Fishermen's Finest Inc. v. Locke

Jan 19: In the U.S. Court of Appeals, Ninth Circuit, Case No. 08-36024. In this case, Fishermen’s Finest, Inc., North Pacific Fishing, Inc., and U.S. Fishing, LLC, (Fishermen’s) appeal from the district court’s order granting summary judgment in favor of the Secretary of the United States Department of Commerce. Fishermen’s challenges the Secretary’s issuance of a final rule adopting Amendment 85 (A85) to the Fishery Management Plan (FMP) for Groundfish of the Bering Sea and Aleutian Islands Management Area (BSAIMA).

The Government allocates Pacific cod in the BSAIMA among different sectors of the fishing industry. Fishermen’s belongs to the trawl Catcher / Processor (CP) sector. It contends that the most recent allocation, which reduced its share of the Pacific cod fishery, did not comport with applicable law. However, in a split 2-1 decision, the Appeals Court ruled, "We affirm because we agree with the district court that the Secretary did not act arbitrarily and capriciously in adopting Amendment A85."

In its conclusion, the majority ruled, "We are persuaded that the Secretary did not act arbitrarily and capriciously in approving Amendment A85. As we noted in Alliance, '[t]he Secretary is allowed, under [controlling precedent], to sacrifice the interest of some groups of fishermen for the benefit as the Secretary sees it of the fishery as a whole.' 84 F. 3d at 350. Here the interests of Fishermen’s were sacrificed for the benefit of the fishery as a whole, as the Secretary favored sectors that benefitted coastal Alaskan residents, and selected data that would reduce prior unintended favoritism to the non-AFA trawl CP sector, to which Fishermen’s belonged."

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Nebraska Public Power District v. U.S.

Jan 12: In the U.S. Court of Appeals, Federal Circuit, Case No. 07-5083. In this en banc decision, which included concurring opinion and a lone dissenting opinion, the Appeals Court addresses what it called "a difficult question involving the allocation of jurisdiction between regional circuit courts and the Court of Federal Claims." The dispute in centers on the interaction between a provision of the Nuclear Waste Policy Act (NWPA), 42 U.S.C. §§ 10101-10270, and a government contract with a utility company that operates a nuclear power facility.

As explained by the Federal Circuit, the NWPA authorizes the United States Department of Energy (DOE) to enter into contracts with nuclear power producers to dispose of the high-level radioactive waste and spent nuclear fuel produced by nuclear power plants. The statute requires the contracts to provide that in return for the payment of fees by the nuclear power producers, DOE would begin disposing of the spent nuclear fuel and high-level radioactive waste no later than January 31, 1998. 42 U.S.C. § 10222(a)(5)(B). DOE did not begin accepting nuclear waste in 1998.

"Several years later, Nebraska Public Power District (NPPD), which had entered a nuclear waste disposal contract with DOE, filed a breach of contract action in the Court of Federal Claims. A central issue in the breach of contract action was whether prior decisions of the United States Court of Appeals for the District of Columbia Circuit interpreting DOE’s obligations under the NWPA were binding on the parties in the action before the Court of Federal Claims.

The Court of Federal Claims held that the D.C. Circuit’s rulings were void because the D.C. Circuit lacked jurisdiction in the prior statutory review proceedings. Neb. Pub. Power Dist. v. United States, 73 Fed. Cl. 650 (2006). That issue is now before us on interlocutory review. We hold that the D.C. Circuit had jurisdiction to review DOE’s compliance with the NWPA, and that the mandamus order issued by the D.C. Circuit in that proceeding is not void. We therefore reverse the order of the Court of Federal Claims and remand to that court for further proceedings."

The 11-1 majority ruled, "In sum, the D.C. Circuit’s decisions in the Indiana Michigan and Northern States cases were not barred by sovereign immunity and should not have been denied res judicata effect on that ground. We therefore reverse the order of the Court of Federal Claims under review and remand for further proceedings consistent with this opinion."

In a lone dissenting opinion, one Justice indicated, "The issue before the court is a fundamental question of jurisdiction between this court and the D.C. Circuit. If the order in mandamus issued by the D.C. Circuit had interpreted the statutory requirements of the Nuclear Waste Policy Act (NWPA), then it would have been within that court’s jurisdiction. Instead, the D.C. Circuit actually forbids the United States from defending itself in a contract action in the Court of Federal Claims. In my judgment, the order in mandamus is clearly directed to the interpretation of the Standard Contract (not the NWPA) and is thus not only outside the jurisdiction of the D.C. Circuit, but also infringes upon the Court of Federal Claims’s exclusive Tucker Act jurisdiction over the administration of contract disputes, thereby impacting the sovereign immunity of the United States and undermining this court’s duty to review the contract decisions of the Court of Federal Claims. I must therefore dissent from the majority’s judgment. . . I can appreciate the majority’s attempt to avoid criticism of a sister court, but the sheer mushy applesauce consistency of the majority opinion in avoiding a jurisdictional confrontation with the D.C. Circuit should be obvious. On this basis, the trial court’s ultimate holding to void the mandamus was correct and should be affirmed."

According to media reports utilities have filed 71 breach of contract cases in the U.S. Court of Federal Claims and the Department of Energy (DOE) estimates of the government's potential liability is $12.3 billion; but utilities estimates damages at $50 billion. According to media reports utilities have filed 71 breach of contract cases in the U.S. Court of Federal Claims and the Department of Energy (DOE) estimates of the government's potential liability is $12.3 billion; but utilities estimates damages at $50 billion. On December 2, the Government Accountability Office (GAO) released a report entitled, Nuclear Waste Management: Key Attributes, Challenges, and Costs for the Yucca Mountain Repository and Two Potential Alternatives (GAO-10-48, November 04, 2009). The report discusses the options of dealing with the nation's most hazardous substances -- which is accumulating at 80 sites in 35 states. The United States has generated 70,000 metric tons of nuclear waste and is expected to generate 153,000 metric tons by 2055 [See WIMS 12/3/09].

Access the complete opinion (click here). Access a Law.com article (click here).

U.S.A. v. Lexington-Fayette Urban County

Jan 7: In the U.S. Court of Appeals, Sixth Circuit, Case No. 08-6296. The district court in this case refused to approve a proposed settlement of a Clean Water Act suit brought by the United States and the Commonwealth of Kentucky against the Lexington-Fayette Urban County Government. The sticking point was a proposed civil penalty of $425,000 that the district court found could be better directed toward alleviating the conditions that violated the Clean Water Act. The Appeals Court ruled, "Such a concern by itself cannot support rejection of an otherwise proper settlement, in light of the express provision for civil penalties in the Clean Water Act. Remand is therefore required."

According to the opinion, the United States, the Commonwealth, and Lexington ultimately reached a settlement agreement, embodied in a proposed consent decree, that would require Lexington to bring its sanitary and storm sewer systems into compliance with the Clean Water Act at an estimated cost, according to the United States, of $250 million to $300 million. The proposed consent decree also would require Lexington to complete two Supplemental Environmental Projects (estimated to cost $1.23 million) and two Commonwealth environmental projects (estimated to cost $1.50 million) and to pay the United States a $425,000 civil penalty. The parties assert that they negotiated the proposed consent decree in good faith. Although Lexington agreed to the entry of the proposed consent decree “without further notice,” Lexington maintains that its agreement to the terms of the proposed consent decree is neither “an admission of liability” nor “an adjudication or admission of any fact or law.”

The settlement was noticed and eighteen public comments were received; four comments remarked that the $425,000 civil penalty was too high and that the money could be better used to bring Lexington’s sewer systems into compliance with the Clean Water Act. The U.S. responded to comments indicating, "It is customary to include substantial penalties for past non-compliance in consent decrees as an important component of enforcement and to operate as a deterrent to future non-compliance by the defendant and by others. It sends an important message to all municipal dischargers that non-compliance is far from free, and that expeditious efforts to improve [a] system are worth the cost."

The district court ruled, "The Court agrees with the commenters who were concerned that the [civil] penalties were too high and that the penalty money could be better applied to the work required under the Consent Decree. . . Present day taxpayers and sewer services users should not be severely penalized for longstanding neglect on the part of the defendant. A large portion of the penalty money could be better utilized by additional [Supplemental Environmental Projects] or by application of a portion of the penalty money to remedial work required by the Consent Decree." The district court denied the United States’ motion for reconsideration, and the U.S. appealed.

The Appeals Court explained further its remand decision saying, "The only stated basis for the conclusion that the proposed penalty was too high was that the money would be better used by Lexington for remediation of 'longstanding' violations. While this may be so, such a consideration conflicts with the determination of Congress that civil penalties are appropriate in the case of Clean Water Act violations. Rejecting a civil penalty as too high because of the greater seriousness of the violation, or because the penalty money could be used for remediation, is in tension with, rather than in accordance with, the statutory purpose behind civil penalties. In most Clean Water Act cases, the more serious the violation, the more that penalty money could be used for remediation. If Congress thought a violator’s money would be better spent that way, Congress would hardly have provided for civil penalties."

Access the complete opinion and separate concurring opinion (click here).

In re: W.R. Grace & Co.

Dec 31: In the U.S. Court of Appeals, Third Circuit, Case No. 08-3697/3720. In the case, W.R. Grace & Co. (Grace) and the State of Montana appeal an order from the United States District Court for the District of Delaware affirming an order from the District’s Bankruptcy Court denying Grace’s motion to expand a preliminary injunction. The proposed expansion would have enjoined claims against the State of Montana arising from Grace’s mining operations near Libby, Montana. Both the District Court and the Bankruptcy Court determined that the Bankruptcy Court lacked jurisdiction under 28 U.S.C. §§ 1334(b) and 157(a) to expand the injunction to enjoin those claims and, therefore, denied the motion. The Appeals Court agreed and affirmed the lower courts' decisions. This appeal is the fourth to be considered by the Third Circuit from Grace’s ongoing efforts to reorganize under Chapter 11 of the Bankruptcy Code, efforts which began in 2001 when Grace sought shelter from liabilities associated with asbestos litigation.

The Appeals Court said, "In conclusion, our precedent dictates that a federal bankruptcy court does not have related-to jurisdiction over a third-party lawsuit if that lawsuit would affect the bankruptcy proceeding only through the intervention of yet another lawsuit. Grace will not be bound by a judgment against Montana unless there is an additional adjudication. Accordingly, we affirm the judgment of the Bankruptcy Court and the District Court that subject matter jurisdiction does not exist to expand the § 105(a) injunction to include the Montana Actions."

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Raytheon Aircraft Co. v. U.S.

Dec 29: In the U.S. Court of Appeals, Tenth Circuit, Case No. 08-3237. The case involves an appeal from a judgment in favor of the United States in a cost recovery action under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA). At trial, the parties disputed the degree to which each is liable for trichloroethylene (TCE) contamination near Hangar 1 and Hangar 4 at Tri-County Public Airport in Herington, Kansas. The United States Army used the airfield from 1942 to 1945. Raytheon Aircraft Company is a successor to Beech Aircraft Corporation, which operated the airfield during the 1950s. According to the Appeals Court, the United States and Raytheon agree they are the only two potentially liable parties.

Raytheon appealed the district court’s finding that it is solely liable for contamination at Hangar 1, as well as the court’s decision to award the United States costs associated with its attempts to list the site on the National Priorities List (NPL). The Appeals Court affirmed the district court’s decision.

The Appeals Court ruled, ". . .this court concludes Raytheon has failed to rebut the presumption that the EPA’s efforts to list the site on the NPL were consistent with the national contingency plan. Because Raytheon has presented no evidence to support a
determination that the EPA’s actions were arbitrary and capricious, the district court’s judgment must be affirmed."

In developing its decision, the Appeals Court reasoned, "Were this court to adopt Raytheon’s view that the decision to abandon a good faith attempt to list a site on the NPL makes that attempt arbitrary and capricious as a matter of law, the EPA would be forced to continue expending efforts and funds in support of a listing in order to recover its costs, even where the results of the ESI [expanded site inspection] itself ultimately reveal the contamination is not serious enough to warrant the listing. Such a result is untenable."

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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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AES Sparrows Point LNG, LLC v. Wilson (Maryland)

Dec 22: In the U.S. Court of Appeals, Fourth Circuit, Case No. 09-1539. The case involves a petition pursuant to the Natural Gas Act, by AES Sparrows Point LNG, LLC and Mid-Atlantic Express Holdings, LLC (collectively AES) to review the State of Maryland Department of the Environment’s denial of a request for water quality certification pursuant to § 401(a)(1) of the Clean Water Act, with respect to a proposed large-scale liquefied natural gas marine import terminal and pipeline project.

The proposal by AES is to construct and operate a liquefied natural gas (LNG) marine import terminal at Sparrows Point (a heavily industrialized area adjacent to Baltimore Harbor) and an eighty-eight-mile pipeline connecting the terminal to three interstate natural gas pipelines in Eagle, Pennsylvania.

The Appeals Court said in conclusion, "we: (1) hold that Maryland waived any potential claim of sovereign immunity in connection with the present petition for review by expressly consenting to defending, in federal court, its decision to deny AES’s Request for § 401(a)(1) Water Quality Certification; (2) hold that AES has failed to establish any basis for us to disturb the Corps’ determination that Maryland had not waived its right to grant or deny AES’s § 401(a)(1) Certification Request; and (3) deny AES’s petition for review of Maryland’s denial of its§ 401(a)(1) Certification Request on the merits." One of the Judges issued a separate concurring opinion.

Access the complete opinion (click here).