Posted on April 5, 2017
Since the election of President Trump and appointment of EPA Administrator Pruitt, more than a few articles and blogs have been written about the new administration’s plans to dismantle EPA, including the proposal to cut EPA’s budget by almost one third. Even if one agrees that EPA needs to be “down-sized,” the massive cuts proposed by the Trump Administration are counter-productive. If EPA fires thousands of environmental professionals, who will be left to repeal or revise unnecessary or unduly burdensome regulations? Unlike Executive Orders, regulations cannot be rescinded or revised with the stroke of a pen.
The hazardous waste regulations adopted to implement RCRA provide a case in point. The Obama EPA adopted the final Hazardous Waste Generator Improvements Rule (discussed by a recent blog by Donald Stever) at the end of last year, acknowledging that the RCRA regulations are in many cases ambiguous, contain inconsistencies, and lack flexibility. EPA took a year to address more than 200 comments before it finalized the rule. Other aspects of the RCRA regulations also need to be modernized to encourage, rather than discourage, the reuse of materials derived from waste.
Just one example involves the recycling of mercury-containing lamps, which have been regulated as Universal Waste since 1995. Although fluorescent lamp manufacturers have reduced the amount of mercury in their lighting over time, such lamps are regulated as Universal Waste because many lamps exhibit the toxicity characteristic for mercury; and thus, would be classified as D009 hazardous waste. While the Universal Waste Rules simplify the management of mercury containing lamps, the hazardous waste regulations and longstanding EPA interpretations of these rules impede the reuse of materials recovered through the recycling of universal waste lamps.
Two of the primary materials produced through lamp recycling are calcium phosphate powder and crushed glass. Calcium phosphate powder removed from fluorescent lamps contains mercury at levels below the hazardous waste threshold, and the amount of mercury in such powder is typically further reduced by a retorting process. Significantly, the phosphate powder also contains several rare earth elements, including Europium, Terbium and Yttrium, which are considered strategic materials by the United States Government, because of the need for such elements in many military and high-tech commercial products, such as cell phones, computer hard drives and other electronic equipment, and precision-guided munitions.
China controls about 95% of the production of rare earth elements. Therefore, recycling calcium phosphate powder to produce rare earths provides a sustainable, domestic source of rare earths needed in the U.S. economy. Unfortunately, as a waste derived material, regulators have limited the ability of businesses to stockpile calcium phosphate powder for future recycling, and much of this material is currently being disposed of in landfills, rather than being reserved for the recovery of rare earths.
Similarly, the crushed glass produced by lamp recycling has characteristics that make it a useful substitute for sand and other materials used in construction operations, such as for road sub-base and pipe bedding materials. EPA’s view, however, is that since Universal Waste lamps would be considered D009 hazardous waste, glass produced as part of the recycling process is in the same hazardous waste treatability group as the initial universal waste lamps, and therefore, is subject to the Land Disposal Restrictions (LDR) for D009 –non-wastewaters. Thus, the glass must be tested to demonstrate compliance with the LDR standard of 0.025 mg/l for mercury using the TCLP test (designed to assess leachate in a landfill environment), before the glass can be used on land as a substitute for other products. While the glass from lamp recycling typically complies with the LDR standard, the additional regulatory process discourages the reuse of this glass as a substitute for raw natural resources.
If President Trump were truly interested in alleviating “unnecessary regulatory burdens placed on the American people”, EPA needs the resources to review specific regulations and identify those regulatory changes that will accomplish the President’s goals. Slashing EPA’s budget, before identifying and promulgating the regulatory changes, will likely result in missed opportunities for improving environmental regulations. Instead, massive reductions in staff and efforts to rescind many regulations without careful consideration will lead to mistakes and litigation, which is in no one’s interest. Businesses need certainty, and the approach outlined by President Trump’s Executive Orders will instead result in more confusion and uncertainty.
Posted on May 27, 2016
In 1991, Iowa passed a law prohibiting the delivery of yard waste to landfills. It was during a time when there was a general panic that landfills were filling up too fast. Twenty-two states have passed similar laws. They all saw it as a win-win: compost could be created and sold by the city and the landfills would last longer. A couple short decades later, several states have had second thoughts. In 2015, Iowa passed a law that allows certain landfills to start accepting delivery of yard waste. The reasoning is instructive.
Landfills contain a staggering amount of potential energy. The tires, paper products and plastic wastes, when burned for energy recovery, could light up a town. But the cost of getting the BTUs out of the waste doesn’t make economic sense – yet. There are exciting, new processes on the horizon that will have us mining that garbage for the energy sink it actually is, but that is still a ways off. One form of energy recovery that is economically viable, however, is methane recovery. As the garbage breaks down, it gives off methane gas that can be captured and burned. Many landfills across the country do this type of recovery and find it simple and profitable.
To effectively produce methane, however, garbage must degrade. The recycling push of the 80s and 90s took away the really good degradables from the waste stream – boxes, newspapers and yard waste were targeted as prime recyclables. The effect was that the best fuel for garbage degradation (and thus methane creation) was banned. Sure, it went towards the worthy goals of paper recycling and creation of high quality compost, but at what cost?
Iowa decided to look into that question. They considered the cost of producing compost from yard waste and compared it to the cost of recovering additional methane that would be made possible by returning the green gold of yard waste to the landfill degradation process. As it turns out, recycling loses.
The analysis turned on a number of factors:
· The cost of buying, maintaining and fueling the trucks, machinery and facility needed for composting would be eliminated resulting in a yearly savings of $2 million;
· Methane recovery would increase from the equivalent of powering 11,000 homes to powering 18,000 homes;
· According to a study commissioned by the city of Des Moines, annual greenhouse gas emission would be reduced by 11% and the landfilling option would provide more than three times the greenhouse gas benefit presented by composting.
Sierra Club is on record as opposing the trend (Georgia, Arkansas, Florida and Nebraska also now allow landfilling of yard waste) because it will result in landfills reaching capacity sooner. In the case of one Iowa landfill, its estimated life would be reduced from 2054 to 2052. Also, Sierra Club argues that more uncaptured greenhouse gases will be produced, but this seems to ignore the net savings from the other GHG reductions identified in the study.
I don’t have any idea whether returning yard waste to landfills is a net positive for the environment. As counterintuitive as it seems, it appears to hold promise. And if it does, where else might full cost accounting be used to guide environmental legislation? At least some states are asking the question - and I suspect more will follow.
Posted on November 2, 2015
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?
Posted on June 5, 2015
Earlier this week, the D.C. Circuit Court of Appeals rejected both industry and environmental group petitions challenging EPA’s determination of what is a solid waste in the context of Clean Air Act standards for incinerators and other combustion units. It wasn’t actually a difficult case, but it does provide a lesson for Congress. When the technical nature of EPA’s decisions was layered on top of the fundamental deference given EPA’s interpretation of the statute under Chevron, the petitioners were never going to prevail:
We afford great deference to EPA’s determinations based on technical matters within its area of expertise.
The crux of the environmental petitioners’ case was that certain of the materials, such as scrap tires, exempted by EPA from the definition of solid waste, are unambiguously “discarded” within the meaning of RCRA, so that EPA did not have discretion to exempt them. Unfortunately, as the Court noted:
the term “discarded” is “marked by the kind of ambiguity demanding resolution by the agency’s delegated lawmaking powers.”
In other words, given the current state of decrepitude of the non-delegation doctrine, when Congress enacts legislation using words as vague as “discarded”, it is essentially telling EPA to figure out what Congress meant to say. And when EPA does figure out what Congress meant to say, the Courts are not going to disturb EPA’s interpretation.
For those in Congress who don’t like the way EPA implements statutes for which it is responsible, they might learn a lesson from Pogo.
Posted on March 25, 2015
Those who have tried to keep up with the development of environmental law into the second decade of the 21st century will not be surprised, as others may be, by the attention now focused on reuse of soil. Uncounted millions of cubic yards of soil are moved each year in the New England region alone. Until very recently, in the absence of contamination above regulatory remediation standards, the excavation and reuse of soils was not subject to any environmental regulation at all.
Now with the pace of national economic activity rising, soil reuse is drawing the focused attention of State regulators in the northeast region and across the nation. EBC Nov 6, 2014 program. In particular, New Hampshire, Massachusetts, Connecticut and Vermont are all currently considering how to regulate soil reuse. In 2014, Massachusetts adopted a requirement for the development of a soil reuse policy by June 2015 and that effort is well underway.
While New Hampshire relies on a broad definition of “contamination,” it recognizes it lacks explicit legal authority to develop a full blown regulatory program for reuse of “mildly contaminated” soil. The current definition of contamination reaches, by its terms, any non-naturally occurring, regulated contaminant “that has the potential to adversely affect human health or the environment.” N.H. Env-Or 602.07.
In these circumstances, New Hampshire is currently regulating on a case by case basis, limiting receiving sites to soils that do not exceed natural background levels. Solid waste regulation can be avoided by an agency waiver, or reuse can be approved with an acceptable soil management plan and soil testing protocol. The New Hampshire agency is making efforts to respond to approval requests rapidly enough to avoid frustrating market driven transactions. It recognizes, as other regulators do, that construction projects may otherwise be forced to send lightly contaminated soil to landfills, depriving the region of essential landfill capacity, while increasing construction costs for little, if any, environmental benefit. For example, both New Hampshire and Massachusetts have recognized that unreclaimed gravel pits and quarries present potential hazards and risks of their own. They can be attractive nuisances that claim the lives of those who try to use them unwisely for recreation year after year and they can become repositories for discarded materials including stolen or abandoned vehicles. In short, they can be a locus of a range of community problems, if unattended. Rather than pay to send lightly contaminated soils to landfills, a better and more beneficial use could be found.
The States considering such new programs recognize that their efforts to impose environmental regulation on such a substantial volume of previously unregulated activity could well have unintended and unnecessary adverse consequences for both small and large scale redevelopment projects just as the economy is gaining strength. It must be undertaken in a manner that will not exacerbate other very significant potential problems. They are coordinating among themselves the planning and development of such regulation and giving serious consideration to designing methods that will likely bear the simplicity and efficiency of general permits. Legislative action will no doubt be necessary to authorize these new programs.
There is little question that as economic activity continues to increase, the States must establish consistent criteria setting forth the standards to be used in determining where mildly contaminated soils generated at construction projects and other developments can be disposed of at subsurface locations. Municipalities and the regulated community need to be educated about this process and engage with the regulators to ensure that the final standards are well-understood, easily implementable, and adequately ensure the environment is protected.
Posted on March 9, 2015
It is popular to grouse about how long it takes EPA to issue a rule these days. When I was at EPA in its formative years, we often went from proposal to final in just a few months. There are many reasons why the trek to final rule signing has now become so time-consuming. To name just one, advocates on all sides increasingly file lengthy comments covering technical, economic, and legal issues. And reviewing courts increasingly require EPA to fully explain its basis and purpose in response to all those comments.
While these types of delays are understandable, another type of delay is not. I am speaking of the lag between the rule’s signing by the Administrator and its publication in the Federal Register. You would think this ministerial act (the Federal Register Director isn’t authorized to re-write EPA’s rules) should be accomplished in four or five days. It almost always was when I was at EPA, and today it often is for other agencies. And sometimes these days, EPA’s signed rules get published in a few days.
But there are many exceptions, and a great example is now before us. Administrator McCarthy signed the RCRA “coal combustion residue” (CCR) final rule on December 19, 2014. It has yet to hit the Federal Register, and EPA staff announced on a recent webconference that they “hoped” it would by late March or early April. Other recent examples come to mind. The signed-to-published lag time for EPA’s 2012 CAA Oil & Gas NSPS/NESHAP rule was 121 days. The lag time for EPA’s 2014 CAA NSPS greenhouse gas (GHG) proposed rule was 110 days. It now looks like the RCRA CCR Rule will break 100.
What in the world is going on during these lengthy lag times? EPA staff will tell you that a document with numerous charts, tables, and graphs bamboozles the Federal Register people – even though the CFR has been replete with charts, tables and graphs for decades. EPA staff will also tell you (as they have for the CCR Rule) that they are fixing “typos.” But with 21st century software, can catching and correcting typos possibly take 100 days or more?
So why grouse about this? I am not suggesting that EPA staff might be making substantive, consequential changes to a final rule after the Administrator signs it. EPA does place the final rule on its Website immediately after the document is signed, so any “corrections” in the Federal Register version can be detected by a careful review. (It would be nice – for transparency’s sake – if EPA would make a practice of releasing a red-line showing exactly which “corrections” were made to the signed version during the 100+ days.)
And I am not grousing about the Federal Register publication delays per se. What bothers me is EPA’s frequent practice of refusing to release critical documents supporting the final rule – for instance, the Response to Comment (RTC) document – until the day the rule hits the Federal Register. It is this embargo – coupled with a long signed-to-published lag time – that hurts. During the recent webconference for the RCRA CCR Rule, for instance, EPA staffers made clear that the RTC and other support documents would not be released until the “hoped for” publication in late March or April.
For an agency (and Administration) that touts “transparency” at every turn, I cannot understand why EPA engages in this embargo practice. And sometimes (but not often enough), EPA does release these support documents before the rule is published in the Federal Register – so there is obviously no legal barrier to such a release.
Why should anyone care about such an embargo? As soon as a final rule is released, regulated entities often need to go into high gear to prepare for compliance. In these preparations, they need to be able to understand and interpret the rule’s provisions, many of which are often unclear or ambiguous. EPA’s RTC often provides interpretations and guidance far more lucidly than the rule’s preamble. One good example: in the RTC to EPA’s 2013 CAA “CISWI” rule, EPA provided a key interpretation of what types of activities would be deemed a “modification” triggering new source status. This interpretation appeared nowhere in the rule’s preamble and could hardly have been divined from the regulatory language. It is plainly unfair and contrary to principles of good government to hide this kind of interpretation from regulated parties for 100+ days when they are preparing for compliance.
Moreover, parties on all sides of a rulemaking (industry and public interest groups) need to begin evaluating judicial review options and theories as soon as they can after a final rule is signed. Why should they have to wait 100+ days for critical documents that are essential to their evaluation?
So dear EPA: PLEASE start releasing your RTC and other supporting documents at the same time you release your signed rule!
Posted on February 23, 2015
The exception from solid waste regulations for agricultural waste applied as fertilizer is a safe harbor that has boundaries based on use. In Community Ass’n for Restoration of the Environment, Inc. v. Cow Palace, LLC (E.D. Wa, 2015), facts evidencing over applied fertilizer and leaking storage lagoons, recently led a district court to a finding of possible imminent peril to public health, welfare or the environment under RCRA.
The court’s partial framing of the legal questions was telling:
(1) [W]hether the manure at the Dairy, when over-applied to land, stored in lagoons that leak, and managed on unlined, permeable soil surfaces, constitutes the “handling, storage, treatment, transportation, or disposal of . . . solid waste....”
Defendant’s useful product counterargument did not overcome its waste handling practices, which were deemed deficient by the court. The case is an excellent primer for the storage and handling of agricultural waste and the parameters for waste handling by large concentrated animal feeding operations (CAFOS). The proper methods and conditions for land applying the waste as fertilizer are also discussed.
Many large farm operations properly manage waste and its use as land applied fertilizer. In Cow Palace, the court reviewed federal law and the overlay of required nutrient management best practice plans applicable to Washington farms by state regulation. Natural Resource Conservation Service lagoon storage rules and RCRA open dump rules were also addressed.
Posted on December 1, 2014
Food is a big part of why Thanksgiving is my family’s favorite holiday. Over the years, we have tried to eat sensibly and sustainably, and to waste less food. But on the Monday after Thanksgiving, I suspect we are not alone as we contemplate the wilted salad, the wan sweet potatoes, and the last of the now not-so-attractive leftover turkey. Indeed, one recent study by NRDC estimated that Americans throw away 40% of their food.
In the last few years, declining capacities at conventional solid waste disposal facilities, combined with the realization that there are more beneficial things to do with food waste and other organics than to throw them in a landfill or burn them have led to partial food or organic waste bans in California, Connecticut, Massachusetts, Vermont, as well as in cities such as Seattle, San Francisco, and New York.
Of course, these ambitious waste segregation programs require that there be an alternative location to reuse or process these materials. Historically, organics have been transformed into compost or animal feed. Unfortunately, the volume of the waste stream is far in excess of what existing, generally small composting facilities can handle. Larger facilities that might be able to increase capacity are generally located far from urban and suburban centers that generate the waste. Many regulators have recognized the need to create an infrastructure to handle this material but a more comprehensive national program is needed if we are really going to stop throwing our food into landfills.
One of the most promising technologies to manage the large amount of organic waste generated near city centers is anaerobic digestion (“AD”). AD systems use anaerobic bacteria to break down organic matter into methane and carbon dioxide. The resulting methane can generate energy in place of traditional fossil fuels. A large-scale system might generate as much as 8-10 MW of electricity (enough to power 8-10,000 homes), while diverting thousands of tons of organics from landfills. And as a bonus, the residual materials can be used as compost or soil amendments. AD systems are well established at wastewater treatment plants and are emerging at certain large agricultural operations.
But there have not been many large scale AD systems designed to handle the anticipated flood of organics that will soon be separated from the general waste stream. Part of the problem may be one of raw material supply – a single large AD system may need hundreds of thousands of tons of segregated organic materials annually. The waste bans may help develop a reliable supply. Siting of these facilities presents other challenges. Some states, most notably Massachusetts have amended regulations to make it easier (though certainly not “easy”) to permit these facilities, at least on a state level. Hopefully other regulators will follow suit, allowing market forces to coalesce and expand what is now a nascent industry. Otherwise the organic material diverted from the solid waste stream by well-intentioned laws and rules will pile up in unpleasant ways.
Posted on October 15, 2014
Product Stewardship. It sounds friendlier than “Product Responsibility” or “Extended Producer Responsibility,” but it means the same thing: arranging for collection and recycling or disposal of unused or waste products. Mandatory in the European Union and the subject of aggressive national programs in Germany and a growing number of countries worldwide, the U.S. has continued its state-by-state approach promoting recycling – but for a growing number of products and in more and more jurisdictions.
We may have initially started with glass, paper, and metal in the 1970’s, but the range of products and materials covered is now broad: from batteries, tires, beverage containers, electronics, and tires, to carpets, mattresses, and paint. Pharmaceuticals may be in the offing. A new final rule from the U.S. Drug Enforcement Administration would allow voluntary drug collection options for retail pharmacies, drug distributors, and hospitals/clinics with an on-site pharmacy.
Of course, there is a “trade association” – the Product Stewardship Institute -- whose members are state and local governments and businesses and NGOs. According to PSI, two states -- California (my birth state) and Maine (my adopted state) -- lead the country with seven or more different types of programs for products. (To see how your state compares, see http://productstewardship.site-ym.com/?State_EPR_Laws_Map.)
Legislatively, some of these programs were developed on a product-by-product basis, but both California and Maine have adopted over-arching framework product stewardship laws or regulations allowing the addition of more products. And some municipalities aren’t being shy – the Ninth Circuit just upheld a 2012 ordinance from Alameda County, California requiring manufacturers to pay for collection and disposal of consumers’ unused medications.
Some of these programs are after-market recycling operations. Others are closer to product “take-back” requirements. The common features of these schemes are a deadline for a program submission (e.g., from a trade association and retailers), fees and potential cost-sharing, management regulations and limited government oversight, and proper recycling or disposal options. “Reverse distribution” options have been favored by some retailers, who benefit from the additional foot-traffic of potential shoppers – if they can stand the paperwork and regulatory burdens.
If you believe the literature, everyone is a winner: municipalities have less waste to manage thereby reducing their disposal costs; recycling and reclamation occur reducing energy and greenhouse gasses; wastes are properly managed; and coveted “green” jobs are created. Obviously, some costs are transferred to businesses in the short term (though as consumers or taxpayers, we all ultimately pay).
More than a few manufacturers and industries are on board. Some trade associations -- like the American Coatings Association -- have created non-profit organizations to promote and operate state programs. ACA has set up PaintCare Inc., a non-profit operating paint collection programs in seven states, with more to come.
In advising the Republic of Kazakhstan on possible product stewardship plans, our firm had occasion to consider “best in world” programs. By contrast to the U.S., the European Union has incorporated Extended Producer Responsibility into the E.U.’s Waste Framework Directive, 2008/98/EC. At this point, Germany is probably leading the E.U. through its Closed Substance Cycle Law (KrWG), intending to promote the “circular economy” by requiring products stewardship to be addressed during the design phase. The goal? Development, manufacture and marketing of products that are reusable, recyclable, durable and technically suitable for environmentally safe disposal. While the U.S. plays out these issues on a jurisdiction-by-jurisdiction and product-by-product basis, Germany is trying a very ambitious comprehensive, national approach. The German effort has run into the complicated realities of sharing collection costs among and between manufacturers and German state and local waste management programs. The country faces additional challenges of collecting and recycling automobiles and all packaging materials, two of the more interesting programs being implemented.
Don’t expect a national law in the U.S. anytime soon, but watch this Product Stewardship trend – it is one of the more interesting developments in environmentalism – and look around. What products will be next in your state? Or in your county? And yes, Kazakhstan is weighing adoption of an Extended Producer Responsibility law this fall.
Posted on July 29, 2014
In an Advanced Notice of Proposed Rulemaking (ANPRM) published in the July 17, 2014 Federal Register, EPA requests public input on reduction of emissions from existing municipal solid waste (MSW) landfills. “Landfill gas” (LFG) contains methane, carbon dioxide and nonmethane organic compounds (NMOC). NMOC includes various organic hazardous air pollutants and volatile organic compounds and was the focus of EPA’s initial landfill emission regulations in 1996. However, the current driver for EPA’s focus on this source category is the President’s Climate Action Plan and the March 2014 Strategy to Reduce Methane Emissions.
With respect to landfills, the Methane Strategy calls for EPA to update its rules to reduce emissions from new, modified, and reconstructed landfills; to explore options to reduce emissions from existing landfills; and to encourage energy recovery from LFG through voluntary programs. The ANPRM addresses the existing landfill component of the strategy. EPA notes that LFG is typically composed of roughly equal parts of methane and carbon dioxide and less than one percent of NMOC. Methane has a global warming potential 25 times greater than carbon dioxide and is also identified as a precursor to ground-level ozone.
MSW landfills are a source category for which EPA has issued new source performance standards (NSPS) under Section 111(b) and emission guidelines under Section 111(d) of the Clean Air Act. Both the NSPS and the emission guidelines were promulgated in 1996. The designated facilities to which the guidelines apply are existing MSW landfills for which construction, reconstruction or modification commenced before May 30, 1991. EPA required state plans to control MSW landfills of a certain size and NMOC emission rate if the landfill had accepted waste at any time since November 8, 1987, or had additional design capacity available for future waste deposition.
In the ANPRM, EPA states that it is not statutorily obligated to conduct review of emission guidelines but has the discretionary authority to do so when appropriate. Despite the focus on the methane strategy, the circumstances EPA identifies for making the review appropriate here are “changes in the landfills industry and changes in size, ownership, and age of landfills” since the emission guidelines were promulgated in 1996. The ANPRM states that any changes to the emission guidelines would apply to landfills that accepted waste after November 8, 1987, and that commenced construction, reconstruction or modification prior to the publication of proposed revisions to the landfill NSPS. Landfills currently subject to the 1996 NSPS would have to comply with those requirements as well as any more stringent requirements in the applicable revised state plan or federal plan implementing the revised Section 111(d) guidelines.
Among the topics on which EPA requests comment are the following: (1) extent to which reduction in methane emissions should be taken into account in revising the guidelines; (2) possible changes in the regulatory framework such as eliminating or reducing the design capacity threshold for applicability; (3) criteria and timing for capping or removing the landfill gas collection and control system (GCCS); (4) emission reduction techniques and GCCS best management practices; (5) alternative monitoring and reporting requirements; and (6) what constitutes sufficient LFG treatment, including use of LFG as fuel. Comments are due September 15, 2014.
Posted on February 3, 2014
Courts have long wrestled both with the survival of environmental claims in bankruptcy and with the proper prioritization of environmental claims within bankruptcy. In Munce’s Superior Petroleum Prods. v. N.H. Dep’t of Envtl. Servs., the First Circuit split with the Third Circuit over the prioritization of punitive fines for a company’s post-petition violation of environmental laws. In Pa. Dep’t of Envtl. Res. v. Tri-State Clinical Labs., Inc., the Third Circuit determined these to be general unsecured claims, but the First Circuit disagreed and gave the fines administrative expense priority ahead of unsecured creditors.
Tri-State Clinical Labs. involved a company that violated solid waste disposal laws by disposing of biological materials into the general trash. The company engaged in this conduct both before and after filing for bankruptcy, and the Pennsylvania Department of Environmental Resources (DER) assessed criminal fines for both the pre- and post-petition conduct. The parties agreed that the fines for the pre-petition violations were general unsecured claims, but DER contended the fines for the post-petition violations should be given administrative priority pursuant to 11 USCS § 503(b)(1)(A) (i.e., as “the actual, necessary costs and expenses of preserving the estate”). The court disagreed. First, the court looked to the specifically-itemized administrative expenses set forth in the statute, and determined, with the exception of fines related to taxes, they were all “compensation for services that are necessarily incident to the operation of a business.” The fines, being punitive in nature, were not compensation for services, and a company’s unlawful conduct is not a “necessary cost of doing business.” In addition, the specific inclusion of tax fines suggested Congress’ intent not to include any other type of “non-compensatory” penalties. Finally, the end result of granting a punitive fine administrative priority status would be the payment of that fine by innocent third parties (the unsecured creditors), not the debtor. The court contrasted its decision with a situation involving compensatory payments to the state for its work in cleaning up a contaminated site, which would have received administrative priority.
The court in Munce’s Superior Petroleum Prods. disagreed with this analysis. Munce’s Superior Petroleum Prods (MSPP) violated state environmental laws requiring secondary containment around its aboveground storage tanks. The New Hampshire Department of Environmental Services (DES) filed an action in court, seeking injunctive relief and civil penalties, and the court entered a consent preliminary injunction requiring MSPP to bring its tanks up to code or take them out of service. MSPP did not comply with the injunction, and DES filed a motion for contempt. MSPP then filed for bankruptcy. The state court stayed the DES action, but then lifted the stay on a finding that DES was “protecting public health and safety and the environment.” The state court then granted DES’ motion for contempt, ordered MSPP to take its tanks out of service and fined MSPP $1000 per day of noncompliance. MSPP still did not comply, and the court ultimately granted DES’ motion for $192,000 in fines.
The bankruptcy court assigned the $192,000 in fines administrative expense priority, and the First Circuit affirmed. The court first determined that the fines were for post-petition conduct (not complying with the contempt order), not for the pre-petition environmental violations that originally triggered DES’ lawsuit. Next, the court decided that “in light of today’s extensive environmental regulations, the payment of a fine for failing to comply with those regulations is a cost ordinarily incident to operation of a business.” Therefore, “fines for noncompliance post-petition with state environmental law” fall within 11 USCS § 503(b)(1)(A) and should be granted administrative expense priority.
Posted on June 28, 2013
A Third Circuit decision this month determined that offers of judgment pursuant to Fed.R.Civ.P. 68 may be made in attorney fee disputes in RCRA citizen suits (42 USC § 7002). In Interfaith Community Organization v. Honeywell International, Inc., 2013 WL 2397338 (C.A.3 (N.J.) Honeywell International (“Honeywell”) agreed to pay certain fees and costs in connection with Appellees Interfaith Community Organization and Hackensack River keeper’s monitoring costs in connection with Honeywell’s remediation of certain sites. A dispute arose as to Appellees’ counsel’s fee filings, and Honeywell served offers of judgment as to the disputed fees. Appellees contended that the offers were null and void in a RCRA citizen suit and prevailed on the issue below. The Third Circuit overturned the decision below.
The Third Circuit first addressed the argument that Rule 68 is incompatible with Congressional intent allowing RCRA citizen suits and is forbidden by the Rules Enabling Act, 28 US § 2072. That act prohibits the Supreme Court from adopting general rules of practice and procedure for cases in the US courts that abridge, enlarge or modify a substantive right. The Third Circuit found that Rule 68, in facilitating settlements, does not affect a litigant’s substantive rights even though a litigant may be faced with a hard choice. Being forced to make that choice does not abridge, enlarge or modify its substantive rights. The court found unpersuasive the appellees’ arguments attempting to distinguish a Supreme Court case that allowed Rule 68 in civil rights litigation involving fee shifting.
In the case below, the District Court had entered a judgment ordering Honeywell to remediate one area and Honeywell had entered into consent decrees agreeing to remediate additional areas. Appellees contended that Rule 68 cannot apply after a judgment has been rendered on liability. The Third Circuit disagreed and found that liability also included fees and costs, and they had not been determined in this case.
Given this decision (which also addresses issues other than Rule 68), it is likely RCRA citizen suit defense counsel will utilize the offer of judgment rule more often. However, there are numerous cases and articles detailing the perils of using the rule in the wrong case or in the wrong way. Counsel should pay close attention to those.
Posted on April 1, 2013
A group of Harvard law students has come up with a novel strategy to achieve more stringent regulation of firearms in the United States, namely environmental citizen suits.
Frustrated by the slow pace of Congressional efforts to strengthen regulation of firearms, this group of students has filed citizen suit notice letters against dozens of hunt clubs and firing ranges in the South and Midwest. The notice letters allege that the hunt clubs and their members:
• Violate the Clean Water Act by discharging pollutants from point sources over navigable waters without a permit
• Violate the Clean Air Act by emitting hazardous air pollutants without a permit
• Dispose of hazardous wastes, including lead and other heavy metals, without a RCRA disposal permit or compliance with the RCRA uniform waste manifest requirements
• Own and operate facilities where CERCLA hazardous substances are released into the environment; and
• Cause or contribute to the unpermitted disposal of solid waste.
This group of students, the Harvard Environmental Law & Litigation Society, is only recently organized, but they are clearly ambitious. One of the students, Angel Del Norte, who spoke on condition of anonymity, said, “We hope our efforts will blow some of those gun crazy deep South Bubbas out of the water.”
One of the targeted organizations, the Poteau Piscine Club in south Alabama, is working to organize a unified response to the citizen suit notices. The club’s President, Robert E. Lee (“Bobby”) Rhebop, stated in a press release that all of the organizations targeted in Alabama had agreed to contribute to a joint legal defense fund. Rhebop added, “If those pointy headed snot noses in Boston think they know something about guns, I can’t wait ‘til they see the business end of my .357. I’ll teach ‘em what a discharge from a real point source can do.”
Reaction has also spread rapidly in Texas. One of the targeted hunt clubs has persuaded their local legislator to introduce a bill in the state senate that would authorize Texas residents who attend Harvard to carry concealed weapons on the Harvard campus. As one proponent of the bill said “If we pass this sucker, I bet every Texan in Harvard will start getting straight A’s.”
To date no one from EPA has commented on the notice letters.
Posted on March 21, 2013
The EPA issued its long-awaited CISWI Rule in the Federal Register on February 7, 2013. 78 FR 9112. The final rule, entitled “Commercial and Industrial Solid Waste Incineration Units; Reconsideration and Final Amendments; Non-Hazardous Secondary Materials That Are Solid Waste,” contains the provisions in EPA’s 2011 rule, vacated in January 2012, that EPA agreed to reconsider. The 2011 final rule in turn superseded EPA’s 2000 CISWI rule. The new CISWI Rule amends 40 CFR part 60 subparts CCCC and DDDD and part 241. The amendments to 40 CFR part 60 subpart DDDD, along with certain incorporations by reference, were effective on the promulgation date; amendments to part 60 subpart CCCC are effective August 7, 2013, and those to 40 CFR part 241 are effective April 8, 2013.
In response to both the court’s vacatur of a Notice of Delay issued in 2011 and the numerous petitions for reconsideration and comments submitted by the regulated community and the public, the final rule includes three subcategories of ERUs (energy recovery units) and two subcategories for waste-burning kilns based on design-type differences, with separate carbon monoxide (CO) limits for the latter. Certain limits were also revised based on comments regarding the CO span methodology and on incorporation of additional data. The rule establishes stack testing and continuous monitoring requirements and allows for the use of continuous emissions monitoring systems (CEMS), setting levels based on a 3 hour block or 30-day rolling average (depending on the parameter and subcategory of CISWI).
The rule addresses and preserves a source’s choice to cease or start combusting solid waste at any time due to market conditions or other reasons, and to switch from one set of applicable emission standards to another pursuant to CAA section 112, thereby amending the original "once in always in" approach reflected in the earlier versions of this rule. This in turn will provide an incentive to the regulated community to continue operating incinerators.
The deadline for compliance with the CISWI Rule by existing sources depends primarily on when the state implementation plan incorporating the final rule is approved, with such approval required no later than five years after the February 7, 2013 Federal Register publication date. The effective date for new source compliance is August 7, 2013 or the date of startup, whichever date is later. New sources are defined as sources that began construction on or after June 4, 2010, or commenced reconstruction or modification after August 7, 2013.
Posted on March 12, 2012
Two recent South Carolina Supreme Court decisions have addressed significant environmental regulatory issues. In the Smith Land decision which dealt with state regulation of discharges into isolated wetlands (“waters of the State”), the court held that there is a private cause of action to enforce the provisions of the South Carolina Pollution Control Act (“PCA”)1. In the Sandlands decision which involved a certified question from the federal district court, the South Carolina Supreme Court held that the state’s Solid Waste Policy & Planning Act (“SWA”) did not preempt local government flow control2. Each of these issues has been addressed in prior blogs (1, 2), although the outcome of the certified question on the flow control matter had not yet been determined.
Several pieces of legislation pending in the South Carolina General Assembly respond to these decisions and the issues they address.
House Bill H.4654 and its companion Senate Bill S.1126 would amend the PCA to identify those activities which require, or do not require, a permit under the Smith Land decision. The bills also preclude a private cause of action to enforce the provisions of the PCA. The House version of the bill cleared the House Agriculture subcommittee and committee with overwhelming support and is now on the House calendar for consideration. These bills enjoy considerable support from the regulated community.
Two other bills address the question of whether state law preempts local government flow control following the Sandlands decision. Senate Bill S.514 and its companion House Bill H.4721 would amend the SWA to prohibit local ordinances that preclude solid waste disposal facilities, regardless of location. The House version has also cleared the House Agriculture subcommittee and committee with nearly unanimous support and is pending on the floor of the House for consideration.
In each instance, the General Assembly clearly appears to be reacting to the Smith Land and Sandlands decisions in an effort to give meaning to its legislative intent. Time will tell whether the proposed amendments will be enacted into law as the Legislature moves through its last year of a two-year Session.
1 Georgetown County League of Women Voters v. Smith Land Co., 393 S.C. 350, 713 S.E. 2d 287 (2011).
2 Sandlands C&D, LLC v. County of Horry, 394 S.C. 451, 716 S.E. 2d 280 (2011).
Posted on August 17, 2010
The most recent Supreme Court examination of the validity of solid waste flow control ordinances under the dormant Commerce Clause occurred in United Haulers Ass’n v. Oneida-Herkimer Solid Waste Management Authority, 550 U.S. 330 (2007). In United Haulers, the Court held that flow control ordinances which favor a state-created solid waste authority, but treat in-state and out-of-state private entities the same, ‘do not “discriminate against interstate commerce” for purposes of the dormant Commerce Clause.’ Id. at 345. In such case, the validity of a nondiscriminatory ordinance with an incidental effect on interstate commerce is analyzed under balancing test set forth in Pike v. Bruce Church, Inc., 397 U.S. 137, 142, 90 S.Ct. 844, 25 L.Ed.2d 174 (1970). Id. at 346. However, if the flow control ordinance favors a single private entity over other private entities, the holding in C & A Carbone, Inc. v. Clarkstown, 511 U.S. 383 (1994), controls. Id. at 341.
United Haulers has been the linchpin for local governments to launch flow control ordinances. However, although the United Haulers decision upheld the validity of a flow control ordinance against a commerce clause challenge, the decision was based on an ordinance that was expressly authorized by the New York legislature and which required the disposal of solid waste at a landfill operated by a solid waste authority created by the New York legislature. In United Haulers, the New York legislature enacted specific legislation which allowed Oneida and Herkimer Counties to “impose ‘appropriate and reasonable limitations on competition’ by, for instance, adopting ‘local laws requiring that all solid waste . . . be delivered to a specified solid waste management-resource recovery facility.’” Id. at 335. Additionally, the flow control ordinance in United Haulers directed that all waste in Oneida and Herkimer Counties be disposed of at the Oneida-Herkimer Solid Waste Management Authority (“Oneida-Herkimer Authority”), which was created by the New York legislature and was therefore a political subdivision of the state. Id. at 335. As such, under United Haulers, it is clear that a local flow control ordinance authorized by state legislation and directing solid waste to a public waste authority created by state legislation does not violate the commerce clause if it satisfies the Pike balancing test. It is likewise clear that a flow control ordinance which directs all solid waste generated within the boundaries of a local government to be directed to a privately-owned facility is still controlled by the holding in C & A Carbone, Inc. v. Clarkstown and invalid. 511 U.S. at 391. However, the United Haulers decision does not specifically address the significance of the authorization for the flow control ordinance by the New York legislature.
According to a 1995 EPA report to Congress, state legislatures in 35 states have expressly authorized the enactment of flow control ordinances by local governments. For those states in which flow control is not expressly authorized by the state legislature, it is unclear whether a flow control ordinance enacted by a subdivision of the state would withstand a commerce clause challenge. At the very least, the absence of state authorization for flow control measures may affect the analysis of certain elements under the Pike balancing test. Additionally, in states in which the state legislature has not expressly authorized the enactment of flow control ordinances by local governments, a local flow control ordinance could be preempted by state solid waste laws and therefore invalid even if it does not violate the commerce clause; thus, leaving open the question of whether or not United Haulers has opened the door forever on local flow control.
At least one frontal challenge to local flow control is pending in S.C. In Sandlands, LLC, et al. vs. Horry County, et al., Case No. 4:09-cv-01363-TLW-TER (currently pending in United States District Court in the District of South Carolina), a landfill and affiliated hauling company are challenging a county’s ability to restrict the exportation of waste to out-of-county landfills on commerce clause and preemption claims. The plaintiffs are attempting to distinguish United Haulers as well as arguing that the ordinance is preempted by State law. The impacts of the ordinance are being felt on disposal facilities in the region as the State has implemented a regional planning approach for siting disposal facilities. While the defendants removed the commerce clause question to federal court, the federal court has certified and the State Supreme Court has accepted the preemption question.
Posted on May 26, 2010
Last week, EPA’s Office of Solid Waste and Emergency Response announced release of its Community Engagement Implementation Plan. Who could be against community engagement? It’s as American as apple pie. It’s environmental justice. It’s community input into decisions that affect the community. It’s transparency and open decision-making.
Call me a curmudgeon, but I’m against it. Study after study shows that, in terms of the actual risks posed by Superfund sites, we devote too many of our environmental protection dollars to Superfund sites, when we should be focusing on air and water. Why do we keep doing this? Because the community demands it. As Peter Sandman has noted, perceptions of risk are driven only partly by the actual hazard posed. To a significant degree, those perceptions are more driven by outrage over the situation. In some circumstances, what Sandman calls outrage management makes sense, but I’m skeptical that EPA’s community engagement initiative is really about outrage management.
In any case, here’s the public policy question of the day. Does it really make sense to spend scarce environmental protection resources, not to reduce risk, but to reduce outrage?