The ACOEL blog has devoted several entries over the last two years to the question 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 differences to cost recovery or contribution claims under Sections 107 and 113 of CERCLA.  One of the more recent developments is the 11th Circuit decision in Solutia v. McWane (Full disclosure: I am counsel to several defendants in this case). 

"Boots" Gale previously blogged about the District Court decision. The District Court dismissed Plaintiffs’ Section 113 claim on the basis that these Defendants had the benefit of CERCLA’s contribution protection obtained via their own administrative settlement with EPA.  Initially, the District Court denied summary judgment on Plaintiffs’ Section 107 claim, but then reconsidered and reversed that decision. 

The 11th Circuit noted that the Supreme Court's Atlantic Research decision declined to decide the issue of whether a party may bring a 107(a) claim for direct cleanup costs incurred via a consent decree entered as past of CERCLA Section 106/107  litigation.  The 11th Circuit confirmed, however, the conclusion of the District Court that numerous federal Circuit Courts had reached that issue since that time, each one concluding Section 113 to be the party’s exclusive remedy, and denying the Section 107 claim.  Relying in part on the conclusions reached by these other Circuit Courts, the 11th Circuit rejected Plaintiffs’ statutory interpretation arguments, and concluded that a party who has a CERCLA Section 113(f) claim cannot also maintain a CERCLA Section 107 claim.  To find otherwise, the 11th Circuit concluded, would “thwart the contribution protection afforded to parties that settle their liability with the EPA…”, “destroy CERCLA’s statutorily-created settlement initiative…”, would allow a plaintiff to impose joint and several liability on defendants, and would prevent those defendants from asserting any Section 113(f) counterclaim since the plaintiffs would have their own CERCLA contribution protection via their consent decree. 

The time has not run yet for the Plaintiffs in this case to seek certiorari from the Supreme Court.  In light of the unanimity of the federal Circuit Courts on this issue, it seems unlikely that the Court would accept the case for decision, despite the importance of the issue and the Court’s decision not to reach the issue in its 2007 decision in Atlantic Research.

Yesterday, the Chesapeake Bay Commission released a study showing that implementation of a nutrient trading system would dramatically reduce the cost to achieve nutrient reductions in Chesapeake Bay. Pardon me if I seem to be posting a lot of dog bites man stories recently.

Although it should not come as a surprise that a trading system would permit nutrient reductions to be attained most cost-effectively, the scope of the benefit is worth noting. If trading were allowed basin-wide, and among both point and agricultural non-point sources, costs are projected to decrease by about 50% of the non-trading compliance costs.

Since I have faced this issue in Massachusetts, I found it even more noteworthy that, if trading were expanded to include regulated urban stormwater sources, compliance costs are expected to be reduced by about 80% over the non-trading scenario. The report’s explanation is both simple and cogent:

Implementing urban stormwater BMPs tends to be a much less cost-effective way of reducing nutrient loads than agricultural BMPs.

To which I say, you could have knocked me over with a feather. I just hope that EPA does not limit its review of this report to the Chesapeake Bay itself, but considers its implications more broadly in the context of stormwater regulation in other areas.

The fish versus faucet debate that has been percolating in Connecticut for the past decade has produced a comprehensive stream flow regulation with release rules applicable to all dam owners.  The new regulations will bring each segment of every river and stream in the state under the regulatory umbrella when fully implemented.

Previous regulations adopted in 1979 applied only to streams stocked with fish by the State and imposed a flat minimum release requirement on owners of dams on those streams.

The new regulations require the Department of Energy and Environmental Protection to first assign each stream segment one of four classifications.  Once the classifications are adopted, the regulations will require owners of dams to release water to maintain flows downstream of the dam according to the classification of the segment.

Class 1 will apply to segments which are free flowing and will require that any dam owner on these segments not manipulate storage or withdraw water from the impoundment.  Class 2 will apply to segments with minimally altered flow and will require dam owners to provide for a continuous release of 75% of the natural inflow to the impoundment.

Class 3 will apply to segments with moderately altered flow and will require dam owners to comply with a variable minimum release regime calculated for the segment based upon one of six bioperiods.  Class 4 applies to segments with substantially altered flows due to human needs for water supply, flood control, industry, agriculture and other lawful uses.

Connecticut’s five major river basins will be classified one basin at a time.  The Department estimates that classification of all five basins will take five years.  The regulations require that the release requirements applicable to regulated dam owners become effective not later than 10 years after a segment is classified.  The lead time was deemed necessary to enable dam owners to make modifications to their structures to be able to comply with the release requirements.

The new regulations represent a compromise package between what the Department originally wanted and the regulated community would accept.  Before the current package was approved, three previous proposed regulations had been rejected by the General Assembly’s Legislative Regulation Review Committee.  To win legislative approval, the Department eliminated groundwater withdrawals from the scope of the regulations and provided exemptions for agricultural and golf course irrigators.

In addition, to provide certainty to water utilities, the regulations specify that segments downstream of a public water supply reservoir shall not be classified as Class 1 or Class 2.  Finally, the regulations do not apply to government flood control dams or hydropower dams regulated by the Federal Energy Regulatory Commission.

The regulations became effective on December 12, 2011.

One of the more recent and interesting decisions in the world of CERCLA litigation practice was rendered just a few days ago by a federal district court in Pakootas v. Teck Cominco Metals Ltd. The judge in that case articulated the legal underpinnings of the often confused notions of CERCLA-based divisibility of harm and apportionment of liability determinations. 

The judge explained that divisibility of harm does not defeat CERCLA liability itself but, instead, is a defense to joint and several liability citing with approval language from U.S. v. Monsanto Co. to the effect that “ . . . While it appears “divisibility” and “apportionment” are terms used interchangeably, what is potentially divisible is the harm, and if the harm is divisible, what is potentially apportioned is liability, assuming there is a reasonable factual basis for apportionment.”

Against this legal backdrop, the facts in Pakootas brought into sharp focus a commonly encountered situation for CERCLA litigants where multiple parties find themselves attempting to apportion response cost liability for different contaminants, released from different facilities that have become commingled, and are encompassed within what the EPA or state regulatory agency has deemed to be a single “site”.

In addressing an apportionment claim Judge Suko, sitting in the Eastern District of Washington, articulated the importance of the distinction between apportionment of liability in such situations and divisibility of harm.  Judge Suko stated that the first inquiry in the apportionment battle must always be to fix responsibility for the harm for which a party might seek to apportion liability.  The court appropriately held that a CERCLA liability determination is based upon the liability- imposing language of the statute itself:

. . . [L]iability attaches when three conditions are satisfied: (1) the site at which there is an actual or threatened release of hazardous substances is a “facility” under 42 U.S.C. Section 9601(9); (2) a “release” or “threatened release” of a hazardous substance from the facility has occurred, 42 U.S.C. Section 9607(a)(4); and (3) the party is within one of the four classes of persons subject to liability under §9607(a). Pakootas I, 452 F.3d at 1073-74.

In Pakootas the party seeking apportionment (Teck) was clearly a liable person under CERCLA and was undeniably associated with the release of contaminants that could be traced only to the facility it operated.  Teck argued as an affirmative defense to a liability claim that the “harm” at the site should be “apportioned” since the contaminants released by Teck could be discretely indentified even though they had become “commingled” with those released by many others. Teck reasoned that it could defend itself against a joint and several liability claim by way of such “apportionment”.  In so many words, Teck sought to apportion liability based upon divisibility of the contaminants associated with its releases.

Judge Suko observed that:

The fact for liability purposes the . . .  Plaintiffs need to, and intend to, establish that Teck’s slag and/or liquid effluent released or threatens to release hazardous substances (certain metals) from the UCR Site does not, however, limit the scope of the releases or threatened releases from the Site for which Teck can be held liable and, in turn, does not limit the scope of the relevant harm for divisibility/apportionment purposes.

After a thorough examination of many of the more recent contribution/apportionment appellate decisions from around the country, Judge Suko ultimately determined that Teck failed to prove that contamination at the site involved was divisible and, as a result, would be subject to CERCLA 107 joint and several liability with other potentially responsible parties at the site. 

If you find yourself representing a party in an apportionment dispute, this case seems to stand for the proposition that if you cannot determine everything that everyone may have done to create a contaminated site; you may be in trouble in pursuing an apportionment or contribution action.  Additionally, and it is just my personal opinion, the decision represents one of the better anthologies of apportionment/divisibility jurisprudence I have seen in recent cases (and that includes some of the work of the Supreme Court). 

Nevertheless, the high burden of technical or scientific proof Judge Suko would impose upon a party seeking apportionment/contribution could well hearken back to the days before post-BNSF days of “reason based” rules for apportioned liability. (See, e.g. J. Barkett, The Burlington Northern Decision, American College of Environmental Lawyers Blog (May 19, 2009).

The oil and gas industry has lately been at the center of the debate over the scope and reach of the Endangered Species Act (“ESA”).  (See, for example, an August 2011 blog by Pamela Giblin).  Creative approaches will be needed to insulate against potential liability. 

When the U.S. District Court for the District of Columbia approved two settlements in multidistrict ESA litigation (MDL No. 2165) on September 9, 2011, the U.S. Fish and Wildlife Service (“FWS”) committed to, among other things, review over 250 candidate species and determine whether to issue a proposed listing rule or to issue a finding that listing is not warranted by the end of fiscal year 2016.  Among those first on the list to be decided are species located in areas of significant oil and gas development and potentially impacted by oil and gas operations.  For example, the Dunes Sagebrush Lizard (also known as the Sand Dune Lizard), a candidate species under the ESA, is known to exist in the energy-rich Permian Basin.

Once a species is listed as endangered or threatened, protective measures apply to the species and its habitat under Section 9 of the ESA.  The ESA prohibits the possession, sale, import, and/or export of endangered species, as well as the “take” of a listed wildlife species by a private or public entity.  Section 3 of the ESA defines the term “take” broadly to mean “harass, harm, pursue, hunt, shoot, wound, kill, trap, capture, or collect, or to attempt to engage in any such conduct.”  Even activities that are not designed or intended to harm a species, but that could do so indirectly, such as servicing a well, can constitute a take prohibited by the ESA. The ESA subjects any person who violates the statute or its implementing regulations to an array of civil and criminal sanctions.

A decision on whether or not to list the Sand Dune Lizard is due in June 2012.  Thus, oil and gas companies operating in areas of lizard habitat, or where other candidate species may exist, need to be thinking proactively about the impacts of a listing.  Some of the tools available to operators can be utilized in advance of listing and can provide important protections and assurances if the species is ultimately listed.  One significant opportunity for an oil and gas company to potentially insulate itself from ESA liability is a conservation agreement. 

Specifically, a Candidate Conservation Agreement with Assurances (“CCAA”) is an agreement, whereby non-federal property owners commit to implement voluntary conservation measures for a candidate species, and in return receive regulatory assurances that additional conservation measures will not be required and additional land, water, or resource use restrictions will not be imposed should the species become listed in the future.  Furthermore, the proactive conservation efforts performed through CCAAs may remove or reduce perceived threats to the covered species, so that FWS could determine that listing the species under the ESA is unnecessary. 

For example, CCAAs have been developed for the Sand Dune Lizard in Texas and New Mexico, and the Lesser Prairie Chicken in New Mexico.  Since assurances under these agreements are only available to operators and land owners who enroll before a species is listed, time is of the essence for projects or operations that may harm candidate species currently under evaluation, particularly the Sand Dune Lizard. 

For oil and gas operators who fail to take any action, the listing of a candidate species affected by development as threatened or endangered could immediately bring their operations to a halt.  FWS estimates that it could take as long as a year or more for an operator to obtain its own individual “take” permit.  Thus, whether or not these species become listed is certainly something to keep an eye on for oil and gas operators and their counsel.

April 22, 2012 was the 42nd Earth Day, an event that passed with limited notice by most Americans and the news media. For all but a few of us who work in the field, the environment is no longer a “top 10” issue. Yet objectively, the planet is in materially worse shape than it was on the first Earth Day in 1970. As a species, we are collectively destroying the earth’s natural systems, plundering its resources and squandering its natural capital at an accelerating and unsustainable rate. The “Tragedy of the Commons” that Garrett Hardin wrote so eloquently about in advance of the first Earth Day is rapidly unfolding just as he predicted.  

On a global scale, the earth’s ecosystems are under siege.  With a human population of 7 billion, and headed for at least 10 billion fairly soon, growing greenhouse gas emissions and resultant climate change, increasing regional water scarcity, and growing global competition for dwindling resources, the trends are to put it mildly, not looking good.  It has been estimated that we are now consuming the planet’s resources, emitting pollutants and generating waste at about 1.5 times the earth’s carrying capacity. The “externalities” of our ever growing global economy are overwhelming the earth’s ability to assimilate them.
[For a fairly comprehensive and sobering account of the causes, effects and trends of global environmental degradation, I recommend Paul Gilding’s recent book, The Great Disruption.]

If we continue on our present course, our environmental, social and economic systems appear to be headed for collapse, or at least some very rough sledding with unacceptably high (and of course, inequitably distributed) human and ecological casualties.  Catastrophic and irreversible climate change is a growing possibility, if not a probability, without fundamental changes in how we use energy.  After more than 40 years of effort, and a proliferation of “green” policies and initiatives, we are clearly losing the war of environmental protection and conservation.  This is particularly disquieting for those of us who work in the environmental profession, supposedly understand these issues, and presumably care about the real world outcomes.

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The topic I have chosen for this blog may be a surprise to some.  It is not about a late-breaking environmental case--though we have had a couple in Montana recently.  It does not analyze a new regulation or explain a newly-discovered risk of industry practice.  It is not about the new federal guidance (such as the National Forest System Land Management Plan).  Rather, my focus is on the recent challenges in legal education.  While this topic is not substantively environmental, it will have an impact on the practice of environmental law in the not-too-distant future.

Just as we need a rational energy policy, we need a system of legal education that serves the public good.  We need to study seriously our nation’s policies on supporting and delivering legal education.  The importance of rule of law and lawyers to our democracy can hardly be overstated.  Public support for education in general and legal education in particular has declined over the last two decades to the point that people who want to make law their life’s work are facing an uphill battle and society is facing a situation in which no one except the wealthy can afford legal representation.

The challenges facing legal education today have been the subject of numerous recent articles.  Rising debt burdens law school graduates as they search for jobs in a tight market.  In January, the ABA Journal reported that America's law students borrowed at least $3.7 billion in 2010.  In [that same year], 85 percent of law graduates from ABA-accredited schools had an average debt load of $98,500, according to data collected from law schools by U.S. News & World Report.  At 29 schools, that amount exceeded $120,000.  In contrast, only 68 percent of those grads reported employment in positions that require a JD nine months after graduation.  Less than 51 percent found employment in private law firms.  The influx of so many law school graduates--44,258 in 2010 alone, according to the ABA--into a declining job market has created serious repercussions.   

In addition to facing high debt loads and fewer job opportunities, law graduates are confronted by criticism that law school is too theoretical and does not fully prepare graduates for practice.  Jeffrey W. Carr, the general counsel of FMC Technologies, stated in a New York Times article, “The fundamental issue is that law schools are producing people who are not capable of being counselors.  They are lawyers in the sense that they have law degrees, but they aren’t ready to be a provider of services.”  Over the last two decades, schools have added offerings in clinics, externships, and simulations to introduce more experiential learning into their curriculum.  Today, the vast majority of the nation's 200 law schools provide students with some kind of clinical training.  Nevertheless, there is no denying that new law graduates continue to need on-the-job training and mentoring by employers and colleagues before they are ready to fully embrace all aspects of the practice.

The American College of Environmental Lawyers (ACOEL) has been looking for innovative ways to fulfill its service mission to the profession.  The ideas include working with law faculty to survey the skills and knowledge new lawyers need to succeed in our profession and to make recommendations for changes in law schools.  I agree whole-heartedly with this and other innovative suggestions for developing our service and improving the profession, but I want to suggest an additional (old) avenue for this service: mentoring.

Mentoring is important for many reasons, and it serves as a way of bridging the gap in knowledge between the theory and practice in the law.  Mentoring is also an opportunity for lawyers to help others gain insight and judgment.  ACOEL members and other environmental practitioners have numerous opportunities to assist students and young lawyers.  Now, more than ever, there is a need for passionate, competent lawyers in environmental law and related fields, and these new lawyers will need mentors.  They will need mentors to be able to serve their clients and also to achieve the sense of serving the public good – one of the principal reasons students enrolled in law school in the first place. 

Practitioners can contribute in a variety of ways.  If you see a lack of mentoring in today's legal profession and want to contribute to this need, I hope you will reach out to a law school near you and offer to help mentor students and newly licensed lawyers.  I also hope you will consider supporting your own law school or others--particularly those that focus on environmental law--to help ensure the next generation of lawyers has the tools and opportunities to flourish in the practice of environmental law and to serve the public in this crucial field.

USEPA continues its program of death by a thousand cuts to the coal industry, but does the agency’s actions reflect a coherent national energy policy? On March 27, 2012 the EPA issued its new source performance standards for new power plants limiting CO2 emissions per megawatt-hour of produced electricity to a level about that of state-of-the-art, combined-cycle, gas-fired power plants. Importantly, industry observers claim that the level is far below what the best coal-fired power plants can achieve at least without commercially unavailable and quite expensive carbon capture technology.  While certain exceptions within the rule preclude stating that EPA has banned the use of coal in new plants, it comes pretty close.  That reminds me of an often repeated statement of an old client of mine back in the 1970’s whose recycled solvent fuel business and the EPA just didn’t get along that well—he would remark that “if coal were discovered today, EPA would never allow it to be burned.”  He appears to have been ahead of his time.

Of course one winner in this is natural gas.  With new sources of natural gas from shale and fracking having driven natural gas prices downward relative to coal and oil, old King Coal has been facing a distinct price disadvantage for years.  EPA had further disadvantaged coal and oil as a result of last year’s cross-state air pollution rule.  Last December, EPA’s MATS rule (mercury and air toxics standards) for power plants further adversely affected coal. Is EPA’s latest effort merely the coup de grace?

Don’t get me wrong.  I’m not a coal apologist.  One need not be a fan or sworn enemy of either natural gas or coal, of free markets or environmental regulation, to realize that something is going on that is important to our national energy situation with no one particularly in charge.  After all, coal mining, transportation and existing uses drive tens of thousands of jobs and the economy of such disadvantaged states as West Virginia.  Presidents and presidential candidates have decried our lack of a national energy policy for 30 years with meager results. 

My point is otherwise: What does the overall national interest—economic, energy and environment—have to say about the relative use of coal vs. natural gas vs. petroleum vs. nuclear power?  Should EPA’s rule, based on concerns for global warming and not immediate health and safety, trump everything else?  Should we increase our reliance on natural gas at the expense of coal?  Should we be at the mercy of market forces without regard to our long term, sustainable future?  Should we simply use a bumper sticker (“Drill, baby, drill”) instead of reasoned policy? 

What passes as policy is a series of regulatory silos each with its own raison d’etre—FERC, NRC, EPA, DOE. And, of course, Congress, some of whose members can’t wait to kill alternative energy policies (solar), decry subsidization for renewables while rejecting as nearly immoral attempts to eliminate out of date tax subsidies for oil and gas (Subsidies at today’s prices?  Give me a break!). EPA’s new rule, in isolation from everything else, is merely another example of our lack of a coherent national policy on energy.  It may be a good environmental rule, but is it good for the country?

On February 28 and 29, 2012, the U.S. Court of Appeals for the District of Columbia Circuit heard oral argument in Coalition for Responsible Regulation v. EPA, No. 09-1322 et. al., consolidated challenges to the U.S. Environmental Protection Agency (EPA) ’s greenhouse gas (GHG) regulations.  These regulations are being challenged by a coalition of industry groups and some states (the Coalition).  The Coalition argues that the EPA does not have the authority to regulate GHGs from stationary sources under the Clean Air Act (CAA)’s Prevention of Significant Deterioration (PSD) permitting program without Congress amending the law.

The Coalition is asking the Court to vacate EPA’s rules regulating greenhouse gases, including the so-called Tailpipe and Tailoring Rules, on the grounds that  they are contrary to the Clean Air Act and deviate from the explicit emission permitting thresholds in the CAA.  As Peter Keisler, a lawyer for the National Association of Manufacturers (NAM) argued, “the agency crossed the line from stationary interpretation to statutory revision” and violated the law by raising the emissions thresholds far above those provided for by Congress in the CAA in order to avoid issuance of an unmanageable number of PSD permits in the short term . 

The PSD program applies to new major sources or major modifications at existing sources for pollutants where the area the source is located is in attainment or unclassifiable with the National Ambient Air Quality Standards (NAAQS).  As Keisler explained to the court, 83% of the GHG emissions from stationary sources would be regulated if EPA addressed greenhouse gas emissions solely in permits for the larger sources already subject to PSD requirements based on their emissions of criteria pollutants. 

As Keisler then explained, under EPA’s Tailoring Rule which requires permits based solely on greenhouse gas emissions, 86% of the GHG emissions from stationary sources would be regulated – “a very tiny increment of difference, but a huge difference” in the number of sources that would now be regulated.  And this increment of difference between 83% to 86% would translate into stationary sources never before regulated and now required to meet all PSD requirements, including implementation of costly best available control technology (BACT).

A decision by the Court is expected this summer. 

Having participated in oral argument preparation and having observed both days of the oral arguments, it is my impression that the NAM arguments against EPA's Tailoring Rule provide the Coalition with the best chance for victory.  NAM’s sound interpretation of the CAA and Congressional intent, coupled with the "avoidance of absurd results" doctrine, would blunt EPA's quantum leap through the CAA to create non-statutory GHG emission thresholds capturing only an additional 3% of stationary sources that were previously unregulated and would now have to bear crippling air pollution control costs for no real environmental benefit.  This is the real absurdity of EPA's Tailoring Rule that I hope the court's decision will remedy.

By Daniel Riesel and Vicki Shiah, Sive Paget & Riesel, PC

Many environmental lawyers get involved in alternative energy development projects. But some may not have the engineering or technical background to understand some of the nuances of such projects.

Recently, a local municipal corporation installed three 1.5 MW wind turbines at its wastewater treatment facility, with the attendant publicity regarding reducing its electric energy consumption from the local distribution utility. The turbines have been up for some time but are not operating. Why not? Because, prior to erecting the turbines, the corporation did not negotiate, execute and implement an interconnection agreement with the local distribution company. And it may be some time before such agreement is executed and the interconnection is made.

Meanwhile, the turbines stand erect and motionless. While some may find this visually pleasing, what most do not realize is that wind effects on a motionless turbine – even when the turbine blades are feathered – produce considerable strain on the turbine components and may result in metal fatigue or breakage sooner than anticipated, with the consequent increase in unbudgeted maintenance and replacement costs. Such costs could have a material effect on the economic viability of the project.

Sign and implement the interconnection agreement first. You have been warned.

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.

The use of ecosystem services as a tool for compensatory mitigation is off to a slow start in Oregon.  It remains to be seen whether state agencies will effectively embrace and implement this relatively new approach to setting priorities and standards for mitigation programs. A specific question from the standpoint of water use and development is whether a wide range of ecosystem services can be used as an alternative to “bucket-for-bucket” in-stream flow replacement as mitigation to offset new water development.

The concept of ecosystem services – defined as “the benefits human communities enjoy as a result of natural processes and biodiversity” – has been recognized in Oregon law since 2009. (ORS 468.581(3)). The law establishes a general policy to support the maintenance, enhancement and restoration of ecosystem services in Oregon (ORS 468.583). Agencies are “encouraged” to use ecosystem services markets as a means to meet mitigation needs for various programs, and are directed to consider mitigation strategies that recognize the need for biological connectivity and ecological restoration efforts at a landscape scale rather than exercise an “automatic preference for on-site, in-kind mitigation” in making mitigation decisions (ORS 468.587(2)). See “Adventures in Water Quality Mitigation” for additional background.

Despite this policy and directive, the Oregon Water Resources Department (OWRD) has not yet taken any actions to modify its mitigation policies relating to issuance of new water right permits.  Under long-standing procedures, OWRD requires mitigation for new uses that are determined to have the potential to interfere with in-stream flows needed for fish that are listed as sensitive, threatened or endangered under state or federal programs.  (OAR Chapter 690, Division 33).

The need for mitigation arises most often in the context of reviewing applications for new ground water use. When the ground water source is determined to be in hydraulic connection to surface waters providing habitat for the listed fish species, mitigation may be required to offset the expected surface water depletion. Based on guidance from a biological opinion issued in a specific water right permit matter some years back, OWRD typically requires “bucket-for-bucket” mitigation in the form of in-stream flow restoration at or above the stream reach that will be affected by the ground water use. 

Applicants generally obtain mitigation water by acquiring and cancelling other existing water rights for surface water use.  In practice, the system results in a de facto cap and trade program, conditioning approval of new water rights on the cancellation of existing rights. 

In a few regions of the state – most notably the Deschutes Basin in Central Oregon – the bucket-for-bucket replacement approach works because mitigation water is generally available through voluntary markets.  This somewhat unique set of circumstances arises because of population growth and land use changes in an area of relatively marginal farming productivity.  As farm lands are converted to housing and urban uses in and near the cities Bend, Redmond and Prineville, the existing water rights become available for mitigation purposes.

In other parts of the state – most notably the highly productive and water-efficient farming region in the mid-Columbia Basin – the fact situation is quite different.  There is very little mitigation water available because existing water rights are needed to maintain existing agricultural production levels.  The frustration for economic development interests is exacerbated by the enormous volume of flow in the Columbia River and huge reservoir pools created by the federal hydropower system, both of which are untouchable because of the regulatory limitations on new withdrawals.   

The issue of ecosystem services as a potential alternative for mitigation took center stage briefly in the 2012 legislative session – but the discussion resulted in no action. HB 4126 would have spurred availability of ecosystem services markets by focusing on improved methodologies for quantifying and applying ecosystem services “credits.” Another bill that was hotly debated but eventually died in committee was focused directly on the Columbia Basin problems.  HB 4101 would have required OWRD to “consider new mitigation options for new surface water diversions” in the Columbia River Basin. The mitigation wording was specifically intended to open the door for alternatives to the “bucket-for-bucket” approach.  By putting the ecosystem services concept to work, mitigation alternatives could reasonably include investment in high value habitat restoration, including temperature reduction or other water quality improvements in priority tributaries to offset direct withdrawals from the Columbia River. 

For many of us directly involved in the Columbia River debates in Oregon, this new approach could be a key to unlocking access to the river for new economic use.  Without this policy change, Oregon water uses will continue to see little or no new irrigation development in the area because of the lack of traditional mitigation sources.  The Governor and legislative leadership are already working on a revival of the HB 4101 discussion in 2013.

On Friday, March 30, the United States Environmental Protection Agency (“EPA”) announced that the agency was withdrawing its December 7, 2010 Imminent and Substantial Endangerment Administrative Order (“AO ”) issued unilaterally to Range Resources Corporation and Range Resources Production Company (“Range”).  With much fanfare and national media attention, EPA issued the AO to address the contamination of two water wells in North Central Texas.  EPA alleged that the source of the contamination was from Range’s oil and gas activities, including hydraulic fracturing, in the Barnett Shale Formation.  Range has challenged EPA’s action with pending litigation in the Northern District of Texas and in the Fifth Circuit.  Was EPA’s decision to withdraw its AO an outgrowth of the recent unanimous Supreme Court decision in Sackett v. EPA?

In addition to ordering replacement water supplies to the recipients of water from the affected water well, the AO included the requirements that Range study a twenty-county aquifer, identify gas flow pathways anywhere within that aquifer regardless of their source, and prepare a plan to eliminate those flows and remediate any area of the aquifer that has been impacted by gas from any source.  Range was to identify and sample all private water wells within 3,000 feet of their two suspect gas wells, as well as all the water wells serving a subdivision in Parker County.  Range informed EPA that it disputed the validity of the AO and would not comply with some of its terms.

In addition to Range’s challenge to the AO, the Railroad Commission Texas, the state agency with sole jurisdiction and responsibility for the control and disposition of waste and the abatement and prevention of pollution of surface and subsurface water resulting from oil and gas activities, called a hearing to consider whether Range’s operations caused or contributed to the contamination of the water wells in question.  Based on the evidence presented at the hearing, conducted on January 19-20, 2011, the Railroad Commission found that the contamination of the water wells came from the shallower Strawn gas field, which begins about 200 to 400 feet below the surface.  Geochemical gas testing demonstrated that the natural gas seeping into the water wells did not match the gas produced by Range from the much deeper Barnett Shale field, which is more than 5.000 feet below the surface in that area of Parker County.  The evidence showed that hydraulic fracturing of gas wells in the area could not result in communication between the Barnett Shale gas field and the shallow aquifers from which water wells in the area produce.  EPA chose not to participate in the state hearing process.

EPA brought a civil enforcement action in the Northern District of Texas against Range on January 18, 2011, Case No. 3:11-cv-00116-F, seeking injunctive relief and civil penalties for Range’s failure to comply with the AO.  Range filed a petition for review on the AO with the 5th Circuit on January 20, 2011, Case No. 11-60040, challenging the AO and the constitutionality of the AO statutory scheme as interpreted and applied by EPA.

The district court in its Order Denying Without Prejudice Defendants’ Motion to Dismiss and Staying Case, 2011 WL 2469731 (N.D.Tex.), struggled with EPA’s claim that it only has to prove noncompliance with the AO and the Court has no jurisdiction to review the factual and legal basis of the AO. The Court found that the AO was a final agency action, but stayed the case pending the 5th Circuit decision.

The issues before the 5th Circuit included whether the AO was final agency action and, if so, has Range been provided due process. Oral argument was considered on October 3, 2011.

On March 21, 2012, a unanimous Supreme Court held in the Sackett case that AOs issued under the Clean Water Act constitute final agency action. Under the Administrative Procedure Act, Respondents, like Chantell and Michael Sackett, are afforded pre-enforcement review of the factual and legal basis of the AO and may bring a civil action under the APA to challenge the AO.

Given the opinion for a unanimous Supreme Court in the Sackett case, EPA must have felt less than enthusiastic about its prospects in the pending Range cases. On Friday afternoon, March 30 with no fanfare and limited media attention, EPA announced the withdrawal of the Range AO. In a letter to EPA on the same date, Range confirmed the withdrawal of the AO and a related joint stipulation to dismiss EPA’s enforcement action and committed to sample twenty private water wells located in southern Parker County on a quarterly basis for one year, a substantial reduction in the scope and magnitude of the terms in the AO.

EPA’s hasty dismissal of the Range case raises some interesting questions. Did EPA agree to withdraw the Range AO in order to minimize the litigation risk of establishing pre-enforcement review rights of respondents to unilateral AOs under the Safe Drinking Water Act?  How extensive will the Sackett case be applied to unilateral AOs authorized under other non-Clean Water Act statutes administered by EPA and other federal agencies? What are the implications to EPA’s ability to react quickly to bonified public health emergencies? Will Congress need to overhaul statutory AO provisions to avoid the problem confronted in Sackett?

A Superfund cleanup project is, of course, an exercise in "greening" the environment, in that the remediation project is designed to remove contamination from the environment and return the affected property to beneficial use. With the February 2012 publication of EPA's "Methodology for Understanding and Reducing a Project's Environmental Footprint" report, EPA has begun to formalize a process for ensuring that the remediation itself is done as greenly as possible.

The methodology describes a total of 21 metrics by which the greenness of a cleanup can be measured across five core elements: air, water, energy, materials and waste, and land/ecosystems. The report contains planning checklists (warranted to be "user-friendly") and a series of spreadsheets (which are assuredly not user-friendly) illustrating formats for organizing raw data and quantifying impact estimates.

While the methodology will primarily be applied to future remediation projects, the techniques are already being tested at a few ongoing remediation sites that have "volunteered" to pilot the methodology. For example, at one site in the Midwest that is in the middle of long-term groundwater pump-and-treat, an EPA consultant examined the project to determine whether the carbon emissions associated with the electricity (generated by the local utility at a coal-burning power plant) needed to run the pumps and associated air strippers could be reduced.

No word yet on whether the next level of meta-analysis will require investigating how to minimize the resources used to analyze the footprint “greenity” of the underlying project itself.

For anyone who thought New York State was galloping toward exploration, development and regulation of drilling for natural gas, and for anyone who wondered how and when you’d see the brakes applied, two towns did just that during the third week of February. Using local zoning ordinances, the towns of Dryden and Middlefield banned drilling for natural gas within their geographic boundaries.  How they did so, whether they are on solid legal ground for their bans, and what, if anything, the state can or should do to further enhance the development of natural gas are important questions.

Drilling for natural gas, which has gone on for decades in the west, has expanded rapidly in the east in recent years, largely due to a technique known as hydraulic fracturing or hydrofracking.   For property owners, leasing land for gas drilling has created an economic boon, and with it the potential for bringing jobs to a portion of the state that has long been economically depressed, along with the prospect of lessening the nation’s dependence on foreign energy sources.  At the same time, hydrofracking has heightened concerns about contamination of well water, air pollution, and the generation of hazardous waste, as well as other environmental concerns. 

For now at least, it appears that towns in New York State may ban gas drilling within their borders if they choose to do so.  Two statutes in particular – aided by judicial interpretation – support bans like those enacted by the Town of Dryden and the Town of Middlefield.  In regulating oil and gas development, the Oil, Gas and Solution Mining Law (OGSML), set forth in Environmental Conservation Law (“ECL”) Article 23, Title 3, and the Mined Land Reclamation Law (“MLRL”), set forth in ECL  Article 23, Title 27, come into play. 

On February 21, 2012, in Anschutz Exploration Company v. Town of Dryden, Index No. 2011-0902, Tompkins County Supreme Court Justice Phillip Rumsey ruled that the OGSML does not preempt local restrictions that ban gas drilling within the geographic boundaries of the municipality.  Similarly, on February 24, 2012, in Cooperstown Holstein Corp. v. Town of Middlefield, Index No. 0011-0930, Otsego County Acting Supreme Court Justice Donald F. Cerio ruled that the OGSML does not preempt a local municipality from enacting a land use regulation within its geographic jurisdiction, and that a local municipality may permit or prohibit gas drilling in conformity with statutory authority.

The New York State Court of Appeals reached a similar decision in Frew Run Gravel v. Carroll, 71 N.Y.2d 126 (1987) with respect to a comparable provision of the MLRL that empowers the New York State Department of Environmental Conservation (“NYDEC”) to regulate mining and the reclamation of mined lands.   The Frew Run court held that zoning ordinances were not the type of regulatory provision that the legislature foresaw as being preempted by the MLRL and made a distinction between the regulation of how property may be used, i.e., the local zoning ordinance, and the regulation of mining activities.  Just 11 years later, the Court of Appeals again examined the supersession claim clause of the MLRL in In the Matter of Gernatt Asphalt Products, Inc. v. Town of Sardinia, 87 N.Y.2d 668 (1996) and likewise concluded that zoning ordinances were not the type of regulatory provision that the legislature foresaw as being preempted by the MLRL.

The Town of Dryden and the Town of Littlefield decisions relied on these authorities, and thus are on solid legal footing.  As a result, a municipality in New York State is free to ban operations related to oil and gas production within its borders just as towns are free to use zoning ordinances to ban mining activity, even recognizing an incidental effect on the oil, gas drilling or mining industry. 

What does this mean for gas drilling in New York State?  Dryden and Middlefield are but two towns in upstate New York that have taken action. Whether these towns are outliers or the start of a trend remains to be seen.  Many citizens of New York long have said that towns should have the authority to block natural gas drilling within their boundaries.  However, towns may forego bans on gas drilling because of the perceived economic benefits.  

The development of natural gas drilling in New York is in its early stages.  During the early run-up to exploration and development of natural gas, the NYSDEC Commissioner, with one stroke of a pen, banned natural gas drilling in the entire New York City watershed, as well as in the City of Syracuse watershed.  The Commissioner’s action alleviated concern that hydraulic fracturing might harm pristine drinking water for those two major cities.  Such environmental concerns could be the subject of sharp debate in other towns where gas drilling is proposed. 

NYSDEC is still six months to a year or more away from adopting a final environmental impact Statement regarding drilling, and ultimately, it may not even be up to New York.  The Environmental Protection Agency has empowered a team of experts to examine the technology and the science of hydraulic fracturing, and to make recommendations that could include extensive federal regulation.  When New York is ready to look at permit applications, the NYSDEC can evaluate the legal landscape to determine how the courts have handled the fracking cases.  As for the New York legislature, assuming that the bans on natural gas drilling are upheld, its willingness to tackle an issue as controversial as natural gas drilling will depend on the price of natural gas, the economic landscape, and the will of the State Executive branch.  For those of you keeping score, for now, it is towns, two, New York State, zero.

¹Using water at high pressure, hydrofracking can break rocks deep underground.  In using this technique, drilling begins vertically and is then done horizontally, opening a larger land area to well placement and allowing for the extraction of more product.
 ²The OGSML contains the following statement:  “The provisions of this article shall supersede all local laws or ordinances relating to the regulation of the oil, gas and solution mining industries; but shall not supersede local government jurisdiction over local roads or the rights of local governments under the real property tax law.” ECL 23-0303(2) (emphasis added).
 ³In Frew Run, the Court of Appeals examined the supersedure provision of the MLRL, which at that time provided:  “For purposes stated herein, this title shall supersede all other state and local laws relating to the extractive mining industry; provided, however, that nothing in this title shall be construed to prevent any local government from enacting local zoning ordinances or other local laws which impose stricter mined land reclamation standards or requirements than those found herein.” ECL 23-2703(2) (emphasis added).

If you live in Texas or have driven through the state, you know that our popular anti-litter campaign slogan is “Don’t Mess With Texas.”  This slogan may have also been appropriate for the 5th Circuit’s recent decision in Luminant Generation Company, et al. v. U.S. Environmental Protection Agency, No. 10-60891, slip op. (5th Cir. Mar. 26, 2012), where the court came down hard on the U.S. Environmental Protection Agency (“EPA”) for its very late disapproval of revisions to Texas’s State Implementation Plan (“SIP”) pertaining to standard permits for  pollution control projects (“PCPs”).   

In Luminant, the 5th Circuit noted that the federal Clean Air Act (“CAA”) “prescribes only the barest of requirements” for New Source Review (“NSR”) of minor new sources of air pollutant emissions.  It found that EPA had not identified a single violation of the CAA or EPA’s regulations and thus had no legal basis for its disapproval of the PCP Standard Permit provisions, striking down as arbitrary and capricious the “three extra-statutory standards that the EPA created out of whole cloth.”  Id. at 21.  Two of those standards referenced Texas law and a third was based on too much agency discretion in permit issuance.

Noting that EPA failed to act until three years after the 18 month statutory deadline for EPA action had passed, the court ordered EPA to expeditiously reconsider the SIP revision submission made by the Texas Commission on Environmental Quality (“TCEQ”), and compared the “sweeping discretion” given to the states in developing their SIPS to EPA’s “narrow task” of “ensuring” that the Texas regulations “meet the minimal CAA requirements that govern SIP revisions to minor NSR, as set forth in 42 U.S.C. § 7410 (a)(2)(C) and § 7310(l).”  Id.  The court then stated that this limited review “is the full extent of EPA’s authority in the SIP-approval process because that is all the authority that the CAA confers.”  Id. at 21-22.

For the past several years, the TCEQ and EPA have butted heads over various aspects of Texas’s SIP.  This was the third of three cases heard by the 5th Circuit on SIP reviews, albeit the first in which a decision has been rendered.  Oral arguments were held in the other two pending cases last fall – the first relating to Texas’ Qualified Facilities program, Texas Oil & Gas Association, et al. v. U.S. EPA, No. 10-60459 (5th Cir. filed Jun. 11, 2010), and the second relating to Texas’s Flexible Permit Program, Texas v. U.S. EPA, No. 10-10614 (5th Cir. filed Jul. 26, 2010). 

Of these three cases, the EPA’s disapproval of Texas’s Flexible Permit Program has caused the most tension between the agencies.  That program provides facilities with flexibility to reduce emissions by the most cost-effective means through allocation of emissions on a facility-wide basis rather than by source point, and has been a basic tenet of permitting in Texas since 1994.  The end result of the Flexible Permit Program—which Texas considers akin to the federal Plantwide Applicability Limit (“PAL”) under the New Source Review program—not only gave facilities greater flexibility and control, but actually reduced emissions and provided for compliance with all state health standards, as well as all applicable federal Clean Air Act requirements. 

Given that EPA’s delay in disapproving these last two aspects of the Texas SIP was even more egregious (effectively up to sixteen years), it is likely that the 5th Circuit will view the EPA’s actions in those cases with a similarly critical eye.  We in Texas hope that the court continues to call EPA to task for its past unpopular and unwarranted decisions with respect to Texas’s SIP.

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.

As Ted Garrett reported in his recent blog, the Supreme Court has issued its long-awaited decision in Sackett v. EPA.  Not surprisingly (based on the questions asked at oral argument), the Court unanimously reversed the Ninth Circuit and ruled that the recipient of an administrative compliance order to restore wetlands under Section 404 of the federal Clean Water Act (CWA) can challenge that order in court under the APA.  The Court soundly rejected the Government’s argument and the Ninth Circuit’s conclusion that the CWA implicitly precludes “pre enforcement” judicial review of such orders. 

In addition to that important ruling, this decision is noteworthy for what it did not do.  Even more pointedly, the decision highlights the enormous underlying problem of uncertainty about the scope of waters regulated by the CWA, which remains untouched and unfixed by this opinion. 

One of the important issues not addressed by the Sackett decision is the constitutional due process argument made by the plaintiffs that precluding judicial review of such orders is unfair and unlawful.  The decision simply says that the CWA itself does not preclude judicial review, so the right to review of this final agency action is presumed under the APA.  As a result, it left for another day whether other statutes (like CERCLA § 113(h)) that expressly preclude pre-enforcement judicial review would pass constitutional muster. 

Second, it did not expressly address whether a party can judicially challenge any aspect of an administrative order, or can only make the basic “jurisdictional challenge” regarding whether the agency in fact has regulatory authority over the subject property or persons.  Justice Ginsburg, in her concurring opinion, states that the decision only addresses the jurisdictional issue and leaves the question of whether other types of challenges can be brought “open for another day and case.”  It remains to be seen whether EPA and the lower courts will adopt this narrow reading of the decision. 

Third, the opinion emphasizes the clear finality of the administrative order at issue in the Sackett case as a basis for APA judicial review.  It remains to be seen whether an agency order or ruling subject to some additional agency appeal, review or deliberative process, no matter how futile or fore-ordained, would be considered a “final agency action”.  It also remains to be seen whether EPA and other agencies will attempt to address and undercut this “finality” factor by creating post-order administrative processes that delay or frustrate judicial review.
 
Finally, while some will trumpet this as a great victory for the regulated community, Justice Alito’s concurring opinion got it right in saying that this “decision provides a modest measure of relief”, but the huge underlying problem reflected by this dispute is the “hopelessly indeterminate” scope of “waters of the United States” regulated under the CWA, which this decision does nothing to alleviate or address.  As a result, while a tiny fraction of regulated persons may now choose to challenge an administrative compliance order in court, the very significant cost of doing so, and the low chance of success combined with the draconian and mounting penalties resulting from a failed challenge, will still leave nearly all regulated persons (in Justice Alito’s words) “with little practical alternative but to dance to the EPA’s tune.” 

The bottom-line is that allowing regulated persons to sue in these circumstances (again in Justice Alito’s words) is “better than nothing,” but the underlying regulatory morass will not be fixed unless and until Congress or EPA and the Corps develop a clear, appropriate and formal delineation of waters regulated by the CWA.  The informal “Jurisdictional Guidance” floated last year by EPA and reportedly now parked at the White House, if adopted, would worsen rather than resolve this uncertainty.  After 40 years, it’s time to fix this mess and pass a clear law or rule on the reach of the Clean Water Act.  

On February 22, 2012, the United States Supreme Court issued a rare 9-0 opinion addressing issues of interest to environmental lawyers and historians alike.  PPL Montana, LLC v. Montana, 565 U.S., 132 S.Ct. 1215 (2012).  The Court's decision needs to be reviewed and properly understood by practitioners and parties dealing with a myriad of activities that take place along and under rivers, including environmental remediation and determination of ownership of river beds and banks within any environmental site through which a river flows.

The Court dealt with a dispute between the Petitioner (owner of hydroelectric facilities on three rivers in Montana) and the State of Montana regarding who owns the riverbeds.  Under the Constitution-based “Equal Footing Doctrine,” first adopted by the Supreme Court in 1842, the answer to that question depends upon whether the rivers were navigable at the time of statehood. 

The high court reversed the decision by the Montana Supreme Court holding that Montana owned the riverbeds in question, based upon the Montana Court’s “infirm legal understanding of [the Supreme] Court’s rules of navigability law for title under the equal footing doctrine.” 

The Court reinstated bedrock principles of title and navigability law that it last ruled on in 1931.  The Court reaffirmed that, while states do receive title at the time of statehood to the beds and banks of rivers that were "really navigable," the states may not amend the pertinent federal navigability rules in their favor, post-statehood, because "it is not for a State by courts or legislature, in dealing with the general subject of beds or streams, to adopt a retroactive rule for determining navigability which would enlarge what actually passed to the State, at the time of her admission."  The Court also confirmed that, if a river was not navigable at statehood, then title to the river's beds and banks stayed in the United States "to be transferred or licensed if and as it chooses;" for example, by land patents or grants, leaving private riparian landholders on either side of a river owning the beds "to the center of the stream."

Some other important highlights from the unanimous opinion, authored by Justice Kennedy:

           1.    The Court explained that, other than for title, the concept of “navigability” is used in different contexts, including for purposes of assessing federal regulatory authority under the Commerce Clause and to determine admiralty jurisdiction, but emphasized that “the test for navigability is not applied in the same way in these distinct types of cases." 
           2.    The Court reiterated that rivers are deemed navigable in fact when they are "used, or are susceptible of being used, in their ordinary condition, as highways for commerce, over which trade and travel are or may be conducted in the customary modes of trade and travel on water."  Importantly, however, in title disputes, the existence or absence of such commercial "navigation is determined at the time of statehood;" is "based on the natural and ordinary condition of the water;" and cannot be based on improvements made to that natural condition.
           3.    The Court rejected Montana's reliance on present-day recreational use of the rivers, including anglers in drift boats, as evidence that the rivers had been susceptible of commercial navigation at the time of Montana's statehood in 1889.  The Court held that an assessment for title navigability at statehood "concerns the river's usefulness for trade and travel, rather than for other purposes," and explained that while "a river need not be susceptible of navigation at every point during the year, neither can that susceptibility be so brief that it is not a commercial reality:"  “At a minimum, a party seeking to use present-day evidence for title purposes must show: (1) the watercraft are meaningfully similar to those in customary use for trade and travel at the time of statehood; and (2) the river's post-statehood condition is not materially different from its physical condition at statehood."

I attended on February 28th and 29th the oral arguments in the D.C. Circuit for what are euphemistically referred to as the “Greenhouse Gas Cases” now pending before that court. Two days of arguments, with 17 different attorneys presenting oral argument.  Perhaps not surprisingly, the judges weren’t the only ones who lost track of which issues were being addressed by different advocates.  The advocates themselves seemed to forget at times and repeatedly walked over each other’s lines.  It reminded me why the Supreme Court is so reluctant to allow for divided argument even in circumstances when the case for divided argument is otherwise quite compelling.

I will leave it to others to dwell on what the D.C. Circuit is likely to do, and instead will don my academic garb for an ironic aside on the history of the CAA’s PSD program. In watching the oral arguments, I was reminded about the extraordinary role that Hunton & Williams has played since the emergence of modern environmental law serving as environmental counsel for the powerplant industry including in this latest round.  One would be hard-pressed to identify any other law firm that has been such a constant and consistent voice on behalf of industry during the past four-plus decades of environmental litigation, especially on air pollution matters.

With the benefit of hindsight, however, those industrial clients might have fared a bit better had Hunton & Williams made one discrete exception to the consistency of its record.  The PSD program today finds its origins in the Supreme Court’s 1973 affirmance by an equally divided Court in Fri v. Sierra Club of a district court ruling that embraced the Sierra Club’s claim that the Clean Air Act, as drafted in 1970, required EPA to prevent “significant deterioration” of areas of the nation that were at the time cleaner than national ambient air quality standards.   The papers of Justice Harry Blackmun, which can be found in the Library of Congress, reveal, however, that Sierra Club achieved that affirmance after Hunton & Williams filed an amicus brief in the case in support of Edison Electric’s contention that the Clean Air Act did not require such a program. That filing apparently prompted Justice Lewis Powell – a former Hunton & Williams partner – to recuse himself from the case (after sitting at oral argument), resulting in the 4/4 split.  There is little doubt, based on his other pro-business votes in environmental pollution cases how Justice Powell would have voted had he not recused himself. The most certain upshot would have been an EPA victory and therefore the Agency never would have had to promulgate PSD regulations in compliance with the High Court’s ruling. And the absence of those initial PSD regulations would have dramatically shifted the political dynamic when Congress was amending the statute in 1977.

What I have always found especially odd about the firm’s amicus filing in the PSD case is that this was not the first time Justice Powell had recused himself in light of Hunton & William’s participation in a case before the Court, including on behalf of the powerplant industry as amicus curiae.  The Justice had done so consistently since joining the Court, which makes one wonder what the firm was thinking when it filed the amicus brief in Fri v. Sierra Club.  Interestingly, Justice Powell ended that recusal practice soon afterwards.  Perhaps the Justice received a very unhappy communication from either Henry Nickel or his close friend at the firm, George Freeman, regarding the necessity of a recusal in those circumstances?  Of course, I have no knowledge whether such a communication ever in fact occurred, but it does not take a lot of imagination to speculate that some folks at Hunton were likely exceedingly unhappy about the Justice’s recusal in light of the Court’s 4/4 affirmance. 

In all events, and regardless of the outcome of the recent greenhouse gas cases before the D.C. Circuit, the Sierra Club’s thank-you note to Hunton & Williams would seem long overdue. 

On December 12, 2011, the Wisconsin Department of Natural Resources (WDNR) issued a policy statement on including Permit "Shield" Statements in Title V air operating permits for sources located in Wisconsin.  A copy of the new policy can be found here.  WDNR's previous policy was to include a statement in Title V permits, indicating that the permittee's compliance with all emission limitations and conditions in the permit constituted compliance with all applicable requirements for the source under the federal Clean Air Act and Wisconsin Law.

In the December 12 policy statement, WDNR decided that in the future, the agency would not include permit shield protection in new Title V air permits, unless (among other things), the permit applicant conducts (and submits to WDNR) a comprehensive written explanation of "every change over the entire life" of each emissions unit at the facility to ensure that none of the changes made to the unit or maintenance activities on the unit constituted a "modification" within the meaning of federal and Wisconsin New Source Review rules.  See Items 5 and 6 on page one of the Executive Summary in WDNR's policy document.

Of course, this means that few, if any, companies with facilities in Wisconsin will be requesting permit shield language in the future for their Title V air operating permit renewals.  The new WDNR policy will effectively mean that the permittee would have to put itself through what would amount to a "voluntary" Section 114 Information Inquiry on all physical changes and changes in operation for every emissions unit in the permitted facility -- going back to the original installation/construction of the equipment.  I don't know of many companies in this current economy that would have the time or resources (or the inclination) to do this.

And for what benefit?  Such a due diligence report, if it was ever actually filed with WDNR, would only invite second-guessing and additional questions on certain projects -- further delaying what has already become an interminably long process.  The environmental groups in Wisconsin would scrutinize such reports if they were ever filed with WDNR.  And in the end, you have to ask yourself, "How many Title V permit shields have ever stopped a federal NSR enforcement case from being filed and prosecuted in the first place?"

There is likely to be some "push back" on this new policy by various industry groups here in Wisconsin.  The hope is that officials in the Governor's Office and higher level WDNR officials will exercise some judgment and restraint in this matter.  We'll see how that plays out in the next several months.

In a 50 page opinion issued February 28, Federal Magistrate Judge Acosta handed EPA and the Oregon Department of Environmental Quality (DEQ) a partial victory in Northwest Environmental Advocates v. EPA et al.  The decision upheld EPA’s approval under the federal Clean Water Act of the Oregon DEQ’s numeric temperature water quality standards, while rejecting certain narrative standards.  NWEA also challenged the biological opinions issued by the National Marine Fisheries Service and U. S. Fish and Wildlife Service under the Endangered Species Act.  The Services concluded that the Oregon temperature and intergravel dissolved oxygen standards would not jeopardize listed salmonid species, and those agencies did not fare as well in the case.

Oregon’s temperature standards were adopted in 1996 and promptly attacked.  In 2003 EPA Region 10 adopted its own Temperature Guidance, and Oregon’s temperature standards were reformulated.  NWEA again found the revised standards wanting and brought the case at issue.  The judge upheld DEQ’s numeric temperature standards, despite evidence that the standards were less than optimal for fish, deferring to the scientific expertise of the government. 

The judge found fault, however, with narrative standards that deal with “nonpoint sources” of heat.  A point source is a discrete, end-of-pipe discharge to a waterway, whereas nonpoint sources are diffuse, such as runoff from a field.  The Clean Water Act regulates point sources through a permit program, while nonpoint source control is mostly aspirational, although it does direct states to develop best management practices and measures for controlling nonpoint source pollution.  Under the Oregon narrative standards, a nonpoint source that adopts “best management practices” is deemed to be in compliance. 

The court found that this formulation undermines DEQ’s numeric standards as it provides a substitute for actual compliance.  The same reasoning was applied to the so-called Natural Conditions Criteria, which provide that compliance is excused if natural conditions exceed standards.  The court found that such an exemption supplants otherwise lawful standards.
 
The court’s objections to the narrative standards notwithstanding, neither the Clean Water Act nor state law authorize direct regulation of nonpoint sources.  The narrative standards were Oregon’s attempt to address pollution from nonpoint sources without adopting a new regulatory program.  It seems the court reacted to the blanket exemptions provided in the rules, and it further seems that Oregon can revise them and pass muster.  The deference shown the agencies on the science suggests that the court will allow some leeway on language used to deal with nonpoint sources and the effects of natural conditions.

No such deference was granted to the federal fisheries services.  On remand they will have to prepare a new biological opinion that accounts for Evolutionary Significant Units (i.e. sub-groups of salmonids), potential for recovery, baseline conditions and cumulative effects.  Further, the Fish and Wildlife Service was chastised for considering factors other than the best scientific data available in formulating its opinion.  That is, FWS seemingly bowed to pressure to support the EPA Temperature Guidance, even though it believed that temperatures for bull trout provided for in the Guidance were not what FWS considered to be optimal. 

The net result of the many years of litigation over Oregon’s temperature standards is that Oregon’s approach, and EPA’s approval under the Clean Water Act, were largely validated.  Problems with narrative standards should be correctable.  Whether on reanalysis the Services find that the standards are protective of listed species, as required under the Endangered Species Act, remains to be seen.

The Supreme Court issued its long awaited decision in Sackett v. EPA. In a unanimous decision, the Court held that the Sacketts may bring a civil action under the Administrative Procedure Act to challenge EPA’s compliance order. The court rejected the government’s argument that EPA is less likely to use orders if they are subject to judicial review, saying that “[t]he APA’s presumption of judicial review is a repudiation of the principle that efficiency of regulation conquers all.” It will be important to see how EPA responds and what if any changes are made to EPA’s practice and procedure for issuing orders in wetlands and perhaps other matters. See link to the Sackett opinion.

EPA had issued a compliance order charging the Sacketts with filling in a wetland during construction of their home, in violation of the Clean Water Act, and requiring them to restore their property. The Sacketts argued that they were entitled to prompt judicial review because they faced severe penalties for noncompliance and disputed that their property is a wetland. The United States argued that the Sacketts could comply with the EPA order and  submit an application for a wetlands permit or defend if EPA brings an enforcement action, but may not seek judicial review of EPA’s order. The tenor of the oral argument did not bode well for the United States, as previously reported.  The Court’s unanimous opinion, reversing the Ninth Circuit, bears that out.

The court’s opinion, written by Justice Scalia, starts with the proposition that the APA provides for judicial review of  “final agency action for which there is no other adequate remedy in a court.” 5 U.S.C. §704. The court concludes that EPA’s compliance order has all the hallmarks of APA finality: it required the Sacketts to restore their property according to an agency-approved plan, exposed the Sacketts to double penalties in future enforcement proceedings, and severely limits their ability to obtain a Section 404 permit from the Army Corps of Engineers. See 33 U. S. C. §1344; 33 CFR§326.3(e)(1)(iv). Rejecting the government’s argument, the court held that applying to the Corps of Engineers for a permit and then filing suit under the APA if that permit is denied does not provide an adequate remedy.

The Court also had little difficulty in disposing of the government’s argument that the Clean Water Act should be read as precluding judicial review under the APA, 5 U. S. C. §701(a)(1). The APA creates a presumption favoring judicial review of administrative action, and the Court concluded that nothing in the Clean Water Act’s statutory scheme precludes APA review.  The court was similarly not persuaded that the issuance of a compliance order is simply a step in the deliberative process, given that EPA rejected the Sackett’s attempt to obtain a hearing, and the next step will involve judicial and not administrative deliberation.  Justice Scalia’s opinion concludes that “there is no reason to think the Clean Water Act was uniquely designed to enable the strong-arming of  regulated parties into ‘voluntary compliance’ without the opportunity for judicial review -- even judicial review of the question whether the regulated party is within the EPA’s jurisdiction.” 

Justice Alito’s concurring opinion is of interest because of its emphasis on the fact that the “reach of the Clean Water Act is notoriously unclear.” Citing an amicus brief filed by the Competitive Enterprise Institute, Justice Alito cites EPA’s guidance advising property owners that jurisdictional determinations concerning wetlands will be made on a case-by-case basis.  His opinion concludes that allowing property owners to sue under the APA is “better than nothing,” but only clarification of the reach of the Clean Water Act can rectify the underlying problem. 

It will be important to see how EPA responds and what if any changes are made to EPA’s practice and procedure for issuing orders in wetlands and perhaps other matters.  The Sackett decision will be relied upon by parties who are subject to orders under other statutes that EPA administers.  For some of the reasons cited by Justice Alito, the Sackett decision also underscores the need for clarification of the reach of the Clean Water Act.  Stay tuned. 

Chapter 4: High Stakes Litigation

My fall 2011 blog  discussed Chickasaw Nation and Choctaw Nation of Oklahoma v. Mary Fallin, in her official capacity as Governor of the State of Oklahoma, et al., Case No. CIV-11-927-C, filed in Federal Court in Oklahoma City (“Federal Court case”) on August 18, 2011.  In the Federal Court case, the Chickasaw and Choctaw Nations seek declaratory and injunctive relief to protect their federal rights, their present and future water rights, regulatory authority over water resources and immunity from state law and jurisdiction over certain waters located in Southeastern Oklahoma.  Certain aspects of this suit were also covered in Mark Walker’s December 2011 blog  on the 1830 Treaty of Dancing Rabbit Creek.  As a result of recent developments, claims in the Federal Court case and outside that litigation have evolved and escalated, and the stakes are now much higher. 

In June, 2010, the Oklahoma Water Resources Board (“OWRB”) entered into an agreement with the Oklahoma City Water Utility Trust (“Trust”) to sell to the Trust certain of the OWRB’s rights to store waters of the Kiamichi Basin in the Sardis Reservoir and to control withdrawals of water from the reservoir.  The tribes claim that a fundamental element of that agreement is the OWRB’s issuance of a water use permit granting the Trust annual water withdrawal rights from the Sardis Reservoir and/or the Kiamichi Basin in an amount roughly equal to ninety percent (90%) of Sardis’ estimated sustainable yield.  The tribes take issue with the sale, transfer and appropriation of water which they assert was given to them under various treaties with the United States that granted them exclusive dominion and control over the water resources on their tribal lands in Oklahoma.

In a most important tactical move, the State of Oklahoma, through the OWRB, filed a Petition for a General Stream Adjudication in the Oklahoma Supreme Court on February 10, 2012, asking that court to assume original jurisdiction and determine the relative rights of all parties laying claim to waters which are the subject of the Federal Court case, pursuant to the federal McCarran Amendment, 43 U.S.C. § 666.  Under the McCarran Amendment, such proceedings may be brought in either federal or state court, with the United States waiving its sovereign immunity if all interested parties are joined so that all rights can be determined in one proceeding.  In a move surprising to many, the Oklahoma Supreme Court on February 23, 2012 unanimously agreed to accept original jurisdiction of the case and set a briefing schedule. 

Not to be outdone, the Chickasaw and Choctaw Nations filed a Motion for Partial Summary Judgment in the Federal Court case on February 14, 2012, essentially asking the federal court to enjoin the Oklahoma Supreme Court from making a determination of the relative rights of the parties to the water.  In this motion the tribes “clarified” that their case is not one that seeks adjudication of water rights, nor do they seek to determine the full extent of their regulatory authority over the water.  The Nations contend that federal law does not allow the defendants to “drain the Treaty Territory waters in whatever quantity and for whatever purposes….without regard to the Nations’ rights…”  Motion for Partial Summary Judgment Brief, p. 15.  As a result of this filing, the Nations’ position is much less clear than before when they were seeking exclusive dominion and control over the same water. 

The Defendants have filed motions to stay briefing on the Tribes’ Motion for Partial Summary Judgment.  Their arguments include assertions that the federal court lacks jurisdiction over the subject matter of the action; the case is barred because it violates the state’s Eleventh amendment immunity in the relief sought against the OWRB defendants; and there is a failure to join indispensable parties (the U.S. and the OWRB).  Interestingly, the Defendants also ask the federal court to abstain from addressing the merits of the Federal Court case in deference to the General Stream Adjudication suit where the Oklahoma Supreme Court has assumed original jurisdiction pursuant to Colorado River Water Conservation Dist. v. United States, 424 U.S. 800 (1976). 

And it gets worse.  On February 20, 2012 the Association for the Protection of Oklahoma Water (“APOW”) filed suit claiming irregularities in the OWRB’s authorization process for requesting a General Stream Adjudication.  The suit alleges that the OWRB went into executive session to discuss the Federal Court case filed by the Chickasaw and Choctaw Nations and came out of the meeting with a motion authorizing the stream adjudication, in violation of the Oklahoma Open Meeting and Open Records Acts.  If the General Stream Adjudication request was filed as the result of improper authorization, presumably that proceeding could be dismissed.  However, assuming the Oklahoma Supreme Court agreed with APOW’s contention, it might decide to stay the proceedings until the OWRB authorized another General Stream Adjudication request in accordance with state law.   The original General Stream Adjudication case could then proceed or, if necessary, a new original action could be filed. 

This is high stakes litigation between powerful sovereigns pitting the decision making role of the federal courts against that of a state supreme court.  The jurisdictional dispute involving the state’s desire to avoid piecemeal litigation and seek a comprehensive determination of the rights of all parties in one action in state court as envisioned by the McCarran Amendment, versus the Nations’ interest in having their treaty rights determined in federal court, will be fascinating to watch.  The substantive supremacy issues go to the heart of how dispute resolution occurs within a federal system, and the ultimate winner of this struggle will realize significant revenue for many years to come. 

There is always the possibility that a negotiated settlement could let the courts off the hook.  With the stakes being so high, both sides are already flinching, as evidenced by the lack of clarity in the filings made by both sides in the Federal Court case.  However, sooner or later each party will have to tell the court exactly what it is asking the court to do, unless the parties settle.  Those looking to see whether a settlement is possible may well be interested in the outcome of an upcoming hearing in the General Stream Adjudication case.  According to an Oklahoma City newspaper, such a hearing is planned in April before a Supreme Court referee. 

Again, the words “stay tuned” are particularly appropriate.  

PostScript:
After this blog was written but before posting, the U.S. Justice Department on March 12, 2012 removed the General Stream Adjudication case from the Oklahoma Supreme Court to the US District Court in Oklahoma City, but it landed in a different federal court than the one where the Chickasaw case is pending.  The Judge asked for briefs by March 27 on whether the cases should be consolidated, and the City of Oklahoma City filed a Motion to Remand the streamwide adjudication on March 19, 2012.  Hold on, these cases are moving at the speed of light.

With significant funding in 2010 under the American Reinvestment and Recovery Act (“ARRA”), a major financial stimulus was afforded the water and wastewater industry to “go green.”  Although many large urban areas decided to address their combined sewer overflow (“CSO”) problems by replacing their existing sewage systems with separate systems, many others opted to construct “green infrastructure” to detain and/or retain the surcharge from rainstorms that could overwhelm operation of wastewater treatment plants and result in the discharge of sewage and other pollutants from CSOs.  In Pennsylvania, a $30 million loan was extended to the City of Philadelphia by the Pennsylvania Infrastructure Investment Authority’s Clean Water State Revolving Fund. This loan enabled the City, which had signed a Consent Order and Agreement with the Pennsylvania Department of Environmental Protection, to implement a green infrastructure program over a 20 year period. 

With the economic recession and major changes in the composition (and philosophies) of the members in both Houses of Congress from the 2010 elections, not only did the prospect of future similar economic stimuli programs go to the “back of the bus”, but the desire of these new members of Congress to reduce spending put increased pressure on the federal government to reduce the funding of any infrastructure improvements. 

A good example of this can be seen in the President’s proposed budget issued on February 13, calling for a proposed EPA budget of $8.3 billion. This reflects a decrease of 1.2 percent below the fiscal 2012 enacted level.  More pertinent to the water and wastewater industry, the proposed cuts included a 19.8 percent reduction (from $1.47 billion to $1.18 billion) in EPA’s budget for the Clean Water State Revolving Funds, and a 7.4% reduction (from $918 million to $850 million) in the Drinking Water State Revolving Fund.  Similar budget cuts occurred in most, if not all, of the states’ share of infrastructure funding.  With dire predictions associated with the Nation’s failure to maintain all of its infrastructure, one may recall the plot in “Atlas Shrugged” where the nation’s infrastructure failed and those who were its leaders “disappeared”.  Recall the query “Who is John Galt?”

As a result, we environmental attorneys find ourselves on the horns of a dilemma.  On the one hand, we are trying to adapt our infrastructure to climate change, foster the use of cleaner and more efficient energy in operating treatment plants, and conserve water. On the other hand, we face the reality of having to represent an industry with an infrastructure that is largely old and outdated and appears, at least in some cases, ready to fail. These failures will no doubt result in more and more violations of the Clean Water Act (and state water laws) in the future. 

Although funding cutbacks are not yet “carved in stone”, it would be wise for us to keep an eye on the budget debates. They may affect our practices in the near term and our environment as well.  

Risk assessments carried out under EPA’s IRIS program have been the subject of critical notice in recent months. The human health risk assessments which EPA performs across a range of programs merit attention, given their broad impacts in practical contexts; for instance, they form the basis for Superfund cleanups and RCRA corrective actions. But because they constitute guidance, they are not subject to judicial review at the time they are published and have not received much scrutiny by lawyers. Here are four aspects of how EPA typically conducts human health risk assessments that deserve attention and reform:

1. Publication Bias. In conducting a human health risk assessment, EPA starts by conducting a literature search  and assembling the scientific papers that report a chemical’s effects or lack of effects on humans and relevant animal species. This appears to be a fair way to review the scientific understanding of the chemical’s possible effects on humans and animals, but it fails to take account of publication bias. This well known phenomenon favors publication of studies finding “positive” results – an association between the chemical and a biological effect – over those that do not. In risk assessments, the determination of a dose below which there is no observable effect is very important. Reviewing the published literature can be highly misleading on that central issue. See, e.g., Sena et al., “Publication Bias in Reports of Animal Stroke Studies Leads to Major Overstatement of Efficacy,”  PLos Biol 8(3) e1000344 (2010) (“published results of interventions in animal models of stroke overstate their efficacy by around one third.”). EPA needs to capture the results of research showing, at given doses, that a chemical has no effect on human or animal biological systems. A start in that direction would be to require researchers who receive government support to report such results.

2. Multiple Comparisons. A researcher on, say, the neurodevelopmental effect of a chemical on children or rats can have the treated subjects perform 20 different tests; at a 95% confidence level, the researcher finds one association which is written up and published without reporting on other tests that did not show an association. Having made 20 comparisons at the 95% confidence level, at least one association is likely to be spurious – the result of random chance. But if one does not know how many tests or comparisons were made, there is no basis for making a fair judgment as to the strength or value to give to the reported positive result. There is no requirement in law or custom that directs researchers to report the number of comparisons they made, and publication bias discourages the ambitious academic from reporting a large number of comparisons which would result in sober analysts putting lesser weight on the positive results reported. EPA needs to know how many comparisons a researcher made and what the results were. This could be achieved in large measure by requiring that government-supported researchers report such data; in addition, EPA could simply ask the researchers to provide this information before it relied on the published results in a weight-of-the-evidence review.

3. Meta analysis. In a weight of the evidence review, replication of results has great weight in persuading the reviewer that the results are sound; conversely, failure to replicate results detracts markedly from the weight that a study will be given. Being able to tell whether results are replicated or not replicated depends on having common metrics used in the studies; e.g., administering the same dose under the same conditions at the same age. This is very rarely done, thereby erecting barriers to accurate determination of the weight that should be given to experimental results. See, e.g., Goodman et al, “Using Systematic Reviews and Meta-Analyses to Support Regulatory Decision Making for Neurotoxicants: Lessons Learned from a Case Study of PCBs,” 118 Env. Health Perspectives 728 (2010). Again the federal agencies that support research financially should require that experiments be conducted and reported with sufficient common metrics to allow effective meta-analysis. Of course, this would not preclude measuring and reporting whatever else the authors chose.

4. Review of data relied on in critical studies. EPA typically relies on one or a few “critical studies” in performing its analysis and reaching conclusions as to the risks to human health that are presented by a chemical. EPA reviews the printed reports found in the peer reviewed journals carefully, but it very rarely asks to see the underlying data. To a lawyer, this seems perverse – a bias against examining the actual data that is said to support the Agency’s conclusion. With no falsification, there are a number of ways to present data that will affect such data’s ultimate implications. Statistical treatment is the most obvious example. Human health risk assessments are of major importance to the public health and frequently result in many millions of dollars of expenditure by companies guarding against the risks that EPA identifies. It is clearly important to make these judgments as accurate as possible. In these circumstances, at least for the critical studies, the Agency should routinely ask that the data underlying the printed article should be produced; it should then examine the data and the reported results should only be relied on where they are fully supported by the data.

Dealing with these four issues should contribute significantly to producing human health risk assessments that would command the respect of the knowledgeable public.

The past several decades have shown, time and again, that environmental regulations generate health and economic benefits that far outweigh their costs. Calling on polluters to clean up their mess spurs innovation that saves American lives and money.

Take the example of catalytic converters. When the EPA required car manufacturers to install catalytic converters to reduce tailpipe pollution, automakers warned of catastrophe. Instead, it cost far less than they had predicted--less than 2 percent of the total car cost -- and led to American dominance in the global market for this clean car technology. The EPA estimated that the health benefits of the rule outweighed the cost at least 10 times.

When Congress mulled over the acid rain program, industry claimed that scrubbing sulfur dioxide from smokestacks would send the price of electricity skyrocketing. It did no such thing. The program inspired engineers to design cleaner power-plant technologies, and the cost of reducing acid rain pollution turned out to be about a quarter of what the government had predicted . In fact, the acid rain program's benefits have exceeded costs by about 40 to 1, according to the Office of Budget and Management . And reducing acid rain saves nearly 19,000 lives every year.

The list goes on and on: leaded gasoline, CFCs, nitrogen oxides. Environmental regulations have saved thousands of lives in this country, and improved the health of millions , without creating any of the dire economic consequences predicted by industry at the outset. On the contrary - these regulations have spurred the development of clean technologies and achieved their goals for a relative pittance. And there's nothing dirty about that.

Two recent South Carolina Supreme Court decisions have addressed significant environmental regulatory issues.  In the Smith Land decision  which dealt with state regulation of discharges into isolated wetlands (“waters of the State”), the court held that there is a private cause of action to enforce the provisions of the South Carolina Pollution Control Act (“PCA”)¹.   In the Sandlands decision  which involved a certified question from the federal district court, the South Carolina Supreme Court held that the state’s Solid Waste Policy & Planning Act (“SWA”) did not preempt local government flow control².   Each of these issues has been addressed in prior blogs (1, 2), although the outcome of the certified question on the flow control matter had not yet been determined.

Several pieces of legislation pending in the South Carolina General Assembly respond to these decisions and the issues they address.

House Bill H.4654 and its companion Senate Bill S.1126 would amend the PCA to identify those activities which require, or do not require, a permit under the Smith Land decision.  The bills also preclude a private cause of action to enforce the provisions of the PCA.  The House version of the bill cleared the House Agriculture subcommittee and committee with overwhelming support and is now on the House calendar for consideration.  These bills enjoy considerable support from the regulated community.

Two other bills address the question of whether state law preempts local government flow control following the Sandlands decision.  Senate Bill S.514 and its companion House Bill H.4721 would amend the SWA to prohibit local ordinances that preclude solid waste disposal facilities, regardless of location.  The House version has also cleared the House Agriculture subcommittee and committee with nearly unanimous support and is pending on the floor of the House for consideration.

In each instance, the General Assembly clearly appears to be reacting to the Smith Land and Sandlands decisions in an effort to give meaning to its legislative intent.  Time will tell whether the proposed amendments will be enacted into law as the Legislature moves through its last year of a two-year Session.

¹ Georgetown County League of Women Voters v. Smith Land Co., 393 S.C. 350, 713 S.E. 2d 287 (2011).
² Sandlands C&D, LLC v. County of Horry, 394 S.C. 451, 716 S.E. 2d 280 (2011).

Even as a latent issue, subsidies to the oil and gas industry have the potential to be a political hot potato.  But with President Obama putting them front and center in his recent speech at New Hampshire’s Nashua Community College, the issue joins the already crowded landscape of political fodder heading into the fall elections.  President Obama’s “all of the above” energy program covers a variety of activities, including production of oil and gas, funding renewable energy sources, and encouraging innovation of new technologies.  In the end, fossil fuels are an exhaustible source of energy that cannot be the total answer to our energy needs, as even oil and gas companies recognize.  And they come with a real set of hazards, as the recent Deepwater Horizon settlement reminds us.
 
Although not directly part of his “all of the above” energy program, President Obama is rightfully addressing government subsidies for oil and gas that could be migrating towards increasing subsidies for solar farms and wind turbines.  While fossil fuels will eventually run out, wind, solar, and biomass will not, but have yet to enjoy the level of support afforded to the oil and gas industry.  According to a recent analysis of the economics of energy by experts at the Imperial College London and the UK Energy Research Center electricity from wind power may, in five years, be less expensive than electricity from natural gas in the U.K. if current levels of government subsidies were transferred to renewable energy sources.
 
While the study is specific to the United Kingdom, there are takeaways applicable in the U.S.  First the analysis recognizes the important support that subsidies provided to oil, gas, and nuclear energy development when each were in infancy.  Through those subsidies, energy companies were encouraged to develop technologies, survey areas that were geologically ripe for oil and gas exploration, and hire workers to help build up the industry.  Second, now that oil, gas and, to a lesser extent, nuclear energy sources are more completely developed, those subsidies should be transferred to the development of renewable energy.  In addition, the gains made by the wind and solar industry should not be set aside in search of the elusive promise of cheaper oil through more drilling.  Fossil fuels will run out.  If “all of the above” is to be a real strategy, then it must provide more of an equal opportunity for all sources of energy.
           
The Department of Energy recently announced $150 million in grants under its ARPA-E program.   This money is intended for development of cutting-edge energy technologies so that they can gain the necessary traction to be self-sufficient.  The announcement follows on the heels of an additional $30 million offered under the ARPA-E program toward development of natural gas-based vehicles.  Both these numbers pale in comparison to the $4 billion in yearly subsidies for oil and gas developers.   Even shifting half of the oil and gas subsidies into renewable and developing technologies could well make a dramatic difference in our overall energy future by encouraging the build-out of wind, solar, and biomass businesses into viable and self-sufficient industries.  There will come a time for a full discussion of the value of energy subsidies as a whole, but this would provide a fair start toward creating parity with fossil fuels.
               
The Deepwater Horizon disaster is a reminder of the cost associated with use of fossil fuels.  Significant government subsidies provided to the oil and gas industry played an important part in encouraging their initial and ongoing development.  Programs such as ARPA-E can provide a jump-start for emerging energy technologies, and shifting subsidies can offer a chance for “all of the above” to be a real solution.

Businesses that use volatile organic compounds (VOCs) in their industrial processes have long been regulated under the Clean Air Act and State Implementation Plans (SIPs) approved under the Act.  The Massachusetts Department of Environmental Protection Air Pollution Control Regulations, for example, contain very specific VOC control requirements at 310 CMR 7.18 for dozens of types of businesses and industries.  They regulate manufacturing processes (vinyl, polystyrene resin); surface coating (metal furniture, metal can, large appliance, magnetic wire, automobile, metal coil, miscellaneous metal, fabric, vinyl, plastic parts, leather, wood products, flat wood paneling); finishing (textiles, automotive refinishing); and degreasing.  The regulations prohibit use of cutback asphalt, and they limit the volatile portion of the inks used in various printing lines.  And, famously, they regulate the emissions, and hence the nostalgia-inducing aroma, of bakeries.

All of this is necessary because VOCs are a precursor to ozone, one of the original six “criteria pollutants” that Congress required EPA (and the states, through their EPA-approved SIPs) to control, in order to meet the National Ambient Air Quality Standards that EPA set for those pollutants.  Notwithstanding a long history of VOC regulatory enforcement, the air quality in all of Massachusetts – indeed all of southern New England – remains in “non-attainment” with the NAAQS for ozone.

EPA Region 1, which is based in Boston, has recently focused on a particular aspect of the problem:  the release of VOCs in connection with operation of “industrial laundries”.  These facilities serve the laundering needs of many different kinds of businesses and institutions – those, like hospitals, that require a steady supply of clean uniforms, and those, like print shops, that use towels to clean their equipment and therefore need a steady supply of fresh ones.  Some of those uniforms and towels contain volatile organic compounds.  And the VOCs can be released at various stages of an industrial laundry’s process of handling them for its customers, including collection, storage, transport, and washing of laundry.

EPA’s initiative has included information requests sent pursuant to Section 114 of the Clean Air Act, 42 U.S.C. 7414, and seeking detailed information about the laundries’ collection practices, their storage equipment, their operations and materials usage and – notably – their customers.  Based on the responses, EPA has required emissions testing at certain facilities, and it has issued Notices of Violation.  In one case during the summer of 2011, the Department of Justice, on behalf of EPA, sued an industrial laundry in New Hampshire (southern New Hampshire does not attain the ozone standard), alleging that the facility’s construction and operation, without prior approval, constituted violations of, among other things, the New Source Review provisions of the Clean Air Act.  The Consent Decree which settled the case requires payment of a civil penalty, modification of operating practices, installation of pollution control equipment, purchase and retirement of Emission Reduction Credits and implementation of a Supplemental Environmental Project. 

EPA continues its enforcement efforts with respect to other facilities in New England.  Whether those efforts will ultimately be successful in bringing southern New England, or parts of it, into compliance with the NAAQS for ozone is open to question, given the persistence of the problem and the wide variety of sources for precursor pollutants.  It is clear, though, that enforcement activity with respect to industrial laundries forms a part of EPA Region 1’s ozone-control strategy.  Other regions with similar non-attainment problems may be close behind.

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.

By Deborah Jennings and Andrew Schatz

In the wake of expected Greenhouse Gas New Source Performance Standards (NSPS) for Electric Generating Units pursuant to Section 111 of the Clean Air Act, Congress has shown some early resistance.  On November 4, 2011, EPA submitted to the Office of Management and Budget (OMB) its proposed rule for regulatory review.  The proposed rule would require new and modified electric utilities to meet potentially stringent performance standards and emissions guidelines for greenhouse gases at a level that has been “adequately demonstrated” by existing technology.  42 U.S.C. § 7411(a)(1).  Although the stringency of such standards is uncertain, they could require installation of expensive technology controls for fossil fuel combustion power plants. 

In response, a group of 221 Congressmen submitted a letter on February 23, 2012 to OMB urging the White House to bar EPA from issuing its proposed NSPS rule.  The letter cited, among other things, concerns that the rules could require installation of costly technology, such as carbon-capture and storage, which they feared would increase electricity costs.  The 221 figure is significant, because it constitutes a majority of the House of Representatives, who along with the Senate, could pass a resolution overturning the rule (with Presidential approval or Congressional override of a veto) under the Congressional Review Act (CRA), 5 U.S.C. §§ 801-808.

Yet, history suggests it is very unlikely that Congress will reverse an EPA climate change regulation using the Congressional Review Act.  For starters, the CRA allows Congress to pass a disapproval resolution seeking to reverse a recently promulgated federal regulation by a simple majority vote (no filibusters) within 60 days of receiving the final rule or its date of publication in the federal register.  Thus, Congress has a very short-time frame to pass such resolutions in both the House and the Senate.  Moreover, the President can still veto the disapproval resolution.  At that point, Congress would need a two-thirds majority to override the veto.  In fact, Congress has only successfully used the CRA once, overturning a Department of Labor rulemaking on ergonomics passed in the waning days of the Clinton Administration. 

Such a scenario could shape up this time around.  EPA originally planned on issuing the proposed utility standards in July 2011 and the final standards in May 2012.  Since EPA has yet to issue its proposed rule, a final rule may not be expected until late 2012 or early 2013, at the conclusion of President Obama’s first term.

A recent enforcement decision concluded the defendants did not have to pay response costs covered by an administrative consent order because the Ohio EPA lacked statutory authority to recover such costs.  The opinion affirmed the trial court’s denial of a claim for response costs  the Ohio EPA had incurred with respect to property owned by Mass Realty, which had failed to comply with an Ohio EPA administrative consent order it had signed when it acquired the property.  The order required Mass Realty to operate and maintain an existing groundwater gradient control system and to pay the Ohio EPA’s past and future response costs.  Mass Realty eventually failed to operate the system, and the Ohio EPA brought on enforcement action to impose civil penalties and to recover its response costs that had risen to about $116,000.

The appellate court denied the claim for response costs, which included “payroll costs, travel costs and enforcement-related costs” despite the fact the administrative consent order Mass Realty signed expressly obligated the company to pay response costs.  The order broadly defined the covered costs as “all costs including, but not limited to, payroll costs, contractor costs, travel costs, direct costs, indirect costs, legal and enforcement-related costs, oversight costs, laboratory costs, the costs of reviewing or developing plans, reports, and other items pursuant to these Orders, verifying the Work, or otherwise implementing or enforcing these Orders.”

Agreeing with Mass Realty’s argument that the Ohio EPA lacked statutory authority to collect the claimed response costs, the court concluded such costs were well beyond the scope of the statutory cost recovery provisions, which authorizes recovery of “the cost of investigation and measures performed, including costs for labor, materials and any contract services.” 

The court also rejected the Ohio EPA’s second statutory basis for issuing the order and recovering the costs pursuant thereto.  The agency noted Ohio law authorizes the agency to “enter into contracts or agreements” in furtherance of Ohio’s environmental statutes.  The court rejected this argument because it found the document that Mass Realty had signed was an order and not a contract or agreement within the meaning of the statute.  The court similarly rejected the Ohio EPA’s further arguments it could collect response costs either due to implied powers under other statutory authority or simply as a valid contract between two entities.  Noting the Ohio EPA “cannot extend its powers beyond those authorized by statute” and finding no statutory provision expressly authorizing the collection of the response costs, the court affirmed the trial court’s judgment.

Typically, EPA guidance contains a “disclaimer” that it does not impose legally binding requirements and that the agency retains the discretion, on a case-by-case basis, to adopt different approaches.  In practice, however, EPA tends to require strict adherence to its guidance as though the guidance had been adopted as a binding regulation.  State regulatory agencies have followed the same or similar patterns.  The practice avoids the notice and comment protections of the Administrative Procedure Act and its state counterparts, denies access to the courts to challenge unlawful guidance, and creates uncertainty in the regulated community. Recently, however, New Jersey has signaled what may be the beginnings of a departure from that approach. 

In January, 2012, after years of advocacy by the regulated community, the New Jersey Legislature adopted Assembly Bill No. 2464, which prohibits the use of guidance documents that have not been adopted as rules, unless the guidance is posted on the agency’s website.  On January 17, 2012, Governor Christie signed A. 2464 into law.  P.L.2011, c.215 (N.J.S.A. 52:14B-3a).  Under the bill, even published guidance cannot impose new or additional requirements not spelled out in state or federal law or rules that the guidance is intended to clarify.  Most importantly, guidance not promulgated as a rule cannot be used as a substitute for state or federal law or rules for enforcement purposes.

This issue came to a head when the N.J. Department of Environmental Protection adopted rules implementing the recently enacted Site Remediation Reform Act, N.J.S.A. 58:10C-1 et seq. (SRRA), best known for creating a licensed site remediation professional program. The rules explicitly made NJDEP guidance enforceable.  That guidance, which contained a number of provisions the regulated community thought were extreme, had not undergone the notice and comment process required by the state APA. 

Now, NJDEP finds itself in an awkward position, having adopted rules which run counter to the newly adopted statute and having relied on the enforceability of its guidance to implement the SRRA.  As of this writing, the agency has not publicly disclosed how it intends to cope with this awkwardness.  It will be interesting to see whether Congress and the legislatures in other states follow the lead of A. 2464.

Current federal law requires states to develop and adopt a statewide antidegradation policy to protect existing in-stream uses for high quality waters.  Georgia has done so under Rule 391-3-6-.03.  Georgia’s antidegradation policy describes what requirements must be met before the State issues a permit under the National Pollutant Discharge Elimination System (“NPDES”) and allows a wastewater point source (i.e. wastewater treatment plan) to discharge pollutants into surface waters.  However, in apparent response to the U.S. Environmental Protection Agency’s (“EPA”) potential revision of its requirements for state antidegradation policies and an Administrative Law Judge’s recent ruling, the Georgia Environmental Protection Division (“EPD”) published proposed amendments to its antidegradation policy in September 2011.

In its proposed amendments, EPD attempts to set out exactly when the antidegradation review process is triggered and what an applicant requesting a new or expanded point source discharge must demonstrate to obtain the permit.  EPD’s proposed rule and related guidelines explain the three basic steps as follows: (1) applicant may demonstrate that proposed discharge will not result in “significant lowering of water quality” (if satisfied, no antidegradation analysis is required); (2) if water quality is significantly lowered, applicant must demonstrate that discharge will accommodate important social or economic development; and (3) applicant must demonstrate that no reasonable alternatives exist that would provide the needed wastewater capacity without authorizing a new or expanded wastewater discharge into surface waters.  The key to this new procedure is the definition of “does not significantly lower water quality.”   Specifically, if the proposed discharge of a pollutant is 10% or less than the remaining assimilative capacity for that pollutant in the receiving stream, then the new discharge per se “does not significantly lower water quality” and no antidegradation analysis is required.  These amendments appear to respond to EPA’s concerns over EPD’s implementation of an antidegradation policy, and clearly appear to respond to the ALJ’s decision in Upper Chattahoochee Riverkeeper, Inc. v. Forsyth County, Georgia. 

In September 2010, Upper Chattahoochee Riverkeeper, Inc. (“UCR”) filed a petition challenging the issuance by EPD of an NPDES permit (“Permit”) authorizing Forsyth County to discharge 6 million gallons per day (“MGD”) of wastewater into the Chattachoochee River from the County’s existing waste water treatment facility and the new Shakerag facility.  The Permit set limits of 200 colony-forming units per 100 milliliters (“cfu/100mL”) and 0.3 milligrams per liter (“mg/L”) for fecal coliform bacteria and phosphorous, respectively.  UCR claimed that the Permit, specifically the expanded limits, threatened the present and future health of the Chattahoochee River without EPD having undertaken a proper study, modeling or antidegradation analysis to show that the degradation of the river was necessary to accommodate Forsyth County’s economic and social development. 

In a decision found later to be overreaching, the ALJ held that any lowering of water quality in the receiving water triggers an antidegradation review and such review must analyze both the technical and economic feasibility of any alternatives, as well as a no-discharge permit alternative.  The ALJ made this conclusion in part by referencing EPD’s failure to define certain terms and therefore the ALJ adopted the EPA’s guidelines.  More surprising, the ALJ also adopted the permit discharge limits suggested by UCR which were much lower than those in the original permit or even those allowed for recreational waters by Georgia’s Department of Natural Resources.  The ALJ then remanded the permit to the Director of EPD for reissuance with revised monthly discharge limits of 23 cfu/100mL for fecal coliform bacteria and 0.08 mg/L for total phosphorous.   

Forsyth County appealed to the Superior Court of Forsyth County which reversed the ALJ’s decision finding that the ALJ had exceeded her authority.  The Court concluded the ALJ could not create an enhanced review by wholesale adoption of EPA guidelines nor set specific effluent limits.  EPD’s recent proposed amendments state clearly that effluent limits cannot be set pursuant to an antidegradation analysis, but only by EPD pursuant to Rule 391-2-6-.06.  The Court remanded the matter to the ALJ, ordering the antidegradation review standard be applied as codified in EPD’s implementing procedures without reference to EPA guidance documents. 

However, the battle is not over as UCR has appealed this decision to the Georgia Court of Appeals. As of this writing, both parties have submitted their briefs for review and oral argument is yet to be set.  In light of EPD’s recent proposed amendments, this decision is one to watch as the appellate court’s holding could have a significant impact on restrictions in future NPDES permits.

After dismissal of The Los Alamos Study Group’s (the “Study Group”) complaint 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 – based on the absence of any Environmental Impact Statement (“EIS”) analyzing the facility and its alternatives – the Study Group appealed the decision to the United States Court of Appeals for the Tenth Circuit.  The Study Group claims on appeal that, regardless of promises by the federal defendants to conduct more NEPA paperwork, a major federal action cannot be implemented unless it has been analyzed in an applicable EIS and authorized by a record of decision (“ROD”).

In the Tenth Circuit, the federal defendants filed a motion to dismiss, claiming the appeal was moot because the federal defendants had issued, after the lower court’s decision, a Supplemental EIS (“SEIS”) authorizing the current CMRR-NF project.  The federal defendants stated in the SEIS that, although the original CMRR-NF as analyzed and authorized by a 2003 EIS and 2004 ROD could no longer be built due to significant changes and seismic conditions, this deficiency was cured by the 2011 SEIS authorizing the current iteration of the project.  The Study Group responded to the motion to dismiss by stating that, under NEPA, no federal project can be implemented unless and until an applicable EIS has been performed and no EIS, with an analysis of current alternatives, supported the current project.  The Tenth Circuit sided with the Study Group, denied the motion to dismiss, and directed the parties to proceed to briefing on the merits.  Briefing is now completed, and the matter awaits oral argument.

While the appeal was pending, the Study Group filed yet another suit against the federal defendants, challenging the continual implementation of the project and the absence of reasonable alternatives in the 2011 SEIS.  The federal defendants have answered the complaint in the second suit and the parties were in the process of negotiating pre-trial procedures, when the matter took an unusual turn.

On Monday, February 13, 2012, NNSA abruptly announced that it would be “deferring the construction of the Chemistry and Metallurgical Research Replacement (“CMRR”) facility and meeting plutonium requirements by using existing facilities in the nuclear complex.”  The use of existing facilities by NNSA is an alternative which the Study Group vigorously advocated in the lower court prior to dismissal of the first case, in the Tenth Circuit Court of Appeals, and also in the second suit.  The available facilities, as a reasonable alternative to the 2011-12 CMRR, include sharing workload with Lawrence Livermore National Laboratories and other plutonium-capable facilities.  Moreover, in the event additional storage is needed for plutonium or special nuclear materials, the Device Assembly Facility in Nevada remains available for that purpose.

Since NNSA’s adoption of the Study Group’s position, the relative legal positions of the parties are unclear.  Although NNSA has not abandoned the CMRR project altogether, it has stated the project will be deferred for at least five years (after FY 2013).  Such a deferral would mean CMRR would not be built until at least 2018, some fifteen years after the original 2003 EIS authorizing a much smaller version of the project, and at least seven years after the issuance of the 2011 SEIS seemingly ratifying the NNSA’s decision to build the $6 billion project.  Under these circumstances, the Study Group will likely argue that no further activity can be taken on any aspect of the CMRR facility based on an antiquated EIS that could not possibly consider the myriad alternatives existing today, and certainly not those that will exist in or after 2018.  In this regard, both cases appear ripe for a declaration that a fresh EIS must be performed, together with applicable scoping, prior to any commitment to a project that may or may not be built at some unspecified time in the future.

According to a report in February 15’s Greenwire, President Obama’s proposed budget would reduce Superfund spending by 6%, from $565 million to $532 million.  I still don’t understand why Obama, particularly with Cass Sunstein still at OMB, hasn’t turned this problem into an opportunity.

I know I’ve flogged this one before, but a significant part of the explanation for the size of the Superfund budget is related to CERCLA’s status as the last bastion of command and control regulation.  Everyone who practices in this area could provide endless examples of the almost unbelievable extent of micromanaging indulged in by EPA and its consultants.  Even where EPA is recovering oversight costs, such an approach taxes the system. 

(And don’t we care about those unreasonable costs being passed on to PRPs?  Oops.  I forgot.  They’re the bad guys.  Don’t care if they incur needless costs.)

Several states have now successfully privatized their state superfund programs, saving both private and public sector funds, without any decrease in environmental protection.  Now’s the time for feds to seize the opportunity presented by the budget cuts to change the way federal cleanups get done.

In Alfiero v. Bertorelli, the Michigan Court of Appeals affirmed a jury verdict holding a real estate agent liable under a theory of silent fraud and negligent misrepresentation for the failure to disclose environmental contamination beneath an abandoned factory that was rehabilitated into condominiums.  This decision raises the duty of care for real estate agents in transactions involving property where there are known past environmental issues.

Plaintiffs sued both the seller and its agent after learning the condominium unit plaintiffs’ purchased had not been properly decontaminated, contrary to statements in a sales brochure and newspaper article the agent provided to plaintiffs in response to plaintiffs’ inquiry about the status of past environmental contamination at the property.  The real estate agent relied upon information provided by seller and argued that although a seller has a duty to disclose to a buyer, that duty does not extend to the seller’s agent, and the agent should not be liable for seller’s misrepresentations. 
 
The unit was located in a former factory that had been contaminated with trichloroethylene (“TCE”).  During the conversion of the factory into condominiums, a TCE vapor barrier was installed, but the site was never properly decontaminated.  Plaintiffs believed that the site had been properly cleaned up because of statements to that effect in the newspaper article and sales brochure provided to them by the real estate agent in response to buyers’ inquiries concerning past contamination.  Plaintiffs purchased the condominium in reliance on those representations without conducting independent due diligence. 

The appellate court ruled in favor of plaintiffs on the grounds of common law fraud or fraudulent misrepresentation, noting that the elements are (1) a false representation of a material fact with the intention of reliance by plaintiffs; (2) defendant knew the representation was false or was made with reckless disregard for its accuracy; and (3) plaintiff actually relied on the representation and suffered damages as a result. (M&D Inc. v. McConkey). The court further found silent fraud is essentially the same except it is based on the defendant withholding or suppressing a material fact that he or she was legally obligated to disclose rather than making an affirmative representation. 

Because both silent fraud and negligent misrepresentation require that a defendant owe a duty to the plaintiff, defendants argued that previous Michigan decisions did not impose on an agent a per se duty of disclosure to buyers and that such duty instead lies solely with the sellers.  The court held that although that is the general rule, when a buyer has expressed a concern about a particular statement, a duty to disclose may arise solely because of the buyer’s expressed interest or direct inquiry to the agent.  Defendants also argued there cannot be fraud if the party claiming to be defrauded had an independent means to determine the truth of the matter.  The court again acknowledged the general rule but held that it is not an absolute rule, stating it is “only applied where plaintiffs ‘were either presented with the information and chose to ignore it or had some indication that further inquiry was needed.’” 

The agents provided plaintiffs with a sales brochure stating that the site had been cleaned up.  When plaintiffs further inquired to the agents about the state of the cleanup, the agents referred plaintiff to a newspaper article reporting that the building had been decontaminated.  Based on those statements, the court found that plaintiffs had no duty of further inquiry and could reasonably rely upon information provided by the agent. 

Nevertheless, the court issued a comparative negligence instruction to the jury, and the jury determined that Plaintiffs’ decision not to obtain an environmental inspection knowing that there had been contamination in the past made Plaintiffs partially at fault. 

This decision reinforces the duties on both sides of a real estate transaction (1) to make adequate and accurate disclosures, on the part of the seller and its agents, and (2) to make reasonable environmental inquiries on the part of the buyer, notwithstanding seller’s statements.  Even though a real estate agent as a general proposition may not be responsible for the seller’s representations concerning a property’s environmental status, a duty is triggered when a buyer makes specific inquiry concerning a factual representation about the property and the agent provides additional information to buttress the seller’s representations. 

The lesson to be gleaned from this case is simple:  a seller’s agent should conduct his or her own due diligence concerning statements about the remediation of environmental contamination when the property has known or suspected past contamination.  Similarly, even for residential properties, buyers have an obligation either to conduct independent verification of seller’s statements concerning environmental conditions or to seek contractual representations and warranties from the seller concerning such conditions. 

Recent actions taken by the Bureau of Land Management (BLM) to protect species on BLM-managed lands, before those species have been listed under the Endangered Species Act (ESA), raise questions about the evolution of BLM’s role in species protection and the impact this evolved role may have on minerals leasing and development on BLM-managed lands. 

BLM is charged, under the Federal Land Policy and Management Act of 1976, with developing Land Use Plans that make its public land and resources available under the principle of multiple-use, but at the same time, conserving special status species and their habitats.  The agency’s actions with respect to two species, the Greater Sage-Grouse and the Dunes Sagebrush Lizard, are indicative of BLM’s trajectory in how it intends to balance its roles as species-protector and minerals-manager on public lands.

A December 27, BLM-issued internal Instruction Memorandum (IM) provides interim management policies and procedures to protect the Greater Sage-Grouse on BLM-managed lands in the Western United States with the expressed goal of potentially avoiding an ESA listing.  The Greater-Sage Grouse is currently not protected under the ESA, its listing having been designated as “warranted but precluded” by the U.S. Fish and Wildlife Service (FWS) in March 2010.  The “warranted but precluded” listing decision concluded that existing regulatory mechanisms in the BLM’s Land Use Plans were inadequate to protect the species, which is found in up to 47 million acres of BLM-managed land. 

The December IM makes it clear the new guidelines apply to both proposed and existing leases.  The IM does recognize holders of existing mineral leases do have valid rights entitling them to certain development activities, but the guidance also indicates BLM will attempt to provide maximum protection to the Sage-Grouse within the bounds of those leases.  For example, for fluid mineral leases, the IM states BLM may issue written orders requiring “reasonably protective measures consistent with the lease terms.”  Further, when an existing leaseholder requires a new permit for minerals development, BLM plans to impose “reasonable” conditions in the permits that are likely to be more protective than the stipulations and restrictions currently identified in approved Land Use Plans.

BLM expressed a similar stance in the development of resource management plans in New Mexico to address the Dunes Sagebrush Lizard.  In that instance, BLM noted "holders of existing oil and gas leases have valid rights for development of their leases" but asserted in responses to public comment that BLM "can withhold approval of prospective well locations on existing leases" or address candidate species through existing lease stipulations. 

With FWS experiencing increasing backlogs in addressing ESA listing petitions, it seems likely there will be many more species that, like the Greater Sage-Grouse and the Dunes Sagebrush Lizard, are found to need habitat protection but cannot be allotted resources by FWS to do so.  If BLM continues to step in and afford protections on the level it has in the case of these two species, effects on minerals leasing in BLM-managed lands could be far reaching.  Minerals leaseholders on BLM lands should keep an eye on how far BLM ultimately stretches the bounds of existing mineral leases to protect the Greater Sage Grouse and Dunes Sagebrush Lizard, because BLM’s approach to these species may be indicative of a trend that will apply to many more species in the future.
     

Section 316(b) of the Clean Water Act is a model of statutory simplicity:  “Any standard established pursuant to section 301 or section 306 of this Act and applicable to a point source shall require that the location, design, construction, and capacity of cooling water intake structures reflect the best technology available for minimizing adverse environmental impact.”  The effort by EPA to implement rules to interpret Section 316(b) approaches the opposite extreme.

The latest rulemaking effort began on April 20, 2011 when EPA published a proposed rule to protect fish from being killed at water intake structures that withdraw at least two million gallons of water per day from waters of the United States and use at least 25% of the water they withdraw exclusively for cooling purposes. 

Pursuant to a settlement agreement with the environmental group Riverkeeper and other organizations, EPA is required to issue the revised rule by July 27, 2012.  In the proposed rule, EPA agrees to impose flexible technology standards to deal with fish trapped against intake structures or drawn into cooling water systems.  The rule requires facilities to obtain an NPDES permit reflecting best available technology in the design, location and construction of cooling water intake structures to minimize impingement (trapping of fish against intake screens) and entrainment (drawing of fish into a cooling water system). 

The proposed rule has been attacked by the Natural Resources Defense Council and Riverkeeper, among other environmental groups.  The rule has also been criticized by industry.

On January 25, 2012, EPA submitted a draft notice of data availability that could lead to amendments of the proposed rule.  Notwithstanding the fact the rule has yet to be adopted and EPA has acknowledged the draft may be amended prior to adoption this summer, EPA staff in Region 1 have sent detailed  information requests to facilities in Maine concerning any cooling water intake structure at those facilities. 

Given the status of the 316(b) rulemaking, why EPA is requesting such information at this time is unclear.  Given the existence of the proposed rule, EPA’s acknowledgement that it may revise the proposed rule and the court-required issuance date of July 27, this rulemaking process bears close scrutiny.

A rather surprising turn of events occurred recently in North Carolina, but the underlying reasons still remain unclear.  On January 11, 2012, the North Carolina Environmental Management Commission (“EMC”), by a 4-3 vote, vacated an Administrative Law Judge’s (“ALJ”) decision on summary judgment that the Rose Acre egg farm’s airborne ammonia emissions are not subject to regulation under, and do not require, a National Pollutant Discharge Elimination System (“NPDES”) permit.  The ALJ’s Decision and the parties’ pleadings are available here.The EMC remanded the matter back to the ALJ, August B. Elkins II, for a full evidentiary hearing.  Thus, the case raises anew the question of whether a discharge to air can constitute a point source discharge to navigable waters of the United States which requires a NPDES permit under the Clean Water Act,.  The answer may depend on whether such a discharge is found to remain “in the air” and not make its way by land “into the water.” 

On October 17, 2011, ALJ Elkin found that the Rose Acre facility does not discharge or have the potential to discharge process wastewater (or manure, litter) to navigable waters of the United States.  Judge Elkin’s relied on the March 2011 decision by the Firth Circuit Court of Appeals in National Pork Producers Council v. EPA, in which it held that the U.S. Environmental Protection Agency lacked the authority to require a NPDES permit for a facility that “proposes to discharge” or any facility that has not yet discharged into a navigable water of the United States.  Judge Elkin held that the DENR has no authority to require Rose Acre to obtain an NPDES Permit. 

Rose Acre is the site of 14 high-rise hen houses with a total of four million egg laying hens, located within the Tar-Pamlico River Basin in North Carolina.  Rose Acre operates what is called a “dry-litter facility” that does not directly discharge into any waters.  In 2009, before the Fifth Circuit’s decision in National Pork Producers Council that only CAFOs that actually discharge were required to secure a NPDES permit, Rose Acre applied for a NPDES permit.  The Division of Water Quality of the North Carolina Department of Environment and Natural Resources (“DENR”) issued a NPDES permit to Rose Acre, which included conditions requiring amendment of the facility’s Best Management Plan (“BMP”).  Rose Acre appealed, contending that it no longer needed an NPDES permit as well as challenging a number of the BMP conditions on the grounds that they exceeded the DENR’s regulatory authority.  The ALJ granted Rose Acre summary judgment.

Existing precedent supports the ALJ’s decision.  Both the Second and Tenth Circuit Court of Appeals have ruled that air emissions, even where there is atmospheric deposition into navigable waters, are not regulated by the Clean Water Act.  The Second Circuit so held in its 2000 decision in No Spray Coalition, Inc. v. City of New York, dealing with insecticide spray to eradicate mosquitoes.  In No Spray Coalition, the Second Circuit found that:
       While the trucks and helicopters used to spray insecticides may be point sources…they discharge the    insecticides into the atmosphere and not into navigable waters.  It would be stretching the language of the [Clean Water Act] well beyond the intent of Congress to hold that the de minimus incidental drift over navigable waters of a pesticide is a discharge from a point source into those waters. The fact that a pollutant might ultimately end up in navigable  waters as it courses through the environment does not make its use a violation of the Clean Water Act…To so hold would bring within the purview of the Clean Water Act every emission of smoke, exhaust fumes, or pesticides in New York City.

In 1997, the Tenth Circuit, in Chemical Weapons Working Group v. U.S. Department of the Army, refused to apply the Clean Water Act § 301(f) prohibition against disposal of chemical weapons into waters to smokestack emissions from a chemical weapons incinerator.  The Tenth Circuit emphasized the potential duplication of regulation by the Clean Air Act as well as finding that under § 301(f), Congress clearly intended to authorize the incineration of chemical weapons.  The Tenth Circuit also viewed the attempt to regulate stack emission under the Clean Water Act as contrary to plain old common sense.  (“Although Plaintiffs may be correct in arguing that an object may fly through the air and still be ‘discharged…into the navigable waters’ under the Clean Water Act, common sense dictates that [the] stack emission constitute discharges into the air – not water- are therefore beyond § 301(f) reach.”). 

Similarly, in American Canoe Assn. v. D.C. Water and Sewer Authority, the U.S. District Court for the District of Columbia rejected allegations that the D.C. Sewer Authority violated its NPDES permit by failing to install odor controlling carbon filters on sewer vents.  The court found that attempts to control sewer gas or hydrogen sulfide fumes emanating from sewers in a NPDES permit are “unrelated to the general purposes of the CWA” and unenforceable obligations. 

During oral argument on its challenge to the ALJ Elkin’s Rose Acre decision before a panel of the EMC, the DENR’s counsel appears to have successfully changed the focus of the legal inquiry from what’s in the air to what’s in the water?  In its Exceptions to the ALJ’s Entry of Summary Judgment, the DENR contended that it had not attempted to regulate airborne emissions of ammonia.  Instead, it now contends that Rose Acre does discharge to navigable waters, citing the fact that “with a rain event the feathers and dust from the ventilations fans at [Rose Acre] are flushed into a stormwater pond and then into waters of the State.  The DENR further relied upon the comparative results of surface water monitoring taken before and the Rose Acre hens were stocked, which showed higher levels of ammonia nitrogen, total inorganic nitrogen, phosphorus and fecal coliform in surface water.  Thus, the DENR took the position that although pollutants may initially be discharged “into the air,” if they wind up on the ground and then make their way to a regulated surface water, there is a “point source” discharge that is subject to regulation under the Clean Water Act. 

Rose Acre contends that the DENR’s argument is a post hoc rationalization, without any supporting, credible evidence, to defend its decision to issue the NPDES permit.  In this regard, Rose Acre notes that the ventilation fans in question “are pointed at a ninety degree angle away from a storm water retention pond that is located over one-fifth of a mile away.”  Judge Elkin found that the stormwater pond point source theory was unsupported by the record.  Relying on the holding in National Pork Producers Council that a CAFO is not required to apply for a NPDES permit until there is an “actual discharge into navigable waters to trigger the CWA’s requirements”, Rose Acre contends that the DENR has failed to present any proof of such a discharge. 

If the Rose Acre case proceeds to ruling after the ordered full evidentiary hearing, it will be worth watching to see whether the ultimate decision is based on what’s in the air or what’s in the water (and how it got there). 

Just a few years ago, the price of natural gas was high enough to encourage development of liquefied natural gas (LNG) import terminals to receive LNG from foreign gas producers and then “re-gassify” such gas before sending it to existing interstate pipelines.  Three such facilities were proposed in Oregon, after a failed attempt to site an LNG terminal in California.  The presumption had been that due to the high capital cost of the terminal and related pipeline, and because of market constraints, there would be but one terminal on the West Coast. 

That dynamic has shifted with discovery of abundant domestic shale gas deposits and attendant lowering of gas prices, and LNG terminal developers are thinking “export,” instead of import.  Should this change in the LNG business model matter to anyone?

Of the proposed Oregon projects, two remain: at the Port of Coos Bay and on the Skipanon Peninsula in Youngs Bay, at the mouth of the Columbia.  The projects have generated controversy, with opponents asserting public safety concerns (i.e. uncontrolled “blast zones”), harm to aquatic habitat, creation of a terrorist target, usurpation of land owner rights along the pipeline route, and all apparently with no benefit to Oregon because the gas may only be shipped to our evil sister to the south, California.  Of course, these are all issues that the FERC and state permitting reviews are designed to uncover, assess and prescribe mitigation for and those processes are incomplete.
 
Natural gas prices have come down to the point that an LNG import facility may no longer make sense.  On the other hand, demand for natural gas in Asia is high, particularly in Japan following the Fukushima nuclear disaster, which in turn raises prices.  Thus, the two remaining Oregon LNG projects are actively considering conversion to export facilities, and there is enough global demand—and plenty of surplus Canadian and U.S. natural gas—that more than one would be needed to make much of a dent in that surplus.  This result has enraged environmental activists, as though it is somehow unfair to change the economic model on which a proposed project is based.

There is nothing about a LNG export facility that is so different—either in form or impact on land or resources—such that it should affect how the public views LNG.  The two concepts have approximately the same footprints, and to the untrained observer, would look the same.  In the case of the Skipanon Peninsula project, tanks are the most prominent structures; import and export tanks are identical, except that an export facility would require only two, whereas an import terminal requires three.  The dock/pier arrangements for import or export facilities are identical.  The two concepts have very similar (and very limited) environmental impacts, all of which will be reviewed in detail in the various state and FERC regulatory processes.  In addition, an LNG export facility would provide four times as many construction jobs (about 10,000 man-years) and almost twice the amount of long-term employment originally anticipated from the project.  The project represents a $5 billion investment in a region with no apparent industrial development alternatives on the horizon, and with property tax rates right around 1%, such a project would infuse approximately $50 million in local annual tax assessments.

There are some who suggest allowing exports of LNG would raise domestic natural gas prices and thereby place the U.S. economy at a disadvantage.  But of course the U. S. participates in a global economy and gas prices are driven by global market conditions.  A commodity will find a market, seeking the highest prices available, wherever it originates.  The U. S. exports approximately 50 million metric tons of grain every year and that probably raises U.S. domestic food prices a little, but would anybody seriously argue that we should stop grain exports?

Markets will determine whether a shift to exporting LNG makes economic sense.  Environmental effects and other public interest issues related to an LNG export terminal and related pipeline projects should be judged on their merits by the federal and state agencies charged to do so. 

Section 303(d) of the Clean Water Act requires each state to identify all water body segments within the state that do not meet water quality standards.  The statute requires the states to submit a list of their impaired water body segments to EPA every two years for review and approval.  The decision to list as stream segment as impaired is important because it usually triggers a chain of regulatory consequences, beginning with the preparation of a Total Maximum Daily Load (“TMDL”) study and typically ending with significantly more stringent permit limits for point sources and more robust regulation of non-point sources.

Although the decision to add a stream segment to a state’s 303(d) list is undeniably important, there is significant uncertainty whether the decision is subject to judicial review.  An ACOEL blog entry reported in December 2011 on a Pennsylvania decision which questioned whether Pennsylvania’s issuance of its 303(d) list was an appealable agency action under state law.  Chester Babst, Beware of “Impaired” Surface Water Designations, posted December 10, 2010.

The federal courts of appeals are split on whether EPA’s decisions in reviewing a state 303(d) list are subject to judicial review.  The 8th Circuit has held that a private stakeholder challenge to EPA’s approval of a Missouri 303(d) list was premature and not justiciable because the addition of a segment to a 303(d) list, by itself, did not have any impact on the rights, duties, or property of private parties.   On the other hand, the 9th Circuit has held that a private party had alleged sufficient claims of present injury to have standing to challenge EPA’s approval of California’s 303(d) list. Even after the 9th Circuit’s decision, EPA argued on remand that the scope of judicial review should be narrow because EPA’s role in reviewing California’s 303(d) list was supposedly only one of limited oversight (“[EPA] note[s] that the 30-day limitation on [its] review process demonstrates that [its] ‘role is one of mere oversight’.”  The district court accepted this argument and rejected the challenge to EPA’s review on remand.

It must have been amusing for knowledgeable stakeholders and state water quality regulators to read EPA’s claim that its role is one of “mere oversight” that is strictly circumscribed by a 30-day time limit.   The practical experience of most states has been quite different.  In fact, EPA routinely runs months and even years past the 30-day limit on its review of state 303(d) lists, and it is not at all unusual for EPA to significantly alter the state’s submission, frequently with a supplemental factual record and the imposition of new impairment decisions generated out of whole cloth.

Normally one might think that identifying impaired stream segments would be a simple task of comparing the numbers in the monitoring results for a given stream segment to the relevant numeric water quality standards, and therefore questions of judicial review would rarely be relevant.  In practice, however, the decision to list a segment as impaired frequently can be problematic or even controversial.  To begin with, monitoring results are sometimes subject to questions regarding the adequacy and accuracy of the sampling and analysis.   In many instances the relevant water quality standard is expressed in a narrative rather than numeric form, and therefore the simple comparison of two numbers is replaced by an exercise in subjective judgment.  Even when the basic identification of an impaired segment has been made, there are still choices of priority and timing that can make a great deal of difference in how the impairment decision affects stakeholders.

Given the potential uncertainties that can attend a listing decision, and the gravity of the regulatory consequences that are set in motion by such a decision, it is unfortunate that EPA and some state agencies have displayed such resistance to any form of independent accountability for their decisions.

On August 8, 2011, EPA published its very lengthy Cross-State Air Pollution Rule (CSAPR).  An indication of CSAPR’s complexity -- and its unpopularity with those affected by it -- is that its promulgation prompted states, cities, labor unions, industry trade associations, and individual industry sources to submit to EPA 62 requests for administrative reconsideration and to file 45 petitions for judicial review of the rule.  Because CSAPR is a Clean Air Act rule of “nationwide scope and effect,” under § 307(b), the 45 petitions challenging that rule had to be filed in the D.C. Circuit. 

The focus of my article today is not the content of CSAPR (though there is much in the final rule that is a cause for concern), but rather on some of the procedural difficulties faced by large groups of appellants challenging a complex EPA rule in the D.C. Circuit.  In particular, my focus is on the restrictions placed by the court on the number and length of briefs that can be filed in a case that involves 45 aligned petitioners who say they have over 55 substantive issues that they want to raise in their principal briefs. 

Under Rule 28.1(e) of the Federal Rules of Appellate Procedure (FRAP), an “appellant’s principal brief . . . is acceptable if . . . it contains no more than 14,000 words . . ..”  In a case involving only one appellant challenging a simple agency rule, the D.C. Circuit has appropriately interpreted FRAP 28.1(e) as allowing that one appellant to file a principal brief not to exceed 14,000 words.  But what happens when dozens of aligned petitioners challenge an extremely lengthy and complex agency rule?  And what happens when -- fearing the “speak now or forever hold your peace” aspects of Clean Air Act § 307(b) -- those numerous aligned appellants must address scores of different aspects of the final rule? 

In Alabama Power Co. v. Costle, the first complex Clean Air Act case brought in the D.C. Circuit, the court came up with an innovative -- and effective -- way of allowing the aligned petitioners to present their concerns.  In that case, the court’s Chief Staff Counsel oversaw a process that allowed the aligned petitioners to file a joint statement of the case and a reasonable number of separate, reasonable-length issue briefs.  (In an interview with Business Week during the litigation, the three judges hearing that case commented favorably upon the approach that their Chief Staff Counsel had developed.) 
   
In the decades following the Alabama Power litigation, however -- as the number and complexity of EPA rules has grown, spawning more lawsuits by increasingly larger numbers of appellants -- the D.C. Circuit has taken steps that have reduced substantially the number and length of briefs that parties can file.  Typically, motions panels on the court direct aligned petitioners, even very large numbers of aligned petitioners, to file just one -- or at most two -- 14,000-word briefs.  And perhaps they will allow a short additional brief to be filed by intervenors and amicus curiae in support of petitioners.  But rarely (if ever) will the D.C. Circuit take the hands-on approach that it did in Alabama Power, i.e., being actively involved in figuring out what the key issues are and ensuring that enough space is devoted to the briefing of each such issue.  Thus, it was not a surprise when, on January 18, 2012, the D.C. Circuit issued a briefing order in the CSAPR litigation, authorizing the 45 aligned petitioners to file “no more than two briefs, not to exceed a combined total of 28,000 words” and allowed intervenors and amicus curiae in support of petitioners to file just one joint “not to exceed 7,000 words[.]” 

Most appellants in these kinds of cases understand (and may even empathize with) the desire of the reviewing judges not to have to read dozens of lengthy briefs addressing the inner workings of labyrinthine Clean Air Act programs.  However, as EPA develops ever-more-complex regulatory programs -- programs that, under the terms of Clean Air Act § 307(b),  must be challenged upon promulgation -- petitioners are in a bind.  Aware that there will be a limit on the amount of space they will have in which to explain a challenged EPA program and to articulate why parts of that program are unlawful, petitioners must often choose to brief only a few issues, thus perhaps waiving their rights to challenge other program elements that are of concern. 

Conspiracy theorists among us might be questioning whether court limits on briefing serve as motivation to EPA to make new regulatory programs even more complex.  In particular, such individuals wonder whether EPA rule drafters are now producing more complicated rules because they know that the more complex new rules are, the less likely it is that rule challengers will -- under current court procedures -- be able to present their concerns fully to the reviewing court. 

This surely had to have been in the mind of one attorney who several years ago had to present oral argument in the D.C. Circuit on an issue which had to be briefed in very few words.  During argument, she was told by one of the judges that she might well have a good point, and it was just too bad that the point had not been developed more fully in her brief.  The advocate in that case is to be commended for not losing her cool and condemning a system under which words per petitioner seem to be allocated in inverse proportion to the complexity of the case(s) before the court.  But she was almost certainly thinking something along those lines.

And speaking of lines, I offer the following lines of verse to make this point: 

The rules produced by EPA
Have caused concerns for years.
But parties once thought courts would hear
Their views with open ears.
In complex cases of today,
Those ears are closed, I fear.
It seems the more you want to say,
The less the courts will hear.      

Last summer, the U.S. Department of Justice, acting on allegations made by agents of the U.S. Fish and Wildlife Service, brought criminal indictments against three oil companies operating oil fields in North Dakota, charging them with violating the Migratory Bird Treaty Act for acts resulting in the killing in the aggregate four Mallards, one North Pintail, one Red-Neck Duck and a Say’s Phoebe.  The birds allegedly fell victim to the oil companies “reserve pits” -- basically big holes dug into the ground to collect waste water and mud from drilling operations.  When such pits are not properly netted, birds can get into these ponds, get covered in muck and die.

In dismissing the government’s case, the United States District Court for the District of North Dakota stated the Migratory Bird Treaty Act of 1918 is far too vague to justify such indictments.  If inadvertently killing birds and drilling operations ought to be criminalized,  Congress must state so explicitly.  If the Act’s concepts of “take” or “kill” were read to prohibit any activity that could accidentally result in a dead migratory bird many every day activities could be criminally prosecuted such as “cutting brush and trees, and planting and harvesting crops, driving a vehicle, owning a building with windows or owning a cat.”

According to the U.S. Fish and Wildlife Service, here are some estimates on how many birds die from crashes involving: 
                     Windows                                 100 million killed
                     Communication Towers        5-50 million killed
                     Power Lines                            10,000 to 174 million killed
                     Cars                                         60 million killed
                     Windmills                               39,000 killed

Even for those of us, bird lovers and hunter, who support efforts to save migratory birds, it is hard to disagree that if the court were to decide otherwise  “many every day activities become unlawful -- and subject to criminal sanctions -- when they cause the death of pigeons, starlings and other common birds.”  Such prosecutorial actions fuel resistance to proper enforcement of environmental laws.

There is no alternative.  Whatever the causes, pace or impacts of climate change, people, cultures, economies and eco-systems will adapt to climate change as it occurs.  What’s in question is where, how much and when adaptation will occur and with what strategic planning, distribution of costs and injury.

To date, the inevitability of adaptation has been over-shadowed by the attention to efforts to prevent global warming.  Scary projections of flooded coastal cities and wholesale ecological change have been used more to support campaigns to reduce CO2 emissions than to promote serious planning for ocean rise and changed eco-systems.  Adaptation planning has not been the priority and has even seemed a cop-out.  But as hopes to prevent or slow climate change are not realized, adaption planning is emerging as a priority.

Indeed, behind the headlines efforts to plan for adaptation are already underway.  President Obama’s initial support for cap and trade got the attention.  But he also issued an Executive Order establishing a Climate Change Adaptation Task Force that is coordinating very significant federal efforts to gather data and plan for adaptation.   Many of those efforts are collected at EPA’s webpage on adaptation.  More than a dozen states have commissioned adaptation plans, e.g., the Massachusetts Climate Change Adaptation Report.  Some universities have developed programs focused on adaptation planning, e.g., UNC’s Center for Law, Environment, Adaptation and Resources (CLEAR).  Insurers and re-insurers, public authorities responsible for long-term infrastructure, and societies of professionals such as engineers and others are putting serious consideration into what adaptation will require over time by way of changed standards for public works and buildings. 

These efforts do not yet amount to a broad plan, but are laying the foundations for adaptation planning to seep broadly into capital planning and resource protection efforts across all facets of our economy.  Compulsory central planning is probably not a politically acceptable option – but the inevitability and breadth of adaptation efforts mean that millions of decision-makers still will plan for adaptation over time.

I had the privilege to be a speaker at a CCS conference held at the Canadian Embassy in Washington DC on January 19, 2012. The conference was hosted by the Global CCS Institute for the purpose of discussing the strategic directions expected to be undertaken in the development and deployment of the geologic sequestration of carbon dioxide. Central to this issue is the national and international concern over climate change at a time when our nation’s energy supply is so closely tied to the use of fossil fuels.

In his keynote speech at the conference Charles McConnell of USDOE’s Office of Fossil Fuels offered the view that coal must be economically advantaged and environmentally sustainable. Much of the conference was dedicated to a review of the many CCS projects being undertaken around the world in an effort to demonstrate the feasibility of the technology.

A key component of the development of CCS is, of course, the cost of the technology and the opportunities that exist to offset those costs. One such opportunity is the use of capture carbon dioxide to enhance the production of oil (EOR). While many of the speakers at the conference recognized the early value of CCS/EOR projects, both Brad Page of the Global CCS Institute and Steve Winberg of Consol Energy pointed out that EOR capacity is only 20% of the ultimate capacity that will be needed to meet the President’s carbon dioxide reduction target. Other alternatives for the geologic sequestration of carbon dioxide include depleted oil and gas reserves and greenfield deep saline formations.

My remarks at the conference were directed at the significant leadership being undertaken by the various states to address the legal and regulatory uncertainties associated with CCS activities. West Virginia is among those states where a legislatively mandated working group has recommended not only a comprehensive set of regulatory requirements, but also a liability transfer mechanism during the post operational phase of a project tied to the establishment of an operator generated trust fund. That working group has also recommended a comprehensive set of policies related to property issues including a determination that the use of pore space may be considered a public use to be authorized by permit.  Click here for the list of conference speakers.

Phase I report “reliance letters” issued by an Environmental Professional (EP) may be misunderstood and misused in the context of conducting CERCLA All Appropriate Inquiry (AAI). The term “reliance letter,” in fact, is nowhere to be found in either the Federal All Appropriate Inquiry Regulations or the related ASTM Standard E 1527-05.

Consider the following common AAI situation: A client has contracted to buy property for which a Phase I Environmental Site Assessment (Phase I ESA) report was recently prepared for the seller. To avoid the costs of obtaining a new Phase I report, the client asks whether it can use the Phase I provided by the seller to satisfy its environmental diligence obligations. The Phase I report explicitly states that it can be used and relied upon only by the contracting user for which it was prepared. The EP may be willing to issue a reliance letter to the client for a fee or occasionally at no cost. But what exactly is a reliance letter and how does it relate to the objective of compliance with AAI requirements?

Unauthorized use prohibitions and reliance letters are intended to protect EPs from potential claims by third-parties who may rely on a Phase I report prepared for another. Nevertheless, an unsophisticated third-party recipient of a reliance letter may construe such a letter as documentation of compliance with AAI requirements. A reliance letter establishes the recipient’s status as an authorized “user” primarily for purposes of the party’s legal relationship with the EP. Requesting a reliance letter to establish authorized user status is only one of several AAI issues that should be considered by third-party users of Phase I reports.

Other important questions to be considered include whether the one year/180 day regulatory shelf-life of the report has expired. Also, what independent inquiries must a third-party undertake to satisfy the AAI regulations? Third-party recipients of reliance letters may easily overlook conducting the “user” inquiries required by the AAI regulations.

The ASTM Standard further contemplates that the results of the user’s separate inquiries be provided to the EP prior to completion of the EP’s Phase I tasks (the AAI regulations are less clear). How do those provisions of the ASTM Standard apply to the third-party reliance situation? Is the third-party user obligated to accumulate the necessary user information and provide it to the EP after-the-fact? If so, how should the EP deal with any new substantive information? Also, if the results of the user inquiry are not referenced in the Phase I report, how does the third-party document that it has satisfied those obligations?

Of course, the EP may decline to issue a reliance letter or may impose costs or terms that are unacceptable. The EP may even suggest that, absent such use and reliance authorization, a new Phase I ESA must be conducted. But is that correct? The regulations set out conditions for third-party use of information contained in a Phase I report prepared for another. No requirement that the EP preparing the report issue a reliance letter is included among those conditions. The ASTM Standard specifically provides that no particular legal relationship between the EP and the user is necessary for the user to satisfy AAI obligations. With or without a reliance letter, the AAI regulations and ASTM Standard contemplate that the third-party may use the results of a report prepared for another person to partially satisfy its AAI obligations.

These questions, and perhaps others, suggest that a third-party user of a Phase I report prepared for another should be aware of the limitations of a reliance letter, if issued, and carefully consider all pertinent regulations in conducting its AAI.

My father introduced me to the big band sound he grew up with in the ‘20s, ‘30s and ‘40s.  In addition to the musical skirmishes between the powerful brass and elegant woodwind sections that highlighted the genre, he was fond of the lyrics.  One of his favorite ditties was a playful calypso tune written by Sy Oliver and Trummie Young, first recorded by Jimmie Lunceford in 1939.  The enlightened refrain gives the recipe for being highly effective -- “Tain’t what you do, it’s the way that you do it – that’s what gets results.”  At about the same time Lunceford was leading his show band, sociologist Robert J. Merton was focusing on avoiding the wrong results.  He popularized the concept of “unintended consequences,” the gist of which is humans cannot fully control the outcome of their actions so be careful what you do and for what you ask.  Seventy-five years later, EPA’s recent proliferation of regulations with short time fuses and no existing or foreseeable means of compliance demonstrates no such careful thought.

Merton’s analysis provided five causes for unintended consequences:  ignorance, error, immediate interest, basic values and self-defeating prophecy.  While these five causes could form the outline for comments on almost any rule, the one that might be most applicable to EPA’s recent flurry of regulatory activity is what Merton called “the imperious immediacy of interest” which refers to instances where the actor’s paramount concern with the immediate action excludes the consideration of further or other unforeseen consequences of the same act.  The speed in which the recent rules have been promulgated, the leap in technology that they require, and the brevity of the time period by which compliance is required are unprecedented and seem destined to result in unintended consequences.

Examples of these rules include the corporate average fuel economy (“CAFE”) standards which EPA established in 2009.  Under the CAFE standards, Model Year 2011 vehicles must achieve 27.3 mpg.  The requirement is ratcheted up to 35 mpg by 2016, and a whopping 54.5 mpg by 2025.  Those developing the standards were warned that the standards would result in the production of smaller, lighter and deadlier cars.  The developers not only required increased mileage, they limited greenhouse gases (GHGs), including CO2 emissions, from motor vehicles – the first time that GHGs were regulated as air pollutants under the Clean Air Act.  Standard developers also recognized that regulating GHGs as pollutants for mobile sources would also trigger regulation of GHGs from stationary sources under the Clean Air Act’s prevention of significant deterioration of air quality program.  The latter was not an unintended consequence, but where such regulation might lead our economy and society is anyone’s guess.  We need only look at the recent reports of spontaneous combustion of electric vehicles to get some idea.

Another example is EPA’s issuance of the cross-state air pollution rule which afforded electric generating facilities only four months between its promulgation and the date of compliance on January 1, 2012.  EPA promulgated the rule amid warnings by states and others that the electric system reliability was jeopardized.  Fortunately, the D.C. Circuit stayed the rule on December 30.  Similarly, EPA pushed out the EGU MACT standard after allowing itself only a few months to consider tens -of -thousands of comments on the proposed rule.  Such speed of promulgation without regard for unintended consequences has EPA staffers concerned about the quality of their work product.  Perhaps it’s time to revisit the requirements for regulatory impact analysis to consider new rules in light of Merton’s five causes of unintended consequences and Lunceford’s catchy tune.  The alternative may be to sing another tune Lunceford popularized -- Blue in the Night.