Curbing Regulation by Litigation

Previous chapters have detailed how the Roberts Court is hostile to efforts by entrepreneurial litigators to expand the use of litigation to advance social policy goals. This tendency is also evident in the context of environmental law, where the Court has repeatedly rejected calls for expansive liability for past environmental harms and looked somewhat favorably on preemption or other claims that could preclude an increase in environmental litigation.

Perhaps the most conspicuous example of the Court’s hostility to aggressive plaintiff’s litigation grew out of the infamous 1989 Exxon Valdez oil spill. In

March 1989, the Exxon Valdez supertanker ran aground off the coast of Alaska, spilling nearly eleven million barrels of oil into Prince William Sound. Largely due to the sound’s remote location, cleanup efforts were delayed and the spill quickly spread to cover thousands of square miles of ocean. Exxon pleaded guilty to various environmental violations, and several lawsuits followed, one of which led to a jury award of just more than $500 million in compensatory damages and $5 billion in punitive damages, subsequently reduced to $2.5 billion on appeal.[1] This was, at the time, the largest punitive-damage award in American history.[2]

In Exxon Shipping v. Baker, a divided Court struck down the punitive damage award, holding that a compensatory-to-punitive ratio greater than 1:1 is excessive under common law.[3] This was a significant victory for Exxon, but it was a less significant victory for business generally. First, and perhaps most importantly, the Court’s holding limiting the award of punitive damages to an amount equal to the compensatory damages was confined to the federal maritime common law, and there is little reason to believe the Court would impose an equivalent limit in constitutional challenges to punitive damages. Among other things, two of the justices who joined the judgment of the Court—Justices Thomas and Scalia—did so explicitly on the grounds that the Court’s holding was so limited and reaffirmed their opposition to imposing any constitutional limitations on punitive damages in state court.[4]

While the Court’s punitive damages holding grabbed the headlines, another aspect of Exxon Shipping could well have a greater impact on environmental law. Specifically, the Court unanimously rejected Exxon’s argument that punitive damages in water pollution cases are preempted by the CWA.[5] Writing for a unanimous Court, Justice Souter explained there was little indication Congress sought to “occupy the entire field of pollution remedies” and no reason to believe that “punitive damages for private harms will have any frustrating effect on the CWA remedial scheme.”[6] This is potentially significant as common law claims for punitive damages under federal maritime law are relatively rare, whereas industry claims that state tort remedies are preempted by federal statute are more common. Moreover, the Court’s antipreemption holding in Exxon Shipping is rather conspicuous as business preemption claims have prevailed in the majority of preemption cases decided by the Roberts Court thus far.

The Court did not look any more favorably upon expansive liability under the Comprehensive Emergency Response, Cleanup and Liability Act (CERCLA, aka “Superfund”). In Burlington Northern & Santa Fe Railway v. United States the Court narrowed the scope of “arranger” liability and clarified the standards for apportioning cleanup costs among potentially responsible parties under Superfund. Justice Stevens’s decision for an eight-justice majority may have unsettled some environmentalist expectations, but the holding rested squarely on a plain reading of the statutory text. Concluding that “arranger” liability only applies to those who take actions directed at the disposal of hazardous waste and cannot be applied to anyone who sells or transfers a product with knowledge that it might be mishandled, the opinion is hardly evidence of judicial hostility to regulation of private business.

Burlington Northern was arguably the most significant Superfund case ever heard by the Court, but it was also a bit late in coming. The Court’s ruling on behalf of the corporate defendants could have had significant practical effects had it come twenty years earlier, but by 2009 the number of sites at which liability questions remained outstanding had declined dramatically.[7] The same decision a decade or two earlier would have been a genuine blockbuster. Coming when it did, however, it will have relatively little practical effect.

In a second CERCLA opinion the Court further curbed efforts to expand liability for additional cleanup. In CTS Corp. v. Waldburger the Court concluded, 7-2, that while the CERCLA statute does preempt state statutes of limitations that would prevent the filing of cost recovery claims for hazardous waste site cleanups, CERCLA does not preempt state statutes of repose.[8] Although both sorts of state laws have the effect of preventing late-filed liability claims, the fact that they differ in purpose and operation served to distinguish them for preemption purposes. Whereas statutes of limitations are intended to discourage late-filed claims, statutes of repose are instead focused on potential defendants, and are intended to relieve them of liability. Thus, the Court concluded, CTS Corporation could not be held liable for cleanup costs at a site it owned more than two decades earlier.

In a third CERCLA case, United States v. Atlantic Research Corp., the Court looked a bit more favorably on efforts to impose liability on potentially responsible parties. In Atlantic Research the Court unanimously affirmed that companies that engage in voluntary clean ups of hazardous waste sites may pursue recovery actions against other potentially responsible parties under CERCLA.[9] This case was a probusiness decision insofar as a private company had sought cost recovery from the US government. Yet the business position in this case was also supported by environmentalist groups and, in future cases, it is likely that it will be private firms on the receiving end of cost-recovery claims for voluntary cleanups (and that the federal government will support such cost-recovery efforts). Although this decision affirmed potential liability, it largely reaffirmed what most had assumed was permissible under CERCLA, so it did not meaningfully expand corporate liability for hazardous waste cleanups.

Just as the Court has been cool to claims seeking to increase corporate liability for environmental harms, it has also taken a narrow view of the authority of federal courts to issue injunctions for alleged environmental violations, particularly under the NEPA. In Winter v. Natural Resources Defense Council, for example, the Court was asked to resolve a conflict between the military and marine mammals.[10] Several environmental organizations had successfully sought a preliminary injunction against the navy’s use of mid-frequency active sonar because it had failed to complete an environmental impact statement.

As first presented to the Court, it looked like a potential blockbuster, raising interesting separation of powers questions, such as the ability of the executive to authorize noncompliance with environmental statutes. Yet as it happened, the ultimate disposition of the case was rather narrow. Ruling 6-3, the Court overturned the preliminary injunction on the grounds that the US Court of Appeals had applied too loose a standard and that the potential threat to marine mammals was outweighed by the national interest in military readiness. As with NAHB, this was an outcome favored by business interests, but unlikely to have a substantial practical effect. ChiefJustice Roberts’s opinion for the Court in Winter stresses the importance of military readiness throughout, making it likely that the decision will have minimal effects in other contexts. Indeed, the Court showed more regard for the national security implications of the case than any environmental concerns.

Even without the national security backdrop, the result in Winter is not surprising. Prior to this case, environmentalist plaintiffs had gone 0-15 in NEPA cases before the Supreme Court.[11] Indeed, the Supreme Court has never decided a single issue in a NEPA case in favor of an environmentalist group.[12] This trend continued with Monsanto Co. v. Geertson Seed Farms in which the Court again concluded that the US Court of Appeals for the Ninth Circuit affirmed an overbroad injunction against a federal agency for a failure to comply with NEPA.[13] When the Animal and Plant Health Inspection Service (APHIS) deregulated a variety of genetically modified alfalfa, the district court not only vacated the agency decision but also enjoined it from taking future deregulatory decisions as it reached hypothetical actions the agency had not yet sought to undertake. Should APHIS undertake other deregulatory decisions in the future, courts could consider issuing injunctions if and when such actions are properly challenged, but not until then.

With the Monsanto decision, the losing streak for NEPA claims reached 016. Yet insofar as the Court is skeptical, if not actually hostile, to NEPA-based claims, this is not an innovation of the Roberts Court.

The Roberts Court is also not particularly sympathetic to other claims filed against government agencies. In Rockwell International Corp. v. United States, the Court made it marginally more difficult for alleged whistle-blowers to bring qui tam actions under the False Claims Act, but did nothing to prevent such suits by the federal government.[14] [15] One of the primary practical effects of this decision is that government contractors sued under the False Claims Act are less likely to face requests for attorneys’ fees from such suits, a result business certainly favors. This may also have the result of reducing the overall number of such suits. Insofar as it is a significant victory for the business community, it is significant for government contractors, not the business community at large.

While Massachusetts v. EPA, and arguably AEP v. Connecticut, took an expansive view of standing, the Supreme Court adopted a more traditional and restrictive view of standing in Summers v. Earth Island Institute.96 This case was a small and predictable win for business insofar as it reaffirmed the Court’s longstanding requirement that citizen-suit plaintiffs suffer an injury-in-fact in order to satisfy the requirements of Article III standing. In Summers, environmentalist plaintiffs had sought to challenge a revision of US Forest Service regulations governing small-scale fire-rehabilitation and timber-salvage projects. In 2003, they challenged the regulatory revisions as applied to a specific project, but the government eventually settled, creating a standing problem insofar as they sought to maintain their suit against the underlying procedural rule change. No longer able to identify a specific project that would be affected by the rule that could be the source of their injury, the Supreme Court held, 5-4, that they no longer had standing to maintain their suit because they could not demonstrate they would suffer an “injury-in-fact” that is both actual or imminent and concrete and particularized. Just as the plaintiffs in Lujan v. Defenders of Wildlife could not satisfy the injury requirement with their someday intentions to visit endangered species threatened by the government’s failure to enforce ESA limitations on federally funded projects overseas, the Summers plaintiffs could not satisfy the injury requirement by arguing that implementation of the Forest Service’s regulation would result in an unlawful timber-salvage project on an as-yet-unidentified parcel at some as-yet-unidentified point in the future.[16]

By rejecting standing “in the absence of a live dispute over a concrete application” of specific regulations,[17] Summers reaffirmed the Court’s hostility to programmatic public interest litigation. The rule reaffirmed in Summers makes it more difficult to challenge underlying policy changes, as prospective plaintiffs need to identify how the policy change, as applied in a specific context, tangibly harms their interests. Industry amici supported this result insofar as they sought to reduce citizen-suit litigation against projects on federal lands, particularly where (as in this case) such suits result in nationwide injunctions. Resource-using industries active on federal lands, such as the timber industry, also sought to insulate the contested Forest Service rule from legal challenge. Forcing environmentalist groups to challenge individual applications of a given policy change would make it more difficult to overturn the underlying rule. Yet Summers broke no meaningfully new ground in the law of standing, and was thus not a particularly significant win for business interests.

  • [1] Exxon Shipping Co. v. Baker, 554 U.S. 471, 481 (2008).
  • [2] Jeffery Rosen, Supreme Court Inc., N.Y. Times, March 16, 2008.
  • [3] Exxon Shipping Co., 554 U.S. 471.
  • [4] 554 U.S. at 515 (Scalia, J., concurring).
  • [5] Id. at 488-89.
  • [6] Id. at 489.
  • [7] Richard J. Lazarus, Docket Capture at the High Court, 119 Yale L.J. Online 89, 92 (2010),available at (last accessedFebruary 17, 2016).
  • [8] CTS Corp. v. Waldburger, 134 S. Ct. 2175 (2014).
  • [9] United States v. Atl. Research Corp., 551 U.S. 128 (2007).
  • [10] Winter v. Natural Res. Def. Council, 555 U.S. 7 (2008).
  • [11] Jason J. Czarnezki, Revisiting the Tense Relationship between the U.S. Supreme Court, AdministrativeProcedure, and the National Environmental Policy Act, 25 Stan. Envtl. L.J. 3, 10 (2006).
  • [12] See id.; see also David C. Shilton, Is the Supreme Court Hostile to NEPA? Some PossibleExplanations for a 12-0 Record, 20 Envtl. L. 551, 553 n.6 (1990).
  • [13] Monsanto Co. v. Geertson Seed Farms, 561 U.S. 139 (2010).
  • [14] Rockwell Int’l Corp. v. United States, 549 U.S. 457 (2007).
  • [15] 555 U.S. 488 (2009).
  • [16] See id. at 495-97.
  • [17] Id. at 490.
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