In re PennEast Pipeline Company: A New Twist in the Pipeline or Established Constitutional Law?

Posted on January 17, 2020 by Catherine R. McCabe

Adding another chapter to the legal controversies that continue to rage over the siting of new gas pipelines, on September 10, 2019 the Third Circuit upheld the State of New Jersey’s sovereign immunity objection to the PennEast Pipeline Company’s attempt to condemn a right-of-way through state-owned property.   The Court held that, while the National Gas Act delegates the federal government’s power of eminent domain to private pipeline companies, that power cannot be used by private parties to overcome a state’s assertion of sovereign immunity.

PennEast sought to construct a new pipeline to carry natural gas from the Marcellus shale fields of Pennsylvania into central New Jersey.  PennEast’s proposed route would pass through more than 40 properties either owned by the State of New Jersey or protected by state-held easements for conservation, agricultural or recreational purposes.  The route was approved by the Federal Energy Regulatory Commission (FERC), over the objections of the state and many private parties. 

Armed with its FERC certification, PennEast initiated condemnation actions against the state and private property owners along its proposed route.  The state objected, invoking, among other arguments, its right of sovereign immunity from suits by private parties.  The U.S. district court ruled in favor of PennEast, citing the Natural Gas Act’s authorization for private gas companies to use the power of eminent domain to acquire rights-of-way for pipeline routes approved by FERC. 

On appeal, a three-judge panel of the Third Circuit reversed, ruling that the Natural Gas Act does not go so far as to delegate the federal government’s exemption from states’ sovereign immunity to private parties.  The panel cited the Supreme Court’s prior decisions in Blatchford v. Native Village of Noatak and Dellmuth v. Muth holding that Congress can override the sovereign immunity of states only by making its intention to do so “unmistakably clear” in the language of the statute.  The panel found nothing in the text of the National Gas Act to support the argument that Congress did so in that statute.  

Moreover, while not reaching the issue, the court expressed strong doubt that Congress would have the constitutional authority to override states’ sovereign immunity, even if it chose to amend the statute to make that intent clear.  The court pointed out that Congress relied on its Commerce Clause powers to enact the Natural Gas Act and that, under the Supreme Court’s ruling in Seminole Tribe of Fla. V. Florida Congress cannot invoke its Commerce Clause powers to abrogate state sovereign immunity.

PennEast’s petition for en banc review was denied by the Third Circuit on November 5, 2019.  The company has publicly stated its intent to seek Supreme Court review, but has not explained what basis for review it would urge upon the Court.  There is no conflict among the circuits, as no other court of appeals has addressed this issue. 

PennEast may argue that this case presents a new and important question of law that has not been settled by the Supreme Court.  But the Third Circuit opinion rests firmly on established Supreme Court precedent that will be difficult to overcome.

So is this the end of the pipeline for PennEast?  Will the Supreme Court take up an invitation to rule against states’ constitutionally-protected sovereign rights?  Will PennEast turn back to FERC and ask for direct federal condemnation?  It’s too early to tell.  In any case, either route poses significant challenges – including PennEast’s own argument, noted by the Third Circuit, that FERC does not actually have direct condemnation authority under the Natural Gas Act.

What’s in a (Tribal) Name?

Posted on January 16, 2020 by Tom Sansonetti

At the time of the American Revolution in what is now upstate New York, there lived a branch of the Iroquois Nation known as the Oneida Indians.  As the 18th Century came to a close, two groups of Oneidas left the area to seek a better homeland.  One group moved to Canada and the other to Wisconsin.  Approximately one thousand Oneida remained behind.

In the ensuing two hundred years, the Wisconsin Oneidas and New York Oneidas each overcame many hardships.  Despite their shared original heritage, the two tribes have had little to do with one another, until more recently.

The Department of the Interior (“DOI”) through its Bureau of Indian Affairs (“BIA”), is required by law to publish annually an official list of federally recognized tribes.  There are many economic benefits for tribes included on the list.  At the present time, there are 562 federally recognized tribes. 

In 2010, the tribe then known as the “Oneida Tribe of Indians of Wisconsin” (the “Wisconsin Oneidas”) passed a resolution requesting that DOI conduct a special election on its reservation to amend the tribe’s constitution by, among other things, changing the tribe’s name to the “Oneida Nation.”  In 2011, the DOI notified the Wisconsin Oneidas that the proposed election could proceed but noted that the Wisconsin Oneidas should consider the potential that the name change may cause confusion with the New York Oneidas, who then called themselves the “Oneida Nation of New York.”  The Wisconsin Oneidas thereafter voted to adopt the proposed name change and received approval from DOI in a June 2015 document signed by the Acting Assistant Secretary for Indian Affairs, who happened to be an enrolled member of the Wisconsin Oneidas.

In 2016, the revised list of federally recognized tribes published in the Federal Register referred to the Wisconsin Oneidas as “Oneida Nation.”  The Oneida Nation of New York was never consulted or conferred with by DOI about the Wisconsin Oneidas’ name change ambitions.  The New York Oneidas’ realization as to what had happened came only with the publication of the revised list.

The Wisconsin Oneidas wasted no time thereafter by petitioning the Trademark Trial and Appeal Board of the United States Patent and Trademark Office (“TTAB”) to cancel the New York Oneidas’ registration of the marks “Oneida” and “Oneida Indian Nation.”  The Wisconsin Oneidas touted their new federally recognized name “Oneida Nation” – in arguing that the New York Oneidas should not be allowed to limit the Wisconsin Oneidas use of that name.

The New York Oneidas then brought an action against DOI in federal district court in Albany, New York, asserting claims under the Administrative Procedure Act.  The New York Oneidas asserted a lack of due process, and injury due to the confusion caused by DOI’s approval of the Wisconsin Oneidas’ name change.  In addition, the New York Oneidas alleged a conflict of interest considering that a member of the Wisconsin Oneida served as the DOI official that approved the name change.

The federal district court granted the government’s motion to dismiss the case against DOI for lack of subject matter jurisdiction because it determined that the New York Oneida lacked standing. On appeal, the Second Circuit Court of Appeals affirmed the district court ruling on October 21, 2019. Oneida Indian Nation v. United States Department of the Interior, Case No. 18-2607.

The key issue in the New York Oneidas not having standing centered on the redressability of the alleged wrongs.  Because the DOI’s present policy is to allow tribes to call themselves what they want pursuant to a duly called election, remanding the case back to DOI made no sense in the courts’ view.  Both the district and appellate courts noted the lack of notice to the New York Oneidas and the possibility of future confusion by outside entities as to which of the tribes is the “real” Oneida Indian Nation.  Efforts between the tribes to resolve the dispute have proven unsuccessful.

Given the DOI’s policy of allowing tribes to self-name and BIA’s lack of intervention in the Wisconsin Oneidas administrative name change, the New York Oneidas have since decided to change their name to the “Oneida Indian Nation,” leaving out any geographical reference.  It is expected that the 2020 Federal Register will list both tribes preferred monikers. 

In the meantime, the TTAB trademark litigation rages on, and unless and until DOI changes its tribal names policy, any outside entity doing business with one of the Oneida tribes had best determine which tribal nation is which!

WHEN DOES “RESPONSIBLE” MEAN NEVER HAVING TO SAY YOU’RE SORRY TO CERCLA?

Posted on January 15, 2020 by Jeff Thaler

Given the billions of dollars that have been spent at federal Superfund sites, and the billions still to come, it is fascinating how relatively little attention has been devoted to the case of Atlantic Richfield Company (ARCO) v Christian recently argued in the U.S. Supreme Court. Is it because there might not yet be a final judgment in the Montana court case? Or because preemption is an insufficiently dramatic attention-grabbing legal issue? Or because relatively few amicus briefs were filed? Or are people just plain tired of CERCLA?

To the last question, certainly environmental lawyers and engineers are not so fatigued! Indeed, the Christian case raises some interesting issues.  If the Court reaches the merits rather than remands the case for lack of a final judgment, resolution of the issues could impact clean-up cases and the scope of remediation efforts all over the U.S., as well as who is a “potentially responsible party” under CERCLA, and potentially also impact federal-state relations and conflicts in other areas of law.

In 1980—the year that CERCLA was enacted—the Anaconda Smelter ceased its copper refining operations. However, because Anaconda’s smokestacks had emitted arsenic and lead across five nearby towns, 20,000 acres and thousands of homes, in 1983 EPA placed the area on its list of Superfund sites. While ARCO (the then-owner of the smelter) was identified as the lead Potentially Responsible Party (PRP), and has since spent $450 million in carrying out the EPA’s remediation plan, downwind landowners wanted more cleanup work done on their lands than what EPA had ordered. They thus sued ARCO in state court 11 years ago.

In its December 29, 2017 decision, the Montana Supreme Court allowed plaintiffs to bring state law claims for more clean-up at federally designated sites of ongoing remediation. The U.S. Supreme Court granted certiorari in June 2019. Two of the granted issues are particularly interesting and potentially far-reaching: 1) Is a private (downwind) landowner at a Superfund site a PRP who must first get EPA’s approval for remedial action, even if that landowner has not been ordered to pay for a cleanup—in other words, who really is “responsible” under CERCLA? And 2) Does CERCLA explicitly or implicitly preempt or otherwise bar state common law claims for restoration, if such claims seek cleanup remedies at odds with (i.e. exceeding) EPA-ordered remedies?

Public Citizen and a group of 15 states (led by Virginia) filed amicus briefs in support of the Montana landowners and the Montana court decision; the Solicitor General and the Chamber of Commerce (with a group of other trade groups) supported ARCO. Arguments of statutory interpretation and federal-state sovereignty were front and center in the briefs.

The case was orally argued on December 3, 2019. Some of the Justices seemed concerned with precluding the claim in light of CERCLA’s text which allows for states to have a meaningful role in the remediation of hazardous sites. Other Justices seemed sympathetic to EPA and ARCO’s concerns that plaintiffs’ desired remediation might worsen groundwater quality by releasing toxins in the soil. And the Solicitor General’s representative spent much of his time defending the assertion that the plaintiff landowners should be treated as PRPs.

Ultimately, should the Court reach the merits, the Justices appeared to be trying to devise a way for the states to maintain an active role in CERCLA remediations without allowing landowners to “interfere” with EPA’s cleanup plan. Coincidentally, in an ACOEL small world moment, because Vermont and Maine were part of the 15-state amicus team, ACOEL members Pat Parenteau (VT) and Jeff Thaler (Maine) were each interviewed after the oral argument by the same news reporter.

Fortunately, they did not contradict each other, or have to say “sorry” when the article came out.

Superfund: 20+20 = 40

Posted on January 14, 2020 by John Barkett

It seems hard to believe that the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA)—affectionately known as the Superfund law—will be forty-years old in December 2020.

I first became involved with CERCLA in 1981, a few months after the law’s adoption. The State of Florida’s environmental regulatory agency was concerned about a transformer salvaging operation. It feared that mineral oil containing polychlorinated biphenyls that had been spilled on the ground would be carried throughout the surrounding area if a hurricane hit Miami and caused severe flooding. So it called on the Environmental Protection Agency to conduct a removal action – an emergency response – under CERCLA. That led to a lawsuit to gain access.  I represented a utility that had sold transformers to the salvager. A federal district court judge set a hearing on EPA’s motion for a preliminary injunction to gain access and allowed two weeks for discovery.  The judge also ordered the utility to intervene in the action.  We were taking depositions around the clock until the judge called us into chambers just before the hearing was scheduled to begin. We left chambers and headed not to the courtroom but to a hotel where we were ordered to engage in settlement discussions and not to return until a settlement had been reached.  The settlement was reached.  No hurricane hit.  The site was eventually remediated.  And acronyms like RI/FS, RD/RA, PRP, and NPL became a part of my daily vocabulary.

This case, however, was not the norm.  Once Chem-Dyne came down establishing the principle that in a government cost recovery action, the Superfund law created joint and several liability, and other cases affirmed EPA’s position that liability was also strict and retroactive, the litigation floodgates opened.  To conserve enforcement resources, EPA (the United States) sued “deep pocket” parties. Those parties then sued other PRPs who sued other PRPs—waves of multi-party actions.  The calls to members of Congress became louder as pizza parlors were spending more money on lawyers for the hazardous substances in the ink on their pizza boxes than they could make on a calzone.

Reforms eventually followed in the next two decades of Superfund.  The Superfund Amendments and Reauthorization Act (SARA) in 1986 plugged some holes in the statute and expressly provided for contribution actions.  The “innocent landowner” defense was added and literally created an industry – environmental assessment firms sprung up over night offering their services to anyone buying land or lending money for a real estate acquisition. 

Other amendments followed.  Section 107 of CERCLA initially ended in subparagraph (m).  Now there is a subparagraph (n) to protect fiduciaries, (o) to protect “de micromis” parties, (p) to create a municipal solid waste exception, (q) to address contiguous properties, and (r) to address prospective purchasers.   The Superfund Recycling Equity Act was passed in 1999 to reverse decisions of courts which found that a person recycling certain products was an arranger for disposal liable under Section 107(a)(3) of CERCLA.

Landfills, used oil recyclers, and solvent recyclers received most of the attention in the first three decades of Superfund—and in many cases are still receiving attention.    In the fourth decade of Superfund, river sediment sites have been the most prominent sites on the National Priorities List.  Their remedial investigation/feasibility study and remedial design/remedial action costs dwarf those of landfills on the NPL.

The Supreme Court has weighed in on the Superfund law on a few occasions. Key Tronic wounded the private Superfund enforcement business when the Court in 1994 determined that a private Superfund plaintiff could not recover litigation attorneys’ fees under CERCLA. Aviall (2004), Atlantic Research (2007), and Burlington Northern (2009) followed in a string of decisions that shook up the Superfund jurisprudence in the arena of contribution actions, cost recovery actions, and the evidence required to establish when someone has arranged for disposal or treatment of a hazardous substance. Burlington Northern also weighed in on how to prove a reasonable basis for apportionment in a cost recovery action.

A lot of money has been spent on Superfund sites these past 39 years.  Whether the risk reduction bought with those dollars was the best use of these funds can be debated.  But there is no debate that toxicology has risen in prominence because of Superfund and lawyers have had to become familiar with notations or phrases like 1 x 106, slope factor, and reference dose, to make sense of the difference between carcinogenic and non-carcinogenic risks in human health risk assessments.

All Superfund lawyers know Section 113(f)(1) of CERCLA, the statutory standard applicable in a contribution action: the court is to allocate response costs according to “such equitable factors as the court determines are appropriate.”  That text has resulted in the “Gore factors,” the “Torres factors,” and a host of arguments – sometimes supported by facts and oftentimes supported by inferences or even educated guesswork – as judges and allocators attempt to satisfy the statutory standard.

As we embark on a fifth decade of Superfund, we have another Superfund Task Force and a new set of recommendations focused on trying to speed up cleanups, accelerate remedial design, encourage private investment resulting in reuse of Superfund sites, promote redevelopment of sites to revitalize communities, and promote transparency and engagement with Superfund stakeholders. Actions always speak louder than words, so we can all just watch and hope that the noble goals of this latest Superfund Task Force can be met.

So, here’s to a “Happy 40th” to the Superfund law in 2020.  I was there for your birth and am glad to still be around to declare: you have definitely aged, but you still seem to be going strong!

It’s Not Going to Be Easy to Be Green

Posted on January 8, 2020 by Seth Jaffe

The New York Citizens Budget Commission has released a report regarding the state’s ability to meet its ambitious GHG reduction targets.  It’s sobering reading.  The CBC states that it is “uncertain” whether New York can meet those goals.  It identifies four reasons:

Immense scaling up of renewable generation capacity is necessary and is likely infeasible by 2030.

The focus on building renewable resources, particularly offshore wind, and entering into long-term power contracts limits flexibility and diminishes consideration of other cost-effective approaches.

State policies on nuclear, natural gas, and hydropower are counterproductive.

The focus on other sectors—particularly transportation—is insufficient.

I understand that some people think that natural gas’s time has passed.  I understand that some people don’t like nuclear power.  I understand that some people don’t like hydropower.

However, I also understand, as the report points out, that some people also don’t like the transmission lines necessary to bring large-scale wind to consumers.  And, indeed, some people don’t even like wind power.  At the same time, people do like their iPhones and their cars, and fresh fruit from foreign places.  In short, even if you don’t like some of the conclusions of this report, it’s a valuable reminder of just how difficult this is going to be.

It’s not easy being green.

When is risk reduction not a benefit?

Posted on January 7, 2020 by Adam Babich

EPA filed a status report on October 15 in the slow-moving mercury and air toxics (MATS) litigation, which is now Murray Energy Corp. v. EPA, No. 16-1127 (D.C. Cir., filed April 26, 2016). The case is a challenge to EPA standards for coal-fired power plants that have been on the books since April 16, 2012, despite a U.S. Supreme Court remand in Michigan v. EPA, 135 S. Ct. 2699 (2015), followed by a D.C. Circuit decision not to vacate, White Stallion Energy Center v. EPA, 2015 WL 11051103 (D.C. Cir. 2015), cert. denied, 136 S. Ct. 2463 (2016), and the pending 2016 challenge to an EPA supplemental finding. EPA’s October 15 status report says that the agency has sent OMB a draft final rule regarding its proposal—published in February 2019—to withdraw its finding that a MATS rule is “appropriate and necessary” while leaving the applicable emission standards in place. 84 Fed. Reg. 2670 (Feb. 7, 2019). These proceedings retain a relevance apart from their utility in illustrating the occasionally bizarre nature of the world in which we live and litigate.

EPA’s proposal would, among other things, implement a new approach to analyzing the benefits of a regulation. Specifically—when calculating benefits for purposes of determining whether regulation of hazardous air pollutants is appropriate—EPA would eschew consideration of “co-benefits” flowing from accompanying reductions in emissions of other pollutants, such as nitrogen oxides, sulfur dioxide, and fine particulate matter. Thus, “if the HAP [Hazardous Air Pollutant]-related benefits are not at least moderately commensurate with the cost of HAP controls, then no amount of co-benefits can offset this imbalance for purposes of a determination that it is appropriate to regulate under CAA section 112(n)(1)(A).” 84 Fed. Reg. at 2676. The idea is that non-HAP benefits should not receive “equal consideration” because criteria pollutants “are already addressed” by another regulatory program. Id. at 2677.

The analysis is reminiscent of EPA’s infamous Select Steel opinion, which dismissed an environmental-justice complaint. EPA File No. 5R-98-R5. In that 1998 opinion, the agency found that because the NAAQS for ozone “has been set at a level that is presumptively sufficient to protect public health and allows for an adequate margin of safety … there is no affected population which suffers ‘adverse’ impacts within the meaning of Title VI resulting from the incremental VOC emissions [that do not cause NAAQS violations].” There could be no disproportionate impact on a minority community that met NAAQS because there was no “adverse” impact at all!

The conclusion that achievement of NAAQS eliminates risk ignores a reality that Congress perceived when it amended the Clean Air Act in 1977. Congress recognized the need to protect people from harmful exposures “notwithstanding attainment and maintenance of all national ambient air quality standards.” 42 U.S.C. § 7470(1). The legislative history acknowledges, “The idea that the national primary standards are adequate to protect the health of the public has been belied.” H.R. Rep. No. 95-294 at 112 (May 12, 1977) (accompanying H.R. 6161). Senator Muskie—the father of the Clean Air Act—explained, “[T]here is no such thing as a threshold for health effects,” S. Deb. on S. 252, 123 Cong. Rec. 18,460 (June 10, 1977). “Even at the national primary standard level, which is the health standard, there are health effects that are not protected against.” Id.

“Appropriate” is an “all-encompassing term that naturally and traditionally includes consideration of all the relevant factors.” 135 S. Ct. at 2707 (quotation marks and citation omitted). Just as it was not “appropriate” for EPA to ignore costs when deciding to promulgate MATS, id., it would be inappropriate to ignore the benefit of lives saved because of ancillary reductions of criteria pollutants.

Risky Business: Ethylene Oxide Business Closures Prompt FDA Alert; EPA Regulations to Follow

Posted on January 6, 2020 by David Tripp

Plant closures of medical equipment sterilization facilities in Chicago and Atlanta prompted the Federal Drug Administration to issue a statement on potential shortages of surgical and medical devices across the country. On October 25,  FDA Commissioner Sharpless noted the closure of two large sterilization facilities resulting in a shortage of pediatric breathing tubes and said, "The impact resulting from closure of these and perhaps more facilities will be difficult to reverse, and ultimately could result in years of spot or nationwide shortages of critical medical devices, which could compromise patient care."

The FDA underscores an important dilemma in environmental matters: when risk assessment information based on emerging science predicts cancer-causing effects at extremely low concentrations, how can citizen concerns be addressed while EPA is developing regulations to minimize impacts on health and protect availability of necessary goods and services?

What is EPA's role in these plant closures?  In the Chicago suburb of Willowbrook, EPA participated in public meetings and confirmed the Sterigenics facility was permitted under the Clean Air Act and operating within permit limits. Sterigenics used Ethylene Oxide (EO or EtO) to sterilize medical devices. EO is uniquely suited for use on medical devices and is the most common sterilizing agent  in the U.S., safeguarding an estimated 50 billion medical devices annually including surgical kits for C-sections, cardiac and knee surgeries, and feeding tubes for neonatal care units. At Willowbrook, based on community health concerns, EPA asked ATSDR for input. ATSDR issued a Letter Health Consultation on August 21, 2018, stating that if measured and modeled data represent typical EtO concentrations in ambient air, an elevated cancer risk exists, and the Illinois Department of Public Health should investigate any elevated cancers in the surrounding population.

IDPH followed with its Cancer Incidence Assessment report, covering 1995 through 2015, finding increases in certain cancers, but concluding that limitations in methodology and data existed. IDPH strongly recommended future studies with larger populations, preferably involving multiple EtO emissions sites to confirm the assessment's findings.

The recommended longer term emission reductions and studies did not happen. Public opposition resulted in lawsuits seeking injunctive relief, and a Seal Order was filed by the State of Illinois. Sterigenics reached settlement with the State to allow reopening with additional emission controls, then closed both Willowbrook and a similar facility in Atlanta. Sterilization facilities which have closed, or are facing public pressure, are caught in a predicament of compliance with existing Clean Air permit requirements being overtaken by local and public pressure. EPA has begun the development of a numeric standard for EO, but in the interim a calculated risk screening level for EO at the 0.10 part per trillion threshold became the de facto control number. However, that threshold number is being hotly debated and one state has indicated it will promulgate a limit 40,000 times higher.  

The concerned citizens and municipalities believe the right result was reached when the facilities closed. FDA and the medical community believe a crisis in availability of sterilization for medical devices and instruments is foreseeable. For the companies, operation in compliance with federal and state permits did not offset sudden forces leading to closure. EPA has announced its "Suite of Actions to Address Ethylene Oxide," including proposed rulemakings for two sets of EO emission standards. The fair notice of these EPA regulatory actions  contrasts with the abrupt pressure for closure forced on the shuttered companies by a risk assessment more commonly used as the beginning step in a screening process that leads to a balanced decision on remedial actions.

Whether EPA and FDA can cooperate effectively to prevent critical shortages of sterilized medical devices remains to be seen. Until a viable option to EO sterilization of medical devices is found and implemented, medical sterilization remains a risky business.