In November, the Sixth Circuit Court of Appeals held that the Clean Air Act (CAA) does not preempt state common law tort claims. It reached this conclusion in an action by property owners who allege that ethanol emissions from Diageo Americas Supply whiskey aging warehouses harm their property. Merrick v. Diageo Americas Supply, Inc., 14-6198, 2015 WL 6646818 (6th Cir. Nov. 2, 2015). The plaintiffs, on behalf of a putative class, allege that the ethanol emissions combine with condensation to promote the growth of an unsightly and difficult to remove “whiskey fungus.” They filed a class action lawsuit in federal District Court alleging that under the Kentucky common law of negligence, trespass and nuisance, they are entitled to an injunction mandating that Diageo capture and control the emissions, and recover damages. Diageo sought to have the action dismissed, arguing that plaintiffs’ state law claims are preempted by the CAA because they “conflict with the Clean Air Act methods for regulating emissions and, therefore, that allowing such claims to proceed would frustrate the purposes and objective of the Act.” Id. at *4. The District Court rejected this defense but certified the question to the Sixth Circuit Court of Appeals.
Steve Berger, Lesly Davis and Doug McSwain, members of the Firm’s Corporate & Securities, Natural Resources & Environmental and Litigation & Dispute Resolution Service Teams, respectively, presented at the first annual Kentucky League of Cities & Kentucky American Water “Water Infrastructure Summit” in Lexington, Kentucky on October 14. Mr. Berger presented on the topic “Water Infrastructure Financing: WIFIA and P3,” and Ms. Davis and Mr. McSwain spoke on the topic “Legal Issues Related to Water Infrastructure” to a group of approximately 75 participants.
Today a three-judge panel of the United States Court of Appeals for the Sixth Circuit stayed enforcement of the new Clean Water Rules (the “Rules’” governing activities involving the “Waters of the United States” pending resolution of several challenges to the Rules). Unlike the prior injunction from the North Dakota District Court, the Sixth Circuit prohibited the Army Corps of Engineers and the EPA from enforcing the Rules anywhere in the United States. The prior rules will remain in effect while enforcement of the new Rules is stayed.
It is likely that the Corps and EPA will seek a hearing before all of the judges of the Sixth Circuit and/or appeal the injunction to the U.S. Supreme Court. The opinion can be found here.
On October 1, the EPA lowered the National Ambient Air Quality Standards (NAAQS) for ground-level ozone to 70 parts per billion (ppb), from the current level of 75 ppb set under President Bush in 2008. Ground-level ozone is a main component of smog and can produce a number of harmful effects on the respiratory system, including difficulty breathing and inflammation of the airways. In its rulemaking, the EPA estimates the public health benefits produced by lowering the standard will be $2.9 to $5.9 billion annually in 2025 and that they will include the prevention of 320,000 childhood asthma attacks a year. The EPA estimates that the lower standard will cause Industry to incur costs of $1.4 billion a year. Depending on the severity of the ozone problem, nonattainment areas will have from Continue reading EPA Reduces Ground-Level Ozone Standard to 70 ppb→
On Tuesday, the Environmental Protection Agency (“EPA”) proposed regulations to reduce emissions of greenhouse gases and volatile organic compounds from the oil and natural gas industry. The regulations are part of the Obama Administration’s plan to cut methane emissions from the oil and gas sector by 40 to 45 percent over the next ten years from 2012 levels. Methane is the main component of natural gas and, according to the Agency, a potent greenhouse gas with a global warming potential more than 25 times greater than that of carbon dioxide. The regulations will reduce methane emissions by 20 to 30 percent from 2012 levels by 2025. The source of the remaining reduction needed to reach the overall goal of 40 to 45 percent is unclear.
The regulations will apply to new and modified natural gas and oil wells only, not existing wells. The rules will require producers to: (1) find and repair leaks at wells, (2) capture gas from hydraulically fractured wells, (3) limit emissions from new and modified pneumatic pumps, and (4) limit emissions from compressors, pneumatic controllers, and other types of equipment used at natural gas transmission stations.
On Monday, President Obama and the EPA unveiled the final version of the Clean Power Plan, a rule that will reduce carbon dioxide emissions from fossil fuel-fired power plants. Assuming the Clean Power Plan survives an expected avalanche of legal challenges, the rule will reduce CO2 emissions from power plants by 32 percent from 2005 levels by 2030. The 32 percent target is higher than the 30 percent target in the 2014 proposed rule, and individual state goals were not adjusted equally to achieve this higher target creating clear winners and losers. For example, Kentucky’s final emission rate goal is 27% lower than what the EPA proposed for Kentucky in 2014 and Indiana’s final emission rate goal is 19% lower, while Mississippi’s final emission rate goal is 37% higher and Tennessee’s final goal is 4% higher than the proposed rule. Another big change is that states will have two more years – until 2022 instead of 2020 – to start meeting emission-reduction requirements. The final rule also places more emphasis on Continue reading EPA Finalizes the Clean Power Plan→
On July 16, 2015, the Department of Interior, Federal Office of Surface Mining Reclamation and Enforcement (“OSM”) released a proposed regulation to prevent or minimize impacts to surface water and groundwater from surface coal mining. The proposed rule, known as the Stream Protection Rule, replaces the controversial Bush era Stream Buffer Zone rule which was the subject of litigation and overturned by the courts in 2014. Development of the Stream Protection Rule has taken years and has been the subject of much controversy and criticism. OSM claims that the new rule will better protect streams, fish, wildlife and the environment from the adverse impacts of surface coal mining and the surface effects of underground mining. The proposed rule is intended to clearly define the phrase “material damage to the hydrologic balance outside the permit area” and calls for, among other requirements, the collection of pre-mining data and the imposition of additional monitoring and restoration requirements. According to OSM, the proposed rule is intended to update its regulations to reflect best available science and experience over the last thirty years. Industry strongly criticizes the rule as another burdensome and costly regulation which is unnecessary in view of the substantial regulations already in place as enforced by both federal and state regulatory authorities. Public hearings on the proposed rule will be held within the 60 day public comment period in Charleston, Lexington, Pittsburgh, St. Louis and Denver. An advanced copy of the proposed rule is available on OSM’s website along with a Draft Environmental Impact Statement.
On May 27, the EPA finalized the “Clean Water Rule” which defines the scope of waters protected by the Clean Water Act. The rule is intended to clarify and implement Supreme Court decisions interpreting the reach of Clean Water Act provisions controlled by the phrase “waters of the United States.”
Those decisions have produced considerable confusion over what waters the EPA and the Corps of Engineers can regulate. The final rule gives the federal government an expansive jurisdiction, but is less ambiguous than the proposed rule because it relies more on distances and less on imprecise terms and descriptions. The New York Times estimates the rule will apply to about 60% of the nation’s waters.
The Clean Water Rule identifies seven different categories of “waters of the United States” (“WOTUS”): traditional navigable waters, all interstate waters (including interstate wetlands), the territorial seas, impoundments, tributaries, adjacent waters, and on a case-by-case basis, waters with a significant nexus to downstream waters. The last three categories are the most controversial and will be discussed in greater detail.
On April 17, 2015, the EPA published a final rule in the Federal Register regulating the disposal of coal combustion residuals (CCRs) as solid waste under subtitle D of the Resource Conservation and Recovery Act (RCRA). The EPA established national minimum criteria for existing and new CCR landfills, existing and new CCR surface impoundments and all lateral expansions, consisting of design and operating criteria, groundwater monitoring, corrective action, closure requirements and post-closure care. Power plants must record compliance with these requirements in the facility’s operating record and on a publicly available website.
Except in limited circumstances, any existing unlined CCR surface impoundment that is contaminating groundwater above a groundwater standard must stop receiving CCR and either retrofit or close. The rule also requires the closure of any CCR landfill or surface impoundment that cannot meet the criteria for location restrictions or structural integrity. The rule does not regulate CCRs that are beneficially used.
The final rule was welcomed by many in the industry, who had feared the costs of a hazardous waste designation. Environmentalists are concerned with the lack of federal oversight. The final CCR rule can be found here.
On June 29, the U.S. Supreme Court struck down the EPA’s Mercury and Air Toxics Standards (MATS), an Obama administration effort to limit toxic emissions of mercury and other hazardous air pollutants (HAPs) from Electric Generating Units (EGUs). In a 5-4 decision under the name Michigan v. EPA, the Court held the EPA unreasonably interpreted the Clean Air Act (CAA) to not require consideration of emissions reduction costs when it decided whether to regulate HAP emissions from EGUs. The 1990 amendment to the Clean Air Act included several provisions to force reduction of EGU emissions that according to Justice Scalia “were expected to have the collateral effect of reducing [their] emission of [HAPs].” So, Congress directed the EPA to study public health hazards posed by HAP emissions from EGUs and regulate the emissions under Section 112 of the Act if the Agency found that to be “appropriate and necessary.” CAA §7412(n)(1). In 2000 the EPA found regulation of HAP emissions from oil and coal fueled EGUs to be appropriate and necessary without giving any consideration to the costs or benefits of such regulation. Then in 2012 the EPA reaffirmed that Continue reading Supreme Court Overturns EPA’s MATS Rule→