PENNSYLVANIA CLEAN WATER AND BROWNFIELDS INVESTMENT OF STIMULUS FUNDS

Posted on February 27, 2009 by Joseph Manko

Among the priorities under the $787.5 billion American Recovery and Reinvestment Act of 2009 is repairing, rebuilding, and constructing the nation’s water infrastructure. Approximately $6 billion will augment the EPA’s clean water and drinking water state revolving funds, of which approximately $221 million will be disbursed to the Commonwealth of Pennsylvania’s Infrastructure Investment Authority (PennVest). The governing board of PennVest is appointed by Governor Rendell, and I have been serving as its chair for the past six years.

 

PennVest administers the approximately $300 million annual allotment of Clean Water and Drinking Water funds previously supplied by EPA on a matching basis with Pennsylvania. These funds will now be augmented by the $212 million in stimulus funds. The Clean Water Fund addresses waste water infrastructure. The fund also addresses brownfields (with its protection of water quality) and storm water, whereas the Drinking Water Fund is strictly for water supply and distribution. At least 50 percent of the funding must be in the form of grants.

 

With the current emphasis on sustainability, alternative energy, greenhouse gas emission reduction and the need for more stringent control over stormwater run-off, the allocation of stimulus funds by PennVest will focus on innovative green technology, including particularly, controlling stormwater and remediating brownfields (at least 20 percent of the stimulus funding must be used for “green infrastructure”.)

 

Although the final disbursement of the economic stimulus funding will be affected by various regulations, the awarding of grants and loans will likely be on the same timetable as in the past with an emphasis on “shovel ready” projects. Funding agreements must be entered into and contracts for the full amount signed within a year.  The ultimate goal is to immediately increase the amount of jobs needed to construct the infrastructural repair, rebuilding and construction. 

PENNSYLVANIA CLEAN WATER AND BROWNFIELDS INVESTMENT OF STIMULUS FUNDS

Posted on February 27, 2009 by Joseph Manko

Among the priorities under the $787.5 billion American Recovery and Reinvestment Act of 2009 is repairing, rebuilding, and constructing the nation’s water infrastructure. Approximately $6 billion will augment the EPA’s clean water and drinking water state revolving funds, of which approximately $221 million will be disbursed to the Commonwealth of Pennsylvania’s Infrastructure Investment Authority (PennVest). The governing board of PennVest is appointed by Governor Rendell, and I have been serving as its chair for the past six years.

 

PennVest administers the approximately $300 million annual allotment of Clean Water and Drinking Water funds previously supplied by EPA on a matching basis with Pennsylvania. These funds will now be augmented by the $212 million in stimulus funds. The Clean Water Fund addresses waste water infrastructure. The fund also addresses brownfields (with its protection of water quality) and storm water, whereas the Drinking Water Fund is strictly for water supply and distribution. At least 50 percent of the funding must be in the form of grants.

 

With the current emphasis on sustainability, alternative energy, greenhouse gas emission reduction and the need for more stringent control over stormwater run-off, the allocation of stimulus funds by PennVest will focus on innovative green technology, including particularly, controlling stormwater and remediating brownfields (at least 20 percent of the stimulus funding must be used for “green infrastructure”.)

 

Although the final disbursement of the economic stimulus funding will be affected by various regulations, the awarding of grants and loans will likely be on the same timetable as in the past with an emphasis on “shovel ready” projects. Funding agreements must be entered into and contracts for the full amount signed within a year.  The ultimate goal is to immediately increase the amount of jobs needed to construct the infrastructural repair, rebuilding and construction. 

Superfund Liability and Apportionment - Burlington Northern v. United States

Posted on January 20, 2009 by Theodore Garrett

Although the Superfund statute is now 28 years old, basic issues of liability and apportionment of liability remain unresolved. This term, the U.S. Supreme Court will decide a case with broad implications for CERCLA liability, Nos. 07-1601 and 07-1607, Burlington Northern v. United States. These consolidated cases, which will be argued early in 2009, raise important issues concerning the circumstances under liability is divisible and the scope of “arranger” liability under CERCLA.  If the Ninth Circuit’s approach is upheld, the heightened evidentiary standards may impose a difficult hurdle on parties to prove reasonable apportionment of liability. The Ninth Circuit’s approach to “arranger” liability is of concern to entities that sell chemicals or other products in the ordinary course of business. The allocation of risk and provisions for insurance and best practices to avoid spills in contracts between suppliers and common carriers may need to be reviewed in light of the Supreme Court’s opinion in this case. 

 

Although the Superfund statute is now 28 years old, basic issues of liability and apportionment of liability remain unresolved. This term, the U.S. Supreme Court will decide a case with broad implications for CERCLA liability, Nos. 07-1601 and 07-1607, Burlington Northern v. United States. These consolidated cases, which will be argued early in 2009, raise important issues concerning the circumstances under liability is divisible and the scope of “arranger” liability under CERCLA.  If the Ninth Circuit’s approach is upheld, the heightened evidentiary standards may impose a difficult hurdle on parties to prove reasonable apportionment of liability. The Ninth Circuit’s approach to “arranger” liability is of concern to entities that sell chemicals or other products in the ordinary course of business. The allocation of risk and provisions for insurance and best practices to avoid spills in contracts between suppliers and common carriers may need to be reviewed in light of the Supreme Court’s opinion in this case. 

 

                                    Background

A now-defunct company, Brown & Bryant, Inc. (B&B), owned and operated a facility at which chemicals were stored and distributed. The B&B operations were conducted in part on land owned by two railroad companies. Some of the chemicals used by B&B were supplied and delivered by Shell Oil Company. The U.S. Environmental Protection Agency (EPA) and the State of California’s Department of Toxic Substances Control (DTSC) brought suit under CERCLA to recover their response costs.

 

In 1996, the EPA and the State filed CERCLA actions against B&B, the Railroads, and Shell for reimbursement of their investigation and cleanup costs.   The district court, after a twenty-seven day bench trial, issued a detailed, 191-page decision holding the Railroads liable under CERCLA § 9607(a) as owners of the facility and as persons who “at the time of disposal of any hazardous substance owned or operated any facility at which such hazardous substances were disposed of.”  Shell was held liable under CERCLA § 9607(a)(3)as a “person who ... arranged for disposal ... of hazardous substances.”  

 

The district court found that the harm to the site was capable of apportionment.  The parties had not provided arguments concerning apportionment, leaving the district court to independently perform the equitable apportionment analysis. For the Railroads, the district court multiplied three proportions: (1) the percentage of the overall site that was owned by the Railroads, 19.1%; (2) the percentage of time that the Railroads leased the parcel in relation to B&B’s total operations, 45%; and (3) the fraction of hazardous products attributable to the Railroad parcel, 66%. This calculation resulted in a determination of 6% liability.  To account for any “calculation errors,” the district court assumed 50% error and raised the Railroads’ proportion of the total liability to 9%. For Shell, the district court approximated the volume of spills of Shell’s product attributable to Shell, and set Shell’s proportion of the total liability at 6%. 

 

The State and EPA appealed the district court’s judgment.  Shell cross-appealed the finding that it was liable as an “arranger” under CERCLA. The federal district court held the Railroads and Shell liable for a minor portion of the total cleanup costs. The agencies appealed. A panel of the Ninth Circuit affirmed the portion of the judgment that imposed liability on Shell as an arranger and reversed the portion of the judgment that declined to impose joint and several liability on the Railroads and Shell. 

 

The Supreme Court granted certiorari. The questions presented are whether the 9th Circuit correctly (1) affirmed the district court’s ruling that Shell is liable as an arranger and (2) reversed the district court’s apportionment of liability. The case is scheduled to be argued early in 2009.

 

                                    The Ninth Circuit’s Decision

 

A panel of the Ninth Circuit affirmed the portion of the judgment that imposed liability on Shell as an arranger and reversed the portion of the judgment that declined to impose joint and several liability on the Railroads and Shell, holding that petitioners did not satisfy their burden of proof on apportionment. United States v. Burlington Northern & Santa Fe Railway, 502 F.3d 781 (9th Cir. 2007), as amended 520 F.3d 918 (9th Cir. 2008). The amended opinion was issued to accompany a denial of en banc review, which prompted an unusual dissent by eight Ninth Circuit judges including the Chief Judge.

 

Apportionment of Liability. The Ninth Circuit notes that § 433A(1) of the Restatement allows for apportionment of damages where “(a) there are distinct harms or (b) there is a reasonable basis for determining the contribution of each cause to a single harm.” 520 F.3d at 934-35.  

On the facts presented, the court found no dispute on the first, purely legal question -- whether the harm is capable of apportionment, but held that the district court erred in finding that there was a “reasonable basis” apportioning the harm based on percentages of land area, time of ownership, and types of hazardous products.  The Ninth Circuit held that there was no evidence linking these factors to the proportion of leakage, contamination, or cleanup costs. 520 F.3d at 945-46. With respect to Shell, the Ninth Circuit similarly found that the evidence relied on by the district court was too speculative to determine the amount of leakage of Shell’s chemicals.  520 F.3d at 946-47.

 

“Arranger” Liability. The Ninth Circuit rejected Shell’s arguments that the district court applied the wrong legal standard in determining whether Shell was an “arranger.”  The Ninth Circuit held that the useful product cases do not apply in this case because “Shell arranged for delivery of the substances to the site by its subcontractors; was aware of, and to some degree dictated, the transfer arrangements; knew that some leakage was likely in the transfer process….” 520 F.3d at 950. The Ninth Circuit cited evidence that spills occurred every time the deliveries were made; that Shell arranged for delivery and chose the common carrier that transported its product to the site; that Shell changed its delivery process so as to require the use of large storage tanks, that Shell reduced the purchase price of the chemicals to reflect loss from leakage; and that Shell distributed a manual and created a checklist to ensure that the chemical tanks were operated in accordance with Shell’s safety instructions. 520 F.3d at 950-51.

 

The Dissent. The order denying the petition for rehearing en banc provoked a strong dissent by Judge Bea, joined in by seven judges including the Chief Judge. The dissent cites the detailed factual findings made by the district court and states: “If this evidence does not provide a ‘reasonable estimate’ for apportionment of liability, I do not see how -- short of ‘perfect information’ sufficient to trace every molecule of pollution to the landlord’s parcel -- apportionment could ever be possible under CERCLA.”  520 F.3d 953. The dissent was equally critical of the panel’s imposition of “arranger” liability on Shell, stating: “The panel’s imposition of arranger liability on a mere seller, which relinquished control over its products upon delivery and before spillage occurred, goes far beyond the statutory language and creates inter-and intra-circuit splits.” 520 F.3d 954.

 

Issues Before The Supreme Court

1. Apportionment of Liability.  Petitioner Burlington Northern argues that the Ninth Circuit’s analysis of apportionment departs from common-law principles, which allow for rough apportionment based on reasonable assumptions. The Ninth Circuit has pushed the “polluter pays” principle in CERCLA beyond all rational limits. Burlington argues that imposing joint and several liability in all but extraordinary cases, as the Ninth Circuit’s reasoning would dictate, would raise a multitude of constitutional problems, citing Eastern Enterprises v. Apfel, 524 U.S. 498 (1998).

 

The United States counters petitioners failed to even attempt to identify and prove a reasonable basis for apportionment and the Supreme Court should not relieve petitioners of the consequences of their litigation strategy. Further, the United States argues that a district court does not have the same “broad discretion” in determining whether and how liability should be apportioned. 

 

2. “Arranger” Liability.  Shell Oil Company argues that “arranger” liability may not be imposed on a manufacturer who merely sells and ships, by common carrier, a commercially useful product, transferring ownership and control to a purchaser who causes contamination involving that product.  Any inadvertent spillage that occurred was the result of the transfer of a useful product, thus Shell cannot be said to have arranged for the discard of waste. Shell did not own the chemicals at the time of any disposal. Shell also argues that a company should not be penalized for providing its customers with a safety manual and other information for the safe handling of its products.

 

The United States argues that Shell is liable because it entered into transactions that it knew would directly result in disposals of hazardous substances. The government’s brief emphasizes that Shell inserted itself over the transfer process by hiring the common carriers used for delivery and because the common carriers used equipment required by Shell. Lack of intent to dispose of a hazardous substance does not preclude arranger liability, the United States argues, where the arranger has advance knowledge of the disposal. 

 

                                    Conclusion

In cases where there is a significant orphan share, the failure to apportion liability may result in the imposition of liability for the entire cleanup cost on parties with minimal responsibility.  If the Ninth Circuit’s approach is upheld, the heightened evidentiary standards may impose a difficult hurdle on parties to prove reasonable apportionment. Alternatively, the Supreme Court might decide the issue on narrow grounds suggested by the United States, namely that petitioners failed to offer evidence concerning apportionment and thus did not meet their burden of proof.

The Ninth Circuit’s approach to “arranger” liability is of concern to entities that sell chemicals or other products in the ordinary course of business. Does every sale and delivery of a useful product potentially subject the supplier to CERCLA liability if leakage or spills occur? If not, how does one draw the line?  Should arranger liability attach only when the sole purpose of a transaction is for disposing a hazardous substance?  The allocation of risk and provisions for insurance and best practices to avoid spills in contracts between suppliers and common carriers may need to be reviewed in light of the Supreme Court’s opinion in this case. 

 

Theodore Garrett is a partner in the law firm Covington & Burling LLP in Washington, D.C. and is Co-Chair of the firm's environmental practice group. His practice involves major regulatory and enforcement issues and transactions, particularly involving air quality, water quality, hazardous waste, and natural resource damages. He has been lead industry counsel in numerous cases seeking judicial review of EPA air and water regulations and has represented clients in numerous Superfund matters. Mr. Garrett advises clients on compliance and related business issues and has been extensively involved in administrative proceedings and litigation, including Supreme Court cases. Mr. Garrett has spoken and written widely in the environmental area. He is the editor and principal author of The Environmental Law Manual and the RCRA Compliance Manual, and is a contributing author to Environmental Litigation and The Clean Water Act Handbook. Mr. Garrett served as a U.S. Supreme Court law clerk to Chief Justice Warren Burger.  He is past Chair of the ABA Section of Environment, Energy and Resources. Mr. Garrett was honored as the Environmental Lawyer of the Year 2008 by Who’s Who International.

 

Contact Information: tgarrett@cov.com or (202) 662-5398

SALMON WARS IN THE PACIFIC NORTHWEST

Posted on November 24, 2008 by Kevin Beaton

Each year thousands of salmon and steelhead protected under the Endangered Species Act (“ESA”) migrate up and down the Columbia River and its tributaries and into the Pacific Ocean as part of the species’ cycle of life. Seemingly, each year armies of lawyers migrate to federal court to argue whether the federal government is carrying out its obligations to protect these species under the ESA. “As part of the modern cycle of life in the Columbia River system, each year brings litigation to the federal courts of the Northwest over the operation of the Federal Columbia River System (“FRCPS”) and, in particular, the effects of system operation on the anadromous salmon and steelhead protected by the Endangered Species Act.” National Wildlife Federation v. National Marine Fisheries Service, 422 F.3d 782 (9th Cir. 2005).

            2008 is no exception as the National Wildlife Federation, the state of Oregon and the Nez Perce Tribe have again filed a lawsuit in the United States District Court of Oregon against the federal government for allegedly failing to carry out their obligations under the ESA in the operation of the FRCPS. The precipitating event for the 2008 lawsuit, is a 2008 Biological Opinion authored by NOAA Fisheries pursuant to Section 7 of the ESA opining that if the action agencies, the U.S. Army Corps of Engineers (“COE”) and U.S. Bureau of Reclamation (“BOR”) carry out a comprehensive reasonable and prudent alternative (“RPA”) then jeopardy to the listed species and adverse modification to critical habitat will be avoided.

 

The portion of the FRCPS that is at issue in the 2008 litigation is a series of fourteen (14) federal hydropower dams authorized by Congress on the Columbia and Lower Snake Rivers which are operated by the COE and BOR. Congress has directed that the dams are for multiple uses including providing power to the Northwest, irrigation, transportation, recreation, flood control and protection of fish. The stakes are high in the litigation, if some of the dams are substantially modified, or breached as some Plaintiffs are advocating, industries, rate-payers and communities reliant upon the multiple uses of the FRCPS will be significantly affected. Thirteen separate salmon and steelhead species that live out a portion of their life cycle in the Columbia River and its tributaries have been listed as endangered or threatened under the ESA.

            The federal government’s attempt to operate the FRCPS in compliance with ESA has been mired in litigation for some 15 years. The science and the law surrounding the FRCPS’ compliance with the ESA is complex. Like 2008, the precipitating event for past litigation has been a § 7 consultation between NOAA fisheries and the COE and BOR and a Biological Opinion (BiOp) and Incidental Take Statement. In recent litigation the federal government has not fared well. For example the 2000 BiOp found that the FRCPS operation did jeopardize certain listed species but that jeopardy could be avoided if off-site mitigation and hatchery initiatives were implemented. The court found the 2000 BiOp was invalid as NOAA could not rely upon off-site and non-federal actions that were not reasonably certain to occur as an RPA. See NWF v. NMFS, 254 F.Supp. 2d 1196 (D.Or 2003).

            The federal government tried again with a 2004 BiOP which found no jeopardy to listed species and no adverse modification to critical habitat. The 2004 BiOp was different from prior BiOps in so far as NOAA Fisheries attempted to segregate the effects of the existence of the 14 dams from the operation of the dams claiming that only the operation of the dams was discretionary and subject to Section 7 consultation. The lower Court struck down the 2004 BiOp on a variety of grounds finding that NOAA improperly separated the existence and operation of the dams in their § 7 consultation, NOAA did not properly take into consideration how the operation of the dams would affect recovery of the listed species and their critical habitat and that the actions relied upon were too uncertain to occur. The Ninth Circuit affirmed the lower Court decision in its entirety. See National Wildlife Federation v. National Marine Fisheries Service, 524 F.3d 917 (9th Cir. 2008). The Ninth Circuit did note that in considering the affect of the agency action on the potential recovery of the species in connection with a Section 7 consultation, NOAA Fisheries did not have to first develop a recovery plan consistent with the requirements of Section 4(f) of the ESA.

            While the appeal was pending before the Ninth Circuit, NOAA Fisheries under some prodding from the lower Court embarked upon an unprecedented collaboration with the four affected states (Washington, Oregon, Idaho and Montana) and eight Indian tribes to reach consensus on the appropriate methodologies to evaluate the effects of the FRCPS on listed species, operational modifications focusing on each of the listed species and hundreds of millions of dollars in funding commitments to the Tribes to carry out mitigation. In developing the 2008 BiOp and RPA, NOAA Fisheries also adopted a “trending to recovery standard” in order to fulfill the directive from the Court concerning the evaluation of survival and “recovery” in a Section 7 consultation. The 2008 BiOp finds that operation of the FRCPS for the next ten (10) years with implementation of the comprehensive RPA will avoid jeopardy to the thirteen species, avoid adverse modification to critical habitat and future recovery of the protected species will not be compromised by implementation of the RPA.

            The Plaintiffs quickly challenged the 2008 BiOp arguing it is legally and technically flawed and more of the same. The federal defendants, a trade association, three states (Washington, Idaho and Montana) and one Tribe argue that based on Court directives the 2008 BiOp got it right this time. The Defendants argue that Plaintiffs challenge is nothing more than a disagreement on the science and that the court should defer to NOAA Fisheries on these issues. Of interest to Clean Water Act attorneys, one of the Plaintiffs (“NWF”) argues that the incidental take statement (“ITS”) issued as part of the 2008 BiOp is equivalent to a “permit” under § 401 of the Clean Water Act and therefore requires water quality certification from the states. If the Plaintiff prevails on this novel theory, it means that potentially four states and three Tribes would need to issue a 401 certification that the ITS will comply with state and tribal water quality standards before the ITS would go into effect.

            A preliminary injunction and summary judgment hearings are set in January 2009. If the Court finds that the disputes surrounding 2008 BiOp are basically scientific disputes a recent Ninth Circuit case could be beneficial to the federal defendants. See, Lands Council v. McNair, 537 F.2d 981 (9th Cir. 2008). In Lands Council, the court noted that federal courts should defer to the scientific judgments of a federal agency when reviewing agency action under the Administrative Act Procedures. Stay tuned to the outcome of this litigation to see if the “cycle of life” of litigation in FRCPS continues or takes a breather to give the federal government, the states and tribes a breather to implement the 2008 BiOp.

Evans v. Walter Industries, Inc. - The Heightened Pleading Standards Announced In Bell Atlantic v. Twombly Apply To Toxic Tort Cases

Posted on March 19, 2008 by Jack Shumate

I.          Introduction

On May 21, 2007, the U.S. Supreme Court, in Bell Atlantic Corporation v. Twombly, 127 S.Ct. 1955; 167 L.Ed. 2d 929, announced a new standard for testing the sufficiency of pleadings in the face of a motion to dismiss. The Court set aside the rule in Conley v. Gibson, 355 US 41; 78 S.Ct. 99; 2 L.Ed. 80 (1957), which held that a complaint should not be dismissed unless it could be shown that it was not possible, pursuant to the pleadings, to demonstrate any set of facts which would support recovery; instead, the Court said that the appropriate test was whether the allegations of the complaint, if taken as true, would support the conclusion that recovery was “plausible.” In overruling Conley, the Court said, of the “possible” standard, “*** after puzzling the profession for 50 years, this famous observation has earned its retirement. The phrase is best forgotten as an incomplete, negative gloss on an accepted pleading standard ****.” 

Bell Atlantic was an anti-trust case based on the Sherman Anti-Trust Act. Many commentators suggested that the Bell Atlantic standard would only apply to matters (such as anti-trust) where the requirements of a statute dictated specific pleading requirements, that the Court had not intended to completely change the standards for testing the sufficiency of complaints.

Shortly after the Bell Atlantic decision, the U.S. District Court for the Northern District of Alabama was faced with the question in Evans v. Walter Industries, case no. 1:05-CV-01017-KOB. The Alabama court held the “plausible” standard applicable to a putative class action toxic tort case and it dismissed the case, with prejudice, against one of the Defendants.

As noted below, this decision could have significant implications in other Superfund cases if the federal courts, generally, reach the same conclusion.

II          BACKGROUND FACTS

This case arises from the extensive environmental concerns in Anniston, Alabama, a city of approximately 27,000 in northeastern Alabama. Anniston was the site where PCBs were first produced in 1927, and continued to be manufactured until 1972. In addition, in the first half of the 20th century the city was home to numerous iron pipe foundries; indeed, it was once known as the “sewer pipe capitol” of the world. The foundries produced thousands of tons, per day, of waste foundry sand allegedly contaminated with lead and a variety of other heavy metals, solvents, and PCBs. 

Much of Anniston is low lying and swampy, traversed by numerous creeks and open drains, many of which have become contaminated with PCBs. Foundry sand has been extensively used as fill material and top soil in residential yards throughout the city and adjoining communities. This has all led to Anniston becoming the location of two Superfund sites, one for remediation of PCBs and the other a removal action to clean lead from residential yards, extensive contribution actions, and a series of class actions by local residents who claim a variety of injuries as a result of local contamination. 

The concern of the local residents has been exacerbated by the fact that Anniston is immediately adjacent to Fort McClellan, an Army post which was for many decades the headquarters of the Army’s Chemical, Biological, and Radiological Warfare Corps and the Army is now in the process of destroying various toxins stored at the post which have become unstable with the passage of time.

III.        PROCEDURAL HISTORY

Plaintiffs, reportedly representing a plaintiff class of 12,000 to 14,000 people, filed a complaint in state court in 2005 asserting very broad, vague claims of personal injury, trespass, nuisance, and diminution of property value against foundry operators and a number of other, non-foundry companies. The case was removed to federal court pursuant to the Class Action Fairness Act and remains there.

Considerable skirmishing, involving Defendants’ motions attacking what were styled as “shotgun” allegations, and subsequent dismissals without prejudice eventually resulted in the filing of a second amended revised complaint in 2007. Defendants again attacked the complaint as the type of “shotgun” pleading which had attracted much negative comment by the Eleventh Circuit. A few days before argument on those motions, the Supreme Court released the Bell Atlantic decision. Defendants cited that decision as supplemental authority, arguing that the Court now had authority to dismiss the “shotgun” pleading with prejudice.

The Plaintiffs had alleged, and argued, that the foundries had produced thousands of tons of contaminated sand which ended up in Plaintiffs’ yards; further, that all of the Defendants may have released sand, PCBs, and other contaminants in sand that was used to clean up spills, stormwater, and air emissions. The Court was critical of these allegations because they did not specify what each Defendant had allegedly done, but, rather, seemed to treat all releases as a group action. The Plaintiffs argued that they could not be required to specify what each Defendant had done until they were permitted to pursue discovery. They argued that the Conley standard should apply and that their allegations should be found to be sufficient because it was “possible” that, in discovery, they could find specific facts to support their allegations. The Plaintiffs also argued that Bell Atlantic did not apply because the allegations were not made pursuant to a statute which required the averment of specific facts.

The Court rejected the Plaintiffs’ arguments and applied the Bell Atlantic standards. Its decision was based on three considerations. First, it noted that Conley was not an anti-trust case; therefore, even though the Supreme Court struck down the Conley test in an anti-trust case, its ruling was not limited to specific statutory actions.

Next, the Court held that adequate pleadings were necessary to advise not only the Defendants, but also the courts, of the allegations of the case so that discovery could be administered and could proceed in an appropriate manner. The Court styled this as a requirement to advise Defendants and the court of “*** who, what, when, where ***” the actions resulting in the damage complained of occurred. 

Next, the Court focused on the Supreme Court’s discussion, in Bell Atlantic, of the high cost of discovery and the increasing practice of plaintiffs in putative class actions to file suit with vague allegations and then use the high cost of discovery to pressure defendants into settling. 

Based on all these considerations, the Court dismissed the complaints as to all parties, but agreed to give Plaintiffs “one last chance” to file an adequate complaint against the foundry defendants. With respect to the non-foundry defendants, the Court observed that the allegations that there “may” have been discharges of contaminants in sand used to clean up spills and in stormwater and air emissions were entirely too vague and that, if the Plaintiffs could not produce much more specific allegations, those claims would be dismissed with prejudice.

Subsequently, Huron Valley Steel Corporation, a Defendant which is a recycler of non-ferrous scrap metals, moved for dismissal with prejudice and for entry of an immediate final judgment. The Court agreed that, from the face of the complaint, it appeared that this was a foundry sand case, that Huron Valley Steel Corporation had never produced or disposed of foundry sand, and that there were no other allegations against it that were not impermissibly vague. Therefore, the court dismissed the matter with prejudice as to Huron Valley Steel Corporation and entered final judgment for that Defendant. 

The court has yet to rule on the motions to dismiss of the remaining Defendants.

IV.       POTENTIAL IMPLICATIONS OF THIS DECISION

If other federal courts follow the line of reasoning of the Alabama court it could remove a number of complications in the future in Superfund matters. Most important, it may do away with, or at least significantly reduce, the practice of filing vague, broadly worded complaints against PRPs by groups of residents who live in the vicinity of Superfund sites, then seeking to pressure defendants to quickly settle. It could also simplify the task of planning and sequencing remediation activities and documenting Administrative Records to protect against such lawsuits. This could provide an important cost saving for PRPs in many cases.

For further information, contact Jack D. Shumate at shumate@butzel.com or (248) 258-1405.

Jack Shumate is Senior Environmental Counsel in the law firm Butzel Long, Professional Corporation. Mr. Shumate holds a BS degree in Chemical Engineering from Rose-Hulman Institute of Technology and received his JD from the Salmon P. Chase College of Law of Northern Kentucky University in 1962. He is listed in the Best Lawyers in America and is a Founding Regent and Charter Fellow of the American College of Environmental Lawyers.

Butzel Long is a full-service law firm headquartered in Detroit, Michigan with offices throughout Michigan and in Florida, New York City, and Washington DC and alliance offices in China and Mexico.

Minimum Streamflow in Arkansas

Posted on November 30, 2007 by Brian Rosenthal

 With some exceptions and common law developed standards, Arkansas has traditionally followed the reasonable use theory of the riparian doctrine. A riparian user must use water in a manner that is reasonable compared to others’ rights  (including as to ground water). 

            As a mid-south state, Arkansas receives a moderate amount of rain per year (approximately 49.19 inches on average since 1895 compiled from the Arkansas Natural Resource Commission’s Arkansas Ground Water Protection and Management Report for 2006). Stress on the amount, use of and quality of its underground aquifers, primarily in east and southeast Arkansas, have  resulted in increased scrutiny and planning for alternate water sources, including from conservation, recovery and surface water.        

            Arkansas has no current active system in operation for regulating water usage.  The Arkansas Natural Resources Commission, however, is directed to monitor our state’s water resources and can set minimum streamflows by rulemaking (but this step requires consultation with other state agencies). Water needs to be considered are domestic and municipal water supplies; agricultural and industrial; navigation; recreational; fish and wildlife and other ecological needs. The regulations and laws describe preferences and priorities, but are untested in practice.

            Minimum streamflows are to be set on a case by case basis, defining such stream flows as the “quantity of water required to meet the largest of the following instream flow needs as determined on a case-by-case basis:” (1) interstate compacts, (2) navigation, (3) fish and wildlife, (4) water quality, and (5) aquifer recharge. 

            After minimum flows are established, non-riparian permits may be applied for from “excess surface water.” Excess surface water means twenty-five percent (25%) of the amount of water available on an average annual basis from any watershed basin above that amount required to satisfy all of the following:

                        1.         Existing riparian rights as of June 28, 1985

                        2.         The water needs of federal water projects existing on June 28, 1985

                        3.         The firm yield of all reservoirs in existence on June 28, 1985

                        4.         Maintenance of instream flows for wish and wildlife, water quality, aquifer recharge requirements, and navigation

                        5.         Future water needs of the basis of origin as projected in the State’s Water Plan

                        6.         Additionally, in the White River Basin, permitted transfers may not exceed on a monthly basis an amount that is 50% of the monthly average.

           

Minimum streamflow is important because of its relevance to the Commission’s planning in the case of a possible shortage. Separate and apart from its use in this way, minimum streamflows are also used to determine when excess surface water is available for transfers to nonriparians.

            These standards may be reviewed in the near future to begin establishing minimum streamflows and potentially, associated protected levels, which the Commission may attempt to implement by rule under shortage conditions. The White River is scheduled as the first river to be reviewed in conjunction with the Memphis District Corps of Engineers’ Grand Prairie Area Demonstration Project.  While such irrigation projects were unusual in eastern states, another such project is on the horizon with the Corps’ November 2007 Record of Decision issued for the Bayou Meto Basin of Arkansas.    

            Thus, Arkansas’s riparian rights doctrines are yielding to state systems of oversight based on depleted aquifers and increased demands. For more information on Arkansas’s water resources and rules, click here.