Cross-posted at Forbes.com’s WLF contributor page
Washington Legal Foundation, along with other organizations, business, and individuals with an interest in the Supreme Court and free enterprise cases before it, watched with great anticipation this morning as the justices issued their first new list of certiorari grants since the Court adjourned last June (the so-called Long Conference). We came away from the big cert grant morning, as likely did many other interested parties, wanting more.
The orders list is here. The grants include a tax case, United States v. Quality Stores addressing whether severance payments made to employees whose employment was involuntarily terminated are taxable. Two other grants relate to the standard of review the U.S. Court of Appeals for the Federal Circuit uses when assessing a district court’s determination that a case is “exceptional” for purposes of imposing attorneys’ fees and other sanctions. Those cases are Octane Fitness v. Icon Health and Fitness and Highmark Inc. v. Allcare Management Systems Inc.
The final cert grant impacting free enterprise is Petrella v. MGM, which involves the movie Raging Bull and the defense of laches against claims of copyright infringement. Marcia Coyle at National Law Journal discussed the interesting facts of the case in a September 16 story.
The bigger story from the big cert grant morning was which petitions the Court did not act on. WLF filed amicus briefs in support of review in a number of the cases, which we’ll indicate below (all noted on SCOTUSblog’s “Petitions we Are Watching” page).
Failure to act on these and other petitions does not mean that the Court cannot reconsider them in a future “conference,” and it does not mean that they have been denied. The Court will be issuing an order list on First Monday, October 7, but that order traditionally has only contained cert denials.
On September 13, Washington Legal Foundation released a Legal Backgrounder authored by three senior officials from the state of West Virginia: Patrick Morrisey, Attorney General; Randy Huffman, Cabinet Secretary of the West Virginia Department of Environmental Protection; and Elbert Lin, the state’s Solicitor General.
The paper, Last Call For Cooperative Federalism? Why EPA Must Withdraw SIP Call Proposal On Startup, Shutdown & Maintenance, focuses on a proposed Environmental Protection Agency rule which impacts 36 states’ implementation of the federal Clean Air Act. This proposed rule, as the authors explain, reflects two troubling EPA practices: 1) the agency’s retreat from working cooperatively with state environmental regulators and 2) the revision of existing rules or the imposition of new requirements through the settlement of lawsuits brought by private activist groups (aka, “sue and settle”).
The proposed rule involves state regulations that impact emissions occurring during power plant startup, shutdown, and maintenance (“SSM”). Even though EPA formally acknowledges that during SSM, conditions arise that are beyond the plant operators’ control, the proposed rule claims that those 36 states’ rules inadequately address these “excess emissions.” The rule issues what’s known as a “SIP call” (SIP=State Implementation Plan) even though, General Morrisey and his co-authors write, “EPA has not identified any [air quality] violation resulting from an SSM provision in West Virginia’s or any state’s SIP.” The paper goes on to make a compelling legal case why the proposed rule is an unlawful exercise of EPA authority.
The proposal attracted a substantial number of comments, some of which were from state attorneys general and environmental regulators criticizing EPA’s departure from cooperative federalism and its embrace of rulemaking through litigation settlement. West Virginia’s comment can be seen here.
EPA’s sue and settle tactics have been the subject of a recent WLF publication as well as Legal Pulse commentary. In addition, thirteen state attorneys general filed suit against EPA in the Western District of Oklahoma on July 16 seeking information on agency settlements of activist groups’ lawsuits. EPA rejected a February 6 Freedom of Information Act request the attorneys general filed for information on contacts EPA has had with specific activist groups on a specific state-implemented regulation.
In an April Featured Expert Contributor post, Appeals Court Rejects EPA Effort to Avoid Judicial Review Through Guidance Documents, Hunton & Williams’ Allison Wood examined a U.S. Court of Appeals For the Eighth Circuit decision, Iowa League of Cities v. EPA. The court ruled that EPA violated the Administrative Procedures Act when it changed two policies for regulating municipal wastewater treatment plants through letters sent to Senator Charles Grassley. Such changes constituted “rules” for which EPA should have engaged in formal notice and comment rulemaking.
In a July 30 order, the court ordered EPA to pay Iowa League of Cities $526,138.41 in attorneys’ fees. The Eighth Circuit panel had initially rejected the League’s request for fees under Clean Water Act Section 509(b)(3) . The League filed a Petition for Partial Rehearing, which EPA opposed.
The court agreed that the League was a “prevailing party” under the Clean Water Act, and that the lawsuit
assisted in the proper implementation of the CWA by upholding ‘the policy of Congress to recognize, preserve, and protect the primary responsibilities and rights of States to prevent, reduce, and eliminate pollution’ and by ensuring public participation in the development of effluent limitations.
We’re pleased to see that the cost, and the risk, of avoiding public accountability have just gone up for EPA and other federal agencies.
Northwest Forest Plan
Cross-posted at WLF’s Forbes.com contributor page
Complying with notice-and-comment and other due process requirements is expensive and time-consuming for federal agencies. Those procedural duties also make agencies accountable to the public and regulated entities. So it’s no surprise that regulators avoid formal rulemaking like the plague. As we’ve spotlighted at The Legal Pulse, agencies instead issue “guidance” documents or utilize even more perversely creative tactics, such as setting new standards by replying to a U.S. Senator’s inquiry letter. Another evasive maneuver which has drawn the ire of not only affected businesses, but also state attorneys general and Members of Congress, is “sue-and-settle.”
Please Sue Us. Special interest groups, especially those with environmental-oriented missions, routinely sue federal agencies to compel actions, especially in situations where the regulators have missed deadlines, or, for political or other reasons, have stopped short of the most rigorous approach. The agencies are presented with an offer they can’t (and often don’t want to) resist: settle the citizen’s suit in a way that implements new mandates (and expands agency authority) without public input.
Judicial Rejection: Conservation Northwest v. Sherman. As noted above, elected officials are expressing their concern with this and seeking remedies (a bit on that below). In the meantime, however, an April 25 U.S. Court of Appeals for the Ninth Circuit decision reflects that judges can and should very closely scrutinize any friendly settlements between federal agencies and activists. In 2007, a throng of environmental groups sued the Bureau of Land Management (BLM) for attempting to eliminate a costly and complex surveying mandate from the management of the Northwest Forest Plan (a land use agreement arising from the 1990s’ spotted owl litigation wars). Continue reading
Featured Expert Column
Allison D. Wood, Hunton & Williams LLP
Guidance documents and letters setting forth so-called “agency-policy” present unique challenges to industry, particularly in the context of permitting. Rather than undergo notice-and-comment rulemaking, which would be subject to judicial review, EPA has instead developed a practice of issuing “guidance”–often in the form of memoranda–that set forth requirements that EPA expects states and EPA regions to follow in issuing permits. The dilemma arises because courts often find that these documents cannot be challenged, and a permit applicant then faces an unpleasant choice: agree to permit conditions that may not be required by law to obtain the permit, or have the permit application denied and head into uncertain and expensive litigation. When the permit is critical for business operations, this really presents a Hobson’s Choice and almost all permit applicants capitulate and accept the terms.
The U.S. Court of Appeals for the Eighth Circuit recently offered some relief to those seeking to challenge guidance documents. In Iowa League of Cities v. EPA, some cities that owned wastewater treatment facilities challenged two EPA letters that responded to inquiries by Senator Charles Grassley about certain Clean Water Act (CWA) requirements for wastewater treatment facilities involving “bacteria mixing zones” and “blending.” The cities contended that EPA’s letters were new rules promulgated without notice-and-comment rulemaking in violation of the Administrative Procedure Act. EPA countered that the letters were merely agency guidance which the court lacked jurisdiction to review.
The court began by examining whether EPA’s act of sending the letters could be considered a “promulgation” of a rule under the CWA. The court adopted the three factor test set forth in Molycorp, Inc. v. EPA, 197 F.3d 543, 545 (D.C. Cir. 1999), for determining whether an agency action constitutes promulgation of a regulation: “(1) the Agency’s own characterization of the action; (2) whether the action was published in the Federal Register . . . .; and (3) whether the action has binding effects on private parties or the agency.” The court said that the third factor “should be the touchstone of our analysis,” because “plac[ing] any great weight on the first two . . . factors potentially could permit an agency to disguise its promulgations through superficial formality, regardless of the brute force of reality.” Continue reading
Cross-posted at WLF’s Forbes.com contributor site
The U.S. Court of Appeals for the Ninth Circuit has certainly earned its reputation as a circuit willing to push out the boundaries of environmental laws and regulations. Consider its June 1, 2012 en banc ruling in Karuk Tribe of Ca. v. U.S. Forest Service, where seven of the sitting eleven judges held that the Forest Service’s decision not to regulate low-level mining activity on public lands constituted an action under the Endangered Species Act, requiring the Service to consult with the Fish and Wildlife Service. In a dissent joined by three other judges, Judge Milan Smith began his opinion with an image and quote from Gulliver’s Travels, and wrote “decisions such as this one, and some other environmental cases recently handed down by our court undermine the rule of law, and make poor Gulliver’s situation seem fortunate.” On March 19, the Supreme Court regrettably denied review in Karuk Tribe.
We must, however, give the Ninth Circuit credit on its environmental rulings when it is due, and it’s earned some accolades with its April 3 Ecological Rights Foundation v. Pacific Gas & Elec. ruling. And despite the “citizen’s group” plaintiff’s loss, the decision is one that on this Earth Day, environmental advocates should be applauding as well.
The plaintiffs sued under the citizen suit provisions of the Clean Water Act (CWA) and the Resource Conversation and Recovery Act (RCRA), alleging that poles treated with pentachlorophenol (PCP) contributed “solid waste” to waters of the United States through stormwater runoff. In other words, when it rains, PCP washes off of the poles and enters various bodies of water. As the court noted, EPA has not decided whether to regulate utility poles as “point sources” of pollution under the CWA. Reviewing applicable judicial precedents, the 9th Circuit panel concluded that because neither the poles themselves nor their owners channel or collect the runoff, the plaintiffs had no claim under the CWA. Continue reading
As we’ve mentioned before, the EPA has been stepping up its focus on “environmental justice.” Recent evidence of EPA’s methods of EJ advocacy came with the quiet release of a draft policy paper concerning their enforcement of Title VI Civil Rights Act violations, entitled “Adversity and Compliance with Environmental Health-Based Thresholds.” (“Paper”) WLF has serious concerns regarding both the wisdom and propriety of the draft policy paper and has submitted comments urging its withdrawal.
As we outline in our comments, the proposed change in the method by which EPA will measure “adversity” is highly significant, yet the Paper fails to provide any meaningful explanation regarding why the change is being proposed. A persistent criticism among stakeholders regarding EPA enforcement of its Title VI regulations has been the agency’s failure to provide clear guidance regarding how it intends to carry out its enforcement responsibilities. Such guidance is necessary so that state regulators and targeted industries can take steps to ensure that they conform to the regulations.
Here’s a point-by-point summary of WLF’s comments:
The Draft Policy Paper on Adversity Is a Step in the Wrong Direction
- The Paper reduces the level of guidance when what is needed is more predictability
- The Paper does not reduce uncertainty among stakeholders by addressing what constitutes “significant adverse impact” or “significant disparate impact”
- The Paper proposes the elimination of the 2000 Draft Investigation Guidance’s NAAQS rebuttable presumption, the result of which would be increases in uncertainty by depriving stakeholders of the ability to predict in advance when environmental effects will be deemed “adverse”
- Proposed changes would only serve to put a thumb on the scale in favor of those raising Title VI challenges
The Draft Policy Paper Is Inconsistent with the Title VI Regulations
- The Paper focuses solely on recipients’ actual decisions to issue permits, rather than the “criteria or methods” associated with such decisions as is outlined by Title VI
- If EPA’s Office of Civil Rights is to be given authority to review permit decisions for disparate impact, then it must be done through changes to Title VI or EPA’s implementation of regulations
EPA Has Not Adhered to the APA’s Notice-and-Comment Requirements
- All proposed rules must be published in the Federal Registrar in accordance with APA standards
- The Paper is a proposed “rule” and not an “interpretive rule” because it seeks to eliminate an existing rule as well as expand the agency’s regulatory footprint
The Invalidity of Disparate Impact Regulations
- The Paper does not appreciate the substantial changes in judicial understanding of Title VI since EPA’s 2000 draft proposal
- Alexander v Sandoval and other decisions have held that Title VI regulations concerning disparate impacts are forbidden
- EPA should narrow, not broaden as the Paper proposes, the scope of their 2000 Draft Investigation Guidance in light of such developments
Photo from EPA’s “Plan EJ 2014 Progress Report”, page 14
Cross-posted at WLF’s Forbes.com contributor page
The Environmental Protection Agency has not been shy in its embrace and promotion of the “environmental justice” (EJ) movement. “Working for Environmental Justice” was one of seven priorities on EPA’s regulatory agenda last year. And its February “Plan EJ 2014 Progress Report,” full of loaded terms like “overburdened communities” and interspersed with photos like this one, reflects an “us vs. them” view of policy making and law enforcement, one that favors confrontation over seeking collaborative solutions. But EPA knows that reports and rhetoric alone won’t achieve “justice.” The Progress Report noted two proposed policy changes at EPA’s Office of Civil Rights, one of which could empower EPA to overturn state-level emissions permits that otherwise fully comply with federal law.
Disparate Impact Theory Background. During the 1990s, EPA adopted a very aggressive interpretation of a provision of the 1964 Civil Rights Act which applied to state use of federal funds, Title VI. State environmental regulators, to whom EPA delegates federal emissions permitting authority, could be accused of discrimination if the permits had a negative, disparate impact on “overburdened communities.” EPA formalized this theory into a “draft guidance” and EJ activists soon began filing Title VI complaints with the agency’s Office of Civil Rights. At the time, WLF, as well as others, argued that EPA lacked such authority and failed to follow administrative procedures.
EPA’s first ruling on a Title VI complaint in 1998 was quite pivotal. The agency presumed that no “adverse effect” (a key element in proving disparate impact) on minority or ethnic populations existed if the permitted entity (there, a steel mill in Michigan) would be in full compliance with the permit’s emissions limit. The EJ activists could not overcome that presumption, and EPA dismissed the complaint. EPA formalized that presumption in 2000 in a new draft guidance on Title VI complaints. Rebuffed by EPA, EJ activists tried to bring disparate impact lawsuits directly against state regulators, but courts ultimately ruled that no private right of action existed in Title VI. Continue reading
Cross-posted at WLF’s Forbes.com contributor page
“We aren’t convinced Congress meant for the EPA to . . . let the wish be the father of the thought“.
With that wonderful turn of a phrase, Senior Judge Stephen Williams began another U.S. Court of Appeals for the D.C. Circuit opinion reminding the Environmental Protection Agency that Congress and its statutes place firm limits on EPA’s discretion and actions.
American Petroleum Institute v. EPA, released last Friday, arose from a “renewable fuel standard” (RFS) program under the Clean Air Act.We’ve commented on this program previously here at The Legal Pulse. Under the mandate, refiners would have to use an increasing amount of biofuels or face fines. Congress’ overarching purpose was to reduce greenhouse gas emissions, and broadly encourage biofuel technology. It singled out “cellulosic biofuel,” which, in 2007 when Congress adopted the program, was barely available on a commercial basis. Congress, the court noted in APA v. EPA, “assumed significant innovation,” but in the event that innovation didn’t occur, lawmakers tasked EPA with the job of projecting what would be available and adjusting the percentage requirement down based on that projection.
Congress, it seems, was far too optimistic about cellulosic fuel. EPA’s estimate for 2011 was around 9 million gallons, 491 million gallons short of Congress’s RFS mandate. API argued that EPA overestimated the available cellulosic fuel; the actual amount was zero. Despite the obvious shortfall in cellulosic fuel, EPA refused to reduce the total volume of biofuels required. API sued under the Administrative Procedures Act to have EPA’s determination vacated. Continue reading
Before fully moving forward into 2013, The Legal Pulse offers five late December developments our readers may have missed during the holiday season:
1. Administration’s Regulatory Plan Released. The federal government waited until late December to release its Spring 2012 Unified Agenda of Regulatory and Deregulatory Actions. This is the list of regulatory plans that the Office of Information and Regulatory Affairs at the Office of Management and Budget requires all federal agencies to submit to it by April of each year. As noted by the House Oversight Committee, the Unified Agenda has traditionally been issued between April and July. We’re in the process of reviewing it, but one item from the EPA’s priorities list jumped off the screen: “Expanding the Conversation on Environmentalism and Working for Environmental Justice.” We’ve consistently raised red flags about environmental justice here at The Legal Pulse, and will keep an even closer eye on that going forward.
2. FTC Issues Report on “Child-Directed” Food Advertising. What a difference a year makes. At the end of 2011, we were still talking about the threat posed to free speech and freedom of choice by the Interagency Working Group’s (IWG) Nutrition Principles to Guide Industry Self-Regulatory Efforts. As that Legal Pulse post explained, Congress all-but terminated that effort by requiring a cost-benefit analysis. Last March, FTC Chairman Leibowitz told a congressional panel that it was “time to move on” from the IWG “self-regulatory” effort.On December 21, the Commission released what it termed a “follow-up” study on food ads directed at children. FTC’s study credited the food industry for expanding its self-regulatory efforts, but remained critical of the amount of money devoted to advertising foods the FTC deemed less-than-nutritious. The study has one major flaw: it is based on data that is three years old. It’s fair to say that a significant amount of improvement in the nutritional value of foods has occurred in those three years. Continue reading