New Limits on Supplemental Environmental Projects Increase Risks to Business in EPA Enforcement

The United States Environmental Protection Agency has long made good use of its policy on Supplemental Environmental Projects (“SEP”). Since most environmental enforcement matters are resolved through settlements, the policy has resulted in significant environmental benefits in the communities directly impacted by violations.

Under EPA’s SEP policy, an alleged violator can voluntarily agree to undertake an environmentally beneficial project in exchange for mitigation of the penalty to be paid. The policy establishes guidelines, categories of projects and importantly, makes clear that a SEP does not include the activities required for a return to compliance. A SEP is something beyond compliance with a nexus to the damage allegedly caused by the violation. In exchange, EPA exercises its enforcement discretion in penalty assessment resulting in a smaller penalty payment.

A good Supplemental Environmental Project is a win-win-win. SEPs further EPA’s goal of protecting and enhancing the public health and the environment. Settling businesses often view SEPs as a better way to spend penalty dollars, giving them some say over how those dollars are spent and maybe even some positive public relations. SEPs are also often viewed positively by non-governmental organizations and local government because SEPs provide local benefits, which are viewed more positively than payments to the federal general fund. SEPs have resulted in the retirement of emissions credits, reductions in neighborhood emissions or restored wetlands, to name a few examples.

The future use of SEPs as a settlement tool is in question following Attorney General Session’s recent directive prohibiting any settlement agreement that “directs or provides for a payment or loan to any non-governmental person or entity that is not a party to the dispute.”

Many SEPs are performed by the alleged violator but third parties are the beneficiaries. While EPA’s policy does include a nexus requirement, it may be difficult to demonstrate that such SEPs meet the directive’s requirement that such settlement “directly remedies the harm that is sought to be redressed.” This standard will be especially challenging where the SEP goes beyond compliance requirements.

In taking away the option, or maybe just limiting it, it is not clear where the win falls and only time will tell if the new directive results in enforcement litigation instead of enforcement settlements. While a SEP may not have been the one thing that pushed a settlement to resolution, it often effectively opens the door to productive discourse. Going forward, businesses facing enforcement should take early stock of their options and be prepared for an increased likelihood of litigation and higher penalty assessments.

Half the States, Environmental and Industrial Groups Call US EPA “All Wet” Over New Rule Redefining US Jurisdictional Waters Under Clean Water Act

navagableOn May 27, 2015, the United States Environmental Protection Agency and the United States Army Corps of Engineers jointly announced a new final rule defining the scope of jurisdictional waters protected under the authority of the Clean Water Act (“Act”).  Immediately following the announcement of the new rule, various entities including industrial and agricultural groups, more than half the states, and numerous environmental groups filed legal challenges in multiple federal jurisdictions.  On October 9, 2015, in In re EPA and Dept. of Defense Final Rule, 803 F.3d 804 (6th Cir. 2015), the Sixth Circuit issued a nationwide stay on enforcement of the new rule pending further developments, including the Court’s own need to determine its jurisdictional authority to hear Plaintiffs’ legal challenges.  Most recently, on February 22, 2016, the Sixth Circuit held that it may exercise subject matter jurisdiction over legal challenges to the new rule.

The Rule

The EPA and the Army Corps assert that the new rule addresses a number of questions raised by decisions of the United States Supreme Court in U.S. v. Riverside Bayview Homes, Solid Waste Agency of Northern Cook County v. U.S. Army Corps of Engineers (“SWANNC”), and Rapanos v. United States (“Rapanos”).  Specifically, “[t]he [new] rule will ensure protection for the nation’s public health and aquatic resources, and increase [Clean Water Act] program predictability and consistency by clarifying the scope of the “waters of the United States” protected under the Act.”  According to the agencies, the new rule will also provide “greater clarity regarding which waters are subject to [Clean Water Act] jurisdiction, reducing the instances in which permitting authorities, including the state and tribes authorized with section 402 and 404 [Clean Water Act] permitting programs, would need to make jurisdictional determinations on a case-specific basis.”

In substance, the new rule divides water features into three general categories: those waters that are jurisdictional by rule in all cases; those waters that are subject to a case-specific jurisdictional analysis; and those waters that are excluded from jurisdiction by rule in all cases.

“Categorical” jurisdictional waters are jurisdictional by rule without the need for additional or case-specific analysis.  The categorical jurisdictional waters recognized by the new rule include: (1) traditional navigable waters which are subject to interstate commerce; (2) all interstate waters, including wetlands; and (3) the territorial seas.  Categorically jurisdictional waters under the new rule also include all tributaries, impoundments, and waters adjacent to the jurisdictional waters listed above.

Along with waters that are considered categorically jurisdictional, the new rule contemplates waters that are subject to a case-specific analysis.  In the new rule, the agencies have identified five specific types of waters located in specific regions which are subject to a case-specific analysis.  In addition, the new rule provides that waters located in whole or in part within the 100-year floodplain of traditional navigable water, interstate water, or the territorial seas, and those waters located within 4,000 feet of the high tide line or ordinary high water mark, are subject to case-specific jurisdictional analysis.  The new rule refers to the waters subject to case-specific analysis as “similarly situated.”

Finally, the new rule also excludes a variety of waters from the definition of “waters of the United States.”  While it retains all pre-existing exclusions from jurisdiction, the new rule provides for several new exclusions which reflect “longstanding agency practice.”  Under the new rule, waters excluded from the definition of “waters of the United States” include: (1) prior converted cropland; (2) waste treatment systems; (3) groundwater; (4) stormwater control features; (5) artificial retention and detention basins used for wastewater recycling, groundwater recharge basins, and percolation ponds; and (6) three types of ditches.  In addition, the new rule carves out exclusions from jurisdiction for a number of specific water features, including, but not limited to, artificial lakes or ponds, artificial reflecting pools or swimming pools, and erosional features, including gullies, rills, and other ephemeral features that are not tributary to other “waters of the United States.”

Implications of the New Rule

The nationwide stay issued by the Sixth Circuit currently precludes the enforcement of the new rule in any jurisdiction.  Accordingly, although its impact remains uncertain, it is anticipated that the new rule will affect a variety of regulated industries, entities, and individuals.  While the new rule may authorize the exercise of federal jurisdiction over previously unregulated waters, the addition of bright line exclusions may exempt some features that would have otherwise been deemed jurisdictional.  It therefore seems that despite the agencies’ efforts to provide certainty and clarity regarding the scope of Clean Water Act jurisdiction, the new rule may raise as many questions as it answers.

 

The Big Chill

Last month, the Environmental Protection Agency (EPA) issued final rules under the Clean Water Act Section 316(b).  The new rules impact existing[1] facilities that: (1) use cooling water intake structures designed to withdraw at least two million gallons of water per day from U.S. waters; (2) have or are required to have a National Pollutant Discharge Elimination System (NPDES) permit; and (3) use at least 25 percent of the water they withdraw exclusively for cooling purposes. Additionally, they showcase the EPA’s efforts to prevent aquatic life from being drawn or trapped by plant and factory equipment. According to EPA, the rules will likely apply to more than 1,000 facilities in sectors including electric generation plants, pulp and paper mills, chemical manufacturing plants, iron and steel manufacturing facilities, petroleum refineries, food processing plants, and aluminum manufacturing facilities. According to Nancy Stoner, EPA’s acting assistance administrator for water, “EPA is making it clear that if you have cooling water intakes you have to look at the impact on aquatic life in local waterways and take steps to minimize that impact.”

The requirements offer facilities a choice of seven technologies to prevent both fish entrainment (aquatic organisms being drawn into the facility) and impingement (aquatic organisms becoming trapped against an intake structure), which have all been in use for decades and are currently in place at more than 40 percent of the affected plants. Republicans and the power-generating sector believe the new rules will increase costs, raise electricity prices, and kill jobs. Sen. Jim Inhofe (R-Okla.) immediately criticized the rules and stated he would seek congressional action to overturn them. “The EPA has released another rule that threatens the affordability and reliability of America’s electricity,” Inhofe said.

The regulation disproportionately impacts power generation plants—of the approximately 1,065 facilities impacted, 544 of them are power generating plants. America’s nuclear infrastructure, consisting of 104 facilities and generating 20 percent of U.S. electricity, is particularly affected with its copious use of cooling water. The average commercial reactor in the U.S. is aged 33 years with the two oldest in service since 1969 and the last newly built reactor entering service in 1996. Although the rule allows facility owners or operators flexibility in fulfilling its “best technology available requirements,” there is an added requirement for biological studies and federal consultations as part of the permitting process—an aspect that will undoubtedly be costly, potentially unfeasible, and enough to give any energy provider an unwelcomed chill.

The new rule, effective sixty days after its publication in the Federal Register, will be implemented through the NPDES permit program. Environmental groups were hoping for more stringent requirements and will undoubtedly challenge the final rule.


[1] Previous Phase I rules, found at 40 C.F.R Subpart I, apply to new facilities. 66 Fed. Reg. 65256 (Dec. 18, 2001).

EPA’s Step Toward Mandating Disclosure of Chemicals Used for Fracking

On May 9, 2014, the Environmental Protection Agency (EPA) issued an Advanced Notice of Proposed Rulemaking seeking public comment on the “types of chemical information that could be reported and disclosed under the Toxic Substances Control Act and the approaches to obtaining this information for chemicals used in hydraulic fracturing activities.”

EPA also is requesting input on “incentives and recognition programs that could support the development and use of safer chemicals in hydraulic fracturing” – also known as fracking.

EPA anticipates that the notice, which will include the due date for public comments, will publish in the Federal Register by the week of May 19.  The comment period closes 90 days after publication in the Federal Register on August 17, 2014.

EPA Proposes Increased Pesticide Regulation

On February 20, 2014, the Environmental Protection Agency (EPA) announced proposed changes to its 20+ year old agricultural Worker Protection Standard (WPS). EPA’s goal is to reduce the risk of injury and illness from pesticide exposure to agricultural workers and their families. EPA estimates the affected population at about 2 ETT BLOG_cropsmillion people. In addition to farm workers, the WPS would affect workers at timber tract operations, nurseries, orchards and greenhouses. “Family farms” are exempted from certain requirements of the WPS. In general, owners are exempted from providing themselves or members of their “immediate family” with safety training and information; cleaned and maintained personal protective equipment; decontamination facilities; notification of pesticide applications; and emergency assistance.

The proposed changes to the WPS include:

  • Annual mandatory trainings (now required every five years) to inform workers about the protections they are afforded under the law, including restrictions on entering pesticide-treated fields and surrounding areas, decontamination supplies, and access to information and use of personal protective equipment. The training will be expanded to include instructions on how to reduce take-home exposure on work clothing.
  • Expanded mandatory posting of no-entry signs for the most hazardous pesticides. The signs prohibit entry into pesticide-treated fields until residues decline to a safe level.
  • First time-ever minimum age requirement: Children under 16 will be prohibited from handling pesticides, with an exemption for family farms.
  • No-entry buffer areas surrounding pesticide-treated fields will protect workers and others from exposure from pesticide overspray and fumes.
  • Additional recordkeeping for improving enforcement and compliance, including requiring employers to keep records of application-specific pesticide information as well as farmworker training. Employers will also need to keep early-entry notifications for two years.
  • Personal protection equipment (respirator use) must be consistent with Occupational Safety and Health Administration (OSHA) standards for ensuring respirators provide protection, including fit test, medical evaluation, and training.
  • Available information specific to the pesticide application, including the pesticide label and safety data sheets, to farm workers or their advocates (including medical personnel).

The WPS does not change an owner’s obligation to provide decontamination supplies and emergency assistance to workers and handlers. The EPA’s proposed changes were published in the March 19 Federal Register. The WPS will be subject to a 90-day comment period, which ends June 17.

Image courtesy of Flickr by NRCS Soil Health