Archive for the ‘Environmental Enforcement’ Category

27 Mar

More Fracking Squabbles in Wyoming

Posted by Kyle Hargus in Environmental Enforcement, EPA, Fracking, Mining.

Photo by Wikimedia Commons. Some rights reserved.

Photo by Wikimedia Commons. Some rights reserved.

Natrona County District Judge Catherine Wilking dealt a blow to Wyoming denizens (Wyomingites?) seeking specific information on chemicals currently being pumped into the ground that could be potentially harmful to the environment. Essentially, the court in Casper ruled in favor of the state of Wyoming, which already has the sought-after intelligence about these chemicals (thanks to a 2010 rule in which Wyoming became one of the first states to require fracking companies to disclose their ingredients to the state government) but refuses to share this information with the general public.

A bit of background: the chemicals in question are used by mining companies to lubricate the cracks in the earth created by hydraulic fracturing (fracking), so that loose sand will pour in and hold the cracks open, to more easily access the natural gases beneath. Environmentalists across the globe have grave concerns about the environmental consequences of fracking, as readers of this blog already know. Wyoming itself is already on red alert with the EPA regarding what kind of permanent damage is being done by fracking to its groundwater. So, the demand by environmental groups to publicly release the ingredients of these fracking fluids does not seem inherently unreasonable to me, and yet the court found otherwise, on the grounds that the ingredients are trade secrets that are protected from disclosure under Wyoming’s open records laws. Environmentalists argue that they have strong claims to the information, as it could help prevent irreversible pollution damage.

While environmentalist groups debate taking the case to a higher court, James Fallow, in a fascinating Q&A with the Atlantic, argues that asteroid mining within the next century could save the environment.

11 Jan

Fracking in California and Moviemaking in Pennsylvania

Posted by John Renehan in Chemical Industry, Environmental Activism, Environmental Enforcement, Gas and Oil Leases, Hydraulic Fracturing, Marcellus Shale, Wastewater.

The Promised Land? Photo by Alan Bowring, some rights reserved.

In July, we wrote about the scramble to regulate fracking. Last month, California entered the fray, releasing a “discussion draft” of hydraulic fracturing regulations and seeking comments from interested parties ahead of the formal rulemaking process set to begin in February.

California’s Department of Conservation’s Oil, Gas, and Geothermal Division released the draft, detailing testing, monitoring, operating, and disclosure requirements (thanks to Arnold Porter for their advisory). The Division will operate a chemical disclosure directory to which operators will have to disclose information about the chemicals and concentrations used as well as data on the amount of fluid recovered. There is a trade secret exemption, but in the case of an operator withholding information, they must submit documentation of the type of information withheld, why it was withheld, and that the proprietary information could not be gathered through testing. However, operators would have to be able to provide the information immediately if necessary to investigate a release of fracking fluid or to a doctor to treat an individual exposed to fracking fluid.

Information from required pre-fracking testing would be available to the public before fracking at a particular well begins, and operators would be required to monitor certain variables in and around a well during fracking and for thirty days after.

A personal tidbit of my own says something on the topic as well.

I just saw Matt Damon and John Krasinski’s Promised Land, which seems to encourage viewers to focus on its exploration of selling mineral rights leases to gas companies rather than its characters and story, so I will do just that. Centered on a Pennsylvania town whose struggling farms are sitting on millions of dollars of natural gas, Matt Damon’s character as a representative of Global Crosspower Solutions claims to be offering the town its last chance to fund and prolong the myth of the small town of family-run farms. At a town meeting, an influential local science teacher raises questions about the risks surrounding the type of drilling Global plans to do – fracking – leaving some of the community hesitant to join farmers promised a big payout in their enthusiasm for the gas company’s drilling plans.

And though the appearance of a fake environmental advocate employed by Global to discredit environmental concerns portrays townspeople as uncritical pawns of interest groups, the point that such tactics may not be far from the truth is certainly taken. The questions Promised Land raises are as much emotional and cultural as scientific and political, but maybe with the information gathered through California’s regulations the debate in the future can be informed by a more measured understanding of its risks.

16 Nov

Second Term Preview of Environmental Regulation

Posted by John Renehan in Clean Air Act, Climate Change, Environmental Activism, Environmental Enforcement, Fuel Efficiency, Global Warming, Greenhouse Gas Emissions, Hydraulic Fracturing, Oil and Gas Sector, Pipelines, Renewable Energy.

Photo by Carl Chapman, some rights reserved

In the next four years, the Obama administration will make its mark on energy and environmental laws, working through pending legislation and proposed regulation as well as considering further reforms in response to environmental and industry lobbying.

A Marten Law memo has the rundown on anticipated changes to energy and environmental laws. Obama’s “all of the above” energy strategy, well chronicled at the Green Mien, is likely to continue. Federal renewable energy programs have seen opposition recently, and the outcome of the pending battle of the wind energy production tax credit will be an early test of the Obama Administration’s policy. Either way, renewable energy growth is likely to be lower in the coming years as production of natural gas continues to increase.

Fracking, too, has contributed to the domestic supply surge, while prompting calls for closer regulatory scrutiny. In response, the Obama Administration has proposed regulation of fracking on federal lands, and EPA is studying the potential impact of horizontal drilling on drinking water.

Energy infrastructure questions are on the agenda, too. Most importantly, the Administration will decide whether to authorize a re-routed Keystone XL pipeline bringing oil from Canadian tar sands to the Gulf of Mexico. Proposals for coal and natural gas export terminals are making their way through state and federal agencies as well.

In the news this week is Obama’s stance on climate change, a topic he avoided during his election campaign. A second term will ensure that EPA will proceed with its plan to regulate greenhouse gas emissions under existing provisions of the Clean Air Act, a plan upheld last summer by the D.C. Circuit Court of Appeals. In addition, EPA is expected to release standards for greenhouse gas emission from power plants and refineries. Several challenges to air quality rules are still pending, though, notably the Cross-State Air Pollution Rule and the Boiler MACT rule affecting industrial facilities.

At a press conference Wednesday, President Obama responded to a reporter’s question about his specific plans to address climate change. You should read his entire response here, but he made himself clear that ignoring jobs and growth simply to address climate change is not on his agenda: “I won’t go for that.” An agenda for job growth that includes making a dent in climate change, however, is “something the American people would support.”

In addition to air and energy policy previews, Marten Law’s memo has summaries of expected policy developments in natural resources and hazardous waste regulation.

12 Oct

EPA Struggling to Keep Pace with Fracking

Posted by John Renehan in Environmental Enforcement, Gas and Oil Leases, Hydraulic Fracturing, Oil and Gas Sector, Oil Shale, Onshore Drilling.

Photo care of geograph. Some rights reserved.

Two reports were released by the Government Accountability Office this week detail challenges facing the EPA in overseeing the oil and gas drilling boom in the U.S. The growth of the dispersed and hard-to-follow fracking industry is the focus of the first report, while the second addresses the public health and environmental impacts of oil and gas development.

EPA officials report that inspection and enforcement of fracking sites is challenging due to limited information on many aspects of the industry. The EPA doesn’t receive information about new well sites in Ohio, for example, and their sheer number makes tracking them difficult. Baseline water-quality data are unavailable in most areas, so assessing groundwater contamination is difficult.

In addition, legal limits on EPA’s authority affects their ability to regulate some aspects of the fracking process. Exploration and production waste, for example, are not regulated under hazardous waste provisions in the Resource Conservation and Recovery Act. The Hill, with more details on the reports (here and here) notes that attempts to increase regulation of the industry have not advanced in Congress.

The second report notes that though all oil and gas development poses environmental and public health risks, the risks from shale gas development are particularly poorly understood. Studies the GAO reviewed, according to the report, “do not generally take into account the potential long-term, cumulative effects” so the extent and longevity of risks is unknown.

10 Oct

Supreme Court Backs Away Slowly From Chevron/Ecuador Dispute

Posted by Kyle Hargus in Chevron, Environmental Enforcement, Environmental Justice.

Photo by Lita V. Some rights reserved.

In February of 2011, American gas giant Chevron (you know, the one with the cute cartoon cars) was ordered to pay $8.6 billion in pollution damages to by a provincial court the relatively small city of Lago Agrio, Ecuador, which claimed that Chevron (the 2nd largest oil company in the U.S.) had done irreparable damage to the area between 1964 and 1992 under the Texaco banner, another oil company that Chevron now owns. The lawsuit was launched in 1993, and the area affected by the damages has since come to be known as “the Amazon Chernobyl.” Chevron at the time responded by calling the ruling “illegitimate and unenforceable,” countering by suing the plaintiffs (the indigenous villagers of Lago Agrio) for racketeering, and requesting a stay of judgment from an international tribunal in the Hague. A federal judge in New York issued an injunction on the dispute in March 2011, blocking any enforcement on the judgment, which was later overturned by the 2nd U.S. Circuit Court of Appeals on January 26th, 2012.

Fast forward to yesterday, October 9th, 2012. The U.S. Supreme Court heard Chevron’s appeal, and ultimately ruled that it would not intervene and block the collection of legal penalties and damage fees, which now total $18.2 billion, as the original $8.6 billion figure was doubled by the Ecuadorian court when Chevron failed to make a public apology. The Supreme Court ruling came despite the fact that Chevron was backed by the National Association of Manufacturers and the U.S. Chamber of Commerce. The fight over environmental reparations will now continue in district courts in New York, Brazil, and Canada, and may end up back at the Supreme Court before a final verdict is reached. If Chevron is strong-armed into paying the $19 billion in damages, it will be the largest judgment of its kind in history.

Read our previous coverage of this case here.

3 Aug

Local Zoning and Natural Gas in Pennsylvania: Court Rules on Act 13

Posted by John Renehan in Development, Environmental Enforcement, Gas and Oil Leases, Marcellus Shale, Natural Gas, Oil and Gas Sector, Onshore Drilling, Real Estate, Wetlands.

Klingerstown, Pennsylvania. Photo by Scott Bauer, U.S. Department of Agriculture. Some rights reserved.

In February, the Pennsylvania General Assembly passed the Oil and Gas Act, revising the state’s regulation of oil and gas operations. Among other changes, “Act 13” required uniformity of local ordinances and granted the Pennsylvania Department of Environmental Protection the right to use its discretion in granting variances for distance restrictions from water and wetlands. The natural gas industry saw the legislation as a vital antidote to the maze of constantly changing local zoning ordinances in the gas-rich Marcellus region that leads to expensive litigation and increased production and development costs, but not everyone was cheering for Act 13.

Six townships, several individuals, and an environmental group joined Robinson Township in challenging the Act, and the Commonwealth Court issued their decision declaring the sections described above unconstitutional. The Court’s rationale for overturning the uniform zoning provision was that zoning is a police power of local districts and allowing nonconforming use in zoning districts violates substantive due process. In addition, the provision allowing Pennsylvania’s DEP to grant waivers for setback requirements from water and wetlands was declared null because the law offered insufficient guidance to the DEP regarding waiver standards.

Local zoning and setback issues affect the cost, timing, and even feasibility of natural gas production, so the day after the Court’s decision, Pennsylvania Governor Tom Corbett announced an appeal directly to the Pennsylvania Supreme Court. The dissenting opinion, which according to Reed Smith’s Alert  on the ruling could offer suggestions for the appeal, argued that “incompatible uses” can be allowed in a comprehensive zoning framework, and attacked the majority’s attempt to call on substantive due process protections. It noted that most substantive due process cases regarding zoning challenge the ordinances as too restrictive, while the petitioners in this case do the opposite, which is inconsistent with constitutional zoning precedent. Furthermore, the shortcoming the Court sees in DEP guidance regarding setback waivers appears to be something the legislature could rectify easily, according to a Buchanan, Ingersoll & Rooney memo. Finally, the natural gas industry – barred from intervening in the case at the lower level – will be able to participate in the Supreme Court appeal process by filing amicus briefs.

15 Jun

Offshore Drilling: Alaska, and More.

Posted by John Renehan in Environmental Enforcement, EPA, Gas and Oil Leases, Offshore Drilling, Oil and Gas Sector, The Arctic.

Photo by Jim Bain. Some rights reserved.

The Interior Department is very publicly scrutinizing every detail of Shell’s plan to begin drilling in the fragile Arctic this summer. Top officials are personally reviewing equipment bound for the drilling sites in Alaska and held a press conference Thursday to tout DOI’s robust testing.

The past year has seen a series of approvals for Shell’s plans. In March, DOI approved Shell’s oil spill response plans, following the EPA’s announcement in September that it had granted air pollution permits to ships associated with the drilling sites.

Last May, the Obama administration created an inter-agency team to streamline the Alaskan permitting process to help speed up domestic development and responding to political pressure over high gasoline prices as well as what Republicans have called bureaucratic permitting delays.

But the Interior Department, increasing its safety standards and scrutiny of drilling plans, wants to ensure it is seen as taking every precaution in the wake of last year’s BP spill in the Gulf of Mexico. Interior’s Bureau of Safety and Environmental Enforcement director James Watson called his agency’s standards “the most rigorous safety and oversight program ever.”

Meanwhile, despite the delays to Shell’s Alaska plan, Republican South Carolina senator Lindsey Graham introduced a bill that would allow his state to open parts of its coast, to offshore drilling 10 to 100 miles off the coast – after which it would petition the federal government for approval.

Further abroad, the questions and politics of offshore drilling are alive and well in France – Paris on Wednesday suspended  exploratory permits for offshore oil in its district of Guyana, in northeastern South America. The French environment minister cited concerns for the local marine environment and said the permits will be suspended until the mining code is reviewed. Shell and other oil companies have found significant oil reservoirs in the region, which they believe mirror the oil reserves off the coast of western Africa.

3 May

Recently in Environmental Disclosure: “20,000 barrels of crude oil were leaked”

Posted by Hester Serebrin in Environmental Disclosure, Environmental Enforcement.

As we’ve posted in the past, public companies must generally disclose environmental legal proceedings in various reports to the SEC, and whether or not those proceedings have a material effect on the company’s financial position. Companies may also disclose business risks related to current or pending environmental regulation.

Below is the juiciest stuff we could find that was filed with EDGAR in the past week.

* * *

Central Florida Pipeline Release, Tampa, Florida

On July 22, 2011, KMP’s subsidiary Central Florida Pipeline LLC reported a refined petroleum products release on a section of its 10-inch diameter pipeline near Tampa, Florida. The pipeline carries jet fuel and diesel to Orlando and was carrying jet fuel at the time of the incident. There was no fire and no injuries associated with the incident. KMP immediately began clean up operations in coordination with federal, state and local agencies. The cause of the incident is outside force damage. The incident is under investigation by the PHMSA, U.S. EPA and the Florida Department of Environmental Protection.

  • EME HOMER CITY GENERATION LP | Form 10-Q | 5/2/2012

New Source Review and Other Litigation

In January 2011, the United States Environmental Protection Agency (US EPA) filed a complaint in the Western District of Pennsylvania against Homer City, the sale-leaseback owner participants of the Homer City plant, and two prior owners of the Homer City plant. The complaint alleged violations of the Prevention of Significant Deterioration (PSD) and Title V provisions of the Clean Air Act (CAA), as a result of projects in the 1990s performed by prior owners without PSD permits and the subsequent failure to incorporate emissions limitations that meet best available control technology (BACT) into the station’s Title V operating permit. In addition to seeking penalties ranging from $32,500 to $37,500 per violation, per day, the complaint called for an injunction ordering Homer City to install controls sufficient to meet BACT emission rates at all units subject to the complaint and for other remedies. The PADEP, the State of New York and the State of New Jersey intervened in the lawsuit. In October 2011, all of the claims in the US EPA’s lawsuit were dismissed with prejudice. An appeal of the dismissal is pending before the Third Circuit Court of Appeals.

On July 26, 2010, a release of crude oil on Line 6B of EEP’s Lakehead System was reported near Marshall, Michigan. EEP estimates that approximately 20,000 barrels of crude oil were leaked at the site, a portion of which reached the Talmadge Creek, a waterway that feeds the Kalamazoo River. The pipelines in the vicinity were shut down, appropriate United States federal, state and local officials were notified, and emergency response crews were dispatched to oversee containment of the released crude oil and cleanup of the affected areas. The released crude oil affected approximately 61 kilometres (38 miles) of area along the Talmadge Creek and Kalamazoo River waterways, including residential areas, businesses, farmland and marshland between Marshall and downstream of Battle Creek, Michigan. The cause of the release remains the subject of an investigation by the National Transportation Safety Board and other United States federal and state regulatory agencies.

Pursuant to an administrative order issued by the Environmental Protection Agency (EPA) under the United States Clean Water Act, EEP was directed to clean up the released oil and remediate and restore the affected areas – a process EEP had begun upon discovering the release.

As at December 31, 2010, EEP estimated that before insurance recoveries, and not including fines and penalties, costs of approximately US$550 million ($96 million after-tax net to Enbridge), excluding lost revenue of approximately US$13 million ($2 million after-tax net to Enbridge), would be incurred in connection with this incident. These costs included emergency response, environmental remediation and cleanup activities associated with the crude oil release, as well as potential claims by third parties.

As at December 31, 2011, EEP revised its total estimate for this crude oil release to US$765 million ($129 million after-tax net to Enbridge), an increase of US$215 million ($33 million after-tax net to Enbridge) from December 31, 2010. The changes in estimate are primarily based on a review of costs and commitments incurred , and additional information concerning the reassessment of the overall monitoring area, related cleanup, including submerged oil recovery operations and remediation activities, including the estimated costs related to the additional scope of work set forth in its response to the EPA directive it submitted to the EPA on October 20, 2011. During the fourth quarter of 2011, EEP resubmitted a revised work plan which was approved by the EPA on December 19, 2011.

EEP continues to make progress on the cleanup, remediation and restoration of the areas affected by the Line 6B crude oil release. All of the initiatives EEP undertakes in the monitoring and restoration phases are intended to restore the crude oil release area to the satisfaction of the appropriate regulatory authorities.

Expected losses associated with the Line 6B crude oil release include those costs that are considered probable and that could be reasonably estimated at December 31, 2011. The estimates do not include amounts capitalized or any fines, penalties or claims associated with the release that may later become evident and are before insurance recoveries. Despite the efforts EEP has made to ensure the reasonableness of its estimates, changes to the recorded amounts associated with this release are possible as more reliable information becomes available. There continues to be the potential for EEP to incur additional costs in connection with this crude oil release due to variations in any or all of the cost categories, including modified or revised requirements from regulatory agencies, in addition to fines and penalties as well as expenditures associated with litigation and settlement of claims.

PCB Contamination

We have been working with the Connecticut Department of Energy and Environmental Protection (CT DEEP) and the EPA, Region I, in connection with certain polychlorinated biphenyl (PCB) contamination in the soil beneath a section of cement flooring at our Woodstock, Connecticut facility. In 2000, the majority of the clean-up efforts were completed, and a small amount of residual soil contamination remained. In 2011, after several discussions and proposals with the CT DEEP, we agreed to install a pump and treat system to alleviate further contamination of the ground water. Since inception, we have spent approximately $2.5 million in remediation and monitoring costs related to the PCB soil contamination at this site. We anticipate future costs related to the ground water contamination issue to be de minimis and related to the continued use and maintenance of the pump and treat system now in place at the site.

In addition, during the first quarter of 2010, we discovered PCB contamination in the building at our Woodstock, Connecticut facility, due to it having contained the equipment that was the source of the original PCB soil contamination. Remediation of the contamination within the facility is currently projected to cost between $1.0 million and $2.6 million; therefore, we recorded a liability of $1.0 million related to the building contamination, which represents the low end of the estimated range, as no other amount in the range is more probable at this time.

We believe that these situations will continue for several more years and no time frame for completion can be estimated at the present time.

In April 2010, the Company received a request for information pursuant to Section 308 of the Federal Water Pollution Control Act (Clean Water Act) from Region 3 of the United States Environmental Protection Agency (the “EPA”) concerning the Company’s wastewater practices used in its fishing operations at its Reedville, Virginia facility. The Company responded to the request. The Company cannot predict the outcome of the EPA’s review.

In February 2011, the United States Coast Guard conducted inspections of the vessels at the Company’s Reedville, Virginia facility regarding the vessels’ bilge water discharge practices. Based on the results of those inspections and subsequent communications with the Coast Guard, the Company conducted a survey of its Reedville, Virginia fishing fleet to determine compliance with applicable laws and regulations. Following the completion of certain improvements and repairs, the Coast Guard inspected the vessels and all but two were approved for full operations prior to the beginning of the 2011 Atlantic fishing season. The other two vessels were approved for full operations shortly after the beginning of the fishing season and the delay did not materially impact the fleet’s Atlantic fishing operations.

The Company spent approximately $3.0 million during 2011 to make the above improvements and repairs to the Reedville fleet. The Company is evaluating the vessels in its Gulf fleet based on the review of its Reedville vessels. Based on the results of that evaluation, it is likely that the Company will incur additional costs to make improvements and repairs to its Gulf fleet. Also in connection with that evaluation, the Company has made the interim decision for at least the early part of the 2012 fishing season to conduct both its Atlantic and Gulf fishing operations within 12 nautical miles of shore, pending the resolution of a waiver request that the Company has filed with the Coast Guard regarding the use of certain vessel equipment applicable to “ocean-going vessels” (as defined by Coast Guard regulations) that operate beyond the 12 nautical mile limit. This interim 12 nautical mile restriction will limit the Company’s fishing grounds and could have a material adverse effect on the Company’s fish catch, business, results of operations or financial condition.

The U.S. Attorney’s Office for the Eastern District of Virginia is reviewing both the results of the Coast Guard’s inspection of the Reedville fleet and the EPA request for information, and is currently evaluating whether any civil or criminal enforcement action is warranted. The U.S. Attorney’s Office has indicated that some form of civil and/or criminal disposition is under consideration, but no specific disposition has yet been determined and the Company’s discussions with that Office are ongoing. Depending on the specific details of that disposition, it is possible that the disposition could have an adverse effect on the Company’s business, results of operations or financial condition. During the first three months of 2012, the Company recognized $0.2 million in expenses related to this matter and as of March 31, 2012, the Company has recorded a $0.3 million reserve.

The EPA has issued Notices of Violations (“NOVs”) for our Haverhill and Granite City cokemaking facilities which stem from alleged violations of our air emission operating permits for these facilities. We are currently working in a cooperative manner with the United States Environmental Protection Agency (“EPA”) and the Illinois Environmental Protection Agency to address the allegations. Settlement may require payment of a penalty for alleged past violations as well as undertaking capital projects to improve reliability of the energy recovery systems and enhance environmental performance at the Haverhill and Granite City facilities. As a result of discussions with the EPA, the Company expects these projects to cost approximately $80 million to $100 million and to be carried out over the 2012 through 2016 time period. The majority of the spending is expected to take place from 2013 to 2016, although some spending may occur in 2012 depending on the timing of the settlement. The final cost of the projects will be dependent upon the ultimate outcome of discussions with regulators. At this stage, negotiations are ongoing and the Company is unable to estimate a range of reasonably possible loss. The Company does not believe any probable loss would be material to its financial position, results of operations or cash flows.

  • SunCoke Energy, Inc. | Form 10-Q | 5/2/2012

In addition, the Company has received an NOV from the EPA related to our Indiana Harbor cokemaking facility. After initial discussions with the EPA and the Indiana Department of Environmental Management (“IDEM”), resolution of the NOV was postponed by mutual agreement because of ongoing discussions regarding the NOVs at the Haverhill and Granite City cokemaking facilities. In January 2012, the Company began working in a cooperative manner with the EPA, the IDEM and Cokenergy, Inc., an  independent power producer that owns and operates an energy facility, including heat recovery equipment, a flue gas desulfurization system and a power generation plant, that processes hot flue gas from our Indiana Harbor facility to produce steam and electricity and to reduce the sulfur and particulate content of such flue gas, to address the allegations. Settlement may require payment of a penalty for alleged past violations as well as undertaking capital projects to enhance environmental performance. At this time, the Company cannot yet assess any future injunctive relief or potential monetary penalty and any potential future citations. The Company is unable to estimate a range of probable or reasonably possible loss.

  • STANLEY BLACK & DECKER, INC. | Form 10-Q | 5/2/2012

The Environmental Protection Agency (“EPA”) and the Santa Ana Regional Water Quality Control Board have each initiated administrative proceedings against Black & Decker and certain of its current or former affiliates alleging that Black & Decker and numerous other defendants are responsible to investigate and remediate alleged groundwater contamination in and adjacent to a 160-acre property located in Rialto, California. The EPA and the cities of Colton and Rialto, as well as Goodrich Corporation, also initiated lawsuits against Black & Decker and certain of its former or current affiliates in the Federal District Court for California, Central District alleging similar claims that Black & Decker is liable under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCLA”), the Resource Conservation and Recovery Act, and state law for the discharge or release of hazardous substances into the environment and the contamination caused by those alleged releases. The City of Colton also has a companion case in California State court. The City of Riverside has a similar suit in California State Court with similar claims and the same parties. Both of these cases are currently stayed for all purposes. Certain defendants in that case have cross-claims against other defendants and have asserted claims against the State of California. The administrative proceedings and the lawsuits generally allege that West Coast Loading Corporation (“WCLC”), a defunct company that operated in Rialto between 1952 and 1957, and an as yet undefined number of other defendants are responsible for the release of perchlorate and solvents into the groundwater basin, and that Black & Decker and certain of its current or former affiliates are liable as a “successor” of WCLC. The Company believes that neither the facts nor the law support an allegation that Black & Decker is responsible for the contamination and is vigorously contesting these claims.

The EPA has provided to Black & Decker and certain of its current and former affiliates a “Notice of Potential Liability” related to environmental contamination found at the Centredale Manor Restoration Project Superfund site, located in North Providence, Rhode Island. The EPA has discovered a variety of contaminants at the site, including but not limited to, dioxins, polychlorinated biphenyls, and pesticides. The EPA alleged that Black & Decker and certain of its current and former affiliates are liable for site clean-up costs under CERCLA as successors to the liability of Metro-Atlantic, Inc., a former operator at the site, and demanded reimbursement of the EPA’s costs related to this site. The EPA released a Proposed Remedial Action Plan in October 2011, which identified and described the EPA’s preferred remedial alternative for the site. The estimated remediation costs related to this Centredale site (including the EPA’s past costs as well as costs of additional investigation, remediation, and related costs such as EPA’s oversight costs, less escrowed funds contributed by primary potentially responsible parties (PRPs) who have reached settlement agreements with the EPA), which the Company considers to be probable and reasonably estimable, range from approximately $67.4 million to $212.0 million, with no amount within that range representing a more likely outcome until such time as the EPA completes its remedy selection process for the site. The Company’s reserve for this environmental remediation matter of $67.4 million reflects the fact that the EPA considers Metro-Atlantic, Inc. to be a primary source of contamination at the site. The Company has determined that it is likely to contest the EPA’s claims with respect to this site. Further, to the extent that the Company agrees to perform or finance additional remedial activities at this site, it intends to seek participation or contribution from additional PRPs and insurance carriers. As the specific nature of the environmental remediation activities that may be mandated by the EPA at this site have not yet been finally determined, the ultimate remedial costs associated with the site may vary from the amount accrued by the Company at March 31, 2012.

19 Apr

“In response to a court deadline…”

Posted by Hester Serebrin in Clean Air Act, Environmental Enforcement, Fracking, Hydraulic Fracturing, Natural Gas.

“In response to a court deadline,” the EPA yesterday finalized the long-awaited (and long-dreaded, by some) rules that aim to reduce air pollution from the oil and natural gas industry, including setting “the first federal air standards” for natural gas wells that are hydraulic fractured. According to the EPA, these rules are expected “to yield a nearly 95 percent reduction in [volatile organic compound] emissions from more than 11,000 new hydraulically fractured gas wells each year.”

Back in August of 2011, when we covered the release of the proposed rules, the EPA was supposed to finalize the rules by February 28, 2012. However, prompted by the outpouring of public comments on the release – including requests to extend the comment period – the litigants agreed to a 35-day extension, pushing out the deadline to April 3, 2012 (um…a few weeks ago, by my count).

Plaintiff WildEarth Guardians was understandably pleased at the news.

More analysis of the new rules can be found on The Hill’s Energy & Environment Blog.

12 Apr

Recently in Environmental Disclosure: Fugitive Emissions

Posted by Hester Serebrin in Environmental Disclosure, Environmental Enforcement.

As we’ve posted in the past, public companies must generally disclose environmental legal proceedings in various reports to the SEC, and whether or not those proceedings have a material effect on the company’s financial position. Companies may also disclose business risks related to current or pending environmental regulation.

Below is the juiciest stuff we could find that was filed with EDGAR in the past week.

* * *

 

  • Antero Resources LLC | Form 10-Q | 4/11/2012

In March 2011, we received orders for compliance from the U.S. Environmental Protection Agency (“the EPA”) relating to certain of our activities in West Virginia. The orders allege that certain of our operations at several well sites are in non-compliance with certain environmental regulations pertaining to unpermitted discharges of fill material into wetlands or waters that are potentially in violation of the Clean Water Act. We have responded to all pending orders and are actively cooperating with the relevant agencies. No fine or penalty relating to these matters has been proposed at this time, but we believe that these actions will result in monetary sanctions exceeding $100,000. We are unable to estimate the total amount of such monetary sanctions or costs to remediate these locations in order to bring them into compliance with applicable environmental laws and regulations.

The Company has been named in separate lawsuits in Colorado and Pennsylvania in which the plaintiffs have alleged that our oil and natural gas activities exposed them to hazardous substances and damaged their properties and their persons. The plaintiffs have requested unspecified damages and other injunctive or equitable relief. The Company denies any such allegations and intends to vigorously defend itself against these actions. We are unable to estimate the amount of monetary or other damages, if any, that might result from these claims.

 

Our interstate gas pipelines are involved in remediation activities related to certain facilities and locations for polychlorinated biphenyl, mercury contamination, and other hazardous substances. These activities have involved the EPA, various state environmental authorities and identification as a potentially responsible party at various Superfund waste disposal sites. At December 31, 2011, we have accrued liabilities of $10 million for these costs. We expect that these costs will be recoverable through rates.

We also accrue environmental remediation costs for natural gas underground storage facilities, primarily related to soil and groundwater contamination. At December 31, 2011, we have accrued liabilities totaling $8 million for these costs.

 

  • UIL HOLDINGS CORP | Form 8-K | 4/10/2012

Berkshire formerly owned a site on East Street (the East Street Site) in Pittsfield, MA that was used for gas manufacturing operations. The East Street Site is part of a larger site known as the GE–Pittsfield/Housatonic River Site. The East Street Site is listed on the MDEP list of confirmed disposal sites. Berkshire sold the East Street Site to the General Electric Company (GE) in the 1970s and was named a potentially responsible party by the EPA in 1990. GE filed suit against Berkshire in 2000 seeking reimbursement of and contribution toward costs incurred by GE in responding to releases of hazardous substances by a predecessor in interest to Berkshire at the East Street Site. Berkshire was found liable to GE under the Comprehensive Environmental Response, Compensation and Liability Act and the Massachusetts Oil and Hazardous Materials Release Prevention and Response Act for costs that GE has and will incur in response to historic releases by a predecessor in interest to Berkshire. In December 2002, Berkshire reached a settlement with GE (the Settlement Agreement) which provides, among other things, a framework for Berkshire and GE to allocate various monitoring and remediation costs at the East Street Site. GE previously made several requests for contribution under the terms of the Settlement Agreement. In September 2011, GE sent Berkshire a letter demanding approximately $1.1 million which GE believes represents Berkshire’s share of response costs incurred by GE at the East Street Site from January 1, 2006 through December 31, 2010. The parties are continuing their discussions regarding GE’s claim. Berkshire expects that it and GE will continue to operate under the terms of the Settlement Agreement in connection with the East Street Site. As of December 31, 2011, Berkshire has accrued approximately $2.7 million for these and future costs incurred by GE in responding to releases of hazardous substances by Berkshire at the East Street Site.

 

We have been informed that the U.S. Environmental Protection Agency (“EPA”) is investigating the accuracy of fugitive emissions monitoring statements and records provided by some of our current and former employees to certain customers in West Texas. We are cooperating with the EPA investigation and, in response to subpoenas, have provided information to the EPA. While we do not believe the ultimate outcome of this matter will have a material adverse effect on our business, consolidated financial position, results of operations, or cash flows, this investigation could result in fines, civil or criminal penalties, or other administrative action.

 

We have received notice of a governmental investigation concerning an environmental incident which occurred in February 2011, outside on the premises of our Cudahy, California facility. We acquired this facility as part of the acquisition in October 2010 of the assets and ongoing business operations of General Testing and Inspection, Inc. (“GTI”), a business which provides in-house or shop inspection and non-destructive testing at the Cudahy premises. On February 11, 2011, while liquid hazardous waste was being pumped into the tanker truck of an unaffiliated certified hazardous waste transporter at the Cudahy facility, a chemical reaction occurred that caused an emission of a vapor cloud. No human injury or property damage was reported or appears to have been caused as a result of the incident. The incident was investigated by the L.A. Country Fire Department (the “Fire Department”) and the U.S. Environmental Protection Agency (“EPA”). At the conclusion of the Fire Department’s investigation, the Fire Department imposed on the Company a fine in the amount of $4,000 for alleged violations of the California Health and Safety Code in April 2011, which was paid shortly thereafter.

The Company received no further governmental communications or notices concerning fines or sanctions related to the incident until January 13, 2012, when we received grand jury subpoenas from the U.S. Attorney’s Office for the Central District of California addressed to the Company, GTI and an employee of the Company. These subpoenas were issued in connection with an EPA criminal investigation. The subpoena received by the Company requested documents and information relating to, among other things, our handling, identification, storage and disposal of hazardous waste, training records, corporate environmental policies, acquisition of GTI and any ongoing organization relationship with GTI, and analytical results of the tests concerning the hazardous materials involved in the incident. In April 2012, we were informed by the U.S. Attorney’s Office for the Central District of California that we are a target of a criminal investigation into potential violations of the Resource Conservation and Recovery Act. The violations are alleged to be related to purportedly improper storage and labeling of hazardous waste at the Cudahy facility. This U.S. Attorney’s Office also raised a concern about a possible obstruction of justice issue involving the conduct of one or more of our employees at this facility. Upon receiving the subpoenas, we engaged our outside legal counsel to assist us in conducting an investigation concerning the incident, including interviews with our current employees. To date, we have produced documents in response to the subpoena, and are aware of at least one of our employees having testified before the grand jury.

While management cannot predict the ultimate outcome of this matter, based on our internal investigation to date, management does not believe the outcome will have a material effect on the Company’s financial condition or results of operations.

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