Newsletter | October/November 2012
Washington Environmental Report | A monthly publication of LeClairRyan's Environmental Practice Area
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NYC focused
Post-Election Report: EPA's Regulatory Express Ready to Take Off.
by Thomas G. Echikson

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During the Obama administration's first term, EPA oversaw an explosion of regulatory activity. The Agency issued rules imposing first-time controls over greenhouse gas emissions from mobile and stationary sources, regulatory barriers to the use of coal in new (and existing) electric generating units, and expensive mandates in a variety of industries.

In the year heading to the election, however, the flow of new regulations slowed to a halt. It became evident that rules were being delayed for political reasons. With the election now past us, the question arises -- what can we expect from EPA in the second term? The answer seems pretty clear -- a re-ignition of the regulatory express.

Over the next two years, EPA will propose and finalize many new and significant rules, particularly under the Clean Air and Clean Water Acts. The pipeline is full, and electric utilities, agricultural operations, the construction and real estate industries, and facilities using large boilers are all going to feel the brunt. What follows is a summary of some of the most significant rulemakings in the works.

1. Stricter Air Requirements

  • Utility MACT/Mercury Rule -- Just days after the election, on November 16, 2012, EPA released a revised "maximum achievable control technology" (MACT) air toxics rule for new power plants. This proposal revises EPA's February 16, 2012 rule, which is being challenged by industry. The most recent proposal does not change the final emission limits for existing power plants, and EPA states that it will not affect the control technologies that will be used to meet the existing limits. EPA also states that it does not project any changes in anticipated costs or benefits from the rule. EPA has estimated the annual costs for compliance with the rule to approach $10 billion, and many believe that this significantly understates the actual costs. Industry has also questioned EPA's estimate of the health and environmental benefits from the rule, as most of the health benefits are attributed to reductions in fine particulate matter rather than mercury or other hazardous air pollutants. EPA anticipates issuing a final rule by March 2013.
  • New Source Performance Standards for Greenhouse Gases from New Electric Generating Units -- Dealing another blow to the use of coal to generate electricity, in April 2012 EPA proposed a rule imposing restrictions on GHG emissions from new electric generating units that would effectively ban construction of new coal-fired power plants. Moreover, once the standard is issued for new plants, EPA would be obligated to create a rule for existing plants, and there are concerns about how such a standard could affect the viability of existing coal-fired units. Most recently, EPA has indicated that it is not rushing to complete this rulemaking, and it may be another year or more before it is issued.
  • Boiler MACT -- On March 21, 2011, EPA issued a final rule establishing standards for emissions of hazardous air pollutants (HAP) from boilers and process heaters located at major sources. After vociferous complaints from industry about the cost and feasibility of complying with the rule and following several petitions for reconsideration, EPA proposed amendments to the rule on December 23, 2011, modifying, among other items, the applicability of the rule to certain boilers, as well as the recordkeeping and tune-up requirements. In the meantime, EPA has stated that it will not enforce the tune-up requirements until the final rule is issued or the end of 2012. The final revised rule has been pending at OMB since May and is expected to be reissued in the next few months.
  • Revised PM2.5 National Ambient Air Quality Standard (NAAQS) -- Under the Clean Air Act, EPA is required to review and, if appropriate, revise the NAAQS for different pollutants every 5 years. On October 17, 2006, EPA issued a revised NAAQS for PM2.5, lowering the 24-hour standard to 35 µg/m3 and retained the level of the annual PM2.5 standard at 15 µg/m3. In June 2012, EPA proposed additional revisions to the PM2.5 NAAQS, looking to reduce the annual NAQS to between 12-13 µg/m3 (and requested comment on an even more stringent limit of 11 µg/m3). The revised PM2.5 NAAQS should be issued in December and is likely to lead to increased compliance costs for many different types of operations. These changes to the PM2.5 NAAQS come on top of last year's tightening of the SO2 and NO2 NAAQS. Combined, these new and stricter standards are likely to increase the difficulty of permitting new and expanded facilities.

12. Stricter Water Requirements

  • 316(b) Cooling Water Intakes for Existing Electric Generating Facilities -- Section 316(b) of the Clean Water Act (CWA) requires that cooling water intake structures reflect the "best technology available" (BTA) for minimizing adverse environmental impacts. Following the Supreme Court's decision in Entergy Corp. v. Riverkeeper, 556 US 208 (2009), overturning EPA's original rule for large existing electric generating facilities, EPA has attempted to develop a revised rule in accordance with a schedule the Agency agreed to with environmental groups. EPA issued the proposed rule in March 2011 and is scheduled to issue a final rule by June 27, 2013. EPA's proposal includes uniform controls at all existing facilities to prevent fish from being trapped against screens (impingement), site-specific controls for existing units to prevent fish from being drawn through cooling systems (entrainment), and uniform controls equivalent to closed cycle cooling for new units at existing facilities (also entrainment).
  • Revisions to the Concentrated Animal Feeding Operations Discharge Permitting Regulations -- EPA anticipates issuing a proposal in the spring of 2013 to revise the CAFO water-permitting regulations that will likely expand the universe of regulated CAFOs and provide more stringent permitting requirements for land application of manure, litter, and process wastewater. CAFOs promise to be the focus of attention particularly in areas like the Chesapeake Bay, where nutrients are believed to be significant contributors to water quality impairment.
  • Effluent Guidelines for The Construction and Development Industry -- The original effluent guideline for the Construction and Development category of facilities was issued in December 2009 and contained a controversial numeric effluent limit for turbidity. EPA subsequently stayed this requirement and intends to re-propose the rule, possibly as early as December 2012. New construction activities can expect more stringent requirements governing stormwater discharges.
  • Stormwater Discharges from Developed Sites -- EPA has long regulated stormwater discharges from construction sites but most recently has begun to focus its attention on stormwater discharges from developed sites, which the Agency believes contribute significantly to water quality impairment. EPA is considering a proposal which would establish requirements for managing stormwater discharges from newly developed and re-developed sites. The rule would likely achieve this goal by reducing the discharge of "excess" stormwater, and the Agency may require other actions to improve control of stormwater and more efficient rainwater use. There remain questions about EPA's authority to mandate restrictions on stormwater flow (as opposed to limits on pollutants in stormwater), but we can expect to see a proposed rule possibly as early as the summer of 2013.
  • Effluent Guidelines for Electric Generating Units -- The current effluent guidelines (i.e., discharge requirements for different facilities within an industrial category) for nuclear and fossil-fueled steam electric power plants were issued in 1982, and EPA is preparing a proposal to update them to reflect recent developments. EPA expects that the rulemaking will address discharges from ash ponds and flue gas desulfurization (FGD) air pollution controls, as well as other power plant waste streams. The proposal should be released in the next few months.
  • Definition of "Waters of the United States" -- After the U.S. Supreme Court decisions in SWANCC and Rapanos, the scope of "waters of the US" protected under the Clean Water Act has been an issue of considerable debate and uncertainty. In April 2011, EPA and the U.S. Army Corps of Engineers issued a draft guidance on the issue. At the same time, these agencies are attempting to develop a proposed rule to clarify which waters are subject to regulation is protected by the Clean Water Act. It is not clear when or if this proposed rule will be published.

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NYC focused
NY State Court Raises the Bar for Landowners Seeking Clean-Up Cost Recovery From a Previous Landowner Causing Contamination
by Michael Case and Benjamin Harbuck

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A New York state court recently issued a decision under the New York Navigation Law, regarding a landowner's ability to obtain summary judgment against a former owner based upon claimed contamination of the claimant's property.

In One Flint St. LLC v. Exxon Mobil Corp. et al., Index No. 2011/4470 (S.Ct. Monroe Cty., 2012), the Court considered a claim by a property owner (One Flint) for reimbursement of environmental costs expended due to alleged discharge of petroleum by a predecessor-in-interest of defendant Exxon Mobil, which owned and operated an oil refinery on the site from 1878 to 1935. Refinery operations included manufacturing grease, storing petroleum in tanks and preparing barrel drums. Thereafter, the site was operated by Rochester Baling Corp. as a scrap metal/salvage yard. A 1,000- gallon underground storage tank, in use at the time, was removed in 1993. Heating oil was later detected in the site's soil, and One Flint incurred costs remediating the heating oil contamination.

One Flint sought summary judgment: (a) declaring Exxon Mobil (as successor -in-interest to the prior owner) strictly liable under Navigation Law § 181(1) for all remedial costs; (b) requiring Exxon Mobil to pay for site remediation; and (c) requiring Exxon Mobil to compensate One Flint for remedial costs incurred.

The Court denied plaintiff One Flint's motion, holding that plaintiff failed to prove, as it must, that Exxon Mobil's predecessor actually caused or contributed to the heating oil release. The possibility that the discharge did not occur during subsequent scrap or salvage-yard operations had not been foreclosed. And, the Court added, it was "uncertain that Plaintiffs themselves are blameless here." While the evidence suggested that Exxon Mobil may ultimately share some liability for the cleanup of the site, the Court noted that a prior owner may not be held liable under the Navigation Law without proof of its ability to control activities occurring on the property, and its actual or constructive knowledge that petroleum products are stored there. Mere status as a prior landowner is not enough.

The Court also considered that many of the named defendants had yet to answer Plaintiff's complaint, and discovery had just begun. Thus, the Court concluded that too many relevant questions remained unanswered, and defendants had not had a reasonable opportunity to investigate the allegations being made against them.

Implications for Property Owners

One Flint Street illustrates the standards of proof required to subject prior owners to liability under the Navigation Law. Navigation Law claims against prior owners require proof of ability to control activities, and knowledge of petroleum storage on site. That proof may be difficult to obtain when the defendant left the site years or decades before current owner's operations began. Further, the One Flint Street holding shows that a claim may only be asserted by an injured person who is not responsible for the discharge.

The One Flint Street decision may be limited by its facts. The decision arose in a case where many of the named defendants had yet to answer the complaint and, as the Court recognized, discovery had "hardly even begun." Thus, the Court recognized plaintiff's right to present its summary judgment motion anew, at a later point when the record is more fully developed.

LeClairRyan's Environmental Law attorneys represent and counsel clients in a full spectrum of matters, including cleanup costs recovery, environmental risk allocation, environmental due diligence, environmental reporting requirements and permitting. Please contact your LeClairRyan attorney for a copy of the One Flint Street holding or to learn more about our Environmental Law capabilities.

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