Landowners, Developers Win Big In Wetlands Case

Building on a 2012 U.S. Supreme Court decision, the Eighth Circuit ruled on April 10th that Clean Water Act jurisdictional determinations made by the U.S. Army Corps of Engineers can be challenged in a “pre-enforcement” context. Hawkes Co., Inc. v. U.S. Army Corps of Engineers, No. 13-3067, __ F.3d __,  (8th Cir. April 10, 2015). The decision will provide project developers and landowners with a powerful tool for ensuring that regulators do not intrude on projects over which they have no jurisdiction.

Section 404 of the Clean Water Act (“CWA”) requires obtaining a permit from the U.S. Army Corps of Engineers (the “Corps”) to discharge dredged or fill materials into “navigable waters.” 33 U.S.C. § 1344. The CWA defines “navigable waters” to mean “waters of the United States.”  33 U.S.C. § 1362(7). The Corps and EPA have broadly construed “waters of the United States”  to apply to many non-navigable waterbodies, including certain wetlands not connected to a surface water. As a result, the scope of “waters of the United States,” and therefore the bounds of federal jurisdiction under the CWA,  has been a highly contentious issue, and the subject of several Supreme Court decisions and ongoing federal rulemaking.
In Hawkes, the affected landowners—owners of a peat mine—contended that the Corps had exceeded its jurisdictional authority by classifying a wetlands as “waters of the United States” subject to the CWA. Such a determination by the Corps can spell the death knell for a proposed project because an “average applicant for an individual Corps permit ‘spends 788 days and $271,596 in completing the process.’” Hawkes, slip op. at 10, quoting Rapanos v. United States, 547 U.S. 715, 721 (2006). In Hawkes, the situation was worse—Corps regulators had “repeatedly made it clear” that a permit to mine peat would ultimately be refused. Hawkes, slip op. at 10.

Previously, persons or businesses seeking to challenge a jurisdictional determination faced a no-win situation: they had to “either to incur substantial compliance costs (the permitting process), forego what they assert is a lawful use of their property, or risk substantial enforcement penalties.” Hawkes, slip op. at 8. The delays inherent in the Corps’ permitting process meant that if the challenger lost the lawsuit disputing the jurisdictional determination, the challenger could be subject to extremely high fines because the CWA authorizes penalties of $37,500 per day per violation.

The Supreme Court’s decision in Sackett v. U.S. Environmental Protection Agency set the stage for the Hawkes decision. In Sackett, the Supreme Court held that a jurisdictional determination is a final agency action subject to judicial review, and that the CWA does not preclude pre-enforcement judicial review of administrative compliance orders issued by the agency to the landowner. 566 U.S. ___, 132 S. Ct. 1367 (2012). The Hawkes decision takes the Sackett decision one step further by holding that the CWA allows these jurisdictional determinations to be challenged even before the agency commences any enforcement action, administrative or otherwise.

Outlook

The Hawkes decision creates a circuit split because a prior Fifth Circuit case determined that jurisdictional determinations are not reviewable in court in a pre-enforcement context. See Belle Co., LLC v. U.S. Army Corps of Eng’rs, 761 F.3d 383 (5th Cir. 2014), cert denied, 83 U.S.L.W. 3291 (Mar. 23, 2015) (No. 14-493). Given the Supreme Court’s decision in Sackett, the circuit split on a topic of significant controversy, and the Court’s consistently strong interest in CWA jurisdiction—see United States v. Riverside Bayview, 474 U.S. 121 (1985), Solid Waste Agency of Northern Cook County v. U.S. Army Corps of Engineers, 531 U.S. 159 (2001), and Rapanos v. United States, 547 U.S. 715 (2006)—review by the U.S. Supreme Court is a distinct possibility.

- Josh Bloom and Dave Metres

For more information, contact Joshua Bloom at (415) 228-5406 or jab@bcltlaw.com, or David Metres at (415) 228-5488 or dmm@bcltlaw.com.

Fracking Contractor Sentenced to 28 Months in Prison for Clean Water Act Violation

A federal court in Ohio has handed down a 28-month prison sentence and imposed a $25,000 fine for dumping fracking waste in violation of the Clean Water Act.

 

The defendant, Benjamin Lupo, is the former owner of Hardrock Excavating, a Youngstown, Ohio oil and gas services contractor. Lupo had previously pled guilty  to one count of making an unpermitted discharge of fracking waste. In pleading guilty, Lupo admitted to ordering an employee to discharge wastewater to a tributary of the Mahoning River more than 30 times over a three-month period from a Hardrock Excavating facility. The discharge caused waste liquid that included a mixture of brine and oil-based drilling mud to enter the tributary and the Mahoning River.

 

The releases were discovered after the Ohio Department of Natural Resources received an anonymous tip in January 2013 reporting illegal after-hours discharges coming from the Hardrock Excavating facility. State inspectors went to the facility and discovered a hose releasing liquid into the storm drain. A sample of the discharge subsequently collected by the state contained benzene, toluene, and other pollutants, officials said.

 

The employee, Michael Guesman, pled guilty in August 2013, admitting to running a hose from a 20,000 gallon storage tank filled with fracking wastewater to a nearby storm drain and draining the contents of the tank into the drain in August 2013. Guesman received three years of probation at his sentencing in March 2014.

 

The aggressive prosecution of Lupo highlights the need for robust environmental compliance programs in the oil and gas industry. A comprehensive and consistently implemented compliance program is the best insurance against the fines, negative publicity, and in some instances, time in custody that well operators and consultants face following a conviction of an environmental crime. This is particularly true for fracking operations, given the intense public scrutiny—and the possibility of significant prison terms—that fracking operators currently face.

 

--Davina Pujari and Chris Jensen

 

For more information, contact Davina Pujari at (415) 228-5459 or dxp@bcltlaw.com, or Chris Jensen at (415) 228-5411 or cdj@bcltlaw.com.

 

California Water Board Finalizes New Water Quality Requirements for Industrial Facility Storm Water Discharges

For the first time in 17 years, industrial facilities in California must contend with a new set of legal requirements controlling storm water.  On April 1, 2014, the California State Water Resources Control Board (State Board) formally adopted the final draft of the general NPDES permit that regulates storm water discharges associated with industrial activity, known as the “Industrial General Permit.” 

The new Industrial General Permit imposes additional permitting requirements and expands the scope of the Permit to cover new categories of industrial facilities.  Facility and EHS managers should review the new permit and ensure their facilities are on-track to be in compliance when the new Permit becomes effective on July 1, 2015.   Failure to comply with the new Permit could expose facilities to regulatory action by the State Board and the Regional Water Quality Control Boards, or result in a citizen group lawsuit under the Clean Water Act.

As discussed previously by Barg Coffin attorneys here, here, and here, the new Industrial General Permit will impose mandatory best management practices (“BMPs”), require increased sampling and monitoring, and mandate technical reports and action plans if monitoring shows that storm water discharges exceed certain pollutant concentrations. 

According to the State Board, there are over 10,000 California industrial facilities currently enrolled under the previous Industrial General Permit, and each will need to confirm that their operations and practices comply with the new requirements. 

Additionally, for the first time, some facilities not previously subject to regulation will be required to notify the State Board that their industrial activities are not exposed to rain water and will not discharge to storm drains in order to obtain an exemption from the substantive requirements of the Industrial General Permit.

Additional information is available on the State Board website, and the Order adopting the Industrial General Permit (2014-0057-DWQ) is available here.

-Don Sobelman and Dave Metres

For more information, please contact Don Sobelman at (415) 228-5456 or des@bcltlaw.com, or Dave Metres at (415) 228-5488, or dmm@bcltlaw.com

General Statements About Future Expansion Do Not Trigger NEPA “Cumulative Impact” Analysis Requirement For CWA Section 404 Permit

 In a ruling that stands to benefit project proponents, the Ninth Circuit Court of Appeals, in Jones v. National Marine Fisheries Service,  Case No. 11-35954 (9th Cir., Dec. 20, 2013), found that the Army Corps of Engineers was not required to consider the cumulative future impacts of a mining project based on the mining company’s general statements about wanting to widen the scope of its mining activities in the future.  Judge Milan Smith authored the unanimous decision, wherein the panel affirmed the district court’s summary judgment in favor of the Army Corps of Engineers in an action challenging the Corps’ issuance of a Section 404 permit under the Clean Water Act for a project to mine mineral sands near Coos Bay, Oregon.

The plaintiffs argued that the mining company’s general statements that it intended to expand its mining operations along a 50-mile stretch of the Oregon coast, as well as the Corps’ consideration of three alternative sites analyzed in the Environmental Assessment as possible future projects, required the Corps to analyze the cumulative impacts of the permitted mining project under NEPA’s implementing regulations. 

The Court disagreed, concluding that the mining company’s stated desires, which included a statement that it intended to mine along the Oregon coast “from Cape Arago to Port Orford,” did not give specific information as to the number, scope or location of any future projects. 

The Court also found that the three alternative sites analyzed in the EA faced significant hurdles to development.  Relying on its prior decisions in Lands Council v. Powell, 395 F.3d 1019 (9th Cir. 2005), Environmental Protection Information Center v. United States Forest Service, 451 F.3d 1005 (9th Cir. 2006), and Northern Plains Resource Council, Inc. v. Surface Transportation Board, 668 F.3d 1067 (9th Cir. 2011), the Court held that the mining company’s intended future activities were speculative and not reasonably foreseeable, and therefore, cumulative impact analysis under NEPA was not required.

The Court also found that the Corps adequately examined the risks associated with potential hexavalent chromium generation from the proposed mining project and conducted an adequate “alternatives analysis” prior to issuing the Section 404 permit.

-- Samir Abdelnour

For more information, please contact Samir Abdelnour at sja@bcltlaw.com, or (415) 228-5443.

New Draft Storm Water Permitting Requirements Issued

California water regulators recently published a new draft of permitting requirements applicable to many businesses – including many businesses never before subject to water quality regulation.  After 16 years of settled practice, businesses will face a significant change to storm water regulation in California if the draft requirements become the law.

On July 19, 2013, the California State Water Resources Control Board (“State Board”) issued a draft general NPDES permit that regulates storm water discharges associated with industrial activity.  This “Industrial General Permit” would require industrial facilities to comply with a set of new requirements. 

The new Industrial General Permit would impose mandatory best management practices (“BMPs”), require increased sampling and monitoring, and mandate technical reports and action plans if monitoring shows that storm water discharges exceed certain pollutant concentrations.  In addition, “light industry” facilities, previously exempt upon a simple self-certification, would now have to file an annual, public report and could be subjected to inspections by water regulators.

As under the current Industrial General Permit, facilities that fail to comply with Permit requirements would be subject to civil penalties of up to $37,500 per day per violation under the federal Clean Water Act.  Accordingly, all businesses and industrial facilities would be well advised to develop a sophisticated understanding of these new requirements.

The State Board is accepting written comments and evidence on the proposed Industrial General Permit until noon on August 29, 2013.  To learn more, the public can attend a web conference workshop on the new permit on August 14, or attend the public hearing on August 21 in Sacramento.  Following the comment period, final adoption of the Industrial General Permit is scheduled for early 2014. 

Additional information is available on the State Board website at http://www.swrcb.ca.gov/water_issues/programs/stormwater/industrial.shtml

--David Metres 

UPDATE, August 19, 2013:  The State Water Resources Control Board has extended the public comment period from August 29, 2013 to 12:00 noon September 12, 2013. 

UPDATE September 12, 2013: The State Board has once again extended the public comment period from September 12 to September 19, 2013.

Attorneys from Barg Coffin Lewis & Trapp, LLP, a nationally-recognized environmental law and litigation firm in San Francisco, will continue to monitor these developments. For more information, please contact Donald Sobelman, des@bcltlaw.com, (415) 228-5456, or David Metres, dmm@bcltlaw.com, (415) 228-5488.