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May 2020

The Ninth Circuit Sends Climate Change Cases Back to State Court

Song

By Leah M. Song

EarthOn May 26, 2020, the Ninth Circuit agreed with plaintiffs that two climate change lawsuits—County of San Mateo v. Chevron Corp. et al. and City of Oakland v. BP p.l.c. et al.—had been improperly removed to the federal courts, continuing courts’ recent trend of remanding these types of cases back to state court.

A growing form of climate change litigation in the United States consists of lawsuits filed by states or municipalities against private industry, and more specifically, the fossil-fuel industry. States, cities and other units of local government have filed lawsuits alleging state common law theories, including nuisance, trespass, failure to warn of the known impacts of climate change, and unjust enrichment. The outcome of these cases thus far has hinged on whether or not the fossil fuel companies are able to successfully remove the litigation to federal court where they stand a much greater chance of getting the litigation dismissed. Generally, plaintiffs (including states, units of local government, and non-governmental organizations) asserting climate change claims against corporations prefer to be in state court where they can take advantage of perceived plaintiff-friendly common law or state statutes. On the other hand, defendants inevitably seek to remove such cases to federal court where they have had a higher level of success securing dismissals on the grounds that the issue is preempted by the Clean Air Act and/or addresses a “political question” which is better left to the discretion of Congress. See City of N.Y. v. BP P.L.C.. 325 F. Supp. 3d 466 (S.D.N.Y. 2018).

In County of San Mateo v. Chevron Corp. et al., six California municipalities and counties sued more than 30 fossil-fuel companies in California state court. The plaintiffs brought a variety of claims under state common law including nuisance, negligence, failure to warn, and trespass. In City of Oakland v. BP p.l.c. et al., the Cities of Oakland and San Francisco sued five fossil-fuel companies in state court under a theory of nuisance. The fossil-fuel companies removed both cases to federal court. The San Mateo district court remanded the case back to state court while the Oakland district court refused to remand the case back to state court, finding that plaintiffs’ public nuisance claims were governed by federal common law, but then proceeding to dismiss the lawsuit. Both cases were appealed to the Ninth Circuit.

On May 26th, the Ninth Circuit joined the Fourth Circuit (Mayor and City Council of Baltimore v. BP P.L.C., et al., No. 19-1644 (4th Cir. Mar. 6, 2020)) in concluding that these climate change cases alleging only state-common law claim belonged in state court. In County of San Mateo v. Chevron Corp. et al., the Ninth Circuit emphasized its limited authority to review an order remanding a case back to state court under 28 U.S.C. § 1447(d). The Ninth Circuit therefore limited its review to determining whether the district court erred in holding that the federal court lacked subject matter jurisdiction under the federal-officer removal statute.

In order to determine whether the district court erred in holding that it did not have subject matter jurisdiction, the Ninth Circuit examined whether the companies were “acting under” a federal officer’s directions. The companies argued that they were “persons acting under” a federal officer based on several agreements with the government. However, the Ninth Circuit concluded that the companies’ activities under these agreements did not give rise to a relationship where they were “acting under” a federal officer. Accordingly, the Ninth Circuit court held that the fossil fuel companies failed to meet their burden for federal-officer removal and therefore affirmed the district court’s remand order.

In City of Oakland v. BP p.l.c. et al., the Ninth Circuit considered whether “the district court erred in determining that it had federal-question jurisdiction under 28 U.S.C. § 1331” and ultimately held that plaintiffs’ state common-law public nuisance claims did not arise under federal common law. The court acknowledged that there are exceptions to the well-pleaded complaint rule for claims that arise under federal law, but concluded that none of those exceptions applied here.

The court reasoned that “[t]he question whether the Energy Companies can be held liable for public nuisance based on production and promotion of the use of fossil fuels and be required to spend billions of dollars on abatement is no doubt an important policy question, but it does not raise a substantial question of federal law for the purpose of determining whether there is jurisdiction under § 1331.” Furthermore, evaluation of the public nuisance claim would require factual determinations which are “not the type of claim for which federal-question lies.” The fossil fuel companies argued that the plaintiffs’ public nuisance claim was completely preempted by the Clean Air Act, but the court was not persuaded.

In response to defendants’ argument that by amending their complaint to assert a federal common law claim, the district court properly had subject matter jurisdiction under 28 U.S.C. § 1331, the Ninth Circuit noted that plaintiffs only amended their complaint in response to the district court’s statements that plaintiffs’ claims were governed by federal common law. Moreover, the Ninth Circuit noted that since a party violates § 1441(a) “if it removes a cases that is not fit for federal adjudication, a district court must remand the case to state court, even if subsequent action conferred subject-matter jurisdiction on the district court.”

Notwithstanding these conclusions, the Ninth Circuit noted that the district court had not addressed alternative bases for removal raised by defendants and therefore remanded the case back to the district court. However, the Ninth Circuit specifically noted that if the district court concludes that there are no valid bases for federal jurisdiction, the case should be remanded back to state court.

Although these rulings did not address the merits of plaintiffs’ common-law claims, these cases will certainly pose challenges for defendants seeking to remove these types of cases to federal court, and will likely affect plaintiffs’ and defendants’ strategies in climate change litigation moving forward. Jenner & Block’s Corporate Environmental Lawyer will continue to update on those matters, as well as other important climate change litigation cases, as they unfold.

 

New Executive Order Presses Agencies to Continue to Seek Regulatory Flexibility in Response to the Covid-19 Pandemic

Song

By Leah M. Song

Covid-19On May 19, 2020, the President issued an executive order titled “Regulatory Relief to Support Economic Recovery” (“Executive Order”). The Executive Order seeks to “overcome the effects the virus has had on [the] economy”  and to that end, directs agencies and executive departments to "continue to remove barriers to the greatest engine ever known: the innovation, initiative and drive of the American people."  To do so, executive departments and agencies are encouraged and directed to take appropriate action.

The Executive Order directs agencies to respond to the economic consequences of COVID‑19 by “rescinding, modifying, waiving, or providing exemptions from regulations and other requirements that may inhibit economic recovery.”  Agencies are directed, "to use, to the fullest extent possible and consistent with applicable law, any emergency authorities” to support the economic response to COVID-19. Agencies are charged with identifying “regulatory standards that may inhibit economic recovery” and take appropriate action to promote job creation and economic growth. This includes issuing proposed rules, exempting persons or entities from requirements, exercising appropriate temporary enforcement discretion or temporary time extensions.

The Executive Order further instructs agencies to provide compliance assistance for regulated entities and to “accelerate procedures by which a regulated person or entity may receive a pre-enforcement ruling.” Agencies should consider enforcement discretion policies for those that “have attempted in reasonable good faith to comply with applicable statutory and regulatory standards.” Additionally, the Executive Order emphasized that agencies should “consider the principles of fairness” and “revise their procedures and practices in light of them.” The Executive Order recommends that agencies review regulatory standards and “determine which, if any, would promote economic recovery if made permanent.”

Consistent with this Executive Order, the Environmental Protection Agency (“EPA”) has previously issued a COVID-19-related policy regarding EPA's decision to exercise enforcement discretion with respect to non-compliance with certain environmental requirements (this enforcement policy was the subject of a prior Corporate Environmental blog).  Although EPA's enforcement discretion policy has been challenged by several states and environmental organizations, the Executive Order would seem to diminish the likelihood that EPA will rescind its enforcement discretion policy in the near term. 

Please feel free to contact the author with questions or for further information. For regular updates about the impact of COVID‑19 in the workplace and on business generally, please visit Jenner & Block’s Corporate Environmental Lawyer blog and Jenner & Block’s COVID‑19 Resource Center.


Employers are Back in the Workplace: So is OSHA!

Sigel

By Gabrielle Sigel, Co-Chair, Environmental and Workplace Health and Safety Law Practice

Covid-19

On May 19, 2020, in recognition of many more businesses opening their workplaces in response to governors modifying stay-at-home orders and the President’s urging businesses to reopen across the country, OSHA revised two of its prior COVID-19 enforcement policies, thereby informing employers that OSHA would no longer grant enforcement discretion regarding the recording of work-related COVID-19 exposure cases and that OSHA intended to conduct more onsite inspections of alleged workplace violations and complaints, particularly those focusing on COVID-19 issues. 

OSHA began its announced changes in enforcement policies by stating that, “The government and the private sector have taken rapid and evolving measures to slow the virus’s spread, protect employees, and adapt to new ways of doing business.”  The two revised policies are to “ensure employers are taking action to protect their employees” as workplaces reopen.  Both new policies go into effect on May 26, 2020.

OSHA’s first policy change is to its own enforcement procedures.  OSHA plans to increase in-person inspections of “all types of workplaces.”  OSHA stated that it can conduct more onsite inspections because the risk to OSHA inspectors is lower and the PPE that OSHA inspectors would need is “more widely available.” Thus, OSHA will rescind its April 13, 2020, Interim Enforcement Response Plan for COVID-19, which stated OSHA's temporary policy of suspending most onsite inspections in favor of written and telephonic communications with employers.  Under the May 26, 2020 Updated Interim Enforcement Response Plan, OSHA intends to return to its pre-pandemic approach for determining whether to respond to employee complaints by (a) in-person investigation; (b) non-formal telephonic investigations; and/or (c) requests that employers respond in writing to a complaint, such as through a Rapid Response Investigation in response to a reported fatality or work-related in-patient hospitalization.  However, in all cases, OSHA intends to “continue to prioritize COVID-19 cases.” 

OSHA’s updated policy also provides that in geographic areas with sustained or resurgent cases of community transmission, OSHA’s Area Directors have the discretion to prioritize onsite inspections for cases of fatalities and imminent danger exposures, particularly in “high-risk workplaces, such as hospitals and other healthcare providers treating patients with COVID-19 [and] workplaces with high numbers of complaints or known COVID-19 cases.”

OSHA’s second announced enforcement policy change concerns OSHA’s recordkeeping regulations, which obligates employers in many businesses with 10 or more employees to record certain cases of employee illness as a recordable case on OSHA-required logs of work-related injuries and illnesses.  The recordkeeping regulation provides that if the employee has a confirmed case of COVID-19, which is “work-related” as defined in OSHA regulation, 29 CFR § 1904.5, and for which the employee received medical treatment beyond first aid or days away from work (the latter almost always being the case), the employee’s illness is recordable. 

The challenge to employers in the case of a community-wide communicable disease is knowing whether the employee’s illness is “work-related.”  In OSHA’s April 10, 2020 enforcement discretion policy issued on this topic, OSHA recognized that for all workplaces except those with a high-risk of exposure to COVID-19-positive people (e.g., COVID-19 hospital wards and prisons), employers did not have to take action to determine whether an employee’s illness was due to a work-related exposure and thus recordable.  In the new OSHA policy, effective May 26, 2020, all employers, regardless of COVID-19 exposure risk levels, must determine whether an employee’s illness is work-related. 

However, OSHA recognizes that, “[g]iven the nature of the disease and ubiquity of community spread, … in many instances it remains difficult to determine whether a COVID-19 illness is work-related, especially when an employee has experienced potential exposure both in and out of the workplace.”  Thus, if the employer conducts a “reasonable and good faith inquiry” and the employer “cannot determine whether it is more likely than not that exposure in the workplace played a causal role…., the employer does not need to record that COVID-19 illness.” (Emphasis added.)

OSHA will consider whether an employer has made a “reasonable determination of work-relatedness” by evaluating:

  • The reasonableness of the employer's investigation into work-relatedness. OSHA states that employers should “not be expected to undertake extensive medical inquiries, given employee privacy concerns and most employers' lack of expertise in this area.” Instead, in response to known employee illness, the employer should “(1) ask the employee how he believes he contracted the COVID-19 illness; (2) while respecting employee privacy, discuss with the employee his work and out-of-work activities that may have led to the COVID-19 illness; and (3) review the employee's work environment for potential exposure,” including other cases in that environment.
  • The evidence available to the employer.“Available” evidence can be information both available at the time of the investigation and learned later by the employer.
  • The evidence that a COVID-19 illness was contracted at work. OSHA will evaluate “all reasonably available evidence… to determine whether an employer has complied with its recording obligation.” Such evidence can include clusters of cases in the work environment or whether the employee had “frequent, close exposure to the general public in a locality with ongoing community transmission” and in either case there is “no alternative explanation.”  On the other hand, a case is “likely not work-related,” if the employee had “close” and “frequent” exposure to someone outside the workplace who was infectious during the relevant time period.

Especially because OSHA can do its own post hoc determination of the reasonableness of the employee’s decision, employers should document their investigation of each case of an employee COVID-19 illness.

OSHA ends its revised policy by cautioning employers that, regardless of whether an employee’s illness is recordable, “as a matter of health and safety” [subtext: subject to potential OSHA enforcement], the employer should respond to protect other workers when it learns that one employee has become ill.  OSHA does not describe, however, what those next steps should be.

Please feel free to contact the author with questions or for further information.  For regular updates about the impact of COVID‑19 in the workplace and on business generally, please visit Jenner & Block’s Corporate Environmental Lawyer blog and Jenner & Block’s COVID‑19 Resource Center.