Wednesday, September 17, 2014
Third Circuit Holds that Federal Suit Challenging Pennsylvania Public Utility Commission Decision Is Precluded by Prior Suit in State Court
On September 16, the Third Circuit (Ambro, Jordan, Roth)) issued a decision in Metropolitan Edison Company v. Pennsylvania Public Utility Commission, No. 13-4288. This case arises indirectly from FERC’s 2006 decision requiring PJM to switch from computing line losses using an average cost method to using a marginal cost method. FERC’s decision had the effect of increasing Metropolitan Edison Company’s and Pennsylvania Electric Company’s costs, and the Companies accordingly sought approval from the Pennsylvania Public Utility Commission to pass on these cost increases to their customers. The Commission rejected the Companies’ requests on the ground that the line-loss costs were a generation cost rather than a transmission cost and, as such, were subject to a generation rate cap in effect through 2010. The Commission’s decision effectively prevented the Companies from passing on the increased line loss costs to their customers. The Companies sued the Commission in Pennsylvania state court. The Companies lost, whereupon they sued the Commission and its commissioners in federal district court. The district court held that the earlier state suit precluded the Companies’ subsequent federal suit. The Third Circuit affirmed.
On September 16, the Ninth Circuit (Tashima, Murguia, Carney (by designation)) issued a decision in United States v. Coeur d’Alene Company, No. 12-36065. The United States negotiated a CERCLA settlement with the Coeur d’Alene Company regarding liability for the cleanup of the Conjecture Mine Site in Bonner County, Idaho. The settlement based Coeur d’Alene’s liability on its limited ability to pay rather than on its proportionate share of the cleanup costs. The district court entered the consent decree over the objections of Federal Resources Corporation, another potentially responsibility party. Federal Resources appealed. The court of appeals affirmed, noting that CERCLA § 122, 42 U.S.C. § 9622, which governs settlements, explicitly contemplates that ability to pay is a factor in CERCLA settlements and that courts have frequently recognized the legitimacy of “ability to pay” settlements. The court rejected Federal Resources’s contention that the district court should have conducted an analysis of the comparative fault of the potentially responsible parties, because the settlement was based on ability to pay rather than fault. The court also dismissed as speculative Federal Resources’s assertion that Coeur d’Alene might have insurance that could cover some of its liability, thereby increasing its ability to pay.
Saturday, September 13, 2014
Third Circuit Holds that Federal Power Act Preempts New Jersey’s Long-Term Capacity Agreement Pilot Program
On September 11, the Third Circuit (Fuentes, Shwartz, Rosenthal (by designation)) issued a decision in PPL EnergyPlus, LLC v. Solomon, No. 13-4330. Existing electric power generators and distribution companies sued the commissioners of the New Jersey Board of Public Utilities challenging New Jersey’s Long-term Capacity Agreement Pilot Program (LCAPP), enacted by the state legislature in 2011 to address a perceived deficit in electric power capacity, and resulting high electricity prices, in New Jersey. The LCAPP furnishes new generators with a guaranteed fifteen-year contract at a predetermined rate to provide capacity to electricity distribution companies in New Jersey. New generators are required to participate in PJM’s capacity auction markets, but the LCAPP contracts offset the difference between the PJM market price and the LCAPP contract price. That is, if the LCAPP contract price exceeds the market price, the distribution company must pay the difference so that the generator receives the contract price; if the market price exceeds the LCAPP contract price, the generator must pay the difference. The district court, following a bench trial, held that the Federal Power Act preempts the LCAPP.
Numerous amici participated to express either criticism or support for state policies that regulate power contracts that affect capacity markets. FERC, the Pennsylvania Public Utility Commission, the Electric Power Supply Association and Edison Electric Institute, and PJM Power Providers Group supported the plaintiffs-appellees and argued the LCAPP should be preempted. Several other state public utility commissions, New Jersey Division of Rate Counsel, American Wind Energy Association, American Public Power Association and National Rural Electric Cooperative Association, and NRG Energy supported the defendants-appellants and argued the LCAPP should not be preempted.
The Third Circuit affirmed. The court reasoned that the Federal Power Act gives FERC authority to regulate interstate sales of electric capacity and that the LCAPP impermissibly constitutes regulation of capacity rates because it essentially sets capacity prices. The court noted the concern of the pro-appellants amici that a ruling against the LCAPP “will hamstring state-led efforts to develop renewable and reliable electric energy resources” (p. 29), but opined that the concern is unwarranted because states are free to use other means, including direct subsidies to generators, as long as they only incidentally affect—rather than directly set—wholesale electricity rates (including capacity prices).
The case—the facts, the parties, the outcome, and the court’s reasoning—is very similar to the Fourth Circuit’s recent decision in PPL EnergyPlus, LLC v. Nazarian, No. 13-2419 (June 2, 2014).
Friday, September 12, 2014
Second Circuit Decides CERCLA Appeal Involving Cleanup of Manufactured Gas Plants in Upstate New York
On September 11, the Second Circuit (Raggi, Lynch, Chin) issued a decision in New York State Electric & Gas Corp. v. FirstEnergy Corp., No. 11-4143, a CERCLA cost recovery and contribution case. This case arises from the cleanup of contaminated former manufactured gas plants in upstate New York, currently or formerly owned by New York State Electric and Gas Corporation (NYSEG) or its predecessor companies. NYSEG filed a CERCLA § 107(a) cost recovery action against FirstEnergy Corporation, alleging that FirstEnergy is liable for a portion of the cleanup costs as a successor to NYSEG's former parent company, Associated Gas & Electric Company (AGECO). FirstEnergy, in turn, filed CERCLA § 113(f) contribution counterclaims against NYSEG and third-party claims against I.D. Booth, Inc. (“I.D .Booth”), the current owner of one of the sites. Following a bench trial, the district court held that NYSEG was entitled to recover certain cleanup costs from FirstEnergy based on a veil-piercing theory, and that I.D. Booth was liable for a portion of the cleanup costs at one site. Everybody appealed, raising numerous issues.
The Second Circuit, in a lengthy and fact-intensive opinion, held (1) that a 1945 covenant not to sue did not bar NYSEG's cost recovery claims against FirstEnergy, because the covenant never became operative due to an unfulfilled condition precedent; (2) that AGECO is not directly liable under CERCLA as an operator because it acted only as a parent company and did not sufficiently participate in the activities of the plants during the time it owned the plants; (3) that FirstEnergy is liable to NYSEG on a veil piercing theory for contamination created during a period when AGECO dominated NYSEG; (4) that NYSEG’s claims were untimely as to sites with remedial actions, which are subject to a six-year statute of limitations measured from initiation of on-site physical action, but timely as to a site subject to a removal action, which is subject to a three-year statute of limitations measured from the completion of the action; (5) that the district court, which used total gas production at the sites to allocate liability, did not err in calculating total gas production; (6) that the district court reasonably exercised its equitable powers in reducing NYSEG's recovery from FirstEnergy by a portion of $20 million NYSEG had received in a prior insurance settlement; (7) that the district court did not abuse its discretion in declining to reduce NYSEG's recovery, because FirstEnergy had not shown that the cleanup would increase the value of the remediated properties or that NYSEG had unreasonably delayed the cleanups; and (8) that I.D. Booth was not entitled to a third-party defense because its extensive delays during negotiations did not exercise due care with respect to the cleanup, and the district court reasonably apportioned liability to I.D. Booth.
Wednesday, September 10, 2014
Fifth Circuit Holds That Texas Public Utility Commission Can Limit Wind Generation Facilities’ Ability to Sell Power Under PURPA
On September 8, a divided panel of the Fifth Circuit (Smith, Prado (dissenting), Elrod) issued a decision in Exelon Wind 1, LLC v. Nelson, No. 12-51228. Before going any further with my summary, let me start with an exhortation to pay attention to this decision if you care about renewable energy or agency deference. FERC cases—this really is a FERC case, even though FERC was not a party—make a lot of people’s eyes glaze over, but this is a significant opinion. If you care about renewable energy, this is an important decision because it allows states to limit the ability of renewable energy facilities to sell power under the Public Utilities Regulatory Policies Act of 1978 (PURPA) through long-term contracts unless the facilities can provide “firm power.” This “firm power” requirement is a problem for renewable energy developers, because (a) renewable energy, in particular wind and solar, is by its nature often variable and therefore can be difficult to provide as “firm power”; and (b) long-term contracts, especially long-term contracts under PURPA’s favorable terms, are often the key to financing renewable energy facilities. As to administrative law, this case is chock full of discussions of important questions of agency deference, including applications of City of Arlington, Christensen, Auer, and Brand X. Both the majority and dissent engage in detail with these questions—and disagree strongly. So on to the actual decision, which takes a little more explaining than the typical case.
The plaintiffs, various Exelon Wind entities, own wind generation facilities in Texas that meet the definition of “qualifying facilities” under PURPA. PURPA requires utilities to purchase electric power from qualifying facilities at rates that can be quite favorable to the facilities. FERC regulations issued pursuant to PURPA allow qualifying facilities to sell power to utilities either on a flexible “as-available” basis or to a “legally enforceable obligation” at either a predetermined rate or flexible basis.
The Texas Public Utilities Commission’s (PUC’s) rules implementing PURPA—actually, the PUC’s rules implementing FERC’s regulations implementing PURPA—only allow qualifying facilities to sell “firm power” to a legally enforceable obligation. That is, if a qualifying facility is not selling firm power, it can only sell on an “as available” basis. Firm power, as its name suggests, must deliver a specified amount of electric power at a scheduled time. This is difficult for wind generation facilities such as those owned by Exelon.
When Exelon attempted to force Southwestern Public Service Company, a utility, to purchase power from Exelon through long-term legally enforceable obligations, Southwestern refused on the ground that Exelon’s power was not firm power. Exelon complained to the PUC, which sided with Southwestern. Exelon complained to FERC, and FERC opined, in an informal declaratory letter, that a qualifying facility may form a legally enforceable obligation even if its power is non-firm.
Exelon filed suit in federal district court against the PUC. The district court found for Exelon and enjoined the PUC Commissioners from requiring qualifying facilities to provide firm power as a condition of creating a legally enforceable obligation. The PUC and Southwestern, which had intervened, appealed. (According to Judge Prado’s dissent, on appeal the PUC abandoned all but its jurisdictional arguments, which if true makes Judge Smith and Elrod’s adoption of the PUC’s merits position interesting.)
The Fifth Circuit panel majority (Smith, Elrod) for the most part rejected the appellants' jurisdictional objections, holding that the federal courts had jurisdiction to adjudicate Exelon’s claims insofar as they raised a broad-based “implementation challenge” to the PUC, as opposed to an individualized “as-applied challenge” that can only be brought in state court. In the course of its analysis, however, the majority declined to defer to FERC’s interpretation of Exelon’s claims as raising an “implementation challenge”; the court’s analysis includes debatable applications of City of Arlington and Christensen.
As to the merits, the majority held that the PUC’s rule limiting legally enforceable obligations to firm power was within the PUC’s permissible discretion because neither PURPA itself nor FERC’s regulations implementing PURPA specifically address the question. Under the majority's reading, PURPA gives states discretion “to define the parameters of the circumstances in which Qualified Facilities could form Legally Enforceable Obligations” (p. 25). The court declined to defer to FERC’s advisory letter, which had interpreted FERC’s PURPA regulations to allow all qualifying facilities—even those that produce non-firm power—to form legally enforceable obligations.
Judge Prado dissented. He would have held, consistent with FERC’s advisory letter, that the PUC violated FERC’s PURPA regulations, which he read to “mandate that every qualifying facility shall have the option to form legally enforceable obligations” (p. 36).
There’s a lot more to say about this decision, but I’ll leave it at that for now.
Monday, September 8, 2014
From Ben Bratman at Pitt:
The University of Pittsburgh School of Law invites applications for a full-time faculty position at the rank of Assistant, Associate or Full Clinical Professor to teach in and direct the School’s Environmental Law Clinic. While this position is not in the tenure stream, it is part of a system of contracts progressing to renewable long-term contracts. The position will begin on July 1, 2015.
The mission of the Environmental Law Clinic is to serve the educational needs of our students and the needs of individuals, community groups, and conservation organizations, particularly those in Western Pennsylvania, for legal services relating to environmental issues. Funding for the Clinic is provided by an endowment from the Howard and Vira I. Heinz Endowments. Duties of the Clinical Professor include classroom teaching, including the possibility of teaching doctrinal courses; supervision of second- and third-year law students as they represent clients and participate in community projects; participation in activities related to the School of Law’s Environmental Law Concentration; administrative duties relating to the Environmental Law Clinic; community outreach and fundraising; and participation in faculty governance of the School of Law. The Environmental Law Clinic was founded in 2000. The candidate hired for the position will have the opportunity to shape the future direction of the Clinic.
Qualifications include admission to practice in Pennsylvania or willingness to seek admission to the Pennsylvania bar; substantial experience in the field of environmental law and, preferably, clinical pedagogy; excellent supervisory and communication skills; the ability to work effectively with students, clients, and other constituents; and an interest in developing clinical experiences for students in the Environmental Law Clinic within a community that supports interdisciplinary collaboration and innovative teaching opportunities.
To apply, please submit a letter of interest, resume, and list of two or three references to Professor Ben Bratman, Chair, Clinical Appointments Committee, at email@example.com. Write “Environmental Law Clinic Application” in the subject line of the email. The deadline for applications is October 1, 2014.
The University of Pittsburgh is an Affirmative Action/Equal Opportunity Employer and values equality of opportunity, human dignity, and diversity. Recruitment is subject to approval by the University’s Provost.
Thursday, September 4, 2014
As I have described in prior posts this week (here and here), a Seventh Circuit decision from last week created a circuit split with the D.C. and Tenth Circuits regarding whether the timing and venue requirements under Clean Air Act § 307(b), 42 U.S.C. § 7607(b), for judicial review of EPA decisions under the Act are jurisdictional. On August 28, in Clean Water Action Council of Northeastern Wisconsin v. EPA, the Seventh Circuit held that the limitations are not jurisdictional. On September 3, in Utah v. EPA, the Tenth Circuit reaffirmed its prior cases holding that the limitations are jurisdictional.
In the Seventh Circuit case, the jurisdictional/non-jurisdictional distinction mattered because it allowed the court of appeals to dodge the § 307(b) question—in that case, whether the petition for review challenged a nationally applicable regulation and therefore should have been brought in the D.C. Circuit. Once the court held that § 307(b)’s limitations are not jurisdictional, it was free to deny the petition on other grounds without reaching the § 307(b) issue. In the Tenth Circuit case, the impact was more significant, because it allowed the court of appeals to dismiss the petitions for review based on untimeliness, over EPA’s objection. EPA had inadvertently induced the untimeliness in that case by attempting to extend the deadline for filing a petition for review, only to have the Tenth Circuit hold that EPA’s extension had no effect on the application of § 307(b)’s sixty-day deadline.
So how did the two courts reach their differing conclusions? Judge Easterbrook’s opinion for the Seventh Circuit relied on a presumption, citing recent Supreme Court decisions, that venue and filing deadlines are non-jurisdictional. In the absence of a “clear statement” or “clean indication” that Congress intended § 307(b)’s limits to be jurisdictional, Judge Easterbrook concluded that they were not.
Judge Bacharach in the Tenth Circuit, by contrast, focused on the text and legislative history of § 307(b), which he read to indicate strong congressional intent to apply the timeliness deadline strictly. Judge Bacharach reasoned (a) that Congress “used jurisdictional terminology” in the statute; (b) that the legislative history indicated Congress intended the deadline to be strictly applied and that courts could consider untimely petitions only based on new information; and (c) that the sixty-day deadline “serves a jurisdictional function by restricting the congressional waiver of sovereign immunity.”
To some extent, then, the two opinions seem like ships passing in the night. Judge Easterbrook did not find the clear statement of congressional intent he believes is required, but he was apparently not pointed to, and did not consider, the legislative materials relied on by Judge Bacharach. Judge Bacharach, on the other hand, does not seem to read the Supreme Court cases to have established the strong presumption against jurisdictionality that the Seventh Circuit found. Judge Easterbrook examined precedential treatment of filing deadlines and found a pattern of non-jurisdictionality; Judge Bacharach examined precedential treatment of filing deadlines for appeals to Article III courts and found a pattern of jurisdictionality. Judge Easterbrook faulted earlier D.C. Circuit and Tenth Circuit decisions (including the original Utah opinion) for their lack of reasoning; Judge Bacharach’s decision on rehearing in Utah presents the most detailed analysis of any court to date.
Given the clear circuit split, and the Supreme Court’s recent strong interest in taking cases examining the jurisdictional/non-jurisdictional distinction, see, e.g., Sebelius v. Auburn Regional Medical Center, 133 S. Ct. 817 (2013); Henderson v. Shinseki, 131 S. Ct. 1197 (2011); Reed-Elsevier, Inc. v. Muchnick, 559 U.S. 154 (2010), the Utah case seems like a case where the Court might well grant certiorari. (Clean Water Action Council, on the other hand, is a poor vehicle because the United States—loser on the issue—won the case anyway.)
Tenth Circuit Upholds Forest Service Decision Allowing Motorcycle Use on Trail in Wyoming Roadless Area
On September 3, the Tenth Circuit (Tymkovich, McKay, Matheson) issued a decision in Biodiversity Conservation Alliance v. Forest Service, No. 12-8071. This case involved a challenge to the Forest Service’s decision allowing motorcycle use on a five-mile trail in a roadless area of Medicine Bow National Forest in southern Wyoming. The Forest Service made its decision based on an Environmental Assessment and Finding of No Significant Impact; the Biodiversity Conservation Alliance objected that the decision required a full Environmental Impact Statement. The Alliance sued, alleging violations of NEPA. The district court found in favor of the Forest Service, and on appeal the Tenth Circuit affirmed. The court of appeals held, in a detailed fact-intensive opinion, that the Forest Service’s analysis in its Environmental Assessment and a Biological Assessment adequately considered the impacts on sensitive wetlands areas known as fens, and that the Alliance had failed to show that the Forest Service’s decision would generate conflicts between motorized and non-motorized recreational users.
Tenth Circuit Reaffirms that Clean Air Act § 307(b)’s Timing and Venue Limitations Are Jurisdictional, Highlighting Circuit Split
On September 3, the Tenth Circuit (Bacharach, Seymour, Murphy) issued a decision denying rehearing in Utah v. EPA, No. 13-9536. This case arose out of EPA’s decision on December 14, 2012, to reject proposed revisions to Utah’s State Implementation Plan under the Clean Air Act. EPA’s notice of its decision inadvertently neglected to highlight the sixty-day deadline under Clean Air Act § 307(b) for filing a petition for review. EPA attempted to correct its error by issuing a notice on January 22, 2013, that parties would have until March 25, 2013, to file a petition for review. Utah and other petitioners, relying on EPA’s statement, filed petitions for review shortly before March 25, 2013. On May 6, 2014, the Tenth Circuit—over the petitioners’ and EPA’s objections—dismissed for lack of jurisdiction, holding that the sixty-day deadline ran from December 14, 2012. Utah v. EPA, 750 F.3d 1182 (10th Cir. 2014). The petitioners filed for rehearing, contending that the sixty-day deadline is not jurisdictional. Contrary to the Seventh Circuit’s decision last week in Clean Water Action Council of Northeastern Wisconsin v. EPA, the Tenth Circuit reaffirmed its prior precedent concluding that the sixty-day deadline is jurisdictional, reasoning (a) that Congress “used jurisdictional terminology” in the statute; (b) that the legislative history indicated Congress intended the deadline to be strictly applied and that courts could consider untimely petitions only based on new information; and (c) that the sixty-day deadline “serves a jurisdictional function by restricting the congressional waiver of sovereign immunity.”
On September 3, the Ninth Circuit (Farris, Nelson, Nguyen) issued a decision in Alaska Community Action on Toxics v. Aurora Energy Services, No. 13-35709. The plaintiff environmental organization filed a Clean Water Act citizen suit against Alaska Railroad Corp. and Aurora Energy Services, alleging that the Seward Coal Loading Facility, owned by Alaska Railroad Corp. and operated by Aurora Energy Services, was spilling coal into Resurrection Bay in violation of the Act. The defendants claimed the spills were covered by the Multi-Sector General Permit for Stormwater Discharges Associated with Industrial Activity. The district court agreed with the defendants and entered summary judgment for them. The plaintiffs appealed, supported by the United States as amicus curiae. Numerous amici curiae, including the State of Alaska and agricultural, mining, petroleum, and railroad associations, filed briefs on the side of the defendants. The Ninth Circuit reversed. The court of appeals reasoned that, although the General Permit does authorize certain categories of non-stormwater discharges, the Seward Facility’s alleged discharges of coal into the Bay do not fall within any of the authorized categories.
Tuesday, September 2, 2014
Seventh Circuit Holds That Clean Air Act § 307(b)’s Timing and Venue Limitations Are Not Jurisdictional, Creating Circuit Split
On August 29, the Seventh Circuit (Easterbrook, Sykes, Tinder) issued a decision in Clean Water Action Council of Northeastern Wisconsin v. EPA, No. 12-3388. This case arose out of Wisconsin’s and EPA’s decisions to approve the renewal of a Clean Air Act Title V permit for a paper mill owned by Georgia-Pacific. The Clean Water Action Council objected to the permit, arguing that when Georgia-Pacific modified the plant in 2004, all of the plant’s emissions—rather than just the increase caused by the modification—should have counted against the applicable PSD Increment. Clean Water Action Council filed a petition for review in the Seventh Circuit. EPA and Georgia-Pacific argued that the petition for review was untimely and brought in the wrong court, because although couched as a challenge to Georgia-Pacific’s permit renewal, it essentially challenged a nationally applicable EPA regulation regarding Title V permit renewals and therefore had to be brought in the D.C. Circuit within sixty days of promulgation of that regulation. The Seventh Circuit held that, contrary to decisions of the Tenth and D.C. Circuits, the timing and venue restrictions in Clean Air Act § 307(b) are non-jurisdictional claim-processing rules. Concluding that the requirements of § 307(b) are non-jurisdictional allowed the court of appeals to reject Clean Water Action Council’s petition on other grounds, without reaching the question whether the petition challenged a nationally applicable EPA regulation and should have been brought in the D.C. Circuit. On the merits of Clean Water Action Council’s petition, the Seventh Circuit upheld as reasonable EPA’s interpretation that the Clean Air Act allows the agency to count only the emissions increase caused by the modification against a PSD Increment.
Thursday, August 28, 2014
On August 27, the Ninth Circuit (Tashima, Murguia, Carney (by designation)) issued a decision in Asarco, LLC v. Union Pacific Railroad Company, No. 13-35356. This case arose out of the ongoing cleanup of contamination resulting from mining in Idaho’s Coeur d’Alene River watershed. Asarco and Union Pacific were among the parties liable for the cleanup costs. In 2009, Asarco entered into a settlement with the United States resolving its liability for response costs and natural resource damages associated with the site. Asarco then filed a contribution action against Union Pacific seeking to recoup some of the costs Asarco paid under the settlement. Union Pacific argued that Asarco’s complaint was time barred and precluded by a 2008 settlement between Asarco and Union Pacific. The district court held that Asarco’s complaint was not time barred, but dismissed Asarco’s complaint on the ground that it was barred by the terms of the 2008 settlement. On appeal, Union Pacific renewed its statute of limitations argument in addition to defending the district court’s holding that Asarco’s complaint was barred by the earlier settlement. The Ninth Circuit reversed, holding (a) that Asarco’s claim was not time barred because its complaint related back to an earlier complaint, even though Asarco’s amended complaint covered claims associated with geographic areas specifically excluded in its original complaint; (b) that Asarco’s earlier complaint was timely because CERCLA § 113(g)(3) does not override Federal Rule of Civil Procedure 6(a)’s “anniversary method” of counting time; and (c) that Asarco’s earlier settlement with Union Pacific did not unambiguously bar Asarco’s contribution action and therefore raised a fact issue not resolvable on a motion to dismiss.
Wednesday, August 27, 2014
On August 26, the D.C. Circuit (Garland, Srinivasan, Sentelle) issued a decision in Sierra Club v. Jewell, No. 12-5383. The plaintiffs in the case are environmental and historical preservation organizations seeking to protect the area of Blair Mountain, West Virginia—site of a landmark armed labor conflict in 1921—from the effects of surface mining. The Blair Mountain Battlefield was listed on the National Register of Historic Places in 2009, but then quickly delisted in response to apparent objections from landowners. (For a site to be listed, a majority of property owners in the area must not object.) The plaintiffs sued to challenge the delisting, but the district court dismissed for lack of standing. The D.C. Circuit reversed, holding (a) that the plaintiffs had demonstrated enjoyment of the Battlefield for its aesthetic and historical value; (b) that the plaintiffs had shown a substantial probability the Battlefield will be subject to surface mining that would impair the plaintiffs’ enjoyment; and (c) that listing on the Register arguably provides the Battlefield with greater protection from mining impacts than if the Battlefield were not listed. On the last point, the court reasoned that, although the Department of the Interior argued the Battlefield, even if it were listed, would not receive the protections in West Virginia law cited by the plaintiffs, for purposes of establishing standing the plaintiffs needed only to make a “non-frivolous” argument that listing would protect the Battlefield.
On August 26, the D.C. Circuit (Garland, Srinivasan, Millett) issued a decision in West Deptford Energy v. FERC, No. 12-1340. The Federal Power Act, through what is known as the filed rate doctrine, requires regulated utilities to charge only rates that are on file with FERC. In this case, however, there was a question of which of two rates should be treated as on file with the agency. Petitioner West Deptford Energy submitted a request to interconnect new electric power generation facilities with PJM. Under PJM’s tariff on file at the time, West Deptford would have had to reimburse other generators for certain upgrades necessitated by the proposed interconnection. While West Deptford’s request was pending, however, PJM submitted tariff amendments to FERC; under these amendments, West Deptford would not have to pay for the upgrades. In the process of approving West Deptford’s interconnection request, PJM determined that the prior tariff controlled and that West Deptford had to pay for the upgrades. FERC sided with PJM. West Deptford filed a petition for review challenging FERC’s decision, and the D.C. Circuit granted the petition. Without holding that FERC had to apply the later tariff, the court held that FERC had acted arbitrarily and capriciously by failing to provide a reasoned explanation for its decision to apply the earlier tariff. Neither PJM’s tariff amendments nor FERC’s correspondence with PJM regarding the amendments specified how the amendments would apply to pending interconnection requests. FERC precedent seems to apply the tariff in effect when the interconnection agreement is executed or when an interconnection agreement is filed with FERC, not when a generator makes its interconnection request. The court also held that FERC had erred by failing to address West Deptford’s argument that, if it was responsible for reimbursing other generators to pay for the upgrades, it was due offsets for amounts that those generators already had been collected.
Tuesday, August 26, 2014
In recent years, renewable energy siting decisions have generated some of the U.S.'s most interesting and complex environmental controversies. Troy Rule (Arizona State) has just put out a new book on the subject. If you're interested in the intersection of land use, environmental, and energy law, you might want to take a look.
Tenth Circuit Affirms Order Denying Preliminary Injunction Against Eastern New Mexico Rural Water System Project
On August 25, the Tenth Circuit (Hartz, Ebel, Phillips) issued a decision in Village of Logan v. U.S. Department of Interior, No. 13-2082. The Eastern New Mexico Rural Water System Project, which will include a pipeline and associated facilities, is being constructed to deliver water from the Ute Reservoir to a group of participating communities. The Project will allow the participating communities to reduce their reliance on groundwater from the Ogallala aquifer, which is suffering declining water levels and water quality from overuse. The Village of Logan, New Mexico has a right to some water from the Ute Reservoir, but it will not benefit from the Project. If Logan wants to receive water from the Reservoir, it will have to construct its own delivery project. The Bureau of Reclamation issued an Environmental Assessment and Finding of No Significant Impact for the Project, and Logan made no comments or objections. More than a year later, Logan sued to enjoin the project, alleging violations of NEPA. The district court denied the motion. Logan appealed, and the Tenth Circuit affirmed. In rejecting Logan’s arguments, the Tenth Circuit held (a) that Logan had not shown it would suffer irreparable harm from the Project, because most of its alleged injuries were either already complete or speculative; (b) that the harms of delaying construction of the Project outweigh any injuries to Logan; (c) that the public interest favors allowing the Project to proceed; and (d) that Logan was unlikely to succeed on the merits of its NEPA claims because it waived most of its challenges by failing to raise them during the administrative proceedings.
Friday, August 22, 2014
On August 20, the Ninth Circuit (Fernandez, Smith, Murguia) issued a decision in Center for Community Action and Environmental Justice v. BNSF Railway Company, No. 12-56086. The plaintiffs were environmental organizations whose members live near railyards owned and operated by the defendant railway companies. Locomotives, trucks, and other heavy-duty vehicles on or near the railyards emitted diesel exhaust containing particulate matter. The plaintiffs filed a citizen suit under RCRA seeking to enjoin the particulate matter emissions as disposals of a solid or hazardous waste that presented an imminent and substantial endangerment to health or the environment. The Ninth Circuit held that the defendant’s diesel exhaust emissions do not constitute a “disposal” of solid waste within the meaning of RCRA and on that ground affirmed the district court judgment in favor of the defendants. The Ninth Circuit reasoned that “disposal” under RCRA does not encompass emissions of solid waste into the air. The court further reasoned that, although air emissions from railyards and other indirect sources are not regulated by either RCRA or the Clean Air Act, this “regulatory gap” reflects a conscious decision by Congress not to regulate such sources. The court did not reach the issues of whether diesel particulate matter is “solid waste” under RCRA or whether the defendants’ emissions, if covered by RCRA, would “present an imminent and substantial endangerment to health or the environment.”
Tuesday, August 5, 2014
Several weeks ago, a Superior Court in Sacramento County, California issued an important public trust doctrine decision. The case concerned the Scott River, which flows through the coast ranges of northern California. According to the plaintiffs, groundwater pumping was depleting flows in the river and harming its fish. The plaintiffs argued that because of these harms, Siskiyou County was obligated to consider the public trust doctrine before issuing well drilling permits. The county defended the case by arguing, among other things, that the public trust doctrine does not apply to tributary groundwater.
In its recent decision, the court decided that legal question in favor of the plaintiffs. The case isn’t over; the plaintiffs still need to prove their factual allegations of harm. But the court’s decision was still a big win for the plaintiffs. While the court did not find that the groundwater itself is a public trust resource, it concluded that the public trust doctrine does apply to groundwater withdrawals that impact a surface water stream. Consequently, according to the court, Siskiyou County was obliged to consider the public trust doctrine when it permitted irrigators to drill and operate wells.
In a recent post at Legal Planet, Holly Doremus has described the case in more detail. This post raises a different question: what impact would the court’s holding, if it stands (as I think it should and will), have on groundwater regulation in California? One might assume the answer is simple: applying the public trust doctrine to groundwater pumping will lead to increased regulatory control of groundwater use, and to increased environmental protection of surface water systems that depend upon groundwater recharge. And that is a possibility. But the reality may be more complex, and below are a few other potential outcomes:
- The case leads to reduced regulation of groundwater use. This may sound like an odd result, until one considers this basic fact: while local governments in California clearly have the ability to regulate groundwater use, see Baldwin v. County of Tehama, 36 Cal. Rptr. 2d 886 (1994), they don’t have a legal obligation to do so. Similarly, California’s State Water Resources Control Board, which arguably has the ability to regulate groundwater use, hasn’t actually exercised that regulatory authority. This all may change soon, as Rick Frank recently pointed out in another Legal Planet post. But so long as regulating groundwater is something governmental entities may decline to do, their decision-makers might think, “well, if we regulate, we have to worry about the public trust doctrine, and if we don’t, the public trust doctrine is someone else’s headache. So let’s not regulate.”
Of course, if a court holds that the public trust doctrine not only obligates government agencies to consider public trust values when they allocate groundwater, but also to create groundwater regulatory programs, that particular perverse incentive would vanish. But the latter holding would be much bolder than the former, and I would be surprised to see it emerge from the litigation.
- The case leads to increased regulation of new groundwater users but doesn’t change circumstances for existing users. This also may sound surprising, because one of the most-heralded aspects of California’s public trust doctrine is its potential, at least in theory, to change existing water rights. But in a 2012 study, I found that for surface water users, the doctrine has hardly ever been used this way. I found that it did operate—in conjunction with many other environmental laws—as a constraint on new water users. But existing water users had generally been left alone.
- The case changes little, because courts view compliance with other California environmental laws as satisfying the public trust doctrine. The extent to which public trust doctrine analysis is distinct, as a legal matter, from other California and federal environmental requirements has been an issue in some recent litigation. As a practical matter, in my 2012 study I found only limited evidence that public trust protections had exceeded those that would have occurred anyway under other environmental laws.
- The case does lead to important changes in groundwater management. This could happen because many local government entities in California do regulate groundwater, and because their regulatory approaches are allowing many impacts that slip through the cracks of other California environmental laws. Perhaps the public trust doctrine will be an important gap-filler. Where local governments already are motivated to address groundwater impacts, the application of the public trust doctrine also might provide some additional support for the exercises of regulatory authority. These, of course, are the outcomes the plaintiffs are hoping for.
So which result will happen? My timid prediction is: all of the above. California groundwater management is presently such a hodge-podge, with many different entities involved and many others choosing to stay out, that all of these reactions are likely to occur in some places.
Friday, July 11, 2014
For several years, all eyes have been on the proposed Keystone Pipeline. But Keystone isn’t the only pipeline that could connect Canadian tar sands crude to a United States port. Another possibility has its southern terminus about a mile from my house.
The pipeline has its origins in World War II. During the early stages of the war, when the United States was still nominally neutral, Canada needed an oil supply port. South Portland, Maine, where I live, became that port, and to this day, a pipeline carries oil from tankers docking in Portland Harbor through northern New England and on to refineries near Montreal. But as Canada’s tar sands bonanza has reduced the country’s need for oil imports, the amount of oil passing through the pipeline has declined, and its owners began to consider whether oil might flow more profitably in the opposite direction.
Most of New England wants no part of this. But state and local governments lack the authority to regulate the contents or safety of interstate pipelines. So, unless the pipeline company needs to build new facilities within their towns—and, in most places, it does not--most New Englanders hold only political leverage over the possible reversal. My city is in a different position. Turning an import facility into a tar sands oil export facility would require the construction of new infrastructure, and that infrastructure would be built right next to the city’s most popular and scenic waterfront park, and in an area where the city hopes to see mixed-use development. The possibility of a pipeline reversal therefore confronted the city with a land use question: do we want new crude oil export facilities on our waterfront?
Addressing that kind of land use question is a classic prerogative of local governments, and last night, the city council took a big step toward answering “no.” For the past six months, and through a series of public meetings, a small committee has been working on drafting an ordinance that would address the local environmental threats posed by new export facilities. Their task was not easy. The ordinance can’t exceed municipal authority, and it also needs to address the desire, shared by many voters in South Portland, to protect the city’s eastern waterfront while protecting industrial jobs and maintaining an active working port in the western part of the city. But I think the committee did an excellent job, and the city council seems to agree. The process isn’t over—planning board review and another city council vote still will occur—and the oil industry is already making noises about a ballot initiative or litigation. But Wednesday’s vote still was a big step, and I’m proud of my city. Through a careful, deliberative, and highly public process, we’ve decided that we’re not going to be the endpoint of the East Coast’s Keystone.
- Dave Owen
(the meeting photo above first appeared in the Portland Press Herald, which has run a series of informative articles about the controversy.)
Thursday, July 10, 2014
In April, 2013, I wrote a post about The Aransas Project v. Shaw, a case involving water management agencies, whooping cranes, and the Endangered Species Act. The defendant water agencies had issued permits for water withdrawals upstream of important whooping crane habitat. According to the plaintiffs, the combination of those permits and the 2008-09 drought reduced freshwater inflows to the estuary where whooping cranes feed, leading to food shortages that killed off large numbers of whooping cranes. Those deaths, the plaintiffs argued, were unpermitted "takes" and were prohibited by section 9 of the ESA.
A federal district court agreed with this theory, but on June 30, the Fifth Circuit reversed. It determined that the district court had failed to apply a "proximate cause" analysis to the take claims. Because the district court failed to apply the correct legal standard, the Fifth Circuit found that it owed no deference to the district court's factual findings. Considering the record de novo, the Fifth Circuit concluded that the water agencies' activities were not the proximate cause of the whooping cranes' deaths.
The reasoning that led the Fifth Circuit to its de novo standard is, to say the least, interesting. In fact, the district court did recite the proximate cause standard, and it did purport to apply it. It just applied it in a way that the Fifth Circuit found overly simplistic. That could be a basis for reversal--appellate courts do review factfinders' factual conclusions for abuses of discretion--but it doesn't seem like a basis for de novo appellate review.
There's also a whiff of hypocrisy in the Fifth Circuit's reasoning. It concluded that the district court had been too simplistic because it had failed to engage with the complexities and contingencies of the alleged causal chain. Perhaps that's a fair critique (for an argument that the district court made a mess of the case, see the comments on my earlier post); I am not familiar enough with the factual record of the case to know.
But the Fifth Circuit's substitute reasoning is also simplistic. Its core conclusion is that "[c]ontingencies concerning permittees' and others' water use, the forces of nature, and the availability of certain foods to whooping cranes demonstrate that only a fortuitous confluence of adverse factors caused the unexpected 2008-09 die-off found by the district court." That conclusion contains a big logical leap, which I don't think is remedied elsewhere in the opinion: it ignores the reality that uncertainty is often a matter of degree. Just identifying some uncertainty within a chain of causation does not mean that the ultimate outcome could fairly be described as "fortuitous." Instead, one must ask how contingent the links in the causal chain were, how much other contributing causes might have added, and how long the causal chain was.
To put it in simple mathematical terms, suppose that event A has a 90% chance of causing event B, which has a 90% chance of causing event C, which has a 90% chance of causing event D. There is uncertainty at every stage of this causal chain, yet the odds of event A leading to event D still are just under 66%. We'd probably be comfortable calling event A the proximate cause of event D. On the other hand, if each event has only a 30% chance of causing the next event, then the odds of event A leading to event D are less than 1%. Contingencies are present in both causal chains, and the chains themselves are the same length. But the causal relationships are drastically different.
Or consider historical examples. One hundred years ago, Gavrilo Princip fired two shots that set in motion a series of events culminating in the slaughter of World War I. In hindsight, history often looks falsely inevitable, yet I suspect most historians would agree that the links between those shots and the horrors of trench warfare in northeastern France were too many, and too contingent, to identify Princip as the proximate cause of the Battle of the Somme. But historians probably will identify the 9/11 attacks as the proximate cause of the U.S. invasion of Afghanistan, even though a contingent causal chain linked those events as well.
The point, again, is that it's not enough to just name uncertainties or other contributing causes, though that's a logical first step in the analysis. We also need to think about how much they matter. And the Fifth Circuit didn't really do that. If it had, the results might have been different. The relationship between permits that allow water withdrawals and actual water withdrawals is pretty direct. So too is the relationship between upstream water withdrawals and downstream reductions in flow. The occurence of a severe drought in 2008-09 was, of course, a chance event, but there's very little chance of Texas avoiding severe droughts throughout the entire duration of a water use permit. The last links in the causal chain--reduced inflows allegedly causing ecological effects to ripple up the food chain, causing whooping cranes to die off--are probably the most uncertain, but reduced inflows damaging an estuary's food chain is pretty plausible, and just labeling that outcome contingent ought to have been the start, not the end, of the analysis.
So how much does the case mean for ESA litigation? The answer, I suspect, is not a whole lot. Even if courts were committed to embracing the gory details of uncertainty analysis, winning ESA section 9 cases would still be a challenge, for the evidentiary burdens plaintiffs face would be substantial. For that reason, plaintiffs don't often try. This latest decision will likely just reinforce that reality.
- Dave Owen