December 20, 2019

In Brief

John R. Jacus

CERCLA

Wisconsin Central Ltd. v. Soo Line Railroad Co., No. 16-cv-04271 (N.D. Ill. Sept. 30, 2019).
The U.S. District Court for the Northern District of Illinois held that the seller of a railroad right-of-way was fully indemnified by the purchaser under an asset purchase agreement, and that the scope of the indemnity covered the seller’s costs of response with respect to land not exchanged as part of the sale. Wisconsin Central Ltd. (Buyer) entered into an asset purchase agreement (Agreement) with Soo Line Railroad Company (Seller) to purchase certain railroad assets, including a right-of-way that became part of a larger area listed as a Superfund site. The Agreement provided for the Seller’s indemnification for all environmental claims arising from the ownership of the assets or operations of the transportation division of the Seller’s company up to 10 years after the closing. For claims asserted after the 10-year anniversary of the Agreement, the Buyer indemnified the Seller for all claims related to ownership of the assets or operation of Seller’s transportation division. Following a 2014 settlement with the U.S. Environmental Protection Agency’s (EPA) in which both the Seller and the Buyer contributed equally to settle the Superfund claims, the Buyer sued the Seller seeking indemnification for the amounts the Buyer paid to settle the Superfund claims. The Seller denied its liability and filed a counterclaim asserting that the Buyer was obligated to indemnify the Seller for amounts it had contributed to settle the Superfund claims. The court held that the Buyer must indemnify the Seller because the environmental claim occurred after the 10-year anniversary. The Seller sought to recover its full $5,259,555 contribution to the Superfund settlements, but the Buyer argued that the Seller was not entitled to the full amount because the “property footprint” of the assets Buyer purchases from the Seller constituted 54.1 percent of the total acreage at issue in the Superfund site. The court held that the Buyer’s arguments failed because the Agreement did not impose any asset-specific limitation upon the indemnification provision and expressly provided for indemnification of environmental claims for the entire transportation division of the Seller. The court also awarded the Seller attorneys’ fees and prejudgment interest.

Clean Air Act

State of Wisconsin v. Envtl. Prot. Agency, 938 F.3d 303, 309 (D.C. Cir. 2019).
The U.S. Court of Appeals for the District of Columbia Circuit held that EPA’s rule implementing the “Good Neighbor” provision of the Clean Air Act (Act) violates the Act because it failed to require upwind states to reduce emissions when downwind nonattainment areas are required to adopt more stringent control measures to attain national ambient air quality standards (NAAQS). The Act’s Good Neighbor provision requires upwind states to eliminate their significant contributions to nonattainment of air quality standards in downwind states. Multiple parties challenged EPA’s 2016 rule implementing this provision, including environmental nongovernmental organizations (NGOs) and downwind states that argued the rule was too lenient, as well as upwind states and industries that argued the rule was too stringent. All challenges to the rule failed save for one. That challenge asserted that the rule was inconsistent with the Act because it permitted upwind states found to be significantly contributing to downwind states’ nonattainment (or interfering with their maintenance of federal standards) to continue their activities contributing to nonattainment beyond the statutory deadlines by which the affected downwind areas must demonstrate attainment of the NAAQS at issue. The court observed that the EPA’s rule allowed upwind states to continue their contributing activities beyond the statutory deadlines that required downwind states to demonstrate attainment. By not subjecting upwind states to any deadline to address their significant contribution or interference, the court held that EPA had exceeded its authority in promulgating the rule. The court remanded the rule to EPA to address the lack of any deadline for significantly contributing upwind states. Notably, the court rejected a variety of other challenges by the various parties to (1) the modeling and implementation options available under the rule, (2) whether the rule’s benefits outweighed its costs, and (3) whether EPA had impermissibly accounted for biogenic sources of ozone precursors in its modeling provisions.

California v. Envtl. Prot. Agency, 940 F.3d 1342 (D.C. Cir. 2019).
The U.S. Court of Appeals for the District of Columbia Circuit held EPA’s action to withdraw its greenhouse gas emissions standards issued in 2012 for model year 2022 to 2025 light duty motor vehicles and issue a notice for a new rulemaking to reconsider these standards (Revised Determination) was not subject to judicial review and dismissed the petitions filed by various states, environmental organizations, and electric power industry groups. The court held that the Revised Determination did not constitute judicially reviewable final agency action under the two-prong test set forth by the U.S. Supreme Court in Bennett v. Spear, 520 U.S. 154, 178 (1997). The court found that the Revised Determination “did not itself effect any change in the emissions standards that were established by the 2012 final rule for model year 2022–2025 vehicles,” but instead created only the possibility that there may be a change in the future to those standards. The court further observed that while EPA had concluded that the emissions standards for future model year vehicles were “not appropriate” because they “may be too stringent,” EPA had taken the position that the Revised Determination did not dictate the outcome of further rulemaking regarding the standards in question. Therefore, the court concluded that the Revised Determination failed to meet the second prong because it “neither determines rights or obligations or imposes any legal consequences, nor alters the baseline upon which any departure from the currently effective 2012 emission standards must be explained.”

Clean Air Act, greenhouse gas regulation

West Virginia v. Envtl. Prot. Agency, No. 15-1363, 2019 U.S. App. LEXIS 29593 (D.C. Cir. Sept. 17, 2019).
The U. S. Court of Appeals for the District of Columbia Circuit granted EPA’s and several other parties’ motions to dismiss long-pending petitions for review of the Clean Power Plan (CPP), developed by the Obama administration to reduce carbon dioxide emissions from existing power plants under the Clean Air Act (Act). Several states and industry groups had challenged the CPP as exceeding statutory authority under the Act, and other states and environmental organizations had intervened to defend the CPP. The U.S. Supreme Court stayed implementation of the CPP in 2016, and following the stay, the D.C. Circuit held en banc oral argument in lieu of panel review, but stayed the case in 2017 before ruling on the merits. EPA argued in its motion to dismiss that litigation over the CPP was mooted by EPA’s publication of a final CPP replacement rule, the Affordable Clean Energy rule, on July 8, 2019, and the court agreed.

Clean Water Act

Cahaba Riverkeeper v. Envtl. Prot. Agency, 938 F.3d 1157, 1160 (11th Cir. 2019).
The U.S. Circuit Court of Appeals for the Eleventh Circuit ruled that EPA has discretion not to institute the withdrawal of Clean Water Act (CWA or Act) delegation from a state not in full compliance with discharge permitting requirements under section 402 of the Act. Petitioner Riverkeeper and other environmental organizations petitioned EPA in 2010 to commence proceedings to withdraw Alabama’s authority to administer the National Pollutant Discharge Elimination System (NPDES) permit program pursuant to EPA’s withdrawal authority under the CWA. The petitioners cited numerous alleged violations of NPDES program requirements in support of their withdrawal petition, but in 2017, EPA chose not to initiate program withdrawal from Alabama. The petitioners sued EPA under the federal Administrative Procedure Act (APA), asserting that EPA did not have discretion not to withdraw the NPDES program under the CWA and its decision was arbitrary and capricious. The court held that EPA did have discretion and noted that while this was an issue of first impression in the Eleventh Circuit, other courts have ruled that EPA does have discretion not to withdraw CWA program delegation. The court reasoned that the statutory text at issue encompasses both a discretionary and a nondiscretionary component that plainly mandates the withdrawal of state permitting authority under particular circumstances, but requires EPA to make a judgment whether a petition for withdrawal sufficiently demonstrates that a state program does not comply with CWA requirements. After reviewing four alleged violations by Alabama, the court found none to be severe enough to warrant withdrawal. Citing EPA regulations that construe the CWA as providing the agency with discretion to determine what type of violation would warrant withdrawal, the court held EPA’s decision was not arbitrary.

Geothermal Steam Act

Pit River Tribe v. Bureau of Land Mgmt., 939 F.3d 962 (9th Cir. 2019).
The U.S. Court of Appeals for the Ninth Circuit affirmed the federal district court’s summary judgment in favor of appellees Pit River Tribe and several environmental organizations who challenged the Bureau of Indian Affairs (BIA) and other federal agencies administration of numerous unproven geothermal leases located in California’s Medicine Lake Highlands. The federal leases had primary terms of 10 years with an allowance for their extension for as long as geothermal steam is produced in commercial quantities. The parties agreed that the Geothermal Steam Act (GSA) requires that any lease be allowed to continue if it is producing geothermal steam in commercial quantities, or is shown to be capable of doing so, within its primary ten-year term. See 30 U.S.C. § 1005(a) (1994). The Bureau of Land Management (BLM) argued that section 1005(a) of the GSA allows production-based extensions to be granted to all leases in a unit if any one of them becomes productive during the primary term. The Appellees argued that the BLM’s decision to continue the terms of the unproven leases for up to 40 years violated the GSA. The court held that although section 1005(c) of the GSA provides that leases subject to “unit plans” may be extended even if not productive during the initial 10-year term, that provision permitted only production-based 40-year extensions at the end of the primary term on a lease-by-lease basis, and BLM failed to provide a compelling reason for the court to depart from the GSA’s plain language.

NEPA, FLPMA

S. Utah Wilderness All. v. Bureau of Land Mgmt., IBLA 2019-94 (Sept. 16, 2019).
The U.S. Department of the Interior’s Board of Land Appeals (IBLA or Board) overturned a Bureau of Land Management (BLM) decision to replace thousands of acres of native forests in the Grand Staircase-Escalante National Monument with foraging plants for livestock. The Southern Utah Wilderness Alliance and several other environmental nongovernmental organizations (NGOs) had appealed the BLM decision to the IBLA, arguing that BLM violated the Federal Land Policy and Management Act (FLPMA) and the National Environmental Policy Act (NEPA) when it approved the project’s planned removal of more than 30,000 acres of pinyon pine and juniper forest and sagebrush from an area within the national monument. Both BLM and NGOs argued that a previous IBLA decision over cumulative impacts supported their respective positions. The BLM’s environmental assessment identified the purpose of the project to be improvement of land health and enhancement of sagebrush-steppe habitat, but the NGOs emphasized that the project’s vegetation treatments would have removed native pinyon pine and juniper trees from the project area by shredding the trees with a wood chipper mounted on a front-end loader. The Board found the BLM had violated NEPA when it failed to consider adequately the adverse cumulative impacts of the project’s vegetation treatments on migratory birds in the national monument. The NGOs also argued that the project’s use of non-native seed was inconsistent with the applicable Monument Management Plan, which prioritized the use of native plants and seeds. In its review of the Plan, the Board found BLM’s proposed use of non-native seed failed to conform to the applicable land use plan under FLPMA.

NEPA, Bald and Golden Eagle Protection Act

Protect Our Communities Found. v. LaCounte, 939 F.3d 1029 (9th Cir. 2019).
The U.S. Court of Appeals for the Ninth Circuit upheld the Bureau of Indian Affairs’ (BIA) approval of the second phase of a California wind farm on tribal lands, holding the agency had properly considered the potential to harm eagles before entering a lease between the Ewiiaapaayp Band of Kumeyaay Indians and the project developer. The court rejected the appellant conservation group’s argument that BIA had improperly relied on an environmental impact statement (EIS) that concluded harm to golden eagles from the project was unavoidable, citing to the BIA’s Record of Decision (ROD) for the project that found no significant impact to eagles based on the Supplemental Project Specific Avian and Bat Protection Plan. The appellant also argued that BIA had failed to explain its decision not to implement one of the measures in the EIS to mitigate eagle impacts, but the court agreed with the BIA that the agency did follow that mitigation measure. The court further rejected the appellant’s arguments that BIA did not consider a project alternative or should have crafted a supplemental EIS. Finally, the court upheld BIA’s decision not to require the project developer to obtain a permit pursuant to the Bald and Golden Eagle Protection Act (BGEPA) from the U.S. Fish and Wildlife Service (FWS) to kill or injure golden eagles before starting construction, as opposed to before starting operation. FWS had previously urged BIA to obtain such a permit before construction of the project. The BIA decided instead to make the developer obtain a BGEPA take permit from the FWS before it started operating wind turbines. The court acknowledged that it was “troubling” that the project could lead to some eagle deaths but observed that NEPA and BGEPA do not provide absolute protection by outlawing the killing of eagles. The court stated that “[w]hile we recognize the legitimate concerns about the well-being of protected eagles raised by plaintiffs and FWS, we are persuaded that those concerns can be addressed through the BGEPA permitting process,” and specifically noted the benefits of the project to the Tribe and to the United States.

PFAS, emerging contaminants

Hardwick v. 3M Co., No. 2:18-CV-1185, 2019 WL 4757134, 2019 U.S. Dist. LEXIS 169322 (S.D. Ohio Sept. 30, 2019).
The U. S. Court of Appeals for the Sixth Circuit denied the motions to dismiss of defendant manufacturers of per- and polyfluoroalkyl substances (PFAS) in a putative class action tort suit. The plaintiff is a firefighter who claims he has been exposed to PFAS in firefighting foam and equipment and, as a result, has PFAS in his blood. The defendants are a group of PFAS manufacturers that the plaintiff claims are responsible for environmental contamination with PFAS as a result of various commercial operations that result in PFAS releases into the air, water, and soils. The plaintiff further alleges that despite their knowledge of adverse impacts, the defendants encouraged continued release of PFAS into the environment and human exposure to PFAS through continued manufacturing, marketing, and use of their PFAS-containing products. The plaintiff brought claims for negligence, battery, conspiracy, and declaratory judgment, and sought equitable relief in the form of an independent scientific panel to study health impacts of PFAS exposure on humans and to make binding recommendations including appropriate testing and medical monitoring to be funded by the defendants. The defendants moved jointly to dismiss the case for failure to state a claim and lack of subject matter jurisdiction. The court denied the motions to dismiss, ruling that the complaint had established subject matter jurisdiction and personal jurisdiction sufficient to move forward, the defendants’ manufacture and distribution of PFAS-containing products in Ohio is sufficient to establish personal jurisdiction, an alleged increased risk of injury is an injury, and the request for medical monitoring is an available injunctive remedy that can redress the plaintiff’s alleged injury. The court made no determination about whether the case is appropriate for class certification.

RCRA, Clean Air Act

Fresh Air for the Eastside, Inc. v. Waste Mgmt. of New York, L.L.C., No. 6:18-CV-06588, 2019 WL 4415682, 2019 U.S. Dist. LEXIS 159906 (W.D.N.Y. Sept. 16, 2019).
The U.S. District Court for the Western District of New York allowed citizen suits under the Clean Air Act (CAA) and the Resource Conservation and Recovery Act (RCRA) brought by residents living near a landfill to continue after the landfill’s owner and New York City, which sends its solid waste there for disposal, sought dismissal. Denying defendants’ motion to dismiss in part, the court dismissed two of the plaintiffs’ claims for private nuisance and trespass but allowed the plaintiffs’ CAA and RCRA citizen suit claims to proceed. The defendants argued Burford abstention was applicable because New York’s Department of Environmental Conservation had denied much of the same relief the plaintiffs were seeking, had required remedial measures, and was investigating New York City’s solid waste disposal. The court held that when the statutory conditions for a citizen suit are met under the CAA or RCRA, Burford abstention or the comparable doctrine of primary jurisdiction do not apply to prevent enforcement of those federal statutes. The court also rejected the defendants’ assertion of the political question doctrine, finding that federal courts were well suited to adjudicate the questions posed by the plaintiffs’ suit. On the substance of the RCRA claim, the court ruled that the plaintiffs had adequately alleged a RCRA endangerment, including sufficient causal nexus between New York City’s conduct and the alleged RCRA violation, and the requisite “imminent and substantial” endangerment to health or the environment. The court dismissed the private nuisance claim because the alleged nuisance conditions were too widespread and threatened more than a few individuals. The court also allowed claims for public nuisance, negligence, and gross negligence to proceed.

John R. Jacus

John R. Jacus is a partner and the Environmental Practice Group Leader in the law firm of Davis Graham & Stubbs LLP in Denver. He is a past Section Council member and Environmental Committees chair and vice chair and a contributing editor of Trends.