ACOEL MEMBERS CONTINUE THE DISCUSSION OF WATERS OF THE US

Posted on January 30, 2015 by David Flannery

          Members of the ACOEL Team that co-authored the earlier white paper on Waters of the US have taken the discussion further by presenting a one-hour audio program which both highlights and updates this important issue. 

          In this discussion, ACOEL members Rick Glick, Michael Wall and Karen Crawford review the judicial and regulatory history of Waters of the US as well as the proposed rule that is being advanced by USEPA and the Corps of Engineers.  In addition, these panelists offer their unique insight into the science report in support of the rule as well as the likelihood of the rule being changed in its final adaption by the agencies or upon review by the US Supreme Court. 

          ACOEL originally undertook its review of this issue at the request of the Environmental Council of States and as part of its commitment to pro bono service.  The white paper on the issue is available at:  http://goo.gl/fneJVD 

          The audio discussion by the ACOEL panel can be found at:  http://goo.gl/uv4nJi.

NJ Supreme Court Declares No Statute of Limitations Defense in Contribution Actions under State’s Cleanup Law

Posted on January 30, 2015 by David B. Farer

On Monday, January 26, 2015, the New Jersey Supreme Court issued its opinion in Morristown Associates, a closely watched case on the potential applicability of the state’s general 6-year limitations period to actions by contribution plaintiffs under the state’s strict, joint and several liability cleanup law, the Spill Compensation and Control Act (commonly referred to as the “Spill Act”).

The Court found no such applicability, and declined to impose a limitations period for commencement of Spill Act contribution actions.

The Spill Act itself expressly provides private parties with a powerful statutory cause of action to seek recompense from others (known as “contribution defendants”) for costs incurred in cleaning up and removing discharges of hazardous substances.  Defenses are statutorily limited to those set forth in the Spill Act, such as acts of war, sabotage and God.  The Spill Act does not articulate a limitations period within which aggrieved parties must commence contribution actions.

Lower state courts had differed on the question of imposing a Spill Act limitations period, and decisions of the federal district court in New Jersey had applied New Jersey’s general 6-year statute, noting that this would be consistent with the approach under CERCLA --  the federal Superfund law -- which does impose limitations periods.  In the trial court and appeals court decisions in Morristown Associates, both of the lower courts had found the state’s general 6-year period to be applicable.  The trial court further held that the 6-year limitation period commenced at the point when the contribution plaintiff should have discovered through investigation that it had the basis for a Spill Act claim, another point that the Appellate Division affirmed.

Focusing on the plain language of the Spill Act, and the legislature’s express statements of intent as set forth in the law, the Supreme Court rejected application of any limitation period.  The Court particularly looked to the restricted set of defenses under the law, and the verbiage that contribution defendants are to be afforded “only” those defenses. 

The Court found that the plain text of the Spill Act supports the legislature’s intention to include no statute of limitations defense, noting that “the Spill Act is remedial legislation designed to cast a wide net over those responsible for hazardous substances and their discharge on the land and waters of this state.”

The Court also saw “no reason to interpose in these factually complex cases a new requirement to determine when one knew of a discharge in order to afford the remediating party the contribution right that the Spill Act confers as against all other responsible parties.  We decline to handicap the Spill Act’s intentionally broad effect in such manner.”

The Appellate Division’s judgment was reversed, and the case remanded.

Toppling Caligula’s Column: Time To Clarify Murky Jurisdictional Waters

Posted on January 28, 2015 by Zach C. Miller

Caligula was the cruelest and craziest of a string of deranged Roman emperors.  Among his meanest and most irrational acts was to have edicts carved at the top of tall columns and then punish unsuspecting violators, who had no way to decipher the obscure laws etched far over their heads.  For this and other cruel acts, he was killed by his own Praetorian Guards.

For all its virtues, American environmental law has traces of this same sort of lunacy and unfair lack of certainty and notice to its regulated citizens.  Examples include the chronic uncertainty, after over three decades, about what constitutes a “solid” or “hazardous waste” under RCRA, our basic waste management law, and what constitutes a “major modification” that triggers the onerous PSD Program of the Clean Air Act. 

Nowhere is this uncertainty more glaring than in the Clean Water Act (CWA).  More than 40 years after its passage, what constitutes a vaguely-defined “water of the U.S.” regulated under the Act is now murkier than ever.  At this juncture, however, EPA and the Army Corps of Engineers have a unique opportunity to provide clarity, certainty, and consistency to this key concept by taking three critical actions that would (1) properly clarify by rule the nature and scope of CWA-regulated waters; (2) clearly describe the process for making and also tracking “jurisdictional determinations” made under such rule; and (3) provide affected parties the right to seek prompt judicial review of any final approved determination.

EPA and the Corps have undertaken the first key task by an ongoing rulemaking set to be completed in 2015.  While aspects of the agencies’ initial proposed rule were problematic, calls by some quarters to ban or “ditch the rule” altogether are misguided.  EPA and the Corps already have on the books vague rules defining regulated waters that are inconsistent with the Supreme Court‘s 2006 Rapanos decision and subsequent case law, and it is in no one’s interest simply to maintain the current status quo of uncertainty and inconsistency.  As Chief Justice Roberts emphasized in Rapanos, if the agencies had adopted reasonable rules clarifying the scope of regulated waters a decade ago, as originally planned, the confusing result in Rapanos would likely have been avoided.

In finalizing such rule, however, the agencies should recall that their role and legal duty is to identify and implement the intent of Congress under the 1972 Act, not embark on a policy making exercise about what additional areas should be regulated as a matter of public policy.  They should also strive to increase, not decrease, the clarity and certainty of what constitutes regulated wetlands and other waters.  For example, aspects of the proposed rule properly and helpfully exclude groundwater and minor ephemeral drainages but then elsewhere create confusion and inconsistency by suggesting that subsurface hydrologic connections and overly broadly defined tributaries can still make an area jurisdictional.  Overly expansive proposed approaches to determining “adjacency” and aggregating numerous small areas for their cumulative nexus to downstream navigable waters similarly increase, rather than lessen, the current regulatory confusion and uncertainty.  Whether the pending rulemaking is a helpful clarification, or just yet another Caligula’s column, depends on how the agencies resolve those and other problematic provisions in the final rule.

The agencies should also use this occasion to develop a specific process and procedures for making approved “jurisdictional determinations (JDs)” under the final rule.  That process should include improved procedures for regulated entities to present evidence that an area is not a “jurisdictional water” under the Act, and for the agencies to track and publically post all final approved JDs as they are made, so they can be used to ensure consistency and inform the public about past determinations in an area.

The third critical fix to make this JD process fair and transparent is to provide that final agency jurisdictional determinations are subject to judicial review.  The Corps’ rules already provide for an administrative appeal of approved JDs, as well as proffered or denied 404 permits.  33 CFR Part 331.  Inconsistent with that appeal process, however, the Corps and EPA have taken the position that their final decisions on JDs, unlike permitting decisions, are not judicially reviewable “final agency actions” under the Administrative Procedure Act (APA).  The 5th Circuit agreed with that position in July 2014 in Belle Company, LLC  v. U.S. Army Corps of Engineers, which is subject to a pending Petition for Certiorari to the U.S. Supreme Court.  In a pending appeal of this issue before the 8th Circuit in Hawkes Co. v. U.S. Army Corps of Engineers, two judges during oral argument on December 11, 2014 indicated disagreement with Belle, suggested the agencies’ position is inconsistent with the Corps’ administrative appeal rules, and described this claimed exemption from judicial review as “government by regulatory tyranny.”  An eventual adverse ruling by the 8th Circuit would greatly increase the odds of the Supreme Court granting certiorari in the Belle case or later in the Hawkes case.  The agencies could avoid that uncertainty and the cost, effort, and risk of litigating this issue before the Supreme Court by simply confirming by rule that final approved JDs are final agency actions subject to judicial review under the APA.  That confirmation would be consistent with the Corps’ administrative appeal rules and the Supreme Court’s 2012 ruling in Sackett v. EPA, which held that EPA compliance orders (that have a parallel practical effect) are subject to judicial review.

EPA and the Corps are at a crossroads.  They can decide to make the definition and identification of jurisdictional “waters of the U.S.” subject to the Clean Water Act clear, consistent, based on Congress’ original intent in 1972, and subject to prompt, objective judicial review.  Or, they can decide to keep that process complex and ambiguous, expanded beyond Congress’ original intent, determined case-by-case in the varying judgment of agency personnel, and unreviewable by any court – in effect etched on a proverbial Caligula’s column.  The choice should be clear.  It’s time to knock that column down.

To Frack or Not to Frack – Who Should Answer the Question?

Posted on January 27, 2015 by Catherine R. McCabe

On December 17, 2014, New York State’s Department of Environmental Conservation (DEC) announced that high volume hydraulic fracturing to recover natural gas (a/k/a “fracking”) will be banned on a state-wide basis.  Is this good law, good science, good policy (or politics)?  Perhaps the most important question is who should decide – states or local governments?  

The DEC’s decision to ban fracking is based on the recommendation of the state’s Department of Health (DOH), which just completed a two-year study of the state of the science on the environmental and public health risks posed by fracking. DEC requested this study after it received over 13,000 public comments on its 2009 draft programmatic environmental impact statement (EIS) for a proposed fracking permit program in New York State.

The DOH study concluded that the cumulative body of scientific information demonstrates that there are “significant uncertainties” about the environmental and public health risks of fracking --- including air pollution, drinking water contamination, surface water contamination, earthquakes, and community impacts such as increased vehicle traffic, noise and odor problems.  The DOH concluded that “it would be reckless to proceed in New York until more authoritative research is done.” 

In accepting DOH’s recommendation, DEC noted that its own review had identified dozens of potentially significant adverse impacts from fracking, and concluded that “the risks substantially outweigh any potential economic benefits” from fracking.  The Commissioner of DEC directed staff to complete the final programmatic EIS for fracking early this year, after which the fracking ban will be put into place.  (No fracking has been permitted in New York State in the interim.)

The DEC decision follows a June 2014 ruling by the New York’s highest court affirming local governments’ authority under the state’s constitution and statutes to use zoning laws to ban fracking in their jurisdictions.

There are good policy reasons for leaving the decision of whether to allow fracking up to local communities.  After all, they bear most of the environmental and potential public health risks that fracking poses. Local communities may be in the best position to decide whether those risks, or even perceived risks, are worth the economic benefits that fracking development can bring to local economies.  The Town of Dryden and Cooperstown cases make it clear that citizens and neighbors do not always agree on the right outcome for their communities.

But many of the local controversies seem to be based, at least in part, on citizens’ differing perceptions of the nature and level of risk that fracking poses to their environment and health.  Surely, the scientists in the state departments of health and environmental conservation are in a better position to evaluate that risk than local governments or individual citizens.  By making this science-based decision on behalf of all its citizens (whether you agree with it or not), New York State should be given credit for stepping up to perform one of the most basic responsibilities of state government – protecting the public health.   

Burlington Northern Continues to PERColate

Posted on January 26, 2015 by Robert M Olian

The Fifth Circuit has just weighed in with a significant interpretation of the Supreme Court’s landmark decision in Burlington Northern & Santa Fe Railway Co. v. United States, 556 U.S. 599 (2009). In a case involving “arranger” liability under CERCLA (the Comprehensive Environmental Response, Compensation and Liability Act), the Fifth Circuit on January 14 overturned a district court judgment that had held BorgWarner liable for leaks of perchloroethylene (PERC) from equipment sold by an affiliate of BorgWarner’s corporate predecessor. Vine Street LLC v. Borg Warner Corp., No. 07-40440 (Jan. 14, 2015)

The Fifth Circuit held there was no “intent” to dispose of PERC even though the dry cleaning equipment was designed with the knowledge that some PERC would inevitably be mixed in with the water that the system was designed to discharge. Because PERC was a useful product and the intent was to reclaim it rather than dispose of it, the Fifth Circuit strictly applied Burlington Northern’s holding that arranger liability requires an intent to dispose and remanded the case to the district court with instructions to enter judgment in favor of BorgWarner.

Vine Street usurps the Fifth Circuit’s earlier “nexus” test (the test in effect when the District Court issued its ruling), which was based on a totality of the circumstances, and gives further ammunition to those defending against CERCLA liability for releases incidental to the sale of a useful product. 

Dancing in Jackboots

Posted on January 9, 2015 by Steve McKinney

While Congress designed CERCLA to enhance EPA’s ability to respond to hazardous contamination, the statute requires a level of cooperation between federal and state authorities for certain CERCLA activities, including the NPL listing process.  But like parents forcing middle-schoolers to dance in etiquette class, Congress’s efforts to make EPA coordinate with States often begins with squabbles over who leads and ends with squashed toes. 

So how much state involvement is required under CERCLA?  More than you might think.  For example, CERCLA section 121(f) states that EPA must provide “for substantial and meaningful involvement” by each State in the “initiation, development, and selection of remedial actions to be undertaken in that State.”  This includes state involvement in decisions whether to perform preliminary assessments and site inspections, allocation of responsibility for hazardous ranking system scoring, negotiations with potentially responsible parties, and participation in long-term planning processes for sites within the State.  CERCLA section 104(c)(3) mandates that before EPA can provide a Superfund remedial action in a particular State, the State must provide EPA with specified assurances in writing.  Those assurances include the State’s agreeing to undertake “all future maintenance of the removal and remedial actions provided for the expected life of such actions” and paying “10 per centum of the costs of the remedial action, including all future maintenance.”  These statutory provisions are confirmed and enhanced by EPA’s own regulations.  See, e.g., 40 C.F.R. 300.500; id. at 300.510.  Further, two EPA guidance memoranda outline a process “to include State input in NPL listing decisions” and to resolve disputes “in cases where [an EPA] Regional Office . . . recommends proposing or placing a site on the [NPL], but the State . . . opposes listing the site.”  See Memo. from Elliot P. Laws, Asst. Admin. EPA Off. of Solid Waste and Emergency Response (“OSWER”), to EPA Reg. Admins., at 1 (Nov 14, 1996); Memo. from Timothy Fields, Jr., Asst. Admin. OSWER, to EPA Reg. Admins., at 1 (July 5, 1997) (Fields Memo.).  This policy requires EPA regional offices to “determine the position of the State on sites that EPA is considering for NPL listing . . . as early in the site assessment process as practical,” to “work closely with the State to try to resolve [any] issue[s],” and to provide the State with “the opportunity to present its opposing position in writing” before EPA Headquarters “decide[s] whether to pursue NPL listing.”  Fields Memo. at 2. 

EPA has historically taken these laws, rules, and guidance to heart, consciously trying to avoid stepping on state feet in the NPL listing process.  Of the over 200 sites that EPA has proposed for listing since 1995, only the Fox River Site in Wisconsin was proposed over state opposition—and that listing was never finalized.   EPA’s deference makes sense considering that a failure to obtain state assurances generally means EPA cannot access the Superfund to finance its remedial activities.  Unfortunately, there are signs EPA’s cooperative approach may be changing.  EPA recently proposed the 35th Avenue site in Birmingham, Alabama, for NPL listing without Alabama’s concurrence.  While EPA claims state support for the listing (79 Fed. Reg. 56,538, 56,544 (Sept. 22, 2014)), the rulemaking docket contains letters of opposition from both the Alabama Department of Environmental Management and the Alabama Attorney General.  Alabama has made clear that it has no ability to fund any remedial efforts at the site, and has no intention of providing any of the required assurances.  Moreover, EPA did not follow its own guidance regarding the “nonconcurrence” dispute.  In short, while EPA and Alabama are facing one another, EPA may have shown up to this dance wearing jackboots.  

CERCLA-LIKE ALLOCATIONS FOR DAM REPAIRS

Posted on January 7, 2015 by John A. McKinney Jr

Much of my legal work deals with hazardous material remediations driven by CERCLA or state equivalents. The allocation of these costs among liable parties, in court or out, is generally conceded to be expensive and ultimately unsatisfying to most of them.  I never thought I would see it in another area of environmental law but now I have.

Dams are regulated in my state by the New Jersey Department of Environmental Protection.  It is a big job.  Most of our lakes and ponds are dammed streams or rivers.  At one point New Jersey had 196 dams where a failure might result in probable loss of life and/or extensive property damage.  50 of these need repairs at an estimated cost in excess of $33 million. There were also another 396 dams where failure might result in significant property damage. 317 are in need of repair to bring them up to state standards at a cost in excess of $126 million.  Who pays for the necessary repairs to these dams and how?

A case decided by our intermediate appellate court on January 2nd of this year answers this question in a most CERCLA-like way.  In New Jersey Department of Environmental Protection v. Alloway Township the Appellate Division interpreted provisions of the Safe Dam Act (N.J.S.A. 58:4-1 to 4-14).  This Act “casts a ‘broad net’ of liability … so that its remedial purpose … is served” by imposing “significant obligations” on the owner or person having control of a reservoir or dam.  At issue in this case was a privately owned lake created by an earthen dam that now has township road on top which is supported by a county bridge and culverts that are part of the dam.

The New Jersey Department of Environmental Protection (“NJDEP”) brought an action against the person owning the property below the lake and the dam, the township that maintained the road on the dam and the county that maintained portions of the dam.  The court held “there are four classes of people who are subject to the statute: (1) dam owners; (2) reservoir owners; (3) those who control the dam; and (4) those who control the reservoir. It follows that if a party fits into any one of those categories, the [NJDEP] may seek enforcement of the SDA against that person.”  All the parties fell into at least one of those classes.

The Appellate Division also blessed the allocation of liability made below.  There, the judge, sitting in the Chancery Division - General Equity Part, made an equitable allocation of the costs of compliance:  sixty-five percent to the County, twenty-five percent to the property owner, and ten percent to the Township.

What – equitable allocation in another environmental program?  Cheer up CERCLA lawyers.  Our skills may be useful in dam regulatory litigation.

What’s Next for EPA’s Next Generation Compliance Initiative?

Posted on January 5, 2015 by Edward F. McTiernan

If you want a sense of emerging developments likely to impact the business community it is important to keep an eye on pronouncements from EPA’s Office of Enforcement and Compliance (OECA).  OECA is the “lead” for EPA’s Next Gen compliance initiative, which will continue to set enforcement priorities as it rolls out through 2015.  Next Gen is far from perfect and severely underfunded, but since its principles provide the guideposts for compliance policy, being well informed provides an important edge in compliance situations. 

For years EPA has been calling on federal and state enforcement managers to develop approaches that go beyond traditional single facility inspections and enforcement.  EPA took the lead in its FY 2014 National Program Manager’s Guidance OECA by announcing the Next Generation Compliance Initiative.

Next Gen focuses on five areas:

1. Designing and drafting regulations and permits that are simpler and easier to implement.

2. Using advanced emissions/pollutant detection technology so that regulated entities, government, and the public have prompt access to monitoring data concerning environmental conditions (as well as potential violations).

3. Electronic submission of permit applications and monitoring data.

4. Prompt web-posting of traditional compliance data, and presenting information obtained from advanced emission monitoring and electronic reporting (so-called big data sets) to the public.

5. Developing data analytics to guide enforcement activities.

EPA kicked off Next Gen in style.  A major policy statement appeared in the September-October 2013 issue of ELI’s Environmental Forum.  The Next Gen strategy was reaffirmed in OECA’s FY 2015 national program manager’s guidance; in numerous interviews and public statements by senior EPA officials and in a compliance plan announced in October 2014.  These efforts are continuing.  Indeed, George Washington Law School will convene the latest in a series of events focusing on Next Gen compliance on March 26 and 27, 2015.  The symposium will address the role of advanced monitoring in environmental compliance and enforcement.  In addition, OECA staff have presented a number of Next Gen workshops to state officials.

Despite EPA’s roll-out efforts, Next Gen has had critics who find the initiative too vague to be helpful. The Government Accountability Office found that OECA lacks a strategic plan to implement the initiative. In addition, Next Gen does little to reward good behavior.   In fact, Next Gen ignores positive feed-back as a driver of improved compliance.        

While increased use of technology and public disclosure sound great, it remains to be seen how OECA will implement Next Gen in practice. Nevertheless, whether Next Gen has staying power or not, there are several themes that need to be considered:

1.       OECA’s focus on improved transparency and community participation is here to stay and enhanced community outreach will increasingly find its way into EPA (and state) regulations.  To keep pace, the regulated community needs to continuously rethink how to use media (new and old) to inform and engage stakeholders, especially members of vulnerable communities.

2.       EPA and delegated states will continue to experiment with ‘innovative enforcement strategies’ using advanced monitoring and data analytics and that rely less upon traditional inspections; self-reporting and tips.  Industry should look for opportunities to provide input to these efforts.       

3.       Monitoring data is now a public resource, easily shared and routinely subjected to new uses. Therefore, rigorous quality assurance and quality control is essential at every step of the data collection and reporting cycle. Use of software that flags inconsistent results or mathematically impossible outcomes (like EPA’s Greenhouse Gas Reporting Tool) should be dramatically expanded.  

4.       E-reporting cannot be a one-way street based simply on replacing paper reports with electronic submissions.  OECA needs to provide guidance and support so that regulators can invest resources and develop policies that ensure that they can use e-reporting to provide relevant compliance assistance in real time. 

We’ll need to wait and see whether OECA’s Next Gen Initiative will play a major role in shaping future environmental enforcement.   In the meantime, OECA’s framework for achieving more effective compliance can serve as a guide for advanced companies to refine their environmental management systems while helping to focus enforcement efforts on the worst performers.