Section 316(b) of the Clean Water Act: Cooling Water Intake Requirements

Posted on June 30, 2014 by Philip Ahrens

On May 19, 2014, EPA issued its long-awaited rule establishing requirements under the Clean Water Act for existing power-generating facilities and manufacturing and industrial facilities that withdraw more than 2 million gallons per day from waters of the United States and use at least 25% of the withdrawal exclusively for cooling purposes.  The stated purpose of the Rule is to reduce injury and death to fish and other aquatic life caused by cooling water intake structures at existing power plants and commercial and industrial facilities.  The rule covers approximately 1,065 existing facilities of which slightly more than half are power-generating facilities.  

The Rule as adopted is 559 pages long.  Summarizing a very complex rule of that length is virtually impossible.  Those facilities covered by the Rule will need to study the Rule carefully to learn exactly how it affects their facility.  At the great risk of over-generalization, there are three broad components to the final Rule which are highlighted in the EPA Press Release of May 19, 2014:

Existing facilities that withdraw at least 25% of their water from an adjacent water body exclusively for cooling purposes and have a design intake flow of greater than 2 million gallons per day are required to reduce fish impingement.  To ensure flexibility, the owner or operator of the facility will be able to choose one of seven options for meeting best technology available requirements for reducing impingement.

Facilities that withdraw at least 125 million gallons per day are required to conduct studies to help the permitting authority determine what site-specific entrainment mortality controls, if any, will be required.  This process will include public input.

New units at existing facilities that are built to increase the generating capacity of the facility will be required to reduce the intake flow to a level similar to a closed-cycle recirculation system.

Any facility not covered by EPA’s rules governing cooling water intake structures will continue to be subject to Section 316(b) requirements set by the EPA, state or territory NPDES permitting director on a case-by-case, best available judgment basis.

EPA began its Section 316(b) rulemaking pursuant to a 1995 Consent Decree with a number of environmental organizations.  Whether environmental organizations, the regulated community or anyone else with standing will appeal this latest rulemaking by EPA is anyone’s guess.  Certainly there have been statements made that one or more appeals will be filed.  Who thinks that a rulemaking 20 years in the making will end quietly?

A Splash of Cold Water: Supreme Court Trims EPA’s GHG Permit Program

Posted on June 27, 2014 by Robert Wyman

Having unleashed EPA rulemaking of unprecedented scale in Massachusetts v. EPA (holding GHGs are “air pollutants” under the Clean Air Act (CAA) that EPA must regulate upon finding “endangerment”) and having further acknowledged EPA’s GHG authority in AEP v. Connecticut (holding CAA displaces federal nuisance common law), early this week in Utility Air Regulatory Group v. Environmental Protection Agency et al., the Supreme Court started the inevitable process of reining in the Agency’s exercise of its potentially boundless GHG authority under a statute designed for regulation of conventional air pollutants.  Although interpretive gymnastics would be required whatever direction it took, the Court decided in a fractured decision that the CAA’s preconstruction Prevention of Significant Deterioration (PSD) and Title V operating permit programs allow EPA to impose Best Available Control Technology (BACT) for GHGs only when a source has triggered these programs “anyway” due to its conventional criteria pollutant emissions.

The consolidated cases below challenged a full basket of major EPA GHG rulemakings, including EPA’s endangerment finding, motor vehicle regulations (the Tailpipe Rule) and stationary source permitting rules.  But the Court granted certiorari on only one question - whether EPA permissibly determined  that its regulation of greenhouse gas emissions from new motor vehicles under one part of the Act triggered permitting requirements under the Act for stationary sources that emit greenhouse gases under another part of the Act.  The Court rejected EPA’s PSD and Title V Triggering and Tailoring Rules, leaving intact only the ancillary BACT review of a source’s non-de minimis GHG emissions when a source otherwise undergoes PSD review for conventional pollutants.

The PSD program requires a permit to construct or modify a “major emitting facility”—defined as any stationary source with the potential to emit 250 tons per year of “any air pollutant” or 100 tons per year for certain types of sources—in areas where the PSD program applies.  To qualify for a permit, the facility must, among other things, comply with emissions limitations that reflect BACT for “each pollutant subject to regulation under” the CAA.  Title V requires a comprehensive operating permit to operate any “major source”—defined as any stationary source with the potential to emit 100 tons per year of “any air pollutant”—wherever located.

Recognizing that applying these thresholds to GHGs would result in permitting for numerous small sources, such as schools, hospitals and even large homes, EPA promulgated the so-called Tailoring Rule with special thresholds for GHGs that would apply in addition to the statutory thresholds and said that it would revisit whether to continue applying these special thresholds after five years, during which time it would study the feasibility of extending permitting to the small sources per the statutory thresholds.  Under Step 1 of the Tailoring Rule, commencing January 2, 2011 (the effective date for its Tailpipe Rule), it obligated sources already required to obtain permits under the PSD program or Title V (so-called “anyway” sources) to comply with BACT for GHGs if they emitted at least 75,000 tons per year (tpy) of carbon dioxide equivalent (CO2e) units.  Then, under Step 2, commencing July 1, 2011, it obligated sources with the potential to emit at least 100,000 tpy of CO2e to obtain permits under the PSD program and Title V for construction and operation, and sources with the potential to emit at least 75,000 tpy of CO2e to obtain permits under the PSD program for modifications.  These higher thresholds were needed on a temporary basis, according to the EPA, because the number of permit applications would otherwise grow by several orders of magnitude, exceeding the agency’s administrative resources and subjecting to the major permit programs sources that Congress clearly did not intend to cover.  EPA’s Tailoring Rule also contemplated a Step 3 where GHG permitting would apply to additional sources as well as a five year study on how to extend the program to remaining sources per the statutory thresholds.

Writing for the Court, Justice Scalia, joined by Justices Roberts, Kennedy, Thomas, and Alito, concluded that EPA’s legal interpretation that the PSD and Title V programs were triggered once EPA regulated GHGs under the mobile source program not only is not compelled, but moreover, simply is not reasonable.  He reasoned that the “air pollutants encompassed by the Act-wide definition as interpreted in Massachusetts” are not the same “air pollutants referred to in the permit-requiring provisions” at issue.  This is so because EPA has routinely given “air pollutant” in the permit-requiring provisions a narrower, context-driven meaning.  The same five justices also concluded that EPA is not permitted to augment with additional thresholds – even temporarily, as EPA claimed – the 100 tpy and 250 tpy statutorily-defined thresholds for triggering the PSD program and Title V permitting requirements.  He writes that the need for such an adjustment simply demonstrates that the PSD program and Title V were never intended to be expanded in this way, and adds that the EPA does not have the power to “rewrit[e] unambiguous statutory terms” such as the statutorily-defined numerical thresholds for applying the PSD program and Title V.

Justice Scalia, joined in this part by Justices Roberts, Kennedy, Ginsberg, Breyer, Sotomayor, and Kagan, then determined that the EPA reasonably interpreted the CAA to require that those new and modified sources already subject to PSD permitting due to their potential to emit conventional criteria pollutants also must comply with BACT for GHGs.  In this context, he emphasizes that the statutory language  – once permitting already has been triggered – requiring BACT “for each pollutant subject to regulation under this chapter” contextually leaves less room for interpretations that could limit BACT to a smaller set of pollutants, in contrast to the triggering “any air pollutant” language, which must be read contextually in a more limited manner.  Additionally, he argues that applying BACT to greenhouse gases “is not so disastrously unworkable, and need not result in such a dramatic expansion of agency authority, as to convince us that EPA’s interpretation is unreasonable.”

Justice Breyer concurred in part and dissented in part, joined by Justices Ginsburg, Sotomayor, and Kagan.  He joins the Court’s opinion as to the application of BACT to greenhouse gases, but asserts that the EPA is also permitted to interpret the CAA so as to trigger permitting requirements for stationary sources that emit an adjusted threshold level of greenhouse gases.  Justice Alito concurred in part and dissented in part, joined by Justice Thomas.  He argues that neither the EPA’s interpretation of provisions triggering permitting requirements nor its interpretation regarding BACT is permissible.

The Court’s decision to require independent PSD and BACT applicability before subjecting sources to BACT for GHG emissions squares fully with significant industry input to EPA early in its discussion of stationary source permitting.  Our National Climate Coalition, for example, urged EPA to embrace such an interpretation in our 2009 Tailoring Rule comments and 2010 PSD White Paper.

Although this decision does not directly affect EPA’s authority to regulate stationary source GHG emissions by establishing New (or Existing) Source Performance Standards under section 111 of the Act, it portends significant challenges for the agency’s recent §111(d) proposal.  Most notable are the several statements in the 5-4 portion of Justice Scalia’s opinion in which he cautions the agency not to “rewrite clear statutory terms to suit its own sense of how the statute should operate.”  In articulating the Court’s test for whether an agency interpretation of ambiguous terms is reasonable, he stresses that an interpretation is less likely be viewed as reasonable to the extent it:

brings about an enormous and transformative expansion in EPA’s regulatory authority without clear congressional authorization.  When an agency claims to discover in a long-extant statute an unheralded power to regulate a ‘significant portion of the American economy,’ [cite omitted], we typically greet its announcement with a measure of skepticism.  We expect Congress to speak clearly if it wishes to assign to an agency decisions of vast ‘economic and political significance.’

This portion of the Court’s ruling will likely figure prominently in the Court’s inevitable review of the agency’s §111(d) proposal.  It thus may behoove EPA to consider in its final rulemaking approaches that bring the existing source program somewhat closer to its traditional rulemakings under that section.

Biting Less Than They Can Chew

Posted on June 26, 2014 by Kenneth Warren

The National Environmental Policy Act (NEPA) requires federal agencies to evaluate the environmental effects of their proposed actions.  When a proposed action may cause significant environmental impacts, NEPA requires the agency to prepare an environmental impact statement that evaluates alternatives including measures to avoid or mitigate impacts.  The agency may not divide a single project into separate bites and find that each in isolation would not have a significant environmental impact.  Instead, regulations issued by the Council on Environmental Quality require the agency’s environmental review to encompass connected actions and similar actions.

In Delaware Riverkeeper Network v. FERC, Texas Eastern Pipeline Company sought certificates of public convenience from the Federal Energy Regulatory Commission (FERC) authorizing construction and operation of the Northeast Upgrade Project, one of four projects to improve the Eastern Leg of a natural gas pipeline known as the 300 Line.  FERC evaluated the Northeast Upgrade project separately from the others on the ground that each project was designed to provide natural gas to different customers pursuant to different contracts within different time frames.  FERC concluded that the potential environmental impacts were not significant and terminated its evaluation by issuing a finding of no significant impact.  Environmental organizations petitioned for review of the FERC action on the ground that the four pipeline projects were interrelated and cumulatively would, in their view, clear hundreds of forest acres, fragment habitat and adversely impact wetlands and groundwater in significant ways.  

On review, the Court of Appeals for the District of Columbia held that FERC’s segmented environmental review failed to meet NEPA’s requirements.  The Court reasoned that all four projects involved the construction of a single, physically interdependent pipeline, were undertaken in a close time frame and were financially interdependent.  No customer was a customer of a single pipeline segment and no logical justification existed for the choice of where one project ended and the next began.  Accordingly, the Court remanded the case to FERC to review the pipeline project as a whole, including its cumulative impacts.

FERC now faces the daunting task of determining how to implement the Court’s holding in other situations.  To be sure, in many cases FERC will be able to readily ascertain whether projects involving a single pipeline are physically, financially and temporally interdependent.  But in some areas of the country, transmission pipelines are being installed contemporaneously with natural gas wells, gathering lines physically connecting these wells to the transmission pipelines, and supporting roads, impoundments and other infrastructure.  Whether these arguably related projects are sufficiently connected or similar to trigger joint NEPA review may turn on whether they involve different ownership, distinct functions, separate financing and customers and clear physical divisions.  Resolving these questions may be no easy task, and even then does not necessarily determine whether a full environmental impact statement must be prepared.  When performing an environmental assessment of multiple projects together, FERC may still conclude that the environmental effects are insignificant.  With so many steps in the analysis that may be controversial, a new wave of NEPA challenges is likely on the horizon.

One postscript for practitioners before the D.C. Circuit.  In a punchy concurring opinion, Judge Silberman expressed his dismay at the submission of a brief “laden with obscure acronyms.”  For those of us in the environmental bar for whom use of acronyms has become second nature, beware.  

The answer is blowin' in the wind: Offshore wind projects moving on up

Posted on June 25, 2014 by Jeff Thaler

After sifting first through 70 proposals and then six finalists from all over the United States, on May 7, 2014 the Department of Energy announced the selection of three offshore wind demonstration projects to receive up to $47 million each over the next four years to deploy grid-connected systems in federal and state waters by 2017. The projects – located off the coasts of New Jersey, Oregon and Virginia – prevailed over project proposals from Maine, Ohio and Texas.

The Energy Department estimates offshore wind could produce more than the combined generating capacity of all U.S. electric power plants if all of the resources in state and federal waters were developed. More than 70 percent of the nation’s electricity consumption occurs in the 28 coastal states -- where most Americans live. Offshore wind resources are conveniently located near these coastal populations. Wind turbines off coastlines generally use shorter transmission lines to connect to the power grid than many common sources of electricity. Moreover, offshore winds are typically stronger during the day, allowing for a more stable and efficient production of energy when consumer demand is at its peak.

At the present time, the only offshore wind project generating electricity and connected to the grid is off of Castine, Maine; I have been legal counsel for the permitting and other project requirements.  UMaine's VolturnUS project is a 65-foot-tall floating offshore wind turbine prototype launched last summer and connected to the transmission system on June 13, 2013, making it the first grid-connected offshore wind turbine in North America. The turbine is 1:8th the geometric scale of a 6-megawatt (MW), 423-foot rotor diameter design. It has been operating extremely well in all kinds of weather and sea conditions for almost a full year. For a photo of the turbine, see a previous ACOEL blog post,

The three projects selected are required to deploy offshore wind installations in U.S. waters, connected to the grid, by 2017:

·  Fishermen’s Energy proposes five 5-megawatt direct-drive wind turbines approximately three miles off the coast of Atlantic City, New Jersey. The project would be built in relatively shallow waters, with the foundations installed into the seabed, similar to the proposed Cape Wind (Massachusetts) and Deepwater (Rhode Island) projects.

·  Principle Power will install five 6-megawatt direct-drive wind turbines approximately 18 miles off the coast of Coos Bay, Oregon, using a semi-submersible floating foundation to be installed in water more than 1,000 feet deep.  More than 60 percent of U.S. offshore wind resources are found in deep waters, including the entirety of the West Coast and much of the East Coast, especially New England.

·  Dominion Virginia Power will install two 6-megawatt direct-drive wind turbines 26 miles off the coast of Virginia Beach, using a foundation to be installed  in relatively shallow waters into the seabed, like Fishermen’s.

The DOE also announced that the proposals from the University of Maine and from the Lake Erie Energy Development Corporation “offered additional innovative approaches that, with additional engineering and design, will further enhance the properties of American offshore wind technology options. This includes concrete semi-submersible foundations as well as monopile foundations designed to reduce ice loading.” The Department has indicated that these two projects were selected to be alternates, and each will receive $3 million over the next year to, as with the three selected projects, bring their engineering and design work from the current 50% level to 100% completion. You can learn more at the Wind Program’s Offshore Wind Web page.

MY PRACTICE IN TRUST?

Posted on June 24, 2014 by George von Stamwitz

The $5.15 billion Tronox environmental settlement in April impressed many of us with the challenge of monetizing decades of real and perceived environmental risk.  It called to mind the even larger $9 billion ASARCO bankruptcy in 2009.  With almost $15 billion in trust between just two environmental bankruptcies, it seems that environmental practitioners are putting on their bankruptcy hats with increasing frequency.  What has flown under the radar is growing importance of trusts to the life of an environmental lawyer dealing with remediation.

These massive bankruptcy cases monetizing future environmental risk merely shed light on the fact that mergers, acquisitions and real estate transactions have increasingly been utilizing trusts to deal with long term liability.  Virtually every liability assumption (a/k/s risk transfer) transaction results in a trust or escrow account.  The environmental lawyer may be reasonably inquiring at this point, “Why does this matter to me; we have trust lawyers, after all?” The answer is that the language of the trust is really like a state of the art consent decree governing a remediation.  The critical questions of remediation goals, cessation of active remedy, dispute resolution, default, insurance, remedy takeover, penalties, bonus payments for success etc., need to be designed into the trust.

In addition to the environmental design issues, there are a host of related legal issues to consider: May our client write off financial reserves after creation of the trust?  Are payments to the trust deductible when made?  How should trust assets be invested? How much control of disbursement is allowable to a donor and still reap tax and accounting benefits?

The tax code recognizes two types of trusts: (1) a Qualified Settlement Fund (QSF)and (2) an Environmental Remediation Trust (ERT).  While QSFs are limited to claims that involve settlements with regulators, ERTs provide many of the same tax advantages as QSFs but apply to a broader set of circumstances.  

One of the joys of the environmental practice is the intersection between environmental practice and many other areas of law.  The intersection of remediation projects with the law of trusts is large and growing.

Oklahoma Rattled by Earthquake Warning

Posted on June 23, 2014 by Mark Walker

            On May 2, 2014, the U.S. Geological Survey and the Oklahoma Geological Survey issued a Joint Statement advising residents that the rate of earthquakes in Oklahoma had increased by 50% in the last seven months  - “significantly increasing the chance for a damaging magnitude 5.5 or greater quake in central Oklahoma.”  This is the first such advisory for a state east of the Rockies.

            The Joint Statement was accompanied by the following graph which illustrates the dramatic rise in Oklahoma earthquake activity:

            What accounts for this increase?  The USGS’s statistical analysis indicated that the increase did “not seem to be due to typical random fluctuations in natural seismicity rates.”  Instead, the “analysis suggests that a likely contributing factor to the increase in earthquakes is triggering by waste water injected into deep geologic formations.” 

            In November, 2013, the Groundwater Protection Council issued a White Paper summarizing its special session on “Assessing & Managing Risk of Induced Seismicity by Underground Injection.”  The paper notes that there are approximately 150,000 UIC Class II permitted injection wells in the U.S., about half of which are disposal wells that inject into non-producing formations.  Yet the number or felt earthquakes suspected to be associated with waste water disposal is very small (the White Paper focused on 8 examples), meaning induced seismicity from waste water disposal is “quite rare.”  The concern seems to be focused around deep well injection into non-sedimentary basement rock or disposal in close proximity to critically stressed faults.

            Earlier this year 14 Arkansas families filed lawsuits against two energy companies alleging that waste water disposal caused earthquake “swarms” in Arkansas in 2010 and 2011 which injured the plaintiffs’ property.  Those swarms resulted in the plugging of several disposal wells and the imposition of a regulatory moratorium on new Class II disposal wells near the Guy-Greenbrier Fault.

            The Oklahoma Geological Survey has developed a draft set of best practices for siting injection wells which seek to avoid placement of injection wells near known faults and injection into deep basement rock.  The Oklahoma Corporation Commission is supporting research and the expansion of the network of Oklahoma seismic monitoring stations, and is following a stoplight approach to permitting new disposal wells which evaluates risk on a site-by-site basis.

 

P.S.      While writing this I experienced two earthquakes (4.3 and 2.7 magnitude) at my home in Edmond, Oklahoma, within a one hour span.  There have been seventeen earthquakes in Edmond within the past 8 days.

EPA’s RDA Math: 3 + 9 ≠ 1

Posted on June 20, 2014 by David Van Slyke

In a surprising turn of events, on March 12, 2014 EPA Regions 1, 3 and 9 each simultaneously but separately responded, and each in a somewhat different way, to three virtually identical NGO petitions asking those Regions to use their Clean Water Act (“CWA”) Residual Designation Authority (“RDA”) to require that stormwater discharges from impervious surfaces at existing commercial, industrial and institutional (“CII”) sites be permitted under CWA Section 402.  The three petitions were filed in July 2013 by several different and somewhat overlapping consortia of environmental organizations.

The three Regions’ responses were all signed by their respective Regional administrators, each was worded differently, and each included a somewhat similar -- yet somewhat different --explanatory enclosure that detailed the basis of each respective Region’s response.

EPA Region 3’s response is a flat out denial of the petition, citing existing tools and programs already in place to address stormwater pollution (e.g., MS4 permits, TMDL implementation and strong state programs).  The enclosure with the Regional Administrator’s letter denying the petition also states that “Region III declines to begin a process for categorical designation of discharges from CII sites to impaired waters since … the data supplied by the Petitioners to support the exercise of RDA is insufficient.”  The enclosure does note that if the existing programs ultimately do not meet their objectives, alternate tools, including RDA, will need to be considered.

Similarly, EPA Region 9’s response “declines to make a Region-wide designation of the sources” in the petition specific to Region 9.  That response also concludes in the enclosure that “we currently have insufficient information to support a Region-wide designation” of the CII sites specified in the petition, “that effective programs are already in place that address the majority of the sites identified in the petition,” and that the Region will keep designation in their toolbag as they “continue to evaluate currently unregulated sources of stormwater runoff.”

However, Region 1’s response states that it “is neither granting the petition … nor is it denying the petition.”  Instead, the Region is going to evaluate individual watersheds in its six states to look at the nature and extent of impairment caused by stormwater, and then “to determine whether and the extent to which exercise of RDA is appropriate.”

Given the identical language in certain portions of all three of the Regional response enclosures (e.g., Statutory and Regulatory Background; Petition Review Criteria), it is clear that EPA Headquarters was in the thick of the discussions regarding the responses to these three RDA petitions.  However, the apparent autonomy afforded each Region in determining how to deal with the issue is remarkable, and the discussions ultimately may have centered (as they often do at EPA HQ) on resource allocations nationally and within each Region. 

The responses of Regions 3 and 9 imply that their current respective paths, with time, will get results without diverting resources.  EPA Region 1 appears to more fully embrace RDA as a near-term viable tool to more aggressively control stormwater runoff from CII sites.  Apparently, the New England regulators’ successful experience with the Long Creek Watershed RDA and their efforts relative to the RDA process for the Charles River has only whetted their appetite for further candidate areas at which to employ this model to address impaired stormwater. 

Whether the NGOs will seek judicial relief from the denial of their Petitions, whether the states in the USA’s upper right hand corner will be supportive of EPA New England’s continued utilization of this tool, as well as how this issue ultimately will be played by EPA HQ, is fuzzy math.

Imposing Repose: The Supreme Court Limits CERCLA § 309

Posted on June 19, 2014 by Michael Wall

On June 9th, the Supreme Court ruled, in CTS Corp. v. Waldburger, that § 309 of CERCLA does not preempt state statutes of repose. Section 309 requires state statutes of limitations for injuries from hazardous substances releases to run from the date the plaintiff knew or should have known of the injury caused by the release. But in CTS, the Court held that state statutes of repose are not statutes of limitations, and are not governed by section 309.

That conclusion was hardly self-evident. While section 309 explicitly applies to statutes of limitation, and does not specifically mention statutes of repose, the later have often been understood as a species of the former. When section 309 was enacted, Black’s Law Dictionary explained that “Statutes of limitations are statutes of repose.” Congress itself often referred to statutes of repose as “statutes of limitation.” And the very year after Congress enacted section 309, the Supreme Court itself described application of a two-year state statute of limitations as “wholly consistent with . . . the general purposes of statutes of repose.” The meaning of these terms has diverged in more recent years, but that divergence was not well-established when Congress enacted section 309.

The Court’s conclusion that Congress recognized a clear distinction between statutes of limitation and statutes of repose thus required the Court to assume that Congress used these terms with more precision in section 309 than Congress had done on other occasions, with more precision than (and in conflict with) the then-current edition of Black’s, and with more precision then the Supreme Court itself used the terms a year later. It is not often that this Court holds Congress’s legal acumen in such high regard.

The Court’s lead argument for why Congress did understand this distinction was that page 256 of the Section 301(e) Study Group Report—an expert report submitted to Congress and referenced in the Conference Committee Report—distinguished between these terms. This is surprising analysis. The CTS majority includes avowed skeptics of relying on traditional legislative history. Those justices might previously have been expected to be even more skeptical of attempts to discern congressional intent from statements buried in expert reports referenced by traditional legislative history. Not so, it seems—or at least, not so for this one opinion.

But does the Study Group Report even make the same distinction as the Court? The report recommends that:

"states . . . remove unreasonable procedural and other barriers to recovery in court action for personal injuries resulting from exposure to hazardous waste, including rules relating to the time of accrual of actions."

The Report then recommends that “all states that have not already done so, clearly adopt the rule that an action accrues when the plaintiff discovers or should have discovered the injury or disease and its cause.” That is what Congress effectively did—albeit for the states—in section 309. The Report then states: “This Recommendation is intended also to cover the repeal of statutes of repose which, in a number of states have the same effect as some statutes of limitation.”

This sentence, the Court concludes, shows that Congress must have known that a law that preempts state statutes of limitation would not also preempt state statutes of repose. But is it not at least as likely that any Member of Congress who actually read page 256 of the Study Group Report would have thought that adopting the discovery rule for all states would “also … cover the repeal of statutes of repose”?

Justice Scalia once wrote that “Congress can enact foolish statutes as well as wise ones, and it is not for the courts to decide which is which and rewrite the former.” Reading CTS Corp., one cannot escape the notion that the Court was willing to stretch its usual interpretive rules in order to apply what it considered a wise result to an arguably ambiguous statute. It did so in the apparent service of the policy of repose. But the holding will bring little peace in a state with a statute of repose to individuals who learn, years too late, that they or their children have been sickened by contaminants that a government agency or business released long ago.

Government Bullies? Not So Much

Posted on June 18, 2014 by David Uhlmann

It has been more than 30 years since EPA hired its first criminal investigators, but questions remain about when environmental violations will result in criminal charges.  Critics frequently portray environmental crime as a poster child of “over-criminalization” with a recent example Senator Rand Paul in his book Government Bullies:  How Everyday Americans Are Being Harassed, Abused, and Imprisoned by the Feds.

To address these concerns, I have suggested that prosecutors should limit criminal charges to violations that involve one or more of the following aggravating factors: (1) significant environmental harm or public health effects; (2) deceptive or misleading conduct; (3) operating outside the regulatory system; or (4) repetitive violations. By doing so, prosecutors would focus on violations that undermine pollution prevention efforts and avoid targeting defendants who committed technical violations or were acting in good faith.

I subsequently developed the Environmental Crimes Project to determine how often the aggravating factors I identified were present in criminal prosecutions. With the assistance of 120 students at the University of Michigan Law School, I analyzed all defendants charged in federal court with pollution crime or related Title 18 offenses from 2005-2010. We examined court documents for over 600 cases involving nearly 900 defendants to create a comprehensive database of environmental prosecutions.

Our research revealed that prosecutors charged violations involving aggravating factors in 96% of environmental criminal prosecutions from 2005-2010. More than three-quarters of the violations involved repetitive conduct, and nearly two-thirds involved deceptive or misleading conduct. Moreover, we found that 74% of the defendants engaged in conduct that involved multiple aggravating factors. And, for 96% of the defendants with multiple aggravating factors, one of the first three factors (harm, deceptive conduct, or operating outside the regulatory system) was present along with repetitiveness.

These findings support at least three significant conclusions. First, in exercising their charging discretion, prosecutors almost always focus on violations that include one or more of the aggravating factors. Second, violations that do not include one of those aggravating factors are not likely to be prosecuted criminally. Third, prosecutors are most likely to bring criminal charges for violations that involve both one of the first three factors and repetitiveness—and are less likely to bring criminal charges if that relationship is absent.

I plan to update my research with data from 2011-2012 and to examine a representative sample of civil cases using the same criteria. But my research already should provide greater clarity about the role of environmental criminal enforcement and reduce uncertainty in the regulated community about which environmental violations might lead to criminal charges.  My research also suggests that prosecutors are exercising their discretion reasonably under the environmental laws and should lessen concerns about over-criminalization of environmental violations.

For more, please see David M. Uhlmann, Prosecutorial Discretion and Environmental Crime, 38 HARV. ENVTL. L. REV. 159 (2014).

Who Owns Riverbeds? Putting Matters on Equal Footing.

Posted on June 17, 2014 by H. Thomas Wells Jr.

            The ownership of riverbeds can be an important question when development of minerals (coal, oil and gas, etc.) includes lands on which there are non-tidal surface streams.  Under what is called the “equal footing doctrine”, each State owns the beds of all streams that were “navigable in fact” at the time that particular State entered the Union, or streams that were “tidal”, or subject to the ebb and flow of the tide.

            Thus, claims of ownership of riverbeds of non-tidal streams depend upon the condition of the stream at the time of statehood, and upon the type of boats that were commonly used for commerce at that time.  This becomes more of a historical research project than a legal analysis.

            For example, in one recent case, involving Montana’s ownership claims to some streambeds, Justice Kennedy relied on the notes and letters of William Clark and Meriwether Lewis (of the famed Lewis and Clark Expedition) in ruling on the ownership claims.  Montana, which was attempting to collect some $40 million in rent from the operator of hydroelectric dams, lost because Lewis’ and Clark’s notes showed there were five waterfalls, including one of over 80 feet, which required them to traverse overland via portage before finally putting their boats back in the water.  Because of the need for portage around the waterfalls, the stream segments in question were not “navigable in fact”.

If you are involved in any matter involving the title to riverbeds, because of the equal footing doctrine, you need to be equally adept at historical, as well as legal, research.

Kids Get Their Day in Court on Climate Change

Posted on June 16, 2014 by Rick Glick

On June 11, the Oregon Court of Appeals held that two teens are entitled to a judicial declaration of whether there exists a “public trust” obligation in state officials to “protect the State’s atmosphere as well as the water, land, fishery, and wildlife resources from the impacts of climate change.”  In Chernaik v. Kitzhaber, the court reversed the trial judge’s dismissal of the case and remanded for a decision on the merits.

This case is one of dozens brought in the name of kids across the country to force government to act more aggressively to combat climate change.  The young activists—with a little help from the environmental advocacy groups Crag Law Center, Center for Biological Diversity and Western Environmental Law Center—argued that the state has displayed a frustrating lack of urgency:  “I don’t want to live in a wasteland caused by climate change,” Olivia Chernaik told the Eugene Register-Guard.

Who could argue with that?  As it happens, no one did at this stage of the proceedings.  Rather, the case turned on whether a judiciable controversy exists under the Uniform Declaratory Judgments ActPlaintiffs asked for a declaration that a public trust obligation exists and that Oregon officials have violated that trust by not preventing climate change, and they asked for an injunction to reduce greenhouse gas emissions by a prescribed amount, which plaintiffs characterize as the “best available science.”  The state countered that such declarations could not lead to practical relief by the court, and that if they did, the court would be intruding on the legislature’s prerogative to determine whether current policies are adequate and what additional measures may be needed. 

The court rejected the state’s arguments, holding that such declarations could stand on their own, which would lead the legislature to take appropriate steps without an injunction.  In other words, the kids should get their day in court to show that a fiduciary duty exists under the public trust doctrine to protect against climate change and which duty the state has failed to properly discharge.

The public trust doctrine stems from English common law, which states that some resources are so central to the well-being of citizens that they cannot be freely alienated and must be protected.  The doctrine was adopted by the U. S. Supreme Court in its 1892 decision Illinois Central Railway v. Illinois, which held that the state could not convey outright title to a substantial segment of the Chicago lakefront. 

Many such cases followed, but in 1983 the influential California Supreme Court, in National Audubon Society v. Superior Court, extended the doctrine to overlay ongoing public trust obligations to limit vested water rights.  In that case, the issue was whether the state must act to limit the Los Angeles Department of Water and Power’s appropriation of water from tributaries to Mono Lake in the face of declining lake levels.

The expansive reading given the public trust doctrine by the California Supreme Court sets the stage for court imposition of regulatory controls to protect the environment.  When the Chernaik case is restarted by the trial judge on remand, we will see if Oregon courts will pick up the baton. 

Doing so could mean big problems for the state, and perhaps lead to unintended consequences.  It would be one thing for the court to order the state to do more to limit greenhouse gas emissions, and another to force the state to find the funds.  In a zero sum budget process, which other essential programs would need to be cut?  And do we want state court judges prescribing and monitoring remedial measures?  Despite the slow pace and inefficiency of the legislative process, wouldn’t we prefer our elected leaders to develop the complex and coordinated suite of measures to address climate change? 

My guess is the courts won’t go there.  But to Olivia Chernaik and co-plaintiff Kelsey Juliana, congratulations on your win and for elevating climate change on the state’s agenda.

New Developments in Conservation Easements

Posted on June 16, 2014 by Philip Tabas

Conservation easements have a long been an effective tool for private efforts to protect land in the United States. But we may not be aware that there is a growing private lands conservation movement in other countries. Conservationists in those counties are adapting the conservation easement as we know it here in the United States to conservation needs in their jurisdictions. Two recent examples highlight this growing trend, one in Micronesia and one in Chile.

As you will recall, a conservation easement is a legally binding agreement between a landowner and the easement holder whereby the landowner agrees to limit the use of his or her property to protect outdoor recreation, natural habitats, open spaces, scenic areas, or historic lands and buildings. Easements have been on the rise in the United States since the 1980s because of important federal and state income tax, federal estate tax, and local property tax benefits that are available to donors of conservation easements.  Easements are usually a less expensive conservation approach than government acquisition, ownership, or land use regulation.

Conservation Easement in Micronesia

One conservation-minded family and a state agency in the small island of Kosrae State in Micronesia has just recently recorded the first conservation easement outside of the Americas and in a form that other Micronesian countries and even the United States could model.

Once a United States Trust Territory, Kosrae is one of three states that comprise the independent nation known as the Federated States of Micronesia (FSM). Its legal system is based on the United States legal system. Kosrae’s Attorney General issued an opinion that a conservation easement is a legally viable option for land protection in Kosrae, analogizing to legal principles established in the United States.

This particular conservation easement is designed to permanently protect a rare freshwater swamp forest comprised primarily of the ”ka” tree. The entire forest, named Yela, comprises approximately 400 acres and is the largest remaining ”ka” forest in the world. The undeveloped valley forest has been and will continue to be used for traditional harvests. Eels, nuts, wild pigs, and taro leaves for underground ovens or “ums” are gathered there. The easement will prevent development on the property.

The Yela deal is innovative not only because it introduces a new conservation tool to the region but it is “a new and improved” version of that tool from which states in the United States could benefit. Instead of the grantor who signs the easement sale agreement solely benefitting from the sale proceeds, as is often the case in the United States, the family in this case has invested that income into a trust fund managed by the Micronesia Conservation Trust and from which the family will derive payments over time.

The Kosraean conservation easement deal is being eyed by both Micronesians and other Pacific Islands because, unlike an outright government purchase of the land, the conservation easement model will accommodate the needs of traditional land uses and generational changes while compensating the owners for keeping the land in its natural state.

Conservation Easement in Chile

The largest and third ever conservation easement was recently created in Chile between The Nature Conservancy as the owner of the 123,000 acre Valdivian Coastal Reserve and Fundación de Conservación (FORECOS), a land trust in Chile. FORECOS will hold a conservation easement over nearly all of the acreage comprising the Valdivian Coastal Reserve, one of the world’s last temperate rainforests. To be enforceable under Chilean law, this easement is structured as an easement appurtenant. TNC will give FORECOS fee title to a small parcel of Valdivian acreage to serve as the ‘benefitted’ parcel of land which will be protected by a reciprocal easement held by the Conservancy.

The Reserve is one of the last intact temperate rainforests along the Valdivian Coastal Mountain Range. It is home to outstanding examples of endemic flora and fauna species, including two of the world’s longest living tree species, the alerce — which can live for more than 3,600 years — and the olivillo — which can live up to 400 years — as well as to numerous imperiled species of mammals, birds, reptiles, amphibians, and fish. The Reserve also contains an important marine coastal ecosystem of scrubland, coastal dune, sandy beaches and rocky coasts. In addition, there are eight river basins and five estuary systems within the Reserve that support numerous globally threatened species of plant and animal life.

At the same time that this easement was created, the Chilean Congress is continuing to consider the Derecho Real de Conservacion (DRC) legislation, which would establish a legal framework to enable the easier use of conservation easements in gross  for conservation in Chile (by removing the need for the appurtenancy requirement). The completion of this first Chilean conservation easement may encourage the enactment of the legislation. This legislation, along with a proposed Unified Donations Law that will provide tax incentives for conservation donations and make donating to conservation non-profits easier in Chile, has received strong backing from many community and political leaders in Chile.

Easements have also been used in conservation projects in Australia (there called “conservation covenants”), Canada, Guatemala, Costa Rica, and Mexico.  While these two most recent examples of conservation easements may differ in detail, they both represent the beginnings of what are likely to be increasingly noteworthy initiatives in countries other than the United States to find and develop new conservation tools to address the needs of both conservation and compatible community development.

If what goes underground doesn’t stay underground, what then?

Posted on June 13, 2014 by Todd D. True

If it’s wastewater from a treatment plant pumped into injection wells and it ends up in the ocean, you need an NPDES permit under the Clean Water Act.  At least that’s the conclusion from the U.S. District Court for the District of Hawaii in Hawai’i Wildlife Fund v. County of Maui, decided May 30, 2014.

            In Hawai’i Wildlife Fund, a case in which my colleague David Henkin in our Honolulu office represented the plaintiffs, the Court considered the following facts:  The County of Maui operates a wastewater treatment plant located about a half mile from the ocean that pumps millions of gallons of treated wastewater into several injection wells each day.  Within the last few years, EPA and others performed a tracer dye study because of concern that much of this wastewater was migrating through a groundwater aquifer and emerging in the ocean off the coast of Maui through seeps and springs.  The results of this study confirmed that, for a number of the injection wells, this was the case, even though it took several weeks for the dye to move from the wells into the ocean through the groundwater aquifer.  Based on other information, the County apparently had been aware since 1991 that its wastewater discharges were reaching the ocean.  Plaintiffs, Hawai’i Wildlife Fund and others, brought a citizens suit under the Clean Water Act asserting that because the County wastewater treatment facility had no NPDES permit, the discharge of wastewater into the ocean via the injection wells and groundwater was an illegal, unpermitted discharge.

U.S. District Court Judge Susan Mollway agreed and granted the plaintiffs summary judgment.  The Court was not deterred by the County’s argument that it had an application for an NPDES permit pending with the State or other preliminary matters.  Instead the Court observed that “the only area of dispute between the parties is whether the discharges into the aquifer beneath the facility constitute a discharge into ‘navigable waters[,]’” the operative language of the Clean Water Act in this case.

On this point, the Court turned to the Supreme Court’s Rapanos decision and concluded that waters regulated by the CWA are broader than waters that are “navigable-in-fact,” hardly a controversial conclusion.  The Court then went on to conclude that “liability [for an unpermitted discharge] arises [under the CWA] even if the groundwater . . . is not itself protected by the [Act] as long as the groundwater is a conduit through which the pollutants are reaching [the ocean].”  As the Court observed, “[t]here is nothing inherent about groundwater conveyances and surface water conveyances that requires distinguishing between these conduits under the [CWA].”  In the Court’s view, as long as the groundwater served as a conveyance for pollutants that reached navigable waters, liability for an unpermitted discharge would attach.

The Court also concluded that liability for an unpermitted discharge arose under an alternative test which the parties drew from the Ninth Circuit’s post-Rapanos decision in Northern Cal. River Watch v. City of Healdsburg, even though the Court expressed skepticism about the applicability of this test where groundwater is involved.  Under this alternative test, because there was a clearly discernible nexus, i.e., the groundwater aquifer, between the County’s discharge of pollutants into injection wells and its subsequent emergence in the ocean, and because the discharge of pollutants to the ocean significantly affected the “physical, biological, and chemical integrity” of the ocean in the area of the seeps and springs through which the discharge emerged, liability for an unpermitted discharge also would attach.

Next up: civil penalties and remedy.

Pulling the Plug on Greenhouse Gas Emissions

Posted on June 12, 2014 by Robert Wyman

Buoyed by favorable recent Supreme Court and DC Circuit decisions recognizing EPA’s broad discretion under the Clean Air Act, on Monday, June 2, EPA scaled new heights of legal adventurism by proposing the Clean Power Plan, a greenhouse gas reduction program for the power sector that would compel states to implement supply- and demand-side energy strategies.  EPA projects that its proposal would achieve approximately a 30% reduction from 2005 levels by 2030.

EPA’s action is under section 111(d) of the Clean Air Act, a little-utilized section that authorizes EPA to set emission guidelines for states to regulate listed source categories whose emissions are not regulated under either the Act’s criteria pollutant program under section 108 or the hazardous air pollutant program of section 112.  The College recently prepared an excellent overview of section 111 authority for the Environmental Council of the States (ECOS).

Certain aspects of EPA’s proposal are worth noting.  First, in stark contrast to prior stationary source rules, EPA seeks to harness the entire energy system, not just efforts at individual sources.  The bulk of the proposed emission reductions will come not from the minor expected heat rate improvements at individual electric generating units (EGUs)(EPA’s first “building block”), but from directing states to increase generation at natural gas plants and renewables while reducing electricity demand.  Three of EPA’s four “building blocks”  thus address emission reductions that are outside the control of EGUs, the listed source category.  Consistent with this approach, EPA proposes a portfolio enforcement approach by which states would be authorized to oblige entities other than the affected source for the reductions in building blocks two through four.  The proposal calls for an overall state energy plan, not just for implementing emission reduction opportunities available to individual sources.

Second, the proposal does not establish common performance standards, but sets highly-variable standards for each state based on EPA’s assessment of the state’s individual capacity to reduce emissions under each of the four building blocks.  EPA clearly listened to state pre-proposal input regarding material differences in each state’s EGU portfolio, its capacity to harness wind and solar generating technologies and other state differences.

Although the proposal’s projected benefits reflect an estimated 30% emission reduction from 2005 levels, EPA actually uses 2012 as the baseline for measuring a state’s starting carbon intensity.  Because EPA sets each state’s interim and future carbon intensity targets based on the state’s capacity for reducing, shifting or avoiding EGU emissions, it is not surprising that the proposal does not provide any state with early action credit in the traditional sense.  Some states are further along on their individual progress lines, but as currently designed the proposal does not allow any state to monetize its early reductions nor to avoid future progress based on its prior actions.  This means that some states will be expected to do more than others for the foreseeable future.  And, unless a true early action mechanism is included in EPA’s final rule, some states, such as California, may continue to incur net energy costs higher than their neighbors.

Several commenters have noted the material legal risk that EPA takes with this proposal.  Among the many expected challenges will be that EPA cannot regulate EGUs under section 111(d) because the House version of that section precludes such regulation if the source category already has been listed under section 112.  The proposal also could be challenged for including in the “best system of emission reduction” (BSER) emission reductions outside the control of the source and for obliging the state and entities other than EGUs to achieve such reductions.  EPA argues in its proposal that it can require states to consider any measure that has the effect of reducing EGU emissions (i.e., an “effects” or “ends” test), but some will argue that section 111 only allows EPA to require those emission reduction options (i.e., “means”) available to the EGU itself.

Should EPA fail to finalize one or both of its section 111(b) new and modified/reconstructed unit proposals, then it may be challenged for a failure to finalize the prerequisite 111(b) rule.  Other challenges could relate to an alleged failure properly to subcategorize facilities and for stepping beyond its emission reduction role to, in essence, regulate a state’s energy policy.

EPA has left some important design issues unresolved.  EPA strongly encourages interstate cooperation, including the use of emissions trading, but it leaves the actual shape of such linkages undefined.  Similarly unresolved is the question of how states can interact if they act alone.  Given the regional nature of power markets and the fact that emission reductions occurring in one state often result from investment (on either the supply or demand side) in another, states and companies will need to know the ground rules for adjudicating potentially-conflicting claims for state plan credit and company compliance credit.  EPA seeks comment on these and other critical issues.

For those interested, a more substantive analysis of the proposal can be found here.

Chicken Little…and Falling Skies?

Posted on June 10, 2014 by David Tripp

On March 27, 2014, the U.S. Fish and Wildlife Service announced its intention to list the Lesser Prairie Chicken (Tympanuchus Pallidicinctus) as a threatened species under the Endangered Species Act. The diminutive LPC is a member of the grouse family, shorter than its close cousin the Greater Prairie Chicken by about one inch. Known for its colorful garb and ritualistic mating dances (jokingly referred to by one biologist as "Spring Break for Chickens"), the LPC population and habitat have declined significantly over the last decade in five states, according to surveys by FSW and state agencies.

Prior to the FWS listing, a voluntary LPC Range-Wide Conservation Plan was proposed by the fish and wildlife agencies of Texas, Oklahoma, Kansas, Colorado and New Mexico. These agencies of the five states with LPC habitat created the Western Area Fish and Wildlife Authority, or WAFWA. Two days before the FWS listing, WAFWA announced that 32 oil and gas, power transmission, and wind energy companies had committed to enroll more than 3.6 million acres in its LPC range-wide conservation plan, providing about $21 million for habitat conservation over 3 years. Despite this effort by WAFWA, the FWS listing went forward.

Is the sky falling for landowners and other parties operating in the LPC habitat areas designated by FWS? Clearly there will be limitations on land use; particularly in the high-priority areas where surveys have shown the presence of "leks" where the LPC gather to mate, or other areas of primary habitat activity. Companies in oil and gas, pipeline, electric transmission, wind energy and other sectors can enroll in the WAFWA program, pay a one-time fee and follow guidelines to minimize unavoidable impacts on the LPC and its habitat.

By participation in the WAWFA range-wide plan, these enrolled companies become a party to a Candidate Conservation Agreement with Assurances. This CCAA provides for protection for "incidental take" of the LPC or its habitat which may occur during operations, including emergency repairs to pipelines, electric transmission lines or similar activities.

However, for "Little Guy" or "Mom and Pop" operations, the picture is not so clear. A ranch or farm operation or a small, independent oil and gas producer or developer may face the need for individual permits from FWS or enrollment in the Natural Resources Conservation Service LPC Initiative. Protective assurances may be given in return for per-acre fees of up to $2.25/acre for oil and gas operations, and in the example of ranch operations, NRCS terms may limit grazing by cattle to no more than once in each five years.

Concerns over these land use limitations and the uncertainty regarding FWS penalties and enforcement policies for incidental take of the LPC or its habitat leave many small farm and ranch operators or oil and gas companies feeling they are under surveillance by mysterious forces, subject to sanctions they do not fully understand, with little power to resist. As a result, some oil and gas companies are abandoning plans to develop existing leases within the habitat areas and are not seeking new leases. Even oil and gas companies who are enrolled in the Rangewide Plan are struggling to understand how to operate moving forward. Land values will be impacted in the habitat areas when ranchers and farmers can find safer ground outside the LPC boundaries. While the LPC and its habitat now are better protected, it is not without cost and anxiety for humans living in the same area.

BP Tightens its Grip on the Deepwater Horizon Checkbook

Posted on June 9, 2014 by Jarred Taylor

BP Exploration and Production, Inc. (“BP”) was recently dealt another blow in its fight to reinterpret its multibillion dollar settlement for economic and property losses arising from the 2010 Deepwater Horizon disaster when the Fifth Circuit refused to rehear BP’s appeal of a prior district court ruling on “causation nexus” requirements in the agreement.  In December 2013, U.S. District Court Judge Carl Barbier ruled that individuals and businesses do not have to prove that they were directly harmed by the oil spill in order to get paid under the terms of the settlement agreement.

In 2012, nearly two years after the spill, BP reached a settlement with the Plaintiffs’ Steering Committee (which acts on behalf of individual and business plaintiffs in the multi-district litigation proceedings) to resolve hundreds of thousands of private economic, property damage, and medical claims stemming from the Deepwater Horizon explosion and oil spill.  BP has disputed many of the economic and property damage claims brought pursuant to the settlement agreement.  BP argues that the claims administrator was incorrectly interpreting the meaning of the settlement agreement, particularly with respect to whether or not a claimant must submit evidence that its losses were directly caused by the spill.

Judge Barbier, who is presiding over the multidistrict litigation stemming from the Deepwater Horizon disaster, ruled that the settlement agreement did not contain a causation requirement beyond the revenue and related tests set out in the agreement, opening BP’s checkbook to economic loss claimants who may not be able to trace the cause of their damages back to the 2010 disaster.  BP already had revised its original $7.8 billion estimate of its potential costs under the settlement agreement up to about $9.2 billion.  Later, as it began challenging economic loss claims, BP proclaimed it could no longer provide a reliable estimate of the ultimate cost of the deal.   

BP appealed the district court’s ruling to the Fifth Circuit Court of Appeals, claiming in December that it had to pay hundreds of millions of dollars to businesses and individuals that exaggerated losses from the disaster.  The Fifth Circuit affirmed the district court’s ruling in March 2014, and on May 19, declined to rehear BP’s appeal. In a strongly worded dissent joined by two other justices, though, Judge Edith Clement argued that the district court’s rulings would “funnel BP’s cash into the pockets of undeserving non-victims” of the 2010 spill, adding that the appeals court had made itself “party to this fraud” by rejecting BP’s arguments. Judge Clement concluded that “another court surely must resolve this.” BP clearly agrees and has vowed to appeal its case to the U.S. Supreme Court, declaring that “no company would agree to pay for losses that it did not cause, and BP certainly did not when it entered into this settlement.” 

Ted Olsen, BP’s lead attorney, said in a 60 Minutes segment in May that the company would take its argument “as far as it is necessary to go to make sure that this settlement agreement is construed properly.” The New Orleans Times-Picayune reports that some experts following the case expect that the Supreme Court will not take up the case, but suspect that BP’s true motive may not be to win on appeal, but to simply prolong the litigation and delay paying claims. The Fifth Circuit lifted its stay on payout of settlement claims, and the Supreme Court just rejected BP’s request that the Supreme Court reimpose the stay pending filing and disposition of its petition for writ of certiorari. 

Meanwhile, in the midst of its attempt to walk back from the economic and property loss settlement it negotiated and—at the time—happily agreed to, BP rejected a $147 million claim from the National Oceanic and Atmospheric Administration (“NOAA”) demanding additional funds to conduct its ongoing Natural Resource Damage Assessment (“NRDA”) activities related to the Deepwater Horizon oil spill. NRDA is the process created by the Oil Pollution Act (“OPA”) and its implementing regulations that authorizes natural resources Trustees to assess injuries to natural resources caused by oil spills and spill response activities, and to restore the injured resources. OPA requires that the party or parties responsible for the oil spill pay for the reasonable costs incurred by the Trustees to carry out the NRDA and restoration. 

Last July, NOAA submitted a claim to BP for the estimated costs of NRDA activities that NOAA planned to implement in 2014. NOAA’s claim includes $2.2 million for research on the recovery of coastal wetlands, more than $10 million to remedy damage to dolphin and whale habitat, and $22 million for oyster habitat restoration. The Financial Times (free subscription required) reports that BP rejected the majority of NOAA’s requests, saying it was concerned by “the lack of visibility and accountability” in the process, and the unwillingness of the Deepwater Horizon NRDA Trustees (a handful of U.S. federal agencies and five Gulf Coast state governments) “to engage in technical discussions of the substantive issues.” The Financial Times reports that “BP said it had paid for work that was not done or done properly, been double-billed for the same study, and not been allowed to see research findings that it had been told would be shared”—evidence BP argues could be used at the trial over civil penalties to show that ecological damages from the spill are much less than once feared. 

According to an April 30 report on BP’s website, BP has already paid nearly $1.5 billion to federal and state government agencies for spill response, NRDA activities, and other claims related to the Deepwater Horizon spill, and over $11 billion to individuals and businesses. I need to disclose, too, that my firm is assisting several claimants to the BP settlement fund.

EPA Meets Regional Uniformity Requirement – the Hard Way

Posted on June 3, 2014 by Robert Wyman

On Friday, in a case argued by my colleague, Greg Garre and briefed by Leslie Ritts, the D.C. Circuit decided a closely watched case construing the EPA’s “regional uniformity” requirement under the Clean Air Act (CAA.)  The court declared the agency’s directive to regional offices outside the Sixth Circuit to ignore a 2012 Sixth Circuit decision interpreting the CAA’s “single source” requirements as inconsistent with EPA’s uniformity requirement. The decision brings to light an important component of the CAA’s nationwide scheme.

Under the CAA, any “major source” of pollution is subject to certain heightened requirements.  EPA regulations provide that multiple pollutant-emitting activities will be considered together for purposes of the “major source” analysis if they are—among other things—“adjacent.”  But EPA has, in recent years at least, given “adjacent” an expansive and atextual meaning, concluding that even facilities separated by considerable physical distance should be deemed “adjacent” as long as they are “functionally interrelated.” 

In 2012, the Sixth Circuit in Summit Petroleum Corp. v. EPA held that EPA’s interpretation was “unreasonable and contrary to the plain meaning of the term ‘adjacent.’”  The EPA opted not to seek Supreme Court review of the Sixth Circuit’s ruling.  A few months after the Summit decision, however, EPA circulated a directive to the Regional Air Directors informing them that the agency would abide by the Sixth Circuit’s decision within the Sixth Circuit, but that “[o]utside the [Sixth] Circuit, at this time, the EPA does not intend to change its longstanding practice of considering interrelatedness in the EPA permitting actions.”

The National Environmental Development Association’s Clean Air Project (NEDA/CAP), an industry group, filed a petition for review in the D.C. Circuit, challenging the EPA’s “Summit Directive” as contrary to the statute and EPA’s own regulations.  NEDA/CAP explained that EPA’s Directive would impermissibly place NEDA/CAP members operating outside of the Sixth Circuit at a competitive disadvantage, subject to a more onerous permitting regime than their peers operating within the Sixth Circuit’s jurisdiction.  That disparity between regions, NEDA/CAP explained, was inconsistent with the CAA’s requirement that EPA assure “uniformity in the criteria, procedures, and policies applied by the various regions,” 42 U. S. C. § 7601(a)(2), as well as EPA regulations that similarly require inter-regional uniformity.

On Friday, the D.C. Circuit issued a decision agreeing with NEDA/CAP in National Environmental Development Association’s Clean Air Project v. EPA. Rejecting EPA arguments that the policy could only be challenged in the context of a discrete stationary source permit application, the Court held that NEDA/CAP’s blanket challenge to the EPA’s creation of two different permitting regimes across the country could be challenged today because of the competitive disadvantages it created for companies operating in different parts of the country.  

On the merits, the Court concluded that maintaining a standard in the Sixth Circuit different from the one applied elsewhere in the country was inconsistent with the agency’s regulatory commitment to national uniformity.  The Court recognized that an agency is ordinarily free, under the doctrine of “intercircuit nonacquiescence,” to refuse to follow a circuit court’s holding outside that court’s jurisdiction.  Here, however, the Court held that EPA’s own regulations required it to “respond to the Summit Petroleum decision in a manner that eliminated regional inconsistency, not preserved it.”  Finding that the agency’s “current regulations preclude EPA’s inter-circuit nonacquiescence in this instance,” the Court vacated the directive.

The decision is noteworthy in a number of respects.  Not only does the decision roundly reject EPA’s threshold objections to NEDA/CAP’s petition (standing, finality, and ripeness), but it appears to represent the first time a court has applied EPA’s uniformity regulations to invalidate a rule.  The decision therefore puts a light on an important component of the CAA’s nationwide enforcement scheme—the “regional uniformity” requirement.