EPA Proposes Expansive Rule on Petroleum Refineries

Bracewell & Giuliani LLP
Richard Alonso and Grant B. MacIntyre USA

May 16, 2014

The U.S. Environmental Protection Agency has proposed an expansive rule that would impose additional requirements at petroleum refineries. The proposed rule (which spans 813 pages) is scheduled to be published in the Federal Register, and interested parties will have 60 days from publication to file public comments.

The proposal is a response to a lawsuit from environmental and public health groups alleging that EPA missed statutory deadlines to review the existing refinery Maximum Achievable Control Technology (MACT) rules. EPA settled the litigation, agreeing to either propose additional regulations or propose a determination that additional regulations are not necessary. EPA has decided to propose additional regulations and is required to take final action on the proposal by April 17, 2015.

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EPA Seeks Public Comment on Fracking Fluid Disclosure Rules

Baker & Hostetler LLP
Daniel M. Kavouras

May 14, 2014

On Friday, the Environmental Protection Agency took the first step toward requiring drillers to disclose the chemicals used in hydraulic fracturing operations, releasing an “advanced notice of proposed rulemaking” seeking public comment on the topic.

The EPA has not yet drafted a proposed regulation, but said in the notice that it will consider both mandatory and voluntary rules. The EPA explained that the “mechanism could be regulatory (under [Toxic Substances Control Act] Section 8(a) and/or Section 8(d)), voluntary, or a combination of both, and could include best management practices, third-party certification and collection, and incentives for disclosure of this information.”

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Judicial Review of a Superfund Clean-up Can Proceed in Stages

Schiff Hardin LLP
Ashley L. Thompson and J. Michael Showalter USA

May 8, 2014

A recent Seventh Circuit decision addressed the contours of the general statement that USEPA’s decisions in an “on-going” remediation may not be challenged under the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”). CERCLA Section 113(h)(4) provides that “[n]o Federal court shall have jurisdiction . . . to review any challenges to removal or remedial action” except during a limited number of actions, none of which allow a plaintiff to challenge an ongoing response action. 42 U.S.C. § 9613(h)(4). Generally, courts applying this provision have found that parties are prohibited from reviewing ongoing clean-up activities under CERCLA.

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Supreme Court Reinstates Cross-State Air Pollution Rule

Perkins Coie LLP
Tyler G. Welti, William (Bill) Pedersen and Alexandra Magill Bromer

May 2, 2014

On April 29, 2014, the Supreme Court by a 6-2 vote reversed the D.C. Circuit and upheld the Environmental Protection Agency’s Transport Rule, which imposed specific Clean Air Act limits on emissions in certain states to prevent them from “contribut[ing] significantly” to failure to attain air quality standards in other states. See EPA v. EME Homer City Generation, L.P., Case No. 12-1182, 2014 WL 1672044 (U.S. Apr. 29, 2014).

The Clean Air Act’s Cooperative Federalism Model

The case involves a portion of the Clean Air Act that follows a “cooperative federalism” model for reducing air pollution. It charges states in the first instance with establishing plans to achieve national ambient air quality standards (NAAQS) set by EPA. See 42 U.S.C. §§ 7408, 7409.

Once EPA sets such a standard, each state must submit to EPA a State Implementation Plan, or SIP, to EPA to attain it. Id. § 7410(a)(1). A SIP must also “contain adequate provisions . . . prohibiting . . . any source or other type of emissions activity within the State from emitting any air pollutant in amounts which will . . . contribute significantly to nonattainment in, or interfere with maintenance by, any other State with respect to any [NAAQS].” Id. § 7410(a)(2)(D) (emphasis added). If EPA determines that a SIP is inadequate, EPA has two years to issue a superseding Federal Implementation Plan for the state. Id. § 7410(c)(1).

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Leak Prompts Chemical Safety Board Call for New Rules

Jackson Lewis P.C.

March 3, 2014

Citing “a gap in the regulatory framework that fails to cover aboveground storage tanks,” the chairman of the  U.S. Chemical Safety Board (CSB) has urged lawmakers at a  congressional field hearing in Charleston, West Virginia, to  approve legislation to prevent major chemical spills.

CSB Chairperson Rafael Maure-Eraso’s remarks came on  February 10, a month after some 10,000 gallons of 4- Methylcyclohexane methanol leaked into the Elk River from a  storage tank situated upstream from the capital city’s water  treatment plant. The river is a tributary of the Kanawha River,  which supplies water for 300,000 people.  Residents were told  not to drink the water or use it for cooking or bathing.  The  directive was lifted after about two weeks.

“While there are laws prohibiting polluting to waterways  with a spill, there are not really any clear, mandatory  standards for how you site, design, maintain and inspect  non-petroleum tanks at a storage facility,” Maure-Eraso said. Tanks at the leak site were not covered by either  state or federal regulations.  He called for “urgent steps” to  address the regulatory gap.

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U.S. Supreme Court Decision on Land-Use Exactions Impacts Developers, Government

Bilzin Sumberg Baena Price & Axelrod LLP
Stanley B. Price

January 29, 2014

If you have ever filed a zoning application and been subjected at the public hearing to a version of the game show “Let’s Make a Deal,” you may find of interest a June 2013 decision by the U.S. Supreme Court that addresses government-imposed conditions on the issuance of development permits.

Relying upon fairly recent rulings in the Dolan and Nollan cases, the Supreme Court in Koontz v. St. John’s River Water Management District determined that monetary exactions, sought by governmental agencies through the zoning and permitting process, could ripen into a taking of property in violation of the United States Constitution.

Exaction Must Be Rationally Related And Roughly Proportionate To Impact

The Court, expanding on its previous taking jurisprudence, pronounced that any exaction sought by a governmental agency, including cash exactions, will be subject to whether the exaction is rationally related to the impact caused by the development approval and is roughly proportionately consistent with the impact.

Justice Alito, writing for the Court majority, stated in pertinent part:

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Family Businesses and Environmental Liability

Davis Wright Tremaine LLP
Lynn T. Manolopoulos and Keith Baldwin

February 7, 2014

We all know that environmental laws impose heavy liability on businesses that release environmental contaminants into the air, soil or water. The family business is not immune to such liability. In fact, many multi-generational family businesses have owned or operated on family real estate for decades. Many have done business for generations without really questioning their environmental compliance. They may also have leased properties they own to businesses that cause contamination and as the owner of that property, the liability may fall to the family.

The consequences can be disastrous. Family net worth can be wiped out by one large environmental claim and/or remediation costs. Inter-generational family relationships can be eroded or permanently destroyed.

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Third Circuit Holds Interrelated Claims Provision is an Exclusion to Coverage

Traub Lieberman Straus & Shrewsberry LLP
Brian Margolies

February 7, 2014

In its recent decision in Borough of Moosic v. Darwin National Assurance Co., 2014 U.S. Ap. LEXIS 2118 (3d Cir. Feb. 4, 2014), the United States Court of Appeals for the Third Circuit, applying Pennsylvania law, had occasion to consider whether an interrelated claims provision in claims made policy should be considered a condition precedent to coverage or an exclusion of coverage.

Darwin insured the Borough of Moosic under a public officials professional liability policy, providing coverage for the period August 1, 2010 to August 1, 2011.  During the policy period, Moosic was named as a defendant in a suit alleging that Moosic had committed a civil rights violation in connection with a land use dispute.  Upon learning that the underlying claimants had brought other suits against Moosic prior to the policy’s date of inception, Darwin denied coverage.  Specifically, Darwin asserted that the civil rights lawsuit was related to a mandamus suit brought against Moosic in 2006 for a dispute pertaining to the same land use issue.  Darwin relied on the following provision in its policy’s Conditions section, stating:

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Ninth Circuit CERCLA Subrogation Ruling Stands After Supreme Court Cert Denial

Manatt Phelps & Phillips LLP
Amy B. Briggs, David B. Killalea , Stephen T. Raptis, Robert H. Shulman
and Susan P. White

January 30, 2014

Why it Matters:

Last year the Ninth U.S. Circuit Court of Appeals issued a noteworthy decision addressing the subrogation rights of insurers under the federal Comprehensive Environmental Response, Compensation, and Liability Act in Chubb Custom Ins. Co. v. Space Systems/Loral, Inc. According to the Ninth Circuit, an insurer lacked standing to bring a subrogation suit under CERCLA because the insurer did not directly incur environmental response costs and did not allege that the insured was a “claimant” or that it had made a claim to the Superfund or to a potentially liable party, as required by the CERCLA statutes. Thus an insurer can maintain a subrogation action against potentially liable parties only if the insured has made a written demand for a sum certain to the allegedly liable party. In that case, the insured had not made such a demand, leaving Chubb unable to recover the money it paid for the required environmental cleanup. Chubb appealed the decision, filing a writ of certiorari to the U.S. Supreme Court. But in January the justices denied the writ without comment, leaving the Ninth Circuit opinion in place as good law. As a result, insurers may seek to obligate policyholders to make such written demands (perhaps through adding language in the policy) to potentially liable parties, allowing insurers the ability to recover for environmental costs.

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