Real Property & Environmental Law Alert : New Jersey, New York, Pennsylvania & Delaware Lawyers & Attorneys for Real Estate Development & Environmental Law

Reversing the Second Circuit, the Supreme Court on June 20, 2011 held, in American Electric Power Company v. Connecticut, that the Clean Air Act, along with EPA regulatory action that it authorizes, displaces any federal common-law right to seek abatement of emissions of greenhouse gases (GHGs) from power plants. The Court’s decision means that for the foreseeable future, the debate over the proper scope of federal GHG regulation will take place in the executive and legislative branches and not the courts. It also leaves unanswered the question whether traditional state common-law remedies still have a role to play in GHG regulation.

The case began as two separate lawsuits filed in the Southern District of New York by eight States and the City of New York, and by three nonprofit groups, against five power companies that, according to the complaints, are the five largest emitters of carbon dioxide in the country. The plaintiffs sought injunctive relief in the form of orders to cap and reduce the emissions, invoking both the federal common law of interstate nuisance and state common law. The district court dismissed both actions as presenting non-justiciable political questions, but the Second Circuit reversed. The appellate panel (which included then-Circuit Judge Sonia Sotomayor) held that the suits were not barred by the political question doctrine, that the plaintiffs had standing to bring their claims, and that the Clean Air Act did not displace federal common law. Recognized that EPA has the authority under the Clean Air Act to regulate carbon dioxide as an air pollutant, and the principle that federal common law is displaced when Congress has spoken directly to a particular issue, the appellate court held that at least until EPA takes some specific regulatory action -- beyond its then proposed (but not final) finding that greenhouse gases endanger public health and welfare, the statute does not regulate greenhouse gas emissions, or does not regulate such emissions from stationary sources. Subsequent to the appellate decision, in December 2009, EPA issued its final GHG Endangerment Finding, identifying six GHGs in the atmosphere to be a threat to public health and welfare of current and future generations. Although the Endangerment Finding does not impose any requirements on industry, it is a prerequisite to such regulation.

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On Monday, January 3, 2011, the Environmental Protection Agency published in the Federal Register, 76 Fed. Reg. 5,370 (Jan. 31, 2011), a Notice of Opportunity for Public Input on the Potential Addition of Vapor Intrusion Component to the Hazard Ranking System (the “HRS”). Should this proposal become a rule it would add another contamination pathway to analyze in connection with listing sites on the National Priorities List (the “NPL”).

The HRS is the principal tool used by EPA to determine which contaminated sites to place on the NPL. Under the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”), which was enacted in 1980 and amended in 1986 by the Superfund Amendments and Reauthorization Act (“SARA”), EPA was required to develop a mechanism to identify sites posing the most serious and immediate threat to the environment or human health and create the list of those sites, constituting the NPL. The HRS was developed to handle that directive.

The HRS is a numerical system that takes into account four potential contamination pathways: 1) groundwater migration; 2) surface water migration; 3) soil exposure; and 4) air migration. During the preliminary assessment and site inspection phase of a site remediation, these four pathways are evaluated using three categories: 1) likelihood that a site has released or has the potential to release hazardous substances into the environment; 2) characteristics of the waste; and 3) people or sensitive environments affected by the release. A score is assigned to each pathway based on this analysis and a formula is employed to determine an overall score, which ranges from 0 to 100. A site with a score of 28.50 or more is eligible to be placed on the NPL.

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The EPA has announced that six different New Jersey communities will receive a total of $3.4 million under the agency’s brownfield grant program in FY 2011. The grants will fund assessment and cleanup efforts at contaminated sites so that the sites can be returned to productive use. The grant program, part of EPA’s larger brownfield efforts, will award some $76 million in grants this year, and has awarded over $800 million since its inception. New Jersey’s grants will fund activities at thirteen sites or areas in Newark, Jersey City, Trenton, Elizabeth, Mantua Township, and Maurice River Township.

At the state level, government funding for brownfield revitalization in New Jersey has virtually dried up. As reported on this blog earlier this month, New Jersey’s Brownfield Reimbursement Program has run out of money and is temporarily shut down.

Paul M. Hauge is an Associate in the Gibbons Real Property & Environmental Department.

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On Tuesday, June 7, the Christie Administration released the State’s draft 2011 Energy Master Plan (Master Plan). The Master Plan provides the Administration’s strategic vision of energy in New Jersey. In particular, the “use, management and development of energy in New Jersey over the next decade,” and includes in-depth discussion of New Jersey’s electricity sources, uses, regulations, challenges, and incentives across all users of electricity in the State: residential, commercial, and governmental. These links provide access to the official State of New Jersey Governor’s Release of Tuesday, June 7th, and the full Draft.

Impact on Solar

While the Master Plan will be subject to public hearings before becoming final, the Master Plan supports the State’s solar initiatives. Although the Master Plan raises concerns about excess allocation of resources to certain energy sectors, such as solar, it, however, confirms the State’s commitment to solar as a key part of NJ’s energy future and proposes that incentives remain in place long term. The Master Plan acknowledges “the integral role that solar energy can play in New Jersey’s ability to meet its RPS objective as well as its role as an engine for economic growth.” The Master Plan, however, has encouraged the BPU to “step up its regulatory review of solar PV to ensure that State-sponsored programs represent worthwhile initiatives that achieve a sensible balance among competing ….objectives,” but the Plan clearly does support behind-the-meter commercial/industrial solar installations rather than residential and certain grid-connected systems.

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The Supreme Court in Montana v. Wyoming --U.S.--, 131 S.Ct. 1765 (2011), rejected Montana’s claim that Wyoming’s usage of water depleted the amount of water available to it under the Yellowstone River Compact between Montana and Wyoming. Montana contended that Wyoming breached Article V(A) of the Compact which provided that “appropriative rights to the beneficial uses of the water of the Yellowstone River System existing in each signatory State as of January 1, 1950, shall continue to be enjoyed in accordance with the laws governing the acquisition and use of water under the doctrine of appropriation.”

Better farming techniques of irrigation developed since 1950 have allowed Wyoming farmers to divert the same amount of water but have resulted in reducing the amount of water returning to the river as run off. It is as though Wyoming farmers had been using leaky buckets for irrigation that returned water to the river in 1950, but later bought new buckets that didn’t leak, giving the farmers more water and more use of it, reducing the amount of water returned to the river and available to the downstream Montana users.

The concept the Court focused on was “beneficial use” and diversion, not depletion. The Court considered appropriation as a water right that once it is perfected, “is senior to any later appropriators' rights and may be fulfilled entirely before those junior appropriators get any water at all.” Thus in the Court’s view, as long as Wyoming farmers diverted the same amount of water in 2011 as in l950, they did not violate the compact, even if the diversion caused depletion of the water resources.

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The Brownfield Reimbursement Program (the “Program”), a New Jersey State initiative designed to reimburse developers up to 75% of costs incurred to remediate a brownfield site, has run out of money and is temporarily shut down. This development arrives on the heels of a recent New Jersey Department of Environmental Protection (“NJDEP”) announcement that, effective May 3, 2011, applications to the Underground Storage Tank Fund, a similar initiative to help homeowners remove USTs, will not be reviewed or processed due to insufficient funds.

Effectuated under the Brownfields and Contaminated Site Remediation Act of 1998, the Program was available to any party that is not liable under the Spill Compensation and Control Act N.J.S.A.58:10-23.11g. Funding for reimbursement under the Program was derived from tax revenues and appears to be a victim of the general budget crisis.

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On Friday, June 24, 2011, David A. Brooks, Counsel to the Gibbons Real Property and Environmental Department, will moderate a panel, “Vapor Intrusion: Old Problems - New Rules” at the 2011 Environmental Law Section Forum Weekend presented by the New Jersey State Bar Association and the New Jersey Institute for Continuing Legal Education and co-sponsored by the New Jersey Corporate Counsel Association. This full weekend program presents an annual update on environmental law in New Jersey and will also include panels discussing funding for remediation projects, New Jersey’s licensed site remediation professional program, litigation related to the remediation of urban river systems, the role of non-governmental organizations, renewable energy and climate change, and ethical issues.

The conference will be held at the Golden Inn in Avalon, New Jersey from June 24, 2011 through June 26, 2011. Please click here to register.

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Thanks to a special “extension statute” enacted in 2001, the statute of limitations that requires the State of New Jersey to commence a civil action within ten years of its accrual does not apply to an action for natural resource damages (NRDs) that is brought “pursuant to the State’s environmental laws.” The Appellate Division recently held that the Legislature intended “the State’s environmental laws” to include the common law -- or at least the common law of strict liability -- and revived a claim that otherwise would have been time-barred.

The State’s Department of Environmental Protection (DEP) filed two complaints against Exxon Mobil Corporation in August 2004, seeking natural resource damages for discharges of pollutants at sites in Linden and Bayonne under the Spill Act and common-law theories of nuisance and trespass. DEP later amended its complaints to add counts sounding in strict liability.

When the trial court dismissed the nuisance and trespass claims, finding that they were time-barred because the extension statute did not apply to such common-law claims, DEP did not appeal that ruling. But when the trial court reached the same conclusion about the common law strict liability claim, DEP filed an interlocutory appeal, which the Appellate Division agreed to hear. Reversing the trial court, the appellate court held that the extension statute did apply, such that DEP’s strict liability claim was not time-barred.

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