EU Commission Limits the Netherlands’ Plans to Subsidize Green Hydrogen Production

Posted in Announcements, Compliance, E2 Europe, Energy, Environment, EU, Featured, Greenhouse Gas, Hydrogen, International, Netherlands

On Sept. 14, 2020 the Dutch minister of Economic Affairs and Climate informed the Dutch Parliament that the EU Commission does not consent to the granting of subsidies for the environmentally friendly production of hydrogen through sustainable energy (so-called ‘green hydrogen’) under the Dutch SDE++ scheme in the form requested by the Dutch government. State-aid rules require that the EU Commission provides its consent before any subsidies are granted.

This is a setback for the Dutch government and its plans to reduce greenhouse gas emissions by means of hydrogen. These plans were laid out in the Dutch hydrogen vision presented to the Parliament as recently as March 30, 2020. The minister has announced that the available subsidy for green hydrogen under the SDE++ scheme will remain available but will be reduced as a result of the discussions with the EU Commission (by limiting the operating hours that can be subsidized). Other Dutch subsidy schemes may be available for green hydrogen projects as well.

Ninth Circuit, in Narrow Holding, Limits Amount Recoverable in CERCLA Contribution Claim to Response Costs Already Incurred

Posted in CERCLA, Court Cases, Remediation

In ASARCO v. Atlantic Richfield, No. 18-35934 (9th Cir. Sept. 14, 2020), ASARCO entered into a consent decree under which ASARCO agreed to pay $111.4 million. ASARCO then sought contribution from Atlantic Richfield. The district court found Atlantic Richfield to be responsible for 25% of ASARCO’s response costs. The Ninth Circuit upheld the district court’s allocation but rejected the court’s finding that all $111 million could, at present, be considered necessary costs of response recoverable in contribution by ASARCO.

Although certain costs have already been expended, the Ninth Circuit considered whether the full settlement could be considered necessary response costs eligible for contribution. The cleanup method had not been determined. Nevertheless, the district court was “convinced that the balance of the approximate $50 million in the trust will most likely be expended to achieve the mandated remediation results.” Under that reasoning, the district court found all $111 million was eligible to be recovered in contribution by ASARCO.

The Ninth Circuit disagreed. The Court found that the expert opinion offered by ASARCO, which did not identify the final remedy but instead opined that “something at some point is going to have to be done,” was too speculative and based on conjecture to allow a finding that all $111 million were necessary costs of response recoverable – at present – in contribution. Under the Court’s holding, ASARCO is able to recover those necessary costs of response that have been incurred and also is entitled to a declaratory judgment that “establishes liability and an allocation for those costs that have not been incurred yet, but may be incurred in the future.”

As with the Third Circuit opinion we recently posted about, this settlement was in the context of a bankruptcy, and the Ninth Circuit acknowledges that the unique facts here make the holding “a narrow one.” The settlement here was a global settlement for several contaminated sites. In 2005, ASARCO filed a Chapter 11 bankruptcy petition and in 2009, ASARCO, the United States, and the state of Montana reached two settlement agreements and two consent decrees, which resolved ASARCO’s liabilities at several Montana sites, including the one at issue in this case. One of those consent decrees created a custodial trust for the sites, and identified EPA as the lead agency responsible for authorizing all work performed and funds expended from the trust.

Any unused funds from remediated sites are diverted to other sites, so the Ninth Circuit’s concern that not all $111 million would be expended at this site was based on the terms of the settlement itself. In addition, the projected costs of the remediation at the site were based on a pump-and-treat remedy, which “now appears extremely unlikely to come to fruition.” For those reasons, the Ninth Circuit emphasized the narrowness of its holding.

Although the Ninth Circuit’s holding is a narrow one, it emphasizes again the need for specificity in settlement agreements. That may not always be possible in the context of a global settlement like the one in ASARCO v. Atlantic Richfield. This case is another in a long series of cases that demand care in the accounting that supports or defends a CERCLA contribution claim. Parties may want to devote attention early to what costs are at issue, whether those costs are sufficiently concrete to be reallocated, who incurred those costs, and whether the contribution plaintiff has or will incur more than its fair share of those costs under at least someone’s theory of the case.

 

Third Circuit Considers the Scope of “Matters Addressed” in CERCLA Settlements

Posted in CERCLA, Court Cases, New Jersey, Superfund

This week, the Third Circuit issued an opinion in NJDEP v. American Thermoplastics Corp et al., No. 18-2865, which adds a new wrinkle on CERCLA section 113(f)(2), which bars non-settling parties from bringing claims for contribution against settling parties, while also placing new emphasis on CERCLA section 104 cooperative agreements in the context of settlements.

The case involves the Combe Fill Superfund Site, a landfill which operated from 1948 to 1981. From 1978-1981, the landfill was owned by Combustion Equipment Associates (“CEA” n/k/a Carter Day Industries) and run by its subsidiary, Combe Fill Corporation (“CFC”). CFC hired Compaction Systems Corporation to conduct operations at and transport hazardous materials to the landfill. In 1981, the site closed and CFC filed for Chapter 7 bankruptcy. USEPA and NJDEP filed claims, which were each settled for $50,000. In 1980, CEA filed for Chapter 11 protection. NJDEP filed a claim, which the court disallowed because only CFC was liable for the costs for cleaning up the Site under New Jersey law. USEPA did not file a claim.  In 1986, Carter Day sought a judgment that USEPA’s and NJDEP’s claims related to the Site were discharged in bankruptcy. The bankruptcy court dismissed the action against USEPA as unripe. The bankruptcy court subsequently approved a settlement entered into between Carter Day and NJDEP by which “all claims of NJDEP against Carter Day with respect to the Combe Fill sites” were discharged, and NJDEP was enjoined “from pursuing any claims against Carter Day with respect to the Combe Fill sites.”

Compaction, which in 2009 settled with USEPA and NJDEP, brought a section 113(f) CERCLA contribution claim, among other claims, against Carter Day. To determine whether Carter Day’s prior settlement with NJDEP barred Compaction’s claim, the district court and the Third Circuit focused on whether the “matters addressed” in that settlement included both state and federal claims that could have been brought against Carter Day. Under CERCLA section 113(f)(2), “[a] party who has resolved its liability to the United States or a State in an administrative or judicially approved settlement shall not be liable for claims for contribution regarding matters addressed in the settlement.”

The settlement, entered into in the context of a bankruptcy and prior to USEPA’s 1997 guidance that directed settlements to include a “matters addressed” section in settlements, raised the question of whether the language encompassed federal claims, in addition to state claims. The parties agreed that, because it was a judicially-approved settlement that identified all NJDEP claims related to the site, that Compaction could not seek contribution of costs it paid to NJDEP ($1.5 million out of $11 million). The district court reasoned that because the language in the settlement agreement encompassed all of NJDEP’s claims related to the site, and because a settling party receives the same contribution protection whether it settles with a state or the United States, the settlement with NJDEP barred all costs sought in contribution by Compaction.

The Third Circuit reversed. In considering the scope of the “matters addressed,” the Court determined it must “interpret the matters addressed in an agreement narrowly when determining whether the settlement with one sovereign covers the claims of another.” This may be a novel interpretation. That said, the Court determined that, although the settlement broadly covered remedial costs at the site, it was limited to claims by NJDEP. As further support, the Third Circuit noted that the settlement here was essentially just an acknowledgment by NJDEP that its claims were barred by the Carter Day bankruptcy, a case in which USEPA was not involved. In addition, the Court found that it would be inequitable to allow Carter Day to avoid liability, given that “USEPA bore the lion’s share of the Site’s cleanup costs.”

The Third Circuit also had the benefit of documents related to a cooperative agreement entered into by NJDEP and USEPA in 1983, which designated NJDEP as the lead agency for the Site’s cleanup.  Compaction only moved to supplement the record with these cooperative agreement-related documents on appeal. Pursuant to that cooperative agreement, USEPA was responsible for 100 percent of the costs of managing and performing the RI/FS and 90 percent of the cost of managing and performing the work in the remedial action, with NJDEP responsible for the other ten percent. The cooperative agreement “negated and denied” the authority of either party to “attempt to negotiate on behalf of the other.” The Third Circuit placed significant emphasis on the cooperative agreement, finding that because that cooperative agreement “reiterates the statutory allocation costs and states that the NJDEP cannot recover funds on behalf of the USEPA . . . [i]t defies reason and the plain language of the Cooperative Agreement that the matters addressed in the NJDEP Settlement with Carter Day could include expenditures incurred—per statute and contract—solely by the United States.”

This decision involves a fairly unique set of facts, but emphasizes the importance of being explicit when identifying the “matters addressed” in a settlement, especially when settling with one of two sovereigns that are incurring costs at a site. Settling private parties should not assume they have complete information about the relationship between sovereigns—and may be unaware of cooperative agreements like the one here. Negotiating a settlement under those circumstances highlights the need to be precise when drafting the “matters addressed.”

 

New Jersey’s Environmental Justice Legislation: The Focus on Major Source Permit Applications Might Impact Property Values

Posted in Compliance, Contamination, DEP, Energy, Environment, Environmental Justice, Featured, Federal Regulation, Hazardous Waste, Legislation, Litigation, NEPA, New Jersey, Oil & Gas, Policy, Politics, Pollution, public health, State & Local, Waste

Last month, I wrote about the “Environmental Justice for All Act,” a bill that proposes a finding that vulnerable populations are disproportionately burdened by environmental hazards. New Jersey is following the federal environmental justice debate, passing historical environmental justice legislation in both the House and Senate, where it is currently awaiting Governor Phil Murphy’s approval. This bill requires the New Jersey Department of Environmental Protection (DEP) to evaluate environmental and public health stressors of certain facilities on “overburdened communities” when reviewing major pollution source permit applications, such as, but not limited, to landfills, gas-fired power plants, large sewage treatment plants, and scrap metal facilities, and medical waste incinerators.

Within two months of the effective date of the legislation, DEP must publish and maintain a list of “overburdened communities” (as defined by a statutory formula) on the agency’s Internet website.  The agency must consider the potential environmental and public health impact of proposed applications located in an overburdened community.  This environmental justice permit review process mirrors the traditional National Environmental Policy Act (NEPA) process in that the applicant must prepare an environmental justice impact statement that assesses the potential environmental and public health stressors associated with the proposed or expanded facility.  In addition, the agency must consider the cumulative impact of the propose permitted activity on existing conditions located in or affecting the overburdened community.

The apparent impact of this legislation on the regulated community is that an otherwise permissible activity might still be denied if there is a finding of disproportionate impact of the proposed regulated activity on an overburdened community.  The bill also provides certain public notice and hearing requirements to allow the overburdened community an opportunity to be heard prior to the issuance of any permit.

2020 has brought a renewed focus on social justice issues so that we should expect to see more consensus, state-sponsored environmental justice legislation that require agencies to evaluate, not only permitting decisions, but also siting and cleanup decisions which all could impact property values.

Pa. Supreme Court Considers the Trial Court’s ‘Gatekeeper’ Role Under Frye

Posted in Articles, Court Cases, Pennsylvania, State & Local

On July 21, 2020, the Pennsylvania Supreme Court issued an anticipated decision in Walsh v. BASF Corp, in which it considered the trial court’s role as the “gatekeeper” for expert testimony, tackling again the state’s application of the Frye test—as opposed to the Daubert test most frequently applied in federal courts and a majority of state courts.  Although the Pennsylvania Supreme Court declined to specifically endorse the trial court’s “gatekeeper” role, its opinion assures that the trial court’s role in assessing the admissibility of expert testimony still exists under Pennsylvania’s Frye analysis.

Read more from my column in The Legal Intelligencer supplement, Pa. Law Weekly this month by clicking here.

McGirt v. Oklahoma: Understanding What the Supreme Court’s Native American Treaty Rights Decision Is and Is Not

Posted in Court Cases, Environment, Featured, GT Alert, Legislation, Litigation, Policy, Politics

Confusion permeates the public arena as to what the U.S. Supreme Court recently did – and didn’t do – by ruling in favor of the Muscogee (Creek) Nation, a federally recognized Native American tribe, and against the state in McGirt v. Oklahoma. Not since a grinning incumbent President Harry S. Truman hoisted The Chicago Daily Tribune’s “Dewey Defeats Truman” special edition on Nov. 3, 1948 – proclaiming his “loss” to New York Gov. Thomas E. Dewey – have so many commentators missed what really happened and why it matters.

Read the full GT Alert, “McGirt v. Oklahoma: Understanding What the Supreme Court’s Native American Treaty Rights Decision Is and Is Not.”

The National Marine Fisheries Service is Angling to Regulate Aquaculture; the Fifth Circuit Won’t Bite

Posted in AgTech, Aquaculture, Court Cases, Regulatory

On Aug. 3, 2020, a split Fifth Circuit plunged federal aquaculture regulation into murky waters. The United States is a minor aquaculture producer, ranked 17th in 2017 on a global scale – but it is the leading importer of fish and fishery products. According to the National Oceanic and Atmospheric Administration (NOAA), by weight, approximately 90% of the seafood eaten in the United States comes from abroad, over half of it from aquaculture. Part of why the United States has been a minor producer is because domestic aquaculture projects have historically been relegated to state-controlled waters and operations like inland recirculating aquaculture systems. Ocean waters between three and 200 miles offshore are under federal control and have previously been unavailable for farming because of concerns about its effect on wild fisheries and ecosystems. While the United States might be a minor producer, its aquaculture projects are still subject to a complex and evolving regulatory scheme, often navigating permitting and operational requirements imposed by multiple state and federal agencies. With respect to the region at issue in Gulf Fishermens Association et al. v. National Marine Fisheries Service et al., the Gulf of Mexico’s aquaculture currently focuses on stock enhancement, food production, research, and restoration efforts of species including oysters, clams, shrimp, assorted finfish, and algae.

In 1976, the Magnuson-Stevens Fishery Conservation and Management Act (the Magnuson-Stevens Act) was passed in response to overfishing concerns and in an attempt to preserve the nation’s fisheries. In 2009, the Gulf of Mexico Fishery Management Council (comprised of Alabama, Florida, Louisiana, Mississippi, and Texas) created an aquaculture regulatory plan. In 2016, the National Marine Fisheries Service (the NMFS, a division of NOAA) finalized this “comprehensive regulatory plan,” which it claimed was designed to develop an “environmentally sound and economically sustainable aquaculture fishery in Federal waters of the Gulf” (the Final Rule). See 81 Fed Reg. 1762 (Jan. 13, 2016). The Final Rule was the first attempt by the NMFS or any of their eight Regional Fishery Management Councils to regulate aquaculture under the Magnuson-Stevens Act, and the Final Rule would allow for a maximum annual production of 64 million pounds of seafood in the Gulf – equal to the previous average annual yield of all marine species in the Gulf except medhaden and shrimp. Plaintiffs brought suit in 2016, concerned that the Final Rule’s expansion of seafood production would harm traditional fishing grounds, reduce prices of wild fish, subject wild fish to disease, and pollute open waters with chemicals and artificial nutrients.

The Fifth Circuit held that because the Magnuson-Stevens Act “neither says nor suggests that the agency may regulate aquaculture,” the NMFS may not do so. To reach this conclusion, the court applied the two-step test established in Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837 (1984). Step one of Chevron deference requires courts to ask whether Congress has directly spoken to the precise question at issue and, if the statute is silent or ambiguous, then proceed to step two: questioning whether the agency’s construction is permissible. According to the Fifth Circuit, NMFS failed step one of the test because the Magnuson-Stevens Act “unambiguously precludes the agency from creating an aquaculture regime” and therefore it affirmed the district court’s 2018 ruling that the Final Rule exceeded the agency’s statutory authority and held that “[i]f anyone is to expand the forty-year-old Magnuson-Stevens Act to reach aquaculture for the first time, it must be Congress.” Problematically, Congress has made several attempts to pass offshore aquaculture legislation, including bills in the 109th, 110th, 111th, 112th, and 115th Congress, none of which were enacted. In the 116th Congress, no comprehensive aquaculture legislation has been introduced, though several bills have been introduced that are related to offshore aquaculture and aquaculture generally, including the Keep Finfish Free Act of 2019 (H.R. 2467), the Commercial Fishing and Aquaculture Protection Act of 2019 (S. 2209), the Prevention of Escapement of Genetically Altered Salmon to the United States Act (H.R. 1105) and the Shellfish Aquaculture Improvement Act of 2019 (H.R. 2425).

Further muddying the waters, while the Fifth Circuit appeal was pending, the U.S. Environmental Protection Agency stepped in to issue draft permits under the Clean Water Act to an offshore aquaculture project that, if completed, would be the first in federal waters of the contiguous United States. Then in May 2020, the Trump administration issued an executive order designed to encourage large-scale fish farming. The order included several components, including a provision permitting finfish aquaculture “in marine and coastal waters out to the limit of the territorial sea and in ocean waters beyond the territorial sea within the exclusive economic zone of the United States.” The executive order also designated NOAA as the lead agency for shepherding applications for aquaculture projects in federally controlled waters and the U.S. Army Corps of Engineers as the agency tasked with drafting nationwide permits.

The continued absence of a governance system for regulating offshore aquaculture creates inconsistencies and obstacles to the industry’s development. At present, the aquaculture permitting process is complex and lengthy, creating uncertainty and resulting in challenges for both investment and ongoing operations. Even where states provide regulations, the states’ waters only reach three miles offshore, creating two voids in the current scheme: consistency for U.S. coastal operations and potential to farm beyond the three-mile boundary. Reconciling the executive order with the Fifth Circuit’s decision, not to mention sorting out regulatory responsibilities among states, Regional Fishery Management Councils, and multiple federal agencies, may result in continuing litigation.

For the aquaculture industry these unanswered logistical questions make for increased uncertainty and may make onshore operations an easier option in the short term. Innovative indoor aquaculture operations continue to develop across the United States, and while these operations are still subject to permitting requirements, the regulatory landscape may be more certain than for coastal operations. While scalability for this developing area of AgTech may still present some uncharted territory, until a federal solution settles the waters, offshore aquaculture remains turbulent.

 

 

UK’s Industrial Energy Transformation Fund Grants Now Available to Manufacturing Companies and Data Centre Operators

Posted in COVID-19, Energy, Finance, International, Manufacturing, United Kingdom

As of 20 July 2020, Phase 1 of the UK’s Industrial Energy Transformation Fund (IETF) is open for applications for grants, according to the Department for Business, Energy and Industrial Strategy (BEIS).

The IETF, announced in the UK’s 2018 autumn budget, is designed to assist the transition of high energy use businesses into a lower carbon future economy. £289 million of the IETF’s total £315 million fund is available to businesses in England, Wales and Northern Ireland, with the remaining £26 million allocated to Scotland for use in a separate programme (details of which are expected to be published later in 2020).

The £289 million allocated to England, Wales and Northern Ireland will be invested in two phases:

  • Phase 1 (which, as noted above, opened on 20 July 2020) with up to £30 million of funding to be managed by Innovate UK, a public body established by the UK government to drive business innovation; and
  • Phase 2 (which will launch in 2021) to allocate the remainder of the fund.

Eligible businesses

Phase 1 of the IETF is open to:

  • organisations within the manufacturing Standard Industrial Classification (SIC) codes 10-33; and
  • data centres.

Industrial businesses of any size can apply, either on their own or in collaboration with other organisations. The lead applicant must operate at an eligible site in England, Wales or Northern Ireland.

Applicants must be eligible to receive state aid under the applicable European Union state aid rules at the time it is confirmed they will receive funding from the IETF.

Read my full GT Alert by clicking here.

‘Environmental Justice for All Act’ Introduced in U.S. Senate

Posted in carbon emissions, Clean Air Act, Clean energy, Clean Water Act, Environmental Justice, Featured, Legislation, NEPA, public health

On July 30, Sens. Cory Booker (D-NJ), Kamala Harris (D-CA), and Tammy Duckworth (D-IL) unveiled the “The Environmental Justice for All Act.”

The bill proposes a finding that communities of color, low-income communities, tribal communities, and other vulnerable populations, such as children, elderly, and persons with disabilities, are disproportionately burdened by environmental hazards. The premise of the bill is that all people have a right to breathe clean air, drink clean water, and live free of dangerous levels of environmental pollution, irrespective of their race, national origin, or income level.

If passed, the bill would authorize regulators to consider cumulative impacts in permitting decisions under the Clean Air Act and the Clean Water Act; authorize $75 million to support projects to address environmental and public health issues; require greater community involvement in agency decision making; and amend the Civil Rights Act to allow private citizens and organizations that experience discrimination in environmental programs to seek legal remedies.

The same bill, H.R. 5986, was introduced in the House earlier this year by Rep. Grijalva (D-AZ). Considering that the recent NEPA re-write eliminates agency responsibility to consider cumulative impacts, the chance of passage of these bills is slim (See July 20 E2 Law Blog Post). However, the Coronavirus Disease 2019 (COVID-19) pandemic has brought a new focus on environmental justice and how multiple routes of environmental exposure compound health impacts within communities of color, resulting in a higher mortality rate among people of color who contract COVID-19. As such, environmental justice issues may well remain a priority for Democrat leadership in the U.S. House and Senate.

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