Re: MDL-1824 Tri-State Water Rights Litigation

Jun 28: In the U.S. Court of Appeals, Eleventh Circuit, Case No. 09-14657. Appealed from the United States District Court for the Middle District of Florida. The Georgia Parties, Gwinnett County, Georgia, and the United States Army Corps of Engineers (the Corps) appeal from the Middle District of Florida's grant of summary judgment in this consolidated suit. The appeal arises from more than 20 years of litigation involving the above parties as well as the States of Alabama and Florida, Alabama Power Company, the City of Apalachicola, Florida, and Southeastern Federal Power Customers, Inc. (SeFPC), a consortium of companies that purchase power from the federal government. All of the underlying cases relate to the Corps' authority to operate the Buford Dam and Lake Lanier, the reservoir it created, for local water supply.

 

    In its order, the district court found that the Corps' current operation of the Buford Project -- Buford Dam and Lake Lanier collectively -- had allocated more than 21% of Lake Lanier's storage space to water supply. The court determined that such an allocation exceeded the Corps' statutory authority and ordered the Corps to drastically reduce the quantity of water that it made available for water supply. The court's summary judgment order also affirmed the Corps' rejection of Georgia's 2000 request for additional water supply allocations to meet the needs of the localities through 2030. The court stayed its order for three years to give the parties time to reach a settlement or to approach Congress for additional water supply authority.

 

    The Appeals Court outlines the claims of the various parties and ruled in a multipart decision, ". . .we hold: First, the district court erred in finding that it had jurisdiction to hear Alabama, SeFPC, and Apalachicola because the Corps has not taken final agency action. The three cases therefore must be remanded to the Corps in order to take a final agency action. Second, the district court and the Corps erred in concluding that water supply was not an authorized purpose of the Buford Project under the RHA [the 1946 Rivers and Harbors Act]. The Corps' denial of Georgia's 2000 water-supply request is therefore not entitled to Chevron deference, and the request must be remanded to the Corps for reconsideration. Third, the district court erred in finding that the 1956 Act, which authorized the Corps to contract with Gwinnett County to withdraw 10 million gallons of water per day, expired after 50 years. Gwinnett County's contractual and just-compensation claims are without merit. Fourth, we also provide certain instructions to the Corps on remand. And finally, the Corps shall have one year to make a final determination of its authority to operate the Buford Project under the RHA and WSA [the 1958 Water Supply Act]."

 

    Access the complete 95-page decision (click here). [*Water, *Drink, *CA11]

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Redevelopment Agency of the City of Stockton v. BNSF Railway Co.

Jun 28: In the U.S. Court of Appeals, Ninth Circuit, Case Nos. 09-16585, 09-16739, & 09-17640. Appealed from the United States District Court for the Eastern District of California. The Appeals Court explains that appellants BNSF Railway Company and Union Pacific Railroad Company (the Railroads) formerly maintained railroad tracks on a parcel of land in Stockton, California, that was contaminated by petroleum. The petroleum was spilled at a nearby industrial site and migrated onto the property via an underground french drain the Railroads had installed in order to remove water from the roadbed. The Appeals Court considered whether the Railroads are liable for the contamination of the property under the law of nuisance or under California's Polanco Redevelopment Act (Polanco Act), Cal. Health & Safety Code § 33459 et. seq. The Appeals Court ruled that the Railroads are not liable.

 

    The Appeals Court said further, "There is no evidence that the Railroads actively or knowingly caused or permitted the contamination as required for nuisance liability and liability under the Polanco Act's Water Code provision. Nor were the Railroads 'owners' of the property under the Polanco Act's CERCLA provision when the contamination occurred. Because the record establishes no genuine issue of material fact as to the Railroads' liability, the Railroads are entitled to summary judgment. Therefore, we need not reach any of the damages issues on appeal or crossappeal. . . We reverse the grant of summary judgment for the Agency on the nuisance and Polanco Act-Water Code provision issues and remand for entry of summary judgment for the Appellants. We affirm the grant of summary judgment to the Appellants on the Polanco Act-CERCLA provision issue. Costs are awarded to the Appellants."

 

    Access the complete opinion (click here). [*Remed, *CA9]

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Roth v. Norfalco LLC

Jun 28: In the U.S. Court of Appeals, Third Circuit, Case No. 10-2524. Appealed from the United States District Court for the Middle District of Pennsylvania. In a brief summary the Appeals Court explains, David Roth was attempting to unload a railway tank car filled with sulfuric acid when its chemical contents exploded, spraying Roth across his face and chest and inflicting severe burns. Roth brought suit, seeking damages for his personal injuries under the common law, but the District Court held that his lawsuit was preempted by the Hazardous Materials Transportation Act (HMTA), 49 U.S.C. §§ 5101–5128. The Appeals Court agreed and affirmed the district court decision. 

    In further explanation, the Appeals Court says, "the statute and its applicability could not be more clear. Roth seeks to impose a tank car design requirement. Section 5125(b)(1) expressly preempts any common law requirement 'about' the design of a 'package, container, or packaging component . . . qualified for use in transporting hazardous materials in commerce.' Roth concedes that Norfalco's tank cars are containers qualified for use in transporting hazardous materials in commerce. Thus, the HMTA plainly encompasses Roth's common law claims. It is irrelevant what Roth was doing at the precise moment of his injury. This only makes sense, for it cannot be the case that the comprehensive design requirements erected by the HMTA cease to govern simply because the tank car was emptied of its contents days after its delivery. The tank car is, at all times, a container qualified for use in transporting hazardous materials. The proposed design requirement is expressly preempted."

 

    Access the complete opinion (click here). [*Haz, *Transport, *CA3]

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Medical Waste Institute v. U.S. EPA

Jun 24: In the U.S. Court of Appeals, D.C. Circuit, Case No. 09-1297. Petitioners Medical Waste Institute and Energy Recovery Council, trade associations representing the medical waste and waste-to-energy industries, respectively, petition for review of a regulation promulgated by U.S. EPA setting performance standards for new and existing hospital/medical/infectious waste incinerators (HMIWI). Petitioners argue that the data set EPA used to establish these standards was flawed, that the Agency's pollutant-by-pollutant approach to setting target emissions levels was impermissible, and that the Agency acted arbitrarily when it removed a provision exempting HMIWI from complying with the standards during periods of startup, shutdown, and malfunction. The EPA counters that the Appeals Court lacks jurisdiction to review the two latter claims, and that the use of the data set was justifiable. The Appeals Court said, "We agree with the EPA and deny the petition for review."

 

    The challenged regulation, titled "Standards of Performance for New Stationary Sources and Emissions Guidelines for Existing Sources: Hospital/Medical/Infectious Waste Incinerators," was issued pursuant to Section 129 of the Clean Air Act (CAA), 42 U.S.C. § 7429. The statute directs the EPA to set required levels of emissions reduction for nine listed air pollutants, as well as for opacity where appropriate. § 7429(a)(4). The statute sets forth the factors EPA is to consider in establishing the standards.

 

    The Appeals Court concluded, "We hold that the EPA's decision to use emissions data from the HMIWI units remaining in operation after the implementation of the 1997 standards, once it determined that the data set upon which it had relied in 1997 was flawed, was reasonable. We do not have jurisdiction to review the challenges to the EPA's long-standing practice of setting emissions floors based on emissions levels achieved by the best performing unit or units for each individual pollutant, and to the agency's removal of an exemption from compliance with emissions limitations during periods of startup, shutdown, and malfunction. The petition is dismissed in part and denied in part."

 

    Access the complete opinion (click here). [*Haz/Medical, *CADC]

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Dairyland Power Cooperative v. United States

Jun 24: In the U.S. Court of Appeals, Federal Circuit, Case No. 2010-5110. The case concerns the Department of Energy's ("DOE's" or "the government's") breach of its obligation to accept spent nuclear fuel from the nation's nuclear power utilities. Liability is not at issue. The parties dispute various aspects of the U.S. Court of Federal Claims' damages award.

 

    As described by the Appeals Court, first, the government contends that the trial court erred in awarding damages based on testimony that absent breach, the plaintiff would have successfully bargained its way to the front of DOE's fuel acceptance queue and would have transferred away all spent nuclear fuel in the first year of performance. Relatedly, Dairyland cross-appeals the amount of damages award, contending that the trial court erred in reducing the damages awarded by the cost of purchasing the exchange. Second, the government argues that the trial court erred in awarding the plaintiff damages to compensate for various indirect overhead costs it claims were caused by the breach. Third, the government contests the trial court's award of plaintiff's investment in an industry consortium to build a private spent fuel storage facility, particularly because, the government points out, plaintiff received significant equity in the venture for its investment. See generally Dairyland Power Coop. v. United States, 90 Fed. Cl. 615 (2009) (Trial Op.).

   

    The Appeals Court explains that the appeal, like a number of others recently before or pending with this court, concerns the government's liability for damages in connection with its failure to develop a permanent solution for the storage of spent nuclear fuel (SNF). From 1967 to 1987, Plaintiff Dairyland Power Cooperative (Dairyland) operated a nuclear power plant in Genoa, Wisconsin called the La Crosse Boiling Water Reactor. The reactor is no longer active, but Dairyland maintains 38 metric tons of spent uranium there in a wet storage pool. The fact that there is SNF stored on-site prevents Dairyland from permanently decommissioning the La Crosse plant.

 

    The Appeals Court ruled, "We hold that the Court of Federal Claims did not commit reversible error in three of these four issues. We therefore affirm the award of damages based on plaintiff's 'exchange' model and the award of indirect costs, as well as the cross-appealed discounting of plaintiff's damages. Regarding the plaintiff's investment in a private venture to build a spent fuel storage facility, we hold that the court was required to only award the cost of that investment to the extent it was made for mitigation, and not as a speculative venture for profit. We vacate the award of damages for the investment in the private fuel storage venture, and we remand for determination of the extent to which the investment was mitigation and the extent (if any) to which it was speculation."

 

    The Appeals Court concludes, ". . .we affirm the Court of Federal Claims' award of damages based on Dairyland's 'exchange' model and its reasoning in awarding overhead and G & A costs. We also affirm its discounting of damages for the cost of the year-one delivery commitment schedules, which Dairyland raised on cross-appeal. We vacate those portions of the award concerning Dairyland's investment in PFS and remand for further proceedings."

   

    Access the complete opinion (click here). [*Haz/Nuclear, CAFed]

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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."

 

    Access the complete opinion (click here). [*Climate, *Air, CA4]

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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."

    Access the complete opinion (click here). [*Remed]

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