Tag Archives: GenX

Making Polluters Pay

March 14, 2018. To follow on the last blogpost, some background on a  polluter’s legal responsibility to pay for environmental damage and limits on the state’s ability to use penalties to fund environmental protection programs.

Scope:  The issue has come up in response to GenX , but this blogpost should not be taken as legal advice with respect to pending or future  GenX litigation.  The blogpost also focuses on what the state can require a polluter to pay under its authority to enforce federal or state environmental laws.  A person harmed by pollution  (such as groundwater contamination) can also sue and ask a court to order compensation for individual injury or property damage. Different legal principles govern those personal injury/property damage cases.

The Prompt. In January, the North Carolina House of Representatives passed House Bill 189  to legislatively address  GenX and other emerging contaminants. In addition to creating a number of studies, the bill proposed to appropriate $2.4 million to the Department of Environmental Quality (DEQ) for wastewater permitting, water quality monitoring, and analysis of emerging contaminants.  Senate President pro Tem Phil Berger had a very negative reaction to the proposed  appropriations:

“[H 189] leaves North Carolina taxpayers holding the bag for expenditures that should be paid for by the company responsible for the pollution, fails to give [the Department of Environmental Quality] authority to do anything they can’t already do and authorizes the purchase of expensive equipment that the state can already access for free.”

The Senate refused to consider the House bill in January, but adopted its own version of H 189 when the legislature reconvened briefly in February. The Senate version included new appropriations, but funds directed to DEQ could only be used for purposes identified in the bill (such as a historical study of the state’s wastewater permitting program). The Senate bill did not allow DEQ to use any of the appropriated  funds for wastewater permitting, compliance inspections, water quality monitoring, or purchase of analytical equipment, suggesting that Senator Berger has held to the  position that the polluter should cover most of the cost of GenX response.  Note: The House and Senate versions of H189 have not been reconciled so no GenX legislation has passed and it is unlikely the legislature will return to the issue again before the next regularly scheduled legislative session in May.

Can the state require a violator  to contribute to the cost of environmental permitting, water quality monitoring, inspections of permitted facilities, or other regular program activities?

No.  The N.C. Constitution (Article 9, Sec. 7) requires that the proceeds of   “all penalties and forfeitures and of all fines collected in the several counties for any breach of the penal laws of the State” must be used exclusively to  support the public school system. In the 1990s, the N.C. Supreme Court ruled that all state civil penalties –including those for environmental violations —  must go to the “school fund”.  In 2005, the court ruled that environmental agencies cannot enter into a settlement agreement that allows a violator to put funds toward a third-party project to conserve natural resources or improve the environment in place of a penalty.  In the court’s eyes, the payment continues to be a “penalty” assessed in response to a specific violation of environmental rules and the money must go the school fund. (The 2005 case on funding of an “environmental enhancement project” as a substitute for a civil penalty is N.C. School Boards Association v. Moore.)

Although the court has not ruled on this specific question,  the same principle seems to apply to requiring a violator to provide funds to support state environmental program activities in place of or in addition to a civil penalty.  Once a payment becomes associated with a specific violation,  the N.C. Supreme Court is likely to view it as  a “penalty” for purposes of the N.C. Constitution.  In that case, the money  would have to go to the public schools rather than to environmental protection programs.

Permit fees can be used to support basic permitting, enforcement, and monitoring activities and many state environmental permitting programs have graduated permit fee schedules based on the type and size of the permitted facility. Making compliance history another factor in setting permit application/renewal fees probably would not conflict with N.C. Constitution — although it also may not generate significant additional revenue for environmental programs.

Can the state require the company responsible for pollution to pay anything other than a civil penalty? 

Yes, but generally only the cost of  response to the specific pollution incident and the environmental harm that it caused:

  1. Natural resource damages. Several state and federal laws allow the state to recover for injury to the state’s natural resources. The compensation goes to the state as trustee for natural resources — such as fish and wildlife  — held by the state for the use of all of its citizens.  A  patchwork of laws allow recovery of natural resource damage; some  apply only to particular kinds of environmental harm (fish kills, for example) or specific types of pollution events (such as an oil spill). The Clean Water Act does not include a  specific provision for natural resource damage caused by a wastewater discharge that does not involve oil or a “hazardous substance”;  most chemicals found in a wastewater discharge, including GenX,  are not EPA-listed hazardous substances.  The federal Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) allows state natural resource damage claims for harm specifically caused by a  spill of oil or an EPA-listed “hazardous substance”. N.C.  law has a somewhat broader provision that allows  DEQ  to require compensation for natural resource damage caused by any release of pollutants that results in a  fish kill or injury to wildlife.  In  those cases, the  state recovers only  the value of the natural resource lost — not program costs. Under the state law allowing recovery of damages for injury to fish and wildlife,  the amount of damages is based on a Wildlife Resources Commission estimate of the value of the lost fish or wildlife. [N.C. General Statute 143-214.3(7).]
  2. Cost of State response to a spill of oil or an EPA-listed hazardous substance.   N.C. General Statute 143-215.88 allows the state to recover the cost of state response to a spill. An example of state costs would be initial emergency response, such as putting booms in the water to control an oil spill. These are usually costs the state incurs early in spill response when the source of the spill may not be known. Later, the polluter would be expected to carry out the response.
  3. Investigative costs.  Under several state laws, DEQ can recover the costs of investigating a pollution incident. These laws only apply to costs associated with the specific event and not the costs of maintaining DEQ’s ongoing inspection/compliance/pollution monitoring programs.
  4. Measures to eliminate a  threat to public health and safety;  clean-up groundwater and soil contamination; or restore other kinds of environmental damage (such as wetlands disturbance) caused by a violation. Most environmental laws, including the Clean Water Act,  make restoration of environmental harm the responsibility of the violator. Both EPA and the state water quality programs have the authority to seek a court order to stop an unlawful discharge and require the violator to take steps to prevent future unlawful discharges. Under state law, DEQ routinely requires violators to cleanup  groundwater and soil contamination caused by a pollution incident. These expenditures are different from the kind of environmental enhancement or conservation projects struck down in N.C. School Boards Association v. Moore because they are limited to addressing the direct impact of a  specific violation.

What does this mean for funding a better state response to GenX and other emerging contaminants?

The N.C. Constitution does not allow DEQ to use the proceeds of any penalty for violation of environmental laws and rules — or anything that looks like a substitute for a penalty — to support environmental protection programs.  Past N.C. Supreme Court decisions suggest the court would view assessment of environmental program costs against a violator as another form of  penalty that must also go to the public schools. Given the constitutional provision, funds to strengthen the state’s response to emerging contaminants like GenX will largely have to come from state appropriations, permit fees and EPA grants.

New Legislative Activity on GenX

January 12, 2018.  When the N.C. General Assembly convened on January 10, the House unanimously adopted House Bill 189  – a bill described by House members as a first step toward improving the state response to unregulated water pollutants.

GenX and the path to House Bill 189. EPA began studying the effects of perfluorinated compounds (used in products such as firefighting foam, water repellants and Teflon) more than fifteen years ago.  EPA worked with chemical companies to phase-out the two most common compounds, perfluorooctanoic acid (PFOA) and perfluorooctanesulfonic acid (PFOS), because of concerns about persistence in the environment and human health risk.   In 2009, Dupont began manufacturing another type of perflourinated compound, GenX, as a replacement for PFOA. The Chemours Company now operates the GenX manufacturing facility in Fayetteville North Carolina which is  located upstream of drinking water intakes for Cape Fear Public Utility Authority (serving Wilmington/New Hanover County) and several smaller water systems.

GenX has uncertain health and environmental risks and no federal standards exist to guide state permitting and enforcement action. EPA has not adopted a drinking water standard for GenX, identified the compound as a priority water pollutant, or set effluent guidelines for discharge of the chemical under a Clean Water Act wastewater discharge permit (the National Pollutant Discharge Elimination System or “NPDES” permit).  EPA has indicated a  concern that GenX may share some of the environmental and health risks associated with PFOA and PFOS.  GenX is one of many “emerging” or “unregulated” contaminants that can be released to the environment.   An earlier blogpost described the major federal environmental laws touching on manufacture, use and discharge of chemical compounds like GenX and the gaps in those laws.

The path to House Bill 189 began with the 2016 discovery of GenX  in drinking water systems using the Cape Fear River as a water supply source. Later, GenX was also found in private drinking water wells near the Fayetteville facility. Public concern about the health effects of GenX and the adequacy of federal/state regulation of contaminants like GenX created pressure for legislative action.  In August 2017,  the General Assembly  appropriated funds to Cape Fear Public Utility Authority and to UNC-Wilmington to study GenX and water treatment options. The legislation, described here,  made no substantive changes to state law and allocated no funding to programs in the Department of Environmental Quality (DEQ) and the Department of Health and Human Services (DHHS)  responsible for enforcing water quality standards and establishing health guidelines for exposure to environmental contaminants.   The  state House of Representatives, however,  created a Select Committee on River Water Quality to further study the issue of unregulated contaminants between legislative sessions. The substance of House Bill 189 came out of the House select committee’s work.

House Bill 189. The bill does not break new ground in water quality law,  but directs DEQ to undertake several studies that could lead to recommendations for future legislation on unregulated contaminants. The bill also proposes to allocate additional state funds to the issue. Although prompted by GenX,  the bill’s provisions apply more broadly to GenX and other unregulated contaminants. By section:

Sec. 1 Science Advisory Board review of the DHHS process for setting health goals for contaminants and new health goals set by the department. In 2017, DEQ reconstituted the department’s existing Science Advisory Board to provide additional expertise in setting  health goals for exposure to unregulated contaminants. Health goals represent the concentration of a contaminant considered safe for humans based on studies of both immediate, acute effects (such as illness, organ damage, skin irritation or respiratory distress) and long-term effects (primarily increased cancer risk).  H 189 supports DHHS consultation with the Board on health goals and goes further to require  DHHS to notify the Science Advisory Board before issuing a new health goal. The bill then focuses on the process for setting health goals, directing the Science Advisory Board to study the DHHS process and make recommendations. Legislative interest in the process for setting health goals may have arisen from recent controversies over use of health goals to advise property owners on the safety of well water affected by contaminants associated with coal ash. Both legislators and industry representatives have sometimes questioned the scientific basis for a health goal as well as the appropriateness of using a non-regulatory health goal to  guide regulatory decisions such as groundwater cleanup and the obligation to provide alternative water supply. See earlier posts concerning controversy over health goals for contaminants associated with coal ash here and here.

Sec. 2  A study of the Clean Water Act permitting program for wastewater discharges. The bill directs DEQ to study specific issues in the NPDES permitting program: 1. Whether NPDES permit applications require sufficient information about pollutants in the wastewater to be discharged;  2. Monitoring, sampling, and analytical requirements for wastewater dischargers; 3. The process for setting standards or discharge limits for contaminants when there is not an existing state or federal standard; and 4. The timeliness and thoroughness of permit reviews.  A report must be provided to the legislature by April 1, 2018. Parts  2 and 3 of the study likely reflect business/industry interest in the process for setting NPDES  permit conditions. That could lead into a debate over how much DEQ can require through individual permit conditions versus going through a rule making process to set generally applicable permit standards.

Sec. 3. Interstate exchange of information about pollutants entering North Carolina rivers.  DEQ has been directed to better coordinate interstate exchange of information about pollutants entering river basins that  North Carolina shares with neighboring states (West Virginia, Virginia, South Carolina, Georgia, and Tennessee).

Sec. 4. Notice of illegal discharges and the presence of unregulated contaminants in surface waters. This section of the bill creates another DEQ study; this study would focus on: 1.  The adequacy of existing  laws requiring notice of an illegal discharge of untreated waste or wastewater; and 2.  DEQ’s process for informing the legislature and the Environmental Management Commission of the presence of an unregulated contaminant for which no state or federal discharge standard has been set. A report must be provided to the legislature by April 1, 2018.

Sec. 5. Water system liability for the presence of an unregulated contaminant in drinking water. The School of Government at UNC-CH will report to the legislature on the potential civil liability of a water system that distributes water contaminated by a pollutant for which no discharge standard has been set under state or federal law and any difference in liability exposure between public and private water utilities.

Sec. 6. Appropriation of funds to support activities related to unregulated contaminants. H 189 proposes to appropriate just over $1.3  million in one-time funding for  water quality sampling; NPDES permitting; air quality sampling and analysis of atmospheric deposition of GenX; and sampling of groundwater, soil and sediment for GenX and other emerging contaminants. The money would come from unused funds originally appropriated for other purposes, including pilot nutrient management projects in the Jordan Lake watershed.

Sec. 7 Additional funding.  The House proposes to appropriate an additional $479,736 in recurring funds from the state’s General Fund to DEQ for water quality sampling and analysis related to GenX and other unregulated contaminants and $537,000 from the state’s Contingency and Emergency Fund for analytic equipment (presumably a mass spectrometer) to evaluate emerging contaminants.

Impact of H 189. The bill does not set any new legal standards for discharge of unregulated contaminants to North Carolina waters or expand the existing authority of DEQ and DHHS to respond to unregulated contaminants. Instead, the bill mandates several studies that could lay the groundwork for future legislative action. House members stressed that the bill represents just a first step toward improving state response to unregulated contaminants.

Aside from the $537,000 earmarked for the mass spectrometer, the appropriations proposed in H 189 essentially offset another  $1.8 million reduction in the DEQ budget for the 2017-2019 biennium. As a result, the appropriations do not represent an actual increase in DEQ’s budget from 2015-2017 levels. An earlier blogpost noted the impact of past budget cuts on the water quality program.   DEQ  had a two-year backlog of wastewater discharge permit renewals in December 2016 — before the reductions required in the most recent budget. The Chemours permit to discharge wastewater to the Cape Fear River from the Fayetteville Works fell in the category of permits overdue for review and renewal. The GenX controversy has also shown a brighter light on the additional burden on the state water quality program — in expertise, research capability, and analytical equipment — to address a contaminant for which no federal standard has been set.

So the appropriations in H 189 are helpful in offsetting additional DEQ budget cuts, but do not provide a net increase in funding. The appropriations also provide no additional resources to DHHS, which has significant responsibility for assessing and advising on the health impacts of an unregulated contaminant.

Senate response. The Senate adjourned without considering House Bill 189. A statement from Senate President pro tem Phil Berger criticized the bill as ineffective and seemed to oppose the appropriations:

“[H 189] leaves North Carolina taxpayers holding the bag for expenditures that should be paid for by the company responsible for the pollution, fails to give [the Department of Environmental Quality] authority to do anything they can’t already do and authorizes the purchase of expensive equipment that the state can already access for free.”

It isn’t clear which expenditures in H 189 the Senate wants to shift to the polluter or how that could be done. Most of the H 189  appropriations cover basic state water quality monitoring, permitting and compliance work.  NPDES permit fees cover a percentage of permitting costs, but those fees  do not vary based on a facility’s violation history.  The legislature has also tended to view fee increases very skeptically out of concern for the impact on business and industry.  A person responsible for illegally contaminating surface water or groundwater can be held financially responsible for cleanup costs and steps to minimize health impacts (such as providing bottled water to the owner of a contaminated well) , but state  law does not currently require a violator to pay any additional amount toward support of basic regulatory activities.

Senator Berger’s statement indicated the Senate may take up legislation related to GenX in the next regular legislative session that begins in May.