The energy industry has been at the forefront of the 2020 election, and energy development is an issue that polarizes Americans and our businesses and political leaders in choosing the path for the future. Energy developments are inextricably linked to our economy and national security, and the decisions and policies that will be implemented over the next four years are critical to the nation and our participation and role in world affairs.
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. 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.
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”
In recent years, the question of whether groundwater that migrates into federally protected navigable waters falls under the purview of the Clean Water Act (“CWA”) has been fiercely debated and heavily litigated across the country. To date, the Fourth and Ninth Circuits have both interpreted the CWA broadly, ruling that the CWA extends to reach groundwater discharges. Just recently, however, the Sixth Circuit in Kentucky Waterways Alliance v. Kentucky Utilities Company, No. 18-5115 (6th Cir. Sept. 24, 2018) and Tennessee Clean Water Network v. Tennessee Valley Authority, No. 17-6155 (6th Cir. Sept. 24, 2018) weighed in on the issue, and rejected the theory that pollutants reaching navigable waters as a result of passing through groundwater (or soil) are discharges that fall under the auspices of the CWA. The Sixth Circuit decisions are noteworthy, as they create a clear conflict among the federal circuit courts regarding the scope of the CWA and, more specifically, whether the Act reaches the issue of groundwater discharges, further increasing the likelihood that the United States Supreme Court will take up the matter to issue a decisive ruling on the proper scope of the CWA and provide a definitive resolution to this hotly contested issue of environmental law. Continue reading “Sixth Circuit Limits Reach of Clean Water Act to Groundwater Discharges, Creates Circuit Split on Proper Scope of CWA”
On Wednesday April 18, 2018, from 1:00 to 1:30 p.m. (EDT), Blank Rome Partners Margaret Anne (“Peg”) Hill and Frederick M. Lowther will present a live webinar where they will discuss adjustments that might be made to the Clean Water Act to restore the originally-intended cooperation between state and federal authorities, and what remedies might be available in lieu of congressional action.
The federal Clean Water Act (“CWA”) has been in existence since 1972. For the states that implemented EPA-sanctioned water quality standards, the CWA (specifically Section 401) gave those states the power to enforce those standards by granting or denying certifications to federally-regulated projects impacting state waters. The concept of state veto power over federally-regulated projects was known as “cooperative federalism.”
By 2005, it became clear that Section 401 rights provided a means for states to delay or frustrate projects on grounds only tangentially related to water quality. In the Energy Policy Act of 2005 (“EPACT”), Congress responded by providing for direct, expedited review of adverse state action in the U.S. Courts of Appeals. Notwithstanding EPACT, several states continued to use Section 401 for purposes broader than originally intended and the direct appellate remedy proved ineffective.
Starting with Islander East in 2007, and culminating recently in Constitution Pipeline, states have effectively blocked a number of federally-approved interstate pipeline projects. The impact of these decisions suggests that it is time to revisit the “cooperative federalism” concept.
For more information about this event or to register, please click here.
In a unanimous decision and opinion delivered by Justice Sotomayor on January 22, 2018, in National Association of Manufacturers v. U.S. Department of Defense, the United States Supreme Court (“SCOTUS”) held that challenges to the June 29, 2015 regulation defining the term “waters of the United States” (“WOTUS”) must be filed in the federal district courts. The Court reasoned that the plain text of the judicial review provisions set forth in 33 U.S.C. §1369(b)(1) of the Clean Water Act does not authorize direct challenges to this regulation (the 2015 WOTUS Rule) in the U.S. Circuit Court of Appeals and, therefore, such challenges must be filed in the federal district courts. Continue reading “SCOTUS Holds that Challenges to the Definition of Waters of the United States Must Be Heard in the U.S. District Courts”