The Washington State Department of Labor & Industries recently confirmed that has been some confusion voiced about when the term “associated” in the phrase “associated Class 2 low voltage wiring,” added in recent revisions to the scope of work for Class B labels in W.A.C. § 296-46B-908, applies to the low voltage cable. In its Electrical Currents newsletter, Volume 19, No. 8 (August 2015), it confirms that the term “associated” means “only the cable originally connected to the united listed on the Class B label may be extended or replaced to accommodate the replacement unit. It does not include new cable installed to a new unit.” It provides two scenarios with the options for permit requirements (i.e., (1) a like-in-kind replace of a single furnace, heating unit, air condition, or heat pump, and (2) a like-in-kind replacement of a single furnace, along with the installation of a new air condition or heat pump), and includes an explanation for each.
Virginia Senate Bill 891 amends Section 43-3 of the Code of Virginia and add Section 11-4.1:1 to protect subcontractors (defined in Section 43-1 as “contractors, laborers, mechanics, and persons furnishing materials, who do not contract with the owner but with the general contractor”), lower-tier subcontractors and material suppliers. Subdivision (c) of Section 43-3 now provides, in relevant part, that “a subcontractor, lower-tier subcontractor, or material supplier may not waive or diminish his lien rights in a contract in advance of furnishing any labor, services, or materials.” In addition, new Section 11-4.1:1 prohibits a subcontractor, lower-tier subcontractor or material supplier waiving or diminishing its right to assert payment bond claims or claims for demonstrated additional costs in a contract in advance of furnishing any labor, services, or materials. A provision in a contract that purports to waive these rights is null and void. Senate Bill 891 was effective July 1, 2015.
In Organized Village of Kake, et al. v. U.S. Department of Agriculture, et al., decided July 29, 2015, an en banc panel of the U.S. Court of Appeals for the Ninth Circuit reinstated the Department of Agriculture’s (Department) 2001 “Roadless Rule”, which limits timber harvesting in the natural forests under the control and supervision of the Department. This rule has particular importance for the Tongass National Forest in Southeast Alaska. Indeed, after the Department decided not to appeal the latest adverse decision of the U.S. District Court of Alaska, the State of Alaska intervened and participated in this appeal. The tangled history of the Roadless Rule implicates three Presidential administrations, several decisions of the federal district courts and three U.S. Courts of Appeals, and it would be surprising if this latest decision will be the last.
This is Part VII of VII of a brief recap of some the significant environmental law and administrative cases decided in the past few months:
B. Texas State Court of Appeals
On June 1, 2015, the Court of Appeals for the Seventh District sitting in Amarillo issued a ruling reversing the grant of summary judgment to five energy production companies whose operations are located near DISH, Texas. The case is Sciscoe, et. al. v. Enbridge Gathering (North Texas), L.P., et. al. Eighteen homeowners and the Town of DISH filed separate lawsuits against these companies essentially alleging that the noise, light, odors, and chemical particulates emanating from their adjacent operations caused a nuisance and constituted a trespass, entitling the plaintiffs to monetary damages; the plaintiffs, however, did not seek injunctive relief. The defendants argued that the migration of odors and chemical particulates onto the plaintiffs’ properties cannot constitute a trespass as a matter of law; that their claims are preempted by Federal and State Clean Air Acts; their emissions fall within the regulatory limits established for these emissions; and that the applicable statute of limitations requires their dismissal. The trial court agreed, and granted summary judgment.
On appeal, the Court of Appeals ruled that the trial court was in error when it ruled that, as a matter, of law, the migration of airborne particulates cannot constitute an actionable trespass. While the plaintiffs must prove their case, they should have the chance to do so. With respect to the defendants’ argument that their permitted natural gas compression units adhered to the law, the Court of Appeals ruled that the they were not “somehow immune from liability for damages they may have caused just because they have a regulatory permit”, and therefore summary judgment on this issue was inappropriate. Regarding the ruling of the trial court that the plaintiffs’ claims were barred by the relevant statute of limitations, the Court of Appeals ruled that the defendants failed to establish, as a matter of law, every element of that defense. Accordingly, summary judgment on this point was reversed. On the other hand, it ruled that the plaintiffs’ claim to recover damages for future diminution in the value of their properties was preempted by Federal and State law.
A state Court of Appeals for the Fourteenth District sitting in Houston, Texas, on March 26, 2015, ruled that environmental indemnities, which were a component of an exchange of Louisiana oil and gas properties in 1994, could be enforced today by and against the corporate successors to the original companies that negotiated these provisions. The case is ConocoPhillips Company v. Noble Energy, Inc., No. 14-13-00884-CV. The decision is significant because ConocoPhillips settled a claim for environmental damages associated with these swapped properties filed by the State of Louisiana and the Cameron Parish School Board for $63 million, and indemnity that was denied.
III. EPA’s Environmental Appeals Board.
On March 13, 2015, the EPA’s Environmental Appeals Board (EAB) issued an important ruling in a Toxic Substances Control Act (TSCA) enforcement matter. The case is In re Elementis Chromium, Inc., TSCA Appeal 13-03.
The Chief Administrative Law Judge imposed a fine of $2,571,800 against Elementis Chromium, a manufacturer and distributor of chromium chemicals, finding that the company violated Section 8(e) of TSCA by failing to submit to EPA an occupational epidemiology study of hexavalent chromium. Elementis Chromium argued that the complaint should be dismissed as it was untimely, in that the five year federal statute of limitations (28 U.S.C. § 2462) had expired, and moreover, the report was exempt from TSCA disclosure because it was exempted from disclosure on the basis of long-standing agency guidelines interpreting Section 8 (e). The EAB held that the statute of limitations did not expire because the “continuing violation” doctrine applied to this matter and to the failure of Elementis Chromium to submit the report to EPA. Nevertheless, the decision to fine Elementis Chromium must be reversed because Elementis Chromium was correct in asserting that EPA guidance exempted the submission of this report because EPA was already adequately informed of the corroborative information contained in the study.
With respect to the statute of limitations (which applies in administrative enforcement matters), the EAB noted that Elementis Chromium’s last date of alleged non-compliance took place on November 17, 2008– based on the continuing violations doctrine– and accordingly, the filing of the complaint in September 2012 was well within the operative five year period. The EAB disregarded Elementis Chromium’s argument that the statute of limitations began to run when Elementis Chromium received the report—in November 2002—because a Section 8 (e) violation is always an ongoing violation because each day the study is withheld is itself a new day of violation. This reading of the statute is confirmed, the EAB holds, by a review of the statutory language and a number of applicable court rulings reviewing the failure of a regulated party to provide a required notice or information to the agency. The U.S. Supreme Court’s recent decision in Gabelli, et al., v. SEC, 133 S. Ct. 1216 (2013) was distinguished because it resulted from an SEC enforcement action. With regard to the impact of EPA’s TSCA guidance, the EAB notes that in 1978 EPA published a Policy Statement on Section 8(e) which provided an exemption for “presumptively reportable information” that was corroborative of a well- established adverse effect, and this policy was reiterated in 1991 and 2006. The EAB was persuaded that the Elementis Chromium’s study fit within this administrative exemption.
Anyone having a business relationship with the U.S. Government who believes the Government or one of its representatives has acted, or failed to act in such a manner as to cause harm, should be aware of the restrictions placed on governmental liability by the Federal Tort Claims Act, especially the discretionary function exception to liability as interpreted by the courts.
On July 27, 2015, the U.S. Court of Appeals for the Ninth Circuit affirmed the district court’s dismissal of a lawsuit filed under the Federal Tort Claims Act (FTCA) against the United States and the National Park Service following the death of a visitor to the Olympic National Park in the State of Washington. The case is Chadd v. United States, et al.. A large, wild mountain goat was known by National Park Service personnel to pose a threat to anyone at any time and, in 2010, it fatally attacked a visitor to the Olympic National Park, and only then was it “destroyed.” Continue reading
This is Part VI of VII of a brief recap of some the significant environmental law and administrative cases decided in the past few months:
M. U.S. Court of Federal Claims
Wetlands mitigation banking agreements are subject to the rules of the U.S. Army Corps of Engineers; they can serve a useful public purpose by assisting with the restoration and preservation of waterways subject to the CWA.
On November 21, 2014, the U.S. Court of Federal Claims issued a ruling in the case of Pioneer Reserve, LLC v. United States. The Court of Federal Claims rejected the Government’s argument that Pioneer Reserve’s breach of contract claim should be dismissed because Pioneer Reserve, located in Alaska, which entered into a “mitigation banking agreement” pursuant to the regulations implemented by the Corps of Engineers, did not in fact, have a contract with the federal government. Pioneer Reserve used its pristine land to establish a mitigation bank which will make mitigation credits available under the law (the CWA) to the proponents of development projects that will require compensatory mitigation credits to offset projected environmental damages resulting from the development of the project. A mitigation banking instrument was signed by representatives of Pioneer Reserve and the Corps of Engineers, and Pioneer Reserve then encumbered to parcels of land with appropriate and protective environmental easements. The credits available to developers through the implementation of the mitigation banking agreement would be sold for $79,000 per credit. However, the Corps of Engineers unilaterally and unexpectedly, or so the plaintiff avers, drastically reduced the number of wetlands mitigation credits that could be sold, resulting in a significant financial loss to Pioneer Reserve. Pioneer Reserve filed a breach of contract action in the Court of Federal Claims, seeking damages of $12 million.
The Government argued that the claim should be dismissed, that Pioneer Reserve did not have a contract with the federal government. The Court of Federal Claims rejected this argument, noting that in other cases the Government sought to enforce the terms of a mitigation banking agreement as being an enforceable contract with the federal government. Accordingly, the Court of Federal Claims ruled that Pioneer Reserve alleged sufficient facts to establish the existence of a contract, and the case will proceed. The parties are now involved in the discovery phase of this litigation.
II. Texas Courts
A. Texas Supreme Court
Responding to an inquiry from the U.S. Court of Appeals for the Fifth Circuit, the Texas Supreme Court ruled, in a 5 to 4 decision, that the “coercive nature” of the administrative proceedings employed by EPA under CERCLA’s cleanup and cost recovery provisions amount to a “suit”, and a PRP’s receipt of a CERCLA letter from EPA, inviting the recipient to negotiate with EPA “is effectively a demand”. Moreover, with respect to judicial review, “as a practical matter, courts afford PRPs no hope of relief, and consequently they have no choice but to comply with EPA’s directives”. The case is McGinnes Industrial Maintenance Corporation v. The Phoenix Insurance Company and the Travelers Indemnity Company. Chief Justice Hecht wrote the majority opinion.
This decision was triggered by ongoing cleanup actions taken at the San Jacinto Waste Pits Superfund Site, which is located in Harris County, Texas, in the vicinity of Pasadena, Texas. According to the Court of Appeals, in the 1960’s McGinnes Industrial Waste Corporation dumped pulp and paper mill waste sludge into disposal pits near the San Jacinto River. EPA began investigating possible environmental contamination in 2005, and in 2007 notified McGinnes’ parent company that it was a PRP at the site, and invited the parent to begin negotiating an order for the cleanup of the site, and the reimbursement of EPA’s expenses to date. When McGinnes and its parent failed to respond to these EPA communications, the agency issued a Unilateral Administrative Order (UAO) directing McGinnes to conduct a remedial investigation and feasibility study; a failure to comply with this UAO would expose McGinnes to $37,500 per day in daily penalties, and very costly punitive damages. McGinnes was covered by standard-form commercial general liability (CGL) insurance policies at the time it was “dumping” waste at the site, and it asked for a defense in accordance with the terms of the insurance policy. The insurers refused, arguing that these EPA administrative proceedings were not a “suit” as specified by the policies. McGinnes then sued its insurers in the district court, but the district court agreed with the insurers’ position, granting their motion for summary judgment. On appeal, the Court of Appeals asked the Texas Supreme Court to answer this question: “Whether EPA’s PRP letters/and or administrative order, issued pursuant to CERCLA, constitute a ‘suit’ within the meaning of the CGL policies, triggering the duty to defend?” The Texas Supreme Court answered: “Yes”.
The dissenting justices argued that the Court was in effect rewriting these insurance policies, and described the ruling as a “disturbing decision”.
The Texas Supreme Court issued two significant rulings on June 12, 2015. In the case of Dacus, et al v. Annise Parker, et al., the Court reversed the Court of Appeals for the Fourteenth Circuit, and holds that the 2010 proposed amendment to the Houston City Charter, authorizing the imposition of maintenance fees directly on Houston City residents to finance city street and drainage improvements, did not meet the common law standard “preserving the integrity of the ballot.” The information on the ballot did not inform the voters that they would be subject to these fees; it simply identified the proposed amendment without describing how the funds would be raised. Since 1884, the Texas Supreme Court has required that such propositions be submitted with such definitions and certainly that the voters are not misled. This ruling should provide more clarity and direction to the lower courts. The case was returned to the trial court.
In Harris County Flood Control District and Harris County, Texas v. Kerr, et al., the Texas Supreme Court affirmed the ruling of the Court of Appeals for the First District that the plaintiffs, homeowners residing in the upper White Oak Bayou watershed, raised a “fact question” in their inverse condemnation lawsuit against the defendants. They complain that the county and the flood control district approved new development in their area without mitigating resulting runoff and drainage issues, causing their homes to flood following major storms. The defendants filed a plea to the jurisdiction and a motion for summary judgment, arguing that no genuine issue of fact had been raised on the elements of the takings claim. Both the Court of Appeals and now the Texas Supreme Court, in a 5 to 4 decision, disagreed. Repeated floods in the area spurred some flood control measures that proved to be inadequate and, by 1999, all of the plaintiffs’ homes had been identified by FEMA as being located in the 100 year floodplain. The case was returned to the trial court.
Justice Willett, in dissent, stated that “I fear the Plaintiffs’ theory of takings, which the Court accepts, vastly and unnecessarily expands the liability of government entities”.
On April 24, 2015, the Texas Supreme Court issued an opinion clarifying the evidentiary standards that will govern the application of the Texas Citizens Participation Act (TCPA). The law, writes the Court, was enacted in 2011, and “protects citizens who petition or speak out on matters of public concern from retaliatory lawsuits that seek to intimidate or silence them”. If a lawsuit amounts to an attempt to stifle a defendant’s ability to communicate to the public on a matter of public concern, the trial court’s duty under the TCPA is to dismiss the lawsuit unless the plaintiff’s “prima facie case” is supported by “clear and specific evidence”—a complicated formulation for the courts to administer.
Hydraulic fracturing and its consequences are an important matter of public concern, and lies at the heart of the Court’s unanimous ruling in the case of In Re Steven Lipsky. Steven Lipsky and his wife Shyla own several acres in North Texas, in somewhat close proximity to the hydraulic fracturing operations of Range Resources. They made public complaints about their contaminated well water, for which they blamed the operations of Range Resources Corporation and Range Production Company. In fact, they filed a lawsuit against Range, and alleged that Range was negligent, grossly negligent and that its operations constituted a nuisance. Range then filed a counterclaim, alleging defamation, business disparagement and a civil conspiracy between Shyla Lipsky and an environmental consultant working with her. Both EPA and the Texas Railroad Commission became involved in this controversy, but EPA withdrew its complaint against Range while the Texas Railroad Commission looked into the complaint and could find no link between the hydraulic fracturing operations and the Lipsky’s contaminated well water.
The Lipskys invoked the TCPA to seek dismissal of the counterclaim, which the trial court denied. However, an intermediate state Court of Appeals agreed that the law required the dismissal of the counterclaim. Because the TCPA had been accorded conflicting interpretations by various state courts of appeal, the Texas Supreme Court used this case to clarify the evidentiary standards imposed by the new law. Briefly, the Court held that evidence of clear and specific evidence may be supported by relevant circumstantial evidence, and that meritorious lawsuits cannot be dismissed simply because of a lack of direct, not circumstantial evidence. Applying this standard, the Texas Supreme Court agreed that Range’s allegations against Shyla Lipsky and their consultant must be dismissed, but the separate complaint against Steven Lipsky could proceed to trial. It denied both parties petitions.
This is Part V of VII of a brief recap of some the significant environmental law and administrative cases decided in the past few months:
K. Tenth Circuit
1. Court of Appeals
In an important decision released on May 29, 2015, the U.S. Court of Appeals for the Tenth Circuit rejected the Sierra Club’s and other environmental organizations’ most recent objections to the permitting and construction of TransCanada’s Gulf Coast pipeline. The case is Sierra Club, Inc., et al., v. Bostick, et al. The U.S. Army Corps of Engineers issued letters verifying that the Corps of Engineers’ Nationwide Permit 12, authorized by the CWA, would cover the proposed pipeline. The pipeline has now been constructed and is delivering oil, and covers 485 miles and consists of 2000 water crossings necessitating the use of this permit, which “allows anyone to construct utility lines in U. S. waters ‘provided the activity does not result in the loss of greater than ½ acre of U. S. waters for each single and complete project.” The Court of Appeals noted that the project also required TransCanada to satisfy wetlands mitigation requirements. In challenging the validity of the Nationwide Permit and the verification letters, the plaintiffs argued that the Corps of Engineers violated both NEPA and the CWA.
With respect to NEPA, the Court of Appeals ruled that this argument had been waived, in particular the alleged risk of oil spills, because it has not been raised with the Corps of Engineers during the comment period that was set aside for the submission of such comments. With regard to the CWA, the plaintiffs argued that the Nationwide Permit issued to TransCanada violated the law by authorizing linear projects with substantial environmental impacts and deferring part of the minimal impacts determination to project-level personnel who would be involved in the pipeline project after the Corps of Engineers’ permitting initial authorization had been granted. However, the Court of Appeals held that the environmental groups did not show that the permit authorizes linear projects with more-than-minimal impacts, nor that the Corps of Engineers, allowing for Chevron deference, impermissibly construed the CWA by providing for a partial deferral of the minimal-impact analysis.
2. District Courts
Last November, the U.S. District Court for Utah ruled that the federal government does not have the constitutional authority to regulate the “taking” of the Utah prairie dog—a species located only in Utah—on non-federal land. The species has, however, been listed as an endangered species since 1973. The decision, People for the Ethical Treatment of Property Owners v. U.S. Fish and Wildlife Service, et al., has been appealed to the Tenth Circuit, and the Justice Department has now filed a very comprehensive brief in this matter; the Case No. is 14-4165.
L. Eleventh Court
1. Court of Appeals
On June 15, 2105, the U.S. Court of Appeals for the Eleventh Circuit affirmed the district court’s grant of summary judgment to the USDA in a controversy arising from the USDA’s implementation of the licensing scheme mandated the Animal Welfare Act, 7 U.S.C. §§ 2131 et seq. (AWA). The case is Animal Legal Defense Fund, et al., v. U.S. Department of Agriculture, et al. The USDA’s Animal and Plant Health Inspection Service licenses and enforces the USDA’s AWA regulatory program. The Miami Seaquarium is licensed by the USDA under the AWA, and the plaintiffs have filed repeated complaints with the USDA regarding the Seaquarium’s exhibition and treatment of “Lolita”, a 20 foot long, 7000 pound Orca whale. Lolita has been exhibited daily since September 1970, in a show entitled, “the Killer Whale and Dolphin Show”. Despite the complaints submitted by the plaintiffs about Lolita’s working and living conditions, which they alleged were violative of the USDA’s regulations, Seaquarium’s license was routinely renewed. The Court of Appeals, however, agreed with the USDA that the AWA says nothing about the renewal of a license or what procedures are required to ensure that renewals adhere to the policies of the AWA. Therefore, the USDA’s implementation of a license renewal process, which is almost solely made on an administrative basis, was reasonable and entitled to Chevron deference. Therefore, the Court of Appeals concluded by stating that “we cannot say the USDA violated the AWA by renewing Seaquarium’s license through its purely administrative scheme”.
In the case of GeorgiaCarry.Org v. the U.S. Army Corps of Engineers, decided June 9, 2015, the U.S. Court of Appeals for the Eleventh Circuit affirmed the decision of the lower court to deny a request for a preliminary injunction against the enforcement of the Corps of Engineers’ regulation that prohibits the possession of loaded firearms or ammunition at any of these projects (except in designated hunting and shooting areas) without the written permission of the district commander. The rule is located at 36 C.F.R. § 327.13. The plaintiffs sought a preliminary injunction on the grounds that the enforcement of this regulation violates their Second Amendment rights. The federal property in question is Allatoona Lake, a recreational site managed by the Corps of Engineers around the Allatoona Dam in Northwest Georgia. The district court held that this prohibition did not burden the plaintiffs’ Second Amendment rights as it did not regulate firearms possession within the home, and did not effectively eliminate their ability to bear arms outside the home. In affirming the district court, the Court of Appeals noted that the Corps of Engineers’ firearms regulation only applies to the Corps of Engineers’ property, and the plaintiffs can “freely exercise their right to bear arms whether within the home or on the streets without running afoul of this regulation”. Finally, the Court of Appeals notes that these proceedings only disposed of the request for a preliminary injunction, and does not address any additional issues that may present themselves when the matter of the request for a permanent injunction is litigated.
On March 23, 2015, the U.S. Court of Appeals for the Eleventh Circuit remanded recently-reissued Nationwide Permit 21 (NWP 21) to the Corps of Engineers for reconsideration by the Corps of Engineers’ of its initial environmental determination made pursuant to the CWA and NEPA. The case is Black Warrior Riverkeeper and Defenders of Wildlife v. U.S. Army Corps of Engineers.
The case involves an appeal from the district court’s grant of summary judgment to the Corps of Engineers in a lawsuit challenging the 2012 version of NWP 21, a general permit issued by the Corps of Engineers under its CWA authority to regulate the surface mining discharges of dredge or fill material into navigable waters. This permit has been used by the Corps of Engineers since 1982, and has been reissued several times over the years. The plaintiffs argued that the Corps of Engineers violated both the CWA and NEPA when it determined that NWP 21 would have a minimum impact upon the environment. The district court held that the plaintiffs had standing to prosecute this lawsuit, but their complaint was barred by the seldom-used equitable doctrine of laches and, on the merits, the district court agreed with the Corps of Engineers that its environmental determinations were neither arbitrary nor capricious. However, the Court of Appeals, while agreeing that the plaintiffs had standing, also held that the district court abused its discretion in holding that laches barred this lawsuit; the record disclosed no inexcusable delay in filing this lawsuit given the complex nature of the issues being litigated. In addition, the Court of Appeals held that the district court’s ruling on the merits must be set aside because, on the eve of oral argument before the Court of Appeals, the Corps of Engineers advised the litigants that it had underestimated the acreage of waters that could be affected by projects authorized by NWP 21. Accordingly, the case was remanded to the Corps of Engineers for reconsideration of its initial findings.
One member of the panel filed a partial dissent, observing that in light of these developments, NWP 21 should be vacated or suspended.
2. District Courts
The U.S. District Court for the Southern District of Georgia has ruled that Georgia’s narrative water quality standards were not incorporated into the Georgia NPDES permit issued to Rayonier, Inc. On March 31, 2015, the court decided the case of Altamaha Riverkeeper, Inc. v. Rayonier, Inc., et al. Rayonier, which has been granted an NPDES permit by the Georgia Environmental Protection Division, operates a pulp mill which discharges 50 to 60 millions of gallons of wastewater into the Altamaha River on a daily basis. Altamaha Riverkeeper filed a lawsuit against Rayonier, arguing that this discharge has a negative impact on the river, and that the discharge violates the state’s water quality standards pertaining to color, odor and turbidity. Rayonier’s defense was that the water quality standards were not incorporated into its permit, and the CWA’s “permit shield” provisions shields Rayonier from liability under the CWA. The district court agreed with Rayonier, and granted Rayonier’s motion for summary judgment on the CWA claims. The district court interpreted the permit in accordance with established principles of contractual interpretation, and its careful analysis of the permit language, led the district court to conclude that “as a matter of law, the permit does not incorporate Georgia’s water quality standards” as a condition of its NPDES permit.
State legislation imposing economic conditions that may have an extraterritorial impact outside the state is not, for that reason alone, invalid under the Commerce Clause. Unless the state legislation somehow discriminates in favor of in-state commerce or imposes a significant burden on interstate commerce, it will not be held invalid as a violation of the Constitution’s Commerce Clause.
On July 27, 2015, the U.S. Court of Appeals for the Ninth Circuit considered a claim that California’s Shark Fin Law, which makes it unlawful for any person to possess, sell, offer for sale, trade or distribute a shark fin in the State of California, is preempted by the federal Magnuson-Stevens Fishery Conservation and Management Act (MSA) and also conflicts with the Commerce Clause because it interferes with interstate commerce in shark fins. The case is Chinatown Neighborhood Association, et al., v. Harris. Continue reading
This is Part IV of VII of a brief recap of some the significant environmental law and administrative cases decided in the past few months:
J. Ninth Circuit
In the case of Association of Irritated Residents v. EPA, et al., decided June 23, 2015, the U.S. Court of Appeals for the Ninth Circuit denied a petition for review filed after EPA acknowledged that it had mistakenly approved certain New Source Review (NSR) rules affecting ozone emissions in California’s Central Valley (which includes the San Joaquin Valley) subject to the California State Implementation Plan (SIP), and then corrected this error. In 2003, legislation was enacted in California to amend the California Health & Safety Code, which at that time exempted major agricultural sources from the CAA’s New Source Review (NSR) requirements. The legislation retained regulatory exemptions for certain minor agricultural sources. However, the San Joaquin Valley Unified Air Pollution Control District issued NSR rules that affected all new and modified sources of air pollution, whether major or minor, and they were made a part of the California SIP. The plaintiffs in this case then filed citizen suits against dairy farms that were minor agricultural sources, alleging that they were violating the EPA-approved California SIP rules. California then submitted SIP revisions to EPA, and in 2013, EPA retroactively revised the scope of its 2004 approval, after receiving an interpretation from the California Attorney General that the 2003 state legislation did not give the air pollution control district the authority to apply the 2004 NSR rules to certain minor agricultural sources. EPA cited CAA Section 110(k)(6) as authority to make these changes. The petitioners challenged this action and asked the court to vacate the amended rule (40 C.F.R. § 52.245). However, the Court of Appeals, applying Chevron deference, held that EPA reasonably interpreted the CAA to authorize this retroactive amendment of its 2004 SIP approval. Representatives of several agricultural interests intervened in this case.
On June 8, 2015, the U.S. Court of Appeals for the Ninth Circuit issued a ruling in the case of United States v. Douglas Vance Crooked Arm and Kenneth G. Shane, which involves a criminal prosecution under the Migratory Bird Treaty Act, 16 U.S.C. § 703 (MBTA). The defendants were indicted and convicted of two felony counts under the MBTA following a U.S. Fish & Wildlife Service (FWS) investigation into the unlawful sale of migratory bird feathers (taken from Golden Eagles). The defendants argued that the indictment, to which they entered a conditionally guilty plea, only alleged facts sufficient to support a misdemeanor charge of trafficking in migratory birds in Montana through the sale of eagle feather fans. In response, the Court of Appeals held that the facts alleged in Count I, which charged a conspiracy to kill, transport and offer for sale migratory birds, accurately charged a felony. However, with respect to Count II, which charged the unlawful trafficking in migratory bird “parts”, the allegations supported only a misdemeanor count. At issue was whether the sale of a fan made of migratory bird feathers constituted a sale of the migratory bird itself. Since the relevant provisions of the MBTA were unambiguous, the Court of Appeals was not obliged to apply Chevron deference to FWS’s interpretation of “migratory bird” to include the species’ feathers.
In Alaska Wilderness League, et al., v. Jewell, et al., a decision released on June 11, 2015, the U.S. Court of Appeals for the Ninth Circuit, by a 2 to 1 decision, affirmed the district court’s grant of summary judgments in favor of the Department of the Interior, the Bureau of Safety and Environmental Enforcement (the Bureau) and two Shell Oil entities, Shell Gulf of Mexico, Inc. and Shell Offshore, Inc., with respect to the Bureau’s approval of Shell’s oil spill response plans. These companies were awarded leases to explore for oil in the Beaufort and Chukchi Seas off Alaska’s Arctic coast, and the Court of Appeals noted Shell’s plans have been “waylaid by a variety of legal, logistical, and environmental problems, including multiple lawsuits, the wreck of one of its drilling rigs, and the temporary suspension of drilling activities in the Arctic after the Deepwater Horizon spill”. Indeed at least eight separate challenges to the Shell leases have been heard by the Court of Appeals to date. Several environmental organizations challenged the decision of the government to approve two of Shell’s oil spill response plans, arguing that the approval was arbitrary and capricious in violation of the Administrative Procedure Act.
The majority opinion concluded that the statutory requirements of the CWA’s provisions regarding of the review of offshore oil spill response plans limited the Bureau’s discretion in deciding whether to approve such plans; so long as the applicant’s plan satisfied the CWA, the Bureau’s approval was mandatory and did not trigger a requirement for interagency consultation under the Endangered Species Act (ESA) before approving the oil spill response plans. In addition, the Bureau’s review of the adequacy of Shell’s oil spill response plans was subject to Chevron deference, to which the Court of Appeals acceded. Regarding the complaint that NEPA review of these plans was also short circuited, the Court of Appeals held that since the Bureau’s discretion was limited, ESA consultation and NEPA review were not required. A strong dissent was filed.
On May 21, 2015, in an unpublished opinion, the U.S. Court of Appeals for the Ninth Circuit issued a ruling in the case of People of the State of California and the City of San Diego v. Kinder Morgan Energy Partners, LP, et al. The Court of Appeals affirmed and reversed a number of rulings made by the district court in this case, which involves multi-million dollar claims the plaintiffs are asserting against Kinder Morgan as a result of long-term spills and releases of petroleum products into the soil and groundwater—including an drinking water acquirer—from facilities purchased by Kinder Morgan that are located adjacent to a sports stadium in downtown San Diego. The district court’s summary judgment rulings had eviscerated the plaintiffs’ case, but the Court of Appeals has now revived these claims, holding that summary judgment on the basis of the evidence before the district court was not warranted.
On April 2, 2015, the U.S. Court of Appeals for the Ninth Circuit decided a complex CERCLA contribution cost recovery case in AmeriPride Services Inc. v. Texas Eastern Overseas Inc., a dissolved Delaware corporation. This case involves soil and groundwater contamination at an industrial area of Sacramento, California which resulted from the release of perchloroethylene (PCE), a CERCLA hazardous substance used in a dry cleaning and laundry operations. The owner of the facility merged with Texas Eastern Overseas Inc. (TEO), which assumed its liabilities, while AmeriPride, the plaintiff in this matter, eventually became owner of the property. AmeriPride began a cleanup at the site after its environmental consultant discovered PCE in the soil. The cleanup is still ongoing, now under the direction of a California state agency.
Over the years, several CERCLA cost recovery lawsuits have been filed in connection with this cleanup and offsite contamination that is also linked to the use and release of PCE. AmeriPride entered into large settlements with adjoining landowners totaling over $10 million, and the settlements were approved by the presiding district court. At the same time, AmeriPride’s lawsuit against TEO continued, and in 2011, the district court held that TEO was liable for a considerable share of AmeriPride’s response costs, and this amount was determined by the court to be $7.7 million, taking into account the amount of the separate settlements. Moreover, the district court assigned TEO’s claims against its insurers to AmeriPride, pursuant to California law. On appeal, the Court of Appeals vacated these rulings, holding that the district court erred in not explaining which equitable principles it used in allocating costs. The Court of Appeals held that the district court was not bound to apply either the Uniform Comparative Fault Act or the pro tanto approach of the Uniform Contribution Among Tortfeasors Act, but that the allocation should be made by the district court based on such equitable factors as the district court deems appropriate. Because the district court did not sufficiently explain its reasoning, the Court of Appeals could not determine whether the district court abused its discretion in allocating costs. In addition, the district court erred in not determining how much of the response costs incurred by the adjoining landowners, that were the object of the separate settlements, were consistent with the National Contingency Plan. Lastly, the Court of Appeals held that California law did not permit the trial court to assign TEO’s claims against its insurer to AmeriPride.
This is Part III of VII of a brief recap of some the significant environmental law and administrative cases decided in the past few months:
G. Sixth Circuit
Court of Appeals
On June 2, 2015, the U.S. Court of Appeals for the Sixth Circuit decided the case of Adkisson v. Jacobs Engineering Group, Inc. In December 2008, a coal ash containment dike operated by the Tennessee Valley Authority (TVA) at its Kingston Fossil Fuel Plant failed, spilling approximately 5.4 million cubic yards of coal ash sludge over 300 acres. TVA, an agency of the federal government, responded to this catastrophe in accordance with CERCLA and EPA’s National Contingency Plan. Jacobs Engineering was engaged to serve as the TVA’s prime contractor for remedial project planning, management and oversight. Jacobs Engineering prepared a comprehensive Site Wide safety and Health Plan which addressed such matters as health-hazard monitoring and training. In 2013, several personal injury lawsuits were filed against Jacobs Engineering by former employees who basically alleged that Jacobs Engineering’s negligence and careless conduct exposed them to injuries and emotional distress, for which they are seeking compensatory and punitive damages. The district court dismissed these lawsuits, agreeing with Jacobs Engineering that it was entitled to derivative governmental immunity based on its contractual relationship with a government entity protected by the Federal Tort Claims Act. However, the Court of Appeals disagreed with the reasoning of the district court, and reversed the dismissal and directed the district court to revisit its decision. The Court of Appeals noted that the extent of immunity for government contractors has been debated by the Courts of Appeals, suggesting that the U.S. Supreme Court may want to take another look at some of its rulings in this area.
On May 21, 2015, the U.S. Court of Appeals for the Sixth Circuit reversed the district court’s grant of summary judgment to the State of Ohio and the Buckingham Coal Company in a dispute with the U.S. Army Corps of Engineers regarding the State of Ohio’s ability to lease to Buckingham Coal the right to mine coal lying beneath land acquired several years ago to develop a flood control project. In 1948, the State of Ohio and the U.S. Government entered into a cost-sharing agreement to construct and maintain a dam and reservoir to control flooding in Ohio’s Hocking River Basin. The project required to acquisition of property interests, including subsurface mineral interests. In 2010, Ohio issued mining leases to Buckingham Coal which would impact the lands acquired in 1948, but the Corps of Engineers objected, arguing that the issuance of these leases required the Corps of Engineers’ review and approval. When this objection was rejected, largely on the basis of a 1962 quitclaim deed provided to the State of Ohio by the U.S. Government, the U.S. Government sought a temporary restraining order which the district court denied. The Sixth Circuit, after reviewing these documents and relevant Ohio law, held that the State of Ohio did not have a unilateral right to issue these mining leases. The case is United States v. State of Ohio; Buckingham Coal Company.
The implementation of the U.S. Department of Agriculture’s (USDA) “Swampbuster” program, designed to protect wetlands located on farming property, was the focus of a ruling by the Court of Appeals for the Sixth Circuit. On April 1, 2015, the Court of Appeals decided the case of Maple Drive Farms Limited Partnership, et al., v. Tom Vilsack, Secretary, United States Department of Agriculture. The “Swampbuster” provisions are part of the Food Security Act of 1985, which denies agricultural benefits—which can be substantial—to farmers who convert wetlands or farm converted wetlands. There are exceptions to these restrictions which Nicholas Smith, the owner of Maple Drive Farms, has attempted to utilize by means of administrative appeals and finally a lawsuit challenging the USDA’s implementation of the law and its exceptions. The land in question is located in Michigan, and consists of 50 acres, and only 2.2 acres of this parcel is considered to be wetlands. With the assistance of the USDA, Smith began farming this plot more than fifty years ago, or well before the Food Security Act was enacted. This parcel was drained and successfully farmed until the early 1980’s when the drainage facilities began to deteriorate. After a few false starts, Smith again attempted to drain the land, and filed the appropriate forms with the USDA in 2008. At that time, the USDA’s representatives determined that the 2.2 acre parcel was a wetland, and eventually a “converted wetlands”. This administrative determination triggered the USDA’s complex administrative review procedures which are implemented by local state agricultural agencies with considerable federal oversight. At the end of the day, Smith was denied any relief, and was declared ineligible to receive the statutory benefits because he had farmed converted wetlands. His appeal to the district court was unsuccessful, but the Court of Appeals reversed and remanded the matter to the district court, holding that the proceedings conducted by the agencies of the USDA, described by the Court of Appeals as a “bureaucratic labyrinth” were inconsistent with the USDA’s own regulatory framework, and were arbitrary and capricious.
H. Seventh Circuit
1. District Courts
A significant CERCLA ruling was issued on March 18, 2015 by the U.S. District Court for the Western District of Wisconsin in Northern States Power Company v. The City of Ashland, Wisconsin, Ashland County, Wisconsin, and L. E. Myers Company. Northern States is cleaning up a CERCLA site located adjacent to Lake Superior in Ashland, Wisconsin pursuant to agreements it has entered into with EPA in 2003 and 2012, and it has filed cost recovery lawsuits against the defendants, including Ashland County. Northern States alleges that Ashland County was a former owner of the facility many years ago, and that it was vested with sufficient ownership and control as the result of a tax delinquency. Contemporary newspaper accounts confirmed, for the judge, that Ashland County appears to have played a direct role in the demolition of onsite facilities and the resulting historic releases of hazardous substances, and Ashland County’s request for summary judgment was denied.
I. Eighth Circuit
1. Court of Appeals
In the case of McClung v. Paul, et al., decided June 8, 2015, the Court of Appeals for the Eighth Circuit affirmed the decision of the lower court that the Corps of Engineers’ district commander’s revocation of a federal permit to use the boat dock and concrete steps located on federal property adjacent to the McClungs’ residence in the Greers Ferry Lake, Arkansas area was not arbitrary and capricious. The McClungs received a federal shoreline permit to maintain the boat dock and the concrete steps, which contained a number of permit conditions. One of the conditions, printed on the back of the permit, stated that no vegetation other than prescribed in the permit will be damaged, destroyed or removed”. They also received a mowing permit which indicated the limited area in which vegetation “modification” was permitted. The Corps of Engineers determined that 8400 square feet of federal land had been sprayed with an herbicide, and these actions were determined by the Corps of Engineers’ district commander to be a violation of the permit. Following an administrative appeal, the permit was revoked, and the McClungs challenged this action in federal court, alleging that the revocation was arbitrary and capricious, that the Corps of Engineers’ action ignored the National Environmental Policy Act, 42 U.S.C. § 4321 et seq. (NEPA), and their constitutional due process rights were violated. The Court of Appeals rejected these arguments, holding that the revocation of this permit was not a major federal action triggering NEPA, and since the McClungs had no property rights in the shoreline permits, there could be no due process violation.
In another case, the Missouri Department of Natural Resources (DNR) denied the 2012 application of the Trinity Lutheran Church to participate in a state program that makes state solid waste management funds available to qualifying organizations to purchase recycled tires to resurface playgrounds. This use of recycled tires is described as a “beneficial use of solid waste”. Trinity Lutheran’s application was rejected on the basis of a long- standing provision of the Missouri Constitution which specifically provides that “no money shall ever be taken from the public treasury, directly or indirectly, in aid of any church”. Trinity Lutheran filed a challenge to this decision in federal court, alleging that the rejection of its application, which the DNR ranked 5th of 44 applications received in 2012, violated its rights under both the federal and Missouri Constitutions. Noting that Missouri has a long history of maintaining a very high wall between church and state, the district court dismissed the lawsuit, which the Court of Appeals affirmed in an opinion released on May 29, 2015. The case is reported as Trinity Lutheran Church of Columbia, Inc. v. Pauley, et al. Circuit Judge Gruender filed a partial dissent arguing that Trinity Lutheran sufficiently pled a violation of the Free Exercise Clause and a derivative claim under the Equal Protection Clause. Judge Gruender also noted that “school children playing of a safer rubber surface made from environmentally-friendly recycled tires has nothing to do with religion”.
On April 10, 2015, the Court of Appeals for the Eighth Circuit, in a very important ruling, held that the U.S. Army Corps of Engineers’ Jurisdictional Determination (“JD”) that the property under review was a wetland that constitutes “waters of the United States” and thereby subject to the permitting and enforcement authority of the Corps, can be reviewed by the federal courts on an immediate basis. The case is Hawkes Co., Inc. v. U.S. Army Corps of Engineers, et al. The Court of Appeals’ approach was influenced by the U.S. Supreme Court’s approach in Sackett v. EPA, 132 S. Ct. 1367 (2012), and the Court of Appeals held that this JD was indeed a final agency action subject to judicial review, particularly when the choices confronting a property owner who wishes to develop his property are so unappealing. The Court of Appeals reviewed a long list of federal administrative actions whose serious consequences triggered judicial review, and took issue with the Fifth Circuit’s recent decision in Belle Co., L.L.C. v. U.S. Army Corps of Engineers, 761 F. 3d 383 (2014). The Government’s request for en banc review has been denied.
There’s now a conflict in the circuits, and an appeal to the U.S. Supreme Court may be in the offing.