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In a very complex, hard-fought case, U.S. District Judge David Hittner discusses how the Texas Commission on Environmental Quality’s (TCEQ) regulatory affirmative defenses to alleged Clean Air Act (CAA) violations will be viewed by the courts, if not the regulatory agencies. Environment Texas Citizen Lobby, Inc., et al., v. ExxonMobil Corp., et alinvolves the complex regulatory regime that any large industrial facility must follow—whether it is a chemical plant, a refinery, steel mill, automotive assembly plant— if they have air emissions that must be regulated. In addition, these facilities must adhere to strict reporting rules, where evidence of non-compliance can often be found by litigants without a lot of hard work. A defense to some of these complaints lies in the fact that regulatory authorities will exercise prosecutorial discretion—by rule—when no one can control emissions during an unplanned upset (i.e., accident, natural disaster, etc.) or a planned shutdown for plant maintenance. ExxonMobil’s “Act of God” defense might have worked, it seems, if Texas had properly incorporated that state requirement in its federal State Implementation Plan (SIP). It should be noted that large scale construction projects necessitate many state and federal permits, and now there are federal laws and regulations to expedite the federal review—and new Executive Orders to reinforce that policy.

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Will the U.S. Constitution’s Commerce Clause always insulate interstate commerce from the imposition of state and local taxes? Not always, as the Texas Supreme Court recently confirmed, when it agreed with the Court of Appeals for the First District of Texas, that Texas counties are permitted to levy property taxes on natural gas held in storage in Texas while awaiting future resale and shipment to out-of-state consumers. The case is ETC Marketing, Ltd. v. Harris County Appraisal District. Affirming the Court of Appeals, the Court rejected the argument that taxing the temporary storage of natural gas conflicts with the Commerce Clause in the U.S. Constitution. Continue Reading ›

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On April 28, the Texas Supreme Court, affirming the Court of Appeals of Texas, First District, sitting in Houston, issued a unanimous ruling in the case of Forest Oil Corporation v. El Rucio Land and Cattle Company, Inc., et al. This case involves claims for environmental contamination caused by oil and gas operations on the land of the McAllen Ranch, whether the Texas Railroad Commission (TRC) has primary jurisdiction to respond to these claims, and whether the court should overturn the decision of an arbitration panel the parties earlier agreed to in order to resolves their disputes. The Texas Supreme Court held that there is nothing in the Texas Water Code and other statutory provisions that gives the TRC primary jurisdiction over oil and gas contamination disputes if the parties exercise their common law remedies in court. This decision is an important statement of the Texas Supreme Court’s views on primary agency jurisdiction when the courts themselves have broad jurisdiction to decide these matters.

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iStock-518756786-infrastructure-300x200Rebuilding America’s aging infrastructure is one task that most economists and civil engineers, and most Americans, agree should be at or near the top of President Donald Trump’s agenda. President Trump touted his background as a real estate developer to convince voters that he was best positioned to identify priorities and bring various interest groups together to structure concrete solutions. If he can harness bipartisan support for fixing or upgrading roads, bridges, tunnels, railways, airports, dams and other critical infrastructure, while satisfying Congressional budget hawks, he will fulfill one of his most consequential campaign promises. However, the just announced Trump Tax-Cut Plan, while light on technical detail, would almost certainly enlarge the budget deficit and will complicate any legislative push for infrastructure funding.

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The California Contractors State License Board (CSLB) recently announced that current Enforcement Chief David R. Fogt will serve as the CSLB’s new Registrar of Contractors starting May 2. This promotion makes David Fogt the first licensee to lead the CSLB’s operations in 20 years. Mr. Fogt obtained his California painting contractor’s license in 1986(now inactive). In February of 1990, he began his CSLB career as a Deputy Registrar Contractor and, over the next decade, he was promoted to other enforcement supervisory positions and eventually to Enforcement Chief in October 2001. Mr. Fogt will take over the day-to-day leadership of CSLB’s more than 400 employees and field offices around the State of California and have direct oversight of the CSLB’s $60 million budget, operating policies and procedures, and executive team.

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On April 18, the U.S. Court of Appeals for the Fifth Circuit affirmed the district court’s ruling in a Louisiana case that dismissed the plaintiff’s claims for property damage based on contamination caused to his property by long-term oil and gas operations conducted by the predecessors of Hess Corporation. The case is Guilbeau v. Hess Corporation.

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On April 20, an intermediate Court of Appeals for the First Court of Appeals, sitting in Houston, reversed the trial court and directed that court to reinstate an environmental enforcement action that had purportedly been settled by agreement of the officials of Brazoria County, Texas and the defendants. Brazoria County had brought an environmental enforcement action against the defendants for violating state and county regulations regarding sewage disposal and the use of on-site sewage facilities. The State had objected to these settlement reached by Brazoria County and the defendants, but the trial court overruled the State’s objections and entered final judgment resolving the case and attaching the Agreed Judgments as exhibits to its judgment. The case is The State of Texas v. Brazoria County and Daniel Infante, Humberto Lumbrero, Isidro Dejesus Luna, and Ma Dejesus Luna.

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On April 20, the U.S. District Court for the District of South Carolina, Anderson Division, dismissed the plaintiffs’ Clean Water Act (CWA) Citizen Suit which alleged that the defendant pipeline operators had violated the CWA by discharging pollutants into navigable waters without a permit. The District Court concluded that although plaintiffs “identified a discrete source for the pollution,” they “failed to allege a discrete conveyance of pollutants into navigable waters.” The District Court otherwise confirmed that “the CWA does not apply to claims involving discharge of pollution to groundwater that is hydrologically connected to surface waters.” The case is Upstate Forever and Savannah Riverkeeper v. Kinder Morgan Energy Partners, L.P. and Plantation Pipe Line Company, Inc.

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On April 20, the U.S. Court of Appeals for the Second Circuit issued a unanimous ruling that may terminate much of the litigation triggered by the bankruptcy of Tronox Inc. The Court of Appeals dismissed the appeal for lack of jurisdiction. The case is In re Tronox Inc.

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Government enforcement actions, including the issuance of subpoenas and Civil Investigation Demands (CIDs), must be authorized by the laws that created the agency or invested it with such broad investigative powers. A relatively new agency like the Consumer Financial Protection Bureau (CFPB), which was established by the Dodd-Frank Act, will often see its enforcement powers challenged at the start, and the regulated community should be aware of these inherent limitations on the exercise of governmental authority.

On April 21, the U.S. Court of Appeals for the District of Columbia Circuit issued another ruling adverse to the CFPB. In CFPB v. the Accrediting Council for Independent Colleges and Schools, the Court of Appeals affirmed the District Court’s ruling that the CFPB has no authority to issue a CID to the Council seeking information held by the Council related to “unlawful acts and practices in connection with accrediting for-profit colleges.”

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