Environmental Litigation Practice Group
Environmental Litigation Update:
2002 in Review
This special edition highlights the important environmental litigation cases and trends in the Pacific Northwest during the past year.
More detailed consideration of each of these cases is available on our Web site located at: http://www.prestongates.com
CRIMINAL LAW
United States v. Olympic Pipe Line Company, Inc.
CR 01-0338R (W.D. Wash.)
By James A. Goeke
On June 10, 1999, a petroleum products
pipeline near Bellingham, Washington
ruptured and released over 235,000 gallons
of gasoline into nearby waters. The escaped
gasoline exploded, killing two boys and a
young man. The U.S. Attorney’s Office for
the Western District of Washington
responded in September 2001 with a seven
count criminal indictment against Olympic
Pipe Line Company, Inc. (Olympic), Equilon Pipeline
Company, LLC (Equilon), and two supervisory employees of
Olympic, Frank Hopf, Jr. and Ronald Dean Brentson (the
“employee Defendants”), alleging five felony violations of the
Pipeline Safety Act (PSA).
The prosecution of Olympic and its employee Defendants
is significant because the felony charges under the PSA
hinge on allegations that the Defendants willfully violated
pipeline safety regulations through various management
omissions rather than through the commission of some
particular affirmative criminal act. Specifically, the PSA
regulations at issue generally require safe operation of
pipelines, reporting of safety conditions, the testing and
maintenance of pipeline equipment, the creation of an
operations manual, and appropriate training for operators.
The indictment specifically alleges that the Defendants failed
to properly test and maintain valves on the pipeline, failed to
investigate unintended shutdowns of the pipeline, and failed
to institute or conduct a proper training program for pipeline
operators and that these failures led to the breach of the
pipeline. The employee Defendants now face the possibility
of up to five years in prison and substantial fines for these
omissions.
In July 2002, the employee Defendants (along with the
corporate defendants) unsuccessfully moved to dismiss the
criminal charges under the PSA, arguing that the regulations
were unconstitutionally vague and thus insufficient to
support criminal charges based on the specific omissions
charged in the indictment. In denying the employee
Defendants’ motion to dismiss, the Court held that “a
regulation or statute [is not] unconstitutionally vague merely
because the terms are not precisely defined” and then
applied a “reasonable person in the industry standard” to
evaluate the regulations as applied to the facts and
omissions alleged in the indictment. The Court also noted the
PSA included a scienter requirement of willfulness that
worked to mitigate otherwise vague language in the
regulations. The case is currently set for trial in January
2003, though at the time of this writing, media reports
indicate a plea agreement involving all defendants may be
imminent. This article will be updated on our web site as
developments occur with this prosecution.
Litigation Department
Seattle
jgoeke@prestongates.com
Page 2
Environmental Litigation Practice Group
INSURANCE COVERAGE FOR ENVIRONMENTAL CLEANUP COSTS
Overton v. Consolidated Insurance Company
145 Wn.2d 417, 38 P.2d 322 (2002)
By John C. Bjorkman
sampling to characterize the extent of
contamination, but neither EPA nor
Ecology took any further action either on
their own or against Overton to
investigate or cleanup the site. Overton
purchased comprehensive general liability
(CGL) insurance in 1977 and 1979
although he soon closed the business.
Subsequent buyers of the real
property discovered PCB contamination
and sued Overton under the Model Toxics
Control Act (MTCA), for recovery of their
cleanup costs. Overton tendered to his
CGL carriers but both denied coverage
claiming that, in light of his knowledge of
the 1976 EPA soil sample test result,
Overton knew of the loss before
purchasing his insurance. The trial court
granted the carriers’ summary judgment
and the Supreme Court affirmed.
The Supreme Court framed the issue
as “whether . . . [Overton’s] knowledge of
PCB contamination prior to the purchase
of the insurance policies precludes
coverage” and concluded, under the facts
presented in this case, it did. The
In January of 2002, the
Washington Supreme
Court issued its latest
opinion on
environmental cleanup
cost coverage under
comprehensive general
liability (CGL) insurance
policies. In the end, the
5-4 decision in Overton v. Consolidated
Insurance Company emphasizes the
importance to insureds of developing and
effectively presenting a careful factual
record when faced with a carrier’s motion
for summary judgment.
In 1972, Jerry Overton’s corporation
bought an existing Spokane, Washington
business that manufactured and repaired
polychlorinated biphenyl (PCB) electrical
transformers. In 1976, the EPA took two
soil samples on site and found elevated
levels of PCBs in one sample. When the
Department of Ecology presented the test
results, Overton denied there was a
problem and denied any responsibility for
a cleanup. EPA recommended further
Overton decision quite clearly holds that
knowledge of an official test result
showing soil contamination can, like
official designation as a “potentially
responsible party,” be strong evidence of
knowledge of a pre-existing loss. But the
Overton Court did not overrule prior case
law holding that the mere knowledge of
contaminants in the soil does not equate,
without more, to the expectation of
“physical injury to ... tangible property.”
Ultimately, the Overton case
demonstrates the necessity of carefully
preparing and presenting a case on
summary judgment.
Environmental Litigation
Practice Group Chair
Seattle
johnb@prestongates.com
ENDANGERED SPECIES ACT
Alsea Valley Alliance v. Evans
161 F. Supp. 2d 1154 (D. Or. 2001)
By Gregory J. Miner
The 2001 federal court
decision in Alsea Valley
Alliance v. Evans, 161
F. Supp. 2d 1154 (D.
Or. 2001) determined
that the National
Marine Fisheries
Service (NMFS) could
not fail to include
hatchery spawned Pacific salmon and
steelhead from Endangered Species Act
(ESA) listing decisions where the
hatchery spawned fish were considered
by the agency to be part of the same
evolutionary significant unit (ESU). This
decision triggered the issuance of a new
draft policy of NMFS regarding
consideration of hatchery fish in ESA
decisions.
Under the draft policy issued in July
2002, NMFS will first determine whether
both natural and hatchery populations
comprise an evolutionary significant unit
and then undertake a status review and
assessment of the ESU. Previously,
NMFS would determine the status of only
natural populations and then determine
which hatchery populations were also
part of the ESU. If a listing is warranted,
all hatchery and natural populations in
the ESU will be included. Both the
positive and negative effects of artificial
propagation will be taken into
consideration during each status review
of ESU and in the ultimate listing
decision.
Litigation
Portland
gminer@prestongates.com
Page 3
WATER LAW
Public Util. Dist. No. 1 of Pend Oreille County v. State Dep’t of Ecology
146 Wn.2d 778, 51 P.3d 744 (2002)
By Catherine Drews and Adam Gravley
On July 18, 2002, the
Washington State
Supreme Court issued
an important decision
that affects Washington
water law in Public
Util. Dist. No. 1 of
Pend Oreille County v.
State Dep’t of Ecology,
146 Wn.2d 778, 51
P.3d 744 (2002).
Pend Oreille addresses
three areas of
Washington water law:
(1) the interpretation of
the transfer and change
statute, RCW
90.03.380; (2) loss of
water rights; and (3)
water quality certification under section
401 of the Clean Water Act.
In 1994, the Pend Oreille Public
Utility District (District) began
developing the Sullivan Creek
Hydroelectric Project and applied to
change the point of diversion for its
surface water rights. These rights
allowed the District to store, divert, and
use water to generate hydroelectric
power. The Department of Ecology
(Ecology) denied the District’s
applications in part on the grounds that
changing the diversion would be contrary
to the public interest. The public interest
at issue was instream flows. Because the
District had to amend its federal license
to generate power with the Federal
Energy Regulatory Commission (FERC),
the District also had to apply to Ecology
for a section 401 water quality
certification under the Clean Water Act.
Ecology issued the section 401
certification, but imposed conditions to
protect instream flows in Sullivan Creek.
The District appealed Ecology’s decisions
to the Pollution Control Hearings Board
(PCHB), and subsequently appealed to
the Washington State Supreme Court.
Preston attorneys Adam Gravley and
Catherine Drews represented the
Washington Water Utility Council
(WWUC) as amicus curiae. The WWUC
argued that Ecology does not have the
authority to consider the public interest
when evaluating a transfer or change
application for surface water rights
because it is not a factor contained in
RCW 90.03.380. In an eight to one
decision, the Court adopted all of the
major points the WWUC raised, and
reversed the PCHB’s contrary decision
regarding Ecology’s authority to deny a
transfer or change application based on
the public interest.
The court’s opinion contains a
number of other important holdings
regarding Ecology’s authority over water
rights and the application of important
state laws. While the Court limited
Ecology’s consideration of public
interests, it perhaps broadens the
agency’s ability to regulate based upon
water quality issues.
Environmental and Land Use Department
Seattle
catherined@prestongates.com
adamg@prestongates.com
Pronsolino v. Nastri
291 F.3d 1123 (9th Cir. 2002)
By Peter Scott
In the closely watched
case of Pronsolino v.
Nastri, the Ninth
Circuit affirmed the
authority of the
Environmental
Protection Agency
(EPA) under the Clean
Water Act to regulate
waters that are quality-impaired
exclusively by nonpoint source pollution.
The Court rejected appellants’
statutory argument that EPA may only
impose total maximum daily load limits
(TMDLs) if the affected waters are
quality-impaired from point sources or a
combination of point and nonpoint
sources. Further, the court rejected the
argument that the imposition of TMDLs
in the absence of point source
dischargers interferes impermissibly with
traditional states’ right to regulate land
use.
If the ruling stands (a petition for
rehearing is pending), it clears the way
for EPA to impose TMDLs on a large
percentage of water bodies that are
quality-impaired primarily as a result of
activities such as urbanization,
agriculture, and forestry. Though it is not
clear how, or even whether, EPA will
exercise that authority, many believe
that the government’s position in
Pronsolino signals a shift in EPA’s
regulatory policy away from further
regulation of point source pollution and
toward regulation of major nonpoint
sources.
Environmental and Land Use Department
Spokane
pscott@prestongates.com
More detailed consideration of each of these cases in this review is available on our Web site located at: http://www.prestongates.com
ASBESTOS LITIGATION
Trends in Northwest Asbestos Litigation
By G. William Shaw and Cabrelle Abel
Personal injury
asbestos litigation is
not slowing down.
The number of
lawsuits has doubled
in six years from
100,000 new cases
filed in 1993 through
1999. The
projections for the
future are only for
more - 700,000 by
2050. In King
County, the number of
suits filed has risen
from an average of 67
cases per year from
1990 to 1997 to 251
cases filed in 2000 alone. What was
thought to be a problem limited to the
companies who made insulation
products containing asbestos now will
touch upwards of 85% of all of U.S.
companies.
People have come into contact with
products that may have contained
asbestos in a variety of ways other than
through traditional industrial insulation
work. Much of the auto industry has
become a target because of the onetime use of asbestos in brake linings.
It is not just the Big Three, but the
after-market manufacturers as well as
the suppliers of the brake linings who
are being sued. A similar wave of
litigation threatens building materials
suppliers, paint suppliers, and other
industries.
Asbestos litigation has been
estimated to have already cost the
economy more than the attacks of 9/11
and the Enron and WorldCom
bankruptcies put together. Once named
as a defendant, a company cannot
prudently hope to settle the first cases
and make the problem disappear. A
viable corporate response must be well
planned.
Everyone, sued the farmers in federal
court alleging claims under the
Resource Conservation and Recovery
Act (RCRA), and a group of residents
filed a class action suit in state court
alleging trespass and nuisance. The
federal action was ultimately dismissed
by the district court, though the
plaintiffs have appealed to the Ninth
Circuit. The state class action suit,
however, is moving forward in the trial
court, with the court recently rejecting
the growers’ request for dismissal.
This contentious issue affects many
groups in the greater Idaho and
Washington area and pits longstanding
agricultural practices against increasing
urbanization and health concerns. For
many farmers the success or failure of
the current state suit may determine
the viability of their businesses.
Litigation
Seattle
billshaw@prestongates.com
cabrellea@prestongates.com
AGRICULTURAL PRACTICES
Grass Burning Litigation
By Alina A. McLauchlin
Over the past year,
the debate over the
agricultural practice
of grass burning in
Idaho moved to the
courts. Farmers
believe the practice is
necessary to ensure
the productivity and
viability of their land. Other citizens of
Idaho consider it a major health
hazard. The two sides have had little
success working out their differences,
though the Governor and the Idaho
Legislature have attempted to broker a
solution.
The battle moved to the courts
when a citizens’ group, Safe Air For
Litigation
Seattle
alinam@prestongates.com
Page 5
Environmental Litigation Practice Group
NOTABLE NINTH CIRCUIT DECISIONS
NATIONAL ENVIRONMENTAL POLICY ACT
Churchill County v. Norton
276 F.3d 1060 (9th Cir. 2001), amended by 282 F.3d 1055 (9th Cir. 2002)
Cumulative impacts analysis continues to generate
controversy. In Churchill County v. Norton, 276 F.3d 1060
(9th Circuit 2001), plaintiff local governments filed a
challenge under the National Environmental Policy Act
(NEPA) concerning implementation of a settlement resolving
water rights disputes and water allocations of the Truckee
and Carson rivers in Nevada. Under the settlement, the
United States Fish and Wildlife Service (USFWS) was
required to acquire water rights for 25,000 acres of
wetlands. The USFWS prepared an environmental impact
statement (EIS) analyzing the impact of the water rights
acquisition. The local government plaintiffs alleged that the
EIS was insufficient for failing to consider all cumulative
impacts of the acquisition, including potential impacts on
municipal water supplies, and for failing to prepare a more
expansive programmatic EIS addressing all phases of the
settlement. The Ninth Circuit rejected both allegations,
holding that: (1) the EIS’ cumulative impacts analysis
sufficiently considered other impacts of the settlement
and potential impacts on municipal water supplies; and
(2) the USFWS properly determined the scope of the EIS
because other impacts of the settlement were not sufficiently
related or connected actions sufficient to justify a
programmatic EIS.
ENDANGERED SPECIES ACT
Biodiversity Legal Foundation v. Badgley
309 F.3d 1166 (9th Cir. 2002)
The environmental community scored a victory against the
Department of Interior requiring timely rulings on
Endangered Species Act (ESA) listings. In Biodiversity Legal
Foundation v. Badgley, 309 F.3d 1166, (9th Cir. 2002), the
plaintiffs brought suit against the Department of Interior and
the United States Fish and Wildlife Service (USFWS) alleging
that the USFWS failed to comply with statutory deadlines
within which to make a determination on publicly presented
petitions seeking to list a species for protection under the
ESA. Between 1995 and 1998, the plaintiffs petitioned the
USFWS to list several species as endangered under the ESA.
The ESA provides that the USFWS shall make an initial
determination “[t]o the maximum extent practicable, within
90 days after receiving the petition” whether the petition
presents sufficient information indicating that the petitioned
action may be warranted. The ESA further provides that the
USFWS must also make a finding within 12 months as to
whether the petition is warranted, not warranted, or is
warranted but . . . .” The USFWS failed to make both
determinations within 12 months, citing funding difficulties.
The Ninth Circuit held that “[b]oth determinations must be
made within one year” and held that injunctive relief is
mandated if the deadlines are not met.
CRIMINAL LAW/RESOURCE CONSERVATION AND RECOVERY ACT
United States v. Elias
269 F.3d 1003 (9th Cir. 2001)
In late December 2001, the Ninth Circuit affirmed that
delegation to the states of authority under a federal
hazardous waste management act did not preclude federal
criminal enforcement authority. In United States v. Elias,
269 F.3d 1003, (9th Cir. 2001), defendant Allen Elias was
convicted of four offenses, including three counts under the
Resource Conservation and Recovery Act (RCRA). The most
serious conviction was for disposing of hazardous waste
without a permit, knowing that his actions placed others in
imminent danger of death or serious bodily injury. The
conviction stemmed from Elias ordering four employees to
clean cyanide-laced material from a holding tank without
providing any safety equipment. Elias was sentenced to 204
months in prison and ordered to pay $6.3 million in
restitution. Elias argued on appeal that the RCRA counts
should be dismissed because the United States had
effectively ceded enforcement authority under RCRA to the
state of Idaho when the Environmental Protection Agency
approved that state’s hazardous waste program under RCRA.
The Ninth Circuit disagreed, holding that although RCRA
provides that the states will be the primary enforcers of
RCRA, the United States still retains both its criminal and
civil enforcement powers under the statute.
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