A Court-Side Seat: SCOTUS Further Clarifies Alien Tort Statute; Revisiting WOTUS

Pillsbury - Gravel2Gavel Construction & Real Estate Law

What follows is a brief account of some of the notable U.S. environmental and administrative law cases recently decided.

THE U.S. SUPREME COURT

Nestle USA, Inc. et al. v. Doe, et al.

The Supreme Court has decided another important case interpreting the Alien Tort Statute in Nestle USA, Inc. et al. v. Doe, et al. This decision, released on June 17, 2021, reverses the Ninth Circuit which had ruled that the respondents—six individuals who alleged they were child slaves employed on Ivory Coast cocoa farms, could sue the American-based companies for aiding and abetting child slave labor. Without dissent, the Court rejected this reading of the ATS and affirmed its own recent rulings on the scope of the ATS.

Article II, Section 2 of the Constitution vests the President, with the advice and consent of the Senate, to nominate and appoint, in addition to Ambassadors and justices of the Supreme Court, “all other Officers of the United States, whose Appointments are not herein otherwise provided for..” The Congress may by law, “vest the appointment of ..inferior officers..in the President alone…or in the Heads of Departments”. The federal government depends on the service of thousands of Administrative Law Judges (ALJs), most of whom are appointed or selected by the head of an agency or internal agency boards. However, because they sometimes wield enormous decisional power, several cases have been filed regarding the constitutionality of ALJs in many governments including the SEC and the Social Security Administration. The latest case, United States v. Arthrex, involves a challenge to the Administrative Patent Judges (APJs) who are often called upon to decide patents “worth billions of dollars”. The judges also serve on the Patent Trial and Appeal Board, along with other executives of the Commerce Department’s Patent and Trademark Office. Arthrex, the petitioner in this case, argued on appeal that the PTAB panel which ruled against its patent, included APJs who were illegally appointed because, as principal officers, they should have been subject to Senate confirmation. The Court of Appeals for the Federal Circuit invalidated their appointments and thereby jeopardized hundreds of pending patent claim judgments. On June 21, 2021, the Supreme Court, in a 5 to 4 ruling, held that the APJs, because of their unreviewable authority under the current arrangement, should have been be subject to the Appointments Clause, but the issue of their constitutional reappointment and the invalidation of hundreds of PTAB judgments could be avoided by interpreting the new patent law to allow the Director of the Patent and Trademark Office to review an if necessary, to set aside their decisions. The slim majority on the Court indicates that this issue is likely to arise in many different administrative law enforcement proceedings conducted throughout the federal bureaucracy.

THE FEDERAL COURTS OF APPEAL

The U.S. Court of Appeals for the Second Circuit – Bey v. City of New York

On June 9, 2021, the court decided a case in which four Black firefighters employed by the FDNY alleged that the facial hair policies of the department did not accommodate their special needs in violation of the Americans with Disabilities Act. They also alleged that this policy violated the Administrative Procedure Act (APA) and Title VII of the Civil Rights Act. The appeals court agreed with the City that an applicable federal OSHA regulation, found at 29 CFR Section 1910.134, required the City to maintain this practice despite any misgivings it may have with this federal workplace rule, because it must be given preemptive effect.

The U.S. Court of Appeals for the Third Circuit – United States v. Brace

In this Clean Water Act civil enforcement matter where the defendant had persisted in ignoring the application of Section 404 of the Clean Water Act to the dredge and fill operations conducted without a permit on regulated wetlands, the court affirmed a lower court ruling which found that “Litigants flout court rules at their peril. District courts have broad discretion to punish them by spiking their briefs if necessary.” The lower court had granted summary judgment to the Government after the defendant’s counsel ignored or flouted many rules of practice, despite repeated warnings from the trial judge, who then struck the defendant’s brief. The Third Circuit, in reviewing the lower court’s ruling, agreed that this drastic action adhered to Third Circuit precedent.

The U.S. Court of Appeals for the Fifth Circuit – Bulkley & Associates v. California Department of Industrial Relations

On June 10, 2021, the Fifth Circuit agreed with the trial court that California’s workplace safety agency did not have sufficient contacts with the State of Texas to allow it to be sued in the Texas federal courts. Bulkley is an interstate trucking business that is both incorporated and headquartered in Texas. One of its drivers was cited in California for violating California workplace safety rules. Bulkley lost an administrative appeal in California and then sought judicial review of the California appeal in a Texas state court. The California agency removed the case to federal court, and then moved to dismiss for lack of personal jurisdiction, which was granted. A similar dispute resulted in another dismissal by the federal district court, and now the Fifth Circuit, in reviewing these actions, agrees that simply sending an enforcement letter to a Texas company regarding out-of-state actions does not establish the minimal contacts necessary to trigger federal jurisdiction.

The U.S. Court of Appeals for the Fourth Circuit – Skidmore v. Norfolk Southern Railway Company

The court decided this preemption case on June 14, 2021. Here, the plaintiff sued the railroad in state court, arguing that the railroad was responsible for the erosion of her land by virtue of a change in a water flow that protected the railroad’s operations. The controversy was removed to the federal courts, where the defendant contended that the lawsuit was preempted by the Interstate Commerce Commission Termination Act, which places exclusive jurisdiction over controversies affecting basic railroad operations in the federal Surface Transportation Board. The court agreed, but also held that the plaintiff may have a residual federal cause of action to pursue.

The U.S. Court of Appeals for the Ninth Circuit – Briseno, et al. v. Conagra Foods, Inc.

This case involves the alleged mislabeling of Wesson Oil which was advertised as being comprised of 100% natural oil, which caused the plaintiffs to purchase a product they would not have otherwise purchased. There was a settlement agreed to by the parties, except for a member of the class who complained about certain provisions. In reviewing the proposed class action settlement that had been approved by the trial court, the appeals court observed on June 1, 2021, that the settlement “reeks of collusion at the expense of class members.” For example, class counsel would receive seven times more money than the class members, the defendants agreed not to challenge the plaintiffs’ attorneys, and as the court commented, there were multiple concerns. The lower court was directed take another look at the settlement.

The U.S. Court of Appeals for the Eleventh Circuit – Burns v. Town of Palm Beach

In this June 8, 2021, decision, the court held that the plaintiff homeowner’s lawsuit against the City for rejecting his building permit was not subject to the First and Fourteenth Amendments. The homeowner wanted to build a new mansion that reflected his evolving philosophy of simplicity in lifestyle. The town’s permitting board decided the plans were inconsistent with the community’s architectural traditions and denied the permit. The opinion is very long—136 pages. The majority was not persuaded that the plans for a larger and more modern house were entitled to the First Amendment’s protection of creative expression.

U.S. DISTRICT COURTS

State of Louisiana. al. v. Joseph R. Biden et al.

On June 15, 2021, the U.S. District Court for the Western District of Louisiana, Lake Charles Division, issued a nationwide preliminary injunction against several Government defendants in the case. The defendants, following the President’s Executive Order of January 27, 2021, “paused” the issuance of new oil and natural leases on public lands and offshore federal waters. The plaintiffs alleged that this action violated the Constitution, the APA, the Outer Continental Shelf Lands Act, and the Mineral Leasing Act. The court remarked that the Supreme Court has long held that a President’s Executive Order can be reviewed by the courts, and that while the Presidency is not an “agency” subject to the APA, courts can nevertheless decide whether a disputed action exceeds statutory authority. For example, nothing in the OCSLA authorizes the President to pause a leasing action. The plaintiff states have standing, and the court concluded that the plaintiffs are likely to prevail on the merits.

NOTEWORTHY ADMINISTRATIVE ACTIONS

The Environmental Protection Agency

On June 2, 2021, the Environmental Protection Agency (EPA) published a notice of its intent to review and reconsider the recent rules which modified the Clean Water Section 401 state certification rules and procedures. The rules were modified in 2020 to replace the outmoded 1971 rules the EPA had been implementing.

On June 11, 2021, EPA issued a press release informing the regulated community that it intends to propose a new TSCA PFAS reporting rule. At the same time, a recent PFAS Guidance document released by EPA headquarters has been rescinded.

The New Mexico Oil Conservation Commission

On June 10, 2021, the New Mexico Oil Conservation Commission promulgated new rules which make it unlawful for oil and gas operators in the state to spill, discharge or release, without authorization, oil, gas, produced water and their constituents. Such spills must be stabilized and remediated.

United States Office of Management and Budget

On June 11, United States Office of Management and Budget (OMB) released its Spring Uniform Regulatory Agenda, listing all the rule making actions that the federal regulatory and executive agencies will be processing over the next several months. Worth following: the EPA and the U.S. Army Corps of Engineers plan to revisit the recently revised redefinition of “Waters of the United States.”

United States General Services Administration

On June 14, 2021, the U.S. General Services Administration (GSA) published a Federal Register notice that there will be a “virtual meeting” of the new Presidential Commission on the Supreme Court of the United States. Public comments are solicited. See the notice published at 86 FR 31504.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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