Rick's Mushroom Service Inc. v. U.S.

Apr 2: In the U.S. Court of Appeals, Federal Circuit, Case No. 07-5137. The case is an appeal from the United States Court of Federal Claims pertaining to a cost-share agreement between the government and Rick’s Mushrooms, Inc. (Rick’s) for implementing conservation practices in a facility for recycling of mushroom waste. Rick’s seeks indemnification from the government for costs incurred in defending and settling claims by a third party for violation of certain State and Federal environmental laws. The Court of Federal Claims dismissed the action for lack of subject matter jurisdiction. The Federal Circuit affirmed that decision.

As noted by the court, mushroom farming is a major economic activity in Chester County, Pennsylvania. Historically, the organic by-product waste of mushroom farming, known as "spent mushroom substrate" (SMS), was dumped in nearby woods or streams, resulting in severe nitrogen pollution. Rick’s operates an SMS transfer facility, which processes SMS by leaching out the excess nitrogen and then recycling it as potting soil or other products. Following a dispute regarding contamination and proper permitting, and an order by the district court, Rick’s agreed to settle the case for $950,000. Thereafter, the Natural Resources Conservation Service (NRCS) drafted a rehabilitation plan and a plan for a roof structure to help eliminate some of the problems with waste discharge. The NRCS did not indemnify Rick’s for its losses in the litigation and did not pay for the new roof structure.
On November 4, 2005, Rick’s submitted a claim under the Contract Disputes Act (CDA) to the contracting officer at the NRCS for $5 million in damages. J.A. 188-89. The claim alleged that the NRCS had breached its implied warranty of the specifications, and, as a consequence, Rick’s had incurred additional costs, including attorneys’ fees in defending the lawsuit; the lost value of its contribution to the original design, its substantial design revisions, and the installation of the new roof structure; and its liability for environmental impact. The court further held that, because the contract between Rick’s and the NRCS was a cooperative agreement and not a procurement contract, and there was no basis for jurisdiction under the CDA for the breach of contract claim. The court, therefore, dismissed the case for lack of subject matter jurisdiction.

The Federal Circuit said that the Court of Federal Claims did not err in concluding that it lacked subject matter jurisdiction to hear the professional negligence claim; it did not err in holding that it lacked subject matter jurisdiction over Rick’s breach of contract claim; did not err in dismissing Rick’s implied warranty claim for lack of subject matter jurisdiction; and found no abuse of discretion by the Court of Federal Claims in its dismissal of the professional negligence claim. It therefore, affirmed the Court of Federal Claim’s dismissal of Rick’s claims for lack of subject matter jurisdiction.

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Florida Key Deer v. Paulison

Apr 1: In the U.S. Court of Appeals, Eleventh Circuit, Case No. 05-16374. The Federal Emergency Management Agency (FEMA) and the U.S. Fish and Wildlife Service (FWS) appealed an adverse summary judgment and grant of injunctive relief. The district court found that FEMA and the FWS failed to comply with section 7 of the Endangered Species Act, with regard to FEMA’s administration of the National Flood Insurance Program (NFIP) in the Florida Keys. FEMA and the FWS maintain that section 7(a)(2) of the Endangered Species Act does not apply to FEMA’s provision of flood insurance and that FEMA has, in any event, fully complied with section 7. The Appeals Court affirmed the decision of the district court.

The case began in 1984 when in 1984, the FWS determined that FEMA’s administration of the NFIP in the Florida Keys potentially jeopardized the existence of the Florida Key deer by effectively authorizing the development that pushed the Key deer to the brink of extinction. In 1989, however, FEMA refused the FWS’s request for formal consultation, asserting that the ESA did not apply to the NFIP. In 1990, the plaintiffs, “Wildlife Organizations,” filed suit seeking an injunction requiring FEMA to comply with section 7(a)(2) of the ESA by formally consulting with the FWS about the impact of its administration of the NFIP on the Key deer. The Wildlife Organizations adopted the FWS’s argument that the NFIP encouraged new development that threatened the meager population of 250–300 Key deer with extinction.

Subsequently, FEMA consulted with the FWS regarding the impact of the NFIP on the Key deer and nine other endangered or threatened species. In 1997, the FWS issued its opinion, which found, among other things, that the NFIP, as administered in the Florida Keys, jeopardized the continued existence of the Key deer and eight other listed species. In accordance with its regulations and the ESA, the FWS recommended “reasonable and prudent alternatives” (“1997 RPAs”) to the manner in which FEMA administered the NFIP to avoid placing the Key deer and other listed species in jeopardy. The Wildlife Organizations eventually amended their complaint and added FWS as a defendant and challenging the adequacy of the 1997 RPAs and their accompanying conservation recommendations.

On March 29, 2005, the district court granted the Wildlife Organizations’ motion for summary judgment, finding that FEMA had not satisfied its obligation under section 7(a)(1) to carry out programs to conserve species and that neither FEMA nor the FWS had satisfied their obligations under section 7(a)(2). On September 12, 2005, the district court enjoined FEMA from providing any insurance for new developments in the suitable habitat of the listed species.

FEMA and FWS challenged the district court’s grant of summary judgment and injunctive relief, arguing that: (1) section 7(a)(2) of the ESA does not apply to FEMA’s administration of the NFIP; (2) section 7(a)(2) of the ESA does not require FEMA to perform an independent analysis of the FWS’s proposed “reasonable and prudent alternatives” before adopting them; (3) section 7(a)(1) of the ESA does not require agencies to develop species- and location-specific programs for the conservation of listed species; and (4) the district court exceeded its authority by issuing an injunction that is allegedly inconsistent with the ESA and the NFIA.

In affirming the district court decision the Appeals Court addressed each of the issues and determined that section 7(a)(2) applies to FEMA’s administration of the NFIP; said that FEMA adopted the RPAs the same day that the FWS proposed them and therefore did not perform an independent analysis; does require programs for the conservation of listed species and FEMA's program is "insignificant in its impact"; and the injunction at issue here does not require FEMA to act inconsistently with the command of the NFIA to issue flood insurance in otherwise eligible communities

Wildlife Organizations included the National Wildlife Federation (NWF), Florida Wildlife Federation and Defenders of Wildlife. The groups praised the decision and issued a release stating, “This is a significant victory for the Florida Key Deer and all of America’s endangered species. The court has sent a clear message that our federal government cannot subsidize development in sensitive coastal and floodplain habitats without taking into account the needs of the endangered species that live there. FEMA’s effort to place itself outside the reach of the Endangered Species Act, our nation’s most important wildlife law, has been soundly rejected.”

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

Friends of Yosemite Valley v. Kempthorne

Mar 27: In the U.S. Court of Appeals, Ninth Circuit, Case No. 07-15124. The Appeals Court explains that, "Twenty years after the Merced River, which lies in the heart of the Yosemite National Park, was designated a Wild and Scenic River, and seventeen years after the National Park Service (NPS) was statutorily required to prepare a Comprehensive Management Plan (CMP) for the Merced Wild and Scenic River, the question whether NPS has developed a valid CMP is again before us. In 2003, we found certain deficiencies in an earlier CMP -- the 2000 CMP -- and remanded it to the district court."

Interior Department Secretary Kempthorne and the NPS argue that the district court erred in finding that (1) the Merced Wild and Scenic River -- Revised Comprehensive Management Plan and Supplemental Environmental Impact Statement (2005 Revised Plan) fails sufficiently to “address . . . user capacities” as required; (2) the 2005 Revised Plan is deficient because it is not a wholly self-contained plan; and (3) the supplemental environmental impact statement (SEIS) prepared for the 2005 Revised Plan violates NEPA.

The Appeals Court affirmed the district court ruling and said, "We hold that the 2005 Revised Plan does not describe an actual level of visitor use that will not adversely impact the Merced’s Outstanding Remarkable Values (ORVs) as required by Yosemite I and the WSRA [Wild and Scenic River Act], because the Visitor Experience and Resource Protection (VERP) framework is reactionary and requires a response only after degradation has already occurred. Moreover, the interim limits are based on current capacity limits and NPS has not shown that such limits protect and enhance the Merced’s ORVs. And, as we made clear in Yosemite II, we again conclude that the WSRA requires that the CMP be in the form of a single, comprehensive document, which addresses all the required elements, including both the 'kinds' and 'amounts' of use, and thus the 2005 Revised Plan is deficient because it addressed only the two components struck down in Yosemite I and was not a single, self-contained plan. Finally, we conclude that the SEIS violates NEPA because the 'no-action' alternative assumed the existence of the very plan being proposed; the three action alternatives -- which are each primarily based on the VERP framework -- are unreasonably narrow; and for the first five years, the interim limits proposed by the three alternatives are essentially identical."

Access the complete 28-page opinion (click here).

U.S. v. Burlington Northern & Santa Fe

Mar 25: In the U.S. Court of Appeals, Ninth Circuit, Case No. 03-17125, 03-17153, and 03-17169. In this important and complicated opinion, a now-defunct company, Brown & Bryant, Inc. (B&B), owned and operated a facility at which toxic chemicals were stored and distributed. Part of the land on which the chemical operation was located was owned by two railroad companies (the Railroads), and some of the chemicals used by B&B were supplied and delivered to the facility by Shell Oil Company (Shell). Because toxic chemicals remaining at the facility threatened groundwater and may continue to do so in the future, U.S. EPA and the State of California’s Department of Toxic Substances Control (DTSC) spent a considerable amount of money to clean up the site and may need to spend more in the future.

The two agencies sought to recover these response costs under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), but the district court held the Railroads and Shell liable for only a minor portion of the total cleanup costs. B&B was defunct by that time, and so could not contribute to the cleanup costs. The agencies were thus "left holding the bag for a great deal of money." Seeking to hold the Railroads and Shell jointly and severally liable for the entire judgment, the agencies appealed. Shell cross-appealed, claiming that it was not an “arranger” under CERCLA, § 9607(a)(3), and therefore is not a party on whom any cleanup liability can be imposed.

In the latest action, the Ninth Circuit issued an order stating, "The full court has been advised of the petitions for rehearing en banc. A judge of the court requested a vote on en banc rehearing. The majority of the active judges have voted to deny rehearing the matter en banc. . . The panel has voted to amend its opinion and to deny appellees’ petitions for rehearing with the following amendments. The opinion filed March 16, 2007 [See WIMS 3/19/07] and amended September 4, 2007, published at 502 F.3d 781 (9th Cir. 2007), is further amended. . . [with 21 specific amendments] No further petitions for rehearing or rehearing en banc will be entertained."

The final opinion concludes, "The district court erred in determining that the harm in this case could be apportioned on this record. Given the district court’s erroneous approach and the paucity of record evidence, there is no reasonable basis for apportioning the damages attributable to the Railroads’ activity. Shell’s liability is a closer call, but the evidence on the record in that regard is also insufficient to support apportionment.
"The district court followed the proper analysis in finding that Shell is liable as an arranger. Shell arranged for the sale and transfer of chemicals under circumstances in which a known, inherent part of that transfer was the leakage, and so the disposal, of those chemicals.

"We therefore reverse as to the district court’s finding on apportionment. We affirm the district court’s findings regarding both the Railroads’ and Shell’s liability. The Railroads and Shell are jointly and severally liable for the harm at the Arvin site, except with regard to the so-called 'Dinoseb hot spot.' We remand for further proceedings not inconsistent with this opinion."

A strong dissent from the order denying the petition for rehearing en banc joined by seven justices indicates, "The panel applies CERCLA in a novel and unprecedented way to impose impossible-to-satisfy burdens on CERCLA defendants. The panel’s interpretation of CERCLA 'arranger' liability creates intra- and inter-circuit conflicts in an area of the law where uniformity among circuits is of paramount importance. . . Further, the panel’s unreasonable application of CERCLA apportionment law imposes joint and several liability on CERCLA defendants where Congress did not so intend. . . The panel’s recent amendments to its opinion do take a step in the right direction by aligning the Ninth Circuit with our sister circuits on CERCLA apportionment law. . . But although the panel’s amended opinion pays lip-service to the Restatement test, the panel then proceeds effectively to disregard it. . .

"True, the land on which the facility operator spilled the toxic fluids encompassed only 4.7 acres. But the panel’s legal errors will spread over this Circuit’s nine states and 1.3 million square miles, to lots large and small. I respectfully dissent from our decision not to rehear this case en banc."

Access the complete order, opinion and dissent (click here).

U.S. v. Approximately 64,695 Pounds Of Shark Fins

Mar 17: In the U.S. Court of Appeals, Ninth Circuit, Case No. 05-56274. As explained by the Ninth Circuit, the case arises from a civil complaint brought by the U.S. Government for the forfeiture of 64,695 pounds of shark fins found on board the King Diamond II (KD II), a United States vessel. Claimant-Appellant Tai Loong Hong Marine Products, Ltd. (TLH) owned the shark fins. TLH, a Hong Kong company, had chartered the KD II and ordered it to meet foreign fishing vessels on the high seas, purchase shark fins from those vessels, transport the fins to Guatemala, and deliver them to TLH. The Government seized the fins pursuant to the Shark Finning Prohibition Act (SFPA), which makes it unlawful for any person aboard a U.S. fishing vessel to possess shark fins obtained through prohibited “shark finning.”

TLH does not contest that, on its behalf, the KD II purchased the fins at sea from foreign vessels that engaged in shark finning. Instead, it argues that the KD II is not a "fishing vessel" under 16 U.S.C. § 1802(18)(B), and for that reason the forfeiture of the shark fins it possessed would violate due process.

The Ninth Circuit said, "We agree that neither the statute nor the regulations provided fair notice to TLH that it would be considered a fishing vessel under § 1802(18)(B). We therefore reverse the judgment of forfeiture and remand for further proceedings consistent with this opinion."

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NRDC v. Winter (Secy. of the Navy)

Feb 29: In the U.S. Court of Appeals, Ninth Circuit, Case No. 08-55054. Defendants Secretary of the Navy, Department of the Navy, Secretary of the Department of Commerce, National Marine Fisheries Service (NMFS), and two Administrators of the National Oceanographic and Atmospheric Administration (NOAA) appeal the district court’s January 3, 2008 order [See WIMS 1/7/08], as modified on January 10, 2008 , granting a motion for a preliminary injunction and imposing certain conditions on the completion of the remaining eight of fourteen large training exercises scheduled to be conducted by the Navy’s Third Fleet in the waters off the coast of southern California between February 2007 and January 2009 (the SOCAL exercises).

The motion was filed by plaintiffs Natural Resources Defense Council, Inc., International Fund for Animal Welfare, Cetacean Society International, League for Coastal Protection, Ocean Futures Society, and Jean-Michel Cousteau (collectively NRDC), who are concerned that the Navy’s use of high-intensity, mid-frequency active sonar (MFA sonar) in the SOCAL exercises will cause serious harm to various species of marine mammal present in the southern California waters, and by extension, to plaintiffs themselves.

In granting NRDC’s motion for a preliminary injunction, the district court found that NRDC had demonstrated probable success on the merits of its claim that the Navy violated the National Environmental Policy Act (NEPA), by failing to prepare an Environmental Impact Statement (EIS). The district court also found that NRDC had demonstrated probable success on the merits of its claim that the Navy violated the Coastal Zone Management Act (CZMA), by submitting a consistency determination to the California Coastal Commission (CCC) that did not take into account the planned use of MFA sonar and by failing to adopt the mitigation measures the CCC determined were necessary for the SOCAL exercises to be consistent with the California Coastal Management Program (CCMP).

On January 15, 2008, the Council on Environmental Quality (CEQ) purported to approve “alternative arrangements,” pursuant to 40 C.F.R. § 1506.11, that would permit the Navy to continue its exercise without first completing an EIS. On the same day, President George W. Bush, pursuant to 16 U.S.C. § 1456(c)(1)(B), exempted from the requirements of the CZMA the Navy’s use of MFA sonar in the SOCAL exercises [See WIMS 1/17/08]. On February 4, 2008, the district court upheld its injunction on the basis of plaintiffs’ NEPA claim, concluding CEQ’s action was invalid and therefore not entitled to deference [See WIMS 2/6/08]. The district court also expressed concerns about the constitutionality of the President’s CZMA exemption on the ground that it appeared to amount to an executive revision of a judicial decision and thus violated the principle, recognized in Hayburn’s Case, 2 U.S. (2 Dall.) 408 (1792), that Congress cannot vest review of the decisions of Article III courts in officials of the Executive Branch.

However, the court declined to decide the constitutionality of the CZMA exemption because it concluded the preliminary injunction was firmly supported on NEPA grounds. The district court also found that plaintiffs had demonstrated a possibility of irreparable harm and that the balance of hardships tipped in plaintiffs’ favor. Natural Res. Def. Council v. Winter, --- F.Supp 2d ----, 2008 WL 314192 (C.D. Cal. Feb. 4, 2008) (Feb. 4, 2008 Dist. Ct. Order). The Ninth Circuit upheld the district court’s preliminary injunction.

NRDC issued a release on March 1 saying that the, "appeals court last night rejected the Bush administration’s unprecedented effort to exempt the U.S. Navy from federal environmental laws as it engages in high-intensity sonar training off southern California." NRDC said further, "In a comprehensive 108-page opinion, a three-judge panel also upheld every element of a lower court order requiring the Navy to take precautions during the sonar training to minimize harm to whales and other marine mammals. The Navy itself estimates that its 'SOCAL' sonar exercises, an on-going series of drills being conducted over two years, will significantly disturb or injure 170,000 marine mammals, including causing permanent injury to more than 450 whales and temporary hearing impairment in at least 8,000 others. The court’s opinion is a precedent from the nation’s second-highest court that will govern ongoing and future litigation between environmental groups and the military in California, Hawaii, and elsewhere."

Richard Kendall, a senior partner at the Los Angeles law firm of Irell & Manella, and co-counsel with NRDC in the lawsuit, who argued the case in the courts said, “The court’s detailed ruling strikes the right balance between national security and environmental protection, and properly rejects the unlawful waiver the Navy obtained from the White House. Based on thousands of hours of Navy training reports, we proved that the Navy is able to conduct the necessary training of its sailors using the environmentally-responsible measures ordered by the court.”

Access the 6-page order (click here). Access the 108-page opinion (click here). Access a lengthy release from NRDC with links to related information (click here).

Pacific Merchant Shipping Association v. Goldstene

Feb 27: In the U.S. Court of Appeals, Ninth Circuit, Case No. 07-16695. On January 1, 2007, the California Air Resources Board (i.e. Goldstene) began enforcing state regulations, the “Marine Vessel Rules,” limiting emissions from the auxiliary diesel engines of ocean-going vessels within twenty-four miles of California’s coast. The Pacific Merchant Shipping Association, a group of companies that own or operate ocean-going vessels subject to the regulations, filed suit to enjoin their enforcement. Pacific Merchant argues that the Rules are preempted by the Clean Air Act and the Submerged Lands Act. The Appeals Court affirmed the district court’s ruling that the Marine Vessel Rules are preempted by the Clean Air Act and reinstated that court’s injunction against enforcement of the Marine Vessel Rules.

The Ninth Circuit said, "In the end, Clean Air Act § 209(e)(2) preempts the Marine Vessel Rules and requires California to obtain EPA authorization prior to enforcement because the Rules are 'emissions standards' that require that engines 'not emit more than a certain amount of a given pollutant.' SCAQMD, 541 U.S. at 253. Because the Clean Air Act preempts here, we, like the district court, find it unnecessary to decide whether the Submerged Lands Act also preempts the state rules at issue. We vacate the stay of the district court’s injunction previously imposed by our motions panel effective upon issuance of the mandate."

Access the complete opinion (click here).