The Nickel Report

Judicial review of state agency regulatory orders in California has long been seen as an exercise in futility as state courts typically give significant deference to agency determinations. However, two recent decisions by California Superior Courts have bucked that trend and may provide renewed hope that success at the trial court level is not out of reach.

We are serious.  And don’t call us Shirley.

So EPA sent your company a dreaded Request for Information (“RFI”).  What do you do now?  If you’ve never been through this process before, you likely have a lot running through your head:

• Did our company do something wrong?  Is my company under investigation?
• Is this EPA’s way of asking for my help to improve its regulations?
• Do I have to answer this?
• How can I possibly compile all this information in 30 days?
• Do we need a lawyer to help us respond?
• What about confidential information?  EPA is asking for customer or supplier information.  Isn’t that private?

On January 22nd, the Supreme Court issued a unanimous (9-0) decision, authored by Justice Sotomayor, agreeing with industry groups, some eNGOs, and many states, that the district courts have jurisdiction over challenges to the 2015 Waters of the U.S. (WOTUS) Rule. Nat’l Ass’n of Manufacturers v. Dept. of Defense, et al., No. 16-299 (Jan. 22, 2018). The Court wholly rejected the government’s claim that the WOTUS Rule is subject to exclusive appellate court jurisdiction under the Clean Water Act’s (CWA) judicial review provision and confirms that current and future challenges to the WOTUS Rule must be brought in district court. By reversing the Sixth Circuit decision which found that the CWA vests the federal courts of appeals with exclusive jurisdiction over challenges to the WOTUS Rule, the Supreme Court set in motion proceedings that will likely result in the lifting of the Sixth Circuit’s nationwide stay of the 2015 WOTUS Rule.

On January 11, 2018, the Federal Energy Regulatory Commission (FERC) denied Constitution Pipeline Company, LLC’s Petition for a Declaratory Order that New York had waived its ability to act under section 401 of the Clean Water Act (CWA) by failing to grant or deny Constitution’s application for a section 401 certification within a “reasonable period of time.” See In re Constitution Pipeline Co., LLC, 162 FERC ¶ 61,014 (Jan. 11, 2018). The decision is another in a sequence of decisions from FERC and the federal courts of appeals concerning the time period for States to act under ...

When Congress enacted the Endangered Species Act (“ESA”) to protect and recover imperiled species and the ecosystems on which they depend, it emphasized the need to strike the proper balance between protecting species and allowing productive human activities. Widespread concern that this balance has been lost has sparked movement within the Trump Administration and Congress to improve the ESA and its implementation by the US Fish and Wildlife Service (FWS) and National Marine Fisheries Service (NMFS) (together, the Services). Many of these reform efforts are focused on ensuring earlier and increased involvement of states and other regulated entities and on improving the listing/delisting process to make certain that the extraordinary protections of the ESA are imposed, where warranted, and lifted, as appropriate.

WOTUS, an acronym that has received a lot of attention in recent years, stands for the “waters of the United States.” When Congress enacted the Clean Water Act (“CWA” or the “Act”) in 1972, it prohibited “the discharge of any pollutant by any person” into navigable waters without a permit. The Act defines navigable waters as the “waters of the United States, including the territorial seas.” 33 U.S.C. §§ 1311(a), 1362(7), (12). But Congress failed to, in turn, define the words “waters of the United States,” and the Supreme Court has noted that these “words themselves are hopelessly indeterminate.” Sackett v. EPA, 132 S. Ct. 1367, 1375 (2012) (J. Alito, concurring). The meaning of these words matters because violations of the CWA are subject to substantial criminal and civil penalties, so knowing whether a feature on your site is a WOTUS subject to federal jurisdiction has important consequences.

Once large infrastructure projects, such as oil and natural gas pipelines, receive federal government approval, they are often the target of legal challenges from opposition groups. Opponents repeatedly argue that the environmental review, pursuant to the National Environmental Policy Act (NEPA), was insufficient. If a court finds deficiencies in the government’s NEPA analysis, can a court halt construction or cease operations even after years of project design, permit approvals at all levels of government, and tens of millions of dollars in investment? This question ...

The stakes are high for anyone facing environmental liability in the wake of superstorms like Hurricanes Katrina, Sandy, Harvey, Irma, and Maria. If you are among the parties potentially liable for the costs to clean up a release of oil or hazardous substances caused by a major storm event, you may be thinking about a possible “act of God” defense.  You may want to think again. In practice, the availability of this defense has proved elusive.  It is still a good idea, however,  to minimize risk in planning for the next “big one.”  Ultimately, advance actions taken to avoid or mitigate the impacts of natural disasters may be the difference between being excused from or being saddled with cleanup liability.

Environmental groups are raising the stakes for power companies facing allegations of coal-ash liability. Power plants that burn coal to produce electricity also create byproducts in the process, known as “coal combustion residuals,” or CCRs. CCRs go by several names, but are commonly known as “coal ash.”

Historically, power companies have stored CCRs in settling ponds, also known as “coal-ash basins.” Coal-ash storage and disposal can lead to allegations of groundwater contamination and environmental contamination claims. Environmental groups have sought to require companies to pay for remediation of disposal sites and alleged groundwater contamination; address alleged natural resource damages; and conduct extensive monitoring and sampling of onsite and offsite sediments, groundwater, fish, and other wildlife.

The regulated community in California may soon have additional reasons to implement supplemental environmental projects (SEPs) when settling an administrative environmental enforcement action. Under a 2009 State Water Resources Control Board (Water Board) policy, settling parties may voluntarily undertake an environmentally beneficial project in return for an offset of a portion of any civil penalty, provided that the project meets certain criteria. The Water Board has now released sweeping proposed amendments to its Policy on Supplemental Environmental Projects (draft SEP Policy) that will incentivize more projects. Most notably, the draft SEP Policy:

Will consider projects that address climate change, such as greenhouse gas emissions reductions or those that build resilience to climate change impacts on ecosystems or infrastructure.

Will allow—subject to approval—greater than 50% of any monetary assessment in administrative enforcement cases to be allocated towards SEPs that are located in or benefit disadvantaged or environmental justice communities, or communities suffering from a financial hardship, or that further the Water Board’s priority of ensuring a human right to water. Under the original policy adopted in 2009, the maximum civil penalty reduction available via performance of a SEP is capped at 50%.

Will allow up to 10% of oversight costs to be included as part of the total SEP amount for the same reasons above. Otherwise, oversight costs are paid in addition to the total SEP amount.

Establishes a new category of SEPs called “Other Projects” to allow educational outreach and other “non-traditional” water quality or drinking water-related projects to be considered for approval.

Expands the applicability of SEPs to enforcement actions prosecuted by the Division of Drinking Water and its Districts and the Division of Water Rights.

In August 2014, residents of Toledo lost the use of tap water for two days because of a toxic algal bloom in the western basin of Lake Erie, which is their water source. In subsequent summers, the lake’s algal blooms have been smaller, but they remain a persistent phenomenon. In fact, the National Oceanic and Atmospheric Administration (NOAA) is predicting a significant cyanobacteria algal bloom in western Lake Erie this summer.

Numerous definitions of “harmful algal blooms” exist, but they generally can be understood as excessive growths of various species of phytoplankton, protists, cyanobacteria, or macro and benthic algae that negatively impact water quality, aquatic ecosystem stability, or animal and human health. The blooms may be toxic or nontoxic. Even nontoxic blooms can have repercussions for drinking water treatment, recreational use of the waterbody, and the overall economy.

George Clemon Freeman Jr. – founding father of Hunton & Williams’ environmental law practice passed away on June 26, 2017, at age 88.  Some of the tributes to George have mentioned a presentation George made to members of a client group in the mid 1970’s.  As remembered by Henry Nickel, George had the unenviable task of speaking to group members right after lunch.  George’s less-than-exciting assigned topic was the regulation of priority pollutants under section 307 of the Clean Water Act.  Seeing his audience about to doze off, George – perhaps drawing on his Yale glee club experience – deviated from his prepared remarks (as he was known to do) and launched into an impromptu version of the Lord High Executioner’s “I Have A Little List” song from Gilbert & Sullivan’s The Mikado.  In the Gilbert & Sullivan version of the song, the list was of those to be beheaded:

“As some day it may happen that a victim must be found
I’ve got a little list – I’ve got a little list
Of society’s offenders who might well be underground
And who never would be missed – who never would be missed.”

Today, EPA and the Corps released a highly anticipated proposal to rescind the Obama Administration’s controversial 2015 Clean Water Rule. The June 2015 rule, which has been stayed since October 2015, would broadly define the scope of “waters of the U.S.” (WOTUS) subject to federal regulation and permitting requirements under the CWA. The proposed rescission is the first step of a two-step process to repeal and replace the 2015 Clean Water Rule with a new WOTUS rule. With today’s proposal, EPA and the Corps are proposing to officially rescind the 2015 rule and continue to implement the regulatory definition in place prior to the 2015 rule while they work to promulgate a new rule to define WOTUS.

In a closely watched case, the United States Court of Appeals for the D.C. Circuit last week dismissed an interstate natural gas pipeline company’s challenge to the State of New York’s delay in issuing a water quality certification under section 401 of the federal Clean Water Act (CWA) for the Millennium pipeline project. While the company requested a ruling that the state had waived its right to make a decision on water quality certification for the project, the court decided to dismiss the action – holding that even if the state agency’s lengthy delays did constitute a waiver under CWA section 401, there was no cognizable injury to the company that would give it standing to challenge the delays in court. Rather, according to the court, the remedy is for the company to present evidence of waiver directly to the Federal Energy Regulatory Commission (FERC) to seek authorization to begin construction of the project. The case is one of several pending across the country that involve a state’s authority to issue, deny, or waive a CWA water quality certification for interstate natural gas pipeline projects.

2017 Chambers USA Awards

Last week at the 2017 Chambers USA Awards, Hunton & Williams’ environmental team was recognized as the team of the year in the environment practice area.  Chambers USA evaluated our practice as “preeminent” in the environmental area and “highly esteemed.”  Chambers USA also noted our “fine track record” for our utility and energy work and our “noteworthy expertise across air, water, waste and climate change matters.”

Over the past several years, the EPA and states have wrestled with the highly controversial question of how to manage ash and other residual materials produced by the combustion of coal in coal-fired power plants.  These so-called “coal combustion residuals” (“CCR”) have been traditionally managed in large man-made ponds at many power plant sites.  While discharges from these impoundments directly to surface waters are regulated by permits issued under the Clean Water Act, the impoundments themselves have been regulated under state waste management programs.  In 2015, EPA fundamentally changed the regulatory landscape for these facilities when it promulgated a federal rule setting national standards for design, operation and closure of CCR impoundments.  EPA, Hazardous and Solid Waste Management System; Disposal of Coal Combustion Residuals from Electric Utilities, 80 Fed. Reg. 21,302 (Apr. 17, 2015).

The latest news is full of stories of federal agencies reviewing and, in some cases, rescinding environmental regulations and cutting agency spending. From these reports, it could seem the federal government might also cut back its enforcement of environmental laws. But in fact, even in this turbulent regulatory and fiscal appropriations landscape, enforcement–particularly criminal enforcement–of core existing environmental laws is one aspect of environmental regulation that is sure to continue.

What They Are:  PFASs (per- and polyfluoroalkyl substances) comprise a group of highly fluorinated manmade compounds that are showing up in drinking water supplies around the country. They are resistant to heat, water and oil, as well as to chemical breakdown. Because of these properties, PFASs have been used for decades as surface protection in a wide range of consumer products including carpets, clothing, cookware and food industry paper products such as pizza boxes and sandwich wrappers. PFASs are also present in foam used for fighting fires involving flammable or combustible liquids, such as oil and gasoline. Additionally, mist suppressants for metal plating operations may contain PFASs.

On February 28, 2017, President Trump signed an Executive Order (EO)  that sets into motion a process for the Administrator of the Environmental Protection Agency (EPA) and the Assistant Secretary of the Army for Civil Works (jointly, the “Agencies”) to review the Obama Administration’s Waters of the US (WOTUS) Rule.  80 Fed. Reg. 37,054 (June 29, 2015). The EO directs the Agencies to review the WOTUS Rule for consistency with the Clean Water Act (CWA) and the policies set forth in the EO, stating that “[i]t is in the national interest to ensure that the Nation’s navigable waters are kept free from pollution,” while at the same time “promoting economic growth, minimizing regulatory uncertainty, and showing due regard for the roles played by Congress and the States under the Constitution.”  Following review, the EO instructs the Agencies to publish, as appropriate, a proposed rule for notice and comment rescinding or revising the WOTUS Rule.

As previous Nickel Report posts have discussed, congressional efforts to rein in freewheeling agency interpretation and reinterpretation of ambiguous statutes have begun to intensify, and calls to reconsider Chevron deference have increased from both within the judiciary and without. One of the most vocal and eloquent critics of Chevron and its progeny, notably Mead and Brand X, is Judge Neil Gorsuch, President Trump’s nominee to fill the current Supreme Court vacancy. In Gutierrez-Brizuela v. Lynch, 834 F.3d 1142 (10th Cir. 2016), Judge Gorsuch penned an exhaustive and erudite analysis of the tension between the separation of powers that the US Constitution demands and the deference that Chevron and Brand X require courts to afford to reasonable agency interpretations of ambiguous statutes, even if those interpretations differ from those previously announced by the courts.

In January, the US Army Corps of Engineers published the final 2017 nationwide permits (NWPs), renewing a critical permitting tool for both the government and the regulated community. To comply with the Clean Water Act (CWA or the Act), projects with minimal adverse environmental effects can obtain authorization for the discharge of dredged or fill material into waters of the United States through the Corps’ streamlined NWP process. The Corps reissued all 50 of the 2012 NWPs, issued two new NWPs, one new General Condition and made a number of notable revisions.

Yesterday President Trump signed several Executive Orders (EOs) and Presidential Memoranda designed to speed environmental permitting and reviews. Among them is an EO to “Expedite Reviews and Approvals for High Priority Infrastructure Projects.” While past administrations have recognized the costs and delays of federal environmental permitting and encouraged timely decisions by regulatory agencies (e.g., EOs 13,212, 13,274 and EO 13,604), President Trump’s EO reflects a new sense of determination by the White House to move important infrastructure projects forward. The EO reflects a recognition that major infrastructure projects trigger an array of overlapping environmental and natural resource laws and requirements.

Recently, the states and federal agencies have clashed in a number of environmental rulemakings and subsequent litigation over those rules. These disagreements have raised a host of important legal and policy questions, including the proper balance of power between the states and the federal government and the communication process and overall relationship between the states and federal agencies. Recently filed litigation challenging the Stream Protection Rule, 81 Fed. Reg. 93,066 (Dec. 20, 2016), would prompt judicial review of many of these issues. But the likelihood of administrative or congressional action on this rule (through the Congressional Review Act) could preclude judicial input on these questions for now. If the rule is ultimately withdrawn or overturned, the manner in which it is may also present important federalism questions. Further complicating this process are two motions to intervene in two of these cases, filed by several environmental groups to defend the final Stream Protection Rule from being vacated or weakened.

A pteropod is not a winged dinosaur. It is a category of marine life that includes sea snails and sea slugs, both of which serve as forage for other marine species. According to the Center for Biological Diversity (CBD), ocean acidification is endangering some pteropods, such as sea snails, by eroding their shells. The sea snail is not the only threatened species—the CBD posits that most marine calcifying organisms (including oysters, clams and coral) are at risk of damage from ocean acidification.

The U.S. Army Corps of Engineers (Corps) recently issued the first Regulatory Guidance Letter (RGL) of the Obama Administration.  RGLs were developed by the Corps as a means of providing written, mandatory guidance to field offices, and are normally issued as a result of evolving policy, judicial decisions, and/or changes to the Corps’ regulations that affect the Corps’ permit program.

On October 21 and November 3, EPA Regions 3 and 9 denied petitions from eNGOs for the agency to use its “residual designation authority” (RDA) to expand the universe of stormwater discharges that are regulated by the Clean Water Act (CWA) in specific watersheds in Maryland and California. See 33 U.S.C. § 1342(p)(2)(E); 40 C.F.R. §§ 122.26(a)(1)(v), (a)(9)(i)(D). This was an important decision by EPA, and any resulting litigation could have significant implications for businesses or activities with significant swaths of impervious surfaces, from which stormwater discharges may occur.