Stewart and Jasper Orchards v. Salazar

Mar 25: In the U.S. Court of Appeals, Ninth Circuit, Case No. 10-15192. Appeal from the United States District Court for the Eastern District of California. The Appeals Court indicates that the appeal addresses whether application of sections 7 and 9 of the Endangered Species Act to the California delta smelt violates the Commerce Clause in the United States Constitution. The Appeals Court concludes that it does not, and it affirms the judgment of the district court.

 

    The delta smelt is a small fish, 60-70 millimeters in length, that is undisputedly endemic to California. The United States Fish and Wildlife Service (Service) listed the delta smelt as a threatened species in 1993 under the Endangered Species Act (ESA) and designated critical habitat for the delta smelt. In 2010, the Service announced that the delta smelt should be re-listed as endangered but that it would forgo re-listing for the time being on account of higher priority listings.

 

    Section 7 of the ESA requires federal agencies to consult with the Service before undertaking any action "authorized, funded, or carried out" by the agency that might "jeopardize the continued existence of any endangered species or threatened species" or might "result in the destruction or adverse modification of habitat" used by any endangered or threatened species. After the consultation, the Service provides the agency with a "biological opinion." If the Service concludes that the proposed action will likely jeopardize the species, then it may suggest "reasonable and prudent alternatives" for agency action that, the Service believes, will not result in violations of the ESA.

 

    In 2008, the Service, acting under ESA § 7, 16 U.S.C. 1536(a)(2), issued a Biological Opinion to the Bureau of Reclamation (Bureau). The Biological Opinion concerned the Bureau's and the California Department of Water Resource's operation of the Central Valley Project and the State Water Project, two of the world's largest water diversion projects. The Biological Opinion concluded that "the coordinated operations of [the water projects], as proposed, are likely to jeopardize the continued existence of the delta smelt" and "adversely modify delta smelt habitat." Stewart & Jasper Orchards, et al (collectively the Growers) sued the Service, claiming that their almond, pistachio, and walnut orchards "experienced substantially reduced water deliveries as a result of the Service's decision to act on behalf of the delta smelt."

 

    The district court denied the Growers' motion and granted the Service's and Environmental Parties' cross-motions. With respect to the issue of standing, the district court first noted that while the Growers' complaint challenges sections "7(a)(2) and 9" of the ESA, the motion for summary judgment "focuses exclusively on the theory that the application of Section 9's take prohibition to the smelt exceeds Congress' authority under the Commerce Clause." Nevertheless, the district court concluded, "[T]here is no dispute that Plaintiffs have standing to bring a section 7 claim." Id. at 931. But the court determined the Growers do not have standing to bring a § 9 claim. Id. at 929-31. It reasoned, "Given that there is no threat of imminent Section 9 enforcement in this case, there is no causal connection between Plaintiffs' injury and the conduct complained of, namely Section 9's application to the coordinated operation of the project."   

 

    The Appeals Court concludes that, "The Growers' as-applied Commerce Clause challenge to ESA §§ 7 and 9 fails because the ESA 'bears a substantial relation to commerce.' Gonzales v. Raich, 545 U.S. 1, 17 (2005). . . In summary, the Growers have Article III standing to challenge ESA § 9, and that claim is ripe for review. The district court properly concluded that the Growers' challenge to ESA §§ 7 and 9 fails under the Commerce Clause. We need not and do not reach any other issues urged by the parties."

 

    Access the complete opinion (click here).

Huber v. New Jersey Dept. of Environmental Protection

Mar 21: The U.S. Supreme Court denied to hear the case of Huber v. New Jersey Dept. of Environmental Protection (No. 10-388) with a written statement from Justice Alito respecting the denial. The statement was joined by Chief Justice Roberts, Justice Scalia, and Justice Thomas.

 

    The issues in the case were: (1) Whether the evidence obtained by the New Jersey Department of Environmental Protection during an unannounced, warrantless inspection of wetlands in the backyard behind petitioners' home, over their repeated objections, should be suppressed because it was obtained in violation of the Fourth Amendment; (2) whether the Fourth Amendment entitles petitioners to greater protection from warrantless searches and seizures on their residential property than a closely regulated business, even when their property contains regulated wetlands; (3) whether the warrantless inspection and seizure of soil samples at petitioners' property was valid under the "special public needs" exception to the warrant requirement; and (4) whether residents lose the right to be free from warrantless inspections of their property due to the presence of regulated wetlands.

 

    The statement issued by Justice Alito indicates, "Our cases recognize a limited exception to the Fourth Amendment's warrant requirement for searches of businesses in 'closely regulated industries.' . . . The thinking is that, other things being equal, the 'expectation of privacy in commercial premises' is significantly less than the 'expectation in an individual's home.' . . . And where a business operates in an industry with a 'long tradition of close government supervision' -- liquor dealers and pawnbrokers are classic examples -- the expectation of privacy becomes 'particularly attenuated.' . . .

 

    "In this case, a New Jersey appellate court applied this doctrine to uphold a warrantless search by a state environmental official of Robert and Michelle Huber's backyard. . . The Hubers' residential property contains wetlands protected by a New Jersey environmental statute. . . According to the court below, the presence of these wetlands brought the Hubers' yard 'directly under the regulatory arm' of the State 'just as much' as if the yard had been involved in a 'regulated industry.' . . . 

    "This Court has not suggested that a State, by imposing heavy regulations on the use of privately owned residential property, may escape the Fourth Amendment's warrant requirement. But because this case comes to us on review of a decision by a state intermediate appellate court, I agree that today's denial of certiorari is appropriate. . . It does bear mentioning, however, that 'denial of certiorari does not constitute an expression of any opinion on the merits.'"

    Access the statement from Justice Alito (click here). Access the petitions, briefs and the opinion of the Superior Court of New Jersey, Appellate Division in the case (click here).

Industrial Enterprises, Inc. v. Penn America Insurance Co.

Mar 18: In the U.S. Court of Appeals, Fourth Circuit, Case No. 09-2346 and 09-2397. As described by the Appeals Court, the appeal involves whether a standard comprehensive general liability insurance policy (CGL policy), which indemnifies the insured for "all sums which the insured shall become legally obligated to pay as damages because of . . .property damage," covers the insured's liability under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) for costs to remediate the presence of hazardous substances on the insured's land.

 

    On July 9, 1999, U.S. EPA sent Industrial Enterprises, Inc., and other owners of neighboring properties near the Back River in Baltimore County, Maryland, letters expressing the EPA's intent to include Industrial Enterprises' property and neighboring

properties in a Superfund Site designated for cleanup under CERCLA due to the presence of hazardous substances on the Site. EPA also advised Industrial Enterprises and the other property owners that they might be required to undertake or fund investigatory and cleanup actions to protect the public health, welfare, and the environment.

 

    Industrial Enterprises forwarded the EPA letter to its insurer, Penn America Insurance Company, requesting that it provide a defense. When Penn America denied coverage, Industrial Enterprises commenced this action for a judgment declaring that Penn America was obligated to pay Industrial Enterprises the sums that it had incurred and reasonably would incur as defense costs in response to the demands made by the EPA. It also demanded reimbursement of defense costs in an amount not less than $600,000.

 

    On the motions of the parties for summary judgment, the district court found a "potentiality" of insurance coverage, requiring Penn America to provide a defense, and accordingly it awarded Industrial Enterprises $465,774.50 for attorneys fees incurred, $89,070 in technical consulting fees incurred, and 6% interest on the sum of those amounts, all reduced by the $210,000 that Industrial Enterprises received in a settlement with the other property owners. The district court also denied Industrial Enterprises' claim for $750,000, which it paid in reaching a settlement and forming a defense coalition with the other neighboring property owners.

 

    On appeal, the Appeals Court, in a split decision, reversed the district court decision. The majority Appeals Court said, "Based on the decision of Bausch & Lomb, Inc. v. Utica Mutual Insurance Co., 625 A.2d 1021 (Md. 1993), where the Maryland Court of Appeals held that a similar CGL policy did not cover expenses incurred in response to the State's regulatory order to remove soil containing hazardous chemicals, we conclude that Industrial Enterprises' liability under CERCLA is not liability for 'property damage,' but rather regulatory liability for response costs. Accordingly, we conclude that Penn America's CGL policy does not cover Industrial Enterprises' regulatory liability and, therefore, Penn America has no duty to provide Industrial Enterprises with a defense."

 

    The majority concluded, "In sum, we hold that Penn America's standard CGL policy, which provides indemnity to Industrial Enterprises for sums that it becomes legally obligated to pay as damages because of property damage, does not provide indemnity to Industrial Enterprises for regulatory liability (including remediation costs) under CERCLA. And because the standard CGL policy in this case does not provide coverage for CERCLA liability, Penn America had no duty to provide a defense or to pay the costs of a defense with respect to such liability."

 

    The dissenting judge argued that, "Bausch & Lomb does not control the result in this case and said, "The issue is not whether contamination of land, surface water, or groundwater is damage to property (it assuredly is), but whether the contamination damages a third person's property such that the liability coverage provisions of a GCL policy are implicated. . . In Bausch & Lomb, there was no credible indication that the pollution contaminating the insured's soil and groundwater affected any property other than its own. . . Under the GCL Policy, Penn America is bound to provide coverage for 'property damage' inflicted by its insured upon third parties, in the 'sums which the insured shall become legally obligated to pay.'"

 

    Access the complete majority opinion and dissent (click here).

General Category Scallop Fishermen v. US Commerce Department

Mar 16: In the U.S. Court of Appeals, Third Circuit, Case No. 10-2341. According to the Appeals Court, the appeal arises from a dispute over the right of fishermen to access the Atlantic Sea Scallop Fishery. At issue is an order of the United States District Court for the District of New Jersey denying summary judgment on all claims by Appellants, who are former general category scallop permit holders, while granting summary judgment on all claims to Appellees Gary Locke, in his capacity as Secretary of the United States Department of Commerce, National Oceanic and Atmospheric Administration (NOAA), and National Marine Fisheries Service (NMFS).

 

    The Appeals Court outlines that it is asked to resolve: (1) whether NMFS complied with the Administrative Procedures Act (APA), and the Magnuson-Stevens Fishery Conservation and Management Act of 1976 (Magnuson-Stevens Act), when it promulgated regulations implementing Amendment 11 to the Atlantic Sea Scallop Fishery Management Plan, including a "control date" that effectively terminated the access rights of general scallop fishermen who were not established in the fishery prior to November 1, 2004; (2) whether the process by which Amendment 11 was adopted complied with the Magnuson-Stevens Act requirement that public hearings be held in "appropriate locations in the geographical area" that will be affected by changes to a Fishery Management Plan (FMP); (3) whether NMFS reasonably concluded that Amendment 11's reliance on NMFS internal dataset to determine permit eligibility complied with the Magnuson-Stevens Act's National Standard 2, which requires the use of the "best scientific information available"; and (4) whether NMFS reasonably concluded that Amendment 11's limitations on the general category scallop fishery were consistent with the Magnuson-Stevens Act's National Standard 5, which prohibits the implementation of any fishery management measure that has "economic allocation as its sole purpose."

 

    The Appeals Court affirmed the judgment of the District Court.

 

    Access the complete opinion (click here).

National Pork Producers, et al v. U.S. EPA

Mar 15: In the U.S. Court of Appeals, Fifth Circuit, Case No. 08-61093. This high profile case involves many agricultural associations versus U.S. EPA and intervening Natural Resources Defense Council (NRDC), Sierra Club and Waterkeepers. The parties argued the issue of EPA's regulations relating to Concentrated Animal Feeding Operations (CAFOs).

 

    In 2003, EPA revised its regulations, implementing the Clean Water Act's (CWA) oversight of Concentrated Animal Feeding CAFOs. Several parties challenged the 2003 revisions (the 2003 Rule), and the Second Circuit reviewed the challenges in Waterkeeper Alliance, Inc. v. Environmental Protection Agency, 399 F.3d 486 (2d Cir. 2005). In 2008, EPA, responding to Waterkeeper, and revised its regulations (the 2008 Rule or the Rule). Subsequently, the Farm Petitioners jointly with the Poultry Petitioners filed petitions for review of the 2008 Rule with the Fifth Circuit and the Seventh, Eighth, Ninth, Tenth, and D.C. Circuits.

 

    Shortly after the issuance of the 2008 Rule, EPA sent guidance letters to members of Congress and to a CAFO executive (hereinafter the EPA Letters or guidance letters). The Poultry Petitioners filed a petition for review in the Fifth Circuit, challenging the EPA's procedures for issuing rules that the Poultry Petitioners allege were final. The petitions for review were consolidated by the Judicial Panel on Multi-district Litigation (JPML), pursuant to 28 U.S.C. § 2112(a)(3), and the Fifth Circuit was randomly selected to review the parties' challenges. Subsequently, the Environmental Intervenors filed a motion to intervene in support of the EPA's position. Also, EPA filed a motion to dismiss the Poultry Petitioners' challenges to the guidance letters. In its decision the Fifth Circuit grants the petitions in part, denies the petitions in part, and grants the EPA's motion to dismiss.

 

    At issue in the present petitions for review is the 2008 Rule, the EPA's response to the Second Circuit's decision in Waterkeeper. See 71 Fed. Reg. 37,744 (June 30, 2006). Also at issue are three guidance letters issued by the EPA in response to questions raised by members of Congress and a farm executive about the 2008 Rule. On appeal, the Farm Petitioners primarily challenge the EPA's "duty to apply" for an NPDES permit, imposition of liability for failing to apply for a permit, and the EPA's regulation of a permitted CAFO's land application. On the issue of the guidance letters, the Poultry Petitioners filed petitions for review challenging the EPA Letters. They argue that the EPA Letters constituted "final agency actions" subject to judicial review and, among other things, were required to have undergone notice and comment per the rulemaking procedures articulated in the APA. The Fifth Circuit first analyzes the Farm Petitioners' challenges and grants the petition in part and denies it in part. Secondly, the decision analyzes the Poultry Petitioners' challenge to the EPA Letters and dismisses their petition for lack of jurisdiction per the EPA's motion.

 

    On the "duty to apply" liability, the Appeals Court says, "We conclude that the CWA provides a comprehensive liability scheme, and the EPA's attempt to supplement this scheme is in excess of its statutory authority." The decision states further, ". . .we decline to uphold the EPA's requirement that CAFOs that propose to discharge apply for an NPDES permit." Citing various previous case, the Fifth Circuit says, "These cases leave no doubt that there must be an actual discharge into navigable waters to trigger the CWA's requirements and the EPA's authority. Accordingly, the EPA's authority is limited to the regulation of CAFOs that discharge. Any attempt to do otherwise exceeds the EPA's statutory authority. Accordingly, we conclude that the EPA's requirement that CAFOs that 'propose' to discharge apply for an NPDES permit is ultra vires and cannot be upheld. . . In summary, we conclude that the EPA cannot impose a duty to apply for a permit on a CAFO that 'proposes to discharge' or any CAFO before there is an actual discharge. However, it is within the EPA's province, as contemplated by the CWA, to impose a duty to apply on CAFOs that are discharging."

 

    Further, the Fifth Circuit says, "The 2008 Rule provides that a CAFO can be held liable for failing to apply for a permit. The Farm Petitioners contend that the EPA does not have the authority to create this liability. We agree. . . the imposition of 'failure to apply' liability is outside the bounds of the CWA's mandate. . . The CWA simply does not authorize this type of supplementation to its comprehensive liability scheme. Nor has Congress been compelled, since the creation of the NPDES permit program, to make any changes to the CWA, requiring a non-discharging CAFO to apply for an NPDES permit or imposing failure to apply liability. . ."

 

    On the subject of land application, the Farm Petitioners argue that the EPA's requirement that all NMPs [Nutrient Management Plans] address protocols for land application exceeds the EPA's statutory authority. The Appeals Court rules, "The Farm Petitioners' arguments are problematic because they are challenging a requirement promulgated in the 2003 Rule. Thus, the Farm Petitioners' arguments had to be made within the 120-day time period for challenging rules promulgated by an agency. . . Thus, the Farm Petitioners' arguments, regarding NMPs and the protocols for land application, brought almost six years after they were promulgated, are time barred."

 

    On the subject the EPA Letters which state that poultry growers must apply for NPDES permits for the releases of dust through poultry confinement house ventilation fans, the Poultry Petitioners argue that this requirement is a substantive rule because it creates new legal consequences and affects individual rights and obligations. The Appeals Court explains that, "The CWA establishes a bifurcated jurisdictional scheme whereby courts of appeals have jurisdiction over some categories of challenges to EPA action, and the district courts retain jurisdiction over other types of complaints.

 

    As such, the decision states, "Although the guidance letters do, as the Poultry Petitioners note, obligate them to obtain a permit if they discharge manure or litter through ventilation fans or face legal consequences, the EPA Letters neither create new legal consequences nor affect their rights or obligations. Here, the guidance letters merely restate section 1342's prohibition against discharging pollutants without an NPDES permit. Agency actions that have no effect on a party's rights or obligations are not reviewable final actions. . . Accordingly, we grant the EPA's motion to dismiss because we lack jurisdiction to consider the Poultry Petitioners' challenge to the EPA Letters."

 

    In a final conclusion the Fifth Circuit rules, "For the foregoing reasons, the petitions are granted in part, denied in part, and dismissed in part. We hereby vacate those provisions of the 2008 Rule that require CAFOs that propose to discharge to apply for an NPDES permit, but we uphold the provisions of the 2008 Rule that impose a duty to apply on CAFOs that are discharging. We vacate those provisions of the 2008 Rule that create liability for failing to apply for an NPDES permit. Additionally, we uphold the provisions of the 2008 Rule that allow permitting authorities to regulate a permitted CAFO's land application and include these requirements in a CAFO's NPDES permit. Finally, we dismiss the Poultry Petitioners' challenge of the guidance letters for lack of jurisdiction."

 

    The American Farm Bureau Federation (AFBF) and other farm organizations, issued a release saying, ". . .a unanimous federal court of appeals has ruled that the Environmental Protection Agency cannot require livestock farmers to apply for Clean Water Act permits unless their farms actually discharge manure into U.S. waters." The ruling was welcomed by the American Farm Bureau Federation, National Pork Producers Council and several other agriculture groups that filed suit against EPA in the U.S. Court of Appeals for the Fifth Circuit. AFBF President Bob Stallman said, "For the second time, a U.S. Court of Appeals has ruled that EPA's authority is limited by the Clean Water Act to jurisdiction over only actual discharges to navigable waters, not potential discharges. We are pleased that the federal courts have again reined in EPA's unlawful regulation of livestock operations under the Clean Water Act. The court has affirmed that EPA, like other federal agencies, can only regulate where it has been authorized by Congress to do so."

 

    Access the complete opinion (click here). Access a release from AFBF (click here).

United States v. Desnoyers

Mar 14: In the U.S. Court of Appeals, Second Circuit, Case No. 10-0447. The Appeals Court indicates that a jury convicted Defendant-Appellee Mark Desnoyers on multiple counts, including one count of conspiracy to

violate the Clean Air Act (CAA) and to commit mail fraud. After trial, the United States District Court for the Northern District of New York (Hurd, J.) entered a judgment of acquittal on the conspiracy count citing both factual and legal insufficiency as grounds

for its decision. The Government appealed the acquittal ruling. The Appeals Court ruled, "We vacate the judgment of acquittal on the conspiracy count, and remand the case to the district court with instructions to reinstate the jury verdict, enter a judgment of conviction on the conspiracy count, and resentence Desnoyers accordingly."

 

    Desnoyers was licensed in New York to conduct air monitoring at asbestos abatement projects and to document the results of asbestos removal work. Based on evidence that Desnoyers conducted his work fraudulently and sometimes not at all, the Government charged Desnoyers with conspiracy to CAA. The jury was asked to determine, among other things, whether each property in the conspiracy count was (1) a commercial property or a residential property with more than four units containing

(2) a sufficient quantity of (3) friable asbestos. According to the opinion, the Government could prove that one of those properties was subject to the CAA asbestos regulations by introducing evidence of the three factors.

 

    The Appeals Court concluded, "The fact that the Government may not have established that the properties at issue in the conspiracy count were subject to the CAA asbestos regulations was a factual deficiency in the Government's case, not a legal one. As a result, the district court erred when it characterized the Government's CAA theory as 'legally impossible.' In sum, the conspiracy count suffered neither a factual nor a legal defect."

 

    Access the complete opinion (click here).

Del-Ray Battery Company, et al v. Douglas Battery

Mar 14: In the U.S. Court of Appeals, Fifth Circuit, Case No. 10-40515. Appellants, battery recyclers, were sued under the Texas Solid Waste Disposal Act (SWDA) in Texas State court for contribution to environmental clean-up costs incurred by Appellees. Appellants asserted in their defense that the Superfund Recycling Equity Act (SREA) -- an amendment to the federal Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) that exempts certain recyclers from liability for clean-up costs under CERCLA, and awards costs and fees to any recyclers improperly sued for contribution under CERCLA -- applied to protect them from the State court action brought pursuant to the SWDA. After Appellees non-suited the State court case, Appellants brought the Federal court action requesting declaratory relief as to the SREA and seeking, under the SREA, the attorneys' and experts' fees they incurred in defending the State court action. They appealed the district court's judgment dismissing their complaint and the Appeals Court affirmed the district court's decision.

 

    By way of background, Appellants Del-Ray Battery Company and Golden Eagle Battery, Inc. (together, Plaintiffs") and Appellees Douglas Battery Company and Interstate Battery Systems of America, Inc. (together, Defendants) are battery recyclers that sold intact, spent lead acid batteries to a recycling facility in Tecula, Texas until the Environmental Protection Agency (EPA") declared the facility a Superfund site and closed it down. The Texas Commission on Environmental Quality (TCEQ), the State's counterpart to the EPA, identified Defendants, among other battery recyclers, as potentially responsible parties and directed them to perform a remedial investigation/feasibility study at the Tecula site. The EPA ultimately paid $4 million in removal and remediation costs to clean up the site, but neither the EPA nor the TCEQ brought suit against any of the battery recyclers to recover the costs of this clean-up.

 

    The Appeals Court concluded, "It is also clear from case law that CERCLA and the SWDA co-exist as regulatory regimes. See Cooper, 543 U.S. at 166–67 (holding that the portion of § 113(f)(1) cited above 'rebuts any presumption that the express right of

contribution provided by the enabling clause is the exclusive cause of action for contribution available to a [potentially responsible party]'); MSOF Corp. v. Exxon Corp., 295 F.3d 485, 491 (5th Cir. 2002) ('This court and other courts have construed the CERCLA saving clauses in accordance with their plain meanings and have held that they preserve parties' rights arising under state law.'). Because the SREA on its face does not apply to state law causes of action, and because CERCLA does not preempt the SWDA, the district court properly dismissed the remainder of Plaintiffs' claims."

 

    Access the complete opinion (click here).