CWA Update: Two Recent Cases Impact CWA Permitting and Enforcement

Margaret Anne Hill, Frank L. Tamulonis III, and Stephen C. Zumbrun

Two recent cases have the potential to dramatically alter the state of permitting and enforcement under the federal Clean Water Act (“CWA”) with far reaching implications to energy infrastructure project proponents and the regulated community.

In the first case, Northern Plans Resource Council v. U.S. Army Corps of Engineers, No. 4:19-cv-00044-BMM (D. Mont), the Montana District Court last month vacated the U.S. Army Corps of Engineers Nationwide Permit 12 (“NWP 12”) for the Keystone XL Pipeline Project, concluding that the Corps failed to consult under the Endangered Species Act (“ESA”) Section 7 when it reissued NWP 12 in 2017. Although that case involved only the Keystone XL Pipeline Project, the Order enjoined the Corps from authorizing any work under NWP 12 until an ESA consultation is completed, effectively resulting in a nationwide injunction of work permitted under NWP 12. NWP 12 provides a streamlined CWA permitting process for thousands of linear “utility line activities” (i.e., pipelines and electrical or communication transmission lines) that would otherwise be forced to apply for numerous individual CWA permits to complete a single project. The nationwide vacatur of NWP 12 created significant uncertainty for project proponents who were left with three options: 1) apply for other potentially applicable nationwide permits, 2) apply for individual CWA Section 404 permits, or 3) redesign a project to avoid impacts to regulated waters.

Just last week, however, the court clarified and slightly narrowed the scope of the April Order. Specifically, the court clarified that NWP 12 cannot be used for new oil and gas pipelines, but the permit remains otherwise valid for 1) maintenance, inspection, and repair activities on existing pipelines, and 2) non-pipeline constructive activities (i.e., electric, Internet, and other cable lines; certain renewable energy projects). The court reasoned that large-scale oil and gas pipeline projects pose the greatest threat to ESA-listed species, and the public interest in ensuring that the Corps complies with ESA trumps the tax and energy benefits of the new pipelines. The court further reasoned that the potential disruption to pipeline projects is overblown in light of the continued availability of the more cumbersome individual Section 404 permit process.

The court’s clarification provides relief to proponents of linear projects that do not involve the construction of new oil and gas lines. The wind industry, for example, which is heavily reliant on the installation of utility transmission lines, is no longer impacted by the ruling. Thousands of other oil and natural gas pipeline projects, however, remain impacted by the decision.

The second case involves the Supreme Court decision of County of Maui v. Hawaii Wildlife Fund, No. 18–260, __ S. Ct. ____, 2020 WL 1941966 (Apr. 23, 2020), where the Supreme Court created a “functional equivalent test” to analyze when discharges to groundwater require a CWA permit.[1] Only weeks after that decision, we are starting to see the “functional equivalent test” in practice. Last week, in a case where a party was attempting to settle Clean Water Act violations with the United States and the State of Indiana, an intervening party argued that the County of Maui decision renders the current settlement insufficient because the settlement did not include penalties for discharges to groundwater. See U.S. et al. v. U.S. Steel Corp., 2:18-cv-00127 (N.D. Ind., Dkt. No. 74).

The important takeaway here is that parties looking to settle Clean Water Act violations should expand their focus beyond just a “direct” discharge to surface water violation (i.e., from a pipe or trench, etc.), but also ensure that a settlement would include violations for “functionally equivalent” direct discharges (i.e., discharges that may have been to soil or groundwater that eventually travelled to surface water). In practice, this will ensure that settlements attempt to resolve as much liability as possible for a site on the front-end. If these “functional equivalent” discharges are not included, then a party could instead possibly face additional CWA liability—perhaps years later—if groundwater, arguably contaminated by a point source, migrates to a CWA navigable water.

As discussed, both Northern Plans Resource Council and County of Maui cases are going to have immediate impacts on the regulated community, but the full story is far from over. For Northern Plans Resource Council, an appeal to the Ninth Circuit Court of Appeals is already underway. Last week, the government filed an emergency motion for stay pending appeal and requested an immediate administrative stay while the motion was being decided. The Ninth Circuit rejected the government’s request for an immediate administrative stay during the pendency of the motion, but granted an expedited briefing schedule requiring all briefs to be submitted by the end of this week. If granted, the district court’s partial injunction and vacatur of NWP 12 will be stayed while the Ninth Circuit resolves the appeal. On the current briefing schedule, we expect a decision from the Ninth Circuit on the emergency motion on or before May 29. And as we previously wrote about, we anticipate that the EPA may issue guidance to address the “functional equivalent discharge” test. Stay tuned for further developments.


[1] We previously wrote about the County of Maui decision in more depth, available here: https://energytrendswatch.com/2020/04/27/the-supremes-weigh-in-on-superfund-and-the-clean-water-act/

Bestfoods Revisited

Margaret Anne Hill, Frank L. Tamulonis III, and Stephen C. Zumbrun

Twenty-two years after the Supreme Court’s ruling in Bestfoods, a government contractor—PPG Industries, Inc. (“PPG”)—comes face to face with one of the most important tenets of that court’s decision: operator liability under Superfund. Although the Supreme Court’s decision in Bestfoods focused on operator liability in the context of a parent and subsidiary relationship, the Third Circuit Court of Appeals in PPG Industries, Inc. v. United States of America et al. relied on the Supreme Court’s analysis of operator liability in determining whether the United States should be held liable under CERCLA as an operator in connection with chromium production during World War II. This case serves as a reminder to private industry: you do not have to be physically operating a plant or facility in order to be liable as an “operator” under Superfund. Rather, you can acquire liability by managing, directing, or conducting activities specifically related to operations involving releases or disposal of hazardous substances, or by engaging in decisions regarding compliance with environmental regulations.

As the Third Circuit explained, chromium production was regulated by the government during both world wars given that chromium chemicals were designated as critical war materials for military use. Chromium distribution was controlled pursuant to orders issued during World War II by the Chemicals Bureau of the War Production Board (“Board”), although chromium production—including the processing of ore and management of waste—were not part of the government’s orders. PPG purchased a facility from a former chromium chemical manufacturer (Natural Products Refining Corporation or “NPRC”) in 1954, and continued to process chromium chemicals until 1963. PPG filed a private cost-recovery claim against the government seeking the recovery of CERCLA response costs that it expended ($367 million, to date), as well as contribution for past and future costs.

PPG’s main contention was that Bestfoods did not apply to its case since that ruling did not involve the government as an operator, and that if Bestfoods was applicable, operator liability should be imposed on those parties having “direction” or “general control” over a facility’s activities. The Third Circuit rejected these arguments and, applying Bestfoods’ definition of “operator” to the wartime operations conducted at the PPG facility, observed that although the government controlled certain aspects of chromium distribution, including pricing and quantities of chromite ore that NPRC could buy and to whom NPRC could sell, as well as what orders had priority, the government did not specifically control operations related to pollution. The Third Circuit considered evidence related to the stockpiling of waste outdoors (which caused the contamination) and rejected the proposition that the government was “directing” PPG to produce more wastes merely because of the government’s knowledge that ramping up chromium production would lead to an increased amount of chromium wastes to be managed. The court also noted that no court has said that the test for determining operator liability depends upon whether a potentially responsible party is a private party or a governmental entity, and cited its 1994 decision in FMC Corp. v. United States Department of Commerce (in which the court found the government liable as an operator based on its active involvement and substantial control of the facility). Further, the court noted that the FMC decision (which PPG argued was a similar case) was distinguishable because the government was directly involved with waste production and regulation at the plant.

The court’s decision and analysis in PPG offers some interesting insights to the concept of operator liability under Superfund and, further, provides instructive guidance to private industry on how to avoid CERCLA liability as an operator. Perhaps the most critical “takeaway” from this case is that operator liability depends on the relationship between the potentially responsible party and the waste-producing facility. “Actual control” of a facility is not necessary; the relevant inquiry will be whether an alleged operator exercises control over “operations having to do with the leakage or disposal of hazardous waste, or decisions about compliance with environmental regulations.” Under this analysis, the relationship between the potentially responsible party and the facility—and not the relationship between the potentially responsible party and the owner of the facility—is the focus of the inquiry. The Third Circuit has just reinforced the Supreme Court’s analysis of CERCLA operator liability as first explained in Bestfoods two decades earlier.

The Supremes Weigh in on Superfund and the Clean Water Act

Margaret Anne Hill, Frank L. Tamulonis III, and Stephen C. Zumbrun

Notwithstanding that the Comprehensive Environmental Response, Compensation, and Liability Act (more commonly known as “Superfund”) has been around for 40 years, and the fact that numerous cases have made their way to the U.S. Supreme Court analyzing liability under the Act, debates continue as to who can be a Superfund “potentially responsible party” or a “PRP.” For those who still do not get the scope and reach of Superfund liability, the Supreme Court has, once again, provided a clear response with respect to liability under the Act in an April 20, 2020, decision, Atlantic Richfield Co. v. Christian et al. In that case, the Court reaffirmed its position set forth in a 2007 case, United States v. Atlantic Research Corp., 551 U. S. 128, 136 (2007), that even parties whose property has been contaminated by others, and who are innocent with respect to the contamination, fall within the broad definition of liable parties under Section 107(a) of Superfund (which uses the term “covered persons”), subject to the third-party defense set forth in Section 107 (b).

Atlantic Richfield involved a group of 98 property owners who filed claims against Atlantic Richfield in Montana state court in connection with the Anaconda Copper Smelter Superfund Site in Butte, Montana, a 300-square-mile site contaminated with arsenic and lead. The property owners’ claims included trespass, nuisance, and strict liability claims under state common law. The landowners sought restoration damages, among other forms of relief, which was the issue before the Court since Atlantic Richfield conceded that Superfund preserves claims for other types of compensatory damages under state law, including loss of use and enjoyment of property, diminution of value, incidental and consequential damages, and annoyance and discomfort. The property owners sought to implement a remedial restoration plan that exceeded the U.S. Environmental Protection Agency’s (“EPA”) selected remedial actions. The question regarding their PRP status was before the Court in the context of determining if they were prohibited from taking further remedial action without EPA’s approval under Section 122(e)(6). Continue reading “The Supremes Weigh in on Superfund and the Clean Water Act”

EPA Reverses Course with the Mercury and Air Toxics Regulations for Power Plants

Margaret Anne Hill, Frank L. Tamulonis III, and Stephen C. Zumbrun

The saga for regulating mercury and air toxics from coal- and oil-fired power plants continues with a final rule promulgated by the U.S. Environmental Protection Agency (“EPA”) on April 16, 2020. EPA initially determined that it was “appropriate and necessary” under Section 112 of the Clean Air Act to regulate hazardous air pollutants (“HAPs”)—including mercury—for these types of power plants, commonly referred to as electric utility steam generating units (“EGUs”).[1] In a change of policy, EPA has now decided that the “appropriate and necessary” determination to regulate HAPs for these power plants—after two decades of additional EPA rules, and corresponding litigation—is no longer correct.[2]

A significant part of the backstory here is related to the U.S. Supreme Court’s decision in 2015 in Michigan v. EPA.[3] Briefly, the Court held that the EPA needed to consider costs in evaluating whether it was “appropriate and necessary” to regulate HAP emissions from coal- and oil-fired EGUs, especially the costs associated with compliance. Following the Supreme Court’s decision, EPA, under the Obama Administration, conducted a study in 2016 to evaluate these costs and concluded that it was still “appropriate and necessary” to regulate HAPs emitted from these sources.[4] The Trump Administration has now reversed course in issuing the April 16 final rule, effectively concluding that the EPA’s decision in 2016 was wrong. Continue reading “EPA Reverses Course with the Mercury and Air Toxics Regulations for Power Plants”

How to Manage COVID-19 Waste

Margaret Anne Hill, Frank L. Tamulonis III, and Stephen C. Zumbrun

The surge in COVID-19 patients has led to a sharp rise in medical waste that could carry the novel coronavirus. One common question raised by the COVID-19 outbreak is how to properly manage and dispose of COVID-19-contaminated waste. The short answer is that COVID-19 waste is not treated any differently than other standard regulated medical waste (“RMW”).

The Occupational Safety and Health Administration (“OSHA”), Centers for Disease Control (“CDC”), and World Health Organization (“WHO”) have all stated that waste from COVID-19 patients should be handled as RMW and should be managed in accordance with routine procedures. OSHA recently issued guidance stating that medical waste with potential or known COVID-19 contamination is not a Category A infectious substance, which is a type of waste capable of causing permanent disability or life-threatening or fatal disease. (See osha.gov/SLTC/covid-19/controlprevention.html#solidwaste.) Rather, COVID-19 waste is a Category B infectious substance (does not cause life-threatening or fatal disease) which is discarded as regular RMW. OSHA advises as follows:

Use typical engineering and administrative controls, safe work practices, and PPE, such as puncture-resistant gloves and face and eye protection, to prevent worker exposure to the waste streams (or types of wastes), including any contaminants in the materials, they manage. Such measures can help protect workers from sharps and other items that can cause injuries or exposures to infectious materials. Continue reading “How to Manage COVID-19 Waste”

EPA Takes a Case-by-Case Approach in New Guidance for Cleanups and Emergency Response Actions: A First in Its History

Margaret Anne Hill, Frank L. Tamulonis III, and Stephen C. Zumbrun

On April 10, the U.S. Environmental Protection Agency (“EPA”) released its latest coronavirus COVID-19 Guidance addressing cleanups and emergency response actions that are being conducted under various environmental laws, including Superfund, RCRA Corrective Actions, TSCA PCB cleanup actions, and the Oil Pollution Act, as well as the underground storage tank program. The bottom line for businesses and the regulated community: for response actions where EPA is the lead agency or has direct oversight for work being performed, EPA is directing its Regional Offices to evaluate, and periodically reevaluate, whether ongoing response actions should continue in light of the potential impact of COVID-19 on cleanup sites, the surrounding communities, EPA personnel, and the respective states. EPA advises that decisions about continuing, reducing, or pausing cleanup actions should be made on a case-by-case basis, and that any requests from potentially responsible parties for extensions or delays in performance should also be evaluated individually.

EPA’s general directive to its regions is that they should consider whether to move forward with response actions, or whether, under the circumstances, securing a site is more appropriate so that response actions can continue at a later date. While on-site response actions may start or continue where there are no COVID-19 health declarations that prohibit or discourage such activities, EPA emphasizes that other factors must also be considered, including: the safety and availability of work crews, the critical nature of the work, logistical challenges (e.g., transportation, lodging, availability of meals, etc.), and the nature of the construction required. Continue reading “EPA Takes a Case-by-Case Approach in New Guidance for Cleanups and Emergency Response Actions: A First in Its History”

FERC Provides Additional Regulatory Relief and Guidance in Response to Coronavirus Pandemic

Mark R. Haskell, Brett A. Snyder, and Lamiya N. Rahman

On April 2, 2020, the Federal Energy Regulatory Commission (“FERC” or “Commission”) announced several measures intended to provide relief to regulated entities responding to the COVID-19 pandemic. A summary of FERC’s previous COVID-19-related relief and guidance can be found here.

In a Policy Statement, the Commission indicated it will prioritize and expeditiously act on requests for relief filed by regulated entities in connection with ensuring business continuity of their energy infrastructure. In a series of notices and orders, the Commission also extended or clarified the relief available to regulated entities that are unable to meet certain deadlines or regulatory requirements as a result of their COVID-19 response. This relief includes:

    • Extension to June 1, 2020 for the following deadlines:
      1. Form Nos. 60 (Annual Report of Centralized Service Companies) and 61 (Narrative Description of Service Company Functions);
      2. Form No. 552 (Annual Report of Natural Gas Transactions); and
      3. Electric Quarterly Report Form 920.
    • Extensions to May 1, 2020 for the following deadlines for categories of filings that would otherwise be due on or before May 1, 2020:
      1. interventions, protests, or comments to a complaint;
      2. briefs on and opposing exceptions to an initial decision;
      3. answers to complaints and orders to show cause; and
      4. initial and reply briefs in paper hearings.
    • Waiver of FERC regulations governing the form of filings submitted to the Commission (e.g., provision of sworn declarations) through May 1, 2020.
    • Shortening of the answer period to three business days for motions for extensions of time due to COVID-19 emergency conditions. The Commission indicated it will also consider requests to shorten the comment period for motions seeking waiver of requirements in Commission orders, regulations, tariffs, rate schedules, and service agreements to as short as five days.
    • Temporary blanket waivers from document notarization and in-person meeting requirements established under open access transmission tariffs, or other tariffs, rate schedules, service agreements, or contracts subject to the Commission’s jurisdiction. These waivers are effective through September 1, 2020.
    • Extension of time for filing regional transmission organization (“RTO”)/independent system operator (“ISO”) Uplift Reports and Operator Initiated Commitment Reports required pursuant to Order No. 844 that were originally due between April and September 2020. These reports are now due to be posted on the RTOs/ISOs websites by October 20, 2020.

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