The Court-Side Seat: FERC Reviews, Panda Power Plaints and Sovereign Immunity

Pillsbury - Gravel2Gavel Construction & Real Estate Law

This is a brief report on new environmental law decisions, regulations and legislation.

THE U.S. SUPREME COURT

Massachusetts Lobsterman’s Association v. Raimondo, Secretary of Commerce
On March 22, 2021, the Supreme Court rejected a petition to review a Presidential decision to invoke the Antiquities Act of 1906 to designate as a monument “an area of submerged land about the size of Connecticut” in the Atlantic Ocean. This action forbids all sorts of economic activity, which compelled the filing of litigation in the First Circuit challenging this designation. Chief Justice Roberts supported the Court’s denial of certiorari, but remarked that a stronger legal case may persuade the Court to review such liberal uses of the Antiquities Act.

THE FEDERAL APPELLATE COURTS

The U.S. Court of Appeals for the District of Columbia Circuit

Air Alliance Houston v. EPA
On March16, 2021, the court ruled that it would grant a 90-day stay of litigation challenging EPA’s recent revisions to EPA’s Risk Management Rules pertaining to accidental chemical releases from stationary sources. (See the rules codified at 40 CFR Part 68.)

United States v. Shen Shi
On March 16, 2021, the court upheld a trade secrets conviction. An important component of complex and hugely expensive offshore deep well drilling operations are “drill riser buoyancy modules,” which are used to neutralize the riser’s weight and the crushing pressure of working in these forbidding areas. The design of successful modules is accorded trade secret protection, and the theft of such trade secrets can be prosecuted under 18 USC Section 1832.

A FERC Request Reviewed
On March 26, 2021, the court reviewed recent orders of the Federal Energy Regulatory Commission (FERC) and the biological opinion issued by the Fish and Wildlife Service in connection with a request made to FERC to allow a temporary variance in a FERC license to a dam operated by the Northern Indiana Public Service Company on the Tippecanoe River. A severe drought in the area was endangering a protected species of mussels, which a change in downstream water flows from the dam could possibly alleviate. Before FERC could grant a license variance, it had to determine whether doing so would be consistent with the Endangered Species Act. A thorough examination of the administrative record caused the court to largely uphold the variance granted by the Commission and the biological opinions on the ESA issue. The matter was remanded to FERC to review its decision that the new dam procedures do not violate a Fish and Wildlife regulation regarding purportedly “minor changes.”

The U.S. Court of Appeals for the Second Circuit – New York Department of Environmental Conservation v. Federal Energy Regulatory Commission
Under Section 401 of the Clean Water Act, states must act on request by a pipeline applicant with a FERC authorization for a state water quality certification within one year of the state’s receipt of the application. In this case, decided on March 23, 2021, the NYDEC challenged two orders of FERC that determined that the state waived its 401 certifying authority because it did not act in a timely manner, arguing that agreements between the state and the applicant set aside that statutory deadline. However, the court disagreed, and held that, under Section 401, this failure had the effect of approving the pipeline without the state’s water quality certification. As stated by the court: “Section 401 was intended to curb conduct by certifying states that upsets the regulatory burden set by the Congress.”

The U.S. Court of Appeals for the Fifth Circuit – Texas Education Agency v. U.S. Department of Education
On March 23, 2021, the court invalidated a whistleblower penalty assessed by the U.S. Department of Education against the Texas Education Agency. The Nation Defense Authorization Act of 2013 (NDAA) prohibits any recipient of federal dollars from retaliating against whistleblowers. Here, a former employee of the Texas Education Agency alleged that the TEA discharged her in retaliation for a whistleblowing complaint she lodged against TEA officials. The agency challenged this allegation, and also asserted that the U.S. Department of Education’s action violated the Texas state agency’s sovereign immunity. The court held that, in general, states are immune from federal agency adjudication, and the TEA is a state agency that also enjoys this protection. There is no evidence that Texas waived its sovereign immunity, and the NDAA did not unambiguously declare that Texas, by accepting federal education funds, waived its sovereign immunity. This ruling may have ramifications in other areas.

STATE COURTS

The Texas Supreme Court

Electric Reliability Council of Texas, Inc. v. Panda Power Generation Infrastructure
On March 19, 2021, the court, in a 5-to-4 ruling, held that it did not have jurisdiction, at this time, to decide this case. Panda Power sued ERCOT in state court, alleging that ERCOT’s energy forecasts caused it to begin construction on new power generation plants, but then a revised forecast predicting a decline in energy usage imperiled its investment. Panda Power alleged fraud and fiduciary breach. ERCOT’s major defense has been that it enjoys sovereign immunity from such lawsuits. By the time the case was argued and ready for decision, the Court noted that a number of decisions had yet to be made by the lower courts in this proceeding. This convinced the majority on the court that it could not rule on these interlocutory rulings. This decision was released within days of the recent adverse weather in Texas, where ERCOT’s sovereign immunity defense was widely discussed and debated.

Public Utility Commission, et al. v. Texas Industrial Energy Consumers, et al.
On March 26, 2021, the Texas Supreme Court decided another energy power case, reversing the Texas court of appeals sitting in Austin, and held that the determination by the Public Utility Commission (PUC) that SWEPCO, an electric power utility, could include the construction of a new coal-fired power plant in its utility rates, was reasonable and in accord with the law. The new plant was constructed in 2012, but a panel of PUC administrative law judges determined in 2010 that the costs of construction were so high that SWEPCO should have stopped the plant’s construction in 2010. The PUC disagreed with this panel and allowed SWEPCO to include most of the construction costs in its rate base since that internal decision was reasonable under the circumstances. The Texas Supreme Court agreed that SWEPCO had a heavy burden to establish that it acted reasonably, which it satisfied. (The court usually grants substantial deference to such rulings by the Commission.)

FEDERAL AGENCIES

EPA
On March 17, 2021, EPA published an Advance Notice of Proposed Rulemaking, inviting comments on its proposal to develop effluent guidelines under the Clean Water Act to regulate the discharge of PFAS chemicals. Comments are due on May 17, 2021. (See 86 FR 14625.)

Department of the Interior (DOI)
On March 19, 2021, the Principal Deputy Assistant Secretary for Land and Mineral Management distributed a memo to all Bureau directors stating that departmental review of many DOI leasing actions, including NEPA analysis, drilling permits, wildlife mitigation corridors, etc., are subject to headquarters review.

CONGRESS

The Environmental Justice for All Act
HR 5986 has been introduced in Congress. It is entitled the This is a complex bill, which requires careful analysis. The Findings provide that “communities of color, tribal and indigenous communities and fossil fuel-dependent communities” are disproportionately burdened by environmental hazards.

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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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