In addition to serving as consumer guardians, state AGs take their role as custodians of the environment very seriously, as exemplified by a recent action by DC AG Schwalb against electric utility Pepco. In Episode 5, Meghan Stoppel and Keturah Taylor consider the ways in which AGs hold businesses accountable for their environmental impact.
PRODUCED IN COLLABORATION WITH:
Stephen Cobb, Member, Executive Producer
Suzette Bradbury, Director of Practice Group Marketing (State AG Group)
Elisabeth Hill Hodish, Policy Analyst
Welcome to the third season of State AG Pulse. In this season, we’re selecting one story every week from the State AG News. Over the next minutes, we’ll take a quick dive into that story to analyze the impact of AGs as regulators and consumer protection guardians, and provide tips to help your business work successfully with state AGs.
Hello and welcome back to the third season of State AG Pulse. My name is Meghan Stoppel. I’m a partner here at Cozen O’Connor in the State AG Group, and it is my absolute pleasure to be joined today by my colleague Keturah Taylor, who I have the pleasure of working with on a daily basis. Thank you, thank you, Keturah, for joining me today in this discussion. I think it’s going to be a good one.
Hi, Meghan. Great to be here with you. Great to be back on the podcast. I’m really looking forward to talking about this story today. So this is an environmental story, which I’m excited to talk about because I think sometimes the important environmental work that AGs do doesn’t necessarily grab a ton of headlines, but it makes such a huge impact on the communities that they live in and that they serve. DC Attorney General Brian Schwalb announced that his office reached a settlement with Pepco – Potomac Electric Power Company – and that’s the public utility that services Washington DC.
So this settlement was reached over allegations that Pepco had been discharging toxic chemicals into the land and waterways around DC for decades, including polluting the Anacostia River. So under the terms of this agreement, Pepco has to pay $47 million towards cleaning up the Anacostia River and another $10 million in penalties. Pepco also has to clean up the contamination at two additional facilities owned by Pepco and look at a few other potential environmental impacts from its operations. Pepco has to pay the District to oversee this work, and of course is not permitted to pass these costs along to its consumers who are ratepayers in the district.
And I think you’re right, I think you used the word unusual when describing this settlement at the outset, Keturah, and I think it is unusual for our group to be talking about environmental settlements entered into or announced by the AGs. I imagine for our listeners coming out of the District of Columbia today that they’re probably perking up a little bit and listening a little more closely because they know where this particular river might be located. Some listeners outside of the District may actually be wondering why we picked this headline for discussion because it’s not about a consumer protection claim or it doesn’t appear to have a broader impact on the business community. I really want to take a minute to talk about why we picked this particular headline in this story and sort of what it tells us about how the AGs operate and how they identify their priorities.
This is a huge amount of money for any company, let alone an electric utility company to pay. And if you’re following along, if you’re listening in, you caught that this settlement was with an electric utility servicing the District. There’s different types of electric utilities. They’re pretty heavily regulated at the state level by state utilities commissions. Let’s talk a little bit about why the AG got involved here and why this wasn’t something that was left to a different state agency, whether that was the Utilities Commission or an environmental agency. Can you tell from looking at the settlement document, Keturah, or the press release, why that was?
Sure. So like most, if not all states, DC has a regulatory agency, in DC, it’s called the Public Service Commission, which regulates utility providers in the District. However, attorneys general still have jurisdiction over environmental violations just like they would have jurisdiction over consumer protection violations committed by, whether it’s utility or any other company operating in their state or in the district. So we’ve seen AGs bring these types of enforcement actions in partnership with state environmental agencies. And we’ve also seen them partner up with the public service commissions or their counterparts in other states to investigate different conduct by utility providers. So for example, in this particular case, the DC attorney general worked with DC’s Department of Energy and Environment during the investigation, and that DOEE will also be heavily involved in coordinating and implementing the cleanup that is required as part of the settlement. So it’s really the AG’s office working in partnership both with the public utilities regulator or the environmental agency, whichever is more appropriate, to investigate these issues and bring about their enforcement actions.
Right. So would it be fair to say for the layperson listener out there today that the AG’s acting sort of as the enforcement arm and they’re bringing along the subject matter experts or the regulatory agencies for their subject matter expertise to assist in either conducting the investigation or bringing the enforcement action here? Do you think that’s what happened?
Absolutely. I mean we can only know so much by looking at the settlement and the underlying complaint, but as you and I have seen in working on other matters, that is exactly what the AG’s office tends to do in these cases.
And we’ve definitely seen that in cases you and I have handled together for clients, the AGs acting sort of almost like in an outside counsel capacity and really working hand in glove with either those utilities commissions or those other state agencies to almost serve as counsel for the agency where really that subject matter expertise is embedded.
But I want to step back and go back to the big picture for a minute, because if you’re not a utility or you’re not a company out there listening in today that is concerned about hazardous waste or your environmental impact because it just doesn’t resonate for your business, I think this story still has some significance and some meaning. And I want to make sure our listeners take something away from that. I mean, certainly we are seeing more and more environmental activity coming out of AGs’ offices in general.
If you pay attention at all to these headlines, you’re seeing a lot of headlines around PFAS these days, that set of forever chemicals that the regulators are concerned about breaking down too slowly. But we’ve been seeing AG activity in this space for years now. I mean, what, five, six years ago, it was the VW emissions scandal where you had the regulators claiming Volkswagen was cheating on their emissions tests, and you had a coalition of AGs and states and their environmental regulators coming together saying, “Not so fast. We’re going to hold your feet to the fire and you’re going to be held accountable for those misrepresentations that you made, both to regulators and to the public.” What else have we seen, I think, in the toxic chemical space that our listeners should be aware of, Keturah, not just what’s coming out of this Pepco case?
Sure. Well, as you mentioned, PFAS is certainly grabbing headlines and has been for the last few years. Actually, one of the toxins involved in this particular Pepco case is also, it’s called a PCB, a polychlorinated biphenyl. And that same chemical actually is involved in some other massive settlements that we’ve seen over the past three years or so between different states and Monsanto, which similarly involved decades of conduct that leached these chemicals into various sites and states were seeking to basically get monetary help to clean up the footprint of these chemicals. So Virginia, Oregon, New Hampshire, Washington, they’ve all reached settlements of hundreds of millions of dollars over the past few years. And we also saw that same chemical compound forming the basis of a case back in 2021 in New York with an auto parts manufacturer. So this isn’t necessarily isolated to one industry, but I would say, looking at the agricultural industry or manufacturing is certainly where you’ll see a lot of these settlements.
No, and it makes sense. And if you think about the big picture, Keturah, the AGs are trying to make the most of limited resources. Not only do they have the ability to lean on the subject matter experts in specific state agencies to help them identify where these problems might lie, find the outside experts if they need them to conduct the investigations, but they’re trying to use their resources and to deploy those resources in the cases that are going to make the most impact on the public. And there is a charge when you take that mantle of the attorney general’s office that you protect the public, that’s sort of part of the oath. And so these types of environmental protection cases, much like your traditional consumer protection cases, are going to very clearly fit that bill.
And it’s one of the reasons why in our day-to-day work, we see those cases, we see the hazardous waste cases still. I won’t name names on this podcast, but we’ve got a colleague here in our practice group that’s worked with a client for years now related to basically an e-waste disposal case. And it has to do with whether or not electronics were essentially improperly disposed of. So it doesn’t even have to be chemicals. It could be did you put that hard drive in a place where it wasn’t, per regulation, supposed to be? Sometimes businesses don’t know that regulations apply to disposal of those types of materials. And sometimes they know, but people make mistakes, right? And it’s not uncommon for the AGs to have either a state agency that they’re working in coordination with or experts in their own offices that are looking at these types of cases and looking for these types of cases.
And I think that’s the big picture takeaway here is the AGs have this authority, they think it’s important, they’re willing to use it, and it can be costly for companies that don’t invest the time and the resources that they need to be investing from a compliance perspective.
So I guess my final question for you, Keturah, and this has been a great discussion, is if we’re trying to read the tea leaves here, I guess in the District of Columbia specifically, what do you think our listeners can take away?
Well, one very clear takeaway from AG Schwalb’s press release is he noted that while Pepco is the first to accept formal responsibility for pollution in the Anacostia River and the surrounding area, that it may not be the last. And so I think AG Schwalb’s office is continuing to look at the local environmental impact of, not only Pepco, but other companies operating in the area. And we can expect to see other lawsuits or settlements announced in the future.
Yeah, that’s really interesting. A little bit of a cliffhanger there, if you will, in the press release by the AG’s office. You don’t see that very often, but I kind of like it. Well, thank you again, Keturah. It’s been a pleasure to sort of hash this one out with you and try to read those tea leaves. And thank you to our listeners for tuning in. Please tune in next time.
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