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A Pair of D.C. Circuit Decisions Portend Increased Regulation of Sewage Treatment Plants, Biomass Energy, and Other Stationary Sources of "Biogenic" Carbon

August 23, 2013 posted by Eric Christensen

A recent decision of the U.S. Court of Appeals for the District of Columbia Circuit (more popularly known as the D.C. Circuit) portends increased regulation of biomass power plants, as well as landfills, sewage treatment plants, and similar facilities that produce greenhouse gases ("GHG") through "biogenic" processes. The decision is critical both to the forest products industry, which frequently burns wood waste and other byproducts to produce energy, and the owners of landfills, sewage treatment plants, wastewater treatment plants, and similar facilities, both public and private. A second recent D.C. Circuit decision, although narrower in scope, similarly upholds stricter regulation of sewage treatment plants under the Clean Air Act. Considered together, the decisions underscore the importance of "thinking outside the box," to escape treating wastes as a traditional regulatory problem, and exploring ways to, for example, convert waste into valuable commodities. One innovative solution was recently undertaken by Pierce Transit, the public transit agency for Pierce County, Washington, which is now using methane produced from the Cedar Hills landfill to fuel its bus fleet. Another approach is the advanced waste-to-energy technologies now widely adopted in Europe, which simultaneously maximize recover of useful materials, convert the remaining materials to useful energy, and minimize emissions of GHG and other pollutants. Innovative approaches like these can turn expensive and burdensome regulatory and waste treatment problems into economic and environmental assets. In the first decision discussed here, issued last month, the DC Circuit rejected the U.S. Environmental Protection Agency's ("EPA") "Deferral Rule." The Deferral Rule is part of EPA's overall strategy to phase in GHG regulation in response to the Supreme Court's ruling in Massachusetts v. EPA, which held that EPA is empowered under the Clean Air Act to regulate GHG emissions. While EPA is moving ahead with regulation of GHG emissions from stationary sources that burn fossil fuels under the so-called "Tailoring Rule," EPA proposed in the Deferral Rule to delay regulation of "biogenic" sources of GHG emissions for three years. The rule covers biomass plants, methanol production, landfills, wastewater treatment plants and other stationary sources where GHG are produced by biological processes such as decomposition or fermentation, rather than by the burning of fossil fuels. The three-year delay was necessary in EPA's view to resolve significant uncertainty -- and controversy -- concerning the extent to which such biogenic sources contribute to climate change. Unlike combustion of fossil fuels, which releases carbon that has been trapped for millenia in geological deposits, biogenic carbon sources generally take up carbon dioxide as well as emitting it. For example, because biomass generators use plants as a feedstock, and those plants absorb carbon dioxide through photosynthesis, the net effect on GHG production of using biomass power or biofuels is arguably minimal, or may even produce a net reduction in GHG emissions. For some biogenic sources, the equation is even more complicated. Landfills, for example, produce large amounts of methane, a potent GHG, through decomposition. If the methane is captured and used, as with the Pierce Transit project, combustion of the methane produces carbon dioxide, which traps far less heat in the atmosphere than methane. The D.C. Circuit, however, rejected the Deferral Rule, concluding that EPA had not adequately justified its decision to defer regulation of biogenic sources of GHG pollution. Center for Biological Diversity v. EPA, D.C. Cir. No. 11-1101 (issued July 12, 2013). As a matter of timing, the decision may not have a great impact because the Deferral Rule was set to expire in July, 2014, and regulation of biogenic carbon sources would then commence. As a legal matter, however, the decision suggests that EPA may not have the statutory authority to distinguish between biogenic and non-biogenic carbon sources. While Judge David Tatel's majority opinion concludes only that EPA failed to explain how the Deferral Rule was justified by under the Clean Air Act, Judge Brett Kavanaugh's concurring opinion concludes that EPA lacks the statutory authority to distinguish between biogenic and other sources of GHG. In her dissenting opinion, Judge Karen LeCraft Henderson concluded that EPA not only has the statutory authority to treat biogenic carbon differently, but that its decision to defer regulation of biogenic sources is "eminently reasonable." Thus, it appears that the basic question concerning the extent of EPA's authority to treat biogenic carbon sources differently under the Clean Air Act will remain unsettled at least until the agency acts on remand, and perhaps considerably longer. A second D.C. Circuit opinion concerning regulation of sewage treatment plants was issued earlier this week. In that decision, the D.C. Circuit upheld EPA's conclusion that sewage treatment plants that use sewage sludge combustion are properly regulated under Section 129 of the Clean Air Act, which governs pollution from "solid waste incineration unit[s]," rather than under Section 112, which provides EPA with more general authority to govern hazardous air pollutants. As a practical matter, this means that sewage sludge combustion will be subject to considerably more stringent regulation than if such combustion were regulated under Section 112. The opinion also concluded that the agency did not adequately explain the complex statistical methods it employed to set MACT standards ("Maximum Achievable Control Technology") for sewage sludge incinerators, but remanded the rulemaking to EPA without vacating the regulation. It therefore remains possible that the MACT standards ultimately adopted by EPA will change, but the rule is now effectively final apart from possible fine-tuning in the remand process. National Ass'n of Clean Water Agencies v. EPA, D.C. Cir. No. 11-1131 (issued Aug. 20, 2013). If you have questions about the cases discussed in this post, environmental compliance, municipal utilities, or other questions related to energy or environmental law, please contact a member of GTH's Energy, Telecommunications, and Utilities practice group, Environment & Natural Resources practice group, or Municipalities and Municipal Entities practice group. We are proud that our partner Jim Waldo was recently named 2013 Lawyer of the Year for Energy and Natural Resources Law, and practice group members Don Cohen, Bill Lynn, and Brad Jones were all named among Seattle's Best Lawyers.