GEAR: Gardere Environmental Action Report

12 January 2010 Publication

This issue of GEAR is provided as a service to clients and friends of the firm. It is designed to provide timely information and links to news and websites with relevant updates on environmental issues.

Case Update

CWA Penalty Authorized For Failure to 'Timely' Obtain a Permit

In Service Oil, Inc. v. United States Environmental Protection Agency, the 8th U.S. Circuit Court of Appeals held that the Clean Water Act (CWA) does not authorize administrative penalties based on the failure to obtain a stormwater discharge permit before starting construction of a new facility. In proceedings below, EPA sought and was awarded administrative enforcement penalties under CWA section 1319(g). The Service Oil court clarified that section 1319(g) authorizes penalties only for violations of the Act's "core prohibition against discharging without a permit, or contrary to the terms of a permit." Following the 2nd Circuit's reasoning in Waterkeeper Alliance, Inc. v. E.P.A., the court held that "unless there is a "discharge of any pollutant there is no violation of the Act, and point sources are, accordingly, neither statutorily obligated to comply with EPA regulations for point source discharges, nor are they statutorily obligated to seek or obtain an NPDES permit."

Although EPA can require point sources to apply for an NPDES permit prior to construction, the court explained, the failure to apply in that time period may lead to other forms of enforcement but cannot support an action for administrative penalties absent an actual unpermitted discharge. Thus, the court provided balanced relief, simultaneously supporting EPA's system of pre-construction permit applications while limiting the scope of the agency's enforcement authority to seek monetary penalties. The implications of the holding are significant for parties wrangling with EPA over what are often substantial administrative penalties EPA seeks for regulatory violations without an actual discharge. In Service Oil, for example, the administrative law judge assessing the penalty attributed nearly $27,000 of the overall $35,600 penalty to the defendant's "complete failure" to apply for and obtain an NPDES permit prior to construction. The 8th Circuit's holding reversed the basis for this portion of the penalty, remanding for further proceedings to re-calculate an appropriate (and much reduced) penalty.


EPA Quickly Challenged on Greenhouse Gas Endangerment Finding

On Dec. 7, 2009, EPA formally issued its Greenhouse Gas Endangerment Finding. This finding clears the way for EPA to finalize its proposed greenhouse gas emissions standards for motor vehicles under Section 202(a) of the Clean Air Act. In its finding, EPA concludes that the atmospheric concentrations of six greenhouse gases, including CO2, threaten both the public health and welfare of current and future generations. In an attempt to limit the reach of this finding, EPA only found that the combined emissions of these greenhouse gases from new motor vehicles and new motor vehicle engines contribute to greenhouse gas air pollution. It ignored other sources of greenhouse gases. Challenging the endangerment finding as "backdoor climate regulations," Alaska Senator Lisa Murkowski announced on Dec. 14 that she would file a disapproval resolution in hopes of blocking EPA regulation of greenhouse gases under the Clean Air Act in favor of climate change legislation working its way through Congress.

Although all legal challenges to the endangerment findings must be filed within 60 days from Dec. 7, 2009, the National Cattlemen's Beef Association (NCBA) didn't wait that long. On Dec. 23, 2009, it filed a petition in the D.C. Circuit Court of Appeals challenging the "endangerment finding" rule, claiming that it's premature to issue this kind of finding, especially given the recent controversy surrounding the scientific validity of alleged human contributions to climate change.

New Region 6 Administrator an Unapologetic Activist on Air Issues

President Obama appointed Dr. Alfredo "Al" Armendariz, an Associate Professor of environmental and civil engineering at Southern Methodist University in Dallas and self-proclaimed activist, to the position of EPA Region 6 Administrator. Dr. Armendariz will implement the agency's activities in Texas, Louisiana, Arkansas, Oklahoma and New Mexico, promoting state and local environmental protection efforts that include a growing interest in the natural gas production and distribution industry. Dr. Armendariz has publicly voiced his concerns that the oil and gas production industry around Fort Worth is a "major contributor to local and global air pollution problems." Accordingly, he believes it is "an absolute no-brainer" that EPA should be addressing methane emissions escaping from natural gas compressors and storage tanks as fugitive emissions.

Should You Start Collecting Greenhouse Gas Emissions Data?

Under the EPA's greenhouse gas reporting rule, suppliers of fossil fuels or industrial greenhouse gases, manufacturers of vehicles and engines, and facilities that emit 25,000 metric tons or more per year of GHG emissions are required to submit annual reports to EPA beginning in 2011. Collection of emissions of CO2 and other greenhouse gases for the reports begins Jan. 1, 2010. The initial reporting is projected to account for about 85 percent of the nation's GHG emissions and apply to about 10,000 facilities. The rule includes final reporting requirements for 31 of the 42 emission source categories identified in EPA's preliminary rule, with the remaining nine sources under further consideration.

New Stormwater Discharge Rules Impact Building and Construction

On Dec. 1, 2009, EPA issued new stormwater effluent limitations guidelines (ELGs) and new source performance standards (NSPS), including numeric effluent discharge limits for pollutant turbidity, and discharge monitoring requirements. The numeric ELGs will be phased in over four years for construction sites that disturb 10 or more acres and 18 months for sites disturbing 20 or more acres. The new requirements will be incorporated into EPA's next construction stormwater general permit when the current general permit expires in June 2011. In delegated states, the new requirements will be incorporated once their current general permits expire and new general permits are issued.

Additionally, EPA is considering new regulations to control post-construction stormwater discharges from newly developed and redeveloped sites. EPA proposed issuing information collection surveys to affected owners, operators, developers, contractors and government agencies. EPA solicited comments by the end of December from the regulated community on a draft version of the survey, which would require detailed information about stormwater management and control practices, local regulations, and baseline financial information.

EPA Expands NESHAP's Reach to New Industries

EPA recently published final rules establishing National Emissions Standards for four area source categories: paint and allied product manufacturing, asphalt processing and asphalt roofing manufacturing, chemical manufacturing and chemical preparations facilities. The rules address area sources that emit less than 10 tons annually of a single hazardous air pollutant (HAP) or less than 25 tons annually of a combination of hazardous air pollutants. The emission standards are reached by creating new management practices for volatile HAPs and equipment standards for particulate matter HAPs.

New Hazardous Waste Regulations Could Affect Macquiladoras

EPA has announced a final rule revising its regulations under the Resource Conservation and Recovery Act governing imports and exports of hazardous waste for recycling, recovery or reclamation. While not limited to exports to facilities across the border in Mexico, the new rule likely will likely affect some businesses working with Macquiladoras. The rule implements a 2001 amended agreement regarding shipments between the 30 member countries of the Organization for Economic Cooperation and Development (OECD), which includes the U.S., Canada and Mexico. The new rule changes documentation and reporting requirements for shipments of hazardous waste destined for recovery among OECD member countries; adds requirements for export notification and pre-shipment consent from EPA and the receiving country for exports of spent lead-acid batteries for reclamation; and adds documentation and reporting requirements for U.S. importers of hazardous waste. EPA expects to publish the final rule in the Federal Register in Jan. 2010, with an effective date six months from the publication. To avoid delays in exporting spent lead-acid batteries, EPA has encouraged the regulated community to provide EPA with notice of planned exports and seek consent as soon as possible because the consent process may take more than six months to complete.

EPA and States Weigh In on TSCA Reform

EPA and state regulators continue efforts to reform chemicals management regulations under the Toxic Substances Control Act (TSCA), as Congress debates reauthorization of the federal statute. On Dec. 2, 2009, regulators in 13 states issued a statement of principles for reforming TSCA. These include principles focused on manufacturer-provided chemical data reporting; protecting vulnerable populations through new regulations, addressing emerging contaminants, including nano-scale contaminants; and identifying safe alternatives to toxic chemicals in products. EPA has issued a statement of "essential principles" for reforming TSCA to aid Congress as it addresses reauthorization of the federal statute. EPA is seeking increased regulatory authority and tools to target chemicals of concern, and promptly assess and regulate new and existing chemicals.

Vapor Intrusion and TCE Toxicology Review

EPA has taken another step in developing its scientific basis for assessing risk posed by vapor intrusion of trichloroethylene (TCE), a solvent commonly used in dry cleaning and industrial operations. EPA issued its Draft IRIS Toxicological Review of TCE in Nov. 2009, concluding that TCE is a human carcinogen by all routes of exposure. EPA is seeking public comment on the document, which calculates an inhalation unit risk value for TCE that is twice the value EPA used in developing a regional screening level value for TCE. Comments are due by February 1, 2010. EPA also announced a listening session to be held on Jan. 26, 2010. Parties interested in participating can register with EPA online by Jan. 19.

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