No Vacatur, No Protection, No Deference and No Discretion: Important End-of-Summer Environmental Decisions

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As the end of summer approaches, the courts have provided a potpourri of relevant environmental decisions.

FEDERAL COURTS OF APPEAL

Town of Weymouth, et al. v. Massachusetts Department of Environmental Protection (MDEP)
On August 31, 2020, the U.S. Court of Appeals for the First Circuit issued an opinion revising the mandate of its earlier June 3, 2020, ruling in the case. In the earlier ruling, the court vacated the grant by the MDEP of an air permit to Algonquin Gas Transmission to build and operate an air compressor station, ordering the agency to “redo” its Best Available Control Technology analysis within 75 days. Algonquin asked the court to reverse without vacatur because the agency could not comply within the time limits established by the court. The First Circuit agreed, and established a new deadline for the agency of January 19, 2021.

State of New York, et al. v. National Highway Safety Administration
Also on August 31, 2020, the U.S. Court of Appeals decided a case involving the National Highway Safety Administration’s attempt to modify the 2016 revisions to the Clean Air Act’s Corporate Average Fuel Economy (CAFE) standards that affect the automobile industry. In 2016, the prior administration increased the penalties for noncompliance to $14, but in 2019, the new administration reduced this “base rate” to $5 for every tenth of a gallon below the standard, and in doing so argued that this penalty was not a civil penalty subject to the constraints of the Federal Civil Penalties Inflation Adjustment Act. A panel of the Second Circuit issued a unanimous ruling that the CAFE penalties were in fact and law subject to the Act, and the agency’s actions in 2019 were untimely and unauthorized. Moreover, because there is no ambiguity in the Act, the agency’s actions were not subject to Chevron or Skidmore deference.

No Contribution Protection for Carter Day
On September 8, 2020, the U.S. Court of Appeals for the Third Circuit issued an important interpretive ruling regarding CERCLA and federal/state relationships. The Combe Fill Superfund Site, located in New Jersey, was placed on the CERCLA National Priorities List (NPL) of sites whose cleanup should be pursued expeditiously. Both EPA and the state of New Jersey have spent large sums of money to clean up this former municipal landfill; indeed, EPA has spent over $100 million and New Jersey has spent $24 million. Carter Day, the operator of the site, entered into a separate settlement with New Jersey in 1991, and argued that this settlement afforded Carter Day “contribution protection” against the numerous federal cost recovery claims made against Carter Day in connection with the separate federal cost recovery litigation. After reviewing the terms of Carter Day’s settlement with New Jersey, the court concluded that CERCLA Section 113 (f) does not confer this legal protection on Carter Day. To rule otherwise would also frustrate the national CERCLA policy favoring expedited cleanups.

Idaho Conservation League v. EPA
In an unpublished case, the U.S. Court of Appeals for the Ninth Circuit has rejected EPA’s approval of the State of Idaho’s state NPDES permitting rules, agreeing on September 10, 2020, that EPA erred when it approved these rules which contained a mens rea intent component in state Clean Water Act enforcement actions. The Ninth Circuit has consistently held that some Clean Water Act enforcement actions do not require a mens rea component and that some criminal enforcement actions can be taken on the basis of proof of simple negligence. Also, Idaho’s proposed rule did not satisfy the requirements of the relevant EPA rule, 40 CFR Section 123.37(b)(2).

ASARCO LLC v. Atlantic Richfield Company LLC (ARCO)
The last case to be noted here is a Superfund cost recovery ruling decided by the Ninth Circuit on September 14, 2020. ASARCO entered into bankruptcy in 2005, and finally resolved its outstanding Montana environmental liabilities in 2009, including those involving the site that is the focus of this case, in 2009, by means of a “cash-out bankruptcy settlement.” Here, the district court agreed with ASARCO that ARCO was liable for its allocated share of the cleanup costs at a former copper smelter in East Helena, Montana. ASARCO contributed more than $100 million and filed a lawsuit against ARCO to recover some of these costs, and the lower court agreed that this amount was in play. The court also held that ARCO’s allocated share was 25%. On appeal, the Ninth Circuit held that only necessary, non-speculative costs were at issue, and here less than half of the $100 million had been spent to date and could not be recovered by ASARCO at this time. The appeals court affirmed the lower court’s allocation of costs to ARCO.

FEDERAL DISTRICT COURTS

Exxon Mobil Company v. United States
On August 19, 2020, the U.S. District Court for the Southern District of Texas concluded its review of Exxon Mobil’s lawsuit against the United States seeking reimbursement of millions of dollars the company spent to cleanup up the environmental contamination generated at its Baytown, Texas, refinery and Baton Rouge, Louisiana, chemical plant during World War II. The federal government established a complex network of federal agencies to coordinate the manufacture of war materials and essentially commandeered these facilities as part of the war effort. At that time, there were few controls placed on the management of these wastes, but Exxon was obliged to address these contaminating activities and materials after the war. Many years later, Exxon Mobil sought reimbursement from the United States pursuant to under CERCLA and other statutes. This litigation proceeded in three phases, and the last phase was a bench trial conducted during the COVID-19 pandemic. The court concluded that Exxon Mobil should recover more than $20 million dollars as reimbursement. The court examined a wide range of materials and expert testimony that formed the foundation of its ruling.

In re Flint Water Cases
On August 26, 2020, the U.S. District Court for the Eastern District of Michigan rejected a motion to dismiss and held that EPA could be held liable in damages for its negligent handling of the Flint, Michigan, drinking water controversy. The U.S. Government asserted that it was shielded from liability under the provisions of the Federal Tort Claims Act because its actions were “discretionary’ and were subject to sovereign immunity. The court, however, found that the Safe Drinking Water Act placed substantial oversight authority in EPA, which was not exercised carefully. According to the court, EPA’s actions were not discretionary under the provisions of Section 1414 of the Act.

 

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