Last summer, the U.S. Department of Justice, acting on allegations made by agents of the U.S. Fish and Wildlife Service, brought criminal indictments against three oil companies operating oil fields in North Dakota, charging them with violating the Migratory Bird Treaty Act for acts resulting in the killing in the aggregate four Mallards, one North Pintail, one Red-Neck Duck and a Say’s Phoebe.  The birds allegedly fell victim to the oil companies “reserve pits” -- basically big holes dug into the ground to collect waste water and mud from drilling operations.  When such pits are not properly netted, birds can get into these ponds, get covered in muck and die.

In dismissing the government’s case, the United States District Court for the District of North Dakota stated the Migratory Bird Treaty Act of 1918 is far too vague to justify such indictments.  If inadvertently killing birds and drilling operations ought to be criminalized,  Congress must state so explicitly.  If the Act’s concepts of “take” or “kill” were read to prohibit any activity that could accidentally result in a dead migratory bird many every day activities could be criminally prosecuted such as “cutting brush and trees, and planting and harvesting crops, driving a vehicle, owning a building with windows or owning a cat.”

According to the U.S. Fish and Wildlife Service, here are some estimates on how many birds die from crashes involving: 
                     Windows                                 100 million killed
                     Communication Towers        5-50 million killed
                     Power Lines                            10,000 to 174 million killed
                     Cars                                         60 million killed
                     Windmills                               39,000 killed

Even for those of us, bird lovers and hunter, who support efforts to save migratory birds, it is hard to disagree that if the court were to decide otherwise  “many every day activities become unlawful -- and subject to criminal sanctions -- when they cause the death of pigeons, starlings and other common birds.”  Such prosecutorial actions fuel resistance to proper enforcement of environmental laws.

There is no alternative.  Whatever the causes, pace or impacts of climate change, people, cultures, economies and eco-systems will adapt to climate change as it occurs.  What’s in question is where, how much and when adaptation will occur and with what strategic planning, distribution of costs and injury.

To date, the inevitability of adaptation has been over-shadowed by the attention to efforts to prevent global warming.  Scary projections of flooded coastal cities and wholesale ecological change have been used more to support campaigns to reduce CO2 emissions than to promote serious planning for ocean rise and changed eco-systems.  Adaptation planning has not been the priority and has even seemed a cop-out.  But as hopes to prevent or slow climate change are not realized, adaption planning is emerging as a priority.

Indeed, behind the headlines efforts to plan for adaptation are already underway.  President Obama’s initial support for cap and trade got the attention.  But he also issued an Executive Order establishing a Climate Change Adaptation Task Force that is coordinating very significant federal efforts to gather data and plan for adaptation.   Many of those efforts are collected at EPA’s webpage on adaptation.  More than a dozen states have commissioned adaptation plans, e.g., the Massachusetts Climate Change Adaptation Report.  Some universities have developed programs focused on adaptation planning, e.g., UNC’s Center for Law, Environment, Adaptation and Resources (CLEAR).  Insurers and re-insurers, public authorities responsible for long-term infrastructure, and societies of professionals such as engineers and others are putting serious consideration into what adaptation will require over time by way of changed standards for public works and buildings. 

These efforts do not yet amount to a broad plan, but are laying the foundations for adaptation planning to seep broadly into capital planning and resource protection efforts across all facets of our economy.  Compulsory central planning is probably not a politically acceptable option – but the inevitability and breadth of adaptation efforts mean that millions of decision-makers still will plan for adaptation over time.

I had the privilege to be a speaker at a CCS conference held at the Canadian Embassy in Washington DC on January 19, 2012. The conference was hosted by the Global CCS Institute for the purpose of discussing the strategic directions expected to be undertaken in the development and deployment of the geologic sequestration of carbon dioxide. Central to this issue is the national and international concern over climate change at a time when our nation’s energy supply is so closely tied to the use of fossil fuels.

In his keynote speech at the conference Charles McConnell of USDOE’s Office of Fossil Fuels offered the view that coal must be economically advantaged and environmentally sustainable. Much of the conference was dedicated to a review of the many CCS projects being undertaken around the world in an effort to demonstrate the feasibility of the technology.

A key component of the development of CCS is, of course, the cost of the technology and the opportunities that exist to offset those costs. One such opportunity is the use of capture carbon dioxide to enhance the production of oil (EOR). While many of the speakers at the conference recognized the early value of CCS/EOR projects, both Brad Page of the Global CCS Institute and Steve Winberg of Consol Energy pointed out that EOR capacity is only 20% of the ultimate capacity that will be needed to meet the President’s carbon dioxide reduction target. Other alternatives for the geologic sequestration of carbon dioxide include depleted oil and gas reserves and greenfield deep saline formations.

My remarks at the conference were directed at the significant leadership being undertaken by the various states to address the legal and regulatory uncertainties associated with CCS activities. West Virginia is among those states where a legislatively mandated working group has recommended not only a comprehensive set of regulatory requirements, but also a liability transfer mechanism during the post operational phase of a project tied to the establishment of an operator generated trust fund. That working group has also recommended a comprehensive set of policies related to property issues including a determination that the use of pore space may be considered a public use to be authorized by permit.  Click here for the list of conference speakers.

Phase I report “reliance letters” issued by an Environmental Professional (EP) may be misunderstood and misused in the context of conducting CERCLA All Appropriate Inquiry (AAI). The term “reliance letter,” in fact, is nowhere to be found in either the Federal All Appropriate Inquiry Regulations or the related ASTM Standard E 1527-05.

Consider the following common AAI situation: A client has contracted to buy property for which a Phase I Environmental Site Assessment (Phase I ESA) report was recently prepared for the seller. To avoid the costs of obtaining a new Phase I report, the client asks whether it can use the Phase I provided by the seller to satisfy its environmental diligence obligations. The Phase I report explicitly states that it can be used and relied upon only by the contracting user for which it was prepared. The EP may be willing to issue a reliance letter to the client for a fee or occasionally at no cost. But what exactly is a reliance letter and how does it relate to the objective of compliance with AAI requirements?

Unauthorized use prohibitions and reliance letters are intended to protect EPs from potential claims by third-parties who may rely on a Phase I report prepared for another. Nevertheless, an unsophisticated third-party recipient of a reliance letter may construe such a letter as documentation of compliance with AAI requirements. A reliance letter establishes the recipient’s status as an authorized “user” primarily for purposes of the party’s legal relationship with the EP. Requesting a reliance letter to establish authorized user status is only one of several AAI issues that should be considered by third-party users of Phase I reports.

Other important questions to be considered include whether the one year/180 day regulatory shelf-life of the report has expired. Also, what independent inquiries must a third-party undertake to satisfy the AAI regulations? Third-party recipients of reliance letters may easily overlook conducting the “user” inquiries required by the AAI regulations.

The ASTM Standard further contemplates that the results of the user’s separate inquiries be provided to the EP prior to completion of the EP’s Phase I tasks (the AAI regulations are less clear). How do those provisions of the ASTM Standard apply to the third-party reliance situation? Is the third-party user obligated to accumulate the necessary user information and provide it to the EP after-the-fact? If so, how should the EP deal with any new substantive information? Also, if the results of the user inquiry are not referenced in the Phase I report, how does the third-party document that it has satisfied those obligations?

Of course, the EP may decline to issue a reliance letter or may impose costs or terms that are unacceptable. The EP may even suggest that, absent such use and reliance authorization, a new Phase I ESA must be conducted. But is that correct? The regulations set out conditions for third-party use of information contained in a Phase I report prepared for another. No requirement that the EP preparing the report issue a reliance letter is included among those conditions. The ASTM Standard specifically provides that no particular legal relationship between the EP and the user is necessary for the user to satisfy AAI obligations. With or without a reliance letter, the AAI regulations and ASTM Standard contemplate that the third-party may use the results of a report prepared for another person to partially satisfy its AAI obligations.

These questions, and perhaps others, suggest that a third-party user of a Phase I report prepared for another should be aware of the limitations of a reliance letter, if issued, and carefully consider all pertinent regulations in conducting its AAI.

My father introduced me to the big band sound he grew up with in the ‘20s, ‘30s and ‘40s.  In addition to the musical skirmishes between the powerful brass and elegant woodwind sections that highlighted the genre, he was fond of the lyrics.  One of his favorite ditties was a playful calypso tune written by Sy Oliver and Trummie Young, first recorded by Jimmie Lunceford in 1939.  The enlightened refrain gives the recipe for being highly effective -- “Tain’t what you do, it’s the way that you do it – that’s what gets results.”  At about the same time Lunceford was leading his show band, sociologist Robert J. Merton was focusing on avoiding the wrong results.  He popularized the concept of “unintended consequences,” the gist of which is humans cannot fully control the outcome of their actions so be careful what you do and for what you ask.  Seventy-five years later, EPA’s recent proliferation of regulations with short time fuses and no existing or foreseeable means of compliance demonstrates no such careful thought.

Merton’s analysis provided five causes for unintended consequences:  ignorance, error, immediate interest, basic values and self-defeating prophecy.  While these five causes could form the outline for comments on almost any rule, the one that might be most applicable to EPA’s recent flurry of regulatory activity is what Merton called “the imperious immediacy of interest” which refers to instances where the actor’s paramount concern with the immediate action excludes the consideration of further or other unforeseen consequences of the same act.  The speed in which the recent rules have been promulgated, the leap in technology that they require, and the brevity of the time period by which compliance is required are unprecedented and seem destined to result in unintended consequences.

Examples of these rules include the corporate average fuel economy (“CAFE”) standards which EPA established in 2009.  Under the CAFE standards, Model Year 2011 vehicles must achieve 27.3 mpg.  The requirement is ratcheted up to 35 mpg by 2016, and a whopping 54.5 mpg by 2025.  Those developing the standards were warned that the standards would result in the production of smaller, lighter and deadlier cars.  The developers not only required increased mileage, they limited greenhouse gases (GHGs), including CO2 emissions, from motor vehicles – the first time that GHGs were regulated as air pollutants under the Clean Air Act.  Standard developers also recognized that regulating GHGs as pollutants for mobile sources would also trigger regulation of GHGs from stationary sources under the Clean Air Act’s prevention of significant deterioration of air quality program.  The latter was not an unintended consequence, but where such regulation might lead our economy and society is anyone’s guess.  We need only look at the recent reports of spontaneous combustion of electric vehicles to get some idea.

Another example is EPA’s issuance of the cross-state air pollution rule which afforded electric generating facilities only four months between its promulgation and the date of compliance on January 1, 2012.  EPA promulgated the rule amid warnings by states and others that the electric system reliability was jeopardized.  Fortunately, the D.C. Circuit stayed the rule on December 30.  Similarly, EPA pushed out the EGU MACT standard after allowing itself only a few months to consider tens -of -thousands of comments on the proposed rule.  Such speed of promulgation without regard for unintended consequences has EPA staffers concerned about the quality of their work product.  Perhaps it’s time to revisit the requirements for regulatory impact analysis to consider new rules in light of Merton’s five causes of unintended consequences and Lunceford’s catchy tune.  The alternative may be to sing another tune Lunceford popularized -- Blue in the Night.

Our dramatic progress in environmental policy from 1970 to 1992 resulted from a healthy competition between the two political parties, I argue in Politics Failed, Not Ideas. Competition between Republicans and Democrats gave us the Clean Air and Water Acts, the Acid Rain Trading program, and the 1992 Rio Treaties on Climate Change, Biodiversity and Sustainable Development.  With Mitt Romney’s victory in the New Hampshire primary, it is time to ask whether this healthy competition over environmental issues will ever return, or whether the concept of  “Republican Environmentalism” is an anachronism, if not an oxymoron.   

A new renaissance of Republican environmentalism may be just around the corner, according to Joe Klein.  In his December Time Magazine article, Why Don't They Like Me, Klein argues that both Romney and Gingrich are “empowerment Republicans” of the 1990’s, who don’t really oppose progressive goals so much as they maintain that they can accomplish them in a better way. A lot of this is damning with faint praise by a partisan who is trying to de-legitimate Romney with voters by creating a perception that he lacks character and flips-flops on issues.  But at least on the environment, there is a core of truth to the point.  After all, occasional claims to the contrary notwithstanding, most Republicans don’t actually want to poison our children and befoul our air and water.  Republican objections to federal environmental initiatives in recent years have had more to do with means than ends.

Republicans generally oppose big government and centralized planning of the economy.  But the press has come to define “strong” environmental policies in terms of the level of federal government coercion rather than the amount of progress made toward meeting environmental goals.  For example, the George W. Bush Administration made some progress in reducing emissions of some Greenhouse Gases (GHGs) through the Methane to Markets program (which in fairness, it inherited from the Clinton Administration).  This successful program worked co-operatively with companies to plug leaks of methane from pipelines – a classic win-win for the environment and the economy – and has now gone global under Obama. However, repeatedly we were told that the Bush Administration was “doing nothing” about GHGs because they were opposed to a federal cap-and-trade program for CO2.

A second basic difference between Republicans and Democrats on the environment is that Republicans generally need to be shown credible proof that environmental regulation will produce benefits several times greater than its costs.  Most Democrats, on the other hand, already “know” in their hearts that environmental programs are good without needing to be convinced by data.  Then Chair of the Senate Environment and Public Works Committee, California Democrat Barbara Boxer, once exclaimed in frustration at a scientific witness during a hearing: “Doctor, I may not know the facts, but I know what’s right!”   On the other hand, Bush Office of Information and Regulatory Affairs Administrator John Graham was able to get tough environmental regulations such as the off-road diesel rule or the first tightening of CAFE standards in a generation through a skeptical White House when he could show the doubters that regulation would produce health benefits several times greater than their cost.  For further discussion on this issue click here.

Republicans and Democrats do look at environmental policies differently, just as they look at what creates true international security or the government’s proper role in energy policy differently.  But if a Republican ends up in the White House on January 21, 2013, we could begin to make progress on the environment again if we focused on the areas where we can find common ground rather than wedge issues that make people on both sides feel morally superior but don’t get things done.

The Supreme Court heard oral argument this morning (January 9, 2012) in Sackett v. EPA, No. 10-1062.  EPA had issued a compliance order charging the Sacketts with filling in a wetlands, in the course of building their home, in violation of the Clean Water Act and requiring them to restore their property.  The Sacketts dispute that their property is a wetlands and seek an opportunity for judicial review of EPA’s order.  EPA argues that the Sacketts could comply with the EPA order or submit an application for a wetlands permit or defend if EPA brings an enforcement action, but may not seek judicial review of EPA’s order. 

The tenor of the oral argument did not bode well for the United States.  Some of the Court’s questions seemed to focus on how to write the opinion and the consequences of a ruling for the Sacketts.  If the Sacketts prevail, it will be important to see how EPA responds and what if any changes are made to EPA’s practice and procedure for issuing orders in wetlands and perhaps other matters.  The transcript of the Supreme Court argument is available [here].

The toughest questions and comments were aimed at counsel for the United States, Malcolm Stewart.  Justice Alito stated:  “Mr. Stewart, if you related the facts of this case as they come to us to an ordinary homeowner, don't you think most ordinary homeowners would say this kind of thing can't happen in the United States?”  (Tr. 37)

Chief Justice Roberts asked “what would you do, Mr. Stewart, if you received this compliance order? (Tr. 35).  When Stewart responded that one could apply for an after-the-fact permit,”  Chief Justice Roberts replied “You wouldn’t do that, right? You know you will never get an after the fact permit if the EPA has sent you a compliance order saying you’ve got wetlands.”  (Tr. 36)  Earlier, Justice Kagan had asked counsel for the Sacketts rhetorically whether the critical point wasn’t that EPA would not entertain an after-the-fact permit while a compliance order is outstanding. (Tr. 12).  Justice Alito expressed the view it “seems very strange for that, for a party to apply for a permit on the ground that they don't need a permit at all.”  (Tr. 14). 

The government’s alternative solution, that one could comply with the compliance order, met with an incredulous response from Chief Justice Roberts:  ”That's what you would do? You would say, I don't think there are wetlands on my property but EPA does, so I'm going to take out all the fill, I'm going to plant herbaceous trees or whatever it is, and I will worry about whether to -- that way, I'll just do what the government tells me I should do.” (Tr. 36-37). 

Justice Breyer focused on the finality of the EPA order for purposes of judicial review, stating “for 75 years the courts have interpreted statutes with an eye towards permitting judicial review, not the opposite. And yet -- so here you are saying that this statute that says nothing about it precludes review, and then the second thing you say is that this isn't final. So I read the order. It looks like about as final a thing as I have ever seen.”  (Tr. 41)

Justice Ginsburg asked Mr. Stewart whether, once EPA made the determination that there were wetlands, that be the end of the matter as far as EPA is concerned.  Mr. Stewart got himself in difficulty when he replied “ I think they have reached that conclusion for now. I don't think it would be accurate to say that we have done all the research we would want to do if we were going to be required to prove up our case in court.” (Tr. 51)  Justice Alito was not pleased with that reply:  “Well, that makes the EPA's conduct here even more outrageous.  We think now that this is -- these are wetlands that -- that qualify, so we're going to hit you with this compliance order, but, you know, when we look into it more thoroughly in the future, we might change our mind?” (Tr. 51)

In questions to counsel for the Sacketts, Justice Breyer noted the government’s concern that “when you get judicial review of this kind of order, the Court doesn't refer on fact-finding that isn't made on a record.  * * * And so they'll have a hard time -- or a harder time -- in each of these cases subjecting it to judicial fact-finding.”  Justice Breyer suggested that EPA might change its procedure if the Sacketts prevail, and providing some type of pre-order or post-order procedure that would be open to change. (Tr. 55) 

It is of course always difficult to predict the outcome of a Supreme Court case with certainty simply based on oral argument.  That being said, it is also difficult to be optimistic about the government’s chances of prevailing based on the comments made by the court during oral argument today.  Whatever the outcome, the Court’s ruling will likely be an important environmental and administrative law precedent. 

I am generally loath to speculate about what the Supreme Court will do based on oral argument, but the overwhelming reaction to the oral argument in Sackett v. EPA was that EPA is going to lose. What would a loss mean? In simplest terms, EPA would no longer be able to issue enforcement orders under the Clean Water Act without those orders being subject to judicial review. Such a decision would undeniably be significant. Everyone practicing in this area knows how coercive EPA enforcement orders can be. A person who thinks that he is not liable or that the order is inappropriate, and faced with having to violate the order and wait for EPA to bring an enforcement action to obtain judicial review, is truly between a rock and a hard place – or perhaps Scylla and Charybdis (I’m not sure which, but it’s not good, either way). The opportunity for preenforcement review would eliminate much of EPA’s coercive power.

The big question is whether a decision against EPA would be so broad as to make it clear that EPA’s order authority under other statutes, such as CERCLA, would be similarly affected. Here, speculation really is difficult, because the Supreme Court could invalidate EPA’s CWA authority several different ways, with differing impacts on other statutes. Readers who want to explore the issue in more depth than a blog post can review an article I did in the ABA Superfund and Natural Resource Damages Litigation Committee Newsletter.

As long as I am speculating, I’m going to go out on limb and predict that the Court’s decision will not be easily limited to the CWA. I think EPA’s order authority is in trouble across the board.

The next big question is when lower courts are going to actually start paying attention to what the Supreme Court says about environmental cases. I’m tired of this pattern. A series of cases are decided by lower courts, almost universally in EPA’s favor. Indeed, one of the striking things about Sackett is that the Supreme Court took the case without a circuit court split – EPA had won before every circuit court that had reached the question. The Supreme Court applies principles that are broadly accepted outside the environmental arena, but which for reasons unknown to everyone but the lower court judges have been thought inapplicable to environmental cases, and EPA loses. The next several years are spent with EPA, DOJ, and the lower courts merrily constructing some new edifice which allows EPA to continue to win – until the Supreme Court takes another case and says “No, we really meant it.”

There is a lesson here for lower courts, if they would but listen. Environmental cases are not sui generis. EPA does not necessarily win just because it is protecting the environment. General principles of corporate, administrative, and constitutional law apply. Under this framework, EPA will still win most of the time. That’s the nature of administrative law. Expert agencies receive a lot of deference from the courts in interpreting their organic statutes and applying their expertise. But they don’t win all the time, and they don’t win just because they are EPA.

Rant over. Let’s see what the Supremes actually do.

SUMMARY
After a failed attempt at the end of the Schwarzenegger Administration, under current Governor Jerry Brown, California is now pushing forward with its new “green chemistry” approach to the regulation of chemicals in consumer products.  These regulations are likely to be formally unveiled early this year and will require extensive risk and life cycle analyses for prioritized products, which are likely to initially include children’s products, personal care products, and household cleaning products. 

The Envisioned Process
The revised California green chemistry regulations will establish a four-step process to identify safer consumer product alternatives.

1.  Chemicals:  The State will publish an initial list of Chemicals of Concern (COCs), likely involving close to 3,000 substances. 
2.  Priority Products:  Next, it will develop a list of Priority Products based on its evaluation of products that contain the identified COCs, as well as the distribution, use, and disposal patterns.
3.  Business Duty to Notify and Evaluate:  Responsible entities will be required to notify the State when their product is listed as a Priority Product and to perform an Alternatives Assessment. 
4.  Product/Chemical Limits/Regulations:  California will identify and impose a “Regulatory Response” to limit potential adverse public health and environmental impacts.

Applicability
As drafted, the regulations will eventually apply to all consumer products containing a COC that are sold, offered for sale, supplied, distributed, or manufactured in California.  There are limited exemptions for:

•    Products exempted by law (specified medical and dental devices, “dangerous” prescription drugs, food, and pesticides) and products used solely to manufacture a product exempted by law;
•    Products manufactured, stored in, or transported through, California, solely for out-of-state use; and
•    Products regulated by other federal or California state regulatory programs or international trade agreements, where the program or agreement provides an equivalent or greater level of protection of public health and the environment than would be provided if the product were listed as a Priority Product (no examples are specified, but EU programs seem likely candidates).

There are de minimis exemptions for products with COCs at concentrations equal to:

•    0.01% by weight for chemicals exhibiting one of nine specified hazard traits (carcinogenicity, developmental toxicity, reproductive toxicity, endocrine toxicity, genotoxicity, immunotoxicity, neurotoxicity, bioaccumulation, or environmental persistence);
•    0.1% by weight for chemicals that do not exhibit any of the nine specified hazard traits and environmental and toxicological endpoints; or
•    A lower or higher concentration if specified by DTSC in the Priority Products list.

The regulations apply to any “responsible entity,” which includes the manufacturer, or, if the manufacturer does not comply, the importer or retailer. 

Alternatives Assessment
This assessment remains at the heart of the Green Chemistry regulations.  Each must be conducted in two stages, with a report sent to State regulators at the end of each stage.

Necessity/Identification of Alternatives:  In the first stage, product criteria are identified (e.g., by function, performance, technical, and legal requirements).  A statement must be provided on whether the COC or a substitute chemical is necessary to meet the product’s requirements.  Next, alternatives to the usage of the COC must be identified and screened, and a work plan proposed for the second stage.   
Detailed Assessment of Alternatives:  The second stage requires a more detailed assessment of alternatives.  The product and each alternative must be evaluated with respect to relevant factors and associated exposure pathways and life cycle segments.  At this stage, the responsible entity selects an alternative that will replace or modify the Priority Product or decides not to modify the Priority Product (or discontinue the distribution of the product in California). 

Regulatory Responses
At a minimum, product information will be required to be provided to consumers if a Priority Product contains a COC above the de mimimis level. Additional possible regulatory responses include mandating implementation of engineered safety measures designed to control access or limit exposure to the COC in a Priority Product and, at the extreme, a potential prohibition on sale of the Priority Product within California. 

CONCLUSION
With reform of the Toxic Substances Control Act stalled in Congress, Governor Brown’s Administration appears more determined than its predecessor to take the lead in product stewardship and chemical regulation through California’s so-called “green chemistry” initiative.

By:    Patrick W. Dennis and Perlette Michèle Jura
         GIBSON DUNN

In the past few years, more than 25 multi-party cases have been filed against semiconductor manufacturers, alleging that employees working in “clean rooms” were exposed to chemicals, such as ethylene glycol ethers, which caused birth defects in the employees’ children.   The majority of these cases have been filed in Delaware state court and seek direct recovery in tort for children plaintiffs, who allege that they were exposed to these chemicals through their employee-parents prior to conception or in utero.   In addition to raising a number of environmental and causation issues, these cases present significant questions about the scope and extent of the duties employers in the non-medical industries have to unborn persons.  They also raise important questions about whether such claims should be addressed through civil litigation, or whether they fall within the exclusive domain of workers’ compensation. 

In a pivotal opinion, on September 30, 2011, Delaware Superior Court Judge Jan R. Jurden (who is presiding over more than a dozen clean room cases) dismissed a clean room case, Peters v. Texas Instruments.  Applying Texas law (where the alleged exposures occurred), Judge Jurden found that the exclusivity provision of the Texas Workers’ Compensation Act (which provides that workers’ compensation is the exclusive remedy for alleged workplace injuries) barred the child’s (and its parents’) civil claims against defendant Texas Instruments, because the child plaintiff’s claims were derivative of and dependent on the parent-employee’s.  Id.  The court also found that, to the extent that the plaintiffs sought to hold Texas Instruments liable for acts predating the child’s conception, Texas courts have not recognized preconception tort liability and it would be improper for Delaware courts to do so when applying Texas law, particularly because expansion of a legal duty falls within the realm reserved to the legislative, as opposed to judicial, branches. It is noted that the Plaintiffs are seeking reconsideration in Peters, but it will be a difficult decision to change from a legal perspective.

The Peters decision may be the first of many dismissals in the series of clean room birth defects cases.  Peters is also an important decision in the developing body of transgenerational tort law and birth defects cases generally.   While a handful of courts have recognized that medical professionals can be liable to individuals for their actions prior to that person’s birth, numerous courts have recognized that imposing duties to unborn children beyond a very narrow set of circumstances would not only prove unworkable, but would also constitute an improper judicial interference in a realm reserved for the legislative branch. An example is the Texas Appellate Court decision in Chenault v. Huie.   Further, employers spend millions on workers’ compensation every year.  One of the benefits that workers’ compensation schemes offer to employers is the promise of exclusive and limited liability: an employee’s recovery for work-related injuries is limited to the amount fixed by the governing workers’ compensation scheme and the employer will not be liable in tort, unless the injury was intentionally caused.  If parent-employees could bring lawsuits on behalf of their minor children for birth defects allegedly caused by preconception or in utero exposures in the course of their employment, it would create a significant loophole in workers’ compensation schemes and disrupt the delicate balance state legislatures have struck between employer and employee interests in the workers’ compensation arena. 

In recent years, several courts have addressed the issue of what standard a plaintiff must meet to successfully challenge agency action on the ground that it was improperly predetermined in violation of the National Environmental Policy Act (NEPA). Because federal agencies conducting major federal action subject to the requirements of NEPA frequently have a preferred alternative in mind when conducting environmental review, legal challenges based on claims that the agency improperly predetermined the outcome of its NEPA analysis are common.  When an agency action is successfully challenged for improper failure to prepare an Environmental Impact Statement (EIS) and the agency reaches the same result upon completion of an EIS, plaintiffs may raise a claim of improper predetermination, contending that the result is essentially a foregone conclusion.

Circuit courts have generally imposed a stringent burden on plaintiffs seeking to prove predetermination in violation of NEPA. Most recently, the Tenth Circuit addressed the appropriate standard for predetermination in Wyoming v. United States Department of Agriculture.  In Wyoming, the State of Wyoming challenged a final rule promulgated by the United States Forest Service that prohibited road construction and commercial timber harvesting in inventoried roadless areas of the National Forest System.  The State alleged, among other claims, that the Forest Service impermissibly predetermined the outcome of the Roadless Rule proceeding.  The Tenth Circuit Court of Appeals reversed the district court, relying on the stringent standard it had set forth in Forest Guardians v. United States Fish & Wildlife.  The court noted that “predetermination occurs only when an agency irreversibly and irretrievably commits itself to a plan of action that is dependent upon the NEPA environmental analysis producing a certain outcome, before the agency has completed the environmental analysis….”

The Ninth Circuit adopted a similarly stringent standard.  Metcalf v. Daley.  In Metcalf, the court found improper predetermination where the agency signed two written agreements binding them to support the proposal under consideration before preparing an Environmental Assessment and Finding of No Significant Impact.  The Ninth Circuit held that the agencies had violated NEPA by making an “irreversible and irretrievable commitment of resources” prior to completing the environmental review.

In Forest Guardians, the Tenth Circuit also addressed the question of what evidence should be considered by a court in evaluating whether an agency has improperly predetermined its outcome in violation of NEPA.  The court concluded that review of evidence outside the environmental review itself is proper where there is a claim of predetermination. In reaching this conclusion, the Court expressly rejected the dicta of the Fourth Circuit in National Audubon Society v. Department of the Navy, stating that a reviewing court “should generally restrict its inquiry to the objective adequacy of the EIS . . . [and] should not conduct far flung investigations into the subjective intent of the agency.”  The Fourth Circuit reasoned that “[w]here an agency has merely engaged in post hoc rationalizations, there will be evidence of this in its failure to comprehensively investigate the environmental impact of its actions and acknowledge their consequences.”  Because such evidence was absent, the Fourth Circuit affirmed the district court’s conclusion that the Navy had failed to undertake the hard look at environmental consequences that NEPA requires.  

In light of these decisions, plaintiffs alleging that an agency has improperly predetermined the outcome of its environmental review in violation of NEPA face an uphill battle in establishing liability.  The imposition of such a stringent burden is well supported by the language of the Council for Environmental Quality regulations implementing NEPA, see 40 C.F.R. § 1502.14(e), as well as by Supreme Court precedent holding that there must be a strong showing of bad faith or improper behavior before inquiry into the mental processes of administrative decision makers may be made.  Citizens to Preserve Overton Park, Inc. v. Volpe. 

By: Karen Aldridge Crawford and Stacy Kirk Taylor
      Nelson Mullins Riley & Scarborough

On December 2, 2011, EPA proposed its fourth round of regulations governing industrial boilers and process heaters (i.e. the boiler MACT standards).  [EPA Notice]  Although additional changes are unlikely (given that this is EPA's fourth set of revisions), EPA is providing a 60-day comment period and does not expect to finalize the regulations until spring (likely April) of 2012.

EPA maintains that the reworked regulations provide greater flexibility, reduce the number of boilers to which the regulations would actually apply, and will ultimately cut the cost of implementation by nearly 50% from the original 2010 proposed rules.  Groups such as the National Association of Manufacturers, however, remain opposed and continue to press for a legislative fix if EPA fails to sufficiently consider the added expense that even the newly proposed regulations will impose on goods manufactured in the United States.  In response to EPA's issuance of the proposed rules, Senator James Inhofe (R-Okla.) of the Senate Committee on Environment and Public Works stated that, although he appreciated EPA's acknowledgment of the potential economic impacts and efforts to revise the rules, the revised rules would still have too great an economic impact on the United States.  Sen. Inhofe then pressed Senate Majority Leader Harry Reid (D-Nev.) to allow a vote on the House-passed EPA Regulatory Relief Act. 

[Inhofe's Comment]   

According to EPA, the major source proposal, which is the part of the proposed regulations that impose actual control technology, would now cover less than 1% of the boilers in the United States (approximately 14,000 boilers).  For boilers located at smaller facilities, such as universities, hospitals, and commercial buildings, only a very small number would actually have to take any additional steps to comply with the proposed rule; the vast majority would simply be required to perform maintenance and routine tune-ups.  Highlighting some of the specific changes, the proposed regulations:

•    Set new emission limits for mercury, hydrogen chloride, particulate matter, and carbon monoxide (the last two of which serve as surrogates for metallic and organic pollutants), many of which, however, are as stringent or actually more stringent than the limits provided in the previous version of the regulations.

•    Increase the number of boiler subcategories (for which subcategory-specific emissions limits are proposed) to fourteen.

•    Eliminate the numeric emission limit for dioxins/furans, noting in the preamble that the level     previously proposed could not be accurately measured with existing technology, and instead tackle dioxin/furan emissions by imposing work practice standards that include periodic tune-ups to ensure good combustion. 

•    Provide greater flexibility than was previously allowed by providing for the use of a variety of     alternative emissions limits and compliance demonstration methods (for example, a facility with more than one boiler can now choose to average emissions as long as the source as a whole is less than 90% of the applicable standard). 

•    Eliminate requirement for continuous monitors for particulate matter. 

•    Revise the compliance deadlines, providing three years from publication of the final rule to comply (the June 4, 2010 date of the initial proposed regulations, however, will remain the date for determining whether a unit is considered a "new" or "existing" unit).  

In conjunction with reworking the boiler MACT standards, EPA revisited the Commercial/Industrial Solid Waste Incinerators (CISWI) rules and the Non-Hazardous Secondary Material (NHSM) rules to provide greater clarity and flexibility as to what types of secondary materials constitute a non-waste fuel.  The changes to the regulations also expressly classify a number of secondary materials as non-wastes when used as fuel and provide a mechanism for requesting such a determination from EPA for other materials.

On December 8, 2011, the Obama administration released a draft policy interpreting a key phrase in the Endangered Species Act (the "Act") that determines when species qualify for protection under the Act.  The Act defines an endangered species as any species “in danger of extinction in all or a significant of portion of its range.” The phrase “significant portion of range” is important, because it means that species need not be at risk of extinction globally to receive protection. The policy proposed on December 8 sharply limits the reach of this phrase by both defining “significant” to mean only where the species currently exists, not its historic range and by defining significant to mean that loss of the species from that portion of range would threaten the survival of the species as a whole.

The proposed policy has resulted in an outcry of opposition from environmental groups.  For example, the Center for Biological Diversity argues that under the proposed policy, "a species could be absolutely gone or close to vanishing almost everywhere it’s always lived — but not qualify for protection because it can still be called secure on one tiny patch of land."  “The policy absolutely undermines the spirit of the Endangered Species Act and will be a recipe for extinction of our native wildlife if it’s finalized - a loophole that’s really a black hole. It will allow for massive species decline and habitat destruction.”

For some advocates of greenhouse gas regulation, tort law has become the primary vehicle to achieve their goal.  Dissatisfied with their progress in the political branches, they’ve begun presenting their claims to courts as tort lawsuits.  When the claims are rejected, they repackage them in different common-law wrappings and sue again. 

The first of these suits was Connecticut et al. v. American Electric Power Co. et al. (“AEP”) (dismissed by the U.S. Supreme Court earlier this year), in which several States and land trusts sought to declare greenhouse gas emissions a common law “nuisance” and secure an injunction capping emissions from a small group of national electric utilities at levels the plaintiffs deemed “reasonable.”  Next came Comer et al. v. Murphy Oil USA et al., where a group of Mississippi landowners sued the same utilities, and scores of other companies, for damages caused by Hurricane Katrina, claiming that the defendants’ greenhouse gas emissions constituted a common law “nuisance,” a “trespass,” and “negligence.”  (After dismissal by the district court and Fifth Circuit, the plaintiffs simply refiled the case—motions to dismiss again are in briefing).  Next, in Native Village of Kivalina v. ExxonMobil Corp. et al., an Alaskan village relied on many of these same common law theories, with allegations of a “conspiracy” added for good measure, suing many of the same defendants for costs the village would purportedly incur protecting itself from storms and other risks they attributed to climate change.  (The district court’s dismissal was recently argued to the Ninth Circuit.)  While courts have thus far rejected all of these suits at the pleading stage, the complaints reflect a continuing trend towards regulation by litigation, in which individual groups of plaintiffs endeavor to advance policy goals through common law actions.

The most recent case is Alec L. et al. v. Jackson et al.  Casting aside even the pretense of a traditional tort case, where one party seeks relief for damages caused by another party’s conduct, the plaintiffs in Alec L. are suing five federal Executive Branch agencies (the Environmental Protection Agency, Department of Defense, Department of the Interior, Department of Commerce, and Department of Agriculture), and explicitly seek an order directing those agencies to promulgate regulations addressing greenhouse gas emissions.  Relying on the “public trust doctrine,” an archaic common law concept rarely cited in modern court decisions, the plaintiffs assert that the federal government holds the atmosphere “in trust” for the public, and that these agencies therefore have a fiduciary obligation to protect the atmosphere from greenhouse gas emissions.  In particular, they ask the court to order the agencies to impose immediate and drastic restrictions on greenhouse gas emissions in this country (6% annually), with the ultimate goal of virtually eliminating the use of conventional fuels by the end of the century.

There is no reason to think that the claims in Alec L. will fare any better than those in the other tort cases discussed above.  All of these claims seek to impose liability for global climatic conditions that are attributable (if at all) to greenhouse gas emissions from billions of sources around the planet over the course of centuries, not to any particular, small group of defendants.  Moreover, they would all put a federal court in the position of making fundamental policy determinations regarding the proper regulatory approach to issues of national and international importance, ordinarily reserved for the political branches.  Indeed, in this respect, the claims in Alec L. are even more difficult to rationalize than those in AEP, as Alec L. asks the court to commandeer and control agencies of the federal government in a manner directly contrary to pre-existing statutory mandates and executive directives.  However, what Alec L. does show is that advocates for greenhouse gas regulation, undiscouraged by their lack of reception at the Supreme Court earlier this year, will continue re-wrapping their claims to send them to more courts.

The cover of Time magazine’s recent issue on inventions depicts a motorized hummingbird, a mini-machine, enabled by nanotechnology, that can mimic the bird’s flight capability and conduct surveillance operations.  Other nanomaterial inventions --using particles at the scale of one billionth of a meter-- include an industrious particle that can hunt down and kill cold viruses.  Amen to that.  As the science of nanomaterials continues to amaze, how are we doing on the governance front to be ready to manage its potential risks to health and the environment? 

The departure of Steve Owens, EPA Assistant Administrator for Prevention, Pesticides, and Toxic Substances, concludes a notable effort to address governance issues in the nano realm; but at the end of 2011, major initiatives to obtain the information needed for a credible oversight program remain incomplete. Under the prior administration, EPA  requested voluntary submittal of data from nanomaterial producers.  About 30 organizations submitted data on 130 materials.  Not surprisingly, only a handful accepted the invitation to conduct voluntary testing for EPA.  The results satisfied no one.  Under Mr. Owens, EPA developed a package of proposed rules under the Toxic Substances Control Act (TSCA) including a Section 4 test rule, a significant new use rule under Section 5 addressing nanomaterials based on chemical substances listed in the TSCA inventory and a Section 8(a) information gathering rule.  These proposals have been under review at OMB’s Office of Regulatory Information and Review (OIRA) for over a year.   

Meanwhile, OIRA, along with the Office of Science and Technology and the Office of the Trade Representative, issued a 5 page memorandum in June, 2011, to provide policy guidance for the multiple federal agencies dealing with nanomaterials under legal oversight authorities.  The memorandum describes the many benefits of nanomaterials, while also acknowledging the need for further scientific work on health and environmental issues as a predicate for appropriate risk management actions.  The only sign that the writers recognize any legal issues complicating action under TSCA or other statutes is a statement  that some statutes may limit mandatory reporting or information gathering to circumstances “where a risk or harm has already been identified,” TSCA’s well known catch-22 in establishing test rules.    This observation is followed by a Delphic reference to agencies’ need “to explore other legally available means to obtain the information necessary to assess risk and possible harms.”  What this means for EPA’s pending proposals is anybody’s guess. 

Information reporting rules for nanomaterials are not easy to develop. EPA must define categories of materials to be reported on, the types of products and facilities to be covered, and the level of detail on product composition and potential impacts from emissions or disposal needed to understand exposures while minimizing the burden of reporting.  In other countries such as France and Canada, efforts  to set mandatory reporting rules have been bedeviled by definitional issues.  France has also faced the challenge of, harmonizing its rules with the European Union’s chemical regulation scheme.   Canada’s Health Agency recently issued a policy statement with a working definition for nanomaterial for use in data reporting at some future time under its existing legal authorities.
                                                 
EPA’s ability to obtain basic information on the production and use of important categories of nanomaterials remains a prerequisite for minimal oversight of the nanomaterials industry offering some assurance to the public that if health or environmental risks are identified by research, they can be addressed without undue delay.  The program begun by Mr. Owens ought to move forward for public review and comment. 

Leslie Carothers
Scholar-in-Residence and Adjunct Professor
Pace Law School

According to news reports of the December 21 opinion rendered by the European Court of Justice, the ECJ’s decision upheld imposition of the European Union’s Emission Trading Scheme (“ETS”) upon non-EU airlines that take off or land at airports in an EU member state.  However, those news reports fail to note what the ECJ did not decide.

In December 2009 the Air Transport Association of American and three US member carriers brought suit in the UK against the UK Secretary of State for Energy and Climate Change to reverse inclusion of non-EU airlines in the EU ETS.  They argued that such inclusion violated the US/EU Open Skies Agreement precluding the signatories from imposing import restrictions, taxes, duties, and similar fees and charges on fuel used by air carriers in international air transport.  They also argued that such inclusion violated the Chicago Convention and the Kyoto Protocol.

The Chicago Convention provides for adoption of international standards and recommended practices on air navigation “safety, regularity, and efficiency” by the International  Civil Aviation Organization (ICAO), a United Nations specialized agency that oversees civil aviation.  The ICAO has adopted aircraft noise and engine emission standards in Annex 16 to the Convention.  The Chicago Convention also provides for resolution of signatory country disagreements over interpretation or application of the Convention and its Annexes by decision of the ICAO Council which can then be appealed to an arbitral tribunal or to the Permanent Court of International Justice (now the International Court of Justice).  The Kyoto Protocol in turn provides for signatory states to address limitations on or reductions to greenhouse gas emissions from aircraft fuels through the ICAO.

For several years member signatories to the Chicago Convention have been considering mechanisms to address greenhouse gas emissions from commercial carriers.  Spurred on by EU plans to impose its ETS on non-EU airlines, the ICAO hopes to have a mechanism in place by the end of 2012 for ICAO decisionmaking at its 2013 meeting.  At the present time a number of market based mechanisms are being considered, including some form of emission trading, carbon taxes on fuel use, levies on departing passengers and cargo, and carbon offsets.  The EU has said that it would exempt non-EU carriers from the EU ETS if they adopt “equivalent” measures.

In its decision the ECJ concluded, in the context of the UK court’s preliminary ruling, that it cannot examine the validity of the ETS under the Chicago Convention because the EU (as opposed to the EU member states who would perform their obligations under that Convention) was not a signatory to, and thus not bound by, the Chicago Convention.  It also concluded that the Kyoto Protocol provisions for addressing greenhouse gas emissions from aviation fuel through the ICAO “cannot . . . be considered to be unconditional and sufficiently precise” to be relied upon by the plaintiffs in contesting application of the EU ETS.  Thus, its rulings were limited to consideration of the Open Skies Agreement and customary international law.  With respect to the former, the ECJ concluded that the tax and fee exemption for aircraft fuel used by carriers engaged in international travel between the EU and the US does not prohibit implementation of the EU ETS.  The court likewise concluded that the EU Directive imposing the ETS was valid under customary law principles.

It remains to be seen what path the plaintiffs, or other interested countries or carriers, may choose to take regarding the court’s interpretation of the Open Skies Agreement and customary international law as they apply to the EU ETS.  Even more interesting is the question of how the ECJ interpretation relates to the decisionmaking power vested in the ICAO.  It is of course possible that the ICAO will implement “equivalent” measures for addressing greenhouse gas emissions before any further judicial decision is rendered.  Nevertheless, additional legal action is highly likely, given the number of interested parties.

In Village of Bald Head Island v. U.S. Army Corps of Engineers, plaintiff Village of Bald Head Island and intervenor North Carolina beach communities sought to compel the U.S. Army Corps of Engineers to implement the Wilmington Harbor Dredging Project and to deposit beach quality dredged spoils on nearby beaches.  The court dismissed the case on the ground that implementation decisions made by the Corps in the course of performing a project are not final agency actions reviewable by a federal court. 

As part of its planning of the harbor deepening project, the Corps first performed an environmental assessment (EA) pursuant to the National Environmental Policy Act (NEPA) in 1996, and modified the EA in 2000 due to changes in the project.  In response to community objections, the Corps committed to certain measures to protect the adjacent beaches from excessive erosion.  These measures were incorporated into the EA, the Coastal Zone Management Act Consistency Determination, and the Finding of No Significant Impact (FONSI). 

For ten years the Corps generally complied with the Commitments.  When budget constraints in 2010 and 2011 caused work to be delayed the Village of Bald Head Island brought an action under the Administrative Procedure Act (APA) seeking a mandatory injunction to force dredging and disposal this winter and thereby prevent erosion from harming homes and Village infrastructure. 

The APA allows a Court to review "final" agency actions, including failures to act when there is a duty to act: 5 U.S.C. §§ 701(b)(2) and 551(13).  The Court determined that the Corps’ Commitments were not final agency actions that can be challenged or enforced under the APA.  Instead, notwithstanding the specific Commitments the Corps had made, the Court characterized the Corps’ decision of when to dredge or when to prepare studies as implementation decisions.  

The Plaintiff and the other beach communities filed a Notice of Appeal to the Fourth Circuit on December 9, 2011, contesting the district court’s holding that the Corps’ method of implementing the project is discretionary and unreviewable.  Appellants contend that the Corps must either implement the Project in a manner consistent with the FONSI and the Commitments, or perform another environmental review.   

Lawyers trying The Aransas Project vs. Bryan Shaw, Chairman of the Texas Commission on Environmental Quality, et al. Civ. Action No. 2:10-cv-00075, Southern District of Texas, Corpus Christi Division, are wrapping up their second week of trial in Judge Janis Graham Jack’s court in Corpus Christi, Texas.  It looks like they will be spending at least a part of next week in trial as well.

For those who are interested in citizen suit Endangered Species Act cases, or the interface of the ESA and the administration of water rights, the case is a must watch.  Plus, unlike many Texas ESA matters which are focused on obscure and unattractive bugs and salamanders, this one involves the mighty and beautiful whooping crane. 

Plaintiffs’ case, noticed in December, 2009 and filed in March of 2010 (after a dry 2009 in Texas), claims that the TCEQ’s administration of water rights on the Guadalupe and San Antonio Rivers is causing a “take” of whooping cranes.  According to the Plaintiff’s, the whooping cranes need plenty of freshwater, wolfberries and blue crabs to make it through the winter at the Aransas Pass Wildlife Refuge.  They claim that the lack of freshwater flows to the bay adjacent to the Refuge, has caused whooping cranes to die either directly from starvation, or due to off-Refuge dangers after the whooping cranes leave the Refuge in search of food and water.  Because the administration of water rights on the Guadalupe and San Antonio rivers is managed by TCEQ strictly in accordance with the Texas Water Code, the lawsuit essentially attacks Texas’ current water rights regime.

Regardless of the facts alleged and defenses offered, Texas is currently in an extreme drought, expected to continue through the whooping crane’s wintering period at the Refuge.  Additionally, USFW has proposed to add a variety of mussels that habitat other Texas Rivers on the ESA. The outcome of the TAP case, the continuation of the current extreme drought and the action of USFW on listing new species in other Texas Rivers could lead to a wholesale attack on Texas’ water rights management in the near future.

To encourage Brownfields development, Congress amended Superfund to add three transactional defenses to potentially responsible party liability: (1) innocent purchaser (IP); (2) bona fide prospective purchaser (BFPP); and (3) contiguous property owner (CPO).  These defenses have shared prerequisites that include: (1) that all appropriate inquiry (AAI) have been performed pre-closing; (2) that specified continuing obligation be performed post-closing; and (3) that, in the case of BFPP and CPO, there be no “affiliation” between the purchaser and a potentially responsible party and, in the case of IP, that the act or omission of the third party giving rise to the contamination not have occurred in connection with a contractual relationship with the IP. 

The purpose of this posting is: (1) to provide context as to how the transactional defenses and their prerequisites relate to each other, as well as to the third party defense; (2) to identify some recent guidance regarding two of those prerequisites--an ASTM standard relating to "continuing obligations" and an EPA memorandum relating to "no affiliation"; and (3) to critique the “no affiliation” discussion of Ashley II of Charleston, LLC v. PCS Nitrogen, Inc., 746 F. Supp. 2d 692 (D.S.C. 2010), a recent case that has garnered much attention.

To read the full article, please click here.

The 17th Conference of the Parties (COP 17) under the United Nations Framework Convention on Climate Change (UNFCC) ended last Sunday, December, 11, 2011, in Durban, S.A.  Some commentators have condemned the outcome as a sham that allows nations to continue emitting greenhouse gases (ghgs) at will for the indefinite future; others have celebrated it as a major step toward binding emissions limits for both developed and developing nations.  Only time will prove which view is correct. 

 In force since 1994, with over 190 parties, the UNFCC established the objective of stabilizing concentrations of ghgs in the atmosphere “at a level that would prevent dangerous anthropogenic interference with the climate system,” which the current consensus translates as  an increase of no more than a 2 degrees Celsius (2C) above pre-industrial levels.  The UNFCC made a sharp distinction between the commitments of developed countries (listed in Annex 1 of the agreement and often referred to as “Annex 1 countries”) and those of developing countries, including major greenhouse gas emitters such as China and India.  The UNFCC obligated only developed countries to take steps to limit their greenhouse gas emissions, and that obligation was unquantified and unenforceable. 

The 1997 Kyoto Protocol quantified emission reduction targets for Annex 1 countries and included a provision for holding Annex 1 parties accountable for missing their targets.  Nevertheless, the Protocol addresses less than one-third of global ghges.  Those outside its jurisdiction include not only the United States, the world’s second largest ghg emitter, but also China and India, now the world’s first and third largest ghg emitters respectively. 

Developing countries’ resistance to binding limitations has been formidable, based on their claim to economic development comparable to that already enjoyed by Annex 1 countries and on their smaller historic contribution to increased ghg concentrations.  But at Durban, that resistance cracked, with help from a bit of lawyerly wordsmithing.  An early draft of the decision document outlining a “platform for enhanced action” called for negotiation of an agreement to reduce ghg emissions in the form of “a protocol, another legal instrument or a legal outcome under the [UNFCC] applicable to all Parties.”  Reportedly India had insisted on including “legal outcome” in this wording in order to make room for voluntary commitments.  That brought objections from others insisting on binding commitments from all parties.  In the negotiating huddle, someone suggested “outcome with legal force” as an alternative, and the parties bought it.  The Washington Post identifies the source of the key compromise language as State Department lawyer Susan Biniaz.  With that inspired piece of lawyering, she opened the door to the next phase of global climate change negotiations.

There is still much uncertainty going forward.  The agreement reached at Durbin is only an agreement to negotiate and is itself non-binding, as economist Robert Stavins has pointed out.   The targets remain to be negotiated.  Non-binding “pledges” of reductions through 2020 previously submitted by the parties would affect future emissions only modestly.  The United Nations Environmental Programme estimates that, even if carried out, these pledges would fall well short of reductions consistent with limiting global warming to 2C.  And finally, there is the uncertainty about the key phrase – “outcome with legal force.”  Does it resolve differences, pointing the way toward binding commitments while giving developing nations some cover, or does it merely paper over disagreements about the nature of the undertakings expected of the parties that will emerge again in force when the negotiations get serious?  Time will tell, but at least the lawyer’s work has given us room to hope. 
 

For many years, the Great Lakes community has identified invasive species as one of the most serious threats to the largest system of surface fresh water in the world.  Well over 180 species are present already, and include such types as sea lamprey, zebra mussels, quagga mussels, round gobies, and many more causing hundreds of millions of dollars of damage each year.  Even with all the concern over the current invaders, much more anguish has developed because of the threat from Asian carp, more specifically silver and bighead carp.

The Asian carp were introduced to fish farms in the southern United States in the 1970’s to remove algae and plankton from catfish ponds.  Along the way, through flooding and other means, they escaped into the rivers, and have been eating and reproducing their way north over the years.  The U.S. Army Corps of Engineers have erected an electric barrier about 40 miles from Lake Michigan on the Chicago Sanitary and Ship Canal, linked to the Illinois River, to stop the further movement.  Although it appears the barrier is having an effect, there is evidence to suggest the carp have already gone beyond and are threatening Lake Michigan.

 When this evidence became public in late 2009, Michigan went to the U.S. Supreme Court to seek a reopening of an old multi state consent decree over water diversion from Lake Michigan to Illinois.  The Court refused to hear the matter, but Michigan and other states have gone to Federal district court in the Northern District of Illinois for injunctive relief to close the locks that separate Lake Michigan from the Chicago Area Waterway System.  The district court denied the injunction, and the Seventh Circuit upheld the denial, but appeared to leave the door open to the plaintiffs if action is not taken quickly enough.

 The U.S. Army Corps of Engineers is undertaking a large study called the Great Lakes and Mississippi River Inter-basin Study to look at all possible connections between the two watersheds, and consider all possible ways to stop the movement of the carp.  The Great Lakes and Mississippi River communities are both concerned that this will take too long.  To address this concern, the Great Lakes Commission and Great Lakes and St. Lawrence Cities Initiative have undertaken an expedited study funded by six foundations looking just at the Chicago Area Waterway System and the option of re-establishing the divide between the two basins by separating them with an earthen barrier that would prevent any flow of water or movement of aquatic species in either direction. 
 The situation presents a number of interesting public policy and legal issues.  How seriously do we need to take invasive species?  How much emphasis should be placed on the prevention of introductions of new species to new areas, and how much certainty in the risk analysis should be required to take action?  How much disruption of commerce is acceptable?  What level of legal showing should be required to get an injunction?

The U.S. Environmental Protection Agency (EPA) published on August 16, 2011, the final Toxic Substances Control Act (TSCA) Chemical Data Reporting (CDR) Rule, previously referred to as the Inventory Update Reporting (IUR) Modifications Rule.  76 Fed. Reg. 50816.  The rule authorizes EPA to collect and disclose information on the manufacturing, processing, and use of commercial chemical substances and mixtures listed on the TSCA Inventory.  The CDR Rule also sets the upcoming submission period from February 1, 2012, to June 30, 2012, and will include submission of chemical production information from 2010 and chemical production, processing, and use information from 2011. 

The rule is significant for three reasons.

First, the rule’s impact is enormous.  Thousands of businesses are affected and include, among others, chemical substance manufacturers and importers, chemical substance users and processors that may manufacture a byproduct chemical substance, utilities, paper manufacturing, primary metal manufacturing, and semiconductor and other electronic component manufacturing.

Second, this is not your grandmother’s rule.  EPA is requiring electronic reporting of CDR information, making the compilation, analysis, and release of these data more efficient, more immediate, and definitely more difficult.  Chemical detractors, competitors, and the plaintiffs’ bar will have more rapid and easier access to comprehensive chemical production and use information.

Third, failed reporting consequences are harsh.  CDR/IUR reporting infractions have been a target rich enforcement area for EPA for years.  Omitted chemicals and/or facilities are subject to steep fines that rack up quickly.  Criminal sanctions apply to submitters making “knowing and willful” false confidentiality claims.

Smart businesses see this rule for what it is -- a TSCA compliance obligation and an invitation to competitive and reputational disaster if mishandled.  Read the rule, understand EPA’s objectives, and start now to prepare for the June 30, 2012, deadline.  More information is available here and here.  

Sophisticated buyers of contaminated and potentially contaminated property (and their counsel) typically take pains to satisfy the Superfund (CERCLA) defenses for Bona Fide Prospective Purchasers (BFPPs) and Contiguous Property Owners (CPOs).  In 2011, buyers readily understand and conduct due diligence (including the now-ubiquitous ASTM Phase I reports) and, when necessary, comply with “continuing obligations” attendant to owning contaminated property (the subject of other recent entries in this blog). 

A sometimes-overlooked element of these CERCLA defenses requires that buyers not have an “affiliation with any other person that is potentially liable” under CERLCA.  EPA has weighed in with a publicly released memo issued on September 21st, Enforcement Discretion Guidance Regarding the Affiliation Language of CERCLA's Bona Fide Prospective Purchaser and Contiguous Property Owner Liability Protection.  This new guidance covers the two exceptions to the “no affiliations” requirement expressly added to CERCLA, and also addresses four common scenarios where the affiliation issue can arise.

The memo is to assist EPA personnel in exercising their enforcement discretion—on a site-specific basis. Why now?  In this blog on March 22, 2011, ACOEL Fellow Linda C. Martin reported on the troubling case known as “Ashley II”, in which a U.S. District court rejected the BFPP defense, in part, because a liability release between the seller and buyer created a disqualifying “affiliation.”   The decision is troubling because sellers and buyers often indemnify and release each other from environmental liabilities.  The case, involving private parties, is now on appeal.

In this guidance, EPA disagrees with the general notion that indemnifications will create a disqualifying relationship, although the Agency could have directly taken issue with the Ashley II decision.  To its credit, the United States has not been aggressive in finding disqualifying “affiliations” to date (at least as reflected in published judicial decisions).  The public statement of the Agency’s views should not only confirm the government’s litigation posture, but also assist courts taking up the issue in private cost-recovery actions.   

EPA’s Draft Guidance for 1-Hour SO2 NAAQS SIP Submissions has been out for public comment since this fall and, after an extension published on October 28, 2011 at 76 FR 66925, the comment period will close December 2, 2011.  Many parts of this draft guidance may trigger comments, but one particularly troubling aspect from a programmatic perspective is EPA’s discussion in Appendix B of infrastructure SIP requirements under Clean Air Act Section 110(a)(2).

Section 110 of the Clean Air Act requires states to prepare plans for implementation, maintenance and enforcement of the National Ambient Air Quality Standards (NAAQS) and to submit those plans to EPA for approval.  The statute specifies in general terms the required content of these State Implementation Plans (SIPs).  EPA has issued regulations at 40 CFR Part 51 that address the requirements for SIP submittals.  When changes to the NAAQS occur such that the state will need to update its SIP to show how it will attain and maintain the new or revised NAAQS, EPA’s regulations allow states to certify that their existing approved infrastructure SIPs are adequate to address the elements of Section 110 and then focus on specific changes to address the new or revised standard.

The particularly disturbing portion of EPA’s draft guidance is the discussion of how to  address existing approved SIP provisions that treat excess emissions from startup, shutdown and malfunction events in a manner that EPA views to be inconsistent with agency guidance, or how to address variance and director’s discretion provisions that EPA says “do not comport with EPA policy.”  Guidance, at B-3.  EPA says it is “discussing options for resolving these issues” and notes that it has negotiated a settlement agreement to specify a deadline of August 31, 2012 to respond to a Sierra Club petition over SSM provisions in 39 states.  EPA then goes further:  “Therefore, as general guidance, EPA can advise that states not make infrastructure SIP submissions that rely on previously approved but potentially flawed provisions.”  Id., at B-4.  

There are mechanisms under the Clean Air Act to address deficiencies in SIPs – guidance from EPA to ignore approved SIP provisions is not one of the options.  As the Supreme Court recognized in General Motors Corp. v. United States, 496 U.S. 530, 540 (1990), the existing SIP that has been approved under Section 110 of the Clean Air Act is the legally enforceable SIP.  In that enforcement action, the issue was the ability to enforce an existing SIP provision where a revision had been adopted by the state and EPA had not acted on the request to approve the revision in a timely manner.  The suggestion in the draft guidance that existing approved SIP provisions be ignored based on EPA policy does not comport with the Clean Air Act or case law. 

After several years of rapidly escalating offset prices, the South Coast Air Quality Management District (SCAQMD) has launched a major effort to consider near- and long-term reforms to the offset component of its nonattainment new source review (NSR) program (under 11/15/11 “New Source Review Roundtable Discussion on Emission Offsets” heading).

Congress added the offset requirement as part of the 1977 amendments to the Clean Air Act (CAA).  The idea was to ensure that new economic activity would not thwart progress made by states as they executed their state implementation plans (SIPs).  Under the CAA offset requirement, major new and modified stationary sources are required to offset their projected net emission increases by reducing surplus emissions from other sources.  As predicted during the most recent Congressional overhaul of the Clean Air Act in 1990, however, increased stationary source regulation, tighter major source definitions (e.g., 10 tons per year in the South Coast), and higher (greater than 1:1) offset ratios have finally squeezed some regional offset markets to the point where the offset program now impedes even the cleanest economic growth.

In the South Coast, for example, stationary source emissions have become an ever-diminishing part the overall emissions inventory (e.g., <10% of VOC emissions).  And there are virtually no remaining surplus control opportunities for stationary sources; so the only source of traditional offsets has been the shutdown of existing facilities.  Under the South Coast rules, however, even those reductions are not made fully available as offsets until they are first discounted to current control (i.e., lowest achievable emission rate, or LAER) levels.  The drastically shrinking pool of available offsets has caused the price of offsets to rise to unprecedented levels.  PM10 offsets, for example, hit a peak price in 2009 of $350,000 per daily pound of emissions.  Recent VOC offsets have cost more than $2,400 per pound, NOx more than $50,000 per pound, SOx more than $12,500 per pound and CO more than $5,000 per pound.  All of these numbers far exceed the $10,000 per ton upper bound contemplated as control costs to comply with the EPA’s 1997 standards for ozone and fine PM.  See Presidential Memorandum, “Implementation of Revised Air Quality Standards for Ozone and Particulate Matter (“There is a strong desire to drive the development of new technologies with the potential of greater emission reduction at less cost.  It was agreed that $10,000 per ton of emission reduction is the high end of the range of reasonable cost to impose on sources.  Consistent with the State’s ultimate responsibility to attain the standards, the EPA will encourage the States to design strategies for attaining the PM and ozone standards that focus on getting low cost reductions and limiting the cost of control to under $10,000 per ton for all sources.”).  62 Fed. Reg. 38421, 38429 (July 16, 1997).

The net effect of the scarce offset supply and astronomically high prices has been to slow regional economic development to a crawl.  For example, offsets to support new natural-gas fired power plants, necessary to back up the state’s renewable power program, have been almost impossible to find and have cost from $50 to $200 million per plant.  Other facilities have faced daunting offset costs as well.  The District’s cost estimates include several shocking numbers, including $12-77,000 for emergency backup generation for a police station, $106-234,000 for a gasoline service station, up to $358,000 for a printing facility, $178-435,000 for an auto body shop, in excess of $1 million for a food processing facility (e.g., a tortilla fryer and oven), from $1-2 million for a sewage treatment plant expansion, well over $1 million for a hospital boiler and $78-115 million for landfill gas recovery.  Although California has led the national clean energy investment effort, without material reform the SCAQMD will almost certainly be unable to offset emissions from the desired low-carbon biofuel or biomass-based renewable electricity projects in the region.  The offset requirement thus threatens to prevent much of the cleanest form of economic growth in the region.

The SCAQMD has identified a handful of near-term adjustments to its NSR program that could reduce the demand for offsets.  These include, for example, the use of an annual rather than peak monthly averaging period to calculate the offset need.  Increasing offset supply will be much more difficult, however.  That is because almost all as-yet-untapped strategies (e.g., identifiable mobile and area source reductions) have been identified and targeted as part of the region’s long-term SIP and thus may to some extent be ineligible as a supply of offsets.

The time has long since come for the District to replace the current offset program with an alternative (such as a clean technology fund) that can continue to improve air quality by accelerating, rather then impeding, clean technology development in the South Coast.  In addition to satisfying air quality improvement needs, rapid clean technology development also is needed to employ an ever-growing regional population and to meet the state’s ambitious clean energy and carbon reduction goals.  There is a win-win strategy to be found.  But it will require frank acknowledgement that the Clean Air Act offset program has served its purpose and now impedes, rather than aids, progress.  Most stakeholders are ready to work together to find a better mousetrap to promote rapid investment where and when we most need it.  We need it immediately in Southern California and the South Coast deserves enormous credit for launching this critical and timely reform effort.

On August 18, 2011, the Chickasaw and Choctaw Nations filed a lawsuit, in federal court in Oklahoma City claiming that they, rather than the State of Oklahoma, have regulatory authority over the water resources within their original tribal boundaries which comprise almost one-fourth of the State.  The source of their claims is the 1830 Treaty of Dancing Rabbit Creek, in which the federal government agreed to convey the lands to the Nations, in fee simple, to entice the Nations to move west of the Mississippi from their aboriginal homelands.

In support of their position, the Nations point to the fact that the State, in its lawsuit against the poultry industry for alleged pollution to the Illinois River Watershed, recently stipulated that the Cherokee Nation (as one of the "Five Tribes") had "substantial interests" in the watershed.  The Nations also rely upon the case of Choctaw Nation v. State of Oklahoma, in which the U.S. Supreme Court held that the Tribes own the riverbed of the Arkansas River as it flows across their treaty lands.  The Nations also contend that the State previously recognized the Nations' water rights when it negotiated a compact with the Nations to apportion out-of-state water sales revenues.  Lastly, the Nations remind the State that, as a precondition to being admitted to the Union, the State of Oklahoma agreed that it would never assert jurisdiction over the Nations' lands or affairs.

One of the main issues underlying the lawsuit is, of course - money.  The Nations are upset that the State recently sold water storage rights in Lake Sardis to the Oklahoma City Water Utility Trust, thus paving the way for water to be transported from tribal lands to provide water to several municipalities in central Oklahoma, without consulting or sharing revenues with the Nations.  Moreover, the temporary moratorium on out-of-state sales while the State studied water availability is about to end, meaning the State could move forward with out-of-state sales of waters located within the tribal territories without sharing the revenues with the Nations.  A 2002 proposed compact had resolved this issue, agreeing to revenue share 50%/50% on such sales, however, the Oklahoma Legislature never approved the compact.

The Nations say they want to talk - sovereign to sovereign - to try to resolve the problem.  However, the Nations contend that the State has spurned all such efforts.  The Governor responded, claiming that the filing of the lawsuit while she was out of town promoting Oklahoma as the go to place to live and do business was a surprise and not helpful to either side's interests.

Neal McCaleb, a spokesman for the Chickasaw Nation, has said, "most people think tribal rights and tribal sovereignty in general is some kind of ancient relic from the past that really doesn't have any relevance to the issues today, like water, and that's not the case."  One hundred and eighty-one years later, the Nations' water claims under the 1830 Treaty of Dancing Rabbit Creek are finally going to court.

In recent years, the states and EPA have placed greater emphasis on regulating storm water discharges from various industrial and municipal sources under the Clean Water Act.  These discharges are typically regulated by a general NPDES Permit issued by EPA or an authorized state.  The standard approach required in these general permits is for a facility to develop a storm water pollution prevention plan (SWPPP) incorporating best management practices (BMPs) that will be followed to reduce pollutant impacts to storm water discharged from the facility.  Typically some type of periodic monitoring is required during storm events.  The monitoring can be just visual monitoring and less frequently chemical analysis of certain pollutants associated with the particular industry.  In lieu of numerical effluent limits, typically the general permit will establish “benchmark levels” for industry specific pollutants that are not to be exceeded.  If a benchmark level is exceeded, the facility is required to undertake and document corrective measures to address the problem.  Typically corrective measures involve modifications to BMPs.  Unlike a numerical effluent limit in non-storm water NPDES permits, benchmark levels are not enforceable effluent limits under the Clean Water Act.  Therefore exceeding a benchmark level by itself does not subject a facility to an enforcement action by EPA, an authorized state or a third party citizen suit.

Over the past five years there has been a significant increase in Clean Water Act storm water enforcement actions.  The emphasis has been on actions against the home construction industry as well as confined animal feeding operations (CAFOs).  The typical enforcement action has been focused on facilities that failed to obtain a required general permit or failed to comply with SWPPS and related paperwork requirements.  Also in the West we have witnessed a significant increase in third party citizen suits for violation of general storm water permits.

Over the past 15-20 years, the BMP approach in general permits has provided relative certainty of the requirements and ease of implementation for permittees.  EPA has taken the position, however, that the BMP approach to storm water permits is just a first phase in the program while the agency gathers data to support future actual numerical limits.  The future is now here.  An EPA Guidance document entitled “Guidance on Establishing TMDL Waste Load Allocations for Storm Water Discharges in NPDES Permits (EPA November 2010),” although not finalized, is already being implemented by EPA to establish numerical criteria. 

For those not familiar with “TMDLs” and “waste load allocations,” some brief background may be helpful.  The total maximum daily load (TMDL) program is dictated by Section 303(d) of the Clean Water Act.  The program requires states to identify impaired waters not meeting water quality standards and to then develop TMDLs to bring the waters back into compliance.  TMDLS are basically pollution reduction plans that identify the loading capacity (with a margin of safety) of a water body which is the level of particular pollutant causing the impaired condition that will bring the water body back into compliance with water quality standards.  The TMDL thus requires reductions of pollutant loading from both point sources (known as “waste load allocations” or “WLAs”) and nonpoint sources (known as “load allocations”).  Typical of Clean Water Act programs, the regulatory onus of complying with TMDLs falls on point sources through the NPDES permit program.  Nonpoint sources are not regulated by EPA and state nonpoint source programs are generally based on a non-regulatory approach.  Also typical of Clean Water Act programs involving water quality standards, a states’ identification of impaired waters and development of TMDLs are subject to EPA review, approval or disapproval.  In many instances EPA will actually develop a TMDL in the face of state inaction.

In the past storm water NPDES permits were often overlooked by the states and EPA in establishing TMDLs.  EPA’s recent Guidance makes clear that storm water permits will be considered when EPA reviews state TMDLs.  In fact the Guidance makes clear that it is EPA’s intent in approving TMDLS to ensure that numerical WLAs are included in general storm water NPDES Permits.  Although the Guidance suggests some flexibility in such an approach by stipulating that WLAs will only be included in storm water permits when “practical,” we all know that “practicality” is in the eye of the beholder.

Inserting WLAs into storm water permits raises a host of technical and compliance issues.  First, because of the variability of storm events it is often difficult to quantify the actual loading of pollutants from a particular facility.  Often times the data on such loading is lacking and is therefore based on modeling which may or may not predict actual conditions.  Thus if EPA implements this Guidance in storm water permits the cost and frequency of monitoring storm water discharges is likely to increase substantially.  Secondly, it is often very difficult to control the concentration or loading of a particular pollutant during storm events absent the installation of expensive wastewater treatment controls.  Thus the cost of compliance may increase substantially once this Guidance is implemented.  Finally, once WLAs or numeric effluent limits do find their way into general storm water NPDES permits, exceedence of these limits will subject facilities to EPA, state or third party citizen suits enforcement actions.

Despite these concerns, numerical limits or WLAs in storm water discharge permits appear to be the next wave of regulation.  Practitioners in this area should make sure that clients with regulated storm water discharges to impaired waters become involved in the TMDL development at the state level to ensure that they receive a reasonable WLA that can be consistently complied with and which will not be too costly to achieve.

The Supreme Court’s last determination of what wetlands are subject to the Clean Water Act and hence may not be filled without a permit left behind a matted mess. In Rapanos v. United States, the 4-1-4 opinion, articulated two tests for when a wetland constitutes a water of the United States.  In the plurality opinion, wetlands must have “a continuous surface connection to bodies that are waters of the United States.”  Justice Kennedy’s swing vote decision for the plurality’s remand, stated that, while there needed to be a connection, it would be sufficient if there was a “significant nexus” with the waters of the U.S.; that is, it would be sufficient if the wetlands, alone or in combination with other lands in the region, would significantly affect the chemical, physical and biological characteristics of the U.S. waters. So which test should be applied?

Since Rapanos, the Seventh and Eleventh Circuits have found that Justice Kennedy’s test must be met, under a weakest-link theory – it is the narrowest grounds for the Supreme Court’s decision in Rapanos. On the other hand, the First, Eighth and recently the Third Circuits have held that if the wetlands can meet either test set forth in Rapanos, then the fill would be in violation of the Clean Water Act.

In order to "clarify" things, EPA and the Corp of Engineers issued a proposed guidance document, to help identify waters subject to Clean Water Act jurisdiction   The Agencies added that the proposed guidance would result in more waters being brought within their jurisdiction - a statement that is the political equivalent of poking a bear with a stick.  Predictably, the proposed guidance quickly came under attack as being an attempt by EPA and the Corp to expand their jurisdiction and to promulgate rules without following proper procedure.

The "clarification" guidance also did not sit well with several Republican members of Congress -- John Mica, Bob Gibbs, James Inhofe and Jeff Sessions.  On November 8, 2011, these four Congressmen wrote a letter to EPA and the Army Corps of Engineers. They noted that EPA had apparently decided not to finalize the draft guidance but, rather, that the Agencies were planning to address the scope of CWA jurisdiction via rulemaking. The authors commended the agencies for deciding to follow the rulemaking procedure, but lamented that if they were simply going to incorporate the guidance documents into the rule, the Agencies had effectively (and improperly) prejudged the issue, particularly given their view that the guidance “misconstrues or manipulates the legal standards announced in the Supreme Court decisions.”
The letter goes on to “encourage” the agencies to start the rulemaking process fresh, open the matter to an advanced notice of proposed rulemaking to obtain public input, and to do a cost-benefit analysis of whatever proposed rule is developed. The authors sincerely hoped that the agencies would not make a “mockery of the rulemaking process under the Administrative Procedure Act.”

Perhaps there is more to the letter than a gentle reminder that the Agencies shouldn't consider mocking the law.  If EPA promulgates the rule rather than issues a guidance, the inevitable challenge will be much more difficult because of the deference (frequently referred to as Chevron deference) that will attach to the rule.  Deference is a powerful weapon in any agency's arsenal and anyone who seeks to diminish the power of an agency would do well to find a way to challenge that deference.   In this case, the letter is preemptively making the case that if the final rule looks like the guidance, it proves that EPA prejudged the outcome, that the rule should be thrown out and that it would be a "mockery" to allow deference to save it. Given the recent decisions regarding agency deference, it just might work.  And if it does, letter-writing will be back in vogue.

In United States v. Donovan, 2011 U.S. App. LEXIS 22026 (3rd Cir., Oct. 31, 2011), the Third Circuit became the latest Circuit Court of Appeals to weigh in on . the Army Corps of Engineers' regulatory authority over wetlands under the Clean Water Act in the wake of the Supreme Court's splintered decision in Rapanos v. United States, 547 U.S. 715 (2006).

In Donovan, the United States brought an enforcement action for filing wetlands without first obtaining a permit from the Corps of Engineers.  The district court granted summary judgment in favor of the federal government, finding that, under the "continuous surface connection test" articulated by the plurality opinion in Rapanos v. United States, 547 U.S. 715 (2006), or the "substantial nexus test" laid out by Justice Kennedy in his concurring opinion in Rapanos, the wetlands in question were subject to regulation under the CWA.  The court imposed civil penalties and granted the government's request for injunctive relief.

On appeal Donovan argued that because the multiple opinions in Rapanos did not provide any governing standard, pre-Rapanos case law should govern whether the wetlands on his property were subject to the CWA.  The Third Circuit rejected this argument and concluded that either the plurality's test or Justice Kennedy's test could be used to determine the CWA's jurisdictional reach over wetlands.  Because the wetlands met either test, the Corps' exercise of jurisdiction was proper.

The Third Circuit needed to cobble together a governing standard for jurisdiction over wetlands because in Rapanos no one standard commanded majority support.  In Rapanos, the Court considered whether wetlands, which lie near ditches or man-made drains that eventually flow into traditional navigable waters, constitute "waters of the United States" within the meaning of the CWA.  Justice Scalia, in a plurality opinion in which three other Justices joined, concluded that "the waters of the United States" as used in the CWA "includes only those relatively permanent, standing or continuously flowing bodies of water 'forming geographic features' that are described in ordinary parlance as 'streams[,] . . . oceans, rivers [and] lakes.'"  547 U.S. at 739.  Importantly, the plurality opinion noted that the phrase "does not include channels through which water flows intermittently or ephemerally, or channels that periodically provide drainage for rainfall."  Id. With regard to wetlands, the plurality opined that "only those wetlands with a continuous surface connection to bodies that are 'waters of the United States' in their own right, so that there is no clear demarcation between 'waters' and wetlands, are 'adjacent to' such waters and covered by the [Clean Water] Act."  547 U.S. at 742.

Justice Kennedy concurred in the judgment but struck out on a different path.  In his view, the Corps of Engineers' jurisdiction over wetlands "depends upon the existence of significant nexus between the wetlands in question and navigable waters in the traditional sense."  547 U.S. at 779.  "Wetlands possess the requisite nexus, and thus come within the statutory phrase 'navigable waters,' if the wetlands, either alone or in combination with similarly situated lands in the region, significantly affect the chemical, physical, and biological integrity of other covered waters more readily understood as 'navigable.'"  Id.

Justice Stevens, in an opinion joined by three other justices, dissented.  In the dissenters' view, the Court should have deferred to the Corps' interpretation of its jurisdiction under the CWA.  Under the Corps' interpretation, wetlands are subject to its jurisdiction if they are adjacent to tributaries of traditionally navigable waters and thus fall within the term "waters of the United States." 

The Third Circuit concluded that a majority of the Supreme Court would have supported the exercise of the Corps' jurisdiction under either the plurality’s "continuous connection test" or Justice Kennedy’s "substantial nexus test"..  The Third Circuit pointed out that the dissenting opinion said they would uphold the Corps' jurisdiction in all cases in which either the plurality's test or Justice Kennedy's test is satisfied.  The Third Circuit joined the First Circuit (United States v. Johnson, 467 F.3d 56 (1st Cir. 2006)) and the Eighth Circuit (United States v. Bailey, 571 F.3d 791 (8th Cir. 2009)) in concluding that either test is sufficient.  The Seventh Circuit (United States v. Genke Excavating, 464 F.3d 723 (7th Cir. 2006)) and the Eleventh Circuit (United States v. Robison, 505 F.3d 1208 (11th Cir. 2007)) have concluded that because he was the “swing” vote for the decision, only Justice Kennedy's substantial nexus test should be used to determine jurisdiction.  The remainder of the circuits that have considered the issue have declined to specify which Rapanos test or tests should be applied.

From what appeared to be a hopelessly fragmented Supreme Court decision, the lower courts have managed to fashion two governing tests for jurisdiction over wetlands.  These tests will continue to control for the foreseeable future until they are superseded by Congressional action or agency rulemaking.

On November 3, 2011, the Wisconsin Legislature completed its final regular session of the year without enacting a delay in the phosphorus rules adopted by the Wisconsin Department of Natural Resources (WDNR) that went into effect just short of one year ago.  This is news?  Well, yes.

Last June 23, 2010, the WDNR citizen advisory board approved significant revisions to three rules to regulate the discharge of phosphorus to Wisconsin’s waterways.  The result of several years’ work with outside interest groups, these revisions establish numerical standards for point sources and performance standards for non-point sources.  Following legislative review, on January 1 and December 1, 2010 the rules relating to non-point and point sources respectively went into effect. For additional background and information about the rule content, click here. 

On January 3, 2011, Wisconsin’s newly-elected Governor, Scott Walker, expressed his concerns for the financial impact on industries and municipalities of compliance with the new phosphorus rules for point sources.  After initially proposing that the rules be substantively rewritten, the Governor instead proposed a two-year delay in the effective date to be enacted as part of the Biennial Budget bill.

Bit it didn’t happen.

Environmental advocacy groups swung into action, urging the Legislature to assure that the rules would remain in effect.  Industrial and municipal groups voiced concerns over the economic consequences of rule implementation.  In May 2011, two Democratic Wisconsin legislators wrote EPA seeking EPA’s perspective on the proposed suspension or effective date delay; EPA responded that Wisconsin’s rules would remain applicable standards unless or until EPA promulgated a more stringent standard or approved a revision made by Wisconsin. 

And the Senate and Assembly Republicans couldn’t agree on any of the options for delaying the rules’ effectiveness.  So, they deleted the Governor’s delay proposal.  When the Biennial Budget was signed on June 26, 2011, there was no language implementing a delay.  The Budget bill did require WDNR to prepare an economic impact analysis on the new rules.  Interestingly, while that requirement remained in place, the Governor vetoed the deadline of December 31, 2011, on the grounds that setting a date certain “may compromise the quality” of the fiscal analysis.

Talk then turned to a separate piece of legislation, to be considered during the regular legislative floor periods in September, October and November.

That didn’t happen either.

Meanwhile, in August 2011, WDNR circulated draft “Guidance for Implementing Wisconsin’s Phosphorus Water Quality Standards for Point Source Discharges” for review and comment: a document of nearly 150 pages on how to implement some 20 pages of rules.  As it appears these rules are in effect and likely to remain so, attention is now focused on figuring out what they mean. 

New Mexico is a land of vast expanses, mountains, mesas, and rich cultural heritages.  Cultural and historic properties are protected by New Mexico law in a manner that can impose significant restrictions and additional permitting requirements.  But should that protection extend to properties that are as large as a prominent mountain and its mesas?  Mount Taylor and its associated mesas span over 700 square miles in several counties in western New Mexico, near the city of Grants.  The “Mount Taylor Traditional Cultural Property," as listed on the State Register of Cultural Properties in 2009, covered an area more than half the size of Rhode Island.  Earlier this year a State court decision invalidated the listing, holding as one of several grounds, that the area was too large to be listed under the New Cultural Properties Act.

Mount Taylor is important to different people for varying reasons.  Its federal, state, and private lands and resources have been used for mining, ranching, logging, and recreation.  Also, some Native Americans claim that Mount Taylor is a part of their cultural and religious beliefs.  In 2009, five Indian tribes and pueblos, concerned about potential renewed uranium exploration and development activity in the Mount Taylor area, used the New Mexico Cultural Properties Act to nominate the Mount Taylor Traditional Cultural Property to the New Mexico State Register of Cultural Properties.  A “traditional cultural property” has been defined as a property that is eligible for listing because of its association with certain cultural practices or beliefs of a community.  The tribes asserted that the nominated property had traditional religious and cultural importance to them.  Because a listing on the State Register may impose additional permitting requirements on any activity that requires a state permit and is within (and in some circumstances, merely near) the listed property, property owners and others in the Mount Taylor vicinity who could be affected by a listing expressed great concern about the nomination. 

Acting on the tribes’ nomination, the state Cultural Properties Review Committee listed the Property under the Act in 2009.  But earlier this year, a reviewing court overturned the listing and held that, under New Mexico law, the size of the listing, combined with the indefinite nature of the Mount Taylor Traditional Cultural Property boundaries, was overbroad, arbitrary and capricious.  It also held that the process the Committee used for the listing was an unconstitutional violation of due process because it did not provide notice of the proposed listing to the mineral interest owners.  The attempted Mount Taylor Traditional Cultural Property listing would have been by far the largest by the State of New Mexico and possibly the largest by any state in the United States.  The matter is currently on appeal to the New Mexico Court of Appeals, and briefing has recently been completed.  The appeal also includes issues besides the size of the traditional cultural property and whether due process was afforded in the listing.  A decision could be entered by the New Mexico Court of Appeals in 2012.

On August 23, 2011, the United States Environmental Protection Agency (EPA) published a package of four proposed rules governing air emissions from the oil and gas natural gas industry.   For the first time, EPA is targeting emissions from gas wells drilled by hydraulic fracturing.  76 Fed. Reg. 52738 (August 23, 2011).  The proposals include source performance standard (NSPS) for volatile organic compounds (VOCs), an NSPS for sulfur dioxide, and air toxics standards for both oil and natural gas production and natural gas transmission and storage.  EPA estimates these proposed rules would apply to more than 25,000 oil and gas wells drilled each year in the United States.

The proposed rule would require industry to use “green completions” (also known as reduced emissions completions) to capture emissions at wells being prepared for production  In addition, the proposed rule establishes emission limits at pneumatic controllers and condensate storage tanks.  Natural gas processing plants would be subject to more rigorous leak detection and repair requirements, and operators would be required to comply with specific maintenance and equipment standards for compressors.  EPA also has proposed to eliminate the one ton per year benzene compliance option for glycol dehydrators at major sources.

The proposed regulations were issued pursuant to a Consent Decree with WildEarth Guardians and San Juan Citizens Alliance.  That Consent Decree resolved a complaint that alleged that EPA failed to review the NSPS and air toxic standards for the oil and gas industry pursuant to the Clean Air Act.  EPA will accept comments until November 30, 2011, and expects to issue a final rule by April 3, 2012.

Every Superfund allocation action involves a “settle or try” decision at some point.  Occasionally, I find an allocation decision where the outcome did not seem to justify the investment in litigation costs and fees and ask, “why didn’t this case settle?”

State of New York v. Solvent Chemical Co., Inc. et al., 685 F. Supp. 2d 357 (W.D.N.Y. 2010) is such a case.   There were three parties involved in the allocation: Solvent Chemical Co., Inc. (Solvent), E.I. du Pont de Nemours & Company (DuPont), and Olin Corporation (Olin).  Costs associated with four separate media were allocated: soils; the A-Zone shallow groundwater; the B-Zone bedrock groundwater; and the “hot spot” groundwater contamination.

The total response costs were $9,124,328.  This chart breaks down the response costs for each of these four media and shows the proposed allocation of Solvent’s expert and the resulting dollars that Solvent would recover:

The parties had a one-day settlement conference with a magistrate judge.  They could not reach agreement.  The case was then tried with the following outcome:

A comparison of the dollars claimed against the final judgment is shown below:

Between the settlement conference and the final judgment was a 19-day trial.  The district court heard from 10 witnesses live and 24 witnesses through their depositions.  There were 1,200 trial exhibits.  The parties made post-trial submissions followed by oral summations over three days in November 2008.  The district court judge took 15 months to issue its decision.

Viewed solely from an economic perspective, Olin was in a no-win situation.  I assume that its litigation fees and costs were much greater than its final allocation.  Why didn’t Solvent and Olin reach a settlement?  One has to believe that if the parties could have gamed out long before the trial the judgment against Olin less Solvent’s Olin-related litigation costs, they would have found a basis to settle.

In DuPont’s case, I will guess that Solvent put more faith in its allocation expert than it turns out, the judge did.  Parties have to remember than judges are instructed by CERCLA to do equity.   Advocacy rarely equals equity. 

The district court refused to allocate DuPont or Olin any future costs in part because a state regulatory official testified that such costs related to a contaminant linked only to Solvent’s operations.  Hence, I assume that, after litigation fees and costs, Solvent lost money.

As a mediator, I always tell parties, “I don’t care if you don’t settle, but I do care if you don’t settle and at the courthouse you wish you could turn back the clock to settle when you had the chance.”   Only the parties and the magistrate judge know why settlement did not occur, but unless the parties had taken extreme positions during settlement effectively forcing the trial, this seems like a case where a lack of foresight was costly.

On August 23, 2011, the United States Environmental Protection Agency (EPA) published a package of four proposed rules governing air emissions from the oil and gas natural gas industry.   For the first time, EPA is targeting emissions from gas wells drilled by hydraulic fracturing.  76 Fed. Reg. 52738 (August 23, 2011).  The proposals include source performance standard (NSPS) for volatile organic compounds (VOCs), an NSPS for sulfur dioxide, and air toxics standards for both oil and natural gas production and natural gas transmission and storage.  EPA estimates these proposed rules would apply to more than 25,000 oil and gas wells drilled each year in the United States.

The proposed rule would require industry to use “green completions” (also known as reduced emissions completions) to capture emissions at wells being prepared for production  In addition, the proposed rule establishes emission limits at pneumatic controllers and condensate storage tanks.  Natural gas processing plants would be subject to more rigorous leak detection and repair requirements, and operators would be required to comply with specific maintenance and equipment standards for compressors.  EPA also has proposed to eliminate the one ton per year benzene compliance option for glycol dehydrators at major sources.

The proposed regulations were issued pursuant to a Consent Decree with WildEarth Guardians and San Juan Citizens Alliance.  That Consent Decree resolved a complaint that alleged that EPA failed to review the NSPS and air toxic standards for the oil and gas industry pursuant to the Clean Air Act.  EPA will accept comments until November 30, 2011, and expects to issue a final rule by April 3, 2012.

The October 16 New York Times asked the question:  Where Did Global Warming Go?  Congress is considering legislation to reduce the authority of EPA.  Some presidential candidates argue that the Environmental Protection Agency has caused significant damage to the American economy, and some have suggested its abolition.  Questions have been raised about the failure of a large solar energy company despite a massive loan guarantee by the United States government. 

 In the midst of all these headlines, I was surprised to read that the European Union has adopted a rule which requires a shift to renewable energy.  This rule will turn buildings into “power plants” to collect and store energy from sun, wind, and other non-fossil fuel sources.  Rule 116 of the Rules of Procedure calls upon EU Institutions to:

• Pursue a 20% increase in energy efficiency by 2020,
• Reduce greenhouse gas emissions by 30% by 2020,
• Produce 33% of electricity and 25% of overall energy from renewal energy sources by 2020,
• Institute hydrogen fuel cell storage technology and other storage technologies for portable, stationary and transport uses and establish a decentralized bottom up hydrogen infrastructure by 2025 in all EU Member States, and
• Make power grids smart and independent by 2025 so that regions, cities, SMEs and citizens can produce and share energy in accordance with the same open access principals as apply to the internet now.

 Germany is the leading early adopter of the program to turn buildings into small power plants that will collect and store energy. 

 How did this happen in the EU?  Are Europeans more concerned about global warming?  Or is it the high cost of oil?  

 Oil prices affect the cost of everything.  If Europe can reduce its dependence on fossil fuel, it can improve its economic condition.  Retrofitting existing buildings and developing new technologies to collect energy from non-fossil fuels provides jobs.  Having each building become a small “power plant” uses lessons learned from the internet practice of sharing information and working collectively to produce a better product than the top down vertical development approach.

 Where did the EU and Germany come up with the plan to turn buildings into power plants to store energy and to reduce their dependence on the price of oil?  They listened to an American economist, Jeremy Rifkin.  Rifkin wrote The Third Industrial Revolution:  How Lateral Power is Transforming Energy, the Economy and the World.  Rifkin’s views may not be accepted by many in America, however, his book and his teachings are worth considering. Rifkin’s ideas are the basis for the EU Rule.

 What happened to global warming and the U. S. green economy?  The New York Times suggests that Americans prefer larger cars and less government intrusion while remaining skeptical of science. 

 Yet American history shows that we have always believed that there is another frontier for our pioneering spirit to conquer.  Some Americans believe that the next frontier is safe development of shale gas and North American oil reserves, as opposed to renewable resources.  This approach requires far less change than the development of alternative fuel sources in the manner dictated by the new EU rule.  The reserves seem plentiful and can displace energy imports.  However, their use continues the rise in green house gas emissions. 

 Is the problem in our current political system?  Is our focus on winning at all costs preventing any consensus on significant long term changes necessary to develop sustainable alternative approaches to energy?

 Perhaps it is the American character.  Traffic congestion is a problem in major cities all over the world.  The most significant changes to eliminate traffic congestion include bans or significant restrictions on driving in London, Milan, Florence and other European cities.  American cities resist restrictions on driving.  Europeans value walking and pedestrian access far more than Americans.  Americans still believe that the convenience of driving is more important than reducing traffic congestion.

 Whatever the answer is to these questions, it appears that Europeans are implementing a green economy that will benefit all of their citizens regardless of whether there is global warming.  Shouldn’t America consider this as well? 

In the US, criminal prosecution of environmental violations is on the rise.  Environmental enforcement remains one of the few areas in which government resources continue to grow.  USEPA’s criminal enforcement program has more than 350 specially trained investigators, chemists, engineers, technicians, lawyers, and support staff.  USEPA opened 346 new environmental crime cases in 2010, the second highest number of new cases since 2005.

In 2010, at just the US federal level, criminal charges were brought against 289 defendants, a 45% increase over 2009 and the highest number since 2005.  251 of the 289 cases (87%) included charges against at least one individual defendant, as opposed to a business or corporation.  Of the cases completed during 2010, 88% resulted in either a guilty plea or conviction at trial.  Defendants convicted of environmental crimes in 2010 were assessed a total of $41 million in fines and restitution and were ordered to pay $18 million for environmental projects, an 80% increase over the previous year.

Since 1990, when 75% of all environmental criminal charges were brought against companies, the focus has changed dramatically, with nearly 75% of such charges now being brought against individuals.  Multiple violations can be stacked (aggregated) for purposes of sentencing, meaning that even misdemeanor violations may result in jail terms of over one year.  In 2010, individual criminal defendants were sentenced to a total of 72 years of jail time.

These statistics, the resources being devoted to criminal enforcement, and the often low burden of proof needed to obtain a conviction, demonstrate that the prosecution of environmental criminal liabilities will only increase in future years in the US. 

In Morrison Enterprises, LLC v. Dravo Corporation, the Eighth Circuit held that a party who has incurred costs responding to a contaminant it did not release into the environment [Morrison], is limited to recovery of such costs pursuant to Section 113(f) CERCLA.  The Eighth Circuit so held because Morrison incurred its response costs pursuant to an administrative or judicially approved settlement under §§106 or 107concluding that the payment of these costs were “compelled”.  More specifically, because Morrison’s response costs were incurred implementing a remedy pursuant to an Administrative Order on Consent (and a subsequent judicial order), the Eighth Circuit concluded that it was of no consequence that Morrison never released the contaminants in question nor owned or operated the facility where the contamination originated.  The Eighth Circuit said that despite the acknowledged fact that Morrison was remediating a contaminants released by another party at a separate and distinct facility, any effort to recoup its response costs were limited to a CERCLA §113(f) contribution action.  

 The Eighth Circuit noted that the Supreme Court in United States v. Atlantic Research had specifically reserved the precise issue presented by Morrison’s appeal, i.e., whether a party sustaining expenses pursuant to a consent decree following a suit under §§106 or 107(a) could recover such compelled costs under §107(a), §113(f), or both.  The Eighth Circuit held that §113(f) provides the exclusive remedy for a party in this procedural situation.  Morrison disagreed with the Eighth Circuit’s holding and has filed a Cert Petition on the issue reserved by the Supreme Court in Atlantic Research. 

 The Cert Petition points out that the issue of whether compelled costs are recoverable under §107(a) or §113(f) has vexed the lower courts, resulting in confusion and a split of authority amongst the circuits.  The Cert Petition also makes the argument that the plain language of CERCLA permits a §107 claim to recover compelled costs given the absence of a single word  or provision in CERCLA §107(a) limiting cost  recovery claims to only those costs which are “voluntarily” incurred.  

 Amici Curiae Pharmacia Corporation (f/k/a/ Monsanto Company) and Solutia Inc., filed a brief in support of Morrison’s Cert Petition.  The Amicus Brief points out that the Eighth Circuit’s holding in Morrison ignores the text of CERCLA and directly contradicts the Supreme Court’s holdings in Aviall and Atlantic Research, where the Supreme Court made it clear that courts must follow the language in the statute.   The Amicus Brief also discusses how the Eighth Circuit’s opinion conflicts with one of the principal goals of CERCLA:  encouraging private party cleanups.  One of the most significant incentives for a private party to step forward and work with the government to investigate a site and conduct a cleanup is the right to pursue other parties to recover its costs.  Limiting such a party to contribution under §113(f) significantly weakens that incentive because the government can (and will) unilaterally settle with recalcitrant parties to protect them from the performing party’s contribution claim. 

On August 23, 2011, the United States Environmental Protection Agency (EPA) proposed new air standards for the oil and natural gas industry (the Proposed Rule).  The Proposed Rule includes EPA’s first federal air standards for wells that are hydraulically fractured, along with requirements for several other sources of pollution in the oil and natural gas industry that currently are not regulated at the federal level. There are four major air components of the Proposed Rule: (1) a New Source Performance Standard (NSPS) for volatile organic compounds (VOC); (2) an NSPS for sulfur dioxide (SO2); (3) an air toxics (NESHAP) standard for oil and natural gas production; and (4) an air toxics (NESHAP) standard for natural gas transmission and storage.

Section 111 of the Clean Air Act (CAA) requires EPA to set NSPS for industrial categories that cause, or significantly contribute to, air pollution that may endanger public health or welfare. These performance standards must reflect the degree of emission limitation achievable through the application of the “best system of emission reduction” (BSER), which EPA determines has been adequately demonstrated within the industry. 

EPA’s existing NSPS for VOCs were issued in 1985. The existing standards address only VOC leak detection and repair (LDAR) at new and modified natural gas processing plants.  Other potential sources of VOC emissions in the oil and natural gas industry currently are not subject to nationwide regulation.  EPA is proposing new standards for several processes or pieces of equipment used in oil and gas production that have not previously been subject to federal regulation, including: well completions at new hydraulically fractured natural gas wells and at existing wells that are fractured or “re-fractured,” which would require the use of “green completions”; centrifugal and reciprocating compressors; pneumatic controllers; and condensate and crude oil storage tanks.

The NSPS for SO2 were also issued in 1985 and apply only to natural gas processing plants. EPA is proposing to strengthen the performance standards for plants processing gas with the highest hydrogen sulfide content in order to further reduce sulfur dioxide emissions from these facilities.

Section 112 of the CAA requires EPA to address emissions of hazardous air pollutants (HAP) from stationary sources.  Section 112(d) requires EPA to promulgate NESHAPs applicable to major sources of HAPs.  For major sources, technology-based maximum achievable control technology (MACT) standards must reflect the maximum degree of emission reductions achievable, considering cost, energy requirements, and non-air quality benefits and environmental impacts.  Unlike Section 111 NSPS standards that apply only to new or modified sources, Section 112 standards are applicable to both new and existing stationary sources.  EPA is proposing changes to the NESHAP standards for major sources in both the natural gas production and storage and transportation subcategories.

The public comment period on the Proposed Rule currently runs through October 24, 2011.  It will be interesting to track the response from the oil and natural gas industry to EPA’s proposal. 

March and September 2009 blog entries discussed issues involving Native American water rights in the Illinois River and its watershed.  The issues arose in connection with a federal district court case in Oklahoma involving poultry litter pollution.  State of Oklahoma v. Tyson Foods, Inc., et al., Case No. 05-CV-329-GFK.  In that case, the non-party Cherokee Nation signed an agreement with the State of Oklahoma wherein the State acknowledged that the Cherokees had “substantial” interests in the Illinois River and its watershed and wherein the Cherokees assigned to the State of Oklahoma any and all of their claims against the poultry defendants.  The poultry defendants challenged the agreement, and for various reasons, the Court concluded that the agreement was not valid and did not grant standing to the State to assert the claims of the Cherokee Nation.

Other tribes did not fail to notice the purported agreement between Oklahoma and the Cherokee Nation, with the State acknowledging the “substantial” interest of the Cherokee Nation in the water resources of the State of Oklahoma, the Illinois River, and its watershed. Indeed, on August 18, 2011, the Chickasaw and Choctaw Nations of Oklahoma filed a case involving Native American water rights in the United States District Court for the Western District of Oklahoma.  Chickasaw Nation and Choctaw Nation of Oklahoma v. Mary Fallin, in her official capacity as Governor of the State of Oklahoma, et al., Case No. CIV-11-927-C.  In this case, the Chickasaw and Choctaw Nations of Oklahoma seek declaratory and injunctive relief to protect their federal rights, their present and future water rights, regulatory authority over water resources, and the right to be immune from state law and jurisdiction in and to certain waters located in the State of Oklahoma.  The background facts are as follows:

In June, 2010, the Oklahoma Water Resources Board (“OWRB”) entered into an agreement with the Oklahoma City Water Utility Trust (“Trust”), agreeing to sell to the Trust certain of the OWRB’s rights to store waters of the Kiamichi Basin in the Sardis Reservoir and to control withdrawals of the water from the reservoir.   The tribes claim that a fundamental element of the agreement is that the OWRB will issue a water use permit that grants the Trust the right to annually withdraw water from the Sardis Reservoir and/or the Kiamichi Basin in an amount roughly equal to ninety percent (90%) of Sardis’ estimated sustainable yield.  The tribes take issue with the sale, transfer and appropriation of water, which they assert was given to the tribes under various treaties with the United States granting them exclusive dominion and control over the water resources on their tribal lands in Oklahoma.

The suit alleges that Oklahoma officials earlier “acknowledged” tribal water rights in the waters in question, as evidenced by State officials seeking participation in a proposed interstate transaction involving the Kiamichi Basin waters.  Paragraph 44.  Similarly, the suit alleges that the State of Oklahoma “recognized [from the earlier poultry litigation] that ‘the Cherokee Nation has substantial interests’…” in the waters and natural resources in the Illinois River watershed.  Paragraph 45.  Thus, the earlier agreement with the Cherokee Nation (in which there was an acknowledgement of some level of sovereign rights of the Cherokee Nation in the Illinois River watershed), and the State’s participation in negotiations with the tribes over an interstate transaction related to the Kiamichi Basin waters, are apparently being invoked as indications of the State’s acquiescence in tribal rights in and to certain Oklahoma waters.

Some think that the State of Oklahoma has held its breath for years over the possibility that a court of competent jurisdiction will have the issue of tribal ownership of water squarely in front of it.  Others think that the tribes don’t actually want to litigate the matter for fear of how it might turn out.  Not so any more, as the Chickasaw and the Choctaw Nations place their ownership rights of water resources of the State of Oklahoma squarely in issue in this case, suing the Governor, the OWRB, the City of Oklahoma City and the Trust for the purported granting of rights to the Trust in the Sardis Reservoir and the Kiamichi River and its tributaries.  A ruling in favor of the tribes establishing tribal sovereignty over water rights in certain Oklahoma water bodies and lakes and watersheds will stand Oklahoma on its ear, if it ever happens.  Will the case be settled or go to trial?  Do the tribes or the State really want to risk letting a court decide these questions?  Stay tuned.

This fall, the United States Supreme Court will decide whether to revisit a question it left open in United States v. Atlantic Research:  Whether a party who has incurred cleanup costs following an Environmental Protection Agency (“EPA”) lawsuit may recover its costs under § 107 of the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), or instead is limited to a contribution action under CERCLA § 113.  The distinction between these cost recovery provisions has divided lower courts for much of the last decade, and forms the basis for the July 2011 certiorari petition in Morrison Enterprises v. Dravo Corp. 

In 2004, the Supreme Court ruled that contribution under CERCLA § 113(f) is only available while or after a plaintiff had been sued under CERCLA – and thus could not be used to recover “voluntary” cleanup costs when a Potentially Responsible Party (“PRP”) remediates a Superfund site prior to litigation.  Cooper Industries v. Aviall Services.  Three years later, the Court clarified in Atlantic Research that voluntarily-incurred response costs were instead recoverable under § 107(a), which “reimburses other parties for costs that those parties incurred.”

Atlantic Research, however, did not resolve whether Section 107 could ever apply during or following CERCLA litigation.  In a footnote, the Supreme Court “recognize[d] that a PRP may sustain expenses pursuant to a consent decree following a suit under” CERCLA without “reimbur[sing] the costs of another party.”  The Court declined to decide “whether these compelled costs of response are recoverable under §113(f), §107(a), or both.” 

That question recently arose in Morrison Enterprises v. Dravo Corp.  After being separately sued by EPA for their contributions to groundwater contamination, Morrison and Dravo entered consent decrees governing the cleanup of their respective “sub-sites”.  Morrison then sued Dravo under CERCLA 107, seeking to recover costs incurred in treating trichloroethylene (“TCE”) that Morrison alleged had originated from Dravo’s upgradient site.

The Eighth Circuit Court of Appeals affirmed the dismissal of Morrison’s suit, stating as a bright line rule: “§ 113(f) provides the exclusive remedy for a liable party compelled to incur response costs pursuant to an administrative or judicially approved settlement under §106 or §107.”  Other circuits courts have held that parties who incur costs under a administrative order with the state, W.R. Grace & Co.-Conn. v. Zotos Intern., Inc., or who contributed money to a cleanup fund under a private settlement agreement, Agere Systems, Inc. v. Advanced Environmental Technology Corp., could maintain cost recovery actions under CERCLA § 107.

The distinction is critical to Superfund plaintiffs and defendants.  For contribution actions under CERCLA § 113, the parties must share “common liability,” recovery is subject to equitable allocation and may be barred by prior settlements, and the statute of limitations is three years.  Under § 107, on the other hand, there is no settlement bar or common liability requirement, recovery is joint and several, and the statute of limitations is six years after the initiation of on-site construction of the remedy.

The Supreme Court is scheduled to consider the Morrison certiorari petition during its September 26, 2011 conference.

Dioxins, a class of chemicals whose most notorious denizen is 2,3,7,8-terachlorodibenzodioxin, a/k/a TCDD, have been of public concern since the 1970's, but their pathway to regulatory consensus has been a series of twists and turns, potholes and dead ends ever since.  Once branded the most potent animal carcinogen ever tested, its human carcinogenicity remains controversial today.  On August 29, 2011, following swiftly on the heels of a Science Advisory Board (SAB) review critical of several aspects of USEPA’s May, 2010 reanalysis of key issues related to dioxin toxicity, USEPA announced  that it would delay the cancer risk portion of its final Integrated Risk Information System (IRIS) assessment and move only to a final non-cancer assessment by the end of January, 2012.  The USEPA reanalysis was in response to a 2006 critique by the National Academy of Sciences (NAS).

TCDD gained notoriety in the 1970s as a contaminant in Agent Orange, the defoliant of choice used during the Vietnam War between 1962 and 1971.  It is a chemical that is not commercially produced; rather it is the inadvertent by-product of numerous processes, including the manufacture of some chemicals, pulp and paper, and most combustion processes, including the burning of household waste.  Because of the ubiquity of the sources from which dioxins are produced, the public may be exposed through eating beef, dairy products, pork or fish, or by living near municipal waste incineration. 

USEPA's first risk assessment of dioxins was issued in 1984; seven years later it began a reassessment in a process that is ongoing.  USEPA's 1994 draft reassessment went through SAB review in 1995, which resulted in a revised reassessment in 2000, a second SAB review in 2000-2001, a second revised draft reassessment in 2003, a NAS review in 2006, a USEPA response to NAS' comments in 2010, and the August 26, 2011 SAB review of USEPA's response to the NAS report.  The beat goes on.

Dioxin levels in the environment, mostly in soil, sediments and biota, have been declining regularly since the early seventies as pollution control efforts have ratcheted down inadvertent production and emissions.  USEPA's reassessment impacts mostly whether and to what extent a site requires clean-up.  A significantly lowered USEPA cleanup target for dioxin in soils raises the specter of reopening hundreds of sites that were remediated under current guidance to a 1 part per billion target for residential soils and a 5-20 ppb target for non-residential soils.  USEPA estimates that 104 CERCLA sites may need to be re-evaluated if it adopts a substantially lowered target.  Even without a cancer risk assessment, USEPA's announcement that it would move forward with its non-cancer risk is likely to result in final guidance that sets a cleanup target for dioxin in residential soil at 72 parts per trillion, a 92.8% reduction from the current target, and a commensurate lowering for non-residential soils to .95 ppb. 

USEPA's decision to split the cancer and non-cancer assessments likely pleased no one, including USEPA Administrator Lisa Jackson, who stated in 2009 that the Agency would complete the assessment by December 2010.  Environmentalists have pushed hard on USEPA for years and are likely not pleased that the cancer analysis has been again derailed by scientific critique.  Many in industry have resisted lowered clean up levels for years, echoing many of the criticisms of USEPA's cancer risk analysis by the NAS and SAB.  SAB's 84 page report issued on August 26, 2011 generally lauded USEPA's efforts in its May, 2010 report responding to the 2006 NAS Report. 

 
Nonetheless, SAB provided additional recommendations "to further enhance the transparency, clarity, and scientific integrity" of the Report.  Two critical elements of TCDD assessment were singled out as deficiencies by SAB: "(1) nonlinear dose-response for TCDD carcinogenicity, and (2) uncertainty analysis of TCDD toxicity."  With everything else going on within and outside USEPA in the legislative, political and regulatory arena, it will be interesting to see if USEPA can or will meet its self-imposed deadline of end of January 2012 for the non-cancer risk assessment; surely the cancer assessment is not now likely to proceed with much haste.

For more information, please contact the author, Michael Rodburg.

In June of this year, a three judge panel of the Eleventh Circuit made an important ruling in the decades-long battle between Alabama, Florida and Georgia over rights to the water reserves of Lake Lanier in Buford, Georgia.  Reversing a United States District Court decision in 2009 by Judge Magnuson, the Eleventh Circuit held that water supply for Altanta’s more than 4 million metro population is an “authorized purpose” of the Buford Project under the Rivers and Harbor Act of 1946  (“RHA”) and that the United States Corps of Engineers (“Corps”) has one year to make a final decision as to how much water Atlanta may draw from Lake Lanier.

To better understand the magnitude of this decision, a brief journey through the history of this long battle is instructive.  In the 1950s, the Buford Dam was constructed and pursuant to the RHA, the Lake Lanier Reservoir was created in North Georgia to control flooding, float barges downstream, and generate power.  According to the Eleventh Circuit’s most recent decision, the reservoir was also created to act as a water supply for the metro Atlanta area although the breadth of the need for this resource was unknown at the time.

As many know, the metro Atlanta area has been one of outstanding growth in the last several decades as the city and its surrounding suburbs have more than tripled their population to more than 4 million in 2010.  This growth has demanded a much greater demand for water, which -- under the RHA -- the Corps had agreed to supply from Lake Lanier.  However, in 1990, the State of Alabama sued the Corps to stop the agency from providing any more water from Lake Lanier to the metro Atlanta Area.  Alabama needs water from Lake Lanier to maintain the operation of its nuclear power plant.  Florida, who later intervened, needs fresh water from Lake Lanier to sustain its multi-million dollar shellfish industry.

United States Senior District Judge Magnuson was specially appointed to hear the several related water cases consolidated in the Middle District of Florida because Georgia, Alabama and Florida judges were conflicted.  In 2009, Judge Magnuson held that it was illegal for the Corps to draw water from Lake Lanier for Atlanta’s needs and that the three states had until July 2012 to reach an agreement regarding water supply or Atlanta would thereafter be allowed to draw only the amounts allowed in 1970—more than 40 years ago.  The Eleventh Circuit’s recent decision clearly reverses the tide.  However, what does this decision really mean for the future?  Both Alabama and Florida are expected to appeal this most recent decision to a full panel of the Eleventh Circuit.  Thus, the water war is not over. 

Governor Deal of Georgia, although pleased about this latest decision, promises to continue efforts to come to an agreement with Alabama and Florida.  Hall County, located in north Georgia and currently drawing more than 18 million gallons per day from Lake Lanier, also reports that it will continue its plans to build an 856 acre reservoir to limit its dependency on Lake Lanier.  At the end of the day, Georgia will still have to work diligently to design alternative water supplies for the metro Atlanta area, but there is no doubt that this most recent decision gives the rapidly growing city more time and a little breathing room.

For questions or comments regarding this article, please email Richard Horder.

On September 2, 2011, President Obama directed EPA Administrator, Lisa Jackson, to withdraw the agency’s proposal to lower the primary National Ambient Air Quality Standard (“NAAQS”) for ozone, a component of smog.  The Administration’s justification for abandoning the proposal to tighten this air standard was the importance of reducing regulatory burdens and uncertainty for business at a time of uncertainty about an unsteady economy.  As a result, the 8-hour ozone NAAQS will remain at the current level of 0.075 parts per million (“ppm”), instead of being reduced to between 0.070 ppm and 0.060 ppm, as EPA had proposed.  Unless pending litigation results in the court speeding up the process, it is not expected that EPA will review this NAAQS final rule again until 2013.

Although the ozone NAAQS is not being reduced, the existing 0.075-ppm standard will result in significant areas of the country being designated nonattainment.  As a result, proposed industrial projects will be required to undergo more rigorous Nonattainment New Source Review permitting, and will need to offset nitrogen oxides and volatile organic compound emissions.  States with nonattainment areas may need to impose new emissions restrictions on existing sources as part of their State Implementation Plans in order to achieve compliance.  These consequences are not without costs.

Nonetheless, the Obama Administration’s action temporarily subdues the significant controversy that the March 2008 proposal and September 2009 revision had generated.  In the Bush-era’s March 2008 proposal, by attempting to establish the primary and secondary ozone NAAQS at 0.075 ppm, the primary standard was higher than the 0.060 to 0.070 ppm range recommended by the Clean Air Scientific Advisory Committee.  This resulted in allegations from environmental groups that the EPA was ignoring science in favor of business groups, while business and industry generally thought the standard was still too stringent.  Subsequently, EPA’s formal announcement in September 2009 regarding reconsideration of the rule to include lower standards led to heavy criticism that its estimate of cost impacts were too low, that the rule would strongly and negatively impact jobs and the economy, and that the agency was ignoring the science in order to push the philosophical agenda of environmental activist groups.

Perhaps the maxim that a good negotiation ends with no side being completely satisfied is applicable here—the Bush-era standard of 0.075 ppm upsets environmentalists and industry alike.  Unless the D.C. Circuit Court of Appeals turns up the timetable, both sides will have to be content (to be upset) until 2013.  In the meantime, perhaps the more interesting aspect of the Administration’s action was the political move that prevents further wrangling by Congressional members—a stream of senators and representatives have been taking jabs at environmental regulatory aims that they argue will harm the economy and job creation.  Throughout the NAAQS revision process, politics have certainly played a role, now to the point that perhaps electoral concerns may be directly influencing EPA’s regulatory agenda.  As other regulatory measures are still in the cross-hairs, including the air toxics standards for industrial boilers (Boiler MACT) and mercury and toxics standards for utilities (Utility MACT), we will undoubtedly continue to see politics play an important role in the implementation of new air standards and regulations.

For further information or questions about this article, please contact the author, Eva Fromm O'Brien.

Recently Japan’s nuclear accident emphasized one important aspect of where to build power plants, and now the State of New York has adopted a new power plant siting law which could be a model for other states.

After not having a law on the books since 2003, New York has adopted a siting law and created a new panel to oversee the development of new power-generating facilities in the State.  The bill, called the Power New York Act, was adopted to rare applause of both environmentalists and business groups.  Efforts to establish a new siting law in New York had stalled over the years, thereby limiting the State’s ability to build new facilities and power sources including wind and solar.

Power New York Act of 2011 is a sweeping energy bill. Section 12 of the new law reauthorizes and modernizes Article X of the Public Service Law, which expired on January 1, 2003, governing the siting and approval of power plants in New York.  The new law hopefully will create a one-stop siting decision-maker.

The law establishes a new seven-person board to oversee the development of power plants in excess of 25 megawatts of energy, which would capture wind farms and even some battery-storage facilities.  The old law limited the board’s oversight to plants with more than 60 megawatts of power, which often left local communities to decide how to handle smaller projects.

The law creates and vests permitting authority with the New York State Board on Electric Generating Siting and the Environment.  The statute provides that two local residents will be part of the board for each proceeding.  The other five members of the board will be state officials.  The law also provides for “intervener funding” which will enable municipalities and other local parties to participate in all phases of the administrative review, including the mandated adjudicatory hearing.

The board is given authority to override local laws and ordinances if they are “unreasonably burdensome.”  Unless otherwise agreed by an applicant or extended due to a “material and substantial amendment to the application” or “extraordinary circumstances,” the board’s decisions must be rendered within a year of the application’s being deemed complete.

Article X overrides the New York State Environmental Quality Review Act which previously covered projects, and instead calls for several environmental analyses of a facility’s impacts.  These analyses include a “cumulative air quality analysis” that evaluates the combined effects from the proposed facility, other proposed sources and all existing sources; describes the demographics of the surrounding community; and sets out “reasonable and available” alternative locations.  It also requires the board to find that the project minimizes or avoids disproportionate impacts on the surrounding community.

The absence of a power plant siting law has been cited as an important reason why there has been scant development of power plants in New York in recent years, including alternative energy sources.  If the new law works in New York, it could become a model for other states.

Three South Arkansas industries and the City of El Dorado, Arkansas decided to remove their discharge from small ephemeral streams and construct a joint pipeline to carry their combined, treated effluent directly to the Ouachita River, a major river that flows through Arkansas into Louisiana.  Louisiana joined with neighbors and two environmental groups to oppose the “Joint Pipeline” NPDES permit.  In a 41-page opinion, the Arkansas Supreme Court rejected the challenges, and in the process provided some important interpretations of the Clean Water Act’s protections for impaired waterbodies and downstream states.

The Louisiana Environmental Action Network (LEAN) argued that a TMDL for mercury impairment in the Ouachita River basin did not allocate a mercury load for the joint pipeline; and therefore a new discharge permit with a mercury effluent limit was prohibited.  LEAN advocated a “0 mg/l” mercury limit based on 40 C.F.R. 122.4(i) which requires a demonstration of sufficient pollutant load allocations in a TMDL before a new discharge may be allowed.  Relying on Friends of Pinto Creek v. EPA, 504 F.3d 1007 (9th Cir. 2007), LEAN argued that load allocations in a TMDL are like tickets to a sold out performance.  Because the Ouachita River Basin TMDL did not provide a “ticket” (i.e. a load allocation) for the Joint Pipeline, LEAN argued that Arkansas could not authorize entry by the Joint Pipeline (i.e. no discharge of mercury could be permitted). 

The Arkansas Supreme Court focused on the first sentence of 40 C.F.R. 122.4(i) and Arkansas v. Oklahoma, 503 U.S.91 (1991) to reject LEAN’s “sold out performance” argument. The first sentence of 40 C.F.R. 122.4(i) prohibits new discharges that “will cause or contribute to the violation of water quality standards.”  Although the NPDES permit included a mercury limit that authorized mercury to be discharged, the permit limited mercury in the effluent to less than the water quality standard.  In other words, the Joint Pipeline effluent would have to be “cleaner” than the already impaired waterbody.   The Court stated that Arkansas v. Oklahoma had rejected the notion that new discharges were categorically banned from impaired waterbodies, and authorized a more flexible approach, especially for permits that authorize “the construction of new plants that would improve existing conditions.”

When a state issues an NPDES permit that requires effluent to meet the water quality standard, the effluent will always be cleaner than the impaired waterbody receiving stream.  Does the Arkansas Supreme Court opinion authorize any new permit into an impaired waterbody, so long as the water quality standard is protected?  That would be a broad reading of this opinion—perhaps too broad. 

In this case, the mercury in the Joint Pipeline effluent is a pass-through pollutant from the Ouachita River – the industrial participants use the mercury-impaired Ouachita River water as make up water, and that same water is returned to the Ouachita River as wastewater.  None of the pipeline participants add mercury through their operations.  EPA has authorized new discharges into impaired waterbodies under these circumstances through the Multi-Sector General Permit (73 Fed. Reg. 56572 at p. 56575 (Sept. 29, 2008)).  Limiting the opinion to a “pass through” of pollutants that originated in the impaired waterbody would be a narrow reading of this opinion—perhaps too narrow. 

 
The opinion clearly stands for the proposition that the existence of a TMDL does not serve as an outright ban on new sources. New sources can get a “ticket” to discharge into an impaired waterbody if the new source does not “cause or contribute to a water quality violation”—even if the TMDL does not specifically accommodate the new source.

On July 7, 2011, one year after the U.S. Environmental Protection Agency issued its proposed Clean Air Pollution Transport Rule, EPA released the final transport rule, now entitled the Cross-State Air Pollution Rule (CSAPR).  The CSAPR will become effective on October 7, 2011, 60 days after its publication in the Federal Register.  That is also the deadline for filing judicial challenges to the new rule.  One Petition for Judicial Review has already been filed in the D.C. Circuit Court of Appeals, and others are expected to be filed prior to October 7.

CSAPR will replace the Clean Air Interstate Rule (CAIR), which EPA promulgated in 2005.  The U.S. Court of Appeals for the D.C. Circuit vacated and remanded CAIR in July 2008.  However, in December 2008, the Court allowed CAIR to remain in place while EPA completed its remand rulemaking. 

CSAPR primarily addresses emissions from electric power plants in twenty-seven states located in the Eastern and Midwestern portions of the U.S.  The new rule generally requires covered, upwind states to reduce sulfur dioxide (SO2) and nitrogen oxide (NOx) emissions in order to enable downwind states to achieve or maintain compliance with the NAAQS for ozone and fine particulate matter (PM2.5).  CSAPR requires reductions of SO2 emissions, annual NOx emissions, and ozone-season NOx emissions.  A state may be subject to the reduction requirement for one or more of these types of emissions.  CSAPR establishes an emission budget and a variability limit for each state that is subject to an emission reduction requirement.  The budgets are established for two phases.  Phase I begins in 2012, and Phase II, under which more stringent state budgets apply, begins in 2014. 

Within the confines of the state budget, emission allowances will be allocated to covered sources.  Covered sources must comply with CSAPR by surrendering an allowance for each ton of SO2 or NOx emitted.  The sources are authorized to trade, bank, and utilize allowances issued under the relevant program.  However, as required by the D.C. Circuit decision, trading is only allowed within states; no interstate trading is permitted.

The states themselves will most likely play only a secondary role in the implementation of CSAPR.  EPA framed CSAPR as a federal implementation plan (FIP) program and set deadlines that generally do not allow enough time for each state to develop its own program to address interstate transport.  By taking these steps, EPA effectively preempted state discretion in determining how to meet at least the first phase of emission reduction obligations.  EPA decided to bypass the states because, in the Agency’s view, the states have arguably not met their Clean Air Act obligations with respect to implementing measures for achieving compliance with the 1997 ozone standard and the PM2.5 standards.  Concurrent with the issuance of CSAPR, EPA published a supplemental notice of proposed rulemaking which, if adopted, would include six additional states in the NOx ozone-season program.

While CSAPR’s structure and approach is generally consistent with the EPA’s preferred option under the 2010 CATR proposal, for many states, the final CSAPR rule is more stringent than the proposed CATR.  For example, the assurance provisions are effective starting in 2012 instead of 2014 as proposed in CATR.  In addition, the allowance surrender requirements under the assurance provisions have increased from one additional allowance per ton of emissions to two additional allowances.  NOx budgets for some states were reduced.

Electric power plants regulated under CAIR will be required to comply with the CAIR 2011 compliance requirements already in effect.  CSAPR will replace CAIR beginning in 2012.  EPA is currently developing federal implementation plans for each state covered by CSAPR to achieve the Phase I requirements in 2012.

Most power plants are expected to achieve the required emission reductions by operating existing air emission control equipment, utilizing low sulfur coal, or increasing electrical generation from cleaner generating units.  Some plants will be required to install new air quality control systems, such as low NOx burners or selective catalytic reduction (SCR) systems, scrubbers or dry sorbent injection capability.  CSAPR could lead to the retirement of some older, less efficient coal-fired units which have not already been upgraded with modern air quality control systems.

For further comments or questions, please contact Michael McCauley.

There is ongoing litigation in an Ohio air pollution control enforcement case, which highlights the real world difficulties that arise from the regulatory requirement to test stack emissions under unrealistic, maximum, worst case conditions that do not correspond to day to day operations.  State ex rel. Ohio Attorney General v. The Shelly Holding Co., et. al., 191 Ohio App. 3d 421, 2010 – Ohio – 6526, 946 N.E. 2d 295.

Shelly owned a number of hot mix asphalt plants.  During stack tests to determine compliance with air pollution permit emission limitations,  several plants failed their tests.  Despite the failed tests, Shelly continued to operate those hot mix asphalt plants. The Ohio Environmental Protection Agency then brought an enforcement action, claiming that the continued operation of the plants after the failed tests constituted continuing violations even though the State had no monitoring data to prove that point.

The Trial Court rejected the State’s contention, stating that it was unwilling to infer a continued violation until Shelly successfully completed a subsequent stack test. “Simply put the Court does not find the requested inference to be reasonable given the fact that the State has the burden .  Further, the Court finds Shelly’s argument that a “stack test” does not represent normal operating conditions to be compelling.  Based on the foregoing, the Court will only consider the day of the “stack test” demonstrating excess emission to be evidence of a violation.” State ex rel. Ohio Attorney General v. The Shelly Holding Co., et. al. (Sept. 2, 2009), Franklin Cty. C. P. No. 07CVH07-9702.

The Court of Appeals of Ohio, Tenth Appellate District (which sits in Columbus, Ohio), reversed the Trial Court, stating that “…in determining the number of days each violation existed, the trial court should have concluded that the violation continued until the subsequent stack test determined that the plant no longer was violating the permit limitations.”  The Ohio Supreme Court has agreed to consider Shelly’s appeal of this ruling.  Shelly also has the amicus curiae support of  a number of trade organizations, including the Ohio Chamber of Commerce.

Arguing that the State has the burden of proof to demonstrate by a preponderance of the evidence each and every day of violation, Shelly seeks a ruling from the Ohio Supreme Court that would prohibit the State from showing, by mere inference, that there are ongoing violations of permits and regulations after a failed stack test.  Citing the record evidence that stack testing conditions are “snapshots” of operating conditions at the time of the test, typically “maximum, worst-case testing conditions,” Shelly claims there was undisputed evidence that those tests do not represent day-to-day operations. The State offered no evidence to show that stack test conditions are indicative of day-to-day operations.   Thus, Shelly argues, the proof of violation during a stack test does not necessarily show that the hot mix asphalt plant exceeded its permit limits during subsequent, more normal operations. Shelly also argued that the Tenth District incorrectly assumed that another stack test is the only way to show the reestablishment of compliance. Changes in operating conditions, restrictions on output or hours, and repairs may prove to be  easier corrections than awaiting another stack test that requires coordination with State schedules.  If a successful stack test is the only way to show compliance, the facility faces the Hobson’s Choice of shut down or, if it continues to operate, the possible inference of continuing violations (and fines).

In short, this case will be interesting to follow because it highlights the real world difficulties that arise from the regulatory requirement to test under unrealistic, maximum, worst case conditions that do not correspond to day to day operations.  While Shelly may be correct that it is improper to assume non-compliance during continuing, business normal operations after a failed stack test that proceeded under artificial conditions, there remains another difficult question for Shelly:  how to re-establish compliance in a mutually satisfactory way.  There is no doubt that the State regulatory authorities would balk at any ruling that would allow a regulated source unilaterally to change or curtail operations to attain compliance.

For questions and comments on this article, please contact Michael Hardy.

Thomas M. Hnasko

A federal district judge in New Mexico has dismissed the Los Alamos Study Group’s (the “Study Group’s”) complaint challenging the United States Department of Energy (“DOE”) and the National Nuclear Security Administration’s (“NNSA”) efforts to construct the new Chemistry and Metallurgy Research Replacement Nuclear Facility (“CMRR-NF”) at Los Alamos, New Mexico.

Despite evidence presented by the Study Group that the project had changed so dramatically since the original NEPA analyses, and that defendants had acknowledged in their draft Supplemental Environmental Impact Statement (“SEIS”) that the originally-approved CMRR-NF project could no longer be built, the federal court nonetheless held that the doctrine of “prudential mootness” supported dismissal of the NEPA challenge because defendants had allegedly changed their policies during the lawsuit and were now conducting a SEIS to rectify any NEPA deficiencies with the project.

The Study Group pointed out at the hearing on defendants’ Motion to Dismiss and the Study Group’s Motion for Preliminary Injunction that the eight-year old EIS did not consider, mention, or remotely authorize the existing project.  The evidence presented by the Study Group also demonstrated that defendants had issued final design contracts for their preferred alternative, that those contracts required the final detailed designs for the project to be “construction-ready,” and that defendants were considering no other alternatives to the massive venture.  Moreover, even the draft SEIS produced by the defendants at the hearing acknowledged that the original project, selected from an EIS prepared in 2003, could no longer be built because of seismic conditions and other geologic constraints, and would be discarded as a “no-action” alternative.

The project as originally conceived called for a pit facility to be built no deeper than 50-75 feet below grade.  Based on the criteria examined in 2003, the 2004 ROD stated that:  “The environmental impacts of the preferred alternative” will be “minimal” and “small.”  Since the 2004 ROD, however, the project has undergone substantial changes.  The original budget for the Nuclear Facility was estimated at $350-$550 million.  The CMRR-NF, as now proposed, has changed from a structure to be built to a depth of 50 feet, to a structure requiring an excavation to 125 feet, with the bottom 50-60 feet of the hole filled with concrete.  The concrete now needed is 375,000 cubic yards, up from 3,194 cubic yards as originally estimated.  This is more concrete than was used for the Big-I Interchange in Albuquerque, or for the Elephant Butte Dam in southern New Mexico.  The steel needed is now 18,539 tons, up from 242 tons.  That is roughly the equivalent of the Eifel Tower.  In short, the present iteration of the Nuclear Facility dwarfs the Manhattan Project and will be the largest construction project in the history of the state of New Mexico.

Despite these fundamental changes, the Department of Justice successfully persuaded the District Court that it remained open to alternatives and was not irrevocably committed to the present iteration of the Nuclear Facility.  According to DOJ attorneys, alternatives were being considered because DOE had not yet decided just how deep the hole should be, i.e., whether it should be 125 feet as reported, or whether it could be reduced to around 80 feet.  The Study Group’s counsel countered that this was not an examination of alternatives, but rather design modifications to a single, pre-determined alternative reached without NEPA support.

 The district court accepted the DOJ’s arguments and reasoned that defendants could continue with their present project so long as additional NEPA compliance was achieved after the fact and no physical construction on the project had yet occurred.  The Study Group has appealed to the Tenth Circuit Court of Appeals, where the primary issue will be whether a federal agency may implement a major federal action and avoid an injunction under NEPA by claiming that additional NEPA analyses, through the vehicle of a SEIS, somehow render the already-chosen project compliant with NEPA’s directive that detailed design or construction activities should not take place until an EIS examines viable alternatives and a  ROD authorizes the federal action.

Any questions or comments should be directed to Thomas M. Hnasko.

On July 29, 2011, EPA denied a 2008 petition by thirteen environmental organizations to develop and promulgate numeric nutrient water quality criteria for any of the 50 states where such criteria do not exist, or at least promulgate such criteria for the Mississippi-Atchafalaya River Basin (MARB) and the Northern Gulf of Mexico (31 states) as well as total maximum daily loads (TMDLs) for nitrogen and phosphorus for the Mississippi River and its tributaries. 

EPA agreed that nitrogen and phosphorus pollution “presents a significant water quality problem facing our nation” which is damaging ecosystems and public health and causing significant adverse economic consequences.  However, EPA stated that its clear preference for addressing nutrient water quality problems is by working with states, other federal agencies (including USDA and USGS), and stakeholders at the regional and community levels, as it has been doing throughout the MARB for a number of years.

 In denying the petition, EPA placed substantial reliance on its March 16, 2011 memorandum entitled Working In Partnership With States To Address Phosphorus and Nitrogen Pollution Through Use of a Framework For State Nutrient Reductions (Framework Memo).

The Framework Memo was issued by Nancy Stoner, EPA’s Acting Assistant Administrator for Water, to EPA’s Regional Administrator, the Directors of all state and tribal water programs, and others. In her transmittal Memorandum she said  “The amount of nitrogen and phosphorus pollution entering our waters has escalated dramatically” over the past fifty years, due in particular to stormwater runoff, municipal wastewater discharges, agricultural livestock activities and row crop runoff. She added, "Nitrogen and phosphorus pollution has the potential to become one of the costliest and the most challenging environmental problems we face."  Stoner urged each region to use the Framework Memo to work closely with the states and “engage all sectors and parties" in a major effort to reduce this pollution, including development of numeric nutrient criteria based on scientific information at the local and watershed levels. 

The Framework Memo calls upon states to identify and prioritize watersheds where nitrogen and phosphorus loadings are significant and to set loading reduction goals based on best available information.  These include establishment of numeric criteria, TMDLs, reasonable timetables for achieving compliance with water quality standards and collaborative efforts to identify and implement best management practices (BMPs) to reduce the loadings.  No doubt to the chagrin of those who make a living by demonizing EPA as a heavy handed bureaucracy, the Framework Memo is quite deferential to the states, recognizing their lead role under the CWA in setting water quality standards and TMDLs. The Memo emphasizes collaboration, prioritized targeting of technical and financial assistance and the setting of “reasonable” milestones based on a consultative process involving all relevant stakeholders. 

If there is a flaw with the Framework Memo it is the absence of guidance to the regions on what to do when states fail to take reasonable measures to curb nutrient pollution.  One is left to guess at this based on a single sentence in the Stoner transmittal memo which states that EPA “will retain all its authorities under the Clean Water Act.”  By that she presumably means that if states consistently fail to set nutrient criteria, develop and implement TMDLs and require reasonable measures towards compliance, EPA may step in and do it for them, but only if all else has failed.

EPA’s  denial of the MARB petition seems reasonable because substantial activities had been accomplished or were in progress at the state and local level.  For example, EPA, USDA and USGS were already leading regional initiatives with state agencies to address nutrient problems in the Mississippi River Basin and the resulting oxygen-starved “dead zone” in the Gulf of Mexico.  The 31 MARB states have listed over 10,000 nutrient-related water quality impairments and developed over 5,000 nutrient-related TMDLs designed to achieve compliance with water quality standards.  Approximately 4,400 of these were developed by the states and 682 by EPA.  EPA cited extensive efforts at the state, local and watershed levels, including CWA Section 319 watershed plans to address nutrient issues.  While EPA noted that it had set federal numerical nutrient criteria for the State of Florida, its general policy has been to encourage states to do this in the first instance.

EPA’s July 29 decision letter and the Framework Memo, taken together, provide useful guidance for practitioners on how EPA plans to approach this complicated set of legal, technical, practical, and political issues in the future.

*  Ridge Hall is Vice Chair of the Chesapeake Legal Alliance and can be reached at ridgehall@gmail.com.

Many practitioners, along with the New Jersey Department of Environmental Protection, assumed, until recently, that the standard of liability under the New Jersey Spill Compensation and Control Act (Spill Act) was more liberal than the comparable standard under the federal analogue, CERCLA.  A recent decision of the Appellate Division of the New Jersey Superior Court, however, appears to have called that assumption into question.  New Jersey Department of Environmental Protection v. Dimant.

The case involved a fairly classic fact pattern in which PCE ground water contamination could have been caused by a number of different dry cleaning establishments.  The relevant provision of the Spill Act provides that “any person who has discharged a hazardous substance, or is in any way responsible for any hazardous substance, shall be strictly liable, jointly and severally, without regard to fault, for all cleanup and removal costs no matter by whom incurred.”  After a bench trial, the lower court ruled that the State “had not proved a nexus between a discharge by [the only remaining] defendant and the contamination” and dismissed the complaint.  The State sought to amend its complaint to assert direct claims against several third-party defendants, but the trial court ruled it was too late. 

 
 On appeal, the State argued that under the language of the Spill Act, “a direct causal connection between the discharge and the damages need not be established.”  In making this argument, the State relied on the language of CERCLA, which the State claimed “requires no direct causal connection between a defendant’s release or threatened release of hazardous substances and the plaintiff’s incurrence or response costs” and the earlier admonition of the State Supreme Court that even parties remotely responsible for causing contamination are liable under the Spill Act.  The Appellate Division found the State’s reliance on CERCLA to be “misplaced,” on the ground that CERCLA case law still requires a connection between a release of a hazardous substance and the incurrence of response costs.  The Court noted that Spill Act case law, up until then, had focused on the connection between the discharger and the offending discharge, and that “[a]lthough none of the Spill Act cases expressly state the necessity for further proving a ‘nexus’ between a discharge and damages resulting from the contaminated discharge, such a requirement is implicit in these holdings.”  The Court found support for that conclusion from the statutory definition of the term “discharge,” which “refers to resultant damage[s].”  The Court then held that “[a]s is plain from that definition, some nexus between the use or discharge of a substance and its contamination of the surrounding area is needed to support a finding of Spill Act liability.”

A subsequent Appellate Division decision followed the reasoning of Dimant. Voellinger v. Electro-Coatings, Inc.; See also, Magic Petroleum Corp. v. ExxonMobil Corp.

These decisions would appear to make it more challenging for the State to obtain liability judgments under the Spill Act, especially in those common cases where tracing the contamination back to its source is problematic.  That challenge is avoided under CERCLA, under which the government need only prove a nexus between the covered person and the facility from which there is a release, and a separate nexus between the release (not the covered person or the covered person’s hazardous substances) and the incurrence of response costs.