Source: https://eem.jacksonkelly.com/2017/07/index.html
Timestamp: 2019-04-26 12:27:24+00:00

Document:
On July 17, 2017, the governments of California’s Marin and San Meteo counties, as well as the city of Imperial Beach, filed three separate complaints in California Superior Court in their respective counties against 37 oil, gas, and coal companies. We have previously written about similar suits filed by citizen groups, states, and cities in federal court here.
Although most of these suits were dismissed by lower courts, Connecticut vs. AEP eventually reached the United States Supreme Court. In an 8-0 decision, the Supreme Court held that corporations cannot be sued under federal common law for greenhouse gas emissions (GHGs) because the federal common law was displaced by the Clean Air Act (CAA), which delegates management of carbon dioxide and other GHGs to the Environmental Protection Agency. See American Electric Power Company v. Connecticut, 564 U.S. 410 (2011). The Supreme Court, however, did not address whether the CAA displaced state common law claims, which left the door open for the suits filed last week in California.
For public nuisance standing, a plaintiff must show special injury that is concrete and redressable by the court. Because climate change has broad and highly uncertain effects, any relief ordered with respect to any set of defendants will have uncertain effects and hence not meet the redressability threshold. Thus, a private plaintiff cannot generally not establish standing in suits such as these. States and municipalities, on the other hand, may be able to establish standing, as demonstrated by Massachusetts’s success in challenging EPA’s failure to regulate greenhouse gas emissions. The Massachusetts situation was somewhat different, however, as it was seeking a remedy that would require nationwide regulation of GHGs, as opposed to the state court injunction sought in these suits.
The California plaintiffs may also have to contend with the argument that the science isn’t settled regarding how much of a reduction in global CO2 emissions would be sufficient to halt or even slow climate change and rising sea levels. Even if the California Superior Court could wipe out all of the emissions associated with the defendants’ products, would the resulting 20% alleged reduction be sufficient to halt climate change? Indeed, some believe reversing climate change is impossible, which casts doubt on the redressability of the plaintiffs’ sea level-related injuries. It is simply hard to imagine that a state court’s jurisdictional reach extends as far as EPA’s and is sufficient to significantly curb nationwide CO2 emissions, much less impact global emissions.
Substantively, the complaints include eight causes of action: (1) public nuisance on behalf of the citizens of California; (2) public nuisance on behalf of plaintiff; (3) strict liability—failure to warn; (4) strict liability—design defect; (5) private nuisance; (6) negligence; (7) negligence—failure to warn; and (8) trespass. The public nuisance claims are generally the same types of claims previously brought in federal court, which will likely face the redressability issues discussed above. The failure to warn claims, though, are somewhat interesting.
Plaintiffs claim that the defendants knew that their products caused climate change, yet failed to warn consumers and regulators of the known and foreseeable risks that inevitably followed the intended use of their products. This, according to the plaintiffs, entitles them to punitive damages and disgorgement of profits. Thus, while a state court might conclude it lacks the power to address the public nuisance aspects of climate change, it could side with the plaintiffs on the failure to warn/strict liability claims if it agrees that the defendants knowingly deceived the public about climate change. The plaintiffs’ claim that the science was settled way back in 1965 regarding the known impacts of climate change/global warming seems a bit spurious. After all, there was some thought as recently as the 1970’s that the earth was headed for a cooling period. Still, if the California Superior Court decides the failure to warn claims are actionable, disgorging profits for even a few years could add up, given the size and number of defendants. The full complaints can be viewed here, here, and here.
The Virginia Supreme Court issued two opinions on July 13, 2017, addressing the rights of pipelines to survey property without landowner permission. In the first, Chaffins v. Atlantic Coast Pipeline, LLC, the Court considered what constitutes adequate prior notice by a pipeline company to gain access for surveys and property evaluation in the absence of landowner approval. In the second, Palmer v. Atlantic Coast Pipeline, LLC, the Court considered whether a company organized under the laws of a state other than Virginia is empowered to utilize Virginia state law to gain access to the property of unconsenting landowners to survey or examine property. We have written about this issue before in the context of cases throughout the region.
Virginia statutes establish a mechanism for natural gas companies to gain access to properties for conducting surveys, examinations, appraisals and tests without the written permission of the landowner. The procedure requires: First, that the gas company send a written request by certified mail to the landowner seeking permission to access the property. The request shall “set forth the date such inspection is proposed to be made” and must be made at least 15 days prior to the proposed date of inspection. Second, if permission is not granted prior to the proposed entry date, then the company must send a “notice of intent to enter” by certified mail and again set forth “the date of the intended entry,” again at least 15 days prior to that date.
Here, The Court ruled that the first effort by Atlantic Coast Pipeline LLC (ACP) was deficient because its notice of intent to enter, issued after permission was refused by the Chaffins, did not provide a date certain for the intended entry. Instead, the notice provided that ACP intended to enter their properties “on or after” a date certain. This notice, the Court ruled, violated the obligation to provide notice of “the date of the intended entry.” Apparently, ACP had since provided a new notice to the Chaffins, but the Court declined to dismiss the case as moot because ACP continued to argue that its original notice was not deficient. In any event, the Chaffins victory provides them with no real measure of relief.
In the second case, the Court was presented with two challenges to the authority of “foreign” companies to use Virginia law for gaining access to private property for pipeline-related surveys and examinations. ACP, owned in part by Virginia-based Dominion Energy, is organized under the laws of Delaware. First, Palmer argued that the statute giving “any firm, corporation, company or partnership, organized for the … purpose of operating as a natural gas company” limits the right of access to “domestic” gas companies because the provision is placed in a statutory title limited to “[Virginia] public service companies.” Had the General Assembly intended to grant the authority to other companies, argued Palmer, it would have been located in a statutory title expounding the authorities of corporations generally. The Supreme Court rejected this argument, noting that the statute at issue granted its entry for survey authority to “[a]ny … corporation” organized as natural gas company.
Palmer, though, offered a second argument that foreign-organized companies cannot use the Virginia right of access provisions. She argued that to construe the statute as allowing non-Virginia organized companies a right of access created an impermissible conflict with Article IX, §5 of the Virginia Constitution. That provision states that “[n]o foreign corporation shall be authorized to carry on in this Commonwealth the business of, or to exercise any of the powers or functions of, a public service enterprise.” The Court, however, declined to address the argument because Palmer’s counsel did not raise it in the trial court and did not properly present it in Palmer’s opening appeal brief. Instead, her counsel sought to preserve the argument with a simple reference in the opening brief, explaining that he thought the argument was a “silver bullet” that he intended to explain in detail only in a reply brief after seeing the arguments of ACP. As a result, the argument remains available for others to advance.
Lastly, the Court considered and rejected several other arguments by Palmer that her Constitutionally protected private property rights included the right to exclude access to her property, notwithstanding statutory provisions granting gas companies a right of access. The Court observed that the common law has long recognized that the right to exclude is “not absolute” and does not allow Palmer to exclude ACP.
D.C. Circuit Temporarily Recalls Its Mandate in Seesaw Battle Arising Out of EPA’s Efforts to Roll Back Obama-Administration Methane Gas Rules.
This order recalls the mandate for a limited period … to give EPA time to “determine whether to seek panel rehearing, rehearing en banc, or pursue other relief.” To stay issuance of the mandate for longer would hand the agency, in all practical effect, the very delay in implementation this panel determined to be “arbitrary, capricious, [and] … in excess of [EPA’s] statutory… authority."
The new rules, now effective July 27, 2017, include a deadline of June 3, 2017 for regulated entities to conduct an initial monitoring survey to identify leaks from equipment.
When the new rules were adopted in June 2016, several industry groups, including the American Petroleum Institute, petitioned EPA to reconsider four aspects of the rules under Section 307(d)(7)(B) of the Clean Air Act, authorizing an administrative stay pending reconsideration under certain circumstances. The industry groups argued that the four objectionable provisions of the new rules were not included in the proposed rule, which was published for public comment, and requested that they be stayed pending reconsideration.
EPA Administrator Pruitt agreed with the merits of the petition and, on June 5, 2017, published notice of a 90-day partial stay of the new rules pending EPA’s reconsideration of the four objectionable provisions. Pruitt’s stay was made effective June 2, 2017, one day before the June 3, 2017 deadline for regulated entities to conduct monitoring to identify leaks from equipment. The administrative stay was subsequently extended for two years when EPA published notice of its intention to reconsider the entire 2016 rule.
Environmental groups, including the Natural Resources Defense Council, filed an emergency petition with the Court claiming EPA’s administrative stay was unauthorized under Section 307(d)(7)(B). Petitioners argued that the issues to be reconsidered had already been the subject of deliberation during the comment period. EPA and industry groups disagreed and further argued that the Court did not have jurisdiction to hear the petition because the stay was not a final agency action.
Explaining its rationale, the Court framed the determinative issue as whether it was “impractical” for the industry groups to raise their objections before the rule was made final. For each of the four provisions, the Court reviewed the administrative record for whether the final rule was a “logical outgrowth” of the proposed rule thereby permitting industry to raise its objections during the comment period. Based on its review, the Court found that industry had ample opportunity to raise and comment on the issues that they now sought to raise for further review. In sum, the Court concluded it was not “impracticable” for industry to have raised the objections during the comment period and a stay was therefore not authorized under Section 307(d)(7)(B). Although the stay was lifted, the Court noted that EPA’s reconsideration of the final rule, pursuant to its June 16, 2017 notice of proposed rule-making, could continue.
Second, the Court found that, in granting reconsideration and staying the rule, EPA did not rely on “its so-called inherent authority.” Instead, it found that EPA expressly acted pursuant to section 307(d)(7)(B), authorizing the agency to grant a stay during “such reconsideration,” a term that “quite obviously” refers back to the reconsideration that EPA “shall” undertake when someone presents an objection of “central relevance” that was “impracticable” to raise during the period for public comment. As such, the Court looked for whether the industry groups met the two requirements for mandatory reconsideration.
The Court bypassed the issue of what standard of review to apply (“arbitrary and capricious” or “limited deference”) because it found EPA’s decision to stay the methane rule was arbitrary and capricious, thus unlawful even under the more deferential standard. In the final analysis, the Court concluded that “industry groups had ample opportunity to comment on all four issues on which EPA granted reconsideration” … and … in “several instances the agency [had] incorporated those comments directly into the final rule.” Because it was thus not “impracticable” for industry groups to have raised such objections during the notice and comment period, section 307(d)(7)(B) did not require reconsideration and did not authorize the stay.
The Pennsylvania Supreme Court has recently issued two rulings affecting the State’s oil and gas industry. Both decisions involved the “Environmental Rights Amendment” to Pennsylvania’s Constitution. One of the rulings related to the court’s 2013 decision enjoining certain provisions of a re-write of Pennsylvania’s Oil and Gas Act of 1984. The other ruling involved the allocation of funds from the Commonwealth’s leasing of oil and gas rights.
In 2012 the Pennsylvania Legislature substantially re-wrote the State’s Oil and Gas Act. Known as “Act 13,” it included among its provisions a “set-back” requirement (restricting the areas in which development could occur) and provided for waiver of the set-back provisions in certain circumstances. In 2013 the waiver provision, among others, was deemed to violate Pennsylvania’s Environmental Rights Amendment by the Pennsylvania Supreme Court. See Robinson Township v. Commonwealth, 83 A.3d 901 (Pa. 2013). The court additionally enjoined the set-back provisions, finding that they were not severable from the waiver provision. Other provisions of Act 13 were also held to be un-severable from the enjoined provisions, including a requirement that Pennsylvania Department of Environmental Protection (PADEP) consider the impacts of a proposed well on certain public resources.
After the Robinson Township ruling, the PADEP continued to require information in permit applications about the same public resources contemplated by the Act 13 provision that the Pennsylvania Supreme Court had found unconstitutional. The Pennsylvania Independent Oil and Gas Association (PIOGA) filed suit in Commonwealth Court. There, the court disagreed that the PADEP was precluded from collecting and using the public resource information, even in light of the Robinson Township decision. It reasoned that the injunction in Robinson Township only affected the PADEP’s ability to collect information on impacts to public resources to the extent that such collection was directly tied to the enjoined set-back and waiver provisions of Act 13. If the set-back and waiver provisions were not implicated, PADEP could disregard the Robinson Township and request the relevant information. PIOGA appealed, and on June 20 the Pennsylvania Supreme Court affirmed the Commonwealth Court’s decision without issuing an opinion.
In Pennsylvania, the Department of Conservation and Natural Resources (DCNR) is empowered to lease minerals in State forests so long as it determines that the lease is in the State’s best interest. Historically, these lease revenues were appropriated to the DCNR. In 2008 alone, the DCNR entered into leases that produced $167 million in revenue (more than the cumulative revenues accrued since 1947). These funds were committed to conservation projects. Thereafter, however, the DCNR temporarily ceased its leasing program while a study was conducted regarding the effects of Marcellus shale production and development. Meanwhile, the Legislature enacted provisions prohibiting expenditures from the lease funds unless they were first appropriated and transferred to the State’s General Fund.
The funding mechanism was challenged by environmental groups in Commonwealth Court. The groups alleged that the legislative provisions violated the Environmental Rights Amendment. The Amendment grants two rights to the public: rights to clean air and water as well as the preservation of natural and scenic values; and common ownership of public resources. The groups argued that disbursement of lease revenues to the General Fund violated the Amendment by using money earmarked for conservation projects to fill State budget gaps.
The litigation addressed a three-part test enunciated in 1973 by the Commonwealth Court (Payne v. Kassab, 3012 A.2d 86 (Pa. Commw. 1973)), which required courts to weigh the potential environmental harm of a challenged decision against its benefits. Relying on the Payne test, the Commonwealth Court refused to find that the legislative provisions violated the Environmental Rights Amendment. The Commonwealth Court also declined to rule, however, that the commingling of the lease payments with the General Fund or the statutory allocation of funds to the General Fund were unconstitutional. On appeal, the Pennsylvania Supreme Court refused to apply the Payne test, finding that it inappropriately limited the scope of the Environmental Rights Amendment. Referencing the rights granted to the public by the Amendment, the court ruled that proceeds from the sale of trust assets (such as oil and gas) are part of the “public trust” and must be used for conservation and maintenance of public resources.
A likely result of these rulings is that the Environmental Rights Amendment will be invoked more often in challenges to Pennsylvania’s permitting, zoning and other decisions.
This article is authored by Douglas J. Crouse, Jackson Kelly PLLC.

References: v. 
 v. 
 v. 
 §5
 v. 
 v.