14 February 2019

Sidley Environmental Trends

Topics discussed this week include:

  • Federal judicial interpretation of the Clean Water Act remains split
  • Federal court holds states violated Clean Water Act for dam decommissioning
  • Suit challenging President Trump’s 2-for-1 executive order survives motion to dismiss
  • Fiat Chrysler enters Clean Air Act consent decree
  • Audi engineers face mobile source “defeat device” criminal indictment
  • Federal court vacates New York regulator’s denial of water quality certificate for natural gas pipeline
  • Green New Deal nonbinding resolution proposed in Congress

Federal judicial interpretation of the Clean Water Act remains split. The U.S. Court of Appeals for the Sixth Circuit decided last month in Tennessee Clean Water Network v. Tennessee Valley Authority not to rehear en banc a panel decision holding the Clean Water Act (CWA) does not regulate pollutants discharged into groundwater that eventually reach navigable waters. The decision leaves in place a circuit split between the Sixth Circuit on this issue of “direct hydrological connection” and the Fourth and Ninth circuits in Upstate Forever v. Kinder Morgan Energy Partners and Hawai’i Wildlife Fund v. County of Maui, respectively. Cert petitions are pending in both Upstate Forever and Maui, but the court took no action on either petition at its January conference. The Supreme Court will next have an opportunity to decide whether to take on the cases at its February 15 conference.

Federal court holds states violated CWA for dam decommissioning. The U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit) has held that California and Oregon violated the CWA’s one-year deadline requirement to certify that federal permits meet state law by intentionally withdrawing and then resubmitting applications, prior to the one-year deadline, for dam decommissionings in those states. The case, Hoopa Valley Tribe v. Federal Energy Regulatory Commission, involved a 2010 agreement allowing dam operator PacifiCorp to file decommissioning applications each year for dams along the Klamath River and then withdraw those same applications before the one-year statutory deadline. PacifiCorp would then reapply for decommissioning the next year with the same materials. This process avoided Federal Energy Regulatory Commission (FERC) review of PacifiCorp’s operating licenses. FERC reviewed and upheld this arrangement in 2014. The D.C. Circuit overturned FERC’s order, holding that this arrangement for withdrawing and reapplying “constitute[d] such [a] failure and refusal [to act] within the plain meaning of these phrases” as used in the CWA.

Suit challenging President Trump’s 2-for-1 executive order survives motion to dismiss. In a suit challenging President Donald Trump’s 2-for-1 executive order, the U.S. District Court for the District of Columbia has denied the government’s renewed motion to dismiss, finding the plaintiffs have asserted sufficient facts to demonstrate standing to survive a preliminary motion, but denied the plaintiffs’ cross motion for summary judgment on standing. The president’s January 2017 2-for-1 order requires that “for every one new regulation issued, at least two prior regulations be identified for elimination.” The suit alleges the order is unlawful, arguing it introduces criteria for removing regulations that are not allowed by law. This is the second time this suit has been before the court, as the citizen group’s initial challenge was dismissed for lack of standing in 2018, but the court granted plaintiffs leave to file an amended complaint. In denying the government’s motion, the court noted that while plaintiffs had met their burden of “plausibly alleging that they have standing to sue,” they still have not met (and may not be able to meet, per the court) the burden of showing that their members have suffered a redressable injury by the executive order.

Fiat Chrysler enters Clean Air Act consent decree. The Department of Justice (DOJ), on behalf of the Environmental Protection Agency (EPA), and the California Department of Justice, on behalf of the California Air Resources Board (CARB), have lodged a proposed consent decree in the Northern District of California to settle civil claims against FCA US LLC, Fiat Chrysler Automobiles N.V., V.M. Motori S.P.A. and V.M. North America, Inc. (collectively FCA) under the Clean Air Act and California state law. The consent decree settles allegations that FCA installed undisclosed software features on approximately 100,000 MY 2014–16 Ram 1500 and Jeep Grand Cherokee vehicles with 3.0 liter EcoDiesel engines. Regulators claimed the software affected the vehicles’ electronic control systems, allowing the vehicles to perform normally during certification testing but causing systems to shut down or not function properly in real-world on-road conditions, allegedly generating increased NOx emissions. Under the proposed consent decree, FCA would pay a civil penalty of $305 million and submit to injunctive relief including a mandatory recall and repair program, extension of vehicle warranties, and a national mitigation program offsetting the alleged NOx emission effects of the defeat devices.

Audi engineers face mobile source “defeat device” criminal indictment. In a separate matter involving alleged mobile source emissions violations, a grand jury in Michigan has indicted four German engineers from Audi accused of designing and installing defeat devices on diesel engines intended to meet U.S. EPA emissions certification. The defeat devices allegedly implemented a “dosing strategy” that would affect the amount of diesel exhaust fluid dosed into the system to reduce NOx emissions during lab testing conditions but dose less during “regular driving,” releasing higher levels of NOx emissions.

Federal court vacates New York regulator’s denial of water quality certificate for natural gas pipeline. The U.S. Court of Appeals for the Second Circuit (Second Circuit) recently vacated the New York State Department of Environmental Conservation’s (DEC) denial of National Fuel Gas Supply Corporation’s (National Fuel) application for a water quality certificate to construct and operate a natural gas pipeline in the state. FERC approved National Fuel’s application to construct a natural gas pipeline in upstate New York and Pennsylvania, subject to National Fuel’s obtaining state water quality certificates. After the DEC denied the water quality certification, National Fuel petitioned for review in the Second Circuit. The court held that DEC acted arbitrarily and capriciously in denying National Fuel’s application because it failed to articulate a rational connection between the facts relied upon and the decision reached, considered factors outside of National Fuel’s application, and did not address factors FERC relied on in its own water quality assessment. The court remanded for DEC to provide a sufficiently reasoned basis for its decision and left open the question of whether DEC is now time barred from blocking the project.

Green New Deal nonbinding resolution proposed in Congress. Members of the House and Senate have introduced a nonbinding resolution to address climate change, domestic energy efficiency and non-fossil-fuel energy sources in what is being touted as a Green New Deal. One of the most prominent positions in the resolution is a call to “meet[] 100 percent of the power demand in the United States through clean, renewable, and zero-emission energy sources.” The resolution also proposes to “upgrad[e] all existing buildings” in the country for “energy efficiency.” The resolution is expected to be referred to a newly proposed House select committee on climate change.