This is a review of initial Supreme Court and Federal Appeals Courts oral arguments and other matters in October 2022.
Oral Arguments at the Supreme Court
Michael Sackett, et ux., v. Environmental Protection Agency
The Supreme Court’s 2022 term began on October 3, 2022, with this important oral argument. For many years, the petitioner has encountered EPA opposition to the construction of a home on his property located near a lake in Idaho. The agency insists that the land is subject to federal regulatory jurisdiction, in that a Clean Water Act permit will be needed before work can proceed. Several courts have already weighed in on this issue; whether the land in question is considered a regulated “wetlands” pursuant to the “significant nexus” test developed by the Court in the Rapanos case decided in 2006. The oral argument was fairly long and spirited. The justices appear to believe that the “significant nexus” is unworkable because in many instances it provides little or no guidance to landowners as to whether their property may be subject to federal jurisdiction, and thus subject to civil and even criminal penalties. Justice Kavanaugh remarked that “this case is going to be important for wetlands throughout the country and we have to get it right.” Later, Justice Gorsuch lamented the fact that implementing a test for federal jurisdiction under the Clean Water Act test is so difficult to apply: “If the federal government doesn’t know [if a property is adjacent to navigable water and is regulated,] “does a reasonable landowner have any idea.” The issue is very difficult to resolve, and the Congress has indicated that is has no interest in entering this regulatory thicket.
National Pork Producers Council et al. v. Karen Ross, et al.
On October 11, 2022, the Court heard oral argument in a Commerce Clause case. California voters approved Proposition 12, which arguably has the effect of regulating how pork is produced nationwide through California’s preferred farming methods (strict confinement restrictions) although only a very small percentage of pork is produced in California. According to an amicus brief filed by the U.S. Chamber of Commerce, “If Proposition 12, stands, California and other States commanding large market shares will be able to impose their notions of sound public policy on the people of other States through important restrictions and trade boycotts.” Such a result is antithetical to the interests served by the Commerce Clause. An older case, Pike v. Bruce Church, 397 US 137 (1970) has for many years been the court’s venerable balancing test that has usually been applied to such claims. Proposition 12 also reflects California’s “moral judgment” on how pork is produced, a judgment that may not be shared by other pork-producing states. The decision of the Court could arguably have an impact on national regulatory issues, such as ESG policy, so there has been a lot of attention focused on this case.
Greenhouse Gas Litigation
The Court has also asked the Solicitor General to provide the Government’s views on an appeal from the Tenth Circuit regarding greenhouse gas litigation filed in the state courts. Many energy companies argue that these cases should be removed to the federal courts, but so far, the federal appeals courts, construing the recent Supreme Court ruling in BP plc v. Mayor and City Council of Baltimore, 141S Ct 1532 (2021) have resisted this invitation. Th energy companies argue the issue of greenhouse gas emissions and alleged climate change damages should cause the “federal common law” to be invoked.
FEDERAL COURTS OF APPEAL
The Fifth Circuit
Spring Branch Wildlife Preserve, et al. v. U.S. Environmental Protection Agency, et al.
On October 17, 2022, in an unpublished opinion, the court affirmed the lower court’s dismissal of the plaintiffs’ request that the court grant them a declaratory judgement regarding the applicability of the Clean Water Act to their properties. The trial court held that it could not proceed because of a lack of subject matter jurisdiction. The plaintiffs failed to challenge any final agency action that would be reviewable under the Administrative Procedure Act and did not request a jurisdictional determination of the applicability of the Act in this matter. Consequently, the courts were unable to decide the case at this time. The brief discussion of the jurisdictional determination is particularly timely in view of the oral argument in the Sackett case that opened the Supreme Court’s 2022 term.
Trifigura Trading LLC v. U.S.
On March 24, 2022, the Fifth Circuit held in that a federal tax on crude oil exports was unconstitutional. (See Section 4611 (b) of the Internal Revenue Code.) The Solicitor General is reported to have decided not to appeal this ruling to the Supreme Court.
The 2017 Payday Lending Rule and the Administrative Procedure Act
On October 19, 2022, the Fifth Circuit held that (a): the 2017 Payday Lending Rule was not invalid under requirements of the Administrative Procedure Act, and the agency did not exceed its authority in promulgating these rule; and (b) the funding of the Bureau, which skirts the normal appropriations process by receiving its annual funding directly from the Federal Reserve, violates the Appropriations Clause, and the Constitution’s “underlying separation of powers.” Therefore, without this unconstitutional funding, the Bureau lacked “any other means” to promulgate the rule, which was vacated.
Central Crude, Inc. v. Liberty Mutual Insurance Company, et al.
On October 28, 2022, the Fifth Circuit affirmed the ruling of the federal district court that a “total pollution exclusion endorsement” in the plaintiff pipeline company’s commercial general liability (CGL) policy with the defendant excluded coverage for the remediation of an ongoing oil spill that occurred in 2007. In January 2007, the plaintiff discovered a crude oil leak on its property and a neighboring tract owned by Chevron in Paradis, Louisiana. The spill was reported to the Louisiana Department of Environmental Quality, and a contractor was retained to remediate the spill. However, efforts to remediate the spill are ongoing after 15 years. In 2007, the insurer denied coverage because of the total pollution exclusion endorsement in the CGL policy. Initial state court litigation filed in 2017 was removed to the federal courts, and the federal district court granted summary judgment to Liberty Mutual. The Fifth Circuit has now affirmed this ruling, citing a Louisiana Supreme Court decision as being authoritative. See Doerr v. Mobil Oil Corporation, 774 So. 2d 119 (La. 2000). That court made it clear that the courts should construe a pollution in light of its general purpose, “which is to exclude coverage for environmental pollution.” Here, all three factors cited in the Doerr are present and caused the Fifth Circuit to uphold the lower court. The “absolute pollution exclusion” unambiguously excludes coverage for the plaintiff’s costs as well as any property damage that resulted from this spill.