Offers of Judgment Permitted in RCRA Citizen Suit Attorney Fees Disputes

Posted on June 28, 2013 by John A. McKinney Jr

A Third Circuit decision this month determined that offers of judgment pursuant to Fed.R.Civ.P. 68 may be made in attorney fee disputes in RCRA citizen suits (42 USC § 7002).  In Interfaith Community Organization v. Honeywell International, Inc., 2013 WL 2397338 (C.A.3 (N.J.)  Honeywell International (“Honeywell”) agreed to pay certain fees and costs in connection with Appellees Interfaith Community Organization and Hackensack River keeper’s monitoring costs in connection with Honeywell’s remediation of certain sites.  A dispute arose as to Appellees’ counsel’s fee filings, and Honeywell served offers of judgment as to the disputed fees.  Appellees contended that the offers were null and void in a RCRA citizen suit and prevailed on the issue below.  The Third Circuit overturned the decision below.

The Third Circuit first addressed the argument that Rule 68 is incompatible with Congressional intent allowing RCRA  citizen suits and is forbidden by the Rules Enabling Act, 28 US § 2072.  That act prohibits the Supreme Court from adopting general rules of practice and procedure for cases in the US courts that abridge, enlarge or modify a substantive right.  The Third Circuit found that Rule 68, in facilitating settlements, does not affect a litigant’s substantive rights even though a litigant may be faced with a hard choice.  Being forced to make that choice does not abridge, enlarge or modify its substantive rights.  The court found unpersuasive the appellees’ arguments attempting to distinguish a Supreme Court case that allowed Rule 68 in civil rights litigation involving fee shifting.

In the case below, the District Court had entered a judgment ordering Honeywell to remediate one area and Honeywell had entered into consent decrees agreeing to remediate additional areas.  Appellees contended that Rule 68 cannot apply after a judgment has been rendered on liability.  The Third Circuit disagreed and found that liability also included fees and costs, and they had not been determined in this case.

Given this decision (which also addresses issues other than Rule 68), it is likely RCRA citizen suit defense counsel will utilize the offer of judgment rule more often.  However, there are numerous cases and articles detailing the perils of using the rule in the wrong case or in the wrong way.  Counsel should pay close attention to those.

Taking the Fifth on the Fifth’s Taking Clause

Posted on June 26, 2013 by Robert M Olian

…nor shall private property be taken for public use, without just compensation.

Everyone understands the Fifth Amendment’s takings clause to mean, at a minimum, the government cannot force the transfer of private property to the government even for a manifestly governmental purpose (e.g. a highway right of way, or a new airport runway), without compensating the property owner.

Tuesday’s Supreme Court decision in Koontz v. St. John’s River Water Management District is the latest in a series of Supreme Court rulings to extend the protections of the Takings Clause beyond the obvious governmental requisitioning of private property. That’s “latest,” not “last”.

Nollan v. California Coastal Commission (1987) and Dolan v. City of Tigard (1994), combine to set forth the Court’s requirements for an “essential nexus” and “rough proportionality” between conditions on land use development and the government’s underlying objectives in the permit scheme to which the property owner is subjected. Absent either nexus or proportionality, a taking has occurred, and the Takings Clause requires that the property owner get “just compensation.” So far, so good.

The facts in Koontz are to some extent irrelevant; indeed the Court’s opinion expressly disowned any determination of the merits of his particular claim for compensation. Depending on whose brief you read, Koontz wanted to develop some wetlands property but the Water Management District refused to approve his project as proposed and put forth some mitigation options that were either “extortionate demands” or “helpful suggestions”, one of which consisted of Koontz spending money to improve public lands remote from his own property. Koontz took umbrage and sued under Florida state law.  The trial court found for Koontz on the basis of Nollan-Dolan, and the intermediate state appellate court affirmed.

The Florida Supreme Court reversed for two reasons: first, it held the Nollan-Dolan standard does not apply to denial of a permit; and second, it held the standard does not apply to a requirement for the payment of money, as opposed to the impairment of a specific piece of property.

Every Justice agreed that the Florida Supreme Court got the first part wrong; that is, they all agreed the Takings Clause applies to permit denials as well as permit approvals. The majority and dissent parted ways with respect to the second question, however, with the majority again holding that Florida got it wrong and that excluding monetary exactions would allow permitting agencies to improperly circumvent the Nollan-Dolan requirements.

Now, one can agree or disagree with the majority, but the decision hardly shocks the conscience. What the decision holds is far less important than what remains to be decided in future cases:

1.    How concrete and specific must a demanded concession be to give rise to liability under Nollan and Dolan?
2.    What happens if a permitting authority merely says, “Denied, come back with something better,” and makes no other demand?
3.    Where will the line be drawn to prevent countless local land use decisions from becoming federal cases?

On these points, the majority took the Fifth.

Partners?

Posted on June 25, 2013 by Steve McKinney

Congress said EPA and the States are partners in implementing the Clean Air Act.  It’s simple: EPA sets pollutant-by-pollutant standards for clean air (NAAQS) and each State develops and implements a state-specific plan to meet and maintain those NAAQS.  Each partner is well-positioned and equipped to perform its assignment and Congress included appropriate “carrots and sticks” in the Act to ensure that both do their job.  The Supreme Court has extolled Congress’s partnership approach and EPA routinely professes its deep appreciation of its State partners and their important role.  So wassup with EPA suddenly demanding that thirty-six States delete rules about excess emissions during startup, shutdown and malfunction (SSM) that have been EPA-approved for 30 to 40 years?

On February 22, in response to a 2011 petition by Sierra Club, EPA proposed to “call” thirty-six state implementation plans (SIPs) because they contain affirmative defense, exemption, or director’s  discretion rules for excess emissions during periods of SSM. EPA’s previous approval of the offending rules wasn’t even a speedbump.  EPA also rejected any obligation to connect the offending rules with air pollution problems in the affected States.  EPA’s legal position on how the States should enforce their CAA permits was enough to shuck the partnership and impose the federal will.  And EPA didn’t even ask nicely.  State requests for information about EPA’s consideration of their SIPs were ignored and States were given 30 days to comment on a proposal EPA took more than a year to develop.  EPA gave its State partners another 45 days only after more than a dozen State Attorneys General jointly asked for more time and the Senate Committee considering the new Administrator’s confirmation made the same request.

When comments were filed on May 13, thirty affected States filed comments; none of them supported EPA’s proposed call of their SIP.  Not even EPA’s regular supporters on issues like tougher NAAQS thought EPA’s dictation was a good idea.  Complaints from EPA’s partners ranged from being wrongfully excluded from EPA’s evaluation of their SIP to EPA trampling on the States’ planning and implementation responsibilities to EPA creating a lot of work that could have been avoided if EPA had just talked to them.  No amount of spin can make this look good for state–federal relationships.

So why?  Well, Sierra Club did ask for it.  Maybe because an obvious compliance impact is on emission limits with continuous monitoring and short averaging times like opacity.  And maybe because coal-fired power plants always have opacity limits and deleting common excess emission rules will set those sources up for widespread enforcement litigation.  Or, maybe the States and the previous EPAs had it wrong for all these years and someone finally straightened everyone else out.  Like so many conundrums of this type, it might take some judges to give us the answer.

Pursuant to a settlement agreement with Sierra Club, EPA must finalize the SSM SIP Call by August 27, 2013.

A Case of the Vapors – Does New Jersey’s Newest Vapor Intrusion Technical Guidance Foreshadow a Return to the “Old Days” of Environmental Regulation in New Jersey?

Posted on June 20, 2013 by Kenneth Mack

Enacted in May 2009, New Jersey’s “Site Remediation Reform Act”, N.J.S.A. 58:10C-1, et seq. (“SRRA” or “Act”) was heralded by the State’s Department of Environmental Protection (“NJDEP”) as a “new world order” for the State’s site remediation regulation.  Four years later, its imposition remains a “work in progress”.

Belatedly following Massachusetts’ lead, the Act largely privatized site remediation by placing most decisions, including the ultimate provision of final remediation approval, in the hands of state-licensed professionals, called “Licensed Site Remediation Professionals” (“LSRPs”).  It replaced NJDEP’s former “command and control” approval process, which tended toward extreme micro-management of each case.  Instead, LSRPs are supposed to use their professional judgment in effecting remediation.

Interestingly, much of the impetus for the SRRA came chiefly from the Government, compelled by its enormous backlog of unresolved cases: it was not unusual for remedial reports to languish on NJDEP desks, awaiting action, for years.  Moreover, NJDEP had little or no knowledge of many sites on its “known contaminated site list” which numbered anywhere from 10,000 to 15,000 (the fact that that number was unclear was itself troublesome).  Indeed, one of the precipitating causes of the Act was a vapor intrusion case in which it was belatedly discovered, in 2006, that a child day care center had been built, and was operating, on a site which formerly housed a thermometer factory.  This site should have been (but was not) cleaned up under the State’s ISRA law when the factory closed in 1994.  The site had been classified as one of “low” concern, so it was not inspected by NJDEP until twelve years after such closure.  The discovery of these circumstances caused public consternation, followed by litigation and, ultimately, legislation. 

Although the environmental consultant community enthusiastically welcomed the new law (almost immediately dubbed the “environmental consultant right to work act”), individual LSRPs continue to have difficulty weaning themselves away from the “security blanket” of prior department approval of their actions.  These fears are understandably heightened by the statutorily enjoined random audit of at least ten percent of LSRPs annually by the LSRP Licensing Board and the Department’s separate ability to audit final remediation approvals, (called “Response Action Outcomes”, or “RAOs”), for up to three years after issuance. 

Partly in response to the LSRPs’ expressed need for some certainty, NJDEP has been steadily adding to the scope and detail of various technical guidance documents, the most recent one of which is its “Vapor Intrusion Technical Guidance (Version 3.1)" issued in March of this year. At 184 pages, with appendices, this guidance (“VI Guidance”) is nearly twice as long as the next-largest NJDEP “guidance document” and far longer than similar VI guidance issued by authorities in neighboring states.  Indeed, its length is nearly that of OSWER’s External “Review Draft” “Final Guidance for Assessing and Mitigating the Vapor Intrusion Pathway from Subsurface Sources to Indoor Air”, whose issuance it preceded by about a month.  Predictably,  the two documents do not exactly mesh seamlessly. 

The prescriptive nature of the VI Guidance is equal to its heft and seemingly contrary to the Act’s proclaimed conferring of discretionary judgment upon LSRPs.  More troublesome is the fact that the various detailed dictates to LSRPs in the VI Guidance have been translated into a welter of forms that must be filed by the LSRP at various points in the VI remedial process.  These new forms –which are apt to change with some frequency – are all “machine readable” and, in light of the draw-down of experienced NJDEP personnel caused by government cutbacks and natural attrition, are increasingly reviewed by machines, rather than experienced personnel, at least in the first instance.  This seems likely to produce an exaltation of form over substance that does little to foster actual remediation.  Moreover, departures from the VI Guidance must be supported by the LSRP’s explanation of rationale under a pre-SRRA regulation entitled “Variance from Technical Requirements”.  Few such “variances” were ever permitted under this regulation in the past.  The fact that such “departures” may be substantively reviewed by NJDEP only after the final RAO is issued and, if denied, would result in the RAO’s invalidation, creates an added “chilling effect” on an LSRP’s consideration of any such deviation, however warranted.  And, while NJDEP personnel continue to be available to LSRPs for consultation and advice, it is unclear what effect, if any, reliance on such advice would have in any subsequent audit of an RAO. 

It may be that the VI Guidance is sui generis and that its overly doctrinaire approach will not be followed by NJDEP in other areas of remediation.  If not, the “new world order” of the SRRA may morph into something that looks very much like NJDEP’s  “ancien regime”.  Or maybe I just have a case of the vapors.

The Reach of Sackett v. EPA: Impacts Beyond Clean Water Act Compliance Orders

Posted on June 19, 2013 by Theodore Garrett

When Sackett was decided by the Supreme Court, an uncharted issue was the extent to which the decision would be extended to make pre-enforcement review available to EPA orders under  other statutes.  EPA has now acknowledged that Sackett has a long reach. 

As previously reported, the Supreme Court in March 2012 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.”

When I reported on this decision earlier, I noted that 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 under other statutes.

EPA has now formally acknowledged that the Sackett decision has implications for other statutes.  In a memorandum dated March 21, 2013, EPA’s Office of Enforcement and Compliance Assurance has concluded that it is important to advise recipients of EPA unilateral orders under other programs of their opportunity to seek pre-enforcement judicial review of such orders. 

In particular, EPA has directed enforcement staff to immediately begin adding the following language to typical unilateral orders under FIFRA, Clean Air Act, Safe Drinking Water Act and EPCRA: 

“Respondent may seek federal judicial review of the Order pursuant to [insert applicable statutory provision providing for judicial review of final agency action.]” 

The foregoing language applies, inter alia, to stop sale, use or removal orders under FIFRA §13, stop work or compliance orders under Clean Air Act §§113(a) and 167, and emergency and compliance orders under EPCRA §§ 325(a). 

With respect to compliance and corrective action orders under RCRA §§3008(a), 3008(h), 9003(h) and 9006(a), EPA’s Memorandum directs enforcement staff to include language advising respondents that they may seek administrative review in accordance with 40 CFR Part 22 or 24 as applicable. 

EPA’s March 21, 2013 Memorandum states that EPA believes that the reasoning in Sackett does not lead EPA to believe that similar language is appropriate for unilateral orders issued under statutory authorities other than those discussed in the Memorandum, and it is noteworthy that the EPA Memorandum makes no reference to unilateral orders under CERCLA. 

Justice Scalia’s opinion in Sackett 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.  EPA undoubtedly believes the CERCLA is different because of the provisions in §§113(h) that deprived the courts of jurisdiction to review challenges to removal or remedial actions selected or orders issued under §106 unless one of five exceptions applies. 

In addition to their Administrative Procedure Act argument, Sacketts also maintained that EPA’s issuance of the compliance order deprived them of due process in violation of the Fifth Amendment.  Because the APA disposed of the matter, the Supreme Court did not reach the Fifth Amendment issue.  Interestingly, before it granted certiorari in Sackett, the Supreme Court denied certiorari to review a decision by the D.C. Circuit rejecting arguments made by General Electric that CERCLA §106 orders violate the due process clause.  Stay tuned.

Sooners Beat Longhorns in Red River Bowl

Posted on June 18, 2013 by Rick Glick

In a unanimous decision issued June 13, the Supreme Court put an end to a parched Texas municipal utility’s bid to secure an Oklahoma water right.  In Tarrant Regional Water District v. Herrmann, the Court rejected every argument Tarrant advanced to access Red River basin water on the Oklahoma side.

The fabled college football rivalry between the Texas Longhorns and Oklahoma Sooners is not the only long simmering regional contest.  Dividing the waters of the Red River between Texas, Oklahoma, Arkansas and Louisiana has been a source of tension through much of the twentieth century, until the states entered into a Compact in 1978, approved by Congress in 1980.  The Compact took 20 years to negotiate. 

At issue is a provision under the Compact that guarantees a minimum flow from a certain reach of the river to Louisiana, which lacks adequate storage facilities.  The provision gives each state an equal share in the water from that reach.  Tarrant, which serves the fast-growing Fort Worth area, had hoped to access water in an Oklahoma tributary before the water reached the Red River, as the river’s water quality is not suitable for domestic use when it enters Texas.  

Failing in its attempt to purchase water from Oklahoma, Tarrant Regional Water District filed a water right application with the Oklahoma Water Resources Board.  Knowing that Oklahoma law prohibits out of state use of water rights, Tarrant simultaneously filed an action in U. S. District Court.  The district argued that the Compact preempts state water law, but the Court found nothing in the Compact to compromise the sovereign right of states to manage their waters.  Absent an express provision in the Compact that allows signatories to access water across state lines, the states are free to regulate their waters as they see fit. 

The states of Oregon and Washington entered into a compact in 1915, ratified by Congress in 1918, to regulate commercial fishing rights.  In light of the Tarrant decision, would expansion of the compact to deal with other regional water issues make sense?  For example, Washington and Idaho allow diversions of Lower Columbia River water for agriculture, whereas Oregon has not, citing fishery concerns.  While the effect of the Federal Columbia River Power System on salmon has been hotly contested, and regional solutions attempted, perhaps a coordinated approach among the Northwest states with regard to Lower Columbia water use could bring about equities and protect fish.  The Tarrant decision can be read to provide assurance that state prerogatives and rights are preserved even under a compact, unless the states decide it is in their mutual best interest to provide otherwise.

Doin’ the Dunes: What Will They Cost?

Posted on June 13, 2013 by Joseph Manko

How appropriate was the name “Sandy”, which hit the New Jersey shore, leaving in its wake a $30 billion cleanup/rebuild price tag.  Climate change experts agree that such catastrophic storms will continue to occur in the future and that adaptation is essential to confront repetitions.

So it is in New Jersey where all 3 branches of government have suggested ways in which to do so.  First, Governor Christie has gone on record as being “not in favor of using eminent domain to kick people out of their homes”.  He therefore proposes to spend $300 million to acquire key beach homes on the Ocean and Monmouth County shorelines.

Second, and most interesting to environmental and land use attorneys, is the U.S. Army Corps of Engineers’ (Corps) pursuit of acquiring easements along the New Jersey shore lines on which to construct and maintain 2-story high sand dunes.  This program, begun in 2003 and contemplated to last 50 years, is focused on 14 miles of New Jersey’s barrier islands at an estimated cost of $144 million. (The Corps’ estimate does not recognize the issues raised here.)  The wild card in the Corps’ approach is how much needs to be paid in compensation for the property owners’ easement, including a partial loss of ocean view.  This is the issue moving through the New Jersey legislature and, more importantly, its courts. In the most recent case, Borough of Harvey Cedars v. Harvey Karan and Phyllis Karan, Judge E. David Millard, the lower court judge, was faced with the question whether the compensation award for an easement on 1/3 of the Karans’ beachfront property, on which the Corps built a 22 foot high sand dune which partially obstructed their ocean view, should be reduced by the resultant benefit of protection from future storms provided by the dunes – or whether the general benefit to others, and the entire state of New Jersey, made such a “special benefit” to the Karans not recognizable under existing New Jersey case law.   Finding such “special benefit” not consistent with prior law and extremely speculative to calculate, Judge Millard  instructed the jury not to make any such reduction in the $375,000 award.  The New Jersey Superior Court Appellate Division affirmed the result, Borough of Harvey Cedars v. Harvey Karan and Phyllis Karan, 45 A.3d 983 (2012) .  The New Jersey Supreme Court granted certification to the Borough and heard two hours of argument on May 20, 2013.

Third, while all this was going on, a bill was introduced in the New Jersey Senate in March 2013 which, if enacted, would allow the Court to consider the “special benefit” which dunes would afford to the affected homeowners.  Whether the bill ever becomes law, as well as questions as to its constitutionality and its effect on New Jersey case law would certainly emerge – as will be the question as to whether the New Jersey Supreme Court will take notice of the bill in rendering its decision.

Issues such as these will clearly impact the cost of climate change adaption, especially so with the threat of the anticipated rising of sea levels and recurring coastal storms to island properties.  Stay tuned.

I Believe in Environmental Regulation, But….

Posted on June 10, 2013 by Seth Jaffe

I believe in governmental environmental regulation.  We have a complicated world and it is not surprising that many activities, including those generating greenhouse gases, cause negative externalities.  At the same time, however, I have spent more than 25 years representing regulated entities in negotiations with government regulators and it is impossible to do such work without obtaining an appreciation for the very significant costs that bureaucracies impose.

With all due respect – cue the upcoming diss – to my many friends in government, the absence of market discipline or the ability to fire nonpolitical bureaucrats often leads to street level bureaucrats operating under a law of their own devising.  Moreover, if a complex economy causes externalities requiring regulation, that same complexity should cause regulators to pause before imposing or revising complicated regulatory regimes.  Unintended consequences abound.

The genesis of these musings was the confluence of a number of otherwise unrelated recent regulatory developments.  The most significant was headline in the Daily Environment Report earlier this week noting that “EPA [is] Still Unable to Provide Time Frame For Revising Definition of Solid Waste Rule.”  RCRA is the perfect example. No one can really quarrel with the need for hazardous waste regulation, in order to prevent the creation of more Superfund sites.  However, if we’re still fighting over the definition of something as basic as solid waste more than 30 years after the inception of the program and EPA’s most recent efforts to update the definition remain fruitless after about five years of effort, then we have to acknowledge some serious implementation problems where the rubber is trying to hit the road.

I’ll also provide two recent examples from my home state of Massachusetts.  MassDEP has been engaged in a serious regulatory reform effort, which has earned deserved praise.  However, as NAIOP has recently noted in comments on the draft proposal to revise the Massachusetts Contingency Plan, MassDEP’s proposed Active Existing Pathway Elimination Measure Permit is “so cumbersome that it is not clear that a PRP or redeveloper would want to seek such a permit.”  This calls to mind MassDEP’s reclaimed water regulations, which were intended to encourage water reuse, but are so cumbersome that no one is applying for the permits.

Thus, the final caution.  The MassDEP example is extremely common – and extremely troubling.  Regulator gets great idea for innovative program. Prior to implementation, concerns are raised about what happens if….  More effort is put into avoiding the perceived downsides than in actually making the program work.  Program ends up being worse than nothing.

I believe in environmental regulation, but…

President Obama Can Dramatically and Cost-Effectively Cut Carbon Pollution from Power Plants Using the Clean Air Act

Posted on June 7, 2013 by Peter Lehner

On the night of his re-election, President Obama told the nation that he wanted “our children to live in an America…that isn’t threatened by the destructive power of a warming planet.”

In the past year, we’ve seen extreme weather, fueled by carbon pollution, cost hundreds of American lives and nearly $100 billion in damage across the country. Yet right now we have no national standards to control carbon pollution from the biggest emitters—the 1500 existing power plants which are responsible for 40 percent of U.S. carbon pollution. NRDC has developed a plan for how the President could use his existing authority under the Clean Air Act to cut this climate-changing pollution from power plants, quickly and cost-effectively.

In a 2011 Supreme Court decision, American Electric Power v. Connecticut, the court ruled that it is the EPA’s responsibility to curb carbon pollution from power plants, new and existing. Carbon pollution limits for new power plants have been proposed and the EPA needs to make them final.  But the step that will make the biggest difference is cutting pollution from existing power plants. Under section 111(d) of the Clean Air Act, the EPA could set state-specific standards for average emissions from existing power plants based on each state’s current energy mix. Then states and power plant owners would have broad flexibility in deciding how to meet those standards, using a range of cost-effective measures and technologies.

Not all states line up at the same starting point when it comes to carbon emissions—some are heavily coal dependent, while others rely more on lower-carbon fuels and clean, renewable energy. Developing state-specific standards will give heavily coal-reliant states more realistic targets, while still moving them toward a cleaner energy supply. In addition, states and power plant owners can keep costs down by using a variety of measures to achieve compliance, whether it’s installing a new boiler in an old coal-fired plant, or investing in a home-weatherization program to reduce energy demand. These efficiency measures will help keep energy bills low and also create thousands of jobs that can’t be outsourced.

All in all, NRDC’s flexible, cost-effective proposal can achieve a 26 percent reduction (from 2005 levels) in carbon pollution from power plants by 2020, according to modeling done by the same firm the EPA uses for much of its air pollution modeling. The cost of compliance, about $4 billion, is comparatively low, and is vastly outweighed by the benefits--$25 to $60 billion in savings. These benefits come in the form of 3,600 lives saved, and thousands of asthma attacks and other illness prevented each year due to less air pollution, as well as the value of reducing carbon pollution by 560 million tons. This is twice the reduction that will be achieved by clean car standards.

The President has been very clear about the need to do something to curb global warming. This cost-effective proposal could be his biggest opportunity to take decisive action. He can dramatically reduce carbon pollution from power plants--while creating major health benefits and jobs--using his existing authority under the Clean Air Act.

No Arranger Liability for Used Transformer Sales

Posted on June 6, 2013 by Thomas Lavender

On May 1, 2013, the United States District Court, Eastern District of North Carolina, entered final judgment on a January 31, 2013 ruling on summary judgment  in favor of Defendant Georgia Power holding that the sale of used transformers did not constitute an arrangement for disposal under CERCLA Section 107.  The May 1 order afforded the opportunity to appeal, which plaintiffs Consolidation Coal Co. (“Consol”) and PCS Phosphate Co. (“PCS”) promptly filed earlier this month. 

In 2005, Carolina Power & Light Company (now Duke Energy Progress, Inc.) (“CP&L”) and Consol entered into an administrative settlement with EPA to perform a time-critical removal action of PCB contamination at the Ward Transformer Company Superfund Site (“Site”) in Raleigh, North Carolina, and to reimburse EPA for its removal costs at the Site.  PCS entered into a trust agreement with CP&L and Consol to contribute to the funding of the removal action required under the Administrative Settlement with EPA.  The plaintiffs and PCS are seeking recovery of costs incurred by the companies at the Site, which to date exceed $60,000,000. 

In its January 31, 2013 ruling, the district court found that Georgia Power’s sale of used transformers to Ward Transformer Company did not constitute an arrangement for disposal under the United States Supreme Court ruling in United States v. Burlington Northern & Santa Fe Railway Co.  In Burlington Northern, the Court held that a finding of arranger liability requires a showing that the defendant took “intentional steps to dispose of hazardous substance.”  The Court further held that a determination of whether arranger liability attaches is a “fact intensive and case specific” inquiry. 

In ruling that Georgia Power did not have the requisite intent to dispose of PCBs when it sold used transformers to Ward Transformer, the district court made the following findings: (1) the transformers were sold in arms-length transactions; (2) they had “marketable value” (between $150 and $3200) when sold; (3) they continued to be “useful materials” after the sale, as demonstrated by the fact that they were refurbished and resold by Ward Transformer for a profit; and (4) Georgia Power drained and disposed of PCB-laden oil in the transformers before selling them.  The court thus held:  “Georgia Power’s purpose for these transactions was to sell transformers to Ward and not dispose of the oil containing hazardous waste. . . . Therefore, Georgia Power had met its burden on summary judgment by showing it did not have the necessary intent to create arranger liability under CERCLA.”  

In Burlington Northern, the Supreme defined the “two extremes” in which intent to dispose required for arranger liability is clear.  At one end of the spectrum, arranger liability clearly attaches when a party enters into a transaction “for the sole purpose of discarding a used and no longer useful hazardous substance.”  At the other end, no arranger liability attaches when a party sells “a new and useful product if the purchaser of that product later, and unbeknownst to the seller, disposed of the product in a way that led to contamination.”  The Supreme Court left open the determination of liability based on a “fact intensive inquiry” in “cases in which the seller has some knowledge of the buyers’ planned disposal or whose motives for the ‘sale’ of a hazardous substance are less than clear.”  The Fourth Circuit will now have the opportunity to shuffle the “sales” category deck in the Ward Transformer case and provide further guidance on those factual determinations which fall between the two extremes identified by the Burlington Northern Court.

Religion and the Environment: Reconciling Apples and Oranges

Posted on June 5, 2013 by James Holtkamp

Setting policy for environmental protection is a bit like mediating the discussion between a father and daughter about her shaggy-haired boyfriend.  Each has a very different perspective – the father looks at the boyfriend with the cold eye of logic (does he have a job- will he ever get a job?) and the daughter sees her suitor as a warm and caring individual (but I love him, Daddy!).  Neither is willing (or sometimes even able) to understand the point of view of the other.

Project proponents often cite additional jobs, taxes and other material benefits in response to concerns about environmental damage from the project.  Opponents argue that the protection of environmental values is important because- well, they are just important.  Quantification of inherently unmeasurable values, such as the cost of illness or death or the extinction of an obscure species resulting from human activities, is at best a clumsy exercise, notwithstanding the legions of PhDs in economics that have tried.  Thus, comparison of the economic benefits with the environmental disbenefits of a particular project or policy is at bottom an unsatisfying exercise because neither side is willing or able to speak the “language” of the other.  This has been especially true in the conversations about climate change, and given the staggering implications of climate change for human society and the environment, those conversations need to be mutually understandable.

So, what common “language” can mediate conflicting world views on environmental issues?  Religion is increasingly serving as a framework for mutual understanding and communication to facilitate resolution of environmental issues.  The debate over man’s impact on the earth under this approach is cast in terms of the sanctity of all creation coupled with a divine mandate for mankind to care for it. 

The notion that human beings have an innate, solemn and God-given responsibility to care for each other and the world they live in is expressed in all of the great religious traditions. For example, in Genesis, God sees that his creation was “very good” and gives man “dominion” over it. (Genesis 1:26, 28, 31).  The Koran commands, “Do no mischief on the earth, after it has been set in order.” (7:56).  Indeed, there are some who suggest that environmentalism is itself a religion insofar as it “shapes a person’s very concept of his or her purpose and meaning in the world and other core beliefs relating to human existence.” 

Can a religion-based ethos of stewardship over creation and care for one’s neighbor solve environmental conflicts?  It can certainly help restore the words “balanced” and “responsibility” to their normal meanings.   It can provide a framework for talking about economic, health and lifestyle benefits to individual human beings, as well as protection of vulnerable ecosystems and esthetic values, based on something other than blind adherence to the laws of economics on the one hand and reflexive opposition on the other.

New EPA Case Studies on Environmental Justice and Permitting

Posted on June 4, 2013 by Elliott Laws

With the 20th anniversary of Executive Order 12898 soon approaching, EPA has been planning on extensively incorporating “environmental justice” into its permitting processes.  This executive order required all federal agencies to address disproportionately adverse human health or environmental effects of their programs, policies, and activities on minority and low-income populations in the U.S.

To that end, nearly two years ago, EPA issued “Plan EJ 2014” as a roadmap – not as a rule – to implement the executive order throughout the agency.  Specifically, Plan EJ 2014 formally introduced EPA’s priorities of promoting increased public participation in the permitting process and considering more stringent permit conditions.  In February of this year, EPA selected two case studies that highlight the agency’s approach to achieving these permitting priorities.

The first case study involved a recent Prevention of Significant Deterioration (PSD) permit for the Pioneer Valley Energy Center, a power plant expected to generate up to 431 MW in Westfield, Massachusetts.  From the developers’ filing of the permit application in November 2008 through EPA’s issuing of the final permit in April 2012, Region 1 incorporated what it has described as environmental justice into this permitting process by providing enhanced public engagement opportunities and including more stringent conditions in the permit.  These stricter conditions were aimed at limiting the applicant’s ability to burn ultra-low sulfur diesel for testing of its emergency generator when air quality would already be diminished.

The second case study involved a National Pollutant Discharge Elimination System (NPDES) general permit for oil and gas exploration in Cook Inlet, Alaska.  Even as this permit has evolved over time, now with federal and state authority split, the subject conditions have been based on environmental justice considerations dating back to 2006-2007.  In the permit’s 2007 iteration, Region 10 incorporated environmental justice into this permitting process by collecting and considering tribal traditional knowledge about the effects of development and by imposing more restrictive permit conditions.  These conditions imposed new monitoring requirements, extended the area where discharges were prohibited for all sources from 1,000 to 4,000 meters from sensitive coastal areas, and explicitly did not authorize several types of drilling discharges for new sources.
 
There are two striking facets of these case studies.  First, even as EPA found no disproportionate adverse effect on minority populations, low-income populations, or tribal populations, EPA still included somewhat more restrictive permit conditions based upon environmental justice considerations.  Second, the imposed conditions do not appear to be particularly onerous – perhaps explaining why the permittees did not challenge the additional restrictions.  Opinions vary as to the impact of these “EJ conditions” on the permitting process, as EPA likely  could have imposed these restrictions under existing statutes and regulations without any reference to environmental justice. 

Nevertheless, EPA seems to be testing the limits of its authority and telegraphing its intent to continue these efforts.  Consequently, practitioners and permit applicants should be wary of EPA seeking to impose potentially unnecessary conditions based upon environmental justice.

Will Supreme Court Accept Challenges to Obama Climate Change Authority?

Posted on June 3, 2013 by Richard Lazarus

Four votes.  That is the number of votes required to grant a Supreme Court petition for a writ of certiorari.  And because that is the same number of Justices who dissented from the Court’s landmark 2007 ruling in Massachusetts v. EPA, EPA has reason to worry over the summer.

Pending before the Court are nine petitions seeking review of a wide ranging set of challenges to EPA’s regulation of greenhouse gas emissions from new motor vehicles and new stationary sources.  Petitioners include most every significant part of American industry, 14 States, and numerous political leaders.  Some petitions, consistent with Judge Brett Kavanaugh’s dissent from the D.C. Circuit’s denial of rehearing en banc in Coalition for Responsible Regulation v. U.S. EPA, are strategically narrow; they ask the Court to review only a relatively narrow issue regarding the applicability of the Clean Air Act’s Prevention of Significant Deterioration Program to greenhouse gas emissions. Others, by asking the Court to overturn EPA’s determination that greenhouse gas emissions from new motor vehicles endanger public health and welfare seek, as a practical matter, to topple   the Obama Administration’s effort to address global climate change in the absence of new federal legislation.  But a few of the petitions jettison even any pretense of modesty by directly asking, consistent with D.C. Circuit Judge Janice Rogers Brown’s blistering dissent from en banc denial, the Court to do no less than overrule Massachusetts v. EPA.

The Solicitor General and other respondents (including 18 States) will no doubt oppose cert on all issues in their responsive filings this summer.  They have nontrivial arguments, especially given the serious questions they can raise concerning the Article III standing of petitioners to raise the particular legal claims that would likely otherwise have the most force on the merits.  But EPA is likely to be less concerned with whether review is granted than, if granted, on what issues.  The legal stakes for some issues raised are far less consequential than they are for others, which are quite enormous.

Any cert grants will likely be announced in late September, shortly before October’s “First Monday” to allow for expedited briefing and argument as early as January 2014 and more likely in February. Otherwise, all petitions will be denied on that First Monday.  It will be a long summer’s wait for all parties.