CASE SUMMARIES.

I. ENVIRONMENTAL QUALITY

A. Clean Air Act

1. Coupar v. United States Department of Labor, 105 F. 3d 1263 (9th Cir. 1997).

Coupar, a federal inmate who had previously worked for Federal Prison Industries, Inc. (FPI), filed whistleblowing complaints against FPI under the Clean Air Act of 1970 (CAA)(1) and Toxic Substances Control Act (TSCA).(2) He claimed that he was transferred to another facility in retaliation for his environmental complaints about FPI operations, and that FPI also retaliated by refusing to place him on a waiting list for a job at the new facility. The United States Department of Labor denied Coupar's retaliation complaint, and Coupar subsequently requested a hearing before a Department of Labor Administrative Law Judge (ALJ). The ALJ scheduled the hearing, but the Bureau of Prisons (Bureau), representing FPI, refused to acknowledge jurisdiction of the ALJ over Coupar's claim and did not participate in the proceeding. The ALJ concluded that he did have jurisdiction over the claim because Coupar was an employee within the meaning of the CAA and TSCA (Acts) and recommended a default judgment because of the Bureau's failure to appear at the proceeding. However, the Secretary of Labor rejected the ALJ's recommended decision and order because he disagreed with the conclusion that Coupar qualified as an employee under the whistleblowing provisions at issue. In this case of first impression, the Ninth Circuit held that an inmate was not an employee within the meaning of the Acts.

The Secretary is charged with administration of the whistleblower protection provisions of the Acts, which stipulate that "[n]o employer may discharge any employee or otherwise discriminate against [him] with respect to ... compensation, terms, conditions, or privileges of employment"(3) because the employee engaged in protected activities--i.e., whistleblowing--related to enforcement of the Acts. However, Congress did not define "employee" in either statute.

The Ninth Circuit held that the Secretary was entitled to Chevron(4) deference in interpreting the term "employee" not to encompass Coupar and that his interpretation was reasonable. The court found an analogy between Coupar's case and Hale v. Arizona.(5) In Hale, the court held that inmates were not "employees" for purposes of the minimum wage provision of the Fair Labor Standards Act (FLSA).(6) In reaching that conclusion, the court employed the "economic reality" test. The economic reality test focuses on the relationship between prison and prisoner, which the court found to be penological rather than pecuniary. In the present case, the Ninth Circuit also found the relationship between Coupar and FPI to be penological, as he was obligated to work pursuant to a prison work program.

Coupar argued that the economic reality test was not appropriate based on differences between the purpose of the FLSA, which is to regulate the economic relationship between employer and employee, and the purposes of the CAA and TSCA, which are to protect the environment. The court rejected this argument, stating that the goal of the whistleblowing provisions is "most certainly aimed at regulating and restricting the relationship between employer and employee."(7) Congress could have extended the protection to prevent retaliation by any violator against any whistleblower, but chose to draw the line at protecting employees from retaliation by their employer. The court reasoned that Congress intended to protect and regulate the usual employer-employee relationship, not relationships based on forced labor. One policy concern the court expressed was the potential for excessive interference with the penological system if the term "employee" was defined to include prison inmates.

The ALJ had applied the "Reid-Darden" test, which focuses on the hiring party's right to control the manner and means by which the product is accomplished. The Ninth Circuit felt that the more appropriate focus was whether Coupar and FPI could be said to be in a "conventional master-servant relationship," which would not be the case according to Hale. The court listed other factors to be considered in deciding if a hired party is an employee under the general common law of agency, including the degree of skill required to do the job, source of the tools, location of the work, and the hired party's discretion over when and how long to work.

Coupar also argued that he was entitled to prevail because FPI failed to appear in the administrative proceedings. However, the Ninth Circuit held that a decision of the Secretary to grant a default judgment is discretionary, and that he did not abuse his discretion by rejecting the ALJ's recommended default judgment. Also, FPI was not without "good cause" to believe that it was not required to attend the ALI proceedings, considering the court's agreement with their interpretation of who is an employee under the Acts.

Coupar also argued that because FPI did not raise in the administrative proceedings the issue of whether he was an employee under the Acts, FPI waived the issue for purposes of Ninth Circuit review. However, the court pointed out that the issue was considered by both the ALJ and Secretary; therefore, the issue was not presented for the first time at the appellate level, and-it was appropriate for the court to have addressed it.

2. Disimone v. Browner, 121 F. 3d 1262 (9th Cir. 1997).

For several years, Maricopa and Pima counties, which respectively include the cities of Phoenix and Tucson, Arizona, have had unacceptably high levels of carbon monoxide. The areas failed to attain air quality standards under the Clean Air Act(8) (CAA) by the statutory deadline of December 31, 1995, and EPA has reclassified the areas as "serious" nonattainment areas. In a 1990 case, Delaney v. EPA,(9) a citizen suit was brought against the Environmental Protection Agency (EPA) under the CAA, claiming that EPA failed to perform its duties in these two areas. The Ninth Circuit ordered EPA to promulgate a Federal Implementation Plan (FIP) and to disapprove the Arizona State Implementation Plan (SIP) with regard to the two counties. Later that year, Congress amended the CAA, leading EPA to request that the Ninth Circuit recall its earlier mandate set down in Delaney. The panel denied EPA's request. However, in 1996 EPA accepted a contingency provision in the revised Arizona SIP and rescinded the FIP completely. The FIP provision required that transportation projects be delayed and that certain measures be adopted if a nonattainment area experienced violations of carbon monoxide standards.

In this case, two individuals, Barry Disimone and Donald Steuter, sued EPA for approving the SIP and withdrawing the FIP. The Ninth Circuit held that EPA's actions were contrary to a direct court mandate and therefore were illegal. In addition, EPA was collaterally estopped from claiming that its action was required by the 1990 Amendments to the CAA. The Ninth Circuit based its decision on the "law of the case doctrine"(10) because EPA's motion to recall mandate and amend judgment had already been denied by a panel of the court. Instead of following the mandate ordered, EPA proceeded to approve the SIP. The Ninth Circuit admitted that typically it confines the law of the case doctrine to decisions in the same case as the one in which it is applied, yet here the cases involved different petitioners. However, the court applied the doctrine because both suits were brought against the same agency, concerned the same issue, and were on behalf of the same citizen population.

The Ninth Circuit also held that EPA was precluded from claiming that its action was required by the 1990 Amendments because the same issue was already litigated and decided. First, EPA's argument in both cases was that the pre-Amendment guidelines were inconsistent with the 1990 Amendments. Thus, the same issue was involved in both cases. Second, the court inferred that the panel must have decided against all of EPA's arguments because such a decision was necessary to deny the motion. Therefore, the court found that the panel had decided that the 1990 Amendments did not warrant recalling EPA's mandate. Furthermore, such a decision was critical and necessary to its order. Finally, there were no circumstances precluding application of the collateral estoppel doctrine. Therefore, the Ninth Circuit held that EPA was collaterally estopped from arguing that that the 1990 Amendments permitted it to approve a SIP in place of an FIP.

B. Hazardous Waste

1. Ashoff v. City of Ukiah, 130 F. 3d 409 (9th Cir. 1997).

Ashoff and other citizens sued the City of Ukiah (city) for injunctive relief, alleging that its solid waste disposal site violated the Resource Conservation and Recovery Act (RCRA),(11) Clean Water Act (CWA),(12) and state law. The district court granted the city's motion to dismiss the RCRA claim for lack of subject matter jurisdiction, concluding that RCRA did not authorize citizen suits "in federal court to enforce state regulations authorized under Subtitle D."(13) Ashoff was therefore constricted to alleging violations of the federal minimum criteria in his complaint. Ashoff timely appealed the dismissal of the RCRA claims, and the Ninth Circuit held that RCRA authorized citizen suits for violations of federal minimum criteria for solid waste landfills, even after a state had adopted a permit program for landfills pursuant to federal criteria, but the statute did not authorize citizen suits based on state standards that were more stringent than federal minimum criteria.

Because lack of subject matter jurisdiction is a question of law, the court reviewed the claims de novo. The Ninth Circuit first affirmed that RCRA authorized citizen suits in authorized states based on the plain language of RCRA's citizen suit provision which states, "any person may commence a civil action on his behalf ... against any person ... who is alleged to be in violation of any permit, standard, regulation, condition, requirement, prohibition, or order which has become effective pursuant to this chapter."(14) Therefore, if state standards become effective pursuant to RCRA, or, for example, are part of an authorized state program, a citizen can sue in federal court to enforce the standard. In this case, California had created such a program, which was approved by the Environmental Protection Agency (EPA) in 1993. In some cases federal regulations give states the option of establishing an alternative measure to meet the federal criteria,(15) and EPA has endorsed citizen suits brought under RCRA for noncompliance with the state selected alternative.

The court then turned to the question of whether RCRA authorized citizen suits based on state standards that exceed the federal criteria, and the court concluded that it did not. First, based on statutory construction, to allow such suits would be inconsistent with the justification for RCRA citizen suits. By implementing the federal criteria, a state's standards become effective pursuant to RCRA and therefore are subject to citizens suing under RCRA. In contrast, RCRA does not authorize suits for violations of state standards that are more stringent than the federal criteria, because such standards do not become effective pursuant to RCRA. The legal effect of such standards flow from state law; therefore, federal court is not an appropriate forum to hear claims regarding their violation.

The court considered two arguments advanced by Ashoff. First, Ashoff argued that other environmental statutes such as the CWA and Clean Air Act (CAA)(16) set up a similar relationship between the state and federal government, and that under each of those statutes citizens can sue on the basis of more stringent state standards.(17) However, the court differentiated the two statutes from RCRA. Unlike RCRA, the CWA explicitly requests that states create more stringent standards(18) and then specifically incorporates such orders issued by a state(19) and state permit programs(20) into the citizen suit provision. The CAA also explicitly mentions state orders(21) as well as standards created by a state permit program(22) in its citizens suit provision.

Ashoff also argued that limiting claims to those based on the federal minimum criteria would allow landfill owners to defeat RCRA citizen suits because they could argue in every case that the state standard was more stringent. However, the court felt that such a result would be unlikely and deemed such considerations insufficient to overcome the legally correct interpretation of the statute. The Ninth Circuit then buttressed its conclusion with policy considerations, including the desire to avoid inappropriately interfering with state sovereignty. The court noted that the state statute upon which Ashoff based his suit did not allow citizen suits, but instead, required that citizens pursue their grievances through administrative procedures. Therefore, the court concluded that allowing citizens to bring suit in federal court would not only limit the flexibility of states to choose the forum for enforcement of their laws, but it might also chill states from adopting more stringent standards under RCRA. Based on these policy considerations as well as statutory interpretation, the Ninth Circuit affirmed the lower court's decision to dismiss the RCRA claim.

2. Atchison, Topeka, & Santa Fe Railway Co. v. Brown & Bryant, Inc., 132 F. 3d 1295 (9th Cir. 1997).

Railroad companies Atchison, Topeka & Santa Fe Railway Company and Southern Pacific Transportation Company (Railroads) brought a contribution action under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA).(23) The Railroads sought contribution for costs due to soil contamination on property they leased to Brown & Bryant (B&B). However, contribution was not sought from B&B but from PureGro, a purchaser of many B&B assets. The Ninth Circuit held that PureGro was not liable for contribution because it was not the "successor-in-interest" under either the "substantial continuation" or "fraudulently entered transaction" exceptions providing successor liability.

B&B operated an agricultural chemical business on property leased from the Railroads. However, upon realizing it could not meet compliance orders issued by the Environmental Protection Agency (EPA), it sold about half of its equipment to PureGro, a competitor in the same business. The equipment sale agreement provided that the purchase was not a purchase of B&B's business and that PureGro was not a de jure or de facto successor. In another sale agreement, PureGro purchased tanks and trailers from B&B's sole shareholder, John Brown.

After these purchases, PureGro and Brown entered into a consulting agreement whereby PureGro retained Brown to help acquire and maintain the prior B&B customers and to assist in the solicitation of new business. PureGro also hired all of B&B's employees, including Brown. For a short time after the asset sale, PureGro occasionally bought fertilizer from B&B. Eventually, PureGro took over B&B's telephone numbers. One local newspaper reported that B&B had "joined" PureGro.

In analyzing whether PureGro was liable as a successor-in-interest, the Ninth Circuit began with the general rule that asset purchasers ordinarily do not incur successor liability. However, the Railroads argued that PureGro was liable under two exceptions to this rule, namely the "substantial continuation" or the existing "fraudulently-entered transaction" exception.

The "substantial continuation" exception expands the "mere continuation" exception to allow the imposition of successor liability if the purchasing corporation is substantially, as opposed to merely, a continuation of the selling corporation. This broader exception had not been adopted in the Ninth Circuit, yet the Railroads argued that the Ninth Circuit should use its powers under federal common law to expand CERCLA liability by adding this exception. The Ninth Circuit examined its prior holding in Louisiana-Pacific Corp. v. Asarco,(24) which left open the availability of the broader exception. In Louisiana-Pacific, the Ninth Circuit had stressed the need for uniform federal rules for successor liability. However, in the case at hand, the Ninth Circuit found Louisiana-Pacific to be undermined by a line of Supreme Court cases which stressed that state law determines the scope of successor liability.(25) Therefore, the Ninth Circuit rejected the creation of the "substantial continuation" exception because California state law provided no such exception. The Ninth Circuit further held that even under federal law, it would not create such an exception because state law was adequate to further CERCLA's goals.

The "fraudulently-entered transaction" exception subjects an asset purchaser to successor liability if the transaction was entered into in order to escape liability. On the facts of the case, the Ninth Circuit found that the sale did not provide B&B a means of escaping liability. B&B had insufficient assets even before the sale. Nor did the parties enter the sale solely to circumvent CERCLA liability. The court noted that the appraised value was paid for each item sold and that there was no agreement between B&B and PureGro forcing PureGro to hire B&B's employees. Thus, the Ninth Circuit held that this exception was not applicable to the present controversy.

3. California v. Montrose Chemical Corp. of California, 104 F. 3d 1507 (9th Cir. 1997).

Defendant Montrose Chemical Corporation operated a DDT manufacturing plant in Torrance, California. The governments of California and the United States (Trustees) claimed that Montrose released 5.5 million pounds of DDT between 1947 and 1982 into Los Angeles and Long Beach Harbors, allegedly harming the marine environment. In the present case, the Trustees brought suit under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA)(26) to recover for natural resources damage to the marine environment as well as response costs incurred in the cleanup of the Montrose site. The defendants filed a motion for summary judgment as to the natural resources damage action based on CERCLA's statute of limitations. A special master denied the motion, but the district court subsequently granted it. The defendants also filed a motion in limine, asking for a cap on liability of fifty million dollars plus response costs. The special master again denied their motion, but the district court sent it back for reconsideration. The motion came back to the district court, and this time the court ordered the parties to submit a written order. After the parties failed to agree on an order, the court entered its own order limiting liability to fifty million dollars plus response costs. The plaintiffs appealed.

On appeal, the Ninth Circuit first held that the Trustees had timely filed the action, and thus the statute of limitations did not preclude any of their claims. According to CERCLA, the statute of limitations began to run on "[t]he date on which regulations [were] promulgated."(27) According to the court, the statute of limitations began to run once all regulations required under section 9651(c) were promulgated, including regulations for simplified assessments and for alternative protocols for conducting assessments. Therefore, March 20, 1987, the date when the final regulations were promulgated, was the date the statute of limitations began to run. Because the government filed the case within three years of that date, the action was timely.

Second, the Ninth Circuit held that the term "incident involving release" is not a term of art meaning "contaminated site." Rather, it includes a series of events over a short period of time that lead to a spill of a hazardous substance. The significance is that liability for each incident involving release is capped at fifty million dollars plus response costs. The Ninth Circuit held that the section of the statute capping liability did not limit collective liability for all releases. Rather, one's liability for each release of a substance is capped at a different amount. Further, the court held that the record was insufficient to decide whether there was only one incident involving release and left the decision for further proceedings. For these reasons, the court reversed the district court's grant of summary judgment and its order limiting liability to fifty million dollars plus response costs.

4. Enron Oil Trading & Transportation Co. v. Walbrook Ins., 132 F. 3d 526 (9th Cir. 1997).

Enron Oil Trading & Transportation Company brought a state indemnification action against its excess insurer under a commercial general liability policy. After the defendant removed the case to federal court, the District Court for the District of Montana granted the defendant's motion for judgment on the pleadings. The Ninth Circuit held that public policy in Montana did not entitle the insurer-defendant to judgment on the pleadings. The Ninth Circuit also held that the policy's pollution exclusion was not a bar to the indemnity action.

The underlying dispute was between Ashland Oil Company (Ashland) and Enron Oil Trading & Transportation Company (Enron). Ashland alleged that it had suffered damage as a result of the injection of a foreign substance (B-G mix) into the pipeline carrying crude oil to Ashland's refinery. Ashland claimed negligence, strict liability, breach of contract and warranty, fraud, and tariff violations. Prior to trial, Enron settled the dispute for $5 million. Enron's primary insurer provided the defense and contributed $500,000. Enron's excess insurer, however, refused to participate. Enron brought a subsequent action against the excess insurer.

After removing the case to federal court, the excess insurer claimed that Enron's action was barred by the insurance policy's pollution exclusion and by Montana's public policy that barred recovery by insureds of indemnity for intentional acts. The District of Montana granted the insurer's claim on the public policy grounds. The Ninth Circuit reviewed the district court's grant of judgment on the pleadings de novo and held that Montana public policy did not afford the insurer-defendant a valid defense. Ashland's underlying action against Enron contained negligence and strict liability aspects that were not barred by public policy. Consistent with the theory of notice pleadings, Enron did not have to allege in its complaint the evidentiary facts in support of its own theory of recovery against its insurer. Accordingly, even if Montana's public policy would provide the insurer a defense, judgment for the insurer on the pleadings was improper.

Turning next to the issue of the pollution exclusion, the Ninth Circuit held that the exclusion would not bar Enron's action against the insurer. The insurer claimed that Montana law was unambiguous, and "contamination" included Enron's injection of "B-G mix" into the Ashland oil pipeline. According to the insurer, such injection rendered the oil "impure, less valuable and less useful."(28) The Ninth Circuit noted that a Montana insurance clause is considered ambiguous when different persons looking at the clause in light of its purpose cannot agree upon its meaning. The court went on to note that adoption of the insurer's interpretation of the pollution exclusion would lead to virtually limitless results.(29)

Policy considerations also favored denying the insurer's motion for judgment on the pleadings. For example, ambiguities in insurance policies, exclusions, and words of limitation are generally construed against the insurer because they are directly contrary to the fundamental protective purpose of insurance policies. Therefore, the Ninth Circuit concluded that the specific pollution exclusion dealt with environmental-type harms and not those of the nature before the court. The Ninth Circuit reversed the district court's grant of judgment on the pleadings and remanded the case for further proceedings.

5. Pinal Creek Group v. Newmont Mining Corp., 118 F. 3d 1298 (9th Cir. 1997).

Three mining companies collectively known as the "Pinal Creek Group" engaged in the voluntary cleanup of the Pinal Creek Drainage Basin near the towns of Globe and Miami, Arizona. In 1991, the Pinal Creek Group filed suit against other potentially responsible parties (PRPs), bringing cost recovery and contribution actions under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA).(30) The defendants moved to dismiss the claims, which sought to impose on them joint and several liability for all response costs incurred by the Pinal Group, but the district court denied the motion. However, the court certified its order for an immediate interlocutory appeal. The Ninth Circuit granted the petition and reversed the lower court's denial of the motion to dismiss.

The Ninth Circuit reviewed the district court's interpretation of CERCLA de novo. On appeal, the Ninth Circuit held that section 107 is the source of CERCLA liability, while section 113 creates a mechanism for apportioning that liability among responsible parties. Thus, a PRP's claim for recovery of cleanup costs is necessarily one for contribution, and that party's liability will correspond to its equitable share of the total liability. The court acknowledged that the statutory text creates a duality by first making a PRP liable for its cleanup costs, and then allowing "any other person" to hold other PRPs liable for those same costs. The court concluded that this duality should be implemented by permitting a PRP who has incurred cleanup costs to assert only a contribution claim against other PRPs. The court found support for this conclusion by examining the legislative history behind section 113(f), which includes comments that Congress, in enacting the provision, was only confirming and clarifying an existing claim for contribution.(31) The court also noted that even before Congress enacted section 113(f), most courts had held that section 107 implicitly incorporates a claim for contribution.(32) Further, the Supreme Court and five federal circuits have reached similar conclusions that a CERCLA claim among PRPs is necessarily one for contribution.(33) At the least, other courts have held that a PRP conducting cleanup operations can not avoid the effects of section 113(f), including its delay, burden of proof rules, statute of limitations, and equitable allocation of orphan shares.(34)

Practically speaking, the Ninth Circuit pointed out that if it holds a group of defendant-PRPs jointly and severally liable, that group would end up absorbing all of the costs attributable to orphan shares (shares attributable to PRPs who are insolvent or cannot be located or identified). This would substantially restrict the court's ability to apportion costs equitably among all PRPs. In contrast, under section 113(f)(1), the court can equitably distribute the costs of orphan shares among all PRPs, as is done with cleanup costs.(35)

In addition, the court expressed concern that even a modified rule of joint and several liability of defendant-PRPs (where orphan shares are borne equally) would result in a chain reaction of multiple and unnecessary lawsuits. Such an approach, in its view, would guarantee inefficiency, potential duplication, and prolonged litigation. Finally, the court rejected policy considerations of promoting rapid and voluntary environmental responses by private parties in light of the test, structure, and logic of CERCLA, and the precedent set in In re Dant & Russell, Inc.,(36) a case in which the Ninth Circuit held that a PRP could only assert a claim of contribution. The court also named other incentives for PRPs to promptly conduct cleanup operations, namely, maintaining ongoing operations and asserting control over cleanup costs. Thus, the Ninth Circuit rejected joint and several liability for PRPs and reversed the district court's holding that PRPs could assert cost recovery actions other than those for contribution.

6. Reese v. Travelers Insurance Co., 129 F. 3d 1056 (9th Cir. 1997).

An officer of a metal reclamation company sued the company's insurer, which refused to defend the company in a liability suit. The insurer refused to defend based on both an owned-property exclusion and a pollution exclusion contained in the company's policies. The Ninth Circuit held that the insurer had a duty to defend because the company had potential liability under a claim for groundwater contamination, which was conceded by the insurer not to be excluded under the policies' owned-property exclusions. Also, the insurer failed to show conclusively that the pollution was intentionally or negligently created, and therefore covered by the pollution exclusion.

Keystone Metal Co., a metals reclamation company, rented commercial property from John Chrisman from 1970-1985. In the course of Keystone's operation, Keystone released residual wastes into the soil and environment on Chrisman's property. Chrisman brought suit against the officers and directors of Keystone, including Robert Reese.

Travelers Insurance Co. issued four comprehensive general liability policies to Keystone, covering the years 1981-1985. These policies promised to defend Keystone and its officers and directors in their official capacities against any suit resulting in bodily injury or property damage, even if the allegations proved to be meritless. Travelers initially agreed to provide a defense in the action brought by Chrisman, but later concluded that it had no obligation to defend Keystone or its officers and withdrew its defense.

Reese filed suit in a third party complaint seeking indemnity from the claims, a declaratory judgment stating that Travelers had a duty to defend and a duty to indemnify, and a breach of an implied covenant of good faith and fair dealing. The district court granted summary judgment to Travelers, relieving it of its duty to defend, and Reese appealed.

The Ninth Circuit held that Travelers had a duty to defend Reese. In order to prevail at the summary judgment stage, Reese had to prove that there was a potential for coverage under the policies, while Travelers had to show a lack of such potential. Travelers alleged that the policy contained the following two exclusions that proved there was no potential coverage: 1) an owned-property exclusion; and 2) a pollution exclusion.

The owned-property exclusion in the policies exempted coverage of property damage that occurred on property owned or rented by Keystone. Travelers produced evidence gathered during discovery that the contamination was limited to the immediate property and that there was no threat of groundwater contamination. The Ninth Circuit pointed out that the allegations against Keystone included property damage beyond the Keystone site. The Ninth Circuit held that Travelers' duty to defend remained intact as long as the complaint contained language creating the potential of a liability. The Ninth Circuit explained that the relevant question was not whether the claims had merit, but whether the policies required Travelers to defend against such claims. Because Chrisman's complaint included the possibility of off-site liability, Travelers had a duty to defend.

The pollution exclusion contained in the policies excluded coverage for damage arising from pollution if the pollution was expected or intended by the insured party. Travelers presented evidence demonstrating that Keystone's officers were aware of the Keystone operations causing pollution. The court noted that the complaint did not specify if any of the defendants negligently or intentionally caused the pollution. California law does not presume that all pollution from the disposal of toxic wastes is nonaccidental. Because the complaint covered accidental spillage, exposure to liability outside of the pollution exemption was a possibility; therefore, Travelers had retained a duty to defend. Accordingly, the Ninth Circuit reversed the district court's grant of summary judgment for Travelers and granted summary judgment to Reese on the question of Travelers' duty to defend the underlying action.

C. National Environmental Policy Act

1. Alaska Center for the Environment v. Armbrister, 131 F. 3d 1285 (9th Cir. 1997).

The Alaska Department of Transportation and Federal Highway Administration (FHA) proposed construction of a road to Whittier, Alaska to replace the twelve mile railroad that connected the town with the state's highway system. In 1995, the agencies published a combined final environmental impact statement (EIS) and draft section 4(f) evaluation for the Whittier Access Project. The EIS analyzed four alternatives for improving access to Whittier, including a no action alternative, improved rail service, and two road alternatives. In 1996, FHA issued a Record of Decision selecting one of the road alternatives for implementation, concluding that only the road alternatives met the purpose and need for the project.

Environmental groups and wilderness tour operators (collectively referred to as Alaska Center for the Environment, or ACE) brought suit alleging that FHA had violated section 4(f) of the Department of Transportation Act,(37) section 138 of the Federal-Aid Highway Act,(38) and the National Environmental Policy Act (NEPA)(39) Section 4(f) proscribes federal agencies from approving transportation projects that require the use of a public park or recreational area unless there is no feasible and prudent alternative to using the land, and the project includes all possible planning to minimize harm to the public land.(40) ACE argued that improving the existing rail service was a prudent and feasible alternative to constructing the road, and that the EIS violated NEPA because it did not adequately address the safety hazards associated with the use of a road to Whittier.

The district court granted FHA's motion for summary judgment, concluding that the agency had not acted arbitrarily in deciding that improved rail access was not a prudent and feasible alternative to the proposed road. The Ninth Circuit affirmed, relying heavily on its previous decision in Arizona Past & Future Foundation v. Lewis,(41) in which the court held that avoidance alternatives that did not accomplish the purposes of a project could be rejected as imprudent.

The Ninth Circuit reviewed FHA's reasons for determining that the rail service was imprudent. FHA had projected that demand for the road to Whittier far exceeded demand for the train because people were more likely to drive their cars than to ride trains, and therefore the improved rail service alternative did not satisfy the project's purpose of meeting the projected demand for access. FHA also concluded that increased rail service posed potential safety risks because the entrance to one rail tunnel was prone to avalanches, and tracks were subject to unsafe ice buildup. Because rail service did not meet the agency's stated purposes of the project, the Ninth Circuit concluded that the agency properly rejected the alternative.

ACE argued that, consistent with the Ninth Circuit's ruling in Stop H-3 Ass'n v. Dole,(42) FHA was required to identify unique problems or truly unusual factors supporting rejection of the rail alternative. The Ninth Circuit distinguished the facts in the case at hand from Stop H-3. The court explained that in Stop H-3 all avoidance alternatives met the purposes of the project, while in the current case, FHA rejected the railsystem alternative because it did not satisfy the purposes of a project. Under the standard developed by the Supreme Court in Citizens to Preserve Overton Park v. Volpe,(43) the agency must only go further and find truly unusual factors when the rejected alternative would satisfy the purpose of the project without using public park or recreational land.

The Ninth Circuit also dismissed ACE's NEPA claim. ACE argued that the EIS failed to adequately address the safety concerns associated with the road and rail alternatives. The court found that this claim was not supported by the record because the EIS had thoroughly examined the relative safety risks of the different alternatives and specified mitigating measures. The Ninth Circuit also dismissed ACE's claim that the FHA defined the purpose of the project too narrowly. The court concluded that the purpose, namely to meet the demand for access to Whittier, was not defined so narrowly as to disqualify all alternatives except those to build a road.

2. Apache Survival Coalition v. United States, 118 F. 3d 663 (9th Cir. 199 7), infra Part III.

3. Association of Public Agency Customers v. Bonneville Power Administration, 126 F. 3d 1158 (9th Cir. 1997).

Various industrial and environmental groups petitioned for review of decisions by Bonneville Power Administration to adopt a market driven business plan, execute power sale contracts with direct service industrial customers (DSIs), and extend transmission agreements to those customers. DSIs are industrial companies who purchase power directly from BPA for their own power intensive operations. In order to respond to changes in the electricity market, BPA developed a new strategy that required profound changes in its business relationship with DSIs. The Ninth Circuit considered a consolidated appeal involving challenges to the administrative decisions relating to BPA's new strategy.

For most of its history, BPA has had a significant price advantage over its competitors in the power market; its low cost power and control of most of the transmission lines in the region made it the top power supplier in the Pacific Northwest. Due to changes in federal law, BPA began to lose its price advantage in the early 1990s. With the Energy Policy Act of 1992,(44) Congress sought to promote competition in the wholesale power market. It did this in part by giving power producers who lack their own transmission system the ability to request that the Federal Energy Regulatory Council (FERC) order transmission line owners to transmit power for them. Transmitting power produced by other generators is known as "wheeling." At the same time that wheeling was creating new competition in the wholesale power market, BPA's power costs were rising because of increases in the cost of its fish and wildlife programs.

BPA took several steps in response to these changes in the market, including the actions challenged by the plaintiffs. For instance, BPA adopted a market-driven approach to power management in their 1995 Business Plan Final Environmental Impact Statement Record of Decision (Business Plan ROD) after preparing an environmental impact statement. Subsequently, BPA fashioned sales contracts tiered off of the Business Plan. In September, 1995 BPA issued the Direct Service Industrial Customer Requirements Power Sales Contract Record of Decision (Block Sale ROD). The Block Sale ROD involved contracts with the DSIs for purchase of power on a "take-or-pay basis," which required the customer to pay for the power for which she contracted even if she did not take delivery. The Block Sale ROD also provided stranded cost protection. Previously, BPA's contracts with the DSIs contained stranded cost provisions allowing BPA to recover costs from a DSI that were incurred when the DSI terminated its contract. The new agreement guaranteed that there would be no stranded costs, because BPA would secure enough revenue to meet all of its operating costs and compete successfully so that investments never became stranded.

In April of 1995, BPA began entering into five-year contracts in which BPA would sell "unbundled" transmission service to DSIs. The service was termed "unbundled" because previously BPA had only transmitted power which it produced, and traditionally this power was "bundled" with transmission service. The new contracts were the mechanism for BPA to wheel power to DSIs. In August of 1995, BPA and the DSIs agreed to extend the terms of the Initial Transmission Agreements arranged under the Block Sale ROD. BPA issued the Long-Term Extension Record of Decision (Long-Term Extension ROD), extending the term of the Initial Transmission Agreement by fifteen years, for a total of twenty years. Three entities then filed petitions of review challenging that decision.

The Association of Public Agency Customers (APAC), representing companies that purchased large amounts of electric power from BPA's public agency customers, filed a petition for review of the Business Plan ROD, the Block Sale ROD, and the Long-Term Extension ROD. The Utility Reform Project, a nonprofit environmental and energy policy advocacy organization representing Oregon and Washington residents whose power comes from BPA, and the Public Power Council, also filed petitions for review of the Long-Term Extension ROD. A group of DSIs, the State of Oregon, and the Northwest Conservation Act Coalition (NCAC), a consortium of over seventy ratepayer and environmental groups, public and private utilities, and individuals, were allowed to intervene. The Utility Reform Project and Kevin Bell, a member of the Utility Reform Project, also filed for review of the Block Sale ROD, and some DSIs, NCAC, and Public Utility District No. 1 of Clark County, Washington were allowed to intervene.

The petitioners argued the following: 1) BPA did not have the statutory authority to wheel nonfederal power, 2) BPA failed to comply with NEPA, 3) BPA was arbitrary and capricious in granting stranded cost protection to the DSIs in the Block Sale Contracts, 4) BPA was arbitrary and capricious in granting the Long-Term Extension Agreements, 5) BPA violated the ratemaking procedures mandated by statute, and 6) the Long-Term Extension Agreements interfered with the state's regulation of retail power sales.

The Ninth Circuit first considered challenges to the Long-Term Extension Agreements. The court held that BPA did have the statutory authority to transmit nonfederal power. BPA argued that it was reasonable to interpret its governing statutes as a grant of authority to transmit nonfederal power. The agency supported its interpretation with the argument that four organic statutes granted BPA broad discretion over the Northwest's federal transmission system, did not limit BPA's ability to provide transmission services to DSIs, and conferred broad authority to contract in BPA's best interest.(45) The Ninth Circuit held that where Congress has not spoken on an issue, the court should defer to the agency's construction of its governing statute, so long as its construction is reasonable.(46) The Ninth Circuit discussed each of BPA's four organic statutes, including the Project Act, the Preference Act, the Transmission Act, and the Northwest Power Act, and concluded that the agency's interpretation was reasonable.

APAC and the Public Power Council argued that because the Transmission Act prohibited discrimination among retail power consumers,(47) BPA was precluded from wheeling non-federal power to the DSIs without also offering the same to APAC's members. The Ninth Circuit disagreed, concluding that the antidiscrimination language in the statute applied only to discrimination among utilities. The court also dismissed a discrimination argument based on the Federal Power Act,(48) which prohibited BPA's rates for transmission services from being "unjust, unreasonable, or unduly discriminatory or preferential."(49) In order to successfully advance a discrimination claim under the Federal Power Act, the Ninth Circuit held that APAC had to show that its members were similarly situated to the DSIs and that there was disparate treatment for the same service. The court found that APAC's members and the DSIs were not similarly situated. While the DSIs contracted directly with BPA and could cancel their agreements with one year of notice, APAC's members contracted with utilities that purchase power from BPA under contracts requiring seven years of notice for cancellation. Because of this distinction, BPA had to act to keep the DSIs from canceling their contracts, but this was not unlawful discrimination.

APAC argued that BPA failed to consider the impact of its decisions on competition, as required by the Project Act.(50) The Ninth Circuit found that the whole thrust of BPA's planning process over the past few years had been to focus on market competition. Therefore, the court found that the Long-Term Extension Agreements furthered, rather than frustrated, the purpose of antitrust laws.

The State of Oregon argued that the Long-Term Extension Agreements interfered with the state's regulatory authority. The Ninth Circuit held that while the power to regulate retail sales of power is generally left to the states, the states do not have the authority, absent clear congressional direction, to regulate transmission lines owned by a federal agency such as BPA.(51) The court also dismissed Oregon's concerns about load-shifting, concluding that these matters were not germane to its review because interstate transmission is clearly a federal matter.

The Ninth Circuit then considered claims that the transmission agreements did not comply with 42 U.S.C. [sections] 4332(2)(E), a provision of the National Environmental Policy Act (NEPA) that requires federal agencies to "study, develop, and describe appropriate alternatives to recommended courses of action in any proposal which involves unresolved conflicts concerning alternative uses of available resources."(52) This requirement is separate and independent of the requirement to prepare an EIS and applies to a wider range of federal actions.(53) The court held that BPA had complied with this provision by considering several alternatives to long-term wheeling for DSIs.

APAC argued that BPA's decision to grant the long-term transmission contracts was an arbitrary and capricious departure from established precedent, and the decision was not supported by the record. The court reviewed the record and found that BPA's decision was amply supported. The court emphasized that BPA's objective was providing stability reserves for its entire system, and was not persuaded by arguments challenging the soundness of BPA's business strategy. The Public Power Council argued that BPA had contractually diminished the utilities' statutory rights to BPA's excess transmission capacity as guaranteed by the Transmission Act.(54) The court found that if this claim were valid, the aggrieved party would have a remedy. The potential for such future litigation did not sufficiently convince the court that BPA acted arbitrarily or capriciously.

The Ninth Circuit next considered petitions for review of the Block Sale contracts. The Northwest Power Act created a process for establishing rates,(55) which the petitioners argued was violated by the Block Sale. Section 7(i) of the Northwest Power Act requires the Administrator of BPA to publish notice of a proposed rate change in the Federal Register and then conduct public hearings to develop a complete record on which to base the final rate.(56) Any final rate must be approved by FERC.(57)

At the time the Block Sale Contracts were issued, BPA was concerned that if it did not act quickly, the DSIs would cancel their contracts and purchase power from other generators in the market. Section 7(i) proceedings had been initiated, therefore the contracts were based on a rate target rather than an actual rate. This created a "rate test." Once the 7(i) proceedings were complete, if the rate met the rate target, then the contracts would stand. If the rate exceeded the rate target, then the DSIs had several options, ranging from canceling their contracts outright to purchasing power at the approved rate. Petitioners argued that the term "rate" should be defined to include terms of any contract that affects the rate, and therefore the section 7(i) process should have been carried out for the Block Sale Contracts. BPA defined rate only as a monetary charge for the sale of electricity, and therefore the term did not include terms and conditions that did not establish such monetary charges. The court found that BPA's definition of rate was reasonable. The court referred to its rejection of a similar attempt to expand the definition of rate in California Energy Resources Conservation & Development Commission v. Bonneville Power Administration.(58) In that case the plaintiff argued that a new Intertie access policy was a ratemaking requiring FERC approval. The court found that the policy was not a charge imposed on customers for the provision of electrical power, and therefore was not a rate. Furthermore, the court noted that every contract will have terms that materially affect the bargain, but the Northwest Power Act does not require the BPA to carry out section 7(i) proceedings whenever it enters into a contract.

The petitioners next argued that even if the terms and conditions of a contract are not by themselves subject to section 7(i) procedures, such contractual terms can sometimes be so closely tied to the rate as to require consideration when ratemaking.(59) The Ninth Circuit dismissed this claim, holding that while the plaintiffs' general proposition might be true, in this case none of the terms of the contracts were sufficiently intertwined with the rate to modify the price paid for power.

Clark County argued that the rate test used in the Block Sale contracts in lieu of a rate constituted a ratemaking outside of a section 7(i) proceeding, or a "rate case." Clark County argued that this rate test created a ceiling above which the Administrator would not go for fear of losing the DSI contracts. Therefore, Clark County argued, the rate test would improperly influence the outcome of the rate case. The Ninth Circuit held that this claim was not ripe and instructed Clark County to raise the claim either in the rate case when the rate was up for FERC approval, or in court after FERC granted approval.

The Ninth Circuit also dismissed the petitioners' argument that the Block Sale Contracts violated the Transmission Act's antidiscrimination provision. The court found that its holding with regard to the Long-Term Extension Agreements applied to the Block Sale Contracts as well.

The Ninth Circuit then gave a detailed account of the record and held that it did not support the argument that BPA acted arbitrarily and capriciously in granting the Block Sale Contracts. While the court did not endorse the BPA's business strategy, it found that the likelihood of its success was beyond the court's review.

The Ninth Circuit then turned to the challenges brought under NEPA. The court first considered the timeliness of APAC's petition challenging the Business Plan. The Northwest Power Act requires that parties challenging a final BPA action file suit within ninety days of the time such action is final.(60) APAC filed its petition more than ninety days after the Business Plan was executed, but within ninety days of publication of the Business Plan in the Federal Register. The court found that the petition was untimely unless publication was required by the Northwest Power Act, which it is not. However, the court concluded that because APAC had insufficient warning that the time for the appeal began to run at the time the plan was executed, rather than published, its decision on the matter would be prospective only. The Ninth Circuit then proceeded to consider the merits of APAC's petition.

Petitioners argued that BPA could not tier the ROD for specific contracts to the Business Plan EIS, but instead had to issue an individual EIS for each contract ROD. However, the court concluded that in many ways a programmatic EIS is superior to a contract-specific EIS because it considers an entire policy. Therefore, BPA did not err by issuing a single programmatic EIS.

The Ninth Circuit considered the petitioners' claim that BPA had failed to consider the cumulative impacts of the Initial Transmission Agreements, Block Sale Contracts, and Long-Term Extension Agreements in the Business Plan EIS. The Business Plan included an analysis of a market-driven alternative, which was selected as the proposed action. The court found that this market approach adequately considered the cumulative impacts of the three arguments.

Petitioners also challenged the decisionmaking process, arguing that the closed door negotiations with the DSIs over the new contracts were not subject to proper public scrutiny or comment. The court held that the NEPA process did not have to precede the agency's formulation of a proposal or selection of a preferred course of action. The court also dismissed the petitioners' claim that the EIS should have included more alternatives to the stranded cost protection provision.

The Ninth Circuit next dismissed the petitioners' claim that the EIS did not adequately consider the environmental consequences of the transmission agreements and stranded costs protection. The court found that BPA had considered such consequences to the market, power supply, and fish and wildlife. The petitioners argued that the Business Plan EIS failed to consider the social effects that could result from utilities being liable for higher stranded costs, which inevitably would be passed on to ratepayers. The court held that NEPA did not require BPA to consider the economic impact of its actions because the statute only required consideration of environmental factors. The court also rejected the argument that ratepayers, particularly those in low socio-economic strata, would be significantly effected by BPA's actions. The court also dismissed claims that the EIS did not adequately address impacts on area aluminum smelters.

Petitioners argued that BPA failed to adequately address mitigation. The court disagreed, holding that the EIS had considered mitigation for each resource type. The petitioners also argued that the EIS failed to consider the long-term environmental effects of the action, focusing instead on a time period ending in 2002. The court held that NEPA did not require any particular analytical protocol and that BPA had reasonably concluded that because long-term calculations were difficult to accurately make, it was better to focus on short-term analysis and assume that short term relationships would provide valid indications of the long run.

The court then concluded that the "no action" alternative did not require analysis of the consequences resulting from not signing any contracts with the DSIs. The court held that the no action alternative could be considered in terms of continuing the status quo.

Finally, the Ninth Circuit considered the claim that the Business Plan EIS was not consistent with the Business Plan. While the EIS only considered wheeling to DSIs, the Business Plan recognized the trend towards wheeling to retail customers and indicated BPA's willingness to shift in that direction. The court held that this potential inconsistency was not ripe because there was no injury. No contracts allowing retail wheeling had been issued, and the Business Plan did not actually commit the BPA to such a course of action. There was no harm to the environment from BPA indicating a willingness to grant transmission access to retail customers in the future.

The court concluded that widespread changes in the electricity market resulting from deregulation had transformed the wholesale power market. The court held that BPA's response to these changes in the market was not arbitrary and capricious, and denied all petitions for review.

4. Keith v. Volpe, 118 F. 3d 1386 (9th Cir. 1997).

Robert L. Kudler, a billboard advertising developer, appealed the district court's entry of a preliminary injunction prohibiting the California Department of Transportation (Caltrans) from issuing him a permit to place billboards along the Interstate 105 freeway (I-105) in Los Angeles County. The district court injunction was granted when the plaintiffs, environmental and civil rights activists, sought to enforce a consent decree and environmental impact statement (EIS) resulting from earlier litigation on the 1105 project. The question for the Ninth Circuit was whether this federal consent decree properly barred construction of billboards on 1-105.

The consent decree and EIS formed a settlement agreement whereby federal and state agencies were permitted to proceed with the construction of 1-105 while mitigating negative aesthetic effects on motorists and surrounding neighborhoods. The consent decree required that 1-105 be constructed as a landscaped freeway to create a park-like atmosphere. The issue on appeal was whether this consent decree superseded the California Outdoor Advertising Act (COAA),(61) the state law regulating billboard placement.

From 1993 to 1996, Kudler applied for several permits authorizing him to place billboards along I-105. Caltrans denied all of these applications. Kudler wanted to place billboards along unplanted sections of the highway that were over 200 feet in length, and he also sought to have Caltrans reclassify these sections of the freeway as nonlandscaped. Caltrans denied these requests. Kudler then filed an action in state court seeking peremptory writs of mandate requiting Caltrans to reclassify the unplanted segments of the freeway as nonlandscaped and issue him permits to place billboards along those segments. Kudler argued that Caltrans had violated the COAA, which provides that permits to construct billboards shall be issued unless the billboard is to be constructed in a landscaped segment of the freeway. The law also mandates that a planted segment of the freeway must be at least 1000 feet in length to be classified as landscaped, and that if such a segment is followed by a gap of 200 feet or less and adjoins a planted section that is at least 500 feet in length, the "landscaped freeway" designation will apply to the planted segment, the gap, and the next planted segment.(62) Kudler argued that because he sought to place billboards in unplanted segments of the freeway that were over 200 feet in length, Caltrans was required to issue him the permits. Caltrans believed that the COAA was superseded by the consent decree, which prohibited erection of billboards along I-105.

On July 12, 1996, the Los Angeles Superior Court issued a peremptory writ of mandate requiring Caltrans to reclassify the disputed segments of I-105 as nonlandscaped and to grant Kudler permits to construct his billboards. The plaintiff groups then filed an ex parte application for an order to show cause why an injunction to enforce the consent decree should not issue and for a temporary restraining order in federal district court. After briefing and a hearing on the order to show cause, in which nonparty Kudler participated, the district court ruled that the consent decree prohibited billboards anywhere along the freeway and granted a preliminary injunction preventing Caltrans from issuing Kudler's permits. Nonparty Kudler then appealed this decision to the Ninth Circuit.

The Ninth Circuit first considered whether it had subject matter jurisdiction and whether the parties had standing to bring this action both in district court and on appeal. Kudler argued that the district court did not have subject matter jurisdiction. The Ninth Circuit disagreed, citing SEC v. G.C. George Securities, Inc.,(63) where the court found that the district court could properly enjoin state administrative proceedings raising issues already resolved in a federal court settlement agreement. Also, the consent decree itself provided that the parties could apply to the district court for relief if any party failed to comply with the terms of the decree.

The Ninth Circuit determined that nonparty Kudler had standing to bring the appeal in the Ninth Circuit. Nonparties are permitted to appeal district court orders in the Ninth Circuit where the appellant participated in the district court proceedings, even though not a party, and the equities in the case weigh in favor of hearing the appeal. At the district court's request, Kudler had responded to the order to show cause by filing a memorandum of points and authorities and participating in oral argument. The Ninth Circuit found that equities clearly weighed in favor of Kudler's right to appeal because the plaintiffs had hailed him into the proceeding against his will and were then trying to prevent his appeal by arguing that he lacked standing.

The Ninth Circuit then turned to the merits of the case, concluding that the district court properly found that the consent decree and EIS prohibit billboards along I-105. The Ninth Circuit discussed the terms of the consent decree, which permitted construction of the freeway but required mitigating measures, including the order that I-105 be constructed as a landscaped freeway. The parties who negotiated the consent decree, and the district judge who had presided over the case for twenty-five years, agreed that the language of the consent decree precluded billboards along the freeway. The Ninth Circuit discussed some of the language of the consent decree and the EIS and concluded that substantial evidence supported the district court's finding that the consent decree's designation of I-105 as a landscaped freeway prohibited billboard construction.

The Ninth Circuit then considered whether a contractual consent decree entered by a federal district court could supersede state laws regulating billboards, when those laws are not in conflict with any federal law. The Ninth Circuit held that while the district court correctly determined that the consent decree precluded billboard construction on 1-105, it erred in concluding that the consent decree overrode state law. The district court lost sight of its limitations under the Constitution. The Ninth Circuit held that the district court could not supersede California law unless it conflicted with a federal law, and that in this case there were no conflicting federal laws that justified overriding state law. The district court had relied on the policy concerns of the National Environmental Policy Act of 1969 (NEPA),(64) but the Ninth Circuit held that because NEPA imposes only procedural requirements, and does not dictate a substantive environmental result, the district court erred in relying on NEPA's generalized environmental purpose.

The Ninth Circuit concluded that the parties to the consent decree did not have the authority to agree to terms that exceeded their authority under state law. The court cited a number of cases, including Perkins v. City of Chicago Heights,(65) for the proposition that the parties to a consent decree cannot agree to do something together that they lack the authority to do individually. The Ninth Circuit held that the doctrine of federalism precluded the district court from overriding valid state laws regulating outdoor advertising. The court reversed the district court decision and vacated the preliminary injunction.

5. Marbled Murrelet v. Babbitt, 111 F. 3d 1447 (9th Cir. 1997).

The Ninth Circuit vacated a district court injunction shutting down logging activities in Humboldt County, California. The court held that approval of eight timber harvest plans (THPs) by the California Department of Forestry and Fire Protection (CDF) constituted neither an "agency action" under the Endangered Species Act (ESA)(66) nor a "major federal action" under the National Environmental Policy Act (NEPA)(67) despite the fact that CDF consulted with the Fish and Wildlife Service (FWS) in approving the THPs.

The district court granted a motion by the Environment Protection Information Center (EPIC) to enjoin logging activities to be conducted under the THPs. The district court determined the following: 1) there were serious questions regarding violations of the ESA and NEPA; and 2) there was a balance of hardships tipping in EPIC's favor.

The Ninth Circuit declined to decide whether the district court had jurisdiction over the ESA claim because of EPIC's failure to give the sixty-day notice of intent to sue required by the ESA. EPIC contended that letters to the appellants prior to the sixty-day notice period constituted proper notice. The Ninth Circuit decided the case on the merits, rendering the notice dispute moot.

Section 7(a)(2) of the ESA requires consultation between FWS and other federal agencies for any agency action. EPIC argued that CDF's consultation with FWS regarding eight THPs constituted agency action and should have triggered the agency consultation requirement of the ESA. California state law requires CDF approval of all THPs. CDF approval procedures allow someone submitting a THP to choose among seven options for providing information on spotted owl takings to the director of CDF. The appellants chose the option of providing to CDF an FWS opinion concluding that the timber plans would not likely result in the taking of an owl.

EPIC argued that this strategy involved a delegation of authority to FWS and that CDF's approval of the THPs hinged on the FWS opinion. EPIC cited a 1996 Ninth Circuit opinion holding that if a federal permit is a prerequisite for a project, the permit issuance becomes a major federal action.(68) The court disagreed, finding the decision to be exclusively the decision of CDF. The FWS concurrence was merely one of seven options available to the appellant and therefore was not a prerequisite for the project. The court pointed to a similar 1996 decision, Marbled Murrelet v. Babbitt (Murrelet I),(69) where FWS advice to lumber companies on how to avoid a "take" of a species under section 9 of the ESA was not determined to be an agency action. The court held in Murrelet I that agency involvement that does not influence private action is not an agency action. Reaching a similar conclusion in the present case, the court held that the FWS concurrence letter clearly indicated that the power to approve the THPs was left with CDF. In addition, the FWS concurrence did not put the agency in control of the THP approval process, and therefore did not create a delegation of authority from CDF to FWS. Because the FWS option was one of seven available to the appellants by state law, the court held there was no federal discretionary involvement in the approval process.

The court's holding that the FWS involvement was not an agency action led to the conclusion that the involvement also was not a major federal action under NEPA, because a major federal action under NEPA is determined under a more exclusive standard than an agency action under the ESA. Finding a violation of neither the ESA nor NEPA, the court vacated the district court decision and removed the injunction.

6. Northwest Environmental Defense Center v. Bonneville Power Administration, 117 F. 3d 1520 (9th Cir. 1997), infra Part II.B.

7. Oregon Natural Resources Council v. Lowe, 109 F. 3d 521 (9th Cir. 1997).

The Oregon Natural Resources Council (ONRC) and several other environmental groups brought an action alleging that the Forest Service failed to comply with both the National Forest Management Act (NFMA)(70) and the National Environmental Policy Act (NEPA)(71) when it prepared and amended a land and resource management plan for Winema National Forest in southcentral Oregon. The Ninth Circuit approved the decisions and methods of the U.S. Forest Service (Forest Service) and affirmed the district court's grant of summary judgment in favor of the Forest Service.

This controversy involved the Winema National Forest Land and Resource Management Plan (LRMP) and a subsequent amendment to the LRMP. ONRC challenged the two planning decisions on the basis that the Forest Service did not comply with NFMA. NFMA directs the Secretary of the Forest Service to develop, maintain, and revise resource plans, and to issue regulations for the development and revision of forest plans.(72) As part of a forest plan, wildlife habitat is managed to ensure viable populations and management indicator species (MIS) are selected and monitored. MIS population changes are believed to indicate the effects of management activities. The LRMP divided the forest into a number of management areas, one of which was designated to maintain old growth forests and old growth-associated species. Five MIS for the old growth area were selected from the Forest Service's regional plan for the Pacific Northwest.

ONRC also challenged the LRMP for failure to comply with NEPA. NEPA requires the preparation of an Environmental Impact Statement (EIS) for any major federal action "significantly affecting the quality of the human environment."(73) Both a draft and a final EIS generally are prepared for LRMPs. In development of the Winema LRMP, areas of lands set aside as old growth were based on a previously prepared old growth inventory, and many of the tracts that were designated as old growth no longer contained old growth stands. Similarly, several areas contained old growth but were not designated as such. The Forest Service also selected a specific old growth stand to help fulfill the requirements for the MIS, but it failed to prepare a supplemental EIS. Instead, the Forest Service issued a finding of no significant impact and submitted a less demanding Environmental Assessment (EA).

ONRC challenged the LRMP for violating NFMA on two grounds. First, the group argued that the Forest Service erred in adopting MIS and management parameters from the regional plan, which was outdated and only intended to provide minimal legal requirements. Second, ONRC challenged the decision not to include the white-headed woodpecker as an MIS. The Ninth Circuit reviewed ONRC's NFMA challenges under the "arbitrary and capricious" standard set forth in the Administrative Procedure Act.(74)

The Ninth Circuit rejected all of ONRC's NFMA challenges. Although acknowledging that the data used to develop the regional plan dated back to the late seventies and early eighties, the Ninth Circuit did not believe that the studies cited were so outdated as to make the Forest Service's reliance upon them arbitrary and capricious. Also, even though the management strategies for the MIS were only intended to be minimums, the Ninth Circuit was unwilling to hold that the Forest Service violated NFMA when it adopted those strategies in the Winema Forest LRMP. Although ONRC had a report(75) which supported their assertion that the management strategies were inadequate to protect the goshawk (one MIS), that document postdated both the LRMP and its challenged amendment.

Thus, the Forest Service did not act in an arbitrary and capricious manner based on the information available at the time of the decision. On the final NFMA challenge, the Ninth Circuit held that it was not arbitrary and capricious to fail to designate the white-headed woodpecker as an MIS. The Forest Service asserted that the white-headed woodpecker was adequately protected through consideration of other MIS, such as the pileated woodpecker and the goshawk. Accordingly, the Ninth Circuit found no violation of NFMA.

ONRC also presented two claims challenging the LRMP for failing to comply with the requirements of NEPA. First, ONRC claimed that the LRMP violated NEPA because it was based on inadequate information about the actual location of existing old growth and because subsequent EISs were not completed as new information became available. Second, ONRC argued that the Forest Service violated NEPA by not responding in the EIS to valid scientific criticisms. The Ninth Circuit reviewed the NEPA challenges to the LRMP under the "rule of reason" standard, which requires that the court determine whether the agency took a "hard look" at the decision's environmental consequences.

On the first challenge, the Ninth Circuit inquired whether the Forest Service's EIS was required to consider the environmental significance of size, configuration, and connectivity of old growth forest stands rather than simply specifying a quantity to be protected. The Ninth Circuit stressed that NEPA ensures a process and not a particular result. The court pointed out that the criticisms were not directed at the EIS, but were aimed at the LRMP itself. Because the specific factors ONRC claimed were missing from the EIS did not have to be included as long as the EIS fulfilled the purpose for which it was intended under NEPA, the Forest Service's failure to consider those factors was not arbitrary and capricious.

After evaluating ONRC's second NEPA challenge to the LRMP, the Ninth Circuit concluded that NEPA had not been violated for failure to consider scientific criticisms. In particular, ONRC referred to the testimony of biologists from the Oregon Department of Fish and Wildlife, the Klamath Tribe, and Winema. In response to ONRC's complaints that the response given by the Forest Service was inadequate to meet NEPA requirements, the Forest Service stated that it was constrained to operate under its regional guide. The Ninth Circuit declined to put itself into the middle of the debate, and pointed out that the court's role is limited to ensuring that the agency took a "hard look" at the environmental consequences. Finding this standard met, the Ninth Circuit found no NEPA violation and accordingly affirmed the district court's grant of summary judgment for the Forest Service.

The dissent disagreed with the majority's determination that the failure to consider the specific land management factors of size, configuration, connectivity, and ecological condition was not a violation of NEPA. The dissent argued that it was a violation of NEPA to conduct an EIS based on an old timber inventory which did not accurately represent the location of old growth tracts. The Regional Forester himself had stressed the importance of considering such attributes of the forest when developing an LRMP. In addition, the Ninth Circuit previously held that a forest plan was unreasonable when it included no consideration of the configuration of old growth that was to be protected,(76) and the dissent found the inadequacy of the presently contested EIS even more extreme. Accordingly, the dissent would have reversed the district court and remanded for an injunction of the Forest Service until such time as it was able to prepare an adequate EIS based on current, available data.

8. Price Road Neighborhood Ass'n v. United States Department of Transportation, 113 F. 3d 1505 (9th Cir. 1997).

An association of residents living near a proposed freeway interchange project brought action against the United States Department of Transportation (USDOT), Federal Highway Administration (FHA), and Arizona Department of Transportation (ADOT) alleging violations of the National Environmental Policy Act (NEPA),(77) as well as the procedural requirements mandated by the Council on Environmental Quality (CEQ) and FHA, because defendants failed to conduct a supplemental environmental assessment (EA) after modifying the original interchange design. The plaintiff-appellants also claimed that the agencies failed to provide adequate public participation opportunities and that the agencies' decisions were based on an inadequate reevaluation, and therefore were arbitrary and capricious. The United States District Court for the District of Arizona granted summary judgment in favor of the defendants, and the plaintiffs appealed. The Ninth Circuit held the following: 1) NEPA requirements were satisfied through use of a reevaluation process rather than creation of a supplemental EA, 2) the fact that agencies did not hold additional meetings while conducting reevaluation of the original EA did not violate public participation requirements, and 3) the reevaluation was adequate, therefore the agencies' determination that the proposed redesign produced "no discernible differences" was not arbitrary and capricious.

The subject of the dispute was the partial redesign of the "Price Interchange" being built by ADOT in Tempe, Arizona. ADOT prepared an EA pursuant to NEPA in 1987 and 1988, and, after final review, issued a finding of no significant impact (FONSI) indicating that the proposal would have no significant effect on the human environment. The initially preferred design was a four-level, fully-directional interchange, which included two below-ground, fully enclosed tunnels. The tunnels were chosen at least in part to allay concerns of residents about the fifty-foot above-ground height of ramps in an earlier design, and reduced this height to twenty-five feet above ground.

In January 1995, ADOT informed FHA that it wanted to save construction and maintenance costs by modifying the initial design to include two fully directional loop ramps rather than the two tunnel ramps. The FHA required ADOT to conduct an environmental reevaluation in order to determine the continuing validity of the original EA and resulting FONSI. Subsequently, ADOT conducted a public meeting to inform the public of the proposed modifications, and eventually modified its proposal and adopted a semidirectional ramp design based on a plan submitted by a citizen. FHA eventually approved the environmental reevaluation, making the finding that there were no discernible differences in the level of environmental impacts when comparing the original design with the revised proposal.' The Price Road Neighborhood Association (PRNA) then filed a complaint against USDOT and ADOT seeking declaratory and injunctive relief based on the claims above.

The Ninth Circuit held that the environmental reevaluation was all appropriate vehicle for FHA to determine the significance of impacts produced by the modified design in deciding whether a supplemental EA was required. While agreeing with the plaintiffs that an agency's NEPA responsibilities do not end with the initial assessment and that supplemental documentation is sometimes necessary, the Ninth Circuit noted that such documentation is only required when the environmental impacts not evaluated by the original analysis are either significant or uncertain. Therefore, the agency must first determine if the impacts resulting from the proposed change are significant before deciding whether supplemental documentation is necessary. As neither NEPA nor the implementing regulations discuss how this determination is to be made, FHA had discretion to issue its own regulation providing for reevaluation of environmental documents. The court held that this reevaluation procedure satisfied the requirement that agencies take a "hard look" at the environmental consequences of their actions and not act on incomplete information.

The Ninth Circuit found that the reevaluation process did not violate explicit statutory and regulatory public participation requirements because ADOT held two public meetings to discuss the redesign of the interchange. Not only did residents voice their concerns at the meetings, but members of the public actively participated in the design process by submitting alternatives, one of which was adopted.

The court rejected PRNA's attempt to challenge the adequacy of the reevaluation by engaging in a battle of the experts. The plaintiffs sought to introduce their own studies with regard to several impacts, including air quality and noise, which contradicted the findings of the agencies, but the court noted that agencies have discretion to rely on their own qualified experts when specialists disagree. In this case, the methodology used and conclusions reached by the agencies were supported by scientific data, therefore, the court found it reasonable for the agencies to rely on the opinions of their own experts.

D. Toxic Substances

1. Coupar v. United States Department of Labor, 105 F. 3d 1263 (9th Cir. 1997), supra Part I.A.

2. Industrial Truck Ass'n v. Henry, 125 F. 3d 1305 (9th Cir. 1997).

This case concerned preemption of state health and safety statute provisions and implementing regulations by federal Hazard Communications Standards (HCS)(78) under the Occupational Safety and Health Act (OSHA).(79) A truck manufacturer brought an action against the State of California seeking declaration that California Safe Drinking Water and Toxic Enforcement Act (Proposition 65)(80) and its regulations were preempted by the federal HCS regarding warning requirements imposed on manufacturers and distributors of industrial trucks (forklift trucks).

OSHA authorizes the Secretary of Labor to promulgate federal occupational health and safety standards such as the HCS to protect workers from hazardous chemicals in the workplace. This standard applies to all sectors of the economy and establishes rules for the identification and evaluation of such chemicals as well as training procedures for handling them. OSHA also permits states to assume and maintain regulatory responsibility for areas covered by a federal standard promulgated under the Act, but to do so, a state must submit to the Occupational Safety and Health Administration (Administration) a "state plan" with proposed state standards. If the state plan is approved by the agency, the state standards displace applicable federal standards; if not approved, the state plan is preempted by the federal statute.

California's plan was first approved in 1973 and has since been modified and approved by the Administration several times. In 1986, California voters approved Proposition 65, which required the state to publish and maintain a list of chemicals known to cause cancer, birth defects, or other reproductive harm, and also prohibited any person doing business in the state from intentionally exposing individuals to those chemicals without a clear and reasonable warning prior to exposure. To implement this piece of legislation, the California Office of Environmental Health Hazard Assessment (OEHHA) promulgated regulations that provided specific warning methods (OEHHA Regs).(81) These regulations went into effect in 1988 and 1989.

In 1990, labor and environmental groups concerned that the HCS promulgated under OSHA would preempt Proposition 65 successfully sought a writ of mandamus from the California Court of Appeals ordering the California Occupational Safety and Health (Cal-OSH) Standards Board to incorporate the provisions of Proposition 65 into the State Plan and to submit the amended plan to the Administration for approval. To comply with the court's order, the board issued regulations seeking to incorporate Proposition 65 and the OEHHA Regs into the state plan (Title 8 Regs),(82) which went into effect in 1991. The Administration recently approved the Proposition 65 modification to the state plan, subject to certain conditions. Therefore, California currently has two sets of regulations on its books dealing with Proposition 65 warnings: Title 8 Regs in the state plan and the OEHHA Regs.

In this action the plaintiffs, manufacturers and distributors of forklift trucks, alleged that enforcement of the warning provisions of Proposition 65 and the OEHHA Regs against industrial truck manufacturers was preempted under OSHA by the HCS, and sought declaratory and injunctive relief against the defendants, the Attorney General of California and the Director of OEHHA. The plaintiffs argued that the Title 8 Regs did not include all of the occupational provisions of the OEHHA Regs because Title 8 Regs expressly apply Proposition 65's warning requirements to "employers" of California workers, as compared to the OEHHA Regs, which apply to "any person in the course of doing business."(83) Plaintiffs argued that under the Title 8 Regs, the State Plan does not apply warning requirements to manufacturers or distributors of industrial trucks beyond imposing an obligation to warn their own employees, while the OEHHA Regs do apply to such entities. Therefore, plaintiffs argued that the broader language of the OEHHA Regs and Proposition 65 itself is preempted by the HCS standard under OSHA, because the Title 8 language submitted and approved by the Administration in the state plan did not incorporate the broader language. Plaintiffs moved for summary judgment against enforcement of the nonapproved provisions. Defendants moved to dismiss, arguing that Title 8 Regs did include all of the warning requirements of Proposition 65 and the OEHHA Regs through incorporation by reference in an appendix to the Title 8 Regs, and therefore there was no preemption argument. The district court granted the defendants' motion to dismiss, but did not address whether Proposition 65 and the OEHHA Regs had been fully incorporated into the state plan. In addition, the court held that even if the regulations were not included in the state plan, the OEHHA Regs would not be preempted by the federal HCS standard. The Ninth Circuit reversed on appeal, holding that OSHA and the HCS do preempt Proposition 65 and the OEHHA Regs.

The court relied on the Supreme Court holding in Gade v. National Solid Waste Management Ass'n(84) that OSHA expressly manifests Congress's intent to preempt state law. The Gade court quoted section 667(b) of OSHA in holding that unless a state plan is submitted to the Administration, OSHA preempts "all state occupational safety and health standards relating to any occupational safety or health issue with respect to which a Federal standard has been promulgated."(85) Therefore, even if state regulations do not conflict with the federal scheme, as long as they relate to the issue of the federal standard, they are still preempted by the standard. Accordingly, if a state submits some regulations on a worker safety issue to the Administration as part of its state plan and omits other regulations relating to the same issue, the omitted regulations, even if complementary to OSHA's scheme, will be preempted by the federal standard. Otherwise, state plan approval would be superfluous because states could pick and choose which occupational health and safety regulations to submit to the Administration.

The court then examined whether portions of Proposition 65 and the OEHHA Regs not included in the state plan related to the issue of the federal HCS. After justifying reasons for granting the Administration deference in interpreting the preemptive effects of its regulations, the court examined the agency's definition of issue as it pertained to the HCS. The Administration stated in implementing regulations of the HCS that the standard was intended to address comprehensively the "issue of evaluating the potential hazards of chemicals, and communicating information concerning hazards and appropriate protective measures to employees, and to preempt any legal requirements of a state ... pertaining to this subject."(86) Therefore, the Ninth Circuit concluded that Proposition 65 and the OEHHA Regs fell "squarely within the 'issue' of the [HCS]," because both were state laws that required "evaluating the potential hazards of chemicals and communicating information concerning hazards."(87) The defendant tried to counter this argument by stating that because the HCS did not impose a regulatory burden on plaintiffs, the standard could not preempt state regulations not applying to the plaintiff. However, the court disagreed, concluding that because the Administration defined the issue of the HCS on the basis of the type of regulation involved, rather than who bore the regulatory burden, the agency had completely occupied the field of hazard evaluation and communication.

The Ninth Circuit supported its conclusion that the state laws in question were preempted by the federal HCS by examining implementing regulations for section 18 of OSHA, which state that "no state ... may adopt or enforce ... any requirement relating to the issue addressed by this Federal standard, except pursuant to a Federally-approved state plan."(88) Therefore, federal standards such as the HCS preempted not only state standards directly covering the same issue, but also the broader category of state laws relating to the federal issue. Because the OEHHA Regs and HCS both directly governed occupational health and safety, they were related to the same issue. Therefore, the court held that as applied to manufactures and distributors of industrial trucks, California's Proposition 65 occupational warning requirements were preempted by OSHA and the HCS, except as contained within the California state plan.

3. Sierra Club v. United States EPA, 118 F. 3d 1324 (9th Cir. 1997).

The Ninth Circuit held that the Environmental Protection Agency (EPA) had no authority to promulgate a final rule which allowed importation of polychlorinated biphenyls (PCBs) into the United States for purposes of disposal, because the rule violated the Toxic Substances Control Act (TSCA).(89) The court also held that the Sierra Club was not required under Rule 15(c) of the Federal Rules of Appellate Procedure to serve notice under its petition for review on all of the commentators and witnesses of the informal rulemaking.

The court first examined the issue of notice under rule 15(c), which imposes upon a petitioner the obligation of serving "a copy [of the petition for review] on all parties who shall have been admitted to participate in the proceedings before the agency."(90) In this case, more than three hundred groups, individuals, and organizations provided comments and input to EPA during the administrative rulemaking process. However, the court held that in an informal rulemaking, while any interested group or person may submit written or oral comments to the agency, no one is "admitted to participate in the proceedings,"(91) and therefore no one becomes a party in a formal administrative adjudication through commenting. Concomitantly, the court granted the Sierra Club's motion to dispense with service of its petition on the individuals and groups who submitted their comments during the rulemaking.

The Ninth Circuit based its analysis of EPA's authority to promulgate the rule allowing importation of PCBs for disposal on the Chevron(92) test. Under the rule in question, titled the "Import for Disposal Rule," EPA stated "it is no longer necessary for persons who wish to import PCBs for disposal in accordance with this rule to apply for case-by-case exemptions under [TSCA] [sections] 6(e)(3)."(93) Instead, under EPA's rule importers must merely submit notice to EPA at least forty-five days prior to the date they intend to bring PCBs into the United States. If notice is provided in a timely and complete manner once per year, a party may "continue importing indefinitely without interruption."(94)

The court found that the statutory language of TSCA showed clear congressional intent regarding the regulation, treatment, and disposal of PCBs, and that this intent was contrary to EPA's rule. TSCA section 6(e)(3)(A)(i) categorically bans the manufacture of PCBs, stating that "no person may manufacture any polychlorinated biphenyl after two years from January 1, 1977." TSCA section 2(7) defines the term "manufacture" to include "import[ing PCBs] into the customs territory of the United States." Under section 6 of the statute, EPA only has the authority to promulgate regulations that prescribe methods of PCB disposal which are consistent with this ban.

There is only one exception to TSCA's broad ban on the manufacture and importation of PCBs. Section 6(e)(3)(B) allows the EPA administrator to grant an exemption if the following conditions are met: 1) she determines that "an unreasonable risk of injury to health or environment would not result", 2) the exemption does not last for more than one year, and 3) the party seeking the exemption makes a good faith effort to develop a substitute chemical. Therefore, the court held that EPA's rule allowing parties to "continue importing [PCBs] indefinitely without interruption"(95) was contrary to Congress's clear intent, as expressed in the unambiguous language of the statute. Not only was the one year limit of the exception clearly disregarded, but the rule also impermissibly obviated the requirements that the administrator find that "an unreasonable risk of injury to health or environment would not result" and that the applicant made a good faith effort to develop a substitute chemical. Therefore, despite EPA's argument that it would be better able to protect the public from PCB contamination if it were allowed to import foreign PCB contaminants into the country, the court overturned the rule based on the first prong of the Chevron test.(96)

E. Torts

1. In re the Exxon Valdez: Alaska Native Class v. Exxon Corp., 104 F. 3d 1196 (9th Cir. 1997), infra Part III.

F. Clean Water Act

1. Ashoff v. City of Ukiah, 130 F. 3d 409 (9th Cir. 1997), supra Part I.B.

II. NATURAL RESOURCES

A. Endangered Species Act

1. American Rivers v. National Marine Fisheries Service, 126 F. 3d 1118 (9th Cir. 1997).

Various environmental and fishing groups alleged that federal agencies, namely the National Marine Fisheries Service (NMFS), the United States Army Corps of Engineers (Corps of Engineers), and the Bureau of Reclamation, violated the Endangered Species Act (ESA)(97) by issuing a Biological Opinion in which the agencies claimed that barging endangered Snake River smolts would mitigate the adverse impacts of the hydroelectric operations. In this case, the Ninth Circuit dealt primarily with the procedural issues of mootness and notice, and did not reach the substantive merits of the claims.

In August 1994, numerous environmental and fishing groups filed suit against the Corps of Engineers, the Bureau of Reclamation, and NMFS alleging that the 1994-1998 Biological Opinion violated section 7(a)(2) of the ESA.(98) Particularly, the groups alleged that the federal agencies violated the Act by issuing a Biological Opinion in which the agencies claimed that barging endangered Snake River smolts would mitigate the adverse impacts of the hydroelectric operations. The proceedings were stayed in order for the defendants to reinstate consultation on the biological opinion and to bring the biological opinion into compliance with another court order.(99)

While the proceedings were stayed, NMFS issued a new biological opinion which superseded the 1994-1998 Biological Opinion. The 1995 Biological Opinion concluded that the hydroelectric system would jeopardize the continued existence of endangered salmon and their habitat, but that barge transportation was a reasonable and prudent alternative as a major means to mitigate the adverse impacts of the hydroelectric system. After issuing the biological opinion, the federal agencies moved for summary judgment on the ground that the plaintiffs' claims were moot.

The Oregon District Court held that the claims were not moot and granted defendants' motion for summary judgment, but the Ninth Circuit reversed. The Ninth Circuit based its reversal on its 1995 case, Idaho Department of Fish & Game v. National Marine Fisheries Service (IDFG).(100) In IDFG, the court held that the issuance of the 1995 Biological Opinion mooted a challenge to the 1993 Biological Opinion. Furthermore, the case did not fit within the "capable of repetition, yet evading review" exception to the mootness doctrine because the 1995 Biological Opinion could still be challenged, and therefore would not evade review. There was still time to litigate the agency decisions made pursuant to that opinion.

In the present case, the new biological opinion superseded the 19941998 Biological Opinion, making any challenges to the latter moot. In addition, the plaintiffs' challenge to that opinion would not evade review because the biological opinion was valid for a period of three years. Therefore, the Ninth Circuit dismissed the challenge to the 1994-1998 Biological Opinion as moot.

The second issue the court addressed was the ESA's sixty-day notice provision. The ESA requires citizens to give the Secretary of the Interior and any alleged violators written notice of intent to sue sixty days prior to filing suit.(101) Plaintiffs failed to provide such notice to the Corps of Engineers and the Bureau of Reclamation. As a result, the Ninth Circuit was forced to dismiss the claims against those defendants.

The plaintiffs also failed to give notice to NMFS, an agency acting on authority derived from the Secretary of the Interior. However, in Bennett v. Spear,(102) the United States Supreme Court held that challenges to the adequacy of biological opinions against the Secretary of the Interior, when acting in his capacity as administrator of the ESA, are to be pled under the Administrative Procedure Act (APA), rather than under the ESA citizen suit provision. The APA does not have a sixty-day notice requirement, and merely requires a final agency action. Here, the biological opinion was a jeopardy opinion which permitted the agency to "take" the endangered species under certain conditions. The Ninth Circuit held the opinion to be a final agency action. Accordingly, the Ninth Circuit held that claims against NMFS were properly pled.

2. Marbled Murrelet v. Babbitt, 111 F. 3d 1447 (9th Cir. 1997), supra Part I.

3. Natural Resources Defense Council v. United States Department of the Interior, 113 F. 3d 1121 (9th Cir. 1997).

The Ninth Circuit held that the U.S. Fish and Wildlife Service (FWS) must designate critical habitat for the coastal California gnatcatcher under the Endangered Species Act of 1973 (ESA).(103) The FWS argued that listing of critical habitat would be imprudent because the identification of the habitat would increase the risk of deliberate habitat destruction. Also, because the majority of the habitat was not on federal land, the FWS argued that listing critical habitat would not be beneficial to the species. The court rejected these arguments, holding that when considering the risk of habitat destruction, the FWS must balance the risks of destruction with the benefits of designation. In making this determination, the FWS must consider whether the designation is beneficial to the species overall, not just beneficial to the majority of its population.

In 1993, the FWS listed the gnatcatcher as a threatened species under the ESA. Section 4 of the ESA requires that when the FWS lists a threatened species, it must also designate critical habitat "to the maximum extent prudent and determinable."(104) A coalition of environmental groups challenged the failure to designate critical habitat and appealed the district court decision denying the challenge.

The Fish and Wildlife regulations state that critical habitat designation would not be "prudent" under section 4 of the ESA when either of the following conditions applies: 1) the identification of critical habitat can be expected to increase risk to the species, or 2) designation of critical habitat would not be beneficial to the species.(105) The FWS argued that designation of critical habitat would not be prudent because public identification would increase the risk of deliberate destruction of gnatcatcher habitat, and designation would not appreciably benefit the gnatcatcher because most of its habitat is on private land.

Although completion of a California tollroad mooted many of the claims in the original suit brought by the plaintiffs, the court found the issue of critical habitat designation for the gnatcatcher to be ripe for review. Under section 7 of the ESA, federal agencies must consult with the Secretary of Interior to ensure their actions do not harm critical habitat.(106) Because the lack of critical habitat designation eliminates the section 7 consultation requirement, the court found that the issue was sufficiently concrete to consider ripeness.

To show that designation would actually increase the risk of habitat harm, the FWS pointed to eleven cases in which landowners or developers destroyed gnatcatcher sites after designation. Two of these incidents occurred after the FWS notified local authorities that gnatcatchers were present. Unconvinced, the court held that the FWS must balance the pros and cons of designation, and that the agency failed to show that designation would cause more destruction than protection of gnatcatcher sites.

The court also struck down the argument that critical habitat designation would not benefit the gnatcatcher because most of its habitat is on private land. The court pointed out that the regulation provides the Service the option of declining to designate critical habitat if it would not appreciably benefit the species, but that the FWS had incorrectly interpreted the statute as "benefits most of the species."(107) Designation of critical habitat would be beneficial to gnatcatchers with habitat on federal land and private land affected by federal projects. In addition, the court held that the FWS's argument was inconsistent with the congressional intent that the imprudence exception be narrow.

The FWS also argued that the California Natural Communities Conservation Program (NCCP) for protection of the gnatcatcher was a superior means of protection. The court chose not to consider this argument because the FWS did not identify this program in the final listing decision as a reason for not designating critical habitat. However, the court suggested that it would still reject the argument if it considered it. The court found the NCCP to be an inadequate substitute for critical habitat designation because designation triggers the ESA section 7 consultation requirement for federal agencies.

B. Fish and Wildlife

1. Alaska Wildlife Alliance v. Jensen, 108 F. 3d 1065 (9th Cir. 1997).

Two environmental groups, the Alaska Wildlife Alliance and American Wildlands, sued the Secretary of the Interior and the National Park Service (Park Service) to halt commercial fishing in Alaska's Glacier Bay National Park. The groups challenged the Park Service's conclusion that commercial fishing is prohibited by statute in the wilderness areas of the park, but not in the nonwilderness areas. An association of commercial fishers intervened and challenged both the plaintiffs' standing and the Park Service's position that commercial fishing is prohibited in wilderness areas of the park. The Ninth Circuit affirmed the district court, holding that the plaintiffs had standing and that the Park Service was correct in its policy that commercial fishing was banned only in the wilderness areas of the park.

The court first discussed the plaintiffs' standing to bring this suit, using a three-part test for analyzing standing. An organization may bring an action on behalf of its members if the following requirements are established: 1) the individual members would have standing to sue, 2) the organization's purpose relates to the interests being vindicated, and 3) the claims asserted do not require the participation of individual members.(108) The intervenors in the suit, the Allied Fishermen of Southeast Alaska (Fishermen) challenged only the first requirement of standing for the environmental plaintiffs. Individual members have standing to sue if they can show the following: 1) an actual or threatened injury that 2) is fairly traceable to the challenged action such that 3) it is likely to be redressed by a favorable decision.(109)

The court found that the plaintiffs were injured because their members had diminished enjoyment of the park due to the noise and trash of the fishing vessels, as well as witnessing sea lions injured by trolling lures. The same facts offered sufficient proof that the injuries were traceable to commercial fishing. The court also indicated that elimination of commercial fishing would redress the plaintiffs' injuries. Finding that all elements of the test were satisfied, the court held that the plaintiffs had standing.

The court also held that commercial fishing is prohibited in the wilderness areas of the park. The Alaska National Interest Lands Conservation Act (ANILCA),(110) which governs Alaska's national parks, prohibits commercial enterprises in wilderness areas with a few limited exceptions. The Fishermen argued that two exemptions should allow commercial fishing. First, the Wilderness Act(111) allows motorized vessels in wilderness areas where the use is established. The court found this provision limited only to the use of motorized vessels and inapplicable to the issue of commercial fishing. Second, the Fishermen pointed to a provision in ANILCA mandating the continuation of existing uses of temporary facilities on public lands where the taking of fish and wildlife is permitted.(112) The court deferred to the Park Service's interpretation that this provision does not mean all existing uses of park resources must be allowed to continue.

The court then turned to the plaintiffs' challenge to commercial fishing in nonwilderness areas of the park. The majority found nothing in the statutes, legislative history, regulations, or case law expressly prohibiting commercial fishing in the nonwilderness areas of the park.

The Organic Act,(113) which governs all national parks, prevents the Secretary of the Interior from acting contrary to the Act's purpose of conservation. The plaintiffs argued that allowing commercial fishing violates this statutory directive. The court found no evidence that commercial fishing is at odds with the long-term goal of conservation. It reasoned that the Wilderness Act, for example, has clear language prohibiting commercial activity, and if Congress intended to extend this ban to national parks, it would have done so when amending the Organic Act in 1970 and in 1978.

The court struck down several of the plaintiffs' arguments made under ANILCA. Because it found that the Organic Act does not prohibit commercial fishing, the court concluded the provision requiring ANILCA to be administered in accordance with the Organic Act added nothing to the argument.

Next, the court held that the provision of ANILCA that prevents restrictions on commercial fishing in certain parts of the park does not constitute an exception to an overall ban. The court interpreted this provision to imply that the Park Service may prohibit fishing elsewhere, but is not required to do so. The plaintiffs argued that such an interpretation made a section of ANILCA superfluous. Section 3202(c) of ANILCA bans the taking of fish and wildlife except that "fishing shall be permitted by the Secretary in accordance with the provisions of [ANILCA] and other applicable state and federal law."(114) If the Act does not generally prohibit commercial fishing, the plaintiffs argued, then it is unnecessary for the Secretary to be able to allow it in certain situations. The court disagreed, finding the following two purposes in the section 3202(c) exception: 1) to exclude hunting from national parks, and 2) to allow for subsistence fishing otherwise prohibited in ANILCA.

The majority found congressional intent to allow commercial fishing in national parks. Beginning in 1936, agencies were allowed to publish regulations under the Federal Register Act,(115) making statutory prohibitions unnecessary. Because Congress has never expressly prohibited commercial fishing in national parks, the majority found that it intended for the Secretary to regulate commercial fishing. The plaintiffs pointed to a 1978 amendment to the Organic Act as evidence that Congress wanted the Park Service to prohibit commercial fishing. The amendment prohibited the Secretary from authorizing activities "in derogation of the values and purposes" for which the parks were created.(116) However, the court determined that the amendment was established during the expansion of the Redwood National Park and therefore was not aimed at fishing.

The court found nothing in the regulations indicating that the Park Service changed its position for the sake of this dispute. The plaintiffs pointed to a 1983 regulation prohibiting commercial fishing except "where specifically authorized by [federal] statutory law."(117) The court interpreted this to be a regulatory ban on commercial fishing except where a statute deprives the agency of the power to prohibit commercial fishing.

The court also found no regulation declaring that commercial fishing derogates park values and purposes. The plaintiffs argued that a proposed, but never adopted, regulation that would have phased out commercial fishing as a nonconforming use(118) indicated the Park Service found commercial fishing to be a derogation of park values. The court pointed to the proposal language, which acknowledged that the Park Service would have to find commercial fishing to be a derogation of park values in order to phase it out. Because the proposal did not make a finding on that particular issue, the court concluded that the Park Service was not committed to that stance.

Finally, the court considered whether there was any case law prohibiting commercial fishing in national parks. The court found only cases that upheld the Secretary's authority to prohibit commercial fishing, but none that required the Secretary to prohibit it.

In a concurring opinion, Circuit Judge Schroeder agreed that no federal statutes prohibit an immediate ban on commercial fishing in the park, but disagreed that congressional intent endorsed agency discretion to permit commercial fishing in the park. The concurrence pointed to the committee report creating Glacier Bay National Park which contained a statement of intent to create a nonconsumptive sanctuary for fish and wildlife.(119)

2. American Rivers v. National Marine Fisheries Service, 126 F. 3d 1118 (9th Cir. 1997), supra Part II.A.

3. Marbled Murrelet v. Babbitt, 111 F. 3d 1447 (9th Cir. 1997), supra Part I.C.

4. Northwest Environmental Defense Center v. Bonneville Power Administration, 117 F. 3d 1520 (9th Cir. 1997).

The Northwest Environmental Defense Center (NEDC) petitioned for review of agreements reached by Department of Energy (DOE), through Bonneville Power Administration (BPA), with Canada and several electric utilities governing rights to water stored behind hydroelectric dams on the Columbia River System in Canada. NEDC alleged that BPA ignored its duty under the Northwest Power Act (NPA)(120) to provide equitable treatment for fish and wildlife in the river, and that the agency also violated the National Environmental Policy Act (NEPA)(121) by failing to prepare an Environmental Impact Statement (EIS). The Ninth Circuit denied the petition.

The court first addressed NEDC's argument that once BPA gained control over 2.25 million acre-feet of water stored behind dams in Canada, it was required under the equitable treatment provision of the NPA to dedicate a portion of this water to benefit fish and wildlife. The court determined that NEDC had standing to raise claims under the NPA. Because fish were guaranteed a share of the water, denial of this benefit would injure fish and constitute an injury in fact to the plaintiffs. The equitable treatment mandate stems from the fact that one goal of the NPA is to "protect, mitigate, and enhance the fish and wildlife, including related spawning grounds and habitat, on the Columbia River and its tributaries."(122) In furtherance of these goals, the Act charges the Administrator of BPA with the duty to exercise his responsibilities in a manner providing the same "equitable treatment" for fish and wildlife as she provides for other purposes of the hydroelectric facilities.

The court concluded that BPA was not required to dedicate a portion of the water for fish at the time it entered into the agreements. Because the vast majority of the water over which BPA acquired control was unallocated, it was premature to determine whether the agency had satisfied its equitable treatment obligation. Once BPA allocates water covered under the agreements, however, the agency is required to demonstrate that it has treated fish and wildlife equitably.

The court emphasized that equitable treatment has both procedural and substantive components. Procedurally, BPA is required to take the Fish and Wildlife Program of the Pacific Northwest Electric Power and Conservation Planning Council (Council)(123) into account to the "fullest extent possible."(124) However, if the Council's program fails to ensure adequate fish survival, BPA has a substantive duty to take additional measures beyond those recommended by the Council. The court deferred to BPA's view that it must balance power needs with those of wildlife on a system-wide basis, but stated that the determination of equitable treatment is "highly fact-specific."(125) Faced with the difficulty posed by the combination of these two requirements, the court encouraged BPA to develop a "mechanism" for fulfilling its obligation to facilitate meaningful review of decisions.

The Ninth Circuit reviewed BPA's decision not to prepare an EIS under an "arbitrary and capricious" standard. NEDC argued that BPA should have prepared an EIS because the decision to enter into the storage agreements was extremely controversial. BPA claimed to have addressed this concern by entering into a separate agreement, supported by some but not all commentators, promising that the storage agreement would not be operated in a manner harmful to fish and wildlife. Despite the fact that not all of the concerned commentators signed on to the fish and wildlife agreement, and the agreement was not addressed in the Environmental Assessment (EA), thereby denying the public an opportunity to review it, the court held that BPA's conclusion that the Fish and Wildlife agreement alleviated most of the concerns regarding the storage agreement was not arbitrary and capricious. In his dissent, Judge Reinhardt pointed out the apparent contradiction of this conclusion. He argued that if the Fish and Wildlife agreement required neither expert analysis nor public discussion because the document's "sole purpose was to placate the public ... and ... not ... to alleviate environmental injuries ... it is difficult to conclude that the Agreement quelled public controversy over the [water storage agreements]--unless one also concludes that the public was totally manipulated and deceived."(126)

NEDC also claimed that an EIS was required because of the following: 1) the failure of the EA to provide for an adequate analysis of cumulative impacts resulting from entering into the storage agreements, 2) BPA's 1988 decision to increase the Intertie capacity, and 3) the proposed expansion of the Bureau of Reclamation's Columbia Basin Project. However, the court held that BPA would consider such cumulative impacts in a future study known as the Columbia River Hydroelectric Operations System Operation Review, and that the proposed expansion of the Columbia Basin Project would not escape NEPA review, therefore "BPA made a reasoned evaluation of the relevant factors."(127) In his dissent, Judge Reinhardt questioned the majority's conclusion that future compliance with NEPA could relieve BPA of its obligation to consider such cumulative impacts at the time it entered into the agreements.

In conclusion, the Ninth Circuit held that BPA did not violate the NPA or NEPA when it entered into the storage agreements. Consequently the court refused to either enjoin the agency from operating the hydrosystem under the agreements or require BPA to prepare an EIS.

5. United States v. Bramble, 103 F. 3d 1475 (9th Cir. 1996), amended (Feb. 14, 1997), infra Part V.

6. United States v. Hugs, 109 F. 3d 1375 (9th Cir. 1997), infra Part V.

C. Forests

1. Forest Guardians v. Dombeck, 131 F. 3d 1309 (9th Cir. 1997).

Environmental interest groups sued Dombeck, Chief of the U.S. Forest Service, seeking a declaratory judgment and injunctive relief for alleged violations by the Forest Service (FS) of the National Forest Management Act of 1976 (NFMA).(128) The plaintiffs argued that the FS violated NFMA by implementing amendments to land and resource management plans (LRMPs) that would apply prospectively only, and therefore would not apply to projects already authorized but still being implemented. The district court granted the FS's motion for summary judgment, plaintiffs timely appealed, and the Ninth Circuit affirmed the district court's ruling.

NFMA, which guides the management of National Forest lands, directs the Secretary of Agriculture (Secretary) to develop LRMPs for units of the National Forest System in order to coordinate the multiple uses and harvest of various forest resources.(129) In 1996, the FS amended the LRMPs for the Southwestern Region forests, providing new standards and guidelines for managing the Mexican spotted owl, northern goshawk, old growth, and grazing activities on national forest lands. Included in the new LRMPs were added restrictions on logging of old-growth forests and livestock grazing. In the Record of Decision for Amendment of Forest Plans (ROD) in the Southwestern forests, the FS specified that the 1996 Plan Amendments would apply only to "'[n]ew permits, new contracts, and other new instruments for the use and occupancy of' national forest lands" in the region.(130) The Forest Guardians later filed a complaint for declaratory and injunctive relief against the FS in the Arizona District Court, alleging that the FS violated NFMA because the ROD stated that decisions made prior to the 1996 Plan Amendments, many of which were still being implemented, were not required to conform to the new standards and guidelines. Plaintiffs sought to enjoin implementation of all forest management activities not consistent with the new amendments, and to enjoin all future authorizations for the use and occupancy of national forest lands not consistent with the new plan. The district court held that the FS's implementation of the 1996 Plan Amendments did not violate NFMA, and granted summary judgment for the FS. On appeal, the Forest Guardians again argued that the FS's decision to implement the 1996 Forest Plan Amendments prospectively but not retroactively violated NFMA. The Ninth Circuit disagreed, and affirmed the district court's grant of summary judgment in favor of the FS.

The Ninth Circuit focused on the Chevron analysis(131) of an agency's interpretation of statutory provisions. The court concluded that Congress had clearly spoken on the issue in question, and therefore the court "must give force to its expressed intent"(132) that the Secretary have discretion in amending existing forest plans and deciding how to implement amendments. In reaching that holding, the court examined section 1604(f)(4) of NFMA, which states that LRMPs developed in accordance with the act "shall be amended in any manner whatsoever after final adoption after public notice...."(133) In the court's view, this broad grant of authority included the ability to implement the 1996 Plan Amendments prospectively only. The Ninth Circuit buttressed its finding with the legal principle that "absent explicit legislative intent to the contrary, `congressional enactments and administrative rules will not be construed to have retroactive effects unless their language requires this result.'"(134) Because the language of section 1604(i) did not explicitly mandate the retroactive application of all amendments, and in fact expressly precludes retroactive applications of amendments where they would impair existing rights,(135) which the court held would be the case here, applying the amendment retroactively would be inappropriate. Therefore, the court held that prior existing agreements were "grandfathered" into the new forest plans, leaving the new standards applicable only to future agreements, and making the old standards applicable to prior agreements. Accordingly, the Ninth Circuit held that the FS's restriction of the 1996 Amendments to new authorization, contracts, and permits was permissible and affirmed the lower court's grant of summary judgment in favor of the FS.

2. Marbled Murrelet v. Babbitt, 111 F. 3d 1447 (9th Cir. 1997), supra Part I.C.

3. Oregon Natural Resources Council v. Lowe, 109 F. 3d 521 (9th Cir. 1997), supra Part I.C.

4. United States v. Gardner, 107 F. 3d 1314 (9th Cir. 1997), infra Part V.

D. Hydroelectric Power

1. American Rivers v. National Marine Fisheries Service, 126 F. 3d 1118 (9th Cir. 1997), supra Part II.A.

2. Association of Public Agency Customers v. Bonneville Power Administration, 126 F. 3d 1158 (9th Cir. 199