Client Alerts
May 05, 2020

Four Important Environmental Law Changes Since You’ve Been Home

Stites & Harbison Client Alert, May 5, 2020


Introduction

Over the past several weeks while most Americans have been sequestered in their homes and national attention has been focused on the COVID 19 pandemic, several nationally important issues of environmental concern have dramatically surfaced. Two issues resulted from decisions of the U.S. Supreme Court, one relating to the discharge of pollution to ground water that eventually finds its way into navigable waters, the other regarding the viability of state law claims against federal superfund Potentially Responsible Parties following a federally approved cleanup. Another major issue that has ripened relates to the Trump Administration’s release of the controversial “Navigable Waters Protection Rule” further defining and re-defining what are Waters of the United States. Adding to the list of startling developments with national ramifications is a federal district court decision enjoining the U.S. Army Corps of Engineers from using Nationwide Permit #12 in applications by linear project proponents (e.g., utilities, oil and gas pipelines) for stream crossings under Section 404 of the Clean Water Act. Each of these topics is addressed in the following discussions prepared by the attorneys in Stites & Harbison’s Environmental, Natural Resources and Energy Service Group.

Waters of the United States: Cycle Continues

Like the natural hydrologic cycle involving the continuous circulation of water, swirling and flowing from evaporation, condensation, transportation, precipitation, surface flow and groundwater recharge, the current administration’s attempt to legally define what are “Waters of the United States” (“WOTUS”) continues the cycle of the U.S. EPA and U.S. Army Corps of Engineers “never say die” efforts to define which hydrologic features and water bodies are protected under the Clean Water Act (CWA).

On April 21, 2020, the U.S. EPA and U.S. Army Corps of Engineers, under their joint jurisdiction regulating WOTUS under the CWA, essentially regulating activities in WOTUS, published the “Navigable Waters Protection Rule” (2020 Rule) which was the final step in the process by the Trump administration to roll back the broader definitions promulgated by the Obama and prior administrations and interpretations along the way by the U.S. Supreme Court.

The cycle of defining and redefining WOTUS has its origins in the definition of “Navigable Waters” in the CWA itself as “Waters of the United States.” Similar to the numerous stages in the hydrologic cycle, the determination of what waters warrant regulatory protection has for over 35 years been subject to conflict and litigation at administrative levels, in Circuit and District Courts across the nation, and has been to the Supreme Court three times regarding the definition of WOTUS and once on a procedural issue (Which lower court has jurisdiction to hear challenges to the WOTUS rules?).

After each administration revises the regulations, either on its own initiative or following the latest Supreme Court decision, it is subjected to challenge from both the environmental and the private landowner/business communities. The environmental community criticizes the agencies for not adequately protecting aquatic features and ecosystems, including wetlands in all of their manifestations. Private landowners, extractive industries, agricultural interests and others see an expansive definition of protected WOTUS as a limitation on their private interests and an unwarranted intrusion on economic development. Very few areas of environmental law have been so controversial.

The 2020 Rule is intended, as the President announced at the beginning of the process, to implement the bright-line rule described in Justice Scalia’s opinion in the Rapanos case regarding the often disputed issue of what is a protected wetland. Rather than the more scientific analysis, the “ Significant Nexus Test” written by Justice Kennedy and agreed to by four other Justices, that WOTUS should be determined on a “case by case analysis of effects on the chemical, physical and biologic integrity of the covered waters.” Scalia called for a simpler standard, “relatively permanent standing or continuous flowing bodies of water and wetlands with continuous surface conditions.”

The 2020 Rule includes non-controversial obvious features such as territorial seas and traditional navigable waters; tributaries that flow into jurisdictional waters; wetlands that are directly adjacent to jurisdictional waters; and lakes, ponds and impoundments of jurisdictional waters. However, the 2020 Rule eliminates many of the types of features meeting the Rapanos Substantial Nexus test including, for example, ephemeral streams and pools, previously farmed land and other features.

So the cycle continues. The new WOTUS rule is finalized and within two weeks it is the subject of numerous federal court challenges across the country including, most recently a challenge by 17 states in a California federal court (California and New York are joined by Connecticut, Illinois, Maine, Maryland, Michigan, New Jersey, New Mexico, North Carolina, Oregon, Rhode Island, Vermont, Washington, Wisconsin, Massachusetts and Virginia, along with the District of Columbia and New York City). Numerous other cases have been filed by various environmental organizations around the nation arguing, among other things, that the Trump administration has exceeded the boundaries allowed under the Rapanos opinion.

U.S. Supreme Court Allows State Law Claims for Restoration Damages at Superfund Sites

On April 20, 2020, the Supreme Court determined that a group of 98 private landowners at a federal Superfund site in Montana cannot use state law claims to require additional remediation without advance EPA approval, based on a limitation in the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). Atlantic Richfield Co. v. Christian, --- S.Ct. ----, 2020 WL 1906542 (April 20, 2020). In 2008, landowners within the 300-acre Superfund site filed claims alleging nuisance, negligence, and trespassing in Montana state court contending the smelter had contaminated their properties with lead and arsenic. Montana law allows landowners in some circumstances to recover “restoration damages” to pay for the restoration of damaged property. In this case, the landowners sought these damages to fund the remediation of their properties above and beyond the requirements of the EPA-approved remedial plan. The smelter challenged the “restoration damages” claims as seeking supplemental remediation that is barred by CERCLA Section 122.

The Supreme Court first held that CERCLA § 113(b), which grants federal courts exclusive jurisdiction over cases “arising under” CERCLA, does not deprive state courts of jurisdiction to hear state law claims for restoration damages because those claims do not “arise under” CERCLA. 42 U.S.C. § 9613(b). However, the Supreme Court accepted the smelter’s argument that the plaintiffs—as owners of land where hazardous substances had come to be located—were potentially responsible parties (PRPs) under CERCLA, and thus were prohibited from implementing their restoration plan without EPA approval. Thus, the Supreme Court ruled that CERCLA does not bar state courts from hearing claims for restoration damages arising from federal Superfund sites, but that plaintiffs who seek such damages must secure federal EPA approval of any additional site investigation or cleanup if the plaintiffs themselves are PRPs.

In making these determinations, the Court concluded that landowners are PRPs because “pollutants have ‘come to be located’” on their properties and explained that “[i]nterpreting ‘potentially responsible parties’ to include owners of polluted property reflects the Act’s objective to develop, as its name suggests, a ‘Comprehensive Environmental Response.’” The Court rejected the landowners’ argument that the breadth of the term PRP should depend on the enforcement status for each landowner, such as whether a landowner has received a notice letter from EPA. The decision opens the door to state court actions to fund additional remedial actions at federal Superfund sites, beyond what is required by EPA. The result of this decision is an increased potential for: (i) uncertainty about cleanup requirements; (ii) additional response costs; and (iii) litigation to resolve the questions left open by the Supreme Court. To date, Atlantic Richfield has spent more than $470 million to remediate the site.

Polluted Groundwater Found in Surface Waters? You May Need a Permit.

The Supreme Court’s decision on wastewater pollution in Hawaii expands obligations to obtain and comply with Clean Water Act (CWA) Section 402 permits (National Pollutant Discharge Elimination System or NPDES permits). County of Maui, Hawaii v. Hawaii Wildlife Fund, Case No. 18-260 (U.S. April 23, 2020). Requirements of the CWA are deceptively simple: one must have an NPDES permit if there is a discharge of a pollutant from a point source into navigable waters. The essential question in this case is whether the discharge was a point source. For those responsible for the release of pollutants that may eventually find their way into “navigable waters” or “waters of the United States” this decision may surprise with obligations to obtain and comply with an NPDES permit.

The County of Maui injects treated wastewater into four underground injection wells authorized by Hawaii and located about one-half mile from the Pacific Ocean. The effluent and the pollutants it carries eventually reach the ocean via groundwater. Studies by the United States Geological Survey and others showed that pollutants from the injection wells increased the acidity and nitrogen levels of the ocean water and that those changes harmed the corals found in the coastal park. (For a description of the circumstances, see https://www.usgs.gov/center-news/polluted-groundwater-threatens-hawaiian-coral-reefs?qt-news_science_products=4#qt-news_science_products).

The County had used this method for many years but had not sought an NPDES permit. Although the obligations imposed by the CWA do not expressly apply to groundwater, the Court found in this case that the discharge of pollutants required a permit because the discharge of pollutants was the “functional equivalent of a direct discharge.” The Court rejected the more expansive analysis of the Ninth Circuit that held an NPDES permit was needed because the pollutants could be “fairly traceable” to the injection of wastewater into the wells. (Compare this “fairly traceable” aspect to the “connectivity” principles of the now-withdrawn Clean Water Rule.)

As in many other cases involving the CWA, the Court avoided giving clear demarcations for when a permit is required. Instead, the majority opinion (6-3) listed several “potentially relevant factors” to be examined that include time, distance, the material through which the pollutant travels, dilution, relative amount of the pollutant that reaches navigable waters, how the pollutant enters the navigable waters, and whether the pollutant remains the same or is changed in the process. The decision is an important step as litigants and courts continue to interpret (and some say expand) the requirements of the CWA. It is a decision that should keep environmental managers awake at night.

Sudden Loss of Nationwide Permit 12 Threatens Future of Development Projects; Will Overwhelm the Corps of Engineers

A recent federal court ruling on the use of Nationwide Permit 12 (NWP 12), in connection with the Keystone XL pipeline project in Montana, threatens the feasibility of current and future development projects nationwide as the U.S. Corps of Engineers (Corps) braces for an increase in individual Clean Water Act (CWA) permit review. The Montana court vacated NWP 12 and two days later, the Corps issued guidance to each of its regional regulatory offices to suspend all NWP 12 verifications until further notice.

The ruling, issued in Northern Plains Resource Council v. U.S. Army Corps of Engineers, No. 4:19-cv-00044-BMM (D. Mont.), held the Corps failed to consult with the U.S. Fish and Wildlife Service and the National Marine Fisheries Service (the Services) when it reissued a new set of Nationwide Permits in 2017. Section 7(a)(2) of the Endangered Species Act (ESA) requires agencies to consult with the Services when federal action “may affect” an endangered or threatened species. 50 C.F.R. § 402.14. In the past, the Corps regularly consulted with the Services before reissuing NWP 12, but 2017 marked a departure from this practice when the Corps determined that General Condition 18 for project-specific consultation in the NWP would satisfy Section 7 on its own. The court found this to be a) arbitrary and capricious and b) an impermissible delegation of Agency duty to individual permittees.

This decision has left industry reeling as it reassesses permitting options for current and future projects and developments. In particular, NWP 12 is used to authorize “the construction, maintenance, repair and removal of utility lines and associated facilities in waters of the United States, provided the activity does not result in the loss of greater than 1/2-acre of waters of the United States for each single and complete project.” When NWP 12 was reissued in 2017, the Corps estimated that it would be used for “11,500 projects per year.” Now, without the use of NWP 12, developers may be required to obtain individual CWA Section 404 permits from the Corps, (a process involving burdensome federal review taking up to a year to complete), for something as minor as a utility cable crossing a stream.

On April 27, the U.S. Department of Justice (DOJ) filed a motion, on behalf of the Corps, requesting the court stay the portions of the order that vacated NWP 12 so that it did not apply to projects outside of the Keystone XL pipeline. The main argument for doing so is that the plaintiff did not seek “to have NWP 12 broadly enjoined; rather, they seek narrowly tailored relief to ensure adequate environmental review of oil pipelines, especially Keystone XL.” The following day, the court denied any temporary stay on its order until it ruled on the motion itself, but it did grant an expedited briefing. DOJ has indicated that if the court does not rule on the motion by May 11, 2020, it will file a notice of appeal to the Ninth Circuit the next day.

Currently, the ruling does not affect other Nationwide Permits or State Programmatic General Permits, but this new precedent could put them at risk of similar litigation. The Corps estimates that there are approximately 5,500 preconstruction notices (PCN) awaiting verification. If those PCNs were to be processed as individual 404 permits, the Corps believes it would take its regulatory offices one and a half years to complete those permits alone. This threatens to tie up construction in an industry already facing the challenges of the COVID-19 pandemic. As the full impact of this decision is yet to be determined, developers with projects involving NWPs should keep a close eye on this litigation as it progresses and seek out creative solutions to permitting, such as applying for other NWP authorizations as we await updates.

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