Gravel2Gavel Construction & Real Estate Law Blog
This is a brief roundup of recent federal court environmental and regulatory law decisions from the federal courts over the past few months, including the much anticipated ruling in Sackett, et ux., v, Environmental Protection Agency.
THE U.S. SUPREME COURT
Sackett, et ux., v, Environmental Protection Agency
Last year, the Supreme Court issued a significant decision curtailing some of the EPA’s regulatory powers in the Clean Air Act in West Virginia v. Environmental Protection Agency. On May 25, 2023, the Court limited EPA’s—and the U.S. Army Corps of Engineers’ authority—under the Clean Water Act. This, too, is a major environmental ruling. The Court held that the EPA could not classify the wetlands located on the Idaho property of Michael and Chantell Sackett as “Waters of the United States” on the basis of the “significant nexus” test devised by Justice Kennedy in his separate opinion in the 2005 case of Rapanos v. United States. Accordingly, the Court unanimously held that their property was not subject to the EPA’s or the U.S. Army Corps of Engineers’ permitting and enforcement power. In 2004, the Sacketts purchased a small lot near Priest Lake in Bonner County, Idaho, on which to build a home. As related by Justice Alito, once they began to fill in their property with dirt and rocks, they were notified by EPA that their backfilling operation violated the Clean Water Act (CWA) because they were affecting protected wetlands. The Sacketts challenged this action, thus beginning a long legal battle with EPA and the federal government. In 2021, the U.S. Court of Appeals for the Ninth Circuit upheld the federal government’s regulatory authority over these wetlands, holding that the CWA covers “adjacent” wetlands having a significant nexus to traditional navigable waters. The Supreme Court decided that this case was suitable for determining whether the Sackett’s wetlands are “waters of the United States” and thus subject to the permitting and regulatory enforcement powers of the EPA and the Corps of Engineers.
The Court reviewed the long and complex history of the CWA, and its many interpretations the agencies have made over the years. As the Court notes, the term “waters of the United States” has been the focus of three intensive rulemaking proceedings since 2015, culminating the “significant nexus” test now being employed by the EPA and the Corps of Engineers. In a 5-to-4 vote, the Court held that the proper test to decide whether a body of water, particularly wetlands, was subject to federal jurisdiction was whether the wetlands have surface connection to bodies of water that are waters of the United States in their own right so that there is no clear demarcation between waters and wetlands. This ruling overturned the determination that the Sacketts’ property contained regulated wetlands even though they were located on the other side of a 30-foot road which feeds into a non-navigable creek which then feeds into Priest Lake, an indisputably navigable body of water. The rejection of the significant nexus test was based on a close reading of the text of the CWA, and to those who criticized this approach, such as Justice Kavanaugh, Justice Alito responded that “textual arguments that ignore the operative test cannot be taken seriously.”
While this decision will reduce the scope and scale of some federal powers under the CWA, it does not foreclose the ability of states to fill the void, or the ability of the Congress to amend the Act that was enacted more than 50 years ago. In the interim, the agencies have promulgated dozens of rules and developed permitting and enforcement policies based on their reading of the law as it was then, which are now likely to be revisited.
Axon Enterprise, Inc. v. Federal Trade Commission and Securities and Exchange Commission v. Michelle Cochran
On April 14, 2023, the Supreme Court issued a unanimous ruling holding that targets of investigations or enforcement actions by federal agencies, in this case the Securities and Exchange Commission (SEC) and the Federal Trade Commission (FTC), may have their constitutional claims against these proceedings heard by a federal district court and are not forced first to channel those claims “through the administrative review schemes at issue.” The Court, in an opinion written by Justice Kagan, states that “We now conclude that the review schemes set out in the Exchange Act and the FTC Act do not displace federal district court jurisdiction over [the petitioners] far-reaching constitutional claims.”
Bohon, et al. v. the Federal Energy Regulatory Commission
A few days later, the Court remanded a similar decision to the U.S. Court of Appeals for the District of Columbia Circuit for further consideration in light of the Axon Enterprises decision. This ruling is likely to have a significant impact on the administrative enforcement procedures of many federal agencies, where ongoing enforcement actions could be delayed until the constitutional issues are resolved.
Suncor Energy v. Board of Commissioners of Boulder County
This was one of several cases of which the Court denied review in several greenhouse gas cases alleging, under state law, that the defendant energy companies caused property damage through their activities. The energy companies argued that these complaints should be heard in the federal courts.
Loper-Bright Enterprises v. Raimondo, Secretary of Commerce
Finally, the Court has agreed to hear another challenge to the Chevron doctrine. The DC Circuit applied Chevron to uphold the National Marine Fisheries Service’s application of a rule to the fishing industry.
THE FEDERAL COURTS OF APPEAL
The U.S. Court of Appeals for the District of Columbia Circuit
State of Kansas and State of Illinois v. Ferrero, Archivist of the United States
On February 28, 2023, the court affirmed the lower court’s dismissal of a mandamus action filed against the Archivist, that would direct him to codify and publish the Equal Rights Amendment to the Constitution, which did not obtain the needed state concurrences in accordance with the time limits imposed by the Congress. The states failed to show, “clearly and indisputably,” that the Archivist had a duty to do.
Midwest Ozone Group v. EPA
On March 3, 2023, the DC Circuit turned away a challenge to an Environmental Protection Agency (EPA) order described as a revised Cross-States Air Pollution rule for the 2008 Ozone NAAQS. The court noted that agency determinations based upon highly complex technical matters are entitled considerable difference by the courts, and that approach was sustained here.
Mandan, Hidatsa and Arikara Nation v. Department of the Interior
On April 21, 2023, the court reversed the lower court’s decision barring the State of North Dakota from intervening in a dispute over the ownership of the riverbed of the Missouri River that runs through certain North Dakota Indian reservations. The state avers that it owns this land and the royalties associated with hundreds of oil and gas leases granted by North Dakota to operate in the riverbed. The Interior Solicitor issued conflicting opinions on this ownership issue, and then filed documents in Interior’s Office of Land Titles supporting the Indians’ claims. As a result, the Department could no longer be viewed as a neutral party.
State of New York v. META Platforms, Inc.
On April 27, 2023, the Court affirmed the holding of the lower court that dismissed an antitrust case filed against Facebook (now known as Meta Platforms, Inc.) by 46 states. Noting that the case is not only “odd, but old,” the DC Circuit held that the defense of laches was available to the defendant and that the states’ allegations did not set forth a violation of Section 2 of the Sherman Act.
The U.S. Court of Appeals for the First Circuit
Relentless, Inc. et al. v. U.S. Department of Commerce
On March 26, 2023, the court decided another case involving the National Marine Fisheries Service rule described above and upheld that rule as being authorized by Congress. The First Circuit panel referenced the DC Circuit’s 2022 Loper-Bright Enterprises ruling as support for its decision, which is now on appeal to the Supreme Court.
The U.S. Court of Appeals for the Third Circuit
Adelphia Gateway, LLC v. Pennsylvania Environmental Hearing Board, et al.
At issue in this March 14, 2023, ruling: Adelphia was granted a certificate by the Federal Energy Regulatory Commission (FERC) to construct and operate an interstate gas pipeline and filed an application with the Pennsylvania Department of Environmental Protection (PADEP) to construct a compressor station pursuant to the federal Clean Air Act and its Pennsylvania counterpart. Adelphia received the necessary authorization, subject to further review by the Hearing Board, which dismissed the appeal for want of jurisdiction; however, the Commonwealth Court reversed, holding that administrative proceedings are not civil actions and that the Natural Gas Act did not preempt state jurisdiction. A federal appeal was taken and now the Third Circuit has ruled that the Natural Gas Act is not in an irreconcilable conflict with giving state court jurisdictional decisions “full faith and credit.”
United Refining Company v. U.S. EPA
On April 5, 2023, the Third Circuit decided a Renewable Fuel Standards case, involving the EPA’s rejection of a petition for hardship relief filed by a “small refinery.” The court upheld the EPA’s rejection of this petition for a hardship exemption, and ruled that the agency reasonably relied on the Department of Energy’s analysis of the refinery’s hardship position.
The U.S. Court of Appeals for the Fourth Circuit
The U.S. Court of Appeals for the Fourth Circuit continues to hear and decide interstate gas pipeline cases involving the Mountain Valley Pipeline.
Sierra Club, et al. v. State Water Control Board
On March 29, 2023, the court decided this case. On December 14, 2021, the Board had granted the pipeline the Clean Water Act 401 certification that construction of a segment of the pipeline in Virginia would comply with the State’s Water Quality standards. The petitioners challenged this certification in the Fourth Circuit, which held that: (a) it had jurisdiction to hear the appeal; and that (b) the state Department of Environmental Quality (DEQ) before deciding to issue the authorization, correctly applied the law and carefully considered the merits of the application, and (c) that it did not act in an arbitrary and capricious manner.
Sierra Club, et al, v. West Virginia Department of Environmental Protection
However, a few days later, on April 3, 2023, the Fourth Circuit vacated the West Virginia DEQ’s certification that the Mountain Valley Pipeline would not violate West Virginia’s water quality standards. The court reviewed the administrative record and concluded that the agency failed to provide a reasoned explanation as to why the pipeline’s past permit violations will not continue to occur in the future, and other assurances made to the court were unconvincing.
The U.S. Court of Appeals for the Fifth Circuit
The Fifth Circuit has decided several significant cases in the past few months.
Flight Training International v. Federal Aviation Administration
On January 24, 2023, the court vacated a new rule issued by the Federal Aviation Administration which changed a longstanding pilot training rule without notice and comment.
Mexican Gulf Fishing Company, et al. v. United States Department of Commerce, et al.
On February 23, 2023, the court reversed the lower court and set aside a rule issued by the National Marine Fisheries Service requiring small charter boats operating the Gulf of Mexico to install, at their expense, onboard monitoring systems, regardless of whether the vessel is being used for commercial or personal purposes. The statutory authority cited by the Service was the Magnusen-Stevens Act, enacted to protect offshore fishing areas. Using the Chevron framework, the court held this rule was not authorized by the Act. Also, reporting GPS data to the government 24 hours a day could create constitutional issues of search and seizure; no criminal warrants for such information had been issued. A similar case will be reviewed by the Supreme Court in the next term.
Newbold v. Kinder Morgan, et al.
On March 14, 2023, the court decided this case, which involved a fatal boating accident caused by a collision with a fully submerged warning sign. The defendant’s liability depended on whether the accident took place in Louisiana or federal waters. The court decided that the accident took place in Louisiana waters and used the 1870 Daniel Ball decision of the Supreme Court as guidance to what constitutes “navigability.”
BNSF Railway Company v. Federal Railroad Administration
On March 15, 2023, the court held that the rejection by the Federal Railroad Administration (FRA) of the railway’s request that the standard track-inspection rules be waived to enable the railroad to test a new technology was arbitrary and capricious as it appeared to ignore the data submitted to support the waiver request, and its decision was, in any event not justified by a rational explanation. The agency was ordered to reconsider this decision in 100 days.
Nix v. Major League Baseball
In a change of pace, on March 16, 2023, the court dismissed an appeal of the lower court’s rejection of a lawsuit filed against major league baseball, some MLB teams and agents by the plaintiff, who has filed many lawsuits in many courts complaining that MLB has frustrated his attempt to sell performance enhancing drugs. According to the court, the plaintiff’s latest complaint fell “far below the Mendoza line.”
Harrison County, Mississippi, et al. v. U.S. Army Corps of Engineers
Following the historic 1927 Mississippi Valley flooding, the federal government authorized the construction and operation of an extensive system of flood controls, including the construction of the Bonne Carre Spillway. After many years of use, the plaintiffs filed a lawsuit seeking the court to require the Corps to compile a supplemental Environmental Impact Statement (EIS), to supplement the 1976 EIS. The plaintiffs contend that the increased reliance on the Spillway has exacerbated other problems, and the National Environmental Policy Act (NEPA) requires that a supplemental EIS be conducted. On March 27, 2023, agreeing with the lower court, the Fifth Circuit held that NEPA, in such circumstance, does not authorize a supplemental EIS.
Bonin, et al. v. Sabine River Authority-Louisiana
Then, in a case decided on April 14, 2023, the court upheld the lower court’s dismissal of a defense to lawsuit filed against the Sabine River Authority for negligently releasing water from the Toledo Bend Reservoir that caused flooding damage to homes in Texas and Louisiana. The Louisiana Authority claimed that it was an “arm of the state” and enjoyed sovereign immunity. The Fifth Circuit has devised a test for such claims (see Clark v. Tarrant County, 798 F 2d 736 (1986)) and holds that the Louisiana defendant was not an arm of the state and could not claim sovereign immunity.
State of Louisiana et al. v. Biden
On April 5, 2023, the court dismissed for lack of jurisdiction and vacated the preliminary injunction redder by the lower court which held that the “issuance of social cost of greenhouse gases” by the current administration was procedurally invalid. The Fifth Circuit held the damages claims were only speculative, thus plaintiff states had no standing to file this lawsuit.
State of Texas v. EPA
On May 1, 2023, the Court rejected EPA’s arguments that a controversy regarding the State Implementation Plan (SIP) must be transferred to the DC Circuit.
Environment Texas Citizen Lobby, Inc. v. ExxonMobil Corporation
Finally, an en banc panel of the Fifth Circuit will hear arguments regarding “standing” under the Clean Air Act on May 17, 2023.
The U.S. Court of Appeals for the Sixth Circuit
The court has decided another “Flint Water” case.
Waid v. Hall, et al.
On March 17, 2023, in the matter of, a group of “Objectors” appealed the trial court’s award of attorney’s fees in this massive litigation and reimbursement for counsel’s expenses. The court of appeals held the Objectors were not entitled to the detailed discovery they were seeking, and that they lacked standing to appeal the “common benefit structure” used by the trial court, and that the court did not abuse its discretion in making these awards.
The U.S. Court of Appeals for the Eighth Circuit
State of Minnesota v. American Petroleum Institute; Exxon Mobil Corporation; ExxonMobil Oil Corporation; Koch Industries; Flint Hills Resources LP; Flint Hills Resources Pine Bend
On March 23, 2023, the U.S. Court of Appeals for the Eighth Circuit rejected an appeal filed by several energy interests that challenged a climate change lawsuit filed by the State of Minnesota against a “litany of fossil fuel producers,” who, they alleged, committed common law fraud and violated the state’s Consumer protection laws by selling fossil fuels in Minnesota while they knew that the production and use of these fuels harms the environment. The court held that no federal law preempted these state law-based claims, making them amenable to removal to the federal courts. A concurring opinion sympathized with the defendants, but as the law stands now, the court could not agree with the defendants that the lawsuit arises under federal law. Consequently, only the Congress or the Supreme Court can change that result.
The U.S. Court of Appeals for the Ninth Circuit
California Restaurant Association v. City of Berkeley
On April 17, 2023, the court reversed the lower court and held that a local city ordinance that prohibits the installation of natural gas piping within new building, was preempted by the federal Energy Policy and Conservation Act, located at 42 USC Section 6297(c) which explicitly preempts such state or local regulations. The law’s exemption provisions encompass building codes that regulate natural use by covered products.
City of Pomona v. SQM North America Corporation
On April 28, 2023, in an unpublished opinion, the Ninth Circuit vacated an award of damages in this long-running controversy. The case has been tried three times; it involves a claim that the defendant’s actions in importing, distributing or selling defectively designed sodium nitrate fertilizer contaminated the City’s water supply with perchlorate. The jury awarded the city over $48 million in damages, but the lower court failed, the Ninth Circuit concluded, in not documenting how the award was supported by the record. The case was remanded to the lower court for appropriate action.
The U.S. Court of Appeals for the Eleventh Circuit
RMS of Georgia, LLC. v. EPA
On April 14, 2023, the U.S. Eleventh Circuit Court of Appeals discussed how the courts decide whether a petition to review an EPA determination under the Clean Air Act involves a “nationally applicable” standard reviewable only in the DC Court of Appeals or whether a local federal circuit court has jurisdiction because it involves a local or regionally applicable action. The subject of this litigation is an EPA “Allocation Action” affecting permits to consume hydrofluorocarbons—a chemical refrigerant. Because the EPA was allocating these permits on a nationwide basis, this was a nationally applicable action whose legality should be addressed by the DC Circuit.