July 01, 2015

In Brief

Theodore L. Garrett

Enforcement/Fish story

Yates v. United States, 135 S. Ct. 1074 (2015).
A federal agent conducting an offshore inspection in the Gulf of Mexico found that a ship had undersized, harvested red grouper on board and instructed Yates, the ship’s captain, to keep the undersized fish segregated from the rest of the catch until the ship returned to port. Federal conservation regulations designed to protect against overfishing required the release of undersized red groupers. After the agent departed, Yates told a crew member to throw the undersized fish overboard. Yates was convicted of violating the “anti-shredding” provision of the Sarbanes-Oxley Act of 2002, 18 U.S.C. § 1519, passed in the wake of the Enron collapse. That statute makes it a crime for anyone who knowingly alters, destroys, conceals, or falsifies “any record, document, or tangible object with the intent to impede or obstruct or influence” a federal investigation. The Supreme Court reversed the Eleventh Circuit’s decision upholding the conviction. The plurality and concurring opinions conclude that, based on traditional tools of statutory construction, the anti-shredding provision is appropriately read to refer to the set of tangible objects used to record or preserve information, and not an across-the-board ban on the destruction of physical evidence. As the plurality opinion emphasized, “But it would cut §1519 loose from its financial-fraud mooring to hold that it encompasses any and all objects, whatever their size or significance, destroyed with obstructive intent.” The plurality opinion also invoked the rule that ambiguity in criminal statutes should be resolved in favor of lenity.

Review of changed agency policies

Perez v. Mortgage Bankers Ass’n, 135 S. Ct. 1199 (2015).
A decision in the labor arena has increased attention on the extent to which courts should defer to an agency’s interpretation of laws and rules. In the Perez case, the Supreme Court upheld the Labor Department’s amendment of an interpretation of rules concerning overtime pay without formal notice and comment, holding that because an agency is not required to use notice and comment procedures to issue an initial interpretive rule, it is also not required to use those procedures to amend or repeal that rule. The Court cited the “longstanding recognition that interpretive rules do not have the force and effect of law.” However, the majority opinion also stressed that the Administrative Procedure Act requires an agency to provide more substantial justification when “its new policy rests upon factual findings that contradict those which underlay its prior policy; or when its prior policy has engendered serious reliance interests that must be taken into account.” In concurring opinions, Justices Scalia, Alito, and Thomas expressed concerns over deference to agency interpretations of regulations. Justice Scalia stated that an agency should be “free to interpret its own regulations with or without notice and comment; but courts will decide—with no deference to the agency—whether that interpretation is correct.”


Anderson v. Teck Metals, Ltd., No. 13-cv-420-LRS, 2015 WL 59100 (E.D. Wash. Jan. 5, 2015).
A district court held that Superfund displaces a federal common law nuisance suit by Washington residents against a Canadian metal smelter and fertilizer manufacturing facility. The plaintiffs alleged personal injury caused by air emissions from the facility. The court stated that by enacting the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), Congress provided a comprehensive liability and remediation scheme to address releases and threatened releases of hazardous substances by making polluters strictly liable for response costs to clean up the hazardous substances and liable for natural resource damages. Congress “has provided a ‘sufficient legislative solution’ to warrant a conclusion that CERCLA occupies the field to the exclusion of federal common law.” Therefore, the court held that any federal common law nuisance claims have been “displaced” by CERCLA and, thus, must be dismissed. The court also held that Washington’s public nuisance statute cannot be applied extraterritorially to defendant’s smelting activities in Canada.

AmeriPride Services Inc. v. Texas Eastern Overseas Inc., 782 F.3d 474 (9th Cir. 2015).
The Ninth Circuit held that courts have discretion to use “the most equitable method” for allocating liability to a nonsettling defendant in a CERCLA contribution action among private parties. The court rejected arguments that courts must use either the proportionate share approach of the Uniform Comparative Fault Act or the pro tanto approach of the Uniform Contribution Among Tortfeasors Act. Although courts have discretion in allocating liability to nonesettling defendants in private-party contribution actions, the Ninth Circuit held that: “[C]hoosing a method that would discourage settlement or produce plainly inequitable results could constitute an abuse of discretion.” 782 F.3d at 488. Because the district court did not explain the basis for using the pro tanto approach, the case was remanded for further proceedings. The court also held that the trial court erred in failing to determine the extent to which the settlement costs sought by plaintiff were incurred consistent with the National Contingency Plan, as required by CERCLA section 9607(a).

Consolidation Coal Co. v. Georgia Power Co., 781 F.3d 129 (4th Cir. 2015).
A divided Fourth Circuit panel held that a party selling used transformers containing spent oil contaminated with polychlorinated biphenyls (PCBs) was not liable under CERCLA as an arranger for disposal. The Ward Transformer Company refurbished used transformers and resold them. The Environmental Protection Agency (EPA) listed the Ward site on the National Priorities List as a result of contamination from oil spills containing PCBs. Various parties that settled with EPA then sued Georgia Power, which had sold the used transformers at a “scrapping” auction to Ward. The Fourth Circuit affirmed the district court’s ruling in favor of Georgia Power, concluding that the company did not have the required intent to dispose of PCBs. Relying on the Supreme Court’s decision in Burlington Northern, the majority opinion stated that “intent to sell a product that happens to contain a hazardous substance is not equivalent to intent to dispose of a hazardous substance under CERCLA.” The court noted that Georgia Power received a profit on the sale of the transformers, the spills of oil containing PCBs occurred during Ward’s actions to refurbish the transformers for re-sale, and Georgia Power had neither control over Ward’s actions nor knowledge of spills at the Ward facility.

Air quality

Citizens for Pennsylvania’s Future v. Ultra Resources, Inc., No. 11-cv-1360, 2015 WL 769757 (M.D. Pa. Feb. 23, 2015).
A federal district judge in Pennsylvania rejected environmentalists’ suit challenging eight Clean Air Act permits for compressor stations operated by an oil and gas production company. The citizen group plaintiffs argued that the eight compressor stations should have been combined for review, which would have required a major source permit instead of minor source permits for each facility. The district court’s opinion granting summary judgment held that the stations did not have to be aggregated because they were too far apart to be adjacent. Citing Pennsylvania Department of Environmental Protection Guidance recommending that a determination of whether two or more facilities constitute a single source for purposes of regulatory standards be done on a “case-by-case basis,” the court noted that while the plain meaning of the terms adjacent and contiguous would normally be dispositive, it declined to hold that functional interrelatedness can never be considered in determining contiguousness or adjacency. In this case, however, the court found that the stations were operated independently and were not interrelated.

Sierra Club v. EPA, 781 F.3d 299 (6th Cir. 2015).
The Sixth Circuit held that states must include reasonably available control methods to regulate emissions controls in areas seeking re-designation from nonattainment to attainment for fine particulates (PM2.5), despite an EPA finding that the areas comply with the national ambient air quality standards (NAAQS). EPA had determined that the Cincinnati-Hamilton metropolitan area had attained national air quality standards for fine particulates, due in part to regional cap and trade programs. EPA also re-designated the area to attainment status, even though the states of Ohio and Indiana had never implemented reasonably available control measures (RACT) applicable to nonattainment areas, because such controls were not needed to meet the air quality standard for PM2.5. The court ruled that states can rely on regional emission cap and trade programs to ensure NAAQS compliance, rejecting the Sierra Club’s argument that the reductions must be from the nonattainment area in question. However, a state seeking re-designation must provide for implementation of RACT, the court ruled, “even if those measures are not strictly necessary to demonstrate attainment with the PM2.5 NAAQS.” Disagreeing with a contrary decision of the Seventh Circuit, the court stated that “the Act unambiguously requires RACT in the area’s SIP as a prerequisite to re-designation.”

Water quality

Hawkes Co. v. U.S. Army Corps of Engineers, 782 F.3d 994 (8th Cir. 2015).
The Eighth Circuit has held that an Army Corps of Engineers jurisdictional determinations of the applicability of Clean Water Act requirements to a wetlands area is subject to judicial review. The plaintiff sought review of the Corps’ determination that a wetland that the plaintiff intends to use for peat mining is jurisdictional. The court rejected the government’s claims that jurisdictional determinations are not final agency action under the Administrative Procedure Act because they do not have immediate legal consequences. The court was not persuaded by the government’s distinction “between an agency order that compels affirmative action, and an order that prohibits a party from taking otherwise lawful action.”

The court relied on the Supreme Court’s decision in Sackett v. EPA, emphasizing that the jurisdictional determination “requires appellants either to incur substantial compliance costs (the permitting process), forego what they assert is lawful use of their property, or risk substantial enforcement penalties.” The concurring opinion notes that while a jurisdictional determination does not begin the accumulation of penalties, judicial review is appropriate under Sackett because other avenues provide the plaintiff with no acceptable options for challenging the need for a permit. The Eighth Circuit’s decision disagreed with a contrary opinion of the Fifth Circuit, Belle Co., LLC v. Army Corps of Engin’rs, 761 F.3d 383 (5th Cir. 2014).

Sierra Club v. McLerren, No. 11-cv-1759–BJR, 2015 WL 1188522 (W.D. Wash. Mar. 16, 2015).
A district court sustained a citizen’s suit against EPA for failure to prescribe Total Maximum Daily Loads (TMDLs) for pollutants discharged in to a water body after the state failed to submit any draft TMDLs to EPA. The court accepted that the state had sufficient reasons for not completing a 2006 draft TMDL for PCBs discharged to the Spokane River. But, in 2011 the state environmental agency changed course and gave a series of reasons why it was declining to issue a TMDL with waste load allocations for PCBs. The Washington Department of Ecology explained in part: “Setting wasteload allocations through a TMDL would set a target well below the ‘background’ PCB concentrations observed in remote bodies of water with no obvious source of contamination other than aerial deposition.” Notwithstanding this explanation, however, the court agreed with plaintiffs that EPA abused its discretion in approving a Task Force to address PCBs as an alternative to completing the TMDL, since the Task Force was not designed to complete or assist in completing a TMDL: “There comes a point at which continual delay of a prioritized TMDL and detours to illusory alternatives ripen into a constructive submission that no action will be taken.” The matter was remanded to EPA for further consultation with the state Department of Ecology to create a definite schedule with concrete goals.

Gulf Restoration Network v. McCarthy, 783 F.3d 227 (5th Cir. 2015).
EPA rejected a petition by a number of environmental groups to regulate nitrogen and phosphorous discharges under section 303(c)(4)(B) of the Clean Water Act. It did so without deciding whether numeric nutrient criteria were “necessary” for the Mississippi River basin. The district court found that EPA had an obligation to address the issue of necessity, but that EPA could properly consider factors, such as cost, feasibility, and administrative burdens in making a determination of necessity. Rejecting EPA’s argument that its decision was a matter of unreviewable discretion, the Fifth Circuit held that the courts may review an EPA decision not to render a determination that water quality standards are necessary for a water body. The Fifth Circuit reasoned that the language in the Clean Water Act was similar to provisions in the Clean Air Act discussed in Massachusetts v. EPA, 549 U.S. 497 (2007), in which the Supreme Court held that EPA could simply not avoid any decision as to whether air quality standards were “necessary” under that act.

However, the Fifth Circuit ruled that EPA is not required to render a decision on “necessity” in response to a citizen petition if it can provide a reasonable explanation for its failure to make such a finding. The case was remanded to the district court to decide whether EPA adequately justified not reaching the issue of necessity.


The Little Hocking Water Ass’n, Inc. v. E. I. duPont De Nemours & Co., No. 2009-cv-01081, 2015 WL 1038082 (S.D. Ohio Mar. 10, 2015).
A Resource Conservation and Recovery Act (RCRA) suit may be brought to address an “imminent and substantial endangerment” caused by air pollution deposited on land, a district court held. A rural water system brought a suit alleging that its well field, as well as the soil and groundwater beneath the land, had been contaminated by deposits from a chemical plant’s air emissions. Declining to follow a decision of the Ninth Circuit, the court found that RCRA’s legislative history and purpose support a conclusion in this case that air emissions which fell onto plaintiff’s well field and contaminated the groundwater constitutes the disposal of solid waste under RCRA. The opinion states that “this type of soil and groundwater contamination is precisely the type of harm RCRA aims to remediate in its definition of ‘disposal.’”

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.