Beveridge & Diamond
 

The Supreme Court Strikes Down a Ninth Circuit Permanent Injunction, Again

Beveridge & Diamond, P.C., June 23, 2010

The Supreme Court surprised many observers when it granted Monsanto’s cert. petition in Geertsen Seed Farms v. Johanns. See 541 F.3d 1130 (9th Cir. 2009). After all, the United States had not appealed the underlying finding that the United States Department of Agriculture (“USDA”) should have prepared a full environmental impact statement (“EIS”) before it decided to deregulate Monsanto’s Roundup Ready alfalfa. Monsanto appealed only the procedure by which the trial court had decided the scope of the injunction, subsequently upheld by the Ninth Circuit. The United States did not support the cert. petition. Moreover, the Court had issued a ruling on the proper standards for injunctive relief just the year earlier in Winter v. Natural Resources Defense Council, 129 S.Ct. 365 (2008). For all these reasons, Monsanto’s petition attracted relatively little attention and only five amicus briefs were filed in support of the petition.

Once the Court took the appeal, however, few experts doubted the outcome. The Court has frequently taken the opportunity to reverse the Ninth Circuit, especially in environmental and natural resources matters. Of course the Court would once again remind the Ninth Circuit that an injunction does not automatically issue simply because a court finds a procedural violation of the National Environmental Policy Act (“NEPA”). Few questioned that the Court would overturn the broad, nationwide injunction against the planting or use of Monsanto’s genetically modified (“GM”) alfalfa.

Then things got complicated. First, Justice Breyer recused himself from the case, as his brother, Judge Charles Breyer, was the federal district court judge who imposed the initial injunction. Only eight justices would hear the case, raising the specter of a split decision. Second, reply briefs filed by respondents and certain amici raised for the first time whether Monsanto had standing to challenge the scope of injunctive relief in light of the lower court’s decision vacating USDA’s deregulation decision. If the administrative action was vacated, they argued, how could a party seek to modify an injunction based on an underlying illegal decision? Third, oral argument revealed confusion on the bench about what the Court needed to decide. Justice Sotomayor questioned Monsanto’s counsel about why the parties were even before the Court and asked for clarification about the basis of the challenge. For an oral advocate, that’s never an encouraging sign.

This week, after all these twists and turns, matters reverted to form, original predictions came to fruition, and the Supreme Court issued a 7-1 ruling reversing the injunction imposed by the lower court. Monsanto Co. v. Geertson Seed Farms, 2010 U.S. LEXIS 4980, Slip Op. No. 09-475 (U.S. June 21, 2010). Writing for the majority, Justice Alito relatively quickly disposed of the eleventh hour standing arguments and turned to the merits of the scope of injunctive relief. He wrote that in order to determine the proper scope of injunctive relief, a court must faithfully apply all four prongs of the traditional test specified in eBay Inc. v. MercExchange L.L.C., 547 U.S. 388, 391 (2006), and reinforced in the Winter ruling of 2008. The Court accepted Monsanto’s position that the trial court had recited improper Ninth Circuit standards and appeared to presume that once a NEPA violation had been found, there was little choice but to impose an injunction until the agency properly considered all potential environmental factors on remand.

The lower courts’ primary errors appeared to be the failure to adequately consider the agency’s proposal to limit the extent of planting and impose restrictions on the use of GM alfalfa to avoid the sorts of injuries alleged by the organic farmers who originally challenged the USDA action. The Court sympathized with Judge Breyer’s “unenviable position” of sifting through expert evidence that “disagreed over virtually every factual issue” to determine whether this partial deregulation was justified, but concluded that simply imposing a complete ban on deregulation was not the appropriate answer. He may have properly concluded that USDA could not completely deregulate the alfalfa without an EIS, but he went too far in using that conclusion to justify a prohibition on even limited deregulation.

Stressing USDA’s separate regulatory authority to completely or only partially deregulate GM alfalfa and the agency’s expertise to make those decisions, the Court concluded that the agency should be able to consider partial deregulation on the basis of a new environmental assessment. Until USDA decided to partially deregulate, however, enjoining partial deregulation did not meet the four-factor test for granting a permanent injunction. In particular, the plaintiffs could not show that they would suffer irreparable injury, because a partial deregulation, if sufficiently limited, would not necessarily harm them, and if they believed it would harm them, they could challenge the partial deregulation when it is granted.

After determining that the complete injunction on deregulation was improper, the Court had little trouble determining that the lower courts’ almost complete nationwide ban on planting GM alfalfa went too far, although not for the reasons Monsanto argued. The nationwide ban was too broad because, if USDA determines that partial deregulation is appropriate, the ban would prevent farmers from legally planting GM alfalfa in accordance with the partial deregulation. More fundamentally, the nationwide ban was unnecessary because it did not have any practical effect once the complete deregulation was overturned and GM alfalfa was regulated again.

The decision might not have immediate impacts on GM alfalfa, as USDA already has published the draft EIS for complete deregulation. Judge Breyer and USDA will have to decide whether they want to take any additional actions toward partial deregulation of GM alfalfa. However, the decision could impact the deregulation of other GM crops, most notably Roundup Ready sugar beets, which currently are being challenged in the U.S. District Court for the Northern District of California.

While the ultimate outcome of this case conformed to expectations, the potential repercussions of the ruling are wide-ranging. Among other impacts, the decision reinforces USDA’s authority and options for making partial deregulation decisions for GM plants; it appears to more firmly place the burden on a prevailing party to show that a broad injunction is necessary; and it could limit the breadth of relief available to plaintiffs, not just for GM plant deregulation, but for other programmatic NEPA decisions in which agencies choose from a range of regulatory options. The ruling also once again reinforces that a broad injunction is not the default remedy for a NEPA violation; a court must actually apply the appropriate test before granting an injunction. Perhaps the Ninth Circuit will finally get this message.

For more information on the impact of the decision, please contact Fred Wagner, at fwagner@bdlaw.com or (202) 789-6041, or Kathy Szmuszkovicz, at kes@bdlaw.com or (202) 789-6037. This alert was prepared with the assistance of Sean Roberts.