1998 - the year in review.

I. INTRODUCTION

This Article is intended to provide a short summary of the most important environmental case law developments of 1998. The treatment of cases is divided into two categories. First, I addresses in some detail what I consider to be the three most significant developments of this past year. This section will discuss the background from which the relevant cases arose, as well as their most obvious implications. The second category will provide a somewhat briefer analysis of other significant decisions, organized by statute or subject matter.

II. THE THREE MOST IMPORTANT CASE LAW DEVELOPMENTS OF 1998

A. Steel Company and its Progeny 

In my view, the most significant decisions of the past year are those involving the "constitutionalization" of the so-called Gwaltney doctrine and the implications of this development for citizen suits. These cases also involve the most complex legal issues.

1. Background

In 1987, the Supreme Court determined, in Gwaltney of Smithfield Ltd. v. Chesapeake Bay Foundation,(1) that citizens could not bring suit under the Clean Water Act (CWA)(2) for "wholly past" violations, that is, violations that had been cured before the filing of the lawsuit.(3) Gwaltney was a statutory decision. In reaching its decision, the Court relied on the fact that the CWA's citizen suit provision allows suit only against those "alleged to be in violation" of the CWA.(4) The Court read this language as indicating that the citizens must allege, and ultimately prove, that the defendant is still in violation at the time the complaint is filed.(5)

The Gwaltney decision essentially eliminated random, episodic violations from the scope of citizen enforcement. It also eliminated systemic violations, if the root cause of the violation was eliminated before the case was filed.

For those concerned about citizen enforcement, Gwaltney left the following two outstanding questions: 1) Would Congress "fix" the problem by changing the statutory formulations to allow suits for wholly past violations?; and 2) What would happen in situations where the violator eliminated the problem causing the violations during the pendency of the law suit? Would the case be moot?

On the first question, Congress took action in the context of the Clean Air Act (CAA)(6) when it amended that law in 1990. It amended section 304(a)(1) of that statute to allow citizens to bring suit for repeated past violations.(7) While this action had effect only under the CAA, it seemed to indicate that, at least at that time, Congress disagreed with the Gwaltney result as a matter of policy.

On the second question, although the Gwaltney opinion itself contains dicta suggesting that the defendant could have rendered the case moot by convincingly demonstrating that it had eliminated the root cause of the violations,(8) the Fourth Circuit concluded on remand by determining that such a demonstration mooted only the injunctive portion of the case.(9) Other circuits agreed.(10) Under the logic of these cases, in situations where the problem remains unresolved at the time the complaint is filed, the plaintiff may still seek civil penalties--even if the defendant later achieves compliance--not only for postcomplaint violations, but also for precomplaint violations back through the statute of limitations period.(11)

2. Steel Co. v. Citizens for a Better Environment(12)

In this case, the defendant had failed to file any required reports under the Emergency Planning and Community Right to Know Act (EPCRA)(13) for seven years.(14) After Citizens for a Better Environment (CBE) sent in its notice letter(15) (and prior to the filing of the complaint), the defendant submitted all of the relevant reports, thus rendering the violations "wholly past." The Seventh Circuit had determined that, unlike the CWA, EPCRA allowed citizens to file suit with respect to wholly past violations.(16)

In Steel Co., the Supreme Court reversed, but on constitutional, not statutory grounds. In an opinion written by Justice Scalia, the Court found that the plaintiff had no standing to bring the case, due to a lack of redressability. The majority focused in particular on three of CBE's claims for relief. With respect to the plaintiff's request for penalties, the Court determined that the potential availability of such penalties did not provide redressability because, under EPCRA, penalties are payable to the Treasury, not the citizen plaintiff.(17) The Court reasoned that "[i]n requesting [penalties], therefore, respondent seeks not remediation of its own injury--reimbursement for the costs it incurred as a result of the [violation]--but vindication of the rule of law--the `undifferentiated public interest' in faithful execution of EPCRA. This does not suffice."(18)

The majority further found that CBE's request for attorneys' fees could not provide redressability because "[t]he litigation must give the plaintiff some benefit besides reimbursement of costs that are a byproduct of the litigation itself."(19) Finally, the Court concluded that the injunctive relief sought by CBE--which was designed to ensure future compliance--was also insufficient, because CBE had alleged neither a continuing violation, nor the imminence of a future violation.(20) The Court further opined that, based upon the facts before it, there appeared to be no basis for any such allegations.(21) Thus, there was no basis for any such relief.

In his concurring opinion,(22) Justice Stevens argued that the deterrent effect a penalty would have on both the violator and others similarly situated should be enough to establish the required redressability:

   When one private party is injured by another, the injury can be redressed
   in at least two ways: by awarding compensatory damages or by imposing a
   sanction on the wrongdoer that will minimize the risk that the harm-causing
   conduct will be repeated. Thus, in some cases a tort is redressed by an
   award of punitive damages; even when such damages are payable to the
   sovereign, they provide a form of redress for the individual as well.(23)

Justice Stevens also maintained that the historical practice--in both England and the United States--of allowing private persons to prosecute criminal cases lent further support to the notion that the Framers would have considered these actions constitutionally valid.(24)

The majority responded to this argument in the following terms:

   Justice Stevens thinks it is enough that respondent will be gratified by
   seeing petitioner punished for its infractions and that the punishment will
   deter the risk of future harm. If that were so, our holdings in Linda R.S.
   v. Richard D., and Simon v. Easter Ky. Welfare Rights Organization, are
   inexplicable. Obviously, such a principle would make the redressability
   requirement vanish. By the mere bringing of his suit, every plaintiff
   demonstrates his belief that a favorable judgment will make him happier.
   But although a suitor may derive great comfort and joy from the fact that
   the United States Treasury is not cheated, that a wrongdoer gets his just
   deserts [sic], or that the nation's laws are faithfully enforced, that
   psychic satisfaction is not an acceptable Article III remedy because it
   does not redress a cognizable Article III injury. Relief that does not
   remedy the injury suffered cannot bootstrap a plaintiff into federal court;
   that is the very essence of the redressability requirement.(25)

3. A Brief Overview of the Lower Court Decisions

a. Friends of the Earth, Inc. v. Laidlaw Environmental Services, Inc.(26)

In Laidlaw, the defendant had failed to comply with the CWA for several years. The defendant came into compliance shortly after the filing of the lawsuit. The district court imposed a significant fine, but denied the plaintiff's request for injunctive relief, in part because, by the time the case reached that stage of the litigation, the defendant had been in compliance for five years.(27)

On appeal, the Fourth Circuit reversed the penalty award, holding that the case had become moot as soon as the district court denied the request for injunctive relief.(28) The court first cited Arizonans for Official English v. Arizona(29) and two other cases(30) for the proposition that mootness and standing are closely linked, and that the mootness doctrine requires that the elements of standing (injury, causation, and redressability) "must continue to exist at every stage of review, not merely at the time of the filing of the complaint."(31) The court went on to conclude that because only penalties remained at stake in the litigation before it, there was no continuing redressability and, therefore, Steel Co. indicated that the case was moot.(32) It therefore remanded the case to the lower court, with instructions to dismiss the case. In a footnote, the Laidlaw court further determined that the plaintiffs' "failure to obtain relief on the merits of their claims precludes any recovery of attorneys' fees or other litigation costs because such an award is available only to a `prevailing or substantially prevailing party.'"(33)

b. Dubois v. United States Department of Agricultures(34)

In Dubois, the relevant defendant was discharging water from a river into a pond to replace water it had drained from the pond for snow-making activities.(35) The district court originally had determined that the defendant's activities were not subject to regulation under the CWA.(36) The First Circuit reversed and directed entry of judgment regarding the plaintiff's request for injunctive relief.(37) As directed, the lower court entered the injunction.(38) It then prepared to consider the issue of penalties. Having read Steel Co. and Laidlaw, however, the discharger moved for dismissal on the grounds of mootness.

As in Laidlaw, the Dubois court began its analysis with Arizonans for Official English,(39) quoting it for the principle that the mootness doctrine is just "`the doctrine of standing set in a time frame: The requisite personal interest that must exist at the commencement of litigation (standing) must continue throughout its existence (mootness).'"(40) The court went on to find that, because compliance had been achieved, the case was moot.(41) It rejected the plaintiff's argument that the "voluntary cessation" exception to mootness doctrine should apply.(42) The court based its rejection on the grounds that the defendant did not cease its violation voluntarily, but rather pursuant to a court order.(43)

c. Natural Resources Defense Council v. Southwest Marine, Inc.(44)

This was a fairly straightforward case in which the defendant argued that, in light of Steel Co., the plaintiff had no standing to seek penalties.(45) The defendant made this argument even though there were allegations that it was still violating the CWA. The gist of the argument was that citizens are simply unable to seek penalties that are payable to the Treasury, even where there are ongoing violations. The court summarily rejected this argument, determining that:

   [Article III] does not mandate an individualized analysis of the remedies
   sought by a party. A party either has standing for purposes of the "case or
   controversy" requirement of Art. III or it does not. That simple inquiry
   regarding a party's injuries and their justiciability for purposes of the
   case--though fraught with difficulties--is not further extended into, and
   made more troublesome by, a Microscopic analysis of standing for each
   remedy sought. See, e.g., Flast v. Cohen, [392 U.S. 83, 99-100, 88 S. Ct.
   1942, 20 L. Ed.2d 947 (1968)]; Jenkins v. McKeithen, 395 U.S. 411,423, 89
   S. Ct. 1843, 23 L. Ed.2d 404 (1969) ("the concept of standing focuses on
   the party seeking relief, rather than on the precise nature of the relief
   sought"). The Court does not view Steel Co. as upsetting that usual
   proposition.(46)

4. Analysis

The key question in Steel Co. was whether the deterrent effect that penalties would have had on Steel Company itself (as opposed to on other regulated entities) should have been enough to establish redressability. As long as the Court was inclined to adhere to its earlier approach in Linda R.S. v. Richard D.,(47) the result in Steel Co. was preordained. In Linda R.S., the Court--in a five to four opinion--determined that the mother of an illegitimate child did not have standing to challenge the allegedly discriminatory application of a Texas child support statute because she could not show that, if the statute were enforced, the child's father would in fact pay child support.(48) The Court stated that:

   Although the Texas statute appears to create a continuing duty, it does not
   follow the civil contempt model whereby the defendant "keeps the keys to
   the jail in his own pocket" and may be released whenever he complies with
   his legal obligations. On the contrary, the statute creates a completed
   offense with a fixed penalty as soon as a parent fails to support his
   child. Thus, if appellant were granted the requested relief, it would
   result only in the jailing of the child's father. The prospect that
   prosecution will, at least in the future, result in payment of support can,
   at best, be termed only speculative. Certainly, the "direct" relationship
   between the alleged injury and the claim sought to be adjudicated, which
   previous decisions of this Court suggest is a prerequisite of standing, is
   absent in this case.(49)

This analysis seems to ignore the very valuable role that sanctions, and the threat of sanctions, play in our legal system. As Justice White stated in his dissent in Linda R.S.: "I had always thought our civilization has assumed that the threat of penal sanctions had something more than a `speculative' effect on a person's conduct."(50) In the same vein, Justice Stevens stated in Steel Co.: "When ... a party obtains a judgment that imposes sanctions on the wrongdoer, it is proper to presume that the wrongdoer will be less likely to repeat the injurious conduct that prompted the litigation. The lessening of the risk of future harm is a concrete benefit."(51)

The Court's logic in both Linda R.S. and Steel Co. is particularly puzzling given that, traditionally, even the most modest injuries (and their possible redress) have been deemed to satisfy standing requirements. As noted by Justice Stevens in his concurrence/partial dissent in Steel Co.: "The Court acknowledges that respondent would have had standing if Congress had authorized some payment to respondent.... Yet the Court fails to specify why payment to respondent--even if only a peppercorn--would redress respondent's injuries, while payment to the Treasury does not."(52)

By finding that claims for civil penalties do not by themselves provide sufficient redressability to provide standing, the Supreme Court in Steel Co. constitutionalized the Gwaltney doctrine. This means that Congress cannot fix the Gwaltney result merely by making clear its intent that citizens be able to bring suit for even wholly past violations. Thus, for example, the changes that Congress made in section 304 of the CAA, allowing citizens to bring an action under that statute with respect to past violations where they are "repeated,"(53) are ineffective, at least when considered in isolation.(54)

Southwest Marine(55) addresses the question whether Steel Co. stands for the further proposition that citizens have no standing to seek penalties that are payable to the Treasury, even in situations where there are ongoing violations supporting a claim for equitable relief. As mentioned, the court in Southwest Marine concluded that Steel Co. cannot bear that weight.(56)

This seems clearly correct. In Steel Co., the Court examined the plaintiffs six claims for relief to determine whether any of them provided the required redressability.(57) The clear tenor of the discussion is that if one of the claims had done so, the plaintiffs would have had standing to pursue the case. There is simply no indication in the Court's opinion that the plaintiff has to establish standing with respect to each claim for relief. Moreover, the Southwest Marine result is fully consistent with the Court's Article III jurisprudence. In the area of pendent jurisdiction, for example, the Court has long acknowledged that once a court has federal question jurisdiction over a federal claim, it can also entertain state law claims that would otherwise be beyond the scope of Article III.(58)

Turning to the issue of Steel Co. 's implications in the mootness context, the first question is whether it should have any. Again, prior to Steel Co., the federal courts of appeals universally had held that while postcomplaint compliance might moot claims for injunctive relief, it did not moot claims for penalties.(59) In reaching this conclusion, the courts relied on the fact that, under the CWA, penalties attach as of the date the violation occurs.(60) Thus, for example, the Fourth Circuit on remand in Gwaltney determined that:

   Under the Clean Water Act, civil penalties attach as of the date a permit
   violation occurs. Liability is fixed by the happening of an event
   (discharge of effluent with an excessive burden of pollution) that occurred
   in the past....

   ... Assuming, then, proof of an ongoing violation, a citizen action, like a
   government action, cannot become moot once there is an assessment of civil
   penalties, so long as the penalties are for past violations that were part
   of or which contiguously preceded the ongoing violations.(61)

This reasoning, though, is based entirely on the structure of the CWA and may be suspect in light of Steel Co. and Arizonans for Official English. If Steel Co. stands for the proposition that penalties payable to the Treasury do not support redressability (and it does), and Arizonans for Official English means that, at least absent a traditional exception to the mootness doctrine,(62) redressability must exist throughout the case (and it appears to), their combined effect may (again, absent an exception to the mootness doctrine) result in a constitutional bar precluding the courts from entertaining claims for penalties where the root causes of the underlying violations have been eliminated. The Fourth Circuit summarily reached this conclusion in Laidlaw,(63) overruling, sub silentio, its prior decision on remand in Gwaltney.(64)

In reaching this result, however, the Fourth Circuit ignored at least three potential counterarguments. First, in Steel Co. the Supreme Court distinguished the situation before it from that which might have been presented in a mootness context.(65) In response to the government's argument (as amicus curiae) that the "voluntary cessation" exception to the mootness doctrine should apply,(66) the Court stated:

   [Such an approach would make] a sword out of a shield. The "presumption"
   [of future injury] the Government refers to has been applied to refute the
   assertion of mootness by a defendant who, when sued in a complaint that
   alleges present or threatened injury, ceased the complained-of activity. It
   is an immense and unacceptable stretch to call the presumption into service
   as a substitute for the allegation of present or threatened injury upon
   which initial standing must be based.(67)

Second, the very fact that the mootness doctrine has exceptions suggests that standing and mootness may not be as closely connected as Arizonans for Official English suggests. If mootness is a hard and fast constitutional doctrine, it is hard to understand how the Court could allow for policy-based exceptions such as the voluntary cessation doctrine.

Finally, there are other contexts in which federal courts have the continuing flexibility to hear cases even though the original basis for Article III jurisdiction has disappeared. Here again, the doctrine of pendent jurisdiction provides a useful example. Under that doctrine, there are circumstances under which federal courts may continue to exercise supplemental jurisdiction over state claims even after the federal claim that provided the original basis for jurisdiction has been dismissed.(68) If this is true, it becomes more difficult to understand why the Constitution should preclude courts from imposing fines even after the plaintiffs original basis for jurisdiction--the ongoing violation--disappears.(69)

The Laidlaw result is all the more striking because the Fourth Circuit declared the case moot after the lower court had both found liability and assessed penalties.(70) It is one thing to hold that a defendant can use the mootness doctrine to avoid fines that, while statutorily perfected, have yet to be assessed. It is quite another thing to hold that a defendant may rely on that same doctrine to avoid penalties that have been lawfully assessed. The fact that the Fourth Circuit reached this conclusion virtually without discussion is troubling.

Even if one assumes that Steel Co. and Arizonans for Official English raise the constitutional bar discussed above, and therefore undermine the ongoing viability of the pre-Steel Co. citizen-suit mootness cases,(71) there is still the question of how the exceptions to the mootness doctrine, particularly the voluntary cessation doctrine, should come into play.(72) Generally speaking, as the Supreme Court stated in City of Mesquite v. Aladdin's Castle, Inc.,(73) "[i]t is well settled that a defendant's voluntary cessation of a challenged practice does not deprive a federal court of its power to determine the legality of the practice."(74) And as the Supreme Court made clear in the CWA context in Gwaltney, while there is an exception to this principle for situations where there "`is no reasonable expectation that the wrong will be repeated,'"(75) the defendant's burden of making this showing is a "heavy one,"(76) requiring a demonstration "that it is `absolutely clear that the allegedly wrongful behavior could not reasonably be expected to recur.'"(77)

The voluntary cessation doctrine most commonly arises in situations where the defendant tries to demonstrate, before the lower court has even passed on the liability question, that it has taken sufficient corrective actions to render the case moot.(78) This scenario is fairly straightforward, involving only a factual question regarding the adequacy of the defendant's showing. Achieving momentary compliance is not enough. Again, under Gwaltney, the defendant must clearly demonstrate that the allegedly wrongful conduct could not reasonably be expected to recur.(79) Thus, the analysis focuses more on the future than it does on the present. Defendants are in the best position to make this showing--and thereby to eliminate any penalty exposure--where they have taken clear and effective steps that address the underlying root cause of the alleged violations in a way that suggests a permanent solution.(80) Conversely, defendants are the most vulnerable to voluntary cessation arguments--and thus the most exposed to penalties--in situations where, although they have achieved temporary compliance, they are unable to show that the steps they have taken make the possibility of future violations remote.(81)

Neither Laidlaw nor Dubois fits this basic mold. In Laidlaw, the defendant voluntarily came into compliance after the filing of the lawsuit, but did not file a motion to dismiss based on mootness grounds.(82) Instead, as previously mentioned,(83) the defendant raised the mootness argument on appeal, relying on the fact that the district court had declined to issue injunctive relief.(84) The fact that the defendant was successful in raising this argument means, if the Fourth Circuit is right, that citizen plaintiffs must actually obtain injunctive relief in order to have any hope of having penalties imposed.(85) The net effect of such an approach would be a shifting of the burden that otherwise applies under the voluntary cessation doctrine: instead of the defendant having to demonstrate--as a precondition to establishing mootness--that the wrongful behavior cannot reasonably be expected to recur, the plaintiff would have to show that injunctive relief is warranted to keep the case alive.(86) This seems to confuse a jurisdictional issue (whether there is a sufficient possibility of recurrence to warrant ongoing federal jurisdiction) with a merits issue (whether the plaintiff has made an adequate showing of irreparable harm to warrant an injunction).(87)

The Supreme Court may be willing to take this step, but it is, most assuredly, a step beyond where the Court has already gone. It is worth noting that the Court recently granted review in the Laidlaw case.(88) It is worth reiterating that in Steel Co., the Supreme Court distinguished the standing issues it was dealing with from the dynamics that could occur in the mootness context, and seemed to assume that the voluntary cessation doctrine would still have full sway in the latter context.(89) Nothing in either Steel Co. or Arizonans for Official English suggests, in situations where redressability was present not only at the outset but up until the point of judgment,(90) that defendants should nonetheless be entitled to dismissal as a matter of law if the plaintiff succeeded in obtaining relief that was different than that which provided the basis for its redressability.

The Dubois approach poses even more basic timing issues. Under section 505 of the CWA (as under most citizen suit provisions), citizen plaintiffs may seek both injunctive relief and penalties.(91) In most cases, of course, the court passes on the propriety of both forms of relief at the same time, assuming it finds liability. In Dubois, the plaintiff was fortunate enough to avoid any Laidlaw-type problems by actually obtaining injunctive relief.(92) By pure happenstance, however, the First Circuit ordered entry of the injunction, thus resulting in the injunctive portion of the case being resolved before the lower court had a chance to address penalty issues. Astonishingly, the district court found that this resulted in the case being moot, and therefore dismissed the case.(93)

This clearly seems like it is the wrong result. When an environmental plaintiff (with standing) wins a citizen suit, it is statutorily entitled to both injunctive relief and penalties. Assuming that this basic scheme--that citizens may seek penalties that are payable to the Treasury--is constitutional,(94) it seems highly implausible that the fortuity of whether the court issues the injunction or imposes the fines first should have constitutional significance.(95) This is particularly so when one considers that, in a case like Dubois, the injunction dissolves upon dismissal. For this very reason, there is strong authority, including Supreme Court precedent, for the proposition that "voluntary cessation of misconduct does not engender mootness where the cessation resulted from a coercive order and a threat of sanctions."(96)

Finally, the attorneys' fees aspect of Laidlaw deserves brief mention. Again, in Laidlaw the Fourth Circuit determined that the plaintiffs' "failure to obtain relief on the merits of their claims precludes any recovery of attorneys' fees or other litigation costs because such an award is available only to a `prevailing or substantially prevailing party.'"(97) In so holding, the court acknowledged that in Gwaltney the Supreme Court had cited CWA legislative history for the proposition that citizens can recover fees when a case becomes moot because the defendant-violator voluntarily comes into compliance.(98) The Fourth Circuit declined to follow this dicta, however, deeming the Court's analysis faulty. In the Fourth Circuit's view, the Court had failed to consider a 1987 amendment to the CWA "requiring a plaintiff to be a `prevailing or substantially prevailing party' to receive an award of litigation costs."(99)

This begs the question of whether a citizen plaintiff whose suit prompts the defendant's compliance should be considered to be a prevailing party even if, in the end, the court's injunctive powers prove to be unnecessary because the defendant voluntarily comes into compliance after the suit is filed. The Fourth Circuit ignored this issue altogether and, in so doing, also ignored the Second Circuit's analysis in Atlantic States Legal Foundation v. Eastman Kodak Co.,(100) where the court had held that, in such situations, plaintiffs are entitled to fee awards if their lawsuit was in fact what prompted the defendant's compliance.(101)

The public policy implications of these mootness issues are noteworthy. Again, the basic assumption in Laidlaw and Dubois appears to be that, when taken together, Steel Co. and Arizonans for Official English mean that environmental defendants can moot citizen suits--and thereby avoid any threat of civil penalties--in situations where they can clearly demonstrate, at any time during the pendency of a given suit (or even on appeal), that they have "solved" whatever the problem was that led to the violations. If this becomes settled law, regulated entities will have much less reason to fear citizen suits because, so long as they are confident that they can solve their problems in a timely fashion, they will have no reason to fear punitive sanctions. Moreover, citizens may be discouraged from filing suit at all in these situations because, although they may be able to compel compliance, they will have little or no prospect of achieving the important added benefit of deterrence (with respect to both the defendant and others) that could be achieved through the imposition of penalties appropriate to the violation.(102) The net effect of all of this is to promote a "one (or more) free bite" kind of mentality, where regulated entities get the message that they don't have to take compliance issues seriously unless and until they have actually been sued.(103)

Additionally, allowing defendants to render penalty claims moot through belated compliance efforts will foster delay tactics in federal citizen-suit litigation. As the Eleventh Circuit noted in Atlantic States Legal Foundation v. Tyson Foods, Inc.:

   Perhaps the most dangerous result [of applying mootness principles in this
   fashion] is that it encourages violators to delay litigation as long as
   possible, knowing that they will thereby escape liability even for
   post-complaint violations, so long as violations have ceased at the time
   the suit comes to trial or is decided on summary judgment. Under such a
   holding, dischargers could intentionally violate the Clean Water Act until
   they are sued and then obtain a stay while continuing their violations
   until they eventually are in compliance with the law. At this point, the
   case would be dismissed and they would have escaped all penalties. [This
   approach] reads the civil penalties provision out of the Clean Water
   Act.(104)

Finally, it is worth noting that if the Laidlaw court's view on fee recovery survives Supreme Court review, it will greatly compound the effect of applying the mootness doctrine to penalty issues in the citizen-suit context. Even if their clients might otherwise be interested in bringing such suits to promote compliance, few attorneys will be interested in taking these cases if their right to recover fees can be so easily subverted.

5. Possible Legislative Responses

Even if the Supreme Court affirms the Laidlaw approach, there are at least two steps that Congress could take that might fix the Gwaltney/Steel Co./Laidlaw problem. These solutions might work in both the standing and mootness contexts.

First, Congress could provide bounty awards (beyond attorneys' fees) to prevailing plaintiffs. Under the Clean Air Act, for example, section 113(f) authorizes EPA to pay citizens bounties of up to $10,000 to any person who furnishes information leading to either a criminal conviction or a judicial or administrative civil penalty.(105) In Steel Co., Justice Scalia --writing for the majority--appeared to acknowledge that the possibility of a payment to the plaintiffs (again, beyond attorneys' fees) might provide sufficient redressability.(106)

Second, Congress could authorize citizens to obtain "supplemental environmental project"-type relief in lieu of, or in addition to, penalties. Section 304(g) of the CAA, for example, authorizes courts to devote up to $100,000 of any applicable fines under CAA citizen suits to "beneficial mitigation projects."(107) This also might provide sufficient redressability.

B. National Mining Ass'n v. United States Army Corps of Engineers (National Mining)(108)

In this case, the D.C. Circuit struck down the "Tulloch Rule," under which the United States Army Corps of Engineers (Corps) and EPA asserted Clean Water Act jurisdiction over the redeposit of dredged materials in the waters of the United States.

1. Background

The Corps and EPA promulgated the Tulloch Rule in 1993 to close a perceived loophole in the CWA regulatory scheme. Prior to the Tulloch Rule, both the agencies and the courts generally had taken the position that dredging activity by itself (that is, without any accompanying filling activities) did not trigger the need for a section 404 permit unless it involved more than a de minimis discharge of fallback material.(109) Thus, developers could drain wetlands by constructing ditches that would let water escape from the relevant area, thus destroying CWA jurisdiction, so long as they disposed of the dredged materials at an upland location.(110)

For purposes of the National Mining case, the Tulloch Rule had two major components. First, it defined the term "discharge of dredged material" as including "[a]ny addition, including any redeposit, of dredged material, including excavated material, into waters of the United States which is incidental to any activity, including mechanized landclearing, ditching, channelization, or other excavation."(111) Second, it created an exception for incidental additions, including redeposits, of dredged material associated with activities that the discharger can show, prior to commencement of the activity, will not have the effect of destroying or degrading an area of waters of the United States.(112) In the accompanying preamble, the Corps and EPA stated their belief that "it is virtually impossible to conduct mechanized landclearing, ditching, channelization or excavation in waters of the United States without causing incidental redeposition of dredged material (however small or temporary) in the process."(113)

2. The D.C. Circuit's Decision

In National Mining, the D.C. Circuit started with the basic proposition that CWA jurisdiction depends on the presence of an "addition of any pollutant to [the] navigable waters."(114) Applying this construct, the court went on to conclude that:

   [T]he straightforward statutory term "addition" cannot reasonably be said
   to encompass a situation in which material is removed from the waters of
   the United States and a small portion of it happens to fall back. Because
   incidental fallback represents a net withdrawal, not an addition, of
   material, it cannot be a discharge.(115)

The court rejected what it termed the agencies' "ingenious but unconvincing" argument that fallback may be deemed to constitute an addition of any pollutant because material becomes a pollutant only upon being dredged:

   Regardless of any legal metamorphosis that may occur at the moment of
   dredging, we fail to see how there can be an addition of dredged material
   when there is no addition of material. Although the Act includes "dredged
   spoil" in its list of pollutants, 33 U.S.C. [sections] 1362(6), Congress
   could not have contemplated that the attempted removal of 100 tons of that
   substance could constitute an addition simply because only 99 tons of it
   were actually taken away.(116)

The Government had argued that section 404(f) of the CWA, which creates a qualified exemption for "normal fanning, silviculture, and ranching activities such as plowing, seeding, cultivating, [or] minor drainage,"(117) indicates through negative inference that Congress intended fallback to be regulated in those circumstances where the exemption does not apply. The D.C. Circuit rejected this argument, determining that:

   Some of the named activities--plowing, ditch maintenance, and the like--may
   produce fallback, but they may also produce actual discharges, i.e.,
   additions of pollutants, so that [sections] 404(f) accomplishes a useful
   purpose simply by exempting them insofar as they produce the latter. Some
   others, such as seeding, seem to us just as unlikely to produce fallback as
   actual discharge, so we are reluctant to draw any inference other than that
   Congress emphatically did not want the law to impede these bucolic
   pursuits.(118)

The National Mining court did not hold that the agencies could never regulate material that comes from the waters. Rather, the court stated that:

   We hold only that by asserting jurisdiction over "any redeposit," including
   incidental fallback, the Tulloch Rule outruns the Corps's statutory
   authority. Since the Act sets out no bright line between incidental
   fallback on the one hand and regulable redeposits on the other, a reasoned
   attempt by the agencies to draw such a line would merit considerable
   deference.... But the Tulloch rule makes no effort to draw such a line, and
   indeed its overriding purpose appears to be to expand the Corps's
   permitting authority to encompass incidental fallback and, as a result, a
   wide range of activities that cannot remotely be said to "add" anything to
   the waters of the United States.(119)

This discussion indicates that the D.C. Circuit was engaged in a Chevron "step two" analysis.(120) Thus, the agencies may have some leeway to adopt an alternative regulatory formulation encompassing fallback in at least some situations.

Finally, it is worth noting that the D.C. Circuit upheld the district court's injunction precluding both the Corps and EPA from applying or enforcing the Tulloch Rule nationally. The court quoted Harmon v. Thornburgh(121) for the proposition that "[w]hen a reviewing court determines that agency regulations are unlawful, the ordinary result is that the rules are vacated--not that their application to the individual petitioners is proscribed."(122)

3. Analysis

The most interesting thing about the National Mining decision is the nature of its Chevron analysis. By invalidating the Tulloch Rule at step two, the D.C. Circuit did something the Supreme Court has never done: it found an agency interpretation of an admittedly ambiguous statutory construct to be so unreasonable as to be impermissible.(123) Once one acknowledges that "the Act sets out no bright line between incidental fallback on the one hand and regulable redeposits on the other,"(124) it seems hard to understand why the agencies cannot conclude that the statute covers all redeposits, whether de minimis or not.

The most questionable aspect of the Tulloch Rule had nothing to do with whether dredging activities entailing fallback should be viewed as "additions" or "subtractions" under the CWA.(125) Instead, it involved the fact that, under the Rule, the jurisdictional question hinged not on the effect of the discharge itself, but rather on the environmental effect of the associated activities (for example, the draining of the wetland).(126) In other words, it could be said that the agencies were using the mere presence of the incidental discharge, which in and of itself had admittedly de minimis effects, as a pretext for regulating the associated activity.

Whether this dynamic should have made the Tulloch Rule "unreasonable" within the meaning of Chevron poses an interesting and close question. EPA's similarly broad assertion of authority in the "section 404(b)(1) Guidelines" under the wetlands program--that, given jurisdiction, it may consider the impacts of otherwise unregulated aspects of an activity on the navigable waters--has never been litigated at the appellate level. Moreover, there is some statutory support for the agencies' authority to consider the entire activity.(127) Finally, it is worth noting that, in a similar context, the Supreme Court has upheld the idea of considering an entire activity once a jurisdictional threshold is met.(128)

4. Postscript

The D.C. Circuit denied the United States' petition for a rehearing in National Mining.(129) The Government did not petition for certiorari. Thus, the Tulloch Rule is now a thing of the past. It remains to be seen whether developers will rush to exploit the resulting regulatory loophole.

C. United States v. Bestfoods(130)

In Bestfoods, the Supreme Court held that parent corporations can be directly liable as "operators" under CERCLA if they were sufficiently involved in the operation of their subsidiaries' facilities.(131) At the same time, however, the Court declined to adopt the "actual control" test that had been followed by several circuits.(132) The Court deemed this test inappropriate because, instead of asking whether the parent had operated the subsidiary's facility, the courts applying it had focused on the general relationship between the affiliated corporations:

   The well-taken objection to the actual control test, however, is its fusion
   of direct and indirect liability; the test is administered by asking a
   question about the relationship between the two corporations (an issue
   going to indirect liability) instead of a question about the parent's
   interaction with the subsidiary's facility (the source of any direct
   liability).(133)

The Bestfoods decision contains two more important pronouncements on the subject of operator liability. First, after bemoaning the "uselessness" of CERCLA's definition of the term "operator" as "any person ... operating" a facility, the Court looked to dictionary definitions of the term "operate" before concluding that:

   [U]nder CERCLA, an operator is simply someone who directs the workings of,
   manages, or conducts the affairs of a facility. To sharpen the definition
   for purposes of CERCLA's concern with environmental contamination, an
   operator must manage, direct, or conduct operations specifically related to
   pollution, that is, operations having to do with the leakage or disposal of
   hazardous waste, or decisions about compliance with environmental
   regulations.(134)

The Court's formulation is noteworthy because it seems to require, as a sine qua non of operator liability, that the person or entity have had some involvement not just in the overall operation of the facility, but specifically in environmental matters. This requirement may cause the government (or other CERCLA plaintiffs) problems where, for example, a company that might otherwise qualify as an operator (for example, because it is doing business on the property) is engaged in a business that does not appear to pose environmental concerns. This may have the potential to undercut the "status-based"(135) strict liability scheme imposed under section 107(a)(1) and:(2).(136)

At the same time, however, the Court's formulation in Bestfoods does not appear to require any involvement in the specific decisions that gave rise to the contamination. Thus, for example, it would appear that if a parent corporation involved itself generally in the environmental decision making at one of its subsidiary's facilities, it would qualify as an operator, and thus face liability for any contamination at the plant, even if the contamination was caused by a rogue employee who was acting contrary to express corporate policy.(137)

The second significant point the Court made about operator liability in Bestfoods was specific to the liability of parent corporations. In that context, the Court emphasized the presumption that dual officers and directors are acting on behalf of the subsidiary when that is what they purport to be doing.(138) Thus, the Court stated that:

   [I]t cannot be enough to establish liability here that dual officers and
   directors made policy decisions and supervised activities at the facility.
   The Government would have to show that, despite the general presumption to
   the contrary, the officers and directors were acting in their capacities as
   [officers and directors of the parent], and not as [officers and directors
   of the subsidiary], when they committed those acts.(139)

In a footnote, the Court elaborated in the following terms:

   We do not attempt to recite the ways in which the Government could show
   that dual officers or directors were in fact acting on behalf of the
   parent. Here, it is prudent to say only that the presumption that an act is
   taken on behalf of the corporation for whom the officer claims to act is
   strongest when the act is perfectly consistent with the norms of corporate
   behavior, but wanes as the distance from those accepted norms approaches
   the point of action by a dual officer plainly contrary to the interests of
   the subsidiary yet nonetheless advantageous to the parent.(140)

The Bestfoods Court also provided a mixed message on the question whether courts should apply state or federal common law in analyzing veil-piercing questions under CERCLA. In a footnote, the Court first noted the various views expressed by courts and commentators on this issue, but then stated that "[s]ince none of the parties challenges the Sixth Circuit's holding that CPC and Aerojet incurred no derivative liability, the question is not presented in this case, and we do not address it further."(141) Elsewhere, though, the opinion contains language suggesting that state common law might apply: "CERCLA is thus like many another congressional enactment in giving no indication `that the entire corpus of state corporation law is to be replaced simply because a plaintiffs cause of action is based upon a federal statute.'"(142)

One final aspect of Bestfoods deserves mention. Although the court may have narrowed the circumstances under which parent corporations will be directly liable under CERCLA--because of the presumption that common officers are acting on behalf of subsidiaries--the Court did recognize that there can be direct liability in some cases, for example, where "an agent of the parent with no hat to wear but the parent's hat might manage or direct activities at the facility."(143) This is important because it appears to reflect the Court's understanding that there can be more than one operator at a particular site.(144) This is also explicit at the very end of the opinion, where the Court notes that it is remanding "for reevaluation of Williams's role, and of the role of any other CPC agent who might be said to have had a part in operating the Muskegon facility."(145)

III. OTHER NOTABLE DECISIONS (BY CATEGORY)

A. Clean Water Act

In American Forest & Paper Ass'n v. United States Environmental Protection Agency (AF&PA I)(146) and American Forest & Paper Ass'n v. United States Environmental Protection Agency (AF&PA II),(147) the courts were asked to rule on the legality of EPA's mandate that states, as a precondition to maintaining authorization to implement the National Pollutant Discharge Elimination System (NPDES) program, consult with either the U.S. Fish and Wildlife Service (FWS) or the U.S. National Marine Fisheries Service (NMFS) as appropriate regarding Endangered Species Act (ESA) concerns before issuing NPDES permits. EPA had also made clear that it would veto any state-issued permits if either FWS or NMFS found that their issuance would result in jeopardy.(148)

In both cases, EPA raised standing objections, arguing that any injuries were hypothetical absent allegations that an associational member had applied for a new permit or sought to modify an old one.(149) In AF&PA I, the court rejected this argument in the following terms:

   We do not find the permit holders' injuries speculative. As an initial
   matter, permits are not eternal: They must be renewed every five years.
   Modifications to existing permits must also be cleared with FWS and NMFS.
   Moreover, EPA has already identified the circumstances under which it will
   veto a proposed permit. Permit holders' imminent need to comply, coupled
   with EPA's frank announcement of its intentions, belies the agency's claim
   that any injury is speculative.(150)

In AF&PA II, by contrast, the Tenth Circuit dismissed AF&PA's challenge for want of standing. It noted that the Association had failed to allege that any of its members discharged or intended to discharge into any of the affected waters.(151)

On the merits, the Fifth Circuit determined that section 402(b) of the CWA(152) provides an exclusive list of the considerations EPA can take into account in determining whether to authorize a state to implement the NPDES program.(153) The court rejected EPA's argument that section 304(i)--which tasks EPA with promulgating guidelines regarding the approval of state programs(154)--gave EPA authority to supplement the statutory criteria for program approval.(155) The court further concluded that section 7(a)(2) of the ESA in no way expands EPA's powers.(156) In so holding, the court cited Platte River Whooping Crane Trust v. Federal Energy Regulatory Commission(157) for the proposition that the ESA "`does not expand the powers conferred on an agency by its enabling act,' but rather directs the agencies to `utilize' their existing powers to protect endangered species."(158)

In Oregon Natural Desert Ass'n (ONDA) v. Dombeck,(159) the Ninth Circuit determined that the Forest Service was not required to seek certification from the State of Oregon under section 401 of the CWA before issuing a grazing permit. The court held that section 401 does not apply to projects that give rise to only nonpoint pollution.(160) In reaching this conclusion, the court first noted that section 401 requires the presence of a "discharge" as a jurisdictional prerequisite.(161) It also noted that this term is defined in section 502(16) to include a "discharge of a pollutant," which is defined elsewhere to refer to point source discharges.(162) Although this definition uses the nonexclusive term "includes" (as opposed to, for example, "means"), the court determined that it cannot be read to encompass nonpoint pollution.(163)

In so holding, the Ninth Circuit relied on four basic points. First, it cited an earlier Ninth Circuit case, Natural Resources Defense Council v. United States Environmental Protection Agency,(164) for the proposition that in 1972 Congress shifted from a water-quality based approach to one that focused on point sources as the major regulatory focus.(165) Second, it noted that, as a result of this change in focus, the CWA deals with nonpoint sources not directly, "but rather through federal grants for state wastewater treatment plans."(166) Third, the court observed that "[a]ll of the sections cross-referenced in [section 401] relate to the regulation of point sources."(167) And finally, and perhaps most significantly, the court noted that the term "discharge" is used consistently (throughout the CWA) "to refer to the release of effluent from a point source," as distinct from the term "runoff," which "describes pollution flowing from nonpoint sources."(168)

This issue is more complex than the Ninth Circuit's opinion makes it appear. Although the court acknowledged that, prior to 1972, the certification requirement applied to all federal activities,(169) it ignored the fact that there is simply no indication in the legislative history that Congress intended to narrow the scope of what became section 4011(170) when it defined the term discharge in section 502(16).(171) In fact, a different panel of the Ninth Circuit had previously made a closely analogous observation in Northwest Environmental Advocates v. City of Portland:

   To be sure, the 1972 CWA amendments reflect [Congress's] dissatisfaction
   with the system of water quality standards. But nowhere does Congress
   evidence an intent to preclude the enforcement of water quality standards
   that have not been translated into effluent discharge limitations....

   ... [The 1972 amendments were] intended to improve enforcement, not to
   supplant the old system.(172)

Almost as an afterthought, the Ninth Circuit, in rejecting the argument at grazing cows qualify as point sources under the CWA, stated that it agreed "with the Second Circuit that the term `point source' does not include a human being, or any other animal."(173) This holding is also quite troubling. It now means that in two different circuits, regulated entities may be able to discharge pollutants into the waterways without implicating the CWA, so long as they do so by hand.(174)

The reader should note that a petition for rehearing is pending in the Dombeck case.(175) The Ninth Circuit has ordered that its opinion be re moved from the bound volume of the Federal Reporters.(176) As this Article goes to press, however, the Ninth Circuit has not granted a rehearing in the case.

B. CERCLA

In addition to Bestfoods,(177) there were three other particularly noteworthy CERCLA decisions in 1998. First, in Pneumo Abex Corp. v. High Point, Thomasville & Denton Railroad Co.,(178) the court determined that the defendant railroads had not "arranged for treatment" of hazardous substances within the meaning of section 107(a)(3) of CERCLA, by shipping used wheel bearings to the plaintiff's facility to be processed into new wheel bearings.(179) The court first determined that, because CERCLA incorporates by reference the Solid Waste Disposal Act(180) (SWDA) definition of treatment, the phrase "`treatment ... of hazardous substances' as used in CERCLA refers to a party arranging for the processing of discarded substance [sic] or processing resulting in the discard of hazardous substances."(181) The court further noted that,

   [i]n determining whether a transaction was for the discard of hazardous
   substances or for the sale of valuable materials, courts focus on several
   factors: the intent of the parties to the contract as to whether the
   materials were to be reused entirely or reclaimed and then reused, the
   value of the materials sold, the usefulness of the materials in the
   condition in which they were sold, and the state of the product at the time
   of transferral (was the hazardous material contained or
   leaking/loose).(182)

Applying these factors to the facts before it, the court determined that the sale of the used bearings was not "arranged for disposal or treatment."(183) The court emphasized that the hazardous substances at issue--the metals in the bearings--were in a contained form in the used bearings when sold, just as they would have been if the foundry was molding new metals from virgin materials.(184) The court also relied on the fact that "[t]he intent of both parties to the transaction was that the wheel bearings would be reused in their entirety in the creating of new wheel bearings."(185)

A second CERCLA case of note, United States v. Chapman,(186) addressed the government's authority to recover its attorneys' fees under the statute. The court's opinion contained both good and bad news for the government. On the good news front, the Ninth Circuit followed the Second Circuit(187) in holding that the government can recover attorneys' fees as response costs under section 107(a)(4)(A).(188) The court relied on both section 104(b)(189) (which allows EPA to recover the costs of legal investigations) and section 101(25)(190) (which defines "response" to "include enforcement activities related thereto") in reaching its result.(191)

At the same time, though, the Ninth Circuit narrowed EPA's recovery right by limiting it to those fees that were reasonably incurred.(192) The court followed an earlier Ninth Circuit decision under the Employee Retirement Income Security Act (ERISA),(193) D'Emanuele v. Montgomery Ward & Co.(194) in determining that the Supreme Court's formulation in Hensley v. Eckerhart(195) is relevant even under statutes that do not limit fee awards to prevailing parties.(196) The Ninth Circuit's approach on this latter question ignores the fact that, while Hensley v. Eckerhart involved a statute that only allowed for the recovery of "reasonable" attorneys' fees,(197) the relevant provisions in CERCLA contain no reasonableness limitation.(198) Additionally, it is worth noting that Chapman is inconsistent with a whole series of cases (outside of the attorneys' fee context) holding that the courts have no authority to review the government's CERCLA response costs under a reasonableness standard, at least in situations where the underlying remedies are "not inconsistent" with the NCP.(199)

And third, it is worth noting that in United States v. Vertac Chemical Corp.,(200) the first district court to consider the significance of the Supreme Court's recent retroactivity decision in Eastern Enterprises v. Apfel(201) summarily concluded that it has no effect on the constitutionality of applying retroactive liability under CERCLA. As noted in Vertac:

   In [Eastern Enterprises] four justices concluded that the retroactive
   provisions of the Coal Industry Retiree Health Benefit Act of 1992 (the
   Coal Act), as applied to Eastern Enterprises, violated the Takings Clause
   of the Fifth Amendment. Justice Kennedy concluded that the Coal Act, as
   applied, violated the Due Process Clause of the Fifth Amendment.(202)

In Eastern Enterprises, the plurality opinion relied on the fact that the Coal Act imposed retroactive liability that was "unrelated ... to any injury" the employers (including Eastern Enterprises) caused.(203) CERCLA, by contrast, imposes liability on a limited (albeit broadly defined) class of parties, who are deemed to be responsible for the contamination.(204) The Vertac court relied on this distinction in deeming the Eastern Enterprises analysis inapplicable under CERCLA:

   [Defendants] contend that they did not cause harm and therefore cannot be
   held to pay the costs of the cleanup associated with harms they did not
   cause or create. It is clear that defendants want to relitigate liability.
   They cannot do so. They have been found jointly and severally liable under
   CERCLA for the costs of the cleanup.(205)

C. Endangered Species Act

There were at least three significant opinions issued this year in cases brought under the Endangered Species Act (ESA).(206) Probably the most significant of these was Sierra Club v. Glickman.(207) In that case, the Fifth Circuit held that federal agencies have a mandatory duty to conserve threatened and endangered species under section 7(a)(1) of the ESA,(208) and that this duty is enforceable through citizen suits fried pursuant to section 11(g) of the Act.(209) On the first point, the court further indicated that these agencies must develop conservation programs for specific species:

   By imposing a duty on all federal agencies to use "all methods and
   procedures which are necessary to bring any endangered species or
   threatened species to the point at which the measures provided pursuant to
   this chapter are no longer necessary," Congress was clearly concerned with
   the conservation of each endangered and threatened species. To read the
   command of [sections] 7(a)(1) to mean that the agencies have only a
   generalized duty would ignore the plain language of the statute.(210)

Even more specifically, the court stated that each agency "must consult with FWS as to each of the listed species, not just undertake a generalized consultation."(211)

Regarding the enforceability of this requirement, the court rejected as "entirely without merit" the Department of Agriculture's argument that its duties under section 7(a)(1) "are not judicially reviewable because it has a substantial amount of discretion in developing" conservation programs.(212) The court noted that:

   A mission agency's discretion to make the final substantive decision under
   its program authorities does not mean that the agency has unlimited,
   unreviewable discretion. Instead, it means that the court conducting
   judicial review must require the agency to show that it has considered the
   relevant factors and followed the required procedures, but that, if the
   agency has done so, the court may not substitute its judgment on the merits
   for the agency's judgment.(213)

The second most significant ESA case was probably Forest Guardians v. Babbitt,(214) which involved the enforceability of the Secretary of Interior's obligation to designate critical habitat for each protected species. Under section 4(b)(6) of the ESA, the Secretary generally must take final action on both species listing and critical habitat designation within one year after publishing a proposed rule.(215) At least partly due to funding constraints, however, the Department of the Interior (Interior) has a huge backlog of listing and critical habitat designation responsibilities.(216) By 1993, Oliver Houck concluded that the Secretary had failed to designate critical habitat for 80 percent of all listed species.(217) In 1996, the Secretary published its "Listing Priority Guidance" (LPG) in the Federal Register, in which it specifically acknowledged that it was relegating critical habitat designation to its third (and lowest) category of priorities.(218)

In Forest Guardians, the plaintiffs challenged Interior's failure to designate critical habitat for the Rio Grande silvery minnow.(219) The lower court found that the ESA had been violated, but declined to issue an injunction, essentially deferring to the LPG as a reasonable response to the agency's funding constraints.(220) On appeal, the Tenth Circuit reversed.(221) The court determined that section 706(1) of the Administrative Procedure Act(222) indicates "unequivocally that courts must compel agency action unlawfully withheld or unreasonably delayed."(223) While it recognized the practical difficulties this reading poses for Interior,(224) the court nonetheless found that the lower court had no flexibility to balance the equities.(225) As an afterthought, however, the court noted that the Secretary could raise an impossibility defense at the contempt stage, if