Ninth Circuit Denies Petition for Rehearing of Area of Origin Decision

On October 15, 2013, the Ninth Circuit Court of Appeals issued an order denying the Petition for Rehearing filed by Tehama-Colusa Canal Authority (“TCCA”), which requested rehearing or rehearing en banc of the Ninth Circuit’s opinion in the case of Tehama-Colusa Canal Authority v. U.S. Dept. of the Interior, et al., Case No. 11-17199.

In its July 1, 2013 opinion, the Ninth Circuit rejected TCCA’s claim that California area of origin law entitled TCCA’s member districts to priority deliveries of Central Valley Project (“CVP”) water from the Bureau of Reclamation (“Bureau”). The court ruled that California area of origin laws, in particular Water Code section 11460, do not require the Bureau to prioritize the allocation of Federally-appropriated CVP water to Sacramento Valley CVP contractors. 

TCCA may still file a petition for a writ of certiorari seeking review of the Ninth Circuit’s opinion by the Supreme Court. 

Related Posts:

• Ninth Circuit Rejects Claims to Area of Origin Priority by Tehama-Colusa Canal Authority 
• District Court Rejects Claims to Area of Origin Priority by Tehama-Colusa Canal Authority
• Tehama-Colusa Canal Authority Appeals Area of Origin Decision
• KMTG Legal Alert: Sacramento Valley Farmers Have No Prior Right To Central Valley Project Water Under Area Of Origin Laws

Ninth Circuit Rejects Claims to Area of Origin Priority by Tehama-Colusa Canal Authority

On July 1, 2013, the Ninth Circuit Court of Appeals issued an opinion rejecting assertions by Tehama-Colusa Canal Authority (“TCCA”) that California area of origin law entitled its member districts to priority deliveries of Central Valley Project (“CVP”) water and that the Bureau of Reclamation (“Bureau”) acted in violation of law by delivering less than 100% of contract amounts during contractual “Conditions of Shortage.”  With the opinion, the Ninth Circuit affirmed the 2011 decision by the United States District Court for the Eastern District of California, discussed here.

In an opinion by Judge Johnnie B. Rawlinson, the court ruled that California area of origin laws, in particular Water Code section 11460, do not require the Bureau to prioritize the allocation of Federally-appropriated CVP water to Sacramento Valley CVP contractors. 

In addition, the court concluded that the “clear contract language” of TCCA members’ water service contracts provides that TCCA members are not entitled to the full amount of water contracted for, and “may have to endure pro rata reduction in times of shortage, along with other CVP contractors.”

Finally, the court held that validation judgments foreclosed TCCA and its members from seeking to “circuitously undo the contract provisions to which they previously acceded.”  The validation judgments, which became final in 2005, validated the water service contracts under California law. 

The Ninth Circuit’s opinion in the case, Tehama-Colusa Canal Authority v. U.S. Dept. of the Interior, et al., Case No. 11-17199, may be found here.

Related Posts:

• District Court Rejects Claims to Area of Origin Priority by Tehama-Colusa Canal Authority
• Tehama-Colusa Canal Authority Appeals Area of Origin Decision
• KMTG Legal Alert: Sacramento Valley Farmers Have No Prior Right To Central Valley Project Water Under Area Of Origin Laws

Ninth Circuit Heard Oral Argument in the Consolidated Delta Smelt Cases

On September 10, 2012, the United States Court of Appeals for the Ninth Circuit heard approximately an hour of oral argument in the Consolidated Delta Smelt Cases appeals, Ninth Circuit Case Nos. 11-15871, 11-16617, 11-16621, 11-16623, 11-6624, 11-16660, 11-16662, and 11-17143.  The lead appeal is also referred to as San Luis & Delta-Mendota Water Authority, et al. v. Salazar, et al.  An audio recording of the oral argument is available here.

The Ninth Circuit panel, comprised of Ninth Circuit judges Johnnie Rawlinson and Jay Bybee, and Eighth Circuit Judge Morris Arnold (sitting by designation), heard oral argument from Department of Justice attorney Robert Oakley (representing Federal defendants), Natural Resources Defense Council attorney Katherine Poole (representing the Natural Resources Defense Council and The Bay Institute), Best Best & Krieger LLP attorney Gregory Wilkinson (representing the State Water Contractors), Kronick Moskovitz Tiedemann & Girard attorney Daniel O’Hanlon (representing San Luis & Delta-Mendota Water Authority and Westlands Water District), and California Deputy Attorney General Clifford Lee (representing the California Department of Water Resources). 

The appeals are now under submission and the parties are awaiting the Ninth Circuit’s opinion. 

Related Stories:

Oral Argument Scheduled for Ninth Circuit Appeals in the Delta Smelt Consolidated Cases
Ninth Circuit Dismisses "Fall X2" Appeal for Mootness

Ninth Circuit Dismisses "Fall X2" Appeal for Mootness

On August 23, 2012, the United States Court of Appeals for the Ninth Circuit issued an order in San Luis & Delta Mendota Water Authority, et al. v. Salazar, et al., Appeal No. 11-17143, granting Appellees' motion to dismiss the appeal. 

The Fall X2 Action is an action in the Reasonable and Prudent Alternative identified in the 2008 U.S. Fish & Wildlife Service biological opinion regarding the effects of the long-term operation of the Central Valley Project and State Water Project on the delta smelt.  In the August 23, 2012 order, the Ninth Circuit held: "Because the implementation period for the Fall X2 Action has passed, any challenge to the district court's injunction is moot." 

As a result of the order, the scheduled oral argument for the two Delta Smelt Consolidated Cases appeals will no longer include oral argument on the propriety of the district court's August 31, 2011 decision that enjoined the federal government from implementing the Fall X2 Action, which, absent the injunction, would have restricted California's water supply by hundreds of thousands of acre feet.

Related Stories:

• Oral Argument Scheduled for Ninth CircuitAppeals in the Delta Smelt Consolidated Cases
• Federal District Court Enjoins Water Supply Restrictions Under Delta Smelt Biological Opinion

 

Ninth Circuit Issues Opinion Regarding ESA Consultation & NEPA Review

In an opinion issued on August 13, 2012, the federal Ninth Circuit Court of Appeals held that the issuance of an annual operating plan for the Glen Canyon Dam by the Bureau of Reclamation (“Reclamation”) is not subject to the consultation requirements of the Endangered Species Act (“ESA”), nor the environmental review requirements of the National Environmental Policy Act (“NEPA”).

The appeal in Grand Canyon Trust v. U.S. Bureau of Reclamation (9th Cir. Case No. 11-16326) involved a challenge to Reclamation’s issuance of an annual operating plan for operation of the Glen Canyon Dam, which impounds the Colorado River. Pursuant to the Colorado River Basin Project Act of 1968 (“CRBPA”), the Secretary of the Interior (“Secretary”) is required to adopt criteria for the long-term operation of the Glen Canyon Dam (“Dam”) and to transmit annual operating plans (“AOPs”) for the Dam to Congress and the Colorado River Basin States. The AOPs must describe the actual operation under the adopted criteria for the preceding water year and the anticipated project operation for the current water year.

In Grand Canyon Trust, the primary issues on appeal were: 1) whether the issuance of an AOP for the Glen Canyon Dam is a discretionary act that triggers the ESA’s consultation requirement; and 2) whether the issuance of an AOP is a major federal action that triggers NEPA’s environmental review requirements. Under section 7(a)(2) of the ESA, a federal agency must consult with the appropriate fish and wildlife agency if the agency action may affect any species listed under the ESA. Under NEPA, a federal agency must prepare an environmental impact statement (“EIS”) for every major federal action significantly affecting the quality of the human environment.

The factual history of the Grand Canyon Trust case is critical to understanding the Court’s holdings. In 1995, Reclamation prepared an EIS in which it evaluated several operational alternatives for managing the Dam, including a modified low fluctuating flow (“MLFF”) regime and a seasonally-adjusted steady flow regime. In 1996, the Secretary selected MLFF as the Dam’s specific operating criteria in a NEPA-required Record of Decision. In 2008, the Grand Canyon Trust filed its original complaint against Reclamation, alleging that Reclamation violates the ESA by not consulting with FWS on the development of each AOP for the Dam and that Reclamation violates NEPA by not preparing an environmental assessment (“EA”) or EIS for each AOP. After three summary judgment decisions and two remands by the district court, the issue of whether an AOP is subject to NEPA and the ESA consultation requirement finally reached the Ninth Circuit.

ESA Section 7 Consultation
In addressing the issue of whether the issuance of an AOP is a discretionary act that triggers the ESA’s consultation requirement, the Court began its analysis by stating the rule that the consultation requirement only applies to federal action in which there is discretionary Federal involvement or control. The Court concluded that in issuing an AOP, Reclamation does not exercise discretion signifying agency action requiring ESA consultation because the CRBPA requires Reclamation to prepare an AOP which describes Dam operations under the adopted criteria. The Court emphasized that Reclamation does not have the discretion to select different operating criteria for the Dam by saying so in an AOP because Reclamation has a specific, non-discretionary obligation to implement the adopted criteria, which in this case, is the MLFF selected in the 1996 Record of Decision. Thus, the Court held that Reclamation does not violate the ESA by issuing an AOP without formally consulting with the Fish and Wildlife Service because Reclamation does not exercise discretion that inures to the benefit of a listed species in preparing an AOP.

NEPA Environmental Review
In addressing the issue of whether the issuance of an AOP is a major federal action triggering NEPA review, the Court stated that an agency must prepare an EIS if an ongoing project undergoes changes which themselves amount to “major Federal actions.” However, the Court concluded that Reclamation is not making material changes to the operating criteria for the Dam when it prepares and issues an AOP. The Court stated that the time for Reclamation to take a “hard look at the environmental consequences” should be at the points where Reclamation established the operating criteria for the Dam, or embarks on some significant shift in direction in operating policy, not merely when there is routine and required annual reporting. Thus, the Court held that AOP preparation does not trigger compliance with NEPA’s procedural requirements.

Conclusion
The Grand Canyon Trust decision provides instructive Ninth Circuit authority regarding the type of federal actions which trigger the ESA consultation requirement and NEPA review. The decision warrants careful review by any federal litigator or administrative practitioner.

For additional information regarding the Grand Canyon Trust decision, please contact Elizabeth Leeper or the KMTG attorney with whom you normally consult.

Ninth Circuit Court of Appeals Rejects Challenges to 43 Federal Water Contracts

On July 17, 2012 the Ninth Circuit issued an important opinion rejecting challenges to the U.S. Bureau of Reclamation's renewal of 43 water contracts in 2004-2005.  The contracts at issue consisted of two general types - water service contracts in the Delta Mendota Canal Unit of the Central Valley Project and Sacramento River Settlement contracts. 

The case stems back to litigation over a 2005 biological opinion issued by the U.S. Fish and Wildlife Service on the effects of State and Federal water project operations on the threatened delta smelt.  That 2005 BiOp was challenged by environmental groups and ruled invalid by the district court.  In an attempt to ride the wave of that success, the same environmental groups then filed a supplemental complaint challenging the earlier contract renewals by the Bureau as invalid because they had partially incorporated the 2005 BiOp.  The district court rejected these claims because the water service contracts expressly provided and allowed for the Bureau to change CVP operations (including reducing deliveries) in any way required by the ESA, and therefore their execution and existence did not cause any actual harm to the delta smelt.  With respect to the settlement contracts, the district court generally found that the Bureau had no discretion to alter their terms and therefore the ESA consultation provisions did not apply to the renewal of those contracts. 

The Ninth Circuit Court of Appeals affirmed both district court rulings, rejecting challenges to both types of water contracts.  The opinion can be found here.

If you have any questions regarding this decision, please contact, Daniel J. O’Hanlon, Hanspeter Walter, or Rebecca Akroyd.
    

Oral Argument Scheduled for Ninth Circuit Appeals in the Delta Smelt Consolidated Cases

On July 10, 2012, the United States Court of Appeals for the Ninth Circuit issued a notice of oral argument in the Consolidated Delta Smelt Cases appeals, Ninth Circuit Case Nos. 11-15871, 11-16617, 11-16621, 11-16623, 11-6624, 11-16660, 11-16662, and 11-17143.  The lead appeal is also referred to as San Luis & Delta-Mendota Water Authority, et al. v. Salazar, et al.  Hearing on the appeal will occur September 10, 2012, at 9:00 a.m. in the Lloyd D. George United States Courthouse in Las Vegas, Nevada.  The court will reveal the identity of panel members not earlier than the week before the case will be heard. 

The court will hear oral argument on appeals regarding two decisions from the United States District Court for the Eastern District of California: 1) the district court’s December 14, 2010 Memorandum Decision re Cross Motions for Summary Judgment, and the related May 18, 2011 final judgment, which held that the U.S. Fish and Wildlife Service’s (“FWS”) 2008 delta smelt biological opinion (“BiOp”) and Reasonable and Prudent Alternative (“RPA”) were arbitrary, capricious, and unlawful and remanded the BiOp and RPA to FWS; and 2) the district court’s August 31, 2011 decision that enjoined the federal government from implementing the so-called “Fall X2” measure, which, absent the injunction, would have restricted California’s water supply by hundreds of thousands of acre feet.

Briefing completed in the so-called “Merits Appeal” on May 25, 2012, while briefing completed in the so-called “X2 Appeal” on April 5, 2012.  An order granting the motion to consolidate the Merits Appeal and X2 Appeal, which were separately briefed, for oral argument, was filed on May 25, 2012.  

If you have any questions regarding this announcement, please contact Daniel J. O’Hanlon, Rebecca Akroyd, or Hanspeter Walter, or the KMTG attorney with whom you normally consult.

Related Stories:

• Court Denies “Fall X2” Motions and Finds Agency Bad Faith 
• Federal District Court Enjoins Water Supply Restrictions Under Delta Smelt Biological Opinion

State Water Resources Control Board and the California Department of Water Resources Weigh in on Area of Origin Debate

On June 5, 2012, the State Water Resources Control Board (“SWRCB”) and the California Department of Water Resources (“DWR”) filed a brief as amici curiae in support of affirmance of the district court in the pending Ninth Circuit appeal of Tehama-Colusa Canal Authority v. U.S. Department of Interior, et al., Case No. 11-17199.

As we previously reported (here, here, and here), the United States District Court for the Eastern District of California ruled in August 2011 that water users in the Sacramento Valley have no preferential right to delivery of Central Valley Project water under California’s so-called “area of origin” laws.

In the amicus curiae brief, DWR and the SWRCB make the following concluding remarks:

It is undisputed that the Tehama-Colusa agreed to a water delivery contract with the Bureau that imposed a pro-rata shortage provision and did not recognize any preference based on California’s Area-of-Origin Statute.  It is also undisputed that Appellant did not try to obtain a water right from the SWRCB, even if Appellant believes it had an Area-of-Origin priority by virtue of its contract with the Bureau. These facts alone are sufficient to affirm the district court’s order granting summary judgment in favor of the United States.

Appellant Tehama-Colusa Canal Authority must file its final appellate brief in Tehama-Colusa Canal Authority v. U.S. Department of Interior, et al., by June 28, 2012.  Oral argument will be scheduled following the completion of briefing.

If you have any questions concerning this topic, please contact Daniel J. O'Hanlon, Hanspeter Walter, or Rebecca R. Akroyd from our office, or the KMTG attorney with whom you normally consult.

Related Stories:

• KMTG Legal Alert: Sacramento Valley Farmers Have No Prior Right To Central Valley Project Water Under Area Of Origin Laws
• District Court Rejects Claims to Area of Origin Priority by Tehama-Colusa Canal Authority
• Tehama-Colusa Canal Authority Appeals Area of Origin Decision

Property Owners Entitled to Judicial Review of EPA Compliance Orders

Last week, in a closely-watched Clean Water Act case, the United States Supreme Court unanimously upheld the rights of property owners to obtain judicial review of a compliance order issued by the Environmental Protection Agency (EPA). The Court's opinion may be found here.

The decision arises out of an order issued by the EPA under Section 309 of the Clean Water Act. The order declared that property owned by Mike and Chantell Sackett of Priest Lake, Idaho, contained wetlands adjacent to Priest Lake. The order found that the Sacketts violated the Clean Water Act by discharging fill material into wetlands, a violation of Sections 301 and 502(12) of the Act, and directed the Sacketts to restore their property as directed by the EPA and to allow EPA access to the property and documentation regarding the site. Failure to comply with the order exposed the Sacketts to civil penalties of up to $75,000 per day for as long as the violation continues.

The issue resolved by the Court involves the Sacketts' efforts to obtain judicial review of the compliance order. After the EPA denied their request for a hearing, the Sacketts sued in federal district court in Idaho, which dismissed their complaint for lack of subject matter justice. That dismissal was subsequently upheld by the Ninth Circuit Court of Appeals, which held that the Clean Water Act precludes pre-enforcement judicial review of administrative compliance orders, and that such preclusion does not violate due process. The Ninth Circuit's opinion may be found here. Absent judicial review, the Sacketts were faced with the prospect of complying with an order at a cost greater than the value of their property. Alternatively, they could ignore the order and risk a civil action by the EPA, with civil penalties that grew with each passing day of alleged violation.

In reversing the Ninth Circuit, the Court held that EPA's compliance order satisfied the requirements for final agency action for which there is no adequate remedy, other than review under the Administrative Procedure Act, and that nothing in the Clean Water Act precluded judicial review. Concluding the opinion of the Court, Justice Scalia explained:

The APA’s presumption of judicial review is a repudiation of the principle that efficiency of regulation conquers all. And there is no reason to think that the Clean Water Act was uniquely designed to enable the strong-arming of regulated parties into “voluntary compliance” without the opportunity for judicial review—even judicial review of the question whether the regulated party is within the EPA’s jurisdiction.

But perhaps the most interesting commentary in the decision is found in Justice Alito's concurring opinion, where he commented:

The reach of the Clean Water Act is notoriously unclear. Any piece of land that is wet at least part of the year is in danger of being classified by EPA employees as wetlands covered by the Act, and according to the Federal Government, if property owners begin to construct a home on a lot that the agency thinks possesses the requisite wetness, the property owners are at the agency’s mercy. The EPA may issue a compliance order demanding that the owners cease construction, engage in expensive remedial measures, and abandon any use of the property. If the owners do not do the EPA’s bidding, they may be fined up to $75,000 per day ($37,500 for violating the Act and another $37,500 for violating the compliance order). And if the owners want their day in court to show that their lot does not include covered wetlands, well, as a practical matter, that is just too bad. Until the EPA sues them, they are blocked from access to the courts, and the EPA may wait as long as it wants before deciding to sue. By that time, the potential fines may easily have reached the millions. In a nation that values due process, not to mention private property, such treatment is unthinkable.

The practical effect of the Court's ruling is that the Sacketts, and others who may find themselves in the "unthinkable" predicament described by Justice Alito, will have their day in court. They will certainly be permitted to challenge EPA's claim of regulatory authority over their property. It is less clear whether, at the pre-enforcement stage, they will also be able to challenge the terms and conditions of the compliance order, as Justice Ginsburg explains in her concurring opinion.

For more information regarding this matter, please contact Eric Adair or the KMTG attorney with whom you normally consult.

Ninth Circuit Finds No CERCLA Arranger Liability for Manufacturer of PCE Recycling Equipment

On July 26, 2011, the Ninth Circuit held that the manufacturer of equipment designed to filter and recycle perchlorethylene ("PCE") could not be found liable as an "arranger" under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. §§ 9601-9675. 

Plaintiff generated PCE-laden wastewater in its dry cleaning operation.  It used the manufacturer's filtering equipment to recycle and capture the valuable PCE for re-use, and then disposed of the filtered wastewater by pouring it down a sewer drain.  The filtered wastewater contained dissolved and invisible PCE that contaminated the surrounding soil, which plaintiff was required to remediate at its own expense.

Plaintiff sought contribution under CERCLA from the manufacturer of the filtering equipment under a theory of arranger liability.  Plaintiff's contribution claimed rested on two contentions: first, that the design of the equipment contemplated and even necessitated the disposal of wastewater contaminated with PCE, such that the manufacturer had taken "intentional steps" and "planned a disposal" of PCE; and second, that the manufacturer had authority to control and actually exercised control over the disposal process.

The Ninth Circuit rejected both contentions.  With respect to the first contention, the court cited Burlington N. & Santa Fe Ry. Co. v. United States, 129 S. Ct. 1870, 1880 (2009), for the proposition that:

[w]hile it is true that in some instances an entity's knowledge that its product will be . . . discarded may provide evidence of the entity's intent to dispose of its hazardous wastes, knowledge alone is insufficient to prove that an entity "planned for" the disposal, particularly when the disposal occurs as a peripheral result of the legitimate sale of an unused, useful product.

Noting that the filtering equipment itself was a useful product, the court declined to find that the manufacturer intended its product's use to result in the unlawful disposal of PCE.  It further declined to infer intent based on the claimed inevitability of the disposal of PCE or the manufacturer's failure to warn about the risk of contamination that would result from improper disposal. 

In rejecting plaintiff's second contention, the court noted that the manufacturer had no legal authority to direct the conduct of plaintiff's employees and then dispensed with plaintiff's several factual contentions, finding "a dearth of evidence" indicating that the manufacturer exercised actual control over the disposal process.  The court also rejected plaintiff's state law theories of nuisance and trespass, finding that neither theory was supported by evidence sufficient to give rise to a genuine dispute.

The Ninth Circuit's opinion may be found here.

If you have any questions concerning this topic, please contact K. Eric Adair from our office, or the KMTG attorney with whom you normally consult.