The Nickel Report

Environmental justice (“EJ”) is a central focus of the Biden administration’s environmental agenda.  On Day One in January, the administration emphasized the importance of EJ in the federal government’s efforts to tackle climate change and to address the disparate impact of decisions affecting natural resources.  In addition, many states are implementing their own EJ requirements.  In the wake of issuance of new and enhanced EJ policies by both the federal government and states, it behooves lawyers in multiple disciplines to account for EJ issues in their legal practice.  The focus of most commentary on EJ issues has been on facility siting and the impacts of “polluting” activities on minority and economically disadvantaged communities.  This article, in contrast, addresses EJ in transactional practices.  Specifically, we identify some of the EJ issues practitioners may confront and seek to manage in merger and acquisition, asset purchase and sale, real estate purchase and sale, facility siting and/or construction, Brownfields development, financing and underwriting contexts.

The U.S. Supreme Court ruled today in Atlantic Richfield Company v. Christian that private landowners at a Superfund site near Butte, Montana, can pursue state law claims in state court seeking “restoration damages” for cleanup actions that go beyond the EPA-selected remedial action. The Court also held, however, that these landowners are potentially responsible parties (PRPs) under the federal Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) and, as a consequence, must obtain EPA approval of the restoration plans before they can be implemented. Chief Justice Roberts wrote the Court’s opinion, in which five other justices joined.  Justice Alito wrote a dissenting opinion declining to sign on to the majority’s conclusion “that state courts have jurisdiction [under state law] to entertain ‘challenges’ to EPA-approved CERCLA plans,” taking the position that it was unnecessary for the Court to address this question.  In a separate dissent, Justice Gorsuch, joined by Justice Thomas, disagreed with the conclusion that the landowners were “PRPs” who needed EPA’s approval to conduct more robust cleanup at their properties than otherwise required by EPA.

Today, April 10, 2020, the U.S. Environmental Protection Agency (EPA) issued its anticipated interim guidance on impacts to operations at cleanup sites due to the COVID-19 pandemic.  The guidance memorandum, issued jointly by the heads of EPA’s Office of Land and Emergency Management (OLEM) and Office of Enforcement and Compliance Assurance (OECA) and directed to Regional EPA Administrators, focuses on adjusting response activities at cleanup sites under a number of EPA administered programs and emergency responses due to the COVID-19 situation and the myriad of state and local shelter-in-place and business curtailment orders.

Going green has gone mainstream. Perhaps nowhere is this more pronounced than in the automotive industry. J.P. Morgan estimates that, by 2030, electric vehicles (EVs) and hybrids will make up 59 percent of the global market share, up from about 1 percent in 2015. What may be the most important feature of the EV revolution is its power source: lithium-ion (Li-ion) batteries. They are not new; they have been powering cell phones and computers for years. What is new is their large-scale use to power automobiles (and, some day, trucks and buses) and significantly reduce emissions. As our colleagues Samuel L. Brown and Lauren A. Bachtel note in an article to be published in the ABA’s Natural Resource & Environment magazine, components of Li-ion batteries include metals (e.g., lithium, cobalt, nickel) that are costly to extract and process. As demand for them increases, pressure to re-use or recycle batteries will increase.

Nobody wants to live near a designated “Superfund” site. Aside from potential exposure to hazardous chemicals, the stigma associated with proximity to a Superfund site leads to loss of property value. In addition, the Superfund process is notorious for its record of protracted and expensive cleanups. In view of these well-founded concerns, a number of states have adopted voluntary cleanup programs (VCPs) as alternatives to the federal Superfund program. A well-structured and well-run VCP can keep a contaminated property out of the Superfund program while at the same time providing a mechanism for investigation and cleanup. VCPs often work particularly well to facilitate the cleanup and re-use of “Brownfields,” former industrial or commercial sites where future use is affected by real or perceived environmental contamination.

One of the first lessons that most Superfund practitioners learn is that it is no easy task to prevent EPA from placing a site on the National Priorities List. The NPL is the “list of national priorities among the known or threatened releases of hazardous substances, pollutants or contaminants throughout the United States.”[1] It “contains the most serious uncontrolled or abandoned hazardous waste sites.”[2] There are nearly 1,350 sites on the NPL today. Since the first list was issued in 1980, only 399 – or, on average, ten per year – have been deleted. That is only two per state in a decade (on average). The pace of EPA’s decision-making on proposed deletions is protracted, if not glacial. And looking to the courts for relief from the stigma of having a site on the NPL rarely bears fruit.

It therefore surprised and may even have delighted some practitioners when the DC Circuit decided, in Genuine Parts Company v. EPA, No. 16-1416 (D.C. Cir. May 18, 2018), to overturn EPA’s decision to list the West Vermont Drinking Water Contamination Site on the NPL.

The US EPA released its draft strategic plan for 2018-2022 on October 5, 2017.^[1] Not surprisingly, the draft plan differs greatly from the Obama EPA’s last strategic plan. The change in administrations has produced innumerable shifts in the policies, goals and operations of the federal government. EPA’s draft strategic plan is emblematic of these shifts.

The application of economic principles to environmental law decisions has come a long way. Today’s conflicts over cost-benefit analysis and the value of mitigation projects and trading markets are more a sign of the important and well-accepted role that economics has come to play in environmental decision-making than a fight over the threshold question of whether economics matters at all. The battle lines have shifted. Economic concepts must be taken into account. The turf on which we now fight concerns to what extent economics should drive environmental decisions.