Shale Gas Drilling Boom Credited for Reduction of CO2 Emissions to 20 Year Low

According to the U.S. Energy Information Agency (“EIA”), the United States’ energy related carbon dioxide emissions in 2011 were the lowest in 20 years.  One of the primary reasons cited for this decline in CO2 emissions is the increase in natural gas fired power plants.  The EIA’s report states that “[t]he introduction of new, efficient gas-fired capacity and a recent decline in the price of natural gas has helped boost natural gas' share [of electric energy production] from 14 percent in 2000 to 24 percent in 2011.”  Natural gas power generation has the lowest carbon intensity per Btu of the fossil fuels. 

Other reasons were also cited as contributing to the decline of CO2 emissions in 2011, including slowed economic growth and an increase in the use of renewable fossil fuel alternatives.

The increase in natural gas fired power plants can be largely attributed to the fact that shale gas drilling has made natural gas plentiful and cheap.  In fact, an Associated Press article on the EIA’s announcement reported that many scientists didn’t see the sharp drop in CO2 emissions because it happened as a result of market forces rather than government regulatory action. 

Of course, many will use the EIA’s announcement to support arguments for the wholesale abandonment of coal as a source of electrical energy production.  But the EIA report warns that it is difficult to draw long-term conclusions based upon one year of data.  There are also questions as to whether natural gas will remain cheap.  The Associated Press article quoted Jason Hayes, a spokesman for the American Coal Counsel, predicting that it will not.  Mr. Hayes believes that the demise of coal fired power plants has been much exaggerated.  He believes that power companies will continue to build coal fired power plants as pollution control technology advances to meet new EPA standards that will take effect in the coming years.

The recent boom in shale drilling has, without a doubt, dramatically decreased natural gas prices.  As long as those prices remain low and stable, electric power companies will increasingly rely upon natural gas to produce electricity.  Based upon the EIA’s data, this could continue to decrease air pollution.  The question, however, is whether natural gas prices will remain low enough to be an attractive alternative to coal.  The price of natural gas has been historically volatile. Coal remains a relatively cheap and reliable source of electricity production.  Accordingly, it is premature to predict the wholesale abandonment of coal as a source of electric power generation in the future.  The hope from here is that the United States promotes a balanced energy policy, as well as advances in pollution control technology, to produce the cheapest, most reliable, most efficient, and cleanest electricity possible.

Chambers Upholds CWA Section 404 Permit

In the ongoing battle over Mountaintop Removal Mining, the coal industry scored a victory Friday in OVEC v. U.S. Army Corps of Engineers, S.D. W. Va. Civil Action No. 3:11-0149.  A link to a copy of the published decision is here: http://www.wvsd.uscourts.gov/district/opinions/pdf/Memorandum%20Opinion%20and%20Order.pdf.  At issue is whether the Corps of Engineers properly issued a Clean Water Act Section 404 valley fill permit to Highland Mining Company in connection with its Reylas surface mine in Logan County. 

A rich history of Section 404 permitting litigation has blossomed in the Southern District of West Virginia, and on appeal, in the Fourth Circuit.  In Kentuckians for Commonwealth Inc. v. Rivenburgh  317 F.3d 425, 430 (4^th Cir. 2003), the Fourth Circuit overturned the Southern District of West Virginia’s judicially-imposed moratorium on valley fill permits.  The Fourth Circuit disagreed with the District Court’s holding that the CWA only permits discharge of fill material that achieves some primary beneficial purpose (such as building a dam) and prohibits discharges that are merely for waste disposal.  In Ohio Valley Environmental Coalition v. Bulen, 429 F.3d 493 (4^th Cir. 2005), the Fourth Circuit held that the Southern District of West Virginia was wrong to enjoin the use of Nationwide Permit 21, finding that the Corps of Engineers acted within the bounds of its discretion in issuing NWP21 for use in coal mining. In OVEC v. Aracoma Coal Co., 556 F.3d 177 (4th Cir. 2009), the Fourth Circuit again ruled that the Southern District improperly substituted its discretion for the Corps of Engineers discretion in striking down a number of permits over concerns about conductivity discharging from mine operation.

In the present case, the Southern District appears to have taken to heart the Fourth Circuit’s  instructions to refrain from adding itself as an additional level of review of Section 404 permits.  Highland Mining’s Section 404 permit had been challenged by the Sierra Club and others, who argued that: 1) a mitigation plan submitted by Highland Mining to offset impacts of the fill was inadequate; and  2) that the Corps erroneously concluded that discharges of selenium and conductivity would not cause significant cumulative adverse effects to the watershed. 

The Court properly recognized that its discretion was severely limited by the Aracoma decision. It stated, “in matters involving complex prediction based on special expertise, a reviewing court must be at its most deferential.” Thus, it declined to substited its judgment for the Corps in reviewing the adequacy of Highland’s mitigation plan. With regard to selenium, the Court ruled that a Clean Water Act Section 401 “certification” issued by the State confirming that the project would meet water quality standards was not contested by EPA and, under Corps regulations, was therefore binding on the Corps.

With respect to conductivity, the Court held that the 401 certification was not binding, because EPA had objected to the permit on conductivity-related grounds. The Court went to great lengths to note that it agreed with the Sierra Club experts regarding the correlation among mining, conductivity increases, and bug loss, but ultimately held that, since the Corps, EPA, and Highland met extensively and created comprehensive monitoring and action plans to deal with conductivity should it become a problem, Aracoma dictated that the Court not substitute its judgment for that of the Corps.  Accordingly, the Court declined to enjoin Highland’s use of the Section 404 permit. 

The upshot of this decision should be that environmental groups should no longer have a valid basis to challenge Section 404 permits in District Court when their argument is merely that the Corps made the wrong permitting decision after reviewing all the evidence submitted to it at the time. So long as the Corps has a reasonable basis for making its decisions, court challenges to those decisions should come to an end.

Court Throws Out EPA's Mining Guidance

In a much-anticipated ruling, U.S. District Judge Reggie B. Walton, ruled that U.S. Environmental Protection Agency exceeded its authority under the Clean Water Act and its very limited participation in Surface Mining Control and Reclamation Act (“SMCRA”) programs.  This yet another ruling in a long and ever growing list of examples of the Obama administration’s EPA exceeding its statutory authority.  Most recently, the D.C. District Court had held that the EPA had improperly usurped the US Army Corps of Engineer’s role in issuing Section 404 (valley fill) permits in NMA v. Jackson, 816 F.Supp.2d 37 (D. D.C. 2011) (Walton, J.) and had illegally used its veto power to revoke a validly-issued Section 404 permit in Mingo-Logan Coal Company, Inc. v. EPA, 2012 WL 975880 (D.D.C. 2012) (Jackson, J.).

In this case, (also styled NMA v. Jackson) the focus is primarily on SMCRA permits and Section 402 pollutant discharge permits (“NPDES permits”).  EPA published a “Final Guidance” relating to the discharge of water with “conductivity” into Appalachian streams.  Conductivity is a measure of the water to conduct an electrical current.  Water becomes conductive as concentrations of dissolved solids, i.e. salts, rise. The Court found that EPA’s Final Guidance – while on its face was discretionary – mandated that state-run SMCRA permitting agencies and state-run NPDES permitting programs incorporate the Final Guidance requirements into all permits.  Thus, each SMCRA permit issue would include the EPA-mandated “Best Management Practices.” Each NPDES permit would be put through a reasonable potential analysis for conductivity, and since EPA’s Final Guidance included a presumption that conductivity causes violations of a state’s narrative water quality standard, every permit would have to be issued with some limit on the discharge of water with conductivity.

Judge Walton found that EPA’s insertion of its own mandatory requirements for the construction of surface mines and for the issuance of NPDES permits improperly overtook the state SMCRA and NPDES permitting regimes.  In other words, the states are charged with issuing SMCRA permits and NPDES permits, and EPA removed the state’s discretion with respect to conductivity.  Accordingly, the Court struck down the Final Guidance as an agency action exceeding statutory authority. Judge Walton acknowledged that his ruling did not address how to strike a balance between “the need to preserve the verdant landscape and natural resources of Appalachia and, on the other hand, the economic role that coal mining play in the region.”

The ruling is considered a victory for the mining industry that has been crippled by EPA’s standards in issuing mining permits.  Opponents of mountaintop removal mining, including those who recently protested and were arrested at Boone County’s Hobet mine, have expressed disappointment with the decision.  However, the decision did not reach the underlying substantive “science” advocated by EPA – that conductivity at extremely low levels impairs streams.  The decision merely held that the manner in which EPA sought to impose its view of the “science” – by mandating state agencies follow EPA’s view of the science wholesale -- was improper.  EPA can still exercise its authority to lodge “specific objections” to NPDES permits that do not have conductivity limits.  While the case represents a major victory for the coal industry, the battle over conductivity and its true effect on Appalachian streams is far from over.