Climate Law Blog

The Center for Climate Change Law has completed the Clean Energy Investment US-India Project. The project aimed to ease the path for U.S. investors and solar and other renewable energy equipment manufacturers to access the Indian market. So far, investment in this expanding market has been limited by high transaction costs. Funded by a generous grant by the Sujana Group, directed by Aarthi Anand, and with the assistance of experienced lawyers, bankers and industrial corporations in both the U.S. and India, the project has drafted and made available for free download the suite of documents needed for a corporation to put up a power plant and obtain necessary finance. By preparing these contract templates and making them freely available, the project hopes to have reduced the prohibitive transaction costs that had limited U.S. investment in renewable energy projects in India.

Background to the Project

Investment in Indian clean energy projects can potentially earn high returns for U.S. investors, lower greenhouse gas emissions and decrease production costs for Indian companies. The burgeoning Indian energy market is estimated at $1.1 trillion by McKinsey, with an estimated potential of reducing 2.8-3.6 billion tonnes of GHG, if it can access the needed finance. Of the $1.1 trillion, it is believed that $333 billion are financially attractive projects, in the sense that they have a positive internal rate of return.

Investment Structure Proposed

The Project has developed a Quasi-Project Finance Model for financing clean energy investment in India.  The proposed model follows non-recourse finance, along the lines of standard project finance.  Lenders will work with an Indian Corporate Sponsor and form a Project Special Purpose Vehicle (“Project SPV”), for financing the captive or independent power project. The details of the proposed structure include:

• The Project SPV:  The Lenders will finance the power project through the Project SPV. The Loan Agreement between the lenders and the Project SPV will govern the terms of the loan. This Project SPV will be owned by equity investors, including the Lenders, Corporate Sponsor and/or other private investors.
• Corporate Power Purchase Agreement (“Corporate PPA”):  The Project SPV will rely on one or more Power Purchase Agreements between the Project SPV and the Corporate Sponsor in order to provide contractual assurances that the power produced by the project will be purchased by the Corporate Sponsor, thereby generating cash flow to repay the loan.
• Government Power Purchase Agreement (“Government PPA”):  Some Corporate Sponsors may have already negotiated orders to supply power to the government.  Some state governments have started executing agreements to buy certain amount of power from renewable energy sources at higher prices than applicable for purchase from coal-fired power sources.  Such existing supply agreements with governments and demonstrable earnings may assist the financial viability of the project, subject to reviewing the legal terms in these Government PPAs.
• In addition to the Corporate PPA, it will be important for the Corporate Sponsor to demonstrate that the arrangements for a reliable engineering, procurement, construction contractor (to build the plant), operation and maintenance, grid connection (to the state electricity grids) etc. are in place. The grid connection will allow for a Plan B – the ability to sell to someone other than the Corporate Sponsor in case of excess supply or for any other reason and is hence, quite important from a lender’s risk perspective.

New Income Streams

In addition to the income stream from the Corporate PPA, the Clean Energy Investment US-India Partnership Project model will also enable the Lenders to include earnings from green income streams and tax allowances, such as:

• Renewable and energy efficient plants in India can potentially register for and earn carbon credits under the United Nation Clean Development Mechanism (“UNCDM”), created under the Kyoto Protocol.
• If for any reason the power project is not eligible to receive credits from the UNCDM or related bodies, the project could still potentially earn credits under voluntary offset mechanisms or national regimes that the Indian Government has proposed. The Indian Government has proposed a Perform, Achieve, Trade (“PAT”) Scheme for installing more energy efficient technology, and Renewable Energy Certificates (“REC”) for renewable power plants.
• The Indian Government also provides tax benefits for energy efficient and other green power plants, which could be utilized to finance the power project.

Including multiple income streams and assets will reduce the lender’s risk and in turn, the Corporate Sponsor could benefit from better loan terms.

Outcomes – the Project Agreements

The Project has now been completed. More information about the Project is available here, and the contract templates can be downloaded here. Any users of the contract templates should retain their own legal counsel, as the templates are starting points and are not a substitute for project- and client-specific legal advice.

On May 6, 2013, the Appellate Body of the World Trade Organization (WTO)’s dispute settlement system held that Ontario’s feed-in tariff (FIT) program to support renewable energy development was inconsistent with Canada’s international trade obligations.  The decision confirmed the conclusion reached by the dispute settlement panel which first ruled on the case in December 2012, although the Appellate Body disagreed with that Panel’s analysis and reasoning on some points of law.

The first complaint against Ontario’s scheme was made by Japan in September 2010, and a second complaint was made by the European Union (EU) in August 2011.  Both Japan and the EU alleged that the FIT program discriminated against foreign suppliers of renewable energy technologies, as participation in the scheme required electricity generators to  source a certain amount of their components from Ontario.  For wind projects, the local content requirement was 25%, while for solar projects it was 60%. As neither complaint was able to be resolved through consultations between the parties, the two cases were submitted for joint adjudication by a Panel.  The Panel held that the local content requirement of the FIT scheme accorded preferential treatment to products made in Ontario, in violation of the national treatment obligation set out in Article 2.1 of the Trade-Related Investment Measures (TRIMs) Agreement and Article III of the General Agreement on Tariffs and Trade (GATT).  These conclusions were confirmed on appeal.

In addition to claims under the TRIMs Agreement and the GATT, Japan and the EU had argued that the FIT scheme constituted a prohibited subsidy in violation of the Agreement on Subsidies and Countervailing Measures (SCM Agreement).  The Appellate Body found that the Panel’s analysis of that agreement was flawed, because it held that the relevant “market” was a single market for electricity in Ontario regardless of the source of the energy.  The Appellate Body’s view was that the relevant market was “shaped by the government’s definition of an energy-supply mix,” and the appropriate benchmark for comparison should have been “competitive prices for wind power and solar [photovoltaic] generation.”  The Appellate Body drew a distinction between markets which only exist because of government intervention, such as measures to create a certain mix of energy supplies, and government interventions that may distort competition in existing markets.  However, the Appellate Body reached no conclusion on whether Ontario’s scheme was consistent with the SCM Agreement, as it had inadequate evidence before it to make the necessary factual determinations.

While the Appellate Body therefore did not determine if Ontario’s program was an impermissible subsidy, its discussion of the interpretation of the SCM Agreement may be important for pending cases concerning government support for renewable energy projects.  In February 2013, the US made a complaint against Indian government support of the Jawaharlal Nehru National Solar Mission, alleging that its domestic content requirements violate the SCM Agreement (in addition to the GATT and TRIMs Agreements).  If consultations between the parties fail to resolve that dispute, then it may be heard by a dispute settlement panel.  Although it has not yet made a formal complaint, in April 2013 India raised concerns about US support of renewable energy producers.  In particular, it has questioned whether schemes adopted by Connecticut, Delaware, Massachusetts and Minnesota are consistent with the SCM Agreement and the TRIMs Agreement.

Teresa Parejo Navajas
Professor of Law
Universidad Carlos III de Madrid (Spain)

On March 1, 2013, the Spanish Council of Ministers approved a Preliminary Law regarding electric systems, which includes a section about environmental control of the technique of hydrofracturing (“fracking”). The preliminary law proposes that those projects that would need to use fracking in order to extract unconventional gas should be subject to an Environmental Impact Assessment procedure.

The EU has not yet regulated this technique and, therefore, it has not established environmental requirements for extraction of unconventional gas in European territory. Spain has seized this EU legal loophole for drafting its law. The political division among Member States on this issue is evident: France, Ireland and Bulgaria have established moratoriums on fracking, while Poland has promoted the technique. In this context, it is going to be very difficult to achieve EU-wide harmonization.

Similarly, the European Commission and the European Parliament have also reached different conclusions regarding the need (or not) to complement or extend the environmental regulation of the EU to fracking. Given this disagreement, a consultation process on regulating fracking recently occurred. The consultation ended March 23rd, and its conclusions are expected to be available next summer.

In any case, the European Commission has already included in its 2013 Work Program an “Environmental, Climate and Energy Assessment Framework to enable safe and secure unconventional hydrocarbon extraction” as a new initiative subject to an Environmental Impact Assessment, aimed at managing risk and providing maximum legal clarity and predictability to both market operators and citizens across the EU.

According to a recent study, Spain has enough non-conventional gas resources to power the country for 39 years. It is clear, though, that with this figure it is impossible to claim –as the Spanish Government does- a long lasting energy policy based on (or even supported by) fracking. In fact, 50 Spanish towns within Cantabria and León (a northern region in which the gas is supposed to be located) wrote a letter to the Ministry of Industry to express their concern about the impacts that fracking would have on their lands and public health. The response of the Minister was clear: fracking should be permitted subject to compliance with the environmental and human health protection provisions, though the companies will need to set up liability insurance (accepting, hence, the associated risks) for possible incidents or accidents.

For some, fracking is seen as threatening Spain with a future of being a “swiss cheese” of polluted fracking sites; for others, it represents a golden opportunity to gain some energy independence in a country that imports 99% of mineral oils consumed. The debate is now open.

by Margaret Barry

New updates to the Center for Climate Change Law and Arnold & Porter Climate Case Chart.  Find the complete chart here.

DECISIONS AND SETTLEMENTS

Friends of the Earth v. EPA (D.D.C. March 27, 2013): added to the “Force Government to Act/Clean Air Act” slide.  Plaintiffs sought to compel EPA to issue a determination under Section 231 of the Clean Air Act regarding whether lead emissions from aircraft engines using aviation gasoline (avgas) cause or contribute to air pollution which may reasonably be anticipated to endanger public health or welfare.  The district court granted EPA’s motion for summary judgment, holding that it lacked subject matter jurisdiction because an endangerment determination under Section 231 is not the type of nondiscretionary act or duty that the Clean Air Act’s citizen suit provision (42 U.S.C. § 7604) grants district courts the jurisdiction to compel.

County of Sonoma v. Federal Housing Finance Agency (9^th Cir. March 19, 2013): added to the “Stop Government Action/Other Statutes” slide.  The Federal Housing Finance Agency (FHFA), the regulator and conservator of Freddie Mac and Fannie Mae, issued a directive preventing Freddie Mac and Fannie Mae from purchasing mortgages for properties encumbered by liens created by property-assessed clean energy (PACE) programs.  FHFA indicated, among other things, that the first liens of the PACE programs could disrupt the housing market and that there was a lack of underwriting standards to protect homeowners and an absence of energy-saving standards to allow for the valuation of home improvements.  Plaintiffs alleged that FHFA must issue a regulation to implement this directive.  The district court ruled against FHFA and required completion of notice-and-comment rulemaking.  On appeal, the Ninth Circuit dismissed the action, ruling that FHFA’s directive was a lawful exercise of its statutory authority as conservator, and that the courts therefore lacked jurisdiction.

Sierra Club v. U.S. Fish & Wildlife Serv. (D.D.C. March 19, 2013): added to the “Petitions Under the Endangered Species Act and Related Litigation” slide.  The Sierra Club challenged the determination of the Fish and Wildlife Service (FWS) in response to its petition to revise the critical habitat for the leatherback sea turtle, claiming that the FWS’s decision to delay any revision was arbitrary and capricious.  It also alleged that the defendants had unlawfully delayed in designating additional critical habitat for the turtles. One of the claims in the Sierra Club’s petition was that “threats on the nesting beach are substantial and that global climate change is exacerbating the situation.”  The court held that the FWS’s determination was  unreviewable because the applicable statutes (the Endangered Species Act and the Administrative Procedure Act) provided no manageable standard to evaluate the FWS’s exercise of discretion.

NRDC v. Mich. Dept. of Env. Quality (Mich. Ct. App. March 21, 2013): added to the “Challenges to Coal-Fired Power Plants” slide.  In 2011, Natural Resources Defense Council and Sierra Club filed a lawsuit seeking review of the Michigan Department of Environmental Quality’s (MDEQ) issuance of an air permit for the expansion of a coal-fired power plant in Holland, Michigan.  The lawsuit alleged that the permit did not comply with federal regulations requiring that modification permits address greenhouse gas emissions.  The state agency had issued the permit in February 2011 following a court decision finding that the agency had overstepped its authority in denying the permit.  The circuit court affirmed MDEQ’s issuance of the permit, and plaintiffs appealed, contending that the circuit court applied the wrong standard of review and that the permit was not authorized by law because the “best achievable controls technology” (BACT) analysis in support of the permit did not adequately consider clean fuels and therefore did not comply with the Clean Air Act (CAA).  The court of appeals ruled that the circuit court had reviewed the permit’s compliance with the CAA de novo and had not improperly deferred to MDEQ.  The court of appeals stated that although the circuit court may have improperly reviewed the record evidence in a situation where there was no contested case hearing, such an error was harmless.  In its own de novo review of CAA compliance, the court of appeals held that MDEQ’s BACT analysis was adequate because it provided a reasoned analysis of each type of fuel that the facility could utilize without major modifications.  The court stated that the CAA does not generally require a facility to be redesigned to use the cleanest fuel.

Butler v. Brewer (Ariz. Ct. App. March 14, 2013): added to the “Common Law Claims” slide.  Plaintiffs filed a complaint for declaratory and injunctive relief on the basis of the public trust doctrine.  Among other things, they sought a declaration that the atmosphere was a public trust asset and that the defendants had a fiduciary obligation as trustees to take affirmative action to preserve the atmosphere and other trust assets from the impacts of climate change.  They asked the court to mandate that the state institute reductions in CO₂ emissions of at least six percent annually.  The superior court dismissed the action, stating that plaintiffs’ remedies were with the legislature or Congress.  On appeal, the court of appeals in a memorandum decision rejected the defendants’ argument that determinations of what resources are protected by the public trust doctrine and whether the state has violated the doctrine are non-justiciable.  The court assumed without deciding that the atmosphere was part of the public trust subject to the doctrine. Nonetheless, the court of appeals affirmed dismissal of the complaint, holding that the complaint failed to make the requisite showing of a specific constitutional provision or other law that had been violated by state action or inaction.  Furthermore, the court agreed in part with defendants that a state statute precluded defendants from redressing Butler’s grievances.  Butler had not challenged the constitutionality of the statute or identified a basis upon which it could be found unconstitutional.  The court determined that it was without power to order the state to take action in violation of the statute and that it therefore could not grant relief.

Filippone v. Iowa DNR (Iowa Ct. App. March 13, 2013): added to the “Common Law Claims” slide.  In 2011, Glori Dei Filippone and others filed an administrative petition with the Iowa Department of Natural Resources (DNR) requesting adoption of rules to reduce statewide greenhouse gas (GHG) emissions from fossil fuels.  Filippone cited the Public Trust Doctrine as one of the rationales for requiring such regulation.  DNR denied the petition, stating that  it had already adopted state regulations regarding an inventory of statewide GHG emissions and also citing existing and impending federal regulation of GHG emissions from certain sources in the state.  Filippone filed a petition for judicial review of DNR’s denial of the petition, and the district court affirmed DNR’s determination.  Filippone again appealed, and the court of appeals upheld the denial. The court of appeals declined to expand Iowa’s public trust doctrine to include the atmosphere, noting that the doctrine has a “narrow scope.” The court of appeals also held that DNR had given fair consideration to the petition and that denial of the petition was not unreasonable, arbitrary, capricious or an abuse of discretion, and that Filippone had failed to preserve error on her Inalienable Rights Clause claim.  One judge on the panel issued a concurring opinion stating that he felt that there was a “sound public policy basis” for extending the public trust doctrine to air but that the court was constrained by Iowa Supreme Court precedent limiting the doctrine’s scope.  Filippone has filed an appeal in the Iowa Supreme Court.

Merced Alliance for Responsible Growth v. City of Merced (Cal. Ct. App. Nov. 29, 2012) (petition for review denied March 13, 2013): added to the “State NEPAs” slide.  On March 13, 2013, the California Supreme Court denied a community group’s petition for review in a case in which the community group had unsuccessfully challenged the City of Merced’s approval of a regional distribution center in the City boundaries.  The community group had alleged that the environmental impact report (EIR) prepared for the proposed project did not address the project’s impact on greenhouse gases and climate change.  The intermediate appellate court held that the EIR adequately addressed these issues.

NEW CASES, MOTIONS AND NOTICES

Southwest Energy Efficiency Project v. New Mexico Construction Industries Commission (N.M. Ct. App. Apr. 4, 2013) (motion for contempt order filed, Apr. 11, 2013): added to the “Stop Government Action/Other Statutes” slide.  In 2011, the New Mexico Construction Industries Commission adopted revisions to four building codes.  The purpose of the revisions was to remove energy efficiency requirements that went beyond the 2009 International Energy Conservation Code.  There was no discussion or deliberation about the revised codes at the meeting at which the revisions were adopted, and the Commission did not make any separate findings or orders.  A number of organizations and individuals challenged the adoption of the revised codes.  The New Mexico Court of Appeals set aside the revisions, ruling that the Commission had failed to state any reason for its adoption of the revised codes.  The court directed the Commission to reconsider and revote on the revisions and to make a statement as to the rationale for its actions, preferably in written form. On April 11, 2013, plaintiffs filed a motion seeking an order holding the Commission and the Governor of New Mexico in contempt for failing to comply with the court’s April 4, 2013 order.   The motion alleged that since the court issued its order, the Commission and the Governor had twice announced that they intended to continue to enforce the building codes that the court had set aside.

Competitive Enterprise Institute v. EPA (D.D.C., filed March 28, 2013): added to the “Force Government to Act/Other Statutes” slide.  Plaintiffs filed a lawsuit against EPA pursuant to the Freedom of Information Act seeking disclosure of EPA instant message transcripts for communications sent from or to three senior EPA officials, including EPA Administrator Lisa Jackson.  The complaint seeks communications related to climate change and the regulation of coal-fired generators.

California Construction Trucking Ass’n Inc. v. EPA (D.C. Cir., filed March 25, 2013): added to the “Industry Lawsuits/Challenges to Federal Action” slide.  In April 2011, parties petitioned EPA to reconsider aspects of the greenhouse gas emissions standards issued in May 2010 for model year 2012-2016 light duty vehicles.  Petitioners argued that EPA had failed to make the standards available to the Science Advisory Board for review and comment prior to promulgating the standards.  In January 2013, EPA denied the petition for reconsideration, finding that the issues raised by the petition could have been made during the public comment period for the rulemaking and that the petition “failed to demonstrate that its objection is of central relevance to the outcome of the rulemaking.” On March 25, 2013, petitioners filed a Petition for Review in the D.C. Circuit seeking review of EPA’s denial.

by Moneen Nasmith

Energy efficiency measures provide tremendous opportunities for achieving effective and cost-friendly reductions in the emissions of greenhouse gases. In the absence of more comprehensive legislative efforts, proponents of energy efficiency projects can look to existing environmental laws for tools to promote and encourage energy efficiency and conservation. One such law is the federal Clean Air Act (“CAA”), which empowers the U.S. Environmental Protection Agency (“EPA”) to use a variety of mechanisms to address air pollution and protect the public health.

A new white paper by CCCL examines the myriad ways that the CAA can be used to promote energy efficiency. One of the chief components of the CAA is the setting of National Ambient Air Quality Standards (“NAAQS”) for non-hazardous pollutants, which are set by EPA but generally implemented by the adoption of implementation plans by each state. These state implementation plans (“SIPs”) can include energy efficiency programs so long as they provide quantifiable, additional, enforceable, and permanent reductions of emissions of the pollutant being regulated. There also is the possibility of including emerging or voluntary energy efficiency measures in SIPs. Advocates who wish to promote these types of efforts can participate in the official comment period on the SIP at the state level, as well as the official comment period on EPA’s review of the SIP at the federal level.

The CAA also establishes permitting programs, each of which can provide a mechanism for including energy efficiency measures. These include extensive permitting requirements for new stationary sources of air pollution. Many of these permits require the imposition of different technology-based standards on permitted sources. Considerations of energy efficiency can play a critical role in determining what precise amount of emissions control technology a new source will be required to adopt to receive a permit. In some cases, offsetting emissions from energy efficiency projects also can be incorporated as permit conditions. As each permit is considered, advocates of energy efficiency measures can become involved by providing comments on the permit conditions and potentially challenging a permit that is insufficiently stringent.

In addition, the CAA uses technology-based standards that apply to specific categories of sources. As with the individual permits, there are opportunities to include energy efficiency measures as part of the conditions covered source categories must meet to undertake new construction, modification, or reconstruction. There also is significant potential for including energy efficiency programs as part of performance standards for existing sources if EPA amends the guidelines that currently establish the recommended standard of performance for existing sources in particular categories.

CCCL’s new white paper, written by visiting fellow Moneen Nasmith, describes in greater detail how advocates can participate in various actions under the CAA, as well as challenge final agency decisions that reflect insufficient consideration of the issue of energy efficiency and conservation. Proponents of energy efficiency projects who wish to take full advantage of the opportunities presented by the CAA also must pay close attention to state and federal environmental agency notices to ensure that they are aware of CAA developments that could provide these openings.

Five months after Superstorm Sandy, the recovering northeast region continues to debate whether to rebuild in the most vulnerable coastal areas or whether to retreat and leave those lands as protective buffers.   A decision to engage in managed retreat would face significant legal, political, and practical challenges, but, according to a panel convened at Columbia Law School on March 28, there are regulatory and policy actions that could make it possible.

The program was chaired by Michael B. Gerrard, Andrew Sabin Professor of Professional Practice and Director of the Center for Climate Change Law.

Peter Byrne, a professor at Georgetown Law School and Faculty Director of the Georgetown Climate Center, identified five key regulatory steps that state and local governments could take to discourage or remove coastal development in vulnerable areas.  One strategy is to condition building permits on the structure meeting certain safety standards, such as minimum elevation or distance from the water’s edge.

Another would be to prevent armoring.  “If you prevent armoring, then retreat will happen,” Byrne noted.  If homeowners are prohibited from building sea walls, flood barriers, and other hard armoring devices, then sea level rise will inevitably approach coastal buildings and eventually make retreat a necessity.  Armoring causes harm to neighboring lots, by changing wave patterns and furthering erosion in un-armored areas.  However, preventing armoring would invite litigation, especially in states where homeowners have a legal right to defend themselves against flood waters.

Insurance also has a significant role to play in encouraging managed retreat.  “Insurance is one of the most misunderstood industries,” said Howard Kunreuther, James G. Dinan Professor of Decision Sciences and Business and Public Policy at the Wharton School of the University of Pennsylvania.  Insurance, he said, provides an opportunity to incentivize preventive actions in advance of a disaster.

Unfortunately, most people do not recognize the value of insurance.   Less than 30% of the homes damaged in Superstorm Sandy had flood insurance, even though many of the homeowners were legally required to have purchased insurance.

Kunreuther noted that homeowners often purchase insurance after a disaster but then stop the policy if they do not experience another disaster within a few years, believing it is a bad investment if they do not see a return.  “We need to convey the message that the best return on insurance is no return,” Kunreuther said.  “Be thankful that you have not had a loss.”

Kunreuther recommended that the National Flood Insurance Program (NFIP) alter its premiums to reflect the vulnerability of the property, provide assistance to homeowners currently living in vulnerable areas but not incentivize others to move to coastal areas, and institute multi-year policies to provide greater continuity.  He also proposed a loan program from insurance companies that would provide homeowners with the capital and incentive to protect their homes against future damage.

Even with regulatory and insurance policy revisions, managed retreat in New York City remains a particular challenge because of the City’s density and the number of people that would need to find housing in alternative locations.  Vicki Been, the Boxer Family Professor of Law at New York University School of Law and Director of the Furman Center for Real Estate and Urban Policy, calculated that the Sandy surge area covered 24% of the City’s land and more than 300,000 residential units.

If the City decided to retreat from the surge area, and to demolish the buildings in the surge zone, it would be particularly difficult to find housing for New York’s low-income residents.  42% of the renters who reported damage after Sandy have a household income of less than $15,000.   According to Been’s calculations, 108,000 households with an income of less than $60,000 would be in need of housing, and only 43,000 units would be available in the appropriate price range in New York City.  Where would the rest go?

New York would need to build, Been said, but “The capacity we’ve been developing in the City [for housing] happens to be where we would be retreating from.” 50% of the additional building capacity that resulted from Mayor Bloomberg’s re-zonings is in the Sandy surge area.

Despite these challenges, Anne Siders, a postdoctoral research fellow at the Center for Climate Change Law, noted that communities across the United States have successfully engaged in managed retreat, and there are lessons to be learned from their experiences.  In case studies she presented from the Midwest River Floods, relocation played a critical role in the success of managed retreat programs.

In New York, the debate over managed retreat will need to focus as much on where the city will develop as where it will retreat.

The panel was co-sponsored by the Center for Climate Change Law and the Earth Institute of Columbia.  A video recording of the panel and presentations will be available at www.columbiaclimatelaw.com.

By Shawna Ganley.

While the Clean Water Act prohibits discharge of pollutants into waterways, EPA regulations make exceptions for certain discharges in the event of extreme weather events, such as 10-year and 25-year storms.  These exceptions run the gamut from toxic pollutants such as DDT, to waste from factory farm effluent holding ponds, runoff from mountaintop mining and overflows from coal-ash ponds at coal-fired power plants.[i]  However, many of these EPA rules are tied to antiquated rainfall maps that date back to the 1960s.[ii]  The National Oceanic and Atmospheric Administration (NOAA) has updated its rainfall tables for many states, but 23 states still only have rainfall figures from 1961.[iii]

Even the figures that have been updated, though, do not adequately reflect current rainfall rates or projected future increases in rainfall.  First, the rainfall tables assume a “static” model of rainfall and appear to continue to use the oldest rainfall data equally weighted with the new, which can discount recent trends in rainfall patterns.  Second, they similarly are not designed to project future expected increases in heavy rainfall, such as those anticipated with climate change.  While a study in the New York region is underway to project future rainfall in extreme weather events, NOAA does not appear to have plans to do this for other regions or for the nation as a whole.

Over the last 50 years since the initial rainfall maps were made, however, rainfall during storms has been increasing.  More than half of the increase in rainfall seen over the last century, for example, is attributable to extreme weather events.[iv]  Studies have also shown that the Northeast has seen a 40% increase in certain types of storm events,[v] while the Southeast has seen an increase in rain during tropical cyclones over the past few decades.[vi]  Moreover, 100-year storms have become at least twice as prevalent since the 1950s.[vii]  In coastal areas, storm surges and flooding due to increased rainfall intensity during storms is an additional concern for the estimated 2.6 million homes in the U.S. that are within four feet of the high tide line.[viii]

As long as these trends are not adequately represented in the rainfall maps, environmental protections under the Clean Water Act are being literally watered down.  As “10- and 25-year storm events” start occurring more and more frequently—rather than in fact every 10 or 25 years—the current rainfall maps allow for greater water pollution than initially intended under EPA rules.

The outdated rainfall tables further pose an even larger problem, in that government entities may be relying on inadequate or inaccurate data for weather-related planning.  Federal agencies and states need up-to-date rainfall estimates, which not only reflect the current trends for increased rainfall during storms, but also estimate future rainfall that is projected due to shifts in weather patterns brought on by climate change.  This is the minimum foundational prerequisite that government entities need for effective mitigation and adaption planning to address the impact of climate change on our communities.

by Cathy Li

The Center for Climate Change Law has compiled a database examining the treatment of water-related issues in all Final Environmental Impact Statements (EIS) reported to EPA from January 1 to September 30, 2012.  The database, available here, comprised of 149 FEISs, details the extent to which federal agencies address topics related to water use.  An accompanying white paper, available here, analyzes the trends and patterns represented in that database.

A previous report published by CCCL in July 2012, “Consideration of Climate Change in Federal EISs, 2009-2011,” available here, examined the varying degrees to which federal agencies addressed climate change and greenhouse gas emissions in their EISs. The new report concerning water-related issues is based on the same methodology.

The analysis finds that, due to the lack of binding centralized guidelines from EPA or CEQ, there exists a wide divergence in the methods different agencies undertake to address these issues. Consideration of water usage varies largely based on project type and leading agencies.  The U.S. Army Corps of Engineers and Bureau of Land Management  were the most comprehensive in their discussion on water usage.  EISs for large-scale construction projects most often included quantitative discussion of amounts of water uses, as well as the full life cycles of operational impacts.  Other types of actions, such as land management plans and restoration projects, often neglected to address water consumption needs or offered only a brief qualitative mention.

On the whole, EISs suffer from a lack of consideration of the bidirectional effects of climate change.  Impacts from the project on the surrounding environment are addressed, but impacts from the environment on the project remain lacking, even though this will become of increased importance in areas with too little water (such as the American Southwest), as well as those facing increasing coastal hazards related to  sea-level rise.  While some EISs do mention these phenomena, few prepare an actual plan of action to mitigate these effects.

In early March 2013 the Pennsylvania Treasury announced that it had sold approximately 4,700 loans made through its Keystone Home Energy Loan Program.  In exchange for the loans, the Treasury received $23 million in cash and $8.3 million in deferred payments, for a total sale value of $31.3 million.  The cash component of the sale was provided by three banks – Fox Chase Bank, WSFS Bank, and National Penn Bank.

The Keystone Home Energy Program provides low-interest loans for high-efficiency furnace or boiler replacements, geothermal heating and cooling units, insulation installations, door and window replacements, and other energy conservation measures. To date, the program has made almost 11,000 loans for more than $75 million.

Pennsylvania Treasurer Rob McCord described the sale of some of these loans on the secondary market as a national milestone in efforts to “engage the private sector” in providing finance for residential energy efficiency, and thereby “increase access to low-cost capital for this type of money-saving, job-creating investment.”  The significance of the sale has also been noted by the federal government, with U.S. Assistant Secretary for Energy Efficiency and Renewable Energy David Danielson describing the success of the Pennsylvania program as “moving the energy efficiency industry a step closer to accessing capital markets and helping to position the United States to lead the global clean energy race.”