Environmental Case Law Update (March – June 2015) ~ Part VII


This is Part VII of VII of a brief recap of some the significant environmental law and administrative cases decided in the past few months:

B. Texas State Court of Appeals

On June 1, 2015, the Court of Appeals for the Seventh District sitting in Amarillo issued a ruling reversing the grant of summary judgment to five energy production companies whose operations are located near DISH, Texas. The case is Sciscoe, et. al. v. Enbridge Gathering (North Texas), L.P., et. al. Eighteen homeowners and the Town of DISH filed separate lawsuits against these companies essentially alleging that the noise, light, odors, and chemical particulates emanating from their adjacent operations caused a nuisance and constituted a trespass, entitling the plaintiffs to monetary damages; the plaintiffs, however, did not seek injunctive relief. The defendants argued that the migration of odors and chemical particulates onto the plaintiffs’ properties cannot constitute a trespass as a matter of law; that their claims are preempted by Federal and State Clean Air Acts; their emissions fall within the regulatory limits established for these emissions; and that the applicable statute of limitations requires their dismissal. The trial court agreed, and granted summary judgment.

On appeal, the Court of Appeals ruled that the trial court was in error when it ruled that, as a matter, of law, the migration of airborne particulates cannot constitute an actionable trespass. While the plaintiffs must prove their case, they should have the chance to do so. With respect to the defendants’ argument that their permitted natural gas compression units adhered to the law, the Court of Appeals ruled that the they were not “somehow immune from liability for damages they may have caused just because they have a regulatory permit”, and therefore summary judgment on this issue was inappropriate. Regarding the ruling of the trial court that the plaintiffs’ claims were barred by the relevant statute of limitations, the Court of Appeals ruled that the defendants failed to establish, as a matter of law, every element of that defense. Accordingly, summary judgment on this point was reversed. On the other hand, it ruled that the plaintiffs’ claim to recover damages for future diminution in the value of their properties was preempted by Federal and State law.

A state Court of Appeals for the Fourteenth District sitting in Houston, Texas, on March 26, 2015, ruled that environmental indemnities, which were a component of an exchange of Louisiana oil and gas properties in 1994, could be enforced today by and against the corporate successors to the original companies that negotiated these provisions. The case is ConocoPhillips Company v. Noble Energy, Inc., No. 14-13-00884-CV. The decision is significant because ConocoPhillips settled a claim for environmental damages associated with these swapped properties filed by the State of Louisiana and the Cameron Parish School Board for $63 million, and indemnity that was denied.

III. EPA’s Environmental Appeals Board.

On March 13, 2015, the EPA’s Environmental Appeals Board (EAB) issued an important ruling in a Toxic Substances Control Act (TSCA) enforcement matter. The case is In re Elementis Chromium, Inc., TSCA Appeal 13-03.

The Chief Administrative Law Judge imposed a fine of $2,571,800 against Elementis Chromium, a manufacturer and distributor of chromium chemicals, finding that the company violated Section 8(e) of TSCA by failing to submit to EPA an occupational epidemiology study of hexavalent chromium. Elementis Chromium argued that the complaint should be dismissed as it was untimely, in that the five year federal statute of limitations (28 U.S.C. § 2462) had expired, and moreover, the report was exempt from TSCA disclosure because it was exempted from disclosure on the basis of long-standing agency guidelines interpreting Section 8 (e). The EAB held that the statute of limitations did not expire because the “continuing violation” doctrine applied to this matter and to the failure of Elementis Chromium to submit the report to EPA. Nevertheless, the decision to fine Elementis Chromium must be reversed because Elementis Chromium was correct in asserting that EPA guidance exempted the submission of this report because EPA was already adequately informed of the corroborative information contained in the study.

With respect to the statute of limitations (which applies in administrative enforcement matters), the EAB noted that Elementis Chromium’s last date of alleged non-compliance took place on November 17, 2008– based on the continuing violations doctrine– and accordingly, the filing of the complaint in September 2012 was well within the operative five year period. The EAB disregarded Elementis Chromium’s argument that the statute of limitations began to run when Elementis Chromium received the report—in November 2002—because a Section 8 (e) violation is always an ongoing violation because each day the study is withheld is itself a new day of violation. This reading of the statute is confirmed, the EAB holds, by a review of the statutory language and a number of applicable court rulings reviewing the failure of a regulated party to provide a required notice or information to the agency. The U.S. Supreme Court’s recent decision in Gabelli, et al., v. SEC, 133 S. Ct. 1216 (2013) was distinguished because it resulted from an SEC enforcement action. With regard to the impact of EPA’s TSCA guidance, the EAB notes that in 1978 EPA published a Policy Statement on Section 8(e) which provided an exemption for “presumptively reportable information” that was corroborative of a well- established adverse effect, and this policy was reiterated in 1991 and 2006. The EAB was persuaded that the Elementis Chromium’s study fit within this administrative exemption.