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:

Hazard Classification
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.

Chemical Labels
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. 

EFFECTIVE DATE
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.

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.

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.

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.  

Dioxins, a class of chemicals whose most notorious denizen is 2,3,7,8-terachlorodibenzodioxin, a/k/a TCDD, have been of public concern since the 1970's, but their pathway to regulatory consensus has been a series of twists and turns, potholes and dead ends ever since.  Once branded the most potent animal carcinogen ever tested, its human carcinogenicity remains controversial today.  On August 29, 2011, following swiftly on the heels of a Science Advisory Board (SAB) review critical of several aspects of USEPA’s May, 2010 reanalysis of key issues related to dioxin toxicity, USEPA announced  that it would delay the cancer risk portion of its final Integrated Risk Information System (IRIS) assessment and move only to a final non-cancer assessment by the end of January, 2012.  The USEPA reanalysis was in response to a 2006 critique by the National Academy of Sciences (NAS).

TCDD gained notoriety in the 1970s as a contaminant in Agent Orange, the defoliant of choice used during the Vietnam War between 1962 and 1971.  It is a chemical that is not commercially produced; rather it is the inadvertent by-product of numerous processes, including the manufacture of some chemicals, pulp and paper, and most combustion processes, including the burning of household waste.  Because of the ubiquity of the sources from which dioxins are produced, the public may be exposed through eating beef, dairy products, pork or fish, or by living near municipal waste incineration. 

USEPA's first risk assessment of dioxins was issued in 1984; seven years later it began a reassessment in a process that is ongoing.  USEPA's 1994 draft reassessment went through SAB review in 1995, which resulted in a revised reassessment in 2000, a second SAB review in 2000-2001, a second revised draft reassessment in 2003, a NAS review in 2006, a USEPA response to NAS' comments in 2010, and the August 26, 2011 SAB review of USEPA's response to the NAS report.  The beat goes on.

Dioxin levels in the environment, mostly in soil, sediments and biota, have been declining regularly since the early seventies as pollution control efforts have ratcheted down inadvertent production and emissions.  USEPA's reassessment impacts mostly whether and to what extent a site requires clean-up.  A significantly lowered USEPA cleanup target for dioxin in soils raises the specter of reopening hundreds of sites that were remediated under current guidance to a 1 part per billion target for residential soils and a 5-20 ppb target for non-residential soils.  USEPA estimates that 104 CERCLA sites may need to be re-evaluated if it adopts a substantially lowered target.  Even without a cancer risk assessment, USEPA's announcement that it would move forward with its non-cancer risk is likely to result in final guidance that sets a cleanup target for dioxin in residential soil at 72 parts per trillion, a 92.8% reduction from the current target, and a commensurate lowering for non-residential soils to .95 ppb. 

USEPA's decision to split the cancer and non-cancer assessments likely pleased no one, including USEPA Administrator Lisa Jackson, who stated in 2009 that the Agency would complete the assessment by December 2010.  Environmentalists have pushed hard on USEPA for years and are likely not pleased that the cancer analysis has been again derailed by scientific critique.  Many in industry have resisted lowered clean up levels for years, echoing many of the criticisms of USEPA's cancer risk analysis by the NAS and SAB.  SAB's 84 page report issued on August 26, 2011 generally lauded USEPA's efforts in its May, 2010 report responding to the 2006 NAS Report. 

 
Nonetheless, SAB provided additional recommendations "to further enhance the transparency, clarity, and scientific integrity" of the Report.  Two critical elements of TCDD assessment were singled out as deficiencies by SAB: "(1) nonlinear dose-response for TCDD carcinogenicity, and (2) uncertainty analysis of TCDD toxicity."  With everything else going on within and outside USEPA in the legislative, political and regulatory arena, it will be interesting to see if USEPA can or will meet its self-imposed deadline of end of January 2012 for the non-cancer risk assessment; surely the cancer assessment is not now likely to proceed with much haste.

For more information, please contact the author, Michael Rodburg.

In the wake of Fukushima's nuclear emergency, Germany has decided to end its use of nuclear energy. Germany announced on May 30 that it plans to shut down all of the country’s nuclear power plants by 2022. This decision to close the source of over 25% of its electric power has major economic implications. Why did the Fukushima incident cause Germany to reverse the decision that it made only last September to extend plant licenses an additional 8 to 14 years?  In light of its history of few natural disasters and a sound nuclear plant safety record, Germany’s response to the Fukushima incident is surprising and confounding.  Whatever the motivation of the German government, the salient question is whether this planned phase-out is even feasible.

Germany certainly is turning its back on the prayer of that famed nuclear plant worker, Homer Simpson: "And Lord, we are especially thankful for nuclear power, the cleanest, safest energy source there is. Except for solar, which is just a pipe dream." Currently, nuclear energy provides the United States with over 20% of its power and provides France with over 75% of its energy needs. Nuclear energy has been both praised as a successful alternative to fossil-fuel energy and condemned for its riskiness and generation of radioactive waste. Many policy makers and some environmental organizations tout the benefit of nuclear energy in reducing our carbon dioxide emissions.

Germany, however, has already taken the first steps to oust nuclear from its energy mix by shutting down seven of the older plants. It plans to boost the use of renewable energy, accelerate the expansion of the “smart” electricity grid, and make buildings more energy efficient. Bloomberg estimates that Germany will spend €10 billion to expand its electricity grid to avoid stunting economic growth. Boosting renewable energy won't be much easier.  German nuclear power plants currently pay a tax to help subsidize renewable energy sources like hydro and wind power. Without the nuclear power plants, the German government must find the funds elsewhere. It will likely cost the government €235 million to replace this loss of revenue in the next three months alone.

The closing of Germany’s nuclear power plants complicates its efforts to reduce its carbon dioxide emissions by 40% by 2020. Assuming that Germany does not increase its fossil-fuel energy production, one can predict the rest of this story: To avoid looming energy shortages and economic instability, Germany will need to buckle down and develop new-and-improved environment-friendly energy sources. If successful, these efforts will pave the way for a worldwide boom in renewable energy development. But it is also possible that Germany will return to pre-Fukushima nuclear energy production — that or purchase nuclear energy generated in France. In the meantime, with Germany's solar manufacturing already up 7.6%, Homer Simpson (with the rest of the world anxiously waiting) will continue to eat his sprinkled donuts from the comfort of his nuclear power plant job, waiting to see if his “pipe dream” is real.

Bold move, Germany. Now pass the donuts.

In his July 8, 2010 ACOEL blog entry, Fournier “Boots” Gale of this firm reported on the then-most recent court decision dealing with whether and how a plaintiff could recover, under CERCLA, costs it incurred for a cleanup performed under a consent decree or administrative settlement. One of the more intriguing developments for CERCLA practitioners has been the tension between and radical changes to cost recovery or contribution claims under 107 and 113 of CERCLA. Boots reported on the July 2, 2010 decision by a federal judge here in Alabama to grant complete summary judgment to defendants, finding that a party compelled to incur such costs can only proceed under Section 113, and not 107. Because the defendants in that case had also entered into an administrative settlement with EPA for the same site, thus obtaining Section 113 contribution protection, all of plaintiffs’ claims were dismissed. That case is still on appeal to the 11th Circuit. The issue decided by the Alabama federal court--whether compelled costs were recoverable under Section 107, 113, or both—had been left unanswered by the United States Supreme Court in United States v. Atlantic Research Corp., 551 U.S. 128 (2007). Courts have been struggling with this issue ever since.

The latest opinion on this issue is from the 8th Circuit, in Morrison Enterprises, LLC v. Dravo Corp., 2011 WL 1237526 (8th Circuit, April 5, 2011). The 8th Circuit was the federal circuit court whose decision was affirmed in the Atlantic Research case, so the result in this case is not surprising. Noting the question unanswered by the United States Supreme Court in Atlantic Research, the Morrison Court, as did the federal court in Alabama, concluded that Section 113 was the appellants’ exclusive remedy, confirming the summary judgment granted by the district court below on the Section 107 claim. One of the Morrison appellants argued to the district court that one of the contaminants it cleaned up was totally unrelated to its operations and, thus, the costs it incurred related to that contaminant were “voluntary” and thus recoverable under Section 107. Interestingly, the plaintiffs in the Alabama case made the same argument. Both the Alabama and 8th Circuit Courts rejected the argument because all of the work was performed under and pursuant to a consent decree, which was broad enough to encompass the costs for cleaning up the contaminant sought to be carved out as voluntary. In effect, even if one wishes to argue later that some costs incurred were for a contaminant for which one had no responsibility, if the costs incurred are pursuant to that consent decree, or administrative settlement, then the costs are not incurred voluntarily and a Section 107 claim is still barred. In a final blow to the cost recovery efforts in this case, the appellant attempted to amend its complaint to assert a Section 113 claim after summary judgment had been entered on its 107 claim, but the district court denied it as untimely (and the Morrison court affirmed on this issue, too).

Anyone with substantial experience representing clients before regulatory agencies has likely encountered the frustrating situation where a staff person holds your client to a standard not found either in statute or regulation, but rather in “unwritten policy” of the agency. For most clients, additional review of such actions by agency staff is either not worth the time and money, or are subsumed in a variety of other issues.

Recently, the Maine Supreme Judicial Court had the opportunity to review the legality of certain actions of the Maine Department of Environmental Protection that were based not in Maine law or regulation, but rather upon “unwritten agency customs and practices”. Despite the Court’s normal deference to a state agency’s interpretation of a statute, in the case of Tenants Harbor General Store, LLC v. Department of Environmental Protection,2011 ME 6, 10 A. 3d 722, the court reversed a lower court judgment for the DEP, and ruled in favor of a small business owner.

The case involved the question of whether the installation of new underground gasoline storage tanks at a convenience store must be undertaken pursuant to new regulations that impose additional restrictions on placement in relation to proximity to public and private water supplies, or whether the tanks would be “grandfathered” and thus not subject to the new regulations. When Tenants Harbor General Store, LLC, which purchased the convenience store with gasoline pumps in question in 2007, removed the old tanks in 2008 and sought to install new tanks in the same location, the DEP refused to treat the proposed installation of new tanks as “replacement of an existing facility”; staff instead insisted that this was a new installation subject to new restrictions. The LLC sought judicial review, and the DEP won the first round in Superior Court.

The DEP argued that the prior owner had signed a document notifying the Department that she was abandoning the facility, and that neither the prior owner nor the LLC provided the Department with notice in writing of the intention to replace the removed tanks. However, as noted by the Maine Supreme Court, “the Department does not, however, identify any applicable statute or rule that required a registrant to provide notice of the intent to replace an existing facility.” Moreover, “none of the Department’s forms indicated any requirement that a registrant provide written notice of the intent to replace a facility that was being removed.”

Interestingly, the Department argued in court that “the LLC could have also have learned of the Department’s practice of requiring of written notice by seeking advice from an attorney”; this proposition was rejected by the Supreme Court, which stated that “neither an applicant nor an advocate would have a basis in law to determine that notice was required. Statutes and regulations, not unwritten agency customs and practices, must inform registrants and their attorneys of what is required to register a facility.” (emphasis in original). Thus, the Supreme Court concluded that the Department’s position “was contrary to the statutory and regulatory law”and, therefore, the Court vacated the lower court’s judgment, and remanded with instructions that the Department accept the LLC’s registration of the tanks to replace the grandfathered tanks.

This decision is the first one in Maine to attack the common approach of regulators to act on unwritten agency customs and practices. The Maine Supreme Court’s decision and logic are certainly applicable to similar situations in other jurisdictions, as well as at the federal level, indeed anywhere that regulators act outside of the confines of properly written laws and regulations.

On February 2, 2011, the U.S. Environmental Protection Agency (“EPA”) issued an “Order Denying Petition for Objection to Permit” in In re Anadarko Petroleum Corp., Frederick Compressor Station, a decision that should finally pave the way for Anadarko Petroleum Corporation (“Anadarko”) to continue to operate its Frederick Compressor Station in Colorado under a minor source operating permit. The EPA’s Order is the latest in a contentious and lengthy struggle that began when the Colorado air permitting agency (“CDPHE”) renewed the Title V operating permit for the Frederick Compressor Station on January 1, 2007. Four years, three challenges by an environmental group (WildEarth Guardians), and two EPA objections later, Anadarko appears to have jumped over all the hurdles.

The main issue before the EPA was whether CDPHE should have aggregated the emissions from the Frederick Compressor Station and various oil and gas wells and other pollutant emitting activities in the Wattenburg Field and treated them all as a single “source” for permitting purposes. Although oil and natural gas facilities are typically regulated independently as “minor sources,” this is not the first time a regulatory agency has aggregated interrelated oil and natural gas facilities into a “major source” to require more rigorous permitting of these sources than would otherwise be required if they were treated individually.

Under the Prevention of Significant Deterioration (“PSD”) program, for example, a “major stationary source” is a “stationary source” that emits or has the potential to emit a certain quantity of pollutants. 42 U.S.C. §§ 7479(1), 7602(j). In turn, a “stationary source” is any building, structure, facility, or installation which emits or may emit a regulated pollutant. 40 C.F.R. § 51.166(b)(5). The federal regulations define “building, structure, facility, or installation” as all of the pollutant-emitting activities which: (1) belong to the same industrial grouping; (2) are located on one or more contiguous or adjacent properties; and (3) are under the control of the same person. Id. § 51.166(b)(6). From a legal perspective, the regulatory agencies must determine whether the oil and natural gas facilities meet the three factors listed above.

On January 12, 2007, the Acting Assistant Administrator of the EPA, William Wehrum, issued a memorandum entitled Source Determinations for Oil and Gas Industries, which indicated that proximity was the most informative factor in making source determinations for the oil and natural gas industries, suggesting that sites separated by more than a short distance (such as ¼ mile) are not “contiguous or adjacent” – and should generally not be treated as a single source. However, on September 22, 2009, Assistant Administrator Gina McCarthy issued a memorandum entitled Withdrawal of Source Determinations for Oil and Gas Industries. The McCarthy memorandum withdrew the Wehrum memorandum and specifically de-emphasized proximity as the determining factor in these determinations.

With regard to the Frederick Compressor Station, WildEarth Guardians twice petitioned the EPA to object to the permit renewal. Both times, the EPA objected and required the CDPHE to provide additional support for its permitting decision. On July 14, 2010, the CDPHE submitted a third and lengthy argument in favor of renewing the Title V permit for the compressor station. The environmental group subsequently petitioned the EPA to object for a third time. Finally, in the February 2, 2011 Order (set down more than four years after the initial Title V renewal was issued), the EPA denied the environmental group’s petition. The EPA conducted a thorough analysis of previous statements and determinations involving aggregation and determined that the CDPHE had properly determined the Frederick Compressor Station was a single source for purposes of PSD and Title V permitting. The EPA’s Order made two findings of particular interest relating to the issue: (1) despite the de-emphasis on proximity under the McCarthy memorandum, the CDPHE properly used distance as an important factor in the contiguous/adjacent analysis, when it was not “the determining factor” in its source determination; and (2) decisions regarding support facilities, while instructive in the aggregation analysis, are really significant only to determining whether two facilities should be treated as belonging to the same SIC code – and there is no reason to analyze them when the two facilities share the same SIC code.

In 2009, the United States District Court for the Eastern District of Wisconsin rendered a widely reported and discussed decision in Appleton Papers Inc. v. George A. Whiting Paper Co., No. 2:08-cv-16-WCG (E.D. Wis. Dec. 16, 2009) (Appleton I) that many remember as being unique. This is because rather than considering the usual so-called “equitable factors” to determine proportionate financial responsibility in a CERCLA contribution action such as waste-in volume or relative contaminant toxicity, the District Court focused entirely on a single marker of relative culpability i.e., Appleton Paper’s knowledge that their actions would cause environmental harm.

In February of 2011, the District Court issued an equally intriguing opinion in Appleton Papers Inc., v. Whiting Paper Co., No. 08-C-16, 41 ELR 2011 (E.D. Wis. Feb. 28, 2011) (Appleton II). Relying in large measure on the District Court’s 2009 decision, multiple defendants argued that the response costs already contributed to cleanup effort should be borne by NCR Corp. and Appleton Papers Inc. (collectively “the Appleton Plaintiffs”). All of the Defendant’s arguments highlighted the same equitable factor that barred the Appleton Plaintiffs from obtaining contribution it, e.g, knowledge that a generated waste might cause environmental harm. The District Court agreed, and determined that the Appleton Plaintiffs were liable to the Defendants for response cost of remediating four of the five operable units along the Lower Fox River. However, the Appleton Plaintiffs were determined not to liable for costs associated with Operable Unit No. One (“OU1”) because the OU1 defendants were unable to prove that the Appleton Plaintiffs contributed to the contamination of OU1 (OU1 is located upstream of the Appleton Plaintiffs’ facility) or that the Appleton Plaintiffs were arranges under CERCLA §107).

These cases warrant practitioners’ review as they clearly express the notion that contribution liability should rest upon satisfaction of the ultimate objective of the CERCLA liability scheme i.e., that the polluter pays the costs of resolving the pollution it causes. This objective should never be far from mind, as the fact based focus of inquiry utilized by the District Court in these cases may well be the undoing of practitioner’s efforts to rely upon supposed technical and legal attributes of relative responsibility. Instead, the focus should be directed to the essential inquiry at the root of the CERCLA legislative cost recovery scheme e.g., the polluter who causes pollution to occur should pay for its cleanup.

There is probably no reason for you to have heard about this case – except that its possibly the largest judgment in the history of mankind! On February 28, 2011, an Ecuadorian Court granted a judgment against Chevron for over $19 billion dollars for environmental damages to the Amazon rainforest in Ecuador allegedly caused by oil and gas operations of Texaco Petroleum Company (TexPet) between 1964 and 1992. Chevron merged with TexPet's parent, Texaco, Inc., in 2001.

One of the more fascinating aspects of the judgment is that one-half of it, approximately $8.5 billion, is a punitive damage award that the Court gave Chevron the option of completely avoiding by saying it is sorry, i.e. by issuing a public apology within 15 days – an apology that was not issued and is likely never forthcoming.

U.S. District Judge (S.D.N.Y) Lewis Kaplan called this "an extraordinary case." Judge Kaplan said this in a March 7, 2011, order preliminarily enjoining the Ecuadorian plaintiffs and their lawyers from enforcing the judgment. Chevron contends that the judgment was the product of fraud and a corrupt Ecuadorian judicial system. Chevron has video footage in which a U.S. lawyer for the Plaintiffs admits he is going to confront the judge to "scare" and "intimidate" him – stating that it's "dirty" and something you would never do in the U.S., but adding unfortunately this is how things are done in Ecuador. Incredibly, the Plaintiffs' lawyers participated in the shooting of a documentary, "Crude: The Real Price of Oil," in which numerous apparently incriminating statements were made. Chevron subpoenaed the film "outtakes" and obtained this footage.

Of course, the case has a long way to go, with appeals by both sides in Ecuador, and a Chevron RICO case against the Plaintiffs and their lawyers in the United States.  In the end, this judgment may yet set another record – the world's largest unenforceable judgment.

I ran across perfluorinated chemicals (PFCs) as a site contaminant of concern for the first time last year when EPA required further assessment for PFCs at a site that was about to be closed out with no further action. I wanted to learn more about them and thought you might too, if this was a new acronym for you as well. PFCs have been used in a wide range of products, including consumer goods like Teflon, Scotchgard and Gore-Tex. PFCs consist of only carbon and fluoride. They are often referred to as “emerging contaminants” by EPA officials (from the National Exposure Research Laboratory and Office of Superfund Remediation and Technology Innovation) and others. Two of the most common PFCs are PFOS (perfluorooctane sulfonate) and PFOA (perfluorooctanoic acid, also known as C8). PFOS is no longer manufactured in the United States and PFOA is the subject of EPA’s 2010/2015 PFOA Environmental Stewardship Program, under which the phase-out of PFOA manufacturing by eight major companies is targeted for 2015.

PFCs have garnered world-wide attention over the last few years because of their prevalence and persistence. According to an expert I consulted, in the last two years there have been more than twenty papers on PFCs published in Environmental Toxicology and Chemistry, the journal of the Society of Environmental Toxicology and Chemistry. One environmental watchdog group suggests PFCs are “destined to supplant DDT, PCBs, dioxin and other chemicals as the most notorious, global chemical contaminants ever produced.” 

While not on the Hazardous Substance List, EPA has been actively dealing with PFCs since 2000, as described in the December 30, 2009 TSCA Action Plan for PFCs. There, EPA reported that while PFCs are found world-wide in the environment, wildlife and humans, significant adverse human health effects have yet to be found, though there is evidence of adverse effects in wildlife and laboratory animals. EPA is concerned about possible future human health effects. Further regulatory action under TSCA is expected in 2012. 

Earlier in 2009, the EPA Office of Water issued Provisional Health Advisories for PFOA and PFOS. EPA’s Office of Solid Waste and Emergency Response then developed toxicity values, which can be used as the basis for cleanup levels and risk-based screening levels in water and other media. As a result, sites where no hazardous substances had been found, or where known hazardous substances were remediated, may now need to be re-evaluated for PFOA and PFOS. Pending or completed property transfers may also be affected. Three states (New Jersey, Minnesota and North Carolina) have addressed levels of PFOS/PFOA in drinking water. 

Given the high level of interest in PFCs in the scientific community and the evolving regulation of PFCs, is it time to say PFCs have arrived as an environmental contaminant, though they may still be an emerging issue for environmental lawyers? More importantly, it remains to be seen how wide an impact the growing knowledge and increasing regulation of PFCs will have, at what cost, and where this should rank among priorities for federal and state regulation.

CERCLA liability under section 107 is often characterized as strict, joint and several unmitigated by considerations of causation, fault or fairness. Contribution is different, however. Congress, in section 113(f)(1), specifically authorized the courts to allocate costs “using such equitable factors as the court determines are appropriate.” Illustrative of this fundamental difference is the fight over who shall pay what for the massive PCB cleanup of the Lower Fox River.

NCR is incurring the bulk of the costs based on discharges of PCBs incident to the manufacture of carbonless paper at a facility on the River. It sued numerous paper mills along the River based on their discharges of PCB containing wastewater incident to the recycling of trim and waste carbonless paper. In late December 2009, Judge Griesbach of the Eastern District of Wisconsin dismissed NCR’s suit for contribution against the paper mills based on NCR's knowledge of the content and risks associated with PCB-containing carbonless paper as manufacturer/developer of the product compared to the recycling paper mills.

Framed thus — in old fashioned terms about knowledge of dangers and avoidance of risk—it was no contest. NCR was denied contribution because of its knowledge, learned gradually over time, about the toxic nature of PCBs as against those who merely, and without access to NCR’s superior knowledge of the product, processed it for recycling. The Court’s analysis, it said, “is governed by traditional principles of equity, such as the relative fault of the parties, any contracts between the parties bearing on the allocation of cleanup costs, and the so called ‘Gore factors.’” The lengthy recitation of the largely undisputed facts was nothing less than a moral indictment of NCR’s actions and reactions as the knowledge about PCB toxicity and its threat to the environment came to be documented and disseminated; in short, nothing less than a fault-based conclusion.

The flip side of this case came down in February 2011. Judge Griesbach decided that the paper mills, which had incurred expenses related to various EPA and Wisconsin DNR orders and settlements, monitoring and investigation, were entitled to contribution from NCR for those portions of the River where both recycling and manufacturing PCB contamination occurred. This time around the Court was satisfied that its singular use of NCR’s “fault” as the sole determinant to deny NCR contribution in 2009 was likewise sufficient to grant the paper mills a right of contribution against NCR. In other words, fault or culpability can become the overriding factor and permit the court to eschew consideration of any other equitable factors, including Gore factors. One sees in the Court’s emphasis on charging the financial cost on those “responsible” for creating the hazardous conditions a tone and direction quite at variance with the rather automatic analysis of liability under section 107. Hence, although approximately half of the PCBs originated with the paper mills and not NCR’s manufacturing, the Court, on culpability grounds, was prepared to impose the entire cost on NCR exclusive only of amounts reimbursed to the defendants by insurance.

A few months ago, a significant anniversary passed without much fanfare: the 30th anniversary of the passage of CERCLA. Interestingly, 30 years has another meaning today in the Superfund world as many of the CERCLA sites have passed through the active cleanup phase and into the long-term operation and maintenance phase. When practitioners began working with the Superfund statute in the early days, the question of when would a Superfund cleanup “end” was considered. Many of us thought that 30 years of monitoring at a site after completion of the active remediation stage was a reasonable expectation. This expectation, while not expressly stated in CERCLA or the National Contingency Plan, was based on the approach used in RCRA closures which generally require 30 years of post-closure monitoring.

But 30 years of working with the Superfund statute has made it clear that 30 years is not a meaningful benchmark for long-term O&M, at least not to EPA. The critical documents in the Superfund process, the Records of Decision, the Consent Decrees and the EPA Guidance documents usually do not specify when long-term operation and maintenance may cease. As a result, because groundwater contamination at many Superfund sites has proven to be so difficult to remediate to drinking water or some other agreed upon standards, many PRP Groups are faced with the possibility that their Superfund site may require perpetual monitoring. In addition, since the Consent Decrees require a five year review process by EPA for all active sites, the possibility of enhanced monitoring or additional remediation always looms on the horizon.
The uncertainties in knowing when a Superfund site will “end” creates many challenges for performing parties and their counsel. Among those difficulties:

• Continual disclosure on company financials and SEC filings;
• Time and expense of keeping PRP Groups functioning over many years and paying for government internal and contracted oversight costs;
• Lack of certainty or predictability in budgeting long-term costs for Superfund liabilities; and
• Loss of institutional memory and familiarity at sites where, over time, companies and their divisions are sold and counsel, consultants and EPA personnel move on and/or retire.
   

These risks and costs, of course, are spared for de minimis parties and other PRPs who structure their settlements as cash-outs either to EPA or to other PRPs. For those performing parties left behind, however, the ability to determine a reasonable end point to the commitment they entered into years, if not decades earlier, often remains a largely unresolved and perhaps undeterminable question under present regulation and practice.

Many of us are working in PRP Groups where active remediation has been completed yet the groundwater remains substantially above the Performance Standards. In many of these sites, the groundwater plume is controlled and presents no risk to human and other environmental receptors yet reasonable predictions about when the monitoring program and the Superfund “machine” can be turned off remains a mystery. With the 30th anniversary of Superfund now passed, it is time for more discussion and coordination between EPA and the PRP community about how and when Superfund sites, especially those with long-term groundwater monitoring requirements, may “end.”

On August 24, 2010, the Connecticut Department of Environmental Protection (DEP) proposed new regulations on the reporting of releases. The intent of the proposed regulations is to clarify when and how certain types of releases (spills) must be reported to the DEP.

Connecticut General Statutes Section 22a-450 requires that any spill or discharge of "oil or petroleum or chemical liquids or solid, liquid or gaseous products, or hazardous wastes which poses a potential threat to human health or the environment, shall immediately [be] report[ed]." However, the very broad language of, and the absence of specificity in, section 22a-450 has left some struggling to determine what events should not be reported. While there have been previous attempts to promulgate regulations on spill reporting, none have been adopted.

The draft regulations provide release reporting criteria, including a list of the threshold quantities and types of releases that should be reported. First, the draft regulations define "reportable materials" to mean "any chemical liquid, solid, liquid or gaseous products, including but not limited to hazardous substances, hazardous waste, waste oil, used oil, petroleum constituents, asbestos, radioactive material, pesticide, prohibited pesticide, restricted use pesticide, or polychlorinated biphenyls." Further, under the draft regulations, reporting obligations are triggered (1) when the amount of reportable material released is equal to or greater than ten pounds; (2) when the quantity of reportable material is unknown, but is likely to be equal to or greater than 10 pounds; (3) for any release of certain specified materials (including friable asbestos, certain pesticides, PCBs, chlorinated solvents, or certain radioactive materials), regardless of the amount of the reported material; and (4) for reportable materials released in certain locations (including releases in public water supply watershed land, aquifer protection areas, watercourses or wetlands, or storm, sanitary, or combined sewers and releases from underground storage tanks), regardless of the amount of the reported material. Imminent hazards, imminent threats of a release, observable releases from abandoned containers, and surface soil stains also trigger reporting obligations. Finally, the proposed regulations list the information that must be included in a report and the deadlines for reporting (within one hour of a spill).

The draft regulations contain exceptions for certain releases of known reportable materials contained and removed within two hours (it is unclear, however, how this two hour exception comports with the requirement to report a spill within one hour) and for certain releases of food products and untreated domestic sewage. The draft regulations also contain exemptions for certain air emissions, water discharges, restricted use pesticide applications subject to other regulations, and various incidental releases.

We all know that the bona fide prospective purchaser (BFPP) provision provides a defense to CERCLA liability for contaminated sites and allows a knowing purchase of contaminated property. It encourages brownfields and voluntary cleanup programs across the country.

Judicial interpretations of the BFPP defense are scarce. In October 2010, a federal district court in South Carolina issued its opinion which was a nasty turn of events for BFPP’s. (Ashley II of Charleston, LLC v. PCS Nitrogen, Inc. (“Ashley II”), Case No. 2:05-cv-02782-MBS). The case was for recovery of cleanup costs associated with a former fertilizer manufacturing plant in Charleston, South Carolina.

The court decided that Ashley was not a BFPP, as it claimed, and was responsible for five percent of the clean-up costs based on the following facts: (1) Ashley had torn down some structures in 2008, which allowed rainwater to contact cracked sumps containing hazardous substances. As a result, disposal of hazardous substances had occurred after Ashley took possession of the property; (2) Ashley was “affiliated” with other PRPs because Ashley had indemnified them and, more significantly, attempted “to discourage EPA from recovering response costs covered by the indemnification”; and (3) Ashley had not exercised appropriate care because it failed to address recognized environmental conditions (RECs) that were identified in the environmental site assessment as well as other potential site hazards.

The lesson here is that Purchasers should consider the effect of indemnity provisions and any interactions they may have with government agencies regarding other PRPs. In addition, because “disposal” may be defined very broadly, purchasers should thoroughly evaluate construction, demolition, and other site activities to determine if such activities could cause a release of hazardous substances. Finally, it is critical that all RECs be addressed, beginning no later than the time the purchaser acquires the property and continuing for the duration of its ownership.

In cases of first and second impression, federal district courts in South Carolina and California have now ruled on the bona fide prospective purchase (“BFPP”) defense following its enactment in 2002 and EPA’s subsequent “all appropriate inquiries” (“AAI”) implementing regulations in 2006. In Ashley II of Charleston, L.L.C. v. PCS Nitrogen, Inc., Judge Seymour of the District of South Carolina undertook an exhaustive 55-page examination of the facts surrounding the purchase by Ashley II of several parcels from various owners. In the more succinct decision of 3000 E. Imperial, LLC, v. Robertshaw Controls Co., et al., Judge Anderson of the Central District of California addressed the divisibility of harm in connection with a purchaser’s cost recovery action against the seller under CERCLA §107(a) and also addressed the plaintiff’s BFPP status.

Ashley II

In a lengthy discussion of the history of the site, the Court examined the involvement of each of the prior owners as well as the actions of Ashley II in determining whether the harm was divisible. Ultimately, the Court determined that the harm was not divisible; however, the Court did construct a basis for allocating liability. Of particular note was the Court’s extensive analysis of the bona fide prospective purchaser status of Ashley II; but also of interest were the Court’s holdings on the issue of contractual indemnifications and release agreements.

One thing that the Court failed to give any attention to was the Consent Agreement entered into between the State of South Carolina and Ashley II. This document bears some resemblance to the State’s Brownfield non-responsible party contracts. This document attempted to establish Ashley II as a non-responsible party and afforded it contribution protection.  

Ultimately, the Court set forth an allocation of the response costs by percentage attributable to each party, with Ashley II bearing its allocation along with those for which it had indemnified.

3000 E. Imperial

The California District Court’s decision came on the heels of the Ashley II decision. Obviously, the history of the 3000 E. Imperial site was less complex. There, the Court discussed at some length the testimony of two competing experts on when the USTs in questions were likely to have resulted in a release. The Court then examined divisibility of harm in conjunction with the Burlington decision and considering the elements of § 433A of the Restatement (Second) of Torts. Ultimately, the Court concluded that the defendant’s claim for divisibility was insufficient. The Court then turned to the defendant’s counterclaim for § 107 cost recovery as a PRP. Obviously, the plaintiff had claimed that it was not a PRP by virtue of its status as a BFPP. Following a brief examination of the plaintiff’s actions following closing and a fleeting reference to “appropriate care,” the Court concluded that the plaintiff did take “reasonable steps” to prevent further releases and was entitled to BFPP status. 

Previously, I discussed EPA’s efforts to “muddle through” on climate change in the absence of comprehensive legislation. This week, I think it’s the Clean Water Act’s turn. If there were any regulatory situation which required some serious muddling through at the moment, interpretation of the Supreme Court’s Rapanos decision almost is a match for the current climate mess. As most of my readers know, Rapanos was a 4-1-4 decision which left EPA, the Corps, developers and environmentalists fairly equally perplexed

Most stakeholders have assumed that Kennedy’s concurring opinion, requiring a “significant nexus” between wetlands and traditional navigable waters before those wetlands are subject to jurisdiction under the CWA, is the law of the land at this point. That is the approach adopted in the Rapanos Guidance issued by EPA and the Corps in 2007. 

A recent decision by the 4^th Circuit Court of Appeals, in Precon Development Corporation v. Army Corps of Engineers, illustrates just how muddled post-Rapanos interpretation has become. The decision in Precon – reversing the District Court – found that the Corps had not built a record sufficient to establish that the wetlands which Precon sought to develop were jurisdictional under the CWA. 

There were two technical issues in Precon. Precon lost what one might have thought would be the more significant issue – the Corps’ finding that, although only 4.8 acres were really at issue in this case, and Precon’s entire development includes 166 acres of wetlands, 448 acres of “similarly situated” wetlands would be examined for a substantial nexus to navigable waters. Precon ultimately won, however, because the Court concluded that the Corps’ record did not contain enough physical evidence to support its determination that a significant nexus exists between the 448 wetland acres and the downstream navigable water. 

The Court’s conclusion raised two issues of broad concern to stakeholders. First, the Court granted little deference to EPA’s conclusion on the significant nexus issue. The Corps argued that its conclusion that there was a significant nexus between the site wetlands and the downstream navigable waters was a factual conclusion. However, the Court concluded that the significant nexus determination was not factual. The Court stated that:

The question is instead whether the Corps’ findings were adequate to support the ultimate conclusion that a significant nexus exists. This legal determination is essentially now a matter of statutory construction, as Justice Kennedy established that a “significant nexus” is a statutory requirement for bringing wetlands adjacent to non-navigable tributaries within the CWA’s definition of “navigable waters.”

Well, this is certainly a nice question of administrative law. The significant nexus issue may now be the ultimate legal question. Nonetheless, I would guess that most wetlands scientists and hydrologists would say that this is largely a factual question. Even if the agency is applying its judgment to answer that question, it’s the type of judgment that requires technical expertise – expertise to which courts have traditionally deferred.

The second of the Court’s important pronouncements was that it would not give the EPA/Corps Rapanos Guidance deference under Chevron. Why not?

Because – although it could – the Corps has not adopted an interpretation of “navigable waters” that incorporates this concept through notice-and-comment rulemaking, but instead has interpreted the term only in a non-binding guidance document.”

Isn’t it timely, then, that EPA and the Corps sent a draft new Rapanos guidance to OMB in December, and GOP leadership in the House is proposing language in a continuing resolution that would preclude EPA from using any funds “to implement, administer, or enforce a change to a rule or guidance document pertaining to the definition of waters under the jurisdiction of the Federal Water Pollution Control Act (33 U.S.C. 1251).” Perhaps EPA and the Corps should take half a loaf. Why not agree to shelve the guidance and instead proceed with notice-and-comment rulemaking to clarify Rapanos? At least then the Courts might grant EPA and the Corps more deference in implementation.  It’s already been almost five years since Rapanos was issued. EPA and the Corps can hardly argue that it’s necessary to go the guidance route because they don’t have the time to proceed through the full regulatory process.

Enough muddling through. Take the time to do it right and issue regulations. Then, maybe the muddle will abate. (Can one abate a muddle?)

The Los Alamos Study Group (the “Study Group”) is presently challenging the United States Department of Energy (“DOE”) and the National Nuclear Security Administration’s (“NNSA”) efforts to construct the new Chemistry and Metallurgy Research Replacement Nuclear Facility (“CMRR-NF”) at Los Alamos, New Mexico.

The Study Group’s complaint, in federal district court in Albuquerque, asserts that the project has changed so dramatically that an eight-year old environmental impact statement (“EIS”) does not begin to adequately analyze the environmental impacts of the present iteration of the CMRR-NF, and that defendants’ offer to conduct a supplemental environmental impact statement (“SEIS”) is merely a fait accompli to continue with the detailed planning and initial construction of the massive venture.

In considering the original Nuclear Facility, the federal defendants issued an EIS in 2003, and followed it with a Record of Decision (“ROD”) in 2004. The 2003 EIS addressed a Nuclear Facility to be built no deeper than 50-75 feet below grade. In the years that followed, however, seismic conditions underlying Los Alamos became better understood, and the federal defendants were faced with a project that arguably did not take into account those conditions. There was no discussion in the 2003 EIS of deeper excavation and no reference to a layer of volcanic ash known to underlie the site that would greatly complicate plans to construct at a greater depth, or meet then-known seismic safety criteria. The ROD stated that: “[B]ased on the CMRR EIS, the environmental impacts of the preferred alternative” (built 50 feet or less deep) would be “minimal” and “small.”
 

Moreover, since 2004, the project has seen further fundamental changes. The original budget for the Nuclear Facility was estimated at $350-$500 million. In 2003, the estimate, as reported to Congress, was $600 million. The EIS stated that construction would be completed in 2009; now, it is estimated to conclude in 2022, at a cost approaching $6 billion.

In 2003, NNSA reported that the Nuclear Facility would have 60,000 square feet of Hazard Category 2 space within 200,000 square feet of gross area. The CMRR-NF has now changed from a structure to be built to a depth of 50 feet, to a structure requiring an excavation to 125 feet, with the bottom 50-60 feet of the hole filled with concrete. As a result, the total volume of excavation for the CMRR-NF has increased from about 167,000 cubic yards in 2003, to 579,000-704,000 cubic yards in 2010, a three-to-four fold increase in construction equipment, spoilage, and disposal needs. The volume of soil now remaining to be excavated has increased six-fold.

Additionally, changes in the basic concept of the Nuclear Facility have expanded to include the introduction of the so-called “hotel concept” that would accommodate various unknown future missions, but would require large open floor areas and significant increases in concrete and steel. The concrete now needed is 371,000 cubic yards, up from 3,194 cubic yards. This is more concrete than was used for the Big-I Interchange in Albuquerque, or for the Elephant Butte Dam in southern New Mexico. The steel needed is now 18,539 tons, up from 242 tons. That is roughly the equivalent of the Eifel Tower. In short, the Nuclear Facility dwarfs the Manhattan Project and would be the largest construction project in the history of the State of New Mexico.

The Los Alamos Study Group case is one of first impression, as it is the first to contest the federal defendants’ decision to perform a SEIS as opposed to a new EIS altogether. Unlike a SEIS, an EIS must consider all available alternatives, including refurbishment of existing, under-utilized buildings at Los Alamos, and any other alternative besides the construction of the present iteration of the $6 billion CMRR-NF. Many of those alternatives, rejected in the original 2004 Record of Decision, may now be viable given the significant cost increases in the present version of the Nuclear Facility.

The federal defendants have filed a motion to dismiss based on prudential mootness and other grounds. All pleadings and other filings in the case may be obtained on the Study Group’s website.

As we all know by now, in Burlington Northern and Sante Fe Railway Co. v. United States, decided in May, 2009 (BNSF I), the Supreme Court surprised us yet again by interpreting CERCLA differently than the lower courts and Superfund practitioners had come to understand the statute to mean. The Court held (a) that “arranger” liability under Section 107(a)(3) of CERCLA is triggered only if there is an intent to dispose of hazardous substances, and (b) that joint and several liability under CERCLA may be avoided if there is a reasonable basis for apportioning harm among the “covered persons,” affirming divisibility on facts that most practitioners would not have expected to prevent joint and several liability. Since then, the lower courts have been wrestling with the application of these rulings under CERCLA. Meanwhile, however, the state courts have begun to address these issues under state law counterparts to CERCLA. Recently, the Supreme Court of Montana did just that. State of Montana v. BNSF Railway Co. (BNSF II)

Montana, like many other states, has its own version of CERCLA, called the Comprehensive Environmental Cleanup and Responsibility Act (“CECRA”). CECRA has its own categories of liable parties, including a broad class of “arrangers,” but unlike CERCLA, explicitly provides for joint and several liability. These differences result in greater potential exposure for defendants in hazardous waste cases.
 

BNSF II involved three adjoining properties north of Kalispell, MT, all of which had been listed as state Superfund sites. One of the sites, called the Reliance site, was a former crude oil refinery. BNSF transported petroleum products into and out of the Reliance site, using railroad cars that sometimes leaked badly. The trial court found that “[r]efinery workers occasionally ‘got a soaking’ when unloading crude oil” from BNSF railcars and that “when shipments of crude oil arrived and the holding tanks were full, the crude oil was dumped onto the ground in pools on BNSF property in the area.” The trial court found that BNSF “had been involved in dumping petroleum products onto the surface of the earth.”

The Montana Department of Environmental Quality (DEQ) sued seven parties, six of whom settled, with the result that a Final Unified Abatement Order was entered, holding BNSF jointly and severally liable for the Reliance site, as an “arranger” under CECRA, even though the trial court made no finding that BNSF intended to release a hazardous substance at the site.

Arranger Liability

Like CERCLA, CECRA contains no definition of an “arranger.” Instead, Section 75-10-715(1)(c) of CECRA includes among the list of liable parties “a person who generated, possessed, or was otherwise responsible for a hazardous or deleterious substance and who, by contract, agreement, or otherwise, arranged for disposal or treatment of the substance or arranged with a transporter for transport of the substance for disposal or treatment,” language that differs somewhat from Section 107(a)(3) of CERCLA.

The trial court held BNSF liable as an “arranger” under CECRA because of its “involvement” with Reliance in the dumping of petroleum on the Reliance site. The trial court relied on the Ninth Circuit decision in BNSF I, adopting a broad form of “arranger” liability, and refused to reconsider its ruling when the Ninth Circuit was reversed by the Supreme Court.

The Montana Supreme Court began its review of the trial court decision by noting that Section 114(a) of CERCLA provides that nothing prevents a State from imposing additional liability beyond those imposed by CERCLA. The Court then held that “an entity need not specifically ‘intend’ to dispose of a hazardous substance for imposition of ‘arranger’ liability ” It was enough that BNSF “possessed or was otherwise responsible for the materials it shipped” and that “[a] necessary and foreseeable consequence of shipping the material was unloading the material.” Since BNSF employees moved full tank cars of crude oil to the Reliance site so Reliance employees could dump the crude oil on the ground, “BNSF participated in the unloading process which resulted in the release of the materials it possessed.” In holding that the trial court did not err in holding BNSF liable as an “arranger,” the Court set a low bar for “arranger” liability under CECRA.

Apportionment

Unlike CERCLA, which is silent as to whether or not “covered persons” are jointly and severally liable under the statute, CECRA provides, in relevant part, that “notwithstanding any other provision of law,*** the following persons are jointly and severally liable for a release or threatened release of a hazardous or deleterious substance***” .

Notwithstanding this statutory language, the trial court entered a pretrial order that once the state proved that BNSF is a liable party, “BNSF must come forward with evidence to show it was only responsible for a portion of the contamination at the site to avoid the possibility of joint and several liability for all the surface contamination.” When BNSF failed to make such a showing, the trial court held BNSF jointly and severally liable. Because BNSF had failed to prove the factual basis for apportionment, the Supreme Court declined to rule on whether apportionment would ever be possible under the statutory language. Thus, BNSF II leaves unanswered the question of whether liability can ever be apportioned under a statute that explicitly provides for joint and several liability, no matter how distinct the harms may have been.

Conclusion

As the United States Supreme Court continues to read CERCLA narrowly, state statutes, like CECRA, may become more important in the development of hazardous waste law. BNSF II may very well represent the beginning of a trend.

Over the past three decades, EPA has issued more than 1,700 CERCLA UAOs to roughly 5,400 PRPs ordering the performance of response actions at CERCLA sites costing in aggregate in excess of $5 billion. Only a small handful of those orders, however, have ever been challenged in court, and vanishingly few have been subject to any independent third party review whatsoever.
 

Why is that? Well, as even EPA might agree, it is not because the Agency is infallible. No, the reason for EPA’s essentially unreviewed exercise of its UAO authority is the CERCLA statute itself, which (a) by operation of Section 113(h), precludes any challenge to a UAO order until the ordered response action has been completed (typically many years later at an average cost of $4 million dollars) and (b) by operation of Sections 106 and 107, subjects any PRP who elects to defy a UAO to treble punitive damages and additional penalties of $37,500 per day, which accumulate until EPA, at its sole discretion, brings an enforcement action.
 

In this regard, CERCLA is an outlier in administrative law. Though instances are common where federal statutes give agencies the power to issue administrative orders, virtually every other comparable scheme affords recipients of such orders either a prior hearing or the prompt opportunity for independent review after the order is issued. CERCLA, of course, provides neither.

So what justifies this unusual approach? It has been suggested on occasion that due process must be dispensed with because UAOs are needed to address emergency conditions. They can only be issued, after all, where an imminent and substantial endangerment to public health or the environment is shown. There are two problems with that rationale, however. First, the courts have largely upheld EPA’s position that “imminent and substantial endangerment” doesn’t really mean “imminent” or “substantial” – there really is no site involving a hazardous substance and a release (actual or threatened) that doesn’t meet the statutory criteria for UAO issuance. Second, as EPA has conceded in litigation, the fact is that EPA doesn’t issue UAOs in true emergencies; in those circumstances, it does the work itself and seeks to recover its costs later.

Okay, so even if true emergencies are not implicated, it’s still the case that EPA has a need to act quickly and that allowing pre- (or prompt post-) issuance review would unduly impede cleanup of hazardous sites, right? Well, as it turns out, that’s not true, either. Analysis of EPA’s CERCLIS database reveals an average 8-year lag-time between identification of a site and issuance of a UAO and a 4-year lag between remedy selection and UAO issuance. Obviously, there’s plenty of time in the system for a little due process.

So why haven’t past procedural due process challenges to this UAO scheme (and there have been a number of them) succeeded? The courts that have rejected those challenges have commonly concluded that the challenging PRPs couldn’t show a pre-hearing deprivation of property, as is required to trigger Fifth Amendment protections. Those courts reasoned that a PRP could simply refuse to comply with and wait for EPA to sue to enforce the UAO, and in that event would suffer no pre-hearing deprivation of property since penalties and damages could only be awarded following a court hearing.

Though the conclusion is facially appealing, its fallacy is demonstrated by the record of the most recent constitutional challenge brought by GE. There, following extensive discovery from EPA and expert testimony on both sides, GE was able to demonstrate empirically that a PRP that elected to defy a UAO would be immediately punished by the equity and capital markets, which would recognize the massive contingent liability such defiance would create and account for it by lowering the PRP’s stock value and increasing its cost of financing, with consequent impacts on its ability to bid for new projects or to hire additional employees, among other things. Indeed, although he took issue with GE’s assessment of the magnitude of the impact, even EPA’s economic expert agreed that defiance would occasion such harmful effects and that they would be significant. And the District Court agreed, as well, that defiance would not avoid a deprivation of property, though it ultimately ruled against GE on the basis that the burden to EPA of providing hearings outweighed the private party interests favoring such hearings.

On appeal the D.C. Circuit rejected the district court’s finding of a pre-hearing property deprivation, however, and ruled instead that such harmful impacts did not involve constitutionally protected property rights and so dismissed GE’s constitutional challenge on that predicate ground without reaching the District Court’s balancing analysis. The potential implications of that holding – which GE believes is inconsistent with Supreme Court precedent – extend well beyond CERCLA confines, and so GE has sought certiorari review.  The government’s response to GE’s petition is due February 4.

Stay tuned.

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

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

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

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

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

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

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

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

Are we ready to go nuclear again?

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

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

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

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

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

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

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

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

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

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

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

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

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

Regulatory Background

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

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

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

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

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

            Efforts to authorize PCBs in caulk: the 1994 NOPR

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

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

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

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

·        Marking in a prominent location;

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

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

·        24-hour notice to EPA of such exceedances;

·        Record-keeping.

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

            The 2010 ANPRM and Comments

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

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

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

Continued Regulatory Uncertainty: Working Out Own Answers

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The most recent Supreme Court examination of the validity of solid waste flow control ordinances under the dormant Commerce Clause occurred in United Haulers Ass’n v. Oneida-Herkimer Solid Waste Management Authority, 550 U.S. 330 (2007). In United Haulers, the Court held that flow control ordinances which favor a state-created solid waste authority, but treat in-state and out-of-state private entities the same, ‘do not “discriminate against interstate commerce” for purposes of the dormant Commerce Clause.’ Id. at 345. In such case, the validity of a nondiscriminatory ordinance with an incidental effect on interstate commerce is analyzed under balancing test set forth in Pike v. Bruce Church, Inc., 397 U.S. 137, 142, 90 S.Ct. 844, 25 L.Ed.2d 174 (1970). Id. at 346.   However, if the flow control ordinance favors a single private entity over other private entities, the holding in C & A Carbone, Inc. v. Clarkstown, 511 U.S. 383 (1994), controls. Id. at 341.   

United Haulers has been the linchpin for local governments to launch flow control ordinances. However, although the United Haulers decision upheld the validity of a flow control ordinance against a commerce clause challenge, the decision was based on an ordinance that was expressly authorized by the New York legislature and which required the disposal of solid waste at a landfill operated by a solid waste authority created by the New York legislature.   In United Haulers, the New York legislature enacted specific legislation which allowed Oneida and Herkimer Counties to “impose ‘appropriate and reasonable limitations on competition’ by, for instance, adopting ‘local laws requiring that all solid waste . . . be delivered to a specified solid waste management-resource recovery facility.’”   Id. at 335. Additionally, the flow control ordinance in United Haulers directed that all waste in Oneida and Herkimer Counties be disposed of at the Oneida-Herkimer Solid Waste Management Authority (“Oneida-Herkimer Authority”), which was created by the New York legislature and was therefore a political subdivision of the state. Id. at 335. As such, under United Haulers, it is clear that a local flow control ordinance authorized by state legislation and directing solid waste to a public waste authority created by state legislation does not violate the commerce clause if it satisfies the Pike balancing test. It is likewise clear that a flow control ordinance which directs all solid waste generated within the boundaries of a local government to be directed to a privately-owned facility is still controlled by the holding in C & A Carbone, Inc. v. Clarkstown and invalid. 511 U.S. at 391. However, the United Haulers decision does not specifically address the significance of the authorization for the flow control ordinance by the New York legislature. 

According to a 1995 EPA report to Congress, state legislatures in 35 states have expressly authorized the enactment of flow control ordinances by local governments. For those states in which flow control is not expressly authorized by the state legislature, it is unclear whether a flow control ordinance enacted by a subdivision of the state would withstand a commerce clause challenge. At the very least, the absence of state authorization for flow control measures may affect the analysis of certain elements under the Pike balancing test.  Additionally, in states in which the state legislature has not expressly authorized the enactment of flow control ordinances by local governments, a local flow control ordinance could be preempted by state solid waste laws and therefore invalid even if it does not violate the commerce clause; thus, leaving open the question of whether or not United Haulers has opened the door forever on local flow control.

At least one frontal challenge to local flow control is pending in S.C. In Sandlands, LLC, et al. vs. Horry County, et al., Case No. 4:09-cv-01363-TLW-TER (currently pending in United States District Court in the District of South Carolina), a landfill and affiliated hauling company are challenging a county’s ability to restrict the exportation of waste to out-of-county landfills on commerce clause and preemption claims. The plaintiffs are attempting to distinguish United Haulers as well as arguing that the ordinance is preempted by State law. The impacts of the ordinance are being felt on disposal facilities in the region as the State has implemented a regional planning approach for siting disposal facilities. While the defendants removed the commerce clause question to federal court, the federal court has certified and the State Supreme Court has accepted the preemption question.

Last week, in City of Pittsfield v. EPA, the First Circuit Court of Appeals affirmed denial of a petition by the City of Pittsfield seeking review of an NPDES permit issued by EPA. The case makes no new law and, by itself, is not particularly remarkable.  Cases on NPDES permit appeals have held for some time that a permittee appealing an NPDES permit must set forth in detail in its petition basically every conceivable claim or argument that they might want to assert. Pretty much no detail is too small. The City of Pittsfield failed to do this, instead relying on their prior comments on the draft permit. Not good enough, said the Court. 

For some reason, reading the decision brought to mind another recent appellate decision, General Electric v. Jackson, in which the D.C. Circuit laid to rest arguments that EPA’s unilateral order authority under § 106 of CERCLA is unconstitutional. As I noted in commenting on that decision, it too was unremarkable by itself and fully consistent with prior case law on the subject.

What do these two cases have in common? To me, they are evidence that, while the government can over-reach and does lose some cases, the deck remains stacked overwhelmingly in the government’s favor. The power of the government as regulator is awesome to behold. Looking at the GE case first, does anyone really deny that EPA’s § 106 order authority is extremely coercive? Looking at the Pittsfield case, doesn’t it seem odd that a party appealing a permit has to identify with particularity every single nit that they might want to pick with the permit? Even after the Supreme Court’s recent decisions tightening pleading standards, the pleading burden on a permit appellant remains much more substantial than on any other type of litigant.

Why should this be so? Why is it that the government doesn’t lose when it’s wrong, but only when it’s crazy wrong? 

Just askin’.

On July 2, 2010, the U.S. District Court for the Northern District of Alabama published a must read opinion regarding cost recovery claims under CERCLA.  See Solutia, Inc., et al. v. McWane, Inc., et al., Case No. 03-1345, Document No. 622 (N.D. Ala. July 2, 2010).The case was originally filed by plaintiffs in 2003 as a CERCLA cost recovery and contribution action against several industrial defendants located in Anniston, Alabama related to plaintiffs' cleanup of historic PCB contamination throughout the Anniston area. In June 2008, the Court had previously granted defendants' motion for summary judgment regarding plaintiffs' CERCLA Section 113 claims for contribution but had allowed plaintiffs to proceed with their CERCLA Section 107 cost recovery claims. However upon motion for reconsideration, the Court on July 2 issued a detailed opinion also dismissing with prejudice plaintiffs’ cost recovery claims under Section 107.

Of interest to CERCLA practitioners, the dismissal opinion provides a lengthy analysis, based on recent Circuit Court decisions, as to whether a plaintiff who seeks to recover costs of a cleanup performed pursuant to obligations under a consent decree or administrative settlement (aka “compelled” cleanup costs) can bring a claim under Section 107(a)(4)(B).  Notably, the U.S. Supreme Court did not decide the appropriate route for recovering “compelled” costs (under Section 107(a), 113(f), or both) in its most recent opinion addressing CERCLA Sections 107 and 113. United States v. Atlantic Research Corp., 551 U.S. 128 (2007). Nevertheless, the Northern District of Alabama agreed to reconsider defendants' motion to dismiss plaintiffs' Section 107 claims in light of Circuit Court decisions issued subsequent to Atlantic Research as well as new evidence.  Indeed, the Court agreed with the defendants' assessment that the majority of Circuit Court decisions decided after the Northern District’s previous denial of defendants’ motions for summary judgment have held that a party who incurred “compelled” cleanup has a viable Section 113 claim for contribution and not a Section 107 claim for cost recovery.

Ultimately the Court concluded that the recent Circuit Court decisions were correct in their assessment that Congress had intended for Section 113(f) to be the exclusive remedy to recover costs incurred pursuant to a judgment, consent decree, or settlement.  Because the Court agreed withdefendants' argument that plaintiffs’ costs related to its PCB cleanup were incurred by virtue of a prior consent decree, the plaintiffs only had a potential right to a Section 113 claim for contribution (which was previously dismissed) – not a Section 107 claim for recovery.

Again, the opinion is a helpful summary of evolving jurisprudence under CERCLA regarding Section 107 and Section 113 claims.  

Sometimes, the practice of environmental law just takes my breath away. A decision issued earlier last month in United States v. Washington DOT was about as stunning as it gets. Ruling on cross-motions for summary judgment, Judge Robert Bryan held that the Washington State Department of Transportation had “arranged” for the disposal of hazardous substances within the meaning of CERCLA by designing state highways with stormwater collection and drainage structures, where those drainage structures ultimately deposited stormwater containing hazardous substances into Commencement Bay -- now, a Superfund site -- in Tacoma, Washington.  

I’m sorry, but if that doesn’t make you sit up and take notice, then you’re just too jaded. Under this logic, isn’t everyone who constructs a parking lot potentially liable for the hazardous substances that run off in stormwater sheet flow? 

For those who aren’t aware, phosphorus, the stormwater contaminant du jour, is a listed hazardous substance under Superfund. Maybe EPA doesn’t need to bother with new stormwater regulatory programs. Instead, it can just issue notices of responsibility to everyone whose discharge of phosphorus has contributed to contamination of a river or lake.

The Court denied both parties’ motions for summary judgment regarding whether the discharges of contaminated stormwater were federally permitted releases. Since the Washington DOT had an NPDES permit, it argued that it was not liable under § 107(j) of CERCLA. However, as the Court noted, even if the DOT might otherwise have a defense, if any of the releases occurred before the permit issued – almost certain, except in the case of newer roads – or if any discharges violated the permit, then the Washington DOT would still be liable and would have the burden of establishing a divisibility defense. 

If one were a conspiracy theorist, one might wonder if EPA were using this case to gently encourage the regulated community to support its recent efforts to expand its stormwater regulatory program. Certainly, few members of the regulated community would rather defend Superfund litigation than comply with a stormwater permit.

You can’t make this stuff up.

No one doubts that EPA’s war on lead-based paint serves the cause of mitigating an established health threat. With children being particularly at risk, the regulations to date have focused on lead-based paint in older homes and other “child-occupied facilities.” On May 6, 2010, however, EPA gave notice of its intent to take the battle to an undefined set of commercial and public buildings. Can a full-scale assault on commercial facilities, which will involve a more complex set of regulatory variables and which will venture farther from the core health risk concerns, succeed in achieving a proper balance of competing factors?

EPA’s May 6, 2010 Advance Notice of Proposed Rulemaking announcing the next step in the lead-based paint campaign was published only days after the April 22, 2010 effective date of the controversial Renovation, Repair and Painting Rule (“RRP Rule”). That rule regulates renovation and repair activities disturbing lead-based paint in older homes and child-occupied facilities. The RRP Rule affects contractors, landlords and others who perform RRP work for compensation.

The RRP Rule includes provisions for the required certification (for a fee) of firms performing covered RRP work, the training and certification (at a significant cost) of “Certified Renovators” through EPA-accredited classes, the required use of detailed RRP work practices when performing covered activities, the retention of compliance records, and the verification of compliance with work practice obligations. Even though the RRP Rule has a relatively narrow focus - residences and other child-occupied facilities - its requirements have generated substantial controversy.

Because the RRP Rule applies to numerous trades and contractors, as well as to certain landlords and other persons, issues related to obtaining the required training, safe implementation of the work practice requirements, costs of compliance and the possibility of a $37,500 per day, per violation penalty are only now being confronted by the regulated community as well as the regulators. Small contractors may be forced out of business, impacting competition. Needed RRP work may not be performed due to cost. Lead-contaminated waste disposal will create new environmental/health problems partially offsetting the benefits of the RRP Rule. Suffice it to say, EPA has not yet solved the numerous problems and complexities of implementing even these regulations focused on older homes and child-occupied facilities.

With this background, and setting aside for the moment legal mandates, one can reasonably question whether EPA is prepared to set its sights on a significantly more complex regulatory challenge- the renovation and repair of an estimated two to three million commercial and public facilities constructed prior to 1980. The ANPR includes no proposed language. Rather, the public is invited to respond to over 100 detailed questions and data requests.

At this time, the scope of EPA’s assault on the renovation and repair of commercial and public buildings is unknown. No current limitations on covered “commercial” and “public” buildings exist and both exterior and interior renovation and repair work are included in the ANPR. Unresolved questions include: What renovation and repair work should be covered? What activities create the most risk? Should exposure pathways be broadened to include nearby properties? How should the substantial amount of lead-contaminated waste be handled to avoid creating a different health and environmental hazard?

This much is known. The regulatory variables associated with extending the war on lead-based paint to commercial and public buildings are more numerous and the targeted health risks have expanded. I suggest that there is a real possibility that the regulations could fail to appropriately balance the legitimate interests of contractors, building owners and the public with the known and perceived health risks. Let us hope that the regulated community weighs-in on these issues and that the EPA gives careful thought to this next step in its campaign against lead-based paint.

The public comment period for this proposal ends July 6, 2010.

The Environmental Protection Agency (EPA) last week announced new permit requirements for pesticide discharges and also issued a stronger standard for sulfur dioxide (SO2) emissions.  These new regulations come on top of other efforts by the EPA to control and limit pollutants and the notice earlier this year that EPA will enforce stricter standards for ground-level ozone. 

Pesticide Discharges

In response to the  April 2009 National Cotton Council v. EPA  decision wherein the court found that pesticide discharges to U.S. waters were pollutants, the EPA has proposed a new permit on pesticide use.  According to a release by the agency, the proposed permit “would require all operators to reduce pesticide discharges by using the lowest effective amount of pesticide, prevent leaks and spills, calibrate equipment and monitor for and report adverse incidents.”

The proposed permit covers the following pesticide uses:
- Mosquito and other flying insect pest control
- Aquatic weed and algae control
- Aquatic nuisance animal control
- Forest canopy pest control

Importantly, the proposed permit does not include earthbound applications to control pests on agricultural crops or forest floors.  However, the agency could decide to regulate these activities through  future rule-making.

The EPA estimates that the new regulations would affect approximately 35,000 pesticide applicators nationally.  The agency is currently soliciting public comment on the permit and plans to finalize it by December of this year.  The new permit requirements will take effect in April of 2011.

Sulfur Dioxide Standard

EPA has issued a new health standard for sulfur dioxide emissions. The new  rule changes the current 24-hour and annual standards to an hourly health standard of 75 parts per billion (ppb).  The existing SO2 standards were established in 1971 and included a 24-hour standard of 140 ppb and an annual average standard of 30 ppb.

Additionally, EPA is also changing the monitoring requirements for SO2, requiring that monitors be placed where SO2 emissions impact population at certain levels.  The new monitors must be operational by January 1, 2013.

Natural Resource Defense Council, Inc. v. County of Dickson, Tennessee, 2010 U.S. Dist. LEXIS 32423 (M.D. Tenn. Apr. 1, 2010).

A district court denied Defendants’ motion to dismiss an environmental group’s claims under the citizen suit provisions of RCRA to abate an alleged imminent and substantial endangerment to human health and the environment posed by trichloroethylene and perchloroethylene disposed at a landfill.  The state agency had issued an order addressing this issue, and so Defendants, among other defenses, asserted that the group’s claims should be dismissed pursuant to 42 U.S.C. § 6972(b)(2)(B)(iv) which bars citizen suits where a court order or administrative order has been issued.  According to the Court, "Administrator" is defined as the "Administrator of the Environmental Protection Agency," and thus the Court was not persuaded by Defendants' argument that Tennessee had stepped into the shoes of the EPA administrator for purposes of enforcing the federally-mandated hazardous waste program based on a memorandum of understanding (MOU) between the state and EPA.  According to the Court, the MOU referenced Subchapter III, while the provision governing "imminent hazards" is located in Subchapter IV.  Therefore, the MOU did not authorize the state to step into the shoes of the EPA administrator for purposes of bringing an action or issuing an order regarding an imminent hazard. That authority is retained by the EPA administrator.  The Court also found that despite Defendants’ assertions otherwise, the group had standing to sue, its claims were not moot, and the doctrines of abstention and primary jurisdiction did not warrant dismissal of the case.

Despite earlier expectations, it appears increasingly unlikely that the House and Senate will consider passage of legislation this year on the Chemical Facility Anti-Terrorism Standards (“CFATS”) program.[1] Under that program the Department of Homeland Security (“DHS”) adopted regulations at Title 6 Part 27 which list about 300 chemicals of interest, each with a screening threshold quantity. Facilities with a chemical of concern above the screening threshold quantity are required to complete a screening questionnaire for review by DHS. 

If the DHS determines that the facility presents a high level of security risk, it notifies the facility which must then prepare a security vulnerability analysis and file the analysis with DHS. This analysis must address each vulnerability that is identified, and it must satisfy security performance standards set forth in the regulations, most of which are phrased in very general terms. DHS may inspect such high risk facilities to assess their compliance with regulatory requirements, and it may issue orders assessing civil penalties which it can enforce through an adjudicatory hearing process.

The statutory provisions governing CFATS are due to expire on October 4, 2010, and Congress was expected to consider substantive revisions to the program and extend it for several years before its expiration in October. Two bills, H.R. 2868 and S. 2996, were expected to receive serious attention in crafting that legislation.

H.R. 2868 passed the House in November 2009 and is entitled the “Chemical and Water Security Act of 2009”. It would extend the program’s current requirements to facilities that treat drinking water or wastewater, with the requirements administered by the U.S. Environmental Protection Agency and state authorities rather than DHS. The House bill would also require high risk facilities to assess inherently safer technology (“IST”) alternatives (referred to in the bill as “methods to reduce the consequences of a terrorist attack”). In addition, the bill would provide for citizen petitions seeking DHS investigation of a chemical facility allegedly in violation of CFATS requirements.

The Obama Administration has advocated modifications to CFATS that are similar to the provisions of H.R. 2868, and Senator Lautenberg who chairs the Senate’s Environment and Public Works Committee has stated his intention of introducing a chemical security bill which is expected to be at least as stringent as the H.R. 2868. However, he has yet to introduce such a bill. 

S. 2996 has received the support of several industry sectors and is entitled “Continuing Chemical Facility Antiterrorism Security Act of 2010”. It would extend CFATS for another five years, leaving the current provisions essentially intact except for the addition of voluntary chemical security training and exercise programs. 

It now appears that the House and Senate will extend statutory authorization of the CFATS program for another year, with supplemental funding provided in the Homeland Security budget bill now under consideration. Of course, the recent oil spill in the Gulf of Mexico could engender renewed interest in the earlier adoption of an IST provision which has been the subject of the greatest discussion. Indeed, one Green Peace blog points to failure of the shut off valve on the oil rig where the Gulf of Mexico oil spill occurred as demonstrating the need for immediate adoption of such a provision. However, absent a major catastrophe on land or connected to a terrorist plot involving a chemical facility or refinery here in the United States, legislative action on proposed changes to the CFATS program is not expected to occur until after the fall elections.

Last week, EPA’s Office of Solid Waste and Emergency Response announced release of its Community Engagement Implementation Plan. Who could be against community engagement? It’s as American as apple pie. It’s environmental justice. It’s community input into decisions that affect the community. It’s transparency and open decision-making.

Call me a curmudgeon, but I’m against it. Study after study shows that, in terms of the actual risks posed by Superfund sites, we devote too many of our environmental protection dollars to Superfund sites, when we should be focusing on air and water. Why do we keep doing this? Because the community demands it. As Peter Sandman has noted, perceptions of risk are driven only partly by the actual hazard posed. To a significant degree, those perceptions are more driven by outrage over the situation. In some circumstances, what Sandman calls outrage management makes sense, but I’m skeptical that EPA’s community engagement initiative is really about outrage management.

In any case, here’s the public policy question of the day. Does it really make sense to spend scarce environmental protection resources, not to reduce risk, but to reduce outrage?

The U. S. District Court for the Eastern District of California has denied reconsideration of its pre-BNSF order finding defendants jointly and severally liable under CERCLA. U. S. v. Iron Mountain Mines. Defendants had argued that the Supreme Court in the BNSF case mandated the district courts to consider grounds for reasonable apportionment. They had earlier argued for apportionment before BNSF and then cited the Supreme Court’s decision as an intervening change of law that entitles it to reconsideration.

The court disagreed, finding that BNSF did not change the law, rather it simply reaffirmed existing law and applied it to a specific set of facts. It seems strange that the Supreme Court would grant cert in a case where the law is settled just to apply the facts. In fact, the working presumption in CERCLA litigation had been that joint and several liability is the rule and apportionment is rare, even though CERCLA doesn’t say that. Most practitioners saw BNSF as a game changer, reopening the possibility of a hard look given to reasonable bases for apportionment in mediated allocations and in court. But the District Court followed the lead of the Justice Department, which has consistently said BNSF marks no departure from standard CERCLA jurisprudence.

It sure would be great if the Supreme Court would provide some clarity in its environmental decisions. Few would think Rapanos helped much with our understanding of the Clean Water Act, and now we need to muddle through a certain lack of precision in representing clients in Superfund matters. While BNSF opens the window, it remains to be seen whether the opening is just a crack or will really let some fresh air in.

A number of us in the Pacific Northwest can remember the phone call that came in the spring of 1989 telling us to come to Alaska. There had been an oil spill, the caller said, and we had better get up there right away. We packed up and left, sometimes with just a couple of sets of clothes, and ended up staying for months, or years. We were lawyers, not scientists, and we could neither contain the spill nor predict its impacts. What we could do – or thought we could do – was assess blame and assign damages. That turned out to be harder than any of us imagined.

Nearly twenty years of litigation followed the Exxon Valdez spill, and there was not a single case, but many. By understanding some of the history of the Exxon Valdez cases, one can appreciate what the lawyers working on the Deepwater Horizon case have in front of them. At the same time, the many differences between the two spills suggest that history will not repeat itself. The legal response to the Deepwater Horizon case, like the cleanup response being carried out in the Gulf at this time, is likely to be far more complex, involve even more parties, and possibly even more time. By way of example:

• The federal Oil Pollution Act of 1990 ("OPA 90"), one of the principal laws likely to be invoked in response to the Deepwater Horizon, was enacted after (indeed, in response to) the Exxon Valdez. While the elements of the liability case against responsible parties under OPA 90 are similar to those asserted under the Clean Water Act in the Exxon case, OPA 90 allows plaintiffs to potentially recover a broader range of compensatory damages, including: damages to real or personal property; subsistence use; federal, state, and local tax revenues; lost profits and earning capacity; and the cost of providing additional public services resulting from the spill. In that sense, the law is more complex now than it was at the time of the Exxon Valdez spill, involves more parties and more and different potential claims. There is also very little case law decided under it;
• The causation issues in the Exxon Valdez case were far simpler than in the present spill. There was no question as to the cause of the 1989 spill into Prince William Sound – a tanker hit a reef. In the case of the Deepwater Horizon, on the other hand, press reports and briefings by BP point to a chain of events, each of which may have contributed to the explosion and to the still mounting damages;
• Unlike the Clean Water Act, OPA 90 expressly allows for contribution claims among responsible parties that were not available under the Clean Water Act. Therefore, the party that initially responds to the spill (BP) may have statutory claims that they choose to assert against other responsible parties at some future time;
• The Exxon case involved a single state (Alaska) and the federal government (and Alaska Native corporations). By comparison, several states have already become involved in the Deepwater Horizon spill (including Louisiana, Mississippi and Alabama), raising potential jurisdictional questions and possible conflicting claims among the governmental plaintiffs;
• In oil spill cases, one of the potentially largest claims the government can bring is for natural resource damages. In order to do so, however, the government has to establish a "baseline" of pre-spill conditions. This is much more difficult to do in some of the ports and commercial areas along the Gulf Coast that are already impacted by hydrocarbons, as opposed to the relatively pristine waters of Alaska's Prince William Sound.
   

II. The Exxon Valdez Litigation

Against this backdrop, it may be helpful to review the history of the litigation that began in March, 1989 with the grounding of the oil tanker Exxon Valdez on Bligh Reef in Prince William Sound, Alaska. Estimates of the quantity of oil spilled range from 10.8 million to 30 million gallons. More than 1,200 miles of coastline were contaminated, 250,000 birds were killed, and 330 civil lawsuits were filed.

• Criminal Prosecution

The state of Alaska criminally prosecuted the Exxon Valdez’s captain, Joe Hazelwood. The United States prosecuted Exxon for various environmental crimes, including criminal violations of the Clean Water Act, the Refuse Act, and the Migratory Bird Treaty Act. Exxon Corporation pled guilty to one count of violating the Migratory Bird Treaty Act, and Exxon Shipping pled guilty to one count each of violating the Clean Water Act, the Refuse Act, and the Migratory Bird Treaty Act. The corporations were jointly fined $25 million and were ordered to pay restitution of $100 million.

• Civil Litigation: The Natural Resource Damage Claims

The United States and the state of Alaska sued Exxon for natural resource damages. That litigation was settled by entry of a consent decree under which Exxon agreed to pay $900 million over a period of ten years. The money was used at the direction of the Oil Spill Trustee Council for species and habitat restoration and recovery. The consent decree contain a reopener provision that allowed the governments to make additional claims of up to $100 million for natural resource damages not known when the settlements were reached.

In 2006 the Department of Justice and the State of Alaska asserted a claim against Exxon under the reopener provision, seeking payment of $92 million clean up oil the governments contend remains in the environment from the 1989 spill. Exxon responded that the nearly 350 studies that have been conducted demonstrate that the spill has left no lingering damages in Prince William Sound, and that the governments’ demands do not satisfy the requirements of the settlement agreement. No case has yet been filed.

• The Private Party Claims

Most of the private civil lawsuits were consolidated before Judge H. Russell Holland in the United States District Court for the District of Alaska. The damages trial proceeded in phases: Phase I determined whether Exxon was liable for punitive damages, and held that it was. Phase II determined the amount of compensatory damages owed to the plaintiffs. Phase III determined the amount of punitive damages to award to the plaintiffs. Subsequent proceedings adjudicated the claims of members of the fifty classes of claimants in the consolidated class action lawsuit.
On August 11, 1994, following the second phase of the trial, the jury returned a verdict of compensatory damages against Exxon of nearly $287 million. On September 16, 1994, following the third phase of the trial, the jury returned a $5 billion punitive damages verdict against Exxon. Exxon appealed, marking the start of an additional fifteen years of litigation and three appeals to the Ninth Circuit and, ultimately, the Supreme Court.

In the first appeal, the Ninth Circuit remanded the punitive damage award to the district court to be reconsidered in light of intervening decisions by the United States Supreme Court addressing the constitutionality of punitive damage awards. In BMW v. Gore and Cooper Industries v. Leatherman Tools, the Supreme Court articulated factors a court must consider when reviewing a punitive damage award: the reprehensibility of the defendant’s conduct; the ration of the award to the harm inflicted on the plaintiff; and the difference between the award and civil and criminal penalties in comparable cases. The district court conducted an extensive analysis of those factors, and concluded the actual harm to plaintiffs was more than $500 million and a ratio of punitive damages to harm was 10 to 1, supporting the original $5 billion award. Nonetheless, the court reduced the punitive damages to $4 billion, to conform to what it viewed as the Ninth Circuit’s mandate. Exxon appealed.

While the second appeal was pending, the Supreme Court issued another punitive damages opinion, State Farm Mut. Auto Ins. Co. v. Campbell. State Farm instructed courts to weigh five specific considerations in calculating punitive damages, and “strongly indicated the proportion of punitive damages to harm could generally not exceed a ration of 9 to 1.” Those five factors are (1) whether the harm caused was physical as opposed to economic; (2) whether the conduct causing the plaintiff’s harm showed “indifference to or a reckless disregard of the health or safety of others;” (3) whether the “target of the conduct” was financially vulnerable; (4) whether the defendant’s conduct involved repeated actions as opposed to an isolated incident; and (5) whether the harm caused was the result of “intentional malice, trickery, or deceit, or mere accident.” The Ninth Circuit summarily remanded the second appeal of the punitive damage award to the district court for recalculation in light of State Farm. On remand, the district court again determined actual harm to be $513.1 million and increased the punitive damage award to $4.5 billion, a ratio of just under 9:1. Exxon appealed again, and this time, the plaintiffs cross-appealed, seeking reinstatement of the $5 billion award.

In the third appeal, Exxon argued that all of its settlement and other pre-judgment compensatory payments to the plaintiffs, which totaled approximately $493 million, had to be subtracted from the more than $500 million in actual harm before calculating the ratio of punitive damages to actual harm. As a result, Exxon argued, the measure of damages would be reduced to $20.3 million. Applying what it contended was the appropriate ratio, 1:1, Exxon argued that a punitive damage award should be capped at $25 million. This time, the Ninth Circuit accepted the District Court’s approximation of $500 million as the amount of actual harm, but in determining the appropriate ratio of punitive damages to actual damages, took into account the fact that while Exxon’s conduct (its “reckless decision to risk the livelihood of thousands by placing a relapsed alcoholic in command of a supertanker”) was particularly egregious and the economic damages significant, it was not intentional. And, as a mitigating factor, Exxon promptly took steps to ameliorate the harm. Thus, Exxon’s conduct, “though inexcusable,” warranted a ratio of 5:1 rather than 9:1, resulting in a punitive damage award of $2.5 billion dollars.

The parties then appealed to the United States Supreme Court. In 2008, the Supreme Court reversed the Ninth Circuit and limited the punitive damage claim to a 1:1 ratio, or roughly $507 million. However, the high court declined to decide whether Exxon was required to pay interest on the amount of the award, and sent the issue back to the Ninth Circuit. Two months later, the appeals court held that Exxon was required to pay the interest, dating back to 1996, roughly doubling the amount of the final award. The average award to the 33,000 claimants came to about $15,000 -- roughly 20% of the amount that was awarded by the jury in 1994.

III. What Happens Next

Press reports indicate that a number of economic damage cases have already been filed against BP, Halliburton and Transocean over the Deepwater Horizon spill, and there are almost certain to be many more, depending on the impact of the spill. The government has yet to file litigation, but it can be expected to do so, under a variety of federal laws including OPA, the Clean Water Act, the Refuse Act, and the Migratory Bird Treaty Act, among others. There will be a lengthy and expensive natural resource damage assessment that the defendants will be expected to pay for. There are potential insurance claims, potential shareholder claims, and possibly contractual and statutory contribution claims between the responsible parties, among others. And if the sum of these were not enough to challenge even the most battle-tested lawyers on all sides, there is the reputational and political overlay which can dominate the legal and scientific issues at play, including Congressional hearings. A spill the size of this one not only impacts BP and its partners, but the entire industry. It also will test the legal system and the brightest minds in it.

For more information regarding the legal impacts of the Gulf spill, please contact Brad Marten or any other member of Marten Law’s Energy, Climate Change or Waste Cleanup practices.

Summary

On May 4, 2010, EPA released its proposed rule to regulate disposal and management of coal combustion residuals (“CCRs”) from coal-fired power plants. The 563 page proposal presents for public comment two alternative approaches. In one approach, EPA would regulate CCRs as a new category of “special wastes” under Subtitle C of RCRA when they are destined for disposal in landfills or surface impoundments. Under the alternative approach, EPA would use Subtitle D of RCRA to set performance standards for disposal of CCRs in landfills and impoundments that would be enforced principally by States. Under both proposals, beneficially used CCRs would be exempt from hazardous waste regulation under RCRA. Neither proposal would have EPA regulate placement of CCRs in mines or non-minefill uses of CCRs at coal mine sites.

What are CCRs?

CCRs are residual materials that remain after combustion of coal to generate electric power. This material is also sometimes referred to as coal ash, coal combustion waste, or coal combustion byproducts. Large volumes of CCRs are generated by power plants in the United States. Some CCRs are beneficially used in other products or processes, some are returned to mines as reclamation material or for non-minefill uses and the rest is disposed at landfills.
 

How are CCRs Regulated Now?

In August 1993 and May 2000, EPA considered whether to regulate CCRs as a hazardous waste under Subtitle C of RCRA, and determined not to do so. Instead, it applied the Bevill Amendment exception (for mining activities) to CCRs and left open the possibility that States may regulate disposal of CCRs. The Office of Surface Mining in the United States Department of the Interior (“OSM”) has authority to regulate placement of CCRs in mines as part of coal mine reclamation.

Why is EPA Revisiting its Previous Determinations Not To Regulate CCRs Under RCRA, Subtitle C?

In December 2008, in Kingston, Tennessee, a retaining wall of a TVA surface impoundment used for disposal of CCRs breached, and CCRs saturated with water from the impoundment were released. The release prompted renewed scrutiny of CCR disposal practices and, in large part, prompted EPA’s decision to revisit previous determinations not to regulate CCRs. EPA’s re-evaluation of CCR disposal since the Kingston release has prompted substantial debate resulting in the delayed announcement of EPA’s May 4, 2010 proposal.

Two Options for Regulation.

In light of strongly held opposing views about regulation of CCRs and the EPA’s desire to avoid further delay in issuing a proposed rule, EPA’s proposal is in the somewhat unusual format of two alternative options. After a 90 day public comment, EPA will decide upon an approach to regulation.

Under the more stringent of the two options, EPA would reverse its previous Bevill Amendment determination, address CCRs as a “special wastes” under RCRA Subtitle C, and regulate the disposal of CCRs in landfills or surface impoundments. “Special wastes” would be a new waste category that would be subject to some, but not all, of Subtitle C requirements applicable to hazardous waste. The Subtitle C option would regulate CCRs from the point of generation to final disposal and would include regulation of siting, liners, run-on and run-off controls, ground water monitoring, fugitive dust controls, financial assurance, corrective action and closure. The Subtitle C approach is favored by environmental groups but opposed by electric power generators because it would significantly increase CCR disposal costs.

The less stringent alternative regulatory option proposed by EPA would leave the Agency’s previous Bevill determination in place so that CCRs would not be regulated under Subtitle C of RCRA. However, CCRs disposed of in surface impoundment or landfills would be subject to RCRA Subtitle D. This option would not require permits from EPA, and requirements would be enforced primarily by States rather than EPA.

Exclusions.

Certain uses and disposals of CCRs are not covered by EPA’s proposed rule making. First, EPA is not proposing to change the existing regulatory exemption from hazardous waste regulations for beneficially used CCRs. Examples of beneficial uses of CCRs may be road construction, agriculture, and building products. EPA is seeking comment on potential refinements for certain beneficial uses. Second, EPA is not proposing to address placement of CCRs in coal mines or non-minefill uses of CCRs at coal mines. Instead, OSM, in consultation with EPA, will consider recommendations of the National Research Council and take the lead in developing national standards for placement of CCRs at coal mines. Third, EPA has not proposed to revise its previous Bevill determination for CCRs generated by non-utilities.

Public Comment.

A 90 day public comment period will begin when the proposed rule is published in the Federal Register. Comments can be submitted to EPA, identified by docket ID No. EPA-HQ-RCRA-2009-0640.

It has always amused me how many people are involved with Brownfields work as compared to how few projects have been completed. It is tough to make the economics work on a Brownfield development in the best of times. Thanks to clean energy rules and incentives this may be changing.

Brownfields and clean energy have several synergies. Brownfields are often in industrial corridors, with great infrastructure and proximity to electrical grids. Biomass projects in particular need access to efficient transportation networks in order to move large volumes of material. Clean energy projects such as solar, wind and biomass plants work well with risk based remediation and institutional controls required for cost effective risk management at a Brownfields sites.

Add to these synergies a vast array of incentives, mandatory quotas and grants for clean energy and we just may have a path to economic viability for some Brownfields projects. EPA has a task force known as ER3 to help facilitate such projects. Keep your eye on a project in Charlotte, North Carolina known as ReVenture Park which seems destined to put wind energy, wastewater treatment and a biomass plant on a large, complex CERCLA/RCRA site.

In June last year insurance giant Zurich issued a report of the work of its Emerging Risks Group study begun in 2006. The report stated that the risks with the greatest potential to affect Zurich and its customers are those associated with nanotechnology.

Similarly, an alphabet soup of regulators—foreign and domestic—is wrestling with largely unknown and largely theoretical risks. The human health and environmental alarms have been sounded by numerous commentators, without yet meaningful, documented empirical observation or controlled studies of human health and safety issues or environmental concerns. Regulation in a factual vacuum is potentially counterproductive and can stifle one of the 21^st century’s most promising new technologies. But no one wants “another asbestos” or to have stood by silent in the spring while nanobots consume an ecosystem. This blog will skim the surface of an increasingly deeper and broader pond.

What is Nanotechnology?

Nanotechnology involves the manipulation of matter at the near atomic or nanometer scale--a nanometer is one billionth of a meter; a standard sheet of paper is 100,000 nanometers thick. Materials composed of or including devices and systems with components at the nanometer scale represent fundamentally new molecular organizations with highly different and potentially unpredictable properties and functions compared to their macromolecular cousins. The technology has found uses in a wide variety of commercial products including wound dressings, pregnancy tests, toothpastes, lubricants, paints, nonstick coatings, tennis racquets, air filters and many other products. In each of these products, the nano scale materials exhibit dramatically different characteristics than would be true of those materials at normal scale.  For example, gold is an excellent conductor of heat and electricity but simply reflects ordinary light. Properly structured gold nano particles absorb light and can actually convert light into heat (which, in turn, can be used for cutting purposes in thermal scalpels).  Nano sized particles of titanium dioxide provide UV protection while remaining transparent. Nano scale materials in thin films applied to eyeglasses, computer displays and cameras make them water repellant, anti-reflective or give them other useful physical characteristics.

Potential Health Issues

The primary human health concern for the extremely small size of nano materials is that they may be introduced into and affect the body in ways completely different than their bulkier macro cousins. See, e.g., Special Report, Nanotechnology: Benefits vs Toxic Risks, Functional Foods And Nutraceuticals (Feb. 2007) ("nanosized particles were found to traverse through lung tissue in unexpected ways, gaining access to blood and lymphatic systems"). 

The potential for different human health related characteristics such as enhanced adhesion, reactivity and absorption means that current methodologies for risk assessment simply are not applicable and safety data drawn from non-nano counterpart materials may be irrelevant.  See, Fischer Nanotechnology -- Scientific and Regulatory Challenges, 19 Villanova Envt. L. J. 315 (2008). For example, when inhaled, nano particles are deposited more efficiently and deeply into the respiratory tract than non-nano materials, and these nano materials may evade human body defense mechanisms that trap larger particles. In addition, nano materials themselves have sometimes been the subject of problematic animal studies. See Lynn, Size Matters: Regulating Nanotechnology 31 Harv. Envtl. L. Rev. 349 (2007).

Moreover, ordinary risk management tools may also simply “not work” in the presence of nano materials. For example, the use of facial masks designed for non-nano aerosols may not be effective for nano sized particles.

Nanotechnology concerns have been heightened by an article published in the European Respiratory Journal in which researchers reported that seven (7) young women suffered permanent lung damage following months of unprotected exposures to fumes and smoke containing nano particles in spray painting operations in China. The researchers concluded that the patients' illnesses appeared to be a "nanomaterial -- related disease.” While the results of this study have been questioned, the legitimacy of concerns with respect to high level environmental exposures to these materials remains. 

Regulatory Focus

An intense regulatory focus on developing an appropriate scientific basis for ensuring that nano materials do not present unreasonable human health concerns is underway. See e.g., Dept. of Health and Human Services, Approaches To Safe Nanotechnology - Managing The Health And Safety Concerns Associated With Engineered Nanomaterials (March 2009).  Giving further impetus to these concerns is the fact that there is a high concentration of nanotechnology applications in pharmaceutical, food and cosmetics applications, industry segments with direct and immediate human interactions. Every agency with jurisdiction over human and environmental health and safety has found or certainly will find reason to explore regulation. The USEPA has begun to issue rules about handling of and exposure to nano forms of alumina, silica and silver; the California Department of Toxic Substances is considering controls on carbon nanotubes. We can expect initiatives over time from the FDA and OSHA.

Insurance Company Reaction

For its part, the insurance industry has focused on product liability concerns. Insurance industry studies have expressed significant reservations about liability issues associated with nano materials. See Lloyd's of London Emerging Risks Team Report, Nanotechnology - Recent Developments, Risks and Opportunities (2007).  Indeed, one insurance carrier (Continental Western Insurance Group) has gone so far as to impose nano-technology exclusions in their standard CGL policies - notwithstanding the fact that no such claims have yet been presented. 

Conclusion

It is clear that nanotechnology offers tremendous scientific and commercial opportunities in the future. These opportunities, however, are likely to be accompanied by health and safety based product liability and environmental risks, and those risks need to be taken into account in the development and exploitation of these products.

This blog is based in part on a more expansive article: Michael Dore, Nanotechnology - Evaluate The Products Liability Risks, 198 N.J.L.J. 866 (December 14, 2009)

For all environmental lawyers and especially for business advisors and bankruptcy lawyers, a very important case was decided by the 7^th Circuit Court of Appeals in fall 2009. The case concerns the effect of a bankruptcy discharge from a 1986 bankruptcy filing versus an affirmative Resource Conservation and Recovery Act (“RCRA”) clean-up injunction. The question is whether the injunction is a discharged claim in bankruptcy. The Court of Appeals concludes a mandatory injunction to perform clean-up does not equate to an equitable remedy giving rise upon breach to a right to payment, which is the covered equitable remedy subject to discharge.

Here, the formerly bankrupt company’s reorganization left it no choice but to have this particular clean-up conducted by a third party at an estimated cost of $150,000,000. The Court found, however, the clean-up order did not result in a right to payment because RCRA does not allow either a demand for clean-up costs or any monetary relief. 

Finding that all equitable orders will inevitably require the ordered party to spend money to comply, the Court concludes discharges are limited to matters where the claim gives rise to a right to payment.  Such situations arise where an equitable decree can not be executed and results in a right to seek money damages and not merely those that impose a cost on the defendant.  

This case reaches a conclusion contrary to a 6^th Circuit case and is distinguishable from the landmark Supreme Court ruling in Ohio v. Kovacs.  In Kovacs a receiver was appointed to take possession of the debtor’s assets so it could obtain money to pay for an ordered clean-up, and the Supreme Court found the receiver, therefore, was seeking money rather than an order that the debtor clean up the contaminated site. 

The holding in this 7^th Circuit case is certainly one that will likely reverberate around the country for years to come. United States v. Apex Oil Co., Inc., 579 F.3d 734 (7^th Cir. 2009).

It has been nearly nine months since the U.S. Supreme Court decided Burlington Northern and Santa Fe Railway Company v. United States (BNSF),[1] a case some called a landmark decision that would change the Superfund practice.[2] In some respects that has turned out to be the case, in others it has not. There have been several reported cases citing BNSF, and all of them confirm that the decision requires both the EPA and potentially responsible parties (“PRPs”) to engage in a more fact-intensive inquiry into “arranger” liability. Less clear, however, is how the apportionment of liability among liable parties in private contribution cases will be affected, given the relatively small number of reported decisions.

Readers will recall that the BNSF decision had two elements: (1) it addressed the scope of arranger liability under CERCLA, and (2) it affirmed the view of several circuit courts that PRPs can avoid joint and several liability if a “reasonable basis” to apportion liability exists. This article reviews how lower court decisions issued subsequent to BNSF have applied those two components.

A Review of the BNSF Facts

BNSF was issued on May 4, 2009. The 8-1 decision written by Justice Stevens arose out of a fairly common fact pattern for CERCLA cases: a small chemical distributor Brown & Bryant, Inc. (“B&B”) owned and operated a facility that repackaged agricultural chemicals. B&B’s operation was on a 3.8-acre parcel, a portion of which was leased from predecessors to BNSF and the Union Pacific Railroad. Neither railroad played any part in B&B’s operations. The other PRP, Shell Oil, sold a soil fumigant to B&B which was shipped via commercial carrier FOB destination, meaning that the buyer was responsible for the product once it arrived at the facility.

After the State of California ordered B&B to clean up soil and groundwater contamination, B&B went out of business and then EPA listed the site on the National Priorities List. Both railroads and Shell were named as PRPs. The railroads were ordered to clean up the entire site, even though the portion of the site that they owned did not require remediation. Shell was named a PRP for having delivered chemicals to the site which it knew or should have foreseen would be spilled by B&B. In 1996, the United States and the State of California filed a cost recovery action against the railroads and Shell, seeking to recover over $8 million in response costs.

The Supreme Court’s Opinion

1. Arranger Liability

In affirming that “arranger liability” under CERCLA must be determined on a case-by-case basis, the Court set up a continuum. At one end are cases where an entity entered into a transaction “for the sole purpose of discarding a used and no longer useful hazardous substance.”[3] In such cases, there is a clear intent to discard the product, and therefore liability under section 107(a)(3). On the other end are situations where a company sells a useful product and “the purchaser of that product later, and unbeknownst the seller, disposed of the product in a way that led to contamination.”[4] The Court acknowledged that there were “many permutations of ‘arrangements’ that fall between these two extremes.” In these cases, based on a “plain reading” of the CERCLA statute, the Court held that “an entity may qualify as an arranger when it takes intentional steps to dispose of a hazardous substance.”[5] Applying this statement of the law to the facts, the Court held that Shell’s mere knowledge of the spills did not amount to an “intent” that they be spilled or otherwise disposed of and that Shell was therefore not liable as an arranger.

2. Apportionment

BNSF highlighted that the CERCLA statute does not contain joint and several liability language. Instead, the notion that PRPs should be held jointly and severally liable is a judicial doctrine grounded in Section 433A of the Restatement (Second) of Torts. Applying the Restatement, the Court held – as had several circuit courts previously– that “apportionment is proper when there is a reasonable basis for determining the contribution of each cause to a single harm.”[6]

Where multiple parties cause a single harm, “CERCLA defendants seeking to avoid joint and several liability bear the burden of proving that a reasonable basis for apportionment exists.”[7] In BNSF, while both the district court and the Ninth Circuit had found that apportionment of the harm was possible, they disagreed on how to allocate responsibility. The district court came up with a nine percent allocation to the railroads. The Ninth Circuit criticized the evidence on which the district court had relied, finding that it was insufficient to establish the “precise proportion” of the Railroads’ responsibility. The Supreme Court affirmed the district court’s approach, holding that the evidence supporting apportionment need not be precise. There must simply be “facts contained in the record reasonably support[ing] the apportionment of liability.”[8]

Lower Court Decisions Applying BNSF

Cases Applying the Court’s Arranger Liability Ruling

Of the four published cases that have substantively applied BNSF in the context of arranger liability, all suggest that lower courts are taking seriously the Supreme Court’s instruction to conduct a factually-intensive review of the parties’ intent. Prior to BNSF, the view prevalent among at least some government attorneys, and even some private party attorneys, was that every party who somehow came into contact with a hazardous substance was liable as having “arranged for disposal.” That view has been shattered.

Two cases, in particular, illustrate this point. The first is Appleton Papers Inc. v. George A. Whiting Paper Co.[9] Plaintiffs in that case were companies who had manufactured and sold carbonless paper. The emulsion used in the paper contained microscopic capsules that burst when pressure was applied, releasing a dye, and allowing the words on a page to be transferred from one sheet to another. The microcapsules were dissolved in a solvent which contained PCBs. The PCBs were released into the Fox River from manufacturing plants which produced the paper. An even greater proportion of PCBs were released by companies that recycled carbonless paper and by municipal wastewater utilities that discharged PCB-contaminated wastewater.

Plaintiff manufacturers filed a contribution action under CERCLA §113 against the recyclers and municipalities (their §107 claim was previously dismissed by the court). The court bifurcated the case into a liability and apportionment phase. In the liability phase, on cross-motions for summary judgment, the court considered whether the defendants knew they were disposing of hazardous chemicals, and concluded that they did not. The analysis – while not explicitly using the word “intent” – focused on what the defendants knew when they recycled the carbonless paper or discharged wastewater from the plants that did. After reviewing a record that included roughly 900 exhibits – including expert reports, government reports, corporate records, laboratory records and deposition transcripts – the court sided with the defendants, finding that they had little or no knowledge that they were disposing of PCBs into the river.[10]

Defendants are recyclers of paper and municipal sewerage entities who simply processed paper and water, and they would have had little reason or ability to inspect or investigate the chemical makeup of anything that came in the door…[t]he recyclers were the ‘innocent victims’ of the circumstances [citation to record omitted]. This is even more true for Defendants who merely received and released wastewater containing invisible PCBs in it.[11]

Similarly, in a case in Washington state, the district court made clear that the issue of arranger liability after BNSF turns squarely on the facts. United States v. Wash. State Department of Transp.[12] In that case, EPA sued the Washington State Department of Transportation (“WSDOT”) to recover cleanup costs at a contaminated site that the state had acquired to build a bridge. During construction of the bridge, a contractor discovered three open-bottom tanks containing tar, which appeared to have been placed there by a coal gasification plant. The State counterclaimed, arguing that the United States was also liable, because the US Army Corps of Engineers (“USACE”) had dredged a portion of the waterway that the coal gassification plant was located on, thereby moving hazardous substances released by others and causing additional releases to the environment. The United States moved for summary judgment. Judge Bryan denied the motion, holding that the United States’ liability, if any, turned on a fact-intensive inquiry that the parties had yet to conduct.

At this point, the facts are insufficiently developed to determine what level of control USACE exerted over the dredging process and what responsibility it may have had regarding disposal of the dredged materials.… As the Supreme Court stated in Burlington Northern, “the determination whether an entity is an arranger requires a fact-intensive inquiry that looks beyond the parties’ characterization of the transaction as a ‘disposal’ or ‘sale’ and seeks to discern whether the arrangement was one Congress intended to fall within the scope of CERCLA’s strict-liability provisions.” 129 S. Ct. at 1879. Considering the USACE’s involvement with dredging the contaminated waterways in light of CERCLA’s strict liability standard, the court cannot say as a matter of law that upon further discovery, the facts will fail to show that the USACE “qualif[ies] as an arranger under [§107(a)(3) when taking] intentional steps to dispose of a hazardous substance” through the granting of permits to dredge the waterway.[13]

Meanwhile, across the country in Maine, a district court applied BNSF in the context of a cleanup of the Penobscot River.See Frontier Communications Corp. v. Barrett Paving Materials.[14] We previously reported on this case. See District Court in Maine Applies Supreme Court’s BNSF Decision on “Arranger” Liability, Marten Law Environmental News (July 22, 2009). The court in the Maine case reiterated that the question of arranger liability is “fact-intensive,” but it found that the record contained sufficient facts to conclude that the defendant had intended to dispose of wastes through a sewer into the river.[15]

Finally, in New Hampshire, General Electric asked a judge to reverse a prior ruling holding GE liable as having “arranged for disposal” of PCB-containing “scrap Pyranol” when it sold the material to a paint manufacturing company. GE relied on BNSF to argue that the phrase “arranged for disposal” required “an intentional action toward achieving the purpose: disposal.”[16] The court did not dispute GE’s reading of the law, but held that there was sufficient evidence of intent to hold GE liable as an arranger.

Cases Applying BNSF’s Apportionment Ruling

We have located two reported decisions expressly dealing with the “apportionment” arm of the BNSF decision. In the first case, the court essentially punted, holding that the best way to apportion liability was to let the case go to trial. See Evansville Greenway and Remediation Trust v. Southern IN Gas and Elec. Co., Inc.[17]

In Evansville, the BNSF decision was handed down while cross-motions for summary judgment were being briefed. The defendants claimed that BNSF “effected a dramatic change that will make it easier for PRPs to avoid the burden of joint and several liability,” while the plaintiffs argued that “BNSF amounts to nothing new.”[18] Noting that “the Supreme Court’s new decision has presented what might be called genuine questions of material law,”[19] the court declined to commit to a particular interpretation of the BNSF decision, based on the fact that the timing of the decision meant that the record before the court was sparse. Instead, the court granted the motion as to liability under 107(a), but reserved the question of apportionment for trial, so that “each side [can] present evidence relevant to its own and its opponents’ different interpretations of BNSF.”[20]

More interesting is the court’s decision in Appleton Papers, discussed above. In that case, the court engaged in an extended discussion of whether BNSF was applicable to a §113 contribution action (having previously dismissed the plaintiff’s §107 claims). The court concluded that, while “Burlington Northern changed the applicable standards for ‘arranger liability’ … there is nothing within Burlington Northern that requires courts to make some sort of threshold determination regarding joint and several liability or allow plaintiffs in a contribution action to make an apportionment argument.”[21]

One question not answered by BNSF is the quantum of proof necessary to establish a reasonable basis for apportionment. Judge Shira A. Scheindlin addressed that question in a non-CERCLA case involving environmental torts, holding that: (1) a fact finder may rely on the “available evidence” in apportioning liability among joint tortfeasors; and (2) the burden of production necessary to support a showing of divisibility is “low.” In re MTBE, S.D.N.Y. Case No. 00 MDL 1898, Docket No. 352 (July 14, 2009). See Applying BNSF, District Court in New York Finds “Best Available Evidence” Is Sufficient to Apportion Liability, Marten Law Environmental News (July 22, 2009). It remains to be seen whether this approach will be extended in a CERCLA context.

Conclusion

It is still too early to get a good sense of whether BNSF will be the watershed case some had predicted. The first few cases have reinforced the Supreme Court’s holding that the inquiry into arranger liability is “fact-intensive.” Only two reported cases have addressed the apportionment arm of the decision, and neither reached the question of how apportionment is to be conducted.

[1] 129 S. Ct. 1870 (2009).

[2] See, e.g., J. Barkett, The Burlington Northern Decision, American College of Environmental Lawyers Blog (May 19, 2009).

[3] 129 S. Ct. at 1878.

[4] Id.

[5] Id. at 1879.

[6] Id. at 1881.

[7] Id.

[8] Id. at 1882.

[9] Slip Op., 2009 WL 5064049 (E.D. Wis., December 16, 2009).

[10] Id. at *15.

[11] Id. at *17.

[12] , ___ F. Supp.2d ___, 2009 WL 2985474 (W.D. Wa., September 15, 2009).

[13] Id. at *8.

[14] District of Maine, Case No. 07-00133.

[15] 2009 WL 1941920, *3

[16] General Electric Company’s Supplemental Memorandum on the Evidence of Intent or Knowledge Required to Prove that a CERCLA Defendant has “Arranged for” Disposal or Treatment of Hazardous Waste at 2, United States v. General Electric Co., 06-354, Doc. No. 89 (D.N.H. Nov. 5, 2008).

[17] ___ F.Supp.2d ___, 2009 WL 3163180 (S.D. Ind., September 29, 2009),

[18] Id. at * 21.

[19] Id.

[20] Id.

[21] Appleton Papers, Inc. v. George A. Whiting Paper Co., Slip Op., 2009 WL 3921036 (E.D. Wis. 2009), **4, 5.

To many Superfund practitioners, United States v. Burlington Northern & Sante Fe Railway Company, __ U.S. __, 129, S. Ct. 1870 (2009) represents the latest in a series of surprises from the Supreme Court. The decision follows Cooper Industries, Inc. v. Aviall Services, Inc, 543 U.S. 157 (2004), from which we learned that the statutory words “during or following” really mean just what they say and contribution claims under the Comprehensive Response Compensation and Liability Act (also referred to as CERCLA or the Superfund statute) are only available in those limited circumstances. A few years later, in United States v. Atlantic Research Corp., 551 U.S. 128 (2007), we learned that “covered persons” (also referred to as potentially responsible parties or PRPs) under the statute may, in certain procedural circumstances, have cost recovery claims in the event they do not meet the criteria for contribution claims.   In Burlington Northern, we learned that “arranger” liability may not be as broad as we had thought it was, and that joint and several liability may not be the automatic we thought it was. It is probably fair to say that the outcome in Burlington Northern, like the outcomes in Aviall and Atlantic Research, was not intuitive to Superfund practitioners.

            A Superfund practitioner might have expected the Supreme Court decision in Burlington Northern to look more like the Ninth Circuit opinion it reversed (found at 502 F.3d 781), endorsing a broad reading of “arranger” liability under the statute and applying joint and several liability to all the defendants, the latter being the norm for more than 25 years since the seminal decision in United States v. ChemDyne, 572 F. Supp. 802 (S.D. Ohio 1983).

As with Aviall and Atlantic Research, it will probably take many years, and many decisions by the lower courts, before we fully appreciate the implications of Burlington Northern, but one thing is already clear. Defendants in multi-party Superfund sites will be contending for apportionment as the alternative to joint and several liability, if for no other reason than to avoid funding the orphan share represented by “covered persons” who can’t be found, no longer exist, or, as is more recently the case, are bankrupt. On the other hand, governments asserting cost recovery claims can be expected to continue to advocate aggressively for joint and several liability, so as to avoid having to absorb the orphan share themselves. The question is what practical impacts this battleground will have on Superfund practice at multi-party sites.

            Burlington Northern raises several practical questions which will have to resolved as the law and practice develop. Here are some of them.

Whether a defendant is entitled to apportioned liability is a fact-intensive inquiry, resolved in Burlington Northern only after a six week bench trial, and only after the district judge took four years to render a decision. Will governments be able to obtain liability judgments at the beginning of cost recovery actions, as they have typically tried to do in the past? Will Burlington Northern force more cases to go to trial? 

Whether liability is subject to apportionment is not likely to be decided until the end of a case, as it was in Burlington Northern. How will cost recovery defendants evaluate their chances of success in the early stages of a case? Will they feel compelled to develop a detailed record to support arguments that liability for a single harm is subject to apportionment, unlike the defendants in Burlington Northern, who limited their arguments to general denials of liability?

Governmental plaintiffs can be expected to insist that liability at multi-party sites is still joint and several, even after Burlington Northern. Will those governmental plaintiffs be willing to consider the litigation risk that liability may be subject to apportionment in negotiating settlements? If so, how will that litigation risk be taken into consideration?

If liability is apportioned, how will any resulting orphan shares be funded? Will EPA’s historic limitations on orphan share funding be adequate? If not, where will the funding come from? Is the Superfund tax more likely to be reinstated because of Burlington Northern?

 Will the organization of multiple “covered persons” into PRP groups be more difficult if the defendants believe they can escape liability through apportionment? How will defendants balance that possibility against the potential benefit in the form of reduced costs that might be gained by performing cleanup work themselves?

Will ADR emerge as the norm for dividing responsibility among defendants who believe their liability is subject to apportionment, as it has in allocating joint and several liability? What evidence will be used to apportion liability? Burlington Northern endorsed many of the same causation-related considerations as the equitable factors historically used to allocate joint and several liability; will some or all of the Gore factors still be relevant? Burlington Northern also endorsed estimations and compromises, considerations not normally found in legal determinations; how will the lower courts react to imprecise calculations of apportioned liability?

How will defendants argue for an orphan share? Will they seek to establish an orphan share from the bottom up (by quantifying the share of missing PRPs), or from the top down (by quantifying their own individual shares)? Whichever way defendants decide to approach the issue, they can be expected to develop the record the district judge found lacking in Burlington Northern.

Finally, in states whose statutes make joint and several liability explicit (e.g, the New Jersey Spill Compensation and Control Act, N.J.S.A. 58:10-23.11g(c)(1)), how will apportionment decisions be made? Will the scope of liability be different to EPA and to such states?   Under such statutes, is there no instance in which liability will be subject to apportionment, even for distinct harms?

Like Aviall and Atlantic Research before it, Burlington Northern promises to be a fertile source of future litigation. 

Shortly before the holidays, EPA Administrator Jackson issued an Order in response to a challenge to a combined Title V / PSD permit issued by the Kentucky Division for Air Quality to an Integrated Gasification Combined Cycle, or IGCC, plant. The Order upheld the challenge, in part, on the ground that neither the permittee nor KDAQ had adequately justified why the BACT analysis for the facility did not include consideration of full-time use of natural gas notwithstanding that the plant is an IGCC facility. 

The Order may not be shocking in today’s environment – all meanings of that word intended – but the lengths to which the Order goes to avoid its own logical consequences shows just what a departure this decision is from established practice concerning BACT. BACT analyses have traditionally involved the proverbial “top-down” look at technologies that can be used to control emissions from a proposed facility. In other words, EPA takes the proposal as a given, and then asks what the best available control technology is for that facility. 

In EPA’s own words – from its New Source Review Workshop Manual (long the Bible for BACT analysis):

Historically, EPA has not considered the BACT requirement as a means to redefine the design of the source when considering available control alternatives. For example, applicants proposing to construct a coal-fired electric generator, have not been required by EPA as part of a BACT analysis to consider building a natural gas-fired electric turbine although the turbine may be inherently less polluting per unit product (in this case electricity).

Apt example, don’t you think? (In case you are wondering, EPA’s decision does not discuss or refer to this text from the NSR Manual.)

What was the basis for EPA’s decision here? Largely, it is that the IGCC facility will be designed to burn natural gas as well as syngas and the permittee specifically stated that it planned to combust natural gas during a 6-12 month startup period. On these facts, EPA concluded that the permittee and KDAQ had to do a better job explaining why full-time use of natural gas should be considered “to redefine the design of the source.”

As noted above, EPA went to great lengths to minimize the scope of the decision. It states that the Order:

should in no way be interpreted as EPA expressing a policy preference for construction of natural-gas fired facilities over IGCC facilities.

should not be interpreted to establish or imply an EPA position that PSD permitting authorities should conclude … that BACT for a proposed electricity generating unit is … natural gas.

does not conclude that it is not possible or permissible for the permit applicant … to develop a rationale which shows that firing exclusively with natural gas would “redefine the source.”

EPA does not intend to discourage applicants that propose to construct an IGCC facility from seeking to hedge the risk of investing in … IGCC technology by proposing … utilizing natural gas for some period….

Methinks EPA doth protest too much. If I may say so, this is a freakin’ IGCC facility. Isn’t it obvious that one doesn’t plan or build an IGCC facility if one plans to burn natural gas? Don’t you think that EPA could have taken administrative notice of what IGCC technology is?

All of EPA’s protestations about the Order’s limits may be designed to mollify IGCC supporters, but what does its rationale mean for all of the existing facilities – coal and oil – that are already capable of firing on natural gas? Next time they are subject to NSR/PSD review, must they evaluate the possibility of switching completely to natural gas? As I’ve said here before, yikes!

The 9th Circuit affirmed the dismissal, for lack of jurisdiction, over a “pattern and practice” claim by a company that complied with an Environmental Protection Agency (EPA) unilateral administrative order (UAO) to conduct a remedial investigation. City of Rialto v. W. Coast Loading Corp., 581 F.3d 865 (9th Cir. 2009).  While acknowledging that CERCLA's judicial review provisions contain "some pitfalls and difficult decisions for a PRP that faces a UAO," the court stated that the pattern and practice claim was not an “automatic shortcut” to federal court jurisdiction. 

The case arose as a result of a unilateral administrative order (UAO) issued by EPA in July 2003 directing Goodrich to conduct a remedial investigation at a 160-acre site in Rialto, California. Goodrich elected to comply with the order. However, in late 2006 Goodrich filed a complaint against EPA alleging, inter alia, that the CERCLA review provisions on their face constitute a coercive regime violating due process. The district court held that it lacked jurisdiction over Goodrich’s “as-applied” challenge to the UAO because such pre-enforcement judicial review is foreclosed by §9613(h) of CERCLA. Goodrich then filed an amended “pattern and practice” claim alleging that EPA issues orders where no emergency exists, obstructs judicial review by delaying its discretionary certificates of completion, and controls and manipulates the record of decision. The district court granted EPA’s motion to dismiss, and Goodrich appealed to the Ninth Circuit.

The Ninth Circuit affirmed. The court of appeals concluded that Goodrich’s allegation that EPA routinely issues orders beyond its statutory authority was substantive because it necessarily depended on the facts of the particular UAO, and that meaningful judicial review of Goodrich’s substantive challenge is available under §9613(h). A claim that a UAO is unlawful can be addressed, the court stated, either by not complying with the UAO and defending an enforcement action, or by complying with a UAO and seeking reimbursement from the government. With respect to Goodrich’s claim that EPA routinely delays certifications of completion in order to thwart judicial review, the Ninth Circuit held that Goodrich’s claim is not ripe because the work required by the UAO has not been completed. Once Goodrich completes the work, it may bring a claim for reimbursement under §9606(b)(2). Finally, with respect to Goodrich’s allegation that EPA controls and manipulates the administrative record supporting the selected cleanup plan, the Ninth Circuit concluded that Goodrich allegations were not a “pattern and practice” claim , but rather were a challenge to the judicial review provisions of the statute itself, which were rejected by the District Court and not appealed by Goodrich. 

The Ninth Circuit noted that in General Electric v. Whitman, 360 F.3d 188, 191 (D.C. Cir. 2004), the D.C. Circuit remanded GE’s suit to the district court to address the merits of GE’s facial due process claim, and on remand the district court ruled on merits and rejected GE’s pattern and practice claim. General Electric v. Jackson, 595 F.Supp.2d 8 (D.D.C. 2009). This ruling on the merits contrasts with the Ninth Circuit’s ruling that the district court lacked jurisdiction. The Ninth Circuit, however, commented that its decision was “consistent” with the District Court’s decision in GE, noting that the District Court there held that it had jurisdiction not because of any independent analysis but because of its interpretation of the D.C. Circuit’s decision remanding the case for further proceedings. 

Companies receiving a UAO and facing the statutory pitfalls and difficult decisions will likely not find much solace in the Ninth Circuit’s opinion. The district court’s opinion in the GE case is being appealed.

“Thus, the Plaintiffs’ present claim that they never knew about the dangers of PCBs until after 1971 rings roughly as hollow as Captain Renault’s feigned outrage upon being ‘shocked, shocked’ to discover gambling at Rick’s Casablanca café.” 

Appleton Papers Inc. and NCR Corp. v. George A. Whiting Paper Co., et al. (slip op. at 25, US District Court, Eastern District of WI, Case No. 08-C-16)

With those words, on December 16, 2009 Judge William C. Griesbach, United States District Judge for the Eastern District of Wisconsin dismissed CERCLA §107 contribution claims brought by Plaintiffs Appleton Papers, Inc. (API) and NCR Corp. against all Defendants.   NCR and API sought contribution from 23 other paper mills, cities, utilities, and sewerage districts, and industrial dischargers to allocate the multi-million dollar costs of remediating the polychlorinated byphenyl (PCB) contamination in the Lower Fox River in northeastern Wisconsin. Defendants’ Summary Judgment motions asserted that Plaintiffs were not entitled to contribution because the Defendants are “essentially innocent parties who had no knowledge that recycling NCR paper or processing wastewater could lead to environmental damage.” Slip op. at 4. The Judge agreed.

Beginning in 1954, NCR developed a carbonless copy paper that relied on an emulsion based on Aroclor 1242, a PCB solvent manufactured by Monsanto Corporation. NCR created the emulsion and developed and sold the carbonless paper product. API’s predecessor manufactured the paper and coated it with the NCR emulsion. API’s wastewater was discharged to the Fox River, taking the PCBs with it. API also sold its waste paper to other mills to be recycled into paper products, resulting in PCB-containing wastewater discharges from those facilities. The result: significant PCB-contamination in the sediments of the Lower Fox River from the mouth at Green Bay to Lake Winnebago and what has been called the largest contaminated sediment cleanup in the world..

The decision turns on what the Plaintiffs knew about the potential harm of the PCBs in their carbonless copy paper and when they knew it. It includes an instructive recital of internal communications within and among NCR and API, Monsanto, and Wiggins Teape, NCR’s exclusive European-licensee, leading to the Court’s conclusion that “I am satisfied that by the late 1960’s Plaintiffs had access to the vanguard of data suggesting an appreciable risk of serious and long-lasting environmental damage resulting from the production and recycling of NCR paper.” (emphasis in original) Slip op. at 26.

Readers will find the case of interest on both the legal analysis -- application of the “Gore factors” in determining equitable allocation, consideration of successor liability, and the Court’s evaluation and weighing of the overall equities – and the factual history. On this latter point, the case may well serve as a primer on how a business’ historical records and risk management decisions can come back to haunt it with respect to future determinations of knowledge and liability: 

“In the face of increasing red flags, Plaintiffs’ approach in the late 1960s was to worry about publicity and wait for the ‘second shoe’ to drop. At its essence, Plaintiffs’ approach was a risk management strategy to accept the risk of potential environmental harm in exchange for the financial benefits of continued (and increasing) sales of carbonless paper containing Aroclor 1242.” Slip op. at 26.

Appeal decisions are still pending. For those who want to know more about the Fox River, PCB-contamination, and the clean-up, both the Wisconsin Department of Natural Resources and the United States Environmental Protection Agency maintain extensive websites:

Click here for WDNR’s Fox River website

Click here for EPA Region 5’s website

Arguably the most significant moderation of CERCLA’s harsh “owner” liability scheme occurred in 2002 through the enactment of the “Brownfields Amendments.” Included in those amendments was the creation of new liability protection for “Bona Fide Prospective Purchasers” (“BFPP”) who acquire ownership of a facility after January 11, 2002.

A relatively straightforward roadmap for prospective purchasers to achieve BFPP status is set out in the Brownfields Amendments and the subsequently-promulgated All Appropriate Inquiry rule. The extent to which tenants might obtain protection from possible “owner” liability has, however, always been far less certain.

The potential applicability of this liability defense to tenants is currently limited to a short parenthetical in CERCLA §101(40). Specifically, a “tenant of a person” that achieves BFPP status shares the liability protections of the property purchaser. Although this “derivative” BFPP status established by the Brownfields Amendments helped clarify the reach of the liability defense with respect to tenants, a number of questions remained unanswered. For example, what happens if the property owner loses its BFPP status through non-compliance with the statutory requirements? Also, does the language of the amendment as it relates to tenants preclude a tenant from independently achieving BFPP status?

Earlier this year, EPA’s Office of Enforcement and Compliance Assurance issued an Enforcement Discretion Guidance (“Guidance”) that addresses the applicability of the BFPP definition to tenants. That Guidance clarifies how EPA intends to exercise its enforcement discretion with respect to tenants “on a site-by-site” basis. In essence, the Guidance provides:

• Tenants with “derivative” BFPP status will lose that status if the property owner ceases to be a BFPP for non-compliance with one or more of the statutory requirements. Nevertheless, EPA may exercise its enforcement discretion and not pursue the tenant under an owner liability theory if the tenant satisfies certain conditions, including not having disposed of hazardous substances on the property and fully cooperating with EPA in its response actions.
• Tenants whose lease documents establish sufficient “indicia of ownership” and who satisfy all requirements of CERCLA §101(40)(A)-(H) and 107(r) may be deemed to have independently achieved BFPP status and thus possibly avoid an enforcement action under CERCLA’s owner liability provisions. Indicia of ownership include the term of the lease, the range of permitted property uses by the tenant, reserved rights on the property by the owner, etc.

EPA’s Guidance is a welcome clarification of how the agency intends to enforce CERCLA’s owner liability provisions in these situations. However, the Guidance goes beyond the derivative status language in the Brownfields Amendments in its discussion of potential limitations on tenant “owner” liability. The problem is that a guidance is just that. It offers none of the statutory certainty that prospective purchasers now enjoy under CERCLA.

Because of the importance of tenant-operated properties to the economy in general and to the development of Brownfields property in particular, I would submit that tenants should be afforded the same clarity and certainty with respect to potential liability under CERCLA as those who acquire title to the property. As the Brownfield Amendments are largely self-implementing, that clarity and certainty is likely to be achieved only through further amendments to the liability provisions of CERCLA.

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

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

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

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

Reduce VMT by 30% from 2008 levels

Recover 90% of all waste generated

Reduce consumption of carbon-intensive foods

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

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

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

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

The U.S. Environmental Protection Agency (EPA) has found evidence that buildings constructed or renovated between 1950 and 1978 may have PCBs at high levels in caulk around windows and door frames, between masonry columns and in other building materials. Congress banned the manufacture and most uses of PCBs in 1976.

On September 25, 2009, EPA issued general guidance to communities as well as specific guidance to help school administrators and teachers reduce the risk of PCB exposure to children, and to assist contractors renovating buildings with suspect caulk.

Although EPA has generated specific guidance for school administrators and teachers, all buildings constructed during this time period may have PCB-containing caulk. EPA’s guidance helps to identify the extent of potential risks and to determine if mitigation steps are needed. EPA will work directly with building owners and administrators facing serious problems to help develop a practical approach to reduce exposures and prioritize caulk removal. 

EPA has also identified several unresolved scientific issues that must be better understood to determine the magnitude of the issue and to develop the best long-term solutions. As a result, EPA will conduct new research to better understand the risks posed by PCB-containing caulk. EPA plans to use these research findings to make additional recommendations to further minimize exposure and generate an action plan for caulk removal.

While the materials EPA released identify the issue of PCB-containing caulk as a concern, the agency advises there is insufficient information concerning the scope or severity of the issue to provide property owners and school administrators with very concrete advice about next steps.  Unfortunately, this can only leave both property owners and school administrators wondering, "just how big a concern is this and how should I respond?" Like lead paint, asbestos, mold, indoor air quality and other types of building hazards, PCBs can be added to the list of risks that real estate professionals and lawyers will have to address in building transactions.

For more information, contact EPA’s toll free hotline at 1-888-835-5372 or the EPA website located at: http://www.epa.gov/pcbsincaulk.

Late last week, Elliott Gilberg, Acting Director of EPA’s Office of Site Remediation Enforcement (OSRE) issued an Interim Policy on Managing the Duration of Remedial Design/Remedial Action Negotiations. Members of the regulated community may not be surprised by the contents of the memo, but they certainly will not be pleased. In brief, the memorandum fundamentally makes two points:

EPA wants to shorten the duration of RD/RA negotiation

EPA is going to use the heavy hammer of unilateral administrative orders, or UAOs, to keep PRPs’ feet to the fire and ensure that negotiations move quickly.

PRPs will likely agree that shortening the duration of negotiations would be a good outcome in the abstract – but achieving it by greater use of UAOs? I don’t think so.

I can only wonder if EPA has even considered the impact of the Burlington Northern decision here. Is this a perverse reaction from EPA? A metaphorical throwing down the gauntlet to PRPs? It certainly feels that way.

I have a different suggestion, if EPA truly wants to shorten negotiations. First, acknowledge Burlington Northern and compromise on the merits in those great majority of cases where there are legitimate divisibility arguments. Second, stop acting like the last bastion of command and control regulation. Set cleanup standards and then, to the maximum extent permitted by existing law, let PRPs clean up to those standards, without micromanaging every detail of the cleanup process.