Water Discharge Regulations Bring New Risks
Waterways Journal article (1/19/09) by David Murray
See partial article on WJ website.

On February 6, new vessel discharge regulations will create “enormous new risks” for towing companies and barge operators.

That message was hammered home in a January 12 “webinar,” or online seminar, on the new regulations given by law firm K & L Gates, a firm of about 1,700 lawyers with worldwide offices and a large maritime law practice. The firm has been “actively involved” in every significant piece of maritime legislation for 35 years on behalf of clients, according to its web site.

Susan Geiger, a partner at K & L Gates, said 14 people attended in person and 240 logged on to hear the presentation, which was prepared by three of the firm’s partners—Geiger, Barry Hartman, and Christopher Nestor.

Rush Job

The new regulations, announced December 18, were developed in a compressed time-frame by the Environmental Protection Agency under pressure from a court order resulting from a suit filed by environmentalists 10 years ago. Environmental groups argued that the agency was wrong to exempt vessels from requirements of the Clean Water Act in the early 1970s. Under the exemption, the Coast Guard instead regulated some vessel discharges under other laws.

An appeals courts judge ultimately agreed, and ordered the EPA to create new regulations to comply with the CWA. The new rules are sometimes collectively known as “the permit,” even though an actual permit is not usually required.

A shortened comment period nevertheless resulted in 1200 pages of industry comments and EPA responses, said Geiger. Many issues raised in the industry comments remain to be worked out.

The regulations cover 26 separate types of discharges—including some never before covered. They create new reporting requirements and carry “extensive” civil and criminal penalties for violations, including jail time.

Harsh Penalties

Violations can carry “extensive” civil and criminal penalties, said Nestor. These may include fines of up to $37,500 a day for each violation per vessel. Some violations carry jail sentences and could lead to debarment from federal contracts.

Even more expensive might be “supplemental environmental projects,” whereby companies, as an alternative to civil penalties, are effectively coerced by citizen groups into providing a benefit to offset alleged environmental damage—by restoring a wetland, for example. Nestor also mentioned that, when calculating penalties, one factor that is considered by the courts is how much economic benefit a company derived from alleged violations as a basis for penalties.

In some legal scenarios, towing companies could incur substantial penalties without any proof that any actual harm resulted from discharges that violated the regulation.

Citizen Lawsuits

Under the Clean Water Act, any “citizen,” not just directly injured parties, can bring an action against an alleged violating company. Nestor warned that the Clean Water Act is used for more citizen lawsuits against companies than any other environmental law. He said that in these lawsuits, citizens do not necessarily have to prove causation, injury, or actual damage to the environment to be successful.

Even before a verdict, such suits can result in injunctions that shut down a company’s operations while a judge or panel investigates claims of violations.

Some Terms Left Vague

Partly due to the compressed schedule, partly because of negotiations over industry comments and questions, the new regulatory language contains some vague language and unresolved issues.

Some phrases were deliberately left undefined, said Geiger, including key phrases like “best industry practices,” “good operating condition,” and “well-maintained vessel.” She asked attendees, “Who is to determine what practices are a reasonable effort to ‘minimize discharges’?”

Geiger warned listeners that the EPA could apply an environmental approach, not the “marine industry best practices” approach used up to now. That means an environmental impact could determine what is required, not the impact on the industry.

Geiger gave one example of an unresolved question. Some companies asked about metal towing cables, which are protected with a slush of chemicals, some petroleum-based. Suppose a cable dips into the water and causes a sheen. Has an actionable “discharge” taken place? According to Geiger, yes.

Legislative Relief Sought

Making compliance more difficult and costly is an added complication. During the comment period, 25 states added additional regulations to the permit, differing from state to state. Issues arising from these disparities have not all been worked out, the presenters said.

Ann Burns, vice president of communications and public affairs for The American Waterways Operators, articulated the industry’s response.

“AWO will work with the EPA and appropriate state agencies to ensure that the new NPDES rule does not result in an endless cycle of multiple-jurisdiction litigation, and to seek a legislative alternative to the regulation of vessels under the NPDES permit program, which was not designed for mobile sources,” Burns told The Waterways Journal.

“AWO’s preference is for a uniform national standard, rather than a patchwork of regulations that would force our members to become knowledgeable about and in compliance with significantly different guidelines every time they cross state lines.”

Burns noted that AWO had already achieved significant mitigation of some of the new regime’s effects.

“AWO was able to secure from Congress passage of a 2-year exemption from NPDES requirements for commercial vessels less than 79 feet in length. AWO, working with its partners, was able to extend the exemption period for vessel discharges under NPDES from September 2008 until February 6, 2009 by securing two judicial extensions that have given members more opportunity to comply with the new federal and state standards. AWO also developed a recommended practice guide as a compliance tool for members dealing with this challenging program.”

Self-Inspections Urged

Geiger said the EPA is strongly encouraging companies to perform their own inspections, rather than entrusting them to third parties. On the question of who is liable for violations, she said liability tends to “leak out” to others besides the owner-operator. For instance, charterers who function as operators may share liability.

The permit carries certification requirements, meaning someone must sign records certifying that their contents are accurate. Whoever signs these records is assuming a significant burden of risk.

Record-Keeping: Good News, Bad News

Geiger said the new permit regime carried no specific requirement to create a new type of record or form.

But that’s both good news and bad news, she said. Some companies may be relieved to find that they are already collecting required data, and may not need to create a new type of record.

But their existing records will have to be turned over to the EPA, where they will become public, subject to searches by citizens—and environmental groups. So companies should think carefully about whether they want to segregate out non-required information they may not want to become public.

“Do you really want all your Oil Record Book entries to become public?” Geiger asked.

Although the “permit” is not an actual permit, merely the totality of the new regulations, EPA can still require a company to file for an actual permit at any time.

Environmentalists Sue for Tougher Regs

Even before the tough new water discharge regulations take effect on February 6, the same environmentalists that filed the original lawsuit in 1999 are suing the Environmental Protection Agency, claiming they are not stringent enough.

On January 13, a coalition of environmental groups, including the Northwest Environmental Advocates (NWEA) of Portland, Ore., filed suit in the Ninth Circuit Court of Appeals, the same court that imposed the new rules on the EPA.

The suit targets blue-water rather than inland carriers, and is concerned with treating ballast water to prevent importation of invasive species. In a press release, NWEA executive director Nina Bell said the group wants the new ballast-water rules to comply with California’s regulations, the nation’s strictest. The current rules only require ballast tanks to be flushed with seawater. The group’s concern with invasive species traveling by ballast water was a key driver of the 1999 lawsuit.

The environmental groups are being represented by the Stanford Law School Environmental Law Clinic, and the Pacific Environmental Advocacy Center (PEAC) at Lewis and Clark Law School in Portland.