Jenner & Block's monthly Environmental Cost Recovery & Lender Liability Update, covering the latest case law and other developments in Environmental Cost Recovery & Lender Liability, is now available for July 2011. The July Environmental Lender Liability Update, as well as all prior months, can be found at Jenner & Block Environmental Cost Recovery & Lender Liability Update Resource Center. This month's update includes a discussion of cases covering CERCLA case law developments, RCRA case law developments, state case law developments in California and Pennsylvania, and Insurance case law developments.
Illinois Governor Pat Quinn has signed into law new legislation conserving clean drinking water by permitting wider use options for treated wastewater. Pursuant to H.B. 248, the North Shore Sanitary District (NSSD) would be permitted to enter into agreements to supply treated wastewater to any public or private entity within or outside the boundaries of the sanitary district, subject to the orders of the Illinois Pollution Control Board.
Governor Quinn said the recycled water is well suited to golf courses and irrigation projects that use huge volumes of water that does not need to meet drinking water standards. The new legislation amends the North Shore Sanitary District Act. The new law (P.A. 97-500) becomes effective immediately.
The NSSD is a municipal body which was organized in 1914 under the North Shore Sanitary District Act of 1911. The NSSD owns and operates more than 100 miles of intercepting sewer lines and pumping stations which collect and convey wastewater from local sewer systems to Sewage Treatment Plants (STP's) in Gurnee, Waukegan, and Highland Park, Illinois. Additional NSSD facilities include the NSSD Sludge Recycling Facility in Zion, the Administration Building and Laboratory in Gurnee, and the Maintenance Building in Waukegan.
In 2010, the states of Michigan, Minnesota, Ohio, Pennsylvania and Wisconsin sued the United States Army Corp of Engineers and the Metropolitan Water Reclamation District of Greater Chicago, seeking injunctive relief aimed at preventing Asian carp from entering into Lake Michigan through the man-made Chicago Area Waterway System ("CAWS"), which connects Lake Michigan to the Mississippi River. The plaintiffs claimed that the defendants were managing the CAWS in a manner that will allow the invasive Asian carp to move into Lake Michigan and thereafter the other Great Lakes, causing an ecological disaster that amounts to a public nuisance under federal common law. The district court for the Northern District of Illinois denied plaintiffs' request for a preliminary injunction seeking, among other actions, the closure of the City of Chicago locks connecting the CAWS to Lake Michigan.
Earthjustice, a non-profit public interest law firm dedicated to environmental protection, and Appalachian Mountain Advocates, a non-profit environmental law and policy organization, recently released a new study, "State of Failure: How States Fail to Protect Our Health and Drinking Water From Toxic Coal Ash," a comprehensive study of state regulations in 37 states. The study highlights the lack of state-based regulations for coal ash disposal and points to the 12 worst states when it comes to coal ash dumping: Alabama, Georgia, Illinois, Indiana, Kentucky, Missouri, North Carolina, Ohio, South Carolina, Tennessee, Texas, South Carolina and Virginia.
There are currently nearly 700 coal ash ponds and hundreds of coal ash landfills in the U.S. The study finds that most states do not require coal ash disposal sites to employ appropriate safeguards. Of the 37 states examined:
- Only 3 states require composite liners for all new coal ash ponds;
- Only 5 states require composite liners for all new coal ash landfills;
- Only 2 states require groundwater monitoring of all coal ash ponds;
- Only 4 states require groundwater monitoring of all coal ash landfills;
- Only 6 states prohibit siting of coal ash ponds into the water table;
- Only 17 states require regulatory inspections of the structural integrity of coal ash ponds.
The EPA is currently considering a federal proposal to regulate coal ash that includes two options: the first option would classify coal ash as hazardous waste, requiring water quality monitoring, liners and the phase out of dangerous "wet" storage of coal ash, such as the pond that collapsed in Kingston, Tennessee in 2008. The second option would continue to allow states to regulate coal ash with appropriate safeguards in place.
How best to manage coal ash remains an ongoing controversy with environmental groups and utility industry representatives at conflict over how EPA should regulate these waste materials. Industry trade groups continue to work with interested parties to ensure that any coal ash reforms ensure the best possible reuse and recycling efforts continue in addition to appropriate waste management practices.
On August 4, 2011, EarthJustice and a number of other environmental groups, submitted a petition to the United States Environmental Protection Agency ("U.S. EPA") seeking to compel U.S. EPA to promulgate rules regulating the production and use of chemical substances and mixtures used in oil and gas exploration and production ("E&P Chemicals") pursuant to the Toxic Substances Control Act ("TSCA"). More specifically, the petition requests that U.S. EPA promulgate a rule under TSCA § 4 that would require manufacturers and processors of E&P Chemicals to conduct acute and chronic toxicity studies to characterize and evaluate the hazards and potential health and environmental effects of these chemicals. The petition also requests that U.S. EPA promulgate a rule under TSCA § 8 that would obligate manufacturers and processors to maintain and submit records concerning the nature of E&P Chemicals (trade name, molecular structure, categories of use, volume of product being manufactured or used, a description of any possible byproducts, etc.). In addition, petitioners request that U.S. EPA require that processors and manufacturers be required to submit any information related to allegations of significant adverse reactions to human health or the environment. Finally, petitioners are seeking to require manufacturers and processors to submit copies of all existing health and safety studies related to these E&P Chemicals. Critics of the petition have stated that much of the information requested by petitioners already is publicly available and that petitioners have failed to demonstrate substantial human or environmental exposure from E&P chemicals. To see a copy of the petition, click here.
The Environmental Law Institute (ELI) and Jenner & Block invite you to attend the Changing Standards for Environmental Disclosures webinar on September 7, 2011 from 9:00 a.m. – 10:30 a.m. (Central).
For years the Securities and Exchange Commission (SEC) has faced growing pressure to strengthen its rules regarding corporate disclosure of environmental liabilities. Critics charge that the legally-mandated disclosure framework relied upon by the SEC, based upon the Securities Act of 1933 and the Securities Exchange Act of 1934, no longer is effective in providing full and fair disclosure to investors on topics addressing environmental, social and governance (ESG) issues. Groups like Ceres, a coalition of investors and environmental groups focused on addressing sustainability challenges, are demanding a broader scope of disclosures, including climate change and water scarcity considerations. These developments and more, mean that companies confront an array of standards for reporting, and face potential pitfalls if their reporting is not accurate and credible. Join our expert panel who will discuss the significant issues raised by these disclosure requirements and the most appropriate strategies for addressing them.
On August 8, 2011, glass and ceramics manufacturer Corning Inc. was dismissed without prejudice from a lawsuit seeking to recover cleanup costs associated with groundwater contamination on and around an industrial park in Downers Grove, Illinois. Maintenance tool manufacturer, Precision Brand Products, Inc. ("Precision"), brought the action against Corning and others, asserting claims for contribution under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), codified at 42 U.S.C. § 9601 et seq., among other theories.
In United States, et al. v. NCR Corp., et al., case number 1:10-cv-00910, in the U.S. District Court for the Eastern District of Wisconsin, U.S. District Judge William Griesbach has rejected the government's renewed attempt to bring Appleton Papers, Inc. into the Lower Fox River Superfund Site cleanup, even after the Court's prior ruling that Appleton was not a liable party.
The U.S. wants Appleton and a few other PRPs to fund ongoing cleanup operations of the PCB-contaminated Lower Fox River in Wisconsin. Appleton holds a majority share in the LLC with NCR, a liable PRP, that is handling cleanup operations, giving Appleton control over cleanup to a certain extent. The U.S. asked the Court to revoke Appleton's shares in the LLC and grant NCR a proxy to vote the shares. This action would allow the Court to order NCR to move forward with cleanup efforts.
Judge Griesbach concluded that such relief was impossible. While the U.S. characterized the relief sought as ancillary and minor, the Court did not agree. The Court was unwilling to order Appleton to cede complete control of the NCR enterprise and concluded it simply did not have the authority to do so. In denying the U.S. request for preliminary injunction, Judge Griesbach concluded "I am not persuaded that I have the authority to order a non-liable party to give up the right to vote shares in a company over its objection."
In its filing, Appleton noted that "… the United States seeks to do through the back door what it could not do through the front door, i.e., force the company to comply with its proposed injunction, the very act that the Court said would be improper."
On August 7, 2011, Illinois Governor Quinn signed House Bill 1558 which establishes the Lake Michigan Offshore Wind Energy Advisory Council. The council is charged with evaluating siting and engineering issues associated with development of wind farms in Lake Michigan. In addition, the council will evaluate the impact of wind farms on commercial fishing, recreational activities, and the environment. According to Governor Quinn, the council will be chaired by the director of the Illinois Department of Natural Resources and will be made up of representatives from state agencies and organizations that include environmental, tourism, education and energy entities. The council is required to identify locations that would be appropriate for offshore wind development by June 30, 2012.
Jenner & Block's monthly Climate Change Update, covering state, regional, national and international legislative, regulatory, and business developments affecting climate change and new technology law, is now available for July 2011. The July Climate Change Update, as well as all prior months, can be found at Jenner & Block's Climate Change Update Resource Center. This month's update includes a discussion of Congressional proposed amendments to EPA's pending appropriations bill targetting climate change programs and deveopments in the lawsuit brought by environmental groups seeking to compel EPA to regulate, under the Clean Air Act, GHG emissions from nonroad vehicles and engines, including marine vessels and aircraft engines.
A recent Ninth Circuit decision refused to find a manufacturer of a dry cleaning machine liable as an arranger under CERCLA. In Team Enterprises LLC v. Western Investment Real Estate Trust (9th Cir. 2011), plaintiff argued that the requisite "intent to dispose" element necessary to trigger CERCLA arranger liability could be inferred from the fact that the dry cleaning machine was designed in a way that made disposal inevitable. Plaintiff also argued that the manufacturer's failure to warn about the risk of contamination from improper disposal and the fact that the manufacturer exercised control over the disposal process provided a sufficient basis to infer the requisite intent necessary to trigger CERCLA arranger liability. The Ninth Circuit rejected all three arguments. First, the Ninth Circuit noted that there was no evidence that by designing the dry cleaning as it did, the manufacturer intended for PCE to be disposed down the drain. The purpose of the machine was to recover and recycle PCE that otherwise would have been discarded. Second, the Ninth Circuit noted that allowing intent to be inferred from a mere failure to warn would impermissibly expand the scope of arranger liability. The court acknowledged that a manufacturer that fails to warn a buyer about the inherent risks of a product may be subject to a product liability claim but that such an allegation was insufficient to satisfy the intent requirement necessary to trigger CERCLA arranger liability. Finally, the Ninth Circuit found that there was simply no evidence that the equipment manufacturer exercised actual control over plaintiff's PCE disposal. This case is a further illustration of the high bar plaintiffs must meet in order to establish CERCLA arranger liability following the Burlington Northern decision.