Posted on April 27, 2011
The Connecticut Department of Environmental Protection (“DEP”) has significantly changed the way storm water discharges from industrial facilities are regulated with the adoption of a new General Permit for Storm Water Discharges Associated with Industrial Activities (“GP”). The new GP becomes effective on October 1, 2011, but the deadline for facilities to submit renewal registrations is June 1, 2011. Approximately 1,500 facilities in the state are subject to the GP.
For the first time, the GP includes a public participation process to allow the public to comment on Storm Water Pollution Prevention Plans (“SWPPs”) before they are approved by DEP. The SWPPs contain the best management practices proposed by the registrant to minimize pollution from storm water run-off.
The public participation provision was added at the urging of environmental groups. They cited the Ninth Circuit’s decision in Environmental Defense Center, Inc. et al. v. EPA, 344 F. 3d 832, (2003), which addressed EPA’s general permit for Small Municipal Separate Storm Sewers (“MS4s”). It held that public participation was an essential part of the federal Clean Water Act permitting scheme, and that EPA’s failure to provide for public review of applications for coverage (Notices of Intent) under the MS4 general permit violated the intent of Congress. Id. at 856.
The new GP also expands monitoring requirements and sets enforceable "benchmark" concentrations, replacing the previous aspirational "target values".
Posted on April 26, 2011
On February 2, 2011, the U.S. Environmental Protection Agency (“EPA”) issued an “Order Denying Petition for Objection to Permit” in In re Anadarko Petroleum Corp., Frederick Compressor Station, a decision that should finally pave the way for Anadarko Petroleum Corporation (“Anadarko”) to continue to operate its Frederick Compressor Station in Colorado under a minor source operating permit. The EPA’s Order is the latest in a contentious and lengthy struggle that began when the Colorado air permitting agency (“CDPHE”) renewed the Title V operating permit for the Frederick Compressor Station on January 1, 2007. Four years, three challenges by an environmental group (WildEarth Guardians), and two EPA objections later, Anadarko appears to have jumped over all the hurdles.
The main issue before the EPA was whether CDPHE should have aggregated the emissions from the Frederick Compressor Station and various oil and gas wells and other pollutant emitting activities in the Wattenburg Field and treated them all as a single “source” for permitting purposes. Although oil and natural gas facilities are typically regulated independently as “minor sources,” this is not the first time a regulatory agency has aggregated interrelated oil and natural gas facilities into a “major source” to require more rigorous permitting of these sources than would otherwise be required if they were treated individually.
Under the Prevention of Significant Deterioration (“PSD”) program, for example, a “major stationary source” is a “stationary source” that emits or has the potential to emit a certain quantity of pollutants. 42 U.S.C. §§ 7479(1), 7602(j). In turn, a “stationary source” is any building, structure, facility, or installation which emits or may emit a regulated pollutant. 40 C.F.R. § 51.166(b)(5). The federal regulations define “building, structure, facility, or installation” as all of the pollutant-emitting activities which: (1) belong to the same industrial grouping; (2) are located on one or more contiguous or adjacent properties; and (3) are under the control of the same person. Id. § 51.166(b)(6). From a legal perspective, the regulatory agencies must determine whether the oil and natural gas facilities meet the three factors listed above.
On January 12, 2007, the Acting Assistant Administrator of the EPA, William Wehrum, issued a memorandum entitled Source Determinations for Oil and Gas Industries, which indicated that proximity was the most informative factor in making source determinations for the oil and natural gas industries, suggesting that sites separated by more than a short distance (such as ¼ mile) are not “contiguous or adjacent” – and should generally not be treated as a single source. However, on September 22, 2009, Assistant Administrator Gina McCarthy issued a memorandum entitled Withdrawal of Source Determinations for Oil and Gas Industries. The McCarthy memorandum withdrew the Wehrum memorandum and specifically de-emphasized proximity as the determining factor in these determinations.
With regard to the Frederick Compressor Station, WildEarth Guardians twice petitioned the EPA to object to the permit renewal. Both times, the EPA objected and required the CDPHE to provide additional support for its permitting decision. On July 14, 2010, the CDPHE submitted a third and lengthy argument in favor of renewing the Title V permit for the compressor station. The environmental group subsequently petitioned the EPA to object for a third time. Finally, in the February 2, 2011 Order (set down more than four years after the initial Title V renewal was issued), the EPA denied the environmental group’s petition. The EPA conducted a thorough analysis of previous statements and determinations involving aggregation and determined that the CDPHE had properly determined the Frederick Compressor Station was a single source for purposes of PSD and Title V permitting. The EPA’s Order made two findings of particular interest relating to the issue: (1) despite the de-emphasis on proximity under the McCarthy memorandum, the CDPHE properly used distance as an important factor in the contiguous/adjacent analysis, when it was not “the determining factor” in its source determination; and (2) decisions regarding support facilities, while instructive in the aggregation analysis, are really significant only to determining whether two facilities should be treated as belonging to the same SIC code – and there is no reason to analyze them when the two facilities share the same SIC code.
Posted on April 22, 2011
In 2009, the United States District Court for the Eastern District of Wisconsin rendered a widely reported and discussed decision in Appleton Papers Inc. v. George A. Whiting Paper Co., No. 2:08-cv-16-WCG (E.D. Wis. Dec. 16, 2009) (Appleton I) that many remember as being unique. This is because rather than considering the usual so-called “equitable factors” to determine proportionate financial responsibility in a CERCLA contribution action such as waste-in volume or relative contaminant toxicity, the District Court focused entirely on a single marker of relative culpability i.e., Appleton Paper’s knowledge that their actions would cause environmental harm.
In February of 2011, the District Court issued an equally intriguing opinion in Appleton Papers Inc., v. Whiting Paper Co., No. 08-C-16, 41 ELR 2011 (E.D. Wis. Feb. 28, 2011) (Appleton II). Relying in large measure on the District Court’s 2009 decision, multiple defendants argued that the response costs already contributed to cleanup effort should be borne by NCR Corp. and Appleton Papers Inc. (collectively “the Appleton Plaintiffs”). All of the Defendant’s arguments highlighted the same equitable factor that barred the Appleton Plaintiffs from obtaining contribution it, e.g, knowledge that a generated waste might cause environmental harm. The District Court agreed, and determined that the Appleton Plaintiffs were liable to the Defendants for response cost of remediating four of the five operable units along the Lower Fox River. However, the Appleton Plaintiffs were determined not to liable for costs associated with Operable Unit No. One (“OU1”) because the OU1 defendants were unable to prove that the Appleton Plaintiffs contributed to the contamination of OU1 (OU1 is located upstream of the Appleton Plaintiffs’ facility) or that the Appleton Plaintiffs were arranges under CERCLA §107).
These cases warrant practitioners’ review as they clearly express the notion that contribution liability should rest upon satisfaction of the ultimate objective of the CERCLA liability scheme i.e., that the polluter pays the costs of resolving the pollution it causes. This objective should never be far from mind, as the fact based focus of inquiry utilized by the District Court in these cases may well be the undoing of practitioner’s efforts to rely upon supposed technical and legal attributes of relative responsibility. Instead, the focus should be directed to the essential inquiry at the root of the CERCLA legislative cost recovery scheme e.g., the polluter who causes pollution to occur should pay for its cleanup.
Posted on April 21, 2011
On Tuesday, April 19, 2011, the Supreme Court heard oral argument in American Electric Power v. Connecticut, a case where the Second Circuit held that States and private plaintiffs may maintain actions under federal common law alleging that five electric utilities have caused or contributed to global warming, and may seek injunctive relief capping defendants’ carbon-dioxide emissions at judicially determined levels. The questions before the court are: 1) whether States and private parties have standing to seek judicially fashioned emissions caps on the five utilities, 2) whether a cause of action to cap carbon-dioxide emissions can be implied under federal common law when the Clean Air Act speaks directly to the same subject matter, and 3) whether claims seeking to cap defendants’ carbon-dioxide emissions at “reasonable” levels based on a court’s weighing of the potential risks of climate change against the socioeconomic utility of defendants’ conduct, would be governed by “judicially discoverable and manageable standards” or could be resolved without “initial policy determination[s] of a kind clearly for nonjudicial discretion.” Baker v. Carr, 369 U.S. 186, 217 (1962).
The transcript of Tuesday’s argument is available online here.
Although one must be cautious about predicting results based on questions raised during oral argument, it is difficult to review the transcript of argument without concluding that the justices were very skeptical about a federal common law action to address climate change.
Several of the Justices questioned whether the relief sought by plaintiffs was properly the role of EPA rather than the courts. Justice Ginsberg observed that “Congress set up the EPA to promulgate standards for emissions, and now what -- the relief you're seeking seems to me to set up a district judge, who does not have the resources, the expertise, as a kind of super EPA.” (Tr. 37)
Justice Roberts expressed a similar concern, namely that with global warming “there are costs and benefits on both sides, and you have to determine how much you want to readjust the world economy to address global warming, and I think that's a pretty big burden to post -- to impose on a district court judge.” (Tr. 40-41) Justice Alito similarly was concerned with how a district judge would deal with the tradeoffs involved in providing relief. (Tr. 59).
Justice Kagan agreed, saying that plaintiff’s complaint “sounds like the paradigmatic thing that administrative agencies do rather than courts.” (Tr. 41-42) Justice Kagan further wondered whether plaintiff’s theory would mean that they “have a Federal common law cause of action against anybody in the world,” (Tr. 51) This prompted Justice Scalia to ask whether one could aggregate “all the cows in the country” and bring a climate change suit against all farmers, or all homes that emit carbon dioxide in their heating systems. (Tr. 52-53). Justice Breyer wondered what would happen if a district judge thought that a $20 per ton tax on carbon was the best way to deal with the problem. (Tr. 61). This prompted Justice Scalia to ask what standard would prevail if a district judge set an emission limit and EPA subsequently set a different standard. (Tr. 65). He added that this is a “displacement of the normal process of administrative law.” (Tr. 66)
Posted on April 20, 2011
Rhode Island may be in the forefront of regulation on a statewide basis of the siting of renewable energy projects. The State just announced plans for a statewide siting plan that would in effect determine licensable locations of renewable energy projects (wind, solar, etc.).
This type of planning has been used in the past for conventional energy projects (both fossil fuel and nuclear), but is now being expanded because of local opposition to alternative energy projects. The effect will be to override local zoning, but it will also add another bureaucratic layer to the licensing process as well as the attendant additional time and expense.
One would expect that other states with comparable population densities may seek to follow Rhode Island’s lead, but whether any choose to do so is anyone’s guess.
Posted on April 15, 2011
There is probably no reason for you to have heard about this case – except that its possibly the largest judgment in the history of mankind! On February 28, 2011, an Ecuadorian Court granted a judgment against Chevron for over $19 billion dollars for environmental damages to the Amazon rainforest in Ecuador allegedly caused by oil and gas operations of Texaco Petroleum Company (TexPet) between 1964 and 1992. Chevron merged with TexPet's parent, Texaco, Inc., in 2001.
One of the more fascinating aspects of the judgment is that one-half of it, approximately $8.5 billion, is a punitive damage award that the Court gave Chevron the option of completely avoiding by saying it is sorry, i.e. by issuing a public apology within 15 days – an apology that was not issued and is likely never forthcoming.
U.S. District Judge (S.D.N.Y) Lewis Kaplan called this "an extraordinary case." Judge Kaplan said this in a March 7, 2011, order preliminarily enjoining the Ecuadorian plaintiffs and their lawyers from enforcing the judgment. Chevron contends that the judgment was the product of fraud and a corrupt Ecuadorian judicial system. Chevron has video footage in which a U.S. lawyer for the Plaintiffs admits he is going to confront the judge to "scare" and "intimidate" him – stating that it's "dirty" and something you would never do in the U.S., but adding unfortunately this is how things are done in Ecuador. Incredibly, the Plaintiffs' lawyers participated in the shooting of a documentary, "Crude: The Real Price of Oil," in which numerous apparently incriminating statements were made. Chevron subpoenaed the film "outtakes" and obtained this footage.
Of course, the case has a long way to go, with appeals by both sides in Ecuador, and a Chevron RICO case against the Plaintiffs and their lawyers in the United States. In the end, this judgment may yet set another record – the world's largest unenforceable judgment.
Posted on April 13, 2011
I ran across perfluorinated chemicals (PFCs) as a site contaminant of concern for the first time last year when EPA required further assessment for PFCs at a site that was about to be closed out with no further action. I wanted to learn more about them and thought you might too, if this was a new acronym for you as well. PFCs have been used in a wide range of products, including consumer goods like Teflon, Scotchgard and Gore-Tex. PFCs consist of only carbon and fluoride. They are often referred to as “emerging contaminants” by EPA officials (from the National Exposure Research Laboratory and Office of Superfund Remediation and Technology Innovation) and others. Two of the most common PFCs are PFOS (perfluorooctane sulfonate) and PFOA (perfluorooctanoic acid, also known as C8). PFOS is no longer manufactured in the United States and PFOA is the subject of EPA’s 2010/2015 PFOA Environmental Stewardship Program, under which the phase-out of PFOA manufacturing by eight major companies is targeted for 2015.
PFCs have garnered world-wide attention over the last few years because of their prevalence and persistence. According to an expert I consulted, in the last two years there have been more than twenty papers on PFCs published in Environmental Toxicology and Chemistry, the journal of the Society of Environmental Toxicology and Chemistry. One environmental watchdog group suggests PFCs are “destined to supplant DDT, PCBs, dioxin and other chemicals as the most notorious, global chemical contaminants ever produced.”
While not on the Hazardous Substance List, EPA has been actively dealing with PFCs since 2000, as described in the December 30, 2009 TSCA Action Plan for PFCs. There, EPA reported that while PFCs are found world-wide in the environment, wildlife and humans, significant adverse human health effects have yet to be found, though there is evidence of adverse effects in wildlife and laboratory animals. EPA is concerned about possible future human health effects. Further regulatory action under TSCA is expected in 2012.
Earlier in 2009, the EPA Office of Water issued Provisional Health Advisories for PFOA and PFOS. EPA’s Office of Solid Waste and Emergency Response then developed toxicity values, which can be used as the basis for cleanup levels and risk-based screening levels in water and other media. As a result, sites where no hazardous substances had been found, or where known hazardous substances were remediated, may now need to be re-evaluated for PFOA and PFOS. Pending or completed property transfers may also be affected. Three states (New Jersey, Minnesota and North Carolina) have addressed levels of PFOS/PFOA in drinking water.
Given the high level of interest in PFCs in the scientific community and the evolving regulation of PFCs, is it time to say PFCs have arrived as an environmental contaminant, though they may still be an emerging issue for environmental lawyers? More importantly, it remains to be seen how wide an impact the growing knowledge and increasing regulation of PFCs will have, at what cost, and where this should rank among priorities for federal and state regulation.
Posted on April 5, 2011
CERCLA liability under section 107 is often characterized as strict, joint and several unmitigated by considerations of causation, fault or fairness. Contribution is different, however. Congress, in section 113(f)(1), specifically authorized the courts to allocate costs “using such equitable factors as the court determines are appropriate.” Illustrative of this fundamental difference is the fight over who shall pay what for the massive PCB cleanup of the Lower Fox River.
NCR is incurring the bulk of the costs based on discharges of PCBs incident to the manufacture of carbonless paper at a facility on the River. It sued numerous paper mills along the River based on their discharges of PCB containing wastewater incident to the recycling of trim and waste carbonless paper. In late December 2009, Judge Griesbach of the Eastern District of Wisconsin dismissed NCR’s suit for contribution against the paper mills based on NCR's knowledge of the content and risks associated with PCB-containing carbonless paper as manufacturer/developer of the product compared to the recycling paper mills.
Framed thus — in old fashioned terms about knowledge of dangers and avoidance of risk—it was no contest. NCR was denied contribution because of its knowledge, learned gradually over time, about the toxic nature of PCBs as against those who merely, and without access to NCR’s superior knowledge of the product, processed it for recycling. The Court’s analysis, it said, “is governed by traditional principles of equity, such as the relative fault of the parties, any contracts between the parties bearing on the allocation of cleanup costs, and the so called ‘Gore factors.’” The lengthy recitation of the largely undisputed facts was nothing less than a moral indictment of NCR’s actions and reactions as the knowledge about PCB toxicity and its threat to the environment came to be documented and disseminated; in short, nothing less than a fault-based conclusion.
The flip side of this case came down in February 2011. Judge Griesbach decided that the paper mills, which had incurred expenses related to various EPA and Wisconsin DNR orders and settlements, monitoring and investigation, were entitled to contribution from NCR for those portions of the River where both recycling and manufacturing PCB contamination occurred. This time around the Court was satisfied that its singular use of NCR’s “fault” as the sole determinant to deny NCR contribution in 2009 was likewise sufficient to grant the paper mills a right of contribution against NCR. In other words, fault or culpability can become the overriding factor and permit the court to eschew consideration of any other equitable factors, including Gore factors. One sees in the Court’s emphasis on charging the financial cost on those “responsible” for creating the hazardous conditions a tone and direction quite at variance with the rather automatic analysis of liability under section 107. Hence, although approximately half of the PCBs originated with the paper mills and not NCR’s manufacturing, the Court, on culpability grounds, was prepared to impose the entire cost on NCR exclusive only of amounts reimbursed to the defendants by insurance.
Posted on April 4, 2011
A few months ago, a significant anniversary passed without much fanfare: the 30th anniversary of the passage of CERCLA. Interestingly, 30 years has another meaning today in the Superfund world as many of the CERCLA sites have passed through the active cleanup phase and into the long-term operation and maintenance phase. When practitioners began working with the Superfund statute in the early days, the question of when would a Superfund cleanup “end” was considered. Many of us thought that 30 years of monitoring at a site after completion of the active remediation stage was a reasonable expectation. This expectation, while not expressly stated in CERCLA or the National Contingency Plan, was based on the approach used in RCRA closures which generally require 30 years of post-closure monitoring.
But 30 years of working with the Superfund statute has made it clear that 30 years is not a meaningful benchmark for long-term O&M, at least not to EPA. The critical documents in the Superfund process, the Records of Decision, the Consent Decrees and the EPA Guidance documents usually do not specify when long-term operation and maintenance may cease. As a result, because groundwater contamination at many Superfund sites has proven to be so difficult to remediate to drinking water or some other agreed upon standards, many PRP Groups are faced with the possibility that their Superfund site may require perpetual monitoring. In addition, since the Consent Decrees require a five year review process by EPA for all active sites, the possibility of enhanced monitoring or additional remediation always looms on the horizon.
The uncertainties in knowing when a Superfund site will “end” creates many challenges for performing parties and their counsel. Among those difficulties:
- Continual disclosure on company financials and SEC filings;
- Time and expense of keeping PRP Groups functioning over many years and paying for government internal and contracted oversight costs;
- Lack of certainty or predictability in budgeting long-term costs for Superfund liabilities; and
- Loss of institutional memory and familiarity at sites where, over time, companies and their divisions are sold and counsel, consultants and EPA personnel move on and/or retire.
These risks and costs, of course, are spared for de minimis parties and other PRPs who structure their settlements as cash-outs either to EPA or to other PRPs. For those performing parties left behind, however, the ability to determine a reasonable end point to the commitment they entered into years, if not decades earlier, often remains a largely unresolved and perhaps undeterminable question under present regulation and practice.
Many of us are working in PRP Groups where active remediation has been completed yet the groundwater remains substantially above the Performance Standards. In many of these sites, the groundwater plume is controlled and presents no risk to human and other environmental receptors yet reasonable predictions about when the monitoring program and the Superfund “machine” can be turned off remains a mystery. With the 30th anniversary of Superfund now passed, it is time for more discussion and coordination between EPA and the PRP community about how and when Superfund sites, especially those with long-term groundwater monitoring requirements, may “end.”
Posted on April 1, 2011
Thirteen months. Seems like a long time, right? In many cases, thirteen months is enough time to buy or sell a major business unit, or perhaps even litigate a minor dispute to trial. In this light, it’s easy to think at first glance that thirteen months should be plenty of time to implement the Bureau of Ocean Energy Management, Regulation and Enforcement’s (“BOEMRE”) six-page regulation requiring offshore operators to adopt a Safety and Environmental Management System (“SEMS”) by November 15, 2011. 75 Fed. Reg 63619 (Oct. 15, 2010). Unfortunately, companies who delay preparations to implement 30 C.F.R. Part 250 Subpart S are in for an ugly surprise particularly given that there are now just eight months remaining in the race to compliance. The challenge is amplified because the new regulation adopts the American Petroleum Institute’s Recommended Practice 75 (“RP 75”) in its entirety, converting the formerly voluntary practices into required elements of the regulation. 30 C.F.R. § 250.1902(c).
In my experience, companies tackling the job of creating a SEMS program that is compliant with the new federal regulations have encountered a number of challenges. Although at least sixty percent of operators already have a SEMS program that incorporates many of the elements of RP 75, converting a voluntary program intended to assist companies with internally identifying and resolving weaknesses in environmental, health and safety performance into a full-scale regulatory program complete with public disclosure is a daunting prospect. As an initial matter, the sheer number of potentially-applicable elements is astounding—by my count the regulation imposes well over 150 separate requirements. In order to thoroughly address all applicable requirements, it is likely that many business units or departments will be involved in creating the SEMS plan. While the Health, Safety and Environmental divisions will be inexorably intertwined in the effort, departments that manage contractor relationships and training should also be involved. As with all endeavors that involve multiple personalities and levels of management, coordinating such a large group of people is bound to be taxing. In addition, creating or modifying training programs and rolling those out to employees will be time-consuming. When viewed as a whole, the thirteen-month period to achieve compliance is no walk in the park—for many companies it will be a sprint to the finish.
Although complying with the now-required API practices is a daunting task in and of itself, the regulations, though short, contain significant requirements in addition to RP 75. Most notably, the new regulations require companies to audit themselves and disclose the results of the audit to BOEMRE. The purpose of the audit is to identify areas in which safety and environmental performance need improvement. Under Subpart S, an audit must be conducted by an independent third-party or “designated and qualified” internal personnel. Id. § 250.1920. Before the audit is even conducted, the operator must submit an audit plan to BOEMRE thirty days prior to the audit. The audit plan will identify the facilities to be audited (the audit must cover at least 15% of the operator’s facilities), and the persons conducting the audit. BOEMRE reserves the right to strike a selected independent third party or designated and qualified personnel if they do not meet BOEMRE’s criteria; specifically, the auditor must have an appropriate background, education, technical capabilities, previous experience with BOEMRE requirements, and no conflicts of interest. BOEMRE may also modify the list of facilities selected for auditing. The first audit must be conducted within the first two years of adopting the operator’s SEMS plan; after that, the company may space its audits out by up to three years. The resulting audit report must disclose any deficiencies in the SEMS uncovered by the audit, and must be submitted to BOEMRE within thirty days of the audit’s completion. Along with the audit report, the operator must submit a plan that addresses any deficiencies identified by the audit report, and identifies the individual employee responsible for correcting each deficiency. Given the tough requirements imposed by BOEMRE’s auditing requirements, operators that are already comfortable with their SEMS plan should consider conducting a trial audit prior to the regulation’s effective date, as all audits conducted after November 15, 2011 must follow BOEMRE’s pre-approval and disclosure requirements. The audit should identify any gaps in compliance and provide a roadmap for areas needing corrective action before the November 15th deadline.