Articles Posted in Environmental

The Texas Supreme Court confirmed that it will hear oral arguments in McGinnes Indus. Maint. Corp. v. The Phoenix Ins. Co., et al., No. 13-20360, case on January 15, 2015. The issue was certified to the Texas Supreme Court by the Fifth Circuit Court of Appeals on June 11, 2014. The Court will decide whether, under Texas law, an EPA order to clean up a site is a “suit” triggering an insurer’s duty to defend. A trial in which the companies’ liability to pay civil penalties to Harris County was litigated, concluded a few weeks ago, with mixed results.

As described by the Fifth Circuit Court of Appeals in an unpublished opinion (issued June 11, 2014), McGinnes is in the waste disposal business. In the 1960s, McGinnes removed waste from a paper mill and released the waste into three ponds located in Harris County, Texas, adjacent to the San Jacinto River. During that time, McGinnes was covered by commercial general liability (GCL) insurance policies which required the insurers to defend its insured in any “suit” (an undefined term in the policies) seeking damages on account of property damage. Many years later, EPA sent a series of CERCLA notice letters to Waste Management, McGinnes parent company, including a Unilateral Administrative Order ordering McGinnes to conduct a remedial investigation and feasibility at what became known as the San Jacinto Waste Pits Superfund Site. Failing to comply with the Order would subject McGinnes to substantial civil penalties. McGinnes then notified its insurers of these demands, and requested that they provide a defense in accordance with the terms of the insurance policies. Travelers refused to defend, arguing that no “suit” had been filed. McGinnes then filed a lawsuit against the insurers in the US District Court for the Southern District of Texas, seeking over $2 million in attorney’s fees as well as a declaratory judgment that Travelers was required to provide a defense to the EPA actions. However, the District Court granted the insurers motion for summary judgment, determining that the EPA CERCLA action was not a suit triggering the duty to defend. It based its decision on the fact that when the policies were issued in the 1960s and 70s when “this sort of administrative bullying did not exist.” McGinnes appealed the order to the Fifth Circuit Court of Appeals.

The Fifth Circuit, realizing there was no controlling Texas precedent to guide it in deciding “an important question of Texas law, for which there is no controlling Texas precedent”, certified a question of law to the Texas Supreme Court, asking whether the EPA’s PRP letters and/or unilateral administrative order received by McGinnes constitute a “suit” within the meaning of the GCL policies, triggering a duty to defend. The appeal was filed on June 11, 2014.

Additional Sources: Houston * Chronicle, Science & Environment, Settlements, split verdict yield murky result in waste pit case (Nov. 13, 2014); HoustonPress, Blogs, Two Companies Settle Over San Jacinto River Waste Pits, Jury Clears Lone Holdout of Liability (Nov. 14, 2014); Texas Supreme Court’s Case Information, McGinnes Indus. Maint. Corp. v. The Phoenix Ins. Co., et al., No. 14-0465

It’s not over until it’s over. The State of Alaska was recently given another opportunity to challenge the U.S. Forest Service’s 2001 “Roadless Rule,” a rule that prohibits the construction and repairs of roads and timber harvesting on millions of acres in the national forests. The case is State of Alaska v. U.S. Department of Agriculture, et al. On November 7, 2014, the D.C. Circuit Court of Appeals reversed the District Court’s dismissal of the State of Alaska’s challenge to the Forest Service’s January 2001 “Roadless Rule,” a rule repealed by the Forest Service in 2005 and reinstated by the District Court for the Northern District of California in a decision issued in 2006, California ex rel. Lockyer v. U.S. Department of Agriculture, 459 F. Supp. 2d 874, 916 (N.D. Cal. 2006) (court reasoned that the elimination of a major nationwide land management program would be sufficient to trigger environmental analysis, rejecting the Department of Agriculture’s argument that replacing the Roadless Rule was a paper exercise).

In 2011, the State of Alaska filed a challenge to the reinstated 2001 “Roadless Rule.” The District Court for the District of Columbia dismissed the action as being untimely filed under 28 U.S.C. § 2401. The Forest Service argued that the State of Alaska’s challenge was out of time because, according to the Forest Service, Alaska’s right of action accrued in 2001 when the 2001 Roadless Rule was issued. On appeal, the Court of Appeals held that “[t]he fundamental problem with the Forest Service’s argument is that the Forest Service repealed the Roadless Rule in 2005. The Forest Service’s 2005 repeal of the Roadless Rule extinguished the right of action that had accrued in 2001.” It further held that the 2006 action of the California District Court effectively resulted in the issuance of “a new rule identical to an old repealed rule” being issued, and created a new right of action “accrued”; “[t]he Forest Service concedes that a new right of action would have accrued in 2006 if the agency acting on its own had issued the new rule.” Accordingly, the Court of Appeals held that the ability of the State of Alaska to file this lawsuit was revived, and its lawsuit is timely. It cited to the “reopener” doctrine, a doctrine “giving rise to a ‘new right of action’ even though the regulation challenged is no different,” citing Sendra Corp. v. Magaw, 111 F.3d 162, 167 (D.C. Cir. 1997). The case was remanded to the District Court for consideration of the State of Alaska’s challenges to the reinstated rule.

Many construction projects are subject to the federal Clean Water Act and its regulation of the discharge of pollutants into the navigable waters of the United States, which the law defines simply as the “waters of the United States”. This definition drives the scope of federal jurisdiction in numerous areas. The EPA and the U.S. Army Corps of Engineers have significant regulatory responsibilities under the Clean Water Act, and these agencies are now proposing to revise the current definition of this very important term.

Today, Pillsbury attorneys Anthony Cavender, Brad Raffle, Wayne Whitlock and Amanda Halter published their advisory titled Oil and Water: Proposed Redefinition of Waters of the U.S. Has Significant Implications for Domestic Operations. The Advisory discusses the EPA and U.S. Army Corps of Engineers announcement of a new Nov. 14, 2014 deadline to submit comments to its much-debated redefinition of the term “Waters of the United States.” The extension, several related legal and regulatory developments since this proposed rule was published in April, and now the results of the election, make this an opportune time to reassess the impact this redefinition will have on domestic operations, including, in particular, oil and gas operations and activities, during a period of extraordinary domestic growth.

If you have any questions about the content of this blog, please contact the Pillsbury attorney with whom you regularly work or Anthony Cavender, Brad Raffle, Wayne Whitlock or Amanda Halter, the authors of this blog.

On July 16, 2014, the U.S. District Court of the District of Maryland issued an important Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et seq. (RCRA), ruling in the case of Sherrill, et al. v. The Mayor and the City Council of Baltimore, 2014 WL 3555956. The City of Baltimore has taken steps to revive and remediate a waterfront property that was the site of a former chemical manufacturing plant. It is conceded that spills and releases of hazardous substances and hazardous wastes have contaminated the site, but the City has entered into an agreement with a casino operator to construct a casino on the property. The matter has been very controversial, causing the plaintiffs in this lawsuit to file a citizen suit under Section 6972 of the RCRA alleging that contaminants are migrating off the property and polluting adjacent properties.

The site was placed by the city into Maryland’s Voluntary Cleanup Program, which required that the City develop adequate cleanup plans. The owner and operator of the proposed casino agreed to take over some of the cleanup operations, and has in fact undertaken waste extraction and removal actions. In connection with the cleanup, the casino operator also ensured that any storm water wastewater discharges were covered by the Maryland General Construction Storm Water Permit, which incorporated the cleanup plans.

The District Court held that this Clean Water Act (CWA) storm water discharge permit triggered the “anti-duplication” provisions of the RCRA and therefore shielded the casino operator from any RCRA liability, and these claims were dismissed. In addition, the claims against the City of Baltimore and the owner of the former chemical plant were also dismissed because the court held that those allegations were insufficiently pled. In effect, this decision expands the CWA permit shield to allegations of RCRA violations.

An appeal has been filed with the 4th Circuit.