ELN Success Stories

ELN negotiated a favorable settlement of a significant opacity enforcement case in May 2006. A state agency, acting at the encouragement of EPA, issued a Notice of Violation (“NOV”) alleging over 3,300 opacity violations placing the client’s operations in peril due to the potential liabilities. Settlement negotiations lasted nearly two years, and resulted in payment of a $75,000 civil penalty along with an agreement to install particulate matter controls at the plant and fund several supplemental environmental projects (“SEP”). Issues that arose in the negotiation were the application of affirmative defenses for unavoidable upsets and startups and shutdowns, interpretation and application of opacity standards, the ability to operate the plant pending installation of controls, and application of EPA’s Civil Penalty Policy including ability to pay a penalty (ABLE model), economic benefit (BEN model) and the appropriateness of proposed SEPs. The plant’s Title V air operating permit came up for renewal during negotiations which complicated the settlement. During the course of negotiations, the client was also able to renegotiate its primary customer contracts resulting in additional revenues to support the settlement.
 

A client with operations in Alaska received a renewed Title V air operation permit with two objectionable conditions. ELN in partnership with an environmental consultant authored an informal appeal of these conditions. The agency director ruled in the clients favor on both issues. First, at issue was the status of the plant as a “major” source of hazardous air pollutants (“HAP”). The client had conducted stack testing for HAP and submitted this data to the agency to support its calculations that it was not “major” and therefore not subject to Boiler MACT standards. Agency staff decided to rely on published emission factors and other methods of calculating HAP emissions rather than the client’s direct measurements. Second, the permit included a “compliance schedule” that included terms different than a negotiated settlement agreement between the client and the agency.

ELN represented a client that received a notice of violation from a local air agency alleging noncompliance due to a change in fuel suppliers. No physical or operational changes occurred at the plant; rather, the plant began purchasing wood-based fuels from suppliers that were chipping wood derived from “urban” sources rather than traditional forest sources. Indeed, because the new fuel included wood from construction and demolition and was dry compared to forest fuels, and because the client already had in place procedures to make sure the new fuel was clean and uncontaminated, it was estimated that the new fuel resulted in a decrease in emissions. Despite these facts, the agency expressed concerns about a potential for an increase in emissions and started an enforcement action based on its insistence that the change in fuels was a “modification” requiring a “Notice of Construction” (“NOC”) application. The matter was settled by including the client’s fuel quality assurance procedures in an enforceable order and by having the client submit a form documenting an exemption from the NOC requirements. No fine was levied against the client. Obtained an agency determination that emissions during the initial construction of an oil production well were not counted towards PSD permit applicability or against PSD avoidance limits. Because there is typically no pipeline available, and because the initial flows are heavy with drilling mud and other contaminants, well kick-offs require flows into tanks resulting in emissions of VOC. ELN concluded that such emissions need not be counted if the fully constructed source was “minor” and thus did not require a PSD “major” permit. If the source obtains a permit that restricts emissions to below the PSD permit thresholds, these construction-related emissions are also not counted against the avoidance limits in the permit. The agency ruling stating that these emissions need not be counted for purposes of PSD applicability allowed the client to proceed with several well drilling projects that would otherwise would have been delayed for months.

Obtained an agency determination that emissions during the initial construction of an oil production well were not counted towards PSD permit applicability or against PSD avoidance limits. Because there is typically no pipeline available, and because the initial flows are heavy with drilling mud and other contaminants, well kick-offs require flows into tanks resulting in emissions of VOC. ELN concluded that such emissions need not be counted if the fully constructed source was “minor” and thus did not require a PSD “major” permit. If the source obtains a permit that restricts emissions to below the PSD permit thresholds, these construction-related emissions are also not counted against the avoidance limits in the permit. The agency ruling stating that these emissions need not be counted for purposes of PSD applicability allowed the client to proceed with several well drilling projects that would otherwise would have been delayed for months.

On matters related to environmental contamination and cleanup in the metal working industry, ELN successfully represented family interests in several properties after the deaths of the father and eldest brother. These matters were complicated by the fact that the eldest brother with purported control over the primary family business transferred his interests to non-family members shortly before his death. Involved were three properties: One property (Plant 1) was owned by a surviving brother and leased to the former family business. A second property (Plant 2) was held by the father’s trust and leased to the former family business. During the course of our representation, the tenant vacated both Plant 1 and Plant 2. The father’s estate held a ground lease on a third property (Plant 3) upon which it had constructed a building that was presently leased to another company with ongoing operations. All three properties evidenced significant contamination due to the release of metal working and metal cooling fluids.

Plant 1 was straightforward in that the former family business was the only tenant of the building since construction. The tenant was clearly obligated under both the lease and under the Washington State Model Toxics Cleanup Act (MTCA) to pay for remedial action costs. ELN convinced the tenant to conduct and fund a thorough cleanup of the property (estimated at $1 million). However the tenant refused to pay for the client’s legal and consulting fees incurred in negotiating and overseeing the tenant’s cleanup. ELN and litigation co-counsel sued the tenant and eventually recouped all of the clients out of pocket expenses including the costs of litigation. The client received a “No Further Action” (NFA) letter from the State Department of Ecology.

Plant 2 was more complicated due to the historical use of the business by other entities including businesses operated and then sold by the family. However, there was evidence that the tenant contributed to the contamination and the tenant could not attribute any of the contamination to specific parties. The tenant cleaned up some portions of the property but refused to address other issues. Negotiations resulted in a settlement whereby the tenant paid for the client’s entire out-of-pocket expenses for past and future estimated costs as well as the estimated premium for environmental insurance. In exchange, the client released the tenant from further liabilities.

Plant 3 presented an even more complicated scenario because three parties were involved (Land Owner, Building Owner-Client and Occupant), and there was a plume of chlorinated solvent contamination under the building in addition to suspected metal working fluids under the building floor. The Land Owner had made a claim against the father’s estate related to the solvent plume. ELN led a review of the available evidence and concluded that the solvent did not come from any present or historical operations at the facility (the plume was TCE whereas only TCA had been used at the site). Further studies by the Land Owner attempted to prove that the building was a source, but the studies failed to conduct soil sampling in an area adjacent to the building that was a potential source (former military motor pool). Based on analysis performed by ELN, the client formally denied the claim against the estate and the Land Owner failed to file suit and foreclosed its ability to recover cleanup costs under the doctrine that a person who acquires property through inheritance is an “innocent purchaser” and immune from federal and state superfund liability.

At the same time, the client was demanding of the Occupant an environmental assessment of the separate contamination under the floor when the Occupant announced its insolvency and pending asset sale. The Occupant and the buyer of the Occupants assets were attempting to extinguish their environmental obligations but the deal required an assignment of the lease from the Client. Using that leverage, ELN negotiated an agreement for cost sharing of an environmental investigation and remediation with $500,000 contributed to an escrow account for that purpose by the Occupant and Buyer.