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Today, the Environmental Integrity Project released a report finding that in the first six months of the Trump administration, the federal government has collected 60% less in civil penalties in environmental enforcement actions than it did, on average, during the equivalent periods of the Clinton, George W. Bush and Obama presidencies.   Between inauguration day and July 31st, only $12 million has been paid by defendants in actions brought by EPA and the Department of Justice, spread over 26 cases.  The previous three administrations averaged $30 million during their first six months.

Below the headline figures are perhaps more interesting numbers on the amount of money violators are being required to invest to fund injunctive relief, such as pollution control equipment, and other measures to comply with environmental standards.  EPA has only been estimating costs in this category for about 20 years, so there is no reliable data from the first year of the Clinton administration.  In the first six months of President Obama’s first term, however, 22 reported cases required more than $1.2 billion be spent on injunctive relief.  Under President Trump, the amount has been only $197 million.

Although the sample size is limited, and most if not all of the cases involved were brought by the previous administration, these numbers provide a good deal of insight into how the Trump administration is approaching environmental enforcement.  The penalties agreed to by the Trump administration are down not just in the aggregate, but per enforcement action.  The Obama administration recovered three times as much money as the Trump administration in penalties with only eight more cases.  It would therefore not be surprising if the pace of settlements increases in coming months and years.  The regulated community may come to see this moment as a good time to get out from under enforcement litigation on favorable financial terms, while viewing unnecessary delay as a risk.

A federal district court in Oklahoma has held that CERCLA may not be used as a regulatory standard to state a claim for negligence per se. The plaintiffs in Bristow First Assembly of God, et al. v. BP, p.l.c., et al., N.D. Okla., No. 15-CV-523, brought a series of claims against a group of oil and pipeline companies that were alleged to have a prior interest in the Church’s property, which they had been advised by the Oklahoma Department of Environmental Quality was contaminated and no longer safe to use.  Among them was a count brought under a theory that the defendants’ failure to clean up the site was a violation of a continuing duty to remediate damages from their operations under CERCLA and therefore constituted negligence per se.

Judge Terence Kern dismissed the claim, finding that “Plaintiffs have failed to establish that CERCLA sets a standard of conduct on which a negligence per se claim can be based.” The specific issue was apparently one of first impression in the 10th Circuit.  The Court, however, relied on decisions of district courts elsewhere in the country to support its decision.  Most convincingly, the court in W. Greenhouses v. United States, 878 F. Supp. 917 (N.D. Tex. 1995), reasoned that violations of neither CERCLA nor RCRA can support a negligence per se allegation because they are strict liability statutes.  They therefore set no standard of care.  Negligence per se relies on borrowing a standard of care from statute in lieu of applying one established by common law.  No strict liability regime can serve that function.

The decision in Trinity Indus., Inc. v. Greenlease Holding Co., 35 F. Supp. 3d 698 (W.D. Pa. 2014), also relied on by the court in Bristow First, applied somewhat different logic. In that court’s opinion, CERCLA is an environmental statute that is not “tailored to protect a particular class of individuals,” and therefore “does not establish the applicable standard of care for purposes of negligence law.”  This reasoning is easier to quibble with.  The statute requires the remediation of contaminated property, so the occupants of those sites are at least among the group of individuals CERCLA sets out to protect.  Negligence per se claims that attempt to drag CERCLA liability into the realm of tort are likely best challenged not on that ground, but for the absence of a fault-based standard of care in that statute.

We will be following this issue and other legal developments related to the intersection of statutory and common law environmental claims.  Check Environmental Law Next in the future for more information and analysis.

By statute, North Carolina has capped the monetary awards available for nuisance claims related to agricultural or forestry operations. The law, H.B. 467, was designed to protect hog farms and other concentrated animal feeding operations (CAFOs) from substantial judgments in odor nuisance lawsuits.   It limits compensatory damages to the reduction in the fair market value of the plaintiff’s property, if the nuisance is found to be permanent, and the diminution of the fair rental value of the property if temporary. The bill passed over the veto of Governor Roy Cooper.

The limits on awards set by H.B. 467 are cumulative. A subsequent action by the same plaintiff or a successor to plaintiff is restricted to the fair market value of the property, less what was recovered in the earlier lawsuit. The limit applies even to lawsuits against separate defendants arising from distinct operations. H.B. 467 does not, however, place limits on available punitive damage awards or bar any otherwise available injunctive relief.

North Carolina joins a handful of other states that have passed similar legislation in recent years aimed at limiting the amount of damages available for agriculture related nuisance claims.

The legislation is a reaction to an increase in odor nuisance lawsuits in North Carolina and elsewhere in the country. In 2013, more than 400 plaintiffs filed nuisance lawsuits against Murphy-Brown, LLC, a subsidiary of Smithfield Foods, Inc., the largest pork producer in the world. Some of those cases are still pending. An early version of the bill would have had retroactive application and limited recovery in the suits that have not been resolved. That provision, however, was changed before the bill passed.

H.B. 467 is a continuation of legislative efforts to insulate the North Carolina livestock industry. A 2013 bill, S.L. 2013–314, amended the state’s right-to-farm law, which prevents operations from becoming a nuisance as a result of changes in the surrounding community. Agricultural facilities cannot benefit from right-to-farm protections if they undergo a fundamental change from previous operations. But the law broadly exempts several categories of changes – including changes in size and technology – greatly curtailing plaintiffs’ recourse against expanded and updated CAFOs.

Collectively, these changes will make it much more difficult for plaintiffs to recover in nuisance actions against North Carolina CAFOs in the future, and will likely turn off many plaintiffs’ lawyers from investing the time and resources into even winnable cases.

The Office of Management and Budget (OMB) recently released a guidance document on the subject of President Trump’s January 30, 2017 executive order, EO 13771, titled “Reducing Regulation and Controlling Regulatory Cost.”  That executive order garnered a great deal of attention with its bold but simplistic decree that “[u]nless prohibited by law, whenever an executive department or agency publicly proposes for notice and comment or otherwise promulgates a new regulation, it shall identify at least two existing regulations to be repealed.”  OMB’s guidance provides some insight into how that ambitious deregulatory agenda might operate in practice.  Not surprisingly, a closer look at EO 13711 and OMB’s guidance reveals that a significant rollback of the regulatory state is not likely imminent.  Instead, the regulation may push agencies to search out and eliminate minor, archaic regulations that remain on the books but have little or no effect on the regulated community.

EO 13771 requires that any incremental costs associated with a new regulatory action shall be offset by the elimination of existing costs associated with at least two prior regulations.  Although this language appears to require a net reduction in regulatory impacts, OMB has interpreted it in a way that will almost certainly not.

OMB’s guidance provides that “[i]n general, executive departments or agencies may comply with those requirements by issuing two EO 13771 deregulatory actions…for each EO 13771 regulatory action.”  Regulatory actions and deregulatory actions, however, are not two equal sides of the same coin.  Regulatory actions are only “significant regulatory actions as defined in Section 3(f) of EO 12866…” and significant guidance documents.  EO 12866 significant regulatory actions are those that have an annual effect on the economy of over $100 million or have other substantial impacts.  While only significant regulatory actions need to be offset, the “deregulatory actions” that they may be offset by need not be “significant.”

The impact of the requirement that any “new incremental costs associated with new regulation” be offset by the elimination of existing costs is also weakened by OMB’s guidance.  “Incremental costs” are not simply the costs of compliance for the regulated community.  Rather, “total incremental costs” are the sum of all costs minus all “cost savings.” As the guidance recognizes,  “[t}here are several types of impacts that…could be reasonably categorized as either benefits or costs, with the only difference being the sign (positive or negative) on the estimates.”  In other words, in many situations agencies may simply categorize the benefits of the regulatory action as “negative costs” and thereby internally reduce a regulation’s “new incremental costs.” Although the guidance says “agencies should conform to the accounting conventions they have followed in past analyses” when accounting for costs and benefits, an increased labeling of regulatory benefits as “negative costs” may be an appealing way for agencies to work around EO 13771.

Taken together, these two components of the guidance suggest we should expect to see few if any major regulations undone, even as new significant regulatory actions are promulgated.

The requirement that significant regulatory action be tied to some sort of deregulatory action may send agencies looking into the archives to see what outdated, insignificant regulations can come off the books.  There is value to that.  But do not expect EO 13771 to spur the deconstruction of the administrative state the administration has promised.

Nine trade associations, including the American Chemistry Council, the American Petroleum Institute, and the American Forest & Paper Association, have filed a Petition for Review challenging the EPA’s Hazardous Waste Generator Improvements Rule.  The rule was developed by the Obama Administration and was not finalized until after the election, on November 28, 2016.  It is not scheduled to become effective anywhere in the country until May 30, 2017, at the earliest.

The primary purpose of the rule was to reorganize existing regulations applicable to hazardous waste generators to make them more user-friendly.  The rule also clarifies ambiguities in the existing regulations.  It will, however, have significant impacts on some hazardous waste generators.  For more information on substance of the Hazardous Waste Generator Improvements Rule, see our earlier post here.

The Petition for Review does not state which portions of the rule the associations seek to eliminate, nor does it articulate the substantive basis for their challenge. The petitioners did, however, submit comments on the proposed rule, which shed light on which requirements they find most concerning and the arguments they are likely to make before the Court.  In those comments, they listed as the most objectionable part of the rule EPA’s position that any violation of a condition for exemption subjects the generator to all of the applicable rules for non-exempt facilities.  As a result, a generator that runs afoul of a condition for exemption could as a result be subject to penalties for not complying with dozens of requirements that apply to the next higher level of generator, or even those that apply only to treatment, storage and disposal facilities.

The petitioners are also likely to focus their challenge on the portion of the rule that for the first time formally incorporates the requirement that hazardous waste determinations be made at the point of generation, before any dilution, mixing or other alteration of the waste occurs.

We will be following this petition and providing updates on Environmental Law Next as the challenge progresses.

The EPA announced today that it is delaying the effective date of all regulations that have been published in the Federal Register but are not yet effective.  There are 30 such regulations, all of which are now scheduled to become effective on March 21, 2017.  The action was taken to comply with the White House’s “Regulatory Freeze Pending Review” memorandum, which was issued to the heads of all executive departments on the day President Trump was inaugurated.

The 60 day period “is necessary to give Agency officials the opportunity for further review and consideration of new regulations,” according to the rule.

The Agency’s action was taken without public comment pursuant to the good cause exceptions to the Administrative Procedures Act.  5 U.S.C. §553(b)(B) allows the administration to forgo regular notice and comment procedures when they are “impracticable, unnecessary, or contrary to the public interest.”

The rule adding a Subsurface Intrusion (SsI) component to the CERCLA Hazard Ranking System (HRS), which we wrote on two weeks ago, is among those affected by this action.  It was set to become effective on February 8, 2017.

The Agency specifically left open the possibility of delaying implementation of some affected regulations beyond March 21, 2017.

On January 9, 2017, EPA issued a final rule adding subsurface intrusion (SsI) as a component to the Hazard Ranking System (HRS), which is the mechanism that is used for determining the eligibility of sites for CERCLA’s National Priorities List (NPL).  The rule allows the threat of subterranean vapor migration into regularly occupied structures to be considered when deciding if the risk posed by a particular site is great enough to warrant listing.

Previously, the only exposure pathways that EPA and state and tribal organizations that assess sites for inclusion on the NPL were permitted to take into account were ground water migration, surface water migration, air migration and soil exposure. SsI is being folded into the existing soil exposure pathway, which is being restyled as the Soil Exposure and Subsurface Intrusion pathway.

The addition of SsI to the HRS at this time was driven by the development in technologies that allow SsI risks to be quantifiably and comprehensively measured in an efficient matter. EPA has long been aware of the health risks of SsI but could not justify considering it as part of the HRS, which requires the availability of data that can be used to objectively compare thousands of disparate sites.

The rule could result in an increase in the number of sites being listed on the NPL. Sites with an HRS score of 28.50 are eligible and that number will not change.  Under the new rule, however, potential SsI that would in the past have been ignored can add points to a site’s HRS score and there are no corresponding reductions elsewhere.  EPA expects that in practice, however, it will result in a shift in the makeup of sites on the NPL without causing more listings during any particular interval.

The rule will not affect sites that have already been evaluated for addition to the NPL. Sites that are already on, or proposed to be put on, the NPL have already been found to pose enough risk through other exposure pathways to warrant listing or proposal for listing.  Sites that were dropped from the listing process at some earlier stage of evaluation will not be reevaluated.

Since the beginning of the fracking boom, the potential impact of fracking operations upon groundwater has been a hotly contested area.   The most recent addition to the public debate is a new EPA report, entitled “Hydraulic Fracturing for Oil and Gas: Impacts from the Hydraulic Fracturing Water Cycle on Drinking Water Resources in the United States”. The report sets forth the results of EPA’s latest investigation on this subject, which relied on independent research as well as published materials.

The agency concludes that fracking can affect drinking water resources under some circumstances, with impacts ranging in severity from temporary changes in water quality to contamination so severe that it renders water from private wells undrinkable. But the report also concluded that there are too many gaps and uncertainties in the available data to determine the frequency with which Americans’ drinking water is impacted by fracking operations.  Similarly, EPA could not fully characterize the severity of the impacts of fracking on drinking water nationwide.

Unsurprisingly, the report found that among the factors and activities that make impacts likely to be more severe or frequent are (1) withdrawals of water for fracking in areas of declining groundwater resources; (2) spills of hydraulic fracturing fluids; (3) wells with inadequate mechanical integrity; (4) injection of fracking fluids directly into groundwater; (5) discharge of inadequately treated fracking fluid wastewater; and (6) disposal of fracking fluid wastewater in unlined pits.

This relatively inconclusive report is receiving criticism from fracking supporters for failing to more forcefully endorse the safety of the practice.  They are highlighting the statement included in the draft version of the report, but removed from the final one, that EPA “did not find evidence that [fracking related activities] have led to widespread, systematic impacts on drinking water resources in the United States.”

The report puts a spotlight on an interesting choice facing the Trump administration, which has been clear about its desire to promote domestic oil and gas production. At Environmental Law Next, we will be watching to see whether incoming EPA Administrator Scott Pruitt pursues further studies with the aim of providing fracking with the government’s imprimatur of safety, or if he decides to just keep his agency away from the debate.

Last week the Environmental Law and Policy Center, (ELPC) a Midwest-focused public interest environmental legal advocacy organization, held a post-election briefing outlining its plan for action during the Trump presidency.   Featuring prominently in the presentation was the launch of ELPC’s High Impact Environmental Litigation Program, or HELP.   The organization envisions a platoon of pro-bono attorneys bringing civil suits against polluters to make up for what it expects will be a reduction in the amount of federal environmental enforcement.

ELPC will likely not be alone among environmental non-profits in marshaling resources for citizen suits. In Environmental Law Next’s take on the likely implications of the election, we predicted that there will be a drop in the amount of EPA enforcement actions and a rise in private litigation in response.  Most federal environmental statutes allow anyone to bring a suit for injunctive relief to address ongoing violations, and even for civil penalties, if the government forgoes its right to act as the plaintiff.

What does this mean for the regulated community? No matter the resources organizations like ELPC can muster for this kind of litigation, it cannot fully assume the place of EPA and other federal enforcement agencies.  Citizen suit provisions give private organizations standing, but not many of the other legal rights that make an efficient, comprehensive enforcement regime possible.  The ability to conduct inspections on private property, for example, is central to EPA’s ability to identify violations and gather evidence.

Nevertheless, a citizen suit can be big problem for a company that finds itself defending one. ELPC is not hiding its intentions with this program, stating its hopes of bringing high impact lawsuits; it is not looking to give slaps on the wrist.  The cost of defending and resolving citizen suits brought by sophisticated non-profits could be as high if not higher than for government enforcement actions.

 

 

Mr. Trump made cutting regulations a central promise of his campaign. At one point he suggested 70% of federal regulations could be eliminated.  Although his staff quickly walked that number back, there is little doubt that at least a few EPA regulations will be among those the administration will target.

An agenda that involves a thoughtful attempt to revise and simplify the environmental title of the Code of Federal Regulations would be a welcome development and might receive broad support.  Observers from most of the political spectrum will concede there are at least some incidents of over-regulation and counterproductive micro-management for which the EPA is responsible.  According to the Heritage Foundation, the annual cost of EPA regulations enacted during the Obama Administration constitute nearly half of all new annual federal regulatory costs imposed during that period.  Examples of over regulation abound in all spheres of environmental law, where it now takes specialists to understand each subdivision of the regulations.  For those who want examples, see the “verified recycler” exemption at 40 C.F.R. 261.4(a)(24), any portion of the land disposal restrictions at 40 C.F.R. Part 268, or the newly issued New Source Performance Standards and Emission Guidelines for Municipal Solid Waste landfills.

It is too early to know whether Mr. Trump will strike the right balance.  His campaign was short on the relevant details.  There were a few areas, however, where he got specific. Some of President Obama’s signature environmental regulations are likely to be completely abandoned.  One way or another, the Clean Power Plan is dead.  At the moment the statutory challenge to it is awaiting adjudication by the full panel of the U.S. Court of Appeals for the D.C. Circuit.  But if his harsh criticism of the rule in the past left any doubt, Mr. Trump recently announced he would appoint an unabashed climate skeptic to lead his EPA transition team.

Similarly, it is likely only a question of how, rather than whether, the United States will reverse course on the Paris Agreement on climate change.  Among Mr. Trump’s options are to formally exit the deal through the process it provides, but that would mean America would still be bound by it until 2020.  He may choose instead to simply ignore the agreement by failing to implement the Clean Power Plan or any other policy that would cause the country to meet its voluntary goals; there is no punishment mechanism in the agreement for those that fall short.

The Clean Water Rule, which was supposed to resolve the issue of jurisdictional limits of the Clean Water Act, will also not survive, at least in its current form.  Before the election it was already being challenged by opponents, on whose behalf 88 Republican members of Congress filed an amicus brief arguing that the agency was expanding its jurisdiction beyond what was intended by the statute and encroaching on the States’ authorities.  And Mr. Trump has excoriated the rule on the campaign trail and said he would eliminate it.  He will now be able to do that.  Look for Mr. Trump to instruct the Justice Department to stop defending the rule in court.

The circumstances Mr. Trump faces with respect to the Clean Water Rule, however, highlight the flaw of his over-simplistic attacks on the quantity of EPA regulations.  Many regulations do not actually impose costs and burdens themselves.  To the contrary, they give clarity and predictability to otherwise ambiguous statutes.  The Clean Water Rule was intended to establish when Clean Water Act permits are required.  Without it, costly and time consuming case-by-case evaluations will be necessary.  If Mr. Trump is truly concerned with cutting bureaucratic red tape he will act swiftly to replace, rather than eliminate, the Clean Water Rule.

Mr. Trump has talked less about President Obama’s GHG emissions standards for light-duty vehicles, which were designed to double the fuel efficiency of new cars and trucks between 2011 and 2025.  A mid-term review of these regulations was already scheduled, and the auto industry sees an opportunity.  This week, the Alliance of Automobile Manufacturers wrote to President-elect Trump asking him to reduce the targets.

There are probably not any monumental changes coming to the regulations that govern the waste and recycling industry.  Several likely policies could provide an indirect boon to business, however.  Corporate tax cuts, a one-time allowance for repatriation of foreign domiciled profits, or a big infrastructure bill would each likely result in higher volumes of waste for disposal.  Gas to energy businesses may not fare as well as focus shifts back to fossil fuels though.

As we learn more about Mr. Trump’s energy and environmental plans, we will keep you updated here.