On Wednesday, April 17, 2013, PHMSA issued a final rule increasing civil penalties for certain knowing violations of the Federal Hazardous Material Transportation Laws and Regulations. The penalties were increased to reflect changes mandated by Congress in 2012 amending 49 U.S.C. § 5123(a). The increased maximum penalties apply to violations occurring on or after August 1, 2012.
State and federal environmental agencies continue to focus enforcement efforts on the management of “waste” retail products, including cosmetics, pharmacy and lawn and garden supplies. The US EPA has also announced its intentions to consider additional hazardous waste regulations and/or guidance focused specifically on the management of waste retail products.
Recent state enforcement efforts have resulted in substantial penalties against retail outlets in connection with the management of discarded commercial products. Most recently, Walgreen Company agreed to pay $16.6 million to settle a hazardous waste management and other charges in a settlement with the State of California. The case was related to the alleged improper handling and disposing of waste pesticides, batteries, electronic devices, over the counter medicines, bleach, paint, aerosol, and automotive products. These products are commonly found on the shelves of many retail outlets, but when unsold and discarded, they are subsequently treated as waste materials. Home Depot agreed to settle similar charges in California.
Many companies distributing products classified as hazardous materials under DOT regulations at 49 C.F.R. struggle with the tension between providing quality customer service by accepting returns of product with the difficulty in ensuring DOT compliance during transportation of the returned product. Some distributors use their own vehicles to pick-up returns; others rely on the customer to figure it out. The complexity of the DOT hazmat regulations makes these transactions tricky, but they are occurring with great frequency as distributors strive to be service oriented and develop customer loyalty.
DOT recognizes that returned hazmat products may justify a more relaxed approach because they pose less of threat to commerce and the environment, and because encouraging product returns discourages their improper handling and disposal. On July 5, 2012, DOT’s Pipeline and Hazardous Materials Safety Administration (PHMSA) announced an Advanced Notice of Proposed Rulemaking on this subject. 77 Fed.Reg. 39662. Distributors of any product that is classified as DOT hazmat should take note of this opportunity to comment on the benefits derived by encouraging returns of hazmat products without imposing regulatory constraints that have the ultimate effect of discouraging environmental protection and increasing the costs of doing business.
In a stinging 151-page order, a federal district court awarded a former refinery manager and his wife $1,677,000 as the result of a malicious prosecution of an alleged environmental crime investigated by USEPA and the FBI. Vidrine v. United States, Case No. 07-1204 (W.D. La. 9/30/11).
The timeline in the underlying criminal case is remarkable. Read more in an article I recently published.
A federal district court recently granted a purchaser’s motion to dismiss a seller’s third party complaint demanding indemnification for over $841,000 of response costs incurred by U.S. EPA.
In United States v. ARG Corporation, Case No. 10-311 (N.D. Ind. 2011), ARG owned an industrial site for 6 years, and then sold it to the City of South Bend. Within days after the closing, the City notified U.S. EPA that it feared hazardous substances left on the property presented an imminent danger to public health. The Government sued ARG under CERCLA for reimbursement of over $841,000 in response costs. ARG filed a third party complaint against the City for indemnification based upon the City’s purchase agreement, claiming that the City was responsible to pay for the cleanup. Neither party argued that the contract language was ambiguous, just that the language should be interpreted in their favor.
The contract language at issue stated as follows:
The Seller shall remain solely financially responsible for the Remediation Activities arising from the Seller’s ownership, use or operation of the property prior to the Closing Date, provided however, that the Purchaser covenants not to execute against the Seller’s assets to satisfy the Seller’s financial responsibilities for remediation of pre-closing environmental damage except for the proceeds of recoveries under the general liability policies issued to the seller prior to closing.
The Purchaser shall be solely financially responsible for the Remediation Activities arising from the Purchaser’s ownership, use or operation of the property after the Closing Date.
The court explained that its goal was to ascertain the intent of the parties as determined by first looking to the plain and ordinary meaning of the contract language. Clear and unambiguous language is given its plain and ordinary meaning. So merely because the parties disagreed about how the language should be interpreted, did not create an ambiguity.
The court held that this language unambiguously stated that ARG was solely responsible for remediating hazardous substances on the property arising from ARG’s ownership, use, or operation prior to the closing, while the City was solely responsible for such activities after the closing.
The court also held that the provision that the City would only seek recovery from ARG’s insurers did not mean that the City agreed to indemnify ARG if ARG was forced to pay the Government for remediating hazardous substances.
Finally, the Court held that ARG’s claim that the parties’ pre-contract negotiations that the City would fully pay for any remediation costs was irrelevant given the clear language in the contract and the contract’s merger provisions; i.e., the agreement embodies the entire agreement between the parties, it cannot be varied except by written agreement of the parties, and “no representation, promise, or inducement not included in this agreement shall be binding on the parties hereto.”
On June 8, 2011, U.S. EPA announced that it was releasing to the public information revealing the identities of over 150 chemicals referenced in 104 health and safety studies previously submitted to the Agency as confidential business information (CBI). The Agency's action was the latest step in an initiative announced in 2010 to declassify chemical information submitted to the Agency. An initial round of chemical information was declassified from 42 other health and safety studies in March. The latest disclosure is the result of voluntary declassifications by some companies in response to an Agency challenge in February to declassify such data, along with additional declassifications performed by the Agency. According to U.S. EPA, the chemicals involved in the latest round of declassifications included those used in "dispersant formulations and consumer products such as air fresheners, non-stick and stain resistant materials, fire resistant materials, nonylphenol compounds, perfluorinated compounds, and lead." A copy of the various studies declassified by U.S.EPA can be found on the Agency's website.
In a June 7, 2011, letter to the Administrator of the Office of Management and Budget's (OMB's) Office of Information and Regulatory Affairs, the U.S. Chamber of Commerce asked OMB to "urge" U.S. EPA to immediately "suspend the consideration and initiation" of all action under U.S. EPA's earlier-announced Chemical Action Plans (CAPs) to list chemicals as ones that present or may present an unreasonable risk of injury to health or the environment under Section 5(b)(4) of the Toxic Substances Control Act (TSCA). To date, U.S. EPA has released eight CAPs under TSCA, and five of those plans include such potential listing actions under Section 5(b)(4) of TSCA. According to the U.S. Chamber, U.S. EPA's consideration of such listings under Section 5(b)(4) represents a "tectonic shift in EPA policy," as "the Agency has not listed a single chemical under Section 5(b)(4)(A) in the thirty-five years since TSCA's enactment." According to the U.S. Chamber, U.S. EPA should not initiate any such action now, until after the Agency first issues "clear, scientifically sound and economically rational listing criteria," and only if in full compliance with the Information Quality Act (IQA), the Administrative Procedure Act, and "all relevant provisions of Executive Order 13563, including robust benefit-cost analyses, public participation and regulatory flexibility." Because, according to the U.S. Chamber, U.S. EPA has not yet considered all of these various factors, the Chamber has asked that all potential listings under Section 5(b)(4) of TSCA be suspended until after: "fixed and scientifically sound listing criteria have been properly promulgated;" "EPA has carried out all the benefit-cost analyses, identified the best, most innovative, and least burdensome tools for achieving regulatory ends, appropriately provided for public participation, and other applicable measures under Executive Order 13563 for each CAP"; and EPA has complied "in all respects with the IQA." A copy of the U.S. Chamber's letter can be found here.
The Indiana Department of Environmental Management (IDEM) recently released its new Remediation Closure Guide. The Remediation Closure Guide is a non-rule policy document that provides guidance for the investigation, remedy selection, and risk-based closure of contaminated or potentially contaminated sites. The Guide replaces IDEM’s Risk Integrated System of Closure (RISC) Technical Guidance and Users Guide, and is the product of House Enrolled Act 1162 (2009), which amended several statutes regulating environmental remediation projects in Indiana.
The public comment period on EPA’s proposed rule regarding the federally enforceable regulation of “coal combustion residuals” (“CCR”) ended on November 19, 2010. CCR, which is essentially coal ash and related product, is used in a variety of applications, including: concrete; road base; structural fill; wallboard; and agricultural use. Therefore, EPA’s potential regulation of CCR impacts a variety of industries.