U.S. EPA Settles Public Interest Groups’ Challenge to Industrial Stormwater Multi-Sector General Permit

Posted in Clean Water Act, EPA, Stormwater, Water

U.S. EPA recently entered into a settlement agreement with public interest groups regarding stormwater permitting requirements that will likely have significant consequences to industrial stormwater dischargers throughout the U.S. 

In states not authorized to issue Clean Water Act permits (currently Massachusetts, New Hampshire, Idaho and New Mexico), USEPA retains responsibility for regulating stormwater discharges associated with industrial activity.  In most instances, these industrial stormwater discharges are authorized and regulated pursuant a series of general permits that are collectively referred to as the Industrial Stormwater Multi-Sector General Permit (MSGP).

After the U.S. EPA reissued the Industrial Stormwater MSGP in June 2015, public interest groups filed lawsuits challenging the permit as failing to adequately protect waterbodies. Last week, the government and the plaintiffs reached a settlement agreement which, while leaving the current Industrial Stormwater MSGP unchanged, will have long-term consequences for industrial stormwater dischargers in the four nondelegated states, as well as in the delegated states (which use the Industrial Stormwater MSGP as a template for their state stormwater permits).

The settlement obligates the U.S. EPA to take a number of actions in connection with reissuing the Industrial Stormwater MSGP at the end of its five-year term. Those actions include funding a study to be conducted by the National Research Council (NRC) which will:

  1. Evaluate the effectiveness of the current benchmark monitoring provisions in the Industrial Stormwater MSGP;
  2. Evaluate the current numeric retention standards and the relative merits of infiltration versus discharge treatment for improving water quality; and
  3. Prioritize industry sectors for the development of numeric effluent limitations or other stormwater control measures, as well as evaluate the need for additional monitoring requirements in certain situations (e.g., discharges to impaired waterbodies).

The target date for completing the NRC study is August 2018, and the U.S. EPA has agreed to consider the NRC’s recommendations when drafting the next version of the Industrial Stormwater MSGP for reissuance. The U.S. EPA has also agreed to evaluate effluent limitations from other jurisdictions prior to finalizing the effluent limitations in the revised Industrial Stormwater MSGP.

Equally important, the settlement agreement establishes a new three-tier structure for responding to exceedances of the benchmark monitoring thresholds. This new structure will require permittees to take more aggressive action (Additional Implementation Measures) to respond to benchmark monitoring exceedances.

Other significant requirements in the settlement agreement include: (i) potentially delaying authorization to discharge stormwater if the facility is subject to a pending stormwater enforcement action (including any citizens suit); (ii) potentially prohibiting stormwater discharges from surfaces paved with coal tar sealant; and (iii) potentially expanding monitoring requirements for discharges to impaired waterbodies.

Finally, the settlement agreement obligates the U.S. EPA to pay $165,000 in attorneys’ fees to the plaintiffs.

Industrial operations that currently discharge, or may in the future discharge, stormwater should recognize that this settlement agreement seeks to ensure that the next iteration of the Industrial Stormwater MSGP will have substantially more stringent stormwater monitoring and control requirements. Members of the regulated community should start to plan for that possibility as they evaluate and update their stormwater management systems. Likewise, they should also anticipate the need to participate vigorously in the public comment process that will precede issuance of the next Industrial Stormwater MSGP to ensure that the U.S. EPA has a complete and balanced administrative record to guide its regulatory decision-making.





Court Weighs In on the ERA After ‘Robinson Township’

Posted in Court Cases, Natural Resources, Pennsylvania, State & Local

The Commonwealth Court of Pennsylvania recently denied a petition seeking declaratory and mandamus relief to require the Pennsylvania Public Utility Commission and a group of executive government officials to regulate greenhouse gases consistent with Article I, Section 27 of the Pennsylvania Constitution.  Funk v. Wolf, No. 467 M.D. 2015 (Pa. Commw. Ct. July 26, 2016).  In 2013, the plurality opinion in Robinson Twp., Washington Cnty. v. Pa. Pub. Util. Comm’n, 83 A.3d 901 (Pa. 2013), created uncertainty as to how state government actors were expected to apply Article I, Section 27, commonly referred to as the Environmental Rights Amendment.

The Commonwealth Court doubled-down on a finding that the Court is not bound by the plurality opinion in Robinson Township regarding judicial review of government decisions that implicate the Environmental Rights Amendment.  The Court returned to the traditional three-prong test.

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

Independent Scientific Panel Faults the EPA’s Landmark Hydraulic Fracturing Study

Posted in Chemicals, Environment, Hydrofracking, Pennsylvania, Texas

In a detailed, 180-page report released Aug. 11, the EPA’s Science Advisory Board (SAB) faulted the clarity and conclusions of the agency’s landmark study on the environmental impacts of hydraulic fracturing, the high-pressure injection of water, sand and chemicals to break open shale and other “tight” geologic formations to release gas and other hydrocarbons.

In that study, formally dubbed “Assessment of the Potential Impacts of Hydraulic Fracturing for Oil and Gas on Drinking Water Resources (External Review Draft)” and released in June 2015, the EPA famously concluded that it “did not find evidence that these [hydraulic fracturing] mechanisms have led to widespread, systemic impacts on drinking water resources in the United States.”

That conclusion, according to the independent technical review panel of scientists from academia, industry and environmental groups, was not adequately supported by the limited evidence the EPA gathered in carrying out its study: “The SAB finds that the EPA did not support quantitatively its conclusion about lack of evidence for widespread, systemic impacts of hydraulic fracturing on drinking water resources, and did not clearly describe the system(s) of interest (e.g., groundwater, surface water), the scale of impacts (i.e., local or regional), nor the definitions of ‘systemic’ and ‘widespread.’”

The SAB echoed this critique throughout its report, faulting, for example, the EPA’s conclusion that spills of hydraulic fracturing fluid had not reached groundwater as “supported only by an absence of evidence rather than by evidence of absence of impact.” The Board called on the EPA to make multiple textual corrections, to seek data from other sources and to explain the failure to include prospective case studies and status updates on federal and state investigations into alleged hydraulic fracturing impacts in Dimock, PA, Pavillion, WY and Parker County, TX.

The Board’s critique was not unanimous, however. Four Board members filed a written dissent, finding that the EPA’s conclusion regarding a lack of “widespread, systemic impacts” was “clear, unambiguous, concise, and does not need to be changed or modified.”

The agency has yet to indicate how it plans to respond to the SAB report. The President sought $12.1 million in the FY 2016 budget for research on hydraulic fracturing, with $4 million earmarked for responding to comments received from the SAB and the public. In light of the SAB’s far-ranging critique, it is not clear whether that funding will suffice.

The Certainties and Uncertainties of EPA’s Civil Penalties Increases

Posted in Articles, EPA

Recent legislation and an even more recent U.S. Environmental Protection Agency (EPA) rulemaking will cause civil monetary penalties for violations of federal environmental laws to increase significantly, beginning Aug. 1; subsequently, penalties will increase annually to track inflation. President Obama signed the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 on Nov. 2, 2015, (Section 701 of Public Law 114-74). This law created a mandate for all federal agencies to adjust civil monetary penalties upwards to match inflation, both initially in the summer of 2016 and annually thenceforth. Penalty adjustment tracking inflation has been required since 1990, but adjustments have been minor and have not kept pace with the actual rate of inflation. The Improvements Act was passed to give this requirement teeth.

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


New York State Regulator Finalizes Definitions Under Amended Brownfield Program Relating to Eligibility For Tangible Property Credits For New York City Brownfield Projects

Posted in Brownfields, Legislation, New York, Regulatory, Uncategorized

On July 29, the Department of Environmental Conservation (DEC) adopted a new rule for the Brownfields Cleanup Program (BCP) to effectuate the brownfield amendments passed by the Legislature last year. Under amendments to the BCP passed in connection with the executive budgeting process, the Legislature sought to limit the availability of certain tangible property tax credits in New York City to Brownfield properties that are: (i) located in an En-Zone as defined by the New York State Department of Labor; (ii) slated for use for affordable housing; (iii) are “upside down” properties where the cost of remediation will exceed the projected value of the remediated properties; or (iv) are “underutilized.” The new rule helps to clarify the scope of some of those eligibility requirements, namely the affordable housing and underutilized categories.

The rule—which provides the definitions for “affordable housing,” “underutilized,” and “brownfield site”—was originally proposed by the DEC on June 10, 2015, and received extensive public comment through Aug. 29. After incorporating additional concerns, the current rule was noticed for additional comments on March 9, 2016; because there were only minimal clarifications provided for the definition of “underutilized,” the slightly amended March 9 proposed rule was adopted, effective Aug. 12, 2016.

The rule itself provides four definitions that end up providing the contours of the tax credit:

  • “Brownfield site” was redefined to comport with the definition provided by the 2015 amendments, meaning “any real property where a contaminant is present at levels exceeding the soil cleanup objectives or other health-based or environmental standards, criteria or guidance adopted by the Department that are applicable based on the reasonably anticipated use of the property, in accordance with applicable regulations.” There were no significant changes between the proposed rule and the adopted rule.
  • Under both rules, “Affordable housing project” was defined as “a project that is developed for residential use or mixed residential use that must include affordable residential rental units and/or affordable home ownership units.” Additionally, projects must be subject to a federal, state, or local affordable housing program.
    • In a rental project “a percentage of the residential rental units in the affordable housing project to be dedicated to tenants at a defined maximum percentage of the area median income based on the occupants’ households annual gross income.”
    • In an ownership project, the project must “set[] affordable units aside for homeowners at a defined maximum percentage of the area median income.”
  • The primary changes between the originally proposed rule and the adopted rule came in the definition of “underutilized.” Under both definitions, underutilized property means nonresidential “real property on which no more than 50 percent of the permissible floor area of the building or buildings is certified by the applicant to have been used under the applicable base zoning”
    • The original rule applied the same requirements for all nonresidential real property—property “other than residential or restricted residential”—regardless of the type of proposed use. Under the proposed rule, additional gradation was added for the distinction between primarily industrial projects and primarily commercial projects. To qualify, the proposed use of a property must be either
      • The 75 percent industrial; or
      • 75 percent of commercial and industrial combined.
    • The new rule does not apply the same requirements for industrial properties, which previously had to have a full showing of tax delinquency or structural deficiencies. Now, only a property with proposed commercial uses must show that it would not be feasible to develop the project without substantial government assistance and that it meets one of the following conditions:
      • property tax payments have been in arrears for at least five years immediately prior to the application;
      • a building is presently condemned, or presently exhibits documented structural deficiencies, as certified by a professional engineer, which present a public health or safety hazard; or
      • There are no structures.
    • The time frame for nonuse—the certification by the municipality that no more than 50 percent of the permissible floor area has been used under applicable zoning—has been reduced from five (5) years to three (3) years.

The revision to the definition of “underutilized” is a modest improvement to DEC’s prior definition, under which few or no properties would likely have qualified. However, these modest changes still do not remove the significant hurdles an applicant for any commercial development would face in qualifying for tangible property Brownfield credits in New York City. The definition still curiously defines current underutilization of a property by focusing on future end use, which makes little sense as it seems that the future use of a property should not be determinative of whether a property’s current condition is underutilized. The definition appears to show that DEC does not want to provide tangible property credits to residential projects within the City of New York, and wants to make it extremely challenging for commercial developments to obtain the tax credit as well. The requirement that an applicant convince the regulator that it has met a vague standard – that the project would not be feasible to develop without substantial government assistance – is a poison pill likely to deter most applicants from even attempting to obtain tax credits for nonindustrial or nonaffordable housing projects, which may have been the agency’s intent by including such a vague and onerous standard within the definition. In the event that an applicant could surmount the biggest hurdle – establishing that the project would not have been developed without “substantial” government assistance – the remaining requirements would not appear to be difficult to satisfy for any “soft” development site that is underbuilt pursuant to existing zoning. In such case it would appear that demolition of any structures at the project site would trigger eligibility as long as an applicant could demonstrate that less than 50 percent of the permissible floor area had been used prior to demolition.

CNH Issues Bidding Guidelines and Agreements for the First Pemex Farm-Out (Trion Project)

Posted in Energy, GT Alert, Oil & Gas

From Jorge Aleman Juarez  of GT Mexico City and  Derek J. Anchondo of GT Houston:

On July 27, 2016, the Commissioners of Mexico’s National Hydrocarbons Commission (the CNH) held a meeting to discuss and approve the invitation to bid, the Bidding Guidelines, and the exploration and production license agreement (the License Agreement) for the selection of the partner(s) for PEMEX Exploration and Production (PEP) for the exploration and production of hydrocarbons in deep waters in the Trion field through the first farm-out to be carried out by PEP.

The Trion field is located within the Perdido area offshore the Gulf of Mexico, which crosses the border into both the United States and Mexico.  It is located 39 Km from the nautical border of the United States and is near the “Great White” field.  Therefore, it is expected that Trion may have similar production capabilities.  Trion has a surface of 1,284 km2 (797.8 miles2), and, according to the information provided by the CNH, the field has a depth of 2,090 to 2,570 meters (6,856 to 8,431 feet).  PEP has previously drilled two oil and gas wells – Trion 1 and Trion 1DL – within the Trion area and, according to the CNH, has already conducted 3D seismic studies in the entire area.  According to PEP, the Trion area has certified 3P reserves of approximately 485 MMBOE.

Read more here.

CEQ Issues Measured Final Guidance for Federal Agencies in their Consideration of GHG Emissions in NEPA Reviews

Posted in Energy, Federal Regulation, FERC, Greenhouse Gas, NEPA, Oil & Gas

On Aug. 1, 2016, the Council on Environmental Quality (CEQ) issued its Final Guidance for Federal Departments and Agencies on Consideration of Greenhouse Gas Emissions and the Effects of Climate Change in National Environmental Policy Act (NEPA) Reviews. CEQ issued the guidance in an endeavor “to provide greater clarity and more consistency in how agencies address climate change in the environmental impact assessment process.”  While this Alert focuses on NEPA reviews performed by the Federal Energy Regulatory Commission (FERC) of natural gas pipeline and liquefied natural gas projects, it is also instructive to companies contemplating the construction or financing of any major energy or infrastructure project.

Read more here.

Army Corps’ Jurisdictional Determinations Are Immediately Appealable

Posted in Articles, Clean Water Act, Pennsylvania, Water

As previously covered by this blog, on May 31, in a unanimous ruling, the eight-member U.S. Supreme Court held that a final determination by the U.S. Army Corps of Engineers (Army Corps) as to whether a property contains “waters of the United States,” subject to Clean Water Act regulations, is a final agency action subject to judicial review under the Administrative Procedure Act, as in U.S. Army Corps of Engineers v. Hawkes, 578 U.S. (2016).

The Clean Water Act prohibits the discharge of pollutants without a permit into “navigable waters,” which the act further defines as “waters of the United States,” 33 U.S.C. Sections 1311(a),1362(7),(12). Many development projects result in the discharge of pollutants into waters of the United States. When a landowner seeks to develop his land, he can proceed without a permit, but may instead desire certainty that he will not be subjected to civil or criminal penalties for violating the Clean Water Act by illegally discharging pollutants into waters of the United States. He can do so by identifying and delineating wetlands early in the project planning process, and verifying those delineations with the Army Corps.

Read more on the implications of this ruling for Pennsylvania in my Legal Intelligencer/Pennsylvania Law Weekly column here.

Brexit: Environmental Law Implications for the Chemicals Sector

Posted in Air, Climate Change, Contamination, Energy, Environment, EU, GT Alert, International, Manufacturing, Waste, Water

This note addresses the possible legal impact of Brexit on the chemicals sector.  It is one of a series of GTM Alerts designed to assist businesses in identifying the legal issues to consider and address in response to the UK’s referendum vote of 23 June 2016 to withdraw from the European Union.   While Brexit has the potential to impact significantly upon the regulatory environment within which companies in the chemical sector operate, it is too early to determine with any certainty the precise nature of that impact.  It is important to note, however, that the UK will remain a member of the EU, and all existing and future EU laws will apply in the UK, until the date of the UK’s exit.  UK-established companies will continue to be subject to EU law at least until the UK’s formal withdrawal from the EU is complete.  This will take some time, for the reasons set out below.

The Implementation of the Brexit Result

There is presently little doubt that the UK will eventually exit the EU.  The referendum result itself was only advisory – it produced a political, as opposed to legal, obligation for the UK to leave the EU – but it seems clear that the UK government continues to be committed to honouring the wishes of the British electorate.    Before exiting, the UK needs to go through the exit procedure set out in Article 50 of the Treaty on European Union, starting with notification to the European Council of its decision to leave the EU.  The new UK Prime Minister, Theresa May, appointed on 13 July 2016, has clearly stated that, while “Brexit means Brexit,” there should be no rush to serve the Article 50 notification.  She and David Davis, the Secretary of State for the new government department in charge of managing Brexit, have supported the view that notification should not take place before the end of 2016.  The situation remains fluid, with the EU institutions and the remaining 27 EU Member States increasing the pressure for formal negotiations to commence swiftly.  However, it is likely that notification will be delayed for some time to allow consideration of the UK’s preferred exit terms and model for its future relationship with the EU, and also to resolve three court actions aimed at ensuring that the government does not serve the Article 50 notification without first giving Parliament the opportunity to vote on it.
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Coscia Gets 3 Years in Prison: The Criminalization of Trading Commodities?

Posted in Court Cases, Energy, GT Alert

Sarao, Coscia, and now the Berkshire Power Company, each charged with crimes – spoofing, fraud, false information – relating to commodity trading. Commodity traders likely have incorporated into their compliance regimes the general risk that allegations of criminal fraud could arise. These criminal matters no longer appear to be isolated instances and, instead, counsel for vigilance to maintain a robust compliance, risk management, internal auditing, and surveillance regime.

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