Minefields (Still) Ahead: EPA’s Improved Good Samaritan Policy for Abandoned Mines Doesn’t Pan Out

Posted on April 7, 2014 by Zach C. Miller

For over forty years, the risk of incurring major liability under the Clean Water Act (CWA) has effectively discouraged “Good Samaritan” volunteers from cleaning up abandoned hardrock mine sites throughout the U.S. Past efforts to amend the CWA to remove this disincentive have been blocked, based in part on the assumption that EPA policies alone should be sufficient to remove the threat of CWA liability and effectively encourage such cleanups. 

In the words of the Gold Rush prospectors, that assumption and related agency policies have simply not panned out. A Good Samaritan Initiative adopted by EPA in 2007 and clarified and “improved” in 2012 has had virtually no effect on removing this threat of CWA liability or causing actual cleanups involving water impacts to occur. Meanwhile, willing Good Samaritans continue to be discouraged from conducting useful remedial actions, and these problem sites remain untouched.

During this same period, flexible state and federal “brownfield” and voluntary cleanup programs have cleaned up hundreds of former industrial sites and revitalized key urban areas, including in lower downtown Denver. But some members of Congress have rigidly refused to apply similar common-sense approaches to abandoned mine sites.

The time has come to recognize that informal agency policies encouraging these voluntary mine cleanups have not fixed and legally cannot solve this long-standing problem and to embrace the practical types of legislative approaches that have worked in the urban brownfield programs. The Good Samaritan CWA amendments introduced in 2013 by Senator Udall and others offer just such a practical solution. Past opponents of such legislation should acknowledge that agency efforts alone cannot remove the existing disincentive for cleaning up these sites and should support this modest, practical step to facilitate these mine cleanups.  

The Problem. According to the GAO, there are over 160,000 abandoned hardrock mines, mainly in the western U.S., that can leach heavy metals such as lead, mercury and arsenic into the environment. EPA’s estimate is over three times higher. EPA further estimates that historic mines have contaminated over 40 percent of the watersheds in the west and would cost more than $35 billion to clean up. These former mines are considered “orphan” sites, because their owners and operators are either dead, defunct or insolvent.

Remediating these sites has proven to be an intractable problem for several reasons. One is the technical difficulties and enormous costs of remediating such sites in full compliance with applicable environmental laws. Another is the risk of incurring substantial liabilities or obligations under those laws for a non-compliant or partial clean up.

The Disincentive. While CERCLA contains a “Good Samaritan” provision that shields qualified non-liable volunteers from incurring liability under that law when they conduct voluntary remedial actions, the Clean Water Act (CWA) currently contains no such exemption. Because the most serious of these abandoned mine sites involve impacts to water quality, this threat of CWA liability has severely inhibited both private Good Samaritans and state and local governments from conducting common-sense, voluntary cleanups that would significantly improve the affected watersheds.

Beginning in 1995 and continuing to the present, Senator Baucus and others have introduced various “Good Samaritan” amendments to the CWA aimed at removing this major legal disincentive. However, because the amendments would have allowed less than full compliance with otherwise applicable water quality standards and discharge permit requirements, certain NGOs and members of Congress to date have strongly opposed and defeated such efforts.

This well-intentioned opposition has been misguided and a classic instance of the perfect being the enemy of the good. By demanding that remediation of these orphan sites be fully compliant and permitted without exception, only a handful of minor abandoned mine cleanups involving water have occurred during the last four decades.

Ineffective EPA Initiative. To address this Congressional logjam and currently discouraged Good Samaritans, EPA has laudably attempted to address this disincentive by adopting in 2007 an administrative “Good Samaritan Initiative”. The Initiative consisted of an EPA statement of Interim Principles and a “Comfort Letter” and model settlement agreement offered to non-liable entities that volunteer to remediate abandoned hardrock mines. This initial guidance focused primarily on the fact that, under the CERCLA 121(e) “permit shield,” no permit would be required under the CWA or other laws while an on-site CERCLA “removal” action was occurring. However, that guidance did not address the fundamental question troubling Good Samaritans about what happens once the removal is completed but some discharge unavoidably continues. As a result, that Initiative did little to allay those concerns and had no appreciable effect on increasing efforts to remediate abandoned mines with water impacts.

In recognition of that ineffectiveness, EPA in December 2012 attempted to bolster its 2007 Initiative by issuing a guidance Memorandum describing two clarifications to the 2007 Guidance. The first was that a CERCLA removal action could be extended through periodic monitoring or other activities, which would lengthen the period when the CERCLA permit shield would apply. However, the prospect of being engaged in a very-long-term CERCLA action has neither enthused Good Samaritans nor addressed their root concern about CWA liability once the CERCLA action is done.

To address that key issue, EPA further clarified that, based on the application of five listed factors, a Good Samaritan cleaning up an abandoned mine “might” not be considered by EPA to be a liable “operator” required to obtain an NPDES discharge permit. All of those factors relate to whether the volunteer has the “power or responsibility” to access the site and control the ongoing discharge after its remedial action is finished.

While issued with much fanfare in 2012, this “improved” Good Samaritan Initiative has again had virtually no effect on addressing the concerns of potential volunteers or increasing cleanups of these sites, for several reasons. First, EPA has emphasized that this Initiative merely explains its current interpretation but is not binding on EPA, third party NGOs, or the courts and “may not be relied on to create a right or benefit … by any person.” Not exactly the assurance that Good Samaritans want and need. Second, EPA stresses that this guidance applies only to Good Samaritans at orphan mine sites, but the factors for determining whether an entity is a CWA-liable “operator” cannot be unique to those parties. As a result, potential Good Samaritans have rightly been skeptical whether they can make any potential CWA liability vanish simply by arranging that their right to access and conduct operations on the affected site terminates upon completion of some defined task. If a mining lessee or contractor attempted such an arrangement, EPA and the courts no doubt would reject any claim it was not a CWA-liable operator. There currently is no legal basis to treat volunteers any differently. This point also offers no comfort to a governmental volunteer, who likely will always have the power of access and thus trigger operator liability.

The 2012 memo also repeatedly indicates that, if a Good Samaritan is not deemed a responsible operator, then the site owner would be required to comply with NPDES permitting requirements. But EPA ignores the fact that, at these orphan sites, there simply is no owner (unless it is the U.S., which to date has largely ignored its own liability).

Over a year after issuance of this “improved” Good Samaritan Initiative, it is clear that this EPA policy has been ineffective in increasing mine cleanups or addressing the CWA legal disincentive for such actions. To the contrary, several groups dedicated to these voluntary efforts have made clear that these nonbinding agency guidance documents have had little to no impact, and the groups’ efforts continue to be stymied in the absence of effective legislative reform.

The Proposed Legislative Fix. To address this problem, Colorado Senators Udall and Bennett have introduced S. 1443, the Good Samaritan Cleanup of Abandoned Hardrock Mines Act of 2013. The bill creates a new Good Samaritan Permit under the CWA, to be issued by EPA or an approved State or Tribe, that would authorize a Good Samaritan volunteer to conduct a specified remedial action at an abandoned mine site. Those actions could include relocating waste rock, re-routing drainages, establishing wetlands, and similar measures that would greatly improve watershed conditions, but they would not need to result in complete compliance with otherwise applicable water quality standards or require a long-term discharge permit. Compliance with that special permit would then shield the volunteer from liability under the CWA and cure the current disincentive for volunteers willing to address these sites.

This huge, languishing problem of abandoned hardrock mine sites needs a solution. This bill isn’t perfect. But it’s a good start. Let’s get started.

Haven’t Complied with a Court Order Requiring the Adoption of a Rule? Watch Out.

Posted on April 2, 2014 by John A. McKinney Jr

What happens when an administrative agency actually fails to comply with a court order mandating the adoption of regulations? New Jersey administrative agencies and bodies have an idea despite the state’s Supreme Court modification of a lower court’s order. As state environmental agencies and boards often face court orders mandating new or modified regulations, they should know what almost happened in New Jersey.

In New Jersey, the nation’s most densely populated state, there is a constant tug between development and preservation. Two New Jersey Supreme Court decisions and the state’s Fair Housing Act address housing. In effect, they require all 566 municipalities to provide for the development and existence of low and moderate-income housing so that each municipality meets its fair share of the region’s housing needs. The Act created the Council on Affordable Housing (COAH) to establish housing fair share numbers for the municipalities and the regulatory means to meet them. COAH has been criticized routinely and has been the subject of several major decisions since its creation. The last such decision, In re Adoption of N.J.A.C. 5:96 & 5:97 by N.J. Council on Affordable Housing, was in September of 2013 when the Supreme Court ordered COAH to enact new rules within five months. With COAH under attack from the current administration and with several seats on its board empty, meeting the deadline seemed unlikely. COAH held no meetings within the five months and the deadline was not met.

As a result of missing the deadline, the Superior Court-Appellate Division, our intermediate court, issued a decision and order of March 7, 2014, that should be a lesson to all regulatory bodies. The Appellate Division took the extraordinary measure of requiring a COAH meeting five days after issuing the order to be attended by sufficient board members to constitute a quorum, at which meeting the board was to instruct its executive director to prepare compliant rules. The Appellate Division required that the new rules be presented to COAH two weeks later. On that date, COAH was to meet again with a quorum, conduct an official meeting and adopt the rules consistent with the state’s Administrative Procedures Act. Six weeks later, again with a quorum required, COAH was to meet to review all public comments, consider them and any amendments proposed by the executive director and adopt the rules.

As if the level of detail in directing COAH was not enough, here’s the part of the decision and order that caused a stir. If this aggressive schedule was not met in any way, the Appellate Division ordered that “each member of the COAH Board will be ordered to personally appear before this court … to show cause why he or she shall not be declared in contempt of this court’s authority subject to monetary sanctions, civil detention, and such other sanctions the court may deep suitable to induce compliance with this order.” If this order does not send a chill into the hearts of tardy regulators, nothing will.

Perhaps the chill was ameliorated by the subsequent order of the New Jersey Supreme Court of March 14, 2014, setting more lenient time frames for compliance. The Supreme Court’s order also dropped the language about appearing personally at a contempt hearing but another court might not if its order to issue regulations is not met. For state regulators in such a situation, their court of highest jurisdiction may not back away from the approach taken by the New Jersey Appellate Division, establishing a specific agency schedule and threatening severe personal consequences in the face of non-compliance with a court order.

There may be nothing particularly new about the judicial power to enforce its orders, including use of citation for contempt. In the context of reviewing administrative regulations and dealing with appointed or elected boards or agencies, exercise of this judicial power generally includes recognition of and sensitivity to the separation of powers and the “real world” circumstances in which agencies act. However, these recent New Jersey orders should put regulators on notice that reviewing courts will be less tolerant of failures to implement their decisions.

Joseph Sax: Innovator and Inspirer (1936-2014)

Posted on April 1, 2014 by David B. Farer

Within three days in March, ACOEL lost two Fellows who were among the most important figures in the history of environmental law. David Sive, who died on March 12, 2014, was memorialized on our blog in the March 26, 2014 posting by our colleague Daniel Reisel, Mr. Sive’s longtime law partner. Three days earlier, on March 9, 2014, Professor Joseph L. Sax died in San Francisco at the age of 78.

Joseph Sax, Professor Emeritus at the University of California, Berkeley, was responsible for establishing the public trust doctrine in environmental law; the concept that there is a public interest in the protection and preservation of certain natural resources such as water bodies, shores, air and particular lands. He wrote of the principle in a seminal 1970 article in the Michigan Law Review, “The Public Trust Doctrine in Natural Resources Law: Effective Judicial Intervention.”

The doctrine was taken up by environmental advocates as the basis to pursue both legislative initiatives to protect natural resources, and judicial actions and remedies to conserve lands, waterways and air. 

In 1979, the National Audubon Society, evoking the public trust doctrine, sued in California state court to enjoin the Los Angeles Department of Water and Power from diverting certain waters from non-navigable tributaries of Mono Lake, far north of the City, due to the impact that the diversions would have on the lake itself. In February, 1983, the Supreme Court of California, referencing a number of the historical antecedents discussed in Professor Sax’s Michigan Law Review article, and citing the article itself for its history of the doctrine, rendered an important and influential decision in favor of the National Audubon Society, recognizing the application of the public trust doctrine both to navigable waters such as the lake, and to the non-navigable tributaries that feed it.

The doctrine has been incorporated in the laws of a number of states, including the Michigan Environmental Protection Act of 1970, which Professor Sax wrote while on the faculty of the University of Michigan Law School. It has also been adopted in other nations. According to the obituary published in the New York Times, the doctrine has been has been advanced almost 300 times in litigation in state and federal courts in the United States.

Professor Sax graduated from Harvard University (1957) and the University of Chicago Law School (1959). Before beginning his long and distinguished teaching career, he worked at the Department of Justice. He began teaching at the University of Colorado in 1962, then went to the faculty of the University of Michigan in 1965, and joined the U.C. Berkeley School of Law faculty in 1986. Throughout his career as a teacher and scholar, Professor Sax was actively involved in advancing environmental causes and advocacy.  From 1994 to 1996, he also served as counsel to Secretary of the Interior Bruce Babbitt, during the Clinton administration.

Innovative Renewable Energy Project Starts Up in Wisconsin

Posted on March 31, 2014 by Michael McCauley

Quarles & Brady recently represented Wisconsin Energy Corporation and Wisconsin Electric Power Company (doing business as "We Energies") in the construction and commencement of operation of a $250 million biomass-fueled co-generation plant. The project is located at Domtar Corporation's paper mill facility in Rothschild, Wisconsin. Wood, waste wood and sawdust are now being be used to produce 50 megawatts of electricity. The new co-generation project also supports Domtar's sustainable papermaking operations. 

The new facility adds another technology to We Energies' renewable energy portfolio. That portfolio includes the 145 megawatt (MW) Blue Sky Green Field Wind Energy Center in Fond du Lac County and the 162 MW Glacier Hills Wind Park in Columbia County. Under Wisconsin law, utilities must use renewable energy to meet 10 percent of the electricity needs of their retail customers by the year 2015. With the start of commercial operation of the Rothschild biomass plant, We Energies estimates that it now has secured enough renewable energy to remain in compliance with the state mandate through 2022. Together, We Energies' three renewable energy operations are capable of delivering nearly 360 MW of renewable energy, enough to supply approximately 120,000 homes.

The Rothschild biomass project created approximately 400 construction jobs and 150 permanent jobs in the surrounding community. This includes independent wood suppliers and haulers from northern and central Wisconsin who are now securing waste wood for the project. We Energies appeared in proceedings before the Public Service Commission of Wisconsin in support of the Company's application for a Certificate of Authority for approval for the biomass plant. The Company filed an application for an air permit and other environmental approvals for the project, including the preparation of environmental assessments in support of the regulatory decisions. 

The air permit for the project was issued on March 28, 2011. We Energies obtained one of the first PSD BACT (Prevention of Significant Deterioration - Best Available Control Technology) determinations for this project for Greenhouse Gas (GHG) emissions in the U.S. under EPA's GHG Tailoring Rule. The Company worked with the Wisconsin Department of Natural Resources (DNR) in developing a novel case-by-case Maximum Available Control Technology (MACT) determination for the biomass boiler under the Section 112 (hazardous air pollutant) provisions of the federal Clean Air Act. The permit was challenged by several environmental groups. The Company prevailed in the permit appeal process. The appeal was dismissed on the merits by the Marathon County Circuit Court in October, 2011. The facility started commercial operation on November 8, 2013.

In Memoriam: David Sive

Posted on March 26, 2014 by Daniel Riesel

David Sive, a founder of modern environmental law, brilliant litigator, untiring mentor and dear friend to many of us, has passed away. He was 91. 

David Sive, the founding partner of Sive, Paget & Riesel, P.C. was a great friend to his colleagues, an exceptional litigator, and a loving husband, father, and grandfather. As an intellectual and spiritual leader of the modern environmental law movement, he devoted his energies and passion to protecting the environment. 

A veteran of World War II, David fought in the Battle of the Bulge. After graduating from Columbia Law School in 1948, he emerged as an authority on administrative law. However, his love of the wilderness soon led him into the then-nascent field of environmental law. He quickly became an authority in this new field, and was often referred to as the father of modern environmental law. His sustained success in the courtroom over decades established vitally important precedents for later generations of environmental lawyers. 

David was one of the first lawyers to bring litigation effectuating the “forever wild” provisions of the New York State Constitution, and litigated a number of cases protecting the environment in his beloved Adirondack and Catskill Mountains. In the 1960s, he played a leading role in the administrative and judicial proceedings that prevented the construction of a power plant on Storm King Mountain along the Hudson River, and helped to establish aesthetics as a recognized environmental value. 

In subsequent decades David litigated numerous important environmental cases. He prevented the construction of the proposed Hudson River Expressway (a precursor of the ill-fated Westway Project). He challenged up to the U.S. Supreme Court the Nuclear Regulatory Commission’s testing of atomic weapons off Alaska’s Amchitka Island, and litigated the principal case establishing that the military is subject to the National Environmental Policy Act. In a landmark case decided by the New York Court of Appeals, David established that the preservation of wilderness areas for the benefit of the public serves charitable, educational, and moral purposes and entitles nature preserves to the tax-exempt status that is essential to their survival. 

David was proud of his role as a teacher, introducing generations of young lawyers to the emerging field of environmental law, both as a member of the adjunct faculty of Columbia and Pace Law Schools, and as the founder of several continuing legal education courses for the Environmental Law Institute and the American Law Institute- American Bar Association. David’s lectures and written scholarship, including an environmental column in the National Law Journal and articles in numerous law reviews, helped to shape the field of environmental law.

David also played a critical role in the creation of the Environmental Law Institute, the Natural Resources Defense Council, and other prominent national environmental organizations, as well as scores of regional and local entities. His legacy is permanently embedded in innumerable precedent-setting cases. But to those who knew David well and worked with him closely, his gentle way and kind soul will be missed most of all.

The Trains Don’t Wait... GHG Permits Leaving the Station

Posted on March 24, 2014 by Catherine R. McCabe

While the world waits for the Supreme Court to decide whether EPA can regulate greenhouse gas (GHG) emissions from stationary sources under the Clean Air Act, EPA and state permitting authorities have moved ahead to issue GHG permits. Some of those permits are encountering legal challenges. The Sierra Club and citizen activists are challenging permits issued by EPA Regions as insufficiently stringent, and urging EPA to use its Prevention of Significant Deterioration (PSD) permitting authority to require greater use of solar energy and carbon capture and sequestration (CCS) at new facilities.

So far, EPA’s Environmental Appeals Board has rejected two citizen challenges to GHG PSD permits issued by EPA Regions. On March 14, 2014, the Board denied the Sierra Club’s petition for review of a GHG permit issued by Region 6 for a new natural gas-fired power plant in Harlingen, Texas. In re La Paloma Energy Center, LLC. (Those of you who follow events in Texas will recall that EPA is currently running the GHG permitting program in that state, but has proposed to approve the state’s application to assume responsibility for that program.) The Board rejected Sierra Club’s arguments that the permit’s GHG emission limits were not stringent enough to meet BACT standards and that Region 6 should have required La Paloma to consider adding a solar energy component to its power plant. The Board cautioned, however, that there is no “automatic BACT off-ramp” for solar energy alternatives, and emphasized that permitting authorities must consider suggestions for adding solar energy components at new facilities on a case-specific basis.

In 2012 the Board rejected similar arguments by citizen activists who urged Region 9 to use its PSD permitting authority to require a new hybrid (gas-solar) power plant in California to reduce GHG emissions by increasing its planned solar generation capacity. In re City of Palmdale. The proposed plant was to be fueled primarily by natural gas, with a modest (10%) solar power component to satisfy California renewable energy requirements. The decisions in both City of Palmdale and La Paloma relied heavily on the Regions’ findings that there was insufficient space at the project sites to accommodate the solar power generation capacity that the petitioners were advocating. 

The Palmdale decision also upheld Region 9’s rejection of CCS as a BACT requirement for that facility based on cost considerations. The estimated annual cost of CCS would have been twice the project cost (annualized over 20 years) in that case. Sierra Club has renewed the debate over the affordability of CCS in a new PSD permit appeal that is currently pending before the Board. In re ExxonMobil Chemical Company Baytown Olefins Plant. Region 6 rejected the CCS option in this case based on a finding that the cost would be disproportionately high. Stay tuned for a Board decision in the next few months . . . 

*Any views expressed herein are the views of the author and do not necessarily reflect the views of the U.S. Environmental Protection Agency or the United States.

Massachusetts High Court Upholds Environmental Agency’s “Improvement” Of Statute: Will The Us Supreme Court Follow Suit?

Posted on March 17, 2014 by Stephen Leonard

How far can an agency deviate from a statutory scheme in order to achieve what it sees as the goals of that scheme? Can the regulatory structure “improve on” the statute?  These issues are currently playing out in two closely watched cases.

Last year these pages described a then-undecided Massachusetts state court case that had attracted a surprising degree of national attention. Pepin v. Division of Fisheries and Wildlife began as a relatively straightforward challenge to an agency determination that the plaintiffs’ land provided habitat for the Eastern Box Turtle and that construction of their planned retirement home was therefore subject to regulation under the Massachusetts Endangered Species Act (MESA). In the course of judicial appeals of the agency decision, the plaintiffs, with new counsel, shifted the focus of their argument to a challenge to the regulations themselves. When the Massachusetts Supreme Judicial Court (Mass SJC), acting sua sponte, transferred the case to its own docket, interest in the case spiked dramatically. Amicus curiae briefs were filed not only by state-based groups, on both sides of the issue (Massachusetts Audubon Society, Development Council of Western Massachusetts, Home Builders Association of Massachusetts), but also by those from farther afield (Pacific Legal Foundation, Defenders of Wildlife, National Association of Homebuilders, The Nature Conservancy). Clearly, something was at stake. And now, just as the Mass SJC has reached a decision in Pepin, very similar arguments are being made, with even more at stake, in this year’s most closely watched environmental case, Utility Air Regulatory Group v. EPA, the United States Supreme Court’s review of the Obama Administration’s attempt to regulate greenhouse gas emissions from stationary sources. 

To understand these issues, some background on the Massachusetts endangered species regulatory scheme and the challenge to it is necessary. (These are described in more detail in the earlier posting.) The challenged regulations established a process for mapping “priority habitats,” areas that are important for species that fall into any of the three categories established under MESA – in descending order of the peril that they face, endangered species, threatened species, and species of special concern. These Priority Habitat regulations require that before a project is undertaken in such an area, it must be reviewed by the Division of Fisheries and Wildlife to determine whether it will result in a “take” of a species falling into any of the three categories.  (“Take” is very broadly defined in the statute and includes habitat alteration.) If a take will occur, the regulations provide, the project may nevertheless proceed if it can be conditioned in such a way as to avoid that result or, in more difficult cases, if the project proponent takes other steps that will result in “a long-term net benefit to the conservation of the impacted species.”   

In practice, the evidence showed, 75% of projects proposed in Priority Habitat have been approved without conditions, 22% have proceeded with conditions, and 3% have required that other measures, resulting in a “long-term net benefit,” be taken in order to permit the project to proceed. Because of this history, at least parts of the development community in Massachusetts had accepted the Priority Habitat regulations as a reasonable way of accommodating both developers’ interests and the purposes of MESA.  

This acceptance was likely based on something else as well: As a practical matter, the Priority Habitat regulations were promulgated in lieu of regulations under another scheme, specifically set out in the legislation but never put into effect by the Division of Fisheries and Wildlife. MESA authorizes the Division to designate as “Significant Habitat” areas that are important to the survival of endangered and threatened species (but not species of special concern). And MESA severely constrains development in areas that the Division has so designated. But, because of the severity of the constraint, the Act also establishes substantial procedural protections before a particular property can be designated as Significant Habitat.  

Rather than designating any Significant Habitat, the Division, relying on a general grant of authority to adopt regulations, created the Priority Habitat scheme, with its less severe restrictions on development and its less burdensome (for the agency) procedural requirements. In short, the Division chose not to adopt regulations specifically contemplated in the enabling legislation and  adopted instead regulations that were easier to administer, less intrusive for those in the regulated community who would have fallen under the legislatively-contemplated scheme and, as a consequence, arguably more effective at protecting at-risk species in Massachusetts. Doing that, though, made the Priority Habitat regulations subject to challenge by those who might prefer that there be no regulation of land use in the interest of protecting at-risk species at all.

The challenge in the Pepin case to the Massachusetts wildlife agency’s rulemaking power is very like the industry challenge to EPA’s rulemaking in Utility Air Regulatory Group. On February 18 of this year, the Mass SJC upheld the validity of the Priority Habitat regulations. On February 24, the United States Supreme Court heard argument on the challenge by industry and certain states to the Environmental Protection Agency greenhouse gas regulations. (Other states intervened in support of the regulations, and there was extensive amicus participation.) At the heart of the challenge in the Supreme Court is an attack on EPA’s determination that it would raise very substantially the threshold at which emitters of greenhouse gases would be regulated; the emission levels specified in the Clean Air Act are much lower, but they were intended for “conventional” pollutants, not greenhouse gases. Using the Congressionally-specified levels would have been an administrative nightmare for EPA. And it would have been enormously burdensome for businesses and even individuals.  EPA therefore determined to use higher thresholds.  This presumably benefits the industry petitioners and the states that support them. But that is not the point. EPA’s action leaves it subject to the accusation leveled at the Massachusetts Division of Fisheries and Wildlife: That it re-wrote a statute in order, in its view, to make it work better, and that an administrative agency may not do that.

The Mass SJC had little difficulty rejecting this claim. The unanimous opinion begins its discussion of the validity of the Priority Habitat regulations by noting that “[d]uly promulgated regulations . . . are presumptively valid and ‘must be accorded all the deference due to a statute.’” And in analyzing whether the plaintiffs had overcome that presumption, the court “look[ed] to the statute as a whole to determine the scope of the agency’s power.” In the recent United States Supreme Court argument, EPA sought to invoke these principles in defense of its greenhouse gas regulations.  And it received some support from the Court. Justice Elena Kagan, according to the New York Times, acknowledged that what the agency did “was true to the law’s larger purpose.” But other Justices were less comfortable: Justice Anthony Kennedy “couldn’t find a single precedent that strongly supports [EPA’s] position.” And Justice Samuel Alito insisted that the agency’s use of its own threshold numbers, rather than those in the Clean Air Act, was unprecedented “in the entire history of federal regulation.”

The two cases are not the same, of course: the statutes are different; the agencies’ actions and choices were different; and the governing administrative law principles may be different in some respects. But it seems likely that the outcomes in the cases turned and will turn less on any of those factors and more on the views of the judges deciding them about the appropriateness of administrative agencies  making their own judgments about how best to accomplish broadly-stated legislative objectives.

One could easily argue that the Massachusetts Division of Fisheries and Wildlife took a more dramatic step, in declining to promulgate regulations that the enabling legislation called for and instead promulgating regulations that were not specifically contemplated by that legislation, than EPA did in adopting the regulatory model that Congress had called for but limiting its reach when it was clear that not doing that would be havoc-making. Perhaps if the Massachusetts Supreme Judicial Court had reviewed EPA’s actions and the United States Supreme Court had reviewed the Priority Habitat regulations, the results would reflect that distinction. But they didn’t. And what we got, and likely will get, are decisions that reflect as much the views of the members of those courts as they do the substantive nuances of the cases themselves.

A CASE OF THE VAPORS: When the Fog Clears, Will the New ASTM Standard for Phase I Environmental Site Inspections Trigger Significant Litigation Over Vapor Intrusion?

Posted on March 12, 2014 by John Manard

Among other changes, the new standard now defines “migration” to include the movement of vapor in the subsurface. That change makes it more clear that the environmental professional conducting a Phase I must, when identifying releases and threatened releases, evaluate the potential for vapors to migrate from contaminated subsurface soils and ground water into the indoor air of buildings on the surface.

While many lawyers and environmental professionals believed the old standard already required an evaluation of the potential for vapor intrusion, there was no consensus, and there are many Phase I reports out there that do not evaluate that potential. Because treatment of vapor intrusion under the old standard was a topic of genuine dispute among practitioners, you might think we could accept this clarification and move on. Not so.

The USEPA rolled a grenade into the tent when, in its preamble to the final rule sanctioning E1527-13, it stated that it “. . . wishes to be clear that, in its view, vapor migration has always been a relevant potential source of release or threatened release that, depending on site-specific conditions, may warrant identification when conducting all appropriate inquires.” (78 Federal Register 79319 (December 30, 2013).

The USEPA’s clarification has prompted some discussion in the blogosphere about potential malpractice claims against environmental professionals who failed to address relevant vapor intrusion issues in past Phase I reports. Closely related is the question of whether landowners currently relying on one of CERCLA’s landowner liability protections may be at risk due to the inadequacy of their consultant’s work. These are legitimate concerns and only time will tell if theoretic liability leads to actual liability and litigation.

However, it does not appear that the sky is falling and there are reasons to suggest that a landside of litigation over this issue is unlikely. While litigation can be expected under the right (very limited) fact pattern, the following factors should alleviate concerns about widespread litigation:

  • While the aggregate Phase I universe is vast, the portion of that universe affected by the vapor intrusion issue is very limited; involving only circumstances where subsurface contamination is known or suspected.
  • Even when genuine vapor intrusion questions exist, a cause of action for malpractice requires damages. Simple receipt of a substandard Phase I report is not enough. The recipient of the report must experience damages related to the failure to address vapor intrusion. I see two such scenarios:
    • A landowner faces liability for remediation of a vapor intrusion problem, and does not qualify for liability protection under CERCLA because the Phase I failed to evaluate the threat of vapor intrusion.
    • A landowner discovers that a vapor intrusion problem reduces the value of its property, after relying on a Phase I that did not evaluate the threat of vapor intrusion.
  • In the former situation, case law demonstrates that courts are reluctant to deny CERCLA liability protection to landowners who reasonably rely on an environmental professional’s Phase I report to satisfy AAI. Reliance on an environmental professional would seem particularly reasonable and appropriate regarding a technical issue such as whether or not an assessment should evaluate the threat of vapor intrusion. If landowner liability is improbable, the specter of derivative Phase I malpractice claims is also diminished. 
  • Concerning the latter (reduced property value) scenario, most Phase I reports are conducted in order to satisfy AAI and qualify for landowner liability protection. While use of the ASTM standard is not limited to that task, the standard directs the environmental professional to assume, absent other direction from the user, that satisfaction of AAI is the user’s purpose. If the user obtains the liability protection it bargained for, can it maintain a malpractice action? The answer to that question will depend upon the facts of each case, but I suspect that the user will face an uphill battle.
  • Only after paring down potential vapor intrusion disputes to those involving actual relevant damages do we reach the substantive malpractice question of whether or not the failure to address vapor intrusion in a Phase I is a breach of a professional standard of care. 

The answer to that breach of standard question is beyond the scope of this note and will require a descent into the bowels of the ASTM standard. I suggest that the USEPA’s proclamation is not dispositive because it addresses compliance with its own AAI requirement, not compliance with the ASTM standard guiding the environmental professional; a distinction that may make a difference.

For transactions in the pipeline when the December 31, 2013 final rule was promulgated, most will not be affected because they do not present the particular facts and circumstances (i.e., subsurface contamination) triggering a vapor intrusion assessment. In those transactions where vapor intrusion is an issue, however, it is key that AAI be completed prior to the acquisition of property. For pending transactions, deficient Phase I assessments should be revised or supplemented to address vapor intrusion potential. If the property has already changed hands, the new owner’s claim to any of the CERCLA landowner liability protections will be at risk. 

How great a risk? Time will tell. But it is clear that good faith arguments that vapor intrusion need not be part of new Phase 1 assessments are no longer tenable.

Working with Utilities to Bring More Clean Energy into the Grid

Posted on March 10, 2014 by Peter Lehner

Environmentalists and utility companies don’t always see eye to eye. But when we do find common ground, big changes can happen. Earlier this month, NRDC and the Edison Electric Institute, which represents all the nation’s investor-owned utility companies, serving 220 million Americans, announced an agreement to work together to bring more clean energy and efficiency into the electric grid.

Moving toward a cleaner, more efficient electric grid is less a question of technology than of policy. Outdated utility regulations can pit utility companies and clean energy against each other. Under the traditional regulatory scheme, utilities have to sell increasing amounts of electricity in order to recover their costs. So when customers start putting up solar panels on their roofs, the utility “loses.” Or when customers weatherize their homes and don’t need as much heat to stay warm, the utility “loses.”

This outdated regulatory model is slowing the growth of clean energy and efficiency, and jeopardizing the development of the grid that utilities and customers would all like to have: an enhanced grid that provides clean, reliable, affordable electricity with less carbon and toxic air pollution. In order to speed up the deployment of clean energy and efficiency across the country, and bring our grid into the modern era, utility companies and customers need to be rewarded for doing the right thing.

NRDC and the EEI have come to a path-breaking agreement on key policy changes that will make our electric grid cleaner and more robust. The most significant change is a shift in thinking. Instead of being in the business of selling electricity, a commodity, utilities should be in the business of providing better quality electricity services. This means more efficient electricity, from diverse clean sources like wind and sun, supplied by a robust, modern grid that can take advantage of clean energy, whether it’s generated from someone’s roof or from a power plant. Both utilities and clean energy providers will be winners if this is done right.

Having the support of utilities is a major step forward in pushing for reform. When utilities are rewarded for making our grid better--cleaner and more efficient--instead of merely for selling more electricity, we’ll see improvements much faster. More clean energy, more efficiency, more reliability, more options for consumers. Working together, with a host of diverse partners, NRDC and EEI can help convince state utility commissions to update their regulatory policies and help usher in a new era of clean, reliable, affordable electricity.

What Would Leon Billings Think?

Posted on March 7, 2014 by Richard Lazarus

Almost as soon as U.S. Supreme Court Justice Scalia joined the bench in the fall of 1986, he made clear his disdain for arguments that the meaning of statutory text could be gleaned from its legislative history. And advocates before the Court who made the mistake of equating “congressional intent” with a statement made by an individual member of Congress during a hearing or a colloquy on a chamber floor could expect a sharp rebuke from the Justice.

The debate at the Court about the proper role of legislative history in statutory construction was not fully joined, however, until 1994 when Justice Stephen Breyer joined the bench. From the outset, Breyer, a former Senate staffer, made equally plain his view that legislative history was both fair game and could be highly relevant.

Indeed, Scalia’s and Breyer’s contrasting views regarding textualism in both statutory and constitutional interpretation became so celebrated that they literally took their debate on the road. To be sure, theirs was a far cry from the Lincoln-Douglas Debates on slavery 150 years earlier, but for legal scholars and Supreme Court observers, it was High Court entertainment.

During the oral arguments last month before the Supreme Court in Utility Air Regulatory Group v. EPA, Justice Breyer managed to take the debate to yet a new level. The issue before the Justices concerned the lawfulness of EPA’s regulations applying the Clean Air Act’s Prevention of Significant Deterioration Program to the emissions of greenhouse gases from new and modified stationary sources. As the Justices struggled to decipher the meaning of statutory terms and phrases that befuddle even seasoned environmental lawyers, Justice Breyer made a surprising reference. He did not merely ask what Senator Edmund Muskie, the bill’s chief sponsor, might have been intending in drafting the language at dispute before the Court. He asked what “Mr. Billings, I think, is the staff person” would have intended if faced with the policy issue that EPA now faced in trying to apply the language he drafted to greenhouse gases.

The Supreme Court courtroom was filled to capacity for the argument. Yet, I can probably safely say that fewer than ten, and likely fewer than five people in the room had any idea to whom the Justice was referring. And those few most certainly did not include any of the Justice’s colleagues on the bench or any of the advocates before him.

But for a few of us, who thrive on environmental law’s history, it was a moment of glory. The Justice was referring, of course, to Leon Billings who was Senator Ed Muskie’s chief staffer for the drafting of almost all of the nation’s path-breaking environmental laws during the 1970s, including, as the Justice correctly surmised, the Clean Air Act of 1970. The statutes were revolutionary in their reach, as they sought no less than to redefine the relationship of human activities to the nation’s environment.

Not relying merely on the soaring rhetoric of a law like the National Environmental Policy Act, these new pollution control laws got into the nitty-gritty of lawmaking. They addressed the extent to which costs, benefits, risk assessment, scientific uncertainty, and technological availability should all be relevant in determining the pollution control standards. They brokered compromises across partisan divides and remained nonetheless exceedingly ambitious and demanding in their reach.

The nation, more than four decades later, has reason to be grateful for the work of former congressional staffers like Leon Billings. Their impressive work lies in sharp contrast to that of Congresses over the past twenty plus years, which have passed no comparably significant environmental laws and done little more than deepen partisan divides even further.  For that reason, the Supreme Court shout-out to “Mr. Billings” was a great moment at the Court. And the Justice’s question an apt one too.

Brownfields Redevelopment – a New Trust Mechanism to the Rescue?

Posted on March 5, 2014 by Elliott Laws

Environmental response trusts created as a result of corporate bankruptcies demonstrate that workable mechanisms exist to protect against future environmental liability. This prompts the question: Can this concept be expanded and become an official amendment to CERCLA, or a separate Brownfields law?

The Revitalizing Auto Communities Environmental Response Trust (“RACER Trust”), the largest response trust every created, owns, manages and remediates the former holdings of General Motors. It includes 89 properties, 60 of which needed environmental remediation, with over $640 million provided to RACER Trust, nearly $500 million of that designated to address environmental liability. The RACER Trust holds the liability for onsite contamination when it sells a property as long as the new owner allows the remediation work to continue. This liability shield also travels with the land, providing security to future purchasers with regard to unexpected contamination that could otherwise cost thousands or millions of dollars. What is unique about this and other trusts, is the cooperative nature which the Trustees and the regulatory agencies have displayed in addressing contamination and remedial activities, very different than the standard contentious approach which routinely exist at sites today.

There have been several legislative proposals in the 113th Congress to provide fixes to CERCLA, the cornerstone law of environmental remediation. The proposed legislation, however, is more focused on transferring authority over clean-up of sites to the states and implementing credit for state contributions to the remediation. In its testimony to the House Energy and Commerce Committee last May, EPA’s Office of Solid Waste and Emergency Response laid out the reasons for its opposition to many of the legislative proposals. The main points of concern are over the potential delays, increased administrative and litigation costs, and conflicting clean-up authority at sites.

But instead of legislation that could result in further slowing down an already protracted process, what about creating opportunities and enticements for development of contaminated properties? Whether under the CERCLA regime, or through the Brownfields program, there are ways to create environmental liability shields that would restore these properties to useful status, providing industry and jobs for the surrounding communities.  In 2007, a nascent proposal to address this issue was developed. The draft legislation called for the creation of the Recovered Property Protection and Assurance Trust or R-PAT for transfer of contaminated properties and their associated environmental liabilities to a quasi-governmental trust. The R-PAT concept would have required a current property owner to pay a significant fee in order to place the land in the trust, and then cleaned up and conveyed, liability-free, to a purchaser. For various reasons, including the quasi-governmental nature of the trust and the floundering economy, the proposal was a non-starter.

However, given the dearth of other viable proposals, perhaps it is time to re-examine the trust concept and how contaminated properties can be best put back to profitable use. If we really want to streamline CERCLA or improve the Brownfields program, then let’s talk about how to get the land back into use, how to remove the time consuming and wasteful antagonism surrounding remediation and how to provide bullet-proof shields for bona fide purchasers now and in the future.

Land Trust Laments

Posted on March 4, 2014 by Dennis Krumholz

I sit on the board of a land conservation organization. Recently, the Director of Land Preservation for our board made a presentation in which she lamented the negative impact that the 2008 recession continues to have on land conservation activities at the organization. Funding by governments, grant-making organizations and private donors have been reduced, and local governments – one key source of land preservation – are themselves cutting their conservation budgets. Our organization has preserved a steadily decreasing amount of acreage since 2008, and the amount of funds spent on acquiring lands has been diminishing.

Many questions presented themselves following this sobering presentation, including whether a similar situation obtains at other land conservation groups, and what might be done until the economy turns the corner and, hopefully, funding is restored to pre-recession levels.

My research has been neither exhaustive nor scientific, and my sources largely anecdotal, but land conservation in other areas of the country seems to have been a mixed bag during this recessionary period, with some regions able to preserve a significant amount of land. In areas as diverse as the Chesapeake Bay, western North Carolina and large swathes of the West, for example, conservation has been robust in recent years. According to the Land Trust Alliance, more land has been preserved in recent years in states such as California, Colorado and Montana than has been developed. Following the housing crisis of 2008, development has been substantially reduced, lowering land prices and thus presenting an opportunity for conservation organizations to purchase land at lower prices.

Yet, at the same time, many conservation groups lack the resources to take advantage of these opportunities. Government-funded trust funds have been depleted by reduced federal and state budgets, and land conservation organizations’ endowments similarly have dropped as a result of fewer donations and, at least until recently, a depressed stock market. Thus, while land is less costly, less money may be available to take advantage of the opportunity, a classic catch-22. What a shame to be losing the chance to preserve environmentally sensitive land while development pressures are reduced. It is only a matter of time before the economy improves, increasing land values and making preservation more costly.

A recent article in The Wall Street Journal illustrates one impact of tightening local budgets on conservation. As noted in that article, cases are pending before state supreme courts in Maine and Massachusetts in which local governments have assessed real estate taxes on land held for conservation, arguing that they provide insufficient public benefit to warrant full tax exempt status. One or more judgments in favor of the municipalities, while nominally increasing their coffers, would have a further negative impact on conservation by imposing an additional financial burden on conservation organizations.

Until the economy improves, and monies again become available for preservation, land trusts need to become creative in their strategies. For example, conservation easements are less costly than acquiring the fee itself, and often come without management costs because the landowners typically continue to use their land for timber, grazing or agriculture. Instead of purchasing larger tracts, our organization has been shifting its resources in recent years to buying largely residential properties that are subject to frequent flooding. Preservation of these parcels, while typically small in size, serves a vital function by allowing families to relocate to higher and safer grounds and by returning flood-prone areas to a relatively undeveloped state, thereby reducing both human impacts and further downstream flooding.

Let’s hope funding for land conservation – government as well as private and non-profit – increases in the coming years to enable the preservation of sensitive and ecologically-valuable lands for years and years to come.

CERCLA Contribution; The Confusion Continues

Posted on February 28, 2014 by William Hyatt

In the words of Justice Thomas in United States v. Atlantic Research Corp., the Circuit Courts have “frequently grappled” with the interplay between Sections 107(a) and 113 of CERCLA. These are the two provisions of the Statute that enable “covered persons”, commonly referred to as potentially responsible parties or “PRPs”, to recover response costs from other PRPs. In Atlantic Research, the Court held that Section 107(a)(4)(B) provides PRPs with a cost recovery cause of action; whereas, Section 113 provides PRPs with two separate contribution claims. One right to contribution exists under Section 113(f)(1) but, according to the Court in Cooper Indus., Inc. v. Aviall Servs., Inc., only “during or following” a Section 106 or 107 enforcement action. The second contribution remedy is found in Section 113(f)(3)(B) for a PRP who has “resolved its liability” for some or all of a response action or for some or all of the costs of such an action in a consent decree or an administrative order on consent (“AOC”). The Court, in Atlantic Research, explained that Section 107(a) allows a PRP to recover costs that it has itself incurred from other PRPs; whereas, the Section 113 contribution remedies allow a PRP to recover amounts it has paid to reimburse others who have actually incurred the costs. These distinctions would seem clear enough, but the lower courts have struggled to apply them.

At least part of the explanation for that struggle can be traced to the statement of the Court in Atlantic Research, that “[w]e do not suggest that 107(a)(4)(B) and 113(f) have no overlap at all,” citing the case where a PRP incurs its own costs pursuant to a consent decree following a Section 106 or 107 suit:

“In such a case, the PRP does not incur costs voluntarily, but does not reimburse the costs of  another party. We do not decide whether these compelled costs of response are recoverable  under 113(f), 107(a), or both.” (emphasis added).

In Bernstein v. Bankert, the Seventh Circuit resolved that issue, ruling, consistently with most other Circuit Courts, that after Atlantic Research, a plaintiff cannot pursue a cost recovery claim when a contribution claim is available. Thus, CERCLA plaintiffs cannot have “both,” as the Atlantic States footnote had suggested might be the case. For many Superfund practitioners, however, much of the rest of the amended panel decision in Bernstein appears to be novel.

The plaintiffs in Bernstein entered into two AOCs with EPA under Section 113(f)(3)(B), one in 1999, the other in 2002. Under the 1999 AOC, the plaintiffs performed a study to identify a removal action to be conducted at the site. In 2000, EPA determined that the plaintiffs had successfully completed the requirements of the 1999 AOC. Plaintiffs then agreed to perform the selected removal action pursuant to a 2002 AOC. At the time of the Seventh Circuit decision, the plaintiffs were continuing to perform the work required by the 2002 AOC. Plaintiffs brought suit in 2008, seeking cost recovery and contribution from other PRPs with respect to both AOCs.

The Seventh Circuit concluded that the plaintiffs had a Section 113(f)(3)(B) contribution claim as to the 1999 AOC because they had “resolved” their liability to EPA, but the claim was barred by the statute of limitations. Plaintiffs argued that Section 113(g)(3), the statute of limitations applicable to contribution claims, contained a “gap” which should be filled by applying Section 113(g)(2), the statute of limitations applicable to removal actions, such as the work required by the 1999 AOC. The Seventh Circuit concluded that it need not resolve the “gap” argument because the claims under the 1999 AOC, filed in 2008, were barred under either Section 113(g)(2) (three years from the 2000 completion of the removal action) or Section 113(g)(3) (three years from the date of the 1999 AOC).

As to contribution claims under the 2002 AOC, the Seventh Circuit focused on the statutory phrase “resolved its liability” as a limitation on the availability of the contribution remedy under that section. Analyzing the language of the AOC (which appears to have been based upon EPA's model AOC for removal actions), the court concluded that a party “resolved its liability” when it completed the requirements of the AOC to the satisfaction of EPA, an event which had not yet occurred. Only then would EPA's “conditional covenant not to sue” the settling parties become effective. Since work in fulfillment of the requirement of the 2002 AOC was ongoing, the court held that the plaintiffs had not “resolved” their liability and therefore had no contribution claim under Section 113(f)(3)(B). Moreover, the Court concluded that a party has not “resolved its liability,” within the meaning of that provision, until “the nature, extent or amount of [the] PRP's liability” is determined, or settled at least in part with EPA. The 2002 AOC, like virtually all other AOCs entered in the Superfund program, contained a reservation of rights on the part of the settling parties to contest their liability. The Court then went on to conclude that since the plaintiffs did not have a contribution claim under Section 113(f)(3)(B), they had a cost recovery claim under Section 107(a)(4)(B) because they had incurred necessary costs of response consistent with the National Contingency Plan.

The defendants-appellees moved the Seventh Circuit for a panel rehearing of its first decision, supported by EPA as amicus. The Seventh Circuit denied reconsideration, but granted rehearing, “in part, to address some issues raised by the EPA:

Specifically, the EPA identified certain passages of our original opinion which suggested that a  party may never structure a settlement agreement with EPA in such a way as to resolve their  liability immediately upon execution of that agreement. That is not the case. A party responsible   for an instance of environmental contamination may obtain an immediately effective release  from the EPA in a settlement, or it may obtain only a performance-dependent conditional  covenant not to sue with an accompanying disclaimer of liability. Whether, and when, a given  settlement 'resolves' a party's liability is ultimately a case-specific question dependent on the  terms of the settlement before the court. In this case, the terms of the settlement did not  provide for a resolution upon entering into the agreement.

The Seventh Circuit panel interpreted Section 113(f)(3)(B) to authorize contribution actions only once a contribution plaintiff has “resolved its liability” in a settlement, but then went on to conclude that resolution of liability does not occur until the requirements of the settlement have been completed and accepted by EPA and until the liability of the PRP has been “determined.” Given the fact that response actions can take decades to complete, this reading of the statute could result in very substantial and likely unanticipated delays in the effectiveness of the covenants not to sue contained in Section 113(f)(3)(B) settlements. Moreover, the same statutory phrase, “resolved its liability,” also appears in Section 113(f)(2), the provision affording protection for settling parties against contribution claims. Before this decision, most Superfund practitioners are likely to have thought that the benefits of a settlement under Sections 113(f)(3)(B) and Section 113(f)(2) accrued when the settlement agreement was signed. Many will be surprised to learn that, at least in the Seventh Circuit, they will not enjoy those benefits until they finish the work required by their settlements and until that work is approved by EPA. Even then, they may not have those benefits if they reserved their right to contest liability, as is commonly the case in Superfund AOCs.

The interpretations of Section 113 in Bernstein appear to be contrary to commonly held understandings of Section 113 (even by EPA) and contrary to the analysis of the Sixth Circuit in RSR Corp. v. Commercial Metals Co. Therefore, many Superfund practitioners believed that such a split might motivate the Supreme Court to grant the petition for certiorari; however, the petition was denied on January 27. While EPA had served as amicus curiae in support of reconsideration of the original panel decision, EPA did not file an amicus brief in support of the petition.

The Seventh Circuit decision is surprising for several reasons:

  • Although the Seventh Circuit did not have occasion in Bernstein to analyze the impact of the phrase “resolved its liability” on consent decrees, the reasoning of the court would suggest that the benefits of Section 113(f)(3)(B) will not accrue to signatories of consent decrees until the requirements of the consent decree have been completed and accepted by EPA. Since CERCLA requires that settlements involving remedial actions be documented in consent decrees, that effectiveness could easily be delayed for many decades. In the meantime, signatories to consent decrees in the Seventh Circuit may not have contribution rights under Section 113(f)(3)(B) or contribution protection under Section 113(f)(2).
  • The Seventh Circuit reasoned that such delays could be avoided by specific language in AOCs or consent decrees, making the covenants not to sue in settlements effective immediately. This reasoning, however, would appear to overlook Section 122(f)(1) which requires that discretionary covenants not to sue contain reservations of rights for “future liability.” The reasoning also appears to overlook the fact that there are many hundreds, if not thousands, of AOCs and consent decrees that have been signed over the years which contain the same EPA “model” language found in the Bernstein AOCs. If the reasoning of the Seventh Circuit in Bernstein is followed elsewhere, those settling parties may have a major surprise awaiting them.
  • No other circuit court has interpreted Section 113(f)(3)(B) in the way the Seventh Circuit did in Bernstein. No other circuit court has placed such emphasis on the term “resolved its liability” to shift the effectiveness of settlements from the point when the settlement agreement is signed until potentially decades later.
  • The Seventh Circuit decision logically defers contribution protection, a key incentive for PRPs to settle with EPA, potentially for decades. Will settlements with EPA be more difficult to achieve in the Seventh Circuit?
  • Under Bernstein, settling parties do not obtain the benefits of Section 113 unless their liability is “determined.” Forcing settling parties to concede their liability may prove to be a major deterrent to settlements.
  • The Seventh Circuit ruled that the plaintiffs had a Section 107(a)(4)(B) cost recovery claim even though their Section 113(f)(3(B) contribution claim had not yet matured. What happens when that contribution claim matures? Do the Bernstein settling parties then lose their Section 107(a)(4)(B) claim? What statute of limitations will then apply? What standard of liability will then apply?

CERCLA is notorious for its ambiguities and lack of clarity. This decision by the Seventh Circuit will likely do little to shed light on the interplay between CERCLA cost recovery and contribution. In the meantime, settling parties in the Seventh Circuit may have different rights than settling parties in other circuits.

Options For Improving Chemical Facility Safety And Security

Posted on February 26, 2014 by Ronald R. Janke

A working group of federal agencies has issued a preliminary list of options for improving chemical facility safety and security for public comment by March 31, 2014. This document implements Section 6(a) of Executive Order 13650, which was issued on August 1, 2013, in response to the explosions at a fertilizer plant in West, Texas. These options for changes in policies, regulations, and standards for chemical facility safety and security are potentially the most far-reaching actions triggered by this Executive Order, which has received renewed attention due to the recent drinking water contamination in West Virginia that was caused by a leak from a chemical storage facility.

The working group lists 49 distinct options, which are each presented as questions, for public input. A number of the options are applicable to specific chemicals, namely ammonium nitrate and other explosives.  A few options specifically apply to oil and gas facilities. Most options, however, broadly deal with chemical safety and security within industry in general. This last category of options addresses issues relating to process safety, regulatory coverage of additional hazardous chemicals, chemical reactivity standards, security at chemical facilities and identifying regulated facilities.

These options raise many important and thought-provoking issues.  Here are a few examples. Can overlapping chemical safety and security programs of two or more agencies be harmonized? Should being subject to one regulatory program, such as the OSHA process safety management, automatically mandate coverage under another program, such as EPA’s risk management program? Should agencies use rulemaking, policies or guidance to effectuate chemical facility safety and security improvements? How can agencies work with private consensus standard organizations in this area? Can strategies, such as greater worker involvement, root-cause analysis or the use of leading indicators, improve safety and security at chemical facilities? While focusing on the front-page accidents can help answer these issues, attention to successful models of chemical facility safety and security is a more reliable guide to identifying useful improvements.

I Thought Redeveloping Brownfields Was a Good Idea: Apparently the Boston Globe Hasn’t Gotten the Message

Posted on February 25, 2014 by Seth Jaffe

In an article earlier this week, the Boston Globe reported on concerns that the Massachusetts Department of Environmental Protection is planning to weaken cleanup standards for hazardous waste sites in Massachusetts, seemingly in response to pressure from developers. The article is so wrong and the concerns are so misplaced that some response is necessary.

First, we expect MassDEP to regulate in the face of uncertainty. That means that MassDEP must set cleanup standards without perfect knowledge. As a result, most people – and certainly the environmentalists complaining about the regulatory changes – would expect MassDEP to err on the side of conservatism, making the cleanup standards more stringent than may be necessary.

At the same time, science evolves and we’d expect MassDEP to alter cleanup standards periodically in response to changed science. Moreover, if MassDEP originally erred on the side of being overly conservative, one would expect that, as science improves, many standards could be relaxed – and that that would be a good thing.

What’s most troubling about the article and the NGO position here is the idea that environmental protection is still a black hat / white hat arena and that if something is good for economic development, then it must be bad for the environment. I thought we’d gotten past that in Massachusetts. Indeed, brownfields redevelopment is the prototypical example given of environmental protection being used to advance economic goals. That’s why it’s both stunning and deeply depressing to see lines such as this in the article:

"Critics worry the rules will spur developers to build on contaminated land, known as brownfields."

Better instead that we should plow under the greenfields and leave the brownfields vacant and without any cleanup, I suppose. I thought we already tried that strategy and concluded it didn’t work.

Silly me.

US Announces Significant Measures to Combat Illegal Wildlife Trade

Posted on February 24, 2014 by Deborah Jennings

Across the globe, populations of elephants, rhinos, tigers, and other wild animals have been decimated as poachers, organized criminal syndicates, terrorist organizations, and corrupt officials seek to capitalize on the growing demand for their ivory, horns, and carcasses. By recent estimates, there are only 3,200 tigers and less than 30,000 rhinos left in the wild, with many subspecies extinct or at the brink of extinction. Combined with a loss of up to 30,000 elephants a year out of an estimated 500,000 remaining worldwide, we may soon see the loss of these great species within the next decade.

The United States recently announced a series of measures aimed at protecting endangered and vulnerable species from the growing risk of extinction at the hands of poachers, traffickers, and consumers. On February 11, 2014, the White House released its National Strategy for Combating Wildlife Trafficking and announced a ban on the commercial trade of ivory. Once implemented, these measures could amount to the most significant efforts by the U.S. government to combat the illegal wildlife trade within the United States and abroad in over two decades.

While China and other southeast Asian countries represent the primary source of demand, it might be surprising to know the United States is actually considered the second largest market for wildlife products in the world. Although international trade in ivory products is generally outlawed under the Endangered Species Act, 16 U.S.C.A. §§ 1531 to 1543, which implements the 1974 Convention on International Trade in Endangered Species (CITES), these restrictions are often times evaded (legally and illegally) under exceptions for trade in “antiques” (100 years and older) and permissible domestic ivory trade.

For example, as noted by the U.S. Fish and Wildlife Service (FWS), it has been permissible under US law to:

  • Import unworked African elephant ivory (i.e., raw tusks) as part of a lawfully taken sport-hunted trophy for which appropriate CITES permits are presented
  • Import and export worked African elephant ivory that meets the requirements for an “antique” under the ESA (with CITES documentation)
  • Export ivory that qualifies as “pre-Act” under the ESA and “pre-Convention” under CITES
  • Sell within the U.S. African elephant ivory lawfully imported into the U.S. as “antique” under the ESA or before the 1989 import moratorium under the African Elephant Conservation Act (AECA).
  • Sell legally acquired African elephant ivory within the U.S. unless restricted by “use after import” limitations associated with items imported after the listing of the species under CITES or unless prohibited under state law.

Going forward, however, international and interstate trade in elephant ivory will be severely limited to primarily antiques, while intrastate sale in ivory will be generally limited to ivory imported prior to 1990 for African elephants and 1975 for Asian elephants. In all cases, the burden of proof to demonstrate that the ivory is compliant will now be on the buyer/seller.

Under the US Fish and Wildlife Service’s proposed regulatory changes, the following activities will be prohibited:

  • Commercial import of African elephant ivory
  • Export of non-antique African and Asian elephant ivory (except in exceptional circumstances as permitted under the ESA)
  • Interstate commerce (sale across state lines) of non-antique African and Asian elephant ivory (except in exceptional circumstances as permitted under the ESA)
  • Sale, including intrastate sale (sale within a state), of African and Asian elephant ivory unless the seller can demonstrate that the ivory was lawfully imported prior to listing in CITES Appendix I (1990 for African elephant; 1975 for Asian elephant) or under a CITES pre-Convention certificate or other exemption document

Imports of African elephant ivory will be limited to certain items and purposes where the ivory item will not be sold (i.e. law enforcement, scientific purposes). Imports of sport-hunted trophies of African elephants will be limited to two trophies per hunter per year.

The proposed regulatory changes will likely take place over the course of the next year, and include: (1) issuance of Director’s Order that will provide guidance to Service officers on enforcement of the existing 1989 AECA moratorium, and clarify the definition of “antique” (mid-February 2014); (2) a proposed or interim final rule to revise the 1989 AECA moratorium and create regulations under the Act in the general wildlife import/export regulations, including measures to limit sport-hunting of African elephants (June 2014); (3) a proposed or interim final rule to revise endangered species regulations to provide guidance on the statutory exemption for antiques (June 2014); (4) a proposal to revoke the ESA African elephant special rule (April 2014); and (5) finalize revisions U.S. CITES regulations, including the “use-after-import” provisions in (February 2014).

While the proposed changes severely restrict ivory sales, they nonetheless leave some room for trade, particularly in the intrastate market. Accordingly, states are also seeking to impose additional restrictions. In New York State, the largest market for illegal wildlife products in the US, Assemblyman Robert Sweeney is proposing to ban the sale of all ivory products, even those legal under federal law. Other states may be inclined to follow suit.

The National Strategy for Combating Wildlife Trafficking – while too detailed for summary here – seeks to implement three strategic priorities: (1) strengthening domestic and global enforcement; (2) reducing demand for illegally traded wildlife at home and abroad; and (3) strengthening partnerships with international partners, local communities, NGOs, private industry, and others to combat illegal wildlife poaching and trade.  Combined with measures to be adopted under the commercial ivory ban, there is increased hope for vulnerable and endangered wildlife.

These issues are front and center this month as world leaders and conservation leaders gather at the London Conference on Illegal Wildlife Trade 2014 on February 13. The conference seeks to help eradicate illegal wildlife trade and better protect the world’s most iconic species from the threat of extinction. DLA Piper attorneys have been working closely on this issue, and recently produced a ten-country report assessing gaps in domestic legislation, judicial capacity, and institutional capacity to combat wildlife trafficking. As the world reacts to this growing threat, there remains much to be done, but also new foundations for hope.

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This blog post is co-authored by Andrew Schatz.

Getting the Lead Out?

Posted on February 21, 2014 by Craig Johnston

There is a very interesting case pending in the Ninth Circuit regarding lead ammunition and its impact on raptors and scavenger birds, including California condors, in and around the Kaibab National Forest in Arizona. In Center for Biological Diversity v. U.S. Forest Service, the Center is pursuing a citizen suit alleging that the Forest Service is contributing to an “imminent and substantial endangerment” to wildlife under the Resource Conservation and Recovery Act by allowing the continued use of lead by hunters in the National Forest.

Factually, the allegations in the case are straightforward. Despite the existence of a “voluntary” program designed to reduce the use of lead ammunition in the Kaibab, hunters are still using it and the wildlife are still suffering the consequences, including mortality. Condors and other wildlife species are exposed to spent lead ammunition when they consume animals that have been shot but not retrieved or when they feed on the remains of field-dressed animals (also known as “gut piles”) that have been killed with lead ammunition. When lead-core rifle bullets strike an animal, they often fragment into hundreds of small pieces of lead that can be found several inches from the site of the wound in large game animals. A very small lead fragment is enough to severely poison or kill a bird, even one as large as a California condor, North America’s largest flying bird. Wildlife that ingest spent lead ammunition, even in minute amounts, experience many adverse behavioral, physiological and biochemical health effects, including seizures, lethargy, progressive weakness, reluctance to fly or inability to sustain flight, weight loss leading to emaciation, and death. In turn, wildlife experiencing these effects are far more susceptible to other forms of mortality, such as predation.

Nowhere is the threat of spent lead ammunition more apparent than on the Kaibab National Forest, an approximately 1.6 million-acre parcel of federal property in northern Arizona, bordering both the north and south rims of the Grand Canyon. Lead ingestion and poisoning from ammunition has been documented in many avian predators and scavengers that inhabit the Kaibab, including bald and golden eagles, northern goshawks, and ferruginous hawks. The most acute threats in the Kaibab are those posed to the condors. There are currently only approximately 75 free-flying condors in northern Arizona and southern Utah. Lead poisoning from exposure to spent lead ammunition is the primary cause of mortality in this fragile population. Even the surviving condors frequently need to have their blood treated for lead contamination; one female condor recently received 16 life-saving treatments over a 16-year period, before she ultimately died of lead poisoning.

The legal issues currently pending before the Ninth Circuit involve standing. The district court found that the Center lacks standing, relying both on its view that the Government would need to undertake a rulemaking in order to ban the use of lead ammunition in the Kaibab and on the fact that the condors’ range extends beyond the Kaibab itself, and thus that they might ingest lead elsewhere even were the Center to prevail. On appeal, the United States relies primarily on the latter of these two theories, which is interesting given that the condors’ lead exposure levels correlate strongly with the deer-hunting season on the Kaibab. As Alan Zufelt of the Arizona Department of Game and Fish put it: “We can put it on the calendar that every year right after the deer hunt there’s going to be a huge spike in condor lead poisoning.”

If the Ninth Circuit holds that the Center has standing, which, in this author’s view, it should, the case will then proceed to the merits, where the key legal question will be whether a landowner that knowingly allows visitors to engage in activities that result in the spread of poisons on its property may be deemed to be “contributing” to any resulting endangerment to wildlife. This issue could have implications not only for condors and the other wildlife on the Kaibab, but ultimately in other land-management contexts as well.

Regulating Climate Change

Posted on February 20, 2014 by Annette Kovar

As I sit in my thankfully warm office on a frigidly cold winter day, I ponder the difficulty of regulating the environmental consequences of climate change. Whether a true believer or a science skeptic, it is hard not to wonder what happens if global warming believers are right. Isn’t it a good idea to work to improve air quality regardless and be ahead of the curve if systematic warming proves a fact?

Even that fairly cautious, deliberative body, the United State Supreme Court, in its 5-4 decision in Massachusetts v. EPA, made quick work of EPA’s reasons for inaction in deciding that EPA could regulate greenhouse gases under the Clean Air Act. The reader may recall that the State of Massachusetts, along with other entities, challenged EPA’s decision that the agency had no authority to regulate carbon dioxide and greenhouse gases. EPA had argued that even if the agency had authority, it could not practically regulate greenhouse gas emissions in a meaningful way to address global climate change. Thus EPA had decided to exercise discretion by not regulating—based on foreign policy considerations such as not putting the U.S. at a competitive disadvantage.

The majority of the U.S. Supreme Court, in rejecting this rationale, was favorably disposed toward taking incremental steps on climate change. The Court said: “Agencies, like legislatures, do not generally resolve massive problems in one fell regulatory swoop (citation omitted). They instead whittle away at them over time, refining their preferred approach as circumstances change and as they develop a more-nuanced understanding of how best to proceed.” Perhaps, in other words, one has to start somewhere. To its credit, EPA then initiated regulatory steps to do just that but has largely been hindered at every step by further legal challenges.

The old adage “Think globally, but act locally,” long touted in land use politics and grassroots environmental movements, might also test the global climate change debate about how best to address this collective problem. It should not come as any great surprise that efforts to address climate change globally have met with limited success. Why should one nation-state undertake costly reform while others continue as usual? One only has to look at how difficult it has been to get “started” regulating greenhouse gas emissions in the U.S. with the push-back from some states, regulated utilities, and global warming skeptics in general.

The New York Times recently reported about a new study on China’s “export” of pollution that focuses on the economics and trade implications on a global scale. That was followed by the recent announcement by the European Union, with an activist record on climate change, that it intends to scale back some of its climate change goals and regulations—citing economic problems like high energy costs and declining industrial competitiveness as reasons. The U.S. continues to raise climate change issues in its diplomatic dialogues and trade discussions with other countries, but it is hard to gain much leverage when the U.S. is unwilling to make commitments to the global community in the same way other industrialized countries have.

If the global problem seems so insurmountable, how can we get much traction taking those incremental steps on a national, state and local level? I am an advocate for addressing climate change—I just don’t know how to persuade the skeptics, if the current science doesn’t convince them. Perhaps taking a second look at economic incentives would help us draft better, fairer regulations that create greater motivation for regional and local initiatives—like carbon trading and the Regional Greenhouse Gas Initiative in the northeastern U.S. It is usually better to frame things via positive incentives. Use carrots rather than sticks.

Two other Times stories also caught my eye. One story was about corporations like Coca-Cola and Nike awakening to the threat of climate change because of a growing realization that weather conditions causing drought and crop failures will ultimately affect their bottom lines. They needed to plan for water scarcity. That reminded me of how the clothing corporations, a while back, were scrutinized for their overseas labor practices and started expressing interest in human rights—arguably with a view to their future bottom line profits. While the impact of the current stories is debatable, public attention may bring consumers and stakeholders into the debate. Some companies are worried about consumer boycotts after bad publicity; better to be ahead of the curve, improve labor rights or use of natural resources, avoid consumer wrath, and protect profits via change now. So both the soft drink industry and particularly clothiers were looking to the future, trying to anticipate negatives.

The other story was about the political debate over flood insurance and who should bear the risk of building in flood zones, another perceived cost of climate change. Broadening public attention to these climate change issues and the  probable dire consequences of no action should help improve the political and regulatory debate. The Obama administration's announced creation of seven regional “climate hubs” to help farmers and rural communities understand the potential consequences of climate change may be just such a new strategy.

So where does this leave me? Still stymied, but hopeful that by broadening my perspective I might yet see allies and alternatives on how regulating climate change might move forward, even incrementally. Two rules of thumb: 1) anticipate probable future negatives and head them off now, and 2) find more carrots and rely less on sticks. By the way, did I mention that I am a state regulator but my remarks are my own?

Snatching Air Permitting Certainty from the Jaws of Tribal NSR Rule Vacatur for Non-Reservation Lands

Posted on February 19, 2014 by John Jacus

The recent decision of the D.C. Circuit in Oklahoma DEQ v. EPA vacated the 2011 Tribal NSR Rules with respect to non-reservation lands for which EPA has not made a prior determination of tribal jurisdiction. By its broad terms, the opinion’s reach extends well beyond lands solely within Oklahoma (“We…vacate the Indian Country NSR Rule with respect to non-reservation Indian country.”). States with EPA-approved implementation plans may once again permit facilities within their borders located on such non-reservation lands, in the wake of this decision. Though it may be decried by EPA and Native American tribes as effecting a partial loss of federal jurisdiction and/or tribal sovereignty, it should be praised by all who value legal and regulatory certainty, especially including those who wish to obtain air permits for their commercial activities within Indian Country.

EPA promulgated the Tribal NSR Rules to fill a regulatory gap created by the asserted general lack of state authority to regulate air quality within Indian Country. It did so by exercising its authority under Clean Air Act § 7601(d)(4) to administer a federal program over Indian Country in the stead of the tribes. This gap persisted for twenty years, until the Tribal NSR Rules were finalized as a Federal Implementation Plan (FIP) for Indian Country lands nationwide that lacked such a plan.

This twenty-year regulatory gap led to the inability to obtain air permits in Indian Country for certain activities, or the conduct of such activities without air permits at all: neither a good result. It also led to enforcement against even well-controlled activities and facilities in Indian Country because without a legally and practically enforceable limit on their emissions, such as in a valid permit, EPA and tribes were required to assume emissions were as high as their potential to emit without controls, often triggering the most serious, alleged violations. This unhappy state of affairs persisted from the passage of the 1990 CAA amendments until 2011, interrupted only in 2006 by the faint promise of proposed rules that would take another five years to be finalized.

When is a Regulatory Gap not a Gap?

EPA’s overbroad assertion of jurisdiction under the Tribal NSR Rules is what ultimately led to the vacatur of the rules for non-reservation lands. The case turned on the D.C. Circuit’s prior holding in Michigan v. EPA, which involved review of the Federal Operating Permits program for Indian Country. In that rule, EPA had established a federal CAA program throughout Indian Country, but declared it would “treat areas for which EPA believes Indian Country status is in question as Indian Country.” 64 Fed. Reg. at 8262. The court in Michigan sided with the petitioners and confirmed § 7601(d)(4) permits the EPA to act only in the shoes of a tribe, and EPA could not regulate in Indian Country where a tribe could not, i.e., on non-reservation lands where there had been no demonstration of tribal jurisdiction. The Oklahoma DEQ decision was controlled by this prior interpretation of EPA’s authority under § 7601(d)(4), and confirmed that a state “has regulatory jurisdiction within its geographic boundaries except where a tribe has a reservation or has demonstrated its jurisdiction.”

The good news is that part of the gap EPA sought to fill was not a gap at all: states with valid SIPs were authorized all along to issue permits for activities on non-reservation lands for which tribal jurisdiction has not been demonstrated.  The decision reaffirms such authority of states for such non-reservation lands, so air permitting with respect to them may proceed, albeit after a period of transition (EPA had loudly proclaimed in the Tribal NSR Rules that states don’t have jurisdiction anywhere in Indian Country).

While this result is not optimal from a tribal perspective, and appears to complicate the future ability of tribes to assume the broadest possible authority to regulate air quality, it is not all bad. For example, in Oklahoma, where no reservation lands remain due to the assimilationist policies of the last century, and where title to allotment lands is a legal quagmire preventing anyone from easily determining if a project is on non-reservation lands within Indian Country, the state may once again issue permits to protect air quality. I suggest it is also not a bad thing in other states, since the ability to obtain valid state air permits for activities on non-reservation lands within Indian Country will not only protect air quality there, but will create air permitting certainty, thereby removing some of the regulatory barriers to economic development on non-reservation lands.

Inverting the Inversions – Utah and the PM2.5 NAAQS

Posted on February 18, 2014 by James Holtkamp

The valleys and mountains of the Great Basin hold cold air in when a high pressure parks itself overhead, with the result that the valleys with significant populations, primarily the 100+ mile Wasatch Front, are subject to a wintertime PM2.5 grunge that builds up until the next storm front moves in to clear it out.

Although Salt Lake City and other parts of the state are in compliance with the annual PM2.5 NAAQS, exceedances of the 24-hour NAAQS have been recorded during inversion periods since 2006, when EPA lowered that standard from 65 μg/m3 to 35 μg/m3. As a result, Utah is going through an arduous PM2.5 state implementation plan (SIP) revision process to address the PM2.5 nonattainment.

Because we can’t change the topography around here or install fans large enough to blow air out of the valleys, the state must seek reductions in emissions that contribute to the wintertime PM2.5 exceedances. Nearly three-fifths of those emissions are from car and truck emissions. About thirty percent of the contributing emissions are from area sources and wood-burning fireplaces and stoves. And the rest of the emissions –only about a tenth of the PM2.5 precursor and direct emissions – are contributed by large industrial sources in the airshed.

The proposed SIP seeks some reductions from the large industrial sources, which must be retrofit not with RACT but with the equivalent of BACT, notwithstanding hundreds of millions of dollars of pollution control improvements already installed over the last decade. The rest of the PM2.5 emissions to be reduced during inversions must come primarily from mobile source and area emissions.  

The modeling underlying the SIP shows that attainment will barely be reached by the 2019 attainment date. But, with the D.C. Circuit throwing out the PM2.5 implementation rule a year ago and requiring EPA to promulgate a new one under more restrictive provisions of the CAA and the predictable citizen’s suits, who knows if attainment can be achieved short of literally turning out the lights and leaving town.

The Utah Legislature is in session and legislators are falling over each other trying to show that they care about cleaner air. However, there is not much state legislators can do, given that the emissions and fuel standards for mobile sources are set by the federal government (with states having the option of adopting California standards under certain circumstances). So, the state is squeezed between the Wasatch Mountains on the one side and the Clean Air Act on the other. It might be easier to cart off the mountains than to bring the Clean Air Act requirements into alignment with the real world.

The National Environmental Policy Act: What Constitutes Segmentation and a “Direct” Environmental Impact?

Posted on February 14, 2014 by Thomas Hnasko

On February 11, 2013, the United States District Court for the District of New Mexico denied a Motion for Preliminary Injunction filed by the Village of Logan, seeking to compel the Bureau of Reclamation (“BOR”) to perform an environmental impact statement (“EIS”) for the Ute Lake Diversion Project in eastern New Mexico. The BOR issued an environmental assessment (“EA”), which failed to analyze the foreseeable impacts to Ute Lake based on the design capacity of the intake structure to withdraw 24,000 acre-feet per year (“af/yr”). The BOR contended that, while contracts had been issued to deliver the full 24,000 af/yr of water, the project which it funded was limited to withdrawals from the lake of only 16,450 af/yr. Significantly, the environmental and socioeconomic impacts of 16,450 af/yr paled in comparison to the projected impacts resulting from withdrawals of 24,000 af/yr.

The briefs in the Tenth Circuit present an issue of first impression under NEPA. That is, can the BOR defer an analysis of certain impacts it knows will occur in the future, and summarily discuss those deleterious impacts under the rubric of “cumulative” rather than “direct” effects? According to the Department of Justice, Logan’s complaint about the matter is only one of “nomenclature,” and it should not matter whether the effects are deemed “direct” or “cumulative.” In response, Logan argues that the difference is one of substance, as an analysis of “cumulative” effects of a project does not require a comparison of the project to reasonably available alternatives, whereas an analysis of foreseeable “direct” effects, i.e., withdrawals up to the capacity of the intake structure, would require a vigorous comparison to available alternatives. These alternatives, which received only a one-half page discussion in the EA’s section on cumulative effects, include retirement of wasteful irrigation groundwater rights to augment municipal water supplies in eastern New Mexico. According to Logan, allowing the BOR to analyze a plainly foreseeable “direct” effect as merely “cumulative” would result in the illegal segmentation of the project. If such a result were sanctioned, there would be no NEPA analysis ever undertaken of the effects between 16,450 af/yr and 24,000 af/yr.

Oral argument is scheduled for March 17, 2014.

Keystone XL, the Old Testament and Attorney Compensation

Posted on February 13, 2014 by Keith Hopson

A former federal district judge was fond of telling his law clerks that Fifth Circuit Court of Appeals opinions were like the Old Testament. “You can find something there to support about any proposition you want.” The January 31, 2014 release of the State Department’s Final Supplemental Environmental Impact Statement for the Keystone XL Pipeline Project brought Judge Roberts’ words to mind.

The Keystone XL Pipeline Project backers tout the report’s conclusion that because the Canadian tar sands oil will be developed with or without the construction of the pipeline, it will not “significantly exacerbate the effects of carbon pollution” (to use the President’s avowed standards for pipeline permit approval). On the other hand, pipeline opponents point to the fact the report does not specifically address the project’s greenhouse gas emissions. Both are valid points, but the gist of the report appears to be the project has finally cleared its environmental hurdle. 

That said, other hurdles remain. While this long-awaited environmental impact statement is an important step in the process, it is just that, a step. Ultimately, the final decision on the pipeline permit will involve something more akin to the common standard for law firm attorney compensation, the so-called “all factors considered” standard. In this instance, that decision will involve economic and national and international political concerns, as well as how the project affects U.S. and international climate policy.

With the issuance of the report, the 90-day interagency consultation period begins. Once EPA, and the Departments of Energy, Defense, Transportation, Justice, Interior, Commerce, and Homeland Security weigh in, the Secretary of State will at some point make to President Obama a permit recommendation. The President, of course, has the final say.

Stay tuned; the project appears to have cleared another hurdle, but the five year and counting race is far from over.

EPA Inches Closer to a More Stringent Ozone Standard: When Will It Actually See the Light of Day?

Posted on February 11, 2014 by Seth Jaffe

Last week, EPA released its second external review draft of an updated Policy Assessment on the national ambient air quality standard for ozone. It also released updated draft risk and exposure assessments. To no one’s surprise, the new drafts confirm support for lowering the ozone NAAQS from 75 ppb to a range of 60 ppb to 70 ppb.

Why is this not a surprise?  Because, as I noted some time ago, the prior draft policy assessment also supported a NAAQS in the range of 60 ppb to 70 ppb. Moreover, the Clean Air Science Advisory Committee weighed in on the prior draft, supporting a standard in the 60 ppb to 70 ppb range. In fact, before getting cold feet, CASAC had indicated that the data would support a standard below 60 ppb.

Courts’ deference to CASAC determinations on these issues is pretty well established. It seems clear that EPA has to lower the NAAQS to at most 70 ppb in order to survive judicial review. It’s not even obvious that 70 ppb would stick, though that will be clearer after CASAC has reviewed this most recent draft Policy Assessment.

The other significant question is when EPA will actually issue the new standard. After all, EPA was prepared to issue a new standard in 2011 or early 2012, when the White House put the proverbial kibosh on EPA’s plans. Will EPA somehow manage to delay issuance of the new standard until after the November elections? Now that the Super Bowl is over, I think that the Vegas bookies are putting their money on after.

Square Pegs in Round Holes

Posted on February 7, 2014 by Richard Glick

The Western states face two reciprocating and overarching problems in water resources policy.  First, water is an increasingly scarce resource facing sharply competitive needs. Climate change is projected to put even more strain on water supplies. Second, most streams listed as water-quality impaired in the West are designated as such for issues related to the biological integrity of the waterway. The combination of aggressive human use of waters, manipulation of stream channels, and failure to control agricultural runoff has resulted in widespread degradation of aquatic habitat.

The primary impediment to addressing these related issues arises from dated legal constructs designed to achieve different objectives in eras with markedly different economies. In other words, trying to apply these constructs to today’s problems is like attempting to fit square pegs into round holes.

The doctrine of prior appropriation governs water rights everywhere in the West.  It was developed in the 19th century to promote mining and agriculture—both water intensive enterprises—in arid climates. The doctrine provides that the first to physically take control of the water and put it to beneficial use has priority over later comers. Thus, the oldest water rights with the highest priorities are mostly agricultural, and many streams have become over-appropriated during the past century. So where does a growing community go for new water supplies? And what about maintaining sufficient high-quality flows instream for healthy fisheries?

The problem is made more acute by the formidable costs and regulatory uncertainty of developing major water storage projects. Many cities seek to acquire or share in old agricultural water rights through direct payments to water right holders or they finance irrigation system improvements for more efficient use of water. Such water marketing approaches free up water for municipal use, while reducing pressure to remove still more water from oversubscribed streams. But if a legislature could have anticipated then what we know now, might it a century ago have considered systems that allocate water based more on maximum public value and efficient use, rather than simply priority in time?

The Clean Water Act was enacted over 40 years ago to address toxic discharges of industrial and sewage wastewater to rivers and lakes.  Dramatic events like the spontaneous ignition of the Cuyahoga River drove public demand for government intervention, leading to the new law. The Act has done a remarkable job of cleaning up end-of-pipe discharges (point sources), but has largely failed at controlling more diffuse sources of pollution (nonpoint sources) from stream channelization, devegetation of riparian habitat and agricultural runoff. Thus, many streams today are impaired by turbidity, nutrient loading, and higher temperatures.

Since the Act does not provide enforcement tools for nonpoint sources, regulatory agencies use the authority available to them to ratchet up controls on point sources. One solution to this problem is water-quality trading, in which a point source permittee can take watershed-restorative action upstream to correct a nonpoint pollution problem in order to meet escalating permit requirements. This approach can yield better ecological outcomes at lower cost. But if Congress were drafting the Clean Water Act today, any rational approach would address the problem of diffuse sources of pollution.

It seems unrealistic to expect substantive changes to either the law of prior appropriation or the Clean Water Act any time soon. Aside from the politics, changes to prior appropriation raise significant constitutional questions to the extent property rights are affected. In the meantime, we’ll have to continue looking for creative workarounds. This circumstance makes interesting work for lawyers, but is hardly the optimal approach to effective water resource use and protection.

Storm Water Management by a Regional Sewer District: Was It a Power Grab or a Logical Extension of Existing Powers?

Posted on February 5, 2014 by Michael Hardy

In the mid 1970’s, the City of Cleveland and some fifty plus surrounding communities created a sewer district now known as the Northeast Ohio Regional Sewer District (“NEORSD”) to handle sanitary and industrial discharges into Lake Erie, and several rivers, including the Cuyahoga.  Over time, however, the Cleveland area experienced considerable urban sprawl,  creating vast expanses of impervious surfaces in the form of parking lots and large clusters of office, shopping, Big Box, commercial and industrial facilities.  With the conversion of green space to impervious roofs and parking facilities, some of the communities began to experience more flooding and erosion problems.   Indeed, the Cleveland Metroparks, known as the “Emerald Necklace”  because of the park lands situated in the flood plains of the Cuyahoga, Chagrin, and Rocky Rivers, was particularly hard hit from the storm water runoff originating in the nearby suburbs.

To address storm water and erosion problems that were “regional” in scale, the NEORSD developed a program in 2010 that included the payment of fees by all property owners based on the amount of impervious surface areas, like driveways, parking areas, and roof tops.  The NEORSD expected to use these funds on projects that would alleviate flooding and stream erosion.  But there was no unanimity among the member communities of the NEORSD about the need for, or the type of program that the district wished to implement.  Approximately ten of those communities objected, in large part because their geographical  elevations were such that they likely would never benefit from the preventive measures.   Moreover, many of those communities already had their own expensive, capital intensive storm water systems.  Furthermore, a significant number of commercial property owners objected because of the hefty fees that they would pay based on the parking lots and roof structures they maintained.

To validate the regional program, the NEORSD filed a declaratory judgment action in the Court of Common Pleas in Cuyahoga County, where it prevailed.  But the dissenting communities and commercial property owners appealed, and secured a two to one appellate reversal in 2013.  The appeals court concluded that the sewer district did not have the authority to address storm water unless it was also contaminated with sewage.  The court of appeals did not reach the merits of the claim that the storm water fees were illegal taxes. (The NEORSD had billed approximately $35,000,000 in fees  by the time of the appeals court decision.)

The NEORSD has appealed the decision to the Ohio Supreme Court, with significant amicus support.  The dissenting communities and the commercial property owners have urged the Ohio Supreme Court to decline to hear the case, and claim that the legislative process in the General Assembly is the proper place to balance the political considerations that might be involved in a fee supported regional storm water management plan.  They claim that the current plan is nothing more than power grab and illegal tax by an unelected and unaccountable body.  The NEORSD, on the other hand, argues that the storm water problems know no political boundaries, and thus its regional, holistic approach is far superior to the piecemeal, community by community approach that previously existed.

As of this note, the Ohio Supreme Court has not decided whether it will take the case.  The underlying court of appeals decision can be accessed here.