Supreme Court Field Trips, Cap-and-Trade Budget Plan

This week I visited the U.S. Supreme Court on Monday and Tuesday with students from my classes at Maryland. On Monday my Constitutional Law class went to the Court to watch the oral argument in United States v. Navajo Nation, a case involving whether the Navajo nation can recover damages against the federal government for mismanagement of royalty payments on coal leases on tribal lands. The case is the latest effort by the Navajo to recover damages for a sweetheart deal for Peabody Coal approved by Interior Secretary Donald Hodel during the Reagan administration. Six years ago the Supreme Court ruled that the Indian Mineral Leasing Act did not provide a damages remedy for this alleged breach of trust. In the current case the Court will decide whether other sources of law, such as federal common law and the Surface Mining Control and Reclamation Act provide such a remedy. The oral argument was not one of the most exciting. Most of the Justices’ questions asked only for factual clarifications and acting Solicitor General Ed Kneedler sat down after only 21 minutes of his opening argument. Nevertheless, as is usually the case, all the Justices except for Justice Thomas ultimately participated in the questioning.

On Tuesday my Global Environmental Law seminar went to the Court to watch the oral argument in Burlington Northern & Santa Fe Railway Co. v. U.S. It represents the Court’s first opportunity to confront the strict, joint and several liability scheme for recovering cleanup costs for releases of hazardous substances under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA). CERCLA created the “Superfund” program for cleaning up abandoned dumpsites. The case involves the question of who will pay for the cleanup of a contaminated site owned by a chemical company and a railroad after the chemical company became insolvent. There are two major issues in the case: (1) whether the district court erred in apportioning liability, which left the U.S. government, instead of the solvent railroad, responsible for most of the cleanup costs and (2) whether Shell Oil, which supplied the chemicals that contaminated the property, can be held liable as a company that “arranged for disposal” of them.

As a long-time observer of CERCLA, I was somewhat distressed by the Justices’ apparent lack of knowledge concerning how the statute is supposed to operate. While the concept of holding Shell Oil liable as an “arranger” seems perfectly reasonable under existing caselaw, Justice Breyer argued that it would be tantamount to holding companies that supply computer print cartridges liable if a consumer disposes of them improperly. Yet the prior caselaw seems to have drawn a reasonable distinction between the sale of a useful product that later results in the release of a hazardous substance (where there is no “arranger” liability) and situations where a chemical supplier knows that its chemicals are being spilled during delivery and fails to control the spillage even though it can (where there is “arranger” liability). Surprisingly, counsel for Burlington Northern argued for a new liability test that her client surely would fail (whether it had saved money due to the spillage) and concluded her rebuttal with a highly exaggerated portrait of the typical extent of CERCLA liability.

Each day after the oral argument, several of my students came to my home on Capitol Hill for a buffet lunch. During lunch we discussed the argument. I told war stories about my experiences as a law clerk for Justice White and discussed how the Court has changed in the nearly three decades since I clerked there.

This week the Obama administration unveiled its proposed federal budget. It proposes that Congress adopt a cap-and-trade program for controlling emissions of greenhouse gases (GHGs) and that permits to emit GHGs be auctioned off. This is projected to generate a total of $237 billion in revenue for the federal government by the year 2012 and $645 billion by 2019. The Wall Street Journal editorial board swiftly denounced the proposal as a disguised “carbon tax,” even though most economists seem to believe that a carbon tax is preferable to the kind of cap-and-trade program the administration is proposing.