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


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

J. Ninth Circuit

In the case of Association of Irritated Residents v. EPA, et al., decided June 23, 2015, the U.S. 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 the California State Implementation Plan (SIP), and then corrected this error. In 2003, legislation was enacted in California to amend the California Health & Safety Code, which at that time exempted major agricultural sources from the CAA’s New Source Review (NSR) requirements. The legislation retained regulatory exemptions for certain minor agricultural sources. However, the San Joaquin Valley Unified Air Pollution Control District issued NSR rules that affected all new and modified sources of air pollution, whether major or minor, and they were made a part of the California SIP. The plaintiffs in this case then filed citizen suits against dairy farms that were minor agricultural sources, alleging that they were violating the EPA-approved California SIP rules. California then submitted SIP revisions to EPA, and in 2013, EPA retroactively revised the scope of its 2004 approval, after receiving an interpretation from the California Attorney General that the 2003 state legislation did not give the air pollution control district the authority to apply the 2004 NSR rules to certain minor agricultural sources. EPA cited CAA Section 110(k)(6) as authority to make these changes. The petitioners challenged this action and asked the court to vacate the amended rule (40 C.F.R. § 52.245). However, the Court of Appeals, applying Chevron deference, held that EPA reasonably interpreted the CAA to authorize this retroactive amendment of its 2004 SIP approval. Representatives of several agricultural interests intervened in this case.

On June 8, 2015, the U.S. Court of Appeals for the Ninth Circuit issued a ruling in the case of United States v. Douglas Vance Crooked Arm and Kenneth G. Shane, which involves a criminal prosecution under the Migratory Bird Treaty Act, 16 U.S.C. § 703 (MBTA). The defendants were indicted and convicted of two felony counts under the MBTA following a U.S. Fish & Wildlife Service (FWS) investigation into the unlawful sale of migratory bird feathers (taken from Golden Eagles). The defendants argued that the indictment, to which they entered a conditionally guilty plea, only alleged facts sufficient to support a misdemeanor charge of trafficking in migratory birds in Montana through the sale of eagle feather fans. In response, the Court of Appeals held that the facts alleged in Count I, which charged a conspiracy to kill, transport and offer for sale migratory birds, accurately charged a felony. However, with respect to Count II, which charged the unlawful trafficking in migratory bird “parts”, the allegations supported only a misdemeanor count. At issue was whether the sale of a fan made of migratory bird feathers constituted a sale of the migratory bird itself. Since the relevant provisions of the MBTA were unambiguous, the Court of Appeals was not obliged to apply Chevron deference to FWS’s interpretation of “migratory bird” to include the species’ feathers.

In Alaska Wilderness League, et al., v. Jewell, et al., a decision released on June 11, 2015, the U.S. Court of Appeals for the Ninth Circuit, by a 2 to 1 decision, affirmed the district court’s grant of summary judgments in favor of the Department of the Interior, the Bureau of Safety and Environmental Enforcement (the Bureau) and two Shell Oil entities, Shell Gulf of Mexico, Inc. and Shell Offshore, Inc., with respect to the Bureau’s approval of Shell’s oil spill response plans. These companies were awarded leases to explore for oil in the Beaufort and Chukchi Seas off Alaska’s Arctic coast, and the Court of Appeals noted Shell’s plans have been “waylaid by a variety of legal, logistical, and environmental problems, including multiple lawsuits, the wreck of one of its drilling rigs, and the temporary suspension of drilling activities in the Arctic after the Deepwater Horizon spill”. Indeed at least eight separate challenges to the Shell leases have been heard by the Court of Appeals to date. Several environmental organizations challenged the decision of the government to approve two of Shell’s oil spill response plans, arguing that the approval was arbitrary and capricious in violation of the Administrative Procedure Act.

The majority opinion concluded that the statutory requirements of the CWA’s provisions regarding of the review of offshore oil spill response plans limited the Bureau’s discretion in deciding whether to approve such plans; so long as the applicant’s plan satisfied the CWA, the Bureau’s approval was mandatory and did not trigger a requirement for interagency consultation under the Endangered Species Act (ESA) before approving the oil spill response plans. In addition, the Bureau’s review of the adequacy of Shell’s oil spill response plans was subject to Chevron deference, to which the Court of Appeals acceded. Regarding the complaint that NEPA review of these plans was also short circuited, the Court of Appeals held that since the Bureau’s discretion was limited, ESA consultation and NEPA review were not required. A strong dissent was filed.

On May 21, 2015, in an unpublished opinion, the U.S. Court of Appeals for the Ninth Circuit issued a ruling in the case of People of the State of California and the City of San Diego v. Kinder Morgan Energy Partners, LP, et al. The Court of Appeals affirmed and reversed a number of rulings made by the district court in this case, which involves multi-million dollar claims the plaintiffs are asserting against Kinder Morgan as a result of long-term spills and releases of petroleum products into the soil and groundwater—including an drinking water acquirer—from facilities purchased by Kinder Morgan that are located adjacent to a sports stadium in downtown San Diego. The district court’s summary judgment rulings had eviscerated the plaintiffs’ case, but the Court of Appeals has now revived these claims, holding that summary judgment on the basis of the evidence before the district court was not warranted.

On April 2, 2015, the U.S. Court of Appeals for the Ninth Circuit decided a complex CERCLA contribution cost recovery case in AmeriPride Services Inc. v. Texas Eastern Overseas Inc., a dissolved Delaware corporation. This case involves soil and groundwater contamination at an industrial area of Sacramento, California which resulted from the release of perchloroethylene (PCE), a CERCLA hazardous substance used in a dry cleaning and laundry operations. The owner of the facility merged with Texas Eastern Overseas Inc. (TEO), which assumed its liabilities, while AmeriPride, the plaintiff in this matter, eventually became owner of the property. AmeriPride began a cleanup at the site after its environmental consultant discovered PCE in the soil. The cleanup is still ongoing, now under the direction of a California state agency.

Over the years, several CERCLA cost recovery lawsuits have been filed in connection with this cleanup and offsite contamination that is also linked to the use and release of PCE. AmeriPride entered into large settlements with adjoining landowners totaling over $10 million, and the settlements were approved by the presiding district court. At the same time, AmeriPride’s lawsuit against TEO continued, and in 2011, the district court held that TEO was liable for a considerable share of AmeriPride’s response costs, and this amount was determined by the court to be $7.7 million, taking into account the amount of the separate settlements. Moreover, the district court assigned TEO’s claims against its insurers to AmeriPride, pursuant to California law. On appeal, the Court of Appeals vacated these rulings, holding that the district court erred in not explaining which equitable principles it used in allocating costs. The Court of Appeals held that the district court was not bound to apply either the Uniform Comparative Fault Act or the pro tanto approach of the Uniform Contribution Among Tortfeasors Act, but that the allocation should be made by the district court based on such equitable factors as the district court deems appropriate. Because the district court did not sufficiently explain its reasoning, the Court of Appeals could not determine whether the district court abused its discretion in allocating costs. In addition, the district court erred in not determining how much of the response costs incurred by the adjoining landowners, that were the object of the separate settlements, were consistent with the National Contingency Plan. Lastly, the Court of Appeals held that California law did not permit the trial court to assign TEO’s claims against its insurer to AmeriPride.