Becker's Iowa Environmental Law Update : Iowa Environmental Lawyer & Attorney : Charles Becker : Belin McCormick P.C. Law Firm : IA Regulatory Compliance, Site Cleanups

I recently posted on the new, federal Renovation, Repair and Painting Rule that is designed to address lead paint when encountered in home renovation.  Some changes were made to the Rule, but a delay of implementation of the Rule was refused by EPA even though the changes resulted in doubling the number of regulated companies.  However, it looks like EPA has had a slight change of heart.

Cynthia Giles, EPA's assistant administrator for enforcement, issued  "Further Implementation Guidance" on June 18th stating that no EPA enforcement action will be taken against renovation and repair firms for failing to be certified until October 1st, thus allowing a delay of about four months for those firms who have not yrt received  their certification.  Also, for individual workers who have not yet obtained their training, they can avoid enforcement action if they apply to enroll in a class by September 30th and their training is completed by December 31, 2010.  All lead safe work practices required by the Rule will apparently continue to be enforced.  Further, there could still be state enforcement in states that have passed laws to implement the program, those being Wisconsin, Iowa, North Carolina, Mississippi, Kansas, Rhode Island, Utah and Oregon.

The delay was at the request of National Home Builders Association, which has argued for more than a year that the training timetable imposed by EPA was impossible to meet. 

This is the kind of action that can cause one (or more) to lose confidence in their regulatory agencies.  It isn't that the delay was a bad idea -- doubling the number of of the regulated entities would cause difficulties even to the best run program.  The problem is that it took a flood and a vote by the Senate to get them to move. And then when they did finally act, it was so late that different renovators (some who made the deadline and some who did not) in different parts of the country (some in states with their own laws and some without) will be affected differently.  Not a great start for the program.

RELATED POSTS: Time To Get The Lead Out  

                            Some Weighty Changes In Lead Paint Rule 

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In a letter to Congress, EPA has requested the reinstatement of the Superfund “polluter pays” tax.  Superfund is the federal law that deals with the nation’s most polluted sites and, if reinstated, the tax would aid funding the investigation and remediation of orphan sites – contaminated sites where a responsible party cannot be found or the party is bankrupt.

The original Superfund tax expired on December 31, 1995, under a Republican-controlled Congress.  The fund peaked in 1996 at $3.8 billion and ran out of money in 2003.  Since then, clean up at orphan sites has been paid out of general funds – that is, tax revenues – to the tune of $1.2 billion per year for the past 4 years.

While the tax existed, the source of the funds was primarily a tax on the chemical industry.  Specifically, there was a tax on crude oil and imported petroleum products at the rate of $9.70 per barrel, hazardous chemicals at varying rates of $0.22 to $4.87 per ton and a charge for imported substances that use hazardous materials in their production.  When an orphan site was identified, the fund could be tapped for the costs.

The request to Congress would reinstate the tax for 10 years (2011 – 2021) and would cause manufacturers of hazardous chemicals to pay into the fund for use at the sites that find pollution that includes hazardous chemicals and for which no one else can be found to pay for the release.

In support of the legislation, Mathy Stanislaus, Assistant Administrator for EPA’s Office of Solid Waste and Energy Response, said:

Since the beginning of this administration we have made it clear that we support the reinstatement of the polluter pays system for the Superfund program.

If Mr. Stanislaus really means what he says, the administration should be adamantly opposed to the Superfund tax because this does nothing to "support the reinstatement of the polluter pays system."

That's not to say that the Superfund tax is necessarily a bad idea.  It adds a few cents to every gallon of (legal) hazardous substances sold so that there will be a pool of money readily available to clean up toluene, for example, identified at a site for which a responsible party cannot be found.  By doing so, it spreads the risk of contamination out over the universe of those who benefit from the sale of a hazardous substance.

But it is time to stop saying that this, in any way, supports the concept of “polluter pays.” It doesn’t. If the Recreational Toluene Company pays $50,000 into the fund in a given year and the fund pays out $50,000 to a contaminated site, it doesn’t mean that Recreational Toluene's toluene was identified at the site, so it was not the polluter. Even if it was somehow determined that Recreational’s toluene was actually at the site, it doesn’t mean that Recreational was the polluter. It means that someone who was sloppy used Recreational’s legal product in an illegal manner. Recreational was not the polluter, but it paid. Call it the “innocent manufacturer pays” tax, or the “someone-other-than-the-general-public-pays” tax, but not the “polluter pays” tax, because they don’t and it isn’t.  If that’s what our elected officials want to do in the case of the environment, that’s fine.  Just don’t pretend it's something that it's not.
 

RELATED POSTS:  Putting The Fund Back In Superfund

                                    City Superfund Liability Goes Down The Drain

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I recently saw a speech given by Richard Sears, a visiting scientist at MIT who was formerly a geophysicist and executive at Shell Oil Company. He said something that is important to understand regarding the environment, environmental laws and sustainability. To paraphrase Mr. Sears:

We didn’t come out of the Stone Age because we ran out of stones: we didn’t come out of the Iron Age because we ran out of iron; and we’re not going to come out of the Oil Age because we’ll run out of oil. Rather, we’ve come out of each of the Ages because of ideas, innovation and technology.

Mr. Sears pointed out that we have plenty of oil and we will have plenty of oil for a long time to come but, as has occurred in the past, we will find a new way to create energy because the history of mankind is to come up with new ideas and innovations and to create new technology to solve our problems. 

I think he’s right and I think it’s worth watching. The trick will be to support the innovators and we can't do that unless we know about them.  For that reason, I am going to periodically post about new ideas and new technologies that affect the environment.  Some of the ideas will be simple and others a bit far out, but hopefully they will make you think about where we might be going.

Let me start with one that plays off of one of the great methods of motivating behavorial change: competition.  More particularly, if you make a game out of anything, people tend to want to play.  That is a large part of the reason for the success of the Prius effect.  Along that same line, welcome the Flower Lamp.

Many people have heard of smart meters, which monitor how much electricity the appliances in your home are using.  For example, you can keep track of how much you’re using (and therefore paying) for air conditioning, the refrigerator and the real energy hog, the digital picture frame. 

The Flower Lamp takes the smart meter one step further.  It visually represents the use of electricity in your home.  When you are being very good, it unfolds and the bulb shines bright. When your children have left every light on in the house and the air condition is running with most of the windows open, the Flower Lamp shuts as tight as a clam.

We all know that we should be shutting off lights and appliances that we aren't using.  We know that, but does it change us?  It doesn't appear to.  But when you add a visual element -- something you can actually look at and alter based on your actions -- it changes everything.  People start wanting to beat the game.  It's almost incidental that it saves money and energy.  It is behavior modification at its finest.

Is this a big innovation?  I don't know, but I think it (and other similar devices) could be.  Like so many great inventions, it's the multiplier effect that makes it worthwhile.  One or two Flower Lamps won't save the world, but put one in even 10% of the 115,000,000 U.S. homes, and it will make a dent.  And that is innovation.

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Sometimes bad facts make such bad law that change becomes obvious.  We can only hope that this will be the result of U.S. v. Saporito.

The case involved a company named Crescent Plating Works.  And the facts went downhill from there.

Without going into extensive detail, it is enough to say that the facility was highly contaminated based on plating operations that had occurred from the 1970s to 2003.  There was disputed evidence with regard to whether the defendant, James Saporito, was an "operator" of the facility.  In the end, however, it didn't matter.

The critical question before the court on the Government’s motion for summary judgment, was whether Mr. Saporito was an “owner” of the facility under Superfund at the time of the cleanup solely because of his undisputed ownership of equipment used in the plating process.  There was no question that Mr. Saporito owned and leased equipment that was an integral part of the plating process but, like most other equipment lessors, Mr. Saporito did not manufacture, install, operate, maintain or direct the use of the equipment.  Nevertheless, Judge Pallmeyer held Mr. Saporito liable for $1.5 million in cleanup costs as an “owner."

During the course of the summary judgment hearing, Mr. Saporito pointed out that there was no evidence offered that connected any of his leased equipment to any release or threatened release or to any cleanup costs.  The court found that CERCLA requires no such connection to be shown.  It was enough that the equipment was a necessary part of a platting process that caused a release of a hazardous substance.  The equipment need not be the cause of the release.

Mr. Saporito next argued that while he may have owned the equipment, he was not an owner of a facility under CERCLA if all he was doing was leasing equipment to an independent party that then used the equipment to cause pollution.  The court found that the plating line was “no less a facility than the land on which it operated.”  Therefore, “an owner of equipment necessary to the operation of the plating line is no less an ‘owner’ than a part-owner of land.”   In fact, according the court, the equipment owner is "arguably more culpable" than a land owner because “a land owner might not inquire into how her land is being used, but an equipment owner is likely to know exactly what her equipment can do.”

Apparently Mr. Saporito saw this disaster coming and argued to the court that the government’s position was absurd because it would make power companies (who supply electricity necessary to run the plating line) and cities (who provide water pipes necessary to allow the process to work) equally liable.  The court, however, had an answer:

The court agrees with Defendant that holding these parties liable would be absurd, but does not share Defendant’s concern that the government’s theory leads to this result. Defendant’s equipment is similar to the power lines or water pipes in that it is necessary for the electroplating process, but under a common understanding of the word “owner,” the power company and the city are not owners of the plating line. Defendant, though, because he owned actual components of the plating line, is an owner.

I think the court has problems on this one, though not for the reasons given by Mr. Saporito.  The question isn't whether, for example, the City is leasing equipment to the line and is therefore an owner; the question is whether the City owns part of the "facility," which is certainly possible.  However, this doesn't save Mr Saporito.

What about the court’s admonition that the “equipment owner is likely to know exactly what her equipment can do?”  Does this really have anything to do with environmental liability?  If it does, the possible universe of potentially responsible parties has, once again, grown significantly.  Certainly a lessor of a backhoe knows that the backhoe could be used to break through a gas pipe line or scoop up coal tar tailings.  Certainly a lessor of plastic totes knows that a company might use the totes to store solvents that might be spilled or otherwise released. Certainly a company who leases chairs could know that a person might stand on them to throw the hazardous waste over the fence.  (Well, maybe that last one is a reach.  At least I hope it is.)

Buried in the opinion is the real basis for the ruling.  It doesn't involve knowing how the equipment is going to be used or whether the machinery was integral to the process.  It involves definitions.  Under Superfund a "facility" is the buildings, structures, installation, equipment, pipe or pipeline, well, pit, pond, lagoon, impondment, ditch, landfill, storage container, motor vehicle rolling stock, aircraft or contaminated site or area.  That's it.  Is it fair to find the innocent landowner or the innocent building owner liable for the tenants environmental sins?  Of course not, and usually it isn't necessary.   Judge Pallmeyer had to reach farther in this case because that's where the solvent defendant could be found.

If the court is correct that the mere owner of leased equipment, the operation of which is part of a line that results in a hazardous waste release, is responsible for the environmental cleanup caused by a sloppy lessee, the repercussions are significant.  Certainly under the court’s analysis, all equipment that is actually used in the production line of a product where a hazardous waste release is identified would fall within the terms of the holding.  That could include acid baths, printing presses, paint lines, white goods production and any line with a degreaser, among many others.   If you just include equipment that, in some manner, touches a hazardous substance or is in a production line that uses a hazardous substance, you have already placed at risk a large number of very profitable leasing companies in the United States as well as the myriad equipment sale/leaseback arrangements that occur on a daily basis.  If you add to this the equipment that a lessor should realize could possibly be used in a release, there isn't a lot left to safely lease. 

The Saporito case is very disturbing in how far it goes to find a responsible party.  Ownership liability under CERCLA has always been a broad concept, but this case seems to stand the concept on its head.   If followed elsewhere, it is hard to believe that equipment leases aren't going to be hard to come by.  If anything, the case should be a call to action.  Since CERCLA was enacted, cases that have liberally construed the PRP provisions of Superfund have resulted in changes that provide limitations of environmental liability for lenders, trustees and bonafide prospective purchasers.  Protection for lessors should be part of this group.  It would certainly help to get us back to the principle that the “polluter pays.”

RELATED POSTS:  City Superfund Liability Goes Down the Drain

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Obtaining information can be costly.  In the area of stormwater regulation, it is an expense that EPA wants to pass on to a chosen few.

As previously reported, EPA held six "listening sessions" in early 2010 to consider:

• Expanding the area subject to federal stormwater regulations;

• Establishing specific requirements to control stormwater discharges from new development and redevelopment;

• Developing a single set of consistent stormwater requirements for all MS4s;

• Requiring MS4s to address stormwater discharges in areas of existing development through retrofitting the sewer system or drainage area with improved stormwater control measures; and

• Exploring specific stormwater provisions to protect sensitive areas.

EPA has decided to go forward and is proposing to survey owners and developers of newly developed sites, NPDES permitting authorities, owners and operators of MS4s and transportation-related MS4 entities.  These are revised questionnaires from those originally proposed in October of 2009.  EPA intends to propose a rule to control stormwater from, at a minimum, newly developed and redeveloped sites and to take final action no later than November 2012. 

Turning to the burdens associated with obtaining the requested information, EPA says:

• The number of potential respondents is 5,516;
•  It will take an average of 30 hours to complete;
•  The total cost of compliance will be $7,000,000;
•  There will be 167,669 hours expended; and
•  The long questionnaire for owners will take 73 hours at a cost of $3,435.

EPA contends that it has the authority to compel responses under sections 304(i), 308 and 402(c) of the Clean Water Act.  Even if EPA has the authority to take this information without compensating the parties for the time and money they will expend to comply (under threat of criminal prosecution if they don't respond), should it?  Maybe it would be wise to expend some resources on determining whether other non-point sources (which account for more than 70% of water pollution) should receive scrutiny before adding yet more regulation to relatively small contributors. 

In any event, you have until June 9, 2010  to comment on EPA's need for the information, the accuracy of the burden estimates and suggestions on how to reduce the burden (presumably such suggestions should be constructive and physically possible).

RELATED POST: The Train's A-Comin': More Stormwater Rule Changes

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EPA has now completed its revisions to the Lead Renovation, Repair, and Painting Program ("RRP") and has published the revised rule.  The rule has three changes that should be noted by all renovators that work on pre-1978 homes and child-occupied buildings.

First, there are minor changes to certification, accreditation and state authorization requirements.  I would note that since I last posted on the lead rules, Utah, Rhode Island, Kansas, Mississippi and North Carolina have joined Iowa and Wisconsin as accredited states to run the RRP Program.

Second, renovation firms are now required to provide a copy of the records demonstrating compliance with the training and work practice requirements of the RRP rule to the owner and if the owner of the building is not the occupant, then the occupant must also be provided with a copy of the records. This information must be supplied when the final invoice for the renovation is delivered or within 30 days of the completion of the renovation, whichever is earlier. 

Finally, and of most significance, an important provision was deleted as part of a settlement of an action brought against EPA.  Under prior versions of the rule, an owner-occupier could opt-out of the rule requirements if the renovator received a signed certification that there was no child under age 6 or pregnant women residing in the home and the home was not a child-occupied facility.  Under those circumstances, the owner could avoid the added costs imposed by the terms of the RRP.  In the final rule, this opt-out provision was eliminated.  EPA estimated that eliminating the opt-out provision will double the number of renovators that need to be certified -- from 110,000 to 220,000 firms.  For that reason, EPA considered delaying the effective date of the rule. After some interesting analysis by EPA relating to the number of firms that specialized their work based on the occupancy of the building, it concluded that no delay was necessary (EPA admitted that it did no analysis to make its determination) and the rule will become effective on July 6, 2010.  I think it is safe to say that it will be a busy time for the RRP training facilities. 

In two related notes, EPA has filed a notice of proposed rulemaking that would require renovators to do dust-wipe testing after most renovations and then provide the results to the owners and the occupants.  Comments will be taken for 60 days.  The rule will likely go final by July 2011.  EPA is also considering a rulemaking to require lead-safe work practices for renovations on the exterior, and possibly interior, of public and commercial buildings.

RELATED POST: Time To Get The Lead Out

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I recently posted on an article authored by Paul Krugman, a highly regarded economist, on his analysis of how to address climate change. I was a bit critical of his choice to spend a considerable amount of time discussing science rather than economics, but I have a much more fundamental problem with the piece: He gave up on economics.

In the last 2500 words of his article, Mr. Krugman decides he needs to make the case for immediate action on climate change so he sets up the classic straw man of “what if we don’t act?” He declares that disaster is certain but that the magnitude of the disaster is uncertain. Based on this uncertainty, Mr. Krugman says:

You might think that this uncertainty weakens the case of action, but it actually strengthens it. As Harvard’s Martin Weitzman has argued in several influential papers, if there is a significant chance of utter catastrophe, that chance -- rather than what is most likely to happen -- should dominate cost-benefit calculations. And utter catastrophe does look like a realistic possibility, even if it is not the most likely outcome policy.

Weitzman argues -- and I agree -- that this risk of catastrophe, rather than the details of cost-benefit calculations, makes the most powerful case for strong climate change.

Spoken like a true politician. That pesky, economics-based cost-benefit analysis needs to go.

Where have you heard this type of argument before?  This is the same argument made by Dick Cheney to justify pursuing Al Qaeda. It is known as the precautionary principle, or the one-percent doctrine based on Mr. Cheney’s statement:

If there’s a 1% chance that Pakistan’s scientists are helping Al Qaeda build or develop a nuclear weapon, we have to treat it as a certainty in terms of our response . . . .

In other words, if there’s a small likelihood, even a one percent chance, of a catastrophic event (such as global warming), then doing a cost-benefit analysis that might result in no immediate response would apparently be . . . well . . . “criminally irresponsible” according to Mr. Krugman.

There are any number of possible responses to that statement, but being a family-friendly blog I will simply say: You have got to be kidding me. We’re going to quit looking at other options based on the 1% possibility of catastrophe? We’re going to ignore the opportunity costs of that decision? We’re going to overlook the downside risk  inherent in such a strategy? And we’re going to do this as a matter of policy for the entire world?  Really?

Allow me to give a few reasons for why such a strategy might not be insanity, but is a very close relative.

First, the precautionary principle is the ideal argument for people who have run out of arguments.  It says: "Ok, ok you’re right almost all of the time, but I might be right a small percentage of the time, so we’re going with my idea."  While I admit that there will be a certain number of politicians that will like this argument (which group will, of course, change depending on who controls Congress), it isn’t a sound basis upon which to promulgate national policy.

Second, where do you draw the line?  What is sacrosanct about a 1 in 100 chance? What about 1 in 1,000,000 or 1 in 10? There has to be a line somewhere. Should we spend years arguing about where it is, or will it be determined, once again, by who has the biggest stick?

Finally, as every trial attorney can tell you, there is an expert for everything. In other words, there will always be someone who can dream up some example of a small chance of a catastrophe. It really isn’t hard to do. (There’s a great Dan Akroyd SNL skit where he justifies selling a “Bag-O-Razor-Blades” to children because they might have a small chance of getting hurt by chocking on their toy bear anyway, so it’s OK for him to sell razor blades. Well, maybe this would actually be the non-precautionary principle.  The precautionary principle would be to prohibit the selling of the bear).

Using the precautionary principle for environmental policy (as EPA seems to be proposing), or war policy or any other public policy, is wrong. It circumvents honest debate and ignores costs. Mr. Krugman, as brilliant an economist as you are, stick to your area of expertise. Don’t throw out cost-benefit analysis just because it doesn’t fit your political beliefs at the moment (though it, too, has problems). You can still get where you want to go (to encourage immediate action on climate change), but do it using the tools of the discipline you know. Keep economics above the fray, don’t drag it down to the political level.

RELATED POST:  Paul Krugman and the Non-Economics of Climate Change
 

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Paul Krugman is a very smart guy. I get that. He is a Nobel laureate in economics, advises presidents and routinely appears on talk shows. The only thing we have in common is that we both have B.A.’s in economics. So it’s good to know that even he can go too far, like the rest of us mere mortals.

In an enlightening piece in the New York Times Magazine, Mr. Krugman gives an 8000 word dissertation on the economics of climate change.  Everyone should read it.  He spends the first 2000 words discussing the types of economic solutions that can be used to address climate change and concludes that a workable, market-based approach to regulation, such as cap and trade, is the logical solution. It is a great explanation of a confusing subject.  He should have stopped there. But he didn’t:

This is an article on climate economics, not climate science. But  [insert Wilhelm Scream here]  before we get to the economics, it’s worth establishing three things about the state of the scientific debate.

Mr. Krugman then feels compelled to discuss the science of climate change -- something in which he is not an expert. He makes the same conclusory statements that are the hallmark of climate change advocates and quickly falls into the compulsory lexicon of massive destruction:

“the upward trend [in temperature] is unmistakable”

“precipitation pattern will change . . . sea levels will rise”

"a rise in global temperatures that will be little short of apocalyptic"

“we will eventually face drastic changes in the climate”

“we’re talking about massively disruptive events, like the transformation of the Southwestern United States into a permanent dust bowl over the next few decades”

“avoiding planetary catastrophe is a lot more important”

It’s not that I disagree with any of his doom and gloom conclusions -- it’s that he isn’t a believable messenger. He doesn’t have the scientific background to support his statements. He’s just undermining his own credibility.  And for what?  Let others with the proper credentials get into that fight (and they will).

Now if Paul Krugman wants to opine on matters outside of his areas of expertise and wants to do so using incendiary and calamitous language, far be it from me to tell him otherwise.  However, it will inevitably cause some people to view him as a politician rather than an economist.  Once that happens, about half of the people will stop listening, no matter how much sense he makes.  And that would be a catastrophe.

RELATED POST:  The Precautionary Principle and Climate Change

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Most of those keeping track are aware that on December 7, 2009, EPA announced its endangerment finding (that greenhouse gas emissions threaten public health and welfare) and followed that up with a final rule a week later. As expected, a number of entities immediately brought action to challenge that finding.

The first case was filed in the D.C. Circuit and is entitled Coalition for Responsible Regulation, Inc. v. EPA.  Since that filing, a total of sixteen other petitions have been filed and have been consolidated with the Coalition case. These include an action by the American Iron and Steel Institute, Gerdau Amsteel Corp., American Farm Bureau Federation, National Mining Association, Peabody Energy Company, Massey Energy Company, Rosebud Mining Company, the U.S. Chamber of Commerce and the Southeastern Legal Foundation, Inc. on behalf of fifteen House Republicans and business associations. Additionally, the states of Alabama, Virginia, Texas, Alaska, Michigan, Nebraska, Florida, Hawaii, Indiana, Kentucky, Louisiana, Mississippi, North Dakota, South Dakota Oklahoma, South Carolina and Utah are joining with the objectors.

On the other side, sixteen states are seeking to intervene in support of EPA. Those states are Arizona, California, Connecticut, Delaware, Iowa, Illinois, Maine, Maryland, Massachusetts, New Hampshire, New Mexico, New York, Oregon, Rhode Island, Vermont,  Washington, Pennsylvania and Minnesota.

Setting aside the business interests that are supporting the action (which motivation is fairly easy to identify), it is interesting to analyze the political interests involved. The attorneys general of each state would make the decision of whether the state should participate in the lawsuit.  Of the seventeen states that are seeking to overturn the EPA determination, all but three have Republican attorneys general (and those three have Republican legislatures). With regard to the sixteen states that are supporting EPA, fourteen of them have Democratic attorneys general (the remaining two have Democratic legislatures).  

In a totally unrelated note, I notice that the National Journal conducted a poll of political bloggers recently. Those bloggers that reported to be right-leaning were asked if it is was in the Republicans’ interest to work with the Democrats on Wall Street reform? 71% of the bloggers said no. The same question was put to the left-leaning bloggers about Democrats and 67% said no.  This is not an isolated finding or sentiment.

Based on these observations, and the recent fight over health care reform (with a second battle coming according to Congressman Steve King), it isn't hard to conclude that bipartisanship, as a political concept, is dead in the United States. It has been for a number of years and it will be for the foreseeable future. What’s more, while lip service is given to the need for some sort of give and take between the parties, it doesn't appear that either the politicians or the electorate really expect, or even want, bipartisanship.  The import of this, for those that are interested in legislative sausage-making, is that the future holds many more battles like we saw with health care reform, and I suspect that this will be particularly evident when it comes time to address environmental and energy issues.

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