Posted on June 19, 2014
On June 9th, the Supreme Court ruled, in CTS Corp. v. Waldburger, that § 309 of CERCLA does not preempt state statutes of repose. Section 309 requires state statutes of limitations for injuries from hazardous substances releases to run from the date the plaintiff knew or should have known of the injury caused by the release. But in CTS, the Court held that state statutes of repose are not statutes of limitations, and are not governed by section 309.
That conclusion was hardly self-evident. While section 309 explicitly applies to statutes of limitation, and does not specifically mention statutes of repose, the later have often been understood as a species of the former. When section 309 was enacted, Black’s Law Dictionary explained that “Statutes of limitations are statutes of repose.” Congress itself often referred to statutes of repose as “statutes of limitation.” And the very year after Congress enacted section 309, the Supreme Court itself described application of a two-year state statute of limitations as “wholly consistent with . . . the general purposes of statutes of repose.” The meaning of these terms has diverged in more recent years, but that divergence was not well-established when Congress enacted section 309.
The Court’s conclusion that Congress recognized a clear distinction between statutes of limitation and statutes of repose thus required the Court to assume that Congress used these terms with more precision in section 309 than Congress had done on other occasions, with more precision than (and in conflict with) the then-current edition of Black’s, and with more precision then the Supreme Court itself used the terms a year later. It is not often that this Court holds Congress’s legal acumen in such high regard.
The Court’s lead argument for why Congress did understand this distinction was that page 256 of the Section 301(e) Study Group Report—an expert report submitted to Congress and referenced in the Conference Committee Report—distinguished between these terms. This is surprising analysis. The CTS majority includes avowed skeptics of relying on traditional legislative history. Those justices might previously have been expected to be even more skeptical of attempts to discern congressional intent from statements buried in expert reports referenced by traditional legislative history. Not so, it seems—or at least, not so for this one opinion.
But does the Study Group Report even make the same distinction as the Court? The report recommends that:
"states . . . remove unreasonable procedural and other barriers to recovery in court action for personal injuries resulting from exposure to hazardous waste, including rules relating to the time of accrual of actions."
The Report then recommends that “all states that have not already done so, clearly adopt the rule that an action accrues when the plaintiff discovers or should have discovered the injury or disease and its cause.” That is what Congress effectively did—albeit for the states—in section 309. The Report then states: “This Recommendation is intended also to cover the repeal of statutes of repose which, in a number of states have the same effect as some statutes of limitation.”
This sentence, the Court concludes, shows that Congress must have known that a law that preempts state statutes of limitation would not also preempt state statutes of repose. But is it not at least as likely that any Member of Congress who actually read page 256 of the Study Group Report would have thought that adopting the discovery rule for all states would “also … cover the repeal of statutes of repose”?
Justice Scalia once wrote that “Congress can enact foolish statutes as well as wise ones, and it is not for the courts to decide which is which and rewrite the former.” Reading CTS Corp., one cannot escape the notion that the Court was willing to stretch its usual interpretive rules in order to apply what it considered a wise result to an arguably ambiguous statute. It did so in the apparent service of the policy of repose. But the holding will bring little peace in a state with a statute of repose to individuals who learn, years too late, that they or their children have been sickened by contaminants that a government agency or business released long ago.
Posted on April 16, 2014
Transportation of crude oil via rail has increased from 9,500 carloads in 2008 to more than 400,000 carloads in 2013, and an increase in incidents associated with these shipments has occurred as well. On February 25, 2014, the U.S. Department of Transportation (DOT) issued an Emergency Restriction-Prohibition Order (amended on March 6, 2014) to address safety issues of transporting crude oil by rail.
The DOT Emergency Order focuses on the imminent safety hazard posed by misclassification of crude oil, which can lead to the use of containers that lack the safety enhancements necessary to safely transport oil properly classified as Packing Group (PG) I and II materials. The Emergency Order required testing and classification of crude oil prior to transportation rather than reliance on generic information. The amended Emergency Order stepped back somewhat because it “does not specify how often testing should or must be performed, nor does it require testing to be performed for each and every shipment.” The amended order allows the operator to determine whether it has sufficient data available to reliably classify the crude oil it intends to ship. It still requires operators to treat Class 3 petroleum crude oil as a PG I (highest danger classification) or PG II (medium danger classification) material rather than the less demanding PG III classification. A presumptive PG I or PG II classification removes from use several models of tank cars that have fewer safety measures. Recent accident investigations indicate that presumptive classifications become dangerous where some sources of crude (like the Bakken Formation) exhibit comparatively higher volatility.
This Emergency Order followed a DOT safety initiative (agreed to by the Association of American Railroads (“AAR”)) that establishes new, voluntary safety standards for the transportation of crude oil by rail, including speed restrictions, increased rail and mechanical inspections, and improved braking systems. But are these measures enough?
Overall, yes. Improved safety requires actions of different types: (1) operational changes; (2) additional steps to prevent derailments; and (3) tank car design changes. The Emergency Order and DOT/AAR safety initiative address the first two pathways. What about tank car design? The Emergency Order leaves that issue for another day. Although the Emergency Order will affect the ability to use certain tank cars with fewer safety measures, it has been estimated that the tougher classification standards for crude oil will affect less than three percent of tank cars now used in the United States. In 2011, AAR adopted higher standards for new tank cars transporting crude oil and ethanol, although there were no retrofit specifications adopted. According to the AAR, roughly 92,000 tank cars are moving flammable liquids and approximately 78,000 of them do not meet the new 2011 tank car standards.
Regulators have also acknowledged the need for improvements for tank cars. The Pipelines and Hazardous Materials Safety Administration (PHMSA) is considering recommendations by the AAR to upgrade new tank car standards and require existing tank car retrofits. The AAR recommended to PHMSA several improvements for tank cars transporting flammable liquids, including an outer steel jacket around the tank car, thermal protection, improved pressure relief valves, and other measures to prevent puncture in the case of an accident.
None of these measures are the final solution, but the Emergency Order, the DOT safety initiative and upgrades to tank car safety standards are crucial steps toward safer transportation of crude oil.
Posted on March 12, 2014
Among other changes, the new standard now defines “migration” to include the movement of vapor in the subsurface. That change makes it more clear that the environmental professional conducting a Phase I must, when identifying releases and threatened releases, evaluate the potential for vapors to migrate from contaminated subsurface soils and ground water into the indoor air of buildings on the surface.
While many lawyers and environmental professionals believed the old standard already required an evaluation of the potential for vapor intrusion, there was no consensus, and there are many Phase I reports out there that do not evaluate that potential. Because treatment of vapor intrusion under the old standard was a topic of genuine dispute among practitioners, you might think we could accept this clarification and move on. Not so.
The USEPA rolled a grenade into the tent when, in its preamble to the final rule sanctioning E1527-13, it stated that it “. . . wishes to be clear that, in its view, vapor migration has always been a relevant potential source of release or threatened release that, depending on site-specific conditions, may warrant identification when conducting all appropriate inquires.” (78 Federal Register 79319 (December 30, 2013).
The USEPA’s clarification has prompted some discussion in the blogosphere about potential malpractice claims against environmental professionals who failed to address relevant vapor intrusion issues in past Phase I reports. Closely related is the question of whether landowners currently relying on one of CERCLA’s landowner liability protections may be at risk due to the inadequacy of their consultant’s work. These are legitimate concerns and only time will tell if theoretic liability leads to actual liability and litigation.
However, it does not appear that the sky is falling and there are reasons to suggest that a landside of litigation over this issue is unlikely. While litigation can be expected under the right (very limited) fact pattern, the following factors should alleviate concerns about widespread litigation:
- While the aggregate Phase I universe is vast, the portion of that universe affected by the vapor intrusion issue is very limited; involving only circumstances where subsurface contamination is known or suspected.
- Even when genuine vapor intrusion questions exist, a cause of action for malpractice requires damages. Simple receipt of a substandard Phase I report is not enough. The recipient of the report must experience damages related to the failure to address vapor intrusion. I see two such scenarios:
- A landowner faces liability for remediation of a vapor intrusion problem, and does not qualify for liability protection under CERCLA because the Phase I failed to evaluate the threat of vapor intrusion.
- A landowner discovers that a vapor intrusion problem reduces the value of its property, after relying on a Phase I that did not evaluate the threat of vapor intrusion.
- In the former situation, case law demonstrates that courts are reluctant to deny CERCLA liability protection to landowners who reasonably rely on an environmental professional’s Phase I report to satisfy AAI. Reliance on an environmental professional would seem particularly reasonable and appropriate regarding a technical issue such as whether or not an assessment should evaluate the threat of vapor intrusion. If landowner liability is improbable, the specter of derivative Phase I malpractice claims is also diminished.
- Concerning the latter (reduced property value) scenario, most Phase I reports are conducted in order to satisfy AAI and qualify for landowner liability protection. While use of the ASTM standard is not limited to that task, the standard directs the environmental professional to assume, absent other direction from the user, that satisfaction of AAI is the user’s purpose. If the user obtains the liability protection it bargained for, can it maintain a malpractice action? The answer to that question will depend upon the facts of each case, but I suspect that the user will face an uphill battle.
- Only after paring down potential vapor intrusion disputes to those involving actual relevant damages do we reach the substantive malpractice question of whether or not the failure to address vapor intrusion in a Phase I is a breach of a professional standard of care.
The answer to that breach of standard question is beyond the scope of this note and will require a descent into the bowels of the ASTM standard. I suggest that the USEPA’s proclamation is not dispositive because it addresses compliance with its own AAI requirement, not compliance with the ASTM standard guiding the environmental professional; a distinction that may make a difference.
For transactions in the pipeline when the December 31, 2013 final rule was promulgated, most will not be affected because they do not present the particular facts and circumstances (i.e., subsurface contamination) triggering a vapor intrusion assessment. In those transactions where vapor intrusion is an issue, however, it is key that AAI be completed prior to the acquisition of property. For pending transactions, deficient Phase I assessments should be revised or supplemented to address vapor intrusion potential. If the property has already changed hands, the new owner’s claim to any of the CERCLA landowner liability protections will be at risk.
How great a risk? Time will tell. But it is clear that good faith arguments that vapor intrusion need not be part of new Phase 1 assessments are no longer tenable.
Posted on February 26, 2014
A working group of federal agencies has issued a preliminary list of options for improving chemical facility safety and security for public comment by March 31, 2014. This document implements Section 6(a) of Executive Order 13650, which was issued on August 1, 2013, in response to the explosions at a fertilizer plant in West, Texas. These options for changes in policies, regulations, and standards for chemical facility safety and security are potentially the most far-reaching actions triggered by this Executive Order, which has received renewed attention due to the recent drinking water contamination in West Virginia that was caused by a leak from a chemical storage facility.
The working group lists 49 distinct options, which are each presented as questions, for public input. A number of the options are applicable to specific chemicals, namely ammonium nitrate and other explosives. A few options specifically apply to oil and gas facilities. Most options, however, broadly deal with chemical safety and security within industry in general. This last category of options addresses issues relating to process safety, regulatory coverage of additional hazardous chemicals, chemical reactivity standards, security at chemical facilities and identifying regulated facilities.
These options raise many important and thought-provoking issues. Here are a few examples. Can overlapping chemical safety and security programs of two or more agencies be harmonized? Should being subject to one regulatory program, such as the OSHA process safety management, automatically mandate coverage under another program, such as EPA’s risk management program? Should agencies use rulemaking, policies or guidance to effectuate chemical facility safety and security improvements? How can agencies work with private consensus standard organizations in this area? Can strategies, such as greater worker involvement, root-cause analysis or the use of leading indicators, improve safety and security at chemical facilities? While focusing on the front-page accidents can help answer these issues, attention to successful models of chemical facility safety and security is a more reliable guide to identifying useful improvements.
Posted on August 5, 2013
Enforcement with a Flair
EPA has seen the smoke.
This certainly is no joke.
Benzene is a neighborhood scare,
With upsets going to the flare.
On July 10, the Department of Justice and EPA announced the lodging of a consent decree with Shell Oil Company to resolve alleged Clean Air Act violations at Shell’s refinery and chemical plant in Deer Park Texas. This agreement represents the fourth “refinery flare consent decree” in the past year. More are expected.
Shell will spend $115 million to control emissions from flares and other processes, and will pay a $2.6 million civil penalty. EPA alleged that Shell was improperly operating its flaring devices resulting in excessive emissions of benzene and other hazardous air pollutants. Shell will spend $100 million to reduce flare emissions.
These flare consent decrees represent a new chapter in EPA’s national Petroleum Refinery Initiative (“PRI”), which, beginning in 2000, resulted in the entry of 31 settlements covering 107 refineries in 32 states, affecting 90% of the domestic refining capacity. EPA did address refinery flares as one of the marquee issues in PRI consent decrees – compliance with the New Source Performance Standards (“NSPS”) for Petroleum Refineries.
EPA is now pushing the envelope to impose “regulatory requirements plus.” Through an enforcement alert in August of last year, EPA warned industry that there were significant issues with flare efficiency and excessive emissions. EPA Enforcement Alert: EPA Enforcement Targets Flaring Efficiency Violations.
What is EPA doing? What is the basis of this Petroleum Refinery Initiative 2.0 and the imposition of “regulatory requirements plus”?
EPA bases this new initiative on the “general duty” requirements. NSPS requires that at all times owners and operators should operate and maintain a facility or source consistent with “good air pollution control practices.” In addition, Section 112r of the CAA requires owners and operators to maintain a safe facility by taking such steps as are necessary to prevent releases of hazardous air pollutants (“HAP”), and to minimize the consequences of accidental releases which do occur. Accordingly, with no threshold amount, any release of a listed HAP (e.g. benzene) that could have been prevented violates this general duty. If a flare smokes, there must be a violation.
This general duty is used to require control measures that go beyond those specified in the regulations. The consent decrees include conditions addressing flare combustion efficiency limits incorporating automated controls with complex and expensive monitoring systems, flaring caps for individual flares and the overall refinery, and flare gas recovery systems for individual flares.
The enforcement train has left the station. Who will be next in line? How much will the ticket cost? Are there rulemaking or other actions that may be taken to slowdown or stop the train? Flares are not unique to petroleum refineries and petrochemical plants (e.g. flaring in oil and gas production facilities). Will EPA provide other industries the opportunity to go for a train ride?
Posted on June 20, 2013
Enacted in May 2009, New Jersey’s “Site Remediation Reform Act”, N.J.S.A. 58:10C-1, et seq. (“SRRA” or “Act”) was heralded by the State’s Department of Environmental Protection (“NJDEP”) as a “new world order” for the State’s site remediation regulation. Four years later, its imposition remains a “work in progress”.
Belatedly following Massachusetts’ lead, the Act largely privatized site remediation by placing most decisions, including the ultimate provision of final remediation approval, in the hands of state-licensed professionals, called “Licensed Site Remediation Professionals” (“LSRPs”). It replaced NJDEP’s former “command and control” approval process, which tended toward extreme micro-management of each case. Instead, LSRPs are supposed to use their professional judgment in effecting remediation.
Interestingly, much of the impetus for the SRRA came chiefly from the Government, compelled by its enormous backlog of unresolved cases: it was not unusual for remedial reports to languish on NJDEP desks, awaiting action, for years. Moreover, NJDEP had little or no knowledge of many sites on its “known contaminated site list” which numbered anywhere from 10,000 to 15,000 (the fact that that number was unclear was itself troublesome). Indeed, one of the precipitating causes of the Act was a vapor intrusion case in which it was belatedly discovered, in 2006, that a child day care center had been built, and was operating, on a site which formerly housed a thermometer factory. This site should have been (but was not) cleaned up under the State’s ISRA law when the factory closed in 1994. The site had been classified as one of “low” concern, so it was not inspected by NJDEP until twelve years after such closure. The discovery of these circumstances caused public consternation, followed by litigation and, ultimately, legislation.
Although the environmental consultant community enthusiastically welcomed the new law (almost immediately dubbed the “environmental consultant right to work act”), individual LSRPs continue to have difficulty weaning themselves away from the “security blanket” of prior department approval of their actions. These fears are understandably heightened by the statutorily enjoined random audit of at least ten percent of LSRPs annually by the LSRP Licensing Board and the Department’s separate ability to audit final remediation approvals, (called “Response Action Outcomes”, or “RAOs”), for up to three years after issuance.
Partly in response to the LSRPs’ expressed need for some certainty, NJDEP has been steadily adding to the scope and detail of various technical guidance documents, the most recent one of which is its “Vapor Intrusion Technical Guidance (Version 3.1)" issued in March of this year. At 184 pages, with appendices, this guidance (“VI Guidance”) is nearly twice as long as the next-largest NJDEP “guidance document” and far longer than similar VI guidance issued by authorities in neighboring states. Indeed, its length is nearly that of OSWER’s External “Review Draft” “Final Guidance for Assessing and Mitigating the Vapor Intrusion Pathway from Subsurface Sources to Indoor Air”, whose issuance it preceded by about a month. Predictably, the two documents do not exactly mesh seamlessly.
The prescriptive nature of the VI Guidance is equal to its heft and seemingly contrary to the Act’s proclaimed conferring of discretionary judgment upon LSRPs. More troublesome is the fact that the various detailed dictates to LSRPs in the VI Guidance have been translated into a welter of forms that must be filed by the LSRP at various points in the VI remedial process. These new forms –which are apt to change with some frequency – are all “machine readable” and, in light of the draw-down of experienced NJDEP personnel caused by government cutbacks and natural attrition, are increasingly reviewed by machines, rather than experienced personnel, at least in the first instance. This seems likely to produce an exaltation of form over substance that does little to foster actual remediation. Moreover, departures from the VI Guidance must be supported by the LSRP’s explanation of rationale under a pre-SRRA regulation entitled “Variance from Technical Requirements”. Few such “variances” were ever permitted under this regulation in the past. The fact that such “departures” may be substantively reviewed by NJDEP only after the final RAO is issued and, if denied, would result in the RAO’s invalidation, creates an added “chilling effect” on an LSRP’s consideration of any such deviation, however warranted. And, while NJDEP personnel continue to be available to LSRPs for consultation and advice, it is unclear what effect, if any, reliance on such advice would have in any subsequent audit of an RAO.
It may be that the VI Guidance is sui generis and that its overly doctrinaire approach will not be followed by NJDEP in other areas of remediation. If not, the “new world order” of the SRRA may morph into something that looks very much like NJDEP’s “ancien regime”. Or maybe I just have a case of the vapors.
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 May 20, 2013
When the Supreme Court issued its 2009 decision in Burlington N. & Santa Fe RR. Co. v. United States (Burlington Northern), Superfund practitioners were encouraged to think that CERCLA joint and several liability could be avoided by arguing that the harm is divisible and therefore capable of being apportioned. Subsequent decisions in the lower courts have dampened that encouragement. The most recent case in point is the May 1, 2013 decision by the U.S. District Court for the Eastern District of Wisconsin in United States v. NCR Corp. (NCR Corp.), the latest in a long line of decisions involving the Fox River Superfund Site.. After an eleven day trial, the District Court permanently enjoined NCR and the other defendants to comply with a unilateral administrative order requiring them to clean up PCB-contaminated sediments in the Fox River.
The court had previously issued a preliminary injunction to the same effect, which was affirmed by the Court of Appeals for the Seventh Circuit on interlocutory appeal. The District Court had also held that EPA’s remedy selection was not arbitrary, capricious or otherwise unlawful and that NCR was not entitled to contribution, decisions not yet reviewed by the Court of Appeals, leaving NCR with apportionment as its best argument in the District Court to avoid having to bear the entire burden of the cleanup.
In the latest decision, the District Court rejected attempts by NCR (and the other defendants) to prove that the “harm” in one of the operable units of the Fox River was divisible and could therefore be apportioned. The Seventh Circuit had ruled that “harm,” for this purpose, “was best defined with reference to the contamination, as set forth in the government’s remediation rules.” The District Court began its analysis of apportionment by pointing out that exceptions to joint and several liability will be “rare.” According to the District Court, to demonstrate that the harm is divisible, a defendant bears the burden of proving two things: first, that the harm is theoretically capable of being divided, a question of law, and second, that there is a reasonable basis for an apportionment, a question of fact. Burlington Northern, the District Court observed, involved only the second of these elements (“Yet, even though it is undeniable that Burlington Northern loosened the rules governing how a given harm might be apportioned, it did not address the key issue here, which is whether the harm is theoretically divisible in the first place” [emphasis in original]).
Applying the analysis of Sections 433A and 875 of the Restatement (Second) of Torts, both Burlington Northern and the Seventh Circuit concluded that some harms will not be theoretically capable of apportionment. Thus, if one of the causes is “sufficient” in and of itself to bring about the result, the harm will not be divisible and apportionment will not be appropriate. The question is “whether one polluter should be considered such a significant cause of the harm that the harm attributable to that cause is incapable of being divided.” Further, some kinds of harms will simply be unsuitable for divisibility by their very nature, as when a chemical is deemed to be harmful when it “surpasses a certain amount” or when a chemical becomes harmful only when mixed with other chemicals.
It is interesting that the courts continue to follow the Second Restatement even though there is a more recent Third Restatement of Torts (2000). While the courts have not provided any basis for their continued reliance on the Second Restatement, some commentators have opined that the Third Restatement can be read as trending away from joint liability and encouraging apportionment.
The District Court observed that whether a harm is theoretically capable of apportionment, although a question of law, is heavily dependent upon the underlying facts. In this case, after an exhaustive review of the evidence, the District Court concluded that NCR had not met its burden of rebutting the government’s contention that the NCR discharges were a “sufficient cause” of the harm. The District Court defined the “harm” as contamination in the sediments above 1 ppm of PCBs. The Court found that NCR had not meaningfully disputed that the remedy for the sediments would have been the same even if NCR had been the only contributor. In other words, because of NCR’s discharges, the same remedial measures would have been required regardless of whether or not discharges from others had occurred. Since NCR’s discharges would, on their own, “require roughly the same remedial measures that are now being undertaken, [NCR] could be deemed a sufficient cause of the harm.” Under those circumstances, the District Court concluded, the harm could not be deemed divisible and apportionment would be inappropriate.
The District Court then went on to conclude that joint and several liability should attach even if NCR had not been a “sufficient cause” of the harm, “so long as the party is necessary to the harm.” Thus, for example, if one party’s discharge produces a concentration below action levels, such that it is not a “sufficient cause” of the harm, when that discharge is combined with other discharges that cause the concentration to exceed the action level, the first discharge is a “necessary” cause and joint and several liability should attach.
The District Court concluded that the “harm” was not theoretically capable of apportionment, thereby avoiding the necessity of determining how apportionment might be accomplished. This decision suggests that the battleground in the apportionment arena is likely to shift from how apportionment is conducted (the issue addressed by Burlington Northern) to the question of whether apportionment is appropriate in the first place. This decision provides a useful guide for practitioners regarding how courts may evaluate this threshold question, and highlights the importance of how courts define the “harm” at issue.
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 March 29, 2013
At the time when Superfund was flexing its muscle and impacting the ability of successful completion of property transfers, most states developed some form of voluntary cleanup program or “VCP”. Those programs were supposed to allow for rapid and effective assessment and remediation, and furnish liability releases or covenants with liability protection. Sounded good huh?
And how many of our clients have a small collection of such sites that they volunteered to assess and address with the sweet promise of walking away, and quickly? Some used the voluntary cleanup program as a risk allocation tool in property transfers. Others wanted the promised release or covenant in order to obtain an environmentally worry-free, and thus more valuable, property that was theirs to sell.
Some states have had the fortitude to reform their voluntary cleanup programs by privatizing the process. In those states licensed professionals determine whether property investigations and remediation are necessary and when they are complete. They then issue some form of certification that leads to a covenant not to sue or a release. [See "New Jersey Follows Massachusetts into the World of Licensed Environmental Consultants and Privatized Cleanup Oversight", David Farer ,July 9, 2009].
In other states the agencies have not overcome their dependence on the fees generated by voluntary cleanup programs, utilizing those fees to pay the salaries of agency personnel engaged in the oversight of voluntary cleanup activities. In these states "voluntary" really means "hooked and can't get out." Let's look at a familiar ballad - best read while listening to Eric Clapton's Voodoo Chile (Live from Madison Square Garden):
Well on the day I signed up
For the Voluntary Cleanup Plan
Well I was promised fast and efficient
Get you out of a jam
It gives you certainty and freedom
And you'll be able to transfer worry free
Lord I'm a VCP chump
Oh Lord, I'm a VCP chump
Well I had a grain elevator
With a little dab of carbon tet
Oh Yeah, just a little dab
In the shallow soil
VCP had me test it
Oh, just a little dab at low levels
Lord I'm a VCP chump
Oh Lord, I'm a VCP chump
And I said I am finished
But VCP said not so fast
So I started on the groundwater
Even though it was 200 feet down
Yeah I started drilling
And haven't hit bottom yet
Now it's 10 years later
From the time I began
Yeah, it's 10 years later
And I haven't found that carbon tet yet
But I 'm gonna keep goin
Cause I'm in the money so deep
My heirs and assigns ask me
Say – what's goin on?
I have to tell them
My sad, sad song
Lord I'm a VCP chump
Oh Lord, I'm a VCP chump
So, most ballads eventually come to an end. How can we continue VCP reform in states where the VCP Bluesy Ballad still is being sung?
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 January 4, 2013
Tremendous progress has been made in protecting and restoring the environment over the past 40 years since the passage of major legislation at the federal, state, and provincial levels in the United States and Canada. However, our skill at measuring that progress is somewhat limited, and we may not have the kind of information we need to judge the health of our ecosystems or the effectiveness of our programs. There have been some good efforts on an international, national, state, and provincial basis to evaluate the state of the environment using certain indicators, but one area needing much more attention is the Great Lakes.
Although there are many indicators monitored on a continuing basis in the Great Lakes, the real difficulty has been synthesizing the information in a way that puts officials in a position to communicate effectively with the public, policy makers, and managers about whether the Great Lakes are getting better, worse, or staying the same. The International Joint Commission (IJC) initiated an effort recently through its Water Quality Board (WQB) and Science Advisory Board (SAB) to identify a limited number of core indicators for this freshwater resource. What’s needed now is a consensus among the scientific and policy leaders on the Great Lakes on the “few indicators that tell us the most” about the waters.
It was not hard to tell the Great Lakes were in trouble when enough dead alewives washed up on its shores requiring front end loaders to remove them, the Cuyahoga River and other tributaries caught fire, and Lake Eric was declared “dead” because of massive algal blooms. Many of these conditions on the Great Lakes led to both a public outcry and Congressional action in order to deal with the lakes’ water pollution and other environmental problems. As programs were put in place to keep oil out of the rivers and reduce nutrient loadings to the lakes, significant visible improvements were seen. The underlying data was available to support the observations, but the visible improvements plus much better fishing success told the story in an easily observable way.
Things are much more complicated now. When looking at the fundamental three legged stool supporting the Great Lakes’ ecosystem, being the chemical, physical, biological integrity of the resource, it is not easy to gage. With regard to chemicals, very low concentrations of legacy pollutants like PCBs and dioxins can cause serious problems. Likewise, ongoing contamination from airborne deposition of mercury is a real concern. New chemicals such as flame retardants are the next problem area with which to deal. Invasive species such as the zebra and quagga mussels, the ever present sea lampreys, and the threat from the Asian carp are a constant problem for maintaining the biological balance in the system. From a physical standpoint, expanding urbanization, suburban sprawl, and the manifestations of climate change are also adding tremendous pressure on the Great Lakes. What’s needed is a core set of chemical, physical, and biological indicators of the health of the ecosystem and the effectiveness of the programs to protect and restore it.
Good progress is being made on this front. After several months of work by some of the top Great Lakes’ scientists and policy makers, a group of just over twenty indicators has been preliminarily identified, with a smaller group as the core. They include:
Physical: Coastal wetlands, land cover, and tributary physical integrity
Chemical: Nutrient concentrations and loadings, and persistent bio - accumulative toxics
Biological: Lower food web productivity/health, fish species of interest, harmful and nuisance algae, aquatic invasive species
Much of the foundation for the work done recently comes from what is known as the State of the Lakes Ecosystem Conference (SOLEC), which is a large gathering, primarily of scientists, held every two years to review and evaluate a large number of Great Lakes’ indicators on the Great Lakes.
What needs to happen next is for the IJC first to adopt a set of core indicators as the ones that tell us the most about the resource, then inform the U.S. and Canadian governments of its findings. Under the recently updated Great Lakes Water Quality Agreement, the parties are responsible for establishing ecosystem indicators for the Great Lakes.
With a set of core indicators, both countries will be in a much better position to communicate with the public, elected officials, and managers about the health of the ecosystem and the effectiveness of programs. In addition, our governments will be in a position to make better choices about the allocation of increasingly scarce resources to maximize the return on investment for improving the health of the Great Lakes, the largest, surface freshwater system in the world.
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 3, 2012
Prior posts (by David Farer and William Hyatt) have featured comment on the litigation that resulted in the New Jersey Supreme Court’s decision in NJDEP v. Dimant (September 26, 2012) under the New Jersey CERCLA analog, the Spill Act, requiring a “reasonable link” between the discharge, the putative discharger, and the site specific contamination. This alert focuses on the implications of the decision for building a liability case.
Dimant concerned liability for required remediation of perchloroethylene (“PCE”) contaminated groundwater at a site. The New Jersey Department of Environmental Protection (“DEP”) inspectors observed for a portion of one day a pipe dripping a liquid onto blacktop. Testing showed the drip contained more than 3,000 times the maximum contaminant level for PCE. There was no evidence presented at trial, however, to indicate the blacktop was cracked, where the drips went, or the frequency or duration of the drips. The DEP did not establish groundwater flow direction and therefore could not prove if the pipe location was up or down gradient of the PCE contaminated groundwater requiring remediation. Also, there were several other potential sources of PCE in proximity to the defendant. In other words, there was no proof connecting the defendant’s discharge of PCE to the PCE contaminated groundwater.
Keep in mind that the Spill Act imposes strict, joint and several liability on a person discharging or “in any way responsible” for a discharge, an arguably very broad standard indeed. In its decision, the Court made it clear that “in an action to obtain damages, authorized cost and other similar relief under the [Spill Act] there must be shown a reasonable link between the discharge, the putative discharger and the contamination at the specifically damaged site.” The Court disclaimed a proximate cause analysis, but did require “sufficient proof of a reasonable, tenable basis” showing how the discharge resulted in the contamination causing at least some of the damage at issue. In short, the DEP failed to demonstrate “the requisite connection” between the dripping PCE and the PCE contaminated groundwater.
What sunk the DEP’s case was a failure to prove the nexus between drips of PCE to the blacktop’s surface and some pathway for contribution of PCE through the soil and into the groundwater. To avoid a similar fate, plaintiffs (including the State) will need proof that the defendant’s discharge actually reached the contaminated resource. That evidence might be historical, physical or chemical analyses done to determine the source of releases affecting the resource. This type of work is often referred to as environmental forensics and finding the right experts in this field will, in many New Jersey cases, be critical to establishing the “reasonable link” required by NJDEP v. Dimant. To the extent that other state courts follow New Jersey’s lead, similar proofs will be necessary.
Posted on November 12, 2012
Those environmental lawyers who had a two- or three-day “vacation” due to Hurricane Sandy now return to the office to face a workload that will in many cases be trebled. First, there’s the work you didn’t get to when your office was closed and now has to be finished post-haste. Second, there’s the work that you would have been doing the next few days had there been no hurricane. And third, there’s the urgent work that you now have to help your clients assess new issues that are present precisely because of the storm.
Wind and water mobilize even structures, equipment and materials that were always meant to be stationary. Storage tanks, waste ponds, drums, hazardous materials and other previously contained environmental hazards have now been released, flooded, or overtopped, often releasing reportable quantities of material. Clients will need to quickly assess the nature and magnitude of releases at and from their facilities to determine their environmental obligations.
The prudent environmental lawyer will immediately begin working with clients to determine whether there are spills and releases that must be reported to federal, state and local environmental agencies. Potential liabilities may depend upon whether under the applicable laws “Act of God” is or is not a defense. Surprisingly, a major hurricane is not, in the eyes (pun intended) of some agencies interpreting some statutes, an Act of God. Clients also need to verify that their pollution control systems – wastewater treatment, air pollution, etc. – are functioning correctly post-storm, even if there were no reportable releases during the storm.
Clients are undoubtedly attuned to the need to submit insurance claims for business interruption and damage to their own property, but now is a good time to begin surveying what kinds of claims might be coming from neighbors and others damaged by releases from the client’s facility. This is particularly so given that we are nearing year-end and many policies no longer have “tails” for notices of claims received after the policy year has run.
Posted on October 3, 2012
2012 marks the 50th anniversary of Silent Spring, one of the first books to point out the environmental dangers associated with pursuing technological and scientific advances without fully understanding their possible negative side effects. Silent Spring was a revolutionary environmental exposé published in 1962 by an unassuming author, Rachel Carson. Her book inspired a powerful social movement that continues to impact environmental law and American society today.
A scientist and ecologist, Carson was a former editor of U.S. Fish and Wildlife Service publications and a feature writer for the Baltimore Sun who eventually dedicated herself to writing books that taught people about the fragile beauty of Earth’s ecosystem. Silent Spring was written in the wake of post-war lethargy, new affluence and during a time when Americans were confident science had all the answers. Disturbed by the proliferate use of synthetic chemical pesticides after WWII, Carson challenged this practice and sounded a loud warning about the use of chemical pesticides, a reminder of the responsibility of science and the limits of technological progress.
Critics called Carson an alarmist, and Silent Spring was met with intense rebuttals from the scientific establishment and some major industries. Regardless, Carson was steadfast in her resolve to show the need for new environmental policies and regulations necessary to protect human health and the environment.
Silent Spring is proof of the power of public opinion, and despite scientific skeptics, the book sparked a major environmental revolution. Carson’s exhaustive environmental calculations in Silent Spring brought to light the fact that people were subjecting themselves to slow poisoning by the misuse of chemical pesticides and toxic pollutants that take more than 15 years to break down. In addition, she exposed the fact that these chemicals could cause irreparable liver and nervous system damage, cancer and reproductive issues.
Carson’s testimony before Congress in 1963 later served as the catalyst for the ban on the domestic production of DDT and sparked a grassroots movement demanding better environmental protection and increased regulation, resulting in the formation of the U.S. Environmental Protection Agency (EPA).
Sadly Carson was not able to enjoy the fruits of her labor. She died after a long battle with breast cancer in 1964, just 18 months after her testimony before Congress. However, many celebrate the impact of her work on April 22 each year on Earth Day.
So after 50 years, how much has changed? Today, there is federal regulation of everything from coastal development to farming practices. Environmental protection includes policies concerning natural resources, human health, economic growth, energy, transportation, agriculture, industry and international trade and all parts of society. Many would say there is over regulation today. In many cases, I agree. However as Rachel Carson showed us, there is a need for some regulation, if just to protect us from ourselves.
Posted on October 2, 2012
On September 26, 2012, the New Jersey Supreme Court issued its decision in NJDEP v Dimant, rejecting an attempt by the state DEP to seek damages from an alleged discharger under the state's strict liability statute, the Spill Compensation and Control Act (typically referred to as the "Spill Act"). The court found that DEP had not established the necessary connection, or nexus, between the alleged discharge and the contamination at the specifically damaged site.
This was the second New Jersey appellate court decision in the past three months in which DEP's positions on regulatory and statutory authority have been successfully challenged.
In Dimant, DEP had sued to recover costs associated with investigation and remediation of PCE-contaminated groundwater found in residential wells, and was also seeking compensation for natural resource restoration. The defendant was a dry cleaner that had operated near the contaminated wells and had used the common dry-cleaning solvent PCE for 15 months in the late 1980s. During that period, in the course of a site inspection, DEP noted an external pipe at the dry cleaning facility which the agency found to be dripping PCB-bearing liquid onto the pavement.
The Spill Act provides that “[a]ny person who has discharged a hazardous substance, or is in any way responsible for any hazardous substance, shall be strictly liable, jointly and severally, without regard to fault, for all cleanup and removal costs no matter by whom incurred.”
DEP argued that the discharge was sufficient to connect the dry cleaner to the contaminated groundwater in the nearby wells. The court rejected this argument, finding that DEP had not met its burden of proof. It noted that DEP never presented sufficient proof of a “reasonable, tenable basis” for how drips of fluid observed at the dry cleaner on one occasion resulted in groundwater contamination in the Bound Brook wells.
The New Jersey Supreme Court upheld the prior trial court and Appellate Division decisions in the case, rejecting DEP's claims and holding that in order to obtain the requested relief, a real rather than hypothetical nexus must be shown to exist between the discharge of hazardous substances and the actual contamination at the specifically damaged site. That the substance dripping on the pavement in one location was the same as that found in the groundwater at another location was not a sufficient connection and did not constitute the “reasonable link” required to impose liability on the defendant.
The court further concluded that DEP could not credibly claim, many years after observing the dripping pipe, that the dry cleaner should bear the expense of studying how the drip may have impacted groundwater, and how the groundwater condition must now be addressed.
This was the second appellate court setback for DEP since July. In an unrelated ruling on July 6, 2012 in Des Champs Laboratories, Inc. v. Robert Martin, the New Jersey Appellate Division found that DEP had overstepped its regulatory authority in narrowing one of the statutory exemptions available under the state's transaction-triggered environmental law, the Industrial Site Recovery Act ("ISRA").
Under ISRA, a wide range of property owners and operators must investigate and if necessary clean up contamination at subject properties upon the occurrence of specific business events such as cessations of operation or sales of properties or businesses, regardless of fault. However, the legislature built certain exemptions into the law. One of them, available to those who have used only small – or de minimis – amounts of hazardous substances, is known as a De Minimus Quantity Exemption, or "DQE."
However, in 2009 DEP issued new regulations unilaterally imposing an additional requirement on DQE applicants that they also establish that the subject property is free of contamination. As the revision to the regulation was unsupported by the ISRA statute, and appeared to circumvent the very purpose of the DQE, Des Champs Laboratories challenged the regulation before the Superior Court, Appellate Division after its own application for a DQE was denied.
On July 6, 2012, the Appellate Division ruled in favor of Des Champs, invalidating the DEP regulatory change. DEP subsequently issued the De Minimis Quantity exemption to Des Champs.
[Note: See also William Hyatt's alert posted on September 2, 2011 on the NJ Appellate Court decision on the Dimant case.]
Posted on August 10, 2012
“Let me be clear: EPA has never designated manure as a hazardous substance nor has the agency ever designated a farm a Superfund site and has no plans to do so.” So says Mathy Stanislaus, EPA Assistant Administrator, Office of Solid Waste and Emergency Response in testimony before the House Energy and Commerce Subcommittee on Environment and Economy on June 27, 2012. The subject of the hearing was a bill called the “Superfund Common Sense Act” (H.R. 2997), which seeks to clarify that livestock manure is not a hazardous substance, pollutant or contaminant for purposes of CERCLA response authority and EPCRA emergency reporting.
With such an unequivocal statement of agency intent, is this latest Congressional effort to ensure a “common sense” interpretation of CERCLA and EPCRA with respect to livestock waste simply an attempt by agricultural interests to create an unnecessary and unwarranted regulatory “free pass,” or a prudent effort to provide needed certainty to the regulated community?
EPA’s position appears to be that the proposed codification of Superfund “common sense” is an uncalled-for response to the concerns being voiced. Beyond his broad statement of agency interpretation and intent, Mr. Stanislaus argues that EPA’s 2008 final rule exempting animal waste at certain farms from air emissions reporting under CERCLA section 103 and EPCRA Section 304 further demonstrates that the agency is already exercising common sense in its regulation of livestock waste.
Notwithstanding these assurances, however, Mr. Stanislaus admits that this final rule is currently under EPA review to address various issues being raised by a range of stakeholders. He also references EPA’s ongoing efforts to develop emissions estimating methodologies to better quantify air releases at livestock operations, presumably for future regulatory purposes.
Needless to say, such statements offer little comfort to the bill’s sponsors and regulated community, which are similarly discomforted by other statements of Mr. Stanislaus. For example, Mr. Stanislaus testified that the Act would prevent EPA from responding under its CERCLA authority to “damaging” releases of hazardous substances associated with manure. Also, Mr. Stanislaus voiced the agency’s concern that the bill’s “common sense” provisions would prevent EPA from using CERCLA to issue abatement orders in response to releases presenting a substantial danger to health or the environment.
Proponents of the bill state that the Act is not about whether manure should be regulated, as animal feeding and other farm operations are already adequately regulated under the Clean Water Act, Clean Air Act and state-specific authorities. Rather, the issue is whether CERCLA’s environmental response provisions and requirements were intended to or should apply to manure management. Although recognizing that CERCLA has specifically exempted only the “normal application of fertilizer” from its definition of “release,” proponents argue that such definitional language is not dispositive of congressional intent with respect to the general characterization of manure as a CERCLA hazardous substance. They also point out that EPA has never issued guidance on what constitutes “normal application of fertilizer,” leaving that exemption and broader CERCLA issues to be resolved by the courts and agency.
Opponents argue that because constituents of manure, such as ammonia and hydrogen sulfide, are hazardous substances, there is no legal or scientific basis to totally exempt manure from the regulatory scheme of CERCLA and EPCRA. They also challenge the notion that CERCLA authority is unnecessary or duplicative by identifying gaps in the reach of other federal environmental laws, including authority to deal with natural resource damages and the recovery of response costs.
Whatever side of the fence you may be on, it does seem inevitable that, if the legal and scientific issues being debated are not addressed by Congress, they will almost certainly be considered and resolved in some fashion by EPA, state agencies and the courts. In light of this -- and notwithstanding EPA’s protests that codification of Superfund “common sense” is unnecessary because agency common sense already prevails -- is a legislative approach to clarifying these important issues preferable to the uncertainties of future agency rule making and the inconsistencies inherent in judicial rulings?
Posted on August 2, 2012
On June 14, the Washington Supreme Court heard oral arguments regarding the constitutionality of utilizing the proceeds from a state excise tax on motor vehicle fuel for non-highway related purposes. The tax in question is the Hazardous Substances Tax which went into effect in its current form in 1989 as part of the Model Toxics Control Act and covers the first in-state possession of petroleum products, pesticides, and a number of chemicals, with “possession” defined as “control of”, and “control” as the power to sell or use, or to authorize sale or use.
The tax is currently set at 0.7% of the fair market wholesale value of the substance in question, with 47.1% of the proceeds placed in the State Toxics Control Account and the remaining 52.9% in the Local Toxics Control Account. Those accounts provide funding for contaminated site cleanup and a number of other state and local environmental programs, particularly those relating to waste and toxics controls. The projected tax revenues for fiscal year 2013 are estimated to be $144 million, with more than 80% of those revenues attributable to payments made by in-state petroleum refineries.
According to the pleadings, the plaintiff Automobile United Trades Organization (“AUTO”) had some concerns about the legality of the Hazardous Substance Tax as adopted in 1989, but did not raise an objection at that time because AUTO also believed it was “good to clean up toxins in the environment”. As a result, the pleadings reference an “uneasy peace” that continued in effect until the Washington State Legislature diverted $180 million of the 2009 tax proceeds to the state’s general fund to help balance the state budget, and bills were introduced in both the state house and senate in 2010 to increase the tax rate from 0.7% to 2% and divert very substantial percentages of the additional revenues to the general fund for at least several years thereafter.
In 2010 the AUTO and Tower Energy Group filed a declaratory judgment action with respect to the constitutionality of the Hazardous Substance Tax as applied to motor vehicle fuel, arguing that any proceeds from taxing motor vehicle fuel must be used for highway purposes under the 18th Amendment of the Washington State Constitution (see Article II, Section 40). A lower court dismissed this argument, concluding that the Amendment did not require such use. It also found that the claim was barred by the doctrine of laches.
The 18th Amendment was adopted in 1944 after the state legislature had used gas tax revenues to fund non-highway related projects. It provides that motor vehicle license fees, as well as all excise taxes collected by the State of Washington on the sale, distribution, or use of motor vehicle fuel and all other state revenue intended to be used for highway purposes, must be placed in a special fund to be used exclusively for highway purposes. It also includes a proviso that exempts certain taxes then in existence (vehicle operator license fees, excise taxes imposed on motor vehicles or their use in lieu of a property tax on such vehicles, or fees for certificates of motor vehicle ownership) from its purview, and it states that “this section shall not be construed to include revenue from general or special taxes or excises not levied primarily for highway purposes”.
The Washington State Attorney General argues that the proviso language just quoted limits the scope of the 18th Amendment to the previously noted gas tax and any other motor vehicle fuel excise tax specifically levied for highway purposes. Thus, the 18th Amendment would not apply to the Hazardous Substance Tax. The plaintiffs disagree, noting the Amendment’s reference to “all excise taxes”, and that the State Attorney General’s interpretation would dismantle its anti-diversionary policy. As made clear during oral argument, the plaintiffs interpret the quoted language as a catch-all provision intended to cover any tax levies in existence at the time of the Amendment’s passage that were similar to the two then existing taxes (a motor vehicle excise tax and a business and occupation tax) exempted from its purview.
Given the questions raised during oral argument, it appears that the Washington Supreme Court’s decision will address the scope of the 18th Amendment and its relationship to the Model Toxics Control Act. Regardless of the outcome, the sequence of events does bring to mind that old adage about sleeping dogs.
Posted on June 25, 2012
CERCLA practitioners are familiar with the Eleventh Circuit’s decision in Solutia, Inc. v. McWane, Inc., 2012 WL 695007 (11th Cir. Mar. 6, 2012). The court of appeals decided that Solutia & Pharmacia, the plaintiff, was limited to a contribution action for costs incurred in cleaning up lead contamination. In so holding, the Eleventh Circuit agreed with three other circuits which have held that a person who enters an administrative or judicially approved settlement under Sections 106 or 107 of CERCLA are limited to a contribution claim under Section 113(f). See Morrison Enter., LLC v. Dravo Corp., 638 F.3d 594, 603 (8th Cir.2011); Agere Sys., Inc. v. Advanced Envtl. Tech. Corp., 602 F.3d 204, 229 (3d Cir.2010), and Niagara Mohawk Power Corp. v. Chevron U.S.A., Inc., 596 F.3d 112, 128 (2d Cir.2010).
While Solutia’s holding is significant, the decision provides an important reminder of the importance of foresight in the outcome of a claim. Let me explain.
Solutia & Pharmacia had entered into a Partial Consent Decree (PCD) in August 2003. The PCD referenced two areas of contamination, a PCB site and the “Anniston Lead Site.” Solutia and Pharmacia reserved their rights in the PCD to seek contribution from parties who could be proven to be liable for the Anniston Lead Site.
In 2005 EPA undermined Solutia & Pharmacia’s reserved contribution rights. It entered into settlements with a number of parties that provided contribution protection for lead-related cleanup costs. By motion, Solutia & Pharmacia protested EPA’s action. The trial court agreed and offered to suspend their obligations under the PCD because of EPA’s breach. By either inaction or conscious decision, Solution & Pharmacia declined the offer.
In 2006, EPA and Solutia & Pharmacia entered into a “Stipulation Clarifying the Partial Consent Decree.” Under the Stipulation, Solutia & Pharmacia agreed to clean up certain “zones” around Anniston, labeled as A, B, C, and D, which were contaminated with lead and not just PCBs. The Stipulation provided that “it shall not be considered an admission of liability and is not admissible in evidence against the Defendants in any judicial or administrative proceeding other than a proceeding by the United States.”
Solutia & Pharmacia argued that because lead contamination was excluded from the PCD, it had a Section 107 claim for its lead-related cleanup costs. Had the case turned just on the PCD, Solutia & Pharmacia would have been in the same position as Texas Instruments in Agere Sys., Inc. v. Advanced Envtl. Tech. Corp.—even though it signed one consent decree for which it was limited to a contribution action, costs it incurred unrelated to that consent decree could be pursued under Section 107(a).
The court of appeals, however, agreed with the district court that the Stipulation obligated Solutia & Pharmacia to clean up areas where PCBs were commingled with hazardous substances disposed of the defendants. Hence the PCD, which was “clarified” by the Stipulation, embraced costs associated with more than remediation of PCBs limiting Solution & Pharmacia to a contribution claim for those costs.
But what of the prohibition on admissibility of the Stipulation into evidence in any judicial proceeding that did not involve the United States? The prohibition is not self-executing; the Stipulation was admitted in the district court and relied on heavily. Solutia & Pharmacia apparently decided to wait until its reply brief to argue nonadmissibility. That was too late. Because admissibility of the Stipulation was not contested in Solutia & Pharmacia’s opening brief, the argument was waived, the court of appeals held.
The defendants in the action had been awarded summary judgment in the trial court because they had contribution protection from lead-related cleanup costs. However, Solutia & Pharmacia had spent $14 million in cleanup costs in areas that were not covered by the PCD. It filed a motion to alter or amend the judgment because the defendants had not sought a summary judgment with respect to these costs. The argument was rejected in the trial court because it had not been raised before entry of the summary judgment.
The court of appeals affirmed this exercise of the trial court’s discretion because the defendants’ motion for summary judgment, in fact, had sought dismissal of all of Solutia & Pharmacia’s Section 107 claims, and Solutia & Pharmacia had never argued prior to the grant of summary judgment that they “voluntarily incurred costs unrelated to the Consent Decree.”
The burden is always on counsel to make and preserve arguments. This is as much a lesson from Solutia as its holding on the Section 107/113 issues.
Posted on June 7, 2012
Significant consequences may result from the upcoming remedial priority ranking of approximately 12,000 contaminated sites by the New Jersey Department of Environmental Protection (NJDEP). In mid-May NJDEP initiated its formal communications with parties responsible for contaminated sites by sending data forms that identified the information that NJDEP will use to compute the remedial priority rankings of most contaminated sites. After about a 90 day review and comment period, NJDEP will rank all of the sites on a scale from 1 to 5, with “1” being the “lowest risk potential” and “5” being the “highest risk potential.” Within about sixty days of receipt of the data form, each recipient will have to register with the NJDEP to preserve its right to submit comments. Only the Licensed Site Remediation Professional (LSRP) for the site, required to be retained by responsible parties by May 7, 2012, may submit the actual comments on the data form. NJDEP intends to publish site rankings in the Fall and to update the rankings quarterly commencing in 2014, as more data becomes available for each site during the course of remediation.
NJDEP originally planned to publish draft site rankings and submit the rankings for comment. However, it decided to issue these draft forms instead, explaining that it wanted to focus its efforts on giving parties the opportunity to make sure that it had up-to-date site remediation information before it calculated the site ranking.
NJDEP’s ranking will be based on:
• risk to the public and the environment;
• length of time the site has been undergoing remediation;
• economic impact; and
• other factors deemed relevant.
I. Why Is NJDEP Ranking Sites, and How Will Sites Be Affected by the Ranking?
Besides a long overdue statutory obligation to rank contaminated sites, NJDEP wants to insure that the sites with the highest potential risk are being remediated. Although nothing is certain, NJDEP likely will not take any action, even if a site is highly ranked, so long as:
• the site is undergoing active remediation;
• no enforcement actions have been commenced; and
• an LSRP has been retained.
However, if the remediation is not proceeding in compliance with these criteria, a high ranking may cause NJDEP to place the site under its “Direct Oversight,” and “Direct Oversight” is not a place that most responsible parties want to be. (See Section III. below) It is also true that a highly ranked site, even if not placed under NJDEP “Direct Oversight,” is more likely to receive public scrutiny and potential adverse publicity than is a lower ranked site. NJDEP, the United States Environmental Protection Agency (USEPA) and legislators constantly receive requests from environmental groups and others to take remedial action or investigate the progress of a remediation. Undoubtedly, a site with a high ranking is a target for future attention, especially because NJDEP will be posting the rankings on its website.
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NJDEP Site Ranking Letter & Draft Data Forms Require Attention.pdf (30.02 kb)
Posted on April 11, 2012
OSHA recently announced its final rule final rule revising the Hazard Communication Standard (HCS). Originally promulgated in 1983, the HCS is based on workers' "right to know" about the hazards they face in the workplace. The intent of the revised HCS is to clarify the information provided to workers, based on an employee's "right to understand" workplace hazards. Click to view OSHA's press release, "US Department of Labor's OSHA revises Hazard Communication Standard: Regulation protects workers from dangerous chemicals, helps American businesses compete worldwide."
The revised HCS reflects the United Nations' Globally Harmonized System of Classification and Labeling of Chemicals (GHCS), which was negotiated by a variety of stakeholders around the world. Because American workers may use chemicals made abroad (and workers abroad may use US-produced chemicals), a consistent labeling standard around the world will enhance worker safety by making labels easier for everyone to understand.
The revised HCS makes three primary changes from the current standard:
Chemical producers and importers still bear the responsibility for classifying hazards presented by chemicals. The revised HCS provides detailed criteria for classifying the type and severity of hazard presented. The intent of the new information on hazard class and severity category is to efficiently provide guidance on the appropriate response to exposure.
The new rule requires a standardized label design that includes the use of pictograms, shown on the Hazard Communication Standard Pictogram Quick Card, which depict the type of hazard presented. Labels are also required to include a "signal word" ("danger" for more severe hazards and "warning" for less severe hazards) and a precautionary statement suggesting safety measures. A sample Hazard Communication Standard Label is available on the OSHA website.
Safety Data Sheets
OSHA will now require a standardized 16-section format for Safety Data Sheets (SDSs), formerly known as Material Safety Data Sheets or MSDSs. This is expected to enhance ease of use, especially in an emergency, by ensuring that key information (for example, spill response procedures) can be quickly found within the document. The new SDS format is shown on the OSHA website.
Chemical producers and importers are required to implement the revised label and SDS formats in 2015. As the GHSC labels are phased in around the world, American workers may start to receive labels and SDSs in the new format before the labeling rule goes into effect in the US. Therefore, to ensure that employees understand the new labels, OSHA requires US employers to train employees on the new label elements and SDS format by December 1, 2013.
Posted on March 30, 2012
It’s long been posited that as courts become more familiar with environmental remediation cases, they will be less likely to defer to a regulator’s overstated claims of environmental harm or assertions of environmental liability. Instead, courts will require proof rather than conclusory evidence masquerading as a fact. A recent case in New Jersey, where the state law akin to CERCLA is the Spill Compensation and Control Act (“Spill Act”), may be the harbinger of similar decisions elsewhere.
In New Jersey Department of Environmental Protection v. Dimant, 418 N.J.Super. 530, 14 A.3d 780 (App.Div. 2011), the intermediate appellate court reviewed a trial court decision on liability for remediation of a 365 acre site contaminated predominantly with perchloroethylene (PCE), a cleaning solvent and degreaser. The site included residences, dry cleaners, and a former gas station site, with two federal Superfund sites nearby. The NJDEP had observed a pipe dripping PCE years earlier at a defendant’s property, and it contended that the defendant was strictly liable for the cost of remediating the 365 acres even if the hazardous substance discharge was de minimis. Instead, the trial court ruled that it is not enough to show a discharge, and that damages from the discharge must also be shown. In other words, there must be a “nexus” between the contamination being remedied and the actual discharge. The appellate court agreed, opining that a plaintiff seeking to prevail must “demonstrate that the defendant had some connection to the damages caused by the PCE contamination, or had added to any contamination already caused by past operation.”
Both this decision and that below are examples of a court going back to basics. Causation cannot be presumed. Discharges must be tied to damages. The failure to prove a nexus to the damages sought will not be ignored in a rush to judgment or under the guise of facilitating cleanups. Prove the case or watch out! But the New Jersey Supreme Court has granted certification on the strict liability issue, and so we will soon see how far that pendulum has swung.
Posted on March 2, 2012
Attorneys, environmental professionals and regulators understand the importance of the Integrated Risk Information System, known as IRIS. In rule-making, permitting, or remediation, the IRIS provides the EPA’s assessment of the health effects possibly resulting from exposure to chemicals in the environment. Whether trying to determine the hazard index, reference dose, cancer slope factor, or other critical toxicological end-point, the IRIS assessment of a specific chemical constitutes an important first step. Currently, the EPA has completed risk assessments of approximately 550 chemicals in the IRIS, and reports that another 55 are on-going.
But there have been numerous, long standing and wide-ranging criticisms of the IRIS process. For example, the National Academy of Sciences criticized the EPA’s IRIS assessment for formaldehyde because it failed to explain its criteria for: identifying epidemiologic and experimental evidence, assessing the weight of the evidence, and characterizing uncertainty and variability. The NAS noted that these criticisms applied with equal force to other IRIS chemical assessments as well.
More recently, in December, 2011, the U.S. Government Accountability Office issued a report to a House subcommittee crediting EPA for making some improvements in the process since earlier criticisms by the GAO in 2008, but noting recurring and new issues remain. The GAO previously noted the IRIS data base faced a serious risk of becoming obsolete because EPA could not keep pace with the pace of needed assessments. Even now, the GAO reported, the IRIS continues to suffer from problems with timeliness and productivity and “issues of clarity and transparency.” The GAO called on EPA to develop a better system to apprise stakeholders of the status of IRIS assessments. As an example, the GAO suggested a minimum of a two year notice of intent to assess a specific chemical, coupled with annual Federal Register reports on the status of on-going and proposed assessments.
To improve the credibility of the risk assessments, the GAO recommended the agency heed the recommendations of the National Academies. The National Academies proposed improvements such as standardized approaches to evaluate and describe study strengths and weaknesses and the weight of the evidence. Additionally, to restore scientific and technical credibility, the National Academies suggested the agency should involve independent expertise like the EPA’s Board of Scientific Counselors.
The GAO reports EPA has been receptive to its constructive criticisms and suggestions. But the GAO and the trade press observe it is unclear how the EPA will actually implement the various suggestions from the GAO and the regulated community.
Posted on December 16, 2011
The U.S. Environmental Protection Agency (EPA) published on August 16, 2011, the final Toxic Substances Control Act (TSCA) Chemical Data Reporting (CDR) Rule, previously referred to as the Inventory Update Reporting (IUR) Modifications Rule. 76 Fed. Reg. 50816. The rule authorizes EPA to collect and disclose information on the manufacturing, processing, and use of commercial chemical substances and mixtures listed on the TSCA Inventory. The CDR Rule also sets the upcoming submission period from February 1, 2012, to June 30, 2012, and will include submission of chemical production information from 2010 and chemical production, processing, and use information from 2011.
The rule is significant for three reasons.
First, the rule’s impact is enormous. Thousands of businesses are affected and include, among others, chemical substance manufacturers and importers, chemical substance users and processors that may manufacture a byproduct chemical substance, utilities, paper manufacturing, primary metal manufacturing, and semiconductor and other electronic component manufacturing.
Second, this is not your grandmother’s rule. EPA is requiring electronic reporting of CDR information, making the compilation, analysis, and release of these data more efficient, more immediate, and definitely more difficult. Chemical detractors, competitors, and the plaintiffs’ bar will have more rapid and easier access to comprehensive chemical production and use information.
Third, failed reporting consequences are harsh. CDR/IUR reporting infractions have been a target rich enforcement area for EPA for years. Omitted chemicals and/or facilities are subject to steep fines that rack up quickly. Criminal sanctions apply to submitters making “knowing and willful” false confidentiality claims.
Smart businesses see this rule for what it is -- a TSCA compliance obligation and an invitation to competitive and reputational disaster if mishandled. Read the rule, understand EPA’s objectives, and start now to prepare for the June 30, 2012, deadline. More information is available here and here.