Category: Environmental Law

NJDEP Releases Report on Sea-Level Rise in New Jersey

On December 12, 2019, the New Jersey Department of Environmental Protection (“NJDEP”) released a report discussing historical sea-level rise (“SLR”) in New Jersey and estimating SLR for the next 100+ years. The Rising Seas and Changing Coastal Storms report (“Report”) was commissioned by NJDEP and prepared by Rutgers University’s New Jersey Science and Technical Advisory Panel.

The historical data provided in the Report evince New Jersey’s particular vulnerability to SLR, as SLR along its coast has consistently remained higher than the total change in the global average sea-level. For example, from 1911 to 2019, SLR along the New Jersey coast rose 17.6 inches (1.5 feet) compared to 7.6 inches (0.6 feet) globally. In addition, over the last 40 years, the average rate of SLR on the New Jersey coast was 0.2 inch/year compared to 0.1 inch/year globally.

According to the projections in the Report, it is likely that SLR in New Jersey will continue to rise but at even higher rates over the next 30 years. The Report estimates that there is, at minimum, a 66% chance that New Jersey will experience SLR of 0.5 to 1.1 foot/feet between 2000 and 2030, and 0.9 to 2.1 feet between 2000 and 2050.

Interestingly, the Report presents three different scenarios when taking into account SLR projections after 2050. The Report states that such projections “increasingly depend upon the pathway of future global greenhouse gas emissions.” Under a “high-emissions scenario, consistent with the strong, continued growth of fossil fuel consumption,” New Jersey will likely experience SLR of 1.5 to 3.5 feet between 2000 and 2070, and 2.3 to 6.3 feet between 2000 and 2100. Under a “moderate-emissions scenario, roughly consistent with current global policies,” New Jersey will likely experience SLR of 1.4 to 3.1 feet between 2000 and 2070, and 2.0 to 5.2 feet between 2000 and 2100. Under a “low-emissions scenario, consistent with the global goal of limiting to 2°C above early industrial (1850-1900) levels,” New Jersey will likely experience SLR of 1.3 to 2.7 feet between 2000 and 2070, and 1.7 to 4.0 feet between 2000 and 2100.

As stated by Governor Phil Murphy in NJDEP’s press release regarding the Report, “New Jersey is extremely vulnerable to the impacts of climate change and we must work together to be more resilient against a rising sea and future storms.”

© 2019 Giordano, Halleran & Ciesla, P.C. All Rights Reserved

For more on state environmental concerns, see the National Law Review Environmental, Energy & Resources law page.

New Jersey Appellate Division Affirms Municipal Court Jurisdiction to Enforce Spill Act Penalties

On November 13, 2019, the Appellate Division held that the New Jersey Department of Environmental Protection (“DEP”) can bring a penalty enforcement action under the Spill Compensation and Control Act (the “Spill Act”), N.J.S.A. 58:10-23.11 et seq., in either the Superior Court or the municipal court with territorial jurisdiction. State of New Jersey Department of Environmental Protection v. Alsol Corporation, No. A-3546-17T1, — A.3d – (N.J. Super. App. Div. Div. Nov. 13, 2019).

In this case, DEP filed a summons in municipal court against Alsol Corporation (“Alsol”) alleging that Alsol failed to remediate certain property in accordance with DEP regulations, and sought to impose penalties against Alsol under the Spill Act. Alsol successfully moved to dismiss DEP’s summons for lack of subject matter jurisdiction. In dismissing the summons, the municipal court concluded that its jurisdiction to enforce civil penalties under the Spill Act was limited to “where a finding of liability ha[d] already been adjudicated.” DEP appealed to the Law Division, which reversed the municipal court’s decision. Alsol then appealed to the Appellate Division.

Following a de novo review, the Appellate Division affirmed and held that municipal courts have jurisdiction to impose civil penalties in a summary proceeding under the Spill Act. The Spill Act provides that any person who violates the Act or a court order issued under the Act, or fails to pay a civil administrative penalty will “be subject to a civil penalty not to exceed $50,000.00 per day for each violation,” and such penalties “may be recovered with costs in a summary proceeding pursuant to the [Penalty Enforcement Law of 1999] in the Superior Court or a municipal court.” N.J.S.A. 58:10-23.11u(d). The Appellate Division found that “a plain reading” of the Spill Act authorizes DEP to bring a penalty enforcement action in municipal court. In its reasoning, the Appellate Division cited to a prior decision in which it addressed an analogous issue under the Solid Waste Management Act, and also noted that the Supreme Court endorsed such an approach in Rule 7:2-1(h) “by making this type of summary action cognizable in the municipal courts using the Special Summons . . . DEP used” in this case.

Potentially responsible parties under the Spill Act should be aware that DEP may seek to impose and enforce penalties under the Spill Act in municipal court or Superior Court, and should treat a municipal court summons with the same urgency as a Superior Court complaint.

© 2019 Giordano, Halleran & Ciesla, P.C. All Rights Reserved

More on NJ environmental regulation on the National Law Review Environmental, Energy & Resources law page.

Ruling in First CWA Case to Rely on EPA’s Interpretive Statement on Groundwater Releases

On November 26, a federal district court judge in Massachusetts held that releases of pollutants reaching surface waters through groundwater do not require permits under the Clean Water Act (CWA), “irrespective of any hydrological connection to navigable waters.” Conservation Law Foundation Inc. v. Longwood Venues and Destinations Inc. et al., 1:18-cv-11821. The decision comes less than three weeks after the U.S. Supreme Court heard oral argument in County of Maui v. Hawaii Wildlife Fund, No. 18-260, in which the justices have been asked to decide whether the CWA’s National Pollutant Discharge Elimination System (NPDES) permitting requirement applies to releases that traverse nonpoint sources—like groundwater—before entering navigable waters.

In 2018, a citizen suit was filed against the owners of the Wychmere Beach Club claiming that the Beach Club’s wastewater treatment facility (in particular, the facility’s 22 leach pits located near the shoreline) discharged nitrogen into the groundwater and subsequently into Wychmere Harbor, a navigable water located off Cape Cod. The complaint accused the Beach Club of violating the CWA by discharging pollutants into the harbor and failing to obtain a federal permit for these releases. The Beach Club argued that it was not liable under the CWA because it released nitrogen into groundwater, rather than directly into the harbor, and that such a release is not covered by the CWA.

Unlike the decisions from the Fourth, Sixth, and Ninth Circuits that have addressed this issue, Longwood is the first case to rely on the April 2019 Interpretive Statement in which EPA concluded that releases traversing groundwater are categorically excluded from the requirement to obtain an NPDES permit. The court concluded that the CWA is ambiguous on the question of whether the statute requires permits for releases that reach surface waters via groundwater. The court then deferred to EPA’s Interpretive Statement under Chevron Step Two after concluding that EPA reasonably decided to exclude releases through groundwater from the NPDES program.

Citing the resultant ambiguity from dueling CWA directives; namely, that the federal government has jurisdiction over the waters of the United States while the states are primarily tasked with groundwater regulation, the court turned to EPA’s April 2019 interpretation of the statute to answer the question of whether – and to what extent – the CWA applies to releases into groundwater that carries pollutants into navigable waters. Finding the agency’s analysis reasonable, the court deferred to EPA’s conclusion that releases of pollutants into groundwater do not constitute point source discharges subject to the NPDES program or permitting requirements.

Until the Supreme Court issues a decision in Maui (expected before the end of June 2020), courts and regulated entities will continue to search for guidance on how the CWA applies to mediated releases of pollutants to surface waters. The Longwood decision’s approach—relying on EPA’s recent guidance—applies only to groundwater and offers no comfort to litigants in the Fourth and Ninth Circuits.

© 2019 Beveridge & Diamond PC

More on the Clean Water Act can be found in the National Law Review Environmental, Energy & Resources Law area.

PFAS Rolling into Regulation

Introduction

Per- and polyfluoroalkyl substances, abbreviated as PFAS, are a class of widely dispersed chemicals quickly gaining notoriety in the public health and environmental remediation space. In 2019, rapid developments toward regulation to govern the investigation and cleanup of PFAS contamination to protect human health are occurring in a wide variety of arenas, including federal regulation and congressional action as well as at the state level through both regulation and enacted legislation. This article examines the current state of regulatory developments for PFAS and projects where things are heading in the remainder of 2019, with particular focus on how those developments will incentivize and accelerate the pace of site cleanups and cost recovery, and pose significant challenges to existing sites where other contaminants are already being addressed.

What are PFAS?

PFAS are a class of more than 4,000 synthetic chemicals comprised of carbon-fluorine chains of varying lengths. PFAS have been in use since the late 1940s, due to their unique resistant physical and chemical properties. For example, PFAS have been used in non-stick applications such as cookware, paper packaging, and textiles, as well as in certain types of firefighting foam.[1] The two most widely studied PFAS are perfluorooctane sulfonate or PFOS and perfluorooctanoic acid or PFOA.

Over the past decade, understanding of PFAS and their potential toxicity to humans and the environment has increased. Of particular concern is their stability in the environment. The properties that made PFAS so desirable for commercial and industrial use keep these compounds from degrading in the environment and allow them to pose a long-term threat if not removed from the environment and/or from drinking water supplies. Common exposure to these compounds can come through their product use as well as drinking from contaminated water supplies impacted by their release. Also notable are the very low levels at which these compounds exhibit their toxicity, and the very stringent levels under consideration by the regulatory agencies for controlling these compounds. For example, EPA has set interim screening levels of 70 nanograms per liter (parts per trillion or ppt), and several states have proposed guidance levels of 15 ppt or less. For context, 15 ppt is equivalent to a few droplets in an Olympic-sized swimming pool.

Federal Regulatory Developments

The Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) authorizes cleanup at sites where hazardous substances have been released, and enables parties conducting cleanups to seek cost recovery from other potentially responsible parties. The ability to potentially recover costs under CERCLA can be an important driver in encouraging impacted parties to investigate and remediate contaminated sites. However, as an emerging contaminant class, PFAS are not currently regulated as hazardous substances under CERCLA.

In February 2019, EPA issued an Action Plan outlining its steps to address PFAS and protect public health.[2] Among its listed priority actions was to propose a national drinking water regulatory determination for the two most widely studied PFAS, PFOA and PFOS, by the end of 2019. This proposed determination would begin the process towards establishment of a maximum contaminant level, or MCL, for these compounds. Another priority action was to initiate the process to list PFOA and PFOS as CERCLA hazardous substances; in April of 2019 at a meeting of state regulators, EPA committed to proposing this hazardous substance designation by the end of 2019.[3] Such a designation will have a multitude of impacts, including 1) PFOA and/or PFOS-contaminated sites will be eligible for listing as Superfund sites; 2) Federal and State authorities will have mechanisms through which they can seek damages or cleanup costs from responsible parties; and 3) Superfund monies will be eligible for use in cleaning up sites contaminated with PFOA and/or PFOS.

This commitment to regulate PFOA and PFOS under CERCLA was reaffirmed in a keynote speech of EPA’s General Counsel on September 12th at the American Bar Association, Section Environment, Energy, and Resources Fall Conference in Boston, Massachusetts. In his speech, the Honorable Matthew Leopold indicated that EPA was actively looking at designating PFOA and PFOS as CERCLA hazardous substances by year’s end. This would represent one of the few times in which new contaminants such as these were regulated under CERCLA.

Concurrent with these EPA actions, congressional legislators have called for increased and expedited federal action to regulate PFOA and PFOS, and in some cases the entire PFAS class of 4000 plus chemicals. There have been several bills proposed in 2019 which would commit EPA to taking expedited action with regards to PFAS, including listing some or all PFAS as hazardous substances, and establishing federal MCLs.[4] Perhaps most notably are two bills regarding appropriations for the Fiscal Year 2020 National Defense Authorization Act. S.1790 (passed by the Senate on June 27, 2019) would require EPA to promulgate drinking water MCLs for PFOA and PFOS within two years of enactment, and H.R.2500 (passed by the House on July 12, 2019) would require EPA to designate all PFAS as hazardous substances within one year of enactment.

State officials have also actively petitioned for more expedited federal action on PFAS. On July 30, 2019, 22 state and territory attorneys general issued a letter to Congress requesting that certain PFAS be designated hazardous substances, in particular, PFOA, PFOS, and a PFOA-replacement chemical known as GenX. In their letter, the attorneys general specifically note that such a designation would promote cleanup efforts, including federal facilities formerly owned or operated by the US Department of Defense.[5]

Based on these developments from multiple agencies and levels of government, it appears likely that in the relatively short term PFOA and PFOS will be designated as hazardous substances under CERCLA. This in turn will open the door for CERCLA regulation of PFAS-contaminated sites. Once designated, the next question will be one of appropriate cleanup levels. Typically, EPA would take the lead with establishment of MCLs that can be used to develop risk-based cleanup levels, and from which states could either adopt or modify. However, the process for proposing and finalizing a federal MCL can take years. Thus, faced with increasing public pressure to respond to PFAS contamination, the states have stepped in to fill this gap.

State Regulatory Developments

In November 2018, New Jersey became the first state to issue an MCL for any individual PFAS, specifically for the chemical perfluorononanoic acid (PFNA).[6] For PFOA and PFOS, there are currently no state MCLs that have been finalized. However, many states have established PFOA and PFOS advisory or screening levels, and several states have begun the MCL rule-making process, with some anticipating finalization this year.

In 2019, three states have proposed MCLs of varying concentrations for PFOA and PFOS:

  • In April, New Jersey proposed an MCL of 14 ppt for PFOA and 13 ppt for PFOS; the public comment period has since closed, and the standard is in the process of finalization;[7]
  • In June, New Hampshire proposed an MCL of 12 ppt for PFOA and 15 ppt for PFOS (they also proposed MCLs for two other PFAS chemicals);[8] those MCLs were approved on July 18,[9] and will become effective on October 1; and
  • In July, New York proposed an MCL of 10 ppt for PFOA and PFOS making them the most protective standards in the nation; the proposal is currently out for public comment, which closes on September 24.[10]

In addition, several other states have provided commitments to establishing MCLs in the near future. These include Massachusetts with an MCL rule proposal anticipated by the end of 2019;[11] Michigan with an MCL rule proposal expected by October with finalization in 2020;[12] and Vermont with a commitment to establishing and adopting MCLs by February 1, 2020.[13] Other states are also moving forward with efforts to regulate PFAS. For example, in August 2019 California established notification levels for PFOS and PFOA in drinking water of 6.5 ppt and 5.1 ppt, respectively, that go into effect January 1, 2020. [14],[15]

Conclusion

With federal and state regulatory action underway, and mounting public pressure to expedite a response, it is clear that regulation of some PFAS under CERCLA is imminent. By the end of the year, it is likely that 1) EPA will have designated, or be close to designating, PFOA and PFOS as hazardous substances; and 2) several states will have finalized MCLs to regulate their remedial response. These two developments will open the door for parties to investigate, cleanup, and ultimately recover the costs associated with PFAS-contaminated sites. In addition, these developments will likely complicate existing sites in terms of both their required remedial response as well as their cost recovery strategy. New PFAS regulation at existing sites will unlock a myriad of cost implications not the least of which involve cost allocation among potentially responsible parties. In the face of these complications and uncertainties, what is clear is that PFAS regulation has rolled off the horizon and directly in front of those involved with protecting public health and the environment.

The opinions expressed are those of the authors and do not necessarily reflect the views of the firm or its clients. This article is for general information purposes and is not intended to be and should not be taken as legal or accounting advice.

[1]  For a more thorough background on the history and usage of PFAS, see the Interstate Technology Regulatory Council fact sheets at https://pfas-1.itrcweb.org/

[2] https://www.epa.gov/newsreleases/epa-acting-administrator-announces-first-ever-comprehensive-nationwide-pfas-action-1

https://www.epa.gov/pfas/epas-pfas-action-plan

[3] https://www.asdwa.org/2019/04/11/cooperative-federalism-pfas-are-top-issues-at-ecos-spring-meeting/

[4]  https://fas.org/sgp/crs/misc/R45793.pdf

[5]  https://portal.ct.gov/-/media/AG/Press_Releases/2019/Multistate-PFAS-Legislative-Letter73019FINAL.pdf

[6]  New Jersey regulated PFNA largely in response to a regional issue relating to specific historic discharges from a chemical manufacturing facility.

[7]  https://www.nj.gov/dep/rules/notices/20190401a.html

[8]  https://www.des.nh.gov/media/pr/2019/20190628-pfas-standards.htm

[9]  https://www.gencourt.state.nh.us/rules/jlcar/minutes/AM7-18-19.pdf

[10]  https://www.governor.ny.gov/news/governor-cuomo-announces-availability-350-million-water-system-upgrades-statewide-and-directs

[11]  https://www.mass.gov/files/documents/2019/06/20/pfas-stakeholder-presentation-20190620.pdf

At the American Bar Association, Section Environment, Energy, and Resources Fall Conference in Boston, Massachusetts, the Commissioner of the Massachusetts Department of Environmental Protection participated in a panel discussion titled “The State of CERCLA Following EPA Reform: More of the Same or Something Super?” In this discussion, Mr. Suuberg indicated that Massachusetts will finalize its PFAS standards by the end of the year, and in an accompanying paper noted that the comment period on the proposed cleanup standard of 20 ppt (for a sum of six PFAS) had closed in July and was currently under review.

[12]       https://www.michigan.gov/egle/0,9429,7-135-3308_3323-494077–rss,00.html

[13]       https://dec.vermont.gov/sites/dec/files/PFAS/Docs/Act21-2019-VT-PFAS-Law-Factsheet.pdf

[14]            https://www.waterboards.ca.gov/drinking_water/certlic/drinkingwater/PFOA_PFOS.html

[15]      California already had notification levels of 14 ppt for PFOA and 13 ppt for PFOS and will continue to have a response level for those drinking water systems exceeding 70 ppt for the total combined concentration of both compounds, consistent with EPA’s advisory level. 

© Copyright Nathan 2019

ARTICLE BY Brian Henthorn and Christopher Loos of Nathan.
For more PFAS Regulation developments, see the National Law Review Environmental, Energy & Resources law page.

Washington’s Model Toxics Control Act: Transforming Contaminated Sites into Community and Environmental Assets

The Model Toxics Control Act (MTCA) has been cleaning up contaminated sites in Washington State for 30 years. On December 10, 2019, Beveridge & Diamond and the Environmental Law Institute will be hosting a seminar (MTCA 30) to celebrate the success and examine the future of the state’s cleanup statute with an all-star program featuring some of the state’s leading experts. In advance of the seminar, B&D is publishing a series of articles focused on MTCA.

MTCA’s Many Triumphs

MTCA has been spurring the cleanup of contaminated sites in Washington for 30 years. Since MTCA went into effect, over 7,000 sites have been cleaned up. While the workhorse statute is not going to take a rest anytime soon, with more than 6,000 sites requiring further action before closure and over 200 new sites identified each year, the citizen’s initiative already has amassed an impressive legacy. Below are just a few of the many examples where MTCA has been instrumental in turning contaminated properties into productive community and environmental assets – on both large and small scales and in urban and rural areas of Washington.

  • Mount Baker Housing Association – Restoring Brownfields to Provide Affordable Housing in Seattle’s Rainier Valley. In 2016, the Mount Baker Housing Association (MBHA) entered into a prospective purchaser consent decree with the State of Washington to investigate and ultimately clean up chlorinated solvent contamination from a former dry cleaner and petroleum contamination from a former gas station and auto repair facility. The innovative use of MTCA’s prospective purchaser provisions allowed the nonprofit affordable housing developer to take on the risks of investing in properties with known contamination while gaining liability protections and expanding housing options for lower-income earners in an expensive real estate market. Importantly, the settlement also has provided a vehicle for MBHA to receive public funds to cover at least some of the remedial action costs. Just the other week, MBHA released a draft remedial investigation / feasibility study and a draft cleanup action plan for public comment.

  • Puget Sound Initiative – Ensuring Healthy Habitats in Padilla and Fidalgo Bays. In 2007, the Department of Ecology (Ecology) identified seven bays around Puget Sound where it would prioritize cleaning up contaminated sites and habitat restoration. In Padilla and Fidalgo Bays in northern Puget Sound, six industrial waterfront sites have been cleaned up while work on five other sites is in progress. The bays are home to valuable marine habitat, including extensive eelgrass beds, which serve as groundfish nurseries. The sites that have been cleaned up in the last 15 years include a former oil tank farm, a former lumber mill and pulp mill, a boatyard, and former milling, shipbuilding, and marina operations, among others.

  • Kittitas Valley Fire and Rescue – Building a New Fire Station in Ellensburg. When the Kittitas Valley Fire and Rescue was looking for a new fire station location, it purchased a property that had been used for hay scales, as well as truck repair and fueling, with associated soil and groundwater contamination. During property redevelopment, the contamination was investigated and remediated, with assistance from Ecology. With effective planning and use of the building design as a protective cap, cleanup was completed for under $250,000 and in under three months.

  • Kendall Yards – Transforming an Old Railyard in Spokane. In 2005, River Front Properties, LLC entered Ecology’s Voluntary Cleanup Program to address contamination at a 78-acre site to the northwest of Spokane’s downtown area. The site had been used extensively for locomotive repair and servicing and had served as a location for plating and storage operations. Over a single year, 200,000 tons of soil contaminated with petroleum, PAHs, and metals were removed from the site. Now, Kendall Yards has turned into a vibrant community with a growing collection of houses, apartment buildings, offices, and restaurants.

  • Gas Stations, Dry Cleaners, and Underground Storage Tanks Around the State. Contaminated sites are not caused only by heavy industrial operations. Many of the most common sources of contamination are gas stations, dry cleaners, and other businesses with underground storage tanks. Ecology has identified over 7,000 leaking tanks in the state. But significant progress is being made. Contamination from over 4,000 tanks has been remediated, and cleanup has started for over 2,000 more tanks. For gas stations, Ecology has entered into multi-site agreements to facilitate and coordinate cleanups for parties with larger portfolios of sites. Collectively, efforts to address contamination at service stations and dry cleaners have resulted in about a thousand NFA determinations under MTCA.

  • Substantial Public Funding for Cleanups and Related Projects. The 1988 citizens’ initiative resulted in a tax on the “first possession” of hazardous substances in Washington, in addition to MTCA’s cleanup framework. Although the tax revenue has fluctuated due to volatility in oil prices, it generated around $2.2 billion between 1988 and 2017 to support Ecology programs and to fund cleanups and related environmental projects around the state. This funding is critical to remediating sites where sufficient private dollars are not available. For instance, between 2015 and 2017, Ecology provided $1.2 million to remediate American Legion Park in Everett. The park was impacted by the nearby former Asarco smelter. The area-wide cleanup has exceeded the dollars collected in a 2009 bankruptcy settlement with Asarco. This year, the state legislature converted the tax on petroleum products from a price-based tax to a volumetric tax with the goal of making funding more predictable. The Department of Revenue also has estimated that revenues under the new tax will be higher.

© 2019 Beveridge & Diamond PC

For more environmental site developments, see the National Law Review Environmental, Energy & Resources law page.

University Of Surrey Announces New Study On Microbial Organisms To Digest Plastic Waste

On October 16, 2019, the University of Surrey, United Kingdom, announced that its researchers have partnered with colleagues from France, Germany, and Spain to start working on a new technique to tackle plastic waste. According to the university’s article, this novel technique may revolutionize the recycling industry. The plan is to create engineered microbial communities that will digest two types of plastic polymers — polyethylene terephthalate (PET) and polyurethane (PU) — and transform them into molecules that can be used to develop a more environmentally friendly material called Bio-PU. This more environmentally friendly material is often used as a construction and insulation material.

According to the University of Surrey, current physical or chemical methods to degrade PET and PU are inefficient. Impurities in PET polymers and high energy costs associated with the high temperatures required to break down the material make its degradation very difficult. Similarly, degradation of PU is limited due to the difficulty in breaking down urethane bonds in the material. Given these challenges, University of Surrey Senior Lecturer in synthetic biology Dr. Jose Jimenez highlights that “[m]oving away from the reliance on single use plastics is a positive step; however, the problem of how we deal with current plastic waste still needs to be addressed.” Hence, the project will investigate the ability of microorganisms to digest plastic waste and turn it into a more environmentally friendly material that can be recycled.

©2019 Bergeson & Campbell, P.C.

For more plastics pollution activities, see the National Law Review Environmental, Energy & Resources law page.

DOJ Policy Review of SEPs May Have Big Implications for Company Environmental Settlements

The U.S. Department of Justice (DOJ) is in the midst of a comprehensive policy review regarding the use of Supplemental Environmental Projects (SEPs) in settlements of environmental enforcement actions. This review could potentially have far-reaching implications for companies that seek to settle such actions brought by either the federal government, or in the case of a citizen suit, a non-governmental organization (NGO). It remains to be seen if the ongoing SEP policy review will result in additional limits on the use of SEPs in settlement, thus limiting the flexibility in achieving penalty mitigation that has been a hallmark of environmental enforcement case resolutions for nearly three decades.

SEPs have been popular among both governmental and non-governmental defendants in enforcement cases for nearly thirty years. SEPs allow settling parties to mitigate a portion of a civil penalty in exchange for performance of environmentally beneficial projects. Under long standing SEP policy, settling parties can receive up to a maximum of 80 percent credit towards mitigation of a portion of a civil penalty for funds expended in performance of SEPs. This policy has proven popular in local communities that benefit from the projects, and these benefits are something that is beyond what is required to achieve compliance with the law. In the early 1990s, SEPs tended to be the exception to the norm of environmental enforcement settlements. But during the later 1990s, SEPs became quite common – even typical.

It is possible that the current ongoing review of SEP policy could result in greater scrutiny of use of SEPs in settlements with companies. Further restrictions on the use of SEPs could take many forms, including limitations on the funds expended, greater scrutiny of the nexus of the SEP to the underlying violations, and even potential elimination of the use of SEPs altogether. Typically, settling parties would much prefer including a SEP as part of a settlement, rather than simply paying all of its out-of-pocket costs as a civil penalty, so further restrictions or elimination of SEPs altogether would not be a positive development for the regulated community.

It is clear that the current administration takes a much more skeptical view of the appropriateness of SEPs than any prior administration. This past August, Assistant Attorney General for the Environment and Natural Resources Division (ENRD) Jeffrey Clark issued a memorandum to all ENRD Section Chiefs outlining new limits on the use of SEPs. Under the new policy, the use of SEPs is prohibited in settlements involving state and local governments, which gives less flexibility to both state and local governments as well as DOJ enforcement attorneys in determining appropriate resolution of enforcement cases.

This latest SEP policy memorandum builds on last November’s memorandum from the Attorney General outlining policies and procedure for civil consent decrees and settlements with state and local governments. This November memorandum included a directive that consent decrees “must not be used to achieve general policy goals or to extract greater or different relief from than could be obtained through agency enforcement authority or by litigation the matter to judgment.” Part of the intent of the outlined policy was to ensure accountability of state and local governments as to their policy goals.

Building on this in reference to SEPs, Clark stated “A clearer example of a form of relief that falls within the prohibition in the November 2018 Policy is difficult to imagine.” Clark left open the possibility of limited case-by-case exceptions to the broader policy of the prohibition, under certain limited conditions, pending his further overall review of SEP policies. But Clark further stated that even if certain limitations are satisfied, “there is no guarantee that I will recommend approval . . . “of including a SEP as part of a settlement with a state or local government.”

© 2019 Schiff Hardin LLP

For more Supplemental Environmental Project issues, see the National Law Review Environmental, Energy & Resources law page.

EPA Repeals Obama Rule Defining Waters of the U.S.

On Thursday, September 12, EPA General Counsel Matt Leopold announced EPA’s final rule repealing the 2015 Waters of the United States (“WOTUS”) Rule. Significantly, General Counsel Leopold did not announce the final replacement WOTUS Rule, which was proposed in February of this year; the replacement rule remains at the final rule stage as EPA revises the rule in light of public comment. A recent interview with Administrator Wheeler indicates that it will be a few months before the replacement rule is finalized.

The 2015 WOTUS Rule, also called the Clean Water Rule, significantly extended the Clean Water Act’s jurisdiction over streams and wetlands on the basis of significant hydrological or ecological connections to traditional navigable waters, interstate waters, and territorial seas. The 2015 Rule was successfully challenged by a number of states in federal district courts on the grounds that the 2015 Rule departed from both the statutory text of the Clean Water Act and major Supreme Court decisions guiding how “waters of the United States” is to be interpreted. As a result, the 2015 Rule was effective only in 22 states, creating a patchwork of applicability that frustrated government officials and the regulated community alike.

The repeal of the rule will be effective 60 days from the official notice in the Federal Register. When the repeal rule goes into effect, the entire country will be governed by the pre-2015 status quo. The 1986 WOTUS Rule will be the basis for determining which waterbodies are WOTUS until the replacement rule is effective, and the SWANCC and Rapanos guidance documents remain in effect as well.

© 2019 Bracewell LLP

When Birds Finally Find a Nest

If you’ve walked outside your office building or downtown condo over the past few months, you’ve probably seen electric scooters parked on sidewalks, in bike racks, in the street, on the steps, or even in a local tree. To some, their presence in the urban landscape is but a mere inconvenience, simply ignored as they walk to their car parked a few feet away. To others, their presence generates a hatred so powerful residents find their cause worthy of protesting to their local city council, recklessly throwing the scooters into local waterways, and even starting an Instagram account with over 100,000 followers dedicated to their destruction. But cities around the globe have come to realize that although their presence can be alarming and uncomfortable to some, finding a solution to make them coexist with residents, pedestrians, and commuters will be an essential component of their urban fabric.

As we mentioned in our September 20, 2018 blog post, Have Electric Scooters Pushed Cities Too Far?, many scooter companies have taken the “dark of night” approach when arriving in new cities, often arriving without notice or much consult with local regulators. In response to this strategy, cities like Ann Arbor, Michigan and Indianapolis, Indiana instituted outright bans on the presence of ride-sharing scooters entirely. In some cases, after negotiations with these cities, Birds, Limes, and Spins were allowed back to the cities in small numbers and in highly regulated instances. In other cases, the scooters remained banned with no relief for the companies or residents in sight.

In many cities which opted to ban and continue to ban these scooters, the biggest issue has been parking and reckless driving by commuters and joyriders alike. Understandably, the presence of this new form of transit, intermixed with pedestrian walking space in a seemingly overnight fashion has made some pedestrians cautious and warry while walking to their favorite restaurants. If you read the local news in cities and towns where scooters are abundant, you might think that accidents are commonplace and injuries abundant. A recent UCLA study concluded that over a one year period, scooters contributed to almost 250 injuries with only 4% of riders wearing a helmet. On the other hand, a recent CDC study concluded that only one in every 5,000 scooter rides results in injury. A similar study conducted by the City of Portland found bicycles were involved in more accidents over a four month period compared to scooters, but the study conceded that bike rides often are in greater abundance and longer distance, making the comparison a bit more difficult to verify.

In an effort to build in a ground-up change in rider behavior, many scooter companies have looked to incentivize responsible riders for proper parking and penalize irresponsible riders for poor parking and riding between trips. Bird has recently started rolling out a per-ride credit to riders who park their scooters in geofenced parking areas designated for scooters. Similarly, scooter companies Lime, Bird, and Spin have allowed non-riders to report improperly parked scooters or reckless riders. In an effort to work in tandem with the scooter companies, many cities are encouraging riders to share the road with cars by incorporating protected bike lanes and resurfacing roadways to accommodate scooters and bikers alike. Similarly, some cities like Kansas City, Missouri and Santa Monica, California have repurposed on street parking spaces capable of holding one car with scooter specific parking, capable of holding up to 20 scooters each. Incorporating these parking solutions into the city scape has resulted in 46% greater compliance with parking ordinances than prior to their implementation.

© 2019 Foley & Lardner LLP
For more urban transportation issues, see the National Law Review Utilities & Transport law page.

Politics Trumps Economics? Trump’s Revocation of California’s Waiver Under the Clean Air Act

Today President Trump announced on Twitter that the U.S. was revoking California’s waiver under the Clean Air Act (CAA) which allowed it to impose stricter tailpipe emission standards than the federal ones. California’s Governor Newsom and Attorney General Becerra immediately announced that the state would file suit to challenge the revocation.

While the revocation has been characterized as an immediate rollback, the federal corporate average fuel economy (CAFE) standards[1] established under the previous administration, which are consistent with California’s, remain in place. Last year the Trump administration proposed to rollback those standards, freezing the efficiency and emission rules in 2021 and canceling further increases in stringency set through 2028. The final rule has not yet been issued. It is rumored that it will not be, as the administrative record supporting it has many problems and most acknowledge that it faces significant legal hurdles.

A little historical context is helpful. California began regulating tailpipe emissions in the 1960’s under then-Governor Reagan to combat air pollution. When the CAA was signed by President Nixon in 1970 it included a provision, Section 209, that allows California to establish stricter standards by obtaining a waiver of the normal federal preemption rules from U.S. Environmental Protection Agency (EPA). Once granted, other states then can adopt California’s standards. Thirteen states and the District of Columbia have adopted California’s current standards.

For 30 years, under both Republican and Democratic administrations, Section 209 waivers to combat air pollution were routinely granted. In April 2007, the U.S. Supreme Court decided Massachusetts v. EPA, 549 U.S. 497 (2007), ruling that greenhouse gases (GHGs) are pollutants under the CAA. In December 2007, the Bush administration denied California’s request for a waiver to impose tailpipe emission standards aimed at reducing GHGs. California promptly sued in January 2008, joined by 11 other states. That case was pending before the U.S. Supreme Court when President Obama took office. In 2009, the parties settled the case before the Court issued its decision, and in 2010 the U.S. and California reached an agreement that aligned the state and federal standards. Those standards were subsequently expanded and a new waiver was granted in January 2013. It is that waiver that is now being revoked.

While litigation is inherently uncertain, it appears that California has a good case for challenging the revocation. Not only is the revocation unprecedented, there is no provision in the CAA providing for it. Section 209 only establishes the criteria for granting a waiver; it’s silent as to revocation. In 2013, the U.S. determined that the criteria for the waiver had been met, and both the states and the industry have acted in reliance on that determination for more than 6 years. The U.S. has also asserted that the federal Energy Policy and Conservation Act (EPCA) preempts California’s standards. However, in Massachusetts v. EPA, the Supreme Court ruled that EPCA does not displace EPA’s authority to regulate GHGs, and courts subsequently have extended that rationale to hold that EPCA does not preempt states’ regulation of GHGs under the waiver.

Just as it was in the late aughts, the automobile industry has been put in an extremely difficult position by this dispute. California has the 5th largest economy in the world, and when one adds in the 13 other states that have adopted its standards – states like New York and Pennsylvania – that equates to a large segment of the auto market. Having to produce vehicles to meet two different sets of emission standards would be extremely costly. The industry desperately needs regulatory certainty. Reflecting this, in June, 17 automakers sent a letter to President Trump calling for one national standard that included California, and in July, four automakers reached an agreement of sorts with California on emission standards.

Instead of the regulatory certainty that is needed for the economy to operate efficiently, it appears that this dispute will move into a phase of protracted litigation and years of regulatory uncertainty. The dispute may be good politics for those that want to motivate their base on each side, both Republicans in Washington D.C. and Democrats in Sacramento, but it is pretty clearly bad economics.

[1]   CAFE is, essentially, the average fuel efficiency of an automaker’s fleet of vehicles.

Copyright © 2019, Sheppard Mullin Richter & Hampton LLP.

For more on the Clean Air Act, see the National Law Review Environmental, Energy & Resources law page.