May 01, 2016

In Brief

Theodore L. Garrett


United States v. Dico, Inc., 808 F.3d 342 (8th Cir. 2015).
A divided Eighth Circuit panel reversed a district court decision holding defendant Dico Inc. liable under Superfund when it sold buildings in Iowa on a site subject to a U.S. Environmental Protection Agency (EPA) cleanup order. The purchaser dismantled the building, and EPA later found polychlorinated biphenyls (PCBs) in soil and steel beams on the property. The district court granted the government’s motion for summary judgment that defendant was liable for cleanup costs by “arrang[ing] for disposal” of the PCBs. The court of appeals agreed with Dico’s argument that the buildings had some commercial value based on which a fact finder may find that Dico did not intend to dispose of PCBs by selling the buildings. “Overall, unlike cases finding liability at summary judgment, we do not believe the evidence of record demonstrates as a matter of law that Dico was merely trying to get rid of a hazardous substance,” the court’s opinion states. The court of appeals cited the Supreme Court decision in Burlington Northern, which calls for a fact-specific inquiry, particularly when the motives for a sale are not clear, and concluded that Dico’s intent should not have been decided on summary judgment. The court affirmed the award of penalties for violating an EPA order concerning the use of the buildings but vacated an award of punitive damages. The dissent viewed the facts as showing that Dico wanted the buildings and their PCB contamination gone and thus intended to dispose of the PCBs.

Air quality

Group Against Smog and Pollution (GASP) v. Shenango, Inc., 810 F.3d 116 (3d Cir. 2016).
The Third Circuit affirmed a district court order dismissing a Clean Air Act citizen suit against a Pennsylvania coke plant for violating emission standards in the state’s implementation plan. In 2012, the state Department of Environmental Protection and Allegheny County filed an action in U.S. district court for violations of the standards. The parties entered into a consent decree to resolve these violations and in 2012 the district court entered final judgment and retained jurisdiction for the purpose of modifying or enforcing the consent decree. In 2014, a citizen group, GASP, filed a lawsuit claiming violations of the same emission standards. The district court granted defendant’s motion to dismiss under FRCP Rule 12(b)(1) because Allegheny County was already diligently prosecuting an action to require compliance. The Third Circuit affirmed, stating that dismissal was warranted under Rule 12(b)(6) for failure to state a claim upon which relief may be granted. The court rejected plaintiffs’ argument that no agency enforcement action was pending when its suit was commenced, stating “the diligent prosecution bar will prohibit citizen suits during the actual litigation as well as after the litigation has been terminated by a final judgment, consent decree, or consent order and agreement.” The court’s opinion cites the legislative history of the Clean Water Act stating that citizen suits are “meant to supplement rather than to supplant government action.” Declining to “contradict the accepted practice of giving deference to the diligence of the agency’s prosecution,” the Third Circuit rejected plaintiff’s argument that the company continues to violate the state plan, noting that under the consent decree the government is enforcing the same violations alleged in the citizen suit.

Water quality

Watervale Marine Co., Ltd. v. U.S. Department of Homeland Security, 807 F.3d 325 (D.C. Cir. 2015).
The D.C. Circuit affirmed a lower court decision rejecting claims that the Coast Guard imposed unlawful security conditions before granting departure clearance for vessels that the Coast Guard believed were violating the Clean Water Act. After receiving whistleblower complaints alleging that oil record books were falsified, the Coast Guard ordered U.S. Customs to withhold departure clearance. After an investigation, the Coast Guard released the vessels only after the vessel owners posted a bond and executed a security agreement. The vessels’ management pled guilty to unlawful discharges of oil but subsequently challenged the Coast Guard’s authority to demand, as a condition of departure, security agreements including facilitating the crew’s travel to court appearances and helping the government to serve subpoenas on foreign crew members outside the United States. The D.C. Circuit rejected the government’s argument that the Coast Guard’s discretion is unreviewable, but rejected the plaintiffs’ claims. The court concluded that since the Coast Guard can hold a ship until a civil or criminal proceeding is completed, it follows that the Coast Guard can notify Customs to release a ship only upon conditions assuring that a civil or criminal proceeding would not be jeopardized.

Askins v. Ohio Department of Agriculture, 809 F.3d 868 (6th Cir. 2016).
The Sixth Circuit affirmed a district court decision dismissing a lawsuit by citizen plaintiffs challenging Ohio EPA’s transfer of part of its National Pollutant Discharge Elimination System (NPDES) permit authority to the Ohio Department of Agriculture (ODA). The plaintiffs challenged specific NPDES permits to animal feeding operations and filed a citizen suit in U.S. district court alleging that the transfer of permit authority to ODA was made without notifying the U.S. EPA or obtaining EPA’s approval. The Sixth Circuit agreed with the U.S. EPA and Ohio position that it was for EPA to decide whether or not the appropriate state authority is handling Clean Water Act permits. The court concluded that EPA’s oversight power in this arena is discretionary, stating “the Clean Water Act does not require the U.S. EPA to conduct a hearing if a state fails to administer properly a state-NPDES program.” The court of appeals also drew a distinction between the statute’s requirements for NPDES programs versus NPDES permits, stating that only permits are subject to the citizen suit provisions and that “a regulator’s failure to follow procedural regulations is not grounds for a citizen suit.”

Natural resources

State of North Carolina v. Alcoa Power Generating, Inc., 2015 WL 5703520 (E.D.N.C.) Sept. 28, 2015).
A district court dismissed a suit brought by the State of North Carolina and held that Alcoa owns a forty-five mile segment of the Yadkin River in North Carolina, on which Alcoa had built four hydropower dams. The state commenced the action in 2013, seven years after it learned Alcoa had asserted ownership of the property. Alcoa produced evidence of record title ownership of most of the segment and adverse possession of the entire segment. The district court noted that the state did not dispute Alcoa’s possession of the property and ruled that Alcoa has been in continuous possession of the property since at least 1962. The district court previously ruled that the segment of the river was not a navigable waterway when North Carolina became a state in 1789 and thus the state did not acquire rights upon statehood.

U.S. v. Estate of E. Wayne Hage, 810 F.3d 712 (9th Cir. 2016).
The Ninth Circuit reversed a decision by a Nevada district court which had ruled that a family did not violate trespassing laws by grazing their cattle on federal lands without a permit. The court of appeals rejected the family’s argument that family’s cattle were not trespassing as they had water rights to nearby lands, and held that the district court’s “easement by necessity” theory “plainly contravenes the law.” The Ninth Circuit stated that “[w]ater rights are irrelevant” to the basic permit requirement and that “[d]efendants openly trespassed on federal lands.” Stating that the trial judge’s rulings were marked by “bias and prejudgment,” the Ninth Circuit remanded the lawsuit and requested the Chief Judge of the district court to assign a new judge. In its remand order, the Ninth Circuit concluded that the trial judge should enter judgment in favor of the government, impose an injunction, and calculate appropriate damages.

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.