September 01, 2013

In Brief

Theodore L. Garrett

Constitutional law

Disproportionate demands for property or monetary conditions in land-use permitting run afoul of the takings clause, the U.S. Supreme Court held. Koontz v. St. Johns River Water Mgmt. Dist., 133 S. Ct. 2586 (2013). A property owner, Koontz, was informed by a Florida water management district that construction on wetlands would be approved only if he reduced the size of his development and gave the regulating district a conservation easement on the remainder of his property or paid for improvements to district-owned wetlands. Believing the demands to be excessive, Koontz brought a lawsuit alleging a taking without just compensation. The claims by Koontz were rejected by the Florida Supreme Court, and the U.S. Supreme Court reversed. Justice Alito’s opinion for the Court concludes that it made no difference that no property was actually taken in this case because disproportional demands are a constitutionally cognizable injury. Because of the direct link between the government’s demand and a specific parcel of real property, this Court held that the case presents the risk that the government may leverage its power in land-use permitting to pursue governmental ends that lack an essential nexus and rough proportionality to the impacts of a proposed use of the property. The Court expressed no view on the merits of Koontz’s claim, however, and remanded the case for further proceedings.


A divided Ninth Circuit affirmed the dismissal of Chubb’s subrogation suit against defendants for recovery of payments to its insured for cleanup costs. Chubb Custom Ins. Co. v. Space Sys./Loral, Inc., 710 F.3d 946 (9th Cir. 2013). The majority held that the carrier could not seek recovery from third parties via subrogation under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) § 112(c) because the carrier did not allege that its insured had asserted a claim against another party or the Superfund. The majority opinion also rejected Chubb’s CERCLA § 107(a) claim because “an insurer that is only obligated to reimburse the insured for cleanup costs does not itself incur response costs.” The opinion concludes that Chubb “cannot circumvent the plain meaning of § 107(a) by piggybacking on a subrogation principle under state law.”

The attorney work product privilege is preserved when communications are shared during pretrial discovery among Justice Department (DOJ) attorneys representing federal agencies, namely EPA and the U.S. Army Corps of Engineers, with conflicting interests. Menasha Corp. v. U.S. Dep’t of Justice, 707 F.3d 846 (7th Cir. 2013). The United States sued a number of defendants for an estimated $1.5 billion in response costs and natural resource damages relating to the contamination of the Lower Fox River. The United States proposed a $4.5 million settlement with municipal and tribal entities and two federal agencies. Menahsa Corporation opposed the settlement and sought communications between members of the two DOJ enforcement and defense litigation teams, alleging collusion between the two sections of DOJ in arriving at a “modest estimate” of the government’s liability. However, the court noted that this case is unlike disputes where different agencies may sue in their own names and are opposing parties in litigation. “The only federal party was the United States,” the opinion states, “a single party represented by a single legal representative, the Justice Department.” Preserving the privilege serves to avoid hampering the ability of DOJ “to formulate a position that would reconcile competing interests within our vast federal government.”

A U.S. district court found that a power company’s sale of used transformers was not an arrangement for disposal giving rise to CERCLA liability. Carolina Power & Light Co. v. Alcan Aluminum Corp., Nos. 5:08-CV-460-FL, 5:08-CV-463-FL, 2013 WL 419300 (E.D.N.C. Feb. 1, 2013). The court emphasized that the power company had drained and disposed of PCBs in the transformers before selling them and that the used transformers had a viable market value when they were sold, and that the transformers were refurbished and resold for a profit.

Air quality

The D.C. Circuit upheld EPA’s maximum achievable control technology (MACT) standards for secondary lead smelters. Ass’n of Battery Recyclers Inc. v. EPA, 716 F.3d 667 (D.C. Cir. 2013). Rejecting arguments by environmental groups, the court held that EPA was not required to recalculate the minimum or “floor” limits when it revises a MACT standard, and that the statute does not bar EPA from considering costs in revising MACT standards. The court also rejected industry arguments that the MACT rules improperly overlapped with the primary lead national ambient air quality standards, and held that nothing in the statute required EPA to consider whether the MACT limits were necessary to protect public health.

Water quality

The Army Corps of Engineers (Corps) properly authorized construction of a wastewater pipeline in Arkansas under nationwide discharge permits 7 and 12, a district court held. Ouachita Riverkeeper, Inc. v. Thomas Bostick, No. 12-803 (CKK), 2013 WL 1449710 (D.D.C. Apr. 10, 2013). The court rejected environmental groups’ claim that an individual permit was required for the proposed pipeline, noting that the Corps found that the construction activities would result in no permanent loss of wetlands. The conversion of forested to scrub wetlands was addressed by compensatory mitigation. The court rejected plaintiffs’ argument that the pipeline would result in the loss of waters of the United States, accepting the Corps’ distinction between the loss of waters and the loss of wetlands function that was addressed through compensatory mitigation.

A delay of 17 years did not warrant issuance of an order of mandamus requiring EPA to complete its reissuance of National Pollutant Discharge Elimination System (NPDES) permits for two electric power plants. In re Sierra Club Inc., No. 12-1860, 2013 WL 1955877 (1st Cir. May 8, 2013). “While the EPA’s delays in reissuing the NPDES permits are concerning and extensive,” the court said, “petitioners have not shown that mandamus is warranted under the circumstances presented here.” EPA argued successfully that it must balance competing priorities with its limited resources, and the court concluded that “the present record provides no reason to think that the EPA will not work diligently to complete its tasks.”

The Sixth Circuit held invalid the Army Corps of Engineers’ reauthorization of two nationwide permits allowing coal mining operations to discharge dredged and fill material into waters of the United States. Kentucky Riverkeeper v. Robert A. Rowlette, 714 F.3d 402 (6th Cir. 2013). The Corps prepared environmental assessments in lieu of National Environmental Policy Act (NEPA) environmental impact statements for the permits. The court found that while the Corps used past impacts to forecast future impacts, it failed to assess cumulative impacts. The court also found that the Corps failed to document its determination that compensatory mitigation will ensure cumulatively minimal adverse effects.


The Bureau of Land Management (BLM) failed to assess the potential contamination from fracking in approving the sale of oil and gas leases in California. Ctr. for Biological Diversity v. Bureau of Land Mgmt., C 11-06174 PSG, 2013 WL 1405938 (N.D. Cal. Mar. 31, 2013). The Magistrate Judge found that BLM failed to conduct a full NEPA analysis, stating that the “potential risk for contamination from fracking, while unknown, is not so remote or speculative to be completely ignored,” citing studies by EPA noting that “fracking has potential risks of contaminating nearby water supplies.”

Theodore L. Garrett

Theodore L. Garrett is a partner of the law firm Covington & Burling LLP in Washington, D.C. He is a past chair of the Section and is a contributing editor of Trends.