In 2020, a growing number of lawsuits and other legal developments potentially associated with climate-driven impacts continued to challenge owners of permitted facilities, including energy infrastructure. Increasingly, owners are accused of failing to prepare for the effects of climate change, including larger floods, stronger hurricanes, and more extreme storm surges. Climate-based challenges continue in both litigation and regulatory settings and in cases filed by citizens’ groups and local governments.
In Texas v. Arkema, Inc., the Harris County district attorney criminally charged the owner of a chemical production and storage facility that flooded during Hurricane Harvey. During the storm, historic flooding cut off power to onsite refrigeration units that stabilized organic peroxide chemicals stored there. Regulators found that despite the facility being prepared for 100- and 500-year storms, the plant was flooded at much higher levels than had ever been previously experienced, estimated as between a 5,000- and 20,000-year storm event.
After the facility lost power and efforts were made to keep the chemicals cold, the floodwaters overtook the plant. The chemicals eventually combusted, releasing emissions into the air. Some first responders were taken to the hospital after the first fire, when they were exposed within the interior of a 1.5-mile evacuation zone surrounding the plant without their personal protective equipment.
The criminal charges included reckless emission of air contaminants and reckless assault, based on Arkema’s alleged failure to implement a flood prevention plan or move chemicals offsite in advance of the storm. The US Chemical Safety Board found that the plant did have a flood prevention plan. The state dismissed one of the two indictments partway through trial. The judge entered directed verdicts on the other indictment because the state had not presented any evidence to support the allegations in the indictment. Dozens of companion civil cases remain pending. Their implications are plain: Owners of facilities that house hazardous materials risk litigation exposure if they fail to prepare for unprecedented weather events.
Litigation has proceeded not only in cases like Arkema, where alleged environmental damage has already occurred, but also in cases alleging future environmental damage. In federal district courts in Massachusetts and Rhode Island, the Conservation Law Foundation (CLF) filed cases against oil companies that operate marine terminals with bulk petroleum storage facilities. These suits include claims under the Resource Conservation and Recovery Act and the Clean Water Act. Among other things, CLF alleged that since its members use the waters and land surrounding these terminals, they are harmed by the owners’ alleged failure to modify the facilities to withstand impacts of climate change that may create a risk of pollutant discharges and releases.
In both cases, the defendant owners moved to dismiss for lack of standing, arguing that the alleged risks, including sea level rise and severe weather events like storm surges, heavy rainfall, and flooding, did not present an “imminent” endangerment sufficient to establish standing. In both cases, the courts ruled that claims based on sea level rise were too attenuated to establish standing, but allowed the other claims to proceed. The Rhode Island court held that while a major weather event “might not occur for many years, the fact that it is certainly impending is enough to meet the standard.”
The defendants in both cases also argued that the US Environmental Protection Agency (EPA) had primary jurisdiction and urged the courts to abstain from ruling or to stay the cases until the EPA reviewed applicable permits. In March, the Massachusetts federal district court agreed, and stayed the case pending the outcome of EPA review, expected to be completed in 2021. Taking a more aggressive stance, the Rhode Island court disagreed, and allowed the case to proceed to the discovery phase.
In Massachusetts, CLF appealed the primary jurisdiction ruling to the First Circuit, which heard argument in early December. While the First Circuit’s ruling remains forthcoming, the panel at argument discussed the prospect that the EPA could itself provide the remedy sought by plaintiff by requiring the oil company to adapt the facility to address climate change as part of the permitting process. It also discussed the argument that if the EPA did not do that, the case could proceed in the district court, leaving CLF with an avenue of relief.
Citizens’ groups and local governments are also using the administrative law process to pursue climate change outcomes. For example, in March 2020, in response to a suit brought by several nongovernmental organizations, the EPA entered a consent decree by which it agreed to make new rules under the Clean Water Act that will require certain facilities housing hazardous materials to develop plans to prevent, mitigate, and respond to worst-case spills, including those resulting from extreme weather events.
In Massachusetts, the Office of Coastal Zone Management recently issued a bid request for a study of climate-related impacts on two of the commonwealth’s 10 designated port areas for industrial marine activities. The terminal targeted by the CLF suit in Massachusetts is located in an area of the harbor abutting one of these designated port areas.
Climate-driven challenges to energy infrastructure are increasing. Owners of permitted facilities that fail to adequately plan and account for the risks of climate change will likely face more difficulty and expense defeating such challenges. Spurred on by extreme weather events like Hurricane Harvey, citizens’ groups, regulators, and other government agencies are exploring new legal theories and other means of pressuring owners of permitted facilities to make changes before extreme weather events occur.
If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:
Kenneth M. Kulak