The Continuing Saga of Cost Recovery and Contribution Claims Under CERCLA Sections 107 and 113

Posted on May 4, 2011 by Jarred O. Taylor, II

In his July 8, 2010 ACOEL blog entry, Fournier “Boots” Gale of this firm reported on the then-most recent court decision dealing with whether and how a plaintiff could recover, under CERCLA, costs it incurred for a cleanup performed under a consent decree or administrative settlement. One of the more intriguing developments for CERCLA practitioners has been the tension between and radical changes to cost recovery or contribution claims under 107 and 113 of CERCLA. Boots reported on the July 2, 2010 decision by a federal judge here in Alabama to grant complete summary judgment to defendants, finding that a party compelled to incur such costs can only proceed under Section 113, and not 107. Because the defendants in that case had also entered into an administrative settlement with EPA for the same site, thus obtaining Section 113 contribution protection, all of plaintiffs’ claims were dismissed. That case is still on appeal to the 11th Circuit. The issue decided by the Alabama federal court--whether compelled costs were recoverable under Section 107, 113, or both—had been left unanswered by the United States Supreme Court in United States v. Atlantic Research Corp., 551 U.S. 128 (2007). Courts have been struggling with this issue ever since.

 

The latest opinion on this issue is from the 8th Circuit, in Morrison Enterprises, LLC v. Dravo Corp., 2011 WL 1237526 (8th Circuit, April 5, 2011). The 8th Circuit was the federal circuit court whose decision was affirmed in the Atlantic Research case, so the result in this case is not surprising. Noting the question unanswered by the United States Supreme Court in Atlantic Research, the Morrison Court, as did the federal court in Alabama, concluded that Section 113 was the appellants’ exclusive remedy, confirming the summary judgment granted by the district court below on the Section 107 claim. One of the Morrison appellants argued to the district court that one of the contaminants it cleaned up was totally unrelated to its operations and, thus, the costs it incurred related to that contaminant were “voluntary” and thus recoverable under Section 107. Interestingly, the plaintiffs in the Alabama case made the same argument. Both the Alabama and 8th Circuit Courts rejected the argument because all of the work was performed under and pursuant to a consent decree, which was broad enough to encompass the costs for cleaning up the contaminant sought to be carved out as voluntary. In effect, even if one wishes to argue later that some costs incurred were for a contaminant for which one had no responsibility, if the costs incurred are pursuant to that consent decree, or administrative settlement, then the costs are not incurred voluntarily and a Section 107 claim is still barred. In a final blow to the cost recovery efforts in this case, the appellant attempted to amend its complaint to assert a Section 113 claim after summary judgment had been entered on its 107 claim, but the district court denied it as untimely (and the Morrison court affirmed on this issue, too).

EPA Completes Six-Year Review of National Primary Drinking Water Regulations

Posted on April 14, 2010 by Jarred O. Taylor, II

EPA recently completed a six year review of the National Primary Drinking Water Regulations (NPDWRs) “to identify those NPDWRs for which current health effects assessments, changes in technology, and/or other factors provide a health or technical basis to support a regulatory revision that will support or strengthen public health protection.” This six-year review is mandated by the Safe Drinking Water Act. The first six year review was completed in 2003. The sixty-plus page March 29, 2010 Federal Register issuance of the notice and request for comments can be found here.

 

EPA reviewed the 85 NPDWRs, included in the Federal Register Statement a detailed explanation for 71, and is proposing that four of them be considered for revision. Not surprisingly, the proposed revisions are to decrease the maximum contaminant level (MCL) closer to the maximum contaminant level goal (MCLG). As a reminder, the MCLG is “set at the level at which no known or anticipated adverse effects on the health of persons occur and which allows an adequate margin of safety.” The MCL, a term with which many are more familiar, is the highest allowed level of a contaminant in water delivered to one using a public water system, and is supposed to be as close to the MCLG as possible. MCLs, however, are not used by regulators just to judge official public drinking water systems, but also groundwater. If you are involved at a site where cleanup standards have been set, or are in the process of being set, for these four NPDWRs, be prepared for some re-negotiation. And, it will not be long after any such changes are made that many states will follow.

 

The primary reason an MCL is higher than an MCLG is technology—our testing methods and analytical abilities cannot detect as low as the MCLG, many of which are zero—aka the practical quantitation limit (PQL). Thus, one of the pieces of EPA’s six year review was whether technology had advanced, with sufficient confidence, to allow a reduction in the MCL closer to the MCLG.

 

The four contaminants EPA is proposing receive revised NPDWRs are acrylamide, epichlorohydrin, and two more common contaminants with which most of us have run into before—tetrachloroethylene (PCE), and tricholorethylene (TCE). PCE and TCE received almost identical recommendations, and both have a current MCLG of 0.0, and an MCL of 0.005 mg/L because of PQL. EPA made no final recommendation on PCE and TCE because the risk assessment for these two contaminants was still in progress and, thus, EPA could not determine whether revised MCLs would gain potential health benefits. However, EPA concluded that advancements in analytical and treatment technologies were such that “analytical feasibility could be as much as ten times lower [than the current MCL] (~ 0.0005 mg/L)”, noting that its review also concluded that levels of PCE and TCE in the environment at this reduced level are “relatively widespread”. EPA is giving stakeholders the opportunity to submit information to it about what laboratories “can reliably and consistently achieve.”

 

Stay tuned—technology’s exponential increase in our ability to detect smaller and smaller concentrations of contaminants in the environment may very well exponentially increase treatment costs and higher costs at cleanup sites. Whether health risks decrease sufficiently from driving down MCLs is yet to be determined, but the writing appears on the wall for now.

Pres. Obama's DOJ Takes Second Shot at Citizen Suit Dismissal

Posted on April 3, 2009 by Jarred O. Taylor, II

Citizen suits in the environmental world are those filed in federal court under the authority Congress gave to a citizen to seek enforcement of the environmental laws, typically when the citizen believes the regulatory authority (i.e. EPA or a state agency) is not doing its job or has missed a violation.  

 

Entire articles have been written about the efficacy of such suits, and their appropriateness in the face of an already-initiated governmental enforcement or cleanup action. Recent cases suggest the courts want to encourage, and not discourage, such filings, although one recent US Supreme Court decision found the citizens lacked standing because there was not an actual, live, dispute. Summers v. Earth Island Institute, __U.S.__(No. 07-463, March 3, 2009) (see ACOEL blog entry of March 4, 2009).

 

Some, therefore, found it surprising when, on March 6, 2009, President Obama’s Justice Department filed a motion seeking the dismissal of a citizen suit filed against the United States over alleged mining contamination in a national forest. What some found even more surprising was this was not the DOJ’s first shot at the citizen group, the DOJ having attempted to get the case dismissed one time before, under Pres. Bush’s DOJ.

 

In Washington Environmental Council v. Mount Baker-Snoqualmie National Forest (W.D. Wash, CV No. 06-1249), the United States had argued in 2007 that it was already taking action at the site under Superfund, and argued that the citizen suit was a barred challenge to the United States’ “removal or remedial action” under Section 113(h) of Superfund. The federal district court denied this first motion to dismiss on the basis that the US Forest Service was just at the inspection and investigation stage, and had not actually selected a remedy.

 

On March 6, 2009, with the citizen suit still pending, DOJ filed another motion to dismiss, arguing that the US Forest Service had advanced its Superfund work so that all of its inspections were complete and it was beginning to perform the engineering evaluation for remediation, and to calculate those costs. DOJ argued in its motion that such activity, even though before any cleanup had been actually conducted, does meet the Section 113(h) criteria barring such challenges, and that the citizen suit should be dismissed. The author is unaware of a court ruling on this recent motion.

 

One hopes the administration’s position in this case (whether right or wrong) would be the same if the subject of the citizen group’s complaint was a non government organization or other private company, and not the United States. Comments?

ALABAMA JOINS OTHER STATES IN ENACTING UNIFORM ENVIRONMENTAL COVENANTS ACT

Posted on July 18, 2008 by Jarred O. Taylor, II

Alabama joined a number of other states dealing with environmental covenants when it enacted the Alabama Uniform Environmental Covenants Act, effective January 1, 2008. Ala. Code§35-19-1 et seq. (“Act”).The Alabama Department of Environmental Management (“ADEM”) has been working on implementing regulations, which are expected to mimic the Act and be released in the next few months. ADEM will also charge a fee for implementation and oversight of the program and covenants.

For those not familiar with the concept, in many situations environmental contamination cannot be completely addressed by total removal (clean closure) of the offending soil or remediation of the groundwater to a level allowed for unrestricted use.  Some amount or concentration of contamination must be left behind. In those situations, EPA and ADEM will require additional measures, such as land use controls or continuing monitoring and maintenance. The idea is that if property has contamination on it unsuitable for a residential housing development or the construction of a school, those interested in buying or developing the property are put on notice of the limit of the property to commercial or industrial use.  These controls and obligations are often embodied in deed restrictions or recorded declarations which could be terminated by various common law mechanisms; therefore, the Uniform Environmental Covenants Act was created to provide a mechanism by which environmental covenants and land use restrictions survive the potential fatal operations of the common law. States were encouraged to adopt the uniform act, and Alabama has now done so.

An “Environmental Covenant” is defined as “[a] servitude arising under an environmental response project that imposes activity and use limitations.” Ala. Code § 35-19-2(5). Such “environmental response projects” can arise under state or federal hazardous waste cleanup laws, such as CERCLA, RCRA, or Alabama’s version of brownfields.

Before the Act was passed, ADEM still required a restrictive covenant or deed of some kind when contaminants were being left behind, but it was never sure what might happen to the restriction upon a subsequent sale of the property because it had no enforcement authority. If the property changed hands several times, there was no manner by which ADEM could require the Seller and the Buyer to maintain that restriction as a part of the sale. With the Act, there is a “holder” of the covenant which can enforce the covenant, and ADEM has enforcement power even if it is not a holder. A holder can be any person, a governmental agency (such as ADEM), an environmental group, or a unit of local government. The interest of a holder is considered to be an interest in real property; however, the Department’s interest in a covenant, unless it becomes a holder, will not be considered to be an interest in real property. There are certain elements that each covenant must meet in order to be effective, and those are clearly set out in the Act. Importantly, each environmental covenant requires at least one holder, and a holder can be the fee simple owner and/or the grantor of the covenant.

If, at the time an environmental covenant is recorded or registered, the Act does not abrogate the common-law doctrine of “first in time, first in right” as it relates to prior and valid property interests. If there are other interests in the subject real property with priority over the covenant, unless the prior interest in the property is made subordinate to the covenant by the owner of such interest, then the prior interest is not affected.

The grantor of an environmental covenant has a statutory responsibility to notify certain persons or entities of the covenant. Specifically, the grantor must provide a copy of the covenant to (i) each person signing the covenant; (ii) each person with a “recorded interest” in the subject property; (iii) each tenant or person in possession of the subject property; and (iv) each county or municipality in which the real property is located (normally the county or municipal office where deeds are recorded, such as the probate office). You also have the option of filing the covenant with ADEM (it keeps a registry), and then filing a notice with the county probate office in lieu of the entire covenant.

Environmental covenants are perpetual although there are exceptions set out in the Act, such as if the covenant itself has a specified length of time, a condition allowing termination is satisfied, or a court is petitioned for its modification. Of course, one always has the option of conducting additional remediation of the property to reach unrestricted use standards, which would then allow for termination of the covenant.

The author wishes to acknowledge the contributions made to this article by Bryan Nichols of Maynard, Cooper & Gale, P.C.