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On August 14, two U.S. Court of Appeals released decisions regarding the interplay between environmental law and the federal tax code.

In the case of Green Gas Delaware Statutory Trust, et al. v. Commissioner of IRS. The Court of Appeals for the District of Columbia Circuit affirmed the ruling of the Tax Court that the appellants could not claim federal tax credits connected with the generation and sale of “landfill gas” that is produced from decomposing landfill waste. Chief Judge Garland’s opinion begins with

Rumpelstiltskin could spin straw into gold. Rumpelstiltskin, Inc. thought it could do the same for garbage, spinning it into tax credits. The Commissioner of the Internal Revenue Service disagreed. So did the Tax Court. So do we.

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The U.S. Environmental Protection Agency (EPA) recently released its Superfund Task Force Recommendations 2018 Update (the Update). The Superfund Task Force was established by former EPA Administrator Scott Pruitt to “provide recommendations on an expedited timeframe on how the agency can restructure the cleanup process, realign incentives of all involved parties to promote expeditious remediation, reduce the burden on cooperating parties, incentivize parties to remediate sites, encourage private investment in cleanups of sites and promote the revitalization of properties across the country.” Over the years, thousands of sites have been listed on EPA’s National Priority List (NPL) of Superfund sites, but the process by which listed sites are cleaned up and finally removed from the NPL has been agonizingly slow. The process is governed by the National Contingency Plan rules. The Update states that, as of July 3, 2018, there are 1,346 sites listed on the NPL, and overall, 399 sites have been removed from the NPL.

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Within the past few weeks, the U.S. Court of Appeals for the Fourth Circuit has issued some very significant rulings regarding the construction of new natural gas pipelines. These cases are Berkley, et al. v. Mountain Valley Pipeline, LLC, decided July 25; Sierra Club, Inc., et al., v. U.S. Forest Service, The Wilderness Society, et al., v. U.S. Forest Service, and Sierra Club, Inc. et al. v. U.S. Department of the Interior, decided July 27, 2018; and Sierra Club v. U.S. Department of the Interior and Defenders of Wildlife, et al., v. U.S. Department of the Interior, decided August 6, 2018. The first two cases involve the Mountain Valley Pipeline, and the last case involves the Atlantic Coast Pipeline.

The Federal Energy Regulatory Commission (FERC) has issued Certificates of Public Convenience and Necessity to these pipelines, but since the construction and operation will require various federal permits and authorizations, these federal regulatory actions are frequently being challenged in the courts. Continue reading

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Today, our colleagues Alex Ginsberg, Glenn Sweatt and Kevin Massoudi published their Client Alert on a recently issued Special Inspector General for Afghanistan Reconstruction (SIGAR) Report that finds over $15 billion in waste, fraud and abuse. In New SIGAR Report Identifies “Waste, Fraud and Abuse” in Afghanistan, our colleagues identify key takeaways from the Report include:

  • The Report reviewed public spending for Afghanistan reconstruction efforts and identified at least $15.5 billion in waste, fraud and abuse.
  • The Report specifies that “fraud” accounts for less than 1% of this figure.
  • The Report confirms that over 99% of the findings in the recent audit were characterized as “waste.”
  • Further regulatory and enforcement actions may result  for contractors that perform contracts in this region.

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On July 25, the U.S. Court of Appeals for the Third Circuit decided the case of Adorers of the Blood of Christ v. FERC, and affirmed the order of the U.S. District Court for the Eastern District of Pennsylvania dismissing the complaint.  The Court of Appeals held that

A Religious Freedom Restoration Act (RFRA)” cause of action, brought by invoking a court’s general federal question jurisdiction, does not abrogate or provide an exception to a specific and exclusive jurisdictional provision prescribing a particular procedure for judicial review of an agency’s action.”

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On July 31, the U.S. Court of Appeals for the Sixth Circuit decided the case of Jones Brothers, Inc. v. Secretary of Labor, et al., another decision involving the authority of a federal administrative law judge to decide a regulatory controversy. In order to reach this argument, the Court of Appeals had to be certain that it had jurisdiction to hear it, that the Jones Brothers had not forfeited their right to make this constitutional argument to the Court of Appeals. After an exhaustive review of the Federal Mine Safety and Health Act, the Court of Appeals concluded that it was empowered to review the appointments issue. Accordingly, the Federal Mine Safety and Health Review Commission’s (Commission) decision was vacated, and the Jones Brothers are now entitled to a new hearing before a different judge.

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On July 23, 2018, the U.S. Court of Appeals for the Second Circuit decided the case of Cooling Water Intake Structure Coalition v. EPA. Environmental conservation groups and industry associations petitioned for review of a final rule promulgated by the U.S. Environmental Protection Agency (EPA) pursuant to section 316(b) of the Clean Water Act (CWA), establishing requirements for cooling water intake structures at existing facilities. Denying the petitions for review, the Court of Appeals summarized:

“Because we conclude, among other things, that both the Rule and the biological opinion are based on reasonable interpretations of the applicable statutes and sufficiently supported by the factual record, and because the EPA 3 gave adequate notice of its rulemaking, we DENY the petitions for review.”

This is a significant CWA and Endangered Species Act (ESA) decision involving the operation of major industrial facilities requiring the daily use of large amounts of water taken from adjacent bodies of water.

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Maryland’s “Disclosing Sexual Harassment in the Workplace Act” goes into effect on October 1, 2018, creating new potential liability and obligations for employers. Our colleagues Jean Kuei and David Grossman recently published their Client Alert titled Maryland Employers Face New Sexual Harassment Disclosure Obligations, identifying key takeaways from the new law:

  • The Act invalidates any employment contract or policy that waives an employee’s right to sue in court for sexual harassment or retaliation.
  • The Act also requires employers with more than 50 employees to submit a report detailing settlements of any sexual harassment claims.
  • Employers may not take any adverse action against an employee who refuses to sign an agreement that requires mandatory arbitration of sexual harassment claims.

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On July 19, the U.S. District Court for the Southern District of New York decided the case of City of New York v. BP P.L.C., et al., granting the defendants’ motion to dismiss and dismissing the City of New York’s amended complaint. The amended complaint alleged three causes of action:  (1) public nuisance; (2) private nuisance; and (3) trespass, and sought compensatory damages and an equitable order ascertaining damages and granting an injunction to abates these injuries, which would not, however, take effect unless the defendants failed to pay court-determined damages.

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Unlike other Terms, only a handful of cases addressed administrative and environmental law issues in the U.S. Supreme Court’s 2017-2018 Term. However, the next Term of the Court promises to be more active in these areas.

  • On January 22, 2018, the Court issued a unanimous opinion in the Clean Water Act (CWA) case, Nat’l Assoc. of Mfrs. v. Dep’t of Defense, holding that the plain language of the CWA requires the appeal of the Environmental Protection Agency’s (EPA) redefinition of “waters of the United States” (WOTUS Rule) must be heard first in the federal district courts. Whereas all appeals of most EPA CWA effluent limitation rules must be heard in the federal Courts of Appeals, Congress chose not to do this with respect to this definitional rule.

The Court points out that reviews in the Courts of Appeals must take place within 120 days of the rule’s promulgation, but any review of a rule in the federal district court must take place within 6 years of the date the claim accrues.

The Sixth Circuit was without jurisdiction over this direct appeal.

The Court also notes (in Justice Sotomayor’s opinion) that the administrative actions regarding the WOTUS rule issued by the new administration did not moot this appeal.

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