Happy New Year? With the Advent of Greenhouse Gas Regulation Only Days Away, Many in Industry Might Prefer, Instead, to Turn Back the Clock

Posted on December 28, 2010 by John Crawford

By James R. Farrell

Butler, Snow, O’Mara, Stevens & Cannada, PLLC (www.butlersnow.com)

 

 

Regulation of greenhouse gas (GHG) emissions has become a reality. Although the Supreme Court’s 2007 ruling in Massachusetts v. EPA deserves much of the credit for EPA’s aggressive response to global warming, congressional inaction on comprehensive climate change legislation ultimately set in motion the agency-driven agenda that has led our country to an historic yet extremely controversial crossroads in environmental regulation. The Supreme Court’s conclusion that GHGs constitute air pollutants as defined by the Clean Air Act required EPA to determine whether GHG emissions from motor vehicles cause or contribute to climate change that is reasonably anticipated to endanger the public health or welfare; however, the Court’s requirement for regulatory action did not preclude the possibility of a legislative response.

 

 

Despite the dim prospects for comprehensive climate change legislation today in the wake of the turbulent 2010 mid-year elections, the political landscape appeared far more favorable little more than eighteen months ago. On June 26, 2009, the House had narrowly passed the American Clean Energy and Security Act of 2009 (the “Waxman-Markey Bill”) by a vote of 219-212. The Waxman-Markey Bill featured a cap and trade component to regulate GHG emissions, and the bill would have required a seventeen percent reduction in GHG emissions from 2005 levels by 2020 and an eighty percent reduction by 2050. 

 

 

In the Senate, Senators John Kerry (D-MA), Joseph Lieberman (I-CT), and Lindsay Graham (R-SC) had been hard at work on a comparable climate change bill dubbed the American Power Act. In early 2010, the bill appeared to have bipartisan support due in large part to its provision for expanded offshore drilling, an early and significant concession by the bill’s sponsors. But when the Deepwater Horizon exploded on April 20th, everything changed. As public outrage at the offshore drilling industry grew daily in response to the unprecedented magnitude of the oil spill, it triggered a proportional decrease in political will for comprehensive climate change legislation. By the time the American Power Act was introduced on May 12th, Senator Graham had already withdrawn his support insisting that the ongoing and more immediate threat posed by the Gulf oil spill had “made it extremely difficult for transformational legislation in the area of energy and climate to garner bipartisan support . . . .”

 

 

In the end, the legislative response to climate change that had once appeared likely – if not imminent – never materialized. In contrast, EPA has wasted no time since Massachusetts v. EPA engaging in regulation-making intended to address climate change. The culmination and cornerstone of this fervent EPA activity is EPA’s Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule (the “Tailoring Rule”), which will usher in a new and hotly contested era of GHG regulation on January 2, 2011. The Tailoring Rule’s phased-in approach to regulation means that the regulatory net it casts will gradually widen with time, initially targeting those stationary sources known to be the largest emitters of GHG emissions but eventually encompassing some smaller sources as well. 

 

 

Whether or not you’ll be ringing in the new year this year likely depends on your political persuasion. For many environmental groups who have lobbied tirelessly for greenhouse gas regulation, 2011 is a long-awaited (and soon to be much-celebrated) new year. For many in industry, however, 2011 is likely to be a year of nostalgia filled with no less than 365 opportunities to remember fondly the less regulated days of yesteryear. Happy New Year!

 

 

Butler, Snow, O’Mara, Stevens & Cannada, PLLC (www.butlersnow.com)

·        John A. Crawford

·        Michael D. Caples

·        James I. Palmer, Jr.

Chemical Disclosure - or my secret name's no secret any more

Posted on December 28, 2010 by Susan Cooke

Since passage of the Federal Insecticide, Fungicide, and Rodenticide Act in 1972, environmental statutes and regulations have sought to balance legislative mandates seeking disclosure of chemical identities and properties against trade secret protection concerns. This tension can be seen in the labeling of cosmetics, the submittal of test data under the Toxic Substances Control Act (“TSCA”), and the disclosure of chemical additives to fluids used for hydraulic fracturing. In all three situations, efforts to increase access to chemical identity information are likely to create further challenges to trade secret protection.

 

 

            On the cosmetics labeling and TSCA front, a bill introduced in the House of Representatives this past July, entitled the Safe Cosmetics Act of 2010, would have required cosmetics labels to identify the name of each ingredient in descending order of its “predominance”, with the same information provided for internet sales. Regardless of the type of sale, the ingredients would not be afforded trade secret protection. While the bill was not enacted, the concerns that kept it alive even in the waning days of the Congressional session may be a harbinger of a new version in the upcoming session.

 

 

            A bill to amend TSCA also filed in the House last July would have required a manufacturer to provide an upfront justification for any trade secret claim made in an information submittal under TSCA, with EPA required to evaluate the submittal within 60 days thereafter. While this bill did not pass either, EPA had previously announced its intention toreview chemical identity CBI claims in health and safety studies submitted under TSCA, and it subsequently proposed amendments to its TSCA regulations that would require upfront justification of a chemical identity claim. In addition, EPA has substantially increased the chemical information available on its Envirofacts database, and is now providing free access to its TSCA inventory of chemicals.

 

 

            Additives to hydraulic fracturing fluids have likewise been the subject of much attention, and have sparked initiatives in a number of states to require their disclosure. Beginning next year, Arkansas will require disclosure hydraulic fracturing fluids on a well by well basis, although allowing more generic disclosure of proprietary chemicals. The information will be publicly available for review on the website of the Arkansas Oil and Gas Commission. In Wyoming, the additives are reported to the staff of the state’s Oil and Gas Conservation Commission, rather than to the public, and the Commission has granted a number of requests for trade secret protection, although the requests themselves are matters of public record. 

 

 

            Colorado requires oil and gas drillers to keep an inventory of the chemical additives at the site of each well, with state regulators getting a copy of the inventory upon request. Pennsylvania requires material safety data sheets covering the fracing fluid materials to be included with each drilling plan submitted for approval, with the MSDS sheets made available to the landowner and to local government and emergency responders. Both Colorado and Pennsylvania are considering expansion of those requirements.

 

 

            In September EPA issued letters to nine companies engaged in hydraulic fracturing related activities seeking the identity of the fracing fluid additives and copies of studies about their health and environmental effects. All of the companies have now responded to the EPA request, with Halliburton establishing a public website to disclose information about those additives. In addition, a number of trade associations, including the American Petroleum Institute, have lent their support to a voluntary disclosure registry under development by the Groundwater Protection Council, which includes a number of state officials responsible for groundwater protection, and the Interstate Oil and Gas Compact Commission, with data to be disclosed on a well-by-well basis. 

 

 

            How efforts such as those just described will address trade secret issues remains to be seen, particularly given the concerns raised about potential contamination of drinking water supplies by fracing fluids. However, it appears that the day has passed when one could claim trade secret protection and provide support for that claim only when the information was actually requested. And the new riff on that old refrain sung by Johnny Mathis and Doris Day appears more likely to be that “my secret name’s no secret any more”.

IDAHO ADOPTS ANTI-DEGRADATION IMPLEMENTATION RULE

Posted on December 23, 2010 by Kevin Beaton

Last  month, the Idaho Department of Environmental Quality (IDEQ) adopted an anti-degradation implementation rule. The rule was adopted in response to a Clean Water Act citizen suit brought by an Idaho environmental group against EPA to force the agency to adopt such a rule for Idaho. Anti-degradation policies and an implementation plan are required as part of a state’s water quality standards under EPA’s Clean Water Act rules at 40 CFRR Part 131. Although Idaho had long ago adopted the required anti-degradation policy, the state had never formally adopted an implementation plan.

Anti-degradation policies are designed to protect existing uses in all waters known as “Tier I” waters, protection of certain “high quality” waters or “Tier II” waters from any lowering of water quality unless a proponent can demonstrate after full review by the state that such a lowering of water quality is economically justified and that all reasonable available pollution controls have been implemented. Putting together the information required for a full Tier II review can be costly, controversial and substantially delay or preclude the issuance of permits. For certain waters known as “Outstanding Resource Waters” or “Tier III” waters, no lowering of water quality is allowed.

Anti-degradation implementation procedures typically address such issues as what type of activities require anti-degradation reviews, which waters are subject to Tier I, Tier II and Tier III protections, whether anti-degradation applies to new or existing activities, how anti-degradation implementation addresses federal general permits such as storm water permits, whether certain activities are exempt from anti-degradation review because they are “insignificant” and the type of information that is required to be submitted as part of a Tier II review.

Idaho’s rule, which was subject to lengthy negotiations with stakeholders, generally followed the flexibility previously allowed by EPA Guidance and prior judicial decisions concerning anti-degradation implementation procedures. In identifying Tier II waters, Idaho adopted the “water body by water body” approach as opposed to the “parameter by parameter” approach and excluded most waters listed as impaired under Section 303(d) as candidates for Tier II waters. Idaho’s rule also confined anti-degradation reviews to new or increased discharges subject to NPDES Permits, Section 404 permits and hydroelectric facilities subject to certification under Section 401 of the Clean Water Act. Nonpoint sources were not required to undergo anti-degradation review. Also Idaho exempted certain new and increased discharges from anti-degradation review if they were deemed “insignificant.” For those interested in the Rule, it can be reviewed at IDEQ’s Web site. Also for those interested in the topic, EPA’s most definitive Guidance on what is required in a State’s anti-degradation implementation procedure can be found at EPA’s Advanced Notice of Proposed Rulemaking (ANPRM) at 63 Fed. Reg. 36741 (July 7, 1998).

Also some recent judicial decisions on the legality of States’ anti-degradation implementations procedures include Kentucky Waterways Alliance v. Johnson, 540 F.3d 466 (6th Cir. 2008); Ohio Valley Environmental Coalition, et al., v. USEPA, Memorandum Opinion and Order, August 29, 2003; Defenders of Wildlife v. U.S. Environ. Protec., 415 F.3d 1121 (10th Cir. 2005); and American Wildlands v. Browner, 260 F.3d 1192 (10th Cir. 2001).

Assuming that the Idaho Legislature approves the IDEQ rule (a requirement for all rules in Idaho), the rule will be submitted to EPA for approval early next year. Assuming EPA approves the rule, whether the environmental groups will challenge that approval remains to be seen. In the meantime, EPA has again taken a national interest in anti-degradation similar to its 1998 ANPRM, and took comment earlier this year on whether EPA rules on state anti-degradation implementation procedures need to be strengthened. At this time it is not known whether EPA will indeed make further efforts to change its anti-degradation rules. It would seem likely that the controversy and litigation associated with anti-degradation implementation procedures will continue.

Beware of "Impaired" Surface Water Designations

Posted on December 10, 2010 by Chester Babst

Is the act of adding a stream segment to the Clean Water Act section 303(d) list of impaired waters appealable? At least one Pennsylvania administrative law judge thinks not, as the mere publishing of the list creates no new duties on anyone. But the list is a discrete, final agency action that is predicate to direct administrative action. The science supporting the listing should be subject to challenge, just as are the specific load and waste allocations following the list.

Section 303(d) requires states to complete and submit a biennial Integrated Water Quality Monitoring and Assessment Report to the United States Environmental Protection Agency (“USEPA”) that lists all impaired surface waters in the state not able to support the specific uses of that water body (e.g., potable water supply uses), even after implementation of pollution control technologies and practices. Impairment status can have a significant impact on regulated entities that discharge into a designated water body.
 

As impaired, these state surface waters will require the development of a Total Maximum Daily Load (“TMDL”) to attain applicable water quality standards. A TMDL accounts for all point and non-point sources of the specified pollutant and it sets a cumulative pollutant load limit that applies to all dischargers, so as to prevent a violation of water quality standards. The USEPA and state agencies use TMDLs to compel best management practices and set discharge limits in National Pollutant Discharge Elimination System (“NPDES”) permits.

On April 3, 2010, the Pennsylvania Department of Environmental Protection (“Department”) published its draft 2010 Integrated Water Quality Monitoring and Assessment Report (“Draft Integrated Report”) for public comment. The Draft Integrated Report does not reveal how the Department reached the decision to designate a water body as being impaired, nor does the Department provide any supporting data for its designations. It is also unclear how pollutant loading allocations will be handled with respect to water bodies that extend into contiguous states.

Should a party wish to challenge an impairment designation, it is unclear when this agency action would be ripe for appeal. In a recent Pennsylvania Environmental Hearing Board case, an Administrative Law Judge offered his view of the process in dicta.

[A] state’s Section 303(d) list submitted to the EPA would not appear to be a final disposition of even what is on the list since, once submitted, it is for the EPA to pass upon the propriety of the list…. Even if the state’s listing as such of a waterway on the state’s Section 303(d) list were construed as a purely state action we still do not see that the state’s mere listing or de-listing of a waterway on the Section 303(d) list creates any immediate duties or liabilities which would be the key to appealability to the Board.

Telford Borough Authority, et al. v. DEP, EHB Docket No. 2010-111-K, slip op. at 7 (Opinion and Order issued September 7, 2010). Although providing insight into one judge’s view, whether a designation is ripe for appeal at the time a state submits a Section 303(d) list to EPA and/or at the time EPA approves or disapproves the list is still an open issue in Pennsylvania. It is also unclear whether a failure to perfect an appeal at either of these points in the process would affect appeal rights of individual sources at the time limitations are set in permits based upon the impairment designation. Given this uncertainty, an appeal of the designation is a prudent step for a source or group of sources that could ultimately be impacted by state actions designed to address the impaired status of a water body.

Because of the significant economic impacts associated with an impairment designation and the potential that such impacts could extend beyond state borders, it is important to monitor state and federal activities for designated water bodies and to consider the potential impact on your client and whether an appeal of the designation is necessary to protect your client’s rights and defenses.

Supreme Court grants cert in Connecticut v. AEP

Posted on December 7, 2010 by Michael Gerrard

The U.S. Supreme Court announced yesterday morning that it has granted certiorari in Connecticut v. American Electric Power, the case seeking an order compelling several electric utility companies to reduce their greenhouse gas emissions, based on common law nuisance theories. Justice Sotomayor recused herself; she had been on the Second Circuit panel that heard the argument below, though she had been promoted to the Supreme Court before the Second Circuit issued its ruling allowing the case to proceed.

Wisconsin DNR Seeks Additional Authority to Protect Against Adverse Impacts of Wind Projects

Posted on December 7, 2010 by Linda Bochert

 

WDNR has issued “Siting Guidelines” available here to help wind project developers site projects in ways that minimize impacts and will be revising its current “Bird and Bat Study Guidelines” to provide more comprehensive information.

 

The WDNR report was submitted in response to 2009 Wisconsin Act 40, which required the agency to determine if its “statutory authority is sufficient to adequately protect wildlife and the environment from any adverse effect from the siting, construction, or operation of wind energy systems.”

WDNR’s legislative agenda is in development. Whether the legislature will take up these recommendations is currently unknown. While WDNR's interest in more comprehensive authority is consistent with its view of its responsibilities, the risk for project proponents and developers is that it will create new grounds for project opponents to rely on to challenge siting decisions. For many the goal of alternative energy sources -- solar, wind, biomass -- is still only desirable when it isn't in their backyard.

 

 

In response to a legislative directive, the Wisconsin Department of Natural Resources (WDNR) in November submitted a report to the Wisconsin Legislature making four recommendations to enhance its authority to protect wildlife and natural resources from wind project impacts:

 

  1. require WDNR to prepare a formal “biological opinion” and require the Public Service Commission of Wisconsin (PSCW) to consider that opinion before PSCW approves a wind project; this opinion would 1) describe the potential impacts of the project to wildlife and natural resources; 2) identify potential conflicts with wildlife protection laws; 3) reach a conclusion as to whether the project has the potential to cause a significant adverse impact to habitat and fish and wildlife resources; and 4) reach a conclusion as to whether mitigation measures can be implemented to substantially reduce those impacts below the level of significance;
  2. require a wind project developer to obtain Incidental Take Permits or Authorizations under the Wisconsin Endangered Species Law (Wis. Stat. s. 29.604) before constructing a wind project; currently, developers are encouraged but not required to obtain such authorizations;
  3. expand the Wisconsin Endangered Species Law to protect endangered and threatened species habitat, to mirror the federal Endangered Species Act; currently, Wisconsin law only protects habitat if a direct take of a species will occur and an Incidental Take Permit or Authorization is required; and
  4. require easements for wind facilities to authorize access to those properties for the conduct of biological studies by developers, WDNR personnel and/or authorized agents.

 

These recommendations reflect WDNR’s view that its standard regulatory authorities over wetland and waterway impacts don’t reach the agency’s growing concerns about protecting wildlife and habitat from turbine siting and operation. Current WDNR authority addresses impacts to waterways and wetlands from project construction, and obligates developers to implement construction site erosion control. Threatened and endangered species are protected from intentional and incidental “takes”. WDNR has implemented this authority through consultation and use of general Incidental Take Permits and Authorizations. Violations of general wildlife protection laws (Wis. Stat. ss. 23.095(1g), 29.011(1) and 29.039) are subject to enforcement, but are limited to intentional taking by unlawful activities, and WDNR does not consider them generally applicable to construction or operation of state or locally approved wind projects.

Should We Go Nuclear - Again?

Posted on November 29, 2010 by Rodney Brown, Jr.

The US hasn't licensed a new nuclear power plant in a quarter-century. Most people have forgotten the plants even exist – but they might be coming back. In the last couple of years, the Nuclear Regulatory Commission has received more than twenty new plant applications.

Are we ready to go nuclear again?

 

 

The US has about 100 nuclear plants in operation today, generating around 20% of the nation's electricity. Most plants were built in the 1960s and 1970s, and will need to be replaced before too long. Far more plants have been built abroad, and many of them will need to be replaced too.

 

 

Replacing worn-out nuclear plants with new ones is very controversial, at least in the US. Our colleague, Michael Gerrard, will explore the controversy by hosting a debate on nuclear power at Columbia Law School on Monday, November 29th from 7 to 9 PM. The debate will be webcast live, and a video will be posted on the website of the Center for Climate Change Law. Contact Ashley Rossi at arossi@law.columbia.edu for more info.

 

 

In the meantime, how can we learn what to believe — and what not to? Fortunately, in 2007 the Keystone Center conducted a "joint fact-finding" to identify facts upon which people with different policy goals could absolutely agree. The participants came from all over, ranging from utilities like Exelon and Entergy to environmental groups like Environmental Defense and the Natural Resources Defense Council. They may continue to disagree on the values implicit in their various policy goals. But it turns out that they can agree on a foundation of facts.

 

 

For example, all agreed nuclear power is in fact a low-carbon energy source that can help fight climate change. They also agreed that the global nuclear industry would in fact need to embark on a massive construction program if nuclear power is to provide even 1 gigatonne of carbon reductions (equal to just one "wedge" from the famous Sokolow & Pacala climate stabilization wedges. Here's the specific factual finding:

 

"The NJFF participants agree that to build enough nuclear capacity to achieve the carbon reductions of a Pacala/Socolow wedge (1 GtC/year or 700 net GWe nuclear power; 1,070 total GWe) would require the industry to return immediately to the most rapid period of growth experienced in the past (1981-90) and sustain this rate of growth for 50 years."

 

On another point, the participants agreed that nuclear power probably would cost between 8 and 11 cents per kilowatt/hour (kW/h) delivered to the grid. This compares to current natural gas costs of about 5 to 6 cents per kW/h. (Wind power's costs fall somewhere in between.)

 

 

On the controversial topic of using new technologies to "reprocess" nuclear fuel, participants agreed it wasn’t likely to prove economically viable:

 

"No commercial reprocessing of nuclear fuel is currently undertaken in the U.S. The NJFF group agrees that while reprocessing of commercial spent fuel has been pursued for several decades in Europe, overall fuel cycle economics have not supported a change in the U.S. from a “once-through” fuel cycle. Furthermore, the long-term availability of uranium at reasonable cost suggests that reprocessing of spent fuel will not be cost-effective in the foreseeable future. A closed fuel cycle with any type of separations program will still require a geologic repository for long-term management of waste streams."

 

Agreement on all the true facts might make it easier to resolve the debate over nuclear power's role in our energy future. To learn more about them download the Keystone Center's executive summary or the report in full.

New Mexico Promulgates a Cap and Trade Rule

Posted on November 23, 2010 by Larry Ausherman

Earlier this month, the State of New Mexico adopted a rule designed to cap greenhouse gas (“GHG”) emissions in New Mexico and implement the State’s participation in a cap and trade market based on the design guidelines of the Western Climate Initiative (“WCI”). But it is too soon to tell how the New Mexico GHG rule will shake out. The future of cap and trade in New Mexico depends on many developments that range from the election of a new governor who will take office in January 2011, the fate of California’s cap and trade program, and the potential that the New Mexico GHG rulemaking will be appealed. An additional New Mexico only greenhouse gas cap and reduction proposal will also be considered by the New Mexico Environmental Improvement Board (“EIB”) in early December. 

 

 

            On November 2, 2010, after lengthy and contentious debate, EIB narrowly adopted the GHG rule that was proposed by the New Mexico Environment Department (“NMED”) last spring. The rule provides for a cap and trade program for certain GHG emissions in New Mexico that could start as early as 2012. The program would not be initiated without participation of other states with GHG emissions sufficient to provide a base of at least 100 million metric tons of CO2 equivalent emissions.  This requirement is designed to avoid the State’s implementing a trading program alone. For all practical purposes, because the trigger for implementation is a base of at least 100 million tons, the New Mexico cap and trade program will not be able to move forward without implementation of the California program. Of the 7 initial participating WCI states, only New Mexico and California are moving forward at this time to implement a cap and trade program.        

 

The New Mexico GHG rule would apply to about 63 large industrial facilities that emit GHGs in the State. The affected facilities include primarily power plants and large oil and gas operations. After the rule becomes effective, the affected facilities would be required to reduce emissions by 2% annually until 2020 or be required to acquire offset credits for emissions from other jurisdictions or external trading programs. The State would initially provide allocations for baseline emissions for those currently existing regulated facilities without charge.  

 

 

            Also in November, the EIB adopted mandatory reporting and verification rules. The rules require sources emitting more than 10,000 metric tons of CO2e emissions to report emissions. Those sources with greater than 25,000 metric tons of CO2 equivalent emissions are required to obtain third-party verification of emissions.   This rule is scheduled to go into effect on January 1, 2011, regardless of whether the cap and trade rule goes into effect. NMED estimates that 130 to 150 sources will be affected by the reporting rule. 

 

 

            Challenges to New Mexico’s GHG rule are likely. The margin of the EIB vote on the rule was narrow, four to three in favor. Moreover, on the day EIB adopted the rule, the New Mexico voters elected a new governor, Susanna Martinez. The Republican governor-elect’s campaign positions included opposition to WCI and the GHC initiatives of the current Democratic governor, Bill Richardson. It seems likely that the new GHC rule will not meet with favor in a Martinez administration. The change of administration is particularly important because to date, Governor Richardson’s support for New Mexico GHG initiatives has been critical to their adoption. New Mexico’s participation in WCI was initiated by Executive Order, and NMED’s efforts to implement the WCI cap and trade program in the state legislature have been unsuccessful. 

 

 

            In addition to the recently adopted GHC cap and trade and reporting and verification rules that were proposed by NMED, an additional petition by The New Energy Economy that would put a cap on GHG emissions in New Mexico is scheduled for decision by the EIB in early December. The New Energy Economy petition asks EIB to mandate that large facilities emitting greenhouse gases must reduce their emissions by 3% every year from 2010 levels, regardless of the development of a cap and trade market in the region.   If adopted, the program would sunset in 2020, and also be suspended in any year that a source begins reducing GHG emissions pursuant to a multi-jurisdictional or national GHG reduction program.

 

 

            The future will tell us which of the two votes taken on November 2 will prove most important. Some key opponents to the New Mexico GHC rule have expressed support for a federal cap and trade effort, but other very significant concerns remain, particularly regarding GHG proposals that are merely state or regional. In New Mexico, as in the rest of the country, the GHG trading market is far from open.

California Takes Dead Aim at Global Warming

Posted on November 22, 2010 by Jose R. Allen

One of the most striking campaign ads to hit the air waves during the run-up to the recent mid-term elections was the "Dead Aim" ad aired by Joe Manchin, the Senator-elect from West Virginia. The ad featured Manchin walking through an open field with a rifle cradled in his arms. He stops, deliberately loads a single cartridge into the firing chamber of the rifle, takes aim at a distant target and fires. The camera then zooms in on the target of Manchin's single, clean shot: a fictitious Senate bill titled, "Cap and Trade." The ad ends with Manchin staring directly into the camera and promising that, "I will take dead aim at the Cap and Trade bill because it is bad for West Virginia." 

 

 

In California voters were far more hospitable to climate change regulation in general and a cap-and-trade program in particular. Just days before California voters went to the polls to defeat a ballot initiative aimed at delaying implementation of California's landmark global warming law (AB 32), the California Air Resources Board (ARB) released for public comment proposed regulations to implement a state-wide cap-and-trade program. The cap-and-trade program would place an overall cap on the amount of GHG that can be emitted by all sources covered by the program. The ARB would then issue allowances equal to the cap to regulated sources. The cap would be gradually reduced between 2013 and 2020 to achieve the GHG gas emissions reduction target established by AB 32. Sources subject to the cap-and-trade program would have to reduce their GHG emissions to achieve their allocated emissions limits or use offset credits to satisfy a portion of their compliance obligations. 

 

 

What was used for target practice in a Senate campaign in West Virginia is used in California as the key part of the strategy to reduce GHG emissions. Only time will tell whether it will be open season on cap-and-trade programs or whether such programs are the wave of the future.

Iqbal and Twombly Result in Dismissal of Pennsylvania DEP Lawsuit

Posted on November 22, 2010 by John Barkett

Recent Supreme Court opinions interpreting Rule 12(b)(6) have been applied in an environmental context. A state agency cost recovery action was dismissed for failure to plead facts sufficient to show a plausible claim for relief, resulting in unnecessary additional litigation costs.

 

 

WhenBell Atlantic v. Twombly, 550 U.S. 554 (2007) was decided, many lawyers lamented the loss of Conley v. Gibson, 355 U.S. 41 (1957) (in effect, if there is a claim somewhere within the four corners of a complaint, a motion to dismiss will be denied) as the governing case in Rule 12(b)(6) jurisprudence. Then Ashcroft v. Iqbal, 129 S.Ct. 1937 (May 18, 2009) came down. The laments became cries for action to restore Conley legislatively, and, indeed, such legislation was introduced in the Congress by Senator Specter who was not returned to office. For now, Iqbal and Twombly remain the law.

 

 

For those few lawyers who may not be familiar with Twombly or Iqbal, both cases dealt with the sufficiency of allegations in a complaint to state a cause of action. Twombly dealt with parallel conduct in an antitrust setting that was consistent with lawful behavior but was alleged conclusorily to represent a conspiracy in restraint of trade.  Without fact allegations to show why lawful parallel conduct was in fact unlawful anticompetitive behavior, the complaint did not survive. Iqbal dealt with claims against the Attorney General and the Director of the FBI for post-9/11 activities that restrained the liberty of the plaintiffs for a period of time. Other defendants remained in the case. The Supreme Court held that the complaint’s allegations against these two executives were not “plausible.” Hence, they were dismissed.

 

What is a “plausible” claim? The Supreme Court gave this answer in Iqbal: “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” This plausibility standard is not “akin to a probability requirement,’ but it asks for more than “a sheer possibility that the defendant has acted unlawfully.”

 

 

It has not taken long for Iqbal and Twombly to be applied in an environmental dispute. Just ask Pennsylvania’s Department of Environmental Protection (DEP). On November 3, 2010, Magistrate Judge Lenihan in the Western District of Pennsylvania, citing this Supreme Court precedent and the Third Circuit’s interpretation of it in Fowler v. UPMC Shadyside, 578 F.3d 203 (3rd Cir. 2009), dismissed a CERCLA amended complaint with prejudice. The 2009 action involved $3.7 million in costs incurred in a landfill response action that was completed in 2004. The DEP characterized the excavation, drum and soil removal, and restoration work it conducted as a remedial action for which it had six years within which to file suit under CERCLA. Three defendants argued that the DEP had engaged in a removal action for which it had only three years from the conclusion of the removal action within which to bring suit. The magistrate judge agreed with the defendants and because suit was brought beyond three years, the case was dismissed. The magistrate accepted the factual averments in the amended complaint as true but disregarded the DEP’s “legal conclusions.” Because the actions described in the complaint were “the equivalent of a CERCLA removal action,” she held, the DEP had failed “to set forth sufficient factual matter to show a plausible claim for relief.”

 

 

The magistrate judge was persuaded by the administrative record that “repeatedly and consistently” characterized the DEP’s response action as “interim.” The DEP was not helped by its 2002 “Analysis of Alternatives” under Pennsylvania’s Hazardous Sites Cleanup Act which stated that the interim response was warranted but that the response as then proposed “is not a final remedial response.” The magistrate judge rejected the DEP’s argument that a “prompt interim response” would be a removal action in CERCLA terms but that a “limited interim response” in fact was the same as a remedial action under CERCLA.

 

 

Under Conley, it is likely that the motion to dismiss would have been denied, discovery would have occurred, and the limitations question would have been decided under Rule 56’s summary judgment standards. Had the DEP filed suit before Twombly, it would have been able to so argue. Of course, if it had done that, it could have been within the three-year removal action window. Not having done so, it had to deal with Iqbal and Twombly’s preference for using the motion to dismiss as a way to address escalating discovery costs in federal court litigation where a claim is not “plausible.”

Another Corner Heard From: Portland (Oregon) Releases a New Climate Action Plan

Posted on November 4, 2010 by Seth Jaffe

Last week, the City of Portland, Oregon (together with Multnomah County) released an updated Climate Action Plan. The Plan presents a number of aggressive goals and targets, with ultimate goals of GHG reductions of 40% by 2030 and 80% by 2050.

The details of the Plan are obviously only relevant to those in the Portland area, but for those anticipating what regulation might look like in California, Massachusetts, and other states that have enacted or will soon enacted some version of a Global Warming Solutions Act, the Plan provides a helpful catalogue of the types of changes that might be sought. Therefore, a quick summary of some of the 2030 goals seems warranted

Reduce energy use from existing buildings by 20%-25%

All new buildings – and homes -- should have zero net GHG emissions. 

Reduce VMT by 30% from 2008 levels

Recover 90% of all waste generated

Reduce consumption of carbon-intensive foods

Expand “urban forest canopy” to cover one-third of Portland

Reduce emissions from City and County operations by 50% from 1990 levels

What’s my take? I have two immediate reactions. First, if any further evidence were needed that attaining significant GHG emission reductions is going to involve major social and economic changes, this is certainly it. 

Second, and perhaps more importantly, this Plan, and others like it, have to constitute a heavy thumb on the side of the scale arguing for comprehensive federal legislation. In the past, I’ve argued that federal legislation would be preferable to a patchwork made up of EPA regulation under existing Clean Air Act authority, public nuisance litigation, and state and regional initiatives. To that list, we can now add comprehensive local regulation. I don’t mean to be too sanguine about the ability of federal legislation to harmonize this entire process; the existing bills would not preempt most state, regional, and local regulations (other than cap-and-trade programs). Nonetheless, delays in federal enactment can only contribute to the proliferation of state, regional, and local programs, some of which may be beneficial, but many of which will be inefficient, contradictory, or both.

Presentation - Climate Change Update, and the Resurgence of Common Law Nuisance in Climate Change Cases

Posted on November 3, 2010 by David Farer

Climate Change Update, and the Resurgence of Common Law Nuisance in Climate Change Cases

Panelists:

Michael B. Gerrard, Center for Climate Change Law, Columbia University Law School

Pamela M. Giblin, Baker Botts

R. Kinnan Goleman, KG Strategies
 

Moderator: Karen Crawford, Nelson Mullins Riley & Scarborough 

Tribal Claims to Water Continue in Oklahoma

Posted on October 29, 2010 by Mark Walker

Last year, in State of Oklahoma v. Tyson (Case No. 05-cv-329-GKF-PJC), a federal court threw out the State of Oklahoma's claims against poultry companies for $600 million in environmental damages to the Illinois River Watershed (IRW) due to the State's failure to join the Cherokee Nation as a party to the lawsuit. The Court held the Cherokee Nation was an indispensable party because of its potential "substantial interests" in the IRW, but the Nation could not be joined as a party because of its sovereign immunity. The Nation's last minute request to join as a party was denied as untimely. The case then proceeded solely as to injunctive and other equitable relief.

 


On the heels of the Tyson decision, in early 2010, the Apache Tribe filed a lawsuit in federal court seeking a declaratory judgment that it has Winters water rights (referencing the 1908 United States Supreme Court case establishing the doctrine of tribal federal water rights) in the Red River Basin within its historical tribal boundaries in southwest Oklahoma. Ironically, the State of Oklahoma now seeks to dismiss this lawsuit claiming the Tribe has failed to join indispensable parties, namely the Tribal "allotees" who received individual allotments of Tribal lands in the 1890's, as well as all other persons who claim an interest in the basin. The State claims that, in order to resolve the Tribe's claims, the Court must necessarily determine how much water the Tribe owns or can use, which the State contends puts the Tribe at odds with all other users within the basin.

 


In response, the Apache Tribe asserts it is not seeking a quantification of its reserved water rights, rather it is only seeking a determination that it has reserved rights under the Winters doctrine.

 


The motion to dismiss is still pending. If the case survives the motion, the Court will have to grapple with the issue of how the allotment of tribal lands, which occurred with most tribes in the late 1800's and early 1900's, affected the water rights which the tribes held prior to allotment, and the water rights associated with the lands which remained with the tribes after the allotment process, and how such rights interrelate with State water regulatory systems that have existed for decades. The importance of these cases looms large, as most of the State of Oklahoma and its water resources lie within the historical boundaries of 39 different federally recognized tribes.

Winner of the Stephen E. Herrmann Environmental Writing Award for 2010

Posted on October 25, 2010 by Rachael Bunday

The American College of Environmental Lawyers announces the Stephen E. Herrmann Environmental Writing Award for 2010. The winner is Kate R. Bowers for her Note, Saying What the Law Isn't: Legislative Delegations of Waiver Authority in Environmental Laws, 34 Harv. Envtl. L. Rev. 257 (2010).  You may view her article here.

Climate Change Policy

Posted on October 18, 2010 by Rachael Bunday

The American College of Environmental Lawyers has adopted the following policy statement on Climate Change. The statement reflects the collective position of the College and not of any individual member.

 

BE IT RESOLVED, that the American College of Environmental Lawyers urges the Congress of the United States to enact legislation to address climate change without delay;

 

AND, BE IT FURTHER RESOLVED, that the American College of Environmental Lawyers urges that the United States actively promote international action to address climate change.

Climate Change Policy

Posted on October 18, 2010 by Rachael Bunday

The American College of Environmental Lawyers has adopted the following policy statement on Climate Change. The statement reflects the collective position of the College and not of any individual member.

 

BE IT RESOLVED, that the American College of Environmental Lawyers urges the Congress of the United States to enact legislation to address climate change without delay;

 

AND, BE IT FURTHER RESOLVED, that the American College of Environmental Lawyers urges that the United States actively promote international action to address climate change.

40 Years of Federal Environmental Law - How Should Lessons Learned From Our Experience Be Used?

Posted on October 14, 2010 by Charles Tisdale

Congress created the primary framework for air and water pollution control in the 1970 Clean Air Act and 1972 Clean Water Act. RCRA and TSCA were enacted in 1976 and CERCLA in 1980. Thus, we have almost 40 years worth of experience with the major federal environmental laws. What lessons can we learn and how should we use our knowledge in the future?

I began the practice of environmental law in 1973. At that time, the regulated community was very concerned that requiring the best treatment systems technologically available for air and water discharges would cause serious economic problems for U.S. industry and local governments. History has shown that this concern was not justified. The technology forcing aspects of the Clean Water Act and Clean Air Act have worked effectively to limit emissions into water and air from stationary sources. Compliance with the standards created pursuant to the Clean Water Act and Clean Air Act resulted in innovations, including recycling, innovative technology, new jobs and changes in the use of materials, all practices which were beneficial to the economy.

Technology forcing, regulation and uniform enforcement produced substantial results. Why not use the same concepts today where they are applicable to discharges which cause problems? Economic considerations are still important, technology forcing can only go so far, but improvements can be made without adversely affecting the economy. Many of the improvements made to comply with water and air laws would now fit within the rubric of “sustainability”.

American environmental laws set models for other countries. This status is changing. The European Union has created new laws that, in some cases, are better than the United States’ laws while still taking into account cost and economic considerations.
 

Concerns about Competitiveness

It is valid to be concerned about the competitiveness of U.S. industry if new environmental laws and regulations are passed. However, 40 years of history teaches us that carefully drawn legislation can produce new practices, new technologies and new jobs which will be beneficial to the economy and to the environment.

Coordination with Other Countries

There is serious concern that reducing emissions further will create conditions in which U.S. industry cannot compete with foreign industries. There is a need to seek commitments from other countries; however, this need should not be used as an excuse to avoid new environmental laws or regulations. China is ahead of the United States in creating new jobs through new technologies related to energy and improvement of the environment. The economic benefit of using the laws and regulations that worked best in the 1970s and 1980s should not be discounted or used as an excuse for the failure to legislate or regulate.

Environmental Priorities

Federal environmental laws were created in response to crisis. A river catching fire, the loss of visibility in cities due to air pollution, contaminated groundwater and soil from historic disposal. Many factors have created what most people view as an environmental crisis in numerous areas. Politics has played a significant role in preventing an effective response to our current problems. However, we again need to consider what history teaches us. The Clean Water Act is often rated as the most successful environmental law. It was enacted while a Republican was President. Long time EPA employees now in private practice tell me the agency worked the best under George Bush, Sr., another Republican President. Thus, politics should not be used as a basis for opposition to changes and improvements in environmental laws and regulations.

Setting Priorities

When the history of the past 40 years is accurately written, I predict we will question why so much money has been spent on cleanup to stringent levels that were not necessary to protect human health or the environment at superfund sites, and so little attention has been given to the need to improve air quality. Studies from numerous reputable sources have shown that exposure to particulates in cities has a long term effect on the health of all residents. Potential exposure to hazardous substances in soil and groundwater creates significant emotion while poor air quality in major metropolitan areas is generally accepted as inevitable. A comprehensive and holistic review of the piecemeal environmental laws may result in new priorities and the opportunity for creative solutions to the major issues.

Many significant environmental problems are created by pollution from non-stationary sources. Thus, solutions will be more difficult than the technology forcing provisions that work so well in the Clean Water Act and Clean Air Act. Nevertheless, we as environmental lawyers should use our experience and knowledge to educate others and seek legal, regulatory and voluntary changes to address the environmental issues that present the most serious problems to public health and the environment. We have the experience and the knowledge. I submit that it is our duty to the public and to future generations and our ideas can result in changes that improve the economy. Sustainability is the first significant environmental movement to come from the bottom up rather than the top down. We have a responsibility to further that movement in the development of new laws and regulations.

Governor Manchin (D-WV) Sues EPA Over Failure to Issue Mining Permits

Posted on October 12, 2010 by David Flannery

On October 6, 2010, and at the direction of Governor Joe Manchin (D-WV), the West Virginia Department of Environmental Protection (WVDEP) filed a complaint against EPA and the Army Corps of Engineers in U.S. District Court for the Southern District of West Virginia. The complaint alleges that two actions by EPA, requiring surface mine permit applications to undergo enhanced scrutiny and setting a new water quality standard based on conductivity, are unlawful and have brought the permitting process to a standstill. WVDEP is seeking a court order declaring EPA’s actions to be unlawful and enjoining their implementation.

 

WVDEP argues that EPA’s actions 1) are substantive rule changes that did not go through formal rulemaking required by the APA; 2) require the Corps to apply illegal presumptions during environmental assessments of new surface mine permits; 3) usurp West Virginia’s authority to implement its own water quality standards and effectively issue NPDES and SMCRA permits; 4) impose new water quality standards that are not based on sound science; and 5) have caused undue delays in the issuance of surface mining permits and threaten the supply of coal available for the nation’s energy needs.

 

Governor Manchin is in a hotly contested race for the US Senate in which his opponent is accusing him of being a "rubber stamp" for President Obama. Undoubtedly this action will be offered as a response to that criticism.

RIGHTS OF CITIZENS MAY DEPEND ON TIME ZONE

Posted on October 4, 2010 by Brian Rosenthal

Under the Clean Air Act (CAA), how long must an operator worry whether a citizen suit will be filed claiming its facility construction modification triggered Prevention of Significant Deterioration (PSD) permit requirements? The answer may depend on when and where the modification occurred. If a company violates its duty to obtain a preconstruction permit under the CAA’s PSD permitting requirement, it may be subject to a later citizen suit for failing to operate with a proper permit or failing to incorporate best available control technology (BACT). The United States Court of Appeals for the Eighth Circuit joins the Eleventh Circuit by concluding the CAA’s PSD provisions are reviewed when construction or modification is initiated and are not ongoing, operating requirements. While there is no statute of limitations for CAA citizen suit actions, the general federal five year limit applies from claim accrual. Thus, in the reviewed case because the last challenged modification was constructed more than five years before the filed citizen suit, the court found the citizen suit untimely. PSD permits are for construction and do not set operating requirements. BACT and PSD go “hand in hand”, so because PSD permitting could not be timely claimed, neither could the claim as to control technology be sustained. Operators in the Sixth Circuit however may not be so safe—that circuit has held State Implementation Plan (SIP) regulations contain operating requirements, but hold the claim in Kentucky, Michigan and Ohio--the Sixth Circuit contrary case may be limited to Tennessee or any other state with an SIP allowing for permit issuance post-construction. Sierra Club v. Otter Tail Power Co., No. 09-2862 (8th Cir. August 11, 2010).

PCB-Containing Caulk: EPA Mixes Its Messages

Posted on September 22, 2010 by Ralph Child

EPA has issued an Advanced Notice of Proposed Rulemaking that broadly re-opens the question whether to authorize PCBs in caulk and under what conditions. EPA did not propose any new rules on the issue, but sought comments on what to do.   This balance of this post reviews EPA’s regulatory efforts on this issue and the comments on the ANPRM, and then summarizes some options for building owners while the agency ponders.

 

 

            Last year EPA announced that in “recent years” it had learned that many 1950 to 1978 buildings may contain caulking with PCB concentrations higher than 50 ppm, indeed often quite a bit higher. Linda Bochert’s post of November 3, 2009 linked to the EPA’s PCBs-in-caulk website, which the agency established to provide guidance for preventing exposures and conducting safe building renovations. 

 

 

            Last year’s guidance conspicuously avoided a central issue: EPA’s position on the legal status of PCB-containing caulk. EPA’s position actually is clear: PCBs at levels above 50 ppm in caulking are not authorized, hence are illegal to maintain. Yet EPA has never mounted a program to identify and remedy PCB-containing caulk, and last year’s guidance tacitly condones leaving PCBs in place indefinitely. So EPA de-emphasizes its legal interpretation. Quite possibly that is because EPA managers have not viewed PCB-containing caulking as causing actual health impacts whereas remediation certainly poses high costs and raises its own health risks.   

 

        

            The bottom line?  Clear-cut and sensible regulatory answers remain far in the future. Meanwhile EPA is sending mixed messages – PCBs in caulk are unauthorized but don’t overreact while we ponder. Building owners, prospective purchasers and contractors must sort out their own answers about what to do or not do.

 

Regulatory Background

 

            In truth, EPA long has had general awareness of PCBs in old caulk. If the concentrations are below 50 ppm, the caulk qualifies as an excluded PCB product and is not regulated by EPA. If the concentrations are higher, EPA considers the use to be illegal to maintain because EPA has never issued a use authorization for PCBs in building materials. 

 

 

            When over-50 ppm PCBs in caulk are reported to EPA, generally EPA has required remediation under TSCA’s rules. EPA New England (Region 1) has had a number of such matters. The Region also insists that cleanups must meet the requirements of the PCB spill regulations, which generally require cleanup in occupied buildings to levels well below 50 ppm.

 

 

            Yet there is no obligation under TSCA for building owners to test for PCBs in caulk or to report exceedances to EPA. Many building owners ignore the issue, even if they are aware of the general possibility. So unauthorized caulk persists in many buildings, or goes away during renovations or demolition, awaiting potential discovery in unplanned circumstances. 

 

 

            That has led to a number of mini-crises, particularly for public school systems facing growing parental and school staff awareness.   PCBs in schools have been much discussed in New York and elsewhere. In January 2010 the New York City schools and EPA entered into an extensive consent order to evaluate school buildings and study ways to encapsulate or treat PCBs over a period of several years. 

 

    

            In practice then, EPA has sent mixed messages. It has commendably - albeit tacitly -recognized that immediate and costly removal of unauthorized PCBs in caulk usually is not warranted. Yet the use remains unauthorized.  Given the strictures of TSCA and the ill repute of PCBs, that remains unsettling for many building owners and prospective purchasers.

 

 

            Efforts to authorize PCBs in caulk: the 1994 NOPR

 

            The mixed messages from EPA and the issues of cost and health risks call out for clear cut regulatory answers, but also hamper EPA from issuing definitive regulations.   It has already tried and retreated before. 

 

 

            Specifically, in 1994 as part of unrelated PCB rule changes, EPA proposed to authorize PCBs in pre-TSCA building materials, with conditions, similarly to intact asbestos containing materials.   The NOPR included EPA’s conclusion that continued use at concentrations above 50 ppm did not pose a significant risk as long as the materials were in good condition. 59 Fed. Reg. 62788, 62810 (12/6/94).

 

The proposed conditions had many downsides from a building owner’s perspective, because leaving the materials in place, once discovered, would have then required:

 

·        Notice within 30 days to EPA and potentially exposed individuals;

·        Marking in a prominent location;

·        Quarterly air monitoring and wipe sampling for one year and annually thereafter until removal of the material;

·        Removal or containment (by encapsulation with a sealant) if wipe sampling or air monitoring showed exceedances of workplace standards;

·        24-hour notice to EPA of such exceedances;

·        Record-keeping.

 

EPA’s final rule issued deferred the issue while indicating EPA intended to issue a supplemental notice of proposed rulemaking and asking for further information on how much of a problem this is or not.  63 Fed. Reg. 35383, 35386 (6/29/98)

 

            The 2010 ANPRM and Comments

           

            Over a decade later, EPA has issued an ANRPM on unrelated PCB rule changes, and used it to request comments on whether EPA should reconsider the 50 ppm level for excluded PCB products. That request also specifically called for comment on whether EPA should issue a use authorization for PCBs in caulk.  ANRPM, 75 Fed. Reg. 17645, 17664 (April 7, 2010). The ANPRM did not, however, describe any revised levels or conditions that EPA might propose for PCBs in caulk. 

 

 

             Many of the comments on the APNRM on this issue call for more study, but otherwise reflect an unsurprising range of recommendations. Comments from the Children’s Environmental Health Network urged EPA to cease any thought of authorizing an increase in the 50 ppm level. Comments from the American Federation of Teachers recommended a “suspension” of the allowance of PCB-containing caulk below 50 ppm while research is done. Massachusetts DPH comments tracked EPA’s position of 1994 by recommending leaving intact caulk alone, and included its own recent guidance to that effect. MIT’s comments proposed a facility-specific and detailed risk management approach. Comments from the National Association of College and University Business Officials recommended issuance of a use authorization for intact materials, perhaps conditioned on an I&M program.

 

 

            Overall, the ANPRM attracted relatively few comments on this issue, by contrast with voluminous comments from the utility sector on other issues. The paucity of attention may mean that PCBs in caulk still have not reached a widespread awareness in the commercial real estate community, which provided exactly no comments. Or building owners just may prefer the status quo.

 

 

           

Continued Regulatory Uncertainty: Working Out Own Answers

               

                It seems likely that EPA will not be providing any new rules on this issue in the foreseeable future.  That leaves the regulated community to work out its own answers as best it can. 

 

 

                It appears that many building owners have determined not to look for PCBs in caulk, even in buildings where they might be expected.  There is no requirement to do so and there have been no reports of actual health impacts due to PCBs in caulk. 

 

 

                Other building owners have chosen to test for PCBs in caulk in order to reduce regulatory risk, but only when renovations or demolition are undertaken for other reasons.  Only if unauthorized PCBs are found then do they conduct remediation under the health and safety and disposal restrictions under the PCB rules. 

 

 

                Some prospective purchasers are including this issue in their due diligence, particularly if renovations are planned, and building attendant costs into the pricing.  But some do not, relying on the absence to date of regulatory requirements, regulatory pressure or health impacts.

 

 

                Some owners are writing requirements into construction contracts to make sure that contractors identify and handle any such caulking appropriately, similarly to contractual provisions for asbestos-containing materials. 

 

 

                Given EPA’s mixed message – PCBs in caulk are unauthorized but don’t overreact – each of those practices may be sensible. Building owners and prospective purchasers must choose their own paths based on their own policies and risk tolerance.

You Want to Preclude a Citizens' Suit? Pick Your Poison.

Posted on September 17, 2010 by Seth Jaffe

When clients are threatened with citizen suits – and particularly when the threatened litigation involves a matter where EPA or a state regulatory agency is heavily involved, the clients always want to know why they can’t somehow get rid of the citizen suit, given that EPA is on the case. The answer is that they can – but only in limited circumstances.

The recent decision in Little Hocking Water Association v. DuPont confirmed this answer in the context of RCRA. The Little Hocking Water Association provides public water to certain communities in Ohio, directly across the Ohio River from a DuPont plant which uses , also known as PFOA or C8 – also known as the contaminant du jour. According to the complaint, the Little Hocking wells have among the highest concentrations of C8 of water supply wells anywhere and its customers have among the highest C8 blood levels anywhere. Little Hocking Water Association thus sued DuPont under RCRA’s citizen suit provision, claiming that DuPont’s release of C8 had created an “imminent and substantial endangerment."

Section 7002 of RCRA contains provisions precluding such citizen suits if either EPA or a state “has commenced and is diligently prosecuting” an action under RCRA to abate the endangerment. In the DuPont case, releases of C8 from the DuPont facility had been the subject of at least two administrative orders on consent entered into by DuPont and EPA. However, consent orders aren’t the same as “an action” under § 7002 or § 7003 of RCRA – and they thus do not preclude a citizen suit.

DuPont tried the next best argument – that EPA had primary jurisdiction over the regulation of C8 – and that the existence of EPA’s regulatory authority and the issuance of the consent orders meant that the courts should defer to EPA. DuPont’s argument was that a court could not fashion a remedy in the case without essentially establishing a new cleanup standard for C8 and that doing so is the job of EPA, not the courts.

The Court gave the primary jurisdiction argument short shrift. As the Court noted, using the doctrine of primary jurisdiction in citizen suits would dramatically reduce the scope of such suits. Since Congress provided a citizen suit mechanism – and provided very specific, discrete, circumstances in which citizen suits are precluded – it doesn’t make sense to use primary jurisdiction to establish another defense, particularly where the defense would almost eliminate the remedy. 

The bottom line? If you don’t want to face a citizen suit (and you’re not in compliance), get yourself sued by EPA or your state regulatory agency. The mere existence of EPA or state regulation, even if requirements are embodied in a consent order, is not enough.

Product or Pollutant? You be the judge.

Posted on September 15, 2010 by Michael Rodburg

The unending war--or so it seems sometimes--between policyholders and insurers regarding coverage for "pollution" never ceases to reveal new ways at looking at the facts of American life. In the latest salvo, we find that what's good for rice farmers is bad for cotton farmers and therefore bad for those who help rice farmers.

 


In Scottsdale Insurance Co. v. Universal Crop Protection Alliance LLC, (8th Cir., No. 09-1774, September 8, 2010) the Eighth Circuit decided that a pollution exclusion clause in defendant's insurance policy barred coverage for its liability to cotton farmers adversely affected by a herbicide applied to rice farmers' fields.

 


The underlying suit was brought by a group of Arkansas cotton farmers against Universal Crop Protection Alliance LLC ("UCPA"), a member-owned cooperative and major purchaser, formulator and distributor of agriculture chemicals. A herbicide containing dichlorophenoxyacetic acid (i.e. 2,4 D), is beneficial in rice production and routinely applied to rice fields by spraying. Unfortunately, it was alleged, that herbicide destroys or seriously damages cotton crops. In Arkansas, the two crops are often grown in close proximity. In a suit commenced in federal court in the Eastern District of Arkansas in May 2007, a group of 80 Arkansas cotton farmers alleged that UCPA and four other herbicide manufacturers had allowed the rice field herbicide to drift off-target or, as later alleged, to re-loft from the fields to which they were applied, and drift onto their cotton fields thereby causing damage and destruction of their cotton crops. UCPA tendered the defense of the suit to its insurer, Scottsdale Insurance Co. The policy was a one year claims made policy that covered "physical injury to tangible property." The policy contained an exclusion from coverage for property damage that would not have occurred but for "the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of pollutants." "Pollutants" was defined as including "any solid, liquid, gaseous or thermal . . . contaminant, including . . . chemicals." Scottsdale brought a declaratory judgment action seeking a declaration that it did not owe defense or indemnity for the underling suit by the cotton farmers against UCPA.

 


In March 2009, the district court granted the insurer's motion for summary judgment finding that the pollution exclusion clause barred coverage. On appeal, decided September 8, 2010, the Eighth Circuit affirmed, finding the pollution exclusion clause broad and unambiguous in the context of the case. Under either an off-target application or the later pleaded "relofting" theory, the insurer was relieved of coverage for the claim: "Neither theory 'arguably' falls outside the scope of exclusion."

 


The nearly metaphysical question which turns cases such as this one way or the other is when does a product become a pollutant? Would UCPA have been covered if a rice farmer also had cotton on the same farm? Or if the "customer" farmer claimed damage from the product to livestock that were inadvertently sprayed while grazing on the intended target field or ingested the herbicide while grazing nearby? Or, was the fact that the product "escaped" from its intended field of application to another's property enough to make it a pollutant once it went astray? Surprisingly, the insurance coverage question arises more frequently than one might expect, especially since the inception of the so-called "total" or "absolute" pollution exclusion clause. The Eighth Circuit opinion offers little guidance and less reasoning. Adopting a mechanical reading, the Court concluded that since 2,4 D was a toxic chemical and had "migrated," it was a pollutant and coverage was not available.

 


A far more satisfying approach--at least from a policyholder's perspective--is represented by the New Jersey Supreme Court's decision some five years ago in Nav-Its, Inc. v. Selective Insurance Co. of America, 869 A. 2d 929 (NJ 2005). There, a contractor was hired to paint and perform floor coating and sealing work in an office building. A building tenant claimed personal injury from exposure to the fumes. The insurer argued, similarly to Scottsdale that the pollution exclusion clause barred coverage as the claimed injury was the result of the release and consequent exposure to "pollutants," i.e. fumes. In holding for the insured, the New Jersey Supreme Court viewed its role as determining the underlying purpose for the exclusion, and concluded that product exposure of the type faced by the contractor was not "traditional" pollution. Painting and sealing fumes were a necessary consequence of handling the products and the damage they caused was within the coverage for products liability and completed operations.

 


Without belaboring the distinctions in the facts of these two cases, the point to be made is quite simple: All tangible products are composed of chemicals; they cause damage only when they come in contact with property or persons in a manner not intended by the original purpose for which they were made or used. If any such exposure automatically renders the product a pollutant, then coverage is illusory for a broad array of circumstances that are not "traditional" pollution in any sense of the word. Conversely, if the courts are inclined to examine policies for their "purpose" and "intent" from the perspective of the insured, they are far more likely to find coverage when the resulting exposure and harm is not "traditional" pollution.

Oklahoma v. Texas--Water Wars

Posted on August 24, 2010 by Linda C. Martin

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

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

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

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

Annual Meeting Update - Saturday Optional Evening Outing

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

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

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

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

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