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Environmental Case Law Update (March – June 2015) ~ Part III

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.