As noted previously, the Ninth Circuit found, in Arizona v. City of Tucson, 761 F.3d 1005 (9th Cir. 2014), that state government agencies are not afforded the same level of deference as EPA on the question of whether a CERCLA consent decree is fair, reasonable and consistent with CERCLA. Arizona filed a petition for writ of certiori, and 10 states filed an amicus brief in support. Yesterday, the Supreme Court denied Arizona’s petition for cert. For an in-depth analysis of the Ninth Circuit decision and its implications, please review my recent column for the Pennsylvania Law Weekly.
On September 30, 2015, the United States Environmental Protection Agency (“EPA”) finalized a proposed rule to regulate wastewater discharges from power plants. The new rule sets limits on dissolved pollutants permitted in these discharges, and focus on mercury, selenium, and arsenic—toxic metals previously unregulated in this context.
Since the 1980s, air pollution controls on power plants have improved greatly. Scrubbers installed to comply with Clean Air Act requirements have significantly reduced air emissions, but divert the metals and other pollutants captured at the smokestacks to wastewater streams. Regulation of this wastewater has not been updated accordingly. Since the last revision, in 1982, wastewater has only been controlled for suspended solids, not dissolved pollutants. A 2009 EPA study revealed these shortcomings and prompted the Agency to develop new regulations.
The finalized rule applies to all steam electric power plants, except for those smaller than 50 megawatts in production capacity, and oil-fired plants. Coal-fired plants are expected to be the most heavily affected, and new coal and petroleum coke plants are subject to additional, more stringent controls. Out of approximately 1,080 steam electric power plants in the U.S., 134 are expected to require new investments in order to comply with the regulations.
Along with effluent limits on toxic metals and dissolved solids, the rule establishes zero discharge limits on pollutants in ash transport water and flue gas mercury control wastewater. Plants will have to utilize chemical or biological treatment to achieve even stricter limits on pollutants in flue gas desulfurization wastewater. The regulations will take effect in 2018, and compliance will be phased in through 2023.
On September 15, the Eighth Circuit reversed the district court’s order certifying a class of property owners who sought nuisance based damages and injunctive relief. In Smith v. ConocoPhillips Pipe Line Co., No. 14-2191, 2015 WL 5332450 (8th Cir. Sept. 15, 2015) the Court concluded that there was no evidence showing that class members were commonly affected by contamination on their property. This decision has important implications for defeating class certification on commonality grounds in toxic tort cases where the class fails to have any proof of widespread contamination throughout the class’s property.
A leak in an existing pipeline was discovered in a small Missouri town in 1963 and repaired, but one hundred barrels of leaded gasoline leaked and had not been recovered from the site. In 2002, a town resident contacted defendant, the successor in interest, about gasoline odors in his home. An investigation of well water used by residents showed the presence of certain chemicals at levels three times above the permissible limit. The defendant purchased the homes on and around the contamination site and began working with the Missouri Department of Natural Resources to identify and fence in the contamination. The defendant later demolished the homes on contaminated properties, removed 4000 cubic yards of soil, and set up a monitoring system to track the spread of contamination.
Property owners within a 1.1 mile radius of the contamination site filed a lawsuit seeking nuisance damages and injunctive relief for one putative class and medical monitoring expenses for a second putative class. The district court refused to certify a medical monitoring class because plaintiffs offered no evidence of actual exposure to toxic chemicals. The district court certified the first class based on evidence that a pollutant was found at a property 0.25 miles from the contamination site, despite the fact that the pollutant found had not been present at the contamination site.
The defendant argued the class could not state a nuisance claim without actual proof of contamination on the class members’ property. To determine whether the putative class suffered a common injury to sustain a nuisance claim, the Eighth Circuit relied on the Fourth Circuit’s decision in Adams v. Star Enter., 51 F. 3d 417 (4th Cir. 1995) (finding fears of contamination spread and decrease in property values insufficient to recover for nuisance claim). The discovery and testing conducted on the putative class’s property did not support the class’s fear of contamination spreading and harming property values. The court concluded that the class fear of contamination spreading, without any proof, was not a sufficient injury to support a nuisance claim. Finding the district court abused its discretion, the 8th Circuit reversed the class certification order and remanded for further proceedings.
When administrations change, so does policy. That may result in an agency changing its mind. On the federal level, that change — particularly a change in a factual finding — will be subject to review under the Administrative Procedure Act.
The Ninth Circuit recently considered such a change in position over whether the Tongass National Forest in Alaska ought to be exempt from the “Roadless Rule,” and its “roadless values” left to protection under the Tongass’s individual forest plan. Organized Village of Kake v. U.S. Dept. of Agriculture, No. 11-35517 (9th Cir. July 29, 2015)(en banc). This was a dispute that has been going on since the transition from the Clinton Administration to the Bush Administration. Perhaps that alone is a lesson. More significantly, the majority suggests that outgoing administrations can insulate their policy choices to some extent by couching them as factual findings. Factual findings appear to require more of a basis to undo. That may have importance as we come to another transition.
This GT Alert provides information regarding the publication of the General Guidelines for government officials that participate in government contracts and issuance of licenses, permits, authorizations and concessions.
The federal government in light of certain recent events in Mexico is trying to reduce conflicts of interest and corruption in connection with government contracts, licenses, permits and concessions.
The Ministry of the Public Function (Secretaría de la Función Pública) (SFP) issued on Aug. 20, 2015, the General Guidelines for government officials that participate in government contracts and issuance of licenses, permits, authorizations and concessions and those who supervise public works (the Specific Government Officials).
Notwithstanding that the coordinated regulatory agencies on energy matters, such as the Energy Regulatory Commission (Comisión Reguladora de Energía) and the National Hydrocarbons Commission (Comisión Nacional de Hidrocarburos), already have strict codes of conduct, companies such as CFE and PEMEX that have codes of ethics and codes of conduct that are different from those in the new General Guidelines, will have to modify their procedures to comply with the new strict Guidelines.
The Clean Water Rule, recently promulgated by the United States Environmental Protection Agency (USEPA) and the United States Army Corps of Engineers (Corps), continues to generate controversy, confusion and regulatory uncertainty. Following decades of rulemakings and legal challenges over the scope of the Clean Water Act’s (CWA) jurisdiction, the Clean Water Rule is the most recent administrative attempt to define what constitutes “waters of the United States,” the term Congress used to set the jurisdictional threshold for regulation under the CWA. Published on June 29th, 2015with an effective date of August 25th, 2015, the rule sets forth six categories of waters and waterbodies regulated under the CWA, and also listed natural and man-made features that are specifically exempted from regulation. (See our earlier post for a more detailed discussion of the Clean Water Rule).
Unfortunately, the regulatory framework of the Clean Water Rule has preciptated further controversy and litigation. Twenty-eight states, various trade and business associations, individual companies and environmental groups sued to challenge the Clean Water Rule. The release of internal Corps memoranda questioning the legality of certain elements the final Clean Water Rule has encouraged litigants to pursue these challenges. Their cases have been filed in various federal district and appeals court around the country, creating uncertainty as to how and when those challenges may be resolved, and thus, whether entities should use the Clean Water Rule’s new jurisdictional analysis in their planning.
A number of these lawsuits have been consolidated in the Sixth Circuit Court of Appeals. However, as of last week, several cases were pending in federal district courts. Two of those district courts (Southern District of Georgia and Northern District of West Virginia) just ruled that jurisdiction over suits challenging the Clean Water Rule resides exclusively in the Circuit Court of Appeals and dismissed those cases for lack of jurisdiction.
Meanwhile, a federal district court in North Dakota not only ruled that it retains jurisdiction over a challenge to the Clean Water Rule, but proceeded to enjoin the rule’s implementation. The court held that a preliminary injunction was warranted because, based on the record before it, the plaintiffs (13 states) would likely be able to prove that USEPA and the Corps “violated its Congressional grant of authority in its promulgation of the” Clean Water Rule and “had failed to comply with [the Administrative Procedures Act] when promulgating the” Clean Water Rule.
In response to this ruling, USEPA issued a statement that the agency interpreted the ruling as applicable only in the 13 states (North Dakota, Alaska, Arizona, Arkansas, Colorado, Idaho, Missouri, Montana, Nebraska, Nevada, South Dakota, Wyoming and New Mexico) that are plaintiffs in that case. The government will certainly appeal this ruling to the Eighth Circuit Court of Appeals, and seek to have the injunction dissolved and the case dismissed for lack of jurisdiction. In the meantime, as a result of this injunction and USEPA’s interpretation of its applicability, different jurisdictional standards now apply in different states.
Property owners and other regulated entities in those 13 states face continued uncertainty as to the scope of CWA jurisdiction. According to USEPA’s statement, the jurisdictional guidance issued by USEPA and the Corps in 2008 will remain in effect in those states pending resolution of that case. At this point, it not possible to determine how long that might take. USEPA and the Corps have offered no further guidance for persons filing permit applications or requesting jurisdictional determinations under the CWA. For instance, how will the Corps handle applications involving interstate waters extending between states that are and are not subject to the injunction (e.g., Louisiana and Arkansas)? If an applicant prepares and files an application relying on the 2008 guidance, will that applicant be required to prepare a new application if the injunction issued by the North Dakota federal district court is overturned before the permit issued?
Of course, suspending implementation of the Clean Water Rule nationally until all of these legal challenges have been resolved would remove much of the current confusion and uncertainty surrounding the Clean Water Rule. But, in the face of the increasing partisanship surrounding the Clean Water Rule, that sensible approach seems highly unlikely. Property owners and other regulated entities have been left without any clear regulatory guidance for navigating through these uncharted waters and, for the foreseeable future, will need to add these new complexities to an already complicated regulatory scheme when evaluating CWA jurisdictional issues.
Greenberg Traurig will continue to monitor judicial, administrative and legislative developments relating to the Clean Water Rule to assist our clients with responding to this evolving issue.
The Third Circuit recently determined that EPA acted within its statutory authority in publishing the Chesapeake Bay TMDL in American Farm Bureau Federation v. United States Environmental Protection Agency, No. 13-4079 (3d Cir. July 6, 2015). My column for the Pennsylvania Law Weekly discusses the decision and the implications for Pennsylvania, a state that did not provide reasonable assurance to EPA that it would be able to meet target pollutant limitations during the drafting of the TMDL.
Read Third Circuit Upholds EPA’s Authority for Chesapeake Bay TMDL, 38 Pa. L. Weekly 760 (Aug. 18, 2015), by clicking here.
Initial Decision Overview
On May 15, 2014, FERC set a hearing to address whether BP violated FERC’s anti-manipulation rules and Section 4A of the NGA and to make certain factual findings regarding the application of the FERC’s Penalties Guidelines. After hearing (and nearly seven years since the alleged violations), and consistent with the OE’s allegations, on Aug. 13, 2015, Presiding Administrative Law Judge (ALJ) Carmen Cintron issued an Initial Decision in BP America, Inc., et al, 152 FERC ¶ 63,016 (2015), concluding that BP America Inc., BP Corporation North America Inc., BP America Production Company, and BP Energy Company (collectively, BP) violated Section 1c.1 of the Commission’s anti-manipulation regulations 18 C.F.R. § 1c.1 (2014), and section 4A of the NGA with respect to its trading of next-day, fixed-price natural gas at Houston Ship Channel (HSC) from Sept. 18, 2008, through Nov. 30, 2008 (Investigative Period).
Alleged Violations: Changing Trading Patterns
Despite BP’s arguments to the contrary, the Presiding ALJ found that OE Staff had met its burden of proof and concluded that “BP, through the Texas team, manipulated the market by selling next-day, fixed, price natural gas at HSC during the Investigative Period, in such a way that they managed to suppress the Gas Daily index and benefit their financial positions.” Judge Cintron noted, “[t]heir financial positions benefited from the Gas Daily index for HSC being lower than the index at Henry Hub.” In concluding that BP engaged in market manipulation, the Presiding ALJ stated “[t]his is a classic case of physical for financial benefits.” She agreed with FERC Enforcement Staff’s assertion that BP’s Texas team of traders “directly used a scheme to defraud, engaging in uneconomic trading in the physical markets at the HSC” during the two and a half month Investigative Period in 2008.
The Occupational Safety and Health Administration (OSHA) proposes to amend its existing exposure limits for occupational exposure in general industry to beryllium and beryllium compounds and to promulgate a substance-specific standard for general industry regulating occupational exposure to beryllium and beryllium compounds. In a proposed rule published on Aug. 7, 2015, OSHA proposes a new permissible exposure limit (PEL). Comments must be submitted by Nov. 5, 2015.
The proposed rule would reduce exposure limits to one-tenth of the amount currently allowed. Currently, OSHA’s eight-hour permissible exposure limit for beryllium is 2.0 micrograms per cubic meter of air. OSHA’s proposed standard would reduce the eight-hour permissible exposure limit to 0.2 micrograms per cubic meter. The proposed rule contains several ancillary provisions, including requirements for exposure assessment, personal protective clothing and equipment (PPE), medical surveillance, medical removal, training, and regulated areas or access control.
Earlier this month, the Federal Energy Regulatory Commission (FERC) issued an Order Assessing Civil Penalties against City Power Marketing, LLC (City Power) and its founder and sole owner, K. Stephen Tsingas (collectively, Respondents) for violating section 222 of the Federal Power Act (FPA) and section 1c.2 of the Commission’s regulations, which prohibit energy market manipulation.
According to FERC, Respondents entered into fraudulent “no risk” Up-to-Congestion (UTC) trades in PJM’s market to earn excessive amounts of Marginal Loss Surplus Allocation (MLSA) payments made to transmission customers. The Commission also found that City Power and Mr. Tsingas, in writing and orally, denied the existence of relevant and material instant messages (IM) when responding to the Office of Enforcement (OE) Staff’s (Staff) investigation in violation of section 35.41(b) of the Commission’s regulations, which prohibits a seller, such as City Power, from submitting false or misleading information or omitting material information to the Commission and its Staff unless it exercises due diligence to prevent such occurrences.