Environmental Law ReSource : Environmental Lawyer & Attorney : Reed Smith Law Firm : Climate Change, Sustainability

This post was written by David Wagner.

Recently, Reed Smith represented Dravo Corporation in a case captioned Morrison Enterprises, LLC v. Dravo Corporation, before the District Court for the District of Nebraska and the Eighth Circuit. Given that several significant issues were addressed in the Eighth Circuit’s decision, we address the key holdings in two different posts. This post addresses the issue of cost recovery versus contribution. A separate post discusses two issues relating to application of the statute of limitations.

The Decision: CERCLA’s Contribution Section Provides the Exclusive Remedy for a Liable Party Compelled to Incur Response Costs Pursuant to an Administrative Settlement

For four years, courts have been addressing an issue under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) left open by the U.S. Supreme Court in United States v. Atlantic Research Corp., 551 U.S. 128 (2007): whether a liable party sustaining expenses pursuant to a settlement following a suit under CERCLA Sections 106 or 107(a) could recover such compelled costs under Section 107(a), Section 113(f), or both. In ruling on this issue, the Eighth Circuit Court of Appeals recently held that CERCLA Section 113(f) – CERCLA’s contribution section – provides the exclusive remedy for a liable party compelled to incur response costs pursuant to an administrative or judicially approved settlement under Sections 106 or 107. Morrison Enterprises, LLC v. Dravo Corporation, 2011 WL 1237526 (8th Cir. Apr. 5, 2011).

In the case, Appellants Morrison Enterprises, LLC (Morrison) and the city of Hastings, Nebraska – both of which were liable under CERCLA for hazardous substances released into the groundwater – sued Dravo Corporation, a manufacturing site owner also liable under CERCLA. The Appellants filed suit under CERCLA Section 107 and sought to recover groundwater contamination costs related to the operation of Well D, a groundwater extraction and treatment system located downgradient of each party’s relevant source of contamination. The District Court granted Dravo Corporation’s motion for summary judgment, finding that Section 113(f) was the Appellants’ exclusive remedy. The Circuit Court affirmed.

At the outset, the Circuit Court explained that “liable parties which have been subject to Section 106 or 107 enforcement actions are still required to use Section 113.” In ruling for Dravo Corporation, the court held that, because Morrison and the city of Hastings were liable parties compelled to incur response costs pursuant to an administrative or judicially approved settlement under Sections 106 or 107, they could only bring a Section 113(f) claim for contribution.

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This post was written by Steven Nolan.

Recently, Reed Smith represented Dravo Corporation in a case captioned Morrison Enterprises, LLC v. Dravo Corporation, before the District Court for the District of Nebraska and the Eighth Circuit. A number of significant issues were addressed in the Eighth Circuit’s decision. This post discusses two issues relating to application of the statute of limitations A separate post addresses the issue of cost recovery versus contribution.

The Decision

The Eighth Circuit issued its opinion in Morrison Enterprises, LLC v. Dravo Corporation, 2011 WL 1237526 (“Morrison”) on April 5, 2011. Two issues relating to the statute of limitations were addressed. First, the court found that a cost recovery suit under §107 of the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), 42 U.S.C. §9607 was not a “subsequent action” under that section where the plaintiff had previously sued the defendant for contribution under Section 113 of CERCLA. Second, the Court found that a decades-long program to install a municipal water supply system was a remedial action subject to the 6-year statute of limitation commencing from the initiation of construction set forth in 42 U.S.C. §9613 (g) (2) (B), and not a removal action, for which the statute of limitation did not begin to run until the project was completed. 42 U.S.C. § 9613 (g) (2) (A).

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This post was written by Nicolle Bagnell and Ariel Nieland.

Last week, Pennsylvania Department of Environmental Protection (DEP) Secretary Michael Krancer gave Marcellus Shale natural gas drilling operators a deadline of May 19 by which to voluntarily stop delivering wastewater produced from natural gas extraction to water treatment facilities. This request from the DEP comes as a result of concerns over increased levels of bromides detected in the Allegheny and Beaver rivers in western Pennsylvania. In August 2010, the prior administration implemented new regulations addressing the potential for contamination from "total dissolved solid" (TDS), a by-product of natural gas extraction. Bromides, which are also present in wastewater containing TDS, can become toxic when combined with chlorine used for water disinfection at treatment facilities. The 2010 TDS regulations imposed more stringent standards on publicly owned treatment works and centralized waste treatment facilities for the treatment of TDS discharges. However, the regulations included a "grandfather clause" allowing for facilities that had historically accepted drilling wastewater to continue to do so, provided that the total amount of wastewater they received did not increase. Out of the 27 "grandfathered" facilities, nearly half have voluntarily ceased accepting Marcellus Shale wastewater in the past year. DEP's request calls upon operators to stop delivering wastewater to the remaining 15 facilities in hopes that concentrations of bromides will "quickly and significantly decrease" as a result.

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This post was written by Paul Dillon.

In the months leading up to the REACH first registration date on 1 December 2010, the focus of the European Chemicals Agency (ECHA) was understandably on the 25,000 registration dossiers submitted. But the ECHA’s focus is shifting and it is now turning its attention to compliance. This comprehensive client bulletin identifies 10 REACH enforcement trends in Member States and what to expect from regulators in the near future, including site inspections. It then recommends ways to prepare for an inspection.

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This post was written by David Wagner.

This week, Reed Smith teamed up with AECOM to present its second seminar on clean air permit issues related to oil and gas development in the Marcellus Shale. At the event, we discussed greenhouse gas (GHG) emission sources, GHG reporting requirements, the federal Tailoring Rule (including Prevention of Significant Deterioration and Title V issues), New Source Performance Standards, and single stationary source determinations for the oil and gas industry. If you missed it, here are the slides and audio. The event featured Jennifer Smokelin and David Wagner of Reed Smith and Tom Bianca of AECOM.

At the first teleseminar, we discussed the Pennsylvania Department of Environmental Protection’s (DEP) air permitting process, focusing on the general permits applicable to oil and gas activities (GP-5, GP-9, GP-11), requests for determinations, and the permit exemption list, as well as DEP’s proposals to narrow the oil and gas permit exemption list and modify GP-5. Check back for details on the remaining teleseminar that will address aggregation issues.

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This post was written by Steven Regan.

On March 28, 2011, House Bill No. 1211 (Printer’s No. 1321) (“HB 1211”) was referred to the Pennsylvania House Committee on Environmental Resources and Energy. HB 1211 would amend section 205 of the Pennsylvania Oil and Gas Act (58 P.S. § 601.205) to add an arbitrary two mile well location restriction. Under the proposed amendment, “[A] permit for a well intending to produce from an unconventional shale formation shall not be issued by the department unless it is located not less than two miles from the nearest well drilled into an unconventional shale formation. . . The well spacing requirements under this subsection shall not be waived.” HB 1211 defined an unconventional shale formation as a “shale formation that typically produces natural gas through high volume hydraulic fracturing or horizontal well bores,” and includes the Rhinestreet, Burket, Marcellus, Mandata and Utica shale formations and other formations designated by the department (DEP)”.

Rather than impose a strict, arbitrary well spacing requirement, the purpose of the Oil and Gas Act to “permit the optimal development of the oil and gas resources of Pennsylvania . . .” (58 P.S. § 601.102(1)) could be easily served if wells producing from unconventional shale formations were governed by the existing well spacing requirements under Section 407 of the Oil and Gas Conservation Law (58 P.S. § 407), e.g., factors such as the surface topography, a well spacing plan and other available geological and scientific data.

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This post was written by David Wagner.

A draft proposed rule that could exempt the geologic sequestration of carbon dioxide (CO2) from federal hazardous waste regulations is now moving through the regulatory process. On March 22, 2011, the U.S. Environmental Protection Agency (USEPA) sent a draft proposed rule to the White House Office of Management & Budget (OMB) that could conditionally exempt CO2 sequestered underground from Resource Conservation and Recovery Act (RCRA) requirements. It appears the rule would address the RCRA liability of owners and operators of carbon capture and sequestration (CCS) wells should CO2 leak and contaminate underground sources of drinking water. Following regulatory review by OMB, USEPA anticipates that the proposed rule will be published in the Federal Register in May 2011.

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This post was written by David Wagner.

On March 31, 2011, a bill (S. 699) was introduced in the U.S. Senate that would authorize the U.S. Department of Energy (DOE) to enter into cooperative agreements to provide financial and technical assistance to as many as 10 large-scale (1 million tons of injected carbon dioxide or more) carbon capture and storage (CCS) demonstration projects at industrial sources. Along with three co-sponsors, Sen. Jeff Bingaman (D-NM) introduced the bi-partisan bill and it was referred to the Senate Committee on Energy and Natural Resources. This is the first step in the legislative process and it’s likely that the next step will be a public hearing on the proposal.

The proposed bill provides liability protection and federal indemnification for the CCS demonstration projects. Under the bill, DOE is authorized to indemnify projects up to $10 billion for personal, property and environmental damages that might be above what is covered by insurance or other financial assurance measures. Upon receiving the closure certificate for the injection site, the site may be turned over to the federal government for long-term site management and ownership. The proposed bill also outlines criteria for site closure certification and includes provisions for siting the demonstration projects on public land. In addition, it would establish and fund a CCS training program for state regulators.

By the way, this new proposed legislation (S. 699) is extremely similar to a 2009 bill (S. 1013) that was reported out of the Senate Committee on Energy and Natural Resources but died on the Senate floor as part of a larger energy legislative package that same year.

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This post was written by David Wagner.

Last week Senators Jeff Bingaman (D-NM) and Lisa Murkowski (R-AK) released a white paper soliciting input on a clean energy standard (“CES”) from a broad range of interested parties. The white paper lays out some of the key questions and potential design elements of a CES and seeks responses to six general policy questions that the Senate Energy and Natural Resources Committee is considering in the development of a CES program. This effort builds on the 2011 State of the Union address in which President Obama urged lawmakers to establish a CES with a goal of 80 percent of the nation’s electricity to come from “clean” sources by 2035. The President emphasized that a CES would recognize electricity from not only renewable energy sources but also nuclear, coal with carbon capture and storage technology and natural gas.

Your response to the white paper is due by April 11, 2011.

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