USA v. Citgo Petroleum Corporation

Jul 17: In the U.S. Court of Appeals, Fifth Circuit, Case No. 11-31117. Appealed from the United States District Court for the Western District of Louisiana. The Appeals Court summarizes saying the United States brought suit against Citgo Petroleum Corporation, seeking civil penalties and injunctive relief under the Clean Water Act (CWA). After a bench trial, the district court imposed a $6 million penalty against Citgo and ordered injunctive relief. The United States appeals, arguing the amount of the penalty is inadequate. Citgo cross-appeals, arguing the district court lacked jurisdiction.

 

    The Appeals Court rules, "There is jurisdiction, but we conclude the district court erred in failing to provide a reasonable approximation of economic benefit as required under the CWA and our caselaw. We vacate the civil penalty award and remand for further proceedings."

 

    Significantly, the Appeals Court indicates that, ". . .the district court concluded in less than one page of analysis that Citgo was not grossly negligent." Citing that a district courts' "finding that a party is negligent or grossly negligent is a finding of fact and must stand unless clearly erroneous." Houston Exploration Co. v. Halliburton Energy Servs., Inc., 269 F.3d 528, 531 (5th Cir. 2001). "And saying, "A finding of fact is 'clearly erroneous' when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed." The Appeals Court said, "In our view, though, almost winning a highly risky gamble with the environment does not much affect the egregiousness of having been gambling in the first place."

 

    The Appeals Court rules, "We have acknowledged the need to uphold the district court's findings unless clearly erroneous. We make no ruling on this question now. The category of negligence into which Citgo's conduct is placed is part of the overall analysis underlying the setting of the appropriate penalty. Because of the conclusions we have already set out, the district court will have the obligation on remand to re-analyze the civil penalty award. At that time, the district court should reconsider all its findings with respect to Citgo's conduct, giving special attention to what Citgo knew prior to the oil spill and its delays in addressing recognized deficiencies."

 

    Another issue is that the government contends that district court used of Citgo's estimate of the amount of oil spilled in calculating the penalty. On the question of how much oil was spilled, the district court accepted Citgo's estimation. After evaluating the methods of calculation used by the parties' experts, the court found Citgo's estimate of 54,000 barrels "more reasonable and credible" than the government's higher estimate of 76,800 barrels. The government's argument on this issue is essentially that the court credited the wrong expert.

 

    The Appeals Court cites, "Where there are two permissible views of the evidence, the factfinder's choice between them cannot be clearly erroneous." Bertucci Contracting Corp. v. M/V ANTWERPEN, 465 F.3d 254, 258 (5th Cir. 2006); and says, "Consequently, we reject the government's argument that the district court erred with respect to its findings on the amount of oil spilled.

 

    "The district court's civil penalty is vacated and this case is remanded for further consideration of the statutory penalty factors and its finding of negligence consistent with this opinion."

 

    Access the complete opinion (click here). [#Water, #Remed, #CA5]

Colon-Cabrera v. Esso Standard Oil Company

Jul 17: In the U.S. Court of Appeals, First Circuit, Case No. 11-2477. Appealed from the District Court of Puerto Rico, San Juan. The Appeals Court explains that appellant Manuel Colón Cabrera filed suit against appellee Esso Standard Oil Company under the Resource Conservation and Recovery Act (RCRA), 42 U.S.C. § 6972, seeking to compel Esso to remediate environmental contamination at a gas station he owned. After lengthy proceedings in the district court and in a concurrent action in the Puerto Rico commonwealth courts, Colón Cabrera filed a motion for voluntary dismissal under Federal Rule of Civil Procedure 41(a)(2), stating that the Federal lawsuit was no longer necessary in light of Esso's alleged concession that it would clean up his gas station.

 

    The district court held its ruling on the motion in abeyance while the parties engaged in settlement negotiations. Although it appeared for a time that the parties would be able to resolve the matter, the Negotiations were ultimately unsuccessful. The district court Subsequently granted Colón Cabrera's motion, but chose to dismiss the case with prejudice pursuant to Rule 41(a)(2) and assess attorneys' fees and costs against him.

 

    Colón Cabrera appealed, arguing that the district court abused its discretion in dismissing the case with prejudice. The Appeals Court rules that, "The parties offer different portrayals of the proceedings. . . but the issue that concerns us here is the district court's emphasis on Colón Cabrera's refusal to accept Esso's settlement offers. We conclude that dismissing the case with prejudice based on appellant's refusal to settle was an abuse of discretion. We therefore vacate the dismissal order and remand for further proceedings."

 

    In concluding, the Appeals Court states, "Given our present understanding of the record, we see no justification for dismissal with prejudice. Nevertheless, we owe deference to the district court's familiarity with the litigation and its grasp of all the relevant facts. We therefore remand so that the district court can reconsider the issue with the benefit of our guidance. If on remand the district court concludes that dismissal with prejudice is a proper exercise of its discretion, it should take care to evaluate the appropriate factors fully and provide an explanation of its reasons."

 

    Access the complete opinion (click here). [#Remed, #Haz, #CA1]

Hoosier Environmental Council v. U.S. Army Corps of Engineers

Jul 16: In the U.S. Court of Appeals, Seventh Circuit, Case No. 12-3187. Appealed from the United States District Court for the Southern District of Indiana, Indianapolis Division. The Appeals Court explains that the case involves the scope of the duty imposed on the Army Corps of Engineers by section 404 of the Clean Water Act and its implementing regulations, to protect wetlands that contain or are covered by waters of the United States (and so are within Federal jurisdiction) from environmental degradation by caused by the construction of a highway. Implementing regulations state that a permit will be denied if the Corps finds that there is "a practicable alternative to the proposed discharge which would have less adverse impact on the aquatic ecosystem," or if the discharge "would be contrary to the public interest." The Appeals Court highlights the above words with italics saying they "are the ones critical to this case."

 

    Environmentalists opposed building a highway (Interstate 69 connection) on the direct route from Indianapolis to Evansville on the ground that it would destroy wetlands, disrupt forests, and also disrupt "karst" ecosystems, unusual landscapes permeated by caves and other formations that provide rich habitats for wildlife, including such endangered and threatened species as the Indiana bat (endangered) and the bald eagle (threatened). The Appeals Court indicates that most of the environmental concerns have been resolved, and this case is concerned just with the filling of wetlands and of stream crossings.

 

    Environmental groups object to the choice of the direct route. They argue that the Corps failed to consider whether the direct route as a whole, rather than one section of it, would be in the public interest and whether the indirect route would be a practicable alternative. But the district court found the Corps' analysis adequate to justify the grant of the permit and so awarded summary judgment to the defendants, precipitating this appeal.

 

    The Appeals Court said, "The plaintiffs have not shown that the conclusion the Corps drew from its detailed and highly technical analysis -- that section 3 of the direct route is in the public interest -- was unreasonable. The Appeals Court concludes in affirming the district decision, "Anyway the highway agencies' Environmental Impact Statements had covered most, maybe all, of the ground that a public interest analysis would have covered. The plaintiffs argue neither that the project as a whole is contrary to the public interest nor that it was sectioned in order to prevent consideration of its total environmental harms. . .They may be playing a delay game: make the Corps do a public interest analysis from the ground up (along with an all-at-once six-section permit analysis) in the hope that at least until the analysis is completed there will be no further construction, so that until then the highway will end at the northernmost tip of section 3 -- making it a road to nowhere."

 

    Access the complete opinion (click here). [#Water/Wetlands, #Transportation, #CA7]

Center for Biological Diversity v. U.S. EPA

Jul 12: In the U.S. Court of Appeals, D.C. Circuit, Case No. 11-1101, consolidated with 11-1285, 11-1328, 11-1336. On Petitions for Review of Administrative Action of the Environmental Protection Agency. In a split decision, the majority explains that as part of its ongoing effort to limit the emission of greenhouse gases, U.S. EPA issued a rule deferring regulation of "biogenic" carbon dioxide -- non-fossil-fuel carbon dioxide sources such as ethanol -- for three years. Citing scientific uncertainty over how to account for biogenic carbon dioxide's unique role in the carbon cycle, EPA justified this "Deferral Rule" on the basis of the de minimis, one-step-at-a-time, and administrative necessity doctrines. Several environmental groups petitioned for review, arguing that EPA's invocation of these doctrines was arbitrary and capricious. The majority vacated EPA's Deferral Rule.

 

    The majority indicates that EPA defines biogenic carbon dioxide emissions, as emissions "directly resulting from the combustion or decomposition of biologically-based materials other than fossil fuels and mineral sources of carbon." Deferral for CO2 Emissions from Bioenergy and Other Biogenic Sources Under the Prevention of Significant Deterioration (PSD) and Title V Programs ("Deferral Rule"), 76 Fed. Reg. 43,490, 43,493 (July 20, 2011). Biogenic carbon dioxide emissions are generated from, among other things, "the biological decomposition of waste in landfills, wastewater treatment[,] or manure management processes," "fermentation during ethanol production," and the "combustion of biological material, including all types of wood and wood waste, forest residue, and agricultural material." The majority also indicates that the Deferral Rule contains a sunset provision on July 21, 2014, and it is voluntary, i.e. "Each state may decide if it wishes to adopt the deferral and proceed accordingly." At least one State, Massachusetts, is currently regulating biogenic carbon dioxide sources at Step Two of the Tailoring Rule.

 

    The Center for Biological Diversity and several other environmental organizations now petition for review. The Appeals Court reviews the actions of the EPA to determine whether they are (A) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law; (B) contrary to constitutional right, power, privilege, or immunity; or (C) in excess of statutory jurisdiction, authority, or limitations. The Appeals Court also determines that the case is ripe for review. Because EPA regulates carbon dioxide as an "air pollutant," petitioners contend that the agency has no authority to exempt any sources of carbon dioxide, including biogenic sources, from the PSD permitting program.

 

    The majority quickly rejects EPA's use of the de minimis doctrine saying, "EPA expressly disavows this doctrine, explaining that the Deferral Rule has a three-year sunset provision whereas the de minimis doctrine 'is used to establish permanent exemptions'. . . Given this concession, the Deferral Rule cannot be sustained under the de minimis doctrine. On the "one-step-at-a-time" the majority says, "EPA failed to explain in the Deferral Rule what 'full compliance' with the 'statutory mandate' means. EPA's brief. . . nowhere offers an interpretation of the Clean Air Act that would allow the agency to treat biogenic carbon dioxide sources differently. . . Without a clear answer to that question, EPA has no basis for invoking the one-step-at-a-time doctrine."

 

    Finally, EPA next invokes the "administrative necessity" doctrine, which permits an agency to "avoid implementing a statute . . . by showing that attainment of the statutory objectives is impossible." The majority says, "Without deciding whether the middle-ground option could pass muster under the statute, we agree with petitioners that EPA's rejection of that option was arbitrary and capricious."

 

    The majority concludes, "Because the Deferral Rule cannot be justified under any of the administrative law doctrines relied on by EPA, this opinion, contrary to our dissenting colleague's suggestion. . . leaves for another day the question whether the agency has authority under the Clean Air Act to permanently exempt biogenic carbon dioxide sources from the PSD permitting program. If and when EPA adopts a permanent exemption for some or all biogenic carbon dioxide sources, we will have the benefit of three years of scientific study, as well as fully briefed and contextualized arguments about EPA's authority under the Clean Air Act."

 

    The dissenting Justice said, "I believe EPA can -- and should -- defer regulation until it has the time it says it needs to study and resolve the issue it is charged with regulating. I would therefore uphold the Deferral Rule. Alternatively, given that the Deferral Rule expires or will be superseded in a matter of months -- and by then EPA will have at least crystallized the issue before us -- we should hold the case in abeyance as unripe. Accordingly, I respectfully dissent."

 

    Kevin Bundy, a senior attorney with the Center for Biological Diversity's Climate Law Institute said, "Burning trees to generate electricity is dangerous, polluting, and ought to be limited to protect people and the environment. This important decision will reduce respiratory ailments, protect forests and help ensure a healthier, more livable climate." Ann Weeks, legal director of the Clean Air Task Force, who argued the case for the petitioners and appeared on behalf of the Conservation Law Foundation and the Natural Resource Council of Maine said, "Today's ruling upholds EPA's authority to regulate pollution that drives climate change. The court's decision is grounded in an understanding that the science shows that biomass fuels, including tree-burning, can make climate disruption worse. The court clearly noted that the atmosphere can't tell the difference between fossil fuel carbon dioxide and carbon dioxide emitted by burning trees." Niel Lawrence, senior attorney at the Natural Resources Defense Council said, "The science is clear that not all biomass burning is good for the planet and today's ruling rightly affirms science as the guide for how EPA must now move forward on biomass energy production. This decision will ultimately benefit the climate, as well as Americans who want to breathe easier and protect the forests that they love. It will also ensure that our investments in clean energy go to sources that are actually clean."

 

    Access the complete majority opinion, separate concurrence and dissent (click here). Access a release from environmental groups (click here). [#Climate, #Air, #CADC]

GenOn REMA LLC v. U.S. EPA

Jul 12: In the U.S. Court of Appeals, Third Circuit, Case No. 12-1022. On Petition for Review of Final Agency Action of the United States Environmental Protection Agency (EPA-HQ-OAR-2011-0081). The Appeals Court explains that Portland Generating Station (Portland‖) is a 427-megawatt, coal-fired, electricity generating plant located in Upper Mount Bethel Township in Northampton County, Pennsylvania. Portland is directly across the Delaware River within 500 feet of Knowlton Township in Warren County, New Jersey. The EPA has found that Portland emits sulfur dioxide in amounts that significantly interfere with the control of air pollution across state borders. Sulfur dioxide is a toxic air pollutant that endangers life and health, causing burning of the nose and throat, difficulty breathing, and obstruction of the lungs and airways. Because of its location, Portland's sulfur dioxide emissions travel directly across the river into areas of New Jersey. In response to a petition under the Clean Air Act, the EPA issued a rule imposing direct limits on Portland's emissions and a schedule of restrictions to reduce its contribution to air pollution within three years. GenOn REMA, LLC (GenOn‖), the owner and operator of Portland, challenges the EPA's rule as inconsistent with the agency's authority under the Clean Air Act and as arbitrary and capricious. The Appeals Court upholds the EPA rule and denies GenOn's petition for review.

    In its conclusion the Appeals Court rules, ". . .we will uphold the EPA's Portland Rule and deny the petition for review. We hold that it was reasonable for the EPA to interpret Section 126(b) to be an independent mechanism for enforcing interstate pollution control, thereby giving it authority to promulgate the Portland Rule. We also hold that the contents of the Portland Rule are not arbitrary, capricious, or abusive of the EPA's discretion."

    Access the complete opinion (click here). [#Air, #CA3]

Waldburger v. CTS Corporation

Jul 10: In the U.S. Court of Appeals, Fourth Circuit, Case No. 12-1290. Appealed from the United States District Court for the Western District of North Carolina, at Asheville. In this split decision, the majority explains that in 2009, Appellants David Bradley and Renee Richardson received unwelcome news: Their well water contained concentrated levels of trichloroethylene (TCE) and cis-1,2-dichloroethane (DCE), both solvents that have carcinogenic effects. Not surprisingly, Bradley and Richardson, and twenty-three other landowners (collectively, the landowners), brought a nuisance action against Appellee CTS Corporation (CTS), the alleged perpetrator. Concluding that North Carolina's ten-year limitation on the accrual of real property claims barred the suit, the district court granted CTS's Rule 12(b)(6) motion to dismiss.

 

    The Appeals Court said, "Having reviewed the dismissal de novo, assuming that the facts stated in the complaint are true, Lambeth v. Bd. of Comm'rs, 407 F.3d 266, 268 (4th Cir. 2005), we hold that the discovery rule articulated in § 9658 of the Comprehensive Environmental Response, Liability, and Compensation Act (CERCLA), 42 U.S.C. §§ 9601-9675, preempts North Carolina's ten-year limitation. Thus, we reverse and remand."

 

    The majority says further, "Our decision here will likely raise the ire of corporations and other entities that wish to rest in the security of statutes of repose, free from the threat of being called to account for their contaminating acts. They likely will cite the well-known policies underlying such statutes and asseverate that we have ignored them. But we are not ignorant of these policies, nor have we turned a blind eye to their importance. . . Accordingly, we reaffirm our conclusion that North Carolina's ten-year limitation on the accrual of actions is preempted by § 9658 of CERCLA. In so holding, we simply further Congress's intent that victims of toxic waste not be hindered in their attempts to hold accountable those who have strewn such waste on their land. For the foregoing reasons, we reverse the district court's order and remand the case so that the litigation can proceed."

    In a lengthy dissenting opinion, one Justice indicates, "The majority essentially concludes § 9658 preempts two categories of state statutes: statutes of limitations and statutes of repose. However, in my view the plain and unambiguous language of § 9658 indicates only statutes of limitations were intended to be preempted. Even if the preemptive effect of § 9658 were susceptible to two interpretations, a presumption against preemption would counsel that we should limit § 9658's preemptive reach to statutes of limitations without also extending it to statutes of repose."

 

    On this subject, the majority indicates, ". . .we join the view articulated by the Ninth Circuit in McDonald v. Sun, in which the plaintiffs found themselves in circumstances remarkably similar to those of the landowners in this case. See 548 F.3d at 777-78, 783 ('[G]iven the ambiguity of the term "statute of limitations at the time of the adoption of § [9658], taken alongside the only evidence of Congressional intent, it is evident that the term 'statute of limitations' in § [9658] was intended by Congress to include statutes of repose.'). Although the Fifth Circuit delineated an opposing view in Burlington Northern & Sante Fe Railway Co. v. Poole Chemical Co., 419 F.3d 355 (5th Cir. 2005), we are unpersuaded by its reasoning. . ."

 

    Access the complete opinion and dissent (click here). [#Remed, #CA4]

Lockheed Martin Corp. v. Goodyear Tire & Rubber Co.

Jul 9: In the U.S. Court of Appeals, Sixth Circuit, Case No. 12-4108. An unpublished opinion that does not set precedent. Appealed from the U.S. District Court for the Northern District of Ohio at Akron. Lockheed Martin Corporation appeals the district court's grant of summary judgment in favor of Goodyear Tire & Rubber Company. Lockheed sued Goodyear under Federal and State law seeking to recover costs spent in the environmental cleanup of a facility known as the Airdock. The Appeals Court affirmed the district court decision.

    On March 13, 1987, Goodyear and GAC [Goodyear Aerospace Corporation] entered into a written agreement with Loral Corporation, under which Loral agreed to buy all of GAC's assets and assume all of GAC's liabilities (the "Asset Purchase Agreement"). Although Goodyear, rather than GAC, held legal title to the Airdock, Goodyear transferred it to Loral pursuant to the Agreement. Ten years later, Loral merged with Lockheed, and Lockheed became the Airdock's owner.

 

    In partial summation, the Appeals Court said, "In sum, the terms of the Asset Purchase Agreement show that the parties viewed the Airdock as an 'asset[] . . . of GAC' under § 2.1, which means that any liability associated with the Airdock was a 'liabilit[y] of GAC' under § 2.2. The Agreement therefore transferred Goodyear's liability for cleaning up the Airdock to Loral." Additionally, the Appeals Court said, "After selling the Airdock, Goodyear did not cause or contribute to the release of any PCBs upon Haley's Ditch. Thus, Goodyear is not liable for the costs of cleaning up Haley's Ditch under Ohio law."

 

    Access the complete unpublished opinion (click here). [#Remed, #CA6]

 

GET THE REST OF TODAY'S NEWS

Access subscription information (click here)

Want to know more about WIMS? Check out our LinkedIn company website (click here).

33 Years of Environmental Reporting for serious Environmental Professionals