Type: Development Article

Vol. 50-1 Washington Update

By Jacob Arechiga and Kylan MacLeod

Washington Updates

Executive Order to Accelerate the Nation’s Economic Recovery by Expediting Infrastructure Investments

Introduction

On July 4, 2020, President Trump issued the Executive Order entitled Accelerating the Nation’s Economic Recovery from the COVID-19 Emergency by Expediting Infrastructure Investments and Other Activities (“EO”).[1] The EO’s stated intent is to streamline regulations, thus limiting regulatory delays, in response to the economic crisis resulting from the COVID-19 pandemic.[2] The EO instructs federal agencies to use emergency powers to expedite project approvals, directing they should: (1) use their emergency authority and statutes’ emergency provisions to expedite projects; (2) provide a report listing expedited projects; and (3) provide status updates with further reports due every thirty days.[3]

This article discusses the content of the EO, and its requirements on agencies to encourage accelerated infrastructure development. Part I discusses the EO and the requirements that agencies must meet. Part II discusses the effects of the EO on industry and the environment. Part III discusses the future potential impact of the EO.

PART I: REQUIREMENTS OF THE EO

The EO instructs various federal agencies to exercise emergency authority provisions to expedite decision making, providing instructions that agencies should follow as well as reporting requirements that the agencies must undertake.[4]

In Sections 3–5, the EO designates steps that specific executive departments must take to expedite project development.[5] Listed are the Secretaries of Transportation, the Army, Defense, the Interior, and Agriculture.[6] Each department must “expedite work on, and completion of, all authorized and appropriated [projects] that are within the authority of the Secretaries.”[7] These projects include “highway and other infrastructure projects,” “civil works projects,” “and infrastructure, energy, environmental, and all natural resources projects,” depending on the Secretary’s authority.[8]

The EO requires the Secretaries to provide reports. Each Secretary must provide a “summary report[] listing all such projects that have been expedited . . . to the [Office of Management and Budget (OMB)] Director, the Assistant to the President for Economic Policy, and the Chairman of [the Council of Environmental Quality (CEQ)]” within thirty days of the EO.[9] Within thirty days of the first report, the Secretaries must “provide a status report to the [same officials] that shall list any additions or other changes.”[10] Reports are continuously required “at least every thirty days for the duration of the national emergency.”[11]

In Sections 6–8, the EO instructs agency heads to apply various environmental statutes’ emergency provisions.[12] The EO specifically addresses the National Environmental Policy Act’s (NEPA) emergency regulations and emergency procedures, the Endangered Species Act’s (ESA) emergency consultation, and the Clean Water Act’s (CWA) and other statutes administered by the U.S. Army Corp of Engineers’ (the Corps) emergency regulations and nationwide permits.[13] All agencies must “identify planned or potential actions to facilitate the Nation’s economic recovery that may be subject to the” NEPA and ESA emergency provisions, with the Corps also being subject to additional requirements under the CWA.[14]  The agencies are required to provide summary status reports on thirty-day intervals, outlining planned or potential actions to various cabinet secretaries and other individuals exerting oversight.[15]

The EO’s Section 9 requires agencies to “review all statutes, regulations, and guidance documents that may provide for emergency or expedited treatment . . . with regard to agency actions pertinent to infrastructure, energy, environmental, or natural resource matters.”[16] After, agencies must “identify planned or potential actions, including actions to facilitate the Nation’s economic recovery, that may be subject to emergency or expedited treatment.”[17] These actions must be listed in a summary report “to the OMB Director, the Assistant to the President for Economic Policy, and the Chairman of CEQ.”[18] Updated reports are also required every 30 days under this section.[19]

PART II: PURPOSES AND EFFECTS OF THE EO

The Trump Administration has made several efforts to expedite the process of approving infrastructure projects. As stated in the EO, it is another step towards “reforming and streamlining [the approval process which the Administration refers to as] an outdated regulatory system that . . . [has] hindered American infrastructure investments.”[20] Infrastructure permitting often “takes years of planning and construction.” [21] The EO’s goal is to accelerate this time-consuming process and provide project developers a means to avoid this lengthy process.[22]

It is still unclear if, how, and to what extent, agencies will implement these expedited procedures and whether project developers will want such expedited review and approval of its projects. Some are concerned that the EO could not survive a legal challenge, with commentators noting that “the legal support for the . . . EO appears dubious and likely to be challenged.”[23] As such, projects accelerated under the EO may “be subject to increased scrutiny and heightened litigation risk from third parties,”[24] as courts have applied the relevant emergency powers narrowly in the past.[25] The judiciary has limited the use of these powers to projects responding to emergencies that posed an “imminent hazard to human health and the environment.”[26] While certain developers are wary of possible legal challenges, some projects are moving forward under the EO, including an oil-drilling project in Alaska and a private spaceport in Florida.[27]

Environmental organizations have voiced their own concerns, arguing the EO will allow projects to avoid environmental regulations and that expedited approval will harm the environment.[28] Gina McCarthy, former EPA Administrator, and the current President and CEO of the Natural Resources Defense Council, stated: “Abusing emergency powers to deep-six necessary environmental reviews is utterly senseless. . . . Getting rid of them will hit those who live closest to polluting facilities and highways the hardest.”[29] The Center for Biological Diversity also expressed its concerns in a letter to the Trump Administration.[30] The Center said that it would seek litigation if the Administration did not revoke the order.[31] Litigation that may emerge from the Center and other organizations is likely to slow projects that seek to be accelerated. It remains to be seen whether the costs and time lost in litigation outweigh the EO’s benefits.

PART III: THE FUTURE OF THE EO

The November 2020 Presidential election probably determined the EO’s future. The president has the power to revoke Executive orders. The President can revoke Executive Orders alone.[32] Because former Vice President Joe Biden won the election, he is likely to revoke the order and may even impose more stringent standards on expedited projects in the future. A shifting standard poses an additional complication for projects that hope to benefit from the EO.

Jacob Arechiga is a Special Counsel in Duane Morris LLP’s Austin, Texas office. His practice is focused on complex commercial matters, particularly those in the energy and electric power industries.

Kylan MacLeod is a second-year student at The University of Texas School of Law and is a Staff Editor of the Texas Environmental Law Journal.

 

[1] Exec. Order No. 13927, 85 Fed. Reg. 35165 (June 4, 2020).

[2] Id.

[3] See id. at 35165–70.

[4] See id.

[5] See id. at 35166–67.

[6] Id.

[7] Exec. Order No. 13927, 85 Fed. Reg. 35165, 35166–67 (June 4, 2020).

[8] Id.

[9] Id.

[10] Id.

[11] Id.

[12] Id. at 35167–69.

[13] Exec. Order No. 13927, 85 Fed. Reg. 35165, 35167–69 (June 4, 2020).

[14] Id.

[15] Id.

[16] Id. at 35169–70.

[17] Id. at 35169.

[18] Id.

[19] Exec. Order No. 13927, 85 Fed. Reg. 35165, 35170 (June 4, 2020).

[20] Id. at 35165.

[21] Rachel L. Lipinski, Jonathan D. Simon, & Tyson C. Cade, Executive Order Seeks to Promote Economic Recovery by Expediting Environmental Reviews for Project Development, Van Ness Feldman LLP (June 8, 2020), https://www.vnf.com.

[22] Exec. Order No. 13927, 85 Fed. Reg. 35165 (June 4, 2020).

[23] United States: Trump Administration Issues Executive Order Seeking to Expedite Environmental Reviews for Infrastructure Projects, Baker McKenzie (June 12, 2020), https://www.bakermckenzie.com [hereinafter Trump Administration].

[24] Lipinski et al., supra note 20.

[25] Trump Administration, supra note 20.

[26] Id.

[27] See Rebecca Beitsch & Rachel Frazin, Major Drilling Projects Among Dozens Fast-Tracked after Trump Order, The Hill (Sept. 2, 2020), https://thehill.com/policy/energy-environment/514809-major-drilling-projects-among-dozens-fast-tracked-after-trump-order; see also FAA Fast Tracks EIS, Will not Seek Comments, News-Leader (Sept. 22, 2020), https://www.fbnewsleader.com/regional/faa-fast-tracks-eis-will-not-seek-comments#:~:text=The%20Federal%20Aviation%20Administration%20has,fast%
20track%20the%20licensing%20decision..

[28] See, e.g., Mark Drajem, NRDC: Trump Tries to Throw Out Environmental Reviews While Nation in Crisis, NRDC (June 4, 2020), https://www.nrdc.org/media/2020/200604; see also Letter from the Center for Biological Diversity to President Donald Trump (June 9, 2020), https://www.biologicaldiversity.org/campaigns/esa_attacks/pdfs/NOI-to-President-Trump-regarding-his-violations-of-the-Endangered-Species-Act.pdf [hereinafter Letter]. .

[29] Drajem, supra note 28.

[30] Letter, supra note 28.

[31] Id.

[32] Vivian S. Chu & Todd Garvey, Congressional Research Service: Executive Orders: Issuance, Modification, and Revocation, 7 (2014).

Vol. 50-1 Federal Casenotes

By Amanda Halter and Matthew Frederick

Federal Casenotes

Cooperation or Retaliation: California’s Recent Push for Electric and Zero Emissions Vehicles Highlights the Trump Administration’s Attack on Clean Air Act Waivers

Introduction

After a record-smashing six weeks of wildfires, heat waves, and even some black-outs in California and the western U.S., on September 23, 2020, California Governor Gavin Newsom issued Executive Order N-79-20 (EO), declaring California’s intent to accelerate the transportation sector’s energy transition by setting a goal that all cars and trucks sold in the state be zero-emission by 2035 and medium- and heavy-duty vehicles by 2045.[1] Subsequently touted as a “ban on gas-guzzlers”[2] for its attention-grabbing zero emissions vehicles targets, not to mention its signing atop a Ford Mustang Mach-E electric crossover,[3] the order directed state agencies to plan for, encourage, and develop broader build-outs of sustainable transportation infrastructure and called for rulemaking to protect communities and workers from oil extraction impacts.[4] The EO reflects Governor Newsom’s latest effort to ensure that California meets its GHG reductions targets by challenging deadlines.[5]

Many industry and political commentators have used the headline “Newsom bans gas-powered cars by 2035,” even though the EO does not in fact impose a ban, reflecting some fear that the goals could be unrealistic and end up hurting California businesses and consumers.[6] However, some California automotive industry workers approve of the EO, recognizing that it is not a ban and may help Californians solve their transportation emissions problem.[7] Notwithstanding the support of some proponents, the major takeaway from the EO is that California is in for a steep climb to equip its power grid to handle the projected increase in electric vehicles (EVs).[8]

While the EO directs state agencies—including the California Public Utility Commission (CPUC), responsible for ratemaking and regulation of the state’s Investor Owned Utilities—to “accelerate deployment of affordable fueling and charging options for zero-emission vehicles,” “update the biennial statewide assessment of zero-emission vehicle infrastructure,” and “develop a Zero-Emissions Vehicle Market Development Strategy . . . that ensures coordinated and expeditious implementation of the system of policies, programs and regulations necessary to achieve the goals and orders established by this Order,” it stops shy of addressing how the demand and supply will be balanced to meet the new goals.[9] The CPUC and the California Air Resources Board (CARB) have their work cut out in attempting to juggle all of California’s energy, population, and pollution regulations while paving the way for 100% EV sales.[10] The EO appears to presuppose further developments on battery storage technology and EV cost reduction.[11]

Regardless of technological feasibility, the fact remains that it is now and, unless overturned by California’s legislature or a court, will remain,[12] California’s policy that all in-state automobile sales should be sales of zero emissions vehicles (ZEVs) by 2035.[13] Governor Newsom has instructed CARB to continue refining, “to the extent consistent with State and federal law,”[14] its regulations mandating certain percentages of annual vehicle sales consist of ZEVs.[15] However carefully Governor Newsom treaded the line between the executive and legislative action by calling upon CARB to go no further than the law already allows, the EO clearly did not emerge in a political vacuum. The EO comes in the midst of a political fire-storm over California’s status as the nation’s air pollution control technology driver.[16]

Clean Air Act Waivers – Past and Present

California has been able to set its own mobile source air emissions standards, “to afford California the broadest possible discretion in selecting the best means to protect the health of its citizens and the public welfare,” since 1977.[17] Since then, other states have been able to voluntarily conform their regulations to California’s, rather than the federal, standard.[18] The U.S. Environmental Protection Agency (EPA) has historically granted California waivers, required under the Clean Air Act § 209 to set air emissions standards more stringent than the EPA’s, to include ZEV standards[19] and, more recently, GHG standards.[20] That is, recent EPA and National Highway Transportation Safety Administration (NHTSA) rulemaking reinterpreted those portions of the Energy Policy and Conservation Act of 1975 pertaining to national fuel economy standards as preempting the State’s ability “to limit or prohibit tailpipe GHG emissions or establish ZEV mandates.”[21]  That rulemaking premised its conclusion on another recent determination by the EPA— that California, and thereby the 177 States,[22] cannot obtain the § 209 waivers that regulated GHGs and set ZEV targets.[23] Litigants challenging the rulemaking in federal court called attention to the rulemaking’s litany of faults and over-reaches under the federal Administrative Procedure Act and National Environmental Policy Act; perhaps most salient is the charge that the EPA and NHTSA did not adequately address their sudden reversal of decades of collaboration between California, the federal government, and industry.[24] They simply read broad preemptive effects (extending to tailpipe emission standards historically set by California and adopted by the 177 States) into the Energy and Policy Conservation Act’s national fuel economy regulations portion and bolstered their interpretation by giving a new restrictive view of California’s § 209 waivers.[25] Adding to the pressure is discord within the regulated community, with some automakers decrying the governor’s decision[26] and some staunchly in support[27]; the fight over California’s waivers and mobile source emissions targets has never been more fierce.

Predictably, given that the tumult between the EPA and the NHTSA and California, the 177 States, and industry has spilled from the administrative realm to the judicial,[28] Andrew Wheeler, the EPA Administrator, responded a few days after the EO’s issuance with a barrage of accusatory and conclusory statements in a letter to Governor Newsom.[29] The thrust of this letter—that California’s electric grid and charging infrastructure is not prepared to scale up to support an increasingly electric vehicle fleet—has reverberated across the media landscape.[30] Citing recent blackouts as evidence, the EPA Administrator envisions scenarios where the state is forced to choose between keeping the A/C on in the hot summer and powering California’s transportation sector.[31]

Renewable energy proponents point out, though, that there is a perfectly good explanation as to why 400,000 customers recently lost power during some of the hottest weather on record across the West and Great Basin:

Critics of renewable energy such as President Trump point to the state’s supposed over-reliance on solar and wind power. The criticism is misplaced, however. The outages the California ISO ordered during a heat wave Aug. 14 and 15 were the product of an unusual combination of circumstances. These included the unexpected shutdown of a natural gas-fueled generating plant, an unexpected delay in returning a second plant to service, smoke from wildfires that reduced the generating capacity of solar units, and the regional nature of the heat wave, which increased air conditioner use in states that ordinarily would be exporting electricity to California.[32]

While these circumstances may recur and may become likelier with climate change affects, citing to the first “capacity-driven outages since the energy crisis of 2000 and 2001”[33] as evidence of ongoing failure lacks resonance. At its heart, though, Wheeler’s letter exemplifies the battle between federal and state control over energy policy. The Administration’s view is that when California regulates GHG emissions from mobile sources, it acts beyond its delegated scope under the CAA.[34] Litigation awaits, while imperatives to address climate change mount.[35] 

Conclusion

The resolution of this discord between federal and state has significant potential implications for acceleration of the clean energy transition and the regulation of air pollutants. Moreover, how California fares in this dispute will have impacted each of the 177 States and opposes the narrative that uniform standards are necessary to ensure smooth industrial function across the many states. The argument goes, if each state has a different emissions standard, we’ll need to make a different car for every state: A classic slippery slope. The history of mobile source regulation under Section 209 shows the exact opposite: states are left free to choose either the federal standard or adopt California’s more stringent standards. The issues that conflicting standards create has not risen yet, save in the limbo that the rulemaking and subsequent laws have created.[36] Likewise, automakers have been and are ready to collaborate both with California and the 177 States to market low-emission vehicles and with the federal government to market higher emissions vehicles that “customers desire,”[37] reinforcing the conclusion that the previous cooperation between the states and the federal government under the CAA was successful.[38] 

Governor Newsom’s EO is a bold experiment on climate change action given Congress’s hesitancy to setting national mobile source emissions standards. Meanwhile, the NHTSA and the EPA may fail in their assault on California’s regulatory approach, both through strained reinterpretation of the CAA and by publicly denigrating the EO, as much of the world, including the auto industry, is rapidly embracing both the imperatives and opportunities of the clean energy transition.

Amanda Halter is managing partner of the Houston office of the international law firm of

Pillsbury Winthrop Shaw Pittman, a member of the firm’s Environmental & Natural

Resources practice section and co-leader of the firm’s Crisis Management team. Amanda

helps companies resolve environmental liabilities and negotiate compliance conditions, as well as manage financial and reputational losses associated with a crisis. Her experience includes a diverse array of environmental regulatory, litigation and crisis matters, including contamination investigations and remedial actions, natural resource damages assessments and claims, environment, health and safety compliance counseling, mass toxic tort actions, permitting and planning for large-scale industrial projects, an project impacts mitigation and restoration strategies. Amanda is a native of Houston, a graduate of Rice University and The University of Texas School of Law.

 

Matthew Frederick is a third-year student at The University of Texas School of Law and a senior editor of the Texas Environmental Law Journal.

 

[1] Exec. Order N-79-20, Exec. Dep’t – State of Cal. (Sep. 23, 2020), [hereinafter Executive Order].

[2] Cal Matters, Will Gov. Newsom’s ‘Audacious’ Ban on Gas Guzzlers Help Trump Win in Midwest? Times of San Diego (Sep. 26, 2020), https://timesofsandiego.com/politics/2020/09/26/will-gov-newsoms-audacious-ban-on-gas-guzzlers-help-trump-win-in-midwest.

[3] Audrey LaForest, California’s fossil fuel ban likely in for long fight; 2035 ZEV goal up against the election and logistics, Automotive News (Sep. 28 2020), https://www.autonews.com/regulation-safety/californias-fossil-fuel-ban-likely-long-fight.

[4] Executive Order, supra note 1.

[5] California Global Warming Solutions Act of 2006, Cal. Health & Safety Code § 38500; see 17 Cal. Code Regs. § 95460 (2020) (regulating methane capture and flaring at municipal landfills as part of fulfilling the state’s climate objectives).

[6] LaForest, supra note 3.

[7] Id.

[8] Michael Hiltzik, Will California have enough electricity for all its EVs? Yes – but it will take work, LA Times (Oct. 1, 2020), https://www.latimes.com/business/story/2020-10-01/california-electricity-evs; see also Wheeler Criticizes California, China Plans for Reducing Greenhouse Gases, Inside EPA Weekly Report (Sept. 24, 2020).

[9] Executive Order, supra note 1, at §§ 3–5.

[10] Hiltzik, supra note 8.

[11] Id.

[12] See John C. Duncan, Jr., A Critical Consideration of Executive Orders: Glimmerings of Autopoiesis in the Executive Role, 35 Vt. L. Rev. 333, 362–63 (2010) (indicating that congressional acquiescence to presidential executive orders “amounts to ratification,” thereby permitting the inference that gubernatorial executive orders remain in effect until overturned by the state legislature or, of course, future governors).

[13] Executive Order, supra note 1, at § 1 (“It shall be a goal of the State that 100 percent of in-state sales of new passenger cars and trucks will be zero-emission by 2035. It shall be a further goal of the State that 100 percent of medium- and heavy-duty vehicles in the State be zero-emission by 2045 for all operations where feasible and by 2035 for drayage trucks. It shall be further a goal of the State to transition to 100 percent zero-emission off-road vehicles and equipment by 2035 where feasible.”).

[14] Executive Order, supra note 1; see, e.g., A.L.A. Schechter Poultry Corp. v. United States, 295 U.S. 495 (1935) (“. . . the recuperative efforts of the federal government must be made in a manner consistent with the authority granted by the Constitution.”).

[15] Cal. Health & Safety Code § 43018(a) (2020).

[16] Preemption Rule, 84 Fed. Reg. 51,310 (Sep. 27, 2019); Complaint, California et. al. v. Chao et. al., No. 1:19-cv-02826 (D.D.C 2019); California et. al. v. Wheeler et. al., No. 20-1357 (D.C. Cir. 2020).

[17] Motor and Equipment Mfrs. Ass’n v. Env’t Prot. Agency, 627 F.2d 1095, 1110 (D.C. Cir. 1979) (evaluating congressional intent in amending the Clean Air Act to include a waiver provision for California in 1977).

[18] Pub. L. No. 95-95, § 129(b), 91 Stat. 685, 750 (1977).

[19] E.g., 58 Fed. Reg. 4,166 (Jan. 13, 1993); see 71 Fed. Reg. 78,190, 78,190-91 (Dec. 28, 2006); see also 76 Fed. Reg. 61,095, 61,095-96 (Oct. 3, 2011); see also 78 Fed. Reg. 2,112, 2,114-15 (Jan. 9, 2013).

[20] Cal. Health & Safety Code § 42823, 43018.5; 74 Fed. Reg. 32,744 (Jul. 8, 2009).

[21] Preemption Rule, 84 Fed. Reg. 51,310 (Sep. 27, 2019).

[22] The 13 so-called 177 States are: Colorado, Connecticut, Delaware, Maine, Maryland, Massachusetts, New Jersey, New York, Oregon, Pennsylvania, Rhode Island, Vermont, and Washington.

[23] Preemption Rule, 84 Fed. Reg. 51,310 (Sep. 27, 2019); Complaint, Chao et. al., No. 1:19-cv-02826.

[24] See Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (1983) (finding that administrative agencies decisions’ reversing long-term regulatory policy face a higher standard of review); Complaint, Chao et. al., No. 1:19-cv-02826 (referencing the interplay between Section 209, waivers, and 177 states in setting mobile source emissions targets; explaining EPA/NHTSA’s reassertion of argument that failed in federal courts (Green Mountain and Central Valley) about applicability of waiver provisions to GHG/ZEV regulations).

[25] Complaint, Chao et. al., No. 1:19-cv-02826.

[26] LaForest, supra note 3 (citing Chevy and other manufacturers who haven’t adopted tougher standards under the agreement to cut vehicle emissions).

[27] Id. (citing Ford and other manufacturers who have embraced collaboration with California).

[28] Chao et. al., No. 1:19-cv-02826; Wheeler et. al., No. 20-1357.

[29] Andrew R. Wheeler, Letter to Governor Gavin Newsom (Sep. 28, 2020), https://ww2.arb.ca.gov
/sites/default/files/2020-10/Wheeler_to_Newsom_9-28-2020.pdf [hereinafter Letter].

[30] Wheeler Warns California Over Plan to Ban New Gasoline Cars in 2035, Inside Cal/EPA (Oct. 2, 2020).

[31] Letter, supra note 29.

[32] Hitzik, supra note 8.

[33] Id.

[34] Preemption Rule, 84 Fed. Reg. 51,310 (Sep. 27, 2019).

[35] Kyoto, COP 22, other climate benchmarks that the U.S. has committed itself to have elapsed, and the Trump Administration is in the process of withdrawing from the Paris Climate Accord.

[36] Complaint, Chao et. al., No. 1:19-cv-02826; Preemption Rule, 84 Fed. Reg. 51310 (Sep. 27, 2019).

[37] Laforest, supra note 3.

[38] See Pub. L. 95-95, Title II, §§ 207, 221, Aug. 7, 1977, 91 Stat. 755, 762; Pub. L. 101-549, Title II, § 222(b), Nov. 15, 1990, 104 Stat. 2502.

Vol. 50-1 Air Quality

by John Turney and Maxwell W. Anderson

Air Quality

New Air Quality Permit in Brownsville, Texas

Background

On March 24, 2016, Texas LNG Brownsville LLC (Texas LNG) submitted an application to the Texas Commission of Environmental Quality (TCEQ) for a new air quality permit authorizing construction of a natural gas liquefaction and export terminal, to be located in the Brownsville Ship Channel in Cameron County, Texas.[1] Texas LNG’s facility is one of three such facilities to be constructed in the area. Emissions from such facilities, predominantly those from pipeline-quality natural gas, include nitrogen oxides (NOx), carbon monoxide (CO), volatile organic compounds (VOC), sulfur dioxide (SO2), particulate matter (PM) at 10 and 2.5 micrograms, and hydrogen sulfide (H2S).[2] The operation would not be a major source requiring review under the federal Prevention of Significant Deterioration new source review program.[3] The TCEQ’s Executive Director (ED) issued a draft permit for Texas LNG’s application.[4] Following a public meeting, the TCEQ received comments and requests for a hearing, and ultimately, Vecinos Para el Bienestar de la Comunidad Costera (Vecinos), and the City of Port Isabel (Port Isabel), among others, were admitted as protestant parties.[5] The protestants argued that the draft permit was deficient and should be rejected, or, alternatively, that it should be revised to better protect air quality, human health, and property.[6] Nonetheless, the Administrative Law Judges (ALJs) recommended that the TCEQ approve the draft permit with one revision.[7]

Proposal for Decision

Burden of Proof and Prima Facie Demonstration

Texas LNG’s application was filed after September 1, 2015, making it subject to Texas Government Code § 2003.047(i-1)–(i-2) (SB 709),[8] which states:

(i-1)     [I]n a contested case regarding a permit application referred under Section 5.556 [of the Water Code] . . . the draft permit prepared by the [ED], the preliminary decision issued by the [ED], and other sufficient supporting documentation in the administrative record of the permit application establishes a prima facie demonstration that:

  1. the draft permit meets all state and federal legal and technical requirements; and
  2. a permit, if issued consistent with the draft permit, would protect human health and safety, the environment, and physical property.

(i-2)      [A] party may rebut a demonstration under Subsection (i-1) by presenting evidence that:

  1. relates to . . . an issue included in a list submitted under Subsection (e) in connection with a matter referred under Section 5.556, Water Code; and 
  2. demonstrates that one or more provisions in the draft permit violate a specifically applicable state or federal requirement.[9]

Under SB 709, the ED’s draft permit on Texas LNG’s application established a prima facie demonstration and created a presumption that the permit, if issued, would meet all legal and technical requirements.[10] This shifts the burden of production onto the protestants in a contested case; however, the ultimate burden of proof remains with the ED and the applicant to prove by a preponderance of the evidence that the applicant satisfies all applicable requirements.[11] The protestants, therefore, may rebut the presumption by presenting evidence related to a referred issue and demonstrating that the draft permit violates an applicable state or federal requirement.[12] The ALJs concluded on two issues that the Protestants failed to overcome the prima facie demonstration established by the ED’s Draft Permit.[13] On the third issue, the ALJs concluded that the Protestants overcame the prima facie demonstration only in part.[14] 

The ALJs rejected Port Isabel’s contention that draft permits issued without clear adherence to the application review process should not be granted the presumption of compliance set forth by SB 709.[15] Port Isabel asserted several deficiencies in the application review process,[16] including that Texas LNG’s permit had been passed off by two different permit engineers over the course of two years, and that no engineer was available during the response to comments or permit contest who could vouch for the permit’s technical review adequacy.[17] The only documentation of a technical review was the “Construction Permit Source Analysis & Technical Review,” which lacked any date of completion or signature.[18] Port Isabel argued that such a review is essentially a draft memo and should not be considered a prima facie demonstration under SB 709.[19] Nonetheless, the ALJs found that SB 709 creates a presumption and shifts the burden of production so long as the TCEQ reviewed the application and held an open meeting.[20]

Referred Issues and ALJ Analysis

The following three issues were referred for hearing:

1. Whether the Draft Permit contained adequate conditions to protect against adverse effects on the health and safety of Port Isabel’s residences and employees, including sensitive subgroups;

(2) Whether the Draft Permit contained adequate conditions to protect against adverse effects on plants, marine and aquatic organisms, animals, wildlife . . .[and]

(3) Whether [Texas LNG’s application] properly calculated and addressed potential emission sources, emission rates, and background concentrations . . . .[21]

Air Quality Analysis and Air Dispersion Modeling (Issue 1)

Port Isabel argued that Texas LNG was required under the Texas Clean Air Act (TCAA) and Title 30, Section 116.11 of the Texas Administrative Code to conduct a Modeling and Effects Review Applicability (MERA) analysis and that emissions of benzene from flares were not adequately detailed in Texas LNG’s MERA analysis.[22] Texas LNG contended that a MERA analysis was not required for emissions from ‘“boilers, engines, or other combustion units fueled only by pipeline-quality natural gas’ and from ‘flares, heaters, thermal oxidizers, and other combustion devices burning gases only from onshore crude oil and natural gas processing plants.’”[23] Nonetheless, Texas LNG conducted a MERA analysis and contended that emissions from the plant met the law’s applicable requirements.[24] Both parties’ experts testified about the adequacy of the MERA analysis calculations, and some evidence existed that, if speciated, the benzene flare emissions  would not have met applicable law.[25] 

The ALJs found that Texas LNG’s facility qualified for an exemption in MERA for boilers, engines, and other combustion units fueled by pipeline-quality natural gas, and that the benzene-admissions did not rebut the prima facie demonstration that the permit met all legal requirements.[26]

Wildlife and Vegetation Impacts (Issue 2)

Port Isabel argued that Texas LNG failed to inform the TCEQ of how closely located the site is to the Laguna Atascosa National Wildlife Refuge, and it should have conducted an ecological risk assessment and bioaccumulation study to determine the true impact on the refuge.[27] Texas LNG contended that the TCEQ only requires applicants to submit a U.S. Geological Survey map, and that Texas LNG did so.[28] Furthermore, Texas LNG contended that its facility was compliant with the Environmental Protection Agency’s (EPA) secondary National Ambient Air Quality Standards (NAAQS), which the TCEQ uses to evaluate the environmental impacts of facilities.[29] Secondary NAAQS are set at levels protective of public welfare, including impacts on soils, water, crops, vegetation, animals, wildlife, visibility and climate.[30] Texas LNG also argued that a sufficient ecological risk assessment was already adequately conducted by the Federal Energy Regulatory Commission in its preparation of the site’s Environmental Impact Statement.[31]

Port Isabel’s expert testified that even if the facility was in compliance with secondary NAAQS, the NAAQS “‘are not protective for nitrogen and sulfur deposition into the environment’ or for ‘the bioaccumulation of persistent organic pollutants or heavy metals.’”[32] The EPA has recognized that NOx and SO2 have interrelated impacts on plants, soils, lakes, and streams, and that there is scientific support for developing a standard to limit acidifying deposition of these pollutants to sensitive aquatic ecosystems.[33] Texas LNG’s expert also testified that the EPA has questioned whether secondary NAAQS standards should be revised but that they have not been revised yet.[34]

The ALJs found that Texas LNG performed the required modeling to demonstrate compliance with secondary NAAQS.[35] Even with scientific evidence of the interrelated impacts of NOx and SO2, without EPA revision to the NAAQS, the ALJs determined that Texas LNG had no duty to self-impose additional restrictions.[36] Therefore, Texas LNG’s application met the requirements of applicable law.

Emissions Controls and BACT Analysis (Issue 3)

Vecinos, joined by Port Isabel, argued that Texas LNG failed to demonstrate use of the Best Available Control Technology (BACT) required under the TCAA.[37] The TCEQ defines BACT as:

An air pollution control method for a new or modified facility that through experience and research, has proven to be operational, obtainable, and capable of reducing or eliminating emissions from the facility, and is considered technically practical and economically reasonable for the facility.[38]

In determining whether a control option is BACT, the TCEQ requires that applicants compare emissions reduction performance levels to those of options previously accepted as BACT in recent reviews for the same industry.[39] The TCEQ implements a three-tiered approach in BACT analysis.[40] Crucially, Tier I requires that sites implement BACT, but allows owners to consider the cost effectiveness of a given control option.[41] In contrast, Tier III requires owners to implement control options with the Lowest Available Emissions Rate (LAER) without consideration of costs.[42] Texas LNG’s facility was subject to Tier I review.

Vecinos asserted various faults with Texas LNG’s BACT demonstration. Vecinos argued that Texas LNG’s demonstration, which described the BACT comparison with previously accepted BACT as a case-by-case basis between entire sites, ignored the specialized meaning of the term “facility” within the TCAA as a “discrete or identifiable structure, device, item, equipment, or enclosure that constitutes or contains a stationary source. . .”[43] That is, Vecinos argued that Texas LNG must demonstrate that it will implement BACT on each “facility” on its site. Vecinos then listed four facilities that Texas LNG failed to implement BACT—flares, hot oil heaters, thermal oxidizers, and fugitive emissions controls.[44] The ALJs only agreed with Vecinos that Texas LNG had failed to consider BACT on hot oil heaters and the discussion of the heaters is illustrative of BACT considerations generally.[45]

Texas LNG proposed the use of hot oil heaters with emissions limits of NOx of 0.024 lb/MMBtu, which exceeded the limit of 0.01lb./MMBtu described in TCEQ’s current BACT requirements.[46] Vecinos argued that Texas LNG failed to perform a proper BACT analysis by failing to consider the hot oil heaters implemented at Freeport LNG, which were permitted in 2011 for a NOx emissions limit of 0.006 lb./MMBtu.[47] Texas LNG contended that the Freeport LNG was subject to LAER, the more restrictive technology standard for nonattainment areas, and that comparison of the two facilities was inapt.[48] The ALJs concluded that although Freeport LNG is subject to LAER, use of LAER control methods would be consistent with BACT under Tier I so long as the control method was economically feasible,[49] and proposed that the draft permit be revised to require Texas LNG to apply the more stringent limit to its hot oil heaters.[50] At its meeting on May 6, 2020, the TCEQ approved the Proposal for Decision, including the revised emission limit, and entered an order issuing the permit.[51]

Conclusion

Ultimately, Texas LNG’s permit survived the contest despite the ALJs noting several deficiencies in the application process. In each case, the ALJs noted that the relevant evidence presented by the Protestants did not overcome the presumption established by SB 709. The contest illustrates the high bar a protestant now faces in contesting a permit once a draft has been approved by the ED. Port Isabel recently filed suit in the Travis County District Court against the TCEQ regarding the issuance of the permit to Texas LNG.[52]

John Turney is retired Senior Counsel of Richards Rodriguez & Skeith and represented regulated companies in a variety of environmental and administrative matters before the TCEQ and other regulatory agencies.

Maxwell W. Anderson is a second-year student at The University of Texas School of Law and is a Staff Editor of the Texas Environmental Law Journal.

 

[1] Proposal for Decision, Texas LNG Brownsville LLC, SOAH Docket No. 582-19-6261 1 (2020) [hereinafter PFD].

[2] Id. at 2, 11.

[3] Id. at 20.

[4] Id.

[5] Id.

[6] Id.

[7] Id. at 20.

[8] Act of Sept. 1, 2015, 84th Leg., R.S., ch. 116 §§ 1, 5, 2015 Tex. Sess. Law Serv. (S.B. 709), at 1 (codified at Tex. Gov’t Code § 2003.047).

[9] Id.

[10] PFD, supra note 1, at 4.

[11] Id.

[12] Tex. Gov’t Code § 2003.047(i-1)–(i-3).

[13] PFD, supra note 1, at 16–17, 24.

[14] Id. at 55 (stating that “the ALJs find that the Application properly calculated emissions sources and established appropriate conditions related to control technologies, with the exception of the hot oil heaters.”).

[15] Id. at 8.

[16] Closing Argument of the City of Port Isabel, Texas LNG Brownsville LLC, SOAH Docket No. 582-19-6261 2–6 (2020).

[17] Id. at 3.

[18] Id.

[19] Id. at 6.

[20] PFD, supra note 1, at 8.

[21] Id. at 6.

[22] Id. at 13.

[23] Id. at 11.

[24] Id.

[25] PFD, supra note 1, at 12–16.

[26] Id. at 16.

[27] Closing Arguments of the City of Port Isabel, Texas, Texas LNG Brownsville LLC, SOAH Docket No. 582-19-6261 16–17 (2020).

[28] PFD, supra note 1, at 18.

[29] Id. at 19; see also Reviewing National Ambient Air Quality Standards (NAAQS): Scientific and Technical Information, Env’t Prot. Agency, https://www.epa.gov/naaqs (last visited Dec. 3, 2020).

[30] PFD, supra note 1, at 19.

[31] Id. at 19, 21–22.

[32] Id.

[33] Id.

[34] Id.

[35] Id.

[36] Id. at 24

[37] Id.; see also Tex. Health & Safety Code § 382.0518(b).

[38] 30 Tex. Admin. Code § 116.10(1).

[39] PFD, supra note 1, at 27.

[40] Id. at 25.

[41] Id. at 28

[42] Id.

[43] Id. at 29; see also Tex. Health & Safety Code § 382.003(b); 30 Tex. Admin. Code § 116.10(4)).

[44] PFD, supra note 1, at 31.

[45] Id. at 55.

[46] Id. at 41.

[47] Id. at 44.

[48] Id.

[49] Id. at 46.

[50] Id. 

[51] Agenda, Tex. Comm’n on Env’t Quality (May 6, 2020), https://www.tceq.texas.gov/assets/public
/comm_exec/agendas/comm/marked/2020/200506.Mrk.pdf.

[52] See City of Port Isabel v. Tex. Comm’n on Env’t Quality, D-1-GN-20-004044 (Dist. Ct., Travis Cty., Tex. Aug. 5, 2020).