Posted on June 10, 2013
I believe in governmental environmental regulation. We have a complicated world and it is not surprising that many activities, including those generating greenhouse gases, cause negative externalities. At the same time, however, I have spent more than 25 years representing regulated entities in negotiations with government regulators and it is impossible to do such work without obtaining an appreciation for the very significant costs that bureaucracies impose.
With all due respect – cue the upcoming diss – to my many friends in government, the absence of market discipline or the ability to fire nonpolitical bureaucrats often leads to street level bureaucrats operating under a law of their own devising. Moreover, if a complex economy causes externalities requiring regulation, that same complexity should cause regulators to pause before imposing or revising complicated regulatory regimes. Unintended consequences abound.
The genesis of these musings was the confluence of a number of otherwise unrelated recent regulatory developments. The most significant was headline in the Daily Environment Report earlier this week noting that “EPA [is] Still Unable to Provide Time Frame For Revising Definition of Solid Waste Rule.” RCRA is the perfect example. No one can really quarrel with the need for hazardous waste regulation, in order to prevent the creation of more Superfund sites. However, if we’re still fighting over the definition of something as basic as solid waste more than 30 years after the inception of the program and EPA’s most recent efforts to update the definition remain fruitless after about five years of effort, then we have to acknowledge some serious implementation problems where the rubber is trying to hit the road.
I’ll also provide two recent examples from my home state of Massachusetts. MassDEP has been engaged in a serious regulatory reform effort, which has earned deserved praise. However, as NAIOP has recently noted in comments on the draft proposal to revise the Massachusetts Contingency Plan, MassDEP’s proposed Active Existing Pathway Elimination Measure Permit is “so cumbersome that it is not clear that a PRP or redeveloper would want to seek such a permit.” This calls to mind MassDEP’s reclaimed water regulations, which were intended to encourage water reuse, but are so cumbersome that no one is applying for the permits.
Thus, the final caution. The MassDEP example is extremely common – and extremely troubling. Regulator gets great idea for innovative program. Prior to implementation, concerns are raised about what happens if…. More effort is put into avoiding the perceived downsides than in actually making the program work. Program ends up being worse than nothing.
I believe in environmental regulation, but…
Posted on June 4, 2013
With the 20th anniversary of Executive Order 12898 soon approaching, EPA has been planning on extensively incorporating “environmental justice” into its permitting processes. This executive order required all federal agencies to address disproportionately adverse human health or environmental effects of their programs, policies, and activities on minority and low-income populations in the U.S.
To that end, nearly two years ago, EPA issued “Plan EJ 2014” as a roadmap – not as a rule – to implement the executive order throughout the agency. Specifically, Plan EJ 2014 formally introduced EPA’s priorities of promoting increased public participation in the permitting process and considering more stringent permit conditions. In February of this year, EPA selected two case studies that highlight the agency’s approach to achieving these permitting priorities.
The first case study involved a recent Prevention of Significant Deterioration (PSD) permit for the Pioneer Valley Energy Center, a power plant expected to generate up to 431 MW in Westfield, Massachusetts. From the developers’ filing of the permit application in November 2008 through EPA’s issuing of the final permit in April 2012, Region 1 incorporated what it has described as environmental justice into this permitting process by providing enhanced public engagement opportunities and including more stringent conditions in the permit. These stricter conditions were aimed at limiting the applicant’s ability to burn ultra-low sulfur diesel for testing of its emergency generator when air quality would already be diminished.
The second case study involved a National Pollutant Discharge Elimination System (NPDES) general permit for oil and gas exploration in Cook Inlet, Alaska. Even as this permit has evolved over time, now with federal and state authority split, the subject conditions have been based on environmental justice considerations dating back to 2006-2007. In the permit’s 2007 iteration, Region 10 incorporated environmental justice into this permitting process by collecting and considering tribal traditional knowledge about the effects of development and by imposing more restrictive permit conditions. These conditions imposed new monitoring requirements, extended the area where discharges were prohibited for all sources from 1,000 to 4,000 meters from sensitive coastal areas, and explicitly did not authorize several types of drilling discharges for new sources.
There are two striking facets of these case studies. First, even as EPA found no disproportionate adverse effect on minority populations, low-income populations, or tribal populations, EPA still included somewhat more restrictive permit conditions based upon environmental justice considerations. Second, the imposed conditions do not appear to be particularly onerous – perhaps explaining why the permittees did not challenge the additional restrictions. Opinions vary as to the impact of these “EJ conditions” on the permitting process, as EPA likely could have imposed these restrictions under existing statutes and regulations without any reference to environmental justice.
Nevertheless, EPA seems to be testing the limits of its authority and telegraphing its intent to continue these efforts. Consequently, practitioners and permit applicants should be wary of EPA seeking to impose potentially unnecessary conditions based upon environmental justice.
Posted on June 3, 2013
Four votes. That is the number of votes required to grant a Supreme Court petition for a writ of certiorari. And because that is the same number of Justices who dissented from the Court’s landmark 2007 ruling in Massachusetts v. EPA, EPA has reason to worry over the summer.
Pending before the Court are nine petitions seeking review of a wide ranging set of challenges to EPA’s regulation of greenhouse gas emissions from new motor vehicles and new stationary sources. Petitioners include most every significant part of American industry, 14 States, and numerous political leaders. Some petitions, consistent with Judge Brett Kavanaugh’s dissent from the D.C. Circuit’s denial of rehearing en banc in Coalition for Responsible Regulation v. U.S. EPA, are strategically narrow; they ask the Court to review only a relatively narrow issue regarding the applicability of the Clean Air Act’s Prevention of Significant Deterioration Program to greenhouse gas emissions. Others, by asking the Court to overturn EPA’s determination that greenhouse gas emissions from new motor vehicles endanger public health and welfare seek, as a practical matter, to topple the Obama Administration’s effort to address global climate change in the absence of new federal legislation. But a few of the petitions jettison even any pretense of modesty by directly asking, consistent with D.C. Circuit Judge Janice Rogers Brown’s blistering dissent from en banc denial, the Court to do no less than overrule Massachusetts v. EPA.
The Solicitor General and other respondents (including 18 States) will no doubt oppose cert on all issues in their responsive filings this summer. They have nontrivial arguments, especially given the serious questions they can raise concerning the Article III standing of petitioners to raise the particular legal claims that would likely otherwise have the most force on the merits. But EPA is likely to be less concerned with whether review is granted than, if granted, on what issues. The legal stakes for some issues raised are far less consequential than they are for others, which are quite enormous.
Any cert grants will likely be announced in late September, shortly before October’s “First Monday” to allow for expedited briefing and argument as early as January 2014 and more likely in February. Otherwise, all petitions will be denied on that First Monday. It will be a long summer’s wait for all parties.
Posted on May 7, 2013
The confluence of aggressive new EPA regulations targeted at coal-fired power plants and low natural gas prices has made the decommissioning of older coal-fired plants substantially more likely in the coming years. Decommissioning a plant does not occur within a specific regulatory framework. In many cases, unless there is a suspected public health threat, potential environmental conditions at the plant do not have to be reported to government agencies. For that reason environmental remediation of a plant site is often addressed in the property sale and redevelopment process.
But the shut down and decommissioning of power plants nonetheless has significant regulatory implications, and the reality is that analysis of regulatory obligations and advance planning, including a proactive strategy for interacting with agencies and other stakeholders, is essential. Understanding obligations requires review of existing permits and the underlying regulatory landscape. And that landscape may shift under your feet – for example, new regulations for coal combustion residuals on the horizon may implicate the closure of certain waste management units.
The regulatory landscape may also provide opportunities to maximize value. There are a wide variety of emission credit programs that vary by jurisdiction. Identifying and capturing emission credits brings value to the table. Similarly, water rights, to the extent they are marketable in a particular jurisdiction, could be a source of revenue.
On the practical front, laying out a smooth decommissioning path through careful planning may help avoid stoking the fire of agency, local or public ire. The agency may have a formal role to play depending on the permit conditions or applicable regulations, but there may also be extensive agency oversight exercised through pursuit of enforcement actions. Particularly where community interest is high, local, state or federal agencies may have a heightened interest and enforcement provides them an avenue for involvement in the site that might not otherwise exist. So it is important to recognize the key stakeholders early and to understand how their interest may translate to pressure on an agency to leverage any violations.
If the site is one with good redevelopment potential, finding and working with a credible and savvy purchaser may keep the focus on the end game and allow for appropriate risk-based standards to be deployed against a more concrete vision for the future of the site. Once there is a well-developed understanding of the regulatory obligations associated with the particular plant and the overall objective for the site after decommissioning, it may be the moment to reach out to the state and federal agencies, and perhaps key stakeholders, with early, accurate and contextualized information.
Because there is not a standard regulatory framework to apply, experience over the coming years as plants come offline will be telling – it is that experience that will provide useful frameworks for up front, comprehensive analysis and strategic outreach for a smooth path through decommissioning.
Posted on May 3, 2013
After being taken to task by states and its own Inspector General for lack of final guidance on Vapor Intrusion, EPA has just released draft guidance documents for hazardous substances and petroleum products for comment. The guidance documents are already generating discussion on the blogosphere, with comments due to EPA by May 24th. Below are some of the issues EPA will have to address for its guidance for hazardous substances, and those of us addressing vapor intrusion for our clients.
Will the guidance collapse under its own weight? EPA’s recommended framework relies upon collecting and evaluating multiple lines of evidence to support risk management decisions, detailed investigation of vapor intrusion including rigorous data quality objectives and recognition of seasonal/temporal variability in levels, consideration of options for building mitigation and subsurface remediation, decisions on how institutional controls can be crafted and monitored, and how the public will be involved. The practical question is how much evidence and process is enough for a rational decision, and how costly and time-consuming an evaluation effort is justified? Rarely are actions taken quickly in the CERCLA or RCRA world, but if there are risks, then they should be acted upon, and applying the guidance in other contexts will be challenging. There already appears to be a consensus that EPA’s approach will be costly, and give vapor intrusion a life of its own in remedial decision-making. EPA will have to address this issue, or find its guidance bypassed or ignored, given the need for timely decisions.
Should we all buy stock in fan manufacturers and makers of synthetic vapor barriers? EPA offers (only on page 125 of 143) the question of weighing relative costs of characterization vs. engineered exposure controls. If EPA guidance is followed, the cost of implementing the guidance will at times greatly exceed the cost of engineering controls. Clients want the deal “done” and are not likely to wait for a lengthy deliberative process.
What role will EPA acknowledge for OSHA standards? EPA proposes guidance for residential and non-residential buildings, but as a practical daily matter, there are separate standards and approaches for workplace and non-workplace scenarios. EPA doesn’t directly address that issue in the 2013 guidance, even though the Agency had helpful statements in its 2002 proposal. The issue gets even more complicated given the unsurprising obligation to consider potential future land uses. If the default scenario is residential use, will the workplace vs. non-workplace distinction disappear?
Déjà vu all over again? Yogi Berra may have been commenting on repeats of the Mickey Mantle/Roger Maris back-to-back home runs, but it is pretty clear we will be reopening sites that may have had vapor intrusion issues, and assessing old sites at which the issue was never raised, or addressed following different procedures. EPA settled the question in November 2012 for CERCLA five-year reviews by declaring vapor intrusion a mandatory topic, and plans to adopt final Hazard Ranking System amendments for vapor intrusion. The guidance document applies to RCRA sites as well, but EPA knows that the guidance will surely find application at many types of sites where volatile chemicals may have been present. Although the document is limited to CERCLA/RCRA guidance, its general purpose is to be helpful, and EPA should probably re-emphasize that not only are all sites different, the recommended framework may not even be practical when applied through other state programs. At risk of over-generalizing, practitioners have learned to recognize the advantages of not following CERCLA and RCRA approaches.
EPA will receive many comments, and there is some cleanup work to be done on the guidance documents, but look for the final documents to be completed in months, not years.
Thanks to Jeff Carnahan, LPG, EnviroForensics, for sharing with me his expertise on vapor intrusion. However, the thoughts expressed here are solely mine.
Posted on May 1, 2013
On April 23, a panel of the D.C. Circuit unanimously held in Mingo Logan Coal Co. v. EPA that the Clean Water Act gives EPA the authority to withdraw permits previously granted under section 404 of the Act. The case emerged from EPA’s determination that the discharge of mining waste from the Spruce No. 1 mine in West Virginia into certain streams and tributaries would have an unacceptable adverse effect on environmental resources. Based on this determination, EPA withdrew the Army Corps of Engineers’ prior specification of these streams and tributaries as disposal sites for the waste from mountaintop removal.
Several features of the case are striking. First, the decision has obvious – and obviously important – implications for the ongoing debate over mountaintop removal and its irredeemable environmental impacts. No longer can the argument be made that a permit, once issued, gives the permittee the power, in perpetuity, to blast the tops off of mountains and dump them into streams.
Second, the decision rested, for the most part, on a single word: “whenever.” The Clean Water Act states that the Administrator of the EPA may withdraw the specification of a disposal site for dredge-and-fill material “whenever” she determines that it will have an “unacceptable adverse impact” on certain environmental resources. The court took Congress, literally, at its word, and held that “whenever” means whenever – that is, even if EPA finds unacceptable adverse impacts after a permit has issued, the agency has the authority to pull the permit.
Third, as if to make certain its own holding is unambiguous, too, the court five times stated that the Clean Water Act unambiguously authorizes EPA to withdraw permits after they are issued. EPA’s current interpretation of the Act is thus not changeable by a future administration.
Should permittees fear that “whenever” will become wherever? It is worth remembering that EPA’s decision on the Spruce No. 1 mine was the first time EPA had – ever! – withdrawn a previously issued permit, in the 40-year history of the Clean Water Act. Whether EPA will be emboldened by this decision, or will continue to mostly allow existing permits to stand, remains to be seen.
Posted on April 30, 2013
On January 3, 2013, the District Court for the Eastern District of Virginia ruled that EPA lacks the statutory authority to set a Clean Water Act (“CWA”) total maximum daily load (“TMDL”) for “stormwater flow rates” as a surrogate for sediment deposition. Virginia Dep’t of Transportation et al v EPA et al. EPA has decided not to appeal. The case has received national attention because of its implications for other TMDLs that use surrogates. This article will discuss the decision and its significance for the TMDL and water quality regulatory regime.
The relevant statutory framework is CWA Section 303, under which each state establishes water quality standards for waters within its boundaries. These consist of a designated use (trout fishing, contact recreation, etc.) and numerical or narrative “water quality criteria” necessary to support that use. For “impaired waters” where the criteria are not being met, the state must set a TMDL (think “pollution budget”) for each pollutant for which the criteria are exceeded, and implement a “planning process” leading to achievement. Where the state fails to act, or sets a TMDL which EPA regards as insufficient, CWA Section 303(d)(2) directs EPA to set the TMDL.
Accotink Creek is a 25 mile tributary to the Potomac River in Virginia, in which the benthic organisms were impaired, primarily because of sediment deposited by stormwater running off impervious urban and suburban areas. In April 2011, after Virginia failed to set a TMDL, EPA set one which limited the flow rate of stormwater into Accotink Creek to 681.8 cu ft/ acre-day. The court said that the parties agreed that “sediment is a pollutant, and that stormwater is not” (Slip op. 3). While EPA’s brief contains a fallback argument that stormwater can be viewed as a “pollutant”, it did not dispute that stormwater flow was being used as a surrogate for sediment. Thus the question addressed by the court was whether EPA has the statutory authority to set a TMDL for a “surrogate” which is not itself a “pollutant”.
EPA has used surrogates in a number of circumstances where, in its view, the surrogate would provide appropriate reduction of pollutants, and would be either easier to measure or provide other benefits (such as, in this case, reduction of stream bank scouring caused by heavy stormwater discharges), or both. The court rejected EPA’s argument that since the CWA does not expressly address the use of surrogates, EPA’s use of them should be upheld as reasonable “gap-filling”, consistent with the broad remedial objectives of the CWA, and entitled to substantial Chevron step 2 deference. The court held instead that because the CWA instructed EPA to set TMDLs for “pollutants”, not “surrogates”, the statute was clear. The court distinguished EPA’s use of surrogates in this case from other instances in which surrogates have been used under other CWA provisions (notably Sections 301, 304 and 402) where EPA appears to have greater latitude.
EPA and states have used stormwater surrogates in TMDLs in Connecticut, Missouri and North Carolina. They have also used other types of surrogates, such as impervious surface area limits and secchi disc readings. Some of those have been challenged, and this decision will no doubt provide ammunition for those who oppose their use. Nationally, however, this amounts to a very small percentage of the TMDLs that are in place, even if one focuses only on sediment (for which, the court noted, EPA has issued approximately 3700 TMDLs).
In addition, this ruling will have no effect whatever on EPA’s permitting of industrial and municipal stormwater discharges, including municipal separate storm sewer systems (“MS4s”), or its ongoing development of stormwater regulations, because these activities are expressly authorized under CWA Section 402(p). This is especially important, because EPA and many states now recognize stormwater as a major source of contamination and water quality impairment. For a thoughtful article on this subject and emerging approaches, see Dave Owen, Urbanization, Water Quality, and the Regulated Landscape, 82 U. of Colo. L. Rev. 431 (April 2011).
Posted on April 22, 2013
I get it that environmental groups place strict compliance with regulatory controls at a premium. After all, the standards are designed to be protective of the resource, and they are The Law, which must be obeyed.
But I sometimes find it dismaying when people conflate immediate, measured, and guaranteed compliance with ecological outcomes. They are not the same. I have been in settlement discussions in which I propose that we first come to agreement on what’s best for the resource, and then figure out how to make that fit into the regulatory framework, but have had few takers. The number is the number is the number.
A recent example arises in the context of water quality trading. EPA policy promotes alternative means of achieving regulatory compliance that promise environmental results at least as good as conventional, engineered approaches, and at lower cost. For example, if discharge water temperatures are the problem, riparian shade tree planting could substitute for mechanical chillers. Of course, measureable cooling would be deferred by many years while the trees grow, but the ancillary benefits of watershed restoration to habitat and ecosystem function are intuitive and compelling. This approach is supported by academia, government, and many in the NGO community. Some though are skeptical.
The City of Medford, Oregon, is embarking on a riparian vegetation approach to reduce temperatures at its wastewater treatment outfall, in full cooperation with Oregon DEQ. A regional NGO, Northwest Environmental Advocates, however, has raised objections. In a letter dated March 15, 2013, NEA asks EPA to examine DEQ’s implementation of the water quality trading policy with reference to Medford. NEA questions allowance of “credits” for watershed restoration work that upstream nonpoint sources would have to do anyway, and asserts that no credits should be allowed until the new trees actually yield shade.
The problem is that the upstream nonpoint sources are not obligated by law to restore riparian vegetation; they just need to adopt best management practices to avoid further degradation. More to the point, restoration of the watershed will simply not occur without the funding provided by a point source with a regulatory problem to solve, such as Medford. By denying the City credits, the incentive to use a watershed approach disappears. Similarly, if no credits are awarded until the trees are grown, funds that could go toward watershed restoration will be diverted to engineered controls on temperature. As DEQ Director Dick Pedersen so aptly puts it, “[i]f we ever build a chiller at the expense of ecosystems, we’ve failed.”
Posted on April 12, 2013
The August 21, 2012 decision of the D.C. Circuit Court in EME Homer City Generation LP v. EPA, Case No. 11-1302, not only vacated the Cross State Air Pollution Rule (CSAPR), it also provided a detailed framework (including the math) for how future plans should be developed by States to implement national ambient air quality standards (NAAQS) through the “good neighbor” provisions of the Clean Air Act. This case has already been the subject of various posts to this Blog. This article will provide an update of activities that have occurred in recent weeks as state and federal agencies, NGOs and the regulated community respond to the decision and its implications for implementing the various NAAQS (past, present and future).
Let me begin by noting that on March 29, 2013, EPA and various environmental organizations filed for a writ of certiorari with the U.S. Supreme Court. Even as EPA was filing for such a writ, EPA has scheduled two meetings this month with states to obtain input on technical and policy decisions. In these meetings, EPA is offering its interpretation of the court decision and its views about various options that exist for conducting the required analyses through the shared responsibility of EPA and the states.
Finally, the Midwest Ozone Group (MOG), a coalition of electric power generation interests, has developed a position statement on how the court opinion might be implemented including the identification of the following seven rules taken from the court opinion.
1. Basic rule - An upwind State’s obligation is limited to its own significant contribution and it cannot be directed to reduce emissions to account for any other factors impacting a downwind State’s nonattainment.
2. Proportionality of Downwind States - A downwind State is responsible for above-NAAQS amounts that are not attributable to significant contributions from upwind States.
3. Proportionality of Upwind States - The ratio of an individual upwind State contribution to the total contribution of all upwind States should be used as scalar to determine how the total upwind contribution is allocated among upwind States.
4. The Role of Costs - EPA may reduce some or all of the obligations of upwind States to avoid the imposition of unreasonable costs.
5. Insignificance - Once contributions are determined, a State is not required to address more than that contribution amount minus the significance threshold.
6. NAAQS Attainment - Once an area meets the NAAQS, no additional upwind emission reductions are required.
7. Over-Control - When multiple downwind areas are concerned, reductions associated with one downwind area should be reviewed in other areas to ensure unnecessary over control is not achieved
The full position statement can be found here.
The MOG position statement is accompanied by a presentation prepared by Alpine Geophysics which applies an example set of modeling data to these rules to illustrate how the rules might be applied as well as the significant technical and policy questions that remain. The Alpine Geophysics presentation can be found here.
Posted on April 8, 2013
Courts in Alaska issued two decisions upholding agency practice in carrying out antidegradation review under the Clean Water Act. The federal court concluded that adoption of water quality standards does not, itself, require antidegradation review. In the second case, a state court concluded that guidance may be developed to implement antidegradation regulations and need not be promulgated as a regulation provided it does not contain substantive criteria.
In Native Village of Point Hope v. U.S. Environmental Protection Agency, Alaska native and environmental organizations challenged EPA's approval of the State of Alaska's adoption of a site-specific water quality criterion ("SSC") for total dissolved solids ("TDS"). The SSC was challenged on a number of grounds, including on the basis that neither the State of Alaska nor EPA analyzed the SSC under the relevant antidegradation policy. The issue before the U.S. District Court for Alaska was whether antidegradation review applied to the adoption of water quality standards ("WQS") or, conversely, only when WQS are translated into permits through effluent limitations. In a case of first impression in the federal courts, the court ruled for EPA, holding that agencies are not required to undertake antidegradation review for the adoption of WQS; the obligation is only triggered when a WQS is incorporated into a permit through effluent limitations.
In Alaska Center for the Environment v. State of Alaska, environmental organizations challenged the State of Alaska's adoption of antidegradation implementation procedures through guidance, arguing that the procedures should have been promulgated as regulations. As background, several NPDES permits in Alaska were withdrawn by EPA in the face of arguments from environmental organizations that the State of Alaska lacked antidegradation implementation procedures. To address this alleged deficiency, the State of Alaska developed a guidance document which EPA found was consistent with EPA's own antidegradation regulation. The primary issue in the litigation was whether the State of Alaska was required to promulgate the guidance in the form of a regulation or whether it was permissible rely upon guidance to implement its regulations. In a decision that turned largely on the State of Alaska's Administration Procedures Act, the court held that it was appropriate for the State to develop the guidance to implement its regulatory program, reasoning that the guidance did not add substantive requirements to existing regulations.
Posted on March 26, 2013
On Monday, EPA lost another battle in the war over guidance. In Iowa League of Cities v. EPA, the 8th Circuit Court of Appeals vacated two letters that EPA had sent to Senator Charles Grassley concerning biological mixing zones and bypass of secondary treatment units at POTWs (also referred to as “blending”, because the POTWs blend wastewater that has not be subject to biological secondary treatment with wastewater that has, prior to discharge). The Court concluded that both letters constituted promulgation by EPA of effluent limits under the Clean Water Act and that they constituted legislative, rather than interpretive rules (I refuse to refer to “interpretative” rules; sorry). As a result, the Court vacated the letters due to EPA’s failure to follow notice and comment requirements applicable to promulgation of legislative rules. Finally, the Court concluded that a duly promulgated rule concerning biological mixing zones might be valid under Chevron, but that a rule barring bypasses of secondary treatment would exceed EPA’s authority under the Clean Water Act.
In first determining whether the letters constituted “promulgation” of an effluent standard, the Court looked to whether the letters were binding on the regulated community. Relying in part on Appalachian Power Co., the Court concluded that the letters were binding:
If an agency acts as if a document issued at headquarters is controlling in the field, if it treats the document in the same manner as it treats a legislative rule, if it bases enforcement actions on the policies or interpretations formulated in the document, if it leads private parties or State permitting authorities to believe that it will declare permits invalid unless they comply with the terms of the document, then the agency’s document is for all practical purposes “binding.”
As the Court noted with respect to the mixing zone issue, the “letter instructs state permitting authorities to reject certain permit applications, regardless of the state’s water quality standards.” With respect to the bypass issue, EPA stated that “it will insist State and local authorities comply with” a never-issued policy that precludes the types of bypass at issue. To try to suggest that words such as “insist” are not binding did not go over well with the Court. “Just as it did in Appalachian Power, the EPA dissembles by describing the contested policy as subject to change.”
After concluding that the letters constituted promulgation of effluent standards, the Court went on to conclude that the letters constituted legislative, rather than interpretive, rules, and thus were subject to notice and comment rulemaking. The following is the key paragraph for those of us attempting to beat back the kudzu that is EPA’s reliance on such informal guidance as a substitute for notice and comment rulemaking:
Identifying where a contested rule lies on the sometimes murky spectrum between legislative rules and interpretative rules can be a difficult task, but it is not just an exercise in hair-splitting formalism. As agencies expand on the often broad language of their enabling statutes by issuing layer upon layer of guidance documents and interpretive memoranda, formerly flexible strata may ossify into rule-like rigidity. An agency potentially can avoid judicial review through the tyranny of small decisions. Notice and comment procedures secure the values of government transparency and public participation, compelling us to agree with the suggestion that “[t]he APA’s notice and comment exemptions must be narrowly construed.”
“Layer upon layer of guidance.” The “tyranny of small decisions.” I couldn’t have said it better myself.
Posted on March 22, 2013
On Wednesday, in Decker v. Northwest Environmental Defense Center, the Supreme Court ruled that runoff from logging roads does not constitute a discharge from a point source that requires an NPDES permit. The decision upholds EPA’s interpretation of its own regulations and overturns – what a surprise! – a 9th Circuit decision which had held that permits were necessary for logging runoff.
While EPA got the result that it wanted here, the decision may come back to haunt it in the long run. The decision was largely based on what is commonly known as Auer deference, the rule that courts will defer to an agency’s interpretation of its own regulations unless that interpretation is “plainly erroneous or inconsistent with the regulation.” After a thorough review of the various relevant regulations and a dip or two into the Oxford American Dictionary, and after noting that the agency’s interpretation need not be “the best one”, the Court found EPA’s interpretation “permissible.”
So, why should EPA be concerned? Justice Scalia, at his most curmudgeonly, dissented on the ground that Auer should be overturned because it grants too much authority to agencies. Justice Scalia rejected out of hand what I would have thought would be the simplest and most obvious defense of Auer: that if courts defer to agency interpretation of statutes under Chevron, shouldn’t they, a fortiori, defer to agency interpretation of the agency’s own rules? Apparently not. To Justice Scalia, Chevron deference merely allocates to agencies, rather than courts, the primary duty of interpreting statutes, but allowing agencies to interpret their own regulations has the dangerous result of concentrating both the writing and interpretation function in one branch of government.
I don’t buy it, but it’s important to note that, while Justice Scalia was the sole dissenter, Justice Roberts wrote a concurring opinion, joined by Justice Alito, stating that, while Decker was not the proper case to reassess Auer (a cynic might say that Justice Roberts reached that conclusion because EPA was aligned with industrial interests, rather than the environmental NGOs, in Decker), they were both open to reviewing Auer in the proper case.
Sounds like three votes to me. Somewhat surprisingly, Justice Thomas joined neither the concurrence nor the dissent. Justice Kennedy wrote the majority opinion, so he clearly still believes in Auer. Without Kennedy and with Thomas a cypher at this point, the votes to revisit Auer may not be there. In any case, it is worth noting that Justice Breyer, who is Justice Scalia’s frequent sparring partner on administrative law issues, took no part in the decision. I look forward to his spirited defense of Auer when the time comes.
Posted on March 21, 2013
The EPA issued its long-awaited CISWI Rule in the Federal Register on February 7, 2013. 78 FR 9112. The final rule, entitled “Commercial and Industrial Solid Waste Incineration Units; Reconsideration and Final Amendments; Non-Hazardous Secondary Materials That Are Solid Waste,” contains the provisions in EPA’s 2011 rule, vacated in January 2012, that EPA agreed to reconsider. The 2011 final rule in turn superseded EPA’s 2000 CISWI rule. The new CISWI Rule amends 40 CFR part 60 subparts CCCC and DDDD and part 241. The amendments to 40 CFR part 60 subpart DDDD, along with certain incorporations by reference, were effective on the promulgation date; amendments to part 60 subpart CCCC are effective August 7, 2013, and those to 40 CFR part 241 are effective April 8, 2013.
In response to both the court’s vacatur of a Notice of Delay issued in 2011 and the numerous petitions for reconsideration and comments submitted by the regulated community and the public, the final rule includes three subcategories of ERUs (energy recovery units) and two subcategories for waste-burning kilns based on design-type differences, with separate carbon monoxide (CO) limits for the latter. Certain limits were also revised based on comments regarding the CO span methodology and on incorporation of additional data. The rule establishes stack testing and continuous monitoring requirements and allows for the use of continuous emissions monitoring systems (CEMS), setting levels based on a 3 hour block or 30-day rolling average (depending on the parameter and subcategory of CISWI).
The rule addresses and preserves a source’s choice to cease or start combusting solid waste at any time due to market conditions or other reasons, and to switch from one set of applicable emission standards to another pursuant to CAA section 112, thereby amending the original "once in always in" approach reflected in the earlier versions of this rule. This in turn will provide an incentive to the regulated community to continue operating incinerators.
The deadline for compliance with the CISWI Rule by existing sources depends primarily on when the state implementation plan incorporating the final rule is approved, with such approval required no later than five years after the February 7, 2013 Federal Register publication date. The effective date for new source compliance is August 7, 2013 or the date of startup, whichever date is later. New sources are defined as sources that began construction on or after June 4, 2010, or commenced reconstruction or modification after August 7, 2013.
Posted on March 14, 2013
In December 2012, EPA issued revised enforcement guidance to assist agency personnel in exercising enforcement discretion regarding the treatment of tenants under Superfund’s bona fide prospective purchaser (BFPP) defense. This guidance expands some of the protections provided by the prior, 2009 guidance. Though recognizing that “[l]easehold interests play an important role in facilitating the cleanup and reuse of contaminated properties,” the agency chose a relatively ineffectual tool for addressing prospective tenant liability and encouraging re-use of Brownfield properties. The agency could have better encouraged Brownfield development by providing tenants with guidance on how to avoid Superfund liability in the first place.
Under Superfund, a tenant's status and activities may give rise to "owner or operator" liability -- for the costs of investigating and remediating a contaminated site and for natural resource damages. The guidance does not flesh out the contours of tenant liability as an owner or operator, but instead assumes that tenant liability exists and explains how the BFPP defense under section 107(r) of Superfund might then be available.
To take advantage of the BFPP defense, an owner or operator of contaminated property must satisfy three statutory prerequisites. It must show: (1) it conducted all appropriate inquiry or AAI, e.g., by having conducted a phase I environmental assessment; (2) it has no affiliation with a potentially responsible party or PRP; and (3) it is satisfying specified continuing obligations, including, among other things, complying with applicable regulatory requirements and not impeding remedial actions.
In brief, the December 2012 guidance confirms that a tenant may receive protection as a BFPP derivatively from its landlord if the landlord conducted AAI, provided that all disposal occurred prior to the landlord’s acquisition of the property and the tenant satisfies the continuing obligations requirement. It also expands EPA's use of enforcement discretion for a tenant who relied upon its landlord for the BFPP defense to include situations in which the landlord loses the BFPP defense, provided the tenant meets the requirements of the BFPP defense other than having performed AAI. In addition, it makes clear that a lease will not disqualify a tenant from the BFPP defense for failure to have satisfied the "no affiliation" prerequisite. Furthermore, it confirms that EPA will use its enforcement discretion for a tenant who independently meets the BFPP prerequisites, including having performed AAI prior to execution of the lease.
The new guidance notes the obvious: all bets are off if the tenant itself engages in an activity that independently creates liability, e.g., by creating or exacerbating contamination. It also notes that, except as otherwise provided, the tenant itself must satisfy the BFPP prerequisites.
The agency explains that it generally will not proactively make determinations as to the availability of the BFPP defense in connection with any particular transaction, e.g., by issuing a comfort letter, though there may be limited circumstances where it might do so. And, of course, the agency’s exercise of prosecutorial discretion provides no comfort where the Superfund claim is brought by a third party, though the agency’s guidance may be persuasive to the court in which the claim is brought.
The problem with the BFPP defense is that it’s a defense, which must be asserted in response to a Superfund claim, and the tenant has burden of proof. Moreover, as far as defenses go, it’s not even the best. The third party defense, which doesn’t require AAI, generally should be available as long as the lease does not relate to the act or omission giving rise to the contamination. See “The Third Party and Transaction-Related Defenses,” J. Civins, M. Mendoza, and C. Fernandez, ABA-SEER Environmental Litigation and Toxic Torts Committee Newsletter, July 2005.
More significantly, as EPA recognizes, “the mere execution of a lease does not necessarily make a tenant liable as an owner or operator,” and the agency and the regulated community would have been better served had the agency issued guidance establishing safe harbors for tenants. A tenant’s first line of defense to Superfund liability should not be a defense, BFPP or other, but rather should be an assertion that it is not a Superfund owner or operator, placing the burden of proof on the plaintiff rather than on the tenant. And case law provides a good basis for EPA issuance of such guidance.
Arguably, a tenant should not be liable and have need of a defense as an owner unless it virtually stands in the shoes of its owner, e.g., by entering into a 99-year lease or by subleasing the property to one who contaminates it. Similarly, a tenant should not be liable as an operator, unless its action caused or exacerbated contamination. Regardless of whether case law adequately fleshes out the contours of a tenant’s owner or operator liability under Superfund, it would have been more useful for the agency to have issued guidance with respect to such liability rather than on the BFPP defense.
Posted on March 11, 2013
Over the past several years, EPA has created or upgraded a number of new informational tools that enable the public to gain access to environmental data. This is part of the agency’s efforts to increase “transparency” regarding private and public sector environmental compliance and enforcement efforts. As expressed in a recent press release, EPA believes that “transparency and access to information at all levels help to drive improvements in environmental performance.”
A couple of very recent examples are worth noting. Earlier this year, EPA announced the creation of new interactive state dashboards and comparative maps. These online tools are components of EPA’s Enforcement and Compliance History Online (ECHO) website, and contain air, water and hazardous waste data for the previous five years. According to EPA, such information includes “the number of completed inspections, types of violations found, enforcement actions taken, and penalties assessed by state.” Users of the site can customize their searches to view just state activity, EPA activity, or both.
A second example is EPA’s program to increase the transparency of chemical information under the Toxic Substances Control Act (TSCA). Just last month, EPA released the 2012 Chemical Data Reporting (CDR) information for more than 7,600 chemicals. The data can be used to identify important trends and analyses, such as determining the number of workers exposed to a particular chemical, the top 20 chemicals used in children’s products, the top 20 chemicals used in consumer products and the top industrial sectors that processed and used reportable chemicals. EPA modified the CDR rule (formerly known as the Inventory Update Reporting rule) in 2011 to require that manufacturers and importers submit CDR information electronically. Accordingly, the CDR information is added to the agency database and made publicly available much faster than ever before. Stakeholders such as the American Chemistry Council and the Environmental Defense Fund applauded the recent changes to the CDR rule to increase the amount of information available to the public and thereby improve public understanding and confidence.
With appropriate controls, greater transparency is laudable for a variety of readily apparent reasons, and there is little doubt that federal and state agencies will increase both the number of tools available to the public and the usability of these tools to interpret data in the coming years. Environmental stakeholders should evaluate these new tools and determine the risks and opportunities presented by them.
For example, industry practitioners are quite familiar with the increasing scrutiny that has been placed on corporate decision-making in recent years by major investors and shareholders regarding such matters as the impact of the corporation’s activities on issues like greenhouse gas emissions and sustainability. Some of these entities are using the new information tools and others like them to identify trends and determine how the corporation “measures up” against industry norms and political or governmental expectations. Similarly, corporations are finding that their outside financial auditors are reviewing environmental databases to “check on” the environmental and safety disclosures that the companies are putting forth during the audit period. Indeed, company management and counsel have sometimes been surprised by their auditors’ independently-gathered information that one or more of the company’s plants are listed on EPA or state databases as “non-compliant” with environmental requirements.
In the same way, increased access to environmental and safety information brings with it new opportunities to gather meaningful information that can be extremely useful in preparing business plans for future activities and for claims and litigation related to environmental exposures. Manufacturers and suppliers of environmental products and services, plaintiffs’ counsel, expert witnesses, environmental groups, public and governmental relations firms and insurance companies are just a small subset of the universe of interested parties for whom easier access to environmental and safety information can be helpful. And now such data can be gathered more quickly and at a fraction of the costs that would have been required in the past. Environmental stakeholders would do well to monitor the development of these transparency tools and to assess the risks and opportunities that they present.
Posted on March 1, 2013
The Environmental Protection Agency (EPA) is planning a rulemaking to expand its Toxic Release Inventory (TRI) program in March 2013. Will the oil and gas extraction sector be included in the program’s expansion?
As part of the Emergency Planning and Community Right-to-Know Act (EPCRA), the TRI program gathers and makes public information about chemical and waste management activities at a wide variety of facilities. EPA touts TRI reporting as one mechanism to reduce the release of chemicals into the environment. It claims that the information gathered helps companies keep up with competitors’ efforts to reduce and recycle waste, and that the public dissemination of information can lead to citizen and EPA enforcement.
EPA considered including the oil and gas extraction sector in TRI in 1997, but decided against it due to technical issues in determining whether individual wells spread out over large geographic areas would be considered a “facility” under EPCRA. A petition filed by environmental groups claims these technical issues are resolved and points to the basin-level definition of facility in EPA’s greenhouse gas (GHG) reporting rule as an example of how oil and gas production operations can be aggregated. Meanwhile, the GHG reporting rule is still under administrative reconsideration and the definition of facility under that rule is a key point of contention between EPA and industry.
As recently as last week, EPA’s Inspector General “recommend[ed] that EPA develop and implement a comprehensive strategy for improving air emissions data for the oil and gas production sector.” If oil and gas production is included in TRI, how will it affect the sector? Will it be a way to get at chemical ingredients used in hydraulic fracturing that are otherwise protected from disclosure as trade secrets? Will the aggregation of data for TRI purposes spill over into air and waste permitting decisions? At a minimum, TRI would require industry to gather more information on chemicals, wastes and emissions and make it publicly available. Thus, industry should prepare for the corresponding public attention and regulation that may accompany TRI expansion.
Posted on February 21, 2013
In December 2008, a surface impoundment maintained by the Tennessee Valley Authority in Kingston, Tennessee failed and the coal combustion residuals (CCRs) stored in those impoundment flooded more than 300 acres of land and flowed into Emory and Clinch Rivers. CCRs, often referred to as coal ash, are residues from the combustion of coal in power plants that are captured by scrubbers and other pollution control equipment. CCRs are currently exempt wastes under RCRA but following the TVA spill EPA proposed to regulate coal ash for the first time.
On June 21, 2010, EPA issued its proposed CCR rule. The proposed regulation considers two options for the regulation of CCRs. Under the first option, CCRs would be regulated as special wastes subject to nearly full regulation as hazardous wastes under RCRA Subtitle C. If CCRs are regulated as “hazardous waste,” disposal will likely be required at specially-permitted, off-site hazardous waste disposal facilities. Under the second option, CCRs would be regulated as solid waste under Subtitle D of RCRA. Under this option, EPA is likely to establish national standards for surface impoundments and landfills. If CCRs are regulated under Subtitle D, it is likely a composite liner, a leachate collection and removal system, and a leak detection system will need to be installed at existing ash ponds.
EPA has not yet taken final action on the proposed CCR rule and has been sued by an environmental group who seeks the issuance of the final rule. In that case, Appalachian Voices v. Jackson, the Agency stated “EPA cannot at this time provide a well-informed judgment as to the specific amount of time that is needed to conclude its review and any necessary revisions of these regulations, and EPA therefore requests an opportunity, following further administrative proceedings, to provide this Court with supplemental briefing at a later date regarding final remedy.” Two actions (I, II) were consolidated in the Appalachian Voices case. EPA has indicated that the final CCR rule is not likely to be issued before the fourth quarter 2013.
Posted on February 6, 2013
Wisconsin has a proud tradition of strong political opinions. Recent Tea-Party backed legislation in Wisconsin limiting the power of government will be interesting to follow as the consequences play out, particularly in the environmental arena.
In March 2011, Wisconsin’s then-new Republican Governor Scott Walker and the Republican legislature passed the Wisconsin Budget Repair Bill, the state law that famously limits the collective-bargaining rights of public employees. Following that, the legislature passed 2011 Wisconsin Act 21, which includes a “limited government” provision that prohibits any “agency [from] implement[ing] or enforc[ing] any standard, requirement, or threshold, including as a term or condition of any license issued by the agency, unless that standard, requirement, or threshold is explicitly required or explicitly permitted by statute or by a rule that has been promulgated in accordance with [state law].”
This will play out in a number of ways. Like other state environmental agencies, the Wisconsin Department of Natural Resources (“WDNR”) relies significantly on guidance documents to implement otherwise complex programs. A number of issues are addressed only in WDNR guidance, not in explicit regulations. These include sediment cleanup standards; references to “sediment” were intentionally removed from the state soil cleanup standards. This not only affects state cleanup programs, but also raises issues as to whether the state sediment cleanup standards can be “applicable or relevant and appropriate requirements” under the Comprehensive Environmental Response, Compensation and Liability Act. Similarly, the WDNR’s vapor intrusion sampling, analysis and remediation protocols are contained only in state and federal guidance documents.
Recently, the U.S. EPA chose language in a proposed SIP denial that adds fuel to some permitting arguments. In 2008, U.S. EPA required revisions to State Implementation Plans (“SIPs”) with respect to PM2.5 permitting; Wisconsin made regulatory changes, and requested SIP approval in 2011. On December 18, 2012, the U.S. EPA proposed disapproval of the SIP revision. 77 Fed. Reg. 74817 (2012). According to U.S. EPA, Wisconsin’s submission is deficient because the Wisconsin regulations do not “explicitly” define the condensable component of PM10 and PM2.5 emissions, and do not “explicitly” identify SO2 and NOx as precursors to PM2.5. The U.S. EPA’s disapproval language gives the Wisconsin Department of Natural Resources the usual additional work to propose and finalize regulatory changes to address the deficiency, but it also gives regulated sources an additional argument that the WDNR lacks the authority to regulate condensable particulate matter and PM2.5 precursors.
Posted on January 18, 2013
Section 316(b) of the Clean Water Act requires that the location, design, construction, and capacity of cooling water intake structures reflect the best technology available for minimizing adverse environmental impact. Although the statutory language is straight-forward, EPA has run into enormous difficulties in promulgating rules to implement Section 316(b).
The latest in a series of rulemaking efforts began on April 20, 2011 when EPA published a proposed rule to protect fish from being killed at water intake structures that withdraw at least 2,000,000 gallons per day from waters of the United States and use at least 25% of the water they withdraw exclusively for cooling purposes. Pursuant to a Settlement Agreement with the environmental group, Riverkeeper, and other organizations, EPA was required to issue the revised rule by July 27, 2012.
When I last wrote about this rulemaking effort by EPA, EPA had received more than 1,100 comment letters and more than 80 documents containing new data for possible use in developing the final impingement mortality limitations. On June 12, 2012, EPA offered a 30-day comment period on the new information with comments due on or before July 11, 2012.
Through the Notice of Data Availability published by EPA on June 12, 2012, EPA also presented data it had received related to the results of EPA’s stated preferences survey. Comments on the data related to EPA’s preference survey were also required to be submitted on or before July 12, 2012.
In my previous blog on this subject, I wrote it was hard for me to understand how EPA would be able to comply with a court-ordered issuance date of new rulemaking by July 27.
Not surprisingly, EPA was unable to issue its new rule by July 27. Instead, EPA entered into a Second Amendment to the Settlement Agreement with Riverkeeper and other organizations. The Settlement Agreement contains the following language: “Not later than June 27, 2013, the EPA Administrator shall sign for publication in the Federal Register a notice of its final action pertaining to issuance of requirements for implementing Section 316(b) of the CWA at existing facilities.” Since entry of the extension, EPA has been remarkably silent about any steps it plans to take prior to the June 27, 2013 deadline for notice of final action.
Concurrent activity at the state level is also of interest. Prior to this latest extension, EPA Region 1 sent about ten extensive Section 308 information requests to facilities in Maine to set the stage for possible issuance of case-by-case, best professional judgment permit requirements pursuant to 316(b) for the selected facilities. It is unclear how the facilities were selected given other Maine facilities also met the proposed thresholds. Those facilities have responded to the information requests but further action even on those facilities is on hold. EPA Region 1 and the Maine DEP have now determined that DEP, which administers a partially delegated NPDES program, now has the statutory capacity to administer the 316(b) program. DEP is in the process of formally seeking explicit delegation for the 316(b) program as anticipated under the original EPA-DEP NPDES Memorandum of Agreement. The DEP has indicated it intends to wait until after EPA issues a final rule implementing Section 316(b) before DEP decides how it proposes to implement 316(b) as a delegated state.
Posted on January 15, 2013
The Attorney Generals of thirteen states (Alabama, Arizona, Georgia, Kansas, Michigan, Nebraska, North Dakota, Oklahoma, South Carolina, South Dakota, Texas, Utah and Wyoming) are investigating EPA's sue-and-settle practice. At issue is the EPA's practice of entering into voluntary settlements of lawsuits brought by environmental groups, through consent decrees, in which the EPA commits itself to promulgate environmental rules and regulations, often under strict time schedules, without input from other stakeholders and impacted parties, including the states. Often-times the EPA also reimburses the environmental group for its attorney fees. Although the stakeholders may have input in the subsequent rulemaking process, the concern is that the effectiveness of such input may be limited because certain results are prescribed by the voluntary settlement or because the agreed schedule effectively limits meaningful input and consideration.
These same concerns were also recently discussed in the June 28, 2012, hearing before the Oversight and Government Reform Committee of the U.S. House of Representatives. Hearing statements and testimony provided good descriptions of (i) how sue-and-settle settlements are a form of "off ramp" rulemaking bypassing the traditional rulemaking concepts of transparency, public participation and judicial review; (ii) how billions of dollars in added costs and millions of lost jobs have resulted from these off ramp settlements and why these added regulatory burdens may not have resulted had the traditional rulemaking process been followed; and (iii) the specific impact of EPA's sue-and-settle settlement upon the Regional Haze rules.
On August 10, 2012, the thirteen Attorney Generals submitted a Freedom of Information Act (FOIA) request to EPA. Among other things, the request seeks communications between EPA and 80 identified "interested organizations", and specifically identifies 33 sue-and-settle settlements entered into by EPA in the last three years. After noting in a press release that EPA entered into one consent decree on the same day the lawsuit was filed, the states seek to determine whether there was collusion to advance a common agenda between the environmental groups and EPA. The FOIA request’s stated purpose is to provide a report to be furnished to the states and Congress outlining EPA's practice. So far, the EPA has done little but object to producing documents, seeking to impose fees upon the states even though the request should be exempt from fees. No meaningful production of documents has occurred.
Certainly there are some good arguments to be made regarding the benefits of allowing citizen groups to file lawsuits to hold EPA accountable. Similarly, there are articles refuting the suggestion of collusion concerning certain prior EPA settlements. Nevertheless, where important environmental policy issues are at stake with far reaching economic consequences, there should never be any question about collusion or secrecy. Transparency should always be the watchword. EPA’s production of the requested documents would do much to advance the goal of transparency. If the settlements were in the best interest of the public, they should be able to withstand the glare of public scrutiny.
Posted on January 7, 2013
Environmental practitioners and their clients have benefitted greatly from the EPA’s historic implementation of the EPA Audit Policy. Thus, the level of concern that has been expressed by environmental practitioners in response to EPA’s statements that the Audit Policy may not live through 2013 is not surprising. For background, see Linda Bochert’s posting, “Dear EPA: please don’t abandon your Audit Policy!”, and FY2013 OECA National Program Manager Guidance.
EPA has discussed the basis for its proposal to abandon the Audit Policy in terms of perceived decreasing utility, which creates difficulty in justifying the expense of implementation. The explanation goes something like this: with the maturity of the environmental programs, regulated industry knows that it needs to comply by now, thus the incentives provided by the Audit Policy are no longer necessary. Also, along with industry outgrowing the original purpose of the Policy, the cost of implementing the policy does not justify its continued implementation in this era of shrinking budgets, particularly given the relatively minor noncompliance events reported pursuant to the Audit Policy.
Has EPA really considered the entire calculus? And, assuming one buys into the external benefits provided by the continued implementation of the Audit Policy, given what’s at stake, isn’t it worth developing options for implementation that don’t impose the same level of staff investment?
Many believe that the Audit Policy has served a purpose far greater than the mere forgiveness of the gravity component of the reported noncompliance events. For many years, the EPA Audit Policy has provided regulated entities with a mechanism to conduct compliance audits with confidence that noncompliance issues can be corrected without fear of punitive enforcement action. The Audit Policy continues to serve this purpose, despite the maturity of the environmental programs, because the nature of regulated entities and industry sectors is so dynamic. Regulated entities are in a constant state of change, as are many EPA programs at any one time. EPA’s assertion that the EPA’s Audit Policy is no longer needed contemplates regulated entities and applicable regulations as static and monolithic bodies and does not recognize the constant state of change across industry sectors and within individual entities, particularly in response to new and modified regulations. Industry sectors also vary in their inherent levels of sophistication and adaptability to changing regulatory requirements, depending in large part upon the degree to which the industry has been pervasively regulated in the past. New regulations across an industry sector upset the equilibrium and demand new management models and compliance approaches, requiring a period of education, acquisition of staff, operational and cultural adaptation to the new requirements. Adaptation within industry sectors can be slowed when immediate demands are placed on sector resources for all entities in that sector simultaneously such as occurs with new industry sector-wide regulation, prioritizing rapid reaction to new regulation over comprehensive proactive compliance. In this regulatory environment, the Audit Policy continues to serve the same purpose as it always has, to encourage a culture of compliance in the dynamic landscape in which regulated entities operate.
To read more and provide your own input on how you believe EPA should approach the future of the EPA Audit Policy, click here.
Posted on December 14, 2012
Although the still-divided Congress is unlikely to pass significant new environmental legislation over the next four years, the second-term Obama administration has an opportunity to pursue its environmental agenda through the EPA with diminished fear of impacts on the next election.
The current term saw a period of strong leadership at EPA, but there is a feeling that the agency has not allowed the other regulatory shoe to drop. EPA stalled on several important regulations, as if anticipating the Romney complaint that excessive regulation was a cause of the recession. Having escaped the prospect of a president hostile to its mission, EPA is now prepared to roll out a queue of pending air pollution regulations in the coming weeks. The regulations will include final national ambient air quality standards, revised power plant emission standards, and expanded boiler emission rules.
Since the election, articles and opinion pieces have abounded that speculate on the Obama administration’s second-term approach to climate change. On November 12, 2012, the New York Times published an op-ed article suggesting that the administration could tackle both climate change and the recession by imposing a carbon tax. A similar suggestion was made in the New Yorker on December 12, 2012. This is undoubtedly a worthwhile concept, but it is probably a regulation too far.
The second Obama term could be an opportune time to revisit old chestnuts and resolve issues that have bedeviled both the regulated community and environmental advocates. For example, the EPA and the Army Corps of Engineers have been muddling through a proposed guidance document that aims to clarify the Supreme Court’s murky definition of “waters of the United States” subject to EPA jurisdiction under the Clean Water Act. But why should EPA and the Corps issue mere guidance rather than promptly promulgate binding regulations, which are subject to judicial review? As a result of adopting binding standards the agencies could gain, in addition to regulatory certainty, a strong basis to resist efforts to make the federal government the national waterfront rezoning authority.
Another stalled national environmental initiative that would benefit from robust leadership in the Obama II administration is EPA’s effort to update its regulations for industrial cooling water intake structures. EPA proposed regulations, designed to protect aquatic organisms, have remained in draft form since March 2011; additional data has been collected and is being analyzed in the interim. Pending final federal regulations, states have been left to adopt varying approaches to this important issue.
Finally, this period of relative freedom from election concerns might allow the administration to address a significant example of environmental unfairness, CERCLA’s scheme of sticking certain liable parties with the “orphan share” of environmental remediation costs that arise from contamination, generated over the last two centuries of industrial development, for which no financially solvent responsible party can be identified. The orphan share is often laid at the doorstep of a financially solvent polluter that caused some, but not all, of the pollution at a Superfund site. Fairness dictates that the public fund the orphan share, as opposed to the party that is prepared to step forward and clean up its own portion of the mess. Perhaps such a policy might have a sobering effect on the members of the public who clamor for a return to pristine conditions, so long as they don’t have to pay for it.
Posted on December 12, 2012
The regulation of vapor intrusion is becoming more prevalent on both the federal and state level. In addition, although not strictly required as part of a Phase I ESA under ASTM 05 and AAI, many consultants take the position that this issue must be addressed at this first level of environmental due diligence.
One of the troubling issues at the state level is whether background concentrations should be taken into account in the establishment of indoor air quality standards. Many household products and building materials contain or release VOCs. However, not all states take background concentrations into account in the regulation of vapor intrusion.
EPA is expected to release its own vapor intrusion guidelines shortly. EPA appears to acknowledge the importance of background data in the process of formulating its guidelines. It remains to be seen whether such guidelines will impose stricter standards than those on the state level.
Posted on December 7, 2012
Since the early days of the Superfund program, EPA has required settling parties to provide financial assurance of the PRPs’ (potentially responsible parties) ability to perform the cleanup work. EPA regulations afford PRPs a choice of financial assurance mechanisms to fulfill this requirement including: a self-funded trust, bonds, letters of credit, insurance or the satisfaction of the “financial test” provided in 40 CFR §264.143(f).
As originally promulgated, the financial test applied to owners and operators of hazardous waste facilities permitted under RCRA. EPA has adopted this test for Superfund financial assurance requirements and state agencies have likewise borrowed it for their own programs. For many years, the “financial test” was the least cumbersome method for PRPs to satisfy their long-term financial assurance obligations. It was also attractive to PRPs because as long as at least one large company met the test, the other PRPs could save the cost of employing alternative financial assurance mechanisms such as prefunding their entire obligation or purchasing letters of credit. Further, while the financial test in 40 CFR §264.143(f) does include very specific and complex financial criteria, in practice EPA often found submission of financial statements or other public financial reports by large companies to be sufficient.
In recent years, perhaps in recognition of the new economic order where major airlines, automobile manufacturers and even manufacturers of famous brands such as Twinkies have filed for bankruptcy, EPA has made strict compliance with the financial means test a settlement priority. All of the forms for financial assurance are now prescribed via EPA’s website. Perhaps the most challenging form for a financial means proponent is the sworn letter from the company’s CFO or accountant certifying that the company satisfies the different elements of the financial test. The letter must be updated and resubmitted every year. The form letter may be found here.
In an era where CFOs and accountants are already burdened with a host of new Sarbanes-Oxley requirements and other regulatory controls, companies are less than enthusiastic about preparing another set of certifications to EPA concerning their company’s financial status. A further challenge presented by the letter is that it must be submitted on behalf of the specific entity participating in the settlement or its parent. Often, a parent corporation cannot or does not want to guaranty a subsidiary’s obligations, and its subsidiary’s financials may not be maintained in a format which makes compliance with the EPA letter practical or feasible.
EPA’s renewed emphasis on financial assurance requirements is understandable in today’s economic climate and even has some benefit for performing parties interested in ensuring that other settling PRPs likewise perform. Indeed, PRP Groups, with the self-interest of protecting themselves from each others’ business failures, often require their group members to provide letters of credit for the benefit of the Group or prefund their Superfund settlement shares into a Group- controlled trust, even if other financial assurance mechanisms have been selected to satisfy EPA.
Whether PRPs like it or not, what is clear is that the era of less than strict compliance with EPA’s financial assurance requirements for Superfund settlements is over.
Posted on December 4, 2012
On March 13, 2012, eleven environmental organizations, led by Gulf Restoration Network ("GRN"), filed
a federal Clean Water Act (CWA) citizen suit which demanded that the U.S. Environmental Protection
Agency (EPA) set federal numeric standards for nitrogen and phosphorus for water bodies within the 31
states comprising the Mississippi River Basin ("Basin States"). Gulf Restoration Network v. Jackson,
E.D. La., No. 2: 12-cv-00677 ("GRN Suit"). The complaint alleges that EPA has failed to develop
numeric water quality criteria for nitrogen and phosphorus in the Basin States. EPA's answer states that it
is appropriately deferring to each state to promulgate numeric nutrient criteria ("NNCs") that satisfy
Clean Water Act water quality standards within the state and that, consequently, federal NNCs are not
appropriate. The trial judge ruled on September 19, 2012 that the case will be decided on "cross-motions
for summary judgment, with no initial disclosures or other discovery." In the same order, the judge set a
briefing schedule for the parties (including numerous entities to which the court granted permission to
intervene) that will extend through the beginning of June of next year.
The GRN Suit, as well as other similar suits that are active in other regions, have prompted many state
environmental agencies to work diligently, pursuant to EPA's deference and also its demand, to develop
NNCs as quickly as possible. If EPA wins the GRN Suit, the Basin States will have to be ready to go
forward with promulgation of their NNCs. If EPA loses, they may be subjected to more stringent federal
NNCs on a "one size fits all" basis. A settlement could mean an even different outcome for all ofthe
In Mississippi, the state's Department of Environmental Quality ("MDEQ") has formed a Nutrient
Technical Advisory Group (TAG) to develop scientifically defensible NNCs that are appropriate for
Mississippi's surface waters. The TAG is composed ofMDEQ staff, MDEQ's external consultants and
in-state university personnel who have water quality expeiiise and is meeting on a regular basis. MDEQ
staff members have stated that the agency's plan is to have draft NNCs developed for all state waters,
excluding the heavily agricultural Delta counties, by June 30, 2013. The draft NNCs for the Delta are to
be developed by November 30, 2014. MDEQ wil then publish these draft NNCs for public comment.
MDEQ has held several stakeholder meetings to discuss the development of Mississippi's NNCs and to
provide an opportunity for questions and comments. The MDEQ staff members have consistently
explained that they are considering "what is protective of the environment" rather than "what is
technically achievable." The new NNCs wil be "worked into permits" as they come up for renewal and
permittees wil be allowed a "reasonable time frame" to come into compliance with the new NNCs.
The key issue for the regulated community in Mississippi, as in other states, will be the cost of
compliance with these new NNCs, which could bear a very expensive price tag. In Florida, for example,
a national environmental engineering consultant prepared an economic analysis of proposed NNCs. The
estimate for direct compliance costs ranged from $ 1.5 bilion annually (best management practices for
impaired water categories) to $4.5 billion annually ("end of pipe" requirements for all water categories).
Regulated communities in Mississippi and in other states across the country are engaging with scientific
and economic data and consultants in order to have an impact concerning this volatile issue. A lot is on