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July 28, 2010

Environmental Groups Challenge NYSDEC’s Issuance of Stormwater Permit for “Small” Municipal Stormwater Systems

On June 28, 2010, a coalition of environmental groups[1] (“Petitioners”) filed an Article 78 Petition (“Petition”) in court challenging the New York State Department of Environmental Conservation’s (“NYSDEC”) April 2010 issuance of a State Pollution Discharge Elimination System (“SPDES”) General Permit that sets forth requirements applicable to municipal separate storm sewer systems (“MS4s”).[2] The General Permit authorizes discharges of stormwater from “small MS4s,” those municipal storm water systems serving communities with a population between 10,000 to 100,000 people.[3] New York regulates MS4s via its SPDES program, which implements the Clean Water Act (“CWA”) pursuant to delegated authority.[4]

In New York a permit is required for stormwater discharges (i.e., runoff over land or impervious surfaces into water bodies) from MS4s and the permit must include “controls to reduce the discharge of pollutants to the maximum extent practicable.”  33 U.S.C. § 1342(p)(3)(B).  For small MS4s, one such control is the development and implementation of a Storm Water Management Plan (“SWMP”).

Petitioners challenged the 2010 MS4 General Permit, alleging it fails to achieve state water quality standards because it would allow stormwater pollution to continue at existing levels instead of reducing pollution.  Petitioners alleged four causes of action:

  1. NYSDEC’s issuance of the General Permit was unlawful because it does not require MS4s to reduce their discharges of pollutants to the “maximum extent practicable.”  Petitioners alleged that NYSDEC’s reliance on the State Stormwater Management Design Manual’s technical standards for post-construction stormwater is unlawful because that manual is outdated, and does not sufficiently reduce pollutant discharges to the “maximum extent practicable.”  Additionally, Petitioners alleged that the General Permit authorization of an optional “banking and credit system” – allowing off-site stormwater pollution reductions to satisfy on-site requirements – would “violate the CWA’s mandate that post-construction stormwater discharges from new development and redevelopment be reduced to the maximum extent practicable” because the banking and credit system is not limited to instances where on-site compliance is impracticable.  (Petition, ¶¶ 65-69.)
  2. NYSDEC issuance of the General Permit was unlawful because it does not ensure compliance with State total maximum daily loads (“TMDL”) (a kind of pollution loading allocation) for water bodies where MS4 discharges contribute to violations of the water body’s water quality standards.  Petitioners alleged that the General Permit does not include limitations necessary to meet water quality standards, does not implement a TMDL wasteload allocation, and does not include a compliance schedule ensuring that permittees will achieve compliance with water quality standards “within the shortest reasonable time” if permittees cannot immediately comply with water quality standards.  Additionally, Petitioners alleged that the General Permit does not ensure that sufficient measures will be taken to meet pollution reduction targets set for bodies of water that the State has prioritized for cleanup (e.g., Long Island Sound).  (Petition, ¶¶ 71-78.)
  3. NYSDEC issuance of the General Permit was unlawful because it does not “include requirements to take samples and measurements representative of the quantity and character of the monitored discharge” as required by State and federal law.  (Petition, ¶¶ 80-81.)
  4. Because the General Permit authorizes MS4s to develop their own effluent limitations (including SWMPs and a banking and credit system), which “are not subject to substantive DEC review and approval, public comment to DEC, and/or the opportunity for a hearing before a hearing [sic] before DEC,” Petitioners allege the permit creates a scheme of self regulation prohibited by the Clean Water Act.  (Petition, ¶¶ 83-90.)

As a practical matter this challenge to the MS4 General Permit could have State-wide impacts, as the MS4 General Permit applies to MS4 municipalities across New York State—not just those on Long Island Sound.  If successful, this litigation could ultimately result in significant new pollution control mandates for already financially strapped municipalities.  Enhanced requirements for pollution reduction in TMDL watersheds could mean reduced development opportunities in those MS4 communities, some of which are already struggling with a shrinking tax base.

[1] Natural Resources Defense Council, Riverkeeper, Waterkeeper Alliance, Soundkeeper, Save the Sound, Peconic Baykeeper, Hudson-Raritan Baykeeper, and Hackensack Riverkeeper.

[2] GP-0-10-002, effective May 1, 2010.  An MS4 is a conveyance or system of conveyances owned or operated by a State, municipality, association, public body (including special districts under State law), Indian tribe or authorized Indian tribal organization, or designated and approved management agency that discharges into waters of the United States; which is “designed or used for collecting or conveying storm water;” and is not a combined sewer or part of a Publicly Owned Treatment Works.  40 C.F.R. § 122.26(b)(8).

[3] NYSDEC classifies all MS4s as small MS4s except for those in New York City.  (Petition, ¶ 46.)

[4] The CWA prohibits the discharge of pollutants to surface waters unless the discharge is pursuant to a National Pollutant Discharge Elimination System (“NPDES”) permit.  33 U.S.C. § 1342.  In New York, NYSDEC has assumed MS4 permitting authority through the State Pollutant Discharge Elimination System (“SPDES”) General Permit program.  See ECL §§ 17-0801 et seq.

EPA Proposes Rule to Reduce Airborne Transport of Pollutants from Power Plants Across State Borders

By: Dan Mach — Filed under: Clean Air Act, Compliance, Emerging Issues — Posted at 10:41 am

On July 6, 2010, the U.S. Environmental Protection Agency (“EPA”) announced a proposed rule to address air emissions that cross state lines and contribute to ozone and particulate matter pollution in the eastern half of the country.  Many areas in the northeast cannot meet National Ambient Air Quality Standards (“NAAQS”) because of pollution from upwind states.[1] The rule would create Federal Implementation Plans (“FIPs”) to reduce sulfur dioxide (SO2) and nitrogen oxide (NOx) emissions from electric power plants in 32 states through a combination of direct abatement standards and a limited voluntary “cap-and-trade” emissions permit trading program.

Once adopted, the proposed rule will replace the 2005 Clean Air Interstate Rule (“CAIR”), which required states to develop State Implementation Plans (“SIPs”) to address interstate transport of SO2 and NOx.[2] CAIR allowed states to opt into a voluntary cap-and-trade program.[3] In a 2008 decision and subsequent decision on rehearing,[4] the D.C. Circuit remanded CAIR to EPA, holding the rule unlawful but declining to vacate it during the period of the agency’s reconsideration.

The basis of the court’s objections was that CAIR’s permit trading program did not contain absolute emissions limits for individual sources, and so could technically allow individual sources in upwind states to increase emissions by buying enough emissions allowances.  The court found that this system violated the CAA, which requires SIPs to contain “adequate measures” prohibiting sources from “contribut[ing] significantly to nonattainment in … any other State …” or “interfere[ing] with the maintenance of” NAAQSs.

The newly proposed EPA rule aims to remedy these flaws.  It relies on state-specific data to identify each state’s contribution to nonattainment or interference with NAAQSs maintenance in other states and uses this information to create a state-wide emissions budget and an enforceable FIP designed to reduce emissions in the state below that budget.  States will have the option of replacing these FIPs with SIPs that achieve the same emissions reduction goals.[5] Within this framework, the rule allows trading of emissions allowances within each state, as well as limited interstate trading.

In addition to this primary proposal, EPA has also requested comment on two alternative schemes.  Under the first alternative, interstate trading of emissions allowances would be prohibited, although trading among power plants within states would continue.  Under the third option, emissions trading would be replaced completely with emissions rate limits.

The final rule, if it survives legal challenges, could have substantial impacts on air quality and also impose significant costs on industry.  EPA estimates that its preferred approach would have annual health and welfare benefits amounting to $120-290 billion in 2014, including the prevention of 14,000 to 36,000 premature deaths, at an annual cost of compliance of $2.8 billion.  The rule represents a central element of EPA’s wider effort to reduce ozone and particulate matter pollution in the eastern U.S., as evidenced by EPA’s recent adoption of more stringent SO2 and NOx standards.

EPA will be receiving public comment on each of the three proposed versions of the Air Transport Rule for 60 days following its publication in the Federal Register.  Three public hearing will be conducted following the comment period, in locations to be announced in the Federal Register notice.

Dan Mach is a summer associate at Sive, Paget & Riesel, P.C.

[1] Factsheet, EPA, Proposed Transport Rule Would Reduce Interstate Transport of Ozone and Fine Particle Pollution, at 1 (July 6, 2010).  See CAA 109(a), 42 U.S.C. § 7409(a).

[2] 70 Fed. Reg. 25,162 (May 12, 2005).

[3] EPA, Clean Air Interstate Rule: Basic Information, (last visited July 16, 2010).

[4] North Carolina v. EPA, 531 F.3d 896 (D.C. Cir. 2008).

[5] EPA, Proposed Air Transport Rule, at 14.

July 27, 2010

New York and Other States Continue Efforts to Enforce and Defend National Clean Air Standards

By: Vicki Shiah — Filed under: Clean Air Act, Climate Change Law, Emerging Issues, Enforcement — Posted at 2:08 pm

Last week, air pollution litigation was a prominent theme at the office of the New York State Attorney General, which announced major developments in two separate matters.   

On July 20, 2010, Attorney General Andrew Cuomo announced that his office, as well as the Pennsylvania Department of Environmental Protection (“PADEP”), had issued a notice of intent to sue the Homer City Station power plant in western Pennsylvania over Clean Air Act (“CAA”) violations that affect air quality in New York.  The Homer City Station plant is a 1,884 megawatt electric power plant located 50 miles west of Pittsburgh.  According to a Cuomo press release, the plant emits “over 100,000 tons of sulfur dioxide (SO2), nitrogen oxides (NOx), and particulate matter (PM) each year,” and “the plant’s annual emissions of over 100,000 tons of SO2 alone constitut[e] one of the largest upwind sources of this kind of pollution to New York state.”  New York and PADEP allege that the plant, in violation of the CAA, failed to upgrade its pollution control technology when the facility underwent modifications in the 1980s and 1990s which increased its emissions.  The lawsuit would seek the facility’s full compliance with the Clean Air Act, which would include the adoption of new pollution control technology. 

On July 22, 2010, Cuomo announced that New York, joined by 12 other states, had filed a motion to intervene in a consolidated case challenging EPA’s recent greenhouse gas “Tailoring Rule.”  The Tailoring Rule makes regulation of carbon dioxide (CO2) emissions practicable by setting the threshold for the applicability of the CAA’s Title V and prevention of significant deterioration (“PSD”) permit requirements at 100,000 tons per year (“tpy”) for new sources and 75,000 tpy for modified sources. 

The existing statutory threshold, at 100 tpy for certain listed sources, or 250 tpy for other sources, was designed for pollutants present in much lower ambient concentrations than CO2.[1]  EPA had determined that, with its recent classification of CO2 as a regulated pollutant (due to the new EPA/NHTSA automobile emissions standards), the old threshold would give rise to a 140-fold increase in PSD permits[2], a significant burden both for the newly regulated sources as well as for EPA.

Since the publication of the Tailoring Rule in the Federal Register on June 3, 2010, at least five separate challenges to the rule have been brought in the D.C. Circuit, where they have been consolidated.  On June 23, the D.C. Circuit set an initial briefing schedule for these cases, with all dispositive motions currently due by September 13, 2010.  New York State, which supports the Tailoring Rule, has been joined in the motion to intervene by California, Illinois, Iowa, Maryland, Massachusetts, Maine, New Hampshire, New Mexico, North Carolina, Oregon, Pennsylvania, and Rhode Island.

Congress’s continued inability to pass comprehensive legislation governing greenhouse gas emissions shifts the focus on regulatory efforts by EPA and the states to address conventional pollutants as well as greenhouse gas emissions.  The recent actions by New York and other states to enforce the Clean Air Act as it applies to coal fired power plants and to defend EPA’s greenhouse gas regulations represents an important, if fragmented, effort to fill the gap left by continued Congressional inaction.

[1] See CAA §§ 165 (limiting application of PSD to “major emitting facilities”), 169(1) (defining “major emitting facility” with reference to the 100/250 tpy threshold). 

[2] 75 Fed. R. 31514, 31535 (June 3, 2010).

July 23, 2010

EPA Soliciting Comments On Plans To Conduct Survey To Determine Public Willingness To Pay For Reducing The Number Of Fish Killed At Cooling Water Intake Structures At Industrial Facilities

By: Jennifer Coghlan — Filed under: Clean Water Act, Emerging Issues — Posted at 11:28 am

On July 21, 2010, EPA issued a notice announcing its intention to request approval from the Office of Management and Budget to conduct a survey to determine the public’s willingness to pay for reducing the number of fish killed at cooling water intake structures (“CWIS”) at industrial facilities.

Clean Water Act § 316(b) requires EPA to promulgate regulations to ensure that the location, design, construction, and capacity of CWIS reflect the best technology available (“BTA”) to protect aquatic organisms from being killed or injured by impingement or entrainment.  EPA divided this rulemaking into three phases.  The first of these, the so-called “Phase I Rule,” governs all new industrial facilities that propose to withdraw 2 million gallons per day (“MGD”) of water with 25 percent or more of the water to be used for cooling.[1] In July 2004, EPA promulgated its “Phase II Rule,” which applied only to existing CWIS at “electric generating plants” and then only to those that are designed to withdraw at least 50 MGD and use at least 25 percent of their withdrawn water for cooling.  However, EPA suspended the Phase II Rule on July 9, 2007 following a decision by the United States Court of Appeals for the Second Circuit holding that EPA had improperly interpreted BTA as “best technology available commercially at an economically practicable cost” and so engaged in cost-benefit analysis not allowed under § 316(b).[2] In 2009, however, the U.S. Supreme Court held EPA had permissibly relied on cost-benefit analysis in developing the Phase II rule.[3] EPA now anticipates combining Phases II and III into one rulemaking covering all existing facilities.

As explained by the Agency, the proposed survey “will allow EPA to estimate total benefits for the proposed regulatory options and fulfill Executive Order 12866 which requires the estimation of the potential benefits and costs to society of the rulemaking.”  The proposed survey would ask respondents whether or not they would vote for policies that would increase their cost of living in exchange for specified changes in: (a) impingement and entrainment losses of fish; (b) commercial fish sustainability; (c) long-term fish populations; and (d) conditions of aquatic ecosystems.   The intended sample size for the survey is 2,000 households.

Comments on the proposed information collection request will be accepted until September 20, 2010.

[1] Both environmental and industry groups sued EPA over the validity of the Phase I Rule.  In 2004, the Second Circuit issued a decision that largely upheld the Phase I Rule, but remanded parts of the regulations.  Riverkeeper, Inc. v. EPA, 358 F.3d 174 (2d Cir. 2004) (“Riverkeeper I”).

[2] Riverkeeper, Inc. v. EPA, 475 F.3d 83 (2d Cir. 2007) (“Riverkeeper II”).

[3] Entergy Corp. v. Riverkeeper Inc., __ U.S. __, 129 S.Ct. 1498 (Apr. 1, 2009).

July 21, 2010

EPA to Study Impacts of Hydraulic Fracturing on Drinking Water; Seeks Public Input

By: Vicki Shiah — Filed under: Emerging Issues, Hydraulic Fracturing & Marcellus Shale — Posted at 10:24 am

This July and August, the U.S. Environmental Protection Agency (“EPA”) is holding a series of public meetings seeking input on the design for an upcoming study to assess the effect of hydraulic fracturing on public drinking water supplies.  Hydraulic fracturing uses high-pressured water, combined with chemicals, to release natural gas present underground in shale formations.  Use of this process has raised concerns across the country that this process will contaminate, or has contaminated, drinking water supplies.  For example, hydraulic fracturing could impact drinking water supplies through the large scale water withdrawals needed to start the process; through the underground leakage of production and/or waste fluids during drilling; through spills of wastewater to land and water surfaces; and through the disposal of waste fluids.

Hydraulic fracturing is an issue of concern to New Yorkers because the state is one of several overlaying the gas-rich Marcellus Shale Formation (the “Formation”).  Notably, the Formation includes lands in the watershed that provides drinking water to New York City and, in total, approximately half of the state’s population.

In its Fiscal Year 2010 budget, Congress called upon EPA to commence a new study on the risks that hydraulic fracturing poses to drinking water supplies.   Acknowledging that shale gas is projected to comprise over 20 percent of the U.S. natural gas supply by 2020, EPA announced a new study in March.  This June, the agency proposed case study criteria and a conceptual modelfor the upcoming study.

EPA is holding meetings this summer to explain the study and to seek public comment on the study’s proposed components.  On the east coast, EPA will hold a meeting in Canonsburg, PA on July 22, 2010, and a meeting in Binghamton, NY on August 12, 2010.  Further information about the proposed study and the public meetings is available here.

July 16, 2010

Malpractice Claim Regarding Environmental Due Diligence Asserted Against Transactional Bond Counsel

By: Maggie Macdonald — Filed under: Emerging Issues — Posted at 1:08 pm

A complaint filed earlier this month in the U.S. District Court for the Eastern District of Louisiana highlights the importance of clearly delineating  the scope of a lawyer’s representation of a client, and accompanying duty to advise clients as to the necessity of environmental due diligence in real estate finance and development transactions.  The plaintiff, a community development district, brought five claims against its transactional counsel based on their alleged failure to advise and perform environmental due diligence.[1]

Plaintiffs retained counsel in order to secure financing for a residential development on 324 acres.  As alleged in the district’s complaint, the defendant law firm represented it would “prepare all necessary materials, documents, regulatory approvals and investigative reports necessary for issuing bonds to finance the project,” and take care of all matters related to the bond financing.  The complaint cites an opinion letter produced by the firm stating that no delays related to environmental or land use permitting were anticipated, as support for the assertion that the firm had purportedly undertaken some responsibility for environmental assessment. However, by the terms of the retainer, the defendant was retained to prepare the necessary financial and transaction documents and the Complaint does not allege that the defendant firm had expressly represented that it would undertake any environmental due diligence.

The plaintiff succeeded in securing $7.695 million in bond financing for the project, and subsequently spent $10 million installing roads, water lines and a sewage treatment plant.  However, prior to selling any residential lots, the plaintiff discovered that a portion of the property had been the location of historic military bombing activity and that the property could contain unexploded ordnance.  The development was promptly halted. The district defaulted on its bonds and subsequently brought claims of legal malpractice, negligence, negligent misrepresentation, breach of fiduciary duty and violations of securities laws against its transaction counsel.  This complaint reinforces the importance of thorough environmental due diligence and its resolution could affect many attorneys both in the real estate transaction and environmental fields.

Regardless of the eventual outcome of the case, the Complaint highlights practical issues for attorneys as well as consultants including the following:

  • the importance of clearly defining the scope of the attorney’s representation and perhaps identifying those areas related to the representation that the attorney is not addressing;
  • the potential duty to alert a client to potential risks associated with a transaction or project, even if outside of the scope of the representation; and
  • the need to document such advice to the client.

This may be the first case where a malpractice claim has been brought against a transactional attorney, where the attorney appears to restrict the scope of its representation to financing, for failure to conduct an appropriate environmental due diligence.  Counsel involved in real estate transactions would be well advised to apprise their clients of the importance of environmental due diligence, even if such work is outside of the scope of their own expertise.

Maggie Macdonald is a summer associate at Sive Paget & Riesel, P.C.

[1] The complaint discussed was filed in U.S. District Court in the Eastern District of Louisiana by Coves of the Highland Community Development District against its counsel McGlinchey Stafford PLLC.

July 9, 2010

Updates Regarding EPA’s Lead Renovation, Repair, and Painting Rule

By: Jennifer Coghlan — Filed under: Compliance, Emerging Issues, Lead Paint — Posted at 3:21 pm

In April 2008, EPA issued its Lead Renovation, Repair and Painting Rule, which required the use of lead-safe work practices during renovation, repair or painting activities in pre-1978 homes.  The 2008 rule, however, allowed owner-occupants to “opt-out” of that requirement by certifying that there were no children under the age of 6 living in the home.  As of July 6, 2010, owner-occupants no longer have that option and all such work in pre-1978 homes must be performed by a certified contractor in accordance with lead-safe practices.   A copy of the May 6, 2010 final rule revoking the “opt-out” provision is available here.

EPA has also announced that it has reopened the comment period on its May 6, 2010 proposed rule to require dust wipe sampling after many types of renovations.  Comments will be accepted until August 6, 2010.

Finally, in recognition of the difficulty contractors have experienced in locating available training classes, EPA issued a guidance document on the enforcement of the new lead rules.  EPA will not initiate enforcement actions for violations of the firm certification requirement until October 1, 2010, and will not enforce certification requirements against individual workers provided that they apply to enroll in certification classes by September 30, 2010 and complete the required training by December 31, 2010.   However, EPA will continue to enforce against firms and individuals who do not comply with the required lead-safe work practices and associated recordkeeping requirements.  A copy of EPA’s Frequent Questions on EPA’s June 18, 2010 Implementation Guidance for the Renovation, Repair and Painting Rule is available here.

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