Continuing on our discussion of the electronic manifest (e-Manifest) system, EPA Administrator, Scott Pruitt, signed the e-Manifest User Fee Final Rule on December 20, 2017.  EPA expects the final rule to be published in the Federal Register in the coming weeks.  The pre-publication version of the final rule is attached here.

Under the final rule, user fees are only being assessed on the hazardous waste and state-only regulated waste receiving facilities.  The “billable event” is the submission of the final manifest copy signed by the receiving facilities.  In assessing the user fee on the receiving facilities only, EPA stated that it was simplifying the billing process and assuming that the receiving facilities will pass on the fees through to the generators by service agreements.

The users will pay different fees depending on the type of manifest submitted.  Given that the user fee is based on cost recovery and that paper manifests are expected to cost more to process, paper manifest fees will be considerably higher than electronic manifests.  EPA is projecting that an electronic manifest will cost $4/manifest, while a mailed copy of a paper manifest will cost $20/manifest.  Image uploads are projected to cost $13/manifest and data file uploads $7/manifest.  These fees are estimates only, based on projections of project costs.  Final user fees will be forthcoming when EPA has a final budget and contracts in place for the system.  EPA will also be publishing revised user fee schedules at two-year intervals.  Based on these estimated numbers, there is a significant incentive for receiving facilities to submit manifests electronically.

The final rule is effective June 30, 2018, which coincides with the launch of the e-Manifest system.  EPA will begin collecting fees on that date.   Receiving facilities will receive an invoice each month and will be directed to the Department of Treasury’s Pay.gov website to submit electronic payments.

We will continue to follow and provide updates from EPA on the e-Manifest system.

 

 

 

The New York Times published a report over the weekend detailing a fall-off in the EPA’s enforcement activities during Scott Pruitt’s tenure as EPA Administrator.  The changes are driven by top down directives from Washington to the regional offices.

The Times found that Scott Pruitt’s EPA started about 1,900 enforcement actions in the nine months since he was confirmed,  around a third fewer than the equivalent period during the Obama administration and a quarter fewer than during the same stretch of the George W. Bush administration.  The analysis found that the civil penalties the current EPA has sought are also less than they were under Pruitt’s predecessors.

Perhaps most significant has been the drop in demands for injunctive relief against alleged violators.  The $1.2 billion of requests made under Pruitt is just 12% of what was sought by the Obama administration in its first nine months.

Data of this kind over the relativity small time period of nine months can be misleading because enforcement actions take time to develop.  Final outcomes – penalties collected and compliance investments compelled – are a better gauge of how aggressive and effective an administration’s enforcement activities are. Nevertheless, several parameters strongly suggest a fundamental shift to a more lax approach to enforcement under Scott Pruitt.

The Times found evidence in addition to enforcement data that shows a purposeful decision by the Agency’s political appointees to rein in enforcement.  For example, it has moved to curtail some of its regional offices’ operating autonomy with respect to issuing information requests to regulated entities.  A confidential May 31, 2017 memorandum from the Director of the Office of Civil Enforcement instituted a new policy.  Now “HQ review is required prior to issuance of information requests under CAA § 114, RCRA § 3007 and CWA §308.”

In response to the New York Times article, EPA issued a release accusing the newspaper of distorting facts about enforcement under the current administration, although the statement does not dispute any specific factual statements in the article.  EPA’s response also asserts that, to date, “no request to gather enforcement information has been denied.”

The article did not include aggregate data on the number of information requests issued since the memorandum was delivered to each of the regional offices.  The Times did, however, discover that, in Region V, requests for information that include a monitoring or testing requirement fell from an average of 4.2 per month to only 1 since May 31st of this year.  It is probably too early, however, to tell if this is indicative of future levels or just a temporary slow-down due to new procedures.

How much control over information requests EPA exercises from Washington is something we will be watching very closely.  They are an essential tool for discovering violations and building enforcement actions.  Which individual information requests, if any, Pruitt’s administration declines to permit might also give an indication of what industries are likely to avoid enforcement generally.  Check back with Environmental Law Next in coming months for more information on this subject.

The U.S. Environmental Protection Agency’s (EPA) e-Manifest system is anticipated to officially launch in June 2018.   The e-Manifest is a nationwide system for tracking hazardous waste shipments electronically and will establish the first national repository of manifest data.  This is a much overdue modernization and consolidation of the current paper system.  The anticipated benefits of the e-Manifest are many, including (1) a reduction of paperwork that is expected to save approximately $75 million annually; (2) nearly real-time shipping tracking capabilities; (3) higher quality data due to better legibility; (4) immediate notice of problems or discrepancies; (5) a unified data system for state and federal wastes; and (6) a single method for reporting manifest data to EPA and states.

Under this new system, EPA is required to collect manifests from any entity required to submit a manifest under federal or state law.  Tens of thousands of generators, transporters, and treatment, storage and disposal facilities will be required to register for the e-Manifest system to submit manifests directly to EPA.  EPA is authorized to collect reasonable fees to pay for the system.  The final rule establishing the user fee methodology is expected later this month. The program will become effective on the same date in all states.

EPA is authorized to develop and implement the e-Manifest system under the Hazardous Waste Electronic Manifest Establishment Act, which was adopted in 2012.  EPA issued a final rule in February 2014, implementing certain provisions of that Act.  We will post an update on the user fee rule as soon as it is available.

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.

Ever since the EPA’s 1985 rulemaking on the Definition of Solid Waste, 50 Fed. Reg. 614 (1985), the question of how one distinguishes legitimate recycling from sham recycling has puzzled both regulators and recyclers. The question is vital because sham recycling is equivalent to illegal disposal and exposes the perpetrator to enforcement and significant penalties. In contrast, legitimate recycling is highly encouraged and satisfies the central purposes of the Resource Conservation and Recovery Act. So telling the two apart is important.

In 1989, Sylvia Lowrance, the then-Director of Solid Waste for EPA, signed a memorandum, entitled, “FOO6 Recycling,” that drew from earlier rulemakings and set forth a summary of the criteria for distinguishing between sham and legitimate recycling. Among these criteria was a comparison between the chemical composition of the purported recyclable material (or “secondary material”) and the analogous raw material or product. Included in her discussion was the question, “Are the toxic constituents actually necessary (or of sufficient use) to the product or are they just “along for the ride?” This “along for the ride” concept has since greatly influenced the question of sham vs. legitimate recycling because it raises the specter that the recycler is actually surreptitiously disposing of hazardous waste under the cover of beneficial recycling. But a lingering question for the last several decades has been how much toxics can actually be “along for the ride” and still be legitimate?

Fast forwarding to 2015, EPA addressed head-on the sham recycling question and set forth four criteria to tell a sham from the real thing. Importantly, the fourth criterion effectively replaced the old “along for the ride” criterion. See 40 C.F.R. 260.43(a)(4); 80 Fed. Reg. at 1725-28. This new criterion requires that the “product of the recycling process must be comparable to a legitimate product or intermediate,” and gives a recycler three options for satisfying it.

Where there is an “analogous” product, the recycled product is comparable if (a) it does not exhibit a hazardous characteristic not exhibited by the “legitimate” product; and (b) the two products have comparable levels of hazardous constituents. Where there is no “analogous” product, the two products are comparable if the product of the recycling process meets “widely recognized commodity standards and specifications[.]” Last, even if the product has high levels of hazardous constituents as compared to the raw material, the recycling can still be legitimate if recycler carries out certain health and environmental studies to show the toxic constituents are not harmful. 40 C.F.R. 260.43(a)(4)(iii).

But Factor 4 is no longer part of EPA’s regulations. In the just-published case of American Petroleum Institute v. EPA, (No. 09-1038), the D.C. Court of Appeals vacated Factor 4, finding that EPA failed to articulate a concrete standard for determining at what contaminant level a recyclable material was “significant in terms of health and environmental risks.” EPA’s “comparable to or lower than” standard, the court said, does not adequately determine when a recycling is a sham: levels can be high and still be part of a legitimate recycling process. Further, the court noted, this standard does not “reasonably focus on items that are part of the waste disposal problem.” It therefore vacated Factor 4 as it applies to all hazardous material recycling.

The court pinpointed the inherent flaw in the “toxics along for the ride” metaphor: at what concentration level does the presence of these toxics signal a sham? The court also criticized EPA for an over-reliance upon recycling horror stories, rather than actual instances of environmental harm. Unfortunately for EPA, it is back to the drawing board on this 30-year old conundrum of defining legitimate recycling. Meanwhile, those seeking to demonstrate the legitimacy of a recycling process (at least as a matter of federal law), will only need to satisfy the remaining three legitimacy criteria: (a)the secondary material must provide a useful contribution to product; (b) the recycling process must produce a valuable product; and (c) the generator and recycler must manage the secondary material as valuable product. In the end, this all might be a good thing, as it may open up opportunities to fulfill the underlying purposes of the Resource Conservation and Recovery Act, rather than become entangled in “labyrinthine maze” that is the definition of solid waste.

For more on this topic, read my article, “Understanding a Sham: When is Recycling, Treatment?,” published in the Boston College Environmental Affairs Law Review here.

Several environmental organizations have petitioned the D.C. Circuit Court of Appeals and moved to block EPA from implementing a 90-day administrative stay of the New Source Performance Standards covering methane emissions from oil and gas infrastructure.  A group of states, plus the District of Columbia and the City of Chicago, have since moved to intervene in favor of petitioners.  Industry groups and conservative leaning states have lined up to support the agency’s action.  The rule, which focuses on detecting and repairing methane leaks, would have required oil and gas well owners and operators to complete initial monitoring by June 3, 2017.

Petitioners ague that EPA lacks the authority to issue a stay of finalized regulations under the Clean Air Act other than pursuant to 42 U.S.C. § 7607(d)(7)(B), which requires identification of an objection of central relevance to the rule that could not have been raised during the initial public comment period.  The groups claim that these conditions are not satisfied, as all the issues relied on by EPA were extensively deliberated during the public comment period, or at least could have been, and in any event are not centrally relevant.  For example, petitioners attack EPA’s claim that its rationale for including low producing well sites in the leak detection and repair program was not presented to the public, noting that EPA explicitly sought comment on this issue in its 2015 proposal.

Petitioners also contend that the stay is overboard and that the EPA’s failure to narrowly tailor it to the specific issues under reconsideration, or balance the equities involved, is arbitrary and capricious.

In response, EPA submits that 42 U.S.C. § 7607(d)(7)(B) establishes only when the agency must reconsider a rule, but that it has inherent authority to reconsider its decisions.  Its argument runs into a bit of trouble because the authority for the three month stay EPA initiated appears to be tied to a reconsideration pursuant to 42 U.S.C. § 7607(d)(7)(B).  Only secondarily does it defend its decision on the grounds that the conditions required by that section are satisfied.

This legal fight is part of a larger battle between the EPA and the environmental community over the rule.  On June 13, 2017, the EPA proposed an additional 2-year stay of portions of the regulations.  In particular, the agency has proposed to stay the fugitive emissions requirements, the well site pneumatic pump standards, and the requirements for certification of closed vent system by professional engineers.  Even if petitioners are successful before the D.C. Circuit, they will still have an uphill battle to maintain the rules indefinitely.  They do not dispute that the agency can initiate a separate rulemaking and likely permanently eliminate as much of the rule as it would like.

Yesterday, the U.S. Environmental Protection Agency and the U.S. Army Corps of Engineers proposed a rule to rescind the 2015 Clean Water Rule and recodify the definition of “waters of the United States,” known as WOTUS, that existed before 2015.  EPA and the Corps intend to re-evaluate and revise the WOTUS definition consistent with the Executive Order issued on February 28, 2017.  In the meantime, EPA states that the proposed rule will be implemented consistent with “Supreme Court decisions, agency guidance, and longstanding practice.”

On May 18th, the D.C. Circuit Court of Appeals granted the EPA’s request to stay challenges to the New Source Performance Standards regulating methane emissions from oil and gas infrastructure, pending review of the rule in accordance with President Trump’s Energy Independence Executive Order.  EPA announced in April that it intended to reconsider the rule and was staying a future compliance date.

Since it was issued last year, the rule has been challenged by various oil and gas industry groups on the grounds that the EPA does not have the authority to regulate methane from oil and gas infrastructure. The challengers have signed on to the EPA’s motion to put the cases on hold pending a review of the current rules.

The President’s executive order specifically directed the EPA to review and reconsider the methane rules for new oil and gas infrastructure, and if appropriate, suspend, revise or rescind them. In its motion to put the cases on hold, the EPA argued that its review of the rules could impact the disputes awaiting resolution in the Court.

Various environmental groups, as well as several states, intervened in the dispute opposing the EPA’s motion, asserting that the EPA had not offered any concrete timeline for the review, rendering the hold indefinite.  The court rejected this argument, but did order the EPA to file status reports regarding its review every 60 days.

The precise fate of the rule is still uncertain, but it is likely it will be greatly rolled back, if not eliminated entirely.  EPA administrator Scott Pruitt has a long history fighting against precisely this kind of regulation of the oil and gas industry.  After President Trump’s decision to pull American out of the Paris Agreement, it is difficult to imagine the EPA leaving anything more than the bare minimum of the rule in effect.

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.

A federal district court in Indiana recently ruled on whether email communications with environmental contractors hired by an attorney are protected from discovery. In Valley Forge Ins. Co. v. Hartford Iron & Metal, Inc., No. 1:14-cv-00006-RLM-SLC, 2017 WL 1361308 (N.D. Ind. April 14, 2017), the Court held that the communications were not protected by the attorney-client privilege, but were, in part, protected by the work-product doctrine.  This decision provides much-needed guidance to lawyers when retaining environmental consultants on behalf of their clients.

The Valley Forge litigation involved a dispute between the owner of a scrap metal recycling facility and its insurer over a settlement agreement relating to an environmental clean-up at the insured’s property.  The settlement agreement allocated responsibilities for the clean-up pursuant to an agreed order with the Indiana Department of Environmental Management (IDEM).  USEPA also later asserted enforcement claims against the defendant.

Following these claims, the defendant’s attorney hired two environmental consultants – one to design a stormwater management system to treat PCB-contaminated stormwater and another to perform site remediation.  The attorney initially retained both consultants directly, with the defendant’s approval; however, the defendant was found to have later entered into a standard construction contract directly with one of the contractors.

The Court performed an in camera review of 185 emails or email threads with the environmental contractors that the defendant had withheld as privileged in response to discovery requests by the plaintiff.  Applying Indiana law, the Court held that none of the emails were protected by the attorney-client privilege.  The Court stated that, while the “attorney-client privilege can extend to consultants hired by the attorney on behalf of a client,” only communications made for the “primary purpose” of obtaining legal advice from the lawyer come within the attorney-client privilege.  These protected communications can include reports made by third parties from gathering information from the client, where the primary purpose of the report is to assist a lawyer in giving legal advice.

In this case, the Court held that that the primary purpose in retaining the environmental contractors was not to provide legal advice, but to provide environmental remediation services.  The Court further held that the attorney’s retention of the contractors, by itself, was not sufficient to bring the contractors within the scope of the attorney-client privilege, nor was labeling the communications as “privileged and confidential” or “attorney-work product.”

The Court then addressed whether the communications were protected by the attorney work-product doctrine, applying federal law.  The Court noted that the doctrine is “distinct from and broader than the attorney-client privilege,” and applies to documents prepared in anticipation of litigation by any representative of the client, “regardless of whether the representative is acting for the lawyer.”  The primary motivating purpose must be to “aid in possible future litigation.”

The record in this case supported the defendant’s claim that the motivating factor to complete the clean-up of its facility was the threat of litigation with IDEM and USEPA.  All of the emails at issue were created after the lawsuit was filed and after the parties became aware of the claims by IDEM and USEPA.  The fact that the emails also served an ordinary business purpose of completing the environmental remediation did not deprive them of their protection under the doctrine because the defendant was able to show that the anticipated litigation was the driving force behind the preparation of the requested documents.

In performing the in camera review, the Court declined to extend the protections of the work product doctrine to transmittal communications that did not contain any attorney comment, impressions or strategy, billing records or emails that merely pertained to administrative, logistical or scheduling matters.  The rest of the emails were held to be protected by the work-product doctrine.