Wednesday, August 27, 2008

James River Insurance v. Ground Down Engineering

Aug 20: In the U.S. Court of Appeals, Eleventh Circuit, Case No. 07-13207. James River Insurance Company appealed the district court’s dismissal of its claim seeking a declaratory judgment that it is not obligated to provide a legal defense to Ground Down Engineering under the insurance policy Ground Down purchased from James River. James River also appealed the denial of its summary judgment motion. James River argues that the “pollution exclusion” in the policy excuses it from the obligation to defend Ground Down and Ground Down’s engineer, Laurel Hall, in a suit filed by Priority Development for "negligently failing to discover construction debris and fuel tanks during an environmental site

In its decision, the Appeals Court concluded that the district court erred in holding that the pollution exclusion does not apply. and vacated the district court’s dismissal and remanded the case with instructions for the district court to enter an order granting summary judgment to James River.

In its decision, the Appeals Court said, "Appellees argument fails for two reasons. First, Priority’s complaint states that the damages associated with the construction debris come from the elevated levels of methane gas caused by the debris and lists the debris under the heading 'environmental contamination.' Second, the pollution exclusion is not actually limited to irritants or contaminants. The definition for pollutants states that 'irritants or contaminants' covers 'waste' which includes 'all . . . materials to be disposed of, recycled, stored, reconditioned, or reclaimed.' Only a strained reading of this language would exclude construction debris causing elevated levels of methane gas from this definition. Finally, the first sentence of the exclusion states that 'Pollution / environmental impairment / contamination is not covered under this policy.' The construction debris described in Priority’s complaint, even without the methane gas, would be considered an environmental impairment."

Access the complete opinion (
click here).

El Comite para el Bienestar de Earlimart v. Warmerdam

Aug 20: In the U.S. Court of Appeals, Ninth Circuit, Case Nos. 06-16000, 06-16131. As explained by the Appeals Court, the case involves a challenge under § 304 of the Clean Air Act (CAA), see 42 U.S.C. § 7604(a) -- the citizen suit provision. A coalition of community organizations (El Comité) brought suit against California state officials (California) responsible for designing and implementing the State air quality plan. The complicated approval process for the State Implementation Plan (SIP) required extensive back-and-forth between California and U.S. EPA.

El Comité takes issue with both the process by which California obtained EPA approval of the SIP and the final outcome of that approval process. In particular, El Comité argues that California violated Federal law by failing to adhere to the SIP approved by the EPA, which it argues required California to implement additional regulations in five areas where air quality standards for reducing harmful emissions have not been met. They charge, "California went astray. . . by using the wrong data to calculate the baseline for its emission standards and by ignoring deadlines that were intended to be incorporated into EPA’s final approval of the SIP." The Appeals Court said, "El Comité’s claim turns on determination of what documents were incorporated into the final SIP and the EPA rule, and interpretation of what the SIP, and hence federal law, requires of California."

The district court concluded that it did not have jurisdiction to review El Comité’s claim regarding the data and methodology used by California to calculate the baseline for emissions standards. The court agreed, however, with El Comité’s expansive interpretation of the SIP, and ordered relief based on that interpretation. That relief was also built on the methodology El Comité advocated for use in calculating the baseline -- the same methodology the district court had held it was without jurisdiction to review.

The Appeals Court indicates that, "As it [district court] carefully worked through the parties’ labyrinthine administrative law arguments, the court acknowledged that its rulings were potentially incongruous. We agree. In our view, the district court ultimately exceeded its jurisdiction. Because § 304 of the CAA provides jurisdiction only to enforce an 'emission standard or limitation,' and because the challenged conduct did not implicate such a standard or limitation, the court was without jurisdiction to order a remedy."

Access the complete opinion (click here).

Sierra Club v. U.S. EPA

Aug 19: In the U.S. Court of Appeals, D.C. Circuit, Case Nos. 04-1243, 07-1039. As explained by the majority in this 2-1 split decision, the 1990 Amendments to the Clean Air Act compel certain stationary sources of air pollution to obtain permits from state and local authorities that identify all emission limits for the source and also include “monitoring . . . requirements to assure compliance with the permit terms and conditions.” 42 U.S.C. § 7661c(c). Sometimes, existing monitoring requirements do not “assure compliance.” The U.S. EPA promulgated a rule preventing state and local authorities from supplementing these inadequate monitoring requirements. The majority opinion vacated the rule saying that, ". . . it is contrary to the statutory directive that each permit must include adequate monitoring requirements."

The majority clarifies the issue by citing an example. ". . . suppose there is a standard that limits emission from a given stationary source to X units of pollutant per day. Suppose also that the standard requires annual monitoring. Where annual testing cannot assure compliance with a daily emission limit, may the permitting authority supplement the monitoring requirement 'to assure compliance with the permit terms and conditions,' as the Act commands? 42 U.S.C. § 7661c(c)."

The majority notes that EPA's position on the issue has varied over time. In 1997, EPA took the position that state and local permitting authorities could supplement periodic monitoring requirements that failed to assure compliance. The Appeals Court cites a letter from Winston A. Smith, Director, Air, Pesticides & Toxics Mgmt. Div., EPA, to Howard L. Rhodes, Director, Air Res. Mgmt. Div., Fla. Dep’t of Envtl. Prot. (Dec. 11, 1997). Then in 2004, EPA issued a rule which provided that nothing in the Part 70 Rules authorized permitting authorities to supplement inadequate monitoring requirements. See 69 Fed. Reg. 3202 (Jan. 22, 2004). EPA said that it alone would remedy inadequate monitoring requirements by undertaking a “programmatic” strategy. The Appeals Court vacated the 2004 rule because EPA had not allowed for notice and comment [Envtl. Integrity Project v. EPA, 425 F.3d 992, 998 (D.C. Cir. 2005)], and then EPA noticed and adopted an identical rule in December 2006 [71 Fed. Reg. 75,422 (Dec. 15, 2006) (2006 rule)].

In vacating the 2006 rule, the Appeals Court majority said, ". . . we have concluded the Act requires: a permitting authority may supplement an inadequate monitoring requirement so that the requirement will 'assure compliance with the permit terms and conditions.' Because § 70.6(c)(1) can be reasonably read this way, we uphold the monitoring provisions of the Part 70 Rules as consistent with the Act. . . We grant the petition for review with respect to the 2006 rule, which we vacate. We deny the petition for review with respect to the monitoring provisions of the Part 70 Rules."

In dissent, one of the three Justices said, "I respectfully part ways with the majority opinion because the relevant statutory language supports EPA’s 2006 rule. . . The dispute in this case boils down to the following: When issuing permits, can state and local permitting authorities independently determine whether, in their view, those pre-existing monitoring requirements are sufficient “to assure compliance” with emission limits -- and if they think not, impose additional monitoring requirements? The legal question here is: Who Decides? According to petitioners, the statute says that state and local permitting authorities can decide on their own to impose additional monitoring requirements as they see fit. EPA responds that it possesses the statutory authority and discretion to decide whether state and local permitting authorities can impose additional monitoring requirements. The statutory text resolves that question; the statute grants EPA the authority to determine whether state and local permitting authorities can impose additional monitoring requirements. . ."

Earthjustice challenged the 2006 EPA rule on behalf of the Environmental Integrity Project, Environmental Defense Fund, Natural Resources Defense Council and Sierra Club. They said the rule specifically prohibited permitting authorities from including stronger air pollution monitoring requirements in permits for approximately 18,000 major stationary pollution sources, even where needed to guarantee compliance with emission limits. Earthjustice attorney Keri Powell who argued the case in court said, “This is a huge victory for everyone who breathes. We can’t have strong enforcement of our clean air laws unless we know what polluters are putting into the air.”

Sierra Club Executive Director Carl Pope issued a statement saying, "This is a huge victory against one of the most egregious rollbacks of environmental protections in our nation’s history. . ." American Petroleum Institute, who intervened on behalf of U.S. EPA, did not issue a statement on the decision.

Access the complete opinion and dissent (
click here). Access a release from Earthjustice (click here). Access a statement from Sierra Club (click here).