Category: Environmental

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”

EPA Announces New Policy Regarding Enforcement Discretion

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

OVERVIEW/APPLICABILITY/SCOPE

Due to the coronavirus COVID-19 pandemic, the U.S. Environmental Protection Agency (“EPA”) announced a Policy that will effectively relax civil enforcement in certain circumstances. The EPA recognizes that worker shortages and supply issues may exist due to the pandemic and has decided to exercise enforcement discretion with respect to compliance with environmental laws. The Policy is retroactive to March 13, 2020, and while EPA emphasizes that it is temporary, EPA did not provide a termination date. It is important to note that the Policy applies only to certain civil violations and the regulated community is required to make every effort to maintain compliance with environmental laws. We have outlined below important specifics that will guide you in relying upon the Policy. You should contact counsel if you are having compliance issues due to the COVID-19 situation or have questions regarding EPA’s new Policy. Continue reading “EPA Announces New Policy Regarding Enforcement Discretion”

DOJ Axes Supplemental Environmental Projects in Civil Settlements

Kevin R. Doherty and Margaret Anne Hill

Earlier this month, the Department of Justice (“DOJ”) officially eliminated the use of “Supplemental Environmental Projects” in civil settlements. The once-popular settlement tool, commonly known as SEPs, allowed alleged violators of environmental laws to complete Environmental Protection Agency (“EPA”)-approved projects in exchange for reduced penalties. These projects were considered by EPA and DOJ as providing tangible environmental and/or public health benefits to the environment and/or the affected community, and through their completion, settling parties were permitted to offset a portion of their civil penalties through cost effective and proactive environmental measures. Continue reading “DOJ Axes Supplemental Environmental Projects in Civil Settlements”

EHS Management During the Coronavirus Pandemic: Proactive Measures

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

The novel coronavirus (“COVID-19”) pandemic has caused significant personal and business disruptions to virtually every aspect of life. Businesses are being challenged by the financial markets, supply chain threats, cybersecurity threats, plus questions regarding future growth, sustainability, and expansion. Understandably, the immediate focus for the business community is on the safety and welfare of employees, as well as economic survival. Notwithstanding these well-founded concerns, companies, and in particular their environmental, health, and safety (“EHS”) staffs, need to be prepared to address employees’ concerns regarding issues related to the company’s COVID-19 response and management, as well as to respond to any environmental or safety incidents, which may involve state environmental agencies or the U.S. Environmental Protection Agency (“EPA”). Simply put, companies involved in environmentally sensitive operations such as refineries, mining, chemical facilities, oil and gas production, water treatment facilities, or plant manufacturing operations, etc., need to remember that EHS personnel must still ensure compliance with EHS laws and requirements during a period when they may find themselves inundated with new COVID-19 responsibilities, or with very little staff to support their company’s EHS regulatory obligations. Below are tips for companies and their EHS managers who might find themselves operating under a “trial by fire” and with limited capacity, or who may find that they have more time on their hands until the economy bounces back from the current disruption. Continue reading “EHS Management During the Coronavirus Pandemic: Proactive Measures”

Coronavirus: OSHA’s and EPA’s Response

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

As the world’s attention turns increasingly (and almost exclusively) to the spread of COVID-19 (the coronavirus), we want to take this opportunity to highlight two important federal agency responses from the U.S. Occupational Safety and Health Administration (“OSHA”) and the U.S. Environmental Protection Agency (“EPA”). The responses from the Center for Disease Control (“CDC”) and World Health Organization (“WHO”) have received the bulk of public attention to date, and for good reason. Just this week, the WHO declared the outbreak a pandemic with nearly 125,000 cases reported across 118 countries and territories. WHO has shipped supplies and protective equipment to 57 countries and is preparing to ship to another 28 countries. WHO has published an R&D roadmap and comprehensive technical guidance. WHO has also pledged more than $440 million (U.S.) to WHO’s Strategic Preparedness and Response Plan.

Here at home, the CDC has likewise been operating in overdrive to reduce the spread and impact of the virus. The CDC has issued multiple clinical guidance documents for healthcare professionals in addition to travel guidance related to COVID-19. The CDC established a COVID-19 Incident Management System on January 7, 2020, and activated its Emergency Operations Center on January 21. Multidisciplinary teams have been deployed to support state and local health departments. CDC also developed diagnostic testing to track and confirm COVID-19 cases and testing kits from commercial labs are expected soon. The CDC has also issued well-publicized recommendations for the public to follow.

In addition to these sweeping responses from the WHO and CDC, OSHA and EPA have been busy preparing and executing their response to this pandemic. While some employers may be able to provide significant flexibility to employees, allowing them to work from home, other employers will need to keep employees onsite, and will need to ensure the safety of their workforce. Other employers, which may manage medical wastes, will need to exercise additional precautions in ensuring that infectious wastes potentially contaminated with COVID-19 are managed in accordance with relevant state and EPA medical waste requirements. Below are the highlights from each agency. Continue reading “Coronavirus: OSHA’s and EPA’s Response”

Pennsylvania Plans to Join the RGGI CO2 Cap-and-Trade Program

Margaret Anne Hill, Christopher A. Lewis, Frederick M. Lowther, Frank L. Tamulonis III, and Stephen C. Zumbrun

At the outset of 2019, Pennsylvania Governor Tom Wolf set a goal for Pennsylvania to significantly reduce greenhouse gas emissions. Now, Governor Wolf plans to achieve that goal by taking the bold step to establish a carbon dioxide cap-and-trade program through executive action. On October 3, 2019, Governor Wolf issued an Executive Order directing the Pennsylvania Department of Environmental Protection (“DEP”) to begin the process for Pennsylvania to join the Regional Greenhouse Gas Initiative (“RGGI”, pronounced “Reggie”). RGGI is a market-based cap-and-trade program implemented by several Northeast states to reduce power sector CO2 emissions. Governor Wolf’s Executive Order made national headlines because of the potential implications of Pennsylvania—a state known for its coal and natural gas reserves—joining RGGI. But this news is only the start of a long regulatory process, one that could realistically take years to become implemented. At this stage, Pennsylvania fossil-fuel power generators should familiarize themselves with RGGI’s requirements and procedures as well as the rulemaking process by which the Commonwealth might join RGGI.

The RGGI Program

RGGI is a collective effort by its member states to create a Northeast regional cap-and-trade program affecting fossil-fuel power plants greater than 25 megawatts. Member states—currently Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont, with New Jersey in the process of rejoining—each enact statutory or regulatory programs in their respective states that are RGGI compliant. CO2 emitting power plants then participate in RGGI regional auctions to purchase CO2 emission allowances for usage, or to sell on secondary markets. RGGI caps the total amount of CO2 emission allowances, measured in tons of carbon, with the most recent cap being 80.2 MM-tons. Beginning in 2021, the cap will be set at 75.1 MM-tons, which will then be reduced by 30 percent between 2020 and 2030. Proceeds from the auctions are distributed to the respective states for investment in programs to further reduce CO2 emissions, such as energy efficiency, renewable energy, or consumer benefit programs. Continue reading “Pennsylvania Plans to Join the RGGI CO2 Cap-and-Trade Program”