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Environmental and Toxic Torts Law Bulletin - Summer 2015 - 9/2/2015

Supreme Court Strikes Down $9.6 Billion Clean Air Act Regulations

On June 29, 2015 the United States Supreme Court issued its decision in Michigan v. Environmental Protection Agency, 135 S. Ct. 2699, holding that the United States Environmental Protection Agency (EPA) acted unreasonably when it refused to consider the cost of implementing proposed limitations on emissions of mercury and other hazardous air pollutants when determining whether to regulate power plants under Clean Air Act Section 7412.  As required by the Clean Air Act, EPA’s decision to regulate power plants under Section 7412 was based on the agency’s determination that regulation was “appropriate and necessary,” a phrase the agency interpreted to mean that “cost makes no difference to the initial decision to regulate.”  Michigan v. EPA, 135 S. Ct. 2699, 2706 (2015); see also 76 Fed. Reg. 24988 (2011) (“We further interpret the term ‘appropriate’ to not allow for the consideration of costs.”).  Therefore, EPA ignored the fact that, by its own estimates set forth in the required “Regulatory Impact Analysis,” the regulation would cost power plants approximately $9.6 billion per year with a corresponding quantifiable “benefit” of only $4 to $6 million per year.

The Court reviewed EPA’s determination under the Chevron standard and ultimately held that EPA interpreted Section 7412 unreasonably when it refused to consider the costs of its decision to regulate.  The Court pointed out the absurdity of EPA’s position:

Read naturally in the present context, the phrase “appropriate and necessary” requires at least some attention to cost.  Once would not say that is even rational, never mind “appropriate,” to impose billions of dollars in economic costs in return for a few dollars in health or environmental benefits.  In addition, “cost” includes more than the expense of complying with regulations; any disadvantage could be termed a cost.  EPA’s interpretation precludes the Agency from considering any type of cost – including, for instance, harms that regulation might do to human health or the environment.  The Government concedes that if the Agency were to find that emissions from power plants do damage to human health, but that the technologies needed to eliminate these emissions do even more damage to human health, it would still deem regulations appropriate.  No regulation is “appropriate” if it does significantly more harm than good.

Michigan, 135 S. Ct. at 2707.  The Court also noted that, in this instance, the estimated cost to power plants was between 1,600 and 2,400 times the quantifiable benefits from reduced emissions.  Id.  at 2706.  The Supreme Court, therefore, reversed the decision of the United States Court of Appeals for the D.C. Circuit upholding the regulation and remanded the case for further proceedings.

Additional Items of Interest

Civil Enforcement

EPA Proposes Changes to 2006 Consent Decree with Alabama Power

On June 25, 2015, the EPA and U.S. Department of Justice proposed a modification to a 2006 consent decree with Alabama Power Company pertaining to emissions from three coal-fired power plants in Alabama. The changes will secure further reductions in harmful air pollutants including nitrogen oxide and sulfur dioxide in accordance with the Clean Air Act. Under the modification, Alabama Power will pay a $100,000 fine and spend around $1.5 million for electrical charging infrastructure for electric airport service vehicles and passenger cars.

Criminal Enforcement

Dairy Company Owner Sentenced for Discharging Cow Feces into French Broad River

On May 5, 2015, William “Billy” Franklin Johnston, one of the owners of Tap Root Dairy in North Carolina, was sentenced to four years probation including 6 months of in-home detention due to his role in discharging cow feces into the French Broad River in December 2012 by allowing spillover from on-site waste containment lagoons. Tap Root Dairy was also fined $80,000 and placed on four years probation.

Former Louisiana Water Works Employees Sentenced After Brain-Eating Amoeba Discovered in Water Supply

On May 12, 2015, Kevin Branch and Danielle Roussel pled guilty in federal district court for falsifying information on water testing logs at the Lions Water Treatment Plant in Reserve and an additional site in Mt. Airy in Louisiana. Naegleria fowleri, a brain-eating amoeba, was found in the water supply following Branch and Roussel’s failure to appropriately test the water samples. Both were sentenced to one year in prison, with that sentence suspended, and were ordered to serve six months probation and pay a fine of $400 each.

Biodiesel Fuel Company Owner Pleads Guilty to Fraud and Clean Air Act Crimes

On June 16, 2015, Philip Joseph Rivkin (also known as Felipe Politan Arriaga) pled guilty to a Clean Air Act false statement and mail fraud following his participation in a scheme to defraud the EPA by falsely stating that he was producing over 60 million gallons of biodiesel fuel.  His company falsely generated fuel credits, which were sold to oil companies and brokers.  Rivkin faces more than 10 years in prison, and must pay $51 million in restitution to reimburse the victims.  He also faced a civil forfeiture action in which $29 million in cash, an airplane, artwork valued in the millions, and several luxury cars were forfeited.

Duke Energy Companies to Pay Over $100 Million Clean Water Act Penalty

On May 14, 2015, three subsidiaries of Duke Energy Corporation pled guilty to nine criminal violations of the Clean Water Act at multiple facilities in North Carolina. Four of the charges resulted from the 2014 coal ash spill from the Dan River steam station.  The companies have agreed to pay a $68 million fine and spend $34 million on environmental projects and land conservation intended to benefit wetlands and rivers in North Carolina and Virginia.

Court Decisions

Alabama Appellate Court Affirms Judgment in Favor in Landlord Awarded Damages for Petroleum Contamination

On July 31, the Alabama Court of Civil Appeals affirmed a judgment in favor of Oakley Land Company, LLC, the owner of certain real property leased to several entities that ultimately became Tracker Marine Retail, LLC, for damages incurred as a result of petroleum contamination on the property.   The trial court had awarded the landlord nearly $50,000 in damages as well as over $17,000 in prejudgment interest and $53,000 in attorney fees based on Tracker Marine’s breach of lease provisions requiring the tenant to keep the leased premises in good condition and repair any damage.

Agency News

EPA Releases New Vapor Intrusion Technical Guides

On June 11, the EPA released two technical guides – Technical Guide for Assessing and Mitigating the Vapor Intrusion Pathway from Subsurface Vapor Sources to Indoor Air and the Technical Guide for Addressing Petroleum Vapor Intrusion at Leaking Underground Storage Tank Sites – that provide information regarding assessment and mitigation activities around sites where vapor intrusion is a concern.  Copies of the guidance documents are available at http://www.epa.gov/oswer/vaporintrusion/.

EPA and USACE Announce Final Rule Defining “Waters of the U.S.”

On May 27, the EPA and U.S. Army Corps of Engineers finalized the Clean Water Rule defining the scope of “waters of the United States” for purposes of the Clean Water Act.  According to EPA, the rule incorporates guidance from the U.S. Supreme Court’s opinions in Rapanos, SWANCC, and Riverside Bayview Homes and defines “waters of the U.S.” to include eight categories of jurisdictional waters.  A copy of the final rule is available at http://www2.epa.gov/sites/production/files/2015-06/documents/epa-hq-ow-2011-0880-20862.pdf.

EPA and NHTSA Propose National GHG for Medium- and Heavy-Duty Vehicles

On June 22, The U.S EPA and the Department of Transportation’s Highway Traffic Safety Administration (NHTSA) proposed a national program to establish additional greenhouse gas emission standards and fuel efficiency standards for medium- to heavy-duty vehicles.  These regulations will be Phase 2 of the current program applicable to vehicles through model year 2018.  For more information, go to

http://www.epa.gov/oms/climate/documents/420f15901.pdf

EPA Proposes New Approach for Chemical Safety Tests

On June 18, EPA announces a proposal to use new tools developed in the ToxCast program to improve testing for chemicals to determine their ability to interact with the human endocrine system. The proposed approach includes validated high throughput assays and a computational model.  A copy of the proposal is available at

https://www.federalregister.gov/articles/2015/06/19/2015-15182/use-of-high-throughput-assays-and-computational-tools-endocrine-disruptor-screening-program-notice.

EPA Releases Draft Assessment on Fracking Impacts

On June 6, the EPA released a draft assessment on the potential impacts of hydraulic fracturing activities on drinking water. The draft identifies potential vulnerabilities to drinking water, but concluded that no widespread, systemic impacts on drinking water have occurred in the U.S.  The executive summary is available at http://www2.epa.gov/sites/production/files/2015-07/documents/hf_es_erd_jun2015.pdf.

Miscellaneous

World’s Most Notorious Poachers Chased 10,000 Miles by Eco-vigilante Group

On April 6, following a 10,000 mile chase by self-described eco-vigilante group, Sea Shepherd, the fishing vessel the Thunder sank off the coast of Africa and its captain and crew were taken into custody.  The Thunder is one of the world’s most notorious poachers, having been banned since 2006 from fishing in the Antarctic and having collected over $76 million in sales from illegal fishing activities.  The chase lasted 110 days as Sea Shepherd members on board two ships – the Bob Barker and the Sam Simon – trailed the Thunder across two seas and three oceans.  As the ship was sinking, members of Sea Shepherd rescued those aboard the Thunder and boarded the vessel to obtain evidence of illegal activities.