In a decision made public on April 8, 2013, the United States District Court, for the Northern District of California, effectively put an end to fracking in the Monterey Shale Formation, for the time being, with its opinion in Center for Biological Diversity and Sierra Club v. The Bureau of Land Management and Ken Salzar, Secretary of the Department of the Interior, Case No. 11-6174 PSG. Although the Court made clear that the policy question of whether fracking is a good thing or a bad thing is outside the Court’s bailiwick, it is apparent from the Court’s decision that fracking may continue to be subject to intense judicial scrutiny.  

EPA and Texas have an ongoing fight about many things, greenhouse gas regulation and permitting being only one of them.  The State refused to accept EPA’s decision under what is known as the Tailoring Rule to require states to implement as part of air emissions permits for certain new and modified existing sources a greenhouse gas permitting requirement.  As a result, in Texas, for facilities that emit over a certain amount of greenhouse gases, they have to apply to the Texas Commission on Environmental Quality (TCEQ) for a permit for conventional emissions and a permit from EPA for emissions of GHGs.  One of the key issues is whether carbon capture will be required, and whether the State will ultimately take over the greenhouse gas permitting from EPA.

On January 25, 2013, the U.S. Court of Appeals for the District of Columbia held that the National Labor Relations Board (“NLRB”) lacked a sufficient quorum of members when it issued a finding that Noel Canning had violated the National Labor Relations Act.  See Noel Canning v. NLRB, 2013 U.S. App. LEXIS 1659 (D.C. Cir. Jan. 25, 2013).  On the date that the NLRB issued its findings against Noel Canning, three of its five members were sitting after appointment by President Obama, without Senate confirmation, under the Recess Appointment Clause of the U.S. Constitution.  The problem, according to the court, was that the “recess appointees” had been appointed while the Senate was in pro forma session, not recess, thereby making the appointments invalid.  With only two validly appointed members sitting on the NLRB, the Court of Appeals held that the NLRB lacked the necessary quorum to take any action against Noel Canning.

The court’s ruling potentially invalidates all NLRB rulings since January 4, 2012, the date of the recess appointments.  And because two of the unconfirmed appointees continue to sit on the NLRB, all NLRB decisions going forward may be called into question.  The NLRB does not appear phased by the court’s ruling, however, and continues to issue decisions.  It is expected that the NLRB will continue with business as usual until the Supreme Court weighs in on the issue.

On February 13, 2013, President Obama asked the Senate to confirm his re-nomination of NLRB Members Sharon Block and Richard Griffin.  That same day, various Republican House of Representatives leaders sent a letter to President Obama and NLRB Chairman Mark Pearce, requesting that the President nominate “four qualified individuals” to the NLRB and that the NLRB cease all activity until confirmation of the requested appointments.  While each branch of the government weighs in on this issue, employers and their attorneys are left with the challenge of interpreting the current state of labor law.

We look forward to gaining insight on the recess appointee controversy, as well as the NLRB’s recent decisions and agendas, from Lafe Solomon, Acting General Counsel for the NLRB, during DRI’s 36^th Annual Employment and Labor Law Seminar, to be held May 1-3, 2013, at the Arizona Biltmore, in Phoenix, Arizona.  If you have not already registered for this exciting event, please access the registration information here to secure your spot today.

In a thoughtful decision handed down in Reeps v. BMW of North America, LLC, 2012 N.Y. Slip Op. 33030(u), on December 16, 2012 in New York County Supreme Court, the Hon. Louis B. York excluded the expert testimony of plaintiff’s two key causation experts in a toxic tort case where plaintiff alleged that a child’s birth defects were attributable to the mother’s in utero exposure to gasoline vapors.

Even before Hurricane Sandy devastated the East Coast, climate change policy had been on the forefront of federal and state legislative agendas.    However, the size and scope of Sandy has brought a new wave of federal and state policy proposals aimed at preventing the frequency and magnitude of superstorms like Sandy.

In Congress, Senator Barbara Boxer (D-CA), the Chair of the Senate Environmental and Public Works Committee, is spearheading several efforts aimed at curbing climate change.  Although the legislation was proposed before Sandy, the aftermath of Sandy has renewed Senator Boxer’s calls to enact the Water Resources Development Act of 2012.  This bill authorizes infrastructure improvements to our nation’s water resources in order to reduce flood risk and storm damage and to foster ecosystem restoration. 

Senator Boxer, in a collaborative effort with the Chairs of the Senate Energy and National Resources Committee and Senate Foreign Relations Committee, has also recently proposed the creation of a “clearinghouse” in order to organize the Senate’s efforts on climate change legislation.  She intends the clearinghouse to be a central forum for lawmakers to examine the current state of the science on climate change and to raise federal and state-specific issues of interest.

In New Jersey, one of the states hit hardest by Sandy, the storm may already be shaping New Jersey’s strategic planning and growth efforts.  The State’s strategic development plan was scheduled for release just weeks after the storm; however, its release has been delayed, and according to the Christie Administration, the plan is under reconsideration “in light of the new challenges that have been presented by the storm and the aftermath of the storm.”     

While the predictability of future natural disasters is far from certain, we can be sure that in the aftermath of Sandy, legislative and public policy proposals addressing climate change will be on the horizon.    Indeed, since President Obama specifically mentioned climate change in his Inaugural Address on January 21, 2013, his Administration will likely seek congressional action before the 2014 mid-term elections.  

With an election brewing, plaintiffs trying to impact climate change may find themselves lobbying politicians rather than running to the nearest courtroom.  On September 21, 2012, the Ninth Circuit further slammed the door on the ability for such claims to succeed in federal court.  Specifically, the Court held that federal common law public nuisance claims are unavailable to parties seeking damages or injunctive relief based on global warming.  Native Village of Kivalina v. ExxonMobil Corp., 2012 U.S. App. LEXIS 19870 (9th Cir. 2012).  In this case, the Native Village of Kivalina and the City of Kivalina filed federal common law public nuisance claims (among others) against twenty-two oil, energy, and utility companies alleging that greenhouse gas emissions caused by Defendants have resulted in global warming impacts to the Village and City.  Kivalina appealed the case to the Ninth Circuit following the district court’s dismissal of its claims for lack of subject matter jurisdiction.

The Ninth Circuit affirmed the district court’s holding and dismissed Kivalina’s federal common law public nuisance claims, explaining that “claims can be brought under federal common law for public nuisance only when courts are “compelled to consider federal questions which cannot be answered by federal statutes alone.”  In other words, federal common law cannot apply when congressional legislation directly speaks to an issue.  To make this determination, the Court relied on the recent Supreme Court decision in Connecticut v. Am. Elec. Power Co., Inc., 131 S. Ct. 2527 (2011) in which the Supreme Court concluded that the Clean Air Act provides a means to seek limitations on greenhouse gases, and thus, displaces any federal common law right to seek abatement of greenhouse gases.  While AEP focused on the abatement of emissions (i.e. injunctive relief), the Ninth Circuit’s holding significantly broadened AEP by applying this analysis equally to claims for damages.

Accordingly, the combination of Kivalina and AEP seems to bar future federal public nuisance claims for damages or injunctive relief based on global warming, and is likely to be a significant deterrent if not a complete bar to such claims being filed in federal court.  Significantly though,  the Ninth Circuit did not address Kivalina’s state claims, and thus, it is possible that  Kivalina will pursue those claims in state court.  State courts are likely to become the next battleground (in this action or in similar actions) to determine whether parties can assert similar public nuisance claims under state law, or if plaintiffs will need to wait for legislation to address climate change and forego any type of damage recovery. 

Heidi Goldstein and Devin Barry, Thompson Hine LLP

A Lone Pine Order is an innovative judicial case management tool that requires toxic tort plaintiffs to produce credible expert evidence to support their theory of causation (or another key component of plaintiffs’ claim) prior to the commencement of pre-trial discovery. A Lone Pine Order is designed to weed out frivolous claims before defendants must invest hundreds of thousands of dollars in legal fees and incalculable time and effort only to learn prior to trial that plaintiffs cannot establish a prima facie case. Both federal and state court judges have learned by experience that a Lone Pine case management order can end in their infancy baseless cases that would otherwise require an enormous expenditure of judicial time and resources. I have written about the use of Lone Pine Orders both on this blog and in journal articles. 

On April 18, 2012, Winston & Strawn and the Environmental Law Institute co-hosted an informative seminar on, “Hydraulic Fracturing Risks and Opportunities: Regulator, NGO, Industry and Investor Perspectives,” in New York City. The meeting was expertly chaired by May Wall, a partner in the law firm’s Environmental Law Department in Washington, D.C. The panelists included Kate Sinding, an NRDC Senior Attorney and Deputy Director of NRDC’s New York Urban Program; John Imse, a principal at Environ in Denver, who advises clients in the oil and gas industry; Lawrence A. Wilkinson, an analyst with Standard & Poor’s Oil & Gas Team; and Carol P. Collier, the Executive Director of the Delaware River Basin Commission. All four speakers were knowledgeable, informative and articulate. Unfortunately, there is insufficient space here to summarize all of the speakers' discussion points.

The U.S. Supreme Court has rejected the federal government’s argument that compliance orders issued by the U.S. Environmental Protection Agency (“EPA”) under the Clean Water Act, 33 U.S.C. §§ 1251 et seq. (the “CWA”), cannot be challenged in court.  In a unanimous opinion issued on March 21, 2012, the Court held that such orders constitute “final agency action” that can be challenged under the Administrative Procedure Act, 5 U.S.C. § 706(2)(a) (the “APA”).  Sackett v. United States Environmental Protection Agency, 566 U.S. ___, No. 10-1062 (Mar. 12, 2012).  In so doing, the Court has weakened one of the favored arrows in the EPA’s enforcement quiver. 

The case arose when Chantell and Mike Sackett bought two-thirds of an acre near Priest Lake, Idaho, intending to build their home there.  The vacant lot is zoned residential and is located in a platted subdivision, with sewer and water hookups.  The lot is separated from the lake by several lots where homes have already been built.  Sackett, slip op. at 3.  The Sacketts applied for and obtained the necessary building permits from the local authorities.  They began preparing the lot to build their home by filling in part of it with dirt and rock.  Id.  Not long after they did so, the EPA hit them with a compliance order. 

As the Court explained, the EPA’s compliance order contained a number of “Findings and Conclusions,” including: that the Sacketts’ property contains “wetlands”; that the property’s wetlands are adjacent to Priest Lake, a “navigable water” under the CWA; and that, by filling in about half an acre of the “wetlands” on their property, the Sacketts had discharged pollutants into waters of the United States in violation of 33 U.S.C. § 1311(a).  Slip op. at 3-4.  The order required the Sacketts to return the property to its prior condition and to seek a wetlands permit – costs that, according to the Sacketts, would add up to tens of thousands of dollars, many times the $23,000 they paid for the property.  Failure to comply with the order could result in fines of up to $75,000 per day – $37,500 for the statutory violation and up to $37,500 for violating the compliance order.  Id. at 2.

The Sacketts tried to challenge the wetlands finding – both before the EPA and in federal court under the APA – but their challenges were rejected.  The district court in Idaho concluded that the CWA precludes judicial review of compliance orders before the EPA has started an enforcement action in federal court, and granted the EPA’s motion to dismiss.  Sackett v. EPA, No. 08-CV-185-N-EJL, 2008 WL 3286801 (D. Idaho Aug. 7, 2008).  The Ninth Circuit affirmed.  Sackett v. EPA, 622 F.3d 1139 (9th Cir. 2010).  In other words, under the lower courts’ decisions, the only way in which the Sacketts could obtain judicial review of the compliance order would be to violate the order, wait for the EPA to sue them, and then raise their arguments in the enforcement action brought by the EPA, while potentially accruing up to $75,000 per day in civil penalties.

In his opinion for a unanimous Court, Justice Scalia set out to explain to the reader “what all the fuss is about.”  After describing the Sacketts’ situation and history – what Justice Scalia referred to as the “strong-arming of regulated parties” by government regulators – the Court held that the Sacketts were entitled to seek relief from the courts. 

The Court explained that the APA has a strong presumption in favor of allowing judicial review of final agency actions.  The Court rejected the EPA’s argument that the lack of an express provision allowing judicial review of administrative compliance orders in the CWA precluded such review, explaining:

[I]f the express provision of judicial review in one section of a long and complicated statute were alone enough to overcome the APA’s presumption of reviewability for all agency action, it would not be much of a presumption at all.

Slip op. at 8.

The Court held that the EPA’s compliance order against the Sacketts met all the requirements for APA judicial review.  First, the Court held that the compliance order was a “final agency action” because it imposed serious legal obligations on the Sacketts, including significant potential double penalties.  Even more importantly, the order represented the “‘consummation’ of the agency’s decisionmaking process” – because the terms of the compliance order were not subject to any further review, as the Sacketts discovered when they unsuccessfully sought a hearing before the EPA.  Slip op. at 5-6.  Second, the order clearly determined the Sacketts’ obligations by ordering them to restore their property to its prior condition.  Finally, the CWA does not expressly preclude review by the courts.  The Court therefore reversed the judgment of the Court of Appeals and remanded for further proceedings.  Id. at 10. 

Justice Ginsburg and Justice Alito filed concurring opinions.  In her one-paragraph concurrence, Justice Ginsburg emphasized that the opinion does not address the question of whether the property owners “could challenge not only the EPA’s authority to regulate their land under the Clean Water Act, but also, at this pre-enforcement stage, the terms and conditions of the compliance order” – a question that is left for another case and another day.

Justice Alito, in contrast, issued a scathing rebuke of the EPA, the CWA, and Congress, stating that “[t]he position taken in this case by the Federal government – a position that the Court now squarely rejects – would have put the property rights of ordinary Americans entirely at the mercy of [EPA] employees.”  Alito, J., concurring op. at 1.  While the Court’s opinion “provides a modest measure of relief” by allowing property owners to challenge the EPA’s jurisdictional determination under the APA, Justice Alito stated that “[r]eal relief requires Congress to do what it should have done in the first place: provide a reasonably clear rule regarding the reach of the Clean Water Act.”  Id. at 2.  Specifically, Judge Alito criticized the EPA’s and Congress’s failure to define what is meant by “the waters of the United States,” leaving this crucial jurisdictional determination to be made “on a case-by-case basis by EPA field staff.”  Id. 

The decision does not reach the merits of the Sacketts’ challenges to the compliance order, nor does it address the Sacketts’ due process argument.  Nonetheless, the decision is significant, and the stakes are high.  While the media has consistently portrayed this case as a battle between property owners as David against the EPA’s Goliath, the opinion also represents a victory for all property owners, including businesses and corporations.  Indeed, General Electric Co. had sought similar relief in a case last year, and filed an amicus brief in support of the Sacketts.  Moreover, the Court’s decision could impact not only CWA enforcement authority, but possibly could also impact review of compliance orders issued under other federal environmental statutes which, like the CWA, do not contain express prohibitions to judicial review.  And, for cases arising out of orders issued pursuant to statutes that do contain an express prohibition against judicial review, the Court may yet decide to go beyond the terms of the statute and the APA and address the due process argument it did not reach in the Sacketts’ case.