Indiana Real Property and Environmental Law Report - Commentary on State and Federal Environmental Issues Affecting Indiana

EPA maintains that there are about 595,000 active UST’s at about 214,000 sites in the United States.  On November 18, 2011, the Federal Register published Revising Underground Storage Tank Regulations—Revisions to Existing Requirements and New Requirements for Secondary Containment and Operator Training, that would update and expand the Environmental Protection Agency’s original 1988 regulations for underground storage tanks (UST’s).

In view of EPA’s and state regulatory agencies’ claims of thousands of petroleum and hazardous chemical leaks each year, the Federal government has proposed stronger rules for underground storage tanks, with new requirements for containment, training, codes of practice and technologies.

The proposed rule comes in the wake of the March 2011 release of EPA’s Leaking Underground Storage Tank Corrective Action Compendium, which provides state and Federal leaking underground storage tank remediation specialists with resources and information.

The proposed new rule includes:

•New secondary containment and interstitial monitoring requirements for new and replaced tanks and piping;

•A requirement for installation of under-dispenser containment for new dispenser systems;

•Requirements for periodic spill, overfill, secondary containment, and release detection testing, along with periodic walkthrough inspections to prevent and quickly detect releases;

•Ending current exemptions for UST systems with field-constructed tanks. These 239 or so tanks, most owned by the Department of Defense, would now be subject to the requirements of 40 CFR part 280, regarding design, construction, installation and notification, operating requirements, release detection and other provisions.  Ranging in size from 20,000 to more than two million gallons, these tanks pose “a substantial threat to human health and the environment,” according to EPA;

•Ending similar exemptions for wastewater treatment tank systems that are not part of a wastewater treatment facility regulated under § 402 or 307(b) of the Clean Water Act. EPA exempted these and other tank categories from leak detection requirements in 1988 because monitoring technology for such systems was not available then, but it is now, according to EPA.

•Allowing for the use of new technologies in tank cladding and jacketing, non-corrodible piping, and operations and detections. The 1988 rule allows these tank technologies: coated and cathodically protected steel; fiberglass reinforced plastic; steel-fiberglass reinforced-plastic composite; and metal without additional corrosion protection, provided that a corrosion expert determines the site is not corrosive enough to cause a release from corrosion during the tank’s life. These would remain unchanged under the new rule.

•New training requirements for three UST system operator classes. Depending on the class, the training would emphasize spill prevention, system operation, corrosion protection, detection and emergency response.

•New training requirements for three UST system operator classes. Depending on the class, the training would emphasize spill prevention, system operation, corrosion protection, detection and emergency response.

EPA's proposal (all 89 pages) would affect a number of industries that use UST’s, including transportation (air, water, truck, transit, pipeline and airport operations), communications and utilities (wired telecommunications carriers and electric power generation, transmission and distribution).

The proposed regulations would apply to tanks that hold petroleum or hazardous chemicals, which are regulated under Subtitle I of the Resource Conservation and Recovery Act. They would not affect UST’s containing hazardous waste, which are regulated under RCRA Subtitle C.

The 7th Circuit Court of Appeals resolved an insurance coverage dispute earlier this week.  The District Court found in favor of Egan Marine and against Great American Insurance. The 7th Circuit affirmed. Egan Marine v. Great Am. Ins.pdf

Egan Marine Corporation (EMC) and Service Welding and Shipbuilding, LLC (SWS) sued their insurance company, Great American Insurance Company (GAIC).  EMC transports products on waterways. SWS runs the shipyard where EMC maintains its vessels. Dennis Egan principally owns both EMC and SWS. EMC and SWS obtained insurance coverage from GAIC.

In January 2005, EMC was hired to transport several loads of clarified slurry oil from the Exxon/Mobil refinery in Joliet, Illinois to Ameropan Oil Company via the Chicago Sanitary and Ship Canal. An EMC tank barge carrying petroleum exploded in the canal.  Following the explosion, the EMC tanker discharged some of its petroleum cargo into the canal. Most of the cargo remained aboard the barge, which ultimately sank along the side of the canal, having been towed by an EMC tugboat.  Both tanker and the tug were insured under GAIC’s policy.

EMC contacted GAIC. The dispute involved the scope of the their insurance policy. The policy indemnified EMC and SWS them against liability under several federal environmental protection laws or the state law equivalents. EMC and SWS attempted to invoke their policy for up to $10 million in coverage following an explosion on one of their vessels that resulted in an oil spill in the Chicago Sanitary and Ship Canal.

GAIC took issue with the indemnification amounts requested by EMC and SWS. GAIC concluded that the explosion implicated only the EMC tanker and its corresponding $5,000,000 of coverage. It based its conclusion on a Coast Guard letter to EMC, in which it identified the EMC tanker as responsible for the oil spill, but did not similarly designate EMC’s tugboat as responsible. In short, GAIC did not believe that it owed any indemnification for the tugboat’s actions.  At no time, however, did GAIC advise EMC as such or issue a reservation-of-rights letter in connection with EMC’s request for coverage.

GAIC sent a letter to SWS, stating that it had exhausted its $5,000,000 policy limit.  GAIC had not actually paid $5,000,000 to or on behalf of EMC and SWS.  GAIC ultimately paid EMC and SWS, but still refused payment of any kind for the tugboat’s actions.

The District Court found for EMC and SWS on coverage, damages and defense costs. The 7th Circuit affirmed.

It owed $5,000,000 per vessel, per incident vessel; it owed no coverage for either of two others for in rem liability. It granted the insureds summary judgment on their breach of contract claim, finding that the insurer owed $5,000,000 in coverage for a vessel, was obligated to pay defense costs up to that amount, and had breached its contract by not doing so. It denied summary judgment on a claim of breach of the duty of good faith and fair dealing.

The Indiana Supreme Court has issued its decision in Town of Avon v. West Central Conservancy District.  Avon v. WCCD.pdf  This is a Home Rule case, with an extensive discussion of the meaning of "watercourse" under Indiana law. Chief Justice Shephard spoke for the Court.

The Washington Township and the West Central Conservancy District (WCCD) owned property within the Town of Avon's boundaries that overlay an underground aquifer. After the Township and WCCD began exploring the possibility of drilling wells into the aquifer in order to withdraw water and sell it to third parties, the Town passed an ordinance that (1) prohibited taking water from a watercourse for retail, wholesale, or mass distribution unless done on behalf of the Town, and (2) defined a watercourse as any body of water whether above or below ground.

The Township and WCCD filed complaints challenging the ordinance's validity under the state's Home Rule Act. The trial court granted summary judgment for the Township and WCCD. The Indiana Court of Appeals affirmed.

In 1907, the Indiana Supreme Court defined a watercourse to mean “a channel cut through the turf by the erosion of running water, with well-defined banks and bottom, and through which water flows, and has flowed immemorially, not necessarily all the time, but ordinarily, and permanently for substantial periods of each year.”   The test is whether there is a substantial existence, unity, regularity, and dependability of the water's flow along a distinguishable course.

The Indiana Code provides that the term watercourse “includes lakes, rivers, streams, and any other body of water.” IC §36–9–1–10. No surprise: the litigants disagreed as to whether an aquifer may be properly categorized as “any other body of water” under this definition.

Avon contends that the word “any” dictates an expansive scope for this provision, and the provision applies to “ ‘each,’ ‘every,’ and ‘all’ bodies of water, wherever located.” (Appellant's Br. at 12.) If true, this definition would include all aquifers.  The Court thought that Avon's suggested interpretation was too broad.

Indiana’s common-law definition of watercourse has consistently held that whether a body of water has defined banks, bottom, and channel is not conclusive in determining if that body of water is a watercourse. The phrase “any other body of water” in IC §36–9–1–10 refers to any other body of water satisfying Indiana's common-law definition of a watercourse. A body of water's similarity to a lake, stream, or river would be informative, but not dispositive.  

The Court noted that the Indiana Code defines an aquifer, for purposes of its Water Resource Management statutes, as “an underground geologic formation that: (1) is consolidated or unconsolidated; and (2) has the ability to receive, store, and transmit water in amounts sufficient for the satisfaction of any beneficial use.” IC §14–25–7–1. “This definition seems to indicate some of the characteristics we might look for in a watercourse.”

The Court's analysis led it to conclude that the White Lick Creek Aquifer is a watercourse under Indiana law, and not the “lost water” the Court addressed in earlier cases. The water in those earlier cases percolated the ground “below the surface of the earth, in hidden recesses, without a known channel or course." 

The Supreme Court reversed, holding (1) the aquifer at issue was a watercourse under Indiana law; (2) the Home Rule Act permitted the Town to regulate another political unit's attempt to withdraw water from the aquifer; and (3) the Town's proposed regulation was not preempted by statutes authorizing the Department of Natural Resources to regulate aquifers.

The Environmental Protection Agency is making public its internal list of serious alleged violations of environmental laws that have gone without enforcement action.  The agency has kept the Watch List for internal use since 2004, but the list now will be posted monthly on the agency's website.

Being on the Watch List does not mean that the facility has actually violated the law only that an investigation by EPA or a state or local environmental agency has led those organizations to allege that an unproven violation has in fact occurred. Being on the Watch List does not represent a higher level of concern regarding the alleged violations that were detected, but merely indicates cases “requiring additional dialogue between EPA, state and local agencies - primarily because of the length of time the alleged violation has gone unaddressed or unresolved.”

When EPA and states identify environmental violations that warrant formal enforcement actions (and possibly penalties), there is an expectation that the government will proceed with the enforcement action in a timely manner. The concept of timely enforcement is between six months and one year.

The EPA understands that the nature of the legal process and the complexities of enforcement can cause the agency and states to miss the timeliness guidelines. Some facilities may be on the Watch List while progress is being made toward resolving the violation; meaning the violation was addressed, but, for example, a penalty may need to be paid or an environmentally beneficial project may need to be completed in order to resolve the violation. EPA's Watch List Fact Sheet provides more information about the Watch List.

EPA does not release specific information about the reason for inclusion or removal from the Watch List because that information is enforcement sensitive.

The Environmental Protection Agency does not intend to revise air quality standards for “coarse particulate matter” - more commonly know as farm dust to those of us living in rural Jackson County - in a new proposed rule.  So says EPA Administrator Lisa Jackson.

Farmers and legislators throughout the Midwest have expressed concern that the Environmental Protection Agency would impose stricter rules on particulate matter, (farm dust) created by normal farming practices like combining crops, tilling land or even driving on gravel roads.

Despite assurances by EPA officials that dust created by agricultural practices was not an issue, inconsistent information caused legitimate concern.  For example, the Clean Air Scientific Advisory Committee recommended the primary standard for coarse particles should be revised “to increase public health protection”. This report was released last April.

The EPA is currently reviewing its National Ambient Air Quality Standards for particulate matter. Agency Administrator Lisa Jackson said she can live with the status quo.  Jackson issued a letter saying she's prepared to propose the retention of current standards.

The "EPA hopes this action finally puts an end to the myth that the agency is planning to tighten this regulation, which has been in place since 1987," said EPA spokesman David Bryan.

Sen. Mike Johanns (R-Neb.), who had previously introduced legislation to remove farm dust from national standards for particulate matter, called EPA's announcement “a victory for farmers and ranchers.”  But Jackson's letter did not satisfy Rep. Kristi L. Noem (R-S.D.), who sponsored a House version of the farm dust bill. She says it's because the EPA is still able to regulate farm dust.  Congressman Noem is a freshman legislator who achieved her high office with the rise of the Tea Party in 2010. The Washington Post has called Noem a "a made-for-Fox News star" and compared her to Sarah Palin.  No more explanation required.

National ambient air quality standards for particulate matter do not target pollution from specific sources or activities.  The Clean Air Act requires the EPA to review and revise air quality standards every 5 years.  The current standards for coarse particulate matter, called PM-10, are 150 micrograms per cubic meter of air.

Jackson sent letters to Sens. Debbie Stabenow (D-Mich.) and Amy Klobuchar (D-Minn.) that propose the retention—with no revision—of the current PM-10 standard. EPA Administrator Lisa Jackson's letter can be found at http://epa.gov/pm/pdfs/20111014Stabenow.pdf.

Along the same lines as yesterday's post regarding the National Public Radio series, the Environmental Law and Policy Center recently announced that it has initiated a project to recount information about Indiana’s polluted lakes and rivers through individual stories.  ELPC maintains that Indiana has weak state policies and poor enforcement - resulting in seriously compromised rivers and lakes.

ELPC intends to demonstrate Indiana’s water pollution problems, and the impact on the state, through the stories of Indiana residents and water experts.  This information, along with photos and videos, is available on the project website www.INourwater.org. 

A couple of samples: 

Geist Reservoir, Indianapolis.  The reservoir that provides drinking water to Indianapolis residents also suffers from high levels of toxic cyanobacteria and algae blooms. Phosphorus pollution from fertilizer, wastewater treatment, agriculture and other sources causes the algae blooms that plague many of Indiana’s waters. 

Turtle Creek Reservoir, Merom. Turtle Creek Reservoir is actually the cooling pond for Hoosier Energy’s Merom coal plant near the Wabash River. Turtle Creek was a popular spot for bass fishing in the 1990’s, but in recent years the population of bass and other game fish has plummeted. Turtle Creek receives runoff from a nearby coal ash landfill and wastewater from the coal plant’s cooling system. Coal ash and coal plant wastewater have created unsafe conditions in other Indiana waters. 

Rivers and Lakes in Kosciusko County.  Manure from the 77 large livestock operations in Kosciusko County has damaged the area’s lakes and streams, including the Lake Wawasee, Lake Tippecanoe, Eel River and Yellow Creek. The state needs better safeguards to protect their lakes, streams and drinking water. 

Young’s Creek Watershed, Johnson County.  Streams in Johnson County are stripped of trees and plants and dredged into ditches. This “ditching” is practiced throughout Indiana as a means to drain farm fields.  But inappropriate ditching destroys natural habitat and increases sedimentation, erosion and chemical runoff downstream. Gary Moody is advocating for more public input and less destructive ditching practices. 

The Indianapolis Star reported on one of the lead stories with their coverage of phosphorus pollution and algae blooms in the Geist Reservoir. 

ELPC’s story on Geist Reservoir.

Indianapolic Star coverage.

The Indiana Department of Environmental Management has contract, grant and loan programs to help cities, towns, and countites to meet environmental mandates and goals through various environmental projects.

IDEM often works in cooperation with other agencies to provide funding in the form of contracts, grants and loans.

But those grants and loans have been fewer and farther between, particularly in 2010 and 2011. 

As governments around the country are managing budget reductions, IDEM temporarily suspended many state-funded grant and loan programs for business and local government recycling projects. Although the majority of these programs still remain on hold, the Recycling Market Development Program has a limited amount of funding available.

Here is a list of monies provided to Indiana counties and communities since 2005 through contracts and grants.  The programs would include §205(j) grants for water quality management planning, §319(h) grants for projects that reduce non-point source water quality problems, pollution prevention grants, and Clean Vessel Act grants. 

IDEM also maintains programs for Brownfield grants and loans through the Indiana Finance Authority, as well as State Revolving Fund low interest loans for expansion of wastewater and drinking water systems.

Grants and loans administered through the Indiana Waste Tire Fund and the Indiana Recycling programs have been suspended.

Indiana Farm Bureau, in its October 24, 2011 newsletter, strongly suggests that Indiana farmers take any allegations of violations of environmental regulations with appropriate concern.  Farm Bureau states that USEPA and IDEM are taking a “more aggressive” stance toward enforcement actions against farmers. 

In recent months, the EPA has: 

Prosecuted an Indiana mint grower for allowing hot water to escape into a ditch, allegedly killing a dog. Earlier this month, grower Michael Maternal of Hamlet was sentenced to two years of probation and eight months in home detention, and he was fined $20,000. 

Prosecuted an Ohio hog producer for allowing an unpermitted discharge of when that killed fish in a nearby creek. The producer was sentenced to three months imprisonment, three months of electronic monitoring, a fine of $51,750 and a restitution payment of $17,250 to Ohio EPA. 

Sought greater civil enforcement in Iowa on the feedlots. 

Has threatened increased federal action such as withdrawing permits in the Chesapeake Bay.

“We’d like to caution people to take any allegations of violations of these environmental laws seriously and seek the advice of experts and legal counsel,” Schneider said. 

“While this isn’t necessarily happening in Indiana, there’s definitely seen more EPA action in other states,” said Indiana Farm Bureau staff counsel, Justin Schneider, adding, “Indications are that enforcement is going to continue to be somewhat aggressive.