Gravel2Gavel Construction & Real Estate Law Blog
If “Winter comes, can Spring be far behind?” It’s been a quiet term thus far for the Supreme Court, due in part to the hearing of oral arguments in many contentious cases. Below is a brief summary of some of the recent significant matters decided by the Federal Courts.
THE U.S. SUPREME COURT
As of this date, the Supreme Court has issued the only decision this term. Arellano v. McDonough, Secretary of Veterans Affairs, decided on January 23, 2023, was a case involving Veterans’ Law and Benefits. The controversy involves the effective date of an award for disability compensation.
Many cases have been argued this term which await a decision, including an important Clean Water Act case, Sackett v. Environmental Protection Agency, argued on October 3, 2022.
THE FEDERAL COURTS OF APPEAL
The U.S. Court of Appeals for the Third Circuit
LTL Management, LLC v. Official Committee of Talc Claimants, et al.
On January 30, 2023, the court decided an important toxic tort bankruptcy case. Johnson & Johnson, which manufactures and sells Johnson’s Baby Powder, has faced a tidal wave of talc toxic tort litigation; there are allegations that the talc contains asbestos which could cause cancer. A wholly owned subsidiary of Johnson & Johnson was split into two new entities with LTL Management LLC, being given principally the talc litigation liabilities. The New Jersey Bankruptcy Court held that LTL was authorized to seek the bankruptcy protections of Chapter 11 of the Bankruptcy Code. On appeal, however, the Third Circuit dismissed the bankruptcy filing by a company “created to file for bankruptcy.” A resort to the protections of the Bankruptcy Code is reserved for entities facing financial distress, which, the court concluded, did not apply to Johnson & Johnson. This ruling may have an impact on other entities considering the use of Chapter 11 to quash hundreds or thousands of personal injury claims.
The U.S. Court of Appeals for the Fourth Circuit
West Virginia Wilderness Committee, at al. v. Council of Environmental Quality, et al.
On December 22, 2022, the court affirmed the lower court’s dismissal of the claims of several environmental organizations that the Trump Administration’s 2020 revisions of the long-standing National Environmental Policy Act (NEPA) rules were arbitrary and capricious. These rules, adopted by all federal agencies having permitting authority, regulate the process by which the NEPA environmental assessments were made. The 2020 rules were jettisoned soon after the Biden Administration took office and new rules were issued in 2022. For that reason, the court held that the 2020 rules were no longer ripe for review.
The U.S. Court of Appeals for the Fifth Circuit
In re: Louisiana Public Service Commission
On January 18, 2023, the court granted a petition for a writ of mandamus to the Federal Energy Regulatory Commission (FERC) filed by the Louisiana Public Service Commission. FERC regulates the transmission and sale of electricity in interstate commerce under the Federal Power Act. Section 206 of the Act allows retail regulators to request FERC to determine whether a regulated electricity rate is unjust and unreasonable. However, FERC’s action on many 206 petitions has been very slow, and now the Fifth Circuit ordered FERC to respond within 21 days as to why it is taking so long to resolve these complaints. The court was especially moved by the argument that “the unrecoverable cost to consumers grows every day FERC delays in taking final action.”
Calumet Shreveport Refining, LLC, et al. v. EPA
On January 27, 2023, the court granted the motions of two small refineries to stay their compliance obligations under the Renewable Fuels program administered by the Environmental Protection Agency (EPA) under the Clean Air Act. For several years, small refineries were granted a blanket exemption from complying with their RFS obligations until 2011. Thereafter, the EPA employed a system of case-by-case review of “hardship exemptions” which considered the special economic factors facing small refineries. However, in late 2021, EPA changed its methodology for determining “disproportionate economic hardship,” and then denied 69 petitions for relief filed by small refineries. The Fifth Circuit was concerned by the retrospective application of this new policy and stayed their RFS compliance obligations pending trial on the merits.
Fort Bend County, et al. v. U.S. Army Corps of Engineers
On February 2, 2023, the Fifth Circuit revived a lawsuit filed by local Southeast Texas political subdivisions which asserted that the lower court erred in dismissing their lawsuit against the U.S. Army Corps of Engineers, which operates the Addicks and Barker Dams flood control program. Major local floods in 2016 and 2017 resulted in disastrous flooding of properties owned by the plaintiff political subdivisions located near the Addicks and Barker Dams. The plaintiffs argued that the Corps was obliged by law to take actions to confront the threats posed by heavy rains which quickly filled the reservoirs behind the dams, and the Corps failed to do so. They argued that this lawsuit was not subject to the exclusive jurisdiction of the Federal Court of Claims. The lower court disagreed, holding that it had no judication to hear this case, and dismissed the lawsuit. The Fifth Circuit reversed the lower court, holding that the plaintiffs avoided pleading a “Tucker Act” claim, and, moreover, does not provide an adequate remedy to the plaintiff’s claims within the meaning of Section 704 of the Administrative Procedure Act.
The U.S. Court of Appeals for the Seventh Circuit
United States v. Doe Corporation
On February 3, 2023, the court decided this case involving Doe Corporation, which is the target of a federal grand jury investigation into suspected criminal violations of the Clean Water Act. Search warrants were obtained, and state and federal agents conducted a search of the premises. After the search, Doe contacted the U.S. Attorney, accusing the agents of executing the search in a dangerous and threatening manner—including the pointing of guns at employees—in violation of Doe’s Fourth Amendment rights. The government then requested a copy of the original video footage, which was denied. The government then served Doe with a grand jury subpoena. The lower court quashed the subpoena, holding that it was issued for an improper purpose. This action was appealed to the Seventh Circuit. The appeals court reversed the lower court, holding that the grand jury had a legitimate interest in seeing a video of the search, and there was no evidence presented that the subpoena was issued for an improper motive.
The U.S. Court of Appeals for the Tenth Circuit
Dine Citizens Against Ruining Our Environment, et al, v. Haaland, Secretary of the Interior, et al.
The Tenth Circuit decided this important oil and gas case on February 1, 2023. The plaintiff’s environmental organizations challenged the environmental assessments of the Bureau of Land Management (BLM) analyzing the environmental impact of 370 applications for permits to drill (APD) for oil and gas in the San Juan Basin of New Mexico. The lower court rejected the arguments that the BLM failed to take a “hard look” at the environmental impact of greenhouse gas emissions (GHG) and hazardous air pollutant emissions. The Tenth Circuit reversed this ruling, holding that BLM failed to take the requisite hard look at GHG emissions, but upheld the Bureau’s analysis of the cumulative impacts to water resources because it was sufficient under NEPA. Several parties intervened in this litigation, including the American Petroleum Institute. The major issue was whether the BLM took a “hard look” at the environmental consequences of the APDs. Under the NEPA rules, BLM must consider the direct, indirect and cumulative environmental impacts of a proposed action; here the effect of GHG emissions must be assessed. The court takes issue with the BLM’s approach—using the emissions calculated for one year to calculate the direct and indirect emissions over a 20-year period (the probable lifespan of a well). In addition, the BLM’s justification for not calculating direct GHG emissions over the lifetime of the wells “is not constituent with the record.” Therefore, the BLM’s calculation of GHG emissions was arbitrary and capricious. With respect to the cumulative impact of GHG emissions from the APD approvals, the BLM defended its “general analysis” because the global climate models are unable to forecast local or regional effects on resources. The petitioners argued that the BLM could have determined the environmental impact of GHG emissions by comparing the emissions to a “carbon budget.” While NEPA does not require the BLM to use any particular methodology, the Tenth Circuit held that “Where the BLM neither applied the carbon budget method nor explained why it did not, BLM acted arbitrarily and capriciously by failing to consider the impacts of the projected GHGs.” An issue was also raised regarding the cumulative health impacts of HAP emissions from APDs (i. e., hazardous air pollutants), and the court held that the BLM failed to take a hard look at these emissions, as well. The appropriate remedy for these defects is to be determined by the lower court on remand, and whether injunctive relief should be granted.
TEXAS COURTS
The Texas Fourth Court of Appeals
People for the Ethical Treatment of Animals, Inc., and Karla Waples v. Bandera Wranglers
On February 8, 2023, the court decided a “feral hog” case. Feral hogs are a large and aggressive species that have wrought considerable damages to property, livestock and crops in many rural areas of Texas. The Texas Legislature and Texas agencies have approved some drastic measures to deal with them. People for the Ethical Treatment of Animals (PETA) is an organization whose stated purpose is to ensure that animals are treated in a humane way, and Karla Waples, a former member of PETA, lives in Austin, and has expressed a present and genuine fear that the defendants “hog catch” in Bandera, Texas, desensitizes persons to violence by exposing them to acts of wanton cruelty to animals. The object of the “hog catch,” which has been held for two decades, is to catch and bag a hog in a burlap sack and drag the bagged pig across a finish line. Juvenile hogs are chased by adults and children in a fully enclosed pen. Apparently, participants in the hog catch are not provided with any written rules requiring the use of personal protective equipment, and the hogs are not treated by veterinarians or even sanitized, and “color commentators” “narrate for the spectators” benefit. PETA seeks to have the hog catch stopped, but the appeals court holds that it has no standing to litigate this matter under Texas law, which does not recognize “organizational standing”: Similarly, Ms. Staples lacks standing because her alleged injuries are not “concrete.” Accordingly, the appeals court sustained the ruling of the lower court and the case was dismissed.
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