Massachusetts Environmental and Land Use Alert

Massachusetts Environmental Developments

MassDEP Poised to Regulate PFAS in the Drinking Water and Site Cleanup Programs

MassDEP is one step closer to issuing draft regulations this summer regulating PFAS in drinking water with the June 8, 2018, issuance by its Office of Research and Standards of recommended interim toxicity and drinking water guideline values for PFAS.

PFAS is the class of several thousand man-made perfluorinated alkyl substances. Most of the discussion nationwide on PFAS has focused on two specific compounds: perfluorooctane sulfonate (PFOS) and perfluorooctanoic acid (PFOA). EPA issued Drinking Water Health Advisories for these specific compounds in November 2016, in part because these two compounds have been the most extensively produced and studied of the PFAS class. It is widely anticipated that EPA will issue a drinking water standard for these two compounds this year, as part of the National PFAS Plan to be developed by Fall 2018, as announced by Administrator Scott Pruitt at the May 2018 PFAS Leadership Summit.

MassDEP is taking a different approach. The June 2018 recommended drinking water guidance values would address the six PFAS that have been identified in drinking water systems in Massachusetts. MassDEP’s Office of Research and Standards is recommending applying the 70 part per trillion health advisory developed by EPA collectively to five of these compounds: PFOA, PFOS, perfluorohexane sulfonate, perfluorononanoic acid, and perlfuoroheptananoic acid. The Office of Research and Standards has determined that the remaining PFAS, perfluorobutane sulfonate (PFBS), is less toxic and is recommending a 2,000 ppt guidance value.

These guidance values are not regulations or statutes and are not enforceable. However, in its June 11, 2018, MassDEP Fact Sheet on PFAS in Drinking Water: Questions and Answers for Consumers, MassDEP stated that based on these guidance values, all public water suppliers should take steps expeditiously to lower levels of the five PFAS combined to below 70 ppt, if that level is currently exceeded. Further, MassDEP has announced that it intends to develop both a drinking water standard and a site cleanup standard for these six PFAS in 2018.

Case Closed: Nonprofits Eligible for Brownfields Tax Credits for Pre-2006 Cleanups

Massachusetts’ top court has given finality to a 2017 ruling by the Massachusetts Appeals Court that nonprofits are eligible for transferrable brownfields tax credits for remediation conducted prior to 2006. By denying further appellate review on May 4, 2018, the Massachusetts Supreme Judicial Court let stand the Appeals Court’s ruling, leaving no further route for the Massachusetts Department of Revenue to avoid granting nonprofits these credits under these circumstances. Northeastern University et al. v. Commissioner of Revenue, 479 Mass. 1107 (2018). In response to our inquiry, the DOR has informed us that they will issue a Technical Information Release addressing this court decision and stated that its guidance on brownfields tax credits remains in effect except where inconsistent with the Court’s decision.

The brownfields tax credit program was created in 1998 to allow eligible taxpayers to receive a tax credit if they pursue an environmental response action and achieve either a permanent solution or remedy operation status under the state cleanup law, M.G.L. c. 21E. The credit applies only to costs incurred on or after August 1, 1998. In 2006, the legislature expanded the program to nonprofit organizations and, as they are not taxpayers, allowed the credit to be transferred. From 2006 to 2013, DOR allowed nonprofits to benefit from the tax credit for work performed from August 1, 1998. Then in November 2013, DOR issued Directive 13-4: Guidance with Respect to Brownfields Tax Credit Applications, in which it stated that nonprofits were not entitled to receive the credit for a response action completed in a taxable year that began before the June 24, 2006 amendments.

As we previously reported in March 2018, a redevelopment company and several universities challenged determinations made by DOR to deny brownfields tax credits for remediation projects completed prior to 2006. 131 Willow Ave., LLC v. Commissioner of Revenue, 33 Mass.L.Rptr. 49 (2015). In making these determinations, DOR had relied on the language of its guidance, known as Directive 13-4. That court held that the plain language of the statute is unambiguous and does not contain any exclusion for nonprofits as to whether the environmental cleanup is completed before or after the 2006 amendment, and therefore the Directive is “unreasonable and DOR’s denial of the applications based on that directive was unlawful.” The Appeals Court affirmed the Superior Court’s ruling. In light of the recent decision of the Supreme Judicial Court to deny further appellate review, this case is now closed, and the DOR must grant tax credits for response actions completed by nonprofits prior to the June 2006 amendments.

Major Offshore Wind Projects Advance in Massachusetts and Rhode Island

Commercial-scale offshore wind power may soon become a reality in New England. On May 23, Massachusetts electric distribution companies selected Vineyard Wind, a subsidiary of Avangrid Renewables, LLC, as the preferred provider of 800 megawatts (MW) of offshore wind generation to the Massachusetts power market, and Rhode Island selected Deepwater Wind as the preferred provider of 400 MW of offshore wind generation to the Rhode Island power market. Both companies propose to generate the electricity from wind projects they intend to construct on federal leases on the Outer Continental Shelf offshore of Massachusetts and Rhode Island.

Massachusetts Vineyard Wind Project

In 2017, Massachusetts electricity distribution companies initiated a request for proposals (RFP) process to acquire 400-800 MW of offshore wind. The RFP process is provided for in a series of state laws (collectively known as Section 83C) requiring Massachusetts utilities to enter into long-term contracts for approximately 1,600 MW of offshore wind energy by June 30, 2027. Three companies submitted responses during the RFP process, each submitting multiple bids to provide different options.

On May 23, Vineyard Wind’s proposal to build an array of about 100 8-MW turbines (for a total capacity of approximately 800 MW), capable of supplying 5.5-6% of Massachusetts’ energy needs, won the RFP process. According to the proposal, power will be transmitted from the offshore wind facility through an undersea cable to Cape Cod, where it will tie in with existing transmission and substation infrastructure. The project also will incorporate distributed battery energy storage that would provide benefits to low-income residents and public buildings by establishing a “Resiliency and Affordability Fund” in partnership with Citizens Energy. Vineyard Wind would contribute $15 million to the fund over 15 years, with the objectives of fostering the “wide deployment of distributed battery energy storage,” providing credits to low-income ratepayers, and helping to implement energy storage and solar energy projects at public buildings.

Even though Vineyard Wind won the RFP Process, it is not yet over. Final contract negotiations between Vineyard Wind and the Massachusetts utilities are due to conclude by July 2, and a contract will be submitted to the Department of Public Utilities (DPU) by July 31, 2018. The DPU will have until December 31, 2018, to approve or reject that contract.

Rhode Island Deepwater Wind Project

In early 2018, Rhode Island directed the state’s utilities to issue a procurement for up to 400 MW of “clean” energy, including offshore wind. On May 23, Rhode Island selected Deepwater Wind to provide this power though Deepwater’s anticipated construction of a 400-MW wind project on its federal OCS lease, currently dubbed “Revolution Wind.” In addition to local utilities, Rhode Island’s Office of Energy Resources and Division of Public Utilities and Carriers evaluated the RFP submissions to select a winner.

Rhode Island-based Deepwater Wind constructed the nation’s first offshore wind farm, a five-turbine project in state waters offshore Rhode Island’s Block Island. The Revolution Wind project will be over ten times larger, in terms of capacity, and will be located 30 miles from the Rhode Island mainland and about 12 miles south of Martha’s Vineyard. To obtain final state approval to provide the power, Deepwater Wind will negotiate a final contract with the local grid operator, National Grid, which will submit a proposed contract to the Rhode Island Public Utilities Commission for review and approval.

What’s Next?

Both developers are working their way through numerous federal, state, and local permitting processes to obtain authorization to construct and operate their projects. Among other things, each project will require authorization from the U.S. Department of the Interior’s Bureau of Ocean Energy Management (BOEM)—the agency that issued the OCS leases to Vineyard Wind and Deepwater Wind—to move forward. This will require compliance with the National Environmental Policy Act, the Endangered Species Act, the Marine Mammal Protection Act, the Coastal Zone Management Act, the National Historic Preservation Act, the Magnuson-Stevens Fishery Conservation Management Act, the Outer Continental Shelf Lands Act, and other related environmental and navigational laws. Both state and local permitting will also be important, with permits required for transmission siting and construction, and for associated onshore facilities.

In addition to environmental concerns, each project will need to address issues related to aviation (in coordination with the FAA), navigation (in coordination with the Coast Guard), and fisheries. Fishing interests present a potential hurdle for offshore wind in the Northeast. Members of the fishing industry from Massachusetts to New Jersey, along with some municipalities, have sued BOEM to invalidate its issuance of an OCS wind lease offshore New York. While Deepwater Wind and Vineyard Wind are in dialogue with fishery interests, the potential for controversy—and related litigation—remains. Nevertheless, Vineyard Wind expects to complete its project in 2021-2022, while Deepwater Wind expects the Revolution Wind project to come online in 2023.

New York and other Atlantic coastal states are also proceeding with plans to procure offshore wind in the near term. Somewhat serendipitously, on May 23, New Jersey enacted new legislation requiring that state to procure 3,500 MW of offshore wind. With Massachusetts and Rhode Island most likely to see the first “steel in the water,” and with strong investments in offshore wind port facilities in southeastern Massachusetts, New England is poised to lead the way in the push to develop offshore wind resources in the U.S.

Massachusetts Land Use Developments

Appeals Court Offers Path for Challenging ZBA’s Failure to Act

A constructive approval cannot be obtained where a zoning board of appeals secretary promptly returns an application and filing fee and says it does not have jurisdiction, according to the Massachusetts Appeals Court in its unpublished recent decision of Neli Ridge, LLC v. Town Clerk of Wilmington, 93 Mass.App.Ct. 1109 (2018).

In that case, the applicants had submitted two applications to the Wilmington building inspector seeking action on a certificate of occupancy, building permit, and to amend a ZBA condition regarding an earlier variance. The building inspector found both applications incomplete and communicated that determination by letter to the applicants. The applicants filed two applications with the Wilmington Zoning Board of Appeals purporting to appeal the building inspector’s decisions. The ZBA secretary found the applications to that board similarly incomplete and that the ZBA did not have jurisdiction over the appeals. The applicants were informed of the ZBA secretary’s decision by letter returning the applications. The ZBA never opening a public hearing on the appeals.

After more than 100 days had passed without action from the ZBA, the applicants filed a notice of constructive approval of its variance modification pursuant to M.G.L. c. 40A, § 15. The town clerk informed the plaintiffs that constructive approval was improper because the ZBA lacked jurisdiction and the town had not accepted the application and filing fee. The plaintiffs ignored this response and three weeks later attempted to submit a certificate of constructive approval. When the clerk did not respond, the plaintiffs filed suit in the Land Court seeking mandamus and declaratory relief in an attempt to compel the town clerk to act.

The Land Court ordered summary judgment of the case in the town’s favor based on the ZBA’s lack of subject matter jurisdiction. The Court found that because the ZBA informed the applicant that his applications were insufficient and not within the ZBA’s authority to take the appeal and did not open a hearing, the time period for a constructive approval never started.

Affirming the Land Court’s decision but on slightly different grounds, the Appeals Court held in a Rule 1:28 decision that there was never a constructive approval of the application.

“Quite simply, there was never any effective filing so as to trigger the constructive approval mechanism. The trust’s filing was not accepted; instead, the ZBA secretary returned the trust’s application and filing fee, stating that the ZBA lacked jurisdiction over the application.” Under these circumstances, the Court noted that the applicants “could not reasonably have thought that any further action from the ZBA was forthcoming.”

The Appeals Court also provided applicants with some specific guidance: if you think the ZBA’s rejection of an application is wrong, file for mandamus relief immediately after the ZBA’s action. The Court found the applicants’ path here was “incongruous at best.”

Some Zoning Deadlines Matter More than Others Says the Massachusetts Appeals Court

Deadlines matter, particularly in the world of Massachusetts zoning. Statutory deadlines govern everything from when a board must hold a hearing to the number of days within which to file an appeal. Need a zoning freeze? There are multiple deadlines for that. And the result of missing a deadline is often draconian: waiver of appeal rights, loss of zoning freeze protection, dismissal of cases.

For this reason, the steady chipping away of one such deadline requirement is surprising and raised the hackles of at least one member of the Massachusetts Appeals Court in a decision this month. The facts of Hickey v. Zoning Bd. of Appeals of Dennis are straightforward and focus on a dispute regarding access to the sea, as many land use disputes in Massachusetts seem to. The Hickeys owned property adjacent to a proposed stairway leading to Cape Cod Bay, which the Dennis building inspector determined was a landscape feature and hence not subject to setback requirements or requiring a building permit. The Hickeys appealed that decision to the Dennis Zoning Board of Appeals, which unanimously supported the building inspector.

The Hickeys decided to appeal that decision to the Land Court, which is where they arguably ran afoul of M.G.L. c. 40A, § 17’s requirement of “[n]otice of the action with a copy of the complaint shall be given to such city or town clerk so as to be received within such twenty days.” As the Appeals Court acknowledged, there is a good reason for this requirement: it allows the public to know whether a decision by a local board is being challenged or is now final by consulting the public files of the town clerk.

The Hickeys’ counsel checked the rest of the technical boxes by filing the action with the Land Court within 20 days and sending by certified mail a copy of the complaint to each of the members of the Zoning Board individually at their home addresses. But instead of sending a copy of the complaint plus a notice document to the town clerk, the Hickeys sent a package by certified mail addressed to “Chairman, Zoning Board of Appeals” at the Dennis town hall, which included copies of the same documents sent to the board members individually. That package made its way to the town planner who discussed the filing of the appeal with the assistant town clerk prior to the expiration of the 20-day appeal period. However, having not received a complaint or notice of appeal, the assistant town clerk certified that there had been no appeal.

At the Land Court, the Town moved to dismiss the case for the Hickeys’ failure to comply with the notice requirement. The Land Court permitted discovery on this issue, which apparently included depositions of town officials to ascertain the path of the Hickeys’ package at the town hall and what and when the assistant town clerk knew regarding the filing of the appeal. As a result, as the Appeals Court noted, it was undisputed that:

• The Hickeys’ counsel did not mail a copy of the complaint to the Dennis town clerk.
• Neither the clerk nor the assistant clerk saw a copy of the Hickeys’ complaint before the appeal deadline had expired.
• The assistant town clerk had actual knowledge that the Hickeys had appealed the decision before the appeal period had expired.

Ultimately, the Land Court dismissed the appeal as failing to meet the Section 17 requirement of providing written notice to the town clerk.

The Appeals Court started out firm, reciting a tough standard: “[R]eceipt of notice by the town clerk is a jurisdictional prerequisite for action under G.L. c. 40A, § 17, which the courts have ‘policed in the strongest way’ and given ‘strict enforcement,’” quoting Konover Mgmt. Corp. v. Planning Bd. of Auburn, 32 Mass. App. Ct. 319, 322-323 (1992), which is in turn quotes Supreme Judicial Court cases from the 1970s and 1980s (Pierce v. Board of Appeals of Carver, 369 Mass. 804, 808 (1976) and O’Blenes v. Zoning Bd. of Appeals of Lynn, 397 Mass. 555, 558 (1986)). And from that stringent principle, the Court recited how cases have chipped away at the rule. “However, ‘[s]trict compliance with all the details of the notice provision is not required, so long as notice adequate to serve the purpose of the provision is given within the period limited.’” quoting Costello v. Board of Appeals of Lexington, 3 Mass. App. Ct. 441, 443 (1975):

• It’s ok if you file a copy of the complaint but not a separate notice of appeal. McLaughlin v. Rockland Zoning Bd. of Appeals, 351 Mass. 678, 680 (1967).
• It’s fine if you file a copy of the notice of the appeal but not the complaint. Carr v. Board of Appeals of Saugus, 361 Mass. 361, 362-363 (1972).
• No problem if you deliver the complaint to the town clerk at her home at 6:35 pm on the last day of the appeal period after town offices are closed. Garfield v. Board of Appeals of Rockport, 356 Mass. 37, 39 (1969).
• Don’t worry if the process server doesn’t realize you have two different packages inside the envelope and just leaves the entire thing for the wrong person at the town hall, so long as the clerk learns of the appeal and the documents make it to the right place with the town clerk by the filing deadline. Konover Mgmt. Corp., 32 Mass. App. Ct. 319, 324-325.

Despite the talk of “strict enforcement” and policing this deadline “in the strongest way” and the clear statutory language that a particular set of documents – notice of action with a copy of the complaint – be provided to the town clerk within the specified time period, the unifying principle for the cases according to the Appeals Court apparently is that the “state of the clerk’s knowledge, not the physical location of the papers” controls. The Appeals Court found this to be a straightforward application of that principle, reversing the Land Court on whether the Hickeys had complied with Section 17’s notice requirements.

As the dissent by Associate Justice Singh explains, the Appeals Court avoided two important considerations and failed to grapple with the implications of this steady whittling away of this requirement. First, Justice Singh takes issue that previous cases rest of what is in the clerk’s mind. Instead, distinguishing the Garfield case’s home delivery to the clerk, Justice Singh pointed out that the case turned on whether the paperwork needed to be filed in the clerk’s office, not that the clerk had knowledge of the appeal. Second, she is upset that the Appeals Court has brushed aside the requirement “there had been an attempt by the plaintiff to provide the clerk with written notice of the appeal by some reasonably effective (albeit imperfect) means.” In Justice Singh’s analysis, an appellant needs to try to reach the town clerk to at least be considered for flexibility in the application of this rule.

In other words, in my view, Konover does not stand for the proposition that a clerk’s actual knowledge of a pending appeal is necessarily dispositive of the jurisdictional question, regardless of the source from which that knowledge might flow. Such an exception, in all cases where the clerk has learned of an appeal by some happenstance independent of the plaintiff's efforts at perfecting the appeal, could negate entirely the statutory requirement that timely notice be provided to the clerk. Moreover, such an exception would have the effect of requiring town clerks (as well as other town officials) to submit to litigation discovery in every instance where the plaintiff has failed to give the formal notice required by the statute.

In addition to the additional litigation burden, this approach is likely to entail as municipal employees are deposed about errant packages and their knowledge of appeals, focus on the clerk’s knowledge raises questions of whether purely oral notification can be sufficient. Except the Appeals Court has dismissed phone call compliance in County of Norfolk v. Zoning Bd. of Appeals of Walpole, 16 Mass. App. Ct. 930, 930 (1983) plus oral notification leaves the clerk’s office with nothing for the file to be reviewed by members of the public.

Simply put, the best practice remains the simplest. Hand deliver a copy of the complaint and a separate notice of appeal to the town clerk before the expiration of the 20-day appeal period. Obtain a date-stamped copy of the notice and complaint for your records as proof. Do it all as early as possible and check it carefully a day or two before the deadline expires.

National Developments

EPA Proposes to Rescind RMP Provisions Amended Under Obama Administration, Seeks Comments

On May 30, 2018, the U.S. Environmental Protection Agency (EPA) published a proposed rule that would rescind the majority of the amendments to the RMP rule that were finalized in January 2017 in the final days of the Obama Administration. Comments on the Proposed Rule are due on or before July 30, 2018.

Procedural Background

As we reported last year, the 2017 RMP Amendments Rule contained some significant revisions to the RMP rule. Following the filing of three petitions for reconsideration from industry groups and a coalition of eleven states, and a decision by EPA Administrator Scott Pruitt to convene a reconsideration proceeding, the EPA published a final rule in June 2017 delaying the effective date of the RMP Amendments Rule to February 19, 2019. The EPA indicated that the delay in the effective date would allow the agency to evaluate the objections raised by the various petitions, consider other issues that may benefit from additional comment, and take further regulatory action. The proposed rule published on May 30 is the next step in EPA’s reconsideration of the RMP Amendments Rule.

Proposed Rule

As we described in our prior reports, the RMP Amendments Rule implemented programmatic changes to prevention program requirements (including incident investigation and accident history requirements, third-party compliance audits, and safer technology and alternatives analyses (STAA)), emergency response preparedness requirements, and information availability requirements. EPA is now proposing to rescind the vast majority of those changes, including most or all of the prevention program requirements and the information availability requirements, modify the emergency response preparedness requirements, and extend the compliance dates for the limited set of revisions that EPA is proposing to retain.

The Proposed Rule seeks in part to address the issues raised by the petitioners, who argued that reconsideration was warranted because among other reasons:

• EPA failed to sufficiently coordinate the changes to the RMP program with the Occupational Safety and Health Administration’s (OSHA) Process Management Safety (PSM) program.
• The new local emergency response coordination requirements would create security risks.
• The public did not have an opportunity to comment on the finding by the Bureau of Alcohol, Tobacco, Firearms, and Explosives (BATF) that the West, Texas fertilizer facility was caused by an intentional act, rather than an accident.
• The EPA’s economic analysis did not accurately assess the costs and burdens associated with the new provisions.

The EPA states that the Proposed Rule would result in annualized cost savings to the industry of approximately $88 million. According to the EPA, the Proposed Rule would also:

• Maintain consistency in accident prevention requirements between EPA’s RMP rule and OSHA’s PSM standard.
• Address security concerns related to the requirements for emergency response coordination, information availability, and public meetings after accidents.
• Address BATF’s finding that an intentional act was the cause of the West, Texas fertilizer warehouse explosion in 2013 that killed 15 people.
• Reduce unnecessary regulations and regulatory costs associated with, among other requirements, the STAA, third-party audits, incident investigation root cause analyses, information availability, tabletop and field exercises.
• Revise compliance dates to provide time for program changes.

Accident Prevention Requirements

The industry petitioners sought reconsideration of the RMP Amendments Rule in part based on EPA’s alleged failure to coordinate with OSHA. The RMP rule and the OSHA process safety management (PSM) standard are substantially similar, and Section 112(r)(7)(D) of the Clean Air Act requires EPA to consult with both the Secretary of Labor and the Secretary of Transportation in any RMP rulemaking, and to coordinate RMP provisions with any requirements established for comparable purposes by OSHA or the Department of Transportation. Following President Obama’s Executive Order 13650, OSHA issued a Request for Information (RFI) in December 2013 to help evaluate potential changes to its PSM standard. EPA followed nearly eight months later with a separate RFI, asking for information on many of the same topics as OSHA, in order “to evaluate any potential updates to the RMP regulation in parallel to OSHA’s evaluation of potential updates to the PSM standard.” Although OSHA took an early lead in the rulemaking efforts, EPA stepped out in front of OSHA in March 2016 by issuing a proposed rule and then finalizing the rule in January 2017. Meanwhile, as of the date of this writing, OSHA has yet to propose a rule amending the PSM standard.

EPA has now concluded in the Proposed Rule that in promulgating the RMP Amendments Rule, the agency moved away from its “longstanding practice” of coordinating with OSHA on its prevention program and process safety efforts to minimize divergence between the two programs. EPA explains in the preamble to the Proposed Rule that “it did not give sufficient weight to the value of coordination with OSHA and focused too much on its legal authority to proceed independently.” EPA, therefore, proposes to rescind the accident prevention amendments pending further action by OSHA, to allow the programs to remain as aligned as possible for the benefit of the regulated community. While certain elements of EPA’s RMP rule and OSHA’s PSM standard do diverge, EPA explains that understanding OSHA’s path forward on process safety management is necessary before EPA can determine whether any divergence from OSHA’s PSM standard would be reasonable.

Information Disclosure Requirements

Petitioners, as well as many commenters during the notice-and-comment period, objected to the proposed public information availability requirements because of the potential for the new requirements to create security risks. The petitioners emphasized that information made available to the public could be used by criminals or terrorists to target facilities for an attack. Finding that these concerns had merit, EPA stated that it “believes the synthesis of the required chemical hazard and facility information may present a more comprehensive picture of the vulnerabilities of a facility than would be apparent from any individual element,” and that requiring a facility to synthesize and make that information available to the public could increase the risk of attack on facilities. EPA, therefore, proposes to rescind the information disclosure requirements under 40 CFR 68.210 of the RMP Amendments Rule, except for the requirement that facilities hold public meetings after RMP reportable accidents (with minor modifications to the information facilities are required to share at the meetings). EPA considers a public meeting to be warranted in these circumstances so that members of a community may learn about the causes of an accident and the facility’s plans to address those causes.

Emergency Response Requirements

EPA proposes to retain the provisions requiring coordination with local emergency response agencies, with modifications to both address security concerns raised by the petitioners and provide flexibility to regulated facilities. The RMP Amendments Rule added a requirement that facilities provide to local emergency response agencies “any other information that local emergency planning and response organizations identify as relevant to local emergency response planning.” The petitioners raised concerns that this language posed security concerns and the program rules did not protect information as confidential business information (CBI). EPA concluded that this language “may have inadvertently opened the door to local emergency officials requesting and receiving security-sensitive information” and is, therefore, proposing to rescind the language. EPA also reaffirms that facilities may assert CBI claims for sensitive information submitted to local emergency response agencies. Further, EPA proposes to retain some form of the requirement for tabletop and field exercises for emergency drills and suggests several alternatives for comment.

Compliance Dates

EPA proposes to revise the compliance dates for various new requirements:

• Emergency coordination provisions: one year after the effective date of the final rule.
• Public meeting provision: two years after the effective date of the final rule.
• Emergency exercise provisions: four years after the effective date of the final rule.
• Incorporation of new Subpart G data elements into RMP plans: five years after the effective date of the final rule.

Conclusion

The Proposed Rule is a substantial change of course for EPA and a dramatic step to scale back the RMP Amendments Rule. The proposal comes at a time when there are court challenges pending to EPA’s actions to delay the effective date of the RMP Amendments and to revise the rule. It is expected that the Proposed Rule will be the subject of substantial and diverse comments from views across the regulatory spectrum.

Environmental Enforcement Policy Developments: The Trump Administration and Congress Make Their Mark

During the past year, numerous developments have signaled a change in approach to environmental enforcement as it is being conducted by the Trump Administration. Enforcement continues, in several cases on high profile matters, but there are differences in scope and approach when compared to the prior administration. Several of these developments are discussed below, followed by a list of key takeaways.

Limiting the Use of Agency Guidance

In a memorandum dated November 2017, Attorney General Jeff Sessions declared that DOJ would no longer issue guidance documents “that effectively bind private parties without undergoing the rulemaking process.” The Attorney General stated, in very direct language, that the Department of Justice (DOJ) would not use guidance to coerce private parties into taking or refraining from action beyond what is required by statute or regulation. He explained that DOJ guidance documents should not use mandatory language to direct private parties to take or refrain from action “except when restating – with citations to statutes, regulations, or binding judicial precedent - clear mandates contained in a statute or regulation”.

With these statements, the Attorney General essentially stated his expectation that DOJ would not exercise authority to interpret statutory or regulatory requirements beyond their clearly discernable meaning, absent a formal notice and comment rulemaking process.

By memorandum of January 25, 2018, Associate Attorney General Rachel Brand issued a companion memorandum to the heads of all civil litigation components at DOJ, seeking to apply the limitations on the use of guidance as established by the Attorney General to policy documents that have been issued by other federal agencies. In her memorandum, the Associate Attorney General directed DOJ’s civil litigators that in affirmative civil enforcement cases they were to limit their use of other agencies’ guidance documents to ensure that such guidance was not being used to create binding requirements that do not already exist in statutes or regulations. The Associate Attorney General stated two guiding principles: that DOJ “may not use its enforcement authority to effectively convert agency guidance documents into binding rules” and that DOJ may not “use noncompliance with guidance documents as the basis for proving violations of applicable law”.

While Associate Attorney General Brand announced her resignation just two weeks after issuing her memorandum, it remains in force and is presumed to have the full support of the Attorney General as a logical extension of his earlier guidance.

Tax Act Deductibility of Certain Costs of Restitution and Return to Compliance

The Tax Cuts and Jobs Act of 2017, Public Law 115-97, included a section addressing the treatment of certain costs of enforcement settlement and injunctive relief under the Tax Code. The Tax Act revised 26 U.S.C. § 162(f) by adding language that specifically allows deductions for projects where a taxpayer can establish that an expenditure either “constitutes restitution (including remediation of property) for damage or harm which was or may be caused by the violation or potential violation of any law, or is paid to come into compliance with any law which was violated or otherwise involved in the investigation or inquiry...”.

For such expenses to be deductible under this section, a court order or settlement document must identify a payment as “restitution or an amount paid to come into compliance” with the law, and the Internal Revenue Service (“IRS”) must agree that the expense is deductible.

The Tax Act also created a new requirement under 26 U.S.C. § 6050X for government agencies to file an informational report with the IRS at the time an agreement is entered into, stating the amount required to be paid for restitution or remediation of property, or for purposes of coming into compliance with any law that was violated or involved in an investigation or inquiry.

On March 27, 2018, the IRS issued a transitional guidance document, Notice 2018-23, indicating that IRS anticipates issuing draft regulations jointly with the Treasury Department addressing the new deduction exemption and reporting provisions, and stating that until the draft regulations are published no agency reporting would be required under Section 6050X. The transitional guidance also stated that, until draft regulations are issued, the requirement that a qualifying restitution or compliance project must be identified in a court order or settlement document will be treated as satisfied for an amount if the settlement agreement or court order specifically states on its face that the amount is to be paid for restitution, remediation, or for coming into compliance with the law.

Emphasis on State-Federal Cooperation

Building on the goal of cooperative federalism in EPA’s fiscal year 2018-2022 strategic plan, a January 22, 2018 EPA memorandum from Susan Bodine, Assistant Administrator of the Office of Enforcement and Compliance Assurance (OECA), provided direction to EPA’s regions to “immediately begin the movement toward a more collaborative partnership between the EPA and authorized States.”

The memorandum established two mechanisms for building this partnership. First, each region was tasked with periodically meeting senior state leadership to ensure that EPA keeps state political leaders informed of planned compliance assurance work, such as high profile inspections and enforcement actions, and to share information on a variety of topics including facilities to be inspected, why facilities have been selected for inspection, and how to use resources to meet national inspection expectations.

Second, EPA regions were directed to generally defer to authorized States to be the “primary day-to-day implementer” for authorized and delegated programs. Exceptions to this deferral are to be identified through close communication and management discussions. Several examples are provided of situations that could warrant EPA involvement, including emergency situations, significant noncompliance that a state has not timely addressed, actions to address widespread noncompliance in a sector or program (such as EPA’s National Enforcement Initiatives), and serious violations that warrant investigation by EPA’s criminal enforcement program.

Environment and Natural Resources Division’s Enforcement Principles and Priorities

On March 12, 2018, Jeffrey Wood, Acting Assistant Attorney General of the Environment and Natural Resources Division of the Department of Justice (ENRD), issued a memorandum laying out the enforcement principles and priorities that would guide the work of ENRD.

The memorandum described seven enforcement principles as follows:

• Adhere to the impartial rule of law.
• Enhance cooperative federalism.
• Exercise pragmatic decision making.
• Employ the full range of enforcement tools.
• Coordinate with agencies.
• Collaborate with U.S. Attorneys’ offices.
• Protect taxpayers and the public fisc.

The memorandum also described five enforcement priorities, as follows:

• “Back to Basics” focus on clean water, clean air, and clean land.
• Maintain the integrity of environmental laws and programs.
• Fight fraud and recover taxpayers funds.
• Fight violent and/or organized crime.
• Protect American’s workers, competitiveness and infrastructure.

End of Sue-And-Settle

On October 16, 2017, EPA Administrator Scott Pruitt released a memorandum and directive regarding what the Administrator viewed was EPA’s prior policy of settling litigation challenging agency actions or failures to act by agreeing in a judicially binding settlement document to take actions with a certain end in mind.

In Administrator Pruitt’s view, this “sue and settle” phenomenon undermined the agency’s processes, threatened the rule of law and violated the principles of cooperative federalism. In particular, Administrator Pruitt argued that the “sue and settle” approach bypassed important procedural safeguards in the Administrative Procedure Act, upset the Constitution’s balance of powers by ceding to the judiciary the ability to dictate executive branch priorities and depriving the Congress of its ability to exercise oversight responsibility, and undermined the principle of cooperative federalism by excluding states from meaningful participation in procedural and substantive agency actions.

The directive that the Administrator released establishes procedures that EPA will follow when it is sued in federal court to ensure there is public transparency and prohibits EPA from entering into any consent decree that converts a discretionary agency duty into a mandatory duty to issue, revise or amend regulations. The directive also requires EPA to post online for review and public comment any proposed consent decree or draft settlement agreement that would resolve claims against the Agency.

Early Notice of Regional EPA

Referrals to DOJ In an effort to promote a more centralized understanding of EPA enforcement cases, in a March 23, 2018 memorandum Assistant Administrator Bodine of OECA instructed EPA regional offices that they should provide her office with early notice of civil enforcement cases recommended for referral to DOJ.

The memorandum indicated that cases led by regions should be briefed to the relevant Regional Administrator before action is taken and that the requested early notices to OECA should include a statement of the Regional Administrator’s position on the matter. For cases led by headquarters, the briefing would be conducted directly for the Assistant Administrator.

The memorandum states that the early notice to OECA will help to ensure the smooth management of judicial cases, in furtherance of EPA’s interest in reducing the average time from the identification of a violation to correction.

Withdrawal of NextGen Memo

By memorandum of April 3, 2018, Assistant Administrator Bodine withdrew EPA’s 2015 policy on the incorporation of “Next Generation” compliance tools into enforcement settlements. The 2015 policy had favored innovative enforcement settlements that expanded compliance activities to require settling defendants to install infrastructure and equipment that went beyond what was required for compliance with existing laws or regulations and called for these arrangements to be routinely used in agency settlements. 

Assistant Administrator Bodine’s memorandum stated that the withdrawal of the NextGen Policy is intended to “make clear that there is no default expectation that ‘innovative enforcement’ provisions will routinely be sought as injunctive relief, where such activities are not required by the applicable statute or regulation.” Instead, the memorandum explains, the identification of appropriate injunctive relief should be left to the wise exercise of enforcement and prosecutorial discretion, which will be informed by the particular facts and circumstances of individual cases.

Key Takeaways

These collected enforcement announcements share some common themes that are putting a unique stamp on the environmental enforcement activities of the Trump Administration:

• The Administration is focused on the central theme of promoting the rule of law, a concept that is explained as ensuring that the government’s enforcement activity is based upon statutory and regulatory provisions, and not policies or interpretations that arise from agency guidance documents.
• EPA and DOJ officials have committed to implementing cooperative federalism, an approach which provides states with an enhanced role in administering environmental requirements. Consequently, we can expect that states will be allowed to implement their environmental enforcement programs with a higher degree of individuality than might have previously been tolerated.
• The EPA Administrator has signaled that he expects EPA to stop settling challenges to agency actions through a “sue and settle” process and that he will either defend agency actions or offer opportunities for notice and public comment before committing to judicially enforceable commitments to resolve such challenges. This may result in fewer challenges, or it may result in longer periods of litigation and therefore slower progress towards final binding agency decisions.
• EPA’s enforcement office is playing an enhanced coordination role for enforcement matters that may be referred to DOJ for civil prosecution, and DOJ’s ENRD has announced the principles and priorities that will govern its activities and the cases that it expects to pursue.
• Congress has offered tax advantages to entities that enter into judicial decrees or settlement agreements to resolve damage or harm caused by a violation of the law, or that have expenditures necessary to come into compliance with the law.

Beveridge & Diamond's Municipal and State Governments industry group helps municipalities navigate the various federal and state regulations that govern their operations. We help guide municipalities through complex project development and permitting processes, interactions with the federal government, and environmental and natural resource litigation. For more information, please contact the authors.