Environmental Law Post

Environmental Law Post

New York’s Clean Energy Standard and its Impact on the State’s Energy Portfolio

Posted in Legislation

The New York State Public Service Commission (“PSC”) recently issued an order that will shape New York’s energy portfolio for years to come. The Clean Energy Standard (“CES”), issued and effective August 1, 2016, is a bold initiative that mandates renewable energy supply 50 percent of the State’s electricity needs by 2030. New York seeks to achieve this goal by focusing on three major areas: (1) large utility scale solar, wind and other renewables; (2) offshore wind; and (3) subsidized nuclear power. The expectation is that by 2030, New York greenhouse gas emissions will be reduced by 40 percent from 1990 levels.

Currently, New York generates about 23 percent of its electricity from renewable resources, but about 80 percent of that comes from hydroelectric. This means that solar, wind and non-hydro renewables account for only five percent of New York’s current electricity requirements.

In order to meet these ambitious goals, solar and wind generation will have to substantially increase. The State believes that there is a lot of potential in offshore wind in the Atlantic Ocean, and the CES sets out a path to developing this resource. The Deepwater Wind Project, off the coast of Montauk, Long Island, is currently going through the regulatory approval process with support from the State. The State hopes that this 90 megawatt wind farm is only the beginning of tapping into offshore wind potential. It is unclear what role offshore wind in the Great Lakes will play, and whether or not it will receive the same State support.

The plan to subsidize nuclear power is somewhat surprising given Governor Andrew Cuomo’s historic position on nuclear energy… Most notably, Cuomo has called for the permanent shutdown of Indian Point Energy Center, a nuclear power plant about thirty miles north of Manhattan. In marked contrast, the State is planning on entering into long-term subsidized contracts with two “at risk” nuclear power plants in upstate New York. Although these plants are no longer competitive in the New York market due to their high operation and maintenance costs, the fear of losing up to 17 percent of the State’s “clean” energy from nuclear power has made the nuclear subsidies a key component in reaching the 2030 Renewable Energy Standard (“RES”).

The CES order reinforces the Governor’s opposition to natural gas – as the resource that many considered to be the bridge between today and 2030. Governor Cuomo banned high volume hydraulic fracturing in New York in December of 2014. Doubling down in April of this year, the Cuomo administration denied necessary water quality permits for the federally approved Constitution Pipeline which proposes to deliver Marcellus formation natural gas from Pennsylvania to New York and other northeast markets.

The CES sets lofty goals in a relatively short amount of time and will have significant impacts on energy generators and customers. The CES requires utilities and retail energy service providers to build new renewable facilities, enter into purchase agreements with other renewable energy generators, or otherwise purchase Renewable Energy Certificates to meet the new RES. Whether the “50 by 30” goal can be met, and the economic impacts absorbed, remains to be seen.

Additional Assistance
Phillips Lytle Partner, David P. Flynn, was assisted in the preparation of this article by Luke Donigan.

For assistance regarding New York’s Clean Energy Standard, please contact David P. Flynn at (716) 847-5473, dflynn@phillipslytle.com, or any of the attorneys on our Energy Industry Practice Team.

Reset of New York Toxic Tort Statute of Limitations Signed into Law

Posted in Legislation

On June 23, 2016, we wrote about legislation that had passed both the New York State Assembly and New York State Senate that would allow people to bring a timely personal injury claim arising from claimed exposure to contaminants within three years of a site’s designation as either a Federal or New York State Superfund Site.

On July 21, 2016, Governor Andrew Cuomo signed this legislation into law as Chapter 128 of the laws of 2016.

As we previously mentioned, this new law could create an incentive for the New York State Department of Environmental Conservation to be more aggressive in the listing of new sites. Also, as every new Superfund Site designation in New York now opens up the possibility of previously time-barred suits becoming viable, a PRP’s response strategy to known or suspected contaminated sites will be as important as ever.

Maximum Civil Penalties for Environmental Violations Set to Dramatically Increase

Posted in Legislation

CA-2016-07-19Through an interim final rule effective August 1, 2016, the U. S. Environmental Protection Agency (“EPA”) is increasing the maximum daily penalties it may assess for environmental violations that occurred any time after November 2, 2015. Any violation of an environmental statute enforced by the EPA, i.e., Clean Water Act, Clean Air Act, TSCA, RCRA, CERCLA and EPCRA, may now have a penalty that is up to 150 percent higher than the previous daily maximum. For example, a Class I violation of EPCRA carries a statutory maximum penalty of $25,000 under 42 U.S.C. 11045(a). Now, the maximum daily civil penalty for that violation is $53,907.

The increase in maximum penalties is a result of the 2015 amendment to the Federal Civil Penalties Inflation Adjustment Act of 1990 (the “Act”). The amendment requires federal agencies to adjust their civil penalties with an initial one-time “catch-up” adjustment so that the new maximums will take effect by August 1, 2016. Beginning January 15, 2017, agencies will also be required to make annual, rather than quadrennial, adjustments for inflation. The adjustment is calculated by multiplying the originally enacted maximum penalty amount, or the amount last adjusted by statute, by the difference between the Consumer Price Index for all Urban Consumers (“CPI-U”) during the month of October 2015 and the CPI-U for the month of October during the year that the penalty was enacted or last adjusted. The Act does provide, however, that the “catch-up” adjustment shall not exceed 150 percent of the penalty that was in effect on November 2, 2015. If the adjustment exceeds 150 percent, then the 150 percent value will be the new maximum penalty. The results of the EPA’s calculations and new maximum daily penalties can be found in Table 2 of 40 C.F.R. Section 19.4: Civil Monetary Penalty Inflation Adjustments.

This maximum daily penalty increase will undoubtedly impact settlement negotiations, and resolving alleged environmental violations with the EPA will become even more costly and potentially more contested and time-consuming. The EPA suggests that the new rule will not necessarily change the civil penalties that it chooses to impose, but nevertheless will have the overall impact of making environmental violations more costly and challenging to defend and resolve. Furthermore, state agencies responsible for environmental enforcement may now choose to increase their own maximum penalties to keep pace with the EPA. The potential for substantially higher maximum daily penalties may also cause the EPA to reevaluate how it chooses to enforce environmental statutes, and the agency will certainly have more bargaining power when it comes to assessing penalties.

Additional Assistance
Phillips Lytle Partner, David P. Flynn, was assisted in the preparation of this article by Luke Donigan.

For assistance regarding maximum civil penalties for environmental violations, please contact David P. Flynn at (716) 847-5473, dflynn@phillipslytle.com, or any of the attorneys on our Environment Practice Team.

NYSDEC Requests Information About PFCs

Posted in Superfund

Phillips Lytle Environment Client Alert June 2016By two letters dated June 14, 2016, the New York State Department of Environmental Conservation (“NYSDEC”) initiated two information requests to businesses across the State to identify the use of certain perfluorinated compounds (“PFCs”). The letters were sent to chemical bulk storage facilities, petroleum bulk storage facilities, major oil storage facilities, fire departments and airports. NYSDEC added certain PFCs to New York’s list of hazardous substances by emergency regulations on January 27, 2016, and added other PFCs on April 25, 2016. Final rulemaking regulating these substances is ongoing, with the public comment period closing July 8, 2016.

One of NYSDEC’s letters requires completion of a survey to identify the use, storage, manufacture, release or disposal of PFCs. The second letter focuses on users of PFCs in connection with fire suppression foams, informs users of new registration, storage, use and disposal requirements, and also surveys past usage of foams to identify possible soil or groundwater contamination. The goal of these letters is to collect information from businesses across the State about the use of PFCs, the phase-in of requirements leading to a permanent prohibition of PFC releases, and to identify facilities and other sites where PFCs have caused environmental contamination. NYSDEC is clearly focusing on businesses where PFCs were either manufactured, used to make other products, released or disposed of.

If you receive one or both of NYSDEC’s letters, be mindful of the importance of determining how the new PFC regulations and NYSDEC’s information requests may impact your business. Care must be taken in considering responses to NYSDEC inquiries. Information requests of this kind often have a long-term horizon in NYSDEC evaluation and use, and may lead to further requests for information or subject sites to environmental investigation and/or remediation. In fact, many businesses are still dealing with the fall-out from responding to similar surveys in the 1980s.

Additional Assistance
For assistance regarding NYSDEC information requests, please contact Morgan G. Graham at (716) 847-7070, mgraham@phillipslytle.com, David P. Flynn at (716) 847-5473, dflynn@phillipslytle.com, or any of the attorneys on our Environment Practice Team.

Toxic Substances Control Act Reform Passes with Bipartisan Support

Posted in Legislation

BeakerExciting and expected news announced from the White House this week: The Frank R. Lautenberg Chemical Safety for the 21st Century Act, which provides for common-sense amendments to the Toxic Substances Control Act (TSCA), was signed into law by President Barack Obama after bipartisan support in both houses of Congress.

Typically a divisive area of law, the law revamps TSCA and finally gives the Environmental Protection Agency (EPA) the authority it needs to effectively regulate the chemical industry of the 21st century. The law contains a number of important amendments that should help modernize the industry. Under the law, the EPA has a number of new obligations that will present both opportunities and challenges for industry.

Under the law, chemicals being used in commerce and new chemicals to be introduced will receive much more scrutiny by the EPA. When TSCA was first enacted, approximately 62,000 chemicals were grandfathered-in, meaning they did not go through any type of risk assessment and were allowed to remain in commerce. The Act now mandates the EPA to review the risk of chemicals currently being used in commerce and the EPA may issue an order requiring testing for both new and existing chemicals. The EPA must differentiate between high and low priority chemicals for evaluation, and risk evaluation procedures must be established though notice-and-comment rulemaking. Under the old regime, a new chemical had to be shown to pose an unreasonable risk before the EPA could request more information from the manufacturer. Even when a chemical may have been shown to pose an unreasonable risk, the procedure for evaluating the risk utilized a cost-benefit balancing standard. Under the new law, the EPA has the authority to request more information on any new chemical. In addition, only human and environmental impacts are relevant to risk assessments; cost may be considered in determining how to regulate, but not whether to regulate.

Previously, the operative mechanism of TSCA required manufacturers to give EPA notice prior to manufacture (pre-manufacture notice [PMN]) of a new chemical. Unless the EPA went through testing and found that the chemical posed an unreasonable risk, the chemical could be manufactured and distributed in commerce. Because manufacturers only had to submit the PMN 90 days prior to manufacture – EPA rarely had enough time to complete a proper risk assessment. The EPA must now affirm the safety of a new chemical before it may enter commerce.

Other important provisions of the Act are the inventory reset rule and changes to confidential business information (CBI) claims. The inventory reset is something that manufacturers will want to pay attention to and understand. The current inventory lists over 84,000 chemicals, most of which are not even in commerce, yet the EPA doesn’t know exactly which chemicals are active or inactive (no longer in commerce). The reset requires the EPA to distinguish between active and inactive chemicals, allowing the agency to focus on chemicals that are still in commerce and therefore pose the most risk to the public. Manufacturers will want to make sure their chemicals are reported to the agency so that they may be put on the ‘active’ list and allowed to remain in commerce. Companies that violate this requirement may face large fines. The rule also requires manufacturers to report all of the chemicals they have manufactured in the previous ten years.

Under TSCA, CBI claim review was not required, meaning that manufacturers simply had to make a claim to be protected. CBI information would only be disclosed to state and local governments if the manufacturer authorized the disclosure. Now, the EPA must review all CBI claims for chemicals maintained on the active inventory list, and those claims will expire after 10 years. Additionally, under certain circumstances, state and health professionals will be given access to information that is otherwise CBI-protected. Furthermore, manufacturers must substantiate the basis for claiming that a chemical identity should be kept confidential.

In short, industry and government alike are touting the TSCA Amendments as a considerable upgrade and positive reform of TSCA. While the bipartisan support is evidence of compromise and improvement, some experts believe that the mandates required by the Act are too large of a job for the resource-limited EPA. Time will tell whether the EPA is able to meet its new regulatory obligations on this important area of law.

Legislation to Reset Statute of Limitations for Toxic Exposure Claims in New York

Posted in Legislation

New York State Senator Kathleen Marchione, a Republican from New York’s 43rd Senate District, introduced the “Hoosick Falls” bill ostensibly in response to her constituents’ ongoing water supply contamination concerns. This legislation, however, is not a rifle shot to address the Hoosick Falls situation. Rather, it has significant, long-term Statewide implications for many companies and potentially responsible parties (PRPs). The bill, S6824A, passed both the New York State Assembly and the Senate by wide margins, and would add Section 214-f to the New York Civil Practice Laws and Rules (CPLR.). If signed into law, this will allow people to bring a timely personal injury claim arising from claimed exposure to contaminants within three years of a site’s designation as a Superfund site or within the period authorized under CPLR Section 214-c, whichever is later.

Currently, pursuant to CPLR Section 214-c people are required to bring an action for damages for personal injury caused by exposure to toxic substances within three years from the time the injury was discovered or should have reasonably been discovered. Assuming that the bill becomes law, the statute of limitations will essentially be reset for those who claim an injury, even if it occurred many years ago or was caused by exposure to contamination at or from a newly designated Superfund site. This new statute of limitations will apply to any site designated as a Superfund site by either the EPA or the New York State Department of Environmental Conservation (DEC).

Individuals who previously would have been time-barred from bringing a cause of action may now find themselves with another opportunity to seek relief. Assuming that Governor Andrew Cuomo signs the bill into law, PRPs will be exposed to new claims even if the claimant suffered an injury or exposure years ago. With each new Superfund site designation comes a new three-year window for parties to bring a cause of action related to that site. While the rate of Superfund site designations has significantly declined since the program’s inception, there are still new designations being made every year. This legislation could create an incentive for the DEC to be more aggressive in the listing of new sites. PRPs will want to be aware of this amendment as each new Superfund site designation opens up the possibility that previously time-barred suits will once again be viable. This may incentivize parties to address sites under the Brownfield Cleanup Program in order to avoid the listing of a site.

Flint Water Crisis Produces Criminal Charges Against State and Local Officials

Posted in Uncategorized

2016-04-22-Flint_waterJust three months after Michigan Attorney General Bill Schuette announced his intent to investigate the circumstances surrounding Flint, Michigan’s water crisis, the state filed criminal charges on Wednesday against two state environmental quality officials and a city utilities administrator for their apparent roles in the crisis. Specifically, the state claims the workers, among other things, tampered with evidence contained in reports on lead levels in city water, conspired to tamper with monitoring reports and violated the Safe Drinking Water Act. The charges filed by the state are serious and carry stiff penalties, including up to two to five years in prison. Even so, Attorney General Schuette, in announcing the charges, maintained that “[t]hese charges are only the beginning” and “there will be more to come – that I [Schuette] can guarantee you.”

In light of the above and also due to the publicity of other alleged water quality crises around the nation (e.g., Hoosick Falls, New York), additional governmental actions, including enforcement activities, to address apparent water pollution problems should be expected. What’s more, affected citizens also may attempt to resolve these matters themselves — by filing citizen suits pursuant to the Clean Water Act or claims under other legal authorities. As a result, suspected or actual water pollution problems should be immediately considered and addressed.

Phillips Lytle LLP has significant experience working with clients to address water quality issues, including, but not limited to, those related to ageing municipal sewer systems, NPDES/SPDES violations and groundwater contamination, and representing clients in federal and state enforcement actions and private citizens suits.

Groundwater in New York: A Threatened Resource?

Posted in Uncategorized

Monitoring_WellNew York State residents have long enjoyed high quality, affordable potable water; the result of the State’s protected source waters and reservoirs, and robust testing and filtration programs. In fact, most New Yorkers have taken the quality of their potable water for granted. But in recent weeks two upstate New York towns – Hoosick Falls and Petersburg – have detected elevated levels of perfluorooctanoic acid (PFOA) in their drinking water supplies, leading state and federal authorities to warn residents against using tap water for human consumption.

There is no reason to believe that the elevated PFOA levels detected in the Hoosick Falls and Petersburg water supplies are indicative of a far-reaching problem with the safety of New York’s municipal water supply systems. However, given the recent tragedy in Flint, Michigan, where elevated levels of lead in the city’s water system were apparently ignored by city, state and federal regulators, and initial criticisms leveled by residents against the State for its response in Hoosick Falls, the State has sprung into action on several fronts. These actions may impact the operations of those providing private and public potable water as well as manufacturing companies throughout New York State whose operations have or may be impacting the quality of the water source.

As with Hoosick Falls, the State may move aggressively to place sites, including operating manufacturing plants with a potential nexus to contaminated drinking water supplies, on the State’s Superfund list. This can create significant issues particularly for operating facilities, including defaults in lending relationships, stigma, potential claims for the cost of addressing the contamination and/or providing replacement /upgraded water supply systems, as well as make the companies targets for toxic tort actions. The recent visit to Hoosick Falls by Erin Brockovich and the law firm that she works with is evidence of this.

As a consequence of these developments and the resulting political pressure, the State has announced the creation of a water quality task force, which will require the testing of groundwater sources statewide. During a press conference announcing the creation of the task force, New York Governor Andrew Cuomo promised that groundwater testing will be comprehensive, and will, for example, include testing of salinity levels near salt mines in Orleans County and the North country, and PCB contamination on Long Island. The testing will exceed that required by the federal government. This may, depending on the testing and public pressure, lead to more aggressive testing of potable water supplies statewide.

These efforts may result in the identification of a number of new Superfund sites across the State, including operating manufacturing facilities or the reopening of sites that had previously been considered remediated. It could also result in increased costs for municipalities due to increased monitoring and compliance costs. Lastly, there may be increased costs for enhanced water treatment and/or identification of new drinking water sources.

The scope of the problem is unknown at this time, and there is a possibility that these problems may not be isolated. The results of the statewide groundwater evaluation plus growing public pressure could create a level of State Superfund activity that has not been seen in years.

Supreme Court Stays Clean Power Plan

Posted in Legislation

smokestacksWe previously reported on the Obama administration’s release of the final version of the Clean Power Plan (“Plan”), a set of Environmental Protection Agency (EPA) regulations designed to significantly reduce greenhouse gas emissions from electric power generating plants. Under the Plan, states are responsible for developing individualized compliance policies by September 2016, with the ultimate goal of a 32% decrease from 2005 levels in carbon emissions from existing power plants by 2030.

While the U.S. Court of Appeals for the D.C. Circuit is set to hear the dispute regarding the Clean Power Plan in June 2016, five separate challenges, including more than 25 states and numerous industry groups petitioned the Supreme Court for an immediate stay of implementation pending the D.C. Circuit’s decision. The parties opposing the Plan argued that implementation would cause irreparable harm including imminent closures of a vast number of existing coal-fired power plants. The EPA responded that, among other reasons, the regulations under the Clean Power Plan, in addition to bringing about critical reductions in carbon emissions, build off of existing regulations and require no action on the part of regulated entities until 2022.

On February 9, 2016, in a five to four decision divided along ideological lines, the U.S. Supreme Court granted the stay ordering the EPA to halt implementation of the Clean Power Plan. Never before has the Supreme Court issued an order preventing an agency from implementing and enforcing regulations prior to any judicial review by a lower court. The White House released a statement stating that it disagrees with the Court’s issuance of the stay, reasoning that the Clean Air Act and the Clean Power Plan are based on a strong legal foundation and provides states time and flexibility to come into compliance.

In June, the D.C. Circuit will hear oral arguments regarding the underlying dispute, to wit, the EPA’s authority under the Clean Air Act to regulate greenhouse gas emissions from existing power plants. The EPA relies on section 111(d) of the Clean Air Act, which authorizes the Agency to regulate air pollution from stationary sources, subject to a number of restrictions. Most notably, the parties disagree on the scope of one such restriction, which precludes the Agency from regulating certain pollutants already regulated under section 112 of the Clean Air Act.

Notwithstanding the outcome in the D.C. Circuit, the Supreme Court will likely be asked to review the merits of the Clean Power Plan in the future. While the five to four decision granting the stay may reflect the majority’s skepticism or doubt regarding EPA’s authority to implement the regulations, the death of Supreme Court Justice Antonin Scalia presents the possibility that a new majority may uphold the regulations.

Concerns Over Retroactive Changes to Net Metering Lead to Proposed Federal Regulation

Posted in Energy, Legislation

Meter_Solar_PanelThe debate over the future of net metering and the proper valuation of distributed energy resources has reached Congress. In the wake of a debacle over retroactive changes to net metering rules in his home state of Nevada, Senator Harry Reid (with Senator Angus King of Maine) recently proposed legislation on the subject. The proposal, known as Amendment 3120 would add language to Section 111(d) of the Public Utility Regulatory Policies Act of 1978 ( PURPA) aimed at protecting net metering customers from retroactive changes to net metering rules and requiring any such changes to consider the benefits of distributed energy resources. Before making changes affecting existing net metering customers, regulators or utilities would be required to demonstrate: “in an evidentiary hearing in a general rate case, that the current and future net benefits of the net metered system to the distribution, transmission, and generation systems of the electric utility are less than the full retail rate.” The legislation would also require changes impacting future net metering customers to include consideration of “the societal value of distributed energy resources.”

Coincidentally, New York’s utility regulators at the Public Service Commission have been hard at work addressing the highly-charged issues of grandfathering rights for net metering customers and the value of distributed generation. In 2014 and 2015, the Public Service Commission issued a series of orders that carefully considered (with some bumps along the way) what projects would be grandfathered. The Commission repeatedly assured the marketplace that existing projects would be protected from net metering changes, stating that:

In order to continue the momentum the solar industry has gained in New York, certainty on the availability of revenues is necessary. Developers who have premised their revenue expectations on the availability of net metering should not be deprived of the revenue stream methodology they anticipated. As a result, once a solar project is connected or accepted for NEM, that methodology will not be replaced with a successor tariff methodology unless otherwise requested by the developer or customer. Instead, to provide regulatory certainty, any successor tariff will adhere only prospectively to projects developed in reliance upon them instead of reliance upon net metering.

Case 14-E-0151 and 14-E-0422, Petition of Hudson Valley Clean Energy, Inc. and Petition of Solar Energy Industries Association, et. al., Order Raising Net Metering Minimum Caps, Requiring Tariff Revisions, Making Other Findings and Establishing Further Proceedings (issued December 15, 2014), at 15 (emphasis added). Subsequently, the Commission determined that these projects would be grandfathered for at least 25 years, a duration intended to coincide with the term of a typical power purchase agreement.

A central goal in New York’s Reforming the Energy Vision proceeding, ongoing since 2014, has been reaching consensus on proper valuation of distributed energy resources. As these issues continue to play out on the Federal level, we would expect New York, with its self-imposed mandate of 50% renewable energy by 2030, to continue to develop policies that encourage distributed generation.

Thomas Puchner is a partner in the Energy practice group at Phillips Lytle LLP. Attorneys in Phillips Lytle’s Energy Practice Group have extensive expertise in all aspects of renewable energy projects, including siting and permitting, power purchase agreements, solar leases, financing (including New York’s Green Bank), and Public Service Commission/Utility regulatory matters. In addition, an interdisciplinary team of Phillips Lytle Energy and Environmental law attorneys excels in all aspects of siting renewable energy facilities on brownfields and landfills.