Law and the Environment : Environmental Lawyer & Attorney : Foley Hoag Law Firm : Boston, Washington D.C.

New MassDEP Commissioner Ken Kimmell has launched a regulatory reform effort at DEP. As everyone knows, Ken did an outstanding job as EEA General Counsel and I expect he will be an outstanding DEP Commissioner. I hope he succeeds and I fully support the regulatory reform initiative. However, he does have one major problem – his staff, other than his senior staff, doesn’t believe in it. Street level bureaucracy is not an abstract intellectual concept; it’s something the regulated community deals with every day. When the Commissioner starts rolling out reform initiatives, even if they are protective of the environment, will his staff be on board? I’m skeptical, as everyone who represents clients before DEP has reason to be.

For today’s cautionary tale about how DEP really operates, I’m going to have to disguise a few facts in order to protect the innocent; reprisals against my clients are not good for business. However, here are the basics.  The client has a 21E site, a state superfund site. They are operating a small treatment system in a residence to ensure that the residence is not impacted by a source area plume. The site has a temporary solution and as recently as 2008 DEP agreed that the site posed no significant risk. Notwithstanding the review in 2008 and the absence of any changes since then, DEP conducted an audit in 2011.

The treatment system off-gases small amounts of VOCs. DEP guidance – argh, guidance alert – states that off-gas treatment is not required if emissions of VOCs will be less than 100 pounds per year. Analysis of site data indicates that the system here releases less than a tenth of a pound per year – less than a thousandth of the threshold.  DEP’s response? They still want an assessment of the potential risks associated with emissions from the treatment system. The results? Both the non-carcinogenic Hazard Index and the carcinogenic excess lifetime cancer risk are more than four orders of magnitude – that’s a factor of 10,000 – below the no significant risk threshold. 

I love anecdotes; it’s one of the beautiful freedoms of blogging that we get to pick and choose our data. However, I am quite confident that every one of my readers in the private sector will have at least five stories of their own that are equally horrific. Moreover, while this is just one story, it does exemplify several aspects of the street level bureaucracy problem.

Guidance only works one way. Regulated entities are bound by it, but the agency feels free to require additional work, even if what the regulated party has done complies with the guidance.

MassDEP employees don’t trust their own system. Even though there was no hint of a risk here, the agency just couldn’t quite believe it. They are so concerned about being blamed for false negatives that they will do anything to eliminate them, regardless of the cost of false positives or the cost of the additional work that they require.

Which brings me to the last problem – DEP routinely assigns a value of $0 to costs that will be borne by the regulated community. Why not require a little more testing in order to provide an extra level of comfort that things are really, really, really, really (one “really” for each order of magnitude) safe?

Until these issues are addressed – and doing so in the face of civil service requirements is a Sisyphean task – regulatory reform is something of a quixotic ideal – though one still worth pursuing.

Good luck, Ken.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

I posted recently that EPA actually seems to be listening to comments from the regulated community and has changed course in some cases in response to those comments. The release by EPA and the Army Corps yesterday of their long-awaited revised guidance implementing the Supreme Court’s Rapanos decision confirms that EPA is in listening mode. Although I am not normally a fan, this new version seems an appropriate use of guidance.

First, it is not a unilateral effort to expand agency jurisdiction. Instead, it responds to the Supreme Court Rapanos decision. Given the lack of a majority decision, Rapanos certainly left both regulators and the regulated community scratching their heads. Moreover, although one of my concerns about guidance is that it can ossify, that is not the case here. The new guidance replaces EPA’s prior Rapanos guidance, issued in 2008.  EPA is entitled to conclude that the prior guidance did not accurately reflect the limits of CWA jurisdiction after Rapanos.

Significantly, in response to substantial pre-issuance pressure to shelve the guidance and instead pursue notice and comment rulemaking, EPA and the Corps have agreed both to take comment on this guidance and to undertake formal rulemaking. Thus, the guidance will serve only to clarify EPA’s and the Corps’ current interpretation pending issuance of a rule.                                                         

On the merits, the guidance seems to be a reasonable interpretation of Rapanos. Everyone knows that Justice Kennedy’s “significant nexus” test is not a model of clarity – that’s why guidance is appropriate. Regulated industries benefit from greater clarity – even if more wetlands will be found to be jurisdictional – because uncertainty imposes its own costs. While the American Farm Bureau Federation has already complained about the new guidance, I think we need to distinguish between complaints about the guidance per se and complaints which really go to the scope of the CWA itself. 

If the guidance itself is too long for you, EPA has provided a useful summary. The summary of the summary? The following waters are protected by the Clean Water Act:

• Traditional navigable waters
• Interstate waters
• Wetlands adjacent to either traditional navigable waters or interstate waters
• Non-navigable tributaries to traditional navigable waters that are relatively permanent, meaning they contain water at least seasonally
• Wetlands that directly abut relatively permanent waters

In addition, the following waters are protected by the Clean Water Act if a fact-specific analysis determines they have a "significant nexus" to a traditional navigable water or interstate water:

• Tributaries to traditional navigable waters or interstate waters
• Wetlands adjacent to jurisdictional tributaries to traditional navigable waters or interstate waters
• Waters that fall under the "other waters" category of the regulations. The guidance divides these waters into two categories, those that are physically proximate to other jurisdictional waters and those that are not, and discusses how each category should be evaluated.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

For those of you who thought that the sky was about to fall in EPA as part of the budget battle, I’m able to report that EPA survived sufficiently intact to continue to issue new rules. Today, EPA proposed a draft revised construction general permit, or CGP, for stormwater discharges from construction sites disturbing at least one acre (or less, if the project is part of a common development plan that is greater than one acre). The revised CGP would replace the current CGP which is set to expire on June 30. EPA has proposed to extend the current CGP through January 31, 2012, in order to give it time to promulgate the new CGP in final form. 

The revised CGP does make some changes. The most notable changes, summarized in EPA's Q&A on the proposal, are intended to incorporate into the CGP the provisions of EPA’s February 2010 effluent limitations guidelines rule, known as the C&D rule. These changes include new requirements concerning:

Sediment and erosion controls

Soil stabilization

Pollution prevention

Inspections

Stormwater pollution prevention plans (SWPPPs)

Buffer zones

The buffer zone requirement was included in the C&D rule, but EPA is now proposing to add significant flesh to the bones. Specifically, the rule would require a minimum fifty-foot buffer between the construction site and any waters of the United States which are located either on or immediately adjacent to the site. The rule would provide flexibility to allow the permittee to substitute additional sediment and erosion controls for some or all of the buffer, so long as the controls “achieve the equivalent sediment load reduction as an undisturbed naturally vegetated, 50-foot buffer.”

For my Massachusetts readers, the 50-foot buffer will seem very similar to the buffer zone already required under the MA Wetlands Protection Act regulations. The jurisdictional scope of the CGP will not be identical to Wetlands Act jurisdiction, but they should be fairly similar.

Comments on the proposed rule will be due 60 days following Federal Register publication.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Thursday afternoon, EPA and the Tennessee Valley Authority announced one of the largest pollution reduction consent decrees in US history – resulting in between $3 to $5 billion of investment in air pollution controls, and retirement of almost one-third of TVA’s coal-fired generating units within the next few years.  Over the next decade, it will reduce TVA's total emissions of nitrogen oxides by 69% and sulfur dioxide by 67%.  Although the agreement provides a timely victory for EPA amid the current backlash against it in Congress, the settlement actually relates to a New Source Review (NSR) suit commenced by EPA during the Clinton Administration in 1999.  The consent decree resolves all alleged past preconstruction violations, as well as alleged violations of the New Source Performance Standards and Title V regulations.

The TVA operates 59 coal-fired boilers at 11 plants in Alabama, Kentucky and Tennessee, and supplies power to around 9 million people in its service area that spans most of the southeastern US. The settlement involves all 11 plants, and includes an obligation to address 92% of TVA’s coal-fired system between 2011 and 2018 by either installing state of the art pollution controls like SCRs and FGD or repowering with renewable biomass. Another 18 coal-fired units, about 16% of TVA’s coal-fired generating system, totaling 2,700 MW of capacity, will be permanently retired – the largest retirement commitment seen under EPA’s Coal-Fired Power Plan initiative, which has settled 22 such NSR cases so far.  However, Greenwire reports that, even before today's announcement, TVA was already planning to retire about 1,000 MW of coal-fired capacity.

I found the option to repower the units with renewable biomass to be particularly interesting, especially given EPA’s current proposal to continue studying biomass emissions for three years before requiring Clean Air Act permits for greenhouse gas emissions from biomass sources.  In the agreement, “Renewable Biomass” is defined very broadly, with no time-frames or extensive restrictions. Instead, it includes, in part, organic matter that comes from forests or grasslands, as well as residues and byproducts from agriculture, forestry and paper industry. Under the agreement, the repowered units would be deemed “new” emission units, themselves subject to New Source Review and other permitting requirements.

The settlement also includes $10 million in penalties -- $8 million paid to EPA, $1 million paid to Tennessee and $500,000 each paid to Alabama and Kentucky -- as well as $350 million in environmental mitigation projects, including $240 million to be spent on TVA-run energy efficiency projects and $60 million to be divided among Alabama, Kentucky, North Carolina and Tennessee for the states to implement projects of their choosing, so long as they're within the categories specified in the consent decree.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Sometimes I’m so timely I can’t stand it. This morning, I posted about the difficulty in challenging regulations under Massachusetts law. Later this morning, the SJC agreed. In Entergy v. DEP, the SJC upheld DEP’s authority to regulate cooling water intake structures under the state CWA. Funny how the SJC cited to the same language here as did Judge Sweeney in the Pepin case.

We will apply all rational presumptions in favor of the validity of the administration action and not declare it void unless its provisions cannot by any reasonable construction be interpreted in harmony with the legislative mandate.

Entergy argued that the statute and DEP’s regulations under it have always focused on discharges of pollutants, rather than intake of water. This was not persuasive to the SJC. The Court stated that

[T]he permitting regime for discharges does not foreclose the department from developing compatible methods of regulating water intakes…. Specific statutory authority to act in a particular respect does not bar consistent action under general statutory authority.

The Court’s bottom line? 

We will not substitute our judgment as to the need for a regulation, or the propriety of the means chosen to implement the statutory goals, for that of the agency, so long as the regulation is rationally related to those goals. [T]he purpose of conferring broad power on an expert agency is to permit discretion in determining the best approaches to a complex issue.”

I think that the SJC probably got this case right based on its own precedents. However, the Court’s last statement is almost breathtaking in its scope. Has there ever been a clearer or broader defense of the modern administrative state? With a statement like that, could one imagine the SJC ever concluding that the legislature delegated too much authority to the regulatory agencies? And yet, as conservatives sometimes note, it is the legislators, and not the agency personnel, who are elected and who are supposed to make the big picture decisions.

Jefferson would be turning over in his grave.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Anyone who has ever tried to challenge a regulation in Massachusetts knows that it is an uphill battle. Just how tilted the playing field is was reinforced late last month in the decision in Pepin v. Division of Fisheries and Wildlife, rejecting a challenge to DFW’s “priority habitat” regulations. The case involves the Eastern Box Turtle, perhaps the most common of state-listed species.

As our Massachusetts readers know, MESA is similar to, but has some significant differences from, the federal ESA. Fundamentally, MESA prohibits taking “endangered” or “threatened” species or species “of special concern.” The statute provides for a rather cumbersome process by which DFW may designate “significant habitat" in order to protect listed species. Whether it is because the process is too cumbersome, or whether it is because the statute provides that property owners may petition for compensation resulting from a taking of their property following designation of significant habitat, DFW simply doesn’t utilize the process.

Instead, DFW has created regulations concerning “priority habitat,” a term not found in the statute. The priority habitat regulations provide somewhat more flexibility and, importantly, do not have a procedure for compensating landowners for regulatory takings. After part of his property was designated as priority habitat, Pepin sued DFW, claiming that the priority habitat regulations were beyond DFW’s authority under MESA. 

Judge Sweeney of the Land Court was having none of it. First, she noted that MESA gives DFW residual authority to promulgate “any regulations necessary to implement the provisions of this chapter.” Moreover, the statute does not preclude DFW from establishing a second category of protected habitat.  With that as background, Justice Sweeney rehearsed the litany of cases with which Massachusetts lawyers are all too familiar. 

The party challenging the validity of an agency’s regulations bears a formidable burden. This Court gives substantial deference to the agency’s expertise and statutory interpretation, applies all presumptions in favor of the validity of administration action, and declares a regulation void only if its provisions cannot by any reasonable construction be interpreted in harmony with the legislative mandate. 

Given this case law, it is not surprising that Judge Sweeney concluded that MESA does not unambiguously prohibit the priority habitat regulations and that the regulations are consistent with legislative intent. 

Of course, the priority habitat regulations do effectively make a nullity of the MESA provisions regarding significant habitat, but what’s a little nullity among friends. Heads the agency wins; tails the regulated industry loses. What’s new?

• Email This
• Print
• Comments
• Trackbacks
• Share Link

In its 2004 decision in Cooper Industries v. Aviall, the Supreme Court turned upside down many years of settled CERCLA jurisprudence establishing that a PRP only has contribution claims against other PRPs under Section 113(f)(1) and not direct cost recovery claims under Section 107(a).  A decision earlier this week by the Eighth Circuit, Morrison Enterprises v. City of Hastings, coupled with the Supreme Court's 2007 decision in Atlantic Research, provides clear guidance on when a PRP suing another PRP must assert a contribution claim and when he must assert a direct cost recovery claim.

In Atlantic Research, the Supreme Court had held that a PRP which voluntarily undertook response actions can seek to recover the costs of that voluntary cleanup work by bringing a Section 107(a) cost recovery action against other PRPs. At the center of the Court’s reasoning was the inability of a volunteer to seek contribution since voluntary cleanup actions by definition lack the compulsion of a government enforcement action which Aviall found to be the sine qua non of a contribution action under Section 113(f)(1). 

Morrison Enterprises establishes the converse proposition: that a PRP which has been compelled by the government to undertake cleanup work or to pay responses costs can recover all or part of its costs only in a claim for contribution under Section 113(f)(1) and not under Section 107(a).    Specifically, Morrison Enterprises involved a claim by a PRP which had been the subject of a Section 107 enforcement action and agreed to perform certain cleanup work in a Consent Order that resolved that enforcement action. The PRP then sought to recover some or all of the costs of its Consent Order work in a Section 107 cost recovery claim against another PRP. The Eighth Circuit ruled that “response costs incurred pursuant to such administrative settlements following a suit under § 106 or § 107(a) are not incurred voluntarily… The district court correctly concluded [that the PRP] could not maintain a cost-recovery action under § 107(a).”    The failure by the PRP to assert a contribution action instead of a direct cost recovery action was fatal to that PRP’s claim.

Morrison Enterprises and Atlantic Research provide useful guidance to PRPs as to when to assert a direct cost recovery action and when a contribution action. However, those decisions do not resolve all of the problems unleashed by Aviall, particularly with respect to how a settling party can obtain finality, which was the subject of several cases that Seth Jaffe and I blogged about last fall -- Ashland v. Gar Electroplating and Emeryville v. Sherwin Williams. While PRPs now may be able to figure out when they have a Section 107(a) claim and when they have a contribution claim, those PRPs still cannot count on courts to construe CERCLA’s contribution scheme to ensure that settling parties will have meaningful protection from future claims. 

• Email This
• Print
• Comments
• Trackbacks
• Share Link

I’m beginning to feel like a broken record, but the drumbeat of the anti-guidance crowd is not letting up. Earlier this week, the Waters Advocacy Coalition, which is a group of farm and industry trade groups, sent a letter to EPA and the Army Corps of Engineers, requesting that EPA and the Corps withdraw their plan to issue further guidance on the interpretation of “navigable waters” post-Rapanos. It’s not surprising that this group would oppose the guidance. What is most interesting – and persuasive – about the letter, though, is this quote from the draft guidance itself:

the agencies expect that the number of waters found to be subject to the CWA jurisdiction will increase significantly compared to practices under the 2003 SWANCC guidance and the 2008 Rapanos guidance.

To me, it would seem a defining characteristic of guidance that it not alter the jurisdictional scope of laws and regulations. That’s what laws and regulations are for. Guidance, on the other hand, to the extent is does have a role, is to guide those affected by regulation, to assist them in their understanding of legal requirements – not to change the scope of those requirements. I think that, by inclusion of this sentence in the draft guidance, EPA and the Corps have made the strongest possible argument against issuing the guidance. 

Perhaps even more notable was the resolution passed last week by the Environmental Council of the States objecting to EPA’s use of interim guidance and rules. Specifically, the resolution states that

EPA should minimize the use of interim guidance, interim rules, draft policy and reinterpretation policy and eliminate the practice of directing its regional or national program managers to require compliance by states with the same in implementation of delegated programs.

EPA should not use its objection authority when based entirely or in part on interim guidance, interim rules, draft policy or reinterpretation policy.

ECOS, of course, is generally on EPA’s side of the fence. The resolution is powerful evidence that EPA’s use of guidance is not simply to facilitate understanding of applicable laws and regulations, but as a substitute for the regulatory process itself – as a way to impose new binding rules.

Taken together, the ECOS resolution and the text of the proposed revision to the post-Rapanos guidance make a compelling case that EPA’s use of guidance has strayed far from true guidance and is in fact often an end-run around the regulatory process.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Recently, I expressed concern that District Courts, which traditionally have never seen a CERCLA plaintiff they didn’t like, would ignore the Supreme Court’s Burlington Northern decision – at least until there is another Supreme Court decision affirming that Supremes really meant the two-part holding in Burlington Northern: (1) divisibility isn’t that hard and (2) parties aren’t liable as arrangers unless they actually intended to dispose of hazardous material. 

Although it shouldn’t be earthshaking, I was therefore encouraged to see last week’s decision in Schiavone v. Northeast Utilities Service Company. In Schiavone, the defendants sold used transformers to a scrap yard. Their policy was to drain the transformers before sale. The Court concluded that there remained a material dispute whether the defendants sent PCB-containing transformers to the site. Nonetheless, the Court granted the defendants’ motion for summary judgment on the ground that there was no evidence that the defendants intended to dispose of PCBs. Citing to Burlington Northern, the Court stated that:

The defendants’ specific intent to dispose of the transformers themselves is not enough to make them “arrangers” under § 9607(a), even if the defendants had knowledge that oil was in the used transformers when they sold them…. The plaintiffs have produced no evidence that could support a conclusion that the defendants had as a purpose in their dealings with [the scrap yard] disposing of transformer oil containing PCBs.  Consequently, the plaintiffs have not created a genuine issue of material fact as to whether the defendants arranged for the disposal of a hazardous substance.

Sometimes, justice does triumph. I am hopeful that arranger cases where the defendant wasn’t actually intending to dispose of hazardous substances will start to fade away. I remain less optimistic about the divisibility side of Burlington Northern, but one can always hope.

• Email This
• Print
• Comments
• Trackbacks
• Share Link