National Priorities for Enforcement and Compliance Assurance (FY 2011-2013) & EPA Identifies Additional Classes of Industries for Financial Assurance Obligations Under CERCLA 108(b)

On Monday (1/4), EPA announced its proposed enforcement priorities for FY 2011-2013 (75 Fed. Reg. 140).  These priorities play a key role in EPA’s environmental enforcement activities.  EPA is accepting comments until January 19, 2010.  Some of the priorities include RCRA corrective action program enforcement, RCRA corrective action financial assurance (See infra Press Release regarding CERCLA 108(b)), energy/mining resource extraction, mining processing, air toxics and environmental justice.

Continuing with the environmental financial assurance theme is today’s Federal Register notice (75 Fed. Reg. 815) and EPA’s 12/30/09 Press Release under CERCLA 108(b) identifying additional classes of industries for development of financial obligation regulations in cleanup of environmental releases.  The three industries identified in EPA’s Press Release and today’s notice are the chemical manufacturing industry (NAICS 325), the petroleum and coal products manufacturing industry (NAICS 324), and the electric power generation, transmission, and distribution industry (NAICS 2211).  The notice states that EPA plans to develop a proposed regulation identifying appropriate financial responsibility requirements under CERCLA 108(b).  Comments on this notice must be received on or before 2/5/10.

Chlorine Gas Shipping Rates Are Trade Secrets, Says Texas Supreme Court

The Texas Supreme Court has held that a railroad’s hazardous materials shipping rates are trade secrets.  In re Union Pac. R.R. Co., No. 08-0740, 2009 Tex. LEXIS 725 (Sept. 25, 2009).  Because the plaintiff had not shown “why she needs the specific rate structures” to make her argument, the high court vacated the trial court’s deposition order that could have revealed the rates.  Plaintiff was attempting to use the information in her argument that Union Pacific knew it had a higher duty when dealing with hazardous materials, but disregarded it.  The high court held, “a party . . . must demonstrate with specificity exactly how the lack of the [trade secret] information will impair the presentation of the case on the merits to the point that an unjust result is a real, rather than a merely possible, threat.”

This toxic tort case resulted from the 2004 collision, derailment and fire of a Union Pacific train transporting chlorine gas in Bexar County, Texas.  Plaintiffs claim that the chlorine gas car should have been located at the rear of the train away from steel cars.  Defendants testified that hazardous materials would not be treated differently except that they could not be placed within five cars of the engine.

Texas has adopted the Restatement of Torts § 757 to use in determining whether a trade secret exists.  The Restatement factors are: (1) the extent to which the information is known outside of the business; (2) the extent to which it is known by employees and others involved in the business; (3) the extent of measures taken to guard the secrecy of the information; (4) the value of the information to the business and to its competitors; (5) the amount of effort or money expended in developing the information; and (6) the ease or difficulty with which the information could be properly acquired or duplicated by others.

The opinion issued per curiam.

First Massachusetts v. EPA, Now This

            On September 21, the Second Circuit reversed a district court’s decision dismissing two cases brought against six electric utilities alleging that they created a public nuisance by emitting too much carbon dioxide and other greenhouse gasses.  The first case was brought by eight states, including California (yes, the Terminator is now the Tree Hugger), New York (that Spitzer guy again) and New Jersey, and the City of New York.  The second case was brought by three environmental groups.  The 139-page opinion is on the Second Circuit’s website, at http://www.ca2.uscourts.gov/decisions/isysquery/1c1c879d-ece0-4f9f-91a1-06a621c82188/1/doc/05-5104-cv_opn.pdf#xml=http://www.ca2.uscourts.gov/decisions/isysquery/1c1c879d-ece0-4f9f-91a1-06a621c82188/1/hilite/

            There’s no point in gilding the lily; here’s the opinion’s opening paragraph:

             “Appeal from a judgment of the United States District Court for the Southern District of New York (Preska, J.) dismissing Plaintiffs-Appellants’ federal common law of nuisance claims as non-justiciable under the political question doctrine. We hold that: (1) Plaintiffs-Appellants’ claims do not present non-justiciable political questions; (2) Plaintiffs-Appellants have standing to bring their claims; (3) Plaintiffs-Appellants state claims under the federal common law of nuisance; (4) Plaintiffs-Appellants’ claims are not displaced; and (5) the discretionary function exception does not provide Defendant-Appellee Tennessee Valley Authority with immunity from suit. Accordingly, we VACATE the judgment of the district court and REMAND for further proceedings.”

             In other words, it was a total win for plaintiffs.

             Both complaints seek “abatement” of the nuisance, meaning they want an injunction forcing the companies to limit their emissions of greenhouse gasses, although apparently they don’t specify by how much.  Nor do they seek money damages.  The main difference between the complaints, according to the opinion, is that the governments alleged harm to their citizens, whereas the environmental groups alleged harm to their land holdings.

             The most remarkable part of the opinion to me is the holding that the environmental groups have standing, i.e., the right to sue at all.  After Massachusetts v. EPA, 549 U.S. 497 (2007), in which the Supreme Court held that states had standing to sue EPA, and that EPA has the authority to regulate greenhouse gasses under the Clean Air Act, it’s not surprising that the Second Circuit held that the states have standing.  But I’m surprised about the environmental groups.   If their case goes to the Supreme Court, there is no way – NO WAY – the Court will affirm the Second Circuit’s holding that the environmental groups have standing.  And if I’m wrong, I promise I’ll donate twenty bucks to the Chamber of Commerce.

Another Victory for Vinyl Chloride Producers’ Sophisticated User Defense—West Virginia

The United States District Court for the Southern District of West Virginia held in a recent decision that a supplier of vinyl chloride to make polyvinyl chloride may argue under West Virginia law that it had no duty to warn of the chemical’s toxicity because the worker’s employers were sophisticated users.  Roney v. Gencorp, et al., No. 3:05-0788, 2009 U.S. Dist. LEXIS 80849 (S.D.W. Va. Sept. 4, 2009).  The Court found that West Virginia would allow an application of the sophisticated user defense even though neither the West Virginia Supreme Court of Appeals nor the U.S. Court of Appeals for the Fourth Circuit had explicitly adopted the theory. 

In Roney v. Gencorp, Roney’s family alleged that Roney’s exposure to vinyl chloride vapors while working at a West Virginia plant from 1965 until 1982 caused him to contract angiosarcoma—a form of liver cancer that killed him in 2003.

Plaintiffs alleged the chemical producers failed to warn plant workers about vinyl chloride’s toxicity and conspired with the plant’s owners to misrepresent the vinyl chloride’s safety.  In defense, the chemical producers successfully argued they should be able to argue under West Virginia law that because the plant’s owners knew as much about the dangers of vinyl chloride exposure as the producers did, they were sophisticated users of the chemical and the producers did not have a duty to directly warn workers the hazards of working around vinyl chloride.  The producers also successfully argued the bulk supplier defense applied because they provided vinyl chloride in bulk to the plant and had no easy way of providing warnings to Roney and that the plant, not the producers, had the burden to provide the warnings.

This is another victory for the sophisticated user defense in vinyl chloride exposure litigation.  In August, the United States Court of Appeals for the First Circuit in Taylor v. The American Chemistry Council, et al., 576 F.3d 16 (1st Cir. 2009) held that the sophisticated user defense under Massachusetts law relieved several suppliers of vinyl chloride of a duty to warn a former polyvinyl chloride plant worker in Massachusetts.

“More Stringent” Does Not Mean “Broader In Scope” for RCRA Enforcement

In a RCRA criminal enforcement case, the Rhode Island federal District Court denied the defendant’s motion for acquittal on charges that it illegally stored mercury without a permit, even though the amount stored was less than would have been actionable under federal regulations.

Defendant Southern Union Co. was found guilty by a jury of storing hazardous waste without a permit in violation of 42 U.S.C. § 6928(d)(2), part of RCRA (the federal Resource Conservation and Recovery Act).  Although the opinion does not specify how much hazardous waste it stored (in this case, mercury), apparently all sides agreed the amount was less than 1,000 kilograms.  This made the defendant a “Small Quantity Generator,” and therefore eligible for a conditional exemption from permitting requirements, the “conditional exemption for small quantity generators” or “CESQG.” 

But U.S. EPA had given Rhode Island the authorization to administer its own hazardous waste management program.  A state may do so under RCRA if the regulations under its state program are “equivalent to” and “consistent with” RCRA regulations, and even if they are “more stringent.”  A state may not, however, impose regulations that are “broader in scope” than RCRA regulations under an EPA-authorized program. 

Rhode Island’s program did not recognize any CESQG.  In other words, in Rhode Island, all hazardous waste storage requires a permit.  And when EPA approved Rhode Island’s program, it noted that Rhode Island’s rules – because they were approved by EPA under RCRA – are “federally enforceable.”

After it was found guilty by the jury for illegal storage (but acquitted by the same jury on two other counts of the indictment), defendant moved for acquittal.  It argued that Rhode Island’s regulations were “broader in scope” than RCRA’s regs because the state’s regulations covered all hazardous waste generators, not just large quantity generators.  As such, the regs could not have been properly authorized by EPA and were not enforceable.

The District Court denied the motion.  In classic deference-to-agency language, it held that “EPA has the inherent authority –subject of course to the APA — to make determinations as to whether a state program submitted to the EPA for approval is more stringent, or seeks to regulate in areas that are beyond the federal program’s scope of coverage.” 

This is true even though EPA apparently determined that California’s and the District of Columbia’s similar treatment of small quantity generators amounted to regulation that was “broader in scope” than RCRA, and therefore not permitted.  The District Court described EPA’s actions with respect to the various states as a policy that evolved over time, although “in a less than perfectly seamless fashion,” and not fatally arbitrary.

The lesson to be learned from this decision is that EPA’s approval of state regulations under RCRA will likely not be overturned by a court – even if the line between “more stringent” and “broader in scope” is not so easily drawn.

The decision is U.S. v. S. Union Co., 2009 U.S. Dist. LEXIS 63619 (D.R.I. July 23, 2009), also available at http://www.rid.uscourts.gov/opinions/smith/07222009_1-07CR0134S_USA_V_SOUTHERN_UNION_COMPANY_P.pdf.

Both Pennsylvania and New Jersey have received approval from EPA to adminster their own hazardous waste programs.  See 51 Fed. Reg. 1,791 (Jan. 15, 1986) (Pennsylvania) and 53 Fed. Reg. 30,054 (Aug. 10, 1988) (New Jersey).  Unlike Rhode Island, neither state has eliminated preferential treatment of CESQGs.  See, e.g., 27 Pa. Bull. 237, 239 (Jan. 11, 1997) and 28 N.J.R. 1693(a) (April 1, 1996).  No foolin’.

Commonwealth Court Limits Exceptions to Rollback Taxes Under “Clean and Green” Act

       In a July 2009 unpublished opinion, Pennsylvania’s Commonwealth Court limited exceptions to the imposition of rollback taxes for split-off land under the “Clean and Green” Act, ruling in favor of York County’s Board of Assessment Appeals. 

      In Donnelly v. York County Bd. of Assessment Appeals, No. 1015 C.D. 2008 (Pa. Commw. Ct. July 2, 2009), landowners owned about 33 acres of land in York County that had been granted a preferential assessment under Pennsylvania’s Farmland and Forest Land Assessment Act of 1974, the “Clean and Green” Act.  The Act provides for preferential assessments – lower taxes – for qualifying agricultural and forested properties.

       In October 2006, the landowners conveyed two acres of the property to their daughter, who lives in a house on the two acres (the opinion does not say when the house was built).  Less than a month later, the county assessor notified the landowners and their daughter that the two acre parcel was not eligible for the preferential assessment.  The assessor imposed seven years of “roll-back” taxes in accordance with the Act on both parcels (the two acres split-off and the remainder).  The landowners and their daughter appealed.  The court of common pleas affirmed, and the landowners appealed again to the Commonwealth Court. 

       The Commonwealth Court affirmed.  The Court said that the facts were not in dispute and that the case turned on statutory construction of the Act, and in particular the exceptions to imposition of the rollback tax.  72 P.S. §5490.6(a.1) (Section 6(a.1) of the Act) provides: 

“(a.1)(1) The split-off of a part of land which is subject to preferential assessment under this act shall subject the land so split off and the entire tract from which the land was split off to roll-back taxes as set forth in section 5.1.  The landowner changing the use of the land to one inconsistent with this act shall be liable for payment of roll-back taxes. The landowner of land which continues to be eligible for preferential assessment shall not be liable for any roll-back taxes triggered as a result of a change to an ineligible use by the owner of the split-off tract. Roll-back taxes under section 5.1 shall not be due if one of the following provisions applies: 

“(i) The tract split off does not exceed two acres annually, except that a maximum of the minimum residential lot size requirement annually may be split off if the property is situated in a local government unit which requires a minimum residential lot size of two to three acres; the tract split off is used only for agricultural use, agricultural reserve or forest reserve or for the construction of a residential dwelling to be occupied by the person to whom the land is conveyed; and the total tract or tracts so split off do not exceed the lesser of ten acres or ten percent (10%) of the entire tract subject to preferential assessment.  

 ”(ii) The split-off occurs through a condemnation.

 ”(2) Each tract which has been split off under paragraph (1)(i) shall be subject to roll-back taxes for such a period of time as provided in section 5.1. The landowner changing the use of the land shall be liable for payment of roll-back taxes.”

        The landowners argued that they met the three criteria for the exception to imposition of rollback taxes in Section 6(a.1)(1)(i): the split off was not more than two acres; it was used for a residential dwelling for the “person to whom the land is conveyed” (the daughter); and it was not more than 10% of the approximately 33 acre parcel.  And the Commonwealth Court agreed as a factual matter that the split-off satisfied these three criteria. 

       So why were the roll-back taxes proper?  The Commonwealth Court employed the principle of statutory construction that “a proviso is deemed to apply only to the immediate preceding clause or provision.”  It reasoned that the “proviso” that spelled out the three requirements for the applicable exception, beginning with “Roll-back taxes under section 5.1 shall not be due …” applies only to the preceding sentence: “The landowner of land which continues to be eligible for preferential assessment shall not be liable for any roll-back taxes triggered as a result of a change to an ineligible use by the owner of the split-off tract.”  And that preceding sentence talks only about the “landowner of land which continues to be eligible for preferential assessment,” not the owner of the split-off; so only the owner of the remainder, and not the owner of the split-off, is eligible for the exception in Section 6(a.1)(1)(i). 

       In addition, said the Court, Section 6(a.1)(2) says that “Each tract which has been split off under paragraph (1)(i) shall be subject to rollback taxes …” (emphasis added).

        Finally, the Court said its result was required by Close v. Berks County Bd. of Assessment Appeals, 839 A.2d 462 (Pa. Commw. Ct. 2003).  In Close, the Court, in a similar situation, imposed taxes on the split-off parcel, but not on the main parcel: “Taxpayers’ remaining 42-plus-acre tract of land remains entitled to the preferential assessment under the Act.”  Close, 839 A.2d at 467. 

       The Donnelly opinion is a good job by the Commonwealth Court of interpreting what may be the most nonsensical statutory language I have ever read.  Section 6(a.1)(1)(i) sets forth criteria under which roll-back taxes “shall not be due,” creating an exemption; then Section 6(a.1)(2) says that “Each tract which has been split off under paragraph (1)(i) shall be subject to rollback taxes …”. 

       The Court’s solution is to hold that the exemption created by Section 6(a.1)(1)(i) applies only to owners of a remainder tract that continues to be preference-eligible – even though those owners are already excluded from roll-backs by the preceding sentence. 

       The Court’s citation to Close is necessary – it is a published opinion by the same court on precisely the same issue – but imperfect, and rightly so.  In Close, the Court held that the owners of the remainder parcel were liable for the roll-back tax, which the Donnelly opinion says is forbidden.  Although the more recent Donnelly opinion does not disclose its departure from Close in this respect, I believe it is correct given the following language in Section 6(a.1)(1): “The landowner of land which continues to be eligible for preferential assessment shall not be liable for any roll-back taxes …”. 

       Sorting out the confusing language of Section 6(a.1) may require the Supreme Court to take a case.  Apparently no petition for allowance of appeal was filed in Donnelly.

        The Donnelly opinion is unreported.  It is available on the Commonwealth Court’s website at http://www.pacourts.us/OpPosting/Cwealth/out/1015CD08_7-2-09.pdf.

Township Can’t Apply Post-Filing Zoning Law to an Application in Furtherance of Pending Subdivision Plan

Developer’s change in proposed sewage treatment for planned subdivision is subject to zoning law in effect at the time the plan for the subdivision was filed, Commonwealth Court says. 

In 2001, developer Heritage Building Group filed a preliminary subdivision and land development plan, but waived its right to have to the Township make a decision on the plan within 90 days.  Apparently, the Township has never acted on the Plan.

The same year, the Township changed its zoning ordinance to mandate that no property may be altered, graded, disturbed or cleared of trees without a zoning permit.  The Township’s earlier (1991) zoning ordinance had no such provision.

Meanwhile, Heritage applied for zoning variances that would allow it to build a centralized sewage system for the development because the soil is not suitable for on-lot systems.  The Township’s Zoning Hearing Board denied the applications twice. 

Changing tactics in 2007, Heritage decided to place fill on the lots which, after four years, would render them suitable for on-lot systems.  It applied for a zoning permit to do so.  The Township zoning officer denied the application on the ground that the fill permit could only be granted if Heritage demonstrated compliance with other zoning requirements; it had not, so the officer denied the permit.  The ZHB affirmed.

The Court of Common Pleas reversed, holding that the Township could not hold apply the 2001 zoning ordinance to an application made in furtherance of a subdivision plan that was filed before the ordinance went into effect.

The Commonwealth Court affirmed, relying on Section 508(4)(i) of the Municipalities Planning Code, 53 P.S. §10508(4)(i), which provides:

“From the time an application for approval of a plat, whether preliminary or final, is duly filed as provided in the subdivision and land ordinance, and while such application is pending approval or disapproval, no change or amendment of the zoning, subdivision or other governing ordinance or plan shall affect the decision on such application adversely to the applicant and the applicant shall be entitled to a decision in accordance with the provisions of the governing ordinances or plans as they stood at the time the application was duly filed” (emphasis added)

In re Appeal of Heritage Bldg. Group, Inc., 2009 Pa. Commw. LEXIS 761 (Pa. Commw. Ct. July 24, 2009).