The Nickel Report

For decades, the precise scope of the Clean Water Act’s point source permitting program has been the subject of much controversy.  Over the past several years, the question of whether that program—known as the National Pollution Discharge Elimination System (“NPDES”)—regulates discharges to groundwater that is hydrologically connected to surface water has produced a number of conflicting decisions and a torrent of commentary and public debate.  The Fourth and Ninth Circuits recently concluded that the NPDES program regulates such discharges under certain circumstances, while the Sixth Circuit reached the opposite conclusion, setting up potential review of the issue in the United States Supreme Court.  See Upstate Forever v. Kinder Morgan Energy Partners, L.P., 887 F.3d 637 (4th Cir. 2018); Haw. Wildlife Fund v. Cty. of Maui, 886 F.3d 737 (9th Cir. 2018); Ky. Waterways All. v. Ky. Utils. Co., No. 18-5115, 2018 WL 4559315 (6th Cir. Sept. 24, 2018); Tenn. Clean Water Network v. Tenn. Valley Auth., No. 17-6155, 2018 WL 4559103 (6th Cir. Sept. 24, 2018).

EPA has finalized a regulation you can live with, but someone dissatisfied with that result has sued the Agency.  Should you intervene to defend EPA’s action?  Is it worth it?  Does the court really pay attention to the arguments of an intervenor?  A recent decision by the D.C. Circuit in Masias v. EPA, No. 16-1314 (D.C. Cir. Oct. 19, 2018), illustrates the value of participation as a Respondent-Intervenor in these circumstances.

On October 18, 2018, the Federal Energy Regulatory Commission (Commission) held its October 2018 open meeting. Commissioner Chatterjee again assumed the gavel on behalf of Chairman McIntrye, who was absent for the second consecutive open meeting. McIntyre subsequently announced that he would step down from the chairmanship due to continuing health issues.

Highlights of the meeting follow:

Continuing its vanguard approach to environmental regulation, California is poised to incorporate Total Maximum Daily Load (TMDL)-specific requirements into its industrial storm water general permit (IGP). TMDLs are pollutant- and water body-specific and establish the maximum amount of a pollutant a water body can receive while meeting water quality standards. Once effective, these new requirements will provide additional avenues of attack for the already active Clean Water Act citizen suit docket.

In my April 2, 2018, post, I asked whether the US Court of Appeals for the Fifth Circuit would put another nail in the coffin of NSR enforcement for projects completed a long time (some of them, decades) before EPA or other plaintiffs filed a complaint alleging NSR violations. A three-judge panel of the Court of Appeals answered in United States v. Luminant, No. 17-10235 (5th Cir. Oct. 1, 2018), by unanimously ruling that the statute of limitations bars civil penalties for NSR violations that allegedly occurred more than five years before the filing of the complaint. But in a 2-1 decision, the majority ruled that, while injunctive relief is also barred in those circumstances for non-government plaintiffs (Sierra Club, in this case), injunctive relief is still “available” when the government is seeking to enforce the Clean Air Act. In her dissent in part, Judge Elrod said she would have affirmed the district court’s dismissal of the case in all respects, characterizing any “injunctive” relief sought by the government as “really just time-barred penalties in disguise.”

The implementation of California’s ambitious Assembly Bill 617 (AB 617) is well under way, but it is still very uncertain whether it can or will achieve its intended outcome. Despite the long process to select the initial list of communities to be included in the in the first year of CARB’s Community Air Protection Program (CAPP) (CARB’s AB 617 implementation program), the hard work to ensure AB 617 is a success remains—namely the development and implementation of the emissions monitoring/reduction plans in the selected disadvantaged communities. In the end, the biggest impediment to AB 617’s successful implementation might be the law’s own requirements, specifically its accelerated implementation schedule, which may not provide California’s air quality management districts (air districts) with enough time to achieve the law’s goals.

On September 20, 2018, the Federal Energy Regulatory Commission (FERC or Commission) held its September 2018 open meeting. This meeting did not include Chairman McIntyre, who is recovering from surgery. Commissioner Chatterjee assumed the gavel on his behalf for the meeting.

The U.S. Court of Appeals for the Second Circuit in July issued a long-awaited decision in the case Cooling Water Intake Structure Coalition v. U.S. Environmental Protection Agency (EPA), upholding the EPA’s 2014 Rule establishing requirements pursuant to Clean Water Act (CWA) section 316(b) for cooling water intake structures (CWIS) at existing facilities. The court also upheld the biological opinion (BO) and incidental take statement (ITS) issued by the U.S. Fish and Wildlife Service and National Marine Fisheries Service (the Services) on the 2014 Rule.

The Second ...

Depending upon the assets being acquired or project being developed, a well-designed due diligence plan can be a critical component in managing transaction risk both before and after closing or commercial operation. Adeptly managing the due diligence process requires careful thought to appropriate timing and scope at both the front and back ends.

Among the most critical items in ensuring a successful outcome are consulting decision-makers who are driving the transaction and engaging professionals to provide appropriate support well in advance. Too often, key risks are overlooked or not adequately allocated or managed as a result of a rushed or improperly focused due diligence effort. Particularly for assets or projects with an inherently higher environmental, health and safety, or social (EHSS) impact potential, attempting to manage risk through the purchase and sale or development agreements alone also may not suffice. For example, avoiding a risk by carving out particular assets, employing third-party risk management strategies such as insurance policies, and post-acquisition integration or stakeholder engagement plans can be among the more effective means of managing EHSS risk—but these each require careful strategic planning by a team of professionals with the skills and experience to navigate a transaction’s complexities, particularly in a cross-border context.