Supreme Court Preview: Chevron, CERCLA, and PFAS

The U.S. Supreme Court’s 2023 Term will feature arguments with potentially far-reaching consequences for environmental regulation—most notably, the future of Chevron deference. The Court will also hear two cases concerning takings claims, and several pending petitions for certiorari would, if granted, implicate multi-district litigation procedure (with impacts on PFAS contamination and other toxic torts cases), Superfund cleanup liability, and Western water rights.

I. Loper Bright and the Future of Chevron Deference

A dispute between the Atlantic herring industry and the Department of Commerce could have major implications for federal environmental regulation. In Loper Bright Enterprises v. Raimondo[1] the Court will confront the question of whether to limit or even overrule its current doctrine of judicial deference to agency interpretations of statutes. As formulated in the Court’s landmark decision in Chevron v. NRDC,[2] federal courts defer to agency interpretations of their authorizing statutes if ambiguous language exists and if the agency’s interpretation is reasonable.[3]

In 2019, the Court considered so-called “Auer” deference, ultimately retaining the doctrine of deference to agency interpretations of their own regulations but setting out detailed guidance on when deference may be appropriate.[4] In a similar vein, several members of the Court have signaled their desire to limit or even overrule Chevron.[5] Chevron deference inherently involves the judiciary ceding some of its interpretative authority to agencies, a move that critics claim both improperly enlarges the power of agencies while minimizing the role of courts. In Loper Bright, petitioners further this criticism and argue that the current application of the doctrine is unworkable, centering the case on the question of whether the Court should reform Chevron or even do away with it entirely.[6]

The petitioners’ case against Chevron stems from regulation under the Magnuson-Stevens Fishery Conservation and Management Act (“MSA”).[7] Under the MSA, the Department of Commerce has the power, delegated to the National Marine Fisheries Service (“NMFS”), to require fishing vessels to carry observers who ensure compliance with fishery regulations.[8] These observers are a key mechanism to ensure that operating vessels comply with catch limits and other rules in the governing Fishery Management Plan (“FMP”). NMFS has stated that “observers perform data-gathering functions “that are critical to the conservation of protected species and to fishery management.”[9] In some instances, the MSA has specific provisions describing how NMFS may or shall require the fishing industry to pay the salaries of these observers and industry payment schemes are in place for fisheries indicated in those provisions.[10] However, the MSA says nothing about industry-funded observers for the Atlantic herring fishery.

NMFS filled that gap by issuing a rule in 2020 permitting FMPs under the New England Fishery Management Council to establish industry-funded monitoring and specifically establishing such a program under the Atlantic Herring FMP.[11] In lower courts, petitioners argued that the NMFS rule was beyond its statutory authority and that Chevron could not be construed to allow agencies to find ambiguous delegations of power in statutory silence.[12] However, after the D.C. Circuit ruled that the MSA’s silence constituted ambiguity and that the agency’s interpretation was reasonable under Chevron, petitioners now argue that Chevron itself was an “egregiously wrong” decision that unconstitutionally gives agencies both judicial and legislative powers.[13]

Along with their argument that the Court should overrule Chevron completely, petitioners include the fallback option of a judicial clarification that statutory ambiguity cannot extend to include silence.[14] If the Court were to balk at eliminating Chevron deference, petitioners argue that the Justices should significantly limit the doctrine by preventing agencies from finding authority not specifically mentioned in the text of a statute and that statutory silence should be interpreted in the most limited manner possible.

In response, the Solicitor General paints Chevron deference as not only consistent with the Constitution’s insistence on separation of powers but also as an invaluable functional tool that allows agencies to wield their expertise to regulate effectively.[15] The government appears to push the Court to adhere to Chevron under the same guardrails as it established in Kisor, highlighting the inconsistencies between petitioners’ arguments and the prior case.[16] The Solicitor General’s office also makes the case that Chevron should receive especially strong stare decisis respect because it is a statutory-interpretation precedent that Congress has declined to overturn. Finally, the government argues that Chevron has been an essential precedent for decades, and the Court would be undermining the foundation of federal governance by overruling it.

Unsurprisingly, the case has spurred a significant number of amici to add their input to the proceedings. For instance, West Virginia and 26 other states filed an amicus brief in support of overruling Chevron,[17] and several Democratic Senators filed a brief urging that the Court uphold Chevron.[18]

Briefing in Loper Bright is set to conclude in mid-October, and argument may be heard as early as November 27. A decision is expected no later than late June 2024.

II. Takings Cases and Government Power Over Property Owners

Late last week, the Court granted certiorari in a new slate of petitions, adding twelve cases to the coming Term. Two of these cases feature takings questions involving state government control over property rights. Under the Takings Clause of the Fifth Amendment, private property cannot be taken by the federal government for public use without just compensation.[19] This prohibition against uncompensated takings of property extends to state and local governments through the Fourteenth Amendment.[20]

One of the two takings cases, Sheetz v. County of El Dorado, examines whether a state government can condition granting a home building permit on payment of development fees enacted by legislation. The property owner in the case, George Sheetz, applied to build a house in Placerville, California, but was required by the county government to pay over $20,000 in traffic mitigation fees.[21] Sheetz filed suit in California state court claiming that the county’s exaction was unconstitutional under the Supreme Court’s decisions in Nollan v. California Coastal Commission[22] and Dolan v. City of Tigard.[23] He argued that the county did not determine that there was an “essential nexus” and “rough proportionality” between his home’s effects on traffic and the need to improve nearby roads.[24]

Both the California trial and appellate courts ruled against Sheetz, finding that development fees that are passed by legislation do not fall under the test created by Nollan and Dolan.[25] In its brief as respondent, El Dorado County argued against the grant of certiorari on the grounds that Sheetz was presenting an illusory split in caselaw divorced from the particular facts of his case.[26] The Court disagreed, and the case will likely be scheduled for argument this winter, with a decision expected in summer of 2024.

The second case centers on whether property owners can sue a state under the Takings Clause if that state has not granted them the express right to do so. In Devillier v. Texas,[27] a group of homeowners are challenging a Fifth Circuit ruling that property owners cannot file a direct Fifth Amendment takings action against a state.[28] The petitioners, whose properties were flooded due to state highway construction, argue that the Takings Clause is “self-executing” and that no other piece of legislation is necessary for property owners to sue the state.[29]

In response, the state of Texas claimed that the Fifth Circuit was right in interpreting the Fifth Amendment to lack a private cause of action and that the questions presented by the petitioners needed “further percolation” in lower courts.[30] Ultimately, the Court decided to hear the case, and like Sheetz, argument will be heard this winter, with a decision expected in summer of 2024.

III. Pending Petitions in Environmental Cases

As the Court rounds out its docket, several petitions in environmental cases are candidates for review. All these petitions were scheduled to be considered at the Court’s “Long Conference” on September 26.

A. Standard of Review in Appeals of CERCLA Allocations

One candidate case originates from the allocation of $50 million of CERCLA liability for groundwater contamination over several decades at an aluminum smelting facility in Columbia Falls, Montana. The court found the respondent, Atlantic Richfield Company, to be primarily responsible for contamination, but allocated 65% of the CERCLA response costs to the petitioner. On appeal, the Ninth Circuit affirmed the allocation using the clear-error standard of review.[31]

The petition for certiorari in Columbia Falls Aluminum Company, LLC v. Atlantic Richfield Company asks the Court to rule on the correct standard of review for equitable allocations under CERCLA.[32] In CERCLA actions, federal district courts are empowered to equitably allocate cleanup costs for Superfund sites.[33] However, the circuit courts are split on the correct appellate standard of review for these district court cost allocations, with three applying a clear-error standard,[34] and seven applying an abuse-of-discretion standard.[35]

Despite acknowledging the formal circuit split, the respondent asserts that whether a court states that it is using the “clear-error” or “abuse of discretion” standard, the practical result is that appellate courts review trial court evaluations of equitable factors with deference, so there is no true split to resolve.[36]

B. Preclusive Effects of Bellwether Trials in Toxic Torts MDLs

The petition for certiorari in E.I. du Pont de Nemours & Co. v. Abbott asks the Court to rule on whether plaintiffs in a multi-district litigation (“MDL”) concerning personal injury caused by PFAS can successfully prevent a defendant from relitigating issues decided in a handful of bellwether trials.[37]At issue is the application of the doctrine of “nonmutual collateral estoppel,” which allows plaintiffs not involved in a prior lawsuit against a defendant to bind that same defendant to rulings on issues material to the new plaintiff’s subsequent case.

This case arose from a series of lawsuits consolidated into an MDL against DuPont in federal district court for alleged health impacts from environmental PFAS contamination.

After three bellwether trials resulted in plaintiff victories, other plaintiffs claimed that the previous verdicts should result in nonmutual offensive collateral estoppel, and that DuPont should be bound in every other pending and future case in the MDL from contesting elements of liability already decided in the bellwether trials. The district court chose to apply non-mutual offensive preclusion in the case of Travis Abbott, who allegedly developed testicular cancer after exposure to PFAS, and Abbott was awarded $40 million in damages.[38] The Sixth Circuit affirmed.

DuPont’s petition now asks the Court to consider the appropriate preclusive effects from MDL bellwether trials. DuPont asserts that the Sixth Circuit’s decision is a national outlier with significant consequences. DuPont characterizes bellwether trials as instruments to explore issues and the strength of arguments, not force defendants into a blanket settlement after a few early losses.[39] This claimed unfairness leads to DuPont’s contention that the usefulness of bellwether trials as a tool to resolve mass torts will be destroyed as defendants will not participate for fear that nonmutual offensive collateral estoppel will be applied against them.[40] The U.S. Chamber of Commerce and a group of large industrial manufacturers, including 3M, America’s largest producer of PFAS, have filed amicus briefs in support of DuPont that echo its concerns.[41]

The respondents, Travis Abbott and his wife, counter DuPont’s arguments by claiming that the bellwether trials fully litigated the issues relevant to their personal injury case and that DuPont is asking for a novel rule by preventing nonmutual offensive collateral estoppel in MDLs.[42] The Abbotts also argue that DuPont and other MDL defendants will not be dissuaded from pursuing bellwether trials by the application of nonmutual offensive collateral estoppel, as these early trials present an opportunity to swiftly resolve litigation.[43]

C. Tribal Involvement in Water Right Adjudications

Klamath Irrigation District v. United States Bureau of Reclamation centers on a battle between farmers and the federal Bureau of Reclamation over water management in Oregon and the essential role that two Indian tribes have played in the dispute.[44] In 2019, the Klamath Irrigation District filed a suit against Reclamation’s water management plan for the Upper Klamath Lake, arguing that farmers with water rights must receive full appropriations before the federal government can place instream flow minimums for endangered species.[45]

As interested users of the water and the fish within it, both the Klamath and Hoopa Valley Tribes intervened in the suit and argued that the plaintiffs were required to join them under Federal Rule of Civil Procedure 19. After successfully intervening, the tribes moved to dismiss the suit, invoking sovereign immunity as a shield against joinder under Rule 19.[46] The trial court ruled in favor of the tribes, dismissing the suit, and the Ninth Circuit affirmed.

Klamath Irrigation District argues in its petition that the Ninth Circuit’s dismissal of its suit has sweeping effects for water rights adjudication in the West. Citing the tribes’ insistence that the suit could not proceed without them and could not proceed against them, the petition claims that in Western states, Indian tribes now have effective veto power over any water rights adjudication that involves their interests.[47]

The federal respondent, Bureau of Reclamation, agrees with Klamath Irrigation District’s argument that the Ninth Circuit erroneously dismissed the case based on the tribes’ intervention, but argues that the case is a poor vehicle for the Court’s review as the petitioner lost the underlying merits arguments in previous cases.[48] The Klamath and Hoopa Valley Tribes have also filed a joint brief opposing the petitions for substantially the same reasons.[49]

D. Statute of Limitations in CERCLA Cost-Recovery Actions

The petition for certiorari in Georgia-Pacific Consumer Products v. International Paper[50] asks the Court to weigh in on a Superfund dispute spanning decades. The history of paper production along the Kalamazoo River in Michigan resulted in significant contamination from polychlorinated biphenyls (“PCBs”). Under CERCLA, the petitioner Georgia-Pacific Consumer Products was designated a potentially responsible party for cleanup of the river and joined a working group of other paper companies to investigate the causes of the contamination and remediation options.

Georgia-Pacific identified other potentially responsible parties during its investigations over several decades and filed several suits in federal district court to determine liability and cost allocation. During the initial stages of litigation, the district court filed a “bare bones” declaratory judgment of liability that did not allocate or even estimate cleanup costs.[51] Years later, Georgia-Pacific identified respondents International Paper and Weyerhaeuser as potentially liable parties and filed a cost recovery suit against both companies. Both respondents were deemed to be liable parties under CERCLA, and the trial court allocated 15% and 5% of the cleanup costs to them, respectively.[52]

However, on appeal to the Sixth Circuit the court ruled that Georgia-Pacific was time-barred from bringing a CERCLA contribution claim against the respondents.[53] The court cited the decades-old declaratory judgment decision as the trigger for the applicable three-year statute of limitations and therefore dismissed the case as time-barred.

In its petition for certiorari, Georgia-Pacific argues that the Sixth Circuit’s ruling undercuts CERCLA’s aim of attributing cleanup costs to those responsible for contamination, as responsible parties will now struggle to file contribution claims in a limited three-year window after an initial declaratory judgement of liability.[54] Petitioner also argues that the First Circuit has offered a much different reading of the contribution claim statute of limitations,[55] creating a circuit split that must be resolved by the Court.

Respondents argue that there is no meaningful circuit split for the Court to review, as the First Circuit decision referenced by Georgia-Pacific occurred under different circumstances. Additionally, respondents claimed that the Sixth Circuit’s decision was in line with CERCLA’s aim of speedy cleanup and that reversing it would undermine the goal of timely remediation of severe contamination.[56]At the Court’s invitation, the Solicitor General’s office filed an amicus brief, which recommends denying the petition and argues that despite a circuit split, the case is a poor vehicle for clarifying CERCLA’s statute of limitations in cost-recovery actions.[57]

For more information, please contact Zachary Zahner, who is based in Marten Law’s Washington, D.C. office. He can be reached at zzahner@martenlaw.com.