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* The digest is a compilation of certain class action decisions and it should not be construed as a complete reflection of the holdings of the cases.

The Internal Revenue Code restricts the amount of private business use that can occur in facilities financed with tax-exempt bond proceeds, but there are a number of exceptions to this general rule. Certain facilities (“exempt facilities”) that are privately used are eligible for tax-exempt bond financing if they benefit the general public or implement specific Congressional policies. In August, the IRS issued final regulations for determining whether a facility is a “solid waste disposal facility” that qualifies for tax-exempt bond financing.

A facility that performs a “preliminary function” also qualifies as a solid waste disposal facility. Such preliminary functions include collecting, sorting, separating, storing, treating, disassembling, or handling solid waste. The final regulations do away with the 50% threshold limit on preliminary functions, but the function still must be preliminary to and directly related to a qualified solid waste disposal process.

There are 3 types of solid waste disposal processes provided for in the final regulations. Absent any express restriction, a solid waste disposal process can include any biological, engineering, industrial, or technical method. The disposal processes provided in the final regulations include: (1) a final disposal process; (2) an energy conversion process; and (3) a recycling process. A final disposal process is just that; it’s the last stop for the material, which is either landfilled, incinerated (without capturing useful energy), or otherwise indefinitely contained. An energy conversion process involves a thermal, chemical, or other process applied to solid waste to create and capture energy. A recycling process involves reconstituting or transforming the solid material, but does not include refurbishing, repairing, or similar activities.

Both energy conversion and recycling processes result in the production of a product that is useful for consumption in agricultural, consumer, commercial, governmental, or industrial operations or activity and which could be sold for such use. The final regulations continue to provide that solid waste disposal process ends at the production of the first marketable product. Whether a “useful product” has been produced involves determining whether a product could be sold, not whether the product actually is sold. Operational constraints that affect the point in production when a useful product can reasonably be extracted or isolated and sold independently may be considered in the analysis. The final regulations provide that the costs of extracting, isolating, storing and transporting the product to a market may be taken into account only if the product is to be used at a different location from where it is produced.

What if the facility in question is a mixed-use facility that provides both a qualified solid waste disposal function and another non-qualified function? The final regulations continue the current rule that permits partial financing of a facility in which only a portion qualifies as a solid waste disposal facility. The costs allocable to the qualified solid waste disposal function are determined using any reasonable method and based on all facts and circumstances. The final regulations also permit an entire facility to be financed with tax-exempt bonds even where the facility processes solid waste and material that does not qualify as solid waste (a “mixed-input facility”) if at least 65% of the materials processed (as determined by weight or volume) are solid waste. This 65% test must be satisfied each year after the facility is actually operating substantially at design levels, with some exceptions for extraordinary events outside the facility’s control. The final regulations provide a 3 year curative period to address the impact from such events.

The final regulations also provide several examples of various facilities that would qualify for tax-exempt financing as solid waste disposal facilities. Such examples include: A facility that converts used tires into roadbed material is engaged in a recycling process so that facility qualifies as a solid waste disposal facility. A facility that burns solid waste and captures steam as useful energy is engaged in an energy conversion process, and so qualifies as a solid waste disposal facility. But, any facilities used to further process the steam to generate electricity are not engaged in an energy conversion process and would not qualify as solid waste disposal facilities. A transfer station that collects, sorts, and processes solid waste before it is landfilled and the trucks used to haul the waste to the transfer station provide preliminary functions directly related to disposal and so qualify as solid waste disposal facilities if at least 65% of the material brought to the transfer station is solid waste. Refurbishment is not a qualified disposal process, so a facility that restores and repairs old cars does not qualify as a solid waste disposal facility.

The final regulations are applicable to bonds issued after October 18, 2011, but may be applied retroactively. The final regs only need to be applied to refunding bonds where the refunding involves an extension of the remaining weighted average maturity of the refunded bonds.
 

The Subsequent Purchaser Doctrine is a judicially created limitation on the rights of a current landowner to sue for pre-acquisition damages. For over 160 years, Louisiana courts have held that a current landowner has no right of action to sue for damages to his/her property occurring prior to the date of sale in the absence of an express assignment of that right. In environmental contamination disputes, appellate courts were divided on whether the doctrine should apply to cases involving non-apparent or subsurface property damage.

In a recent 4/3 decision, a majority of the Justices of the Louisiana Supreme Court rejected the notion that property damage must be overt, and held that a landowner has no right to sue for non-apparent damages to land inflicted before the act of sale in the absence of an express assignment of, or subrogation to, that right. Eagle Pipe and Supply, Inc. v. Amerada Hess Corporation, 2010-2267 (La. 10/25/2011) –So.3d --. In reaching this decision, the majority acknowledged 160 years of jurisprudence constante regarding the subsequent purchaser rule and found that the rationale should also extend to the situation where damage to the property is not apparent.

In reaching this decision, the Louisiana Supreme Court also rejected various theories advanced by Eagle Pipe, most notably of which was Eagle Pipe’s continuing tort theory. According to the Court, the presence of alleged contamination on Eagle Pipe’s property was not caused by “overt, persistent and ongoing acts,” but was simply a continuing ill effect from the original tortious acts. As such, it was not a continuing tort and could not give rise to a separate tort claim under that theory.

This decision resolves any dispute among the appellate courts and explicitly limits the rights of current landowners to bring suit for environmental harm inflicted prior to the date they acquired the property, regardless of whether the purchaser could have known of the contamination. Such landowners may still seek claims against prior owners and are further permitted to seek environmental remediation, but private actions and damages have been severely abrogated by the Court’s ruling. Moreover, in rejecting the continuing tort theory, the Court refused to allow private claims for environmental harm to exist in perpetuity, providing greater certainty to industry with respect to tort liabilities.

Notably, the Court’s decision created a sharp divide among the justices which continues to persist. Justice Clark, who authored the majority opinion, and Justice Weimer, who authored the dissent have both provided additional written opinions, days after the original opinion was released. As this dispute continues, it is important to recognize a number of similar cases currently pending before the Court, including two arising from oil and gas exploration and production activities performed pursuant to mineral leases. The Court will continue to face such sharp divisions in ruling on these matters and the issue is far from final resolution.
 

On October 15, 2010, the former Bureau of Ocean Energy Management, Regulation and Enforcement (“BOEMRE”) issued new regulations, incorporating in its entirety and making mandatory the implementation of the American Petroleum Institute’s Recommended Practice 75 (API RP 75).  The rule requires development of Safety and Environmental Management Systems (SEMS) plans by “a lessee, the owner or holder of operating rights, a designated operator or agent of the lessee(s), a pipeline right-of-way holder, or a state lessee granted a right-of-use and easement.” 30 C.F.R § 250.105. According to BOEMRE, “the purpose of SEMS is to enhance the safety and cleanliness of operations by reducing the frequency and severity of accidents.” This final rule applies to all Outer Continental Shelf oil and gas and sulphur operations and the facilities under BOEMRE jurisdiction including drilling, production, construction, well workover, well completion, well servicing, and DOI pipeline activities.

Responsibility for developing and implementing a SEMS program lies with the lessee (or owner or holder of an operating right), unless it delegates the responsibility to another (likely the operator). Contractors are not responsible for developing the plan; however if compliant, contractor procedures may be incorporated into the lessee’s/operator’s SEMS plan.
 

• SEMS program must be complete and in effect, 40 C.F.R. 250.1900(a); and
• Initial hazard analysis, 40 C.F.R 250.1911(a).

On October 11, 2011, the Bureau of Safety and Environmental Enforcement (“BSEE”) issued guidance concerning the implementation of the rule. While repeating required elements of a SEMS plan, the guidance provides examples of adequate documentation and coordination between the operator and its contractors. As described below, operators must do more than rely on assurances made by the contractor. Under the SEMS program, the operator must:

• agree with and accept the contractor’s safety procedures and make them available during an inspection;
• document that each contractor is knowledgeable and experiences (by auditing / testing);
• perform periodic evaluations of contract employees;
• inform the contractor of any known hazards; and
• verify how contractors are trained.

While the SEMS rule was progressing to final promulgation, BOEMRE proposed amendments to the rule to add further requirements for SEMS programs. It is apparent from the proposal that BOEMRE believes employees need additional rights to affect the development of the SEMS plan and to stop and report unsafe acts to the government. Comments are due on the proposal by November 14, 2011. The proposed rules include the following additions to the SEMS program:

• procedures to allow any employee to stop work;
• clearly defined requirements as who has authority to make safety decisions;
• demonstrations that employees are involved in development of the SEMS plan;
• guidelines for employees to report unsafe conditions and request a BSEE inspection; and,
• requirements for third party audits.

On October 14, 2009, the Louisiana Department of Environmental Quality (DEQ) issued General Permit No. LAG260000 for discharges within the territorial seas of Louisiana from oil and gas exploration, development, and production facilities.

In a lawsuit filed in state district court in Baton Rouge, the Louisiana Environmental Action Network challenged this General Permit. In a May 2010 decision, the state district court upheld the permit. However, in a ruling dated June 10, 2011, the Louisiana First Circuit Court of Appeal remanded the permit to DEQ for further proceedings.  In a Notice published in the Potpourri Section of the Louisiana Register on October 20, 2011, DEQ said it would be modifying the General Permit to remove produced water discharges from coverage under the permit.  Facilities wishing to discharge produced water within the territorial seas of Louisiana now must seek authorization to do so under an individual permit.  In addition, facilities discharging produced water currently covered by the General Permit must file the O and G-IND permit application for an individual permit no later than April 1, 2012.  The notice states that “the individual permit will require an evaluation of the effects of produced water discharges on the environment and human health.”  DEQ further said that “the regulated community will be responsible for providing information that will be utilized to determine whether authorization to discharge produced water in the territorial seas will be granted.”

Effective today, October 20, 2011, new permitting and disclosure requirements apply to hydraulic fracturing operations in Louisiana. Known as “fracking” in the oil and gas industry, hydraulic fracturing refers to the process of injecting fluid into tight shale or sandstone formations, which creates fractures in the rock through which oil and gas may travel into the wellbore. When combined with horizontal drilling, fracking allows producers to capture oil and gas reserves that were once thought to be out-of-reach.

Pursuant to the newly-implemented amendment to Subpart I of LAC 43:XIX (Statewide Order 29-B), fracking operators must now apply for and obtain a specific permit for “hydraulic fracture stimulation” from the Louisiana Department of Natural Resources’ Office of Conservation before utilizing pressurized fluids to fracture any formation for the purpose of improving its ability to produce hydrocarbons. After obtaining the requisite permit and conducting its fracking operations, the operator must be prepared to publicly disclose (1) the types and volumes of base fluid used during fracking; (2) a detailed list of all additives used in the fluid and the name of the supplier for each type of additive; and (3) a list and concentration of any chemicals contained in the fracking fluid that are regulated by the Occupational Safety and Health Administration (OSHA) and reported on Materials Safety Data Sheets (MSDS). The lone exception to these disclosure requirements permits an operator to withhold trade secrets, but the regulations still require the operator to disclose pertinent chemical characteristics of even proprietary constituents used in fracking operations.

To comply with these disclosure requirements, the operator must utilize the Office of Conservation’s new WH-1 Form to disclose the information about the base fluids (discussed above), together with detailed information about the identities and volumes of water supplies used during each phase of fracking operations. In lieu of submitting the WH-1 Form directly to the Office of Conservation, the operator may elect to satisfy its chemical reporting obligations by publishing the required information to an online database that makes the information available to the public free of charge. If utilizing the online option, the operator must also furnish a written statement to the Office of Conservation certifying that all required information has been published in an online registry. FracFocus is one online database specifically endorsed by the new regulation, but the disclosure requirements can also be met by publishing the required information to any other “similar registry.” It is anticipated that the option to satisfy Louisiana’s new disclosure requirements by publishing information to FracFocus will be heavily utilized, as many oil and gas companies have already become accustomed to using this registry to comply with other states’ disclosure regulations.
 

On August 25, 2011, the U.S. Department of Transportation’s (“DOT”) Pipeline and Hazardous Materials Safety Administration (“PHMSA”) announced that it was seeking information concerning contemplated changes in natural gas transportation safety regulations. (1)  This advanced notice of proposed rulemaking (“ANPRM”) follows another one published by PHMSA involving hazardous liquid pipelines. See, 75 Fed. Reg. 63774 (Oct. 18, 2010). Draft rules have not yet been proposed in response to that initiative. In this initiative, PHMSA requests comments on considerations to greatly expand both the reach and the regulatory requirements for gas pipelines.

Historically, rural gas gathering lines were largely unregulated. See, 76 Fed. Reg. at 53100. In 2006, PHMSA divided onshore gas gathering lines into two categories based on its relative operating pressure (compared to design): Type A and Type B. See, 49 C.F.R. 129.9. Regulatory requirements differ based on this classification. Within the ANPRM, PHMSA suggest that existing regulation of gas gathering lines is insufficient, stating that less than ten percent of gas gathering lines in the U.S. are regulated by PHSMA. Specifically PHMSA requests comments on additional regulatory reporting requirements, changes in the definition of gathering lines (to reduce the mileage of unregulated pipelines) and regulations to require corrosion control and integrity management (“IM”) requirements.

PHMSA also requests comments on potential redefinition of areas considered high-consequence areas (“HCA”). Generally an HCA is an area with a higher population density. See, 49 C.F.R. 192.901. Areas designated as an HCA must develop and follow a written IM program. See, 49 C.F.R. 192.905. Changes in the definition of HCA will result in changes in the mileage of pipelines required to implement IM programs.

IM programs require pipeline operators to identify and consider threats and risk “to evaluate the merits of additional preventive and mitigative measures.” 49 C.F.R. 192.911(c). According to 49 C.F.R. 192.935, “an operator must take additional measures beyond those already required by Part 192 to prevent a pipeline failure and to mitigate the consequences of a pipeline failure in a high consequence area.” However, the additional measures are generally not specified. See, 76 Fed. Reg. at 53089. The ANPRM requests comments on requiring specific additional measures.(3)   PHMSA also requests comments on applying the additional measures to pipeline at non-HCA. Otherwise the ANPRM contains requests concerning the cost and benefit of strengthening other IM requirements: modifying the repair criteria, revising requirements for collecting, validating and integrating pipeline data, use of risk modeling, incorporating prior findings and more prescriptive methods.

The ANPRM also requests comment on several significant non-IM related requirements including:
 

• valve spacing and the need for remotely or automatically controlled valves
• corrosion control
• longitudinal weld seam issues
• underground gas storage requirements
• management of change
• quality management systems
   

Persons interested in submitting written comments must do so by December 2, 2011.
 

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(1)  Pipeline Safety: Safety of Gas Transportation Pipelines, ANPRN, 76 Fed. Reg. 53086 (Aug. 25, 2011).
(2) U.S. Department of Transportation Seeks Comment on Possible New Gas Pipeline Safety Measures (Aug. 24, 2011), found here, (last visited Aug. 29, 2011).
(3) These additional requirements include: additional line markers; depth of cover surveys; close interval surveys for cathodic protection verification; coating surveys and required recoating; additional right-of-way patrols, shorter in-line inspection run intervals; additional gas quality monitoring, sampling, and in-line inspection tool runs; and improved standards for marking pipelines for operator construction and maintenance one-calls. See 76 Fed. Reg at 53090.

On September 2, 2011, President Obama announced that he had requested the Environmental Protection Agency to withdraw the proposed revision to the primary National Ambient Air Quality Standard for ozone at this time. A White House press release quoted the President as stating:

“I have continued to underscore the importance of reducing regulatory burdens and regulatory uncertainty, particularly as our economy continues to recover. With that in mind, and after careful consideration, I have requested that Administrator Jackson withdraw the draft Ozone National Ambient Air Quality Standards at this time. Work is already underway to update a 2006 review of the science that will result in the reconsideration of the ozone standard in 2013.” 1

The request was delivered to EPA Administrator Lisa Jackson via a letter from Cass Sunstein, Director of the Office of Management and Budget. The letter stated that the decision was based on the President’s Executive Order 13563, which emphasizes that “Our regulatory system must protect public health, welfare, safety, and our environment while promoting economic growth, innovation, competitiveness, and job creation.” The letter from OMB indicated that EPA was already in the process of reviewing the ozone standard again based upon the most recent science and is required to complete that review by 2013. It urged EPA to complete that process. However, OMB indicated that the President requested that EPA “reconsider” its proposed rule in light of the directives of the Executive Order, in particular, to “promote predictability and reduce uncertainty.” The OMB letter flatly stated that President Obama did not support EPA’s proposed rule and that regulatory agencies should take action consistent with the President’s priorities. 2

The 1997 standard presently being enforced was set at 85 ppb and all Louisiana parishes are in attainment. When the 2008 standard was adopted, Louisiana was required to designate which parishes were in nonattainment with the 75 ppb standard. The initial designation in early 2009 named 11 parishes as exceeding the standard. However, improved air quality in 2009 and 2010 resulted in Louisiana amending the proposed designation of nonattainment to just one parish – East Baton Rouge. Conditions in 2011 have apparently resulted in several more parishes (Ascension, Iberville, Caddo, and Jefferson) sliding in to nonattainment with the 75 ppb standard; but, official data on those additional parishes likely will not be available until the end of the year. EPA’s default policy is to require every parish in a Consolidated Metropolitan Statistical Area (CMSA) to be classified as nonattainment if even one parish in the CMSA is nonattainment, so other parishes in the same CMSA with these could be included within the nonattainment area. However, the state can rebut that default policy with evidence that emissions in a parish are not impacting ozone attainment with a nearby parish, generally due to low levels of traffic or lack of major sources.

If EPA withdraws the proposed rule as expected, it will begin to act on the pending state designations in the near future. Under the Clean Air Act Section 107(d), EPA can agree with the state proposals for nonattainment area designations, or can alter those proposals upon 120 days notice to the state, with an opportunity for the state to argue its position. EPA makes the final decision on designations to nonattainment. Once a parish is designated as nonattainment, then the state has the obligation to adopt State Implementation Plan requirements to control emissions such that the area will achieve attainment by specified deadlines that will depend upon how much the air quality exceeds the standards. Further, new construction and modifications over certain size thresholds will require more stringent control requirements and offsets of new ozone causing pollutants within the nonattainment area. For the above parishes, this process of designation to nonattainment will play out over the next one or two years.

Withdrawal of the proposed rule to lower the standard will also clear the way for court action to proceed on the 2008 standard. A number of groups challenged the 2008 standard for either not being stringent enough or for being too stringent. Those cases are consolidated in State of Mississippi v. EPA, No. 08-1200, United States Court of Appeal for the D.C. Circuit (Ozone NAAQS Litigation). Because EPA was reconsidering the standard, the Court held the briefing schedule in abeyance, but is likely to now move forward on that appeal.
 

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[1] See http://www.whitehouse.gov/the-press-office/2011/09/02/statement-president-ozone-national-ambient-air-quality-standards (last visited September 2, 2010).

[2] The OMB letter to EPA is available at http://www.whitehouse.gov/the-press-office/2011/09/02/letter-oira-administrator-cass-sunstein-epa-administrator-lisa-jackson-o (last visited September 2, 2010)

On July 28, 2011, the Louisiana Department of Environmental Quality (LDEQ) denied a petition for the adoption of a rule to regulate fossil fuel carbon dioxide (CO2) emissions and to establish an effective emissions reduction strategy that will achieve a concentration of 350 parts per million (ppm) atmospheric CO2 by the year 2100. The petition was filed on May 4, 2011, by Kezia Kamenetz, of New Orleans, and Kids vs Global Warming, a non-profit organization formed in Oak View, California.

1. Ensure that CO2 emissions from fossil fuels peak in the year 2100;
2. Adopt a CO2 emissions reduction plan that reduces state-wide fossil fuel generated CO2 emissions by at least 6% annually until at least 2050 and expands Louisiana’s capacity for carbon sequestration;
3. Establish a state-wide greenhouse gas (GHG) emissions accounting, verification, and inventory program; and
4. Issue annual progress reports to ensure the public has access to current data regarding the effectiveness of Louisiana’s efforts to reduce fossil fuel CO2 emissions.

The petitioners argued that the LDEQ should grant the petition and promulgate the proposed rule because science shows that anthropogenic climate change is occurring. The petitioners also argued that climate change is already occurring in Louisiana and is projected to significantly impact Louisiana in the future. The petitioners asserted that the public trust doctrine reflected in Article XI § 1 of the Louisiana Constitution requires LDEQ to act to preserve the atmosphere and to “provide a livable future for present and future generations of Louisiana residents.” That constitutional provision states, in part: “The natural resources of the state, including air and water, and the healthful, scenic, historic, and esthetic quality of the environment shall be protected, conserved, and replenished insofar as possible and consistent with the health, safety, and welfare of the people….”

In denying the petition for formal rulemaking, the LDEQ provided three reasons for its decision. First, the LDEQ stated that global climate change is an issue that is best addressed through “comprehensive federal legislation rather than through piecemeal regulation at the state level.” The LDEQ argued that such an approach was necessary to avoid “conflicting or inconsistent regulations among the states”. Next, the LDEQ stated that EPA has already taken several actions regarding GHGs and CO2 emissions, which, while currently subject to judicial review, are already being implemented by the LDEQ. In particular, the LDEQ noted that it has recently issued the first permit in the nation that addresses Best Available Control Technology for GHGs (the PSD and Title V permits for the anticipated Nucor Steel facility). The LDEQ also noted that EPA is in the process of developing additional GHG regulations and has already promulgated a GHG reporting program (see 40 C.F.R. Part 98). Finally, and with respect to the petitioners’ public trust doctrine argument, the LDEQ stated that the doctrine simply “does not establish ‘environmental protection’ as an exclusive goal. Instead, it requires a balance between environmental costs and benefits, considering economic, social, and other factors.”

A copy of the petition and the LDEQ’s response are available on the LDEQ’s Electronic Data Management System here.  

The recent development of the Haynesville Shale in North Louisiana and other shale formations around the country has generated huge public interest in the hydraulic fracturing process, which is known as “fracking” in the oil and gas industry. Fracking refers to the procedure of injecting fluid into tight shale or sandstone formations to create fractures in the rock, through which oil and gas flow into the wellbore. When combined with horizontal drilling, fracking allows producers to capture oil and gas reserves that were once thought to be out-of-reach.

Last week, the Louisiana Department of Natural Resources (LDNR) filed a Notice of Intent to amend LAC 43:XIX Subpart I (Statewide Order No. 29-B). The proposal seeks to amend Statewide Order 29-B to include new reporting regulations for fracking operations in Louisiana. If the proposed regulation is promulgated, it would require any operator engaged in fracking to regularly report:

1. The types and volumes of base fluid used during fracking;
2. A detailed list of all additives used in the fluid and the name of the supplier for each type of additive; and
3. A list and concentration of any chemicals contained in the fracking fluid that are regulated by the Occupational Safety and Health Administration (OSHA) and reported on Materials Safety Data Sheets (MSDS).

If, however, the identity of any reportable chemical or additive is a “trade secret,” the operator may refuse to report proprietary details but must still report pertinent chemical characteristics of the product. The proposed regulation would only apply to new wells that are drilled after the date that a final regulation is promulgated.

The Notice of Intent is merely the first step in promulgating the new reporting requirements for fracking in Louisiana. This proposed regulation was initiated based on recommendations from the State Review of Oil and Natural Gas Environmental Regulations (STRONGER), (1) which champions itself as a “successful alternative to federal oversight of state oil and gas exploration and production waste regulatory programs.” (2)  With this proposal, Louisiana joins a growing list of states including Arkansas (3), Michigan (4), Montana (5) , Texas (6) , and Wyoming (7) that are discussing or have passed state regulations requiring disclosure or reporting of the contents of hydraulic fracturing fluids. A public hearing regarding the proposed Louisiana regulations will occur on August 30, 2011 in Baton Rouge.

To view the full Notice of Intent, visit the LDNR’s website.

 (1)  See Louisiana Department of Natural Resources, Notice of Intent: Hydraulic Fracturing Stimulation Operations (LAC 43:XIX.118) (“a review of the Office of Conservation policies and regulations associated with the hydraulic fracturing process was conducted by the non-profit, multi-stakeholder organization, STRONGER, Inc. to assess the effectiveness and adequacy of current regulations. Their report finalized March 2011, recommended some of the changes included in the proposed amendment.”).

(2)  STRONGER, Inc. website, “The History and Accomplishments of the State Review Process,” available at: http://www.strongerinc.org/documents/STRONGER%20State%20Review%20Process%203-4-2011.pdf.

(3)  See Arkansas Oil & Gas Commission, Rule B-19, available at: http://www.aogc.state.ar.us/PDF/B-19%20Final%201-15-11.pdf.

(4)  See Michigan Department of Environmental Quality, Supervisor of Wells Instruction 1-2011(Reporting Instructions), available at: http://www.michigan.gov/documents/deq/SI_1-2011_353936_7.pdf.

(5)  See Department of Natural Resources and Conservation of the State of Montana website, available at: http://bogc.dnrc.mt.gov/PDF/36-22-157pro-arm.pdf.

(6)  See Texas House Bill 3328 (effective 9/1/11), http://www.legis.state.tx.us/BillLookup/Text.aspx?LegSess=82R&Bill=HB3328; http://www.legis.state.tx.us/BillLookup/history.aspx?LegSess=82R&Bill=HB3328.

(7)  See Wyoming Oil & Gas Conservation Commission Rules (Chap. 4, Sect. 10), http://soswy.state.wy.us/Rules/RULES/7929.pdf.

On July 15, 2011, the House of Representative, Committee on Energy and Power, Subcommittee on Energy and Commerce held hearings on a draft of the “Pipeline Infrastructure and Community Protection Act of 2011.”  Chairman Fred Upton’s initial comments focused on recent pipeline incidents: the 20,000 barrel oil spill into Talmadge Creek, Michigan in the summer of 2010, the September 2010 gas pipeline explosion that killed 8 people in San Bruno, California and the most recent spill of 1,000 barrels of oil near Billings, Montana. (1)  Chairman Upton concluded that these incidents indicate that pipeline laws must be strengthened. Included within the draft legislation are the following provisions:

• one-hour time limit to report incidents;
• use of automatic or remote control shutoff-valves;
• better leak detection technology;
• substantial increase in civil penalties for releases from pipeline;
• enhanced inspection techniques; more miles of pipeline inspected; and
• increased number of pipeline inspectors.
   

Cynthia Quarterman, Administrator of the Pipeline and Hazardous Materials Safety Administration (“PHMSA”), within the Department of Transportation, appeared and offered general support for the bill. However she offered specific recommendations to various provisions to strengthen the legislation. Among the recommendations were: (2)

• higher administrative penalties should apply in High Consequence Areas;
• eliminate statutory exemption for gathering lines; and
• clarity should be added that shut-off valve requirements apply to gas and hazardous pipelines.
   

Because changes in regulatory programs often occur quickly after incidents such as these recent three pipeline events, interested parties should be aware of the above issues and recommendations. Owners and operators of regulated pipelines should expect more inspection/detection requirements and the likelihood of enhanced PHSMA and state agency inspections and enforcement actions.
 

(1)   Opening Statement of Chairman Fred Upton (July 15, 2011), found at http://republicans.energycommerce.house.gov/Media/file/Hearings/Energy/071511/Upton%20.pdf (last visited July 18, 2011).

(2)  Written Statement of Cynthia Quarterman, Administrator, PHMSA (July 15, 2011) found at http://www.phmsa.dot.gov/staticfiles/PHMSA/DownloadableFiles/Testimony/House%20Energy%20and%20Commerce%20Written%20Testimony%20-%20July%2015%202011%20-%20For%20Web%20_2_.pdf (last visited July 18, 2011).

As of July 3, 2011, the air quality measured at the official ozone monitor at 1425 Airport Drive, which is within Shreveport, but located in Bossier Parish, indicated that the design value for the parish is now 76.7 parts per billion (ppb) which exceeds the 75 ppb standard set by EPA in 2008. 40 C.F.R. §50.15. The design value for each monitor is the 3 year average of the 4th highest ozone reading at that monitor each year. The exceedance of the current standard will likely cause the Louisiana Department of Environmental Quality (LDEQ) to propose that EPA designate Bossier Parish, and perhaps Caddo and DeSoto Parishes, as an ozone nonattainment area.

LDEQ was required to submit its recommendation for nonattainment designations under the 2008 ozone standard by March 12, 2009. EPA was then required to act on the proposals and make final designations no later than March 12, 2010. 73 Fed. Reg. 16436, 16503 (Mar. 27, 2008). In its 2009 recommendation, LDEQ did designate Caddo, but not Bossier or DeSoto, parishes as nonattainment. (1) However, when air quality in Caddo parish improved to compliance status over the past several years, LDEQ amended that recommendation in January 2010 to classify Caddo as attainment. (2)

Because the 2011 ozone season (May-September) is not complete, and the data not verified, EPA would likely need to wait until after verification before any such designation. Data indicating high readings at the Shreveport/Bossier monitor can be excluded if proved to be invalid or if due to “an exceptional event.” If LDEQ flags such data as invalid, the process to resolve the issue can take more than one year, thus delaying any final nonattainment designation status.

The ozone monitor in Caddo Parish (at Dixie) has a current design value of 72 ppb, which is below the standard; nevertheless, Caddo and DeSoto Parishes could be classified as nonattainment based on the design value at the Bossier Parish monitor. Adjacent areas that contribute to exceedance of ambient air quality are to be considered within the boundary of the nonattainment designation. 42 U.S.C. § 7409(d)(1)(A)(i). According to EPA guidance, presumptively the entire Consolidated Metropolitan Statistical Area (“MSA”) affects ambient air quality. (3)  Bossier, Caddo and De Soto Parishes comprise the Shreveport-Bossier City CMSA. LDEQ would be required to submit documentation showing that Caddo and DeSoto parish air emission sources do not contribute to the ozone values in Bossier Parish – a difficult burden.

Upon designation to nonattainment, any new sources or major modifications to existing sources must follow the more stringent requirements of Nonattainment New Source Review (NNSR) located at LAC 33:III.504 instead of Prevention of Significant Deterioration (“PSD”) found at LAC 33:III.509. (4)   The NNSR program requires the new or modified source to obtain offsets of any VOC or NOx emissions at least a 1.1 to 1 ratio, and it requires the new or modified equipment to employ technology of lowest achievable emission rate instead of best available control technology, the PSD requirement. Further, the LDEQ will be required to develop and submit to EPA for approval a State Implementation Plan (SIP) to move the area into compliance. The SIP must require, at a minimum, that existing major sources employ Reasonably Available Control Technology and may also include measures such as additional planning and control requirements for mobile sources or non-road sources such as diesel fired engines.

The Shreveport-Bossier area will be able to escape these consequences only if air quality improves enough in 2012 to enable the 3 year average ozone value to comply with the standard. If EPA chooses to lower the standard, as proposed, then it is still likely that designations will be based on the design value over 2009-2011 or perhaps 2010-2012, and the same consequences will follow, albeit on a slightly longer time line. Only a significantly improved performance during 2012 could bring the design value down to the level of 67-70 ppb, the level expected to be promulgated by EPA if it moves forward on the reconsideration proposal.
 

*************

 (1)  Letter from Harold Leggett, Secretary, LDEQ to Lawrence Starfield, Action Administrator, EPA Region 6, Re: State of Louisiana Area Designations 2008 Ozone National Ambient Air Quality Standards (NAAQS) (Mar. 12, 2009). Found at http://www.epa.gov/ozonedesignations/2008standards/rec/letters/06_LA_rec.pdf (last visited July 5, 2011).
 

(2)  Letter from Peggy Hatch, Secretary, LDEQ to Al Armendariz, Administrator, EPA Region 6, Re: State of Louisiana Area Designations Amendments 2008 Ozone National Ambient Air Quality Standards (NAAQS) (Jan. 25, 2011).

(3)  Memorandum from John S. Seitz, Director, Office of Air Quality Planning and Standards, Boundary Guidance on Air Quality Designations for the 8-hour Ozone National Ambient Air Quality Standards (March 28, 2000) found at http://www.epa.gov/ozonedesignations/1997standards/documents/032800_boundaryguidance.pdf (last visited July 5, 2011).

(4)  It should be noted that the required nonattainment SIP will likely result in changes to §504. The nonattainment SIP has not been submitted as it is due 18 months after EPA designation.

In response to the Gulf of Mexico Deepwater Horizon Incident, the Louisiana Department of Natural Resources (“DNR”), Office of Conservation (“Conservation”) issued a series of emergency rules with effective dates: July 15, 2010(1) , December 9, 2010(2), January 12, 2011(3) and most recently May 12, 2011(4).  . The initial emergency rule created:

“a new Chapter within Statewide Order No. 29-B (LAC 43:XIX.Ch. 2) to provide additional rules concerning the drilling and completion of oil and gas wells at water locations, specifically providing for the following: rig movements and reporting requirements, additional requirements for applications to drill, casing-header requirements, mandatory diverter systems and blowout preventer requirements, oil and gas workover operations, diesel engine safety requirements, and drilling fluid regulations.” See, 36 La. Reg. 1427.

The initial emergency rule also amended Statewide Order No. 29-B-a (LAC 43:XIX. Ch. 11) “to provide for and expand upon rules concerning the use of storm chokes in oil and gas wells at water locations.” Id.

In the emergency rules, Conservation has reviewed and incorporated “all provisions of the MMS [Minerals Management Service] regulations concerning well control issues at water locations” that were not repetitive, duplicative or otherwise inapplicable to the situations encountered in Louisiana waters. See, 37 La. Reg. 1548. In addition to providing Conservation more time promulgate final comprehensive rules, the most recent version of the emergency rules contains a few noteworthy changes from the January 2011 version of the rule. These are:

• The Oil and Gas Well-Workover Operations section, located at LAC 43:XIX.211, contains specific requirements for blow out preventer components and configuration. Conservation removed a provision (formally located at LAC 43:XIX.213.L) allowing the Commissioner to grant an exemption from specific equipment requirements mandated by that section. The January 2011 version of the rule allowed an exemption from specific equipment requirements where the operator could demonstrate the unavailability of the mandated equipment and that anticipated surface pressures minimize the opportunity for loss of well control.

• Conservation changed the mandatory industry standard for design and operation of subsurface safety valves (“SSSV”) from “API RP 14B” to “API RP 14H”. See, LAC 43:XIX.1104.E (making the emergency rule consistent with 30 C.F.R. §250.804(a)(5)). 

• All four versions of the emergency rule require that installed subsurface-controlled SSSV’s be removed and tested every twelve or six months, depending on whether they were installed on a landing nipple or not. However, the most recent emergency rule also included a requirement that all SSSVs be inspected for leakage every month to six weeks. See, LAC 43:XIX.1104.E.2.a.

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(1)  36 Louisiana Register 1427, July 20, 2010, available at: http://www.doa.louisiana.gov/osr/reg/1007/1007.pdf
(last visited June 27, 2011).

(2)  36 Louisiana Register 2823, Dec. 20, 2010, available at: http://www.doa.louisiana.gov/osr/reg/1012/1012.pdf
(last visited June 27, 2011).

(3)  37 Louisiana Register 460, Feb. 20, 2011, available at: http://www.doa.louisiana.gov/osr/reg/1102/1102.pdf
(last visited June 27, 2011). 

(4)  37 Louisiana Register 1547, June 20, 2011, available at: http://www.doa.louisiana.gov/osr/reg/1106/1106.pdf (last visited June 27, 2011).
 

Deepwater oil and gas production from the Gulf of Mexico has become a significant portion of the current production within the United States, equal to over 1.6 million barrels per day of oil equivalent; total U.S oil production is around 5.3 million barrels per day. (1)  Worldwide shallow water oil production peaked around the year 2000 whereas worldwide deep water production has risen to around 5 million barrels per day. On May 10, 2011, the Bureau of Ocean Energy Management, Regulation and Enforcement (“BOEMRE”) approved Royal Dutch Shell’s Exploration Plan S-0744 to better define discoveries announced in 2009 and 2010. (2) 

Several environmental groups filed suit in an attempt to block the approved plan. Gulf Restoration Network, Inc., Florida Wildlife Federation, and Sierra Club Inc. filed a petition on June 8, 2011, in the United States Court of Appeals, 11th Circuit, in an attempt to set aside BOEMRE’s approval of the plan. The allegations in the petition are relatively general, alleging violation of the National Environmental Policy Act (“NEPA”) (i.e., for BOEMRE’s alleged failure to appropriately conduct the required environmental assessments and/or impact statements) and further alleging elements required pursuant to 43 U.S.C §1349(c) necessary to maintain the suit under the Outer Continental Shelf Lands Act (“OCSLA”).
 

In response to the Deepwater Horizon Incident, on June 18, 2010, BOERMRE issued new regulations concerning exploration, production and development plans. In interpreting one of these, BOEMRE Notice to Lessees (NTL) No. 2010-N06, establishes that calculation of the worst case discharge (“WCD”) is “the daily rate of an uncontrolled flow from all producible reservoirs into the open wellbore.” (3)  In compliance with the regulation and notice, Shell calculated a theoretical worst case discharge (“WCD”) that exceeded estimates of the Deepwater Horizon incident. (4)  

The plan includes Shell’s evaluation of potential mitigating factors, effectiveness of intervention devices (including redundant blow out preventers “BOPs”) and containment methods (sub-sea containment assembly and other specialized connection devices). Earth Justice’s comments contend it is unreasonable for exploration plans to rely on use of BOPs in light of the failure of BOPs during the Deepwater Horizon incident and dismiss planned containment methods as “reliance on an unproven system of unknown reliability.”  (5)

The Shell Exploration Plan relies on new technology developed by Marine Well Container Co. (“MWCC”), a consortium of oil companies operating in the Gulf of Mexico. MWCC recently announced that the new system can operate at depths of up to 10,000 feet. (6)  According to a Dow Jones press release, “MWCC’s containment system improves on techniques that were gradually developed by BP after several failed attempts to cap the Deepwater Horizon spill. It consists of a capping stack that would stop the high-pressure flow of oil and gas from a runaway well, and ship the hydrocarbons to a surface vessel if needed.” (7)  BOEMRE previously approved an exploration plan that used the MWCC containment system for drilling a prospect in 6,941 feet of water. (8)

In its comments, Earth Justice further questioned BOEMRE methodology in determining that the likelihood of a spill. In an attempt to diminish the historical successful drilling of offshore wells without incident, Earth Justice argues that BOEMRE should reduce the set of comparable wells to only those in the Gulf of Mexico drilled in water of similar depths or complexity. Considering the single catastrophic failure in the Gulf (Deepwater Horizon), this approach, which lowers the number of comparable wells drilled in the Gulf, presumably would result in a greater risk of failure for future wells. (9)

Given the importance of oil and gas production from deep water Gulf of Mexico, this challenge will be an interesting test of the adequacy of industry efforts to comply with regulations developed by BOEMRE in response to the Deepwater Horizon incident and of BOEMRE’s adequacy in addressing NEPA requirements when approving drilling plans. 

(1)  Rafael Sandrea, Deepwater Crude Output: How Large Will it Be?, Oil & Gas Journal, 48-51 (Nov. 1, 2010).

(2) GoM: Shell Receives BOEMRE Approval for Appomattox Deep Water Exploration Plan in the Gulf of Mexico, http://www.energy-pedia.com/article.aspx?articleid=145375 (last visited June 15, 2011).

(3) NTL No. 2010-N06, Frequently Asked Questions, No. 14, http://www.gomr.boemre.gov/homepg/regulate/regs/ntls/2010NTLs/10-n06-FAQs.pdf (last visited June 14, 2011),

(4) Supplemental Exploration Plan, Section 2(j) Blowout scenario, http://www.gomr.boemre.gov/PI/PDFImages/PLANS/30/31468.pdf (last visited June 14, 2011).

(5) Earth Justice Comments dated April 21, 2011, http://www.courthousenews.com/2011/06/14/ShellDoc.pdf (last visited June 14, 2011).

(6) Angel Gonzalez (Dow Jones Newswire), MWCC Oil Spill Containment System Approved for 10,000-Foot Depths, Oil & Gas Journal (June 14, 2011), http://online.wsj.com/article/BT-CO-20110614-713284.html?mod=WSJ_Energy_middleHeadlines (last visited June 15, 2011).
(7)  Id.

(8)  BOERMRE’s Fourth Permit with MWCC System, Oil & Gas Journal, p. 5 (March 28, 2011).

(9)  Ultra-deep Gulf of Mexico exploration started in 2005 resulting in a lower number of comparable events. Deepwater drilling also occurs worldwide.

On June 1, 2011, the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) issued a notice to Gulf of Mexico Outer Continental Shelf Region (GOMR) lease and pipeline right-of-way (ROW) holders on reporting hurricane and tropical storm effects. Specifically, the recent notice, designated NTL No. 2011-G01(1), requires four reports, as appropriate:

• Evacuation and Production curtailment statistic report – partially evacuated platforms are not considered evacuated
• Facility shut-in reports – including facilities that are partially shut-in
• Facility damage reports – including platforms, rigs and pipelines
• Pollution reports - facility discharged or continues to discharge oil during or as a result of the event
   

The Evacuation and Production curtailment statistic report and the Facility shut-in report overlap in subject matter. They differ in that the first report is general and requires overall company statistics (number of facilities evacuated or not evacuated, overall production shut-in); the second report is specific, requiring statistics platform by platform. Facility damage reports are to be submitted as soon as the information becomes available. Other reports are to be submitted daily as long as the condition exists. Reports may be submitted by e-mail or through the BOEMRE GOMR internet-based Permitting and Reporting System (eWell). Although the notice outlines the specific information and instructions required when the transmission is by e-mail, BOEMRE GOMR strongly encourages use of eWell to transmit the required data.

The eWell system, described in NTL No. 2007-G15 (2), was developed to increase efficiency of well permitting and reporting transactions between OCS lessees and operators and the GOMR by both reducing the time (and cost) required to process data and to reduce input errors. The system is designed to simplify submittal of multiple reports and subsequent daily reports. Interested lessees and operators and pipeline ROW holders must apply to BOEMRE GOMR for access to the eWell system.
 

[1] BOEMRE, Hurricane and Tropical Storm Effects Reports, NTL No. 2011-G01, http://www.gomr.boemre.gov/homepg/regulate/regs/ntls/2011NTLs/11-G01.pdf (last visited June 10, 2011).

[2] BOERME, eWell Permitting and Reporting System, NTL- No. 2007-G15, http://www.gomr.boemre.gov/homepg/regulate/regs/ntls/2007NTLs/07-g15.pdf (last visited June 10, 2011).

On April 28, 2011, Governor Bobby Jindal declared a State of Emergency as a result of growing concern over the predicted crest of the Mississippi River well above flood stage in many areas. Consistent with his authority, on May 13, 2011, James Welsh, Commissioner of Conservation, also issued an emergency and administrative order. It is expected that substantial flooding in the state will likely lead to adverse effects on many oilfield sites which could result in serious threats to public safety and the environment. The order specifically applies to following throughout the state:

• Oilfield sites – including injection wells
• Other facilities – including commercial E&P waste disposal and transfer stations
• Structures and Pipelines

Ordered actions are both general calls for alert monitoring of the situation and a more specific list of necessary steps (as appropriate). The Order contains a practical, common sense mandate, to keep track of forthcoming proclamations, orders, warnings, predictions, forecasts, directives or other communications from federal, state and local authorities and to monitor water levels and weather activity. Additionally, the order requires operators to take all necessary steps and perform all necessary actions to avoid damage to the environment or threats to life or safety, including the following, where appropriate:

• Empty petroleum tanks and re-fill with water
• Remove chemicals from sites
• Remove or secure loose items
• Ensure that storm chokes or downhole plugs are installed in wells
• Empty active pits of E&P waste
• Shut in and secure wells where necessary
• Protect sites from stray debris

The above list of actions is discretionary, tasking each operator with the duty to determine which actions are necessary as each operator is in the best position to assess the potential risks and dangers.

The Order also requires notification to the Office of Conservation within 12 hours should an operator shut down one of the covered facilities. The Order will extend for 120 days, unless modified or extended. The order may be found here. 

On March 21, 2011, a final rule title “Identification of Non-Hazardous Secondary Material That Are Solid Waste” was published in the Federal Register. See, 76 Fed. Reg. 15456. The final rule does not as much identify that which is a solid waste as it identifies materials that are not solid waste. The effect of the rule is to determine whether combustion units should be regulated under Section 129 or Section 112 of the Clean Air Act (CAA) – solid waste is regulated under Section129 and non-solid waste under Section112. See, 76 Fed. Reg. 15610.

Under current regulations, certain materials (spent, sludges, by-products, specific chemical products and scrap) are solid waste when burned for energy recovery. See, 40 C.F.R. §261.2(c)(2). Materials are not solid waste when recycled through use or reuse as ingredients, as substitute products, or returned to the original process. See, 40 C.F.R. §261(e). The preamble of the final rule expands recycling by indicating that it includes burning for energy recovery. See, 76 Fed. Reg. 15468-69.
 

1. Those that remain with the generator and meet the specified legitimacy criteria
2. Scrap tires managed by established collection programs
3. Resinated wood used as fuel
4. Used as ingredient in a combustion unit
5. Secondary materials that have been processed into a legitimate fuel
6. Non-hazardous determinations

The “legitimacy criteria” is a very important test intended to ferret out sham recycling. Legitimate materials are not thrown away. See, 76 Fed. Reg. 15471. Legitimate fuels must: (1) be managed as a valuable commodity, (2) not be stored for an unreasonable time, (3) have a meaningful heating value, (4) be burned for heat recovery, and (5) contain equivalent or less contaminants compared to traditional fuels burned in a given combustion unit design. See, 40 C.F.R. §241.3(d). It should be noted that the EPA implies that the concept of legitimacy is important in hazardous waste determinations. See, 76 Fed. Reg. 15463.

In conclusion, the final rule adds definition to the question of non-hazardous solid waste combustion. The rule adds a definition for traditional fuel, which is neither a solid waste nor a secondary material. Traditional fuels will be subject to CAA §112 as well as certain non-hazardous secondary materials that meet exceptions from the definition of solid waste. Secondary materials that do not meet an exception will be classified as solid waste and be subject to CAA §129.
 

On April 7, 2011, the U.S. Court of Appeals for the District of Columbia issued a per curiam opinion denying petitioners’ motion to stay EPA from implementing the new 75 ppb 1-hour sulfur dioxide (SO2) National Ambient Air Quality Standard. Nat’l Env. Development Assn. Clean Air Project v. EPA, No. 10-1252, (D.C. Cir., Apr. 7, 2011). That standard was published by EPA at 75 Fed.Reg. 35520 (June 22, 2010). A number of industrial parties and two states – Texas and North Dakota - challenged the standard by filing petitions for reconsideration with EPA and petitions for judicial review with the D.C. Circuit. The Louisiana Department of Environmental Quality (LDEQ) intervened in the case to challenge the standard while the American Lung Association and the Environmental Defense Fund intervened to support the standard. In January 2011, EPA denied the petitions for reconsideration, clearing the way for the court litigation to move forward. Some of the parties sought a stay of implementation of the new rule until there is a final decision on the merits. The D.C. Circuit opinion on April 7, 2011, indicated that petitioners did not meet the stringent burden of staying EPA’s implementation of the standard while the litigation progresses. The per curiam opinion did not address the merits of the case. The court ordered the parties to submit a proposal for a briefing schedule by May 12, 2011. It is likely that oral argument will not be held until the last quarter 2011 or first quarter 2012.

This result means that states must complete their recommendations for designations of nonattainment, attainment and unclassifiable areas by June 2, 2011 and EPA must take final action on those designation recommendations by June 2, 2012. It is anticipated that two Louisiana parishes will be proposed for nonattainment classification – West Baton Rouge and St. Bernard. LDEQ must submit to EPA revisions to its State Implementation Plan to address requirements for sources in attainment and unclassifiable parishes by June 2, 2013 and must submit revisions to its SIP by February 2014 (18 mos. from EPA nonattainment designation) to address sources in nonattainment parishes to bring them into attainment by August 2017 (5 yrs. from EPA nonattainment designation). The denial of the stay also means that certain new source review requirements, including Prevention of Significant Deterioration NAAQS compliance demonstrations for new sources and major modifications, remain applicable as of the effective date of the rule (August 23, 2010).

The Louisiana Department of Environmental Quality (“LDEQ”) announced a final rule change, effective April 11, 2011, that deletes an exemption from water discharge permitting for pesticides applied directly or near waters of the state(1).  The exemption, based on an identical exemption promulgated by the EPA under the NPDES program, allowed the use of pesticides in such locations if applied “in compliance with relevant requirements of the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA).”(2)  See, 40 C.F.R 122.3(h) and LAC 33:IX.2315.A.8.  However, the federal exemption from permit requirements was later held invalid and vacated by the U.S. Court of Appeals for the Sixth Circuit in National Cotton Council of Am. v. U.S. EPA, 533 F.3d 927 (6th Cir. 2009), cert. denied, 130 S.Ct. 1505 (2010).

The Sixth Circuit noted that prior to incorporating the exemption into federal regulation, “[t]he State of Washington had issued a general permit to allow the application of all aquatic pesticides in the State” allowing users of aquatic pesticides to “discharge those pesticides covered by the rule without obtaining a permit.” (3)   Further the court stated that “[o]nce the EPA or a state agency issues such a [general] permit, covered entities, in some cases, need take no further action to achieve compliance with NPDES besides adhering to the permit conditions.”(4)  In its Louisiana Register notification, LDEQ indicated that the Sixth Circuit decision compelled it to remove the equivalent LPDES exemption, but acknowledged that, in response to deleting the exemption, it was necessary “to issue a general permit for the application of pesticides.” (5) 

In January 2011, the LDEQ published a draft general LPDES permit for pesticide application to fulfill this purpose and invited public comment (which ended on February 16, 2011). (6)  The draft general permit authorizes dischargers to discharge pesticides in accordance with four identified categories: mosquito and other flying insect pest control, aquatic weed and algae control, aquatic nuisance animal control and forest canopy pest control.  Unlike most general permits, the proposed general permit does not require submission of a Notice of Intent (NOI) for coverage; however certain record keeping requirements exist to demonstrate authorization and compliance. The draft general permit “also authorizes the discharge of storm water runoff from facilities which handle or use pesticides . . . when handled and stored according to FIFRA instructions” unless the facility “qualifies for coverage under the Multi-Sector General Permit.”  The general permit disallows the use of pesticides where they cause a violation of water quality standards or various other listed impairments; but does not require ambient water body testing by the pesticide user.  LDEQ does conduct routine ambient monitoring through its water quality assessment division.  According to the draft permit, the LDEQ “may deny coverage under the permit and require submittal of an application for an individual LPDES permit based on a person’s compliance record, ambient water quality data, or any other information relative to the application of pesticides.”

With the withdrawal of the regulatory exemption, as of April 11, 2011, discharge of pesticides into or near waters of the state without a permit will be prohibited.  Those planning to apply pesticides after that time should familiarize themselves with the details of the existing draft permit and ultimately any final general permit that may be issued by LDEQ.
 

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(1) 37 La. Reg. 588-89 (Feb. 20, 2011).
(2)  Application of Pestcides to Waters of the United States in Compliance With FIFRA, 71 Fed. Reg. 68483 (Nov. 27, 2006).
(3)  Id. at 931.
(4)  Id. citing S. Florida Water Mgmt. Dist. V. Miccosukee Tribe of Indians, 541 U.S. 95, 108 n. *(2004)
(5)  37 La. Reg. at 589.
(6)  Public Notice, Draft of Reissuance of Water Discharge General Permit LAG870000, Discharge of Pesticides Into or Near Waters of the State, AI 169705 (Jan. 8, 2011) located at http://www.deq.louisiana.gov/apps/pubNotice/ (last visited Feb. 21, 2011).

On January 26, 2011, the U.S. EPA denied petitioner’s request to reconsider the newly promulgated one-hour sulfur dioxide (SO2) national ambient air quality standard (NAAQS). See, 76 Fed. Reg. 4780. The EPA determined that the objections raised were not of “central relevance” purportedly because they failed to support an argument that the promulgated standards should be revised. The petitioners objected, in part, to non-binding preamble guidance concerning implementation issues that were separate and independent from revisions of the NAAQS. Since the EPA denied reconsideration, no need existed for a stay. 

Petitioner’s primary objection centered on perceived changes in EPA policy through utilization of modeling data to designate areas as non-compliant with the SO2 NAAQS. EPA countered that modeling had long been utilized “to determine whether areas have attained the NAAQS.” Petitioners also expressed concerns that modeling may over-predict violations. In its denial, the EPA countered that “modeling can very accurate identify areas of potential daily, maximum 1-hour concentrations above the NAQQS,” and if over-predictions exist, “interested parties would have a fair opportunity to show that using modeling in that case may not be appropriate.” See, 76 Fed. Reg. at 4782. Under this implementation process, the designation of non-attainment, based on modeling, will be the challengeable final decision.
 

According to the EPA, “Nothing in the final promulgated rule prevents a state from basing its designation on monitoring data.” See, 76 Fed. Reg. at 4792. The EPA further stated that they have left open the possibility that they may accept such a designation, however, such is to be determined based on future guidance. Additionally, the EPA states that the guidance will be subjected to the notice-and-comment process. Consistent with the previous statements, the EPA concluded that neither the preamble nor the rule requires that the States perform modeling. Although the above statements support an EPA denial that an implementation strategy has been established, the non-binding guidance reflects the EPA’s current view of that which constitutes “the most accurate data to support” designations and SIP actions. In conclusion, the EPA flatly denied that it owes any substantive deference to State decision. See, 76 Fed. Reg. at 4797. 

The denial allows the litigation currently pending in the U.S. Court of Appeal for the DC Circuit, Montana Sulphur & Chemical Company v. EPA, to move forward.