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Environmental & Energy Law Blog

Insights and Commentary on Environmental and Energy Issues Nationwide

One Step Forward, One Step Back – NY Moves Forward on Its Environmental Self-Audit Policy as EPA Looks to Retreat

By Adam Silverman on Posted in Energy, Environment, Federal Regulation, Policy, State Regulation

New York’s Department of Environmental Conservation (DEC) recently proposed an environmental “audit incentive” policy, which is similar to the United States’ Environmental Protection Agency’s (EPA) long standing self-audit policy. In its draft policy, DEC encourages participation by waiving or reducing penalties for environmental violations that regulated entities discover through an environmental audit, and expeditiously report and correct. Ironically, as New York moves forward with a policy designed to enhance compliance in a world where government resources are constrained, EPA has signaled that it is seeking to reduce its own program to meet budget pressures. EPA’s policy provides significant value to participants, and has been a successful means to encourage compliance. New York’s policy should do the same by providing a valuable tool for companies that voluntarily seek to achieve compliance and reduce penalty exposure. When finalized, the policy’s broader qualification standards for newly-acquired operations should be especially useful when companies acquire operations with existing compliance issues.

The GT Alert — One Step Forward, One Step Back – NY Moves Forward on Its Environmental Self-Audit Policy as EPA Looks to Retreat was prepared by Steven C. Russo and Adam B. Silverman.

To view the GT Alert on www.gtlaw.com, please click here.

To view the GT Alert as a PDF, please click here.

New York Appellate Court Affirms Broad Right of Local Governments To Use Zoning to Ban Gas Drilling

By Caleb Holmes on Posted in Hydrofracking, Oil & Gas

From Steven C. Russo of GT New York:

In a much awaited ruling, an upstate New York appellate court unanimously upheld the right of local governments to zone out gas drilling.  The case, Norse Energy v. Town of Dryden, was brought by a gas company seeking to nullify a very broad ban of gas drilling adopted by the Town of Dryden in anticipation of New York State greenlighting high-volume hydraulic fracturing in New York State.

The court found that the provision in the New York’s Oil, Gas and Solution Mining Law superseding “all local laws and ordinances relating to the regulation of the oil, gas and solution mining industries”  did not preclude a total bar to gas and petroleum activities through a locality’s zoning power.  The specific ordinance at issue had banned “all activities relating to the exploration for, and production and storage of, natural gas and petroleum.”  The decision went off on the interpretation of the word “regulation,” with the court finding that the only laws precluded by this provision of law were local laws regulating the rules and procedures of the industry, not a total bar to exploration, production and storage activities on zoning principles.  The strong presumption that local governments have the right to regulate land use within its jurisdiction clearly played a strong role in the court’s reasoning.  The superseding provision in the law also carved out local laws relating to uses of roads, an exception that arguably cuts against the court’s reasoning because such carve out would appear to be unnecessary if the scope of the preemption only went to the means and method of gas drilling.

The court also found that there was no implied preemption in New York’s oil and gas law.  Petitioners had argued that local bans would make New  York’s spacing unit regulatory scheme, which authorizes the payment of royalties based on the creation of drilling spacing units of up to 640 acres, unworkable.  The court disagreed, finding that the spacing units could accommodate the existence of local bans.  That reasoning, however, ignores the fact that spacing units can and often do move across municipal boundaries.  An open question also exists as to whether a local government, using zoning, can ban subsurface drilling within its jurisdiction.  It would be difficult to find a land use rationale for precluding subsurface drilling, but the statute at issue clearly does ban such drilling and the court did not address that particular point.

There was a companion case, Cooperstown Holstein Corp. v. Town of Middlefield, where the local court also upheld the right of a local government to ban gas drilling via zoning.  That decision was also affirmed based on the reasoning of Dryden.  These two decisions confirm the primacy of local zoning in New York and the hostility of New York courts to preemption of that right.  It will be interesting to see if the Court of Appeals chooses to take up this matter and decide the controversy once and for all.

Pennsylvania Supreme Court Maintains Presumption that Oil and Gas are Not “Minerals”

By David Mandelbaum on Posted in Court Cases, Hydrofracking, Oil & Gas

On Wednesday, the Pennsylvania Supreme Court decided Butler v. Charles Powers Estate, No. 27-MAP-2012 (Pa. Apr. 24, 2013), re-affirming the general presumption in Pennsylvania law that a deed that conveys or reserves “minerals” does not convey or reserve rights in shale gas.  This presumption dates at least from Dunham v. Shortt & Kirkpatrick, 101 Pa. 36 (1882).  However, Dunham turned on the fugacious nature of oil and gas.  “Mineral” in the common lay understanding means something metallic and fixed.  Oil and gas seep.  However, Dunham arguably conflicts with United States Steel Corp. v. Hoge, 468 A.2d 1380 (Pa. 1983), holding that coal bed methane is conveyed in deeds conveying the coal.  Thus, reasoned the Superior Court in Butler, a deed reserving “minerals” might have been reserving the shale rock and therefore the gas within the rock.  The upshot of affirmance would have been to call into question gas title throughout the Marcellus Shale region in Pennsylvania, or at least so some alleged.  The Supreme Court has laid all that concern to rest.

Find the court’s opinions here.

 

 

A Reminder About Pollution Liability Coverage

By Caleb Holmes on Posted in Uncategorized

In his recent Pennsylvania Law Weekly article, Kyle Johnson of GT Philadelphia discusses a recent decision from the federal district court in Pittsburgh, Wiseman Oil v. TIG Insurance, 2013 U.S. Dist. LEXIS 14747 (W.D. Pa. Jan. 22, 2013), which highlights the importance of carrying environmental insurance, especially in connection with properties or facilities with an increased potential for environmental legacy liabilities. Many property owners believe that comprehensive general liability (CGL) policies adequately protect against environmental liabilities. However, standard CGL policies will typically only cover certain, very limited environmental liabilities and are by no means an effective tool for comprehensive environmental protection. Pollution legal liability (PLL) policies, designed to respond to contamination found on properties, are a far more useful and comprehensive mechanism to mitigate potential liability stemming from current or past ownership of environmentally sensitive properties.

To read Mr. Johnson’s article, click here.

Upcoming Webinar: Koontz v. St. Johns River Water Management District Case

By Kerri Barsh on Posted in Environment

The US Supreme Court’s forthcoming decision in Koontz v. St. Johns River Water Management District promises to be one of the most important property rights rulings in many years. In addition to affecting a wide range of real estate development projects that are subject to local, state or federal permit requirements, the decision may also affect negotiations with government regulatory authorities outside the real estate context.

Previous decisions of the Court have established a doctrine of “unconstitutional exactions,” which requires payment of just compensation when a land use authority unreasonably conditions a development permit on the developer’s dedication of some other, unrelated property to public use (like a remote bike path or conservation easement).

In Koontz, the conditions imposed by the state agency were so onerous that the developer refused them, and as a result, was denied a development permit. The threshold question before the Court is whether the unconstitutional exactions doctrine applies to such a permit denial, and more generally, whether these facts constituted a taking of Koontz’s property.

A “no” answer could sanction excessively hard bargaining by government agencies, whereas a “yes” answer could inhibit regulators from imposing conditions that are reasonable in fact, but nevertheless invite takings claims and the attendant burden and expense of litigation. Most broadly, Koontz involves the bounds that federal, state and local agencies must observe when negotiating with developers or other regulated entities.

Following the decision, Kerri Barsh, co-chair of GT’s National Environmental practice, and Jerry Stouck, shareholder in GT’s Litigation practice, will be hosting a webinar with Paul Beard, III of the Pacific Legal Foundation, who argued on behalf of Koontz in the U.S. Supreme Court, to discuss the implications of the ruling.

The date and time of the webinar will be announced once the Koontz decision is issued. Please check back for further details.

Carbon Claustrophobia — Significant Changes Coming to the Regional Greenhouse Gas Initiatives Cap and Trade Program

By Adam Silverman on Posted in Carbon Credits, Climate Change, Energy, Environment, Policy, State Regulation

The New York State Department of Environmental Conservation (DEC), in conjunction with the New York State Energy Research and Development Authority (NYSERDA), is currently accepting public comments on several proposed changes to the DEC’s regulations governing New York’s participation in the Regional Greenhouse Gas Initiative (RGGI). DEC’s proposed changes, which are based on updates to the RGGI model rule, are designed to reduce the RGGI emissions “cap” to increase the costs of CO2 emissions credits to encourage further reduction in CO2 emissions.

The linked GT Alert Carbon Claustrophobia – Significant Changes Coming to the Regional Greenhouse Gas Initiatives Cap and Trade Program explains the significance of the changes to the RGGI regulations.  Steven Russo of GT’s New York office and Adam Silverman of GT’s Philadelphia office prepared the alert.

Is EPA Playing Chicken With Clean Air Act?

By Adam Silverman on Posted in Articles, Carbon Credits, Climate Change, Energy, Environment, Federal Regulation, Politics

In this week’s Pennsylvania Law Weekly and Legal Intelligencer, I write about the motivations behind EPA’s potential delay of issuing a final rule that would limit carbon emissions from new power plants.  The agency appears to be playing a high stakes game of political chicken that could provoke congress to pass standalone cap-and-trade legislation.  Read Is EPA Playing Chicken With Clean Air Act Greenhouse Gas Standards?, 36 Pa. L. Weekly 312 (Apr. 2, 2013), by clicking here.

Adam B. Silverman is an associate in Greenberg Traurig’s Environmental Group.  He practices in GT’s Philadelphia Office, and represents clients in a wide range of transactional, regulatory and litigation environmental matters.

Stormwater’s Day in the Sun

By Hamilton Hackney III on Posted in Stormwater

For those following stormwater regulatory issues, 2013 is proving to be a very interesting year.  Last week, the U.S. Supreme Court upheld a regulation exempting stormwater flows from logging roads from permitting under the Clean Water Act.  This is the third federal court decision of the year to address the scope of federal authority to regulate stormwater flows.  Still to come are USEPA’s development/redevelopment stormwater regulations, the initial draft of which are anticipated this June.

The Supreme Court ruled last week that USEPA had properly interpreted its regulations in determining that stormwater flowing from logging roads does not require a NPDES permit.  The opinion, Decker v. Northwest Envt’l Defense Center,  No.  11-338 (March 20, 2013), resulted from a Clean Water Act citizen suit against a logging operation in Oregon.  The suit, which claimed that stormwater discharges from the operation’s roads required a NPDES permit, indirectly challenged USEPA’s interpretation of its so-called Silvicultural Rule (40 C.F.R section 122.27(b)(1)), as exempting from the NPDES permitting program any stormwater flows from logging roads.  The Ninth Circuit Court of Appeals had ruled against USEPA, and concluded that stormwater discharges from logging roads were “associated with industrial activity,” thus requiring a NPDES permit.  Subsequent to the Ninth Circuit decision, USEPA amended the Silvicultural Rule to clarify that stormwater flows from logging roads were not “associated with industrial activities” and therefore not subject to NPDES permitting.

The Supreme Court overturned the Ninth Circuit and upheld USEPA’s interpretation.  The Court concluded that, by amending the Silvicultural Rule, USEPA had not mooted the case, because the defendants could still be held liable for violations of the Clean Water Act if USEPA’s interpretation of the original Silvicultural Rule was invalid.   Turning to that interpretation, the Court noted that USEPA’s interpretation need not be the only possible or even the best interpretation – only that it cannot be “plainly erroneous or inconsistent with the regulation.”  Under that mild standard of review, the Court concluded that interpreting logging roads as falling outside the scope of industrial activity was a permissible interpretation.

Earlier this year, in Los Angeles County Flood Control District v. Natural Resources Defense Council, No. 11-460 (January 8, 2013), the Supreme Court ruled that the flow of contaminated stormwater between different sections of a municipal separate storm sewer system (MS4) did not trigger the need for a NPDES permit.  That case followed the Court’s prior precedent regarding what constituted a “discharge” for the purposes of determining if a NPDES permit was required.  Nonetheless, the case is important in that it overturned a Ninth Circuit holding that the flow of contaminated stormwater between components of the MS4 should be regulated as a discharge of pollutants.  If left standing, the ruling below would have dramatically expanded the regulation of water flows within MS4s and other managed water systems and imposed unmanageable regulatory burdens on the operators of those systems.

Finally, a federal district court recently invalidated an effort by USEPA to use “surrogates” as a tool for regulating stormwater discharges.  In Virginia Dept. of Transp. v. U.S. Envt’l Protection Agency, _____ F.Supp.2d ____, 2013 U.S. Dist. LEXIS 981 (January 3, 2013), the court addressed a Total Daily Maximum Load (TMDL) established by USEPA for the Accotink Creek, which used stormwater flow as a surrogate for limiting sediment loading in the creek from stormwater discharges.  The court rejected this approach, because USEPA’s authority under the Clean Water Act to establish TMDLs is limited to “pollutants,” and stormwater is not deemed a “pollutant” under the statute.  This case marks the fourth unsuccessful attempt by USEPA to regulate sediment loading from stormwater based on flow.  USEPA has stated publicly that it will not appeal the decision.

As mentioned above, USEPA is preparing draft regulations that would establish a national program to regulate stormwater flows associated with development and redevelopment activities.   These regulations are intended to fill the “gap” between current federal construction and industrial stormwater regulations.  These regulations were mandated in a 2010 settlement of a lawsuit filed by public interest groups to force regulators to improve water quality in the Chesapeake Bay.   The three court decisions discussed above will unquestionably influence the agency’s decision-making as it attempts to finalize draft regulations for public release.   Read together, these cases signal that on the one hand courts remain willing defer to USEPA’s interpretation of its regulations where there is some basis to support that interpretation.  On the other hand, these decisions also reveal judicial suspicion of both efforts to expand the Clean Water Act’s regulatory footprint and novel regulatory schemes, absent a clear statutory basis to do so.

Massachusetts High Court Limits the Scope of Article 97

By Hamilton Hackney III on Posted in Articles

The Massachusetts Supreme Judicial Court (SJC) recently held that the redevelopment of land taken for urban renewal is not subject to legislative approval under Article 97 of the Massachusetts Constitution.  This constitutional provision mandates that any disposition or change in use of lands held for certain public purposes must first be approved by a two-thirds vote from both houses of the Legislature.

Article 97 was added in 1972 and provides in part:

The people shall have the right to clean air and water, freedom from excessive and unnecessary noise, and the natural, scenic, historic, and esthetic qualities of their environment; and the protection of the people in their right to the conservation, development and utilization of the agricultural, mineral, forest, water, air and other natural resources is hereby declared to be a public purpose.

Article 97 of the Amendments to the Massachusetts Constitution.  Importantly, Article 97 also provides that any lands taken for Article 97 purposes shall not be used for any other purpose or conveyed unless first approved by  a two-thirds vote of the Legislature (both houses).  Over the years, there has been a fair amount of debate (and litigation) over when the disposition and/or conversion of use of public land triggers the need for Article 97 approval.

In Mahajan v. Department of Envt’l Protection (SJC-11134, March 15, 2013), the SJC narrowed the circumstances under which such legislative approval will be required.  Specifically, the Court considered whether legislative approval was required for  redevelopment of a waterfront parcel owned by the Boston Redevelopment Authority (BRA).  The parcel in question is adjacent to the Boston Harbor, and is located on filled land previously subject to tidal action.  In Massachusetts, such filled tidelands are deemed subject to the public trust, and private use of those lands requires approval from the Massachusetts Department of Environmental Protection (MassDEP) in the form of a license issued under M.G.L. c. 91.

After the BRA secured a c. 91 license, the plaintiffs appealed, alleging that issuance of the c. 91 license constituted a disposition triggering Article 97.  The SJC rejected the appeal on two grounds, both of which provide potentially important limitations on the scope of Article 97.  First, the Court ruled that, when the BRA took the parcel by eminent domain for urban renewal purposes, that acquisition did not fall automatically within the scope of Article 97.  While the taking did effect the public purpose of urban renewal, the Court distinguished that public purpose from the public purposes established in Article 97.  The Court did leave open the possibility that post-taking use of a parcel taken for urban renewal (e.g., use as a park) could subject the parcel to Article 97; however, those facts were not present in this case.  So, while the Court did not completely foreclose the application of Article 97 in future cases to lands taken for urban renewal, the decision provides some important limitations on the circumstances under which that might occur.

The Court also ruled that granting a c. 91 License does not constitute an Article 97 disposition triggering the need for legislative approval.  This conclusion is consistent with the statutory language in M.G.L. c. 91, section 15 that the grant of a license “does not convey a property right.”  Nonetheless, the Court’s conclusion serves as a helpful confirmation that c. 91 license applications will not trigger Article 97 and the resulting need for legislative approval of the rights granted under the license.  For developers of waterfront real estate in Massachusetts, this is welcome news.

EPA & Florida Reach Agreement on Disputed Nutrient Standards for Florida’s Waterways

By Kerri Barsh on Posted in Environment, Florida, Policy, State Regulation
On Friday, March 15, 2013, the Florida Department of Environmental Protection (DEP) announced an Agreement in Principle with the U.S.  Environmental Protection Agency on the new criteria for Florida’s waters that would limit nitrogen and phosphorus, two nutrients commonly blamed for algae blooms and other water quality problems.  The EPA Agreement in Principle is intended to resolve a lengthy and contentious dispute between EPA and environmental advocacy groups who called for more rigorous regulations and State regulators, utilities, and agricultural interests  who opposed the federal standards as overlybroad and too costly to implement.  
 
As noted in an earlier E2 blog post, EPA approved the state ’s new rules for streams, lakes and springs and South Florida estuaries and coastal waters in November 2012, but proposed federal criteria for  the remaining estuaries, coastal waters and South Florida streams and canals. Florida  DEP responded by maintaining that implementation of the state rules was prohibited under an “all-or-nothing” provision in  2012 state legislation because  EPA wascontinuing to propose federal pollution limits.
 
The announcement of the Agreement by the Secretary of Florida DEP was applauded by the representatives of the State and U.S. Legislatures. The EPA Region IV Administrator similarly congratulated “the state of Florida for their hard work on this very complicated effort.”   EPA’s regulation of Florida’s waterways has been the subject of protracted state opposition, as well as intense bipartisan criticism from Florida’s congressional delegation.  The U.S. House of Representatives reportedly voted in 2011 to terminate funding for EPA’s numeric nutrient criteria program if the federal rules were implemented.  U.S. Senator Rubio issued a statement on Friday, calling the agreement “a significant win for job creators across the state” and “important for the economy that state agencies, not Washington ‘bureaucrats,’ controlled pollution rules.”     
 
Whether the Agreement by Florida and federal regulators will mark the end of what has been described by the Secretary of Florida DEP as “the endless litgation” remains unclear.  An attorney for EarthJustice, the firm who had sued the EPA over the delay in the establishment of the numeric limits, condemned the new standards as “bogus” and “flawed” and noted that federal district Judge Robert Hinkle must still approve the Agreement before the dispute is settled.  In addition, the Agreement itself requires the Florida Legislature to adopt the document setting forth the path for implementation of Florida’s numeric nutrient standards  and withdraw the “all-or-nothing” provision in the 2012 state legislation, once EPA approves the state rules.  
 
If everything proceeds as outlined in the Agreement,  the dual federal and state nutrient criteria rulemaking will be eliminated upon adoption of the state legislation and completion of the DEP rulemaking to encompass all coastal and inland waterways, a process that is required to be concluded by December 2014.    
 
Stay tuned for more developments.