Exxon argued unsuccessfully that there were more than 300 entities, including New Hampshire, that contributed to the contamination and that should share the liability.  Exxon’s argument that it added MTBE to comply with Clean Air Act air quality standards also failed to persuade the jury.

The jury’s $236 million verdict in favor of New Hampshire stands among the top jury verdicts issued this year and is the largest verdict ever awarded to the State of New Hampshire.  Even with this quarter of a billion dollar award, it could have been worse for Exxon.  The jury initially proposed an award exceeding $800 million, but the trial court adjusted the award to mirror Exxon’s stake in the New Hampshire gas market between 1988 and 2005.

Because Exxon plans to appeal the verdict, it is unlikely that any money will change hands in the near future.

Maximum penalties for a knowing violation of federal hazardous material transportation requirements increased to $75,000 (or $175,000 if the violation results in death, serious personal injury or substantial destruction of property).  Similarly, a knowing violation of hazardous material transportation requirements applicable to the design, manufacturer, fabrication inspection, marking, etc., of a package or container which is represented to be qualified for use for the transportation of hazardous materials was similarly increased to a maximum of $75,000 for each violation and $175,000 if the violation results in death, serious personal injury or substantial destruction of property.  Consistent with current law, each day of violation is subject to the maximum penalty (except for violation related to packaging or manufacturer qualifications).  Accordingly, multi-day violations can result in substantial penalties.

The PHMSA rulemaking also eliminated a required minimum penalty for most violations except for a $450 minimum penalty for violation of training requirements.  Nevertheless, the preamble to the rule clearly indicates that PHMSA intends to demand penalties in most circumstances.

The decision of the Fourth Circuit in Ashley II serves notice that a party satisfying the all appropriate inquiries standard to qualify as a BFPP must continue post-closing to abide its continuing duty of appropriate care with respect to hazardous substances located at the facility in order to maintain the BFPP defense.

I recently published an article about this ruling, providing more detail on the arguments and decision

The Environmental Protection Agency (“EPA”) argued that the definition of “industrial activity” pertained to operations of a more fixed and permanent nature, rather than to the transportation of logging raw materials. The Supreme Court agreed and overruled the Ninth Circuit Court of Appeals. The Supreme Court ruled that since the discharges at issue were not “associated with industrial activity,” such discharges did not require NPDES permits because they fell within the Clean Water Act’s general exemption for “discharges composed entirely of stormwater.”

Case Significance

The EPA’s November 30, 2012 amendment to the Industrial Stormwater Rule removed uncertainty as to the permit requirements for discharges from logging roads going forward. The Decker decision also clarified that companies do not have liability for past discharges of channeled stormwater runoff from logging roads conducted without NPDES permits. This is significant because the Act allows private parties to file citizen’s suits to enforce its provisions and to recover attorney’s fees and costs. Moreover, civil penalties for violation of the Act may be severe and result in fines of up to $25,000 per day for each violation.

The Decker decision is also significant because of the Supreme Court’s interpretation of the Industrial Stormwater Rule as extending only to traditional industrial buildings such as factories and associated sites and other relatively fixed facilities. Other transportation or mobile industries should take note of this holding.  The same logic could potentially be applied to argue that such operations are not “associated with an industrial activity” and are likewise exempt from NPDES permit requirements.

I invite you to read an article that I recently published, which explains the background, the Decker decision, and the significance of this case in more detail.

1. Tenants Conducting Environmental Due Diligence to Qualify for Bona Fide Prospective Purchaser Protection For Contaminated and Formerly-Contaminated Properties
2. Changes Coming to ASTM E-1527 Phase I Environmental Site Assessments
3. More Lenders Following SBA’s Environmental Risk Management Guidance

 
I invite you to learn more about these changes in environmental due diligence to the commercial real estate market by attending a webinar on June 4 at 10:00 a.m. EST. I will be presenting on this topic, along with Kent Johnson of August Mack Environmental, Inc.

Unhappy with the progress of the remediation, in 2007, the City sued Kinder Morgan and its predecessor alleging the petroleum releases from the Mission Valley Terminal contaminated the Property and damaged the City.  The City claimed approximately $250 million in damages, including $126 million in damages to remediate its water supply and $120 million in real estate “loss of use” damages.

To learn more about this lawsuit, please read Bill Wagner's recent blog post on Commonground.

To learn more, I invite you to read my recent article.

Under the CAA, each state submits its SIP, the state’s plan to comply with federal air quality standards, to the EPA for approval. Because California had made proposed revisions to its SIP, it was required to obtain EPA’s approval. California’s revisions called for emissions reductions from various sources, including non-road engines. After EPA proposed approving California’s revised SIP, American submitted comments asking EPA to deny California’s revisions and again requested that EPA amend its Section 209(e) regulations. Despite American’s comments, EPA approved the SIP. Thus, EPA declined reviewing its Section 209(e) regulations and characterized American’s petition as yet another attempt to salvage a favorable outcome. EPA’s decision led to American filing suit in the Ninth and D.C. Circuits to challenge the denial of its petition. The Ninth Circuit proceedings were stayed pending the outcome of the D.C. Circuit case.

In the D.C. Circuit case, American challenged EPA’s approval of California’s revised SIP while EPA argued that, under Section 307(b)(1) of the CAA, the D.C. Circuit did not have jurisdictional authority to address American’s claims. Looking at Section 307(b)(1)’s language, the court concluded that venue would be proper in one of two situations, neither of which American established. Namely, American could not demonstrate that EPA’s approval of California’s SIP was “nationally applicable” or had a “nationwide scope or effect.” In fact, the court noted that most EPA approvals of a state SIP constitute the “prototypical ‘locally or regionally applicable’ action that may be challenged only in the appropriate regional court of appeals.”  Therefore, the D.C. Circuit ruled that American had to pursue its claim in the Ninth Circuit.

Similarly, the court rejected American’s claim that it was entitled to “a fresh round of judicial review” of EPA’s Section 209(e) regulations, this time on statute of limitations grounds. Section 307(b)(1) establishes a general 60-day period for challenging EPA regulations, unless the challenge is based on grounds arising after the 60-day period expires. American argued that because its latest petition was part of the comments submitted in response to EPA’s proposed approval of California’s revised SIP, EPA’s denial of the petition fell within Section 307(b)(1)’s “arising after” exception. Rejecting American’s argument, the court explained that the CAA is a statutory scheme “in which Congress specifically address[ed] the consequences of failure to bring a challenge within the statutory period.” Therefore, EPA’s denial of American’s petition did not qualify as an “arising-after” ground. Restating its decision in American Road & Transportation Builders Association v. EPA, 588 F.3d 1109 (D.C. Cir. 2009) (ARTBA I), the court ruled that American’s challenge to EPA’s 209(e) regulations was time-barred.

The D.C. Circuit’s opinion demonstrates the importance of closely watching and making timely challenges to the EPA’s administrative actions. Taft’s environmental practice group has significant experience effectively navigating administrative issues. For more information, please contact me or any other member of Taft’s environmental practice group.