Gravel2Gavel Construction & Real Estate Law Blog

On November 5, 2014, a panel of the U.S. Court of Appeals for the Fifth Circuit refused to reconsider its June 2014 decision affirming the District Court’s decision that B.P. Exploration & Production, Incorporated and Anadarko Petroleum Corporation can be held liable for violating the Clean Water Act (CWA) in connection with the massive Deepwater Horizon oil spill in the Gulf of Mexico. BP and Anadarko owned and operated the well, but they argued that the floating rig, owned and operated by Transocean (which has already settled its liability) and not the well was the source of the oil spilling into the Gulf of Mexico. In the earlier ruling, the panel held that under the plain terms of the CWA, the defendants were liable because “there was no dispute of material fact that controlled confinement of oil was lost in the well”, and that the well “was a point from which oil or a hazardous substance was discharged”. BP and Anadarko argued that it was the Deepwater Horizon rig and its appurtenances constituted the point at which control of the oil was in fact, lost.

On January 9, 2015, Fifth Circuit issued another ruling, rejecting the petitioners’ request for a rehearing en banc. The vote rejecting the petition was surprisingly close, 7 to 6, with two abstentions. In a vigorous dissent, Judge Clements stated that the denial of the petition “ensures that our precedent concerning liability for oil spills under the Clean Water Act remains unclear”. The panel’s “controlled confinement” test does not follow from the text of the Clean Water Act, and, moreover, Fifth Circuit precedent in ambiguous civil penalty cases should be resolved in favor of the defendant, and this precedent was not followed here.

On January 7, 2015, the U.S. District Court for the Central District of California held that California’s ban on the sale in California of foie gras–a delicacy made from fattened and force-fed duck liver–was preempted by federal law, namely the Poultry Products Inspection Act (PPIA), 21 U.S.C. §§ 451-470. The case is Associations Des Eleveurs De Canards et D’Oies Du Quebec, et al., v. Kamala Harris, Attorney General of California. This is an example of the preemptive effect of federal legislation, which will often trump conflicting state law, especially in business matters.

The plaintiffs, a group of Canadian farmers, alleged that this ban has caused them to lose millions of dollars in sales in California, and the court held that they had standing to bring this lawsuit. The District Court then reviewed the California statute (enacted in 2012) and the provisions of the PPIA, and determined that the California law conflicts with and is preempted by the federal law, which regulates the distribution and sale of poultry products in interstate commerce.

Some of the issues in this case have already been reviewed by the Ninth Circuit, which held in 2013 that the California Attorney General was not entitled to Eleventh Amendment immunity (see 729 F. 3d 937), and it is likely that another appeal will be made to the Ninth Circuit. The Ninth Circuit has recently upheld several state laws against such challenges.

On December 29, 2014, the U.S. District Court for the Eastern District of North Carolina held that the plaintiffs in a Resource Conservation and Recovery Act (RCRA) and Clean Water Act (CWA) citizens-suit against the owners and operator of a swine farm had the right to have the case tried before a jury. The case is North Carolina Environmental Justice Network, et al , v. Taylor, et. al. It is alleged that the defendants illegally dumped swine waste into the waters and onto the lands surrounding the swine farm. The defendants challenged the demand for a jury trial, and both sides argued that a 1987 Supreme Court decision, Tull v. U.S., 481 U. S. 412 (1987), supported their positions. After reviewing the Tull case and other precedents, the District Court held that the Tull decision, which discussed the right to a jury trial when the federal government was seeking civil penalties, was a Seventh Amendment right available to either side in a citizens-suit case.

On January 9, 2015, the U.S. District Court for the District of Columbia approved a proposed consent decree that had been negotiated by EPA and the California Air Resources Board (CARB) that resolved the government’s claims that Hyundai Motor Company, Hyundai Motor America, Kia Motors Corporation, Kia Motors America, and Hyundai America Technical Center, Inc. violated the Clean Air Act and the California Health & Safety Code by falsifying fuel economy and greenhouse gas emissions claims that affected more than 1 million vehicles sold in the 2012 and 2013 model years.

It was alleged in the consent decree that there was a discrepancy in the information provided by the defendants in connection with the application for “Certificates of Conformity” and the actual specifications of the vehicles in that the vehicles provided lower fuel economy and emitted higher emissions than was stated in the applications. 126,000 vehicles were sold in California, and the $100,000,000 civil penalty–the largest yet recovered–was split between the U.S. Government ($93,700,000) and the State of California ($6,300,000). In addition, Hyundai agreed to forfeit 4.75 million greenhouse gas credits.

The proposed settlement was published in the Federal Register, and several comments were received. Some of the commenters requested that Hyundai also provide $25 million of Supplemental Environment Projects in some states, but the United States rejected this request, arguing that to do so would unravel the settlement that had been negotiated. The decision is reported as United States of America, et al. v. Hyundai Motor Company, et al.

In addition to the bread and butter federal agency appropriations language in the Consolidated and Further Continuing Appropriations Act, 2015 (the “Act”), enacted late last year, the Act includes a number of provisions affecting environmental regulation, including:

• The interpretive rule published by Environmental Protection Agency (EPA) and the Corps of Engineers regarding the applicability of Section 404(f)(I)(A) of the Clean Water Act (CWA), effective March 25, 2014, will be withdrawn;
• None of the funds made available by this Act may be used to require a permit for the discharge of dredged or fill materials for activities identified in Section 404(f)(1)(a), (c) of the CWA
• None of the funds made available by this Act may be used by the Department of the Interior to write or issue, pursuant to Section 4 of the Endangered Species Act, to proposes a listing for the greater sage-grouse;
• No funds may be used to promulgate or implement any rule requiring the issuance of permits under Title V of the Clean Air Act for emissions of greenhouse gases from biological products associated with livestock production;
• The President is directed to provide the Congress with a comprehensive report describing in detail all federal agency funding of domestic and foreign climate change programs for fiscal years 2014 and 2015;
• There will be no greenhouse gas reporting requirements for emissions from manure management programs;
• Any projects financed by grants for state projects financed by funds from the Safe Drinking Water Act will use American iron and steel products; and
• No funds may be used to regulate the lead content of ammunition or fishing tackle under Toxic Substance Control Act or any other law.