MacClarence v. EPA

Mar 4: In the U.S. Court of Appeals, Ninth Circuit, Case No. 07-72756. Bill MacClarence petitioned the court for a review of an order the U.S. EPA Administrator denying his request that the Agency object to the issuance of a Clean

Air Act Title V permit for pollutant-emitting activities at Gathering Center #1 (GC 1), an oil and gas processing facility in Prudhoe Bay. The Alaska Department of Environmental Conservation's (ADEC) granted the permit to British Petroleum Exploration (Alaska), Inc.'s (BP), which owns GC 1. The Appeals Court said that because the Administrator's denial of MacClarence's request "was not arbitrary or capricious, we deny the petition."

 

    By way of background, the Prudhoe Bay Unit (PBU) is located on the North Slope of Alaska and extends over 300 square miles. It consists of a series of oil and gas facilities, including thirty-eight drill sites or "well pads" and six production centers, as well as support facilities for PBU workers. GC 1 is one of the six production facilities at the PBU. BP owns approximately 26.35% to 50.7% of the facilities at the PBU, including GC 1, and operates all of the PBU facilities pursuant to an agreement with the other owners. The PBU facilities are engaged in a continuum of oil and gas refining activities, from drilling to sale. Well pads in the PBU pump "three-phase" crude oil from the tundra beneath the PBU facilities. This oil is transferred to the production centers, including GC 1, where it is separated into processed crude oil, water, and hydrocarbon gases. The processed crude oil is pumped from the production centers to the Trans-Alaska Pipeline for sale, while other facilities at the PBU dispose of or re-inject the by-products of the production process.

 

    MacClarence argues that the permit did not comply with the CAA because ADEC, in the final draft permit for GC 1, had not properly "aggregated" stationary sources of air pollution in the PBU. The Appeals Court indicates, "As the record for this case reveals, the aggregation of pollutant-emitting activities for the purposes of designating a "major source" or "major stationary source" is not a clear-cut task. Under the governing regulations, however, determinations regarding 'major sources' for purposes of issuing Title V permits and 'major stationary sources' for purposes of meeting PSD requirements involve the same analysis; the aggregated sources must belong to the same industrial grouping, be located on continuous or adjacent properties, and be under common control."

 

    The Appeals Court says in its ruling that "we do not decide whether MacClarence's substantive argument -- that the CAA requires all pollutant-emitting sources in the PBU to be aggregated for purposes of Title V and other substantive CAA provisions -- is correct. Rather, we consider only whether the EPA Administrator erred in determining that MacClarence failed to demonstrate, pursuant to 42 U.S.C. § 7661d(b)(2), that the final Title V permit for GC 1 did not comply with the CAA.

 

    The Appeals Court indicates that, in denying MacClarence's request, the Administrator reasoned that MacClarence (1) "failed to provide adequate information to support his claim that the entire PBU should be aggregated," and (2) "failed to demonstrate that the failure to aggregate all facilities within the PBU has led to a deficiency in the content of the permit." Therefore, the Appeals Court rules, "Because we conclude that we may properly uphold the Administrator's denial of MacClarence's petition on the basis of the first ground, we need not reach the second. . . the Administrator's conclusion that MacClarence "failed to provide adequate information to support his claim that the entire PBU should be aggregated" was not arbitrary or capricious. . .

 

    "Therefore, we conclude that the Administrator's determination that MacClarence did not demonstrate that the entire PBU should be aggregated did not constitute an impermissible interpretation of MacClarence's burden under 42 U.S.C. § 7661d(b)(2), to 'demonstrate' that ADEC's final Title V permit for BP's GC 1 did not comply with the CAA, nor was it arbitrary or capricious."

 

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David L. Lewis v. U.S. Department of Labor

Feb 24: In the U.S. Court of Appeals, Eleventh Circuit, Case No. 08-12114. In this unpublished opinion, Dr. David Lewis petitioned the court for review of the final order of the U.S. Department of Labor Administrative Review Board (ARB) denying his whistleblower complaints against his employer, the U.S. EPA, brought pursuant to the employee protection provisions of the Clean Air Act (CAA); the Safe Drinking Water Act (SDWA); the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA); the Toxic Substances Control Act (TSCA); the Federal Water Pollution Prevention and Control Act (FWPPCA); and the Solid Waste Disposal Act (SWDA).

 

    The case involves a dispute between two EPA employees regarding EPA's Rule 503 [See 40 C.F.R. § 503.1 (2009)] relating to the land application of biosolids. Lewis became concerned that heavy metals in sludge may be adverse to the public health and that the effects of pathogens in the sludge were not adequately investigated during the Rule 503 peer review process. The Appeals Court affirmed the ARB decision denying the complaints.

 

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Niagara Mohawk Power Assn. v. Chevron U.S.A., Inc.

Feb 24: In the U.S. Court of Appeals, Second Circuit, Case No. 08-3843. As explained by the Appeals Court, Niagara Mohawk Power Corporation (NiMo) commenced this action to recover costs pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), and the Superfund Amendments and Reauthorization Act of 1986 (SARA) from the defendants for cleanup of properties previously owned by NiMo and once either owned, leased, or used by the defendants. In the appeal, NiMo challenges orders of the United States District Court for the Northern District of New York which denied NiMo's motion for summary judgment, granting summary judgment in favor of the defendants, and denying NiMo's motion for reconsideration.

 

    We are called upon to determine whether NiMo, as a potentially responsible party under CERCLA, can seek response and cleanup costs under either § 107(a)(4)(B) or § 113(f)(3)(B), after having settled its CERCLA liability with the New York State Department of Environmental Conservation (DEC) but not with the Environmental Protection Agency (EPA), where the EPA has not expressly authorized the DEC to settle CERCLA liability relating to the property at issue.

 

    The Appeals Court said, "We hold that NiMo may seek contribution costs under § 113(f)(3)(B) because NiMo has settled with the DEC, but consequently NiMo may not seek reimbursement for response costs under § 107(a). We hold that the district court erred in granting summary judgment for the defendants because there are genuine issues of material fact with regards to their respective liabilities.

 

    Additionally, the Appeals Court ruled, "We hold that the district court erred by holding that NiMo did not comply with the National Contingency Plan. We hold that the district court erred in part by dismissing NiMo's New York Navigation Law claims. Finally, we hold that the district court erred in dismissing Chevron's third party action against the County of Rensselaer and others. We affirm, however, the district court's dismissal of NiMo's state contribution, indemnity, and unjust enrichment claims because they are preempted by CERCLA."

 

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Gintis v. Bouchard Transportation Co.

Feb 23: In the U.S. Court Appeals, First Circuit, Case No. 09-1717. In this case, a fuel barge owned and operated by defendants discharged a substantial amount of oil into the waters of Buzzards Bay in southeastern Massachusetts. Plaintiffs are owners of residential waterfront property on the bay who brought suit as individuals and as members of a proposed class. The district court denied class certification, but the Appeals Court said, ". . .because the court did not subject the parties' contentions to the plenary analysis that precedent requires, we vacate the judgment and remand."

 

    The  Appeals Court provided more detail and said, "It is enough to say here that Bouchard's arguments in this appeal appear to show that substantial and serious common issues would arise over and over in potential individual cases. Indeed, the only apparent mitigation of this prospect of duplicative litigation lies in the possibility that not many individual actions would be brought if separate actions were the only course, and this implicates the second condition for certification under paragraph (3), that class litigation be

superior to a string of individual plaintiffs going alone. While superiority is a separate base to be touched, it is addressed by many of the considerations that inform a trial court's judgment call about how clearly predominant the common issues must be. . .

 

    Here there is evidence that may well go to the very reason for Rule 23(b)(3), mentioned before (i.e., to make room for claims that plaintiffs could never afford to press one by one), since the record contains one estimate that potential individual recoveries are probably in the $12 to $39 thousand range. Given the elements of injury, causation and compensation on which Bouchard intends to join issue, there is a real question whether the putative class members could sensibly litigate on their own for these amounts of damages, especially with the prospect of expert testimony required. Like predominance, the issue of superiority is thus a serious one in these circumstances and should be addressed thoroughly."

 

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Precision Pine & Timber, Inc. v. US

Feb 19: In the U.S. Court of Appeals, Federal Circuit, Case No. 08-5092. The Appeals Court explains that this is a government contract case, "We must decide whether the federal government's suspension of fourteen contracts breached any express or implied warranties." These fourteen contracts are between the U.S. Forest Service and Precision Pine & Timber, Inc. (Precision Pine), and provide for timber harvesting in Forest Service Region 3, which covers Arizona's national forests. In August 1995, the Forest Service suspended the contracts pursuant to a court order. The order prohibited further timber harvesting in that region until the Forest Service consulted with the U.S Fish and Wildlife Service about the pertinent land resource management plans. The order explained that such consultation was required under § 7 of the Endangered Species Act, due to the recent listing of the Mexican spotted owl as an endangered species. The fourteen contracts remained suspended until completion of the consultation process in December 1996.

    Precision Pine subsequently brought the suit in the U.S. Court of Federal Claims, alleging that suspension of the contracts breached both express and implied warranties. The trial court agreed with Precision Pine. On liability, it granted summary judgment in favor of Precision Pine, concluding that the government breached both an express contractual warranty and the implied duty of good faith and fair dealing. (Precision Pine I or liability decision). Following this decision, the case was transferred to a different judge for the sole purpose of adjudicating damages. After five years of discovery, a twenty-four day bench trial, and extensive supplemental briefing, the trial court awarded $3,343,712 in damages to Precision Pine (Precision Pine V or preliminary damages decision). The United States then appealed the liability determination and damages award. The Appeals Court reversed the lower court decision.

    Although the contract dates and terms differ slightly, the Appeals Court said "for our purposes the issues posed are the same." The Appeals Court said, "Seven of the contracts present the question of whether a particular clause (CT 6.25) created an express warranty and, if so, whether it was breached. If CT 6.25 did create an express warranty, then we must also decide whether the government breached its implied duty to cooperate as to those contracts. For eleven of the contracts, we must also decide whether the United States breached its implied duty not to hinder. We conclude that the answer to each of these questions is no. Clause CT 6.25 of the contracts did not create an express warranty, and the Forest Service's actions did not breach any implied duty to cooperate or not to hinder. Accordingly, we reverse the trial court's liability decision and vacate the damages award for all contracts, except the Hay contract. Because the government concedes it lacked authority to suspend the Hay contract, we remand for further proceedings as to that contract. For the other thirteen contracts, the trial court should enter judgment for the United States."

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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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