Wednesday, October 8, 2014
On September 29, FERC issued an order authorizing Dominion Cove Point LNG, a subsidiary of Dominion Resources, to site, construct, and operate facilities for the liquefaction and export of domestically produced natural gas at Dominion’s existing liquefied natural gas (LNG) import terminal in Calvert County, Maryland, and to construct and operate related gas transportation facilities in northern Virginia. The Cove Point LNG Terminal was originally authorized in 1972 as an import terminal. The recent surge in domestic natural gas production has created market conditions whereby Dominion has determined it is more profitable to export LNG through Cove Point than to use the facility for imports. FERC issued its order pursuant to its authority under Natural Gas Act § 3, 15 U.S.C. § 717b (requiring FERC authorization to export natural gas), and Natural Gas Act § 7(c), 15 U.S.C. § 717f (requiring FERC authorization to extend or improve natural gas transportation facilities).
The Cove Point project is significant in several respects. First, it is another manifestation of the remarkable change in the world market for natural gas, with increases in domestic production leading to steep decreases in natural gas imports into the United States. The United States is projected to become a net natural gas exporter by 2020. The conversion of Cove Point from LNG imports to exports is not unique. FERC has previously approved three other export projects, the Maritime Administration has approved three others, and thirteen more export terminals have been proposed. The New York Times recently published an article about plans to convert the Golden Pass LNG Import Terminal in Texas to an export facility.
Second, there is considerable controversy regarding the effects of increasing natural gas exports on domestic natural gas prices. In 2012, the Energy Information Administration projected that gas exports would increase average electricity prices by 2-3%. Senator Ron Wyden (D-Ore.) and others have expressed concern that the EIA’s projects are unrealistic and that exports may have adverse effects on the U.S. economy. Proponents of natural gas exports acknowledge some modest effect on domestic natural gas prices (along the lines of EIA’s projections) but emphasize the net macroeconomic benefits of increased exports.
Third, environmental groups worry that exports will further increase natural gas production, leading to increased fossil fuel production (with resulting climate and other environmental impacts). The Sierra Club’s Beyond Natural Gas Campaign, Chesapeake Climate Action Foundation, Earthjustice, and Bill McKibben all have vocally opposed the Cove Point Liquefaction Project on environmental grounds. FERC’s Environmental Assessment for the Cove Point Liquefaction Project did not analyze how exports from Cove Point would affect the development of upstream natural gas production, transportation, and distribution facilities because of the uncertainties of such development. Environmentalists have been particularly critical of this omission. The controversy raises both factual and legal questions. Factually, will LNG exports have a significant impact on domestic gas production? Legally, if there is an impact, to what extent are agencies that authorize LNG exports obligated to consider the environmental impacts of such production? Across a range of areas including but not limited to energy projects, environmentalists have long pushed agencies to consider broader, systemic impacts of their decisions. Agencies have generally resisted, focusing on more immediate impacts that involve less uncertainty. The extent to which NEPA documents are a useful and appropriate tool for assessing systemic impacts will continue to generate controversy in the LNG export issue and other environmental issues for quite some time.
Thursday, October 2, 2014
On Tuesday, Arizona federal district court judge David G. Campbell dismissed claims by several mining associations, Utah and Arizona counties, and the Nuclear Energy Institute, seeking to set aside the Obama Administration’s January 9, 2012 withdrawal of over one million acres of federal lands surrounding Grand Canyon National Park from uranium mining. This decision protects the Colorado River watershed and several Havasupai sacred sites from the direct and indirect impacts of uranium mining by preventing the development of thousands of claims that have been located on federal lands near the park since the latest spike in uranium prices in 2004. The Center for Biological Diversity, along with the Grand Canyon Trust, the Havasupai Tribe, the National Parks Conservation Association, and the Sierra Club all intervened in support of Interior’s withdrawal.
In their appeal to the district court, the plaintiffs, American Exploration & Mining Association, Gregory Yount, the Nuclear Energy Institute, the National Mining Association, the Arizona Utah Local Economic Coalition, and Quaterra Resources, Inc., raised claims under NEPA, FLPMA, and the Establishment Clause. First, they argued that BLM violated NEPA by failing to consult with local governments, and by failing to address “scientific controversies” in the final Environmental Impact Statement. Noting that the BLM had given two of the counties cooperating agency status during the EIS process, and that the agency gave ample opportunity for the plaintiffs to appear and consult at “two public scoping meetings, five meetings with cooperating agencies, and three meetings or hearings with the [counties] specifically,” the court ruled that BLM had provided more than adequate opportunity to consult. Moreover, BLM had included the results of several county studies on the proposed withdrawal in both the draft EIS and the final EIS, and had reconciled any scientific discrepancies regarding location and quantity of uranium reserves consistent with NEPA’s requirements.
Second, the plaintiffs argued that the BLM’s withdrawal was for an “invalid purpose” under FLPMA because the record did not support the BLM’s stated reasons for the withdrawal, which included uncertainty regarding the impacts of uranium mining on water resources. Also, they argued that BLM had unlawfully considered the impact of mining activity on cultural and tribal resources, the need for further study on wildlife impacts, and the existence of valid claims within the withdrawal area not affected by the action. The court disagreed, finding that although there was some uncertainty in the record about how mining might impact water, wildlife, and other resources, “DOI decided to err on the side of protecting the environment,” satisfied the requirements of FLPMA section 204. This precautionary approach was supported by the NEPA Record of Decision, which showed uranium and arsenic in soil and water samples taken in the vicinity of several active mining sites, as well as trace amounts of iron, lead, manganese, radium, sulfate and uranium.
The plaintiffs also argued that the final EIS undervalued the uranium deposits in the withdrawn sections because it included valuations based on a 1990 USGS study, which violated FLPMA’s requirement that a withdrawal “fully disclose the value of minerals to be closed to development.” The court disagreed, holding that it was acceptable for the agency to engage USGS experts to adjust the 1990 predictions, without conducting on-the-ground surveys of the million acres proposed to be withdrawn. Noting that “nothing in FLPMA or its implementing regulations requires that the estimate be exact,” the court deferred to the agency’s determination of the most accurate scientific estimates regarding in-ground uranium reserves.
Third, one of the plaintiffs argued that the cultural resource justification for the withdrawal violated the Establishment Clause of the First Amendment because it elevated Havasupai religious concerns above other, secular interests. Applying the test from Lemon v. Kurtzman, the court held that the purpose of the withdrawal was secular, and there was “no record evidence” demonstrating any religious purpose. In response to an argument that the withdrawal process gives Native American governments “veto power” to prohibit certain land uses and “creates a preference for American Indian religious activities” on federal lands, the court held that the withdrawal did not primarily affect Havasupai religious interests, but instead, primarily affected uranium mineral resources. Also, the court found that nothing in the withdrawal process elevated Native American influence over the federal government’s management of the area in question above other interests.
In sum, this decision supports a precautionary approach to mineral withdrawals. It affirms the agency’s choice, “when faced with uncertainty due to a lack of definitive information, and a low risk of significant environmental harm,” to temporarily withdraw land from mineral entry before conducting a NEPA review. Although this may run counter to the general policy underlying NEPA, in this instance, BLM’s action prevented the development of thousands of uranium claims until the agency could fully study the impacts of those claims and determine whether to make a full withdrawal. As the district court noted, if the BLM waited to act until after the NEPA review process was complete, the claims may have become vested and at that point, it would have been too late to protect the Colorado River watershed and the Havasupai sacred sites.
- Hillary M. Hoffmann
Monday, September 29, 2014
On September 26, the D.C. Circuit (Brown, Wilkins, Silberman) issued a decision in Smith Lake Improvement District and Stakeholders Association v. FERC, No. 13-1074. When FERC renewed Alabama Power’s license for the Warrior hydropower project, an organization of lakefront property owners objected to FERC’s decision to maintain existing lake levels. The association filed a request for rehearing of FERC’s relicensing order, and FERC reaffirmed its order. The association then filed another rehearing request, which FERC summarily denied on the ground that it raised issues already addressed in the first rehearing order. The association then petitioned for review in the D.C. Circuit, within sixty days of the second rehearing order but 124 days after the first rehearing order. Thus, if the Federal Power Act’s sixty-day statute of limitations began running from the first rehearing order, the association’s petition was untimely. If the limitations period ran from the second rehearing order, the petition was timely. Alabama Power moved to dismiss the petition as untimely. FERC disagreed and sided with the petitioner on the issue, arguing that all subsequent rehearing petitions should toll the limitations period unless they are “vexatious.”
The D.C. Circuit granted Alabama Power’s motion to dismiss the petition for review, holding that a second request for rehearing tolls the statutory sixty-day period for judicial review only if the second request follows a first rehearing order that modifies the results of the original order. Here, because FERC’s first rehearing order did not modify its original order, the association’s second rehearing request did not toll the statutory limitations period, and accordingly the association’s petition for review was untimely. The court acknowledged that its rule places prospective petitioners in somewhat of a dilemma as to whether to file a successive rehearing request with FERC or a petition for review with the court. The D.C. Circuit opined that petitioners unsure of whether a FERC rehearing order has modified a previous order—and therefore tolled the limitations period—should file a petition for review. If the court then determines that the FERC rehearing order did modify the previous order, and a successive rehearing request is in order, then the court “would expect” FERC to allow the petitioner to file a late rehearing request.
Sunday, September 28, 2014
Third Circuit Holds that Natural Gas Act Broadly Authorizes Eminent Domain for Replacement Pipelines Located Outside of Original Right of Way
On September 26, the Third Circuit (Rendell, Chagares, Jordan (dissenting)) issued a decision in Columbia Gas Transmission v. 1.01 Acres, No. 13-4458. The Third Circuit held that, under the Natural Gas Act, the owner of a natural gas pipeline holding a blanket certificate of public convenience and necessity from FERC has a right of eminent domain to obtain easements outside of an existing right of way to replace deteriorating pipeline. Judge Jordan dissented, troubled by what he regarded as a “limitless” reading of the applicable FERC regulations generating a result he regarded as “deeply problematic” and “constitutionally suspect.” The primary point of disagreement amongst the members of the panel was whether FERC had consistently and unambiguously interpreted its regulations not to place any locational limitations on pipeline replacements outside of an original right of way. FERC regulations authorize holders of such certificates to “replace . . . any eligible facility.” 18 C.F.R. § 157.208(a). The panel majority held that “replace” unambiguously includes replacements that involve some relocation. Judge Jordan, on the other hand, regarded the term “replace” as ambiguous, and cited regulatory history that he believed placed limits on the extent to which a replacement facility could be located away from an original facility.
Seventh Circuit Issues Two Decisions Involving Cleanup of Wisconsin’s Lower Fox River and Green Bay Superfund Site
On September 25, the Seventh Circuit (Wood, Kanne, Tinder) issued decisions in two related cases—NCR Corp. v. George A. Whiting Paper Co., No. 13-2447, and United States v. P.H. Glatfelter Company, No. 13-2436—both arising out of the cleanup of the Lower Fox River and Green Bay Superfund Site in northeastern Wisconsin. These are both lengthy decisions raising numerous issues that are likely to be important precedent in other future CERCLA cases.
The Whiting Paper case involved a CERCLA contribution claim brought by NCR Corporation, one of the potentially responsible parties (PRPs) for the Site, against other PRPs. The other PRPs, in turn, brought contribution counterclaims against NCR. The district court held that NCR was not entitled to equitable contribution from the other PRPs, and that the other PRPs were entitled to equitable contribution from NCR. The court of appeals, in an opinion authored by Judge Wood, addressed at least seven significant issues, many of which were important questions of CERCLA law.
1. Cost recovery vs. contribution.
a. The court of appeals held that NCR was limited to a contribution (as opposed to cost recovery) claim, because NCR’s costs were incurred during or following government suits and administrative consent orders to enforce EPA administrative orders.
b. Another company, Appvion, presented a thornier issue, apparently an issue of first impression post-Atlantic Research. Appvion was initially identified as a PRP and paid response costs in that capacity, then later was determined not to be liable under CERCLA, but is liable as an indemnitor of NCR. Appvion sued to recover response costs it paid while it was regarded as a PRP. The court of appeals, citing Chubb Custom Insurance Co. v. Space Systems/Loral, Inc., 710 F.3d 946 (9th Cir. 2013), noted that normally indemnitors are limited to proceeding through their indemnitees. But that rule did not apply to Appvion, because it was seeking to recover for costs incurred as a PRP, not as an indemnitor.
2. Equitable allocation. As to the district court’s equitable allocation of costs amongst NCR and the other PRPs, the court of appeals held that the district court had abused its discretion in focusing entirely on one equitable factor—knowledge of the danger posed by PCBs—and in limiting discovery to that factor, in the process excluding other potentially relevant equitable factors such as relative volume of PCBs. The court distinguished the district court’s impermissible consideration of only certain factors from a situation in which a court may permissibly ultimately decide to allocate costs based on a single factor, after considering other factors as well.
3. Arranger liability. The court held that NCR’s predecessor, Appleton Coated, was not liable as an arranger for selling “broke” carbonless paper—essentially scrap paper—because its purpose was to sell a useful product at a market price, not just to get rid of it. The court contrasted United States v. General Electric Co., 670 F.3d 377 (1st Cir. 2012), in which GE nominally sold PCB-containing material but actually was simply trying to get rid of the material.
4. Insurance offsets. With respect to the issue whether Glatfelter’s (another PRP) contribution claims against NCR should be offset by insurance proceeds that Glatfelter obtained, the court held that the collateral source rule does not apply to CERCLA contribution actions and that the court could take the insurance proceeds into account. The court of appeals approved of the district court’s method for taking the proceeds into account, which allocated the payments between liability coverage (which should offset Glatfelter’s contribution claims against NCR) and defense costs (which should not).
5. Natural resource damages. As to liability for natural resource damages, the court held that CERCLA contribution claims can include natural resource damages.
6. Preemption of common-law counterclaims. The court of appeals held that CERCLA preempted state-law counterclaims of negligence, strict liability, and public nuisance against NCR, on the ground that allowing such claims would effectively reapportion costs among the PRPs in a manner contrary to CERCLA.
7. Other issues. The court of appeals also addressed two other case-specific issues, involving Glatfelter's claims based upon discharges at Portage, Wisconsin, and the potential preclusive effect of the district court’s holding that Appvion is not a PRP.
The issues in the Glatfelter case are considerably narrower. This case involved a claim brought by the United States against potentially responsible parties (PRPs), including Glatfelter and NCR Corporation, to enforce EPA’s 2007 administrative order. After the district court ruled in favor of the government and against the PRPs, Glatfelter and NCR appealed. The Seventh Circuit, in a decision authored by Judge Tinder, affirmed in part and reversed in part. Of the seven issues in the case, one is a significant legal issue. The district court had enjoined the defendants to comply with EPA’s administrative order. The Seventh Circuit held that this was in error, and that a permanent injunction is an inappropriate mechanism to enforce a CERCLA administrative order.
The remaining issues were more case-specific, although they may form important precedent for other cases raising similar facts. As to those issues, the court of appeals held (a) that EPA did not unlawfully delegate responsibility for the cleanup to the Wisconsin Department of Natural Resources, because the two agencies entered into a cooperative agreement under CERCLA § 104 (without deciding that such an agreement was required); (b) that the agencies reasonably decided to maintain a preference for dredging in the selected remedy; (c) that the agencies appropriately increased their estimates of the cost of the cleanup in 2010 based on new information by publishing an explanation of significant differences rather than amending the Record of Decision; (d) that the district court appropriately held Glatfelter liable for response costs based on its liability for the Site generally instead of proof that it had a causal connection to the specific operable unit in question; (e) that the district court incorrectly rejected NCR’s argument that the response costs could be apportioned based on the mass of hazardous substances attributable to each PRP; and (f) that the district court correctly rejected Glatfelter’s argument that it caused none of the contamination in the relevant operable unit.
Wednesday, September 24, 2014
Ninth Circuit Affirms Denial of Preliminary Injunction Against Logging Projects in Montana's Flathead National Forest
On September 24, the Ninth Circuit (Hawkins, Rawlinson, Bea) issued a decision in Friends of the Wild Swan v. Weber, Nos. 13-35817 & 13-35819. The plaintiff environmental organizations sued the Forest Service, alleging that two logging projects in Montana’s Flathead National Forest violated the National Environmental Policy Act (“NEPA”), the National Forest Management Act (“NFMA”) and the Endangered Species Act (“ESA”). The district court denied the plaintiffs’ motions for preliminary injunctions, and the plaintiffs appealed. The Ninth Circuit affirmed. With respect to the NEPA claims, the court held that the Forest Service adequately justified its reasons for limiting the geographic scope of its cumulative effects analysis. For similar reasons, the court held the plaintiffs are unlikely to succeed on their ESA claims. With respect to the NFMA claims, the court held (a) that the Forest Service adequately justified its methodology for assessing winter snowshoe hare habitat; and (b) that the Forest Service used the best available scientific data to define potential fisher habitat.
Tuesday, September 23, 2014
For the past few weeks, Todd Aagaard has been going a great job keeping us posted on important federal court decisions. In keeping with that theme, I thought I’d add an update on a state court non-decision. Last week, the town of Orrington, Maine settled its lawsuit against two landowners who, the town argued, had wrongly allowed beaver-attracting vegetation to grown on their properties, leading to major damage when the beavers’ dams later burst.
Don’t laugh. This is serious stuff, and not just at the edge of the Great North Woods. I learned this several years ago, when a few non-law professors approached me about participating in an interdisciplinary research project on the law, ecology, economics, and (human) sociological impacts of beavers. The subject initially struck me as pretty esoteric, at least on the legal side. But then I searched Westlaw for the term “beaver dam” and discovered that there were actually quite a few cases like the one that settled last week.
Why so many? The reason, I think, is that the boundaries between water and land are already fraught with legal peril. Consider Rapanos and SWANCC, for example, or accretion/avulsion dilemmas; we lawyers spend a lot of time thinking about the edges of aquatic habitat. An animal whose life’s mission is to tinker with those edges therefore can cause a lot of legal mischief.
We also might see more legal issues arising. Beavers once were everywhere in North America, and they played important roles in shaping both aquatic and terrestrial habitats. Years of trapping decimated their populations, but they’re coming back. And with more beavers populating the landscape, and more people moving into suburban-fringe habitats, the potential for trouble (and for a lot of ecological benefits) grows.
I never did pursue that research project. One of the would-be lead investigators moved to another country, preliminary signals about grant funding weren’t great, and the whole thing fizzled. And, to my knowledge, not much else has been written on the subject. But if you’re a student looking for an environmental law topic for a comment, I’d suggest looking into the law of beavers. You might find it surprisingly interesting.
On September 18, a divided panel of the Fifth Circuit (Reavley, Jones (dissenting), Graves) issued a decision in United States v. Transocean Deepwater Drilling, Inc., No. 13-20243, a case arising out of the Deepwater Horizon disaster in 2010. The Chemical Safety Board is an independent federal agency established by Clean Air Act § 112(r)(6), 42 U.S.C. § 7412(r)(6), to investigate accidental releases of hazardous substances into the ambient air from stationary sources that result in a fatality, serious injury, or substantial property damages. The Board initiated an investigation into the Deepwater Horizon disaster and in connection with that investigation issued administrative subpoenas to Transocean, which objected that the Deepwater Horizon incident was outside the Board’s jurisdiction. The United States filed a petition to enforce the subpoenas, the district court ordered enforcement of the subpoenas, and Transocean appealed. The Fifth Circuit affirmed, holding (a) that the Deepwater Horizon was a stationary source within the meaning of Clean Air Act § 112(r); and (b) that the Board had jurisdiction to investigate the release of gases and explosion at the Deepwater Horizon, separate from the marine oil spill that ensued (and was outside the Board’s jurisdiction).
Judge Jones dissented; she would have held that the Deepwater Horizon was a vessel and not a stationary source and that the incident was sufficiently connected to an offshore oil spill to preclude the Board from investigating.
Monday, September 22, 2014
On September 17, the D.C. Circuit denied the petitions for rehearing en banc in Electric Power Supply Association v. FERC, 753 F.3d 216 (D.C. Cir. 2014). In a May 23, 2014, decision, a divided panel of the court of appeals had held that FERC Order 745, which regulated compensation for demand response, exceeded FERC's authority under the Federal Power Act. The decision induced considerable consternation among many proponents of the smart grid, as demand response has the potential to serve an important function in improving the reliability and environmental performance of the electric power grid. Among other critiques, Joel Eisen and I condemned the court's reasoning in an op-ed in the New York Law Journal, arguing that the majority decision "employ[ed] a crabbed reading of [FERC's] statutory authority that would unduly restrict the use of demand-side measures. The D.C. Circuit panel assumed that demand response is exclusively a retail market phenomenon, beyond the scope of FERC's authority over wholesale markets. The panel reached this conclusion even though FERC's Order 745 provided for compensating demand response services in wholesale—not retail—markets."
Although the denial of rehearing is disappointing, this is far from the death knell of demand response. There is still the possibility that FERC will file a petition for certiorari, and it remains to be seen how the loss of Order 745 will affect the development of demand response. At the very least, the decision leaves broad authority in the hands of states to give demand response services the incentives they merit.
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 firstname.lastname@example.org. 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.