Supreme Court Rules on Permits
The recent Supreme Court case of Koontz v. St. Johns River Water Management District, 133 S. Ct. 2586 (2013), has generated a lot of commentary and debate in the legal community, including speculation concerning the ramifications of the case on various land use permitting scenarios. Oversimplifying the facts and legal theories, the Supreme Court extended previous regulatory takings rulings to a situation whereby the governmental entity denied a permit for the failure of the applicant to agree to “suggested” alternative concessions proposed by the local government. The alternative concessions included mitigation measures, conservation easements, and infrastructure improvements.
Before Koontz, the Supreme Court had only placed a higher burden on a government entity in certain types of permit decisions to justify requiring special concessions, primarily instances in which the government approved a permit subject to a demand to dedicate an interest in property to the public. To be valid, the exaction imposed had to closely relate to the harm the local government was trying to protect against, and the exaction had to reasonably deal with, and be “proportionate” to, the adverse impact of the activity conducted under the permit on the applicable community.
Under the Supreme Court’s directive in Koontz, the government entity now basically has the burden in permit denials and monetary exactions to show that its actions were acceptable (that is, subject to a higher scrutiny review by the courts), as opposed to a government action being deferred to by the courts and the burden placed on the applicant to demonstrate that the exaction was an unconstitutional “taking.” Under Koontz, this higher scrutiny standard now applies to land use permit denials and monetary exactions.
Mr. Koontz must litigate further to determine whether the suggested alternative concessions are closely related to the harm the local government was trying to protect against and whether the concessions are proportionate. The practical implication of the Koontz case is that local governments will need to be more conservative when negotiating mitigation measures for permit approvals.
U.S. House Approves Coal Ash Bill
The U.S. House of Representatives passed the Coal Residuals Reuse and Management Act, H.R. 2218, on July 25, 2013. The legislation would regulate the ash from coal-fired power plants by classifying it as a solid waste under Subtitle D of the federal Resource Conservation and Recovery Act.
The prospect of some form of enhanced regulation of coal ash has been a contentious issue for several years. Following a 2008 breach of a coal ash impoundment operated by the Tennessee Valley Authority (TVA) in Kingston, Tennessee, the Environmental Protection Agency (EPA) proposed alternative regulatory options, one that would classify the ash as a hazardous waste and the other that would regulate the material as a solid waste. After alternative draft regulations were published, EPA received over 450,000 comments, many of which focused on various problems with regulation of the material as a hazardous waste.
Such regulation would necessitate management of the materials in permitted hazardous waste landfills or disposal units, and the existing permitted disposal capacity would be overwhelmed in such an event. The prospect of attempting to permit and build new hazardous waste disposal facilities is likely to meet substantial opposition (and delay) from communities where such facilities are proposed. Finally, but significantly, much of the ash is currently used in a number of products, including concrete, wallboard, and roadbed construction. Classification of the ash as hazardous waste would almost certainly end these beneficial reuses out of concern over litigation and potential liability issues.
Thus, because the public comment period ended in November 2010, EPA has apparently been unable to select one of the two options and issue final regulations. Arguably, part of this delay has been because of the attention the issue received during the last Congress, and which has carried over to the current session that began in January.
The bill passed by the House would settle the regulatory question without EPA action. It also is an indication that prospects for overall congressional approval appear to be good. The House bill as approved is very similar to a bill introduced previously in the Senate with strong bipartisan support. Furthermore, EPA officials formally signaled a willingness to work with Congress on such legislation during a hearing on the issue held by a House subcommittee in April. EPA has been unwilling to commit to a definitive schedule to issue a final rule, and the delay indicates that the Agency has recognized that Congress is likely to act and is giving that prospect every opportunity to develop.
EPA Considers Updates to All Appropriate Inquiries Rule
On August 15, 2013, EPA published by “direct final rule” an amendment to the All Appropriate Inquiries Rule, 40 C.F.R. Part 312, by adding reference to the American Society for Testing and Materials (ASTM) International’s E1527-13 “Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process.” ASTM’s E1527-13 Phase I standard is an updated version of the E1527-05 standard issued in 2005.
Under the amendment, prospective purchasers of real property that seek protection from environmental liability would have been afforded new options to satisfy the “all appropriate inquiries” requirements of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) in conducting their environmental due diligence. EPA proposed to allow the option of following any of (1) the rules and procedures set forth in 40 C.F.R. Part 312, (2) ASTM E1527-05 (Phase I ESA, 2005 standard), (3) ASTM E2247-08 (Phase I ESA for forestland or rural property), or (4) under EPA’s direct final action, the ASTM E1527-13 standard (Phase I ESA, 2013 standard).
In response to the proposed amendment, EPA received comments critical of allowing an option to use the 2005 or 2013 ASTM Phase I standard in conducting due diligence. Critics said that adoption of the new rule would create a “two-tier” due diligence market and urged EPA to choose one standard or the other. Because EPA received adverse comments, EPA is expected to withdraw the rule and issue a revised proposed rule subject to public notice and comment. The “direct final rule” would then become effective November 13, 2013. It remains possible but unclear that a revised rule would become final by that date.
ASTM Finalizing Revisions to Phase I ESA Standards
The ASTM E50 Committee is finalizing changes to the E1527 “Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process,” with an expected release date this fall.
Three key changes are anticipated to be included in the revised standard. First, definitions for Environmental Conditions will be altered. Recognized and Historic Recognized Environmental Conditions (REC and HREC) will be simplified, and a new definition for “Controlled Recognized Environmental Conditions” (CREC) will be introduced to identify RECs that have been conditionally closed. Second, after the revisions, environmental professionals will have a duty to consider the significance of available regulatory agency files and provide a rationale if these files are not reviewed. Third, environmental professionals will be required to consider vapor encroachment and intrusion as a potential pathway for human exposure and migration of contaminants. Studies will not be required under the standard, but this change may lead to more recommendations for Phase II investigations focusing on vapor intrusion pathways.