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January 2001
Environmental Law Newsletter

U.S. Supreme Court Proceedings

Corps of Engineers Has No Jurisdiction Over Isolated Wetlands: On January 9, 2001, the U.S. Supreme Court issued a five-to-four decision limiting the extent of the U.S. Army Corps of Engineers’ jurisdiction to require dredge and fill permitting for work in intrastate wetlands. Solid Waste Agency of Northern Cook County v. U. S. Army Corps of Engineers, U.S. No. 99-1178, 1/9/2000. The Clean Water Act (“CWA”) gives the Corps jurisdiction over “navigable waters,” statutorily defined as “waters of the United States.” The Corps had interpreted the phase expansively to include all waters over which Congress has jurisdiction pursuant to the Commerce Clause of the Constitution. In this case, the Corps claimed jurisdiction under the CWA because the isolated wetlands in question are used as habitat by migratory birds.

Chief Justice Rehnquist’s majority opinion avoided deciding the constitutional issue of whether the nexus between interstate commerce and migratory birds is sufficient to give Congress jurisdiction over wetlands that are not navigable, would not be navigable even with improvements, and are not next to waters that are navigable. His opinion, joined by Justices O’Connor, Scalia, Kennedy and Thomas, instead held that the text of the CWA itself did not allow an interpretation that the jurisdiction of the Corps extends to ponds that are not adjacent to open water. Justice Stevens’ dissenting opinion cited legislative history indicating that Congress intended that the term navigable waters “be given the broadest possible constitutional interpretation.”

The Supreme Court decision may have limited practical effect in jurisdictions such as Massachusetts that have extensive state or local wetland regulatory regimes. The case is of rather greater symbolic significance as a further constraint on federal authority under existing statutes and regulations.

U.S. Supreme Court Hears Arguments on Air Standards: We previously reported that a federal appeals court had struck down revised National Ambient Air Quality Standards (“NAAQS”) set in July, 1997 by the federal EPA for ground level ozone and particulate matter, and on further review and appeals of this decision. (Copies of these earlier articles from July, 1999, and March and August, 2000 are available on our web page, www.bulkley.com.) The Supreme Court heard oral arguments in the matter in November. Browner v. American Trucking Associations, U.S. Nos. 99-1257 and 99-1426. The arguments centered on whether EPA set the NAAQS arbitrarily (Congress may not delegate arbitrary decision-making authority) and whether EPA should have considered compliance costs when setting the NAAQS. A decision is expected by June, 2001.

Lessee Superfund Liability: The U.S. Supreme Court recently declined review of an appeals court decision concerning the liability of a lessee under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA,” a.k.a. Superfund). Commander Oil Corp. v. Barlo Equipment Corp., U.S. No. 00-373, certiorari denied 11/6/00. In doing so, the Court missed an opportunity to clarify the extent to which a lessee can be liable as an “owner” under CERCLA. The federal appeals court had overturned a district court decision that a “lessee who has control over and responsibility for the use of the property is the owner of the property” for CERCLA purposes, but had ruled that a lessee who is “the de facto owner” can be liable as a CERCLA “owner.” Commander Oil Corp. v. Barlo Equipment Corp., 2d Cir., Nos. 98-7975, et al. 6/12/00. Factors cited by the appeals court that could be important in determining if a lessee is an “owner” under CERCLA include whether: (1) the term of the lease is long and cannot be canceled by the owner; (2) the owner retains no voice on property use; (3) the lessee has the right to sublet without notifying the owner; (4) the lessee is responsible for paying all taxes, insurance, operating and maintenance costs; and (5) the lessee is responsible for making all repairs.

In another case, a federal district court in California ruled that a long-term sale leaseback deal so changed the nature of the landlord-tenant relationship that the tenant was an “owner” for CERCLA liability purposes. Nestle USA Beverage Division, Inc. v. D.H. Overmeyer, No. 96-1207 (N. D. Cal., 3/27/98). The lease in question was for 20 years with an option to renew for two additional 10-year terms. The leaseback required the lessee to pay all taxes, assessments, insurance, repairs, operation and maintenance. The court noted that other federal courts have also found lessees to be liable as owners. Although the lessee appealed other aspects of the decision, it did not appeal the finding that it was an “owner” under CERCLA, and the appeals court explicitly left that finding undisturbed. Nestle USA Beverage Division, Inc. v. D.H. Overmeyer, No. 98-15968 (9th Cir. Cal., 3/31/99).

Other News

Bypasses Of Air Emission Control Equipment for Repairs Curtailed: A Massachusetts DEP Administrative Law Judge on October 13, 2000 upheld DEP’s authority to issue an air permit that effectively bars the operation of emission sources while control equipment is temporarily bypassed due to malfunctions. In the Matter of W.E. Andrews Co., Inc. (Final Decision), Docket No. 99-133, File No. MBR-99-IND-020. W.E. Andrews Co., Inc. (“Andrews”) had objected to a provision in a newly-issued air permit that would allow it to bypass its thermal oxidizer control system for only such a short term (five minutes) that it effectively bars Andrews from operating three of its printers when the oxidizer malfunctions. Previous permits had allowed Andrews to continue to operate for short periods while it fixed a broken control device, so long as it did not exceed the overall annual emissions cap for the facility. Andrews had made use of the bypass provisions in earlier permits one or two times per year on average, and it had generally taken two to four hours to repair the problem and resume normal operation. Andrews is appealing the decision.

This inflexibility with respect to bypasses appears to be mirrored on the federal level. A federal appeals court recently affirmed EPA’s disapproval of Michigan’s revised State Implementation Plan for ozone control, which provided exemptions for facilities during startup, shutdown, or malfunction. Michigan Manufacturers Association v. Browner, 6th Cir., Nos. 98-3399 and 98-3400, unpublished decision 8/24/00.

Large Aboveground Storage Tank Inspection Deadline Extended: The Office of the State Fire Marshall has extended the date by which annual inspection reports must be submitted for aboveground storage tanks in Massachusetts with capacities greater than 10,000 gallons to June 1, 2001. The original deadline was December 1, 2000. However, the regulations that the Fire Marshall promulgated earlier this year requiring regularly-scheduled self-inspection and comprehensive record keeping remain in effect. The regulations do not apply to tanks containing only water, but do apply to mixtures that are mostly water such as milk or wastewater. 502 CMR 5.00. The agency contact is Fire Protection Engineer Jacob Nunnemacher at (978) 567-3377.

Firm That Shipped Unlabeled Hazardous Material Liable To UPS Worker For $775,000: A California jury recently found a company that sells air conditioning parts and supplies liable to pay $775,000 to a United Parcel Service worker who suffered permanent lung damage from exposure to a hydrofluoric acid-based cleaner the company had shipped. The cleaner was improperly packaged and was not labeled as a hazardous material. Laeng v. Johnstone Supply Inc., Cal. Super. Ct., No. RCV 42611, 10/18/00.

If you have questions on these subjects or otherwise wish to contact our Environmental Law Department, contact its Chairman, Chris Myhrum, at (413) 272-6281 or [email protected]