Alex Beehler
Authored by: Alex Beehler, Former Acting Under Secretary (Installations & Environment), Department of Defense

September 2, 2012

An oft-repeated mantra is that the United States Department of Defense (DoD), is the Nation’s “Biggest Polluter.” Given the immensity of our military enterprise ($750 billion annual budget, a majority of the buildings of the federal government, and a majority of the government’s energy use), that may be technically true in terms of size. But, in reality, the statement is misleading at best. In fact, DoD is fast becoming one of our country’s leading environmental stewards.

While DoD faces cleanup responsibilities from past pollution throughout its military facilities, it is meeting those responsibilities with a $3 billion per year remediation and munitions response program that has examined almost 30,000 sites and addressed over 75% of those sites requiring some remediation. Military facilities, according to USEPA, currently have a 98% compliance rate, equivalent to that of top industry leaders.

Most importantly, DoD has learned from its past mistakes.  It has gone beyond environmental compliance to be proactive stewards in many communities and industrial fields. For instance, after years of stonewalling neighborhood complaints of groundwater contamination, the Defense Supply Service Center’s Richmond facility decided to address problems in 2003 by launching V-REMS (Virginia Regional Environmental Management System) in partnership with surrounding communities, state and local governments, corporations, and other interested private parties. This unique effort has proven so successful that it has expanded to nearly 100 members, including other military facilities, throughout central Virginia. V-REMS is now focused on such larger challenges as bringing the Richmond Metropolitan area back into ozone attainment for improved air quality. These forward-leaning efforts by V-REMS have resulted in awards from the Governor of Virginia, DoD, and the White House.

Another example of DoD learning from past experience involved contamination of drinking water in various locations throughout the United States due to DoD use of perchlorate, a stabilizing agent in munitions and flares. Once again, after years of denying both responsibility and harm, DoD decided to create the Emerging Contaminant Directorate in 2004 to engage on the issue with the affected communities and government regulators in a transparent fashion to seek all relevant facts and the best available science. As a result of this initiative, the military’s role in perchlorate contamination of drinking water was found to be very limited.

More importantly, the DoD internal process established by the Office of Emerging Contaminants has been expanded into a comprehensive examination process of all potential chemicals of concern. This program of chemical management and risk analysis, the first of its kind in the federal government, has caused their military to substitute proactively the use of less toxic components in operations and materiel. The newly-renamed Office of Chemical Management and Risk Analysis also recently received a prestigious award from Harvard University’s Kennedy School of Government for innovative management.

The Department has become a leader in other aspects of sustainability, as well. Ten years ago, the military began to realize that suburban encroachment outside the fence line was both hindering base testing and training, as well as increasing the already considerable flow of endangered and threatened species onto military installations. Realizing that it best neighbors are fields, forests, and farmland, DoD and the Services at their major installations commenced engagement with surrounding communities to ensure sustainable development adjacent to the military fence line.

This effort included the development of the conservation buffer zone program, whereby DoD and the Services provide funding for the third-party purchase and management of conservation lands and easements. The result over the last five years has been the preservation of 80,000 acres near military bases and significant habitat preservation and restoration of many of the country’s most vulnerable species.

DoD’s stewardship has been further demonstrated in a wide range of activities, from curtailment of 98% of use of ozone depleting substances to funding successful cutting-edge research on detection of buried unexploded ordinances. DoD components have led the way in improved portable battery packs, geo-thermal and desalinization projects, and research on marine mammals. Through these projects and more, fundamental cultural change is taking hold in DoD through the reexamination of daily operational and personal routines throughout the Services.

Jane Luxton
Authored by: Jane Luxton, Partner, Pepper Hamilton LLP and Former General Counsel, NOAA

August 10, 2009

In two contradictory decisions announced within the space of ten days – both relating to the polar bear, climate change, and the Endangered Species Act – the Obama Administration has managed to anger parties across the political spectrum and create uncertainties about the implications of its actions and the resulting state of the law.

On April 28, Interior and Commerce Secretaries Salazar and Locke announced their rescission of a December 2008 Bush administration final rule modifying requirements for the consultation process under section 7 of the Endangered Species Act (ESA). But in contrast to this decision, the Obama administration decided to uphold a companion December 2008 “special polar bear rule,” which specifically limited consideration in ESA consultations of adverse effects from actions outside the bear’s normal habitat, including CO2 climate impacts from facilities thousands of miles away.

The Endangered Species Act and the Consultation Quagmire
The ESA, enacted in 1973, is often cited as a prime example of federal environmental statutes that were intended for other purposes but have become enmeshed in the U.S. climate change debate. Under the original consultation rule, agencies that grant permits or take other federal action affecting listed species must consult with the relevant “service agency” – either the Fish and Wildlife Service (FWS) or the National Marine Fisheries Service (NMFS), depending on the species – under ESA section 7 to ensure that the action does not jeopardize the species or result in the destruction or adverse modification of its critical habitat.

If a species is listed because of climate-change related factors, as in the case of certain corals and polar bears, any federal “action” that adds more CO2 to the atmosphere arguably makes it harder for that species to survive and recover. Such circumstances raise an important question: Can an action agency conclude that the CO2 emissions from a new power plant, manufacturing facility, road-building project – or even a new hospital, a school, or additions to the federal vehicle fleet – would have “no effect” on a threatened or endangered species, as the courts have interpreted that term?

Avoiding a Regulatory Nightmare
Although the 2006 listing of elkhorn and staghorn corals for, among other reasons, climate change related factors, had already set the issue in motion, that listing was little noticed. The May 2008 polar bear listing, however, shone a spotlight on the matter. At the time, the Washington Post noted the problem, arguing that if the ESA were to be “used as a backdoor way to regulate greenhouse gas emissions,” the outcome would be “a potential regulatory nightmare.”

To address this concern, the Bush administration’s ESA rule modification authorized action agencies to make consultation determinations without involving FWS or NMFS in circumstances where no take was anticipated and the effects of the action were “manifested through global processes” and “cannot be reliably predicted or measured” at the individual species scale, “would result at most in an extremely small, insignificant impact,” or would pose a “remote” potential risk of harm. Reacting sharply, environmental groups characterized the rule as “lethal,” saying that allowing action agencies to make such a determination on their own – notwithstanding the threat of judicial review – would “eviscerate the Endangered Species Act process.”

Perhaps as a belt-and-suspenders move, in the contemporaneous special polar bear rule, the Bush administration explicitly addressed attempts to link climate change to ESA consultations for that species, effectively ending consultations for impacts potentially caused by global carbon emissions. Critics felt it “falsely asserted that there was no direct link between specific greenhouse gas emissions and the decline in the polar bear’s habitat,” while others not only disagreed with excluding CO2 emissions, but also feared the “blanket exemption” in the rule would additionally exempt more conventional sources of contaminants that could negatively affect polar bears, such as oil and gas drilling.

The April-May Decisions and Their Aftermath
The Obama administration’s decision to rescind the 2008 consultation rule modification was hailed by environmental groups like the Center for Biological Diversity as a “huge victory in favor of sound science and common sense,” while homebuilders and other industry groups denounced the move as adding to confusion about the role of climate change factors in ESA determinations. At the same time, the Center’s spokesman cautioned, “it’s only half the pie,” citing the special polar bear rule, which restricted consideration of greenhouse gas and other factors outside the bears’ current range.

But on May 8, despite receiving letters signed by 41 House members, 130 environmental groups, 1000 scientists, and 53 law professors, all urging rejection of the special polar bear rule, Secretary Salazar declared he would keep it in place. At a minimum, these opposite-leaning actions have left ambiguity in their wake, and a closer analysis suggests the results are not what the Administration hoped to achieve.

With such intense objection to both rules, the Administration’s decision to revoke the consultation rule came as no surprise, but Secretary Salazar’s retention of the special polar bear rule sent shock waves: “‛Salazar’s decision today is a gift to Big Oil and an affirmation of the pro-industry/anti-environmental policies of the Bush Administration,’ said [Center for Biological Diversity’s Noah] Greenwald. Even more tellingly, the environmental groups’ reactions pointed out the inconsistency: “‛It makes little sense for Salazar to rescind Bush’s national policy barring consideration of global warming impacts to endangered species in general, but keep that exact policy in place for the one species most endangered by global warming – the polar bear,’ said Greenwald.”

Secretary Salazar’s press release explained his reasoning for retaining the special polar bear rule: “[T]he Endangered Species Act is not the proper mechanism for controlling our nation’s carbon emissions. Instead, we need a comprehensive energy and climate strategy that curbs climate change and its impacts – including the loss of sea ice.” Ironically, Secretary Kempthorne said virtually the same thing one year earlier: “Listing the polar bear as threatened can reduce avoidable losses of polar bears. But it should not open the door to use the ESA to regulate greenhouse gas emissions from automobiles, power plants, and other sources. That would be a wholly inappropriate use of the Endangered Species Act.”

Regardless of this concurrence on intentions, the net result of the April-May determinations is the limitation on consideration of greenhouse gases in consultations relating to polar bears, but not with regard to other species listed because of climate change factors, such as elkhorn and staghorn corals and the black abalone. The ESA has long been notorious as a litigation magnet, and this recent split decision does not appear to have hindered the ability of those who see it as a useful tool for advancing larger climate change policy objectives, targeting unwelcome CO2 emitting facilities and projects wherever they may be located.

This column was adapted from a Working Paper written by the author, appearing in the Washington Legal Foundation’s Critical Legal Issues Series (Number 166, July 2009). Please click here for a PDF of the original paper.

The material in this publication was created as of the date set forth above and is based on laws, court decisions, administrative rulings and congressional materials that existed at that time, and should not be construed as legal advice or legal opinions on specific facts. The information in this publication is not intended to create, and the transmission and receipt of it does not constitute, a lawyer-client relationship.

Chris Kearney
Early Observations on the Obama Administration’s Environmental Policies

Authored by: Chris Kearney, Former Deputy Assistant Secretary for Policy and International Affairs and Senior Advisor to the Deputy Secretary, Department of the Interior

July 15, 2009

President Barrack Obama has been in office for about six months. He stands for election in approximately 40 months. Therefore, while definitive observations at this point are tenuous at best, there are some important early indicators of how the President and his team approach governing in the environmental arena, and what that may mean for the future.

I will take these indicators in turn: its views toward partnerships in meeting environmental challenges; appointments to key positions; the extent to which the previous administration’s policies are reversed or continued; and the keeping, or breaking, of campaign promises.

Let’s begin with the administration’s view of partnerships. As in so many areas, the President has been articulate and passionate about his concern for the environment and the need to address the many challenges facing our nation. Specifically, he has spoken eloquently about the matter of our changing climate and efforts to improve the air we breathe and the water we drink.

In so doing however, it is not what he has said that is noteworthy, but rather its what he and his appointees have not said. Frequently, the nature of comments made in announcing decisions has been decidedly “government knows best.” The failure to recognize and support a partnership approach to addressing the nation’s environmental concerns —  a common practice in many quarters for years —  is striking and unfortunate.

Collaborative efforts, which frequently involve federal and state governments, invidual citizens, non-profts, and the private sector, have become critical to enhancing the government’s ability to meet environmental obligations and objectives. Deemphasizing the partnership aspect of federal actions sends an unfortunate message to the diverse array of individuals and organizations involved. In short, words — or the absence there of — matter. However, the effect of a deemphasis on partnerships goes beyond words.

As the watchdog arm of Congress, the General Accountability Office, said last year, “Experts generally view collaborative resource management that involves public and private stakeholders in natural resource decisions as an effective approach for managing natural resources. Several benefits can result from using collaborative resource management, including reduced conflict and litigation and improved natural resource conditions….”

A second indicator of the President’s approach thus far is revealed through his political appointments. A review of the key positions filled, as well as pending nominees, generally reflects a mix of academia, lawyers, veterans of the Clinton Administration, and current and past career employees. Here again — recognizing several vacancies are still looming — it is what is missing that is striking. The lack of representatives from the communities the agencies impact is problematic and disappointing (e.g. business representatives, ranchers, commercial fishing community).  Such appointments may be a product of the rhetoric of the campaign, but that time has passed. The business of governing is at hand and appointees should more fully reflect that fact.

A third early indication relates to policy proposals and actions taken relative to the previous administration. On this front, it has been a “mixed bag.” – no clear indication one way or another.  In several key areas (e.g. environment, climate, agriculture, and natural resources), the administration has upheld the previous one on some (Interior’s Polar bear rule), modified others (EPA ruling on mountaintop mining permits), pushed forward on others previously held up  (EPA’s climate endangerment finding), directed that others get further study (Forest Service’s Roadless Rule), and reversed others (EPA’s definition of solid waste as it relates to RCRA and the Department of Energy’s action on FutureGen).

On many other topics, we have yet to see an indication of how the administration will proceed. Examples range from environmental matters related to international trade agreements to ocean and coastal related activities, with scores in between.

Finally, there is the question of how this President will fully adjust to moving from the “poetry” of a campaign to the “prose” of governing, as a Democrat pollster so eloquently put it recently. Past administrations have been accused of never getting out of campaign mode. Will the Obama Administration suffer the same fate?

In the coming months and years, the President and his appointees will be confronted constantly by the complexities and vagaries that is Washington, DC decision making:  limited resources (staff and dollars); statutory mandates; court ordered requirements; pressure from agency constituency groups; the strong views of many voices in Congress; the glare of media attention; anonymous information leaks from within the agencies, the pressure to meet campaign promises, likely plans for reelection, and the list goes on. In addition, they will make countless decisions never envisioned in the campaign and indeed, never contemplated when many assumed their positions.

The chapters of the book that will become the administration’s environmental record are just beginning to be written. Might that record resemble the period when some the most sweeping environmental laws were passed  — and  still govern this nation —  and EPA was created, as it in the 1970s? Or will it look more like that of the incremental era of the 1990s? Or will it be the dawn of a new and fundamentally unique era?

Stayed tuned. It’s going to be an interesting few years.

John Paul Woodley, Jr.
Authored by: John Paul Woodley, Jr. Former Assistant Secretary of the Army for Civil Works

June 15, 2009

In a little-noticed section of the massive 2007 Army Corps of Engineers water project authorization bill, Congress mandated that the Army revise the Reagan-era “Economic and Environmental Principles and Guidelines for Water and Related Land Resources Implementation Studies” (surely a title only a bureaucrat could love!), which had governed federal water project planning for 24 years.  The mandate gave the Army two years to do the job.

So, what are the “Principles and Guidelines?”  Produced in 1983 by the now-defunct US Water Resources Council, a cabinet-level interagency group chaired at the time by Interior Secretary James Watt, the Principles and Guidelines essentially tell federal water project planners what to do.  They set out what types of plans to produce, and how to choose among competing alternatives to recommend projects that address water resource needs.

The “P & G” is the water project planner’s most fundamental reference.  Any time a new reservoir, levee, or navigation project is being planned, the P & G come into play.  They tell the planner how to define the federal interest in the project and how the federal interest is distinguished from the local interest.  They also tell the planner exactly how to measure project outputs against costs to arrive at a recommendation for federal funding.

The 1983 P & G dictated that “national economic development” was the goal of federal water policy.  The economic development benefits had to be environmentally acceptable; that is, environmental impacts were to be avoided, minimized, and mitigated.  In short, the 1983 P & G did not recognize any federal role in improving the functions of natural systems at all.

By the late 1990s the limitations of this approach were apparent to many observers.  Starting with the movement to restore the Florida Everglades, more and more people were advocating for a federal role in environmental restoration, especially in areas where federal projects had themselves altered natural systems and led to outcomes their designers had not anticipated or planned for.  Congress began to authorize the Corps of Engineers to undertake planning and construction of projects specifically designed to improve the environmental performance of aquatic ecosystems.

Since they don’t have economic development outputs, these projects could not be analyzed using the 1983 P & G.  Federal planners were forced to operate under a blanket exception to policy, and develop new measurement schemes to compare costs and benefits of ecosystem restoration projects.  Even today, these new schemes are a work in progress, and there is no well-defined concept available for assessing the environmental benefits of alternatives for ecosystem restoration projects.  This translates into massive uncertainty about what kind of projects will be approved for federal funding.

Congress addressed this problem in the Water Resources Development Act of 2007.  The Act directed the Secretary of the Army to revise the principles and guidelines, with the restoration of the functions of natural systems among the appropriate purposes for federal water resources projects.  Since these revisions are to be issued by the Secretary of the Army they will be applicable only to the Corps of Engineers.  The multi-agency Water Resources Council that issued the 1983 P & G still exists on paper, but has no budget and no staff.  However, the President may decide to go beyond the terms of the Congressional mandate and produce revisions applicable to all federal executive agencies by executive order.  Even if the revisions formally apply only to Corps projects (representing about $2 Billion annually in construction) they could still be referenced by other federal agencies.

In 2008, the Bush administration decided to commence the revision process, understanding that it could not be completed before the new presidential administration took over.  The idea was to lay the groundwork for the revisions that the new administration could build upon and thus have some hope of meeting the deadline set in the Act, November 2009.  A draft version of the Principles section of the revised P & G was published in the Federal Register in September 2008.

There remain a number of key questions that must be answered before the revisions can be finalized.  Answers to these questions will determine the direction of hundreds of millions of dollars in federal construction funding.

Most fundamental is the question of how to define the federal interest – how to tell the difference between those projects that the federal government should undertake and those that should be a local or state responsibility.  The inventory of authorized but unfunded federal water projects is already very large.  Unless we take the view that all aquatic ecosystems are necessarily federal responsibilities, the revised P & G will have to define some threshold to sort the federal from the local.

Another question is how to analyze projects with both economic development and ecosystem restoration benefits.  Under the 1983 P & G, project alternatives that advance both economic development benefits and ecosystem restoration benefits are at a competitive disadvantage because the ecosystem restoration benefits add costs to the project but do not show corresponding economic benefits.  This will inevitably lower that alternative’s cost-benefit ratio compared with other alternatives.   Should the planner be driven to choose the less costly alternative in every case, abandoning opportunities for significant ecosystem restoration as part of the project?  If not, the revised P & G will have to include a rigorous methodology for assessing these multi-purpose alternatives.

Yet another controversial question is whether planners should be constrained to consider federal budgetary considerations in formulating project recommendations.  The president’s budget for civil works projects in recent years has generally provided construction funding only to projects with the highest cost-benefit ratios, in an effort to maximize the impact of federal investment in water infrastructure.   Federal budget planners are concerned that unreasonable expectations are created when projects with little prospect for funding in the short run are recommended to Congress for authorization.  Project planners, on the other hand, argue that formulation of project recommendations is a separate function from the annual federal budget deliberations, and that constraints on project formulation unnecessarily limit the range of options available for budget consideration in any given year.

The answers to these questions (and many others) will dictate the course of federal water policy for a generation.  Revision of the P & G affords the most far-reaching opportunity in many years to influence how the nation addresses its water resource development challenges.  So far, the new administration has not given many clues as to where it plans to take water project policy.  Will policymakers seize this opportunity to revolutionize federal water policy and set the stage for a new era of federal investment in sustainable water resource development?

Only time will tell – but time is in short supply.  To meet the Congressional deadline, the Army will have to complete the revision process by November of this year.   Everyone interested in the future direction of federal water policies should take note and be prepared to weigh in on short notice.

Nicholas Culver
Authored by: Nicholas Culver, Founding Member, THG

March 22, 2009

In the face of dwindling consumer confidence, continued business retrenchment, and a banking sector on life support, President Obama’s plans for a cap and trade system by 2012 are bold. The U.S. faces financial ruin today, while the phenomenon of climate change remains largely a threat of tomorrow. Nevertheless, once the economy recovers, slowing the effects of climate change should be a high priority for the administration.

Obama’s Cap and Trade System

Without major reductions in greenhouse gases, climate change will intensify major weather patterns, disrupt the global food supply, and raise sea levels enough to threaten dozens of major cities. A cap and trade system, as outlined by the Obama administration, would force large-scale emitters to buy permits for the right to emit greenhouse gases, thereby providing the government with the ability to control total emissions.

The permits would be re-sellable, allowing companies that face the highest retrofitting costs to buy extra permits from companies able to reform at lower costs. The newly created market for permits would ensure that the most cost-effective reduction measures available are implemented first.

The cap and trade system will bring in $646 billion of revenue through 2019, according to the President’s budget. Annual government revenues will steadily increase thereafter, and eventually top $100 billion, as regulators gradually reduce the supply of permits available. By 2050, the system would reduce emissions to 83% below 2005 levels.

The provision to sell permits to major emitters, instead of giving them away without charge, is crucial. Free permits reward a history of profligate emissions, while auctions place the strongest incentives to mitigate or sequester carbon squarely on the largest sources. The challenge will be ensuring that Congress, which is responsible for final passage of the system, retains a strong provision for auctions.

The cap and trade system will effectively tax carbon-emitting activities, thereby discouraging them. A large portion of the tax will be passed onto households and businesses. Energy and transportation fuel prices will rise as energy producers pursue greener but more expensive alternatives. The research firm Point Carbon estimates the system would increase electricity rates by 7% on average, with higher costs in coal-dependent states. This tax in disguise can be justified not only by the higher costs that climate change would impose, but also by its palliative fiscal effect.

A Growing Debt

Alongside climate change, the U.S. faces a long-term fiscal crisis due to global trade imbalances, growing entitlement requirements, and the rising costs of fixing the banking sector. The national debt will reach $11 trillion shortly, over two-thirds of the U.S. annual gross domestic product. Foreign investors hold over a quarter of U.S. debt, double the share recorded in 1983, and two-thirds of foreign debt is held by central governments. A national debt out of control could set the stage for foreign flight from the dollar, rising interest rates, and sharp currency devaluation.

In order to control the debt in the medium term, spending must be cut or government revenues must increase. President Obama’s first move to address growing budgetary concerns will be to roll back recent income tax cuts for the top 2% of earners and raise the capital gains tax to 20% by 2011. However, the nation’s books cannot be balanced on the backs of the wealthy alone. This presents an important question: which additional economic activities should be taxed?

On this question, economists as liberal as Princeton’s Paul Krugman and as conservative as Harvard’s Greg Mankiw agree: taxes should be levied on goods and services whose consumption impose a cost to society above and beyond the nominal price paid by the user. These activities carry a ”negative externality” and environmental degradation is a classic case.

It is clear that the price of electricity derived from coal combustion does not account for its contribution to future damages from climate change or its toll on natural landscapes. Similarly, the price of driving a car does not reflect the economic drag from traffic congestion in major cites or the geopolitical perils of securing a supply of oil abroad. A cap and trade system applies an additional fee to these activities, bringing the price closer to their true cost to society.

The President’s budget matches cap and trade revenues with expenditures for green energy investment ($120 billion) and for Making Work Pay tax credits for low and medium income earners ($526 billion), thereby giving the appearance that the system would not reduce budget deficits. But these programs are long-standing Obama campaign pledges, and merely constitute one slice of planned government expenditures, all of which must be paid for somehow. By using cap and trade revenues to offset these programs, the administration will solve one piece of the fiscal puzzle.

An Issue of Timing

Consensus projections point to an economic recovery beginning in the second half of this year and moderate growth in 2010, but this outcome is far from assured. An increased burden on households and businesses during recession would delay a return to economic growth. For this reason, Congress should ensure that plans for a cap and trade system are made contingent on a strong recovery.

As Clinton official James D. Baker noted ten years ago, “ignoring climate change will likely be the most costly of all possible choices, for our children and us.” A cap and trade system will contribute positively to U.S. fiscal solvency, while discouraging activities responsible for the slow degradation of our environment.