Court has interpreted this to prevent federal suits by citizens of other states as well as citizens of the state itself The federal gov t can waive this immunity but must do so pursuant to the Fourteenth Amendment due process Thus Congress is limited in its power to allow private suits against the states According to Revesz while there are restraints on federal power the restraints are relatively limited For this reason most of the discussion about federal vs state regulation comes down to policy questions Limitations on State Power The Supremacy Clause A federal statute e g the Clean Air Act can explicitly state that it preempts state law Field occupation implicit preemption Conflict preemption A state regulation cannot conflict with federal law The Dormant Commerce Clause States cannot burden out-of-state competition Thus states cannot reserve hazardous waste sites for only in-state waste Policy Arguments re Federal Regulation vs State Regulation In favor of Federal Regulation Race to the bottom p If states could collude they would implement relatively stringent standards from industry to achieve maximum social welfare re environment and health Our legal system does not allow such collusion b c the benefits presumably are outweighed by the social costs to consumers Generally it s not a good idea to change an entire market for a localized inefficiency As a result a prisoner s dilemma situation occurs and states implement suboptimally lax environmental standards in order to compete for industry dropping standards until an equilibrium is reached where sufficient benefits are no longer achieved to justify the cost Revesz argues that despite theoretical models that attempt to demonstrate otherwise none support the claim that without federal intervention states will not race to the bottom over environmental standards Furthermore even if the federal government mandates environmental standards states could compete in other areas that decrease social welfare Thus the only solution would be to federalize all standards labor tax etc which is not a palatable solution A lot of arguments about the race to the bottom center on other issues interjurisdictional competition for example in the end and the race to the bottom issue doesn t really add anything In the end however competition will not necessarily lead to suboptimally lax regulation It depends on where the bargaining power is States can and do regulate too strictly NIMBYism Interjurisdictional externalities spillover Jurisidictions don t care about the harms imposed upon other jurisdictions They gain economic benefits from having the particular industry in their jurisdictions and they only see some of the costs How strong is this argument Jurisdictions have been found to play around with pollution in order to try to send the impact out of their borders e g increased stack height Example of clean air regulation we have two types of standards ambient and emissions If use ambient standards you re probably going to need federal standards because it s hard to prevent other jurisdictions from violating yours You need some sort of allocation mechanism for figuring out who can meet them more cheaply if you want to use caps Emissions standards because these don t limit aggregate pollution you may still have suboptimal transboundary effects Interjurisdictional spillover is frequently given as a rationale for federal regulation but the existing federal mechanisms don t actually do a lot to take care of this Unless it s actually effective can it really be a good reason for federal regulation Economies of scale Uniformity of standards National standards lead to economies of scale in production processes because companies do not have to tailor their processes to meet many different state standards But it s not clear that for items such as power plants which are not mass-produced that this argument applies Economize resources Scientific research e g is a substance a carcinogen can be done on the national level and not be duplicated in several jurisdictions Notice-and-comment rulemaking can occur in a centralized manner rather than in several different jurisidictions Counter Competition and smaller operations have benefits as well High levels of centralization are not always more economical Information could still be centralized while other functions are given to states Quasi-constitutional argument As citizens of the United States you have a right to a certain level of environmental quality that your state can t take away from you Analogous to your right to vote Public choice concerns Environmental groups are more easily represented at the national level due to the high costs of information and of passing state-by-state laws Industry groups also operate at the national level If you see environmental regulation as a product of a clash between environmental groups and industrial groups why do we actually get environmental regulation at all What about free-rider problems You have heterogenous interests in the environmental community you have a big aggregation etc However environmental groups may have great economies of scale in organization It would be hard to participate in legislative process in the fifty states but they might be able to get the resources together in one situation What about money Maybe you need a certain threshold of money to be effective and once you re past that you re not that much more effective In some cases this holds true and in others it doesn t The more you can contribute to campaigns the better you likely are Arguments against federal regulation and in favor of state regulation Different regional preferences self-determination Per Revesz research regional differences re environmental issues outweigh party differences But federal regulation could account for this Counter access to information is more difficult for the federal government and political pressure is high not to favor certain areas Differences in cost benefits Based upon regional geography climate demographics etc it may be very expensive for a particular state to reduce pollution to the level mandated by a national standard However federal regulation could account for this Counter See above The Clean Air Act Criteria and hazardous pollutants Criteria pollutants regulated under - p V- Pollutants that reasonably may be anticipated to endanger public health or welfare Are present in the air due to numerous or diverse mobile or stationary sources For which air quality criteria had not been issued before enactment of the CAA but for which the Administrator plans to issue criteria Example B c EPA made findings of adverse health effects of lead must list lead as criteria pollutant under NRDC v Train lead case d p Once listed Administrator has months to issue criteria Criteria are technical documents that identify the public health and welfare effects of the pollutant p II- When CAA passed criteria had been promulgated for sulfur oxides PM CO hydrocarbons and ozone Nitrogen oxides added in Pb after citizen suit in No additional criteria pollutants have been added Hazardous pollutants under b Initial list of hazardous pollutants Can be revised but you can t add criteria pollutants to this list NAAQS p Administrator to issue primary and secondary NAAQS simultaneously w issuance of air quality criteria Administrator to propose NAAQS for pollutants for which air quality criteria were issued before CAA Primary NAAQS set at a level which in the judgment of the Administrator and based on the air quality criteria is requisite to protect the public health and allows an adequate margin of safety b Cost of compliance is not to be taken into account b c the statute does not indicate as such Whitman v Am Trucking Ass ns U S p see Cases D C Circuit had already held that the EPA does not have to consider feasibility Lead Induss Ass n see Cases Breyer concurrence explained on p The statute does not require elimination of all risk Thus cost is implicitly allowed to be a consideration in setting the NAAQS Notes Breyer s health-health tradeoff argument by making this more expensive you re decreasing collective health But health-wealth correlation does not prove causation And how is the cost distributed If most of the cost is borne by very wealthy people it s not going to impair their health How regressive is your tax system That s the question Because CB can t legally be considered there is a lack of transparency in decision-making Notice and comment can t really work if you can t see the agency s full basis for its policy Better to have explicit CBA Secondary NAAQS set at a level which in the judgment of the Administrator and based on the air quality criteria is requisite to protect the public welfare from any known or anticipated adverse effects associated with the presence of such air pollutant in the ambient air b Welfare effects on welfare are effects on soils water crops vegetation weather visibility climate property hazards to transportation effects on economic values and personal comfort and well-being h general provisions pV- Key distinction is between public health and public welfare Welfare covers a wider range of things including economic stuff basically everything except human health which falls into public health Primary stds are not necessarily more stringent than secondary See chart on p which shows for SO a more stringent secondary std Basically notice-and-comment rulemaking SIPs State Implementation Plans Generally an experiment in cooperative federalism the federal government provided a goal for air quality and the state retained discretion to achieve that goal in a manner consistent with state and local priorities p Required elements of a SIP a Coherent plan for meeting the NAAQS and PSD or nonattainment standards through enforceable emissions limitations Approval of a SIP k Administrator must approve the plan if it meets the requirements if not a disapproval of a part counts as a disapproval of the entire plan Measures exist for conditional approval which converts into disapproval if the conditions aren t met If the Administrator finds that a SIP is inadequate to attain or maintain the NAAQS then she can issue a SIP call which apprises the state of the deficiency and requires a SIP revision State has months k EPA cannot reject a SIP due to technological or economic infeasibility Union Electric Co v EPA U S p P s statutory argument as expeditiously as practicable means you have to consider feasibility Court says that the phrase just means that you achieve the goal faster than three years if doing so is possible States are allowed to establish state regulations that are more stringent than federal NAAQS per but the SIPs must comply with the NAAQS Id Court Look at states are allowed to set stricter standards if they want to Why not let them do it through the SIP Why is in here Federalism If states want to have stricter standards they ought to be allowed to it doesn t harm other states in the way that having a weaker standard does i e race-to-the-bottom interstate externalities Exemption for vehicle standards except in cars there is preemption of auto regulations except in CA Pros and cons of having the state to set the standards rather than the federal government States can more cheaply determine the best ways to meet the NAAQS given their regional particularities But state politicians can use the system to punish opponents and reward supporters On the other hand states can better determine which workers are less reemployable in the area and make decisions that affect them less Why might it be easier for a state to promulgate stricter standards under a SIP than under state law They re a bit insulated from local political processes they ve already got to make the plan so it s easier to move from that to a stricter standard The Feds made us do this Makes enforcement by private plaintiffs easier because they re violating federal law and can thus be sued in federal citizen-suit actions What about enforcement by the government Fed gov and state can both enforce the SIP Union Electric s best argument was probably that states have avenues other than SIPs for implementing more stringent standards However if Union Electric had prevailed in this case the EPA would have a much more complicated task of evaluating SIPs to ensure they meet a floor and a ceiling This would have opened up the approval process to a multitude of challenges Justice Powell concurrence Congress may not have understood the Draconian possibility that could result from the CAA But couldn t a state decide to shut down a utility regardless of the CAA Federal Implementation Plans Administrator must promulgate a FIP within two years of the disapproval of a SIP unless the state corrects the deficiency c SIP not implemented federal gov t required to implement FIP c Coalition for Clean Air v EPA th p Facts No SIP for South Coast Air Basin in California despite years of litigation Dirtiest air in the country CA submitted a series of SIPs that the EPA didn t approve b c the SIPs couldn t meet the NAAQS EPA had proposed FIPs but w drew them because of the potential disruptive social and economic consequences they would cause CfCA sued and EPA settled in with requirement to promulgate FIP Then the CAA was amended in EPA eventually made an FIP However Congress wiped it out in a Defense appropriations rider This was essentially a veto-proof bill ensuring passage of the rider Also this type of rider received almost no scrutiny b c the committee attaching it a defense committee was not an environmental committee Lastly a rider is typically attached at the last-minute such that most Congresspersons do not know about it even though they vote on it Then EPA rescinded the FIP and California passed an SIP which did not have to meet the NAAQS under the non-attainment provision Thus it took about years for southern Cali to be covered by a SIP even though the statute requires such in no more than years Constitutional problem with FIPs Can the fedgov require a state to pass a law No So EPA can t as part of a FIP commandeer a state legislature th Amendment Generally the SIPs aren t considered commandeering because the feds will regulate if they don t Conditional funding is okay as well An option for states as opposed to a requirement But if a FIP requires a state to legislate that s different The fedgov can directly regulate individual polluters but can t mandate state legislation Why would the state prefer to punt the responsibility to the federal gov t To pass the political price onto the federal gov t This was a situation where all the options were bad But the federal gov t passed on the responsibility as well For one federal enforcement would be difficult Secondly if voters in CA don t like the plan federal politicians could suffer the fallout possibly even leading to a change or repeal of the CAA New Source Performance Standards Generally Uniform technology-based standards based on the best available technology reflects the degree of emission limitation achievable through the application of the best system of emission reduction which taking into account the cost of achieving such reduction and any nonair quality health and environmental impact and energy requirements the Administrator determines has been adequately demonstrated a Administrator can vary the NSPS based on categories classes types and sizes In setting a NSPS EPA is not required to conduct CBA but it is required to demonstrate a reasonable basis for its decision Portland Cement v Ruckelshaus D C p Cf New York v Reilly D C p EPA provided sufficient evidence to support its decision re municipal incinerators How do you take economic cost into account Do you look only at cost to the industry itself Social cost What if an industry can t survive in one region due to existing level of pollution or other things that make cost prohibitive but is flourishing elsewhere Can you regulate them into the ground since they re alive elsewhere What if there are close substitutes Even moderate costs will cause the industry to collapse because the substitute will suddenly become cheaper What if there are close substitutes in one part of the country but not in another Are these permissible costs under the statute Yes probably Otherwise it s got no teeth And the EPA would have to demonstrate how it would work and effect competition everywhere instead of more generally Very difficult to do this How did EPA demonstrate the technology here EPA doesn t have to go set every single existing plant in order to set a standard for new sources But they needed to look at more than one It s really hard to argue that you can generalize properly from one what if the one has some quirk or particularity EPA could have defined the best way of controlling pollution as a dry-process plant w this technology They didn t have an appropriately demonstrated technology for the wet-process plant What if no existing plant could have met the standard Could EPA have said No existing plant could meet this but if you build a new plant around this standard then it ll meet it And get away with no demonstration Does it make sense to try to set a standard for new plants by examining old plants Why does it matter if existing plants can meet the standard or not Court says that EPA could have extrapolated from existing data and expert opinions to project what would be the best technology for new plants But since they decided to base it on testing then they have to do the testing properly Prevention of Significant Deterioration PSD p Prohibits states from allowing air quality to degrade in relatively pristine regions Initially created by regulation in response to Sierra Club v Ruckelshaus below Then codified in at et seq p V- Ambient component a federally set baseline and an increment which is set through a combination of federal and state programs Program allows some degradation but does constrain it Emission component New modified major emitting facilities MEFs BACT Standard set via combination of federal and state decisions under Existing sources and non-MEFs SIPs have to show how the state will take steps not to violate the PSD a PSD permitting for new modified MEFs Categorize area as Class I Class II or Class III Entire country initially Class II where deterioration consistent with moderate well-controlled economic growth was acceptable States could re-classify areas into Class I typically national parks or Class III via effects analysis public hearing notice to affected land managers Governor legislature and representative general purpose unit of local government have to approve a redesignation Keeps a state from imposing this on a county e g a Fed gov must approve unless the state didn t follow procedure or Class I reqs are violated No states have sought redesignation from Class II to Class I but some Native American tribes have Redesignation to a more-protective standard is easier than redesignation to a less-protective standard No state has ever redesignated an area to Class III Why Probably local governments would be very unhappy Maybe the areas where industry wants to locate are already at a point where the NAAQS are going to constrain you Maybe areas are clean for one pollutant but not for others so say you can t degrade further for SOx because you re in nonattainment for PM Maybe they already get a lot of what they want from Class II designation Ambient Requirement Baseline Baseline is set when someone applies for a permit for a major emitting facility per in an area subject to that part Defines current level of air pollution and provides basis for increments Increment amount of deterioration toward the NAAQS authorized for a particular attainment area PM and SO increments set by Congress EPA has also set increments for NO but not for CO or hydrocarbons which are primarily regulated via mobile source regulations elsewhere in the statute No increment for ozone which is controlled via control of its precursors EDF v EPA re PSD increments p EDF challenged the increment for NO on the grounds that EPA had merely set the same percentage increment as for SO and PM Court said that this was a contingent safe harbor but that an analysis under c was also required In the end EPA promulgated the same rule and allowed states to use alternative means of control such as cap and grade under the CAIR What happens if nobody asks for a permit for a while Before the baseline is set there s not limit on degradation Lots of sub-MEF plants built Pollution from other areas Until baseline is set they can t do anything about this Why might it take a long time for an MEF to apply for a permit No economic growth in the area No local need for what they might produce or no workforce infrastructure available Relationship of increment to NAAQS Class I areas roughly of the NAAQS Class II areas roughly of the NAAQS Class III areas roughly of the NAAQS So the designation makes a big difference Example SOx NAAQS are Increment in Class II is Will constrain only where the baseline is below If baseline is higher than NAAQS prevent you from going over in any case So lots of areas w air quality better than the NAAQS won t experience additional constraint due to the PSD program Emissions limits BACT for new modified MEFs based on maximum emission reduction of each pollutant which takes into account energy environmental and economic impacts and other costs and is achievable for such facility through application of production processes and available methods systems and techniques Cannot be less stringent than NSPS Determined by state on case-by-case basis but if not based on a reasonable analysis EPA may take steps to ensure compliance w CAA Alaska Dept of Environmental Conservation v EPA below Alaska s approval based upon a least-cost reduction standard rather than EPA s top-down standard was criticized by EPA Top-down BACT EPA establishes a ranked list of control technologies and sources must take the top one unless they can demonstrate that on grounds of technical energy environmental or economic impacts this standard is not achievable Then can use the next-best alternative BACT contains all the elements of NSPS although the language is different BACT is determined on a case-by-case basis unlike categorical NSPS Thus the facility at issue does not have to be representative of the industry and if the source can meet a stricter standard it doesn t matter that others may not be able to BACT set by state-level authority while NSPS set by Administrator If the MEF does not fall into a category that has an NSPS A new NSPS is set So even though BACT cannot be less stringent than NSPS it could be a lax standard if no NSPS is relevant that would be technology-forcing Major emitting facility MEF definition see also section ii under New Source Review Facilities that require a permit from the state if they wish to locate in a PSD area See also New definition comes from NSPS a any stationary source the construction or modification of which is commenced after the publication of regulations Modification a physical chance in or change in the method of operation of a stationary source which increases the amount of any air pollutant emitted by such source or which results in the emission of any air pollutant not previously emitted Sierra Club v Ruckelshaus U S aff d by equally divided Court p Led to statutory establishment of the PSD program Plain language argument the Act authorizes EPA to protect and enhance the quality of the Nation s air resources Basic purposes of the act under b On its face this language would appear to declare Congress intent to improve the quality of the nation s air and to prevent deterioration of that air quality no matter how presently pure that quality in some sections of the country happens to be Why is this a weak statutory argument on its face For one you could actually read this to require improvement from everyone protect and enhance For some statutes this might work better but the CAA is a very complex technical statute relying on a general preamble doesn t seem very sensible This is a detailed regulatory regime A statutory argument on the other side that Court didn t look at where s the obvious place in the statute the SIPs Wouldn t you expect the section to set standards for SIPs that required prevention of further degradation This is the section that tells you what states have to do to come into compliance with federal ambient standards Why find this by implication when there s a logical place for it to be Legislative history Administration officials testified before Congress that deterioration would be barred Senate Report accompanying the bill that was eventually adopted stated that they understood it to bar SD House Report less clear but doesn t appear contradictory But how authoritative is this It reads as a complete restraint on any degradation continued maintenance If this were in the statute it would be pretty dispositive But conference report is always more authoritative Even though the Senate s bill became the Act all this really means is that the final bill had the Senate number not the House number The final bill rejected the Senate-version s provision Thus the leg ve hxy actually works against the Court s opinion Administrator has remarked that he believes the Act allows SD Rules are contradictory Remember that this is pre-Chevron In a Chevron world this would be a strong argument for not deferring to the agency at all The part of the Rules allowing significant degradation is contrary to the legislative policy of the Act Alaska Dept of Environmental Conservation v EPA U S p Facts Cominco owned a zinc mine in NW AK Powered by diesel generators Subject to a PSD permit for NOX Wanted to increase production on a standby diesel generator ADEC applied top-down BACT and proposed one method as BACT company then proposed a non-top method but wanted to apply it to existing generators as well ADEC approved this over EPA objections and EPA issued a stop order under a Holding EPA s oversight role extended to determining the reasonableness of a state permitting authority s BACT determination in light of statutory guidelines Reasoning a and give EPA encompassing supervisory responsibility over construction and modification of facilities in the PSD area Court finds that Congress entrusted state authorities w initial responsibility However EPA has the authority to protect against unreasonable BACT designations when the state s decision does not reflect reasoned analysis Non-Attainment Ambient component Reasonable Further Progress RFP annual increment reductions Problem only requires the most stringent emission limitation which is contained in a SIP of any State for such class or category of sources A SIPs mainly regulate existing sources b c new sources are regulated by NSPS Alternatively B allows the most stringent emission limitation which is achieved in practice by such class or category of source whichever is more stringent If an NSPS has not been determined the emission limitation may not be all that stringent Emissions components reasonably available control technology RACT c applicable to existing sources lowest achievable emissions rate LAER a for new sources Note In PSD areas and other areas states are allowed to make decisions about whether or not they want to control existing sources but in nonattainment areas it is required Permits for new sources c permits are required for the construction and operation of new or modified major stationary sources anywhere in the nonattainment area as explained in below Must show the facility will comply with the LAER provide for offsets and that the owner is on schedule for compliance for other sources Must show that sufficient offsetting emissions reductions have been obtained such that total allowable emissions from existing sources in the region from new or modified source which are not MEFS and from the proposed source will be sufficiently less than total emissions so as to represent reasonable further progress a A Has to comply with lowest achievable emission rate that rate of emissions which reflects the most stringent emission limitation in any state implementation plan or is achieved by any source in this category Revesz distinction bw LAER and BACT isn t clear The offset requirement is a brand-new shiny thing but this distinction isn t Specific provisions Statute contains specific rules for certain pollutants These were added by the Amendments If your pollutant isn t covered you fall back on the general provisions Example Attainment framework for Ozone Classifies attainment areas by degree of nonattainment sets deadlines for attainment Marginal to extreme Only LA is extreme The worse you get the more onerous the requirements Offset ratios are stricter so normally you just need to reduce more than you ll add specify a ratio of reduction for new sources frex So you benefit from having more time but the conditions are much tougher Case study Citizens Against the Refinery s Effects Inc CARE v EPA offset case th Cir p Facts Factory secured an offset for its emissions b c the VA highway department switched to a different type of asphalt in some of its highway districts Notes But the state had already switched to this type of asphalt in most of its districts Is this real reasonable further progress The court reasoned that the program was voluntary previously and now it ll be compulsory Thus it is now enforceable Presumably it s less expensive to switch to this than to install control technology Example a factory on the verge of bankruptcy can now sell the fact that it s going to close You ve actually gained pollution How do you calculate the amount of the offset However much you were emitting at the time of the sale That creates an incentive to produce more right before you shut down It looks like that actually happened in CARE v EPA the year they picked was the year that they used the most asphalt How can you fix this program Set a universal baseline for one thing Have to manage the incentives created EPA allows industrial plants to be bubbled so improvements would not require a permit as a new source if total emissions of the plant will not increase Chevron v Nat l Resources Defense Council Inc NRDC bubble case U S p What is the definition of a stationary source Reagan administration proposed a plantwide definition NRDC wanted you to look at a particular unit j Major stationary source any stationary facility or source of air pollutants But the definitions section for nonattainment specifically does not define a major stationary source MEF definition in PSD different tonnage requirements Why is the court even looking at definitions Because the definition of modification in is the same as in a Tenuous link Does the court hold that the plantwide definition is required by the statute No Ambiguous statutory guidance This is where Chevron deference gets developed EPA s interpretation of the term source hadn t been consistent Different interpretation for PSD vs nonattainment In nonattainment areas EPA had taken the more restrictive interpretation non bubble concept In PSD it had allowed a bubble-type interpretation Can the same term be interpreted differently by an agency in different statutory provisions Under Chevron s admin rule it seems like you could interpret it in light of the specific programs created by the statute Why did the Reagan administration want this change Create an incentive for big units to be built w o having to comply w NSPS Plus then you will potentially get ramp-up of emissions from existing facilities prior But isn t this inconsistent with the purpose of the nonattainment provisions It may not clash with the statutory language but it s in collision with the purpose What s the most charitable construction The statute s about a tradeoff bw economic growth and environmental improvement Reagan administration might claim that these regulations would be so burdensome that you d never get a new source Structure of the environmental laws tend to enormously privilege existing sources Big barrier to entry new plants would have to get a permit Restricts economic growth to a certain degree Deadlines EPA cannot extend an attainment deadline other than by reclassifying an area Sierra Club v EPA nonattainment deadline D C p New Source Review p Generally Proposal to construct a new source of air pollution may be subject to new source performance standards or the permit requirements of the PSD and nonattainment programs New Source Review encompasses the PSD and NonA permitting standards but also applies to modifications at existing sources New Source Review was supposed to ensure that modifications triggered more stringent standards But the EPA issued regulations in the s that limited modifications to major modifications which did not include routine maintenance approved in Wis Electric Power Co WEPCO v Reilly th Cir section iii below p held that the EPA could have reasonably determined that the unprecedented maintenance at issue in the case was not routine and thus not exempted from NSR New sources are controlled more strictly than existing sources Regulation of existing sources mostly left to states under SIP program Why have stricter standards for new sources Differential compliance costs for new vs existing sources But what about incentive for anticipating change And what about equity What if they can t do anything to the plant Extends the period during which it s profitable to operate the plant basically So what happens when you have a plant that comes into compliance and then EPA makes the regs more stringent Desire to protect pro-environmental investments We see this under CWA If a company comes into compliance and then the standard is amended the company gets years of protection of the investment before it has to comply Note that we re very concerned about settled expectations in CAA but not in Superfund Retroactive liability New or modified source definition PSD provisions cross-reference NSPS definition of modification referring to Regulations re NSPS further defining modification as an hourly rate of emissions do not necessarily apply to PSD which EPA further defined more restrictively in reference to total emissions EPA s interpretation that modification is defined differently is reasonable Environmental Defense v Duke Energy Corp U S p Duke challenged the more restrictive interpretation construction in PSD defined to include modification as in c The modification must lead to a significant increase in air pollution in order to trigger NSR new rule for establishing baseline and future emissions in order to project the significance of an increase EPA created a -year lookback period to give sources flexibility to account for slow periods in the business cycle prev mos prior Challenged in NY v EPA and upheld Plantwide Applicability Limitation allowed sources to voluntarily adopt plantwide ceilings or camps on emissions and avoid NSR Use of emissions limitations rather than actual emissions to measure emissions increases in the Clean Unit program Exemption of certain control projects that result in net overall environmental benefits from NSR Exemption for sources from recordkeeping requirements if they determine that there is no reasonable possibility that their projects constitute modification for NSR purposes Challenged in New York v EPA and remanded for a reasoned justification of this decision Reasons for including modification Would encourage the installation of modern pollution controls on existing sources Both commentators and courts have adopted this theory based on legislative hxy However what s actually happened is that the cost-benefit calculus has been tipped towards maintaining older facilities and patching them up at just below the level that will trigger NSR Old plant effect Depends on what the cost of environmental regulation is How could you restructure this to avoid an old plant effect Cap and trade system existing sources get them but they face an incentive to reduce their pollution Time limit on grandfathering Think of this as similar to nonconforming uses in land use Prior estimated natural life of the plant That s all they would have expected ordinarily Defining modification and measuring increase has been historically a significant challenge EPA had defined it differently w in the NSPS context see Duke Energy above and even in the same rule see New York v EPA In EPA issued a standard rule for the two which defined modification as any physical change in or change in the method of operation of a major stationary source that would result in a significant net emissions increase of any pollutant subject to regulation under the Act Physical change exempted a number of things see list p New emissions increase was any increase in actual emissions from a particular physical change or change in the method of operation at a stationary source had to account for contemporaneous increases or decreases in emissions of the pollutant Contemporaneous offsets had to occur in the five years prior Significant was a set tons year amount specified for each pollutant Wisconsin Electric Power Co v Reilly th Cir p Question was WEPCO s program a major modification triggering NSR under the statute Physical change Replacement of various drums and air heaters Plant argued that modification should be read to require a fundamental change not replacement in kind Court found this not to be supported by the statute or precedent This would open vistas of indefinite immunity like-like replacement would mean that the application of NSPS and PSD might be postponed into the indefinite future the legislative history of the act suggests that this was not the intended result Congress wanted to speed up improvement in air quality The statute itself strikes an environmental-economic balance not sticking strictly to the statute could upset that balance Is this routine maintenance EPA makes a case-by-case determination whether or not something is routine in this case they found that it wasn t Omitted section EPA improperly relied on potential to emit rather than projected actual emissions to determine if there was a significant net increase Post-WEPCO Administration comes out w the rule and the -Year Lookback Rule see above under significant increase This was challenged in New York v EPA and the rule was upheld Lookback Rule means they ll choose the highest -month period in the preceding ten years as their baseline What s the rationale for doing this Need to look back over a full business cycle Surrendering capacity issue What could you do instead Some kind of averaging thing Why didn t the court require the agency to define more specifically what the length of the business cycle was EPA says that this may vary from industry to industry and that picking years facilitates certainty and clarity Note that they erred on the side of permissiveness New York v EPA D C p EPA s definition of modification upheld under Chevron deference Interstate provisions Problem Upwind Pollution ----- Downwind States p Upwind states create pollution that is externalized to downwind states Coasian bargaining could limit the level of pollution to that which each state was willing to pay for or accept payment to receive But Coasian bargaining is not likely to occur because High transaction costs relative to benefits Baseline entitlements are not well defined by law In Kentucky v EPA the transaction costs were presumably not that high But until the case was settled the entitlement was not established During the Carter administration the downwind state had the entitlement but the EPA resolved the issue under the Reagan administration Issues of causation are very complicated The original CAA was a poor tool to address such externalities b c emissions standards do not control i the geographic placement of sources ii the size of each source or iii the number of sources located in a state In fact the CAA incentived states to increase their interstate pollution Solutions Section tall stacks provision Attempted to limit the use of tall stacks by limiting the amount of credit a state can receive for emissions limitations to the level consistent with a stack height built according to good engineering practice This strategy is only effective to the extent that the emissions limitation affects the regulation of tall stacks After the market permit regulation of SO this provision became less relevant SIP Challenge via a D SIPs must meet NAAQS and must prohibit in-state sources from contribut ing significantly to nonattainment or interfering with maintenance or from interfering with PSD measures violating increments of another state If no baseline under PSD no challenge If SIP does not address can be challenged under judicial review per b State must bring a challenge w in days of approval of a SIP or SIP revision Thus a citizen cannot bring a suit under but could seek judicial review of the Administrator s decision to approve the SIP Agency review of SIP revisions should only focus upon emissions from the single pollution source at issue not the emissions caused by aggregate sources New York v EPA SIP Challenge th Cir p Challenges regarding aggregate emissions should be brought under EPA is allowed to consider costs in the determination of significant contribution under Section D Michigan v EPA D C Cir cert denied p Facts EPA issued SIP calls for states and D C to mitigate the interstate transport of ozone EPA then issued a rule that required the areas to reduce NOxs by highly cost-effective controls defined as controls that EPA found to be capable of removing NOx for ton or less As a result the ultimate line of significance would vary from state to state depending on variations in cutback costs Various parties challenged the EPA s decision Holding The EPA reasonably acted in accordance with its authority under when it considered costs in defining significant contribution under Section D required uniform controls that have non-uniform effects and established NOx budgets for each state Reasoning Cost consideration In the Benzene case the plurality opinion suggests that a significant risk is defined at least in part by reference to the cost of eliminating it Ps have not proposed any other method by which EPA could determine significance Rule in D C Cir Clear congressional intent to preclude consideration of costs is required to reach a finding which bars agencies from doing so Ps have not demonstrated such intent in this case Non-uniformity Although the EPA s decision will lead to a non-uniform financial impact the EPA considered this issue and found that a more individualized regional approach would not provide a significant improvement in air quality or a substantial reduction in cost NOx budgets States have a real choice in how they want to achieve the NOx budget allocated to them Thus these budgets do not fall within the realm of impressible SIP call regulation as defined in Virginia v EPA see Note below and Train v NRDC Dissent The statute does not grant the EPA authority to consider cost of alleviation when assessing SIPs The text clearly grants the EPA to require states to act in regard to amounts which will contribute significantly to nonattainment Notes Why was cost-consideration upheld here re but not upheld later in Am Trucking re where the Supreme Court declined to find elephants in mouseholes called for NAAQS requisite to protect the public health But does not explicitly allow for cost consideration either and under the same analysis adequate margin of safety in could allow for cost consideration Virginia v EPA D C Cir p n held that the CAA did not authorize EPA to condition SIP approval on the adoption of particular measures Michigan limited this holding b c it allowed the EPA to essentially require certain measures if some choice was still available to states What was EPA trying to accomplish via its ruling Cost-minimization Meet the NAAQS at the cheapest cost to the nation as a whole What would have happened if this cost-minimization standard had been applied in APCD Jefferson County v EPA below under It would likely have resulted in requiring Gallagher to take control measures since it had not done much it would presumably have cost relatively less to do something The difference in this case is that the EPA issued the rule Why are these two EPA decisions inconsistent Different administrations decision vs decision PSD Application This is approach for nonattainment areas What about PSD areas Under a D i II what is the standard for interfer ing with measures required to be included in the applicable implementation plan If a baseline has not been set by construction of a new source there are no PSD requirements Section petition - Interstate pollution abatement State can petition the EPA at any time for a finding that a major source or group of sources emits or would emit any air pollutant in violation of the prohibition of a D i i e the sources would contribute significantly to the challenging state s nonattainment or maintenance or would interfere with its PSD measures Administrator must make a finding w in days after petition and after a public hearing If EPA finds a violation it must set a schedule to bring the sources into compliance as expeditiously as practicable but no later than years after the finding Prior to construction or modification a new or modified source that is subject to PSD requirements or might contribute significantly to an interstate nonattainment must provide written notice to the potentially-affected states Issues Only states and political subdivisions can bring claims under this not individuals The EPA Administrator is the decision-maker b How do you determine if pollution is significant violation of a D i so there s not a substantive standard Whereas does not allow the EPA to mandate particular control measures directly does allow such federal mandate Appalachian Power Co v EPA D C Cir p Facts Eight states initiated a challenge to the SIP call at issue in Michigan v EPA The EPA promulgated an automatic trigger mechanism which would result in findings if an upwind state s response to the SIP call was not approved A petition will only be granted if i emissions in the challenged state substantially contribute to ii a violation of NAAQS in the challenging state Air Pollution Control District of Jefferson County Kentucky v EPA th Cir p Facts EPA approved a Kentucky SIP that set an emissions limitation at lbs SO MMBtu EPA approved the same limitation for Indiana s SIP Indiana exempted the Gallagher Power Station which is just across the border from KY from the limitation Jefferson County designated as nonattainment area Indiana submitted a SIP revision setting the limitation at lbs which was the current emissions rate of Gallagher The Administrator approved Indiana s revision w respect to the primary NAAQS but not the secondary ones KY filed a petition EPA denied the petition finding that the Gallagher plant does not cause or significantly contribute to Jefferson County s nonattainment b c only about of the SO concentration at any location in the county where the NAAQS are violated was attributable to Gallagher although - SO concentration in other parts of the County were attributable to G and the interstate pollution abatement provisions only protect against interference with national standards not more stringent local standards although G limits the margin for growth contemplated by the KY SIP the PSD regulations are inapplicable since Jefferson is a nonattainment area not a PSD area Holding The EPA s determination is not unreasonable and thus should be upheld Reasoning Although the statute does not explicitly refer to a significant contribution test reference in a implies that Congress intended it Prohibiting de minimis contributions by one state to another state s NAAQS violation would in effect hold one state hostage to another s failure to enact the pollution control strategies necessary to conform to the requirements of the Clean Air Act Notes As a result of this ruling although states are free to set their own more stringent standards under interference with such standards cannot be enforced against upwind states under Thus if interstate pollution is a problem a state would probably not want to enact more stringent standards that would only affect in-state sources The court provides no analysis for what counts as a significant contribution Class Notes The entire county was classified as nonattainment even though the court parsed out areas of the county that were not in nonattainment Allowing downwind states to set more stringent standards that constrain upwind states would allow upwind states to be hostage to downwind states a first-in-time rule that is generally disfavored b c it encourages wasteful use of resources Conversely the ruling of this case allows upwind states to hold downwind states hostage Ironically the CAA was enacted as a federal law in part to address interstate externalities but the very provision that would seem to address that does not allow states to do so SIP Call via k Administrator must issue a SIP call to require the State to revise the plan as necessary to correct such inadequacies when he finds a SIP is substantially inadequate to attain or maintain the relevant NAAQS adequately mitigate interstate pollutant transport per A or otherwise comply with any requirement of this chapter Challenges to SIPs and interstate provisions Petition the EPA to issue a SIP Call If that petition is denied then the denial can be appealed in court Although there are three potential avenues for challenging SIPs SIP Challenge SIP Call and a State Petition under they all have the same substantive standard b c they all point to a D Per b which allows for judicial review Challenges to the NAAQS have to be filed in the D C circuit but challenges to SIPs must be filed in the relevant circuit unless the administrator s decision has national scope or effect Most likely the circuit of the state whose SIP is being challenged There s no time limit in but there s a -day time limit in SIPs The EPA Administrator is the decision-maker in but in it s the relevant federal judge SIP amendments Courts have held that the only thing that can be challenged after an amendment is the effects of the amendment Problem with this is that it enables you to change a SIP bit by bit to sneak in pollution that would otherwise be impermissible Alternative solutions for interstate air pollution Internalize the externality by making any downwind pollution created by a state count towards their compliance with NAAQS Problem is trying to measure this Ban downwind pollution Pollution isn t random prevailing winds dictate pretty well where pollution will go But if you just banned downwind pollution entirely you might just stop a state from having any industry What could a judge do Sometimes they sort of try to impose taxes but that s frowned-upon It s hard to fix this w o a statutory scheme Conceptualize the air in a downwind state as a resource to be shared between the upwind and the downwind state Set possibility of more stringent state ambient standards aside Assume it s met in the downwind state But what s a plausible regulatory tool risk management strategy for minimizing the problem Want to minimize costs Figure out where you can regulate most cheaply and do that So you re sort of averaging air quality between the two But what if the downwind state wants to do better What about in a PSD situation Assume no baseline but the state really wants cleaner air and doesn t want to get dragged up to the NAAQS Should an upwind state be allowed to impose whatever pollution it wants on the downwind state until the baseline gets set Acid Deposition Marketable Permit Scheme p History of attempts to control SO CAA Amendment authorized EPA to set new standards for SO EPA allowed low-sulfur coal or scrubbing Amendment required new electric plants to use scrubbers essentially eliminating the low-sulfur option Amendments- Market-based tradable permit scheme Big dirties EPA distributed allowances to certain electric-generating units EGUs at emission rate of lbs SO MMBtu heat input multiplied by the unit s baseline MMBtu Others EPA distributed allowances to other EGUs and emissions units at lbs SO MMBtu times unit s baseline Cap maximum at MM lbs Policy Incentivizes utilities to reduce their SO emissions so that they can profit off the sale of their allowances permits Effect Low-sulfur western coal again became a viable option Widely considered a success per p n Some states attempted to protect business dirty coal interests which were affected by the MPS However the Dormant Commerce Clause does not allow the type of discrimination against out-of-state coal producers that the Illinois Coal Act established even when economic costs to a region result from unrestricted interstate commerce Alliance for Clean Coal v Miller th Cir p Constitutional Background p n The Constitution through the Commerce Clause art I cl grants Congress plenary authority to regulate interstate commerce Conversely the Dormant Commerce Clause jurisprudence has established that this authority limits states ability to interfere with interstate commerce by discriminating against out-of-state parties or by otherwise burdening the interstate flow of articles of commerce Policy Establish a unitary national economy Facts In response to the CAA Amendment which could potentially cause lost jobs in high-sulfur coal-mining regions such as Illinois the Illinois Legislature passed the Coal Act A Virginia trade association including railroads who transport coal sued the Illinois Commerce Commission ICC who was charged with implementing the Coal Act Holding The Coal Act and the compliance plans approved in accordance with it are invalid b c they impermissibly restrict interstate commerce Reasoning The Act discriminates against out-of-state coal producers by requiring that the ICC to take account of costs to the local economy when considering whether to approve compliance plans that certain plants to install scrubbers to continue to burn Illinois coal that the cost of using high-sulfur coal be passed on to the consumers and that the ICC consider the impact on local employment before approving a utility s plan to decrease its use of Illinois coal by or more Although Ds argued that the Act only encouraged the use of Illinois coal the Court found that the Act s mandates amounted to ingenious discrimination T he fact that the rate-payers i e taxpayers are footing the bill does not cure the discriminatory impact on western coal producers The market participant exception does not apply Protection against local economic harm is not a justification for such discrimination Concurrence Cudahy T he Commerce Clause effectively precludes consideration of local economic damage as a legitimate reason to handicap interstate commerce Federal preemption through the operation of the Supremacy Clause might also cause the Coal Act to be invalid if the court were to determine that Congress intended to occupy the field with a market-based approach via the CAA Amendment Nor can downwind states provide for greater protection of environmental interests The Supremacy Clause prohibits state laws from impeding the execution of the full purposes and objectives of federal laws by interfering with the methods by which the federal laws were designed to achieve those goals Clean Air Markets Group v Pataki d Cir p Facts Because Title IV of the CAA Amendments of created a nationwide marketable-permit scheme for SO emitting units in states downwind from NY could just buy more permits rather than reducing their SO emissions To address this problem NY passed the Air Pollution Mitigation Law in Section -k Statute Section -k imposed a mitigation offset fine assessed at the purchase trading price of the allowance to NY utilities who sold or traded their allowances to facilities in certain upwind states The law also imposed the offset for allowances not sold to those states but subsequently transferred to one of the states Accordingly to avoid such a fee the utilities must attach restrictive covenants to allowances not sold to one of the identified states that prohibit their subsequent transfer to one of the identified states Holding Section -k is invalid under the Supremacy Clause of the Constitution Reasoning Although NY argued that its law and the federal law have the same ultimate goal environmental protection the NY law impermissibly interferes with the methods by which the federal law was designed to achieve this goal The text of the federal law clearly indicates Congress intent to effectuate a nationwide tradable-permit scheme Legislative history Congress considered and rejected a plan that would place regional restrictions upon trades EPA regulations mandate that state programs will not interfere with trading Like the Illinois Coal Act the NY law may not explicitly restrict the actions of facilities However it clearly interferes with their ability to effectuate allowance transfers The NY law requires utilities to forfeit of any proceeds from trades to identified upwind states The law decreases the value of allowances traded to non-identified states by essentially requiring restrictive covenants on such trades NAAQS case study Lead p Background Administrator forced to add lead because he d made findings about the dangers of lead when promulgating the unleaded gasoline rule under of the CAA W in Administrator s discretion to make a finding of adverse effect but once he d done it had to list lead as a criteria pollutant However in a subsequent challenge to the sulfur oxides NAAQS court held that the content of a revision as opposed to a new standard was w in the Administrator s discretion Setting the lead standard Determine the criteria what the effects are and who s at risk What does the statute say about the stringency of the standard Primary requisite to protect the public health allowing an adequate margin of safety Secondary protect the public welfare from known or anticipated adverse effects Determine the critically sensitive population Young children age - b c still developing so greater possibility of developmental effects MR also greater likelihood that little kids will ingest something eat paint chips Critical population is the one that sees an adverse effect at the lowest concentration Could be pregnant women asthmatics old ppl etc Why look at the most-sensitive population If they re protected everybody else is as well Meets no-risk goal Young children aren t always the most critically-sensitive group Determine the pivotal adverse health effect lowest level at which adverse effect is observed The health effect that occurs at the lowest concentration is chosen as the signal via which to set standards This is sometimes called a critical population critical effects test Point is to stay under the threshold by determining where it exists The EPA determined the air lead standard to prevent the occurrence of EP elevation in children rather than ALAD inhibition Why ALAD shows an effect earlier but the effect doesn t lead to impairment not a harmful physiological change as with EP elevation But you can imagine that the Administrator might have chosen this level instead a detectable physiological change at a lower level Precautionary approach due to lack of studies Also CDC had used it Determine the mean population blood level that would protect the CSP Although CDC established an individual threshold for risk at g Pb dl micrograms of lead per deciliters of blood the EPA is looking at mean population exposure meaning some individual children will be below and some above the mean So EPA set the mean at g Pb dl Based upon a normal statistical distribution about kids will still be above the CDC individual level of g Pb dl Did the EPA not care about them On what basis did the Administrator make this judgment Determine the relationship b w air lead exposure and blood lead level Ratio of exposure to blood lead increase set at for every g of lead in the air blood lead increases by g This is conservative estimate based on studies showing a range of responses but it s not entirely clear why EPA chose this level Determine the allowable blood lead increment from air Problem most of blood lead comes from non-air sources Basically kids in public housing were getting lead from eating paint chips off the wall or paint turning into dust in the air EPA didn t have statutory authority to regulate this though Since non-air sources contribute most NAAQS must be set low to keep average exposure under Estimates of non-air contributions ranged from to EPA chose Not much explanation of why Probably due to imbalanced regional impact No NAAQ will be protective in all locations but EPA doesn t think that allows them to set location-specific standards I f EPA were to use a larger estimate of non-air contribution to blood lead the result would be an exceptionally stringent standard which would not address the principle source of lead exposure Conversely EPA believes that it should not adopt an estimate of non-air contributions below the level shown in available studies to be the lower mean blood leave level documented in the criteria document Target is minus from non-air sources g dl This must be divided by the ratio determined in step making the appropriate standard g m Margin of safety b c based on lowest threshold and attuned to most sensitive population EPA has selected a ratio at the protective end of the range notice however that they could have picked a much more stringent standard and didn t What happens if this gets challenged in court How does an Administrator set a standard Maybe it wouldn t actually be that hard to reduce emissions to Maybe that would be super-cheap Theoretically you re not allowed to look at this Eads says that you do anyway Cases Cost-benefit under CAA Lead Induss Ass n v EPA p II- Court previously reviewed and approved the unleaded gas regulations In this case asked to review the NAAQS Question must the Administrator consider economic and technological feasibility in setting the NAAQS No Petitioner bases this on the statutory provision allowing an adequate margin of safety believes this requires the Administrator to weigh these factors in deciding what that margin is Court doesn t buy it Nothing in the Act or the legislative history back this up Congress told Administrator to consider this when they wanted him to requires it to be considered in NSR provisions frex Expressio unius explicit language lists lots of factors that are supposed to be considered So industry isn t arguing that you can consider costs in the scientific analysis but is arguing that in the decision on an adequate margin of safety you can do so Court says that adequate margin of safety on its face doesn t have anything to do with costs and that if they d wanted costs to be considered there they would have put it there Congress knows how to do this if they want to But why assume against it Scalia s argument goes to this it s too important and too likelihood to strongly influence the application of the statute Question is the Administrator allowed to set the standards based on likely harm rather than proven harm Yes Congress wanted them to err of the side of caution Economic and technological feasibility to be subordinated to goal of protecting public health CSP to be focus of regulation Absence of adverse effect on those individuals the goal Whitman v Am Trucking Ass ns U S p Challenge to the PM and ozone NAAQS Does the public health encompass an economic-impact factor No Congress was aware of the potential economic impact of air quality regulations permits the Administrator to waive the compliance deadline if there are potential adverse impacts on the public health or welfare NSR provisions auto provisions basically Congress knows how to give this authority if it wants to The CAA does not hide elephants in mouseholes Also the statute is explicit in other sections indicating that Congress knows how to make it clear when they want to adequate margin and requisite do not constitute authority to consider economic impact These modest words do not have the power to determine whether implementation costs should moderate national air quality standards Does the Administrator s judgment allow him to consider economic impacts It may allow him to include certain unenumerated impacts However not cost of implementation that s too direct and too important and too likely to severely impact what s done that would sure have been mentioned if Congress had wanted it considered Conversely the statute could have clearly articulated that costs should not be taken into account Minor questions Do the provisions that allow the states to receive information on the economic impacts of abatement technologies constitute permission to weigh these factors No Did b as interpreted by the Administrator lack an intelligible principle to guide the EPA s authority Lower court found that EPA s interpretation was a nondelegation violation An agency s interpretation doesn t create a nondelegation problem That s in the statute This statute is well within the outer limits of nondelegation doctrine Breyer s concurrence See above in NAAQS section Mobile Sources p Generate more than half of U S air pollution Regulated by Title II vehicle emissions which reflect the greatest degree of emission reduction achievable through the application of technology which the Administrator determines will be available for the model year to which such standards apply giving appropriate consideration to cost energy and safety factors fuel content Technology standards do not limit aggregate pollution Preempt state standards Set a floor and ceiling a Ceiling on any pre-sale regulation of motor vehicles California s South Coast Air Quality Management District enacted Fleet Rules with stringent requirements for the purchase of fleet vehicles The lower courts found that purchase requirements did not qualify as standards within the meaning of a and were not preempted but the Supreme Court disagreed Engine Mfgs Ass n v S Coast Air Quality Mgt Dist U S p Exception b EPA can waive certain state standards unless A state s determination was arbitrary and capricious B state did not have a necessary and compelling need or iii state s standard is inconsistent with a technological feasibility Calif and identical programs other states have received such waivers California s waiver for in-use maintenance restrictions was upheld in Motor Equip Mfg Ass n v EPA D C p Market participant exception discussed in Engine Mfgs p EPA s grant of a deadline waiver for The Auto Industry was reversed by the court b c the risks to the auto industry were outweighed by the potential environmental risks of delay Int l Harvester Co v Ruckelshaus D C Cir p Greenhouse Gas Regulation for Mobile Source CO Emissions CAA requires EPA in response to a petition for rulemaking to make a judgment about whether CO is a pollutant that endangers public welfare Massachusetts v EPA U S p Dissent Scalia Not a nondiscretionary duty The statute says nothing about the reasons for which the Administrator may defer making a judgment Hazardous air pollutants p Regulated under shall establish any such standard at the level which in his judgment provides an ample margin of safety to protect the public health from such air pollutant Pre- Don t have to establish ambient standards or review SIPs Thus EPA can directly control them via a -step rulemaking process Listing as hazardous Uniform national emissions standards Results disappointing Only seven pollutants listed in the years after the passage of the Act Regulations that were promulgated were often ineffectual quintessential example of ineffective halth-based standard-setting NRDC v EPA court rejected a standard explicitly based on technical and economic feasibility Court allowed EPA to consider feasibility only w i the framework of an ample margin of safety Health standard set first then margin of safety established NRDC v Thomas DC Circuit upheld trail court s dismissal of a case that sought to compel the Administrator to list eight pollutants for which he had made a finding of carcinogenicity Court found that the notices were not the functional equivalent of a finding that these were HAPs DC Circuit in a decision interpreted this to allow consideration of costs reforms Technology-based approach to regulation w health as a backstop Initial list of HAPs set by Congress Requirement to establish source categories For each category an emission standard to be established following a schedule Standard to be set according to the Maximum Available Control Technology for major sources the average emission limitation achieved by the best performing of the existing sources or for categories containing fewer than sources the emission limitation achieved by the best performing five sources years after development of the initial standards a health-based standard could be established to eliminate residual risks Still with the foot-dragging f Allows costs to be considered in setting the second set of standards but can costs be considered when setting standards to protect the public health first part of the sentence or only when environmental effects Note that the first part of the sentence is basically identical to the pre- language which was the subject of the court s holding the Administrator shall within years after promulgation of standards for each category or subcategory of sources pursuant to subsection d of this section promulgate standards for such category or subcategory if promulgation of such standards is required in order to provide an ample margin of safety to protect public health in accordance with this section as in effect before November or to prevent taking into consideration costs energy safety and other relevant factors an adverse environmental effect National Mining Association v EPA EPA s final rule on the implementation of emissions standards for HAPs Definition of major sources any stationary source or group of stationary sources rule language nearly identical to statutory language Emissions from all sources of HAPs w in a plant site to be aggregated so long as geographically adjacent and under common control If total emissions exceed standard then MACT applies to all sources Petitioners argued that a minor facility that happens to be located at a larger industrial site will be impermissibly regulated Argue that these have to be w I the same source category Held Statutory language accords w EPA s interpretation Compelled by the statute Statutory language Held EPA is required to consider state and local controls even if not included in the SIP when calculating the amount of hazardous air pollutants a statonary source can emit EPA is not limited to considering federally enforceable controls when calculating the maximum capacity of a plant not that operational controls are treated as reducing the plants emitting capacity Cement Kiln Recycling Coalition v EPA Congress imposed minimum stringency requirements that apply w o regard to costs or to ther factors For new sources must achieve the same level as the best controlled similar sources For existing sources MACT EPA implements these via two-step process EPA issued standards limiting emissions from three types of sources that produce of HAP emissiosn in the US W i each category EPA set standards for a series of HAPs Then EPA set the MACT floors for each one id d the best-performing of sources MACT pool id d emission control technology used by most of the sources Two techniques end of stack control technology feedrate EPA then expanded the pool to include all sources using the MACT control and set the floor at the worst emission level achieved by any source in the expanded pool Then EPA set five beyond-the-floor standards as req d by d Sierra Club argues that d requires floors to reflect emissions actually achieved by the best-performing sources and doesn t allow EPA to set a lower floor based on what it believes to be achievable by all sources EPA argues that d s floor provision incorporates d s ahcievability standard Court finds that this conflicts w the plain language of the statute Sierra Club v EPA Sierra Club challenges the promulgation of regulations governing HAP emissions from primary copper smelters EPA found that copper smelters used PM controls to control HAP emissions and thus set standards in terms of PM not HAP Sierra Club argued that EPA didn t consider non-air quality health and environmental impacts as required by d taking into consideration the cost of achieving such emission reduction and any non-air quality health and environmental impacts and energy requirements Non-air quality impacts are results of emissions that don t manifest themselves as air pollution like acid deposition according to SC According to EPA however they re health and environmental imapcts that may result from measures to achieve the emission reductions Congress didn t define the term and EPA s interpretation passes the Chevron test Non-air quality impacts are groups with consideration of the costs of emission reductions and energy requirements which strongly suggests that this is meant to allow the administrator to consider the costs and benefits of the control measures Furthermore this construction would suggest that EPA was supposed to consider these less-direct impacts now but more direct impacts later when the the risk-based standards are promulgated The Clean Water Act Generally a it is the national goal that the discharge of pollutants into the navigable waters be eliminated by Ambient standards CAA version of water quality standards Emissions rules CAA version of effluent standards All new sources required to meet strict performance standards All of the work of the CWA for the first twenty years was done via effluent limitations Water quality standards took about years to be established So the work that the ambient standards due in the CAA is different than the work that water quality standards do in the CWA CWA driven by ELs Effluent limitations b A Effluent limitations have to be established Must require the best practicable control technology currently availably as defined by the administrator pursuant to Note that this does NOT say for categories classes However the DuPont court said yes to categories b Must identify the characteristics of the pollution May consider total cost of technology in relation to effluent benefits age of equipment engineering aspects non-water quality environmental impacts for both BPT and BACT b A For specific toxic pollutants must specify the use of the best available technology economically achievable for such category or class which will result in reasonable further progress toward the national goal a d National standards of performance standard of performance means a standard that reflects the greatest degree of effluent reduction which the Administrator determines to be achievable through application of the best available demonstrated control technology new sources defined source any building structure facility or installation construction any placement assembly or installation of facilities or equipment at the premises d preemption for years Best management practices allowed as a type of effluent limitation under CWA Major method for carrying this