A Swing of the Pendulum?

Posted on March 30, 2012 by John A. McKinney Jr

It’s long been posited that as courts become more familiar with environmental remediation cases, they will be less likely to defer to a regulator’s overstated claims of environmental harm or assertions of environmental liability.  Instead, courts will require proof rather than conclusory evidence masquerading as a fact.  A recent case in New Jersey, where the state law akin to CERCLA is the Spill Compensation and Control Act (“Spill Act”), may be the harbinger of similar decisions elsewhere.

In New Jersey Department of Environmental Protection v. Dimant, 418 N.J.Super. 530, 14 A.3d 780 (App.Div. 2011), the intermediate appellate court reviewed a trial court decision on liability for remediation of a 365 acre site contaminated predominantly with perchloroethylene (PCE), a cleaning solvent and degreaser.  The site included residences, dry cleaners, and a former gas station site, with two federal Superfund sites nearby.  The NJDEP had observed a pipe dripping PCE years earlier at a defendant’s property, and it contended that the defendant was strictly liable for the cost of remediating the 365 acres even if the hazardous substance discharge was de minimis.  Instead, the trial court ruled that it is not enough to show a discharge, and that damages from the discharge must also be shown.  In other words, there must be a “nexus” between the contamination being remedied and the actual discharge.  The appellate court agreed, opining that a plaintiff seeking to prevail must “demonstrate that the defendant had some connection to the damages caused by the PCE contamination, or had added to any contamination already caused by past operation.”

Both this decision and that below are examples of a court going back to basics.  Causation cannot be presumed.  Discharges must be tied to damages.  The failure to prove a nexus to the damages sought will not be ignored in a rush to judgment or under the guise of facilitating cleanups.  Prove the case or watch out!  But the New Jersey Supreme Court has granted certification on the strict liability issue, and so we will soon see how far that pendulum has swung.

Shallow Victory In Sackett Highlights Morass Caused by Murky Jurisdictional Waters

Posted on March 29, 2012 by Zach C. Miller

As Ted Garrett reported in his recent blog, the Supreme Court has issued its long-awaited decision in Sackett v. EPA.  Not surprisingly (based on the questions asked at oral argument), the Court unanimously reversed the Ninth Circuit and ruled that the recipient of an administrative compliance order to restore wetlands under Section 404 of the federal Clean Water Act (CWA) can challenge that order in court under the APA.  The Court soundly rejected the Government’s argument and the Ninth Circuit’s conclusion that the CWA implicitly precludes “pre enforcement” judicial review of such orders. 

In addition to that important ruling, this decision is noteworthy for what it did not do.  Even more pointedly, the decision highlights the enormous underlying problem of uncertainty about the scope of waters regulated by the CWA, which remains untouched and unfixed by this opinion. 

One of the important issues not addressed by the Sackett decision is the constitutional due process argument made by the plaintiffs that precluding judicial review of such orders is unfair and unlawful.  The decision simply says that the CWA itself does not preclude judicial review, so the right to review of this final agency action is presumed under the APA.  As a result, it left for another day whether other statutes (like CERCLA § 113(h)) that expressly preclude pre-enforcement judicial review would pass constitutional muster. 

Second, it did not expressly address whether a party can judicially challenge any aspect of an administrative order, or can only make the basic “jurisdictional challenge” regarding whether the agency in fact has regulatory authority over the subject property or persons.  Justice Ginsburg, in her concurring opinion, states that the decision only addresses the jurisdictional issue and leaves the question of whether other types of challenges can be brought “open for another day and case.”  It remains to be seen whether EPA and the lower courts will adopt this narrow reading of the decision. 

Third, the opinion emphasizes the clear finality of the administrative order at issue in the Sackett case as a basis for APA judicial review.  It remains to be seen whether an agency order or ruling subject to some additional agency appeal, review or deliberative process, no matter how futile or fore-ordained, would be considered a “final agency action”.  It also remains to be seen whether EPA and other agencies will attempt to address and undercut this “finality” factor by creating post-order administrative processes that delay or frustrate judicial review.
Finally, while some will trumpet this as a great victory for the regulated community, Justice Alito’s concurring opinion got it right in saying that this “decision provides a modest measure of relief”, but the huge underlying problem reflected by this dispute is the “hopelessly indeterminate” scope of “waters of the United States” regulated under the CWA, which this decision does nothing to alleviate or address.  As a result, while a tiny fraction of regulated persons may now choose to challenge an administrative compliance order in court, the very significant cost of doing so, and the low chance of success combined with the draconian and mounting penalties resulting from a failed challenge, will still leave nearly all regulated persons (in Justice Alito’s words) “with little practical alternative but to dance to the EPA’s tune.” 

The bottom-line is that allowing regulated persons to sue in these circumstances (again in Justice Alito’s words) is “better than nothing,” but the underlying regulatory morass will not be fixed unless and until Congress or EPA and the Corps develop a clear, appropriate and formal delineation of waters regulated by the CWA.  The informal “Jurisdictional Guidance” floated last year by EPA and reportedly now parked at the White House, if adopted, would worsen rather than resolve this uncertainty.  After 40 years, it’s time to fix this mess and pass a clear law or rule on the reach of the Clean Water Act.  


Posted on March 28, 2012 by Paul Phillips

On February 22, 2012, the United States Supreme Court issued a rare 9-0 opinion addressing issues of interest to environmental lawyers and historians alike.  PPL Montana, LLC v. Montana, 565 U.S., 132 S.Ct. 1215 (2012).  The Court's decision needs to be reviewed and properly understood by practitioners and parties dealing with a myriad of activities that take place along and under rivers, including environmental remediation and determination of ownership of river beds and banks within any environmental site through which a river flows.

The Court dealt with a dispute between the Petitioner (owner of hydroelectric facilities on three rivers in Montana) and the State of Montana regarding who owns the riverbeds.  Under the Constitution-based “Equal Footing Doctrine,” first adopted by the Supreme Court in 1842, the answer to that question depends upon whether the rivers were navigable at the time of statehood. 

The high court reversed the decision by the Montana Supreme Court holding that Montana owned the riverbeds in question, based upon the Montana Court’s “infirm legal understanding of [the Supreme] Court’s rules of navigability law for title under the equal footing doctrine.” 

The Court reinstated bedrock principles of title and navigability law that it last ruled on in 1931.  The Court reaffirmed that, while states do receive title at the time of statehood to the beds and banks of rivers that were "really navigable," the states may not amend the pertinent federal navigability rules in their favor, post-statehood, because "it is not for a State by courts or legislature, in dealing with the general subject of beds or streams, to adopt a retroactive rule for determining navigability which would enlarge what actually passed to the State, at the time of her admission."  The Court also confirmed that, if a river was not navigable at statehood, then title to the river's beds and banks stayed in the United States "to be transferred or licensed if and as it chooses;" for example, by land patents or grants, leaving private riparian landholders on either side of a river owning the beds "to the center of the stream."

Some other important highlights from the unanimous opinion, authored by Justice Kennedy:

           1.    The Court explained that, other than for title, the concept of “navigability” is used in different contexts, including for purposes of assessing federal regulatory authority under the Commerce Clause and to determine admiralty jurisdiction, but emphasized that “the test for navigability is not applied in the same way in these distinct types of cases." 
           2.    The Court reiterated that rivers are deemed navigable in fact when they are "used, or are susceptible of being used, in their ordinary condition, as highways for commerce, over which trade and travel are or may be conducted in the customary modes of trade and travel on water."  Importantly, however, in title disputes, the existence or absence of such commercial "navigation is determined at the time of statehood;" is "based on the natural and ordinary condition of the water;" and cannot be based on improvements made to that natural condition.
           3.    The Court rejected Montana's reliance on present-day recreational use of the rivers, including anglers in drift boats, as evidence that the rivers had been susceptible of commercial navigation at the time of Montana's statehood in 1889.  The Court held that an assessment for title navigability at statehood "concerns the river's usefulness for trade and travel, rather than for other purposes," and explained that while "a river need not be susceptible of navigation at every point during the year, neither can that susceptibility be so brief that it is not a commercial reality:"  “At a minimum, a party seeking to use present-day evidence for title purposes must show: (1) the watercraft are meaningfully similar to those in customary use for trade and travel at the time of statehood; and (2) the river's post-statehood condition is not materially different from its physical condition at statehood."

A Belated Thank You to Hunton & WIlliams from Sierra Club for PSD?

Posted on March 27, 2012 by Richard Lazarus

I attended on February 28th and 29th the oral arguments in the D.C. Circuit for what are euphemistically referred to as the “Greenhouse Gas Cases” now pending before that court. Two days of arguments, with 17 different attorneys presenting oral argument.  Perhaps not surprisingly, the judges weren’t the only ones who lost track of which issues were being addressed by different advocates.  The advocates themselves seemed to forget at times and repeatedly walked over each other’s lines.  It reminded me why the Supreme Court is so reluctant to allow for divided argument even in circumstances when the case for divided argument is otherwise quite compelling.

I will leave it to others to dwell on what the D.C. Circuit is likely to do, and instead will don my academic garb for an ironic aside on the history of the CAA’s PSD program. In watching the oral arguments, I was reminded about the extraordinary role that Hunton & Williams has played since the emergence of modern environmental law serving as environmental counsel for the powerplant industry including in this latest round.  One would be hard-pressed to identify any other law firm that has been such a constant and consistent voice on behalf of industry during the past four-plus decades of environmental litigation, especially on air pollution matters.

With the benefit of hindsight, however, those industrial clients might have fared a bit better had Hunton & Williams made one discrete exception to the consistency of its record.  The PSD program today finds its origins in the Supreme Court’s 1973 affirmance by an equally divided Court in Fri v. Sierra Club of a district court ruling that embraced the Sierra Club’s claim that the Clean Air Act, as drafted in 1970, required EPA to prevent “significant deterioration” of areas of the nation that were at the time cleaner than national ambient air quality standards.   The papers of Justice Harry Blackmun, which can be found in the Library of Congress, reveal, however, that Sierra Club achieved that affirmance after Hunton & Williams filed an amicus brief in the case in support of Edison Electric’s contention that the Clean Air Act did not require such a program. That filing apparently prompted Justice Lewis Powell – a former Hunton & Williams partner – to recuse himself from the case (after sitting at oral argument), resulting in the 4/4 split.  There is little doubt, based on his other pro-business votes in environmental pollution cases how Justice Powell would have voted had he not recused himself. The most certain upshot would have been an EPA victory and therefore the Agency never would have had to promulgate PSD regulations in compliance with the High Court’s ruling. And the absence of those initial PSD regulations would have dramatically shifted the political dynamic when Congress was amending the statute in 1977.

What I have always found especially odd about the firm’s amicus filing in the PSD case is that this was not the first time Justice Powell had recused himself in light of Hunton & William’s participation in a case before the Court, including on behalf of the powerplant industry as amicus curiae.  The Justice had done so consistently since joining the Court, which makes one wonder what the firm was thinking when it filed the amicus brief in Fri v. Sierra Club.  Interestingly, Justice Powell ended that recusal practice soon afterwards.  Perhaps the Justice received a very unhappy communication from either Henry Nickel or his close friend at the firm, George Freeman, regarding the necessity of a recusal in those circumstances?  Of course, I have no knowledge whether such a communication ever in fact occurred, but it does not take a lot of imagination to speculate that some folks at Hunton were likely exceedingly unhappy about the Justice’s recusal in light of the Court’s 4/4 affirmance. 

In all events, and regardless of the outcome of the recent greenhouse gas cases before the D.C. Circuit, the Sierra Club’s thank-you note to Hunton & Williams would seem long overdue. 

No Title V Permit "Shield" Protection in the Future in Wisconsin

Posted on March 26, 2012 by Michael McCauley

On December 12, 2011, the Wisconsin Department of Natural Resources (WDNR) issued a policy statement on including Permit "Shield" Statements in Title V air operating permits for sources located in Wisconsin.  A copy of the new policy can be found here.  WDNR's previous policy was to include a statement in Title V permits, indicating that the permittee's compliance with all emission limitations and conditions in the permit constituted compliance with all applicable requirements for the source under the federal Clean Air Act and Wisconsin Law.

In the December 12 policy statement, WDNR decided that in the future, the agency would not include permit shield protection in new Title V air permits, unless (among other things), the permit applicant conducts (and submits to WDNR) a comprehensive written explanation of "every change over the entire life" of each emissions unit at the facility to ensure that none of the changes made to the unit or maintenance activities on the unit constituted a "modification" within the meaning of federal and Wisconsin New Source Review rules.  See Items 5 and 6 on page one of the Executive Summary in WDNR's policy document.

Of course, this means that few, if any, companies with facilities in Wisconsin will be requesting permit shield language in the future for their Title V air operating permit renewals.  The new WDNR policy will effectively mean that the permittee would have to put itself through what would amount to a "voluntary" Section 114 Information Inquiry on all physical changes and changes in operation for every emissions unit in the permitted facility -- going back to the original installation/construction of the equipment.  I don't know of many companies in this current economy that would have the time or resources (or the inclination) to do this.

And for what benefit?  Such a due diligence report, if it was ever actually filed with WDNR, would only invite second-guessing and additional questions on certain projects -- further delaying what has already become an interminably long process.  The environmental groups in Wisconsin would scrutinize such reports if they were ever filed with WDNR.  And in the end, you have to ask yourself, "How many Title V permit shields have ever stopped a federal NSR enforcement case from being filed and prosecuted in the first place?"

There is likely to be some "push back" on this new policy by various industry groups here in Wisconsin.  The hope is that officials in the Governor's Office and higher level WDNR officials will exercise some judgment and restraint in this matter.  We'll see how that plays out in the next several months.


Posted on March 23, 2012 by Rick Glick

In a 50 page opinion issued February 28, Federal Magistrate Judge Acosta handed EPA and the Oregon Department of Environmental Quality (DEQ) a partial victory in Northwest Environmental Advocates v. EPA et al.  The decision upheld EPA’s approval under the federal Clean Water Act of the Oregon DEQ’s numeric temperature water quality standards, while rejecting certain narrative standards.  NWEA also challenged the biological opinions issued by the National Marine Fisheries Service and U. S. Fish and Wildlife Service under the Endangered Species Act.  The Services concluded that the Oregon temperature and intergravel dissolved oxygen standards would not jeopardize listed salmonid species, and those agencies did not fare as well in the case.

Oregon’s temperature standards were adopted in 1996 and promptly attacked.  In 2003 EPA Region 10 adopted its own Temperature Guidance, and Oregon’s temperature standards were reformulated.  NWEA again found the revised standards wanting and brought the case at issue.  The judge upheld DEQ’s numeric temperature standards, despite evidence that the standards were less than optimal for fish, deferring to the scientific expertise of the government. 

The judge found fault, however, with narrative standards that deal with “nonpoint sources” of heat.  A point source is a discrete, end-of-pipe discharge to a waterway, whereas nonpoint sources are diffuse, such as runoff from a field.  The Clean Water Act regulates point sources through a permit program, while nonpoint source control is mostly aspirational, although it does direct states to develop best management practices and measures for controlling nonpoint source pollution.  Under the Oregon narrative standards, a nonpoint source that adopts “best management practices” is deemed to be in compliance. 

The court found that this formulation undermines DEQ’s numeric standards as it provides a substitute for actual compliance.  The same reasoning was applied to the so-called Natural Conditions Criteria, which provide that compliance is excused if natural conditions exceed standards.  The court found that such an exemption supplants otherwise lawful standards.
The court’s objections to the narrative standards notwithstanding, neither the Clean Water Act nor state law authorize direct regulation of nonpoint sources.  The narrative standards were Oregon’s attempt to address pollution from nonpoint sources without adopting a new regulatory program.  It seems the court reacted to the blanket exemptions provided in the rules, and it further seems that Oregon can revise them and pass muster.  The deference shown the agencies on the science suggests that the court will allow some leeway on language used to deal with nonpoint sources and the effects of natural conditions.

No such deference was granted to the federal fisheries services.  On remand they will have to prepare a new biological opinion that accounts for Evolutionary Significant Units (i.e. sub-groups of salmonids), potential for recovery, baseline conditions and cumulative effects.  Further, the Fish and Wildlife Service was chastised for considering factors other than the best scientific data available in formulating its opinion.  That is, FWS seemingly bowed to pressure to support the EPA Temperature Guidance, even though it believed that temperatures for bull trout provided for in the Guidance were not what FWS considered to be optimal. 

The net result of the many years of litigation over Oregon’s temperature standards is that Oregon’s approach, and EPA’s approval under the Clean Water Act, were largely validated.  Problems with narrative standards should be correctable.  Whether on reanalysis the Services find that the standards are protective of listed species, as required under the Endangered Species Act, remains to be seen.

Sackett v. EPA: Parties May Sue To Challenge Clean Water Act Compliance Orders

Posted on March 22, 2012 by Theodore Garrett

The Supreme Court issued its long awaited decision in Sackett v. EPA. In a unanimous decision, the Court held that the Sacketts may bring a civil action under the Administrative Procedure Act to challenge EPA’s compliance order. The court rejected the government’s argument that EPA is less likely to use orders if they are subject to judicial review, saying that “[t]he APA’s presumption of judicial review is a repudiation of the principle that efficiency of regulation conquers all.” 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. See link to the Sackett opinion.

EPA had issued a compliance order charging the Sacketts with filling in a wetland during construction of their home, in violation of the Clean Water Act, and requiring them to restore their property. The Sacketts argued that they were entitled to prompt judicial review because they faced severe penalties for noncompliance and disputed that their property is a wetland. The United States argued that the Sacketts could comply with the EPA order and  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, as previously reported.  The Court’s unanimous opinion, reversing the Ninth Circuit, bears that out.

The court’s opinion, written by Justice Scalia, starts with the proposition that the APA provides for judicial review of  “final agency action for which there is no other adequate remedy in a court.” 5 U.S.C. §704. The court concludes that EPA’s compliance order has all the hallmarks of APA finality: it required the Sacketts to restore their property according to an agency-approved plan, exposed the Sacketts to double penalties in future enforcement proceedings, and severely limits their ability to obtain a Section 404 permit from the Army Corps of Engineers. See 33 U. S. C. §1344; 33 CFR§326.3(e)(1)(iv). Rejecting the government’s argument, the court held that applying to the Corps of Engineers for a permit and then filing suit under the APA if that permit is denied does not provide an adequate remedy.

The Court also had little difficulty in disposing of the government’s argument that the Clean Water Act should be read as precluding judicial review under the APA, 5 U. S. C. §701(a)(1). The APA creates a presumption favoring judicial review of administrative action, and the Court concluded that nothing in the Clean Water Act’s statutory scheme precludes APA review.  The court was similarly not persuaded that the issuance of a compliance order is simply a step in the deliberative process, given that EPA rejected the Sackett’s attempt to obtain a hearing, and the next step will involve judicial and not administrative deliberation.  Justice Scalia’s opinion concludes that “there is no reason to think the Clean Water Act was uniquely designed to enable the strong-arming of  regulated parties into ‘voluntary compliance’ without the opportunity for judicial review -- even judicial review of the question whether the regulated party is within the EPA’s jurisdiction.” 

Justice Alito’s concurring opinion is of interest because of its emphasis on the fact that the “reach of the Clean Water Act is notoriously unclear.” Citing an amicus brief filed by the Competitive Enterprise Institute, Justice Alito cites EPA’s guidance advising property owners that jurisdictional determinations concerning wetlands will be made on a case-by-case basis.  His opinion concludes that allowing property owners to sue under the APA is “better than nothing,” but only clarification of the reach of the Clean Water Act can rectify the underlying problem. 

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 Sackett decision will be relied upon by parties who are subject to orders under other statutes that EPA administers.  For some of the reasons cited by Justice Alito, the Sackett decision also underscores the need for clarification of the reach of the Clean Water Act.  Stay tuned. 


Posted on March 20, 2012 by Linda Martin

Chapter 4: High Stakes Litigation

My fall 2011 blog  discussed 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, filed in Federal Court in Oklahoma City (“Federal Court case”) on August 18, 2011.  In the Federal Court case, the Chickasaw and Choctaw Nations seek declaratory and injunctive relief to protect their federal rights, their present and future water rights, regulatory authority over water resources and immunity from state law and jurisdiction over certain waters located in Southeastern Oklahoma.  Certain aspects of this suit were also covered in Mark Walker’s December 2011 blog  on the 1830 Treaty of Dancing Rabbit Creek.  As a result of recent developments, claims in the Federal Court case and outside that litigation have evolved and escalated, and the stakes are now much higher. 

In June, 2010, the Oklahoma Water Resources Board (“OWRB”) entered into an agreement with the Oklahoma City Water Utility Trust (“Trust”) 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 water from the reservoir.  The tribes claim that a fundamental element of that agreement is the OWRB’s issuance of a water use permit granting the Trust annual water withdrawal rights 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 them under various treaties with the United States that granted them exclusive dominion and control over the water resources on their tribal lands in Oklahoma.

In a most important tactical move, the State of Oklahoma, through the OWRB, filed a Petition for a General Stream Adjudication in the Oklahoma Supreme Court on February 10, 2012, asking that court to assume original jurisdiction and determine the relative rights of all parties laying claim to waters which are the subject of the Federal Court case, pursuant to the federal McCarran Amendment, 43 U.S.C. § 666.  Under the McCarran Amendment, such proceedings may be brought in either federal or state court, with the United States waiving its sovereign immunity if all interested parties are joined so that all rights can be determined in one proceeding.  In a move surprising to many, the Oklahoma Supreme Court on February 23, 2012 unanimously agreed to accept original jurisdiction of the case and set a briefing schedule. 

Not to be outdone, the Chickasaw and Choctaw Nations filed a Motion for Partial Summary Judgment in the Federal Court case on February 14, 2012, essentially asking the federal court to enjoin the Oklahoma Supreme Court from making a determination of the relative rights of the parties to the water.  In this motion the tribes “clarified” that their case is not one that seeks adjudication of water rights, nor do they seek to determine the full extent of their regulatory authority over the water.  The Nations contend that federal law does not allow the defendants to “drain the Treaty Territory waters in whatever quantity and for whatever purposes….without regard to the Nations’ rights…”  Motion for Partial Summary Judgment Brief, p. 15.  As a result of this filing, the Nations’ position is much less clear than before when they were seeking exclusive dominion and control over the same water. 

The Defendants have filed motions to stay briefing on the Tribes’ Motion for Partial Summary Judgment.  Their arguments include assertions that the federal court lacks jurisdiction over the subject matter of the action; the case is barred because it violates the state’s Eleventh amendment immunity in the relief sought against the OWRB defendants; and there is a failure to join indispensable parties (the U.S. and the OWRB).  Interestingly, the Defendants also ask the federal court to abstain from addressing the merits of the Federal Court case in deference to the General Stream Adjudication suit where the Oklahoma Supreme Court has assumed original jurisdiction pursuant to Colorado River Water Conservation Dist. v. United States, 424 U.S. 800 (1976). 

And it gets worse.  On February 20, 2012 the Association for the Protection of Oklahoma Water (“APOW”) filed suit claiming irregularities in the OWRB’s authorization process for requesting a General Stream Adjudication.  The suit alleges that the OWRB went into executive session to discuss the Federal Court case filed by the Chickasaw and Choctaw Nations and came out of the meeting with a motion authorizing the stream adjudication, in violation of the Oklahoma Open Meeting and Open Records Acts.  If the General Stream Adjudication request was filed as the result of improper authorization, presumably that proceeding could be dismissed.  However, assuming the Oklahoma Supreme Court agreed with APOW’s contention, it might decide to stay the proceedings until the OWRB authorized another General Stream Adjudication request in accordance with state law.   The original General Stream Adjudication case could then proceed or, if necessary, a new original action could be filed. 

This is high stakes litigation between powerful sovereigns pitting the decision making role of the federal courts against that of a state supreme court.  The jurisdictional dispute involving the state’s desire to avoid piecemeal litigation and seek a comprehensive determination of the rights of all parties in one action in state court as envisioned by the McCarran Amendment, versus the Nations’ interest in having their treaty rights determined in federal court, will be fascinating to watch.  The substantive supremacy issues go to the heart of how dispute resolution occurs within a federal system, and the ultimate winner of this struggle will realize significant revenue for many years to come. 

There is always the possibility that a negotiated settlement could let the courts off the hook.  With the stakes being so high, both sides are already flinching, as evidenced by the lack of clarity in the filings made by both sides in the Federal Court case.  However, sooner or later each party will have to tell the court exactly what it is asking the court to do, unless the parties settle.  Those looking to see whether a settlement is possible may well be interested in the outcome of an upcoming hearing in the General Stream Adjudication case.  According to an Oklahoma City newspaper, such a hearing is planned in April before a Supreme Court referee. 

Again, the words “stay tuned” are particularly appropriate.  

After this blog was written but before posting, the U.S. Justice Department on March 12, 2012 removed the General Stream Adjudication case from the Oklahoma Supreme Court to the US District Court in Oklahoma City, but it landed in a different federal court than the one where the Chickasaw case is pending.  The Judge asked for briefs by March 27 on whether the cases should be consolidated, and the City of Oklahoma City filed a Motion to Remand the streamwide adjudication on March 19, 2012.  Hold on, these cases are moving at the speed of light.

Infrastructure – To Repair or Ignore?

Posted on March 16, 2012 by Joseph Manko

With significant funding in 2010 under the American Reinvestment and Recovery Act (“ARRA”), a major financial stimulus was afforded the water and wastewater industry to “go green.”  Although many large urban areas decided to address their combined sewer overflow (“CSO”) problems by replacing their existing sewage systems with separate systems, many others opted to construct “green infrastructure” to detain and/or retain the surcharge from rainstorms that could overwhelm operation of wastewater treatment plants and result in the discharge of sewage and other pollutants from CSOs.  In Pennsylvania, a $30 million loan was extended to the City of Philadelphia by the Pennsylvania Infrastructure Investment Authority’s Clean Water State Revolving Fund. This loan enabled the City, which had signed a Consent Order and Agreement with the Pennsylvania Department of Environmental Protection, to implement a green infrastructure program over a 20 year period. 

With the economic recession and major changes in the composition (and philosophies) of the members in both Houses of Congress from the 2010 elections, not only did the prospect of future similar economic stimuli programs go to the “back of the bus”, but the desire of these new members of Congress to reduce spending put increased pressure on the federal government to reduce the funding of any infrastructure improvements. 

A good example of this can be seen in the President’s proposed budget issued on February 13, calling for a proposed EPA budget of $8.3 billion. This reflects a decrease of 1.2 percent below the fiscal 2012 enacted level.  More pertinent to the water and wastewater industry, the proposed cuts included a 19.8 percent reduction (from $1.47 billion to $1.18 billion) in EPA’s budget for the Clean Water State Revolving Funds, and a 7.4% reduction (from $918 million to $850 million) in the Drinking Water State Revolving Fund.  Similar budget cuts occurred in most, if not all, of the states’ share of infrastructure funding.  With dire predictions associated with the Nation’s failure to maintain all of its infrastructure, one may recall the plot in “Atlas Shrugged” where the nation’s infrastructure failed and those who were its leaders “disappeared”.  Recall the query “Who is John Galt?”

As a result, we environmental attorneys find ourselves on the horns of a dilemma.  On the one hand, we are trying to adapt our infrastructure to climate change, foster the use of cleaner and more efficient energy in operating treatment plants, and conserve water. On the other hand, we face the reality of having to represent an industry with an infrastructure that is largely old and outdated and appears, at least in some cases, ready to fail. These failures will no doubt result in more and more violations of the Clean Water Act (and state water laws) in the future. 

Although funding cutbacks are not yet “carved in stone”, it would be wise for us to keep an eye on the budget debates. They may affect our practices in the near term and our environment as well.  


Posted on March 14, 2012 by Angus Macbeth

Risk assessments carried out under EPA’s IRIS program have been the subject of critical notice in recent months. The human health risk assessments which EPA performs across a range of programs merit attention, given their broad impacts in practical contexts; for instance, they form the basis for Superfund cleanups and RCRA corrective actions. But because they constitute guidance, they are not subject to judicial review at the time they are published and have not received much scrutiny by lawyers. Here are four aspects of how EPA typically conducts human health risk assessments that deserve attention and reform:

1. Publication Bias. In conducting a human health risk assessment, EPA starts by conducting a literature search  and assembling the scientific papers that report a chemical’s effects or lack of effects on humans and relevant animal species. This appears to be a fair way to review the scientific understanding of the chemical’s possible effects on humans and animals, but it fails to take account of publication bias. This well known phenomenon favors publication of studies finding “positive” results – an association between the chemical and a biological effect – over those that do not. In risk assessments, the determination of a dose below which there is no observable effect is very important. Reviewing the published literature can be highly misleading on that central issue. See, e.g., Sena et al., “Publication Bias in Reports of Animal Stroke Studies Leads to Major Overstatement of Efficacy,”  PLos Biol 8(3) e1000344 (2010) (“published results of interventions in animal models of stroke overstate their efficacy by around one third.”). EPA needs to capture the results of research showing, at given doses, that a chemical has no effect on human or animal biological systems. A start in that direction would be to require researchers who receive government support to report such results.

2. Multiple Comparisons. A researcher on, say, the neurodevelopmental effect of a chemical on children or rats can have the treated subjects perform 20 different tests; at a 95% confidence level, the researcher finds one association which is written up and published without reporting on other tests that did not show an association. Having made 20 comparisons at the 95% confidence level, at least one association is likely to be spurious – the result of random chance. But if one does not know how many tests or comparisons were made, there is no basis for making a fair judgment as to the strength or value to give to the reported positive result. There is no requirement in law or custom that directs researchers to report the number of comparisons they made, and publication bias discourages the ambitious academic from reporting a large number of comparisons which would result in sober analysts putting lesser weight on the positive results reported. EPA needs to know how many comparisons a researcher made and what the results were. This could be achieved in large measure by requiring that government-supported researchers report such data; in addition, EPA could simply ask the researchers to provide this information before it relied on the published results in a weight-of-the-evidence review.

3. Meta analysis. In a weight of the evidence review, replication of results has great weight in persuading the reviewer that the results are sound; conversely, failure to replicate results detracts markedly from the weight that a study will be given. Being able to tell whether results are replicated or not replicated depends on having common metrics used in the studies; e.g., administering the same dose under the same conditions at the same age. This is very rarely done, thereby erecting barriers to accurate determination of the weight that should be given to experimental results. See, e.g., Goodman et al, “Using Systematic Reviews and Meta-Analyses to Support Regulatory Decision Making for Neurotoxicants: Lessons Learned from a Case Study of PCBs,” 118 Env. Health Perspectives 728 (2010). Again the federal agencies that support research financially should require that experiments be conducted and reported with sufficient common metrics to allow effective meta-analysis. Of course, this would not preclude measuring and reporting whatever else the authors chose.

4. Review of data relied on in critical studies. EPA typically relies on one or a few “critical studies” in performing its analysis and reaching conclusions as to the risks to human health that are presented by a chemical. EPA reviews the printed reports found in the peer reviewed journals carefully, but it very rarely asks to see the underlying data. To a lawyer, this seems perverse – a bias against examining the actual data that is said to support the Agency’s conclusion. With no falsification, there are a number of ways to present data that will affect such data’s ultimate implications. Statistical treatment is the most obvious example. Human health risk assessments are of major importance to the public health and frequently result in many millions of dollars of expenditure by companies guarding against the risks that EPA identifies. It is clearly important to make these judgments as accurate as possible. In these circumstances, at least for the critical studies, the Agency should routinely ask that the data underlying the printed article should be produced; it should then examine the data and the reported results should only be relied on where they are fully supported by the data.

Dealing with these four issues should contribute significantly to producing human health risk assessments that would command the respect of the knowledgeable public.

Regulation Is Not a Dirty Word

Posted on March 13, 2012 by Peter Lehner

The past several decades have shown, time and again, that environmental regulations generate health and economic benefits that far outweigh their costs. Calling on polluters to clean up their mess spurs innovation that saves American lives and money.

Take the example of catalytic converters. When the EPA required car manufacturers to install catalytic converters to reduce tailpipe pollution, automakers warned of catastrophe. Instead, it cost far less than they had predicted--less than 2 percent of the total car cost -- and led to American dominance in the global market for this clean car technology. The EPA estimated that the health benefits of the rule outweighed the cost at least 10 times.

When Congress mulled over the acid rain program, industry claimed that scrubbing sulfur dioxide from smokestacks would send the price of electricity skyrocketing. It did no such thing. The program inspired engineers to design cleaner power-plant technologies, and the cost of reducing acid rain pollution turned out to be about a quarter of what the government had predicted . In fact, the acid rain program's benefits have exceeded costs by about 40 to 1, according to the Office of Budget and Management . And reducing acid rain saves nearly 19,000 lives every year.

The list goes on and on: leaded gasoline, CFCs, nitrogen oxides. Environmental regulations have saved thousands of lives in this country, and improved the health of millions , without creating any of the dire economic consequences predicted by industry at the outset. On the contrary - these regulations have spurred the development of clean technologies and achieved their goals for a relative pittance. And there's nothing dirty about that.

Will the South Carolina General Assembly Speak?

Posted on March 12, 2012 by Thomas Lavender

Two recent South Carolina Supreme Court decisions have addressed significant environmental regulatory issues.  In the Smith Land decision  which dealt with state regulation of discharges into isolated wetlands (“waters of the State”), the court held that there is a private cause of action to enforce the provisions of the South Carolina Pollution Control Act (“PCA”)1.   In the Sandlands decision  which involved a certified question from the federal district court, the South Carolina Supreme Court held that the state’s Solid Waste Policy & Planning Act (“SWA”) did not preempt local government flow control2.   Each of these issues has been addressed in prior blogs (1, 2), although the outcome of the certified question on the flow control matter had not yet been determined.

Several pieces of legislation pending in the South Carolina General Assembly respond to these decisions and the issues they address.

House Bill H.4654 and its companion Senate Bill S.1126 would amend the PCA to identify those activities which require, or do not require, a permit under the Smith Land decision.  The bills also preclude a private cause of action to enforce the provisions of the PCA.  The House version of the bill cleared the House Agriculture subcommittee and committee with overwhelming support and is now on the House calendar for consideration.  These bills enjoy considerable support from the regulated community.

Two other bills address the question of whether state law preempts local government flow control following the Sandlands decision.  Senate Bill S.514 and its companion House Bill H.4721 would amend the SWA to prohibit local ordinances that preclude solid waste disposal facilities, regardless of location.  The House version has also cleared the House Agriculture subcommittee and committee with nearly unanimous support and is pending on the floor of the House for consideration.

In each instance, the General Assembly clearly appears to be reacting to the Smith Land and Sandlands decisions in an effort to give meaning to its legislative intent.  Time will tell whether the proposed amendments will be enacted into law as the Legislature moves through its last year of a two-year Session.

1 Georgetown County League of Women Voters v. Smith Land Co., 393 S.C. 350, 713 S.E. 2d 287 (2011).
2 Sandlands C&D, LLC v. County of Horry, 394 S.C. 451, 716 S.E. 2d 280 (2011).

Energy Subsidies: Weighing the Playing Field

Posted on March 9, 2012 by Elliot Laws

Even as a latent issue, subsidies to the oil and gas industry have the potential to be a political hot potato.  But with President Obama putting them front and center in his recent speech at New Hampshire’s Nashua Community College, the issue joins the already crowded landscape of political fodder heading into the fall elections.  President Obama’s “all of the above” energy program covers a variety of activities, including production of oil and gas, funding renewable energy sources, and encouraging innovation of new technologies.  In the end, fossil fuels are an exhaustible source of energy that cannot be the total answer to our energy needs, as even oil and gas companies recognize.  And they come with a real set of hazards, as the recent Deepwater Horizon settlement reminds us.
Although not directly part of his “all of the above” energy program, President Obama is rightfully addressing government subsidies for oil and gas that could be migrating towards increasing subsidies for solar farms and wind turbines.  While fossil fuels will eventually run out, wind, solar, and biomass will not, but have yet to enjoy the level of support afforded to the oil and gas industry.  According to a recent analysis of the economics of energy by experts at the Imperial College London and the UK Energy Research Center electricity from wind power may, in five years, be less expensive than electricity from natural gas in the U.K. if current levels of government subsidies were transferred to renewable energy sources.
While the study is specific to the United Kingdom, there are takeaways applicable in the U.S.  First the analysis recognizes the important support that subsidies provided to oil, gas, and nuclear energy development when each were in infancy.  Through those subsidies, energy companies were encouraged to develop technologies, survey areas that were geologically ripe for oil and gas exploration, and hire workers to help build up the industry.  Second, now that oil, gas and, to a lesser extent, nuclear energy sources are more completely developed, those subsidies should be transferred to the development of renewable energy.  In addition, the gains made by the wind and solar industry should not be set aside in search of the elusive promise of cheaper oil through more drilling.  Fossil fuels will run out.  If “all of the above” is to be a real strategy, then it must provide more of an equal opportunity for all sources of energy.
The Department of Energy recently announced $150 million in grants under its ARPA-E program.   This money is intended for development of cutting-edge energy technologies so that they can gain the necessary traction to be self-sufficient.  The announcement follows on the heels of an additional $30 million offered under the ARPA-E program toward development of natural gas-based vehicles.  Both these numbers pale in comparison to the $4 billion in yearly subsidies for oil and gas developers.   Even shifting half of the oil and gas subsidies into renewable and developing technologies could well make a dramatic difference in our overall energy future by encouraging the build-out of wind, solar, and biomass businesses into viable and self-sufficient industries.  There will come a time for a full discussion of the value of energy subsidies as a whole, but this would provide a fair start toward creating parity with fossil fuels.
The Deepwater Horizon disaster is a reminder of the cost associated with use of fossil fuels.  Significant government subsidies provided to the oil and gas industry played an important part in encouraging their initial and ongoing development.  Programs such as ARPA-E can provide a jump-start for emerging energy technologies, and shifting subsidies can offer a chance for “all of the above” to be a real solution.

EPA Enforcement: Cleaning the Cleaners

Posted on March 7, 2012 by Stephen Leonard

Businesses that use volatile organic compounds (VOCs) in their industrial processes have long been regulated under the Clean Air Act and State Implementation Plans (SIPs) approved under the Act.  The Massachusetts Department of Environmental Protection Air Pollution Control Regulations, for example, contain very specific VOC control requirements at 310 CMR 7.18 for dozens of types of businesses and industries.  They regulate manufacturing processes (vinyl, polystyrene resin); surface coating (metal furniture, metal can, large appliance, magnetic wire, automobile, metal coil, miscellaneous metal, fabric, vinyl, plastic parts, leather, wood products, flat wood paneling); finishing (textiles, automotive refinishing); and degreasing.  The regulations prohibit use of cutback asphalt, and they limit the volatile portion of the inks used in various printing lines.  And, famously, they regulate the emissions, and hence the nostalgia-inducing aroma, of bakeries.

All of this is necessary because VOCs are a precursor to ozone, one of the original six “criteria pollutants” that Congress required EPA (and the states, through their EPA-approved SIPs) to control, in order to meet the National Ambient Air Quality Standards that EPA set for those pollutants.  Notwithstanding a long history of VOC regulatory enforcement, the air quality in all of Massachusetts – indeed all of southern New England – remains in “non-attainment” with the NAAQS for ozone.

EPA Region 1, which is based in Boston, has recently focused on a particular aspect of the problem:  the release of VOCs in connection with operation of “industrial laundries”.  These facilities serve the laundering needs of many different kinds of businesses and institutions – those, like hospitals, that require a steady supply of clean uniforms, and those, like print shops, that use towels to clean their equipment and therefore need a steady supply of fresh ones.  Some of those uniforms and towels contain volatile organic compounds.  And the VOCs can be released at various stages of an industrial laundry’s process of handling them for its customers, including collection, storage, transport, and washing of laundry.

EPA’s initiative has included information requests sent pursuant to Section 114 of the Clean Air Act, 42 U.S.C. 7414, and seeking detailed information about the laundries’ collection practices, their storage equipment, their operations and materials usage and – notably – their customers.  Based on the responses, EPA has required emissions testing at certain facilities, and it has issued Notices of Violation.  In one case during the summer of 2011, the Department of Justice, on behalf of EPA, sued an industrial laundry in New Hampshire (southern New Hampshire does not attain the ozone standard), alleging that the facility’s construction and operation, without prior approval, constituted violations of, among other things, the New Source Review provisions of the Clean Air Act.  The Consent Decree which settled the case requires payment of a civil penalty, modification of operating practices, installation of pollution control equipment, purchase and retirement of Emission Reduction Credits and implementation of a Supplemental Environmental Project. 

EPA continues its enforcement efforts with respect to other facilities in New England.  Whether those efforts will ultimately be successful in bringing southern New England, or parts of it, into compliance with the NAAQS for ozone is open to question, given the persistence of the problem and the wide variety of sources for precursor pollutants.  It is clear, though, that enforcement activity with respect to industrial laundries forms a part of EPA Region 1’s ozone-control strategy.  Other regions with similar non-attainment problems may be close behind.


Posted on March 2, 2012 by Michael Hardy

Attorneys, environmental professionals and regulators understand the importance of the Integrated Risk Information System, known as IRIS.  In rule-making, permitting, or remediation, the IRIS provides the EPA’s assessment of the health effects possibly resulting from exposure to chemicals in the environment.  Whether trying to determine the hazard index, reference dose, cancer slope factor, or other critical toxicological end-point, the IRIS assessment of a specific chemical constitutes an important first step.  Currently, the EPA has completed risk assessments of approximately 550 chemicals  in the IRIS, and reports that another 55 are on-going. 

But there have been numerous, long standing and wide-ranging criticisms of the IRIS process.  For example, the National Academy of Sciences criticized the EPA’s IRIS assessment for formaldehyde because it failed to explain its criteria for: identifying epidemiologic and experimental evidence, assessing the weight of the evidence, and characterizing uncertainty and variability. The NAS noted that these criticisms applied with equal force to other IRIS chemical  assessments as well.

More recently, in December, 2011, the U.S. Government Accountability Office issued a report to a House subcommittee crediting EPA for making some improvements in the process since earlier criticisms by the GAO in 2008, but noting recurring and new issues remain.  The GAO previously noted the IRIS data base faced a serious risk of becoming obsolete because EPA could not keep pace with the pace of needed assessments.  Even now, the GAO reported, the IRIS continues to suffer from problems with timeliness and productivity and “issues of clarity and transparency.”  The GAO called on EPA to develop a better system to apprise stakeholders of the status of IRIS assessments.  As an example, the GAO suggested a minimum of a two year notice of intent to assess a specific chemical, coupled with annual Federal Register reports on the status of on-going and proposed assessments.

To improve the credibility of the risk assessments, the GAO recommended the agency heed the recommendations of the National Academies.  The National Academies proposed improvements such as standardized approaches to evaluate and describe study strengths and weaknesses and the weight of the evidence.  Additionally, to restore scientific and technical credibility, the National Academies suggested the agency should involve independent expertise like the EPA’s Board of Scientific Counselors.

The GAO reports EPA has been receptive to its constructive criticisms and suggestions.  But the GAO and the trade press observe it is unclear how the EPA will actually implement the various suggestions from the GAO and the regulated community.