View from the Top: John Cruden on Federal Environmental Enforcement

Posted on July 28, 2015 by Blogmaster

 

ACOEL Fellow John Cruden, head of DOJ’s Environment and Natural Resources Division, recently gave this speech to the ABA Litigation Section on the current direction of federal environmental enforcement efforts.  The speech focuses on efforts to coordinate with and leverage local, state, regional and international partners.

DUTCH COURT: NETHERLANDS MUST DO MORE TO REDUCE GREENHOUSE GAS EMISSIONS

Posted on July 21, 2015 by John Dernbach

            On June 25, 2015, The Hague District Court in the Netherlands issued an order and opinion requiring the Netherlands to reduce its greenhouse gas emissions by 25 percent below 1990 levels by 2020.  This level is more ambitious than the 17 percent reduction goal to which the Dutch government has currently committed.  The case, Urgenda Foundation v. State of the Netherlands suggests what courts may be willing to do when government policy lags behind what climate science indicates is needed. 

            Urgenda sued the government in tort under the Dutch Civil Code on behalf of itself and 886 individuals, claiming among other things that “the State is in breach of its duty of care for taking insufficient measures to prevent dangerous climate change.”  For U.S. lawyers, accustomed to limited governmental tort liability under federal and state law, the breadth of this claim may be startling.  But it was also novel, though less so, to the court, which explained that this legal issue “has never before been answered in Dutch proceedings.” 

            Although the state has considerable discretion in policy making for climate change, the court said, that discretion is constrained by both the U.N. Framework Convention on Climate Change and the Treaty on the Functioning of the European Union (TFEU).  Objectives and principles of the Climate Change Convention and the TFEU that constrain Dutch discretion, the court said, include “protection of the climate system, for the benefit of current and future generations, based on fairness;”  the precautionary principle, and consideration of “available scientific and technical information.” 

            Urgenda’s case was based on numerous scientific reports, including the 2007 report of the Intergovernmental Panel on Climate Change (IPCC), which said that Annex I countries (including both the Netherlands and the United States), need to reduce their greenhouse gas emissions by 25-40 percent below 1990 levels by 2020, and 80-95 percent below 1990 levels by 2050, to limit the global temperature increase to 2.0 degrees Celsius.    Parties to the Convention on Climate Change have agreed that a temperature increase above that level (equivalent to 3.6 degrees Fahrenheit) would be dangerous. 

            After analyzing multiple factors relevant to the appropriate duty of care, the court concluded that the state “has acted negligently and therefore unlawfully towards Urgenda by starting from a reduction target for 2020 of less than 25% percent compared to the year 1990.”   It ordered a 25 percent reduction, saying there are “insufficient grounds for the lower limit” of a 40% reduction from 1990 levels specified in the 2007 IPCC report.  

            Although the case was decided under Dutch legal rules that are quite different from our own, and may be appealed, it has significance to U.S. lawyers.  First, it shows great respect for climate change science, describing IPCC and other scientific reports in considerable detail.  The case therefore underscores the important role that courts can play in affirming the validity of climate change science.

            Second, the court’s willingness to interpret domestic law in ways consistent with international commitments, including those in the Convention on Climate Change as well as the commitment to keep warming to 2.0 degrees Celsius, raises an interesting and important question about whether U.S. domestic laws related to climate change also should be interpreted in ways consistent with international commitments.  U.S. courts have often held that statutes should be construed in a manner consistent with treaties and other international obligations.    

            Finally, the decision indicates the value of judicial intervention as a way of forcing governments and businesses to do more than they are doing.  Additional legal support for such cases was provided, in March 2015, by the issuance of the Oslo Principles on Global Climate Change Obligations.  These principles were developed by a group of legal experts from around the world.  The central idea is that “[s]tates and enterprises must take measures, based on” the precautionary principle, “to ensure that the global average surface temperature increase never exceeds pre-industrial temperature by more than 2 degrees Celsius.”  Many sources of local, national, and international law support these principles, the experts said, including “international human rights law, environmental law and tort law.” 

            According to a report issued on July 16, 2015 by the American Meteorological Society, 2014 was the warmest year on record.  As the effects of climate change intensify, there may be more such litigation, and decisions like this could become more common.       

Can the Majority and the Dissent Both Be Wrong? The Supreme Court Remands the MATS Rule

Posted on June 30, 2015 by Seth Jaffe

In Jonathan Cannon’s excellent post on Monday’s Supreme Court decision in Michigan v. EPA, he noted that the majority and the minority aren’t actually that far apart in their views on whether EPA must consider costs in this rulemaking.  I have a slightly different take:  They may not be that far apart, but they’re both wrong.  

In fact, the issue in Michigan v. EPA seems so simple that the MATS rule could have been affirmed in a two-page opinion.  Judge Scalia notes that the word “appropriate” – on which the entire 44 pages of the majority, concurring, and dissenting opinions focus – is “capacious”.   I agree.  If so, and if Chevron means anything, “appropriate” is surely capacious enough to allow for an interpretation that does not include cost considerations.  That should have been the end of the case.

I do feel compelled to note, however, that Justice Kagan’s dissent also got it wrong, in at least three ways:

  • I think she’s flat wrong to suggest that, because the MATS “floor” is based on the top 12% of facilities already in operation, that means that establishment of the floor already takes cost into account. As Justice Scalia cogently notes, those existing facilities may well have been under their own regulatory duress – a duress that may not have considered cost.
  • Justice Kagan confuses cost-benefit analysis and cost-effectiveness analysis. For any given goal sought by EPA, the various options provided by the MATS rule may allow power generators to attain the goal in the most cost-effective means possible, but if even the most cost-effective approach were to yield $10B in costs and $10M in benefits, that would fail the cost-benefit test for most people.
  • Finally, and most importantly, Justice Kagan got the consequences wrong. Instead of suggesting, as she did, that the majority decision,
 "deprives the American public of the pollution control measures that the responsible Agency, acting well within its delegated authority, found would save many, many lives,"  
she should have made the point that the majority decision will have no impact on EPA or the MATS rule.  The Supreme Court did not vacate the rule; it merely remanded the rule to the Court of Appeals.  Justice Kagan’s position should have been that EPA still has sufficient discretion, even on the existing record, to defend the MATS rule within the confines of the majority opinion.  Instead, Justice Kagan gave ammunition to those who oppose the rule, by suggesting that it cannot be saved.

A pox on both their houses.

Do Climate Change and Same-Sex Marriage Have Anything in Common?

Posted on June 29, 2015 by Seth Jaffe

Recent events have me pondering this question.

Most notably, in two court decisions last week, courts ordered the State of Washington and the government of the Netherlands to take more aggressive action against climate change.  In the Washington case, in response to a complaint from eight teenagers, a trial court judge has ordered the Washington Department of Ecology to reconsider a petition filed by the teenagers requesting reductions in GHG emissions.  Similarly, in the Netherlands, a court ordered the government to reduce GHG emissions by 25% within five years.  The Dutch case was brought under human rights and tort law, not under existing Dutch environmental laws.

I have been very skeptical of the use of nuisance-type litigation to require more aggressive government regulatory efforts.  I still think comprehensive market-based regulation is the best approach.  However, in the absence of aggressive action in the United States and world-wide, these suits are going to increase in number.

So, how are they similar to the same-sex marriage issue?  First, as noted in Obergefell, courts were initially – and for some time – not just unfriendly to litigation efforts in support of same-sex marriage, they were positively dismissive.  Second, there is the gradual increase over time in the litigation.

Next, there is also the change over time in the scientific understanding of the issues.  While same-sex marriage has always been, on both sides, primarily a moral issue, it would be wrong to ignore the role that an increasing understanding of the genetics of sexual preference has played in the debate.  Similarly, the move towards an overwhelming weight of evidence, not just that climate change is occurring, but that it is anthropogenic, has obviously been important to the climate change debate.

Finally, while the moral issues in same sex marriage may seem to distinguish it from the climate issue, the recent papal encyclical makes clear that there are moral aspects to the climate change debate as well.

I have no crystal ball.  I do not know whether we are going to see a groundswell, and then, perhaps, a tidal wave that will somehow overcome the gridlock in United States and world politics on climate change.  There are differences in the two issues, most obviously in the short-run economic costs of addressing climate change.  Nonetheless, I do know that it wouldn’t surprise me if the tidal wave comes, and relatively soon.

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Climate-change-how-does-it-work

If Congress Wants to Limit EPA’s Discretion, Perhaps It Should Do a Better Job Legislating

Posted on June 5, 2015 by Seth Jaffe

Earlier this week, the D.C. Circuit Court of Appeals rejected both industry and environmental group petitions challenging EPA’s determination of what is a solid waste in the context of Clean Air Act standards for incinerators and other combustion units.  It wasn’t actually a difficult case, but it does provide a lesson for Congress.  When the technical nature of EPA’s decisions was layered on top of the fundamental deference given EPA’s interpretation of the statute under Chevron, the petitioners were never going to prevail:

We afford great deference to EPA’s determinations based on technical matters within its area of expertise.

Scrap_Tires

The crux of the environmental petitioners’ case was that certain of the materials, such as scrap tires, exempted by EPA from the definition of solid waste, are unambiguously “discarded” within the meaning of RCRA, so that EPA did not have discretion to exempt them.  Unfortunately, as the Court noted:

the term “discarded” is “marked by the kind of ambiguity demanding resolution by the agency’s delegated lawmaking powers.”

In other words, given the current state of decrepitude of the non-delegation doctrine, when Congress enacts legislation using words as vague as “discarded”, it is essentially telling EPA to figure out what Congress meant to say.  And when EPA does figure out what Congress meant to say, the Courts are not going to disturb EPA’s interpretation.

For those in Congress who don’t like the way EPA implements statutes for which it is responsible, they might learn a lesson from Pogo.

EPA Is Not an Expert in Determining Electric System Reliability

Posted on May 7, 2015 by Seth Jaffe

The D.C. Circuit Court of Appeals just reversed and remanded EPA’s rule allowing backup generators to operate for up to 100 hours per year as necessary for demand response. It’s an important decision that could have lessons for EPA and the regulated community across a wide range of circumstances, including eventual challenges to EPA’s proposed GHG rule.

demand response

EPA said that the rule was necessary to allow demand response programs to succeed while maintaining grid reliability.  Commenters had argued that, by encouraging greater use of uncontrolled backup generators, EPA’s rule makes other generators less economic, thus creating a negative feedback loop, with less and less power generated by controlled units, resulting in greater and greater need for uncontrolled backup generators. Here’s what the Court concluded:

  1. EPA failed adequately to respond to the commenters’ arguments. Noting that “an agency must respond sufficiently to “enable [the court] to see what major issues of policy were ventilated,” the Court instead found that EPA “refused to engage with the commenters’ dynamic markets argument."
  2. To the extent EPA did respond, it was “self-contradictory”, arguing that it was not justifying the regulation on reliability grounds, even though the final rule said that it was based on reliability concerns.
  3. The 100-hour rule was based on faulty evidence. EPA relied on evidence that backup sources had to be available at least 60 hours to participate in a PJM “Emergency Load Response Program.”  However, PJM itself noted that this minimum does not apply to individual engines.
  4. Finally, and perhaps most importantly, while EPA justified the rule on reliability grounds, the Court stated that:

grid reliability is not a subject of the Clean Air Act and is not the province of EPA.

This last issue is the part of the opinion that could have some bearing on judicial review of EPA’s GHG rule.  The Court noted that there was no evidence that FERC or NERC had participated in the backup generator rule or provided comments to EPA.  When, during the course of the rulemaking, a commenter suggested that EPA work with FERC, this was EPA’s response:

the rulemaking’s purpose was to address emissions from the emergency engines “and to minimize such pollutants within the Agency’s authority under the CAA. It is not within the scope of this rulemaking to determine which resources are used for grid reliability, nor is it the responsibility of the EPA to decide which type of power is used to address emergency situations.”

This statement did not make the Court happy:

EPA cannot have it both ways it [sic] cannot simultaneously rely on reliability concerns and then brush off comments about those concerns as beyond its purview. EPA’s response to comments suggests that its 100-hour rule, to the extent that it impacts system reliability, is not “the product of agency expertise.”

And why is this relevant for the GHG rule?

First, because EPA had better consult with FERC and NERC, so that it can defend any statements it makes in the GHG rule about its impact, if any, on reliability.  Second, it’s clear that the court will not show deference to EPA’s conclusions about reliability, since that is not within the scope of EPA’s expertise.

Eroding Ice: Fourth Circuit’s recent decision limiting “Arranger Liability”

Posted on April 29, 2015 by George von Stamwitz

A plaintiff seeking to characterize a business transaction as “disposal” under CERCLA may now feel like a polar bear looking for a patch of thick ice. 

On March 20, 2015, a divided panel on the Fourth Circuit Court of Appeals, in Consolidation Coal Co. v. Ga. Power Co., affirmed a District Court's ruling holding that transformer sales did not evidence an intent on to dispose of hazardous materials, and therefore did not support a finding of “arranger liability” under “CERCLA” even when words like “scrapping” and “disposal” were used. Looking to the framework of the Supreme Court’s 2009 ruling in Burlington Northern Burlington Northern and Santa Fe Railway Co. v. United States and the Fourth Circuit’s 1998 ruling in Pneumo Abex Corp. v. High Point, Thomasville & Denton Railroad Co., the 2-1 majority held that while a party who sells a product that contains hazardous substances also “‘intends’ to rid itself of that hazardous substance in some metaphysical sense… [an] intent to sell a product that happens to contain a hazardous substance is not equivalent to intent to dispose of a hazardous substance under CERCLA.” Rather, in the court’s words, “there must be something more.” 

Georgia Power, a major Georgia electrical utility that supplies power to most of Georgia, sold used electrical transformers containing PCBs to Ward Transformer Company. Ward repaired and rebuilt used transformers for resale. In the process, Ward’s Raleigh, North Carolina, facility became contaminated with PCBs. After the Ward site was added to the National Priorities list, Consolidated Coal Company and another company bore most of the cleanup costs as PRPs under CERCLA, spending approximately $17 million each in cleanup costs. 

Any attorney who has ever tried or been involved with a CERCLA case knows that Georgia Power, given these facts, looks like a prime target to sue for contribution.

In their appeal to the Fourth Circuit Court of Appeals, Consolidated Coal argued the District Court improperly considered the low value of the used transformers and Ward’s ability to profit from their resale. This, Consolidated Coal contended, overlooks the possibility that Georgia Power had a “dual intent” to make money from the sales of transformers and thus had an intent to dispose of the hazardous materials as an arranger. Thus, according to Consolidated Coal, Georgia Power’s “secondary motive” for the transformer sales -- to dispose of PCBs –- was sufficient to create arranger liability under CERCLA. 

The Court concluded that there was no direct or substantial evidence that Georgia Power intended, “even in part,” to arrange for disposal. Furthermore, the use of the words “scrapping” or “disposal” in Georgia Power’s documents had “limited bearing” on their intent to “dispose” of transformers as the word is construed in CERCLA, let alone the PCBs within those transformers. The Court was also not swayed by the fact that the transformers were sold in lots and that some of the transformers were partially disassembled, or that old oil was required to be removed from the transformer as part of the reconditioning process. According to the Court, all Georgia Power did was to sell its transformers to the highest bidder.

While these cases remain fact sensitive, the trend lines suggest CERCLA plaintiffs alleging “disposal” may be on thin ice.

Perhaps a Corps Jurisdictional Interpretation is Final Agency Action After All

Posted on April 16, 2015 by Seth Jaffe

After Sackett, the question on everyone’s mind was “How far does it go?”  The first test of that question was the decision by the 5th Circuit Court of Appeals – not known as a bastion of liberalism – in Belle Company v. Corps of Engineers, holding that a Corps jurisdictional determination is not final agency action subject to judicial review.  Late last week, however, in Hawkes Co. v. Corps of Engineers, the 8th Circuit disagreed, creating a circuit split.

As we noted at the time, the 5th Circuit decision in Belle focused on the differences between the Sacketts’ position facing an enforcement order and that of Belle Company facing a Corps JD.  As the 5th Circuit emphasized, the JD did not require Belle Company to do anything.  Nor did the JD expose Belle Company to penalties.  Nor did it prejudice Belle Company’s ability to obtain a permit.  Nor did it include a finding of a CWA violation.

The 8th Circuit took a different tack, focusing instead on the one great, glaring similarity between the enforcement order in Sackett and the JD in Hawkes Co. – in both cases, the Corps’ decision, as a practical matter, defined the property owner’s rights and ended the proceeding.

It’s not obvious to me that the Supreme Court will take the case, even with the circuit split.  I don’t think that the Court likes these cases.  On the other hand, it is obvious that the conservative wing of the court sees Sackett as a very important decision and there could well be four votes to decide the issue at this point.

If the Court does take the case, all bets are off.  I think that the 5th Circuit still has the better of the legal argument, and I expect that will be sufficient for all but the most ardent property rights advocates on the Court.  Whether there are five ardent property rights advocates on the Court is what remains to be seen.

Oklahoma Federal Court Says It Lacks Jurisdiction to Award Declaratory Relief to EPA in Clean Air Act Case

Posted on March 23, 2015 by Donald Shandy

On January 15, 2015, Oklahoma Western District Judge Timothy DeGiusti dismissed a declaratory judgment action brought by the United States Environmental Protection Agency (EPA) against Oklahoma Gas and Electric Company (OG&E) under the Clean Air Act.  In United States v. Okla. Gas & Elec. Co. , the Court found that it lacked subject matter jurisdiction over EPA’s claims.

The litigation involved certain modifications made by OG&E at its Muskogee and Sooner plants.  These modifications occurred more than five (5) years prior to EPA’s suit.  Before commencing each of the projects, OG&E submitted “Project Notifications” to the Oklahoma Department of Environmental Quality (DEQ) that: (1) stated that each of the modifications would not result in a significant emissions increase; and (2) committed to submitting annual reports supporting this conclusion.  OG&E did not submit detailed emissions calculations.  However, five years of data subsequent to the modifications confirmed that significant emissions increases did not occur. 

Although the underlying dispute revolves around whether OG&E was required to obtain a Prevention of Significant Deterioration (PSD) permit before commencing each of the modifications, EPA did not allege that the projects were “major modifications” or that the projects resulted in “significant emissions increases” from the Sooner or Muskogee plants.  Nor did the government seek penalties for violations of the PSD permit requirements or injunctive relief requiring OG&E to obtain permits, likely seeking to avoid the application of the five year general statute of limitations applicable to government claims for fines, 28 U.S.C. § 2462. Instead, the government only sought a declaration that OG&E did not properly project whether the modifications to the Sooner and Muskogee plants would result in a significant increase in emissions.

Given that the government did not allege a “major modification” or a “significant emissions increase” for any of the projects, the Court found that the government had not presented an actual case or controversy sufficient for the Court's exercise of jurisdiction. 

Even if OG & E failed as a matter of law to evaluate whether the modifications would result in a significant increase in post-modification emissions of regulated pollutants at each facility, that failure to project is not, without more, determinative of whether a PSD permit is required. Unmoored from a claim that the modifications at issue are major modifications, Plaintiffs ask this Court to make a declaration as to a collateral legal issue governing aspects of a future potential suit. EPA's attempt at piecemeal litigation, therefore, cannot withstand the Court's jurisdictional limitations.

The Court also rejected EPA’s novel claim for injunctive relief seeking to require OG&E to properly calculate whether the projects were likely to result in a significant emissions increase prior to construction.

The Court is not aware of any decision in which the injunctive relief requested by EPA has been granted, or for that matter, ever requested. As the parties concede, there is no statutory or regulatory requirement that projections be submitted to EPA or any other regulatory authority in the first instance. And, as the Sixth Circuit addressed in DTE Energy, there is no prior approval required by the agency. Thus, if the Court were to grant the injunctive relief requested by EPA it would be directing OG & E to submit projections where no statutory or regulatory authority for such action exists. The availability of relief of the nature requested by EPA is a matter to be addressed by Congress, not this Court.

This is an important decision limiting EPA’s ability to “second-guess” a facility’s pre-construction permitting calculations in the absence of data demonstrating a significant emissions increase.  

Never Mind the Road to the Final Four. How About the Road to the Right Case for Revisiting Auer Deference?

Posted on March 17, 2015 by Andrea Field

In its March 9, 2015 decision in Perez v. Mortgage Bankers Association, the Supreme Court held that the Administrative Procedure Act’s notice-and-comment requirement “does not apply . . . to interpretative rules.”  The decision was unanimous, but the concurring opinions of Justices Alito, Scalia, and Thomas express concern with the consequences of the Court’s opinion.   As set out well in the temperate concurrence of Justice Scalia (yes, it really is temperate), in giving the category of interpretive rules Auer deference: 

we do more than allow the agency to make binding regulations without notice and comment.  Because the agency (not Congress) drafts the substantive rules that are the object of those interpretations, giving them deference allows the agency to control the extent of its notice-and-comment-free domain.  To expand this domain, the agency need only write substantive rules more broadly and vaguely, leaving plenty of gaps to be filled in later, using interpretive rules unchecked by notice and comment.

While the three concurring justices are looking down the road for the right case for revisiting what is generally known as Auer deference (i.e., judicial deference to an agency’s interpretation of its own regulations), Seth Jaffe’s next-day blog posting suggests that the road to the right case might be a long one.           

I agree that the Court is unlikely to revisit Auer during the current Administration.  But what happens if those in the next Administration disagree with choices made by the current Administration?  What if they choose to address those disagreements by issuing a tsunami of interpretative rules that reverse both longstanding interpretive rules on which people have relied and/or the newer interpretive rules of the current Administration?  What happens, for example, if the next Secretary of the Department of Labor reverses the interpretive rule upheld by Perez?  Will those adversely affected by such a new interpretive rule stand by without protest?  Will they be satisfied with Justice Sotomayor’s suggestions for recourse (e.g., by trying to persuade courts that the reinterpretations are arbitrary and capricious)? 

I think not.  I think that just a short jog down the road, we will see some particularly bold (or outrageous) re-interpretative rules flowing from agencies unimpeded by fears of the judicial review process.  That will prompt challenges from those supportive of the previous interpretive rules.  And that might well prompt the Chief Justice and one or more other justices to join Justices Alito, Scalia, and Thomas in revisiting Auer deference.  I, for one, would welcome that revisit.    

News Flash: Courts Still Defer to an Agency’s Interpretation of Its Own Rules

Posted on March 10, 2015 by Seth Jaffe

The Supreme Court on Tuesday ruled that, when an agency revises its interpretive rules, it need not go through notice-and-comment rulemaking.  Although the decision, in Perez v. Mortgage Bankers Association, required the court to reverse a long-held line of D.C. Circuit cases, the decision was not difficult; it was, in fact, unanimous.  In short, the Administrative Procedures Act:

states that unless “notice or hearing is required by statute,” the Act’s notice-and-comment requirement “does not apply … to interpretative rules.”

It carves out no exception for revisions to interpretive rules.  Game over.

The truly interesting part of the case was in the concurring opinions.  Both Justices Scalia and Thomas, effectively joined by Justice Alito, argued that Supreme Court decisions giving deference to agencies’ interpretation of their own rules have no constitutional foundation and should be overruled.

This is not the first time that they have made these arguments.  As I noted previously, in Decker v. Northwest Environmental Defense Center, Chief Justice Roberts also suggested that it might be time to revisit what is generally known as Auer deference.  It is notable in Perez that the Chief Justice joined the Court’s opinion.  Absent a change in the make-up of the Court, I don’t see it revisiting Auer any time soon.

Otherwise, the most notable part of the case is a statement from Justice Thomas that, to me, already wins the metaphor of the year prize.  Justice Thomas’s argument against Auer deference, while couched in constitutional terms, is really a screed (parts of which I sympathize with) against the growth of rulemaking and the modern administrative state.  He laments the use of interpretive rules and the decline of formal notice-and-comment rulemaking, and the protections that are required:

Yeti-590x330

Today, however, formal rulemaking is the Yeti of administrative law. There are isolated sightings of it in the ratemaking context, but elsewhere it proves elusive.

True dat. It just doesn't justify abandoning Auer deference in my book.

 


No Competitors In My Backyard?

Posted on March 2, 2015 by Seth Jaffe

In Paradise Lost, John Milton wrote that “easy is the descent into Hell, for it is paved with good intentions.”  

road to hell

A modern environmental lawyer might say that the road to waste, inefficiency, and obstruction is paved with good intentions.  Nowhere is that more apparent than with citizen suit provisions, as was demonstrated in the decision earlier this week in Nucor Steel-Arkansas v. Big River Steel.

Big River Steel obtained a permit from the Arkansas Department of Environmental Quality to construct a steel mill in Mississippi County, Arkansas.  Nucor owns an existing steel mill in – you guessed it – Mississippi County, Arkansas.  Nucor brought a host of claims in various forums (Sorry; I’m not a Latin scholar and cannot bring myself to say “fora”) in an effort to derail the Big River Steel project.  It appealed the permit in Arkansas courts.  It also petitioned EPA to object to the permit.

Finally – the subject of this case – it brought a citizens’ suit under the Clean Air Act alleging that the permit did not comport with various CAA provisions addressing permitting.  The Court rightly dismissed the complaint, basically on the ground that the suit was simply an improper collateral attack on the air permit.  The 5th and 9th Circuits have reached similar conclusions in similar circumstances.

The point here, however, is that clients don’t want to win law suits; they want to build projects.  Even unsuccessful litigation can tie projects up in knots, jeopardizing project financing or causing a project to miss a development window.

The road to hell is paved with the pleadings of bogus citizen suits.

Court Rejects Preemptive Declaratory Judgment Lawsuit Against NGOs

Posted on February 24, 2015 by Peter Van Tuyn

In a decision lauded by local residents, Alaska Native tribal and business interests, the commercial and sport fishing communities, and conservationists, President Obama recently withdrew the Arctic waters of the North Aleutian Basin (also known as Bristol Bay) from future oil and gas leasing.  As President Obama  noted, Bristol Bay is a national treasure, one of Alaska’s most powerful economic engines, and home to one of the world’s largest salmon runs.  At the same time, the Obama Administration is working on the next outer continental shelf leasing program, and will soon be making critical decisions about whether and how to include within it leasing in the U.S. portion of the Arctic’s Chukchi and Beaufort Seas.

Industry interest in the area is led by Shell, which holds leases in the Chukchi and Beaufort Seas, and as detailed in an article I recently co-authored and in a dramatic cover story in the New York Times Magazine, has experienced a stormy effort to drill there.  Not content, however, to focus on the on-the-water challenges of drilling in the Arctic, Shell also pursued a novel legal strategy by preemptively suing its critics in an effort to smooth the waters for its drilling.

 After receiving approval from U.S. agencies for various aspects of its drilling plans, Shell filed lawsuits against conservation groups alleging that the groups were engaged in an “ongoing campaign to prevent Shell from drilling in the Arctic” and that it was “virtually certain” that the groups would challenge the federal approvals.  Shell sought a declaration from the courts that the approvals were legal. 

            The Ninth Circuit Court of Appeals recently issued an opinion rejecting Shell’s strategy on the jurisdictional ground that the Declaratory Judgment Act, on which Shell had based its strategy,  “does not create new substantive rights, but merely expands the remedies available in federal courts.”  The court noted that the law underlying Shell’s request for declaratory judgment was the Administrative Procedures Act (APA), which allows a party aggrieved by agency action to seek judicial review of that action, and that since it is only the agency that can be sued under the APA, “it would be odd to conclude that a [jurisdictionally-required] case or controversy exists merely because Shell seeks to know who would prevail if the environmental groups asserted an APA claim against the [agency].”  Indeed, as the court found, were it to hold otherwise, its “holding would create several unusual consequences,” two of which it found “particularly noteworthy”:

First, it would allow a district court to declare the [agency]’s actions unlawful under the APA in a judgment that is not binding on the [agency] itself. ... Second, absent agency intervention, such a lawsuit would allow the lawfulness of agency action to be adjudicated without hearing the agency’s own justification for its actions.

I would suggest that two other “unusual consequences” of a ruling for Shell would have been the upsetting of the historical body of administrative law guiding judicial review of federal agency action and an illegal limit on the First Amendment right of citizens to petition the government.  

The Poop on (and Unfortunately Surrounding) the Cow Palace

Posted on February 23, 2015 by Brian Rosenthal

The exception from solid waste regulations for agricultural waste applied as fertilizer is a safe harbor that has boundaries based on use. In Community Ass’n for Restoration of the Environment, Inc. v. Cow Palace, LLC (E.D. Wa, 2015), facts evidencing over applied fertilizer and leaking storage lagoons, recently led a district court to a finding of possible imminent peril to public health, welfare or the environment under RCRA.

The court’s partial framing of the legal questions was telling: 

(1) [W]hether the manure at the Dairy, when over-applied to land, stored in lagoons that leak, and managed on unlined, permeable soil surfaces, constitutes the “handling, storage, treatment, transportation, or disposal of . . . solid waste....” 

Defendant’s useful product counterargument did not overcome its waste handling practices, which were deemed deficient by the court. The case is an excellent primer for the storage and handling of agricultural waste and the parameters for waste handling by large concentrated animal feeding operations (CAFOS). The proper methods and conditions for land applying the waste as fertilizer are also discussed.

Many large farm operations properly manage waste and its use as land applied fertilizer. In Cow Palace, the court reviewed federal law and the overlay of required nutrient management best practice plans applicable to Washington farms by state regulation. Natural Resource Conservation Service lagoon storage rules and RCRA open dump rules were also addressed.

Deflated Footballs and Environmental Trials

Posted on February 11, 2015 by James Price

The 2015 Super Bowl between the New England Patriots and Seattle Seahawks is over, but the NFL’s investigation continues into whether the Patriots cheated by deflating footballs during earlier National Football League contests.  There are lessons in this experience for those of us who handle environmental trials or advise clients in such matters.

“Deflategate,” as this incident came to be known, tapped into sportswriters’, NFL veterans’, and the public’s distrust for (and maybe even dislike of) the Patriots in general and Bill Belichick, in particular.  Many critical comments referred back to the 2007 scandal in which Belichick and the Patriots were caught videotaping an opponent’s game signals.

Similar preconceived attitudes and prejudgments affect juries, and sometimes even judges, that are called on to decide environmental disputes.  Polling regularly shows that protecting the environment is a goal approved by a large percentage of the public.  Polling also shows that large percentages of potential jurors do not trust big business.  Jim Stiff, a jury consultant from Dallas, Texas, has studied comments during many mock jury deliberations and reports that potential jurors expect large corporations to know the regulations to which they are subject.  Jurors seldom give credence to a corporation’s arguments that the requirements were unclear, that the company thought it was complying when hindsight shows it was not, or that the company was doing the best it could in a difficult situation. Further, jurors often come to trial with a hindsight bias that leads them to ignore the evolution of environmental information and judge earlier conduct based on today’s knowledge.  

With civil trials, if an individual or small business is alleging injury from a large corporation’s environmental activities, jurors may focus on the specific allegations of damage they can see or with which they can identify, in contrast to the more abstract arguments advanced by the defendant. 

With environmental criminal trials, such difficulties are compounded by additional factors that can lower the thresholds of liability-creating activity and feed into jurors’ tendencies to reduce complex arguments into core principles they can grasp:

             -- Some environmental statutes impose criminal liability on the basis of negligent acts without requiring specific intent to commit a criminal act;

            -- Court rulings under other environmental statutes hold a defendant need only have intended to conduct the act at issue and not the resulting consequence of that act;

            -- Many environmental criminal cases include at least one count of failing to report an environmental event.  Prosecutors try to reduce failures to report to a black-and-white analysis:  The defendant did not report an event the statute required.

To counteract these attitudes, corporate defendants facing environmental allegations early on must develop themes that will appeal to juries (and judges, too) such as opponents’ overreaching and lack of harm.  They may need to cultivate arguments surrounding the complexity of the issues in dispute, but they must also make their case and themes simple.  They may argue that their actions were approved by environmental regulators, and, surprisingly enough, they should be prepared to demonstrate that the regulators have the public’s interest at heart and are not coddling the regulated community.  They need to have witnesses who can clearly explain complex technical matters in a way those without technical degrees can understand.  They will seek to exclude potentially prejudicial evidence of earlier events.  They will want to develop a thoughtful and strategic approach to juror selection. 

In the case of the Patriots, Bill Belichick gave a press conference a week before the Super Bowl in which he reported the Patriots had conducted experiments showing changes in weather and temperature could account for deflating the footballs.  He did not provide any details.  About the same time, physics professors and mechanical engineers reported online that the intrinsic physical properties of gases such as air are governed by a principle known as the Ideal Gas Law.  They said that under such principles, when footballs inflated at room temperature are taken to cold, wet, outdoor weather, drops in PSI are inevitable.  Most talking heads, however, seemed to brush off these assertions of physics properties and experiments.

All of the evidence in this matter is not in.  Nevertheless, in the court of public opinion, a large number of well-informed and probably well-intentioned people have made up their minds.  Maybe the Patriots did cheat.  Maybe not.  But the people who have already made up their minds, either way, might just be demonstrating the challenges corporate defendants face in environmental trials.

THE (NON)FINALITY OF SUPREME COURT OPINIONS

Posted on December 17, 2014 by Richard Lazarus

Last spring, as the Washington Post reported, I caught Justice Scalia in an embarrassing blunder that prompted the Justice to revise overnight the version of his dissenting opinion in EPA v. EME Homer City Generation, L.P. posted on the Supreme Court’s website. Scalia’s stumble? In his zeal to condemn EPA for what the Justice plainly considered to be an outrageous construction of Clean Air Act language in EME Homer, he somehow managed to get completely backwards what EPA had argued in Whitman v. American Trucking Ass’n.  And as the environmental law blogosphere cheerily trumpeted, what made the mistake especially “cringeworthy” was that Scalia himself had written the Court’s opinion in Whitman, so one was hard-pressed to blame just his law clerk.  (On the other hand, here at Harvard Law School, I was very much hoping it was not a Harvard clerk.)

However, what most fascinated me about the entire episode was not Scalia’s initial mistake, but the Court’s procedures for correction. The only reason the public knew about this particular correction was because Justice Scalia’s initial error had been so widely publicized, which was what in turn led me and others to spot the correction and publicize that as well. Otherwise, the correction was made entirely without the Court itself providing any notice. The slip opinion that appeared on the Court’s website was simply different from the one appearing the very next morning.

I was likely more focused on the Court’s process for correction because at that very moment, I had just completed a law review article on the Court’s longstanding, but wholly unappreciated, practice of revising slip opinions in just this kind of clandestine manner. And, not just dissenting opinions as in EME Homer, but also majority opinions of the Court.  The Court has literally always done this sort of thing, although no one had ever called them out on it.

I first became aware of the practice as a lawyer for the U.S. Department of Justice in 1987 when, at EPA’s prompting, we urged the Court to correct a “mistake” in its original slip opinion in International Paper Co. v. Ouellette, a significant Clean Water Act case, because of EPA’s concern that certain language in that opinion mischaracterized the role of citizen suits.  At our client’s urging, my then-boss, the Solicitor General, formally notified the Court of this “formal error” and the Court changed the language, precisely as we recommended, to eliminate the issue. As a result, the language appearing several years later in the bound volume of the U.S. Reports differed substantively from the original slip opinion language. No notice of this change was given, including to any of the parties in the case. The U.S. had participated as an amicus.

When this happened in 1987, I vowed someday to write on the topic.  It took me only about 27 years to do so, and the upshot appeared a few days ago in a lengthy article published in the December 2014 issue of the Harvard Law Review.  The article undertakes a full look at the Court’s practice, extending back to its earliest days until the present. (For example, Chief Justice Roger Taney added 18 pages to his opinion for the Court in Dred Scott v. Sandford in 1857, after the original opinion announcement.)

In my partial defense, not only did the necessary archival research require significant work over an extended time period, but the topic invariably took a backseat to other, seemingly more pressing, topics on which I was engaged.   In all events, the final article is now available here, and includes discussion of EME Homer, International Paper Company, and other environmental cases.

JERSEY PRAGMATISM

Posted on December 11, 2014 by Dennis Krumholz

A thought occurred to me recently, and not for the first time, about the decisions of the New Jersey state judiciary, including our Supreme Court, in the area of environmental law generally and site remediation particularly.  My realization was that those decisions are driven as much by a desire to facilitate the remediation of contaminated sites as they are by principled interpretation of statutes, regulations, canons of construction and the like.

Such an approach, of course, is understandable on one level, as New Jersey environmental statutes are ameliorative in nature, a cleaner environment is in the interest of everyone, and our fair state has suffered environmentally from its industrial legacy more than most jurisdictions.  But on a deeper level, courts are supposed to decide cases in accordance with law, and deciding cases with a particular goal in mind may result in an injustice to the litigants.  Moreover, fuzzy reasoning could provide inaccurate guidance to the bar and public.

In one recent case, for example, the Supreme Court of New Jersey was called upon to determine the degree of causation that the New Jersey Department of Environmental Protection (“NJDEP”) needed to establish in order to impose liability on a discharger of hazardous materials.  Rather than simply requiring proximate cause, the court hemmed and hawed its way along, formulating the appropriate standard at various points as a “real, not hypothetical” connection, and as a “reasonable nexus or connection” between the alleged discharger and the discharge. 

The Court ultimately held that the standard of causation needed to establish liability varies with the form of relief requested.  Unfortunately, the Court provided no support for this approach, which conflates the proof needed to establish liability with what is necessary to impose damages.  This leads to the conclusion that the Court was reluctant to impose a difficult burden of proof on the state and, presumably, private litigants which could result in judgments for defendants and hence, in the Court’s view, deter remediation of contaminated sites.

In another recent case, the Supreme Court had to determine the interplay between the jurisdiction of a state agency and state trial courts in adjudicating liability for site remediation.  The Court reversed the trial and appellate courts and held that a litigant could seek relief in court before the contours of the remediation had been firmly established. 

Undergirding the Court’s reasoning was pragmatism – the earlier we allow a contribution plaintiff to pursue other responsible parties, the more the defendants will be encouraged to participate in the remediation process, thereby facilitating more and faster cleanups.  While the result was correct as a matter of existing law, the reasoning was weighted far too heavily with an eye towards the result.

Finally, in a case that recently was argued and awaits adjudication, the Supreme Court was asked to determine whether a statute of limitations exists under the New Jersey Spill Compensation and Control Act, our state’s CERCLA analog, and, if so, how long it is and when it begins to run.  Implicit in many of the questions the Court asked the advocates was which resolution would facilitate the faster remediation of more sites – no statute of limitations at all, which would allow remedial claims to be brought at any time and not foreclose an action, or a limitations period which would incentivize the plaintiff and defendants to move forward more quickly to clean up sites.

Remediating the environment, and making sure responsible parties are held to their obligations, are plainly laudable goals.  But a little less focus on the ultimate environmental outcome and greater adherence to the principles of adjudication, statutory interpretation and the like would improve the quality of justice without sacrificing environmental protection.

Old MacDonald Had a Farm [Loan] E-I-E-I-O My

Posted on December 10, 2014 by Charles Nestrud

On December 2, 2014 the United States District Court for the Eastern District of Arkansas enjoined the Small Business Administration (SBA) and the Farm Service Agency (FSA) (together the “Agencies”) from making any payments on their loan guaranties to Farm Credit Services of Western Arkansas (Bank), pending the Agencies’ compliance with the National Environmental Policy Act (NEPA) and the Endangered Species Act (ESA).  The Bank had loaned nearly $5 million to C&H Hog Farms, Inc. (C&H) in 2012 for the construction of a confined animal feeding operation (CAFO), collateralized by a guaranty from the United States. 

The court’s decision paves the way for potential alteration of the collateral agreement terms, over two years after the non-party Bank had closed and funded the loan.  Such court action could jeopardize the farm loan guaranty program.

In its decision the court found that the SBA failed to conduct any environmental review of its loan guaranty or to consider the impact of that loan on the endangered Gray Bat that resides in an area near the CAFO, and that the FSA’s environmental impact and endangered species reviews were inadequate; the Agencies’ actions thereby violated both NEPA and ESA.  The court’s injunction precludes the Agencies from making any payment on their loan guaranties to the Bank until they have complied with their obligations under NEPA and ESA, giving them a year to do so.

In August of 2012, and as provided under state regulation, C&H received a General No Discharge Permit (Permit) from the Arkansas Department of Environmental Quality (ADEQ) that addresses the management of manure, litter, and process wastewater generated from the CAFO.  The Permit authorizes up to 6503 swine, at a location along a creek that discharges to the Buffalo National River, the nation’s first national river.

Upon completion of FSA’s review process and issuance of a Finding of No Significant Impact in August 2012, C&H obtained an initial construction loan of $3.6 million, 75% of which was guaranteed by SBA.  C&H later received a $1.3 million loan, with 90% of that loan guaranteed by FSA.  Both loan guaranties were required by the Bank.  The loans were funded, construction was completed, CAFO operations commenced, and C&H has been making timely loan payments. 

In August of 2013 the Buffalo River Watershed Alliance and several other organizations sued the Agencies, alleging that the CAFO permit contemplated at least occasional discharges of waste into surface waters that could pollute the Buffalo National River, and that the Agencies had violated NEPA, ESA, and certain other federal requirements.  The plaintiffs requested that the loan guaranties be enjoined, pending a further environmental review.  On December 2, 2014 an injunction was issued.  C&H and the Bank were not parties to the litigation.   

The significance of this decision is not the finding of a NEPA or ESA violation.  What is surprising, and noteworthy, is the Court’s conclusion that such agency action was sufficiently related to a loan arrangement between two entities that were not party to the suit, leading to possible rewriting of that loan two or more years after it was negotiated and closed, and the funds dispersed. 

The court concluded there was a sufficient causation nexus because “[w]ithout the guaranties, there would’ve been no loans.  Without the loans, no farm.”  In addition, the Court concluded that requiring further NEPA and ESA review would in fact redress the plaintiffs’ injuries for the loans already made since the Agencies have an “ongoing role in monitoring any conditions placed on their guaranties,” thereby suggesting that further restrictions could well be placed on C&H’s operation of the CAFO.    

The Agencies have now agreed to undertake the additional review within the mandated 12 month time period.   That review may result in no additional restrictions, or in restrictions that C&H can carry out without difficulty.  With C&H being current on its loan payments, this decision may ultimately have no practical impact on C&H or its Bank.  However, the “oh my” scenario is equally possible, because the court’s decision has no limits on the scope of additional restrictions that may be imposed.

As noted by the court, “[t]he federal agencies, through guaranty conditions, have control over C&H’s case-relevant behavior” and “it’s likely that more environmental review will change how C&H operates its farm.”  If C&H is unable to meet those restrictions, resulting in a loan default, the Bank will lack the guaranty it required to fund the loan in the first place.  Thus, the court has authorized the guarantor to re-write the terms if its guaranty, post hoc, to the severe detriment of the non-party Bank.

With a six year statute of limitations on filing a NEPA claim, what farm loan guaranty is safe from being altered or eliminated as a result of judicial action?  Will Old MacDonald be prohibited from obtaining next year’s crop loan until the Agencies complete an EIS, a process that will take a year to complete and likely cause him to miss the planting season? 

And what about other endangered species that could implicate the validity of other farm loan guaranties?  EPA’s proposed habitat designation for two newly listed endangered mussels will encompass over 40% of the area of the state of Arkansas, impacting one third of all property owners in the state, most of which are farmers. 

In addition, the broader implications of this decision on security interests cannot be overlooked.  There were no parties in the litigation to argue that relieving the United States from its debt/collateral obligation would unfairly reward the Agencies for their failure to comply with NEPA and ESA.  The Agencies certainly did not advance that argument.   In fact, the injunction is what the Agencies requested, the court noting that its “Order will follow generally the terms [of the injunction] suggested by [the Agencies].”  The Court even ordered the Agencies to “modify or void the loan guaranties as they deem appropriate in light of their revised and supplemented NEPA and ESA analysis.”  The impact upon the agricultural loan program is clear, since these loans are routinely traded as federally insured securities.  

The Arkansas Farm Bureau has succinctly identified the potential implications of this decision:  “[The opinion] probably just made it a whole lot harder for the next guy who’s trying to get a farm loan, regardless of where they are.”  You can take that to the bank—or not!    

Another Legal Victory for America’s First Offshore Wind Project

Posted on December 5, 2014 by Katherine Kennedy

The 468 megawatt Cape Wind project, slated for construction in federal waters off the coast of Massachusetts in Nantucket Sound, is the first offshore wind project to be proposed and approved in the United States.  The project has strong support from the Commonwealth of Massachusetts, many national, state and local environmental groups, organized labor and many others. 

But being the first in an innovative venture is always difficult, and unsuccessful litigation by project opponents – some funded in large part by billionaire Bill Koch – has slowed the pace of the project.  By Cape Wind’s count, thirty-two cases have been filed by project opponents.  Cape Wind has ultimately prevailed in all of these actions.

A recently issued but unheralded district court decision now signals yet another legal victory for Cape Wind.

In April 2010, after a lengthy and comprehensive environmental review and permitting process which included preparation of two environmental impact statements, the U.S. Department of Interior approved the Cape Wind project.  Project opponents then filed three complaints in the United States District Court for the District of Columbia.

The complaints, which were ultimately consolidated, challenged approval of the project by various federal agencies and alleged violations of the National Environmental Policy Act (NEPA), the Endangered Species Act, the Migratory Birds Treaty Act, the National Historic Preservation Act, the Outer Continental Shelf Lands Act, and the Coast Guard and Maritime Transportation Act of 2006. 

Cape Wind intervened in the actions as a defendant-intervenor.  Because of the project’s clean energy significance, NRDC attorneys (including me), joined by the New England-based Conservation Law Foundation and Mass Audubon, the state’s leading wildlife protection organization, filed two “friend of the court” briefs in support of the project.

In March 2014, U.S. District Court Judge Reggie Walton issued an 88-page decision granting summary judgment to the defendants, rejecting the bulk of opponents’ challenges to the federal government’s 2010 approval of the project.  The court dismissed outright a host of claims that related to the government’s environmental review of the project under the National Environmental Policy Act and to the Coast Guard’s review of navigation issues under the Outer Continental Shelf Lands Act.

The court remanded two limited issues back to the federal agencies. First, it directed the U.S. Fish & Wildlife Service (FWS) to make an independent determination about whether a potential operational adjustment for the project was a “reasonable and prudent measure”.  The court explained that it was unable to tell, based on the record, whether the Fish & Wildlife Service had made an independent determination or had adopted a position taken by a sister agency.

Second, the court directed the National Marine Fisheries Service (NMFS) to issue an incidental take permit covering right whales.  While the NMFS biological opinion stated that the project “was not likely to adversely affect right whales” and that “incidental take was not likely to occur,” the court found that the opinion did not state that an incidental take would not occur or determine the volume of any potential take.

After the court’s decision, the two federal agencies complied with the district court’s instructions.  FWS issued its independent determination with respect to the potential operational adjustment.  NMFS amended the incidental take opinion to state that no take of right whales was anticipated, and thus the incidental take amount for this species could be set at zero.

However, that did not end the matter.  As the district court noted in its September 12, 2014 order, “history should have forewarned that any attempt to bring this [protracted] litigation to an expeditious conclusion would prove difficult.”  And as expected, the plaintiffs filed a supplemental complaint challenging the two agencies’ actions on remand.

On November 18, 2014, the district court dismissed the plaintiffs’ supplemental complaint.  The court made short work of the claims, finding them all to be barred – some because they had been previously waived or abandoned and some because the Court had previously considered and rejected them.  Indeed, the court noted that some of the claims were “difficult to understand.” With that decision, this chapter in the long string of legal challenges was concluded, at the district court level at least.  The plaintiffs filed a notice of appeal yesterday.

Meanwhile, the Cape Wind project continues to move forward.  In July, the U.S. Department of Energy issued a conditional loan guarantee commitment for the project, the first step toward securing a $150 million loan guarantee.  In August, the project selected its lead construction contractors.  Construction is expected to proceed in 2015.  

And Cape Wind’s example has spurred forward movement in the U.S. offshore wind industry.  Currently, there are some fourteen offshore wind projects in an advanced stage of development along the East Coast and elsewhere, representing 4.9 gigawatts of potential renewable electricity capacity.  Despite the protracted litigation, it’s my hope that Cape Wind, buoyed by its legal victories, will herald the start of a new renewable energy industry that will fully and sustainably tap into the United States’ huge offshore wind resource.

CITY OF MARGATE, NEW JERSEY

Posted on December 3, 2014 by Joseph Manko

As my three prior blogs have discussed (see parts I, II, and III), the State of New Jersey has responded to Hurricane Sandy’s devastation in 2012 by escalating its efforts to construct sand dunes on its beaches to protect the shore communities beach front properties from repetitive coastal flooding. These cases have attacked the failure of the ensuing takings awards as not giving adequate compensation for the resulting partial loss of ocean view by the impacted homeowners or, by failing to reduce such awards to reflect the benefit the dunes would provide against future flooding in the future.

Now comes along a shore community, the City of Margate (in which this author owns a 10th floor vacation condominium), which filed a 16 page complaint (with 149 pages of exhibits) and asked the U.S. District Court of New Jersey to enjoin the NJ Department of Environmental Protection (NJDEP) and the U.S. Army Corps of Engineers (Corps) from trespassing on its residents properties by constructing dunes on Margate’s beaches. Despite the proposed takings being grounded in the Government’s power to protect the public health, safety and welfare, the Court issued a temporary restraining order (TRO) on November 24 in response to Margate’s Complaint alleging an “unlawful taking of Margate’s beachfront property”, required a bond of [only] $10,000.00 and scheduled a December 4, 2014 hearing to determine whether a preliminary injunction should be issued.

Stay tuned for further updates on this litigation which constitutes a challenge to the propriety of using sand dunes as an appropriate storm protection strategy for Margate, acknowledging that some preventive measures are necessary to deal with what will probably be recurring coastal flooding.

Should Watersheds Have Standing? Should Corporations?

Posted on November 24, 2014 by Seth Jaffe

In his seminal essay in 1972, Christopher Stone famously asked “Should Trees Have Standing?” Apart from Justice Douglas’s dissent in Sierra Club v. Morton, the idea has never gained much traction, at least in United States courts.  Now, due to the passage of a “Community Bill of Rights” ordinance by the Grant Township (Pennsylvania) Supervisors, the concept is about to get a legal test.

It appears that the ordinance was drafted by the Community Environmental Legal Defense Fund, and the Supervisors have retained CELDF to defend the ordinance against a challenge by the Pennsylvania General Energy Company, which apparently wants to dispose of fracking wastewater in Grant Township.

According to the complaint challenging the ordinance, the ordinance does not just enshrine nature with rights; it would deprive them to corporations.  Allegedly, the ordinance states that corporations challenging the ordinance are:

not deemed to be ‘persons,’ nor possess any other legal rights, privileges, powers, or protections which would interfere with the rights or prohibitions enumerated by [the] Ordinance.

Good luck defending that one in court.  Call me an old-fashioned anthropocentric, but I prefer defending protections for natural systems and the environment on the ground that such protections are good for people.

THE SEVENTH CIRCUIT BREATHES NEW LIFE INTO THE DIVISIBILITY OF HARM

Posted on November 19, 2014 by William Hyatt

DEFENSE TO JOINT AND SEVERAL LIABILITY

On September 25, 2014, the Seventh Circuit added two more opinions to the long list of decisions arising out of the Lower Fox River and Green Bay Superfund Site (Fox River Site) in northeastern Wisconsin.   

In NCR Corp. v. George A. Whiting Paper Co., a contribution suit, the court reversed and remanded a decision by the Eastern District of Wisconsin, which had held that NCR was not entitled to any contribution from the other defendants. 

In U.S. v. P.H. Glatfelter Co. (Glatfelter), an enforcement action, the court ruled on a number of important CERCLA issues, such as whether a permanent injunction can be issued to enforce a Section 106 unilateral administrative order.  In affirming in part and reversing in part the same District Court decision, the Seventh Circuit provided the latest appellate guidance on the divisibility of harm defense to joint and several liability.  

The District Court had rejected divisibility of harm defenses raised by defendants NCR and Glatfelter, ruling, as a matter of law, that the “harm” in one of the operable units of the Fox River Site (OU-4) was not “theoretically” capable of being divided.  The District Court ruling thereby avoided the second step of the divisibility of harm analysis, the factual question of how a divisible harm might be apportioned.  That was the question resolved by the Supreme Court in Burlington N. & Santa Fe R.R. Co. v. United States (Burlington Northern), a decision which gave Superfund practitioners great hope because the apportionment approved by the Court was so imprecise. Litigation in the lower courts following Burlington Northern quickly turned to the question of what makes a harm “theoretically” capable of being divided.  The question is whether it is possible to approximate the contamination caused by each party.

In the District Court, defendants NCR and Glatfelter argued for divisibility of harm on different theories.  NCR admitted that it had contributed to the contamination in OU-4, but argued that the harm was capable of apportionment and that it should be liable only for its apportioned share of the costs.  Glatfelter argued that it did not cause any of the contamination in OU-4 and therefore was not liable for the costs of cleaning up OU-4. 

As to NCR, the Seventh Circuit first addressed the question of what the appropriate metric should be for measuring the contamination caused by each party.  The District Court, after a lengthy trial, had viewed the harm as “binary,” in the sense that contamination in concentrations above EPA’s maximum safety threshold of 1.0 ppm of PCBs was harmful; whereas, concentrations below that level were not.  The Seventh Circuit rejected that “on-off switch” approach on the ground that the evidence at trial had shown that the dividing line between “harmfulness and geniality” was much more subtle.  The Seventh Circuit reviewed the various metrics used by EPA to measure harm and settled on “surface weighted average concentrations” (SWAC) of 0.25 ppm throughout OU-4 as the appropriate value.  Even that value, however, could not be viewed as “binary,” according to the Seventh Circuit , because lesser concentrations still could pose risks of harm.  

This analysis led the Seventh Circuit to reconsider whether remediation costs can be a useful approximation of the contamination caused by each party.  The District Court had concluded that, like contamination levels, remediation costs were “binary” in the sense that “sediment with PCB concentrations below 1.0 ppm would impose no remediation costs, while sediment with PCB concentrations above 1.0 ppm would always impose about the same remediation costs.”  The Seventh Circuit said “[w]e think the district court got this wrong as well.”  Instead, “remediation costs increase with the degree of contamination above 1.0 ppm.  As a result, remediation costs are still a useful approximation of the degree of contamination caused by each party.”  As the Seventh Circuit explained, that is so because “the cost of the remedial approach in a particular area is positively correlated with the level of contamination near the surface of that area, which contributes to the operable unit’s SWAC, and consequently, the harm.”

The Seventh Circuit concluded:

As a result, we think the harm would be theoretically capable of apportionment if NCR could show the extent to which it contributed to PCB concentrations in OU4.  And if NCR cleared that hurdle, we think a reasonable basis for apportionment could be found in the remediation costs necessitated by each party.

The Seventh Circuit then went on to agree with the District Court’s critique of  expert opinion offered by NCR to estimate the percentage of mass it contributed to OU-4, but faulted the District Court for failing to explain why it rejected an alternative approach to estimating mass-percentages.  The Seventh Circuit did not say whether the estimated mass-percentages, if properly done, would have proven that the harm in OU-4 was “theoretically” capable of apportionment.  Instead, the Seventh Circuit reversed the District Court’s rejection of the divisibility defense and remanded for further fact finding.

As to Glatfelter, the Seventh Circuit characterized its divisibility argument as an “all-or-nothing game,” in the sense that Glatfelter argued that none of its PCBs made their way into OU-4, obviating the need, in Glatfelter’s view, to approximate its share of the PCB contamination in OU-4.  The Seventh Circuit thoroughly analyzed the testimony of Glatfelter’s expert (to the point of proposing complex algebraic formulas to demonstrate his testimony was unsound), concluding “Glatfelter failed to prove that the PCB discharges for which it is responsible were not a sufficient, or at least a necessary cause of at least some of the contamination in OU-4.  Therefore, the district court correctly ruled against Glatfelter on its all-or-nothing divisibility defense.”

So what do Superfund practitioners learn from Glatfelter?  Some things we already understood are confirmed.  Divisibility analysis is a two step process; the initial and far more challenging step is to prove that the harm is “theoretically” capable of apportionment.  The burden of proof on that issue rests with a defendant advancing a divisibility of harm defense.  Glatfelter now instructs that the test to determine whether a harm is theoretically capable of apportionment depends upon the extent to which the defendant contributed to concentrations of contaminants at the site, an obvious subject for expert testimony.  The battle on that issue can be expected to resume in the District Court.  To the extent the first step is cleared, a reasonable basis for apportionment could be found in the remediation costs necessitated by each party.  

More than theoretical is the fact the Fox River Site will produce more opinions for guidance to Superfund practitioners in this confusing and difficult area of the law. 

More Chinks in the Permit Shield Armor

Posted on September 24, 2014 by Eric Fjelstad

The history of the Clean Water Act (CWA) permit shield provision was recently addressed in a blog post by David Buente on July 31, 2014.  This post covers an update on one of the referenced cases that was pending before the Ninth Circuit Court of Appeals.  The case Alaska Community Action on Toxics v. Aurora Energy Services, LLC (“ACAT”) involved a facility in Seward, Alaska that conveyed coal onto ships where it was exported into international markets.  The facility had been covered under the Multi-Sector General Permit (“MSGP”) since the mid-1980s.  The MSGP authorized the discharge of stormwater and also identified eleven categories of non-stormwater discharges which were authorized under the MSGP.  None of these categories covered discharges of coal.

The plaintiffs filed a CWA citizens suit in early 2010 alleging that coal was discharged from a conveyor into the ocean during ship loading operations and that these discharges were not covered under the MSGP.  The alleged discharges involved small chunks of coal falling from the underside of the conveyor belt on the “return” trip and incidental dust or chunks unintentionally released during the loading of ships.  The district court granted summary judgment in favor of the facility, applying the principles in  Piney Run Pres. Ass’n v. City Comm’rs, 268 F.3d 255 (4th Cir. 2001).

On appeal, the Ninth Circuit reversed, holding that the MSGP did not cover discharges of coal.  The court found that all non-stormwater discharges were prohibited except those identified in the list of eleven permissible non-stormwater discharges.  The Ninth Circuit’s decision is most striking for what it does not say.  First, there is no discussion in the opinion of the fact that the permittee had, in fact, disclosed its coal discharges during the permitting process.  Second, the court places no weight - indeed, did not even mention - the fact that EPA and its state counterpart actively oversaw the facility, including its discharges of coal.  In contrast, the district court specifically found that all the relevant parties - EPA, the Alaska Department of Environmental Conservation (“ADEC”), and the permittee - viewed the MSGP as extending to discharges of coal.  As the district court found, “the discharges were not only ‘reasonably contemplated’ by EPA, but were actively regulated by the agencies under the General Permit.”

The Ninth Circuit’s decision in ACAT should make any MSGP permittee shudder since it suggests that many facilities may not be properly permitted.  Specifically, if a non-stormwater discharge is not identified on the list of permissible non-stormwater sources, ACAT suggests that discharge is not covered by the MSGP.  The case also reaffirms the point that reliance on agency communications and “course-of-dealing” with agencies can be a perilous exercise.

Time will tell whether the ACAT court’s analysis will be applied outside of the MSGP context to IPs and other GPs.  In the meantime, when considering permit shield issues, permittees and their counsel would be wise to carefully focus on the language of permits and what a permit purports to cover (and not cover).

You Can’t Estop the Government — Even When It Wants to Be Estopped

Posted on August 25, 2014 by Seth Jaffe

On August 12th, the 9th Circuit Court of Appeals issued a decision that arguably explains everything from why the Tea Party exists to why otherwise calm and sane executives suddenly lose all their hair. Perhaps most astounding, the decision is clearly correct. Perhaps the law is an ass.

In 2008, Avenal Power submitted an application to EPA for a PSD permit to construct a new 600 MW natural gas-fired power plant in Avenal, California. Although section 165(c) of the Clean Air Act requires EPA to act on such applications within one year, EPA failed to do so.

Subsequently, and before EPA ever did issue a permit, EPA revised the National Ambient Air Quality Standard for NOx. Avenal Power apparently could demonstrate that emissions from the new plant would comply with the old NAAQS, but could not demonstrate that it would not cause an exceedance of the new NAAQS. After some waffling, EPA took the position that it could grandfather the permit application and review it under the prior NAAQS. Citizen groups appealed and the Court of Appeals held that EPA had no authority to grandfather the application.

To the Court, this was a simple application of Step 1 of Chevron. The Court concluded that sections 165(a)(3) and (4) and 110(j) of the CAA unambiguously require EPA to apply the NAAQS in effect at the time a permit is issued. Thus, EPA has no discretion to grandfather permit applications, even though EPA was required by law to issue a permit decision at a time when more lenient requirements were in effect.

I think that the Court’s decision is clearly right on the law. The statutory language seems unambiguous.  But what did the Court have to say to those who feel that the result is inequitable, because Avenal was legally entitled to a decision in one year, and would have obtained its permit if EPA had acted timely? Pretty much, tough luck:

Finally, EPA relies heavily on the argument that the equities weigh in favor of Avenal Power. In short, we agree. Avenal Power filed its application over six years ago, and endeavored to work with EPA for years, even after filing suit, to obtain a final decision. But however regrettable EPA’s treatment of Avenal Power has been, we simply cannot disregard the plain language of the Clean Air Act, or overlook the reason why an applicant must comply with revised and newly stringent standards —that is, “to protect and enhance the quality of the Nation’s air resources so as to promote the public health and welfare and the productive capacity of its population.” Honoring the statute’s plain language and overriding purpose, we must send EPA and Avenal Power back to the drawing board. (Emphasis added.)

In other words, EPA screwed up, and Avenal Power got screwed. Imagine having to explain that to your client.

 

law is an ass

Engagement, Proportionality and Cooperation: Proposed Changes to the Federal Rules of Civil Procedure

Posted on July 3, 2014 by John Barkett

The Advisory Committee on Rules of Civil Procedure has taken a major rulemaking step to bring down the costs of federal court litigation.  Encouraging judges to become more engaged earlier in litigation, modifying the scope of discovery, and eliminating the circuit conflicts on the exercise of inherent authority in sanctioning the loss of electronically stored information are among the changes that will be made if the amendments are adopted.

In my October 17 2013 blog post, I described proposed changes to the Federal Rules of Civil Procedure published for public comment by the Advisory Committee on Civil Rules (of which I am a member).  The Committee received about 2,300 pubic comments on the proposed amendments.  There were three public hearings and the Committee listened to nearly 125 commenters in what amounted to about 25 hours of oral presentations.

The Advisory Committee assimilated these comments and at its meeting on April 10-11, 2014, adopted a final set of amendments.  On May 29-30, the Standing Committee on Rules of Practice and Procedure adopted the proposed amendments.  The votes of both Committees were unanimous.

The proposed reduction in the presumptive limits on depositions and interrogatories, and the proposed creation of a presumptive limit on requests for admissions (except as to authenticity of documents) received the greatest public attention.  The Committee was persuaded by the commenters to leave the existing limits in place and not to create a limit on requests for admission.

The change to Rule 1 received the least amount of public attention.  If it becomes law, it will provide that the rules will be “employed by the court and the parties” to secure the just, speedy, and inexpensive determination of every action.  Cooperation was on the minds of the Advisory Committee as a means to help bring down the costs of litigation without compromising a lawyer’s duty of diligence in representing a client.

Slight changes were made to Rule 16 to encourage district court judges to make maximum use of the initial case management conference to develop an understanding of the claims and defenses and then to keep the parties focused on discovery that is relevant to those claims and defenses.  In addition, Rule 16(b)(3) adds to the potential list of items included in a scheduling order that directs a party to request a conference with the court before moving for an order relating to discovery—consistent with the belief that addressing discovery disputes at their incipiency will reduce costs to all parties.

The public comments also affected the change to Rule 26(b)(1), which addresses the scope of discovery.  New Rule 26(b)(1) contains these changes:

• the words “proportional to the needs of the case” have been added to provide an additional contour on discovery that is otherwise “relevant to any party’s claim or defense”;
• the limits on discovery in current Rule 26(b)(2)(C) (the importance of the issues at stake in the action, amount in controversy, importance of discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefits) were moved directly into (b)(1) as factors to be considered in evaluating proportionality;
• an additional proportionality factor has been added: “the parties’ relative access to relevant information”;
• the current sentence allowing discovery of information “relevant to the subject matter involved in an action” upon a showing of good cause has been deleted; and
• the sentence, “Relevant information need not be admissible at the trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence,” has been replaced with this sentence: “Information within this scope of discovery need not be admissible in evidence to be discoverable.”

Similar to the goal of greater engagement by the court under Rule 16’s changes, the changes to the scope of discovery are designed to reduce discovery costs by encouraging courts and parties to focus more thoughtfully on what information is important to a fair resolution of a claim.

The Committee decided to replace existing Rule 37(e) with new Rule 37(e) and to leave in the limitation of Rule 37(e) to electronically stored information.  Proposed Rule 37(e) creates a uniform standard nationwide for issuance of an adverse inference instruction for the loss of electronically stored information after a duty to preserve is triggered.  The Advisory Committee chose a bad faith standard (followed in the 5th, 10th, and 11th Circuits) over the negligence standard (followed in the 2nd Circuit).  Specifically, proposed Rule 37(e) provides that, “if electronically stored information that should have been preserved in the anticipation or conduct of litigation is lost because a party failed to take reasonable steps to preserve it, and it cannot be restored or replaced through additional discovery,” then a court

(1) upon finding prejudice to another party from loss of the information, may order measures no greater than necessary to cure the prejudice; or

(2) only upon finding that the party acted with the intent to deprive another party of the information’s use in the litigation, may

(A) presume that the lost information was unfavorable to the party;

(B) instruct the jury that it may or must presume the information was unfavorable to the party; or

(C) dismiss the action or enter a default judgment.

There will be changes relating to document production.  I note two of them here.  Rule 34 will require that objections to document requests be made “with specificity” and that an objection state whether any responsive materials are being withheld on the basis of the objection.  Proposed Rule 26(d)(2) will allow delivery of a Rule 34 request more than 21 days after service but the request will not be deemed served until after the Rule 26(f) conference.

There will be changes relating to document production.  I note two of them here.  Rule 34 will require that objections to document requests be made “with specificity” and that an objection state whether any responsive materials are being withheld on the basis of the objection.  Proposed Rule 26(d)(2) will allow delivery of a Rule 34 request more than 21 days after service but the request will not be deemed served until after the Rule 26(f) conference.

Rule 84 relating to the forms that appear at the end of the Federal Rules of Civil Procedure has been abrogated.  There were very few public comments on this proposal consistent with the sentiment expressed by many to the Committee that the forms were not used enough to subject them to change through the rulemaking process.  Instead, the Administrative Office of the United States Courts will post forms on its website.  The time limit for service in Rule 4 has also been reduced from 120 days to 90 days.

The next stop for the proposed amendments is the Judicial Conference in September 2014.  Assuming a favorable vote there, the amendments will be transmitted to the Supreme Court and then the Congress.  Assuming no action by either body, they will become part of the Rules of Civil Procedure December 1, 2015.