November 30, 2010

PLF asks Supreme Court to review Ninth Circuit’s hostility towards private sector

By PLF asks Supreme Court to review Ninth Circuit’s hostility towards private sector

Author: Brandon Middleton

I blogged a couple of months ago about the Kaiser Eagle Mountain case, where Kaiser (a private company) has faced an incredible amount of regulatory hurdles in its attempt to help address a significant public policy issue in Southern California.  While Southern California has seen substantial population growth over the past half-century, the amount of landfill space has remained stagnant.  This has led to a major public health and safety concern in places like Los Angeles County, where landfill space is expected to be exhausted in less than 10 years.

Kaiser, as private companies often do, sought to serve the public through its business expertise.  The company proposed a land exchange with the federal government, whereby Kaiser would give the federal government land that would allow the government to enhance protection for endangered species.  In exchange, the feds would give Kaiser suitable property in Riverside County that would allow Kaiser to develop a much-needed landfill in Southern California.

Kaiser originally approached the government about the land exchange in 1989.  Yet more than two decades later, the land exchange proposal remains nothing more than that—a creative and necessary idea thwarted by years of senseless environmental litigation.

While Kaiser has spent more than $50 million in simply trying to get this project off of the ground, and federal and state agencies have dedicated countless hours to cooperatively working with Kaiser in order to address the Southern California landfill shortage, environmental groups have resorted to litigation in order to prevent this vital land exchange from occurring.

The latest legal delay came earlier this year, when the Ninth Circuit agreed with environmental groups’ claims that the federal government’s approval of the Kaiser Eagle Mountain land exchange did not comply with the National Environmental Policy Act.  See National Parks & Conservation Association v. Bureau of Land Management, 606 F.3d 1058 (9th Cir. 2010).

I explained in my earlier post why National Parks was wrongly decided.  Without going into great detail again, the Ninth Circuit invalidated the Bureau of Land Management’s NEPA Environmental Impact Statement because the federal agency honestly acknowledged that Kaiser had its own business objectives in proposing the land exchange (as if the motivation for profit is a bad thing).  There is indeed no question that Kaiser proposed to address the Southern California landfill crisis by developing what experts in the field have described as “one of the world’s safest landfills and a model for others to emulate.”  And, not surprisingly, Kaiser made sure the land exchange made business sense, and the Bureau of Land Management duly noted Kaiser’s objectives in analyzing the land exchange.

But the Ninth Circuit’s decision to overturn the Bureau of Land Management’s NEPA analysis simply because the agency considered the objectives of a private business makes no sense.  As Judge Stephen S. Trott remarked in a scathing dissent to the Ninth Circuit’s decision, the majority in National Parks completely failed to understand how the private sector can help accomplish the goals the public sector: “Of course Kaiser has its own goals it hopes to accomplish from this project, and of course it hopes to make a profit, but it seems blindingly apparent that its goals dovetail with the public’s need for a landfill.”  Not only that, but as Judge Trott also pointed out, the Bureau of Land Management would have been acting illegally had it not been forthright in acknowledging Kaiser’s interest in the land exchange. (“Of course BLM acknowledged Kaiser’s purpose—the law requires BLM to do so!”).

The National Parks decision was no doubt a disappointment for those of us who value the entrepreneurial spirit of companies like Kaiser and how it can help solve many of today's most pressing public policy concerns.  Fortunately, Kaiser has chosen not to stand idle and accept the Ninth Circuit’s unjustified hostility towards the private sector.  Instead, the company has filed a petition with the U.S. Supreme Court, requesting the Court to review the Ninth Circuit’s controversial decision.

I am pleased to report that Pacific Legal Foundation has joined Kaiser in its request for Supreme Court review by filing last week an amicus curiae brief support of Kaiser, available here.  In our amicus brief, we highlight the uncertainty private companies will face when working with federal agencies due to the Ninth Circuit’s decision.  That is, Supreme Court review is necessary in order to resolve a split in the circuit courts over a federal agency’s NEPA obligations “where a private entity approaches a government entity with a joint proposal that will benefit both,” to again quote Judge Trott.

The D.C. Circuit and Tenth Circuit hold what I believe is the correct view, which is that federal agencies “are precluded from completely ignoring a private applicant’s objectives.”  See Colo. Envtl. Coal. v. Dombeck, 185 F.3d 1162, 1175 (10th Cir. 1999) (citing Citizens Against Burlington, Inc. v. Busey, 938 F.2d 190, 196 (D.C. Cir. 1991)).

On the other hand, the Seventh Circuit (see Van Abbema v. Fornell, 807 F.2d 633 (7th Cir. 1986) and Simmons v. U.S. Army Corps of Engineers, 120 F.3d 664  (7th Cir. 1997)) and Ninth Circuit (as demonstrated in National Parks) effectively prevent federal agencies from working cooperatively with private companies and taking their business objectives into consideration.

This circuit split, and especially the circumstances surrounding National Parks, reminds me of the recent disturbing trend of the fictional circumstances of Atlas Shrugged becoming today’s regulatory reality.  One can’t help but think of Dagny Taggart when reading Judge Trott’s warning that nothing good will come out of the Ninth Circuit’s decision:

[H]ere we are…hitting the reset button, and unnecessarily sending the parties back to a Sisyphean hill which cannot be climbed in a lifetime….  How many of the people who started this project are still employed by Kaiser, are still in public service, or for that matter, are still alive?  Yet, the process has developed an eternal life of its own as full employment for all swept along with or by it.

Now, [because of the Ninth Circuit’s decision], the endless process continues.  No doubt we will see this case back again, years from now, unless the proponents of this project [grow] weary of it and throw in the towel, thwarted and defeated not by substance, but by interminable process.

I am glad that Kaiser has taken a stand and, with support from PLF, has asked the Supreme Court to review the Ninth Circuit’s National Parks decision.  For the sake of regulatory sanity, let’s hope the Court agrees to review this case.

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