Source: https://eem.jacksonkelly.com/2017/08/index.html
Timestamp: 2019-04-26 12:21:18+00:00

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On August 23, the Third Circuit Court of Appeals affirmed the Corps’ decision to issue a Clean Water Act § 404 “fill” permit to a pipeline developer for 13 miles of pipeline in Pennsylvania. See Delaware River Network v. U.S. Army Corps of Engineers, No. 17-1506 (3rd Cir. Aug. 23, 2017). The Riverkeeper’s challenge was an original action filed in the 3rd Circuit pursuant to the Natural Gas Act. See 15 U.S.C. § 717r(d)(1) (providing Circuit Court with original and exclusive jurisdiction over order of a federal agency (other than FERC) issuing a permit under federal law for an interstate gas project).
There, Tennessee Gas Pipeline Company sought a permit from the Corps for water crossings needed for a “looping” pipeline that would allow an increase in the volume of gas transported across Pennsylvania. The Corps’ Clean Water Act rules provide that it should not issue a permit where there is a “practicable alternative” with less aquatic ecosystem impact, “so long as the alternative does not have other significant adverse environmental consequences.” 40 C.F.R. § 230.10(a). The Riverkeeper argued that the Corps should have denied the permit because the need for the water crossings associated with the pipeline could have been obviated by the construction of a compressor to force more gas through the existing line.
Second, the Riverkeeper argued that the Corps failed to consider the compressor alternative. This, the court quickly rejected, noting that the applicant’s alternative analysis expressly discussed compression, and the Corps identified it as an alternative that was considered.
Finally, the Riverkeeper argued that the Corps erroneously rejected the compressor alternative by failing to make appropriate findings under its so-called § 404(b)(1) Guidelines. Under the applicable rule, “no discharge of … fill material shall be permitted if there is a [i] practicable alternative to the proposed discharge [ii] which would have less adverse impact on the aquatic ecosystem, [iii] so long as the alternative does not have other significant adverse environmental consequences.” 40 C.F.R. § 230.10(a). The Riverkeeper argued that the compressor alternative satisfied all three prongs of the rule and, therefore, a permit for the pipeline loops was inappropriate. The Court agreed as to the first two prongs, but not the third. Thus, it implicitly ruled that the Corps need not reject a permit for a project unless there are alternatives that satisfy all three prongs of the rule.
As to the first prong, “practicability,” the Court did not find support in the record for the Corps’ conclusion that the compressor alternative was impracticable on a cost basis. As to the second prong—“aquatic impacts”—the rule provides that a permit shall be denied if the alternative is practicable and “would have less impact on the aquatic ecosystem.” The Court observed that the compressor station qualified under this test because it would obviate the need for the stream crossings associated with the pipeline. As to the third prong, though, the Court held that the Corps properly found that the compressor alternative would have “other significant adverse environmental consequences” and, therefore, lawfully rejected it as an alternative that required denial of the pipeline permit.
This article was authored by Robert G. McLusky, Jackson Kelly, PLLC.
A public study led by West Virginia University has proposed a regional effort towards developing infrastructure capable of supporting oil and natural gas storage facilities along the Ohio and Kanawha rivers. The data was presented on August 29 in Canonsburg, Pennsylvania. Known as the Appalachian Storage Hub study, researchers from the West Virginia, Pennsylvania and Ohio geological surveys have identified and mapped geologic formations that could offer potential locations for subsurface storage of natural gas liquids from the Marcellus and Utica shale formations.
Areas suitable for “solution mining.” This type of mining uses liquid (i.e., water) that is injected through boreholes where it dissolves salts and mineral that are then extracted. Solution mining is suitable is areas where “Salina F Salt” is at least 100 feet thick.
Areas where Greenbrier Limestone is present 1,800 to 2,000 feet below the surface and is at least 40 feet thick.
Areas where existing sandstone reservoirs in depleted gas fields and inactive gas storage fields can be converted to natural gas liquids storage.
The Appalachian Storage Hub study is a product of the Tri-State Shale Coalition, which was created in 2015 by a collaborative agreement signed by the Governors of West Virginia, Pennsylvania and Ohio. The Coalition is a public-private partnership whose membership consists of charitable organizations, non-profit economic development organizations, academic institutions, and workforce development groups. The Coalition aims to promote the Appalachian region as a base for petrochemical, plastics fabrication and manufacturing jobs and investments.
Earlier this summer West Virginia Senators Manchin and Capito proposed legislation to establish funding for such a natural gas storage hub. A study by the American Chemistry Council suggests that the Appalachian region has the potential to become a petrochemical and plastic manufacturing center comparable to the Gulf Coast, citing the region’s proximity to East Coast and Midwest manufacturing markets and the local abundance of raw materials (OGJ Online, May 18, 2017).
This article was authored by Douglas J. Crouse, Jackson Kelly PLLC.
On August 15th, 2017 the Environmental Protection Agency (EPA) released and began accepting public comments on guidance for states that want to develop a permitting program for the disposal of coal combustion residuals (CCR), or coal ash. While the guidance does offer some flexibility to states in developing their permitting programs, state programs must be at least as protective as the Federal CCR requirements at 40 C.F.R. Part 257, Subpart D.
Pursuant to a 2015 EPA regulation, coal ash is regulated as a solid waste under Subtitle D of the Resource Conservation and Recovery Act (RCRA). (Environmental groups had wanted it to be regulated as a hazardous waste under Subtitle C of RCRA.) The Water Infrastructure Improvements for the Nation Act (WINN Act), signed by President Obama shortly before leaving office in December 2016, gives states the authority to develop their own permitting programs for disposal of CCR. Like many other environmental regulatory programs, states that choose to do so must submit their proposed CCR permitting program to EPA for its review and approval. States that choose not to adopt their own permitting program are considered “non-participating states.” EPA cannot implement its own permitting program in non-participating states unless and until Congress provides a specific appropriation for EPA to do so.
Importantly, until a facility has obtained a permit pursuant to an approved state or federal CCR program, the facility must continue to comply with the federal CCR regulations at 40 C.F.R. Part 257, Subpart D.
Comments on EPA’s guidance document can be submitted electronically at regulations.gov under Docket ID # EPA-HQ-OLEM-2017-0458. The public comment period ends on September 14, 2017.
This article was authored by Jennifer L. Hughes, Jackson Kelly PLLC.
The U.S. Court of Appeals for the Seventh Circuit issued an opinion that serves as a reminder to every attorney that sometimes the best advice to a client is to accept a penalty and forego an appeal. It may be distasteful, but as I learned years ago in law school “bad facts make bad law”. Consider the following.
National Power Corporation designs and manufactures custom battery packs, including ones using lithium batteries. Although batteries are normally very safe items, they do present a risk of fire. For this reason they are regarded as “hazardous materials” by federal agencies such as the Pipeline and Hazardous Materials Safety Administration (PHMSA) and the Department of Transportation (DOT) as well as international agencies. Because they are deemed hazardous, their shipment as well as their disposal is regulated. Shipments of hazardous materials mean that documentation of procedures will always be an element of agency oversight as National Power would learn.
In 2010 a Federal Aviation Administration agent conducted an inspection of the company’s shipment procedures. Among the issues the agent examined was its testing of the batteries before shipment, or a waiver by PHMSA that authorized shipping without testing. When the company could not produce required documentation on its testing of its products, the inspector found eleven violations of PHMSA’s hazardous material regulations and filed an administrative complaint with DOT. Following a hearing before an administrative law judge (ALJ), a civil penalty of $12,000 was awarded the FAA. The company appealed the decision to the Administrator of the FAA claiming that its violations were not deliberate, and therefore, not “knowing” as required by the regulations. It also claimed that the $12,000 civil penalty was excessive and “arbitrary and capricious”. The FAA also appealed on other grounds. The result was a finding that the ALJ had reached some erroneous legal conclusions, but the major consequence was an increase in the civil penalty to $66,000. The company then requested review before the Court of Appeals. It affirmed following a brief discussion of what “knowing” conduct means under FAA regulations and concluded that the civil penalties were rationally imposed.
But wait, there’s more. In its brief to the Seventh Circuit, National Power cited a Wikipedia article about a British comic book character, “Judge Dredd” (also the subject a very bad 1995 movie starring Sylvester Stallone), a “street judge” empowered to arrest, convict and execute offenders. Apparently, the purpose in doing so was to illustrate how arbitrary the civil penalty was. The court noted this “authority” in footnote, in its opinion. It is a recognition that every lawyer who ever presents an appellate case should hope to avoid.
So, what can we learn from this. First, recognize when the facts are bad and that there is nothing that can be done in the case to make them better. Second, the agency inspector may have been overzealous, but the violations he noted were based on the facts he found. Third, the $12,000 penalty might have hurt, but it could have – and did become – far worse. Finally, the three judges on the panel will probably remember for a long time National Power’s citation to a comic book as legal authority. A copy of the case can be found here.
Most lawyers and business professionals generally understand that a Phase I Environmental Site Assessment (ESA) should be conducted before purchasing industrial or commercial properties. But fewer understand the protections (or pitfalls) that come with a proper Phase I ESA. This article provides some background for purchasers and lenders (and their lawyers).
The Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) imposes strict liability on property owners for the costs of cleaning up hazardous substances. In the 1980s, many purchasers of real estate ended up footing large bills to remedy historic contamination on their property caused by prior owners.
This, understandably, created a chilling effect on the purchase of properties previously used for certain industrial or commercial purpose.
Congress addressed this problem in 1986 with amendments to CERCLA that created an “innocent landowner” defense for purchasers who unwittingly bought property containing hazardous substances despite making “all appropriate inquiries” into the prior uses of the property.
In a proper Phase I ESA, the environmental professional will undertake a number of standard due diligence steps, including: inspecting the site, reviewing site records, inspecting government records and interviewing persons with knowledge of the site’s history. The environmental professional undertakes these steps to determine if there are “Recognized Environmental Conditions” (RECs) on the property.
On the flip side, if a Phase I (or Phase II) ESA shows no problems, a purchaser may have a strong “innocent landowner” defense in the event hazardous substances are later found on the property despite the purchaser making “all appropriate inquiries” into the site’s condition and history.
In summary, a proper Phase I ESA not only protects a purchaser from making a potentially bad business decision; it can also provide a purchaser a defense to costly cleanup liability under CERCLA.
seek concessions from the seller (such as indemnity or reduction in price).
Importantly, CERCLA does offer some protection for purchasers even where contamination is found. CERCLA contains a “bona fide prospective purchaser” defense that allows purchasers to perform a Phase I ESA and avoid liability for historic contamination if the purchaser agrees to certain controls on the future use of the property.
Because CERCLA imposes strict liability on “owners” of contaminated property, the statute ensnared a number of lenders in the 1980s who acquired property through foreclosure.
To remedy this unfair result, Congress passed the Lender Liability Act of 1996. The new law clarified that lenders cannot be held liable as “owners” under CERCLA if they foreclose on property, even if they take steps to preserve or protect the property prior to selling or disposing of it.
The Lender Liability Act likewise clarified what steps a lender may take to protect its collateral without being deemed to have “participated in management” to such an extent that the lender may be deemed an “owner or operator” of the site who is liable for response costs.
Importantly, the protections of the Lender Liability Act apply whether or not a Phase I ESA is performed.
Nevertheless, lenders often require a Phase I ESA and there are good reasons for doing so. While a Phase I ESA may not add to the direct liability protections afforded lenders under CERCLA, a properly conducted Phase I ESA may alert the lender to problems that may affect its collateral or the borrower’s ability to repay the loan.
Reading a Phase I ESA can be intimidating. To provide complete protection under CERCLA, a Phase I ESA should follow the latest ASTM standard for environmental site assessments. The ASTM standards are logical, but contain a fair amount of jargon that can be confusing to the occasional reader.
An experienced environmental lawyer, however, can typically review a Phase I ESA quickly and provide high level advice relatively inexpensively.
This article was authored by M. Shane Harvey, Jackson Kelly PLLC.
Any statement about the breadth of liability imposed by CERCLA, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, almost always seems to be an understatement. CERCLA makes the owner of property contaminated with hazardous substances or a person who arranges for the disposal of hazardous substances strictly liable for subsequent clean-up costs. Such owners or operators become a “potentially responsible party” (PRP) liable for remediating the contamination. The statutory liability is broad, and the EPA has argued assiduously over the years to extend liability as far as possible. Thus, it is fitting for the federal government, and specifically the U.S. Forest Service, to be deemed a PRP for contamination on previously mined land under a recent decision of the U.S. Court of Appeals for the Tenth Circuit.
Chevron Mining Inc., a subsidiary of the multinational oil company, became the owner of the Questa Mining site in New Mexico in 2005 when it acquired Union Oil. By that time, mining for molybdenum by both underground and surface methods, had occurred since 1919. During the 20 years between 1964 and 1983 when open-pit mining was conducted, the mining company disposed of more than 320 million tons of waste rock. It also deposited more than 100 million tons of mine tailings produced from ore beneficiation into two tailings ponds. Throughout the history of the mine, these activities were performed with the authorization of both the Forest Service and the Bureau of Land Management on public lands in the vicinity of the mine. Virtually no mining occurred from an underground operation in the decade that Chevron owned the mine before its closure in 2015.
When EPA delineated the Questa mine site as subject to CERCLA, it was shocked – SHOCKED – to learn that Chevron sought to hold the federal agencies which owned the land and had acted historically to facilitate mining as a PRP responsible for contributing to the cleanup. Its liability arose primarily because the lands on which the waste rock and tailings were deposited were unpatented lands under the General Mining Law of 1872 and therefore, the United States never relinquished title to those lands (“It is undisputed that the United States held legal title to relevant portions of the Questa mining lands at the time of significant hazardous substance disposal”). “Nevertheless, the government argues ‘bare legal title’ is insufficient to trigger owner liability. Instead, it contends the unique nature of unpatented mining claims on federal lands requires an exception to CERCLA’s ownership liability provision.” Op. at 22. The Tenth Circuit refused to exempt the federal land agencies from liability, concluding “that, at a minimum, the term owner covers fee title holders for purposes of CERCLA liability, irrespective of any additional indicia of ownership. To find otherwise would be inconsistent with CERCLA’s statutory scheme and an ordinary application of its terms.” Op. at 27.
Although the appellate court found the federal agencies liable as PRPs required to participate in the remediation of the property, it remanded the case to the district court to determine what its allocated share of liability should be.
The decision will have limited application outside of the Western United States where public lands predominate. Nevertheless, it serves as a powerful reminder that even the passive ownership of land is sufficient to impose CERCLA liability.
The case is Chevron Mining Inc. v. United States, U.S. Court of Appeals for the Tenth Circuit (No. 15-2209) July 19, 2017.
The U.S. Court of Appeals for the Tenth Circuit has trimmed the discretion that the Office of Surface Mining can assert when it brings an enforcement action against a mining operator. Its decision applies a principle of law announced by the Supreme Court almost 25 years ago in Darby v. Cisneros which most agencies prefer to ignore.
As explained by the Tenth Circuit, Darby makes “intra-agency review ‘a prerequisite to judicial review only when expressly required by statute or when an agency rule requires appeal before review and the administrative action is made inoperative pending that review.’ 509 U.S. 137, 154. This rule prevents agencies from enforcing initial decisions while a mandatory administrative appeal is pending, which would effectively insulate such decisions from judicial scrutiny.” Op. at 2. In other terms, Darby forces an administrative agency to make a choice between immediate compliance with the order issued (independently reviewable by a court) or suspend compliance while further administrative compliance is completed.
Over the course of 40 years of the Surface Mining Act, OSM has contrived enforcement schemes more designed to confuse and exhaust than to achieve review of agency action. Thus, when OSM issues a notice of violation (which it rarely can do given that most coal mining is conducted in states with primary jurisdiction to enforce their programs), review is first conducted in a hearing before an administrative law judge. Review of the ALJ’s initial decision must be conducted before the Interior Department’s Board of Land Appeals, an appellate body within Interior’s Office of Hearings and Appeals. Under the regulations that establish this process, a party subject to an order of an ALJ may seek a stay of the enforcement of the order while the IBLA reviews the decision, but granting the stay is discretionary.
Under the facts of the Tenth Circuit decision, an Oklahoma mining company was denied a stay in its IBLA appeal. It then sought immediate review in a federal district court. The court dismissed the case on OSM’s motion on the grounds that the IBLA’s administrative review was not final. A federal court ordinarily does not have subject matter jurisdiction to hear a case if the agency decision is not final. On appeal the Tenth Circuit reversed, finding that the denial of the stay had the effect of making the ALJ’s decision immediately final and reviewable by the district court.
Administrative litigation with an Interior Department agency can be compared to watching a ship depart from a dock without knowing if it will ever reach its port. With this decision OSM will be forced in future controversies to select whether it will insist upon immediate compliance, and potentially be forced into review in a judicial forum, or complete administrative review while the alleged environmental harm is ongoing. In either case, the mining company is afforded a more certain process before having to comply with OSM’s order.
The case is Farrell-Cooper Mining Company v. U.S. Department of the Interior, No.16-7061, U.S. Court of Appeals for the Tenth Circuit (July 25, 2017).
This article was authored by Blair Gardner, Jackson Kelly PLLC.

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