Friday, September 28, 2012

Fifth Circuit’s Reversal on Katrina Litigation Leaves Flood Victims Gasping for Air

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I’ll forego reporting on India today to address a new development in the post-Hurricane Katrina litigation: Judge Jerry Smith’s breathless hairpin turn in the “Katrina Canal Breaches Litigation.” On Monday, Judge Smith, writing for a three-judge panel of the Fifth Circuit U.S. Court of Appeals, dismissed a lawsuit against the U.S. Army Corps of Engineers for flood damage during Hurricane Katrina, a case that could have exposed the federal government to billions of dollars in damages over the next several years. Judge Smith’s opinion reversed a decision he wrote just six months ago, representing the same three-judge panel, which had ruled the plaintiffs’ claims were legitimate and must move forward.

Why the switch? The new opinion suggests it is because the first time around all three judges somehow misunderstood the facts. But that’s unconvincing. A look at the court’s earlier opinion and the trial court’s original findings of fact show that the Fifth Circuit got it right the first time. What’s more, this sudden reversal could deny thousands of flood victims the means to build back their lives, while narrowing the chances that the government can be held accountable for even the most pedestrian mistakes. .I’ll return to these points in a moment, but first some background.

The Katrina Canal Breaches Litigation involves claims by residents of New Orleans and St. Bernard Parish for damages resulting from storm surge allegedly funneled through the Mississippi River Gulf Outlet (MR-GO), a navigation channel that has since been de-authorized and “plugged” for safety reasons. (I last blogged about this case here.) Plaintiffs argued that the Army Corps's negligence in design, construction, and maintenance of MR-GO increased Katrina’s storm surge and made the levee system more vulnerable than it otherwise would have been. Plaintiffs were particularly troubled by the Corps’s refusal to prevent erosion by armoring the banks at the time of construction and in the several years thereafter. The lack of armor—or “foreshoring,” as engineers call it—caused the channel’s width to expand considerably, leaving a perfect path for a bulldozing hurricane.

The Corps never refuted the factual claims and the trial court later characterized the agency’s actions as “negligent.” But the Corps argued its acts were shielded by two forms of government immunity, one based on the Flood Control Act of 1928 and the other based on the traditional doctrine of sovereign immunity. The first was correctly rejected by both the trial and appellate courts. The second is the focus of my analysis here.

Sovereign immunity generally bars suits against the government. The idea derives from the British fiction that “the King can do no wrong,” and thus cannot be hauled into his own court. Today that seems unfair, so a statute called the Federal Tort Claims Act waives the government’s sovereign immunity for personal injury claims caused by negligent acts as long as the act cannot be reasonably characterized as involving a balance of “policy” options.

In this case, the Corps tried to argue its failure to armor the channel was a policy choice that weighed public risk against construction cost. But neither the trial court nor the appellate court (the first time around) bought the argument. That’s because all of the trial testimony showed that Corps officials never believed the erosion posed a safety risk. They were tragically wrong about that; in fact, every scientific study available at the time said they were wrong about that. But the point is that the decision to let the channel erode happened not because someone thought the public risk was worth it, but because no one thought there was a public risk. It was as if the Corps were claiming that a crash caused by one of its truck drivers was caused not by the driver’s ignorance of worn-out brakes, but by her choice to balance the risk of worn-out brakes against the cost of replacing them.

But don’t take my word for it. Here’s the Fifth Circuit panel, in its original decision, describing the evidentiary record (italics mine):

The . . . plaintiffs and [friends of the court] point to ample record evidence indicating that policy played no role in the government's decision to delay armoring MRGO.

Then this:

The district court found as a matter of fact that, in . . . maintaining . . . the MRGO, the Corps labored under the mistaken scientific belief that the MRGO would not increase storm-surge risks.

Even the Corps’s own lawyers were willing to concede:

At oral argument in the district court, the United States made the same admission: The Corps “determined that MRGO played no role in major hurricane events” and, “for that reason, the Corps saw no reason” to take any steps to remedy MRGO's dangers.

And when confronted by a single vague quotation intended by the Corps to suggest some policy dimension, the court casually bats it aside:

Against the considerable evidence amassed to suggest that the Corps's decisions were grounded on an erroneous scientific judgment, not policy considerations, the government offers little affirmative evidence: “[I]n the Corps' view, maintaining MR–GO through dredging and raising the levees through separate projects allowed the Corps to maximize its limited resources and to continue operating the MR–GO as a shipping channel as Congress charged it to do.” This quotation is the closest the government comes to arguing that it had policy reasons . . . for delaying MRGO's armoring. But the government's contention cannot stand where there is no record evidence that, because of budgetary constraints, the Corps failed to implement feasible remedial measures or that it ever performed a cost-benefit analysis.

So there it is: the Corps never approached safety as a policy issue because it never understood safety as an issue at all. Corps officials said that. Corps lawyers said that. And, according to the appellate court, the whole “ample record evidence” says that.

And yet, somehow after a few months, all this judicial confidence goes wobbly. I imagine one of the judges waking up in the middle of the night crying, “Caesar’s Ghost! All this time I have misunderstood the facts of that vexing case. I must call the others.” And something like that does indeed appear to have happened, for the next we read in the panel’s do-over opinion:

[T]here is ample record evidence indicating the public-policy character of the Corps's various decisions contributing to the delay in armoring. Although the Corps appears to have appreciated the benefit of foreshore protection as early as 1967, the record shows that it also had reason to consider alternatives (such as dredging and levee “lifts”) and feasibility before committing to an armoring strategy that, in hindsight, may well have been optimal.

We may never know what spirits swayed the jurists at this late date. That’s a shame, because if a federal court is going to backtrack on a case of such magnitude, it owes us some analysis, not a few conclusory statements. If willful ignorance constitutes a policy choice, is there any incompetence that does not?

I’m afraid some will say plaintiffs should never have expected more in the first place. Did anyone really expect a government agency to be held accountable in such an exceptional case? Sure, Katrina was an outlier. But disasters as a category are not; they are the rule, not the exception. If the King can be hauled into court when the stakes are low, the same must be true when the stakes are high.

 

Robert R.M. Verchick
Gauthier ~ St. Martin Chair in Environmental Law 
Loyola University New Orleans

 

September 28, 2012 | Permalink | Comments (0) | TrackBack (0)

Thursday, September 27, 2012

Taking Snow?

In recent decades, the federal lands have generated a whole bunch of water rights cases.  The usual fact pattern involves a private party that leases federal lands, and that uses water on those lands.  Under well-established principles of western water law, leaseholders may develop private water rights to water flowing across their leaseholds, and that those rights are defined by state, not federal, law.  That raises issues when the federal government attempts to restrict the leaseholder’s activities, or denies renewal of the lease.  According to at least some leaseholders, such a restriction or denial constitutes an unconstitutional taking of the private water rights.

ISS018-E-005353Most of the cases to raise this issue have involved grazing leases.  However, a federal district court in Colorado is now considering a new variation of this dispute.  National Ski Areas Association v. United States Forest Service involves, as its name suggests, ski areas on federal land. In 2012, the Forest Service issued a guidance document that either (a) clarified that ski areas’ water rights are jointly held with the Forest Service (that’s the Forest Service version); or (b)compelled ski areas to transfer some existing rights into joint ownership, and compelled forest managers to exact joint ownership of other water rights as a condition for future renewal of leases (that’s the ski area version).   The National Ski Areas Association sued, opposing what they described, in a press release, as “this outright taking of private property by the U.S. Government.”

So will this be the next major water rights/takings case?  Probably not.  The ski areas’ primary argument is a classic procedural administrative law claim; the association argues that the guidance document was actually a legislative rule that should have gone through notice and comment.  The ski areas also bring several other administrative law arguments, but the takings claim, though central to their political and public relations offensives, appears nowhere in the their brief.  That doesn’t mean the issue is just rhetorical fluff; the ski areas may have just decided that a facial administrative law challenge has better prospects than a facial takings challenge, and may well be reserving the legal takings arguments for a later case (if this initial one fails).  And no matter how the court (and, probably, the 10th Circuit) resolves the case, it will need to answer some questions about the water rights at issue.  Still, in this round, at least, the takings issue won’t be squarely presented.

Nevertheless, this is a case to watch.  There are a lot of federal leaseholders with water rights, and whatever the district court says will be of great interest not just to ski areas and cattle ranchers, but also to holders of oil and gas leases, to miners, and, of course, to environmentalists.  So stay tuned.

- Dave Owen

September 27, 2012 | Permalink | Comments (0) | TrackBack (0)

Wednesday, September 26, 2012

Emerging Issues in the Arctic Part 7: Coda

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Last spring, I set out to blog about developments in the Arctic, hoping to identify theoretical perspectives, policy angles, legal conflicts, cool technologies and news items of interest. It was easy enough to predict that the eyes of the world would be turned on the Arctic region this summer, to see how much ice melted, how many cargo ships passed through the Northern Sea Route and the Northwest Passage, and whether Shell Oil would succeed in drilling for oil in the Beaufort and Chukchi Seas. Well, the extent of ice melt has set records. Russia continues to industrialize along the Northern Sea Route. And commercial shipping across the Northwest Passage is finally happening. But, despite having sent 2 drill ships, more than 20 support vessels, a capping stack and emergency equipment into the area, Shell finally announced on September 17 that it will not be drilling for oil and gas in the Arctic in 2012.

How anticlimactic!

How did a result Shell did its best to portray as inevitable become so evitable?

There are two simple explanations: First, earlier this month, as Shell began to drill a top well at a site on the Chukchi Sea, a 30 mile-long, 12 mile-wide, 25-meter thick piece of ice drifted toward the site. The drill ship had to move, and there is no longer enough time to drill a full well. That’s the kind of thing that goes down up in the Arctic. Second, more recently, the company's new containment dome, an important component of its highly scrutinized oil spill response system, was damaged during the final tests being conducted near the port town of Bellingham, Washington. Without the containment dome operating, the Coast Guard would be unlikely to approve of the response system, and the Department of Interior would be unlikely to issue the final permits necessary to drill. So, instead of pressing its luck and trying to drill deep against the odds, Shell will content itself with drilling a number of top wells—which, according to the company do not threaten a blowout or oil spill—and look forward to next year, when it will try again strike oil. 

But there is a more complex explanation, as well: Shell’s decision to scale back its plans is the temporary stopping point in an ongoing dialogue among the company, the oversight agencies, the State of Alaska, national and local environmental groups, native Alaskan communities and the courts that is working and re-working its way through administrative, political and judicial channels. Emily Meazell and Jim Rossi have written a sequence of important pieces exploring the dialogic possibilities of serial litigation in administrative law. (You can start here, go here, and then here). Admittedly, the battle over drilling in the Arctic falls outside Professors Meazell’s characterization of “serial litigation” as an iterative back-and-forth between the agencies and the courts on a particular aspect of a rulemaking or adjudicatory process; yet, I think it falls inside Professor Rossi’s expansion of the “dialogue” concept to incorporate a more generalized perspective on judicial review. For the sake of giving it a name, I would say that what we have here is a prime example of “assault litigation.” Assault litigation involves repeated challenges to a single administrative project—be it a rulemaking or any type of adjudication—brought in a number of different lawsuits spread out over a relatively short period of time and from a variety of legal angles.  

Now, Shell has spent upwards of $4.5 billion and six years working its way over, around, and through various regulatory hurdles and legal challenges (in addition to ice and weather delays and technical glitches) in pursuit of tapping the oil and gas reserves beneath the waters offshore Alaska’s Arctic coastline. Shell lost a case or two in the early days, but judicial review has been favorable of late. In the last six months alone the company has successfully defended a series of lawsuits challenging everything from the leases granting it the right to drill to several different approvals of its emergency oil spill response plans to its air permits. Yet, the assault litigation has had a visible impact on audiences other than the defendant agencies and the courts. Interior Secretary Ken Salazar, technically a defendant in some cases, has been particularly involved, frequently weighing in publicly on the company’s plans and the department’s review of them and making clear that Shell’s operations are being scrutinized not only by engineers and technocrats at Interior, the Coast Guard, and EPA, but also by executive officials operating at the highest political levels. Meanwhile, Congress has introduced legislation that would, among other things, expedite lease sales in the Arctic. Other oil companies have announced that they are backing away from plans to proceed in the Arctic, for the time being, due to “regulatory uncertainty.”

Would the agencies have required as much from Shell as they have in the absence of the assault litigation? (This question leaves aside the question of whether, as plaintiffs claim, the agencies are still not requiring enough.) Would Shell be drilling today, perhaps without a properly functioning containment dome, possibly taking bigger risks on the ice floe, without the increased heat? Does the fact that Shell keeps winning in court indicate that there is something wrong with opponents’ ability to fire multiple challenges to a single project? Does it indicate that something is right? And what does it mean about the fragmented structures of environmental and natural resources law?

Not sure. But I look forward to looking at these questions more closely soon.

While the Arctic may be made safer by the participation, increased application of agency expertise, and greater political accountability encouraged by the assault litigation, Shell’s not drilling this year does not mean that the Arctic is saved. In fact, as the record ice melt, ongoing industrial development, increased shipping and tourism traffic, and oil and gas drilling by other nations in other offshore jurisdictions all make plain, the Arctic, as we have known it for the last four hundred years, is history. And an all-out litigation war is not going to change that.

-- Michael Burger

September 26, 2012 | Permalink | Comments (0) | TrackBack (0)

Tuesday, September 25, 2012

Senate Passes Thune Bill Unanimously...What next for EU Aviation Directive?

Earlier this week, the U.S. Senate unanimously passed the Thune Bill, which prohibits and protects airlines from complying with the European Union's Aviation Directive. http://www.reuters.com/article/2012/09/24/uk-usa-carbon-airlines-idUSLNE88N00K20120924. The Directive, implemented earlier this year, requires all commercial carriers landing and taking off from airports EU nations to pariticpate in the EU's emissions trading scheme [ETS]. The Directive has faced strong opposition, notably from U.S. airlines and governments such as China, India, and the United States. The governments of China and India have explicitly prohibited their airlines from complying withthe EU Directive and China is reportedly cancelling or reducing its Airbus orders in retaliation.

The United States Senate has passed a bill authorizing a similar ban on compliance with the Directive. The Bill, S. 1956, or the "Thune Bill," as it is known after its sponsor Senator John Thune (R-SD), gives the Secretary of Transportation the power to prevent airlines from complying with the EU Aviation Directive. [http://ww.govtrack.us/congress/bills/112/s1956/text].

The Bill vests with the Secrertary of Transport the authority to prohibit U.S. civil aircraft carriers from participating in the EU-ETS scheme. In making the decision, the Secretary must determine whether imposing such a prohbition is in the public interest, taking into account various important factors, including the impact on U.S. consumers, carriers, and operators; U.S. interest in economic, energy, and environmental security; and U.S foreign relations and international commitments. [Section 2].

The Thune Bill also requires the Secretary of Transporation and other government officials "to take other actions under existing authorities that are in the pulic interest necessary to hold operators of civil aircraft of the United States harmless from the emissions trading scheme..." [emphasis added] [Section 3(2)].

While the objective of the Thune Bill, to prevent unilateral action by the European Union on an issue requiring multilateral cooperation, is understandable, the language of the Bill and the approach of the Senate could potentially put U.S. taxpayers at risk, even those who do not avail of the airline services, unless the scope of the hold harmless provision is clarified.

In most contracts and law, a "hold harmless" clause guarantees or indemnifies a particular person or group. It is unlcear from the language of the Bill whether this is the intended purpose of the hold harmless clause. It is equally unclear that the purpose of the clause is not to indemnify civil aircraft carriers.

If the hold harmless clause operates to indemnify airline, it could work as follows: under the EU Directive, airlines that do not comply with it will be fined at a rate of about $125 for each metric ton of emissions produced by the airlines. The EU countries enforcing the Directive also have the authority to ban flights of non-complying airlines from entering airports in the EU territory. If an EU nation takes either step, the airlines could seek indemnity from the Secretary or other appropriate administrative agencies, who would be legally bound to provide reimbursement if the hold harmless clause is in operation.

Whether an airline can claim indemnity depends on the interpretation that could be given to the various conditions in the hold harmless provision. Specifically, the Bill requires the Secretary of Transportation to take measures "in the public interest" to hold the airlines harmless. If the provision is interpreted naroowly to mean the interest of passengers, then the Secretary must according to law reimburse the airlines. If, on the other hand, the public interest is construed more broadly to include the general public, then airlines may not receive reimbursement. Given the general functions of the agencies identified, however, it is likely that they will construe public interest narrowly and value the public interest in preserving lower and competitive airfares, rather than broader tax implications. In such an event, the requirement that agencies take into account public interest could well lead to a situation where American tax payers bear the burden of indemnifying airlines. It is equally unlikely that the U.S. government would leave airlines in a legal dilemma, where both compliance and non-compliance with the Directive would cost them.

Thus, while the Thune Bill mirrors the action taken by other governments such as China and India, the legal solution that it offers must be applied in a manner that ensures that American taxpayers do not face undue economic burden. International negotiations and remedies may be a better way to resolve the problem. Alternatively, the Bill before it is finally adopted, should clarify the scope of the hold harmless provision and the public interest language, or ensure that taxpayers do not bear the brunt of a problem faced by civil aircraft carriers.

--Deepa--

September 25, 2012 | Permalink | Comments (0) | TrackBack (0)

Sunday, September 23, 2012

In Case You Missed It - Week of September 16th-22nd

* Less than 10% of Caribbean coral reefs are showing live coral cover – on the verge of collapse.

* Natural gas fracking controversies heat up around the globe: see here, here, and here.

* A new report in the New England Journal of Medicine finds that doctors are less likely to trust research studies funded by industry.

* Entergy CEO maintains informed views on climate change, but will be retiring soon.

* Conservationists and farmers come together to push Congress to pass Farm Bill.

* Amazon deforestation jumped 220% in August (relative to last August's rate).

September 23, 2012 | Permalink | TrackBack (0)