Supreme Court Docket Full of Environmental Cases

Last week’s rancorous oral argument in the case of Environmental Defense, et al. v. Duke Energy Corp.,[1] signaled the beginning of what could be an important term for environmental issues at the U.S Supreme Court. While it is too early to know whether it indicates a trend, the Roberts Court has already demonstrated its willingness to set its own course on environmental issues. The Court has already accepted review in four high-profile environmental cases this term. In three of those four cases, the Court accepted review over the Bush administration’s objections. The Court also surprised most commentators when it accepted review in a case where review was filed solely by an environmental group. This was the first such case accepted for consideration in 35 years.

Environmental Defense v. Duke Energy Corp.

The Environmental Defense v. Duke Energy case involves EPA’s New Source Review (“NSR”) program. The case arose after Duke Energy made extensive modifications to several coal-fired generating units. Although the changes did not result in any increase in the hourly output of emissions, they did allow Duke Energy’s generators to operate for more hours per day, resulting in an increase in total emissions output per year. The United States sued, claiming that Duke’s changes were “major modifications” as defined by EPA, and that Duke failed to obtain EPA permits for the improvements. Environmental Defense intervened as a plaintiff.

The Court granted certiorari on two issues, and did so despite the opposition of the Solicitor General, who urged the Court not to hear the case. The first issue is substantive,the other jurisdictional.. The substantive issue in the case is whether to sustain the use of an emissions test that would allow a more lenient interpretation of the NSR permit program, or whether to sustain EPA’s current test under the NSR program. Amendments to the Clean Air Act enacted in 1970 added New Source Performance Standards (“NSPS”). Subsequent 1977 amendments established the Prevention of Significant Deterioration (“PSD”) program, which requires permits for certain emission “modifications.” EPA’s regulations under the PSD program focus on increases in annual emissions rather than hourly emissions, while the NSPS definition has its focus on hourly emissions. 

The jurisdictional question concerns which appellate courts have jurisdiction to review EPA’s clean air enforcement actions. Duke Energy successfully argued to the Fourth Circuit that NSPS and PSD definitions must be the same, and that EPA did not have authority to define PSD “modifications” based on annual emissions. Environmental Defense and the government argue that the Fourth Circuit had no authority to evaluate the meaning of the term “modification” because the Clean Air Act requires petitions to review EPA regulations to be brought only in the District of Columbia Court Circuit of Appeals. In addition, they argue that the text of the statutes and the courts’ duty to defer to EPA support the EPA’s regulation.[2] A previous article on the case appearing in this newsletter[3] noted a split in the circuits on this issue, and some commentators had speculated that it was this procedural issue that may have been the reason the Court took the case. Whether or not that turns out to be correct, the oral argument focused on the substantive issue, not the procedural one.[4]

In addition to Duke Energy, the Court has agreed to hear two other environmental cases over the opposition of the Solicitor General. The other two are Massachusetts et al. v. EPA,[5] and Rockwell International Corp. et al. v. United States.[6]

Massachusetts, et al. v. EPA

The Massachusetts case concerns EPA’s decision not to regulate carbon dioxide and other air pollutants associated with climate change under the Clean Air Act. Section 202(a)(1) of the Act requires the EPA to set emission standards for “any air pollutant” from motor vehicles or motor vehicle engines “which in [its] judgment cause[s], or contribute[s] to, air pollution which may reasonably be anticipated to endanger public health or welfare.” The petitioners in the case are twelve states, three cities, an American territory,[7] and numerous environmental organizations who requested that EPA regulate CO2 and other greenhouse gases pursuant to Section 202(a)(1). EPA responded by concluding that it did not have statutory authority to regulate greenhouse gas emissions from motor vehicles, and that, even it did, it would not exercise the authority at this time. The D.C. Circuit issued a split decision upholding EPA’s decision not to issue regulations.[8] The D.C. Circuit’s decision upholding EPA’s decision was previously reported in this newsletter.[9]

Rockwell, Int’l v. United States

Rockwell v. U.S., concerns a whistleblower action filed on behalf of the United States against Rockwell International. The whistleblower, James Stone, alleged that Rockwell falsely reported to the Department of Energy that it had complied with applicable regulations when submitting reimbursements under its contract for processing waste at the Rocky Flats nuclear weapons facility. By the time Stone sued, the news media had already published several reports detailing environmental violations at the Rocky Flats plant.

Under the False Claims Act, a private plaintiff can file a whistleblower claim based on publicly known information only if that person was an “original source” with “direct and independent knowledge of the information.”[10] Rockwell moved to dismiss Stone’s complaint claiming that Stone was not an “original source.” The district court denied the motion, finding that Stone, who had been the principal engineer at Rocky Flats for several years, qualified as an original source because he had direct and independent knowledge of Rockwell’s environmental violations and knew that Rockwell’s governmental compensation was linked to its compliance with environmental regulations. After trial, a jury returned a verdict in favor of the United States and Stone for over $4 million. The Tenth Circuit Court of Appeals affirmed.[11] The Supreme Court will decide whether Stone’s information is sufficient to qualify as an “original source” under the whistleblower statute.

United Haulers Ass’n v. Oneida-Herkimer Solid Waste Management Authority

The Bush administration did not weigh in on the fourth environmental case the Supreme Court agreed to hear this term, United Haulers Association Inc. et al. v. Oneida-Herkimer Solid Waste Management Authority, et al.,[12] in which the waste hauling industry is seeking to overturn a lower court’s determination that an earlier high court ruling governing disposal practices does not apply to publicly-owned landfills.

The Supreme Court previously ruled in C & A Carbone, Inc. v. Town of Clarkstown,[13] that a “flow control ordinance, which require[d] all solid waste to be processed at a designated transfer station before leaving the municipality,” violated the Commerce Clause because it “de-priv[ed] competitors, including out-of-state firms, of access to a local market.” Following on the Carbone opinion, the United Haulers case presents two questions: (1) whether the prohibition struck down in Carbone applies when the “preferred processing facility” is owned by a public entity; and (2) whether a flow-control ordinance that requires delivery of all solid waste to a publicly owned local facility and imposes such an “insubstantial” burden on interstate commerce that it will satisfies the Commerce Clause if it serves even a “minimal” local benefit.[14] On the first issue, the Second Circuit issued an opinion that conflicted with an opinion from the Sixth Circuit in National Solid Waste Management Ass’n v. Daviess County.[15] Oral argument in this case is set for January 8, 2007.

Additional Cases Being Considered by the Court

In addition to these pending cases, the Supreme Court is also considering petitions for certiorari in the case of UGI Utilities Inc. v. Consolidated Edison Company of New York Inc., a decision previously reported on in this newsletter.[16] In this case, which was the first appellate decision applying the Court’s opinion in Aviall Services, Inc. v. Cooper Industries, the Second Circuit decided that an implied cause of action existed under § 107(a) for recovery of costs incurred by a party who had cleaned up “voluntarily” – that is, without having first been sued or having settled its CERCLA liability with EPA or a state agency.. The Supreme Court recently asked the Solicitor General to weigh in on the certiorari petition in that case.[18] Finally, in another case that was previously reported in this newsletter,[19] plaintiffs in the case of Pakoota v. Teck Cominco Metals, Ltd.[20]announced that they intended to seek certiorari of the Ninth Circuit’s decision that the operator of a Canadian smelter can be held liable under the Superfund statute for a release that originated in Canada and continued into the United States. While the Ninth Circuit sustained the decision that the Canadian smelter could be held liable under CERCLA, it declined the opportunity to resolve broad issues of the extraterritorial application of Superfund that had been presented in that case, and it is anticipated that the Supreme Court will be requested to address those issues.

For more information, please contact Steve Jones.