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2014 A&WMA Environmental Law Update David Ashton Assistant General Counsel.

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1 2014 A&WMA Environmental Law Update David Ashton Assistant General Counsel


3 What We Will Cover ●C●Clean Water Act (CWA) developments ●C●CERCLA developments ●B●Bankruptcy & Environmental law

4 Expansion of Clean Water Act Jurisdiction Jurisdictional Background for “waters of the United States” – 1970s Any water body the use, degradation, or destruction of which could affect interstate commerce. – 2001 “Isolated” non-navigable ponds and waters whose only connection to interstate commerce is their use by migratory birds not subject to CWA. – Solid Waste Agency of Northern Cook County v. U.S. Army Corps of Engineers, 531 U.S. 159 (2001) – 2006 Streams and wetlands are only subject to CWA when “significant nexus” to navigable waters. “Adjacent waters” must be reasonably close in proximity to a river or lake. – Rapanos v. United States, 547 U.S. 715 (2006) » Raised considerable doubt as to whether tributaries with only intermittent or ephemeral flows were subject to CWA – 2007 Existing regulations cover only adjacent wetlands, and not other types of adjacent waters. – San Francisco Baykeeper v. Cargill Salt, 481 F.3d 700 (9 th Cir. 2007)

5 Expansion of Clean Water Act Jurisdiction Connectivity of streams and wetlands to downstream waters: A review and synthesis of scientific evidence – EPA draft report (2013) findings: 1.) All streams, regardless of size or frequency of flow, are connected and have important effects on downstream waters. 2.) Wetlands and open-waters in flood plains and riparian areas are integrated with streams and rivers. 3.) There is insufficient information to generalize about wetlands and open-waters outside of riparian areas and floodplains and about their connectivity to down stream waters.

6 Expansion of Clean Water Act Jurisdiction Proposed EPA Guidance to identify waters protected by CWA – 1.) Small streams and streams that flow part of the year are protected under CWA if they have a physical, chemical, or biological connection to larger bodies of water downstream and could affect the integrity of those downstream waters. – 2.) When a water body does not have a surface connection to an interstate water or a traditional navigable water, but there is a significant physical, chemical, or biological connection between the two, both water bodies should be protected under CWA. – 3.) Water bodies may be “traditional navigable waters” and subject to CWA protections, under a wider range of circumstances than identified in previous guidance. – 4.) Interstate waters are protected. If the body of water crosses state boarders it is protected whether it is navigable or not.

7 Expansion of Clean Water Act Jurisdiction Summary of Key Points in the Proposed Guidance – The following waters are protected under CWA: Traditional navigable waters Interstate waters Wetlands adjacent to either traditional navigable waters or interstate waters – “adjacent” means bordering, contiguous, or neighboring. » “neighboring” encompasses all waters located within a flood plain or riparian area of, or that have a surface or shallow subsurface hydrologic connection to, a jurisdictional body of water. » Would eliminate Rapanos definition of adjacent. Non-navigable tributaries to traditional navigable waters that are relatively permanent (i.e., contain water at least seasonally) – Includes any natural or man-made channel or wetland that contributes flow directly or indirectly to a downstream body of water The territorial seas

8 Tributaries were not previously defined in the regulations Tributary: means a water body physically characterized by the presence of a bed and banks and ordinary high water mark, which contributes flow, either directly or through another water, to a water [that is jurisdictional]. In addition, wetlands lakes, and ponds are tributaries (even if they lack a bed and banks or ordinary high water mark) if they contribute flow, either directly or through another water to a water [that is jurisdictional]. A water that otherwise qualifies as a tributary under this definition does not lose its status as a tributary if, for any length, there are one or more man-made breaks (such as bridges, culverts, pipes, or dams) or one or more natural breaks (such as wetlands at the head of or along the run of a stream, debris piles, boulder fields, or a stream that flows underground) so long as a bed and banks and an ordinary high water mark can be identified upstream of the break. A tributary, including wetlands, can be natural, man-altered, or man- made water body and includes waters such as rivers, streams, ponds, impoundments, canals, and ditches not excluded [in this section].

9 Expansion of Clean Water Act Jurisdiction Summary of Key Points in the Proposed Guidance (cont.) – In addition, the following waters are protected by CWA if a fact-specific analysis determines they have a "significant nexus" to a traditional navigable water or interstate water: Tributaries to traditional navigable waters or interstate waters Wetlands adjacent to jurisdictional tributaries to traditional navigable waters or interstate waters Waters that fall under the "other waters" category of the reg. – guidance divides these waters into two categories: » those physically proximate to other jurisdictional waters » those that are not, and discusses how each category should be evaluated. – Eliminates San Francisco Baykeepers’ “only adjacent wetlands” rule. All impoundments of waters of the United States “Significant nexus” means a water body that more than speculatively or insubstantially, alone or in combination with similarly situated waters in the region, affects the chemical, physical, or biological integrity of a jurisdictional water body.

10 Expansion of Clean Water Act Jurisdiction Summary of Key Points in the Proposed Guidance (cont.) – The following aquatic areas are generally not protected under CWA: Wet areas that are not tributaries or open waters and do not meet the agencies' regulatory definition of "wetlands" Waters excluded from coverage under the CWA by existing regulations Waters that lack a "significant nexus" where one is required for a water to be protected by the CWA Artificially irrigated areas that would revert to upland should irrigation cease Artificial lakes or ponds created by excavating and/or diking dry land and used exclusively for such purposes as stock watering, irrigation, settling basins, or rice growing Artificial reflecting pools or swimming pools created by excavating and/or diking dry land Small ornamental waters created by excavating and/or diking dry land for primarily aesthetic reasons Water-filled depressions created incidental to construction activity Groundwater drained through subsurface drainage systems and Erosional features (gullies and rills), and swales and ditches that are not tributaries or wetlands

11 Expansion of Clean Water Act Jurisdiction By expanding the Clean Water Act jurisdiction, the proposed rule would require permits for a wide array of development projects in extensive areas not previously subject to regulation. This would include virtually every category of resource utilization and development interest including but not limited to: – Real Estate development Including master planned communities – Water resource development and use – Forest products – Mining – Oil and gas – Energy project siting and operation – Marina and port development – Transportation and infrastructure

12 NPDES Permits National Pollutant Discharge Elimination System (NPDES) permits are required for all facilities that discharge pollutants from any point source into waters of the United States. – Pollutants Any type of industrial, domestic/municipal, and agricultural waste discharged into water Three categories: – 1.) Conventional – 2.) Toxic – 3.) Non-Conventional

13 NPDES Permits Pollutants can enter waters of the US from a variety of pathways including agricultural, domestic/municipal, and industrial sources. – sources are categorized as either Point Sources or Non-Point Sources, and Direct and Indirect. – Point Sources Typical point source discharges include discharges from POTW, and outfalls of industrial facilities and urban areas. majority of agricultural facilities defined as Non-Point Sources and are exempt from NPDES regulation. – Direct Point Sources Discharge wastewater directly into the receiving water body. – Indirect Point Sources Discharge wastewater into POTW, which in turn discharges into receiving body of water. NPDES permits are issued only to Direct Point Sources.

14 NPDES Permits NPDES permits are typically a license for a facility to discharge a specified amount of a pollutant into a receiving water under certain conditions. – However, permits may also authorize facilities to process, incinerate, landfill, or beneficially use sewage sludge. Two types of permits: individual and general: – Individual Permits Specifically tailored to an individual facility – General Permits Covers multiple facilities within a specific category May cover a category of Point Sources – Storm water point sources – Facilities that involve the same or substantially similar types of operations – Facilities that discharge the same types of wastes or engage in the same types of sludge use or disposal – Facilities that require the same or similar monitoring

15 Los Angeles County Flood Control District v. Natural Resources Defense Council, Inc., 133 S.Ct. 710 (2013) Facts – The County of Los Angeles and the Los Angeles County Flood Control District control and operate a municipal separate storm sewer system (ms4). – ms4 is highly interconnected between 84 cities and some unincorporated areas of the county amounting to 500 miles of open channels and 2,800 miles of storm drains. No comprehensive map of storm drain system exists. – Storm water is channeled in the ms4 to various watercourses including the Los Angeles River, the San Gabriel River, the Santa Clara River, Malibu Creek, and eventually Pacific Ocean. – Evidence was provided that the monitoring stations for Los Angeles River and San Gabriel Rivers, located in a section of the ms4, discharge storm water known to contain standards-exceeding pollutants into the two rivers. – allows untreated and heavily polluted water to enter the rivers and eventually Pacific Ocean.

16 Natural Resources Defense Council, Inc. v. County of Los Angeles, 636 F.3d 1235 2010 - 9 th Circuit Held: – CWA prohibits discharges that are not in compliance with CWA into navigable waters. – CWA is indifferent to originator of water pollution anyone who discharges pollutants into navigable waters is responsible and liable. “Act bans the discharge of any pollutant by any person regardless of whether that person was the root cause or merely the current superintendent of the discharge.” Id. at 1253 – Therefore, the County of Los Angeles and the Los Angeles County Flood Control District are liable for pollutants that pass through the ms4 and into the rivers whether or not they are the originators of that pollution.

17 Los Angeles County Flood Control District v. Natural Resources Defense Council, Inc., 133 S.Ct. 710 (2013) SUPREME COURT DISAGREES WITH THE NINTH CIRCUIT!!! – Supremes held transfer of water from one water body to another does not constitute a discharge under CWA. bases this opinion on previous holding of South Florida Water Management District v. Miccosukee Tribe of Indians, 541 U.S. 95 (2004) (Miccosukee I) – Miccosukee I: transfer of water from one water body to another does not constitute a CWA discharge unless the two bodies of water are “meaningfully distinct.”

18 Los Angeles County Flood Control District v. Natural Resources Defense Council, Inc., 133 S.Ct. 710 (2013) In LA County, Supremes held since the water merely flowed through a manmade channel and back into the same river no CWA discharge had occurred. – “Under a common understanding of the meaning of the word ‘add,’ no pollutants are ‘added’ to a water body when water is merely transferred between different portions of that water body.” Id. at 713. – Supremes cite the dictionary: “add” means “to join, annex, or unite (as one thing to another) so as to bring about an increase (as in number, size, or importance) or so as to form one aggregate.” Id.

19 Unitary Water Theory – all waters of the United States are one unitary whole, rather than separate individual bodies of water. The unitary water theory arises from the language of CWA that prohibits “the discharge of any pollutant by any person” unless done in compliance with the act. “discharge of a pollutant” is defined as “any addition of any pollutant to navigable waters from any point source.” – Take note that the word “any” does not appear before “navigable waters”, whereas it does appear in front of “pollutant” and “point source” This can be read in two different ways: – 1.) No pollutants can be discharged into any individual body of water, or – 2.) No pollutants can be discharged into any water, with all bodies of water representing the whole of navigable waters

20 EPA’s Water Transfer Rule The EPA’s water transfer rule: – transfer of water between two bodies of water does not implicate CWA unless the transfer subjects the transferred water to an intervening industrial, municipal, or commercial use. only initial point source of pollutants is regulated not transfer of polluted water Under this framework, the most polluted water can be transferred into the most pristine water as long as the transferred water is not subjected to an intervening industrial, municipal, or commercial use.

21 Court’s Treatment of the Unitary Water Theory In Miccosukee I, Supremes criticized Unitary Water Theory but declined to rule on matter. – This was due to the conflicting NPDES regulations that arose from the practice of the theory. Industrial water users can obtain “intake credit” for pollutants present in water that user withdraws from navigable waters. When user discharges those waters user does not have to remove preexisting pollutants as long as user discharges intake water into the same body of water from which it was withdrawn. In Friends of the Everglades v. SFWMD, 570 F.3d 1210 (11 Cir. 2009) (Miccosukee II), the Unitary Water Theory was upheld. – At the time Miccosukee I was decided EPA had not yet formulated Water Transfer Rule. WTR was a reasonable solution to an ambiguous statute (applying Chevron doctrine). In Catskill Mountains Chapter of Trout Unlimited, Inc. v. USEPA, 2014 WL 1284544 (S.D. NY 2014) (Catskills III), application of Unitary Water Theory was vacated. – Holding – also applying Chevron doctrine - : 1.) water transfer rule was arbitrary and capricious; 2.) the provision of rule interpreting scope of “navigable waters” was arbitrary and capricious; and 3.) remand to EPA was warranted.

22 Catskill Mountains (2014) Catskill Mountains Chapter of Trout Unlimited, Inc. v. USEPA, 2014 WL 1284544 (S.D. NY 2014) (Catskills III), vacating application of Unitary Water Theory through WTR: Soup analogy to explain differences between discharges within a single body of water and discharges between two distinct bodies of water: – “if one takes a ladle of soup from a pot, lifts it above the pot, and pours it back into the pot, one had not ‘added’ soup or anything else to the pot” – The question is whether there are two pots of soup, not one – “The implication of the analogy is that ladling one type of soup-say mulligatawny-into a pot of soup containing another type of soup- say, wild mushroom,-adds “pollutants” to the recipient soup, spoiling the soup and leaving no soup for you.”

23 Silvicultural Rule, 40 C.F.R. § 122.27(b)(1) 1976 - 2014 Silvicultural Rule – Specifically defined timber "harvesting operations, surface drainage, or road construction and maintenance from which there is natural runoff" to be "non point source silvicultural activities" excluded from NPDES permitting. NEDC v. Brown, 640 F.3d 1063 (9 th Cir. 2010) – Held that NPDES permits were required for forest road storm water runoff. Decker v. NEDC, 133 S. Ct. 1326 (2013) – Reverses Ninth Circuit’s Brown – Upholds the EPA’s interpretation of its regulations to exclude storm water runoff from logging roads from NPDES permitting as a discharge associated with industrial activity NEDC v. Decker, 728 F.3d 1085 (9 th Cir. 2013) (on remand) – Revived specific issue of whether storm water runoff collected in a system of ditches, culverts, and channels are point sources to which Clean Water Act NPDES permit requirements apply.

24 February 2014 Farm Act, H.R. 2642 §12313 Silvicultural Activities Amends CWA to clarify that an NPDES permit is not required for storm water runoff from logging roads and other specified forestry activities conducted in accordance with standard industry practice – Eliminates any uncertainty associated with the EPA’s pre-existing regulation known as the Silviculture Rule, 40 C.F.R. §122.27 that defines these same activities as non-point source silviculture activities which are not subject to NPEDS permit requirements Does not change the status of other permitting requirements, such as §404 Dredge and fill permits. Logging and other forest road operators will continue to be subject to state best practices and similar rules protecting water quality.

25 2014 Farm Act, H.R. 2642 §12313 Silvicultural Activities The new law specifically eliminates any NPDES permit requirements for any discharge from runoff resulting from the following forestry activities conducted in accordance with standard industry practice: – Nursery operations – Site preparation – Reforestation and subsequent cultural treatment – Thinning – Prescribed burning – Pest and fire control – Harvesting operations – Surface drainage – Road construction and maintenance

26 Hoosier Environmental Council and Citizens for Appropriate Rural Roads v. US Army Corps of Engineers, 722 F.3d 1053 (2013) Background – This case is concerned with filling of wetlands and six stream crossings. – CWA §404(a) authorizes USACE to issue permits to discharge “dredged or fill materials” into US navigable waters. – Permit will be denied if USACE finds a practicable alternative to proposed discharge that would have a less adverse impact on aquatic ecosystem, or if discharge would be contrary to the public interest. Facts – I-69 is an incomplete interstate highway that is planned to run from Canada to Mexico and passes through Indiana. – This controversy centers on the construction of a section of I-69 between Indianapolis and Evansville Indiana.

27 Hoosier Environmental Council and Citizens for Appropriate Rural Roads v. USACE, 722 F.3d 1053 (2013) Facts (cont.) – Before construction of I-69 there were two alternative routes one could travel between Indianapolis and Evansville. Indirect Route: – Take I-70 from Indianapolis to Terre Haute, then Route 41 from Terre Haute to Evansville Direct Route: – The roads on the Direct Route (future I-69) tend to be narrow, crowded with truck traffic and experience an above average incidence of traffic accidents. The Indirect Route is 155 miles long The Direct Route is 142 miles long – circled section is the subject of this dispute

28 Hoosier Environmental Council and Citizens for Appropriate Rural Roads v. US Army Corps of Engineers, 722 F.3d 1053 (2013) Facts (cont.) – Environmentalists opposed building a highway on the direct route since it would destroy wetlands, disrupt forests, and disrupt karst ecosystems. – The federal and state highway authorities prepared Environmental Impact Statements concluding that building the new interstate was preferable to upgrading the Indirect Route. – USACE concluded that the CWA would not be violated since there was no less environmentally damaging alternative that was practicable, and the highway (Direct Route) was not contrary to public interest. USACE is only required to assess the environmental impact of practicable alternatives – The highway agencies found that the Indirect Route was not a practicable alternative USACE reviewed the Environmental Impact Statement before issuing the permit. – USACE found that the Federal Highway Administration's Environmental Impact Statement narrowed USACE’s duty to the selection of alternative alignments within the Direct Route HOLDING – If another agency makes a responsible analysis, USACE can rely on it when making it’s own determination. – Different agencies have different comparative advantages and do not need to duplicate each others’ studies, therefore USACE was not required to conduct a totally independent environmental analysis

29 Agricultural Conservation Practices Exemptions from Clean Water Act Interpretive Rule Regarding Applicability of Exemption from Permitting under § 404(f)(1)(A) of CWA to Certain Agricultural Conservation Practices. – Exempts certain discharges associated with normal farming, silviculture, and ranching activities in “waters of the United States,” including wetlands. interpretive rule is already in effect, as of April 21, 2014, even though EPA and USACE are still receiving public input on its implementation. – rule identifies specific Natural Resources Conservation Service agricultural conservation practices that are appropriately considered normal farming activities and are exempt from permitting for discharges of dredged or fill material.

30 CONSERVATION PRACTICE STANDARDS EXEMPT FROM PERMITTING UNDER CLEAN WATER ACT SECTION 404(f)(1)(A) Brush Management Herbaceous Weed control Irrigation Canal or Lateral Clearing and Snagging Conservation Cover Prescribed Burning Critical Area Planting Monitoring Well Windbreak/Shelterbelt Establishment Fence Fuel Break Field Border Irrigation Field Ditch Riparian Herbaceous Cover Riparian Forest buffer Filter Strip Firebreak Stream Habitat Improvement and Management Aquatic Organism passage Fish Raceway or Tank Fishpond Management Bivalve Aquaculture Gear and Biofouling Control Grassed Waterway Hedgerow Planting Hillside Ditch Land Reclamation, Landslide Treatment Land Reclamation, Toxic Discharge Control Land Clearing Forage and Biomass Planting Prescribed Grazing Pumping Plant Land Reclamation, Abandoned Mined land Land Reclamation, Currently Mined Land Grazing Land Mechanical Treatment Range Planting Trails and Walkways Animal Trails and Walkways Stream Crossing Structure for Water Control Vegetative Barrier Tree/Shrub Establishment Restoration and Management of Rare and Declining Habitats Wetland Wildlife Habitat Management Shallow Water Development and Management Early Successional Habitat Development Management Windbreak/Shelterbelt Renovation Road/Trail/Landing Closure and Treatment Forest Trails and Landings Wetland Restoration Wetland Enhancement Tree/Shrub Pruning Forest Stand Improvement Mulching Tree/Shrub Site Preparation Obstruction Removal Forage Harvest Management

31 In re Deepwater Horizon, No. 12-30883 (5th Cir. June 4, 2014) Defendants BP Exploration & Production, Inc. (BP) and Anadarko Petroleum Corp. (Anadarko) owned 65 and 25 percent, respectively, of Macondo well drilled by vessel Deepwater Horizon, that subsequently blew out in 2010 and resulted in a oil spill that lasted nearly three months. Following summary judgment in favor of Plaintiff US on the question of defendants’ liability for civil penalties under CWA, defs BP and Anadarko appealed. BP & Anadarko’s argument: – Liable facility was the Deepwater Horizon (owned by Transocean) – Not the well – Deepwater Horizon vessel with riser, was the owner of the facility from which oil was discharged


33 In re Deepwater Horizon, No. 12-30883, (5th Cir. filed June 4, 2014) The Fifth Circuit affirmed district court’s holdings: (1) BP and Anadarko were liable for civil penalties under 33 U.S.C. § 1321(b)(7)(A), which imposes mandatory penalties upon the owners of facilities “from which oil or a hazardous substances is discharged; (2) Discharge is the point where “uncontrolled movement” begins; and (3) Oil flowing from the well through the Deepwater Horizon’s riser was a discharge from the well itself.

34 Conclusion The jurisdiction of the Clean Water Act is expanding! – This may have impact on many activities that were previously not covered by CWA. NPDES Permits – If you simply transfer water from one point in a body of water to another point in that same body of water it will not be considered a “discharge” violating a NPDES permit. – Certain forestry activities are now exempt from NPDES permitting. Dredged and Fill Permits – Agencies, such as USACE, that are charged with permitting do not have to conduct completely independent environmental analysis if a responsible analysis has been conducted by another agency. – Many agricultural conservation practices are exempt from dredged and fill permit requirements. CWA Penalties – Discharge is point where “uncontrolled movement” begins

35 Comprehensive Environmental Remediation, Compensation, and Liability Act (CERCLA)

36 CTS Corp. v. Waldburger, No. 13–339, --- S. Ct. ----, 2014 WL 2560466 (June 9, 2014) 42 U.S.C. § 9658 provides that for certain state-law tort actions involving environmental harms, CERCLA will preempt a state statute of limitations commencement date and replace it with a delayed commencement date provided by federal law. The Supreme Court recently granted certioriari to determine whether the Fourth Circuit correctly interpreted § 9658 to apply to state statutes of repose in addition to state statutes of limitations.

37 CTS Corp. v. Waldburger, No. 13–339, --- S. Ct. ----, 2014 WL 2560466 (June 9, 2014) CTS Corp. argues that § 9658 is “limited to a state’s statute of limitations, not a state’s statute of repose.” CTS Corp.’s argument is dependent on a distinction between time-barring statutes. CTS Corp. alleged that: – Statutes of repose are substantive limitations, and conditions precedent to a party’s right to maintain a lawsuit – Statutes of limitation are procedural devices that operate as a defense to limit the remedy available from an existing cause of action.

38 CTS Corp. v. Waldburger, No. 13–339, --- S. Ct. ----, 2014 WL 2560466 (June 9, 2014) CTS Corp. relied on statutory interpretation, particularly plain language and legislative history analysis, to bolster their argument. CTS Corp. noted that a CERCLA Study Group Report distinguished between statutes of limitation and repose, but the final language of the § 9658 mentions only statutes of limitation, and thus CTS asserts that Congress deliberately omitted statutes of repose from the statutory language.

39 CTS Corp. v. Waldburger, No. 13–339, --- S. Ct. ----, 2014 WL 2560466 (June 9, 2014) CTS Corp. also made a federalist argument, stating that the Fourth Circuit’s interpretation of § 9658 amounts to a dramatic federal intrusion upon a matter traditionally left to the states (“effectively eviscerating state statutes of repose”). Waldburger argued the term “statute of limitations” in § 9658 is should be interpreted broadly, and that the legislative history supports a broad interpretation that it includes statutes of repose.

40 CTS Corp. v. Waldburger, No. 13–339, --- S. Ct. ----, 2014 WL 2560466 (June 9, 2014) Waldburger specifically noted that the Study Group Report, under the heading “Statutes of Limitation,” recommends that: – States adopt the rule that an action accrues when the plaintiff discovers or should have discovered the injury or disease and its cause, and – States “repeal … statutes of repose which, in a number of states have the same effect as some statutes of limitation in barring [a] plaintiff’s claim before he knows that he has one.”

41 CTS Corp. v. Waldburger, No. 13–339, --- S. Ct. ----, 2014 WL 2560466 (June 9, 2014) Waldburger noted that the Fourth Circuit correctly reasoned that Congress, in its adoption of § 9658, was “equally concerned with statues of repose and limitations, and with their effect of barring plaintiffs’ claims before they are aware of them.” Walburger additionally noted that a search of the United States Codes reveals that Congress never uses the term “statute of repose,” although it indisputably enacts statutes of repose; further, the North Carolina statute at issue similarly omitted the term “repose”

42 CTS Corp. v. Waldburger, No. 13–339, --- S. Ct. ----, 2014 WL 2560466 (June 9, 2014) Following CTS Corp.’s petition, the Supreme Court granted certiorari, and held that: – (1) CERCLA’s discovery rule preempts only state statutes of limitation and not statutes of repose (abrogating McDonald v. Sun Oil Co., 548 F.3d 774 (9th Cir. 2008)); and, – (2) CERCLA’s discovery rule did not impliedly preempt state statutes of repose.

43 CTS Corp. v. Waldburger, No. 13–339, --- S. Ct. ----, 2014 WL 2560466 (June 9, 2014). In support of its holding, the Supreme Court reasoned that statutes of limitation and repose have distinct purposes targeting different actors: – (1) Statutes of limitation prevent the surprise revival of claims that have been “allowed to slumber until evidence has been lost... and witnesses have disappeared;” however, they are subject to equitable tolling when extraordinary conditions prevent bringing a timely action – (2) Statutes of repose are not related to the accrual of any cause of action, and are generally not subject to equitable tolling; they effect a legislative judgment that defendants should “be free rom liability after the legislatively determined period of time.”

44 In re September 11 Litigation No. 10-4197, 2014 WL 1717232 (2d Cir. May 2, 2014) A building owned by Cedar & Washington Assoc., LLC, plaintiff-appellant, was contaminated as a result of the September 11, 2001 attack on the World Trade Center. Plaintiff-appellant sought to recover costs incurred during remediation of the contaminated dust and debris generated by the collapse of buildings at the World Trade Center complex. On appeal from decision on remand that went in favor of defendants owners and lessees of World Trade Center, airlines, and other companies), Second Circuit affirmed the district court’s holdings that:

45 In re September 11 Litigation No. 10-4197, 2014 WL 1717232 (2d Cir. May 2, 2014) (1) Under CERCLA §107(b), 42 U.S.C.S. § 9607(b), the September 11, 2001 attacks: (a)wrested from the defendants all control over the planes & buildings; (b)obviated any precautions or prudent measures defendants might have taken to prevent contamination; and, (c)located sole responsibility for the event, and the environmental consequences, on fanatics whose acts defendants were not bound by CERCLA to anticipate or prevent;

46 In re September 11 Litigation No. 10-4197, 2014 WL 1717232 (2d Cir. May 2, 2014) (2) September 11 attacks fit the category of "acts of war" under CERCLA; (3) The act-of-war defense barred the CERCLA claim, and the developer did not identify any other basis for its claim of indemnification; (4) Because no legal duty or equitable consideration obligated defendants to remediate World Trade Center Dust from the developer's building, this common law claim failed.

47 Commonwealth of Penn. Dep’t of Envtl. Prot. v. Beazer East, Inc. 553 F.App’x 153 (3d Cir. Dec. 17, 2013) Dep’t of Envtl. Prot. (DEP) sought recovery of cleanup costs under CERCLA § 107, 42 U.S.C.S. § 9607, for removal of hazardous waste from a former strip mine that was later converted into a landfill. In its claim against five defendants, DEP alleged that the action taken at the site was a “remedial action” rather than a “removal,” and thus subject to a longer statute of limitations. When action originally taken DEP called it “limited interim response” and decision documents indicated response was not a final remedial response and additional response action may be necessary

48 Commonwealth of Penn. Dep’t of Envtl. Prot. v. Beazer East, Inc. 553 F.App’x 153 (3d Cir. Dec. 17, 2013) District court disagreed, and ruled in favor of defendants On appeal, Third Circuit held: (1) District court properly dismissed an action brought by DEP seeking reimbursement for cleanup costs under the CERCLA § 107, 42 U.S.C.S. § 9607, because: (a) the actions undertaken by the DEP on the site were a removal; (b) action undertaken was intended to remove the hazardous waste from the area, not remedy the damaged environment.

49 Commonwealth of Penn. Dep’t of Envtl. Prot. v. Beazer East, Inc. 553 F.App’x 153 (3d Cir. Dec. 17, 2013) Third Circuit held (continued): (2) Because the action was not a remedy, but rather a removal, the DEP filed its complaint beyond the applicable three-year limitations period set forth in 42 U.S.C.S. § 9613(g)(2)(A).

50 Commonwealth of Penn. Dep’t of Envtl. Prot. v. Beazer East, Inc. 553 F.App’x 153 (3d Cir. Dec. 17, 2013) Implications of Third Circuit decision: “A removal action is not converted into a remedial action just because it effects a permanent remedy.” – 553 F. App’x at 158 (quoting Hatco Corp. v. W.R. Grace & Co.— Conn., 849 F.Supp. 931, 962 (D.N.J. 1994)). How a cleanup is described in decision documents can be decisive re relevant SOL.

51 Bernstein v. Bankert, 702 F3d 964 (7th Cir 2012) cert. denied, 134 S.Ct. 1024 (Jan. 27, 2014) Certiorari to Seventh Circuit denied, 134 S.Ct. 1024 (Jan. 27, 2014) What CERCLA remedies does a person who has settled have under CERCLA? – § 107 cost-recovery; or – § 113 contribution? Trend: if you’ve settled; limited to § 113 Held: – Plaintiffs can bring a § 107 suit for costs they were compelled to incur under the AOC. – However, under AOC once plaintiffs complete AOC work & EPA certifies completion, plaintiffs will no longer have a § 107 “resolved liability” Only § 113

52 Bernstein v. Bankert, 733 F.3d 190 (7th Cir. 2013), cert. denied, 134 S.Ct. 1024 (Jan. 27, 2014) In its amended opinion, the Seventh Circuit held that: – A settling PRP’s liability is not resolved for purposes of CERCLA § 113(f)(3)(B) contribution claim, 42 U.S.C. § 9613(f)(3)(B) – until activities required under a settlement agreement have been completed. – “The end result is that a § 9613(f)(3)(B) contribution action, predicated as it is on the resolution of liability, is not available simply because a settlement has occurred. The trigger is the resolution of liability through that settlement, which, pursuant to the statute, does not occur until satisfactory performance has been certified.” 702 F.3d @ 976. – EPA can still draft liability releases that are triggered prior to completion of work required by settlement, thereby “resolving” liability before work is fully completed.

53 Bernstein v. Bankert, 702 F3d 964 (7th Cir 2012) cert. denied, 134 S.Ct. 1024 (Jan. 27, 2014) 7 th Circuit Ruling Created Confusion: – What happens to a claim that starts as § 107 cost-recovery action once plaintiff has completed AOC performance? – Case suggests that SOL limitations period for such actions does not start running until work under settlement agreement is complete. – If trigger for actual resolution of liability to US is completion of settlement obligations and not settlement signing, isn’t settling party vulnerable to a lawsuit by US or others while it is performing its duties under an AOC? Party’s liability would not be “resolved” and, therefore, the settling party would get the protection from contribution lawsuits (“contribution protection”) available through § 113(2)

54 ASTM 1527-13 – All Appropriate Inquiry On December 30, 2013, USEPA issued its final rule approving the use of ASTM International’s revised “Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process,” ASTM E1527-13, for meeting the “All Appropriate Inquiries” standard under Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) and implementing regulations at 40 C.F.R. Part 312. EPA had issued a final rule approving the revised standard on August 15, 2013, but withdrew that rule due to adverse public comments.

55 ASTM 1527-13 The new final rule addresses those comments and does not provide an additional comment period. The rule went into effect on December 30, 2013. Although the new rule does not prohibit the continued use of the previous ASTM E1527-05 standard, EPA states its intent to publish a proposed rule, in the near future, to amend the All Appropriate Inquiries final rule to remove the reference to the previous ASTM E1527-05 standard. The anticipated proposed rule will allow for public comment.

56 ASTM 1527-13 Although ASTM E1527-13 is not a significant departure from ASTM E1527-05, there are three noteworthy changes: (1) updates to the definitions of recognized environmental conditions (RECs) and historical recognized environmental conditions (HRECs), and the addition of a requirement to identify controlled recognized environmental conditions (CRECs); (2) addition of requirements to assess the potential for vapor intrusion; and, (3) inclusion of additional steps in the regulatory file-review process and mandatory user responsibilities.

57 Enforcement of Environmental Law in Bankruptcy

58 In re Munce’s Superior Petroleum Products Inc., 736 F.3d 567 (1st Cir. Nov. 20, 2013) Debtor Munce’s Superior Petroleum Products ("MSPP") had a long history of violating environmental regulations and refusing to pay resulting environmental fines. MSPP stored fuel in above-ground oil tanks at three of its facilities in New Hampshire without secondary containment systems, violating containment requirements and other environmental laws. New Hampshire Dep’t of Envtl. Servs. ("NHDES") notified MSPP of violations, and MSPP did not take any corrective action.

59 In re Munce’s Superior Petroleum Products Inc., 736 F.3d 567 (1st Cir. Nov. 20, 2013) In 2010, NHDES instituted a state court action seeking an injunction and civil penalties against MSPP. State court entered injunction requiring MSPP to comply or cease using tanks. When MSPP did neither, NHDES moved to hold it in contempt. While the contempt motion was pending, MSPP filed for Chapter 11. Bankruptcy petition stayed the contempt motion. NHDES moved for relief from stay. Bankruptcy court held that automatic stay did not apply to NHDES' contempt action because it was an action “for the purpose of protecting public health and safety, and the environment, and to effectuate public policy.”

60 In re Munce’s Superior Petroleum Products Inc., 736 F.3d 567 (1st Cir. Nov. 20, 2013) Once the stay was lifted, the state court granted NHDES’ contempt motion. The court gave MSPP 10 days to remove the tanks from service. After that, it fined MSPP $1,000 a day for every day of noncompliance. MSPP again did not take action. NHDES moved for an assessment of contempt penalties. The court ordered MSPP to pay $192,000 in civil penalties. NHDES moved to have fines treated as an administrative priority claim under Section 503(b) Bankruptcy Code. Under 503(b), “actual, necessary costs and expenses of preserving the estate” are entitled to priority as administrative expenses and are paid in full ahead of general creditors’ claims.

61 In re Munce’s Superior Petroleum Products Inc., 736 F.3d 567 (1st Cir. Nov. 20, 2013) MSPP argued that, unlike a compensatory fine, which can be given priority, a punitive civil fine cannot be given priority. First Circuit disagreed, citing earlier law finding that it would be “fundamentally” unfair to allow a polluter to avoid a civil penalty simply because it had filed for bankruptcy.

62 In re Munce’s Superior Petroleum Products Inc., 736 F.3d 567 (1st Cir. Nov. 20, 2013) Implications of the First Circuit decision: (1) In the First Circuit, civil penalties for environmental violations are prioritized ahead of general creditors. (a) The NHDES would receive its full $192,000 penalty before any general creditor would be paid anything. (b) This decision thus creates the potential that environmental fines could greatly impair or even eliminate the payments to general creditors.

63 In re Munce’s Superior Petroleum Products Inc., 736 F.3d 567 (1st Cir. Nov. 20, 2013) Cases in other circuits have similarly concluded that noncompensatory environmental fines should receive administrative priority: In re Chateaugay Corp., 112 B.R. 513, 525 (S.D.N.Y. 1990) (“penalties for post-petition violations would also be entitled to be treated as administrative expenses”); U.S. Dept of Interior v. Elliott, 761 F.2d 168 (4th Cir. 1985) (civil penalties assessed while debtor is operating as debtor in possession had administrative priority); In re N.P. Mining Co., 963 F.2d 1449 (11th Cir. 1992) (“when a trustee or debtor in possession operates a bankruptcy estate, compliance with state law should be considered an administrative expense”).

64 Thank you

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