GenOn Mid-Atlantic v. Montgomery Co., MD

Jun 20: In the U.S. Court of Appeals, Fourth Circuit, Case No. 10-1882. Appealed from the United States District Court for the District of Maryland, at Greenbelt. The Appeals Court explains that the question in the case is whether a Montgomery County, Maryland exaction on carbon dioxide emissions, levied only upon GenOn Mid-Atlantic's electricity-generating facility, is a tax or a fee. After holding that the carbon charge was a tax, the district court determined that the Tax Injunction Act deprived it of jurisdiction to hear GenOn's challenge. The Appeals Court ruled, "We think, however, that because the charge was levied upon a single 'taxpayer' and formed part of a wide-ranging regulatory program, the district court had jurisdiction over GenOn's claims. We accordingly reverse and remand for further proceedings.

 

    By way of background in the case, the Montgomery County Council enacted Expedited Bill 29-10 on May 19, 2010 to impose a levy on large stationary emitters of carbon dioxide within the county. The County Executive signed the bill on May 28. Bill 29-10 imposes what it terms an 'excise tax' of $5 per ton of carbon dioxide emitted, but only on emitters that end up exceeding 1 million tons of carbon dioxide in a year. For those large emitters, the $5 per ton charge applies to every ton emitted. The revenue generated by the levy is to be deposited in the Montgomery County general fund, with 50% earmarked for funding greenhouse gas reduction programs such as mass transit and 50% available for the County's general use. The County projects that the levy will raise annual revenue between $11.7 and $17.6 million.

 

    GenOn operates an electricity plant in Montgomery County that emits carbon dioxide. As the only entity in Montgomery County expected to exceed 1 million tons of carbon dioxide emissions annually, GenOn is the only entity likely to be subject to the $5/ton levy on its entire volume of emissions. After consulting with the County's electricity service provider, the Council determined that GenOn would not be able to pass the cost of the carbon charge on to its Montgomery County customers because its power is sold via competitive auction.

 

    Four days after Bill 29-10 was signed into law, GenOn sought to enjoin enforcement on the ground that it violates the United States and Maryland Constitutions. The district court noted that the charge had some indicia of a regulatory fee, but ultimately concluded that it was more like a tax for purposes of the Tax Injunction Act. The court then dismissed GenOn's suit without prejudice.

 

    The Appeals Court said, "The chief problem with Montgomery County's carbon charge is that the burden falls on GenOn alone. But the whole idea of a tax is that it is, to some extent, a burden generally borne. Thus, an 'assessment imposed upon a narrow class' is less likely to be a tax than an 'assessment imposed upon a broad class of parties.' Bidart Bros. v. Cal. Apple Comm'n, 73 F.3d 925, 931 (9th Cir. 1996). The fact that this charge affects the narrowest possible class is compelling evidence that it is a punitive fee rather than a tax. . . In addition to its punitive scope, Montgomery County's carbon charge falls outside the ambit of the Tax Injunction Act because of its plainly regulatory purpose. . ."

 

    Finally, the Appeals Court concludes, "Of course we do not resolve this case on the merits, nor do we suggest that one party or the other should prevail on remand. We do not at all begrudge Montgomery County its regulatory purpose here, and there is much to be said for the worthy office of environmental stewardship. All we hold is that the Tax Injunction Act is no bar to federal jurisdiction in this case. We accordingly reverse the judgment of the district court and remand for consideration of GenOn's claims."

 

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Greif Industrial Packaging v. R. Sharp, III

Jun 21: In the U.S. Court of Appeals, Fifth Circuit, Case No. 10-30387. Appealed from the United States District Court for the Eastern District of Louisiana. In this unpublished decision, the dispute concerns the proper interpretation of an asset purchase agreement between a Chapter 11 debtor and the company that purchased it out of bankruptcy. The Appeals Court said, "We affirm the judgment of the district court with respect to the holdback claims for environmental liabilities and the Ingersoll-Rand industrial equipment. We reverse and remand the judgment of the district court with respect to the Lexington insurance premium.   

    Evans Industries, Inc., (Evans) operated a series of five leased facilities in Louisiana and Texas that manufactured, filled, warehoused and distributed steel drums and industrial containers. Evans filed a Chapter 11 petition in April 2006, and the bankruptcy court confirmed the reorganization plan in October 2006. The plan formed a Distribution Trust of Evans Industries (the Trust) and allocated most of Evans's assets to that Trust. R. Patrick Sharp, III was appointed Trustee. In November 2006, on the plan's closing date, Greif Industrial Packaging (Greif) entered into an asset purchase agreement (APA) with Evans.   

    After Greif took over the facilities, it made two disputed claims against the "holdback" fund. First, it claimed $649,633.75 in expenses it incurred removing and disposing of hundreds of barrels of environmentally hazardous waste left behind by Evans at four of the five sites. Second, it claimed $10,452.06 for payments it made to a third party, Ingersoll-Rand, for five pieces of industrial equipment ("Bobcat loaders") that Evans had purchased but not yet fully paid off. Added up, the disputed holdback claims totaled $660,085.81. The bankruptcy court ruled for the Trustee and against Greif as to the holdback amounts and the utility deposits, but ruled for Greif as to the setoff claim for the prorated insurance premium. The parties cross-appealed as to the holdback issues and insurance premium setoff.

 

    On the environmental issues, the Appeals Court said, "After taking possession of the business premises and assets, Greif spent nearly $650,000 to remove and properly dispose of hundreds of barrels of hazardous waste left behind by Evans at several sites. It is not disputed that this cleanup complied with applicable government environmental regulations. Greif attempted unsuccessfully to claim that amount from the holdback. Greif argues on appeal that Evans breached its warranty that the facilities complied with all relevant environmental regulations, and, in the alternative, that the bankruptcy court and district courts misread the relevant portion of the APA in which Evans retained responsibility for environmental cleanup costs that accrued prior to the APA. We reject Greif's contentions."

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SCOTUS Decides American Electric Power Co. v. Connecticut

Jun 20: In the U.S. Supreme Court (SCOTUS), Appealed from the Second Circuit, Case No. 10-174. In this important case the High Court addresses the issue of whether the plaintiffs (several States, the city of New York, and three private land trusts) can maintain Federal "common law public nuisance" claims against greenhouse gas (GHG) carbon-dioxide emitters (four private power companies and the Federal Tennessee Valley Authority). The plaintiffs asked for a decree setting carbon-dioxide emissions for each defendant at an initial cap, to be further reduced annually. The Supreme Court ruled that U.S. EPA's authority under the Clean Air Act "displace the claims the plaintiffs seek to pursue." The High Court reversed the judgment of the Second Circuit and remanded the case for further proceedings consistent with its opinion. The Supreme Court ruling was unanimous, with two justices -- Alito and Thomas -- filing a separate concurring in part and concurring in the judgment opinion; and Justice Sotomayor took no part in the consideration or decision of the case.

 

    The Supreme Court heard oral arguments in the case on April 19, [See WIMS 4/25/11, WIMS 2/8/11 & WIMS 2/15/11]. Petitioners in the case involve five investor-owned utilities [American Electric Power Co. Inc., American Electric Power Service Corp., Cinergy Corp., Southern Co. and Xcel Energy Inc.] (Petitioners) and the Tennessee Valley Authority (TVA), an electric utility owned by the U.S. government which filed a separate brief. Respondents include: CT, NY, CA, IA, RI, VT, the City of NY and Open Space Institute, Inc., Open Space Conservancy, Inc., and Audubon Society of New Hampshire. Additionally many amicus briefs on both sides of the issue were filed.

   

    The High Court ruled in part, "It is altogether fitting that Congress designated an expert agency, here, EPA, as best suited to serve as primary regulator of greenhouse gas emissions. The expert agency is surely better equipped to do the job than individual district judges issuing ad hoc, case-by-case injunctions. Federal judges lack the scientific, economic, and technological resources an agency can utilize in coping with issues of this order. See generally Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837, 865–866 (1984). Judges may not commission scientific studies or convene groups of experts for advice, or issue rules under notice-and-comment procedures inviting input by any interested person, or seek the counsel of regulators in the States where the defendants are located. Rather, judges are confined by a record comprising the evidence the parties present. Moreover, federal district judges, sitting as sole adjudicators, lack authority to render precedential decisions binding other judges, even members of the same court.

    "Notwithstanding these disabilities, the plaintiffs propose that individual federal judges determine, in the first instance, what amount of carbon-dioxide emissions is 'unreasonable,' App. 103, 145, and then decide what level of reduction is 'practical, feasible and economically viable,' App. 58, 119. These determinations would be made for the defendants named in the two lawsuits launched by the plaintiffs. Similar suits could be mounted, counsel for the States and New York City estimated, against 'thousands or hundreds or tens' of other defendants fitting the description 'large contributors' to carbon-dioxide emissions. Tr. of Oral Arg. 57.

    "The judgments the plaintiffs would commit to federal judges, in suits that could be filed in any federal district, cannot be reconciled with the decisionmaking scheme Congress enacted. The Second Circuit erred, we hold, in ruling that federal judges may set limits on greenhouse gas emissions in face of a law empowering EPA to set the same limits, subject to judicial review only to ensure against action 'arbitrary, capricious, . . . or otherwise not in accordance with law.' §7607(d)(9)."

     The High Court also addressed the issue of plaintiffs request for relief "under state law, in particular, the law of each State where the defendants operate power plants." The High Court said,  "The Second Circuit did not reach the state law claims because it held that federal common law governed. . . In light of our holding that the Clean Air Act displaces federal common law, the availability vel non of a state lawsuit depends, inter alia, on the preemptive effect of the federal Act. Id., at 489, 491, 497 (holding that the Clean Water Act does not preclude aggrieved individuals from bringing a 'nuisance claim pursuant to the law of the source State'). None of the parties have briefed preemption or otherwise addressed the availability of a claim under state nuisance law. We therefore leave the matter open for consideration on remand."

 

    Access the complete opinion (click here). Access the Supreme Court docket indicating the various briefs filed, questions presented and attorneys involved in the case (click here). Access a transcript of the oral arguments (click here). Access links to the 2nd Circuit decision, briefs and petitions filed (click here). Access the various other briefs in the case (click here). [*Air, *Climate, *SCOTUS] (click here for information on getting the links and more information about eNewsUSA).

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In Re: Natural Res. Defense Council

Jun 17: In the U.S. Court of Appeals, D.C. Circuit, Case No. 10-1142. On Petition for Writ of Mandamus to the Food and Drug Administration. The appeal concerns whether this court or the district court has jurisdiction over matters relating to a citizen petition filed pursuant to Food and Drug Administration (FDA) regulations promulgated under the Food, Drug, and Cosmetic Act (the Act) , 21 U.S.C. §§ 301 et seq.

 

    The Appeals Court explains that because its citizen petition to revoke regulations permitting Bisphenol A (BPA) to be used as a food additive, see, e.g, 21 C.F.R. § 177.1555; id. § 177.1595, has been pending since October 21, 2008, the Natural Resources Defense Council (NRDC) seeks what amounts to a writ of mandamus directing the FDA to issue a final decision on its petition. The Appeals Court rules, "We hold that exclusive jurisdiction over citizen petitions lies in the district court, and accordingly we dismiss the petition." The Appeals Court says further, "Accordingly, because the NRDC cannot show that jurisdiction over its citizen petition lies exclusively in this court, or that all final FDA action on its petition would be directly and exclusively reviewable in this court, we dismiss the petition for lack of jurisdiction."

 

    In further explanation, the Appeals Court said, "during oral argument, counsel for the NRDC suggested that section 10.30(e)(1) of the regulations, providing that the FDA 'shall . . . rule upon each petition . . . taking into consideration . . . time requirements established by statute,' requires the FDA to comply with the statutory timeline in section 409(c)(2) of the Act, and thereby establishes that the citizen petition process is governed by the requirements of section 409 generally. Oral Arg. Recording at 3:02-3:23. The NRDC referred to section 10.30(e) in its Petition at 8, but only in the context of listing the three possible responses by the FDA to a citizen petition. This was insufficient to put the FDA on notice of the argument presented during oral argument. Ordinarily this would mean that the argument is forfeited. Cf. U.S. v. Southerland, 486 F.3d 1355, 1360 (D.C. Cir. 2007). Inasmuch as the NRDC's petition is filed as an original proceeding in this court and the issue goes to our jurisdiction, however, we reach the merits. See Shays v. FEC, 528 F.3d 914, 922–23 (D.C. Cir. 2008). The FDA correctly argued in its response that section 10.30(e)(1) does nothing more than make the statutory deadlines one of several factors that the FDA must consider and weigh in its discretion. This provision simply highlights the difference between the food additive petition review process, which is subject to the statutory timeline, and review of a citizen petition established by regulation, which treats the timeline as a guideline for the FDA to consider and allows for a "tentative response" by the FDA. The NRDC's reliance on section 10.30(e) is thus insufficient to support its position that section 409 applies generally to its citizen petition."

 

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American Bottom Conservancy v. U.S. Army Corps of Engineers

Jun 14: In the U.S. Court of Appeals, Seventh Circuit, Case No. 10-3488. Appealed from the United States District Court for the Southern District of Illinois. The Appeals Court explains that, the "American Bottom" is a 175-square-mile floodplain of the Mississippi River in southwestern Illinois, across the river from St. Louis. The area contains wetlands that provide habitat for many different species of birds, butterflies, and other wildlife. The American Bottom Conservancy is an environmental organization that seeks to preserve the wetlands. Its members include birdwatchers and other people who enjoy seeing wildlife in the wild.

 

    Waste Management of Illinois, Inc., owns and operates a landfill in the American Bottom that it calls the "Milam Recycling and Disposal Facility." The landfill, located near the town of Madison, Illinois, is due east of St. Louis and southwest of a state park that contains a large lake -- Horseshoe Lake, the largest in Illinois, after Lake Michigan. Because the Milam landfill is filling up with waste from St. Louis, Waste Management wants to build another landfill -- the "North Milam Recycling and Disposal

Facility" -- on 180 acres of a 220-acre tract ("North Milam") that it owns just north of the Milam RDF; the tract is thus located between that landfill and the State park.

 

    Obtaining permission to build a new landfill, and building it, will take time. In the meantime Waste Management wants to remove the soil from some of the wetlands and transport it to its existing landfill for daily cover. The consequence will be to transform the wetlands into a dry "borrow pit." The wetlands occupy 26.8 acres of the tract and Waste Management wants to destroy 18.4 of them (69 percent). But to destroy wetlands it needed a permit from the Army Corps of Engineers. The Corps granted the permit on condition that Waste Management create double the amount of wetlands on a nearby tract that it owns. The company accepted the condition. Additionally, The application for permission to build the new landfill is pending.

 

    The district court dismissed a suit by the Conservancy, without prejudice on the ground that the Conservancy had not established standing to sue under Article III of the Constitution and therefore the suit did not invoke the district court's jurisdiction. The Appeals Court indicates that the only issue before it is the Conservancy's standing.

 

    The Appeals Court reviews a number of precedent-setting standing decisions and legal writings. The Appeals Court says, ". . .the plaintiff's affidavits claim that the destruction of the 18.4 acres of wetlands will reduce the amount of perceptible wildlife, and the claim is not so implausible that it can be rejected without counteraffidavits, which Waste Management has not submitted. And if a really substantial elimination of wildlife were required to establish standing, a cumulatively immense elimination of wildlife could occur as a result of numerous small projects requiring destruction of wetlands, none of which would create an injury great enough to support standing if such a requirement were imposed."

 

    The Appeals Court also said, "Since Waste Management has committed to creating twice the wetlands that it will destroy, maybe, despite the probable delay in their developing to the point at which they will provide habitat comparable to what is to be destroyed, the permit granted by the Corps of Engineers is actually a boon to the environment. But that is a question that goes to the merits of the Conservancy's challenge to the Corps; it does not detract from the injuries to the Conservancy's current members, who presented uncontradicted evidence that they will lose present enjoyment of wildlife if the existing wetlands are destroyed."

 

    Finally, responding to a request from Waste Management (not the Corps), the Appeals Court addresses why it cannot decide on the issue of the case. The Appeals Court said, "The district court dismissed the suit without prejudice, because on the view it took of standing it had no jurisdiction; it therefore could only dismiss without prejudice. Were we to decide the case on the merits we would be directing the entry of judgment with prejudice; otherwise the plaintiff would be free to relitigate the case. An appellee who wants, not that the judgment of the district court be affirmed on an alternative ground, but that the judgment be changed, in this case from a dismissal without to a dismissal with prejudice, must file a cross-appeal. . . Waste Management didn't do so. The judgment is reversed with instructions to reinstate the suit."

 

    Access the complete opinion (click here). [Please Note: The 7th circuit has a temporary web hyperlink nomenclature system. If the link does not work click on this link and enter the case number above (click here).] [*Solid, *CA7]

 

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Certain Underwriters at Lloyds v. NFC Mining, Inc.

Jun 10: In the U.S. Court of Appeals, Sixth Circuit Court of Appeals, Case No. 10-5232. Appealed from the Eastern District of Kentucky at Pikeville. After residents of Floyd County, Kentucky sued NFC Mining, claiming the company damaged their homes, Certain Underwriters at Lloyd's of London followed suit, literally. Underwriters filed a second lawsuit trying to establish that NFC's insurance policy did not cover the company's potential liability to the residents. The district court awarded partial summary judgment to Underwriters. The Appeals Court affirmed the district court ruling saying that NFC pursued only one point presented and failed to raise its other appellate arguments.

 

    In a brief 4-page opinion the Appeals Court said, "NFC first presses the one argument raised and rejected below -- that it reasonably expected the contract to insure against damage from coal dust and that the district court's interpretation of the insurance contract should have respected those expectations. The argument, which is premised on the language of a certificate of insurance Underwriters filed with a state agency, falters at both steps. NFC could not reasonably think that a certificate of liability insurance, as opposed to the insurance contract itself, would confer coverage for coal dust damages. NFC did not sign or approve the certificate; Underwriters filed the certificate with the State. Even then, moreover, the certificate says nothing about this issue. It does not mention the terms of coverage or the coverage limit, except to say that the policy's coverage is consistent with state law. Even had all of this not been true, even in other words if NFC had reasonably anticipated that the policy would cover damages caused by coal dust, the language of the exclusion defeats the company's claim (and expectation). We break no new ground in holding that the language of an insurance policy, not an insured's expectations, controls disputes over the meaning of a policy. In this instance the language of the exclusion is straightforward and inconsistent with NFC's position. . ."

 

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Supreme Court Denies Hearing GE CERCLA Challenge

Jun 6: The U.S. Supreme Court refused to hear the appeals of General Electric Company, Petitioner v. Lisa P. Jackson, Administrator, Environmental Protection Agency, et al. Case No. 10-871. Appealed from the U.S. Court of Appeals D.C. Circuit (Case No. 09-5092, decided June 29, 2010 [See WIMS 6/30/10], with a rehearing also denied on September 30, 2010.

 

    In the case, General Electric challenges the constitutionality of a statutory scheme that authorizes U.S. EPA to issue orders, known as "unilateral administrative orders" (UAOs) directing companies and others to clean up hazardous waste for which they are responsible under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). In the D.C. Circuit, General Electric argued that the statute, as well as the way in which EPA administers it, violated the Due Process Clause because EPA issues UAOs without a hearing before a neutral decisionmaker. The D.C. Circuit said, "We disagree. To the extent the UAO regime implicates constitutionally protected property interests by imposing compliance costs and threatening fines and punitive damages, it satisfies due process because UAO recipients may obtain a pre-deprivation hearing by refusing to comply and forcing EPA to sue in federal court."  

 

    The Appeals Court indicated that General Electric insists that the UAO scheme and EPA's implementation of it nonetheless violate due process because the mere issuance of a UAO can inflict immediate, serious, and irreparable damage by depressing the recipient's stock price, harming its brand value, and increasing its cost of financing. But, the Appeals Court said, ". . .such -- 'consequential' injuries -- injuries resulting not from EPA's issuance of the UAO, but from market reactions to it -- are insufficient to merit Due Process Clause protection. We therefore affirm the district court's grant of summary judgment to EPA.

 

    Access the Supreme Court docket for the case (click here). Access the D.C. Circuit opinion that now stands (click here). [*Remed, *SCOTUS]

 

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