Energizing From the Ground Floor: Gerry Pels on Environmental Law

In the rapidly evolving world of environmental law, Gerry Pels is as sharply adept as it gets. Pels has been a leader in the Texas environmental legal community for over 30 years. A long time, in a relatively young field. Getting in on the ground floor has been exciting for Pels, who sees this relatively fresh sector as an opportunity for ingenuity. “It's really an area where creativity still is at a premium,” Pels says.

A virtuoso in a categorically misunderstood field, Pels has been on the front lines of some of the most cutting-edge environmental law matters of our time. He famously resolved the Cooper v. Aviall litigation and argued the Clean Air Act issues before the 5th Circuit in a case that would re-shape the field – resulting in a decision that was established, in large part, by his very arguments.

Pels’ work with the Clean Air Act was a formative experience for the accomplished attorney. “Having the opportunity to argue in the 5th Circuit was a pleasure,” Pels says. “I could not believe how educated the judges were on super technical Clean Air Act issues. They asked me all the right questions, none of them softballs.”

Pels, who was told early on in his career that, “Texas isn’t a save-the-whales state,” possesses a talent for thinking outside the box that has been essential to his success. He maintains that environmental law is growing more complex as standards shift, making his work endlessly fascinating. Pels explains, “The degree of sophistication required to comply with the rules now is just remarkable in comparison to what it was when the practice was really just evolving in the ‘80s.”

Houston-based Pels chairs the firm-wide Environmental Section at Locke Lord, where he is partner. He is an esteemed member of the 2023 Lawdragon Green 500: Leaders in Environmental Law.

Lawdragon: Can you give us an overview of your practice mix?

Gerry Pels: For the last 10 years my practice has mostly involved assisting clients with addressing air emissions compliance, permitting, quantification, validation and enforcement defense – matters of that nature. The industry and the nation are becoming generally more attuned to the importance of air quality and in Houston it's associated with a heightened focus on the energy and fossil fuel industry. The sensitivity to methane emissions has brought all air emissions into focus for businesses as well as the consumers of services. Having said that, I still do a lot of waste and water related work, as well as navigating site clean-ups for clients.

LD: So your practice generally follows the industry?

GP: That's exactly right. I do what my clients need me to do at any given time. As a lawyer, you need to evolve with your clients and with their needs – and that's especially true in environmental areas. Your emphasis needs to shift to address both the legal and cultural focus.

LD: How did you first come to focus on environmental law?

GP: My journey in environmental law started a year or so after I got out of law school. When I came to the firm there were about 60 lawyers. Looking back, we tended to throw associates into the deep end if they could handle it. As a young associate, I got a call from a client who worked for a national real estate developer who was interested in the Superfund law. She said, "Do you have anyone at your firm who works with that law in that environmental area?" We didn't have an expert, so I told her that I would be happy to research the issues and get back to her with my conclusions. I found it really interesting. At the time, very few firms in Houston really had mature environmental departments. I started looking at the body of law that was out there – waste regulation, air regulation, water regulation – and came to the conclusion that this is an area where our clients could really use that help.

It was kind of an environmental Rubik’s Cube, because crafting arguments to defend one set of claims in some instances affected defenses for other claims.

I set sail on a path of self-education. I'm not kidding, I read every statute and most every rule. I'd go on vacations with my wife and I’d be sitting on the beach reading the 40 CFR and state rules. By the time I was a mid-level associate, it was pretty clear this is what I was going to do. Some partners encouraged me. Some partners thought it was a career mistake that wouldn't work in Texas. They really misunderstood the practice as being tree-hugging when in fact it's helping industrial concerns figure out what they need to do, in an efficient way, to comply with laws and rules.

LD: You really got in on the ground floor of this area of law.

GP: Oh yeah. I'm not as big a pack rat as I used to be, but what's interesting is I've looked back at some of the CLE presentations that I either gave or attended in the ‘80s and early ‘90s. And you wonder, could things really have been that simplistic? The degree of sophistication required to comply with the regulatory programs now is just remarkable in comparison to what it was when the practice was really just evolving in the ‘80s. And for that reason, our clients face even more challenges today than they probably did when we were all learning.

LD: What can you tell us about the Cooper v. Aviall case on which you worked?

GP: Really interesting case. In short, the Supreme Court’s Aviall decision limited those circumstances under the federal Superfund law by which potentially responsible parties (PRPs), could seek contribution for cleanup costs from other PRPs. The Court held, a PRP could only seek “contribution” from other PRPs if the PRP bringing the claim was subject to a government enforcement action.

After the decision, PRPs who cleaned up property voluntarily were in somewhat of a quandary, not knowing if they could recover costs from other responsible parties. The lack of clarity regarding whether costs could be recovered for voluntary cleanups, had the potential to undermine the policy goal of encouraging the clean-up of contaminated facilities. Ultimately, in 2007 the Supreme Court in its Atlantic Research Corporation decision, agreed that PRPs conducting cleanups voluntarily could seek “cost recovery” under a different provision of CERCLA and these claims were considered a complementary cause of action to “contribution” claims. Aviall did not affect separate claims that could arise under state statutes, common law, or contracts.

Keep in mind, I was not involved at the time of the Supreme Court decision, I became involved afterward when the client, Cooper Industries, moved the case to me. At the time, the company was potentially facing separate claims under state statutes, common law and contractual claims under a Purchase and Sale Agreement. Stated another way, even if certain CERCLA claims had become barred by the decision, the company faced virtually the same liability under state statutes and other legal theories.

It took years to resolve the case because of the complexity of issues that these very different yet integrated claims gave rise to. The state statutory causes of action involved claims not just for hazardous substances clean-up but also for industrial solid waste and petroleum products. The contract and common law claims represented additional causes that we had to defend.

We really had a witches’ brew of legal issues to litigate. The case involved really interesting and complex factual and legal issues. It was kind of an environmental Rubik’s Cube, because crafting arguments to defend one set of claims in some instances affected defenses for other claims. Ultimately, we were able to develop arguments that allowed us to properly defend the case in a holistic manner and ultimately resolve it in a way that allowed our client to be very comfortable. We were really pleased. We had a great team working on the case here at the shop and it took all of us to craft the arguments needed to finally bring the litigants together and settle the matter.

They really misunderstood the practice as being tree-hugging when in fact it's helping industrial concerns figure out what they need to do, in an efficient way, to comply with laws and rules.

LD: Are there any other cases that stand out as particularly memorable for you?

GP: There's two that stick out in my mind. One was The City of South Bend v. Cooper Industries. Cooper Industries was sued under the Indiana State Superfund statute to address alleged contamination associated with operations conducted by Studebaker at the historic Studebaker plant. It involved novel issues of corporate successor liability and questions involving the scope and magnitude of cleanup required at the former Studebaker manufacturing corridor. Ultimately, we were able to settle it through developing legal arguments and technical models which made clear that the cleanup work could be completed for far less than was demanded or anticipated. Again, we had a super team working together to successfully resolve the matter.

The other case was BCCA Appeals Group v. EPA. It involved a whole group of industrial companies, NGOs, the State, Houston, Harris and Brazoria Counties, and the Environmental Protection Agency, among others. It was a fascinating case because, as petitioners, it had on the same side heavy industry entities and NGOs seeking to set aside the SIP. Certain industry representatives believed certain control measures were too stringent, while certain NGO and environmental petitioners argued other control measures would not allow for timely satisfaction of Clean Air Act air quality deadlines. The City of Houston and Harris County worked with EPA, while Brazoria County aligned with the petitioners. For industry, the chemicals and substances a business worked with (and hence their emission controls) generally dictated what side of the dispute they were on. The 5th Circuit was the court of original jurisdiction because under the Clean Air Act, Federal Circuits hear State Implementation Plan, or SIP, challenges. I was representing the City of Houston, and we were arguing that the SIP as approved, should stand.

My specific argument had to deal with whether and why EPA’s actions fell under the Chevron doctrine for judicial deference to administrative actions. When we were putting together the arguments, I don't think any of us on our ledger thought that would be a critical argument. But for some reason, my gut told me it may be more important than people think.

I had never argued at the 5th Circuit before and I remember one of my law partners and lifelong friends told me, "Gerry, you know you like to talk, but when the red light comes on, you just have to shut up because you'll get these guys upset with you." So I was making my argument and the red light came on and I just said, "If you'll allow me to summarize in a sentence or two, I will." And the Court said, "No, we have more questions we want to ask you." They kept me in the hot box for about another 15 minutes because they wanted to learn about the argument.

I could not believe how educated the panel of judges was on super technical Clean Air Act issues. They asked me all the right questions and none of them were softballs. It was obvious they had gone through literally boxes of briefs that all of us had filed and they just nailed the questions. Months after the case was argued, I remember getting a phone call from my client who learned of and had read the opinion before I did. She was extremely pleased and told me she felt the decision, in many ways, was based on my arguments. That was cool. It was a great experience to make arguments to that court, and to have technical legal questions asked of me that were precise and very thoughtful. It was also nice to be on the winning side.

Having the opportunity to argue in the 5th Circuit was a pleasure. It was one of those times where you say, wow, I'm honored to be a lawyer. It was a great experience and the Court got it right.

LD: That sounds so satisfying. How did you come to law in the first place?

GP: I started out expecting to be an engineer because in high school I was more attuned to math than to verbal skills. Before my college classes started, I made a decision and migrated to a different major with the intent of going to law school. I’ve always liked solving puzzles and to me, the law is like puzzle solving and figuring out how best to make the pieces fit to allow your client to be successful. How I ended up at Vanderbilt in Nashville, being from Philadelphia is another story, but it worked out well – great school!

There's so many new laws and rules coming out ... it's an area of law where creativity is at a premium.

The environmental side of it just fell in my lap and I'm glad it did because it's an area where you can continually be very creative in developing arguments. There's so many new laws and rules coming out - the law surrounding this area is still very young. This stuff really started to become focused on in the ‘80s – that's only 40 years ago. So it's really an area where I think creativity still is at a premium.

LD: Do you find that people have misconceptions about this area of law?

GP: For sure. I was a kid when, in 1983, I started practicing here in Texas right out of law school. I don’t think everyone understood the direction I wanted to go with this practice because I actually started our section when I was a young associate. No one had focused on these issues previously in any material way. I didn’t have a long history with the firm and I’m not sure I was fully understood.

You have to understand, I was a young associate from Philadelphia and it seemed everyone down here in Houston was listening to country music, while I'm listening to The Clash, The GoGo’s and The Talking Heads. So my colleagues had to be thinking, “What’s with this guy? What can he be thinking?” I remember one of the partners thought he was doing me a favor, and said to me, "Gerry, you need to understand Texas is not a save-the-whales state." He stated further, “I think you could have a great career and become a real estate or corporate partner.” I replied, "But that's not what this is all about. This is about working with industry to allow them to operate within the parameters of the law and to protect them from liability."

I was very fortunate and pleased that the senior partners of the firm let me run with it and develop the practice. They didn’t hire in anyone senior to me and had confidence in the direction I wanted to take us. Or, maybe they thought I was crazy.

LD: What impact does ESG [Environmental, Social and Governance] investing have on your practice?

GP: Some people, including me, say, “It's ESG with a capital E.” Right now, an ESG emphasis looks heavily at methane emissions. Companies are working to understand those emissions and their emission sources. In many ways, ESG is requiring a lot of emissions tracking where what we're seeing goes beyond what's currently required under our laws. As companies find the need to identify, verify and track their methane emissions, it also ties into, what are their other emissions? This raises many questions. Have they quantified all of those emissions effectively? Have they authorized all of those emissions effectively? A lot of companies may not have been current on their permitting or compliance. They may not have taken into account all of their equipment modifications or sources acquired in many transactions. A lot of companies are going to need to do a lot of homework to make sure that their disclosures are sufficiently accurate and have gone through the necessary validation process to meet SEC standards, once they are finalized.

The impact of those standards will trickle down to privately held businesses as well because the SEC's rules require determination of “emissions’ intensity.” That is, what are your emissions per unit of service or production? So ultimately, it will be more than just public companies that are going to have to address these issues because their customer base and interest in maintaining their brand will require it.

My perspective is that the investment community should be looking at corporate sustainability in terms of, to what extent a business could be impacted long-term by environmental (and other) issues, and how could those issues affect their long-term profitability and sustainability – and hence shareholder value. There are a number of issues where that can be evaluated beyond methane emissions that are going to affect corporate sustainability and play into ESG concepts. Right now the environmental component, including methane emissions, is very important.

Even though we're moving away from fossil fuels, there will still be environmental impacts we need to manage and be sensitive to.

LD: And how is the energy transition impacting your practice?

GP: Renewable energy and alternative energies are here to stay. But in many ways the new and alternative energy generation facilities are still going to require traditional environmental legal insight.

I’ve worked on any number of interesting energy generation projects over the years – there's biogas, wood burning, renewable gas, to name a few. There are any number of projects which are in lieu of fossil fuels, but they still are going to have the traditional air permitting and often compliance requirements. In some instances, the issues are more complex because the technologies are new and emissions controls are developing. Even though we're moving away from fossil fuels, there will still be environmental impacts we need to manage and be sensitive to. I suspect it’s only a matter of time before new laws and regulations are put into place to address those issues.

There are even environmental issues with more benign projects. Texas has many wind farms and solar projects, yet there remains a strong intersection between these alternative energy projects and environmental law. Regarding projects with a significant number of solar panels, an issue that we should be considering now is, what do we do in 30 years when these panels require disposal? Right now, disposal of these types of panels is challenging. How are we going to maximize disposal options for that waste? How are we going to recycle? How are we going to extract and reuse the important metals and minerals that are used? These are all important issues and could give rise to new and important industries that will be heavily regulated by environmental laws.

Similarly, with wind farms right now there's a dearth of landfill space for the blades and there are recycling challenges associated with those blades. How does that fit under state solid waste statutes for cleanup and cost recovery? Will landowners have causes of action against businesses who constructed them and leave them? These are issues that we're going to have to confront, to name just a few.

LD: I saw you used to teach. What did you enjoy about that?

GP: I taught law school here in Houston at the South Texas College of Law for about seven years in the ‘90s. I basically started the environmental law program at South Texas. I began teaching a survey course addressing major federal environment statutes and also taught a hazardous waste seminar. I really enjoyed teaching. As a teacher, you learn from your students as much as you teach them. I like to think I was a good student as well. It was a gratifying experience. I didn't necessarily want to give it up, but my wife correctly felt that with both working at a large firm and being a law professor, there may not be much time left for other important things. Our kids weren’t getting any younger, and it made sense to prioritize different things. So I gave it up to spend more time with my family, which I have never regretted. Interestingly, several students have become clients, which is quite rewarding.