Oklahoma v. Texas--Water Wars

Posted on August 24, 2010 by Linda C. Martin

Tarrant Regional Water District (“TRWD”) provides water to more than 1.7 million Texans in an 11-county area, and wants to buy water from Oklahoma. However, Oklahoma isn’t selling. Oklahoma has enacted statutes that impose restrictions on water sales across state lines which, as a practical matter, preclude the interstate sale of Oklahoma water to the TRWD. In 2007, TRWD sued to have those restrictions lifted, arguing that under the Commerce Clause of the US Constitution, state laws that discriminate against other states regarding water, an alleged article of commerce, are unconstitutional.

TRWD also argued that the Red River Compact (“Compact”) supersedes Oklahoma’s laws and would permit the sale of water to TRWD. This Compact was signed by Texas, Oklahoma, Louisiana and Arkansas in 1978 and approved by the U.S. Congress in 1980. The Compact essentially “divided” the water from the Red River and its tributaries between the states involved. In November, the U.S. District Court for the Western District of Oklahoma granted partial summary judgment rejecting TRWD’s claims based upon the Commerce Clause. The Court determined that, in fact, protection of Oklahoma water for use in Oklahoma was one of the purposes of the Compact, although the judge noted that this case presented a close question.

TRWD amended its complaint, and argued that the law in Oklahoma would not preclude the sale of groundwater to TRWD. Although the judge agreed, he determined that this claim was not yet ripe for consideration, as TRWD had not yet filed an application with Oklahoma to obtain groundwater. In addition, another new claim was added--- that the purchase of water from the Apache Tribe of Oklahoma was not covered by the Compact. This claim was dismissed as not providing the basis for a justiciable claim, since the arrangement with the Tribe had too many contingencies and uncertainties.

The judge entered judgment in the TRWD case on July 16, 2010, and TRWD filed its appeal with the Tenth Circuit on August 12, 2010. Stay tuned, the water wars between Oklahoma and Texas are far from over.

Annual Meeting Update - Saturday Optional Evening Outing

Posted on August 23, 2010 by Rachael Bunday
Optional Evening Outing
 
The College has booked a ride on the Sam Houston Boat Tour  from 6-8pm for all members and their guests. Heavy hors d'oeuvres, beer and wine will be served. Please RSVP to Carol Dinkins (cdinkins@velaw.com) if you plan on attending. There will be modest fee for food and drink - more details to follow.
 
See below for more information about the boat tour.
 
 

Get ready for an unforgettably spectacular waterborne tour of one of the busiest ports in the world aboard the Port of Houston Authority's free public tour boat!

Named for the legendary military commander who led the fight for Texas independence from Mexico and later statehood, the M/V Sam Houston offers free leisurely 90-minute round-trip cruises along the Houston Ship Channel.

Embarking from the port's Sam Houston Pavilion, visiting sightseers can enjoy passing views of international cargo vessels, and operations at the port's Turning Basin Terminal. Measuring 95 feet in length and 24 feet in width, the boat carries a maximum capacity of 90 passengers with air-conditioned lounge seating and additional standing room on the boat's rear deck.

The M/V Sam Houston has been operating as the Port Authority's public tour vessel since its inaugural voyage on July. 30, 1958. By 1979, a total of 1 million passengers had taken the tour.

Managing the Legal Risks of Green Buildings

Posted on August 23, 2010 by Joseph Manko

As with “green washing” of products, which are subject to existing product liability law, there is an emerging area of law regarding liability for claims that a building marketed as “green” or alleged to achieve the desired platinum, gold, silver or standard Leadership in Energy and Environmental Design (LEED) certification has failed to do so.

As the LEED requirements and techniques for sustainable development become better understood and more widely adapted, more and more developers are seeking to build “green.” To the extent that the construction costs permit a manageable return on investment (ROI) and the specifications and requirements for such development are clearly spelled out in the various contractual documents, including especially the agreement with architects, we will likely see more and more claims that the resultant buildings are “green.”

Although some theories of liability will track areas in construction law, e.g., deficiencies in design, construction or installation, green buildings claims will face an additional layer of risk. Without such statutory coverage, cf strict product liability, today’s bases for liability may include breach of contract, tort, fraud and false advertising claims.

For example, in the Maryland case of Shaw Development v. Southern Builders, which was settled without an opinion, the loss of a tax credit based upon compliance with a LEED Silver certification level led to a claim of liability.

The best way to mitigate these risks is to ensure that all contractual documents are clear and consistent, project management is assured, information disclosures are accurate, and finally that insurance coverage, where available, is provided. With regard to documents, AIA form contract B214-2007 has been developed to provide some model contractual language; more than forty insurance carriers are now underwriting green building liability; and in many law firms, some of their attorneys and other technical people have become LEED accredited.

This is an area that will continue to develop as more and more green buildings are constructed. For more in-depth information on potential liability and tips to mitigate claims, see the Harvard Law School Environmental Law & Policy Clinic White Paper, “The Green Building Revolution: Addressing and Managing Legal Risks and Liabilities”.

Managing the Legal Risks of Green Buildings

Posted on August 23, 2010 by Joseph Manko

As with “green washing” of products, which are subject to existing product liability law, there is an emerging area of law regarding liability for claims that a building marketed as “green” or alleged to achieve the desired platinum, gold, silver or standard Leadership in Energy and Environmental Design (LEED) certification has failed to do so.

As the LEED requirements and techniques for sustainable development become better understood and more widely adapted, more and more developers are seeking to build “green.” To the extent that the construction costs permit a manageable return on investment (ROI) and the specifications and requirements for such development are clearly spelled out in the various contractual documents, including especially the agreement with architects, we will likely see more and more claims that the resultant buildings are “green.”

Although some theories of liability will track areas in construction law, e.g., deficiencies in design, construction or installation, green buildings claims will face an additional layer of risk. Without such statutory coverage, cf strict product liability, today’s bases for liability may include breach of contract, tort, fraud and false advertising claims.

For example, in the Maryland case of Shaw Development v. Southern Builders, which was settled without an opinion, the loss of a tax credit based upon compliance with a LEED Silver certification level led to a claim of liability.

The best way to mitigate these risks is to ensure that all contractual documents are clear and consistent, project management is assured, information disclosures are accurate, and finally that insurance coverage, where available, is provided. With regard to documents, AIA form contract B214-2007 has been developed to provide some model contractual language; more than forty insurance carriers are now underwriting green building liability; and in many law firms, some of their attorneys and other technical people have become LEED accredited.

This is an area that will continue to develop as more and more green buildings are constructed. For more in-depth information on potential liability and tips to mitigate claims, see the Harvard Law School Environmental Law & Policy Clinic White Paper, “The Green Building Revolution: Addressing and Managing Legal Risks and Liabilities”.

Is United Haulers the Final Word on Local Flow Control?

Posted on August 17, 2010 by Thomas Lavender, Jr.

The most recent Supreme Court examination of the validity of solid waste flow control ordinances under the dormant Commerce Clause occurred in United Haulers Ass’n v. Oneida-Herkimer Solid Waste Management Authority, 550 U.S. 330 (2007). In United Haulers, the Court held that flow control ordinances which favor a state-created solid waste authority, but treat in-state and out-of-state private entities the same, ‘do not “discriminate against interstate commerce” for purposes of the dormant Commerce Clause.’ Id. at 345. In such case, the validity of a nondiscriminatory ordinance with an incidental effect on interstate commerce is analyzed under balancing test set forth in Pike v. Bruce Church, Inc., 397 U.S. 137, 142, 90 S.Ct. 844, 25 L.Ed.2d 174 (1970). Id. at 346.   However, if the flow control ordinance favors a single private entity over other private entities, the holding in C & A Carbone, Inc. v. Clarkstown, 511 U.S. 383 (1994), controls. Id. at 341.   

 

 

United Haulers has been the linchpin for local governments to launch flow control ordinances. However, although the United Haulers decision upheld the validity of a flow control ordinance against a commerce clause challenge, the decision was based on an ordinance that was expressly authorized by the New York legislature and which required the disposal of solid waste at a landfill operated by a solid waste authority created by the New York legislature.   In United Haulers, the New York legislature enacted specific legislation which allowed Oneida and Herkimer Counties to “impose ‘appropriate and reasonable limitations on competition’ by, for instance, adopting ‘local laws requiring that all solid waste . . . be delivered to a specified solid waste management-resource recovery facility.’”   Id. at 335. Additionally, the flow control ordinance in United Haulers directed that all waste in Oneida and Herkimer Counties be disposed of at the Oneida-Herkimer Solid Waste Management Authority (“Oneida-Herkimer Authority”), which was created by the New York legislature and was therefore a political subdivision of the state. Id. at 335. As such, under United Haulers, it is clear that a local flow control ordinance authorized by state legislation and directing solid waste to a public waste authority created by state legislation does not violate the commerce clause if it satisfies the Pike balancing test. It is likewise clear that a flow control ordinance which directs all solid waste generated within the boundaries of a local government to be directed to a privately-owned facility is still controlled by the holding in C & A Carbone, Inc. v. Clarkstown and invalid. 511 U.S. at 391. However, the United Haulers decision does not specifically address the significance of the authorization for the flow control ordinance by the New York legislature. 

 

 

According to a 1995 EPA report to Congress, state legislatures in 35 states have expressly authorized the enactment of flow control ordinances by local governments. For those states in which flow control is not expressly authorized by the state legislature, it is unclear whether a flow control ordinance enacted by a subdivision of the state would withstand a commerce clause challenge. At the very least, the absence of state authorization for flow control measures may affect the analysis of certain elements under the Pike balancing test.  Additionally, in states in which the state legislature has not expressly authorized the enactment of flow control ordinances by local governments, a local flow control ordinance could be preempted by state solid waste laws and therefore invalid even if it does not violate the commerce clause; thus, leaving open the question of whether or not United Haulers has opened the door forever on local flow control.

 

 

At least one frontal challenge to local flow control is pending in S.C. In Sandlands, LLC, et al. vs. Horry County, et al., Case No. 4:09-cv-01363-TLW-TER (currently pending in United States District Court in the District of South Carolina), a landfill and affiliated hauling company are challenging a county’s ability to restrict the exportation of waste to out-of-county landfills on commerce clause and preemption claims. The plaintiffs are attempting to distinguish United Haulers as well as arguing that the ordinance is preempted by State law. The impacts of the ordinance are being felt on disposal facilities in the region as the State has implemented a regional planning approach for siting disposal facilities. While the defendants removed the commerce clause question to federal court, the federal court has certified and the State Supreme Court has accepted the preemption question.

EPA'S CLIMATE EFFORTS TAKE CENTER STAGE

Posted on August 6, 2010 by Deborah jennings

With Congress failing to act on climate change, attention turns to EPA’s efforts to regulate greenhouse gases (GHGs) pursuant to its authority under the Clean Air Act (CAA). On December 7, 2009, the EPA issued its Endangerment Finding for GHGs, concluding under the CAA’s mobile source section that GHGs endanger public health and welfare, and that GHG emissions from motor vehicles contribute to climate change. See 74 Fed. Reg. 66,496 (Dec. 15, 2009). The determination was a direct response to the Supreme Court’s decision in Massachusetts v. EPA, 549 U.S. 497 (2007), holding that because GHGs are considered “air pollutants” under § 202(a) of the CAA, EPA has authority to regulate them if it determines that they endanger public health or welfare.

Although the Endangerment Finding does not itself impose any requirements on regulated entities, it sets in motion a chain of events culminating in the regulation of GHGs emissions from stationary sources under the CAA. First, it is the predicate for EPA’s rule, signed jointly with the Department of Transportation (DOT) on April 1, 2010, to create GHG emission standards and Corporate Average Fuel Economy (CAFE) standards for light duty vehicles (e.g., cars, light-trucks). See 74 Fed. Reg. 49,454 (proposed on Sept. 15, 2009); 75 Fed. Reg. 25324 (finalized on May 7, 2010). This will dramatically improve fuel economy, requiring automobile companies to meet a combined average fleet of 250 grams of CO2 per mile, or 35.5 miles per gallon by 2016. Additionally, on May 21, 2010, President Obama directed the EPA and DOT to create GHG and CAFE standards for medium- and heavy-duty trucks for Model Years 2014-2018, which currently average only 6.1 miles per gallon. He also directed the agencies to extend the national program for cars and light-duty trucks to Model Years 2017-2025.
 

The implications of the initial mobile source rule cannot be overstated. According to EPA, as soon as the rule “takes effect” on January 2, 2011, GHGs will become “subject to regulation” under the CAA and therefore must be regulated from stationary sources as well. Stationary sources producing relatively low threshold quantities of GHGs would become subject to the Title V and Prevention of Significant Deterioration (PSD) permitting programs, and potentially stringent pollution controls associated with the latter. In a related rulemaking, EPA announced that the rule would “take effect” no earlier than January 2, 2011, so that PSD for GHGs would not be triggered until that date. 75 Fed. Reg. 17004 (Apr. 2, 2010).

In anticipation of the automobile GHG standard triggering PSD for stationary sources, EPA recently finalized a “Tailoring Rule” to raise the statutory threshold for regulation under the PSD and Title V programs to insulate smaller GHG sources from being subject to such requirements. See 74 Fed. Reg. 55,292 (Oct. 27, 2009) (proposed rule); 75 Fed. Reg. 31,514 (June 3, 2010) (final rule). Under the CAA, sources emitting 100 or 250 tons per year (tpy) of a “regulated pollutant” are subject to the PSD program, while Title V permitting requirements apply to sources emitting 100 tpy or more. By increasing these thresholds to 75,000 or 100,000 tpy of GHGs under the final rulemaking, EPA hopes to protect smaller entities, such as small farms and businesses, from the prospect of onerous GHG controls. While significantly paring down the number of potentially regulated entities, the final Tailoring Rule would still cover 67% of GHG emissions from stationary sources in the United States.

Under the final rule, EPA will phase in the PSD and Title V permitting requirements in two initial stages. First, between January 2, 2011 and June 30, 2011, only sources currently subject to the PSD permitting program for pollutants other than GHGs would be subject to additional permitting requirements for their GHG emissions under PSD. Thus, where a new or modified source exceeds significant emissions thresholds for a traditional PSD pollutant and also increases GHGs by 75,000 tpy CO2e, it will be required to install Best Available Control Technology (BACT) to reduce GHG emissions. These controls are determined on a case-by-case basis during the PSD permitting process, taking into account, among other things, the cost and effectiveness of the control technology. While BACT has yet to be determined, it is very likely to carry significant teeth for new and modified facilities, and will undoubtedly be less flexible than purchasing carbon credits to offset a facility’s emissions. Similarly, only sources currently subject to the Title V operating permit program would be required to meet applicable GHG requirements. No sources would be subject to CAA permitting requirements based solely on their GHG emissions at this time.

Under Step 2 (July 1, 2011 to June 30, 2013), new construction projects emitting at least 100,000 tpy CO2e of GHGs and modifications of existing facilities increasing GHG emissions by 75,000 tpy CO2e will be subject to PSD permitting requirements, regardless of whether they significantly increase emissions of any other pollutant. Title V operating permit requirements will apply to sources emitting at least 100,000 tpy of GHGs. The rules will require certain sources, such as solid waste landfills and industrial manufacturers, to acquire permits for the first time.

Finally, EPA plans on exploring a third step, which may expand permitting requirements for sources emitting at least 50,000 tpy of GHGs, but will not require permitting for facilities emitting below that threshold. Sources exceeding the 50,000 tpy threshold would not be subject to permitting requirements until at least April 2016.

As part of this flurry of new climate change regulatory activity, EPA also approved a Mandatory Greenhouse Gas Reporting Rule, requiring fossil fuel or industrial GHG suppliers, vehicle and engine manufacturers, and facilities emitting greater than 25,000 tpy GHGs to submit annual reports to EPA reporting their emissions. 74 Fed. Reg. 56,260 (Oct. 30, 2009). The information gathered will be used to create a national GHG registry covering 85-90% of national emissions, while also informing future policy decisions. Facilities must commence monitoring on January 1, 2010 and submit to EPA their first annual reports containing 2010 data by March 31, 2011.

Although most of EPA’s measures are sure to be challenged in court, they represent an extremely critical foundation for greenhouse gas controls in the U.S. EPA action under the Obama Administration has all but ensured that U.S. businesses will operate in a carbon-constrained environment.

Hydraulic Fracturing - To Disclose or Not To Disclose

Posted on August 5, 2010 by Robert Kirsch

The ongoing developments in the Gulf of Mexico, together with last years coal ash and mine safety incidents have contributed to a renewed interest for regulation in Congress. One of the areas under consideration for such further regulation is hydraulic fracturing, a well drilling technique used to develop oil and gas resources.

The technology used in fracturing has been in use for decades in the oil industry. Thousands of wells across the country use the technology. The renewed interest in regulating coincides with the expansion of fracturing into more recently confirmed deposits of natural gas, located in shale deposits thousands of feet beneath the earth’s surface. A hydraulic fracturing well, in those contexts, is first drilled vertically down, and then advanced horizontally into the shale. Then, highly pressurized water, plus very low concentrations of chemicals, added to enhance the effectiveness of the technique and to protect the related equipment, is introduced into the well. The resulting pressure cracks the shale, permitting the well to collect natural gas.

Congress exempted the fracturing process from regulation under the Safe Drinking Water Act (SDWA) in 2005. Since then, fracturing has been regulated by the states where the wells are located. However, the changed regulatory climate, coupled with the fact that shale deposits have been identified in locations like New York and Pennsylvania, which are not traditional “energy states,” has led to questions about whether that exemption should end or be modified. Most recently, efforts have focused on narrowing, not abandoning the exemption. All of this has occurred despite a positive regulatory and enforcement history for the fracturing industry.

There have been two principal avenues for the Congressional proposals related to fracturing. Both would require well developers to identify the chemicals added to the water, and provide them to an oversight body, which would publish the information on the internet. One route would amend the SDWA to allow states to compel disclosure, and would require a federal disclosure mechanism as a default, if a state failed to set one up. The other route, which has been less talked about recently, would accomplish a similar result within the framework of the Emergency Planning and Community Right to Know Act.

Industry is not of one mind on whether and how to advance the disclosure concept. Many important natural gas developers are prepared to work with a tailored federal disclosure requirement, provided the oversight entity is one other than EPA. Other, traditional elements within the industry, oppose any change to the federal exemption. And, both prongs agree that the issue has been well and adequately regulated by states for years, and should remain principally the province of the states.

In the current Washington environment, regulation seems more likely than ever, but it is far from inevitable. Despite aggressive opposition campaigns, an advocacy film and public forums crowded with well-organized fracturing opponents, those clamoring for federal change have yet to substantiate even the most often repeated anecdotes of environmental risk. 

In response to a request from Congress, EPA has launched a study to evaluate the possible influences of fracturing activities on ground water sources used for drinking. Similar, but more limited exercises also are taking place at the state level. The best result, of course, would be to maintain the current level of regulatory oversight until these studies are complete, and then to evaluate the need for change based on those scientific results. Unfortunately, that is not necessarily how our environmental laws have progressed in the past. Perhaps it will be how Congress proceeds this time. Hope springs eternal.