Gravel2Gavel Construction & Real Estate Law Blog
This is Part I of VII of a brief recap of some the significant environmental law and administrative cases decided in the past few months:
I. FEDERAL COURTS
A. Supreme Court
The U.S. Supreme Court, on June 29, 2015, in a 5 to 4 ruling, held in Michigan v. EPA, that EPA, when deciding whether it was appropriate and necessary to regulate Hazardous Air Pollutants (HAP) such as, for instance, mercury and other toxic pollutants emitted from electric utility power plants, must consider the costs of compliance at this stage of the rulemaking proceedings.
In its 2012 rulemaking, EPA excluded any consideration of costs when deciding it was “appropriate”—as required by the Clean Air Act (CAA) at 42 U.S.C. § 7412(n)(1)(A)—to impose the requirements of these new rules on these utilities. In the 1990 amendment to the CAA, the agency was directed by Congress to develop National Emission Standards for Hazardous Air Pollutants, but it also established a “unique procedure” to determine the applicability of the HAP program to fossil-fueled power plants. EPA was accordingly directed to perform a study of the hazards to public health reasonably anticipated to occur as a result of emissions by power plants of HAP pollutants after the imposition of the requirements of the law. This study was completed in 1998. However, EPA also determined that it was free to interpret the term “appropriate” so as to allow the agency to ignore the consideration of costs when it made the initial decision to regulate.
Justice Scalia, writing for the narrow majority, held that EPA’s interpretation of this term in this context was unreasonable and must be rejected. The Court noted that the estimated costs of compliance were $9 billion per year while the estimated benefits amounted to $4 to $6 million per year. The judgment of the DC Circuit, White Stallion Energy Center, LLC v. EPA, 748 F.3d 1222 (2014), was reversed. Justice Kagan dissented, joined by Justices Ginsburg, Breyer, and Sotomayor.
In a 6 to 3 decision, on June 25, 2015, the U.S. Supreme Court affirmed in King, et al., v. Burwell, the decision of the Fourth Circuit Court of Appeals that “an Exchange established by a State” can also be read to include an “Exchange” established by the State or the Federal Government. The Chief Justice wrote the majority opinion, and Justice Scalia dissented, joined by Justices Alito and Thomas. The Chief Justice, as he did in the first Affordable Care Act (ACA) case to reach the Court, parses the legislation very carefully, noting that the statutory language and the means by which the law was passed makes its interpretation very difficult. Nevertheless, in context, the provision is clear enough to uphold it.
The Chief Justice also noted that the petitioners arguments about the “plain meaning” of the law are strong, but it is not the Court’s job to go out of its way to upset the Congressional decision. Justice Scalia responded that this reading “is quite absurd and the Court’s 21 pages of explanation make it no less so”. Importantly, Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., et al., 467 U.S. 837 (1984) and Chevron deference did not play a large role in the Court’s decision, which was concerned to some extent with IRS regulations.
The Court will not hear an appeal of the Fifth Circuit Court of Appeals’ decision which reversed the lower court’s ruling that the State of Texas had violated the Endangered Species Act in its administration of the state water permitting program which allegedly denied adequate amounts of fresh water at the Aransas, Texas Whooping Crane preserve. The case is Aransas Project v. Shaw.
The U.S. Supreme Court, by reversing the Ninth Circuit on June 22, 2015, has terminated the decades-old litigation over the Department of Agriculture’s administration of the California Raisin Marketing Order. The case is Horne, et al., v. Department of Agriculture. Chief Justice Roberts, writing for the majority (Justice Sotomayor dissented, and Justices Breyer, Kagan and Ginsburg filed partial dissents) , described the program and how it was applied to the petitioners, who raise and “handle” raisins subject to the Agricultural Marketing Agreement Act of 1937, which was enacted during the Depression to maintain stable market for certain agricultural commodities. The United States Department of Agriculture’s California Raisin Marketing Order for raisins requires raisin growers in certain years to give percentage of their crop to the government, free of charge.
In 2003, the Raisin Administrative Committee ordered 47% of the raisin crop to be turned over. The Raisin Administrative Committee, a governmental entity, acquires title to the raisins and decides, in its discretion, how to dispose of them.
In 2002, the petitioners refused to set aside any of their raisins for the Government, which caused the Government to initiate administrative enforcement proceedings to assess a fine equal to the market value of the raisins ($480,000) and a civil penalty of $200,000 for failing to turn the raisins over. When the Government tried to collect the fine, the petitioners turned to the courts, which initially held that the federal courts could not adjudicate a takings defense when seeking review of a final agency order. Prolonged litigation ensued, resulting in two rulings by the Ninth Circuit and two rulings by the Supreme Court.
Chief Justice Roberts noted that the petition for certiorari raised three questions: (1) Does the Fifth Amendment’s Takings Clause apply to both real and personal property, and the court, beginning with a reference to Magna Carta held that it does; (2) was the reserve requirement imposed by the Raisin Administrative Committee a “clear physical taking”, and the Court ruled that it was; and (3), whether a governmental mandate to relinquish specific identifiable property as a condition on permission to engage in commerce, was a “per se” taking; and in this case it was.
The Chief Justice stated that “[s]elling produce in interstate commerce, although certainly subject to reasonable governmental regulation, is not a special governmental benefit that the Government may hold hostage, to be ransomed by the waiver of constitutional protection”. Finally, the Government argued that the case should be heard by the Court of Federal Claims pursuant to the Tucker Act to determine the just compensation due the petitioners, but the Court rejected this argument, noting that in its initial decision, the Court specifically rejected the contention that the Hornes were required to pay the fine and then seek compensation. The Court concluded: “There is no need for a remand. This case, in litigation for more than a decade, has gone on long enough.”
In his opinion, Justice Breyer noted concerns that the majority’s opinion appeared to slight the offsetting benefits that governing regulation can provide, which should be part of the calculus in determining what “just compensation “ should be in particular cases.
In a 6 to 3 decision, the U.S. Supreme Court, on June 15, 2015, held in Baker Botts L.L.P. v. Asarco LLC, that the Bankruptcy Code does not permit a Bankruptcy Court to award attorney’s fees for work performed defending a fee application.
In 2005, ASARCO filed for bankruptcy protection when faced with mounting environmental claims, falling copper process, and a striking work force. ASARCO engaged Baker Botts and Jordan, Hyden, Womble, Culbreth & Holzer to provide legal representation during the bankruptcy. The firms successfully prosecuted fraudulent transfer claims against ASARCO’s parent company, obtaining a judgment worth several billion dollars. This judgment resulted in a successful reorganization, and all of ASARCO’s creditors were paid in full. The firm filed claims for compensation pursuant to the Bankruptcy Code, and they were awarded over $120 million. The bankruptcy court also awarded the firms over $5 million for the time they spent litigating the defense of their fee application against the objections of the ASARCO’s parent which was again in charge of the company. The Court held that the Bankruptcy Code does not permit an award for defending a fee application, and the “American Rule”, by which litigants pays their own attorney fees, win or lose, unless a statue or contract provides otherwise, also counsels caution.
On April 29, 2015, the U.S. Supreme Court issued another unanimous ruling holding that the right to judicial review is a fundamental tenet of administrative law. The case is Mach Mining, LLC v. Equal Employment Opportunity Commission, and involves the right to challenge the conciliation proceedings of the Equal Employment Opportunity Commission (EEOC) in employment discrimination matters. Reversing the Seventh Circuit Court of Appeals, the Court ruled that the “strong presumption” favoring judicial review of administrative action applies to the informal conciliation procedures used by the EEOC in attempting to resolve these disputes, and accordingly rejected the holding of the appeals court that the statutory directive in Title VII of the Civil Rights Act of 1964 to attempt conciliation is not subject to judicial review. The Court concluded its opinion by stating that, “Judicial review of administrative action is the norm in our legal system, and nothing in Title VII withdraws the courts’ authority to determine whether the EEOC has fulfilled its duty to attempt conciliation of claims”.
The Court confronted a similar challenge a few years ago when it delivered an opinion in the case of Sackett v. EPA, 132 S. Ct. 1676 (2012), in which it decided that an EPA Clean Water Act (CWA) administrative compliance order is an enforcement action that can be subject to judicial review in the federal courts, and it may well choose to decide whether the important jurisdictional determinations the U.S. Army Corps of Engineers (Corps of Engineers) makes under its CWA authority are also subject to judicial review.
Without dissent, but with strong concurring opinions, the U.S. Supreme Court has decided two cases that could, over time, significantly affect the relationships between the federal government and the regulated community; Department of Transportation, et al., v. Association of American Railroads and Perez, et al., v. Mortgage Bankers Association, et al. In the first case, the Court was asked to review the distribution of regulatory powers between Amtrak, which operates many railroad operations, and its rail competitors, resulting from a transportation law enacted in 2008. In enacting this law, the question is whether the Congress illegally delegated some of its regulatory powers to Amtrak. The Court ruled that it did not, but the case was returned to the lower court to decide some important constitutional issues. In the second case, the Court held that federal agencies, when they issue interpretive rulings, are not required to follow the standard notice and comment procedures that govern federal rulemaking, even though these interpretive rulings may have a very important effect on the parties that it regulates. While legal, the practice clearly troubles some of the Justices.
In Department of Transportation, decided on March 9, 2015, Justice Kennedy, writing for the Court, vacated a D.C. Circuit ruling (reported at 721 F.3d 666 (D.C. Cir. 2013)) which held that, for purposes of implementing the “metrics and standards” provisions as mandated by the Passenger Rail Investment and Improvement Act of 2008 (Act), Amtrak was a “private entity” exercising an unconstitutional delegation of authority over its private rail competitors. The Court held that this determination of Amtrak’s status was erroneous, and that Amtrak was, and has always been, a largely federal entity funded by the Congress. However, the case was remanded to the circuit court to consider the serous constitutional issues involved in Amtrak’s exercise of this authority. Justice Alito concurred, and his opinion described the many constitutional flaws that he sees in the present configuration of Amtrak’s powers under the Act. Justice Thomas, in a long concurring opinion, sets forth his views regarding the constitutional contours of the non-delegation doctrine.
In Perez, decided on March 9, 2015, the Court reversed the D.C. Circuit’s opinion (reported at 720 F.3d 966 (D.C. Cir. 2013)), which held that whenever a federal agency issued an interpretive rule significantly departing from an earlier interpretive rule, the notice and comment provisions of the Administrative Procedure Act (APA) must be followed. Justice Sotomayor, writing for the Court, held that this decision, reflective of recent D.C. Circuit jurisprudence, cannot be squared with the text of the APA which clearly exempts such administrative proceedings from the APA’s notice and comment requirements. Implementing such a change is the province of the Congress and not the courts. Even so, regulated entities are not without recourse under the APA–the arbitrary and capricious standard and the Court’s recent ruling in the FCC, et al., v. Fox Television Stations, Inc., 556 U.S. 502, 513 (2009), decision holding that an agency must provide more substantial justification when its “new policy” rests upon factual findings which contradict its prior policy, or when there are serious reliance issues at stake. Justice Scalia concurred, and he lamented the scope of deference the courts have applied to such exercises of agency interpretation, and Justice Thomas filed an opinion which “calls into question the legitimacy of our precedents requiring deference to administrative interpretation of regulations” rather than reviewing the regulations themselves.
B. DC Circuit
1. Court of Appeals
On June 2, 2015, the U.S. Court of Appeals for the District of Columbia Circuit decided the case of Carbon Sequestration Council and Southern Company Services, Inc., v. EPA on standing grounds. In 2010, EPA promulgated a rule establishing a new category of Safe Drinking Water Act injection wells, known as “Class VI” wells, to respond to the need to sequester large amounts of carbon dioxide necessitated by EPA’s new carbon capture and storage program. In connection with this rulemaking, EPA also determined that “supercritical carbon dioxide streams” managed in Class VI wells were “solid waste” within the meaning of the Resource Conservation and Recovery Act (RCRA). Believing that EPA’s action was inconsistent with RCRA and a number of DC Circuit precedents, this determination was challenged. However, the Court of Appeals held that none of the petitioners had standing to litigate this issue. Under circuit precedent, the Court of Appeals ruled that they could not show that they suffered any injuries attributable to this new rule although they were otherwise deeply engaged in the carbon capture and storage program.
On June 3, 2015, the U.S. Court of Appeals for the District of Columbia Circuit issued another major RCRA decision, albeit in an unpublished opinion.. The case is Solvay USA Inc. v. EPA. In 2011, EPA issued rules to classify non-hazardous secondary materials under RCRA as “solid waste” for the purpose of CAA emission standards applicable to sludge incinerators and other combustion units. The rule is codified at 40 C.F.R. Part 241. As noted by the Court of Appeals, whether a facility is regulated by CAA Section 7429 or 7412 has significant practical consequences for the regulated facilities. The Court of Appeals rejected the arguments of both the environmental and industry petitioners, holding that EPA’s interpretation of both RCRA and the CAA was entitled to considerable deference by the courts, and that the APA will only allow a court to set aside an action that arbitrary and capricious, and there is no evidence that it was. The Court of Appeals’ opinion is very brief (four pages) and will not be published. However, the Court of Appeals directed the clerk not to issue the mandate for seven days to give the parties time to seek rehearing or rehearing en banc.
On May 12, 2015, the U.S. Court of Appeals for the DC Circuit heard oral argument on a petition for mandamus which alleged that EPA had unreasonably delayed issuing the financial responsibility rules required by Section 108 of Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) (see 42 U.S.C. § 9608(b)). The case is In re Idaho Conservation League, Case No. 14-1149. By law, EPA was required by the statute to develop these rules, beginning in the 1980’s; they are intended to establish financial responsibility rules for facilities handling hazardous substances which would be triggered in the event of a release requiring a CERCLA response. To date, no rules have been promulgated. When the case was argued (In re Idaho Conservation League), the judges on the panel were very critical of EPA’s failure to abide by the statute. Accordingly, on May 19, 2015, the Court of Appeals ordered EPA to expedite its rulemaking schedule for the first class of industries it will examine—the hard rock mining industry. As stated by the Court of Appeals: “There is a limit to how long a court will entertain an agency’s excuses for inaction in the face of a Congressional command to act.” EPA was also ordered to prepare a schedule by which it will determine similar financial responsibility rules for manufacturing entities, the petroleum industry, the coal industry and the electric power industry. The Court of Appeals noted that it had not yet determined whether the petitioners has Article III standing to pursue these claims, and asked for supplemental briefs.
On May 15, 2015, the U.S. Court of Appeals for the District of Columbia Circuit again ruled that the National Association of Home Builders lacked representational standing to challenge a “preliminary, internal determination” made by EPA and the US Army Corps of Engineers in 2008 that two stretches of the Santa Cruz River in Southern Arizona are traditional navigable waters. The case is National Association of Homebuilders, et al., v. EPA. Holding that it was bound by the first standing decision in this matter made by an earlier panel of the court (reported at 667 F.3d 6 in 2011), the DC Circuit held that the plaintiffs, a trade group whose members include land owners owning property in the Santa Cruz River watershed that wish to develop their properties, failed to demonstrate to the court that the new declarations of harm that will allegedly result from this determination sufficiently overcame the standing deficiencies noted in that initial decision. The land owners asserted that the determination harmed them by making it more likely than not that they will need federal permits before they can discharge dredged or fill material on their property. The plaintiffs characterized the agencies’ determination of navigability as a binding legislative rule made without any public notice or comment, and they sought a declaratory ruling that the rule was invalid.
The Court of Appeals noted that the internal determination that these stretches of the river were traditional navigable waters does not necessarily determine the applicability of the CWA to their properties, and they were unable to establish to the Court of Appeals’ satisfaction that any cognizable injury resulted from this determination. Two of the judges sitting on the panel concurred, noting while they were bound by the standing determination of the first panel, that opinion was at odds with other standing decisions of the circuit holding that standing to challenge a “rule” does not require waiting for a government enforcement. However, as the Court of Appeals also noted, there is now a conflict in the circuits regarding whether litigants may seek immediate review of a jurisdictional determination of federal CWA jurisdiction, citing the recent decision of the Fifth Circuit (Belle Company, L.L.C., et al., v. U.S. Army Corps of Engineers) and the Eighth Circuit (Hawkes Co., Inc., et al., v. U.S. Army Corps of Engineers), although this issue was not critical to the disposition of this matter. Somewhat surprisingly, on Monday, May 18, 2015, the U.S. Supreme Court requested the Corps of Engineers to respond to a request that the Court take another look at the Belle Company, L.L.C. decision of the Fifth Circuit in the wake of the recent Eighth Circuit ruling in the Hawkes co., Inc. case.
On April 24, 2015, the U.S. Court of Appeals for the DC Circuit decided the case of Delta Construction Company, Inc., et al., v. EPA, denying petitions requesting the court’s review of rules jointly issued by EPA and the National Highway Traffic Safety Administration regulating greenhouse gas emissions and mandating fuel economy rules affecting cars and trucks (the court describes these two rules as “the Car Rule” and the “Truck Rule”). In 2012, the Court of Appeals upheld the Car Rule in Coalition for Responsible Regulation v. EPA, 684 F.3d 102 (2012) decision, reversed in part by the U.S. Supreme Court in Utility Air Regulatory Group v. EPA, 134 S. Ct. 2427 (2014). In this case, the various petitioners mounted a collateral attack on the Car Rules on procedural grounds and the Truck rules on similar grounds. Another petitioner, Plant Oil Powered Fuel Systems (POP Diesel), which makes after-market modifications to diesel engines and promotes the use of vegetable oil in place of diesel fuel, argued that these rules make its products economically infeasible. As so often happens, the DC Circuit held that none of the petitioners had standing to seek review. Indeed, POP Diesel, was obliged to adhere to the special requirements of the federal transportation laws, and it failed to do so. Accordingly, since 49 U.S.C. § 32909, does not permit a direct review in the courts of appeals, it lacked standing.
Another panel of the U.S. Court of Appeals for the DC Circuit decided the case of Myersville Citizens for Rural Community, Inc., et al., v. FERC on April 24, 2015. This is the second time the Court of Appeals has reviewed the expansion plans of Dominion Transmission, Inc., an operator of natural gas storage and transmission facilities serving several northeastern states. FERC authorized the construction of a natural gas compressor station in Myersville, Maryland, and this facility has now been in operation for several months.
Judge Millet, writing for a unanimous court, holds that FERC’s decision to issue a Certificate of Public Convenience and Necessity to Dominion was supported by substantial evidence, and that the Commission’s analysis of pertinent procedural and economic factors was thorough and persuasive. In the earlier case, Dominion Transmission, Inc., v. Summers, 723 F.3d 238 (2013), the Court of Appeals essentially rebuked the Maryland Department of the Environment for failing to process Dominion’s application for the necessary air quality permit, and remanded the matter to the Department. In 2014, the Department finally granted the permit, and in this ruling, the court holds that the Commission has not undermined the CAA by issuing the Certificate. Lastly, the Court of Appeals rejected the petitioners’ complaints about FERC’s adherence to the requirements of National Environmental Policy Act (NEPA) in conducting an environmental review of the project.
EPA has taken administrative actions in response to two RCRA decisions, Sierra Club v. EPA, 755 F.3d 968 (2014), and National Resources Defense Council and Sierra Club v. EPA, 755 F.3d 1010 (2014), EPA has removed two exclusions from the list of regulatory exclusions located at 40 C.F.R. § 261.4(a). The “gasification rule” and the “comparable fuels rule” were important to segments of the petroleum and chemical industries. This action was made effective on April 8, 2015.
The “gasification rule” was promulgated by EPA in 2008, and excluded from RCRA’s hazardous waste permitting and other regulatory requirement residual materials left over from the petroleum refining process that are inserted into a refinery’s gasification unit to produce synthesis gas, which is a type of fuel that can be used to recover energy. EPA determined that this exclusion was permissible under a number of decisions by the DC Circuit construing RCRA’s definition of “solid waste”, principally American Mining Congress and Engelhard Corporation v. EPA, 824 F.2d 1177 (1987), and it also served another RCRA goal of recovering and reclaiming industrial materials.
In the Sierra Club decision, the Court of Appeals held that a 1984 amendment to the law, RCRA § 6924(q), required that such material be regulated as a hazardous waste, and that EPA misconstrued the scope of the American Mining Congress decision. Consequently, EPA has removed the “gasification” exclusion from 40 C.F.R. § 261.4(a)(12)(i). In the National Resources Defense Council decision, the Court of Appeals held that the “comparable fuels” exclusion, adopted in 1998, was also subject to the strictures of RCRA § 6924(q). As a result, EPA’s determination that it had the discretion under RCRA and the American Mining Congress decision to classify as a fuel product and not as a solid waste, hazardous-derived fuels that also met the management requirements of 40 C.F.R. § 261.38 was erroneous. EPA has now removed the specific regulatory exclusion, formerly located at 40 C.F.R. § 261.4(a)(16) as well as 40 C.F.R. § 261.38.
2. District Courts
The U.S. District Court for the District of Columbia has denied a request for a preliminary injunction to stop the U.S. Department of Transportation (DOT) from granting necessary permits to begin the reconstruction and repair of the Virginia Avenue Tunnel, a tunnel which for 111 years has facilitated rail transportation through and under the Capitol Hill neighborhood of Washington, DC. The case is Committee of 100 on the Federal City v. Foxx, et al., and it was decided on April 7, 2015.
CSX Transportation owns the Virginia Avenue Tunnel, and plans to repair and renovate the tunnel which no longer provides efficient service, and requires constant repair and maintenance. CSX Transportation expects that it will take 30 to 42 months to complete the project, which is supported by the DOT, the District of Columbia Government, AMTRAK, and many regional government agencies. In June 2014, the Final Environmental Impact Statement (FEIS) was completed, and it consists of six volumes, 13 appendices and over 2500 pages. The plaintiffs, a non-profit group that is dedicated to urban planning and historic preservation in Washington, challenges the adequacy of the FEIS, which it argues violates NEPA. While acknowledging that the project will be long, dusty, noisy and inconvenient to many local residents (as well as displacing over 200 trees), the District Court determined that the FEIS was satisfactory, and denied the plaintiff’s request for a preliminary injunction prohibiting the DOT from issuing the permits necessary to begin construction. The District Court determined that the balance of equities clearly favors the defendants and the public interest. According to the District Court, there is a substantial interest in modernizing this deteriorating and outmoded railroad tunnel, making it capable of handling contemplated large increases in railroad traffic safely and efficiently, and the project will be of inestimable value to Washington and the East Coast.
On May 12, 2015, the District Court partially granted a request for a preliminary injunction against the enforcement on new Department of the Interior (DOI) rules which are intended, under the ’s reading of the Lacey Act, 18 U.S.C. § 42, to prohibit the interstate transportation of listed “injurious species”; the species in this matter are the Reticulated Python and the Green Anaconda. These species are raised and sold in commerce, but if they escape, they can become dangerous predators. The case is United States Association of Reptile Keepers, Inc., v. Jewell.
In 2010, the DOI proposed a new rule listing nine constricting species as “injurious”, and thereby proposed to prohibit their importation and interstate transportation. A final rule, affecting the Reticulated Python and the Green Anaconda, was promulgated in March 2015, and was immediately challenged by the plaintiffs. They allege that the DOI was without legal authority to issue these rules, and that their implementation would be financially ruinous. After reviewing the text of the Lacey Act and its legislative history, the District Court agreed with the plaintiffs that the DOI had exceeded its authority in promulgating these rules, and granted a partial preliminary injunction. As written, the District Court concluded, the interstate transportation of these species—that is within the 50 States—is not prohibited. Insofar as the DOI argued that its interpretation of the law was entitled to Chevron deference, the District Court held that such deference does not extend to criminal statutes such as the Lacey Act.
The District Court was, however, mindful of the destruction wreaked by the Burmese Python in Florida, which has “accomplished a staggering depletion of native wildlife species” in Florida. Therefore additional hearings are scheduled to define the exact parameters of any injunction. The District Court was also worried that these species would find Florida and Texas to be very hospitable if they ever escaped confinement.
On March 31, 2015, the District Court issued a long opinion in a Freedom of Information Act (FOIA) matter. The case is Sea Shepherd Conservation Society v. IRS. Sea Shepherd is a non-profit organization that has vigorously opposed Japanese whaling operations; indeed the Ninth Circuit has described its controversial tactics as amounting to piracy. See Institute of Cetacean Research v. Sea Shepherd Conservation Soc., 725 F.3d 940 (9th Cir. 2013). Sea Shepherd was recently made aware of the fact that the United States and Japanese governments had discussed its activities when two diplomatic cables were uncovered and released by WikiLeaks.
In January 2013, Sea Shepherd became the subject of an IRS investigation into its tax exempt status, which was concluded with no action in October 2014. Alarmed by these disclosures, Sea Shepherd made several FOIA requests to the IRS, whose response the group considered to be less than adequate. Finally, Sea Shepherd filed a lawsuit challenging the adequacy of the FOIA search, and the District Court agreed with Sea Shepherd, rejected the motion for summary judgment submitted by the Service, and directed that a more vigorous search be conducted.
C. First Circuit
1. Court of Appeals
On March 13, 2015, the U.S. Court of Appeals for the First Circuit affirmed the dismissal of a lawsuit seeking recovery of funds from the president of a defunct non-profit company whose business was to place interns with EPA. The company, Environmental Careers Organization (ECO), was organized as a non-profit entity under the laws of Massachusetts and ECO received compensation from the EPA for its costs of placing students in agency internships. EPA audited the accounts of ECO, and sought recovery of more than $6 million, and ECO was forced into bankruptcy. The Trustee filed a lawsuit which alleged the former president of ECO breached his fiduciary duty of care to the organization by improperly retaining some surpluses. However, at trial, the former president moved for judgment dismissing the lawsuit as a matter of law because the Trustee failed to proffer, in advance of trial, expert witnesses who would testify as to the applicable standard of care. Both the trial court and Court of Appeals agreed that the issues required the testimony of experts who were qualified under Federal Rule of Evidence 702; the complex underlying issues were “beyond the ken of lay jurors”. The case is Cruickshank, as Trustee of the Chapter 7 Estate of the Environmental Careers Organization v. Cook. Retired Associate Justice David Souter was a member of the panel.
D. Third Circuit
The U.S. Court of Appeals for the Third Circuit has unanimously affirmed the lower court’s ruling that the Chesapeake Bay Total Maximum Daily Load (TMDL), developed over many years to address pollution in Chesapeake Bay, was consistent with the CWA and the U.S. Constitution’s division of powers between the states and the federal government. The case is American Farm Bureau Federation, et al., v. EPA.
In 2010, EPA published the TMDL for nitrogen, phosphorus and sediment that can be released into Chesapeake Bay. The Bay’s watershed consists of 64,000 square miles and contains tens of thousands of lakes, rivers streams and creeks all flowing into the Bay. It has a surface area of 4500 square miles and almost 12,000 miles of shoreline, and it is estimated that by 2030, 20 million people will live in the watershed—by any measure, this TMDL– and the environmental problems it confronts– is very significant. Many trade associations, led by the American Farm Bureau, have argued that all aspects of the Chesapeake Bay TMDL which go beyond the tally of the allowable sum of pollutants that the Bay can safely absorb every day, exceeds the scope of EPA’s authority under the CWA. Moreover, the EPA’s actions will have the effect of unlawfully intruding upon the states’ traditional role in regulating land use. However, this argument has not been successful with the states immediately involved with the TMDL—Virginia, West Virginia, Maryland, Delaware, Pennsylvania and the District of Columbia—that ceded authority to EPA to devise this plan, nor with the district court or the court of appeals.
The Farm Bureau argued that the statutory words “total maximum daily load” are not ambiguous, and therefore EPA was unwarranted in interpreting that term as it has in developing a complex plan specifying the distribution of pollutants from point sources and non-point sources, or by establishing deadlines for meeting target pollutant reductions. However, the court of appeals, in applying Chevron, determined that the term was ambiguous, and EPA was justified in developing rules to implement the authority it had been provided by Congress. Proceeding to “Chevron Step Two”, the Court of Appeals held that EPA’s interpretation was reasonable, and indeed all courts that have reviewed EPA’s TMDL determinations have agreed on this point. The petitioners raised federalism issues, but the court responded that the most recent U.S. Supreme Court decisions addressing this issue in the context of the CWA, the SWANCC and Rapanos rulings, dealt with smaller, even isolated bodies of water where the exercise of federal jurisdiction was problematical. Finally, the Court of Appeals was not persuaded that this TMDL and its implementation would unconstitutionally intrude on a state’s power to regulate land use within its boundaries.
The Court of Appeals concluded its opinion by stating that, to judge from the arguments and amici briefs filed in the case, “the winners are environmental groups, the states that border the Bay, tourists, fishermen, municipal waste water treatment works, and urban centers. The losers are rural counties with farming operations, nonpoint source polluters, the agricultural industry, and those states that would prefer a lighter touch from EPA”.