The regulatory environment continues to be challenging, to say the least, for American developers, manufacturers and other businesses. As recent court rulings and EPA announcements illustrate, the EPA’s regulatory approach and stricter enforcement of the country’s major environmental laws shows no sign of slowing down. What follows is a roundup of some specific developments that should be on the radar screens of compliance officers and their counsel.
D.C. Circuit Upholds EPA’s Greenhouse Gas Rules
In one of the most anticipated environmental cases in years, the U.S. Court of Appeals for the District of Columbia recently upheld the EPA’s suite of greenhouse gas (GHG) rules, including the GHG standards for automobiles and the “tailoring rule” governing the permitting of new and modified industrial sources of GHGs.
In Coalition for Responsible Regulation, Inc v. EPA (D.C. Cir., No. 09-1322, June 26, 2012), a coalition of states and industry had attacked the rule on numerous grounds, arguing that the EPA’s technical conclusions were scientifically indefensible and its rules arbitrary and capricious and contrary to the terms of the Clean Air Act. The court unanimously rejected all of these arguments, concluding that not only was EPA justified in pursuing regulation of GHGs under the Clean Air Act, but that the agency was also compelled to do so in many respects.
The ruling effectively concludes the multi-year legal challenge to the EPA’s authority to regulate GHG emissions from autos and industrial sources. However, the EPA still faces some challenges as it continues to implement this authority.
Congress is threatening to revisit the issue, although the likelihood of any legislative change in this election year is low. Moreover, the state of Texas and industry are challenging the EPA’s takeover of the GHG permitting program in Texas. And, most importantly, the details of what the EPA may require to control GHGs are just emerging. Thus for most companies the focus turns to the EPA’s nascent GHG permitting program for new and modified sources.
The EPA and states have already issued several “Prevention of Significant Deterioration” pre-construction permits imposing “Best Available Control Technology” for GHG emissions, and these efforts are being watched carefully to ascertain what sort of requirements are likely to be imposed. Like all new regulatory programs, there are likely to be some hiccups as the effect of these precedents on future determinations becomes better understood.
The EPA continues to aggressively enforce the major environmental statutes, announcing in recent weeks several significant settlements, which shed light on the agency’s enforcement priorities:
- Homebuilder Toll Brothers entered into a multi-state settlement, paying a $741,000 civil penalty to resolve alleged violations of the Clean Water Act storm water permitting program at 370 sites in 23 states. This settlement reflects the EPA’s continuing enforcement focus on storm water discharges associated with construction, a high priority enforcement area for the EPA. Over the last several years, EPA has entered into similar settlements with Ryland Homes, Lindsey Construction Company, Beazer Homes, Colorado Structures, Inc., and others.In addition to the civil penalty, Toll Brothers agreed to implement a comprehensive nationwide storm water compliance program; appointment of national, division-level and site storm water compliance managers; implementation of special requirements for Stormwater Pollution Prevention Plans, and routine inspections of construction sites and training for employees and contractors.
- The EPA announced another settlement under the Clean Water Act, this one involving Fairhaven Shipyards Company, which was alleged to have discharged untreated wastewater and storm water without obtaining NPDES permits. Under the agreement, Fairhaven will pay a $175,000 civil penalty and bring itself into compliance with the act.
- In a second high-priority enforcement area, the EPA recently settled another in a long series of actions brought against coal-fired power plants under the New Source Review provisions of the Clean Air Act. Dairyland Power Cooperative agreed to a $950,000 civil penalty and to install $150 million of controls consisting of selective catalytic reduction for NOx and Flue Gas Desulfurization or Dry Sorbent Injection for SO2. Several units will cease burning coal, and others will be permanently retired.
- In another Clean Air Act settlement, BASF agreed to a civil penalty of $780,000 and to take corrective action to address alleged violations of the leak detection and repair requirements at its chemical manufacturing facility in Wyandotte, Mich.
- In what may portend a future enforcement approach for fracking operations, the EPA announced a settlement with the Bonds Company, which operates oil production facilities in Arkansas. Bonds was alleged to have violated the Clean Water Act Spill Prevention Control and Countermeasure (SPCC) requirements. EPA has been looking for enforcement tools to use against fracking operations, particularly after an adverse court decision in one case brought under the Safe Drinking Water Act and the Supreme Court’s decision this past term in Sackett v. EPA, which authorized pre-enforcement review of administrative enforcement orders issued under the Clean Water Act (and, by extension, the Safe Drinking Water Act). The SPCC program, which requires facilities that store large quantities of petroleum products to develop and implement SPCC plans, may provide the EPA a finger hold to increase its regulatory and enforcement oversight of fracking operations.
Supreme Court Grants Certiorari in 2 Clean Water Act Cases Involving Storm Water Discharges
On June 25, 2012, the Supreme Court agreed to review two Ninth Circuit decisions involving storm water discharges.
In the first, the court will review the Ninth’s Circuit decision in Los Angeles County Flood Control v. NRDC, 673 F.2d 880 (2011), in which the court upheld a district court decision finding the county liable for storm water discharges from concrete channels constructed for flood and storm water control as part of a municipal separate storm sewer system. The court will review the issue of whether storm water flows constitute discharges regulated under the Clean Water Act. The case should be of great interest to municipalities that operate similar systems and may help clarify whether “transfers” of water within one water body constitute discharges requiring permits.
In the second, the court will review the decision in Northwest Environmental Defense Center v. Brown, 640 F.3d 1063 (2011), in which the Ninth Circuit held that storm water runoff from forest roads must be permitted under the Clean Water Act, reversing the longstanding view of EPA exempting such discharges. This case should be of interest to forest managers and agricultural concerns, which could be adversely affected by the Ninth Circuit’s decision.
About the Author
Veteran environmental attorney Thomas G. Echikson is a partner in the Washington, D.C., office of national law firm LeClairRyan. His practice focuses in part on environmental litigation, regulatory counseling, permitting, advocacy and toxic tort defense.