Posted on August 3, 2015
In the latest chapter of Homer’s Odyssey, the DC Circuit, on remand from the Supreme Court, determined that EPA had exceeded its statutory authority by imposing uniform emissions reductions under the Transport Rule also known as the Cross-State Air Pollution Rule. On July 28, 2015, the DC Circuit held in EME Homer City Generation, L.P v. EPA that the 2014 sulfur dioxide (SO2) emissions budgets for Alabama, Georgia, South Carolina, and Texas, as well as the 2014 ozone-season nitrogen oxide (NOx) budgets for Florida, Maryland, New Jersey, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Texas, Virginia, and West Virginia are invalid. The court remanded without vacatur to EPA for reconsideration.
A brief history of Homer’s voyage so far.
In 2011, EPA promulgated the Transport Rule to address emissions from upwind States that contribute to nonattainment of National Ambient Air Quality Standards (NAAQS) in a downwind State under the Clean Air Act’s “good neighbor provision”. 42 U.S.C. Sec. 7410(a)(2)(D)(i). Upwind States challenged the Rule, contending that it would lead to over-control of emissions in the upwind States. The Rule imposed uniform pollution reductions on upwind States regardless of the actual amount of pollution that individual upwind States contributed to the downwind States.
In 2012, the DC Circuit considered these over-control challenges, agreed with the petitioners, and vacated the Rule. See EME Homer City Generation, L.P. v. EPA, 696 F/3d 7 (D.C. Cir. 2012).
On review, the Supreme Court reversed, holding that the potential for over-control did not require invalidation of the Rule on its face. To address potential over-control in an upwind State, the Court recognized that requiring emissions reductions by more than is necessary to achieve attainment in every downwind State to which it is linked would be impermissible. The Court explicitly authorized an upwind State to contest the emissions reductions under the Rule through “particularized, as-applied challenges.” EPA v. EME Homer City Generation, L.P., 134 S.Ct. 1584 (2014).
On remand, the DC Circuit considered the “as-applied challenges” as informed by the Supreme Court decision. The DC Circuit evaluated the challenges by determining whether a downwind location would still attain its NAAQS if linked upwind States were subject to less stringent emissions limits. Based on the record, the Court determined that EPA’s uniform cost thresholds have required States to reduce pollutants beyond the point necessary to achieve downwind attainment, which violated the Supreme Court’s clear mandate.
Although invalidating the 2014 emissions budgets, the DC Circuit remanded without vacatur. The Court stated that on remand, the parties may provide new evidence, data, or calculations for EPA to consider in establishing emissions budgets.
What will be the next chapter in this Odyssey? What effect will the decision have on the emissions trading market developed around the 2014 emissions budget? Will there be further appeals? How and when will EPA reconsider the emissions budgets?
The voyage is not over!
Posted on July 10, 2014
Last Monday June 23, it was the Supreme Court’s turn in the UARG case to decide whether EPA could “tailor” its climate policy to fit the PSD and operating permit programs in the current Clean Air Act. Both the Court and EPA faced the issue without any precise guidance from the missing branch: Congress.
As a result, yet another court – the DC Circuit – must next consider the proper remedy in the UARG case and, if past DC Circuit decisions are a sound guide, remand the matter back to EPA to take action consistent with the courts’ decisions. The DC Circuit will almost certainly not tell EPA what it can do, nor should it tell EPA how to exercise its remaining substantial discretion. The courts are only telling EPA what it cannot do in certain respects. Thus, the courts’ guidance to EPA is limited.
EPA will retain considerable discretion when it tries again to regulate GHG emissions from major stationary sources and major stationary source modifications under titles 1 and 5 of the Clean Air Act. EPA has loads of options, as many commenters pointed out during the prior EPA rulemaking. The options may fit the current Clean Air Act to varying degrees. In the words of the Supreme Court in the June 23 UARG decision, though, “Even under Chevron’s deferential framework, agencies must operate ‘within the bounds of reasonable interpretation.’” (J. Scalia for the Court, slip opinion at p. 16)
EPA may try to avoid options that would be most vulnerable to challenge under the principles expressed by the Court in the UARG opinion. One Court majority held that EPA lacked authority to “tailor” the Act’s numerical thresholds governing the PSD and operating permit programs. A different Court majority upheld EPA’s BACT rules for GHGs. Some commenters will undoubtedly urge EPA to continue its drive towards regulating GHGs under titles 1 and 5 of the current Clean Air Act. But, EPA should re-solicit the broadest public comment and carefully consider all options, as the Supreme Court requires under the Chevron standard of judicial review. After all, there will be a national election in 2016 and there will be a new Administration with its own views on the options. If the current Administration wishes to leave a lasting legacy in this area, it would be well advised to act on the basis of the most solid record and adopt moderate, fully vetted polices that can survive. As retiring Congressman John Dingell recently said in a farewell speech held by the National Press Club in Washington, D.C., “Compromise is an honorable word."
Congress is very unlikely to provide any additional guidance in this area any time soon, though. The nation will miss some basic policy decisions and compromises, such as:
• Should the PSD and operating permit programs apply to GHGs? How?
• Which sources should be covered? When? With a phase-in? Tied to what?
• In the PSD program, can and should BACT work the same way for GHGs as for criteria pollutants?
• In the operating permit program, when should sources have to add GHG provisions (since there aren’t yet any substantive requirements for the operating permits to pick up)?
• What substantive requirement should EPA develop and for which sources? When? E.g., should EPA set GHG emissions standards or other requirements for power plants and other source categories under section 111(d) of the Act, as EPA recently proposed?
• What role(s) should state and local agencies and programs play?
In the 1990 Clean Air Act amendments, Congress resolved issues like these in the Act itself. The leading precedent is title 4 – acid rain – where Congress even allocated emissions of SO2 by individual numbered electric power generators in named powerplants in named states. Both houses and both parties held hands and made this deal under the Capitol dome – a deal which has resulted in a stunning and stable policy success. The acid rain deal largely avoided the dilemmas that EPA and the courts now face in dealing with stationary source permitting under titles 1 and 5 of the Clean Air Act. It seems most likely that whatever EPA does next under the current Clean Air Act will be challenged vigorously in court – again and again – until Congress can once again come together under the dome.
Posted on June 27, 2014
Having unleashed EPA rulemaking of unprecedented scale in Massachusetts v. EPA (holding GHGs are “air pollutants” under the Clean Air Act (CAA) that EPA must regulate upon finding “endangerment”) and having further acknowledged EPA’s GHG authority in AEP v. Connecticut (holding CAA displaces federal nuisance common law), early this week in Utility Air Regulatory Group v. Environmental Protection Agency et al., the Supreme Court started the inevitable process of reining in the Agency’s exercise of its potentially boundless GHG authority under a statute designed for regulation of conventional air pollutants. Although interpretive gymnastics would be required whatever direction it took, the Court decided in a fractured decision that the CAA’s preconstruction Prevention of Significant Deterioration (PSD) and Title V operating permit programs allow EPA to impose Best Available Control Technology (BACT) for GHGs only when a source has triggered these programs “anyway” due to its conventional criteria pollutant emissions.
The consolidated cases below challenged a full basket of major EPA GHG rulemakings, including EPA’s endangerment finding, motor vehicle regulations (the Tailpipe Rule) and stationary source permitting rules. But the Court granted certiorari on only one question - whether EPA permissibly determined that its regulation of greenhouse gas emissions from new motor vehicles under one part of the Act triggered permitting requirements under the Act for stationary sources that emit greenhouse gases under another part of the Act. The Court rejected EPA’s PSD and Title V Triggering and Tailoring Rules, leaving intact only the ancillary BACT review of a source’s non-de minimis GHG emissions when a source otherwise undergoes PSD review for conventional pollutants.
The PSD program requires a permit to construct or modify a “major emitting facility”—defined as any stationary source with the potential to emit 250 tons per year of “any air pollutant” or 100 tons per year for certain types of sources—in areas where the PSD program applies. To qualify for a permit, the facility must, among other things, comply with emissions limitations that reflect BACT for “each pollutant subject to regulation under” the CAA. Title V requires a comprehensive operating permit to operate any “major source”—defined as any stationary source with the potential to emit 100 tons per year of “any air pollutant”—wherever located.
Recognizing that applying these thresholds to GHGs would result in permitting for numerous small sources, such as schools, hospitals and even large homes, EPA promulgated the so-called Tailoring Rule with special thresholds for GHGs that would apply in addition to the statutory thresholds and said that it would revisit whether to continue applying these special thresholds after five years, during which time it would study the feasibility of extending permitting to the small sources per the statutory thresholds. Under Step 1 of the Tailoring Rule, commencing January 2, 2011 (the effective date for its Tailpipe Rule), it obligated sources already required to obtain permits under the PSD program or Title V (so-called “anyway” sources) to comply with BACT for GHGs if they emitted at least 75,000 tons per year (tpy) of carbon dioxide equivalent (CO2e) units. Then, under Step 2, commencing July 1, 2011, it obligated sources with the potential to emit at least 100,000 tpy of CO2e to obtain permits under the PSD program and Title V for construction and operation, and sources with the potential to emit at least 75,000 tpy of CO2e to obtain permits under the PSD program for modifications. These higher thresholds were needed on a temporary basis, according to the EPA, because the number of permit applications would otherwise grow by several orders of magnitude, exceeding the agency’s administrative resources and subjecting to the major permit programs sources that Congress clearly did not intend to cover. EPA’s Tailoring Rule also contemplated a Step 3 where GHG permitting would apply to additional sources as well as a five year study on how to extend the program to remaining sources per the statutory thresholds.
Writing for the Court, Justice Scalia, joined by Justices Roberts, Kennedy, Thomas, and Alito, concluded that EPA’s legal interpretation that the PSD and Title V programs were triggered once EPA regulated GHGs under the mobile source program not only is not compelled, but moreover, simply is not reasonable. He reasoned that the “air pollutants encompassed by the Act-wide definition as interpreted in Massachusetts” are not the same “air pollutants referred to in the permit-requiring provisions” at issue. This is so because EPA has routinely given “air pollutant” in the permit-requiring provisions a narrower, context-driven meaning. The same five justices also concluded that EPA is not permitted to augment with additional thresholds – even temporarily, as EPA claimed – the 100 tpy and 250 tpy statutorily-defined thresholds for triggering the PSD program and Title V permitting requirements. He writes that the need for such an adjustment simply demonstrates that the PSD program and Title V were never intended to be expanded in this way, and adds that the EPA does not have the power to “rewrit[e] unambiguous statutory terms” such as the statutorily-defined numerical thresholds for applying the PSD program and Title V.
Justice Scalia, joined in this part by Justices Roberts, Kennedy, Ginsberg, Breyer, Sotomayor, and Kagan, then determined that the EPA reasonably interpreted the CAA to require that those new and modified sources already subject to PSD permitting due to their potential to emit conventional criteria pollutants also must comply with BACT for GHGs. In this context, he emphasizes that the statutory language – once permitting already has been triggered – requiring BACT “for each pollutant subject to regulation under this chapter” contextually leaves less room for interpretations that could limit BACT to a smaller set of pollutants, in contrast to the triggering “any air pollutant” language, which must be read contextually in a more limited manner. Additionally, he argues that applying BACT to greenhouse gases “is not so disastrously unworkable, and need not result in such a dramatic expansion of agency authority, as to convince us that EPA’s interpretation is unreasonable.”
Justice Breyer concurred in part and dissented in part, joined by Justices Ginsburg, Sotomayor, and Kagan. He joins the Court’s opinion as to the application of BACT to greenhouse gases, but asserts that the EPA is also permitted to interpret the CAA so as to trigger permitting requirements for stationary sources that emit an adjusted threshold level of greenhouse gases. Justice Alito concurred in part and dissented in part, joined by Justice Thomas. He argues that neither the EPA’s interpretation of provisions triggering permitting requirements nor its interpretation regarding BACT is permissible.
The Court’s decision to require independent PSD and BACT applicability before subjecting sources to BACT for GHG emissions squares fully with significant industry input to EPA early in its discussion of stationary source permitting. Our National Climate Coalition, for example, urged EPA to embrace such an interpretation in our 2009 Tailoring Rule comments and 2010 PSD White Paper.
Although this decision does not directly affect EPA’s authority to regulate stationary source GHG emissions by establishing New (or Existing) Source Performance Standards under section 111 of the Act, it portends significant challenges for the agency’s recent §111(d) proposal. Most notable are the several statements in the 5-4 portion of Justice Scalia’s opinion in which he cautions the agency not to “rewrite clear statutory terms to suit its own sense of how the statute should operate.” In articulating the Court’s test for whether an agency interpretation of ambiguous terms is reasonable, he stresses that an interpretation is less likely be viewed as reasonable to the extent it:
brings about an enormous and transformative expansion in EPA’s regulatory authority without clear congressional authorization. When an agency claims to discover in a long-extant statute an unheralded power to regulate a ‘significant portion of the American economy,’ [cite omitted], we typically greet its announcement with a measure of skepticism. We expect Congress to speak clearly if it wishes to assign to an agency decisions of vast ‘economic and political significance.’
This portion of the Court’s ruling will likely figure prominently in the Court’s inevitable review of the agency’s §111(d) proposal. It thus may behoove EPA to consider in its final rulemaking approaches that bring the existing source program somewhat closer to its traditional rulemakings under that section.
Posted on April 30, 2014
On April 29, 2014, Justice Ginsburg delivered the opinion of the Supreme Court in EPA v. EME Homer City Generation, L.P., 572 U.S._(2014) reversing the DC Circuit’s decision regarding the Transport Rule, also known as the Cross-State Air Pollution Rule (CSAPR), a rulemaking designed to address the significant contribution of upwind States to nonattainment of National Ambient Air Quality Standards in downwind States under the Good Neighbor Provision of the Clean Air Act (CAA). In addition to upholding EPA’s cost-effective allocation of air pollutant emission reductions among upwind States as a permissible interpretation of the Good Neighbor Provision, the majority held that the CAA does not compel EPA to provide States with an opportunity to file a SIP after EPA has quantified the State’s interstate pollution obligations. This opinion is a severe blow to cooperative federalism.
In the majority opinion, cooperative federalism was relegated to a single footnote, which was surprising given the issues for which certiorari was granted. The second issue addressed in the briefs and argument – whether states are excused from adopting state implementation plans prohibiting emissions that “contribute significantly” to air pollution problems in other states until after the EPA has adopted a rule quantifying each state’s inter-state pollution obligations – provided the Supreme Court with an opportunity to address the relative health of cooperative federalism and whether the federalism bar should be raised or lowered in the context of the CAA.
Justice Ginsburg’s footnote addressed Justice Scalia’s dissenting opinion in which he criticized the majority for “making hash of the Clean Air Act, transforming it from a program based on cooperative federalism to one of centralized federal control.” EPA’s promulgation of federal implementation plans without providing the States with a meaningful opportunity to perform the emissions reductions through state implementation plans is inconsistent with the core principle and regulatory strategy of cooperative federalism embedded in the CAA – air pollution control at its source is the primary responsibility of States and local governments.
Homer’s Odyssey continues. For the next chapter, his ship will not sail under the fair winds of cooperative federalism.
Posted on March 7, 2014
Almost as soon as U.S. Supreme Court Justice Scalia joined the bench in the fall of 1986, he made clear his disdain for arguments that the meaning of statutory text could be gleaned from its legislative history. And advocates before the Court who made the mistake of equating “congressional intent” with a statement made by an individual member of Congress during a hearing or a colloquy on a chamber floor could expect a sharp rebuke from the Justice.
The debate at the Court about the proper role of legislative history in statutory construction was not fully joined, however, until 1994 when Justice Stephen Breyer joined the bench. From the outset, Breyer, a former Senate staffer, made equally plain his view that legislative history was both fair game and could be highly relevant.
Indeed, Scalia’s and Breyer’s contrasting views regarding textualism in both statutory and constitutional interpretation became so celebrated that they literally took their debate on the road. To be sure, theirs was a far cry from the Lincoln-Douglas Debates on slavery 150 years earlier, but for legal scholars and Supreme Court observers, it was High Court entertainment.
During the oral arguments last month before the Supreme Court in Utility Air Regulatory Group v. EPA, Justice Breyer managed to take the debate to yet a new level. The issue before the Justices concerned the lawfulness of EPA’s regulations applying the Clean Air Act’s Prevention of Significant Deterioration Program to the emissions of greenhouse gases from new and modified stationary sources. As the Justices struggled to decipher the meaning of statutory terms and phrases that befuddle even seasoned environmental lawyers, Justice Breyer made a surprising reference. He did not merely ask what Senator Edmund Muskie, the bill’s chief sponsor, might have been intending in drafting the language at dispute before the Court. He asked what “Mr. Billings, I think, is the staff person” would have intended if faced with the policy issue that EPA now faced in trying to apply the language he drafted to greenhouse gases.
The Supreme Court courtroom was filled to capacity for the argument. Yet, I can probably safely say that fewer than ten, and likely fewer than five people in the room had any idea to whom the Justice was referring. And those few most certainly did not include any of the Justice’s colleagues on the bench or any of the advocates before him.
But for a few of us, who thrive on environmental law’s history, it was a moment of glory. The Justice was referring, of course, to Leon Billings who was Senator Ed Muskie’s chief staffer for the drafting of almost all of the nation’s path-breaking environmental laws during the 1970s, including, as the Justice correctly surmised, the Clean Air Act of 1970. The statutes were revolutionary in their reach, as they sought no less than to redefine the relationship of human activities to the nation’s environment.
Not relying merely on the soaring rhetoric of a law like the National Environmental Policy Act, these new pollution control laws got into the nitty-gritty of lawmaking. They addressed the extent to which costs, benefits, risk assessment, scientific uncertainty, and technological availability should all be relevant in determining the pollution control standards. They brokered compromises across partisan divides and remained nonetheless exceedingly ambitious and demanding in their reach.
The nation, more than four decades later, has reason to be grateful for the work of former congressional staffers like Leon Billings. Their impressive work lies in sharp contrast to that of Congresses over the past twenty plus years, which have passed no comparably significant environmental laws and done little more than deepen partisan divides even further. For that reason, the Supreme Court shout-out to “Mr. Billings” was a great moment at the Court. And the Justice’s question an apt one too.
Posted on December 19, 2013
In Sackett v. EPA, the Supreme Court held that pre-enforcement review is available to challenge an order concluding that parties had violated the Clean Water Act by filling a wetland without a permit. Practitioners have wondered whether, in response to Sackett, EPA would take steps to avoid review, such as by issuing warning letters instead of orders. In a recent case, EPA employed another tactic. EPA withdrew an enforcement order, hoping thereby to avoid judicial review under Sackett by claiming that the case was now moot. Not so fast, a court in West Virginia concluded, EPA’s position is still reviewable. Alt v. EPA, 2013 WL 5744778 (N.D. W.Va. No. 2:12–CV–42, Oct. 23, 2013), available here.
In the Alt case, EPA issued an enforcement order against Lois Alt, the owner of a poultry farm, on the grounds that Alt failed to obtain a Clean Water permit for storm water discharges that allegedly contained manure. Alt filed suit in U.S. District Court in West Virginia challenging the EPA order based on the Supreme Court’s Sackett decision. The American Farm Bureau intervened because of concern over EPA’s position on agricultural storm water.
Subsequently, EPA withdrew the order against Alt, nominally because Alt had taken steps to remedy environmental harm -- or did EPA foresee an unhappy ending in court? In any event, EPA filed a motion to dismiss the lawsuit as moot. Alt opposed EPA’s motion to dismiss, arguing that EPA would likely resume its unlawful conduct after the case is dismissed. The district court denied the motion on the grounds that EPA had not changed its underlying position concerning whether the discharges were agricultural storm water exempt from permit requirements. The district court noted that EPA reserved the possibility of reissuing the order if there was a significant change in the poultry farm’s operations, and the intervenors showed that EPA’s alleged assertion of authority can be expected to continue. In short, EPA’s position was reviewable even though the order that provoked the lawsuit had been withdrawn by EPA. As Jimmy Reed said in his classic blues song, “You can run, but you can’t hide.”
If that wasn’t enough to ruin EPA’s day, the court went on to reach the merits of EPA’s position concerning the need for a NPDES permit and granted summary judgment for Alt. The court held that no permit was required because the discharges were exempt as “agricultural storm water discharges.” The court rejected EPA’s argument that the discharges did not have an agricultural purpose, concluding that the poultry operation was agricultural, that the incidental manure was related to the raising of poultry, and that the runoff from the farm was storm water caused by precipitation.
The Alt decision is significant both for its review of an EPA position underlying an order that had been withdrawn and for its decision concerning the agricultural storm water exemption.
Posted on December 13, 2013
December 10, 2013 was a banner day in Clean Air Act jurisprudence. On that date, the Supreme Court – which has heard only 19 environmental law cases in the past decade – set aside 90 minutes for argument concerning EPA’s Cross-State Air Pollution Rule (CSAPR). And at virtually the same time, just a short distance away, the D.C. Circuit was hearing challenges to major portions of EPA’s Mercury and Air Toxic Standards (MATS) Rule. If you were unable to attend either argument but want to know more about the arguments than you can learn from the press reports, then this “Advice from Air Act Andy” column is for you.
Question: Based on questions asked by the Justices in the CSAPR argument, the press is predicting that the Supreme Court is going to reverse the D.C. Circuit’s vacatur and remand of CSAPR. What do you think?
Air Act Andy: I learned years ago (in an earlier case involving interstate transport of pollution under the Clean Air Act) that it is unwise (and ultimately embarrassing) to predict what a court will do based on the questions asked at oral argument. That is particularly true of the December 10, 2013 CSAPR argument in the Supreme Court, where the vast majority of the Justices’ questions focused on what role costs should or may play in the drafting of a rule designed to address the interstate transport of air pollution. Admittedly, many of the Justices seemed to be on the same costs-can-play-a-role-in-this-kind-of-rulemaking band wagon; however, the cost issue was not a key part of the D.C. Circuit’s decision. (Indeed, some would say it wasn’t an issue at all in the D.C. Circuit.) Because the Court spent so much time on the cost issue and asked so few questions about the other bases for the D.C. Circuit’s vacatur of CSAPR, it would be foolhardy to predict what the Court will decide on those other crucial issues (including the so-called FIP/SIP issue and over-control issue).
Question: Was the CSAPR argument chocked full of analogies?
Air Act Andy: Indeed, it was. Malcolm Stewart (counsel for the government and apparently a basketball player) used a slew of basketball analogies to describe the concept of “significant contribution.” There were also charitable giving analogies, a pin-the-tail on the donkey analogy (from Justice Scalia), a shooting-and-stabbing the victim analogy (from Chief Justice Roberts), and an extended cow and sheep grazing analogy (from Justice Breyer).
Question: Did the Court take an exercise break in the midst of argument?
Air Act Andy: Yes. After Mr. Stewart’s argument, Chief Justice Roberts announced a “30 second break” during which several of the Justices stood up and did a limited round of Musical Chairs, but without removing any chairs.
Question: Did a lawyer from Texas admit to being an agnostic?
Air Act Andy: Kind of. On the issue of the role that costs should play in interstate transport rules, Texas’s Solicitor General said that the states “are remaining agnostic.”
Question: It has been my experience that the D.C. Circuit initially imposes strict time limits on oral advocates, but it then routinely lets those presenting argument take extra time to address issues of interest to the court. In the MATS case, the court gave the advocates much more time than usual to present their arguments. In exchange for giving advocates more time up front, did the court insist that advocates sit down when the red light went on?
Air Act Andy: That is not how it played out. Chief Judge Garland (who sat on the panel along with Judge Rogers and Judge Kavanaugh), told counsel at the outset that the court would keep to the pre-allotted two hours designated for all 12 arguing attorneys, but – in fact – the MATS argument lasted three hours. The panel peppered petitioners’ counsel and EPA’s counsel with questions, digging into several technical arguments with a fine-toothed comb of the record. Not one petitioners’ counsel had any time left for rebuttal.
Question: I heard that the courtroom had an explosive feel. Is that true?
Air Act Andy: Ah, perhaps you are referring to the moment when Judge Garland’s heavy binder of materials crashed to the floor near the beginning of EPA counsel’s remarks during the first of three phases of the argument. Unflappable as always, though, Judge Garland just told counsel to “Go ahead.” “Don’t mind us,” Judge Kavanaugh added.
Question: What is the appropriate dress for the Supreme Court?
Air Act Andy: I am so glad you asked this question. Based on what I saw people wearing on December 10, I would have said that “appropriate dress” is wearing anything that is black, charcoal gray, or navy blue. Having returned to the Court the next day to hear a colleague of mine argue a case, though, I must now amend my answer. When I arrived at the Court on December 11, wearing a long stylish gray cardigan sweater instead of a suit jacket, I was stopped by guards and politely told I would not be allowed to sit in the section reserved for members of the Supreme Court Bar unless I replaced my fashionable sweater with a suit jacket. Someone from the clerk’s office then graciously provided me with a nice-fitting ladies suit jacket with a label indicating that the jacket was from the “Lady Executive Signature Collection.” This is something Air Act Andy will keep in mind for the next visit to the Supreme Court – which will likely be in February 2014, when the Court is scheduled to hear argument on EPA’s greenhouse gas rules.
Posted on November 26, 2013
EPA and the Army Corps of Engineers continue their ongoing effort to bring clarity to the tangled mess wrought by the Supreme Court in Rapanos v. U. S. In that 2006 case, a fractured Court issued five separate opinions on the jurisdictional reach of the Clean Water Act. Congress didn’t help in the first place by extending such jurisdiction to “navigable” waters, defined in the Act as “waters of the United States” without further elucidation. EPA and the Corps have developed new rules now under review by the Office of Management and Budget prior to release for public comment.
The agencies and the courts have long struggled with a workable definition of “waters of the United States,” particularly in the context of filling wetlands. The Supreme Court previously held that wetlands adjacent to navigable waters are jurisdictional because of their ecological connection to those waters, but isolated wetlands in the Pacific Flyway are not. In Rapanos, a four member plurality in an opinion by Justice Scalia limited jurisdiction to areas that are wet with flowing or standing water on a more or less regular basis, which would exclude many areas that appear dry but meet the agency definition of wetlands. The determinative fifth vote, however, was from Justice Kennedy, who applied a different test, requiring only a “significant nexus” between the navigable waterways and the wetland.
Since Rapanos, many courts have been unable to discern guiding precedent and adopted hybrids of the Scalia and Kennedy tests. In the meantime, the agencies on two occasions have adopted guidance to help permit writers and the regulated community recognize jurisdictional wetlands. The agencies’ latest effort would go beyond guidance to rules having the force of law.
The rules define jurisdictional waters of the United States to include categories of wet areas, such as tributaries of navigable waterways. The rules would exclude drainage ditches excavated on uplands or other artificially wet areas, such as waste treatment systems or irrigated lands. The expectation is that by establishing by rule categories of jurisdictional waters that per se have a significant nexus to navigable waters, the cost of permitting and litigation would decrease, while certainty for land developers would increase.
The rules are based on a report by EPA staff that compiles and synthesizes peer-reviewed scientific research on the relationship between tributaries, wetlands and open waters. The report is under review by EPA’s Science Advisory Board, and EPA has said the rules would not be released for public comment until that review is complete.
Still, the fact that the rules were developed before the report and Science Advisory Board review is complete has drawn criticism from Congressional Republicans. They charge that the report is just window dressing for EPA doing what it wants. In a letter dated November 13 to EPA, the Senate and House Western caucuses urge EPA to withdraw the rule “based on the devastating economic impacts that a federal takeover of state waters would have.”
The prospect of having rules in place to define jurisdictional waters is, on its face, a positive development because of the uncertainty that now pervades this area. However, in addition to Congressional resistance, the goal of avoiding litigation will likely prove elusive. If challenged, the agencies will be entitled to a measure of deference once the rules are adopted, but we can safely predict there will be many challenges.
Once the rules clear OMB and the Science Advisory Board, they will be published for public comment. Watch this space for updates.
Posted on June 26, 2013
…nor shall private property be taken for public use, without just compensation.
Everyone understands the Fifth Amendment’s takings clause to mean, at a minimum, the government cannot force the transfer of private property to the government even for a manifestly governmental purpose (e.g. a highway right of way, or a new airport runway), without compensating the property owner.
Tuesday’s Supreme Court decision in Koontz v. St. John’s River Water Management District is the latest in a series of Supreme Court rulings to extend the protections of the Takings Clause beyond the obvious governmental requisitioning of private property. That’s “latest,” not “last”.
Nollan v. California Coastal Commission (1987) and Dolan v. City of Tigard (1994), combine to set forth the Court’s requirements for an “essential nexus” and “rough proportionality” between conditions on land use development and the government’s underlying objectives in the permit scheme to which the property owner is subjected. Absent either nexus or proportionality, a taking has occurred, and the Takings Clause requires that the property owner get “just compensation.” So far, so good.
The facts in Koontz are to some extent irrelevant; indeed the Court’s opinion expressly disowned any determination of the merits of his particular claim for compensation. Depending on whose brief you read, Koontz wanted to develop some wetlands property but the Water Management District refused to approve his project as proposed and put forth some mitigation options that were either “extortionate demands” or “helpful suggestions”, one of which consisted of Koontz spending money to improve public lands remote from his own property. Koontz took umbrage and sued under Florida state law. The trial court found for Koontz on the basis of Nollan-Dolan, and the intermediate state appellate court affirmed.
The Florida Supreme Court reversed for two reasons: first, it held the Nollan-Dolan standard does not apply to denial of a permit; and second, it held the standard does not apply to a requirement for the payment of money, as opposed to the impairment of a specific piece of property.
Every Justice agreed that the Florida Supreme Court got the first part wrong; that is, they all agreed the Takings Clause applies to permit denials as well as permit approvals. The majority and dissent parted ways with respect to the second question, however, with the majority again holding that Florida got it wrong and that excluding monetary exactions would allow permitting agencies to improperly circumvent the Nollan-Dolan requirements.
Now, one can agree or disagree with the majority, but the decision hardly shocks the conscience. What the decision holds is far less important than what remains to be decided in future cases:
1. How concrete and specific must a demanded concession be to give rise to liability under Nollan and Dolan?
2. What happens if a permitting authority merely says, “Denied, come back with something better,” and makes no other demand?
3. Where will the line be drawn to prevent countless local land use decisions from becoming federal cases?
On these points, the majority took the Fifth.
Posted on November 12, 2012
Written October 3, 2012
Water, lots of it, promises to dominate the Supreme Court’s October Term 2012 with three significant environmental cases already on the docket and potentially a couple more looming on the horizon.
In Arkansas Fish & Game Commn v. US, No. 11-597, argued on October 3rd, the Court will decide a Fifth Amendment Takings claim against the Army Corps of Engineers for temporarily flooding downstream riparian property. The parties and their supporting amici proffer competing per se “takings” and “no takings” tests. The Court seems likely to reject each in favor of the Justices’ preferred ad-hoc balancing approach. The other two cases, set for argument on consecutive days in December, are Decker v. Northwest Environmental Defense Center, No. 11-338 (consolidated with Georgia-Pacific v. Northwest Environmental Defense Center, No. 11-347) and LA County Flood Control Dist v. NRDC, No. 11-460 (I am co-counsel for respondents in the LA County case). Both cases concern the application of the Clean Water Act to storm water discharges: logging in Decker and municipal storm water in LA County. The cases are the Court’s first opportunity to address storm water issues. The environmental respondents plainly have reason for concern in both cases. They won in the Ninth Circuit, the Supreme Court’s favorite circuit for reversal in environmental cases. One sign of potential trouble for the respondents: The Court asked the Solicitor General in both cases whether the cases warranted review. The SG said no, that neither case presented an important legal issue. Typically, the Court will take a case despite the SG’s negative view only if there are at least four Justices (the number required to grant review) contemplating reversal. Of course, Justices can and do change their minds once they have the benefit of full briefing and oral argument. For both Decker and LA County, environmental respondents are plainly hoping for just that.
Whether the October Term 2012 is a true blockbuster for environmental law may depend on the fate of petitions, should they be filed with the Court, seeking further review of the D.C. Circuit’s recent Clean Air Act rulings in Coalition for Responsible Regulation v. Jackson (EPA’s greenhouse gas regulations) or EME Homer City Generation v. EPA (EPA’s Cross-State Air Pollution Rule). EPA won the first in June and lost the second in August. Should the losing parties in either case successfully petition for Supreme Court review, the promise of a blockbuster Term will likely materialize.
Posted on August 8, 2012
Under the federal Clean Water Act (CWA), most municipalities in the United States are now required to have National Pollutant Discharge Elimination System (NPDES) permits for discharges of stormwater/urban runoff. As intended by Congress, both the U.S. Environmental Protection Agency (EPA) and authorized state NPDES permit writers originally took a programmatic approach relative to the requirements they put into such Municipal Separate Storm Sewer Systems or “MS4” permits. Over time, though, municipalities have, in various ways, been required to address water quality standards more directly, including where such standards are expressed quantitatively.
In California, this has manifested itself in the issuance of MS4 permits containing provisions called “Receiving Waters Limitations,” which, among other things, preclude the permitted municipal stormwater discharges from “causing or contributing to a violation of an applicable water quality standard.” Since this ambitious goal is a tall order that likely cannot be met without the construction of large, capital-intensive detention and treatment facilities for which no funding is available, other language contained in these MS4 permits has instructed the municipality that if “exceedances of water quality standards persist,” they must evaluate and submit plans to improve their stormwater management programs to address the situation and then implement such plans and improvements according to a schedule they propose – an “iterative process” that envisions reasonable further progress towards the achievement of water quality standards over time and which inherently recognizes that resource and feasibility constraints may inform the pace of that progress.
Last year, in NRDC v. County of Los Angeles, et al., 636 F. 3d 1235 (9th Cir. 2011), the U.S. Court of Appeals ruled that demonstrating compliance with the iterative process language in these MS4 permits did not create a safe harbor and shield a municipality from direct enforcement of the Receiving Water Limitations themselves, including by means of a citizens’ suits. The U.S. Supreme Court recently granted cert. in this case, raising a glimmer of hope for municipalities that a reasonable further progress approach might somehow be restored.
Unfortunately, the High Court may well not speak directly to this issue notwithstanding its practical import for municipalities. Its cert. grant instead requested briefing and argument on the more unusual and academic issue of whether water that flows from one portion of a river that is navigable water, through an MS4 or other engineered channel, and into a lower portion of the same river is “discharge” from an “outfall” requiring an NPDES permit. As its cert. grant itself suggests, this is an issue the U.S. Supreme Court likely already addressed in South Florida Water Management District v. Miccosukee Tribe of Indians, 541 U.S. 95 (2004). Accordingly, if the Ninth Circuit’s decision is reversed on this basis and without a discussion of the broader issues that caused it to arise, it will be left to Congress, EPA, or state permit writers to decide if they are willing to restore a reasonable further progress approach to municipal stormwater permitting.
Posted on July 23, 2012
The Supreme Court’s recent decision on the Patient Protection and Affordable Care Act (Act) caused equal parts celebration and outrage by upholding the constitutionality of the individual mandate as a tax. Environmental lawyers, however, are focusing on other, less prominent aspects of the decision, which could have implications for the constitutionality of environmental laws. These aspects are: (1) the conclusion of a bare majority of the Court that the Act’s individual mandate was not within Congress’ Commerce Power; (2) the holding -- concurred in by seven justices -- that the withholding of all Medicaid funds from states refusing to expand their coverage as required by the Act exceeded Congress’ power under the Spending Clause and ran afoul of the anti-commandeering principle of the Tenth Amendment.
The Court’s Commerce Clause ruling addressed the individual mandate’s requirement that those not participating in the health insurance market purchase health insurance unless covered by an exclusion. In their opinions on this issue, Chief Justice Roberts and Justices Scalia, Kennedy, Thomas and Alito agreed that failure to participate in the health insurance market did not warrant regulation under the Commerce Clause simply because that inactivity had an effect on the premiums charged to others buying health insurance. As Chief Justice Roberts put it: “The Framers gave Congress the power to regulate commerce, not to compel it.” Slip op. at 24 (emphasis in original). This feature of the Court’s ruling may have no precise analogue in environmental statutes: typically environmental statutes prohibit or restrict activity with an arguable relation to interstate commerce rather than compelling such activity. But certainly environmental lawyers will be searching for one.
More generally, the five justices in the majority on this issue made clear their resolve to extend the restrictive view of the Commerce Power announced in cases such as U.S. v. Lopez and U.S. v. Morrison and to cabin decisions suggesting a more generous view of that power, such as Wickard v. Filburn and Gonzales v. Raich. This resolve could affect future Commerce Clause rulings on the permissible scope of the Endangered Species Act, the Clean Water Act, and other environmental statutes: interpretations of the Clean Water Act influenced by restrictive commerce clause decisions have already narrowed its scope.
The Court’s holding on the Medicaid expansion provision could have more direct implications for environmental statutes, particularly for cooperative federalism arrangements under statutes such as the Clean Air Act that threaten to withhold federal funds if states do not agree to implement prescribed programs. The expansion provision required states to expand coverage to low income individuals as well as make other changes; states that failed to undertake this expansion were threatened with loss of all federal Medicaid funds. Seven justices agreed that the choice the Act offered to the states – expand or forfeit all Medicaid funds – was not a choice at all, but coercion and therefore impermissible. Their views appear in two opinions, one by Chief Justice Roberts, joined by Justices Breyer and Kagan, and another by Justices Scalia, Kennedy, Thomas, and Alito.
While coming to the same conclusion on this issue, the two opinions were not entirely aligned on the features of the case that justified this conclusion, and neither drew clear lines for application in future cases. Both opinions stressed the relative size of the forfeiture – all of Medicaid funds, which equaled nearly 22% of all state expenditures. Both noted that the penalty upheld in South Dakota v. Dole -- withholding of 5% of federal-aid highway funds from states that failed to raise their drinking age to 21 – amounted to less than half of one percent of South Dakota’s budget. But neither offered to fix the outermost line: too much is somewhere between 0.5 and 22%. In a theme not picked up by the others, Justice Roberts’ opinion also argued that the expansion represented a new program, which impermissibly used the funds provided through an existing program (pre-expansion Medicaid) to leverage its acceptance by the states. How the courts develop these different strains of analysis in future cases and what lines of demarcation emerge will determine the significance of threats to existing or future environmental law provisions that rely on the Spending Power.
Posted on January 12, 2012
The Supreme Court heard oral argument this morning (January 9, 2012) in Sackett v. EPA, No. 10-1062. EPA had issued a compliance order charging the Sacketts with filling in a wetlands, in the course of building their home, in violation of the Clean Water Act and requiring them to restore their property. The Sacketts dispute that their property is a wetlands and seek an opportunity for judicial review of EPA’s order. EPA argues that the Sacketts could comply with the EPA order or submit an application for a wetlands permit or defend if EPA brings an enforcement action, but may not seek judicial review of EPA’s order.
The tenor of the oral argument did not bode well for the United States. Some of the Court’s questions seemed to focus on how to write the opinion and the consequences of a ruling for the Sacketts. If the Sacketts prevail, it will be important to see how EPA responds and what if any changes are made to EPA’s practice and procedure for issuing orders in wetlands and perhaps other matters. The transcript of the Supreme Court argument is available [here].
The toughest questions and comments were aimed at counsel for the United States, Malcolm Stewart. Justice Alito stated: “Mr. Stewart, if you related the facts of this case as they come to us to an ordinary homeowner, don't you think most ordinary homeowners would say this kind of thing can't happen in the United States?” (Tr. 37)
Chief Justice Roberts asked “what would you do, Mr. Stewart, if you received this compliance order? (Tr. 35). When Stewart responded that one could apply for an after-the-fact permit,” Chief Justice Roberts replied “You wouldn’t do that, right? You know you will never get an after the fact permit if the EPA has sent you a compliance order saying you’ve got wetlands.” (Tr. 36) Earlier, Justice Kagan had asked counsel for the Sacketts rhetorically whether the critical point wasn’t that EPA would not entertain an after-the-fact permit while a compliance order is outstanding. (Tr. 12). Justice Alito expressed the view it “seems very strange for that, for a party to apply for a permit on the ground that they don't need a permit at all.” (Tr. 14).
The government’s alternative solution, that one could comply with the compliance order, met with an incredulous response from Chief Justice Roberts: ”That's what you would do? You would say, I don't think there are wetlands on my property but EPA does, so I'm going to take out all the fill, I'm going to plant herbaceous trees or whatever it is, and I will worry about whether to -- that way, I'll just do what the government tells me I should do.” (Tr. 36-37).
Justice Breyer focused on the finality of the EPA order for purposes of judicial review, stating “for 75 years the courts have interpreted statutes with an eye towards permitting judicial review, not the opposite. And yet -- so here you are saying that this statute that says nothing about it precludes review, and then the second thing you say is that this isn't final. So I read the order. It looks like about as final a thing as I have ever seen.” (Tr. 41)
Justice Ginsburg asked Mr. Stewart whether, once EPA made the determination that there were wetlands, that be the end of the matter as far as EPA is concerned. Mr. Stewart got himself in difficulty when he replied “ I think they have reached that conclusion for now. I don't think it would be accurate to say that we have done all the research we would want to do if we were going to be required to prove up our case in court.” (Tr. 51) Justice Alito was not pleased with that reply: “Well, that makes the EPA's conduct here even more outrageous. We think now that this is -- these are wetlands that -- that qualify, so we're going to hit you with this compliance order, but, you know, when we look into it more thoroughly in the future, we might change our mind?” (Tr. 51)
In questions to counsel for the Sacketts, Justice Breyer noted the government’s concern that “when you get judicial review of this kind of order, the Court doesn't refer on fact-finding that isn't made on a record. * * * And so they'll have a hard time -- or a harder time -- in each of these cases subjecting it to judicial fact-finding.” Justice Breyer suggested that EPA might change its procedure if the Sacketts prevail, and providing some type of pre-order or post-order procedure that would be open to change. (Tr. 55)
It is of course always difficult to predict the outcome of a Supreme Court case with certainty simply based on oral argument. That being said, it is also difficult to be optimistic about the government’s chances of prevailing based on the comments made by the court during oral argument today. Whatever the outcome, the Court’s ruling will likely be an important environmental and administrative law precedent.
Posted on January 11, 2012
I am generally loath to speculate about what the Supreme Court will do based on oral argument, but the overwhelming reaction to the oral argument in Sackett v. EPA was that EPA is going to lose. What would a loss mean? In simplest terms, EPA would no longer be able to issue enforcement orders under the Clean Water Act without those orders being subject to judicial review. Such a decision would undeniably be significant. Everyone practicing in this area knows how coercive EPA enforcement orders can be. A person who thinks that he is not liable or that the order is inappropriate, and faced with having to violate the order and wait for EPA to bring an enforcement action to obtain judicial review, is truly between a rock and a hard place – or perhaps Scylla and Charybdis (I’m not sure which, but it’s not good, either way). The opportunity for preenforcement review would eliminate much of EPA’s coercive power.
The big question is whether a decision against EPA would be so broad as to make it clear that EPA’s order authority under other statutes, such as CERCLA, would be similarly affected. Here, speculation really is difficult, because the Supreme Court could invalidate EPA’s CWA authority several different ways, with differing impacts on other statutes. Readers who want to explore the issue in more depth than a blog post can review an article I did in the ABA Superfund and Natural Resource Damages Litigation Committee Newsletter.
As long as I am speculating, I’m going to go out on limb and predict that the Court’s decision will not be easily limited to the CWA. I think EPA’s order authority is in trouble across the board.
The next big question is when lower courts are going to actually start paying attention to what the Supreme Court says about environmental cases. I’m tired of this pattern. A series of cases are decided by lower courts, almost universally in EPA’s favor. Indeed, one of the striking things about Sackett is that the Supreme Court took the case without a circuit court split – EPA had won before every circuit court that had reached the question. The Supreme Court applies principles that are broadly accepted outside the environmental arena, but which for reasons unknown to everyone but the lower court judges have been thought inapplicable to environmental cases, and EPA loses. The next several years are spent with EPA, DOJ, and the lower courts merrily constructing some new edifice which allows EPA to continue to win – until the Supreme Court takes another case and says “No, we really meant it.”
There is a lesson here for lower courts, if they would but listen. Environmental cases are not sui generis. EPA does not necessarily win just because it is protecting the environment. General principles of corporate, administrative, and constitutional law apply. Under this framework, EPA will still win most of the time. That’s the nature of administrative law. Expert agencies receive a lot of deference from the courts in interpreting their organic statutes and applying their expertise. But they don’t win all the time, and they don’t win just because they are EPA.
Rant over. Let’s see what the Supremes actually do.