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August 2013

Federal Appellate Court Rules That The Clean Air Act Does Not Preempt State Common Law Claims

Torrence_Allison_COLORBy Allison A. Torrence

 

On August, 20, 2013, the U.S. Court of Appeals for the Third Circuit issued a ruling reversing dismissal of common law claims brought by a group of residents who live near a coal-fired power plant in Springdale, Pennsylvania. Bell v. Cheswick Generating Station, No. 12-4216 (Aug. 20, 2013). The residents are complaining that ash and other contaminants from the power plant owned by GenOn Power Midwest, L.P. ("GenOn") have settled onto their properties, covering them with black dust and causing harmful and noxious odors. The residents allege claims under the state common law theories of nuisance, negligence and trespass. GenOn argued that the federal Clean Air Act preempted state common law with regard to its power plant because the power plant is subject to a comprehensive regulatory scheme, including air pollution permits.

The trial court agreed with GenOn's arguments and granted dismissal of the residents' claims. On appeal, the Third Circuit evaluated the language of the Clean Air Act and prior precedent of the U.S. Supreme Court (International Paper Co. v. Ouellette, 479 U.S. 481 (1987)), which held that the Clean Water Act did not preempt certain state common law claims related to water pollution. The statutory language at issue are the two "savings clauses" in the Clean Air Act:

Nothing in this section shall restrict any right which any person (or class of persons) may have under any statute or common law to seek enforcement of any emission standard or limitation or to seek any other relief…

42 U.S.C. § 7604(e).

Except as otherwise provided…nothing in this chapter shall preclude or deny the right of any State or political subdivision thereof to adopt or enforce (1) any standard or limitation respecting emissions of air pollutants or (2) any requirement respecting control or abatement of air pollution…

42 U.S.C. § 7416.

The Third Circuit held that the savings clauses in the Clean Air Act were substantially similar to the savings clauses in the Clean Water Act, which the Supreme Court had held preserved certain state law tort actions. Thus, "[g]iven that we find no meaningful difference between the Clean Water Act and the Clean Air Act for the purposes of our preemption analysis, we conclude that the Supreme Court's decision in Ouellette controls this case, and thus, the Clean Air Act does not preempt state common law claims based on the law of the state where the source of the pollution is located." Bell, slip op. at 20.

The Third Circuit also rejected GenOn's public policy argument – that allowing state common law claims in this case would undermine the regulatory framework established between the federal government and the states under the Clean Air Act. The Third Circuit rejected this argument by again citing the Supreme Court's reasoning in Ouellette. The court stated that the requirements placed on pollution sources under the Clean Water Act (and by analogy the Clean Air Act) ware a "regulatory floor", and thus states are free to impose higher standards, including through common law tort actions. The Third Circuit also distinguished the present case from the Supreme Court's recent decision in American Electric Power Co. ("AEP") v. Connecticut, 131 S. Ct. 2527 (2011), in which the Supreme Court held that the Clean Air Act displaced federal common law rights to seek abatement of carbon-dioxide emissions from power plants. However, the Supreme Court left open the question of whether the Clean Air Act preempted state common law. A question answered in the negative by the Third Circuit.

This decision will likely be seen as a boon to plaintiffs seeking common law claims against regulated industry. Indeed, under this ruling, a power plant or other emission source could be in full compliance with all requirements imposed under the Clean Air Act, but still face litigation due to nuisance or other common law claims allegedly caused by its emissions. In particular, because the court specifically referenced and distinguished AEP v. Connecticut, environmentalists will likely point to this new decision to bolster common law lawsuits related to greenhouse gas emissions and climate change.

A copy of the Third Circuit's opinion is available here.


Environmental Groups Petition IJC About Sulfide Mining Impacts On Great Lakes

Grayson_Lynn_COLORBy E. Lynn Grayson

 

At least 40 environmental groups have petitioned the International Joint Commission (IJC) to evaluate the water-related impacts from sulfide mining exploration and development within the Rainy River and Lake Superior Basins. In their petition, the groups request that the IJC make recommendations to assist governmental bodies in the U.S. and Canada in ensuring Article IV of the Boundary Waters Treaty of 1909 is honored.

The Boundary Waters Treaty of 1909 provides the principles and mechanisms to resolve and prevent disputes, particularly those concerning water quantity and quality, along the boundary between Canada and the United States. Article IV of the Treaty states, "It is further agreed that the waters herein defined as boundary waters and waters flowing across the boundary shall not be polluted on either side to the injury of health or property on the other."

Sulfide mining is the mining of metals, such as copper, lead, nickel, gold and zinc, when these metals are embedded in a sulfide ore body. It may also be known in some contexts as "non-ferrous" or "hardrock" mining. In recent years, the lands surrounding Lake Superior and within the Rainy River Watershed in Minnesota, Wisconsin, Michigan and Ontario have experienced increasing sulfide mineral exploration and development. This form of mining has a history of severe and long-lasting water pollution associated with it in the United States and Canada as well as other locations around the world.

According to petitioners, "… The expansion of sulfide mining across the region, the pollution history of this industry, and the lack of a strong regulatory framework, highlight the pressing need for an assessment of these activities' impacts on the region's water resources. We request that the Commission proceed with this analysis and recommendation development as expeditiously as practical."

Canada and the United States created the International Joint Commission because they recognized that each country is affected by the other's actions in lake and river systems along the border. The two countries cooperate to manage these waters wisely and to protect them for the benefit of today's citizens and future generations.

The IJC is guided by the Boundary Waters Treaty, signed by Canada and the United States in 1909. The treaty provides general principles, rather than detailed prescriptions, for preventing and resolving disputes over waters shared between the two countries and for settling other transboundary issues. The specific application of these principles is decided on a case-by-case basis.

The IJC has two main responsibilities: regulating shared water uses and investigating transboundary issues and recommending solutions. The IJC's recommendations and decisions take into account the needs of a wide range of water uses, including drinking water, commercial shipping, hydroelectric power generation, agriculture, industry, fishing, recreational boating and shoreline property.

For more information, visit http://www.ijc.org.

 


Another Federal Circuit Adopts Five-Year Limit On NSR Enforcement Actions

Siros_Steven_COLORBy Steven M. Siros

 

The U.S. Court of Appeals for the Third Circuit recently joined the Seventh, Eighth, and Eleventh Circuits in finding that U.S. EPA is required to bring New Source Review (NSR) enforcement proceedings within five years of the alleged violation. On August 21, 2013, in United States of America, et al. v. EME Homer City Generation, LP, the court dismissed an enforcement proceeding brought by U.S. EPA against the owners of a coal-fired power plant for failing to have obtained an NSR permit for modifications that were made over a decade ago.

Although U.S. EPA acknowledged that its current enforcement proceeding was filed more than five years after the plant modifications were made, it argued that a new violation occurred each day that the plant operated without a valid NSR permit. The court rejected this argument, noting that nothing in the text of the NSR rules required the facility to obtain an NSR permit to "operate".  Rather, the court noted that the operative language of the Clean Air Act required that a permit be obtained prior to "construction" and/or "modification" of a facility.  As such, according to the Third Circuit, enforcement actions premised on a failure to have obtained such a permit must be brought within five years of plant construction and/or modification.  The court also rejected U.S. EPA's policy arguments that such a ruling would impair U.S. EPA's ability to enforce the Clean Air Act, finding that when "more than five years have passed since the end of construction and the facility has been taken over by new owners and operators, the Clean Air Act protects their reasonable investment expectations." 


Attorneys General Support Keystone Pipeline

Grayson_Lynn_COLORBy E. Lynn Grayson

 

The U.S. Department of State is reviewing the Presidential Permit application relating to the expansion of the Keystone Pipeline project. In a petition forwarded to Secretary of State John Kerry on August 9, 2013, twenty-one state attorneys general have supported the pipeline and urged him to recommend issuance of the permit for TransCanada Corporation's proposed Keystone XL crude oil pipeline.

The attorneys general believe the pipeline will bolster the nation's economy, modernize the country's energy infrastructure and strengthen our national security. The petition was supported by the Attorneys General from the following states: ND; MO; AL; AK; AZ; CO; FL; GA; ID; IN; KS; LA; MI; MT; OH; OK; SC; SD; UT; VA; and WVa.

Environmental Group Ordered To Pay Disney’s Attorneys’ Fees For Filing Baseless Reverse False Claims Act Lawsuit

Siros_Steven_COLORBy Steven M. Siros

 

In the latest saga of what has become a long running dispute between plaintiff RBC Four Co. LLC ("RBC") and the Walt Disney Company ("Disney"), a federal district court judge dismissed RBC's reverse False Claims Act allegations and ordered RBC to reimburse Disney for its attorneys' fees incurred in defending what the court determined to be baseless claims. According to the RBC complaint, since at least 1991, Disney has dumped dangerous chemicals into the waters surrounding its Burbank, California studios. In 1991, U.S. EPA sent Disney an information request seeking information relating to contamination at a Superfund Site in the San Fernando Valley and Disney was alleged to have responded to U.S. EPA with misleading statements and/or documents concerning its handling of hazardous materials at the Burbank site.  In its complaint, RBC argues that Disney's misleading response to U.S. EPA's information request and other information it provided to regulators over the past decade constituted efforts by Disney to avoid payment of obligations owed to the Government pursuant to various environmental laws and regulations, including the Clean Water Act and CERCLA.

The court found RBC's complaint to be devoid of any facts showing a particular legal obligation that Disney avoided by making allegedly false representations to the Government. In support of its decision to dismiss RBC's complaint without leave to replead, the court noted that the type of "obligations" that might give rise to a reverse False Claims Act claim do not extend to potential liabilities under an environmental statute as alleged by plaintiffs.

In ruling on Disney's request for sanctions, the court found that RBC's claims were "legally baseless from an objective perspective and cannot have been the product of competent inquiry." The court further noted that this was the fourth qui tam action that RBC (or one of its affiliates) had brought against Disney and is one of 12 actions that had been filed against Disney since 2007. Each of these actions has arisen out of the same or similar facts and several of those claims had been dismissed with prejudice. Although the court declined to designate RBC as a "vexatious litigant" as requested by Disney, the court noted that the record reflected that RBC had engaged in a pattern of duplicative and excessive litigation against Disney, suggesting that such a designation might be appropriate if future claims were filed. The court also ordered RBC to pay Disney's attorneys' fees and costs in defending the litigation. Please click here to see a copy of the court's order.


New Report Concludes No Material GHG Emissions From Keystone XL Pipeline

Grayson_Lynn_COLORBy E. Lynn Grayson

 

In the recent debate surrounding the pending Keystone XL pipeline decision, new questions have been raised about the pipeline's potential impact on greenhouse gas (GHG) emissions. President Barack Obama has indicated that the relative emissions related to increased Canadian oil sands processing in US markets (resulting from the Keystone XL project) are a key criteria for the US Administration's decision. The conclusion of IHS CERA's analysis is that incremental GHG emissions from the pipeline would not be substantial.

A new report prepared by IHS CERA concludes:

  1. The Keystone XL decision is a market share decision between Canada and other imported heavy oil supplies, particularly those from Venezuela.
  2. Even if the Keystone XL pipeline does not move forward, we (IHS CERA) do not expect a material change to oil sands production growth.

IHS CERA essentially agreed with the conclusions of the State Department in a draft environmental impact statement issued earlier this year, which concluded that any one project—including the Keystone XL pipeline—was unlikely to have a significant impact on Canadian oil sands development or US dependence on heavy oil.

In its new report, IHS CERA also said that other pipeline projects and rail tankers will move the product if Keystone XL is not built. If Keystone XL is not built, a likely alternative oil option is heavy oil from Venezuela suggesting that Venezuela may be the #1 beneficiary of a negative decision on the Keystone XL pipeline.

Bills Encouraging Small Hydropower Projects Await President Obama’s Signature

Schriftman_Seth_COLORBy Seth J. Schriftman

 

On August 1, a pair of bills designed to encourage the development of small hydropower projects was approved by the Senate.  The bills, known as the Hydropower Regulatory Efficiency Act (H.R. 267) and the Bureau of Reclamation Small Conduit Hydropower Development and Rural Jobs Act (H.R. 678) await President Obama’s signature.

As noted in H.R. 267, the hydropower industry currently employs approximately 300,000 workers and is the largest source of clean and renewable electricity in the United States. Hydropower resources provide nearly 7 percent of the electricity in the U.S.  However, only 3 percent of the 80,000 dams in the U.S.  generate electricity, so there is substantial potential for adding hydropower generation to non-powered dams.  Further, according to one study, by utilizing these untapped resources, the U.S. could add 60,000 megawatts of new hydro-power capacity by 2025, which could create 700,000 new jobs over the next 13 years.

Both bills seek to promote the use of small conduit hydropower, which is defined  in H.R. 678 as “a facility capable of producing 5 megawatts or less of electric capacity.”  Specifically, if enacted, H.R. 267 would ease the Federal Energy Regulatory Commission’s licensing requirements for small-scale hydroelectric projects that are considered to have a low impact on the environment.  Similarly, H.R. 678 would encourage small hydropower development at Bureau of Reclamation facilities by easing the environmental review standards for such projects.

The text of H.R. 267 is available here.

The text of H.R. 678 is available here.


President Obama Issues Executive Order On Chemical Safety

Torrence_Allison_COLORBy Allison A. Torrence

 

On August 1, 2013, President Obama issued an Executive Order titled "Improving Chemical Facility Safety and Security." The Executive Order is in response to recent tragedies involving chemical accidents at U.S. facilities, most recently the explosion at a fertilizer plant in West, Texas. The Executive Order establishes the Chemical Facility Safety and Security Working Group, co-chaired by the Secretary of Homeland Security, the Administrator of the EPA, and the Secretary of Labor. The Working Group is tasked with the following goals:

  • Improving Operational Coordination with State, Local, and Tribal Partners.
  • Enhanced Federal Coordination.
  • Enhanced Information Collection and Sharing.
  • Policy, Regulation and Standards Modernization.
  • Identification of Best Practices.

Notable requirements in the Executive Order include:

  • Assessing the feasibility of sharing data related to the storage of explosive materials and chemicals that are regulated under the Chemical Facility Anti-Terrorism (CFATS) standard with State, Tribal and local emergency responders.
  • Developing recommendations on ways to identify chemical facilities that are not in compliance with all federal chemical safety requirements.
  • Developing a list of potential regulatory and legislative proposals to improve the safe, secure storage, handling and sale of ammonium nitrate (the chemical at issue in the West, Texas explosion).
  • Reviewing the Risk Management Program (RMP) and the Process Safety Management Standard (PSM) to determine if RMP or PSM should be expanded to address additional substances.
  • Identifying any chemicals that should be added to the CFATS Chemicals of Interest list.

The Working Group is required to provide a status report to the President by April 28, 2014.

Executive Order, "Improving Chemical Facility Safety and Security" is available at: http://www.whitehouse.gov/the-press-office/2013/08/01/executive-order-improving-chemical-facility-safety-and-security


NIOSH Study Finds That Workers’ Silica Exposure At Fracking Sites Exceeds Occupational Health Criteria

Schriftman_Seth_COLORBy Seth J. Schriftman

 

A groundbreaking recent study authored by the National Institute for Occupational Safety and Health (NIOSH), “Occupational Exposures to Respirable Crystalline Silica During Hydraulic Fracturing,” discusses the harm related to an employee’s exposure to respirable crystalline silica during hydraulic fracturing (“fracking”). The study also includes recommendations for companies which utilize fracking in their operations.

Fracking involves the high pressure injection of large volumes of water or sand, and smaller amounts of well treatment chemicals, into a gas or oil well to fracture shale or other rock formations and release the hydrocarbons trapped inside.  Crystalline silica (also known as “frac sand”) is often used as a proppant to hold open cracks and fissures created by the hydraulic pressure.  The mechanical handling of frac sand creates respirable crystalline silica dust, which is a potential exposure hazard for workers.  Specifically, frac sand is moved along transfer belts and by trucks for its use in the fracking process.  This process often involves hundreds of thousands of pounds of frac sand, which creates airborne silica dust.  Occupational exposure to respirable crystalline silica is already an established hazard in many industries, including those which involve mining, sandblasting, foundry work, agriculture, and construction, but  not yet for oil and gas extraction work.

According to the authors, this new NIOSH study is the “first [known] systematic study of work crew exposures to crystalline silica during hydraulic fracturing.” The study cites occupational health knowledge gaps relating to fracking, including:

1) understanding which job titles have risks of chemical exposures;

2) quantifying the magnitude of exposure risks for both chemicals and minerals; and

3) understanding the relative contribution of all likely routes of exposure, including inhalation, dermal exposures, and ingestion. 

Further, in noting the seriousness of the health impacts of crystalline silica, the study observes that the inhalation of respirable crystalline silica can cause health issues such as silicosis, lung cancer, autoimmune disorders, kidney disease, and an increased risk of tuberculosis. 

NIOSH initiated the study to assess chemical exposures to oil and gas extraction workers in 2010.  Approximately 435,000 workers were employed in the U.S. oil and gas extraction industry in 2010, nearly half of which were employed by well servicing companies, including companies that conducted fracking.  To date, exposure assessments for respirable crystalline silica during fracking efforts have been the predominant focus of the NIOSH field effort. 

In conducting the study, researchers at NIOSH collected personal breathing zone samples at well sites in five states (Colorado, Texas, North Dakota, Arkansas, and Pennsylvania) from workers with different job titles between August 2010 and September 2011, to evaluate worker exposure. At all sites, there were respirable silica samples which exceeded the occupational health criteria (e.g., The Occupational Safety and Health Administration’s (OSHA’s) personal exposure limit, the NIOSH recommended exposure limit, and/or the American Conference of Governmental Industrial Hygienists threshold limit value). In some instances, these crystalline silica exposures exceeded ten or more times the applicable occupational health criteria. Based on these evaluations, an occupational health hazard was determined to exist. In addition, seven points of dust generation were identified, including sand handling machinery and the dust generated from a work site itself.

According to the study, companies are just starting to implement controls to limit silica-containing dust generation during fracking due to the relatively recent understanding of the magnitude and hazards of exposure risks.   Recommendations for companies that conduct hydraulic fracturing using frac sand include product substitution when feasible, engineering controls or modifications to sand handling machinery, administrative controls, and the increased use of proper personal protective equipment.

The study, published in the Journal of Occupational and Environmental Hygiene, is available here.


Seventh Circuit “Clarifies” Position On CERCLA 113 v. 107 Claims

Torrence_Allison_COLORBy Allison A. Torrence

 

On July 31, 2013, the Seventh Circuit Court of Appeals issued an Amended Opinion in the case of Bernstein v. Bankert, Nos. 11-1501 and 11-1523. As discussed previously in this blog, the Seventh Circuit's original opinion addressed, among other things, the circumstances in which a plaintiff can bring a contribution claim under section 113 of CERCLA verses a cost recovery claim under section 107 of CERCLA. The Seventh Circuit originally held that the plaintiffs did not have a contribution claim under section 113 of CERCLA because the Administrative Order on Consent ("AOC") at issue did not resolve the plaintiff's liability until the remediation work was completed and the covenant not to sue from EPA was effective. Because the plaintiff did not have a CERCLA 113 claim, the court held that it could pursue a cost recovery claim under section 107 of CERCLA. The plaintiff and EPA sought rehearing, claiming that this interpretation of CERCLA would be detrimental to EPA's enforcement authority and discourage future potentially responsible parties ("PRPs") from entering into settlement agreements because they would not be able to seek contribution until all of the work under the agreement was completed.

The Seventh Circuit granted the motion for rehearing, in part, but only to clarify its opinion, keeping the original holding in place. The court's amended opinion explains that although the AOC in the Bernstein case did not trigger contribution rights because the covenant not to sue was not effective until remedial work was completed, EPA can enter into settlement agreements with future PRPs that contain an immediately effective release from EPA, in which case, the PRP will have resolved its liability and could seek contribution under section 113 of CERCLA.

The three primary elements the Seventh Circuit examined in the AOC were:

  1. The covenant not to sue did not take effect until all work under the AOC was completed.
  2. The covenant not to sue was conditioned upon the complete and satisfactory performance by respondents of their obligation under the AOC.
  3. The respondents did not admit liability.

The relevant language in the Bernstein AOC states that "upon issuance of the [Notice of Completion], U.S. EPA covenants not to sue Respondent…In consideration and upon Respondent's payment of [EPA's response costs], U.S. EPA covenants not to sue or take administrative action against Respondent under Section 107(a) of CERCLA…These covenants are conditioned upon the complete and satisfactory performance by Respondents of their obligations under this Order." In addition, the respondent stated that entry of the AOC "shall not constitute any admission of liability by any (or all) of the Respondents nor any admission by Respondents of the basis or validity of U.S. EPA's findings, conclusions or determinations contained in this Order." Bernstein, slip op. at 20-21.

In contrast to the Bernstein AOC, the court cites a Sixth Circuit opinion as an example of a settlement agreement with an immediately effective promise not to sue that would establish a contribution right under section 113 of CERCLA. RSR Corp. v. Commercial Metals Co., 496 F.3d 552 (6th Cir. 2007). The Seventh Circuit also states that "EPA can structure its settlements with future PRPs in such a way as to resolve liability effective immediately upon execution…In fact, the EPA's current model AOC has already incorporated provisions to that effect." Bernstein, slip op. at 45. The court cites the EPA website, which posts the Model AOC for Removal Action, issued in 2007.

In the consent decree at issue in RSR, the respondent expressly does not admit liability. As for the covenant not to sue, the consent decree states: "the United States covenants not to sue or to take administrative action against Settling Defendants…Except with respect to future liability, these covenants not to sue shall take effect upon the receipt by EPA of the payments required by [the consent decree]. With respect to future liability, these covenants not to sue shall take effect upon Certification of Completion of Remedial Action by EPA….These covenants not to sue are conditioned upon the satisfactory performance by Settling Defendants of their obligations under this Consent Decree."

Looking at the model AOC cited by the court in Bernstein, the language is similar to the consent decree in RSR. The model AOC contains a non-admission of liability clause. The covenants not to sue by EPA take effect upon receipt by EPA of past response costs (if applicable) or on the effective date of the AOC. The covenants not to sue in either situation are "conditioned upon the complete and satisfactory performance by Respondents of all obligations under this Settlement Agreement."

Based on the language in the Bernstein AOC as compared to the language in the RSR consent decree and the EPA Model AOC, it is hard to determine what language the Seventh Circuit requires be used or not used in a settlement agreement to allow for a contribution claim by the settling party. The Bernstein opinion cites non-admission of liability language and the conditional nature of the covenant not to sue as evidence that the settling party's liability has not been resolved. However, the settlement agreements the court sites as examples where liability has been resolved also contain non-admission language and conditional covenants not to sue. Thus, the only difference that is apparent is whether the covenant not to sue is effective upon the effective date of the settlement or on some initial payment verses whether the covenant not to sue is effective upon completion of the removal action (although even this distinction is not entirely clear because the RSR consent decree only resolved past liability immediately; with regard to future liability, the covenants not to sue only took effect upon completion of the remedial action).

The practical implication of the amended Bernstein opinion is not clear. Trial courts in the Seventh Circuit may very well have difficulty interpreting this confusing opinion. In addition, the parties in Bernstein may seek further review in the Seventh Circuit or the Supreme Court. Therefore, now more than ever, any CERCLA suit brought in the Seventh Circuit should assert both 107 and 113 claims (if there are otherwise valid bases for such claims), because it remains unclear which type of CERCLA claim a trial court will find to be the most appropriate.

A copy of the Amended Bernstein opinion is available here.


Final Rule On Solvent-Contaminated Wipes

Grayson_Lynn_COLORBy E. Lynn Grayson

 

EPA has issued a final rule that modifies the hazardous waste management regulations for solvent-contaminated wipes under the Resource Conservation and Recovery Act (RCRA). Specifically, this rule revises the definition of solid waste to conditionally exclude solvent-contaminated wipes that are cleaned and reused and revises the definition of hazardous waste to conditionally exclude disposable solvent-contaminated wipes. The purpose of this final rule is to provide a consistent regulatory framework for solvent-contaminated wipes that is appropriate to the level of risk posed by these wipes in a way that maintains protection of human health and the environment, while reducing overall compliance costs for industry, many of which are small businesses.

A summary chart developed by EPA provides a quick reference guide for how the new rule now will manage solvent-contaminated wipes. A press release and frequently asked questions document also are available.

The final rule will take effect January 31, 2014.

More information, including the rule, is available at http://www.epa.gov/osw/hazard/wastetypes/wasteid/solvents/wipes.htm.