Posted on December 28, 2012
By: Jarred O. Taylor II and Shannon K. Oldenburg
The Gulf Coast Ecosystem Restoration Council (the “Council”) held its first public meeting on December 11, 2012, in Mobile, Alabama, intended to introduce the Council to the public and to give the public feedback opportunity on the Council’s plans. The Council, established by the Resources and Ecosystems Sustainability, Tourist Opportunities, and Revived Economies of the Gulf Coast States Act of 2012 (the “RESTORE Act”), is charged with developing and overseeing implementation of a comprehensive plan to help restore the ecosystem and economy of the Gulf Coast region in the wake of the Deepwater Horizon oil spill.
The RESTORE Act will fund the Council’s work via a Trust Fund made up of 80 percent of all Clean Water Act administrative and civil penalties related to the oil spill:
• 35 percent of the money will be divided equally between the five Gulf States;
• 30 percent will be spent through the Council to implement a comprehensive plan;
• 30 percent will be used through States’ plans to address impacts from the oil spill;
• 2.5 percent will be used to create the Gulf Coast Ecosystem Restoration Science, Observation, Monitoring and Technology Program within the Department of Commerce’s National Oceanic and Atmospheric Administration (“NOAA”); and
• the remaining 2.5 percent will be used for Centers of Excellence Research grants, which will each focus on science, technology, and monitoring related to Gulf restoration.
Overarching themes of the comments from both the Council and the public in attendance at the meeting were that ideas for Gulf restoration should originate from the Gulf Coast, not from the federal government, and that the Gulf of Mexico Ecosystem Restoration Strategy developed by the Gulf Coast Ecosystem Restoration Task Force (“GCERTF”) should be used as a framework for the Council’s work. To much approval from the audience, Rachel Jacobson, Principal Deputy Assistant Secretary for Fish and Wildlife and Parks, Department of the Interior (Ken Salazar’s designated representative on the Council), commented that the Council should incorporate the “four pillars” of the GCERTF strategy into the process and work of the Council in determining how the RESTORE Act funds should be distributed and used. These four pillars are (1) restore and conserve habitat; (2) restore water quality; (3) replenish and protect living coastal and marine resources; and (4) enhance community resilience. Notably, Jacobson and many of the other designated representatives to the Council served as members of the GCERTF and also act as Trustees for the Natural Resources Damage Assessment (“NRDA”) for the Deepwater Horizon oil spill.
The Council has only 180 days from passage of the RESTORE Act to publish: 1) procedures to assess whether programs and activities carried out under the Act are in compliance with the Act’s requirements; 2) auditing requirements for disbursing funds from the Trust Fund; and 3) procedures to identify and allocate funds for the expenses of administering the Trust Fund. The Council will publish a “proposed plan” by the end of this year that will be the focus of public hearings in late January and early February 2013, likely to be in the style of the public “listening sessions” held by the GCERTF last year. The Council also will release a “draft comprehensive plan” for restoration in Spring 2013, and publish a final plan on July 6, 2013, the anniversary of enactment of the RESTORE Act.
An incredible amount of work has already gone into Gulf restoration, but much work remains. Only time will tell if these legislative acts and work will translate into true restoration in the Gulf area.
Posted on December 26, 2012
As the Clean Water Act celebrates its 40th anniversary, it has ignited a controversy in New Hampshire with potentially hundreds of millions of dollars at stake. In the law’s early days, publicly owned treatment works (“POTWs”), mandated and financed in large part with federal funds, were viewed as the “good guys” in the national effort to restore quality in receiving water bodies into which raw sewage was being discharged. That view of POTWs seems to have changed in New Hampshire, at least as relates to the State’s largest saltwater estuary; the Great Bay. Faced with the potential need to finance significant POTW upgrades or reconstruction, New Hampshire POTWs are challenging EPA’s permitting decisions in the courts, through administrative channels and in the press.
As we know, POTWs are regulated through National Pollutant Discharge Elimination System (“NPDES”) permits that monitor and control a variety of effluent criteria. Interestingly, however, New Hampshire was and remains one of the few states that has not obtained authority to issue new and renewed NPDES permits. Because of this status as a non-delegated state, dischargers in New Hampshire with expiring permits must apply to the federal government for renewal. As environmental regulation has progressed, however, and as federal funds have diminished or disappeared, POTWs and the towns and sewer districts that operate them have found themselves opposed to the EPA’s efforts to impose stricter standards to address pollutants that were not of primary concern when the POTWs were constructed and initially permitted.
In New Hampshire, this is seen vividly in NPDES renewal efforts EPA is undertaking for several POTWs that discharge under expired and expiring permits, directly or indirectly, into the Great Bay estuary located on the State’s coast. Once a rich habitat for oysters, eel grass and other sea life, Great Bay is now stressed by a variety of factors including both point and non-point discharges as well as other environmental factors. At the heart of the controversy in New Hampshire is EPA’s intention to reduce effluent limitations for nitrogen to as low as three parts per million (the limits of technology) in order to ameliorate nitrogen related problems in Great Bay. From the municipalities and POTWs perspective, the costs to comply with these new lower limits are exorbitant. One widely cited study estimates that, for the Great Bay estuary POTWs to comply with the new nitrogen limit, it will cost in excess of one half billion dollars in capital,operation and maintenance expenses. Those costs will, of course, be passed along to a relatively small population of ratepayers.
A coalition of communities with affected POTWs has joined forces in response, proposing “adaptive management programs” combining somewhat lower discharge limits with comprehensive non-point controls aimed together at achieving EPA’s stated goals. It is unclear at this time whether those efforts will be successful. The coalition communities certainly have in mind the experiences in Chesapeake Bay, or closer to home in neighboring and similarly non-delegated Massachusetts, where EPA is using its Residual Designation Authority (“RDA”) to require permits in the Charles River watershed. EPA has been public with its view that the Charles River RDA program may become a model for watersheds elsewhere in New England and nationwide. It is thought that an adaptive management program as proposed by New Hampshire’s coalition communities would obviate the need to utilize RDA for Great Bay, but that issue remains to be addressed in the future.
Posted on December 19, 2012
The attached article will be published in the upcoming issue of the Lewis & Clark Law School Environmental Law Review. The article is among the first to integrate current climate change science, particularly ongoing impacts and predicted impacts, with a detailed roadmap for substantial reform of our environmental processes for reviewing proposed renewable energy projects.
Most existing articles either focus only on climate science or on minor modifications to the regulatory system. Using offshore wind power as a case study, this article demonstrates how, in an increasingly carbon-constrained world, our existing environmental laws and regulatory process no longer achieve their underlying goals of long-term ecosystem conservation. To the contrary, these laws and regulations are supporting a system with increasing greenhouse gas emissions that is annually costing trillions of dollars.
We have little time left to create a practical path to achieving an 80% reduction in greenhouse gases by 2050—with failure resulting in average global temperatures rising more than the internationally-agreed targeted ceiling of 2°C. After examining the obstacles confronting a potential developer of offshore wind, this article clearly lays out why and how the existing regulatory process should be quickly reformed so that offshore wind and other clean renewable energy sources can help us escape the escalating consequences of our carbon-intensive economic system.
Posted on December 18, 2012
A prior post by Michael Rodburg described New Jersey’s coastal regulatory programs, Sandy’s impact on that state and the policy choices it now must face. This alert will focus on Connecticut’s experience with Storm Irene and Super-storm Sandy and the challenges for government at all levels that the storms have presented.
Connecticut is known as the “land of steady habits,” but after being hit by two significant storms within a fourteen month period, many people are beginning to question the sustainability of the state’s historic coastal growth patterns and the ability of the current regulatory scheme to address the challenges that climate change is bringing to coastal states like Connecticut.
The impact on Connecticut from Sandy was not as great as the impact on New Jersey, because the storm atypically turned West as it approached Long Island, and the eye of the storm hit the New Jersey coast head on. However, Connecticut was not spared, because Sandy’s peak easterly winds occurred during a spring high tide event. This combination of factors pushed a record high storm surge into western Long Island Sound, which narrows as it approaches its westerly outlet through the East River separating Manhattan from Brooklyn.
Due to this constriction, the water had no where to go but up in the western Sound, and it over-topped seawalls and flooded many residential areas in Fairfield County which had not historically been subjected to flooding. It also threatened several utility sub-stations in Bridgeport and other urban centers, which were only saved by emergency flood proofing efforts. Sadly, for many East-facing shorefronts, Sandy flooded out structures that had just been re-built following the ravages of Irene.
Ironically, like the programs in New Jersey discussed in Michael Rodburg’s post, Connecticut has had a decades old and robust coastal regulatory program. The first legislation in 1939 was prompted by the deadly 1938 Hurricane. In 1969, legislation was adopted to regulate and protect tidal wetlands. These two programs have evolved since their initial passage and now require State permits respectively for dredging, installation of structures, and placement of fill in tidal and navigable waters, and for similar regulated activities in tidal wetlands. The legislature strengthened the coastal programs in 1979 by authorizing a comprehensive coastal zone management program which required government agencies to make permit decisions in the coastal area consistent with the goals and policies of the Coastal Management Act (“CMA”).
Despite this expansive regulatory edifice designed to provide natural resource protection, minimize armoring, and offer preferred regulatory status to water-dependent uses in the coastal area, Sandy clearly challenged the adequacy of the current scheme. One problem is that the statutes, particularly the CMA, have come decades too late to effectively steer development away from the coast. A second is that the CMA’s goal of encouraging only water-dependent uses to be located in the coastal area has not been followed by the 34 towns in the coastal area which have the power to determine land use patterns through zoning.
The flaws in the current regulatory scheme prompted some environmental groups after Irene to call for a phased “retreat from the coast,” which immediately drew fire from property rights advocates in the legislature, and a legislative Shoreline Protection Task Force was created in the 2012 legislative session to study the issues.
Aside from the property rights issues involved in a governmental strategy of retreat, a significant problem in Connecticut would be that many coastal communities have a limited industrial/commercial tax base. As a result waterfront properties comprise a disproportionately large share of the municipal grand list. For government to try to force property owners out, or buy them out would leave many communities with a major revenue hole. At a time of declining state revenues and a looming budget shortfall, it will be interesting to see how Connecticut’s General Assembly reacts to the impacts of Irene and Sandy in the legislative session beginning in January of 2013.
Posted on December 14, 2012
On December 12, 2012 U.S. Energy Secretary Steven Chu announced competitive awards of $4 million each for 7 offshore wind projects from Maine to Oregon, in 6 different states. I am the lawyer for the University of Maine's project, which involves plans to install a pilot floating offshore wind farm with two, six-megawatt direct-drive turbines on concrete, semi-submersible foundations. I am also working on permitting a smaller-scale pilot project for UMaine that would be deployed in early to mid-2013 as the first floating offshore wind project in North America.
The Department of Energy Department made the awards with the goal of beginning to speed the deployment of stronger, more efficient offshore wind power technologies and showcase innovative technologies -- helping to further lower costs and drive performance improvements.
In year 1, each project will receive up to $4 million to complete 50% of the design process, and to begin outreach, environmental studies and permitting work. DOE will in early 2014 select up to three of the projects for follow-on phases that focus on siting, construction and installation, and aim to achieve commercial operation by 2017.The final projects will receive up to $47 million each over four years, subject to congressional appropriations.
Click HERE to read the full article from the U.S. Department of Energy.
Posted on December 14, 2012
Although the still-divided Congress is unlikely to pass significant new environmental legislation over the next four years, the second-term Obama administration has an opportunity to pursue its environmental agenda through the EPA with diminished fear of impacts on the next election.
The current term saw a period of strong leadership at EPA, but there is a feeling that the agency has not allowed the other regulatory shoe to drop. EPA stalled on several important regulations, as if anticipating the Romney complaint that excessive regulation was a cause of the recession. Having escaped the prospect of a president hostile to its mission, EPA is now prepared to roll out a queue of pending air pollution regulations in the coming weeks. The regulations will include final national ambient air quality standards, revised power plant emission standards, and expanded boiler emission rules.
Since the election, articles and opinion pieces have abounded that speculate on the Obama administration’s second-term approach to climate change. On November 12, 2012, the New York Times published an op-ed article suggesting that the administration could tackle both climate change and the recession by imposing a carbon tax. A similar suggestion was made in the New Yorker on December 12, 2012. This is undoubtedly a worthwhile concept, but it is probably a regulation too far.
The second Obama term could be an opportune time to revisit old chestnuts and resolve issues that have bedeviled both the regulated community and environmental advocates. For example, the EPA and the Army Corps of Engineers have been muddling through a proposed guidance document that aims to clarify the Supreme Court’s murky definition of “waters of the United States” subject to EPA jurisdiction under the Clean Water Act. But why should EPA and the Corps issue mere guidance rather than promptly promulgate binding regulations, which are subject to judicial review? As a result of adopting binding standards the agencies could gain, in addition to regulatory certainty, a strong basis to resist efforts to make the federal government the national waterfront rezoning authority.
Another stalled national environmental initiative that would benefit from robust leadership in the Obama II administration is EPA’s effort to update its regulations for industrial cooling water intake structures. EPA proposed regulations, designed to protect aquatic organisms, have remained in draft form since March 2011; additional data has been collected and is being analyzed in the interim. Pending final federal regulations, states have been left to adopt varying approaches to this important issue.
Finally, this period of relative freedom from election concerns might allow the administration to address a significant example of environmental unfairness, CERCLA’s scheme of sticking certain liable parties with the “orphan share” of environmental remediation costs that arise from contamination, generated over the last two centuries of industrial development, for which no financially solvent responsible party can be identified. The orphan share is often laid at the doorstep of a financially solvent polluter that caused some, but not all, of the pollution at a Superfund site. Fairness dictates that the public fund the orphan share, as opposed to the party that is prepared to step forward and clean up its own portion of the mess. Perhaps such a policy might have a sobering effect on the members of the public who clamor for a return to pristine conditions, so long as they don’t have to pay for it.
Posted on December 14, 2012
All of us know that enforcement of the Clean Air Act’s (CAA) proscriptions against pollutant air emissions is premised on the concept of Acooperative federalism. We know that the CAA’s policy development and enforcement regime is based upon a division of state and federal regulatory responsibility. Stated simply, the concept is that the federal government, through the EPA, sets standards for permissible emissions of substances affecting ambient air quality while individual states retain responsibility for implementing programs to enforce these standards.
The States’ implementation mechanisms are aptly titled State Implementation Plans or SIPs. SIPs are employed to demonstrate that federal and state air pollution regulations will allow counties in a particular state to meet federally mandated ambient air quality standards (NAAQS). The SIP process approval results in pollution control requirements which govern and often times unduly complicate compliance efforts of state regulators. They can also increase compliance costs borne by the regulated community. One aspect of that conundrum is the fact that when States fail to meet deadlines for attaining these standards, the regulators themselves can face sanctions from EPA and even suits by the public. Litigation and its costs complicate matters further.
As some regulators in Pennsylvania recently observed . . . [T]he current aggressive schedules for NAAQS reviews, State Implementation Plan (SIP) development and promulgation of Maximum Achievable Control Technology (MACT) standards are significant problems. Taken together, these inefficiencies are a resource drain on EPA, the states, the regulated community and the economy as a whole. The messy situation described in this quote is the subject of this blog.
The turbulence inherent in this divided relationship has escalated in recent times fraying the long-standing statutory regulatory compact between the federal government and the States.
An instructive example of the conflict of enforcement concept and reality engendered by the CAA’s cooperative federalism scheme was clearly highlighted in the recent case WildEarth Guardians v. Jackson. This case dealt with EPA’s delays in approving SIPs or pollution control plans affecting discharges of fine particulate matter or PM2.5. The plaintiffs in Wild Earth alleged that EPA failed to take final action under section 110(k)(2) and (3) of the CAA to approve SIP submittals in twenty (20) states meeting applicable requirements respecting the 2006 PM2.5NAAQS.
In 2006, the U.S. Court of Appeals for the District of Columbia had found that EPA’s PM2.5 NAAQS had to change because it failed to adequately protect human health. A change in this NAAQS required a change in States SIPs. SIPs were proposed but languished at EPA. Five years later, the plaintiffs in Wild Earth alleged that . . . [W]ithout infrastructure plans, citizens are not afforded full protection against the harmful effects of PM2.5 while seeking declaratory and injunctive relief.
Shortly after the suit was filed the plaintiffs and the EPA entered into a settlement. A consent decree called for the EPA to approve or disapprove SIP submittals for the 2006 PM2.5 standard as early as September 12, 2012 for some of the states involved and as late as February 13, 2013 for others. The Consent Decree was entered and the case dismissed in May of 2012. Case closed and compliance efforts back on track?
Unfortunately, many of the underlying issues raised in Wild Earth, specifically, the lack of cooperation between the States and the federal government on implementation of the PM2.5 NAAQS have raged on unabated. For example, eleven (11) states sued the EPA over the agency’s alleged failure to promulgate final NAAQS for PM2.5. In New York v. Jackson the plaintiffs are seeking a declaration that EPA is in violation of Section 109(d)(1) requesting that EPA review, propose and promulgate a new PM2.5 NAAQS. On June 14, 2012, EPA announced a proposal to strengthen the NAAQS PM2.5. Almost simultaneously, the D.C. Circuit issued an order refusing to set a schedule for EPA to issue a new PM2.5 NAAQS. Am.Farm Bureau v. EPA.
These developments will inevitably spawn additional delays in PM2.5 related SIP modifications and EPA approvals. That is the point of these comments on this small corner of CAA regulation and enforcement. Is the cooperative federalism underpinning of the CAA still workable? Can court’s recognize and respect the concept when regulatory policy, administrative lethargy and real human health concerns collide? These comments and observations have focused on the PM2.5 issue mainly because it has come up in some recent work in our office.
Without doubt other and more far-reaching examples of regulatory and judicial “turbulence abound, i.e., the raging fight over the EPA’s Cross State Air Pollution Rule (CSAPR). In a dissenting opinion on the CSAPR case, on the concept of cooperative federalism, Judge Rogers had this to say. . . [T] he result is an unsettling of the consistent precedent of this court strictly enforcing jurisdictional limits, a redesign of Congress’s vision of cooperative federalism between the states and the federal government in implementing the Clean Air Act based on the court’s own notions of absurdity and logic that are unsupported by a factual record, and a trampling on this court’s precedent on which the Environmental Protection Agency was entitled to rely . . . . Whew!
So what are CAA practitioners to make of the mess Judge Rogers eloquently describes? This blog entry offers no practical guidance for those laboring for an aggrieved client nor laments a bad result impairing enforcement prerogatives of the regulators. Instead, I only point out that it may be time for a concerted effort to step back and reconsider whether the CAA’s cooperative federalism’s bifurcation of rule promulgation and enforcement continues to make scientific, policy or common sense in today’s world.
Posted on December 13, 2012
On November 30, 2012, the United States Fish and Wildlife Service (“FWS”) announced its proposal to list the Lesser Prairie Chicken (“LPC”) as threatened under the Endangered Species Act (“ESA”). The proposed rule resulted from a comprehensive 2011 settlement agreement approved by the D.C. Circuit in In re Endangered Species Act Section 4 Deadline Litigation 2011, whereby FWS agreed to review over 250 candidate species and make a determination as to each species whether to issue a proposed listing rule or to issue a finding that the listing is not warranted, over a six-year period. Under the ESA, an endangered species is one that is in danger of extinction throughout all or a significant portion of its range, while a threatened species is likely to become endangered within the foreseeable future. FWS will make a final determination on whether to list the LPC as threatened by September 30, 2013.
The LPC is found across a five-state span, including Colorado, Oklahoma, New Mexico, Texas, and Kansas. Activities identified by FWS as threats to the species include habitat loss, fragmentation, modification, and degradation within the species’ range. Other threats include land uses related to wind energy and transmission development. If FWS ultimately lists the LPC as a threatened species, energy industry operations that could potentially harm the species would be affected. Specifically, due to the species’ avoidance of tall, vertical objects, FWS has identified oil and gas wellheads and wind turbines as features that may cause habitat displacement for the bird. Section 9 of the ESA prohibits the “take” of a listed wildlife species by a private or public entity. Because “take” is defined quite broadly under the ESA, even activities that are not designed or intended to harm a species, but could do so indirectly, such as operation of these tall structures, could potentially constitute a violation.
Unlike endangered species, in regard to a species listed as threatened, FWS has the authority under ESA Section 4(d) to tailor the “take” prohibitions to the conservation needs of the species. The FWS may use its Section 4(d) authority to incentivize participation in conservation plans that will support recovery of the LPC. Additionally, there are conservation plans that may be entered into by energy companies before a species is listed under the ESA. Called Candidate Conservation Agreements with Assurances (“CCAAs”), these agreements, allow non-federal property owners to commit to implement voluntary conservation measures for a candidate species in return for 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 threats to the covered species, so that listing the species under the ESA may become unnecessary. CCAAs, therefore, provide a significant opportunity for a compliant energy company to potentially insulate itself from liability in the event the LPC is listed as threatened. CCAAs have been developed for the LPC in New Mexico and Texas, and Oklahoma, under the leadership of the Oklahoma Department of Wildlife Conservation, has submitted a CCAA to FWS for review. Notably, because the final listing determination for the LPC must be made September 30, 2013, time is of the essence for energy companies to consider entering into a CCAA.
See the FWS’s Proposed Listing
See the FWS’s News Release Regarding the Proposed Listing
See the FWS’s Facts Regarding the Proposed Listing
Posted on December 12, 2012
The regulation of vapor intrusion is becoming more prevalent on both the federal and state level. In addition, although not strictly required as part of a Phase I ESA under ASTM 05 and AAI, many consultants take the position that this issue must be addressed at this first level of environmental due diligence.
One of the troubling issues at the state level is whether background concentrations should be taken into account in the establishment of indoor air quality standards. Many household products and building materials contain or release VOCs. However, not all states take background concentrations into account in the regulation of vapor intrusion.
EPA is expected to release its own vapor intrusion guidelines shortly. EPA appears to acknowledge the importance of background data in the process of formulating its guidelines. It remains to be seen whether such guidelines will impose stricter standards than those on the state level.
Posted on December 11, 2012
The song “Cool Water” was written and recorded in 1936 by Bob Nolan, an original member of the Sons of the Pioneers along with Len Slye, better known by his film name, Roy Rogers. “Cool Water” could be the theme song for Texas and other water-short western states. The Texas Water Development Board recently compiled “Water for Texas 2012 State Water Plan”. Quite simply, Texas does not have enough water to meet its current needs, much less its future needs, during periods of serious drought conditions. Texas is searching for cool, clear water.
Texas continues to grow. According to the Plan, the population of Texas is expected to increase 82 percent between 2010 and 2060, from 25.4 million to 46.3 million. Water needs are projected to increase by 22 percent, from 18 million acre-feet per year to 22 million acre feet per year in 2060. At the same time as water demand is rising, existing water supplies are diminishing by almost 2 million acre feet per year. Where will the additional water supplies be found to meet the identified needs?
The State Water Plan includes recommended water management strategies developed by regional planning groups, which include: conservation, drought management, conjunctive use of surface and groundwater, surface water reservoirs, aquifer storage, groundwater development, water reuse, desalination plants. In addition to addressing surface and groundwater water rights, water planners and users will need to confront the environmental implications of these strategies. What are the environmental regulatory constraints and impediments?
The implications and potential conflicts are far-reaching. We can all anticipate the obvious regulatory hurdles, contested procedures and property rights obstacles that projects to develop new surface reservoirs will confront. But what of other strategies like water conservation and reuse? Proposing water conservation (e.g. increased cooling water cycles) and reuse (e.g. use of treated municipal wastewater effluent) at a natural-gas fired power plant may threaten surface water quality as the total dissolved solids to be discharged are concentrated through these strategies. Also, what kinds of measures and alternatives under other environmental regulatory programs (e.g. Endangered Species Act) will need to be considered as these strategies are proposed?
The history of Texas is growth. To do nothing to meet its increasing water needs would result in staggering economic losses. Texas met the challenge after the drought of record in the 1950s. Texas will do it again! The question is: “how happy will the trails be?”
Posted on December 7, 2012
Since the early days of the Superfund program, EPA has required settling parties to provide financial assurance of the PRPs’ (potentially responsible parties) ability to perform the cleanup work. EPA regulations afford PRPs a choice of financial assurance mechanisms to fulfill this requirement including: a self-funded trust, bonds, letters of credit, insurance or the satisfaction of the “financial test” provided in 40 CFR §264.143(f).
As originally promulgated, the financial test applied to owners and operators of hazardous waste facilities permitted under RCRA. EPA has adopted this test for Superfund financial assurance requirements and state agencies have likewise borrowed it for their own programs. For many years, the “financial test” was the least cumbersome method for PRPs to satisfy their long-term financial assurance obligations. It was also attractive to PRPs because as long as at least one large company met the test, the other PRPs could save the cost of employing alternative financial assurance mechanisms such as prefunding their entire obligation or purchasing letters of credit. Further, while the financial test in 40 CFR §264.143(f) does include very specific and complex financial criteria, in practice EPA often found submission of financial statements or other public financial reports by large companies to be sufficient.
In recent years, perhaps in recognition of the new economic order where major airlines, automobile manufacturers and even manufacturers of famous brands such as Twinkies have filed for bankruptcy, EPA has made strict compliance with the financial means test a settlement priority. All of the forms for financial assurance are now prescribed via EPA’s website. Perhaps the most challenging form for a financial means proponent is the sworn letter from the company’s CFO or accountant certifying that the company satisfies the different elements of the financial test. The letter must be updated and resubmitted every year. The form letter may be found here.
In an era where CFOs and accountants are already burdened with a host of new Sarbanes-Oxley requirements and other regulatory controls, companies are less than enthusiastic about preparing another set of certifications to EPA concerning their company’s financial status. A further challenge presented by the letter is that it must be submitted on behalf of the specific entity participating in the settlement or its parent. Often, a parent corporation cannot or does not want to guaranty a subsidiary’s obligations, and its subsidiary’s financials may not be maintained in a format which makes compliance with the EPA letter practical or feasible.
EPA’s renewed emphasis on financial assurance requirements is understandable in today’s economic climate and even has some benefit for performing parties interested in ensuring that other settling PRPs likewise perform. Indeed, PRP Groups, with the self-interest of protecting themselves from each others’ business failures, often require their group members to provide letters of credit for the benefit of the Group or prefund their Superfund settlement shares into a Group- controlled trust, even if other financial assurance mechanisms have been selected to satisfy EPA.
Whether PRPs like it or not, what is clear is that the era of less than strict compliance with EPA’s financial assurance requirements for Superfund settlements is over.
Posted on December 6, 2012
There is a vital need for attorneys and other professionals to understand and discuss the past, current, and future role of our public lands system in the energy policy of the nation. In April of 2013, ABA SEER is hosting a symposium in partnership with The Public Land and Resources Law Review (PLRLR) at The University of Montana titled Balancing Act and Paradigm Shift: The Role of Public Lands in America’s Energy Future. The PRLR’s 35th Public Land Law Conference and ABA SEER’s 41st National Spring Conference on the Environment will combine to create an academic symposium to discuss the role of America’s three major sources of public lands and resources: river systems, terrestrial lands, and oceans.
If your work involves public lands, public resources or energy, this conference will be of interest to you. If you work with law students (in J.D. or LL.M. programs) with an interest in public lands and resources, I hope you will alert them to this opportunity and encourage them to submit an article. Entries should demonstrate original thought on a question of legal and/or policy significance relating to the symposium topic of the role of public lands and resources in America’s energy future. The topic is not confined to any particular type of public land or issue in energy or environmental law or policy. Any relevant article, case comment, note, or essay may be submitted, including writing submitted for academic credit. Jointly authored pieces are eligible only if all authors are students and consent to submit.
The winning submissions will receive a $1,000, $500, and $250 cash prize for 1st, 2nd, and 3rd place submissions, respectively. First and second place entries will be invited to attend the symposium on April 18, 2013 in Missoula, MT, with travel support from ABA-SEER. The first place entry will be published in the symposium edition of the Public Land & Resources Law Review in the summer of 2013.
The deadline for the student writing competition is January 14, 2013. For full details on entry requirements, click here.
Posted on December 5, 2012
How far can affected stakeholders go in fashioning local, “place-based” solutions to water management problems? In other words, is it OK to throw western water law out on its ear – a little bit -- if no one complains?
The policy question arises in Oregon in connection with recent efforts to balance the need for increased water supply to support the potential for substantial agricultural-based economic growth in the Umatilla Basin – a major Oregon tributary to the Columbia River system – with competing water demands to comply with the Endangered Species Act by restoring and protecting instream flow for listed salmon. The balancing act also seeks to support treaty-based instream water rights for the Confederated Tribes of the Umatilla Reservation (CTUIR) and restore severely depleted ground water supplies (See CRUSTaskforce). The desire of stakeholders to explore new ideas that go beyond the boundaries established by existing water law is a foreseeable consequence of Oregon’s long-standing commitment to locally-based collaborative efforts to resolve complex natural resource issues (See Oregon Solutions and http://www.oregon.gov/owrd/LAW/docs/i_Chapter_4_Final.pdf). Just how far should state bureaucrats be willing to go in bending or changing traditional programs and policies to make way for customized, place-based solutions?
The specific example in the Umatilla Basin relates to proposals for establishing a water bank and brokerage system. (See http://orsolutions.org/beta/wp-content/uploads/2012/06/Oregon-Solutions-Presenation-6_18_2012-CRUST.pdf). A broad-based coalition of local interests including individual farmers, irrigation districts, the CTUIR, conservation interests, local governments and agri-businesses have jointly proposed an option for collaborative water management. Under their concept, each year a water management plan would be filed with the state to describe how water would be used, and possibly redistributed under existing water rights. The concept includes a bottom line requirement that the water management changes not result in injury to any water user not participating in the plan, and not diminish instream flows. No harm, no foul. However, in preliminary discussions, the Oregon Water Resources Department – the state agency in charge of allocating and administering water rights -- has balked at the plan because it could allow water users to ignore priority dates and “spread” water – concepts traditionally abhorred in Western water law.
So, the question is: Should government get out of the way to let water users figure out their own strategies for managing water – even if it would throw certain principles of Western water law out on its ear? Why not, if it reflects a local consensus and no one complains?
Posted on December 4, 2012
On March 13, 2012, eleven environmental organizations, led by Gulf Restoration Network ("GRN"), filed
a federal Clean Water Act (CWA) citizen suit which demanded that the U.S. Environmental Protection
Agency (EPA) set federal numeric standards for nitrogen and phosphorus for water bodies within the 31
states comprising the Mississippi River Basin ("Basin States"). Gulf Restoration Network v. Jackson,
E.D. La., No. 2: 12-cv-00677 ("GRN Suit"). The complaint alleges that EPA has failed to develop
numeric water quality criteria for nitrogen and phosphorus in the Basin States. EPA's answer states that it
is appropriately deferring to each state to promulgate numeric nutrient criteria ("NNCs") that satisfy
Clean Water Act water quality standards within the state and that, consequently, federal NNCs are not
appropriate. The trial judge ruled on September 19, 2012 that the case will be decided on "cross-motions
for summary judgment, with no initial disclosures or other discovery." In the same order, the judge set a
briefing schedule for the parties (including numerous entities to which the court granted permission to
intervene) that will extend through the beginning of June of next year.
The GRN Suit, as well as other similar suits that are active in other regions, have prompted many state
environmental agencies to work diligently, pursuant to EPA's deference and also its demand, to develop
NNCs as quickly as possible. If EPA wins the GRN Suit, the Basin States will have to be ready to go
forward with promulgation of their NNCs. If EPA loses, they may be subjected to more stringent federal
NNCs on a "one size fits all" basis. A settlement could mean an even different outcome for all ofthe
In Mississippi, the state's Department of Environmental Quality ("MDEQ") has formed a Nutrient
Technical Advisory Group (TAG) to develop scientifically defensible NNCs that are appropriate for
Mississippi's surface waters. The TAG is composed ofMDEQ staff, MDEQ's external consultants and
in-state university personnel who have water quality expeiiise and is meeting on a regular basis. MDEQ
staff members have stated that the agency's plan is to have draft NNCs developed for all state waters,
excluding the heavily agricultural Delta counties, by June 30, 2013. The draft NNCs for the Delta are to
be developed by November 30, 2014. MDEQ wil then publish these draft NNCs for public comment.
MDEQ has held several stakeholder meetings to discuss the development of Mississippi's NNCs and to
provide an opportunity for questions and comments. The MDEQ staff members have consistently
explained that they are considering "what is protective of the environment" rather than "what is
technically achievable." The new NNCs wil be "worked into permits" as they come up for renewal and
permittees wil be allowed a "reasonable time frame" to come into compliance with the new NNCs.
The key issue for the regulated community in Mississippi, as in other states, will be the cost of
compliance with these new NNCs, which could bear a very expensive price tag. In Florida, for example,
a national environmental engineering consultant prepared an economic analysis of proposed NNCs. The
estimate for direct compliance costs ranged from $ 1.5 bilion annually (best management practices for
impaired water categories) to $4.5 billion annually ("end of pipe" requirements for all water categories).
Regulated communities in Mississippi and in other states across the country are engaging with scientific
and economic data and consultants in order to have an impact concerning this volatile issue. A lot is on
Posted on December 3, 2012
Prior posts (by David Farer and William Hyatt) have featured comment on the litigation that resulted in the New Jersey Supreme Court’s decision in NJDEP v. Dimant (September 26, 2012) under the New Jersey CERCLA analog, the Spill Act, requiring a “reasonable link” between the discharge, the putative discharger, and the site specific contamination. This alert focuses on the implications of the decision for building a liability case.
Dimant concerned liability for required remediation of perchloroethylene (“PCE”) contaminated groundwater at a site. The New Jersey Department of Environmental Protection (“DEP”) inspectors observed for a portion of one day a pipe dripping a liquid onto blacktop. Testing showed the drip contained more than 3,000 times the maximum contaminant level for PCE. There was no evidence presented at trial, however, to indicate the blacktop was cracked, where the drips went, or the frequency or duration of the drips. The DEP did not establish groundwater flow direction and therefore could not prove if the pipe location was up or down gradient of the PCE contaminated groundwater requiring remediation. Also, there were several other potential sources of PCE in proximity to the defendant. In other words, there was no proof connecting the defendant’s discharge of PCE to the PCE contaminated groundwater.
Keep in mind that the Spill Act imposes strict, joint and several liability on a person discharging or “in any way responsible” for a discharge, an arguably very broad standard indeed. In its decision, the Court made it clear that “in an action to obtain damages, authorized cost and other similar relief under the [Spill Act] there must be shown a reasonable link between the discharge, the putative discharger and the contamination at the specifically damaged site.” The Court disclaimed a proximate cause analysis, but did require “sufficient proof of a reasonable, tenable basis” showing how the discharge resulted in the contamination causing at least some of the damage at issue. In short, the DEP failed to demonstrate “the requisite connection” between the dripping PCE and the PCE contaminated groundwater.
What sunk the DEP’s case was a failure to prove the nexus between drips of PCE to the blacktop’s surface and some pathway for contribution of PCE through the soil and into the groundwater. To avoid a similar fate, plaintiffs (including the State) will need proof that the defendant’s discharge actually reached the contaminated resource. That evidence might be historical, physical or chemical analyses done to determine the source of releases affecting the resource. This type of work is often referred to as environmental forensics and finding the right experts in this field will, in many New Jersey cases, be critical to establishing the “reasonable link” required by NJDEP v. Dimant. To the extent that other state courts follow New Jersey’s lead, similar proofs will be necessary.