Michael R. Goldman, Carrick Brooke-Davidson, and Jean M. Flores 2012-12-26 02:12:56
The year 2012 brought exciting and significant environmental law holdings from federal and Texas courts. Some decisions were long-anticipated while others came as something of a surprise. Hot topics included judicial review, greenhouse gas regulation, cooperative federalism in a Clean Air Act context, and Texas-specific issues arising from ownership of groundwater and standing to oppose permits. Although space allows only a brief mention of the cases below, for the environmental practitioner, all are worth reading in full. Judicial Review In the long-awaited category, a unanimous U.S. Supreme Court held that respondents may seek judicial review under the Administrative Procedures Act of U.S. Environmental Protection Agency compliance orders under the Clean Water Act. Sackett v. EPA, 132 S.Ct. 1367 (2012). EPA alleged that the Sacketts had violated the CWA’s prohibition on unauthorized discharges into navigable waters by filling part of their lot while building a house. EPA issued a compliance order to restore their property in accordance with an EPA plan. EPA maintained that judicial review was available only if EPA sought to enforce the order. The court disagreed, finding that the order had all the hallmarks of final agency action subject to Administrative Procedure Act review and the owners had no other adequate remedy in a court. The court also held that the CWA does not preclude pre-enforcement review of compliance orders. The lower court’s judgment dismissing the APA claim was reversed. Greenhouse Gas The D.C. Circuit in Coalition for Responsible Regulation v. EPA, 684 F.3d 102 (D.C. Cir. 2012) upheld EPA rulemaking addressing greenhouse gases under the CAA. The EPA issued the rules following the U.S. Supreme Court’s decision in Massachusetts v. EPA, 549 U.S. 497 (2007), in which the court held that greenhouse gases meet the definition of an air pollutant. Petitioners, including Texas, challenged the rules. In a per curiam opinion, the court ruled that EPA’s actions were neither arbitrary nor capricious and that EPA’s interpretation of the governing CAA provisions was unambiguously correct. It also ruled that the petitioners lacked standing to challenge certain parts of the rulemaking. Cooperative Federalism The 5th Circuit twice called for cooperative federalism with regard to EPA’s implementation of the Clean Air Act. In Luminant Generation Company, L.L.C., et al. v. EPA, 675 F.3d 917 (5th Cir. 2012) Texas, among others, sought review of the EPA’s disapproval — which was more than three years tardy — of state regulations providing for standardized permits of certain projects that reduced or maintained current emission rates. Petitioners contended that the EPA acted arbitrarily and capriciously and in excess of its statutory authority by applying three different incorrect legal standards. The 5th Circuit agreed with the petitioner and held that the three purported extra-statutory standards were “created out of whole cloth” and that EPA’s disapproval of the regulations was arbitrary and capricious. In State of Texas, et al. v. EPA, 690 F.3d 670 (5th Cir. 2012), Texas, among others, sought review of EPA’s disapproval — this time 16 years tardy — of the state’s revision of its State Implementation Plan’s Flexible Permit Program for Minor New Source Review. This untimely disapproval unraveled approximately 140 permits issued by Texas, and required regulated entities to qualify for prerevision permits or risk federal sanctions. The 5th Circuit held that EPA’s reason for disapproval was arbitrary and capricious and without basis in the statute or its implementing regulations.” In addition, the 5th Circuit stated that EPA’s final rule disapproving Texas’ Flexible Permit Program transgresses the CAA’s delineated boundaries of cooperative federalism. The court then vacated the agency’s final rule and remanded for the EPA’s further consideration. It is worth noting that in another Luminant case, 699 F.3d 427 (5th Cir. 2012), the 5th Circuit upheld the EPA’s approval and disapproval of portions of the State’s SIP revisions concerning air emissions during planned and unplanned facility startup, shutdown, and maintenance/malfunction activities. This followed an earlier opinion that also upheld the EPA’s disapproval of the State’s SIP revisions to the Qualified Facilities Program. BCCA Appeal Group v. EPA, 476 Fed. Appx. 579 (5th Cir. 2012). The D.C. Circuit also addressed cooperative federalism in EME Homer City Generation, L.P. v. EPA, 696 F.3d 7 (D.C. Cir. 2012). The court vacated the EPA’s Cross-State Air Pollution Rule issued under the CAA, which attempted to set emissions limits for upwind states based on contributions to downwind states’ air quality problems. Under the CAA’s “good neighbor” provision, upwind states may be required to control in-state sources that contribute significantly to a downwind state’s nonattainment. The court held that CSAPR exceeded EPA’s authority by requiring the upwind states to reduce emissions by more than their own significant contributions to a downwind state’s nonattainment. In addition, the CAA affords states the initial opportunity to implement reductions required under the good neighbor provision but EPA’s rule did not so allow. Instead, the rule promulgated federal implementation plans to achieve the reductions. The court found that the EPA had departed from its prior approach to implementing the good neighbor provision. Texas was one of the petitioners. Groundwater in Texas In Texas during a drought, “whiskey is for drinking; water is for fighting over.” Texas common law recognizes a “Rule of Capture,” which gives landowners a legally protected property right to groundwater that they bring to the surface. This year, the Texas Supreme Court created quite a buzz when it significantly expanded this right. In Edwards Aquifer Authority v. Day, 369 S.W.3d 814 (Tex. 2012), the court held that a landowner exclusively owns all of the groundwater beneath his land even if he has never used it before. The court also held that a landowner had rights against parties who trespass against the privately owned groundwater. Standing Issues Several Texas cases addressed standing issues in the context of determinations of “affected person” status in the permitting process. Affected person determinations are crucial in the permitting process because they determine who has the legally protected ability to challenge permit issuance through a contested case hearing. Of particular note, the City of Waco sought affected person status under the Texas Water Code to object to a permit that would increase the number of cattle at a dairy. The TCEQ denied the city’s request for affected person status and, in 2011, the Austin Court of Appeals upheld the agency’s decision. However, in a new twist this year, in City of Waco v. TCEQ, 346 S.W.3d 781(Tex. App. – Austin, 2011, pet. denied), the court of appeals substituted a lengthy new opinion holding that the TCEQ acted arbitrarily and abused its discretion in concluding that the city was not an affected person. This case illustrates how difficult it can be for a permit applicant to avoid a contested case hearing. We expect all of the above issues to be further addressed, challenged, and refined in federal and Texas courts this year. MICHAEL R. GOLDMAN, JEAN M. FLORES, and CARRICK BROOKE-DAVIDSON are all shareholders in the environmental law firm of Guida, Slavich & Flores, P.C. Goldman and Flores practice in the firm’s Dallas office, and Brooke-Davidson practices in the Austin office.
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