This is a review of initial Supreme Court and Federal Appeals Courts oral arguments and other matters in October 2022.
Oral Arguments at the Supreme Court
Michael Sackett, et ux., v. Environmental Protection
Agency
The Supreme Court's 2022 term began on October 3,
2022, with this important oral argument. For many years, the
petitioner has encountered EPA opposition to the construction of a
home on his property located near a lake in Idaho. The agency
insists that the land is subject to federal regulatory
jurisdiction, in that a Clean Water Act permit will be needed
before work can proceed. Several courts have already weighed in on
this issue; whether the land in question is considered a regulated
"wetlands" pursuant to the "significant nexus"
test developed by the Court in the Rapanos case decided in
2006. The oral argument was fairly long and spirited. The justices
appear to believe that the "significant nexus" is
unworkable because in many instances it provides little or no
guidance to landowners as to whether their property may be subject
to federal jurisdiction, and thus subject to civil and even
criminal penalties. Justice Kavanaugh remarked that "this case
is going to be important for wetlands throughout the country and we
have to get it right." Later, Justice Gorsuch lamented the
fact that implementing a test for federal jurisdiction under the
Clean Water Act test is so difficult to apply: "If the federal
government doesn't know [if a property is adjacent to navigable
water and is regulated,] "does a reasonable landowner have any
idea." The issue is very difficult to resolve, and the
Congress has indicated that is has no interest in entering this
regulatory thicket.
National Pork Producers Council et al. v. Karen
Ross, et al.
On October 11, 2022, the Court heard oral argument in
a Commerce Clause case. California voters approved Proposition 12,
which arguably has the effect of regulating how pork is produced
nationwide through California's preferred farming methods
(strict confinement restrictions) although only a very small
percentage of pork is produced in California. According to an
amicus brief filed by the U.S. Chamber of Commerce, "If
Proposition 12, stands, California and other States commanding
large market shares will be able to impose their notions of sound
public policy on the people of other States through important
restrictions and trade boycotts." Such a result is
antithetical to the interests served by the Commerce Clause. An
older case, Pike v. Bruce Church, 397 US 137 (1970) has
for many years been the court's venerable balancing test that
has usually been applied to such claims. Proposition 12 also
reflects California's "moral judgment" on how pork is
produced, a judgment that may not be shared by other pork-producing
states. The decision of the Court could arguably have an impact on
national regulatory issues, such as ESG policy, so there has been a
lot of attention focused on this case.
Greenhouse Gas Litigation
The Court has also asked the Solicitor General to provide the
Government's views on an appeal from the Tenth Circuit
regarding greenhouse gas litigation filed in the state courts. Many
energy companies argue that these cases should be removed to the
federal courts, but so far, the federal appeals courts, construing
the recent Supreme Court ruling in BP plc v. Mayor and City
Council of Baltimore, 141S Ct 1532 (2021) have resisted this
invitation. Th energy companies argue the issue of greenhouse gas
emissions and alleged climate change damages should cause the
"federal common law" to be invoked.
FEDERAL COURTS OF APPEAL
The Fifth Circuit
Spring Branch Wildlife Preserve, et al. v. U.S.
Environmental Protection Agency, et al.
On October 17, 2022, in an unpublished opinion, the court
affirmed the lower court's dismissal of the plaintiffs'
request that the court grant them a declaratory judgement regarding
the applicability of the Clean Water Act to their properties. The
trial court held that it could not proceed because of a lack of
subject matter jurisdiction. The plaintiffs failed to challenge any
final agency action that would be reviewable under the
Administrative Procedure Act and did not request a jurisdictional
determination of the applicability of the Act in this matter.
Consequently, the courts were unable to decide the case at this
time. The brief discussion of the jurisdictional determination is
particularly timely in view of the oral argument in the
Sackett case that opened the Supreme Court's 2022
term.
Trifigura Trading LLC v. U.S.
On March 24, 2022, the Fifth Circuit held in that a
federal tax on crude oil exports was unconstitutional. (See Section
4611 (b) of the Internal Revenue Code.) The Solicitor General is
reported to have decided not to appeal this ruling to the Supreme
Court.
The 2017 Payday Lending Rule and the Administrative
Procedure Act
On October 19, 2022, the Fifth Circuit held that (a): the
2017 Payday Lending Rule was not invalid under requirements of the
Administrative Procedure Act, and the agency did not exceed its
authority in promulgating these rule; and (b) the funding of the
Bureau, which skirts the normal appropriations process by receiving
its annual funding directly from the Federal Reserve, violates the
Appropriations Clause, and the Constitution's "underlying
separation of powers." Therefore, without this
unconstitutional funding, the Bureau lacked "any other
means" to promulgate the rule, which was vacated.
Central Crude, Inc. v. Liberty Mutual Insurance
Company, et al.
On October 28, 2022, the Fifth Circuit affirmed the
ruling of the federal district court that a "total pollution
exclusion endorsement" in the plaintiff pipeline company's
commercial general liability (CGL) policy with the defendant
excluded coverage for the remediation of an ongoing oil spill that
occurred in 2007. In January 2007, the plaintiff discovered a crude
oil leak on its property and a neighboring tract owned by Chevron
in Paradis, Louisiana. The spill was reported to the Louisiana
Department of Environmental Quality, and a contractor was retained
to remediate the spill. However, efforts to remediate the spill are
ongoing after 15 years. In 2007, the insurer denied coverage
because of the total pollution exclusion endorsement in the CGL
policy. Initial state court litigation filed in 2017 was removed to
the federal courts, and the federal district court granted summary
judgment to Liberty Mutual. The Fifth Circuit has now affirmed this
ruling, citing a Louisiana Supreme Court decision as being
authoritative. See Doerr v. Mobil Oil Corporation, 774 So.
2d 119 (La. 2000). That court made it clear that the courts should
construe a pollution in light of its general purpose, "which
is to exclude coverage for environmental pollution." Here, all
three factors cited in the Doerr are present and caused
the Fifth Circuit to uphold the lower court. The "absolute
pollution exclusion" unambiguously excludes coverage for the
plaintiff's costs as well as any property damage that resulted
from this spill.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.