D.C. Circuit Hears Oral Argument on Challenge to Carbon Sequestration RCRA Conditional Exclusion

In December 2010, the United States Environmental Protection Agency ("EPA") promulgated regulations under the Safe Drinking Water Act, 42 U.S.C. §§ 300fet seq., creating a new category of underground injection wells—Class VI—to govern underground injection of carbon dioxide ("CO2") for geologic sequestration. Geologic sequestration involves capturing CO2 gas from stationary emissions sources, compressing that gas into what is called a supercritical fluid, transporting the fluid by pipeline, and then injecting the fluid into Class VI underground injection wells.

On January 3, 2014, the EPA promulgated a rule under the Resource Conservation and Recovery Act ("RCRA") conditionally excluding from the definition of "hazardous waste" hazardous CO2 streams that are injected into Class IV wells for purposes of geologic sequestration and that meet other criteria. 79 Fed. Reg. 350 (Jan. 3, 2014).

On April 2, 2014, the Carbon Sequestration Council, its member Southern Company Services, and the American Petroleum Institute ("API") filed a petition for review of the final rule in the United States Court of Appeals for the District of Columbia, arguing that the CO2 emissions used in geologic sequestration are not "solid waste" and, therefore, not subject to RCRA, negating the need for the conditional exclusion. Under RCRA, a "solid waste" is, in relevant part, "other discarded material, including solid, liquid, semisolid or contained gaseous material." 42 U.S.C. § 6903(27). Petitioners contended that the supercritical fluid injected into the wells is not a "solid waste" under RCRA because it is not included as one of the specifically enumerated forms of material in the definition of "solid waste," and it is clear that Congress intended this to be an exclusive list. 

In the alternative, the petitioners argued that EPA's interpretation that the compressed gas is a "solid waste" is not entitled to deference pursuant to Chevron U.S.A., Inc. v. Natural Resource Defense Council, Inc., 467 U.S. 837 (1984) because (i) EPA's interpretation of the definition was not compelled; (ii) EPA did not consider the matter in a detailed and reasoned manner, including considering how the RCRA regulatory scheme would apply to CO2 emissions; and (iii) EPA's position conflicts with its longstanding position that RCRA does not apply to uncontained gases. Finally, the petitioners argued that captured CO2 is not a "solid waste" because it is not discarded, since there is a possibility that the fluid could be used for enhanced oil recovery or other productive use. 

EPA responded to the petition, arguing that the petitioners lacked standing primarily because they failed to allege a sufficient injury-in-fact. On the merits, EPA argued that the rule is reasonable because (i) the list of physical forms in the RCRA definition of "solid waste" is a nonexhaustive list and EPA reasonably interpreted it to include the supercritical fluid, and (ii) when "discarded" is given its ordinary meaning, EPA reasonably determined that the supercritical fluids were discarded.

Judges Garland, Brown, and Edwards heard oral argument on March 26, 2015, but have not yet ruled on the Petition.

District Court Holds Coal Companies Have Standing to Sue EPA for Failing to Evaluate Losses of Employment that May Result From Enforcement of the Clean Air Act

On March 24, 2014, multiple coal companies filed suit against the Administrator of EPA in the United States District Court for the Northern District of West Virginia. Murray Energy Corp. v. McCarthy, No. 5:14-CV-39. The plaintiffs alleged that EPA failed to comply with § 321(a) of the Clean Air Act ("CAA"), which requires EPA to "conduct continuing evaluations of potential loss or shifts of employment which may result from the administration or enforcement of the provision of [the CAA] and applicable implementation plans, including where appropriate, investigating threatened plant closures or reductions in employment allegedly resulting from such administration or enforcement." 42 U.S.C. § 7621(a).

EPA originally filed a motion to dismiss for lack of subject matter jurisdiction, arguing that the district court lacked jurisdiction because plaintiffs had failed to articulate a statutory waiver of EPA's sovereign immunity. In September 2014, the district court rejected EPA's argument. In denying the motion, the court held that the coal companies adequately had pled that that the CAA imposes a nondiscretionary duty on EPA to evaluate potential job loss or shifts of employment resulting from enforcement of the CAA. Because that duty was nondiscretionary, § 304 of the CAA authorized plaintiffs to file suit against EPA. 

In December 2014, EPA filed a second motion to dismiss for lack of Article III standing. On March 27, 2015, the district court denied that motion, finding that plaintiffs satisfied the standing elements of injury-in-fact, causation, and redressability.

With respect to injury-in-fact, the court noted that "economic injury from business competition created as an indirect consequence of agency action can serve as the required 'injury in fact.'" As summarized by the court, plaintiffs argued that, had EPA complied with the requirements of § 321(a), then "the information would document the threatened business closures and consequent unemployment, which could be used to convince the EPA, the Congress, and/or the American public that the actions of the EPA have been harmful and must be changed." The court, accordingly, found that the plaintiffs had alleged sufficient injury-in-fact. 

With respect to causation, the court stated that:

the causation element of standing is satisfied not just where the defendant's conduct is the last link in the causal chain leading to an injury, but also where the plaintiff suffers an injury that is "produced by [the] determinative or coercive effect" of the defendant's conduct "upon the action of someone else."

The court found that the plaintiffs' allegations "that the actions of EPA have had a coercive effect on the power generating industry, essentially forcing them to discontinue the use of coal" were sufficient to show that the alleged injuries "are fairly traceable to the actions of EPA" and its failure to conduct the evaluations required by § 321(a). 

In discussing redressability, the court noted that the plaintiffs were asserting procedural and informational injury as a basis for standing. When a party alleges procedural injury, the party need not "prove that if he had received the procedure the substantive result would have been altered," just that "the procedural step was connected to the substantive result." In addition, a party has informational standing when "denied information that must be disclosed pursuant to a statute." The court held that the alleged injuries were redressable because, if the court issued an injunction requiring EPA to comply with § 321(a), "the results of the inquiry may have the effect of convincing EPA, Congress, and/or the American public to relax or alter EPA's prior decisions." 

On April 10, 2015, the United States filed a motion for summary judgment, arguing that EPA has conducted the evaluations required by § 321(a). On April 22, 2015, the plaintiffs filed a motion to compel discovery, extend the deadline for fact discovery, and hold the United States's motion for summary judgment in abeyance pending completion of discovery, arguing that they need discovery before being able to respond to the motion for summary judgment. The court has not yet ruled on these motions.

Massachusetts Court Dismisses Suit Seeking to Compel Harvard University to Divest from Fossil Fuel Stocks

On March 17, 2015, a Massachusetts trial court granted a motion to dismiss filed by entities responsible for overseeing and administering Harvard University's endowment in an action brought by the Harvard Climate Justice Coalition and seven Harvard University students seeking to enjoin Harvard from holding any direct or indirect investments in fossil fuel companies. The plaintiffs brought the lawsuit in November 2014 and asserted two counts against Harvard, one for mismanagement of charitable funds and a second for intentional investment in abnormally dangerous activities. The plaintiffs alleged, among other things, that they had standing under Massachusetts law to "enforce the lawful management" of Harvard's endowment because they had interests that were personal, specific, and existed apart from any broader community interests. 

In granting the defendants' motion to dismiss, the court held that the plaintiffs lacked standing to sue Harvard for alleged mismanagement of its charitable assets because the plaintiffs' status as Harvard students did "not endow them with personal rights specific to them that would give them standing to charge Harvard with mismanagement of its charitable assets" and that allegations that Harvard's investment in fossil fuel companies diminishes plaintiffs' education, chills academic freedom, and stifles confrontation of climate change on campus were insufficiently personal to the plaintiffs "to form a foundation for their standing to challenge how Harvard invests its endowment." The court likewise rejected the plaintiffs' argument that they had alleged a viable claim that Harvard had intentionally invested in abnormally dangerous activities because (i) no court in any jurisdiction had ever recognized such a tort; (ii) the plaintiffs lacked standing to assert such a claim on behalf of "Future Generations"; and (iii) allowing the plaintiffs to assert such a claim would open the door to suits from students "seeking court orders that Harvard—or any other charitable organization—take other actions to deal with the 'exceptional risks' posed by whatever danger to Future Generations those other students fear above all others."