Federal Court “Shall” Hear Challenge on EPA’s Failure to Assess Job-Loss Impact of its Rules

EPA-LogoSection 321(a) of the federal Clean Air Act (CAA), titled “Continuous Evaluation of Potential Loss or Shifts of Employment,” states plainly:

The Administrator shall conduct continuing evaluations of potential loss or shifts of employment which may result from the administration or enforcement of the provisions of this chapter and applicable implementation plans, including where appropriate, investigating threatened plant closures or reductions in employment allegedly resulting from such administration or enforcement.

The Environmental Protection Agency (EPA) has long treated this as yet another optional duty, which it may or may not perform at its discretion. Murray Energy Corporation and a number of other coal companies that have suffered substantial job losses due to environmental regulations disagree. The word “shall” in § 321(a), they argue, reflects that Congress required EPA to do this. Last March, these companies filed suit in the Northern District of West Virginia, seeking declaratory and injunctive relief. A June 6 WLF Legal Backgrounder by Vermont Law School Professor Mark Latham and Shook, Hardy & Bacon L.L.P. attorneys Victor Schwartz and Chris Appel, Is EPA Ignoring Clean Air Act Mandate to Analyze Impact of Regulations on Jobs?, described the suit and its arguments.

On September 16, Chief Judge John Preston Bailey rejected EPA’s specious argument that the agency is protected by sovereign immunity and allowed the suit to proceed. The plaintiffs sued under a section of the CAA which permits actions if EPA has failed to perform a non-discretionary duty. The court thus had to determine whether EPA had discretion to ignore § 321(a).

As Chief Judge Bailey noted, courts need not defer to federal agencies’ positions when determining jurisdiction. And Chief Judge Bailey certainly offered no deference. He cited extensive case law that supported Murray Energy’s argument that “shall” reflects a mandatory duty. As one court stated, “The word ‘shall’ does not convey discretion. It is not a leeway word, but a word of command.” EPA argued that § 321(a)’s lack of a “date-certain deadline” renders the provision discretionary. Chief Judge Bailey found that while that issue “was open to question,” relevant precedent dictated that the lack of a deadline was not “fatal to plaintiffs’ case.”  He added, “While EPA may have discretion as to the timing of such evaluations, it does not have the discretion to categorically refuse to conduct any such evaluations.”

In addition, Chief Judge Bailey refused to strike the plaintiffs’ request for injunctive relief.

Given the enormous implications of this case for EPA and for regulated entities, this decision marks, as the saying goes, merely the end of the beginning for Murray Energy Corp. v. McCarthy.

Also published by Forbes.com at WLF’s contributor site

Federal Appeals Courts Reject Clean Water Act “Permit Shield” Defense

sboxermanFeatured Expert Column – Environmental Law and Policy

by Samuel B. Boxerman, Sidley Austin LLP with Katharine Falahee Newman, Sidley Austin LLP

In the past two months, two federal circuit courts examined the extent of the Clean Water Act’s (“CWA”) “permit shield” defense and reached similar conclusions—the defense cannot be used by a party that does not completely fulfil certain National Pollution Discharge Elimination System (NPDES) permit, or permit application, obligations. Permit holders and applicants should be wary of the risk presented by this emerging case law, as the decisions could open the door to increased enforcement, unless an applicant has provided to the permitting authority a wide range of data regarding its discharge during the application process.

Generally, the CWA shields a permit holder from liability if the party possesses or has applied for an NPDES permit through the appropriate federal and state regulatory framework. The permit shield states that “compliance with a permit issued pursuant to this section shall be deemed compliance,” see 33 U.S.C. § 1342(k). The shield protects permit holders from challenges that their permits are not sufficiently stringent as well as actions to compel the permit holder to change its operations following changes to CWA regulations. Continue reading

Fifth Circuit Decides Texas Water Agencies Can Leave Crystal Ball at Home: Aransas Project v. Shaw

Guest Commentary

by John Eisler, a 2014 Judge K.K. Legett Fellow at the Washington Legal Foundation and a student at Texas Tech University School of Law.

Photo by NaturesFan1226

Photo by NaturesFan1226

“[B]ecause of convenience, of public policy, of a rough sense of justice, the law arbitrarily declines to trace a series of events beyond a certain point.”[1] That “certain point” is proximate cause and many times the line drawn can seem arbitrary. Consider last year’s opinion from a U.S. District Court in South Texas that held the Texas Commission on Environmental Quality (TCEQ) liable for “taking” whooping cranes under Section 9 of the Endangered Species Act (ESA). The taking occurred—in the court’s view—from the TCEQ’s failure to “properly manage” the inflows of freshwater into the San Antonio and Guadalupe bays over the winter of 2008-2009.[2] The court acknowledged that “[o]rdinary requirements of causation apply to ESA cases.” The very next sentence concluded that “[p]roximate causation exists where a defendant government agency authorized the activity that caused the take.”[3] Out of a 124-page opinion, that phrase marked the extent of the court’s proximate cause analysis. The court also enjoined the TCEQ from issuing any new water permits in the area until the State could provide “reasonable assurances” the permits would no longer take whooping cranes and ordered the TCEQ to “seek an Incidental Take Permit that will lead to development of a Habitat Conservation Plan.”[4]

The United States Court of Appeals for the Fifth Circuit, in a per curiam opinion, emphatically reversed, concluding, “the district court’s opinion misapplies proximate cause analysis and further, even if proximate cause had been proven, the injunction is an abuse of discretion.” Aransas Project v. Shaw, — F.3d —-, 13-40317, 2014 WL 2932514 (5th Cir. June 30, 2014). The Fifth Circuit’s welcome reversal restores proximate cause to its rightful place.

Continue reading

Seventh Circuit Ruling Exposes Federal Regulators to Public Nuisance Claims

sboxermanFeatured Expert Column – Environmental Law and Policy

by Samuel B. Boxerman, Sidley Austin LLP with Katharine Falahee Newman, Sidley Austin LLP

In recent years, plaintiffs have increasingly asserted public and private nuisance theories in cases seeking damages and remedies to address alleged environmental harms, despite the fact that the defendant was in compliance with relevant federal law—and in particular, the Clean Air Act (CAA). Defendants have opposed these suits on multiple grounds, including arguing the CAA preempts these common law claims. Most prominently, in American Elec. Power Co., Inc. v. Connecticut, 131 S. Ct. 2527 (2011), the Supreme Court held the CAA displaced public nuisance claims under federal common law, but left open the question whether the Act would similarly limit state common law tort claims. Last year, in Bell v. Cheswick Generating Station, 734 F. 3d 188 (3rd Cir. 2013), the U.S. Court of Appeals for the Third Circuit addressed the issue, holding the CAA did not preempt state common law claims of the source state. It now appears that the Sixth Circuit will get into the act, as the district court certified an interlocutory appeal in Merrick v. Diageo Americas Supply, (W.D. Ky. June 12, 2014), where, like Cheswick, the court had held the CAA does not preempt source state common law tort claims.

Recently, a unanimous panel of the Seventh Circuit weighed in on a similar but somewhat different variation on the theme of claims for public and private nuisance in Michigan, et al. v. United States Army Corps of Engineers, et al. (No. 12-3800). There, the court determined that governmental agencies may be subject to public nuisance suits despite maintaining a waterway as authorized by federal statute, but ultimately dismissed the suit after finding that Asian Carp are not an imminent threat to the Great Lakes. Continue reading

EPA’s “Waters of the U.S.” Proposal: Coming Soon to a Back Yard Near You?

 wetlandGuest Commentary

by Scott McFadin, a 2014 Judge K.K. Legett Fellow at the Washington Legal Foundation and a student at Texas Tech School of Law.

On April 21, the Environmental Protection Agency (EPA) and the United States Army Corps of Engineers issued proposed regulations that would increase their regulatory jurisdiction under the Clean Water Act (CWA). The Act gives EPA authority to regulate “waters of the United States.” Over the past two decades, federal courts have (pardon the pun) muddied the waters on agencies’ authority. The most recent Supreme Court pronouncement on federal regulators’ jurisdiction, Rapanos v. U.S., held that the agencies only have jurisdiction over waters or wetlands with a “significant nexus” to traditional navigable waters. EPA has taken advantage of this unclear legal guidance, proposing a stunningly broad definition of “waters of the United States.” EPA claims its definition merely clarifies existing guidance on “waters,” and will in fact reduce the scope of its jurisdictions. When one considers EPA’s own proposed definitional language, testimony from respected trade groups, and social scientists, however, the truly expansive reach of the new rule becomes quite clear. In classic bureaucratic fashion, EPA has proposed a regulation that is long enough to deter it being read and far-reaching enough to arguably provide jurisdiction over a dry ditch in your backyard.

Much like Humpty Dumpty in Through the Looking Glass, EPA is quite masterful at using words in just the way they choose them to mean.1 Continue reading

The Supreme Court’s NOT Top 10: October 2013 Term Cases the Justices Wrongly Passed Over

supreme courtThe Supreme Court press and other court observers have spilled a lot of ink this past month discussing the cases the Supreme Court took and decided during October Term 2013. Relatively little was said about the cases the court chose not to decide—and it passed over some doozies. But as Rush drummer and lyricist Neil Peart put it so eloquently, “If you choose not to decide, you still have made a choice.”

Pro-Business? Journalists like to portray the Roberts Court as particularly business friendly (see, e.g., here , here, and here; but see here), but businesses asked the Court to take plenty of cases this past term that it instead declined. When the Court denies cert in cases of such importance to business at the same time that it has a historically light docket, it can hardly be said to be pro-business. Companies crave legal certainty, so even if the Court took these cases and decided them against business interests, many times simply settling contested questions would be better than leaving them up in the air.

Wanted: More Business Cases. The Court needs to hear more business cases than it currently is, for at least two reasons. First, the unprecedented proliferation of new regulations by this administration has given rise to many more conflicts of the kind that produce Supreme Court cases. Second, to the extent the Clinton-and-Obama-appointee-dominated lower courts are predisposed against business litigants (or, more charitably, deciding close questions consistently against them), businesses will appeal more cases to the Supreme Court when they believe a lower court has denied them justice. Of course the Supreme Court justices take neither of these criteria into consideration when assessing individual cases, but surely these factors matter when assessing whether the Court leans in favor of business in forming its docket. Continue reading

New York Court of Appeals Upholds Local Ordinances Restricting Hydraulic Fracturing

sboxermanFeatured Expert Column – Environmental Law and Policy

by Samuel B. Boxerman, Sidley Austin LLP with Joel F. Visser, Sidley Austin LLP

*Editor’s note: Washington Legal Foundation filed an amicus brief in support of the Petitioners in the case discussed below.

Across the country, companies are using hydraulic fracturing techniques to develop shale oil and gas resources that create jobs and provide for economic growth. However, developers face a determined opposition that is using referenda, court challenges, and municipal ordinances in an effort to stymie development. In a long-awaited ruling issued today in In re: Mark S. Wallach, as Chapter 7 Trustee for Norse Energy Corp. USA v. Town of Dryden, Case No. 130, and Cooperstown Holstein Corp. v. Town of Middlefield, Case No. 131, the New York Court of Appeals gave this round to the opponents of development, finding the towns’ home rule authority gave it the power to ban development unless explicitly preempted by state statute.

The Court affirmed the appellate court decision that the towns’ prohibitions on oil and gas development were valid zoning ordinances and not preempted by New York’s Oil, Gas and Solution Mining Law (“OGSML”). Two judges dissented from the opinion and would have held that the complete prohibitions on oil and gas activities essentially regulated how oil and gas development can occur and are preempted by the OGSML. The Court made clear, however, that its decision did not address the merits of hydraulic fracturing generally and asserted that such decisions involved policy questions that should be left to the coordinate branches of government.

The OGSML’s supersession clause at issue states: “The provisions of this article [i.e., the OGSML] shall supersede all local laws or ordinances relating to the regulation of the oil, gas and solution mining industries; but shall not supersede local government jurisdiction over local roads or the rights of local governments under the real property tax law.” ECL 23-0303(2)). Continue reading