Massachusetts High Court Rules Global Warming Solutions Act Mandates Annual, Declining Restrictions on GHG Emissions

Posted in Environment, Greenhouse Gas, Litigation, Massachusetts, Oil & Gas, Regulatory

In a decision that will have far-reaching consequences for the Massachusetts economy, Massachusetts’ highest court has ruled that the Global Warming Solutions Act (GWSA), passed in 2008, mandates the imposition of annual, declining limits on greenhouse gases (GHG) emissions.  In Kain vs. Dept. of Environmental Protection (SJC-11961, May 17, 2016), the Massachusetts Supreme Judicial Court (SJC) ruled that the regulatory programs that the Massachusetts Department of Environmental Protection (MassDEP) had relied on to comply with the GWSA mandate were insufficient.

At issue in the case was an allegation that MassDEP failed to adopt “regulations establishing a desired level of declining annual aggregate emission limits for sources or categories of sources that emit greenhouse gas emissions.”  M.G.L. c. 21N, § 3(d).  The GWSA required that these regulations be promulgated by January 1, 2012, with an effective date of January 1, 2013.  When MassDEP did not promulgate regulations by the statutory deadline, citizens filed a petition proposing regulations establishing GHG emission limitations.

In response, MassDEP concluded that several existing state programs met the statutory requirement in Section 3(d).  Specifically, MassDEP cited its regulations limiting sulfur hexafluoride leaks, a state low emissions vehicle (LEV) incentive program, and Massachusetts’ ongoing participation in the regional CO2 cap and trade program (known as the Regional Greenhouse Gas Initiative or RGGI).  A lawsuit ensued, resulting in a trial court ruling that deferred to MassDEP’s interpretation regarding its compliance with the statutory mandate in Section 3(d).

The appeal bypassed the intermediate appellate court and proceeded directly to the SJC, the state’s highest court of revew.  The SJC concluded that the statutory language in Section 3(d) was “unambiguous” and rejected MassDEP’s interpretation that the sulfur hexafluoride leak regulations, the LEV program and state participation in RGGI satisfied the statutory mandate.  The Court ruled that MassDEP must promulgate regulations that “address multiple sources or categories of sources of greenhouse gas emissions, impose a limit on emissions that may be released, limit the aggregate emissions released from each group of regulated sources or category of sources, set emission limits for each year, and set limits that decline on an annual basis.”

The adoption of the requisite regulations is undoubtedly a major regulatory task.  The SJC remanded the matter to the trial court to enter a judgment enforcing its ruling.  A significant unanswered question is the amount of time that the trial court will allow MassDEP to comply with this ruling, and whether the trial court will retain jurisdiction over the case until the regulations are promulgated.  Drafting regulations of this complexity, conducting the appropriate stakeholder outreach and public comment process, and finalizing the regulations in the ordinary course could easily take several years.

Another interesting aspect of this case is its timing relative to various ongoing renewable energy policy debates in Massachusetts. After a lengthy and contentious debate, the Legislature recently passed a bill raising the public and private solar net metering caps from 5% of the utilities’ peak load to 8% and from 4% of utilities’ peak load to 7%, respectively.  That bill also establishes a process to gradually reduce the solar industry’s reliance on ratepayer subsidies.

In addition, the Legislature is currently debating a bill filed by the Baker Administration to promote the transmission of Canadian hydro-electric power to Massachusetts for the express purpose of meeting the GHG reduction mandates in the GWSA.  And while the Baker Administration recently concluded that the Commonwealth is on track to meet the GHG reduction goal in the GWSA of 25% by 2020, this determination has been questioned by public interest groups, including those involved in the Kain case.

So, there will be considerable scrutiny focused on MassDEP as it complies with the Kain decision and promulgates regulations imposing annual, declining emissions limitations on GHG sources or categories of sources.  Counterbalancing that legal mandate will be concerns about limiting the economic impacts to businesses in the Commonwealth.  MassDEP will need to identify those sources or categories of GHG sources (e.g., mobile sources, industrial plants, commercial and residential buildings) that must be targeted, and then ensure that the GHG emissions for those sources are reduced over time based on an annual schedule in order to achieve the GHG reduction goals in the GWSA.  This regulatory program will presumably include GHG source monitoring (or an alternative means of compliance verification for regulated sources) and enforcement if those regulated sources fail to meet the promulgated GHG reduction rates.

 

Taking Another Look at Environmental Indemnity

Posted in Articles, Contamination, Environment, Insurance, Real estate, Risk management

From Grant E. Nichols of GT Philadelphia:

For at least the past 30 years, parties involved in the purchase or sale of properties that contain environmental exposure have had to negotiate environmental indemnity agreements, either to protect assets, transfer liability, or to simply get a deal across the finish line.  However, as more properties have become insured through comprehensive environmental insurance programs, thus fundamentally changing the nature of, and obligations associated with, the environmental risks associated with that property, indemnity agreements often have not kept pace.  As environmental risk management has become more sophisticated and more central to transactions involving environmentally-contaminated real estate, so should negotiations apportioning environmental risks among various stakeholders.  This includes a more nuanced approach which recognizes that parties other than the signatories to an indemnification agreement can incur such risks.

Read more in my Legal Intelligencer/Pennsylvania Law Weekly column here.

 

 

Rejecting the Aspire Court Decision, the CFTC Proposes a ‘Private Right of Action’ Amendment to RTO-ISO Order

Posted in CFTC, Commodities, Energy, GT Alert

The RTO-ISO Order

On March 28, 2013, the Commodity Futures Trading Commission (CFTC) issued an Order (the RTO-ISO Order), which exempted certain electric energy transactions conducted in particular regional transmission organizations (RTOs) and independent system operators (ISOs) from the Commodity Exchange Act (CEA) and CFTC Regulations, with the exception of certain enumerated provisions – specifically, CFTC’s general anti-fraud and anti-manipulation authority, and intent-based prohibitions. The exempted transactions specifically enumerated in and defined by the RTO-ISO Order included “Financial Transmission Rights,” “Energy Transactions,” “Forward Capacity Transactions,” and “Reserve or Regulation Transactions” (collectively, Covered Transactions). To qualify, Covered Transactions, among other conditions, had to be offered under the authority of a tariff approved by the Federal Energy Regulatory Commission (FERC) or the Public Utility Commission of Texas. While the RTO-ISO Order set forth the above-referenced surviving CEA authority, it did not address the availability of CEA Section 22, which provides for private rights of action by plaintiffs injured by alleged violations of the CEA.

Because Section 22 was not within the specifically-enumerated sections of the CEA that survived the blanket exemption, many believed that private rights of action for alleged violations of the CEA by the entities covered by the RTO-ISO Order were thereby extinguished. Federal courts agreed.

Continue Reading >

Case Analysis: Sierra Club v. Chesapeake Operating LLC

Posted in Court Cases, Oil & Gas

On Feb. 16 the Sierra Club filed a lawsuit in the U.S. District Court for the Western District of Oklahoma against oil and gas drillers Chesapeake Operating LLC, Devon Energy Production Co. and New Dominion LLC.1

The Sierra Club claims that wastewater injection wells have contributed to cause increased earthquake activity in Oklahoma and alleges that, because “no government body is currently taking a holistic or proactive view of waste injection and its potential to induce earthquakes,” a court order is needed to require the establishment of an independent earthquake monitoring and prediction center to determine the amount of production waste that can be injected into specific wells before seismic activity occurs.

The suit also seeks an injunction ordering the three defendants to reduce the amounts of production waste being injected underground “to levels that seismologists believe will not cause or contribute to increased earthquake activity.”

The Sierra Club action followed an earlier lawsuit filed by 14 residents of Edmond, Oklahoma, against a dozen oil and gas companies. The plaintiffs in that suit claimed that saltwater disposal wells were in part to blame for the 4.3 and 4.2 magnitude earthquakes that struck near Edmond on Dec. 20 and Jan. 1.2 Two other cases involving a personal injury and a property damage claim are also making their way through the Oklahoma state courts. Those cases stem from a 5.6 magnitude quake in 2011 near the town of Prague. Continue Reading.

Ability to Challenge Agencies in Court is ‘Judicial Activism’ Both Sides Can Support

Posted in Articles, EPA, Litigation

The U.S. Supreme Court will soon decide a case that may allow federal courts to involve themselves in a greater number of public policy disputes. With that in mind, Shareholder Jerry Stouck authored his recent column for the National Law Journal discussing Hawkes Co., Inc. v. EPA, argued on March 30, which will decide whether certain types of federal agency action can be challenged in court.  Many who observed the oral argument predict the justices will vote to allow more agency actions to be challenged. To read Stouck’s column, click here.

 

Upcoming Deadlines for Biocides in the EU

Posted in Biocides, EU

In the European Union the manufacturing, import, sale, and use of chemical substances are highly regulated. Biocidal products are regulated under (EU) No. 528/2012 (EU Biocides Regulation). The EU Biocides Regulation entered into force in EU Member States on Sept. 1, 2013. However, the European legislature has provided for a gradual implementation of the rules on biocides, biocidal products, and articles that contain or have been treated with biocides (so-called “treated articles”). Producers and importers of biocides should be aware of the relevant deadlines to ensure timely compliance. The next important deadline is Sept. 1, 2016.

Existing EU Authorization Requirements for Active Substances in Biocides

Biocides are used to protect humans, animals, materials, or articles against harmful organisms (e.g., against pests and bacteria). The EU Biocides Regulation covers biocidal products and “treated articles”. It applies to substances or micro-organisms that have an effect on or against harmful organisms, and products containing those substances or micro-organisms. This is called an “active substance.” Under the EU Biocides Regulation, the active substances in biocides generally require prior authorization by the European Chemicals Agency (ECHA) if the manufacturer wants to place the biocide on the European market.

Continue Reading >

 

GT Philadelphia at the PA Environmental Law Forum

Posted in Events, Pennsylvania

Recently, lawyers from Philadelphia’s Environmental Practice Group attended the Pennsylvania Environmental Law Forum in Harrisburg, Pennsylvania. Organized by the Pennsylvania Bar Institute, the annual Forum includes educational presentations by experienced practitioners along with networking events.

Jillian Kirn gave a presentation on cooling water intake structures commonly used by industrial facilities, such as power plants, and the requirements of EPA’s “Phase II” rule issued under § 316(b) of the Clean Water Act, which regulates existing large facilities.  The objective of the § 316(b) regulations is to minimize fish mortality, a common byproduct of water intake.  Under the “Phase II” rule, covered facilities are required to perform studies to analyze their effect on aquatic populations and implement controls which are found to represent the best available technology.  The extent of controls required at an individual facility depends on the facility’s size, the nearby aquatic population, and the cost of implementing various technologies.  Just over one thousand existing facilities are subject to the rule, and the means of compliance are expected to vary based on site-specific factors.

In addition to Kirn’s presentation, Caleb Holmes gave an update on CERCLA litigation.  Holmes’ panel also included an update on the Hazardous Sites Cleanup Program (“HSCA”), Pennsylvania’s state Superfund statute.  David Mandelbaum served on the Forum’s Planning Committee and moderated a round-table discussion on ethics.

 

Massachusetts Takes Important Step Towards Clean Water Act Permitting Delegation

Posted in Clean Water Act, Massachusetts, Permitting, Regulatory, Water

Massachusetts Governor Charlie Baker has filed legislation that moves Massachusetts one step closer to a long-desired goal:  authorization to administer the Clean Water Act NPDES permitting program.  Currently, Massachusetts is one of only four states (in addition to Idaho, New Hampshire, and New Mexico) that has not been “delegated” this authority.

A number of the major federal environmental statutes seek to balance nationally consistent federal standards with local control.  Under the Clean Air Act, the Clean Water Act, the Safe Drinking Water Act, and the Resource Conservation and Recovery Act, this is accomplished by delegation of authority to state agencies to administer regulatory programs promulgated by the United States Environmental Protection Agency (USEPA).  From the regulated community’s perspective, the most important aspect of this “delegated” authority is the issuance and enforcement of permits.

In order to be delegated authority under a particular statute, a state must submit a plan for USEPA approval that details how that agency will provide the legal authority, funding, and staffing needed to carry out the federal regulatory program.  USEPA conducts a public comment process and then determines which (if any) elements of the program the state is qualified to implement.  See 40 C.F.R. Part 123.

However, USEPA retains certain rights, including the right to comment on draft permits, to take additional enforcement actions if it deems the state’s enforcement efforts to be inadequate, and in extreme cases to revoke delegation if it concludes that the state’s permitting, public participation, or enforcement programs are inadequate.  Revocation of delegated authority is not a hypothetical power – for instance, there was a recent effort to revoke Vermont’s delegated authority under the Clean Water Act.

In Massachusetts, the state has been delegated authority under the Clean Air Act, the Safe Drinking Water Act, and the Resource Conservation and Recovery Act, but not the Clean Water Act.  While the Massachusetts Department of Environmental Protection (MassDEP) is currently a co-signatory on the roughly 3,000 NPDES permits in the Commonwealth (in addition to the stormwater discharge general permits), there has been growing interest to have MassDEP assume authority over the NPDES program.  In particular, the interactions between MassDEP and USEPA over the regulation of stormwater discharges has proven contentious and highlighted the importance of local control over regulatory matters.

In response to legislation filed in 2012, MassDEP prepared a report evaluating the advantages and disadvantages of delegation.  The Baker Administration is now taking the next step by filing legislation confirming MassDEP’s statutory authority to administer the NPDES permitting program.  While this legislation has received strong support from municipalities eager for more creative regulatory approaches, environmental groups have raised concerns about whether delegation could undermine water quality in the Commonwealth.

If the Legislature passes the bill, MassDEP will prepare a plan for public comment and review and approval by USEPA.  That process will take several years, but the Baker Administration will likely seek to complete the delegation process before the end of its first term in 2018.

Glyphosate Litigation Primer

Posted in Litigation, Proposition 65

Introduction

Plaintiffs’ lawyers in several states are investigating cases of non-Hodgkin lymphoma and other forms of cancer in individuals exposed to the widely used herbicide glyphosate. These investigations follow on the heels of a 2015 report by a working group at the International Agency for Research on Cancer (IARC), which concludes that glyphosate is probably carcinogenic in humans.  At least five product liability lawsuits already have been filed, including one in California where the court recently denied defendant’s motion to dismiss.  Manufacturers, distributors and users of glyphosate likely will see an increasing number of these cases and should be prepared to respond.

Background

Glyphosate is one of the most widely used herbicides in the world, with a broad range of agricultural, commercial and even household applications. On July 29, 2015, an IARC task force published a monograph concluding that there is sufficient scientific evidence of glyphosate’s carcinogenicity in experimental animals and that the herbicide also caused DNA and chromosomal damage in human cells.  Based on its review, the task force concluded that glyphosate probably is a human carcinogen and recommended that the Joint Meeting on Pesticide Residue (JMPR) reevaluate glyphosate, along with two other pesticides.  JMPR is set to reevaluate glyphosate at its next meeting in May 2016.

The Joint Glyphosate Task Force, LLC (JGTF), which has more than 20 corporate members with a glyphosate technical registration in the U.S. or Canada, criticized the IARC report, noting that the monograph contained no new studies or data and pointing out that regulatory agencies around the world have conducted thorough and science-based risk assessments on glyphosate, concluding that it was not a human carcinogen.

In September 2015, the California Environmental Protection Agency’s Office of Environmental Health Hazard Assessment (OEHHA) issued a notice of intent to list glyphosate as a substance known to cause cancer under California’s Prop 65. According to OEHHA, California law requires the listing based on the IARC report.  In early 2016, Monsanto filed a lawsuit against OEHHA seeking to block the proposed listing.

In April 2016, the Alliance for Natural Health published a study finding that 10 out of 24 common breakfast foods contained detectable levels of glyphosate that may result in the consumer ingesting more than EPA believes to be safe. The study concludes by recommending further evaluation by the FDA and EPA.

Existing Litigation

We are aware of five product liability lawsuits that have been filed following the IARC report. Three are pending in Delaware, one is in Hawaii and another in California.  The California case is pending in the Northern District, where a federal judge issued a decision on April 8, 2016 denying the motion to dismiss.  The court’s order rejects preemption arguments that were based on the Federal Insecticide, Fungicide, and Rodenticide Act and the EPA’s approval of glyphosate.  The ruling likely will embolden plaintiffs’ counsel and lead to more cases being filed.  Food producers also could be a litigation target based on recent research finding glyphosate residue on common foods.  At least three class actions already have been filed against a major manufacturer of breakfast cereals, claiming that the product fails to disclose that it contains glyphosate.  In addition, if glyphosate is added to the Prop 65 list, litigation is sure to follow, and many food manufacturers may need to consider adding warnings to products sold in California.

Texas Supreme Court strikes down Houston air quality ordinances

Posted in Air, Texas

On Friday, the Texas Supreme Court struck down Houston’s air quality ordinances, ruling the city had overstepped its authority to police local polluters.  In an 8-1 decision, the justices ruled that local ordinances requiring businesses to pay registration fees and allowing criminal sanctions for emissions violations were inconsistent with state law. The justices wrote in their opinion that if the Texas Commission on Environmental Quality (TCEQ) chose not to take enforcement action against a company, it did not give the city the legal authority to step in.  “By authorizing criminal prosecution even when the TCEQ determines an administrative or civil remedy — or even no penalty at all — to be the appropriate remedy, the city effectively moots the TCEQ’s discretion and the TCEQ’s authority to select an enforcement mechanism,” the opinion states. “This is impermissible.” This decision appears to be another episode in the continuing jurisdictional struggle in Texas over state and local regulation of environmental issues.

 

LexBlog