Articles Posted in Environmental

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This is Part I of VII of a brief recap of some the significant environmental law and administrative cases decided in the past few months:

I.  FEDERAL COURTS

A.  Supreme Court

The U.S. Supreme Court, on June 29, 2015, in a 5 to 4 ruling, held in Michigan v. EPA, that EPA, when deciding whether it was appropriate and necessary to regulate Hazardous Air Pollutants (HAP) such as, for instance, mercury and other toxic pollutants emitted from electric utility power plants, must consider the costs of compliance at this stage of the rulemaking proceedings. Continue Reading ›

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In Gunpowder Riverkeeper v. FERC (where Columbia Gas Transmission, LLC was an Intervenor), the U.S. Court of Appeals for the District of Columbia Circuit denied Gunpowder Riverkeeper’s petition seeking a review of FERC’s issuance of a conditional certificate for public convenience and necessity granted by FERC to Columbia Gas Transmission to extend a natural gas pipeline in Maryland pursuant to FERC’s s authority under the Natural Gas Act (NGA).  Gunpowder Riverkeeper is described by the Court of Appeals as an association of individuals who “work, live, and recreate along the Gunpowder River and its tributaries” who are concerned with the power of eminent domain conveyed to Columbia Gas under Section 7 of the NGA to secure rights-of-way.  Continue Reading ›

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In National Association for Surface Finishing v. EPA, the U.S. Court of Appeals for the District of Columbia Circuit upheld EPA’s 2012 revision of its Clean Air Act (CAA) emissions standards for hexavalent chromium.  The new rule imposes more stringent emissions limitations than the former rule required, and mandates the phase-out of a category of fume suppressant containing a toxic compound.  These new emissions limits were a reversal of sorts for EPA, which in 2010 indicated that the data reviewed by it at that time did not warrant further tightening of the standard.  Various environmental organizations, opposing the new limitations, argued that the technology review required by the CAA compelled EPA to impose a new “maximum achievable control technology” (MACT) floor, but the Court of Appeals, deferring to EPA and its expertise, rejected this argument.  According to the Court of Appeals, EPA “provided a transparent, reasoned explanation of its decisions, considering all relevant information in the record”  Moreover, the “statute does not mandate a particular method of cost-benefit analysis”.  The industry association’s arguments were similarly found unpersuasive.  The Court of Appeals found that, when EPA shifted its position in 2010, it was reasonable because it had before it new data relevant to the decision at hand.

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On July 20, 2015, the U.S. Court of Appeals for the Fifth Circuit again turned aside a challenge to the State of Texas’ “flexible permit” program, which is reserved for Clean Air Act permitting of minor sources of air pollution.  The program has been in effect since 1994, but a 2010 EPA disapproval of the Texas State Implementation Plan (SIP) was appealed to the Fifth Circuit, which reversed the EPA’s determination.  See Texas v. US EPA, 690 F. 3d 670 (5th Cir. 2012).  EPA thereafter conditionally approved the Texas State Implementation Plan (“SIP”) and the flexible permit program, but a group of citizen/environmental groups challenged the EPA’s approval.  Concluding that “our earlier opinion controls here”, the court held that the EPA’s action was not arbitrary, capricious, an abuse of discretion or otherwise not in accordance with the law; “to the contrary, it was explicitly in accordance with the law set out in our 2012 opinion”.  The case is Environmental Integrity Project, et. al. v. EPA.

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In the case of Energy Future Coalition, et al. v. EPA, decided July 14, 2015, the D.C. Circuit Court of Appelas rejected a challenge to 2014 EPA rules regulating emission testing requirements for new motor vehicles– 40 C.F.R. § 1065.701(a). The rule requires that a “test fuel” be used by the manufacturers that is “commercially available”. The petitioners, representatives of biofuel producers whose fuel contains 30% ethanol, complain that since their fuel is not designated as being “commercially available” by EPA, the rule adversely affects them and is arbitrary and capricious. The Court of Appeals rejected this challenge because EPA’s rules were simply reflecting the statutory scheme enacted by the Congress.

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In a ruling issued July 13, 2015, the U.S. Court of Appeals for the Tenth Circuit affirmed the decision of the lower court dismissing the claim of the Energy and Environment Legal Institute (EELI) that Colorado’s renewable energy mandate, as approved by Colorado voters, violates the “dormant commerce clause” of the U.S. Constitution. The case is Energy and Environment Legal Institute, et al., v. Epel, Tarpey, Patton, Commissioners of the Colorado Public Utilities Commission.

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The Third Circuit Court of Appeals has unanimously affirmed the lower court’s ruling that the Chesapeake Bay “total maximum daily load” (TMDL), developed over many years to address pollution in Chesapeake Bay, was consistent with the Clean Water Act (CWA) and the U.S. Constitution’s division of powers between the states and the federal government. The case is American Farm Bureau Federation, et al., v. EPA, et al.

In 2010, EPA published the TMDL for nitrogen, phosphorus and sediment that can be released into Chesapeake Bay. The Bay’s watershed consists of 64,000 square miles and contains tens of thousands of lakes, rivers streams and creeks all flowing into the Bay. It has a surface area of 4500 square miles and almost 12,000 miles of shoreline, and it is estimated that by 2030, 20 million people will live in the watershed–by any measure, this TMDL–and the environmental problems it confronts–is very significant. Many trade associations, led by the American Farm Bureau Federation, have argued that all aspects of the Chesapeake Bay TMDL, which go beyond the tally of the allowable sum of pollutants that the Bay can safely absorb every day, exceeds the scope of EPA’s authority under the CWA. Moreover, they argue that EPA’s actions will have the effect of unlawfully intruding upon the states’ traditional role in regulating land use. However, this latter argument has not been successful with the states immediately involved with the TMDL–Virginia, West Virginia, Maryland, Delaware, Pennsylvania and the District of Columbia–that ceded authority to EPA to devise this plan, nor with the District Courts or the Court of Appeals.

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In the case of Michigan, et al., v. EPA, decided June 29, 2015, the U.S. Supreme Court, in a 5 to 4 ruling, held that EPA, when deciding whether it was appropriate and necessary to regulate Hazardous Air Pollutants (HAP), such as mercury and other toxic pollutants emitted from electric utility power plants, must consider the costs of compliance “at this stage” of the rulemaking proceedings.

In its 2012 rulemaking, EPA excluded any consideration of costs when deciding it was “appropriate”–as required by the Clean Air Act (CAA), 42 U.S.C. § 7412(n)(1)(A)–to impose the requirements of these new rules on these utilities. In the 1990 amendment to the CAA, EPA was directed by Congress to develop National Emission Standards for Hazardous Air Pollutants, but it also established a “unique procedure” to determine the applicability of the HAP program to fossil-fueled power plants. EPA was accordingly directed to perform a study of the hazards to public health reasonably anticipated to occur as a result of emissions by power plants of HAP pollutants after the imposition of the requirements of the law. This study was completed in 1998. However, EPA also determined that it was free to interpret the term “appropriate” so as to allow the agency to ignore the consideration of costs when it made the initial decision to regulate.

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On June 30, 2015, the U.S. Court of Appeals for the Fifth Circuit affirmed the trial court’s decision to grant Kurt Mix, a former BP engineer, a new trial after it was discovered that the jurors had been exposed to extrinsic evidence bearing on the general prosecution of BP employees in the wake of the Deepwater Horizon oil spill. The case is United States of America v. Mix.

Mix was involved in efforts to calculate the amount of oil flowing from the Macondo well, the site of the Deepwater Horizon accident, and developing plans to staunch the flow of oil into the Gulf of Mexico. He was charged with obstruction of justice for deleting text messages between himself and his supervisor related to, the Government alleges, the flow rates. Mix was acquitted on one charge and convicted on the other charge. His counsel, without the permission of the court, contracted the jurors to “obtain feedback about the defense’s failed trial strategy”, and they learned that the forewoman of the jury reported to some of her fellow jurors that she overheard a conversation in a courthouse elevator that other BP employees were being prosecuted in the wake of the spill.

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Responding to an inquiry from the U.S. Court of Appeals for the Fifth Circuit, the Texas Supreme Court ruled Friday, in a 5 to 4 decision, that the “coercive nature” of the administrative proceedings employed by the Environmental Protection Agency (EPA) under Comprehensive Environmental Response, Compensation, and Liability Act’s (CERCLA) cleanup and cost recovery provisions amount to a “suit”, and a potentially responsible party’s (PRP) 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, in the 1960’s McGinnes Industrial Waste Corporation (McGinnes) 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 company 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 company failed to respond to these EPA communications, EPA issued a Unilateral Administrative Order (UAO) directing McGinnes to conduct an 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 a 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 are not a “suit,” as specified by the policy. McGinnes then sued its insurers in federal court, but the court agreed with the insurers’ position, granting their motion for summary judgment. On appeal to the Fifth Circuit, that Court of Appeals asked the Texas Supreme Court to answer the 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” — to which the Texas Supreme Court answered: “Yes”.

Dissenting justices Boyd, Johnson, Guzman and Lehrmann argued that the Court was, in effect, rewriting these insurance policies, and described the ruling as a “disturbing decision”.