On Tuesday, April 16th, from 12:00 - 1:00 pm CST, Jenner & Block is hosting an interactive webinar that will discuss how environmental claims can arise in many different contexts and how high costs can be avoided. One way to manage the cost of environmental claims associated with historical operations is to pursue coverage under historical (and often pre-pollution exclusion) occurrence-based commercial general liability insurance policies. Our panelists will discuss the nuances and pitfalls that can arise in environmental insurance litigation and creative strategies to maximize recovery. In addition, companies facing environmental risks in their current operations or transactions can also manage environmental risk through a variety of current insurance products. Our panelists will identify current options available to manage environmental risks going forward and provide insight into the costs and benefits of those insurance products.
Jenner & Block Partners Allison Torrence and Brian Scarbrough will be panelists, along with Richard Reich, Managing Director at Aon Risk Services Central, Inc. Jenner & Block Associate Alex Bandza will moderate the webinar.
Please click here to RSVP for this webinar.
U.S. EPA continues to be on the hook for damages associated with the Gold King Mine located in San Juan County, Colorado. Several years ago, a contractor working on behalf of U.S. EPA to address environmental impacts associated with a closed gold mine, destroyed a plug holding water trapped inside of the mine, causing the release of approximately three million gallons of mine waste water into Cement Creek, which was a tributary of the Animas River. Although U.S. EPA took responsibility for the incident, it has refused to pay damages incurred as a result of he release, leading to lawsuits being filed by a variety of plaintiffs, including the states of Utah and New Mexico, the Navajo Nation, and affected individuals. Plaintiffs asserted a variety of claims, including claims under CERCLA, RCRA, CWA, and the Federal Tort Claims Act (FCTA). U.S. EPA filed a motion to dismiss, arguing among other things, that it was entitled to sovereign immunity for damages resulting from an ongoing cleanup effort.
On February 28, 2019, the federal district court in New Mexico rejected U.S. EPA’s claim that it was protected from CERCLA liability on sovereign immunity grounds, noting that at least three circuit courts have found that U.S. EPA can face liability under CERCLA where U. S. EPA’s actions in remediating a site are alleged to have caused releases of hazardous wastes. The court also found that plaintiffs’ allegations (which included Utah and New Mexico, as well as the Navajo Nation and individuals), if proven, would demonstrate U.S. EPA’s liability as an “arranger,” “operator,” and “transporter” of hazardous substances. Specifically, Plaintiffs stated claims for arranger liability because they "allege that EPA took intentional steps to dispose of a hazardous substance.” With respect to operator liability, the court noted that Plaintiffs “allege that EPA managed, directed, or conducted operations specifically related to the pollution, that is, operations having to do with the leakage or disposal of hazardous waste.” Finally, regarding transporter liability, Plaintiffs “allege that EPA took steps to drain the mine and treat the water at the site.”
With respect to the RCRA, CWA, and FCTA claims, the court concluded that there were disputed issues of fact that precluded the court from being able to grant dismissal of those claims. We will continue to provide updates on this proceeding.
What's in Your Baby Powder: NY Proposes Stringent New Disclosure Requirements on Cleaning and Personal Care Products
Last week, New York Governor Andrew Cuomo announced the Consumer Right to Know Act (“Act”) as part of his proposed executive budget. The Act would authorize the New York Department of Environmental Conservation, along with the New York Department of Health and the New York Department of State, to promulgate regulations requiring product manufacturers to disclose the presence of potentially hazardous substances on their product labeling. Among other things, the Act would require these agencies to assess the feasibility of on-package labeling; develop regulations establishing a labeling requirement for designated products; develop a list of more than 1,000 substances that must be labeled; and identify the types of consumer products that will be subject to these new labeling requirements. The Act would also extend the Department of Environmental Conservation’s disclosure requirements for household cleaning products to encompass all cleaning products sold in New York, and it would empower the Department of Health to require similar disclosures for personal care products like shampoo, deodorant, or baby powder. Needless to say, these disclosure requirements would be among the most stringent—if not the most stringent—in the United States.
Governor Cuomo’s announcement is available here. We will keep our readers updated on the progress of Governor Cuomo’s proposal.
The director of the Agency for Toxic Substances and Disease Registry (ATSDR), Peter Breysse, continues to defend his agency's minimal risk levels (MRLs) for perfluorinated chemicals that were released in June 2018 as part of a draft toxicological profile. In response to questions posed at a recent Senate hearing, Breysse noted that ATSDR’s draft MRLs roughly corresponded to drinking water levels of 14 parts per trillion (ppt) for perfluorooctane sulfonate (PFOS) and 21 ppt for perfluorooctanoic acid (PFOA). Where these levels are exceeded, ATSDR has recommended that residents take steps to lower their exposures and contact state and local authorities. Breysse also recommended that residents consult with physicians and noted that ATSDR has information on its website for physicians to consult regarding exposure risks for these chemicals.
The drinking water levels referenced in the ATSDR toxicological profile (14 ppt for PFOS and 21 ppt for PFOA) correspond generally with regulatory standards implemented in several states, including New Jersey and Vermont, both of which have the lowest regulatory levels for these compounds in the United States. However, the ATSDR MRLs are much stricter than U. S. EPA’s drinking water advisory level of 70 ppt. In addition, many news outlets reported that U.S. EPA had sought to delay ATSDR’s issuance of its June 2018 toxicological profile. Perhaps coincidentally, at about the same time as ATSDR issued its draft report, U.S. EPA announced plans to begin to evaluate the need for a maximum contaminant level (MCL) for PFOA and PFOS.
Although ATSDR and U.S. EPA continue to work cooperatively (at least on paper) to address PFOA and PFOS at contaminated properties throughout the United States, it remains to be seen how well these agencies will cooperate in setting an MCL for these contaminants. The agencies' "cooperative" relationship may face choppy waters, especially in light of ATSDR's continued defense of its MRLs and U.S. EPA's skeptical view regarding same.
On October 23, 2018, President Trump signed into law America’s Water Infrastructure Act of 2018 which, in addition to authorizing federal funding for water infrastructure projects, also requires drinking water systems serving more than 3,300 people to test for unregulated contaminants pursuant to U.S. EPA’s Unregulated Contaminants Monitoring Rule (UCMR). Prior to this new law, only drinking water systems that served more than 10,000 people were required to monitor for unregulated contaminants. Contaminants covered by the UCMR include PFOA, PFOS, 1,2,3-TCP, hexavalent chromium and 1,4-dioxane. This new testing requirement, which goes into effect in 2021, is expected to add more than 5,000 drinking water systems to the list of systems that are required to test for these unregulated contaminants.
The challenge that continues to be faced by drinking water systems across the country is what to do if these contaminants are in fact found in the drinking water supply. As their name would imply, U.S. EPA has yet to set drinking standards for these contaminants although many states and local entities continue to enact a patchwork of regulatory requirements often without regard to the technical feasibility of treating these chemicals and/or the health risks actually posed by these chemicals. Unfortunately, until such time as U.S. EPA takes action to enact a federal standard, the regulated community will continue to be subject to this regulatory quagmire and now, with the new testing requirements, more drinking water systems will be forced to struggle with this issue without any clear regulatory guidance.
On September 13, 2018, the United States Environmental Protection Agency (“EPA”) took the final, unprecedented step of adding a contaminated site to the Superfund National Priorities List (“NPL”) based solely on the risk to human health posed by indoor air vapor intrusion at the site. The newly designated site, which consists of the former Rockwell International Wheel & Trim facility and its surrounding 76 acres (the “Site”), is located in Grenada, Mississippi. The Site has an extensive history. Beginning in 1966, the Rockwell facility operated as a wheel cover manufacturing and chrome plating plant. After chrome plating operations ceased in 2001, the facility was used for metal stamping until approximately 2007. According to EPA, the Site’s historic operations resulted in multiple releases of trichloroethene, toluene, and hexavalent chromium into the surrounding soil and adjacent wetland. However, EPA’s primary concern—and reason for listing the site—is the potential for airborne volatile organic compounds (“VOCs”) to enter the facility through cracks, joints, and other openings, resulting in contaminated indoor air. The potential for indoor air contamination appears to be of particular concern to EPA, given that nearly 400 individuals currently work within the facility.
The Site will now join a list of approximately 160 contaminated sites that have been federally designated as NPL sites. The NPL includes the nation’s most contaminated and/or dangerous hazardous waste sites. A contaminated site must be added to the NPL to become eligible for federal funding for permanent cleanup under the Comprehensive Environmental Response, Compensation, and Liability Act. While EPA’s decision to list the Site based on risks from indoor air contamination is unprecedented, the move is not all together surprising, given EPA’s recent rulemaking actions. In May 2017, EPA passed a final rule expanding the list of factors the agency is allowed to consider when designating NPL sites to specifically include risks to human health from impacted indoor air. In the preamble to the rule, EPA noted that it needed the authority to list sites on the basis of significant risk to human health from vapor intrusion contamination.
In contrast to EPA’s position, environmental consultants operating at the Site have strongly opposed the NPL designation. Several of the firms submitted comments on the final listing, asserting that EPA’s risk evaluation failed to take into account the Sub Slab Depressurization System (“SSDS”) installed at the facility in 2017, which subsequently reduced levels of VOCs in the indoor air to safe levels. However, EPA rejected these arguments, noting that even though the SSDS may protect workers from immediate threats, “it is not intended to address possible long-term remedial goals such as addressing the sources of the contamination below the building.”
EPA’s designation of the Site should alert potentially responsible parties that vapor intrusion issues may result in an increased chance of a site becoming listed on the NPL. In addition, parties relying on engineering controls to maintain compliant indoor air vapor levels should note the potential for EPA to deem such actions insufficient as long-term site remedies.
United Airlines became the first U.S. airline to publicly commit to reducing its greenhouse gas emissions (GHG) by 50% by 2050. In a press release issued on September 13, 2018, United Airlines explained that it would achieve that reduction by expanding its use of more sustainable biofuels and by relying on more fuel-efficient aircraft and implementing other operational changes to better conserve fuel. United Airlines' commitment to reduce GHG emissions by 50% by 2020 is consistent with reduction targets established by the International Air Transport Association in May 2018.
U.S. EPA has yet to regulate GHG emissions from aircraft in the United States, notwithstanding U.S. EPA’s July 25, 2016 endangerment finding for GHG emissions from aircraft and U.S. EPA’s Advanced Notice of Proposed Rulemaking contemplating adoption of the International Civil Aviation Organization’s (ICAO) aviation carbon emission design standards.
The decision by United Airlines is likely to be followed by other U.S. carriers that have international routes because those carriers will be subject to the ICAO standards when flying internationally.
Last week, the Santa Barbara County District Attorney and California Attorney General obtained guilty verdicts against Plains All American Pipeline, L.P. regarding the 2015 Refugio Oil Spill near Santa Barbara, CA. By way of background, on May 19, 2015, a pipeline operated by Plains to transport crude oil ruptured on shore just north of Refugio State Beach in Santa Barbara County, California, causing over 140,000 gallons of crude oil to be released from the pipeline, which spilled crude oil into the Pacific Ocean and across coastal beaches. At trial, testimony revealed that over 100,000 gallons of crude oil were never recovered.
Plains was convicted of one felony for unlawfully discharging oil into state waters and eight misdemeanors for the following: failing to timely call emergency response agencies; violating a county ordinance banning oil spills; and killing marine mammals, protected sea birds, and other sea life. Sentencing will be held on December 13, 2018.
According to a statement by California Attorney General Xavier Becerra, the verdict “should send a message: If you endanger our environment and wildlife, we will hold you accountable. At the California Department of Justice, we will continue prosecuting corporate negligence and willful ignorance to the fullest extent of the law.” (Emphasis added.)
As noted in Law360 (sub. req.), the verdict “underscore[s] the importance of pipeline companies taking their maintenance, inspection and compliance duties seriously, especially in states like California which have strict requirements and liability where knowledge or intent isn’t necessary to sustain criminal convictions.” Furthermore, the conviction specifically as to failure to notify emergency responders “underscores the importance of that duty and that companies must ensure their policies leave no room for error.” The relative rarity of criminal environmental convictions for corporations means this case is one to watch is it moves towards sentencing and/or appeals.
The presence of emerging contaminants such as perfluorinated chemicals (PFOS) and 1,4-dioxane in drinking water often make the headlines as sampling technologies become more sophisticated and these contaminants are being detected with increasing frequency in drinking water systems across the country. There has been a significant push to compel regulators to set regulatory standards and/or issue health advisories for these emerging contaminants, but the impact that these standards and health advisories have on drinking water systems cannot be ignored.
In reaction to media coverage of these emerging contaminants in drinking water supplies, state regulators have been at the front of the pack in trying to set what are often conflicting standards that may not always reflect the current state of science regarding these contaminants. These state regulations often fail to consider the difficulties that drinking water suppliers face in complying with these standards, especially in instances where there are not established treatment technologies that are capable of treating these contaminants in a cost-effective manner. In addition, when setting health advisories for various contaminants, U.S. EPA typically does not consider the effect of those advisories on drinking water providers. It is often the case, however, that these providers are pressured either by state regulators and/or the general public to ensure that the drinking water meets these health advisory levels, which are set without regard to whether cost-effective technologies exist that are capable of treating these emerging contaminants.
On May 18, 2018, the Federal Energy Regulatory Commission (FERC) issued an order denying a rehearing request on FERC’s prior issuance of a certificate of public convenience and necessity for a natural gas pipeline project for Dominion Transmission. An environmental group had challenged that certificate, arguing in part that FERC failed to adequately consider the upstream and downstream impacts of the project. These upstream and downstream impacts, according to the environmental group, included greenhouse gas (GHG) emissions. FERC, on a party-line vote, concluded that the upstream and downstream GHG impacts of this particular project were not sufficiently causally connected to and/or the reasonable foreseeable effect of the project and therefore fell outside of the scope of the required NEPA analysis. FERC distinguished its holding with the decision in Sierra Club v. FERC, 867 F.3d 1357 (D.C. Cir. 2017) by noting that in that case, the pipeline project was delivering natural gas to identifiable gas-fired electric generating plants and therefore the downstream use of the gas was foreseeable.
The Delaware Riverkeeper Network sent a letter to FERC asking it to formally rescind its May 18 order, claiming that FERC’s decision was contrary to the requirements of NEPA. This letter, along with similar letters from other environmental groups, are likely precursors to legal challenges to FERC’s interpretation of its obligations under NEPA. Notwithstanding the positions being advanced by these environmental groups, FERC continues to review and approve pipeline projects without requiring a detailed analysis of GHG emissions as evidenced by FERC’s May 31 approval of the Okeechobee Lateral Project.
A recent decision by the U.S. District Court for the District of Alaska rejected efforts by the Center for Biological Diversity (the “Center”) to challenge the constitutionality of the Congressional Review Act (CRA). The CRA, which was originally enacted in 1996, allows for Congressional disapproval of rules promulgated by administrative agencies under limited circumstances. Historically, the CRA had been used sporadically, but the current Congress has relied on the CRA on at least 16 occasions to roll back Obama administration regulations, and more CRA resolutions may be on the horizon.
In Center for Biological Diversity v. Zinke, the Center challenged the use of the CRA to invalidate a Department of Interior (DOI) rule which limited certain hunting and fishing practices on Alaskan National Wildlife Refuges. More specifically, the Center argued that the CRA unconstitutionally allowed Congress to alter DOI’s authority without using bicameralism and presentment to amend the underlying statutes that gave DOI its authority over the National Wildlife Refuges in Alaska. The Center also argued that the CRA’s prohibition on the issuance of a future rule in “substantially the same form” violates the separation of powers doctrine.
The district court dismissed the Center’s lawsuit, finding that “Public Law 115-20 was passed by both the House and the Senate and submitted to the President for approval as required by the CRA—which was also passed by both houses of Congress and signed into law by the President. Thus, the requirements of bicameralism and presentment are met and [the Center’s] separation of powers concerns fail to state a plausible claim for relief.” The court further noted that “[a]ny injury caused by DOI’s inability to promulgate a substantially similar rule, in the absence of any assertion that DOI would otherwise do so, is too speculative to constitute a concrete or imminent injury and is insufficient to confer Article III standing.” The court also noted that even if the Center could establish an “injury in fact,” the Center had not adequately alleged how invalidating the CRA would redress the Center’s alleged injuries.
Although the CRA remains in full force and effect, one might wonder whether it will retreat back into the shadows at least until the next administration. The conventional view had been that Congress only has 60 days after a rule takes effect to pass a CRA resolution disapproving it. However, lawmakers in Congress are advancing a more novel interpretation of the CRA to review (and potentially disapprove) older rules (and guidance). If a rule or guidance was not officially “submitted” to Congress for review (and many apparently have not officially been submitted), then the current administration could now submit them for review which would restart the 60-day clock. For example, in April, the Senate voted to disapprove a 2013 Consumer Financial Protection Bureau guidance on auto loan financing. The House has not yet taken action on the resolution. If, however, the guidance were to be disapproved under the CRA, then the effect of that disapproval is that the agency will be unable to enact a “substantially similar” rule or guidance. That is really the true power of the CRA, and word is that members of Congress are reviewing older rules and guidance that could be the target of a CRA resolution. Whether the CRA remains a powerful tool this far into the Trump administration remains to be seen, but one can expect that the Center’s constitutional challenge to the CRA is unlikely to be the last.
In 2016, the world underwent its largest ever annual increase in renewable power by adding an estimated 161 gigawatts of capacity in renewable power generation. The increase stemmed from a world-wide investment of USD $240 billion in renewable energy, marking the seventh straight year that the world’s investment in renewable power sources topped $200 billion dollars. Despite the world’s growing investment in renewable power, an estimated 1.2 billion people still live without access to electricity. Individuals without electricity must supplement their energy needs through fuel based lighting and heating. Burning these sources is not only more expensive relative to many forms of renewable power, but also results in the release of toxic fumes and black carbon, which are major contributors to local air pollution and climate change.
Recent decisions from the Fourth and Ninth Circuits—finding that the Clean Water Act (“CWA”) could regulate discharges into groundwater that ultimately migrate into navigable waterways—may prompt U.S. EPA to revisit its position that the CWA applies to discharges from a “point source via ground water that has a direct hydrologic connection to surface water.” On April 12, 2018, the Fourth Circuit concluded that a release from pipeline that impacted groundwater that ultimately discharged to a nearby creek could trigger liability under the CWA. See Upstate Forever v. Kinder Morgan Energy Partners, L.P. (4th Cir. April 12, 2018). This decision follows on the heels of a Ninth Circuit decision affirming a district court's decision allowing a CWA citizen suit to proceed that alleged CWA violations associated with sanitary wastewater discharges through permitted underground injection wells that ultimately discharged into the ocean. See Hawai’i Wildlife Fund v. County of Maui (9th Cir. Feb. 1, 2018). Defendants are likely to seek Supreme Court review of both the Fourth and Ninth Circuit decisions.
Following the Ninth Circuit decision, on February 20, 2018, U.S. EPA issued a notice seeking comment by May 21, 2018 on whether it should review and potentially revise its previous positions on groundwater discharges; specifically, whether it is consistent with the CWA to subject discharges to jurisdictional surface waters via groundwater to CWA permitting. U.S. EPA also is seeking comment on whether some or all of such discharges are addressed adequately through other federal authorities, existing state statutory or regulatory programs, or through other existing federal regulations and permit programs. It will be interesting to see where U.S. EPA ultimately comes out on this issue; U.S. EPA filed an amicus brief urging the Ninth Circuit to affirm the district court's decision that discharges reaching navigable waters through groundwater are covered by the CWA. However, statements in U.S. EPA’s request for comments would seem to suggest that U.S. EPA is rethinking its position on this issue. We will continue to follow and provide updates as this process unfolds.
U.S. EPA Removes Portion of Former Refinery Site from NPL: Precursor to More Expedited CERCLA Cleanups?
After almost 30 years having been listed on the NPL, U.S. EPA has removed the surface portion of the 55-acre Pacific Coast Pipeline site from that distinctive list. Since being added to the NPL in 1989, more than 42,000 cubic yards of contaminated soils have been removed from the site and a multi-layer cap has been installed. The groundwater portion of the site will still remain on the NPL in order to address benzene and protect drinking water and agricultural wells.
One goal of EPA Administrator Pruitt’s Superfund Task Force was to improve and expedite site cleanups and accelerate full and partial deletions for sites that meet all applicable requirements. “The partial de-listing of the Pacific Coast Pipeline site is an example of EPA’s commitment to accelerate the remediation of contaminated sites and transform them into productive assets for the community,” said Pruitt.
Whether this partial NPL deletion is a precursor of U.S. EPA taking a more streamlined approach to CERCLA cleanups remains to be seen, but it would appear to be a step in the right direction.
NextEra Energy Resources LLC (“NextEra”), the largest generator of wind energy in North America, is currently locked in legal disputes with local townships over its new wind energy project, the “Tuscola Wind III Energy Center.” NextEra’s subsidiary, Tuscola Wind III LLC (“Tuscola”), plans to construct the 55 turbine wind farm across the Fairgrove, Almer, and Ellington Townships of Tuscola Country, Michigan. The project, if completed, will be the third wind farm constructed by NextEra in Tuscola County. The proposed $200 million dollar wind farm is projected to supply wind energy for up to 50,000 homes.
After reaching agreements with nearly 100 landowners to secure land for the project, Tuscola submitted a Special Land Use Permit (“SLUP”) to the local townships for construction and operation of the wind farm. However, two of the townships, Almer and Ellington, denied the permits and enacted one year moratoriums on the construction of wind farms. According to Tuscola, its permits were blocked by newly elected members of the Townships’ Boards who were affiliated with a regional anti-wind citizens advocacy group. The company alleged that the organization was engaged in a systematic effort to block the Tuscola project and that the group had used “tactics of intimidation, threats of lawsuits, referenda, and recalls . . . in an effort to prevent the development of wind projects.”
The company is now fighting back. In lawsuits filed in the Eastern District of Michigan, NextEra is seeking to have the Board of Trustees’ denial of the SLUP overturned. On November 3, 2017, the district court issued its first decision on the matter, affirming the denial of the SLUP by the Almer Township. The court found that the Township’s Board had properly denied the application after it determined that the purposed wind farm would violate Almer’s noise zoning ordinance. The court noted that although Almer’s noise ordinance was admittedly ambiguous, the Board should be provided deference to interpret the meaning of its own ordinance. Finding that the board’s interpretation of the ordinance was reasonable, the court elected not to overturn the decision.
On March 13, 2018, the district court reached a markedly different result in Tuscola’s parallel suit against the Ellington Township. Here, the District Court overturned the Ellington Township’s denial of the SLUP. Unlike the Almer Township Board, it appears Ellington’s Board refused to even consider the merits of Tuscola’s SLUP, and relied entirely on its newly enacted moratorium to block consideration of the application. The Court concluded that the township’s moratorium was an inappropriate suspension of its zoning ordinance, and was thus void. Therefore, the Board could no longer rely on the moratorium as a reason to refuse to consider the SLUP application. Left open by the decision was whether Ellington could successfully deny the SLUP on other grounds or what timeframe the township had to approve/deny the permit. Interestingly, the Ellington decision arrived exactly one day after the district court reaffirmed its earlier holding in the Almer case (Both decisions were authored by the same Judge).
Finally, in the newest twist, landowners of property proposed for the Tuscola Wind III site have now filed suit in Tuscola County Circuit Court seeking a court order to ouster the newly elected board members alleged to be part of the anti-wind organization. The ultimate resolution of Tuscola’s dispute may end up relying in part on the success of this new suit.
On July 25, 2017, Environmental Protection Agency (“EPA”) administrator Scott Pruitt’s “Superfund Task Force” issued a final report revealing the Task Force’s recommendations for streamlining the remediation process of over 1,300 Superfund sites currently overseen by the EPA. The Task Force’s recommendations included a strong emphasis on facilitating the redevelopment of Superfund sites by encouraging private sector investment into future use of contaminated sites. The recommendations were subsequently adopted by Mr. Pruitt, who has repeatedly affirmed that a top priority of the administration is revamping the Superfund program. In the recent months, it appears EPA and the Trump administration have taken new steps to further the objective of pushing private redevelopment for Superfund Sites.
On January 17, 2018, EPA posted a “Superfund Redevelopment Focus List” consisting of thirty-one Superfund sites that the agency believes “pose the greatest expected redevelopment and commercial potential.” EPA claims that the identified sites have significant redevelopment potential based on previous outside interest, access to transportation corridors, high land values, and other development drivers. “EPA is more than a collaborative partner to remediate the nation’s most contaminated sites, we’re also working to successfully integrate Superfund sites back into communities across the country,” said EPA Administrator Scott Pruitt. “[The] redevelopment list incorporates Superfund sites ready to become catalysts for economic growth and revitalization.”
Along the same lines, President Donald Trump’s sweeping infrastructure proposal, released February 12, 2018, proposed an amendment to the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”) that would allow Superfund sites to access funding from the EPA’s Brownfield Program, which the administration believes could help stimulate redevelopment of the sites. The proposal further requests Congress pass an amendment to CERCLA that would allow EPA to enter into settlement agreements with potentially responsible parties to clean up and reuse Superfund sites without filing a consent decree or receiving approval from the Attorney General. The proposal claims that CERCLA’s limitations “hinder the cleanup and reuse of Superfund sites and contribute to delays in cleanups due to negotiations.”
Time will tell whether the administration’s strategy will be enough to entice new development into the Superfund sites. To follow the progress of EPA’s Superfund redevelopment efforts, visit EPA’s Superfund Redevelopment Initiative website here.
In a win for the White House, a D.C. federal judge dismissed a complaint filed by several public interest groups that challenged President Trump’s executive order requiring that two federal regulations be repealed for every new regulation that is promulgated. The lawsuit was dismissed on standing grounds, with the court rejecting the public interest groups' argument that they had both “associational” and “organizational” standing.
The district court rejected the public interest groups' claim that they had standing because the executive order would unlawfully force federal agencies to delay or scrap rules that protect the groups' concrete interests. The court also rejected the public interest groups' claim that the executive order impinges on the groups' advocacy efforts by forcing them to choose between advocating for new regulations at the cost of losing other beneficial rules. Instead, the court found that the public interest groups had not sufficiently identified particular members who would be harmed. The court also found that the interest groups had not offered any evidence as to whether they had declined or were imminently likely to decline to advocate for a new rule because of the executive order.
The court is still evaluating whether to give the groups leave to amend their complaint or whether the lawsuits should be dismissed outright. Please click here to read the opinion.
On February 15, 2018, the Federal Energy Regulatory Commission (“FERC”) unanimously voted to remove barriers for electric storage resources to participate in the capacity, energy, and ancillary services markets operated by regional transmission organizations (“RTOs”) and independent system operators (“ISOs”). FERC’s Final Rule requires each of these RTOs and ISOs to develop a plan for revising its tariff structure that establishes a participation model for various electric storage resources.
Currently, electric storage resources, such as large-scale batteries, pumped hydro systems, and thermal energy storage, play a more limited role in RTO and ISO markets, often participating only in fast-responding frequency regulations markets. FERC’s new rule seeks to expand energy storage’s participation beyond these roles by requiring RTOs and ISOs to develop a participation model that specifically accounts for the unique physical and operational characteristics of electric storage resources.
The Final Rule provides the following criteria for the participation models:
- First, electric storage resources must be “eligible to provide all capacity, energy and ancillary services that it is technically capable of providing.” This criteria will eliminate some wholesale market rules that limit the services electric storage resources may provide.
- Second, the models must ensure that participating systems “can be dispatched and can set the wholesale market clearing price as both a wholesale seller and wholesale buyer consistent with rules that govern the conditions under which a resource can set the wholesale price.” In other words, ISOs and RTOs must develop a participation model that accounts for the unique ability of electric storage resources to both purchase/store energy off the grid and to sell energy back to the grid.
- Third, the models must “account for the physical and operational characteristics of electric storage resources through bidding parameters or other means.” In other words, the markets must take into account electric storage resources’ duration and operating parameters.
- Finally, the models must “establish a minimum size requirement for participation in the RTO and ISO markets that does not exceed 100kw.”
FERC’s Final Rule will go into effect 90 days after publication. After this, each RTO and ISO is required to file its tariff modifications to comply with the Final Rule within 270 days of the publication date, and to implement the modifications within one year of the filing date. This timeframe will allow various stakeholders and interested parties an opportunity to review and comment on the proposed tariff changes submitted by each RTO and ISO.
While pumped-storage hydro is currently the dominate form of electric energy storage in the United States' RTO and ISO markets, other technologies like batteries and flywheels are becoming more commercially viable, and will likely benefit from FERC’s order. In issuing its Final Rule, FERC noted that the United States’ energy storage resource capacity is expected to grow more than sevenfold over the next five years, and FERC hopes to support this growth to enhance competition and promote greater efficiency in the national’s electric wholesale markets.
The White House rolled out its 2019 budget, which includes deep cuts to a number of federal agencies, including U.S. EPA. The proposed 2019 budget seeks to cut approximately $2.5 billion, or 23%, from U.S. EPA’s budget, including the elimination of approximately 20% of U.S. EPA’s workforce. The proposed budget also seeks to eliminate a number of programs, including programs that provide money to the Energy Star program and to international organizations and countries to fight climate change. Other programs on the cutting block include assistance to fund water system improvements, with significant reductions to the Great Lakes Restoration Initiative and the Chesapeake Bay Program.
The proposed budget places emphasis on the continued elimination of redundant programs and continues to focus on implementing the President’s Executive Order on a Comprehensive Plan for Reorganizing the Executive Branch. The Executive Order seeks to streamline U.S. EPA’s permit review process and reducing unnecessary burden on the regulated community.
The budget plan faces a likely uphill battle in Congress with many of the same proposals that were rejected by Congress last year being recycled in the proposed 2019 budget. Please click here to go to U.S. EPA’s budget website.
On February 7, 2018, the Federal Energy Regulatory Commission (“FERC”) moved for a last-minute review to save the Sabal Trail natural gas pipeline just hours before it was scheduled to be shut down. In a motion filed on Tuesday in the U.S. Court of Appeals for the District of Columbia, FERC asked the court for a 45-day stay of issuance of the court’s mandate to allow the agency to issue an order on remand reauthorizing certificates for the pipeline project.
The request stems from an August 22, 2017 D.C. Circuit opinion concluding that FERC did not adequately analyze the impacts of greenhouse gas (“GHGs”) emissions that would result from the construction and operation of the $3.5 billion pipeline. The court concluded that FERC had failed to comply with the requirements of the National Environmental Policy Act (“NEPA”) because the agency’s Environmental Impact Statement (“EIS”) did not consider the indirect environmental effects of authorizing the transportation of natural gas to be burned, which in turn generates GHG emissions. The court remanded the matter back to FERC to give a quantitative estimate of the downstream GHG emissions that will stem from the pipeline or explain specifically why it was not able to do so.
On January 31, 2018, the D.C. Circuit court denied FERC’s petition to rehear the issue, setting the stage for a one week countdown to the shutdown of the major gas network, which has been operating since June 2017. On Monday, FERC took a major step to keeping the pipeline in service by issuing a revised supplemental environmental impact statement (“SEIS”), but neglected to state whether it would issue an emergency order to prevent shutdown of the Sabal Trail pipeline. However, it is unclear if FERC has the authority to immediately reissue certificates to the pipeline prior to a thirty day wait period following the issuance of the SEIS. This may explain why the agency elected to request a short stay from the court for it to reauthorize the pipeline.
In its February 7th motion, FERC asserted that “[i]f pipeline service is halted, Florida Power & Light may not be able to meet its customers’ electricity needs efficiently or reliably.” The utility services an estimated 4.9 million households in Florida. FERC’s motion automatically stays the court’s mandate until February 16, which is when responses to the motion are due.
It is also unclear whether the D.C. Circuit will ultimately approve FERC’s SEIS. The document provides an estimate that the pipeline could increase Florida’s GHG emissions by 3.6 to 9.9% over 2015 levels. However, the agency declined to comment on the potential environmental effects from that increase, noting there was no “suitable” scientific method for doing so. We will continue to follow this issue and will provide updates as events warrant.
In what should be a wake-up call for companies that ship lithium batteries, the U.S. Transportation Department’s Federal Aviation Administration (“FAA”) recently levied a $1.1 million civil penalty for alleged violations of DOT shipping regulations. According to the FAA, on June 1, 2016, a Florida-based battery distribution company offered four shipments of 24-volt lithium batteries to FedEx for air transport. One of the batteries is alleged to have caught fire while being transported on a FedEx truck after having been shipped on an aircraft, destroying the truck. FAA contends that the shipped batteries failed both UN and U.S. testing standards, were not equipped to prevent reverse current flow, and were improperly packaged. FAA also alleges that the company did not provide proper training to its employees.
Although the $1.1M penalty has not been finalized, companies that ship lithium should ensure that their shipments are in full compliance with all applicable DOT shipping regulations. The transportation of lithium batteries in aircraft is the subject of ongoing evaluation and scrutiny by the FAA and companies that are deemed to be in violation of these requirements are likely to face significant penalties as evidenced by the $1.1M fine referenced above.
On January 15, 2018, the European Chemicals Agency (“ECHA”) added seven chemicals to its Candidate List of “Substances of Very High Concern” (“SVHC”) for Authorization. These seven chemicals are:
- Cadmium nitrate
- Cadmium hydroxide
- Cadmium carbonate
- 1,6,7,8,9,14,15,16,17,17,18,18- Dodecachloropentacyclo[126.96.36.199,9.02,13.05,10]octadeca-7,15-diene (“Dechlorane Plus”TM) [covering any of its individual anti- and syn-isomers or any combination thereof]
- Reaction products of 1,3,4-thiadiazolidine-2,5-dithione, formaldehyde and 4-heptylphenol, branched and linear (RP-HP) [with ≥0.1% w/w 4-heptylphenol, branched and linear].
If you are still with me after having read through those chemical names, here is some more useful information. Once a chemical is listed on ECHA’s Candidate List, it triggers a number of regulatory obligations, including the requirement that importers of products containing one or more SVHC substances above 0.1 percent by weight file notifications with ECHA. In addition, chemicals on the Candidate List may be subsequently targeted by ECHA for phase-out.
According to a statement by ECHA in conjunction with its notice of listing, these specific seven chemicals are not widely used and ECHA does not view this listing as imposing substantive industry-wide regulatory burdens. There are now 181 substances on ECHA’s Candidate List. Please click here to go to the ECHA website for a list of 181 SVHCs.
As 2017 draws to an end, we wanted to thank everyone that follows our Corporate Environmental Lawyer blog. 2017 has been an interesting year and we have enjoyed providing information on critical environmental, health and safety issues for the regulated community. As part of the year in review, we thought it might be interesting to highlight the most popular posts from each of the four quarters in 2017.
- Trump Administration: 2017 Insights
- New State 1,4-Dioxane Drinking Water Standard-New York Threatens to Take Action if U.S. EPA Doesn’t
- World Water Day: Wednesday, March 22, 2017--Jenner & Block Announces Special Water Series
- Trump Administration Issues Freeze on New and Pending Rules – Halting Dozens of Recent EPA Rules
- Great Lakes Compact Council Holds Hearing on Cities Initiative Challenge to Waukesha Diversion of Lake Michigan Water
- Federal Judge Orders Dakota Access Pipeline to Revise Environmental Analysis; Leaves Status of Pipeline Construction Undecided
- Litigation in D.C. Circuit Court Put on Hold While EPA Reconsiders 2015 Ozone Air Quality Standards
- Attorney-Client Privilege Does Not Protect Communications with Environmental Consultants
- News of OECA’s Demise May be Greatly Overstated
- EPA Announces Proposed Rule to Rescind ‘Waters of the United States’ Rule
- Court Decision Remanding FERC’s Evaluation of GHG Emissions May Derail $3.5B Pipeline
- Hurricane Harvey and Act of God Defense—Viable Defense or Futile Prayer
- Who is in Charge of Protecting the Environment—The Role of U.S. EPA and State Environmental Agencies During a Hurricane
- Shell Latest Target of CWA Climate Change Citizen Suit
- New Climate Change Lawsuit: Publicity Stunt or Reasonable Effort to Protect California Property Owners?
- Cities Risk Ratings Downgrade for Failure to Address Climate Change Risks
- Dumpster Diving Results in $9.5M Penalty Recovery for California
- Following Keystone Pipeline Oil Spill, Judge Orders Parties to Prepare Oil Spill Response Plan for Dakota Access Pipeline
- EPA Publishes Proposed Rule on Reporting Requirements for the TSCA Mercury Inventory
- Imagine a Day Without Water
We look forward to continuing to blog on breaking environmental, health and safety issues and we are sure that we will have plenty to blog about in 2018. Warmest wishes for a wonderful holiday season.
Steve Siros and Allison Torrence
On December 4, 2017, I wrote a blog regarding Moody’s Investors Service’s threat to downgrade state and municipal credit ratings if they failed to adequately plan for and attempt to mitigate climate change risks. A day later, in conjunction with the North American Climate Summit, Chicago’s mayor and dozens of other mayors signed the “Chicago Climate Charter,” which calls on mayors to work to achieve a reduction in greenhouse gas emissions that’s equal to or more than that required by the 2015 Paris Agreement. The charter would require participating cities to track and publicly report greenhouse gas emissions and take action to plan for climate change related impacts in local infrastructure and energy planning. While these actions may not have been in direct reaction to Moody’s threat, such forward thinking may minimize the risk for participating cities in future rating downgrades relating to climate change impacts.
In a November 28, 2017 report, Moody’s Investors Service warned cities and states that they faced the risk of a credit rating downgrade if they were not proactive in planning to mitigate the risks of climate change. The Moody’s report listed six indicators that it used to assess the exposure and overall susceptibility of states and municipalities to the physical effects of climate change, including share of economic activity derived from coastal areas, hurricane and weather damage as a share of the economy, and the share of homes in a flood plain. Based on these indicators, Florida, Georgia, Mississippi, and Texas were the states most at risk from climate change. Although Moody’s couldn’t point to a specific state or municipality whose rating was (or might be) downgraded as a result of a failure to plan for climate change, the Moody’s report clearly sets the stage for such downgrades in the future.