Posted on October 31, 2012
When hydraulic fracturing “exploded” in Pennsylvania and Ohio to unlock the huge reservoirs of natural gas buried thousands of feet below surface in the deep shale formations, the initial environmental concerns focused on the potential for contamination of drinking water supplies from the “fracking” fluids and methane, and from the induced seismicity from the disposal of the waste brines into the underground injection wells.
While those concerns remain, new issues have surfaced. In Ohio’s Utica shale play, the deep wells typically consume 5,000,000 or more million gallons of water for the hydraulic fracturing and well completion. Beginning in June, a number of political subdivisions and water districts saw the energy industry’s needs for water as a wonderful business opportunity. For example, the Muskingum Watershed Conservancy District, whose eighteen counties cover 20 percent of Ohio, reportedly contracted with one exploration and production company to sell millions of gallons of water from one of its reservoirs in eastern Ohio. The City of Steubenville signed a five year contract to supply as much as 700,000 gallons a day from a reservoir that holds water from the Ohio River. Newspaper reports at the time mentioned monthly payments to Steubenville on the order of $120,000. The Buckeye Water District enjoyed a seven-month windfall of $24,000 per month for sales of water to a large drilling firm. Even the Ohio Department of Natural Resources weighed possible plans to grant drilling companies access to state-held reservoirs, lakes and streams.
But the public announcement of these water supply contracts produced significant public backlash. The reaction to the plans of the Muskingum Watershed Conservancy District, for example, prompted a reversal of the sales, and lead to a moratorium pending completion of an independent water availability study by the U.S. Geological Survey and an updating of the District’s water supply plan with input from the new study. Low stream flows in the Susquehanna River watershed in Pennsylvania lead the Susquehanna River Basin Commission to suspend 57 approved water withdrawals by gas drillers and other industrial users.
Perhaps in response to the public outcry over the potential impact on water resources, the Ohio General Assembly passed wide-ranging legislation to deal with the growth of shale gas exploration in Ohio. One of the features of that bill requires drillers to disclose their water source and the likely volume of water for well completion.
The link to that legislation is here:
In another piece of legislation, the Ohio General Assembly adopted a measure to regulate the withdrawal of water from the Lake Erie watershed, effectively precluding the use of Lake Erie watershed waters for hydraulic fracturing in the counties where the drilling is occuring because they are outside the watershed.
The legislation on the use of Lake Erie water can be found at this link:
Even with these safeguards, groups like the National Wildlife Federation urge the adoption of even stronger rules on the use of water for hydraulic fracturing. With the projected exponential growth of shale gas drilling, there will be continuing efforts to regulate the use of water, and the encouragement for water recycle and reuse, for hydraulic fracturing.
Posted on October 29, 2012
The aim of this post is to encourage environmental lawyers to pay more attention to issues and developments in human health risk assessment.
Remedial clean ups under Superfund and RCRA are very largely driven by human health risk assessments carried out under EPA’s Integrated Risk Information System (IRIS) as applied to chemicals on the site. The health-protective regulations under the Clean Air Act also are typically the product of statutorily mandated human health risk assessments. Mass tort cases seeking medical monitoring and personal injury are often based on such assessments. Just as the cost of clean up and CAA compliance are driven by these assessments, so too are numerous corporate decisions on what chemicals to use in manufacturing and commercial activity.
Despite its centrality to so many important activities, IRIS is cordoned off from most of the legal system. It is not rooted in or governed by any statute. Its results are not reviewable except in the context of their application to a particular site – and if that site is governed by Superfund, review, as a practical matter, is available only at the end of the remedial process. Perhaps because of this structure and because human health risk assessments are an intensely scientific undertaking, the presence of lawyers is very little felt.
Nonetheless, environmental lawyers should be aware of some on-going efforts aimed at examining and reforming IRIS and similar systems.
First, the Administrative Conference of the United States commissioned Prof. Wendy Wagner of the University of Texas School of Law to undertake a study entitled “Science in the Administrative Process: A Study of Agency Decisionmaking Approaches.” Prof. Wagner details in 80 pages how the processes of EPA (including IRIS), the Fish and Wildlife Service (endangered and threatened species listing) and the Nuclear Regulatory Commission use science in regulatory decision-making. These useful guides are followed by almost 40 pages of recommendations and suggestions of best practices on issues such as the role of OMB in reviewing proposed agency actions with a major scientific component and the right of staff scientists to dissent from agency actions. Not surprisingly, given Prof. Wagner’s professional background, most of the topics on which she focuses are readily accessible to lawyers.
On September 10, 2012, the Administrative Conference held a workshop open to the public on many of Prof. Wagner’s ideas and proposals. It did not appear to me that very many environmental lawyers were on the stage or in the audience, despite the fact that issues and reforms discussed were central to their professional lives.
Second, in 2009, the National Academies published “Science and Decisions: Advancing Risk Assessment.” The volume focuses on EPA and IRIS. It is a thorough review of the issues and challenges of risk assessment from scientists who are, from time to time, called on to review EPA’s handiwork. Although some of the advice is merely editorial – be succinct and to the point, one chart or figure can be worth a thousand words – the authors address many of the major scientific issues in risk assessment, e.g. the selection of default values given the known sensitivity of a lab animal to a chemical, the probable sensitivity of humans has to be “calculated” or how to treat cumulative risks where there is exposure to two or more chemicals.
EPA is now working on implementing many of the suggestions set out in “Science and Decisions.” In September, 2012, the comment period closed on the draft of EPA’s “Framework for Human Health Risk Assessment to Inform Decision Making.” This document responds in large part to “Science and Decisions,” addressing “the recommendation that EPA formalize and implement planning, scoping, and problem formulation in the risk assessment process and that the agency adopt a framework for risk-based decision making.” EPA is not done absorbing “Science and Decisions” and the National Research Council is not done with EPA. The Council will continue to review how EPA implements IRIS. There will be an emphasis on EPA’s weight-of-evidence analyses and recommended approaches for weighing scientific evidence for chemical hazard and dose-response assessments. See Review of the IRIS Process, National Academies Current Projects.
The ongoing initiatives will provide the structure and the process for human health risk assessments in the future. The work of environmental lawyers will be shaped by what the scientists decide. Environmental lawyers should be engaged in these debates and arguments now.
Posted on October 23, 2012
The technique known as hydraulic fracturing (“fracking”), especially in the context of developing natural gas, continues to generate controversy, legal fees and emotion. The question remains as to whether the technique itself presents any unusual risk to the environment or natural resources. What is clear, however, is the political significance of fracturing and the challenges that our polarized, political dialog presents to achieving a rational result in or from the fracturing debate.
On the federal side, the Administration has taken steps in order to represent to voters that the President has done what he could to see that hydraulic fracturing occurs in a manner that does not threaten the environment. Concrete steps are taking place in three Agencies.
- BLM has issued draft regulations relating to fracturing activities taking place on federal lands. The proposal drew thousands of comments and no action is likely until well after the election.
- EPA issued draft guidance proposing to regulate hydraulic fracturing under the UIC program. This proposal also resulted in thousands of comments, all but precluding any chance that EPA will be in a position to act until well after the election.
- EPA is continuing its study into the possible connection between hydraulic fracturing and underground sources of drinking water. A partial report reflecting some retrospective analysis is due before year end, but the meat of the report will not be available until 2014.
- EPA continues to pursue its general investigation into the way fracturing occurs through its investigation into 9 fracturing companies. EPA has proposed to publish information reflecting well densities and chemical use relatively soon.
- EPA has reviewed and is continuing to review petitions filed by environmental organizations seeking to force the Agency to take steps to regulate fracturing under various regulatory programs, including TSCA. EPA has denied some of the relief sought, but is collecting information under some and beginning its evaluation of others.
- At the regional level, EPA has engaged in studies when citizen pressure has suggested a connection between fracturing and contaminated drinking water. This has proven to be an area where EPA has not maintained consistency or scientific integrity. The agency’s work at Dimmock, Pavillion and elsewhere has resulted principally in controversy and criticism, and has done little to advance the state of knowledge about fracturing.
- DOE Secretary Chu has been an Administration spokesman for White House efforts to coordinate the many federal entities that seem to be working on fracturing issues. His role has been above the weeds and the fact that a Secretary charged with overseeing national energy policy, if there is one, is the Administration’s front man, appears to be a bone to those suggesting the sole interest of the President is in making energy development more difficult.
- Within DOA, the Forest Service has sent mixed signals with respect to whether fracturing is viewed as posing risks to other resources. While several forests have adopted plans anticipating the development of resources within their jurisdiction, including by fracturing, the George Washington National Forest plan remains under review, having proposed to ban fracturing in its initial draft release.
- The USGS recently has entered the fray in connections with published concerns linking fracturing and increased seismic activity. Preliminary indications suggest the true focus of such efforts may be long term injection wells, rather than transient fracturing activities, but there is more to follow on this topic.
The federal role in the fracturing debate also has occurred in courts. Environmental interest groups recently have begun to raise fracturing activities in a number of lawsuits challenging the adequacy of the environmental reviews conducted in connection with federal leases. Many such cases are making their way through the courts, and are being watched for the decisions..
In his public statements, the President, of course, has been careful to promote the safe development of natural gas resources, including by fracturing. He has offered what generally have been viewed as favorable statements in his state of the union address, and more recently in his remarks at the Democratic National Convention. Of course none of those favorable comments has slowed any of the developments noted above, nor were the President’s remarks necessarily inconsistent with such action.
There is much resistance to the above federal efforts from states, and from industry which has had decades of experience accommodating state regulators in connection with drilling and developing wells. States too have been active, to varying degrees, with some devising thoughtful programs balancing the needs of developers with the concerns of some members of the public. The politicization of the issue also has reached the states, however, and nowhere is it more in evidence than in the glacial SGEIS process that has been under way for years, with no regulations on the horizon. There also have been intrastate efforts directed at fracturing by the Susquehanna River and Delaware River Basin Commissions, with the former moving forward with water management programs while the latter has, by default, banned fracturing until a compromise is agreed upon among the member sovereign constituencies.
And – don’t expect the controversy and misunderstandings surrounding fracturing to disappear soon. In addition to a small scale advocacy film last year, Hollywood is entering the fray with a major film slated for release in the not-too-distant future. Television already has managed to capitalize on the drama fracturing offers in more than one series.
Things will change after the election. Stay tuned to find out how.
Posted on October 17, 2012
By Deborah Jennings and Andrew Schatz
If California regulators approve a proposed AES combined-cycle natural gas-fired peaking power plant, it could blur the standard for Best Available Control Technology (BACT) for greenhouse gas (GHG) emissions from gas-fired electric generating facilities. EPA expressly excluded simple cycle peaking units from its recently proposed New Source Performance Standards (NSPS) for GHGs because combined cycle units, which are GHG lower-emitting, were presumed not to be useable as peakers. By virtue of AES’s proposed combined-cycle peaking plant, EPA may be moved to change its view. Low-emitting combined cycle may set the BACT standard for future, gas-fired peaking units as a result.
AES is proposing to use a combined-cycle system in a peaking capacity at its Huntington Beach Energy Project (HBEP) in Huntington Beach, California. See AES Southland Development, LLC, BACT Determination for the Huntington Beach Energy Project (June 2012). The HBEP will consist of two combined cycle power blocks with a net capacity of 939 MW to be used for peaking and supplying local capacity. AES’s proposal to use combined-cycle for a peaking unit is notable because typically peakers have been simple cycle systems. The combined-cycle system is more efficient than simple cycle systems and has lower GHG emission rates. Whereas simple cycle systems combust natural gas to generate electricity, combined cycle-systems also capture lost heat from the combustion process to generate additional electricity through a steam turbine (i.e. a heat recovery steam generator). Accordingly, BACT for GHG emissions at the HBEP project results in an GHG emissions rate of 1,082 pounds of CO2 per megawatt-hour (lbs CO2/MWh). In contrast, a recent BACT determination for the simple cycle “peaking” power plant at the Pio Pico Energy Center in San Diego was 1,181 lbs CO2/MWh.
Regulatory agencies have struggled to determine what constitutes GHG BACT for natural gas (and other fossil-fuel) fired power plants. Regulatory authorities have declined to require natural gas-fired power plant projects to consider GHG lower emitting combined-cycle technologies in a BACT analysis. For example, in June 2012, Wisconsin authorities declined EPA Region V’s request to consider the use of combined-cycle gas turbines in a GHG permit for a wastewater utility fuelled by landfill gas.
EPA has sent conflicting signals on the issue. In the past, EPA has suggested from time to time that combined cycle be considered in the BACT analysis for natural gas plants. However, in drafting its New Source Performance Standards (NSPS) for GHG Emissions for New Stationary Sources: Electric Utility Generating Units (EGUs), EPA concluded that it cannot require proposed simple cycle facilities to meet the NSPS designed for combined-cycle natural gas facilities based on functional differences in peaking plants. 77 Fed. Reg. 22392 (April 13, 2012).
Specifically, EPA declined to include simple cycle facilities as an affected source in the proposed 40 CFR part 60, subpart TTTT for GHG emissions from new facilities governing combined-cycle plants and coal-fired plants. Id. at 22411. In its NSPS proposal, EPA required new fossil fuel-fired EGUs greater than 25 MW to meet an output-based standard of 1,000 lb CO2/MWh, representing the performance of widely used natural gas combined cycle technology. Id. at 22392. (Interestingly, in setting the NSPS at 1,000 lb CO2/MWh, EPA proposes a more stringent threshold for GHG emissions from new facilities than even HBEP). In choosing to exclude simple-cycle facilities from this standard, EPA reasoned that unlike combined-cycle plants (which are typically designed to provide baseload power and are able to emit CO2 at similar levels), simple-cycle plants are typically designed to provide peaking power, operate less, and “it would be much more expensive to lower their emission profile to that of a combined cycle power plant.” Id. at 22411.
In proposing a relatively lower emitting combined-cycle for a peaking unit, the AES project casts doubt on EPA’s conclusion that simple cycle is different. Accordingly, EPA may come to impose combined-cycle BACT limits on future natural gas combustion peaking facilities.
Posted on October 11, 2012
For the first time in its long history, the American Law Institute will consider two projects involving environmental law: 1) the law regarding environmental impact assessments, and 2) principles of environmental enforcement and remedies. In each case, if the proposal is approved, the relevant federal, state and local law would be reviewed exhaustively by a working group with environmental experience. Their product would then be reviewed by the full ALI membership, probably resulting in a report of some sort.
Most of us know ALI as the author of the Restatements of the Law in such fields as torts, contracts, property, trusts, etc. The Restatements typically report with great thoroughness on the relevant case law and statutes, with the goal of setting forth a highly accurate statement of the law, including variations among jurisdictions, and sometimes indicating where clarification would be helpful. The result is a consensus-based formulation of the law of the land, widely relied on by practitioners, teachers, courts and others. Harvard Law Professor Clark Byse has referred to it as “The law of Restatemania.”
Because the field of environmental law is relatively new and largely dominated by federal statutes, it has been widely thought until now that there is little need for a “Restatement of Environmental Law” or even a significant part of it. A few previous ALI projects have touched on environmental law issues. For example, the Restatement of Torts addresses nuisance, negligence, trespass and strict liability for highly hazardous activities, all of which can arise in an environmental context. ALI’s 1991 “Reporters’ Study on Enterprise Responsibility for Personal Injury” addressed some aspects of toxic tort liability, including joint and severable liability.
The current effort is the result of the deliberations of some 47 ALI members who practice or teach environmental law, who concluded that there are a number of areas in environmental law where there is substantial confusion which could benefit from the type of thoughtful analysis and reporting for which ALI is well known. After screening over 30 possible projects, the group is recommending the two described at the outset.
The Enforcement Law project would survey both civil and criminal law. It would discuss how environmental liability arises, who can be liable, who can seek enforcement, and what remedies are appropriate. It would discuss areas of overlapping federal and state jurisdiction, and consider both statutes and common law.
The Environmental Impact Assessment project would discuss the triggering and nature of an obligation to assess potential environmental impact (including federal, state and local NEPAs), the scope of the inquiry and the methods.
This effort is being led by a 5 person steering committee chaired by Professor Tracy Hester, Director of the Environment, Energy and Natural Resources Center of the University of Houston Law Center. He can be reached at email@example.com for further information. The other committee members are Dean Irma Russell and Professors Robert Percival, Victor Flatt and Joel Mintz. Given the ALI’s clout in the legal profession, this initiative should be of considerable interest to ACOEL members.
Posted on October 8, 2012
The full import of the pivotal American Electric Power Co., Inc. v. Connecticut, 131 S. Ct. 2527 (2011), decision holding that federal common law claims for injunctive relief were displaced by federal regulation of GHGs under the CAA remain to be decided. The Ninth Circuit Court of Appeals has now upheld the dismissal of a federal nuisance action filed in 2008 against Exxon Mobil et al., seeking damages for flooding attributable to climate change. Native Village of Kivalina v. Exxon-Mobil Corp., No. 09-17490 (Sept. 21, 2012). Damage estimates approached $400 million. The suit was dismissed by the District Court in 2009 on the grounds the regulation of greenhouse gases was a legislative matter rather than a judicial controversy and for lack of standing.
The Supreme Court in AEP held only that the plaintiff was not entitled to injunctive relief. Relying on AEP, the Ninth Circuit held that the federal Clean Air Act displaces climate change-related federal common law public nuisance claims for both injunctive relief and damages. In a concurring opinion, Judge Pro wrote that he would have dismissed for lack of standing as the plaintiff had failed to prove its injuries were directly attributable to the defendants.
In AEP, the Supreme Court held that the CAA would bar state common law nuisance claims if such claims were preempted, but the Court did not decide if the CAA in fact preempted state common law nuisance claims. In Kivalina, the district court dismissed the state common law nuisance claims without prejudice. The Ninth Circuit did not rule on the validity of these claims. Since the plaintiff’s state common law claims are undisturbed by this decision, it remains to be seen whether Kivalina or other will pursue such claims.
Posted on October 4, 2012
For four centuries Pennsylvania has been at the epicenter of America’s search for growth-sustaining fuel, but not without paying an environmental price. In the 18th century, Pennsylvania’s (literally “Penn’s Woods”) abundant forests supplied wood to fuel America’s expansive westward development. In denuding its forests, however, Pennsylvania experienced enhanced erosion and sedimentation and other environmental detriments.
In the 19th century, 1859 specifically, oil was discovered in Oil City. Pennsylvania (and America) turned its attention from wood to oil. Although primary oil production shifted eventually to the Gulf states, nevertheless, Pennsylvania, as an oil producer, enjoyed the benefits and suffered the environmental detriments created by laissez faire, unregulated drilling and transportation of petroleum.
By the 20th century, coal was king in Pennsylvania. The residual impacts from coal mining, especially strip mining, remain to this day in the form of scarred landscapes, acid mine drainage and air emissions, albeit the impacts are now monitored amid a focus on environmental enforcement efforts.
In the 21st century coal remains a force in energy production in Pennsylvania, but again nature has put the state in the national discussion over domestic fuel protection as it has become a national leader in developing the natural gas entrapped in the Marcellus Shale underlying large portions of southwest, north central and northeastern Pennsylvania. Natural gas extracted from the Marcellus Shale has become Pennsylvania’s (and increasingly, America’s) fuel of choice for the 21st century. Will the environmental legacy be different this time?
In February, 2012, Pennsylvania enacted The Oil and Gas Act Amendments of 2012, known as Act 13, in an attempt to adapt Pennsylvania’s longstanding Oil and Gas Act to issues unique to the technique used to fracture layers of shale and release natural gas, commonly known as “fracking.” The Amendments raise a number of new legal issues:
1. By offering shale gas fees to host municipalities who are willing to accept them, the Act preempts accepting municipalities from enacting zoning ordinances to regulate fracking. A recent Commonwealth Court decision held such preemption unconstitutional. An appeal by the State is pending before the Pennsylvania Supreme Court. Briefs have been filed and oral argument is scheduled for October 17 in Pittsburgh.
2. Despite mandatory setback distances from wells, required by the Amendments, instances of citizens claiming that or suing because their water supply was contaminated as a result of the recovery of shale gas, either through leakage, spillage, or other events will need to be resolved.
3. Pennsylvania’s Department of Environmental Protection has differed with EPA and the Delaware River Basin Commission regarding how much authority these agencies should have to regulate operations associated with Marcellus Shale gas production.
4. In a victory for the shale gas industry, the District Court for the Western District of Pennsylvania invalidated a 2009 U.S. Forest Services Agreement with environmental groups that would have required the preparation of a NEPA environmental assessment prior to drilling in U.S. forests.
5. Some property owners who have leased their subsurface drilling rights for Marcellus Shale gas recovery have found themselves unable to refinance their mortgages. Although the property owners argue that their land has become more valuable because of the potential recovery of fees from the Marcellus Shale gas recovery, some banks have refused to refinance claiming that the fracking lowers the value of the property because of the potential of pollution and/or the location of drilling rigs and other heavy equipment on the property, thereby making foreclosure more difficult.
6. Pennsylvania’s Public Utility Commission (PUC) is the collector under Act 13 of the “impact fees” from natural gas well operators – which have to date exceeded $200 million and will be distributed in large part to “accepting” host municipalities. In accordance with Act 13, the PUC has also begun issuing advisory opinions on the legality of local zoning ordinances. The Pennsylvania Supreme Court’s decision on the Commonwealth Court’s invalidation of the preemption issue could affect how the PUC approaches these matters going forward.
While the sources of fuel and the techniques for obtaining it have changed much over the centuries in Pennsylvania, fuel production from forests, coal mines, oil rigs and fracking wells share a common legacy, initially attracting often environmentally insensitive wild catters, raising issues of local control versus the need for statewide uniformity, and creating the risk of potentially permanent environmental impacts if state-of-the-art environmental protections are not implemented. In sum, notwithstanding changes in preferred fuel sources over the past four centuries, the issues, impacts and challenges remain similar; the need to balance energy production and environmental protection, or, as they say – “the more things change, the more they remain the same”. Rather than be resigned to repeating history, however, the Commonwealth should rise to the challenge and use its acquired knowledge to inform our discussion as to how to utilize its resources, including natural gas, to provide energy solutions going forward.
Posted on October 3, 2012
2012 marks the 50th anniversary of Silent Spring, one of the first books to point out the environmental dangers associated with pursuing technological and scientific advances without fully understanding their possible negative side effects. Silent Spring was a revolutionary environmental exposé published in 1962 by an unassuming author, Rachel Carson. Her book inspired a powerful social movement that continues to impact environmental law and American society today.
A scientist and ecologist, Carson was a former editor of U.S. Fish and Wildlife Service publications and a feature writer for the Baltimore Sun who eventually dedicated herself to writing books that taught people about the fragile beauty of Earth’s ecosystem. Silent Spring was written in the wake of post-war lethargy, new affluence and during a time when Americans were confident science had all the answers. Disturbed by the proliferate use of synthetic chemical pesticides after WWII, Carson challenged this practice and sounded a loud warning about the use of chemical pesticides, a reminder of the responsibility of science and the limits of technological progress.
Critics called Carson an alarmist, and Silent Spring was met with intense rebuttals from the scientific establishment and some major industries. Regardless, Carson was steadfast in her resolve to show the need for new environmental policies and regulations necessary to protect human health and the environment.
Silent Spring is proof of the power of public opinion, and despite scientific skeptics, the book sparked a major environmental revolution. Carson’s exhaustive environmental calculations in Silent Spring brought to light the fact that people were subjecting themselves to slow poisoning by the misuse of chemical pesticides and toxic pollutants that take more than 15 years to break down. In addition, she exposed the fact that these chemicals could cause irreparable liver and nervous system damage, cancer and reproductive issues.
Carson’s testimony before Congress in 1963 later served as the catalyst for the ban on the domestic production of DDT and sparked a grassroots movement demanding better environmental protection and increased regulation, resulting in the formation of the U.S. Environmental Protection Agency (EPA).
Sadly Carson was not able to enjoy the fruits of her labor. She died after a long battle with breast cancer in 1964, just 18 months after her testimony before Congress. However, many celebrate the impact of her work on April 22 each year on Earth Day.
So after 50 years, how much has changed? Today, there is federal regulation of everything from coastal development to farming practices. Environmental protection includes policies concerning natural resources, human health, economic growth, energy, transportation, agriculture, industry and international trade and all parts of society. Many would say there is over regulation today. In many cases, I agree. However as Rachel Carson showed us, there is a need for some regulation, if just to protect us from ourselves.
Posted on October 2, 2012
On September 26, 2012, the New Jersey Supreme Court issued its decision in NJDEP v Dimant, rejecting an attempt by the state DEP to seek damages from an alleged discharger under the state's strict liability statute, the Spill Compensation and Control Act (typically referred to as the "Spill Act"). The court found that DEP had not established the necessary connection, or nexus, between the alleged discharge and the contamination at the specifically damaged site.
This was the second New Jersey appellate court decision in the past three months in which DEP's positions on regulatory and statutory authority have been successfully challenged.
In Dimant, DEP had sued to recover costs associated with investigation and remediation of PCE-contaminated groundwater found in residential wells, and was also seeking compensation for natural resource restoration. The defendant was a dry cleaner that had operated near the contaminated wells and had used the common dry-cleaning solvent PCE for 15 months in the late 1980s. During that period, in the course of a site inspection, DEP noted an external pipe at the dry cleaning facility which the agency found to be dripping PCB-bearing liquid onto the pavement.
The Spill Act provides that “[a]ny person who has discharged a hazardous substance, or is in any way responsible for any hazardous substance, shall be strictly liable, jointly and severally, without regard to fault, for all cleanup and removal costs no matter by whom incurred.”
DEP argued that the discharge was sufficient to connect the dry cleaner to the contaminated groundwater in the nearby wells. The court rejected this argument, finding that DEP had not met its burden of proof. It noted that DEP never presented sufficient proof of a “reasonable, tenable basis” for how drips of fluid observed at the dry cleaner on one occasion resulted in groundwater contamination in the Bound Brook wells.
The New Jersey Supreme Court upheld the prior trial court and Appellate Division decisions in the case, rejecting DEP's claims and holding that in order to obtain the requested relief, a real rather than hypothetical nexus must be shown to exist between the discharge of hazardous substances and the actual contamination at the specifically damaged site. That the substance dripping on the pavement in one location was the same as that found in the groundwater at another location was not a sufficient connection and did not constitute the “reasonable link” required to impose liability on the defendant.
The court further concluded that DEP could not credibly claim, many years after observing the dripping pipe, that the dry cleaner should bear the expense of studying how the drip may have impacted groundwater, and how the groundwater condition must now be addressed.
This was the second appellate court setback for DEP since July. In an unrelated ruling on July 6, 2012 in Des Champs Laboratories, Inc. v. Robert Martin, the New Jersey Appellate Division found that DEP had overstepped its regulatory authority in narrowing one of the statutory exemptions available under the state's transaction-triggered environmental law, the Industrial Site Recovery Act ("ISRA").
Under ISRA, a wide range of property owners and operators must investigate and if necessary clean up contamination at subject properties upon the occurrence of specific business events such as cessations of operation or sales of properties or businesses, regardless of fault. However, the legislature built certain exemptions into the law. One of them, available to those who have used only small – or de minimis – amounts of hazardous substances, is known as a De Minimus Quantity Exemption, or "DQE."
However, in 2009 DEP issued new regulations unilaterally imposing an additional requirement on DQE applicants that they also establish that the subject property is free of contamination. As the revision to the regulation was unsupported by the ISRA statute, and appeared to circumvent the very purpose of the DQE, Des Champs Laboratories challenged the regulation before the Superior Court, Appellate Division after its own application for a DQE was denied.
On July 6, 2012, the Appellate Division ruled in favor of Des Champs, invalidating the DEP regulatory change. DEP subsequently issued the De Minimis Quantity exemption to Des Champs.
[Note: See also William Hyatt's alert posted on September 2, 2011 on the NJ Appellate Court decision on the Dimant case.]