Pennsylvania Manufacturers’ Association Insurance Company v. Johnson Matthey, Inc.: Multiple Trigger Doctrine and Impacts to Superfund Litigation

Posted in Articles, Contamination, Pennsylvania

The Commonwealth Court recently held that certain Comprehensive General Liability (“CGL”) “occurrence” insurance policies issued before the institution of a blanket pollution exclusion cover latent environmental contamination that occurred during the policy period, even when such contamination does not manifest until after the policy period expires. This holding identified latent environmental contamination as falling within an exception to the longstanding rule that CGL occurrence insurance policies are triggered by the first manifestation of injury. Pennsylvania Manufacturers’ Ass’n Insurance Co. v. Johnson Matthey, Inc., (Johnson Matthey), No. 330, 2017 WL 1418401 (Pa. Commw. Ct. Apr. 21, 2017).

Determining when an “occurrence” under a CGL policy is triggered by environmental contamination can have important practical implications. Insurers take the position that the “first manifestation rule” applies.  The first manifestation rule limits the occurrence to one trigger—the time the contamination first manifested.  Insureds take the position that the “multiple trigger exception” applies, covering latent contamination over a broader period of time and giving insureds access to multiple policies for a single event.  The difference in when a policy is triggered can be significant for how insureds conduct themselves and for how other PRPs (including for example, insureds’ contribution defendants) conduct themselves.

Read more from my article in The Legal Intelligencer supplement, PA Law Weekly, by clicking here.

Beware the Public Trust: New York’s Highest Court Stops Retail Expansion On Citi Field’s Parking Lot Under Public Trust Doctrine

Posted in Litigation, New York

New York courts have long held that the “public trust” doctrine precludes the use of dedicated parkland for non-park uses. The New York Court of Appeals showed just how strictly that doctrine is applied when, after many years of planning and litigation, it enjoined development of a retail entertainment complex known as Willets West in the Citi Field parking lot, the baseball stadium that is home to the New York Mets. The June 6 opinion showed that the public trust doctrine is alive and well in New York State and can create havoc for development projects on land that is located within a state or municipal park, regardless of its current use.

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Air Source Aggregation: Compression Station and Natural Gas Wells are Not A Single Source in Pennsylvania Merely Because they are Owned by Corporate Affiliates

Posted in Air, Pennsylvania

On Friday, June 2, a Pennsylvania intermediate appellate court held that air emissions from a natural gas gathering system compression station and a natural gas well pad served by that gathering system could not be aggregated for purposes of air emissions permitting because they were owned by different corporations, albeit corporate affiliates.  National Fuel Gas Midstream Corp. v. Dep’t of Envt’l Prot’n, No. 116 CD 2016 (June 2, 2017).  A different result would create a practical and conceptual problem:  a permit issued to the compression station owner would implicitly (or explicitly) control emissions from the wells, and the wells are operated by a different entity.

Under the Pennsylvania Air Pollution Control Act, 35 Pa. Stat. Ann. §§ 4001-4015, and the federal Clean Air Act, 42 U.S.C. §§ 7401-7671q, major sources of air pollution require plan approvals to construct and then permits to operate.  “Minor” sources may emit under state-only permits.  The Pennsylvania regulations authorize the Pennsylvania Department of Environmental Protection to exempt certain emission sources from regulation.  25 Pa. Code § 127.14.  DEP’s Exemption 38 exempts natural gas wells under certain conditions.  DEP Air Quality Permit Exemptions, Doc. No. 275-2101-003 (Aug. 10, 2013).  The wells at issue here were exempt.  The compression station was below the emissions threshold for a state-only permit, and sought approval under what is a streamlined “general permit,” GP-5.

Under federal regulations, multiple emitting activities constitute a single aggregated source if: (i) they are within the same major industrial classification, (ii) are contiguous or adjacent, and (iii) are under the control of the same person or common control.  40 C.F.R. § 52.21(b)(6); see also Alabama v. Costle, 636 F.2d 323 (D.C. Cir. 1979).  In this case, Parent owned Subsidiaries A and B.  Subsidiary B owned Indirect Subsidiary C.  Subsidiary A owned and operated the wells.  Indirect Subsidiary C owned and operated the compression station.  DEP contended that this corporate relationship satisfied the “common control” prong of the aggregation test simply because the Parent had ownership of A and C.  The Environmental Hearing Board took a somewhat less categorical approach than DEP, but found control because the Parent had the power to “influence” the operations of A and C.

The Commonwealth Court reversed and remanded.  The test for “control” is the ability to direct operations of the facility, not just the ability to influence them.  Absent piercing the corporate veil, the court concluded that one corporate affiliate does not have the ability to direct operations of another merely because they are both owned (indirectly) by their parent, citing a federal Superfund case, United States v. Bestfoods, 541 U.S. 51 (1998).  The Indirect Subsidiary C would receive a permit for the compression station, but Subsidiary C could not direct Subsidiary A to operate A’s wells differently.  Neither Subsidiary A nor the Parent would be permittees.  Therefore, aggregation merely on the basis of the ability to influence operations, said the court, would not be correct.

To read the full opinion, please click here.

The EPA’s Call for Identification of Rules to be Changed Results in a Majority of Comments in Support of EPA Regulation

Posted in Clean Water Act, EPA, Water

We write to follow up on last month’s blog post, GT Alert, and webinar on the April 13 issuance of a federal register notice by the U.S. Environmental Protection Agency (EPA) calling for submissions to identify regulations for repeal, replacement, or modification. The agency set a 30-day timeframe for response.

Despite that tight timeframe, the agency received about 35,000 written comments by the deadline, not including comments received in response to public meetings that were held. From a review of the comments, it appears that an overwhelming majority of commenters asked that the agency leave regulations in place, with only a smaller number of comments from industry and trade associations that generally requested fairly modest, technical changes.

How the EPA will prioritize the relatively small number of comments requesting regulatory changes remains to be seen. Via a number of executive orders, the president has called on the agency to undertake a number of sizeable regulatory reforms, including to the Waters of the United States (WOTUS) Rule, which sought to define which waters are jurisdictional under the Clean Water Act, and to the Clean Power Plan (CPP), which imposed greenhouse gas budgets on existing power plants.

Given the protracted process and extensive public comment that presaged WOTUS and the CPP, it is difficult to imagine that the EPA will be issuing proposed replacement rules any time soon. Meanwhile, a separate executive order (E.O. 13771) requires agencies to repeal two regulations for each new regulation issued – and to insure that the net compliance costs associated with new regulations are zeroed out by compliance cost reductions coming from changes to existing rules. This requirement necessarily complicates the EPA’s rulemaking task, at a time when significant budget cuts and staff reductions have been proposed.

The EPA regulatory landscape is changing, but how fast remains to be seen.

Developments in Recent NY Medical Monitoring Claims

Posted in Litigation, New York, Water

As readers of this blog know, we have been closely following developments regarding claims for medical monitoring.  (Medical Monitoring Claims in Illinois, Part 1; Medical Monitoring Claims in Illinois, Part 2.) A recent decision arising out of Hoosick Falls, New York, allowed Plaintiffs’ request for a medical monitoring fund to survive defendants’ motion to dismiss. On Feb. 24, 2016, Plaintiffs, on behalf of a putative class, brought suit against Saint-Gobain Performance Plastics Corp. and Honeywell International Inc., alleging that Defendants’ manufacturing facilities in the Village of Hoosick Falls, New York, caused groundwater contamination. Specifically, Plaintiffs alleged that Defendants’ manufacturing and disposal of products containing perfluorooctanoic acid (PFOA) caused PFOA to contaminate the municipal water system and private wells. PFOA is a chemical used to create water, oil, and grease repellency which can remain in soil and water for extended periods of time. Plaintiffs alleged that they experienced heightened blood levels of PFOA, which may cause cancer, as well as loss of property value due to the stigma of contaminated groundwater. The complaint asserted claims for negligence, private nuisance, trespass, and strict liability for abnormally dangerous activity. The complaint set forth two subclasses of plaintiffs based on their water source: (1) Municipal Water Property Damage – owners of real property in the village who receive drinking water from the municipal water supply; and (2) Private Well Water Property Damage – owners of real property in the village who receive drinking water from a privately-owned well.

Defendants brought a motion to dismiss for failure to state a claim.  Significantly, Plaintiffs sought to establish a medical monitoring program designed to fund future testing and treatment for diseases related to PFOA exposure. Defendants argued that Plaintiffs asserted a separate medical monitoring claim without alleging the existence of present physical injuries, a requisite under New York law. The Court disagreed, finding that Plaintiffs properly alleged an injury to both person and property. In particular, the Court adopted the reasoning of the Second Circuit in In re World Trade Ctr. Lower Manhattan Disaster Site Litig., holding that the heightened accumulation of PFOA in Plaintiffs’ blood levels permits a claim for negligence seeking medical monitoring damages. See 758 F. 3d 202, 213 (2nd Cir. 2014). Even if the accumulation of toxins in blood were not a sufficient injury, the Court relied on Caronia v. Philip Morris USA, Inc. to find that plaintiffs may seek medical monitoring as consequential damages for a tort alleging injury to property. 2011 WL 338425 (E.D.N.Y. Jan. 13, 2011) aff’d in part, question certified, 715 F.3d 417 (2d Cir. 2013), certified question accepted, 21 N.Y.3d 937 (2013), and certified question answered, 22 N.Y.3d 439 (2013), and aff’d, 748 F.3d 454 (2d Cir. 2014). However, the Court cautioned that the decision did not determine what Plaintiffs must prove at trial to recover consequential medical monitoring damages. Noting that the Defendants’ motion to dismiss raised “several complex and novel issues of New York law” which is “significantly muddled,” the Court certified the question for interlocutory appeal.  We will continue to follow this appeal closely.

Defendants also argued that the property damage claims based on injury to groundwater must be dismissed because the water is a public resource belonging to the state of New York, not individual residents. The Court agreed that Plaintiffs could not state a claim for relief if the only alleged injury was to the public groundwater; however, the Court found that Plaintiffs’ claims for negligence and strict liability based on property damage survived because they alleged the loss of their potable water, reduction in property value, and sought damages for remediation costs for property contamination and restoring their potable water supply.  Defendants moved to dismiss the trespass claim brought by the Private Well Plaintiffs on the basis that the Plaintiffs’ property was not injured by PFOA contamination. The Court rejected this argument, finding that the groundwater provided the medium through which the contamination moved into Plaintiffs’ private wells, thus injuring Plaintiffs’ private property. Defendants also moved to dismiss the private nuisance claim for failure to state a claim. Defendants argued that a private nuisance claim must affect only a small number of people, but Plaintiffs alleged a widespread injury. The Court agreed in part and dismissed the Municipal Water Plaintiffs’ nuisance claim, finding that the allegations of  harm suffered by “all renters and owners in Hoosick Falls” constituted a public nuisance, which only the state of its subdivision have standing to bring; however, the Private Well Plaintiffs suffered a “special loss” sufficient to maintain a private nuisance action where they had to install point of entry treatment systems on their property which requires ongoing maintenance. Because of this, the Court allowed the Private Well Plaintiffs’ nuisance claim to proceed.

New Delegation Centralizes Largest Superfund Cleanup Decisions

Posted in EPA, GT Alert, Superfunds

In a move designed to streamline approvals of and ensure consistency among the largest Superfund cleanups, EPA Administrator Scott Pruitt last week approved a new delegation of authority giving him and his yet-to-be-named deputy the final signature authority to approve large Superfund cleanups over $50 million. Prior to the revision, approval authority rested with EPA’s 10 regional administrators and the assistant administrator of the Office of Land and Emergency Management.

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Overview of Coal Ash Disposal, Regulation and Beneficial Use

Posted in Articles, Coal, Energy, Pennsylvania, Regulatory

According to the U.S. Energy Information Administration, the commonwealth of Pennsylvania is the largest generator of coal ash in the United States. Pennsylvania is home to roughly 100 coal ash disposal facilities, three of which have been classified as “high hazard” by the U.S. Environmental Protection Agency (EPA). Throughout the country, numerous electric generating facilities have been retiring coal-fired units in favor of natural gas combined cycle units. Still, many of those same electric generating plants find themselves undertaking large-scale coal ash mobilization projects resulting from decades of coal ash accumulation and catalyzed by new regulations from the EPA. With litigation both arising from, and in opposition to, the coal ash regulations, it is an area worth watching at the state and federal levels.

Read more from my article in The Legal Intelligencer supplement, PA Law Weekly by clicking here.

Perfluorinated Chemicals – Drinking Water & Fast Food Packaging

Posted in Chemicals, Water

Manufacturers, users, and distributors of PFOS and PFOA have faced litigation across the United States by plaintiffs alleging contamination of drinking water.  The claims range from personal injury to diminution of property value.  A recent study of PFAS in fast food packaging suggests possible health concerns associated with using certain PFASs in fast food packaging.  Frank Citera and Kaitlyn Maxwell provide an overview of perfluorinated chemicals in drinking water and fast food packaging here. To access their CLE webinar on this topic please visit Lawline.

Product Stewardship and Textiles

Posted in Chemicals, EPA, Proposition 65

The environmental parameters associated with textiles continue to attract both regulatory and value chain attention. In an interesting development, Vietnam just relaxed its chemical testing rules for exported textiles (e.g., textiles and apparel exported to the U.S. and EU markets), specifically for formaldehyde and aromatic amines. Formaldehyde is frequently used in treating textiles, including popular “no-iron” and “permanent press” textiles.  Aromatic amines are present in some common dyes used in textiles and include chemicals that are either known or suspected to be carcinogens.

The presence of these chemicals in textiles is relatively unregulated at the federal level in the United States, though there has been some attention at the state level. For example, formaldehyde is subject to California’s Proposition 65, and some crafts/textile stores in California post Proposition 65 warnings for their imported textiles. Washington, Maine, and Minnesota have statutes with reporting requirements for what are typically described as “high priority” chemicals, including formaldehyde, intentionally added to children’s products (though not all of these encompass apparel). There has been occasional litigation based on claims of skin irritation allegedly caused by the presence of formaldehyde in apparel.

Perhaps more importantly than formal regulation, the chemical content of apparel, including formaldehyde, receives a certain amount of attention in social media. This reverberates into market impacts, with some companies trying to leverage this into a competitive advantage by advertising “chemical-free” clothing. This leverage could increase if major buyers begin to drive chemical content requirements through their value chains. Some of the most prominent retailers, including Walmart,  have already launched initiatives to decrease or remove certain chemicals, including formaldehyde, from a range of products, including personal care, cosmetics and cleaning products. Some major buyers and brands, including Walmart, Levi Strauss, and VF have signed on to policies and standards associated with sustainable forestry and agriculture that affect the value chain for a variety of raw materials for textiles, including rayon and cotton.

Decisions by Vietnam to impose more stringent chemical content standards for apparel on its own market than it does for its strong apparel export market might increase public and retailer attention to this issue. The most likely ongoing pressure points will probably be from social media, consumers, and companies seeking to leverage this issue for competitive advantage. And even if increased federal regulation is viewed by some as less likely under the current administration, that will not restrict state regulators from taking action (the preemption provisions of the newly amended Toxic Substances Control Act  will operate, roughly speaking, in inverse proportion to the degree of EPA regulation of specific chemicals: the less active EPA is, the more freedom of movement at the state level).

EPA Solicits Comments on Regulatory Reform

Posted in Energy, Environment, EPA, GT Alert, Regulatory

On April 13, the U.S. Environmental Protection Agency (EPA) published a request for comments to aid EPA’s ongoing “Evaluation of Existing Regulations,” which seeks to identify regulations that may be appropriate for repeal, replacement, or modification. Comments must be submitted by May 15, so parties interested in taking this opportunity to help EPA identify regulations that are burdensome or otherwise undesirable need to act quickly.

This notice follows President Trump’s Feb. 24 Executive Order on Enforcing the Regulatory Reform Agenda, E.O. 13777, which outlined the new administration’s goal of alleviating unnecessary regulatory burdens. Pursuant to E.O. 13777, each federal agency must designate a Regulatory Reform Officer and establish a Regulatory Reform Task Force. EPA has already established both.

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