Massachusetts Environmental and Land Use Alert
Massachusetts Environmental Developments
Massachusetts Governor Baker Issues Order Dramatically Curtailing Agency Regulatory Authority
As we reported in our last issue, shortly after incoming Governor Charlie Baker was sworn in earlier this year, his Secretary of Administration and Finance issued a memo imposing a temporary three-month freeze on new state regulations while his administration evaluated existing requirements and budgetary issues.
On March 31, 2105, Governor Baker extended that freeze in a dramatic fashion, issuing a sweeping Executive Order 562 that is almost revolutionary in its impact on the regulatory authority of state administrative agencies. The executive order, which remains in effect for one year, prohibits any agency from issuing new regulations during that one-year period unless the new rules meet certain criteria described below and requires all executive agencies to sunset their regulations by March 31, 2016, such that “only those regulations which are mandated by law or essential to the health, safety, environment or welfare of the Commonwealth's residents shall be retained or modified.”
For the citizens and businesses of Massachusetts, where state agencies have a long history of expansive regulatory programs, aggressive rule development, and sweeping administrative authority, this is an extraordinary measure, and it will undoubtedly reshape state government programs for many years to come.
The executive order requires that any state agency proposing a new regulation must demonstrate that the regulation will satisfy seven criteria:
- There is a clearly identified need for governmental intervention that is best addressed by the Agency and not another Agency or governmental body.
- The costs of the regulation do not exceed the benefits that would result from the regulation.
- The regulation does not exceed federal requirements or duplicate local requirements.
- Less restrictive and intrusive alternatives have been considered and found less desirable based on a sound evaluation of the alternatives.
- The regulation does not unduly and adversely affect Massachusetts citizens and customers of the Commonwealth or the competitive environment in Massachusetts.
- The Agency has established a process and a schedule for measuring the effectiveness of the regulation.
- The regulation is time-limited or provides for regular review.
Further, the order provides that every regulation must be clear, concise and written in plain and readily understandable language.
Under the executive order, any agency proposing a new regulation must prepare and submit to its cabinet secretary a business/competitiveness impact statement that will include a competitiveness review and an assessment of disruptive economic impacts on small businesses and other entities. If the cabinet secretary approves of the proposal, it must then be submitted to the Secretary of Administration and Finance, who is to develop a public input process.
In addition, the executive order requires state agencies to undertake a review of every existing regulation within their jurisdiction and requires them to sunset those regulations by March 31, 2016, unless the agencies find that the regulations are mandated by law or essential to health, safety, environment, or welfare. In order to find that regulations satisfy this standard, an agency carries the burden to demonstrate that they meet the seven criteria set forth above.
This dramatic executive order tells us Governor Baker is intent on remaking Massachusetts government and in repositioning the state in its interactions with the regulated community. The press release accompanying the order speaks of wanting to ensure that the government provides exceptional customer service and helping to spur job creation and business development. Secretary of Administration and Finance Kristen Lepore is quoted as saying: “We will ensure that all regulations administered by the Executive Department benefit the Commonwealth without undue burdens or costs and serve a legitimate purpose in making Massachusetts a safe, healthy, and effective place to do business.”
In just three short months, the new governor has embarked on a substantial reevaluation of the role that state government plays, and the authority that state agencies exercise. We do not yet know the impact that this new approach will have on the administration of environmental programs in Massachusetts. As yet unknown is how the Governor will exercise the exception in the executive order allowing for new and existing rules essential to health, safety, environment, or welfare. Also unknown is how the administration will balance environmental programs with the cost-benefit and business impact provisions in the executive order. We also do not know what effect public review and comment will have on the new rule review process to be conducted by Administration and Finance.
What we can promise is that the next several years will certainly be a fascinating journey for those with strong views about the impact of environmental regulations.
EPA Supplemental Environmental Projects Policy Updated for First Time Since 1998
For the first time in 17 years, U.S. EPA has updated its policy governing projects that can be performed as part of settlements with EPA. EPA’s Office of Enforcement and Compliance Assurance (OECA) recently issued this critical update to its Supplemental Environmental Projects Policy on March 10, 2015, which became effective immediately. The 2015 SEP Policy supersedes all prior versions and incorporates EPA OECA guidance and implementation decisions on SEPs from the last 17 years.
SEPs are not required by law but, where negotiated, may mitigate a settling defendant’s civil penalty assessment. The 2015 SEP Policy provides EPA compliance enforcement personnel with a framework for determining whether to include a SEP in a civil or administrative settlement, how to evaluate proposed projects, and what is required in settlement documents where a SEP is included. While EPA reiterated in the policy update its continued support for the inclusion of SEPs in settlements, the evaluation of, and determination to include, a proposed SEP remains within EPA’s discretion.
The 2015 SEP Policy identifies the types of projects that may and may not qualify as SEPs. The eight categories of projects that may qualify as SEPs include:
- Public health projects, if specific to the population that was harmed or put at risk by the alleged violations.
- Pollution prevention projects.
- Pollution reduction projects.
- Environmental restoration and protection projects.
- Assessments and audits addressing pollution prevention, environmental quality, or compliance.
- Environmental compliance promotion projects.
- Projects related to emergency planning and preparedness.
- Other projects if they demonstrate environmental or public health benefits.
Projects that will not qualify as SEPs include:
- General public educational or awareness projects.
- Contributions to colleges or universities for environmental research.
- Cash donations.
- Projects unrelated to environmental protection.
- Studies or assessments that do not incorporate a requirement to correct or resolve issues identified in the studies or assessments.
- Projects that will be undertaken with federal loans, grants, contracts, or any other forms of federal assistance.
- Projects that may become profitable to the settling defendant within a certain number of years.
- Projects for the provision of raw materials only.
- Projects that are not discrete actions with public health or environmental benefits.
- Projects that depend on contributions by others who are not a party to the settlement or hired by the settling defendant to implement the project.
- Third-party compliance projects.
Generally, proposed projects should meet one or more of the policy’s evaluation criteria and should demonstrate support for EPA’s mission to protect public health and the environment. The 2015 SEP Policy highlights five current EPA priorities: Children’s Health, Environmental Justice, Pollution Prevention, Innovative Technology, and Climate Change. Of these five, protecting children’s health, encouraging the development of innovative technologies, and addressing climate change are newly incorporated priorities with this policy update.
MassDEP Provided Substantial Discretion to Interpret Legislative Mandate in Global Warming Solutions Act
Just how much discretion will the courts give to the MassDEP to interpret legislative intent when it implements legislative directives such as a requirement to develop rules under the Global Warming Solutions Act? The answer, according to a recent decision by a Superior Court judge, is a surprising amount.
The decision, in a case entitled Isabel Kain v. MassDEP, Suffolk Superior Court Civ. Action No. 14-02551, concerned a challenge to MassDEP’s compliance with a requirement in the state Global Warming Solutions (GWS) Act to enact regulations establishing declining annual emission limits for greenhouse gases (GHGs). M.G.L. c. 21N, § 3(d). The challenge was brought by several citizens advocacy groups and individuals who claimed that MassDEP had failed to carry out a clear statutory obligation to promulgate regulations by a date specified in the GWS Act.
Under the GWS Act, the Secretary of Energy and Environmental Affairs is required to adopt a statewide GHG limit effective in calendar year 2020, and MassDEP is required to adopt regulations “establishing the desired level of declining annual aggregate emission limits for sources or categories of sources that emit greenhouse gas emissions.” M.G.L. c. 21N, § 3(d). Such regulations were mandated to take effect on January 1, 2013, and to expire on December 31, 2020. See St. 2008, c. 298, § 16. The plaintiffs, in this case, alleged that MassDEP failed to meet this statutory requirement.
As a guidepost for understanding how courts will interpret statutes, under federal law, there is a well-defined process for determining whether an agency has properly construed a statutory mandate. Using the analytical framework established by the U.S. Supreme Court in Chevron USA v. NRDC, 467 U.S. 837 (1984), a court first determines whether Congress has directly spoken to the issue. If the court finds that the intent of Congress is clear, then the agency must adhere to that intent or the court will overturn the agency’s action. If the court, however, finds that the intent of Congress is not clear – that is, if the statute is ambiguous – then the court conducts a second analysis to determine whether the agency’s action is based on a permissible interpretation of the statute, and the court grants deference to the expertise of the agency involved. “[C]onsiderable weight should be accorded to an executive department’s construction of a statutory scheme it is entrusted to administer, and the principle of deference to administrative interpretations has been consistently followed….” Id. at 844.
In Massachusetts, the Supreme Judicial Court follows a nearly identical two-step process to determine whether a state agency’s interpretation of a statutory mandate is permissible. See Franklin Office Park Realty Corp v. DEP, 466 Mass. 454 (2013). First, the court “use(s) conventional tools of statutory interpretation’ to determine ‘whether the Legislature has spoken with certainty on the topic in question.” As under federal law, if a court finds that a state statute is unambiguous, the court will reject any agency action that does not give effect to the legislative intent. The Legislature’s intent is therefore critical and no deference is offered to an agency if the intent is clear. If the Legislature has not directly addressed an issue, and the statute is therefore ambiguous, the court will move to a second step in the analysis and will determine whether the agency’s interpretation is reasonable, granting substantial deference to that agency’s particular expertise. “In this second step, we will disturb an agency’s interpretation of its statutory mandate only if it is ‘patently wrong, unreasonable, arbitrary, whimsical, or capricious’.” Id. at 460, citing Brookline v. DEQE, 398 Mass. 404, 414 (1986).
These well-worn paths for court review of statutory mandates require that the reviewing court first determine whether a statute is clear. This ensures that the court will give effect to legislative intent when the legislature has spoken clearly. Only if a statute is not clear does the court move to the second step and evaluate the agency’s action, granting deference to the agency’s view where the agency is exercising discretion in its area of expertise.
In Kain v. MassDEP, the central question before the Superior Court was whether MassDEP had adhered to the rule development requirements of the GWS Act, and the litigants squared off on the question of how to interpret the statutory mandate to adopt regulations establishing a desired level of declining annual aggregate emissions. Specifically, they argued about whether the agency’s actions had complied with the requirements of the statute to enact regulations by January 1, 2013.
The state Attorney General’s office, filing its brief on behalf of MassDEP, defended MassDEP’s actions by arguing an extraordinary position, that the language in § 3(d) of the GWS Act only required MassDEP to set “aspirational target levels” that would “help the secretary and the Department keep the state on track to meet the required 2020 reduction level.” See Defendant’s Opposition to Plaintiff’s Motion for Judgment at 4. Regardless of your views on the outcome of the case, this argument was quite novel. The Attorney General’s office, in an attempt to maneuver around the two-step analytical framework, argued that a legislative mandate to promulgate regulations could be unambiguously interpreted as merely an aspirational goal. It is unusual to have an Attorney General’s office argue that the state legislature does not intend to require action when it sets a statutory deadline. [We would note that this argument was made in 2014, and it is not clear whether the new Attorney General, Maura Healey, who took office in January 2015, would advocate a similar position.]
The Superior Court, to its credit, did not embrace the aspirational goal argument. However, neither did it adopt the position of the plaintiffs that the statute unambiguously required MassDEP to adopt specific rules. Instead, the Court determined that by affording the agency “the deference to which it was entitled by law,” it could conclude that MassDEP had “fulfilled the essential mandate” of §3(d).
In its application of deference, the Court seemingly merged the two-step statutory evaluation process and ignored the initial question of whether the statute was ambiguous. While the Court noted that the most important factor in statutory interpretation is legislative intent, it did not determine whether the statute was, in fact, a clear expression of legislative direction. Instead, the Court reasoned:
Upon review, the Court has determined that it need not decide which (if either) party’s reading of § 3(d) is correct in this regard; because under either construction of the statute, and according to the agency the deference to which it is entitled by law, DEP has fulfilled the essential mandate of §3(d).
The difficulty of this analysis is that instead of analyzing the statutory requirement first and reaching a conclusion about whether the Legislature spoke clearly, the Court leaped directly to a review that afforded MassDEP deference. The Court took this position further, cautioning that “[t]his court should be extremely wary of entering into controversies where we would find ourselves telling a coequal branch of government how to conduct its business.” (Citing Mass. Redemption Coalition v. Sec. of Exec. Branch of Env’l Affairs, 68 Mass. App. Ct. 67, 70 (2007).)
The risk in this analysis is that the Court appears to have side-stepped its critical function of protecting clear legislative direction by deferring immediately to the discretion of an administrative agency. By deferring to MassDEP, the Court essentially placed a state administrative agency in a position of being a more powerful branch of government than the Legislature, a position that the review standard would seemingly forbid.
The decision of the Court in Kain v. MassDEP upheld MassDEP’s implementation of the rule development requirements in § 3(d) of the GWS Act. The Court found that the agency had implemented three rules, each of which met “the essential mandate of § 3(d),” although after the statutory deadline: a sulfur hexafluoride rule limiting leakage from electrical power equipment, a carbon dioxide trading program rule tracking the commitments the state made in the Regional Greenhouse Gas Initiative, and a rule adopting the California motor vehicle emission requirements.
It is not surprising that the Court found MassDEP had complied with the GWS Act, given that the Court afforded the agency broad deference in its interpretation of the statutory mandate. One of the plaintiffs in the case has announced its intent to appeal so it is likely the decision will be reviewed by an appellate court. It remains to be seen whether a reviewing court will conduct a different, more traditional, analysis of the statutory interpretation, or whether the appellate court will look favorably on the Superior Court’s broad deference to administrative action.
Municipalities Lose First Round in Bid to Hold PCB Manufacturers Liable For Environmental Impacts
Two Massachusetts municipalities are down but not out in their attempts to hold manufacturers of PCBs responsible for the environmental effects of PCB-containing products decades later. In March, the Federal court in Boston issued several opinions involving claims bought by towns against Monsanto and its successors Pharmacia Corporation and Solutia, Inc. alleging that they are responsible for harm caused by the release of polychlorinated biphenyls (PCBs) at schools because they manufactured the PCBs. These cases raise interesting issues as to whether a manufacturer should bear responsibility for harm caused by its products, long after those products enter the stream of commerce.
In the first case, Town of Westport v. Monsanto Co., the Town of Westport alleged Monsanto and its successors produced PCBs for use in transformers, light ballasts, caulks, paints and sealants when it knew that PCBs had harmful effects on humans. Congress banned the manufacture of PCBs in 1979 as part of the Toxic Substances Control Act, but the products that contained PCBs manufactured during this period live on. Westport alleged that it has identified PCBs in the buildings of its school system. Based on theories of breach of implied warranty of merchantability (design defect and failure to warn), negligence, public and private nuisance, trespass, and the Massachusetts contamination remediation statute, M.G.L. c. 21E, Westport claimed that Monsanto and its successors must address the PCB contamination found in the schools.
In March, the U.S. District Court addressed Monsanto’s motion to dismiss some of Westport’s causes of action: public nuisance, trespass, and M.G.L. c. 21E. First, the court determined that the defendants were not liable for public nuisance, based on lead and asbestos cases involving similar claims, because Monsanto had no power to abate the nuisance once the PCBs were sold. Second, the court determined that the fact, if true, that Monsanto sold PCBs with the knowledge that they would be made into building materials was not analogous to negligent entry on the town’s land causing injury. Finally, under M.G.L. c. 21E, the town alleged that the Defendants were liable as arrangers, transporters, or as persons who “otherwise caused” a release of hazardous materials. The court dismissed the arranger and transporter claims because no specific allegations were made supporting these claims. The court also dismissed the “otherwise caused” claim because there was no allegation Monsanto caused the release other otherwise interacted with the property where the release occurred, other than through manufacture and sale of PCBs. Westport’s claims of implied warranty of merchantability, negligence, and private nuisance remain.
Also in March, the U.S. District Court ruled in the second case, Town of Lexington v. Pharmacia Corp., in which Lexington attempted to bring a class action against the same defendants as the Westport case on behalf of all similarly situated towns for recovery of environmental remediation costs due to the presence of PCBs in indoor air of schools. Lexington included claims for breach of the implied warranty of merchantability (design defect and failure to warn) and violation of the Massachusetts consumer protection act, M.G.L. c. 93A. In the first of two opinions in the case, the court denied Lexington’s motion to certify the class because, among other reasons, the class was overbroad; i.e., it was not likely limited to school districts impacted by PCBs manufactured by Monsanto. In the second opinion, Solutia and Monsanto moved for summary judgment on the basis that they do no bear liabilities associated with the manufacture of PCBs due to various contracts between the defendants. The court denied Solutia’s motion for summary judgment, determining that Solutia retained liability via contract. The court reserved its decision on Monsanto’s motion and requested an additional briefing.
Massachusetts Land Use Developments
Zoning Deficiencies Not Cured by Existing Structures Exception for ANR Plans
Dividing up the “traditional New England family compound” has a host of societal implications and land use complications that were on display in the Supreme Judicial Court’s recent decision in Palitz v. Zoning Board of Appeals of Tisbury, 470 Mass. 795 (2015). In that case, the SJC ruled that zoning infirmities caused by the division of such a tract under the “existing structures” exception of M.G.L. c. 41, § 81L, must be addressed by variance because the property division, even though accomplished by way of an Approval Not Required (ANR) plan under § 81L, does not cure those zoning deficiencies.
As with many land use cases, Palitz involves one neighbor attempting to block the water view of another by expansion or replacement of an existing, smaller dwelling. Here, three homes were built close together on three parcels held in common ownership from the early 1920s. In the mid-1990s, the owner divided the land into three lots under the “existing structures” exemption to the Subdivision Control Law pursuant to § 81L. The owner obtained and recorded the ANR endorsement from the Tisbury Planning Board and sought a variance to address the zoning problems (minimum lot size and frontage) of the lot known as 87 Main Street, which was created by the § 81L plan. The Zoning Board of Appeals granted the variances and the property was sold to the plaintiff in 2007.
In 2012, the plaintiff sought a building permit to tear down the existing dwelling and construct a new dwelling on the same footprint, but with a third floor measuring 10 feet taller that would block a neighbor’s water view. The zoning enforcement officer required the variance to be amended, which the Zoning Board denied based in part on the impact on the neighbor’s view. The plaintiff appealed to Land Court, which agreed that a new or amended variance was required, and the SJC took the case on direct appellate review.
The plaintiff argued that because the structure was nonconforming prior to the enactment of the Zoning Act, it was entitled to grandfathering under M.G.L. c. 40A, § 6, and that the § 81L plan did not result in a physical alteration of the preexisting structure. As a result, the plaintiff argued, the earlier variance was not necessary and the later proposed new structure did not require an amended or new variance. The SJC disagreed and explained that the § 81L division created noncompliance with the Zoning Bylaw in several respects (lot size, frontage, and front yard setback) that did not fall within the protection of § 6 for pre-existing nonconformities. Instead, the 1995 variance was necessary at the time and a new or amended variance was required to change the structure because the proposed reconstruction would have expanded noncompliance permitted by the earlier variance. The SJC effectively prohibited the plaintiff from piggybacking § 6 nonconformity protections on a § 81L “existing structures” lot division.
Grandfathering arguments aside, the plaintiff also asserted that the policy behind the “existing structures” exemption contemplated the “traditional New England family compound” and must insulate it from the need for any zoning relief that might otherwise arise from the division of the land into separate lots. “[While t]his would explain why plans depicting such structures are entitled to ANR endorsements,” the SJC reasoned, “it would not explain why a landowner should be entitled to carve up the land without any regard to zoning bylaws – particularly in light of the long-standing principle that ‘a landowner will not be permitted to create a dimensional nonconformity if he could have used his adjoining land to avoid or diminish the nonconformity.’" Palitz, 470 Mass. at 805, quoting Planning Bd. of Norwell v. Serena, 27 Mass. App. Ct. 689, 690 (1989). In short, the SJC rejected the notion that “an ANR endorsement pursuant to the existing structures exemption” is “tantamount to the grant of a variance.” The SJC upheld the decision of the Land Court requiring an amended or new variance for the proposed project.
Troubles for Town’s Wind Turbine
In the long-running dispute between the Town of Falmouth and the neighbors to the Town’s wind turbine that powers the municipal wastewater treatment facility (WWTF), score one for the neighbors. The Massachusetts Appeals Court reversed the decision of Barnstable Superior Court Justice Robert C. Rufo in Drummey v. Town of Falmouth, 87 Mass. App. Ct. 127 (2015), finding that the Town was required to obtain a special permit from the Falmouth Zoning Board of Appeals to the install the wind turbine on Town land.
Claiming harm from sound pressures and noise from the turbine’s operations, the plaintiffs first sought the building commissioner’s enforcement of the Zoning Bylaw. They alleged that the town violated the Bylaw by failing to secure a special permit for the turbine’s construction and maintenance. The building commissioner denied their request. The plaintiffs appealed to the ZBA and the Superior Court, both of which affirmed the building commissioner’s ruling.
Notwithstanding that the Bylaw provides that a petitioner may apply for a special permit to construct a windmill, the Superior Court found that this provision did not “apply in the limited circumstance where the Town itself desires to construct and operate a windmill for municipal purposes in a district where all such purposes are permitted as of right.” The Court explained that the turbine was a “municipal purpose” that fell within the enumerated community service uses permitted as of right in the Bylaw, which includes: “All municipal purposes, including the administration of government, parks, playgrounds, recreation buildings, Town forests, watershed, water towers and reservoirs, beaches, fire and police stations and armories.” Although turbines were not expressly included in the list of municipal purposes, the Superior Court found the list to be illustrative and not exclusive.
On appeal, the Appeals Court first recited the rule of law that the interpretation of a town's bylaw raises a question of law. As such, the Court “reviews the judge's… interpretations of zoning bylaws, de novo [anew or afresh].” It remarked that, as in other districts of the Bylaw, windmills were specifically designated in the public use district as an accessory use by special permit. Therefore, it logically followed that windmills could not have been intended to fall within the list of more general municipal uses allowed as of right. While the Superior Court’s understanding of the non-exclusive nature of the list was accurate, the Appeals Court found that that characterization of the list “did not adequately consider the weight that must be given a specific by-law provision that has been drafted to take into account the public welfare.” Specifically, the Bylaw included “a comprehensive scheme” for wind turbines including controls on their placement and impact on the town. In effect, the lower court erroneously reviewed the key Bylaw provision in isolation, not in context as the law requires.
The Court vacated the judgments of the Superior Court and remanded the case to the Superior Court for entry of new judgments consistent with its opinion. The Town has filed an application for further appellate review, which is pending before the Supreme Judicial Court.
Beveridge & Diamond's Municipal and State Governments industry group helps municipalities navigate the various federal and state regulations that govern their operations. We help guide municipalities through complex project development and permitting processes, interactions with the federal government, and environmental and natural resource litigation. For more information, please contact the authors.