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December 2012

D.C. Circuit Court Denies Request For Rehearing of Decision Upholding EPA GHG Emission Regulations

Sigel_Gabrielle_COLORBy Gabrielle Sigel

 

On December 20, 2012, the U.S. Court of Appeals for the D.C. Circuit voted to deny rehearing of a June 26, 2012 panel decision of that court, which had upheld a series of U.S. Environmental Protection Agency ("EPA") Clean Air Act regulations for control of greenhouse gas ("GHG") emissions from mobile and stationary sources. Coalition for Responsible Regulation v. EPA, No. 09-1322, U.S. Ct. App. D.C. Cir., on petition for rehearing en banc (12/20/2012). In a 6-2 decision, with two judges writing dissents, the D.C. Circuit court denied petitioners' request for rehearing. The statements of three D.C. Circuit judges supporting the panel's original decision and of the two judges who disagreed and voted to grant the rehearing provide a preview of the parties' arguments in opposition to and in favor of an appeal being heard by the U.S. Supreme Court, particularly with respect to EPA's permitting program for stationary sources.

In June 2012, a panel of the D.C. Circuit court had approved EPA's Clean Air Act ("CAA") GHG regulations. Coalition for Responsible Regulation v. EPA, No. 09-1322, U.S. Ct. App. D.C. Cir. (6/26/12). The case was before the court after several States, led by Virginia and Texas, and industry groups, including the U.S. Chamber of Commerce, had filed petitions with the appellate court in response to EPA's series of GHG regulations. Those regulations included EPA's finding that GHG emissions constitute a danger to public health and environment, regulation of emissions from mobile sources, and requiring permits for GHG emissions from stationary sources, limited to the largest sources of GHGs. The D.C. Circuit court panel of three judges upheld all of EPA's regulations in a unanimous per curiam decision. (Id.) (A more detailed explanation of the panel's decision can be found at the Corporate Environmental Lawyer blog entry, "Federal Appellate Court Gives U.S. EPA Greenhouse Gas Regulatory Victory," June 27, 2012.)

In response to the loss before the panel, several of the petitioners filed petitions with the D.C. Circuit court for rehearing en banc, i.e.,for a review of the case by all eight of the judges sitting on the D.C. Circuit court. Two judges voted to grant the en banc petitions and, in their statements supporting their dissent, they focused on EPA's regulation of stationary sources. The contested EPA regulations subjected GHG stationary source emissions to permitting under the CAA's Prevention of Significant Deterioration ("PSD") program for emission sources located in attainment areas. "Attainment" under the CAA applies to facilities that operate in areas of the U.S. whose ambient air conditions meet National Ambient Air Quality Standards ("NAAQS") for six regulated air pollutants. Even though GHGs are not a NAAQS-regulated pollutant, EPA interpreted the CAA requirements such that the PSD program applied to GHG emissions. Specifically, EPA interpreted the CAA's statutory trigger for PSD permitting - emission of "any regulated pollutant" - to apply to GHGs, not just NAAQS-regulated pollutants. Because the PSD program is triggered by emission levels that are relatively very low for GHG emissions (albeit relatively high when applied to emissions of NAAQS pollutants), EPA issued its Tailoring Rule, which modifies the CAA's statutory triggers for sources of GHG emissions. Under the Tailoring Rule, PSD requirements initially only apply to sources emitting GHGs of at least 75,000 or 100,000 tons per year ("tpy"), rather than the statutory levels of 100/250 tpy that are applied to the NAAQS pollutants. EPA justified its Tailoring Rule on three grounds: (1) implementing the CAA's tpy triggers for GHGs would lead to "absurd results" not intended by Congress; (2) the administrative burden that would otherwise be imposed; and (3) the agency's authority to implement statutory requirements over time. Rather than addressing the substance of EPA's bases for the Tailoring Rule, the Circuit Court held that neither industry nor State petitioners had standing to address the Tailoring Rule. Basically, the D.C. Circuit panel found that petitioners failed to show that the Tailoring Rule caused "injury in fact" or that vacating the rule would redress the injury.

The dissenting judges took issue primarily with the substance of EPA's decision to apply the PSD program to GHG emissions. In her statement dissenting from the denial of rehearing, Judge Brown began by lamenting the Supreme Court's 2007 decision, Massachusetts v. EPA, 549 U.S. 497 (2007), in which the Court decided that the CAA's regulation of pollutants from automobiles included GHGs, if EPA determined that such emissions endangered public health. Specifically, she "engages Massachusetts's interpretive shortcomings in the hope that either Court or Congress will restore order to the CAA." (Brown dissent, slip op. 2.) Judge Brown also explored her view that, even after Massachusetts, EPA is not entitled to apply the PSD program to GHG emissions. She notes that EPA itself recognized and promoted the "absurdity" of applying the CAA as written to GHG emissions, and finds that EPA does not have the power to "preempt legislative prerogatives", which repeatedly failed to regulate GHGs. (Id., 13.) She pronounced that "[t]he real absurdity is that this unprecedented expansion of regulatory control, this epic overreach, may very well do more damage to the well being of Americans than GHGs could ever do." (Id.) Judge Brown also relied on Supreme Court precedent under the "major questions" doctrine, Food & Drug Admin. v. Brown & Williamson Tobacco Corp., 529 U.S. 120 (2000), to urge that administrative agencies should not receive deference "on questions of great significance more properly resolved by the legislature." (Id., 14.) Finally, Judge Brown took issue with the panel's decision on standing, finding that petitioners' standing in this case was no more speculative than the petitioners' standing that the Supreme Court recognized as sufficient in Massachusetts. Judge Brown concluded, "In denying rehearing en banc, this Court has read Massachusetts to its illogical ends and it is American industry that will have to pay. That this Court did so is unsurprising, but certainly not fated." (Id., 22-23.)

Judge Kavanaugh, in his dissent, noted that "[t]his case is plainly one of exceptional importance…[with] massive real-world consequences." (Kavanaugh dissent, slip op. 1.) He reviewed the CAA's language and found that the CAA's PSD language should more logically and appropriately be interpreted to mean that it applied only to NAAQS pollutants and not to GHGs. He noted that this more "straightforward" interpretation avoided the "absurdities" that lead to EPA's Tailoring Rule. (Id., 6, 17.) Judge Kavanaugh concluded by finding that EPA's regulation of GHGs under the PSD program put "the bedrock underpinning of our system of separation of powers…at stake." (Id., 18.) Because "EPA went well beyond what Congress authorized for the [PSD] statute", it is the court's duty to enforce the statutory boundaries and require EPA to read the CAA in a manner that avoids its application to GHGs from stationary sources. (Id., 21.)

In response to the dissents, three Circuit court judges (Sentelle, Tatel, and Rogers) issued a statement in support of the denial of the en banc petition. They rejected Judge Brown's view that Massachusetts did not envision the far-reaching consequences leading to control of GHG emissions from stationary sources. They also disagreed with Judge Kavanaugh's limit of the PSD program to NAAQS pollutants, stating that "the panel's interpretation of the statute is the only plausible one." (Order denying pet. for rehrg., slip op. 3.) They agreed, however, with Judge Kavanaugh that separation of powers is an important issue, but found that "Congress spoke clearly, EPA fulfilled its statutory responsibilities, and the panel, playing its limited role, gave effect to the statute's plain meaning." (Id., 4.)

All of the judges issuing opinions in response to the petitions for en banc rehearing were speaking to the Supreme Court, which will decide whether to grant the expected petition for permission to appeal to that Court. The petition for writ of certiorari before the Supreme Court must be filed within 90 days after entry of judgment in the Circuit court.

U.S. EPA Finalizes Boiler MACT Rule

Siros_Steven_COLORBy Steven M. Siros

 

On December 20, 2012, U.S. EPA finalized air emissions regulations for boilers and incinerators. The new rules, which revised regulations originally promulgated but put on hold in 2011, drew praise from environmental groups and criticism from industry and trade associations. The new rules affect major sources (boilers with the potential to emit ten tons per year of any single air toxic or 25 tons per year of a combination of air toxics), area sources (boilers with a potential to emit less than 10 tons per year of any single air toxic or 25 tons per year of a combination of air toxics), and solid waste incinerators. Major sources have until 2016 to comply with the new rules; area sources must be in compliance by 2014; and incinerators have until 2018 to comply with the new rules.

For major sources and incinerators, the new rules are projected to result in higher emission reductions for certain pollutants (sulfur dioxide) but lower emission reductions for others (volatile organic compounds). The new rules create numerous boiler subcategories in an effort U.S. EPA said was intended to better numerical limits or work practices to particular boiler types  In fact, according to U.S. EPA, only 14% of the largest boilers will be subject to specific numerical emission limits, with the remaining 86% only needing to follow work practice standards to minimize toxic air emissions.

The compliance costs associated with these new standards are projected to be in excess of $2 billion, but U.S. EPA predicts that there will be a resulting health benefit of between $13 and $29 for each dollar spent to comply with the new rules.

The final rules are available at http://www.epa.gov/airquality/combustion/actions.html.


U.S. Appellate Court Defines Settling Parties' Rights to CERCLA Contribution and Cost Recovery

Sigel_Gabrielle_COLORBy Gabrielle Sigel

 

On December 19, 2012, the U.S. Court of Appeals for the Seventh Circuit issued a panel decision that clarifies the law within that Circuit on issues left unresolved after several U.S. Supreme Court's decisions interpreting certain provisions of the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9601, et seq. ("CERCLA"). In Bernstein v. Bankert, No. 11-1501 (U.S. Ct. App. 7th Cir., Dec. 19, 2012), the appellate court addressed the rights of parties, who settle with U.S. EPA, to pursue non-settling parties for payment of their costs. The court's decision revived CERCLA causes of action that a lower court had ruled were barred under CERCLA's statutes of limitations.

The Bernstein plaintiffs are trustees of a fund that had been established to pay costs of complying with two Administrative Orders on Consent ("AOCs") that potentially responsible parties ("PRPs") had signed with U.S. EPA ‒ one in 1999 and one in 2002 ‒ to address contamination of a property in Indiana known as Third Site. At Third Site, prior to 1982, the now defunct Environmental Chemical and Conservation Company ("Enviro-Chem") had conducted waste handling and disposal activities. The 1999 AOC, which had been executed by both de minimis and other PRPs, required an environmental investigation and engineering analysis at the Site and payment of government costs. In October 2002, U.S. EPA approved the settling parties' activities under that first AOC. In November 2002, U.S. EPA issued a second AOC, this one requiring PRPs to pay for the removal action that EPA selected for the Site. Although several PRPs paid into the trust established to fund the requirements of both AOCs, the alleged former individual owners of the Site ("the Bankerts"), their corporate entity Enviro-Chem, and their insurers did not pay.

In 2008, while the removal action was still ongoing, the trustees filed a complaint against the Bankerts in the Southern District of Indiana seeking CERCLA § 9607 cost recovery, a declaration of CERCLA liability, cost recovery under Indiana's Environmental Legal Actions statute ("ELA"), and recovery under other state law claims. In response to the Bankerts' summary judgment motion, the trial court first found that the trustees could not bring a § 9607 cost recovery claim, only a § 9613(f) contribution claim, and granted the Bankerts' motion for summary judgment on statute of limitations grounds with respect to the federal and state law claims, mooting claims for declaratory judgment and against the insurers. The trustee plaintffs appealed.

The appellate court first addressed the lower court's decision that the trustees could only bring a § 9613(f) contribution claim, and not a § 9607 cost recovery claim, each of which claim has a different statute of limitations. The court provided an overview of CERCLA rights of action, including when they can be triggered. The court found that "under the plain terms of the statute": (1) a person who has been sued under §§ 9606 or 9607 can bring a § 9613(f)(1) contribution action; (2) a person who has resolved liability to the federal or state government for all or some of its costs of a response action can bring a § 9613(f)(3)(B) contribution action; and (3) a person who does not fit into the qualifications for a contribution action, but still has incurred recoverable costs, can bring a § 9607 cost recovery action. (Slip op. 18-19.) The court then analyzed the trustees' rights under each of the AOCs individually, an approach which neither side had taken in their arguments before the court.

Specifically, the court first focused on the 1999 AOC, which it determined that U.S. EPA had approved as completed in October 2000. Thus, the court determined, in October 2000, the settling PRPs had resolved their liability to the government because the government's release of and covenants not to sue the settling PRPs only applied once the work was approved and completed. Because the settling PRPs had resolved their liability to the government, they could bring a contribution action under § 9613(f)(3)(B). The court rejected plaintiffs' claim to a § 9607 cost recovery action, even though they had sustained "necessary costs of response," holding that a plaintiff "is limited to a contribution remedy when one is available." (Slip op. 27.) However, the court then found that plaintiffs' contribution action, filed in 2008, was barred under CERCLA's statutes of limitations. The court did not, however, definitively determine which such statute applied. The Bankerts argued that the statute began running when the AOC was executed in 1999, based on CERCLA § 9613(g)(3), which provides a 3-year period to file contribution action after the signing of a de minimis settlement agreement.  Trustees accepted that argument with respect to de miminis parties' claims, but not with respect to the claims of other settling PRPs. The trustees argued that, because there is a "gap" in the statutory language with respect to non-de miminis parties' claims, the § 9613(g) statute of limitations applicable to § 9607 cost recovery actions should apply. The court found that under either approach, the statute had run prior to the 2008 court filing – either in 2002, 3 years after the AOC was signed, or in 2003, 3 years after the completion of the removal action required in the first AOC.

The court next found that because the work under the 2002 AOC was still continuing, plaintiffs had not yet triggered their release and covenant not to sue from the government. Because their liability to the government was not yet resolved, they could not bring a § 9613 contribution action. Because a contribution action was not available, and because they allegedly had incurred response costs, plaintiffs were able to bring a § 9607 cost recovery action. Because the removal action was not yet completed, the 3-year statute of limitations following the completion of a removal action had not yet begun to run. The court rejected the Bankerts' argument that those "compelled" to incur response costs could not recover under § 9607, finding that neither Supreme Court precedent nor other legal authority required that result. Therefore, plaintiffs could pursue a § 9607 cost recovery action and a declaratory judgment action for costs incurred under the 2002 AOC. The court noted, however, that plaintiffs may not be able to impose joint and several liability because, based on the Supreme Court's decision in Burlington N. and Santa Fe Ry. Co. v. U.S., 556 U.S. 599 (2009), the Bankerts may be able to show a "reasonable basis for apportionment" of their liability. (Slip op. 37.)

The appellate court also found that Indiana's 10-year catch-all statute of limitations applied to the ELA claim and that the statute applies separately to each of the separate AOCs, because each had a separate obligation to pay and, hence, a separate "injury" for statute of limitations purposes, even though both AOCs, as well as prior orders issued by U.S. EPA, pertain to the same Site. In reaching this conclusion, the court rejected the Bankerts' request to certify questions about the state statute of limitations to the Indiana Supreme Court for decision.

Finally, the court found that the Bankerts' insurer was not entitled to summary judgment with respect to its coverge obligations for the Third Site. The insurer previously had won a defense to coverage with respect to a different Enviro-Chem site, and had sought to bar coverage here on claim preclusion or issue preclusion grounds. The court found that the facts concerning the Third Site were distinct so that the trial court needed to separately consider the insurer's coverage obligations at that site.

The Bernstein decision resulted in several important CERCLA and related holdings that, unless modified upon rehearing or en banc or by the Supreme Court, will govern environmental litigation within the Seventh Circuit. Those holdings include:

  • A PRP who qualifies for a CERCLA § 9613(f) contribution action must use that cause of action to recover costs from other PRPs, and cannot use a CERCLA § 9607 cost recovery action.
  • Each government settlement agreement at a single site invokes a distinct payment obligation, each of which can be the basis for a CERCLA cause of action and, therefore, a new running of the applicable statute of limitations.
  • A PRP's right to bring a CERCLA § 9613(f)(3)(B) contribution action in response to its settlement with the government is not triggered unless and until the government issues a final release of the PRP's liability, typically upon acceptance of all work under the settlement agreement. Until that time, a PRP seeking to recover costs of response can only proceed under § 9607.
  • A PRP who executed a settlement with the government and who was "compelled" to pay response costs is entitled to proceed under § 9607; however, that plaintiff PRP will not be able to impose joint and several liability if the defendant PRPR can prove a reasonable basis for apportioning liability.

U.S. DOT May Seek More NEPA Categorical Exclusions

Grayson_Lynn_COLORBy E. Lynn Grayson

 

State and local transportation agencies are seeking the creation of 266 categorical exclusions (CEs) under NEPA to expedite new transportation-related projects. A new report, U.S. Department of Transportation National Environmental Policy Act Categorical Exclusion Survey Review, concludes that CEs are key to any environmental streamlining strategy.

CE means a category of actions which do not individually or cumulatively have significant environmental effects. CEs, if available, avoid costly and time-consuming environmental assessments or environmental impact statements under NEPA.

The report includes a listing of the types of actions for which new CEs may be sought:

  • safety and operations;
  • maintenance and preservation actions;
  • bridges;
  • activities within existing right-of-way or urban areas;
  • railroads;
  • transit;
  • rehabilitation and reconstruction;
  • environmental mitigation;
  • bicycle and pedestrian facilities;
  • utilities, lighting, and signage;
  • actions consistent with existing plans or land use and those approved by other agencies;
  • culverts and waterways;
  • acquisitions;
  • excess right-of-way;
  • activities with limited federal involvement/funding;
  • activities under a certain size/cost threshold;
  • alternative energy;
  • parking;
  • geotechnical work;
  • aesthetic treatments;
  • ferries; and
  • other.

The report said the Federal Highway Administration and the Federal Transit Authority "will evaluate and determine which of these requested CEs are not otherwise duplicative, meet regulatory requirements and can be substantiated" as recommended by the Council on Environmental Quality's NEPA guidance. The department will then issue a notice of proposed rulemaking containing a description of each proposed new CE and requesting public comments.

The report, U.S. Department of Transportation National Environmental Policy Act Categorical Exclusion Survey Review, is available at http://www.fhwa.dot.gov/MAP21/sec1318report.pdf.


New Guide For Safer Chemicals Released

Grayson_Lynn_COLORBy E. Lynn Grayson

 

The Guide to Safer Chemicals (Guide) was released today by a broad coalition of groups working to replace chemicals of high concern with safer alternatives. This first-of-its kind tool sets benchmarks for how manufacturers, retailers and purchasers can track their progress to using chemicals in products that are safer for human health and the environment.

"This practical, easy-to-use guide is intended to revolutionize the way companies are able to move away from hazardous chemicals and replace them with safer alternatives," said Dr. Mark Rossi, Co-Chair of BizNGO and lead author of The Guide." Today's business leaders recognize that comprehensive programs for safer chemicals are essential to innovation, informed decisions, and clear communication with suppliers."

Every week new scientific research links exposure to chemicals of high concern in products to the increasing incidence of serious chronic health problems, including asthma, childhood cancers, infertility and learning and development disabilities. The uncertainty surrounding the safety of chemicals is eroding consumer confidence in a wide range of products.

The Guide is a how-to-resource for implementing the visionary BizNGO Principles for Safer Chemicals, which are: 1) Know & Disclose Product Chemistry; 2) Assess & Avoid Hazards; 3) Commit to Continuous Improvement; & 4) Support Public Policies & Industry Standards.

The Guide is a practical tool for all downstream users of chemicals (purchasers, retailers and product manufacturers) to benchmark their progress toward safer chemicals use. A simple hiking analogy of four benchmarks—Trailhead, Base Camp, High Camp and Summit—illustrates a company's progress in implementing the Principles.

Based on industry best practices, the BizNGO Principles set the following four goals:

#1: Know and Disclose Product Chemistry: Companies need to know the chemicals in their products and supply chains and set goals to disclose this information to the public.

#2: Assess and Avoid Hazards: Once companies or suppliers know the chemicals in their products or processes, they evaluate them, identify chemicals of high concern, and implement programs to substitute chemicals of high concern with safer alternatives. Buyers work with suppliers to implement this principle.

#3: Commit to Continuous Improvement: Companies set goals and publicly report on their progress to achieving these goals, which include endorsing the four BizNGO Principles and establishing a corporate chemicals policy.

#4: Support Public Policies and Industry Standards: Companies advance the implementation of the above principles in public policies and industry standards. Goals include: Publicly presenting their work on implementing the principles; Integrating implementation of the principles into industry standards and other voluntary initiatives; Collaborating with NGOs on implementing the principles; and Engaging in public policies – regulations and legislation – that support implementing the principles.

The Guide was released today at the 7th annual meeting of BizNGO, a coalition formed in 2006 that includes over 500 leaders from businesses, non-governmental organizations (NGOs), universities, and government agencies. Some of the companies that have endorsed the BizNGO Principles include: Staples, Hewlett-Packard, Dignity Health, Kaiser Permanente, Construction Specialties, Novation, Perkins+Will, Shaw Industries, Seventh Generation, Method, and Premier. Some of the endorsing NGO's include: Health Care Without Harm, Center for Environmental Health, Breast Cancer Fund, Ecology Center, Clean Water Action, Clean Production Action, and Health Building Network.

For more information about The Guide and the work of BizNGO, visit the website at http://www.bizngo.org/.


Court Finds That Environmental Documents Obtained From Public Agency Protected By Work Product Privilege

Siros_Steven_COLORBy Steven M. Siros

 

In an environmental coverage dispute, a New York federal judge recently ruled that information obtained by an insurance company from governmental agencies was protected work product and need not be disclosed in discovery. In the matter of Travelers Indemnity Co., et al. v. Northrop Grumman Corp., Northrop sought communications between its insurers and various agencies, including U.S. EPA, the Navy, and the New York Department of Environmental Conservation. Northrop's insurers argued that these materials were protected from disclosure under the attorney-client and work product privileges, likening these materials to the materials selected by an attorney in preparation for a deposition.

The court agreed, finding that information received from these public agencies after the insurers' declination of coverage fell "within the ambit of what the case law clearly indicates reflects the attorneys' work product: the documents were selected pursuant to instructions of counsel."  The court also refused to order the insurers to disclose the identity of persons interviewed unless those persons were interviewed prior to the insurers' declination of coverage.

To see a copy of the order, click here.


CERCLA BFPP Protections Applicable To Certain Tenants

Grayson_Lynn_COLORBy E. Lynn Grayson

 

EPA has released new CERCLA guidance confirming that certain tenants who lease contaminated or formerly contaminated properties may be entitled to self implementing bona fide prospective purchaser liability protections.

Section 107(a)(1) of CERCLA provides that "the owner and operator of a vessel or facility ... from which there is a release, or a threatened release which causes the incurrence of response costs, of a hazardous substance, shall be liable for ... (A) all costs of removal or remedial action incurred by the United States Government ... ." Thus, without liability protection, an owner or operator of contaminated property is a potentially liable party under CERCLA. Section 107(r)(1) of CERCLA provides statutory liability protection for certain owners or operators of property, called bona fide prospective purchasers or "BFPPs." CERCLA § 107(r)(1) states:

Notwithstanding subsection (a)(1) of this section, a bona fide prospective purchaser whose potential liability for a release or threatened release is based solely on the purchaser's being considered to be an owner or operator of a facility shall not be liable as long as the bona fide prospective purchaser does not impede the performance of a response action or natural resource restoration.

In general terms, CERCLA § 101(40)(A)-(H) defines a BFPP as "a person (or a tenant of a person) that aquires ownership of a facility after [January 11, 2002]" and that establishes that: 

  • all disposal of hazardous substances at the facility occurred prior to acquisition;
  • the person conducted all appropriate inquiry (AAI) into the previous ownership and uses of the facility;
  • the person provides legally required notices;
  • the person takes reasonable steps with respect to hazardous substance releases;
  • the person provides cooperation, assistance, and access;
  • the person complies with land use restrictions and institutional controls;
  • the person complies with information requests and administrative subpoenas; and
  • the person is not potentially liable for response costs at the facility or "affiliated" with any such person.

In its updated guidance, EPA confirms: 1) a tenant may derive BFPP status from an owner who satisfies the BFPP criteria; or, 2) EPA may exercise its enforcement discretion to treat the tenant as a BFPP, assuming BFPP criteria are met.

The statutory protection found at CERCLA § 107(r)(l) is self-implementing and the EPA generally will not be involved with facility-specific transactions or determinations of BFP status.

Three new model letters addressing site-specific "comfort" or status letters for tenants involved in renewable energy projects on contaminated properties also are available including:

  • model federal Superfund interest and no current federal Superfund interest comfort/status letter;
  • a model based on no previous federal interest comfort/status letter; and,
  • a model state action comfort/status letter.

For more information or questions about this guidance, please contact Susan Boushell at 202-564-2173 (boushell.susan@epa.gov) or James Miles at 202-564-5161 (miles.james@epa.gov) in the Office of Enforcement and Compliance Assurance, or Brigid Lowery at 202-566-0198 (lowery.brigid@epa.gov) in the Office of Solid Waste and Emergency Response.

For a listing of the available tools and policies, including the EPA's policy on the issuance of comfort letters, see: http://cfpub.epa.gov/compliance/resources/policies/cleanup/superfund/.


U.S. EPA Throws Supreme Court A Curveball By Issuing Final Logging Rule The Day Before Oral Argument

Siros_Steven_COLORBy Steven M. Siros

 

On December 3, 2012, the U.S. Supreme Court heard oral arguments in the consolidated cases of Decker v. Northwest Environmental Defense Center and Georgia Pacific v. Northwest Environmental Defense Fund Center. At issue in both of these cases is the Ninth Circuit's 2010 decision that found that channelized storm water from logging roads that eventually flows into streams and rivers requires a NPDES permit under the Clean Water Act ("CWA").

There were three basic issues that were expected to be argued before the Court:

  • Does the CWA allow the respondents (hereinafter, "NEDC") to challenge the validity of the Silvaculture Rule more than 30 years after it was finalized?
  • Was the Silvaculture Rule, which defines logging roads as nonpoint sources, an appropriate exercise of U.S. EPA discretion in light of the specific statutory language in the CWA?
  • Did U.S. EPA appropriately exclude logging from the industrial activity category which requires storm water discharge permits?

In order to prevail, NEDC would need to prevail on each of these three questions.

Interestingly, on the Friday before the Monday oral argument, U.S. EPA threw the parties a curve ball when it issued a final rule revising 40 CFR 122.26(b)(14)(ii) to clarify that storm water discharges associated with logging roads do not require storm water discharge permits. The final rule and website notice specifically refers to the Ninth Circuit's decision, noting that the rule is intended to address the uncertainty created by the Ninth Circuit's holding and to clarify U.S. EPA's intent that these logging roads are not subject to the Section 402 NPDES permitting framework.

Not surprisingly, the new rule dominated oral argument with Chief Justice Roberts starting things off by congratulating petitioners on "getting almost all the relief they're looking for under the new rule issued on Friday." Timothy Bishop, arguing on behalf of the petitioners, attempted to convince the Court that it should still decide the merits of the case. Mr. Bishop argued that the issue of whether U.S. EPA could properly exclude logging activities from the definition of activities associated with industrial activity was an issue that had been briefed and could be decide by the Court. The Court seemed less sure, with Justice Kagan noting that the question had not been decided by the Ninth Circuit and asking if it "would be good practice to decide this issue without any briefing on it and without a decision below".

The Court seemed inclined to vacate the Ninth Circuit's decision in light of the newly issued U.S. EPA rule but posed a number of questions as to what would happen if the Ninth Circuit decision were allowed to stand. Mr. Bishop explained that his clients were concerned that respondents might continue to seek attorneys' fees and penalties as prevailing parties if the Ninth Circuit decision were allowed to stand. Several justices seemed concerned over that potential scenario.

When it came time for the United States to present its amicus argument, Deputy Solicitor General Malcolm Stewart was peppered with questions from the justices as to why he had not notified the Court that U.S. EPA would be issuing its final rule the Friday before a Monday oral argument. The Deputy Solicitor General insisted he had just learned about the final rule on Friday and had immediately notified both parties. The Court did not appear satisfied with that explanation, with Chief Justice Roberts noting that "there were 875 pages on the merit briefing in this case, and if we knew that the final rule was imminent, we could have rescheduled the case for April or something along those lines."

With respect to the merits of the case, the Deputy Solicitor General expressed his view that the final rule rendered this matter moot (which would require dismissal of the case and presumably vacation of the Ninth Circuit opinion). In response to questions from the Court, the Deputy Solicitor General expressed his view that respondents would not be prevailing parties and therefore should not be entitled to attorneys' fees nor should petitioners be subject to civil penalties for past violations.

On behalf of respondents, Jeffrey Fisher started his argument by asking the Court to dismiss the petition for certiorari as having been improvidently granted. Mr. Fisher reminded the Court that the case was interlocutory in nature having reached the Court on the Ninth Circuit's reversal of the District Court's decision to dismiss the case under Rule 12(b)(6).

The effect if the Court were to dismiss the petition as having been improperly granted is somewhat unclear. Mr. Fisher apparently believes that the case would go back before the Ninth Circuit although it would seem that the effect of dismissal of the petition would be that the case would go back to the District Court. Clearly, petitioners seek to preserve the Ninth Circuit's decision holding that discharges from logging road that are channeled through ditches are point source discharges. Petitioners would then be free to mount a challenge to U.S. EPA's storm-water regulations without having to re-litigate the issue as to whether these discharges are in fact point sources. However, it appeared that several of the justices were uncomfortable with allowing the Ninth Circuit opinion to stand.

It will be interesting to see how the Court reacts to U.S. EPA's newly issued final rule which clearly was intended to provide the Court with a convenient excuse to avoid ruling on the merits of this case (which is really the position that had been urged by the United States in the first instance when it argued that the certiorari petition shouldn't be granted). An opinion is expected to be issued sometime next year. To view a transcript of the oral argument, please click here.