Articles Posted in Environmental

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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”.

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In the case of Association of Irritated Residents v. EPA, decided June 23, 2015, the 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 California’s State Implementation Plan (SIP), and then corrected this error.
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An important Fifth Amendment Takings Clause case was decided today. The U.S. Supreme Court, by reversing the Ninth Circuit, has terminated the decades-old litigation over the Department of Agriculture’s administration of the California raisin “marketing order.” The case is Horne, et al. v. Department of Agriculture.
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The U.S. Supreme Court will not hear an appeal of the Fifth Circuit’s decision which reversed the lower court’s ruling. The Fifth Circuit found that the State of Texas had violated the Endangered Species Act in its administration of the state water permitting program which allegedly denied adequate amounts of fresh water at the Aransas, Texas Whooping Crane preserve. The case is Aransas Project v. Shaw.

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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 judgment of the Court of Appeals of the Fourteenth Circuit, and held that the 2010 proposed amendment to the Houston City Charter, authorizing the imposition of maintenance fees directly on 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 Court has required that such propositions be submitted with such definitions and certainly that the voters are not misled. Today’s ruling should provide more clarity and direction to the lower courts. The case has been returned to the district court.
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