New Year Brings New Coal Ash Regulations and New Legislative Proposals

December 19, 2014 marked the deadline for the Environmental Protection Agency (EPA) to announce its final decision regarding a new regulatory scheme for coal ash disposal (Coal Combustion Residuals or CCR). The new regulations are to focus on the disposal of coal ash.

The pressure for new regulations began mounting after the rupture of a Tennessee power plant in 2008 which sent over 1 billion gallons of coal ash into nearby Tennessee rivers. Subsequently, on February 2, 2014, a Duke Energy plant released approximately 39,000 tons of coal ash into the Dan River in North Carolina.

During the lead up to the EPA decision, interest groups have been battling over whether coal ash should be categorized as solid non-hazardous waste or hazardous material. This ongoing battle will likely foreshadow legislative arguments we can expect in 2015.

In the past, Representative, David McKinley of West Virginia and Senator John Hoeven of North Dakota both have been active in introducing legislation allowing states to regulate coal ash as non-hazardous waste. Additionally, Senator James Inhofe, the incoming chairman of the Senate Committee on Environment and Public Works has stated that states have “responsibly and effectively managed coal ash” without federal intervention.

Further, Inhofe has stated, “[i]n the new Congress, my colleagues and I will intently review the impacts this rule could have to our economy and electricity reliability as well as highlight how states are leading the way on properly disposing and recycling coal ash.” See Sean Cockerham, EPA rules on coal ash may disappoint environmentalists, buoy industry, ColumbusLedger-Enquirer (Dec. 17, 2014). Following his re-election, Majority leader Mitch McConnell stated that he feels a “deep responsibility” to stop the EPA from regulating carbon emissions at coal-burning power plants. McConnell said his top priority is “to try to do whatever I can to get the EPA reined in.” See Sam Youngman, McConnell: If Rand Paul runs for president, ‘he’ll be able to count on me’, Lexington Herald-Leader (Nov. 6, 2014).

Florida Supreme Court Rules in Favor of Water Management District

On May 22, 2014 the Florida Supreme Court in South Florida Water Management District v RLI Live Oak, LLC, No. SC12-2336 ruled that in circumstances where a Florida Statute authorizes a state governmental agency like the Water Management District to recover a civil penalty in a judicial forum, then the agency must only prove the violation by a preponderance of the evidence. In this case the applicable statue did not specify the agencies burden to prove the violation.  The Supreme Court distinguished its previous ruling in Department of Banking & Finance V Osborne Stern & Co. 670 So. 2d 932 (Fla. 1996) and held that the “clear and convincing evidence” burden is not applicable to the statute enforced by the Water Management District.  At the trail court, the Water Management District successfully obtained civil penalties for  the unauthorized filling of wetlands. The Supreme Court’s ruling will make it less onerous on Water Management Districts in Florida to successfully win civil penalties for wetland violations.

EPA Revises Construction and Development Stormwater

In March, EPA published a new Final Rule that revised a 2009 Final Rule addressing stormwater discharges from its Construction and Development (C&D) point source category.  The March revision withdrew the numeric turbidity effluent limitation and monitoring requirement and made certain other changes and clarifications.  (Federal Register: March 6, 2014 Federal Register)  The revised rule results from litigation filed by a number of entities, Wisconsin Builders Association, et al. v. EPA, Case Nos. 09-4113, 10-1247, and 10-1876 (7th Cir.), and specifically from a settlement agreement entered between the parties on December 10, 2012.  (Settlement Agreement).

While several parts of the original 2009 Final Rule raised concerns, attention focused substantially on the numeric limit for turbidity.  For the first time in C&D regulation, EPA imposed a standard or limit of 280 nephelometric turbidity units (NTU) for  discharges from a C&D site.  Historically, turbidity impacts from a construction site have been evaluated on a comparative basis using in-stream turbidity measured upstream and compared with a similar measurement downstream from the construction activity.  Ordinarily any increase of 50 NTU or less would be considered to comply with the development’s construction stormwater permit or regulatory obligations.  The Associated General Contractors of America estimated that the numeric limit for turbidity would have imposed a cost of around $10 billion dollars a year.  Thus, the industry focused on this number in the challenge to the final rule, raising specific questions about the scientific basis EPA relied on in developing the numeric limit.  (Stormwaterone   Article).  The concerns raised specifically about the numeric limits were prompted EPA to stay that portion of the rule, and neither EPA nor the various authorized States were required to implement the limit while the court challenges proceeded leading to the Settlement Agreement.

Despite withdrawing the numeric turbidity limit, EPA indicated in its Summary of the revised Rule that it has reserved the section for potential revision if it decides to “. . . promulgate additional effluent limitations guidelines and monitoring requirements in a future rulemaking.”  (Subsection II. B. 8., 79 FR 44, p. 12665).  Thus, the idea of numeric turbidity limits may reappear as the Agency continues to evaluate the issue.

Federal Court of Appeals Strikes Down A Portion of the EPA’s Rule Limiting a Court’s Authority for Imposing Civil Fines for Equipment Failures

Federal Court of Appeals strikes down a portion of the EPA’s rule limiting a Court’s authority for imposing civil fines for equipment failures.  While upholding portions of EPA’s new  rules for air toxic emissions for cement kilns, in a ruling dated April 16th the District of Columbia Court of Appeals struck down the provision that limited the Federal Courts from imposing civil penalties involving citizen suits for violations of the Clean Air Act for unavoidable equipment malfunctions. The Federal Courts previous 2008 decision  finding unlawful  EPA’s earlier  attempt to “exempt” compliance with emissions standards during equipment startups, shutdowns and malfunctions,  is now joined with this recent decision to strip the new EPA rule of providing the opportunity to claim an affirmative defense for malfunctions.  Commentators have opined that this ruling will cause EPA to consider removing similar affirmative defenses from other rules which may apply to power plants and boilers. The obvious ramification of this ruling is that the applicable industries may face citizen suits for unavoidable and unintended  violations of emission standards with no particular guidance given to the Federal Courts on how to deal with those equipment malfunctions.

Seventh Circuit Highlights Challenges To Class Certification In Environmental Litigation

Property owners in the town of Roxana, Illinois, a small village on the Mississippi River across from St. Louis, filed suit against Shell Oil Company and ConocoPhillips.  The property owners alleged that a refinery owned by Shell and later ConocoPhillips leaked benzene and other petroleum-based contaminants into the groundwater under their homes.  The property owners sought the lost value in their homes as a result of the groundwater contamination.

The Illinois District Court Judge certified the property owners as a class under Rule 23, Federal Rules of Civil Procedure.  On appeal, the Seventh Circuit reversed.  Parko v. Shell Oil Co., 2014 WL 187184 (7th Cir., January 17, 2014).  The Circuit Court concluded that the plaintiff/property owners failed to demonstrate the “predominance of issues common to the entire class over issues that vary among the members of the class” – a critical element in class certification.

Once Shell and ConocoPhillips challenged the plaintiffs’ injury and damage model, the Circuit Court concluded that the trial judge should have investigated the predominance of issues and taken evidence on the matter.  Predominance of issues is not merely a pleading requirement.  The questions the Circuit Court wanted answered were as follows:

[I]f the defendants are right, there is no common issue, only individual issues that will vary from homeowner to homeowner:  is there benzene in the groundwater beneath his home at a level of concentration that if the groundwater were drunk would endanger health (and is there any possibility it would enter the water supply); what is the source of the benzene in the groundwater beneath a given home (that is, who is the polluter who caused the groundwater to become polluted); could the presence of the benzene in that concentration cause any other form of harm; has the presence of the benzene reduced the value of his property; if so, how great has the reduction been.

The court concluded that “[i]t is difficult to see how these issues can be managed in the class action format.”

Before a trial court certifies a class, particularly in the environmental context, it must be prepared to engage in a rigorous analysis of plaintiffs’ proposed methodology for proving injury and damages.

For more information on environmental law topics, please contact one of the Burr & Forman team members for assistance. We are happy to answer any questions or concerns you may have.

Questionning Environmental Law And Regulatory Policy

A significant issue in the recent federal government shut down was the fundamental question over the scope of government authority and its role in a wide range of activities.  In short, should there be any government involvement with respect to particular issues?  While the shut down focused most directly on the federal healthcare program, similar questions have been raised both about Congressional enactments over things such as environmental protection, and the scope of those enactments as reflected by regulation.  These policy and practical issues are playing out now with respect to the regulation of air emissions.

Recently, the U.S. Supreme Court has agreed to consider some issues presented by a case styled: Utility Air Regulatory Group v. EPA, but in doing so, it appears that the Court will not revisit its decision confirming that Congress granted EPA has the general authority to regulate global warming greenhouse gases (see, Massachusetts v. EPA, 549 U.S. 497 (2007)).  The Court did not take up the Petitioners’ challenge to the basis for regulation, but will apparently focus on the question of whether the scope of federal power under the Clean Air Act to regulate mobile emissions sources (cars and trucks) also allows EPA to regulate stationary sources of these gases.  The Supreme Court seems to have reiterated that Congress has the fundamental authority to legislate about conditions such as global warming and will focus on how the EPA may do so.

Recent reports from emerging economies tend to lend credence to concern over the fundamental effects of air emissions and support at least basic regulation.  From a human health perspective, the Reuters News Service recently noted a report from the International Agency for Research on Cancer, which indicated that in 2010, approximately 223,000 deaths occurred from lung cancer world wide as a result of air pollution, and that there was also increasing evidence that such pollution results in bladder cancers as well as respiratory and heard diseases.  Regulation may also have practical, non-health benefits. At least one high tech company has begun to notice the impacts of certain air pollutants on electronic equipment.  A recent report noted that Intel has begun to link sulfur-containing air emissions to problems with the life span and performance of electronics.  This same article also notes that human life spans in northern China have been shortened by five years of more as a direct result of air emissions.  While these issues are occurring in nations with emerging industrial economies (China and India in these examples), it seems fair to say that they are less a problem in the United States as a result of regulatory programs initiated at the federal level in the 1970s.  Thus, while some may continue to argue that the government has neither the authority to regulate environmental conditions, or the practical capability to make those conditions less harmful, the law and the evidence appear to be to the contrary.

The Environmental Group at Burr & Forman continually monitors emerging issues and changes to law and regulation in this area of practice.  Court actions and articles such as those referenced above are examples of an apparent trend towards additional or expanded regulation that will have direct impact on our clients and their activities.  We are always available to advise and assist clients with regard to environmental regulation that may have direct or indirect impact on them.

For more information on environmental law topics, please contact one of the Burr & Forman team members for assistance. We are happy to answer any questions or concerns you may have.

Supreme Court Rules on Permits

The recent Supreme Court case Koontz vs. St. Johns River has generated a lot of commentary and debate in the legal community and speculation concerning the ramifications of the case on various land use permitting scenarios. Oversimplifying the facts and legal theories, the Supreme Court extended previous rulings to a situation whereby the governmental entity denied a request/permit for the failure of the applicant to agree to “suggested” alternative concessions proposed by the local government. The alternative concessions included mitigation measures, conservation easements and infrastructure improvements.  Prior to Koontz, the Supreme Court had only placed a higher burden on a government entity in certain types of permit decisions to substantially justify requiring special concessions.  Such decisions were primarily those where the government entity would approve a permit subject to a demand to dedicate an interest in property to the public.  In non-legal terms the exaction had to be closely related to the harm the local government was trying to protect against and that the exaction imposed had to reasonably deal with, and was “proportionate” to the adverse impact of the activity conducted pursuant to the permit on the applicable community.  Under the Supreme Court’s directive in Koontz, the government entity now basically has the burden in permit denials and monetary exactions to show that their actions were acceptable (i.e. subject to a higher scrutiny review by the courts) as opposed to a government action being deferred to by the courts and the burden placed on the applicant to demonstrate that the exaction was an unconstitutional “taking”.  With Koontz, this higher scrutiny standard now applies to land use permit denials and/or monetary exactions.  For Mr. Koontz, he must still litigate further to determine whether the suggested alternative concessions are closely related to the harm the local government was trying to protect against and the concessions were proportionate.  The practical implication of the Koontz case is that local governments will need to be more conservative when negotiating mitigation measures for permit approvals.

For more information on environmental law topics, please contact one of the Burr & Forman team members for assistance. We are happy to answer any questions or concerns you may have.

BP Unable To Block Oil Spill Claim Payments

On March 15, 2013, BP asked United States District Court Judge Carl Barbier, Jr. to block the Deepwater Horizon claims administrator from awarding “business economic losses” that BP contends are “fictitious” claims for damages.  BP maintains that the claims administrator, Louisiana lawyer Patrick Juneau, was misinterpreting the wording of the settlement agreement regarding larger claimants and was allowing payments “for non-existent, artificially calculated losses.”  BP takes issue with the timing used by companies to determine when losses occurred.  In addition to asking Judge Barbier to enter a temporary injunction prohibiting the claims administrator from awarding business economic losses, BP also filed a separate complaint in federal court against Mr. Juneau and the settlement program seeking to change the rules governing claims payment.

On April 5, 2013, Judge Barbier rejected BP’s request.  Judge Barbier ruled that he had already upheld the claims administrator’s interpretation of the settlement, and he had no reason not to do so again.  Judge Barbier appeared to be somewhat frustrated with BP, its request to halt payments, and its separate lawsuit against the claims administrator.  Regarding BP reasserting its challenge to Mr. Juneau’s interpretation of the settlement agreement, Judge Barbier noted that “[d]espite the fact that the record has continued to grow, I don’t think that it changes the fundamental issue before the Court.”  Regarding BP filing a separate lawsuit against the administrator, the Court noted: “As a matter of law, how can a claims administrator be in breach of his contract if all he’s doing is applying it as he believes it should be applied, and now as ordered by the Court?  How can that possibly be a breach of contract?”

BP has appealed Judge Barbier’s ruling to the Fifth Circuit Court of Appeals.

For more information on environmental law topics, please contact one of the Burr & Forman team members for assistance. We are happy to answer any questions or concerns you may have.

 

EPA Confirms Uncertainty Over Timing Of Final Coal Ash Rule

Previously, we referenced an article in Bloomberg BNA reporting on an interview with an EPA representative who indicated that the Agency could not provide a definitive timeline for promulgating final regulations on the management of coal ash generated by power plants. EPA has now more formally confirmed this uncertainty.  Recently, in announcing projected publication dates for a wide range of rules in various stages of development, EPA effectively acknowledged that there is no target date for the final rule. This is also reflected on EPA’s web page which tracks the history of the rule’s development.

Finally in consolidated litigation brought by various interest groups seeking to force the agency to issue a final rule (Appalachian Voices, et al v. EPA, D.C., DKT No. 1:12-cv-00523 RDW), the Agency recently acknowledged that it may be the end of the year before a final rule is announced.

For more information on environmental law topics, please contact one of the Burr & Forman team members for assistance. We are happy to answer any questions or concerns you may have.

U.S. Supreme Court Overturns Effort to Hold Stormwater Permit Holder Liable for Condition of Waters Passing Through

The United States Supreme Court, in a unanimous ruling, has acted to limit a potential liability of municipalities and other stormwater permit holders with respect to the condition of waters entering and passing through their jurisdictions.  In a short opinion issued on January 8, the Court ruled in LOS ANGELES COUNTY FLOOD CONTROL DISTRICT v. NATURAL RESOURCES DEFENSE COUNCIL, INC., ET AL., that the Flood District could not be held responsible under its municipal separate storm sewer system (stormwater) permit for the polluted condition of waters passing through its jurisdiction.

The Court’s action reversed a decision by the Ninth U.S. Circuit Court of Appeals, which had found that water moving from channelized or concreted portions of a river to an unchannelized portion of the same river constituted a discharge subject to evaluation under the District’s discharge permit.  The Supreme Court cited its earlier 2004 opinion SOUTH FLORIDA WATER MANAGEMENT DISTRICT v. MICCOSUKEE TRIBE OF INDIANS, 541 U.S. 95, noting it had held there that transporting water between two sections of the same water body does not constitute a discharge subject to regulation under the Clean Water Act.   Instead, the Court explained that the CWA regulates discharges and that those only occur if a pollutant is added to the water body from a point source.  Justice Ginsburg, writing for the Court, concluded that “no discharge of pollutants occurs when water, rather than being removed and then returned to a water body, simply flows from one portion of the water body to another.”  This was true even though improvements had been made in portions of the water body’s channel, in this instance, to enhance flood control efforts.

This case has been watched with particular interest by jurisdictions and other entities that may channelize or otherwise direct water through areas or activities under their control.  This includes not only municipalities and watershed districts, but entities such as state and local departments of transpiration.  At least some of these entities in our region have faced similar claims and threats of litigation from environmental groups.

For more information on environmental law topics, please contact one of the Burr & Forman team members for assistance. We are happy to answer any questions or concerns you may have.