Decided: July 1, 2015

The Fourth Circuit held that the District Court for the District of Maryland incorrectly granted Defendants’ Motions for Dismissal on claims the Plaintiffs brought under the Resource Conservation and Recovery Act (RCRA).  The Fourth Circuit thus vacated the dismissals, and remanded the case.

In 2012, the Mayor of Baltimore, City Council of Baltimore, and City of Baltimore Development Corporation (hereinafter collectively “City”) made an agreement with CBAC Gaming and its subsidiary CBAC Borrower LLC (hereinafter collectively “CBAC”) to develop an 8.5 acre site in Baltimore as a casino.  The site had previously been used for a variety of industrial purposes.  One of the former landowners, Maryland Chemical Co., Inc. (“Maryland Chemical”), had “conducted ‘chemical manufacturing and/or bulk chemical storage, repackaging and distribution’” for around 50 years when it owned part of the land.

Plaintiffs, residents of Maryland, brought suit against City, CBAC, and Maryland Chemical.  Based on environmental assessments from the 1990s and early 2000s, Plaintiffs alleged that the casino site was contaminated with hazardous waste, which was moving downhill to an adjacent City-owned riverfront recreation site, and into the river.  Plaintiffs further alleged that Defendants’ actions on the casino site violated RCRA.  Defendants moved to dismiss the claims against them, and the district court granted all dismissals.  Plaintiffs appealed.

RCRA, 42 U.S.C. 6901 et.seq., is a comprehensive environmental statute which covers how to store, treat, and dispose of solid and hazardous waste.  Part of the RCRA, 42 U.S.C. 6972(a)(1)(A)-(B), authorizes suit by private citizens for violations.  Citizens can sue for:  1) an ongoing violation of a permit required under the RCRA, or under a parallel state standard authorized under RCRA, or 2) a past or present violation which poses a substantial, imminent danger to health or the environment.  

Plaintiffs sued CBAC under both prongs of 42 U.S.C. 6972(a)(1)(A)-(B), claiming that remedial activities it promised to undertake in during construction did not meet RCRA, and that construction would contribute to contamination, and the migration of contaminants.  CBAC moved for dismissal under Fed. R. Civ. P 12(b)(1) for lack of subject matter jurisdiction, arguing that an anti-duplication provision of RCRA meant that the permits it obtained under a different environmental protection system protected it from RCRA liability.  CBAC also moved for dismissal under Fed. R. Civ. P 12(b)(6) for failure to state a claim.  Although the district court did not clearly state the rule under which it dismissed the claims against CBAC, it found that a RCRA claim could not proceed against CBAC because the requirements under the alternative permitting system would be inconsistent with the requirements under the RCRA.  The Fourth Circuit found the district court’s reasoning incorrect under either Fed. R. Civ. P. 12(b)(1), or 12(b)(6).  Under 12(b)(1), the Fourth Circuit held that the plain language of the RCRA non-duplication statute was not jurisdictional.  Under 12(b)(6), the court found that the district court did not properly analyze whether the requirements of the two permitting systems were actually inconsistent, and in any case, the complicated facts and issues at stake made the case particularly ill-suited to dismissal for failure to state a claim.  The Fourth Circuit thus held that the district court improperly dismissed the claims against CBAC under either 12(b)(1) or 12(b)(6).  

Plaintiffs also brought claims under both prongs against the City, and the district court dismissed for failure to state a claim.  The Fourth Circuit held that Plaintiffs had shown a sufficient case under each prong to survive a motion to dismiss.  Under the ongoing permitting prong, the Fourth Circuit found that Plaintiffs had alleged the City owned some of the property where violations were occurring, and there were ongoing specific violations of the type RCRA covers.  Under the past or present violations threatening harm to health or the environment prong, the Fourth Circuit found that Plaintiffs had alleged actions by the city that fit within the RCRA, and that even if the City was trying to remediate past damage, it could violate RCRA during remediation.  

Plaintiffs brought a claim against Maryland Chemical under the past or present violations harming health or the environment prong.  The district court dismissed for failure to state a claim, since it found that the Plaintiff’s allegations did not include enough active human participation by Maryland Chemical to meet the requirements of a RCRA claim.  Relying on the plain language of the statute, the Fourth Circuit found that the Plaintiffs’ allegations contained enough evidence of active participation by Maryland Chemical in activities that would violate RCRA to survive a motion to dismiss.  

For the above reasons, the Fourth Circuit vacated the district court’s dismissal of all claims, and remanded to the district court.

Full Opinion

Katherine H. Flynn

Decided: July 11, 2014

The Fourth Circuit affirmed the district court, and held that the “permit shield” defense for discharges of selenium was unavailable to a corporation that failed to disclose the presence of the pollutant during the permit application process.

A & G Coal Corporation (“A&G”) owned and operated the Kelly Branch Surface Mine (“Kelly Branch”) in Virginia. In 2010, A&G applied for a National Pollutant Discharge Elimination System permit from the Virginia Department of Mines, Minerals, and Energy. In its application, A&G provided information regarding the discharges from more than two-dozen existing and proposed discharge points, including two artificial ponds. However, the application failed to indicate whether or not A&G would be discharging selenium, an element that can be harmful in high doses, and is categorized as a toxic pollutant under the Clean Water Act (“CWA”). The permit does not restrict or authorize the discharge of selenium from the plant.

Appellee environmental groups (“SAMS”) tested water in the two ponds and found that they contained selenium. SAMS brought this action against A&G seeking declaratory and injunctive relief, as well as civil penalties, claiming A&G violated the CWA by discharging selenium without authorization. A&G contended that it properly complied with its legal obligations by disclosing those pollutants it knew, or had reason to know, were present at the site, which selenium was not among. Thus, A&G claimed it was protected by the “permit shield” provision of the CWA. The district court rejected this defense, and held that the defense was unavailable to A&G because of its failure to disclose selenium in its permit application.

The permit scheme requires individuals wishing to discharge one or more pollutants to apply for an individual permit from the appropriate state authority. Federal regulations require permit applications to include substantial detail about the nature and composition of expected discharges. For discharge points that discharge “process wastewater,” like some of the discharge points at Kelly Branch, applicants must report data on a large number of pollutants, including selenium. If the discharge is not “process wastewater,” applicants must still “indicate whether it knows or has reason to believe that any of the pollutants in table II or table III of appendix D to this part [including selenium] . . . for which quantitative data are not otherwise required . . . [is] discharged from each outfall.” 40 C.F.R. § 122.21(g)(7)(vi)(B). Additionally, the Environmental Protection Agency (“EPA”) requires that applicants mark whether each listed element, one of which is selenium, is “believed present” or “believed absent.” Thus, the disclosure process requires applicants to acknowledge either the presence or absence of a pollutant, like selenium. Virginia has adopted these same requirements under its state statutory permit scheme.

The CWA contains a “permit shield” provision, which provides that “[c]ompliance with a permit issued pursuant to this section shall be deemed compliance” with other sections of the CWA that detail effluent limitations and their enforcement. 33 U.S.C. § 1342(k). “By rendering permits final, the shield allows permit holders to conduct their operations without concern that an unexpected discharge might lead to substantial liability.” However, to be protected by the “permit shield,” applicants must fully comply with federal and state reporting requirements. The Fourth Circuit has adopted a two-part test to determine whether the “permit shield” defense protects a permit holder from liability:

We therefore view the NPDES permit as shielding its holder from liability under the Clean Water Act as long as (1) the permit holder complies with the express terms of the permit and with the Clean Water Act’s disclosure requirements and (2) the permit holder does not make a discharge of pollutants that was not within the reasonable contemplation of the permitting authority at the time the permit was issued.

Piney Run Pres. Ass’n v. Cnty. Comm’rs, 268 F.3d 255, 259 (4th Cir. 2001).

Under the first prong, A&G argued that it had no obligation to disclose selenium unless it knew or had reason to know it would be present, which it did not. The Court rejected this argument, noting that the discharges in A&G’s application met the regulatory definition of “process wastewater.” Thus, A&G was required to test for selenium, and other pollutants, and submit this information with its application, which it failed to do. Even if the discharge was not “process wastewater,” the Court noted that A&G still failed to comply with reporting requirements. The application required data about selenium, which A&G did not submit. Furthermore, at a minimum, A&G was required to acknowledge whether selenium was “believed to be present,” or “believed to be absent,” which it also did not do. Thus, the Court held that A&G failed to comply with its disclosure obligation as required by the first prong of the Piney test. Because A&G failed to meet the first prong of the test, the Court declined to address A&G’s claim that it was able to satisfy the second prong of the Piney test.

In sum, the Court found that “A&G was required by its DMME permit application instructions to test for the presence of selenium and by federal and state regulations to, at minimum, report whether it believed selenium to be present or absent.” A&G failed to fulfill these disclosure obligations, and therefore, could not assert a “permit shield” defense.

Full Opinion

Jennifer Jokerst

Decided: April 3, 2014

The Fourth Circuit affirmed the district court’s decision by holding the following: (1) that the Loudoun County Board of Supervisors (Board) improperly denied T-Mobile Northeast’s, LLC, (T-Mobile) permit to build a telecommunications tower at the “Silo Site” because the Board based the decision on environmental effects in violation of the Telecommunications Act of 1996 (the Act); and (2) that the Board’s decision to deny T-Mobile’s permit to build a tower at the “Bell Tower” site was based on substantial evidence, and did not violate the Act.

T-Mobile applied to the Board seeking special exception permits required for the construction of two telecommunications facility sites in Loudoun County, Virginia.  T-Mobile’s proposed sites included the “Silo Site”— a 90-foot antenna disguised as a silo on a privately owned farm—and the “Bell Tower Site”— an 80-foot bell tower on church property to house an antenna.  The Act limits state and local governments’ ability to freely regulate wireless facilities.  For example, the Act expressly prohibits regulation decisions based on the environmental effects of radio frequency emissions.

The Board denied the special exception permit for the Silo Site for the following reasons: (1) the proposed design created “an unnecessary visual impact on surrounding properties”; (2) the height of the silo did not “blend with the . . . surrounding area”; (3) a denial of the application would not prohibit “the provision of personal wireless services in this area”; and (4) the facility would have a “negative environmental impact.”  On appeal, the district court held that the Board improperly denied T-Mobile’s permit for the Silo Site by relying on the potential environmental effects of the tower.  The court entered an injunction requiring that the Board issue T-Mobile the necessary permits to build the Silo Tower.

The Board denied the special exception permit for the Bell Tower site for the following reasons: (1) it was not a preferred location; (2) it was not on an existing structure; and (3) it did not mitigate the impact on adjacent residential uses.  On appeal, the district court affirmed the Board’s decision, stating that substantial evidence existed in support of the Board’s rejection.

In affirming the district court’s decision on the Silo Site, the Fourth Circuit reasoned that despite the three valid reasons the Board provided for rejecting T-Mobile’s permit, the fourth reason, environmental concerns, still violated the Act.  The Court also affirmed the district court’s decision not to remand the case to the Board for a decision based on permissible reasons.  The Court reasoned that allowing the Board to simply remove the impermissible basis for denying the application would circumvent Congress’s express prohibition on using environmental concerns as the basis for a decision; even if not reflected in the written statement, the environmental concerns would remain a reason for the Board’s denial.

With respect to the Bell Tower Site, the Court reasoned that those residents’ concerns about aesthetics, effects on property value, and noise pollution constituted substantial evidence in support of the Board’s decision to deny the permit.  Because T-Mobile failed to provide sufficient evidence that no reasonable alternative sites existed, the Court rejected the claim that the denial of the permit prevented T-Mobile from providing wireless service, in violation of the Act.  The Court also rejected T-Mobile’s claim that the Board’s decision was based on concern of the environmental effects of radio wave emissions.  While citizens voiced their concerns about the tower’s effect on their health, the Act does not prevent such expression, and there was no evidence that the potential health and environmental effects formed any basis for the Board’s decision.  Therefore the Fourth Circuit affirmed the district court’s decision with respect to both of T-Mobile’s permits, and allowed T-Mobile to build at the Silo Site, but not the Bell Tower Site.

Full Opinion

– Amanda K. Reasoner

Decided: May 15, 2013

The Fourth Circuit affirmed the United States District Court for the Southern District of West Virginia.

Four Environmental groups (collectively, the “Environmentalists”) commenced this action, against the U.S. Army Corps of Engineers (the “Corps”), in connection with a proposed surface coal mine adjacent to a stream known as Reylas Fork. The action stemmed from the Corps issuance of a fill permit under CWA § 404, authorizing the mining company to place rock overburden into the adjacent valley of Reylas Fork as part of the mining process. Finding that the fill would not have a substantial cumulative impact on the water quality in the relevant watershed, the Corps issued the permit without issuing an accompanying environmental impact statement (“EIS”). Under the EPA guidelines, the Corps could only issue a § 404 permit after concluding that the mining activity would not cause or contribute to violations of the State’s water-quality standards. The National Environmental Policy Act (“NEPA”) generally requires federal agencies to prepare an EIS for major federal actions that significantly affect the quality of the human environment. However, in this instance, the Corps found that the proposed mine would have no significant impact. Thus, the Corps did not issue an EIS with its conclusion. Before the district court, the Environmentalists proposed two arguments. First contending that the Corps “materially misapprehended” the baseline conditions in the relevant watershed, thus corrupting its analysis of the cumulative impact that the mine would have on the streams in the watershed. Second, the Environmentalists alleged that the Corps acted arbitrarily and capriciously in determining that the valley fill would not have a significant cumulative impact on the water quality in the relevant watershed. Ruling on a motion for summary judgment, the district court found in favor of the Corps on both claims.  This appeal followed.

The Fourth Circuit first addressed the Environmentalists claim that the Corps “materially misapprehended” the baseline conditions of the relevant watershed in its analysis. Affirming the district court’s decision, the court found that the Corps considered the relevant data about baseline conditions and properly assessed them as evidenced by the fact that the Corps (1) analyzed the conditions at the fill site itself; and (2) recognized and analyzed the impaired conditions of the streams in the relevant watershed. According to the court, the Corps conclusion was a contextual judgment made after considering relevant data from both the impact site and the entire watershed. Next, the court addressed the Environmentalists contention that the Corps acted arbitrarily and capriciously in concluding that the cumulative effect of the proposed mine would be insignificant and the Corps failed to take a “hard look” at potential environmental consequences because the decision document was “not supported by any reasoned analysis of, or expert opinion about, the science on conductivity and stream impairment.” Once again affirming the district court, the Fourth Circuit found that the Corps grappled with the issue extensively, rationally finding that (1) the connection between conductivity and stream impairment was not strong enough to preclude a permit and (2) the compromise measures agreed to by the EPA and the mining company would successfully mitigate the potential for adverse effects. In so holding, the court noted that the Corps judgment in this case was based on facts and recommendations, adduced during a lengthy consultation between the Corps, the mining company, the EPA, and the West Virginia Department of Environmental Protection. Thus, the Corps decision-making process satisfied the NEPA’s “hard look” procedural requirement.

Full Opinion

-W. Ryan Nichols

Decided on: February 21, 2013

The Fourth Circuit addressed whether a “biological opinion” (“BiOp”) issued by the National Marine Fisheries Service (“the Service”) to the Environmental Protection Agency (“EPA”) is arbitrary and capricious under the Administrative Procedure Act. The BiOp concluded that pesticides in question would jeopardize several endangered species and their habitats and therefore could not be reregistered without substantial restriction. The Fourth Circuit held that the BiOp was in fact arbitrary and capricious.

Dow AgroSciences and other manufacturers (“Manufacturers”) hold EPA registrations for various pesticides. The Manufacturers’ pesticides had to be reregistered. If the proposed action is likely to affect an endangered species, the agency must consult with the Secretary of the Interior to obtain an opinion evaluating the agency’s action under the Endangered Species Act. The Service agency issued a BiOp that explains whether the proposed action will jeopardize the continued existence of endangered species or their habitats. In reregistering, the Manufacturers agreed to voluntarily take measures to reduce the impact of their products on the environment, but the EPA did not consult with the Secretary of the Interior to obtain a BiOp, prompting several environmental groups to file suit. After several years, the Service issued a draft BiOp, which the EPA, the Manufacturers, several states, and others criticized. After the Service revised the BiOp, the Manufacturers commenced an action under the Administrative Procedure Act, alleging that the BiOp was arbitrary and capricious. The district court dismissed the complaint on the ground that the BiOp was judicially reviewable only after the EPA issued a final reregistration order. On appeal, the Fourth Circuit reversed and remanded. On remand, the district court granted summary judgment to the Service.

On appeal, the Manufacturers argued that the district court erred in permitting the Service to supplement the record and the BiOp with post hoc justifications. In reviewing the Service’s decision, a court can only consider the record before the agency at the time it acted and contemporaneous justifications. The district court concluded that the record before the service was inadequate on certain points and inappropriately admitted new evidence and permitted post hoc justifications. The Manufacturers also argued that the BiOp was arbitrary and capricious, namely in: (1) failing to provide support for its use of a 96-hour modeling assumption; (2) relying on a U.S. Geological Survey’s water monitoring study; and (3) failing to justify uniform buffers. The Fourth Circuit agreed with the Manufacturers as to all of these arguments, stating that the Service may have had satisfactory explanations for the choices it made, but failed to adequately reflect those explanations in the BiOp. Accordingly, the Fourth Circuit reversed.

Full Opinion

-Michelle Theret

Decided: July 13, 2012

Appellants filed suit challenging the United States Department of Agriculture’s (USDA) decision to construct a dam as part of a larger project along the Lost River Subwatershed. Appellants alleged that the USDA, through its agency the Natural Resources Conservation Service (NRCS), failed to comply with the National Environmental Policy Act (NEPA) — a procedural statute that “sets forth a regulatory scheme for major federal actions that may significantly affect the natural environment.” The district court considered each alleged violation, and ultimately concluded that the USDA complied with the NEPA’s procedural requirements. As such, the district court granted USDA’s motion for summary judgment, and the appellants appealed. The court of appeals affirmed.

This case involves a NRCS project to provide watershed protection, flood prevention, water supply, and recreation along the Lost River Subwatershed. The project involves a combination of land-treatment measures, dams, and impoundments. To comply with the NEPA, the NRCS was required to follow set procedures, including a scoping process and issuance of an environmental impact statement.

On appeal, the appellants raised eight issues, all of which deal with alleged violations of the NEPA. Appellants first alleged that the NRCS did not comply with the NEPA requirements in declaring watershed protection, flood prevention, and water supply as the stated purposes and needs for the dam at issue. The court of appeals disagreed, holding that the NRCS’s decision to include watershed protection, flood prevention, and water supply as the purposes underlying the dam’s construction was an appropriate exercise of its discretion. The court dismissed the appellants’ next contention as well, holding that the NRCS was not required to engage in a second scoping process when it issued a supplemental environmental impact statement.

Appellants next alleged that the NRCS’ supplemental environmental impact statement omitted information that is necessary to a complete analysis of the potential environmental impacts and benefits of the dam’s construction. The court disagreed, finding that the supplemental environmental impact statement contained all the necessary information. The court also rejected the appellants’ fourth and fifth contentions, finding that the NRCS considered all reasonable alternatives and all the environmental effects that would result from the dam’s construction.

Appellants then alleged that the NRCS presented a misleading and inaccurate cost-benefit analysis and failed to provide sufficient detail about planned mitigation measures. The court rejected these allegations, holding that the cost-benefit analysis was not misleading or inflated in any way, and that the NRCS provided the appropriate amount of detail for the environmental impact statement stage. Appellants’ eighth and final contention was that the NRCS violated the NEPA by failing to invite a cooperating agency to participate in preparing the supplemental environmental impact statement. The court dismissed this argument, noting that even if the NRCS failed to ask the cooperating agency to participate, such error was harmless.

In summary, the court of appeals rejected all eight allegations of a NEPA violation and affirmed the district court’s judgment granting summary judgment to the USDA.

Full Opinion

– Kassandra Moore

Decided: June 18, 2012

A developer proposed building a mooring facility and concrete boat ramp (the “Project”) about 3,000 feet back from the Back Bay National Wildlife Refuge (the “Refuge”) in Virginia Beach.  The approved permit authorized channel dredging and excavation and relocation of silt and other material.  Because the project would require clearing wetlands, the permit required the creation of equivalent wetlands nearby and relocation of plants displaced by new construction.  There were also operational conditions to the project, such as horsepower limitations on boat motors, restrictions on who may use the facility, and the installation of signs informing the public that there is a no-wake zone within the Refuge.  Prior to issuing the permit, the Army Corps of Engineers (the “Corps”) solicited public comment and most of the responses opposed the project.

The Fish and Wildlife Service (“FWS”) suggested that the Corps prepare an Environmental Impact Statement (“EIS”) to address the potential impact the project would have on federal resources.  An EIS is prepared in connection with “every recommendation or report on proposals for … major Federal actions significantly affecting the quality of the human environment.” Agencies draft an Environmental Assessment (“EA”) to determine whether environmental quality is “significantly affect[ed].”  In this case, the Corps determined that no EIS was required as the no-wake zone would be a significant measure of protection to the Refuge and its resources.  The Corps stated that the no-wake zone could be enforced by any federal, state, local, or county agency or private security firm so long as the entity has the authority to enforce the no-wake zone under the appropriate law.  Enforcement was problematic due to lack of funding.  The building permit did not mandate enforcement nor did it guarantee funding for enforcement.

Friends of Back Bay and Back Bay Restoration Foundation filed a complaint seeking review of the Corps’s decision to allow dredging and relocation of silt and fill material and challenging the determination that issuance of the permit did not qualify under NEPA as a federal action requiring an EIS.  The district court ultimately entered summary judgment in favor of the defendants, rejecting the plaintiffs’ contention that harm to the Refuge from boating could be considered a legitimate secondary effect of the dredging.  Regarding the NEPA challenge, the district court concluded that the Corps’s decision to grant the permit without preparing an EIS was within the agency’s broad discretion and not contrary to law.  The plaintiffs appealed.

The APA provides that a reviewing court is bound to “hold unlawful and set aside agency action” for certain specified reasons, including whenever the challenged act is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.”  This gives rise to a highly deferential standard of review with a strong presumption in favor of finding agency action valid.  The court must carefully inquire into the record and consider whether the agency considered all relevant factors and whether there was clear error.  The reasonableness of the Corps’s decisionmaking will be reviewed de novo.

The parties debated how to characterize the EA, with the plaintiffs arguing that the Corps found that granting the permit would affect the environment to the degree necessary to trigger the need for an EIS, but establishing the no-wake zone would ameliorate adverse effects.  The defendants maintained that the no-wake zone was in effect for nearly two years before the EA, thus it constituted a baseline condition.  A material misapprehension of the existing baseline conditions can be a foundation for an arbitrary and capricious decision.  In North Carolina Wildlife Federation v. North Carolina Department of Transportation, No. 11-2210, 2012 WL 1548685 (4th Cir. May 3, 2012), federal and state agencies were charged with evaluating the construction of a proposed toll highway and erroneously adopted the assumption that the road would be built in estimating the resulting consequences.  This was an “obvious and fundamental blunder,” and required reconsideration.  Additionally, this case stood for the proposition that, when an agency miscalculates the underlying baseline, courts frequently find NEPA violations.

In this case, the creation and continued existence of the no-wake zone is a foundational proposition upon which the Corps’s decision was premised.  However, the no-wake zone is entirely unenforced.  Citing Nat’l Audubon Soc’y v. Hoffman, 132 F.3d 7, 17 (2d Cir. 1997), the Fourth Circuit stated that measures designed to minimize an action’s effect on the environment are more likely to be effective when they are policed, either through the imposition of a mandatory permit condition or literal police presence, neither of which was present in Back Bay.  Because the decision to not issue an EIS was based upon a misapprehension of the baseline conditions, the judgment below must be vacated and the matter remanded.

On remand, the Corps should consider ten factors promulgated by the Council on Environmental Quality.  Two of these factors especially support the plaintiffs’ contention that an EIS should be prepared: the unique characteristics of the geographic area and the degree to which the effects on the quality of the human environment are likely to be highly controversial.  The Refuge and its vicinity are unique and “ecologically critical.” Furthermore, the debate of the potential effects on the environment has proved to be highly controversial.  The FWS specifically recommended preparation of an EIS, a conclusion with which the Fourth Circuit agreed.

The plaintiffs also reasserted that the permit should not have been issued pursuant to § 404 of the CWA, but the Fourth Circuit declined to address the issue at this time.  Accordingly, the judgment was vacated and remanded.

Full Opinion

–Michelle Theret