SCOTUS Update: Environmental and Administrative Law Cases Decided in 2017

The 2016 Term of the U.S. Supreme Court was fairly quiet, perhaps reflecting the fact that with only eight members, the Court needed a working consensus to handle its docket. The Court handed down seventy rulings, but only a few can be described as bearing on environmental or administrative law. A few rulings importantly concerned the operation of federal agencies and their enforcement authorities.

• On March 21, the Court decided National Labor Relations Board v. SW General, Inc. dba Southwest Ambulance. This case concerns the operation and application of the Federal Vacancies Reform Act of 1998 (FVRA). The National Labor Relations Board’s (NLRB) Regional Director, exercising authority on behalf of Lafe Solomon, the NLRB’s acting General Counsel (who served in that capacity for many months without Senate confirmation), filed a complaint against SW General alleging that the ambulance company had committed unfair labor practices. An NLRB Administrative Law Judge (ALJ) agreed, and SW General filed an appeal with the U.S. Court of Appeals for the District of Columbia arguing that the complaint was invalid because the NLRB’s General Counsel could not legally perform the duties of the General Counsel under the restrictions of the FVRA. The Court of Appeals agreed, and vacated the NLRB’s orders. The NLRB then appealed to the U.S. Supreme Court, which has now ruled, in a decision written by Chief Justice Roberts, affirming the decision of the Court of Appeals that Mr. Solomon’s “continued service” violated the FVRA. The Court’s decision is certain to focus the attention of both the Executive Department and the Senate on the necessity of having these important positions filled expeditiously and in compliance with the law to ensure that the machinery of government functions properly.
• On May 30, the Court decided BNSF Railway Company v. Terrell, et al., reversing the Montana Supreme Court. The Montana Supreme Court held that Montana state courts had jurisdiction over two Federal Employers’ Liability Act (FELA) lawsuits filed on behalf of former employees against BNSF Railway Company even though, “while doing business in Montana, [it] was not incorporated in Montana nor did it maintain its principal place of business there.” The Court, in an 8-1 ruling, rejected this interpretation of FELA. As stated by the Court, “FELA does not authorize state courts to exercise personal jurisdiction over a railroad solely on the ground that the railroad does some business in their States.” The plaintiffs did not reside in Montana nor were their injuries related to work performed in Montana and they did not work for BNSF Railway Company in Montana. Nevertheless, the Montana Supreme Court held that local Montana courts could exercise general personal jurisdiction over BNSF Railway Company pursuant to Section 56 of FELA as construed by the court, or pursuant to Montana law which can apply to persons “found within Montana.” With regard to the Montana Supreme Court’s holding that Montana law established jurisdiction simply because BNSF Railway Company is “found within” the state, this argument raises issues as to whether such an exercise of personal jurisdiction “comports with the Due Process Clause of the Fourteenth Amendment.” The Court confirmed that such an assertion would be contrary to a number of important Court precedents.
• On June 5, the Court handed down Town of Chester v. Laroe Estates, Inc., a decision that has some environmental and regulatory takings overtones. In 2001, a land developer, Steven Sherman, paid $2.7 million to purchase nearly 400 acres in the town of Chester, NY. He soon found himself embarked on a journey through the Town’s ever-changing “labyrinth of red tape”, which left him financially exhausted. Several years later, Sherman filed state and federal lawsuits against the Town, and eventually foreclosure proceedings were instituted against him by a local bank. Another property developer, Laroe Estates, took an interest in the property, and attempted to intervene as of right in the litigation to protect its interests in these proceedings. His petition to intervene was denied by the trial court because he did not have Article III standing, a ruling the U.S. Court of Appeals for the Second Circuit reversed, but which has now been sustained by the Court. Justice Alito wrote the unanimous decision.
• In Koresh v. SEC, decided on June 5, a unanimous Court held that 28 U.S.C. § 2462, which applies to “any action, suit or proceeding for the enforcement of any civil fine, penalty or forfeiture, pecuniary or otherwise,” also applies to Security and Exchange Commission (SEC) disgorgement actions. A few years ago, in Gabelli v. SEC, the Court held that Section 2462 applies when the SEC seeks statutory monetary penalties. Both decisions arguably may have application to other federal enforcement actions where the governing statute does not contain a specific statute of limitations. According to the Court, in 2009, the SEC brought an enforcement action against Charles Koresh, whose investment-adviser firms provided investment advice to business development companies, alleging that he violated several securities laws for which “disgorgement” was an appropriate remedy. The jury determined that Koresh misappropriated $34.9 million, and the U.S. Court of Appeals for the Tenth Circuit agreed that a disgorgement judgment in the amount of $34.9 million was appropriate (as well as a civil penalty and prejudgment interest). Koresh argued that the disgorgement action was subject to Section 2462’s five year statute of limitations, and the Court agreed, reversing the Court of Appeals. The Court held that: (a) the SEC disgorgement action was a “penalty”; (b) triggering Section 2462; and (c) insofar as the action was commenced in October 2009, the five-year statute of limitations applied.
•  On June 23, the Court decided a vexing regulatory takings case, Murr, et al., v. Wisconsin, et al. This was a 5 to 3 ruling, with Justice Kennedy writing the majority opinion, holding that there had been no regulatory taking of the plaintiffs’ property. The plaintiffs owned adjacent lots in Troy, Wisconsin, and contended that local government regulations “took” their property by enacting and enforcing burdensome regulations that forbade the property’s development as separate sites because of their substandard size as defined by these local rules. The owners filed a lawsuit in Wisconsin state court, alleging a regulatory taking, but the Wisconsin courts denied relief. The Court then granted certiorari. Justice Kennedy noted that the hallmark of the Court’s regulatory takings jurisprudence has been “flexibility”, and that no single condition or factor can supply the exclusive test for determining the “denominator” –the parcel of land that is subject to the takings claim–in the formula that is used to determine whether a forbidden “taking” has occurred. Consequently, the Court fashioned a new test, based on a number of factors to measure a “takings claim”, rejecting any calls for the Court to adopt a more formalistic rule.
• On June 26, the Court decided California Public Employees’ Retirement System v. ANZ Securities. In a 5 to 4 ruling, written by Justice Kennedy, the Court held that the filing of a putative class action under the federal securities laws does not toll the statute of repose established in Section 13 of the Securities Act of 1933. Section 13 was determined to be a statute of repose, consistent with the Court’s 2014 decision in a Superfund case, CTS Corp. v. Waldburger, which discussed the differences between statutes of limitations (which may be tolled) and statutes of repose, which may not. The time bar in Section 13 of the Town of Chester, NY, v. Laroe Estates, Inc. gives the defendant a “complete defense” to any suit after a certain period.
• In Trinity Lutheran Church of Columbia, Inc. v. Comer, also decided on June 26, the Court reversed the U.S. Court of Appeals for the Eighth Circuit, which had held that the Missouri Department of Natural Resources was correct in its determination that the church could not participate in a state-run recycling program because of its religious status and the controlling provisions of Missouri’s State Constitution. Trinity Lutheran sued the Department in federal court, arguing that the Department’s failure to grant its application (it ranked fifth out of 44 applicants) violated the church’s rights under the Free Exercise Clause of the First Amendment to the Constitution. The lower courts had ruled that the Free Exercise Clause did not compel the State to disregard the “anti-establishment” principles of the Missouri Constitution. The Supreme Court, in a 7 to 2 decision written by the Chief Justice, held that Trinity Lutheran’s exclusion from this state recycling program, “solely because it is a church, is odious to the Constitution…and cannot stand.”
• Also on June 26, the Court, in New Mexico v. Colorado, denied the State of New Mexico’s request to file a bill of complaint against the state as a result of the damages suffered by the State of New Mexico and its residents from the Gold King Mine spill that released thousands of gallons of hazardous substances from a remedial Superfund cleanup. New Mexico asserted claims based on the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA or Superfund), Resource Conservation and Recovery Act (RCRA), and common law nuisance violations.

With a full complement of Justices, the 2017 Term of the Court promises to be especially interesting to lawyers who follow environmental law and developments in administrative law:

• When the Court recessed, it had not decided how to dispose of two original cases involving disputes between adjacent states over access to surface waters and groundwater. These cases are Florida v. Georgia and Mississippi v. Tennessee. In both cases, the Court appointed Special Masters to investigate these claims and file appropriate reports.
• The Court will hear oral argument in National Association of Manufacturers v. Department of Defense, a Clean Water Act (CWA) case on October 11, 2017. At issue is which court – a U.S. District Court or U.S. Court of Appeals – has jurisdiction to hear a petition to review the June 2015 rule jointly promulgated by the Environmental Protection Agency (EPA) and the Department of Defense (DOD) with respect to the CWA’s definition of “Waters of the United States”. In addition, it is likely that the Court will be asked to resolve a circuit split regarding the legal status of federal ALJs: are they subject to the Appointments Clause, or are they inferior officers that do not require Senate confirmation? The U.S. Court of Appeals for the Tenth Circuit and U.S. Court of Appeals for the District of Columbia have issued conflicting rulings. On June 26, the DC Circuit, in an equally divided vote, refused to review its decision upholding the constitutionality of the current system in the case of Lucia v. SEC.

Photo: Enokson, Environment – Creative Commons