The MJEAL Blog

Loopholes, Closed: D.C. Circuit Strikes Down EPA’s Exemption Provisions in its Air Quality Program

Posted by Brian Tengel on Wednesday, March 27th, 2013 in Administrative Law, Environmental Law | 0 comments

In October 2010, the Environmental Protection Agency issued a rule[i] exempting certain polluting facilities from conducting air-quality monitoring as part of the Clean Air Act’s permitting process. [ii] The agency thought it had the authority to exempt the facilities because their emissions were not significant enough to justify the costs of monitoring.  The D.C. Court of Appeals thought otherwise.

The court struck down the rule in late January,[iii] and EPA is now in the process of formulating a new proposed rule that complies with the court’s guidelines.[iv] The rule was an attempt by the agency to forestall the deterioration of air quality resulting from emissions of particulate matter of less than 2.5 micrometers (“PM2.5”).  While it ostensibly represented an effort to strengthen the Act’s regulatory regime, the rule was criticized for the exemption provisions, which effectively gave EPA the power to waive a statutory requirement that polluters must submit air quality studies as a prerequisite for applying for a permit to build or modify a facility.[v] This loophole did not sit well with the court, which held that the agency lacked the statutory authority to promulgate the exemptions.[vi] The decision represents a major setback for EPA’s air-monitoring program for PM2.5, and it creates considerable regulatory uncertainty for entities currently in the process of trying to demonstrate that they qualify for the monitoring exemptions.

EPA established the exemptions through two air-quality screening devices known as Significant Impact Levels (“SILs”) and Significant Monitoring Concentrations (“SMCs”).[vii] SILs are numeric values used to gauge the pollution effects of a new or modified facility, and SMCs are values representing air quality concentration levels for certain pollutants.  Under the rule, if a facility can show that its PM2.5 emissions do not exceed the SILs or SMCs, then it is exempt from conducting the air quality analyses that are a mandatory component of the permitting process for new or modified facilities. [viii] The analyses are intended to provide data indicating whether the facility will end up violating the Clean Air Act’s national ambient air quality standards.[ix]

In justifying the SILs and SMCs, EPA relied primarily on Alabama Power Co. v. Costle.[x] In that case, the D.C. Court of Appeals held that, “[u]nless Congress has been extraordinarily rigid,” an administrative agency likely has an implied “de minimis authority to establish exemptions from statutory commands,” especially in cases where “the burdens of regulation yield a gain of trivial or no value.”[xi] EPA argued that when a facility’s ambient impact is below the SIL or SMC, it is effectively de minimis, and that an exemption is appropriate because the regulation “yield[s] information of trivial or no value.”[xii] The Sierra Club found EPA’s application of its de minimis authority unpersuasive, however, and it filed suit seeking to have the rule vacated.[xiii] The D.C. Court of Appeals largely agreed with the Sierra Club.  It vacated and remanded the SIL provisions that exempted facilities from complying with the monitoring requirements, but it left in place certain provisions that do not implicate the exemption authority.[xiv] The court also vacated the SMC, holding that EPA exceeded its authority in creating this screening device.[xv]

In reaching its conclusion on the SMCs, the court engaged in statutory analysis of § 165(e) of the Clean Air Act, which requires an analysis of the air quality at a given site before a permit application for a new facility can be approved.[xvi] The court interpreted this section as being “extraordinarily rigid” in setting an air-monitoring requirement, holding that Congress’s use of “shall” in this section “evidences a clear legislative mandate that the preconstruction monitoring requirement applies to PSD permit applicants.”[xvii] In its textual analysis, the court juxtaposed the stringent language of subsection (e) with the looser language in other subsections to argue that Congress would not have used such strict language if it intended to allow EPA to waive the requirement.  The court also noted that, because the monitoring data is to be used to determine the air quality at a proposed site before an entity applies for a permit, this data is critical in assessing whether that entity has exceeded the Act’s emission limits; as a result, Congress could not have intended to give EPA discretion to exempt certain facilities from the monitoring.[xviii] Finally, the court pointed out that § 165(e) requires that the air monitoring data be made public to allow “informed participation” in permit application hearings.[xix] Giving EPA the power to waive the monitoring mandate would deprive the public of information necessary for meaningful participation in the hearings.

The court’s stringent statutory interpretation of § 165(e) leaves EPA with little choice but to promulgate a new rule.  By the court’s reading, the statute is clear:  Congress did not intend to permit agency discretion in enforcing the air monitoring requirements.  When a court strikes down an agency rule, agencies often invoke Chevron v. U.S.A., Inc. v. Natural Resources Defense Council to argue that courts should give agencies deference in interpreting a statute they are charged with administering.[xx] But that strategy will likely not work here.  In its opinion, the court rejected a similar argument that EPA enjoyed a “virtual presumption” of agency authority,[xxi] holding that even if there were a “presumption,” it would be defeated by an “extraordinarily rigid” requirement.[xxii]

The result of the court’s decision will likely be increased regulatory uncertainty surrounding the Act’s permitting process for new or modified facilities.  It is not clear what will happen to pending PM2.5 permits that relied on the SILs and SMCs loopholes, nor is it clear whether the decision will have any bearing on pending permits that used the loopholes for other pollutants.[xxiii] EPA has already stated[xxiv] that it will be reexamining these pending permits in light of the court’s decision—a task it will have to perform while simultaneously drafting the new proposed rule.  In the meantime, facilities engaged in the permitting process will have to abide the delay and uncertainty until EPA figures out a way to reconcile its regulations with the court’s decision.

Urban Renewal and the Public Use Requirement

Posted by Kamal Al-Salihi on Thursday, March 21st, 2013 in Administrative Law, Environmental Law | 0 comments

The takings issue has received much attention since the famous (or infamous) Kelo v. City of New London[1] decision. This blog post is intended to highlight the complexity behind a simple requirement, that the state appropriate land for a “public use.” What constitutes a “public use” is clear at the extremes, but can otherwise become quite confusing. Michigan is used as a template for the state law analysis portion of this post because of the expansive application that eminent domain doctrine will likely see in Detroit in light of large-scale renewal efforts.[2] Such urban renewal projects have been proposed both by wealthy individuals[3] and non-profit organizations.[4]

In a narrow sense, a public use can be understood as something that is literally used by the public, like railroads or dams, or more broadly as something that produces a public benefit, like blight remediation.[5] At one extreme, you have cases where private property is condemned for a rather obvious public use, like highways or post offices. Highways and post offices are open to everyone and are used extensively by the general public; taking land for such purposes satisfies the public use requirement.[6] At the other extreme, if the government condemns property “solely for the purpose of transferring it from one landowner to another, to be put to whatever use the second landowner wishes,” that transfer would not satisfy the public use requirement.[7] The challenge lies in the gray areas between these two extremes.

The takings issue is often encountered in the urban revitalization context where large tracts of land are needed for a particular project. Such projects may include renovating brownfields[8] or eradicating blight.[9] These endeavors have a nationwide significance, but in Michigan, and in Detroit especially, the issue pulls on a very delicate chord. As are brownfields, blight is common in Detroit, and the risk that blighted structures pose for the community are very real.[10] Blight has “[affected] crime, emergency resources, and property values.”[11] Many observes note that public-private partnerships are the solution because the government, with its strained resources, has not been able to tackle the issue efficiently on its own.[12]

The Public-Private contracting paradigm has gained traction, recently. For example, in early 2013, 616 First Street Partners, LLC was commissioned to renovate 70,000 square feet of industrial building in Grand Rapids, MI, as part of a project to address the brownfield issue.[13] In another case, Detroit’s Mayor, Dave Bing, partnered with a nonprofit group, Detroit Blight Authority, to tackle blight in the Eastern Market area.[14] These public-private partnerships seem to be the way forward; however, often times, there are individual property owners who are not willing to give up their land at any cost. [15]

As a result, the municipality is faced with the decision of abandoning the project or exercising eminent domain to secure the land. Often, in the context of urban revitalization projects, the city itself is not the party implementing the project but the private party in the partnership, like the “Baltimore Development Corporation.”[16] The private entity is thus receiving the land that the city “took” from another private party. Sometimes that “taken” land is held privately. Sometimes that land is held in a partnership entailing both public and private ownership elements. And sometimes the land is returned to the public arena. Can all of these situations fall within the “public use” exception?

The Supreme Court case, Kelo v. City of New London, examined this issue and determined in a 5-4 decision that, under certain circumstances, a taking and “giving” from one private party to another, can satisfy the public use exception. The Kelo Court gave an expansive interpretation to the public use exception and also gave a great deal of deference to the agency or municipality in determining the level of necessity behind the taking.[17]

State courts, like Michigan’s, have not been so deferential. It has been observed that, in comparison to federal courts, state courts are “generally . . . more willing to strike down attempts to use eminent domain for economic development based on the public use clauses of [their] relevant state constitutions.”[18] In Michigan, that court was the state Supreme Court in County of Wayne v. Hathcock.[19]

Before the Kelo decision, the Michigan Supreme court indicated that condemning private property and transferring it to other private parties must meet certain criteria beyond what the Kelo decision entailed. In County of Wayne v. Hathcock, the Court required Michigan’s constitutional ‘public use’ criteria, laid out below, to be satisfied before permitting the taking.[20] The Michigan Supreme Court’s decision in County of Wayne v. Hathcock is of great importance for two related reasons. First, because it interprets Michigan’s State Constitutional “public use” requirement.

The County of Wayne v. Hathcock Court read the Michigan State Constitution, Mich. Const. art. X, § 2, as requiring that an urban revitalization taking possess one of these three qualities –

(1)  The private land condemned and transferred to a private entity must entail a “public necessity of the extreme sort otherwise impracticable.” For example – Highways, railroads, canals and other instrumentalities of commerce.

(2)  The private entity must remain accountable to the public in its use of that property (i.e., elements of public oversight are needed).

(3)  The condemned land may be transferred to private entity when the selection of the land to be condemned is itself based on public concern. For example, the selection and condemning of the land is itself for the public’s own good (e.g., clearing slums for health reasons).[21]

The County of Wayne v. Hathcock court’s interpretation of Michigan State Constitution, Mich. Const. art. X, § 2 is also of great importance for a second reason. In 2006 a ballot proposal[22] was enacted into law as an Amendment to Article X, which effectively “[froze] the Michigan Constitution’s definition of ‘public use’ to how it was understood in 2006.”[23] Justice Young’s iteration of the Court’s understanding of art. X, § 2 in County of Wayne v. Hathcock is the clearest indication of how the term “public use” was understood at the time.[24]

The Kelo decision can be viewed as a larger framework into which a taking for public use must fall; Michigan’s state law is narrower, and limits the extent to which the public use doctrine can reach.[25] Therefore, in order to successfully “take” property for an urban revitalization project in Michigan, the “takers” are well advised not only satisfy the looser requirements set forth in Kelo, but also to satisfy one of Justice Young’s three criteria in County of Wayne v. Hathcock. Otherwise, the transaction will not comport with state law, and it will be invalid.

It is clear that a proposed urban revitalization project must satisfy Kelo – it must be for a “public use.” Michigan Statutory provision, MCL 213.23, reflect this concept. Per the Michigan State Constitution, this “public use” must involve certain levels of either direct generation of a public benefit, public control over the project, or the taking must itself be necessary for a public benefit, like eradication of brownfields for health purposes.[26]

It is possible that projects in Detroit, and Michigan, aimed at eradicating blight fall under County of Wayne v. Hathcock’s category #3, the land itself being a public concern. Indeed, if firefighters, other rescue personnel, and members of the general public are at risk of serious injury or death due to crumbling buildings,[27] then projects aimed at eliminating that risk are directly related to the publics own good. Similarly, if safety or health risks are posed by brownfields, County of Wayne v. Hathcock’s category #3 should apply as well to vindicate a taking for ‘public use.’

However, to be safe, the public-private urban revitalization project should also implement elements of public oversight to comport with County of Wayne v. Hathcock’s category #2. As I conclude below, such oversight is highly beneficial to the developer, regardless of Michigan’s state laws. The Urban Land Institute points out in its Stockton Report that “setting objectives that can be seen and measured by the development community and the general public, and creating a corporate culture that is aligned, responsive, and customer-driven” is a key component to the success of urban renewal projects, generally.[28] More specifically, it is in the private entity’s benefit to encourage public oversight and participation.  This way they can ensure that they are delivering a desired end product, one that other consumers will demand in the future. At the end of the day, the private entity is seeking to generate profits, and more business down the road means more profit.

-Kamal Al-Salihi is an Articles Editor on MJEAL.  He can be reached at kamalda@umich.edu.

Farm Bill to Face Strong Criticism from Every Angle…Again

Posted by Matt Evans on Tuesday, March 19th, 2013 in Administrative Law, Environmental Law | 0 comments

The U.S. Farm bill is a piece of legislation addressing most of the federal government’s policies related to domestic agriculture.  Traditionally, a new bill is passed every five years.  The most recent bill, passed in 2008, has had pieces extended to the end of September, 2013, while other parts were allowed to expire last October.  The Bill is consistently one of the most highly contested pieces of congressional legislation.  This is due in large part to the massive nature of the bill, the variety of interests it attempts to balance, and the amount of people it impacts both directly and indirectly.  Some of the most notable opponents of the proposed Farm Bills have been environmentalists, economists, farming organizations, nutritionists, and anti-hunger advocates each of whom take issue with areas of the Bill for various reasons.[1]

The Farm Bill is a massive piece of legislation; the Congressional Budget Office estimated the total cost of the 2008 bill at just below $284 billion over five years.[2] The Bill is divided into “Titles,” which are broad categories that are related to food and farming.  The most recent bill included 15 Titles: commodity programs, conservation, trade, nutrition, credit, rural development, research, forestry, energy, horticulture, livestock, crop insurance and disaster assistance, commodity futures, trade and tax provisions, and miscellaneous.[3] About two-thirds (67%) of the spending measures were allocated toward nutrition, followed by agricultural subsidies (15%), conservation (9%), and crop insurance (8%). The remaining three percent included credit, rural development, research, forestry, energy, livestock, and horticulture/organic agriculture.[4]

Environmentalists find issues with the Farm Bill and attack it from various angles.  Some are against the Bill because they say it incentivizes farmers to plow up wetlands and grasslands that would otherwise be left undisturbed.  Through subsidies and crop insurance plans, farmers have much less to lose if a field does not produce.  This encourages them to farm much more land, often land that does not efficiently or effectively produce crops.[5] For this reason, the combination of government subsidies and the high prices of many commodities has contributed to the loss of millions of acres of wetlands and grasslands in the Great Plains, which has destroyed wildlife populations.[6] Environmentalists also argue that we should not be encouraging industrial agriculture, as it is already the largest contributor to America’s water pollution.[7]

Economists dislike the idea of billions dollars of taxpayer funded subsidies and insurance plans because it disrupts the free market and encourages wasteful and inefficient practices.[8] By removing many of the risks that are created in the free market, farmers can be more aggressive in their planting.  Further, economists are quick to point out that these subsides are unrivaled when compared to other sectors of the economy.[9] By removing many of the natural incentives of a free market, many economists say it creates a much less efficient system that hurts the American people.

Many farming organizations are disappointed with the farm bill because the funding is disproportionately disbursed to large industrial farms as opposed to family farmers.[10] These industrial farms, because of their size, have a louder voice and a stronger pull, which leads to the disparity in benefit distribution.  Further, farmers argue that farming is still a very risky venture, and farm programs in the Farm Bill ensure a stable supply of food for the country.[11]

Anti-hunger advocates argue that these huge subsidies artificially lower to price of American crops and makes it impossible for farmers in poor countries to compete.5  These farmers cannot compete with the artificially-reduced prices of their competition, and this puts their livelihood at stake.  In turn, this creates large-scale instability in food markets in the developing world, which can lead to catastrophic effects for these populations.[12]

Nutrition experts dislike the farm bill because they believe it strongly subsidizes the wrong types of agriculture.  The subsidies often are given to growers of corn, soybeans, cotton and rice, which are not the cornerstones of a healthy diet.[13] They argue that if the government is to provide subsidies, it should be for food that is good for our people.  They argue that these subsides should be given to organic farms growing healthy fruits and vegetables.  This would lower the cost of more healthy options and incentivize consumers to make more health-conscious decisions.[14] This would result in the advancement of other government goals such as battling our nation’s obesity epidemic, lower the cost of health care, and advance public health campaigns, such as “Let’s Move,” an initiative headed by Michelle Obama.[15]

Listening to the strong attacks from all angles, it might be easy to forget the many benefits of the Farm Bill.  The majority of the Bill’s finances are spent funding food stamp and other nutrition initiatives which help keep our population fed.[16] It is also responsible for the low price of many foods;  there was speculation that the price of milk would jump from $3.65 to $6-8 per gallon if the Farm Bill was allowed to expire.[17] Further, through many different means, it provides safety and stability to our national food markets (an otherwise terribly unpredictable sector), for both producers and consumers.[18] Throughout its history, the Bill has allowed American agriculture to produce enough food to meet the demand of our increasing population while requiring a much smaller portion of our workforce to be allocated to agriculture (currently about 1% of our population).

All of the criticisms of any proposed Farm Bill are amplified when put into context by the slowly improving economy and rapidly increasing national debt.  As we draw nearer to the September 30, 2013 ending date of the current extensions, expect the critical voices of the Bill to get louder and more passionate.

-Matt Evans is a General Member on MJEAL.

Federal Power Lines

Posted by Sarah Duffy on Tuesday, March 19th, 2013 in Administrative Law, Environmental Law | 0 comments

In President Obama’s recent Inaugural Address, he renewed the call for Federal action on climate change, a political and technical challenge that has stymied policymakers for decades. The national discourse on climate change has centered around energy policy and the need for increasing renewable energy sources. Advocates argue that the use of renewable energy will not only slow the causes of climate change, it will also reduce reliance on foreign sources. But before renewable resources can reach a scale that accomplishes any of those goals, they face a major challenge in electricity transmission.

Traditionally, electricity utilities were vertically integrated entities – meaning that one company owned and operated the electricity production, transmission (long-distance transport to converters), and distribution (local transport to homes and businesses). Throughout the early twentieth century, energy production was thought to be a natural monopoly requiring too much capital input up front for any actor to enter the market without a guaranteed customer base. To encourage investment, state governments would permit a company to control the market on the condition of government oversight and regulation. Starting in the 1970s, as technology progressed and infrastructure spread across state lines, the industry recognized that it was actually transmission that was a natural monopoly: if investors could rely on already-existing transmission lines, they were willing to invest in diverse sources of energy and create competition.

To encourage competition in the generation sector, Congress passed Energy Policy Act (EPAct) of 1992[1] giving the Federal Energy Regulatory Commission (FERC) jurisdiction over interstate transmission and authority to require utilities to allow other generators to use their transmission lines. Since all states (with the exception of Texas) are part of an interstate transmission system, the EPAct of 1992 basically gave FERC nationwide jurisdiction over transmission. However, siting of new transmission lines remained within state control, which posed a barrier to new renewable energy sources because states are not required to approve new transmission lines. Many renewable energy sources, such as wind and solar, are best suited for locations far from populations centers (e.g. wind in North Dakota or solar in Arizona). In order to transport that energy to major metropolitan centers, transmission lines have to cross through multiple states that do not have a financial interest in permitting them. The cost of building such high-voltage lines oftentimes far exceeds the benefits for states that have small populations that could use the power.

In 2005, Congress attempted to give FERC some leverage over siting by allowing FERC to declare certain geographic areas as National Interest Electric Transmission Corridors.[2] These NIETCs, as they would be called, are areas where there are severe constraints on transmission capacity that have or will adversely affect consumers. A request for a state permit to construct transmission facilities in a NIETC is subject to FERC “backstop authority” – FERC has authority to step in when a state has “withheld approval” on the permit for more than a year or has placed economically infeasible conditions on approval.[3]

However, a recent Fourth Circuit Court of Appeals decision has limited the scope of this “backstop authority”. The court held that the phrase “withholding approval” of a permit did not include an outright denial of a permit in a NIETC (Piedmont Environ. Council v. F.E.R.C., 558 F.3d 304 (4th Cir. 2009)). FERC argued that the language should be read to include a denial, effectively ensuring that any transmission lines in these areas would be approved, either by the state or by FERC through the “backstop authority.” The court disagreed.[4] As a result, FERC can only preempt a state on requests for new transmission lines when the state fails to act for more than a year, or puts unreasonable conditions on an approval. But there will likely be further litigation in the future, since the issue has yet not been heard by the Supreme Court.

A recent report issued by the Bipartisan Policy Center has opened up the newest chapter in the debate on federal control of energy transmission. The report, titled Capitalizing on the Evolving Power Sector: Policies for a Modern and Reliable U.S. Electric Grid, urges further amendments to current energy laws that would empower FERC to control transmission siting decisions, create more efficient review processes under environmental laws, and prioritize long-term regional strategies for developing a national power grid.[5] The report notes that the increase in investments in renewable sources of energy make it imperative to build high-capacity transmission to transport this energy, usually in rural areas, to population centers. It also calls for guidance from the Department of Energy on how local distribution systems can also be updated to increase reliability.[6]

While these recommendations have found some support in Congress, the utility industry is more skeptical. The National Association of Regulatory Utility Commissioners (NARUC), which is a non-profit that represents state public utility commissions, has expressed concern that these measures would infringe on local control of electricity.[7] The group argues that giving authority to FERC to effectively overrule a state’s decision against a proposed transmission line will disrupt the balance between state and federal power. Although the preservation of state power can often be a fatal bullet to proposals for increasing agency authority, there is growing concern over the country’s energy supply and security, which may change the tone of many Congressmen when they consider this proposal in the upcoming session.

Despite President Obama’s strong rhetorical commitment to taking executive action on climate change,[8] the legislative and regulatory web that controls the electricity sector may force a different approach. With the prospect of a national cap-and-trade bill long dead and pressure mounting from environmentalists for large-scale action, a revamp of our approach to transmission may just offer the Obama administration the chance it’s been looking for to regain its credibility on the environment.

Contesting the Navy’s Authorization to ‘Take’ Marine Mammals Requires a Balance Between Environmental and National Security Interests

Posted by Angela Xu on Friday, March 15th, 2013 in Administrative Law, Environmental Law | 0 comments

On January 31, 2013, the Federal Register published a proposed rule that would allow the Navy to harm marine mammals on more than 31 million separate instances from 2014 to 2019.[1] The National Marine Fisheries Service (NMFS) authored the draft rule authorizing the Navy to “take” whales and dolphins during the course of its testing and training exercises along the Atlantic coast, in the Gulf of Mexico, and in waters off of Southern California and Hawaii.

This proposed rule must be understood in the context of the Marine Mammal Protection Act (MMPA), which regulates the “take” of marine mammals in US waters, or by US citizens on the high seas.[2] A take refers to any instance of harassing, injuring, or killing any marine mammal. Under MMPA, NMFS can authorize a limited scope of “incidental takings,” which are takings that occur unintentionally, but not unexpectedly. Most of the takings here would occur as a result of naval sonar exercises, which can cause hearing damage that, if serious enough, would lead to death.

The rule faces strong opposition from private individuals and environmental interest groups. Individuals can submit comments on the proposed rule through the Federal Register website until March 11. The Administrative Procedure Act requires federal agencies to consult the public in rulemaking. In addition to preserving the democratic process, this requirement helps agencies identify potential areas of litigation before they pass the rule. As of February 23, all 54 comments on the rule indicated strong disapproval of the takings authorization. [3] Moreover, the rule has generated backlash from prominent environmental groups who have successfully brought suits over similar issues in the past.

In particular, the National Resources Defense Council (NRDC) has been actively involved in litigation in this area. They have previously sued the Navy and the Secretary of the Interior on three separate occasions to prevent takings. Their two most recent cases were both decided in 2008, with mixed results.

In Natural Resources Defense Council v. Gutierrez, NRDC sought a preliminary injunction to limit the Navy’s peacetime use of sonar during training after NMFS published a rule authorizing Navy takings in oceans around the world for five years.[4] NRDC argued that NMFS violated the MMPA by authorizing excessive takings and failing to submit information for public comment. The district court in Northern California applied a harms analysis. Under that test, plaintiffs had to show the possibility of irreparable harm without an injunction, and that environmental interests would suffer greater hardship without the injunction than national security interests would suffer with the injunction. The court granted the preliminary injunction, stating that “Environmental injury by its nature can rarely be remedied by money and is likely to be long lasting.”[5]

In Winter v. Natural Resources Defense Council, the Navy appealed the lower courts’ grant of a preliminary injunction.[6] NRDC had sued to enjoin the use of sonar exercises in southern California waters. The Supreme Court reversed and vacated the injunction. Chief Justice Roberts held in his opinion that the alleged injury to marine mammals was outweighed by the public interest and the Navy’s interest in “effective, realistic training of its sailors.”

Despite the precedent set by Winter, the case does not mean that further suits by NRDC over this issue are doomed to failure. The majority opinion and Justice Ginsburg’s dissent suggested that a preliminary injunction would be more likely to be upheld if it were sufficiently narrowly tailored. In stating that an injunction must be crafted to “provide mitigation conditions under which the Navy may conduct its training exercises,” the justices provided a valuable insight to parties wishing to initiate MMPA suits in the future. [7] An example of such an injunction would be one that allows the Navy the minimum possible distance from a marine mammal before a ship is required to shut down its sonar. Taking a lesson from Winter, NRDC or any parties wishing to bring suit should seek similar injunctions that will allow the Navy to continue with its exercises, while protecting marine mammals as much as possible.

Why are Student Health Insurance Plans Treated Differently Under the Affordable Care Act?

Posted by Michael Casner on Saturday, March 2nd, 2013 in Administrative Law | 0 comments

President Obama signed the Patient Protection and Affordable Care Act (“PPACA” or, more commonly, “Obamacare”) into law by on March 23, 2010.[1] Several provisions of this act, including the individual mandate and Medicaid expansion, were hotly debated[2] and litigated, resulting in a 5-4 Supreme Court decision upholding their constitutionality.[3] In the midst of this debate, the PPACA’s handling of student health insurance plans has gone almost completely unnoticed. This comment will analyze why student health insurance plans are unique and why Congress correctly singled them out for special treatment.

The PPACA mentions student health plans in a single sentence under the section heading “Rules of Construction.”[4] The provision states,

Nothing in this title (or an amendment made by this title) shall be construed to prohibit an institution of higher education (as such term is defined for purposes of the Higher Education Act of 1965) from offering a student health insurance plan, to the extent that such requirement is otherwise permitted under applicable Federal, State or local law.[5]

Student health insurance programs are the only class of health insurance programs that are exempted in the PPACA. The other three subsections under “Rules of Construction” establish that the PPACA does not supersede any of the antitrust laws,[6] does not modify or limit Hawaii’s Prepaid Health Care Act,[7] and does not modify any existing Federal requirements concerning the State agency responsible for determining program eligibility.[8] A search of the legislative history of the PPACA reveals no mention of this provision. No other statutes in the United States Code mention student health services. So why does the PPACA single out student health insurance programs?

In 2008, the Government Accountability Office (GAO) found that 80% of college students aged 18 through 23 had health insurance.[9] Among those, 7% of students (roughly half a million) were insured through “individual market and other group market plans, including student insurance plans.”[10] Over half of all colleges offer health insurance plans to their students.[11] Student insurance plans are highly tailored to the special populations they serve: college students tend to be young, healthy, low frequency users of healthcare, and tend to pay the entire cost of their insurance premiums.[12] Many colleges choose to set policy limits low and not to cover preventive services in order to keep premiums low.[13] However, there is a great deal of variability amongst student health insurance plans, with annual premiums ranging from $30 to $2,400.[14]

College students currently have five options when choosing health insurance. First, they can remain uninsured, which is an attractive option for a population that is young, healthy, struggling to stretch their student loans, and unlikely to need medical care. This is exactly the “moral hazard” that the individual mandate of the PPACA was enacted to avoid.[15] Additionally, this option leaves students open to devastating consequences in the event of a medical emergency or unexpected illness. Second, some student may have the option of remaining insured under their parents’ health insurance plan.[16] Prior to 2011, the age of dependency varied depending on the policy and the state in which it was effective, leaving some college students uncovered.[17] The PPACA changes this to mandated coverage of unmarried dependents until they reach 26, which allows an larger number of college students to remain covered under their parents’ plan.[18] Furthermore, this type of coverage is only available to students whose parents have health insurance, which becomes less likely the lower the parents’ income.[19] Third, some students may qualify for coverage under COBRA, but such coverage is typically prohibitively expensive.[20] Fourth, students may opt to purchase individual health insurance, which again is typically very expensive.[21] Finally, students can opt into the student health insurance plan offered by their school.[22]

On March 21, 2012, the Department of Health and Human Services published its regulation regarding the administration of § 1560(c) of the PPACA.[23] This regulation defines student health insurance as a type of individual health coverage that is provided by a health insurance issuer through an institution of higher education, and is available only to current students and their dependents.[24] Such insurance policies are prohibited from refusing health insurance coverage based on pre-existing conditions.[25] The regulation also exempts student health insurance plans from the guaranteed availability and guaranteed renewability provisions of the PPACA and sets a different schedule for compliance with the annual limits provisions of the PPACA.[26] The regulation also explains that student administrative health fees are not to be considered cost-sharing requirements under the PPACA with respect to student administrative health fees.[27] Finally, the regulation requires notice to policyholders that their policy is exempted from the above provisions of the PPACA.[28]

Because of their unique role in the delivery of healthcare services, and the unique nature of the population from which their policyholders are drawn, student health insurance programs differ from other types of health insurance. If these insurance programs were subject to the PPACA, especially the community rating[29] and annual limits provisions,[30] their costs would rise so precipitously that most colleges that currently provide them would be unable to continue to do so.[31] Congress recognized this problem when it enacted § 1560(c) of the PPACA, and the Department of Health and Human Services has responded by clarifying how and when the PPACA applies to student health insurance policies. Hopefully this will allow colleges and universities to continue to offer health insurance to their students, many of whom would otherwise have to go without coverage.

No Laughing Matter: Utah’s Fight to Reclaim Federal Lands

Posted by Austin Anderson on Tuesday, February 26th, 2013 in Administrative Law, Environmental Law | Comments Off

On its face, Utah’s Transfer of Public Land Act (hereinafter “TPLA”)[i], like those recently passed by Arizona[ii] and Idaho[iii], seems as authoritative a demand as that of a child to his parent:

(1) On or before December 31, 2014, the United States shall:

(a) extinguish title to public lands; and

(b) transfer title to public lands to the state.[iv]

But in this case, he’s a child with claims in contract, and the parent’s apparently supreme authority is necessarily tempered by its respect for constitutional sovereignty.  And, like any demand carrying the poignancy of a bona fide “you promised,” the demands are not lightly to be ignored.

Critics have called the legislation “an embarrassment,”[v] and most have dismissed the possibility of the states ultimately succeeding in court,[vi] should the federal government fail to comply with the demand and the states subsequently seek relief from the judiciary.  Even the Legislative Review Note appended to the statute itself concludes, “[the requirement] that the United States extinguish title to public lands and transfer title to those public lands to Utah by a date certain… and any attempt by Utah in the future to enforce the requirement, have a high probability of being declared unconstitutional.”[vii]

The skepticism derives from authorities no less than the U.S. Constitution, the U.S. Supreme Court, and the Utah Enabling Act.  The Constitution, via the Property Clause, grants the federal government full discretion in the disposition of its lands:  “The Congress shall have power to dispose of and make all needful rules and regulations respecting the Territory or other property belonging to the United States; and nothing in this Constitution shall be so construed as to prejudice any claims of the United States, or of any particular state.”[viii] Furthermore, the U.S. Supreme Court has said, inter alia, “Congress has the same power over [territory] as over any other property belonging to the United States; and this power is vested in Congress without limitation,”[ix] and, “[w]ith respect to the public domain, the Constitution vests in Congress the power of disposition … That power is subject to no limitations. Congress has the absolute right to prescribe the times, the conditions, and the mode of transferring this property… No State legislation can interfere with this right.”[x] Finally, the Utah Enabling Act provides, “That the people inhabiting said proposed State do agree and declare that they forever disclaim all right and title to the unappropriated public lands lying within the boundaries thereof.”[xi]

Nevertheless, the constitutionality of TPLA remains plausible.  To appreciate this requires an understanding of the precise claims at issue.  Considerations of the principles of federalism and equal standing are important but supplemental to what is perhaps the state’s strongest argument:  contractual obligation.[xii]

Utah’s claim in contract is that the federal government, in granting Utah statehood via the Utah Enabling Act[xiii] (hereinafter “UEA”), gave Utah certain promises in exchange for its cession of public land, foremost among them that federal title to the lands would eventually be extinguished, that the public lands would be sold, and that 5% of the proceeds of the sales would be paid to the state of Utah.[xiv] Section 3 of the UEA, Utah having “forever disclaim[ed] all right and title,” nevertheless concludes, “until the title thereto shall have been extinguished by the United States.”[xv] More compellingly, Section 9 provides, “That five per centum of the proceeds of the sales of public lands lying within said State, which shall be sold by the United States subsequent to the admission of said State into the Union . . . shall be paid to the said State, to be used as a permanent fund, the interest of which only shall be expended for the support of the common schools within said State.”[xvi]

The use of “shall” in these provisions is significant.  Given the plenary power of the federal government with respect to its property, “shall” might simply be construed in favor the federal government (i.e. not necessarily as a command).  But precedent, taken with an analysis of the use of “shall” throughout the Enabling Act, suggests otherwise.  “Shall” occurs 83 times throughout the Act, is used as a command almost without exception,[xvii] and is readily used in contradistinction to “may,” which occurs 20 times and exclusively as an expression of permissiveness.  Furthermore, extensive precedent dictates that “shall” is used to imply something that will or must occur, while “may” merely grants the possibility of its occurrence.[xviii]

Moreover, in conjunction with this “promise” there is controlling precedent equating the Enabling Acts with bilateral contracts, and the promises made in such Acts by the United States have been held to be “obligatory on the United States.”[xix]

If Utah’s claim represents an actual contractual obligation of the United States, then there are at least two ways in which a court might interpret the obligation in light of the Property Clause of the Constitution (and corresponding precedent).  First, the court might interpret the Property Clause of the Constitution as referring to governmentally owned property with no encumbrances.  The plain meaning of the clause seems to suggest this, although it does not state it explicitly.  In any case, if the government did rescind, it might simply choose to pay Utah its damages.  Or it might embrace the obligation, but contend that even under the statute’s terms, it’s clearly within the discretion of the federal government when to extinguish its own title (and here the court may or may not impose a duty to extinguish within a “reasonable time”).  On the other hand, in either instance, the government might make a powerful statement of executive discretion and refuse to fulfill the obligation or pay damages; and the judiciary might well grant the executive extreme deference in view of the broad power conferred by the Property Clause.

Ultimately, there is little precedent speaking to the precise issue at hand.  The leading authorities cited in the Legislative Note and by critics, for example, have been distinguished by Donald J. Kochan as “miss[ing] their target and… almost entirely inapposite.”[xx] In general, the broad precedential statements cited by critics of TPLA are much broader than the holdings themselves require, and none of the precedent addresses the specific question of whether the federal government is obligated in contract to extinguish title to land received from the state in consideration for admission to the Union.[xxi]

Regardless of any future decision, the enforceability of the claims is unclear.  It remains to be seen whether the executive would enforce a judgment favorable to the states and whether the states could effectively resort to the political process.

- Austin Anderson is a General Member of MJEAL.  He can be reached at aean@umich.edu.

Can’t Quite Get It Right: The EPA’s Failed Attempts at Interstate Pollution Regulation

Posted by Jeff Jay on Monday, February 25th, 2013 in Administrative Law, Environmental Law | Comments Off

At the end of January, the EPA’s efforts to regulate ozone and fine particle were again frustrated, this time by the U.S. Court of Appeals for the D.C. Circuit’s decision not to reconsider its August 2012 remand of the Cross-State Air Pollution Rule (CSAPR).[1] This is just the latest in a series of setbacks for the EPA in its attempt to achieve the National Ambient Air Quality Standards (NAAQS) established under Clean Air Act (CAA) authority. It’s worth looking at how we got here before later considering potential next steps.

In 2005, the EPA issued the Clean Air Interstate Rule (CAIR) with the goal of reducing the amount of power plant emissions – originating in 27 eastern states – that drifted across state lines, specifically sulfur dioxide and nitrogen oxides. In 2008 however, that rule was first vacated and then remanded, with the U.S. Court of Appeals for the D.C. Circuit instructing the EPA to produce a replacement rule.[2] In response, the EPA proposed CSAPR in 2010 and finalized the rule in 2011, with a scheduled implementation date of January 1, 2012. CSAPR require twenty-seven eastern states to power plant emissions that contribute to ground level ozone and fine particle pollution across state lines. CAIR’s cap and trade system, which the U.S. Court of Appeals found to lack reasonable measures to ensure the abatement of unlawful emissions, remains in place until the EPA is able to produce a revised CSAPR rule.

Whereas CAIR was remanded for not doing enough to protect public health, CSAPR was ruled to be an overreach. In its August 2012 ruling, the Court of Appeals held that the EPA had gone beyond its statutory powers on two separate grounds. First, the court found that under CSAPR the EPA overstepped its jurisdiction in requiring states to reduce emissions beyond the level of pollution actual impacting neighboring states. The CAA enables the EPA to require a state to reduce its emissions that drift across state boundaries, but in remanding CAIR in 2008, the Court of Appeals specifically held that the EPA’s CAA authority could not be used to require larger reductions.[3] CSAPR was written in such a way that a state’s required contributions could be based on regional projections rather than on the amount produced by the individual state.[4] The court also faulted CSAPR for circumventing a state’s authority to develop its own emission reduction plan.[5]

The EPA now must decide whether to appeal the remand, and, more importantly, whether CSAPR is or ever was the correct approach. The EPA is still under court order to strengthen and replace CAIR, but the EPA has other alternatives to achieve its statutory goals. Other EPA rules, such as the one on Mercury and Air Toxics, will help to decrease many of the pollutants targeted by CSAPR and CAIR. Additionally, CSAPR was structured in such a way that reductions would be required based on cost rather than on a state’s production, which was a significant departure from CAIR’s model and led to the remand of the rule. Unfortunately, under current law the EPA is limited in its ability to require sufficient reductions when applying a cross-state rule such as CSAPR.

The federal implementation plans (FIPs) that CSAPR would have implemented to structure each regulated state’s emissions reduction are another subject that the EPA will have to evaluate. The Appeals Court held that instead the EPA should first defer to states and allow each to develop its own plan to reach the EPA-mandated goals. As a result, the EPA must find a way to both provide the necessary latitude for states to implement their own plans while also holding them accountable enough to avoid the same issues of lax enforcement plaguing CAIR.

How the EPA decides to satisfy its duties will be a critical question for the agency as it continues to actively engage the issues of public health and pollution.

Jeff Jay is a General Member of MJEAL.  He can be reached at jefjay@umich.edu.

Obama’s Open Government Initiative: Progress Report

Posted by Eric Merron on Sunday, February 24th, 2013 in Administrative Law, Environmental Law | Comments Off

In President Obama’s first term in office, he made a bold promise to “usher in a new era of open government”[i] as he laid out his vision for increased transparency and accountability in the federal government. As part of his open government initiative, he directed federal agencies to make publicly available their daily operations and he crafted new guidelines for the Freedom of Information Act (FOIA).[ii] The government has made great strides towards pushing through this agenda, but many aspects of his bold promise remain unfulfilled. As Obama begins his final term in office, he needs to establish a second wave of momentum to push for increased governmental transparency.

Initiative:

Obama’s inaugural address in 2009 highlighted the need to do “business in the light of day.”[iii] He issued memos calling for government agencies to be more transparent and for FOIA to be administered with the presumption of openness. Obama’s initiative was further clarified in a White House directive that specified how agencies could fulfill the transparency requirement. He directed each federal agency to devise a public plan on how to increase their transparency, launch an open-government website, and make all data available on the new websites.

With regards to FOIA, Attorney General Eric Holder issued new guidelines to limit instances in which agencies could deny requests for government data and called on agencies to more efficiently respond to such requests.[iv] After a FOIA request is received, an agency has 20 working days to respond and must provide a reason for the denial of any request.

Assessment:

Per the Open Government Directive, agencies have largely met their obligations to create open government webpages and to develop plans that embrace transparency, public participation, and cooperation with other agencies.[v] However, there is a great deal of scrutiny regarding the quality of the government information available on the websites.

For instance, USASpending.gov reports on how agencies spend taxpayers’ money. Ellen Miller of the Sunlight Foundation said that the website consists of over “$1.2 trillion worth of misreported spending in 2009 alone.”[vi] The government has compiled and made data easy to find, with simple websites such as Grants.gov for federal grants and Recalls.gov for unsafe products. However, in order for the data to be useful in attempts to hold the government accountable, the data needs to be accurate. There have been numerous instances of discrepancies between website reporting and federal budget documents.[vii]

The Obama Administration launched FOIA.gov, which tracks data regarding agency responses to information requests. According to FOIA.gov, the backlog on requests has decreased from 130,419 in FY 2008 to 83,490 in FY 2011. While the data is now publicly accessible, there are still a significant number of backlogged requests and many inadequately explained denials.[viii]

A National Security Archive audit found that 62 of 99 agencies have not updated FOIA regulations since Holder’s 2009 memorandum.[ix] Moreover, there was a June 2012 Bloomberg study where a reporter requested executive travel information from 57 major federal agencies. Only eight of those agencies responded within the allocated 20-day period.[x]

Reform:

Obama has not addressed the initiative in his inaugural address or in any other public forum since the beginning of his second term. Obama needs to continue to make the open government initiative a priority on his agenda. Below are proposals that would strengthen Obama’s open government initiative and provide a solid foundation for future administrations:

(1)  Re-assert executive support for the Open Government Initiative

(2)  Follow up with agencies that have not complied with Holder’s 2009 memorandum

(3)  Assess progress in the first term and compile a list of “best practices” that agencies should adopt

(4)  Monitor agency FOIA exemptions and reduce agency use of discretionary withholdings[xi]

(5)  Establish a central body that can assess the accuracy of agency data and enforce compliance with FOIA requirements

(6)  Remove financial barriers to requesting information from the government

– Eric Merron is a general member of MJEAL. He can be reached at merron@umich.edu

A Pipeline to a New Water Era?

Posted by Alison Toivola on Monday, February 18th, 2013 in Administrative Law, Environmental Law | Comments Off

My last blog post was about a pipeline to carry fuel. I thought it would be interesting to keep the same pipeline theme going for my latest post, so I decided to write about another proposed pipeline. But this time around, it’s not about fuel. It’s about water.

The Colorado River is a precious water source for at least seven states,[i] 25 million people [ii] and 5.5 million acres of irrigation throughout and beyond the Colorado Basin.[iii] It is vital to the lives and livelihoods of many in this country, but it struggles to maintain sufficient water levels and is often the center of controversial water law issues. A new U.S. Department of the Interior’s Bureau of Reclamation Report, released in December 2012, has come up with a novel idea to maintain the water level of the river: it proposes to construct a 600-mile pipeline in order to pump water from the Missouri River into the struggling Colorado River.[iv] The amount of added water to the Colorado River system could contribute significantly to its recipients, and increase the quantity of water flow by adding supplies sufficient to support upwards of one million single family homes.[v]

While the report also includes some of the more common proposals you may expect, such as water conservation and limiting water consumption, the large project-based proposal is a more radical approach reminiscent of 20^th century attempts at water provision that have largely failed.[vi] Large projects have recently begun to resurface as viable options in the present day as mere conservation alone is becoming increasingly incapable of fixing systemic issues, such as ever-increasing demand.[vii] It is true that there was a time not so long ago when people thought that “the big dam era is over and that a central task of water policy is to stretch, reallocate and protect the quality of existing supplies of water,” but population growth and climate change have clearly frustrated these predictions.[viii] Now, the United States federal government, through its various administrative outlets, has been increasingly responding to water shortages with a recurring concept that science and engineering can fix problems too large for simple conservation strategies.[ix]

One of the most contentious issues about this particular pipeline – legally speaking – boils down to a question of federalism. Does the federal government reserve the right to construct and implement such a pipeline?  What about the water rights reserved to the states? The pipeline will be transporting water from Missouri, over the state of Kansas and into Colorado. From there it will be deposited into the Colorado River, feeding many more states downstream, and eventually ending up in Mexico. At the end of the Executive Summary of the Bureau of Reclamation’s Report, there is an explicit statement disclaiming the study’s imposition on any rights or entitlements reserved to the seven states of the Colorado Basin. Such an express repudiation presents strong evidence of the tense balance of power that exists between state and federal management systems with respect to water rights.[x] It’s not just the construction costs that are huge, but the political costs as well.[xi]

The American West has historically maintained a unique legal structure of water rights, especially as compared to the Eastern part of the country.[xii] In the West, state laws have consistently and historically dominated the legal landscape; these laws tended to regulate the “beneficial” use of water within state boundaries, leaving any surplus water in streams and rivers up for grabs on a first-come, first-served basis.[xiii] This type of market-based, individualized management was implemented because water shortage concerns in the 19^th century were very different from those of today; scarcity was recognized, but the need for government intervention was not yet seen as an appropriate solution.

While state authorities have historically maintained control over their water rights as an inherently state issue,[xiv] grandiose federal enactments such as the Clean Water Act, and Supreme Court decisions such as Cappaert v. United States, 426 U.S. 128 (S.Ct. 1976) (holding property rights reserved to the federal government include related water rights), have gradually infringed on state water rights.[xv] Acts and decisions such as these are supported by a federal power that can be traced back to the United States Constitution. Multiple references within the Constitution highlight federal supremacy over state rights, including the Commerce Clause (denoting federal power over navigable rivers) and the Property Rights Clause (denoting federal power of United States property, interpreted to include water on the property).[xvi] While under the Constitution the states retain a police power to regulate within their borders, the national government has been able to expand its regulation and infringe upon such regulations over the last half a decade. Indeed, laws governing rivers, lakes and groundwater especially have seen paradigmatic regulatory shifts.[xvii] One thing is clear, however: history has consistently reinforced the supremacy of public necessity over any private interests in water.[xviii] Yet the question remains whether such “public necessity” should be decided by the state government or the federal government.

On the one hand, precedence has often held in favor of a strong deference for state rights.[xix] Yet deference to states is not due to a complete lack of federal power. The federal government maintains the Constitutional and regulatory powers enumerated above to control states’ decisions. Even though the federal government has remained self-restrained when exercising these powers, there have also been very few instances in the water law history of the United States when any significant need has arisen.[xx] Remember that large water projects have been absent from the American legal scheme for many years. Historically, deference for state law has been subjugated to a few large federal projects – such as the Hoover Dam – in which the courts have held that federal directives take precedence over state interests.[xxi] It appears that we may be seeing a re-emergence of these large projects in the present day, after years of absence, which may lead to a new re-balancing of state and federal rights. The federal government has an arsenal from which to pull from in support of their ability to implement large-scale water projects in the Western United States.

However, states too have a large arsenal to pull from in support of their individual concerns. Even with the power of the federal government so delineated, it remains that deference to state water laws has been “high, but not absolute” throughout history.[xxii] The Hoover Dam, a primary example of a massive federal water project, was initially facilitated by a 1922 compact made between the seven downstream states. As recent evidence of this same deference, a 2003 report by the United States Department of the Interior called “Water 2025: Preventing Crises and Conflict in the West” explicitly called for state deference in any water-making decisions that may follow from the report.[xxiii] And this very report, discussing the Missouri River pipeline, has also made note of the state powers remaining reserved to the states. Given the proposed pipeline’s routing, the state of Missouri is especially likely to speak up for state deference; it will be feeling a pure loss of resources, and no gain, under this large-scale project. So too will the states who receive the downstream waters of the Missouri River, for they too have only to lose with this proposal. However, the fact that the Colorado Basin states have already formed a coalition to resolve water disputes is telling that at least those states directly connected to the Colorado River may be more amenable to federal guidance in the construction and implementation of such a pipeline.

Since 20/20 foresight does not exist, the legal balance of powers that will come into play if the pipeline is built remain to be seen. Will the federal government assert sufficient control, through Constitutional claims, Federal Acts or Supreme Court precedence, or will a few states sufficiently support their independent right to regulate water laws, as history has shown a consistent deference for? First we must see if the pipeline will even be implemented. But if it is implemented, we can be sure to look forward to a court case or two hinging on this inherently federalist question.

—–Alison Toivola is a general member of MJEAL.