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April 29, 2010

Federal Government Approves First Offshore Wind Farm

On April 28, 2010, Secretary of the Interior Ken Salazar approved Cape Wind Associates, LLC’s proposed $1 billion, 130-turbine wind farm off the coast of Cape Cod in Nantucket Sound, about five miles from the nearest shoreline.  The project, when constructed, would be the first wind energy project on the Outer Continental Shelf, and would generate enough energy to power more than 200,000 homes in Massachusetts.  The scale of the project is significant; it would cover approximately 25 square miles, and the tip of the highest blade of each turbine would reach 440 feet above the surface of the water.

Supporters, including the Sierra Club and Greenpeace, argue that the project would provide a clean, renewable source of energy and hundreds of construction jobs, and would decrease the region’s reliance on fossil fuels and benefit the environment by lowering emissions of greenhouse gases.

Opponents have focused on negative impacts to natural beauty and the surrounding area’s historic landmarks.  In addition, they claim that infrastructure improvements will result in sharply increased costs over those for conventional power.  The Wampanoag tribe, which requires unobstructed views of the sunrise for sacred ceremonies, has announced that it will challenge the project for violations of tribal rights.

In response to concerns expressed during the consultations with tribes and the Advisory Council on Historic Preservation, the Department of the Interior (“DOI”) required the developer to change the design and configuration of the wind farm to mitigate potential visual and historic impacts.

This is not the final hurdle that this project must clear, however.  The Federal Aviation Administration has yet to make a final determination on the project and the developer has not yet entered into a contract with the local utility, National Grid, to carry the power.  Nine state and local permits are being appealed in the courts, and nearly a dozen parties have filed notices of intention to sue for violations of various environmental laws and regulations.

Despite the remaining steps before construction may begin, DOI’s approval of the Cape Wind project is seen as a positive sign for several other proposed offshore wind projects along the eastern seaboard.  Each project will face its own complex federal, state and local permitting issues, but DOI’s action on Cape Wind will likely provide valuable political momentum to other proposed offshore wind projects.

Read the full DOI press release here.

Announcement: SPR Principal Jeff Gracer to Moderate Panel on Climate Change at New York City Bar Association

By: Bridget M. Lee — Filed under: Announcements, Climate Change Law — Posted at 12:37 pm

SPR principal Jeff Gracer will moderate a program on climate change law and litigation on Wednesday, May 12, 2010 at 6:00pm in the Great Hall of the New York City Bar Association.  The program has been organized by the New York City Bar Association’s Committee on Environmental Law, and is being co-sponsored by the Association’s Committees on International Environmental Law, Energy Law, and Project Finance, as well as the Environmental Law Institute.  It will address the status of international negotiations, Congressional deliberations, EPA’s greenhouse gas rulemakings, and climate change litigation.

A keynote address will be given by Peter Lehner, Executive Director of the Natural Resources Defense Council.  For registration information, please visit the City Bar’s website, or contact Jeff Gracer.

April 28, 2010

DEC Excludes Watershed Areas from Current Environmental Review of Marcellus Shale Drilling

On Friday, April 23, the New York State Department of Environmental Conservation (“NYSDEC”) announced that it would exclude the New York City and Syracuse drinking water watersheds from its Final Supplemental Generic Environmental Impact Statement (“FSGEIS”) concerning natural gas development in the Marcellus Shale.  Unless and until NYSDEC creates a separate Generic Environmental Impact Statement applicable to the New York City and Syracuse watersheds, each permit application to drill for gas in these areas must be accompanied by a site-specific Environmental Impact Statement (“EIS”).  Because an EIS can be lengthy, complicated, and costly—especially if contested in litigation—DEC’s position may discourage gas companies from drilling in these watersheds; some accounts have characterized NYSDEC’s decision as a de-facto ban on drilling in these areas.  However, the regulatory limbo imposed on the New York City and Syracuse watershed areas is not permanent; according to the Associated Press, “[t]he DEC and the state Health Department will work with Syracuse, New York City and communities within the watersheds to develop special restrictions for drilling companies seeking permits in the watershed.”

NYSDEC’s decision reflects the competing demands it faces with respect to natural gas development in New York state.  The New York City watershed supplies drinking water to over nine million people; the Syracuse watershed supplies roughly 200,000 people.  Due to the high quality of this water, both cities are exempt from federal regulations requiring drinking water filtration.  Environmentalists and city officials have consistently called for a state ban on natural gas development in the watershed areas in order to protect drinking water sources.  However, NYSDEC Commissioner Alexander “Pete” Grannis has expressed concern that an outright ban on drilling in these areas, much of which is privately owned, could give rise to takings claims from property owners deprived of potentially lucrative leasing opportunities.

NYSDEC’s compromise, which was announced without an official written statement, may lower the temperature of the debate surrounding gas production in the Marcellus Shale.  It remains to be seen whether the Department’s present action will ultimately result in a solution that is both politically and environmentally tenable.

April 23, 2010

DEC Begins to Exercise its Authority Pursuant to the New York Endangered Species Act

In what appears to be a significant emerging trend, the New York State Department of Environmental Conservation (“DEC”) is beginning to exercise its long-dormant authority to regulate endangered and threatened species and their habitat.  This trend could have a significant impact on developments proposed in or near these species’ habitat.

The DEC recently issued four licenses, or New York State Endangered Species Act permits (“ESA Permits”) under Article 11 of the Environmental Conservation Law (“ECL”), a number which is notable for far exceeding past issuances.  The permits were issued for the construction of a wind power plant, a retail facility, a road project, and a residential development.  These ESA Permits authorize the “taking” of endangered and/or threatened species, which includes the killing, capturing, disturbing and worrying the species, or modification of its habitat.  ECL § 11-0535; see also State v. Sour Mt. Realty, Inc., 714 N.Y.S.2d 78 (2d Dept. 2000); State v. White Oak Co., 787 N.Y.S.2d 333 (2d Dept. 2004).

To receive the ESA Permit, the applicants had to demonstrate a net conservation benefit to the identified species once all mitigation measures and permit conditions are complete.  Although DEC determines necessary mitigation measures on a case-by-case basis depending upon the type of species involved, DEC required similar mitigation conditions for each of the ESA Permits.  Conditions included permanently protecting land by transferring title or a conservation easement, and securing a performance bond before commencing any activities on site to cover the estimated costs of habitat restoration and mitigation.  Setting aside crucial habitat or new habitat that did not exist may become a standard permit requirement.

Under Governor Pataki, the DEC did not exercise its endangered species authority pursuant to Article 11.  Instead, endangered and threatened species issues were dealt with pursuant to the State Environmental Quality Review Act (“SEQRA”).  Under the new administration, and Commissioner Pete Grannis, DEC has notably begun to exercise its Article 11 authority.  Therefore, projects that might “take” a listed species and cannot be modified to avoid the taking entirely will have to obtain an ESA Permit.

Although developers have always had to consider the impacts of a proposed project on listed species under SEQRA, if the mitigation measures minimized the adverse impacts, then the requirements of SEQRA were usually satisfied and the review ended, even if the project resulted in alteration or destruction of the species’ habitat.  Now, it appears that even when the project satisfies SEQRA requirements, if the project’s impacts alter or destroy listed species’ habitat or “take” a listed species, the developer must apply for an ESA Permit. To receive the permit, the developer must demonstrate a “net conservation benefit” from the proposed mitigation measures, which may include setting aside crucial habitat or creating new habitat for the listed species.  Therefore, when planning a project, the developer should try to ensure that impacts to listed species and their habitat are considered and avoided entirely.  Otherwise, the developer will need an ESA Permit.

DEC has sent draft regulations to the Governor’s office for approval, a required step before releasing them for public comment.  The draft regulations are expected in the near future.  The content of the draft regulations are unknown, but based on the ESA Permits issued, they may likely require mitigation measures like permanent protection and monitoring of habitat, and securing a performance bond to ensure that the mitigation measures are implemented.

DEC’s Article 11 enforcement authority was made clear in the recent ESA Permits and DEC’s recent letter (pdf) denying Entergy’s application for a Water Quality Certificate pursuant to Section 401 of the Clean Water Act for Indian Point Units 2 and 3 (“Indian Point”) in Buchanan, New York.    Sampling data from 1975-1990 determined that Indian Point’s operations harmed (i.e., resulted in a “taking” of) shortnose sturgeon, a New York listed endangered species, and Atlantic sturgeon, a federally protected species, by impinging the sturgeon on and entraining them in the cooling water intake structures.  Although recent sampling data was not available, DEC determined that based on prior studies and Indian Point’s unauthorized “take” of the listed species, the relicensing of Indian Point “would continue to cause mortality to the sturgeon species” and therefore was not in compliance with Article 11.

April 20, 2010

DEC Accepting Comments on Proposed Policy on Brownfield Cleanup Program Applications and Agreements Until April 30

DEC recently released its proposed DER-32: Brownfield Cleanup Program Applications and Agreements, which sets forth DEC guidance on the New York State Brownfield Cleanup Program (“BCP”) application process and sets forth the terms and conditions to be included in all Brownfield Cleanup Agreements (“BCAs”).   Notable aspects of the draft policy include the following:

  • The draft policy clarifies that applications should not be submitted until the Applicant is “ready, willing and able” to advance the remedial project, which DEC defines as being prepared to enter into a BCA within 100 days of submitting the application.  BCAs must be signed within 60 days of receipt from DEC, or the application is considered withdrawn without prejudice and the acceptance into the program rescinded.
  • The BCP requires Volunteers (i.e., parties not responsible for the contamination at a proposed BCP site) to conduct a limited off-site investigation, but does not require off-site remediation if such contamination is identified.  Participants (i.e., parties responsible for the contamination), however, are required to conduct off-site remediation.  DEC’s draft policy document requires that, for sites at which there are multiple Applicants and one is a Participant, all Applicants (even those who are Volunteers) will be treated as Participants – DEC will not structure the BCA to clarify that only the Participants have a responsibility for off-site remediation.
  • The draft policy explains that DEC has specified that the terms and conditions of the BCA include the schedules set forth in work plans; accordingly, “the failure to initiate, proceed with, or complete the remedial program in accordance with its schedule is cause to terminate the BCA.”

A copy of the proposed policy is available here.  DEC is accepting comments on the draft until April 30, 2010.

April 15, 2010

State Denies Water Quality Certificate Necessary for Continued Operation of Indian Point Nuclear Power Plant

A recent decision of the New York State Department of Environmental Conservation (“NYSDEC”) highlights the growing tension between a renewed national interest in nuclear energy and established principles of environmental protection. Last week, NYSDEC staff denied Entergy Nuclear Operations (“Entergy”) a water quality certification necessary for the continued operation of Indian Point Units 2 and 3 (collectively “Indian Point”), located in Buchanan, New York.  As part of its license renewal application with the Nuclear Regulatory Commission (Indian Point’s licenses expire in 2013 and 2015), Entergy, the plant’s operator, applied for a Water Quality Certificate (“WQC”) pursuant to Section 401 of the Clean Water Act.  In a letter dated April 2, 2010, NYSDEC informed Entergy that it would not issue a WQC because Indian Point’s activities violated state water quality standards and the Clean Water Act.  Without the WQC, the Nuclear Regulatory Commission cannot renew the licenses.

NYSDEC’s decision focused on Indian Point’s cooling water intake structures, which draw up to 2.5 billion gallons of water daily from the Hudson River.  It based its denial on the “significant adverse impact upon aquatic organisms” caused by these structures, on the leakage of radioactive material into the river, and thermal discharges into the river.  The Hudson River’s cold water is critical to the steam-powered process, triggered by the heat of nuclear reactions, that generates electricity.

Since the power plant’s inception, fish and other organisms have been killed or injured by the operation of the cooling water intake structures.  The structures use “once through” technology to draw in vast quantities of water – containing fish and organisms, which are discharged back to the river after the water is used.  Larger organisms, such as fish, are “impinged,” or crushed against the cooling water intake structures as they are sucked against the machinery.  Smaller organisms, such as eggs, plankton and larvae, are “entrained,” or drawn into the cooling water intake structures, where they are injured or killed.  In its application for a WQC, Entergy proposed the continued use of once-through technology, combined with the use of cylindrical wedge-wire screens to reduce impingement and entrainment.  

NYSDEC determined that Entergy’s proposal did not represent the “best technology available for minimizing adverse environmental impact,” a standard required by New York regulations, 6 NYCRR § 704.5, and the Clean Water Act, CWA § 316(b), 33 U.S.C. § 1326(b).  NYSDEC stated that the “closed-cycle” cooling system, which recycles cooling water within the plant, represented the best technology to minimize entrainment and impingement and was “available” to Entergy despite being expensive to implement.  In contrast, NYSDEC determined that the addition of cylindrical wedge-wire screens to once-through intake structures not a “reasonable alternative intake technology” because it would only “reduce adverse environmental impacts;” it would not “minimize” them.  Specifically, NYSDEC stated that the utility of the proposed screening technology was not proven at a facility using as much water as Indian Point, and, according to available studies, would not result in sufficient reduction in entrainment. 

In addition to its determinations under the “best technology available” standard, NYSDEC also stated that the Indian Point’s once-through cooling water intake structures do, and would continue to, result in the unlawful “taking,” or harm, to the shortnosed sturgeon (a New York endangered species) and the Atlantic sturgeon (a federally protected species) under state and federal law.  Finally, the dangers posed to fish by impingement and entrainment, thermal discharges, and radioactive leakages would also render the water surrounding Indian Point unsuitable for its designated best purpose under state law – secondary contact recreation and fishing.  See 6 NYCRR § 701.11.     

Industry, environmentalists, and regulators have battled over the environmental damage caused by Indian Point’s once-through cooling system for the nearly four decades since the plant opened.  NYSDEC’s denial letter recites the complex history of the statutory, regulatory, and advocacy factors which resulted in Indian Point’s continued use of once-through cooling technology in the face of state and federal “best technology available” requirements.  By specifically endorsing closed-cycle cooling technology as “available” and “feasible” and rejecting Entergy’s proposed alternative as environmentally inadequate, NYSDEC underscored that it does not interpret its cooling water intake regulations as grounds for traditional cost-benefit analysis.  In contrast, EPA regulations interpreting CWA § 316(b), 40 CFR  § 125.90 – 125.99, are influenced by cost-benefit analysis; they allow less expensive alternatives to closed-cycle technology and allow the agency to issue variances based on cost-benefit analysis. Last year, in Entergy v. Riverkeeper, 129 S. Ct. 1498 (2009), a divided Supreme Court upheld these regulations.  While the Court held that § 316(b) does not bar EPA from using cost-benefit analysis, it noted that the statute does not require cost-benefit analysis, either. 

NYSDEC’s decision has not caused Indian Point’s immediate shutdown because Indian Point’s current operating licenses have not yet expired.  Furthermore, Entergy may appeal the decision administratively by requesting a hearing within 30 days.  According to the New York Times, Entergy may lobby Congress to repeal the Nuclear Regulatory Commission’s requirement that licensees hold a state water quality certificate.  The result for Entergy and Indian Point will likely have national repercussions in light of the Obama Administration’s greater emphasis on nuclear energy as a non-fossil fuel source of electricity.

April 12, 2010

Federal Court Dismisses Claims for Cost Recovery and Contribution Under Superfund

By: Ashley S. Miller — Filed under: CERCLA/Superfund, Project Updates — Posted at 4:34 pm

A recent decision  in a matter litigated by SPR fills an important gap in Superfund law by establishing that suits by parties settling with a state brought under CERCLA’s contribution provision[1] must be brought within three years of the date of the settlement of liability.  The District Court’s decision in Chitayat v. Vanderbilt Associates, et al., 03-5314-cv, Memo & Order (E.D.N.Y. March 22, 2010) also reinforces many of the emerging rules governing suits amongst private Superfund litigants.

The plaintiff in the case sought recovery of costs incurred under a 1998 consent order which required him to reimburse the New York State Department of Environmental Conservation (“DEC”) for its costs of cleaning up tetrachloroethene (“PCE”) which had been discovered at 100 Oser Avenue site in Hauppauge, NY (the “Site”).  Costs incurred, and expected to be incurred, amounted to several million dollars.

Plaintiff alleged a claim for cost recovery pursuant to CERCLA § 107, and contribution under CERCLA § 113(f)(3)(B).  The Court ruled that the plaintiff’s 107(a) cost recovery claim failed because pursuant to his consent order plaintiff was, “not required to expend his own funds to remediate the Site” but instead had to “‘reimburse’ the DEC for the DEC’s response costs.”  (Slip. Op. at 14.)  Accordingly, plaintiff had not incurred costs of response within the meaning of CERCLA § 107 and could not assert a claim under that section.

With respect to plaintiff’s contribution claim under CERCLA § 113(f)(3)(B), the court held that while plaintiff was entitled to assert the claim, it was timebarred by a 3-year statute of limitations which began to run upon issuance of the consent order.  Plaintiff filed his suit approximately 5 years after the date of his consent order.

The Court’s holding on contribution is notable for two reasons.  First, the Court determined that the consent order had resolved plaintiff’s liability for purposes of § 113(f)(3)(B) despite the fact that plaintiff was required to pay back DEC costs in yearly installments over many years.  Plaintiff would not receive a release from liability unless he continued to pay and comply until all DEC’s costs were reimbursed.  Such a result could be decades away, and may never occur.  The Court nonetheless held that under Niagara Mohawk Power Corp. v. Chevron U.S.A., Inc., – F.3d –, 2010 WL 626064 (2d Cir. Feb. 24, 2010), plaintiff’s consent order created a contribution claim under § 113(f)(3)(B).

The most significant aspect of the ruling relates to the statute of limitations which applies to § 113(f)(3)(B) contribution claims.  The Court noted a gap in the statute, the, “lack of a triggering event in § 113(g)(3) encompassing a state administrative order or a unilateral EPA order under § 106,” but held that in light of recent Supreme Court precedents, a three-year statute of limitations applies to contribution claims arising from settlements of liability with a state.  (Slip. Op. at 23.)  In this context, the “triggering event should be the date of the ‘settlement’ of that liability,”—here, the date of plaintiff’s consent order.  In so holding the Court rejected alternative theories that a six year limitations period, or no limitations period applies.  (Id. at 21-23.)  This holding clarifies a complex issue of statutory construction that has vexed courts for many years, and provides useful guidance to future litigants.

The following Sive Paget & Riesel litigators represented three defendants in the case: Daniel Riesel, Dan Chorost and Ashley S. Miller.

  • A copy of the decision is available here (pdf)

[1] Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”), 42 U.S.C. § 9613(f)(3)(B).

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