The United States Court of Appeals for the Eighth Circuit recently decided that personal information about applicants for environmental permits is exempt from disclosure under the Freedom of Information Law (FOIA). American Farm Bureau Federation v USEPA, 2016 WL 4709117 (8th Cir. 2016).

The case arose out of a challenge by the American Farm Bureau Federation and the National Pork Producers Council to the disclosure of certain personal information about their members. The Clean Water Act prohibits the discharge of pollutants into waters of the United States, except as authorized under the Act. Members of the plaintiff associations own or operate concentrated animal feeding operations (CAFOs)that had discharge permits issued by USEPA. When applying for a permit, owners and operators are required to submit permit applications that include some personal information (e.g. names, addresses, email addresses and phone numbers). EPA obtained information about other CAFOs from states. While EPA was gathering information about CAFOs, several environmental organizations file Freedom of Information Requests about CAFOs. After disclosure of the information, the plaintiffs raised concerns and EPA took the position that the disclosure was required by FOIA.

The plaintiffs based their claim on the 6th exemption to FOIA, which exempts from disclosure “personnel and medical files and similar files the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.” EPA took the position that disclosure was required because the information was publicly available from other sources and the public interest in the information meant that the request was not “unwarranted.” The Court rejected that argument, finding that the disclosure could be a substantial invasion of privacy because it could facilitate harassment of the owners. The Court also rejected the claim that the privacy interests were reduced by the fact that the information was publicly available from other sources.

We live in a world in which the government is always gathering information about businesses. This decision informs business owners that their private information can be protected from public disclosure, even if it is publicly available from other sources.

At the end of May, the Supreme Court held, in United States Army Corps of Engineers v Hawkes, Co., that a mining company could challenge a decision by the Army Corps of Engineers as “final” even though the party had not exhausted its administrative remedies. The case represents a significant expansion of the rights of regulated parties to challenge agency actions.

The case arose out of Hawkes’ desire to engage in peat mining in an area that may affect federally protected wetlands. Determining whether federally protected waters are present can be difficult and the penalties for the discharge of pollutants into federally protected wetlands can be great, so Hawkes did what many parties would do in that circumstance – they asked the Army Corps of Engineers for a jurisdictional determination (JD). The Army Corps determined that “waters” were present. Hawkes applied for a permit for its activities, but found that the permit process would require them to prepare assessments that would cost in excess of $100,000, so Hawkes brought suit to challenge the JD.

The District Court dismissed the suit because one may only challenge “final agency action” and the JD was not a “final” action. Under existing case law, a determination is not “final” unless (1) it represents the conclusion of the agency’s decision making process and (2) it has legal consequences. See, Bennett v Spear, 520 U.S. 154 (1997). The government argued that the JD was not final because (1) the agency’s decision making process would not conclude until the end of the permit process and (2) the JD had no legal consequences because both before and after the JD, Hawkes had exactly the same choice: it could start mining, risk an enforcement action and defend the action by challenging the agency’s jurisdiction or it could pursue a permit and, at the end of that process, challenge the agency decision.

The Eighth Circuit Court of Appeals reversed, finding the agency action to be final (792 F3d 994 (8th Cir. 2015) and the Supreme Court affirmed. The parties agreed that the jurisdictional determination was the end of a process and the issue before the court was whether the JD had legal consequences. The Court noted a JD that concludes that “waters” are not present, has legal consequences because it serves as a shield against an enforcement action. The finding that “waters” are present, therefore, has legal consequences because it denies the availability of this shield.

Businesses dealing with regulatory agencies often find the “finality” requirement frustrating. They want to seek a judicial remedy as soon as they feel aggrieved. They don’t want to hear the one needs to exhaust available remedies within the agency before going to court. That path is often costly and time consuming. The Hawkes decision provides some relief from that, taking a more practical approach to what is final and making it possible to challenge agency action even if there are, at least in theory, other available means of redress within the agency.

In Ebert v General Mills, 2016 WL2943193, (8th Cir, May 20, 2016), residential neighbors brought a class action suit against General Mills alleging that it caused the release of TCE into the ground and that TCE has migrated under their homes in the form of vapor in shallow groundwater, causing them injury.   The specific injury alleged was risk to the health of the residents and diminution in value of their homes.

The District Court granted class certification and the Eighth Circuit Court of Appeals reversed.  In determining whether a claim may be certified as a class action under rule 23 of the Federal Rules of Civil Procedure, the court must first examine whether there are common issues of fact or law and if there are, then the court examines whether the common issues predominate.  The issue of predominance, the Court stated, is qualitative and not quantitative.  Here, there were numerous common issues related to the defendant’s conduct and to the effects of that conduct.  However, the Court concluded that issues of liability and damages would require an examination of the facts related to each individual residence.  Thus, the individual issues predominate.

The decision follows the reasoning of the Supreme Court in several recent decisions.  See, e.g. Wal-Mart Stores v Dukes, 564 U.S. 538 (2011) and Tyson Foods, Inc. v Bouaphakeo __ U.S. __, 136 S. Ct. 1036 (2016).  The fact that the Supreme Court has addressed class certification several times in recent years, shows the important role class certification plays in resolving matters that affect large groups.  The risk to a business in facing a large class claim and the difficulty individuals have in litigating against large corporate entities, combine to mean that the issue of class certification will continue to be important to both parties.  With regard to the use of class action by neighbors of a Superfund Site, the Eighth Circuit approach seems sound because the impacts can only be assessed on an individual basis.





A Texas appellate court made a ruling in a clean air act/public nuisance case that included a statement that I have made to numerous clients  – – you have two independent obligations.  First, follow the regulations.  Second, make sure take reasonable steps to avoid causing injury to others.  Many people have trouble seeing those as independent obligations.  They think if you follow the regulations, you are OK.  In Scisco v Enbridge Gathering, L.P. 2015 WL 3463490 (Tex. App. June 1, 2015), the court said that one could be liable to pay damages for nuisance for air emissions that are permitted under the Clean Air Act.

The case was a civil suit in which property owners sought damages based on air emissions emanating from defendants’ energy production facilities.  The defendants moved for summary judgment on a number of grounds, including the claim that suits for common law nuisance based on air emissions were preempted by the Clean Air Act.  The defendants argued that if their air permit under the Clean Air Act allowed such emissions, State law could not require them to pay damages based on such emissions.  The court disagreed, reasoning that the obligation to obey the regulations and the obligation to avoid causing injury are separate, and compliance with one does not mean compliance with the other.

The court reversed a trial court order that had granted summary judgment.  Thus, it does not mean that there was a nuisance, or damage or any liability.  It merely means that the trial court must now examine the issues.  From a regulatory compliance perspective, however, the decision makes an important.  In some regulatory programs, a permit serves as a shield against common law actions.  In most, however, compliance with the law (even a law designed to protect people from harm) does not necessarily provide a defense to a civil action seeking damages for harm caused.

The Ninth Circuit Court of Appeals, in Ameripride Services, Inc. v Texas Eastern Overseas Inc,, (2015 WL 1474947, April 2, 2015) recently addressed the relationship between consistency with the National Contingency Plan (NCP) and CERCLA contribution claims.   The issue was, given that a section 107 cost recovery plaintiff must prove that the costs were incurred in a manner that was consistent with the NCP, does the same requirement apply to a contribution plaintiff?  The court concluded that NCP compliance is also a requirement for a contribution claim.

The court reasoned that while section 113 (the contribution provision) makes no reference to the NCP, it does reference section 107, providing a contribution claim against “any other person who is liable or potentially liable” under section 107.  Because a section 113 contribution claim is tied to liability under section 107, the court concluded that one should not be able to collect under section 113, costs that could not be recovered under section 107.

This decision places a difficult burden on settling parties and may reduce the likelihood of settlement.  Plaintiff in the contribution action had settled groundwater contamination claims brought under section 107 by a public water supplier and brought suit to collect a portion of those costs.   Based on this ruling, the contribution claimant can only collect to the extent that the settlement paid for costs that would be section 107 response costs, meaning costs  incurred in a manner consistent with the NCP.  That means that if a section 107 defendant thinks the plaintiff will have a problem proving NCP consistency, but nevertheless settles the suit thinking it can bring a contribution claim against other PRPs, it may have a problem with its contribution claim because it may need to prove that remedial costs about which it questioned consistency with the NCP when it was a defendant, were in fact consistent with the NCP.  Because the contribution claimant did not incur those response costs and did not control how they were spent, it may have difficulty proving consistency with the NCP.

Approval and agreement may sound like the same thing, but the recent Court of Federal Claims decision in Pioneer Reserve, LLC v United States (November 21, 2014) points out that the difference can be very important.  Pioneer and the United States executed a mitigation banking instrument, which gave Pioneer “wetlands mitigation credits” that it could sell to developers.  Pioneer sold some of the credits.  The Army Corps of Engineers then reduced the number of credits to which Pioneer was entitled and Pioneer sued for breach of contract.

The government moved to dismiss the suit, arguing that approval of the mitigation banking instrument was a regulatory act (see 33 CFR 325 for the regulations regarding such instruments).  The signature of the representative of the Army Corps of Engineers was thus, approval of the request for credits and not a contract binding the government to issue a specified number of credits. The Court of Federal Claims disagreed, finding that the document was a contract binding the government.

The court relied on the language of the instrument, rather than the nature of the instrument.  That is, whether the instrument is a contract or merely a regulatory instrument depends on whether the document consists of “regulatory proclamations” or “manifests the government’s intent to contract.”  Here, there were definite terms and conditions indicating that there had been negotiations.  This bargaining was evidence of an agreement.  Thus, this instrument was a contract that could be enforced against the government in the Federal Court of Claims.

In United States v Conagra Grocery Products Company, LLC, 2014 WL 971973 (D. Maine 2014), the court held that Conagra could be liable for cleanup costs as corporate successor to the liabilities of a corporate successor to a corporate successor to a corporate successor, even though some of the intervening transactions were asset purchases.  In following the twisted chain of corporate transactions, the court provided a good review of the basics of how CERCLA liabilities transfer from corporation to corporation.

The contamination at the site was begun by a leather tanning business known as the A.C. Lawrence Leather Company (“Old Lawrence”).  In December 1952 Old Lawrence was merged into Swift & Company.  In 1973, Swift transferred Old Lawrence to Estech as part of a corporate reorganization and merger in which Swift transferred all of its chemical and energy businesses to Esmark, and Estech was the Esmark subsidiary that operated the leather business.  In 1976, Estech sold the tannery to a group of former tannery employees who formed the company that the court referred to as New Lawrence.  The court noted a dispute between the parties over the extent to which the New Lawrence acquired Old Lawrence environmental liabilities by contract.  In 1984, Esmark’s stock was transferred to Beatrice Companies, Inc.  (BCI).  In 1991, Estech was merged into BCI.  Between 1991 and 1993, in a series of mergers, BCI merged into Beatrice Company, which merged into Hunt-Wesson, Inc., and in 1999 Hunt-Wesson changed its name to Conagra, which became an LLC in 2005.  The question is whether Conagra has the environmental liabilities of Old Lawrence.

The government claimed that the Conagra has Old Lawrence’s environmental liabilities.  Conagra moved for summary judgment claiming it could not have those liabilities and that motion was denied.  The court reasoned as follows:  When a corporation owns all of the stock of another corporation, the company that owns the stock does not have CERCLA liability simply because the subsidiary it owns or operates has corporate liability.  Under basic corporate law principles, the two corporations are separate entities and whether the corporate parent has the liabilities of the subsidiary is based on traditional corporate veil piercing analysis – not by CERCLA law.  However, when a corporation merges with another, it brings its corporate liabilities into the merged entity.

The court first analyzed whether Estech had acquired the Old Lawrence liabilities and then whether Conagra was a corporate successor to Estech.  Estech acquired assets of Swift in 1973.  The general rule is that an asset purchaser does not obtain the liabilities of the seller of the assets unless the buyer assumes the liabilities by contract, the sale is a de facto merger or the sale is a mere continuation of the predecessor under a different name.  The court examined the language of the contract to determine whether environmental liabilities had been transferred and concluded that the matter could not be determined on summary judgment.  However, the contract issue only affected the 1955-1973 Old Lawrence liabilities.  Estech operated Old Lawrence from 1973-1976 and thus clearly had the Old Lawrence liabilities for those years.

The court next discussed whether Conagra is Estech’s successor.  The court noted that Estech obtained Old Lawrence in Swift’s 1973 corporate reorganization and that when it sold Old Lawrence in an asset sale to New Lawrence in 1976, it did not divest itself of the Old Lawrence liabilities.  Even if those liabilities were transferred to New Lawrence by contract, Estech would remain liable to the government.  In 1984, Esmark was acquired by Beatrice; in 1986 the Estech stock was transferred from Esmark to Beatrice; the Esmark stock was then transferred several more times.  The court noted that as long as Estech retained its corporate form, its parent corporations did not acquire its environmental liabilities.   However, in 1991 Estech merged into BCI thereby transferring its liabilities to BCI.  BCI then merged into Beatrice, which merged into Hunt-Wesson, which changed its name to Conagra.  Conagra is thus Estech’s corporate successor.

So how does one protect against the receipt of old, long forgotten environmental problems?  Maintaining separate corporate forms helps.  Asset acquisition helps.  Examining corporate history helps, but make sure you also examine contracts.  It is important to note that environmental liabilities are much easier to acquire than to divest.  Indeed, one generally cannot transfer environmental liabilities by contract and expect the government to be bound by that transfer.  The case could also demonstrate that trying to make things so complicated that people will not be able to follow generally does not work.  Environmental liabilities are large enough that there is a whole industry out there searching for other potentially responsible parties.

A recent decision by a federal district court in Illinois answered the above question by concluding that the danger does not have to be very imminent.  Indeed, a plaintiff could state a claim by alleging that contamination that had been in the ground for more than 50 years and is not currently threatening anyone, may create an imminent danger.  City of Evanston v Texaco, 2014 WL 683736 (N.D,.Ill, February 2014).

The City instituted a RCRA citizen’s suit against an oil company and the owner of a property that was formerly occupied by a gas station. The oil company moved to dismiss arguing that the contamination was more than 50 years old, no one was permitted to drink the groundwater, the site was paved over and therefore, there could not be an “imminent and substantial endangerment.”  The court denied the motion, noting that the statute allows a suit where “hazardous waste may present an imminent and substantial endangerment.”  By emphasizing the word “may” the court allowed the case to proceed.

The case should probably not be read to mean that an imminent endangerment does not need to be imminent.  Instead, the better read is that courts may be hesitant to resolve such claims on a motion to dismiss.  The decision gives the City the opportunity to prove its case, but leaves open the future finding, after discover, that there is no imminent endangerment in this case.

The United States Supreme Court has agreed to hear a case interpreting the CERCLA provision that preempts State statutes of limitations. Section 9658 of CERCLA provides that for actions brought under State law relating to hazardous substances or pollutants, the statute of limitations cannot begin to run until the injured party knew or should have know of the injury. This provision preserves claims that might otherwise be time-barred.

There is a split in the federal circuits regarding what section 9658 means for statutes of repose. The difference between a statute of limitations and a statute of repose is that a statute of limitations bars claims that are brought a specified amount of time after a claim arises, which generally means after the injury, while a statute of repose bars claims a specified amount of time after an event (such as a sale of property) even if that event has not caused injury.  The Fourth Circuit Court of Appeals held that section 9658 applies to statutes of repose.  Waldburger v CTS Corporation, 723 F.3d 434 (2013).

The Supreme Court will decide whether, when section 9658 said “statute of limitations” it also meant “statute of repose.” The decision will impact not only what state law claims can be brought against alleged polluters, but it could also provide significant guidance regarding how to read CERCLA. Recent Supreme Court decisions have counseled lower courts to pay more attention to the language of CERCLA and if that trend considers, the Court will not extend the provision to statutes of repose.

A New York court recently concluded that sampling data cannot be protected from disclosure under either the attorney client privilege or the attorney work product doctrine. In Abbo-Bradley v City of Niagara Falls, __ F.Supp.2d __ (W.D. N.Y. July 2013), plaintiffs instituted an action alleging that they had suffered personal injury and property damage as a result of releases of hazardous waste. Shortly thereafter, plaintiffs sought a temporary restraining order to require defendants to provide plaintiffs with advance notice of any sampling and an opportunity to take split samples. An agreement was reached regarding the language of such an order. Then, when plaintiff’s began sampling, defendants sought a similar order requiring plaintiffs to provide advance notice and an opportunity to split samples. Plaintiffs objected to the proposed order based on the attorney work product doctrine.

The court noted that the work product doctrine protects two types of materials that are prepared for litigation: (1)documents that contain the opinions or mental impressions of attorneys and (2) factual investigations and technical analyses. The court noted that attorney opinions and strategies receive more protection than factual analyses. Work product does not, however, protect the factual material that is the source of the work product (i.e.,facts used by the attorney to develop strategy or facts analyzed by techical experts). Here, the court noted that defendants were not seeking mental impressions or strategies or the results of plaintiffs’ technical analysis. They were merely seeking facutal information to assure that all parties have access to the same material. The court also noted that the attorney client privilege could not protect this information because that protects confidential communications from attorney to client and the source of this information is not the client.

This decision raises questions about the common practice of having the attorney retain the consultant so that the consutant’s findings will be protected. The decision suggests that any such protection will be limited. The factual data is likely not to be protected, but the analyses can be protected.

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