DON'T DIG A WATERY GRAVE: STAY CURRENT ON THE LATEST WATER REGULATIONS AND AVAILABLE FUNDING
originally posted for the Association of Corporate Counsel's Green-House Counsel ©2009
The construction and rehabilitation of our nation’s infrastructure has come to the fore with the advent of both climate change and the transformation of our energy production. As water shortages continue to move eastward from the western states and new water quality standards are promulgated to address previously unregulated pollutants, the handling of water will ultimately require as much, if not more, attention from corporate counsel than the current focus on fossil fuel. To anticipate this potential sea change, counsel should be aware of the evolution of governmental regulation of the use and handling of water, as well as monetary incentives to achieve compliance with the emerging laws.
To provide a brief history, in 1972, the Clean Water Act was amended to regulate direct discharges from industrial facilities and publicly owned treatment works (POTW), and later expanded to cover indirect discharges (e.g., runoff of stormwater) from agriculture and land development. Although the 1972 laws created a discharge permit system (NPDES) and initial funding for POTW construction, it wasn’t until the enactment of the Water Quality Act of 1987 that EPA received annual funding to award to states who set up revolving grant and loan funds to address problems with wastewater, drinking water and stormwater systems within each of their states.
Although the amounts varied with the changes in the executive office and congressional makeup, these funds were normally matched by the states through general obligation and/or revenue bonds and derived from the loan repayments and interest earnings to ensure that the funds would continue to be available to achieve their mission year after year. One such example is the Pennsylvania Infrastructure Investment Authority (PENNVEST), which awards grants and loans for wastewater, drinking water and stormwater projects, including brownfields, acid mine drainage and nutrient trading. Similar programs exist in each of the 50 states.
The enactment of the American Recovery and Reinvestment Act of 2009 (ARRA) provided additional stimulus funds, designed to create jobs, and required that 20 percent of the funds be disbursed for “green infrastructure” projects. EPA received $4 billion of stimulus money, to encourage the full recycling of wastewater and stormwater to reduce energy costs, augment future water supplies and minimize adverse impacts on water quality. Since there are financial federal incentives from both the U.S. Environmental Protection Agency (“EPA”) and the Department of Housing and Urban Development (“HUD”), you should proceed with due diligence to determine if funding opportunities are available for your organization. If an appropriate match is identified, assist in the requisite applications for these funds.
· Water Quality Standards;
· Clean Water Act;
· Publicly Owned Treatment Works;
· POTW;
· Wastewater;
· Drinking water;
· Stormwater;
· American Recovery and Reinvestment Act of 2009;
· ARRA;
· “Green infrastructure”;
· Stimulus money;
· Financial federal incentives; and
· Funding opportunities.
Has the BNSF Case Changed the Superfund Practice?
It has been nearly nine months since the U.S. Supreme Court decided Burlington Northern and Santa Fe Railway Company v. United States (BNSF),[1] a case some called a landmark decision that would change the Superfund practice.[2] In some respects that has turned out to be the case, in others it has not. There have been several reported cases citing BNSF, and all of them confirm that the decision requires both the EPA and potentially responsible parties (“PRPs”) to engage in a more fact-intensive inquiry into “arranger” liability. Less clear, however, is how the apportionment of liability among liable parties in private contribution cases will be affected, given the relatively small number of reported decisions.
Readers will recall that the BNSF decision had two elements: (1) it addressed the scope of arranger liability under CERCLA, and (2) it affirmed the view of several circuit courts that PRPs can avoid joint and several liability if a “reasonable basis” to apportion liability exists. This article reviews how lower court decisions issued subsequent to BNSF have applied those two components.
Continue Reading...South Carolina Supreme Court Allows Enforcement of Unpromulgated Rule
In a unanimous decision, the S.C. Supreme Court upheld the implementation of South Carolina’s Coastal Zone Management Plan (CZMP) and finally decided the question landowners have argued for years – how could the South Carolina Department of Health and Environmental Control (SCDHEC) enforce an unpromulgated rule?[1]
The developer in the Spectre case had sought a land-disturbance permit under the SCDHEC stormwater program. The agency denied the permit contending that the proposed filling of 31.76 acres of isolated freshwater wetlands on a 62.93 acre site was inconsistent with the CZMP. An appeal of the denial was taken to the State Administrative Law Court, which held that the CZMP was not enforceable because it was not a regulation promulgated pursuant to the State’s Administrative Procedures Act (APA).[2]
Following the United State Supreme Court’s decision in SWANCC[3], isolated wetlands in South Carolina have been largely without protection. South Carolina has seen the introduction of several bills aimed to fill the void by expressly authorizing the regulation of impacts to isolated wetlands; however, none are pending in the current session of the General Assembly. Nonetheless, in those areas covered by the CZMP, South Carolina relied upon its authority to determine consistency with the CZMP in connection with the consideration of state permits. Isolated wetlands beyond the reach of the CZMP remain unregulated. However, numerous attacks on the validity of the CZMP have been made, but none reaching the Supreme Court until Spectre.
SCDHEC was charged in 1976 with developing a comprehensive coastal management program that it was to enforce “in accordance with this chapter and any rules and regulations promulgated under this chapter.”[4] The statute provided that statewide hearings and public review of the CZMP would occur and the CZMP would become the “final management plan for the State’s coastal zone” upon review and approval by the Governor and General Assembly.
The Court went to great lengths to distinguish the Spectre decision from its previous holdings relating to the imposition of requirements by means other than properly promulgated regulations.[5] In spite of numerous references to the necessity of SCDHEC to adopt regulations to implement its coastal program[6], the Court concluded that the “General Assembly did not believe it was meant to be an unenforceable document.” Despite the fact that the statute specifically mandated SCDHEC to adopt interim and final rules it would follow in evaluating permits, and expressly provided that such final rules must be promulgated pursuant to the APA[7], the Court concluded that the General Assembly had created a “separate and more rigorous procedure for promulgation of the CZMP.” Moreover, since SCDHEC had developed the CZMP in accordance with those specified procedures, “the plan is valid.”
It remains unclear where the Court will stop in crafting exclusions to the APA, but it now appears that the Court is prepared to conclude that a separate process by which a policy document is developed can be deemed functionally equivalent to the APA and afford an unpromulgated rule the force and effect of law.
[1] Spectre, LLC v. South Carolina Department of Health and Environmental Control, et al., (Opinion No. 26764, February 1, 2010).
[2] S.C. Code Ann. §§ 1-23-10, et seq. (2009).
[3] Solid Waste Agency of Northern Cook County v. U.S. Army Corps of Engineers, 12 S.Ct. 675, 531 U.S. 159, 148 L.Ed.2d 576 (2001).
[4] SC Code Ann. § 48-39-80 (2009).
[5] Captain’s Quarters Motor Inn, Inc. v. South Carolina Coastal Council, 306 S.C. 488, 413 S.E.2d 13 (1992).
[6] S.C. Code Ann. §§ 48-39-50(E), (F), (I), and (R), -70(A), -80(A), and -130(B).
[7] S.C. Code Ann. § 48-39-130(B) also provided that the interim rules and regulations were not subject to the APA.
Regional Climate Programs in Line for Shakeup, Voluntary Markets To Remain
By Deborah Jennings and Andrew Schatz, DLA Piper US LLP[1]
As comprehensive climate legislation stalls in Congress, increased attention is being paid to alternative climate regimes, particularly the prospect of Environmental Protection Agency (EPA) regulation and regional and voluntary climate initiatives. Regional initiatives have faced their share of challenges during their infancy and, to varying degrees, may incur more with the development of a federal cap-and-trade program or EPA regulation of greenhouse gas (GHG) emissions under the Clean Air Act (CAA).
The Regional Greenhouse Gas Initiative (RGGI) and the California Global Warming Solutions Act (AB 32) are the most advanced climate initiatives in the U.S. California’s AB 32 requires measures to reduce California’s GHG emissions by 174 million metric tons of CO2 equivalent, or 29%, by 2020. California recently issued a draft cap and trade regulation covering 600 of the state’s largest industrial and electric generating stationary sources. The RGGI program is more mature with a cap-and-trade program that commenced in 2009. It “stabilizes” CO2 levels during 2009-2014 and reduces emissions 10% by 2019.
In its first year, RGGI has generated several concerns. Unlike other cap-and-trade programs, such as the NOx Budget Trading Program, which distributed allowances to regulated entities, but incentivized them to invest in emission controls, RGGI states decided to sell emissions allowances. Under RGGI, a utility must both purchase allowances and pay for emission controls. The sale of allowances makes RGGI look more like a tax on energy and inevitably will lead to higher energy costs.
RGGI’s offset program is also restrictive, thereby narrowing compliance options. Although the model rule provides for use of offsets for reduction of emissions in certain categories such as landfill methane capture and afforestation, this opportunity is undercut by the requirement to demonstrate economic “additionality.” To be useable, these offsets must have been generated by projects that are not “economically attractive absent the revenue stream provided by an emissions offset.” This subjective test does not recognize the reality that many of these projects are economically marginal and need more than one source of revenue. This economic additionality requirement undercuts the creation of offsets.
Noticeably absent from RGGI is Pennsylvania, one of the largest coal-fueled utility states in the Northeast. Because Pennsylvania and other big coal states are included in larger electricity dispatch regions, CO2 regulation and increased cost on RGGI utilities will result in increased demand for electricity from the unregulated utilities in the same power region. A clear example of this is PJM, which oversees electric supply in the coal states of Ohio, Pennsylvania, Virginia, and West Virginia, as well as the RGGI states of Delaware, Maryland, and New Jersey. Untaxed electricity with high carbon-content from non-RGGI generators will be preferred and sold in larger quantities than more expensive power, thereby undercutting the objective of reducing emissions. This is the “leakage” phenomenon.
RGGI and other state and regional regulatory climate programs may be eliminated under proposed federal climate legislation. The House bill specifically pre-empts state and regional cap-and-trade programs between 2012 and 2017. Pre-emption concerns may already be impacting the RGGI market, where prices for 2012 allowances are barely above the Reserve Price.
In the meantime, EPA is forging ahead with its own GHG regulations. Last Fall, it made a GHG “endangerment” finding and required quantification and reporting of GHG emissions. EPA will soon finalize the regulation of GHGs from light-duty vehicles, setting in motion a statutorily required process to regulate GHGs from major stationary sources that are modified or constructed. Among the class of stationary sources that will be affected are municipal solid waste landfills, which are the source of approximately one fourth of methane emissions in the US. Once regulated by EPA, construction or modification of these sources would require GHG control and would no longer generate “offset” allowances because controls would be now required by law.
Notwithstanding potential federal climate policy, the voluntary carbon markets should continue to flourish based on experience to date. Global voluntary carbon markets nearly doubled in 2008 and are expected to increase. Europeans purchased half of these offsets for noncompliance purposes. This continued interest in voluntary markets is partly motivated by individuals and corporations choosing to reduce their carbon footprint. Our law firm, for example, has purchased carbon credits since 2008 to offset air travel emissions as part of a Sustainability Initiative. As national awareness of climate issues continues to grow, voluntary carbon markets are likely to expand and thrive.
[1] The views presented in this article are the authors’ alone and not DLA Piper US LLP or its clients.
More on a New Ozone NAAQS: EPA's Clean Air Science Advisory Committee Endorses EPA's Proposed Range
EPA has proposed lowering the NAAQS to a range of from 0.060 ppm – 0.070 ppm. Earlier this week, EPA’s Clean Air Science Advisory Committee, or CASAC, met and endorsed EPA’s proposed range. Some CASAC members did express concern about EPA’s proposed secondary seasonal standard, intended to protect crops and forests. However, overall, the CASAC seal of approval is pretty much the end of this argument.
It is important to recall how we got here. CASAC already endorsed the 0.060 ppm – 0.070 range several years ago, before EPA’s last ozone standard was issued. It was EPA’s refusal to follow the CASAC recommendations, and instead propose a 0.075 ppm standard, which led to litigation challenging the standard and the current controversy.
It is difficult to overstate the weight given the CASAC’s views. Indeed, EPA’s fine particulate standard was vacated in significant part because EPA failed to follow CASAC’s recommendations.
Thus, a standard that does not comport with CASAC’s recommendations would likely be rejected by the courts as arbitrary and capricious. However, I suspect that CASAC’s influence also runs the other way. Assuming that EPA does indeed promulgate a revised NAAQS in the 0.060 ppm – 0.070 ppm range, and assuming that industrial interests challenge the new standard, it will be very difficult to establish that the new standard is arbitrary and capricious if it has been endorsed by CASAC.
As I noted in connection with the fine particulate standard, it’s not obvious to me that this is a good thing. Depending on whose ox is being gored, anyone can get up on a soapbox and say that they want science to be free of politics. However, these are really policy decisions. It’s one thing to acknowledge that these are complicated issues and we thus have to allow Congress to delegate its authority to the EPA administrator. It’s another effectively to delegate the decision further to the CASAC, which is about as obscure an acronym body as we have. Do we really want standards which will result in compliance costs in at least the tens of billions of dollars being made by groups which truly are not accountable in any meaningful way?
Practical Impacts of Burlington Northern on Multi-Party Superfund Sites
To many Superfund practitioners, United States v. Burlington Northern & Sante Fe Railway Company, __ U.S. __, 129, S. Ct. 1870 (2009) represents the latest in a series of surprises from the Supreme Court. The decision follows Cooper Industries, Inc. v. Aviall Services, Inc, 543 U.S. 157 (2004), from which we learned that the statutory words “during or following” really mean just what they say and contribution claims under the Comprehensive Response Compensation and Liability Act (also referred to as CERCLA or the Superfund statute) are only available in those limited circumstances. A few years later, in United States v. Atlantic Research Corp., 551 U.S. 128 (2007), we learned that “covered persons” (also referred to as potentially responsible parties or PRPs) under the statute may, in certain procedural circumstances, have cost recovery claims in the event they do not meet the criteria for contribution claims. In Burlington Northern, we learned that “arranger” liability may not be as broad as we had thought it was, and that joint and several liability may not be the automatic we thought it was. It is probably fair to say that the outcome in Burlington Northern, like the outcomes in Aviall and Atlantic Research, was not intuitive to Superfund practitioners.
A Superfund practitioner might have expected the Supreme Court decision in Burlington Northern to look more like the Ninth Circuit opinion it reversed (found at 502 F.3d 781), endorsing a broad reading of “arranger” liability under the statute and applying joint and several liability to all the defendants, the latter being the norm for more than 25 years since the seminal decision in United States v. ChemDyne, 572 F. Supp. 802 (S.D. Ohio 1983).
Continue Reading...BLANKENSHIP-KENNEDY DEBATE CLIMATE CHANGE
On January 21, 2009 thousands packed the auditorium at the University of Charleston in Charleston West Virginia and tuned in on television and radio for the debate between Massey Energy CEO Don Blankenship and environmentalist Robert F. Kennedy, Jr.
Asked about his primary concerns for the future of energy, Mr. Blankenship stated that they were the security of this country and improving the quality of life in this country and throughout the world. This answer became somewhat of a theme for Mr. Blankenship, as he stated his concern for the health and well-being of people, which is dependent on their quality of life, which is heavily dependant on affordable electricity, which is heavily dependent on coal.
When asked the same question, Mr. Kennedy offered several minutes of comments similar to other speeches he has given around the country concerning Appalachia and coal in which he highlighted his families’ ties to West Virginia along with his views against surface mining.
The audience, having a near equal number of supporters from both sides, was relatively subdued thanks to early pleas from University of Charleston President and event moderator Dr. Welch to hold-off applause until the end. At times, however, both debaters received loud applause for their answers to questions.
Throughout the debate, Mr. Kennedy stated the many health and environmental issues he believed to be caused by coal, while Mr. Blankenship reminded Mr. Kennedy that many of his biggest issues with coal, such as the burning of coal and its contribution to Mercury in water, are primarily caused by other countries with much a higher usage of coal, such as China and India.
Mr. Kennedy also focused a great deal on alternative energy, such as wind and solar energy, as well as West Virginia’s need to switch its focus on these alternative energy sources. Mr. Blankenship responded that if it was profitable to build solar panel fields or wind farms, without government subsidies, it would be happening at a greater rate than is occurring. Blankenship stated that his company is pouring hundreds of millions of dollars into the coal industry because that is where the investment will pay off in a free enterprise market.
While the security at the event mirrored that of international flight travel, the debate itself was a success, going off without much disturbance other than the occasional burst of applause.
SCOTT BROWN'S ELECTION - ONE MORE SET-BACK FOR CLIMATE CHANGE LEGISLATION?
When Scott Brown was elected to fill Senator Kennedy’s senate seat, news reports highlighted the impact on health care legislation and the loss of the filibuster-proof sixty vote Democratic majority in the Senate. In environmental circles, however, many commentators pointed out the potential impact on climate change legislation.
Prior to his election, most believed that once Congress passed the health care bill, it would turn its full attention to climate change legislation and pass some form of legislation to limit green house gas (“GHG”) emissions. The loss of this key Democratic Senate seat makes the prospect of GHG legislation in the near future seem less likely, although some commentators take the contrarian view. They argue that if health care reform moves to the back burner, the chances of passing a climate bill would increase because Democrats need a major legislative victory to bolster the 2010 election efforts.
Continue Reading...WATER MORE VALUABLE THAN OIL NOW? FOR SURE SOMEDAY!
According to Bloomberg News, the worldwide scarcity of usable water worldwide already has made water more valuable than oil. The Bloomberg World Water Index, which tracks 11 utilities, has returned more to investors every year since 2003 than oil and gas stocks or the Standard & Poor’s 500 Index.
When you want to spot emerging trends, follow the money. Today, many of the world’s leading companies and investors are making big bets on water. Why -- there simply is not enough freshwater to go around, and the situation is expected to get worse before it gets better.
The most essential commodity in the world today is not oil, not natural gas, not even some type of renewable energy. It’s water -- clean, safe, fresh water.
Continue Reading...Zubulake Revisited: Judge Scheindlin on Discovery Sanctions
Every environmental litigator understands the duty to preserve documents. Before a complaint is filed, a plaintiff must preserve documents relevant to the claims about to be advanced. If a defendant reasonably anticipates litigation, the defendant must undertake reasonable efforts to preserve documents that are relevant to the impending lawsuit. Once a complaint is served, a defendant must preserve documents relevant to the claims alleged.
In the electronic world, especially on a prelitigation basis, it is doubly important to identify custodians with relevant documents (“key players”) since with a keystroke, they have the ability to delete responsive electronically stored information. Aluminum Corp. v. Alcoa, Inc., 2006 U.S. Dist. LEXIS 66642 (M.D. La. July 19, 2006) illustrates the risk. Alcoa sent a cost-recovery demand to Consolidated Aluminum in 2002 and promptly put a litigation hold on the electronic documents of four Alcoa employees involved with a remedial investigation and cleanup. In 2003, Consolidated filed a declaratory judgment action seeking to be absolved of liability. In 2005, Consolidated propounded discovery that prompted Alcoa to expand its key player list by eleven more names. It was not until this expansion that Alcoa suspended its janitorial email deletion policy and backup tape maintenance policy which at Alcoa meant that email older than about seven months was no longer available unless it had been archived by the individual user. The magistrate judge imposed a monetary sanction on Alcoa—in effect determining that Alcoa should have identified these additional individuals as key players in 2002. 2006 U.S. Dist. LEXIS 66642, *36.
Continue Reading...