Source: http://www.acoel.org/category/Major-Topics.aspx
Timestamp: 2019-04-23 23:57:25+00:00

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Since one of the objectives of the ACOEL blog is to promote thought and discussion, I have decided to plunge in with abandon. Hopefully the objective of promoting discourse will be met.
We all have reconciled ourselves to the fact that environmental advocacy has become very politicized on all portions of the political spectrum—so much so, that environmental advocacy oftentimes morphs into political/partisan advocacy. In the last several years we have seen environmental advocacy reach a new level. I leave it to the reader to decide whether that level is high or low. I have my point of view, and I suspect the reader will see that soon enough.
Two projects, one proposed, and one still only in the realm of “contemplation” serve as lightning rods for this new form of environmental advocacy: the Keystone XL Pipeline project and the potential Pebble Mine. Keystone XL formally has been proposed. The Pebble Mine has yet to have a permit application submitted but nonetheless is the subject of protracted and unique opposition.
It is becoming increasingly common to witness the advocacy relating to the Keystone XL Pipeline project—unprecedented in both its breadth and emotional intensity--from proponents and opponents alike. Proponents have tended to follow the more traditional advocacy approach of published opinion pieces and structured meetings and association support. The opposition has been much less traditional. Certainly there has been a history of focused opposition to some projects viewed by some as adversely impacting the environment, but those have been very focused locally or at most regionally. We all recall “tree sitters” opposing harvesting of redwood timber. Street theatre is not uncommon. Here in Michigan I have seen an individual dressed up as a skeleton in opposition to use of a school built on an abandoned municipal landfill, or dressed up as a fish in opposition to a proposed hard rock mine. The call for civil disobedience in opposition to Keystone XL goes well beyond street theatre, however. It is something that has not been seen, at least in my memory, since the days of the Civil Rights and Vietnam War protests. Lost in all of the demonizing of the development of hydrocarbons in Alberta, Canada’s northern reaches (called “oil sands” by proponents and “tar sands” by opponents) is the fundamental impact that a denial of the Presidential Permit necessary to construct the pipeline will have on the diplomatic relationship between Canada and the United States. The failure to issue a permit thus far has contributed substantially to a reconsideration of Canadian policy goals and economic development. No longer is the Canadian policy as focused and U.S.-centric as it once was. Canada is reevaluating the degree to which it can continue to trust its southern neighbor. It is not a stretch of the imagination to read the tone and tenor of the “policy” discussion and advocacy antics as being officious. An offer to “help” with the evaluation of the climate change risk of the bitumen production and methods of amelioration, while perhaps well-intentioned, certainly is capable of being seen as sanctimonious, or even arrogant. The old images of the “ugly capitalist”, and the “ugly American” are being supplemented by images of the “ugly environmentalist.” The increasingly strident nature of the anti-Keystone advocacy ignores or dismisses broader foreign policy considerations.
Now, if that is not enough to get discussion going, I don’t know what is. But, on the off chance that there is need for more encouragement, let me raise one other advocacy project: the contemplated Pebble Mine located in the Bristol Bay, Alaska, watershed. Pebble Mine may not be as well-known nationally as Keystone XL, but some NGOs are trying to make certain that it does become known—and opposed. If Pebble is known for anything, it is that it is the subject of an environmental assessment being undertaken by U.S. EPA, in advance of any permit application having been filed and without any proposed mining plan having been developed. Now Pebble has a major mail order retailer using its customer-based mailing list vigorously and bluntly to oppose the Pebble project. Within the last several weeks I received a “fly fishing” catalogue from this company, a company from which I have purchased products for well over 30 years. I started seeing full-page advertisements opposed to Pebble in the interior of its catalogues within the last year. This most recent mailing is the first time I received a catalogue whose cover was emblazoned with the words “Pebble Mine” inside a red circle with a slash through it and the admonition to “JOIN THE FIGHT” at the company’s website.
In an age where social issues are increasingly being highlighted in commercial advertisements, perhaps I have been lulled into thinking that subtlety makes such advertising acceptable. There is nothing subtle about this fly fishing catalogue’s assault on a mining project. Opposition to mining in sulfide ore bodies appears to have become a focal point for the leadership of this company.
This is a free country and we all enjoy freedom of speech. The ultimate power, of course, is to take one’s business elsewhere, but I just found this to be a rather unique “in your face” form of environmental advocacy. If I want to receive environmental advocacy—from any quarter, I will ask for it. If I wish to purchase goods and get on a mailing list for that purpose, I expect to get future mailings about similar products. I do not expect—or authorize—use of my name and address to receive decidedly political advertising nor biased social commentary. I know how and where to get plenty of that in a setting where it is both thoughtful and analytical. Combining a commercial catalogue with a political advertisement, or rather turning a catalogue into a political advertisement, crosses the line. Perhaps it is a line that we as a society are willing to tolerate in this age of political intolerance. We will see.
Now, let the discussion begin.
Setting policy for environmental protection is a bit like mediating the discussion between a father and daughter about her shaggy-haired boyfriend. Each has a very different perspective – the father looks at the boyfriend with the cold eye of logic (does he have a job- will he ever get a job?) and the daughter sees her suitor as a warm and caring individual (but I love him, Daddy!). Neither is willing (or sometimes even able) to understand the point of view of the other.
Project proponents often cite additional jobs, taxes and other material benefits in response to concerns about environmental damage from the project. Opponents argue that the protection of environmental values is important because- well, they are just important. Quantification of inherently unmeasurable values, such as the cost of illness or death or the extinction of an obscure species resulting from human activities, is at best a clumsy exercise, notwithstanding the legions of PhDs in economics that have tried. Thus, comparison of the economic benefits with the environmental disbenefits of a particular project or policy is at bottom an unsatisfying exercise because neither side is willing or able to speak the “language” of the other. This has been especially true in the conversations about climate change, and given the staggering implications of climate change for human society and the environment, those conversations need to be mutually understandable.
So, what common “language” can mediate conflicting world views on environmental issues? Religion is increasingly serving as a framework for mutual understanding and communication to facilitate resolution of environmental issues. The debate over man’s impact on the earth under this approach is cast in terms of the sanctity of all creation coupled with a divine mandate for mankind to care for it.
Can a religion-based ethos of stewardship over creation and care for one’s neighbor solve environmental conflicts? It can certainly help restore the words “balanced” and “responsibility” to their normal meanings. It can provide a framework for talking about economic, health and lifestyle benefits to individual human beings, as well as protection of vulnerable ecosystems and esthetic values, based on something other than blind adherence to the laws of economics on the one hand and reflexive opposition on the other.
What lessons can environmental litigators take from the Supreme Court’s recent jurisprudence on pleadings? As most of the legal community is aware, the Court retired the “no set of facts” standard for a motion to dismiss under Rule 12(b)(6) and installed a “new” plausibility pleading standard in its 2007 decision, Bell Atlantic Corp. v. Twombly and 2009 decision, Ashcroft v. Iqbal. Together, these cases are often affectionately called “Twiqbal” and have caused both the courts and plaintiffs a great deal of angst over the years since their pronouncement. Yet, in the midst of the confusion, the greater question remains whether these decisions, as a practical matter, actually represent a game changer for pleading.
According to the latest Report to the Judicial Conference Advisory Committee on Civil Rules, there has been no increase in the rate of courts granting motions to dismiss following Twiqbal. However, a recent study from the University of California Hastings College of Law disputes this conclusion and finds that dismissal rates of all claims have, in fact, increased since Twiqbal. More importantly, the Hastings study finds a greater likelihood that a claim will be dismissed for factual insufficiency following the Supreme Court’s decisions.
Such studies raise the question of what impact, if any, Twiqbal has today on pleading environmental claims. Thus far, although several courts have addressed environmental claims under the Twiqbal plausibility standard, the results have not been consistent. Like the antitrust and civil rights claims addressed in Twombly and Iqbal, courts have often elevated the pleading standard for environmental claims due to their complexity, which often requires expensive discovery to flesh out the facts after filing the complaint. An early dismissal in such circumstances stands to avoid substantial litigation costs. Thus, if a court believes Twiqbal indeed represents a heightened pleading requirement, it is likely to require more specific facts to support the relevant environmental claims.
Accordingly, the environmental plaintiff should hedge its bets and take care in crafting its complaint if it is filing in federal court. Specifically, the plaintiff may want to take more time to investigate prior to filing to better describe the defendant, it’s link to the site, the types of hazardous substances released, and how specifically the defendant’s actions caused the release and the damages incurred. Depending on the circumstances, the plaintiff may want to avoid federal court altogether and rely on state claims as most states have yet to adopt the Twiqbal plausibility pleading standard. On the other side of the field, the environmental defendant should more carefully consider the value of filing a motion to dismiss for factual insufficiency and attack any gaps between the facts alleged and the formulaic recitations of the elements of the claim.
Investors, including public, labor and religious pension funds and socially responsible investment (SRI) funds, are filing increasing numbers of shareholder resolutions on environmental, social and governance (ESG) issues. Each spring, investors vote their proxies on these shareholder proposals, including many focused on environmental matters. The average number of votes on environmental proposals are increasing as well. In addition, a growing number of such resolutions are “withdrawn”, based on an agreement that the company will take specified actions consistent with the proposal. Ceres tracks ESG resolutions filed by members of its investor network, and nearly 40% have been withdrawn by agreement in recent years.
ESG proposals generally call for reports, policy changes or actions by companies to address ESG-related business risks and opportunities, such as filing a sustainability report, setting a greenhouse gas emission reduction target, improving energy efficiency or linking executive compensation to ESG metrics. As outlined in a recent Bloomberg BNA article, emerging topics featured in 2013 resolutions include physical risks from climate change, risks from hydraulic fracturing including methane emissions, “stranded asset” risks associated with energy companies’ fossil fuel reserves and sourcing sustainable palm oil to reduce deforestation. According to a recent analysis, investors now file about 50% more shareholder proposals on environmental and social issues than they did a decade ago, with nearly 400 filed each year.
But there has not been as dramatic an increase in the number of proposals voted on because proponents have withdrawn an increasing number of their proposals, generally after reaching agreements with the company. Such negotiated “withdrawals” are a sign that corporate America is increasingly willing to adopt new practices to address social and environmental concerns. Although votes on shareholder proposals are legally nonbinding, companies now appear to pay more attention to them.
One likely reason for greater corporate responsiveness is that the shareholder resolutions are garnering higher votes – the average vote on such proposals has grown from 11.9% in 2003 to 18.5% in 2012, according to As You Sow. In addition, according to a recent study by the IRRC Institute entitled “Growing Traction for Environmental and Social Proposals at U.S. Companies”, the number E&S resolutions grew by one-third between 2005 and 2011 to about 40 percent of all shareholder proposals going to a vote, and the number of votes above 30% on such proposals grew from 3% in 2005 to 31% in 2011.
Investors who have filed the most ESG resolutions during the 2013 proxy season to date are: socially responsible investment firms (29%), pension funds (26%), and faith-based institutional investors (18%). Surprisingly, philanthropic foundations have filed only 7%, while unions have filed 8%, and individual investors 6%. Special interest groups such as animal rights organizations accounted for the remaining 6%.
The fastest growing type of resolution filed over the last several years has related to political spending disclosure, representing 33% of 2013 resolutions so far, with ‘sustainable governance’ resolutions representing another 14% of this year’s resolutions. Sustainable governance resolutions include those asking for annual sustainability reports, as well as requests linking executive compensation to ESG metrics, such as reduced pollution or improved worker safety. Climate change and other environmental issues are the focus of 26% of the 2013 resolutions.
As ESG filings and average votes continue to grow, companies are increasingly faced with the question of how best to respond to a shareholder resolution. Corporate managers nearly always oppose these resolutions, and frequently ask for the SEC’s approval to exclude them from their proxy statement, although the resolutions often serve as early warnings for emerging financial risks such as climate change. The Society of Corporate Secretaries of Governance Professionals recommends that companies: 1) meet with the filer to discuss the request; and 2) consider whether and to what extent the company can implement the proposal or take other actions that will satisfy the filer.
Companies receiving resolutions should keep in the mind that the shareholder filer’s ultimate goal is not to get a high vote, but rather for the company to address the issue raised in the resolution, which the shareholder believes presents an important risk or otherwise affects the value of their investment. And filers are generally willing to negotiate in good faith and build a productive working relationship with the company. Some banks that received resolutions about predatory lending practices prior to the financial crisis probably wish they had paid more attention to the risks raised in the resolutions. Nearly all companies and investors would have been better off if they had done so, and the same lesson may very well apply to resolutions on environmental issues.
For the first time in its long history, the American Law Institute will consider two projects involving environmental law: 1) the law regarding environmental impact assessments, and 2) principles of environmental enforcement and remedies. In each case, if the proposal is approved, the relevant federal, state and local law would be reviewed exhaustively by a working group with environmental experience. Their product would then be reviewed by the full ALI membership, probably resulting in a report of some sort.
Because the field of environmental law is relatively new and largely dominated by federal statutes, it has been widely thought until now that there is little need for a “Restatement of Environmental Law” or even a significant part of it. A few previous ALI projects have touched on environmental law issues. For example, the Restatement of Torts addresses nuisance, negligence, trespass and strict liability for highly hazardous activities, all of which can arise in an environmental context. ALI’s 1991 “Reporters’ Study on Enterprise Responsibility for Personal Injury” addressed some aspects of toxic tort liability, including joint and severable liability.
The current effort is the result of the deliberations of some 47 ALI members who practice or teach environmental law, who concluded that there are a number of areas in environmental law where there is substantial confusion which could benefit from the type of thoughtful analysis and reporting for which ALI is well known. After screening over 30 possible projects, the group is recommending the two described at the outset.
The Enforcement Law project would survey both civil and criminal law. It would discuss how environmental liability arises, who can be liable, who can seek enforcement, and what remedies are appropriate. It would discuss areas of overlapping federal and state jurisdiction, and consider both statutes and common law.
The Environmental Impact Assessment project would discuss the triggering and nature of an obligation to assess potential environmental impact (including federal, state and local NEPAs), the scope of the inquiry and the methods.
This effort is being led by a 5 person steering committee chaired by Professor Tracy Hester, Director of the Environment, Energy and Natural Resources Center of the University of Houston Law Center. He can be reached at tdheste2@central.uh.edu for further information. The other committee members are Dean Irma Russell and Professors Robert Percival, Victor Flatt and Joel Mintz. Given the ALI’s clout in the legal profession, this initiative should be of considerable interest to ACOEL members.
2012 marks the 50th anniversary of Silent Spring, one of the first books to point out the environmental dangers associated with pursuing technological and scientific advances without fully understanding their possible negative side effects. Silent Spring was a revolutionary environmental exposé published in 1962 by an unassuming author, Rachel Carson. Her book inspired a powerful social movement that continues to impact environmental law and American society today.
A scientist and ecologist, Carson was a former editor of U.S. Fish and Wildlife Service publications and a feature writer for the Baltimore Sun who eventually dedicated herself to writing books that taught people about the fragile beauty of Earth’s ecosystem. Silent Spring was written in the wake of post-war lethargy, new affluence and during a time when Americans were confident science had all the answers. Disturbed by the proliferate use of synthetic chemical pesticides after WWII, Carson challenged this practice and sounded a loud warning about the use of chemical pesticides, a reminder of the responsibility of science and the limits of technological progress.
Critics called Carson an alarmist, and Silent Spring was met with intense rebuttals from the scientific establishment and some major industries. Regardless, Carson was steadfast in her resolve to show the need for new environmental policies and regulations necessary to protect human health and the environment.
Silent Spring is proof of the power of public opinion, and despite scientific skeptics, the book sparked a major environmental revolution. Carson’s exhaustive environmental calculations in Silent Spring brought to light the fact that people were subjecting themselves to slow poisoning by the misuse of chemical pesticides and toxic pollutants that take more than 15 years to break down. In addition, she exposed the fact that these chemicals could cause irreparable liver and nervous system damage, cancer and reproductive issues.
Carson’s testimony before Congress in 1963 later served as the catalyst for the ban on the domestic production of DDT and sparked a grassroots movement demanding better environmental protection and increased regulation, resulting in the formation of the U.S. Environmental Protection Agency (EPA).
Sadly Carson was not able to enjoy the fruits of her labor. She died after a long battle with breast cancer in 1964, just 18 months after her testimony before Congress. However, many celebrate the impact of her work on April 22 each year on Earth Day.
So after 50 years, how much has changed? Today, there is federal regulation of everything from coastal development to farming practices. Environmental protection includes policies concerning natural resources, human health, economic growth, energy, transportation, agriculture, industry and international trade and all parts of society. Many would say there is over regulation today. In many cases, I agree. However as Rachel Carson showed us, there is a need for some regulation, if just to protect us from ourselves.
April 22, 2012 was the 42nd Earth Day, an event that passed with limited notice by most Americans and the news media. For all but a few of us who work in the field, the environment is no longer a “top 10” issue. Yet objectively, the planet is in materially worse shape than it was on the first Earth Day in 1970. As a species, we are collectively destroying the earth’s natural systems, plundering its resources and squandering its natural capital at an accelerating and unsustainable rate. The “Tragedy of the Commons” that Garrett Hardin wrote so eloquently about in advance of the first Earth Day is rapidly unfolding just as he predicted.
On a global scale, the earth’s ecosystems are under siege. With a human population of 7 billion, and headed for at least 10 billion fairly soon, growing greenhouse gas emissions and resultant climate change, increasing regional water scarcity, and growing global competition for dwindling resources, the trends are to put it mildly, not looking good. It has been estimated that we are now consuming the planet’s resources, emitting pollutants and generating waste at about 1.5 times the earth’s carrying capacity. The “externalities” of our ever growing global economy are overwhelming the earth’s ability to assimilate them.
If we continue on our present course, our environmental, social and economic systems appear to be headed for collapse, or at least some very rough sledding with unacceptably high (and of course, inequitably distributed) human and ecological casualties. Catastrophic and irreversible climate change is a growing possibility, if not a probability, without fundamental changes in how we use energy. After more than 40 years of effort, and a proliferation of “green” policies and initiatives, we are clearly losing the war of environmental protection and conservation. This is particularly disquieting for those of us who work in the environmental profession, supposedly understand these issues, and presumably care about the real world outcomes.
In his July 8, 2010 ACOEL blog entry, Fournier “Boots” Gale of this firm reported on the then-most recent court decision dealing with whether and how a plaintiff could recover, under CERCLA, costs it incurred for a cleanup performed under a consent decree or administrative settlement. One of the more intriguing developments for CERCLA practitioners has been the tension between and radical changes to cost recovery or contribution claims under 107 and 113 of CERCLA. Boots reported on the July 2, 2010 decision by a federal judge here in Alabama to grant complete summary judgment to defendants, finding that a party compelled to incur such costs can only proceed under Section 113, and not 107. Because the defendants in that case had also entered into an administrative settlement with EPA for the same site, thus obtaining Section 113 contribution protection, all of plaintiffs’ claims were dismissed. That case is still on appeal to the 11th Circuit. The issue decided by the Alabama federal court--whether compelled costs were recoverable under Section 107, 113, or both—had been left unanswered by the United States Supreme Court in United States v. Atlantic Research Corp., 551 U.S. 128 (2007). Courts have been struggling with this issue ever since.
The latest opinion on this issue is from the 8th Circuit, in Morrison Enterprises, LLC v. Dravo Corp., 2011 WL 1237526 (8th Circuit, April 5, 2011). The 8th Circuit was the federal circuit court whose decision was affirmed in the Atlantic Research case, so the result in this case is not surprising. Noting the question unanswered by the United States Supreme Court in Atlantic Research, the Morrison Court, as did the federal court in Alabama, concluded that Section 113 was the appellants’ exclusive remedy, confirming the summary judgment granted by the district court below on the Section 107 claim. One of the Morrison appellants argued to the district court that one of the contaminants it cleaned up was totally unrelated to its operations and, thus, the costs it incurred related to that contaminant were “voluntary” and thus recoverable under Section 107. Interestingly, the plaintiffs in the Alabama case made the same argument. Both the Alabama and 8th Circuit Courts rejected the argument because all of the work was performed under and pursuant to a consent decree, which was broad enough to encompass the costs for cleaning up the contaminant sought to be carved out as voluntary. In effect, even if one wishes to argue later that some costs incurred were for a contaminant for which one had no responsibility, if the costs incurred are pursuant to that consent decree, or administrative settlement, then the costs are not incurred voluntarily and a Section 107 claim is still barred. In a final blow to the cost recovery efforts in this case, the appellant attempted to amend its complaint to assert a Section 113 claim after summary judgment had been entered on its 107 claim, but the district court denied it as untimely (and the Morrison court affirmed on this issue, too).
In 2009, the United States District Court for the Eastern District of Wisconsin rendered a widely reported and discussed decision in Appleton Papers Inc. v. George A. Whiting Paper Co., No. 2:08-cv-16-WCG (E.D. Wis. Dec. 16, 2009) (Appleton I) that many remember as being unique. This is because rather than considering the usual so-called “equitable factors” to determine proportionate financial responsibility in a CERCLA contribution action such as waste-in volume or relative contaminant toxicity, the District Court focused entirely on a single marker of relative culpability i.e., Appleton Paper’s knowledge that their actions would cause environmental harm.
In February of 2011, the District Court issued an equally intriguing opinion in Appleton Papers Inc., v. Whiting Paper Co., No. 08-C-16, 41 ELR 2011 (E.D. Wis. Feb. 28, 2011) (Appleton II). Relying in large measure on the District Court’s 2009 decision, multiple defendants argued that the response costs already contributed to cleanup effort should be borne by NCR Corp. and Appleton Papers Inc. (collectively “the Appleton Plaintiffs”). All of the Defendant’s arguments highlighted the same equitable factor that barred the Appleton Plaintiffs from obtaining contribution it, e.g, knowledge that a generated waste might cause environmental harm. The District Court agreed, and determined that the Appleton Plaintiffs were liable to the Defendants for response cost of remediating four of the five operable units along the Lower Fox River. However, the Appleton Plaintiffs were determined not to liable for costs associated with Operable Unit No. One (“OU1”) because the OU1 defendants were unable to prove that the Appleton Plaintiffs contributed to the contamination of OU1 (OU1 is located upstream of the Appleton Plaintiffs’ facility) or that the Appleton Plaintiffs were arranges under CERCLA §107).
These cases warrant practitioners’ review as they clearly express the notion that contribution liability should rest upon satisfaction of the ultimate objective of the CERCLA liability scheme i.e., that the polluter pays the costs of resolving the pollution it causes. This objective should never be far from mind, as the fact based focus of inquiry utilized by the District Court in these cases may well be the undoing of practitioner’s efforts to rely upon supposed technical and legal attributes of relative responsibility. Instead, the focus should be directed to the essential inquiry at the root of the CERCLA legislative cost recovery scheme e.g., the polluter who causes pollution to occur should pay for its cleanup.
CERCLA liability under section 107 is often characterized as strict, joint and several unmitigated by considerations of causation, fault or fairness. Contribution is different, however. Congress, in section 113(f)(1), specifically authorized the courts to allocate costs “using such equitable factors as the court determines are appropriate.” Illustrative of this fundamental difference is the fight over who shall pay what for the massive PCB cleanup of the Lower Fox River.
NCR is incurring the bulk of the costs based on discharges of PCBs incident to the manufacture of carbonless paper at a facility on the River. It sued numerous paper mills along the River based on their discharges of PCB containing wastewater incident to the recycling of trim and waste carbonless paper. In late December 2009, Judge Griesbach of the Eastern District of Wisconsin dismissed NCR’s suit for contribution against the paper mills based on NCR's knowledge of the content and risks associated with PCB-containing carbonless paper as manufacturer/developer of the product compared to the recycling paper mills.
Framed thus — in old fashioned terms about knowledge of dangers and avoidance of risk—it was no contest. NCR was denied contribution because of its knowledge, learned gradually over time, about the toxic nature of PCBs as against those who merely, and without access to NCR’s superior knowledge of the product, processed it for recycling. The Court’s analysis, it said, “is governed by traditional principles of equity, such as the relative fault of the parties, any contracts between the parties bearing on the allocation of cleanup costs, and the so called ‘Gore factors.’” The lengthy recitation of the largely undisputed facts was nothing less than a moral indictment of NCR’s actions and reactions as the knowledge about PCB toxicity and its threat to the environment came to be documented and disseminated; in short, nothing less than a fault-based conclusion.
The flip side of this case came down in February 2011. Judge Griesbach decided that the paper mills, which had incurred expenses related to various EPA and Wisconsin DNR orders and settlements, monitoring and investigation, were entitled to contribution from NCR for those portions of the River where both recycling and manufacturing PCB contamination occurred. This time around the Court was satisfied that its singular use of NCR’s “fault” as the sole determinant to deny NCR contribution in 2009 was likewise sufficient to grant the paper mills a right of contribution against NCR. In other words, fault or culpability can become the overriding factor and permit the court to eschew consideration of any other equitable factors, including Gore factors. One sees in the Court’s emphasis on charging the financial cost on those “responsible” for creating the hazardous conditions a tone and direction quite at variance with the rather automatic analysis of liability under section 107. Hence, although approximately half of the PCBs originated with the paper mills and not NCR’s manufacturing, the Court, on culpability grounds, was prepared to impose the entire cost on NCR exclusive only of amounts reimbursed to the defendants by insurance.
When Does a Superfund Cleanup "End"?
A few months ago, a significant anniversary passed without much fanfare: the 30th anniversary of the passage of CERCLA. Interestingly, 30 years has another meaning today in the Superfund world as many of the CERCLA sites have passed through the active cleanup phase and into the long-term operation and maintenance phase. When practitioners began working with the Superfund statute in the early days, the question of when would a Superfund cleanup “end” was considered. Many of us thought that 30 years of monitoring at a site after completion of the active remediation stage was a reasonable expectation. This expectation, while not expressly stated in CERCLA or the National Contingency Plan, was based on the approach used in RCRA closures which generally require 30 years of post-closure monitoring.
But 30 years of working with the Superfund statute has made it clear that 30 years is not a meaningful benchmark for long-term O&M, at least not to EPA. The critical documents in the Superfund process, the Records of Decision, the Consent Decrees and the EPA Guidance documents usually do not specify when long-term operation and maintenance may cease. As a result, because groundwater contamination at many Superfund sites has proven to be so difficult to remediate to drinking water or some other agreed upon standards, many PRP Groups are faced with the possibility that their Superfund site may require perpetual monitoring. In addition, since the Consent Decrees require a five year review process by EPA for all active sites, the possibility of enhanced monitoring or additional remediation always looms on the horizon.
Loss of institutional memory and familiarity at sites where, over time, companies and their divisions are sold and counsel, consultants and EPA personnel move on and/or retire.
These risks and costs, of course, are spared for de minimis parties and other PRPs who structure their settlements as cash-outs either to EPA or to other PRPs. For those performing parties left behind, however, the ability to determine a reasonable end point to the commitment they entered into years, if not decades earlier, often remains a largely unresolved and perhaps undeterminable question under present regulation and practice.
ARE YOU SURE YOUR CLIENT IS A BFPP?
We all know that the bona fide prospective purchaser (BFPP) provision provides a defense to CERCLA liability for contaminated sites and allows a knowing purchase of contaminated property. It encourages brownfields and voluntary cleanup programs across the country.
Judicial interpretations of the BFPP defense are scarce. In October 2010, a federal district court in South Carolina issued its opinion which was a nasty turn of events for BFPP’s. (Ashley II of Charleston, LLC v. PCS Nitrogen, Inc. (“Ashley II”), Case No. 2:05-cv-02782-MBS). The case was for recovery of cleanup costs associated with a former fertilizer manufacturing plant in Charleston, South Carolina.
The court decided that Ashley was not a BFPP, as it claimed, and was responsible for five percent of the clean-up costs based on the following facts: (1) Ashley had torn down some structures in 2008, which allowed rainwater to contact cracked sumps containing hazardous substances. As a result, disposal of hazardous substances had occurred after Ashley took possession of the property; (2) Ashley was “affiliated” with other PRPs because Ashley had indemnified them and, more significantly, attempted “to discourage EPA from recovering response costs covered by the indemnification”; and (3) Ashley had not exercised appropriate care because it failed to address recognized environmental conditions (RECs) that were identified in the environmental site assessment as well as other potential site hazards.
The lesson here is that Purchasers should consider the effect of indemnity provisions and any interactions they may have with government agencies regarding other PRPs. In addition, because “disposal” may be defined very broadly, purchasers should thoroughly evaluate construction, demolition, and other site activities to determine if such activities could cause a release of hazardous substances. Finally, it is critical that all RECs be addressed, beginning no later than the time the purchaser acquires the property and continuing for the duration of its ownership.
The National Environmental Policy Act: When Is A SEIS Just Not Enough?
The Los Alamos Study Group (the “Study Group”) is presently challenging the United States Department of Energy (“DOE”) and the National Nuclear Security Administration’s (“NNSA”) efforts to construct the new Chemistry and Metallurgy Research Replacement Nuclear Facility (“CMRR-NF”) at Los Alamos, New Mexico.
The Study Group’s complaint, in federal district court in Albuquerque, asserts that the project has changed so dramatically that an eight-year old environmental impact statement (“EIS”) does not begin to adequately analyze the environmental impacts of the present iteration of the CMRR-NF, and that defendants’ offer to conduct a supplemental environmental impact statement (“SEIS”) is merely a fait accompli to continue with the detailed planning and initial construction of the massive venture.
Moreover, since 2004, the project has seen further fundamental changes. The original budget for the Nuclear Facility was estimated at $350-$500 million. In 2003, the estimate, as reported to Congress, was $600 million. The EIS stated that construction would be completed in 2009; now, it is estimated to conclude in 2022, at a cost approaching $6 billion.
In 2003, NNSA reported that the Nuclear Facility would have 60,000 square feet of Hazard Category 2 space within 200,000 square feet of gross area. The CMRR-NF has now changed from a structure to be built to a depth of 50 feet, to a structure requiring an excavation to 125 feet, with the bottom 50-60 feet of the hole filled with concrete. As a result, the total volume of excavation for the CMRR-NF has increased from about 167,000 cubic yards in 2003, to 579,000-704,000 cubic yards in 2010, a three-to-four fold increase in construction equipment, spoilage, and disposal needs. The volume of soil now remaining to be excavated has increased six-fold.
Additionally, changes in the basic concept of the Nuclear Facility have expanded to include the introduction of the so-called “hotel concept” that would accommodate various unknown future missions, but would require large open floor areas and significant increases in concrete and steel. The concrete now needed is 371,000 cubic yards, up from 3,194 cubic yards. This is more concrete than was used for the Big-I Interchange in Albuquerque, or for the Elephant Butte Dam in southern New Mexico. The steel needed is now 18,539 tons, up from 242 tons. That is roughly the equivalent of the Eifel Tower. In short, the Nuclear Facility dwarfs the Manhattan Project and would be the largest construction project in the history of the State of New Mexico.
The Los Alamos Study Group case is one of first impression, as it is the first to contest the federal defendants’ decision to perform a SEIS as opposed to a new EIS altogether. Unlike a SEIS, an EIS must consider all available alternatives, including refurbishment of existing, under-utilized buildings at Los Alamos, and any other alternative besides the construction of the present iteration of the $6 billion CMRR-NF. Many of those alternatives, rejected in the original 2004 Record of Decision, may now be viable given the significant cost increases in the present version of the Nuclear Facility.
The federal defendants have filed a motion to dismiss based on prudential mootness and other grounds. All pleadings and other filings in the case may be obtained on the Study Group’s website.
Montana, like many other states, has its own version of CERCLA, called the Comprehensive Environmental Cleanup and Responsibility Act (“CECRA”). CECRA has its own categories of liable parties, including a broad class of “arrangers,” but unlike CERCLA, explicitly provides for joint and several liability. These differences result in greater potential exposure for defendants in hazardous waste cases.
The Montana Department of Environmental Quality (DEQ) sued seven parties, six of whom settled, with the result that a Final Unified Abatement Order was entered, holding BNSF jointly and severally liable for the Reliance site, as an “arranger” under CECRA, even though the trial court made no finding that BNSF intended to release a hazardous substance at the site.
Like CERCLA, CECRA contains no definition of an “arranger.” Instead, Section 75-10-715(1)(c) of CECRA includes among the list of liable parties “a person who generated, possessed, or was otherwise responsible for a hazardous or deleterious substance and who, by contract, agreement, or otherwise, arranged for disposal or treatment of the substance or arranged with a transporter for transport of the substance for disposal or treatment,” language that differs somewhat from Section 107(a)(3) of CERCLA.
The trial court held BNSF liable as an “arranger” under CECRA because of its “involvement” with Reliance in the dumping of petroleum on the Reliance site. The trial court relied on the Ninth Circuit decision in BNSF I, adopting a broad form of “arranger” liability, and refused to reconsider its ruling when the Ninth Circuit was reversed by the Supreme Court.
The Montana Supreme Court began its review of the trial court decision by noting that Section 114(a) of CERCLA provides that nothing prevents a State from imposing additional liability beyond those imposed by CERCLA. The Court then held that “an entity need not specifically ‘intend’ to dispose of a hazardous substance for imposition of ‘arranger’ liability ” It was enough that BNSF “possessed or was otherwise responsible for the materials it shipped” and that “[a] necessary and foreseeable consequence of shipping the material was unloading the material.” Since BNSF employees moved full tank cars of crude oil to the Reliance site so Reliance employees could dump the crude oil on the ground, “BNSF participated in the unloading process which resulted in the release of the materials it possessed.” In holding that the trial court did not err in holding BNSF liable as an “arranger,” the Court set a low bar for “arranger” liability under CECRA.
Unlike CERCLA, which is silent as to whether or not “covered persons” are jointly and severally liable under the statute, CECRA provides, in relevant part, that “notwithstanding any other provision of law,*** the following persons are jointly and severally liable for a release or threatened release of a hazardous or deleterious substance***” .
Notwithstanding this statutory language, the trial court entered a pretrial order that once the state proved that BNSF is a liable party, “BNSF must come forward with evidence to show it was only responsible for a portion of the contamination at the site to avoid the possibility of joint and several liability for all the surface contamination.” When BNSF failed to make such a showing, the trial court held BNSF jointly and severally liable. Because BNSF had failed to prove the factual basis for apportionment, the Supreme Court declined to rule on whether apportionment would ever be possible under the statutory language. Thus, BNSF II leaves unanswered the question of whether liability can ever be apportioned under a statute that explicitly provides for joint and several liability, no matter how distinct the harms may have been.
As the United States Supreme Court continues to read CERCLA narrowly, state statutes, like CECRA, may become more important in the development of hazardous waste law. BNSF II may very well represent the beginning of a trend.
Over the past three decades, EPA has issued more than 1,700 CERCLA UAOs to roughly 5,400 PRPs ordering the performance of response actions at CERCLA sites costing in aggregate in excess of $5 billion. Only a small handful of those orders, however, have ever been challenged in court, and vanishingly few have been subject to any independent third party review whatsoever.
Why is that? Well, as even EPA might agree, it is not because the Agency is infallible. No, the reason for EPA’s essentially unreviewed exercise of its UAO authority is the CERCLA statute itself, which (a) by operation of Section 113(h), precludes any challenge to a UAO order until the ordered response action has been completed (typically many years later at an average cost of $4 million dollars) and (b) by operation of Sections 106 and 107, subjects any PRP who elects to defy a UAO to treble punitive damages and additional penalties of $37,500 per day, which accumulate until EPA, at its sole discretion, brings an enforcement action.
In this regard, CERCLA is an outlier in administrative law. Though instances are common where federal statutes give agencies the power to issue administrative orders, virtually every other comparable scheme affords recipients of such orders either a prior hearing or the prompt opportunity for independent review after the order is issued. CERCLA, of course, provides neither.
So what justifies this unusual approach? It has been suggested on occasion that due process must be dispensed with because UAOs are needed to address emergency conditions. They can only be issued, after all, where an imminent and substantial endangerment to public health or the environment is shown. There are two problems with that rationale, however. First, the courts have largely upheld EPA’s position that “imminent and substantial endangerment” doesn’t really mean “imminent” or “substantial” – there really is no site involving a hazardous substance and a release (actual or threatened) that doesn’t meet the statutory criteria for UAO issuance. Second, as EPA has conceded in litigation, the fact is that EPA doesn’t issue UAOs in true emergencies; in those circumstances, it does the work itself and seeks to recover its costs later.
Okay, so even if true emergencies are not implicated, it’s still the case that EPA has a need to act quickly and that allowing pre- (or prompt post-) issuance review would unduly impede cleanup of hazardous sites, right? Well, as it turns out, that’s not true, either. Analysis of EPA’s CERCLIS database reveals an average 8-year lag-time between identification of a site and issuance of a UAO and a 4-year lag between remedy selection and UAO issuance. Obviously, there’s plenty of time in the system for a little due process.
So why haven’t past procedural due process challenges to this UAO scheme (and there have been a number of them) succeeded? The courts that have rejected those challenges have commonly concluded that the challenging PRPs couldn’t show a pre-hearing deprivation of property, as is required to trigger Fifth Amendment protections. Those courts reasoned that a PRP could simply refuse to comply with and wait for EPA to sue to enforce the UAO, and in that event would suffer no pre-hearing deprivation of property since penalties and damages could only be awarded following a court hearing.
Though the conclusion is facially appealing, its fallacy is demonstrated by the record of the most recent constitutional challenge brought by GE. There, following extensive discovery from EPA and expert testimony on both sides, GE was able to demonstrate empirically that a PRP that elected to defy a UAO would be immediately punished by the equity and capital markets, which would recognize the massive contingent liability such defiance would create and account for it by lowering the PRP’s stock value and increasing its cost of financing, with consequent impacts on its ability to bid for new projects or to hire additional employees, among other things. Indeed, although he took issue with GE’s assessment of the magnitude of the impact, even EPA’s economic expert agreed that defiance would occasion such harmful effects and that they would be significant. And the District Court agreed, as well, that defiance would not avoid a deprivation of property, though it ultimately ruled against GE on the basis that the burden to EPA of providing hearings outweighed the private party interests favoring such hearings.
On appeal the D.C. Circuit rejected the district court’s finding of a pre-hearing property deprivation, however, and ruled instead that such harmful impacts did not involve constitutionally protected property rights and so dismissed GE’s constitutional challenge on that predicate ground without reaching the District Court’s balancing analysis. The potential implications of that holding – which GE believes is inconsistent with Supreme Court precedent – extend well beyond CERCLA confines, and so GE has sought certiorari review. The government’s response to GE’s petition is due February 4.
Since passage of the Federal Insecticide, Fungicide, and Rodenticide Act in 1972, environmental statutes and regulations have sought to balance legislative mandates seeking disclosure of chemical identities and properties against trade secret protection concerns. This tension can be seen in the labeling of cosmetics, the submittal of test data under the Toxic Substances Control Act (“TSCA”), and the disclosure of chemical additives to fluids used for hydraulic fracturing. In all three situations, efforts to increase access to chemical identity information are likely to create further challenges to trade secret protection.
On the cosmetics labeling and TSCA front, a bill introduced in the House of Representatives this past July, entitled the Safe Cosmetics Act of 2010, would have required cosmetics labels to identify the name of each ingredient in descending order of its “predominance”, with the same information provided for internet sales. Regardless of the type of sale, the ingredients would not be afforded trade secret protection. While the bill was not enacted, the concerns that kept it alive even in the waning days of the Congressional session may be a harbinger of a new version in the upcoming session.
A bill to amend TSCA also filed in the House last July would have required a manufacturer to provide an upfront justification for any trade secret claim made in an information submittal under TSCA, with EPA required to evaluate the submittal within 60 days thereafter. While this bill did not pass either, EPA had previously announced its intention toreview chemical identity CBI claims in health and safety studies submitted under TSCA, and it subsequently proposed amendments to its TSCA regulations that would require upfront justification of a chemical identity claim. In addition, EPA has substantially increased the chemical information available on its Envirofacts database, and is now providing free access to its TSCA inventory of chemicals.
Additives to hydraulic fracturing fluids have likewise been the subject of much attention, and have sparked initiatives in a number of states to require their disclosure. Beginning next year, Arkansas will require disclosure hydraulic fracturing fluids on a well by well basis, although allowing more generic disclosure of proprietary chemicals. The information will be publicly available for review on the website of the Arkansas Oil and Gas Commission. In Wyoming, the additives are reported to the staff of the state’s Oil and Gas Conservation Commission, rather than to the public, and the Commission has granted a number of requests for trade secret protection, although the requests themselves are matters of public record.
Colorado requires oil and gas drillers to keep an inventory of the chemical additives at the site of each well, with state regulators getting a copy of the inventory upon request. Pennsylvania requires material safety data sheets covering the fracing fluid materials to be included with each drilling plan submitted for approval, with the MSDS sheets made available to the landowner and to local government and emergency responders. Both Colorado and Pennsylvania are considering expansion of those requirements.
In September EPA issued letters to nine companies engaged in hydraulic fracturing related activities seeking the identity of the fracing fluid additives and copies of studies about their health and environmental effects. All of the companies have now responded to the EPA request, with Halliburton establishing a public website to disclose information about those additives. In addition, a number of trade associations, including the American Petroleum Institute, have lent their support to a voluntary disclosure registry under development by the Groundwater Protection Council, which includes a number of state officials responsible for groundwater protection, and the Interstate Oil and Gas Compact Commission, with data to be disclosed on a well-by-well basis.
How efforts such as those just described will address trade secret issues remains to be seen, particularly given the concerns raised about potential contamination of drinking water supplies by fracing fluids. However, it appears that the day has passed when one could claim trade secret protection and provide support for that claim only when the information was actually requested. And the new riff on that old refrain sung by Johnny Mathis and Doris Day appears more likely to be that “my secret name’s no secret any more”.

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