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

The Cape Wind project cleared another important hurdle yesterday with a 4-2 ruling by the Massachusetts Supreme Judicial Court, holding that the state Energy Facilities Siting Board (EFSB) can authorize local construction permits for the project’s transmission lines. The decision in Alliance to Protect Nantucket Sound Inc. v. Energy Facilities Siting Board is particularly significant because it means that the renewable energy project has all of the state and local permits it needs to move forward.  

In late 2007, after the Cape Cod Commission denied its proposed Development of Regional Impact (DRI), Cape Wind applied to the EFSB for a “certificate of environmental impact and public interest” -- a composite of all of the individual state and local permits required for the construction of the 18.4 miles of transmission lines that will connect the wind farm to the regional power grid. This suit, brought by the Cape Cod Commission, the town of Barnstable, and the Alliance to Protect Nantucket Sound, challenged the EFSB’s May 2009 decision granting the certificate to Cape Wind. In short, the SJC held that the EFSB had the authority to grant the certificate and upheld the Board’s substantive findings, which balance the environmental impacts of the transmission lines with the need for the project. 

A key aspect of the decision is the SJC's rejection of the petitioners' arguments that the EFSB should have reviewed “in-State” impacts of the wind farm, which is permitted exclusively by Federal authorities, rather than focusing solely on the impacts of the transmission lines, which require state and local permits.  Essentially, if the project is built in federal waters, the EFSB can trust the feds to get it right, the majority said.

Chief Justice Marshall (joined by Justice Spina) dissented, issuing a stern warning:

The stakes are high.  As we have recently seen in the Gulf of Mexico, the failure to take into account in-State consequences of federally-authorized energy projects in federal waters can have catastrophic effects on state tidelands and coastal areas, and all who depend on them. 

The decision also includes a lively debate about the implications of the public trust doctrine and the Chapter 91 licensing scheme in this context.

Writing for the majority, Justice Botsford concluded that the statute which authorizes the EFSB to issue certificates of environmental impact and public interest provides

an express legislative directive to the siting board to stand in the shoes of any and all State and local agencies with permitting authority over a proposed "facility"-- that is, a directive to assume all the powers and obligations of such an agency with respect to the decision whether to grant the authorization that is within the agency's jurisdiction, with regulatory enforcement thereafter returned to that agency.

Again, Chief Justice Marshall disagreed.  Reflecting on the SJC’s recent decisions in Moot v. Department of Envtl. Protection, (2007) and Arno v. Commonwealth, (2010), she reasoned that even in this case -- which has to do with the administration rather than the relinquishment of public trust rights -- the Legislature must act expressly. Here, Justice Marshall concluded,

the siting board has purported to act as the protector of the public's long-standing rights under the public trust doctrine without the necessary express legislative authority to do so.

Of course, underlying this debate is the important policy question of which picture of Nantucket Sound is more protective of the public trust?  The state, and now the SJC, have chosen.

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Those who operate industrial facilities or do development in Massachusetts often know far more than they would like about Chapter 214, § 7A, the environmental citizens’ suit provision of the Massachusetts General Laws. Chapter 214, § 7A, eliminates plaintiffs’ usual obligation to demonstrate standing and simply gives 10 citizens the right to sue to prevent or eliminate “damage to the environment.” The damage does have to constitute a violation of a statute, regulation, ordinance, or by-law, the major purpose of which is to prevent damage to the environment.

Chapter 214, § 7A, does not contain any statute of limitations. Does this mean that ten persons can sue any time, even if the conduct complained of is allowed under a permit and the permit was issued long ago, as long as the plaintiff alleges that the permit should not have been issued and the conduct in fact violates a statute or regulation? Thankfully, Judge Locke of the Superior Court recently answered that question, posed in EarthSource v. Burt, with an emphatic “No.”

Full disclosure time – this firm (including yours truly) represents Covanta, the private defendant, in EarthSource v. Burt.

Earthsource v. Burt deals with efforts by Covanta, which operates four municipal waste combustors in Massachusetts, to initiate a process at its SEMASS combustor in which it would take what are known as fats, oils, and grease (or FOGs) from restaurants, separate the FOGs from the associated wastewater, recycle the wastewater, and combust the FOGs at the SEMASS facility. EarthSource is a competitor of Covanta in the FOGs processing business. It and some citizens (many, if not all, of them affiliated with EarthSource or related entities) brought suit against MassDEP and Covanta, not just to stop the FOG project at SEMASS, but alleging wholesale violations by Covanta at all of its Massachusetts facilities. Routinely, the complaint alleged that DEP misinterpreted its own regulations, should not have issued the permits, and that the permits were void “ab initio.” 

Covanta and DEP both moved to dismiss those counts that involved claims related to permits issued outside the appeal period provided in either the applicable substantive statute or in the Massachusetts Administrative Procedure Act, ch. 30A, § 14. EarthSource argued that the APA does not limit the time in which suits can be brought under Chapter 214, § 7A. Judge Locke concluded otherwise, noting that:

a contrary rule would be disruptive to the permitting agencies and that G.L. c. 214, § 7A should not become a means to disturb otherwise settled permits whenever a group of plaintiffs chooses to file suit sometime in the future.

Truer words were never spoken. Going forward, the rule for persons who don’t like permits is going to be “speak now or forever hold your peace.”

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On August 12, in Sierra Club v. Otter Tail Power Co., the Eighth Circuit Court of Appeals dismissed the Sierra Club’s suit related to the Big Stone Generating Station, a coal fired power plant in South Dakota. In doing so, it disagreed with EPA and sided with what appears to be the majority on a question that has produced differing responses amongst the courts - whether the Prevention of Significant Deterioration (“PSD”) program prohibits only the construction or modification of a facility without a PSD permit, or whether it imposes ongoing operational requirements. Finding that PSD requirements are conditions of construction or modification, and not conditions of operation, the court held that violations related to the defendants’ failure to obtain PSD permits occurred at the time the modifications were made, and that the claims were thus barred by the statute of limitations.

The Sierra Club challenged three modifications undertaken at the Station: a 1995 change in fuel source from lignite coal to sub-bituminous coal; a 1998 boiler modification; and, 2001 changes which allowed the Station to supply steam to a nearby ethanol plant. In June 2008, the Sierra Club filed a citizen suit alleging, among other things, that the defendants violated and continued to violate the Clean Air Act in that they had failed to obtain PSD permits prior to the modifications and, as a result, were operating without appropriate permits and without abiding by best available control technology (“BACT”) limits that would have been imposed had PSD permits been obtained.

The Eighth Circuit upheld the district court’s dismissal of the case, basing its decision largely on the language of the PSD statute, which prohibit a facility from being “constructed” without meeting PSD requirements, and the citizen suit provision, which authorizes suit “against any person who proposes to construct or constructs,” as well as the related regulations.  Finding the language unambiguous, the court refused to defer to the contrary interpretation of EPA, which participated as an amicus party. The court rejected the argument that the CAA and PSD regulations should be interpreted as establishing operational duties based on the program’s purpose and the fact that PSD permits impose requirements on the operation of facilities, finding that such requirements are not enforceable independent of the permitting process. In addition to finding the Sierra Club’s civil penalty claims barred, the court held that its claims for equitable relief seeking to bring the Station into compliance with the Act were also barred. 

Under the Eighth Circuit’s reasoning, while a facility must obtain a PSD permit prior to construction or modification, and, having done so, must operate in accordance with the permit, if the operator fails to apply for such a permit, claims relating to its failure to obtain or operate pursuant to an appropriate PSD permit are barred unless brought within five years of the construction or modification. Given the potential difficulties involved in detecting PSD violations, the decision places a burden on plaintiffs seeking enforcement of PSD requirements to identify and file claims related to such violations as early as possible. Given that this issue has come up a number of times and there is some disagreement amongst the courts as to the right answer, it is possible that the Sierra Club will seek further review of this issue.

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EPA shows no signs of slowing down in its efforts to use the Clean Air Act’s PSD/NSR provisions as an enforcement club. The latest target in EPA’s crosshairs is the Detroit Edison Monroe Power Plant. Late last month, DOJ filed a complaint alleging violations of PSD/NSR requirements in connection with a project to replace the high temperature reheater and the economizer at Monroe Unit 2. Aside from the broad sign that EPA remains committed to these cases, the most recent action is notable for at least two reasons:

The suit names both Detroit Edison, which owns the plant, and DTE Energy, Detroit Edison’s parent. The complaint alleges that DTE Energy “employees make decisions involving construction and environmental matters at the plant” and that it “must approve major capital expenditures at” Monroe. Naming the parent is consistent with actions EPA has taken with respect to some of this firm’s clients; Parent companies would be wise to pay attention to this trend.

The project that is the subject of the complaint took place this year; we’re not talking about EPA reaching back to projects completed in the 1980s or 1990s. The complaint alleges that DTE provided one day’s notice before commencing the project. I’m not involved in the case, so I don’t know the details, but it’s hard to imagine that there isn’t some relevant background here. Either Detroit Edison and DTE, relying on some of the more favorable PSD/NSR decisions, decided just to pay their money and take their chances, or someone at EPA or the State of Michigan led the plant astray. Time will tell.

There has been no doubt for some time that EPA is going to continue to seek reductions in conventional pollutant emissions through these types of enforcement actions. This action is also a good reminder, however, of the type of action we have to look forward to, assuming that the Tailoring Rule is upheld. If there is no Congressional action, the PSD/NSR program is going to be EPA’s only leverage to get GHG reductions.

I can’t wait.

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As many of you know, the Commonwealth's tidelands licensing statute, Chapter 91, is one of my favorites, for no other reason than that it gives me the opportunity to talk about where the "waters ebbeth and floweth."  Deriving from the Colonial Ordinances of 1641 and 1647, Chapter 91 is about as arcane as it gets – which, of course, lawyers are supposed to like. 

The short version is that the Commonwealth holds the fee interest in “Commonwealth Tidelands” – those below the low water line. While the Commonwealth can license private use of Commonwealth Tidelands, only the legislature, acting explicitly, can give up those rights. Private Tidelands, the land between high and low water, are owned by the upland owner, but are subject to public rights in “fishing, fowling, and navigation” – another reason why I love Chapter 91.

In a decision handed down today, the Massachusetts SJC made crystal-clear that nothing short of an explicit legislative act is sufficient to eliminate the public’s ownership rights in tidelands. In Arno v. Commonwealth, the “owner” of land in Nantucket that was filled in the 19^th Century sued the Commonwealth, essentially seeking a declaration that he was the fee owner of the land. His argument was that a prior owner had registered the land in 1922, and the Attorney General, in commenting at the time, did not object to registration or assert that the Commonwealth still owned the land. To the SJC, what the AG did – or intended to do – in 1922 was irrelevant. 

Neither the Land Court nor the Attorney General had the authority to divest the public of its rights in Arno’s parcel…. Only an act of or an express delegation by the Legislature could extinguish the public’s rights.

The decision is probably not a surprise following the SJC’s original Moot decision, but is nonetheless a lesson to those who would claim ownership in tidelands. If the waters ebbeth and floweth – or if they ever did – only the legislature can give them away.

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The good news is that EPA is relying on good science. The bad news is that the science says things will keep getting worse.

After several months of review, on July 29, EPA denied 10 petitions to reconsider its 2009 Endangerment Finding for Greenhouse Gases under Section 202(a) of the Clean Air Act. The petitions, which were filed by, among others, the attorneys general of Texas and Virginia and the US Chamber of Commerce, pointed to errors in the 2007 report by the Intergovernmental Panel on Climate Change and the University of East Anglia “Climategate” email scandal as examples of how the science underpinning EPA’s ruling may have been flawed or skewed.  A number of petitioners have vowed to appeal the ruling.

In rejecting the petitions, the EPA confirmed, in a 217-page denial and 360-page response to each charge, that there are no scientific or other bases to change its finding that climate change caused by emissions of greenhouse gases threatens public health and the environment. As the denial concluded, the evidence proving climate change is a human-caused problem remains “robust, voluminous and compelling.”   

The science supporting the Finding has also been reinforced by recent additional major science assessments. One of these is this week’s report by NOAA on the State of the Climate, which, though it is a rigorous and solid report, is one depressing read.  The report draws on the work of more than 300 scientists from 160 research groups in 48 countries, taking observations from the top of the atmosphere to the depths of the ocean, all of which reach the same conclusion – our climate is unmistakably changing. The report looks at 10 measurable planet-wide indicators -- all of which are moving quickly in the direction they should not.  Among the notable conclusions and statistics are that the decade of the 2000s was the warmest yet and the average temperature on Earth has grown a full degree Fahrenheit over just the past 50 years.

People may be unhappy about the conclusions and may disagree about appropriate policies to address climate change, but the probability that a court will overturn the Endangerment Finding seems approximately zero.

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My apologies if this post is a mash note to Judge Wilkinson. Sometimes a decision is written with such clarity and simplicity that you have to sit up and take notice. Such is the case with yesterday’s decision in North Carolina v. TVA, reversing the District Court decision imposing an injunction against four TVA plants that would have required installation of additional controls for NO_x and SO₂ , notwithstanding the absence of any allegation that the plants were violating their permits under the Clean Air Act. My apologies also to my friends in the environmental community and the Massachusetts AG’s office, who supported the District Court decision, but I have a hard time seeing this decision as anything other than the death knell for this kind of public nuisance litigation.

My only complaint with the opinion is that second paragraph of the decision is such a cogent summary that it’s not obvious to me that the decision needed to go on for another 30 pages. That paragraph states:

This ruling was flawed for several reasons. If allowed to stand, the injunction would encourage courts to use vague public nuisance standards to scuttle the nation’s carefully created system for accommodating the need for energy production and the need for clean air. The result would be a balkanization of clean air regulations and a confused patchwork of standards, to the detriment of industry and the environment alike. Moreover, the injunction improperly applied home state law extraterritorially, in direct contradiction to the Supreme Court’s decision in International Paper Co. v. Ouellette, 479 U.S. 481 (1987). Finally, even if it could be assumed that the North Carolina district court did apply Alabama and Tennessee law, it is difficult to understand how an activity expressly permitted and extensively regulated by both federal and state government could somehow constitute a public nuisance. For these reasons, the judgment must be reversed.

While I will thus leave the bulk of the opinion to readers particularly interested in the subject, one other paragraph stands out for me. After discussing the contours of public nuisance litigation, Judge Wilkinson noted that:

while public nuisance law doubtless encompasses environmental concerns, it does so at such a level of generality as to provide almost no standard of application. If we are to regulate smokestack emissions by the same principles we use to regulate prostitution, obstacles in highways, and bullfights, see Keeton, supra, at 643-45, we will be hard pressed to derive any manageable criteria. As Justice Blackmun commented, "one searches in vain . . . for anything resembling a principle in the common law of nuisance."

There’s no question in my mind that this decision is the end of public nuisance litigation as a viable cause of action for traditional pollutants, where those pollutants are comprehensively regulated under a federal statute. Moreover, it certainly provides a roadmap for dismissal of public nuisance claims concerning GHG emissions. As I noted last year in discussion Connecticut v. AEP, even though the 2^nd Circuit allowed GHG nuisance claims to proceed, part of its argument was that there is no comprehensive federal regulatory scheme with respect to GHG. Its argument clearly suggested that, once such regulations are in place, public nuisance defendants might have better luck. The promulgation of the Tailoring Rule now means that public nuisance defendants can point to North Carolina v. EPA and say that the federal rules have displaced the common law of nuisance. I think that they will probably win that argument. They certainly should.

Thank you Judge Wilkinson.

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Last week, in City of Pittsfield v. EPA, the First Circuit Court of Appeals affirmed denial of a petition by the City of Pittsfield seeking review of an NPDES permit issued by EPA. The case makes no new law and, by itself, is not particularly remarkable.  Cases on NPDES permit appeals have held for some time that a permittee appealing an NPDES permit must set forth in detail in its petition basically every conceivable claim or argument that they might want to assert. Pretty much no detail is too small. The City of Pittsfield failed to do this, instead relying on their prior comments on the draft permit. Not good enough, said the Court. 

For some reason, reading the decision brought to mind another recent appellate decision, General Electric v. Jackson, in which the D.C. Circuit laid to rest arguments that EPA’s unilateral order authority under § 106 of CERCLA is unconstitutional. As I noted in commenting on that decision, it too was unremarkable by itself and fully consistent with prior case law on the subject.

What do these two cases have in common? To me, they are evidence that, while the government can over-reach and does lose some cases, the deck remains stacked overwhelmingly in the government’s favor. The power of the government as regulator is awesome to behold. Looking at the GE case first, does anyone really deny that EPA’s § 106 order authority is extremely coercive? Looking at the Pittsfield case, doesn’t it seem odd that a party appealing a permit has to identify with particularity every single nit that they might want to pick with the permit? Even after the Supreme Court’s recent decisions tightening pleading standards, the pleading burden on a permit appellant remains much more substantial than on any other type of litigant.

Why should this be so? Why is it that the government doesn’t lose when it’s wrong, but only when it’s crazy wrong? 

Just askin’.

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There are only two permissible answers to this question:

1.                   Yes

2.                   I don’t know.

I was reminded of this reality in reading the decision issued earlier this month in Solutia v. McWane, in which Chief Magistrate Judge Greene of the Northern District of Alabama held that a party which incurs response costs pursuant to a consent decree or administrative order may not bring an action for cost recovery under § 107 of CERCLA and is instead limited to a contribution action under § 113 of CERCLA. 

For those of our readers who are either masochists or do Superfund law for a living and thus have to keep up with this stuff, the decision is worth reading; it’s a useful summary of the post-Atlantic Research, post-Aviall case law. At bottom, the decision is a reasonable, practical result. Why should the nature of a private party’s right of action depend on whether the party did the cleanup itself or instead reimbursed the government for costs incurred pursuant to a government-led cleanup?

I will say that it’s not obvious to me that the Supreme Court would agree, were it to hear the case, simply because the Supreme Court has appeared to be so fixated on the traditional common law understanding of the nature of contribution as the right of a contribution plaintiff to receive a payment from a third party defendant when the contribution plaintiff has paid to the original plaintiff more than its fair share of a common liability.  Direct response costs don’t fit neatly into that traditional contribution model. However, it's probably a moot point, because it is hard to picture this issue getting to the Supreme Court. I expect the justices to conclude that they’ve heard enough of these cases by now.

We’re still left with my original question. Why is it that 30 years after CERCLA was passed and 24 years after the SARA amendments, the nature of third party claims still isn’t clear? Because CERCLA is incomprehensible, that’s why.

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On July 6, 2010, the United States Environmental Protection Agency (“EPA”) released a proposed rule, dubbed the “Transport Rule”, which would replace the Clean Air Interstate Rule (“CAIR”). As you likely recall, in 2008 the D.C. Circuit Court of Appeals, in North Carolina v. EPA, found that CAIR had a number of fatal flaws and remanded it to the Agency. (Due to its environmental benefits, the Court agreed to leave CAIR in effect while EPA worked on addressing its concerns).  

EPA has clearly attempted to address the problems identified in North Carolina v. EPA. Most significantly, while the Transport Rule still contains a trading component, trading is limited and the Rule ultimately requires that each state provide the reductions required to mitigate that state’s contribution to the interstate air transport problem. At 1,300 pages, the Rule is too long even to summarize here. For a quick summary, take a look at our Client Alert. You might also want to take a look at EPA’s helpful Fact Sheet and presentation summary for slightly more detail.

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It has long been understood that Massachusetts that the Commonwealth cannot meet its renewable energy goals with solar power alone. Solar is great, but really ratcheting up the percentage of energy supplied by renewable sources is going to take a big commitment to wind. In fact, Governor Patrick announced a goal of 2,000 MW of wind on- and off-shore in Massachusetts by 2020. There are currently 17 MW of wind power in Massachusetts.

Everyone knows the permitting travails – now, hopefully, over – that Cape Wind has faced. It is less known that on-shore wind has not been any easier to develop in Massachusetts. Yesterday, in Ten Local Citizen Group v. New England Wind, the Supreme Judicial Court released a major on-shore wind project from permitting appeal purgatory. The New England Wind project (perhaps still better known as Hoosac Wind) in Florida and Monroe, Massachusetts, was proposed in 2003. Not uncommonly for projects of this sort, the appeal that delayed project implementation had nothing to do with the merits of on-shore wind. It was an appeal over wetlands approvals needed for a gravel access road. By the time MassDEP issued a Superseding Order of Conditions, the opponents requested an adjudicatory hearing, the hearing was held, the ALJ issued a 78-page recommended decision rejecting the permit, the Commissioner issued a 31-page final decision affirming the permit and rejecting the ALJ’s recommended decision, the Superior Court affirmed the Commissioner, and the SJC affirmed the Superior Court, it was July 6, 2010.

I don’t know about you, but I’m out of breath just typing this history. There has to be a better way. It’s certainly safe to say that if wind projects – wherever located – take 7 or 8 years to permit, it’s going to be 2120, not 2020, before we have 2,000 MW of wind in Massachusetts. As some readers will be aware, the Administration has been supporting legislation to facilitate siting of wind power facilities in Massachusetts, but it hasn’t been enacted yet and the forces that make it difficult to obtain final permits in Massachusetts go far beyond the issues that would be addressed by the wind siting legislation. 

For the lawyers among my readers, the decision breaks little ground. Yes, the Commissioner of DEP has considerable discretion in interpreting her own regulations. No, the ALJs who hear adjudicatory appeals and make recommended decisions are not entitled to any deference. 

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Sometimes, the practice of environmental law just takes my breath away. A decision issued earlier last month in United States v. Washington DOT was about as stunning as it gets. Ruling on cross-motions for summary judgment, Judge Robert Bryan held that the Washington State Department of Transportation had “arranged” for the disposal of hazardous substances within the meaning of CERCLA by designing state highways with stormwater collection and drainage structures, where those drainage structures ultimately deposited stormwater containing hazardous substances into Commencement Bay -- now, a Superfund site -- in Tacoma, Washington.  

I’m sorry, but if that doesn’t make you sit up and take notice, then you’re just too jaded. Under this logic, isn’t everyone who constructs a parking lot potentially liable for the hazardous substances that run off in stormwater sheet flow? 

For those who aren’t aware, phosphorus, the stormwater contaminant du jour, is a listed hazardous substance under Superfund. Maybe EPA doesn’t need to bother with new stormwater regulatory programs. Instead, it can just issue notices of responsibility to everyone whose discharge of phosphorus has contributed to contamination of a river or lake.

The Court denied both parties’ motions for summary judgment regarding whether the discharges of contaminated stormwater were federally permitted releases. Since the Washington DOT had an NPDES permit, it argued that it was not liable under § 107(j) of CERCLA. However, as the Court noted, even if the DOT might otherwise have a defense, if any of the releases occurred before the permit issued – almost certain, except in the case of newer roads – or if any discharges violated the permit, then the Washington DOT would still be liable and would have the burden of establishing a divisibility defense. 

If one were a conspiracy theorist, one might wonder if EPA were using this case to gently encourage the regulated community to support its recent efforts to expand its stormwater regulatory program. Certainly, few members of the regulated community would rather defend Superfund litigation than comply with a stormwater permit.

You can’t make this stuff up. 

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Last year, I analogized PRP efforts to have CERCLA’s unilateral administrative order provisions declared unconstitutional to Chevy Chase’s repeated announcements during the first year of Saturday Night Live that Francisco Franco was still dead. Eventually, that joke wore out. With yesterday’s decision by the D. C. Circuit Court of Appeals, in General Electric v. Jackson, upholding EPA’s UAO authority, these legal challenges may be similarly about to wear out. 

The analysis in GE v. Jackson is pretty straightforward. EPA may not obtain fines or treble damages if a PRP defies a UAO unless the agency goes to court and the court concludes that the PRP is in fact liable under CERCLA and that none of the statutory defenses apply. Because PRPs thus have a “pre-deprivation” remedy, there is no due process violation. At a formal level, that’s hard to dispute. The formal pre-deprivation remedy and the absence of a circuit split make it unlikely that the Supreme Court will have any interest in hearing this case.

GE’s most cogent argument, to me, is that, as a practical matter, the deck is so heavily stacked in EPA’s favor that it really is very difficult for PRPs to take advantage of the due process rights that CERCLA provides. The Court gave this argument short shrift, noting that, out of 1,638 recent UAOs, PRPs had refused to comply with 75, or 4.6%. However, we do not know the details underlying these data. Many of these 75 non-complying PRPs could simply be deadbeats, rather than viable PRPs who considered themselves not liable or had reason to believe that EPA’s remedy was arbitrary and capricious. 

There are limits to the use of anecdotal evidence, but does anyone who has a lot of CERCLA experience really deny that the coercion faced by PRPs is extreme? This is why liberal friends of mine who consider themselves environmentalists, but who aren’t lawyers and don’t know how CERCLA works, are often shocked when I describe some of these cases – in an unbiased way, of course – and ask how CERCLA can be constitutional.

My own sense is that the D.C. Circuit decision is probably right as a matter of constitutional law. Not every law that is unfair is unconstitutional. I certainly think that CERCLA’s UAO provisions are unfair. I also think that they are bad law, masquerading as “polluter pays” provisions. However, to the extent one can really even speak about Congressional intent given the haphazard way CERCLA was drafted, Section 106, as interpreted in GE v. Jackson, is pretty clearly what Congress intended and, for now, it’s the law. 

Francisco Franco is still dead, and so are constitutional challenges to EPA's UAO authority under CERCLA.

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Yesterday, the Supreme Court issued its decision in Monsanto v. Geertson Seed Farms, the big NEPA case before the Court this term. The District Court had struck down the decision by the Animal and Plant Health Inspection Service to completely deregulate roundup ready alfalfa (RRA). That decision was not actually under appeal. The appeal concerned only the scope of the injunction issued by the District Court, which precluded APHIS from issuing any kind of deregulation decision without completing an Environmental Impact Report (EIS) and similarly issued a nationwide injunction against planting of RRA alfalfa prior to completion of an EIS. The District Court decision had been upheld by the Ninth Circuit Court of Appeals.

The Supreme Court reversed, and vacated the injunction. I’ve got to say, Supreme Court decisions in environmental cases have often puzzled me in recent years, but it is difficult to read this one and not feel its inevitability and obviousness. This case really shouldn’t be news. The Court decided in Winter v. Natural Resources Defense Council (the Navy sonar training case) that the standard for injunctions in NEPA cases is not any different from that in any other case. In other words, injunctions are not automatic – or even presumed – in NEPA cases. Instead, the party seeking the injunction must satisfy the traditional four-factor test in order to obtain relief.

In Monsanto, the Court simply put the final nail in the coffin of the idea NEPA is somehow different. Citing to cases suggesting that the standard may be more lenient under NEPA, the Court yesterday said that:

The statements quoted above appear to presume that an injunction is the proper remedy for a NEPA violation except in unusual circumstances. No such thumb on the scales is warranted. … It is not enough for a court considering a request for injunctive relief to ask whether there is a good reason why an injunction should not issue; rather, a court must determine that an injunction should issue under the traditional four-factor test….

Here, the Court concluded that an injunction prohibiting even partial deregulation of RRA was overbroad. Moreover, because no one challenged the District Court decision striking down APHIS’s original deregulation decision, those opposing use of RRA will have another opportunity to go to court and seek an injunction in the future, should APHIS again try to deregulate RRA without having first complied with NEPA.

The lesson? If you want an injunction for a NEPA violation, you better be able to demonstrate that the balance of equities and the public interest are on your side.

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Yesterday, the Supreme Court decided, 8-0, in Stop the Beach Renourishment v. Florida Department of Environmental Protection, that a Florida law which allows the State DEP to fill in submerged land (owned, under Florida law, by the State), and then to cut off the littoral owners’ rights to accretion of the beach front without paying compensation, was not a taking requiring compensation under the 5^th Amendment. The decision was fairly easy, even for the property rights wing of the court, because it concluded that Florida law had always provided for such a result, so that the action by the DEP did not change the private owners’ preexisting rights.

However, the decision masks both continuing deep divisions on the Court concerning Takings Clause issues and confusion, if not incoherence, in the Justices' thinking.  As I noted when the Court took the case, the Court in Lucas distinguished state regulatory action limiting owners’ use of the property from “restrictions that background principles of the State’s law of property and nuisance already place upon land ownership.” I think it's a specious distinction. We used to regulate by common law of nuisance. Now we regulate by statute and regulation. Why should the common law be treated differently by the Supreme Court for Takings Clause purposes than statutes or regulations? 

In yesterday’s decision, four members of the Court answered this question. It turns out, according to Justices Scalia, Alioto, Roberts, and Thomas, that judicial changes to the common law may also subject the government to a regulatory takings claim. The reason? It is that, according to Justice Scalia, “the Constitution was adopted in an era when courts had no power to ‘change’ the common law.” News to me. I hadn’t realized that there was a halcyon day when the common law was fixed and perfect. Thus, it turns out, common law restrictions on property avoid the taking label only if they existed as of the time of the Constitution.

Justices Kennedy, Sotomayor, Breyer, and Ginsburg concurred in the judgment (Stevens did not participate), but stated that it was premature to try to determine when judicial decisions might provide grounds for a takings claim. Justice Kennedy did emphasize that the plain language of the Takings Clause does not address what are now known as regulatory takings: 

The Framers most likely viewed this Clause as applying only to physical appropriation pursuant to the power of eminent domain.

Of course, Justice Kennedy is right on this score – a point somehow ignored by Justice Scalia in his originalist approach to constitutional interpretation. 

I normally represent private property owners and there are certainly times when, it appears to me, the government tries to achieve what might be noble objectives on the backs of private owners, simply because it doesn’t want to bear the cost.  Nonetheless, I think that this issue isn’t that complicated and the proper resolution would eliminate most takings claims. If a private use of land unreasonably imposes costs on neighbors or the public, then that use can be restricted, either by courts or by regulatory agencies, without payment of compensation. That type of regulation simply isn’t a taking. And, yes, the definition of “unreasonable” may change over time. That’s life in the big city – or the beachfront. Get over it.

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Last Friday, the Court of Appeals for the 5^th Circuit issued an order – boggling the minds of lawyers and non-lawyers alike – dismissing the plaintiffs' appeal in Comer v. Murphy Oil, one of the climate change nuisance cases. As the order and dissents make clear, it’s quite a set of circumstances. The District Court dismissed the case. A panel of the 5^th Circuit reversed. A request to rehear the case en banc was made. Seven out of 16 judges recused themselves. Of the nine remaining judges, six voted to rehear the case en banc. 

Three months later, one of the nine judges who voted on the en banc petition recused herself, leaving only eight – or half – of the judges. After requesting and receiving letter briefs from the parties, five of the remaining eight judges concluded that the last recusal deprived the Court of Appeals of a quorum, which means that the Court cannot hear or decide the appeal. Since the Court had already determined that, pursuant to its rules, the original panel decision was vacated when the decision to hear the case en banc was made, there is now no Court of Appeals decision; nor will there ever be one. The District Court decision dismissing the case, which had been reversed by the panel, is now in effect again, and the plaintiffs’ only remedy is a Supreme Court appeal.

As readers of this blog know, I’m not a believer in climate change nuisance litigation. As a formal matter, I think plaintiffs probably lack standing in these cases. As a practical matter, nuisance litigation is not the right way to regulate GHG emissions. However, I have to admit that I find the order breathtaking. The plaintiffs have a formal statutory right of appeal. As Judge Dennis pointed out in a scathing dissent,

federal courts lack the authority to abstain from the exercise of jurisdiction that has been conferred…. Just as courts have an “absolute duty … to hear and decide cases within their jurisdiction, [] litigants have a corresponding due process right to have their cases decided when they are properly before the federal courts.”

I’ll spare you the details, but Judge Dennis provided several different practical solutions that the Court could have utilized to hear the case.

My initial reaction is that this will slow Supreme Court review of this issue. The 5^th Circuit was likely to affirm the District Court decision, which would have created a split with the Second Circuit. The order issued last week means that there is no circuit split at this point. While the plaintiffs can appeal the order to the Supreme Court. even if the Supreme Court were to reverse the order, it would only be to order the 5^th Circuit to hear the appeal on the merits. If the 5^th Circuit is to hear the case, it’s years away at this point. 

Jarndyce v. Jarndyce, anyone?

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In 1972, Christopher Stone published his seminal book “Should Trees Have Standing?” That same year, Justice Douglas posed essentially the same question in his dissent in Sierra Club v. Morton, in which he argued that inanimate objects should have standing “to sue for their own preservation.”

I hadn’t thought of this for some time, but was reminded of the issue by an article in GreenWire this week, reporting on a study which has concluded that kudzu, an invasive species which is, one might say rhetorically, taking over the southeastern United States, increases NO_x levels and thus leads to the formation of ground-level ozone. Indeed, the study concluded that if kudzu does in fact take over – to the point where it covers all non-urban, non-agricultural soil – the number of areas exceeding the ozone NAAQS would increase by more than one-third.

Now, what’s the point of this other than the opportunity for a snappy headline? Perhaps nothing. I love a snappy headline. On the other hand, the report does serve as a useful reminder that environmental science and policy are really complicated. I do not use this complexity to suggest that the government should not act in the face of uncertainty, but I do believe that it can serve as a useful reminder of the limits of our knowledge and the appropriateness of a prudent caution before we assume we know all the answers. 

At a practical level, can EPA set up an offset program that would allow new sources of NO_x to move forward if they remove a certain number of acres of kudzu? After all, no one likes kudzu, anyway.

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When the Burlington Northern decision was first announced, I concluded that “never has the Supreme Court done so much by doing so little.” On May 5, Judge John Mendez, of he Eastern District of California, proved me at least half right. In United States v. Iron Mountain Mines, joint and several liability was imposed on the defendants in 2002. The 2002 decision stated that “given the nature of pollution at the site, it would be difficult to identify distinct harms.” The court did not analyze whether there was a reasonable basis for apportionment of liability. 

Following the Burlington Northern decision, the defendants moved for reconsideration, arguing that Burlington Northern constituted an intervening change in the law. Defendants argued that “the Supreme Court clearly meant to send a signal to other courts that they must begin evaluating apportionment in a different way.” I think that the defendants in Iron Mountain were right.  Unfortunately, that’s not the standard for a motion for reconsideration.   If Iron Mountain were being decided for the first time today, the defendants might get a better result, but that doesn't mean that they win their motion for reconsideration.

What the Supreme Court really said in Burlington Northern isn’t that the law was wrong; it is that District Courts weren’t applying the law correctly. District court judges had their collective judicial thumbs firmly on the side of the government. The Supreme Court simply told the lower courts to take those thumbs off the scales. I hope that this decision will not encourage lower courts to keep the thumbs on the scales.

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First Kerry-Lieberman, then the Tailoring Rule – a busy week for climate change. Senator Kerry certainly did not miss the coincidence. He called the release of the Tailoring Rule the “last call” for federal legislation. I’ve noted before the leverage that EPA regulation would provide, but this is the most explicit I’ve seen one of the sponsors on the issue.

As to the substance, there are not really any surprises at this point. EPA is certainly working to soften the blow of GHG regulation under the PSD program. Here are the basics (summarized here):

January 2, 2011 – Facilities obtaining PSD permits for pollutants other than GHGs after that date will need to meet BACT for GHG (whatever that may be) if their GHG emissions will increase by at least 75,000 tpy.

July 1, 2011 – New facilities with emissions of at least 100,000 tpy of GHG will need to obtain a PSD permit and meet BACT (whatever that may be) for GHG, even if they do not need a PSD permit for other pollutants. Modified facilities with increases of at least 75,000 tpy will have to obtain a PSD permit and meet BACT (whatever that may be) for GHG, even if they do not need a PSD permit for other pollutants.

July 1, 2012 – EPA will conclude a further rulemaking to address smaller sources. EPA has already committed to not regulate sources with GHG emissions below 50,000 tpy and further stated that permits would not be required for smaller sources before April 30, 2016.

As I’ve subtly hinted above, we still don’t know what EPA thinks BACT for GHG may be. EPA has at least suggested that, with respect to coal plants, BACT may be Integrated Gasification Combined Cycle, or IGCC, and with respect to IGCC plants, BACT may be natural gas. If so, we’re not going to see many traditional coal plants permitted after this rule takes effect.

What about opposition to the rule? It’s near certain that someone will challenge it. While environmental groups support it and have suggested that opponents may not have standing, I’m skeptical. I think it likely that someone with standing will challenge it. I also think that there is a reasonable chance that the rule is overturned, because it’s not obvious to me that the courts will buy the “administrative necessity” argument. The more fundamental point is that I’m not sure it matters. If the Tailoring Rule is struck down, a court is still unlikely to vacate the rule. Instead, the court is likely to keep the Tailoring Rule in place, while giving EPA time to figure out how to comply with conflicting mandates in a way that doesn’t bring the world as we know it to an end.

At bottom, the problem isn’t the Tailoring Rule. The problem is that Massachusetts v. EPA makes regulation of GHG under the existing Clean Air Act inevitable absent congressional action. In other words, John Kerry is right; the Tailoring Rule is last call for the climate bill. I happen to agree with opponents that regulation of GHG under existing authority will be a nightmare. Even exempting small sources, PSD is just a terrible way to go – one of the last vestiges of command and control regulation and a nearly incomprehensible one, at that.

However, given Massachusetts v. EPA, Congress really only has two ways to fix the problem. The first would be to pass climate legislation. The second would be to pass legislation to preclude EPA regulation of GHG under existing authority. Right now, neither alternative seems likely, but once EPA rules are in effect, they’ll both be more tempting. We’ll see which we Congress moves.

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The Western Climate Initiative is scheduled to begin its cap-and-trade program in 2012.  But as ClimateWire highlighted today, the number of states who will be ready and willing to participate in the program is quickly dwindling.  Utah is the latest member of the seven-state, four-Canadian-province agreement to announce that it will not have the state authority needed to actually implement a cap-and-trade program in 2012.  Montana, Washington and Oregon will also probably miss the 2012 start date, and Arizona's governor withdrew from the cap-and-trade program entirely in February.   Meanwhile, New Mexico's implementation of regulations may be derailed by a lawsuit from utility and oil and gas companies which contends that the state Environmental Improvement Board cannot regulate greenhouse gases without setting ambient air quality standards.

This leaves only California, British Columbia, Manitoba, Ontario and Quebec as the original members of the agreement who may be on track to take part as planned.   But even California's ability to participate in 2012 might face challenges -- as ClimateWire noted on Monday, a ballot initiative set for November would cancel the state's authorizing statute, A.B. 32, until the unemployment rate falls.

Although California and the Canadian provinces account for 70% of the region's emissions, and WCI is working on a plan to allow other states to join the cap-and-trade program in subsequent years, these defections may cause significant issues for the Initiative.  One important issue to iron out for California's participation is which jurisdiction controls the allowances that cover electricity imports.  Under the WCI framework, electricity imports from outside of the region are counted as part of the cap in the jurisdiction where they are used, but generation originating inside the region is assigned to the generating facility.  This could create a large problem for California, which imports nearly half of its electricity from neighboring states.

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One of the outstanding questions following the Supreme Court decisions in Aviall and Atlantic Research was whether a party which had entered into a consent decree with the United States and incurred direct response costs as a result could bring an action for cost recovery under § 107 of CERCLA or whether such a settling party would instead have a contribution action under § 113. The problem facing practitioners and the courts following Atlantic Research was that the Supreme Court seemed to have backed itself into a corner. By focusing its analysis of § 113 so narrowly on the traditional common law understanding of contribution, it at least suggested that contribution claims under § 113 might be limited to situations in which the plaintiff had paid “reimbursement” to satisfy a “common liability.”

Unfortunately, if a party which settled with the government and paid direct response costs could instead bring an action under § 107, then the defendant in the private action would face the specter of joint and several liability, notwithstanding that the private plaintiff was also liable. The Supreme Court thought it addressed this issue in Atlantic Research by noting that the defendant in a private action under § 107 could bring a contribution counterclaim, thus forcing an equitable allocation. However, as the Third Circuit noted in Agere Systems v. Advanced Environmental Technology, decided earlier this week, the Supreme Court’s solution doesn’t work when the private plaintiff has entered into a consent decree with the government pursuant to which it has protection against claims for contribution under § 113. Can Justice Thomas say “oops”?

What was the Third Circuit’s solution? Like Justice Thomas, it chose the straightforward approach. It simply barred private claims under § 107 where the private plaintiff would otherwise be liable under CERCLA, but, by virtue of contribution protection, would be immune from a counterclaim under § 113. While the holding is certainly right as a matter of policy, as a matter of law it seems largely a case of what we lawyers might call ipse dixit – basically, it’s so because I say so. Because it would be unfair to allow a private liable party to obtain a joint and several verdict against another private party, the court simply forbid it.

Interestingly, the Third Circuit did not address the question whether the plaintiffs had a right to bring a contribution action under § 113; it appeared to assume that they had such a right, without discussing the Supreme Court’s indication that contribution claims might be limited to reimbursement. If forced to face the issue directly, the Third Circuit would presumably have said that, just as we have to be fair to private defendants and not impose joint and several liability on them, we have to be fair to private plaintiffs and give them some kind of remedy. If they don’t have claims under § 107, they simply must have claims under § 113.

Given the practicality of the result, it seems likely that other courts of appeal will follow the Third Circuit’s lead. However, if the issue does somehow make it up to the Supreme Court, I still wouldn’t bet on the outcome there. They have surprised us before with their Superfund jurisprudence.

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Last week, Judge Thomas Varlan handed the power plant sector a major win in the NSR enforcement arena, ruling that economizer and superheater replacement projects in 1988 at the TVA Bull Run plant were routine maintenance not subject to NSR/PSD regulations. Judge Varlan ruled for the TVA notwithstanding that: 

The projects cost millions of dollars (but less than $10M each)

They extended the life of the plant by 20 years

The costs were identified as capital, not maintenance, expenses

The projects were more extensive than other economizer/superheater projects that had previously been implemented at the Bull Run facility

Why did the Court rule for the TVA?

Although expensive, the projects’ costs were consistent with a wide range of maintenance projects conducted at Bull Run during the time frame

These projects were routine in the industry, even if not commonly performed more than once at individual facilities

Life extension, while a result of the projects, was not their primary purpose

If this decision is upheld on appeal, it will significantly weaken EPA and citizen NSR/PSD enforcement efforts in the power plant sector – at least in the Sixth Circuit, where there are a lot of coal-fired power plants.

Whether the decision is right or wrong – and neither reversal nor affirmance by the Sixth Circuit would surprise me – I’d like to take this opportunity to get on my soapbox about the NSR program as a whole. Why are we fighting about whether projects implemented 22 years ago were routine maintenance? Wouldn’t it make more sense to rely on trading programs that are proven to work cost-effectively to reduce emissions than to try to figure out whether replacement of a superheater provides sufficient leverage to require a power plant to install a scrubber or SCR?

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Last week, Judge John Darrah handed the government a defeat in a PSD/NSR enforcement action, when he ruled that the requirement to obtain permits under the PSD program prior to making major modifications was solely a pre-construction obligation and did not constitute a continuing violation. 

United States v. Midwest Generation was one of the recent wave of government PSD/NSR actions, filed last summer. The problem with the government’s case was that Midwest Generation had purchased the six facilities at issue in the case from Commonwealth Edison in 1999 and all of the alleged changes but one were made prior to the purchase.

Although the court thoroughly reviewed the case law – and found it generally supportive of its conclusion – its major focus was on a plain reading of the statutory language (and we know how much this Supreme Court likes plain readings). The relevant statute provision provides that:

No major emitting facility … may be constructed in any area to which this part applies unless … a Permit has been issued…. 

To Judge Darrah,

the plain meaning of the statute’s introductory language … thus prohibits the construction of a “major emitting facility’ unless [the statutory requirements] are met…. On its face, nothing in § 7475 prohibits the subsequent operation of such a facility without a permit. (Emphasis in original.)

There are other counts in the government’s complaint, including claims of operating permit violations. However, the decision on the NSR/PSD claims is quite significant. The case does not simply dismiss, as some other decisions have done, penalty claims. This is not a statute of limitations decision (though the Judge did also follow most other cases in dismissing, on statute of limitations grounds, the penalty claims with respect to the one alleged modification that occurred after Midwest Generation bought the facilities). As Judge Darrah made clear, the government is not entitled to “any relief on those claims – injunctive or otherwise.” (Emphasis in original.)

Score one of generators – particularly merchant generators who bought facilities after modifications had already been made.

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I’ve been waiting to write this headline ever since the SJC took this case. Today, the SJC issued its long-awaited decision in Moot v. Department of Environmental Protection. For those of you who pay attention to where the waters ebbeth and floweth – or at least where they ebbed and flowed in 1641 – you know that this is the second time that Moot has been before the SJC.

After the SJC struck down MassDEP regulations which provided that landlocked tidelands did not need a license under Chapter 91, as the Commonwealth’s waterways statute is now known, the Legislature took a shot at fixing what would have been a major problem by passing new legislation specifically excluding landlocked tidelands from the need to obtain a license. 

Moot challenged the legislation, arguing that it completely relinquished all of the Commonwealth’s rights in private tidelands, without making the findings necessary to justify such a relinquishment. The SJC did not agree. The Court concluded that the Commonwealth has preserved its rights in landlocked tidelands, and noted that projects subject to MEPA must address project impacts on the Commonwealth’s tideland rights. In essence, the Court concluded that the oversight provided by MEPA was sufficient to demonstrate that the Commonwealth could and would still enforce its rights in landlocked tidelands. Since those rights are still protected, the Court concluded, the Legislature had authority to exclude landlocked tidelands from the need to obtain a license under Chapter 91. 

This is clearly the right result. The only question in my mind is the gymnastics that the Court had to go through to get there. The Court may have concluded that the Commonwealth has not relinquished all of its rights in landlocked tidelands, but does anyone think that the MEPA process will ever result in developers being required to make changes to their projects to protect those rights? I sure hope not. Certainly, the first developer forced to do anything different as a result of that process is not going to be a happy camper. It would have been cleaner for the SJC to acknowledge that the Legislature was effectively relinquishing the public’s rights in landlocked tidelands and to affirm that act. Nonetheless, this decision pretty much did what was needed and a large number of landowners – not just the developers defending this case – are breathing a lot easier this afternoon.

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It’s difficult to keep up with the various moves in Congress, attempting either to advance climate change legislation or to preclude EPA climate change regulation. On the advance side, E&E Daily had a very helpful summary earlier this week on the various issues affecting those senators that will need to be brought on board to reach 60 yes votes in the Senate. The identified issues include, not surprisingly: (1) coal, (2) nuclear power, (3) trade-sensitive industries, (4) oil and gas drilling, and (5) sector-specific limits. In what is probably a sidelight to the whole debate, Vernon Ehlers, a Republican, but the first research physicist elected to Congress, has taken climate change skeptics to task, saying that the scientists relied on by the skeptics are not “the experts in the field.”

On the preclusion side, Congress is being deluged with requests, including from some of its own members, to stop EPA from regulating GHG under existing regulatory authority. In the past week:

20 governors (if you include Puerto Rico and Guam) wrote to Congress opposing any EPA regulation of GHG under existing authority. The letter specifically says that they seek not just a delay, but preclusion of any regulation absent specific Congressional authorization.

98 industry groups, including such left-leaning groups as the U.S. Chamber of Commerce and the API, wrote to all senators in support of Senator Murkowski’s resolution to disapprove of EPA’s endangerment finding. The letter specifically asserts that EPA’s tailoring rule “has little legal foundation” – while at the same time criticizing for not going far enough to protect smaller sources of GHG.

Senator Levin wrote a letter to Senator Kerry which, while indicating support for climate change legislation, stated that industrial sources should not be regulated for at least 10 years

I still find it difficult to believe that the resolution disapproving the endangerment finding will be enacted. While Senator Murkowski recently referred to EPA’s efforts as a “backdoor” attempt to regulate GHG, EPA’s is doing pretty much what the Supreme Court ordered it to do, and it seems to be making every effort to minimize the economic impact of those regulations. I still agree that EPA regulation will be a mess, and it’s not obvious to me that the tailoring rule will survive legal challenge, but it’s difficult to see how EPA could be doing anything less than what it is doing in light of Massachusetts v. EPA.

All of which gets back to those fence sitters and the difficulty of getting 60 Senators to agree on enough to move a bill. One aspect is looking more and more certain. If there is a bill, state authority is going to be preempted and EPA authority under prior CAA provisions is going to be superseded.

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Massachusetts has an “anti-SLAPP” statute (as do 26 other states at this point, apparently). The law protects “petitioning”, by precluding litigation targeting petitioning, providing an early motion to dismiss, and awarding attorneys’ fees to defendants where a court finds that the defendants were indeed engaged in petitioning activity.

Yesterday, the Massachusetts Appeals Court struck a blow for reason when it determined, in Brice Estates v. Smith, that a trespass is not protected petitioning activity. Those of you outside Massachusetts may be wondering why we needed a court case to tell us this. Those of you inside Massachusetts, particularly in the development community, know where this is headed.

Brice Estates involved a real estate developer, looking to build a large residential subdivision. Low and behold an abutter observed a four-toed salamander – a species protected under the Massachusetts Endangered Species Act. Of course, the developer shouldn’t have been surprised, because developers of projects with significant opposition often learn of mysterious discoveries of endangered species at the project location.

The only aspect of this case that was different was that a specifically identified person was known to have gone onto the developer’s property – thus providing the basis for a trespass claim. The Court of Appeals made clear that, while notifying the authorities of the presence of the salamander was protected petitioning activity, the trespass itself was not. Moreover, the court also made clear that, even if the reason why the owner filed suit was the protected petitioning activity, the owner may still bring the action with respect to the non-protected activity.

Time will tell whether the lesson to NIMBY types is “no shenanigans” or “don’t get caught.”

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To date, the only circuit courts that have reviewed public nuisance claims related to climate change, the Second Circuit, in American Electric Power, and the Fifth Circuit, in Comer v. Murphy Oil, have ruled that such suits can proceed. However, last week the Court of Appeals for the Fifth Circuit decided to hear Comer v. Murphy Oil en banc, which certainly has to give the plaintiffs pause. While I am not fully versed in this issue, a quick glance at the web indicates that statistical analysis confirms one’s naïve assumption, i.e., that a full appellate court often decides to hear a case en banc because a majority thinks that the panel got it wrong.

As I noted when the original decision was issued, even under liberal standing rules, which suggest that the plaintiffs’ harm can be “traced” to the defendant as long as the defendant’s conduct “contributed” to the harm, it’s going to be very difficult for plaintiffs, particularly under the Supreme Court’s new pleading rules, to argue that, for example, Murphy Oil “contributed” to the harm caused by Katrina. If the Fifth Circuit sitting en banc affirms the District Court dismissal in Murphy v. Comer, we could be headed back to the Supreme Court on climate change, since that would set up a conflict between the Second and Fifth Circuits.

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Yesterday, EPA Administrator Jackson issued a letter to Senator Jay Rockefeller responding to certain questions regarding EPA regulation of GHGs under existing Clean Air Act authority, including promulgation of the so-called “Tailoring Rule”, describing how stationary source regulation under the existing PSD program would be phased-in once GHGs are subject to regulation. Here are the highlights:

EPA still expects to promulgate the Tailoring Rule by April 2010.

The GHG permitting threshold will be “substantially higher than the 25,000-ton limit that EPA originally proposed.”

No permits will be required until 2011. Initially, only facilities otherwise subject to CAA permitting will be required to obtain permits. The smallest facilities will not be subject to GHG permitting before 2016.

You can talk all you want about global warming, but it seems to me as though it’s EPA that’s feeling the heat. EPA has clearly heard the threats of a Congressional resolution barring EPA regulation of GHGs under existing authority. The reaction from Congress is all the evidence one needs. Both Senators Rockefeller and Murkowski praised the letter. While neither indicated that the letter would be sufficient to stop them from pursuing Congressional action, it might be enough to peel off some fence-sitters who might otherwise have felt compelled to support the legislation.

What does EPA’s statement of intent mean for various law suits swirling around this issue?

I don’t see any impact on litigation against the Endangerment Finding; it will still proceed and it will still lose.

The likelihood of law suits from environmental groups alleging that EPA is shirking its responsibilities under the CAA has certainly increased. Moreover, while EPA has a lot of discretion, I could imagine courts saying to EPA:  “Nice try, but the CAA doesn’t give you the kind of flexibility you have asserted in the Tailoring Rule. Only Congress can provide that flexibility by amending the CAA.” In this respect, the situation is similar to litigation over the CAIR regulations, which pretty much everyone liked, but which were struck down because the approach EPA took in the CAIR rule wasn’t consistent with the CAA.

Finally, any kind of regulation by EPA will provide an additional defense to private nuisance litigation. As I have previously noted, one question raised by the nuisance law suits is whether EPA has regulated GHG in a manner sufficient to “displace” the common law of nuisance. In this respect, the sort of program described yesterday by Administrator Jackson may be the best possible outcome for the regulated community, because it will narrow EPA regulations while providing a ground to preclude nuisance litigation.

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The grand total is 16 separate challenges to EPA’s endangerment finding, according to Greenwire. I’m not one of those lawyers who regularly bash the legal profession. I still recall my law school professor, Henry Hansmann, stating that the role of lawyers is in fact to be transaction-cost minimizers, and I think that that is largely true. That being said, I am certainly wondering what all of this litigation is about.

The endangerment finding is basically a scientific determination. As I have previously noted, EPA discretion in this area is substantial and the likelihood that a court would reverse EPA’s scientific determination seems about as close to zero as possible. Apparently, some of the law suits do not attack the underlying scientific underpinnings of the determination, but instead attack EPA’s procedures for carrying it out or the expected regulatory and thus economic implications of the finding. If possible, these seem even less likely to succeed.

Finally, before we get to the merits of either of these arguments, there are substantial standing questions, given that the endangerment finding itself imposes no regulatory requirements on any of the plaintiffs.

It is more likely that these law suits are tactical in nature, filed as part of the broader battle to stop EPA from using existing Clean Air Act authority to regulate GHGs. I support that battle in that I agree that regulation under existing authority will be a nightmare. However, I think it’s a losing battle and I don’t see the litigation challenging the endangerment finding as likely to help in any case.

Hope springs eternal, I suppose.

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Earlier this week, the Southeastern Legal Foundation filed a petition for review of the EPA Endangerment Finding with the District of Columbia Court of Appeals. It’s not really surprising that someone filed suit, but the list of plaintiffs is interesting – though more for who is not on it than who is. There is not a single Fortune 500 company on the list of plaintiffs. Whether that speaks to the larger corporations doubting the merits of the challenge or simply making a strategic decision that it is not worth it to be associated with the litigation, I leave for them to say.

I will say that the likelihood that this challenge succeeds is vanishingly small. Ever since Ethyl Corporation v. EPA, courts have given EPA extraordinarily broad discretion when regulating on “the frontiers of scientific knowledge.” Whatever concerns dissenters may have about climate change science, I think it is pretty clear that EPA has a stronger record to support the Endangerment Finding than it had in Ethyl Corporation.

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I have never been a fan of specialized courts, but I have to admit that the Massachusetts Supreme Judicial Court’s MEPA jurisprudence is strong evidence for the other side. It’s almost hard to describe how badly the SJC has mangled MEPA. The most recent example is yesterday’s decision in Town of Canton v. Commissioner of the Massachusetts Highway Department. (Requisite disclaimer – this firm represented the Town of Canton in the case.)

In Canton, the SJC ruled that a party bringing suit to challenge the adequacy of the Certificate issued by the Secretary of Energy and Environmental Affairs an on EIR must do so within 30 days following issuance of the first permit issued to the project under review – even if the plaintiff doesn’t care about that permit. For example, in Canton, the case was dismissed because suit was not brought within 30 days of issuance of a sewer connection permit, even though Canton’s complaint was that the EIR did not adequately address traffic issues and the Highway Department had not yet acted on the necessary traffic approvals.

The basis for the decision is a plain language reading of the statute – 30 days of the first permit means 30 days. However, the Court’s policy logic is exactly backward. The SJC stated that it is necessary to adhere to the strict 30 day rule in order to make challenges to projects efficient and not unduly delay them. I fear that the development community will not be happy with the results of this case, however. The purpose of MEPA is consultative. Get all the information out there and make sure that the agency considers it before issuing approvals. The import of Canton, however, is to short-circuit the review process. The next time this fact pattern appears, plaintiffs will be forced to bring suit, without even giving the Highway Department a chance to get it right. How does encouraging litigation before it is known even to be necessary help citizen plaintiffs, developers, or agencies?

In fairness to this Court, while I think that they got the decision wrong, it is at least understandable given prior SJC MEPA jurisprudence. The problem is that the SJC began getting MEPA wrong in the Cummings and Enos cases, and they haven’t stopped since. The notion that parties challenging the adequacy of an EIR cannot sue the EEA Secretary – the person that approved the EIR – is just nuts. Put Enos and Cummings together with Canton and here’s the result, taking the agencies in play in the Canton case. 

1.         EEA approves an EIR

2.         DEP issues sewer connection permit

3.         Highway Department issues traffic approvals.

Where has the SJC left us? The citizen plaintiffs care about 1 and 3, and not 2, but suit is triggered when 2 happens, even though the plaintiffs don’t yet know whether the Highway Department will do the right thing or not.

Here’s another scenario likely to happen with some frequency. EEA secretary approves EIR. Citizen plaintiff believes that endangered species analysis was deficient. As is often the case, however, the Division of Fisheries and Wildlife takes some time to issue the needed permit. DEP, however, issues an unrelated permit. Once more, action by DEP triggers a need to sue, even though the plaintiff cares about the Secretary’s approval of the EIR and the DFW take permit, which hasn’t yet been issued – and may never be issued.

Which is going to come first, a legislative fix, the SJC revising the whole structure of MEPA jurisprudence, or hell freezing over?

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Those of us who advise clients regarding compliance with environmental regulations have often been in the awkward position of agreeing with clients that the agency position is, shall we say, misguided, yet at the same time advising against legal challenge, because the judicial review deck is stacked so heavily in favor of the agency. (In another time or place, one might ask why this is so.)

Nevertheless, occasionally, the agency loses and, when it does, that loss can be instructive. Yesterday, the Massachusetts Supreme Judicial Court ruled that MassDEP may not impose conditions on registrations under the Water Management Act without first promulgating regulations to guide its discretion in imposing such conditions.

Under the WMA, withdrawals existing as of the date of Act were grandfathered and persons with such withdrawals are allowed to maintain them by registering the withdrawal with MassDEP. Such registrations must be renewed periodically, but MassDEP may not reduce the size of the withdrawal. (New or increased withdrawals, on the other hand, require a permit and are subject to more stringent regulation.)

In the last round of registration renewals, MassDEP began imposing conditions on the registrations in order to increase water conservation. However, while the statute authorizes MassDEP to impose conditions on permits, similar language does not exist with respect to registrations. 

The SJC spent some time discussing MassDEP’s authority to promulgate regulations that would impose conservation requirements on registrants, but made clear that the plain language of the statute did not seem to authorize MassDEP to impose conditions on registrants absent regulations.

What’s the lesson here? With respect to the WMA, it’s “no shortcuts.” If MassDEP wants to impose conservation requirements on registrants, it must do so pursuant to validly promulgated regulations. What’s the broader lesson? Challenging the agency may be an uphill battle, but legislative language does matter and, where the language is clear, the courts will – at least sometimes – enforce it.

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Last week, I reported on a decision by EPA Administrator Jackson, in an appeal from a permit issued by the Kentucky Division of Air Quality, to the effect that the developer of an Integrated Gasification Combined Cycle (IGCC) plant, which converts coal to gas for combustion, had to consider use of natural gas as BACT, because the plant already had plans to use natural gas as a startup and backup fuel.

This week, Administrator Jackson went one step further – granting an objection to a permit for a traditional coal plant in Arkansas on the ground that it did not consider IGCC as BACT. As with the Kentucky decision, the issue in the Arkansas case was whether requiring IGCC would be to “redefine” the source. Also as with the Kentucky decision, the Administrator ruled that, while requiring consideration of IGCC as BACT might be to redefine the source, neither the permittee nor the Arkansas Department of Environmental Quality had built a record sufficient to make that conclusion.

As David Bookbinder of the Sierra Club succinctly put it in Greenwire: "Control technology for conventional coal is IGCC and control technology for IGCC is natural gas." In short, the way to control emissions from a coal plant is to burn natural gas instead. 

I think that Bookbinder is exactly right concerning the import of the two decisions. I also think that the result is nuts. Can anyone say with a straight face that they really believe that this approach is consistent with the statutory intent? As I noted last week, EPA didn’t think so when they wrote in the New Source Review Workshop Manual that

applicants proposing to construct a coal-fired electric generator, have not been required by EPA as part of a BACT analysis to consider building a natural gas-fired electric turbine although the turbine may be inherently less polluting per unit product (in this case electricity).

I also think that this is what happens when the agency ties itself into knots to reach a certain result based on statutory language written in another time for another purpose. Might there be a lesson in this for EPA’s efforts to regulate GHG utilizing existing CAA authority?

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EPA announced yesterday that it had reached a settlement with Duke Energy to address allegations of New Source Review violations at Duke’s Gallagher coal-fired generating plant in New Albany, Indiana. A jury had already found Duke liable for certain NSR violations at the plant. The settlement obviates the need for a remedy trial, which had been scheduled for early 2010.

The settlement requires Duke Energy to repower Units 1 and 3 at Gallagher with natural gas or shut them down and to install emission controls at Units 2 and 4. Duke will also pay a $1.75 million penalty and spend $6.25 million on various mitigation projects. 

The settlement is not that surprising, particularly given the prior liability findings. It nonetheless serves as a useful reminder that EPA continues to focus on coal plants and that it is going to use all the tools at its disposal to reduce coal plant emissions. Although the press release does not mention global warming, these settlements are another way for EPA to attack the climate change problem under existing authority, even in advance of rules regulating GHGs under the PSD program.

BTW, if it seems as though I am inundating you with posts today, the blog will be on vacation until January 4, so I wanted to get some last posts done. Happy holidays to all.

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Last week, Judge William Griesbach, of the Federal District Court for the Eastern District of Wisconsin, issued an important Superfund contribution decision, which shows just how much equitable discretion judges have in resolving contribution claims. In Appleton Papers v. George Whiting Paper, Judge Griesbach ruled, on summary judgment, that one equitable factor, knowledge of the potential environmental harm caused by PCBs, trumped all others, and that the plaintiffs, who had manufactured carbonless copy paper, or CCP, had no right to contribution from paper companies which used CCP and as a result discharged substantial amounts of PCBs into the Fox River.

The basis for Judge Griesbach’s holding was that “between parties who produced the product and those who merely processed it and recycled it along with all other paper products or water sources, these latter parties are significantly less blameworthy.” (The Judge’s italics, not mine.) This is not necessarily an unreasonable conclusion and probably within the Judge’s discretion to make, but does it follow that that is a sufficient basis to determine, without a trial, that the defendants were – literally – infinitely less blameworthy?

Interestingly, the plaintiffs had produced evidence that the defendants’ discharges had polluted the Fox River, even aside from PCBs. The Judge held that, because such other pollution did not cause response costs, it was irrelevant to the equitable judgment regarding who should pay to clean up PCBs.

The Judge also acknowledged that much of the contamination occurred before the plaintiffs themselves knew of the environmental risks posed by PCBs. Notably, however, the Judge did not discuss whether response costs would have been any different had discharges ceased as soon as the plaintiffs gained knowledge of the risks.

I’m not surprised that the plaintiffs in this contribution action are being held to bear the lion’s share of response costs. I am surprised that, on summary judgment, the court was able to conclude that the defendants’ share, notwithstanding their knowing pollution of the Fox River, and notwithstanding that much of the harm was caused before anyone had knowledge of the risks posed by PCBs, was a big, fat, zero.

What’s the real lesson here? The real lesson is that, while Judge Griesbach both noted that his equitable power is “broad and loose,” and acknowledged that it is “not unfettered,” the emphasis is greatly on the side of "broad and loose," and less so on the side of “not unfettered.” 

I’ve made this point in the past, but lesson one of Superfund contribution actions remains – Get The Judge On Your Side.

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On Tuesday, District Judge Roger Titus issued an injunction against the construction of the Beech Ridge Energy wind project – 122 wind turbines along 23 miles of Appalachian ridgelines – unless the project can obtain an incidental take permit, or ITP, under the Endangered Species Act. Judge Titus concluded, after a four-day trial, that operation of the turbines would cause a “take” of the endangered Indiana Bat. 

I’m not going to get into the details of the decision, though it certainly does not seem crazy on its face. I am going to go on a rant that there has to be a better way.

Those of us who are old enough to have gotten interested in policy in the 1970s will recall TANSTAAFL – there ain’t no such thing as a free lunch. Appalachian ridgeline turbines kill Indiana Bats. Offshore wind turbines kill sea birds or spoil pristine views. Remember when everyone thought that hydroelectric power was the “clean” energy? Dams kill fish and alter ecosystems. Nuclear power creates long-lasting wastes. I probably don’t need to explain the costs of coal. TANSTAAFL.

Today, people look to solar, and geothermal, and tidal power. I don’t know about you, but while I’m open to persuasion, my default assumption is that geothermal and tidal power could bring changes to complex systems that we really don’t begin to understand. Maybe solar has no environmental costs, but I wouldn’t bet on it. TANSTAAFL.

In a world where everything has costs, we need to find a way to balance those costs to achieve societal objectives. Maybe the harm to the Indiana Bat would be so great that the Beech Ridge Energy project is not worth it. Maybe not. Either way, does anyone think that the ESA provides a mechanism to make that judgment? Of course not; it’s not designed to do so. It’s designed to protect the bats.

We really need an overarching statute that allows the government to assess the unavoidable trade-offs, because there ain’t no such thing as a free lunch, and decide which projects should move forward. Lest my environmentalist friends think that I want to be able to give developers a blank check, I can only say, no, no, no. I’m agnostic on the outcomes, but I’m quite certain that the approach I advocate would only make thorough (which is not to say slow) review under NEPA and related statutes more important. Decision-makers can’t balance the costs and benefits of different projects unless they have a thorough understanding of what those costs and benefits are.

TANSTAAFL.

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Public and private developers spend a lot of time talking about NIMBY, or Not In My Backyard. With the increasing number of coastal development projects, ranging from wind farms to LNG facilities to plans for casinos, we should perhaps be talking about another acronym: NIMO, or Not In My Ocean. Yesterday, a decision from the First Circuit Court of Appeals in Weaver's Cove LNG v. Rhode Island Coastal Resources Management Council gave some hope that NIMO will not mean that states can simply squelch development of ocean resources.

Weaver’s Cove, as originally proposed in 2003, was to be an LNG terminal  located up the Taunton River, in Fall River, Massachusetts. To address safety and related concerns, the proposal has been moved off-shore.

The only element of the project that is subject to the jurisdiction of Rhode Island authorities is dredging that would be necessary in Rhode Island waters. That dredging requires a federal consistency determination by the Rhode Island Coastal Resources Management Council, or CRMC. In addition, Rhode Island state law requires that the CRMC provide a license to the project, known as an Assent. Here, the CRMC refused to provide either the federal consistency determination or the state law Assent. Weaver’s Cove LNG sued, won in the District Court, and won again yesterday at the Court of Appeals.

The facts of the case are complicated and the Court limited the decision as far as it could to the case-specific facts. Nonetheless, there are two points to be gleaned from the decision that may be of broader import

The Coastal Zone Management Act contains a provision, specifically intended to prevent states from frustrating the purposes of the CZMA, which provides that, if a state fails to act on a consistency request within six months, the state’s concurrence is “conclusively presumed.” Here, Rhode Island argued that the clock hadn’t begun to run, because Weavers’ Cove hadn’t provided all of the information necessary for CRMC to make a consistency finding. The Court didn’t buy it. Again, the facts here won’t translate to other cases, but what will transfer is the Court’s refusal simply to accept Rhode Island’s request that the Court defer to a state agency’s interpretation of its own law. Calling the CRMC’s interpretation of Rhode Island law “untenable” and “clearly erroneous,” the Court rejected it and held that, because of the CRMC’s failure to act, consistency would indeed be “conclusively presumed.”

Perhaps even more significantly, the Court concluded that the Rhode Island law which would require that the CRMC issue an Assent before the project could move forward is preempted by the Natural Gas Act (NGA). While the Court did not find that the NGA explicitly preempted Rhode Island law or that it occupied the field, it did conclude that, in this case, state law conflicted with the NGA. 

Notwithstanding the Court’s efforts to limit its preemption holding, I think it will provide grist for preemption arguments in other cases, as will its reluctance to defer to state agency interpretation of state law, where such deference might create obstacles to the accomplishment of federal objectives.

It’s too much to say that this decision represents the end of NIMO. However, it’s also difficult to see this as totally abstracted from an awareness by the Court of the delays experienced by the Cape Wind project. We’ve got to figure out a way to get to an answer more quickly. The answer my be “no” to some projects, but it shouldn’t take six years to get an answer.

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Two more decisions were released last week concerning whether nuisance claims could be brought with respect to harm alleged to have resulted from private conduct contributing to climate change. First, in Village of Kivalina v. ExxonMobil Corporation, the District Court dismissed nuisance claims. Second, in Comer v. Murphy Oil, the Fifth Circuit Court of Appeals reversed a District Court dismissal of nuisance claims related to damage resulting from Hurricane Katrina.

Village of Kivalina first. In this case, an Inupiat Eskimo village claimed that global climate change traceable to the defendants has essentially made their village uninhabitable. Notably and, I think, shrewdly, they did not seek injunctive relief, but sought only damages related to the cost of relocating the village. The District Court concluded both that the law suit raised non-justiciable political questions and that the plaintiffs did not have standing, because their harm was not fairly traceable to the defendants’ conduct.

The Fifth Circuit wasn’t buying either of these arguments in Comer v. Murphy Oil. To the Fifth Circuit, like the Second, in the American Electric Power case, the complexity of the underlying proof is not sufficient to render these types of cases non-justiciable. The cases involve tort claims; courts resolve tort claims – pretty much, end of story. I’ve got to say, from my lowly perch, that I think that the Second and Fifth Circuits got it right here. It’s easy to say that it would be better for Congress to deal with climate change than state legislatures or, as here, courts. However, that’s not that same as courts declining to exercise jurisdiction. I’d be surprised if the political question argument  has any real legs.

Standing is a different matter. I still think that both the traceability and redressability elements of standing are problematic. Plaintiffs in both Village of Kivalina and Comer v. Murphy Oil solved the redressability issue by seeking only damages, and not injunctive relief. Both the Second and Fifth Circuits noted that traceability, as a standing issue, necessitates only that the plaintiffs allege that the defendants’ conduct “contributes to” the plaintiffs’ injuries. This is not a stringent test. However, in light of the recent Supreme Court decision in Ashcroft v. Iqbal, I could imagine some courts looking askance at the types of allegations made in these complaints, even at a pleading stage.

On balance, what these cases tell me is that some of these cases are actually likely to be litigated all the way through to trial. Notwithstanding the potentially huge recoveries, it seems here that the cost to the defendants of paying out anything more than nominal damages would be high, and the prospects of successful defense of these claims are still reasonably good. That’s a recipe for trial, as far as I can tell.

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In an interesting decision issued a few weeks ago, a District Court in Georgia held that a property manager at a strip mall could not be held liable as an owner of a facility under CERCLA. However, the court held that the property manager could be liable as an operator of the facility. I don't think that the decision is correct, but if it is the law, then property managers would be wise to consider carefully what responsibilities they are willing to assume and what sort of indemnification agreements may be required with the actual property owners.

The case, Scarlett & Associates v. Briarcliff Center Partners, involved a strip mall which had as one of its tenants – surprise, surprise – a dry cleaning operation. The owner had almost no connection to the property. It had leased the entire strip mall. When the lessee ran into financial problems, its lender took over the property and engaged Faison & Associates to manage the property for it. Faison managed the property for approximately two years, until the bank sold the lease.

It seems obvious that Faison was not an owner of the property, since it neither owned nor leased the property, and the court agreed.

However, the court denied Faison’s motion for summary judgment on operator liability. Looking to the Bestfoods decision, the court concluded that there was sufficient evidence that Faison "manage[d], direct[ed], or conduct[ed] operations specifically related to pollution….” The evidence cited by the court, however, is troubling, to say the least. In ruling against Faison, the court noted that Faison had informed the dry cleaner of certain EPA requirements and requested documentation that the dry cleaner was in compliance. There was also evidence that Faison “generally was responsible for managing and maintaining the shopping Center and performing all acts necessary to effect [the bank’s] compliance with all laws….”

I don’t think that that’s enough. In fact, the reverse seems to be the case. Don’t we want property managers to be taking steps to ensure that operating lessees comply with applicable regulations? If that can be evidence that the manager is an operator, the only result will be to cause property managers to be more hands off, which means less oversight, which means less compliance. The law has to be that property managers can take steps to ensure that lessees are in compliance without such steps being interpreted as “operation” of the facility by the manager.

Nonetheless, with this decision out there, if I were a property manager, I’d be very carefully reviewing my contracts both to ensure that I have minimized the likelihood that I will be considered an operator and to ensure that I have received proper indemnifications from the property owner.

Good luck.

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Late last week, Elliott Gilberg, Acting Director of EPA’s Office of Site Remediation Enforcement (OSRE) issued an Interim Policy on Managing the Duration of Remedial Design/Remedial Action Negotiations. Members of the regulated community may not be surprised by the contents of the memo, but they certainly will not be pleased. In brief, the memorandum fundamentally makes two points:

EPA wants to shorten the duration of RD/RA negotiation

EPA is going to use the heavy hammer of unilateral administrative orders, or UAOs, to keep PRPs’ feet to the fire and ensure that negotiations move quickly.

PRPs will likely agree that shortening the duration of negotiations would be a good outcome in the abstract – but achieving it by greater use of UAOs? I don’t think so.

I can only wonder if EPA has even considered the impact of the Burlington Northern decision here. Is this a perverse reaction from EPA? A metaphorical throwing down the gauntlet to PRPs? It certainly feels that way.

I have a different suggestion, if EPA truly wants to shorten negotiations. First, acknowledge Burlington Northern and compromise on the merits in those great majority of cases where there are legitimate divisibility arguments. Second, stop acting like the last bastion of command and control regulation. Set cleanup standards and then, to the maximum extent permitted by existing law, let PRPs clean up to those standards, without micromanaging every detail of the cleanup process.

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On Monday, the Court of Appeals for the 2^nd Circuit finally issued a decision in Connecticut v. American Electric Power Company, reversing the District Court decision which had dismissed this public nuisance law suit against six large generating companies. The decision is notable in a number of different respects and may have far-reaching implications

·  Standing. Following Massachusetts v. EPA, it is not really surprising that the plaintiffs were able to establish that they have suffered injuries sufficient to provide standing. The more questionable point is redressability. The Court acknowledged that it must be “likely” that the injury will be redressed by a favorable decision. The Court’s response to this issue was that the plaintiffs need not demonstrate that a favorable decision will eliminate the injury, only that it will provide some measure of relief. Even so, could plaintiffs really prove that even elimination of all CO₂ emissions by the defendants would have any impact on climate change? I’m extremely skeptical. The Court did note that there is a “lowered bar for standing” at the pleading stage, so we may see more of this issue as the case proceeds.

·  Displacement. Connecticut v. American Electric Power, unlike the North Carolina v. TVA case decided in January, is basically premised on federal common law of public nuisance. However, federal common law only exists in the absence of legislation addressing the same issues and is subject to “displacement” by such legislation. Following Massachusetts v. EPA, there is no doubt that the CAA provides authority to regulate GHG. What, therefore, is the role of federal public nuisance claims at this point? The Court’s ruling here left defendants alive to argue this issue another day. The Court noted that EPA has not yet issued a final endangerment finding and certainly has not issued regulations limiting GHG emissions from stationary sources. Thus, the problem complained of by plaintiffs “has not been thoroughly addressed by the CAA.” In other words, if either Waxman-Markey passes or EPA moves forward with regulations on its own, defendants may have another crack at dismissing Connecticut v. American Electric Power. 

·  Nuisance Claims in Other Contexts. In tandem with North Carolina v. TVA, this case certainly puts new life into nuisance as a potentially important arrow in the quiver for environmental plaintiffs. As we noted in January, the TVA decision left room for nuisance claims even where National Ambient Air Quality Standards have been attained. This leaves substantial room for nuisance claims in a variety of contexts, as long as underlying legislation hasn’t specifically preempted such claims

·  Prospects for Federal Climate Change Legislation. We have already discussed the choice between regulation by EPA and comprehensive federal cap-and-trade legislation. Now it appears that this dilemma has three horns, not just two. Which would generators prefer? Waxman-Markey or judicial injunctions following nuisance litigation?

It’s a lot to consider.

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On Tuesday, EPA announced its intention to issue new effluent guidelines for the Steam Electric Power Generating industry by sometime in 2012. The announcement follows an EPA study in 2008 which indicated that toxic metals, particularly those collected as part of flue gas desulfurization processes, can pose a problem in facility effluent. EPA’s announcement is not particularly surprising, given the ongoing study and given that EPA has not revised the guidelines since 1982. Indeed, notwithstanding EPA’s announcement, Environmental Integrity Project, Defenders of Wildlife and Sierra Club announced that they would still sue EPA over its failure to timely update the guidelines.

There are two reasons why this announcement is significant beyond just its implications for effluent discharges from these facilities. First, it’s hard to see EPA’s announcement – and the threat of NGO litigation – as anything other than another bullet aimed squarely at the coal industry. From climate change, to attacks on mountaintop removal, to the reaction to the TVA spill, to this effort to make the effluent guidelines more stringent, there is no doubt that coal is in the cross-hairs at the moment. If there are any doubters concerning this point, Duke Energy CEO Jim Rogers isn’t among them. He was quoted in this morning’s Energy & Environment Daily as saying that it is at least possible to envision a world in 2050 “where coal is not in the equation.”

The other reason why this announcement is significant is that it raises fairly squarely the question regarding the very structure of our current regulatory system.  It’s not really any more than happenstance and political convenience that we regulate different environmental media differently. In this context, it is noteworthy that EPA’s Science Advisory Board just recommended that EPA consider setting multi-pollutant standards under the Clean Air Act, rather than regulating each pollutant separately. Theoretically, that’s good as far as it goes, but it doesn’t really solve the problem of the balkanization of EPA’s different regulatory programs.  In the long run, EPA’s regulatory efforts would be much more cost-effective – and would probably garner much more public support – if they were rationally based on an overall assessment of risk, across pollutants and across media.

I’m not holding my breath.

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In another sign that the NSR program is alive and well under the Obama administration, the United States (together with the State of Illinois, filed suit Thursday against Midwest Generation, alleging violations of NSR requirements at six coal-fired power plants. Although the action is not too surprising, given that the Bush EPA had issued a notice of violation to Midwest Generation in 2007, it remains noteworthy. Each new prosecution serves to remind generators that failure to comply with NSR rules can lead to significant costs.

Of course, that in terrorem effect on other generators is precisely what the administration and environmental groups want. Unfortunately, for those of us who believe that the NSR program is an incredibly wasteful way to reduce air pollution, such litigation only detracts from efforts to make air pollution control regulations more cost-effective.

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Justice Potter Stewart famously said, with respect to obscenity, that “I know it when I see it.” I fear that the test for what constitutes an imminent and substantial endangerment under RCRA is no clearer than Justice Stewart’s subjective test regarding obscenity.

This week, in a decision that is good news for RCRA defendants, Judge Illlston, of the Northern District of California, ruled, in West Coast Home Builders v. Aventis Cropscience USA,  that risks posed by potential future vapor intrusion into buildings from a groundwater plume could not be “imminent and substantial” where no development has yet occurred on the property that is the subject of the litigation. The court was interpreting the Supreme Court’s statement in Meghrig v. KFC Western, to the effect that RCRA “implies that there must be a threat which is present now, although the impact of the threat may not be felt until later.”

Although Judge Illston’s interpretation of Meghrig seems right, other RCRA cases have been allowed to proceed, even though the relationship between the contamination and the exposure have often been equally attenuated. It seems that the court liked the simplicity of a black-letter rule that risks associated with conditions not yet in place can never be imminent.  I am not confident this case will provide much clarity, but even if it only establishes a bright line rule in one narrow corner of the "imminent and substantial endangerment" landscape, that's better than the prior morass.

A developer might reasonably respond to this decision by arguing that such a ruling means that the development will never happen, because no one will finance such a project without knowing that the potential vapor intrusion risk will be addressed. (And a court might respond by saying that that is a problem for Congress to solve, not the courts.)

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Although not breaking any new ground, a decision from the Massachusetts Appeals Court last week provides a helpful summary of the discretion typically given to MassDEP in making permitting decisions. In Healer v. Department of Environmental Protection, abutters to a proposed wastewater treatment facility in Falmouth sued MassDEP, claiming that the groundwater discharge from the leach field associated with the facility would damage drinking water supplies and nearby wetlands. The Court affirmed the MassDEP Commissioner’s rejection of the abutters’ challenge.

As the Court noted

the “applicable standard of review is “highly deferential to the agency” and requires the reviewing court to accord “due weight to the experience, technical competence, and specialized knowledge of the agency, as well as to the discretionary authority conferred upon it…. We give deference to the decision of an agency interpreting its own regulations … [and] do not intrude lightly within the agency’s area of expertise, as long as the regulations are interpreted with reference to their purpose and to the purpose and design of the controlling statute.”

As if that were not enough of a nod towards agency deference, the Court also noted, in the context of the plaintiffs’’ challenge to the monitoring requirements imposed in the permit, that

The Legislature “has chosen to put into the hands of an expert administrative agency the decision making regarding complex issues of environmental … science…, and has allowed the agency considerable discretion in determining monitoring of applicable parameters in order to carry out its duty….

Finally, the Court made at least one statement about the plaintiffs’ affirmative case that is sure to be cited by MassDEP and permittees in future citizen suits. In rejecting the plaintiffs’ argument that toxic household chemicals might cause environmental damage, the Court stated that the “regulations do not require the department to establish permit conditions based on the plaintiffs’ speculative concerns.”

So, what’s the upshot of Healer? It certainly confirms that, as a general matter, courts are not going to reverse agency decisions unless they seem really off-the-wall.  On the other hand, it remains true that MassDEP does not always win and my own jaded view is that courts remain willing to reverse MassDEP, even when deference would require that the court affirm the agency, if the agency decision somehow rubs the court the wrong way.

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In an important decision yesterday, the Massachusetts Supreme Judicial Court ruled that the operator facility participating in the renewable portfolio standard program did not have standing to challenge a state decision authorizing other facilities to participate in the RPS program. The decision may have broad implications regarding when businesses may challenge the issuance of permits or other approvals to competitors in Massachusetts.

In Indeck Maine Energy v. Commissioner of Energy Resources, the plaintiffs operated biomass facilities which were authorized to sell renewable energy credits. When the Department of Energy Resources authorized two other biomass facilities to sell RPS credits, plaintiffs sued.

As the SJC noted up front, to establish standing, a plaintiff must “allege an injury within the area of concern of the statute or regulatory scheme under which the injurious action has occurred.” At least in Massachusetts, an injury from business competition does not confer standing. However, prior cases held that this rule “does not apply … to competitors in a regulated industry.” The question is thus: What does it mean to be in a regulated industry?

After analyzing the purpose of the RPS statute and its prior cases on this issue, the court came to a relatively simple conclusion:

The question of standing in the context of competitive injury turns not simply on whether an industry is regulated, but rather on how that industry is regulative. The common threat present in the cases in which standing has been found is regulatory schemes that contemplated some form of protection of the competitive interests of the respective plaintiffs.

Accordingly, if an industry is regulated in such a way that it can be said that the protection of competitors is within the regulatory scheme’s area of concern, such a competitor alleging harm deriving from business competition would have standing to sue.

Applying the rule here, the SJC concluded that the plaintiffs did not have standing, because the Legislature “did not seek to protect and thereby confer standing to sue on existing competitors, thereby creating a barrier to market entry.” In other words, a business does not have standing to challenge an approval issued to a competitor unless the very purpose of the regulatory scheme was to protect the competitive position of the plaintiff.

This decision has potentially significant impacts on other permitting regimes, such as those implemented by MassDEP.  Following Indeck, a business harmed by the issuance of an environmental permit issued to a competitor will not have standing to challenge the permit, because it is not the purpose of any of the environmental permitting regimes to create barriers to market entry.

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Construction and development companies praying for an economic recovery next year have something else to worry about: pending new EPA regulations regarding stormwater discharges from construction activities – and claims from environmental groups that EPA’s proposal isn’t stringent enough.

EPA issued a proposal on November 28, 2008. That proposal is complex, but the aspect of it that has received the most attention is the requirement that certain construction sites greater than 30 acres meet numerical turbidity limits (specifically, 13 nephelometric turbidity units (NTUs), which I had to include in this post just because it sounds so cool). Developers have opposed the numeric limits; the National Association of Home Builders estimates that the cost to comply would be $15,000 to $45,000 per acre.

On the other hand, the NRDC and Waterkeeper Alliance have threatened to sue EPA if EPA does not revise the propose rule to include post-construction controls as part of the rule. EPA has stated that it is not planning to do so. It’s not obvious that NRDC and Waterkeeper Alliance have the better of this specific debate, but the argument regarding post-construction controls is similar to the ongoing discussion in Massachusetts and elsewhere regarding the need for ongoing stormwater controls at properties other than industrial facilities that are already regulated.

The issue is not going to go away.  EPA is under a deadline to issue the rule by December 1, 2009.

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Last Friday, in NRDC v. EPA, the Court of Appeals for the D.C. Circuit struck down parts of EPA’s Phase 2 rule for achieving compliance with the ozone NAAQS. The most important part of the ruling was the Court’s conclusion that EPA could not rely on compliance with the NO_x SIP Call to satisfy the requirement that sources in an ozone nonattainment area demonstrate achievement of reasonably available control technology, or RACT. The basis for the decision was the Court’s conclusion that the plain language of the relevant portions of the CAA did not allow use of a cap-and-trade program to substitute for the source-specific compliance requirements imposed by the statute.

In this case, § 172(c)(1) of the CAA “requires that nonattainment areas achieve ‘such reductions in emissions from existing sources in the area’ as can be achieved by the adoption of RACT.” For the Court, this was simple and dispositive.

Thus, the RACT requirement calls for reductions in emissions from sources in the area; reductions from sources outside the nonattainment area do not satisfy the requirement.

In other words, a cap and trade program won’t do, if it allows sources to avoid explicit statutory requirements. There is nothing in the Act that precludes layering a cap-and-trade program on top of RACT requirements – but that would defeat the purpose of the cap-and-trade program, which is to allow emissions reductions to be made wherever they can be achieved most cost-effectively. To require minimum reductions at all facilities precludes such cost-effective decisions.

Frankly, while I’m a fan of cap-and-trade programs, the decision is neither unreasonable nor surprising, after the decision in North Carolina v. EPA striking down the parallel provision in the Clean Air Interstate Rule. As courts like to say (especially when Supreme Court confirmation hearings are under way), their job is not to make good policy; it is to interpret and enforce the law. If Congress wants to expand the role of cap-and-trade programs, it knows how to do so.

Of course, the elephant in the room is climate change legislation. If Congress does not enact a bill, North Carolina v. EPA and NRDC v. EPA circumscribe EPA’s discretion in implementing a cap-and-trade program for greenhouse gases under existing law.  I take the point made by Administrator Jackson and environmentalists that, if no one wants to regulate churches and schools, then EPA can probably figure out a way to do so.  However, exercise of such discretion is not the same as promulgating rules that will ensure that those facilities which are the subject of regulation have the flexibility to reduce greenhouse gas emissions in the most cost-effective manner possible.  

Is anyone in Congress listening?

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Earlier this week, the Georgia Court of Appeals reversed a decision of the Superior Court in Georgia that would have required Longleaf Energy Associates, developer of a coal-fired power plant, to perform a BACT analysis of CO₂ emissions control technologies in order to obtain an air quality permit for construction of the plant. The case is a reprise of the Deseret Power case regarding a coal-fired plant in Utah.

The court in Longleaf Energy concluded that CO₂ is not yet a regulated pollutant under the CAA, and thus that no BACT analysis is required. There were several bases for this conclusion:

The “Johnson Memo,” issued in response to Deseret Power, has not been withdrawn by EPA, though it is under reconsideration. Even EPA’s proposed endangerment finding for CO₂ noted that such a finding would not make CO₂ a regulated pollutant under the CAA.

As discussed in the Johnson Memo, neither the CAA nor any existing EPA regulations impose emissions limitations on CO₂.

Such a finding would “preempt” Congressional and EPA decision-making on the issue and impose standards in Georgia to which facilities outside of Georgia would not be subject.

The Longleaf Energy decision is a perfectly reasonable interpretation of the CAA – but it’s not the only plausible interpretation. I mention this in order to highlight a point I have made previously. As members of Congress and stakeholders consider the costs and benefits of federal climate change legislation, they have to consider the alternative. Most people, including me, have framed the question as a comparison of the legislative option with regulation by EPA under existing authority. This is largely correct, but misses two points. First, it’s going to take EPA some time to promulgate regulations. In the meantime, there will be more Deseret Power and Longleaf Energy decisions and there is no reason to be confident that such decisions will be consistent or even reconcilable. Second, even after EPA issues regulations, the Longleaf case gives me pause as to whether such regulations would be effective in creating any kind of uniform national interpretation of these issues.

There is just no question that, in the absence of federal legislation, the resulting patchwork of regulations and federal and state decisions concerning the regulation of CO₂ and other GHGs is going to be a big mess.

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While some of my colleagues are laboring in the climate change vineyards (and we should have posts soon summarizing the House bill), I thought I would note another interesting enforcement decision issued this week.  United States v. Oliver is, in some respects, a run of the mill decision.  A mom-and-pop medical waste incinerator (the adjective is the court’s not mine; it does give one pause) failed for several years to comply with EPA regulations governing such facilities.  EPA sought and obtained a permanent injunction ceasing facility operations until the defendants can demonstrate to the satisfaction of EPA and the court that it can comply with the applicable regulations.

The interesting part of the decision relates to the Court’s imposition of a penalty.  EPA took the position that the Court should presume that the maximum penalty should be imposed, citing Pound v. Airosol and United States v. B & W Inv. Properties. Doing so in this case would have generated a penalty of $220,080,000 before any mitigation were considered. That EPA itself only sought a penalty of $445,000 demonstrates the absurdity of even starting with the maximum penalty. The court, noting that the defendant had two employees and was poorly capitalized, stated that the size of the business argued for a penalty “far smaller” than what the government sought.

The court also considered, as a separate factor, the impact of the penalty on business operations. While previously noting that the defendants showed no real likelihood of being able to come into compliance, the court nonetheless noted that imposition of a large penalty would pretty much make it impossible for the defendants to operate in compliance with applicable regulations, and therefore concluded “that the penalty should be dramatically lower than the amount sought by the United States.”  The court imposed a $75,000 penalty.

I’m not sure I’d read too much into this decision, but it does give defendants a basis for arguing that courts should not start with the maximum statutory amount in determining an appropriate penalty.  It also puts the defendant’s ability to pay front and center in the penalty calculus.

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In an interesting case, the Court of Appeals for the First Circuit this week vacated most of a preliminary injunction issued by a federal judge in Puerto Rico, because, the Court concluded, the lower court had wrongly, and without doing so explicitly, converted a PI hearing into a hearing on the merits.

In Sanchez v. Esso, a gasoline station operator brought RCRA citizen suit claims against Esso, which supplied gasoline to the station, and which actually was the owner of the USTs in which the gasoline was stored. Plaintiffs requested a PI requiring Esso both to assess and to remediate the contamination resulting from leaks in the tanks. After the District Court issued the PI, Esso sought interlocutory relief.  The Court of Appeals vacated most of the injunction.

As the Court of Appeals noted:

[w]hen a trial court ‘disposes of a case on the merits after a preliminary-injunction hearing … it is likely that one or more of the parties will not present their entire case….  Therefore, it is ordinarily improper to decide a case solely on such a basis. 

Reviewing the District Court proceedings, the Court of Appeals pointed to District Court’s statement that the Esso “appear[ed] to be in continuous violation” of the applicable regulations.  Moreover, following issuance of the injunction, Esso had asked the District Court to require the plaintiffs to post a bond.  The District Court denied the request on the ground that:

"'the grant of the preliminary injunction carried[d] no risk of monetary loss" for Esso in the face of the "documented" contamination resulting from Esso’s "violation of regulatory safeguards."

The District Court also made statements to the effect that the only issue going forward was the “extent” of Esso’s liability.

The Court of Appeals concluded that it was “inescapable” that the District Court pre-judged Esso’s ultimate liability.  Aside from the District Court’s conclusory statements about liability, the District Court also failed to address the traditional factors required for issuance of a PI.  This was “a clear error of law.”

It is unclear what impact this case will have. However, RCRA, like most environmental statutes, has an element of strict liability.  The strict liability nature of these statutes often makes it too easy for courts – and perhaps regulators at times? – simply to assume that a defendant is liable, without worrying about the sometimes messy process of discovery and the taking of evidence.  Sanchez v. Esso thus serves as a welcome reminder that even in a world of strict liability, a defendant remains entitled to his day in court.

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For those of you who cannot get enough of Superfund, I spoke at a Boston Bar Association panel on this subject yesterday about the implications of the Supreme Court’s Burlington Northern decision. Thanks to EPA Region I and Joanna Jerison, head of the Region I Superfund Legal Office, for being willing to speak on so obviously sore a subject. And thanks to Craig Campbell for participating on the panel as well.

As you can see from her presentation and mine, it appears that EPA and the private bar do not yet have a common understanding of the implications of the case. Isn’t that a surprise?

I still think, as I said at the meeting, that never has the Supreme Court done so much by doing so little. With respect to the divisibility issue, which is of the greatest long-run significance, the Court explicitly did not change the law at all. And yet …. We all know that they did. Now, instead of divisibility being an insuperable hurdle, it should become something like routine.

Or so I hope.  

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In 1992, in South Carolina Coastal Council v. Lucas, the Supreme Court held that a state statute or regulation that denies a property owner all economic use of her property requires payment of just compensation under the Takings Clause. The Court distinguished statutes and regulations from restrictions inherent in background principles of the common law of nuisance – the latter types of restrictions do not require just compensation.

The Supreme Court announced earlier this week that in the fall 2009 term it will hear another, similar, property rights case. The Court will hear an appeal of a decision by the Florida Supreme Court holding that a beach erosion control statute did not unconstitutionally deprive landowners of their property rights without just compensation. 

The facts in Stop the Beach Replenishment v. Florida Department of Environmental Protection are somewhat obscure and relate specifically to the consequences of beach replenishment in Florida. However, it again does raise the question of how the Supreme Court treats statutes. Prior to the 1960s, governments pretty much regulated nuisances pursuant to common law police power. Apparently, exercise of such power has the constitutional blessing of the Supreme Court.

On the other hand – to note the obvious – since the 1960s, across the gamut of environmental police power issues, use of statute and regulation has overtaken reliance on the common law. For some reason, however, constitutional jurisprudence has not caught up with reality on the ground. The whole idea of the common law is that it is flexible and changes over time. Is there any doubt that, had there not been an explosion of environmental statutes and regulations, there would have been an explosion in the development of the common law of nuisance? It seems near certain that courts would have identified numerous additional uses of property over the past 40 years that would now be considered nuisances.

Why should the same regulatory outcome require compensation if taken pursuant to statute or regulations, but not if it occurs as a result of judge-made common law?   

(In the interests of full disclosure, the broad question of how courts treat statutes, as opposed to the otherwise developing common law, was raised by my then-Professor Guido Calabresi in his 1982 book, A Common Law for the Age of Statutes.  Judge Calabresi, your student has not forgotten.)

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In Congressional testimony last month, EPA Administrator Lisa Jackson apparently told Congress that amendments to the CAA may be necessary in order to ensure that any revised CAIR rule issued by EPA would be safe from legal challenge.  The testimony is not really a surprise. Anyone reading the decision striking down the original CAIR rule would understand that the Court had concluded that the cap-and-trade program promulgated under CAIR was not authorized by the CAA.

Like the situation posed by EPA’s obligation to address climate change endangerment following the Supreme Court decision in Massachusetts v. EPA, the threat of further litigation and court mandates may be the best hope of getting something done.  EPA is expected to issue a new rule in 2010 and if the agency does not have legislative authority for a cap-and-trade program, then we’re going to see a command-and-control rule. The unattractiveness of that possibility may be what’s necessary to get the legislation sought by EPA.  

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Last week, Judge Larry McKinney issued an order requiring to shut down three coal-fired generating units at its Wabash Station facility by no later than September 30, 2009. The decision actually struck me as a thoughtful analysis of injunctive relief issues in a situation where a violation of NSR regulations had already been proven. Although the decision has gotten most press for the order shutting down the units, it covers a number of issues important to injunctive relief situations, and there are some nuggets which are potentially useful to generators; it is not a one-sided decision. Here are some highlights:

The shut-down order – although significant, is not as earth-shattering as it seems. Cinergy gave the judge little choice by testifying that it would not be economic to install pollution controls on the units, given their age and size. The fight was thus about when, not whether, the units would be shut down. The judge was clearly annoyed that, following the liability finding, Cinergy had seemingly taken no action to plan for a shut-down. The judge, in response to reliability concerns, did allow the units to operate through the summer of 2009.

Irreparable harm discussion – a few noteworthy aspects here

The court relied on modeling which demonstrated that Wabash emissions contributed to PM_2.5 levels downwind

The court noted that contributions of “just a few tenths of a ug“ can be significant when an area is on the border between compliance and noncompliance.

Like the court in the TVA injunctive relief case we posted about earlier this year, the court specifically noted that adverse health affects can occur at levels below the NAAQS

The court rejected the plaintiffs’ argument that acid deposition and mercury emissions from Wabash had caused irreparable harm, concluding “that Plaintiffs did not provide sufficient nexus between the relevant excess emissions and the negative … effects. 

In a win for generators, the court rejected the plaintiffs’ position that BACT for NO_x emissions in 1989 was SCR technology. This is an important issue, because EPA and the states will sometimes try to take the position that unproven technologies are nonetheless BACT. The decision squarely rejects that argument.

Surrender of SO₂ allowances. The court required Cinergy to surrender SO₂ allowances equal to the excess emissions from the May 2008 jury verdict to the time the units are shut-down. However, it is important to note that the Plaintiffs had requested that the court order Cinergy to install BACT on larger units at the Station that had not violated NSR rules. The court rejected that argument, noting that the Plaintiffs’ proposal “does not bear an equitable relationship to the degree and kind of harm it is intended to remedy …. Imposition of such a remedy is punitive in nature.”

In sum, although the decision is important, it is not surprising in context. Indeed, the finding on BACT, which was favorable to Cinergy, may have the most precedential significance.

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Earlier this week, the jury reached a verdict in the Cinergy – now Duke Energy – NSR retrial. The short version is simple:

Condensor retubine – no need to go through NSR

Pulverizor replacement – requires NSR

I don’t know all of the details of the case.  For example, I don’t know if the pulverizer capacity was expanded when they were replaced.  If any readers know the details and want to share them, I’d be grateful.

The decision does call to mind a previous post, in which I suggested that environmentalists might trade elimination of the NSR program for a requirement that all existing facilities comply with NSPS by a date certain. If instead of the current NSR program, the CAA had been amended in 1977 to give existing facilities until 2002 – 25 years – to be as clean as new facilities, there would have been howls of outrage at the time from the environmental community, but today we would be in a much better place.  Although the same howls would be heard today, shouldn’t it be possible to reach a deal, particularly given the pressure old facilities will be under as a result of a cap-and-trade program, that would eliminate NSR in return for a date certain by which existing facilities have to be clean as new?  It might be 15 years later than if the deal had been struck in 1977, but that doesn’t mean it would be a bad idea now.

BTW, for a cogent economic analysis of this issue, take a look at my friend Rob Stavins' post from a few weeks ago.  I'm tempted to say great minds thing alike, but perhaps I'll just go with a great mind thinks alike.

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One more note on the Burlington Northern decision.  A client of mine has already noted that one impact of the decision will be to result in more litigation over divisibility, which will be good for private lawyers (ouch!).  She’s right, as my clients always are, but she shouldn’t be.

Litigation should only increase if EPA does not adjust its settlement demands. If EPA responds appropriately, and makes demands which reflect a fair resolution of a divisible liability, then there shouldn’t necessarily be more litigation than there is today.  However, if EPA continues to negotiate with PRPs as though liability is always joint and several, then there will certainly be more litigation – and EPA will start to lose some more cases.  

Anyone care to bet which response by EPA is more likely?

If EPA adjusts its settlement demands downward in response to the decision – or if we start to see litigation in which courts find liability to be divisible – then EPA’s ability to fund Superfund cleanups will be under even more pressure.  This could provide some additional momentum behind the current Congressional effort to reinstitute the Superfund tax.

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Those of us who have practiced in the Superfund arena for some time know that the government, in those rare cases where it has been forced to litigate, has used the same oral argument in every case: “Good morning, your honor. My name is ______. I represent the government in this action and we win.” Today, the Supreme Court made clear that that the government now needs a new oral argument template.

In Burlington Northern v. United States, the Supreme Court issued two important decisions in one. First, the Court held that a defendant must actually intend its waste to be disposed of before it can be found liable as an arranger under § 107(a)(3) of CERCLA. The facts were these. Shell Oil sold pesticides to Brown & Bryant, Inc., which operated a chemical distribution business. As part of the transfer of pesticides from Shell to B&B, some pesticides were released on the property. There was evidence that Shell knew that releases were a regular part of the transfer process. Both the District Court and Appeals Court concluded that Shell’s knowledge that releases occurred was enough to establish arranger liability.

Noting that CERCLA does not define the term “arrange[e] for”, the Court looked the phrase’s ordinary meaning. Doing so, the Court concluded that liability may attach only where the defendant “takes intentional steps to dispose of a hazardous substance.” The government argued that, because the defendant knew that disposal was the inevitable result of its sale of product to the site owner, the defendant had “intended” disposal to occur. The Court rejected this argument. The Court was very clear: The defendant “must have entered into the sale of [the product] with the intention that at least a portion of the product be disposed during the transfer process.”

The direct holding with respect to Shell will be important in a number of cases and is helpful in setting a fairly bright line on arranger liability. Even beyond the immediate holding, however, I wonder what, if anything, this case means for what is known as transshipment liability. Under section 107(a)(3), a person is liable as an arranger if they

arranged for disposal or treatment … of hazardous substance owned or possessed by such person, by any other party or entity, at any facility or incineration vessel owned or operated by another party…

It has always seemed to me that the plain reading of § 107(a)(3) is that the defendant must have “arranged” for the disposal of the hazardous substances at the site where disposal occurred. In those not uncommon situations where the site operator transshipped the waste – without the generator’s knowledge or consent – the generator should not be liable under CERCLA at the transshipment site, because it did not intend for any disposal at the transshipment site. Given the Supreme Court’s emphasis on what the generator intended, I think that, in the right case, a transshipment generator defendant would stand a pretty good chance of winning, if he or she were willing to litigate the case all the way up to the Supreme Court. 

I hope someone will and I hope I’m right. 

The second holding in Burlington Northern may be of even more practical significance. In it, the Court reversed the Court of Appeals and upheld the District Court’s original divisibility finding with respect to the Burlington Northern Railroad. The District Court used a simple formula based on percentage of the site owned by Burlington Northern and the percentage of time that Burlington Northern leased the land as compared to the total duration of site operations. What’s most significant is that the Court did not even require any significant analysis to uphold the District Court; Justice Stevens’ opinion merely stated that there was evidence that contribution from the railroad parcel to the overall contribution was limited, so that, “[w]ith these background facts in mind, we are persuaded that it was reasonable for the court to use the size of the leased parcel and the duration of the lease as the starting point for its analysis.”

This seems obvious, but is probably a game changer in government Superfund litigation. The overwhelming tenor of lower court opinions has been that the defendant’s burden in a divisibility argument is almost overwhelming and that the burden will be satisfied in the rarest of cases and only upon almost perfect evidence of divisibility. The Supreme Court has made clear that that is simply not the case. Superfund cases are no different than other cases and there is no unstated higher burden of proof. 

Thus, while a district court judge might still be affirmed if he or she concludes that the defendant did not meet its burden of proving divisibility, the real import of the decision is that now district court judges need not fear that they will be automatically reversed if they do conclude that the harm is divisible. Given the standard stated in Burlington Northern, it might go too far to say that most cases will be divisible, but divisibility findings should not be at all rare – and that’s definitely news.

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This morning, EPA issued a proposed finding that greenhouse gasses contribute to air pollution and may endanger public health or welfare. The proposed finding comes almost exactly two years after the Supreme Court, in Massachusetts v. EPA, ordered the agency to examine whether emissions linked to climate change should be curbed under the Clean Air Act, and marks a major shift in the federal government's approach to global warming.

The finding, which now moves to a 60-day public comment period, identifies the six greenhouse gases that pose a potential threat as a set, a tactic which we discussed the potential impact of a few weeks ago. 

Overall, the proposed finding is very similar to the language released in March. It concludes that “in both magnitude and probability, climate change is an enormous problem. The greenhouse gases that are responsible for it endanger public health and welfare within the meaning of the Clean Air Act.”

Some interesting highlights of the finding include:

• Environmental justice: As the EPA press release states, “in proposing the finding, Administrator Jackson took into account the disproportionate impact climate change has on the health of certain segments of the population, such as the poor, the very young, the elderly, those already in poor health, the disabled, those living alone and/or indigenous populations dependent on one or a few resources.”
• National Security: As the EPA press release phrased it, “Escalating violence in destabilized regions can be incited and fomented by an increasing scarcity of resources – including water. This lack of resources, driven by climate change patterns, then drives massive migration to more stabilized regions of the world.” 
• Vehicles: By including a "cause or contribute" finding for cars, the proposed finding implies that not only are greenhouse gases dangerous in general, but that such emissions from cars and trucks are reasonably likely to contribute to climate change

The finding does not include any proposed regulations.  However, while release of the finding is a huge development, it still seems likely that the Obama Administration will hold off on regulations in favor of a legislative solution. As the Washington Post reported today, at the Aspen Environment Forum last month, Administrator Jackson emphasized that "the best solution, and I believe this in my heart, is to work with Congress to form and pass comprehensive legislation to deal with climate change.” 

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As some of my clients know all too well, I’ve been spending a lot of time on some Superfund matters recently. Although I can’t remember a period when I didn’t have at least one moderately active Superfund case, significant immersion in complex remedial decision-making and negotiations provides an unwelcome reminder just how flawed CERCLA is. Almost 20 years after the acid rain provisions of the Clean Air Act ushered in wide-spread acceptance of the use of market mechanisms to achieve environmental protection goals and the state of Massachusetts successfully privatized its state Superfund program, the federal Superfund program, like some obscure former Russian republic which remains devoted to Stalinism, is one of the last bastions of pure command and control regulation.

Can anyone tell me why the remedy selection process takes years and costs millions of dollars – before any cleanup has occurred or risk reduction been achieved? Can anyone tell me why, after the remedy has been selected, EPA has to spend millions of dollars – charged back to the PRPs, of course – to oversee the cleanup? Oversight costs can easily exceed 10% of cleanup costs, while oversight during the remedial design and feasibility study process sometimes seem to be barely less than the cost of actually performing the RI/FS.

While there are certainly a multiplicity of causes, there are two factors which greatly contribute to the problem. One was, coincidentally, highlighted in a post today by my friend Rob Stavins. As Rob noted, unlike the acid rain program, which was new at the time, the Superfund bureaucracy is well entrenched and there are a number of actors with a vested interest in maintaining the status quo. 

The second issue relates to the genesis of the Superfund program, as well as its continuing raison d’être. Whenever EPA has ranked relative risks from different environmental hazards, Superfund sites come in at the bottom. However, if you think back to Superfund’s origins, what comes to mind? Love Canal and the Valley of the Drums – and some concerned near-by residents who rallied around a cause to ensure that the problem would be addressed. As renowned risk communications expert Dr. Peter Sandman has noted, there is not necessarily a significant correlation between actual risk levels and public outrage, and it’s not possible to decrease outrage simply by providing accurate information about risks.

In short, the public is outraged by hazardous waste sites and does not trust PRPs to clean them properly. All of those EPA oversight costs are, in large part, intended not to decrease risk, but to lower outrage.  Outrage is understandable in some circumstances, and efforts to reduce it are laudable, but is it really an appropriate use of scarce environmental protection resources to spend the money that gets poured into Superfund sites?

There has to be a better way. Indeed, there is a better way. It’s called a privatized system in which PRPs have to meet well-defined cleanup standards, but are allowed to do so on their own, in whatever manner is most cost-effective, subject to audits by regulators. Privatized programs such as the one in Massachusetts are not perfect. However, their flaws – which largely stem from a failure to fully support privatization -- pale in comparison to the waste that is the federal program under CERCLA.

In other contexts, I’ve called on the Obama administration to embrace regulatory reform. Why not start with Superfund? Notwithstanding Rob Stavins’ point about the difficulty of overturning an entrenched status quo, if the states could do it, why not the federal government?

Besides, I have an entrenched personal reason for seeking Superfund reform. This stuff drives me nuts.

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As many readers of this blog will have already learned, the Supreme Court issued its long-awaited decision in Entergy v. Riverkeeper yesterday. The Court reversed the Second Circuit Court of Appeals and held that EPA was within its authority to consider cost-benefit analysis in setting standards for cooling water intake structures under § 316(b) of the Clean Water Act.

I’m definitely getting on my soapbox here, but this should not be news and it should not be controversial – though I certainly realize that it is. If current conditions tell us anything, it is that resources are not infinite. The irony here is that it is environmentalists who tend to make this point most frequently. Unfortunately, they don’t like to acknowledge that, because resources are not infinite, cost-benefit decisions get made implicitly, even when EPA does not utilize cost-benefit analysis in its regulations.

When I was just a poor Superfund lawyer, I attended a public meeting in Somersworth, New Hampshire, as local residents tried in vain to persuade EPA that they could save more lives by installing traffic signals and hiring public safety personnel than by spending millions of dollars cleaning up an old landfill to the nth degree. The simple truth is that when we force regulated industries to incur costs without regard to the associated benefits, other spending gets displaced. It may be better to have power plant owners spend money on closed cycle cooling than on worker health benefits or, God forbid, payments to shareholders, but let’s make the decision honestly and not ignore the trade-offs.

I still don’t understand why the debate can’t be about how fairly to define costs and benefits. There are serious issues here, but there’s certainly no free lunch. I posted recently about my disappointment regarding early indications that the Obama administration will not be a friend to common sense regulatory reform. The same issues arise here. The Obama administration, because of its undoubted credibility, could advance the cause of cost-benefit analysis and cost-effectiveness analysis. I fear it is not going to happen.

For the same reason, it’s quite possible that the Riverkeeper decision may be much ado about nothing. Riverkeeper holds that EPA may consider costs and benefits, but does not require it. Environmentalists are already clamoring for EPA to rewrite the 316(b) rules and I wouldn’t be surprised if the agency does so.

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The Empire Strikes Back? Revenge on the NIMBYs? Whatever you want to call it, the U.S. Chamber of Commerce now has a great new web site, called Project No Project, which lists energy projects which have been stalled by local opposition.  The site lists project by state and by type, and explains the status of the project, who the opponents are, and what its prospects seem to be.

It is good to see the Chamber join the digital age and adopt some of the methods of those on the other side of these battles.

Of course, one person’s NIMBY is another’s abomination.  As this story was reported in ClimateWire on Monday, Glenn Wattley, CEO of the Alliance to Preserve Nantucket Sound – the leading opponent of the Cape Wind project – disputed the notion that the group’s opposition to Cape Wind resulted from the NIMBY phenomenon.  Isn’t it amazing that project opponents almost always acknowledge that NIMBYism exists, but always deny that their opposition to the project they are fighting is motivated by NIMBYism?

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In December, I posted about the decision in Canton v. Paiewonsky, in which Judge Fabricant held that a party seeking to challenge the certificate of the Secretary of Energy and Environmental Affairs approving an Environmental Impact Report must do so within 30 days of issuance of the first permit for a project – even if the plaintiff’s concerns about the project are totally unrelated to that permit and the plaintiff would not be harmed by issuance of the permit. As before, I’ll provide the disclaimer that this firm represents the plaintiff in the Canton case.

That acknowledgment aside, it is difficult to read today’s Appeals Court opinion in Hertz v. Secretary of the Executive Office of Energy and Environmental Affairs as saying anything other than that Judge Fabricant got it wrong. Hertz is technically not even a decision about MEPA. The plaintiffs in Hertz challenged an amendment to a municipal harbor plan. The Appeals Court ruled that they did not have standing, notwithstanding that they abutted the property that was the subject of the amendment to the plan, because they did not suffer a particularized harm that was protected by the municipal harbor plan process.

What is most interesting about the decision in Hertz is that, even though it is not a MEPA case, the Court’s analysis focused on the Supreme Judicial Court decision in Enos v. Secretary of Environmental Affairs – which is a MEPA decision and which is the case on which the Town of Canton relied for the argument its suit was timely. Reading the opinion in Hertz together with Enos, the conclusion seems clear that, had Canton sued to challenge the adequacy of the EIR upon issuance of the first permit issued to the project, Canton’s inability to allege that the issuance of the permit would cause it to suffer particularized harm would have meant that the suit would have been dismissed for lack of standing. That being the case, the statute of limitations cannot begin to run on issuance of the first permit; the statute of limitations has to begin to run on issuance of the permit about which the plaintiff is complaining, because only then has the plaintiff suffered a harm sufficient to provide it with standing to sue.

We’ll see what the SJC does with the appeal in Canton, but it still seems here that the better reading of the MEPA statute is that the statute of limitations for a suit challenging a certificate on an EIR must begin to run when the permit that is the subject of the plaintiff’s concern is issued, rather than when the first permit is issued, regardless of whether the plaintiff has any concerns about that first permit.

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The batting average of the Bush administration EPA in appeals of its regulatory proposals may now have dropped below the proverbial Mendoza line. This week, the Court of Appeals for the District of Columbia remanded a substantial part of EPA’s particulate rule. That the Bush administration could achieve results where the Mendoza line is even a close metaphor is a testament to just how low its stock has fallen in the courts.

The case itself is important for a number of reasons, but is too lengthy for detailed analysis here. Highlights include:

• First, the basic holding: the court remanded EPA’s primary annual standard for PM_2.5, because EPA did not justify that the 15 ug/m³ standard was sufficient to protect public health with an adequate margin of safety. Second, the court also remanded EPA’s determination of the secondary, public welfare, standard for PM_2.5.
• The court gave great weight to the role of the Clean Air Science Advisory Committee (CASAC) and staff recommendations in the regulatory process. After this decision, EPA is going to think twice about choosing a regulatory course difference than that recommended by CASAC and staff. On balance, I think that this is a bad thing and more evidence of the collateral damage from the extreme positions taken by the Bush administration. After all, while the Clean Air Act sets some boundaries, these are ultimately policy decisions that should be made by the President and his or her chosen staff, not by a committee no one’s heard of or low-level staff.
• Unlike the chaos created when the court vacated the CAIR regulations, the court appears to have learned its lesson. This time around, the court remanded the rule, but left the standard in place for now.
• The court’s decision to remand the public welfare standard will have implications for current efforts to implement the its Regional Haze Rule. The extent to which this decision throws Haze Rule implementation back to the drawing board may not be known for some time.

How many more cases can the Bush administration lose after it’s already out of office? At least one. Greenwire reports today about speculation that this decision means that the EPA rules regarding the nitrogen oxide NAAQS may also be in trouble.

The interesting question in all this is the extent to which the abysmal record of the Bush EPA in defending its decisions in the courts will damage EPA’s credibility and thus result in a long-term weakening of the deference given EPA by the courts. At this point, my assumption is that, in the long run, these cases will be seen as an aberration and courts will resume their prior practice of granting EPA substantial deference. Of course, whether that is a good thing or not is a separate question.

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The next Bush-era rule to be tossed overboard may be a big one, namely EPA's hands-off stance on regulation of CO₂ for PSD purposes.   EPA  Administrator Lisa Jackson said today in a letter to the Sierra Club that the agency would grant the group's petition seeking reconsideration of former Administrator Johnson's December 18th memo which described why EPA should not regulate CO₂ emissions from new coal-fired plants.  Although EPA did not stay the effectiveness of the Johnson memo, the letter emphasizes that the memo does not bind States issuing permits under their own State Implementation Plans, and cautions other PSD permitting authorities against assuming that the Johnson memo is the final word on interpreting the Clean Air Act requirements.  EPA will take public comment on concerns raised over the Johnson memo and the appeals board's decision, and plans to publish a notice of proposed rulemaking soon.

As we previously noted, the new administration was likely to be saddled with the decision of whether CO₂ emissions must play a part in PSD decisions, given the Deseret Power decision that the Clean Air Act was ambiguous on whether the EPA must impose a BACT limit for CO₂.   Now it looks like the Obama administration may take the issue on soon.

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We posted recently about the revival of EPA’s NSR enforcement program. Now, yet another shoe has dropped. The Center for Biological Diversity has announced the creation of the Climate Law Institute, the purpose of which is to use citizen law suits under existing laws to advance regulations intended to address climate change. The press release states that the Institute has $17 million in funding with which to pursue its mission.  

While that mission will focus on climate change, as its name implies, it will not be limited to litigation under the Clean Air Act. It was the CBD which led the litigation resulting in the listing of the Polar Bear under the Endangered Species Act.  The Institute indicates that, in addition to the Clean Air Act, the ESA, NEPA, and the Clean Water Act may all be utilized as part of its overall litigation strategy.  

Among other specific targets identified in the press release, the Institute states that it aims to prevent the construction of any new coal-fired power plants and to phase out existing coal plants as quickly as possible.

Unless EPA moves very quickly across a number of fronts – which may well happen – it looks as though we’re going to see a lot of climate-related litigation in the near future.

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In addition to our post yesterday and the items highlighted in the New York Times Green.Inc blog on the difficulties facing new and existing coal-fired power plants this week, the Environmental Protection Agency and the Department of Justice have launched what they call a new national crackdown targeting coal-fired plants that violate the Clean Air Act.

As the first piece of this campaign, the agencies filed suit on Wednesday against a Kansas power plant for PSD violations dating back to 1994, and following a notice of violation issued to the plant owners in January 2004.   

EPA and DOJ  had been criticized for not pursuing new cases against power plants during the Bush administration, but it looks as though efforts to take on the coal industry are ramping up again.

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The EPA and DOJ announced yesterday that Kentucky Utilities (KU), a coal-fired electric utility, has agreed to spend approximately $135 million on pollution controls to resolve violations of the Clean Air Act New Source Review program.  KU will also pay a $1.4 million civil penalty plus $3 million in implementing supplemental environmental projects, or SEPs.  Finally, KU will also surrender over 50,000 SO₂ allowances shortly after entry of the consent decree, and annually surrender any excess NOx allowances resulting from the installation of pollution control equipment.   

The consent decree, which covers one of the three coal-fired electric generating units at the E.W. Brown plant in Mercer County, Kentucky, requires KU to meet the most stringent limit for nitrogen oxide (NOx) emissions ever imposed in a federal settlement with a coal-fired power plant.  According to the EPA's fact sheet, the new pollution control equipment will reduced combined emissions of SO₂ and NOx by more than 31,000 tons per year to just 10% of the 2007 emission levels.  KU has also agreed to install controls to reduce particulate matter emissions by approximately 1,000 tons per year.

Notably, one of the SEPs provides for KU to contribute $1.8 million towards a $7 million carbon capture and sequestration pilot project led by the University of Kentucky.

This Consent Decree is the sixteenth judicial settlement in the series of cases begun in 1999 against 32 plants in 10 states to bring the power plant industry into full compliance with the NSR and PSD requirements of the Clean Air Act.  It shows that although these cases have been around for a while, the EPA and DOJ are still focused on enforcement for NSR violations.

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In Key Tronic Corp. v. United States, the Supreme Court held that costs which are “closely tied to the actual cleanup may constitute a necessary cost of response in and of itself….” Such costs include “work performed in identifying other PRPs.”   According to the Supreme Court, “tracking down other responsible solvent polluters increases the probability that a cleanup will be effective and get paid.”

On the other hand, the Supreme Court noted that attorneys’ fees incurred in the course of negotiations with the government or for the purpose of defending a party against expected litigation are not recoverable. 

The problem in this approach is that distinguishing between these two motives will almost always be impossible. This difficulty was brought home by a recent case from the Eastern District of California. In BNSF Railway v. California, the court denied a contribution plaintiff’s effort to recover its attorneys fees incurred in identifying additional PRPs, because the court could “not distinguish [plaintiff’s] efforts expended in searching for PRPs from their own litigation expenses.”

Well, duh.

When a PRP attempts to identify other PRPs, is there ever a situation in which the PRP is acting solely out of the goodness of his heart? It seems more likely that the PRP is looking for others to share the pain. Indeed, for PRPs with large pocketbooks, the Supreme Court’s premise that identifying other PRPs will increase the likelihood that the cleanup will be effective and get paid for seems questionable, at best. Even if no other PRPs are identified, the well-heeled PRP is likely to perform the cleanup itself. The identification of additional PRPs, while possibly decreasing the share to be paid by the original PRP, is, if anything, likely to lead to more private cost recovery litigation.

On the other hand, is it reasonable to allow recovery of attorneys’ fees to small PRPs, because their identification of additional PRPs does increase the likelihood that the cleanup will be completed, but not to the GEs of this world? That hardly seems fair and certainly has no basis in the statutory language.

It seems to me that the Supreme Court’s language in Key Tronic is simply unworkable in the real world. The better approach would be to allow recovery of attorneys’ fees incurred in the identification of additional PRPs, regardless of whether the motivation for the PRP search might have been to protect the PRP’s own financial interests in defending an action brought by the government.   Such a rule might actually facilitate private settlements, but it would in any case be much easier for courts to administer and, on that basis alone, would be preferable to the current free-for-all, in which the outcome seems most likely to be decided by the judge’s respective level of sympathy for the plaintiff and the defendant.

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Attorneys who have litigated citizen suits under RCRA have often wondered if there is any possible risk that would not qualify as an “imminent and substantial endangerment,” thus subjecting the person who “contributed” to such endangerment to liability under RCRA.

In Scotchtown Holdings v. Town of Goshen, the District Court for the Southern District of New York earlier this month established at least some outer parameters for this seemingly boundless phrase. In Scotchtown Holdings, the owner of land allegedly contaminated by the defendant’s use of sodium chloride – also known as salt to the uninitiated – caused groundwater contamination that precluded development of the plaintiff’s property for residential use.

The court granted the defendant’s motion to dismiss on the ground that, because the property had not already been developed – and because the contamination meant that it would not be developed – there was no imminent and substantial endangerment.

It may be that this decision is obvious and unremarkable. It is certainly distinguishable from cases where at least a potential future exposure exists if no cleanup were to occur and current land uses remain unchanged.  In Scotchtown Holdings, no exposure would occur unless land use were to change.  Nonetheless, for those of us who thought that the presence of contamination almost meant that an imminent and substantial endangerment existed, QED, the decision is a breath of fresh air.

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Readers of a certain age will recall Chevy Chase’s Weekend Update segment during the first year of Saturday Night Live, when, for a number of shows, he would report that Francisco Franco was still dead. (And isn’t it great that there is actually a Wikipedia article on the subject of Franco still being dead!).

This segment was brought to mind by the report of this week’s decision out of the District Court for the District of Columbia, in the case of General Electric v. Jackson, affirming that EPA’s authority to issue unilateral administrative orders under § 106 of CERCLA had survived an as applied constitutional challenge brought by General Electric. Clients have been asking their lawyers whether CERCLA could possibly be constitutional ever since it was passed more than 28 years ago. Today, with this decision, I can report that CERCLA is still constitutional.

The same court had rejected a facial challenge to CERCLA’s constitutionality in 2005. In the recent decision, the court concluded that EPA’s “pattern and practice” in implementing § 106 also survived challenge. GE had raised two concerns. The first is that, under the decision in Ex Parte Young, EPA’s coercion of PRPs through its use of § 106 deprives PRPs of their due process rights. The court rejected this argument on the ground that the availability of the sufficient cause defense and the ultimate availability of judicial review meant that EPA’s issuance of § 106 orders is not unconstitutionally coercive.

Second, GE argued that EPA’s process for issuing § 106 orders deprives PRPs of a constitutionally protected property interest and that, in order to do so, EPA must provide more process, in particular a neutral decision-maker, prior to issuing orders. Here, while the court found that issuance of § 106 orders does deprive PRPs of a property interest, the balance of harms weighs in EPA’s favor and imposition of greater pre-issuance process would impose substantial costs on EPA without providing significant benefit to PRPs.

Francisco Franco is still dead. CERCLA is still constitutional. Plus ca change, plus c’est la même chose.

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In a decision that could have significant impact on states’ efforts to limit cross-border pollution, Judge Lacy Thornburg of the District Court for the Western District of North Carolina issued an affirmative injunction against the TVA this week, requiring it to install pollution control equipment at its facilities located nearest to North Carolina and imposing specific emissions limits from those facilities. The basis for the injunction was a finding, after trial, that the facilities created a public nuisance as a result of the air pollution transported from those facilities to North Carolina.

The decision is notable for a number of the findings and holdings.

• Generally speaking, compliance with regulations does not preclude a finding that air emissions constitute a nuisance. (The Court applied the nuisance law of the states in which the plants were located.)
• Ozone and PM_2.5 can create adverse health impacts at concentrations below the National Ambient Air Quality Standards (NAAQS). This suggests that facilities contributing to concentrations of air pollutants can be subject to an injunction requiring the facility to decrease emissions, even if the area is in attainment of the NAAQS.
• The Court looked to survey data indicating that Blue Ridge Parkway visitors would pay $328 in annual taxes in order to improve visibility. As many readers will know, this kind of survey research is extremely controversial and may lead to some extraordinary damages findings.
• The Court declined to impose an injunction against TVA facilities that were not proximate to North Carolina, essentially on the ground their impacts on North Carolina were de minimis. The court found that those plants against which an injunction was entered contributed to somewhere between 5% and 10% of ambient contaminant concentrations. The other plants contributed less 0.1% of ambient concentrations.
• The Court imposed a stringent schedule by when pollution control equipment must be installed. The Court gave the TVA 27 months to install scrubbers and 21 months to install SCRs. This time frame was substantially shorter than that proposed by the TVA.

The one piece of good news for generating plants was the court’s causation analysis with regard to more distant plants. That analysis, if followed, suggests it would be extremely hard for a public nuisance plaintiff to prevail in a global warming case, since the causative contribution of any facility or even group of facilities to the global warming problem is almost certain to be even more attenuated than for those TVA plants distant from North Carolina.

The decision undoubtedly gives downwind states a substantial hammer against upwind sources of contamination (and could be applied to water pollution cases as well as air pollution). Indeed, in the current set of Congressional negotiations, industrial interests could conceivably be tempted to accept more stringent emissions limits in return for preemption of state nuisance laws. It will be interesting to see how this plays out in Congress.

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Those of us who litigate know that, with all respect to our expert colleagues, pulling a necessary opinion out of an expert can be very difficult. Experts like adjectives and adverbs, particularly if those modifiers help the expert avoid saying anything meaningful. A recent decision from the Court of Appeals for the Fourth Circuit makes clear the limits of such timidity.

In Miller v. Mandrin Homes, the plaintiffs alleged that the defendants sold them a house that was subject to contamination. The plaintiffs brought several claims, including one under CERCLA, which they admitted was the crux of the case. As our readers know, one of the elements of a prima facie case under CERCLA is proof that there has been a release or threatened release of a hazardous substance. 

Unfortunately for the plaintiffs’, their expert only stated that contamination detected in a sump at the house was “indicative” of a release. The court found such testimony speculative, stating that this phrase “does not show that [the expert] … could testify that it was his scientific opinion that groundwater contamination existed. [The expert] stated his opinion in a passive manner that suggests his finding falls in the realm of the possible rather than the probable.”

The lesson here is critical, if basic. Know the elements of your case. If they are subject to expert opinion, make sure that your expert is willing to state that it is more likely than not that the relevant fact is true. I have often had the precise experience of working with experts to change their use of “indicates” to “demonstrates” or similar such language. If you are in litigation or at risk of litigation, ignore this issue at your peril.

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Last week, I posted about the Pollard decision, which made clear that local boards to not have unlimited discretion to ignore evidence provided by project proponents. This week, the shoe is on the other foot, so to speak. In Macero v. MacDonald, the Massachusetts Appeals Court reversed a decision in favor of a project opponent, on essentially the same analysis as that in Pollard.

In Macero, the developer sought a variance from state and local septic system regulations. The developer provided some information from a professional. However, the local Board of Health did not, apparently, formally review that information, and its decision did not include specific findings that the standards for the variance had been met. As the Appeals Court stated, “the authority of the board is broad…. However, competent judicial review … is … rendered difficult if not impossible by the lack of specific findings and rationale for the agency decision.”

The lesson here? Even if the board is on your side, make sure that they take the time to dot all their i’s and cross all their t’s.

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Following briefing from the parties, the D.C. Circuit Court of Appeals today withdrew its vacatur of EPA’s Clean Air Interstate Rule. While the decision striking down the rule stands, the Court determined that keeping CAIR in effect while EPA prepares a replacement rule “would at least temporarily preserve the environmental values covered by CAIR.”

EPA rejected a request by the industry plaintiffs to impose a deadline on EPA for issuing the replacement rule, but emphasized to EPA that it “did not intend to grant an indefinite stay of the effectiveness of this court’s decision.”

The decision to keep CAIR in place for now will provide a measure of certainty and should be particularly well received by state environmental agencies which had been trying to determine whether they needed to reinstate their NO_x SIP Call rules.

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A recent Superior Court decision may significantly affect how appeals are conducted in MEPA cases. In Canton v. Paiewonsky, Judge Fabricant ruled that Canton’s challenge to the MEPA certificate for the Westwood Station project was filed too late, because it was not filed within 30 days of the issuance of the first permit issued to the project, even though the first permit had nothing to do with the basis for Canton’s challenge to the MEPA certificate.

First, a bit of disclosure: this firm represents the Town of Canton in this case. Nonetheless, I truly believe that, unless I were representing Westwood Station, I would think that this decision is plainly wrong and will have several adverse consequences, even if we had no connection to the case.

The basis for the decision is the language in the MEPA statute, which provides that an action to challenge a MEPA certificate “shall commence no later than thirty days following the first issuance of a permit or grant of financial assistance by an agency.” The court concluded that this language is plain on its face – end of inquiry.

Canton made two arguments.  The Court gave them both short shrift. Canton noted that the first permit, a beneficial use determination, or BUD, by MassDEP, was not the subject of public notice, so the limitations period almost certainly would run before any member of the public were aware that it had even started. The court’s solution was simple, if totally unrealistic and impractical – “properly timed public records requests.”

Canton’s second argument was that it had no basis to sue on issuance of the BUD, because it had no concerns about the BUD, which was irrelevant to Canton’s claims that the MEPA certificate was flawed. In other words, Canton suffered no injury from issuance of the BUD, so it had no standing to sue. Canton’s concerns were largely about traffic issues. The Court largely ignored the case law cited by Canton, on the ground that those cases did not address the statute of limitations issue explicitly.

Interestingly, the Highway Department did not join in Westwood Station’s motion to dismiss, perhaps because the Department realized that, outside the four corners of this case, the decision does no one any good. First, with respect to the notice issue, resource-constrained state permitting agencies will certainly have to respond to many more public records requests. As a practical matter, even with more requests, it will be impossible for interested parties to know about all the approvals issued to development projects.

Even developers, aside from Westwood Station, will not benefit from this decision, because the result will be to force potential challengers into court early, increasing transaction costs and potentially making amicable resolution of development challenges more difficult. The court’s willingness to ignore the real ripeness issue will require project proponents to bring suit on issuance of the first approval, even if negotiations are still proceeding on the approval that really matters.

Sometimes a plain reading is not quite as plain as a judge thinks it is.

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Developers and others who appear before local boards know what an uphill battle it is to challenge decisions of those boards. After all, there’s a reason for the existence of the phrase “You can’t fight City Hall.” Of course, it’s never a good idea to fight City Hall unless you absolutely have to do so, but a recent decision from the Massachusetts Appeals Court gives some hope to those forced into that position by a board taking an extreme position.

In Pollard v. Conservation Commission of Norfolk, the local conservation commission, acting under its local wetlands bylaw, rejected a request for an order of conditions – a permit, to those of you outside Massachusetts – on the ground that the developer had not met its burden of demonstrating that the proposed work would not adversely affect a resource area. The developer had submitted a report by a consultant, in which the consultant opined that the project would not adversely affect the resource area and would comply with the bylaw.

The only evidence in the record before the commission was the report from the developer’s consultant. The commission took no other evidence. Instead, the commission simply concluded that the expert’s report was not credible. Since the developer had the burden of demonstrating compliance with the bylaw, the commission concluded that this was a sufficient ground on which to reject the permit application. 

The Appeals Court concluded otherwise.

While noting that the commission was not required to credit the developer’s expert, even though uncontradicted, the Appeals Court concluded that the commission was required to provide a basis for its rejection of the expert, noting that “evidence of a party having the burden of proof may not be disbelieved without an explicit and objectively adequate reason.” Since the commission had made no effort, either in its decision or in court, to explain its rejection of the expert opinion, the Court had no way to determine whether the commission “decision was arrived at with fairness and without predisposition.”

Developers cannot necessarily take this decision to the bank. As long as local boards provide some reasoned basis for their decision, a successful challenge will remain a long shot. However, where a local board truly ignores available evidence, there is some hope that courts will ensure that reason prevails.

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For those of you who haven’t been keeping up with the law on private cost recovery and contribution claims under CERCLA, following the decision in Atlantic Research, I recently participated in a panel discussion on the issue. A copy of my presentation can be found here.

The most contentious issue during the discussion was whether private parties who have settled with the government and performed direct cleanups – as opposed to reimbursing the government – as a result of such settlements have an action for cost recovery under § 107 of CERCLA or an action for contribution under § 113 of CERCLA. 

My own view is that the Supreme Court has backed itself into a corner by so narrowly associating claims under § 113 with traditional contribution claims. It seems to me that the Court has limited contribution claims to situations where one liable party has reimbursed the original plaintiff for more than the contribution plaintiff’s fair share of the common liability. Thus, in a situation where the private plaintiff has directly incurred response costs – even if following a consent decree – no contribution claim lies. This is also consistent with a plain reading of § 107 – and we know that the Supreme Court loves plain language interpretations of CERCLA – which provides for claims for response costs, without any distinction being drawn between whether those costs were incurred voluntarily or not.

As I said at the panel, I just wish that the language of CERCLA was as clear to me and all of the practitioners with whom I work as it apparently is to Justice Thomas and the rest of the Supreme Court.

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On the better late than never front, I finally got around to reviewing the still relatively recent decision in United States v. Cinergy Corp. regarding the scope of injunctive relief available with respect to violations of the Clean Air Act’s New Source Review, or NSR, provisions. Although the decision was issued in mid-October, its significance is great enough to mention here.

As most readers here will know, the Cinergy case is one of the remaining NSR enforcement cases originally brought by the Clinton administration. The defendants had previously been found liable for NSR violations at the Wabash River power plant. The recent decision involved the defendants’ efforts to preclude the government from seeking retroactive injunctive relief, i.e., not penalties, and not prospective relief to prevent future violations, but injunctive relief intended to remedy, mitigate, or offset the prior violations.

The relevant statutory language, from § 113 of the CAA, provides that a court may “restrain” violations, impose penalties, and, critically, “award any other appropriate relief.” The court in Cinergy held that this broad language authorizes injunctive relief focused on past harm, rather than just restraint of future violations.

It is one thing to order restoration of an illegally filled wetland. In that context, such a remedy is understandable and its scope necessarily somewhat limited. In the case of air pollution, however, once the emissions have occurred, it is obviously impossible to identify the location of that pollution or the scope of the remedy appropriate for such past harm. In other words, demonstrating an appropriate nexus between the harm and the remedy will often be difficult, if not impossible. 

One obvious possible form of relief would be to calculate the excess emissions resulting from the non-compliance and require the defendant to overcontrol in the future until it has offset those excess emissions. Whether the court will order such an offset or any other form of remedial injunction is not yet known, because the court concluded that it needed to have an evidentiary hearing regarding what relief it should in fact order. However, the mere possibility that such relief may be available certainly provides the government with a significant hammer to use during settlement negotiations in pending or future NSR enforcement cases. 

One issue of concern is whether such relief might be ordered against a current owner of a facility even if the original NSR violation was caused by a prior owner. In that case, the prior owner is not capable of offsetting the historical excess emissions, but the current owner would have a strong equitable argument that a remedial injunction should not be imposed against it.

As always, some of these questions are obviously going to have to wait for future judicial decisions.

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Foley Hoag is excited to launch the Law and the Environment Blog. In today’s fast changing world, almost all of us get our news—including our news about developments in environmental law and policy—electronically. This blog is not intended to be a substitute for the BNA™, or Greenwire™, or Google™, although we do hope that we will be able on occasion to let you know about issues that haven’t yet come to your attention.

What we really want to accomplish is to provide some perspective on those developments. We’ll try to tell you which developments may matter to you. And why they matter. And how they matter. Whether you’re a manufacturer or a power plant developer, whether you’re a renewable energy developer or hoping to be a renewable energy consumer, whether you are a municipality or public agency or university, we want to comment on current issues in a way that is useful to you in your business. We’ll cover climate change, renewable energy, hazardous and solid waste, clean air and water, sustainability and green design. You name it, if it’s got an acronym attached to it, we’ll cover it.

As the headline indicates, we want to inform, update, comment, and discuss. In other words, while we’re going to enjoy posting, we’ll enjoy the blog more—and its usefulness will increase—when we hear from you. Please comment on the blog entries. Let us know about developments we missed or implications of our discussions that we did not consider. Let us know, even if you disagree.

We look forward to the conversation.

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In Massachusetts v. EPA, the Supreme Court concluded that greenhouse gases, including CO₂, are “air pollutants,” the it left (barely) open the question whether CO₂ is “subject to regulation” under the Clean Air Act (“CAA”). 

Following Massachusetts v. EPA, there have been a number of cases in which advocates of climate change regulation have sought to require EPA to regulate CO₂ as a pollutant. One of those cases, In re Deseret Power Electric Cooperative, was just decided by the EPA Environmental Appeals Board. In Deseret Power, the Sierra Club had challenged issuance of a PSD permit issued by EPA Region 8 which would have allowed Deseret Power to construct a coal-fired power plant near Bonanza Utah. The basis for the challenge was the failure of EPA to impose a best available control technology, or BACT, limit on CO₂ emissions.

Notwithstanding the decision in Massachusetts v. EPA, EPA took the position that it historically had not interpreted the term “subject to regulation under the Act” to include CO₂. Moreover, it claimed in Deseret Power that it did not have authority to impose a BACT limit on CO₂ emissions. The EAB firmly rejected EPA’s position that it did not have authority to impose BACT limits on CO₂. However, the EAB also rejected the Sierra Club’s argument that EPA was required to impose compliance with BACT for CO_2.  In fact, the EAB concluded that “the statute is not so clear and unequivocal as to preclude Agency interpretation of the phrase ‘subject to regulation under this act,’ and therefore the statute does not dictate whether the Agency must impose a BACT limit for CO₂.”

So where does the Deseret Power decision leave the regulation of CO₂ under the CAA?  Probably pretty much where it was before the decision was issued – that is, right in the lap of the new administration. However, if I were a betting man, I would certainly be reluctant to back new ventures that involve significant CO₂ emissions unless the developer has a plan for addressing CO₂ emissions.

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Can a party found liable of violating the Clean Air Act's New Source Review provisions be required to reduce future pollution more to mitigate emissions caused by past violations?  According to a recent U.S. District Court decision, maybe.

In U.S. v. Cinergy Corp., S.D. Ind., No. 99-1693, decided October 14, 2008, the first court to rule on whether retroactive, as opposed to prospective relief, is available under Section 113 of the Clean Air Act found that the court does have the authority to grant such relief.  Although the court stopped short of ordering this relief (procedurally, this opinion was a denial of the defendants' summary judgment motion), the court held in sweeping language that nothing in the Clean Air Act limits the full range of equitable relief that courts can order.

This recent ruling relies heavily on a 1946 U.S. Supreme Court decision, Porter v. Warner Holding Co., 328 U.S. 395, 398 (1946), in which the Supreme Court held that when a court's equitable jurisdiction is invoked by a statute, "all the inherent equitable powers of the District Court are available for the proper and complete exercise of that jurisdiction," unless the law by "clear and valid legislative command" or "necessary and inescapable inference" has restricted the court's equitable powers.

In Cinergy Corp., the district court said its equitable powers were invoked by the phrasing of Section 113 of the Clean Air Act which gives a court, "jurisdiction to restrain [a] violation [of the Clean Air Act], to require compliance, assess [a] civil penalty, to collect any fees owed the United States... and to award any other appropriate relief."   Applying this rule, the court determined that it would have the authority to require the three defendants to take appropriate actions that remedy, mitigate and offset harms to the public and the environment caused by their proven violations of the Clean Air Act.

In this particular enforcement suit, three companies -- Cinergy Corp. (now part of Duke Energy Corp.), PSI Energy Corp., and the Cincinnati Gas & Electric Co. -- were found liable in May of long-term violations of the New Source Review requirements in their operation of a power plant in West Terre Haute, Indiana. The US requested in their filings that the court impose specific measures to reduce pollution beyond what is required for prospective compliance, in order to make up for the nearly two decades of illegal pollution caused by the plant. 

A trial on remedies is expected to begin in February, 2009.

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In a recent decision, the 7^th Circuit Court of Appeals confirmed that neither CERCLA nor RCRA provide convenient ways for the buyer of a building containing asbestos to finance the abatement of that asbestos. In Sycamore Industrial Park Associates v. Ericsson, the seller of the building replaced the old heating equipment shortly prior to sale, but left the old system, including piping, in place. The buyer sought to make the seller pay for the asbestos abatement on the ground that the seller has disposed of the old equipment by abandoning it in place when it installed the new system. The 7^th Circuit didn’t buy it.

The Court acknowledged that there might be a close question as to whether the asbestos constituted a solid or hazardous waste or RCRA and CERCLA. However, the Court concluded that it need not answer the question, because the seller had not “disposed” of the material. The Court concluded that, where all of the asbestos was either inside the building or inside a pipe chase, there “is no real threat that asbestos ‘or any constituent thereof may enter the environment or be emitted into the air or discharged into any waters….” 

The Court did indicate that the intent of the seller may be relevant; it gave the example that a person looking to avoid liability for a toxic retaining pond, could not sell the entire property, including the pond, as a means of avoiding such liability. It described this situation as the “malicious motive case.” Absent such a malicious motive, however, sale of property including toxic or hazardous material does not put a person into the category of potentially responsible parties.

Similar to its analysis of the “disposal” question, the Court also concluded that there was no release or threat of release that would subject a person to CERCLA liability. “We reaffirm that when there is no emission into the outside environment,… there is no release or threatened release, and thus there can be no liability under CERCLA. 

The Court reached the same conclusion under RCRA. First, utilizing the same analysis as under CERCLA, it found that there had been no disposal by the seller. It also rejected the allegation that the seller had handled or stored the asbestos, concluding that “RCRA requires active involvement in handling or storing of materials for liability.”

In short, if the asbestos isn’t walking out the door, it may be a problem inside a building, but CERCLA and RCRA won’t help the building owner pay to fix that problem.

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