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

The Clean Water Act is complex and rule intensive.  As such, it is easy to forget the purpose of the Act -- clean water.   The Eighth Circuit recently had an opportunity to remind us of that purpose in the case of Service Oil, Inc. v. U.S. EPA.

For those who practice in the area of property development and storm water regulation, the facts were not surprising.  Service Oil began construction of a Stamart Travel Plaza on more than five acres of land in Fargo, North Dakota. As soon as earth was turned, the site became a potential “point source” under federal law. The storm water discharges from the site were deposited into Fargo’s storm sewer system which then went into the Red River of the North. As a result of this discharge, the site was required to obtain an NPDES permit. The North Dakota Department of Health was authorized to issue the NPDES permits and required that a Notice of Intent to obtain such a permit had to be submitted at least 30 days prior to the start of construction.

In October of 2002, EPA and the North Dakota Department of Health officials inspected the Stamart site and found that no Notice of Intent had been filed, which was quickly corrected by Stamart.  As luck would have it, there was apparently no rain fall that occurred at the site between the time that development commenced and the time Stamart was able to get its Notice of Intent on file. Though the state officials were satisfied, EPA continued its review and determined that Stamart had also failed to conduct site inspections as required by state law.

In bringing its action against Stamart, EPA sought an $80,000 administrative penalty based on two acts: (1) Stamart’s failure to file its Notice of Intent in a timely manner and 2) Stamart’s failure to conduct timely inspections. The majority of the penalty ultimately assessed by the Administrative Law Judge was for the failure to properly file the Notice of Intent. The ALJ found that Section 1318 of the Clean Water Act had record-keeping requirements supported by regulations that required the preconstruction submission of a completed permit application.

On appeal, the Court agreed that the Clean Water Act prohibits discharges without a permit.  It also agreed that it is logical that the regulations provide for permit applications to be submitted prior to any initial discharge. The Court focused on the fact that the regulations required that a person who proposes a new discharge must submit its application before the date on which the discharge is to commence. However, the statute’s requirements, by its terms, applies to a point source. In the words of the Court:

Failure to comply with [the requirement of submitting an application before discharge] cannot be a violation of section 1318(a) because that statute’s record-keeping requirements are expressly limited to “the owner or operator of any point source.” Before any discharge, there is no point source. (Emphasis added).

The Eighth Circuit was simply emphasizing that EPA does not regulate “point sources.” Rather, a point source is just a defined term which determines whether the regulatory scheme might apply to that source. If the source is not deemed to be a point source (such as agricultural runoff), then the regulatory scheme does not apply to it. If it is defined to be a point source (such as a construction site), then the regulations do apply, but only after there has been a discharge.  Since the statute gives jurisdiction only over actual water discharges, a developer cannot be penalized for failing to take out a permit, at least not until a discharge event, such as storm water runoff, has actually occurred.

To emphasis this point, the Court quoted an earlier Second Circuit case:
 

The Clean Water Act gives the EPA jurisdiction to regulate and control only actual discharges—not potential discharges, and certainly not point sources themselves. (Emphasis in original).

So does this mean the developer can avoid filing a Notice of Intent or obtaining a permit?  The Court, recognizing that EPA might be concerned that it lacks regulatory authority to assess administrative penalties for failing to submit a timely permit application, offered these words of consolation:

Prudent builders know that permits do not issue over night and that storm water discharges can happen any time after the start of construction makes the site a point source. They will apply and obtain permits before starting construction to avoid penalties for unlawful discharges that may prove to be severe. That is the regulatory regime Congress crafted.

In other words, developers take note -- counting on the Farmer's Almanac is probably not a sound business plan. 

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A key aspect of being effective is figuring out what needs your attention right now and what can wait until later. EPA seems to understand this.  Every three years, EPA creates a set of national enforcement priorities setting out the areas in which it will focus its inspections, compliance assistance and enforcement actions over the course of those three years. It provides for interesting reading.

For example, the priorities for the years 2008, 2009 and 2010 were:

• Air toxics

• New source review/prevention of significant deterioration

• Concentrated animal feeding operations

• Municipal combined sewer and sanitary sewer overflows

• Storm water
• 
Mineral processing
• 
Financial responsibility
• 
Indian country

The Agency is in the process of setting its priorities for 2011, 2012 and 2013. To identify the possible areas of consideration, EPA collected information from the various regions, states, tribes, associations and the public. Based on the information it received, EPA created the following list of candidates for the upcoming enforcement priorities:

• Air Toxics – EPA is proposing to continue to focus on leak detection and repair and the presence of hazardous air pollutants near schools;
• Concentrated Animal Feeding Operations (CAFOs) – this initiative would focus on the regulation of surface water runoff carrying animal waste into waterways. There is no discussion of air or odor issues;
• Environmental Justice – a review of burdens that pollution has disproportionately placed on vulnerable populations including children, communities of color, Native Americans and the poor;
• Indian Country Drinking Water – it has been determined that the level of noncompliance of public water systems in Indian country is significantly hirer than at comparable public water systems outside of Indian country. This initiative would attempt to identify the reasons why and find a method of correcting those deficiencies;
• Marine Debris – this would focus on debris that is improperly discharged into a water way. Enforcement of current regulations and cleanup activities would be key components of the initiative. It is viewed as a good fit to address along with municipal runoff issues;
• Mineral Processing – mineral processing and mining use strong chemicals and generate large volumes of waste for disposal. Over the past decade, significant damage has been done to the environment from these operations. This initiative would focus on inspections and sampling by EPA;
• Municipal Infrastructure – the storm water and sanitary sewer piping for many cities is outdated and frequently causes discharge events. This initiative would require significant modifications and repairs to many of the city systems;
• New Source Review/Prevention of Significant Deterioration – EPA has determined that many air pollutant sources have made operational changes that have resulted in increased air emissions, but failed to obtain proper permitting. The industrial sectors which will be reviewed are coal-fired electric utilities, cement manufacturing facilities, sulfuric and nitric acid manufacturing facilities, glass manufacturing facilities and lime manufacturing sites;
• RCRA Enforcement – increased emphasis on cleanups of contaminated facilities and creation of a nationally consistent approach to enforcement at all RCRA facilities;
• RCRA Financial Assurance – increased enforcement of determining that sufficient funds are set aside for response and closure of RCRA facilities;
• Resource Extraction – various forms of resource extraction, such as mountaintop mining and oil and gas development, have caused increased concerns about a rise in levels of air pollution and water quality degradation. This initiative would increase the focus on the regulation of these resource extraction activities under CAA, CWA and SDWA, with emphasis on federal lands and Indian Country;
• Pesticides at Day Care Facilities – a study done in 2001 of wipe samples from indoor services at day care centers identified at least one pesticide in every day care center studied. Some centers had up to ten different kinds of pesticides in use. This initiative would investigate the use and effect of pesticides at day care centers;
• Surface Impoundments – many industrial facilities use surface impoundments to treat or store non-hazardous liquid and solid waste which can contaminate surface water, groundwater and air. Additionally, hazardous waste storage in such impoundments without a RCRA permit is a violation of law. EPA estimates there are 18,000 surface impoundments operating and that inspection and oversight is a worthwhile initiative;
• Wetlands – recent studies show a pattern of wetland loss under the Clean Water Act which justifies an enforcement initiative;
• Worker Protection Standards for Agricultural Pesticides – studies show that farm worker families have a higher level of pesticide exposure than non-farm worker families. In light of the number of farm workers and pesticide applicators, an initiative of inspections for both product and use compliance is necessary.

Cynthia Giles, EPA’s Assistant Administrator for Enforcement and Compliance Assurance, spoke at the National Environmental Justice Advisory Council on January 29, 2010. At that time, Ms. Giles indicated that the fifteen new enforcement areas for consideration were likely too many and that, when finally published, there will likely be fewer than nine initiatives for the 2011 through 2013 period. She also indicated that air toxics emissions, large animal feeding operations and new source review violations will likely make the cut for the national enforcement priorities.

It is important for businesses and legal practitioners to carefully note the final list of initiatives. At least over the past three years, a great deal of the EPA’s enforcement activities have been conducted on the topics that they identified as initiatives and there is every reason to believe that this will continue in the future. To be forewarned . . . .

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A recent guest editorial in the Des Moines Register makes an interesting observation about water quality in agricultural states -- it stinks.

The authors state that Iowa has a double standard concerning sewage. That is, there are significant and costly regulations for point sources, such as municipal and industrial wastewater treatment facilities that discharge into rivers and streams, but virtually no regulation of non-point discharges, like the transporting and spreading of manure on farmland that then washes off into the waterways. According to the authors:

If state officials hope to stop the degradation of Iowa’s waters, it does not make sense to ignore the agricultural component, which accounts for at least 90 percent of our water pollution.

To be sure, it’s hard to argue against cleaner water. But is it fair to impose a new regulatory and financial burden on cities and urban industries, while continuing to allow industrial agriculture to spread untreated sewage into the land?

The authors conclude that the agricultural, non-point sources should be held to the same standard as point sources and suggest that agricultural discharges should be required to pass through a wastewater treatment facility, though the article fails to mention the staggering cost of that proposal.

It’s certainly an interesting point, and it is not unique to Iowa or the United States. The Clean Water Act has always given a free ride to non-point pollution sources. Though it may make no scientific sense to say that a 40-acre field that has agricultural runoff is somehow different from a 40-acre field that is being prepared for a subdivision, that has been the regulatory scheme for decades. And it has been true despite the fact that, as pointed out by the authors, the vast majority of water contamination can be attributed to non-point sources.

In the past, even the mention of imposing such costs on agriculture, a significant employer in many state economies, was political suicide -- and maybe it will continue to be. But as EPA and state environmental agencies begin to force more and more costly regulation on point sources (for example, storm water runoff from construction sites), those same sources are going to start pressing the question of why non-point sources, which are significantly larger polluters, are virtually exempt from expensive regulation. It may be that it’s going to become harder and harder to keep this cow sacred. At a minimum, it’s going to make for an interesting debate. 
 

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In his State of the Union speech, President Obama promised / threatened (which eye you use affects the view) to increase nuclear power generation. His proposed budget for fiscal year 2011 gives support to that promise.

The proposed budget increases loan guarantees for nuclear power generation from $18.5 billion  to $54.5 billion. While the proposal certainly has its detractors, any program that gets its funding tripled in the present economic times should be very happy. Is this a setback for renewable energy sources like solar and wind power? The answer appears to be, no.

While the proposed budget certainly increases the support for nuclear power production, it also cut $36 billion in tax benefits over the next decade for oil and gas and $2.3 billion for the coal industry (though, to be fair, these cuts are like giving a manicure to a polar bear) and provides for credit subsidy funding of $500 million to support $3 to $5 billion of loan guarantees for energy efficiency and renewable energy projects. Taken together, these proposals would appear to be a pretty strong indication that Obama wants: 1) less oil and coal; 2) more renewable energy; and 3) more nuclear power generation. 

In the end, Congress will make its own decision as to what projects to fund, but it is notable that this President seems to be indicating that the extreme left voices that rail against allowing any nuclear power need to be ignored. If climate change legislation has a chance in 2010, a nuclear component will certainly be necessary and the President’s proposed budget simply reflects this political reality.

With his statement at the State of the Union and now with his support in the proposed budget, it will be difficult for Republicans to argue that this President is not trying to find a middle ground for climate change legislation. (Who says he hasn’t learned anything from the health care debacle). Now we’ll see if Congress (i.e. the Senate), sees it the same way.

RELATED POST: Will Nuclear Power Be Part Of The Solution?
 

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