When Is Property Damage From a Release “Expected or Intended”? Only After the Owner Learns of the Spill and Ignores It

Any good trial lawyer will tell you that the law is about telling stories.

Once upon a time, Timothy and Stacy Creamer bought a house.  Only after they closed did they realize that some strategically placed rugs were hiding the evidence that, “up from the ground come a bubblin’ crude.”

Unlike Jed Clampett, rather than finding themselves millionaires, the Creamers found themselves with a million dollar liability – literally.

This being a law story, of course the sellers were bankrupt.  The Creamers thus pursued the sellers’ insurer.  The case ended up in the Appeals Court, which held that the Creamers could pursue their claims under the policy.

The insurer, Arbella, made three arguments in support of its summary judgment motion.  The Court rejected them all.  In order, the Court held that:

  1. The property damage was caused by an occurrence.  Arbella argued that the damage was caused by the sellers’ fraud, not by the original release of oil.  However, as the Court pointed out, the Creamers’ had claims based on Chapter 21E, the Commonwealth’s superfund law.  Since Chapter 21E is a strict liability statute, the Creamers’ damages were caused by the release, not by the sellers’ fraud.  (But see number 3, below!)
  2. The loss occurred during the policy period.  Following precedent, the Court concluded that, so long as the property damage occurred during the policy period, it did not matter that the harm to the claimant did not occur until later.
  3. At least some of the damage was not “expected or intended.”  This is the most significant part of the case.  While preserving Creamers’ claims, the Court split the baby on this one.  It held that the original release was not expected or intended, but that, once the sellers discovered the spill without doing anything about it, any further damage was “expected” by the seller.  The Court thus remanded for a determination by the Superior Court how much of the total property damage was “expected.”

The Creamers will thus get their day in court, but, depending on when the sellers learned of the contamination, their recovery could be significantly limited.  They certainly will not get enough to move to Beverly Hills.  No swimming pools or movie stars for the Creamers.

Injunctions In RCRA Citizen Suits — Broad, But Not Infinite

Two recent cases illustrate the potential scope of, and the potential limitations on, injunctive relief in RCRA citizen suits.  First up, Schmucker v. Johnson Controls.

Contamination was detected at the Johnson Controls manufacturing facility in Goshen, Indiana.  In response, Johnson Controls performed substantial remediation under the auspices of the Indiana Department of Environmental Management’s Voluntary Remediation Program.  Nonetheless, significant contamination remains at the site,… More

An NSR Enforcement Decision – Last of a Dying Breed?

Late last month, Federal Judge Rodney Sippel ruled that EPA could obtain injunctive relief against Ameren Missouri in the long-running NSR enforcement case concerning Ameren’s Rush Island Plant.  The Court had already ruled that Ameren had violated the Clean Air Act by failing to obtain a PSD permit prior to implementing substantial modifications at the plant.

Having lost at the liability stage, Ameren took three shots at avoiding injunctive relief.  Three strikes and Ameren’s out.  The Court concluded that:

  • It has it has authority to issue an injunction for a past violation, even where EPA has withdrawn its penalty claim.  The Court distinguished cases where ownership had changed since the modifications were made.
  • Federal courts may make determinations regarding what constitute BACT.
  • It has authority to require emissions reductions at other facilities owned by Ameren, in order to compensate for the excess emissions occurring at Rush Island due to the NSR violation.  This may be the most significant aspect of the decision.

The Court did deny EPA’s motion for summary judgment that BACT requires installation of flue gas desulfurization at Rush Island.  However, as long as Ameren isn’t closing Rush Island, I would not expect that to be a heavy lift for EPA at trial.

Given EPA’s decision to deemphasize NSR enforcement, I don’t know how many more of these cases we’re going to see.  With that in mind, I’m going to note what I said about the NSR enforcement program when the liability decision was issued in this case:

Put simply, why would we decide to regulate existing facilities only when they make significant upgrades that make them more efficient?  Wouldn’t it make more sense to regulate the existing facilities that remain inefficient?

Governor Baker Shows Support for Offshore Wind Industry

Governor Baker addressed a room full of offshore wind stakeholders at “The Future of Offshore Wind” Forum hosted by the Environmental League of Massachusetts on Wednesday morning.  He applauded the developers, environmental groups, legislators and local students for the progress made in recent years which has led to a dramatic decrease in the price of offshore wind energy to ratepayers in recent years.

Thanks to a bill Governor Baker signed into law in 2016,… More

When Is A Regulatory Denial a Regulatory Taking? Not Very Often, At Least in Massachusetts

On Tuesday, the Massachusetts Appeals Court denied a regulatory takings claim brought by a plaintiff whose development plans for her property in Falmouth were denied by the Falmouth Conservation Commission.  Plaintiff’s evidence showed that the property was worth $700,000, if developable, and $60,000, if not.  

The Court ruled, in conformity with the “vast majority” of decisions in other states, that there is no right to a jury trial on the question whether a regulatory taking has occurred. This question is obscure, arcane, boring, and the decision seems correct.

On the merits, the decision is probably right, though the notion that the plaintiff would receive a “windfall” if compensated, because her parents bought the lot for $49,000 in 1975 and it’s now worth $60,000 even after the alleged taking, seems somewhere between silly and downright offensive.

I’d still like to put regulatory takings jurisprudence on a firmer footing.  I’ve been making this argument since 2009, but I’m hoping that someday, somewhere, some judge will listen.  Here’s the idea, adopted from my then law school professor, Guido Calabresi.

The rationale behind the Wetlands Protection Act is that certain activities harm the public good by damaging important public resources.  Sounds like a nuisance to me.  What happened was that, as we started basing our environmental regulatory programs on statutes, rather than on common law, the common law ceased developing in the way that it had over centuries.  We don’t have to figure out any more whether new development would constitute a nuisance, because we can simply prohibit it under the WPA.

To me, though, it would make more sense to utilize the lens of nuisance law.  We should ask whether, in the absence of the WPA, the common law would have advanced in such a way that developments that harm wetlands resources would now be considered a nuisance.  If so, then no compensation is due.  No one is  entitled to compensation for having to abate a nuisance.

Rather than trying to figure out the extent to which a regulation interferes with someone’s “investment-backed expectations,” why not figure out whether we are just making landowners conform to expected norms of behavior or whether we are instead simply imposing on one person the costs necessary to obtain a general benefit?

Citizen Plaintiffs Lose a Climate Suit — Let Me Count the Ways

Yesterday, Judge Paul Diamond dismissed climate litigation brought by the Clean Air Council and two minor plaintiffs.  Like the Juliana case in Oregon, the plaintiffs argued that the government had violated the their rights by failing to take robust action against climate change.  Here are some of the failures that Judge Diamond identified in the complaint.

First, he found the plaintiffs did not have standing.  Why not?

  • No injury in fact
  • No traceability
  • No redressability

Judge Diamond also ruled that prudential concerns regarding separation of powers compelled a conclusion that plaintiffs did not have standing:

Article III standing exists “to prevent the judicial process from being used to usurp the powers of the political branches.” These considerations preclude me from acting as a “virtually continuing monitor[] of the wisdom and soundness of Executive action.”

Next, Judge Diamond ruled, in the alternative, that plaintiffs failed to state a claim.  Why not?

  • No due process right to a life-sustaining climate
  • No “state-created danger”
  • No substantive due process violation
  • No federal public trust

I’ll note that, having found plaintiffs did not have standing, it was actually improper for him to reach the question of whether the complaint stated a claim, because, in the absence of standing, the Court had no further jurisdiction.

That Judge Diamond went out of his way to drive four additional stakes into plaintiffs’ complaint reminds me of the Black Knight in Monty Python and the Holy Grail.  That the plaintiffs are likely to claim that this defeat is only a flesh wound – and they might be right in the long run – only strengthens the analogy.

EPA’s National Compliance Initiatives — Say Goodbye to NSR Enforcement

Earlier this month, EPA released its recommendations for its National Compliance Initiatives for 2020-2023.  I face a dilemma in posting about the NCI, because I actually agree with the two biggest changes EPA is proposing.  This administration has given regulatory reform a bad name.  It’s sort of like a reverse “Nixon in China” situation.  These changes might be credible if they were made in any administration other than this one.

Nonetheless, I have to call them as I see them.  The first change is actually just in the name.  The NCI used to be called the National Enforcement Initiatives.  I have always thought that enforcement is just a means to an end and it’s a very bad proxy for how we’re actually doing in attaining our environmental goals.

In terms of specifics, most of the attention has been on the proposal to eliminate enforcement of New Source Review requirements from the list of priorities.  Since I have previously described the NSR enforcement initiative as the most successful program that shouldn’t exist, my views should be pretty clear.  I still think it would be a huge win-win to eliminate the NSR program completely as part of a grand bargain to put a price on greenhouse gases and move to more market-based regulation of traditional criteria pollutants as well.

I can dream, can’t I?

The Office of Surface Mining Loses Another NEPA Case — Do I Detect a Trend?

Last week, a federal judge once more rejected the Environmental Assessment for the expansion of the Spring Creek Mine in Montana.  The case does not really break any new ground, but it does add to the growing number of cases in which courts have rejected federal action approving a variety of large facilities related to energy production in one way or another.  The crux of this case was the failure of the EA to consider downstream, indirect, impacts of the proposed project.  Among the indirect impacts that the EA failed to consider were the following:

  • Coal transportation
  • Non-greenhouse gas emissions
  • Greenhouse gas emissions

Not surprisingly, the discussion of the GHG issue may be the most significant.  The Court acknowledged that OSM included an analysis of GHG emissions that, on its own, may have satisfied NEPA.  According to the Court, OSM went off the rails went it performed an assessment of the benefits of the project without considering the costs imposed by the combustion of additional coal in electricity generation.

If an agency elects to quantify the benefits of a proposed action, it must also quantify the costs. This is because it is improper for an agency to place its “thumb on the scale by inflating the benefits of the action while minimizing its impacts.”

It’s worth noting that, even though OSM has twice failed to deliver an EA that complies with NEPA, the Court once again chose not to vacate the mining plan approval or enjoin mining operations.  The plaintiffs have to be wondering what it will take to get substantive, and not merely procedural, relief.  Perhaps the Court is waiting for three strikes.

PFAS Concerns – Real Hazard or Just Outrage?

Concern about the impacts of Poly- and Perflouroalkyl Substances is extensive and growing.  Without seeking to downplay the potential risks from PFAS exposure, I do think that the way we are addressing PFAS demonstrates everything that’s wrong about how we talk about, assess, and respond to environmental risk in the United States.

Exhibit 1 for my view is Senator John Barrasso, the Republican chair of the Senate Committee on Environment and Public Works.  According to Bloomberg(subscription required), Barrasso criticized EPA’s plan for addressing PFAS as lacking teeth.  He said that EPA must take “decisive action” with respect to PFAS.  This is the same Senator John Barrasso who has a lifetime scorecard of 8% and a 2017 scorecard of 0% from the League of Conservation Voters.  I’m quite sure that it wouldn’t take me more than 30 minutes to identify at least 10 EPA programs that Senator Barrasso has opposed that are much more important to reducing risks to human health and the environment than anything EPA might do in regard to PFAS.

So, why the fuss about PFAS?

For that, I refer you to the work of Peter Sandman, a leading expert on risk communication.  As Sandman has made clear, public concern about environmental risks is driven not just by the hazard posed by any situation, but also by the level of outrage that the hazard has caused among the public.

Superfund sites just generate more outrage per unit of risk than other environmental risks.  Does anyone doubt that Senator Barrasso must have gotten more constituent calls and emails about PFAS than about air pollution or climate change?

Of course, that Senator Barrasso is from Wyoming, where there are significant fossil fuel interests and no manufacturers of PFAS among his constituents, might also have something to do with the seeming inconsistency between his lifetime LCV rating and his critique of EPA as being too soft on PFAS.

More on the Green New Deal: Nukes, Hydro, and a Carbon Tax Aren’t Dead Yet.

Yesterday, Ed Markey and Alexandria Ocasio-Cortez released a proposed congressional resolution providing a framework for the so-called Green New Deal.  I am pleased to note that it would not exclude use of nuclear power or large-scale hydropower.  Neither would it preclude use of market-based approaches towards regulating carbon.  Of course, it also doesn’t advocate for putting a price on carbon.

I realize that this is simply a resolution and not proposed legislation.  As such, it’s more of a political document than it is a blueprint for a Green New Deal.  Nonetheless, I do think that that’s a significant weakness.  I don’t see how anyone can look at this as a serious proposal; it’s just a political weapon.

In fact, it reads more like a broad party platform than a charter for a Green New Deal.  They may be wonderful goals and good policies, but it’s not obvious to me what any of the following items have to do with a Green New Deal:

  • guaranteeing a job with a family-sustaining wage
  • adequate family and medical leave, paid vacations, and retirement security to all people of the United States
  • strengthening and protecting the right of all workers to organize, unionize, and collectively bargain free of coercion, intimidation, and harassment
  • strengthening and enforcing labor, workplace health and safety, antidiscrimination, and wage and hour standards across all employers, industries, and sectors
  • high-quality health care
  • affordable, safe, and adequate housing
  • economic security

Why not just call this the proposal for the complete 2020 Democratic Party platform?

The Green New Deal — Everything That’s Wrong With Environmentalists?

A few weeks ago, a coalition of 626 groups sent a letter to Congress, setting forth some principles concerning what should and should not be part of a Green New Deal.  Among the policies that apparently should not be part of a Green New Deal are nuclear power, large-scale hydropower and –wait for it – any use of market-based mechanisms.  Why not?  Because they:

place profits over community burdens and benefits.

In short, the letter is a nearly perfect combination of ideological purity and self-righteousness that has long been the stereotype of many environmentalists.  The letter would be ridiculous even if it were right in its policy recommendations.  It is even more so given that the single most important thing we can do for the climate is to put a price on carbon.

In fairness, the stereotype is not fully apt here.  Most major environmental NGOs did not sign on to the letter, including the Sierra Club, NRDC, EDF, and the Audubon Society.  The New Republic noted, though, that many of these groups were timid in their opposition.  It will be interesting to see if they are demonized on Twitter by the supporters for their lack of true commitment.

It must be nice to be certain that one is doing God’s work.

Bad Superfund Judging — Like, Saints/Rams Bad

Last month’s decision in Ohio v. Breen was the most blatantly, obviously, and incontrovertibly wrong Superfund decision I have ever come across.  How wrong was it?  Saints/Rams level wrong.  

The case involved Superfund claims brought by the state of Ohio concerning a former pesticide operation.  The State sued numerous people, including the current owner of property that had been contaminated as the result of the pesticide operations.  The owner argued that it was not liable.  It did not assert an innocent landowner defense.  It did not assert an “all appropriate inquiry defense.”  Nope.  Its argument was simple.  It asserted that a court may not impose liability under § 107(a)(1) of CERCLA unless a person is both an owner and an operator.  And the Court agreed.

To be held liable under § 9607(a)(1) requires current ownership and active participation in the hazardous release.

I hold the attorneys for the State of Ohio responsible for this travesty.  They are the ones who failed to identify the hundreds – thousands, perhaps – of judicial decisions holding that §107(a)(1) imposes liability on a person who is either an owner or an operator.

I can’t imagine that the decision will stand.  Someone in the office of the Attorney General must understand the rudiments of Superfund liability.  Nonetheless, it remains a useful lesson.  I’m not sure what the lesson is, but there has to be some kind of lesson in this case, somewhere.

Carbon Free Boston — Or How to Save the World in a Few Easy Steps

Boston’s Green Ribbon Commission has just released Carbon Free Boston, which outlines a pathway to a carbon-free city by 2050.  It’s a thoughtful and careful report.  My immediate reaction was two-fold.  Of course we have to do all this and of course this will be nearly impossible.

The transmittal letter to Mayor Walsh acknowledges the immensity of the undertaking:

The report’s analysis makes clear the great magnitude of the change needed to achieve carbon neutrality. It requires an electricity grid that is powered by renewable sources of energy and a large-scale reduction in the use of oil and natural gas for transportation, space heating, and hot water. It requires immediate and dramatic efforts to make buildings more energy efficient. It entails replacing travel in personal vehicles with greater use of public transportation, cycling and walking, while eliminating the use of internal combustion engines for remaining vehicles. And it necessitates sending zero-waste to landfills and incinerators. These necessary achievements will require innovation and transformation in our city’s core systems. And we will need to make these changes in a way that is cost effective, that equitably distributes benefits and burdens, and that does not unduly disrupt ongoing operations.

I can’t begin to go into all the details of what has to be done, but here are a few that highlight some of the necessary challenges:

  • In 2050, 85% of buildings will have been built prior to 2018 – and all of these will require “deep energy retrofits”
  • “A carbon-neutral transportation system requires fundamental changes to how people and goods move around Boston”  These changes include
    • The easy moves, such as completely electrifying our cars, buses, and trains, and
    • The more difficult moves, such as getting people out of cars to transit, biking, and walking
  • “Rethinking consumption” in order to eliminate waste generation

I noted recently that we seem to be near a tipping point in climate change belief among US citizens.  Even so, it’s a long journey from believing in climate change to deep energy retrofits of all buildings, getting people out of cars, and eliminating waste generation.

Time to start walking.

Deadlines For Permit Issuance Are Double-Edged Swords

On Friday, the D.C. Circuit Court of Appeals ruled that applicants for licenses under the Federal Power Act may not reach private agreements with states to circumvent the FPA requirement that states act on water quality certification requests under § 401 of the Clean Water Act within one year.

The facts are important here and somewhat convoluted.  The short version is that PacifiCorp operates a number of dams on the Klamath River.  In 2010, PacifiCorp reached a settlement with California, Oregon, and a number of private parties – not including the Hoopa Valley Tribe, the plaintiff here – to decommission certain dams and relicense others.  However, the decommissioning was dependent on certain third party actions, including, apparently, federal funding.  Part of the settlement required California and Oregon to “hold in abeyance” their § 401 certificate reviews.  Specifically, each year, PacifiCorp:

sent a letter indicating withdrawal of its water quality certification request and resubmission of the very same . . . in the same one-page letter . . . for more than a decade.

The Court was not pleased.

Such an arrangement does not exploit a statutory loophole; it serves to circumvent a congressionally granted authority over the licensing, conditioning, and developing of a hydropower project. … There is no legal basis for recognition of an exception for an individual request made pursuant to a coordinated withdrawal-and-resubmission scheme, and we decline to recognize one that would so readily consume Congress’s generally applicable statutory limit.

The Court limited its holding to the facts of this case; it does not apply, for example, to applications that are substantively amended and resubmitted.  It only applies to what PacifiCorp and the states unabashedly did here – reach a private agreement to get around the explicit provisions of the statute.

Nonetheless, it’s an important decision.  Based on data reported in the opinion, it may have a significant impact on a number of FERC licensing proceedings, where similar agreements may also be in place.

The decision also highlights an issue with these types of permitting deadlines.  These provisions follow a fairly well-trod path.  Some agency is slow in responding to permit applications.  A legislature responds by demanding that approvals be issued within a certain period of time.  The regulated community is happy.  Then, life moves on and, in the real world, parties realize that, for one reason or another, strict adherence to the statutory deadline is infeasible, impractical, or just plain not in anyone’s best interest.  They thus do what creative people do – they find a way around the deadline that was supposed to be protecting them.  Or, they try to do so until a court says no, no, no.

Be careful what you wish for.

Americans Are Increasingly Sure About Climate Change: That Appears to Include DOD

Two reports crossed my desk this week that, together, made me wonder if we’re finally nearing the tipping point on climate change belief in the United States.  First, Yale and George Mason released Climate Change in the American Mind. The report shows that almost 75% of Americans think global warming is happening and more than 50% are very sure that it’s happening.  More than 60% of Americans think it’s mostly caused by human activity.

Although there is concern that some of the increase is simply variation in the numbers among Republicans, based on whether the Denier-in-Chief has been fulminating recently, these data are consistent with my general sense that the evidence is just getting too overwhelming – part of that evidence being, of course, that more Americans are seeing first-hand the impact of extreme weather events, and there are just too many of them, in too many different contexts, to say that they are all just random events.

The second piece of evidence was the Report on Effects of a Changing Climate to the Department of Defense.  Apparently, President Trump is too busy to notice that our military is quite concerned about the impact of climate change on DOD facilities and operations.  The summary is a bland, sobering, military-speak document that makes clear just how severely climate change will affect DOD.  About two-thirds of 79 facilities that DOD examined are currently vulnerable to current or future flooding and more than half are vulnerable to current or future drought.

Here’s hoping that history will look back and say that, somewhere around 2019-2020, public belief in anthropogenic climate change became commonplace, and denial – in the public debate as well as the scientific debate – became the realm of cranks.