CERCLA’s Confusion Between Section 107 and Section 113

Over a decade after the Supreme Court’s decision in Cooper Industries v. Aviall, the divide between CERCLA Section 107 cost recovery claims and Section 113 contribution claims remains unsettled.  PRPs incurring response costs at Superfund sites would almost always prefer to seek reimbursement of those costs as a Section 107 claim given its more favorable statute of limitations and joint and several liability standard. However, the post-Aviall case law offers little clarity as to the precise dividing line between Section 107 and 113 claims.

The recent Michigan decision in Ford Motor Company v. Michigan Consolidated Gas Co., the 2014… More

Musings on Another Snowy Morning While Waiting For the Redline in Boston

As two current events illustrate, climate change over the coming years is likely to test and ultimately expose the fundamental inadequacy of much of the infrastructure built to support modern societies.  The first current event involves a record-breaking drought in South America which has left water taps dry in many homes in one of the largest cities in the world — San Paulo, Brazil.  The second current event involves record-breaking cold and snow over the past month which has left significant portions of Boston’s public transportation system inoperable.

The idea that a major urban center could be without water or public transportation for any significant period of time is hard to fathom.  These are epic lapses in public planning.  While it’s easy to point fingers in such circumstances, what these epic lapses seem most to show is an inherent limitation in the way people understand risk and the possibility of change. It’s human nature for people to assume that what has happened will always happen.

When planners design infrastructure, they typically review historical records to find the most extreme situations that have previously occurred and try to design a system robust enough to address those extremes.  The problem with this approach, of course, is that it assumes that at some point in recorded history we have already experienced the most extreme situations.   The record- breaking weather extremes that climate change brings are likely to subject our infrastructure to challenges beyond their design capabilities, as we are seeing in Boston and San Paulo.

Insanity is not only to do the same thing in the same situtation and expect a different result; insanity is also to continue doing the same thing in changed circumstances and to expect the same result.

Is It Too Late to Just Throw Superfund to the Curb?

Last week, Judge Paul Borman of the Eastern District of Michigan, allowed a motion by the United States for judgment on the pleadings, dismissing a third-party complaint brought against the United States by Michigan Consolidated Gas.  The decision is the latest judicial effort to clarify the distinction between cost recovery actions under § 107 of CERCLA and contribution actions under § 113 of CERCLA.

I don’t have any criticism of Judge Borman’s decision.  It seems fairly clearly correct under 6th Circuit jurisprudence.  I will say, nonetheless, that the decision is gibberish.  That’s a technical legal term.  It’s also the reason for this post.  Again, I don’t criticize Judge Borman.  I’m generally opposed to specialist courts.  However, does any experienced Superfund practitioner think that a decision such as this will make any sense to a lay person?  Isn’t that problematic?  Here’s my ultimate conclusion:

It is simply not possible to craft a decision explicating §§ 107 and 113 of CERCLA that is not gibberish.

Judge Borman made the now-usual bow towards prior precedent, noting that:

[n]o one accuses CERCLA of being a well-drafted or easy-to-follow statute.

At this point, I’m tired of these sheepish acknowledgements.  CERCLA is an embarrassment.  If it were just an embarrassment, it would be bad enough.  Unfortunately, it’s more than that.  It’s a waste of environmental protection dollars.  And, more to the point here, the terrible drafting has also led to a huge waste of transaction costs.

I know that sunk costs are sunk, but can we just junk the whole thing and start over?

The Impact of the Clean Power Plan on Reliability: Now We Have Dueling Assessments

In November, the North American Electric Reliability Corporation provided its “Initial Reliability Review” of EPA’s Clean Power Plan.  NERC raised a number of concerns about the impact of the CPP on reliability.

Now the Advanced Energy Economy Institute – you can guess its perspective – has engaged the Brattle Group to provide an assessment of NERC’s IRR.  Not surprisingly, the Brattle Group is more sanguine about EPA’s ability to implement the CPP without adversely impacting reliability.

I am not an expert in electric system reliability.  I will say only this – the historical record of environmental regulation since 1970… More

An Analysis of the Problems at the MBTA: Is This the Origin of “Sue-and-Settle”?

On Sunday, the Boston Globe had a fairly comprehensive look at the causes of the current failings of the MBTA.  MBTA-Bus-Snow (1)Interesting reading for those who like to belabor the obvious.  The short version?  Lack of political will and combined with a typical willingness to spend money we didn’t have.

As an environmental lawyer, I found the article interesting, because a discussion of the origin of the Big Dig transit commitments – a story I know pretty well – for the first time turned on a light bulb for me.  This could be seen as the genesis of the practice of “sue-and-settle.”

I know that there are arguments that today’s “sue-and-settle” debates are made up by those who don’t like citizen suit provisions.  I know that this type of deal is time-honored and that lots of examples could be found that pre-date the Big Dig.  I even know that CLF and the Commonwealth settled the Big Dig matter before CLF even had to bring suit.  Nonetheless, read the following passage and tell me that it doesn’t sound very much like a conspiracy between a plaintiff and a willing defendant:

The public transit projects were already in the state’s long-term plans. But advocates were concerned that the next governor would not have the same enthusiasm for the T as Dukakis, who routinely rode the Green Line to work.

Indeed, while there was an element of threat involved — the foundation said it would sue to block the Big Dig unless the public transit projects were locked into place — the advocates had a willing partner in the corner office. The two sides came to an agreement on the MBTA projects. And Dukakis’s environmental affairs secretary made a key sign-off on the governor’s final day in office.

And thus, a fine tradition was born.  That’s my version of history and I’m sticking to it.

Déjà Vu All Over Again: CLF and CWRA Try Once More to Get EPA to Regulate Stormwater Discharges to the Charles River

In 2008, EPA made a preliminary determination to use its residual designation authority (RDA) under the Clean Water Act to designate stormwater discharges from two or more acres of impervious surfaces in the Lower Charles River charles15Watershed and released a draft general permit to cover such discharges.  However, EPA never finalized that designation.

In 2013, the Conservation Law Foundation and other groups petitioned EPA Regions 1, 3, and 9 to use RDA to address a number of watersheds in those regions, including the entire Charles River watershed in Region 1.  In 2014, while Regions 3 and 9 denied the petitions, Region 1 punted, stating that it was neither granting nor denying the petition.  If, as I speculated at the time, Region 1 was trying to avoid judicial review, it may have failed.  On Tuesday, CLF and the Charles River Watershed Association sent EPA a notice of their intent to sue EPA for failing to require permits from stormwater dischargers in the Charles River watershed, as well as for failing to act on its RDA petition regarding the Charles River.

In refusing to act on the 2013 petition, EPA stated that, with respect to the Charles:

the Region plans to revisit its proposal and consider whether it would be appropriate to expand the designation to include sources in additional towns or throughout the entire watershed.  EPA will conduct this effort in the context of the petition previously filed by CLF specifically related to the Charles River watershed.

I do not see this as an example of what Congressional Republicans refer to as “sue and settle.”  Nonetheless, it is true that when last EPA Region 1 tried to regulate stormwater discharges to the Charles, it received a storm of criticism, including from municipal leaders and other public officials.  EPA’s cost estimates were subject to significant criticism for underestimating the cost of compliance.  It would not surprise me if some part of EPA’s collective mind will be pleased at being able to move forward with the regulation, while trying to let the blame fall on CLF and CWRA.

Parent Corporations Beware: Control Over Your Subsidiaries is a Double-Edged Sword

The decision earlier this month in Cyprus Amax Minerals v. TCI Pacific Communications is a useful reminder that corporate form exists for a reason and that parent corporations who ignore corporate niceties do so at their peril.  In the Bestfoods decision, the Supreme Court made clear that CERCLA does not displace state corporate law and that a parent corporation will only be held indirectly liable for the acts of its subsidiaries when the corporate veil can be pierced under applicable state law.

Though state law varies somewhat, veil piercing principles tend to be fairly similar among the states.  Here’s one piece of advice that probably is relevant in all 50 states.  If senior management of the parent makes either of the following statements, expect the veil to be pierced.

[The parent] in fact and constant practice manages and directs the operations of its subsidiaries companies without regard to corporate lines of separation, and constantly exercises its authority to act for and in behalf of its subsidiaries in any and all matters.

[The parent] possesses consequent to that absolute ownership, complete control of all the affairs of its subsidiaries . . . and in fact and in actual practice does exercise complete control in the general conduct of its and their business, and it acts as agent for and in behalf of its subsidiaries.

Shooting fish in a barrel aside, shooting-fishCyprus Amax is a reminder of what can happen when the corporate form is ignored.  We all know that there are good reasons why parents sometimes ignore the corporate form.  That’s fine.  It’s a balancing act.  It’s simply our job as lawyers to remind our clients that there is another side to the scales.  Ignore the corporate form if need be – with any luck, like the owners of the subsidiary here, you may be dead long before the chickens come home to roost!

FutureGen is Dead. Long Live CCS.

Although there is no news on DOE’s web site as of today, apparently FutureGen 2.0 future gen 2is dead.  DOE stopped federal funding.  The FutureGen Alliance has already asked DOE to reconsider, but that seems unlikely at this point.

Two big questions beg for answers in light of the announcement.  First, does carbon capture and storage still have a future even if FutureGen does not?  On that one, I have no crystal ball, but I’ve always been skeptical.

The other question is what the death of FutureGen means for EPA’s decision in its proposed NSPS rule that CCS represents the “best system of emissions reduction” for CO2 from power plants.  Given my skepticism about CCS’s prospects, it should be no surprise that I have a hard time seeing CCS as representing BSER.  While FutureGen was not part of EPA’s basis for concluding that CCS is BSER, the controversy over that issue will surely be reignited by DOE’s decision.

A Federal Court Rules that Increased Conductivity Impairs a Stream — How Shocking!

On Tuesday, Chief Judge Robert Chambers ruled that Fola Coal Company violated the Clean Water Act by discharging mine waste with sufficiently high levels of conductivity to cause or materially contribute to impairment of Stillhouse Branch.  The decision appears designed to be bullet-proof to any appeal.  Judge Chambers thoroughly explained why the opinion of the defendant’s expert should not be given “great weight,” why the plaintiffs’ experts were reliable, and why EPA’s “Field-Based Aquatic Life Benchmark for Conductivity in Central Appalachian Streams” is entitled to substantial Chevron deference.

In short, Judge Chambers found on a number of independent grounds that plaintiffs more than met their burden do demonstrate impairment caused or materially contributed to by Fola Coal’s operations.  I just don’t see an appellate court reversing those findings.  For those interested in the actual nitty-gritty of putting together an expert case, the Court’s discussion of the both sides’ experts is well worth reading.

It’s interesting to compare this decision with the 6th Circuit permit shield decision also issued on Tuesday.  It is possible that the 6th Circuit decision could have important consequences, if it causes EPA to take a second look at what some delegated states are doing with their general permit programs.  Otherwise, the Fola Coal case is likely to have the more lasting impact.  If mine owners cannot address conductivity issues, more decisions such as this are likely, and that would be a serious problem for surface mine operations.

General Permits Are Also Entitled to a Permit Shield

On Tuesday, the 6th Circuit Court of Appeals held that the “permit shield” provisions of the Clean Water Act protected ICG hazard from Sierra Club claims that effluent from ICG Hazard’s Thunder Ridge mine thunderridgecoalminecaused exceedances of Kentucky water quality criteria for selenium.  Thunder Ridge is covered by a general permit, not an individual site permit, and the Sierra Club argued that the shield should not apply.  However, this seems like a classic case of a distinction without a difference, and the Court agreed.

The statute provides that “compliance with a permit issued pursuant to this section shall be deemed compliance” with the relevant parts of the CWA itself.  In interpreting this provision, courts have concluded that, with respect to individual permits, the shield is available so long as:  (1) the permittee complies with reporting and disclosure requirements and (2) the discharge at issue was “within the permitting authority’s reasonable contemplation.”

The Court of Appeals here agreed that the same rule should apply to general permits.  Reviewing prior case law, the Court concluded that EPA has already determined that the scope of the permit shield should be the same for general permits as for individual permits.  Finding EPA’s interpretation reasonable, the Court deferred to it under Chevron.  Having crossed that bridge, the Court easily found that selenium discharges were within KDOW’s “reasonable contemplation” when it issued the general permit.  After all, KDOW included monitoring requirements for selenium in the general permit and also specified how permittees would have to respond if selenium were detected.

Given that ICG Hazard disclosed selenium information to the Kentucky Division of Water  and the KDOW knew about the potential for selenium in the mine effluent, the decision seems clearly correct.  The plaintiffs have a legitimate complaint, but it’s not with ICG Hazard.  The complaint should be with KDOW for issuing a general permit that allows the selenium water quality criterion to be exceeded and with EPA for delegating to Kentucky a program that issues permits allowing exceedances.  Given that the general permit is in effect, however, mine companies choosing to be covered by the general permit should be no less entitled to rely on the permit shield than mine owners covered by individual permits.

Coming Soon to a Settlement Near You: Next Generation Compliance

In a memorandum issued earlier this month, EPA Assistant Administrator for Enforcement Cynthia Giles encouraged use by EPA staff of “Next Generation Compliance Tools” in civil settlements.  Some of the tools are more “next generation” than others, but they all bear watching by the regulated community.  The specific tools highlighted in the Giles memorandum include:

  • Advanced monitoring, including real-time monitoring of ambient pollution levels at the facility fence-line or in the immediate neighborhood
  • Third party compliance verification
  • Electronic reporting
  • Increased public availability of compliance data

To me, the first and last bullets are key.  Third party compliance verification is so last generation that I remember suggesting it in 1978 in a class at MIT.  I believe it may have been innovative then; it isn’t now.

Advanced monitoring, particularly when combined with real-time disclosure to neighbors or citizen group, is a whole other kettle of fish.  It will certainly facilitate citizen oversight – and citizen enforcement – of environmental laws.  Of course, in some circumstances, done right, there could be advantages to regulated entities in having such information.  The question always arises, though, if it’s so good for the regulated entities, then why don’t they voluntarily install such equipment, without an enforcement prod by EPA.

In any case, we’re certainly going to see more of this.  While EPA may not always have legal authority to require the various Next Generation Compliance tools, the memorandum encourages EPA staff to include them in Supplemental Environmental Projects.

And if you want some idea of what EPA considers to be Next Generation settlements, EPA has provided a list of examples.

The Need For Expert Evidence To Make Out An Innocent Landowner Defense Under CERCLA

As every litigator knows, evidence almost always tells a story that is untidy and riddled with loose ends.  This was illustrated by a recent innocent landowner case in California — Coppola v. Smith.  There, a company had purchased land in 1995 without knowledge that it had been contaminated with perchloroethylene (PCE) from a dry cleaning operation in the 1950s and 1960s.  When the company was sued under contribution by a nearby dry cleaner for contributing PCE to to regional groundwater contamination, the company claimed that it was protected by the innocent landowner defense under Section 101(35)(A) and (B) of CERCLA.  The company moved for summary judgment on its innocent landowner defense, and the federal court mostly agreed, finding that the company had purchased the site long after disposal of the PCE, had no knowledge of the contamination until eight years after the purchase,  had done nothing to contribute to the contamination, and had cooperated fully with the government.

The sticking point, however, was whether the company in purchasing the property in 1995 had made all “appropriate” inquiries about the property and its environmental condition.  Here’s where the untidiness came in.  The company had reviewed a preliminary site assessment prepared four years before the 1995 purchase.  Although that assessment found no environmental issue with the property, the assessment was not conducted in accordance with ASTM standards and the assessment specifically noted that information about the ownership and operation of the property from 1958 to 1972 could not be found and that PCE had been detected at low levels in two nearby groundwater wells without any apparent source.

The dry cleaner contended that this preliminary site assessment could not satisfy the company’s  innocent landowner defense because it did not employ ASTM standards, did not involve soil and groundwater testing, and failed to consult historical Sanborn maps which showed the site being used for dry cleaning.  The court rejected the dry cleaner’s contention on the ground that it had failed to show that it was applying standards and practices which were customary in 1995 in this part of California.  Nonetheless, the court went on to deny summary judgment.  According to the court, the company had likewise failed to present any evidence as to whether its review of the preliminary report was consistent with the standard of environmental due diligence customarily employed in the area in 1995 when purchasing property.  Plainly, an expert witness on what was customary environmental due diligence in 1995 was necessary to tidy up the loose ends in the evidence.


No Arranger Liability For Sale of A New Hazardous Substance

Relying on the 2009 Supreme Court decision in Burlington Northern, the Fifth Circuit recently overtuned a CERCLA liability finding against a supplier of perchloroethylene.  Vine Street LLC v. Borg Warner Corp. involved the familiar CERCLA issue whether the seller of a hazardous substance can be liable for its disposal by the buyer.  The lower court, in a pre-Burlington Northern decision, had found it sufficient that the seller had sold unused PERC to a dry cleaner with knowledge that the dry cleaner would inadvertently dispose of some of that PERC in wastewater because the dry cleaner was using a water separator installed by the seller that was not 100% effective in removing all… More

It’s All Connected: EPA Finally Determines that the Science Supports an Expansive Definition of Waters of the United States

On Thursday, EPA issued its final report on Connectivity of Streams & Wetlands to Downstream Waters:  A Review & Synthesis of the Scientific Evidence.  The Connectivity report is intended to support EPA’s rule clarifying the definition of waters of the United StatesCorps_Regulatory_Jurisdiction.  I know that groups on all sides will be providing their two cents, but of this I am sure enough to abandon my usual reluctance to speculate:  This report will be more than sufficient to insulate EPA’s final rule from judicial challenge.  If opponents of the rule want to defeat it, they’d better be working on those 60 votes in the Senate.

There’s a lot to the report, but the key conclusions can be summarized fairly simply:

  • The scientific literature unequivocally demonstrates that streams, individually or cumulatively, exert a strong influence on the integrity of downstream waters.
  • Wetlands and open waters in riparian areas and floodplains are physically, chemically, and biologically integrated with rivers via functions that improve downstream water quality.
  • Wetlands and open waters in non-floodplain landscape settings provide numerous functions that benefit downstream water integrity.
  • Watersheds are integrated at multiple spatial and temporal scales by flows of surface water and ground water, transport and transformation of physical and chemical materials, and movements of organisms.
  • The incremental effects of individual streams and wetlands are cumulative across entire watersheds ….  When considering the effect of an individual stream or wetland, all contributions and functions of that stream or wetland should be evaluated cumulatively.

I have frequently discussed the role EPA’s scientific support plays in judicial review of EPA regulations.  Suffice it to say that the level of peer review to which this report has been subjected will be enough for the Court of Appeals.

What is the Social Cost of Carbon? And Who Bears Those Costs?

As I noted last year, there has been significant criticism of the Integrated Assessment Models used to calculate the social cost of carbon.  An article published this week in Nature Climate Change (not free), attempts to respond to some of those criticisms.  The result is a social cost of carbon that might be as high as $220/ton of CO2.  The authors thus conclude that, if their findings are confirmed, “aggressive, near-term mitigation could well be warranted.”

I’m not the person to provide that confirmation – or refutation.  I will note, though, that the results are almost entirely linked to more significant impacts in poorer regions.  Indeed, the authors acknowledge that:

uncertainty around the magnitude of growth impacts in rich regions means that they could benefit from warming.

Yikes.  If that finding is replicated, the difficulty of getting the developed world to agree to the carbon reductions scientists generally think are necessary may have just gotten more difficult to achieve.