Environmental Enforcement for Corporate Counsel

May 13, 2014

globe with gavelFor corporate counsel, staying compliant with environmental and energy laws is all about staying up-to-date. Environmental regulations and precedent are constantly being updated, frequently with more stringent compliance standards. What’s legal this year might be illegal in the next.

The Current Role of Agency Enforcement

Enforcement action by the U.S. Environmental Protection Agency and Department of Justice looms large for many in-house counsel. The trends are evolving and in many ways follow the activity trends in environmental and energy law. While no company can risk the assumption that they are flying under the radar of an agency with enforcement authority, EPA and DOJ’s priorities and direction have recently received attention as EPA struggles to cope with budget and staffing cuts. To stay up-to-date, keep an eye out for public information on these issues.

EPA publishes both “multi-year national enforcement initiatives” and a strategic plan. EPA’s enforcement priorities are evaluated every three years, with the most recent iteration issued in the beginning of 2013. The document is available online.

The agency’s strategic plan, released last month, reveals a course correction to focus on enforcing “high-impact” cases with the “biggest impact” on human health, while pursuing fewer overall cases. EPA made this decision based on budgetary and staffing constraints. It will also introduce “Next Generation Compliance,” a program focused on increasing technology-based enforcement through the use of “advanced monitoring” and “electronic reporting.” The plan is available online.

The Justice Department also releases an annual report of its accomplishments. In April, DOJ released its Fiscal Year 2013 results for the Environmental and Natural Resources Division, which included over $1.78 billion in civil and stipulated penalties, cost recoveries, natural resource damages and other civil monetary relief, according to the Department. It obtained another almost $6.5 billion in corrective measures, through court orders and settlements, the report says.  The report is available online.

Success through Settlement

Last month the Justice Department filed a consent decree with Lowe’s Home Centers LLC over the home improvement store’s alleged failure to follow lead paint rules. U.S. v. Lowe’s Home Centers, No. 14-cv-449, complaint and consent decree filed, 2014 WL 1496309 (S.D. Ill. Apr. 17, 2014). The agency characterized the action as its largest Toxic Substances Control Act settlement to date.

The Department made news late last year over its decision to pursue criminal enforcement against a Duke Energy subsidiary for bird strikes at two Wyoming wind energy projects. The company pleaded guilty to two misdemeanor violations of the Migratory Bird Treaty Act, and agreed to pay $1 million related to golden eagle and other bird deaths. U.S. v. Duke Energy Renewables Inc., No. 13-cr-268 (D. Wyo. Nov. 7, 2013). In response, the U.S. Fish and Wildlife Service issued a rule expanding eagle take permits for a length of 30 years to lessen the burden on renewable energy projects. Eagle Permits; Changes in the Regulations Governing Eagle Permitting, 78 Fed. Reg. 73704-01 (Dec. 9, 2013). It may not come as a surprise, but Reuters reported this month that the new rule is being threatened by legal challenge from the American Bird Conservancy. Stay tuned to see if an initial enforcement success parlays into long-term regulatory change.

While these high-profile cases rightfully get media attention, many enforcement actions plug away at legacy CERCLA sites, or take bad actors to task. One quirky example came last year when the Justice Department settled with a print shop owner who allegedly sold a semi-trailer on Craigslist in 2006. U.S. v. Weiss, 2013 WL 5937912 (D. Colo. Nov. 6, 2013). For $900, a buyer could have an empty trailer, but for $300 less, the trailer could be purchased as-was: “filled with various containers of screen printing materials, including hazardous substances,” the order said. A $70,000 Superfund site was created when the discount buyer disposed of the hazardous materials at a location in Denver.

It remains to be seen whether these smaller cases will receive federal attention in the coming years, and how state agencies will respond to enforcement gaps.

Success of Litigation Priorities

In the courtroom, success has not come as easily for EPA. The agency saw an agricultural enforcement effort rebuffed by a West Virginia District Court Judge late last year. EPA litigated an enforcement case against a CAFO owner, and the farmer was ultimately successful when the judge ruled the waste did not meet the definition of “agricultural stormwater runoff.” Alt v. U.S. Envtl. Prot. Agency, 2013 WL 5744778 (N.D.W. Va. Oct. 23, 2013). EPA and intervening plaintiffs have appealed the decision to the Fourth U.S. Circuit Court of Appeals.
EPA is also struggling to make good on enforcement initiatives in the air pollution arena. EPA has pursued several Clean Air Act enforcement cases under the Prevention of Significant Deterioration program, where it took companies to task for failing to obtain major modification permits. In at least three cases the agency has fallen short of convincing a court either that permits were required or that its enforcement action was timely. The cases include U.S. v. Midwest Gen., 720 F.3d 644 (7th Cir. July 8, 2013) and U.S. v. EME Homer City Gen., 727 F.3d 274 (3d Cir. Aug. 21, 2013).

So in at least two areas, EPA’s enforcement priorities have not been given the red-carpet treatment in federal court. And as budgets continue to shrink, EPA and the Justice Department have tough decisions ahead in determining which cases are worthy of the “biggest impact” crown.

Looking to the Future

It’s hard to consider it energy and environmental law one field — between the convergence of energy and environmental issues, the mainstreaming of renewable energy projects and associated issues, there’s no one “typical” case.  In the climate change arena, novel theories will continue to develop as science and regulations emerge in this sector. There are also a lot of rough edges in the energy extraction field, where citizen suits will continue to shape the law. It will be the challenge of the agencies – with input by the regulated community and their counsel – to craft and enforce these regulations in a sensible way.

Learn more about environmental and energy law in this interview with the author.