Recent Court and EPA Decisions Impacting Industries

May 6, 2020

CERLCA Jurisdiction and PRP Definition

A recent Meyers | Nave publication discusses the Supreme Court’s April 20, 2020 decision in Atlantic Richfield Co. v. Christian. The firm suggests the decision adds another layer of complexity to the Comprehensive Environmental Response, Compensation, and Liability Act – CERCLA, liability issue. The decision opens the door for state courts to hear claims that challenge EPA-defined approved clean-ups and has the potential to expand the “potentially responsible party” – PRP class for current “owners” of a “facility.”

The Court’s decision introduces new considerations into CERCLA liability analysis and settlement strategy. The Court’s holding will have many immediate ramifications, including the following:

• It may be argued that the decision broadens the definition of PRP. CERCLA’s already-expansive definition of PRPs now includes landowners whose soil is contaminated by another PRP’s facility because a release has “come to be located” on their land.

• The decision has the potential to unravel comprehensive and time-consuming CERCLA requirements in a federally-approved clean-up scheme. For example, if EPA waives the requirement to adopt state applicable or relevant and appropriate requirements (“ARARs”) at a federal CERCLA site, it seems entirely plausible that some litigants could use a nuisance or similar lawsuit to seek to impose ARARs that EPA specifically considered and waived.

• The decision might have created an additional layer of CERCLA requirements that apply to PRPs that desire to bring state law claims in state court. Though they were found to be PRPs, the plaintiff landowners were allowed to present their own plan to restore their own private property as long as they obtained EPA approval, but it is unclear what process the landowners would use.

• The decision might reduce the incentive to enter into CERCLA settlements with EPA if parties are not shielded from contribution claims − which now could arise by exposing settling parties to potential litigation at the state level. While the Court noted that CERCLA: (1) encourages covenants not to sue which cap liability to the Government and (2) protects settling parties from contribution claims by other PRPs, the decision seems to contradict both of those positions and undermines finality of settlements.

Clean Water Act Developments

In April, the courts and federal agencies announced major developments significantly affecting regulation under the Clean Water Act – CWA and how the CWA may be applied in the future.

• First, a U.S. District Court in Montana issued a sweeping decision under Section 404 of the CWA that purports to invalidate and enjoin the use of Nationwide Permit 12 (NWP 12), the widely-used general CWA § 404 permit for construction of pipelines and other utility lines across regulated water bodies, for all projects anywhere in the country.

• Second, the Trump Administration published its long-anticipated “Navigable Waters Protection Rule” in the Federal Register, defining what constitutes Waters of the United States (WOTUS) that are regulated under the CWA, which is narrower in scope than both the 2015 rule promulgated by the Obama Administration and the pre-2015 rule now in effect.

• Third, the Supreme Court issued a decision in County of Maui, Hawaii v. Hawaii Wildlife Fund, et al. (No. 18-260) in which the majority held that a CWA discharge permit is required where “the addition of the pollutants through groundwater is the functional equivalent of direct discharge from [a] point source into navigable waters [i.e., WOTUS].”

Each of these developments could have far-reaching implications for regulations under the CWA. Assuming the 2020 Rule withstands legal challenges, it is seen as favorable for industry and other regulated entities, while the two judicial decisions are perceived as problematic for such entities. Davis Graham & Stubbs describes each development in more detail in the firm’s recently published article.

MATS Supplemental Cost Finding and Clean Air Act RTR 

On April 16, 2020, the U.S. Environmental Protection Agency (EPA) finalized the 2016 Supplemental Cost Finding for the Mercury and Air Toxics Standards – MATS, for coal- and oil-fired power plants, consistent with a 2015 U.S. Supreme Court decision. The agency also completed the Clean Air Act-required residual risk and technology review – RTR, for MATS. According to the EPA power plants are already complying with the standards that limit emissions of mercury and other hazardous air pollutants (HAPs), and this final action leaves those emission limits in place and unchanged.

However, with this final action, EPA is not removing coal- and oil-fired power plants from the list of affected source categories for regulation under section 112 of the Clean Air Act, consistent with existing case law. Those power plants remain subject to and must comply with the mercury emissions standards of the MATS rule, which remains fully in effect notwithstanding the revised cost-benefit analysis.

In addition, EPA has completed the required RTR for MATS and determined no changes to the rule are needed to further reduce residual risk. The RTR satisfies the statutory requirements set out by Congress in the Clean Air Act. More information is available on EPA’s Mercury and Air Toxics Standards website.

Proposal to Retain NAAQS for Particulate Matter

On April 14, 2020, the U.S. Environmental Protection Agency – EPA announced its proposal to retain, without changes, the National Ambient Air Quality Standards – NAAQS for particulate matter (PM) including both fine particles (PM2.5) and coarse particles (PM10).

According to the EPA because of Clean Air Act programs and efforts by state, local and tribal governments, as well as technological improvements, average PM2.5 concentrations in the U.S. fell by 39 percent between 2000 and 2018 while average PM10 concentrations fell by 31 percent during the same period.

EPA states it is following the principles established to streamline the NAAQS review process and to fulfill the statutory responsibility to complete the NAAQS review within a 5-year timeframe. More information about the rule can be found at EPA’s: National Ambient Air Quality Standards (NAAQS) for Particulate Matter (PM) Pollution website.

EPA will accept public comment for 60 days after the proposed standards are published in the Federal Register. EPA plans to issue the final standards by the end of 2020.

U.S. Greenhouse Gas Emissions and Sinks Inventory Announcement

The Environmental Protection Agency’s annual report, “Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2018,” provides a comprehensive look at U.S. emissions and removals by source, economic sector, and greenhouse gas – GHG. The gases covered by this inventory include carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, sulfur hexafluoride, and nitrogen trifluoride. The inventory also calculates carbon dioxide emissions that are removed from the atmosphere by “sinks,” e.g., through the uptake of carbon and storage in forests, vegetation, and soils.

On April 13, 2020, the EPA’s comprehensive annual report on nationwide GHG emissions released to the public. It shows that since 2005, national GHG emissions have fallen by 10%, and power sector emissions have fallen by 27%.

“While there was a small rise in emissions due to weather and increased energy demand from the prior year in this report, based on preliminary data, we expect next year’s report to show that the long-term downward trend will continue,” said EPA Administrator Andrew Wheeler.

According to the announcement, annual trends are responsive to weather variability and economic conditions. Year-over-year, national GHG emissions were 3% higher in 2018 than the prior year, due to multiple factors, including increased energy consumption from greater heating and cooling needs due to a colder winter and hotter summer in 2018 compared to 2017.

According to environmental and research groups, driving the drop’s long-term downward trend is chiefly due to a shift away from coal power generation. The 2019 drop was driven by a nearly 10 percent fall in emissions from the power sector, the biggest decline in decades [Rhodium Climate Service]. Utilities are closing coal plants in favor of cheaper natural gas and renewable energy.

Emissions from industry rose slightly last year, and are now greater than those from coal-fired power plants, most driven by a strong economy. Emissions from buildings were up, and emissions from other sectors of the economy collectively grew by more. The shift to lower-carbon energy is largely restricted to the electricity sector, and in order to meet international and state goals, state policies continue to target other sectors that collectively make up a majority of U.S. emissions.

More information is available at EPA’s website Inventory of U.S. Greenhouse Gas Emissions and Sinks.

For more information about potential impacts to waste, energy, or manufacturing please contact your nearest SCS Engineer’s office or your Project Manager.