Steven M. Siros Feed

D.C. Circuit Rejects U.S. EPA Efforts to Ban Hydrofluorocarbons

By Steven M. Siros Antarctic ozone map for 2017-08-06

On August 8, 2017, the United States District Court for the District of Columbia issued a decision concluding that the U.S. Environmental Protection Agency (U.S. EPA) did not have statutory authority to issue a 2015 rule that restricted the use of hydrofluorocarbons (HFCs) in a variety of products, including aerosols, motor vehicle air conditioners, commercial refrigerators and foams. 

Section 612(a) of the Clean Air Act required manufacturers to replace ozone-depleting substances (ODS) with "safe" product substitutes.  To that end, U.S. EPA was required to develop lists of "safe" and "prohibited" ODS substitutes.  Pursuant to this directive, U.S. EPA placed HFCs on the list of "safe" substitutes and manufacturers began to replace ODS with HFCs. 

However, over time, U.S. EPA began to learn that although not an ODS, HFCs were in fact greenhouse gases.  As such, in 2015, U.S. EPA promulgated a final rule that moved HFCs off of the "safe" list and onto the "prohibited" list.  See 80 Fed. Reg. 42,870 (July 20, 2015).  As part of the 2015 final rule, U.S. EPA also then prohibited the use of HFCs in aerosols, motor vehicle air conditioners, commercial refrigerators and foams even if the manufacturers of these products had previously elected to replace the ODS in these products with the previously "safe" HFCs.  A lawsuit was subsequently filed by manufacturers of certain HFCs.    

The parties to the lawsuit both acknowledged that U.S. EPA had the ability to ban the use of ODS and that U.S. EPA could change or modify the lists of "safe" and "prohibited" ODS substitutes based on U.S. EPA’s assessment of the risks that those substances posed to human and the environment.  However, the key dispute was whether U.S. EPA had the authority under Section 612 of the Clean Air Act to prohibit manufacturers from making products that contain HFCs if those manufacturers had previously replaced an ODS with a HFC that at the time was listed as a "safe" substitute. 

The D.C. Circuit concluded that U.S.EPA did not have that authority.   The court rejected U.S. EPA’s argument that the term “replace” as used in the statute was intended to apply each time a manufacturer uses a substitute substance as opposed to when the manufacturer originally “replaced” the ODS with the HFC finding U.S. EPA's proposed interpretation to “border on the absurd.”  As such, the D.C. Circuit  vacated the 2015 rule to the extent the rule required manufacturers to replace HFCs with a substitute substance on the "safe" list. 

Another Speedbump for U.S. EPA—Status of U.S. EPA RMP Stay May be at Risk

 
 
 
 
 

Methane

Likely emboldened by the U.S. Court of Appeals decision to vacate U.S. EPA's efforts to stay certain provisions of new source performance standards ("NSPS") relating to fugitive methane emissions, on July 24, 2017, a coalition of 11 Democratic state attorney generals filed a Petition for Review in the D.C. Circuit challenging U.S. EPA's June decision to delay implementation of the Obama administration's amendments to the Clean Air Act Risk Management Program ("RMP") for 20 months. This lawsuit is in addition to a previously filed lawsuit by environmental and labor groups that also challenged U.S. EPA's stay of the RMP amendments. 

In support of their petition, the AGs contend that the requirements of Section 307(d)(7)(B) of the CAA were not met which argument proved determinative in the earlier challenge to U.S EPA's stay of the  methane NSPS.  DOJ has already sought to distinguish U.S. EPA's delay of the methane NSPS from its delay of the RMP rule by noting that U.S. EPA sought public input on its proposed 20-month delay of the RMP rule in its March 30, 2017 federal register notice.  We will continue to track both of these lawsuits as they wind the D.C. Circuit.

New Climate Change Lawsuit: Publicity Stunt or Reasonable Effort to Protect California Property Owners?

 By Steven M. Siros   Power plant

Answering this question is likely to engender significant debate, depending on which side of the global warming conundrum one finds oneself.  However, a recent lawsuit by two California counties and one California city is likely to prompt such a debate which will play out in California state court. On July 17, 2017, Marin County, San Mateo County, and the City of Imperial Beach filed separate but similar environmental lawsuits in California state court claiming that 37 oil, gas, and coal companies caused (or will cause) billions of dollars in climate-change related damages as a result of their extraction and sale of fossil fuels in California. The multi-count complaints allege a variety of state common law claims, including public nuisance, negligent failure to warn, and trespass. The complaints contend that as result of the activities of these defendants, sea levels will rise which will cause billions of dollars in losses to each of the plaintiffs. 

These cases represent the latest in what has been to date a series of unsuccessful efforts to hold energy companies responsible for future speculative damages associated with alleged future environmental impacts associated with climate change. These cases will likely be subject to early dispositive motions seeking to have these cases thrown out of court at an early stage. We will continue to follow these cases and provide additional updates. 

U.S. EPA’s Stay of Methane Rule May Have Hit a “Speed Bump”

By Steven M. Siros   Methane

On July 3, 2017, the U.S. Court of Appeals for the District of Columbia issued an opinion which vacated U.S. EPA’s stay of certain provisions of new source performance standards (“NSPS”) relating to fugitive emissions of methane and other pollutants by the oil and natural gas industries.  After U.S. EPA originally published these NSPS rules in 2016, several industry groups sought reconsideration of these rules pursuant to Section 307(d)(7)(B) of the Clean Air Act (“CAA”). On April 18, 2017, U.S. EPA Administrator Scott Pruitt found that the petitions raised at least one objection to the rule that warranted reconsideration and on June 5, 2017, just two days prior to the deadline requiring regulated entities to conduct initial methane monitoring in order to identify potential equipment leaks, U.S. EPA agreed to stay the rule for 90 days while the rule was being reconsidered.   Then, on June 16, 2017, U.S. EPA published a notice of proposed rulemaking seeking to extend the stay for an additional two years. Several environmental groups filed an emergency motion challenging U.S. EPA’s decision to stay the rules for 90 days.   

In a split decision, the D.C. Circuit agreed that a stay pursuant to Section 307(d)(7)(B) of the CAA was only allowed if the following specific requirements of the rule are met: (1) it was impracticable to raise the objections now being raised during the notice and comment period and (2) the objection is of central relevance to the outcome of the rule. The Court found that both requirements were not met, noting that the “administrative record thus makes clear that the industry groups had ample opportunity to comment on all four issues for which EPA granted reconsideration, and indeed, that in several instances the agency incorporated those comments directly into the final rule.” The Court also addressed industries’ argument that U.S. EPA’s decision to reconsider the rule was not a final agency action. The Court agreed, over Judge Brown’s dissent, that although U.S. EPA’s decision to reconsider the rule was not a final agency action, U.S. EPA’s decision to stay the rule was tantamount to amending or revoking the rule and was in fact reviewable. It is important to note that notwithstanding the Court’s decision that U.S. EPA improperly stayed the NSPS rules pursuant to Section 307(d)(B)(7) of the CAA, the Court specifically stated that “nothing in this opinion in any way limits EPA’s authority to reconsider the final rule and to proceed with its June 16 [notice of proposed rulemaking]," which seeks to stay the effective date of the NSPS for two years. 

This decision may provide some insight as to how the Court intends to deal with a separate pending lawsuit filed by environmental groups which seeks to challenge U.S. EPA’s decision to stay revisions to the CAA’s risk management program; U.S. EPA relied on Section 307(B)(7) to justify its decision to stay those rules as well. 

Exelon and Jenner & Block Beach Cleanup Day!

Grayson

 

By E. Lynn Grayson 

Exelon and Jenner & Block partnered today with the Alliance for the Great Lakes to cleanup 12th Street Beach, near the Adler Planetarium. Team members worked together to police the beach front picking up and disposing of waste and other discarded materials. The litter was identified, logged, recorded and weighed to aid in understanding the short term and long term impacts we are having on the Great Lakes and the many ecosystems that rely upon them.

The Alliance for the Great Lakes Adopt-a-Beach program promotes working together to protect the Great Lakes through beach cleanups and other community projects. For more than 25 years the Adopt-a-Beach program has worked to keep Great Lakes shorelines healthy, safe, and beautiful. The program is largest of its kind in the region. Adopt-a-Beach touches all five Great Lakes with volunteers from all eight Great Lakes states.

Thanks to our friends at Exelon for including us in this special environmental outreach!

Exelon and Jenner & Block
Exelon and Jenner & Block
Jenner & Block EHS Team
Jenner & Block EHS Team

 

News of OECA’s Demise May be Greatly Overstated

Bodine
Susan Bodine

By Steven M. Siros

President Trump announced his intent to nominate former U.S. EPA waste chief Susan Bodine to head up the Office of Enforcement and Compliance Assurance (“OECA”).  Since 2015, Bodine has served as chief counsel on the Senate Environment and Public Works Committee and formerly served as the assistant administrator of the Office of Solid Waste and Emergency Management (now known as Office of Land and Emergency Management).  This nomination may put to bed rumors that had been swirling that the Administration was looking to eliminate OECA and represents the first nomination by the new Administration for an open U.S. EPA position since the nomination of Scott Pruitt as U.S. EPA Administrator.        

Bodine’s prior experience may be useful in helping to advance several of Administrator’s Pruitt’s priorities, including speeding up Superfund cleanups and returning some enforcement roles back to U.S. EPA program offices.  The challenge, of course, will be accomplishing these goals in light of the anticipated significant budget cuts within U.S.  EPA.  Sen. John Barrasso (R-WY), the environmental committee chairman, promised a prompt hearing on Bodine’s nomination.    


Earth Day 2017: Environmental and Climate Literacy

By Steven M. Siros

Earth day 2017As has been the case for the past several years, we are pleased to present a special blog posting commemorating Earth Day.  This year, Earth Day is Saturday, April 22, 2017 and the Earth Day campaign is "Environmental and Climate Literacy".  This campaign is focused on working to ensure that the general public is educated and literate with respect to environmental issues. For more information regarding this campaign, please click here.  

The very first Earth Day, which was held in America in 1970 following a devastating oil spill, is credited as the beginning of the modern environmental movement.  Now, more than forty years later, Earth Day is a global event with festivals, rallies and other events will be taking place at various locations throughout the world.  

In special commemoration of Earth Day 2017, we have linked to the following two "TED" talks which we hope that you will find interesting.  The first "TED" talk (click here) focuses on the Great Lakes, which represent one of the largest collections of fresh water in the world. The second "TED" talk is done by renowned architect Jeanne Gang and focuses on blending nature into architectural projects (click here).  Happy Earth Day 2017.   

 

Allison Torrence to Moderate CBA Seminar on Local, State and Federal Environmental Law

 By Steven M. Siros CBA

On Wednesday, March 22, 2017, from 3-5:30 p.m., Jenner & Block partner Allison A. Torrence will moderate a seminar presented by the Chicago Bar Association (CBA) Environmental Law Committee, addressing the current landscape of local, state and federal environmental law. Ms. Torrence is the current chair of the CBA Environmental Law Committee. Details about the seminar, and a link to register, are below.

Navigating the Current Landscape of Local, State and Federal Environmental Law

Date:                     March 22, 2017
Time:                     3:00-5:30 p.m.
Location:              The Chicago Bar Association, 321 S. Plymouth Ct., Chicago, IL

2.5 IL MCLE Credit


Description:

Local, state and federal governments all have an important role to play in enacting and enforcing environmental laws. While governments may have differing and changing priorities, environmental regulation and enforcement remain important components of all levels of government. This program will educate participants on some key issues facing business, citizens and communities under local, state and federal environmental law.


Topics and speakers:

HOT TOPICS AND CURRENT ISSUES IN ENVIRONMENTAL LAW FROM THE LOCAL GOVERNMENT PERSPECTIVE
Mort Ames, City of Chicago Department of Law

CURRENT STATE OF ILLINOIS STATE ENVIRONMENTAL LAW
James Morgan, Division of Legal Counsel, Air Enforcement Illinois

EPA THE NUTS AND BOLTS OF U.S. EPA ENFORCEMENT: A VIEW FROM REGION 5
Leverett Nelson, Regional Counsel, U.S. Environmental Protection Agency, Region 5


Moderators:

Allison A. Torrence, Jenner & Block LLP; Chair, CBA Environmental Law Committee

Kristen Laughridge Gale, Nijman Franzetti, LLP; Vice-Chair, CBA Environmental Law Committee


REGISTER HERE

Proposed Trump Budget Would Cut U.S. EPA Funding by Approximately 31%

 By Steven M. Siros

On March 15, 2017,  President Trump released his FY 2018 budget blueprint titled “America First—A Budget Blueprint to Make American Great Again.” In addition to increasing defense spending by $54 billion, the blueprint proposes a $2.7 billion budget reduction for U.S. EPA.  Highlights of U.S. EPA's proposed $5.7 billion budget include:

Continue reading "Proposed Trump Budget Would Cut U.S. EPA Funding by Approximately 31%" »

OSHA Violation Doesn’t Abrogate Workers’ Compensation Immunity

 By Steven M. Siros OSHA logo

Most state workers’ compensation regulations provide an intentional tort exception for employers' workers’ compensation immunity.  A Louisiana district court recently rejected a plaintiffs’ effort to trigger this intentional tort exception to workers’ compensation immunity by citing an OSHA “willful” violation as proof that their employer consciously desired that plaintiffs’ suffer their alleged injuries. In the case at issue, plaintiffs were overcome by fumes when they were ordered to clean a tank rail car that contained hazardous chemicals. Their employer was cited for OSHA violations and several of those violations fell into the “willful” category. The court found that these allegations insufficient to meet Louisiana’s “extremely high” standard necessary to avoid the workers’ compensation bar. Hernandez v. Dedicated TCS, LLC (E.D. La. 3/3/17). 

Last year, several courts in Washington and Kentucky had similarly ruled that state workers’ compensation laws provided the exclusive remedy for employees injured in the course of their employment notwithstanding OSHA willful violations. But a U.S. District Court in Idaho recently ruled that employees could pursue tort claims after they were ordered to retrieve radioactive plates without proper protection gear in violation of applicable OSHA regulations.


Gay Sigel, Steve Siros, and Allison Torrence Speak at March 7 CLE Program

Jenner Block logo

Grayson

 

By E. Lynn Grayson 

Jenner & Block Partners Gay Sigel, Steve Siros, and Allison Torrence will speak at the upcoming program Environmental, Health, and Safety Issues in 2017: What to Expect From the Trump Administration, hosted by Jenner & Block’s Environmental, Workplace Health & Safety Practice Group on Tuesday, March 7 from 12:00 pm to 1:00 p.m. With the Trump Administration beginning to take shape, federal environmental, health, and safety (EHS) policy is certain to shift to the right. This CLE program will provide an overview of the Trump Administration’s actions impacting EHS matters to date and prognosticate on changes that may be forthcoming. You are invited to join us for this special program in person or via webinar. If you plan to participate, please RSVP as indicated below.

Program Details:

When: Tuesday, March 7, 12:00—1:00 p.m. with lunch starting at 11:45 a.m.

Where: Jenner & Block, 353 North Clark, Chicago, IL—45th Floor Conference Center 

For more information about the program and to RSVP, please connect here.

New State 1,4-Dioxane Drinking Water Standard-New York Threatens to Take Action if U.S. EPA Doesn’t

 By Steven M. Siros EPA logo

In a February 11, 2017 letter to U.S. EPA, New York Governor Andrew Cuomo indicated that if U.S. EPA didn’t move promptly to establish a federal maximum contaminant level (MCL) for 1,4-dioxane, New York would be forced to set its own MCL for drinking water in the state. Governor Cuomo pointed to a perceived regulatory gap, noting that New York has expended tremendous resources to address unregulated emerging contaminants such as 1,4-dioxane, PFOA and PFOS. The Governor also noted that water systems serving fewer than 10,000 people are not required to test for unregulated contaminants such as 1,4-dioxane but that New York was moving forward with a plan to require all public water systems on Long Island to test for these unregulated contaminants regardless of size. 1,4-dioxane is alleged to have been found in 40 percent of the public water supplies in Suffolk County.

1,4-dioxane is one of several emerging contaminants that does not currently have an MCL. 1,4-dioxane is a stabilizer that is commonly associated with the chlorinated solvent trichloroethane (TCA). However, it is also commonly found in shampoos, cosmetics, and other personal care products. In the absence of federal regulation, 1,4-dioxane regulatory levels vary from state to state. For example, Michigan recently lowered its 1,4-dioxane regulatory limit from 85 parts per billion (ppb) to 7.2 ppb. Other states have lower limits still, with Massachusetts having set a regulatory limit for 1,4-dioxane of 0.3 ppb.  

This patchwork of standards illustrates the challenges that the regulated community faces in the absence of federal action to set an acceptable MCL for 1,4-dioxane and other emerging contaminants. It remains to be seen if the Trump administration will follow through with its expressed intent of relying to the states to implement and enforce environmental rules and regulations or if the administration will recognize the benefits to the regulated community of consistency, at least with respect to drinking water standards.

Allison Torrence to Speak at CBA Environmental Law Committee Meeting on 2/7/2017

 By Steven M. Siros

Jenner & Block partner Allison Torrence will be speaking at the Chicago Bar Association (CBA) Environmental Law Committee meeting on Tuesday, February 7, 2017. Allison, who is Chair of the CBA Environmental Law Committee, will be speaking about the new RCRA Hazardous Waste Generator Improvements Rule. The presentation will provide an overview of current hazardous waste generator requirements and insights into significant changes made by the new rule.

Meeting Details:

DATE: Tuesday, February 7, 2017, 12:15 p.m. to 1:30 p.m.

LOCATION: CBA Headquarters, 321 South Plymouth Court, Chicago, Illinois

TOPIC: RCRA Hazardous Waste Generator Improvements Rule

SPEAKER: Allison A. Torrence, Jenner & Block

The meeting will be webcast and Illinois MCLE credit will be provided for CBA members. For more information, please go to the CBA website.

Happy New Year from the Corporate Environmental Lawyer Blog

 Torrence_jpgBy Steven M. Siros and Allison A. Torrence

As we begin the New Year, we wanted to take a moment to look back at some of the major EHS developments in 2016 and think about what we can expect in 2017.

2016 was a busy year for the Corporate Environmental Lawyer blog, which is now in its sixth year with over 760 posts. In 2016, we had nearly 100 blog posts from 10 different authors and over 6,700 visits to the site.

Our five most popular blogs from 2016 were:

EPA Lacks Authority to Regulate Plastic Microbeads in Water, by E. Lynn Grayson

Court Orders New EPA Spill Prevention Rules, by E. Lynn Grayson

Bipartisan TSCA Reform Act Signed by President Obama, by Allison A. Torrence

Navigating Hawkes, the Newest Wetlands Ruling from the Supreme Court, by Matt Ampleman

ExxonMobil, 13 State Attorneys General Fight Back Against the Exxon Climate Probes, by Alexander J. Bandza

As always, we are monitoring a variety of issues that are important to you and your business, including, for example, RCRA regulatory changes, the future of climate change regulation, implementation of the TSCA Reform Act, and new developments in environmental litigation. You can find current information about these developments and more on the Corporate Environmental Lawyer blog. If you don’t find what you are looking for on our blog, we welcome your suggestions on topics that we should be covering. In addition, keep abreast of new developments in the EHS area through our Twitter @JennerBlockEHS.

We also look forward to the opportunity to share our thoughts and insights with respect to current EHS issues with you at an upcoming program:

The program will take place at Jenner & Block’s Chicago office and also will be available as a webinar. We will post a formal invitation to the program in a few weeks.

We also invite you to visit our newly redesigned Environmental and Workplace Health & Safety Law Practice website for more information about our practice. We look forward to another exciting year and to connecting with you soon.

U.S. EPA Says Sorry But We Don’t Have to Pay for Gold King Mine Spill

 By Steven M. Siros Gold King Mine Spill

On Friday, January 13, 2017, notwithstanding its previous promises to take full responsibility for the Gold King Mine environmental spill, U.S. EPA, with guidance from the United States Department of Justice, concluded that it was not legally liable to pay compensation for administrative claims for the Gold King Mine disaster under the Federal Tort Claims Act. According to U.S. EPA, the Federal Tort Claims Act does not authorize damages for discretionary acts by federal agencies (i.e., actions which require the exercise of judgment on the part of the agency). Because U.S. EPA was conducting a site investigation of the gold mine pursuant to CERCLA, the agency’s actions are considered a discretionary function under the law (at least according to U.S. EPA). 

Not surprisingly, this action by U.S. EPA was blasted by New Mexico lawmakers and the Navajo nation with lawmakers vowing to continue to press for legislation that would hold U.S. EPA fully accountable for the spill. Moreover, U.S. EPA’s conclusion that it has no responsibility for administrative claims is likely to be challenged as aggrieved parties have six months from the date of denial to challenge U.S. EPA’s decision. 

Please click here to see U.S. EPA’s public statement concerning its liability conclusion with respect to the Gold King Mine spill.

U.S. EPA Collects $6B in Penalties in 2016

 By Steven M. Siros

EPA logoAccording to U.S. EPA’s annual enforcement report, U.S. EPA collected approximately $6 billion in civil penalties and required companies to expend in excess of $13.7 billion for pollution control investments in 2016. U.S. EPA’s 2016 collections represented a significant increase over 2015, when U.S. EPA only collected $207 million in civil penalties. The significant increase in 2016 was mainly attributable to a record $5.6 billion Clean Water Act penalty assessed against BP for the Deepwater Horizon event. It is also important to note that the $13.7 billion in pollution control investments doesn’t include the approximately $15 billion that Volkswagen has agreed to expend, because those amounts will primarily be expended in 2017.

Notwithstanding the spike in civil penalties, inspections and evaluations continue their downward trend with approximately 13,500 inspections and evaluations taking place in 2016, as compared with nearly 20,000 in 2012. Pollution reduction also continues to its downward trend with U.S. EPA only requiring companies to reduce releases of pollution by 324 million pounds per year—a result that U.S. EPA attributes to a continuing focus on toxic pollutants which come from smaller volume emitters.

Please click here to see a copy of U.S. EPA’s 2016 enforcement report.

U.S. EPA Issues Final Rule Adding Vapor Intrusion to NPL Site Scoring System

 By Steven M. Siros EPA subsurface intrusion

In a move that should not come as a great surprise, on December 7, 2016, U.S. EPA published a final rule which added a "subsurface intrusion” or “SsI" component to CERCLA’s Hazard Ranking System (HRS). More specifically, SsI can include either groundwater or vapor intrusion although vapor intrusion is the much more common exposure pathway. The new rule, which can be found here, will become effective within 30 days of publication in the federal register. According to U.S. EPA Waste Chief Mathy Stanislaus, the new rule expands the types of sites that be assessed by U.S. EPA to now include sites that solely have SsI  issues, as well as sites that have SsI issues that are coincident with a groundwater or soil contamination problem.

The final rule is substantially similar to the draft rule but does have minor adjustments that were made in response to comments which U.S. EPA contends will better “help refine the mechanics of assigning an HRS site score.” Importantly, the new rule doesn’t change the existing HRS cutoff score of 28.5 for a site to qualify for listing on the NPL, nor does the new rule apply to sites that are already on or proposed to be listed on the NPL.

Industry groups and the Department of Defense had objected to the draft rule, and it is unclear whether the new rule will be retained or modified under the incoming Trump administration.  We will continue to track this and other rulemaking efforts on the part of U.S. EPA as the administration continues to transition. 

Environmental Attorney Reception at Jenner

 By Steven M. Siros 

Skyline

On September 13th, from 5 pm to 7 pm, the CBA Environmental Law Committee, CBA Young Lawyers Section Environmental Law Committee, ISBA Environmental Law Section, and ABA Section of Environment, Energy, and Resources will be hosting a networking reception for environmental attorneys at Jenner & Block's offices in Chicago. Complimentary food and drinks will be provided thanks to the event’s sponsors. Jenner & Block partner Allison Torrence is the Chair of the CBA Environmental Law Committee and will be giving brief welcome remarks.

Details for this event are below. If you would like to join us at this reception, please RSVP here.

Environmental Attorney Reception

September 13, 2016 | 5:00 pm to 7:00 pm

Jenner & Block Conference Center | 45th Floor | 353 N. Clark St. | Chicago, IL 60654

 

Jenner & Block CLE Program/Webinar: Environmental Litigation Update—September 1st at Noon

Grayson By E. Lynn Grayson

Logo

On September 1, 2016, Jenner & Block is hosting a CLE program titled Overview of Critical Litigation Issues for Environmental Practitioners in our Chicago offices at Noon. The program will feature two of our environmental litigation partners as speakers, Steven Siros and Allison Torrence. Together, they will provide environmental litigation updates addressing new developments related to the Clean Power Plan, “waters of the United States,” emerging contaminants, and CERCLA cost recovery/contribution claims.

The program also will be shared via webinar for those who are unable to join us in person. To register for the program, please RSVP here.

D.C. Circuit Rejects Government’s “Double Recovery” Claims in CERCLA Case

Rocket By Steven M. Siros

The U.S. Court of Appeals for the District of Columbia has rejected arguments by the federal government that allowing an aerospace contractor to pass through certain CERCLA remediation costs back to the government under its existing government contracts constituted an impermissible double recovery under CERCLA. Lockheed Martin Corp. v. U.S. (D.C. Cir. Aug. 19, 2016). Lockheed had incurred in excess of $287 million to remediate several contaminated sites where it had manufactured solid-propellant rockets pursuant to government contracts. Lockheed sued the government under CERCLA to recover a portion of its costs incurred to remediate these sites, alleging that the government was directly responsible under CERCLA for a portion of these costs due to the government’s acquiescence in certain of Lockheed’s disposal activities. At the same time, however, the government and Lockheed had entered into an agreement pursuant to which the government agreed that Lockheed was entitled to recover a portion of its remedial costs as indirect costs charged through its current government contracts (the “Billing Agreement”). 

The district court engaged in a thorough analysis of the typical CERCLA equitable contribution factors and allocated a specific percentage of liability to Lockheed and a specific percentage of liability to the government (the percentages varied across the sites). On appeal, the government pointed to the fact that Lockheed was already recovering a significant portion of its remedial costs from the government through the Billing Agreement and argued that any further obligation on the part of the government to reimburse Lockheed for additional remedial costs was inconsistent with CERCLA’s broad equitable principles and constituted an impermissible double recovery under CERCLA Section 114. 

Relying in large part on the Billing Agreement, the D.C. Circuit noted that “the government agreed to [Lockheed’s recovery of its response costs] by entering into a settlement that allowed Lockheed in its new contracts to charge the government for the company’s own CERCLA liability at the discontinued sites.” Notwithstanding that the D.C. Circuit appeared sympathetic to the government’s claim that CERCLA was not designed to provide for a government-funded cleanup program but instead intended to shift remediation costs to the polluting party, here the government voluntarily agreed to the complained of funding mechanism when it entered into the Billing Agreement. In response to the government’s argument that allowing Lockheed to continue to pass these remedial costs through the Billing Agreement constituted an impermissible “double recovery,” the D.C. Circuit noted that the district court found that crediting mechanism agreed to by the parties would preclude any perceived “double recovery” and the D.C. Circuit found no reason to disturb that finding. Interestingly, the D.C. Circuit specifically stated that nothing in the Federal Acquisition Regulations or the Defense Contract Audit Agency Manual mandated the crediting mechanism agreed to by the parties but the D.C. Circuit declined to opine on the interplay of federal contracting law and CERCLA Section 114, leaving that to be resolved at a later time.


An Idled Pipeline Must Be an Abandoned Pipeline—New PHMSA Advisory

SirosBy Steven M. Siros

PHMSA logoA recently issued PHMSA advisory bulletin seeks to clarify the regulatory requirements that apply to mothballed or idled unused gas or hazardous liquid pipelines. As required by the Pipeline Safety Bill that was signed into law on June 22, 2016, PHMSA recently issued an advisory bulletin providing  guidance to owners and operators of gas or hazardous liquid pipelines regarding the requirements for idle and/or unused pipelines. 

Although the bulletin recognizes that owners and operators often refer to pipelines that are not in operation but that might be used again in the future as “idled,” “inactive,” or “decommissioned,” the PHMSA regulations do not recognize “idle” or “inactive” status for hazardous liquid or gas pipelines. Instead, the regulations consider such pipelines to either be active and fully subject to all relevant parts of the safety regulations or abandoned. Assuming that these pipelines have not been abandoned in accordance with the requirements set forth at 49 CFR §§ 192.727 and 195.402, these pipelines must comply with all relevant safety requirements, including periodic maintenance, integrity management assessments, damage prevention programs, and public awareness programs. 

The bulletin goes on to suggest, however, that in situations where the pipeline has been purged of all hazardous materials but not yet abandoned because of an expectation that the pipeline may later be used, the owner/operator may be able to defer certain of these safety requirements. Although PHMSA indicated that it intends to engage in a future rulemaking to provide further guidance as to which requirements might be deferred, in the interim the bulletin suggests that owners or operators planning to defer certain activities coordinate the deferral in advance with the regulators. 

The guidance also reiterates that notwithstanding that companies might not have access to records relating to where historical pipelines might be located and/or if these pipelines were properly purged of combustibles, the owners and operators still have a responsibility to assure facilities for which they are responsible or last owned do not present a hazard to people, property, or the environment. 

Please click here to see PHMSA's advisory bulletin.

U.S. EPA’s New eDisclosure System—Six Month Snapshot

SirosBy Steven M. Siros

US EPA logoRolled out in December 2015, U.S. EPA’s eDisclosure system has received mixed reviews. Although self-disclosures for “New Owners” or for criminal violations continue to be required to be submitted under the old system, most other self-disclosures must be submitted through U.S. EPA’s new eDisclosure portal. Self-disclosures made through this system are placed into one of two categories. Broadly, Category 1 disclosures are EPCRA violations that meet all of the Audit Policy or Small Business Compliance Policy conditions, while Category 2 disclosures are all other violations. For Category 1 violations, the eDisclosure system will automatically generate an “eNotice of Determination” which confirms that no penalty will be assessed conditioned on the accuracy and completeness of the eDisclosure (and assuming that the violation is corrected within the requisite 60- or 90-day time period). For Category 2 disclosures, the eDisclosure system will automatically generate an “Acknowledgement Letter” acknowledging receipt of the disclosure and notifying the entity that U.S. EPA will make a determination as to eligibility for penalty mitigation if and when it considers taking enforcement action.  The self-disclosed violation must still be corrected within the requisite time frame.  The new eDisclosure system did not modify any of the underlying eligibility requirements of U.S. EPA’s Audit Policy or Small Business Compliance Policy.

Although the regulated community has acknowledged that the eDisclosure system has streamlined self-disclosures, there has been some concern regarding U.S. EPA’s recent pronouncement that disclosures submitted under the new system would generally be released in response to FOIA requests, notwithstanding the potentially unresolved nature of the alleged violations. These released disclosures would then be made available on a publicly searchable FOIA website. Companies considering whether to self-report under the eDisclosure system must evaluate whether the benefits of civil penalty immunity or mitigation are outweighed by the risks of adverse publicity and/or potential citizen suit claims. System glitches such as website time-outs have also been reported and some have complained that there is inadequate space for narrative responses on the website portal.  Time will tell whether the eDisclosure system accomplishes its objective of minimizing U.S. EPA resources while encouraging self-disclosure and the subsequent correction of reported violations. 

Commercial Property Assessed Clean Energy (PACE) Financing

By Donald I. Resnick, Kristen M. Boike and Lynn S. Fradkin

Commercial Property Assessed Clean Energy (PACE) financing is an innovative program designed to incentivize commercial businesses to undertake green efforts.  By utilizing PACE financing, governmental bodies encourage commercial entities to invest in improvements or technologies that will save energy, produce renewable energy, and/or, in some states, conserve water.  This concept is growing in popularity because it is a creative method to efficiently and effectively provide capital for sustainability projects.

How Does Commercial PACE Financing Work?

A potential borrower interested in securing commercial PACE financing must first determine whether the state in which the project is located has passed commercial PACE financing enabling legislation and, if so, whether the applicable municipality or county has established a program for which the project qualifies.  A state must pass authorizing legislation to enable a governmental entity or other inter-jurisdictional authority to form a special tax district or special assessment district to operate a commercial PACE program.  This is a key feature of the PACE financing model because the model requires the imposition of assessments or special taxes against the property that benefits from such improvements.

PACE enabling legislation has already been adopted in 32 states,1 including Illinois, California, and New York, as well as the District of Columbia.  Once the state legislation has been passed, a program sponsor (a state, consortium of governmental entities, or a single local governmental body) must design and implement a commercial PACE program to achieve its objectives, which may include economic and workforce development and greenhouse gas reduction targets.  Accordingly, there may be numerous programs within a particular state, each with its own customized parameters.  For example, in California there are 11 different commercial PACE programs2 and, as a result, PACE financing is available in most California municipalities.3

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New Focus on Health and Safety of Infill Associated With Synthetic Turf Fields

SirosBy Steven M. Siros

NTPThe National Toxicology Program (“NTP”) recently announced that it intends to join the crowded playing field (pun intended) of state, federal, and international agencies that are evaluating the potential human health risks associated with synthetic turf fields. Synthetic turf fields have been the subject of ongoing assessment by U.S. EPA, the Agency for Toxic Substances and Disease Registry, the Consumer Product Safety Commission, California’s Office of Environmental Health Hazard Assessment, and the European Union’s chemicals agency. However, the NTP intends to focus specifically on the tire crumb rubber used in those turf fields and to conduct short-term in vivo and in vitro toxicology studies on the crumb rubber. 

As more schools and other public facilities install synthetic turf fields, the potential health effects of the infill is an issue that is attracting increased attention. The NTP believes that its proposed study will help to fill what it views to be an important data gap. Although existing health study have not identified an elevated health risk from playing on artificial turf fields, these studies have generally focused on the potential health effects of exposure to lead other materials released from the artificial grass blades and/or exposure to possible emissions associated with the turf field in its entirety.   NTP and U.S. EPA have noted that there are limited studies on the effects of exposure to the tire crumb materials specifically which will be the focus of the NTP study.     

Please click here to go the NTP press release concerning its study.

Challenges When Dealing with Unregulated/Emerging Contaminants in Drinking Water Systems

SirosBy Steven M. Siros

Drinking waterOne of the more challenging issues for companies dealing with contaminated groundwater sites near public drinking water supplies is how to handle contaminants for which there are uncertain or evolving regulatory action levels. For example, perfluorinated chemicals (“PFCs”) have garnered a lot of publicity recently after these contaminants were detected in several municipal drinking water supplies. However, there currently is no federal maximum contaminant level (“MCL”) for PFCs generally, and more specifically, for perfluorooctanoic acid (“PFOA”). Instead, there are conflicting health advisory levels that vary drastically between U.S. EPA and the individual states, ranging between 20 and 400 parts per trillion (“PPT”). Similarly, 1,4-dioxane is another contaminant that is the subject of conflicting regulatory standards in drinking water. There is no MCL for 1,4-dioxane but it, along with PFOA, is on U.S. EPA’s Drinking Water Contaminant Candidate List 4. As such, if detected, the municipality is required to provide notification to the public via its Consumer Confidence Report. However, the health advisory and/or clean-up level for 1,4-dioxane in groundwater varies greatly from state to state, ranging from .3 to 5 parts per billion, and as such, there is no consistent regulatory standard for 1,4-dioxane in drinking water.

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