Ninth Circuit Upholds Permanent Injunction in NEPA Case Without Evidentiary Hearing

Last year, the U.S. District Court for the Northern District of California enjoined seed growers nationwide from planting certain strains of genetically modified alfalfa, concluding that the U.S. Department of Agriculture (the “USDA”) violated the National Environmental Protection Act (“NEPA”) by failing to adequately assess the environmental effects of “Roundup Ready” alfalfa before deregulating it.[1] Earlier this month, the Ninth Circuit Court of Appeals affirmed both the substantive decision of the district court to require more environmental review, and the procedural decision not to hold an evidentiary hearing before granting injunctive relief. W. Org. of Res. Councils v. Johanns (In re Geertson Seed Farms).[2]

The standard for injunctive relief in environmental cases could change before the end of the year, when the U.S. Supreme Court issues its opinion in Natural Resources Defense Counsel v. Winter.[3] In Winter, scheduled for hearing next month, the Supreme Court will review an injunction issued by the Ninth Circuit in a decision that arguably lowered the threshold for issuing preliminary injunctions from a showing of “irreparable harm” to a showing of the “possibility of harm.”[4] For now, under Geertson Seed, district courts will weigh requests for permanent injunctive relief under NEPA according to the eBay factors (discussed below). If an injunction will be in place only until the required environmental analysis is finished, then in some circumstances, courts in the Ninth Circuit’s jurisdiction can determine such requests without holding an evidentiary hearing.

Background

The Plant Protection Act gives the Secretary of the USDA the authority to adopt regulations preventing the introduction and dissemination of plant pests.[5] The USDA regulates genetically engineered plant pests through the Animal and Plant Health Inspection Service (“APHIS”).[6] Such products and organisms are known as “regulated articles” under the Plant Protection Act. APHIS originally concluded that alfalfa seed lines known as “Roundup Ready alfalfa,” genetically engineered by the Monsanto Company and Forage Genetics International to tolerate the herbicide glyphosate (the active ingredient in Roundup), were regulated articles under the Plant Protection Act.[7]

Any person may petition APHIS for a determination that a regulated article does not present a plant pest risk, so should not be regulated.[8] In April 2004, Monsanto and Forage Genetics petitioned APHIS for a determination of nonregulated status for Roundup Ready alfalfa. Geertson Seed Farms and other alfalfa growers, along with the Center for Food Safety, Center for Biological Diversity, Western Organization of Resource Councils, Sierra Club and other non-profit organizations, opposed the petition. The petition opponents argued that: (1) the genetically modified alfalfa would contaminate conventional and organic alfalfa through gene transmission; (2) due to contamination, deregulation could prohibit farmers from marketing their natural products as organic and/or non-genetically engineered; (3) contamination would also impact organic livestock sellers; and (4) genetically modified alfalfa would negatively impact the export market, because 75 percent of American alfalfa is exported to Japan – a country that does not permit imports of glyphosate tolerant alfalfa. They also expressed concern that deregulation would spur development of glyphosate tolerant weeds.[9]

Following the biotech companies’ petition, APHIS prepared an environmental assessment (“EA”) under NEPA and took public comments on the EA and petition for deregulation. The agency received 663 comments; 520 opposed deregulation.[10] In June 2005, APHIS issued a Finding of No Significant Impact (“FONSI”) and approved Monsanto’s deregulation petition in full; “that is, the agency concluded that Roundup Ready alfalfa should be deregulated and sold without direct regulation by the USDA.”[11] However, APHIS acknowledged that, upon deregulation, Roundup Ready alfalfa could be planted near organic alfalfa crops without any buffer. Still, APHIS deemed the risk of gene transmission insignificant because organic operations would presumably develop and maintain a plan to avoid cross-pollination.[12] APHIS concluded that quality control could limit the amount of glyphosate resistant alfalfa included in exports to Japan, that organic farmers would still have the ability to purchase non-genetically modified alfalfa, and that alternative herbicides could minimize potential problems of glyphosate resistant weed development.[13] The agency also found that: (1) the genetically modified seeds exhibit no plant pathogenic properties; (2) they will not harm threatened or endangered species that are beneficial to agriculture; and (3) they should not reduce the ability to control pests and weeds in alfalfa or other crops.[14] For these reasons, APHIS granted the companies’ petition filed under the Plant Protection Act and implementing regulations,[15] and deregulated Roundup Ready alfalfa.[16]

In February 2006, Geertson Seed, another conventional alfalfa seed producer, and several environmental groups filed suit against the Secretary of the USDA and the Administrators of APHIS and the U.S. Environmental Protection Agency, challenging the decision to deregulate Roundup Ready alfalfa. The court allowed Monsanto, Forage Genetics, and three individuals to intervene as defendants.

The District Court’s February and March 2007 Orders

The plaintiffs in Geertson Seed brought claims under NEPA, the Endangered Species Act (“ESA”), and the Plant Protection Act. In his February 2007 order, U.S. District Judge Charles R. Breyer of the Northern District of California addressed only the plaintiffs’ NEPA claims. The NEPA issue presented a question of first impression: “[W]hether the introduction of a genetically engineered crop that might significantly decrease the availability or even eliminate all non-genetically engineered varieties is a ‘significant environmental impact’ [under NEPA] requiring the preparation of an environmental impact statement [(“EIS”)], at least when it involves the fourth largest crop in the United States.” The judge ruled that this introduction qualifies as a significant environmental impact under NEPA, so required preparation of an EIS. [17] He made the following findings in support of that conclusion: (1) a realistic potential for contamination of non-genetically engineered alfalfa exists; (2) APHIS failed to address the effects of genetically engineered alfalfa on organic farmers’ business; and (3) APHIS failed to adequately examine the potential for development of glyphosate resistant weeds.[18]

In conclusion, the district court found that the petition raised “substantial questions” as to whether (1) “deregulation of Roundup Ready alfalfa without any geographic restrictions will lead to the transmission of the engineered gene to organic and conventional alfalfa; (2) the possible extent of such transmission; (3) farmers’ ability to protect their crops from acquiring the genetically engineered gene; [and (4)] the extent to which Roundup Ready alfalfa will contribute to the development of Roundup-resistant weeds … and how farmers will address such weeds.”[19] APHIS must answer these questions in its EIS. The district court reserved consideration of plaintiffs’ claims brought under the ESA and Plant Protection Act, pending APHIS’ preparation of its EIS.

With those findings, on March 12, 2007, Judge Breyer vacated the federal defendants’ June 2005 decision deregulating Roundup Ready alfalfa and enjoined all future planting of Roundup Ready alfalfa nationwide.[20]

The Ninth Circuit Opinion

The Scope of Injunctive Relief

The defendants appealed the scope of the injunction to the Ninth Circuit, and argued that the district court should have held an evidentiary hearing before issuing a nationwide injunction.[21] The defendants also argued that the district court “erred in ordering injunctive relief because it improperly presumed irreparable injury instead of applying the traditional four-factor test for the issuance of a permanent injunction, as required under eBay v. MercExchange, L.L.C.,” and, as a result, ordered overbroad injunctive relief.[22]

To obtain permanent injunctive relief, a plaintiff must show: “(1) that it has suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction.”[23] This “traditional balancing of harms” also applies in the environmental context, and courts cannot categorically grant or deny injunctive relief without applying the four-factor eBay test.[24] In Geertson Seed, the Ninth Circuit found that the district court properly applied the eBay test. The lower court found the following: (1) with respect to harm, genetic contamination of organic and conventional alfalfa had already occurred; (2) the harm was sufficient to merit “broad injunctive relief”; (3) the harm to growers of non-genetically engineered alfalfa (and consumers) outweighed the financial hardships to Monsanto, Forage Genetics and growers; and (4) it would be in the public interest to enjoin use of Roundup Ready alfalfa before the USDA studies its impact, as failing to do so could make non-genetically engineered alfalfa unavailable in the marketplace.

Lack of an Evidentiary Hearing

The Ninth Circuit also affirmed the district court’s decision not to hold an evidentiary hearing before entering a permanent injunction. The Ninth Circuit conceded that “generally, a district court must hold an evidentiary hearing before issuing a permanent injunction unless the adverse party has waived its right to a hearing or the facts are undisputed.”[25] However, the court found that the injunction at issue in the case “is not a typical permanent injunction.” Instead, the court determined that the injunction is designed to ensure compliance with NEPA, and is therefore more limited in “purpose and duration.” Citing judicial economy and the district court’s consideration of extensive evidentiary submissions in the remedy phase, the Ninth Circuit held that the district court did not err by declining to hold an evidentiary hearing before enjoining the planting of Roundup Ready alfalfa nationwide. The court found that an evidentiary hearing would have required the district court “to engage in precisely the same inquiry it concluded APHIS failed to do and must do in an EIS,” and that the appellants “in effect” asked the court “to accept its truncated EIS without the benefit of the development of all the relevant data and … without the opportunity for and consideration of public comment.”[26]

Adopting the reasoning in its 2002 Idaho Watersheds Project v. Hahn opinion,[27] the Ninth Circuit concluded in Geertson Seed that the lower court “did not need to conduct an extensive inquiry, involving scientific determinations, to determine what interim measures are necessary to protect the environment while the government conducts studies in order to make the very same scientific determinations.”[28] In Idaho Watersheds, the lower court imposed interim protective measures without holding an evidentiary hearing in a NEPA case. On appeal, the Ninth Circuit determined that evidentiary hearings are not prerequisites to injunctive relief where: (1) interim injunctive measures are “designed to allow for a process to take place which will determine permanent measures”; (2) “all parties will have adequate opportunity to participate in the determination of permanent measures (and if need be challenge the outcome in court);” and (3) the injunction will terminate upon completion of the required review.[29] In Idaho Watersheds, the district court rejected both the plaintiffs’ proposal for injunctive relief and the intervenor-defendants’ proposal for no injunction at all. Instead, the court ordered conditions proposed by the defendant agency, the Bureau of Land Management.[30]

In Geertson Seed, the court did not implement injunctive relief designed by the defendant agency; in fact, it rejected the agency’s proposed conditions.[31] Accordingly, intervenor-defendants Monsanto and Forage Genetics also contended that, “even if Idaho Watersheds authorizes entry of a permanent injunction without an evidentiary hearing, it does so only if the court adopts the agency’s recommendation.”[32] The court disagreed with the intervenor-defendants’ alternative argument, and clarified its holding in Idaho Watersheds as follows: “the key reason a further evidentiary hearing was not required was that the injunction would be in place only until the necessary environmental studies were conducted” – not that the injunctive relief was fashioned by the defendant agency.[33] Therefore, under Idaho Watersheds and Geertson Seed, if an injunction will be in place only until the required environmental analysis is finished, then courts in the Ninth Circuit’s jurisdiction are not necessarily required to hold an evidentiary hearing before granting injunctive relief – even if the conditions of the relief are not proposed by the agency.

The Dissent

Dissenting, Circuit Judge N. Randy Smith noted that the nationwide injunction has “severe economic consequences” for the appellants, as well as farmers and distributors across the country. Judge Smith opined that, by affirming the district court's decision not to hold a hearing, the majority effectively created “a third exception to the evidentiary hearing requirement.” According to the dissent, under Geertson Seed, a court may now forego an evidentiary hearing “simply because (1) the injunction may dissolve at some point and (2) the issues, to be raised at the hearing, overlap with the issues the agency must consider.” Describing the majority’s “deference” to the district court as a “mistake” – particularly in light of the district court’s “wholesale rejection” of the agency’s position – Judge Smith opined that “[t]here aren’t many environmental cases that don’t fit into the majority’s newly-created exception.”[34]

Conclusion

The question presented to the U.S. Supreme Court with respect to injunctive relief in Winter is “whether … the preliminary injunction, based on a preliminary finding that the [defendant agency] had not satisfied NEPA’s procedural requirements, is inconsistent with established equitable principles limiting discretionary injunctive relief.”[35] The standard for injunctive relief in environmental cases could change before the end of the year when the Winter decision comes down.[36] Until then, under Geertson Seed, courts in the Ninth Circuit’s jurisdiction will weigh requests for permanent injunctive relief under NEPA according to the eBay factors, and, in some circumstances, can determine such requests without holding an evidentiary hearing.

For more information on NEPA or the ESA, contact Jessica Ferrell or any member of the Endangered Species & Natural Resources or Permitting & Environmental Review practice groups.