Monday, January 5, 2009

Freeman v. Blue Ridge Paper Products, Inc

Dec 29: In the U.S. Court of Appeals, Six Circuit, Case No. 08-6321. The case is a class action for nuisance in the form of water pollution from a paper mill involves an effort by plaintiffs to avoid removal to Federal court under the Class Action Fairness Act (CAFA) of 2005. Plaintiffs, three-hundred landowners who own property in Tennessee downriver from Blue Ridge’s paper mill in Canton, North Carolina, divided their suit into five separate suits covering distinct six-month time periods, with plaintiffs’ limiting the total damages for each suit to less than CAFA’s $5 million threshold.

The suits were filed in state court with identical parties and claims, except that the suits were for a series of different, sequential six-month periods. Each suit limited the total class damages to less than $4.9 million. The cases were removed to Federal court by the defendant paper mill, but remanded by the district court. The Appeals Court indicates that, "Because no colorable basis for dividing the claims has been identified by the plaintiffs other than to avoid the clear purpose of CAFA, remand was not proper."

In a split decision, the majority ruled, "The remand order is reversed and the case remanded for the district court to consider whether the aggregated cases satisfy the amount in controversy requirement under § 1332(d). The attorney fee order is also reversed." The dissenting justice says, "There is no gainsaying the point emphasized by the majority that CAFA was intended to prevent local courts from 'keeping [class action] cases of national importance out of Federal court' . . . The aspect of this case that the majority overlooks, however, is the fact that this class action is not a 'case of national importance' but is, instead, a matter of local concern."

Access the complete opinion (
click here).

Coalition of Watershed Towns v. EPA

Dec 29: In the U.S. Court of Appeals, Second Circuit, Case Nos. 07-2449 & 07-3912. Petitioners are a confederation of towns in the Catskill and Delaware watershed region of New York, that are seeking review of two actions regarding the implementation of the Safe Drinking Water Act of 1974 (SDWA) by U.S. EPA. The Appeals Court says, "For the reasons explained in this opinion, we may not address the merits of the petition because petitioners lack standing to sue under Article III of the Constitution. Specifically, petitioners have not shown that their proposed injuries are likely to be redressed by a favorable court decision. The petition is denied."

The towns petition for review of two “final actions” by the EPA: (1) an April 25, 2007 letter from the EPA highlighting the State’s non-compliance with certain EPA regulations regarding administrative penalties and temporarily postponing the previously scheduled transfer to the State of primary enforcement responsibility (primacy) over the Catskill and Delaware watersheds until the State complies with the relevant regulations; and (2) a July 30, 2007 Filtration Avoidance Determination (FAD), which required the City to spend additional monies on land acquisition in the Catskill and Delaware watershed regions.

As a threshold matter, the EPA argues that, under the “case-or-controversy” requirement of Article III of the Constitution, the Towns lack standing to bring this petition because they have not suffered any “injury-in-fact,” i.e., an invasion of a legally protected interest that is “concrete and particularized . . . and [ ] actual or imminent, not conjectural or hypothetical”.

The Appeals Court ruled, "Despite any injury the Coalition may allege, any relief this Court could provide is speculative. Even if we were to hold that the EPA was required by the MOA [Memorandum of Agreement] to transfer primacy to the State in May 2007, as opposed to September 2007, when they actually transferred primacy, there is no basis for us to conclude that petitioners would more likely than not be in any different position than they are now. While the State might have been required by state regulations and laws to perform a cost-benefit review of the substance of the July 2007 FAD [Filtration Avoidance Determination], petitioners do not point to any evidence suggesting that the State’s analysis would have substantially differed from the EPA’s, or would remedy any injury alleged by petitioners. Indeed, the State’s intervention in this case on the side of the EPA and in support of the June 2007 FAD leads us to conclude that the State would have promulgated substantially the same determination."

Access the complete opinion (
click here).

Devon Energy Corp v. Kempthorne (Interior Secretary)

Dec 23: In the U.S. Court of Appeals, D.C. Circuit, Case No. 07-5299. The case arises from a final order issued by the United States Department of the Interior (DOI) requiring Devon Energy Corporation (Devon), retroactively to recalculate royalties owed to the Government pursuant to its lease to extract coalbed methane from Federal land in Wyoming. At issue is the agency’s interpretation of its “marketable condition rule.”

The rule was included as a part of DOI’s 1988 Revision of Gas Royalty Valuation Regulations, which establish the framework for calculating the royalty value of coalbed methane gas production. In its disputed order, DOI held that the marketable condition rule precluded Devon from deducting certain costs associated with compression and dehydration when calculating the “gross proceeds” upon which royalties are owed.

In its rationale, DOI determined that gas cannot enter a pipeline and move to a purchaser unless it meets the requirements of the pipeline, which typically requires compression to raise its pressure and dehydration to reduce its water content. Thus, DOI concluded that if gas is not sufficiently compressed and dehydrated to be deliverable to the point of purchase through the pipeline, it is not in marketable condition. Devon filed suit in the District Court to challenge Interior’s order. The District Court denied Devon’s motion for summary judgment and granted the Secretary’s cross-motion.

On appeal, Devon argues that DOI’s order is "inconsistent with the plain language of the marketable condition rule, and also inconsistent with DOI’s own prior interpretation of the rule." The Appeals Court ruled, "We affirm the judgment of the District Court. First, we find that Interior’s interpretation of the marketable condition rule reflects a perfectly reasonable construction of the rule. It is clear that the agency’s order is not at odds with the plain language of the rule, nor does it effectively 'amend,' rather than reasonably construe, the rule."

Second, the Appeals Court says, ". . . we reject Devon’s claim that DOI’s order conflicts with a prior interpretation of the marketable condition rule. Devon argues that its position finds support in guidance documents distributed by agency personnel after DOI’s promulgation of the 1988 regulations. However, as Devon concedes, these contested guidance documents were distributed by agency individuals who had no authority either to amend the marketable condition rule or to issue authoritative guidelines on behalf of the agency."

Access the complete opinion (
click here).

American Forest Paper Association v. FERC

Dec 23: In the U.S. Court of Appeals, D.C. Circuit, Case No. 07-1328. In its brief summary, the Appeals Court says, "Petitioners insist the term 'markets' as used in the recent amendment to the Public Utility Regulatory Policies Act (PURPA) must always denote a competitive market. The Federal Energy Regulatory Commission (FERC) interprets the word 'markets' to encompass both competitive and non-competitive markets." The Appeals Court said that "FERC’s interpretation is reasonable" and denied the petition for review.

The Appeals Court further explains, "Section 824a-3(m)(1) [of PURPA] refers to 'markets' several times. In a formal rulemaking, FERC interpreted the term 'markets' in subparagraph (m)(1)(A) as encompassing both competitive and non-competitive markets. . . The fact that FERC chose to adopt certain rebuttable presumptions via rulemaking, rather than by case-by-case adjudication, does not violate any of the statute’s requirements. And, as we have long held in such scenarios, the 'decision whether to proceed by rulemaking or adjudication lies within the [agency’s] discretion.”

Access the complete opinion (
click here).

FPL Energy ME Hydro v. FERC

Dec 23: In the U.S. Court of Appeals, First Circuit, Case No. 05-1871. FPL Energy Maine Hydro LLC (FPL) owns a facility that provides hydroelectric generation and flood control along the Kennebec River in Maine. The present dispute grows out of FPL's effort to secure a renewal of an operating license from the Federal Energy Regulatory Commission (FERC) and its attempts to get a water quality certification from the State of Maine, a necessary predicate for the renewal of the license. FPL's predecessor first obtained an operating license from FERC in 1979. Before its license could be renewed by FERC, section 401(a)(1) of the Clean Water Act required the applicant to obtain certification by Maine that the project complied with various state and Federal water quality standards, or demonstrate that Maine had waived certification by "fail[ing] or refus[ing] to act on a request for certification" within one year.

FPL argues that FERC erred because the Board's action rescinding the certification violated the CWA's one-year time limit and is a nullity, resulting in either a waiver of certification or reinstatement of the DEP Commissioner's certification. Alternatively, FPL says FERC failed to recognize that it had discretion to disregard the DEP Board's allegedly belated action and that the case should be remanded so that it can exercise that discretion.

In its decision to deny FPL's request, the Appeals Court says in part, ". . .relying on our decision in Puerto Rico Sun Oil Co. v. EPA, 8 F.3d 73 (1st Cir. 1993), FPL argues that FERC misconstrued its own powers by failing to recognize that it had authority to accept or disregard the DEP Board's action precisely because it was untimely. FPL says, therefore, that the stay order should at the very least be remanded to FERC so it can rule again on the stay application with an awareness that it can disregard the rescission of the certification.

"Sun Oil does say that the responsible federal agency -- there it was the EPA -- is free to disregard an untimely state certification action under section 401. . . but the premise of FPL's argument is that in this case, as was unquestionably true in Sun Oil. . . the state's action was untimely. This is the very premise that the Maine SJC [Maine Supreme Judicial Court] rejected and (as we have explained) the Maine SJC's contrary determination that the DEP Board's rescission was timely binds FPL in this court. The petition to review FERC's stay order is denied.

Access the complete opinion (click here).

North Carolina v. EPA

Dec 23: In the U.S. Court of Appeals, D.C. Circuit, Case No. 05-1244, consolidated with 31 other cases and involving scores of attorneys. Just in time to meet the January 1, 2009, first major compliance deadline under U.S. EPA's Clean Air Interstate Rule (CAIR), the Appeals Court responded in part to a request by EPA and other parties and remanded the case, "without vacatur," for EPA to conduct further proceedings consistent with the court's prior opinion. Previously, on July 11, 2008 [See WIMS 7/14/08], the Appeals Court had ruled, ". . . we find more than several fatal flaws in the rule and . . . we vacate the rule in its entirety and remand to EPA to promulgate a rule that is consistent with this opinion." EPA, environmental groups, states and others had asked the court to reconsider its July 11 opinion. The program was designed to reduce millions of tons of smog- and particulate-forming pollution from coal-fired power plants in 28 eastern states.

The Appeals Court said in the latest reconsideration, "On July 11, 2008, we issued an opinion, in which we found 'more than several fatal flaws in the rule.' North Carolina v. EPA, 531 F.3d 896, 901 (D.C. Cir. 2008) (per curiam). In light of the fact that the Environmental Protection Agency (EPA) adopted CAIR as an integral action, we vacated the rule in its entirety and remanded to EPA to promulgate a rule consistent with our opinion. Id. at 929-30. On September 24, 2008, Respondent EPA filed a petition for rehearing or, in the alternative, for a remand of the case without vacatur. On October 21, 2008, we issued an order on our own motion directing the parties to file a response to EPA’s petition. (Order at 1, Oct. 21, 2008.) We also required the parties to 'address (1) whether any party is seeking vacatur of the Clean Air Interstate Rule, and (2) whether the court should stay its mandate until Respondent [EPA] promulgates a revised rule.' Id. Respondent EPA was given leave to 'reply to the question whether a stay of the court’s mandate in lieu of immediate vacatur would suffice.' Id.

"Having considered the parties’ respective positions with respect to the remedy in this case, the court hereby grants EPA’s petition only to the extent that we will remand the case without vacatur for EPA to conduct further proceedings consistent with our prior opinion. . . In addition, some of the Petitioners have suggested that this court impose a definitive deadline by which EPA must correct CAIR’s flaws. Notwithstanding these requests, the court will refrain from doing so. Though we do not impose a particular schedule by which EPA must alter CAIR, we remind EPA that we do not intend to grant an indefinite stay of the effectiveness of this court’s decision. Our opinion revealed CAIR’s fundamental flaws, which EPA must still remedy. Further, we remind the Petitioners that they may bring a mandamus petition to this court in the event that EPA fails to modify CAIR in a manner consistent with our July 11, 2008 opinion."

In a separate concurring opinion, one of the Judges indicated, "The parties’ persuasive demonstration, extending beyond short-term health benefits to impacts on planning by states and industry with respect to interference with the states’ ability to meet deadlines for attaining national ambient air quality standards for PM2.5 and 8-hour ozone, shows that the rule has become so intertwined with the regulatory scheme that its vacatur would sacrifice clear benefits to public health and the environment while EPA fixes the rule."

Vickie Patton, deputy general counsel at Environmental Defense Fund (EDF) said, "Today's court decision is a welcome gift for the millions of American's that face serious health threats from power plant pollution. Power plants across the East will reduce millions of tons of smog and soot pollution today while America's new leadership fixes the mistakes made by the Bush Administration."

Access the complete opinion (
click here). Access a release from EDF (click here). Access EPA's CAIR website for additional information (click here).