Topics discussed this week include:

  • Environmental group brings Clean Water Act citizen suit against Shell and Motiva that alleges climate change-related harms.
  • District court stays CERCLA unilateral administrative order.
  • District court overturns Department of the Interior stay of rule governing royalties for oil, natural gas and coal production on federal and Indian lands.
  • Second Circuit upholds New York State’s decision to deny Clean Water Act certification to proposed pipeline.
  • C. Circuit holds that FERC should consider power plant emissions in pipeline environmental impact statement.
  • Hurricane Harvey affects Gulf Coast energy and chemical resources.

Environmental group brings Clean Water Act citizen suit against Shell and Motiva that alleges climate change-related harms. The Conservation Law Foundation filed a Clean Water Act citizen suit against Royal Dutch Shell plc and various affiliates (Shell), as well as Motiva Enterprises in the District of Rhode Island, alleging that Shell was violating its Rhode Island Pollutant Discharge Elimination System (RIPDES) permit at its Providence Terminal by failing to properly account for the effects of climate change. The Providence Terminal’s RIPDES permit requires Shell to develop a stormwater pollution prevention plan (SWPPP) that addresses pollutants reasonably anticipated to affect stormwater through best management practices and other methods. The plaintiff’s novel legal theory is that Shell is violating the Providence Terminal’s RIPDES permit because the company allegedly “has failed to consider and address the risks of sea level rise, increased and/or more intense precipitation, increased magnitude and frequency of storm events, and increased magnitude and frequency of storm surges” in its SWPPP. The plaintiff also alleges other statutory and RIPDES permit violations at the Providence Terminal, some of which are climate change-related.

District court stays CERCLA unilateral administrative order. In a rare move, the District of Rhode Island stayed an U.S. Environmental Protection Agency (EPA) unilateral administrative order (UAO) under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA). The UAO had ordered Emhart Industries to conduct a cleanup of the Centredale Manor Restoration Project Superfund Site, a dioxin site in North Providence, R.I. The district court found that the EPA acted arbitrarily in certain respects in developing the site remedy, such as in its conclusion that site groundwater was a potential source of drinking water, certain assumptions made about fish activity and consumption, and by requiring a Resource Conservation and Recovery Act cap in part of the site. As a result, Emhart was not required to pay the treble damages and other penalties associated with noncompliance with a UAO, and the EPA must improve its analysis before making a final remedial decision.

District court overturns Department of the Interior stay of rule governing royalties for oil, natural gas and coal production on federal and Indian lands. The Northern District of California held that the Department of the Interior’s Office of Natural Resources Revenue (ONRR) violated the Administrative Procedure Act (APA) when it stayed its new rule governing royalties from oil, natural gas and coal extraction on federal and Indian lands. The ONRR had stayed the royalty rule pursuant to APA Section 705, which allows agencies to stay regulations’ effective dates pending judicial review. However, the Court determined that agencies can apply APA Section 705 only to regulations that have not yet gone into effect, regardless of when the first compliance dates in the rule occur. Because the royalty rule became effective on Jan. 1, 2017, the Court determined that the Feb. 22 stay was invalid, despite the fact that the first compliance deadlines did not occur until Feb. 28. The Court also based its decision in part on the fact that ONRR did not issue the stay using notice-and-comment procedures. While the practical implications of the holding are limited because ONRR subsequently issued a final rule with an effective date of Sept. 6 that repealed the royalty rule, the case may have implications for litigation over other Obama-era rules that the Trump administration has stayed.

Second Circuit upholds New York State’s decision to deny Clean Water Act certification to proposed pipeline. The United States Court of Appeals for the Second Circuit held that New York State had not acted in an arbitrary manner in denying a Clean Water Act Section 401 certification to a proposed Constitution Pipeline Company pipeline project. The proposed project, an approximately 120-mile interstate natural gas pipeline that would run from Pennsylvania to New York State, required both a Federal Energy Regulatory Commission (FERC) certificate of public convenience and necessity and a Section 401 certification. In a Section 401 certification, a state certifies that a project that requires a federal license will meet state water quality standards. In this case, New York State’s Department of Environmental Conservation (DEC) denied the Section 401 certification request, arguing that Constitution had not provided DEC with sufficient information to conclude that the company’s preferred construction approach would not harm state water bodies. The Second Circuit held that DEC’s decision was not arbitrary and capricious. It also determined that the United States Court of Appeals for the District of Columbia Circuit, rather than the Second Circuit, had jurisdiction to rule on whether New York State had waived its right to issue the Section 401 certification by exceeding the statutory timeframe for issuing the certification.

D.C. Circuit holds that FERC should consider power plant emissions in pipeline environmental impact statement. A split panel of the D.C. Circuit held that the FERC should have evaluated the emissions of power plants receiving natural gas from a southeastern pipeline project when drafting an environmental impact statement (EIS) for the project under the National Environmental Policy Act. The case involved the Southeast Market Pipelines Project, a series of three natural gas pipelines in Alabama, Georgia and Florida, the largest of which will be the approximately 500-mile Sabal Trail Pipeline. In its decision, the D.C. Circuit determined that the FERC’s EIS insufficiently addressed the project’s “indirect environmental effects” by failing to make “a quantitative estimate of the downstream greenhouse emissions that will result from burning the natural gas that the pipelines will transport or explain[ing] more specifically why it could not have done so” (emphasis omitted). The Court also noted, however, that it did “not hold that quantification of greenhouse-gas emissions is required every time those emissions are an indirect effect of an agency action.” Although the Court remanded the case to the FERC to redraft an EIS consistent with its opinion, the practical effect of the opinion on portions of the project that have already begun to operate is unclear.

Hurricane Harvey affects Gulf Coast energy and chemical resources. Hurricane Harvey, which recently battered the Texas Gulf Coast and caused upward of 50 inches of precipitation in some places, has affected the region’s oil, gas and chemical facilities, as well as hazardous substance sites, in numerous and perhaps unexpected ways. For example, storage units at Arkema, Inc.’s chemical plant in Crosby, Texas, that contained organic peroxide exploded, with the organic peroxide combusting when the power supply that kept the storage tanks chilled failed. Additionally, some fear that flooding at the region’s Superfund sites could also affect existing remedies and exposure pathways, an issue the EPA has begun investigating.