Late Summer Break

We are on our late summer break and will return with daily blog posts of important environmental developments on Monday, September 11, 2006 (Patriot Day).

A Critical Look At The Future Of Bio-fuels

Aug 24: The Washington, DC-based, Center for Science and Public Policy has posted a critical analysis entitled, The Future of Bio-fuels: A Blend of Hope and Concerns, by Richard S. Courtney. According to the synopsis of the report, "Biomass is biological material used as fuel, and biofuel is biomass that has been converted into a form that makes it useful as a displacement for a fossil fuel; for example, petroleum. Biomass is solar energy collected by photosynthesis over a small area and a few growing seasons in plants that are not compressed and not dried. Simple calculations of the solar energy collection at the Earth's surface demonstrate that no developments of biomass can provide significant amounts of energy because the energy required to farm and harvest it is a substantial proportion of the collected solar energy. And biomass cannot be economic because the net amount of energy harvested can only be small. Indeed, governments would not need to subsidize bio-mass if it were an economically competitive fuel. But the production of biomass has potential for environmental damage by reducing biodiversity, and reliance on the use of biomass threatens energy security."

The report concludes, "Biomass has some significant uses to provide economic waste disposal, but it has little potential as a primary energy source. For example, the European Commission admits that achieving its target of 5.75% of its transport fuels by use of biomass will require substantial imports of biomass despite turning more than 14% of EU agriculture over to biomass production. The limits to biomass for primary energy supply are set by physical laws and, therefore, cannot be overcome... conversion of 10% of US agricultural production to biomass production would provide less than 0.1% of US energy needs... However, the production of biomass has potential for environmental damage by reducing biodiversity and reliance on the use of biomass threatens energy security. These problems are causing concern to environmentalists in Europe..."

Richard S Courtney is a Member of the European Science and Environment Forum (ESEF) and acts as a technical advisor to several UK Members of Parliament. He is Chairman of the Southern Region of a Trade Union (BACM-TEAM) affiliated to the UK’s Trades Union Congress. Having been the contributing Technical Editor of CoalTrans International, he is now on the Editorial Board of Energy & Environment. His present work mostly consists of providing commissioned advice to national governments, although he has recently conducted research studies of energy interactions at sea surface. The Center for Science and Public Policy (CSPP) is a non-profit, non-partisan public policy organization. CSPP relies on scientific experts in many nations and the vast body of peer-reviewed literature to help lawmakers, policy makers, and the media distinguish between scientific findings that are agenda-driven and those that are based on accepted scientific methods and practices. CSPP operates as a policy center for the conservative organization Frontiers of Freedom.

Access the complete 18-page analysis (click here). Access the CSPP website (click here). [*Energy]

Insurance Industry Response To Global Climate Change

Aug 22: Dozens of new insurance activities, such as 'green' building credits and incentives for investing in renewable energy, are emerging to tackle the causes of climate change and rising weather-related losses in the U.S. and globally, according to a major new report issued by the Ceres investor coalition. But the report also states that more insurance companies need to be offering similar services to minimize losses and make the most of business opportunities related to climate change. Mindy Lubber, president of Ceres said, "Climate change poses unprecedented risks to the insurance industry, but it also creates vast opportunities for new products and services to help consumers and businesses reduce their losses, while also reducing the pollution causing global warming. We've seen encouraging progress from big-name insurers and brokers since last year's devastating hurricanes, but many more creative services will be needed as we confront what is perhaps the biggest threat in the industry's history." The insurance industry is the world's largest industry, with $3.4 trillion in yearly premium revenue.

The report comes on the heels of devastating back-to-back hurricane seasons in the U.S. that caused a record $75 billion in insured losses during 2004 and 2005, including $45 billion from Hurricane Katrina alone. While no individual weather event can be attributed to global warming, a growing body of new scientific data show that rising temperatures are likely increasing the intensity of hurricanes, floods, drought, wildfires and other extreme weather events in the U.S. and globally. The report, From Risk to Opportunity: How Insurers Can Proactively and Profitably Manage Climate Change, highlights the insurance industry's unique, powerful role historically in helping the country grapple and manage emerging risks. Just as the industry asserted its leadership to minimize risks from building fires and earthquakes, it is well positioned today to further society's understanding of global warming and advance forward-thinking solutions to minimize its impacts.

The report, written by two insurance industry experts, identifies 190 innovative products and services available or in the pipeline from dozens of insurance providers in 16 countries. Many provide win-win benefits, by reducing financial losses and greenhouse gas emissions. More than half of the activities come from U.S. companies, covering climate change solutions including energy efficiency, green building design, carbon emissions trading and sustainable driving practices.

Examples cited include the Firemen's Fund Insurance that is launching a first-of-its-kind "green" coverage, including rate credits and other incentives, for commercial building owners who re-build damaged properties using green and LEED-certified (Leadership in Energy and Environmental Design) building practices. California-based Firemen's Fund will begin seeking state regulatory approvals this month so that the products can be offered in states around the country this fall. Another example, Marsh, the world's largest insurance broker, and AIG, the world's largest insurer, have launched carbon emissions credit guarantees and other new renewable energy-related insurance products that are allowing more companies to participate in carbon offset projects and growing carbon emissions trading markets. The carbon trading market in the European Union alone is expected to hit $30 billion by the end of 2006.

The new report also outlines the nation's growing insurance availability crisis that has hundreds of thousands of coastal homeowners feeling the combined sting of premium shocks and coverage restrictions after last year's hurricanes. In Louisiana and Florida alone, more than 600,000 homeowners' property policies have been cancelled or not renewed in the past year. In Massachusetts and New York, private insurers have cancelled coverage for more than 80,000 coastal homeowners the past two years, even though it has been decades since the last major hurricane hit the region. Among the impacts of the pullouts is a stronger reliance on governments as insurers of last resort. As more private insurers refuse to take on new policies or renew existing ones, mandated state-run insurance "pools" are being forced to take on more customers and more financial exposure.

Ceres is a national coalition of investors, environmental groups and other public interest organizations working with companies to address sustainability challenges such as climate change. Ceres directs the Investor Network on Climate Risk (INCR), a network of 50-plus institutional investors who collectively manage more than $3 trillion in assets.

Access a release and link to the audio of the press conference (click here). Access the complete 55-page report (click here). Access the Ceres website for additional information (click here). [*Climate]

Gas Demand Grows In July Despite $3/Gallon Average

Aug 21: U.S. gasoline demand rose in July compared to year-earlier levels despite higher pump prices, data compiled by the American Petroleum Institute (API) shows. In its Monthly Statistical Report covering July 2006, API noted that gasoline deliveries, a proxy for demand, climbed 1.7 percent. U.S. distillate fuel use also climbed, up 9.2 percent compared to July 2005, but lower deliveries of jet fuel, residual fuel oil and other products offset the gains to push total U.S. petroleum deliveries down 0.2 percent versus July 2005 levels. API said the gasoline demand increase was a bit "puzzling," given the potential dampening effect of higher retail prices averaging nearly $3 per gallon for the month -- up 30 percent from one year earlier and 56 percent from July 2004. API said, “Stronger income growth may have provided a boost to demand, but we still believe consumers are adjusting their travel patterns as a result of higher prices."

On the supply side, U.S. crude oil production slid 1.3 percent July compared with a year earlier, the smallest year-on-year decline in 14 months. Domestic refinery operations continued at a strong pace as the national capacity utilization rate averaged 92.6 percent in July, down from 94 percent in July 2005. U.S. petroleum imports rose to 14 million barrels per day, a record for the month of July and the fifth highest level ever.

Access a release from API (click here). [*Energy]

Worldwide Assessment Of Water Management In Agriculture

Aug 21: One in three people is enduring one form or another of water scarcity, according to new findings released by the Comprehensive Assessment of Water Management in Agriculture at World Water Week in Stockholm. According to a release, "These alarming findings totally overrun predictions that this situation would come to pass in 2025." Frank Rijsberman, Director General of the International Water Management Institute (IWMI) said, "Worrisome predictions in 2000 had forecast that one third of the world population would be affected by water scarcity by 2025. Our findings from the just-concluded research show the situation to be even worse. Already in 2005, more than a third of the world population is affected by water scarcity. We will have to change business as usual in order to deal with growing scarcity water crisis we see in some countries like India, China, and the Colorado River basin of USA and Mexico."

The Comprehensive Assessment, carried out by 700 experts from around the world over the last five years, indicates that one third of the world’s population is currently living in places where water is either over-used - leading to falling groundwater levels and drying rivers - or can not be accessed due to the absence of the appropriate infrastructure. The Assessment, the first of its kind critically examining policies and practices of water use and development in the agricultural sector over the last 50 years, was co-sponsored by the Consultative Group on International Agricultural Research (CGIAR), FAO, the Ramsar Convention on Wetlands, and the Convention on Biological Diversity in a bid to find solutions to the challenge of balancing the water-food-environment needs. It was spearheaded by IWMI, one of 15 agricultural research centers supported by the CGIAR that are striving to increase food production, increase rural incomes, and safeguard the environment.

Despite the impending threat, the Assessment identifies numerous bright spots -- innovative approaches that hold potential for the future. These include very low cost technologies that facilitate access to, and use of water by, the rural poor. With health issues addressed, for example, people can effectively use urban wastewaters as a productive resource. Irrigation could also be reformed and transformed to reduce water wastage and increase productivity. The report finds that agriculture uses up to 70 times more water to produce food than is used in drinking and other domestic purposes, including cooking, washing and bathing. As a rule of thumb, each calorie consumed as food requires about one liter of water to produce.

David Molden who led the Comprehensive Assessment said, “The Assessment shows that while a third of the world population faces water scarcity, it is not because there is not enough water to go round, but because of choices people make. It is possible to reduce water scarcity, feed people and address poverty, but the key trade-off is with the environment. People and their governments will face some tough decisions on how to allocate and manage water. Not all situations are going to be a win-win for the parties involved, and in most cases there are winners and losers. If you don't consciously debate and make tough choices, more people, especially the poor, and the environment will continue to pay the price.”

The 2006 World Water Week in Stockholm is taking place August 20-26 at the Stockholm City Conference Centre in the Swedish capital. The World Water Week is hosted and organized by the Stockholm International Water Institute (SIWI). Over 100 different organizations and programs are on board as convenors or co-convenors of different activities and more than 1500 participants are expected from 100 countries.

Access a release (click here); and another (click here). Access the Assessment website for links to the research reports, discussion papers & briefs, conference papers and additional information (click here). Access the CGIAR website for more information (click here). Access the World Water Week website for complete details on the conference (click here). [*Water]

International Report Sees Delays In Ozone Recovery

Aug 18: The Executive Summary of a new scientific assessment by the World Meteorological Organization (WMO) and the United Nations Environment Programme (UNEP), and based on a full report prepared by over 250 international scientists, concludes among its findings that the stratospheric ozone layer that protects life on earth from excessive solar radiation will recover five to 15 years later than previously expected. According to the report, UNEP/WMO Scientific Assessment of Ozone Depletion: 2006, the updated scientific understanding indicates that the ozone layer over the mid-latitudes (30° - 60° North and South) should recover by 2049, five years later than anticipated by the previous (2002) assessment. The ozone over the Antarctic should recover by 2065, 15 years later than once expected. Because of special conditions within the Antarctic vortex (a natural cyclone of super-cold, super-fast winds), the Antarctic ozone “hole” is expected to recur regularly for another two decades.

Michel Jarraud, Secretary-General of WMO said, “While these latest projections of ozone recovery are disappointing, the good news is that the level of ozone-depleting substances continues to decline from its 1992-94 peak in the troposphere and 1990s peak in the stratosphere. Global changes in climate suggest that atmospheric conditions are different today from those prior to periods marked by ozone depletion. This may have implications for ozone recovery. Maintaining and improving observational and assessment capabilities are critical in separating effects due to changes in climate from those in ozone -- depleting substances and will play a major role in verifying the effectiveness of actions taken under the 1985 Vienna Convention, the 1987 Montreal Protocol and its amendments.”

The next annual Meeting of the Parties to the Montreal Protocol, to be held in New Delhi from October 30 to November 3, will consider the policy implications of the Executive Summary of the current report. The full body of the report, which was written and reviewed by over 250 experts from around the world, will be available in early 2007.

Access a release and links to related information (click here). Access the Executive Summary (click here). [*Climate]

7th Circuit Says 4th Circuit Is "Out Of Bounds" On Air Act Ruling

Aug 17: In the U.S. Court of Appeals, Seventh Circuit, USA v. Cinergy Corp., Case No. 06-1224. U.S. EPA sued the owner of a number of coal-fired electric power plants claiming that the owner (Cinergy) had violated section 165(a) of the Clean Air Act, 42 U.S.C. § 7475(a), by physically modifying the plants without first obtaining from EPA a permit that the Agency contends is required by EPA regulation 40 C.F.R. § 52.21 for the type of modification that Cinergy made. The modifications produced increases in the nitrogen oxides and sulfur dioxide annually emitted by the plants. The Appeals Court notes, "If the EPA prevails in the suit, Cinergy will be required to retrofit the plants with costly pollution-control equipment (best available control technology). Cinergy argues that the regulation does not require modifications that do not increase the hourly rate at which a plant emits pollutants, even if the modifications increase the annual rate. The EPA argues that Cinergy is misreading the regulation. The district judge agreed with the EPA but authorized Cinergy to take an interlocutory appeal from his ruling, and the Seventh Circuit consented to take the appeal.

The Seventh Circuit said, "Cinergy’s suggested interpretation, besides not conforming well to the language of the regulation, would if adopted give a company that had a choice between making a physical modification that increased the hourly emissions rate and one that enabled an increase in the number of hours of operation an incentive to make the latter change even if that would produce a higher annual level of emissions, because it would elude the permit requirement. Cinergy’s interpretation would also distort the choice between rebuilding an old plant and replacing it with a new one."

The Appeals Court indicates that Cinergy’s argument was rejected by the D.C. Circuit in New York v. EPA, which upheld the EPA’s interpretation of the regulation. But it was accepted by the Fourth Circuit in United States v. Duke Energy Corp., 411 F.3d 539, 546-51 (4th Cir. 2005), cert. granted, 126 S. Ct. 2019 (2006), creating a circuit conflict which the Appeals Court says is the reason "the Supreme Court presumably granted certiorari in the Duke Energy case to resolve."

In its brief 9-page opinion, the Seventh Circuit says in affirming the district courts agreement with EPA's interpretation, "In so ruling, the Fourth Circuit stepped out of bounds, as we have said in describing Cinergy’s argument. But in any event the argument’s premise is incorrect... The New Source Performance Standards and Prevention of Significant Deterioration provisions of the Clean Air Act are at one in defining a modification as a physical change in a plant that results in an increase in emissions, but are silent on whether the increase is in the hourly rate of emissions or in some other rate. The task of deciding was left to the EPA. There was nothing to require that it flesh out the vague statutory meaning in the identical way in different parts of the Clean Air Act adopted years apart and reflecting, to an extent anyway, different philosophies of pollution control. Cinergy’s other arguments are makeweights, and we will not extend this opinion to discuss them."

Environmental Defense issued a release hailing the decision and said, "The ruling in the government’s 'new source review' enforcement case against Cinergy firmly and explicitly rejects the flawed Fourth Circuit opinion now pending appeal in the U.S. Supreme Court’s review of the case, Environmental Defense, et al. v. Duke Energy Corporation (No. 05-848). The case is being briefed this summer and the High Court just established November 1st as the oral argument date in the Duke case. A corporate merger of Duke and Cinergy was approved in April. This pivotal decision by one of the most influential federal court of appeals in the nation sends a powerful signal that it is time to address the serious human health and environmental impacts of coal-fired power plants. The court's strong, clear decision also puts its considerable weight behind a protective interpretation of the Clean Air Act's clean up requirements for coal plants at the same time that the Supreme Court is considering a major case presenting these very questions.”

Access the complete opinion (click here). Access a release from Environmental Defense (click here). Access discussion on the SCOTUSblog (click here). Access links from the Indiana Law blog including background and the 8/29/05 district court decision (click here) the [*Air]

ACC Supports HPV Chemical Information Collection Rule

Aug 16: The American Chemistry Council (ACC) expressed its support for U.S. EPA's use of authority under the Toxic Substances Control Act (TSCA) to obtain information on “orphan” High Production Volume (HPV) chemicals. The final rule and technical corrections were announced in the Federal Register [71 FR 47122-47130, 8/16/06]. EPA has now finalized separate Preliminary Assessment Information Reporting (PAIR) rules and Health and Safety Data Reporting rules for each of 243 “orphan” High Production Volume (HPV) chemicals. Orphan HPV chemicals are those which were not voluntarily sponsored in the HPV Chemical Challenge Program. ACC indicates that since 1998, the association and its members have worked with EPA, the environmental organization Environmental Defense, and other stakeholders to ensure that the HPV Chemical Challenge Program is a success. Through this unprecedented program, chemical companies have volunteered to provide the public with important health and environmental effects data and other information for more than 2,222 individual substances, which together represent approximately 93 percent (by volume) of chemicals in U.S. commerce.

EPA's final rule, issued pursuant to section 8(a) of TSCA, requires certain manufacturers (including importers) of certain HPV Challenge Program orphan (unsponsored) chemicals to submit a one-time report on general production/ importation volume, end use, and exposure-related information to EPA. The Interagency Testing Committee (ITC), established under section 4(e) of TSCA to recommend chemicals and chemical mixtures to EPA for priority testing consideration, amends the TSCA Section 4(e) Priority Testing List through periodic reports submitted to EPA. The ITC recently added certain HPV Challenge Program orphan (unsponsored) chemicals to the Priority Testing List in its 55\th\ and 56\th\ ITC Reports, as amended by deletions to this list made in its 56\th\ and 58\th\ ITC Reports. Two tungsten oxide compounds were added to the Priority Testing List by the ITC in its 55\th\ ITC Report but were removed from the Priority Testing List in the 58\th\ ITC Report. In addition, EPA is making technical corrections to update the EPA addresses to which submissions under the Preliminary Assessment Information Reporting (PAIR) rule must be mailed or delivered.

The final rule is effective September 15, 2006; however, Sec. 712.28 and 712.30(c), which contain technical corrections, are effective August 16, 2006. For purposes of judicial review, this rule shall be promulgated at 1 PM EDT on August 30, 2006. PAIR Forms must be submitted to EPA on or before November 14, 2006. A request to withdraw a chemical from the PAIR rule, pursuant to 40 CFR 712.30(c), must be received on or before August 30, 2006. ACC said that the final rule helps to “level the playing field” by ensuring that health and environmental information is also provided on chemicals for which the manufacturers or importers did not voluntarily commit to providing this information to EPA and to making this information public. The rules are also among EPA’s office pollution prevention and toxics largest rulemakings, in terms of the number of chemicals covered. As such, ACC said, "they demonstrate that TSCA is both strong and flexible."

Access the FR announcement (click here). Access an ACC release with links to related information (click here). Access EPA's HPV Challenge Program website for extensive information (click here). [*Toxics]

NE-Mid-Atlantic States Release Final Model GHG Rule

Aug 15: The participating states issued a model rule for the Northeast-Mid-Atlantic Regional Greenhouse Gas Initiative (RGGI) program. The model set of regulations details the proposed program, as outlined in the Memorandum of Understanding (MOU). The model rule will form the basis of individual state regulatory and/or statutory proposals to implement the program [See WIMS 3/27/06]. The states that agreed to sign the MOU include Connecticut, Delaware, Maine, New Hampshire, New Jersey, New York, and Vermont. Development of the model rule was subject to detailed public input. On March 23, 2006, the participating states released a draft version of the model rule for public comment. The states received public input on the draft model rule for a period of 60 days. In excess of 1,000 pages of comments were received from more than 100 organizations.

The states made substantial revisions to the draft model rule in response to public comments. Some of the changes made to the model rule required substantive changes to the MOU. As a result, an amendment to the MOU was also agreed to and signed by the agency heads of the energy regulatory and environmental agencies in each participating state. The participating states also released a Post-Model Rule Action Plan outlining the actions that will be taken to implement the program and work items that will be undertaken to support program implementation.

Under the Regional Greenhouse Gas Initiative (RGGI), seven Northeast states agreed to propose a cap-and-trade program to reduce carbon dioxide (CO2) emissions, which are a major contributor to global warming. This is the first mandatory cap-and-trade program for CO2 emissions in U.S. history. In addition to the states listed above, the State of Maryland recently adopted legislation requiring Maryland to join RGGI by June 2007. Under RGGI, the seven states will launch a regional cap-and-trade system that utilizes emissions credits or allowances to limit the total amount of CO2 emissions. Beginning in 2009, emissions of CO2 from power plants in the region would be capped at approximately current levels -- 121 million tons annually -- with this cap remaining in place until 2015. The states would then begin reducing emissions incrementally over a four-year period to achieve a 10 percent reduction by 2019. Compared to the emissions increases the region would see from the sector without the program, RGGI will result in an approximately 35 percent reduction by 2020.

Access links to a press release, the model rule, rule revisions, the rule action plan and the MOU (click here). Access the WIMS-EcoBizPort Climate Change website for links to additional resources [*Climate]

$15 Million U-M Michigan Dioxin Exposure Study Released

Aug 15: People living in parts of Midland and Saginaw counties, near the Dow Chemical Co. plant have higher levels of dioxins in their bodies than a control group of people elsewhere in Michigan, according to a University of Michigan study released August 15, 2006. The $15 million U-M Dioxin Exposure Study was financed by a grant from Dow Chemical and was controlled and conducted entirely by U-M researchers. Research decisions were reviewed by an independent scientific advisory board. U-M researchers spent two years studying residents in five geographic areas.

The report indicates that in the Tittabawassee River floodplain near Dow, one of the geographic areas studied, people had 28 percent higher median levels of total dioxin-like chemicals in their blood than people in a control group in Jackson and Calhoun counties. Dioxins are toxic chemicals. They had 32 parts of dioxins for every trillion parts of blood, compared to 25 in people living in Jackson and Calhoun counties.

The Jackson/Calhoun region was used as a comparison because it is similar to Midland/Saginaw but is more than 100 miles away from the Dow plant. Dioxin levels in Jackson/Calhoun residents are close to the national median level. According to a release, much of the increased amount of dioxins in Midland/Saginaw residents was related to age. Nationally, older people have higher dioxins levels. People in Midland/Saginaw tend to be older than people in Jackson/Calhoun. Some of the increase was associated with eating certain foods such as fish from local waters contaminated by Dow and other sources, engaging in recreational activities on or near contaminated waters, or having worked at the Dow plant from 1940 to 1959. A small portion of the increase was related to living on soil contaminated by Dow, the study found.

U-M scientists studied levels of dioxins in people’s property soil, household dust and blood samples, and interviewed residents about their age, body mass, dietary habits, land use, occupation, and other personal details. A total of 695 Midland/Saginaw residents and 251 Jackson/Calhoun residents gave blood samples. Participants in the study were at least 18 years old. The researchers found that the median level of dioxins in soil in Jackson/Calhoun, the control area, was 4 parts per trillion -- 4 parts of dioxins for every trillion parts of soil. The median levels in Midland/Saginaw ranged from 4 parts per trillion in the near-floodplain area to 13 in the floodplain and 59 in the area downwind of Dow. The researchers found that people who lived in Midland/Saginaw on property with contaminated soil had higher median levels of dioxins in their blood. If the dioxins in their soil increased by 1,000 parts per trillion, the dioxins in their blood increased by about 0.7 parts per trillion (a 2 percent increase over the average level of blood dioxin for most people).

Access a release (click here). Access the U-M Dioxin website for the complete report, handouts, presentations, information on meetings and background information (click here). Access the WIMS-EcoBizPort Special Report on Midland Area Dioxin Issues for further background information and links to additional resources (click here). [*MIToxics]

UNFCCC Awards Kyoto International Transaction Log Contract

Aug 15: The United Nations Framework Convention on Climate Change (UNFCCC) Secretariat has awarded the multi-million dollar contract to build the electronic infrastructure required for settling emission trades under the Kyoto Protocol, the International Transaction Log (ITL). The contract went to Trasys SA, an IT company based in Belgium. The company subcontracted the European company LogicaCMG to maintain the system’s day-to-day operation. Richard Kinley, acting head of the UNFCCC Secretariat said, “Both companies are solid members of the IT community. They bring strong reputations and many years of experience from developing and operating similar systems in other markets.”

The Kyoto Protocol requires 35 industrialized countries to reduce greenhouse gas emissions below levels specified for each of them in the Protocol. Overall, this should amount to reductions of at least 5% below 1990 levels between 2008 and 2012. The ITL will be connected to the emissions trading registries of all the industrialized countries that sign up to the Kyoto Protocol. Kinley said, “Awarding this contract is a significant milestone in finalizing the systems to make carbon trading under the Kyoto Protocol a reality. We remain on track for Kyoto countries' systems to link to the ITL and become fully operational by April 2007.” Companies investing in climate friendly projects can obtain additional carbon credits in exchange for every tonne of emissions saved through the Kyoto Protocol’s project-based mechanisms (Clean Development Mechanism and Joint Implementation, i.e. CDM & JI). These can then be freely traded on the carbon market.

Access a UNFCCC release (click here). Access the UNFCCC website with links to extensive information including details of the CDM and JI programs (click here). [*Climate]

8th Circuit Joins 2nd Circuit On CERCLA Suits

Aug 11: In the U.S. Court of Appeals, Eighth Circuit, Atlantic Research v. United States, Case No. 05-3152. Atlantic Research Corporation of Camden, Arkansas, sought partial reimbursement from the United States for costs incurred in an environmental cleanup. Atlantic’s claim is based on the Comprehensive Environmental Response, Compensation, and Liability Act, amended by the Superfund Amendments and Reauthorization Act of 1986. The issue for consideration is whether CERCLA forbids a party such as Atlantic, which has voluntarily cleaned up a site for which it was only partly responsible, to recover part of its cleanup costs from another liable party. The Appeals Court held that CERCLA § 107 permits such a cause of action.

Atlantic sought to recover a portion of these costs from the United States by invoking CERCLA §§ 107(a) and 113(f).3 Atlantic and the government began to negotiate in an effort to resolve these financial matters. The negotiations ended with the United States Supreme Court decision in Cooper Industries, Inc. v. Aviall Services, Inc., 543 U.S. 157, 125 S. Ct. 577, 160 L.
Ed. 2d 548 (2004) (Aviall). In Aviall, the court found a party could only attempt to obtain § 113(f) contribution 'during or following' a §§ 106 or 107(a) CERCLA civil action. Id. at 161, 125 S. Ct. at 580. As no action had been commenced against Atlantic under either §§ 106 or 107(a), the Aviall decision barred its § 113(f) contribution claim. With its § 113(f) claim Aviall-foreclosed, Atlantic amended its complaint. The amended complaint relied solely on § 107(a) and federal common law. In lieu of answer, the government moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), arguing this Court’s pre-Aviall decision in Dico, Inc. v. Amoco Oil Co., 340 F.3d 525 (8th Cir. 2003) (Dico) foreclosed Atlantic’s § 107 claim. The district court agreed and Atlantic appealed the decision.

The Appeals Court provides considerable discussion of pre-Aviall claims and the effect of the Aviall Supreme Court decision. The Second Circuit is the only Court which has considered this question since the Aviall decision. That Court also revisited its pre-Aviall precedent and concluded that § 107 allowed one liable party to recover voluntarily incurred response costs from another. Consolidated Edison Co. v. UGI Utilities, Inc., 423 F.3d 90, 100 (2d Cir. 2005).

The Eighth Circuit said, "We agree with our sister Circuit, and hold that it no longer makes sense to view § 113 as a liable party’s exclusive remedy. This distinction may have made sense for parties such as Dico, which was allowed to seek contribution under § 113. But here, Atlantic is foreclosed from using § 113. This path is barred because Atlantic – like Aviall – commenced suit before, rather than 'during or following,' a CERCLA enforcement action. Atlantic has opted to rely upon § 107 to try to recover its cleanup costs exceeding its own equitable share. We conclude it may do so."

Editor's Update Note: On January 19, 2007, the U.S. Supreme Court agreed to hear the case of U.S. v. Atlantic Research Corp. (Docket: 06-0562). The case was appealed from the Eighth Circuit Court of Appeals decision of August 11, 2006 [See WIMS 8/14/06]. The primary questions presented in the case is: "Whether a party that is potentially responsible for the cost of cleaning up property contaminated by hazardous substances under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), but that does not satisfy the requirements for bringing an action for contribution under Section 113(f) of CERCLA, 42 U.S.C. 9613(f), may bring an action against another potentially responsible party under Section 107(a), 42 U.S.C. 9607(a)?"

Access the complete Eighth Circuit opinion (click here). Access a Medill News Service summary of the action (click here). Access the U.S. Supreme Court Docket for the case (click here). [*Remed]

Ninth Circuit Interprets Supreme Court Wetlands Decision

Aug 10: In the case of Northern California River Watch v. City of Healdsburg, in the U.S. Court of Appeals, Ninth Circuit, Case No. 04-15442. [Editor's Note: The Ninth Circuit provides considerable discussion of its interpretation of the Rapanos decision and, in particular, the interpretation of Justice Kennedy's "controlling" opinion. The discussion begins on page 9 of the opinion.]

The City of Healdsburg appeals the district court’s judgment in favor of Northern California River Watch, an environmental group, in this litigation under the Clean Water Act (CWA). Plaintiff alleges that Healdsburg, without first obtaining a National Pollutant Discharge Elimination System (NPDES) permit, violated the CWA by discharging sewage from its waste treatment plant into waters covered by the Act. Healdsburg discharged the sewage into a body of water known as “Basalt Pond,” a rock quarry pit that had filled with water from the surrounding aquifer, located next to the Russian River.

The issue is whether Basalt Pond is subject to the CWA because the Pond contains wetlands adjacent to a navigable river of the United States. The district court held that discharges into the Pond are discharges into the Russian River, a navigable water of the United States protected by the CWA. The court followed the United States Supreme Court decision in United States v. Riverside Bayview Homes, Inc., 474 U.S. 121 (1985).

The Ninth Circuit, in what is believed to be the first Appeals Court interpretation of the Supreme Court's Rapanos decision [See WIMS 8/2/06] said, "The Supreme Court, however, has now narrowed the scope of that decision. See Rapanos v. United States, 126 S.Ct. 2208 (2006). In a 4-4-1 decision, the controlling opinion is that of Justice Kennedy who said that to qualify as a navigable water under the CWA the body of water itself need not be continuously flowing, but that there must be a “significant nexus” to a waterway that is in fact navigable. Adjacency of wetlands to navigable waters alone is not sufficient. Id. at 2236-52. In light of Rapanos, we conclude that Basalt Pond and its wetlands possess such a “significant nexus” to waters that are navigable in fact, because the Pond waters seep directly into the navigable Russian River. We affirm the district court’s holding that Basalt Pond is subject to the CWA. We also affirm the district court’s ruling that neither the waste treatment system nor the excavation operation exceptions in the Act apply to Healdsburg’s discharges."

In it discussion of the Supreme Court ruling in Rapanos, the Ninth Circuit said, "In the last term, however, the Supreme Court discussed the intersection between Riverside Bayview Homes and SWANCC. United States v. Rapanos, 126 S.Ct. 2208 (2006). The Rapanos decision involved two consolidated cases, United States v. Rapanos, 376 F.3d 629 (6th Cir. 2004) (Rapanos I) and Carabell v. U.S. Army Corps of Engineers, 391 F.3d 704 (6th Cir. 2004)...

"In Rapanos, a 4-4-1 plurality opinion, the Supreme Court addressed how the term 'navigable waters' should be construed under the Act. The plurality, written by Justice Scalia for four Justices, would have reversed on the grounds that only those wetlands with a continuous surface connection to bodies that are 'waters of the United States' are protected under the CWA. Justice Stevens, writing the dissent for four Justices, would have affirmed on the grounds that wetlands not directly adjacent to navigable waters, but adjacent to tributaries of navigable waters, are protected under the CWA. Justice Stevens argued that Riverside Bayview Homes is still the controlling precedent and does not require a 'significant nexus' test.

"Justice Kennedy, constituting the fifth vote for reversal, concurred only in the judgment and, therefore, provides the controlling rule of law. See Marks v. United States, 430 U.S. 188, 193 (1977) (explaining that '[w]hen a fragmented Court decides a case and no single rationale explaining the result enjoys the assent of five Justices, the holding of the Court may be viewed as that position taken by those Members who concurred in the judgments on the narrowest grounds')..."

Access the complete opinion (click here). On August 1: The Senate Committee on Environment and Public Works, Subcommittee on Fisheries, Wildlife, and Water, Chaired by Lincoln Chafee (R-RI) held a hearing on interpreting the effect of the U.S. Supreme Court's recent decision in the joint cases of Rapanos v. United States and Carabell v. U.S. Army Corps of Engineers on "The Waters of the United States". Access the hearing website and links to all testimony (click here). Access a "simple" explanation of the Rapanos v. U.S. decision from QuizLaw (click here). [*Water]

EPA Proposes Revisions To Degreaser Air Toxics Rule

Aug 10: U.S. EPA is proposing options to reduce air toxics emissions by up to 70 percent from halogenated solvent cleaning operations. Halogenated solvents, also known as degreasers, are used to remove soils such as grease, oils, waxes, carbon deposits and tars from metal, plastic, fiberglass and other surfaces. The proposal includes two options, both of which would result in increased health protection for the public and cost savings for the industry. The proposals would impose an annual cap on emissions of the solvents methylene chloride, perchloroethylene and trichloroethylene. The caps would provide affected facilities with the flexibility to reduce their emissions using any traditional methods available. Most degreasing operations already emit less than either proposed caps. The proposal would focus on facilities posing the highest risks by requiring them to reduce emissions and meet the cap. EPA issued a national rule to limit emissions of air toxics from degreasing operations in 1994.

The proposal addresses the residual risk and the eight-year technology review provisions in the Clean Air Act. These provisions direct EPA to review existing control technology standards. EPA is to tighten those standards if needed to protect health or because of improvements in emissions reduction methods. EPA will accept public comment on its proposal for 45 days following publication of the proposed action in the Federal Register.

Access a release (click here). Access a fact sheet on the proposed rule (click here). Access a prepublication copy of the proposed rule (click here). [*Air]

DOE Releases National Electric Transmission Congestion Study

Aug 8: On the first anniversary of Energy Policy Act of 2005 (EPAct), Department of Energy Secretary Samuel Bodman announced that the Department has published the National Electric Transmission Congestion Study. The report identifies three groups of congestion areas that merit further federal attention. The most severely congested areas are called “Critical Congestion Areas.” These areas are Southern California, and the Atlantic coastal area from the New York City area to northern Virginia. A second group, “Congestion Areas of Concern,” consists of four areas that appear to require close observation and further study to determine the magnitude of their existing or emerging congestion problems. These are: New England, the Phoenix-Tucson area, the Seattle-Portland area, and the San Francisco Bay area. The third group, “Conditional Congestion Areas,” consists of areas where congestion is not acute at present, but it would become so if large amounts of new electric generation were to be built without associated transmission capacity including Montana-Wyoming, the Dakotas-Minnesota, Kansas-Oklahoma, Illinois, Indiana, Upper Appalachia and the Southeast.

With the release of the study, DOE will now be seeking comments until October 10, from interested parties on the possible designation of National Interest Electric Transmission corridors in relation to all three groups of congestion areas. If appropriate, the DOE Secretary will designate certain areas as National Corridors in accordance with the law. The study, and comments on it from stakeholders, will be used in future decisions by the Department concerning the designation of National Corridors. Section 1221(a) of the Energy Policy Act of 2005 updates Section 216 of the Federal Power Act and requires DOE to issue a national transmission congestion study for comment by August 2006 and every three years thereafter. Based on the study and public comments, DOE may designate selected geographic areas as "National Interest Electric Transmission Corridors." Applicants for projects proposed within designated corridors that are not acted upon by state siting authorities within one year may request FERC to exercise federal "backstop" siting authority.

Bodman also released a report prepared by the Department that details other programs that have been undertaken since the passage of EPAct. The report, On the Road to Energy Security: Implementing a Comprehensive Energy Strategy, is designed to be an easy-to-read document that explains many of the highlights of EPAct, and provides a progress summary on achieving the Act’s goals of greater energy security. Additionally, Bodman provide an overview briefing on issues surrounding the Prudhoe Bay, Alaska oil field shutdown.

Access a lengthy release (click here). Access links to the complete Congestion study, an executive summary, comment procedures, and extensive background information (click here). Access the EPAct accomplishments summary (click here). [*Energy]

How Federal Policies Affect The Allocation of Water

Aug 7: The Congressional Budget Office (CBO) has issued a report entitled, How Federal Policies Affect the Allocation of Water. According to the report, the drought conditions of recent years have focused attention on the nation’s use of freshwater resources. This CBO paper examines the mechanisms that govern water allocation, how they affect the benefits that accrue to society from its use of water resources, how those effects might change over time, and what influence federal policies could have on such considerations. The paper was prepared in response to a request from the Ranking Member of the Subcommittee on Water and Power of the House Committee on Resources, Raul Grijalva (R-AZ). CBO notes that in keeping with its mandate to provide objective, impartial analysis, the paper makes no recommendations.

To examine how society uses its water resources, the CBO analysis addresses several major questions: What are this country’s water sources, and how is the water used?; What determines the underlying allocation, and does that allocation maximize water’s potential benefits to society as a whole?; and What policies might the federal government consider toward that end? The report indicates that the state laws governing property rights and the pricing mechanisms that conceal opportunity costs make the current allocation of water relatively inflexible. That inflexibility might become increasingly costly in the future, as it exacerbates pressures on federal spending and reduces the potential gains to the economy from the use of water resources. Four developments in particular augment demand pressures: the settlement of Indian tribes’ claims on water rights currently held by others; environmental laws that require greater amounts of water be retained in natural courses; growing populations in arid states; and the recurring impacts of droughts, which may increase in frequency and intensity as a result of shifts in precipitation patterns.

Under policy options, the report says that broader use of markets in deciding how scarce water resources are allocated could improve on the current system of administrative allocation that has emerged under state law. Because markets offer flexibility in balancing supply and demand -- by providing incentives to reallocate water among users, to use less water, and to provide more water -- they could mitigate society’s costs of adjusting to changing conditions. The report notes that, "The federal government could facilitate market transfers of water by clarifying the potential for broader water marketing using its jurisdiction under the commerce clause of the Constitution and federally reserved water rights. The commerce clause gives the Congress the authority to allocate interstate waters to serve the national interest -- even if doing so means overriding state law."

Access the complete 32-page report (click here). [*Water]

Prudhoe Bay Oil Field Shutdown; Iran Plays The Oil Card

Aug 7: BP Exploration Alaska, Inc. announced that it has begun an orderly and phased shutdown of the Prudhoe Bay oil field following the discovery of unexpectedly severe corrosion and a small spill from a Prudhoe Bay oil transit line. Shutting down the field will take days to complete. Over time, these actions will reduce Alaska North Slope oil production by an estimated 400,000 barrels per day, reportedly 8 percent of U.S. domestic crude oil production. The decision follows the receipt on Friday, August 4 of data from a "smart pig run" completed in late July. Analysis of the data revealed 16 anomalies in 12 locations in an oil transit line on the eastern side of the oil field.

BP America Chairman and President Bob Malone said, “We regret that it is necessary to take this action and we apologize to the nation and the State of Alaska for the adverse impacts it will cause. However, the discovery of this leak and the unexpected results of this most recent smart pig run have called into question the condition of the oil transit lines at Prudhoe Bay. We will not resume operation of the field until we and government regulators are satisfied that they can be operated safely and pose no threat to the environment.” BP indicated it is identifying and mobilizing additional resources from across Alaska and North America in order to speed inspection of remaining Prudhoe Bay oil transit lines. BP operates 22 miles of oil transit pipeline at Prudhoe Bay. Smart pigging inspection has been completed over about 40 percent of that length. BP previously announced plans to replace a three-mile segment of pipeline following inspections conducted after a large spill discovered on March 2, 2006.

Meanwhile, various media reports indicate that Iran's Deputy Oil Minister Mohammad Hadi Nejad-Hosseinian, in India for two days of talks on a proposed $7 billion gas pipeline, said that global crude oil prices could reach $100 a barrel on geopolitical tension and soaring winter demand. Other Iranian statements have warned of oil prices of $200 if international sanctions were imposed on the country in its nuclear dispute with the U.S.

An August 7, 2006, Standard & Poor's article entitled, The Effect Of A Major Oil-Supply Disruption On U.S. And Global Economies, analyzes a range of options that indicate oil prices could reach $250 oil barrel, under a worse case scenario where Iran would close the Strait of Hormuz, a shipping route for oil tankers from Kuwait, Saudi Arabia and the United Arab Emirates. The most likely scenario according to S&P is based on a limited Middle East conflict with oil prices around $75 a barrel and falling even lower by year's end.

Access a release from BP (click here). Access the BP Alaska corrosion Response website for continued updates and information (click here). Access an extensive Reuters financial analysis (click here). Access links to various media coverage on the Iranian oil issue (click here). Access the S&P for links to the article and an audio playback of a telephone conference call held on July 27, 2006 to discuss S&P's view on the economic impact of increased oil prices (click here, registration required). [*Energy]