Litigation Publications

Deconstructing Subdivision Bonds

RCA Shareholder David Kash writes in the November International Association of Defense Counsel (IADC) newsletter about handling of defaulted subdivision cases. Read the article here.

THE MITIGATED FONSI

CEQ has now Approved the Use of Mitigation to Reduce Environmental Impacts to a Level That Eliminates the Need for an EIS

John C. Lemaster, Ryley Carlock & Applewhite

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Sean T. Hood, Ryley Carlock & Applewhite

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In a significant development for those who work on projects that require review under the National Environmental Policy Act (NEPA),[1] the Council on Environmental Quality (CEQ) [2] recently issued final guidance[3] reversing its past position that an Environmental Impact Statement (EIS) remains necessary even if mitigation measures are developed during the NEPA process that will reduce the reasonably foreseeable environmental impacts of a major federal action to a level that is not significant.[4]

CEQ's new guidance is that "use of mitigation may allow the agency to comply with NEPA's procedural requirements by issuing an EA and a Finding of No Significant Impact (FONSI), or ‘mitigated FONSI,' based on the agency's commitment to ensure the mitigation that supports the FONSI is performed, thereby avoiding the need to prepare an EIS."[5]

Mitigation can take several different forms, including the following as enumerated in the Final Guidance:

Avoiding an impact by not taking a certain action or parts of an action;
Minimizing an impact by limiting the degree or magnitude of the action and its implementation;
Rectifying an impact by repairing, rehabilitating, or restoring the affected environment;
Reducing or eliminating an impact over time, through preservation and maintenance operations during the life of the action; and
Compensating for an impact by replacing or providing substitute resources or environments.[6]

In reversing its prior position,[7] CEQ outlined a number of issues to be considered in connection with a federal agency's issuance of a mitigated FONSI:

Monitoring

"Monitoring is essential in those important cases where the mitigation is necessary to support a FONSI and thus is part of the justification for the agency's determination not to prepare an EIS;"[8]
The more important the environmental impact being mitigated, the more stringent the monitoring must be;[9]
The monitoring plan should be described (or incorporated by reference) in the mitigated FONSI.[10]

Enforcement

The mitigation measures must be enforceable, i.e. subject to sufficient legal authority to ensure they will be performed;[11]
Likewise, an agency should not issue a mitigated FONSI if it is not reasonable to believe that the necessary funding will be available to ensure adequate monitoring and enforcement;[12]
An agency should place appropriate restrictions on authorizations (e.g. grants or permits) given by the agency that will enable the agency to suspend or cancel the authorizations in the event of noncompliance with the mitigation plan;[13]
The mitigation requirements should be clearly described in the mitigated FONSI, including measurable performance standards or expected results;[14]
Secondary mitigation measures can be identified for implementation in the event that the initial measures are unsuccessful.[15]

Responsibility and Consultation

The lead agency may share monitoring responsibilities with coordinating agencies;[16]
An agency may rely upon neutral outside experts to help ensure that mitigation and monitoring will be successful;[17]
An agency should involve the public when preparing a mitigated FONSI.[18]

[1] 42 U.S.C. § 4331 et seq.

[2] CEQ was established within the Executive Office for the purpose of overseeing federal agencies' discharge of their duties under NEPA, see, e.g., 42 U.S.C.A. § 4344(3), and issues federal regulations concerning NEPA compliance.

[3] Memorandum for Heads of Federal Departments and Agencies re: "Appropriate Use of Mitigation and Monitoring and Clarifying the Appropriate Use of Mitigated Findings of No Significant Impact," dated January 14, 2011 ("Final Guidance"). Available at:

http://www.whitehouse.gov/sites/default/files/microsites/ceq/01%2014%2011%20Mitigation%20and%20Monitoring%20Guidance.pdf

[4] NEPA's requirement that federal agencies must consider environmental consequences only applies in the case of "major Federal actions" that "significantly" impact the human environment. 42 U.S.C. § 4332(2)(C). CEQ's implementing regulations outline what constitutes a "Major Federal action," 40 C.F.R. § 1508.18, and what impacts are "significant." 40 C.F.R. § 1508.27.

[5] Final Guidance at pp. 4-5 (citing 40 CFR § 1508.20).

[6] Id. at p. 2.

[7] Id. at p. 3 n. 8 (citing its prior guidance, "Forty Most Asked Questions Concerning CEQ's National Environmental Policy Act Regulations," 46 Fed. Reg. 18,026 (Mar. 23, 1981), available at ceq.eh.doe.gov/nepalregs/40/40Pl.htm.)

[8] Id. at p. 10.

[9] Id. (enumerating some factors agencies should use in determining the level of "importance").

[10] Id. at pp. 10-11.

[11] Id. at p. 7 and n. 18.

[12] Id. at p. 7.

[13] Id. at pp. 9 and 14-15.

[14] Id. at pp. 7-8.

[15] Id. at pp. 9-10.

[16] Id. at p. 12.

[17] Id. at p. 5.

[18] Id. at p. 13. However, CEQ recognizes that some information must be treated as confidential, such as "confidential business information or the location of sacred sites." Id. at 14.

WILDERNESS SOCIETY V. UNITED STATES FOREST SERVICE

The Demise of the Misguided "Federal Defendant Rule" and the Return of Project Proponents and State and Local Interests to NEPA Litigation in the Ninth Circuit

John C. Lemaster, Ryley Carlock & Applewhite

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Sean T. Hood, Ryley Carlock & Applewhite

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The Ninth Circuit, in an en banc opinion, has abandoned its long-standing, and much-maligned, "federal defendant rule" that provided that only the federal government and its agencies could be defendants in actions seeking redress under the National Environmental Policy Act ("NEPA").[1] Wilderness Society v. United States Forest Service, 630 F.3d 1173 (9th Cir. 2011) (en banc). The rule had "categorically preclude[d] private parties and state and local governments from intervening of right as defendants on the merits of NEPA actions." Id. at 1177.

This means that the Ninth Circuit categorically refused to even entertain a motion to intervene as of right filed by a project proponent - the company that has spent years working with the coordinating agency to obtain permits and rights-of-way and financing scientific study to support the agency's "hard look" into the environmental impacts of the project, and with investments in the project typically totaling millions of dollars.

The rationale for the rule was that, because NEPA is a procedural statute that does not provide a substantive right, the federal agency charged with implementing NEPA was the only proper defendant in a NEPA action. Churchill County v. Babbitt, 150 F.3d 1072, 1082 (9th Cir. 1998). Indeed, in establishing the rule in Portland Audubon Society v. Hodel, the Ninth Circuit held that a proposed intervenor's "significant economic stake" in the outcome of a NEPA action was not a "protectable interest" that would justify intervention. 866 F.2d 302, 309 (9th Cir. 1989). The court concluded that NEPA did not provide protection for "purely economic interests." Id.

The federal defendant rule did not prohibit private parties and local and state government from intervening in the remedial phase of a NEPA action. See e.g., Forest Conservation Council v. United States Forrest Service, 66 F.3d 1489, 1494 (9th Cir. 1989). This bifurcation of NEPA actions - precluding private parties from intervening in the merits phase of the litigation but allowing intervention on the remedial phase of the litigation - caused significant confusion. For example, an intervenor could seek to intervene as of right in opposition to entry of a preliminary injunction, which is remedial, not on the merits. However, the question arose whether the intervenor could argue the likelihood of success on the merits of the NEPA claim, which is a fundamental component of the Ninth Circuit's preliminary injunction test. Clear Channel Outdoor Inc. v. City of Los Angeles, 340 F.3d 810, 813 (9th Cir. 2003) (A preliminary injunction will be entered when the movant establishes "either (1) a likelihood of success on the merits and the possibility of irreparable injury; or (2) that serious questions going to the merits were raised and the balance of hardships tips sharply in its favor.").

For years, project proponents and other non-federal entities interested in the outcome of NEPA litigation in the Ninth Circuit have argued that the federal defendant rule was at odds with the text and purpose of Rule 24(a), Federal Rules of Civil Procedure. Rule 24(a) provides that "the court must permit anyone to intervene who...claims an interest relating to the property or transaction that is the subject of the action...." How can it be said that a project proponent with millions of dollars of investment has no interest relating to the project that is the subject of the NEPA litigation?

The rule's disapproval was underscored by the positions taken in Wilderness Society. Thirty-seven amici filed briefs urging the Ninth Circuit to abolish the rule, id. at 1178, and not even the appellee conservation groups opposing intervention would speak in favor of the rule. Id. at 1177 ("The conservation groups took no position on the propriety of the rule."). The thirty-seven amici represented nearly every conceivable contingent with interests in NEPA litigation, including commercial interests, state and local governments, the federal government, and regional water authorities. Id. at 1178. Even conservation groups, recreation groups, and Indian tribes - groups that would typically be opposing projects, and therefore would be opposing intervention of non-federal defendants - argued against the prohibition on intervention as of right. Id.

Twenty-two years after establishing the rule in Portland Audubon, the Ninth Circuit finally came around. After analyzing the history and rationale of the federal defendant rule compared to the construction of Rule 24(a) in other contexts, the court found that the federal defendant rule "runs counter to all of the" standards governing intervention under Rule 24(a), and is "at odds" with the standards of intervention applied in all other intervention contexts. 630 F.3d at 1179. The court found the federal defendant rule "eschews practical and equitable considerations and ignores our traditionally liberal policy in favor of intervention." Id. The court also found that the federal defendant rule was "out of step" with all of the other circuits except the Seventh Circuit. Id. at 1180.

Stated most succinctly, "the ‘federal defendant' rule mistakenly focuses on the underlying legal claim instead of the property or transaction that is the subject of the lawsuit." Wilderness, 630 F.3d at 1178.

The Ninth Circuit's abolition of the federal defendant rule does not mean that project proponents are now recognized to have sufficient interests for intervention as a right. Rather, the Ninth Circuit will now analyze each would be intervenors' interests on a case-by-case basis, just like every other motion to intervene. Id. at 1180. However, the guidance given by the court regarding what must be shown suggests that most project proponents / investors will be able to make a strong case that they have a legally protectable interest giving rise to a right to intervene. Id. at 441 ("A putative intervenor will generally demonstrate a sufficient interest for intervention of right in a NEPA action, as in all cases, if ‘it will suffer a practical impairment of its interests as a result of the pending litigation.'") (citing California ex rel. Lockyer v. United States, 450 F.3d 436, 441 (9th Cir. 2006) (emphasis added).

What Abolition of the Rule Means For

NEPA Litigation In The Ninth Circuit

Objecting entities can now expect that their attacks on projects constituting major federal actions will now be defended on the merits not only by the Department of Justice on behalf of the coordinating agency, but also by private firms on behalf of the project proponents backing the projects with private investments. Our experience with DOJ NEPA lawyers is that they are typically very good. However, the investors have a much greater financial incentive to see the project come to fruition, and they will often fund a more vigorous and expensive defense, which in turn can increase the attention that the challengers must devote in order to mount a credible opposition to the project. Ultimately, we expect that fewer challenges will be successful now that proponents will be able to participate in the liability phase.

[1] 42 U.S.C. § 4331 et seq.

NAVIGATING THE WATERS OF SETTLING WITH INDIAN TRIBES

WHEN DOES ENFORCEABILITY REQUIRE SECRETARIAL OR CONGRESSIONAL APPROVAL?

John C. Lemaster, Ryley Carlock & Applewhite

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Sean T. Hood, Ryley Carlock & Applewhite

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Introduction

Governmental and private entities are faced with claims for alleged injury to Indian lands in a variety of circumstances. This can arise as a result of direct use of Indian lands: states lease Indian lands for freeway expansion; corporations conduct retail and other business on reservations; and mining companies and natural resource developers utilize rights-of-way for pipelines, reservoirs, and other uses on Indian lands.

Claims can also arise from activity that occurs entirely off-reservation, but which a tribe alleges nevertheless impacts tribal lands or tribal resources. This occurs perhaps most commonly in the context of water right adjudications, where the relative rights to a common water source are determined among Indian water users and non-Indian water users. Other examples are off-reservation energy or natural resources transportation projects that a tribe claims will impair tribal water rights (cue the claim of extensive, unquantified, Winters reserved rights[1]) or harm to other natural resources.

When faced with claims for impacts to Indian lands, it is important to consider what authorizations will be needed to settle the claims. Even if settlement terms can be reached with the claimant tribe, federal law renders some agreements invalid and unenforceable unless Congress authorizes the agreement as required by the Indian Non-Intercourse Act[2] or, in other circumstances, unless the Secretary of the Interior consents to the agreement pursuant to 25 U.S.C. § 85.[3]

It is also important to consider whether the United States has an independent claim in its capacity as trustee for the settling tribe. If so, waivers should be obtained from the United States as well as the tribe in order to ensure finality.

If the involvement of the federal government will be necessary in order to achieve a complete and enforceable settlement, this is a reality best confronted at the outset of the dispute, rather than on the eve of settlement or, much worse, years later when the tribe or the United States reinstitutes litigation of the same issues (and long after the previously-disbursed settlement funds have been spent).

A brief overview of Indian water rights is useful because these issues arise so frequently in the context of water rights disputes. That overview is followed by discussions of the Indian Trust Doctrine, the Indian Non-Intercourse Act and congressional approval, the consent of the Secretary of the Interior pursuant to 25 U.S.C. § 85, and waiver of separate claims held by the United States as trustee.

I. INTRODUCTION

The interstate distribution of natural gas is governed by two federal statutes: The Natural Gas Act, 15 U.S.C. §§ 717 to 717Z (the "NGA") and the Natural Gas and Hazardous Materials Pipeline Safety Act, 49 U.S.C. §§ 60101 to 60125 (the NGPSA"). The NGA is a comprehensive scheme regulating the interstate transportation and sale of natural gas for ultimate distribution to the public. 15 U.S.C. § 717.[1] The NGPSA is a comprehensive federal statute regulating the safety of natural gas pipelines. 49 U.S.C. § 60102.

The NGA provides that a natural gas company must obtain a certificate of public convenience and necessity from the Federal Energy Regulatory Commission ("FERC") in order to transport, sell, construct, extend, acquire or operate any natural gas facility. 15 U.S.C. §717f(c). To obtain a certificate, a natural gas company must submit an application to FERC to engage in these activities. 15 U.S.C. §717f(d). The process FERC uses to determine whether to issue a certificate of public conference and necessity is subject to extensive federal regulation. 18 C.F.R. Part 157. The nature of the FERC proceedings is beyond the scope of this paper. For purposes of this paper, the FERC process analyzes all aspects of the proposed action including the location, construction, and environmental impacts of the proposed action.

Once this administrative process is completed, FERC will issue a certificate if two conditions are satisfied: 1) the natural gas company is able and willing to do the acts and perform the services proposed, to conform to the provisions of the NGA, and to conform to the regulations of FERC, and 2) the service, sale, operation, construction, extension, or acquisition is or will be required by the present or future public convenience and necessity to the extent authorized by the certificate. 15 U.S.C. § 717f(e).

The NGA specifically provides that a natural gas company has the power of eminent domain to construct natural gas pipelines and facilities:

When any holder of a certificate of public convenience and necessity cannot acquire by contract, or is unable to agree with the owner of property to the compensation to be paid for, the necessary right-of-way to construct, operate, and maintain a pipeline or pipelines for the transportation of natural gas, and the necessary land or other property, in addition to right-of-way, for the location of compressor stations, pressure apparatus, or other stations or equipment necessary for the proper operation of such pipeline or pipelines, it may acquire the same by the exercise of the right of eminent domain in the district court of the United States for the district in which such property may be located, or in the State courts. The practice or procedure in any action or proceeding for that purpose in the district court of the United States shall confirm as nearly as may be with the practice and procedure in similar action or proceeding in the courts of the state where the property is situated: Provided, that the United States district courts shall have jurisdiction of cases when the amount claimed by the owner of the property to be condemned exceeds $3,000.

15 U.S.C. § 717f(h) (emphasis in original). This paper examines several issues arising under the condemnation procedures authorized by the NGA.