Environmental News from the Courts

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Environmental News from the Courts
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EPA's Exemption of De Minimis Air Pollution Sources Upheld

The Ninth Circuit recently found that the United States Environmental Protection Agency's ("EPA") exemption of de minimis sources from regulation under a Federal Implementation Plan ("FIP") was not in violation of the Clean Air Act ("CAA"). The FIP was put in place for the Phoenix, Arizona area after EPA disapproved Arizona's State Implementation Plan ("SIP") for that area. The FIP concluded that attainment of the national CAA standards for particulate matter of less than 10 microns ("PM-10") was impracticable, and further exempted certain PM-10 sources that it considered de minimis. Local citizens challenged the de minimis exemption, arguing that it violated the CAA.MO

The Court held that exemption of de minimis PM-10 sources from regulation did not violate the CAA for three reasons. First, the FIP was required only to include reasonably available control measures, and EPA had the authority to determine that measures designed to control insignificant sources of pollutants were not reasonable. Second, the Court found that EPA acted reasonably when it looked to de minimis levels set for PM-10 for new sources to establish de minimis levels for existing sources. Third, the Court held that EPA was not required to examine the public health impacts of the de minimis sources, because EPA determined that those sources had a de minimis effect on Phoenix's ability to meet the air quality standards, which standards were themselves based upon public health. Since public health already was taken into account in setting the standards, the Court said, sources that will not adversely affect attainment of the standard by definition will not adversely affect public health. Ober v. EPA, No. 98-71158 (9th Cir., March 2001).

Defense and Indemnity Costs Must Be Allocated on Proportionate Basis

Rejecting the policyholder's contention that an insurer's defense obligation is unlimited, the Chancery Division in Bergen County held that an insurer's defense obligation must also be allocated on a proportionate basis across all policies in all triggered years. Thus, under the Court's ruling, the allocation formula adopted by the New Jersey Supreme Court in Owens-Illinois (regarding allocation of indemnity costs) should also be applied to defense costs, so that each insurer is assigned a percentage of cost based upon its time on the risk and the degree of risk assumed. The Stepan Company v. New Jersey Manufacturers Ins. Co., No. C-297-98 (Ch. Div., Bergen County, April 19, 2001).

Coverage Triggered When Waste Is Leached to Groundwater, not when Deposited in Landfill

Under New Jersey insurance law, the concept of a "continuous trigger" is used to determine when an environmental injury occurs. Determining when the injury occurs thus enables parties to pinpoint which policies are potentially liable to respond to the loss. Under the "continuous trigger" rule, an insurance company's liability runs from the time of first "exposure" through to "manifestation" of injury. Recently, the Appellate Division provided guidance on when the trigger begins to run by holding that the trigger is not pulled until there has been some "damage." In this regard, the Court held that damage was not caused by the dumping of waste into a landfill, which is designed for that purpose, but rather, when the landfill leaked and permitted leaching of contaminants into the groundwater. Quincy Mutual Fire Ins. Co. v. Bellmawr, No. A-3861-98T5 (App. Div., Mar. 20, 2001).

New Septic Regulations Challenged in Court

Realtor and construction groups joined forces to file suit late in April 2001 challenging NJDEP's recent septic regulations. Under the new regulations, effective as of March 20, 2001, developments of six or more units require an environmental analysis. The old regulations required the analysis where proposed developments had more than forty-nine units. Plaintiffs claim that the regulations are invalid because administrative procedures were not followed in promulgating the regulations, which were part of the much larger Water Quality and Watershed Management regulations that had been proposed last summer and subsequently withdrawn.

Meanwhile, in the Legislature, companion bills A-3293 and S-2250 that would negate implementation of the septic regulations were introduced and referred to the respective Environment Committees in March 2001.

In a third blow to the concept of linking sewer permits to the State Plan, Acting Governor Donald DiFrancesco on April 25th extended the existing regulations until April 30, 2002.