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Environment, Energy, and Resources Law: The Year in Review 2012 PDF

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ISBN: 978-1-61438-988-0 ISSN: 1946-9640 Copyright 2013 American Bar Association. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. To request permission, contact the ABA’s Department of Copyrights and Contracts via www.americanbar.org/utility/reprint. The material contained herein does not necessarily express the views or position of the American Bar Association, the Section of Environment, Energy, and Resources, or The University of Tulsa College of Law. The materials contained herein represent the opinions of the authors and editors and should not be construed to be those of either the American Bar Association or the Section of Environment, Energy, and Resources unless adopted pursuant to the bylaws of the Association. Nothing contained herein is to be considered as the rendering of legal advice for specific cases, and readers are responsible for obtaining such advice from their own legal counsel. These materials and any forms and agreements herein are intended for educational and informational purposes only. ABA SECTION OF ENVIRONMENT, ENERGY, AND RESOURCES 2012–2013 COUNCIL Executive Committee Chair ALEXANDRA DAPOLITO DUNN Chair-Elect Vice Chair Secretary Budget Officer WILLIAM L. PENNY STEVEN T. MIANO SONYA L. CHANNING J. MARTIN BASKERVILLE Education Officer Membership and Publications Officer Immediate Past Chair PETER C. WRIGHT Diversity Officer SETH A. DAVIS IRMA S. RUSSELL PAMELA E. BARKER Section Delegates to the ABA House of Delegates LEE A. DEHIHNS, III and SHEILA SLOCUM HOLLIS Council Members ROBIN K. CRAIG JEFFERY S. DENNIS JONATHAN W. KAHN AMY L. EDWARDS TRACY D. HESTER LYLE DAVID LARSON FRANCINE MARIE FFOLKES ROGER R. MARTELLA, JR. KAREN MIGNONE HOWARD KENISON JAMES M. STUHLTRAGER REBECCA WRIGHT PRITCHETT JOHN P. MANARD, JR. KAREN M. WARDZINSKI Special Committee on The Year in Review Chair: JOHN E. THORSON Section Director: DANA JONUSAITIS THE UNIVERSITY OF TULSA COLLEGE OF LAW EDITORIAL BOARD Faculty Advisor: ROBERT BUTKIN Student Editors Managing Editor ERIN POTTER Executive Editors ALAN BARKER DANIELLE DAVIS KIMBERLY WENDELL Senior Staff DEREK NORRIS Staff MITCHELL S. ARNOLD KURT BAUMGAERTNER ADAM BENDER MATTHEW COMEAUX AUBRA DRYBREAD JOEL P. JOHNSTON BRYAN LOWER TROY MCPHERSON SAM PERRINE This page is intentionally left blank. SUMMARY OF CONTENTS Introduction ................................................................................................................... xvii Highlights of The Year in Review 2012...................................................................... xviii Environmental Committees Chapter 1 • Agricultural Management ...........................................................................1 Chapter 2 • Air Quality ..................................................................................................7 Chapter 3 • Endangered Species ..................................................................................30 Chapter 4 • Environmental Disclosure .........................................................................37 Chapter 5 • Environmental Enforcement and Crimes ..................................................43 Chapter 6 • Environmental Litigation and Toxic Torts ...............................................50 Chapter 7 • Environmental Transactions and Brownfields ..........................................60 Chapter 8 • Pesticides, Chemical Regulation, and Right-to-Know .............................75 Chapter 9 • Superfund and Natural Resource Damages Litigation .............................85 Chapter 10 • Waste and Resource Recovery ................................................................99 Chapter 11 • Water Quality and Wetlands .................................................................106 Energy and Resources Committees Chapter 12 • Energy and Environmental Markets and Finance .................................121 Chapter 13 • Energy and Natural Resources Litigation .............................................129 Chapter 14 • Energy and Natural Resources Market Regulation ...............................144 Chapter 15 • Energy Infrastructure and Siting ...........................................................161 Chapter 16 • Forest Resources ...................................................................................168 Chapter 17 • Hydro Power .........................................................................................175 Chapter 18 • Marine Resources..................................................................................181 Chapter 19 • Mining and Mineral Extraction .............................................................193 Chapter 20 • Native American Resources ..................................................................202 Chapter 21 • Nuclear Law ..........................................................................................213 Chapter 22 • Oil and Gas ...........................................................................................218 Chapter 23 • Petroleum Marketing ............................................................................257 Chapter 24 • Public Land and Resources ...................................................................267 Chapter 25 • Renewable, Alternative, and Distributed Energy Resources ................273 Chapter 26 • Water Resources ...................................................................................280 Cross Practice Committees Chapter 27 • Alternative Dispute Resolution .............................................................307 Chapter 28 • Climate Change, Sustainable Development, and Ecosystems ..............313 Chapter 29 • Constitutional Law ................................................................................338 Chapter 30 • International Environmental and Resources Law .................................349 Chapter 31 • Science and Technology .......................................................................366 Chapter 32 • Smart Growth and Green Buildings ......................................................371 Council Related Committee Chapter 33 • Ethics.....................................................................................................377 v TABLE OF CONTENTS Chapter 1 AGRICULTURAL MANAGEMENT ............................................................................ 1 I. SELECTED EPA ACTIONS ON CONCENTRATED ANIMAL FEEDING OPERATIONS............. 1 A. Revision of CAFO Clean Water Act Regulation .................................................... 1 B. EPA Withdraws Proposed Rule for CAFO Reporting ........................................... 1 C. Solicitation for Comments on Revisions to Federal CAFO Regulations ............... 1 D. Controversy over EPA’s use of Aerial Surveillance of CAFOs ............................. 2 E. EPA Oversight of Iowa’s CAFO Regulation ......................................................... 2 II. GENETICALLY ENGINEERED CROPS AND ANIMALS ....................................................... 2 A. NEPA Challenges to USDA Regulations of Genetically Engineered (GE) Crops ......................................................................................... 2 B. USDA Permits for Field Trials of GE Crops and Animals .................................... 3 C. Challenges to Planting of GE Crops on Federal Wildlife Refuges........................ 4 D. Bayer Settlement and Trials Concerning Liberty Link Rice .................................. 5 III. FEDERAL FARM BILL .................................................................................................... 5 IV. FARM BILL CONSERVATION COMPLIANCE CASE ........................................................... 6 V. SELECTED STATE AND LOCAL ACTION INVOLVING AGRICULTURE ................................ 6 A. California Amends Clean Air Act State Implementation Plan for Pesticides ........ 6 B. Urban Agriculture Developments .......................................................................... 6 Chapter 2 AIR QUALITY .................................................................................................................. 7 I. JUDICIAL DEVELOPMENTS ............................................................................................ 7 A. Title I – Federal (FIPs) and State Implementation Plans (SIPs), Conformity, Federal Facilities ................................................................................................... 7 B. Title I – Displacement of Common Law Claims .................................................... 9 C. New Source Review (NSR), Prevention of Significant Deterioration (PSD), New Source Performance Standards (NSPS) ...................................................... 10 D. Title II – Mobile Sources and Fuels..................................................................... 11 E. Title III – Hazardous Air Pollutants .................................................................... 12 F. Title V – Permitting.............................................................................................. 12 G. Civil and Criminal Enforcement .......................................................................... 13 H. Citizen Suits ......................................................................................................... 13 I. Procedural Issues ................................................................................................ 14 II. REGULATORY DEVELOPMENTS ................................................................................... 14 A. Title I – Federal (FIPs) and State Implementation Plans (SIPs), Conformity, Federal Facilities ................................................................................................. 14 B. New Source Review (NSR), Prevention of Significant Deterioration (PSD), New Source Performance Standards (NSPS) ...................................................... 20 C. Title II – Mobile Sources and Fuels..................................................................... 22 D. Title III – Hazardous Air Pollutants .................................................................... 24 E. Title V – Permitting.............................................................................................. 26 F. Title VI ................................................................................................................. 26 G. Greenhouse Gas Emissions ................................................................................. 27 Chapter 3 ENDANGERED SPECIES ............................................................................................ 30 I. LEGISLATIVE DEVELOPMENTS .................................................................................... 30 II. ADMINISTRATIVE DEVELOPMENTS ............................................................................. 30 III. JUDICIAL DEVELOPMENTS .......................................................................................... 31 A. Section 4: Listings, Critical Habitat Designation, and Recovery Plans .............. 31 vi B. Section 5: Habitat Acquisition ............................................................................. 33 C. Section 6: State Cooperative Programs............................................................... 33 D. Section 7: Federal Agency Conservation Duty, Jeopardy Standard Consultations, and Incidental Take Statements ................................................... 33 E. Section 9: Take Prohibition ................................................................................. 36 F. Section 10: Permits and Experimental Populations ............................................ 36 G. Section 11: Enforcement, Citizen Suits, Standing, and Jurisdiction Issues ......... 36 H. Miscellaneous ESA Topics and Related Federal and State Laws ....................... 36 Chapter 4 ENVIRONMENTAL DISCLOSURE ........................................................................... 37 I. OVERVIEW ................................................................................................................ 37 II. HYDRAULIC FRACTURING DISCLOSURE ...................................................................... 37 A. Federal Activity ................................................................................................... 37 B. State Activity ........................................................................................................ 38 C. Public Group Activity .......................................................................................... 38 III. SEC ENFORCEMENT ACTIONS AND SHAREHOLDER CLASS ACTIONS........................... 39 IV. SHAREHOLDER RESOURCES ........................................................................................ 40 V. STOCK EXCHANGE ACTIVITY ...................................................................................... 41 VI. FEDERAL ACCOUNTING STANDARDS BOARD (FASB) ACTIVITY ................................. 42 VII. EPA’S DE-EMPHASIS ON VOLUNTARY DISCLOSURE ................................................... 42 Chapter 5 ENVIRONMENTAL ENFORCEMENT AND CRIMES ........................................... 43 I. ENVIRONMENTAL ENFORCEMENT RESULTS FOR 2012 .............................................. 43 II. ENVIRONMENTAL ENFORCEMENT INITIATIVES FOR 2012 ............................................ 44 III. NOTABLE SUPREME COURT CASES ............................................................................. 44 A. Sackett v. Environmental Protection Agency ....................................................... 44 B. Southern Union Co. v. United States ................................................................... 45 IV. SUMMARY OF OTHER SIGNIFICANT CASES .................................................................. 46 A. Criminal Cases .................................................................................................... 46 B. Civil Cases ........................................................................................................... 48 Chapter 6 ENVIRONMENTAL LITIGATION AND TOXIC TORTS ...................................... 50 I. DEEPWATER HORIZON: SETTLEMENTS AND DECISIONS ............................................ 50 II. CLIMATE-BASED TORT ACTION .................................................................................. 51 III. TRESPASS ................................................................................................................... 53 IV. EXPERTS/CAUSATION ................................................................................................. 54 V. FRACKING ................................................................................................................... 56 VI. DAMAGES ................................................................................................................... 56 VII. CLASS ACTIONS .......................................................................................................... 57 VIII. OTHER TORT-BASED ACTIONS ................................................................................... 57 Chapter 7 ENVIRONMENTAL TRANSACTIONS AND BROWNFIELDS ............................. 60 I. PARENT AND SUCCESSOR LIABILITY ......................................................................... 60 A. Parent Liability .................................................................................................... 60 B. Successor Liability ............................................................................................... 61 II. INDIVIDUAL LIABILITY ............................................................................................... 62 III. CONTRACTUAL LIABILITY .......................................................................................... 63 IV. BANKRUPTCY ............................................................................................................. 64 V. LENDER LIABILITY ..................................................................................................... 65 vii VI. BROWNFIELDS ............................................................................................................ 66 A. Cases .................................................................................................................... 66 B. Legislative Update ............................................................................................... 67 VII. ENVIRONMENTAL INSURANCE .................................................................................... 68 VIII. INSTITUTIONAL CONTROLS ........................................................................................ 69 IX. ENVIRONMENTAL INVESTIGATIONS/DUE DILIGENCE .................................................. 70 A. Changes and Proposed Changes to the ASTM International (ASTM) Standards ............................................................................................... 70 B. Environmental Due Diligence for Hydraulic Fracturing Operations ................. 71 X. IMPACT OF BUILDING ISSUES ON TRANSACTIONS ........................................................ 72 A. Vapor Intrusion Cases ......................................................................................... 72 B. Lead-Based Paint ................................................................................................. 73 C. PCBs .................................................................................................................... 73 Chapter 8 PESTICIDES, CHEMICAL REGULATION, AND RIGHT-TO-KNOW ............... 75 I. TOXIC SUBSTANCES CONTROL ACT (TSCA) ............................................................. 75 II. PESTICIDES ................................................................................................................. 77 A. Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) ........................... 77 B. Endangered Species Act (ESA) ............................................................................ 78 III. EMERGENCY PLANNING AND COMMUNITY RIGHT-TO-KNOW ..................................... 79 IV. NANOTECHNOLOGY .................................................................................................... 80 V. HYDRAULIC FRACTURING (HF) .................................................................................. 81 VI. GENETICALLY ENGINEERED (GE) PRODUCTS ............................................................. 82 VII. GREEN CHEMISTRY ..................................................................................................... 83 Chapter 9 SUPERFUND AND NATURAL RESOURCE DAMAGES LITIGATION .............. 85 I. SUPERFUND: ADMINISTRATIVE AND REGULATORY DEVELOPMENTS .......................... 85 II. SUPERFUND: JUDICIAL DEVELOPMENTS ...................................................................... 85 A. Applicability and Constitutional Issues ............................................................... 85 B. Jurisdiction .......................................................................................................... 86 C. Standing ............................................................................................................... 86 D. Elements of Liability ............................................................................................ 87 E. Liability of Particular Parties ............................................................................. 87 F. Joint and Several Liability: Divisibility ............................................................... 89 G. Private Cost Recovery, Contribution and Contribution Protection .................... 90 H. Allocation and Indemnification ........................................................................... 92 I. Defenses ............................................................................................................... 93 J. Recoverable Response Costs (Including Attorneys’ Fees) .................................. 96 K. Claims Against the Government, Including Section 106(b) Actions ................... 97 L. NPL ...................................................................................................................... 98 M. Preemption ........................................................................................................... 98 N. Miscellaneous ...................................................................................................... 98 III. NATURAL RESOURCE DAMAGES ................................................................................. 98 Chapter 10 WASTE AND RESOURCE RECOVERY ................................................................... 99 I. LITIGATION DEVELOPMENTS .................................................................................... 99 A. Southern Union Co. v. U.S. .................................................................................. 99 B. National Solid Wastes Management Association v. City of Dallas ..................... 99 C. Campbell County v. Royal ................................................................................. 101 D. American Eagle Waste Industries, LLC v. St. Louis County ............................. 101 viii E. Gracie Point Community Council v. New York State Department of Environmental Conservation ............................................................................. 102 F. E-Waste Cases ................................................................................................... 103 G. Developments in Cases Reported in the 2011 Annual Report ........................... 104 II. REGULATORY DEVELOPMENTS ................................................................................. 105 A. State Requirements for E-Waste ........................................................................ 105 B. Non-Hazardous Secondary Materials Rule ....................................................... 105 C. Coal Combustion Residuals Regulations ........................................................... 105 Chapter 11 WATER QUALITY AND WETLANDS .................................................................... 106 I. JUDICIAL DEVELOPMENTS ........................................................................................ 106 A. Clean Water Act (CWA) Section 303 Water Quality Standards ........................ 106 B. CWA Section 303(d) – Total Maximum Daily Loads (TMDLs) ......................... 108 C. CWA Sections 304 and 306 – Criteria and Guidelines and Performance Standards ..................................................................................... 109 D. CWA Section 309 – Enforcement ....................................................................... 109 E. Section 401 – State Certification ....................................................................... 110 F. CWA Section 402 – National Pollutant Discharge Elimination System (NPDES) ................................................................................................ 111 G. CWA Section 404 – Wetlands ............................................................................ 114 H. CWA Section 505 ............................................................................................... 115 II. ADMINISTRATIVE DEVELOPMENTS ........................................................................... 117 A. CWA Section 303 – Water Quality Standards ................................................... 117 B. CWA Section 303(d) – Total Maximum Daily Loads (TMDLs) ......................... 117 C. CWA Sections 304 and 306 – Criteria and Guidelines, and Performance Standards ........................................................................................................... 117 D. CWA Section 402 – National Pollutant Discharge Elimination System (NPDES) ................................................................................................ 119 III. LEGISLATIVE DEVELOPMENTS .................................................................................. 120 A. CWA Section 303 – Water Quality Standards ................................................... 120 B. CWA Section 303(d) – Total Maximum Daily Loads (TMDLs) ......................... 120 Chapter 12 ENERGY AND ENVIRONMENTAL MARKETS AND FINANCE ...................... 121 I. LEGIT EMIT: CALIFORNIA LOW CARBON FUEL STANDARD VS. THE DORMANT COMMERCE CLAUSE ................................................................................................. 121 II. NOX/SO2 ALLOWANCE TRADING SCHEME VACATED ................................................ 122 III. INNOVATIVE AND ADVANCED TECHNOLOGY GREENHOUSE GAS CREDIT FOR HEAVY DUTY VEHICLES AND ENGINES ..................................................................... 124 A. Introduction ....................................................................................................... 124 B. GHG Regulatory Background ........................................................................... 124 C. Innovative Technology Credits .......................................................................... 124 D. Advanced Technology Credits ........................................................................... 125 E. Conclusion ......................................................................................................... 125 IV. INCREASING TREND IN JOINT VENTURES BETWEEN DOMESTIC AND FOREIGN OIL COMPANIES ........................................................................................................ 126 V. IMPLICATION OF FOREIGN INVESTMENT IN SHALE EXPLORATION AND PRODUCTION ............................................................................................................ 127 A. Introduction ....................................................................................................... 127 B. Discussion .......................................................................................................... 127 C. Future Implications ........................................................................................... 128 ix Chapter 13 ENERGY AND NATURAL RESOURCES LITIGATION ...................................... 129 I. LITIGATION OVER INTERNATIONAL ENERGY AND RESOURCES OPERATIONS ............. 129 A. Claims for Tortious Interference and Award of $66.5 Million in Actual Damages in Connection with Failed Oil and Gas Project in Bulgaria Upheld on Appeal .............................................................................................. 129 B. Court Finds that Sovereign Immunity Compelled the Dismissal of the Plaintiffs’ Lawsuit Against the Republic of Iraq, and that the “Commercial Activity” Exception was not Available Under the Facts Presented................... 130 C. Court Resolves Dispute Over the Manner for Selecting Arbitrators for a Three-Party Dispute Under an Arbitration Clause that Appeared Designed for Only Two-Party Disputes ............................................................................. 131 D. Court Finds that a Series of Prior Lawsuits Over the Same Subject Matter Precluded the Plaintiffs’ Present Suit and that Sanctions Were Appropriate ... 132 E. Based Upon the Doctrine of forum non conveniens, Court Finds that Negligence Suit Filed in the Texas Courts Should be Dismissed and Refiled in the Courts of Peru .......................................................................................... 133 F. Court Affirms Order Dismissing Case for Lack of Personal Jurisdiction ......... 135 G. Court Affirms Dismissal of RICO Claims Against Arbitration Counsel ............ 136 II. OTHER SELECT ENERGY AND NATURAL RESOURCES LAWSUITS ............................... 136 A. Court Addresses the Extent to Which Oil and Gas Royalty Auditors Employed by the Federal Government may File qui tam Suits Using Information Obtained, and Previously Disclosed to the Government, as Part of Their Job Responsibilities for the Government ................................. 136 B. Court Denies Motion to Dismiss Complaint Alleging Violations of Securities Laws and Misrepresentations by Coal Mining Company Concerning its Safety and Compliance Record and Practices .......................... 137 C. Rulings Entered in the Litigation Concerning the Deepwater Horizon Oil Spill in the Gulf of Mexico in 2010 .............................................................. 138 D. Suits Related to the Deepwater Horizon Oil Spill Filed by Plaintiffs Alleging that the Defendant Companies Used Their Contributions in Dealing with the Incident but did not Compensate Them .................................. 140 E. Hollywood Intersects with the Deepwater Horizon Oil Spill ............................ 142 F. Reserve Pits Used in Commercial Oil Development are Found to be Outside the Reach of the Migratory Bird Treaty Act ......................................... 142 G. Applying Illinois law, Court Rejects Attempt to Convert a Letter of Intent that Expressly Disclaimed any Binding Effect into an Enforceable Contract ... 143 Chapter 14 ENERGY AND NATURAL RESOURCES MARKET REGULATION ................ 144 I. ELECTRICITY MARKETS ............................................................................................ 144 A. Federal Developments ....................................................................................... 144 B. State Developments: Efforts to Promote/Curtail Renewables, Increase In-State Capacity, or Other Relevant Developments ......................................... 148 II. NATURAL GAS DEVELOPMENTS ................................................................................ 151 A. FERC Enforcement Actions Under Natural Gas Act Section 5 ......................... 151 B. Natural Gas Export Issues – Liquefied Natural Gas ......................................... 151 C. Natural Gas Pipeline Security Issues ................................................................ 152 D. Gas/Electric Interdependence............................................................................ 153 E. Impact of Commodity Futures Trading Commission Regulations on the Natural Gas Pipeline Sector .............................................................................. 153 III. FERC ENFORCEMENT AND DODD-FRANK UPDATE ................................................... 154 A. Ongoing FERC Enforcement Actions ................................................................ 154 x

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