New York Court of Appeals Upholds Local Ordinances Restricting Hydraulic Fracturing

sboxermanFeatured Expert Column – Environmental Law and Policy

by Samuel B. Boxerman, Sidley Austin LLP with Joel F. Visser, Sidley Austin LLP

*Editor’s note: Washington Legal Foundation filed an amicus brief in support of the Petitioners in the case discussed below.

Across the country, companies are using hydraulic fracturing techniques to develop shale oil and gas resources that create jobs and provide for economic growth. However, developers face a determined opposition that is using referenda, court challenges, and municipal ordinances in an effort to stymie development. In a long-awaited ruling issued today in In re: Mark S. Wallach, as Chapter 7 Trustee for Norse Energy Corp. USA v. Town of Dryden, Case No. 130, and Cooperstown Holstein Corp. v. Town of Middlefield, Case No. 131, the New York Court of Appeals gave this round to the opponents of development, finding the towns’ home rule authority gave it the power to ban development unless explicitly preempted by state statute.

The Court affirmed the appellate court decision that the towns’ prohibitions on oil and gas development were valid zoning ordinances and not preempted by New York’s Oil, Gas and Solution Mining Law (“OGSML”). Two judges dissented from the opinion and would have held that the complete prohibitions on oil and gas activities essentially regulated how oil and gas development can occur and are preempted by the OGSML. The Court made clear, however, that its decision did not address the merits of hydraulic fracturing generally and asserted that such decisions involved policy questions that should be left to the coordinate branches of government.

The OGSML’s supersession clause at issue states: “The provisions of this article [i.e., the OGSML] shall supersede all local laws or ordinances relating to the regulation of the oil, gas and solution mining industries; but shall not supersede local government jurisdiction over local roads or the rights of local governments under the real property tax law.” ECL 23-0303(2)). Continue reading

Supreme Court Observations: Don’t Buy the Spin, EPA Lost the Utility Air Regulatory Group v. EPA Case

peterglaserGuest Commentary

by Peter S. Glaser, Troutman Sanders LLP

*Editor’s note: On June 23, the U.S. Supreme Court issued its opinion in Utility Air Regulatory Group v. Environmental Protection Agency. The author of this commentary represented Washington Legal Foundation pro bono in the case for our amicus briefs at both the petition for certiorari and merits stages.

EPA lost; it didn’t win 

Although you wouldn’t know it from the way EPA and environmental NGOs are portraying the decision.  Industry opposed EPA’s Tailoring Rule with essentially two alternative arguments.  Industry’s maximum position was that EPA could not regulate greenhouse gasses ( GHGs) at all under the Prevention of Significant Deterioration (PSD) or Title V permit programs.  Industry’s alternative position was essentially that if a source is subject to PSD because of its non-GHG emissions (with some caveats), it could be required to do best available control technology (BACT) for both its non-GHG and its GHG emissions.  The Court adopted a variant of industry’s alternative argument.  During briefing, EPA resisted both of industry’s positions.  So it’s a little much for EPA to be claiming victory.

We don’t need to relitigate whether industry should have presented alternative positions or whether industry should have presented the Court with an all-or-nothing position:  either uphold the Tailoring Rule, which we know you don’t want to do, or rule that GHGs cannot be regulated under PSD or Title V at all.  Certainly, a maximum victory would have been preferable to the victory we got, where large facilities triggering PSD for their non-GHG emissions must undertake GHG BACT—a result that is not too far off from at least steps one and two of the Tailoring Rule.  In the end, only two justices (Alito and Thomas) expressed a preference for industry’s maximum position even when presented with the alternative argument.  Whether the other three justices in the majority would have endorsed industry’s maximum position if there had been no alternative position—or whether not presenting an alternative would have resulted in losing the case—is something we will never know. Continue reading

WLF Webcast on Effective Advocacy at EPA, TODAY 1:00 p.m. EDT

PodiumPic1To effectively shape rulemaking at today’s Environmental Protection Agency, lawyers must go well beyond the filing of expertly crafted comments. It’s no surprise, then, that the Center for Responsive Politics recently found that the Environmental Protection Agency is the second most lobbied administrative body in the federal government.

Join us TODAY, 1:00-2:00 p.m. EDT for a free WLF Web Seminar program entitled Don’t Rest on Your Written Comments: Pursuit of Successful EPA Advocacy. Our presenter is Foley & Lardner LLP partner Richard Stoll

Viewers will benefit from Mr. Stoll’s three decades of EPA advocacy and learn how to adroitly advance their interests both before and after official comments have been filed.  He will also discuss “sub-regulatory” guidance from the agency, how to pursue it, and how to put it to good use.

Registration is required for the program. Please click HERE to register. Go to our home page, http://www.wlf.org, to view the program at 1:00.

 

New Hampshire Union Leader Publishes WLF Op-Ed on State’s MTBE Lawsuit

scalesNew Hampshire likes to be first. It boasts America’s first modern state-run lottery, the first ski school, and even the world’s first paintball game.  And Dixville Notch, NH residents enter the first votes in each presidential election.

Thanks to a recent $236 million verdict in a state-sponsored lawsuit, New Hampshire may be gunning for first in the hearts and minds of America’s plaintiffs’ bar too—a distinction, Washington Legal Foundation’s General Counsel Mark Chenoweth argues in a June 11 New Hampshire Union Leader op-ed, that the state should not proudly embrace.

New Hampshire hired private, contingent-fee attorneys to sue oil companies for groundwater contamination. As Mark explains:

They alleged that leaking underground storage tanks contaminated local groundwater with the chemical MTBE. But rather than sue gas stations that owned the leaking tanks (and violated EPA rules), the state’s hired guns went after deep-pocketed oil companies (that were following EPA rules). The lawyers calculated that they could win a large payday, regardless of those companies’ actual responsibility, by putting deep pockets and pollution claims in front of a jury.

In compliance with a statutory mandate, EPA allowed the addition of MTBE to gasoline to improve air quality. Congress anticipated that leaks might occur, so it created a fund states could tap for clean-up. New Hampshire did not seek money from the fund, perhaps, the Union Leader op-ed notes, because the state would have to use those funds for groundwater clean-up. Not wanting to be limited, the state filed suit instead, even though it could not show physical harm to any person or destruction of any property.

New Hampshire now could have a $236 million slush fund courtesy of a jackpot justice verdict, and as Mark writes, “Attorney General Joseph Foster has staunchly opposed placing the money in a state-managed trust devoted to testing and clean-up.”

New Hampshire’s “success” has inspired neighboring Vermont to jump on the MTBE lawsuit bandwagon. Dallas law firm Baron & Budd and New York firm Weitz & Luxenberg will be joining up with New Hampshire’s local counsel, the Pawa Law Group, to represent Vermont and its litigious attorney-general, William Sorrell.

Supreme Court Observations: CTS Corp. v. Waldburger

sboxermanFeatured Expert Column – Environmental Law and Policy

by Samuel B. Boxerman, Sidley Austin LLP with Kathareine Falahee Newman, Sidley Austin LLP

On Monday June 9, the U.S. Supreme Court ruled against a group of landowners, holding that Section 309 of the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), 42 U.S.C. § 9658, does not preempt North Carolina’s ten-year statute of repose. See CTS Corporation v. Waldburger, et al., No. 13-339. In a 7-2 opinion authored by Justice Kennedy, the Court determined that while CERCLA preempts state statutes of limitations it does not prevent a state from barring a lawsuit via a statute of repose.

By reaching this result, the Court upholds a state’s right to provide a measure of finality to a potential tort defendant, who otherwise could face tort liability for contamination discovered decades after the defendant’s last contributing act. Of course, the ruling does not limit a defendant’s potential responsibility under CERCLA to perform or pay for a clean up to respond to the contamination—such CERCLA liability is not subject to a state statute of repose.

The case involved a group of property owners who purchased land on or near CTS Corporation’s former plant in Asheville, North Carolina. During plant operations between 1959 and 1989, CTS manufactured and disposed of electronics and stored various chemicals, including trichloroethylene (TCE) and cis-1,2-dichloroethane (DCE). In 1987, CTS sold the property, which was eventually divided by a subsequent owner and sold to various individuals. In 2009, the landowners discovered that their groundwater and land were contaminated and in 2011, they brought suit against CTS seeking damages, 24 years after CTS’s original property sale.

North Carolina’s statute of repose states that “no cause of action shall accrue more than 10 years from the last act or omission of the defendant giving rise to the cause of action.” N.C. Gen. Stat. Ann. § 1-52(16). Citing this law, CTS argued that because its last act occurred in 1987 when it sold the site, it could not be subject to the suit under state law and moved to dismiss. The District Court agreed and dismissed the case, but a divided panel of the U.S. Court of Appeals for the Fourth Circuit reversed, finding that Section 309, dealing with preemption of state law, was ambiguous and preempted the North Carolina statute of repose. Continue reading

EPA Right on Principle, Wrong on Approach with Clean Air Act Affirmative Defense for Malfunctions

DC CircuitGuest Commentary

by Christopher Sisk, a 2014 Judge K.K. Legett Fellow at the Washington Legal Foundation and a student at Texas Tech School of Law.

In his recent dissenting opinion in EPA v. EME Homer City Generation, LP, Justice Scalia lamented, “Too many important decisions of the Federal Government are made nowadays by unelected agency officials exercising broad lawmaking authority, rather than by the people’s representatives in Congress.” He’s right. All too often, American businesses like EME Homer City Generation bear the cost of the Environmental Protection Agency’s regulatory overreach, and the courts’ failure to rein it in. It is quite ironic, then, that one of the few times EPA has lost a court battle lately, it was actually attempting to cut businesses a break.

In that case, Natural Resources Defense Council v. EPA, an environmental activist group asked the D.C. Circuit to strike down a 2013 national emissions standard for cement manufacturers. Judge Kavanaugh, writing for the unanimous panel, upheld all but one part of the standard, rejecting only EPA’s attempt to create an affirmative defense against certain citizen suits under the Clean Air Act (CAA). As we will discuss below, however, the ruling did leave the door open for EPA to authorize such an affirmative defense by approving State Implementation Plans (SIP).

Recognizing the realities of an industrialized America, EPA sought to create an affirmative defense for unavoidable malfunctions that cause a facility to be temporarily out of compliance. While EPA requires facilities to be in continuous compliance with the CAA, it recognizes this expectation is not always possible to meet. Malfunctions happen, and may lead to excess pollution. EPA tried to protect facilities from overzealous environmental groups’ citizen suits in such situations, while retaining its own enforcement capability. Continue reading

EPA Seeks Input on Regulating Hydraulic Fracturing Fluids under Toxic Substances Control Act

sboxermanFeatured Expert Column – Environmental Law and Policy

by Samuel B. Boxerman, Sidley Austin LLP with Ben Tannen, Sidley Austin LLP

As I have written previously in a Washington Legal Foundation Legal Backgrounder, the federal government is extending its regulatory reach over hydraulic fracturing. An example of that trend is the recent Advance Notice of Proposed Rulemaking (“ANPR”) by the U.S. Environmental Protection Agency (“EPA”) seeking comment through an advanced notice of proposed rulemaking (“ANPR”) on whether, and if so how, to impose a federal rule mandating the disclosure of the contents of chemical substances and mixtures used in hydraulic fracturing.

Currently, states where hydraulic fracturing techniques are used have already considered these questions and imposed a range of disclosure requirements. Moreover, to facilitate disclosure, state regulators and industry, working together through the Ground Water Protection Council and Interstate Oil and Gas Compact Commission, have developed a voluntary national hydraulic fracturing chemical registry accessible to the public online—FracFocus.org. Although established as a voluntary disclosure portal, to date, FracFocus has information on over 72,000 well sites and ten states have issued regulations requiring operators to use FracFocus as the means of official state chemical disclosure.

To the agency’s credit, EPA’s notice seeks comment on voluntary disclosure options, as well as using the FracFocus database as the repository for information it collects. ANPR at 1, 19.   However, EPA is also considering imposing mandatory federal disclosure rules, including mandates under Section 8 of the Toxic Substances Control Act (TSCA). Continue reading

FDA’s Proposed Regulation of Brewers’ Spent Grains is All Wet

spent brewing grains

spent brewing grains

During his February 5, 2014 appearance at a House Energy and Commerce Committee hearing, Food and Drug Administration (FDA) Deputy Commissioner Michael Taylor stated that “the whole goal of [the Food Safety Modernization Act (FSMA)] is to achieve the food safety goal without imposing regulations, just for the sake of regulation.” Dr. Taylor must have been unaware of his agency’s proposal to require that brewers, distillers, and vintners develop extensive hazard analysis and control plans before selling or donating their spent grains or grape pomace to farmers for livestock feed. This proposal seems to be the epitome of regulating for the sake of regulating.

Farmers have been procuring and feeding their livestock spent brewing grains and grapes for centuries. These livestock “happy hour” arrangements advance environmental sustainability, engender bonds among local businesses, and financially benefit both parties. Farmers get low cost whole grain feed packed with fiber, protein, and, of particular importance to livestock in arid climates, moisture. Alcohol makers save millions by not having to landfill the by-products.

FSMA Section 116 exempts activities at facilities which “relateto the manufacturing, processing, packing, or holding of alcoholic beverages.” In a proposed animal food safety regulation, FDA essentially nullifies this statutory exemption. The agency “tentatively concludes” that when brewers or distillers go through the “mashing” process—soaking grains in hot water—and then offer the by-product to farmers, they suddenly become food producers. The same goes for winemakers and their grape pomace. FDA’s conclusion has sparked a deserved firestorm of opposition from the affected industries as well as members of Congress. Continue reading

EPA and the Army Corps’ “Waters of the U.S.” Proposal: Will it Initiate Regulatory Overflow?

sboxermanFeatured Expert Column – Environmental Law and Policy

by Samuel B. Boxerman, Sidley Austin LLP with Lisa Jones, Sidley Austin LLP

On March 25, 2014, the Environmental Protection Agency (EPA) and the United States Army Corps of Engineers (Corps) (“the Agencies”), released a long-awaited Proposed Rule defining the scope of “waters of the United States” governed by the Clean Water Act (CWA or Act). Since its release, the proposal has been praised by some, questioned by many others, and already was the subject of hearings on Capitol Hill. If finalized, the proposal will most likely end up in court—and if it were allowed to stand as is, would most certainly cause significant impacts across multiple sectors of our economy, from agriculture to housing to energy.

Decades in the making, the Proposed Rule would supersede existing agency guidance, and replaces the Obama Administration’s previous effort to issue its own “waters of the United States” guidance. The 370-page notice proposes to define “waters of the United States” by regulation, after allowing agency guidance documents and various Supreme Court decisions* to define the phrase on a case-by-case basis since 1975. The definition is critical, because the scope of the “waters of the United States” is the cornerstone of the Clean Water Act; it sets the parameters of the jurisdiction Congress established in the Act. Thus, the breadth of this definition will determine when EPA and the Corps may regulate all manner of development under the Act. Continue reading

Department of Energy Task Force Issues Report on FracFocus

sboxermanFeatured Expert Column – Environmental Law and Policy

by Samuel B. Boxerman, Sidley Austin LLP with Ben Tannen, Sidley Austin LLP

The scope and extent of disclosure of hydraulic fracturing fluids continues to be an issue with which regulators are wrestling on both the state and federal levels.  In the most recent addition to the discussion, on February 24, 2014, the U.S. Department of Energy’s (DOE) Secretary of Energy Advisory Board (SEAB) N1 released its Task Force Report on FracFocus 2.0 (“Report”).  This Report makes recommendations related to FracFocus, the web-based, publicly available national hydraulic fracturing chemical constituent registry, on topics ranging from trade secret claims to future funding.  The Report was developed in response to a November 2013 request by Secretary of Energy Ernest J. Moniz asking SEAB to create a task force to focus on seven discrete issues related to FracFocus.  N2  In 2011, a SEAB subcommittee had previously studied the potential environmental impacts of unconventional gas production.  N3

FracFocus, operated by the Ground Water Protection Council and Interstate Oil and Gas Compact Commission, started in April 2011.  N4  In its first year of operation, it publicized information on over 14,000 wells from 231 companies.  N5  Since then, the number of wells registered on the website has more than quadrupled, to over 62,000.  N6  By the end of 2013, 14 states required some sort of disclosure on FracFocus, while companies located in other states voluntarily disclosed information on the site.  N7  According to the Report, “FracFocus has greatly improved public disclosure quickly and with a significant degree of uniformity.”  N8

The issue the Report examines most closely is the extent to which companies rely on the trade secret exemption in making disclosures on FracFocus.  The current FracFocus disclosure exemption is based on an OSHA regulation.  N9  The task force asserted its belief that, as a general principle, “full disclosure of all known constituents added to fracturing fluids is desirable.”  N10 Continue reading