John Dubinsky v. Mermart

Feb 10: In the U.S. Court of Appeals, Eighth Circuit, Case No. 09-2072. John Dubinsky, et al (Subordinate Bondholders) invested in a refinancing venture for a real estate development. They sued the developer of the project, Mermart, L.L.C. (Mermart), alleging breach of contract and demanding equitable accounting for failure to pay interest under the financing documents, as well as alleging unjust enrichment, negligence, and fraudulent misrepresentation based on alleged representations that the project was free from environmental hazards. The district court dismissed the contract claims, finding that the Subordinate Bondholders failed to obtain written consent of UMB Bank, N.A. (UMB Bank), the Senior Mortgagee, as required by the financing documents. The district court also dismissed the negligence, unjust enrichment, and fraudulent misrepresentation claims because the economic loss doctrine precluded recovery. The Appeals Court affirmed the district court ruling.

    The Appeals Court said further, "We agree with the district court that the negligence claim is an enforcement action under the Subordination Agreement. Id. Similarly, we find that, like the negligence claim, the failure to make interest payments due to the characterization of the lead paint remediation as an "upgrade expense," is a matter that arises out of the Financing Documents. . . We affirm the dismissal of the negligence and unjust enrichment claims because the Subordinate Bondholders did not obtain written permission to sue. . .

    "Finally, the Subordinate Bondholders argue that Mermart made fraudulent misrepresentations pertaining to the absence of lead-based paint. Mermart counters that any such alleged statements are also covered solely by contractual duties. . . we find that the claimed fraudulent misrepresentation is also a matter that arises out of the Financing Documents. Again, we affirm the dismissal of this claim because the Subordinate Bondholders did not first obtain the written permission from the Senior Mortgagee to sue."

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Service Oil, Inc. v. U.S. EPA

Dec 28: In the U.S. Court of Appeals, Eighth Circuit, Case No. 08-2819. In this administrative enforcement proceeding, U.S. EPA imposed a substantial monetary penalty on Service Oil, Inc., the owner of a construction site that did not timely obtain a storm water discharge permit. According to the Appeals Court, EPA based the amount of the penalty not on unlawful discharges, but on Service Oil’s failure to comply with the Agency’s permit application regulations. The Appeals Court concluded that "this is an expansion of EPA’s remedial power not authorized by the governing statutes," and reversed and remanded the decision for redetermination of the penalty.

The Eighth Circuit said in part, "As the Second Circuit held in invalidating a portion of EPA’s regulations governing concentrated animal feeding operations, 'unless there is a "discharge of any pollutant," there is no violation of the Act, and point sources are, accordingly, neither statutorily obligated to comply with EPA regulations for point source discharges, nor are they statutorily obligated to seek or obtain an NPDES permit.'" [citing Waterkeeper Alliance, Inc. v. E.P.A., 399 F.3d 486, 504 (2d Cir. 2005).

The Appeals Court said further, "While acknowledging 'the policy considerations underlying the EPA’s approach,' the court [2nd Circuit] concluded that 'it contravenes the regulatory scheme enacted by Congress; the Clean Water Act gives the EPA jurisdiction to regulate and control only actual discharges -- not potential discharges, and certainly not point sources themselves.'”

The Appeals Court rules, "Our conclusion that EPA lacks statutory authority to assess administrative penalties for failure to submit a timely permit application does not mean, as the EAB [Environmental Appeals Board] posited, that the agency must either guess the identities of potential new point sources, or allow unpermitted discharges to ensue. Prudent builders know that permits do not issue overnight and that storm water discharges can happen any time after the start of construction makes the site a point source. They will apply and obtain permits before starting construction to avoid penalties for unlawful discharge that may prove to be severe. That is the regulatory regime Congress crafted. By contrast, under the EAB’s interpretation of § 1318(a), a person about to commence construction could apply to EPA for a storm water discharge permit less than the ninety days “before the date on which construction is to commence” prescribed in 40 C.F.R. § 122.21(c)(1); obtain the permit before construction commences and any discharge occurs; and still face a costly administrative enforcement proceeding and potential monetary penalties for failing to comply with the regulation. The statute is to the contrary.

"The decision of the EAB based the amount of monetary penalty assessed primarily on Service Oil’s 'complete failure to apply for its storm water permit prior to starting construction.' As a violation of the permit application regulations is not within the purview of 33 U.S.C. § 1319(g)(1)(A), this was a statutorily impermissible factor. Accordingly, we grant the petition for review, vacate the order assessing a civil penalty of $35,640, and remand to the agency for redetermination of the amount of the penalty in accordance with § 1319(g)(3) and this opinion."

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Thomas v. Jackson (U.S. EPA)

Sep 10: In the U.S. Court of Appeals, Eighth Circuit, Case No: 08-2152. Plaintiffs filed a complaint in district court under the Administrative Procedure Act (APA), arguing that approval by the U.S. EPA of the State of Iowa’s 2004 “§ 303(d) lists” violated several aspects of the Clean Water Act (CWA). The district court dismissed the complaint and the Appeals Court affirmed the district court decision.

In part the Appeals Court ruled, "We disagree with Plaintiffs’ contention that when a state uses a non-compliant variation of approved water quality standards in drafting its § 303(d) list, the ultimate, EPA-approved list must be invalidated in its entirety even if the EPA applied the correct water quality standards rather than the non-compliant variation. See Sierra Club, Inc. v. Leavitt, 488 F.3d 904, 912 n.14 (11th Cir 2007) (rejecting a similar argument where the court concluded that the record showed the EPA applied the approved standards rather than the challenged variation); see also 40 C.F.R. § 130.7(d)(2) (establishing a time frame for the EPA to develop § 303(d) list if it disapproves the state’s draft list). However, if the EPA were to itself apply the unapproved state modification, the resulting § 303(d) list would be undermined. Florida Public Interest Research Group Citizen Lobby v. EPA, 386 F.3d 1070, 1090–91 (11th Cir. 2004) (FPIRGCL) (remanding for additional review where the court concluded that the record showed that the EPA applied the challenged variation rather than the standards as approved)."

Second, Plaintiffs contended that the EPA impermissibly accepted Iowa’s distinction between “evaluated” and “monitored” waters and its position that waters evaluated, but not monitored, need not be placed on the § 303(d) list. The Appeals Court said, "The EPA maintains that it reviewed all 'evaluated' waters consistent with federal regulations, ignoring Iowa’s distinction. As with the Credible Data Law, Plaintiffs’ only evidence that the EPA adopted Iowa’s distinction is the fact that the EPA only added four of the 'evaluated' waters back to the § 303(d) list. Plaintiffs argue that '[w]e must assume' that the EPA approved of Iowa’s distinction. The burden of proof lies with Plaintiffs, however, and Plaintiffs cannot meet that burden through unsupported assumptions."

Finally, Plaintiffs contend that even relying on the approved water quality standards was in error because Iowa was in the process of revising its water quality standards. The EPA counters that applicable water quality standards remain in effect until the new standards are approved. The Appeals Court said, "As Plaintiffs have pointed to no authority to the contrary, and any
improper delay in the promulgation of the revised standards is not directly at issue in the case before us, we defer to the EPA’s reasonable application of its own regulations. . ."

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Kennedy Bldg. Assoc. v. CBS Corp.

Aug 18: In the U.S. Court of Appeals, Eighth Circuit, Case No. 07-3622. According to a court summary the district court's order finding that CBS has substantially complied with the remediation requirements imposed upon it was consistent with this court's mandate, and it did not abuse its discretion in determining that no further relief was required by the provisions of the injunction previously entered in the case. The district court was without authority under the mandate to increase the bond in the case; Kennedy's Rule 60(b)(2) motion to increase the bond was untimely.

The mandate did not preclude the district court from considering Kennedy's claim for response costs and as the court cannot determine whether the district court denied the motion on the merits or because it believed the request was outside the scope of the mandate, and the matter was remanded for further proceedings. In its final ruling the Appeals Court said, ". . .we affirm the order of the district court modifying the MERA [Minnesota Environmental Rights Act] injunction and denying Kennedy’s motion to increase the bond. We remand this case for clarification of the district court’s order denying Kennedy’s request for response costs." The Appeals Court said, ". . .we direct that the district court make the appropriate findings: (1) Which, if any, of Kennedy’s claimed response costs are compensable; and (2) The amount of money damages, if any, to which Kennedy is entitled."

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United States v. Northshore Mining Co.

Aug 17: In the U.S. Court of Appeals, Eighth Circuit, Case No. 08-1423, 08-1529, & 08-1533. According to a court written summary, Northshore received all of the relief it sought in its motion to dissolve the injunction in the case, and it lacked standing to appeal the order; nor did Northshore have standing to appeal the district court's collateral ruling denying its Rule 60(b) motion as the court's ruling on that motion was immaterial to the ultimate ruling vacating the injunction; the United States' appeal must also be dismissed because it was not aggrieved by the district court's order since its interest did not extend to air-emissions programs and the order involved only affects air emissions.

With respect to the remaining appeal by Minnesota and the Minnesota Pollution Control Agency, those parties have failed to show that the district court abused its discretion by vacating sua sponte [acting spontaneously without prompting from another party] the injunction's air-emissions programs as the State and the agency have sufficient regulatory tools to monitor and control the plant's fibre emissions in ways which parallel the injunction. In its conclusion, the Appeals Court said, ". . .we dismiss Northshore’s appeal, dismiss the United States’ cross-appeal, and affirm the district court’s conclusion that the air-emissions provisions of the injunction are moot."

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United States v. Gary Bailey

Jul 9: In the U.S. Court of Appeals, Eighth Circuit, Case No. 08-1908. According to the Appeals Court, Gary Bailey constructed a road on a parcel of wetlands in Lake of the Woods County (County), Minnesota, without obtaining a permit under Section 404 of the Clean Water Act (Act). The United States Army Corps of Engineers (Corps) ordered Bailey to restore the land to its previolation condition. Bailey refused, and the United States brought an action under Section 309(b) of the Act to enforce the restoration order and to enjoin Bailey from discharging further pollutants into the wetland.

Bailey counterclaimed against the United States, alleging that the Corps did not have jurisdiction over his parcel of land and that its restoration order was arbitrary and capricious. Bailey sued the County in a third-party complaint, alleging that the County should pay to restore the land. All parties moved for summary judgment.

In what the Appeals Court called "a most comprehensive, thorough opinion (from which we have borrowed extensively)," the district court granted in part the United States’s motion for summary judgment, finding that the Corps properly asserted jurisdiction under the Act and that its restoration order met the requirements of United States v. Sexton Cove Estates, Inc., 526 F.2d 1293 (5th Cir. 1976). United States v. Bailey, 516 F. Supp. 2d 998 (D.Minn. 2007). The district court dismissed Bailey’s counterclaim against the United States and his third-party complaint against the County. The district court subsequently issued a final injunction, ordering Bailey to restore the wetland at his own expense to its previolation condition. United States v. Bailey, 556 F. Supp. 2d 977 (D. Minn. 2008).

Bailey appeals, contending that the district court erred in concluding that the Corps has jurisdiction over his property, in granting summary judgment in favor of the United States, and in entering an injunction to enforce the restoration order. He
also argues that the restoration order is arbitrary and capricious. The Appeals Court affirmed the district court opinion.

According to the Appeals Court summary, "The wetlands in question met the substantial nexus test announced in Justice Kennedy's concurring opinion in Rapanos v. United States, 547 U.S. 715 (2006) because they were adjacent to the Lake of the Woods in Minnesota, and the district court did not err in finding it had jurisdiction to hear the United States' complaint under Section 309(b) of the Clean Water Act; the district court did not err in admitting the Corps' expert evidence establishing the existence of wetlands as the evidence was reliable and satisfied the Daubert test; the district court's order requiring Bailey to restore the wetlands in question was not arbitrary or capricious; restoration order was not a violation of Bailey's equal protections rights under the Fourteenth Amendment.

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US v. Missouri Industrial Energy Consumers

Jun 22: In the U.S. Court of Appeals, Eighth Circuit, Case No. 08-3404. The Missouri Industrial Energy Consumers (MIEC), an association of businesses formed to address its members' concerns about utility services, moved to intervene in an enforcement action filed against the Metropolitan St. Louis Sewer District (District) by the United States and the State of Missouri under the Clean Water Act (CWA). The district court denied the motion for lack of standing. The Appeals Court affirmed the district court decision.

In its decision, the Appeals Court said, "Judicial efficiency is not promoted by allowing intervention by a party with no interest upon which it could seek judicial relief in a separate lawsuit. . . Not only would allowing MIEC to intervene produce no gains in judicial efficiency, it would most likely complicate and delay the proceedings with peripheral issues of cost and local government financing. Although MIEC would certainly like to participate in this enforcement action, 'a federal case is a limited affair, and not everyone with an opinion is invited to attend.'" [citing Mausolf, 85 F.3d at 1301]. . . MIEC has a representative on the District's Rate Commission which makes recommendations about rate changes and will have the opportunity to comment on any proposed rate increases during that public process. The type of grievances that MIEC asserts are properly advanced in these fora, not in this federal action."

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State of Missouri v. St. Louis Sewer District

Jun 9: In the U.S. Court of Appeals, Eighth Circuit, Case No. 08-3399. The United States and the State of Missouri filed this enforcement action against the Metropolitan St. Louis Sewer District (District) under the Clean Water Act (Act). They sought Federal civil penalties and injunctive relief to limit discharges of untreated wastewater and sewage by the District. The District raised several affirmative defenses claiming financial inability to comply with the Act's requirements and filed two counterclaims. The State then moved to strike the District's affirmative defenses and to dismiss its counterclaims, arguing that they were barred by sovereign immunity and the Eleventh Amendment.

The district court denied the motion and Missouri appeals, arguing that it did not waive its sovereign immunity by filing this action since the Act requires its participation. The Appeals Court affirmed the district court decision. The Appeals Court said, "Though Missouri did not add any state law claims to those brought by the United States, the fact is that it affirmatively joined in asserting the federal claims. As a result the State will be entitled to participate in negotiating and enforcing any judgment or consent decree entered against the District. Were the State to assert the defense of sovereign immunity against the District's counterclaims while exercising the rights of a plaintiff, we would be condoning the selective invocation of immunity that the Supreme Court recognized as unfair in Lapides."

Further, the Appeals Court said, "Section 309(e) undoubtedly compels a state to become a party in federal court, but it does not compel the state to take any action that would waive its sovereign immunity. A state required to join a federal enforcement action under § 309(e) can preserve its potential sovereign immunity defense by aligning as a defendant and taking no other actions inconsistent with the assertion of sovereign immunity."

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Wilderness Watch v. Abigail Kimbell

Mar 6: In the U.S. Court of Appeals, Eighth Circuit, Case Nos. 07-3689, consolidated with 07-3696 and 08-1167. In this case involving the Boundary Waters Canoe Area Wilderness Act, Wilderness Watch, Sierra Club North Star Chapter, and Northeastern Minnesotans for Wilderness (collectively Wilderness Watch) brought suit against Abigail Kimbell, Chief of the United States Forest Service, and Ed Schafer, Secretary of the United States Department of Agriculture (collectively Forest Service), alleging that the Forest Service's decision to construct a certain snowmobile trail between McFarland Lake and South Fowl Lake in northeastern Minnesota violated the Boundary Waters Canoe Area Wilderness (BWCAW) Act.

Wilderness Watch based its challenge on Congress's inclusion of South Fowl Lake (and of North Fowl Lake, to which it is connected) in the "wilderness" under the BWCAW Act. According to Wilderness Watch, the BWCAW Act prohibits snowmobiling on the Fowl Lakes (Count I) and requires the Forest Service to implement motorboat quotas on them (Count II).

The district court granted summary judgment to the Forest Service on Counts I and II, finding that the North and South Fowl Lakes are not "wilderness" under the BWCAW Act and therefore are not subject to snowmobiling and motorboat restrictions. But the district court also found that the environmental assessment (EA) prepared by the Forest Service for the plan to construct the snowmobile trail connecting the Fowl Lakes adjacent to the BWCAW failed to properly analyze the noise impact resulting from snowmobile use on the trail, as required by the National Environmental Policy Act (NEPA).

As a result, the district court remanded to the Forest Service, instructing it to prepare an environmental impact statement (EIS) assessing the sound impact of the proposed trail routes on the adjoining wilderness area, and also enjoined the Forest Service from conducting any further activity on the proposed trail pending its completion of the EIS. Wilderness Watch appeals from the district court's grant of summary judgment to the Forest Service on Counts I and II, and Cook County, a political subdivision of the State of Minnesota, Conservationists with Common Sense, and Arrowhead Coalition for Multiple Use (collectively Intervenors) appeal from the district court's NEPA ruling.

The Appeals Court affirmed the district court decision and concluded, "Accordingly, we hold that Wilderness Watch's claims that the Forest Service (1) violated the BWCAW Act by permitting snowmobiles on South Fowl Lake and (2) failed to implement motorboat quotas on North and South Fowl Lakes in violation of § 4(f) of the BWCAW Act are time-barred by the six-year statute of limitations. As to the district court's NEPA ruling, we lack jurisdiction to review the district court's order remanding the matter to the Forest Service for an EIS and decline to vacate the injunction."

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Missouri Coalition For The Environment. v. U.S. Corps of Engineers

Sep 16: In the U.S. Court of Appeals, Eighth Circuit, Case No. 07-2218. In this case, the Missouri Coalition seeks disclosure of a number of documents from the U.S. Army Corps of Engineers under the Freedom of Information Act (FOIA). The district court granted summary judgment in favor of the Corps on the basis that the "deliberative process privilege," 5 U.S.C. § 552(b)(5), exempts all 83 documents responsive to the request. The documents related to the Upper Mississippi River System Flow Frequency Study (UMRSFFS) designed to identify the 100-and 500-year flood plains. The Coalition appealed the district court judgment and the Appeals Court remanded the case for further proceedings.

According to the Corps each and every document was identified as "privileged under FOIA Exemption 5, the Deliberative Process Privilege." The Coalition argued that the Corps had failed to prove that the documents were exempt from disclosure. The case revolves around the so-called "Vaughn index" which is designed to "help determine whether a governmental agency has discharged its burden under FOIA" and evolves from the Vaughn court, i.e. Vaughn v. Rosen, 484 F.2d 820, 826 (D.C. Cir. 1973). Vaughn indices serve two purposes: First, to ensure an “effectively helpless” party’s right to information “is not submerged beneath governmental obfuscation and mischaracterization” and second, to “permit the court system effectively and efficiently to evaluate the factual nature of disputed information.”

The Coalition argues that, viewed in the light most favorable to the Coalition, the Corps’ Vaughn index is insufficient to show whether the Corps’ obligations under FOIA were discharged. As a result, the Coalition posits, some of the documents should have been released. Alternatively, the Coalition proposes that even if the Vaughn index is adequate, some of the documents – in whole or in part – are not subject to the exemption. The Corps contends that it satisfied its FOIA obligations with an adequate Vaughn index that properly demonstrated the documents were subject to the deliberative process privilege.

The Appeals Court said that sworn declarations from Corps staffers provided adequate additional information to the Vaughn index to explain why the documents should be exempt. For example, one affidavit submitted indicated, "These communications are exempt from disclosure under Exemption 5 because they are predecisional and part of the deliberative process. They involve the give-and-take that is inherent in such a study process. . ."

The Coalition argues that the prior release of some of the documents, in whole or part, destroys the credibility of the index and affidavits. The Appeals Court said, "We are not persuaded that the fact the UMRSFFS report was ultimately released and that some of the information in the final report was contained in the requested documentation affects the deliberative or predecisional nature of the requested documents. We therefore conclude the Vaughn index is sufficient to establish that some of the information requested is, in fact, exempted by the deliberative process privilege. However, because the district court failed to analyze the segregability of the documents, we cannot conclude at this time that the privilege applied, as the district court concluded, to all 83 responsive documents in their entirety. . . Here, the district court made no findings on the issue of segregability. Although the issue was properly raised and preserved for appeal, we are unable to determine from the record whether the issue was considered and rejected or not considered at all. Therefore, we must remand the case for a segregability analysis consistent with this opinion."

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Clark v. U.S. Department of Agriculture

Aug 12: In the U.S. Court of Appeals, Eighth Circuit, Case No. 07-3127. Appellant Dorothy Clark appealed the district court’s refusal to grant a declaratory judgment and set aside a United States Department of Agriculture (USDA) determination that she converted wetlands in violation of the "Swampbuster" provisions of the Food Security Act of 1985. Because the USDA determined she had converted wetlands, Clark became ineligible for certain farm program payments. Clark challenged the USDA’s interpretation of the term “converted wetland” and argues the evidence is insufficient to support the USDA’s determination that she converted wetlands. In addition, she challenged a USDA regulation that placed the burden on her to request, and prove her eligibility for, a “minimal effect” exemption. The Appeals Court said, "Given the deference we owe to the USDA’s regulation, its interpretation of the applicable law, and its factual determinations, we affirm the district court’s denial of relief."

The so-called Swampbuster provisions, designed to deter the conversion of wetlands, authorize the USDA to make determinations as to whether certain lands qualify as wetlands and whether wetlands that have been manipulated qualify as converted wetlands. A person determined to have converted wetlands may become ineligible to receive farm program payments; however, there is an exception to the ineligibility provision for manipulations determined to have only a "minimal effect" upon wetland and biological functions.

In making its ruling, the Appeals Court indicates that, Clark notes that Congress amended 16 U.S.C. § 3822(f) in 1990, replacing the phrase “The Secretary may exempt,” with the phrase “The Secretary shall exempt.” Pub. L. 101-624, Title XIV, § 1422, Nov. 28, 1990, 104 Stat. 3573. Clark argued generally that this amendment reflects a legislative desire to curb perceived resistance from the USDA towards issuing such exemptions.

The Appeals Court says, "We do not disagree with this general statement: the amendment clearly deprives the USDA of discretion where discretion previously existed, and following the 1990 amendment the USDA must grant such exemptions where a manipulation is shown to have a minimal effect. The statute, even as amended, however, does not apportion the burden of proof regarding the technical determination of whether a manipulation has more than minimal effect. Nor does it contain any language suggesting the USDA is without authority to impose a burden of proof upon landowners who fail to request a determination prior to taking action likely to hinder the USDA in its assessment of the wetlands’ pre-manipulation function and value."

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Followell v. United States

Jul 3: In the U.S. Court of Appeals, Eighth Circuit, Case No. 07-3017. Cheryl Followell, as executrix, brought the action on behalf of the estate of her deceased mother, Betty Gurley. Followell and Gurley Refining Company (GRC) appealed an order of the district court dismissing this action for failure to state a claim and the Appeals Court affirmed.

The Appeals Court cited the district court in saying that the dispute between Plaintiffs and U.S. EPA (EPA) has had, "a long and tortuous history" reaching back more than twenty years when the EPA filed a civil action in 1987 alleging Plaintiffs violated the Comprehensive Environmental Response Compensation and Liability Act of 1980 (CERCLA). During the course of the CERCLA litigation, William Gurley fraudulently transferred roughly $17 million in assets to Betty Gurley. After judgment was entered against him, he declared bankruptcy. The Appeals Court said, "For over a decade, William Gurley, Betty Gurley, and GRC have engaged in 'vexatious litigation' to prevent the EPA from collecting the debt." The Appeals Court said in a brief 3-page opinion, "the district court's conclusion res judicata precludes Plaintiffs' 'relitigation of a claim on grounds that were raised or could have been raised in the prior action.'"

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State of Missouri v. U.S. Army Corps of Engineers

Feb 8: In the U.S. Court of Appeals, Eighth Circuit, Case No. 07-1149. The United States Army Corps of Engineers (Corps) manages the Missouri River Mainstem Reservoir System (the System) under the Flood Control Act of 1944. The System consists primarily of a series of dams and reservoirs on the upper River. The Corps’ governing operational document is the Missouri River Mainstem Reservoir Master Water Control Manual (the Master Manual), which has been revised five times since its initial adoption in 1960. The Corps also publishes specific operational details in an Annual Operating Plan.

In recent years, persistent drought conditions have challenged the Corps’ ability to perform its dominant Flood Control Act functions of flood control and maintaining downstream navigation while also continuing to benefit secondary uses such as irrigation, recreation, fish, and wildlife. Forced to make difficult choices, the Corps has faced repeated lawsuits by competing beneficial users of the River as controlled by the System. In South Dakota v. Ubbelhode, the Eighth Circuit reversed the grant of preliminary injunctions preventing the Corps from releasing drought-depleted waters from reservoir lakes in South Dakota and North Dakota in order to maintain downstream navigation.

Meanwhile, environmental groups sued, and the Judicial Panel on Multi-District Litigation consolidated all actions in the District of Minnesota. In March 2004, the Corps issued a revised Master Manual (the 2004 Master Manual) containing provisions prompted by a Biological Opinion issued by the U.S. Fish and Wildlife Service (FWS) under the Endangered Species Act. Competing users challenged the actions of both agencies on numerous grounds. In In re Operation of the Missouri River System Litigation, (2006) (hereinafter Mo. River), the Eighth Circuit affirmed the district court’s grant of summary judgment in favor of both agencies.

The Appeals Court explains, "In this action, a sequel to Mo. River, the State of Missouri claims that the Corps violated the National Environmental Policy Act (NEPA) by implementing March 2006 revisions to the 2004 Master Manual without preparing a supplemental environmental impact statement (SEIS). The district court granted the Corps’ motion for summary judgment. Missouri appeals. We conclude that the Corps’ actions were not arbitrary and capricious and therefore affirm."

In its final analysis the Appeals Court makes an important observation saying, "Finally, Missouri argues that the Corps violated NEPA when it failed to follow the EA with either an EIS or a FONSI [finding of no significant impact}. This is an unduly restricted view of the agency’s options for complying with NEPA’s procedural mandates. The Corps’ regulations provide that an EA is used 'for determining whether to prepare an EIS or a FONSI,' and '[a] FONSI shall be prepared for a proposed action . . . for which an EIS will not be prepared.' 33 C.F.R. §§ 230.10(a), 230.11. However, these provisions must be read in conjunction with CEQ’s implementing regulations, see 33 C.F.R. § 230.1, which sensibly provide that '[a]gencies may prepare an environmental assessment on any action at any time in order to assist agency planning and decisionmaking.' 40 C.F.R. § 1501.3(b). Neither the Corps’ nor CEQ’s regulations prescribe a specific process to determine whether to prepare an SEIS. Here, the Corps prepared an EA, not to help it decide whether to prepare an EIS, but rather to determine whether the change in agency action required an SEIS. As this case illustrates, it is reasonable to expect that the Corps will sometimes determine that a FONSI is not appropriate because the action being taken has a significant impact on the environment, but an SEIS is not required because the impact was sufficiently analyzed in an earlier FEIS. This approach is neither a misuse of the EA procedure nor a violation of NEPA."

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Royal Indemnity v. Apex Oil Company

Jan 2: In the U.S. Court of Appeals, Eighth Circuit, Case Nos. Case No: 06-3454, 06-3461 and 06-3469. Royal Indemnity Company brought the action pursuant to 28 U.S.C. §§ 2201 and 2202, to seek a declaration of the rights and obligations of Royal Indemnity Company, various other insurance companies and Apex Oil Company, Inc. (Apex), under certain insurance policies Royal Indemnity Company and the other insurance companies issued to Apex. The Appeals Court affirmed the district court’s decision to abstain, but vacated the dismissal order and remanded the case so that the court can instead enter an order staying the proceedings.

Between May 2003 and April 2005, the State of Illinois, the United States, and a group of individuals filed five separate lawsuits (the underlying suits) against Apex in state and federal courts in Illinois based on the actions of Apex and its predecessor companies in releasing contaminants into the soil surrounding its oil refinery in Hartford, Illinois. Royal Indemnity Company defended Apex on the majority of the underlying suits. On August 5, 2005, Apex brought suit against multiple insurers in the Circuit Court of Madison County, Illinois (the Illinois lawsuit), seeking a declaration of the parties’ rights and responsibilities with respect to the Hartford soil contamination under policies the insurance companies had issued to Apex.

On March 22, 2006, Royal Indemnity Company initiated the lawsuit by filing a complaint in Federal court pursuant to the Declaratory Judgment Act, 28 U.S.C. §§ 2201 and 2202, “seeking adjudication of the parties’ rights and obligations under certain insurance policies.” In its complaint, Royal Indemnity Company also sought a declaration of the rights and responsibilities of the parties based on claims of equitable contribution, subrogation, unjust enrichment and/or equitable estoppel for the costs Royal Indemnity Company incurred in defending Apex as well as attorneys’ fees, costs and interest.

Royal argues that the district court erred in applying the Wilton and Brillhart abstention doctrine and instead should have applied the “exceptional circumstances” test articulated in Colorado River. The Eighth Circuit said, "However, unlike Colorado River, this lawsuit involves a declaratory judgment action. Apex, therefore, claims that the district court correctly relied upon Wilton and Brillhart to govern its abstention analysis." Royal also argued that the Ninth Circuit’s decisions in Government Employees Insurance Co. v. Dizol, 133 F.3d 1220 (9th Cir. 1998) (en banc), and United National Insurance Co. v. R & D Latex Corp., 242 F.3d 1102 (9th Cir. 2001), support its claims that Wilton and Brillhart do not apply here. However, the Appeal Court said, "...not only are these cases not binding precedent for us, they are easily distinguishable..."

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