The Government’s “Bare Legal Title” CERCLA Defense Wears Thin

Posted on August 29, 2017 by Theodore Garrett

The United States has encouraged economic activities such as mining on federal lands.  Such activities have resulted in contamination and subsequent CERCLA cleanup orders.  Companies undertaking such cleanups have sought contribution from responsible parties including the United States.  Two recent decision reject the government’s argument that its “bare legal title” should not give rise to CERCLA owner liability.  A logical result and also poetic justice, since the United States has consistently urged that CERCLA be construed broadly and liberally as a remedial statute.  Turnabout is fair play.  

In Chevron Mining Inc. v. United States, the 10th Circuit on July 19, 2017 held that the United States was liable as an owner under CERCLA 107(a) because it owned national forest lands in New Mexico.  The lands were mined over several generations by Chevron Mining.  Chevron began remediation expected to cost more than $1 billion pursuant to three EPA administrative orders.  Chevron then filed suit against the United States seeking contribution.  The 10th Circuit held that owner liability attaches to the United States as the owner of portions of the site, and plaintiff need not show that the defendant caused the release of hazardous wastes that required cleanup.  The court rejected the government’s argument that “bare legal title” is insufficient to trigger owner liability, noting that CERCLA contains neither an express nor an implied exception for owners of “bare legal title.”  The court’s opinion also notes that Chevron received loans from the United States, under the Defense Production Act, to fund its exploration activities and received authorization from the Forest Service for pipelines to dispose of mine tailings.  The case was remanded to the district court for further proceedings to determine the government’s equitable share. 

Similarly, in El Paso Natural Gas Company v. United States, the District of Arizona ruled on August 15, 2017 that the United States is liable under CERCLA as an owner of 19 uranium mines.  The mines are located on the Navajo Reservation and are being remediated by El Paso.  The court cited longstanding law that the United States owns fee title to reservation land.  The fact that the Navajo Nation has significant rights in reservation land is not inconsistent with the power of the United States over reservation land.  The court cited the Chevron Mining case above with approval, and also noted dicta from the 9th Circuit that the passive title owner of real property is liable.  Given CERCLA’s broad remedial purposes, the district court held that the United States, as a fee title holder with plenary and supervisory powers over reservation land, is an owner for purposes of CERCLA.  The court’s decision does not address the extent of the government’s liability, to be addressed in the equitable allocation phase of the case. 

These and other decisions will support efforts by companies responsible for remediation at CERCLA sites on federal land to have the government contribute an appropriate share of the cleanup costs.  Also, mindful of its potential liability, perhaps the government will more carefully consider risks and costs when making remedy decisions, which would be welcomed at all sites, whether or not on federal lands.

The Annual Texas Environmental Superconference—Austin in August?

Posted on June 26, 2017 by Jeff Civins

The Texas Environmental Superconference is one of a kind. Held each year in Austin in sweltering early August, this conference consistently sells out, attracting over 500 participants from the public and private sectors.Indeed, now in its 29th year, it was the winner of the first American Bar Association Section of Environment, Energy & Resources (ABA SEER) award for Best State or Local Bar Environment, Energy and Resources Program of the Year.

The key to the conference’s popularity is its unabashed willingness to integrate humor into content--with annual themes, skits, quizzes, prizes, and, for the past several years, even a conference song.Past themes have included Yogi Berra quotes (“It’s like déjà vu all over again”); Clichés (“The best thing since sliced bread”); Shakespeare (“Much Ado About Pollution”); “Star Wars (“May the farce be with you”); and Willie Nelson songs (“On the Road Again”).Dwarfing all other past conferences, though, was the Disney movie-themed conference, which featured the song “SuperconferenceAustinTexasExpialidocious” and is the subject of 2 You Tube videos. (introductory remarks and conference song).

Speakers generally weave the conference themes into their presentations and, on occasion, even appear in costume.For example, an EPA chief of enforcement appeared as Harry Truman in the politically-themed conference, “Join the Party,” and as Darth Vader, in the Star Wars-themed program. And an EPA General Counsel appeared as a tiara-wearing Wonder Woman in the super hero-themed program.A former EPA Regional Administrator and TCEQ Chairman appeared variously as the Beatles, the Odd Couple, Game Show contestants, and Yoda and Luke Skywalker.

This year’s conference – to be held on Thursday-Friday, August 4-5, 2017 – has as its theme board games and is entitled “Let the Games Begin.”The Wednesday evening session on enforcement is entitled “Trouble.”Registration is at Environmental Superconference-2017.

Participants look forward to attending each year for the chance not only to experience a fun and informative program, but also to network and to informally discuss issues of concern with other environmental professionals representing diverse perspectives, e.g., private and public sectors; regulators, regulated community, and environmental organizations; legal and technical professionals; and local, state, and federal governments.

The conference is organized by the Environmental and Natural Resources Law Section of the State Bar of Texas, in conjunction with other environmental professional organizations, including ABA SEER, the Air & Waste Management Association—Southwest Section, the Water Environment Association of Texas, the Texas Association of Environmental Professionals, and the Environmental Health and Safety Audit Center.Proceeds from the conference are used to fund environmental internships, student writing awards, and section outreach programs.

Thanks to a generous contribution from Supporter, EARTHx (formerly Earth Day Texas), the Superconference this year is offering –and last year offered--scholarships for employees of non-profit organizations with environmental matters as a significant focus.

The Annual Texas Environmental Superconference is the answer to the question, why come to Austin in early August?

Superfund Reform, Part 2: Giving Credit Where Credit Is Due

Posted on May 30, 2017 by Seth Jaffe

Last week, I offered less than fulsome praise of EPA Administrator Pruitt’s announcement that he was taking control of remedial decisions for big Superfund sites.  Now, he’s followed up with a memorandum announcing establishment of a task force to look at ways to reform Superfund implementation.  While he’s still plainly wrong in putting Superfund “at the center of the agency’s core mission,” I have to confess that I think he otherwise has pretty much hit a home run with the latest memorandum.

Let’s start with the basics.  Superfund is a mess.  It’s one of the most poorly written statutes in Congressional history, and Superfund cleanups take way too long, are way too expensive, and fail to deliver bang for the buck in either risk reduction or productive reuse.

In a perfect world, Superfund would be amended to privatize cleanups and put cost-effective risk-based cleanups at the center of the program.  However, Scott Pruitt cannot unilaterally amend Superfund.  Heck, he may not realize it, but even Donald Trump cannot unilaterally amend Superfund.

Given this reality, Pruitt’s memorandum identifies all of the appropriate goals for meaningful administrative reform.  They include:

  • a focus on identifying best practices within regional Superfund programs, reducing the amount of time between identification of contamination at a site and determination that a site is ready for reuse

  • overhaul and streamline the process used to develop, issue or enter into prospective purchaser agreements, bona fide prospective purchaser status, comfort letters, ready-for-reuse determinations

  • Streamline and improve the remedy development and selection process, particularly at sites with contaminated sediment, including to ensure that risk-management principles are considered in the selection of remedies

  • Reduce the administrative and overhead costs and burdens borne by parties remediating contaminated sites, including a reexamination of the level of agency oversight necessary.

The last is my personal favorite.

I somehow expect I’m not going to be praising this administration on a regular basis, but I can still acknowledge when they get something right.  Let’s just hope that the task force is for real and comes up with a set of meaningful administrative improvements.

Fingers crossed.

The Making of Bad Law

Posted on May 24, 2017 by John Barkett

One of the challenges for lawyers involved in CERCLA litigation is educating the judge on how CERCLA works.  But when both the advocate and the court misapprehend how CERCLA works, Voila!  Bad law is made. 

CERCLA is hardly a model of clear drafting, but one area of confusion involves the difference in the burden of proof in the application of Section 107(a)(4)(A) and (B).  As CERCLA practitioners know, a party liable under one of the four categories of Section 107(a)(1) – (4) is liable under Section 107(a)(4)(A) to the United States, a State, or a Tribe for costs that are incurred “not inconsistent with the national contingency plan.”  On the other hand, under Section 107(a)(4)(B), “any other necessary costs of response incurred . . . consistent with the national contingency plan” is the standard applicable to private cost recovery claims.   

Washington State Dep't of Transp. v. Washington Natural Gas Co., 59 F.3d 793 (9th Cir. Wash. 1995) is one of many decisions that explain the distinction. In a 107(a)(4)(A) action, a defendant has the burden of proving that the government or Indian tribe’s costs are inconsistent with the National Contingency Plan (NCP) because of the presumption of NCP consistency attached to governmental or tribal actions. “In contrast, any ‘other person’ seeking response costs under § 9607(a)(4)(B) must prove that its actions are consistent with the NCP.”  59 F.3d at 799-800 (citation omitted).  In other words, Section 107(a)(4)(A) focuses on costs because consistency is presumed.  Section 107(a)(4)(B) focuses on actions because consistency must be proved.

Lawyers, law clerks, and judges who do not understand the distinction can become the purveyors of bad law.  Pentair Thermal Mgmt., LLC v. Rowe Indus., Inc. Nos. 06-cv-07164 NC & 10-cv-01606 NC, 2013 WL 1320422 (N.D. Cal. Mar. 31, 2013) illustrates the problem.  In Pentair, there was a cleanup of polychlorinated biphenyls in soils.  There was no quarrel with the NCP process leading up to the selection of an excavation remedy. But during remediation problems were encountered that resulted in adjustments to the remedy and increased costs. CERCLA practitioners know that fundamental changes to a National Priorities List-site remedy require another round of public participation.  40 C.F.R. §300.435(c)(2)(ii)(H).  To defeat plaintiff’s costs, defendant decided to argue that the changes to the remedy required re-notice to the public of the remedial action because they were fundamental changes, and thus plaintiff’s actions were not consistent with the NCP.

Defendant’s argument was premised on United States v. Burlington Northern Railroad Company, 200 F.3d 679 (10th Cir. 1999), where the court of appeals concluded that the Environmental Protection Agency’s problems during a remedial action did, indeed, represent a fundamental change to the remedy requiring re-notice to the public. The court of appeals held that despite an NCP violation, on remand, the burden of proof remained on the defendant to establish that “EPA’s remedial actions resulted in demonstrable excess costs that would not have otherwise been incurred.” Id. at 695.

The district court in Pentair found NCP consistency even with the changes to the remedy.  However, without appreciating the fact that Burlington Northern was a Section 107(a)(4)(A) case—presumably because defendant was relying on the decision—the court said that even if the remedial changes were fundamental, defendant would still lose based on Burlington Northern and another governmental cost recovery action, Minnesota v. Kalman W. Abrams Metals, Inc., 155 F.3d 1019 (8th Cir. 2015).  Both of these were Section 107(a)(4)(A) cases where a defendant must prove which of the government’s costs were inconsistent with the NCP.  The district court in Pentair failed to appreciate the distinction.  It wrongly held that, had the district court determined that the remedy changes were fundamental, defendant would still have had the burden of proof to show which of plaintiff’s costs were non-NCP compliant. 

The dangers of dicta!  Compounded by the failure to comprehend the different burdens of proof in a 4(A) and a 4(B) action.  That’s the formula for making bad law.

Can We Really Expect An Administrator Not To Administrate?

Posted on May 19, 2017 by Jeffrey Porter

This month EPA Administrator Scott Pruitt announced that he will personally pass judgment on any Superfund remedy estimated to cost more than $50 million.  Revisions to CERCLA Delegations of Authority 14-2 Responses and 14-21A Consultations, Determinations, Reviews and Selection of Remedial Actions at Federal Facilities, May 9, 2017.

Administrator Pruitt’s announcement begins with his unequivocal assurances that the “Superfund program is a vital function” of EPA, and that he is taking this action “to facilitate the more-rapid remediation and revitalization of contaminated sites and to promote accountability and consistency in remedy selection.”

Skeptics fear that Administrator Pruitt has some other secret objective.   But no one can seriously argue that this isn’t Administrator Pruitt’s decision to make.  The Superfund statute unequivocally says “[t]he President shall select appropriate remedial actions determined to be necessary” in accordance with the statute and the implementing regulations, and “which provide for cost-effective response.”  42 U.S.C. §9621(a).  The implementing regulations unequivocally delegate that responsibility to Administrator Pruitt  (well, to be precise, it is theoretically possible that another federal agency or a state can be a “lead agency” under the regulations but, in that unlikely case, the Administrator’s May 9th decision presumably wouldn’t apply).  

After all, it was a perceived need for prompt federal action to clean up the most complex contaminated sites in our country that drove the enactment of the Superfund statute over thirty-five years ago.  Because Congress perceived that need, the statute limits the ability of anyone, including state and local governments, to interfere with the selection and implementation of a Superfund remedy.

Over the decades, the contaminated sites posing the most immediate concern have been addressed, sites that would never have been prospects for Superfund listing thirty years ago have found their way into the program, and the Superfund statute has been interpreted, and reinterpreted, in regulations, countless judicial decisions, and EPA guidance documents.   If those regulations, judicial decisions and guidance documents have one thing in common, it is that they vest in EPA the maximum decision-making discretion permitted by the statute.

Because the sites posing the most immediate concern have been addressed, and what was once new is now the subject of thousands of pages of regulations, judicial decisions and guidance documents, anyone familiar with the Superfund program has to agree that regional program staff have, over the decades, been increasingly left mostly alone to make remedial decisions costing hundreds of millions of dollars.

And, as someone who has practiced in this area of environmental law for almost thirty years, I think it is equally clear that regional decision-making has attempted to soften the effect of Congress’s unambiguous statement of its intention that no one, including state and local governments, stands in the way of Superfund remedies by local consensus building, and that what Administrator Pruitt calls “consistency” has suffered as a result.

As a life-long Democrat, I have plenty of concerns about the Trump Administration’s environmental agenda.  But Administrator Pruitt has been anything but obtuse about his support of aspects of that agenda that concern me so I’m going to take him at his word regarding his intentions for the Superfund program, including because increased accountability and consistency in the Superfund program would be a very good thing.

Scott Pruitt Just Solved All of the Problems with Superfund. Not.

Posted on May 17, 2017 by Seth Jaffe

Last week, EPA Administrator Pruitt issued a memorandum requiring that all Superfund remedies estimated to cost at least $50 million be approved by the Administrator.  I’m not optimistic that this will cure, or even ameliorate, what ails CERCLA.  

First, the memorandum gets off on precisely the wrong foot.  Administrator Pruitt states that:

 The Superfund program is a vital function of the U.S. Environmental Protection Agency, and under my administration, Superfund and the EPA’s land and water cleanup efforts will be restored to their rightful place at the center of the agency’s core mission.

What’s the problem with this statement?  When EPA has actually looked at the top risks addressed by its programs, risks from Superfund sites never even make the list.  Except for a limited set of circumstances, Superfund has been a colossal waste of money, resources, and focus for EPA.  If Administrator Pruitt wants to reform Superfund, he shouldn’t be “placing it at the center of the agency’s core mission.”  He should be further deemphasizing it.

Even if one assumes that this is just puffery, the new approach is flawed on the merits, for at least two reasons.

First, the problem with Superfund is that it’s the last bastion of command and control regulation.  I understand that Pruitt may want to take the reins precisely to reduce the number of ukases issuing from the regional offices.  However, the underlying problem will remain; he just thinks he’ll be providing kinder, gentler, command and control.  Wouldn’t it be better to support fundamental reform of CERCLA, to create a privatized program, such as in Massachusetts and other states?

Finally, while PRPs might just wish Superfund went away, in the real world, PRPs just want certainty and timely decisions.  Aside from a few cases where Pruitt might put the kibosh on expensive remedies that don’t eliminate real risks, I fear that in the majority of cases, all that will happen will be that cleanup decisions will be delayed; PRPs will pay more as a result of such delays.

This administration continues to give regulatory reform a bad name.

Does Chevron Ever Permit EPA to Rewrite a Statute? EPA’s Release Reporting Exemptions Are Struck Down

Posted on April 13, 2017 by Seth Jaffe

On Tuesday, the Court of Appeals for the District of Columbia vacated EPA’s final rule governing reporting of air releases from animal feeding operations.  The Court found that EPA had no statutory authority to exempt AFOs from the reporting regulations.

The decision is also important because it is another in a recent line of cases regarding the extent of agency authority to interpret statutes.  The issue was whether EPA had authority to exempt smaller AFOs from reporting requirements, on the ground that it could not:

foresee a situation where [it] would take any future response action as a result of such notification[s].

Although EPA did not explicitly justify its rule on de minimis grounds, the Court understood EPA to be making a de minimis argument and analyzed the rule in that context.  The Court concluded that EPA had not justified a de minimis exception, because:

an agency can’t use it to create an exception where application of the literal terms would “provide benefits, in the sense of furthering the regulatory objectives, but the agency concludes that the acknowledged benefits are exceeded by the costs.”

Here, the Court found that there were benefits to requiring reporting without a de minimis exception.  That was enough to vacate the rule.

It is worth noting the concurrence from Judge Janice Rogers Brown, who agreed that EPA had overstepped, but was concerned about the panel opinion’s summary of Chevron as being focused on whether the agency’s interpretation is “reasonable.”  Stoking the anti-Chevron flames, Judge Brown wrote to make clear that the “reasonableness” inquiry does not apply at step one of Chevron.  Ever-vigilant, she wants to be certain that courts do not abdicate their duty to state what the unambiguous language of a statute means.

I don’t have any problem with that.  Phase I of Chevron is an important bedrock principle.  If there’s no ambiguity, there’s no deference.  However, it’s worth noting that Judge Brown also stated that:

an Article III renaissance is emerging against the judicial abdication performed in Chevron’s name.

Notwithstanding the congressional discussion of this issue, I remain skeptical that any such “Article III renaissance” is occurring.  One concurrence from one appellate judge who happens to be named Gorsuch does not a renaissance make.

Of course, the really important part of Judge Brown’s concurrence was her citation to Luck Be a Lady, from Guys and Dolls, the greatest musical of all time.

Applying EPA Guidance to Improve Sediment Site Cleanups

Posted on March 9, 2017 by Mark W. Schneider

After years of struggling to implement prompt and cost-effective cleanups of sediment sites under the Superfund program, EPA has adopted a new set of tools.  This would be a good time for EPA to conduct an unbiased evaluation of whether recent Records of Decision (“ROD”) issued for sediment sites comply with the Office of the Land and Emergency Management (“OLEM”) Directive 9200.1-130 (Jan. 9, 2017), and direct the regions to revise RODs where necessary. 

For example, Region 10 recently issued its ROD for the Portland Harbor, a complex, multi-party sediment site, which seems out of sync with the new guidance.  In particular, Region 10’s use of unachievable cleanup levels for several contaminants of concern, unwarranted assumptions about current and future land uses in certain areas of the site, and failure to properly assess background levels in some instances conflict with the Directive’s recommendations.

In prior posts, I advocated for actions that could help the agency, potentially responsible parties, and the public achieve success in sediment cleanups.  In one post, I recommended that Congress eliminate CERCLA’s bar on pre-enforcement review.  In another, I advocated for revision of the dispute resolution provisions in the model Administrative Settlement Agreement and Order on Consent (“ASAOC”) to require the selection of a neutral third party to resolve disputes between EPA and ASAOC respondents. The rationale for these earlier recommendations applies equally to this recommendation; each of them is intended to require EPA compliance with its own guidance and sound legal and scientific principles.  

In its directive, OLEM identified 11 recommendations “based on current best practices for characterizing sediment sites, evaluating remedial alternatives, and selecting and implementing appropriate response actions.”  In particular, OLEM directed the regions to “develop risk reduction expectations that are achievable by the remedial action.”  Most sediment RODs fail to comply with this “best practice.”  For example, EPA has repeatedly issued RODs that establish action levels that cannot be met using any current or reasonably foreseeable remedial technology, leading to remedies that are unrealistic and unnecessarily costly.  This causes potentially responsible parties to resist, resulting in litigation or delays that perhaps could have been avoided. 

EPA should apply its directive.  It should systematically review each sediment ROD issued in the last several years, determine whether and to what extent the ROD deviates from the OLEM directive, and instruct regional personnel to revise RODs to comply with the directive.  This would require a second look at the RODs at, among other sites, the Lower Duwamish Waterway, Portland Harbor, and the lower 8 miles of the Passaic River.  Review of these and other RODs might lead to more realistic cleanup decisions, reductions of risks, where necessary, and implementation of feasible remedies.

Trump’s Impact on Environmental Law? Let the Speculation Begin!

Posted on November 15, 2016 by Seth Jaffe

What will a Trump Presidency mean for environmental law?  trump-climateI’m not sure my crystal ball is better than anyone else’s, but here are a few quick thoughts:

  • It’s still going to be difficult to amend the key statutes, unless the GOP goes nuclear with the filibuster rules.  I don’t see Clean Air Act amendments happening.  Significant amendments might be possible to the Endangered Species Act and Superfund.
  • Changing regulations is more difficult than one might think.  As has already been noted, the Bush administration did not fare too well with judicial review of its efforts to roll back some Clinton environmental initiatives.  For example, I still think that the new ozone standard should survive and I think that courts would take a dim view of EPA efforts to raise it.  The Clean Power Plan is another matter.  All Trump needs there may be a new Supreme Court Justice.
  • The easiest target is executive orders.  The social cost of carbon?  Toast.  Guidance on incorporating climate change into NEPA?  Toast.

Trying to keep things light, I’ll close with a summary in haiku, which often takes nature as its subject.

Trump Presidency?

Deep-six the Clean Power Plan

Goodbye to winter

The Enforcement of CERCLA Section 106 Orders; the Seventh Circuit Suggests a New Twist

Posted on November 2, 2016 by William Hyatt

Superfund practitioners have long known that unilateral orders issued by EPA under Section 106(a) of the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), commonly known as the Superfund statute, can be very potent enforcement tools.  Recipients of such orders who “willfully” choose to defy them, “without sufficient cause,” face the prospect of potentially ruinous civil penalties under Section 106(b) and treble damages under Section 107(c)(3).  The term “sufficient cause” is not defined in CERCLA and has been subjected to very limited judicial interpretation.  Making matters worse, by virtue of Section 113(h), Section 106 order recipients cannot obtain pre-enforcement review of such orders.  Instead, they must wait until EPA brings an enforcement action, or one of the other triggers listed in Section 113(h) occurs (while the penalties and treble damages continue to accumulate, for a period which could last for years), before they can obtain a judicial determination of whether or not their defiance was “without sufficient cause.”  This enforcement scheme has thus far withstood due process challenges on the ground that no penalties or treble damages can be imposed until there is a court hearing.  Waiting for that court hearing can produce extreme apprehension on the part of defiant order recipients.

In United States v. Glatfelter, one of the prodigious number of reported decisions relating to the Lower Fox River Superfund Site, the Court of Appeals for the Seventh Circuit, after concluding that permanent injunctions will not be available to enforce Section 106 unilateral orders, suggested how that apprehension might be relieved:

“Nothing we have said prevents the government from seeking declaratory relief to establish that a PRP lacks sufficient cause for noncompliance, such as the arbitrariness of the selected remedy or a defense to liability.” 

This suggestion may trigger a whole new round of litigation regarding Section 106 orders.  For instance, does a private litigant enjoy the same right to seek declaratory relief?

Flatulence Isn’t Super fun(d)

Posted on September 2, 2016 by Peter Hsiao

Do air emissions of pollutants constitute a “disposal” under the federal hazardous waste laws?  The Ninth Circuit said “no” in Pakootas, et al. v. Teck Cominco Metals, Ltd. based upon its reading of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA or Superfund).  The decision both sets important precedent and showcases the judicial process to discern legislative intent when a statute’s plain language is stressed by an unusual fact pattern.  If air pollutants can create CERCLA disposals, then emissions from any stationary or mobile source, including animal emissions of methane (which is considered a pollutant subject to CERCLA by EPA), may be the basis of cleanup liability.

The decision involves a smelter located just north of the border with British Columbia.  An earlier decision in that case held that a foreign-based facility can be liable under CERCLA for slag discharges into a river running to the United States.  Plaintiffs then alleged the facility arranged for disposal by emitting hazardous air contaminants which were carried by the wind and deposited in Washington State.  The district court denied a motion to dismiss and certified the matter for immediate appellate review.

Reading the plain language of CERCLA, the Ninth Circuit found that “a reasonable enough construction” of the law would be that the facility “arranged for disposal” of its air pollutants.  No legislative history or EPA rules shed light on this subject.  However, the Court concluded it was not writing on a blank slate.  Noting that CERCLA incorporates the definition of “disposal” from the Resource Conservation and Recovery Act (RCRA), the Court cited its prior decision in Ctr. for Cmty. Action and Envtl. Justice v. BNSF Rwy. Co., which held that diesel particulate emissions “transported by wind and air currents onto the land and water” did not constitute “disposal” of waste within the meaning of RCRA.  To be a disposal, the solid or hazardous waste must first be placed into or on any land or water and thereafter be emitted into the air.  The Court also cited its en banc decision in Carson Harbor Vill., Ltd. v. Unocal Corp., holding that passive migration was not a disposal under CERCLA. 

The Court thereby found that arranging for “disposal” did not include arranging for air “emissions.”  This interpretation of “disposal” was largely consistent with CERCLA’s overall statutory scheme.  The Court expressed concern that plaintiffs’ more expansive reading would stretch CERCLA liability beyond the bounds of reason.  “[I]f ‘aerial depositions’ are accepted as ‘disposals,’” the Court said, “‘disposal’ would be a never-ending process, essentially eliminating the innocent landowner defense.” 

The Court did not discuss in detail the statutory interplay with the Clean Air Act, which regulates air emissions under a complex regulatory and permit scheme.  Under CERCLA, federally permitted releases are excluded from liability.  But because air permits often specify the control equipment parameters rather than an emission limit, a CERCLA plaintiff may allege that the mere existence of a permit does not provide a blanket immunity from liability and the facility would remain liable for any releases that were not expressly permitted, exceeded the limitations of the permit, or occurred at a time when there was no permit.  The Court in passing did note its skepticism that the federally permitted “release” exception evidenced any Congressional intent regarding the meaning of “disposal.”

The Ninth Circuit is the highest court to exclude air emissions from the reach of CERCLA and RCRA.  The Court’s citation to Carson Harbor does not provide an exact analogy since a passive landowner has not “arranged” for the initial release of hazardous substances, as compared to the smelter operations which result in air emissions.  But the Court’s unwillingness to create potentially unlimited CERCLA liability for air emissions is compelling.  Under CERCLA, liability is strict, joint and several and retroactive.  Air emissions are widely transported and dispersed in relatively small concentrations by large numbers of potential sources, making CERCLA liability findings and allocations difficult if not impossible. 

The Court thereby divined Congress’ intent to make CERCLA’s scheme workable, apart from a literal reading of its text.  For judges to “repair” statutory language in this way is controversial.  The decision is reminiscent of the U.S. Supreme Court holding that the Obama health care plan provides tax credits to millions of people who purchase insurance from a federal marketplace, even though the statute only provides credits for those who purchase from marketplaces “established by the state.”  According to Justice Roberts, that was the only way the law would work, and despite the plain wording in the statute, “Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them.”  CERCLA also is not a model of clarity, and the Ninth Circuit similarly incorporated practicality as a factor in discerning Congress’ intent to avoid overreaching in assigning liability for the cleanup of toxic chemical releases.

The Data Don’t Lie: Has MNA Science Outpaced Site Decision-Making?

Posted on July 26, 2016 by Charles Efflandt

The importance of a thorough technical evaluation of monitored natural attenuation (MNA) at chlorinated solvent and other groundwater-contamination sites cannot be overestimated. Regulatory acceptance of MNA as a preferred remedial alternative can save millions of dollars in response costs compared to common presumptive remedies. Because “active” remediation technologies rarely achieve complete contaminant treatment or removal, MNA is an implicit, if not specifically evaluated, component of most groundwater remedial actions. A proposal to use MNA as the primary cleanup mechanism, however, is often met with resistance from regulators, notwithstanding years of supportive data.  Such resistance may be attributable to antiquated agency policies or, perhaps, an inadequate evaluation of evolving MNA science.

The use of MNA at groundwater sites has typically required a showing of a stable or shrinking plume, source control, sustainable natural attenuation conditions, and acceptable risk to health and the environment. Today, mathematical and modeling tools can systematically establish data trends demonstrating that remedial action objectives will be achieved through natural attenuation in a reasonable time frame.

Unfortunately, even if confronted with irrefutable data, many state regulators will reject meaningful consideration of MNA unless the attenuation mechanism can be pigeon-holed into  policies that focus on the demonstration and scoring of anaerobic biodegradation conditions at a site.  That is because after almost two decades, EPA’s 1998 Technical Protocol for Evaluating Natural Attenuation of Chlorinated Solvents in Ground Water remains the framework for MNA evaluations and decision-making in many states. Because the 1998 Protocol presumed that the primary effective mechanism for natural attenuation was anaerobic biodegradation, the Protocol has unduly restricted state policies for screening and approval of MNA remedial action.

Numerous studies since the publication of  the 1998 Protocol, however,  have shown that a viable MNA remedial strategy can be supported by attenuation mechanisms other than anaerobic biodegradation These studies have documented other viable contaminant-destructive attenuation mechanisms and evaluation tools, such as aerobic cometabolism enzyme degradation, magnetic susceptibility, compound specific isotope analysis, and improved sampling and modeling techniques. Greater awareness of these scientific developments by regulators and environmental professionals will result in MNA being an increasingly important remedial tool at many groundwater sites.

We have learned the hard way that it’s much more difficult and expensive to clean up sites using default remedies than first thought. Fortunately, it is becoming increasingly apparent that nature has an ability to degrade various chemicals more quickly and effectively than previously believed.   Regulatory acceptance should not, and need not, include unreasonable technical hurdles, such as imposing  attenuation “causation” requirements that are neither feasible nor necessary to support what cannot be disputed. That a proposed MNA remedy does not neatly fit into the traditional anaerobic degradation box, and cannot with precision be attributed to one or more alternative degradation mechanisms potentially active at a site should not be determinative. At the end of the day, the data don’t lie. The MNA determination ought to begin with, and remain focused on, the empirical data and data trends.

Deal or no Deal? - Partial Dismissal of CERCLA Claims Against United States and Tribal Entities

Posted on May 19, 2016 by Larry Ausherman

Three companion decisions in Atlantic Richfield Co. v. U.S. et. al., Case No. 1:15-cv-00056, in the U.S. District Court for the District of New Mexico, provide insight on the CERCLA statute of limitations, potential pitfalls in pleading CERCLA claims, and the defense of sovereign immunity by an Indian Pueblo in the context of CERCLA and contract claims.  The case remains pending.

In the 1940s, when the war was over, the federal government was in the market for uranium concentrate for bombs, and it encouraged private entities to mine and mill uranium for sale to the government at prices set by the government.  Much of the country’s uranium reserves were in the Grants Uranium Belt in western New Mexico, an area that includes the Laguna Pueblo. 

Uranium was discovered on Laguna Pueblo lands in 1952, and Anaconda Copper Mining Company entered into mining leases with Laguna, which were approved by the Bureau of Indian Affairs, acting pursuant to its trust responsibility to the Pueblo.  Much uranium was mined there from the Jackpile Paguate mine beginning in 1952, and operations continued until 1982.        In 1986, the Pueblo and Anaconda’s successor, Atlantic Richfield Co. (“ARCO”), entered into an agreement to terminate the leases and perform remediation.  ARCO agreed to pay the Pueblo to perform remediation, and the Pueblo agreed to assume all liability and release ARCO regarding it.  The Department of the Interior approved the agreement and, following the preparation of an EIS, BLM and BIA issued a ROD that established requirements for the remediation.  ARCO paid $43.6 million to the Pueblo to perform the remediation and release ARCO. 

All defendants were involved in varying degrees with the remediation.  BIA had responsibility to determine the extent of remediation required and approve key remediation decisions according to a cooperative agreement with the Pueblo.  But BIA and the Pueblo saw in ARCO’s $43.6 million payment an economic development opportunity.  The Pueblo formed Laguna Construction Company (“LCC”) to conduct the remediation, and BIA ceded certain oversight to the relatively inexperienced LCC as well.  Work on the initial remediation ended in 1985.  Beginning in 2007 the Pueblo, and then EPA, investigated the adequacy of mine reclamation at the mine site and found problems.  In 2012 EPA proposed listing on the NPL, and in 2014 it asserted that ARCO should fund the RI/FS, but EPA has brought no litigation. 

ARCO claims that the remediation was mishandled and brought CERCLA claims against the United States, the Pueblo and LCC, seeking cost recovery, contribution, and declaratory relief.  The United States moved to dismiss.  In detailed decision by Senior United States District Judge, James A. Parker, all of ARCO’s claims against the United States were dismissed.    In companion decisions, some claims against the Pueblo and LCC were dismissed and some survived motions to dismiss.  Dismissals were based in part on the CERCLA statute of limitations, the court’s determination that the ARCO pleadings were deficient and sovereign immunity.

ARCO sought to recover two categories of response costs:  (1) the $43.6 million it paid to the Pueblo in 1986 in exchange for the Pueblo’s agreeing to be responsible for the remediation and to release ARCO from all responsibility for it; and (2) the significant costs ARCO incurred in responding to EPA’s more recent efforts to shift responsibility to ARCO.  The Court dismissed ARCO’s claims for cost recovery and contribution for the 1986 settlement payment as time barred.  The Court dismissed ARCO’s claim to recover the costs in responding to EPA and associated investigation as inadequately pled to establish that the expenditure constitutes “necessary costs of response.”  Claims for contribution under 113(f)(1) (referenced by the court as “post judgment contribution claim”) were dismissed as premature because ARCO had not been sued.  Finally, the claims against the United States for declaratory judgement were dismissed; the court ruled that ARCO cannot bring a claim for declaratory relief because it has failed to establish a valid underlying contribution or cost recovery claim. 

Claims against the Pueblo and LCC are somewhat more complicated as a result of sovereign immunity defenses they raised.  The court considered the sovereign immunity defense asserted by both Laguna Pueblo and LLC, its federally-chartered Tribal Corporation.  The Court concluded that both the Pueblo and LCC are entitled to assert sovereign immunity as a bar to ARCO’s CERCLA claims because the language of existing waivers of sovereign immunity was not unequivocal enough to cover CERCLA claims.  The Court therefore dismissed those CERCLA claims.  However, the court found that the Pueblo and LCC waived sovereign immunity with regard to ARCO’s breach of contract claims.  The source of this waiver for the Pueblo is in the 1986 Agreement to Terminate Leases.  The court found that this agreement served to waive sovereign immunity from claims brought under that contract.  Regarding LCC, the source of the waiver of sovereign immunity for breach of contract claims was in the Articles of Merger associated with the merger of LCC from a New Mexico corporation to a federal LCC formed under 25 USC §477, which may assert sovereign immunity.  A motion for reconsideration by LCC is pending.

Although the facts of Atlantic Richfield are unique, its lessons are broader.  First, in pleading a CERCLA claim for cost recovery, care should be taken to allege in some detail facts which support all elements of the claim, including facts showing that necessary response costs within CERCLA were incurred.  Second, without adequate waiver of sovereign immunity, the settlement and payment in exchange for a release and commitment by a tribe or tribal corporation to assume full responsibility for clean-up may leave the door open for CERCLA liability in the future without recourse through CERCLA-based contribution and cost recovery claims.  Finally, although the court’s decision confirmed that the defense of sovereign immunity applies to CERCLA contribution and cost recovery claims brought by private parties against sovereign Indian tribes and their federally chartered corporations, the court’s analysis confirms that under the right circumstances, a tribe may waive its sovereign immunity protections. 

Roger Goodell and EPA Administrative Orders

Posted on May 4, 2016 by George von Stamwitz

You do not have to be a football fan to be aware of the legal battles between NFL Commissioner Roger Goodell and the star quarterback, and perpetual winner, Tom Brady arising out of Brady’s use of deflated footballs at a playoff game. Brady won the round in district court where the judge focused on the merits of the factual case. Goodell recently won on appeal where the court of appeals focused on the fact that the NFL Players Association bargained away the right to challenge Goodell’s decisions on the merits. On appeal, it did not matter whether Brady did anything wrong. All that mattered was that Goodell thought Brady did something wrong.

In recent dealings with EPA on its model Administrative Order on Consent (“AOC”) for Remedial Investigations and Feasibility Studies (“RI/FS”), it seems EPA wants PRPs to make the same mistake the Players Association made: let EPA be judge and jury over any dispute that arises under the AOC. The most troubling language in the model is that EPA’s final decision on the dispute “becomes part of the Order.” While the vast majority of EPA folk I have met are more reasonable than Roger Goodell, RI/FS projects can involve millions of dollars, which sets the table for expensive disputes.

What is a Brady fan to do? First, the model should be changed to allow pre-enforcement review, as pointed out in a recent ACOEL post by Mark Schneider. Second, if the AOC process is otherwise desirable, there are ways to minimize the effect of the model language on at least one category of dispute: work expansion disputes, often the most serious and expensive variety of disputes. A very specific Scope of Work attached to the AOC would minimize the risk of work expansion by EPA through dispute resolution. If a dispute arises that could expand the work, do not invoke dispute resolution. Take the position that the AOC does not apply to EPA’s demand because the demand is beyond the scope of the AOC. If EPA enforces the AOC on this point you can defend without EPA’s position becoming part of the AOC beforehand. Thus, you avoid Brady’s fate—having a good argument and nowhere to go.

Show Me The (Big) Money – CERCLA Financial Assurance in the Era of Megasites

Posted on April 14, 2016 by David Van Slyke

In the CERCLA world, the low hanging fruit has largely been picked.  Long gone are the days of the run-of-the-mill $3M RI/FS leading up to a $30M RD/RA.  We are getting to the tough stuff now – the megasites – and all the difficult issues related to PRP involvement in RD/RA (whether via consent decree settlement or compliance with a UAO) are on steroids.

One of those more difficult issues in the context of multi-party megasites relates to financial assurance (“FA”) requirements in RD/RA UAOs and consent decrees.  The 29-page April 2015 EPA FA Guidance, while helpful on some levels, is remarkably thin (2 paragraphs) when it comes to dealing with multi-party sites.  And in a breathtaking understatement, especially with regard to big-ticket sites, EPA notes in the guidance that “FA matters can get complicated with multi-PRP-led cleanups….” 

Recently, added pressure has been placed on the Agency in this area as a result of a March 31, 2016 EPA Inspector General report stating that “[d]ata quality deficiencies and a lack of internal controls prevent the EPA from properly overseeing and managing its financial assurance program for RCRA and CERCLA.”  In particular, EPA’s OIG analysis indicates (among other things) that there are 128 CERCLA sites with no (or expired) financial assurance in place and the estimated cleanup costs for those sites is over $3.7B.

As Proposed Plans and RODs continue to roll out from the Agency with billion-dollar-plus price tags – typically related to multi-party contaminated sediment sites – the difficulty of up-front funding of these hugely expensive remedies becomes obvious.  PRPs at multi-party sites will have varying abilities and business desires to up-front fund liquid FA mechanisms, and while some entities will prefer (and be able) to provide assurance by a financial test or corporate guarantee, many will not. 

And EPA’s willingness to deal with multiple mechanisms (either different mechanisms from multiple parties or multiple mechanisms from a PRP group) is limited.  In fact, the use of multiple financial assurance mechanisms is discouraged under the 2015 FA Guidance.  Further, the September 2014 Model Remedial Design / Remedial Action Consent Decree along with the September 2015 Model Unilateral Order for Remedial Design / Remedial Action specifically state that while PRPs may use multiple mechanisms, this can only occur with liquid mechanisms – trust funds, surety bonds guaranteeing payment or letters of credit.  Interestingly, the 2014 Model CD also allows the use of insurance policies, indicating that the Agency’s thinking about the liquidity of insurance policies has evolved. 

The viability of financial assurances is not simply an EPA-driven issue.  Given the multi-decade cleanup process and huge stakes involved at CERCLA megasites, and with the overlay of joint and several liability, PRPs need to be thinking carefully about the financial viability of their co-PRPs when entering into CDs or PRP agreements to perform under a UAO.  And regardless of how EPA ultimately decides to deal with this issue at megasites, PRPs no doubt will be pushing each other to ensure long-term equitable responsibility for meeting their FA obligations at this new breed of Superfund sites.

Dispute Resolution for CERCLA Sediment Investigations

Posted on February 22, 2016 by Mark W. Schneider

In my last blog entry, I advocated for the amendment of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) to eliminate the bar on pre-enforcement review as one step toward improving the investigation and cleanup of sediment sites.  In this entry, I propose that the U.S. Environmental Protection Agency (EPA) and potentially responsible parties (PRPs) significantly revise the dispute resolution process for EPA Administrative Settlement Agreements and Orders on Consent (“ASAOCs”) to require the resolution of disputes by neutral third parties unaffiliated with EPA or an affected PRP. 

The goal of sediment remediation is to protect public health and the environment through prompt and cost-effective remedial action.  Unfortunately, this goal has not been met at many sediment sites.  At some sites, neither the public nor the PRPs have been served by investigations that have unnecessarily taken decades and wastefed hundreds of millions of dollars to undertake.  EPA’s selection of remedies at many sites has been delayed and has not resulted in the selection of protective and cost-effective remedies.

Most sediment cleanups are performed in accordance with consent decrees, which appropriately vest dispute resolution authority in federal district court judges.  In contrast, most sediment investigations are conducted under ASAOCs, which vest dispute resolution authority in EPA personnel.  While many at EPA with responsibility for dispute resolution have the best of intentions and seek to be objective, the fact that they work for EPA, often supervise the EPA staff who made the decision leading to the dispute, and are often steeped in EPA practices renders most of them unable to serve in a truly independent role.  To ensure fairer dispute resolution, ASAOCs should instead vest dispute resolution authority in neutral third parties with no affiliation with either EPA or the PRPs subject to the ASAOC.  This would require the amendment of existing ASAOCs and the insertion of new dispute resolution language, which differs from EPA’s model language, in ASAOCs that have not yet been signed. 

Additionally, while the dispute resolution official should be deferential to EPA, he or she should not rubber-stamp agency decisions, as currently is often the case.  Where investigations have been mired in years of inaction, an independent dispute resolver with a fresh perspective may determine that EPA has sufficient data to make informed cleanup decisions and could compel agency action.  At other sites where EPA is requiring PRPs to prepare feasibility studies advocating for remedies that almost certainly will fail, it is essential that a neutral decision-maker act independently to ensure that feasible remedies are selected.

EPA will resist any effort to revise its approach to dispute resolution, and it may require the intervention of elected officials or others to compel such a change. The public, EPA, and affected PRPs would all benefit from it. 

Revisiting CERCLA Pre-Enforcement Review

Posted on February 22, 2016 by Mark W. Schneider

As a private practitioner and former trial attorney at the U.S. Department of Justice, I have advocated for timely and cost-effective cleanups that protect public health and the environment.  Unfortunately, only a minority of cleanups under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) have met these criteria.  Of the many impediments to the thorough, prompt and cost-effective remediation of contaminated sites, and sediment sites in particular, one of the most significant is CERCLA’s bar on pre-enforcement review of the U.S. Environmental Protection Agency’s (EPA) remedial decisions.  To promote more effective and timely cleanups of sediment sites, I suggest that CERCLA be amended to eliminate the current bar on pre-enforcement review.  By allowing potentially responsible parties (PRPs) to seek and obtain judicial review of EPA decisions or failures to make decisions, more progress would likely be made on more sites.

CERCLA Section 113(h) states that, with limited exceptions, “No Federal court shall have jurisdiction … to review any challenges to removal or remedial action selected under section 9604 of this title, or to review any order issued under section 9606(a) of this title ….”  42 U.S.C. § 9613(h).  Despite many challenges, courts have generally upheld the validity of this provision.  As a result, PRPs typically cannot challenge EPA's decisions unless EPA has sought to compel performance under an enforcement order or if EPA is acting under a consent decree.  As the “opportunity” for challenge may not come until years after EPA has made its cleanup decision, most PRPs are not willing to face the risk of losing a remedy challenge and the potential imposition of treble damages.  

CERCLA should be amended to allow parties to challenge agency action or inaction at other times in the process, such as during the preparation of remedial investigations and feasibility studies.  At many sediment sites, EPA has delayed remediation and required parties to incur hundreds of millions of dollars during investigations.  If PRPs had the opportunity to obtain judicial review of agency action and inaction earlier in the process, they could seek to compel the agency to act in a way that is consistent with CERCLA’s requirements.

Having worked at the Department of Justice when CERCLA Section 113(h) was drafted, I recall my colleagues stating at the time that a bar on pre-enforcement review was necessary to avoid the challenges of having a non-expert federal judge address complex scientific questions and to prevent PRPs from tying up EPA in litigation.  I offer three suggestions in response to these concerns.  First, if a federal judge were confronted with a particularly complex issue, the court could appoint a special master to handle the proceedings.  Second, to encourage PRPs to seek prompt resolutions, a CERCLA amendment could require PRPs to fully comply with an agency’s directives pending resolution of the judicial dispute and impose a penalty on those parties whose challenge of agency action was unsuccessful.  Third, agencies could seek an expedited hearing of disputed issues.

While it is very unlikely that Congress would consider a CERCLA amendment to address only this issue, PRPs should raise this issue the next time amendments are being considered.  It will succeed only through the concerted efforts of advocates who seek more and better cleanups and those who seek prompt and reasonable government decision-making.   

Cat on a Hot Stove-Lid: What We Should Learn from the Gold King Mine Spill

Posted on December 22, 2015 by Zach C. Miller

Mark Twain once wisely warned:

We should be careful to get out of an experience only the wisdom that is in it -- and stop there; lest we be like the cat that sits on a hot stove‑lid.  She will never sit on a hot stove-lid again -- and that is well; but also she will never sit down on a cold one any more.

While trying to clear the collapsed entrance to the inactive Gold King Mine in Colorado, EPA contractors in August 2015 inadvertently released over 3 million gallons of metal-laden wastewater into a tributary of the Animas River.  Partly because of EPA’s involvement, and partly because high iron levels turned the Animas River orange for several days, the incident generated considerable controversy and attention.

Subsequent views about what we should learn and do as a result of this spill have been quite divergent and, in this writer’s view, off the mark. 

As might be expected during this election season, one response was protracted administration-bashing Congressional hearings, aimed at the heads of both EPA (criticizing the Agency for not better controlling its contractor at this remote mountain site) and the Department of the Interior (which has no responsibility for the site but issued a requested report on the spill).  Not surprisingly, these blame-and-shame hearings were not focused on, and did not produce, constructive information or plans for preventing such events in the future.  However, they did cause EPA remedial efforts and related U.S. transactions at inactive mine sites to be put on hold, which was counter-productive for dealing with this problem. 

At the other extreme, some environmental advocates have asserted that this wastewater release from an inactive mine supports their view that U.S. mining law should be fundamentally overhauled, including to provide for substantial royalty payments to the government and imposition of major financial assurance requirements on miners under CERCLA Section 108.  Those calls ignore the fact that this historic site pre-dates subsequently adopted mine reclamation and bonding requirements imposed on current mines under state and federal law.  They also represent a sea-change in mining law that goes far beyond this inactive mine issue, would occur at a difficult economic time for the mining industry, and is unlikely to gain traction in this polarized political climate. 

Congressional reactions reflect those widely disparate positions, with new proposed bills ranging from a narrow proposal for grants to mining colleges to study the problem (H.R. 3734) to a broad mining reform act that imposes substantial new fees and royalties (H.R. 963).  One other proposed bill would freeze DOI’s Abandoned Mine Lands (AML) Program at $17 million per year and institute a “Good Samaritan” program to encourage third-party volunteer clean-ups at AMLs (H.R. 3843), and another would create a foundation to accept donations for AML cleanups, with one-time matches from the federal government of up to $3 million per year (H.R. 3844). 

Many of these proposals are either political posturing or over-reaching, and others do not focus on or effectively address the problem of abandoned mines.  Moreover, they either are unlikely to go anywhere in Congress, or would accomplish little if they do.  

However, there are effective steps we should take if we learn the following key lessons provided by the Gold King spill:   

·         There are tens of thousands of abandoned mines like Gold King that are already discharging polluted wastewater to thousands of miles of streams.  If we do nothing, such discharges will continue and worsen, and occasional blow-out releases like Gold King are inevitable. 

·         The damage and economic impacts caused by these abandoned mine sites are real and will increase. 

·         These mine sites are very complex and expensive to fix. 

·         Some states and volunteer entities are willing to address these sites if existing liability disincentives can be removed.

Given these circumstances, we should focus on practical approaches that will achieve real, near-term, on-the-ground remedial actions.  Furthermore, the approaches must be backed by meaningful sources of funding, and be politically achievable in the current, polarized political climate. 

A good start would be adopting an effective “Good Samaritan” law addressing the existing disincentives for third parties to remediate abandoned and inactive mine sites, coupled with meaningful federal funding initiatives.  The Keystone Policy Center is currently working to achieve consensus on such an approach. 

A second practical approach would be to use CERCLA National Priority List (NPL) designation at select sites to provide funding where no viable mine operators remain.  The Gold King incident has served as a catalyst for removing past local opposition to NPL listing for the upper Animas River drainage.  That’s a good beginning. 

We should heed Twain’s advice and use the real lessons of Gold King to move beyond politics and take practical steps like those noted above to start fixing these old mine sites.  And we should stop getting mired in the same, currently dead-end debates that lead to doing nothing and can be put aside for another day – lest we be like the cat that will never sit on a cold stove-lid.

EPA To Rename OSWER: How About “The Office That Should Be Eliminated As Soon As Possible”?

Posted on November 2, 2015 by Seth Jaffe

According to the Daily Environment Report (subscription required), EPA is going to change the name of the Office of Solid Waste and Emergency Response to the Office of Land and Emergency Management.  What a grand name; surely it is an improvement.

I don’t think that this quite rises to the level of rearranging deck chairs on the Titanic (though I certainly have clients who would not object if OSWER sank without a trace), but one does get the sense of a bureaucracy beginning the long, hard, slog of trying to figure out how to perpetuate its existence as Superfund – mercifully – begins to fade away.

It’s probably a vain hope, but mightn’t EPA determine instead how to reallocate those functions of OSWER that need to continue, but actually try to figure out a way to shrink this element of the bureaucracy, instead of repurposing it?

titanic

EPA RELEASES FRAMEWORK FOR FUTURE CERCLA 108(b) FINANCIAL RESPONSIBILITY RULEMAKING

Posted on October 26, 2015 by Ronald R. Janke

The Environmental Protection Agency has released a framework for its future financial responsibility rulemaking under CERCLA 108(b).  Although this framework states EPA’s current thinking only in general terms, this document represents the clearest public statement of the agency’s intentions since it announced its intention to develop such rules for hardrock mining facilities in 2009.  This framework also informs of EPA’s intentions toward other classes of facilities in future rulemakings under this authority.  This framework appeared as part of a court filing on August 31, 2015 and was the subject of an EPA webinar on September 29, 2015.

EPA states that the regulatory approach it is considering has five foundational components. First, the universe of facilities to be regulated are hardrock mines and “primary processing activities located at or near the mine site that are under the same operational control as the mine.”  Second, the flow of funds from the financial responsibility instrument to the CERCLA would supplement existing CERCLA sources of funding, as EPA intends to use its existing CERCLA enforcement processes first to clean up sites.  Third, the scope and amount of financial responsibility would consist of three components: (1) response costs, calculated based on a model being developed by EPA to reflect the primary site conditions; (2) a fixed amount for natural resource damages and (3) a fixed amount for health assessment costs.

Fourth, EPA does not intend to preempt state, tribal and local government mining and reclamation closure requirements.  EPA intends to avoid preemption under CERCLA 114(d) by adopting financial responsibility requirements that are “in connection with liability for a release of a hazardous substance” in contrast to “many” state regulatory requirements designed to assure compliance with reclamation and closure requirements.  Fifth, EPA likewise intends that its CERCLA financial responsibility requirements will be distinct from federal closure and reclamation bonding requirements imposed by other federal agencies under other laws with jurisdiction over mining on federal lands.

The morsel of information provided in EPA’s framework leaves interested parties hungry for more information by what is left unsaid.  Particular concerns are the response cost model and its inputs and the path that EPA intends to tread around the multitude of existing financial assurance mechanisms that already apply to hardrock mining to avoid duplication and preemption.  In this regard, EPA could not have picked a more difficult place to begin drafting CERCLA 108(b) rules than for this industry, which has in place many and extensive financial assurances governing the impact of its operations.

CERCLA Financial Assurance Update: Section 108(b) Remains Stalled, But New EPA Guidance for Settlement Agreements and UAOs

Posted on August 7, 2015 by Charles Efflandt

Earlier this year, I posted in this blog a discussion of EPA’s 35 year – and still unfinished – journey toward full implementation of the financial assurance (“FA”) mandate of CERCLA Section 108(b). Section 108(b) obligates EPA to identify “classes of facilities” that will be required to demonstrate financial ability to respond to future releases of hazardous substances and to promulgate rules establishing those FA requirements. Inexplicably, Section 108(b) remained dormant for 28 years. Litigation initiated by NGOs in 2009 and 2010 prompted the agency to identify the hardrock mining and several other industries as priority targets for regulation. The task of developing the FA requirements for those industries, however, remained a work-in-progress.

Ever vigilant, environmental advocacy groups filed a Petition for Writ of Mandamus in August 2014 taking EPA to task for its delays and inaction. The theme of the litigation is that (1) Section 108(b) is a critical component of CERCLA’s overall scheme, (2) EPA’s failure to issue FA rules has resulted in cleanup delays, funding shortfalls and increased public health risks, and (3) EPA’s inaction cannot be justified by competing priorities within the agency. In May of this year, the D.C. Circuit Court of Appeals issued an order requiring EPA to expedite implementation of Section 108(b) to the greatest extent possible, update its rulemaking schedule for the identified industries, and disclose to the litigants the regulatory “framework” for the hardrock mining industry, which EPA acknowledged had been completed. EPA’s website suggests that it will publish the hardrock mining rule in August 2016.

In short—the more things change, the more they stay the same. Perhaps the low priority assigned to this CERCLA provision suggests that the cleanup response track-record of even the priority industries may not justify a need to regulate under Section 108(b) - a process that will involve complex issues with significant financial consequences. Nevertheless, Section 108(b) remains the law of the land. Congress must either follow-through with its periodic efforts to amend Section 108(b) or EPA must finish this long journey. No benefit inures to the public, affected industries or the agency from the existing uncertainties and delays.

EPA’s foot-dragging in implementing Section 108(b) is in contrast with its recent action emphasizing FA as an enforcement priority in CERCLA settlement agreements and UAOs. The agency’s April 2015 Guidance to Regional Counsel is touted as the first comprehensive document issued by EPA to assist with the development of FA requirements and provide transparency in the use of its Superfund authority. Space limitations do not permit a detailed review of this 22 page guidance, which includes modified model FA language and sample documents. Some take-aways from a first read of the guidance:

  • The Guidance does not address future Section 108(b) requirements.
  • It is suggested that the EPA Regions have flexibility to include or exclude certain FA mechanisms at specific sites, BUT headquarters consultation and approval is often necessary.
  • The financial test and corporate guaranty mechanisms are perceived by EPA as having a higher risk of not achieving FA objectives and imposing increased administrative burdens on the Agency; therefore, it is suggested that those mechanisms should be used with caution.
  • The Guidance recognizes the complications arising at sites involving numerous, dissimilar PRPs, with a preference for requiring jointly-funded versus separate FA mechanisms.
  • The Guidance emphasizes the need for agency diligence in the ongoing evaluation of site conditions and costs, with increases in the initial FA amount to be required as appropriate.
  • Practical considerations for evaluating the financial test and guaranty FA options are addressed in an appendix.

Notwithstanding suggestions of flexibility in the use of FA tools on a site-by-site basis, this comprehensive new guidance does not appear to include much good news for the settling PRP. In fact, EPA’s stated concerns on the use of the financial test, corporate guaranty and insurance policy FA mechanisms could further complicate an already contentious issue in CERCLA settlement negotiations. What impact the guidance may have on FA negotiations as new sites arise, of course, remains to be seen.

Eroding Ice: Fourth Circuit’s recent decision limiting “Arranger Liability”

Posted on April 29, 2015 by George von Stamwitz

A plaintiff seeking to characterize a business transaction as “disposal” under CERCLA may now feel like a polar bear looking for a patch of thick ice. 

On March 20, 2015, a divided panel on the Fourth Circuit Court of Appeals, in Consolidation Coal Co. v. Ga. Power Co., affirmed a District Court's ruling holding that transformer sales did not evidence an intent on to dispose of hazardous materials, and therefore did not support a finding of “arranger liability” under “CERCLA” even when words like “scrapping” and “disposal” were used. Looking to the framework of the Supreme Court’s 2009 ruling in Burlington Northern Burlington Northern and Santa Fe Railway Co. v. United States and the Fourth Circuit’s 1998 ruling in Pneumo Abex Corp. v. High Point, Thomasville & Denton Railroad Co., the 2-1 majority held that while a party who sells a product that contains hazardous substances also “‘intends’ to rid itself of that hazardous substance in some metaphysical sense… [an] intent to sell a product that happens to contain a hazardous substance is not equivalent to intent to dispose of a hazardous substance under CERCLA.” Rather, in the court’s words, “there must be something more.” 

Georgia Power, a major Georgia electrical utility that supplies power to most of Georgia, sold used electrical transformers containing PCBs to Ward Transformer Company. Ward repaired and rebuilt used transformers for resale. In the process, Ward’s Raleigh, North Carolina, facility became contaminated with PCBs. After the Ward site was added to the National Priorities list, Consolidated Coal Company and another company bore most of the cleanup costs as PRPs under CERCLA, spending approximately $17 million each in cleanup costs. 

Any attorney who has ever tried or been involved with a CERCLA case knows that Georgia Power, given these facts, looks like a prime target to sue for contribution.

In their appeal to the Fourth Circuit Court of Appeals, Consolidated Coal argued the District Court improperly considered the low value of the used transformers and Ward’s ability to profit from their resale. This, Consolidated Coal contended, overlooks the possibility that Georgia Power had a “dual intent” to make money from the sales of transformers and thus had an intent to dispose of the hazardous materials as an arranger. Thus, according to Consolidated Coal, Georgia Power’s “secondary motive” for the transformer sales -- to dispose of PCBs –- was sufficient to create arranger liability under CERCLA. 

The Court concluded that there was no direct or substantial evidence that Georgia Power intended, “even in part,” to arrange for disposal. Furthermore, the use of the words “scrapping” or “disposal” in Georgia Power’s documents had “limited bearing” on their intent to “dispose” of transformers as the word is construed in CERCLA, let alone the PCBs within those transformers. The Court was also not swayed by the fact that the transformers were sold in lots and that some of the transformers were partially disassembled, or that old oil was required to be removed from the transformer as part of the reconditioning process. According to the Court, all Georgia Power did was to sell its transformers to the highest bidder.

While these cases remain fact sensitive, the trend lines suggest CERCLA plaintiffs alleging “disposal” may be on thin ice.

Burlington Northern Continues to PERColate

Posted on January 26, 2015 by Robert M Olian

The Fifth Circuit has just weighed in with a significant interpretation of the Supreme Court’s landmark decision in Burlington Northern & Santa Fe Railway Co. v. United States, 556 U.S. 599 (2009). In a case involving “arranger” liability under CERCLA (the Comprehensive Environmental Response, Compensation and Liability Act), the Fifth Circuit on January 14 overturned a district court judgment that had held BorgWarner liable for leaks of perchloroethylene (PERC) from equipment sold by an affiliate of BorgWarner’s corporate predecessor. Vine Street LLC v. Borg Warner Corp., No. 07-40440 (Jan. 14, 2015)

The Fifth Circuit held there was no “intent” to dispose of PERC even though the dry cleaning equipment was designed with the knowledge that some PERC would inevitably be mixed in with the water that the system was designed to discharge. Because PERC was a useful product and the intent was to reclaim it rather than dispose of it, the Fifth Circuit strictly applied Burlington Northern’s holding that arranger liability requires an intent to dispose and remanded the case to the district court with instructions to enter judgment in favor of BorgWarner.

Vine Street usurps the Fifth Circuit’s earlier “nexus” test (the test in effect when the District Court issued its ruling), which was based on a totality of the circumstances, and gives further ammunition to those defending against CERCLA liability for releases incidental to the sale of a useful product. 

Dancing in Jackboots

Posted on January 9, 2015 by Steve McKinney

While Congress designed CERCLA to enhance EPA’s ability to respond to hazardous contamination, the statute requires a level of cooperation between federal and state authorities for certain CERCLA activities, including the NPL listing process.  But like parents forcing middle-schoolers to dance in etiquette class, Congress’s efforts to make EPA coordinate with States often begins with squabbles over who leads and ends with squashed toes. 

So how much state involvement is required under CERCLA?  More than you might think.  For example, CERCLA section 121(f) states that EPA must provide “for substantial and meaningful involvement” by each State in the “initiation, development, and selection of remedial actions to be undertaken in that State.”  This includes state involvement in decisions whether to perform preliminary assessments and site inspections, allocation of responsibility for hazardous ranking system scoring, negotiations with potentially responsible parties, and participation in long-term planning processes for sites within the State.  CERCLA section 104(c)(3) mandates that before EPA can provide a Superfund remedial action in a particular State, the State must provide EPA with specified assurances in writing.  Those assurances include the State’s agreeing to undertake “all future maintenance of the removal and remedial actions provided for the expected life of such actions” and paying “10 per centum of the costs of the remedial action, including all future maintenance.”  These statutory provisions are confirmed and enhanced by EPA’s own regulations.  See, e.g., 40 C.F.R. 300.500; id. at 300.510.  Further, two EPA guidance memoranda outline a process “to include State input in NPL listing decisions” and to resolve disputes “in cases where [an EPA] Regional Office . . . recommends proposing or placing a site on the [NPL], but the State . . . opposes listing the site.”  See Memo. from Elliot P. Laws, Asst. Admin. EPA Off. of Solid Waste and Emergency Response (“OSWER”), to EPA Reg. Admins., at 1 (Nov 14, 1996); Memo. from Timothy Fields, Jr., Asst. Admin. OSWER, to EPA Reg. Admins., at 1 (July 5, 1997) (Fields Memo.).  This policy requires EPA regional offices to “determine the position of the State on sites that EPA is considering for NPL listing . . . as early in the site assessment process as practical,” to “work closely with the State to try to resolve [any] issue[s],” and to provide the State with “the opportunity to present its opposing position in writing” before EPA Headquarters “decide[s] whether to pursue NPL listing.”  Fields Memo. at 2. 

EPA has historically taken these laws, rules, and guidance to heart, consciously trying to avoid stepping on state feet in the NPL listing process.  Of the over 200 sites that EPA has proposed for listing since 1995, only the Fox River Site in Wisconsin was proposed over state opposition—and that listing was never finalized.   EPA’s deference makes sense considering that a failure to obtain state assurances generally means EPA cannot access the Superfund to finance its remedial activities.  Unfortunately, there are signs EPA’s cooperative approach may be changing.  EPA recently proposed the 35th Avenue site in Birmingham, Alabama, for NPL listing without Alabama’s concurrence.  While EPA claims state support for the listing (79 Fed. Reg. 56,538, 56,544 (Sept. 22, 2014)), the rulemaking docket contains letters of opposition from both the Alabama Department of Environmental Management and the Alabama Attorney General.  Alabama has made clear that it has no ability to fund any remedial efforts at the site, and has no intention of providing any of the required assurances.  Moreover, EPA did not follow its own guidance regarding the “nonconcurrence” dispute.  In short, while EPA and Alabama are facing one another, EPA may have shown up to this dance wearing jackboots.  

CERCLA-LIKE ALLOCATIONS FOR DAM REPAIRS

Posted on January 7, 2015 by John A. McKinney Jr

Much of my legal work deals with hazardous material remediations driven by CERCLA or state equivalents. The allocation of these costs among liable parties, in court or out, is generally conceded to be expensive and ultimately unsatisfying to most of them.  I never thought I would see it in another area of environmental law but now I have.

Dams are regulated in my state by the New Jersey Department of Environmental Protection.  It is a big job.  Most of our lakes and ponds are dammed streams or rivers.  At one point New Jersey had 196 dams where a failure might result in probable loss of life and/or extensive property damage.  50 of these need repairs at an estimated cost in excess of $33 million. There were also another 396 dams where failure might result in significant property damage. 317 are in need of repair to bring them up to state standards at a cost in excess of $126 million.  Who pays for the necessary repairs to these dams and how?

A case decided by our intermediate appellate court on January 2nd of this year answers this question in a most CERCLA-like way.  In New Jersey Department of Environmental Protection v. Alloway Township the Appellate Division interpreted provisions of the Safe Dam Act (N.J.S.A. 58:4-1 to 4-14).  This Act “casts a ‘broad net’ of liability … so that its remedial purpose … is served” by imposing “significant obligations” on the owner or person having control of a reservoir or dam.  At issue in this case was a privately owned lake created by an earthen dam that now has township road on top which is supported by a county bridge and culverts that are part of the dam.

The New Jersey Department of Environmental Protection (“NJDEP”) brought an action against the person owning the property below the lake and the dam, the township that maintained the road on the dam and the county that maintained portions of the dam.  The court held “there are four classes of people who are subject to the statute: (1) dam owners; (2) reservoir owners; (3) those who control the dam; and (4) those who control the reservoir. It follows that if a party fits into any one of those categories, the [NJDEP] may seek enforcement of the SDA against that person.”  All the parties fell into at least one of those classes.

The Appellate Division also blessed the allocation of liability made below.  There, the judge, sitting in the Chancery Division - General Equity Part, made an equitable allocation of the costs of compliance:  sixty-five percent to the County, twenty-five percent to the property owner, and ten percent to the Township.

What – equitable allocation in another environmental program?  Cheer up CERCLA lawyers.  Our skills may be useful in dam regulatory litigation.