Environmental Crimes 2013

Sirote & Permutt PC
Charles R. Driggars

October 2, 2014

Of the three-letter acronyms for federal agencies that cause the most dread in CEOs, owners, officers and plant managers across the company,  EPA ( next, perhaps, to IRS) is probably right at the top. Ordinary regulatory actions (and civil suits) regarding alleged pollution violations are worrying enough; far worse, however, is the  specter  raised by notice by EPA (Environmental Protection Act)  that criminal investigations are under way.

EPA’s criminal enforcement actions resulted in more than $4.5 billion in combined fines, restitution and court-ordered environmental projects in fiscal year 2013 alone. In some cases, however, a wholly different kind of punishment can be – and has been – imposed, jail time. And this harsh penalty is utilized more than is commonly assumed.

One example: In March 2013, the owner of a Texas bio-diesel company was sentenced for 51 counts of wire fraud, 24 counts of money laundering and four counts of making false statements in the context of the Clean Air Act (CAA) violation after pleading guilty to participating in a scheme to defraud the EPA.   EPA, with the U.S. Secret Service, conducted the joint investigation; in the end, the individual received a $175,000 fine, 188 months in federal prison in addition to being ordered to pay almost $55 million in restitution.

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11th Circuit Discusses Pleading Standards for Toxic Tort Claims

Pillsbury Winthrop Shaw Pittman LLP
Anthony B. Cavender

October 11, 2014

On October 6, 2014, the U.S. Court of Appeals for the Eleventh Circuit issued its ruling in the case of Adinolfe, et. at. v. United Technologies Corporation. The Court of Appeals reversed the decision of the lower court to dismiss, with prejudice, two toxic tort cases, involving hundreds of homeowners, at the pleading stage. United Technologies Corporation (UTC) is responsible for the operations of Pratt & Whitney, which operated an aircraft and rocket engine manufacturing plant that the plaintiffs allege released large quantities of toxic materials that migrated through groundwater to the properties of the plaintiffs, damaging their properties and even causing personal injuries.

The District Court presiding judge used a “Lone Pine” order which is used to manage discovery to require the plaintiffs in mass tort cases to provide prima facie factual support, including expert testimony, for their claims or run the risk of having those claims dismissed. See Lore v. Lone Pine Corp., No. L-33606-85, 1986 WL 637507, at *3-4 (N.J. Sup. Ct. Law Div. Nov. 18, 1986). The Court of Appeals decided that a Lone Pine order should not be used as a pre-discovery case management tool before the District Court judge rules on the legal sufficiency of a complaint, and therefore the decision to dismiss must be reversed.

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Environmental Claims: The Gift that Keeps on Giving

Pepper Hamilton LLP
Vicki R. Harding

October 10, 2014

Asarco LLC v. Goodwin, 756 F.3d 191 (2nd Cir. 2014) 

A reorganized company (Asarco) sought contribution for payment of environmental claims from beneficiaries of trusts created under John D. Rockefeller’s will. The district court dismissed the claims, and Asarco appealed to the 2d Circuit.

During Asarco’s bankruptcy, federal, state and local governments filed proofs of claim for environmental remediation and future response costs and natural resource damages. The claims related to two sites – mining facilities located in the Monte Cristo Mining Area (MCMA) and a former smelter plant located 40 miles away in Everett (Everett Smelter). The bankruptcy court approved settlement of the Everett Smelter claims in April 2008 and the MCMA claims in June 2009, resulting in unsecured claims of $38 million and just over $12.2 million respectively. Asarco’s plan of reorganization was approved in November 2009 and became effective in December 2009. The claims were paid on the effective date.

After emerging from bankruptcy, the reorganized Asarco sought to obtain reimbursement of the environmental remediation costs from other potentially responsible parties under CERCLA. In particular, Asarco’s predecessors had operated MCMA from 1903 to 1905 and the Everett Smelter from 1903 to 1912. Prior to 1903 the Everett Smelter was owned by a company (PSRC) that Asarco alleged was “operated by [John D.] Rockefeller directly and through his personal agents acting at his direction and under his control.” Rockefeller also had interests in companies that owned or operated some of the MCMA mines. Relevant activities included ownership and operation of the sites resulting in discharge of various hazardous waste between 1892 and 1903.

To accomplish the goal of timely cleanup of hazardous waste sites, with the costs borne by those who are responsible, “CERCLA looks backward in time and imposes wide-ranging liability.” The parties agreed that if Rockefeller was alive today he would be liable under CERCLA. They also agreed that Asarco had settled its CERCLA liability pursuant to a judicially approved settlement. So, the question for the court was whether there was a right of contribution against the beneficiaries of a potentially responsible party’s estate.

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EPA Finalizes Change to All Appropriate Inquiry Rule: ASTM E-1527-05 Does Not Establish CERCLA Defenses Anymore

Seyfarth Shaw LLP
Andrew H. Perellis , Jeryl L. Olson and Ilana R. Morady

October 6, 2014

On October 6, 2014, EPA finalized an amendment to the “All Appropriate Inquiries” (AAI) rule to remove the reference to ASTM E-1527-05. 79 Fed. Reg. 60087. This means that ASTM E-1527-05 is no longer adequate to establish landowner and lender liability protections under CERLA. Buyers, sellers, and lenders take note: you will now need to ensure that your AAI is conducted under the newer 2013 ASTM standard.

“All Appropriate Inquiries,” or AAI, is the process of evaluating a property’s environmental conditions and assessing the likelihood of any contamination. Buyers, Sellers and Lenders involved in the transfer of real estate, including real estate transferred as part of a corporate merger, acquisition or asset sale, know that ASTM E-1527 is the typical starting point for conducing AAI and thus obtaining landowner and lender liability protections under the environmental statute CERCLA. In 2013, the 2005 ASTM standard was revised (see our article, SOMETHING NEW IS IN THE AIR:  Important Changes to ASTM E 1527 “Phase I” Environmental Due Diligence, to read more about the 2013 revisions). EPA’s policy at the time was that both ASTM E1527-05 and E1527-13 were consistent with the AAI rule at 40 CFR Part 312.  Now, however, EPA has amended the AAI rule  to remove the reference to ASTM E-1527-05, thus rendering the 2005 standard inadequate for establishing CERCLA landowner and lender liability protections.

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Synergy Launches 2nd Version of FUEL-VIEW

Contact: Brink Young                                                     FOR IMMEDIATE RELEASE
Phone: 484-369-5000
[email protected]                                                        October, 1 2014

ROYERSFORD, PA: Synergy Environmental, Inc. announces the launch of the SECOND VERSION of their Compliance & Inventory software,  FUEL-VIEW

FUEL-VIEW is a proprietary Software Program developed to simplify the collection of Leak Detection and Inventory Data. It can manage your entire retail or commercial fuel operation remotely.

Manage your Alarms and Fuel Inventory from the same program. It couldn’t be easier.

View all of your data with the click of a button. Get a station by station report or the 30,000 foot look at your entire portfolio.  Never be stuck without your compliance data again. Fuel-View keeps your records for 5 + years.

If you are still manually managing your underground storage tanks, you need to see this! Fuel-View will not only simplify the way you manage your tanks, but save you money at the same time. With the cost of running a retail fuel operation, can you afford not to look into Fuel-View as a solution? Check out the Features & Benefits of Fuel-View

For a Free Demo of Fuel-View, Contact Brink Young at Synergy Environmental today.