Texas Attorney Blog

Like many Texas oil and gas attorneys, I am keenly interested in the struggle unfolding between the EPA, Congress and the State of Texas. In a previous blog post, I discussed the EPA's recent efforts to regulate greenhouse gasses across the nation. Today, I'll describe the State of Texas' and the US Congress' responses to the EPA's new greenhouse gas rules.

The EPA's greenhouse gas regulations require the states to implement a federally mandated greenhouse gas permitting system. Under EPA greenhouse gas regulations, new, large power plants that are already required to obtain pollution permits must also obtain a greenhouse gas permit. The permit would require those new power plants to implement the newer technologies available to control carbon dioxide emissions.

Most states agreed to implement the EPA's new greenhouse gas plan. Texas and Wyoming, on the other hand, filed legal challenges to the program.

Texas Governor Rick Perry publicly refused to go along with the EPA. Governor Perry's spokeswoman called the EPA's plans “misguided,” “unnecessary,” and “burdensome,” and said that the the permitting system threatens “hundreds of thousands of Texas jobs” and imposes “increased living costs on Texas families.”

The EPA caught wind of Perry's refusal and took matters into their own hands. Because it was clear that Texas would not implement the new greenhouse gas rules, the EPA decided to take over Texas' greenhouse gas permit program. So, new power plants that are required to get a greenhouse gas permit under the EPA's greenhouse rules would need to get that permit directly from the EPA, rather than the State of Texas.

Continue reading " Texas and Congress Take on EPA in Greenhouse Gas Battle " »

Much to the chagrin of many Texans, the US Environmental Protection Agency (EPA) recently decided to regulate greenhouse gasses around the nation. This decision was a long time in the making and has important implications for the State of Texas and the whole nation. In this blog post, I'll describe the legal backdrop of greenhouse gas regulation, and I'll summarize the EPA's proposed plans to tackle greenhouse gasses.

Greenhouse gasses are heat trapping gasses that some scientists believe cause global warming. Carbon dioxide is one of the most abundant greenhouse gasses, and some climate change experts believe that the compound's increased presence in the Earth's atmosphere causes global climate change. The compound is created naturally through human and animal respiration, and it is also a natural by-product of combustion. When humans burn things, like coal, oil or natural gas, carbon dioxide is released into the atmosphere. It is not yet definitely proven, in my mind, that man-made carbon dioxide has any appreciable impact on the earth's temperature.

In the 2007 US Supreme Court case Massachusetts vs. EPA, the Court held that the EPA is required to study greenhouse gas emissions and determine whether greenhouse gas regulation is appropriate under the Clean Air Act (CAA).

The Supreme Court held that CAA section 202(a)(1) applies to greenhouse gasses, in addition to more traditional pollutants. The Court cited Section 202(a)(1) which requires the EPA Administrator to set emission standards for "any air pollutant" . . . "which in his judgment cause[s], or contribute[s] to, air pollution which may reasonably be anticipated to endanger public health or welfare." While the Supreme Court did not hold that the EPA must regulate greenhouse gasses, it did require the EPA Administrator to take the first step and determine whether or not greenhouse gasses are reasonably anticipated to endanger public welfare.

In 2009, the EPA Administrator made two important findings. The Administrator found that current and projected concentrations of six key, well-mixed greenhouse gasses 1) contribute to man-made global warming, and 2) threaten the public health and welfare of current generations. Remember that under Massachusetts v. EPA's interpretation of the CAA, the EPA must regulate air all pollutants that are reasonably anticipated to endanger public health or welfare. Once the EPA determined that greenhouse gasses lead to global warming, the EPA was poised to set emissions standards for greenhouse gasses, as required by Massachusetts v. EPA's interpretation of the CAA.

Continue reading " EPA Takes Aim at Texas Greenhouse Gas Emissions " »

According to the American Land Title Association, the first reported private transfer fee covenant was created to pay money to the Sierra Club and the National Audubon Society in order to fund an open space preserve. Since then, developers and homeowners' associations alike have borrowed the mechanism to generate a form of income that was previously unavailable. Over the past decade, private transfer fee covenants have been heavily used in California and Texas, prompting lawmakers to consider banning the provisions altogether.

In 2007, the Texas Legislature addressed private transfer fees in Section 5.017 of the Texas Property Code. The provision provides that a deed restriction on residential property that requires the buyer to pay a third party a fee in connection with his purchase of the property is unenforceable. However, the statute's broad prohibition of private transfer fee covenants has a few major exceptions. Texas' private transfer fee prohibition does not apply to 1) property owners' associations, 2) certain not-profit organizations, and 3) governmental entities.

Texas' approach is not without criticism. First, many argue that the law does not go far enough because it only applies to residential property. Commercial developers are free to include private transfer fee covenants in the deeds of commercial property. Second, private transfer fees are legal and enforceable if made payable to homeowners' associations. Some find fees payable to homeowners' associations to be less objectionable than fees payable to the developer. After all, the money goes to improve common property and maintain the premises. On the other hand, homeowners complain that they already pay homeowners' association monthly dues. What gives the HOA a right to 1% of their home's purchase price?

Lastly, many lawyers and legal analysts complain that Texas' private transfer fee law is ambiguous. It's unclear whether private transfer fees are enforceable if chargeable to the property's seller. Additionally, the law does not address the tough legal details that arise with private transfer fee covenants. For example, the statute does not give homeowners' associations any specific remedy for enforcing private transfer fees, nor does it address whether or not a buyer could get out of a contract to buy a home once he discovers that he is obligated to pay a large fee to his homeowners' association.

The lesson for consumers is clear. Before you enter into a contract to purchase a home or condo, make sure that you know about all of the fees that you are expected to pay at closing and beyond. While you may not be happy about having to pay a private transfer fee to a homeowners' association, if you know that the fee is expected, you may be able to negotiate with the seller for a lower purchase price. On the flip side, buyers should also know that one day they may want to sell their property. A private transfer fee makes the sale a little more difficult, and gives the buyer some leverage to negotiate for a lower price.

Texas real estate attorney Aimee Hess is available to discuss any deed restriction, including private transfer fee covenants. She can be reached toll free at 1 (888) 818-5880.

This week we continue our examination of ethanol as an alternative energy source. As a Texas oil and gas attorney, I am particularly interested in the impact that a shift from fossil fuels to alternatives would have on our economy and on our society. It is an unavoidable fact that we are a fossil fuel-based society; any shift from fossil fuels to alternative energy sources will have costs associated with them. While we don't know what all those costs will be, our experience with ethanol shows that the costs—at least in the early stages of development—can at best limit, and at worst outweigh, any benefits gained from the use of alternative fuels.

What are some of the costs of using ethanol as an alternative energy source? After looking at the issue, I believe there are three primary costs:

• The cost to us as taxpayers
• The cost to us as consumers
• The cost to our environment

These costs are well documented in study after study, but you never hear about them in the media. The media and the public seem to have bought the idea of limitless and cost-free benefits accruing to our society. There are some benefits, as other studies have shown. But if we don't look at the costs, how can we decide if the benefits are worthwhile?

What are the costs to us as taxpayers? In order to encourage ethanol production, Congress has approved generous subsidies to farmers and refiners. Since 1978, the Volumetric Ethanol Excise Tax Credit (VEETC) has provided refiners with an incentive to blend corn ethanol with gasoline. According to the the Government Accountability Office, in 2008 the government gave a total of $4 billion dollars in subsidies for corn-based ethanol; in 2009 the figure jumped to $6 billion dollars. Ethanol production in that year replaced a mere 2% of the U.S. gasoline supply. The average cost to the taxpayer was the equivalent of $82 a barrel, or $1.95 a gallon on top of the gasoline price. According to the Congressional Budget Office, the cost of replacing one gallon of conventional gasoline was $1.78 per gallon for corn ethanol in 2009. In addition to the tax credit, there is the Renewable Fuels Standard (RFS) which currently requires 36 billion gallons of renewable fuel (primarily ethanol) to be blended with gasoline by 2022 as well as a tariff on the importation of ethanol which functions much the same way a tax would, by increasing the cost of imports to consumers.

Continue reading " A Rational Analysis of Ethanol-Part Two " »