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EPA Administrative Law Reporter A Monthly JournAl of EnvironMEntAl AppEAls BoArd, AlJ, fEdErAl And stAtE dEcisions

(continued on page 4)

Contents Page

Washington, D.C. January 2015 Volume 45, Number 1

RCRA EditorMichael W. Steinberg, Esq.

HIGHLIGHTS

PublisherNeil J. Cohen, Esq.

Water EditorColburn T. Cherney, Esq.

Recent Decision inDex .......................6

Decision summaRies ...............................9

Documents

FEDERAL COURT OPINIONS

Opinion, Vine Street LLC v. Borg Warner Corp.

Opinion, LWD PRP Group v. Alcan Corp.

Opinion, Anderson v. Teck Metals, Ltd.

Opinion, Waverly View Investors, LLC v. United States of America

Opinion, White Plains Housing Authority v. Getty Properties Corp.

Opinion, Environment Texas Citizen Lobby, Inc. v. ExxonMobil Corporation

Opinion, Pakootas v. Teck Cominco Metals, Ltd

Opinion, In re Methyl Tertiary Butyl Ether Products Liability Litig.

The most noteworthy decisions this month are the following: • In Vine Street LLC v. Borg Warner Corp., No. 07-40440 (5th Cir. Jan. 14, 2015), in a case where a buyer of unused solvent (PERC) used it in a dry cleaning operation and some leaked in the process, the Fifth Circuit held the seller did not arrange for its disposal even though the seller installed the equipment and knew some of it would leak; the dry cleaner used the seller’s water separator that was not totally effective in removing all of the solvent before the wastewater was discharged to a sewer and escaped from there onto the plaintiff’s property. • In LWD PRP Group v. Alcan Corp., No. 14-5730 (6th Cir. Jan. 14, 2015), CERCLA contribution claims brought by a group of PRPs to obtain reim-bursement for the costs of cleaning up a Superfund site were time-barred because the claims were brought more than three years after the effective date of an administrative settlement to perform a removal action. The Sixth Circuit, noting that in June 2014 it had held in Hobart that a contribution action brought after an administrative settlement with the United States or a state had to be filed within three years of the settlement’s effective date, concluded that was nothing in the present case to distinguish it from Hobart.• In Anderson v. Teck Metals, Ltd., No. CV-13-420-LRS (E.D. Wash. Jan. 5, 2015), Senior Judge Suko, of the federal district court for the Eastern District of Washington, held that private plaintiffs could assert federal common law claims, but that CERCLA so occupied the field that it precluded plaintiffs from bringing claims founded on federal common law public nuisance. Because defendant was a foreign entity whose offensive actions oc-curred entirely outside the United States, plaintiffs’

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Volume 45, Number 1, January 2015. Copyright © 2015 Computer Law Reporter, Inc. All Rights Reserved.

3

EPA Administrative Law Reporter1601 Connecticut Avenue, N.W., Suite 701, Washington, D.C. 20009 • 202-462-5755 • Fax 202-328-2430

____________________________________________________________________________________

PublisherNeil J. Cohen, Esq.

RCRA EditorMichael W. Steinberg, Esq.

Morgan, Lewis & Bockius LLPWashington, DC

Water EditorColburn T. Cherney, Esq.

Ropes & GrayWashington, DC

BoaRD of aDvisoRs

Robert F. Lawrence, Esq.Orrick, Herrington & SutcliffeSan Francisco

Angus Macbeth, Esq.Sidley & AustinWashington, DC

Barry S. Neuman, Esq.Whiteford Taylor Preston LLPWashington, DC

Daniel Riesel, Esq.Sive, Paget & RieselNew York, NY

Lynn L. Bergeson, Esq.Bergeson & Campbell, P.C.Washington, DC

Ridgway M. Hall, Jr., Esq.Washington, DC

Michael O. Hill, Esq.Primmer Piper Eggleston & CramerWashington, DC

James Stewart, Esq.Lowenstein, Sandler, Kohl,Fisher & BoylanRoseland, NJ

Richard G. Stoll, Esq.Foley & LardnerWashington, DC

David B. Weinberg, Esq.Wiley Rein LLPWashington, DC

4

state public nuisance claims were also precluded. The court found plaintiffs’ pleadings suf-ficient with respect to the issues of negligence, strict liability, and causation, and denied defendant’s motion to dismiss plaintiffs’ claims for strict liability and negligence.

• In Waverly View Investors, LLC v. United States of America, No. CCB-14-1527 (D. Md. Jan. 13, 2015), Judge Blake, of the federal district court for the District of Maryland, held that the court did not have subject matter jurisdiction over plaintiff’s claim for dam-ages under the Federal Tort Claims Act (FTCA). The U.S. Army’s disposal of toxic chemi-cals in unlined pits at Fort Detrick, Maryland, had contaminated groundwater underneath plaintiff’s adjacent property and prevented plaintiff from developing its land. But both the Army’s historic waste disposal practices, and the remediation actions it had undertaken in recent years, were discretionary in nature and subject to policy considerations. Thus, the discretionary function exception to the FTCA applied, and the Government’s sovereign immunity precluded suit.

• In White Plains Housing Authority v. Getty Properties Corp., No. 13-CV-6282 (NSR) (S.D.N.Y. Dec. 16, 2014), Judge Roman, of the federal district court for the Southern Dis-trict of New York, held that the spread of benzene contamination resulting from a petroleum spill did not implicate CERCLA liability, as the benzene was merely a natural constituent of gasoline and therefore fell within CERCLA’s petroleum exclusion. Some defendants, however, were subject to RCRA’s citizen suit provision despite the state’s involvement in overseeing cleanup efforts, because the state had not yet brought an action under RCRA nor engaged in CERCLA-specific cleanup or enforcement. Given that plaintiff’s RCRA suit survived a motion to dismiss with respect to some of the defendants, the court chose to exercise supplemental jurisdiction with respect to all defendants over plaintiff’s state law claims.

• In Environment Texas Citizen Lobby, Inc. v. ExxonMobil Corporation, No. H-10-4969 (S.D. Tex. Dec. 17, 2014), Judge Hittner, of the federal district court for the Southern District of Texas, found for plaintiffs on the issues of organizational standing and action-ability under the Clean Air Act’s (CAA) citizen suit provision. However, despite the fact that plaintiffs established multiple actionable Air Act violations at defendant’s facility, the court awarded plaintiffs no relief. Exxon’s history of good faith compliance, the expen-ditures it had made voluntarily to minimize unauthorized emissions, and the significant emissions reductions already achieved, weighed against imposing civil penalties beyond those already assessed by state regulators. Given Exxon’s efforts to enhance its compli-ance and the progress it had made in doing so, the court concluded that injunctive relief or the appointment of a special master to monitor compliance would be unproductive and unduly burdensome. And in view of the court’s finding that actionable permit violations

5

had occurred, it found that further declaratory relief would be merely duplicative. Judge Hittner’s decision includes a detailed discussion of requirements for actionable violations under CAA § 304 and a useful analysis of the factors relevant to assessment of civil penal-ties under the Act.

• In Pakootas v. Teck Cominco Metals, Ltd., No. CV-04-256-LRS (E.D. Wash. Dec. 31, 2014), Senior Judge Suko, of the federal district court for the Eastern District of Washing-ton—in a case of first impression—held that air emissions containing hazardous substances are not themselves a “disposal” within the meaning of CERCLA, but if those substances settle onto land or into water, a disposal has occurred. This appears to be the first decision in which any federal court has directly addressed this issue. The court rejected defendant’s argument that the Ninth Circuit’s recent decision in Center for Community Action and En-vtl. Justice v. BNSF Railway—which dealt with this issue in a RCRA context—represented a change in controlling law. Given the ground-breaking nature of the court’s holding and its potential impact on this litigation, the district court certified its decision for immediate interlocutory appeal to the Ninth Circuit. The Ninth Circuit has yet to decide whether to entertain such an appeal.

• In In re Methyl Tertiary Butyl Ether Products Liability Litig., No. 1:00-1898, MDL 1358 (SAS), M21-88 (S.D. N.Y. Dec. 18, 2014), a water district seeking damages for con-tamination of its water wells by a gasoline additive allegedly coming from gas stations was able to withstand summary judgment with respect to all defendants on the causation issue. District Judge Scheindlin held that the “focus plume” model of the plaintiff’s expert suf-ficiently traced MTBE from the defendants’ individual stations to the plaintiff’s wells.

6

CERCLA; ARRANGER LIABILITY; SCIENTER

Vine Street LLC v. Borg Warner Corp., No. 07-40440 (5th Cir. Jan. 14, 2015)

Fifth Circuit Holds Arranger Liability Under CERCLA Does Not Apply to the Seller of a Useful Hazardous Substance Even Though the Seller Knew Some of It Would Leak As an Unintended Consequence of Its Use ..............................9

CERCLA; CONTRIBUTION ACTION

LWD PRP Group v. Alcan Corp., No. 14-5730 (6th Cir. Jan. 14, 2015)

Sixth Circuit Holds CERCLA Contribution Claims for Cleanup Costs of Superfund Site Brought More Than Three Years After Administrative Settlement Were Time-Barred; Court Finds Nothing To Distinguish Case FromHobart ................................................................................10

FEDERAL COMMON LAW; PUBLIC NUISANCE; STATUTE OF LIMITATIONS;

EXTRATERRITORIAL APPLICATION OF CERCLA; NEGLIGENCE; STRICT LIABILITY FOR

ABNORMALLY DANGEROUS ACTIVITIES

Anderson v. Teck Metals, Ltd., No. CV-13-420-LRS (E.D. Wash. Jan. 5, 2015)

In a Case of First Impression, Federal Court Holds That CERCLA Displaces the Federal Common Law of Public Nuisance; State Public Nuisance Claims Were Also Precluded Where a Foreign Defendant’s Actions Were Entirely Extraterritorial .........................................................................14

CLEAN WATER ACT; NPDES; DISCHARGE; POLLUTANT; POINT SOURCE; WATERS OF THE

UNITED STATES; INJUNCTIVE RELIEF

Myers v. Bureau of Land Management, No. 13-cv-00701-RM-BNB (D. Colo. Jan. 13, 2015)

Federal Agency Violated the Clean Water Act By Discharging Pollutants From Wells Used for Public Water Supply, but Injunctive Relief Was Denied in View of the Modest Degree of Harm and the Difficulty of Obtaining an Alternate Source of Public Water ......................................18

Recent Decisions Index

Federal Court deCisions

7

CERCLA; FEDERAL TORT CLAIMS ACT; DISCRETIONARY FUNCTION EXCLUSION;

SUBJECT MATTER JURISDICTION

Waverly View Investors, LLC v. United States of America, No. CCB-14-1527 (D. Md. Jan. 13, 2015)

Because Waste Disposal Practices and Remediation Actions at a Federal Facility Were Discretionary and Subject to Policy Considerations, the Government Was Shielded By Sovereign Immunity Under the Federal Tort Claims Act ................21

RCRA; CERCLA; PETROLEUM EXCLUSION; CITIZEN’S SUIT; DILIGENT PROSECUTION;

SUPPLEMENTAL JURISDICTION;

White Plains Housing Authority v. Getty Properties Corp., No. 13-CV-6282 (NSR) (S.D.N.Y. Dec. 16, 2014)

Spread of Benzene Contamination in Soil and Groundwater Resulting From Gasoline Spill Does Not Implicate CERCLA Liability, As Even Hazardous Constituents of Gasoline Fall Within CERCLA’s Petroleum Exclusion .....................24

CLEAN AIR ACT; CITIZEN SUITS; STANDING; ACTIONABILITY; CIVIL PENALTIES;

INJUNCTIVE RELIEF; DECLARATORY JUDGMENT

Environment Texas Citizen Lobby, Inc. v. ExxonMobil Corporation, No. H-10-4969 (S.D. Tex. Dec. 17, 2014)

Federal Court Provides Plaintiffs No Relief Despite Its Finding of Multiple Actionable Air Act Violations By Defendant ................................................28

RCRA; CERCLA; DISPOSAL; ARRANGER LIABILITY; CERTIFICATION; INTERLOCUTORY

APPEAL

Pakootas v. Teck Cominco Metals, Ltd., No. CV-04-256-LRS (E.D. Wash. Dec. 31, 2014)

Air Emissions Alone Do Not Constitute a “Disposal” for Purposes of CERCLA, but Hazardous Substances From Those Emissions Are Disposed of If They Ultimately Settle Onto Land or Into Water .........................................................33

GROUNDWATER CONTAMINATION; CAUSATION; NUISANCE; STATUTE OF LIMITATIONS

In re Methyl Tertiary Butyl Ether Products Liability Litig., No. 1:00-1898, MDL 1358 (SAS), M21-88 (S.D. N.Y. Dec. 18, 2014)

“Focus Plume” Model of Plaintiff’s Expert Sufficiently Traced MTBE From Individual Gas Stations to Plaintiff’s Water Wells .................................35

8

CITIZEN SUITS; CIVIL PENALTIES; JURY TRIALS

North Carolina Environmental Justice Network v. Taylor, No. 4:12-CV-154-D (E.D. N.C. Dec. 29, 2014)

District Court Holds Citizen Plaintiffs Are Entitled to a Jury Trial on Civil Penalties for Violations of CWA and RCRA .........................................41

OVERVIEW WITNESS; PERMIT VIOLATIONS

U.S. v. Riley, No. 13-10185 (D. Kan. Dec. 29, 2014)

District Court Declines To Allow EPA Expert To Testify As Overview Witness Because Testimony Would Impinge on Province of the Court and Jury .....................43

INNOCENT LANDOWNER DEFENSE; EXPERT TESTIMONY

Coppola v. Smith, Case No. 1:11-cv-01257-AWI-BAM (E.D. Cal. Jan. 15, 2015)

The Need For Expert Evidence To Make Out An Innocent Landowner Defense Under CERCLA ...........................................................45

Clean Air Act

Environment Texas Citizen Lobby, Inc. v. ExxonMobil Corporation ................................... 28

Clean Water Act

Myers v. Bureau of Land Management ..................................................................................... 18

Comprehensive Environmental Response, Compensation, and Liability Act

Vine Street LLC v. Borg Warner Corp. ....................................................................................... 9

LWD PRP Group v. Alcan Corp. ............................................................................................... 10

Waverly View Investors, LLC v. United States of America .................................................... 21

Pakootas v. Teck Cominco Metals, Ltd ..................................................................................... 33

Resource Conservation and Recovery Act

White Plains Housing Authority v. Getty Properties Corp. ................................................... 24

Pakootas v. Teck Cominco Metals, Ltd ..................................................................................... 33

Case Table arranged by sTaTuTe

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Recent Decisions

CERCLA; ARRANGER LIABILITY; SCIENTER

Vine Street LLC v. Borg Warner Corp., No. 07-40440 (5th Cir. Jan. 14, 2015)

Fifth Circuit Holds Arranger Liability Under CERCLA Does Not Apply to the Seller of a Useful Hazardous Substance Even Though the Seller Knew

Some of It Would Leak As an Unintended Consequence of Its Use

In a case where a buyer of unused solvent (PERC) used it in a dry cleaning operation and some leaked in the process, the Fifth Circuit held the seller did not arrange for its dis-posal even though the seller installed the equipment and knew some of it would leak; the dry cleaner used the seller’s water separator that was not totally effective in removing all of the solvent before the wastewater was discharged to a sewer and escaped from there onto the plaintiff’s property.

The Circuit relied on the Supreme Court’s decision in Burlington N. & Santa Fe Ry. Co. v. United States, 556 U.S. 599 (2009) that “knowledge alone is insufficient to prove that an entity ‘planned for’ the disposal, particularly when the disposal occurs as a periph-eral result of the legitimate sale of an unused, useful product.”

According to the court:

Some of College Cleaners’ PERC ultimately escaped from the sewer system and entered the soil and

groundwater, contaminating both the College Cleaners property and another neighboring property. Vine

Street later acquired both pieces of property and learned of the PERC contamination. . . .

Borg Warner argues that it is not liable to Vine Street under either CERCLA or the TSWDA because its

subsidiary Norge did not intend to dispose of PERC when it sold dry cleaning equipment and an initial

supply of PERC to the cleaners. Vine Street, the current owner of the subject property, argues, how-

ever, that Borg Warner intentionally disposed of PERC into the ground because Norge knew that water

separators designed to release wastewater, but not PERC, into the sewer were not completely effective.

Additionally, Vine Street emphasizes that Norge, i.e., Borg Warner, played a key role in designing the

dry cleaning facility, including connecting the equipment to drains that emptied into a sewer, and urges

us to conclude that Norge’s role in the design supports a finding of intent. . . .

Under Burlington Northern, the plaintiff must establish that the purported arranger took “intentional

steps to dispose of a hazardous substance.” Thus, CERCLA arranger liability is premised upon an inten-

tional act directed toward the disposal of hazardous waste. . . .

Federal Court deCisions

10

We focus first on the basic intent requirement, as the district court found that the discharges of PERC

were unintentional. In its opinion, the district court stated that “[w]hile the pollution happened many

years ago, neither party intended to allow the discharge of PERC into the ground.” Vine Street seizes

on the phrase “into the ground” and argues that even though Norge did not intend to pollute the ground-

water, it nonetheless intended for PERC to discharge into the sewer. We believe that Vine Street

overemphasizes the value in this phrase, when considered in the light of the district court’s opinion. . . .

It also found no evidence of a manufacturing defect or improper maintenance. Each of these separate

findings underscores that the district court found a lack of intent on the part of Norge and that it imposed

liability solely based on the weaker nexus that existed between Norge and the ultimate disposal of PERC

down College Cleaners’sewer line. . . .

Furthermore, Norge developed the water separators to separate wastewater from PERC and pro-

ceeded to develop additional measures to reduce any discharges of PERC after it learned that the sepa-

rators were not completely efficient. The district court treated Norge’s subsequent remedial measures

as evidence that Norge did arrange for the disposal of a hazardous substance because the measures

confirmed Norge’s knowledge of the discharges. Following Burlington Northern, however, it is evident

to us that these remedial measures, coupled with the design of the water separators, generally cut against

a finding of intent.

* * *

CERCLA; CONTRIBUTION ACTION

LWD PRP Group v. Alcan Corp., No. 14-5730 (6th Cir. Jan. 14, 2015)

Sixth Circuit Holds CERCLA Contribution Claims for Cleanup Costs of Superfund Site Brought More Than Three Years After Administrative Settlement Were

Time-Barred; Court Finds Nothing To Distinguish Case From Hobart

CERCLA contribution claims brought by a group of PRPs to obtain reimbursement for the costs of cleaning up a Superfund site were time-barred because the claims were brought more than three years after the effective date of an administrative settlement to perform a removal action. The Sixth Circuit, noting that in June 2014 it had held in Hobart that a contribution action brought after an administrative settlement with the United States or a state had to be filed within three years of the settlement’s effective date, concluded that was nothing in the present case to distinguish it from Hobart.

The court said that in Hobart it had relied on four factors: (1) the parties in their agree-ment had stated their intent that it be an administrative settlement, (2) the agreement pro-vided that the settling parties were entitled to protection from contribution actions under

11

Sections 113(f)(2) and 122(h)(4) of CERCLA, (3) the agreement was titled “Administrative Settlement Agreement and Order on Consent,” and (4) the agreement contained a covenant from the EPA not to sue or take administrative action pursuant to Sections 106 and 107(a) for work and future response costs. All of these factors that led the Hobart court to con-clude that the agreement qualified as an administrative settlement that could support a contribution action were present in the agreement in the present case.

Background

The LWD Incinerator Site is part of the LWD, Inc. Superfund site in Calvert City, Kentucky. From the 1970s to 2004, a hazardous waste incinerator operated at the site. After the last-known owner abandoned the site, the EPA conducted initial waste removal activi-ties at the request of the Kentucky Department of Environmental Protection.

The EPA identified potentially responsible parties (PRPs) and, on March 1, 2007, it entered an “Administrative Settlement Agreement and Order on Consent for Removal Action” with 58 of the responsible parties. The plaintiff, LWD PRP Group, is an associa-tion composed of some of these PRPs.

Under the agreement, the PRPs agreed to conduct removal activities and to compen-sate the EPA for future response costs. On September 29, 2009, the EPA issued a notice of completion of the removal activities.

On August 31, 2012, the plaintiff filed the current suit against many defendants, includ-ing some of the appellants. It also executed tolling agreements with other potential defen-dants, including the remaining appellants. These appellants were added to the complaint.

The plaintiff sought a variety of relief, including cost recovery under Section 107 of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA) and contribution under Section 113(f).

Denying the appellants’ motion to dismiss the Section 113(f) claim, the district court ruled that the September 29, 2009, completion date starting the running of the statute of limitations.

The Sixth Circuit granted the petition for interlocutory review.

Statute of Limitations

Hobart Corp. v. Waste Management of Ohio, Inc., 758 F.3d 757 (6th Cir. 2014) was decided after the district court denied the motion to dismiss. Hobart held that an EPA settlement was an administrative settlement that resolved liability to the United States. The contribution action seeking costs incurred under the settlement was subject to a three-year

12

statute of limitations running from the agreement’s effective date. The court relied on four factors, each of which also was present in the settlement agreement here.

First, the Hobart parties included language in their agreement that stated their intent that the agreement be “an administrative settlement for purposes of Section 113(f)(3)(B)” resolving their liability to the United States. The settlement agreement here said exactly the same thing.

Second, the Hobart agreement provided that the settling parties were entitled to the protection from contribution actions or claims provided by Sections 113(f)(2) and 112(h)(4). The Hobart court explained that, for this paragraph to have any meaning, the agree-ment had to be an administrative agreement under Section 113(f). The settlement agree-ment in the present case included identical language.

Third, the title of the Hobart agreement was “Administrative Settlement Agreement and Order on Consent,” which the court observed matched the language of Section 113(f)(3)(B). Here, the title was “Administrative Settlement Agreement and Order on Consent for Removal Action.”

Fourth, the Hobart agreement contained a covenant from the EPA not to sue or take ad-ministrative action pursuant to Section 106 and 107(a) for work and future response costs. The agreement here contained almost identical language.

The Hobart court also determined that the agreement was a Section 122(a) settlement, a type of settlement not expressly mentioned in CERCLA’s contribution limitations provi-sion, rather than a Section 122(h) settlement, a type that was mentioned. The court then concluded that, because the claims—like the ones here—were for contribution, the three-year statute of limitations for contribution actions nonetheless applied. In the absence of a triggering event, the court “borrowed” the most analogous triggering event, the effective date of the settlement agreement.

The appellee insisted that the settlement agreement here was a Section 122(a) settle-ment intended primarily to facilitate the completion of a removal action, and therefore the triggering even should be the completion of the removal action. But even if this were so, Hobart required application of a three-year limitations period running from the agree-ment’s effective date.

The appellee asserted that the contribution limitations provision should not be read to apply to contribution actions for costs incurred under types of agreements it did not ex-pressly mention because that would render the provision’s list of triggering events mean-ingless. But that argument was rejected in Hobart.

13

The appellee pointed to a footnote in United States v. Atlantic Research Corp., 551 U.S. 128 (2007), arguing it established that reimbursement sometimes was available under both Sections 107 and 113(f). Accordingly, the Section 113(g)(2) statute of limitations for ac-tions to recover removal costs—which did not begin to run until removal was completed—was more appropriate, the appellee asserted.

But the appellee misread the footnote, which merely reserved the question of whether the remedies overlapped. Moreover, Hobart clarified that even if a settlement required PRPs to perform a removal action, a lawsuit to recover the costs of the removal action was a contribution action under Section 113(f), not a cost recovery action under Section 107, and thus was subject to the ordinary statute of limitations for contribution actions.

The appellee’s legislative history and policy arguments against the Hobart result fared no better. The legislative history argument was rejected in Hobart and, in any event, argu-ments that Hobart should have been decided differently could not be considered in a panel decision.

Finally, the appellee argued that the parties intended the limitations period to run from completion of the removal action. But even if the appellee’s forfeiture of this argument (for failing to raise it below) were ignored, the tolling agreements did no more than ex-clude a defined “tolling period” from counting towards the statute of limitations or other time-based defenses in order to facilitate settlement negotiations. This did not necessarily mean that the appellants believed the statute of limitations had not run yet. It could mean, for example, that the appellants valued a settlement because litigating the limitations issue would be expensive and uncertain.

Moreover, the limitations period was statutory, not contractual. The EPA and the ap-pellee did not have the power to agree to lengthen the time to bring claims. And even if it were true that the appellants shared a mistaken understanding of the limitations period when they entered into the tolling agreements, it would not have prevented them from later asserting the defense as long as they did so in time.

The only way the appellee potentially could have leveraged the tolling agreements was to assert that the parties intended not only to exclude the time listed, but also to waive any already accrued limitations defense. But the agreements provided no support for such a reading. Further, some of the appellants did not sign the agreements.

* * *

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FEDERAL COMMON LAW; PUBLIC NUISANCE; STATUTE OF LIMITATIONS;

EXTRATERRITORIAL APPLICATION OF CERCLA; NEGLIGENCE; STRICT LIABILITY FOR

ABNORMALLY DANGEROUS ACTIVITIES

Anderson v. Teck Metals, Ltd., No. CV-13-420-LRS (E.D. Wash. Jan. 5, 2015)

In a Case of First Impression, Federal Court Holds That CERCLA Displaces the Federal Common Law of Public Nuisance; State Public Nuisance Claims Were Also

Precluded Where a Foreign Defendant’s Actions Were Entirely Extraterritorial

On January 5, 2015, Senior Judge Suko, of the federal district court for the Eastern District of Washington, held that private plaintiffs could assert federal common law claims, but that CERCLA so occupied the field that it precluded plaintiffs from bringing claims founded on federal common law public nuisance. Because defendant was a foreign entity whose offensive actions occurred entirely outside the United States, plaintiffs’ state public nuisance claims were also precluded. The court found plaintiffs’ pleadings sufficient with respect to the issues of negligence, strict liability, and causation, and denied defendant’s motion to dismiss plaintiffs’ claims for strict liability and negligence.

Background

Residents of the Upper Columbia River Region (UCRR) of Washington State filed a class action suit against Teck Metals, Ltd., claiming that toxic substances from defendant’s lead-zinc smelter in Trail, British Columbia, were responsible for class members’ breast cancer and other physical ailments. The smelter has been in operation since 1896. In another claim against Teck by the Colville Confederate Indian Tribes, Teck had already ac-knowledged that slag and effluent from the smelter had been discharged into the Columbia River at or near its plant, and that the Upper Columbia River in Washington State had be-come contaminated by those discharges. A 2012 study by the Washington Department of Ecology cited elevated levels of lead, antimony, mercury, zinc, cadmium and arsenic in soil and surface waters downstream from the plant. Plaintiffs filed suit on December 20, 2013, seeking recovery under the theories of negligence, public nuisance, and strict liability. At issue before the court in this decision was defendant’s motion to dismiss.

Federal Common Law Public Nuisance

Citing both Ninth Circuit and Supreme Court precedent, the court explained that fed-eral common law may be created “only if a ‘federal rule of decision is necessary to protect uniquely federal interests.’” Moreover, “uniquely federal” questions exist only in narrow circumstances pertaining to the rights and responsibilities of the United States, interstate and international disputes affecting the rights of states, the United States’ relations with

15

foreign nations, and in admiralty cases. Citing the Ninth Circuit’s holding in National Audubon Society v. Dep’t of Water, 869 F.2d 1196 (9th Cir. 1988) (hereinafter National Audubon), Teck argued that private plaintiffs, unlike state entities, are categorically pre-cluded from pursuing federal common law public nuisance claims.

This court refused to read National Audubon so broadly. Plaintiffs in National Audubon had justified their federal nuisance claim on the assertion that the lake in question was an “interstate or navigable water,” and that the pollution in question affected not only the state where it originated, but also a neighboring state. However, a careful reading of National Audubon shows that the lake was located wholly within the same state as the source of pol-lution, and was an “interstate or navigable water” only in the broadest possible sense. The state law of California, where both the lake and the source of pollution were located, was sufficient to address the problem both in California and in the neighboring state.

In this case, by contrast, the source of air pollution was outside the State of Washington, while the impact complained of by plaintiffs was within Washington State—thus creating a true interstate, or international, dispute. In addition, later courts have never read National Audubon, as Teck suggested, as holding that only state entities may sue under the federal common law of nuisance. The court therefore rejected Teck’s argument that the plaintiffs lacked standing to pursue this cause of action.

The court then noted, however, that even if plaintiffs did have standing, the court still had to determine whether Congress had displaced the federal common law of nuisance by CERCLA. This was a question of first impression, as no court has ever previously decided whether CERCLA alone is sufficient to displace a federal common law public nuisance claim.

A claim may be brought under federal common law only when the complaint impli-cates a federal question “which cannot be answered from the federal statutes alone” (quot-ing Native Village of Kivalina v. ExxonMobil Corp., 696 F.3d 849 (9th Cir. 2012)). Whether the federal statute provides the same remedy as that sought by plaintiffs is irrelevant. The question is merely whether Congress has so completely addressed the harm alleged that it has effectively occupied the field.

Here, the court found that the “harm” complained of by plaintiffs was not specifically their personal injury, but rather defendant’s liability for the release of hazardous substances. Thus, CERCLA’s lack of a damages remedy for personal injury was not controlling as to whether CERCLA precluded plaintiffs’ federal common law claim. The court emphasized that, through CERCLA, Congress had “spoken directly” to the release of hazardous sub-stances into the environment, and had given a “sufficient legislative solution” to conclude

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that CERCLA “occupies the field to the exclusion of federal common law.” CERCLA provides “a comprehensive liability and remediation scheme” to address environmental releases, and “mak[es] polluters strictly liable for response costs to clean up the hazardous substances” as well as compensate for natural resource damages. The court therefore held that plaintiffs’ federal common law claim was precluded by CERCLA, and granted defen-dant’s motion to dismiss.

State Law Public Nuisance Claim

As an alternative to their federal common law claim, plaintiffs also pled a state law public nuisance claim. Under Washington state law, “a nuisance is ‘an unreasonable inter-ference with another’s use and enjoyment of property.’”

Here, however, Teck’s offending act (the discharge of slag and effluent at its plant in Canada) was extraterritorial. The court stated that it had found no previous decision of any court applying a state’s nuisance statute to foreign entities whose offending actions took place wholly outside the United States. The Ninth Circuit’s decision in Pakootas v. Teck Cominco Metals, Ltd, that CERCLA was not being applied to Teck extraterritorially, did not change this. As the court noted, CERCLA applies to releases of hazardous substances, which took place inside Washington, at the Upper Columbia River Site. Nuisance law, by contrast, pertains to a defendant’s actions, which took place at its smelter in Trail, British Columbia. Accordingly, the court dismissed plaintiffs’ state law public nuisance claims.

Statute of Limitations / Discovery Rule

Teck conceded that a three-year statute of limitations applied to all of plaintiffs’ claims, as they were all based on personal injury. The company argued, however, that all of the claims accrued before December 19, 2010, which was more than three years before plain-tiffs filed their class action suit.

The court explained that a statute of limitations defense “may properly be raised in a motion to dismiss” if the conclusion that the claim is time-barred is “apparent on the face of the complaint.” Dismissal, however, is granted “only if the assertions of the complaint, read with the required liberality, would not permit the plaintiff to prove that the statute was tolled.”

One way in which a statute of limitations may be tolled is through the “discovery rule.” Under that rule, the statute will not begin to run until a plaintiff discovers, or reasonably could have discovered, all essential elements of the cause of action. The discovery rule does not require knowledge that a cause of action exists, but merely knowledge of the facts that would give rise to the cause of action.

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The allegations in plaintiffs’ amended complaint did not specify a particular date of “discovery” for any of the plaintiffs. This was not fatal, however, because the allegations were sufficient to establish a potential defense to the statute of limitations. At the plead-ing stage of trial, plaintiffs are not required to allege which facts became known to each individual on what specific dates. It was not clear, on the face of the complaint, that all of plaintiffs’ claims had expired as of the date suit was filed. Thus, it was appropriate to wait for evidence to be presented at the summary judgment stage or trial—following discov-ery—before determining whether the statute of limitations had expired prior to the date of filing.

Causation

Teck claimed that plaintiffs had failed to allege any facts to establish causation, which was an essential element for all of plaintiffs’ claims. Though the complaint alleged gener-ally that certain chemicals could cause particular diseases, Teck noted that the complaint said “nothing as to whether those chemicals can cause diseases at the . . . level [plaintiffs] claim they were exposed to as a result of living in the UCRR.”

Contrary to Teck’s assertions, the court found that even when proving specific causa-tion at later stages of trial, “it is not always necessary for a plaintiff to quantify exposure levels precisely or use the dose-response relationship, provided that whatever methods an expert uses to establish causation are generally accepted in the scientific communi-ty” (quoting Henricksen v. ConocoPhillips Co., 605 F. Supp. 2d 1142, 1157 (E.D. Wash. 2009)). While measurement of a plaintiff’s exposure may later become necessary at the summary judgment stage or at trial, those data were not necessary at the pleading stage. Plaintiffs’ allegations of specific levels of air emissions from defendant’s smelter, coupled with evidence of health-related impacts from exposure to those chemicals and allegations of plaintiffs’ actual exposure over significant periods of time, were sufficient to withstand defendant’s motion to dismiss.

Abnormally Dangerous Activities / Strict Liability

Washington courts recognize the doctrine of strict liability for abnormally dangerous activities. Unlike negligence, strict liability does not require proof of duty or breach of duty. Liability is imposed regardless of whether the defendant exercised reasonable care. The Restatement (Second) of Torts § 520 (1977) provides six factors to be considered in determining whether an activity is “abnormally dangerous.”

The court held that plaintiffs’ failure to address each of the six Restatement factors at the pleading stage was not fatal at this stage of litigation. It was, in the court’s view, “rea-sonable to infer that one or more of the listed factors exist[ed]” to support plaintiffs’ claim,

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as the complaint clearly alleged that Teck had released hazardous and toxic substances into the environment, thereby creating “a high risk of significant harm.”

* * *

CLEAN WATER ACT; NPDES; DISCHARGE; POLLUTANT; POINT SOURCE; WATERS OF THE

UNITED STATES; INJUNCTIVE RELIEF

Myers v. Bureau of Land Management, No. 13-cv-00701-RM-BNB (D. Colo. Jan. 13, 2015)

Federal Agency Violated the Clean Water Act By Discharging Pollutants From Wells Used for Public Water Supply, but Injunctive Relief Was Denied in

View of the Modest Degree of Harm and the Difficulty of Obtaining an Alternate Source of Public Water

On January 13, 2015, Judge Moore, of the federal district court for the District of Colorado, found that the Bureau of Land Management (BLM) had clearly violated the Clean Water Act’s (CWA) prohibition of unpermitted discharges by virtue of uncontrolled leaks from both an old water well and drilling operations for a new well. Nevertheless, the court denied plaintiffs’ request for injunctive relief in view of the fact that (1) BLM had applied for, and was pursuing, a NPDES permit; (2) there was no evidence that the harm caused by BLM’s discharges would be irreparable; and (3) the cost and inconvenience to the public of having to acquire a new, reliable source of water would likely outweigh any benefit achieved by immediately closing the old well. Judge Moore instructed the clerk to withhold entering judgment, however, until BLM submitted follow-up reports on the status of its NPDES permit application and its progress in closing the old well.

Background

The Bureau of Land Management (BLM) owns two wells near Canon City, Colorado, known locally as the “Old Well” and the “New Well.” The wells are used, in part, to pro-vide water to the Park Center Water District (Park Center), which in turn supplies water for residents in or around Canon City. The Old Well has been operational since 1968 and is the primary source of drinking and household water for some 4,000 users in that area. Though Park Center has one other principle source of water for its customers, it relies heavily on the water supplied by BLM.

It has been known for some time that the Old Well experiences uncontrolled leakage, and that water diverted from the well due to that leakage discharges into nearby Fourmile Creek. Fourmile Creek is a tributary of the Arkansas River, which is “an interstate, naviga-ble-in-fact river,” and the creek itself is both a “water of the United States” and a “navigable

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water” as those terms are defined in the Clean Water Act (CWA, or Act). Discharges from the Old Well have been found to contain pollutants including heat, total suspended solids, arsenic, and radionuclides.

In addition to the discharges from the Old Well, drilling operations at the New Well have resulted in discharges of water, drilling mud, and portions of the drilling rig pad into the creek. In March 2013, BLM and EPA entered into a Federal Compliance Agreement (FCA) requiring BLM to apply for a NPDES permit for its discharges from both wells. In partial fulfillment of the FCA, on June 18, 2013, BLM submitted plans to EPA for manage-ment of both controlled and uncontrolled discharges from its wells.

Canon City customers of Park Center filed suit, on March 18, 2013, alleging that BLM had violated the CWA by discharging pollutants into Fourmile Creek from both the Old and New Wells. On November 6, 2013, Park Center filed a motion to intervene. At issue before the court in this decision was plaintiffs’ motion for summary judgment and request for injunctive relief.

Illegal Discharge Under the CWA

Plaintiffs moved for summary judgment on the question of BLM’s violation of the CWA. Section 301(a) of the CWA prohibits “the discharge of any pollutant by any per-son” unless authorized by a NPDES permit. The CWA, § 502(12), defines “discharge of a pollutant” as the “addition of any pollutant to navigable waters from any point source.” Pollutant is broadly defined to include heat, as well as solid or chemical wastes and bio-logical or radioactive materials. “Navigable waters” are defined as “waters of the United States,” and “point sources” include “any discernible, confined and discrete conveyance,” including “any pipe [or] ditch.”

BLM admitted that it had discharged pollutants from both the Old and New Wells. It admitted that the wells constituted point sources as defined in the CWA, it acknowledged that its discharges included pollutants as that term is defined in the Act, and it admitted that Fourmile Creek constituted a “water of the United States.” It was clear that BLM did not have a NPDES permit authorizing such discharges. Thus, the court granted summary judg-ment for plaintiffs respecting BLM’s violation of the Act.

Injunctive Relief

Plaintiffs also sought an injunction that would have compelled BLM to abandon the Old Well within 7 to 10 months after the court’s decision, and would have required BLM to file a feasibility study with the court within 5 months if BLM intended to continue drilling the New Well. The court noted that injunctive relief “is an extraordinary remedy which is

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never to be awarded as of right.” A party seeking an injunction must prove: (1) a likeli-hood of success on the merits; (2) irreparable harm if an injunction is not granted; (3) the threatened injury outweighs the harm of an injunction to the opposing party; and (4) an injunction would not adversely affect the public interest.

As to plaintiffs’ likelihood of success on the merits, the court noted its initial conclu-sion that BLM had violated the CWA. However, with respect to irreparable harm, the court found “no support . . . in the Expert Report.” Though environmental harm is often consid-ered irreparable, there was no evidence that remediation could not restore the alleged loss of fish and wildlife, or succeed in making the well water near plaintiffs’ homes safe for consumption. In the meantime, the court reasoned, monetary damages should adequately compensate plaintiffs for the cost of obtaining water elsewhere for drinking and irrigation. Moreover, with EPA already engaged in ongoing regulation of the alleged harm, the threat of irreparable harm was reduced.

With regard to balancing the equities, the court noted that closing the Old Well while drilling the New Well could cost Park Center more than $2.5 million. Denying the injunc-tion would allow BLM to continue its discharges for a time, but BLM had applied for a NPDES permit and there was no evidence that remediation would be unsuccessful. As to the public’s interests, Park Center had no readily available substitute for the water it pur-chased from BLM, and granting the requested injunction would deprive 4,000 users of an adequate and reliable water supply.

Accordingly, the court granted plaintiffs’ motion for summary judgment regarding BLM’s violation of the CWA, but denied plaintiffs’ request for injunctive relief. However, the court also ordered BLM to submit reports describing its progress in finishing the New Well and closing the Old Well, and detailing the status of its NPDES permit application. The Clerk of Court was directed to withhold entering the court’s judgment until the court considered those reports.

* * *

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CERCLA; FEDERAL TORT CLAIMS ACT; DISCRETIONARY FUNCTION EXCLUSION;

SUBJECT MATTER JURISDICTION

Waverly View Investors, LLC v. United States of America, No. CCB-14-1527 (D. Md. Jan. 13, 2015)

Because Waste Disposal Practices and Remediation Actions at a Federal Facility Were Discretionary and Subject to Policy Considerations, the Government Was

Shielded By Sovereign Immunity Under the Federal Tort Claims Act

On January 13, 2015, Judge Blake, of the federal district court for the District of Maryland, held that the court did not have subject matter jurisdiction over plaintiff’s claim for damages under the Federal Tort Claims Act (FTCA). The U.S. Army’s disposal of toxic chemicals in unlined pits at Fort Detrick, Maryland, had contaminated groundwater under-neath plaintiff’s adjacent property and prevented plaintiff from developing its land. But both the Army’s historic waste disposal practices, and the remediation actions it had un-dertaken in recent years, were discretionary in nature and subject to policy considerations. Thus, the discretionary function exception to the FTCA applied, and the Government’s sovereign immunity precluded suit.

Background

The facility at issue was a 399-acre parcel within the confines of Fort Detrick, called Area B. Fort Detrick, is an Army Medical Command installation located in Frederick, Maryland. During and after World War II, Fort Detrick served as home to the United States’ biological weapons program. In 1969, the Department of Defense disposed of its stock of biological weapons, and since then the fort has focused, among other things, on biomedical research and development. Area B was used largely as a disposal site for solid and hazardous wastes from the fort’s operation, and a variety of acids and chemicals, in-cluding trichloroethylene (TCE), tetrachloroethylene (PCE) and dichloroethylene (DCE), were disposed of at that location in unlined trenches.

Plaintiff Waverly View Investors, LLC (Waverly) is a developer that owns 92 acres of undeveloped land adjacent to Fort Detrick’s Area B. Plaintiff claimed that groundwater contamination caused by the U.S. Army’s waste management practices at the fort caused the levels of TCE, PCE and DCE in the groundwater underneath Waverly’s land to exceed federal limits. That contamination allegedly has prevented Waverly from developing its land. Plaintiff sued under the Federal Tort Claims Act (FTCA), and common law theories of negligence, trespass and private nuisance, seeking $37.2 million in compensatory dam-ages. In its complaint, Waverly distinguished between the Army’s waste disposal activities from 1955 to 1972, and its decisions concerning remediation from 1972 to the present. At

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issue in this decision was the United States’ motion to dismiss for lack of subject matter jurisdiction, on the basis that Waverly’s claims fell within the FTCA’s discretionary func-tion exception (DFE).

Federal Tort Claims Act and the Discretionary Function Exception

Plaintiff’s action was brought under the FTCA, which provides a limited waiver of sovereign immunity. Under the FTCA, the United States Government is liable for tort claims in the same manner and to the same extent as any private individual. This waiver of immunity, however, is subject to a number of exceptions, including the DFE. Determining whether a claim falls within the DFE requires a two-step analysis that was formulated by the Supreme Court in Berkovitz v. United States, 486 U.S. 531 (1988). First, the court must determine whether the government’s conduct involved an element of judgment or choice. The exception does not apply if the action was specifically prescribed by statute, regula-tion, or policy. Second, even if the action involved an element of judgment, the court must determine if that judgment was the kind that the discretionary function exception was de-signed to shield. Even mandatory actions driven by considerations of policy are shielded by the DFE. A government agent’s actions “are presumed to be ‘grounded in policy’ when that agent uses discretion provided by statute, regulation, or agency guideline.” In sum, the court explained as follows:

[T]he question here is whether Waverly has shown that the Army either (1) lacked discretion regarding

its waste management practices or (2) made waste management decisions of the kind that were not sus-

ceptible to policy analysis. If Waverly can show either, then the DFE does not apply, the United States

has waived sovereign immunity, and this court has subject matter jurisdiction.

Whether the Army’s Waste Disposal Practices Were Discretionary

The first question was whether the Army’s past waste disposal practices were discre-tionary in nature. Waverly argued that they were not, citing 25 distinct statutory or regu-latory provisions that it claimed governed the military’s disposal of TCE, PCE and other wastes. The court, however, rejected Waverly’s argument. Of the 25 provisions cited by Waverly, 20 were adopted after the Army stopped disposing of waste at Area B in 1972, and thus could not have governed the Army’s conduct at the time of disposal. That left only 5 potentially relevant provisions.

Even the relevance of those five provisions was doubtful according to the court’s analy-sis. Construing them in the larger context of the regulations of which they were a part, several of the requirements actually applied only if “practicable” or if they could be accom-plished within budget constraints. One of the provisions was contained within a regulation

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related explicitly to “policy;” another directive was part of an executive order issued under the Clean Water Act, which did not clearly apply to groundwater. In addition, the court found that “none of the provisions were sufficiently specific to bind the Army.” To satisfy the step-one standard in the DFE analysis, a directive must be “mandatory and it must clearly and specifically define what the employees are supposed to do.” The court found that none of the provisions Waverly cited were this specific.

The court cited numerous cases in the Fourth Circuit and elsewhere, involving similar complaints, in which other courts consistently held that the Government’s waste disposal practices were discretionary. In most of those cases, the plaintiffs cited directives mandat-ing that waste be disposed of in a manner protective of the environment and human health; but in each case, the directives lacked any specific, mandatory procedures for handling waste. In sum, the court found that there were no government directives specifically regu-lating the disposal of TCE or PCE at the time those wastes were disposed of at Fort Detrick.

Whether the Army’s Waste Disposal Practices Were Subject to Policy Considerations

Waverly argued that, even if the Government was not bound by any specific, mandatory directive regarding waste disposal, it was acting merely as a private landowner addressing “mundane, administrative, garden-variety, housekeeping problem[s] that [were] about as far removed from the policies applicable to the [Army’s] mission as it is possible to get.” Plaintiff asserted that the Army’s disposal of toxic wastes “did not reflect any exercise of military function or authority,” and that to hold otherwise would construe the discretionary function exception so broadly as to entirely swallow the FTCA.

The court, however, disagreed with Waverly’s characterization of the Army’s conduct. Waste disposal actions at the fort inherently reflected policy considerations including na-tional security, resource constraints, and environmental impact. Thus, the court determined that Waverly failed to carry its burden of demonstrating that the Army’s decision to dispose of chemicals in unlined pits on its own facility was devoid of policy considerations.

Whether the Army’s More Recent Remediation Actions

Fell Outside the Discretionary Function Exception

Waverly argued that Army Regulation 200-1 required the Army to identify, prevent, and remediate contamination at the fort. Even if the Army had discretion concerning how to act, it did have discretion as to whether to act. Thus, the Army’s failure to properly over-see remediation efforts and ensure public safety was not a matter of discretion. Plaintiff further argued that the Army’s decisions and actions regarding waste remediation were not driven fundamentally by policy considerations. Matters of “professional and scientific

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judgment” fall outside the scope of the DFE, as they “do not involve the weighing of eco-nomic, political and social policy.”

As to the discretionary nature of the Army’s remediation, the court noted that the SARA regulations in 1986 explicitly stated that responses by the Army to environmental hazards are discretionary governmental functions. With regard to the policy implications of the Army’s remediation, the court noted that such decisions went well beyond purely scientific principles, requiring the Army to balance the goals of public safety, health, environmental impact, resource constraints, regulatory constraints, and stakeholder input.

The Court’s Holding

The court concluded that Waverly had failed to carry its burden of persuasion that the Government’s historic waste disposal activities or more recent remedial actions were outside the scope of the FRCA’s discretionary function exception. Having concluded that the DFE applied to Waverly’s claim, the court determined that it did not have subject mat-ter jurisdiction over the case. It therefore granted the Government’s motion for summary judgment.

* * *

RCRA; CERCLA; PETROLEUM EXCLUSION; CITIZEN’S SUIT; DILIGENT PROSECUTION;

SUPPLEMENTAL JURISDICTION;

White Plains Housing Authority v. Getty Properties Corp., No. 13-CV-6282 (NSR) (S.D.N.Y. Dec. 16, 2014)

Spread of Benzene Contamination in Soil and Groundwater Resulting From Gasoline Spill Does Not Implicate CERCLA Liability, As Even Hazardous

Constituents of Gasoline Fall Within CERCLA’s Petroleum Exclusion

On December 16, 2014, Judge Roman, of the federal district court for the Southern District of New York, held that the spread of benzene contamination resulting from a pe-troleum spill did not implicate CERCLA liability, as the benzene was merely a natural constituent of gasoline and therefore fell within CERCLA’s petroleum exclusion. Some defendants, however, were subject to RCRA’s citizen suit provision despite the state’s in-volvement in overseeing cleanup efforts, because the state had not yet brought an action under RCRA nor engaged in CERCLA-specific cleanup or enforcement. Given that plain-tiff’s RCRA suit survived a motion to dismiss with respect to some of the defendants, the court chose to exercise supplemental jurisdiction with respect to all defendants over plain-tiff’s state law claims.

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Background

Plaintiff White Plains Housing Authority (WPHA) owns and operates a five-building, residential apartment complex in White Plains, New York. Defendant Getty Properties Corporation (Getty) operated a gasoline filling station (the Getty Station) adjacent to plain-tiff’s complex from approximately 1973 to 1988. At some point during Getty’s ownership of the station, gasoline was released into the environment, began to separate into its con-stituent parts, and migrated underneath plaintiff’s land.

Defendant Michael Kenny purchased Getty’s property in 1994 and held it until 2011. From 2005 to 2011, Kenny co-owned the property with defendant Kenneth Seus. Plaintiff claimed that, throughout Kenny’s and Seus’s time of ownership, gasoline continued to leak from the station’s storage tanks, and both gasoline and gasoline constituents—including benzene—continued to migrate onto plaintiff’s land. In February 2011, defendant Singer Real Estate Group, LLC (Singer) purchased the Getty property with knowledge of the on-going contamination.

The contamination was reported to the New York State Department of Environmental Conservation (DEC) in or around February 1998. From that time forward, Getty attempted to remediate the contamination, but its efforts were largely ineffective. The benzene level on plaintiff’s property at the time of trial far exceeded DEC’s water quality standards for drinking water, and the contaminant plume extended near —and possibly underneath—one of plaintiff’s apartment buildings.

Plaintiff had begun a $350 million renovation of its project and was concerned that the contamination might interfere with its financing. Plaintiff therefore brought suit, under CERCLA, RCRA, and various state law theories, seeking to recover its own costs and ensure that the contamination on its land was abated. At issue in this decision were de-fendants’ motions to dismiss plaintiff’s complaint. For reasons explained below, the court granted in part, and denied in part, those motions.

CERCLA’s Petroleum Exclusion

Plaintiff sought both cost recovery under CERCLA § 107(a) and an order, under CERCLA § 113(g)(2), that defendants would be jointly and severally liable for necessary costs of future investigation and cleanup. CERCLA § 107(a) allows any party to recover necessary response costs if there is a release of a hazardous substance from a facility into the environment, and the costs expended by plaintiff in responding to that release were incurred in a manner consistent with the National Contingency Plan. Plaintiffs asserted that the Getty Station released benzene, a hazardous substance, into the environment, and that all defendants were potentially responsible parties (PRPs) within the meaning of the

26

Act. Defendants did not dispute that they were PRPs, but argued that the gasoline released from the Getty Station fell within CERCLA’s petroleum exclusion and was therefore not considered a hazardous substance as defined by CERCLA.

The court was therefore asked to address the question of “whether benzene that was once part of a gasoline mixture discharged into the environment, but which thereafter sepa-rated from other constituent parts of the gasoline, may support a CERCLA claim.” Plaintiff had characterized the contamination on its land as “a ‘plume’ of the hazardous substance benzene,” and had asserted that the continuing migration of contaminants from the Getty Station constituted a continuing “release.” Plaintiff further suggested that CERCLA’s pe-troleum exclusion did not apply “where, once in the ground, gasoline separates ‘into its by-products or constituents due to physical, chemical, and biological actions.’”

In the absence of Second Circuit precedent on this issue, the court relied on the reason-ing of the Ninth Circuit Court of Appeals and the Northern District of New York, both of which had held that, where contaminants in a petroleum product increase with usage or industrial processing, the added contaminants fall outside the petroleum exclusion and may subject a party to CERCLA liability. But those contaminants that exist naturally within petroleum or fractions of petroleum fall within the petroleum exclusion and do not expose a party to liability. In this case, the benzene present on plaintiff’s property was wholly indigenous to defendants’ gasoline, was not added through usage, and did not increase in concentration during storage or industrial processing. Consistent with the holding of WilshireWestwoodAssociatesv.AtlanticRichfieldCorp.,881 F.2d 801 (9th Cir. 1989), the court held that the benzene at issue fell within CERCLA’s petroleum exclusion, and thus was not considered a hazardous substance for purposes of CERCLA liability. The court granted defendants’ motion to dismiss the cost recovery claim, and having dismissed plain-tiff’s cost recovery claim, the court also dismissed its claim for declaratory relief.

RCRA Citizen’s Suit Provision

Plaintiff also asserted a claim under the citizen suit provision of RCRA, § 7002(a). While there is no petroleum exclusion under RCRA, the statute does contain carve-outs under § 7002(b)(2)(C) that preclude a citizen suit if a state: (1) has commenced and is diligently prosecuting an action under RCRA § 7002(a)(1)(B); (2) is engaging in a removal action under CERCLA § 104, or (3) has incurred costs to initiate a RI/FS under CERCLA and is diligently proceeding with a remedial action.

Although defendants conceded that New York was not itself engaged in enforcement or remediation, they contended that DEC’s oversight of defendants’ remediation efforts constituted an “action” within the meaning of the first-enumerated carve-out. Contrary

27

to defendants’ assertion, however, the court held that “prosecution” of an “action,” as de-scribed in RCRA § 7002(b)(2)(C), envisions an action in court, not merely administrative oversight of a private cleanup. And exceptions (2) and (3) above require, at the least, fed-eral authorization to carry out a CERCLA-specific removal action or a joint federal-state cooperative enforcement agreement leading to CERCLA enforcement. Given that none of the exceptions in RCRA § 7002(b)(2)(C) applied, the court denied defendants’ motion to dismiss plaintiff’s claim under RCRA § 7002 against the majority of defendants, including Getty, Kenny and Seus (Getty Defendants).

Supplemental Jurisdiction Over State Law Claims

All defendants moved to dismiss plaintiff’s state law claims pursuant to Fed. R. Civ. P. 12(b)(6), for lack of subject matter jurisdiction, effectively asking the court to decline to exercise supplemental jurisdiction over those claims. Federal district courts have supple-mental jurisdiction over all other claims so related to claims within the courts’ original ju-risdiction that they “form part of the same case or controversy under Article III.” Whether courts choose to exercise supplemental jurisdiction depends upon a balancing of factors focusing on judicial economy, convenience, fairness and comity.

Though the court dismissed plaintiff’s CERCLA claim against all defendants, it sus-tained the RCRA claim against the Getty Defendants. And because a federal claim re-mained against at least one defendant, the court determined that judicial economy would not be served by dismissing state law claims that arose from substantially the same “com-mon nucleus of operative facts.” Though no federal claim remained against Singer, the court determined that dismissal of the state law claims against Singer would not promote judicial economy, as it would effectively create duplicate actions. Dismissal could also have sabotaged the principles of fairness and comity, given the risk of inconsistent deci-sions by federal and state courts on substantially the same state law claims. Accordingly, defendants’ motion to dismiss the state law claims was denied with respect to all defen-dants, including Singer.

* * *

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CLEAN AIR ACT; CITIZEN SUITS; STANDING; ACTIONABILITY; CIVIL PENALTIES;

INJUNCTIVE RELIEF; DECLARATORY JUDGMENT

Environment Texas Citizen Lobby, Inc. v. ExxonMobil Corporation, No. H-10-4969 (S.D. Tex. Dec. 17, 2014)

Federal Court Provides Plaintiffs No Relief Despite Its Finding of Multiple Actionable Air Act Violations By Defendant

On December 17, 2014, Judge Hittner, of the federal district court for the Southern District of Texas, found for plaintiffs on the issues of organizational standing and action-ability under the Clean Air Act’s (CAA) citizen suit provision. However, despite the fact that plaintiffs established multiple actionable Air Act violations at defendant’s facility, the court awarded plaintiffs no relief. Exxon’s history of good faith compliance, the expen-ditures it had made voluntarily to minimize unauthorized emissions, and the significant emissions reductions already achieved, weighed against imposing civil penalties beyond those already assessed by state regulators. Given Exxon’s efforts to enhance its compli-ance and the progress it had made in doing so, the court concluded that injunctive relief or the appointment of a special master to monitor compliance would be unproductive and unduly burdensome. And in view of the court’s finding that actionable permit violations had occurred, it found that further declaratory relief would be merely duplicative. Judge Hittner’s decision includes a detailed discussion of requirements for actionable violations under CAA § 304 and a useful analysis of the factors relevant to assessment of civil penal-ties under the Act.

Background

This litigation concerned ExxonMobil, Inc’s industrial complex in Baytown, Texas, consisting of an oil refinery, olefins plant and chemical facility (the “Complex”). On December 13, 2010, plaintiffs Environment Texas Citizen Lobby, Inc. and the Sierra Club filed a citizen’s suit under CAA § 304, seeking the assessment of civil penalties, declara-tory judgment, injunctive relief, and the appointment of a master in response to unauthor-ized air emissions and operational deviations from defendant’s Title V permits.

Founded in 1919, the Exxon Complex has become the largest and most sophisticated petroleum and petrochemical facility in the United States. Located on approximately 3,400 acres, it can process more than 550,000 barrels of crude oil per day and produce 13 billion pounds of petrochemical products each year, ranging from jet fuel to plastics. The facility contains 10,000 miles of pipe, 1 million valves, 2,500 pumps, 146 compressors, and 26 flares, and employs more than 5,000 people. The Complex is governed by multiple Air

29

Act permits issued by the Texas Commission on Environmental Quality (TCEQ), which together contain over 120,000 individual permit conditions or limitations.

The court noted that Exxon, under its Title V permits, was required to document and report on three levels of noncompliance or indications of noncompliance. The most serious reported emissions events, called “reportable emissions events,” involved releases greater than specifically targeted threshold quantities of particular pollutants. Less severe events, which were documented as “recordable emissions events,” involved releases of less than the targeted threshold quantities of pollutants. Still less serious were operational “devia-tions,” which involved events that created a potential for unauthorized air emissions, but did not necessarily entail any excess emissions. At trial, Exxon stipulated that, during the period covered by this suit, the Complex had experienced 241 reportable emissions events, 3,735 recordable events, and 901 deviations.

After investigating these events and deviations, TCEQ and Harris County—where the Complex is located—assessed a total of $1,423,632 in civil penalties against Exxon. In addition, TCEQ required Exxon to take corrective actions or document corrective actions already taken to prevent or minimize future events or deviations. As part of Exxon’s settle-ment with TCEQ, the parties agreed to an enforcement order that (1) resolved all pending enforcement issues for past violations, (2) established stipulated penalties for any future violations, (3) required that Exxon demonstrate specific emissions reductions, and (4) man-dated implementation of four environmental improvement projects at the Complex with a total projected cost to Exxon of $20 million.

In this action, plaintiffs sought relief beyond that achieved by TCEQ, including as-sessment of more than $600 million in additional civil penalties. In a detailed discussion ranging from citizen suit requirements to civil penalty assessments, the court found that plaintiffs had standing to sue on behalf of their members, and that some of the violations alleged in the lawsuit were actionable under the CAA’s citizen suit provision. Ultimately, however, the court held that no relief was appropriate beyond what had already been im-posed by TCEQ.

Organizational Standing and Injury-In-Fact

The court concluded that both Environment Texas and the Sierra Club had standing to sue as public interest organizations. Both plaintiffs are non-profit corporations with purposes that include environmental protection and issue advocacy. Organizations such as plaintiffs have standing to sue on behalf of their members if (1) their members would otherwise have standing to sue in their own right, (2) the interests the suit would promote are germane to the organization’s purposes, and (3) neither the claim asserted nor the relief

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sought requires the participation of individual members. Of these requirements, Exxon challenged only the assertion that the organizations’ members had standing to sue in their own right.

For plaintiffs’ members to have such standing, the members must have suffered an actual or threatened injury that was fairly traceable to defendant’s action, and would likely be redressed if plaintiffs prevailed in the suit. Plaintiffs were able to prove each of those elements.

With respect to the injury-in-fact requirement, the court noted that the threshold for establishing that element is low, particularly in litigation over environmental issues. In this case, individual members of both organizations testified that they had suffered physical symptoms attributable to air pollution, had refrained from recreating outdoors near defen-dant’s Complex, or had moved away from Baytown entirely in order to distance them-selves from the Complex.

With regard to traceability, plaintiffs were able to establish “a fairly traceable connec-tion” between their members’ injuries and defendant’s Air Act violations. Such connec-tions need not be established to a scientific certainty, and plaintiffs’ members were able to correlate some of their adverse experiences with specific dates of some of defendant’s emissions events and deviations.

As to redressability, plaintiffs established that prevention or deterrence of Air Act vio-lations at the Complex would redress the harm alleged, and that penalties, injunctive relief, and the appointment of a master to monitor defendant’s permit compliance would likely contribute to that deterrence. Plaintiffs therefore established that members of both organi-zations would have had standing to sue Exxon in their own right, and that plaintiffs them-selves therefore had organizational standing to bring this suit.

Actionability

There was no dispute that Exxon had violated some emissions standards or limitations during the time covered by this suit. The question, however, was “whether such violations [were] actionable under the CAA as a citizen suit.” Under CAA § 304, a plaintiff may establish that a party is “in violation” of an emission standard or limit by proving that the violation continued on or after the date the complaint was filed, or by demonstrating “a continuing likelihood of recurrence in intermittent or sporadic violations.” Specifically, a plaintiff may establish that a violation is actionable by proving: (1) repeated violations of the same emission standard or limitation before the complaint was filed, (2) violations of the same standard or limitation both before and after the complaint was filed,; or (3) a

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likelihood that the same inadequately corrected process or operation would cause recurring violations of one or more specific permit conditions.

In this case, plaintiffs faced two practical challenges in attempting to establish action-able violations. First, lacking any independent data of their own, plaintiffs were limited to the information contained defendant’s own records and reports. Second, Exxon’s Title V permits contained over 120,000 individual permit conditions, and the court construed the CAA to require that plaintiffs establish repeated or continuing violations of precisely the same permit limit or standard (citing CAA § 304(a)(1) & (f)(4)). Despite these challenges, plaintiffs were able to establish a limited number of actionable violations pertaining to de-fendant’s operating procedures and hourly emissions limits for NOx.

Available Relief

In addition to injunctive and other relief, defendants asked the court to assess civil penalties of more than $600 million, reflecting the maximum allowable penalty for each alleged violation. Nevertheless, despite plaintiffs’ uncontroverted proof of multiple action-able violations, the court declined to award any form of relief, for the reasons explained below.

Civil Penalties—Having found that “only a few” recorded events and deviations were actionable under CAA’s citizen suit provision, the court determined that no civil penalty should be imposed beyond what had already been assessed by TCEQ. In reaching this determination, the court considered the size of the business involved, the economic impact of any penalty on the business’s profitability, Exxon’s compliance history, the duration of Exxon’s violations and resulting harm, the payment of previous civil penalties for those same violations, the economic benefit to Exxon of noncompliance, and the seriousness of the violations.

The court agreed with plaintiffs that the size and profitability of Exxon and the econom-ic impact of any penalty imposed weighed in favor of assessment of additional penalties. However, Exxon’s long history of cooperation with regulators and its good faith efforts to comply weighed strongly against such relief. The court noted that Exxon’s own reports and records demonstrated thousands of emissions events and deviations during the years in question, but it also recounted a long history of good faith efforts and voluntary environ-mental initiatives implemented at the Complex, and concluded that “Exxon’s full compli-ance history and good faith efforts to comply weigh against assessing a penalty.” Beyond that, Exxon’s records proved that a large percentage of events and deviations were of short duration, and testimony at trial was mixed as to any actual harm to human health resulting from Exxon’s operation of the Complex. Given the size and complexity of the facility, and

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the fact that Exxon had spent hundreds of millions of dollars to enhance maintenance and reduce emissions, the court determined that Exxon had not benefitted financially through noncompliance.

Injunctive Relief—A party seeking injunctive relief must prove: (1) a likelihood of success on the merits, (2) that a failure to grant the injunction would result in irreparable injury, (3) that the resulting injury would outweigh any damage an injunction would cause the opposing party, and (4) that the injunction would not disserve the public interest. Given that an injunction is an extraordinary remedy, not granted as a matter of course, a court need not award injunctive relief even if the plaintiff prevails in a citizen’s suit. Here, plain-tiffs requested that Exxon be enjoined for five years from violating the emissions standards and limitations found by the court to be actionable.

The court concluded that an injunction would be excessively intrusive upon the de-fendant and burdensome to the court, as it would require continuing supervision of defen-dant’s operations by the federal court. The court also noted Exxon’s “attitude and laudable efforts” in “continuously trying to improve the level of emissions” without any previous oversight by the court, and emphasized that Exxon already faces the threat of enforcement by TCEQ if it fails to comply with its permits. Because an injunction would do no more that require Exxon to obey the law in the future—something it is already required to do—the court found that injunctive relief was unnecessary and declined to provide it. The court also denied plaintiffs’ request for appointment of a special master to monitor compliance with the injunction plaintiffs had hoped to get. The court determined that plaintiffs had not shown that a special master would be any more effective than defendant’s own workforce in reducing emissions events and deviations.

Declaratory Relief—Plaintiffs requested a “declaratory judgment that Exxon violated its Title V permits and thus the CAA.” The court agreed that multiple violations had been established and were actionable under the CAA. However, having already held that those violations had occurred, the court considered it unnecessary to provide additional declara-tory relief and thus denied plaintiffs’ request.

* * *

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RCRA; CERCLA; DISPOSAL; ARRANGER LIABILITY; CERTIFICATION; INTERLOCUTORY

APPEAL

Pakootas v. Teck Cominco Metals, Ltd., No. CV-04-256-LRS (E.D. Wash. Dec. 31, 2014)

Air Emissions Alone Do Not Constitute a “Disposal” for Purposes of CERCLA, but Hazardous Substances From Those Emissions Are

Disposed of If They Ultimately Settle Onto Land or Into Water

On December 31, 2014, Senior Judge Suko, of the federal district court for the Eastern District of Washington—in a case of first impression—held that air emissions containing hazardous substances are not themselves a “disposal” within the meaning of CERCLA, but if those substances settle onto land or into water, a disposal has occurred. This appears to be the first decision in which any federal court has directly addressed this issue. The court rejected defendant’s argument that the Ninth Circuit’s recent decision in Center for Community Action and Envtl. Justice v. BNSF Railway—which dealt with this issue in a RCRA context—represented a change in controlling law. Given the ground-breaking na-ture of the court’s holding and its potential impact on this litigation, the district court certi-fied its decision for immediate interlocutory appeal to the Ninth Circuit. The Ninth Circuit has yet to decide whether to entertain such an appeal.

Background

Plaintiff Joseph A. Pakootas is a member of a Native American Indian tribe situated in the Upper Columbia River Basin, in the State of Washington. That area has been adversely impacted by the operation of a lead-zinc smelter by defendant Teck Cominco, Ltd. (Teck). The smelter is actually located in Trail, British Columbia, which is several miles up-river from the tribe; but hazardous substances from the slag and effluent deposited by Teck over the years into the Columbia River near its plant have come to be located along the Upper Columbia River in the State of Washington. Both Pakootas and the State have sued Teck under CERCLA § 107, seeking recovery of response costs and natural resource damages.

In an earlier phase of this litigation, Teck stipulated that: (1) it had discharged slag and effluent from its smelter into the Columbia River, (2) hazardous substances from that waste had migrated to the site in question, and (3) the release of hazardous substances at the site in question had caused both Native American tribes and the State of Washington to incur response costs. Teck still argues, however, that it is not among the four classes of responsible parties listed in CERCLA § 107(a); specifically, that it is not an “arranger” as that term is defined in the statute. At issue in this decision was whether air emissions from defendant’s smelter provided a basis for recovery of response costs and natural resource damages.

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Meaning of Disposal

The specific question addressed in this decision was whether the term “disposal,” in the context of CERCLA, includes hazardous substances that are emitted into the air, but even-tually come to rest on the land or in the water at a CERCLA “facility.” Defendants argued that the Ninth Circuit’s August 20, 2014 decision in Center For Community Action and Env’tl Justice v. BNSF Railway Co., 764 F.3d 1019 (9th Cir. 2014) (hereinafter “CCAEJ”) represented an “intervening change in the controlling law,” justifying reversal of the court’s earlier decision denying defendant’s motion to dismiss.

CERCLA itself does not define the term “disposal,” but borrows RCRA’s definition. In CCAEJ, the Ninth Circuit explained that RCRA’s definition of disposal did not include the act of “emitting,” but only the acts of “discharging, depositing, injecting, dumping, spill-ing, leaking, and placing.” On that basis, the Ninth Circuit concluded that the “emission” of solid waste into the air did not constitute “disposal” under RCRA, even if particles from those emissions eventually settled on the ground or in the water. In the CCAEJ opinion, the Ninth Circuit further opined that

The text of [RCRA § 103(3)] . . . limits the definition of disposal to particular conduct causing a par-

ticular result. By its terms, “disposal” includes only conduct that results in the placement of solid waste

“into or on any land or water.” . . . That placement, in turn, must be “so that such solid waste . . . may

enter the environment or be emitted into the air, or discharged into any waters . . . . We therefore conclude

that “disposal” occurs where the solid waste is firstplaced “into or on any land or water” and is thereafter

“emitted into the air.”

Plaintiffs in CCAEJ asserted that the defendants had “disposed” of particulate matter contained in diesel fuel when emissions from their diesel engines were transported by the wind onto land and water near defendants’ rail yards. The court, however, held that the term “disposal” did not encompass emissions of solid waste directly into the air, even if particulate matter from those emissions ultimately came to rest on land or in the water.

The district court in this decision emphasized that CCAEJ was a RCRA case, and that the harm plaintiffs complained of resulted from inhalation of airborne particles. Here, by contrast, the court was dealing with a CERCLA complaint, which encompasses the concept of releases from a “facility.” In this instance, the “facility” was neither defendant’s smelter nor the air around it, but rather the area along the Upper Columbia River in Washington State, where hazardous substances originating at the Trail Smelter up-river had come to be located. The court held that “[e]missions to the air alone do not constitute a ‘CERCLA

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disposal,’ but that “disposal” does occur for purposes of CERCLA when hazardous sub-stances from those emissions come to rest on land or in the water at a “facility.”

Certification to the Ninth Circuit

The district court considered its holding to be consistent with the Ninth Circuit’s de-cision in CCAEJ. Nevertheless, given that no federal court had previously “addressed this issue head-on,” the court certified its order for immediate interlocutory appeal to the Ninth Circuit pursuant to 28 U.S.C. § 1292(b). If the Ninth Circuit accepts the appeal, the question will be whether “Teck’s aerial emissions are actionable under CERCLA if they result in a ‘disposal’ of hazardous substances ‘into or on any land or water’ of the [Upper Columbia River] Site.” As the district court noted, a decision on this issue by the Ninth Circuit could “materially advance the ultimate termination of this litigation.”

If the air pathway is eliminated from this case, it will undoubtedly reduce the time necessary to bring

this case to a conclusion because it will leave only the recovery of response costs and natural resource

damages resulting from Teck’s discharges of slag and effluent into the river.

Pending a petition by Teck for appeal, and the Ninth Circuit’s ultimate decision, the district court has stayed the air pathway portion of the case.

* * *

GROUNDWATER CONTAMINATION; CAUSATION; NUISANCE; STATUTE OF LIMITATIONS

In re Methyl Tertiary Butyl Ether Products Liability Litig., No. 1:00-1898, MDL 1358 (SAS), M21-88 (S.D. N.Y. Dec. 18, 2014)

“Focus Plume” Model of Plaintiff’s Expert Sufficiently Traced MTBE From Individual Gas Stations to Plaintiff’s Water Wells

A water district seeking damages for contamination of its water wells by a gasoline ad-ditive allegedly coming from gas stations was able to withstand summary judgment with respect to all defendants on the causation issue. District Judge Scheindlin held that the “fo-cus plume” model of the plaintiff’s expert sufficiently traced MTBE from the defendants’ individual stations to the plaintiff’s wells.

The court noted that under its prior ruling, the plaintiff had to prove that each release site identified as part of a focus plume contributed to contamination of the wells associated with that plume. The expert claimed that his model showed that MTBE from each station

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would enter a plume, commingle with MTBE from other stations, and then impact one or more wells.

While expressing some hesitation about the validity of the plume theory, the court said it was not its role at the summary judgment stage to decide whether the expert reli-ably could establish causation. “Time will tell whether he is right, but for now, dismissal on the ground of causation is premature.” Although the defendants presented “substantial and relatively persuasive evidence” that the plume model could not reliably trace gasoline from each station to a corresponding production well, “their arguments are better suited for a Daubert motion than for a summary judgment motion seeking dismissal.”

The plaintiff fared less well with other aspects of the summary judgment motions. Significantly, the court ruled that the plaintiff lacked evidence placing the gasoline of cer-tain defendants (the “Issue 5” defendants) at the gas stations in question. First, there simply was not reasonably probable evidence that the gasoline of any of these defendants was delivered to any station at issue. Second, the plaintiff could not rely on a commingled prod-ucts theory because such a theory was justified, not when evidence was simply lacking, but when gathering evidence was, for practical purposes, impossible.

The court also found evidence lacking for nuisance claims, and claims under the Orange County Water District Act. Also, claims at certain stations were barred by the statute of limitations.

Background

The defendant oil companies used the gasoline additive methyl tertiary butyl ether (MTBE). The plaintiff Orange County Water District alleged that the defendants’ use and handling of MTBE contaminated, or threatened to contaminate, groundwater within its jurisdiction.

Various defendants filed motions for summary judgment or partial summary judgment.

The District, in its opposition to the Omnibus Motion and the Trial Sites Motion, relied on the declarations of its expert, Dr. Stephen Wheatcraft. His “Fate-and-Transport Model” purported to trace MTBE releases from individual stations to production wells by model-ing the path of MTBE plumes. While he has conducted station-specific models to trace MTBE in other California regions, he claimed that such a station-specific model was not most of the stations on Orange County because of “clustering.” Because there were many individual stations in close proximity, it was “nearly impossible” to attribute MTBE detec-tions to a single station.

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To compensate for this perceived problem, Wheatcraft grouped individual stations into “focus plumes.” The plumes essentially were MTBE masses formed by releases from nearby individual stations, and the model charted the migration of the plumes to produc-tion wells. Wheatcraft insisted his model shoed that MTBE from each station would enter a plume, commingle with MTBE from other stations, and then impact one or more wells.

Disagreeing with this conclusion, the defendants and their experts argued that com-mingling of plumes in an aquifer did not mean that all the contamination from different sources would behave the same way in groundwater or necessarily would be transported to the same well, or that the commingled portion of plumes would travel to a well. Therefore, in order to determine whether it was more likely than not that the contamination from one source in an overlapping or commingled plume impacted a supply well or other reference point one had to determine whether a pathway existed between that source and the well.

Applicable Law

Under California law, causation is an element of each of the District’s remaining claims. A March 11, 2010 case management order (CMO 60) was central to the dispositive issue of causation with respect to tracing gasoline from each station to a production well. It pro-vided that if the District offered no proof that a particular release site contributed to con-tamination, and the District would not drop the site from that focus plume, the defendants could file a motion for partial summary judgment for that site.

Some of the defendants (the “Issue 5 defendants”) contended the District lacked evi-dence tracing their gasoline to the stations at issue. Under the commingled products theory of proof, the plaintiffs may be able to prove causation even if they could not identify the exact defendant that caused the injury. The theory was available only in cases in which a plaintiff could prove that certain gaseous or liquid products of many refiners were present in a completely commingled state at the time and place that the harm occurred, and the commingled product caused the injury. In such cases, each refiner was deemed to have caused the harm, and a defendant had to prove its product was not present at the time or place.

The court previously held that the District was statutorily authorized to pursue a claim of public nuisance. Determining whether contamination was a continuing nuisance ordi-narily was a question of fact turning on the nature and extent of the contamination.

Claims under the Orange County Water District (OCWD) Act could be asserted against only those “causing or threatening to cause … contamination or pollution.” Under the Act, the District could recover reasonable costs incurred for cleanup, abatement, or remedial work.

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The court previously held that the District’s claims were subject to the three-year stat-ute of limitations of Section 338 of the California Code of Civil Procedure. The limitations period began to run when the cause or action accrued, or when a plaintiff suffered some appreciable and actual harm.

Expert’s Model Sufficiently Traced MTBE From Individual Stations to Production Wells

Under the court’s CMO 60, each of the District’s remaining claims required proof that “each release site identified as part of a focus plume contributed to contamination of the wells associated with that plume.” Although the defendants presented relatively persuasive evidence that Wheatcraft’s plume model could not reliably trace gasoline from each indi-vidual station to a corresponding production well, their arguments were better suited for a Daubert motion than a summary judgment motion.

While there was some question about the validity of the plume theory, it was not the court’s role at the summary judgment stage to decide whether Wheatcraft could reliably establish causation. Instead, the court had to draw all inferences and construe all evidence in the District’s favor. The District has insisted that the model traced gasoline from each station at issue to a corresponding production well, and Wheatcraft maintained that a sta-tion-specific model would be less effective. For now, dismissal on the ground of causation would be premature.

For the same reasons, summary judgment on the Trial Sites Motion was denied. The motion was predicated on the testimony of the District’s hydrogeology expert, Anthony Brown, who was unable to conclude with confidence that MTBE releases at the trial sites posed a threat to production wells. But the Wheatcraft’s testimony expressed a clear opin-ion that the sites posed a significant threat to production wells.

District Lacked Evidence Tracing The Issue 5 Defendants’ Gasoline to the Stations

While the District could adequately trace gasoline from the stations at issue to the production wells to survive summary judgment, it could not adequately place the Issue 5 Defendants’ gasoline at those stations. First, the District lacked reasonably probable evi-dence that the gasoline of any Issue 5 Defendant was delivered to any station at issue.

The District attempted to manufacture a factual dispute regarding suppliers based in part on market share figures concerning national MTBE production capacity, information regarding California sales of gasoline containing MTBE, and allegations that certain Issue 5 defendants might have sold gasoline to jobbers who supplied gasoline to stations in Orange County. The defendants correctly noted, however, that the District’s explanations for how their gasoline was delivered were too vague.

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Nor could the District rely on the commingled products theory. That theory was justi-fied, not when evidence was lacking, but when gathering evidence was, for practical pur-poses, impossible. Here, gathering evidence was not impossible, nor nearly so.

The District had ample opportunity to pursue discovery from jobbers and suppliers. Although responses concerning jobbers and suppliers to the preliminary interrogatories at the outset of the case gave the District a good starting point from which to gather evidence tracing suppliers to the stations, the District failed to pursue such evidence. It waited until two months before the close of discovery to subpoena 40 station operators and to depose only on jobber after getting the defendants to provide extensive jobber lists.

District Lacked Evidence of Affirmative Conduct To

Establish Nuisance Claims Against Issue 1 Defendants

The court previously determined that, to be liable for nuisance under California law, a defendant had to take affirmative acts that contributed directly to the nuisance. A supply contract did not satisfy this.

The Issue 1 defendants did not own or have any significant control over the stations at issue. Some merely had supply contracts with the stations. The District’s allegations re-garding failure to provide storage and handling instructions related to a potential products liability claim, not a claim for nuisance. California law was clear that products liability claims disguised as nuisance claims failed.

Dispute Existed Over Claims for Continuing Nuisance

In determining claims for continuing nuisance, California courts examined whether the alleged activity was currently continuing. Because Wheatcraft’s testimony created a factual dispute regarding whether alleged MTBE contamination at each station at issue had migrated towards the production wells, summary judgment on this claim had to be denied.

District Lacked Evidence of Affirmative Conduct for OCWD Act Claims Against Issue 3 Defendants

The parties acknowledged that the Act itself was vague about the level of affirmative conduct required to trigger liability. It did not specify whether the word “cause” should be read to require affirmative conduct, as in common law nuisance claims, or whether the term should be interpreted more liberally. When legislation did not expressly purport to depart from common law, it was construed in light of common law principles bearing on the same subject.

The District sought to draw an analogy with the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). It argued that a plaintiff was

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required to prove only that a defendant possessed a chemical that could have reached a plaintiff’s property, a much laxer standard that affirmative conduct.

But the OCWD Act did not in any way expressly depart from the common law, and therefore had to be interpreted in light of common law principles bearing on nuisance. Thus, as with the Issue 1 defendants, the district had not established the level of affirmative conduct necessary to prevail under the Act.

District Lacked Evidence of Recoverable Costs Under OCWD Act

The Issue 4 defendants were entitled to summary judgment on the OCWD Act claims. The court previously had granted summary judgment on this issue at focus sites because the District could not recover costs under the Act that were clearly investigative rather than remedial. Here, it failed to identify any new remedial costs.

Although the District argued that it had identified costs that were categorically dif-ferent from those ruled to be unrecoverable, the District did not identify in any detail the alleged site-specific remedial action for which it sought compensation. Instead, it relied on vague discovery responses and an expert declaration that the court previously declined to consider. In any event, these did not point to recoverable costs. The District never fol-lowed the court’s previous instructions by seeking to reopen discovery to identify specific recoverable costs.

The District tried to obtain passage of a bill to amend the Act to create liability for in-vestigative costs, claiming that courts had misinterpreted the Act as excluding such costs. The legislature apparently did not agree enough, and the bill died in February 2014.

Statute of Limitations

The District failed to submit any evidence sufficient to create a factual dispute regard-ing a post-limitations period release. Therefore, dismissal of the negligence, strict liability, and permanent nuisance claims against the Issue 7 defendants was warranted.

There were three stations at issue. The parties did not dispute that the relevant claims at the first station were time-barred. The District’s claims at the second station were barred by the District’s own past concessions. Its attempt to reverse course and submit evidence contradicting its prior admission failed as a matter of law. In any event, the evidence was wholly insufficient. It relied on generic, non-site-specific expert opinion regarding evi-dence of underground storage tanks leaking over time to create a factual dispute as to when the claim accrued. But, pursuant to the court’s prior rulings, summary judgment had to be granted without more concrete evidence. Finally, the District relied on the same evidence for the third site, and the relevant claims for that site also had to be dismissed.

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Late-Disclosed Liability Theories Regarding Issue 8 Defendants Could Not Prevail

The court would not accept theories of liability disclosed well after the close of dis-covery and in responses to contention interrogatories. The District insisted it disclosed the claims it planned to assert against each defendant on a station-specific basis during discov-ery. In particular, it pointed to a response to the first interrogatory which it said associated each Issue 8 defendant with each focus plume at issue.

But this representation was misleading because the response simply associated all de-fendants with all focus plumes that led to supplemental discovery responses. These later re-sponses did not identify the Issue 8 defendants at the Issue 8 stations, nor could the District show at any other point during discovery that it disclosed specific information sufficient to put the Issue 8 defendants on notice of how, and at which stations, the District planned to hold them liable. Accordingly, the Issue 8 defendants have been deprived of the opportuni-ty to participate in meaningful discovery concerning the stations now associated with them.

* * *

CITIZEN SUITS; CIVIL PENALTIES; JURY TRIALS

North Carolina Environmental Justice Network v. Taylor, No. 4:12-CV-154-D (E.D. N.C. Dec. 29, 2014)

District Court Holds Citizen Plaintiffs Are Entitled to a Jury Trial on Civil Penalties for Violations of CWA and RCRA

In a case alleging defendant illegally dumped waste, the District Court held that plain-tiffs were entitled to a jury trial even though part of the claim was for equitable injunctive relief. The court added that either plaintiff or defendant could request a jury trial since the claims for equitable injunctive relief and legal penalties are not inextricably tied.

According to the court:

The parties dispute whether, in a citizen suit under the CWA and the RCRA, a party is entitled

to a jury determination on the issue of liability for civil penalties. Each side cites Tull v. United States,

481 U.S. 412 (1987), in support of its position. In Tull, the Court held that the defendant-petitioner had

a Seventh Amendment right ‘’to a jury trial to determine liability on the legal claims.” Id. at 425. Tull

clarified that an action by the government for civil penalties is akin to those ‘’traditionally available only

in a court oflaw, [and] petitioner . . . [was] entitled to a jury trial on demand.”Tull, 481 U.S. at 423; see

also S.E.C. v. Kopsky, 537 F. Supp. 2d 1023, 1026 (E.D. Mo. 2008) (“[C]ivil penalties imposed as a fine

rather than mere disgorgement are unquestionably legal remedies for which there is a Seventh Amendment

42

right to a jury trial.”). In Tull, however, the government brought the CWA claim pursuant to 33 U.S.C. §

1319(d), the enabling provision allowing the government to remedy statutory violations.

Defendants argue that Tull is limited to suits involving the government and does not extend to cases

brought under ‘’the citizen suit provisions of the CWA and the RCRA.” According to defendants,

Tull’s “determination that the government’s CWA claim required ajury trial because actions in debt

historically were tried before a jury does not apply to the statutorily-created and limited citizen suits,

in which the citizens recover no ‘debt’ and Congress afforded them no right to a jury trial.” In support,

defendants rely primarily on Sanchez v. Esso Standard Oil De Puerto Rico, Inc., No. 08-2151(JAF),

2010 WL 3087485 (D.P.R. Aug. 5, 2010) (unpublished), a case brought under the RCRA’s citizen-

suit provision. In Sanchez, the court held that, unlike in RCRA’s direct enforcement provision, ‘’the

provisions for injunctive relief and civil penalties [in the citizen-suit provision] are intertwined.”

The court reasoned that the request for civil penalties was “inextricably entangled” with the request

for injunctive relief because, under the citizen-suit provision, ‘’the proof required for civil penalties for

violations would necessarily implicate the grounds for injunctive relief.” Thus, in Sanchez, the court

held that “[p]laintiff’s suit is equitable in nature, thereby precluding [the] demand for ajury.”

Defendants also cite Gwaltney to bolster their argument that plaintiffs’ claims are solely equitable. In

Gwaltney, the Court analyzed whether a plaintiff seeking both civil penalties and injunctive relief in a

citizen suit could obtain relief for wholly past violations. 484 U.S. at 52. The Court compared the CWA’s

direct enforcement provision with the citizen-suit provision and stated that section 1365(a) of the CWA

“does not authorize civil penalties separately from injunctive relief

. . . [C]itizens, unlike the Administrator, may seek civil penalties only in a suit brought to enjoin or other-

wise abate an ongoing violation.” Id. at 58-59 (emphasis added). The Court recognized that the govern-

ment’s direct enforcement ability “constitutes a separate grant of enforcement authority.”

Defendants argue that this “separate grant of enforcement authority” alters entitlement to a jury. According

to defendants, Gwaltney clarifies that requests for civil penalties in citizen suits are inextricably intertwined

with claims for injunctive relief. See id. (“The citizen suit provision suggests a connection between in-

junctive relief and civil penalties that is noticeably absent from the provision authorizing agency enforce-

ment.”). Defendants claim this “connection” sufficiently distinguishes citizen suits from government

enforcement actions to preclude the right to a jury determination of liability for legal claims.

Defendants overstate Gwaltney’s impact. Although the Court in Gwaltney recognized a marked distinc-

tion between the government’s ability to pursue statutory civil penalties and a private citizen’s, the Court

merely held that the government could pursue wholly past violations while citizen suits were limited

to cases of ongoing violations. See id. at 58--61. Thus, under Gwaltney, citizen suits cannot be brought

solely to recover civil penalties and therefore must be joined to equitable claims seeking to abate an

ongoing violation. Id. at 58-59. However, Gwaltney did not address how the jurisdictional “connection”

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between civil penalties and injunctive relief in citizen suits affects either party’s entitlement to a jury de-

termination on the legal claims.

Here, in resolving whether a party is entitled to a jury determination on the issue of liability for civil

penalties, the court relies on principles that the Court discussed in Tull. Tull established that “[a] civil pen-

alty was a type of remedy at common law that could only be enforced in courts of law.” Tull, 481 U.S. at

422. The Tull Court then found that “because the nature of the relief authorized by [section] 1319(d) was

traditionally available only in a court of law, petitioner in [Tull] is entitled to a jury trial on demand.” Id.

at 423. Although plaintiffs here seek civil penalties under section 1319(d) by way of section 1365, they

seek the same relief as in a direct enforcement suit. Accordingly, Tull’s section 1319(d) analysis applies,

and plaintiffs are entitled to a jury determination of liability for civil penalties.

In opposition to this conclusion, defendants argue that when claims for civil penalties are intertwined

with equitable claims they become “equitable in nature and thus not entitled to be tried before a jury.” In

Tull, however, the Court held that “if a ‘legal claim is joined with an equitable claim, the right to a jury

trial on the legal claim, including all issues common to both claims, remains intact. The right cannot be

abridged by characterizing the legal claim as ‘incidental’ to the equitable relief sought.”’ Tull, 481 U.S. at

425. Tull also clarified that civil penalties are legal claims and that a court in equity “may not en-

force civil penalties.” Tull, 481 U.S. at 424. Accordingly, even if under Gwaltney legal claims for

civil penalties must be joined with equitable claims in citizen suits, parties are still entitled to a

jury determination of their legal claims. To the extent that other district courts reached a different

conclusion, this court respectfully disagrees with their analysis of Tull and the Seventh Amendment. See

Sanchez, 2010 WL 3087485, at 2.

* * *

OVERVIEW WITNESS; PERMIT VIOLATIONS

U.S. v. Riley, No. 13-10185 (D. Kan. Dec. 29, 2014)

District Court Declines To Allow EPA Expert To Testify As Overview Witness Because Testimony Would Impinge on Province of the Court and Jury

In a permit violation case where the EPA sought to allow an expert witness to address the jury as an “overview witness” regarding the federal-state enforcement scheme, the meaning of hazardous waste, the definition of solid waste, when a facility is subject to the RCRA, and identify actions a facility must undertake before it can store or dispose of hazardous waste, the court denied the motion subject to reconsideration at trial. However the witness was allowed to provide an overview of how the investigation began, the law enforcement agencies involved, the investigative techniques used.

44

According to the court:

Witness testimony must not “invade[] the judge’s province to define the law.” United States v.

Messner, 107 F.3d 1448, 1454 (10th Cir. 1997). A witness may “refer to the law in expressing an opin-

ion” if the testimony does “not invade the court’s authority by discoursing broadly over the entire range

of the applicable law.” Specht v. Jansen, 853 F.2d 805, 809 (10th Cir. 1988). “When the purpose of the

testimony is to direct the jury’s understanding of the legal standards upon which their verdict must be

based, the testimony cannot be allowed. In no instance can a witness be permitted to define the law

of the case.” Messner, 107 F.3d at 1454 (quoting Specht, 853 F.2d at 810).

Newsome’s proposed testimony is an overview of the law to be applied in this case. It will not express

an opinion about the facts of this case and will not help the jury understand facts of consequence. Rather,

it will attempt to define the elements by which defendants are to be judged. Newsome’s testimony

ventures beyond proper opinion testimony and into jury instruction, which is reserved for the court.

Accordingly, the government’s motion to admit overview testimony is DENIED.

* * *

45

Best of the Blogs

INNOCENT LANDOWNER DEFENSE; EXPERT TESTIMONY

Coppola v. Smith, Case No. 1:11-cv-01257-AWI-BAM (E.D. Cal. Jan. 15, 2015)

The Need For Expert Evidence To Make Out An Innocent Landowner Defense Under CERCLA

As every litigator knows, evidence almost always tells a story that is untidy and riddled with loose ends. This was illustrated by a recent innocent landowner case in California—Coppola v. Smith. There, a company had purchased land in 1995 without knowledge that it had been contaminated with perchloroethylene (PCE) from a dry cleaning operation in the 1950s and 1960s. When the company was sued under contribution by a nearby dry cleaner for contributing PCE to to regional groundwater contamination, the company claimed that it was protected by the innocent landowner defense under Section 101(35)(A) and (B) of CERCLA. The company moved for summary judgment on its innocent landowner defense, and the federal court mostly agreed, finding that the company had purchased the site long after disposal of the PCE, had no knowledge of the contamination until eight years after the purchase, had done nothing to contribute to the contamination, and had cooperated fully with the government.

The sticking point, however, was whether the company in purchasing the property in 1995 had made all “appropriate” inquiries about the property and its environmental condi-tion. Here’s where the untidiness came in. The company had reviewed a preliminary site assessment prepared four years before the 1995 purchase. Although that assessment found no environmental issue with the property, the assessment was not conducted in accordance with ASTM standards and the assessment specifically noted that information about the ownership and operation of the property from 1958 to 1972 could not be found and that PCE had been detected at low levels in two nearby groundwater wells without any appar-ent source.

The dry cleaner contended that this preliminary site assessment could not satisfy the company’s innocent landowner defense because it did not employ ASTM standards, did not involve soil and groundwater testing, and failed to consult historical Sanborn maps which showed the site being used for dry cleaning. The court rejected the dry cleaner’s con-tention on the ground that it had failed to show that it was applying standards and practices that were customary in 1995 in this part of California. Nonetheless, the court went on to

46

deny summary judgment. According to the court, the company had likewise failed to pres-ent any evidence as to whether its review of the preliminary report was consistent with the standard of environmental due diligence customarily employed in the area in 1995 when purchasing property. Plainly, an expert witness on what was customary environmental due diligence in 1995 was necessary to tidy up the loose ends in the evidence.

* * *

IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT

No. 07-40440

VINE STREET LLC Plaintiff - Appellee v. BORG WARNER CORP; Defendant - Appellant

Appeal from the United States District Court

for the Eastern District of Texas Before KING, JOLLY, and COSTA, Circuit Judges.

E. GRADY JOLLY, Circuit Judge:

This appeal requires us to address the scope of so-called “arranger

liability” under the Comprehensive Environmental Response, Compensation,

and Liability Act of 1980 (“CERCLA”), 42 U.S.C. § 9607(a)(3), and the Texas

Solid Waste Disposal Act (“TSWDA”), Tex. Health & Safety Code §

361.271(a)(3), in the light of the Supreme Court’s decision in Burlington

Northern & Santa Fe Railway Co. v. United States, 556 U.S. 599 (2009). In

2006, some three years before the Supreme Court decided Burlington

Northern, the district court held a bench trial and ruled that Borg Warner

Corp. was liable to Vine Street LLC for 75% of the costs associated with

United States Court of Appeals Fifth Circuit

FILED January 14, 2015

Lyle W. Cayce Clerk

Case: 07-40440 Document: 00512902065 Page: 1 Date Filed: 01/14/2015

No. 07-40440

cleaning up a plume of perchloroethylene, or “PERC,” that discharged from a

dry cleaning business that operated from 1961 until 1975. The liability was

associated with a former subsidiary of Borg Warner, Norge, which furnished

dry cleaning equipment, design assistance, and an initial supply of PERC to

the cleaning business.

On appeal, Borg Warner argues that it is not liable to Vine Street under

either CERCLA or the TSWDA because Norge did not intend to dispose of

PERC when it sold dry cleaning equipment and an initial supply of PERC to

the cleaners. Vine Street, the current owner of the subject property, argues,

however, that Borg Warner intentionally disposed of PERC into the ground

because Norge knew that water separators designed to release wastewater, but

not PERC, into the sewer were not completely effective. Additionally, Vine

Street emphasizes that Norge, i.e., Borg Warner, played a key role in designing

the dry cleaning facility, including connecting the equipment to drains that

emptied into a sewer, and urges us to conclude that Norge’s role in the design

supports a finding of intent. After a full review of the parties’ arguments and

the record, we agree with Borg Warner and REVERSE and VACATE the

district court’s judgment and REMAND for entry of judgment in favor of Borg

Warner.

I.

The environmental damage at issue in this litigation stems from the

operation of a dry cleaning business on a piece of property in Tyler, Texas, from

1961 until 1975. The business, called “College Cleaners,” operated in

collaboration with Norge, a former subsidiary of Borg Warner, to function as a

“Norge Laundry & Cleaning Village” that offered customers self-service dry

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cleaning.1 Norge sold six to eight dry cleaning machines to College Cleaners

and provided an initial supply of PERC, the chemical used in the machines to

clean the clothes.2 Additionally, Norge provided support to College Cleaners,

assisting with the design of the building, installing machines in the building,

testing the machines before the opening, and assisting customers with the

operation of machines at the opening. Particularly relevant to this appeal, the

district court also determined that Norge designed the drainage system and

connected the dry cleaning machines to the drains and sewer system.

As part of the drainage system, Norge equipped the dry cleaning

machines with water separators that would release wastewater into the sewer

and recycle PERC for future uses. These water separators were not completely

effective, however, and some PERC discharged into the sewer along with the

wastewater through Norge’s water separators.3 PERC was expensive,

however, and both College Cleaners and Norge took steps to preserve as much

PERC as possible. College Cleaners employees handled the PERC with care

to avoid unintended waste. Several years after College Cleaners opened, Norge

also modified the design of its water separators to reduce any loss of PERC

through the separators. From these facts, the district court concluded that

1 Borg Warner sold Norge to a company called Fedders in 1968. At the time it sold Norge, it purported to assign the liabilities associated with Norge’s business to Fedders. Borg Warner has raised the issue of contractual allocation of liability on appeal, but as we explain infra, we need not reach that issue in order to decide this appeal.

2 It appears that Norge only provided the initial supply of PERC. The cleaners received additional supplies of PERC from another company, and although Vine Street suggested in its brief that Borg Warner supplied its own PERC to the cleaners, there does not appear to be any evidence supporting this assertion in the record.

3 Although there was some dispute in the district court as to the effectiveness of these separators, most of the PERC was recycled. It appears from the record that the parties largely operated on the assumption that the water separators were generally at least 95% effective.

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when the pollution occurred, “neither party intended to allow the discharge of

PERC into the ground.”

Some of College Cleaners’ PERC ultimately escaped from the sewer

system and entered the soil and groundwater, contaminating both the College

Cleaners property and another neighboring property. Vine Street later

acquired both pieces of property and learned of the PERC contamination. It

applied to participate in the Texas Commission on Environmental Quality’s

voluntary cleanup program. To offset its costs, Vine Street filed suit against

Borg Warner and a number of other defendants. The case against Borg Warner

proceeded to a bench trial, and the district court held it responsible for 75% of

the past, present, and future cleanup costs, along with a number of other

expenses. Vine Street was responsible for the remainder.

Borg Warner filed a timely notice of appeal, but this case was stayed

shortly after Borg Warner filed its initial brief because Fedders, another party

to the action, declared bankruptcy. Fedders was subsequently dissolved in

bankruptcy, and this appeal resumed after the conclusion of those proceedings.

II.

As this case proceeded to a bench trial, “this court reviews findings of

fact for clear error and legal issues de novo.” Delahoussaye v. Performance

Energy Servs., L.L.C., 734 F.3d 389, 392 (5th Cir. 2013). Borg Warner has not

challenged any of the district court’s factual findings on appeal, and thus this

appeal turns on whether those facts support the district court’s legal

conclusion, namely that Borg Warner is a responsible person for purposes of

CERCLA and the TSWDA. We address each statute in turn.

A.

To establish CERCLA liability, the plaintiff must show:

(1) that the site in question is a “facility” as defined in [42 U.S.C.] § 9601(9); (2) that the defendant is a responsible person under [42

4

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No. 07-40440

U.S.C.] § 9607(a); (3) that a release or a threatened release of a hazardous substance has occurred; and (4) that the release or threatened release has caused the plaintiff to incur response costs.

Amoco Oil Co. v. Borden, Inc., 889 F.2d 664, 668 (5th Cir. 1989). The parties

agree that the only dispute is whether Borg Warner is a “responsible person”

under the second prong of the analysis.4

The category of responsible persons under CERCLA applicable here is

the “arranger” category, which extends to

any person who by contract, agreement, or otherwise arranged for disposal or treatment, or otherwise arranged with a transporter for transport for disposal or treatment, of hazardous substances owned or possessed by such person, by any other party or entity, at any facility or incineration vessel owned or operated by another party or entity and containing such hazardous substances.

42 U.S.C. § 9607(a)(3). Borg Warner now concedes that its liability is co-

extensive with Norge’s, and thus our review focuses on Norge’s actions. In

order to resolve this appeal, we need only interpret the phrase “arranged for

disposal . . . of hazardous substances.” Id. We focus on the term “arrange,”

which implies a scienter requirement, and the term “disposal,” which

distinguishes between waste and useful products.

1.

a.

The Supreme Court recently clarified the standard applicable to

CERCLA arranger claims in a case that bears a striking resemblance to the

case before us. Burlington N. & Santa Fe Ry. Co. v. United States, 556 U.S.

599 (2009). In Burlington Northern, an agricultural chemical distributor

purchased several chemical products from Shell Oil Company. Id. at 602.

4 Borg Warner does contest the amount of damages as an alternative argument on appeal. As we explain infra, we conclude that Borg Warner is not liable as an arranger, and thus we do not reach the issue as to damages.

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Shell transported the chemicals to the distributor by common carrier, and they

were transferred on arrival from tanker trucks into a storage tank. The

distributor would then move the storage tanks around its property. Id. at 603–

604. Leaks frequently occurred during each stage of these transfers, and,

critically, Shell was aware of the frequent spills on the distributor’s land. Id.

Indeed, Shell developed additional protocols, including more detailed safety

manuals and a discount program for distributors, to reduce spillage. Id.

Despite Shell’s efforts, the distributor’s land became increasingly

contaminated, and a number of parties to the cleanup sought to hold Shell

liable as an arranger under § 9607(a)(3).

The Court in Burlington Northern first noted two hypotheticals at

opposite ends of the arranger liability spectrum: (1) an entity is always liable

under CERCLA if it enters into a transaction “for the sole purpose of discarding

a used and no longer useful hazardous substance;” and (2) an entity is not liable

under CERCLA “merely for selling a new and useful product if the purchaser

of that product later, and unbeknownst to the seller, disposed of the product in

a way that led to contamination.” Id. at 610. Difficult issues of arranger

liability arise, however, under “the many permutations of ‘arrangements’ that

fall between these two extremes—cases in which the seller has some

knowledge of the buyers’ planned disposal or whose motives for the ‘sale’ of a

hazardous substance are less than clear.” Id. Because there are so many

permutations, the Court recognized that whether an entity is an arranger is

often a fact-specific question. Id. It also emphasized, though, that arranger

“liability may not extend beyond the limits of the statute itself.” Id.

Thus, the Court interpreted the term “arrange” to imply “action directed

to a specific purpose” and held that “an entity may qualify as an arranger

under § 9607(a)(3) when it takes intentional steps to dispose of a hazardous

substance.” Id. at 611. On the facts of Burlington Northern, the Court accepted 6

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No. 07-40440

as true that Shell knew that its shipping conditions would result in spillage of

hazardous substances. Id. at 612. Knowledge, standing alone, did not give rise

to liability because “knowledge alone is insufficient to prove that an entity

‘planned for’ the disposal, particularly when the disposal occurs as a peripheral

result of the legitimate sale of an unused, useful product.” Id.

b.

Relevant to this appeal, Burlington Northern effected a partial change

in this Circuit’s law. This Court has long recognized the so-called “useful

product doctrine,” and we have held that a party is not liable as an arranger if

it were engaged in the mere sale of a useful product that is not properly

considered to be “waste.” See Dayton Indep. Sch. Dist. v. U.S. Mineral Prods.

Co., W.R., 906 F.2d 1059, 1065–66 (5th Cir. 1990). We did not require that a

party intend to dispose of waste, however, as we imposed liability as long as

there was a sufficient “nexus” between the purported arranger and the disposal

of waste. See Geraghty & Miller, Inc. v. Conoco Inc., 234 F.3d 917, 929 (5th

Cir. 2000). After Burlington Northern, we have recognized that Geraghty &

Miller is no longer controlling authority. Celanese Corp. v. Martin K. Eby

Constr. Co., 620 F.3d 529, 532 n.1 (5th Cir. 2010).

On appeal, Borg Warner urges us to apply Burlington Northern and

reverse the district court’s judgment in favor of Vine Street, which was based

on the outdated nexus standard from Geraghty & Miller. We will review this

appeal under the standard in Burlington Northern and, in doing so, conclude

that Borg Warner is not an “arranger” under CERCLA.5

5 As a threshold matter, we conclude that Borg Warner preserved this issue for review on appeal. Generally, we must decide an appeal based on the law as it stands at the time we render our decision. Gulf Offshore Co. v. Mobil Oil Corp., 453 U.S. 473, 486 n.16 (1981). An intervening change in the law, however, “normally does not permit a party to raise an entirely new argument that could have been articulated below or in the party’s opening brief.” Learmonth v. Sears, Roebuck & Co., 710 F.3d 249, 256 (5th Cir. 2013). In Learmonth, we

7

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No. 07-40440

2.

Under Burlington Northern, the plaintiff must establish that the

purported arranger took “intentional steps to dispose of a hazardous

substance.” 556 U.S. at 611. Thus, CERCLA arranger liability is premised

upon an intentional act directed toward the disposal of hazardous waste.

a.

i.

We focus first on the basic intent requirement, as the district court found

that the discharges of PERC were unintentional. In its opinion, the district

court stated that “[w]hile the pollution happened many years ago, neither party

intended to allow the discharge of PERC into the ground.” Vine Street seizes

on the phrase “into the ground” and argues that even though Norge did not

intend to pollute the groundwater, it nonetheless intended for PERC to

discharge into the sewer. We believe that Vine Street overemphasizes the

value in this phrase, when considered in the light of the district court’s opinion.

To be sure, the district court repeated and clarified its finding as to intent

throughout its opinion. The district court noted that a witness “recalled no

spills or intentional disposals of PERC that occurred and indicated College

Cleaners personnel handled the rather expensive PERC with a high degree of

care.” It also found no evidence of a manufacturing defect or improper

declined to consider a new issue on appeal when the plaintiff “could have made the ‘general argument’ below.” Id. at 257.

Here, Borg Warner plainly made the same general argument below that it makes today. Before the district court, Borg Warner urged the court to consider “whether the purpose of the transaction was waste disposal” under the pre-existing nexus approach. It also argued that the so-called “useful product doctrine” was relevant to deciding whether there was a disposal of waste. Additionally, we note that Vine Street also argued the case under the Burlington Northern standard at oral argument. Vine Street merely contends that it meets Burlington Northern. Thus, we proceed to evaluate the case under Burlington Northern.

8

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No. 07-40440

maintenance. Each of these separate findings underscores that the district

court found a lack of intent on the part of Norge and that it imposed liability

solely based on the weaker nexus that existed between Norge and the ultimate

disposal of PERC down College Cleaners’ sewer line.

ii.

Although the district court ruled before the Supreme Court decided

Burlington Northern, we see no need to remand the case for any further fact

finding under the Burlington Northern standard; Norge’s actions were plainly

unintentional when viewed under that standard. Although the distinction

between an intentional and a knowing act is a relatively fine one, Burlington

Northern provides crucial clarification. First, the Court explained that Shell

knew its shipping procedures “would result in the spilling of a portion of the

hazardous substance of the purchaser or common carrier.” 556 U.S. at 612. In

that same vein, the plaintiffs argued that Shell could anticipate the spills and

thus it was properly liable as an arranger. Id. Vine Street makes a similar

argument in different terms today: Norge knew that PERC would escape the

water separators into the sewer system, and because the discharge was

inevitable, Norge necessarily intended to discharge PERC into the sewer.

The Court rejected these arguments advanced by the plaintiffs, however,

underscoring two factors. First, the Court emphasized that the disposal

occurred “as a peripheral result of the legitimate sale of an unused, useful

product.” Id. at 612. Critical to this appeal, the Court evaluated the

underlying transaction and concluded that the purpose behind the transaction

was to sell useful chemicals to distributors and not to dispose of them. Second,

the Court pointed out that although Shell was aware of the spills, the spills

were unintentional because “the evidence revealed that Shell took numerous

steps to encourage its distributors to reduce the likelihood of such spills.” Id.

at 613. Thus, “[a]lthough Shell’s efforts were less than wholly successful, given 9

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No. 07-40440

these facts, Shell’s mere knowledge that spills and leaks continued to occur is

insufficient grounds for concluding that Shell ‘arranged for’ the disposal of [a

hazardous substance].” Id.

Both factors implicated in Burlington Northern are also implicated here.

Vine Street and Borg Warner acknowledge that PERC was a useful product

that was necessary to College Cleaners’ operation.6 To the point, the district

court concluded both that College Cleaners employees handled PERC with care

and that Norge designed its machines to recycle as much of the PERC as

possible. Here, Norge’s dry cleaning machines contained water separators that

would recycle most of the PERC and discharge wastewater into the sewer.

Moreover, when we view the business relationship between Norge and College

Cleaners as a whole, it is clear that the transaction centered around the

successful operation of a dry cleaning business—not around the disposal of

waste.

The First Circuit’s decision in United States v. General Electric Co., 670

F.3d 377 (1st Cir. 2012), provides a useful contrast. In General Electric, an

alleged arranger had accumulated a glut of a scrap material, low-quality

Pyranol, that it sold at bargain prices to a manufacturer that intended to use

the scraps as a paint additive. Id. at 380. The manufacturer missed payments

on the scrap material, but the arranger continued to send supplies of the scrap

material. Id. The First Circuit concluded that the scrap Pyranol was not a

useful product because there was no evidence that the arranger viewed the

product as having value or marketed it as valuable. Id. at 386–87. The court

6 Vine Street argues that Borg Warner has waived its useful product arguments because the useful product doctrine is an affirmative defense that Borg Warner failed to plead in its complaint or raise at trial. Borg Warner repeatedly raised its useful product arguments in the district court, and we may consider its arguments on appeal, particularly as they are now intertwined with the Burlington Northern analysis of intent.

10

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No. 07-40440

also emphasized the suspicious facts in that case, where the manufacturer

received unsolicited increases of the Pyranol and received such shipments even

after regularly missing payments. Id. at 388. In short, the CERCLA defendant

in General Electric attempted to dispose of excess waste products through the

guise of a legitimate transaction.

Here, there is no evidence to suggest that Norge engaged in subterfuge

to disguise the disposal of PERC as a legitimate transaction surrounding the

operation of a dry cleaning business. Unlike General Electric, Norge’s PERC

was unused and not a scrap material, and Norge also sold College Cleaners the

equipment needed to put the PERC to use. Indeed, the record reveals that

College Cleaners successfully operated for some fifteen years at that location

and that it used, and reused, Norge’s supply of PERC.7 Thus, as in Burlington

Northern, the purpose of the transaction between Norge and College Cleaners

was to sell PERC and dry cleaning equipment, two unused, useful products.

Both Norge and College Cleaners intended that the water separators would

recycle the expensive PERC for future uses.

In an analogous context, we declined to hold manufacturers of asbestos

liable for environmental cleanup costs because the manufacturers designed the

materials “for the primary purpose of creating a new useful and marketable

product for the construction industry.” Dayton, 906 F.2d at 1065. When those

manufacturers sold the materials to the CERCLA plaintiffs, they were not

“disposing” of the product. Id. To that end, we have said that arranger liability

applies to those “who would attempt to dispose of hazardous wastes or

substances under various deceptive guises in order to escape liability for their

7 Indeed, Vine Street’s counsel stated at oral argument that Norge’s initial supply of PERC to College Cleaners constituted approximately 20% of the PERC used throughout the fifteen-year lifetime of the cleaners. This fact underscores that Norge’s supply of PERC was a useful product and that much of the PERC was successfully recycled.

11

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disposal.” Id. at 1066. Here, that description simply does not apply to Norge.

We repeat that distinction: Norge supplied College Cleaners with a supply of

unused, useful PERC, and some of that PERC inadvertently discharged

because the water separators were not completely effective.

Furthermore, Norge developed the water separators to separate

wastewater from PERC and proceeded to develop additional measures to

reduce any discharges of PERC after it learned that the separators were not

completely efficient. The district court treated Norge’s subsequent remedial

measures as evidence that Norge did arrange for the disposal of a hazardous

substance because the measures confirmed Norge’s knowledge of the

discharges. Following Burlington Northern, however, it is evident to us that

these remedial measures, coupled with the design of the water separators,

generally cut against a finding of intent.

In sum, we hold that Norge did not intend to discharge PERC under the

standard set out in Burlington Northern.

b.

Finally, Vine Street attempts to distinguish this case on the basis that

Norge was integrally involved in installing the dry cleaning machines and

connected them to the drains and sewer line. We are unmoved by this

distinction.

Vine Street’s purported distinction flows in large part from dicta in a

Ninth Circuit case, in which that court held that a dry cleaning equipment

manufacturer was not liable as a CERCLA arranger but still took time to note

that there was no evidence that the manufacturer “hooked up [the equipment]

to the sewer.” Team Enters., LLC v. W. Inv. Real Estate Trust, 647 F.3d 901,

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No. 07-40440

911 (9th Cir. 2011).8 The Team Enterprises court, however, was only pointing

out the complete lack of evidence in the case before it; it did so by pointing to a

number of factual scenarios that might give rise to a finding of intent that were

absent in the case before it. The Ninth Circuit plainly did not hold that merely

connecting dry cleaning equipment to a sewer is sufficient evidence of intent.

To be certain, the reasoning of Team Enterprises actually contradicts

Vine Street’s position here. In Team Enterprises, dry cleaning equipment was

designed so that the machines would deposit wastewater into a bucket. PERC

would separate from the wastewater in the bucket, and the cleaner could

recycle PERC while pouring wastewater (along with invisible amounts of

PERC) down the drain. Id. at 906. Much like Vine Street here, the plaintiff in

Team Enterprises argued that “intent can be inferred from [the

manufacturer’s] designing its product in such a way as to render disposal

inevitable.” Id. at 909. Here, Vine Street argued repeatedly that intent can be

inferred from the fact that discharge was “inherent” from the inefficiencies of

the water separators. The Ninth Circuit concluded, however, that “[t]he self-

evident purpose of the [dry cleaning machine] was to recover and to recycle

usable [PERC] that would otherwise be discarded.” Id. Thus, the court held

that the plaintiff had failed to show that the manufacturer intended to

discharge PERC. Id. at 909–10.

As in Team Enterprises, Norge designed its machines and the dry

cleaning facility with the intent that College Cleaners could reuse its supply of

8 Additionally, Vine Street points to a pre-Burlington Northern case from a California district court in which the court concluded that a CERCLA plaintiff could survive a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure, in part because the complaint alleged that the equipment manufacturer connected the machines “to the building drain, which was itself connected to the sewer system.” Cal. Dep’t of Toxic Substances Control v. Payless Cleaners, 368 F. Supp. 2d 1069, 1080 (E.D. Cal. 2005). As we explain infra, we find this district court case unpersuasive.

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No. 07-40440

PERC. It did not intend to dispose of PERC, and thus Borg Warner is not liable

as an arranger.

B.

Finally, we turn to Vine Street’s additional claim under the Texas Solid

Waste Disposal Act. An entity is an arranger under the TSWDA if it:

(3) by contract, agreement, or otherwise, arranged to process, store, or dispose of, or arranged with a transporter for transport to process, store, or dispose of, solid waste owned or possessed by the person, by any other person or entity at:

(A) the solid waste facility owned or operated by another person or entity that contains the solid waste; or

(B) the site to which the solid waste was transported that contains the solid waste.

Tex. Health & Safety Code § 361.271(a)(3). We have held that “we are

confident that the Texas Supreme Court would apply Burlington [Northern] to

[a party’s] SWDA claim.” Celanese Corp., 620 F.3d at 534. Thus, we hold that

Vine Street’s TSWDA fails for the same reasons as its CERCLA claim.

III.

Consequently, Borg Warner is entitled to judgment in its favor on Vine

Street’s CERCLA and TSWDA claims because Norge, its subsidiary, did not

intentionally dispose of a waste product when it sold dry cleaning equipment

and an initial supply of PERC to College Cleaners. We should note that the

Supreme Court’s decision in Burlington Northern changed the relevant law

while this case was on appeal. Accordingly, we hold that the district court’s

decision cannot stand in the light of Burlington Northern.

REVERSED, VACATED, and REMANDED, for entry of judgment in favor of Borg Warner.

14

Case: 07-40440 Document: 00512902065 Page: 14 Date Filed: 01/14/2015

*The Honorable James S. Gwin, United States District Judge for the Northern District of

Ohio, sitting by designation.

NOT RECOMMENDED FOR FULL-TEXT PUBLICATIONFile Name: 15a0047n.06

No. 14-5730

UNITED STATES COURT OF APPEALSFOR THE SIXTH CIRCUIT

LWD PRP GROUP,

Plaintiff-Appellee,

v.

ALCAN CORP. ET AL.,

Defendants-Appellants.

)))))))))))))

ON APPEAL FROM THE UNITEDSTATES DISTRICT COURT FORTHE WESTERN DISTRICT OFKENTUCKY

Before: GIBBONS and COOK, Circuit Judges; GWIN, District Judge*

GWIN, District Judge. Broadly speaking, this case deals with a party’s effort to obtain

reimbursement for the costs of cleaning up a Superfund site in Calvert City, Kentucky. This appeal

presents a particular legal question: whether the three year statute of limitations for contribution

actions after an administrative settlement to perform a removal action–a broad term defined by

CERCLA to include a variety of activities including “the cleanup or removal of released hazardous

substances from the environment”–begins running when the settlement becomes effective or begins

running when the removal action is completed.

No. 14-5730, LWD PRP Group v. Alcan Corp. et al.

1Although not giving a final judgment, the district court certified the question for

interlocutory appeal.

2758 F.3d 757 (6th Cir. 2014).

-2-

In this case, if the limitations period runs from the settlement’s effective date, the statute of

limitations had already expired before this action was filed. On the other hand, if the limitations

period runs from the completion of the removal action, the statute of limitations defense fails.

The district court agreed with Plaintiff-Appellee that the statute of limitations for such claims

runs from the completion of the removal action and denied Defendants-Appellants’ motion to

dismiss the contribution claims.1

After the district court’s decision, we decided virtually the same issue in Hobart Corp. v.

Waste Management of Ohio, Inc.2 In Hobart, we held that a contribution action brought after an

administrative settlement with the United States or a State must be filed within three years of the

settlement’s effective date. With Hobart, we agreed with Defendants-Appellants’ argument

regarding how CERCLA’s statutes of limitations should apply.

We find nothing distinguishes this case from Hobart and, despite Plaintiff-Appellee’s

invitation, we do not have power to reverse a precedential opinion of this Court. We therefore

REVERSE the district court’s denial of the motion to dismiss Plaintiff-Appellee’s contribution

claims.

No. 14-5730, LWD PRP Group v. Alcan Corp. et al.

3CERCLA § 107(a). For simplicity, throughout this opinion we cite to CERCLA without

providing the parallel U.S. Code citation. In general, CERCLA § 1xx can be found at 42 U.S.C.§ 96xx. For example, CERCLA § 107 is codified at 42 U.S.C. § 9607.

4CERCLA § 107(a)(4)(B); see United States v. Atl. Research Corp., 551 U.S. 128 (2007).

5CERCLA § 113(f)(3)(B).

6Hobart, 758 F.3d at 767-68.

-3-

I. Background

A. CERCLA Background

Before turning to the facts of this particular case, some background on CERCLA is useful.

In general, CERCLA imposes liability on parties who played a role in polluting a site: by owning

and operating the site; by sending hazardous waste to the site; or by participating in transporting

hazardous waste to the site.3 CERCLA also gives a variety of methods for liable parties to obtain

reimbursement from other liable parties to apportion costs in an equitable fashion.

For example, parties that voluntarily incur costs can bring cost recovery actions under

CERCLA § 107 against other liable parties.4 CERCLA § 113(f) separately allows contribution

actions for any “person who has resolved its liability to the United States or a State for some or all

of a response action or for some or all of the costs of such action in an administrative or judicially

approved settlement.”5

We have repeatedly considered the interplay between cost recovery actions and contribution

actions, including most recently in Hobart, where we resolved several issues relevant to this appeal.

First, in Hobart, we held that a response cost directly incurred by a party that is recoverable

using a § 113(f) contribution action is not also recoverable under the cost recovery provisions of

§ 107.6

No. 14-5730, LWD PRP Group v. Alcan Corp. et al.

7Id. at 768 (quoting CERCLA § 113(f)(3)(B)).

8Id. (citation omitted).

9CERCLA § 113(g)(2)(A) (“An initial action for recovery of the costs referred to in section

[107] must be commenced– (A) for a removal action, within 3 years after completion of the removalaction, except that such cost recovery action must be brought within 6 years after a determination togrant a waiver under section [104(c)(1)(C)] for continued response action . . . .”).

10CERCLA § 113(g)(3) (“No action for contribution for any response costs or damages may

be commenced more than 3 years after– (A) the date of judgment in any action under this chapter forrecovery of such costs or damages, or (B) the date of an administrative order under section [122(g)](relating to de minimis settlements) or [122(h)] (relating to cost recovery settlements) or entry of ajudicially approved settlement with respect to such costs or damages.”).

-4-

Second, in Hobart, we held that for an administrative settlement to support a contribution

action, it must resolve the plaintiff’s “liability to the United States or a State for some or all of a

response action or for some or all of the costs of such action.”7 This determination is case-specific,

and requires the court to “interpret the settlement agreement as a contract according to state-law

principles.”8

Third, in Hobart, we addressed the relevant statute of limitations where the plaintiff seeks

contribution after an administrative settlement. In doing so, we considered two potentially relevant

limitations provisions.

On one hand, under CERCLA § 113(g)(2)(A), a party seeking to recover the costs of a

removal action under § 107 faces a three year statute of limitations running from the completion of

the removal action.9

On the other hand, under CERCLA § 113(g)(3) (the “Contribution Limitations Provision”),

a party seeking contribution after an administrative settlement with the EPA that resolves liability

must satisfy a three year statute of limitations running from the settlement’s effective date.10

No. 14-5730, LWD PRP Group v. Alcan Corp. et al.

11Hobart, 758 F.3d at 772 (citing RSR Corp. v. Commercial Metals Co., 496 F.3d 552, 556,

558 (6th Cir. 2007)).

12CERCLA § 113(g)(3).

13Hobart, 758 F.3d at 774-75.

14Id.

15Id. at 775.

-5-

We concluded in Hobart that CERCLA’s Contribution Limitations Provision gives a three

year statute of limitations on all actions for contribution after an administrative settlement.11 The

Contribution Limitations Provision mentions two types of administrative settlements, those reached

under CERCLA § 122(g) or CERCLA § 122(h), and expressly provides that the statute of limitations

begins to run on the effective date of these kinds of settlements.12

In Hobart, we also recognized that administrative settlements other than those expressly

referenced in CERCLA’s Contribution Limitations Provision can give rise to contribution rights.

For example, although the settlement in Hobart was reached under § 122(a)–not a type of settlement

mentioned in the Contribution Limitations Provision–it nonetheless gave rise to contribution rights

because it resolved liability.13

In Hobart, we further observed that the Contribution Limitations Provision was silent on the

triggering date for the statute of limitations for these types of administrative settlements. We

rejected the idea that the statute of limitations should have no starting date. Instead, we “borrowed”

an analogous triggering event.14 We concluded that the most similar triggering event was the

effective date of the agreement that gave rise to the right to pursue the contribution action.15

No. 14-5730, LWD PRP Group v. Alcan Corp. et al.

16Id. at 774-75.

17R. 758 at 4 (Second Amended Complaint at 4).

18R. 758 at 5-6 (Second Amended Complaint at 5-6).

19R. 758 at 6-7 (Second Amended Complaint at 6-7).

20R. 758 at 8 (Second Amended Complaint at 8); R. 776-3 (Settlement Agreement).

21R. 758 at 8 (Second Amended Complaint at 8).

22R. 776-3 at 9-10, 17-18 (Settlement Agreement at 9-10, 17-18).

-6-

In reaching these conclusions, we rejected a number of contrary arguments, including the

argument that because the Contribution Limitations Provision gave some triggering events, it should

not apply outside the presence of the identified triggering events.16

B. Factual Background

The LWD Incinerator Site is part of the LWD, Inc. Superfund site in Calvert City,

Kentucky.17 From the 1970s to 2004, a hazardous waste incinerator operated at the site.18 After the

last-known owner and operator abandoned the site, the EPA conducted initial waste removal

activities at the request of the Kentucky Department of Environmental Protection.19

The EPA identified potentially responsible parties (“PRPs”) and, on March 1, 2007, it

entered an “Administrative Settlement Agreement and Order on Consent for Removal Action”

(“Settlement Agreement”) with fifty-eight of the responsible parties.20 The Plaintiff-Appellee in this

case, the LWD PRP Group, is an association composed of some of these fifty-eight PRPs.21

Under the Settlement Agreement’s terms, the fifty-eight PRPs agreed to carry out certain

removal activities at the site and to compensate the EPA for future response costs.22 On September

No. 14-5730, LWD PRP Group v. Alcan Corp. et al.

23R. 758 at 8 (Second Amended Complaint at 8).

24R. 1 (Complaint).

25R. 914-3 (Tolling Agreements).

26R. 581 (First Amended Complaint).

27R. 758 (Second Amended Complaint).

28R. 758 at 241-245 (Second Amended Complaint at 241-245).

-7-

29, 2009, the EPA issued a notice of completion of the removal activities specified in the Settlement

Agreement.23

The parties respectively argue that these two dates–the September 29, 2009, completion date

and the March 1, 2007, settlement date –started the statute of limitations on Appellee’s claims for

contribution of costs it incurred under the Settlement Agreement. Appellee says the statute of

limitations should run from the date it completed removal activities under the settlement. Appellants

argue that the statute of limitations runs from the effective date of the administrative settlement.

On August 31, 2012, Appellee filed the current lawsuit, naming many defendants, including

some of the Appellants.24 Appellee also executed tolling agreements with other potential defendants,

including the remaining Appellants.25 These Appellants were added in the First Amended

Complaint.26 Appellee later filed a Second Amended Complaint, correcting the names of certain

parties and adding the record title holder of the site as a new defendant.27

The Second Amended Complaint sought a variety of forms of relief, including cost recovery

under CERCLA § 107 and contribution under CERCLA § 113(f).28

No. 14-5730, LWD PRP Group v. Alcan Corp. et al.

29R. 776 (Motion to Dismiss).

30R. 961 (Dist. Ct. Op.).

31R. 1012 (Dist. Ct. Op.); R. 1014 (Dist. Ct. Order).

32R. 1033 (Order Accepting Appeal). Appellee has filed a Third Amended Complaint that

does not differ from the Second Amended Complaint in any respect relevant to this appeal. R. 985(Third Amended Complaint).

33 758 F.3d 757 (6th Cir. 2014).

-8-

Appellants sought dismissal of Appellee’s § 113(f) contribution claims on statute of

limitations grounds.29 The central question is whether the three year statute of limitations began to

run on the Settlement Agreement’s effective date of March 1, 2007, as Appellants contend, or on

the completion of the removal action on September 29, 2009, as Appellee says.

Resolving this legal question will determine the success of Appellants’ statute of limitations

defense. That is, Appellants do not appear to dispute that the defense would fail if the clock began

running when the removal action was completed. Likewise, Appellee does not appear to dispute that

its § 113(f) contribution claims would be time-barred if the clock began running on the Settlement

Agreement’s effective date.

The district court agreed with Appellee that the completion date should start the clock, and

therefore denied Appellants’ motion to dismiss the § 113(f) contribution claims on statute of

limitations grounds.30 It later denied a motion for reconsideration of this ruling, but also certified

that issue for interlocutory review.31 We granted the petition for interlocutory review.32

We now consider the issue, guided by Hobart Corp. v. Waste Management of Ohio, Inc.,33

which was decided after the district court denied the motion to dismiss and after the certification of

the issue for interlocutory appeal.

No. 14-5730, LWD PRP Group v. Alcan Corp. et al.

34See Mich. Bell Tel. Co. v. Climax Tel. Co., 202 F.3d 862, 865 (6th Cir. 2000).

35In re Trailer Source, Inc., 555 F.3d 231, 245 (6th Cir. 2009) (quoting Easley v. Pettibone

Mich. Corp., 990 F.2d 905, 912 (6th Cir. 1993)).

-9-

II. Analysis

A. Standard of Review

Appellants challenge the district court’s denial of their motion to dismiss Appellee’s § 113(f)

contribution claims. The issue is properly before us under the procedures for interlocutory review

set out in 28 U.S.C. § 1292(b). All issues we address in this case are purely legal, so our review is

de novo.34 In the interlocutory review setting, “‘even those issues not properly certified are subject

to our discretionary power of review if otherwise necessary to the disposition of the case.’”35

B. Hobart Is on Point and Controlling

Given the similarities with Hobart, this case is relatively straightforward. In Hobart we held

that an EPA settlement (the “Hobart Agreement”) was an administrative settlement that resolved

liability to the United States. The contribution action seeking costs incurred under that settlement

was thus subject to a three year statute of limitations running from the agreement’s effective date.

We relied on four factors. Each is also present in the Settlement Agreement in this case.

First, the Hobart parties included language in their agreement that stated their intent that the

agreement be an administrative settlement: “‘The Parties agree that this Settlement Agreement

constitutes an administrative settlement for purposes of Section 113(f)(3)(B) of

CERCLA . . . pursuant to which [Appellants] have, as of the Effective Date, resolved their liability

No. 14-5730, LWD PRP Group v. Alcan Corp. et al.

36Hobart, 758 F.3d at 768-69 (quoting the Hobart Agreement) (emphasis added in Hobart)

(alteration and omission in original).

37R. 776-3 at 25 (Settlement Agreement at 25).

38Hobart, 758 F.3d at 769 (quoting the Hobart Agreement).

39Id. (citation omitted).

40R. 776-3 at 25 (Settlement Agreement at 25).

41Hobart, 758 F.3d at 769 (quoting the Hobart Agreement) (emphasis added in Hobart). The

full title of the Hobart Agreement was “Administrative Settlement Agreement and Order on Consentfor Remedial Investigation/Feasibility Study.” Hobart Agreement at 1, Hobart Corp. v. Waste Mgmt.of Ohio, Inc., No. 3:10-00195 (S.D. Ohio May 24, 2010), ECF No. 1-1.

42Hobart, 758 F.3d at 769.

43R. 776-3 at 1 (Settlement Agreement at 1).

-10-

to the United States for the Work, and Future Response Costs.’”36 The Settlement Agreement in the

present case says exactly the same thing.37

Second, the Hobart Agreement provided that its settling parties were “‘entitled, as of the

Effective Date, to protection from contribution actions or claims as provided by Sections 113(f)(2)

and 122(h)(4) of CERCLA.’”38 As we explained, “[f]or this paragraph to have any meaning and

Appellants to receive any protection from contribution actions, the [Hobart Agreement] must be an

administrative agreement under § 113(f).”39 The Settlement Agreement in the present case includes

identical language.40

Third, we noted in Hobart that “the parties titled the [Hobart Agreement] an

“‘Administrative Settlement Agreement and Order on Consent.’”41 “In doing so,” we observed, “the

parties precisely matched the statutory language in § 113(f)(3)(B).”42 Similarly, the Settlement

Agreement in this case is titled “Administrative Settlement Agreement and Order on Consent for

Removal Action.”43

No. 14-5730, LWD PRP Group v. Alcan Corp. et al.

44Hobart, 758 F.3d at 769 (quoting the Hobart Agreement) (alteration and omission in

original).

45R. 776-3 at 22 (Settlement Agreement at 22).

46Hobart, 758 F.3d at 774-75. Some of the aspects of the Hobart Agreement that led us to

conclude it was a § 122(a) agreement apply here as well. For example, the Settlement Agreement wasnot published in the Federal Register, and in listing statutory authority, the Settlement Agreementreferences only § 122 generally, rather than specifically mentioning § 122(h). Appellee’s Brief at 19-20 (stating that the Settlement Agreement was not published in the Federal Register); R. 776-3 at 3(Settlement Agreement at 3) (citing § 122 generally, not § 122(h) specifically); see Hobart, 758 F.3d at774. On the other hand, some of the language in the Hobart Agreement that contributed to ourconclusion that that agreement was a § 122(a) settlement by directly referencing § 122(a), Hobart, 758F.3d at 774 (quoting the Hobart Agreement), does not appear in the Settlement Agreement in thecurrent case. We need not resolve whether the Settlement Agreement in the present case is a § 122(a)or § 122(h) settlement because Hobart dictates that in either case, the applicable statute of limitationsis three years measured from the Settlement Agreement’s effective date.

47Hobart, 758 F.3d at 774-75.

-11-

And fourth, the Hobart agreement contained a covenant from the EPA “‘not to sue or take

administrative action against [Appellants] pursuant to Sections 106 and 107(a) of CERCLA . . . for

the Work and Future Response Costs.’”44 The Settlement Agreement in the present case contains

the same provision with almost identical language.45

In sum, all of the factors that led us to conclude that the Hobart Agreement qualified as an

administrative settlement that could support a contribution action are present in the Settlement

Agreement in this case.

Further, we concluded that the Hobart Agreement was a CERCLA § 122(a) settlement, a

type of settlement not expressly mentioned in CERCLA’s Contribution Limitations Provision, rather

than a § 122(h) settlement, a type that is mentioned.46 We then concluded that because the claims

in Hobart, like the ones at issue here, were for contribution towards costs incurred under an

administrative settlement that resolved liability to the United States, the three year statute of

limitations for contribution actions nonetheless applied.47 In the absence of a triggering event, we

No. 14-5730, LWD PRP Group v. Alcan Corp. et al.

48Id. at 775.

49(Appellee’s Brief at 22-27).

50Id. at 23-24 (“In effect, this Court rewrote § 113(g)(3) in Hobart . . . .”); see Hobart, 758

F.3d at 774-75 (rejecting a similar expressio unius argument).

-12-

“borrowed” the most analogous triggering event. We then found the effective date of the Settlement

Agreement the most analogous starting point.48

C. Appellee’s Counter-Arguments Fail

Appellee insists that the Settlement Agreement in the present case is a § 122(a) settlement

primarily intended to facilitate the completion of a removal action, and that the triggering event for

the statute of limitations should therefore be the completion of that removal action. But even if

Appellee is correct that the Settlement Agreement is a § 122(a) settlement–an issue we need not

resolve–Hobart requires the application of a three year statute of limitations running from the

Settlement Agreement’s effective date, not from the removal action’s completion.

Appellee says that the Contribution Limitations Provision should not be read to apply to

contribution actions for costs incurred under types of administrative agreements it does not expressly

mention. Appellee argues that doing so would impermissibly render that provision’s enumeration

of certain triggering events meaningless.49 But as Appellee appears to recognize, we considered and

rejected this argument in Hobart.50

No. 14-5730, LWD PRP Group v. Alcan Corp. et al.

51506 F.3d 452 (6th Cir. 2007).

52(Appellee’s Brief at 26).

53758 F.3d at 772 n.12 (“To the extent that ITT Industries holds that § 113(g)(3) governs only

contribution actions stemming from § 122(g) or (h) settlements, [our prior decision in] RSRCorporation forecloses such a result.” (internal citation omitted)).

Moreover, ITT Industries was concerned with whether a § 113(f) contribution action could bebrought for costs incurred under a particular § 122(a) settlement at all, not with what the statute oflimitations would be. And although there is language in that case suggesting that no contributionaction was permitted for costs incurred under § 122(a) settlements, ITT Indus. Corp, 506 F.3d at 461(“[W]e must interpret § 113(g)’s omission of settlements reached pursuant to § 122(a) to mean thatsettlements under that subsection are insufficient to constitute an administratively approved settlementunder § 113(f)(3)(B).”), that language came only after we had already concluded that the settlement inquestion did not resolve any liability. Id. at 459-60.

We have subsequently held that “the defining feature of an ‘administrative settlement’ is thatthe agreement ‘resolve[s] [the PRP’s] liability to the United States or a State for some or all of aresponse action for some or all of the costs of such action . . . .’” Hobart, 758 F.3d at 768 (quotingCERCLA § 113(f)(3)(B)) (alterations and omission in original). On this understanding, the languagein question from ITT Industries merely provided additional support for a holding that was alreadydetermined by the conclusion that the agreement at issue in that case did not resolve any liability. Thus, Hobart concluded that a § 122(a) settlement that differed from the ITT Industries agreement inthat it resolved liability could support a § 113(f) contribution claim.

Both parties at least implicitly accept that interpretation here, (Appellee’s Brief at 16);(Appellants’ Brief at 13), and we accept it as well.

54(Appellee’s Brief at 14-17).

55See Atl. Research Corp., 551 U.S. at 139 n.6.

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Appellee also argues that our decision in ITT Industries, Inc. v. BorgWarner, Inc.51 prevents

application of CERCLA’s Contribution Limitations Provision to settlements of the type at issue

here.52 But this argument was also rejected in Hobart.53

Further, Appellee says that our interpretation in Hobart insufficiently accounts for what it

calls the “Atlantic Research gap.”54 By this, Appellee means that it believes that a footnote in the

Supreme Court’s Atlantic Research decision established that reimbursement is sometimes available

under both § 107’s cost recovery provisions and § 113(f)’s contribution provisions.55 Accordingly,

Appellee says, in such cases, CERCLA § 113(g)(2)’s statute of limitations for actions to recover the

No. 14-5730, LWD PRP Group v. Alcan Corp. et al.

56(Appellee’s Brief at 14-17).

57Atl. Research Corp., 551 U.S. at 139 n.6 (“We do not decide whether [costs analogous to

those in question here] are recoverable under § 113(f), § 107(a), or both.”).

58Hobart, 758 F.3d at 772.

59(Appellee’s Brief at 29-34).

60R. 914 (Response to Motion to Dismiss).

61See Appellants’ Brief at 34-38, Hobart, 758 F.3d 757 (No. 13-3273), ECF No. 54.

62(Appellee’s Brief at 34-38).

-14-

cost of removal actions, which does not begin to run until the removal action is completed, is more

appropriate.56

But Appellee overreads Atlantic Research. The footnote it cites merely reserves the question

of whether the remedies overlap or not.57 Moreover, in Hobart, we clarified that even if a settlement

requires PRPs to perform a removal action, a lawsuit to recover the costs of that removal action is

a contribution action under § 113(f), not a cost recovery action under § 107, and is thus subject to

the ordinary statute of limitations for contribution actions.58

Next, Appellee says that legislative history supports its reading of CERCLA’s statute of

limitations provisions.59 Appellee did not make this argument to the district court, and it is therefore

forfeited.60 Moreover, it is foreclosed by Hobart, where it was raised and thus implicitly rejected.61

Because a panel of this Court may not overturn a prior panel’s reported decision, we need

not, and will not, revisit any of the above arguments, which we have already rejected in Hobart.

Appellee’s policy arguments against the result reached in Hobart fare no better. Appellee

says that Hobart has created and will continue to create premature litigation and has undermined and

will continue to undermine the EPA’s ability to agree to early settlements.62 As with Appellee’s

No. 14-5730, LWD PRP Group v. Alcan Corp. et al.

63(Appellee’s Brief at 20-21).

64(Appellee’s Brief at 21). Appellee asserts that the EPA was a party to the tolling

agreements, but the tolling agreements included in the record nowhere mention the EPA. See R. 914-3(Tolling Agreements). The signature pages for the tolling agreements were not filed due to volume, R.914 at 28 n.8 (Response to Motion to Dismiss at 21 n.8), which makes it difficult to conclusivelydetermine whether the EPA was a party to the tolling agreements. Even if the EPA were a party to thetolling agreements our analysis would remain unchanged.

65R. 914 (Response to Motion to Dismiss).

66R. 914-3 at 1 (Tolling Agreements at 1).

-15-

other arguments for why Hobart should have been decided differently, only the full court, sitting

en banc, would have power to reverse Hobart’s holding.

Finally, Appellee argues that the parties intended the statute of limitations to run from the

completion of the removal action, rather than from the effective date of the Settlement Agreement.

In support, Appellee points to the fact that many of the Appellants signed tolling agreements more

than three years after the Settlement Agreement’s effective date.63 Appellee argues that “[t]he

intentions of the parties to the [Settlement Agreement] (EPA and [Appellee] LWD PRP Group),

coupled with the intentions of the parties to the tolling agreements (EPA, [Appellee] LWD PRP

Group, and [some of the Appellants]), must be taken into account by this Court in interpreting these

two relevant contracts central to the statute of limitations issue.”64

This argument fails for several reasons. First, Appellee forfeited it by failing to advance it

before the district court.65

Second, even if we overlooked this forfeiture, the tolling agreements did no more than

exclude a defined “tolling period” from counting towards the statute of limitations or other time

based defenses in order to “facilitate settlement negotiations.”66 This does not, as Appellee suggests,

necessarily mean that Appellants believed the statute of limitations had not yet run. It could mean,

No. 14-5730, LWD PRP Group v. Alcan Corp. et al.

67Cf. John Hancock Fin. Servs., Inc. v. Old Kent Bank, 346 F.3d 727, 733-34 (6th Cir. 2003)

(upholding a grant of summary judgment on claims for which the statute of limitations had run prior tothe execution of a tolling agreement).

68R. 1 (Complaint) (including some of the Appellants as defendants); R. 914-3 at 5-8 (Tolling

Agreements at 5-8) (not including these Appellants on the list of parties to the tolling agreements).

-16-

for example, that Appellants valued a settlement because litigating the statute of limitations issue

would be expensive and potentially uncertain.

Moreover, the limitations period is statutory, not contractual. The EPA and Appellee did not

have the power to agree to lengthen the time within which the Appellee could bring claims against

third parties, even if the Settlement Agreement had clearly expressed their intent to do so. And even

if Appellee were correct that Appellants shared a mistaken understanding of the limitations period

when they entered into the tolling agreements, that would not prevent Appellants from later asserting

the defense as long they did so timely under the Federal Rules of Civil Procedure.

The only way that Appellee could potentially leverage the tolling agreements in this case is

to assert that the parties to them intended not only to exclude the time listed, but also to waive any

already accrued statute of limitations defense. The language of the agreements, however, provides

no support for such a reading. Rather, it simply excludes a certain period of time.67 Furthermore,

some of the Appellants did not sign tolling agreements, as they had already been named in the initial

complaint.68

III. Conclusion

For the foregoing reasons, we REVERSE the district court’s order denying Defendants-

Appellants’ motion to dismiss Plaintiff-Appellee LWD PRP Group’s § 113(f) contribution claim.

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF WASHINGTON

BARBARA ANDERSON, )MICHAEL BUFFAN, GAIL ) No. CV-13-420-LRSLEADEN, TRAVIS MAGERS, )RHETT WEILEP, and LEIGH ) ORDER RE WILLIAM on behalf of themselves ) MOTION TO DISMISSand all others similarly situated, )

)Plaintiffs, )

))

v. ) )

TECK METALS, LTD., )a Canadian corporation, )

)Defendant. )

______________________________ )

BEFORE THE COURT is Defendant’s Motion To Dismiss Amended

Class Action Complaint (ECF No. 37). Oral argument was heard on December 17,

2014.

I. 12(b)(6) STANDARD

A Fed. R. Civ. P. 12(b)(6) dismissal is proper only where there is either a

"lack of a cognizable legal theory" or "the absence of sufficient facts alleged under

a cognizable legal theory." Balistreri v. Pacifica Police Dept., 901 F.2d 696, 699

(9th Cir. 1990). In reviewing a 12(b)(6) motion, the court must accept as true all

material allegations in the complaint, as well as reasonable inferences to be drawn

from such allegations. Mendocino Environmental Center v. Mendocino County,

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14 F.3d 457, 460 (9th Cir. 1994); NL Indus., Inc. v. Kaplan, 792 F.2d 896, 898

(9th Cir. 1986). The complaint must be construed in the light most favorable to

the plaintiff. Parks School of Business, Inc. v. Symington, 51 F.3d 1480, 1484 (9th

Cir. 1995). The sole issue raised by a 12(b)(6) motion is whether the facts

pleaded, if established, would support a claim for relief; therefore, no matter how

improbable those facts alleged are, they must be accepted as true for purposes of

the motion. Neitzke v. Williams, 490 U.S. 319, 326-27, 109 S.Ct. 1827 (1989).

The court need not, however, accept as true conclusory allegations or legal

characterizations, nor need it accept unreasonable inferences or unwarranted

deductions of fact. In re Stac Electronics Securities Litigation, 89 F.3d 1399,

1403 (9th Cir. 1996). “Factual allegations must be enough to raise a right to relief

above the speculative level . . . on the assumption that all the allegations in the

complaint are true (even if doubtful in fact) . . . .” Bell Atlantic Corporation v.

Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955 (2007). The factual allegations must

allege a plausible claim. Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1951

(2009).

II. STATUTE OF LIMITATIONS/DISCOVERY RULE

Defendant Teck Metals, Ltd. (“Teck”) appears to concede, at least for the

purposes of this motion, that a three year statue of limitations applies to all of

Plaintiffs’ claims (strict liability, nuisance and negligence) because they are based

on personal injury. RCW 4.16.080(2). Teck contends “[i]t is apparent from the

face of the [First Amended Class Action Complaint (ECF No. 28)] that all of

Plaintiffs’ claims have long since accrued and expired.” More specifically, Teck

contends all of the claims accrued before December 19, 2010, which is three years

from December 20, 2013, the date on which Plaintiffs filed their original Class

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Action Complaint (ECF No. 1).

A statute of limitations defense, “if apparent from the face of the

complaint,” may properly be raised in a motion to dismiss. Conerly v.

Westinghouse Elec. Corp., 623 F.2d 117, 119 (9th Cir. 1980). A dismissal motion,

however, should be granted “only if the assertions of the complaint, read with the

required liberality, would not permit the plaintiff to prove that the statute was

tolled.” Id., quoting Jablon v. Dean Witter & Co., 614 F.2d 677, 682 (9th Cir.

1980). “Generally, the applicability of equitable tolling depends on matters

outside the pleadings, so it is rarely appropriate to grant a Rule 12(b)(6) motion to

dismiss . . . if equitable tolling is at issue.” Huynh v. Chase Manhattan Bank, 465

F.3d 992, 1003-04 (9th Cir. 2006).

The “discovery rule” is a form of tolling. Under the discovery rule, the

statute of limitations does not begin to run until a plaintiff discovers or reasonably

could have discovered all the essential elements of the cause of action. Allyn v.

Boe, 87 Wn.App. 722, 943 P.2d 364, 372 (1997). The discovery rule does not

require knowledge of the existence of a legal cause of action itself, but merely

knowledge of the facts necessary to establish elements of the claim. Douchette v.

Bethel Sch. Dist. No. 403, 117 Wn.2d 805, 814, 818 P.2d 1362 (1991). In Putz v.

Golden, 2010 WL 5071270 (W.D. Wash. 2010) at *13, the court found the

plaintiffs’ allegations were sufficient to withstand a motion to dismiss based on

the statute of limitations, noting that “[f]urther discovery may reveal that the

exceptions of equitable tolling or the discovery rule should not apply, but the court

expresses no opinion regarding the proper outcome at this stage of the litigation.”

While the factual allegations in the Amended Complaint here do not point to

a specific date of “discovery’ for any of the named Plaintiffs, this is not critical so

long as the allegations are sufficient to establish a potential defense to the statute

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of limitations. Plaintiffs are not required to allege, as maintained by Teck, “what

previously unknown facts came to each individual’s attention, when the facts were

discovered, and how these facts supplied knowledge of elements of their claims

that were previously unknown.”

“A plaintiff is not required to negate an affirmative defense, such as the

statute of limitations, in his complaint.” Clark v. City of Braidwood, 318 F.3d

764, 767 (7th Cir. 2003). The statute of limitations “is rarely a good reason to

dismiss under Rule 12(b)(6),” Reiser v. Residential Funding Corp., 380 F.3d 1027,

1030 (7th Cir. 2004), because “the question is only whether there is any set of facts

that if proven would establish a defense to the statute of limitations.” Clark, 318

F.3d at 768 (quoting Early v. Bankers Life and Casualty Co., 959 F.2d 75, 80 (7th

Cir. 1992)). A Rule 12(b)(6) challenge “which tests the sufficiency of the

complaint, generally cannot reach the merits of an affirmative defense, such as the

defense that the plaintiff’s claim is timebarred,” except for the “relatively rare

circumstances where facts sufficient to rule on an affirmative defense are alleged

in the complaint.” Goodman v. Praxair, Inc., 494 F.3d 458, 464 (4th Cir. 2007).

The facts necessary to determine the applicability of the discovery rule must

clearly appear on the face of the complaint.

It is not apparent from the face of the First Class Action Amended

Complaint that all of Plaintiffs’ claims have accrued and expired. Therefore,

resolution of whether the “discovery rule” applies to each claim should be based

on evidence presented at summary judgment proceedings after discovery is

completed or, if necessary, at trial. A liberal reading of the allegations in the

Amended Complaint, and particularly those at Paragraphs 40-44, reasonably

suggests it was not until after 2010 that individuals residing in the Upper

Columbia River Region (UCRR), or who once resided there, knew or had reason

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to know that emissions from Teck’s smelter could be responsible for their specific

health problems and that the same was susceptible of proof so that they had a legal

right to maintain an action against Teck.

II. CAUSATION

Teck contends the Amended Complaint fails to allege any facts to establish

causation which is an essential element of all of the Plaintiffs’ claims. According

to Teck, “absent . . . from the Amended Complaint are essential factual links in the

causal chain between releases from the [Trail] Smelter and Plaintiffs’ alleged

diseases.”

Teck asserts that Plaintiffs’ allegations regarding general causation are

insufficient because “[w]hile Plaintiffs have arguably alleged that certain

chemicals can cause certain diseases1, they say nothing as to whether those

chemicals can cause diseases at the (as yet undisclosed) level they claim they were

exposed to as a result of living in the UCRR.” Teck does not cite any authority for

the proposition that a specific dose-response relationship must be alleged in order

to plausibly allege general causation (whether exposure to a substance for which

defendant is responsible is capable of causing a particular injury or condition in

the general population). Indeed, as Plaintiffs note, Teck does not cite any

1 See Paragraphs 45 and 46 of Amended Complaint:

The Trail Smelter has released high volumes of toxinsand hazardous substances that have made their way intothe Northport (sic) and UCRR, including: aluminum, antimony, arsenic, cadmium, copper, lead, manganese,mercury, silica, sulfur dioxide, thallium, and zinc.

These toxins are known to cause many diseases, includingcancer, inflammatory bowel disease, neurological disease,respiratory disease, and endocrinological disorders, whichalso have been reported at elevated levels in the Northport area.

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authority that such must be alleged in order to plausibly allege specific causation

(whether exposure to an agent was responsible for a given individual’s disease).

Even when it comes to proving specific causation, as opposed to merely

pleading it, “it is not always necessary for a plaintiff to quantify exposure levels

precisely or use the dose-response relationship, provided that whatever methods an

expert uses to establish causation are generally accepted in the scientific

community.” Henricksen v. ConocoPhillips Co., 605 F.Supp.2d 1142, 1157 (E.D.

Wash. 2009). “While precise or exact information concerning dosage or the dose-

response relationship is not always required, the boundaries of allowable expert

testimony are not so wide as to permit an expert to testify as to specific causation

without having any measurements of a plaintiff’s exposure to the allegedly

harmful substance.” Id., citing Hardyman v. Norfolk & Western Ry. Co., 243 F.3d

255, 264 (6th Cir. 2001). Again, however, it is necessary to offer measurement of a

plaintiff’s exposure at the proof stage (summary judgment or trial), not at the

pleading stage.

Teck asserts that “[b]ecause Plaintiffs plead no specific facts about their

own exposure to hazardous substances, they fail to provide a plausible basis . . . to

conclude their injuries are fairly traceable to Teck.” According to Teck, Plaintiffs

fail to plead “what specific metals or chemicals each was exposed to personally,

the means by which each was exposed, or in what quantities and the periods of

time during which each was exposed.” This level of specificity is not required in

order to establish “plausibility” regarding specific causation. What Plaintiffs have

alleged in their Amended Complaint is sufficient to state a plausible claim for

specific causation.

Plaintiffs allege actual exposure to Teck emissions via the air pathway over

significantly long periods of time. Accordingly, while there are no specific

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allegations in the Amended Complaint about any of the Plaintiffs drinking river

water or lake water, swimming in river or lake water, eating fish from the river or

lakes, or eating vegetables from gardens they or others had in the UCRR, merely

breathing the air in the UCRR for a prolonged period of time was enough

according to the Amended Complaint: 1) “Between 1921 and 2005, it is estimated

that Teck also emitted 38,465 tons of zinc, 22,688 tons of lead, 1,225 tons of

arsenic, 1,103 tons of cadmium, and 136 tons of mercury into the air” (Paragraph

22; emphasis added); 2) “Multiple studies have identified environmental exposure

to mercury as a cause of inflammatory bowel disease. Teck emitted 136 tons of

mercury into the air from 1926-2005 . . . . The Washington Department of

Ecology found elevated levels of mercury in the Northport area, primarily

attributed to airborne emissions by Teck” (Paragraph 51; emphasis added); 3)

All four Plaintiffs [Gail Leaden, Travis Magers, Rhett Weilep, and Leigh

Williams] lived in the UCRR for significant portions of their lives before being

diagnosed with Crohn’s or ulcerative colitis” (Paragraph 56)2; 4) “Given the

presence of elevated levels of mercury in the UCRR attributable to the Trail

Smelter, the alarmingly large cluster of inflammatory bowel disease in the

Northport area, and the absence of some of the most common other risk factors,

and given the scientific studies linking inflammatory bowel disease to exposure to

the materials emitted by Teck and deposited in the UCRR, the diseases of

Plaintiffs Gail Leaden, Travis Magers, Rhett Weilep and Leigh Williams were

2 See Paragraphs 12 through 15 specifying exactly how long each of them

lived in the UCRR. Lead Plaintiff Barbara Anderson, who was diagnosed with

breast cancer, voluntarily dismissed her claims against Teck and is no longer a

party to the litigation. (ECF No. 32).

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caused by long-term exposure to Teck’s emissions, particularly mercury”

(Paragraph 57); 5) “Cadmium is emitted to soil, water, and air by non-ferrous

metal mining and refining, manufacture and application of phosphate fertilizers.

The highest risk of exposure comes from processes involving heating cadmium-

containing materials such as smelting and electroplating. The major route of

exposure is through inhalation of dust and fumes or incidental ingestion from

contaminated hands, food, or cigarettes” (Paragraph 60; emphasis added);

6) “Anywhere from 5-50% of the cadmium inhaled will enter the body through

the lungs. Breathing air contaminated with very high levels of cadmium can

severely damage the lungs and may cause death. Breathing even lower levels of

cadmium over long periods of time (for years) results in a build-up of cadmium in

the kidneys” (Paragraph 61; emphasis added); 7) If lead enters the body through

inhalation of dust or chemicals that contain lead, it quickly enters other parts of

the body through the bloodstream” (Paragraph 63); and 8) Teck emitted 22,688

tons of lead into the atmosphere between 1921 and 2005. . . . Teck emitted 1,103

tons of cadmium into the atmosphere between 1921 and 2005 . . . .” (Paragraph

68; emphasis added).

The court agrees with Plaintiffs that their action is on “all fours” with

Brown v. Whirlpool Corporation, 996 F.Supp.2d 623 (N.D. Ohio 2014). In that

case, Whirlpool contended the plaintiffs did not plausibly allege its dumping and

emitting practices proximately caused plaintiffs’ injuries. The district court

disagreed:

Viewed in the light most favorable to plaintiffs, the complaintalleges a plausible causal relationship between Whirlpool’salleged negligence and plaintiff’s injuries. In brief, plaintiffshave alleged that Whirlpool polluted the air and soil in andaround Clyde over a period of at least fifty years.

During that time, Whirlpool dumped carcinogens and other

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hazardous materials at multiple sites throughout the Clydearea- a practice that “allowed many . . . pollutants . . . toblow through the wind . . . onto the citizens of Clyde andEastern Sandusky County.” . . . Moreover, the complaintalleges the soil surrounding the Clyde plant contained PCBs-a class of known carcinogens- at levels exceeding the relevantEPA safety threshold. Although only one plaintiff allegesshe visited a dump sites (sic)- Whirlpool Park, where highlevels of PCBs were found as recently as 2012- the complaintadequately alleges a mechanism that could expose plaintiffsand others to Whirlpool’s hazardous waste.

Furthermore, plaintiffs provide non-conclusory allegationsthat Whirlpool’s airborne emissions exposed plaintiffs to carcinogens, VOCs [Volatile Organic Compounds], andother toxic substances. Significantly, plaintiffs allege theOhio EPA determined Whirlpool emitted “unacceptablelevels” of benzene- a known carcinogen- and other chemicalsfrom the Clyde plant in 2009 and 2010. . . . In addition, plaintiffs allege Whirlpool emitted abnormally high levelsof VOCs in 2005, after it switched to a new type of paint.

As a result of their exposure to those substances, plaintiffsallege they or their children developed cancers, disabilities,and other diseases. Regarding the incidence of cancer,multiple government agencies have confirmed the existenceof a cancer cluster in southeast Sandusky County, and onestudy identified only a low probability that the cluster couldbe explained by chance alone.

Id. at 637-38.

The allegations in Whirlpool bear a close resemblance to the allegations in

the Amended Complaint: 1) Plaintiffs allege Teck has polluted the air and the soil

and the water in the UCRR for approximately the past 100 years (Paragraphs 17-

33); 2) the Environmental Protection Agency (EPA) and others have determined

that Teck is the principal source of contamination in the area (Paragraphs 34-39);

3) an informal health survey indicates Northport residents suffer from thyroid or

endocrine disorders at six times the rate of the general population and found

elevated rates of arthritis, cancer, inflammatory bowel disease, brain aneurisms,

and Parkinson’s disease; and 4) a subsequent health survey conducted by Dr.

Korzenik found 17 confirmed cases of either ulcerative colitis or Crohn’s disease,

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a cluster representing 10 to 15 times what would normally be seen in a population

the size of Northport (Paragraphs 42-44).

Plaintiffs’ Amended Complaint sets forth allegations plausibly establishing

that Teck’s emissions are the proximate cause of the diseases suffered

by them. Proximate cause will be adjudicated based on the proof presented either

at summary judgment or trial.

III. ABNORMALLY DANGEROUS ACTIVITY/STRICT LIABILITY

Washington courts recognize the doctrine of strict liability as set forth in

Restatement (Second) of Torts §§ 519 and 520 (1977).3 “One who carries on an

abnormally dangerous activity is subject to liability for harm to the person, land or

chattels of another resulting from the activity, although he exercised the utmost

care to prevent the harm.” Restatement (Second) of Torts § 519(1)(1977).

Whether an activity is “abnormally dangerous” is a question of law. Klein v.

Pyrodyne Corp., 117 Wn.2d 1, 6, 810 P.2d 917 (1991). Six factors are considered

in determining whether an activity is abnormally dangerous:

(a) existence of a high degree of risk of some harm to the person, land

or chattel of others;

(b) likelihood that the harm that results from it will be great;

(c) inability to eliminate the risk by the exercise of reasonable care;

(d) extent to which the activity is not a matter of common usage;

3 With strict liability, unlike negligence, it is unnecessary to prove duty and

breach of duty. Strict liability is “liability that is imposed on an actor apart from

. . . a breach of duty to exercise reasonable care.” Prosser & Keeton on Torts, §75

at 534 (5th ed. 1984).

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(e) inappropriateness of the activity to the place where it is carried on; and

(f) extent to which its value to the community is outweighed by its

dangerous attributes.

Restatement (Second) of Torts § 520 (1977).

Furthermore,

[a]ny one of the [six factors] is not necessarily sufficient ofitself in a particular case, and ordinarily several of them willbe required for strict liability. On the other hand, it is notnecessary that each of them be present, especially if othersweigh heavily. Because of the interplay of these factors, it is not possible to reduce abnormally dangerous activitiesto any definition. The essential question is whether the riskcreated is so unusual, either because of its magnitude or because of the circumstances surrounding it, as to justifythe imposition of strict liability for the harm that resultsfrom it, even though it is carried on with reasonablecare.

Klein, 117 Wn.2d at 7 (quoting Restatement (Second) of Torts § 520, cmt. f

(1977).

The “Statement of Facts” section of Plaintiffs’ Amended Complaint

(Section IV) does not specifically address each of the six factors (i.e., does not

specifically allege that lead/zinc smelting is not a matter of common usage and

that it is inappropriate to the place where it is carried on). That is not fatal,

however, because it is reasonable to infer from the alleged facts that one or more

of the listed factors exist to support the conclusion as set forth in the strict liability

claim for relief (Paragraph 108), that “[o]peration of the Trail Smelter constitutes

an abnormally dangerous activity because Teck releases and has released

hazardous and toxic substances, which create a high risk of significant harm.”

Alleging a negligence claim (failure to exercise reasonable care) is not

inconsistent with alleging a strict liability claim. Plaintiffs’ strict liability claim

asserts that even if Teck exercised reasonable care, it is still liable because it

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engaged in an abnormally dangerous activity. Plaintiff’s negligence claim asserts

that even if Teck did not engage in an abnormally dangerous activity, it still failed

to exercise reasonable care and should be held liable. This distinction was

explained in Roeder v. Atlantic Richfield, 2011 WL 4048515 (D. Nev. 2011) at *5:

Strict liability applies when, and only when, the harm for which the plaintiff means to hold the defendant liable cannothave been prevented with due care. In such cases, defendantis held strictly liable to pay for any harm resulting from theinevitable effects of his activity. This is the nature of astrict liability claim as contradistinguished from a negligenceclaim.

Roeder was a class action arising out of alleged air and groundwater

contamination by a mining company. The mine site consisted of an abandoned

copper mine and extraction facility in Nevada. The companies who operated the

mine from 1918 to 1982 extracted approximately 360 million tons of ore and

debris from the open pit mine, much of which remained as waste in a “pit lake”

and “tailings or leach heap piles.” Toxic substances at the mine site included

arsenic, chromium, lead, mercury, uranium, thorium, and radium. These

substances had contaminated the local groundwater, surface water, soil, and air,

leaving the plaintiffs exposed to them. The district court declined to dismiss

plaintiffs’ strict liability claims, finding they were available under the factor-based

approach of the Restatement (Second) of Torts:

Open-pit copper mining likely had great value to the community and was likely appropriate to the areas of theMine Site when it was ongoing, and open-pit coppermining may be common in Nevada (or may have beenso during the relevant time period). However, it was not likely a common activity for “many people in thecommunity.” Moreover, open pit mining likely involvesthe use of many chemicals and the storage of manywaste materials that will inevitably seep into the groundwhen stored in outdoor piles, as Plaintiffs allege,creating a high degree of risk of harm to people andland via heavy metals contamination. The harm is likelyto be great, causing serious health problems, such as

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cancer. Finally . . . the risk of such seepage cannotbe eliminated through reasonable care. In order to beprofitable, a mine must presumably create abnormallyvast piles of waste that cannot reasonably be isolatedfrom the surrounding air and soil. Whatever is in thesewaste piles will inevitably diffuse into the surroundingenvironment.

2011 WL 4048515 at *5.

The district judge in Roeder deemed the facts in his case most analogous to

State Dep’t of Envtl. Prot. v. Ventron Corp., 94 N.J. 473, 468 A.2d 150 (1983),

where the State of New Jersey sued various corporations that had carried on

mercury processing operations at a site for almost fifty years. The lawsuit sought

recovery for the cost of the cleanup and removal of mercury pollution seeping

from a forty-acre tract of land into a creek, a tidal estuary of the Hackensack River

flowing through the Meadowlands. Based on consideration of the Restatement

(Second) factors, the Supreme Court of New Jersey affirmed the trial court’s

finding that the corporations had engaged in abnormally dangerous activity for

which they could be held strictly liable:

Pollution from toxic wastes that seeps onto the land ofothers and into streams necessarily harms the environment.[Citation omitted]. Determination of the magnitude of thedamage includes recognition that the disposal of toxic wastemay cause a variety of harms, including ground watercontamination via leachate, surface water contamination

via runoff or overflow, and poison via the food chain.[Citation omitted]. The lower courts found that eachof those hazards was present as a result of the contaminationof the entire tract. [Citation omitted]. Further, as was the case here, the waste dumped may react synergistically withelements in the environment, or other waste elements, toform an even more toxic compound. [Citation omitted]. With respect to the ability to eliminate the risks involvedin disposing of hazardous wastes by the exercise of reasonable care, no safe way exists to dispose of mercuryby simply dumping it onto land or into water.

The disposal of mercury is particularly inappropriate inthe Hackensack Meadowlands, an environmentally sensitivearea where the arterial waterways will disperse the pollution

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through the entire ecosystem. Finally, the dumping of untreatedhazardous waste is a critical societal problem in New Jersey,which the Environmental Protection Agency estimates is thesource of more hazardous waste than any other state. [Citationomitted]. From the foregoing, we conclude that mercury and other toxic wastes are “abnormally dangerous,” and thedisposal of them, past or present, is an abnormally dangerousactivity. We recognize that one engaged in disposing oftoxic waste may be performing an activity that is of some useto society. Nonetheless, “the unavoidable risk of harm that isinherent in it requires that it be carried on at his peril, ratherthan at the expense of the innocent person who suffers harmas a result of it.” Restatement (Second) [of Torts § 520], comment h at 39.

Id. at 159-60.

The allegations of Plaintiffs’ Amended Complaint bear many similarities to

the facts in Roeder and Ventron. Plaintiffs have alleged facts plausibly showing

that Teck’s smelter operations are abnormally dangerous so as to withstand a Fed.

R. Civ. P. 12(b)(6) motion to dismiss. Whether those operations will ultimately be

deemed abnormally dangerous as a matter of law is a question which will be

determined based on evidence presented at summary judgment or trial.

IV. FEDERAL COMMON LAW PUBLIC NUISANCE CLAIM

A. Standing

Congress has not authorized courts to develop a substantive law of air or

water pollution and therefore, federal common law can only be fashioned if a

“federal rule of decision is ‘necessary to protect uniquely federal interests.’”

National Audubon Society v. Department of Water, 869 F.2d 1196, 1202 (9th Cir.

1988), quoting Texas Industries, Inc. v. Radcliff Materials, Inc., 451 U.S. 630,

640, 101 S.Ct. 2061 (1980). A “‘uniquely federal interest’ exists ‘only in such

narrow areas as those concerned with the rights and obligations of the United

States, interstate and international disputes implicating the conflicting rights of

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states or our relations with foreign nations, and admiralty cases.’” Id., quoting

Texas Industries, 451 U.S. at 641.

Teck contends National Audubon Society precludes the Plaintiffs who are

“private” parties, as opposed to state entities, from pursuing a federal common law

pubic nuisance claim. In National Audubon Society, the Ninth Circuit reversed the

district court’s conclusion that the plaintiff had stated a federal common law

nuisance claim based on air pollution where it had accepted the plaintiff’s

allegations that dust storms polluted not only the air of California, but also that of

Nevada. Based on its review of two Supreme Court decisions, Georgia v.

Tennessee Copper Company, 206 U.S. 230, 27 S.Ct. 618 (1907), and Illinois v.

Milwaukee (“Milwaukee I”), 406 U.S. 91, 92 S.Ct. 1385 (1972), both of which

“involved a state suing sources outside its domain which were causing pollution

within the state,” 869 F.2d at 1205, the Ninth Circuit concluded as follows:

The great similarity between these cases underscores thelimited context in which the [Supreme] Court has beenwilling to recognize a federal common law nuisance claimbased on air pollution due to an interstate dispute. It appearsthat the Court considers only those interstate controversieswhich involve a state suing sources outside of its ownterritory because they are causing pollution within thestate to be inappropriate for state law to control, andtherefore subject to resolution according to federal common law.

Therefore, true interstate disputes require application offederal common law. [Citations omitted]. Because weconclude this is essentially a domestic dispute and therefore not the sort of interstate controversy whichmakes application of state law inappropriate, relianceon federal common law is unnecessary. Auduboncannot rely on the federal common law of nuisance tostate its air pollution claim.

Although we recognize that this case could developinto a dispute involving conflicting rights of States,that is not the case before court, and we do not decidelegal questions based on contingencies, speculation orpotential conflicts. [Citations omitted]. Because we

ORDER REMOTION TO DISMISS- 15

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conclude that Audubon cannot properly assert a federalcommon law nuisance action based on air pollution onthese facts, we need not decide whether or not such acause of action would be preempted by the Clean AirAct, or whether Audubon would have standing toassert this claim.

Id. at 1205 (emphasis added).

National Audubon Society cannot be read for the proposition that only state

entities can pursue a federal common law public nuisance claim. First of all, the

Ninth Circuit made it explicitly clear that it was not going to address whether

Audubon had standing to pursue such a claim as a private party. Secondly, the

circuit’s decision was narrowly limited to the particular facts of the case which the

circuit concluded amounted to essentially an intrastate, domestic dispute. Those

facts were the National Audubon Society suing the Los Angeles Department of

Water and Power (DWP) for conditions at Mono Lake located in California. The

federal nuisance claim was predicated on the assertion that Mono Lake was an

“interstate or navigable” water in which there was an overriding federal interest,

and that DWP’s diversions of water to Los Angeles of four freshwater streams that

would otherwise flow into Mono Lake were causing air pollution in the form of

alkali dust storms from the newly exposed lake bed. The suit was brought in the

Eastern District of California, the location of the source of the pollution (Mono

Lake), against an entity based in California (the Los Angeles DWP). Arguably,

California law was sufficient to address the source of the pollution in California

and in the process, remedy both the air pollution in California and Nevada. Here,

on the other hand, the source of the pollution is located outside the State of

Washington (Teck’s smelter in British Columbia) resulting in pollution inside the

State of Washington. It is more in the way of an interstate dispute.

///

ORDER REMOTION TO DISMISS- 16

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It appears that Judge Reinhardt in his dissenting opinion in National

Audubon Society, 869 F.2d at 1210, thought the majority was limiting standing in

federal common law nuisance actions to state complainants, a proposition with

which he disagreed. Nevertheless, he noted that “[w]hile the majority discusses

the need for state plaintiffs at some length, ultimately it appears to base its holding

on the fact this case involves only California parties.” Id. at 1211. National

Audubon Society did not involve a dispute between parties from different states,

unlike the dispute here between Teck, a Canadian corporation, and the Plaintiffs.

It is no wonder then that in Native Village of Kivalina v. ExxonMobil

Corporation, 696 F.3d 849 (9th Cir. 2012), the Ninth Circuit did not address

whether there was any consequence to the complainant not being a state entity.

Indeed, there is no mention of National Audubon Society in Kivalina.

Furthermore, in Connecticut v. American Electric Power Company, 582 F.3d 309,

365-66 (2nd Cir. 2009), in which the Second Circuit held that non-state entities

could sue under the federal common law of nuisance, Judge Reinhardt’s dissenting

opinion in National Audubon Society was cited as support. It is difficult to fathom

that the Second Circuit (or any circuit court) would omit to mention the majority

opinion in National Audubon Society if that opinion in fact held that non-state

entities cannot sue under the federal common law of nuisance.

This court will not dismiss Plaintiffs’ federal common law nuisance claims

for lack of standing. Assuming they do have standing, the next question is

whether those claims are nonetheless precluded because Congress has displaced

them through the Comprehensive Environmental Response, Compensation, and

Liability Act (CERCLA), 42 U.S.C. §9601 et seq..

//

//

ORDER REMOTION TO DISMISS- 17

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B. Displacement

In Kivalina, the Ninth Circuit held that the Clean Air Act (CAA) and EPA

action authorized by the CAA displaced plaintiffs’ federal common law public

nuisance claim for damages and affirmed the district court’s dismissal of

plaintiffs’ action for lack of subject matter jurisdiction. Here, Teck contends that

CERCLA displaces Plaintiffs’ federal common law public nuisance claims for

damages. No court has held whether CERCLA, by itself, is sufficient to displace a

federal common law public nuisance claim for damages.

Claims can be brought under federal common law for public nuisance only

when the courts are “compelled to consider the federal questions which cannot be

answered from the federal statutes alone.” Kivalina, 696 F.3d at 856, quoting City

of Milwaukee v. Illinois (“Milwaukee II”), 451 U.S. 304, 314, 101 S.Ct. 1784

(1981). “The test for whether congressional legislation excludes the declaration of

federal common law is simply whether the statute speak[s] directly to [the]

question at issue.” Id. quoting Connecticut v. Am. Elec. Power Co., Inc.,

U.S. , 131 S.Ct. 2527, 2537 (2011) (“AEP”). “The existence of laws

generally applicable to the question is not sufficient; the applicability of

displacement is an issue-specific inquiry.” Id. The question is “whether

Congress has provided a sufficient legislative solution to the particular [issue] to

warrant a conclusion that [the] legislation has occupied the field to the exclusion

of federal common law.” Id. quoting Mich. v. U.S. Army Corps of Eng’rs, 667

F.3d 765, 777 (7th Cir. 2011).

“[T]he Supreme Court has instructed that the type of remedy asserted is not

relevant to the applicability of the doctrine of displacement.” Kivalina, 696 F.3d

at 857, citing Exxon Shipping Co. v. Baker, 554 U.S. 471, 128 S.Ct. 2605 (2008),

and Middlesex County Sewerage Authority v. National Sea Clammers Ass’n., 453

ORDER REMOTION TO DISMISS- 18

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U.S. 1, 4, 101 S.Ct. 2615 (1981). “Under Exxon and Middlesex, displacement of a

federal common law right of action means displacement of remedies.” Id. In

Kivalina, the Ninth Circuit held the AEP case “extinguished Kivalina’s federal

common law public nuisance damage action, along with the federal common law

public nuisance abatement actions.” Id. “Judicial power can afford no remedy

unless a right that is subject to that power is present.” Id. Accordingly, the fact

CERCLA does not provide a damages remedy for personal injuries is irrelevant to

whether CERCLA displaces and precludes Plaintiffs’ federal common law public

nuisance claims in the case at bar.

Plaintiffs assert the “question at issue” is “whether Teck can be held liable

for personal injuries caused by its contamination of the UCRR under the federal

common law of nuisance.” According to Plaintiffs, “the legislative history of

CERCLA confirms that Congress rejected the inclusion of any statutory personal

injury provisions within CERCLA and thus did not intend to occupy the field of

personal injury liability caused by contaminants.” This is too narrow a view of the

“question at issue” and essentially focuses on the available remedies which, as

noted above, is irrelevant. The “question at issue” is liability for the release and

threatened release of hazardous substances. This is the harm of which Plaintiffs

complain. Congress has spoken directly to this issue via CERCLA and has

provided a “sufficient legislative solution” to warrant a conclusion that CERCLA

occupies the field to the exclusion of federal common law. By way of CERCLA,

Congress has provided a comprehensive liability and remediation scheme to

address releases and threatened releases of hazardous substances by making

polluters strictly liable for response costs to clean up the hazardous substances,

and liable for natural resource damages to remedy harm to the environment for

which they are responsible. CERCLA was enacted to “provide for liability,

ORDER REMOTION TO DISMISS- 19

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compensation, cleanup, and emergency response for hazardous substances

released into the environment and the cleanup of inactive hazardous waste

disposal sites.” 3550 Stevens Creek Associates v. Barclays Bank of California,

915 F.2d 1355, 1357 (9th Cir. 1990), quoting Pub. L. No. 96-510, 94 Stat. 2767

(1980).

Plaintiffs’ federal common law public nuisance claims have been displaced

by CERCLA and therefore, must be dismissed.

V. STATE LAW PUBLIC NUISANCE CLAIM (RCW 7.48.120)

As an alternative to their federal common law public nuisance claims, the

Plaintiffs plead state law public nuisance claims. In Washington, a nuisance is “an

unreasonable interference with another’s use and enjoyment of property . . . .”

Kitsap County v. Allstate Ins. Co., 136 Wn.2d 567, 592, 964 P.2d 1173 (1998).

Nuisance “consists in unlawfully doing an act, or omitting to perform a duty,

which act or omission either annoys, injures or endangers the comfort, repose,

health or safety of others, offends decency . . . or in any way renders other persons

insecure in life, or in the use of property.” RCW 7.48.120 (emphasis added). The

“acts” at issue here occurred in Canada (discharging slag from Teck’s smelter into

the river; emitting pollution from the stacks of Teck’s smelter). The allegations in

Plaintiffs’ Amended Complaint are consistent therewith: “Teck’s operation of the

Trail Smelter is [a] nuisance.” (ECF No. 28 at Paragraph 117).

The court agrees with Teck that Plaintiffs seek to extraterritorially apply

Washington’s nuisance statute to Teck’s activities in Canada. No court has ever

sanctioned such an extraterritorial application. It is irrelevant that the Ninth

Circuit Court of Appeals previously found in related environmental litigation that

CERCLA is not being applied extraterritorially to Teck. Pakootas v. Teck

ORDER REMOTION TO DISMISS- 20

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Cominco Metals, Ltd., 452 F.3d 1006 (9th Cir. 2006) (“Pakootas I”) CERCLA

and Washington’s public nuisance statute are distinct. Liability under CERCLA

depends on releases and threatened releases of hazardous substances. Those

releases occurred in Washington (from the UCR Site) and, as such, there is no

extraterritorial application of CERCLA. Pakootas I, 452 F.3d at 1074-75.

Under Washington law, nuisance can be based upon intentional, reckless, or

negligent conduct. Hostetler v. Ward, 41 Wn.App. 343, 357, 704 P.2d 1193

(1985). It is possible for the same act to constitute negligence and also give rise

to a nuisance. Peterson v. King County, 45 Wn.2d 860, 863, 278 P.2d 774 (1954).

However, “[s]eparate legal theories based upon one set of facts constitute ‘one

claim’ for relief under CR 54(b).” Snyder v. State, 19 Wn.App. 631, 635, 577 P.2d

160 (1975). “‘[A] negligence claim presented in the garb of nuisance’ need not be

considered apart from the negligence claim.” Atherton Condo. Apartment-Owners

Ass’n Bd. of Dir. v. Blume Dev. Co., 115 Wn.2d 506, 527, 799 P.2d 250

(1990)(quoting Hostetler, 41 Wn.App. at 360.). “In those situations where the

alleged nuisance is the result of defendant’s alleged negligent conduct, rules of

negligence are applied.” Id. at 527.

Plaintiffs contend their state law public nuisance claims do not merge with

their negligence claims because “[q]uite apart from the negligence which led to

additional discharges . . . Plaintiffs’ nuisance claim[s] arise[] from Teck’s

intentional discharge of toxins into the UCRR.” As Teck points out, however,

merely alleging intentional conduct is not enough to prevent merging of a

nuisance and a negligence claim. “[N]uisance dependent upon negligence consists

of anything lawfully but so negligently or carelessly done or permitted as to

create a potential and unreasonable risk of harm which, in due course, results in

injury to another.” Hostetler, 41 Wn.App. at 359. (Emphasis added). It is

ORDER REMOTION TO DISMISS- 21

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necessary to allege tortious intent to prevent the merger of a nuisance and a

negligence claim. Tortious intent is found where “the actor desires to cause the

consequences of his act, or . . . believes that the consequences are substantially

certain to result from it.” Restatement (Second) of Torts § 8A (1965); Bradley v.

American Smelting and Refining Co., 104 Wn.2d 677, 682, 709 P.2d 782 (1985).

See Hurley v. Port Blakely Tree Farms, L.P., 2014 WL 2962806 (Wash App. Div.

1) at *7.

Plaintiffs’ Amended Complaint certainly alleges intentional conduct on the

part of Teck (intentionally discharging slag into the river; intentionally emitting

chemicals into the air). While it does not allege that Teck’s smelting activities

were unlawful or that Teck desired to cause the consequences of its intentional

conduct, it alleges that Teck believed those consequences were substantially

certain to follow from its intentional conduct. According to Paragraph 8 of the

Amended Complaint:

Defendant has intentionally released millions of tons oftoxins and hazardous chemicals into the atmosphere andthe Columbia River, knowing that these toxins would contaminate the UCRR and knowing or having reasonto know that these substances would cause bodily injuryto Plaintiffs and members of the proposed Class.

(Emphasis added).

The court cannot conclude that Plaintiffs’ nuisance claims are based on the

same facts and allegations as their negligence claims such that the nuisance claims

must be dismissed as duplicative. Nevertheless, this is inconsequential because as

discussed above, the state law public nuisance claims fail because Washington’s

public nuisance statute cannot be applied extraterritorially to Teck’s smelting

activities in Canada.

//

ORDER REMOTION TO DISMISS- 22

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VI. PERSONAL JURISDICTION

In determining whether a defendant purposefully directed activities toward a

forum state, courts in the Ninth Circuit employ the “effects test.” Mavrix Photo,

647 F.3d 1218, 1228 (9th Cir. 2011). “The ‘effects’ test which is based on the

Supreme Court’s decision in Calder v. Jones, 465 U.S. 783, 104 S.Ct. 1482, 79

L.Ed.2d 804 (1984), requires that ‘the defendant allegedly must have (1)

committed an intentional act, (2) expressly aimed at the forum state, (3) causing

harm that the defendant knows is likely to be suffered in the forum state.’” Id.

(quoting Brayton Purcell LLP v. Recordon & Recordon, 606 F.3d 1124, 1128 (9th

Cir. 2010)).

Teck contends Plaintiffs’ Amended Complaint fails to allege that Teck

“purposefully directed” its activities at the forum state (Washington) because the

Amended Complaint does not allege that Teck caused harm to human health in

Washington which it knew was likely to be suffered there (a “foreseeable” effect).

According to Teck, “[t]he Amended Complaint fails to allege any facts to support

the necessary inference that Teck foresaw that its releases in Canada were likely to

cause harm to human health in Washington.” This is inaccurate, as revealed by

Paragraph 8 of Plaintiffs’ Amended Complaint, quoted above, which was

specifically pled in conjunction with Plaintiff’s allegation in the same paragraph

that “[t]he court’s exercise of specific jurisdiction over Defendant is appropriate

under the facts of this case.” The facts alleged in Paragraph 8 of the Amended

Complaint, if true, are sufficient to establish personal jurisdiction.

Defendant’s motion to dismiss tests only the Plaintiffs’ theory of

jurisdiction. It attacks the face of Plaintiffs’ Amended Complaint, rather than the

underlying facts. In evaluating the Plaintiffs’ jurisdictional theory, the court need

only determine whether the facts alleged, if true, are sufficient to establish

ORDER REMOTION TO DISMISS- 23

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jurisdiction and no evidentiary hearing or factual determination is necessary.

Credit Lyonnais Securities (USA), Inc. v. Alcantara, 183 F.3d 151, 153 (2nd Cir.

1999). In opposing a motion to dismiss on the papers, Plaintiffs need only make a

prima facie showing of jurisdictional facts to establish a basis for personal

jurisdiction, the uncontroverted allegations of the Amended Complaint must be

taken as true, and the court will draw all reasonable inferences in favor of

Plaintiffs. Dorchester Financial Securities, Inc. v. Banco BRJ, S.A., 722 F.3d 81,

84 (2nd Cir. 2013). Plaintiffs have made this prima facie showing.

At this juncture, there is no basis for dismissing Plaintiffs’ action for lack of

personal jurisdiction pursuant to Fed. R. Civ. P. 12(b)(2). Based on the evidence

presented at summary judgment or trial, the court may be required to revisit

whether Teck foresaw impacts to human health such that the exercise of personal

jurisdiction remains appropriate.

VII. CONCLUSION

Defendant’s Motion To Dismiss Amended Class Action Complaint (ECF

No. 37) is GRANTED in part and DENIED in part as set forth above. It is

denied to the extent it seeks dismissal based on the statute of limitations, causation,

and personal jurisdiction. Plaintiffs fail to state federal common law public

nuisance claims and state law public nuisance claims upon which relief can be

granted. Those claims are DISMISSED with prejudice.

//

//

//

//

//

ORDER REMOTION TO DISMISS- 24

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IT IS SO ORDERED. The District Court Executive is directed to enter

this order and forward copies to counsel of record. A notice shall be sent to

counsel of record setting this matter for a telephonic scheduling conference.

DATED this 5th day of January, 2015.

s/Lonny R. Suko

LONNY R. SUKO Senior United States District Judge

ORDER REMOTION TO DISMISS- 25

Case 2:13-cv-00420-LRS Document 52 Filed 01/05/15

IN THE UNITED STATES DISTRICT COURT DISTRICT OF COLORADO Judge Raymond P. Moore Civil Action No. 13-cv-00701-RM-BNB WALTER MYERS, KATHERINE MYERS, AMANDA WEAKLAND, and PATRICK WEAKLAND,

Plaintiffs, v. BUREAU OF LAND MANAGEMENT, an agency of the United States,

Defendant, and PARK CENTER WATER DISTRICT, Defendant-Intervenor.

ORDER

The Clean Water Act (“CWA”) provides in 33 U.S.C. § 1365(a)(1) that citizens may sue

any person who is alleged to be in violation of an effluent standard or limitation. This is such an

action.

This matter is before the Court on Plaintiffs’ Motion for Summary Judgment and Request

for Injunctive Relief (“Motion”). (ECF No. 37.) The Motion is fully briefed with permitted

surreplies. (ECF Nos. 75, 76, 88, 90, 92, 100-2, 102, 103, 104.)

For the reasons set forth below, the Court GRANTS, in part, Plaintiffs’ Motion. The

Court GRANTS Plaintiffs’ Motion to the extent it seeks a judgment that the Bureau of Land

Case 1:13-cv-00701-RM-BNB Document 125 Filed 01/13/15 USDC Colorado Page 1 of 16

Management (“BLM”) violated the CWA. The Court DENIES Plaintiffs’ request for injunctive

relief.

I. LEGAL STANDARDS

A. Summary Judgment

Summary judgment is appropriate only if there is no genuine dispute of material fact and

the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a); Celotex Corp. v.

Catrett, 477 U.S. 317, 322 (1986); Henderson v. Inter-Chem Coal Co., Inc., 41 F.3d 567, 569-70

(10th Cir. 1994). Whether there is a genuine dispute as to a material fact depends upon whether

the evidence presents a sufficient disagreement to require submission to a jury or is so one–sided

that one party must prevail as a matter of law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242,

251-52 (1986); Stone v. Autoliv ASP, Inc., 210 F.3d 1132, 1136 (10th Cir. 2000). Once the

moving party meets its initial burden of demonstrating an absence of a genuine dispute of material

fact, the burden then shifts to the non-moving party to move beyond the pleadings and to designate

evidence which demonstrates the existence of a genuine dispute of material fact to be resolved at

trial. See 1-800-Contacts, Inc. v. Lens.com, Inc., 722 F.3d 1229, 1242 (10th Cir. 2013) (citation

omitted). A fact is “material” if it pertains to an element of a claim or defense; a factual dispute is

“genuine” if the evidence is so contradictory that if the matter went to trial, a reasonable jury could

return a verdict for either party. Anderson, 477 U.S. at 248. In considering whether summary

judgment is appropriate, the facts must be considered in a light most favorable to the non-moving

party. Cillo v. City of Greenwood Vill., 739 F.3d 451, 461 (10th Cir. 2013) (citations omitted).

If a movant properly supports a motion for summary judgment, the opposing party may not

rest on the allegations contained in her pleadings, but must respond with specific facts showing a

genuine factual issue for trial. Fed. R. Civ. P. 56(e); Scott v. Harris, 550 U.S. 372, 380 (2007)

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(holding that “[t]he mere existence of some alleged factual dispute between the parties will not

defeat an otherwise properly supported motion for summary judgment; the requirement is that

there be no genuine issue of material fact”) (citation omitted).

Only admissible evidence may be considered when ruling on a motion for summary

judgment. Jaramillo v. Colorado Judicial Dep’t, 427 F.3d 1303, 1314 (10th Cir. 2005) (citation

omitted) (holding that hearsay evidence is not acceptable in opposing a summary judgment

motion); World of Sleep, Inc. v. La-Z-Boy Chair Co., 756 F.2d 1467, 1474 (10th Cir. 1985).

Affidavits must be based on personal knowledge and must set forth facts that would be admissible

evidence at trial. Murray v. City of Sapulpa, 45 F.3d 1417, 1422 (10th Cir. 1995) (quotations and

citation omitted). “Conclusory and self-serving affidavits are not sufficient.” Id. The Court

will not consider statements of fact, or rebuttals thereto, which are not material or are not

supported by competent evidence. Fed. R. Civ. P. 56(c)(1)(A), 56(e)(2), 56(e)(3). “[O]n a

motion for summary judgment, it is the responding party’s burden to ensure that the factual dispute

is portrayed with particularity, without depending on the trial court to conduct its own search of the

record.” Cross v. The Home Depot, 390 F.3d 1283, 1290 (10th Cir. 2004) (internal quotation and

citation omitted). The Court is not obligated to comb the record in order to make arguments for a

party. See Mitchell v. City of Moore, Okla., 218 F.3d 1190, 1199 (10th Cir. 2000). Further,

Local Rule 7.1(e) provides that “[e]very citation in a motion, response or reply shall include the

specific page or statutory subsection to which reference is made.” D.C. Colo. L. Civ. R. 7.1(e).

B. Permanent Injunctive Relief

“To obtain a permanent injunction, a plaintiff must show: ‘(1) actual success on the merits;

(2) irreparable harm unless the injunction is issued; (3) the threatened injury outweighs the harm

that the injunction may cause the opposing party; and (4) the injunction, if issued, will not

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adversely affect the public interest.’” Kitchen v. Herbert, 755 F.3d 1193, 1208 (10th Cir. 2014)

(quoting Sw. Stainless, LP v. Sappington, 582 F.3d 1176, 1191 (10th Cir. 2009)). It is “the

movant’s burden to establish that each of these factors tips in his or her favor.” Heideman v.

South Salt Lake City, 348 F.3d 1182, 1188-89 (10th Cir. 2003) (citation omitted). If a plaintiff

fails to meet its burden on any of these four requirements, its request must be denied. Winter v.

Natural Res. Def. Council, Inc., 555 U.S. 7, 23-24 (2008) (denying a request for injunctive relief

on the public interest and balance of equities requirements alone even as the Supreme Court

assumed irreparable injury to an endangered species and a violation of the environmental statute at

issue).

II. BACKGROUND

A. Factual Background1

The facts as recited below are based on adequate citations to the record which would be

admissible at trial or based on uncontested averments in the parties’ respective filings.

1. The Wells at Issue

BLM owns two wells near Fourmile Creek north of Canon City, Colorado. (ECF No. 76

at 2.) These two wells are known as the “Old Well” and the “New Well.” Beginning in 1968, the

Old Well supplied water to Park Center Water District (“Park Center”). (ECF No. 76-8, BLM

Park Center Well History of Use.) The Old Well presently supplies water to Park Center

including 1,420 taps and 4,000 users. (ECF No. 76-9, Aff. of Charles J. Well ¶ 5.) Also, BLM

1 Plaintiff’s Motion fails to include a statement of facts as required by the Court’s practice standards. Plaintiff later submitted its statement of facts in support of its Motion. (ECF No. 72.) Plaintiff requests that the Court consider its additional facts submitted in its “Substituted Reply in Support of Motion for Summary Judgment and Request for Permanent Injunctive Relief.” (ECF No. 102 at 7 n.1.) The Court is not persuaded that Walker v. City of Orem, 451 F.3d 1139, 1155-56 (10th Cir. 2006) compels the Court to consider these new facts. In Walker, the district court did not exclude the plaintiff’s additional facts. Id. The Tenth Circuit considered these additional facts based upon the district court’s treatment of the case. Id. More importantly, nothing in Plaintiffs’ “Additional Undisputed Facts” would materially affect the holdings the Court reaches in this matter.

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provides approximately 16 acre-feet of water from the Old Well annually to the City of Cripple

Creek (“Cripple Creek”). (ECF No. 76-11, Stipulation ¶ 4; ECF No. 76-13, Decl. Roy E. Smith ¶

3(b).)

In 2008, it was decreed that BLM could divert 227 acre-feet of water per year from the Old

Well. (ECF No. 76-2, Ruling at 2, 3.) In 2008, BLM entered into a new lease with Park Center

in which Park Center is given the right to take up to 521 acre-feet of water from the Old Well per

year “for municipal, domestic, and incidental irrigation, augmentation, exchange, and substitute

plan purposes,” subject to the lease terms. (ECF No. 76-12, 2008 Lease at § 1(A).) The

provision of the full 521 acre-feet is contingent on BLM’s successful application to the Colorado

Water Division 2 Court for an additional 500 acre-feet of nontributary groundwater. (ECF No.

76-12, 2008 Lease at § 1(D).)

Diversions from the Old Well have totaled more than 227 acre-feet per year due to an

uncontrolled leak from the Old Well. (ECF No. 76-13, Decl. Smith ¶ 3(c).) The Old Well is

currently discharging. (Compare ECF No. 75 ¶ 5 with ECF No. 102 at 3.) Discharges from the

Old Well into Fourmile Creek include various pollutants, as that term is defined in section 502(6)

of the CWA, 33 U.S.C. § 1362(6), including but not limited to heat, total suspended solids, arsenic,

and radionuclides. (ECF No. 37-3 at 3, FCA § II.7-8.) Fourmile Creek is a seasonal tributary of

the Arkansas River (an interstate, navigable-in-fact river) and constitutes a “water of the United

States” as that term is defined in 40 C.R.R. § 122.2 as well as a “navigable water” as that term is

defined in section 502(7) of the CWA, 33 U.S.C. § 1362(7).

On December 31, 2012, with regard to the Old Well, BLM and Park Center jointly filed an

Application for Plan of Augmentation with the Colorado District Court, Water Division 2, Case

No. 2012 CW 125 (“Augmentation Application”). (ECF No. 76-3.) The proposed withdrawal

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amount is 770 acre-feet per year. (ECF No. 76-3 at 4.) The Augmentation Application

anticipates discharges from the Old Well into Fourmile Creek. (ECF No. 76-3 at 3.) Objections

have been filed to the Augmentation Application and a trial is set for 2016. (Compare ECF No.

76 ¶ 19 with ECF No. 102 at 2.)

In 2009, BLM issued an “Environmental Assessment” regarding drilling the “New Well”

and capping the Old Well. (ECF No. 76-17; compare ECF No. 76 ¶ 24 with ECF 102 at 2.)

During drilling of the New Well since 2010, water, drilling mud, and portions of the drilling rig

pad have been discharged into Fourmile Creek. (ECF No. 76-19, BLM News Release; ECF No.

76-20, BLM Information Memorandum; ECF No. 76-21, Contract Diary Aug. 7, 2010; ECF No.

76-22, Early Alert; compare ECF No. 76 ¶ 29 with ECF No. 102 at 2.) BLM anticipates that the

cost to finish the New Well and shut down the Old Well will be approximately $2.8 million.

(ECF No. 76-26, Decl. Sara Dawson ¶ 3.)

In March 2013, BLM and the United States Environmental Protection Agency (“EPA”)

entered into a “Federal Compliance Agreement” (“FCA”). (ECF No. 76-28, FCA.) The FCA

required, no later than September 30, 2013, BLM to apply for a National Pollutant Discharge

Elimination System (“NPDES”) permit “for any discharges from the old well or new well, unless

by that date both wells have ceased discharging and are not reasonably expected to discharge in the

future.” (ECF No. 76-28, FCA ¶ III.17.) On September 30, 2013, BLM submitted an NPDES

permit application for discharges from the Old Well, from the New Well, and for overflows.

(ECF No. 76-29, Application.) Additionally, the FCA requires BLM to develop two separate

site-specific discharge control plans to address (1) “controlled discharges,” i.e., “discharges that

are a result of the development of the [New Well],” and (2) “uncontrolled discharges,” defined as

“ongoing leakage from the [Old Well], discharges from additional casing failure at the [Old Well],

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and any unexpected and unplanned discharges that may occur during the development of the [New

Well].” (ECF No. 76-28, FCA ¶ III.9.) On June 18, 2013, BLM submitted a “Plan for

Management of Controlled Discharge,” and a “Plan for Management of Uncontrolled Discharges”

to EPA for review and approval. (ECF Nos. 76-30, 76-31; compare ECF No. 76 ¶ 36 with ECF

No. 102 at 2.) The FCA requires BLM to “take all practicable steps to eliminate the discharge of

any pollutant from the [Old Well] or the [New Well] that would cause any . . . in-stream or

discharge concentration limits to be exceeded” as delineated in the FCA. (ECF No. 76-28, FCA ¶

III.1.) The pollutants BLM must control or eliminate, as listed in the FCA, include, among

others: heat, total suspended solids, arsenic, and uranium. (ECF No. 76-28, FCA ¶ III.1.) The

FCA requires that BLM coordinate with the EPA, the Colorado Department of Public Health and

Environment, and the Colorado Division of Parks and Wildlife “to minimize adverse impacts to

Fourmile Creek” in the event of any uncontrolled discharge from the Old or New Wells. (ECF

No. 76-28, FCA ¶ III.15.)

2. Park Center

Pumping water to Park Center residents from the closest municipal water provider is

financially prohibitive. (ECF No. 75-8, Aff. James Wade ¶ 2.) Since its inception, Park Center

has leased water from BLM. (ECF No. 75-8, Aff. Wade ¶ 3.) Park Center has only one other

principal source of water: surface water from the Canon Heights Irrigation and Reservoir

Company (“Canon Heights”). (ECF No. 75-8, Aff. Wade ¶ 6.) When Canon Heights’ surface

water is not available to Park Center, Park Center’s customers are solely reliant upon BLM’s well

water. (ECF No. 75-8, Aff. Wade ¶ 7.) During drought conditions from June 2012 through

January 1, 2013, BLM’s well water supplied 99.3% of Park Center’s water usage. (ECF No.

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75-8, Aff. Wade ¶ 10.) From January 1, 2013 to September 30, 2013, BLM’s well water supplied

84% of Park Center’s water usage. (ECF No. 75-8, Aff. Wade ¶ 10.)

Although connection of Park Center’s users to Canon City’s water supply is physically

possible, such a connection is cost-prohibitive due to technical problems. (ECF No. 75-8, Aff.

Wade ¶ 12.) If Canon City’s water were pumped to Park Center’s users, such pumping would

destroy Park Center’s existing water systems. (ECF No. 75-8, Aff. Wade ¶ 12.) The total cost to

improve Park Center’s water systems to accommodate water from Canon City would likely exceed

$2.5 million. (ECF No. 75-8, Aff. Wade ¶ 12.) Additionally, costs of treated water from Canon

City would be triple the cost of Park Center’s water. (ECF No. 75-8, Aff. Wade ¶ 12.)

3. The Alleged Harm

The Weaklands do not live on the property they own south of the Old Well discharges and

there are no buildings on that property. (Compare ECF No. 76 at ¶ 37 with ECF No. 102 at 2.)

Prior to the 2010 discharges, Walt Myers used his well water for drinking exclusively.

(ECF No. 100-3, Aff. Walter Myers ¶ 11.) Walt Myers also used his well for other domestic

purposes. (ECF No. 100-3, Aff. Myers ¶ 11.) Walt Myers cannot enjoy the fish and wildlife

found in Fourmile Creek prior to the 2010 blowout and current discharges. (ECF No. 100-3, Aff.

Myers ¶ 10.) The Myers have no desire to or intention of moving as a result of the discharges.

(ECF No. 75-1, K. Myers Dep. 30:18-31:19.) The Myers’ irrigation and farming water needs

have been and are fulfilled using water from Canon Heights. (ECF No. 75-1, K. Myers Dep.

44:20-45:16.) The discharges have not affected the Myers’ ability to use their land for gardening

or cultivating grapes from their vineyard. (ECF No. 75-1, K. Myers Dep. 44:20-45:16.)

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B. Procedural Background

On March 18, 2013, Plaintiffs filed their Complaint which alleges that BLM violated the

CWA by discharging pollutants into Fourmile Creek from the Old and New Wells. (ECF No. 1 ¶¶

1, 2, 27, 32, 34-38.) Plaintiff’s Complaint has three claims for relief. (ECF No. 1.) On August

9, 2013, BLM filed a motion for partial dismissal of the Complaint. (ECF No. 26.) Prior to the

Court’s ruling on BLM’s partial motion to dismiss (ECF No. 26), Plaintiffs filed a motion for

summary judgment and request for injunctive relief (ECF No. 37).

On November 6, 2013, Park Center filed a motion to intervene. (ECF No. 42.) On

November 7, 2013, the Court granted Defendant Park Center’s motion to intervene. (ECF No.

49.)

On February 12, 2014, Magistrate Judge Boland recommended that BLM’s motion for

partial dismissal (ECF No. 26) be granted as it seeks dismissal of Claims Two and Three of

Plaintiffs’ Complaint and dismissal of Plaintiffs’ claim for civil penalties against BLM. (ECF

No. 84 at 6-7.) The Court adopted the Recommendation, to wit, the Court dismissed Plaintiffs’

Second Claim for Relief, dismissed Plaintiffs’ Third Claim for Relief, and dismissed Plaintiffs’

claim for civil penalties against BLM. (ECF No. 108 at 2.)

Plaintiffs’ Motion seeks that “the Court grant Plaintiffs judgment in their favor and an

[o]rder halting the illegal discharge within ten (10) days of the Court’s Order.” (ECF No. 37-2 at

16.) Plaintiffs, in their reply brief in support of their motion, modified their requested relief.

(ECF No. 102 at 19.) Plaintiffs now seek that the Court issue an order “compelling the

abandonment of the Old Well within . . . 7 to 10 months . . . in order to halt the ongoing illegal

discharges and discontinue the degradation of Fourmile Creek. In addition, if Defendants choose

to continue . . . to drill the New Well . . . they should be compelled to file a feasibility study with

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the Court within five months. . . .” (ECF No. 102 at 19.) Plaintiffs requested an “adjudicatory

hearing on the equitable portion of the instant motion.” (ECF No. 102 at 19.)

BLM asks that the Court deny Plaintiffs’ request for a permanent injunction. (ECF No.

104 at 10.) Park Center asks that the Court deny Plaintiffs’ Motion and request for a permanent

injunction. (ECF No. 103 at 7.)

III. ANALYSIS

A. Summary Judgment

Though Defendant BLM does not contest that it violated the CWA by discharging

pollutants into Fourmile Creek via its Old and New Wells (ECF No. 76 at 1-2), the Court must

satisfy itself that Plaintiffs’ carried their burden. See Reed v. Bennett, 312 F.3d 1190, 1194-95

(10th Cir. 2002).

Section 301(a) of the CWA states that “the discharge of any pollutant by any person shall

be unlawful,” unless authorized by an NPDES permit. 33 U.S.C. § 1311(a). In this case, it is

uncontested that BLM does not have an NPDES permit for either the Old Well or New Well.

Thus, at issue is whether BLM “discharged a pollutant.”

“Discharge of a pollutant” means the “addition of any pollutant to navigable waters from

any point source.” 33 U.S.C. § 1362(12)(A). The CWA defines “pollutant” as “dredged spoil,

solid waste, incinerator residue, sewage, garbage, sewage sludge, munitions, chemical wastes,

biological materials, radioactive materials, heat, wrecked or discarded equipment, rock, sand,

cellar dirt and industrial, municipal, and agricultural waste discharged into water.” 33 U.S.C. §

1362(6) (emphasis added). The CWA defines “navigable waters” as “waters of the United States,

including the territorial seas.” 33 U.S.C. § 1362(8). The CWA defines “point source” as “any

discernible, confined and discrete conveyance, including but not limited to any pipe, ditch,

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channel, tunnel, conduit, well, discrete fissure, container, rolling stock, concentrated animal

feeding operation, or vessel or other floating craft, from which pollutants are or may be

discharged.” 33 U.S.C. § 1362(14) (emphasis added).

BLM admits that it discharged from the Old and New Wells. (ECF No. 76-28, FCA ¶

II.7.) The Old and New Wells constitute “point sources” as defined by section 502(14) of the

CWA, 33 U.S.C. § 1362(14). The discharges from the Old and New Wells into Fourmile Creek

include various pollutants, as that term is defined in section 502(6) of the CWA, 33 U.S.C. §

1362(6), including but not limited to heat, total suspended solids, arsenic and radionuclides.

(ECF No. 76-28, FCA ¶ II.7.) BLM admits that Fourmile Creek is a seasonal tributary of the

Arkansas River (an interstate, navigable-in-fact river) and, therefore, constitutes a “water of the

United States” as that term is defined in 40 C.F.R. § 122.2 and a “navigable water” as that term is

defined in section 502(7) of the CWA, 33 U.S.C. § 1362(7). (ECF No. 76-28, FCA ¶ II.9.)

Therefore, the Court finds that Defendant BLM violated the CWA.

B. Permanent Injunctive Relief

An injunction is an extraordinary remedy which is never to be awarded as of right.

Winter, 555 U.S. at 8. In order to obtain a permanent injunction, a requesting party must

demonstrate: “(1) actual success on the merits; (2) irreparable harm unless the injunction is

issued; (3) the threatened injury outweighs the harm that the injunction may cause the opposing

party; and (4) the injunction, if issued, will not adversely affect the public interest.” Fisher v.

Okla. Health Care Auth., 335 F.3d 1175, 1180 (10th Cir. 2003).

In the context of the CWA, “[n]ot all violations of the [CWA] warrant an injunction.”

Sierra Club v. El Paso Gold Mines, Inc., Case No. 01 PC 2163 OES, 2003 WL 25265873, at *12

(D. Colo. Feb. 10, 2003) (citing Weinberger v. Romero-Barcelo, 456 U.S. 305, 314-15 (1982) and

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Amoco Prod. Co. v. Vill. of Gambell, Alaska, 480 U.S. 531, 544 (1987) and Town of Huntington v.

Marsh, 884 F.2d 648, 651 (2d Cir. 1989)). The “Supreme Court has explicitly rejected the notion

that an injunction follows as a matter of course upon a finding of [a] statutory violation.” Marsh,

884 F.2d at 651. The exercise of equitable discretion, “which must include the ability to deny as

well as grant injunctive relief,” prompts that an “injunction should issue only where the

intervention of a court of equity ‘is essential in order effectually to protect property rights against

injuries otherwise irremediable.’” Weinberger, 456 U.S. at 312 (quoting Cavanaugh v. Looney,

248 U.S. 456, 456 (1919)). The Supreme Court repeatedly holds that the “basis for injunctive

relief in the federal courts [is] irreparable injury and the inadequacy of legal remedies.” Id.

(citations omitted). “Great care must be used in the granting of . . . final injunctive relief because

of the extraordinary nature of that remedy.” Comm’l Sec. Bank v. Walker Bank & Trust Co., 456

F.2d 1352, 1356 (10th Cir. 1972).

1. Actual Success on the Merits

The Court has found that BLM has violated the CWA, thus Plaintiffs have demonstrated

actual success on the merits of their claim (ECF No. 1 at ¶¶ 34-38).

2. Irreparable Harm2

“‘To constitute irreparable harm, an injury must be certain, great, actual and not

theoretical.’” Schrier v. Univ. of Colo., 427 F.3d 1253, 1267 (10th Cir. 2005) (quoting

Heideman, 348 F.3d at 1189). It is “harm that cannot be undone, such as by an award of

2 “When the evidence shows that the defendants are engaged in, or about to be engaged in, the act or practices prohibited by a statute which provides for injunctive relief to prevent such violations, irreparable harm to the plaintiffs need not be shown.” Star Fuel Marts, LLC v. Sam’s East, Inc., 362 F.3d 639, 651-52 (10th Cir. 2004) (internal alteration and quotation marks omitted). Plaintiffs did not make this argument. Further, in this case, as discussed in this subsection, the EPA is involved in regulating the alleged discharges and BLM is in the process of coming into compliance with the CWA. Thus, the Court uses its equitable discretion to order relief that “will achieve compliance with the [CWA].” Weinberger, 456 U.S. at 318 (emphasis added).

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compensatory damages or otherwise.” Salt Lake Tribune Publ’g Co., LLC v. AT & T Corp., 320

F.3d 1081, 1105 (10th Cir. 2003).

Plaintiffs argue that BLM’s illegal discharge is causing irreparable harm. (ECF No. 37-2

at 9-11.) Plaintiffs’ argument, however, is not supported by the record. While it is true that

environmental injury often constitutes irreparable harm, Amoco Prod., 480 U.S. at 545, Plaintiffs

fail to demonstrate that future remedial efforts will not be successful in stemming the loss of fish

and other wildlife in Fourmile Creek3. Plaintiffs fail to demonstrate that future remedial efforts

will not be successful in making the drinking water near the Myers’ home safe for consumption.

Further, Plaintiffs fail to demonstrate how monetary compensation is not sufficient to remedy the

alleged harm due to Myers’ having to travel to obtain water for drinking or irrigation purposes.

“The possibility that adequate compensatory or other corrective relief will be available at a later

date, in the ordinary course of litigation, weighs heavily against a claim of irreparable harm.”

Sampson v. Murray, 415 U.S. 61, 90 (1974) (citation omitted). In this case, Plaintiffs have failed

to demonstrate that monetary compensation and future remedial efforts would not alleviate the

harm suffered.

Further, when an environmental agency is engaged in ongoing regulation of the alleged

irreparable harm, the threat of irreparable harm is reduced. Sierra Club v. City of Colo. Springs,

05-CV-01994-WDM-BNB, 2009 WL 2588696, at *16 (D. Colo. Aug. 20, 2009). The EPA,

through the FCA, requires BLM to “develop any appropriate mitigation [plans] as determined by

the BLM and the [Parks and Wildlife Division of the Colorado Department of Natural Resources 3 The Court understands Plaintiffs’ position that the damage is irreparable. But the Court finds no support for this position in the Expert Report. (ECF No. 100-6 at 6, Carla Johnson Expert Report (“In order to ensure the restoration of the environmental ecosystem and preserve the water rights of the inhabitants who rely on the Fourmile Creek waterway, all discharges from the wells need to be stopped and the sites abandoned.”).) Plaintiffs’ Expert’s report does not address whether future remedial efforts would or would not be successful. (See generally ECF No. 100-6.) And it is Plaintiffs’ burden, as the movant, to establish irreparable harm.

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(CPW)] to address impacts from uncontrolled discharges, including the potential impact of well

completion.” (ECF No. 76-28, FCA ¶ III.C.1.) Thus, although an NPDES permit has yet to be

issued for the discharges at issue (and it is unclear whether they will be issued), the EPA is

involved in the regulation of the alleged irreparable harm through the FCA.

Based on the record, the Court finds that Plaintiffs have failed to demonstrate irreparable

harm.

3. Balancing of Parties’ Equities

In evaluating a request for injunctive relief, the Court “must balance the competing claims

of injury and must consider the effect on each party of the granting or withholding of the requested

relief.” Amoco Prod., 480 U.S. at 542.

Although the Court acknowledges that it is technologically feasible for Park Center to “tie

into” Canon City’s water-supply system (ECF No. 76-9, Aff. Wellen ¶ 7; ECF No. 75-8, Aff.

Wade ¶ 12), the costs to Park Center could exceed $2.5 million which is potentially more than the

costs to BLM of shutting down and opening up of the Old and New Wells respectively (ECF No.

76-26, Decl. Dawson ¶ 3). Thus, should the Court grant the permanent injunction, there would be

a heavy economic burden on a party to the case.

If the Court were to deny the permanent injunction, BLM will continue to discharge into

Fourmile Creek. BLM, however, has applied for an NPDES permit for finishing the New Well

and for discharges that might occur in relation to closing the Old Well. (ECF No. 76-29,

Application.) If BLM is successful in its application, BLM would no longer violate the CWA.

And again, Plaintiffs have failed to demonstrate that future remediation efforts will not be

successful in restoring Fourmile Creek such that the future discharges no longer present a threat to

wildlife or to potable drinking water on Plaintiff Myers’ property.

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4. The Public’s Interest

A court sitting in equity “should pay particular regard for the public consequences in

employing the extraordinary remedy of injunction.” Weinberger, 456 U.S. at 312 (citing RR

Comm’n v. Pullman Co., 312 U.S. 496, 500 (1941)).

Park Center depends on water from the Old Well to serve its 4,000 users, i.e., the public.

(ECF No. 75-8, Aff. Wade ¶ 5.) Park Center has no readily available source of replacement

water—even taking into account Canon City’s water system. (ECF No. 75-8, Aff. Wade ¶ 11.)

Further, Canon City is not a party to this action and Plaintiffs have not demonstrated that Canon

City has consented to providing water to Park Center’s users. See Canon City, Colo., Mun. Code

§ 13.04.120(A)(1) (2014) (“All new water service to be provided to properties outside the

corporate limits of the city shall be provided to the terms, provisions, conditions and limitations of

a written service contract, signed by the property owner and approved by formal action of [the

Canon City] City Council.”). Thus, if the Court were to grant the permanent injunction, 4,000

citizens would be without an adequate and reliable source of treated water. (ECF No. 75-8, Aff.

Wade ¶¶ 6-12.)

Further, BLM, in compliance with the FCA, submitted to the EPA plans for managing

controlled and uncontrolled discharges from the Old and New Wells. (ECF Nos. 76-30, 76-31;

compare ECF No. 76 ¶ 36 with ECF No. 102 at 2.) And, pursuant to the FCA, should BLM’s

discharges from the wells exceed the EPA-set limits in the FCA or if “BLM becomes aware of any

evidence that the . . . temperature may negatively affect the downstream aquatic life, the BLM will

immediately . . . stop all discharges to the maximum extent practicable and notify the EPA. . . .”

(ECF No. 76-28, FCA ¶ III.4.) Thus, the public’s interest in clean water is in the process of being

fulfilled by the EPA and BLM’s FCA.

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Additionally, BLM and Cripple Creek have entered into a stipulation with regard to a

certain portion of the water that is to be diverted through the Old Well. (ECF No. 76-11,

Stipulation ¶ 4; ECF No. 76-13, Decl. Roy E. Smith ¶ 3(b).) If the Court were to grant the

injunction, the Court would upset the settled expectations of Cripple Creek’s water users.

IV. CONCLUSION

Based on the foregoing, the Court:

(1) GRANTS, in part, Plaintiffs’ Motion for Summary Judgment (ECF No. 37), to wit,

the Court declares that BLM violated the CWA;

(2) DENIES Plaintiffs’ request for injunctive relief without prejudice;

(3) ORDERS the parties to submit a joint-status report to the Court within fourteen

days of entry of this Order as to what remains of Plaintiffs’ Complaint (ECF No. 1) to be decided at

a trial;

(4) ORDERS BLM, within thirty days of entry of this Order, to submit a report to the

Court detailing its progress on finishing of the New Well and closing the Old Well; and

(5) ORDERS BLM, within thirty days of entry of this Order, to submit a report to the

Court detailing the status of its NPDES permit application for the Old and New Wells.

The Clerk of the Court is directed to withhold entering JUDGMENT in this matter until the

Court considers the parties’ joint-status report and BLM’s reports to the Court.

DATED this 13th day of January, 2015.

BY THE COURT:

____________________________________ RAYMOND P. MOORE United States District Judge

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND

WAVERLEY VIEW INVESTORS, LLC : :

: v. : Civil No. CCB-14-1527 :

: UNITED STATES OF AMERICA :

MEMORANDUM

Plaintiff Waverley View Investors, LLC (“Waverley”) sues the United States under the

Federal Tort Claims Act (“FTCA”) for negligence, trespass, and private nuisance arising out of

the United States Army’s waste disposal and remediation practices at Fort Detrick, which have

contaminated groundwater beneath Waverley’s land. The United States filed a motion to dismiss

for lack of subject matter jurisdiction on the grounds that Waverley’s claims fall within the

FTCA’s discretionary function exception (“DFE”). The court held a hearing on the motion on

December 15, 2014. For the reasons stated below, the motion to dismiss will be granted.

BACKGROUND

This lawsuit arises out of groundwater contamination caused by hazardous chemicals that

have migrated from Fort Detrick. Specifically, Waverley alleges the United States’ waste

management practices at Fort Detrick caused the levels of trichloroethylene (“TCE”),

tetrachloroethlyene (“PCE”),1 and dichloroethlyene (“DCE”) on Waverley’s land to exceed

federal maximums, (Pl.’s Opp’n Ex. 10, Tonkin & Hennet Decl. ¶ 10, ECF No. 23-11), thereby

delaying and ultimately precluding Waverley from developing its land. Waverley now seeks

$37.2 million in compensatory damages. A summary of relevant facts follows.

1 The United States uses “PCE” to refer to perchloroethlyene. The parties place no apparent emphasis on this difference.

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Fort Detrick became home to the United States’ biological weapons program during

World War Two. During that war, the military began investigating, developing, and testing

various biological agents at Fort Detrick. (Def.’s Mot. Dismiss Ex. 1, Curtis Decl. ¶ 9, ECF No.

18-4.) This program stopped, however, in 1969, when President Nixon renounced offensive

biological warfare and directed the Department of Defense (“DoD”) to dispose of existing

biological weapons stocks. (Id. ¶ 10.) Since then, Fort Detrick has focused on biomedical

research and development, medical logistics, materiel management, and telecommunications.

(Id.) Today, Fort Detrick remains an active Army installation occupying 1,146 acres within the

city limits of Frederick, Maryland. (Def.’s Mot. Dismiss Ex. 5, Gortva Decl. ¶ 4, ECF No. 18-8.)

The part of Fort Detrick at issue here is a 399-acre parcel of land called Area B, which is

separated from the fort’s main operations area. (Id. ¶ 6.) Area B was the locus of Fort Detrick’s

biological testing and—important for the purposes of this litigation—its waste management

practices. (Id.) The Army disposed of all kinds of waste in Area B. And, in doing so, the Army

used standard industry practices: it separated contaminated from conventional solid waste;

divided solid waste into burnable and nonburnable wastes, the former going to incinerators and

the latter to landfills; and sent liquid waste into a separate sewer system. (Curtis Decl. ¶ 11.)

Within Area B, the Army set up waste pits in which it buried various nonburnable wastes.

The specific waste pits at issue here are in a subsection called Area B-11, which lies on Area

B’s—and the fort’s—edge. Area B-11 is also next to Waverley’s land. (Pl.’s Opp’n Ex. 1,

Anderson Decl. ¶ 11, ECF No. 23-2.) In Area B-11, the Army disposed of various acids and

chemicals, including the TCE and PCE at issue here, from 1955 to 1970.2 (Curtis Decl. ¶¶ 12,

2 The Army also disposed of other wastes in Area B-11, including sterilized anthrax; Escherichia coli; radioactive carbon, sulfur, and phosphorous; phosgene; liquid sludge; herbicides and insecticides; and autoclaved, incinerated animal carcasses. (See Pl.’s Opp’n Ex. 15, Federal Facility Agreement for Fort Detrick (“Federal Facility Agreement”), at 9-11, ECF No. 23-16.)

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17.) The chemicals the Army buried in Area B-11 were “integral tool[s]” in advancing the

military’s mission. (Id. ¶ 13.) The Army used TCE to degrease metal parts and help freeze

biological warfare agents. (Id.) And the Army used PCE to decontaminate clothing that had

been exposed to anthrax and to neutralize organisms used in biological warfare simulants. (Id.)

The pits in Area B-11 were dug about 15 feet deep, 12 feet wide, and 20 feet long and

treated with fluorescein dye to track water flow. (Id. ¶ 17.) At the time, “it was common

practice to dispose of wastes in unlined landfills.” (Def.’s Mot. Dismiss Ex. 18, Defense

Environmental Restoration Program Annual Report to Congress (2000) (“2000 Annual Report”),

at 4, ECF No. 18-21.) The pits in Area B-11 were likewise unlined. (Federal Facility

Agreement § 6.4.) Moreover, the pits were neither systematically numbered nor accurately

documented. (Id.) The Army appears to have stopped using disposal areas in the southwest part

of Area B, including Area B-11, by 1972. (Curtis Decl. ¶ 16.)

In the early 1970s, the Department of Defense was not legally required to address

environmental problems caused by past military operations. (2000 Annual Report, at 3-4.) In

1975, however, it decided to begin “working to clean up the environment and protect human

health” at military installations nationwide through what was called the Installation Restoration

Program (“IRP”). (Id.) That same year, the Army began publishing Army Regulation 200-1,

which “provide[d] general guidance to elements within the Department of the Army on

environmental protection” and “prescrib[ed] policies, responsibilities, and procedures for the

protection and preservation of environmental quality for the Department of the Army in

peacetime.” (Def.’s Mot. Dismiss Ex. 26-1, Army Regulation 200-1 (1975), ECF No. 18-32.)

In 1977, the Army conducted an initial assessment of contamination at Fort Detrick. (See

Pl.’s Opp’n Ex. 12, Installation Assessment of Fort Detrick (1977), ECF No. 23-13.) This began

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with an “onsite records search” that looked for “indications of possible contamination by

chemical, biological[,] radiological and industrial materials resulting from past research[,]

testing, storage, demilitarization and disposal operations.” (Id. at 1.) The authors of the records

search concluded that “[t]he records and historical operations suggest that Area B is

contaminated with CBR [chemical, biological, and radiological] material” and that an ad hoc

committee be formed to make recommendations for further action. (Def.’s Mot. Dismiss Ex. 2,

Record Evaluation Report No. 106 (1977), at iv, ECF No. 18-5.) The committee reviewed the

report but recommended against a more elaborate “preliminary survey” at Area B, in part

because it was not yet “obligatory . . . to certify beyond question that there is no CBR

contamination at Fort Detrick . . . .” (Installation Assessment of Fort Detrick (1977), at 2.) The

committee also recognized that conducting a preliminary survey would “present special

difficulties” and that “extreme caution” was necessary to protect the public from drilling

operations, which could release hazardous substances into the environment. (Id. at 4, 5.)

In 1980, Congress passed the Comprehensive Environmental Response, Compensation,

and Liability Act (“CERCLA”), which “require[d] responsible parties to clean up releases of

hazardous substances to the environment.” (2000 Annual Report, at 4.) In 1986, the Superfund

Amendments and Reauthorization Act (“SARA”) expanded CERCLA and formally established

the Defense Environmental Restoration Program (“DERP”), which continued the efforts begun

by the Installation Restoration Program. (Id.) In recognition of the complexity of the task facing

the federal government,3 SARA included a CERCLA regulation clarifying that the federal

government’s responses to a particular environmental hazard were “discretionary governmental

functions” and that CERCLA did not “create any duty of the federal government to take any

3 As of 2007, there were 31,000 sites under consideration nationwide. (Def.’s Mot. Dismiss Ex. 19, Defense Environmental Programs Annual Report to Congress (2007) (“2007 Annual Report”), at 10, ECF No. 18-22.)

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response action at any particular time.” 40 C.F.R. § 300.400(i)(3) (originally found at 40 C.F.R.

§ 300.61(e)(3) (1986)). DERP established a multiple-step process for the “identification,

investigation, and cleanup of contamination and military munitions associated with past activities

at DoD facilities . . . .” (2007 Annual Report, at 9.)

In 1981, an EPA contractor conducted a preliminary assessment of Fort Detrick. (See

Pl.’s Opp’n Ex. 17, Preliminary Assessment of Fort Detrick (1981), at § 2, ECF No. 23-18.) The

assessment concluded that, even though the “potentially contaminated areas” were no longer in

use, “they can’t be certified as clean.” (Id.) The assessment also noted that “Fort Detrick is

presently installing a monitoring well network to determine if any toxic materials are migrating.”

(Id.) The assessment recommended that, going forward, “the State and EPA monitor the Army’s

investigations.” (Id.)

The Army continued to monitor Fort Detrick’s environmental situation into the 1990s. In

1991, monitoring wells detected TCE contamination at Area B, which prompted the restoration

effort that continues to this day. (Gortva Decl. ¶ 7.) In 1992, a preliminary site inspection

conducted by the Army Corps of Engineers identified five landfill areas as “waste sources with

potential to release.” (Def.’s Mot. Dismiss Ex. 7, Preliminary Site Inspection (1992), at 67, ECF

No. 18-10.) The Army Corps of Engineers recommended more soil and surface water sampling.

(Id.) Later that year, the Maryland Department of the Environment found TCE contamination in

residential wells near Fort Detrick. (Federal Facility Agreement § 6.10.) The Army immediately

provided an alternative water source to affected residents. (Gortva Decl. ¶ 11.)

The Army continued to conduct fieldwork to identify the scope of contamination in and

around Fort Detrick until 1997, when the Army confirmed that Area B-11 was the primary

source of TCE and PCE contamination. (Id. ¶¶ 13-15.) The Army completed a draft remedial

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investigation in 1998. (Def.’s Mot. Dismiss Ex. 9, Area B-11 Chemical Waste Disposal Pits

Decision Document (2000), at § 2.2.1, ECF No. 18-12.) In 2000, recognizing “the elevated

levels of [TCE] and [PCE] in the groundwater near . . . Area B-11[,]” the Army decided to

conduct an interim removal action that would “remove the primary source of the groundwater

contamination in Area B, thereby preventing future releases.” (Id. at §§ 1.3-1.4.) The Army’s

decision document analyzed three “removal alternatives” for addressing Area B-11

contamination and ultimately chose to use soil freezing, excavation, and off-site incineration to

contain the waste pits. (Id. §§ 2.9, 2.11.1.) The interim removal action, which began in 2001,

was complex, requiring containment tents, freeze walls, and the removal of thousands of tons of

contaminated soil. (Def.’s Mot. Dismiss Ex. 11, Fort Detrick Interim Removal Action Area B-

11 Disposal Pits Technical Closure Report, at §§ 1.0, 1.3, ECF No. 18-14.) As a result, the

action cost $25 million and was not completed until 2004. (Gortva Decl. ¶ 25.) But the action

succeeded in reducing TCE and PCE concentrations in the groundwater in Area B. (Id. ¶ 26.)

With the interim removal action completed, the Army continued to monitor groundwater

in Area B, but decided to institute a “prohibition on future intrusive activities” because of the

“complex safety requirements and associated costs.” (Federal Facility Agreement § 6.11.) The

Army continued to consider its options and eventually decided to install landfill caps that would

prevent further groundwater contamination. (Gortva Decl. ¶ 33.)

In 2009, the EPA placed Fort Detrick’s Area B on the National Priorities List, which

meant EPA, instead of the Maryland Department of the Environment, would be responsible for

leading Area B’s remediation. (Id. ¶¶ 34-35.) The Army and the EPA entered into a Federal

Facility Agreement, which outlined their respective responsibilities in this process. To this day,

the Army continues to conduct its remedial investigation of Area B. (Id. ¶¶ 45-48.)

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In 2012, Waverley bought the 92.8-acre parcel of undeveloped land next to Area B-11.

(Anderson Decl. ¶ 5.) It did so with the intention of creating a residential development there.

(Id. ¶ 9.) Though it was aware of contamination concerns near Fort Detrick when it bought the

land, Waverley knew the Maryland Department of the Environment had issued a “No Further

Requirements Determination” regarding the land. (Id. ¶¶ 10-14.) But groundwater testing

conducted by the Army in January 2014 revealed that Waverley’s land had been contaminated by

TCE and PCE at levels far exceeding federal maximums. (Id. ¶ 16.)

On May 8, 2014, Waverley filed this lawsuit against the United States. The United States

filed a motion to dismiss for lack of subject matter jurisdiction, citing the discretionary function

exception to the FTCA. Waverley opposed this motion, claiming the Army’s past waste disposal

practices in Area B-11 and its past and present waste remediation efforts at Fort Detrick violated

a variety of provisions that allegedly bound the Army to a specific course of conduct. This court

held a hearing on the motion on December 15, 2014.

STANDARD

A motion made under Federal Rule of Civil Procedure 12(b)(1) should be granted “only

if the material jurisdictional facts are not in dispute and the moving party is entitled to prevail as

a matter of law.” Evans v. B.F. Perkins Co., 166 F.3d 642, 647 (4th Cir. 1999); see also United

States ex rel. Vuyyuru v. Jadhav, 555 F.3d 337, 347-48 (4th Cir. 2009). The plaintiff bears the

burden of proving that subject matter jurisdiction exists. Piney Run Preservation Ass’n v. Cnty.

Comm’rs of Carroll Cnty., Md., 523 F.3d 453, 459 (4th Cir. 2008). Accordingly, Waverley

“bear[s] the burden of proving that the discretionary function exception does not apply” to the

United States’ conduct. Indem. Ins. Co. of N. Am. v. United States, 569 F.3d 175, 180 (4th Cir.

2009). Additionally, when considering a “Rule 12(b)(1) motion to dismiss, the district court may

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regard the pleadings as mere evidence on the issue and may consider evidence outside the

pleadings . . . .” Blitz v. Napolitano, 700 F.3d 733, 736 n.3 (4th Cir. 2012) (quoting Velasco v.

Gov’t of Indonesia, 370 F.3d 392, 398 (4th Cir. 2004)).

ANALYSIS

Waverley brings this lawsuit under the FTCA, which constitutes a “limited waiver” of the

United States’ sovereign immunity. Molzof v. United States, 502 U.S. 301, 305 (1992). The

FTCA makes the federal government liable for tort claims “in the same manner and to the same

extent as a private individual under like circumstances[.]” 28 U.S.C. § 2674. But this waiver is

“subject to several exceptions.” Suter v. United States, 441 F.3d 306, 310 (4th Cir. 2006). One

of these is the DFE, under which the United States is not liable for “[a]ny claim . . . based upon

the exercise or performance or the failure to exercise or perform a discretionary function or duty

on the part of a federal agency or an employee of the Government, whether or not the discretion

involved be abused.” 28 U.S.C. § 2680(a).

The DFE analysis proceeds in two steps. First, a court must determine whether the

challenged conduct “involves an element of judgment or choice.” Suter, 441 F.3d at 310

(quoting Berkovitz v. United States, 486 U.S. 531, 536 (1988)). No such discretion exists when

“a federal statute, regulation, or policy specifically prescribes a course of action for an employee

to follow.” Indem. Ins. Co., 569 F.3d at 180 (quoting Berkovitz, 486 U.S. at 536). Second, even

if the challenged conduct involves an element of judgment, a court must determine “‘whether

that judgment is of the kind that the discretionary function exception was designed to shield,’

i.e., whether the challenged action is ‘based on considerations of public policy.’” Suter, 441

F.3d at 311 (quoting United States v. Gaubert, 499 U.S. 315, 325 (1991)). This inquiry focuses

“not on the agent’s subjective intent in exercising the discretion . . . , but on the nature of the

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actions taken and on whether they are susceptible to policy analysis.” Gaubert, 499 U.S. at 325.

In other words, a court “look[s] to the nature of the challenged decision in an objective, or

general sense, and ask[s] whether that decision is one which we would expect inherently to be

grounded in considerations of policy.” Baum v. United States, 986 F.2d 716, 721 (4th Cir.

1993). A government agent’s acts are presumed to be “grounded in policy” when that agent uses

discretion provided by statute, regulation, or agency guideline. Gaubert, 499 U.S. at 324.

Accordingly, the question here is whether Waverley has shown that the Army either (1)

lacked discretion regarding its waste management practices or (2) made waste management

decisions of the kind that were not susceptible to policy analysis. If Waverley can show either,

then the DFE does not apply, the United States has waived sovereign immunity, and this court

has subject matter jurisdiction. Waverley challenges two sets of decisions: those relating to past

waste disposal practices (roughly 1955 to 1972) and those relating to ongoing remediation efforts

(roughly 1972 to present). The court applies the DFE analysis to each set of decisions below.

I. United States’ Waste Disposal at Fort Detrick Waverley argues the United States’ decisions regarding its waste disposal practices in

Area B-11 fall outside the DFE. In Waverley’s view, the Army had no discretion to bury TCE

and PCE in unlined waste pits in Area B-11 while Fort Detrick served as the home to the United

States’ biological weapons program.4 Moreover, Waverley asserts that the Army’s waste

disposal decisions were not susceptible to policy analysis because they were garden-variety

housekeeping decisions typical of “a landowner with waste to dispose of[.]” (Pl.’s Opp’n 29.)

Neither argument is convincing.

4 Although the biological weapons program at Fort Detrick ended in 1969, the record reflects that the United States may have disposed of the chemical waste at issue in Area B until 1972. Waverley does not contend the United States disposed of TCE or PCE after 1972. Accordingly, for this part of the analysis, the court considers Army decisions made, and directives in force, between 1955 and 1972.

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A. Discretionary Nature of Waste Disposal Decisions

Waverley cites several dozen provisions as proof that “specific, mandatory duties

governed the military’s disposal of TCE, PCE, and other wastes at Fort Detrick[.]” (Pl.’s Opp’n

16.) For several reasons, none of these provisions carries Waverley’s burden at step one.

At the outset, the majority of the provisions were adopted after the Army had stopped

disposing of waste at Area B-11. Those provisions are, therefore, irrelevant for the present

analysis. See, e.g., Indem. Ins. Co., 569 F.3d at 180 (examining only the administrative guidance

that was “in existence” at the time government agent engaged in challenged conduct). Of the

twenty-five duties Waverley cites, twenty were implemented after the relevant waste disposal

decisions had already been made.5

That leaves five provisions that could have bound the Army to a specific course of

conduct,6 but these also failed to remove the Army’s discretion. Waverley notes that several of

these provisions contain language such as “must” and “shall” that is, at least on its face,

mandatory.7 But when those provisions are construed alongside other language within the

relevant regulations, they seem closer to statements of policy goals. For example, other parts of

section 263.3 of DoD Directive 5500.5, which Waverley cites as mandatory, state that the “cost

of the natural resources and related programs . . . must be accomplished within financing

available . . . [,]” id. § 263.3(a) (emphasis added), and that agencies “are required to comply

insofar as practicable . . . [,]” id. § 263.3(e)(2) (emphasis added). Similarly, the language

Waverley cites from DoD Directive 5100.50 is in a section entitled “Policy” and that also states,

5 These provisions—found at paragraphs 68(f) and 68(g) of Waverley’s complaint—include a 1977 DoD Instruction and various versions of Army Regulation 200-1, which was first adopted in 1975. 6 These provisions—found at paragraphs 68(a) through 68(e) of Waverley’s complaint—include DoD Directive 5500.5, DoD Directive 5100.50, Executive Order 11258, and Executive Order 11507. 7 See, e.g., DoD Directive 5500.5, 30 Fed. Reg. 14908, 14909 (Dec. 2, 1965) (codifying 32 C.F.R. pt. 263) (“[I]nstallation activities must not adversely affect neighboring civilian populations or the environment.” (emphasis added)); DoD Directive 5100.50, § IV, 31 Fed. Reg. 849, 849 (Jan. 21, 1966) (“Pollution of the environment by the operation of military installations, facilities or buildings shall be controlled.” (emphasis added)).

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“[w]here resources to accomplish pollution control are limited, priority of effort will be

afforded” to address “direct hazard[s] to the health of man;” “economic implications;” and “the

recreational and esthetic value of our natural resources.” 31 Fed. Reg. at 850.

Moreover, some of these directives might not even apply to the challenged conduct. For

example, Waverley cites language in Executive Order 11258, 30 Fed. Reg. 14483 (Nov. 17,

1965), which states that “[f]ederal installations shall provide secondary treatment, or its

equivalent, for all wastes except cooling water and fish hatchery effluents.” Id. at 14484. But

this executive order was issued under the authority of the Federal Water Pollution Control Act—

now known as the Clean Water Act (“CWA”)—and it is, at best, uncertain whether that Act

applies to groundwater. See Rapanos v. United States, 547 U.S. 715, 739 (2006) (holding that

CWA reaches “only those relatively permanent, standing or continuously flowing bodies of

water forming geographic features that are described in ordinary parlance as streams[,] . . .

oceans, rivers, [and] lakes” (alteration in original) (citation and quotation marks omitted)); Cape

Fear River Watch, Inc. v. Duke Energy Progress, Inc., --- F. Supp. ----, 2014 WL 2573052, at

*10 (E.D.N.C. June 9, 2014) (“Congress did not intend for the CWA to extend federal regulatory

authority over groundwater . . . .”).

But the court need not decide whether these provisions were mandatory or applied in the

first instance to the Army’s conduct because none of the provisions were sufficiently specific to

bind the Army. To prove the Army lacked discretion, Waverley must point to a directive that

gave the United States “specified instructions that it [wa]s compelled to follow.” Williams v.

United States, 50 F.3d 299, 309 (4th Cir. 1995) (emphasis added); see also Baum, 986 F.2d at

722 n.2 (noting that language in construction standard stating that “[s]ubstantial railings along

each side of the bridge shall be provided for the protection of traffic” was “far too general to

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serve as a mandatory regulation” for DFE purposes); accord Loughlin v. United States, 286 F.

Supp. 2d 1, 8 (D.D.C. 2003) (“Not all regulations satisfy [the step one] standard; . . . a directive

must ‘be mandatory and it must clearly and specifically define what the employees are supposed

to do.’” (quoting C.R.S. by D.B.S. v. United States, 11 F.3d 791, 799 (8th Cir. 1993))). None of

Waverley’s cited provisions do this. For example, DoD Directive 5500.5’s declaration that

Army activities “must not adversely affect neighboring civilian populations or the

environment[,]” 30 Fed. Reg. at 14909, does not “specifically prescribe[] a course of action for

[the Army] to follow” in disposing of TCE and PCE at Fort Detrick, Berkovitz, 486 U.S. at 536.

The other provisions existing at the time, (see Compl. ¶ 68(b)-(e)), fail for the same reason.8

Case law bolsters the conclusion that the Army retained discretion regarding its disposal

of chemical waste in Area B-11; practically all cases considering analogous military-caused

contamination have held that the DFE applied to past military waste disposal decisions.9

Within the Fourth Circuit, Horton v. United States, 3:13-cv-947-CMC, 2014 WL

2780271 (D.S.C. June 19, 2014) (unpublished), and Oxendine v. United States, Civil No. 3:08-

4036-CMC-PJG, 2009 WL 3757517 (D.S.C. Nov. 9, 2009) (unpublished), are instructive.10 In

both, landowners sued the United States on the basis of TCE contamination of groundwater

caused by waste disposal practices at Shaw Air Force Base. And in both cases, the court held the

DFE barred plaintiffs’ claims, in part because plaintiffs had not identified any directive

“prescrib[ing] a specific and mandatory course of action” regarding the Air Force’s efforts “to

8 At the motions hearing, Waverley argued that Executive Order 11258’s “secondary treatment” requirement was sufficiently specific. In support, Waverley cited Starrett v. United States, 847 F.2d 539 (9th Cir. 1988), which held that Executive Order 11258 “constitute[d] a specific and mandatory direction to the Navy to provide secondary treatment for wastes and to prevent their being discharged if they constitute[d] a health hazard . . . .” Id. at 541. Beyond the fact that Starrett is only persuasive authority, this court declines to rely on that case because its reasoning varies from that used by the overwhelming weight of authority, as explained further below. 9 In fact, Waverley recognizes that “many claims of environmental contamination at military facilities have been dismissed on the basis of the discretionary function exception.” (Pl.’s Opp’n 14.) 10 Unpublished cases are cited for the soundness of their reasoning, not for any precedential value.

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preserve and improve surface and underground waters.” Horton, 2014 WL 2780271, at *4. In

Oxendine, the court emphasized chronology, noting that “TCE was apparently used at Shaw

AFB in the 1940 and 1950s” but “was not regulated as a toxic pollutant until 1978 . . . .” 2009

WL 3757517, at *2. Because the plaintiff could not “establish TCE use at Shaw AFB after the

enactment of the environmental statutes and regulations governing TCE[,] . . . the military’s

actions regarding TCE prior to the regulation of that contaminant f[e]ll within the [DFE].” Id. at

*5 (emphasis in original).

Courts beyond the Fourth Circuit are in accord with Horton and Oxendine. In Aragon v.

United States, 146 F.3d 819 (10th Cir. 1998), for example, landowners next to Walker Air Force

Base sought compensation for TCE contamination of their water wells. Plaintiffs cited various

sections of the Air Force Manual existing at the time of disposal, including one section which

stated that the discharge of toxic wastes must be “stringently controlled.” Id. at 825. Despite the

manual’s ostensibly mandatory and specific language, the Tenth Circuit concluded the Air Force

retained “discretion to determine how to dispose of TCE-contaminated waste water” because that

section “d[id] not prescribe specific, mandatory waste water disposal methods or treatment

procedures.” Id. at 825-26. In Snyder v. United States, 504 F. Supp. 2d 136 (S.D. Miss. 2007),

aff’d, 296 F. App’x 399 (5th Cir. 2008), cert. denied, 129 S. Ct. 2763 (2009), former service

members alleged that the disposal of TCE and PCE at Camp Lejeune during the early 1970s

caused a congenital heart defect. The plaintiffs cited a Navy regulation stating that “refuse, in

any form, should not be disposed of where it may pollute surface or underground waters which

are eventually to be used as drinking water.” Id. at 141. The court held the regulation did not

remove the Navy’s discretion in deciding how to dispose of the complained-of contaminants—

TCE and PCE—both because those contaminants were not specifically regulated at the time and

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because the regulation did not “offer any specific guidance regarding how to dispose of refuse,

leaving to military personnel th[at] determination . . . .” Id.

The present case is no different. The record reflects that the Army stopped disposing of

waste at Fort Detrick by 1972, but the harmful contaminants at issue here were not subject to

regulation until 1978 at the earliest. And the provisions Waverley cites are far too general.

Because “there were no government regulations which specifically regulated TCE and PCE at

the time” the Army disposed of those chemicals in Area B-11, id. at 141, and because no existing

regulations stated with sufficient specificity how the Army was to dispose of TCE and PCE, the

court concludes the Army retained discretion as to how it disposed of waste at Fort Detrick.

Waverley nevertheless argues that a mandate not to dispose of waste in a way that could

pollute groundwater and endanger public health “does not become discretionary merely because

the particular practices that could result in such pollution are not specified.” (Pl.’s Opp’n 19.) In

Waverley’s view, “[s]o long as the Army’s disposal ‘could’ pollute groundwater and endanger

public health or welfare, they were prohibited.” (Id.) Waverley presents evidence that, even

though TCE and PCE were not yet formally regulated as hazardous substances under the existing

environmental laws, the Army “knew or should have known that burying chemical waste . . . in a

karst terrane was inappropriate and not a safe disposal practice.” (Tonkin & Hennet Decl. ¶¶ 40-

42.) That knowledge, Waverley argues, was sufficient to trigger the Army’s duty to stop

disposing of chemicals in unlined waste pits at Area B-11.

Waverley’s argument fails for several reasons. As an initial matter, it ignores one of

Berkovitz’s primary teachings: a directive must have “specifically prescribe[d] a course of action

. . . .” 486 U.S. at 536. Moreover, Waverley’s focus on what consequences the Army’s conduct

could have had on the environment resembles an assessment of the Army’s conduct under a

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negligence standard. Yet “negligence on the part of the [Army] . . . is largely irrelevant to the

discretionary function inquiry.” Baum, 986 F.2d at 722 n.2. The question is not what the Army

could or should have done at the time, see Loughlin, 286 F. Supp. 2d at 8 (noting that DFE

analysis “does not hinge upon whether [the government’s] decisions were wise and

commendable, or . . . unwise and deplorable”), but rather whether some directive required the

Army to follow a specific course of conduct with respect to waste disposal decisions. Finally, in

making its argument, Waverley essentially admits the Army had discretion regarding its waste

disposal practices. Waverley’s expert declared that “early guidance for disposal of chlorinated

solvents focused on evaporating the volatile solvents into the atmosphere . . . [and] did not

advocate for the disposal of chlorinated solvents into the groundwater system.” (Tonkin &

Hennet Decl. ¶ 40 (emphasis added)). That statement suggests that any sort of directive existing

at the time was mere guidance and that the Army retained discretion to select from among

various methods of disposing waste into pits.

Waverley also cites several cases that apparently held the DFE did not apply under

“similar circumstances.” (Pl.’s Opp’n 14.) But these cases are far from similar. For example,

Chang-Williams v. Dep’t of the Navy, 766 F. Supp. 2d 604 (D. Md. 2011), not only involved a

remarkably different factual context,11 but also involved conduct deemed unprotected (i.e., “the

United States’ decision to ignore its own promise”) that is not present here—the United States

made no promises to Waverley. Although Waverley relies on W.C. & A.N. Miller Cos. v. United

States, 963 F. Supp. 1231 (D.D.C. 1997), to suggest that decisions regarding safety are less likely

to “involve[] social, economic, or policy considerations[,]” id. at 1241, that decision’s holding

11 The plaintiff’s family had been brutally attacked by a Marine Corps sergeant. The Marine Corps had issued a protective order against the sergeant and had also explicitly promised to protect the plaintiff’s family. The court held that the DFE did not apply because the Marine Corps’ disregard of its “specific assurances” to the plaintiff that she and her family would be protected was not discretionary. Id. at 618.

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concerned a failure to warn, see id., not how the waste was disposed of, see id. at 1240.12 And

Clark v. United States, 660 F. Supp. 1164 (W.D. Wash. 1987), is “distinguishable and of

questionable current vitality because it was decided before the Supreme Court adopted the [DFE]

analysis standards of Berkovitz and Gaubert.” Aragon v. United States, 950 F. Supp. 321, 326

(D.N.M. 1996), aff’d, 146 F.3d 819 (10th Cir. 1998). Instead of analyzing the decisions’

theoretical susceptibility to policy analysis, the Clark court analyzed whether the government

had actually relied on policy considerations in making its waste disposal decisions. See 660 F.

Supp. at 1176 (concluding DFE did not apply because Air Force failed actually “to consider the

effect of groundwater in selecting and operating waste disposal facilities on McChord [Air Force

Base]”).

Waverley also relies on Jones v. United States, 691 F. Supp. 2d 639 (E.D.N.C. 2010), but

this case too is distinguishable and demonstrates why the DFE does not apply here. In Jones, the

plaintiff alleged she developed non-Hodgkin’s lymphoma from being exposed to DCE, TCE, and

PCE while stationed at Camp Lejeune from 1980 to 1983. Id. at 640. The court distinguished

Snyder and held that the DFE did not apply. A relevant 1972 Navy Bureau of Medicine and

Surgery (“BUMED”) instruction for Camp Lejeune mandated that “[d]rinking water shall not

contain impurities in concentrations which may be hazardous to the health of consumers,” and

specifically limited the acceptable levels of chlorinated hydrocarbons. Id. at 642. Because the

military had allowed concentrations of the complained-of chemicals to exceed those specific

limits, the alleged contamination “was not a matter committed to discretion subject to policy

analysis at the time of Plaintiff’s residence at Camp Lejeune.” Id. In the present case, just as in

Snyder, no specific limits had yet been set on TCE and PCE.

12 Moreover, a subsequent decision in the District of the District of Columbia was “unable to agree with [Miller]’s holding” and noted that the Miller decision was “legally flawed” because it relied on an “outmoded distinction between ‘planning’ and ‘operational’ decisions.” Loughlin, 286 F. Supp. 2d at 25-26.

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Accordingly, Waverley has not shown that the United States lacked an element of choice

regarding its decisions to dispose chemicals such as TCE and PCE in unlined pits in Area B-11.

B. Waste Disposal Decisions’ Susceptibility to Policy Analysis Waverley argues that, even if the United States was not bound by any mandatory and

specific directive regarding the disposal of TCE and PCE, when the government makes decisions

while “acting as a private landowner, . . . the discretionary exception does not extend to such

decisions.” Maalouf v. Swiss Confederation, 208 F. Supp. 2d 31, 36 (D.D.C. 2002). In

Waverley’s view, decisions regarding waste disposal reflect “mundane, administrative, garden-

variety, housekeeping problem[s] that [are] about as far removed from the policies applicable to

the [Army’s] mission as it is possible to get.” Hawes v. United States, 409 F.3d 213, 227 (4th

Cir. 2005) (Motz, J., dissenting) (quoting Gotha v. United States, 115 F.3d 176, 181 (3d Cir.

1997)). That the Army was “merely doing what everyone else in industry was doing[,]” (Pl.’s

Opp’n 29), apparently bolsters Waverley’s point that the Army’s use and disposal of TCE and

PCE “did not reflect any exercise of military function or authority[,]” (id. at 30). And Waverley

emphasizes that, “[e]ven when military actors are involved, courts must be careful not to read the

discretionary function exception so broadly as to allow it to swallow the whole of the FTCA.”

Chang-Williams, 766 F. Supp. 2d at 617-18.

Waverley’s argument oversimplifies the nature of the Army’s waste activities at Fort

Detrick. To characterize Army decisionmaking on this issue as mere “garden-variety

housekeeping” ignores the factors the Army would have had to consider as it was operating Fort

Detrick’s biological warfare program, including national security, resource constraints, and

environmental impact. Case law supports the conclusion that waste disposal decisions of the

kind the Army made were susceptible to policy analysis. See, e.g., OSI, Inc. v. United States,

Case 1:14-cv-01527-CCB Document 31 Filed 01/13/15 Page 17 of 22

18

285 F.3d 947, 953 (11th Cir. 2002) (“The nature of the military’s function requires that it be free

to weigh environmental policies against safety and military concerns.”); Aragon, 146 F.3d at 826

(finding “little doubt” that Air Force base operating “under military exigencies” made waste

disposal decisions that “involved policy choices of the most basic kind”).

Waverley cites cases “at the opposite end of th[e] spectrum,” Loughlin, 286 F. Supp. 2d

at 23 n.19, from the complex military waste disposal decisions at issue here: Maalouf involved a

sledding accident on embassy property; Hawes involved the failure to maintain an on-base

obstacle course; and Carney v. United States, 368 F. Supp. 2d 439 (D. Md. 2005) (Blake, J.),

involved a failure to warn about a known hazard in a ship’s fan room. In other words, those

cases involved “prosaic” acts and omissions “made by the [government] as an administrator or

landowner,” rather than, as here, “fundamental choices about how best to test and discard

experimental munitions developed during wartime.” Loughlin, 286 F. Supp. 2d at 23 n.19.

Accordingly, Waverley has not shown that the Army’s decisions to dispose of chemical

waste in unlined pits in Area B-11 were of the kind insusceptible to policy analysis.

II. United States’ Waste Remediation at Fort Detrick Waverley argues separately that the United States’ decisions regarding its waste

remediation efforts in Area B fall outside the DFE. In Waverley’s view, in the time since the

Army stopped disposing of chemical waste in Area B, the Army has failed to remediate both

suspected and known TCE and PCE contamination.13 Waverley asserts the Army’s decisions not

to remediate contamination at Area B-11 were insusceptible to policy analysis both because they

implicated safety and because they merely required application of scientific and technical

judgment. Again, Waverley has failed to carry its burden at either step of the DFE analysis.

13 According to Waverley, the Army allegedly first suspected the potential for contamination based on the 1977 initial assessment. And, as the United States acknowledges, the Army definitively detected contamination in 1991.

Case 1:14-cv-01527-CCB Document 31 Filed 01/13/15 Page 18 of 22

19

A. Discretionary Nature of Waste Remediation Decisions

In addition to the directives cited above, Waverley relies on various versions of Army

Regulation 200-1 to argue the Army lacked discretion in deciding how to identify, prevent, and

remediate contamination at Fort Detrick. In arguing that “[a]ny discretion the Army had over

how to act did not afford it discretion about whether to act[,]” (Pl.’s Opp’n 27 (emphasis in

original)), Waverley implies the Army has done nothing since the 1970s to treat contamination.

The primary problem with Waverley’s argument is that it ignores regulations which

explicitly left discretion with the Army regarding how to remediate contamination. As already

noted, the 1986 SARA included CERCLA regulations clarifying that the Army’s responses to

environmental hazards were “discretionary governmental functions” and that the Army did not

have a duty “to take any response action at any particular time.” 40 C.F.R. § 300.400(i)(3)

(originally found at 40 C.F.R. § 300.61(e)(3) (1986)). Accordingly, from 1986 forward, the

Army explicitly retained discretion to decide how to remediate contamination at Fort Detrick.

Furthermore, the Army likely retained discretion regarding remediation efforts even

before CERCLA explicitly said so. Pre-1986 remediation decisions were made within the IRP

framework, which was established in 1975. And that four-phase framework similarly left

discretion with the Army as to how to respond to contamination. See Western Greenhouses v.

United States, 878 F. Supp. 917, 928 (N.D. Tex. 1995) (describing IRP process).

Even assuming the IRP did not grant full discretion to the Army, Waverley has failed to

cite any provision existing between 1972 and 1986 that bound the Army to a specific course of

conduct with respect to its waste remediation efforts. For example, Waverley cites the 1975

version of Army Regulation 200-1, which states that “[w]astes must be either recycled and

reclaimed or confined and contained so they will not migrate to re-emerge in pollutant form.” 32

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20

C.F.R. § 650.6(b), 40 Fed. Reg. 55,962, 55,964 (Dec. 2, 1975) (codifying Army Regulation 200-

1). But this provision fails because it is not mandatory. That provision is found in a section

explicitly called “Implementing guidance” and which states that subsection (b) constitutes

“[g]uidance for implementing [Army] environmental policies . . . .” Id. § 650.6. Waverley also

cites a different section of Army Regulation 200-1, which states that “[a]ll measures to prevent

accidental pollution of the environment by uncontrolled release of hazardous chemicals to the

air, water, or land environment will be taken by all Army activities.” Id. § 650.131(a). But this

provision fails for the same reason as the provisions ostensibly stating nondiscretionary waste

disposal obligations: it is not sufficiently specific. That the Army was required to take “all

measures” does not prescribe a specific course of conduct regarding uncontrolled releases of

hazardous chemicals into the environment. Moreover, while Waverley argues section 650.131(a)

is sufficiently specific because the regulations define “hazardous,” the reality is that the

regulation does not amply do so. In fact, a subprovision of that same section states that “it is

difficult to identify materials which should be classified as hazardous or toxic. . . . Certain

chemicals, such as asbestos, cadmium, lead, mercury . . . are recognized as hazardous . . . . Other

materials, however, are more difficult to categorize since excessive amounts of almost anything

can be harmful when released.” Id. § 650.130(b).14

Accordingly, Waverley has not shown that the United States lacked discretion regarding

its decisions to remediate TCE and PCE contamination in Area B at any point after 1972.

B. Waste Remediation Decisions’ Susceptibility to Policy Analysis Waverley makes two arguments that the Army’s waste remediation decisions are

insusceptible to policy analysis. First, Waverley argues that, even if the Army’s decision to

14 The court acknowledges that TCE and PCE became federally regulated in 1978. Even if that clarified that TCE and PCE were hazardous substances, Army Regulation 200-1 still failed to prescribe a specific course of conduct.

Case 1:14-cv-01527-CCB Document 31 Filed 01/13/15 Page 20 of 22

21

pursue a remediation project was discretionary, its “failure to properly oversee the project and

ensure safety was not.” (Pl.’s Opp’n 33.) For this proposition, Waverley cites two Ninth Circuit

cases. See Myers v. United States, 652 F.3d 1021 (9th Cir. 2011); Whisnant v. United States, 400

F.3d 1177 (9th Cir. 2005). Second, Waverley argues that matters “of professional and scientific

judgment” are unprotected. See, e.g., In re Glacier Bay, 71 F.3d 1447, 1453 (9th Cir. 1995)

(“[D]ecisions involving the application of objective scientific standards . . . are not insulated by

the [DFE] because they do not involve the weighing of economic, political and social policy.”

(citation and quotation marks omitted)).

Neither argument shows that the Army’s waste remediation decisions were not

susceptible to policy analysis.15 The remediation decisions here were of the kind that required

the Army to balance public safety, health, environmental impact, resource constraints, regulatory

constraints, and stakeholder input—not just pure matters of safety or scientific application. This

position finds substantial support in factually analogous cases. See, e.g., Daigle v. Shell Oil, 972

F.2d 1527, 1541 (10th Cir. 1992) (finding “little doubt” that Army’s toxic waste cleanup efforts

at Rocky Mountain Arsenal “involved policy choices of the most basic kind” because Army

faced “a monumental task” in cleaning up the extensive hazardous waste and needed to

determine how best to “contain[] the spread of further contamination . . . while still protecting

public health”); Lockett v. United States, 938 F.2d 630, 639 (6th Cir. 1991) (holding that EPA’s

decisions to delay, on several occasions, cleanup efforts at a scrap yard site involved “‘judgment

calls’ concerning the sufficiency of evidence of violations of applicable regulations, the

15 Moreover, the cases Waverley cites involved more specific mandates, see Myers, 652 F.3d at 1029 (holding that the Navy Manual sufficiently specified mandatory review procedure and “le[ft] nothing to the Navy’s discretion”); a dissimilar factual context, see Whisnant, 400 F.3d at 1183 (involving failure to remove toxic mold in Navy commissary’s meat department); or purely technical mandates, see In re Glacier Bay, 71 F.3d at 1452-53 (holding that National Oceanic and Atmospheric Administration hydrographers lacked discretion in deciding how far apart sounding lines could be spaced while surveying ocean floor).

Case 1:14-cv-01527-CCB Document 31 Filed 01/13/15 Page 21 of 22

22

allocation of limited agency resources, and determinations about priorities of serious threat to

public health” that met step two). The Army’s contamination problem at Fort Detrick is just as

complex as those present in Daigle and Lockett. And, while not necessarily relevant for the DFE

analysis, the Army’s actual conduct over the past several decades reflects substantial policy

balancing—the Army considered a multitude of factors at every step of the remediation process.

Accordingly, Waverley has not shown that the Army’s waste remediation decisions at

Area B-11 were of the kind insusceptible to policy analysis.

CONCLUSION

Waverley has not carried its burden of proving the United States’ waste management

decisions at Fort Detrick fell outside the DFE. Waverley has not identified any provision that

prescribed a specific course of conduct for the Army regarding disposal and remediation of TCE

and PCE at Fort Detrick. Moreover, all of the Army’s decisions were of the kind susceptible to

policy analysis—these were decisions that would have had to weigh various national security,

social, economic, and environmental considerations. Because the DFE applies, the court does

not have subject matter jurisdiction over this case. Accordingly, the court will grant the United

States’ motion to dismiss.

A separate Order follows.

1/13/2015 /S/ Date Catherine C. Blake United States District Judge

Case 1:14-cv-01527-CCB Document 31 Filed 01/13/15 Page 22 of 22

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

---------------------------------------------------------------)

WHITE PLAINS HOUSING AUTHORITY,

Plaintiff,

-against-

GETTY PROPERTIES CORPORATION, TYREE ENVIRONMENTAL CORPORATION,

SINGER REAL ESTATE GROUP, LLC, MICHAEL C. KENNY and KENNETH C. SEUS,

Defendants.

---------------------------------------------------------------)

NELSON S. ROMAN, United States District Judge:

13-CV-6282 (NSR)

OPINION & ORDER

Plaintiff White Plains Housing Authority ("Plaintiff') commenced this action by

complaint filed September 6, 2013 (dkt. no. I), as amended October 22, 2013 (dkt. no. 7) and

January 21, 2014 (dkt. no. 26), against Getty Properties Corporation ("Getty Properties"), Tyree

Environmental Corporation ("Tyree"), Michael C. Kenny, and Kenneth C. Seus (collectively, the

"Getty Defendants"), and against Singer Real Estate Group LLC (incorrectly named as "Singer

Real Estate Group, LLC") ("Singer," and together with the Getty Defendants, "Defendants").

The complaint asserts claims under: the Comprehensive Environmental Response,

Compensation, and Liability Act ("CERCLA"), 42 U.S.C. § 9601 et seq., for both cost recovery

and declaratory relief; the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. §

6901 et seq.; the New York State Navigation Law§ 181(1); and New York state law regarding

private nuisance, trespass, strict liability, and negligence. These claims stem from purp01ted

gasoline discharge into the environment from a former gasoline filling station located in White

Plains,,NewYorkc The operative complaint asserts each claim against each of the Defendants, liSll(. ,i..,IJ','\.

DOCT\lL:\T

ELECTRO:\lCALLY FILL:J II'

DOC Ii: I DATE FlLED: I;). ( I., I Jo 14-1

Case 7:13-cv-06282-NSR Document 50 Filed 12/16/14 Page 1 of 28

with the exception that the RCRA claim is not asserted against Singer.

Defendants now move to dismiss the complaint pursuant to Federal Rule of Civil

Procedure 12(b)(6), for failure to state a claim upon which relief can be granted, and 12(b)(1),

for lack of supplemental jurisdiction over the state law claims. The two pending motions to

dismiss (dkt. nos. 34, 36) are consolidated for purposes of this opinion and order. For the

following reasons, the Court GRANTS the motions in part, and DENIES the motions in part.

I. FACTS

A. Plaintiff’s Motion to Strike

As a threshold matter, Plaintiff challenges the Getty Defendants’ submission of an

affidavit and voluminous exhibits. See Affidavit of Paul Hatcher (the “Hatcher Affidavit”) (dkt.

no. 41). The materials submitted with the Hatcher Affidavit, and the facts in the affidavit,

pertain primarily to the RCRA claim. The Getty Defendants seek to establish that substantial

dialogue and diligence have occurred as between Getty Properties and Tyree, on one hand, and

the New York State Department of Environmental Conservation (the “DEC”), on the other. The

Getty Defendants argue that well-documented past and ongoing remediation of the

environmental contamination at issue undercuts the RCRA claim.

The Getty Defendants argue that the Court should take judicial notice of the information

in the Hatcher Affidavit and the exhibits, analogizing these materials to an administrative agency

“consent decree mandating investigation and remediation of [sic] hazardous waste site.” Getty

Mem. at 3 n. 1 (citing Chesapeake Bay Found., Inc. v. Severstal Sparrows Point, LLC, 794 F.

Supp. 2d 602, 602 (D. Md. 2011)). In the alternative, they argue, “under Rule 12(d), the Court

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can consider matters outsite [sic] the pleadings on a Rule 12(b)(6) motion.” Id.1

In response, Plaintiff points out that there is no agency consent decree among the

materials submitted. Plaintiff argues that the Hatcher Affidavit is objectionable and should be

disregarded. See Plaintiff’s Mem. at 8-9.

Plaintiff is correct that “[i]n adjudicating a motion to dismiss, a court may consider only

the complaint, a written instrument attached to the complaint as an exhibit, any statements or

documents incorporated in it by reference, and any document upon which the complaint heavily

relies.” Geron v. Seyfarth Shaw LLP (In re Thelen LLP), 736 F.3d 213, 219 (2d Cir. 2013).

Equally true, “matters judicially noticed by the District Court are not considered matters outside

the pleadings.” Id. (citing Staehr v. Hartford Fin. Servs. Grp., Inc., 547 F.3d 406, 426 (2d Cir.

2008)).

Courts in this circuit routinely take judicial notice of complaints and other publicly filed

documents. See, e.g., Rothstein v. Balboa Ins. Co., No. 14-cv-1112, 2014 U.S. App. LEXIS

16567, at *1-2 (2d Cir. June 25, 2014) (taking judicial notice of other complaints filed with

federal courts); Rothman v. Gregor, 220 F.3d 81, 92 (2d Cir. 2000) (taking judicial notice of

other complaint “as a public record”). Courts also take judicial notice of information readily

accessible in the public domain, the significance of which is not subject to reasonable dispute.

See, e.g., Staehr, 547 F.3d at 426 (taking judicial notice of information in the public domain,

albeit not for its truth, in assessing whether there was inquiry notice of alleged fraud); accord

Fed. R. of Evid. 201 (court may judicially notice a fact not subject to reasonable dispute because

1 Federal Rule of Civil Procedure 12(d) provides that “[i]f, on a motion under Rule 12(b)(6) or 12(c), matters outside the pleadings are presented to and not excluded by the court, the motion must be treated as one for summary judgment under Rule 56. All parties must be given a reasonable opportunity to present all the material that is pertinent to the motion.”

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it is generally known within the jurisdiction or is supported by sources beyond question).

Here, the Getty Defendants would have the Court go quite a bit further. Appended to the

Hatcher Affidavit are voluminous materials, including remediation reports, studies, work plans,

and letter and email correspondence among the relevant parties. The Getty Defendants represent

that these materials are part of the DEC file and are accessible through a Freedom of Information

Law request. See Getty Mem. at 3 n.1.

That may be true, but the materials’ presence in the DEC file does not necessarily compel

judicial notice. See Rothstein, 2014 U.S. App. LEXIS, at *1-2 (denying motion seeking judicial

notice of certain documents made public by state agency under New York’s Freedom of

Information Law, while granting the motion as to complaints filed in other federal courts). The

materials submitted are not formal, filed pleadings or routine regulatory filings. They are, rather,

an assortment of discovery materials reflecting environmental remediation efforts and related

correspondence with a state agency. Some of the documents are informal emails. Others are

letters or reports. The parties differ in their characterization of the information reflected in these

documents, as it relates to the question of whether there has been diligent remediation of

environmental contamination.

The Court finds that these materials are not appropriate for judicial notice on a Rule

12(b)(6) motion where the analysis turns primarily on what is between the four corners of the

complaint. Lundy v. Catholic Health Sys. of Long Island Inc., 711 F.3d 106, 113 (2d Cir. 2013)

(court must accept all factual allegations in the complaint as true and draw all reasonable

inferences in the plaintiff’s favor). The information in the Hatcher Affidavit and its significance

are the subject of much dispute, and the information is not generally known or supported by

sources beyond question.

4

Case 7:13-cv-06282-NSR Document 50 Filed 12/16/14 Page 4 of 28

Perhaps expecting such a ruling, the Getty Defendants argue that nevertheless “the facts

matter and should be considered,” and they urge the Court to convert the motion to a motion for

summary judgment. See Getty Reply Mem. at 5-7. The Court declines to do so here. Although

the Court permitted the Getty Defendants orally to join in Singer’s motion for leave to file a

dispositive motion (and to file the dispositive motion), Singer had sought leave to file a motion

to dismiss pursuant to Rule 12(b)(6). See dkt. nos. 4, 24. Having reviewed pre-motion letters

and the colloquy at the pre-motion hearing, the Court disagrees with the Getty Defendants’

characterization that there was adequate notice that the motion to dismiss might be converted to a

motion for summary judgment. When counsel for Singer sought clarification at the pre-motion

hearing, the Court differentiated between a motion to dismiss and a summary judgment motion

and indicated that the former was expected. Additionally, the mere fact that Plaintiff enclosed a

remediation report with its opposition brief does not mean Plaintiff had adequate notice of

possible conversion. Plaintiff presumably bolstered its submission with this report as a way to

respond to the Getty Defendants’ voluminous filing, and Plaintiff formally objected to the

Hatcher Affidavit by letter before filing any opposition briefing. See dkt. no. 33.

The Court denies the Getty Defendants’ application to convert their motion to a motion

for summary judgment. The Court strikes the Hatcher Affidavit and all materials appended

thereto because they are inappropriate for consideration under Rule 12(b)(6). The Court has not

considered or relied upon those materials in issuing this decision. Likewise, the Court strikes

and has not considered or relied upon the remediation report accompanying the Declaration of

Norman W. Bernstein, submitted with opposition briefing, notwithstanding references to that

report in the complaint. See dkt. no. 40. The Court also strikes and has not considered or relied

upon the document accompanying the Reply Affidavit of Paul Hatcher, submitted with reply

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Case 7:13-cv-06282-NSR Document 50 Filed 12/16/14 Page 5 of 28

briefing. See dkt. no. 46.

Should this matter reach the summary judgment stage, the parties (and specifically, the

Getty Defendants) are directed to follow the Court’s individual rules of practice in civil cases.

Those rules require that the Getty Defendants submit a pre-motion letter seeking leave to file a

dispositive motion. See Individual Practice Rule 3(A)(ii). That pre-motion practice tends to

narrow the issues and clarify the nature of the relief sought, and should eliminate any further

confusion on the Getty Defendants’ part as to what motion is anticipated. Provided the Court

ultimately grants leave to file a summary judgment motion in this case, the Getty Defendants are,

of course, free to resubmit the Hatcher Affidavit then.

B. Complaint

1. Background

The complaint alleges that Plaintiff is a municipal housing authority that owns and

operates a five apartment building, residential housing complex known as Winbrook apartments,

in downtown White Plains, New York. See Second Amended Complaint (“Compl.”) ¶¶ 7, 9.

One of the five buildings is “Building 159,” which is located at 159 South Lexington Avenue.

Id. ¶ 10.

Getty Properties operated a retail gasoline filling station, Getty Station No. 00369, at 26

East Post Road, White Plains, New York (“Getty Station”), which is adjacent to Plaintiff’s

building complex. Id. ¶ 13. Getty Station was in use from approximately 1973 to 1988. Id. ¶

14. Gasoline was stored at Getty Station during that time. Id. ¶ 114.

Gasoline is a “fraction” of petroleum and crude oil, i.e., its properties are indigenous to

petroleum and crude oil and are created through the distillation and refining process. See id. ¶¶

110-11, 113. Benzene is another indigenous subcomponent of petroleum, and of gasoline, but no

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Case 7:13-cv-06282-NSR Document 50 Filed 12/16/14 Page 6 of 28

pure Benzene was stored at Getty Station, only gasoline containing benzene and other constituent

chemicals. See id. ¶ 112.

2. Gasoline Discharge and Residual Contamination

Plaintiff alleges that at some point while Getty Properties owned and operated Getty

Station, gasoline was released into the environment. Id. ¶ 114. Once in the ground under Getty

Station, that gasoline (chemically, a “mixture”) separated into its constituent parts, one of which

was benzene. Id. ¶¶ 114-15. Benzene is toxic and water soluble, and it does not tend to adhere

to soil. Id. The benzene from the gasoline discharge therefore traveled more quickly through

surrounding groundwater than did other constituent parts of the gasoline. Id. Eventually, the

benzene, and to a lesser extent, other volatile organic compounds (ethyl-benzene and toluene),

migrated away from Getty Station to the space underneath a parking lot adjacent to Plaintiff’s

Building 159. Id. ¶¶ 33, 52-52, 119. The parking lot is Plaintiff’s property as well. Id.

As noted, Building 159 is residential in nature. There are underground conduits such as

ducts and pipes which enter the building. Id. ¶ 58. Presently, there is a “groundwater plume” of

benzene and other chemicals contaminating Plaintiff’s property and continuing to migrate toward

Building 159. Id. ¶ 78.

Because of its toxicity, the benzene in the plume “may present an imminent and

substantial endangerment to human health and the environment.” Id. ¶ 83. Additionally,

Plaintiff has begun a $350 million renovation project, which would make the five building

complex energy efficient. Id. ¶ 84. Plaintiff broke ground on that project on January 15, 2014.

Id. ¶ 85. The plume may prevent or interfere with financing for the project, at least some of

which is contingent public financing, because federal and state regulations prohibit the

development of contaminated properties. Id. ¶¶ 92-94.

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Case 7:13-cv-06282-NSR Document 50 Filed 12/16/14 Page 7 of 28

3. Property Ownership

Getty Station is no longer an operating gas station, and ownership of the underlying

property has changed hands over the years. Individual defendant Kenny purchased the property

in 1994 and held it until 2011. Id. ¶¶ 24, 27-28. From 2005 to 2011, Kenny held the property as

co-owner with individual defendant Seus. Id. From 1994 through 2011, additional “hazardous

wastes” (presumably, additional gasoline or residue thereof) were released into the environment

from Getty Station, and gasoline constituents continued to migrate onto Plaintiff’s property. See

id. ¶¶ 24, 27. In February 2011, Singer purchased the property. Id. ¶ 43. Singer did so knowing

the property was contaminated. Id.

4. Remediation

The complaint alleges that several steps toward remediation have taken place, but that

they have been ineffective. The contamination was reported to the DEC in or about February

1998, presumably triggering DEC oversight of remediation efforts thereafter. See id. ¶ 38. In

2000, Getty Properties—still involved, apparently, despite the property sale to Kenny—obtained

consent from Plaintiff to conduct periodic monitoring in the parking lot adjacent to Building 159.

Id. ¶ 37. In 2001, Getty Properties retained environmental consultant Tyree to help remediate the

contamination. Id. ¶ 35.

From August 2001 to April 2007, Tyree operated a dual phase high vacuum extraction

system at the property. Id. ¶ 39. Then, in April 2007, Tyree substituted a vapor/fluid recovery

program in place of the vacuum extraction system. Id. ¶ 40. Plaintiff contends that the new

recovery program was ineffective, and largely a cost-saving measure approved by Getty

Properties. See id. ¶¶ 41-42. Tyree terminated the recovery program in 2009. Id. ¶ 41.

In late 2011, Tyree contacted Plaintiff to obtain consent to test a chemical process known

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Case 7:13-cv-06282-NSR Document 50 Filed 12/16/14 Page 8 of 28

as ozone injection in Plaintiff’s parking lot, a process which may generate fumes that could enter

Building 159 through ducts or pipes. Id. ¶¶ 45, 57. The DEC apparently had approved the ozone

injection. Id. ¶ 59.

In May 2012, Tyree provided Plaintiff a September 2011 monitoring report summarizing

Tyree’s remediation activities to date. Id. ¶ 46. The report indicated a benzene level on

Plaintiff’s property far in excess of DEC acceptable water quality standards for potable water.

See id. ¶¶ 50-51. The report also did not fully illustrate the proximity of the contamination to

Building 159. Id. ¶ 60. Partly because of that proximity, Plaintiff objected to the DEC-approved

ozone injection. Id. Plaintiff requested that Tyree delineate the entire contamination plume and

document its proximity to Building 159. Id. ¶ 61. In response, in March 2013, Tyree submitted

to the DEC a revised work plan that (i) called for additional testing of the plume’s encroachment

onto Plaintiff’s property, (ii) did not involve ozone injection, and (iii) showed the location of

Building 159. Id. ¶ 62.

Also in March 2013, a conference call was held among Plaintiff, the DEC, and relevant

parties, consultants, and counsel. Id. ¶ 63. Following that call, it appeared that all differences of

opinion concerning remediation had been resolved. Id. Thereafter, however, Getty Properties

did not cause Tyree to implement the work plan until October 2013, after clearing up some

confusion and confirming the DEC’s approval. See id. ¶¶ 64-65. Then, in November 2013,

Tyree filed a report with the DEC showing the results of soil and groundwater samples taken

from Plaintiff’s property. Id. ¶ 68. The November 2013 report did not map the location of the

plume and characterized the contamination as “petroleum impacted” (Plaintiff describes it as

“individual chemical constituents”). Id. ¶ 69. The report allegedly had numerous other

deficiencies too, for example, it did not model the plume’s trajectory and did not address

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Case 7:13-cv-06282-NSR Document 50 Filed 12/16/14 Page 9 of 28

concerns regarding vapor intrusion of Building 159. Id. ¶ 70. On December 30, 2013, a

consultant Plaintiff had retained, First Environment, provided a report and critique of the Tyree

report, which showed continued migration of the plume toward (and possibly, underneath)

Building 159. Id. ¶¶ 73-74. Subsequent groundwater testing confirmed that there are atypically

high concentrations of benzene within ten feet of Building 159, including near a water line

entering the building. Id. ¶¶ 75-76.

II. MOTION TO DISMISS STANDARD

On a motion to dismiss for failure to state a claim upon which relief can be granted, Rule

12(b)(6) dismissal is proper unless the complaint “contain[s] sufficient factual matter, accepted

as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662,

678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)); accord Hayden v.

Paterson, 594 F.3d 150, 160 (2d Cir. 2010). “Although for the purposes of a motion to dismiss

[a court] must take all of the factual allegations in the complaint as true, [it is] ‘not bound to

accept as true a legal conclusion couched as a factual allegation.’” Iqbal, 556 U.S. at 678

(quoting Twombly, 550 U.S. at 555). “While legal conclusions can provide the framework of a

complaint, they must be supported by factual allegations.” Id. at 679.

When there are well-pleaded factual allegations in the complaint, “a court should assume

their veracity and then determine whether they plausibly give rise to an entitlement to relief.” Id.

A claim is facially plausible when the factual content pleaded allows a court “to draw a

reasonable inference that the defendant is liable for the misconduct alleged.” Id. at 678.

Ultimately, determining whether a complaint states a facially plausible claim upon which relief

may be granted must be “a context-specific task that requires the reviewing court to draw on its

judicial experience and common sense.” Id. at 679.

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III. DISCUSSION

A. CERCLA

Plaintiff asserts a cost recovery claim against all Defendants under Section 107(a) of

CERCLA, 42 U.S.C. § 9607(a), seeking to recover costs incurred responding to the

environmental contamination on Plaintiff’s property. As a derivative of the cost recovery claim,

Plaintiff asserts a second claim under 28 U.S.C. § 2201 and 42 U.S.C. § 9613(g)(2), seeking

declaratory relief, namely, an order declaring that Defendants are jointly and severally liable for

necessary costs of future investigation and clean-up.

Section 107(a) of CERCLA permits a citizen suit against qualifying defendants, to

recover the “necessary costs of response” incurred “consistent with the national contingency

plan” (the “NCP”), plus interest. 42 U.S.C. § 9607(a)(1)-(4)(B). A viable private action requires

(i) a release or threatened release, (ii) from a facility, (iii) of a hazardous substance, (iv) which

causes “necessary costs of response.” Id. Defendants do not dispute that they qualify as

potentially liable parties under Section 107(a). Rather, the dispute at this stage of the case

centers on the term “hazardous substance.” Plaintiff’s CERCLA claims posit that Getty Station

released benzene, a hazardous substance, into the environment. Defendants argue that the case

concerns a release of gasoline, of which benzene was but one constituent part.

CERCLA defines “hazardous substance” as any substance designated within certain

enumerated statutes which list a variety of toxic chemicals. 42 U.S.C. § 9601(14). But the

definition also contains a carve-out:

The term does not include petroleum, including crude oil or any fraction thereof which is not otherwise specifically listed or designated as a hazardous substance under subparagraphs (A) through (F) of this paragraph . . . .

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Id. This carve-out is known as the “petroleum exclusion,” and because gasoline is a fraction of

petroleum, the exclusion bars a CERCLA claim for gasoline spills. See Wilshire Westwood

Associates v. Atlantic Richfield Corp., 881 F.2d 801, 801 (9th Cir. 1989). On the other hand,

“subparagraphs (A) through (F),” mentioned in the petroleum exclusion, enumerate statutes

which specifically name benzene as a hazardous substance, and it is undisputed that benzene also

is indigenous to petroleum. See Compl. ¶ 112. Thus, the clause beginning, “which is not

otherwise specifically listed or designated,” carves benzene out of the petroleum exclusion.

Consequently, a release of benzene, standing alone, may support a CERCLA claim. That is not

in dispute. See Singer Mem. at 6.

Instead, the instant motions present the question of whether benzene that was once part of

a gasoline mixture discharged into the environment, but which thereafter separated from other

constituent parts of the gasoline, may support a CERCLA claim. See Compl. ¶¶ 114-15.

Recognizing that gasoline discharge is non-actionable, whereas benzene discharge is actionable,

Plaintiff seeks to frame the contamination as a “plume” of the hazardous substance benzene,

which has been, and is continuing to be, “released” within the meaning of CERCLA. Id. ¶¶ 31,

32, 130.

In response, Singer argues that Plaintiff has alleged only a release of gasoline from Getty

Station, and not any release of benzene. Singer Mem. at 6. Singer contends that any post-release

breakdown of the gasoline into constituent parts including benzene does not bring the action

within CERCLA’s purview. See id. at 6-7. Similarly, the Getty Defendants argue that

“petroleum constituent parts, including benzene, are within the purview of the statutory

exclusion” for petroleum products. Getty Mem. at 6.

Rebutting Singer’s argument, Plaintiff contends that “continuing migration” of

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contaminants from Getty Station is a continuing “release.” See Plaintiff’s Mem. at 16-17 (citing

New York v. Shore Realty Corp., 759 F.2d 1032, 1042-45 (2d Cir. 1985) (“[T]he leaking tanks

and pipelines, the continuing leaching and seepage from the earlier spills, and the leaking drums

all constitute ‘releases.’”)). Plaintiff further argues that the petroleum exclusion does not apply

where, once in the ground, gasoline separates “into its by-products or constituents due to

physical, chemical, and biological actions,” and where one of those by-products or constituents is

benzene. Plaintiff’s Mem. at 19 (quoting Compl. ¶¶ 114-15). Plaintiff argues that “Congress did

not provide an exclusion for the by-products of gasoline after it degrades in groundwater.”

Plaintiff’s Mem. at 19. Plaintiff argues that there would have been no reason to carve

enumerated hazardous substances out of the petroleum exclusion had Congress wished to make

the release of “all petroleum or anything derived from it” non-actionable. Id. And Plaintiff

argues that a separate exclusion insulating service station providers who transport or dispose of

recycled oil, 42 U.S.C. § 9614(c)(1), is redundant if the petroleum exclusion is read so

expansively. Id.

There is no Second Circuit authority on all fours with the instant case. Rather, the

principal appellate guidance is Wilshire Westwood Associates v. Atlantic Richfield Corp., from

the Ninth Circuit. 881 F.2d 801 (9th Cir. 1989). The Wilshire Westwood court addressed the

argument that the hazardous substances carve-out from the petroleum exclusion renders the

exclusion inapplicable to all releases of petroleum products containing those hazardous

substances. Id. at 804. The court disagreed with the plaintiff in that case, noting that such a

construction would render the petroleum exclusion a nullity since hazardous substances are

indigenous to petroleum and crude oil, and thus are always present as a constituent part. Id. The

court also declined to draw a distinction between substances added to a petroleum product and

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those indigenous to the product, where all of the alleged additives were also indigenous. Id. at

805. Ultimately, noting an absence of compelling legislative history, and according

Environmental Protection Agency (“EPA”) guidance due deference, the court concluded that

“the petroleum exclusion in CERCLA does apply to unrefined and refined gasoline even though

certain of its indigenous components and certain additives during the refining process have

themselves been designated as hazardous substances within the meaning of CERCLA.” Id. at

810.

Shortly after the Wilshire Westwood holding, this Court referenced that holding in a case

concerning the extent to which waste oil emulsion—petroleum fraction to which contaminants

have been added during use—falls within the petroleum exclusion. City of New York v. Exxon

Corp., 766 F. Supp. 177, 186 (S.D.N.Y. 1991). Consistent with the reasoning in Wilshire

Westwood and with EPA guidance, the Court found that where levels of contaminants in the oil

increase during the industrial process, the waste oil emulsion falls within CERCLA’s definition

of hazardous substances, rather than within the petroleum exclusion. Id. at 187. The Court

therefore held that CERCLA liability attaches to the extent that contaminant levels in the waste

emulsion exceed the levels in the unused petroleum product. Id. By implication, however,

indigenous contaminants which do not increase in concentration during the industrial process do

not support a CERCLA claim. See id.

Still more recently, our sister court in the Northern District of New York addressed the

petroleum exclusion and likewise tracked the reasoning in Wilshire Westwood. In Wademan v.

Concra, after finding that a CERCLA claim failed for lack of standing, the court stated in dicta

that the complaint failed to state a CERCLA claim in light of the petroleum exclusion, where the

complaint alleged that “benzene, a derivative of petroleum,” was the source of the plaintiff’s

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injuries. 13 F. Supp. 2d 295, 302 (N.D.N.Y. 1998). In City of New York v. Almy Bros. Inc., the

court again found no CERCLA liability, for the release of sludge from tanks that stored diesel

fuel and other petroleum-related products, where there was no evidence that hazardous

substances were added to the products or that the substances increased in concentration during

product use. No. 90-cv-818, 1998 U.S. Dist. LEXIS 11769, at *26-27 (N.D.N.Y. July 31, 1998).

While none of these authorities are controlling, this Court sees no reason to deviate from

their reasoning. Applying that reasoning to this case, first, the mere presence of benzene in the

gasoline originally released from Getty Station does not forestall the operation of the petroleum

exclusion. Wilshire Westwood, 881 F.2d at 810. Plaintiff concedes this. Plaintiff’s Mem. at 20.

Second, the benzene now present in the groundwater is a “derivative” of a petroleum product,

gasoline. Wademan, 13 F. Supp. 2d 302. Plaintiff effectively concedes this as well. See Compl.

¶ 113 (gasoline was released), ¶ 114 (the gasoline separated into its by-products through

chemical processes). Third, the benzene was wholly indigenous to the gasoline, not additive, and

its concentration did not increase during storage or industrial use. Almy Bros., 1998 U.S. Dist.

LEXIS 11769, at *26-27. The complaint does not allege otherwise.

Nevertheless, Plaintiff argues that the continuing migration of a constituent part of

gasoline, the benzene, supports CERCLA liability, even though the original discharge was

gasoline in its whole, unseparated form. See Compl. ¶¶ 114, 130. Although novel, the Court

finds that argument to be unsupported and in tension with the precedents and reasoning discussed

above.

The Second Circuit’s holding in New York v. Shore Realty Corp., which characterized

“leaching and seeping from earlier spills” as individual “releases,” does not support Plaintiff’s

position. 759 F.2d 1032, 1044-45 (2d Cir. 1985). That case involved several discharges from

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tanks and drums that occurred over a period of years, but notably, the tanks and drums contained

stand-alone quantities of benzene and other toxic chemicals. Id. at 1038. In finding that

persistent chemical leaching and seeping were actionable, the Second Circuit held only that

continuing leaks from the original storage facility into groundwater and a nearby bay were

additional releases. See id. at 1038-39, 1045 (e.g., “seepage from the bulkhead . . . leakage from

some of the tanks”). The Court did not address facts like those in the instant case—involving

gasoline’s breakdown to a more elemental form—because the original materials leaked in Shore

Realty were not petroleum or gasoline mixtures, but rather, were undisputedly hazardous

substances. Shore Realty is therefore inapposite and sheds little light on the arguments made

here.

It should also be noted that EPA opinions are in tension with Plaintiff’s position, if not

wholly contrary to it.2 And the EPA’s interpretation of the petroleum exclusion is entitled to

substantial deference. Chevron, USA, Inc. v. Natural Resources Defense Council, 467 U.S. 837,

842-45 (1984) (court may not substitute its own construction for a reasonable agency

interpretation).

Further, Plaintiff has cited no authority supporting the proposition that degradation of

gasoline re-releases hazardous substances contained therein. This argument, rather, is in tension

with the basic factual premise of this dispute. In the pleadings, Plaintiff concedes that no

benzene in its pure form was stored at Getty Station. Compl. ¶ 112. Plaintiff also concedes that

the only fraction of petroleum or crude oil stored and released from Getty Station was gasoline.

2 See Memorandum from Francis Blake, General Counsel, EPA, regarding Scope of the CERCLA Petroleum Exclusion under Sections 101(14) and 104(a)(2) (July 31, 1987), at 5 (petroleum includes “crude oil and fractions of crude oil, including the hazardous substances, such as benzene, which are indigenous in those petroleum substances”).

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Id. ¶ 113. This was, after all, a gasoline filling station. Although the complaint does not

elaborate on the circumstances of the original gasoline discharge, the case plainly centers on the

release of gasoline into groundwater and the residual effects of that release.

It may well be that constituent parts of the gasoline have since dispersed and that benzene

did so more quickly than other chemicals. Plaintiff contends a benzene “plume” now threatens

to impact its property. But that dispersion, a secondary effect of the initial gasoline release, does

not alter the nature of the release. If it did, that would frustrate the purpose of the petroleum

exclusion, since plaintiffs could simply wait until a spilled petroleum product breaks down into

elemental form, and then sue. Query when along the spectrum of chemical degradation such a

claim would accrue for statute of limitations purposes.

Ultimately, the Court agrees with Defendants that on the face of the complaint, no release

of benzene, as opposed to gasoline, is alleged. Plaintiff therefore cannot avoid the petroleum

exclusion. That exclusion bars the cost recovery claim. The declaratory relief claim fails in turn.

Those two claims are dismissed.

B. RCRA

Plaintiff asserts the RCRA claim against the Getty Defendants only. Section 6972(a) of

the RCRA provides a private right of action, much like CERCLA does:

[A]ny person may commence a civil action on his behalf . . . against any person . . . including any past or present generator . . . or past or present owner or operator of a treatment . . . facility, who has contributed or who is contributing to the past or present handling, storage, treatment . . . or disposal of any solid or hazardous waste which may present an imminent and substantial endangerment to health or the environment . . . .

42 U.S.C. § 6972(a)(1)(B). “The language of this section of the RCRA is expansive, and is

‘intended to confer upon the courts the authority to grant affirmative equitable relief to the extent

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necessary to eliminate any risk posed by toxic wastes.’” Kara Holding Corp. v. Getty Petroleum

Mktg., Inc., 67 F. Supp. 2d 302, 310 (S.D.N.Y. 1999) (quoting United States v. Price, 688 F.2d

204, 214 (3d Cir. 1982)).

There is no petroleum exclusion in the RCRA. There are, however, certain other carve-

outs:

No action may be commenced . . . if the State . . . (i) has commenced and is diligently prosecuting an action under subsection (a)(1)(B) of this section; (ii) is actually engaging in a removal action under section 104 of [CERCLA]; or (iii) has incurred costs to initiate a Remedial Investigation and Feasibility Study under [CERCLA] and is diligently proceeding with a remedial action under that Act . . . .

42 U.S.C. § 6972(b)(2)(C). The Getty Defendants seek dismissal of the RCRA claim pursuant to

these carve-outs, arguing that the DEC is “actually engaging in a removal action” and that the

DEC “has incurred costs to initiate a study . . . and is diligently proceeding.” See Getty Mem. at

10-11. The Getty Defendants concede that the DEC has not commenced any court action, and

they further concede the absence of an action or costs incurred under CERCLA. Id. at 11. Even

so, they argue that diligent DEC oversight of ongoing remediation bars recovery under the

RCRA. To demonstrate the required diligence, they rely on the Hatcher Affidavit almost

exclusively.

The Court has stricken the Hatcher Affidavit and thus the affidavit and enclosed materials

do not compel dismissal of the RCRA claim. Further, even assuming arguendo that the Getty

Defendants’ submission demonstrates DEC diligence, their argument fails because they concede

the absence of an outright DEC lawsuit, while describing only state administrative enforcement.

“[S]tate administrative actions simply do not constitute ‘actions,’” as contemplated in Subsection

6972(b)(2)(C)(i) of the RCRA. Kara Holding Corp., 67 F. Supp. 2d at 307 (collecting

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authorities); see also Orange Env’t, Inc. v. Cnty. Of Orange, 860 F. Supp. 1003, 1024 (S.D.N.Y.

1994) (“[W]e hold that subsection (b)(2)(C)(i) only prohibits (a)(1)(B) claims where a state has

brought an action in court.”). Thus, the first carve-out—for diligent prosecution of an action

under the RCRA—does not preclude an RCRA claim. Kara Holding Corp., 67 F. Supp. 2d at

307. The cases the Getty Defendants cite do not disturb this conclusion; most involved outright

EPA lawsuits, i.e., “actions,” and several of the cases are inapposite because they arose under

different statutes entirely.

Likewise, the argument that RCRA subsections (b)(2)(C)(ii) or (iii) precludes the claim

fails because the Getty Defendants conflate DEC state enforcement with a removal action and

costs incurred under CERCLA. The exclusions at (ii) and (iii) plainly require the latter,

CERCLA-specific enforcement. Orange Env’t, Inc., 860 F. Supp. At 1026. At the least, there

must be federal authorization to carry out a removal action pursuant to a settlement agreement or

a joint federal-state cooperative enforcement agreement, id. at 1026, 1028,3 and no such

agreement is alleged or judicially noticeable here. Rather, taking the complaint at face value, the

DEC received reports, provided oversight, and approved work plans for remediation efforts (see

Compl. ¶¶ 38, 59, 62-63), but the agency did so without federal cooperation and without taking

any action under CERCLA. The Getty Defendants therefore cannot capitalize on the latter two

carve-outs from the RCRA either. Their motion to dismiss the RCRA claim is denied.

C. SUPPLEMENTAL JURISDICTION

Next, all Defendants move to dismiss the state law claims pursuant to Rule 12(b)(1), for

3 See also Solvent Chem. Co. ICC Indus., Inc. v. E.I. Dupont De Nemours & Co., 242 F. Supp. 2d 196, 219 (W.D.N.Y. 2002) (“Plaintiffs, not the State, are remediating the 3163 Buffalo Avenue Site and Olin Hot Spot, and their remedial efforts have been conducted under the State’s Environmental Conservation Law, not CERCLA . . . . Thus, the exception under RCRA Section 7002(b)(2)(C)(iii) does not apply.”).

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lack of subject matter jurisdiction, thereby requesting that the Court decline to exercise

supplemental jurisdiction over those claims. “In any civil action of which the district courts have

original jurisdiction, the district courts shall have supplemental jurisdiction over all other claims

that are so related to claims in the action within such original jurisdiction that they form part of

the same case or controversy under Article III of the United States Constitution.” 28 U.S.C. §

1367(a). “The district court may decline to exercise supplemental jurisdiction over a claim under

subsection (a) if the district court has dismissed all claims over which it has original

jurisdiction.” Id. § 1367(c)(3). “In the usual case in which all federal-law claims are eliminated

before trial, the balance of factors to be considered under the pendent jurisdiction doctrine—

judicial economy, convenience, fairness, and comity—will point toward declining to exercise

jurisdiction over the remaining state-law claims.” Dilaura v. Power Auth. of N.Y., 982 F.2d 73,

80 (2d Cir. 1992).

In light of the above rulings, dismissal of the state law claims pursuant to Rule 12(b)(1) is

not warranted. The Court has dismissed the CERCLA claim asserted against all Defendants, but

has sustained the RCRA claim asserted against the Getty Defendants. Because a federal claim

remains against at least one defendant, judicial economy will not be served by dismissing state

law claims which arise from substantially the same “common nucleus of operative fact.” United

Mine Workers v. Gibbs, 383 U.S. 715, 725 (1966). There is no federal claim remaining against

Singer, and thus arguably Singer should be free to litigate in state, rather than federal, court. But

that would not accomplish judicial economy since it would create duplicative actions. Parallel

federal and state litigation likely would inconvenience both courts and at least one of the parties,

Plaintiff. It also could jeopardize principles of fairness and comity, given the risk of inconsistent

decisions by the two courts on substantially identical state law claims. The balance of factors

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under the pendent jurisdiction doctrine therefore compel retention of the state law claims against

both the Getty Defendants and Singer. The motions to dismiss those claims for lack of subject

matter jurisdiction are denied.

D. STATE LAW CLAIMS4 Finally, Singer moves to dismiss each of the five state law claims against it pursuant to

Rule 12(b)(6). The Court will address each claim in turn.

1. New York Navigation Law

The New York Navigation Law (a/k/a the “Oil Spill Act”) imposes statutory strict

liability on parties “who ha[ve] discharged petroleum.” N.Y. Nav. Law § 181(1). A viable

Section 181(1) claim requires that: (i) Defendants are “dischargers”; (ii) a discharge of

petroleum occurred; and (3) the discharge contaminated Plaintiff’s property. Lambrinos v.

Exxon Mobil Corp., No. 00-cv-1734, 2004 U.S. Dist. LEXIS 19598, at *19 (N.D.N.Y. Sept. 29,

2004) (summarizing New York state authorities).

Singer first argues that the Navigation Law claim should be dismissed because Plaintiff

has not alleged that Singer controlled the property or events leading to the original gasoline spill,

in other words, that Singer was a discharger. Singer Mem. at 12-13. That argument fails

because the New York Court of Appeals has sustained a Section 181(1) claim against a property

owner that purchased a gasoline service station with knowledge of a previous petroleum spill and

the need for cleanup. New York v. Speonk Fuel, Inc., 3 N.Y.3d 720, 724 (2004); see also Sunrise

Harbor Realty, LLC v. 35th Sunrise Corp., 86 A.D.3d 562, 565 (App. Div. 2011) (“[A]

4 The parties, all of whom are organized, were doing business, or owned property in New York, agree that New York law applies to all state law claims asserted. Accord Geron, 736 F.3d at 221-20 (under the applicable “interest analysis” for choice of law in tort actions, “the significant contacts are, almost exclusively, the parties’ domiciles and the locus of the tort” (quotation marks and citation omitted)).

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landowner who purchases the property after a spill occurred may be liable if it did nothing after

it learned of the discharge and the need for a cleanup.”). The property owner’s “ability to clean

up the contamination” is sufficient to confer “discharger” status under the statute. See Sunrise

Harbor Realty, 86 A.D.3d at 565.

Here, Plaintiff contends the Getty Defendants’ remediation efforts continued after Singer

purchased the property in 2011, but the complaint alleges that remediation has failed and

suggests Singer has done nothing proactive to cure the problem. See, e.g., Compl. ¶¶ 45, 57, 69,

83. At this stage, the Court must draw all reasonable inferences in Plaintiff’s favor, including the

inference that Singer, as owner of the former Getty Station, could have done something to abate

the contamination. See Speonk, 3 N.Y.3d at 724 (“While we decline to specify any particular

action that Speonk might have undertaken, we consider it sufficient for purposes of liability here

that, with knowledge of its [predecessor’s] discharge of oil and the need for cleanup, Speonk did

nothing.”).

Singer next argues that the claim should be dismissed because no discharge occurred

during Singer’s ownership of the property. Speonk Fuel and Sunrise Harbor Realty likewise

undercut that argument. See also State v. C.J. Burth Servs., Inc., 79 A.D.3d 1298, 1300-01 (App.

Div. 2010) (property owner liable for failure to take action even though did not cause leakage or

own property at time leakage began). Again, while the complaint does allege that certain

remediation efforts have taken place, presumably through access Singer granted, the efforts

allegedly were ineffective. See Compl. ¶¶ 38-65, 83. Singer arguably should have done

something more proactive to clean up the contamination. Speonk, 3 N.Y.3d at 724; Sunrise

Harbor Realty, 86 A.D.3d at 565.

Finally, Singer argues that the claim should be dismissed because Plaintiff asserted that

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no “petroleum” contamination affected its property (see CERCLA discussion, supra). As noted,

however, regardless of how the complaint or briefs attempt to characterize the residual

contamination, this case centers on the release of gasoline, a petroleum product. As such, the

case falls squarely within the province of the Oil Spill Act. Singer’s motion to dismiss that claim

is denied.

2. Private Nuisance

In order to establish liability under a private nuisance theory, Plaintiff must show that

defendant’s conduct:

is a legal cause of the invasion of the interest in the private use and enjoyment of land and such invasion is (1) intentional and unreasonable, (2) negligent or reckless, or (3) actionable under the rules governing liability for abnormally dangerous conditions or activities.

Scribner v. Summers, 84 F.3d 554, 559 (2d Cir. 1996) (internal citation and quotation omitted).

If based on an “intentional and unreasonable” invasion, the claim requires that (a) the defendant

acted for the purpose of causing the invasion, or (b) knew that it was resulting or was

substantially certain to result from the defendant’s conduct. Id. (quoting Copart Indus., Inc. v.

Consolidated Edison Co., 41 N.Y.2d 564, 571 (1977)). A “negligent or reckless” act or omission

which causes an intrusion can also support a private nuisance claim. Id.

Singer argues that the claim should be dismissed because Plaintiff has not alleged any

specific acts or omissions by Singer. Singer Mem. at 17. This argument fails, however, because

(as under the Oil Spill Act) the New York Court of Appeals has held that mere “failure to act”

can support a private nuisance claim. Copart Indus., Inc., 41 N.Y.2d at 570. Thus, the general

allegation that Singer purchased contaminated property and took no steps to clean it up is legally

sufficient. See Shore Realty, 759 F.2d at 1050-51 (private nuisance claim viable where

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landowner learned of nuisance on its property and had a “reasonable opportunity to abate it”).

Although the complaint is indeed silent as to what specific steps Singer should have taken, nearly

three years passed between the time Singer purchased the property and the time this action was

filed. It can be inferred that during that time, Singer had a “reasonable opportunity” to abate the

continued migration of benzene through groundwater and yet did not do so. Id. The allegations

are therefore sufficient to state a private nuisance claim against Singer. The motion to dismiss

that claim is denied.

3. Trespass

“Under New York law, trespass is the intentional invasion of another’s property.”

Scribner, 84 F.3d at 557. “To be liable, the trespasser need not intend or expect the damaging

consequences of his intrusion; rather, he need only ‘intend the act which amounts to or produces

the unlawful invasion.’” Hanna v. Motiva Enters., LLC, 839 F. Supp. 2d 654, 671 (S.D.N.Y.

2012) (quoting Scribner, 84 F.3d at 557). “When trespass claims arise from the movement of

noxious liquids from one property to another, the appropriate standard is whether defendants:

(1) intended the act which amounts to or produces the unlawful invasion, and (2) had good

reason to know or expect that subterranean and other conditions were such that there would be

passage of the contaminated water from defendants’ to plaintiffs’ land.” Id.

Singer argues that the trespass claim should be dismissed because the complaint alleges

only that Singer took title to the property in 2011 and stood by while benzene continued to

migrate through groundwater onto Plaintiff’s property. See Singer Mem. at 19. In response,

Plaintiff contends the allegation concerning continued migration of hazardous substances from

the former Getty Station is sufficient. See, e.g., Compl. ¶ 130 (continued releases), ¶ 207

(continued migration).

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Under New York law, the “intentional act” requirement for trespass is more stringent

than the aforementioned requirements for the Navigation Law and private nuisance claims.

Compare Hanna, 839 F. Supp. 2d at 671 (must “intend the act”), with Speonk, 3 N.Y.3d at 724

(doing nothing suffices), and Shore Realty, 759 F.2d at 1050-51 (failure to abate suffices). The

complaint alleges virtually no facts concerning the acts which precipitated the gasoline spill at

Getty Station. Cf. Hanna, 839 F. Supp. 2d at 671. The complaint mentions a release of gasoline

prior to 1988 but contains no further explanation of that event. See Compl. ¶¶ 14, 113.

Whatever the details, the complaint is silent as to any intentional act Singer may have taken

which could have “amounted to or produced” the subterranean benzene invasion. Hanna, 839 F.

Supp. 2d at 671. Notably, the initial encroachment onto Plaintiff’s property occurred years

before Singer bought the former Getty Station. Compl. ¶ 17. On those facts, unlike tort theories

which countenance successor-owner liability for failure to clean up or abate contamination, it

cannot be said that Singer intended or precipitated a trespass. That claim is dismissed.

4. Strict Liability

Next, New York common law imposes strict liability on landowners for certain

abnormally dangerous or ultra-hazardous activities taking place on their property. See

Doundoulakis v. Town of Hempstead, 42 N.Y.2d 440, 448 (1977). Singer argues that the strict

liability claim should be dismissed because gasoline storage and use is commonplace and not

considered abnormally dangerous or ultra-hazardous. See Singer Mem. at 20 (citing authorities).

Plaintiff responds that the claim survives because the basis for strict liability is not gasoline

storage, but rather, “the handling (or mishandling) of the hazardous wastes, solid wastes and

hazardous substances” at and from Getty Station and the “deliberate failure to control the

migration of chemicals.” Plaintiff’s Mem. at 31.

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Singer is correct that storage and use of gasoline at filling stations is not considered

abnormally dangerous and does not support strict liability, see 750 Old Country Road Realty

Corp. v. Exxon Corp., 645 N.Y.S.2d 186, 87 (App. Div. 1996), and this settled law undercuts the

argument that the handling and clean-up of gasoline residue supports a strict liability claim.

Various arguments can be made under the factors laid out in the Restatement (see Plaintiff’s

Mem. at 32), but absent New York state authority holding that the clean-up of spilled gasoline is

abnormally dangerous or ultra-hazardous, this Court declines to make that leap.

Moreover, the gravamen of Plaintiff’s argument here is that mishandling contaminant

remediation is ultra-hazardous. And yet the complaint does not allege that Singer was involved

in the remediation. Indeed, Plaintiff pleads and argues the opposite in support of other claims.

Although Singer’s passive role may support liability on grounds such as nuisance or negligence,

that role undercuts the contention that Singer is strictly liable under common law for “handling

(or mishandling) of the hazardous wastes.” Plaintiff’s Mem. at 31. Singer’s passive role also

distinguishes this case from scenarios where landowners actively continue to store or maintain

toxic substances on the premises. See, e.g., Shore Realty, 759 F.2d at 1051-52 (defendant’s

“maintenance of the site—for example, allowing corroding tanks to hold hundreds of thousands

of gallons of hazardous waste—constitutes abnormally dangerous activity and thus constitutes a

public nuisance”).

For these reasons, the Court finds the pleading inadequate to support a common law strict

liability claim against Singer. Singer’s motion to dismiss that claim is granted.

5. Negligence

Finally, negligence requires a duty owed and breached, damages, and causation.

McCarthy v. Olin Corp., 119 F.3d 148, 161 (2d Cir. 1997). Singer argues that Plaintiff has not

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alleged that Singer breached any duty. Plaintiff responds that the complaint does, in fact, assert a

breach of duty: knowingly allowing contamination to migrate onto a neighbor’s property. See

Compl. ¶ 102.

In contrast to the common law strict liability analysis, the complaint adequately alleges a

breach of duty for negligence purposes. Two interrelated principles support this conclusion.

First, landowners owe a duty to keep their land safe, which runs to tenants, patrons, invitees, and

also those in close proximity for whom injury is foreseeable. 532 Madison Ave. Gourmet Foods,

Inc. v. Finlandia Ctr., Inc., 96 N.Y.2d 280, 290 (2001) (“A landowner who engages in activities

that may cause injury to persons on adjoining premises surely owes those persons a duty to take

reasonable precautions to avoid injuring them.”). Second, that duty arises not only when a

landowner creates a dangerous condition on the land, but also when a third-party or force

majeure creates it and the landowner knowingly fails to cure it. See id. at 288-89 (landowners’

“special relationship puts them in the best position to protect against the risk,” even if the risk

arises from the harmful conduct of others). In short, under the negligence principles applicable

to landowners, the mere failure to abate a known dangerous condition is a cognizable breach of

duty. In this way, the negligence claim is much like the Navigation Law and private nuisance

claims. Plaintiff adequately has alleged landowner failure to abate a known dangerous condition

from 2011, when Singer purchased the property, through the present. Singer’s motion to dismiss

the negligence claim is denied.

IV. CONCLUSION

For the reasons stated above, both motions to dismiss the CERCLA claim are

GRANTED. The Getty Defendants’ motion to dismiss the RCRA claim is DENIED. Singer’s

motion to dismiss the state law claims is GRANTED as to trespass and common law strict

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liability, but is DENIED as to Navigation Law§ 181(1), private nuisance, and negligence.

The Clerk of Court is respectfully requested to terminate the motions at docket numbers

34 and 36. Defendants shall serve and file their answers to the complaint by January 21, 2015.

Dated: December Jl32014 White Plains, New York

28

SO ORDERED:

Unit

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF WASHINGTON

JOSEPH A. PAKOOTAS, an )individual and enrolled ) No. CV-04-256-LRSmember of the Confederated )Tribes of the Colville ) ORDER DENYING MOTION Reservation; and DONALD ) FOR RECONSIDERATION,R. MICHEL, an individual ) INTER ALIAand enrolled member of the ) Confederated Tribes of the )Colville Reservation, and THE )CONFEDERATED TRIBES OF )THE COLVILLE RESERVATION, )

)Plaintiffs, )

)and )

)THE STATE OF WASHINGTON, )

) Plaintiff-Intervenor, )

))

vs. ) )

TECK COMINCO METALS, LTD., )a Canadian corporation, )

)Defendant. )

______________________________)

BEFORE THE COURT are Defendant’s Motion For Reconsideration Of

Order Denying Motion To Strike Or Dismiss (ECF No. 2118), and Defendant’s

Motion To Modify Phase II Schedule Regarding Aerial Emission Allegations

(ECF No. 2119). Telephonic argument was heard on December 16, 2014.

///

ORDER DENYING MOTIONFOR RECONSIDERATION- 1

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Defendant asks the court to reconsider its order which declined to strike or

dismiss Plaintiffs’ allegations concerning aerial emissions as a basis for recovery

of response costs and natural resource damages. (See “Order Denying Motion To

Strike Or Dismiss” at ECF No. 2115). Defendant asks for reconsideration on the

basis of the Ninth Circuit’s August 20, 2014 decision in Center For Community

Action and Environmental Justice v. BNSF Railway Company, 764 F.3d 1019

(2014) (“CCAEJ”). On October 20, 2014, the Ninth Circuit denied a petition for

rehearing en banc and its mandate issued on October 30.

I. DISCUSSION

CCAEJ is a Resource Conservation and Recovery Act (RCRA) case, 42

U.S.C. §§ 6901-6992k. It is not a Comprehensive Environmental Response,

Compensation, and Liability Act (CERCLA) case, 42 U.S.C. §9601 et seq., and

makes no mention of CERCLA. That said, CERCLA borrows RCRA’s definition

of “disposal” which is as follows:

[T]he discharge, deposit, injection, dumping, spilling,leaking, or placing of any solid waste or hazardouswaste into or on any land or water so that such solidwaste or hazardous waste or any constituent thereofmay enter the environment or be emitted into the airor discharged into any waters, including ground waters.

42 U.S.C. § 6903(3). (Emphasis added).

In CCAEJ, the Ninth Circuit had this to say about § 6903(3):

We note first that RCRA’s definition of “disposal” does notinclude the act of “emitting.” Instead, it includes only actsof discharging, depositing, injecting, dumping, spilling,leaking, and placing. That “emitting” is not included inthat list permits us to assume, at least preliminarily, that“emitting” solid waste into the air does not constitute“disposal” under RCRA.

. . .

ORDER DENYING MOTIONFOR RECONSIDERATION- 2

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The text of §6903(3) is also very specific: it limits thedefinition of “disposal” to particular conduct causing aparticular result. By its terms, “disposal” includes onlyconduct that results in the placement of solid waste“into or on any land or water.” 42 U.S.C. §6903(d). That placement, in turn, must be “so that such solid waste. . . may enter the environment or be emitted into the airor discharged into any waters, including ground waters.”Id. We therefore conclude that “disposal” occurs wherethe solid waste is first placed “into or on any land or water”and is thereafter “emitted into the air.”

Id. at 1024. (Emphasis in original).

In their complaint, the CCAEJ plaintiffs alleged the defendants “dispose” of

solid waste (diesel particulate matter) by allowing the waste to be “transported by

wind and air currents onto the land and water near the railyards.” Plaintiffs

alleged the particulates are then “inhaled by people both directly and after the

particles have fallen to the earth and then have been re-entrained into the air by

wind, air currents, and passing vehicles.” Id. at 1023. According to the Ninth

Circuit:

The solid waste at issue here . . . at least as it is characterizedin Plaintiffs’ complaint, is not first placed “into or on anyland or water”; rather, it is first emitted into the air. Onlyafter the waste is emitted into the air does it then travel“onto the land and water.” To adopt Plaintiffs’ interpretationof §6903(3), then, would effectively be to rearrange thewording of the statute- something that we, as a court,cannot do. Reading §6903(3) as Congress has drafted it,“disposal” does not extend to emissions of solid wastedirectly into the air.

Id. at 1024.

Defendant Teck Cominco Metals, Ltd. (“Teck”) says this court “denied [its]

motion [to strike or dismiss], agreeing with Plaintiffs that emissions to air could

constitute a CERCLA disposal.” This court, however, did not find that aerial

emissions from Teck’s smelter constitute a “CERCLA disposal.” Indeed, they

cannot be a “CERCLA disposal” because what gives rise to arranger liability

ORDER DENYING MOTIONFOR RECONSIDERATION- 3

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under the plain terms of 42 U.S.C. § 9607(a)(3) is “disposal . . . of hazardous

substances . . . at any facility . . . from which there is a release . . . of a hazardous

substance . . . .” Defendant’s Trail, B.C. Smelter is not a “facility” under

CERCLA, nor are the skies above the smelter, nor is the river running alongside

the smelter. The “facility” is the UCR Site located in the United States. “Facility”

is a term of art under CERCLA, defined at 42 U.S.C. § 9601(9) as “any site or area

where a hazardous substance has been deposited, stored, disposed of, or placed,

or otherwise come to be located . . . .” (Emphasis added). Liability under

RCRA, on the other hand, does not depend on there being a disposal at a

“facility.” RCRA’s citizen suit provision authorizes private parties to sue “any

person who has contributed or who is contributing to the past or present . . .

disposal of any solid or hazardous waste which may present an imminent and

substantial endangerment to health or the environment.” 42 U.S.C. §

6972(a)(1)(B).

As this court explained in its “Order Denying Motion To Strike Or

Dismiss,” the “CERCLA disposal” alleged by Plaintiffs occurred when hazardous

substances from Teck’s aerial emissions and its river discharges were deposited

“into or on any land or water” of the UCR Site. This disposal occurred in the

“first instance” into or on land or water of the UCR Site and therefore, does not

run afoul of RCRA’s definition of “disposal” as interpreted by the Ninth Circuit in

CCAEJ.

RCRA’s definition of “disposal” is colored by how that term is used in the

CERCLA context. And in the CERCLA context, it means disposal “into or on any

///

///

///

ORDER DENYING MOTIONFOR RECONSIDERATION- 4

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land or water” of the “facility,” that being the UCR Site.1 RCRA’s definition of

“disposal” cannot be viewed apart from what § 9607(a)(3) of CERCLA has in

mind regarding liability for the cleanup of a “facility.” RCRA is not concerned

with cleanup of a “facility” and that term is not defined in RCRA. The harm

sought to be remedied in the CCAEJ case was inhalation of diesel particulate

matter by humans. (See Plaintiff’s First Amended Complaint, ECF No. 10 in CV-

11-08608-SJO). Recognizing as much, the Ninth Circuit in its decision framed the

issue as whether RCRA “may be used to enjoin the emission from Defendant’s

railyards of particulate matter found in diesel exhaust.” CCAEJ, 764 F.3d at 1020.

The Ninth Circuit in CCAEJ had no reason to consider how its interpretation of

“disposal” relates to the additional CERCLA definitions of “facility” and

“release.”

This court has analytically treated Defendant’s discharge of slag and liquid

effluent into the Columbia River in the same fashion. The CERCLA disposal

“into or on any land or water” was not the discharge of slag and liquid effluent

into the Columbia River at the Trail Smelter. Rather, it was the disposal of

hazardous substances contained in that slag and effluent which occurred when the

slag and effluent were deposited “into or on any land or water” of the UCR Site.

Accordingly, as this court quoted in its “Order Denying Motion To Strike Or

///

1 In CCAEJ, the Ninth Circuit acknowledged the importance of context in

determining what “disposal” means under RCRA:

Thus, we preliminarily conclude- based on the statute’swording considered alone and in context- that emittingdiesel particulate matter into the air does not constitute“disposal” as that term is defined under RCRA.

764 F.3d at 1025. (Emphasis added).

ORDER DENYING MOTIONFOR RECONSIDERATION- 5

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Dismiss,” one of its “Conclusions of Law” regarding Defendant’s CERCLA

liability for river pathway response costs was that:

Disposal at the UCR Site occurred when, after Teck activelyand intentionally discarded its slag and effluent as waste intothe Columbia River at Trail, at least some portion of that slag andeffluent came to a point of repose at the UCR Site.

(Paragraph 18 at pp. 42-43, ECF No. 1955). (Emphasis added).

Emissions into the air and river discharges in Trail, B.C. are disposals in an

ordinary sense, but they do not constitute “CERCLA disposals.” And for that

matter, they do not constitute RCRA disposals because there is no authority of

which this court is aware that RCRA can be applied extraterritorially to regulate

generation and disposal of hazardous waste in Canada. Emissions to the air alone

do not constitute a “CERCLA disposal.”

In over 30 years of CERCLA jurisprudence, no court has impliedly or

expressly addressed the issue of whether aerial emissions leading to disposal of

hazardous substances “into or on any land or water” are actionable under

CERCLA. A reasonable explanation is that the issue simply has not been raised in

any CERCLA case. Instead, it appears to have been treated as a given that if

hazardous substances from aerial emissions are “disposed” of “into or on any land

or water” of a CERCLA “facility,” response costs and natural resource damages

can be recovered for cleaning up those hazardous substances and compensating

for harm caused.

This court ascribes no particular significance to the fact the United States

decided not to submit an amicus brief in support of a petition for rehearing en

banc in the CCAEJ case. A reasonable explanation is the United States recognized

the circuit was unlikely to grant a petition to address the CERCLA ramifications

of a decision that did not involve CERCLA. Instead, the United States opted to

ORDER DENYING MOTIONFOR RECONSIDERATION- 6

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file an amicus brief with this court in this CERCLA case. Likewise, this court

ascribes no particular significance to the circuit’s declining the CCAEJ plaintiffs’

petition for rehearing en banc. A reasonable explanation is the circuit was

unwilling to undertake an examination of potential CERCLA ramifications from a

decision that did not involve CERCLA.

II. CONCLUSION/CERTIFICATION

Fed. R. Civ. P. 60(b)(6) permits a court to relieve a party from an order for

“any reason that justifies relief.” It “is to be used sparingly as an equitable remedy

to prevent manifest injustice and is to be utilized only where extraordinary

circumstances exist.” Harvest v. Castro, 531 F.3d 737, 749 (9th Cir. 2008).

“A motion for reconsideration should not be granted, absent highly unusual

circumstances, unless the district court is presented with newly discovered

evidence, committed clear error, or if there is an intervening change in the

controlling law.” Marlyn Nutraceuticals, Inc. v. Mucos Pharma GmbH & Co.,

571 F.3d 873, 880 (9th Cir. 2009).

For the reasons set forth above, this court’s “Order Denying Motion To

Strike Or Dismiss” is not clearly contrary to the Ninth Circuit’s decision in

CCAEJ and therefore, is not clearly erroneous so as to warrant reconsideration.

Nor does CCAEJ, on its face at least, represent an “intervening change in the

controlling law” with regard to CERCLA and indeed, it is not apparent it even

represents an “intervening change in the controlling law” with regard to RCRA.

Accordingly, Teck’s Motion For Reconsideration (ECF No. 2118) is DENIED.

While this court is confident in its analysis of how RCRA’s definition of

“disposal” is to be interpreted in a CERCLA context, it again acknowledges that

apparently no court has addressed this issue head-on. Therefore, the court hereby

ORDER DENYING MOTIONFOR RECONSIDERATION- 7

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CERTIFIES its “Order Denying Motion To Strike Or Dismiss” and this “Order

Denying Motion For Reconsideration” for an immediate interlocutory appeal to

the Ninth Circuit Court of Appeals pursuant to 28 U.S.C. § 1292(b). Because of

the Ninth Circuit’s decision in CCAEJ, in particular its interpretation of the term

“disposal” as defined in RCRA, there is a “substantial ground for difference of

opinion” on the “controlling question of law” of whether Teck’s aerial emissions

are actionable under CERCLA if they result in a “disposal” of hazardous

substances “into or on any land or water” of the UCR Site (a CERCLA “facility”).

A decision from the Ninth Circuit on this issue will “materially advance the

ultimate termination of this litigation.” If the air pathway is eliminated from this

case, it will undoubtedly reduce the time necessary to bring this case to a

conclusion because it will leave only the recovery of response costs and natural

resource damages resulting from Teck’s discharges of slag and effluent into the

river.

Of course, this court does not have the final say on whether there will be an

interlocutory appeal. Within ten (10) days after this court’s certification, Teck will

have to file a petition with the circuit seeking permission to appeal. Fed. R. App.

P. 5. This court has discretion to stay the air pathway portion of the case while

that petition is pending. The parties have already stipulated to a three months

extension of certain Phase II pretrial dates pertaining primarily to air allegations

(ECF Nos. 2133 and 2142).2 Lest there be any misunderstanding as to precisely

2 It is the court’s understanding that the parties have not stipulated to alter

any of the Phase II Schedule dates as they pertain to the river pathway portion of

the case in Phase II (determination of recoverable response costs), with the

exception of the date pertaining to completion of fact discovery.

ORDER DENYING MOTIONFOR RECONSIDERATION- 8

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which dates are impacted, the parties may wish to file an additional stipulation

which clarifies the same. Depending on the length of time it takes for the circuit

to determine whether it will entertain an interlocutory appeal, this court will, upon

motion by the Defendant or stipulation of the parties, consider whether that time

should be added to the extension to which the parties have already stipulated.

Resolution of Defendant’s Motion To Modify Phase II Schedule (ECF No.

2119) is STAYED pending the Ninth Circuit’s determination of whether it will

entertain an interlocutory appeal in this matter. Should the circuit deny permission

to appeal, the court will proceed to resolve the motion. Should the Ninth Circuit

permit the appeal, this court will stay the air pathway portion of the case pending

resolution of the appeal, seemingly rendering moot Defendant’s Motion To

Modify Phase II Schedule.

IT IS SO ORDERED. The District Court Executive is directed to enter

this order and forward copies to counsel of record.

DATED this 31st day of December, 2014.

s/Lonny R. Suko

LONNY R. SUKO Senior United States District Judge

ORDER DENYING MOTIONFOR RECONSIDERATION- 9

Case 2:04-cv-00256-LRS Document 2149 Filed 12/31/14

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK ----------------------------------------------------- ~

IN RE: METHYL TERTIARY BUTYL ETHER ("MTBE") PRODUCTS LIABILITY LITIGATION

This document relates to:

Orange County Water District v. Unocal Corporation, et al., 04 Civ. 4968

----------------------------------------------------- ~

SHIRA A. SCHEINDLIN, U.S.D.J.:

I. INTRODUCTION

I; ,

- • •• < ~-- .... '

OPINION AND ORDER

Master File No. 1:00-1898 MDL 1358 (SAS) M21-88

This is a consolidated multi-district litigation ("MDL") relating to

contamination - actual or threatened - of groundwater from various defendants'

use of the gasoline additive methyl tertiary butyl ether ("MTBE") and/or tertiary

butyl alcohol, a product formed by the breakdown ofMTBE in water. In this case,

plaintiff Orange County Water District (the "District"), which is charged with

maintaining groundwater quality, alleges that defendants' use and handling of

MTBE has contaminated, or threatened to contaminate groundwater within its

jurisdiction. Familiarity with the underlying facts is presumed for the purposes of

'>.

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this Order.1

Currently before the Court are two motions: (1) a motion for

summary judgment brought by all defendants in this action on various grounds (the

“Omnibus Motion”),2 and (2) a motion for partial summary judgment brought by

certain defendants on claims brought by the District at four designated focus trial

sites, alleging that the District suffered no compensable injury or cognizable

damages at those trial sites (the “Trial Sites Motion”).3 For the reasons stated

below, defendants’ Omnibus Motion is GRANTED in part and DENIED in part.

Defendants’ Trial Sites Motion is DENIED.

1 For a thorough recitation of the District’s factual allegations, see In reMTBE, 824 F. Supp. 2d 524, 529-32 (S.D.N.Y. 2011); In re MTBE, 676 F. Supp.2d 139, 149-50 (S.D.N.Y. 2009).

2 For a detailed list of the specific grounds and corresponding movants,see Memorandum of Points and Authorities in Support of Defendants’ Motion forSummary Judgment (“Def. Mem.”) at 26-35.

3 See generally Memorandum of Law of Defendants Atlantic RichfieldCompany, BP West Coast Products LLC, BP Products North America, Inc., ArcoChemical Company, Lyondell Chemical Company, Shell Oil Company, EquilonEnterprises LLC, Texaco Refining and Marketing Inc., Union Oil Company ofCalifornia, Valero Marketing and Supply Company, Valero RefiningCompany–California, and Ultramar Inc. in Support of Their Motion for SummaryJudgment Due to Lack of Injury and Damages at Certain Trial Sites (“Def. TrialSites Mem.”).

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II. BACKGROUND4

The history of this now ten year old lawsuit is contained within the

hundreds of pages worth of prior opinions I have already issued in this case. Once

again, I provide a very brief overview. The crux of the District’s lawsuit is that

releases of MTBE, contained in defendants’ gasoline, have reached, or will reach,

water production wells, contaminating Orange County’s water supply. For the past

decade, defendants have chipped away at the District’s case through various

stipulations and favorable summary judgment rulings.5 The District’s own

attempts to prevail on its claims before trial have been less successful.6 What

remains are the District’s timely claims for nuisance, negligence, strict liability,

4 The facts recited below are drawn from the pleadings, the parties’Local Civil Rule 56.1 Statements, the declarations submitted in connection withthis motion, and the exhibits attached thereto. These facts are undisputed unlessotherwise noted. Where disputed, the facts are viewed in the light most favorableto the nonmoving party. See Beard v. Banks, 548 U.S. 521, 529-30 (2006).

5 See, e.g., In re MTBE, No. 04 Civ. 4968, 2014 WL 4631416(S.D.N.Y. Sept. 16, 2014) (dismissing all claims against certain defendants onground of res judicata); In re MTBE, 676 F. Supp. 2d 139 (S.D.N.Y. 2009)(granting in part certain defendants’ motion for summary judgment on statute oflimitations grounds); In re MTBE, 475 F. Supp. 2d 286 (S.D.N.Y. 2006) (same).

6 See, e.g., In re MTBE, 824 F. Supp. 2d 524 (S.D.N.Y. 2011) (denyingthe District’s motion for partial summary judgment on statutory and common lawclaims and directing the District to show cause as to why summary judgmentshould not be granted to defendants on the District’s trespass claim, which theCourt later dismissed).

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violations of the Orange County Water District Act (“OCWD Act”), and

declaratory relief against various defendants at thirty-one focus stations, each of

which are associated with certain focus plumes.7 In this section, I describe the

specific grounds of defendants’ motions and provide an overview of the facts

relevant to resolving those motions.

A. The Pending Motions

In the Omnibus Motion, various groups of defendants have moved for

summary judgment on eight grounds:8 (1) lack of affirmative conduct by

defendants which is necessary in order to prevail on a claim for nuisance, (2) lack

of evidence of reasonable abatability by plaintiff which is necessary in order to

prevail on a claim for continuing nuisance, (3) lack of affirmative conduct by

defendants which is necessary in order to prevail on a claim under the OCWD Act,

7 See Case Management Order 116 (displaying the claims broughtagainst defendants by station, and showing which stations are associated withwhich plumes). A “plume” is essentially a mass of MTBE formed by MTBEreleases from stations in close proximity.

8 As noted above, the groups of defendants for each ground aredifferent. For reference, I will refer to these groups based on the numberedgrounds listed below (e.g. defendants moving for summary judgment on nuisanceclaims due to lack of affirmative conduct are the “Issue 1 defendants”). Thisterminology matches the language used in the appendices to defendants’memorandum of law, which spell out the corresponding movants for each of thegrounds. See Def. Mem. at 26-35.

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(4) lack of evidence of any recoverable costs incurred by plaintiff which is

necessary in order to prevail under the OCWD Act, (5) lack of evidence tracing

defendants’ gasoline to the stations at issue, (6) lack of evidence tracing particular

defendants’ gasoline from the stations at issue to the production wells, (7) claims at

certain stations are time-barred, and (8) failure to disclose information in

discovery.9 In the Trial Sites Motion, defendants move for partial summary

judgment at four focus stations where defendants claim that the District cannot

establish any compensable injury.10

In opposition to both the Omnibus Motion and the Trial Sites Motion,

the District relies heavily on declarations by its fate-and-transport expert, Dr.

Stephen Wheatcraft.11 On September 22, 2014, I denied defendants’ motion to

strike Dr. Wheatcraft’s first declaration, rejecting their argument that the

declaration constituted a “sham affidavit” because of alleged contradictions

9 See generally Def. Mem.

10 See generally Def. Trial Sites Mem.

11 See 7/21/14 Declaration of Dr. Stephen W. Wheatcraft, expert for theDistrict (“First Wheatcraft Decl.”); 10/10/14 Supplemental Declaration of Dr.Stephen W. Wheatcraft (“Second Wheatcraft Decl.”); 10/29/14 SecondSupplemental Declaration of Dr. Stephen W. Wheatcraft (“Third WheatcraftDecl.”).

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between it and his prior deposition testimony.12 Following an October 6, 2014

teleconference, during which the parties debated the merits of Dr. Wheatcraft’s

fate-and-transport modeling,13 the District submitted, at the Court’s request, a

supplemental declaration of Dr. Wheatcraft explaining in further detail how his

model traced gasoline from the individual stations to production wells.14 With the

Court’s permission, defendants filed a response in opposition to this supplemental

declaration, including a declaration by their own expert,15 and the District filed a

final supplemental declaration of Dr. Wheatcraft replying to defendants’

opposition.16

B. Dr. Wheatcraft’s Fate-and-Transport Model

At the heart of both summary judgment motions is the disputed

testimony of Dr. Wheatcraft, who purports to trace MTBE releases from individual

stations to production wells by modeling the path of MTBE plumes. To explain

12 See In re MTBE, No. 04 Civ. 4968, 2014 WL 5088095 (S.D.N.Y.Sept. 22, 2014).

13 See 10/6/14 Teleconference Transcript (Dkt. No. 429) (“Conf. Tr.”).

14 See Second Wheatcraft Decl.

15 See Defendants’ Response to Supplemental Declaration of Dr.Stephen Wheatcraft (“Def. Response to Second Wheatcraft Decl.”); 10/17/14Declaration of John Wilson (“Wilson Response Decl.”).

16 See Third Wheatcraft Decl.

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how the model works, it is helpful first to state what Dr. Wheatcraft does not do:

trace specific MTBE releases from their precise, station-specific release point to

the associated production well.17 While Dr. Wheatcraft did conduct station-

specific models to trace MTBE in other regions of California, he claims that in

Orange County, a station-specific model “was not possible” for most of the stations

“due to clustering.”18 In essence, Dr. Wheatcraft argues that where there are many

individual stations in close proximity, as there allegedly are in Orange County, it is

“nearly impossible” to attribute MTBE detections to a single station.19

Accordingly, a corresponding station-specific model would be inaccurate because

the “mass of MTBE would be knowingly understated.”20

To compensate for this perceived problem, Dr. Wheatcraft groups

individual stations into “focus plumes.” The plumes are essentially MTBE masses

formed by releases from nearby individual stations; Dr. Wheatcraft’s model charts

the migration of the plumes to production wells.21 He states that a “separate MTBE

source term for each of the focus plume stations was added to the model at the

17 See generally Second Wheatcraft Decl.

18 Third Wheatcraft Decl. ¶ 11.

19 Second Wheatcraft Decl. ¶ 10.

20 Id. ¶ 11.

21 Wheatcraft Decl. ¶ 5.

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location of the station.”22 Therefore, though Dr. Wheatcraft is tracing the path of

“plumes,” not individual station-specific releases, the data driving the model is

information regarding releases “from each individual focus plume station.”23

Ultimately, Dr. Wheatcraft insists that his model “shows, and it is [his] opinion,

that MTBE from each station will enter a plume, comingle [sic] with MTBE from

other stations, and then impact one or more wells.”24

Defendants and their expert disagree with Dr. Wheatcraft’s

conclusion, as well as the alleged flaws of a station-specific model.25 Instead,

defendants argue that “[c]ommingling of plumes in an aquifer does not mean that

alL the contamination from different sources will behave the same way in

groundwater or will necessarily be transported to the same receptor (e.g., a supply

well), or that the ‘commingled portion’ of the plumes will travel to a supply

well.”26 Therefore, in order “to determine whether it is more likely than not that

the contamination from one source in an overlapping or commingled plume

22 Id. ¶ 4.

23 Id.

24 Third Wheatcraft Decl. ¶ 14.

25 See generally Def. Response to Second Wheatcraft Decl.; WilsonDecl.

26 Def. Response to Second Wheatcraft Decl. at 6.

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impacts a supply well or other reference point one needs to determine whether a

pathway exists between that source and the well.”27

C. Defendants’ Conduct in Orange County

In this section, I outline the facts relevant to each of the grounds in the

Omnibus Motion. Unless otherwise indicated, these facts are undisputed.

1. Issue 1 Defendants

The Issue 1 defendants move for summary judgment based on the

District’s alleged lack of evidence to support the type of affirmative conduct

necessary to establish a nuisance claim at the corresponding stations. These

defendants did not own the stations at issue.28 Some of the Issue 1 defendants

entered into supply contracts and branding agreements with the stations at issue.29

For instance, World Oil had an agreement with Exxon to brand World Oil’s station

“Exxon” and sell Exxon-branded gasoline.30 Similarly, Chevron USA did not own

the station G&M #4, but it did supply the station with gasoline.31 However, the

27 Id.

28 See Defendants’ Rule 56.1 Statement in Support of Defendants’Motion for Summary Judgment (“Def. 56.1”) ¶¶ 1-77.

29 See, e.g., Defendants’ Rule 56.1 Reply Statement in Support ofDefendants’ Motion for Summary Judgment (“Def. Reply 56.1”) ¶¶ 2, 6.

30 See id. ¶ 4.

31 See id. ¶ 6.

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stations themselves, not the defendants associated with the stations, were

responsible for providing station employees with training on the handling and

storage of gasoline and the clean-up of spills and leaks.32 The District contends

that the Issue 1 defendants provided “inadequate” instructions regarding the

handling, storage, and clean-up.33

2. Issue 2 Defendants

The Issue 2 defendants move for summary judgment on the ground

that the District lacks evidence of reasonable abatability to state a claim for

continuing nuisance. In response to this contention, the District relies, rather

vaguely, on a combination of expert reports claiming that the MTBE contamination

in Orange County can and must be abated.34 Also relevant to the inquiry of

abatability is a determination regarding whether the contaminants at issue are

continuing to migrate towards production wells. The facts underlying this question

are summarized above in the description of Dr. Wheatcraft’s fate-and-transport

32 See, e.g., id. ¶ 5.

33 Plaintiff Orange County Water District’s Opposition to Defendants’Omnibus Motion for Summary Judgment (“Pl. Opp.”) at 6.

34 See, e.g., Plaintiff Orange County Water District’s Local Rule 56.1Statement of Disputed and Material Facts in Opposition to Defendants’ 56.1Statement in Support of Motion for Summary Judgment (“Pl. 56.1”) ¶ 78 (citingexpert opinions regarding the need to remediate contamination sooner rather thanlater).

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model.

3. Issue 3 Defendants

The Issue 3 defendants move for summary judgment based on the

District’s alleged lack of evidence to support the type of affirmative conduct

necessary to establish an OCWD Act claim at the corresponding stations. The

facts the Issue 1 defendants depend on in support of dismissal of the nuisance

claim, summarized above, are the same facts on which the Issue 3 defendants rely.

4. Issue 4 Defendants

The Issue 4 defendants constitute all remaining defendants in this

action; they move for summary judgment on the ground that the District lacks

evidence of recoverable costs under the OCWD Act. The District claims that it has

incurred “millions of dollars” of “site specific response costs.”35 According to the

District, these costs primarily consist of “drilling to determine the extent of off-site

MTBE, assessing site specific conditions and existing remedial activities to

determine the threat posed by MTBE at each station and developing steps to

address off-site MTBE coming from the focus plume stations.”36

5. Issue 5 Defendants

35 Pl. Opp. at 14.

36 Id.

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The Issue 5 defendants move for summary judgment on the ground

that the District lacks evidence tracing these defendants’ gasoline to the stations at

issue. In September 2003, at the outset of the litigation, the District’s counsel told

the Court that the District needed defendants’ “list of jobbers” so that the District

“could go to the jobbers and get their records” in an effort to trace gasoline to the

stations at issue.37 In response, defendants provided extensive jobber lists,

including seven jobbers the District identified as among the biggest distributors in

Orange County.38 Several years later, in April 2010, the District issued four jobber

subpoenas.39 Ultimately, the District deposed only one jobber.40

Defendants provided extensive disclosures to the District regarding

MTBE suppliers.41 One of the District’s own experts, James Barrington, opined

that “the manufacturers and suppliers . . . may be identified through standard

industry practices, as well as through interviews with industry personnel, including

37 Def. 56.1 ¶ 213.

38 See id. ¶¶ 211, 215.

39 See id. ¶ 220. Of those, only USA Petroleum was among the seventhe District considered to be among the largest in the area. See id. ¶ 221.

40 See id. ¶ 223.

41 See id. ¶¶ 208-211, 216-218, 226.

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station owners and operators.”42 He also noted that it “may be necessary to review

both the manufacturer’s records and the records or recollections of jobbers and

station operators to identify the manufacturer or supplier.”43 Nonetheless, the

District waited until the final two months of discovery to subpoena nearly forty

station operators, and, as noted above, deposed only one jobber.44

6. Issue 6 Defendants

The issue 6 defendants comprise all of the remaining defendants in

this action. The facts relevant to their contention that the District cannot trace

gasoline from the stations to the production wells are described above in relation to

Dr. Wheatcraft’s fate-and-transport model.

7. Issue 7 Defendants

The issue 7 defendants move on the ground that claims at certain

stations are barred by the statute of limitations. One of those stations, World Oil

#39, had not been identified in the Court’s prior statute of limitations ruling. The

District’s evidence regarding post-1996 releases at this station consists of

testimony by one of its experts, Marcel Moreau, who opines generally that MTBE

42 Id. ¶ 233.

43 Id.

44 See id. ¶¶ 223, 230, 241.

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releases and leaks in underground storage tanks occur over time in multiple ways.45

Based on this testimony, the District disputes that no releases at this station

occurred after 1996.46 With regard to another of these stations, Chevron #9-5568,

the District conceded in a prior Rule 56.1 statement submitted in connection with

the Court’s prior statute of limitations ruling that its claims accrued prior to May 6,

2000.47 MTBE detections at the final station for which defendants seek a statute of

limitations dismissal, Mobil 18-HEP, were last recorded on February 7, 2000.48

8. Issue 8 Defendants

The Issue 8 defendants complain that the District failed to disclose

information in discovery. Defendants’ main argument is that in response to

specific interrogatories, the District never identified certain Issue 8 defendants as

potentially liable at various sites at which the District now claims they are liable.49

Specifically, defendants served a contention interrogatory requesting that the

District identify each defendant against whom it was seeking damages at each

45 See id. ¶ 256.

46 See id.

47 See id. ¶ 257.

48 See id. ¶ 258.

49 See Def. Mem. at 23-25.

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site.50 The District first answered this interrogatory generally in February 2010,

and in May 2010 provided a supplemental response to identify the specific

defendants that the District associated with each site.51 These supplemental

responses did not identify the Issue 8 defendants.52 Several years after the close of

fact discovery, the District prepared a station matrix identifying the specific claims

it was asserting against each defendant at each station at issue.53

III. LEGAL STANDARD

Summary judgment is appropriate “only where, construing all the

evidence in the light most favorable to the non-movant and drawing all reasonable

inferences in that party’s favor, there is ‘no genuine issue as to any material fact

and . . . the movant is entitled to judgment as a matter of law.’”54 “A fact is

material if it might affect the outcome of the suit under the governing law, and an

issue of fact is genuine if the evidence is such that a reasonable jury could return a

50 See Def. 56.1 ¶ 259.

51 See id. ¶¶ 260-263, 265.

52 See id. ¶ 263.

53 See Defendants’ Reply in Support of Defendants’ Motion forSummary Judgment (“Def. Reply Mem.”) at 24-25.

54 Rivera v. Rochester Genesee Reg’l Transp. Auth., 743 F.3d 11, 19 (2dCir. 2014) (quoting Fed. R. Civ. P. 56(c)) (some quotation marks omitted).

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verdict for the nonmoving party.”55

“[T]he moving party has the burden of showing that no genuine issue

of material fact exists and that the undisputed facts entitle [it] to judgment as a

matter of law.”56 To defeat a motion for summary judgment, the non-moving party

must “do more than simply show that there is some metaphysical doubt as to the

material facts,”57 and “may not rely on conclusory allegations or unsubstantiated

speculation.”58

In deciding a motion for summary judgment, “[t]he role of the court is

not to resolve disputed issues of fact but to assess whether there are any factual

issues to be tried.”59 “‘Credibility determinations, the weighing of the evidence,

and the drawing of legitimate inferences from the facts are jury functions, not those

55 Windsor v. United States, 699 F.3d 169, 192 (2d Cir. 2012), aff’d, 133S. Ct. 2675 (2013) (quotations and alterations omitted).

56 Coollick v. Hughes, 699 F.3d 211, 219 (2d Cir. 2012) (citationsomitted).

57 Brown v. Eli Lilly & Co., 654 F.3d 347, 358 (2d Cir. 2011) (quotationmarks and citations omitted).

58 Id. (quotation marks and citations omitted).

59 Cuff ex rel. B.C. v. Valley Cent. Sch. Dist., 677 F.3d 109, 119 (2d Cir.2012).

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of a judge.’”60

IV. APPLICABLE LAW

In this section, I first review a relevant case management order setting

forth the manner in which the District must prove causation, an element of each of

the District’s remaining claims. I then review the rest of the law applicable to the

District’s claims as addressed in the Omnibus Motion.61

A. The Case Management Order and Causation: All Defendants

Central to the dispositive issue of causation with respect to tracing

gasoline from each station to a production well is a March 11, 2010 case

management order, which states, in relevant part:

The issue is whether each release site identified as part ofa focus plume contributed to contamination of the wellsassociated with that plume. If OCWD provides no proofthat a particular release site contributed to suchcontamination, and OCWD will not drop the release sitefrom that focus plume, then defendants may file a motion

60 Barrows v. Seneca Foods Corp., 512 Fed. App’x 115, 117 (2d Cir.2013) (quoting Redd v. New York Div. of Parole, 678 F.3d 166, 174 (2d Cir.2012)).

61 The Trial Sites Motion hinges on whether the District can prove that itsuffered an appreciable injury or threat of an appreciable injury at certain trial sites. As I stated in a prior opinion, “‘the burden must be on the plaintiff to establishsome measure of such things as the magnitude and likelihood of the danger and itcannot be enough to merely suggest a danger and assert that it has not been ruledout.’” In re MTBE, 824 F. Supp. 2d at 541 (quoting Beck Dev. Co. v. SouthernPac. Transp. Co., 44 Cal. App. 4th 1160, 1214 (1996)).

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for partial summary judgment on that site.62

Under California law, causation is an element of each of the District’s remaining

claims.63

B. The Commingled Products Theory of Proof: Issue 5 Defendants

As I have ruled previously, as a general matter, the plaintiffs have “the

burden to show that the defendants’ products were at the stations at issue when the

releases occurred.”64 Therefore, plaintiffs must provide “reasonably probable”

evidence of delivery of the Issue 5 defendants’ gasoline to any focus station.65

However, under the commingled products theory of proof, which I developed as an

alternative liability theory to address the particular facts of this MDL, plaintiffs

may be able to prove causation even if they cannot identify the exact defendant

who caused the injury. The commingled products theory is available only in cases

where “a plaintiff can prove that certain gaseous or liquid products (e.g., gasoline,

62 Case Management Order #60 (Dkt. No. 129) (“CMO 60”) (emphasisadded).

63 See, e.g., Soule v. General Motors Corp., 8 Cal.4th 548, 572 (1972)(strict liability); Koepke v. Loo, 18 Cal. App. 4th 1444, 1448-49 (1993)(negligence); Melton v. Boustred, 183 Cal. App. 4th 521, 542 (2010) (nuisance);Cal. Water Code App. § 40-8(c) (OCWD Act claim).

64 In re MTBE, 591 F. Supp. 2d 259, 266-67 (S.D.N.Y. 2008).

65 Id. at 266.

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liquid propane, alcohol) of many refiners and manufacturers were present in a

completely commingled or blended state at the time and place that the harm or risk

of harm occurred, and the commingled product caused plaintiff’s injury.”66 In such

cases, “each refiner or manufacturer is deemed to have caused the harm,” and to

exculpate itself, a defendant must prove “that its product was not present at the

relevant time or in the relevant place, and therefore could not have been part of the

commingled or blended product.”67 It follows that this theory is not available to

plaintiffs if they can prove direct causation.68

C. Public Nuisance: Issue 1 Defendants

I have previously held that the District is statutorily authorized to

pursue a claim for public nuisance.69 I have also summarized California law

regarding nuisance claims based on the manufacture or supply of an allegedly

defective product as follows:

While it is true that the law of nuisance is not intended to

66 In re MTBE, 447 F. Supp. 2d 289, 301 (S.D.N.Y. 2006).

67 Id.

68 See In re MTBE, 980 F. Supp. 2d 425, 475 (S.D.N.Y. 2013)(“Alternate theories of proof are justified not when evidence is lacking, but whengathering evidence is, for practical purposes, impossible.”).

69 See, e.g., In re MTBE, 457 F. Supp. 2d 455, 463 (S.D.N.Y. 2006).

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serve as a surrogate for ordinary products liability,California courts have allowed nuisance claims to proceedwhere the manufacturer’s or distributor’s actions havecreated or assisted in the creation of the nuisance. Suchactions, however, must amount to more than simply themanufacture or distribution of the defective product –rather, a defendant must take other affirmative acts thatcontribute directly to the nuisance.70

D. Continuing Nuisance: Issue 2 Defendants

Determining whether contamination constitutes a continuing nuisance

“is ordinarily a question of fact turning on the nature and extent of the

contamination.”71 California courts use three tests to assess whether a nuisance is

continuing: (1) “Whether the offens[ive] activity is currently continuing,” (2)

“whether the impact of the condition will vary over time,” or (3) whether the

nuisance is “reasonably abatable.”72 Within this framework, California courts

describe “the ongoing migration of groundwater contaminants” as “the relevant

factor” in “determin[ing] the continuing nature of the offense or activity.”73

70 Id. at 463 (citations and quotations omitted) (emphasis added).

71 In re MTBE, 824 F. Supp. 2d at 544 (citations and quotationsomitted).

72 California v. Kinder Morgan Energy Partners, L.P., No. 07 Civ.1883, 2013 WL 314825, at *23 (S.D. Cal. Jan. 25, 2013).

73 Id. at *24 (emphasis in original). Accord Arcade Water Dist. v.United States, 940 F.2d 1265 (9th Cir. 1991).

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E. Affirmative Conduct Under the OCWD Act: Issue 3 Defendants

OCWD Act claims can be asserted against only those persons

“causing or threatening to cause . . . contamination or pollution.”74 The Act itself

does not clearly define the level of involvement required to trigger liability under

it. Under California law, terms not defined within a statute are interpreted by their

plain and ordinary meaning.75 “Where the words of a statute do not have a ‘plain

meaning,’ statutory construction is necessary.”76

F. Recoverable Costs Under the OCWD Act: All Defendants

Under the OCWD Act, the District may recover reasonable costs

incurred to perform cleanup, abatement, or remedial work.77 In this action, I

previously granted summary judgment in Defendants’ favor at fourteen sites

74 Cal. Water Code App. § 40-8(c).

75 See, e.g., Hinds Invs., L.P. v. Angioli, 654 F.3d 846, 850 (9th Cir.2011).

76 City of Modesto Redevelopment Agency v. Superior Ct. (Dow Chem.Co.), 199 Cal. App. 4th 28, 36 (2004) (applying nuisance standard to California’sPolanco Act).

77 See Cal. Water Code App. § 40-8(c).

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because under the Act, costs associated with testing production wells and

commissioning consultant reports are not related to remediation.78

G. Statute of Limitations: Issue 7 Defendants

As I stated in a prior opinion, the District’s claims are governed by the

three-year statute of limitations found in section 338 of the California Code of

Civil Procedure.79 “The limitations period begins running when a plaintiff’s cause

of action accrues,” or, when a plaintiff has “suffered some appreciable and actual

harm.”80

H. Failure to Disclose Information in Discovery: Issue 8 Defendants

I have previously held that “[c]ontention interrogatories are treated as

judicial admissions which usually estop the responding party from later asserting

positions not included in its answers.”81 In so holding, I noted that where plaintiffs

fail to disclose how and why defendants are liable at specific sites, and fail to show

that such failure was harmless or substantially justified, late-disclosed theories will

78 See In re MTBE, 279 F.R.D. 131, 138 (S.D.N.Y. 2011).

79 See In re MTBE, 676 F. Supp. 2d at 145.

80 Id. (citation and quotations omitted).

81 In re MTBE, No. 08 Civ. 312, 2014 WL 494522, at *2 (S.D.N.Y. Feb.6, 2014).

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not be permitted.82

V. DISCUSSION

This section analyzes each issue defendants argue warrants a

determination of summary judgment in their favor. I will begin with the causation

issue common to all defendants and then proceed through the remaining issues in

the order defendants presented them in their motion. I also address the Trial Sites

Motion in conjunction with the causation issue.

A. Dr. Wheatcraft’s Model Sufficiently Traces MTBE fromIndividual Stations to Production Wells

The most important issue presented in defendants’ summary judgment

motions is whether Dr. Wheatcraft’s plume model comports with the Court’s

instructions regarding causation in CMO 60. This is because each of the District’s

remaining claims requires proof that “each release site identified as part of a focus

plume contributed to contamination of the wells associated with that plume.”83

Although defendants present substantial and relatively persuasive

evidence that Dr. Wheatcraft’s plume model cannot reliably trace gasoline from

each individual station to a corresponding production well, their arguments are

better suited for a Daubert motion challenging Dr. Wheatcraft’s methodology than

82 See id. at *3 (granting summary judgment for defendants).

83 CMO 60.

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for a motion seeking a summary judgment dismissal. The District has insisted

repeatedly through Dr. Wheatcraft’s declarations that the plume model is the best

and most reliable way to prove causation on a station-by-station basis. While I

have some hesitation about the validity of the plume theory,84 it is not my role at

the summary judgment stage to decide whether Dr. Wheatcraft can reliably

establish causation. Instead, I must draw all inferences and construe all evidence

in the District’s favor. The Court has afforded the District several opportunities to

explain Dr. Wheatcraft’s model and its station-specific tracing capabilities, and

each time, the District has insisted that the model traces gasoline from each station

at issue to a corresponding production well. Further, Dr. Wheatcraft maintains,

contrary to defendants’ assertions, that a station-specific model would be less

effective than his plume model. Time will tell whether he is right, but for now,

dismissal on the ground of causation is premature.

For the same reasons, summary judgment on the Trial Sites Motion is

denied. That motion is predicated on the testimony of the District’s hydrogeology

expert, Anthony Brown, who was unable to conclude with confidence that MTBE

releases at these certain trial sites pose a threat to Orange County’s production

84 In a different MTBE case brought by the Crescenta Valley WaterDistrict, defendants prevailed on a Daubert motion excluding Dr. Wheatcraft’stestimony. See Crescenta Valley Water Dist. v. Exxon Mobil Corp., et al., No. Civ.07 Civ. 02630 (C.D. Cal. Jan. 8, 2013) (Dkt. No. 273).

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wells.85 However, the testimony of Dr. Wheatcraft, the District’s fate-and-

transport expert, expresses a clear opinion that these sites do pose a significant

threat to production wells. Accordingly, summary judgment on the Trial Sites

Motion and on Issue 6 of the Omnibus Motion is denied.

B. The District Lacks Evidence Tracing the Issue 5 Defendants’Gasoline to the Stations

While the District can adequately trace gasoline from the stations at

issue to the production wells to survive summary judgment, it cannot adequately

place the Issue 5 defendants’ gasoline at those stations, which it must do to prove

causation for each of its claims against them. Analyzing this ground for summary

judgment dismissal requires two steps. First, I need to evaluate whether the

District has provided evidence showing that the Issue 5 defendants’ gasoline was

delivered to the relevant stations at the relevant times. Second, in the absence of

such evidence, I need to determine whether the District can establish the presence

of defendants’ gasoline at the stations in question through the commingled

products theory.

As to the first part of the inquiry, the District simply lacks “reasonably

probable” evidence that the gasoline of any Issue 5 defendant was delivered to any

85 See generally Def. Trial Sites Mem.

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station at issue.86 The District attempts to manufacture a factual dispute regarding

certain suppliers based in part on market share figures concerning national MTBE

production capacity (as opposed to the MTBE supply to Southern California),87

information regarding sales of gasoline containing MTBE in California generally,88

and allegations that certain Issue 5 defendants might have sold gasoline to jobbers

who, in turn, supplied their gasoline to stations within Orange County.89 At

bottom, defendants correctly note that the District’s explanations for how the Issue

5 defendants’ gasoline was delivered to the stations at issue are entirely too vague

– they are “devoid of any specifics, but replete with conclusions, [that] are

insufficient to defeat a properly supported motion for summary judgment.”90

For that reason, I next turn to the question of whether the District can

show that the Issue 5 defendants’ gasoline was blended into gasoline delivered to

the Orange County area or otherwise present at the stations at issue. As I have

stated before, though, the commingled products theory is an alternate theory of

86 In re MTBE, 591 F. Supp. 2d at 266.

87 See, e.g., Pl. Opp. at 21.

88 See id. at 21-23.

89 See id.

90 Bickerstaff v. Vassar Coll., 196 F.3d 435, 452 (2d Cir. 1999).

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proof which is “justified not when evidence is lacking, but when gathering

evidence is, for practical purposes, impossible.”91 The District cannot assert the

commingled products theory here because gathering evidence was not impossible,

nor nearly so. It is undisputed that the District had ample opportunity to pursue

discovery from jobbers and suppliers. The preliminary interrogatories and

defendants’ initial responses regarding jobbers and suppliers at the outset of this

litigation gave the District a good starting point from which to gather evidence

tracing suppliers to the stations at issue. For whatever reason, the District failed to

pursue such evidence, waiting until two months before the close of discovery to

subpoena forty station operators and deposing only one jobber in the seven years

after asking defendants for, and being provided with, extensive jobber lists.

Indeed, the District’s own expert recognized that the District could obtain the

information it needed through “standard industry practices.”92 Thus, the District

cannot now rely on the commingled products theory to shield it from its own

tactical or litigation decisions. Accordingly, summary judgment is granted to the

Issue 5 defendants on the ground that the District lacks evidence, which it could

91 In re MTBE, 980 F. Supp. 2d at 475.

92 Def. 56.1 ¶ 233 (citing the testimony of the District’s expert, Dr.Barrington).

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have obtained, tracing those defendants’ products to the stations at issue.

C. The District Lacks Evidence of Affirmative Conduct Necessary toEstablish Claims for Nuisance Against the Issue 1 Defendants

It is not difficult to resolve the ground on which the Issue 1

defendants move in their favor. I have already found that to be liable for nuisance

under California law, “a defendant must take [] affirmative acts that contribute

directly to the nuisance,”93 and that a supply contract does not meet this criteria.94

Following this precedent, the District’s allegations here are plainly insufficient to

withstand summary judgment as to the Issue 1 defendants. The Issue 1 defendants

did not own or have any significant control over the stations at issue; some of them

merely had supply contracts with the stations at issue. The District’s allegations

regarding failure to provide storage and handling instructions relate to a potential

products liability claim, but not to a claim for nuisance. As I have ruled in the past,

California law is clear that products liability claims disguised as nuisance claims

must fail.95 Accordingly, summary judgment is granted to the Issue 1 defendants

on the claims against them for nuisance.

93 In re MTBE, 457 F. Supp. 2d at 463.

94 See In re MTBE, 980 F. Supp.2d at 460 (dismissing nuisance claimsbased solely on supply contracts).

95 See In re MTBE, 457 F. Supp. 2d at 463.

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D. Whether the Contamination Continues to Migrate Beyond theStations at Issue Is in Dispute

In determining claims for continuing nuisance, California courts

examine whether the alleged offensive activity is currently continuing.96 Because

Dr. Wheatcraft’s testimony creates a factual dispute regarding whether the alleged

MTBE contamination at each station at issue has migrated beyond those stations

and towards the production wells, summary judgment on this claim is denied.97

E. The District Lacks Evidence of Affirmative Conduct Necessary toEstablish Claims Under the OCWD Act Against the Issue 3Defendants

Because the District has not demonstrated the affirmative conduct

necessary to establish nuisance claims against the Issue 1 defendants, if the OCWD

Act claims require a similar showing of affirmative conduct, then the OCWD Act

claims against the Issue 3 defendants must also be dismissed. Both the District and

defendants acknowledge that the OCWD Act itself is vague about the level of

96 See California v. Kinder Morgan Energy Partners, L.P., No. 07 Civ.1883, 2013 WL 314825, at *23 (S.D. Cal. Jan. 25, 2013).

97 As noted above, it is possible that a successful Daubert motion mayresult in a dismissal of the continuing nuisance claims, but at this stage, Dr.Wheatcraft’s model keeps the District’s continuing nuisance claims against theIssue 2 defendants alive.

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affirmative conduct required to trigger liability under the Act.98 Specifically, the

Act does not elucidate whether the word “cause” should be read to require

affirmative conduct, as in common law nuisance claims, or whether “cause” should

be interpreted more liberally, in a departure from common law nuisance claims.99

The parties do not dispute, however, that when legislation does not expressly

purport to depart from the common law, “it will be construed in light of common

law principles bearing upon the same subject.”100

Accordingly, in an effort to defeat summary judgment as to the Issue

3 defendants, the District crafts a statutory construction of the OCWD Act,

construing it in light of the remedial purposes of the Comprehensive

Environmental Response, Compensation, and Liability Act (“CERCLA”), a federal

environmental statute.101 The District insists that analogizing to a different

statutory scheme is necessary because the OCWD Act purports to depart from the

common law of nuisance by, in general terms, requiring the Act to be liberally

98 See Cal. Water Code App. § 40-8(c) (claims can be asserted againstthose persons “causing or threatening to cause . . . contamination or pollution”);Def. Reply Mem. at 8-10; Pl. Opp. at 11-13.

99 See Def. Reply Mem. at 8-10; Pl. Opp. at 11-13.

100 Leslie Salt Co. v. San Francisco Bay Conservation etc. Com., 153 Cal.App. 3d 605, 618-19 (1984).

101 See Pl. Opp. at 11-13.

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construed.102 The District then notes that environmental statutes under CERCLA

require a plaintiff to prove only that a defendant possessed a chemical that could

have reached a plaintiff’s property – a much laxer standard than the “affirmative

conduct” required to establish a claim for common law nuisance.103

But the District’s effort fails because the OCWD Act does not in any

way expressly depart from the common law, as I have recognized in a prior MTBE

ruling.104 Therefore, I must interpret the OCWD Act in light of common law

principles bearing on nuisance, following the lead of the California courts.105 Thus,

summary judgment to the Issue 3 defendants is granted because, as with the Issue 1

defendants, the District has not established the level of affirmative conduct

necessary to prevail under the OCWD Act.

F. The District Lacks Evidence of Recoverable Costs Under theOCWD Act

The Court is quite familiar with the subject of costs recoverable under

102 See id. at 12 (citing Cal. Water Code App. § 40-75).

103 See id. at 13.

104 See In re MTBE, No. 04 Civ. 4972, 2005 WL 1500893, at *5(S.D.N.Y. June 24, 2005) (interpreting the OCWD Act as empowering the Districtto bring claims sounding in nuisance).

105 See, e.g., City of Modesto, 199 Cal. App. 4th at 36 (applying nuisancestandard to California’s Polanco Act).

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Case 1:04-cv-04968-SAS Document 438 Filed 12/18/14 Page 31 of 39

the OCWD Act.106 I have granted summary judgment on this issue at focus sites in

the past because the District cannot recover under the OCWD Act costs that are

clearly investigative, not remedial, in nature.107 Because the District has not

presented or timely identified any new remedial costs incurred under the OCWD

Act, I now grant summary judgment in favor of the Issue 4 defendants on the

OCWD Act claims against them.

The District’s primary argument against granting summary judgment

on this ground is that the types of costs it has allegedly incurred are indeed

recoverable under the Act. These costs, the District insists, are categorically

different from the costs I have previously ruled unrecoverable under the OCWD

Act.108 However, in support of that contention, the District does not identify in any

detail the alleged site-specific remedial action for which it seeks compensation.

Instead, it relies on vague discovery responses and an expert declaration that the

Court previously declined to consider in the prior summary judgment briefing on

106 See In re MTBE, 279 F.R.D. at 138.

107 See id.; In re MTBE, 824 F. Supp. 2d at 534-35 (“The plain languageof the Act” states that “[t]he costs incurred for remediation are recoverable, but thecosts incurred for investigation are not.”).

108 See Pl. Opp. at 14.

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Case 1:04-cv-04968-SAS Document 438 Filed 12/18/14 Page 32 of 39

this issue.109 In any event, these materials do not point to recoverable costs under

the OCWD Act, nor are they entitled to be considered now. The District failed to

follow the Court’s instructions in my prior ruling, in which I noted that the District

“may have to re-open discovery” in order to identify specific, recoverable costs. 110

But the District never sought leave to do so, and in this new round of briefing has

not pointed to a single specific cost that could be considered recoverable under the

OCWD Act.

The District has apparently tried to circumvent the consistent position

of this Court, and other courts, regarding costs recoverable under the OCWD Act

by appealing to the California legislature, but to no avail. The District sponsored a

bill to amend the Act and make a party “liable for the actual costs incurred

investigating the contamination or pollution.”111 Indeed, the stated premise of the

District’s proposal was based on its claim that in prior MTBE contamination cases,

“judges have misinterpreted the OCWD Act as excluding investigatory work from

remedial expenses recoverable under the OCWD Act.”112 The legislature

109 See Rule 56.1 Statement ¶ 111.

110 In re MTBE, 279 F.R.D. at 138.

111 Def. Reply Mem. at 12 (quoting the legislative history) (emphasisadded).

112 Id.

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Case 1:04-cv-04968-SAS Document 438 Filed 12/18/14 Page 33 of 39

apparently did not agree enough to amend the Act, and the bill died in February

2014.113 The guidance from my prior decisions, and now the California legislature

itself, is quite clear: the District cannot recover investigative costs, which are the

only types of costs under the OCWD Act that the District has identified in this

action. Thus, summary judgment on the OCWD Act claims against the Issue 4

defendants is granted.

G. Claims at Certain Stations Are Barred by the Statute ofLimitations

I have also addressed the statute of limitations in this case at length in

prior opinions.114 Consistent with my prior statute of limitations rulings and the

District’s own past representations, and because the District has again failed to

submit any evidence sufficient to create a factual dispute regarding a post-

limitations period release, dismissal of negligence, strict liability, and permanent

nuisance claims against the Issue 7 defendants on statute of limitations grounds is

warranted.

There are three stations at issue in this analysis: Mobil 18-HEP,

Chevron #9-5568, and World Oil #39. First, the Issue 7 defendants and the

113 See id.

114 See, e.g., In re MTBE, 676 F. Supp. 2d at 145.

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Case 1:04-cv-04968-SAS Document 438 Filed 12/18/14 Page 34 of 39

District do not dispute that the relevant claims at Mobil 18-HEP are time-barred,115

which they indeed are.116 Second, the District’s relevant claims at Chevron #9-

5568 are barred by their own past concessions. In a prior round of briefing, the

District conceded that its claims at this site accrued prior to May 6, 2000.117 The

District’s bold attempt here to reverse course and now submit evidence

contradicting its prior admission fails as a matter of law.118 Even if I were to

accept it, the evidence the District offers to prove a post-May 6, 2000 release at

this site is wholly insufficient. The District relies on a rather generic, non-site-

specific expert opinion regarding evidence of underground storage tanks leaking

over time to create a factual dispute over when the instant claim accrued.

However, pursuant to my prior rulings, without more concrete site-specific

evidence, summary judgment must be granted. Third, because the District relies

on the same evidence to show a post-limitations release at the final site, World Oil

#39, the relevant claims at this site must also be dismissed for the reasons stated

above. Accordingly, summary judgment is granted to the Issue 7 defendants on

115 See Pl. Opp. at 30 & n.20.

116 See In re MTBE, 676 F. Supp. 2d at 149-50.

117 See Rule 56.1 Statement ¶ 257.

118 See In re MTBE, 980 F. Supp. 2d at 439 (noting that a court can treatstatements in briefs as binding judicial admissions of fact).

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Case 1:04-cv-04968-SAS Document 438 Filed 12/18/14 Page 35 of 39

their negligence, strict liability, and permanent nuisance claims.

H. The District’s Late-Disclosed Theories of Liability Regarding theIssue 8 Defendants Cannot Prevail

As I stated in the New Jersey MTBE case,119 the Court will not accept

theories of liability disclosed well after the close of discovery and in responses to

contention interrogatories.120 The District does not dispute this reality, but instead

insists that it disclosed the claims it planned to assert against each defendant on a

station-specific basis during discovery.121 In particular, the District points to a

response to Interrogatory No. 1, which it contends associated each Issue 8

defendant with each focus plume at issue.122

But, as defendants accurately point out, this representation is

misleading because the interrogatory response simply associated all defendants

with all focus plumes, prompting an extended meet-and-confer that culminated in

the District providing supplemental discovery responses that identified on a

station-by-station basis each defendant associated with a particular focus station.123

119 See In re MTBE, 2014 WL 494522, at *2.

120 See id. at *3.

121 See Pl. Opp. at 30-35.

122 See id. at 32.

123 See Def. Reply Mem. at 24.

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Case 1:04-cv-04968-SAS Document 438 Filed 12/18/14 Page 36 of 39

These supplemental responses did not identify the Issue 8 defendants at the Issue 8

stations, nor can the District show at any other point during discovery that it

disclosed specific information sufficient to put the Issue 8 defendants on notice of

how, and at which stations, the District planned to hold them liable. The station

matrix containing this necessary information was prepared several years after the

close of fact discovery for the convenience of the Court and the parties in preparing

for summary judgment motions. Accordingly, the Issue 8 defendants have been

deprived of the opportunity to participate in meaningful discovery concerning the

stations now associated with them. Therefore, summary judgment to the Issue 8

defendants is granted on the claims associated with the Issue 8 stations.124

VI. CONCLUSION

For the foregoing reasons, defendants’ Omnibus Motion is

GRANTED in part and DENIED in part. Defendants’ Trial Sites Motion is

DENIED. The Clerk of the Court is directed to close these motions [Dkt. Nos. 344

and 349].

124 With the dismissal of claims on other grounds presented in theOmnibus Motion, the only claim that the Issue 8 ground independently affects isthe claim for continuing nuisance against Exxon Mobil Corporation at World Oil#39.

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Case 1:04-cv-04968-SAS Document 438 Filed 12/18/14 Page 37 of 39

Dated: New York, New York December 18, 2014

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Case 1:04-cv-04968-SAS Document 438 Filed 12/18/14 Page 38 of 39

- Appearances -

Liaison Counsel for Plaintiffs:

William A. Walsh, Esq.Weitz & Luxenberg, P.C.180 Maiden LaneNew York, NY 10038(212) 558-5500

Counsel for the District:

Michael D. Axline, Esq.Tracey L. O’Reilly, Esq.Miller, Axline, & Sawyer 1050 Fulton Avenue, Suite 10Sacramento, CA 95825(916) 488-6688

Liaison Counsel for Defendants:

James A. Pardo, Esq.Lisa A. Gerson, Esq.McDermott Will & Emery LLP50 Rockefeller Plaza, 11th FloorNew York, NY 10020(212) 547-5583

Counsel for Trial Sites Defendants:

Richard E. Wallace, Jr., Esq.Peter C. Condron, Esq.Amanda Gilbert, Esq.Sedgewick LLP29 K Street, N.W.Harbourside – Suite 500Washington, D.C. 20007(202) 204-1000

Counsel for Omnibus Defendants:

Jeffrey J. Parker, Esq.Whitney J. Roy, Esq.Sheppard, Mullin, Richter & Hampton LLP333 South Hope Street, 48th FloorLos Angeles, California 90071(213) 620-1780

Jon D. Anderson, Esq.Latham & Watkins LLP650 Town Center, 20th FloorCosta Mesa, California 92626(714) 540-1235

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Case 1:04-cv-04968-SAS Document 438 Filed 12/18/14 Page 39 of 39

IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NORTH CAROLINA

EASTERN DIVISION No. 4:12-CV-154-D

NORTH CAROLINA ENVIRONMENTAL ) WSTICE NETWORK, NEUSE ) RIVERKEEPER FOUNDATION, INC., ) and WATERKEEPER ALLIANCE, INC., )

Plaintiffs,

v.

DONALD TAYLOR and ANNIE TAYLOR, individually and d/b/a TAYLOR FINISHING, WSTIN T. MCLAWHORN, and AARON MCLAWHORN,

Defendants.

) ) ) ) ) ) ) ) ) ) ) )

ORDER

On July 27, 2012, plaintiffs sued defendants Donald Taylor and Annie Taylor, who own

defendant Taylor Finishing, a swine farm. See Compl. [D.E. 1]; Second Am. Compl. [D.E. 65] ~~

28-29, 31. Plaintiffs also sued Justin McLawhorn and Aaron McLawhorn, the prior owners of

Taylor Finishing and the current owners of defendant McLawhorn Livestock Farm, Inc. Second Am.

Compl. ~ 30. Plaintiffs claim that defendants illegally dumped swine waste onto the lands and

waters surrounding Taylor Finishing in violation of the Clean Water Act ("CWA") and the Resource

Conservation and Recovery Act ("RCRA"). Second Am. Compl. ~~ 59-84. Plaintiffs seek relief

under the citizen-suit provisions in 33 U.S.C. § 1365 and 42 U.S.C. § 6972(a)(1)(A) and (B).

Specifically, plaintiffs seek "a declaratory judgment, injunctive relief, the imposition of civil

penalties, and the award of costs, including attorneys' and expert witness' fees." Second Am.

Compl. ~~ 3, 98-111. On August 12, 2014, defendants filed a motion to strike plaintiffs' demand

for a jury trial [D.E. 104]. Plaintiffs responded in opposition [D.E. 108], and defendants replied

[D.E. 109]. As explained below, the court denies the motion to strike.

Case 4:12-cv-00154-D Document 147 Filed 12/29/14 Page 1 of 6

I.

Congress created citizen-suit provisions to provide a supplemental means of enforcing federal

law. Gwaltney of Smithfield. Ltd. v. Chesapeake Bay Found .. Inc., 484 U.S. 49, 60-61 (1987);

Friends of the Earth v. Carey, 535 F.2d 165, 172 (2d Cir. 1976); Natural Res. Def. Council. Inc. v.

Train, 510 F.2d 692, 699-700 (D.C. Cir. 1974). Citizen suits are appropriate when "federal, state,

or local agencies fail to exercise their enforcement responsibility." Ark. Wildlife Fed 'n v. ICI Ams.,

Inc., 29 F.3d 376,380 (8th Cir. 1994). In the environmental context, Congress has "made clear that

citizen groups are not to be treated as nuisances or troublemakers but rather as welcomed participants

in the vindication of environmental interests." Friends of the Earth, 53 5 F .2d at 1 72. Both the CW A

and the RCRA contain citizen-suit provisions. Under the CW A, "any citizen may commence a civil

action ... against any person ... who is alleged to be in violation of (A) an effluent standard or

limitation under this chapter or (B) an order issued by the Administrator or a State with respect to

such a standard orlimitation." 33 U.S. C. § 1365(a). Similarly, under the RCRA, "any person may

commence a civil action on his own behalf against any person ... who is alleged to be in violation

of any permit, standard, regulation, condition, requirement, prohibition, or order which has become

effective pursuant to [the RCRA]." 42 U.S.C. § 6972(a)(l)(A). A citizen also may file suit under

the RCRA "against any person ... who has contributed or who is contributing to the past or present

handling, storage, treatment, transportation, or disposal of any solid or hazardous waste which may

present an imminent and substantial endangerment to health or the environment." 42 U.S.C. §

6972(a)(1)(B).

The parties dispute whether, in a citizen suit under the CW A and the RCRA, a party is

entitled to a jury determination on the issue of liability for civil penalties. Each side cites Tull v.

United States, 481 U.S. 412 ( 1987), in support of its position. 1 In Tull, the Court held that the

1 "[T]he relief available under [section] 6972 of the RCRA is virtually identical to that available under the CWA .... " Saline River Props .• LLC v. Johnson Controls. Inc., No. 10-10507, 2010 WL 2605972, at *3 (E.D. Mich. June 25, 2010) (unpublished). Thus, the court's analysis

2

Case 4:12-cv-00154-D Document 147 Filed 12/29/14 Page 2 of 6

defendant-petitioner had a Seventh Amendment right "to a jury trial to determine liability on the

legal claims." Id. at 425. Tull clarified that an action by the government for civil penalties is akin

to those "traditionally available only in a court oflaw, [and] petitioner ... [was] entitled to a jury

trial on demand." Tull, 481 U.S. at423; see also S.E.C. v. Kopsky, 537 F. Supp. 2d 1023, 1026 (E.D.

Mo. 2008) ("[C]ivil penalties imposed as a fine rather than mere disgorgement are unquestionably

legal remedies for which there is a Seventh Amendment right to a jury trial."). In Tull, however, the

government brought the CWA claim pursuant to 33 U.S.C. § 1319(d), the enabling provision

allowing the government to remedy statutory violations.

Defendants argue that Tullis limited to suits involving the government and does not extend

to cases brought under ''the citizen suit provisions of the CWA and the RCRA." Mem. Supp. Jury

Strike [D .E. 1 05] 1-2. According to defendants, Tull' s "determination that the government's CW A

claim required a jury trial because actions in debt historically were tried before a jury does not apply

to the statutorily-created and limited citizen suits, in which the citizens recover no 'debt' and

Congress afforded them no right to a jury trial." Defs.' Reply [D.E. 109] 3. In support, defendants

rely primarily on Sanchez v. Esso Standard Oil De Puerto Rico. Inc., No. 08-2151(JAF), 2010 WL

3087485 (D.P.R. Aug. 5, 2010) (unpublished), a case brought under the RCRA's citizen-suit

provision. In Sanchez, the court held that, unlike in RCRA's direct enforcement provision, ''the

provisions for injunctive relief and civil penalties [in the citizen-suit provision] are intertwined."

Id. at *2. The court reasoned that the request for civil penalties was "inextricably entangled" with

the request for injunctive reliefbecause, under the citizen-suit provision, ''the proof required for civil

penalties for violations would necessarily implicate the grounds for injunctive relief." Id. Thus, in

Sanchez, the court held that "[p ]laintiff' s suit is equitable in nature, thereby precluding [the] demand

for a jury." Id.

applies equally to the jury demands and requests for civil penalties under both the CW A and RCRA. See Second Am. Compl. ~~ 107-08.

3

Case 4:12-cv-00154-D Document 147 Filed 12/29/14 Page 3 of 6

Defendants also cite Gwaltney to bolster their argument that plaintiffs' claims are solely

equitable. In Gwaltney, the Court analyzed whether a plaintiff seeking both civil penalties and

injunctive relief in a citizen suit could obtain relief for wholly past violations. 484 U.S. at 52. The

Court compared the CWA's direct enforcement provision with the citizen-suit provision and stated

that section 1365( a) of the CW A "does not authorize civil penalties separately from injunctive relief

... [C]itizens, unlike the Administrator, may seek civil penalties only in a suit brought to enjoin or

otherwise abate an ongoing violation." Id. at 58-59 (emphasis added). The Court recognized that

the government's direct enforcement ability "constitutes a separate grant of enforcement authority."

ld. at 58.

Defendants argue that this "separate grant of enforcement authority" alters entitlement to a

jury. According to defendants, Gwaltney clarifies that requests for civil penalties in citizen suits are

inextricably intertwined with claims for injunctive relief. See id. ("The citizen suit provision

suggests a connection between injunctive relief and civil penalties that is noticeably absent from the

provision authorizing agency enforcement."). Defendants claim this "connection" sufficiently

distinguishes citizen suits from government enforcement actions to preclude the right to a jury

determination of liability for legal claims.

Defendants overstate Gwaltney's impact. Although the Court in Gwaltney recognized a

marked distinction between the government's ability to pursue statutory civil penalties and a private

citizen's, the Court merely held that the government could pursue wholly past violations while

citizen suits were limited to cases of ongoing violations. See id. at 58-61. Thus, under Gwaltney,

citizen suits cannot be brought solely to recover civil penalties and therefore must be joined to

equitable claims seeking to abate an ongoing violation. Id. at 58-59. However, Gwaltney did not

address how the jurisdictional "connection" between civil penalties and injunctive relief in citizen

suits affects either party's entitlement to a jury determination on the legal claims.

4

Case 4:12-cv-00154-D Document 147 Filed 12/29/14 Page 4 of 6

Here, in resolving whether a party is entitled to a jury determination on the issue ofliability

for civil penalties, the court relies on principles that the Court discussed in Tull. Tull established that

"[a] civil penalty was a type of remedy at common law that could only be enforced in courts of law."

Tull, 481 U.S. at 422. The Tull Court then found that "because the nature of the relief authorized by

[section] 1319(d) was traditionally available only in a court oflaw, petitioner in [Tull] is entitled to

a jury trial on demand." Id. at 423. Although plaintiffs here seek civil penalties under section

1319( d) by way of section 1365, they seek the same relief as in a direct enforcement suit.

Accordingly, Tull' s section 1319( d) analysis applies, and plaintiffs are entitled to a jury

determination of liability for civil penalties.

In opposition to this conclusion, defendants argue that when claims for civil penalties are

intertwined with equitable claims they become "equitable in nature and thus not entitled to be tried

before a jury." Defs.' Reply 1. In Tull, however, the Court held that "if a 'legal claim is joined with

an equitable claim, the right to a jury trial on the legal claim, including all issues common to both

claims, remains intact. The right cannot be abridged by characterizing the legal claim as 'incidental'

to the equitable relief sought."' Tull, 481 U.S. at 425 (quoting Curtis v. Loether, 415 U.S. 189, 196

n.11 (1974)); see Beacon Theatres. Inc. v. Westover, 359 U.S. 500, 508-11 (1959). Tull also

clarified that civil penalties are legal claims and that a court in equity "may not enforce civil

penalties." Tull, 481 U.S. at 424. Accordingly, even if under Gwaltney legal claims for civil

penalties must be joined with equitable claims in citizen suits, parties are still entitled to a jury

determination of their legal claims. To the extent that other district courts reached a different

conclusion, this court respectfully disagrees with their analysis ofTull and the Seventh Amendment.

See Sanchez, 2010 WL 3087485, at *2.

One final point. In Tull, defendants wanted a jury trial and plaintiffs did not. Here, plaintiffs

want a jury trial and defendants do not. If this court accepted defendants' position that the right to

a jury under the CW A and RCRA depended on the identity of the plaintiff, a future defendant's right

5

Case 4:12-cv-00154-D Document 147 Filed 12/29/14 Page 5 of 6

to a jury trial would hinge not on the nature of the relief sought but on whether the government

brought the case seeking civil penalties or whether a private citizen brought the case seeking civil

penalties. The right to a jury trial, however, belongs to each party. See U.S. Const. amend. VII; Fed.

R. Civ. P. 38. In light ofthe relief sought in a citizen suit, it makes no sense to read defendants'

proposed distinction into the CWA or RCRA. See Tull, 481 U.S. at 421 (stating that the ''the relief

sought is '[m]ore important' than finding a precisely analogous common-law cause of action in

determining whether the Seventh Amendment guarantees a jury trial"). Because the relief sought

is the same in both a citizen suit and a direct enforcement suit, either party has the right to demand

and receive a jury determination of liability for civil penalties.

II.

In sum, the court DENIES defendants' motion to strike plaintiffs' jury demand on the issue

of liability for civil penalties [D.E. 104].

SO ORDERED. This J..'i day of December 2014.

6

Case 4:12-cv-00154-D Document 147 Filed 12/29/14 Page 6 of 6

1

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF KANSAS

UNITED STATES OF AMERICA, Plaintiff, v. Case No. 13-10185-JTM SEAN M. RILEY, BRIAN J. RILEY, JACK E. GIBBONS, AND INTEGRATED PLASTIC SOLUTIONS, LLC., Defendants.

MEMORANDUM AND ORDER

This case arises from defendants’ alleged storage of hazardous waste without a

permit in violation of the Resource Conservation and Recovery Act (“RCRA”), 42 U.S.C.

§ 6901 et. seq. Before the court are Motions in Limine by the government seeking to

allow overview testimony by two government witnesses (Dkt. 35) and seeking

sanctions for defendants’ failure to provide reciprocal discovery (Dkt. 36).

I. Background

Defendants Sean M. Riley, Brian J. Riley, Jack E. Gibbons, and Integrated Plastic

Solutions, LLC were indicted for allegedly storing hazardous waste without a permit in

violation of the RCRA. The government submitted its initial discovery to defendants on

November 18, 2013. (Dkt. 36, at 1). The court issued a General Order on Discovery and

Scheduling (“scheduling order”) on November 26, 2013. (Dkt. 23), and a jury trial was

scheduled for January 28, 2014. (Dkt. 23, at 6). The government produced its final round

Case 6:13-cr-10185-JTM Document 45 Filed 12/29/14 Page 1 of 8

2

of discovery on April 17, 2014. (Dkt. 36, at 2). The trial date has since been continued to

January 13, 2015, by a joint motion dated September 9, 2014. (Dkts. 37; 38).

II. Motion in Limine Standards

The motion in limine provides a trial court the opportunity “to rule in advance of

trial on the relevance of certain forecasted evidence, as to issues that are definitely set

for trial, without lengthy argument at, or interruption of, the trial.” United States v. Cline,

188 F. Supp. 2d 1287, 1291 (D. Kan. 2002) (quoting Palmieri v. Defaria, 88 F.3d 136, 141

(2d Cir. 1996)). The power to make evidentiary rulings in limine is not expressly

provided by statute or rule; it stems from the court’s authority to administer and try

cases. Luce v. United States, 469 U.S. 38, 41 n.4 (1984); see FED. R. EVID. 103(d), 104(c), 402,

403, 611(a). Such rulings may increase judicial efficiency, but many evidentiary rulings

“should be deferred until trial so that questions of foundation, relevancy and potential

prejudice may be resolved in the proper context.” Mendelsohn v. Sprint/United Mgmt. Co.,

587 F. Supp. 2d 1201, 1208 (D. Kan. 2008) (citing Sperberg v. Goodyear Tire & Rubber Co.,

519 F.2d 708, 712 (6th Cir. 1975)). An in limine evidentiary ruling is subject to change, at

the court’s discretion, “when the case unfolds” in trial. Luce, 469 U.S. at 41-42.

III. Analysis

The government filed two motions in limine. The first (Dkt. 35) seeks to admit

overview testimony by EPA Special Agent Eddie McGlasson and RCRA Compliance

Officer Dierdre Newsome. The second (Dkt. 36) seeks sanctions for defendants’ alleged

failure to provide reciprocal discovery under Federal Rule of Criminal Procedure 16

and the scheduling order.

Case 6:13-cr-10185-JTM Document 45 Filed 12/29/14 Page 2 of 8

3

A. Motion in Limine to Admit Overview Testimony (Dkt. 35) is Denied

Overview testimony is a broad category of evidence typically offered to preview

the government’s case at the beginning of a trial. United States v. Brooks, 736 F.3d 921,

930 (10th Cir. 2013). It occurs when a witness testifies before any evidence is admitted

and provides a roadmap of the evidence to follow. Id. at 929-30. Overview testimony is

not directly addressed by the Federal Rules of Evidence, but is simply a form of lay or

expert opinion testimony pursuant to Rules 701 and 702. Id.; see also United States v.

Griffin, 324 F.3d 330, 349 (5th Cir. 2003); United States v. Casas, 356 F.3d 104, 119 (1st Cir.

2004). Lay opinion testimony is admissible if it is “rationally based on the witness’s

perception,” is “helpful to clearly understanding the witness’s testimony or to

determining a fact in issue,” and is not based on information within the scope of expert

testimony under Rule 702. FED. R. EVID. 701. Expert opinion testimony is admissible if

“the expert’s scientific, technical, or other specialized knowledge will help the trier of

fact to understand the evidence or to determine a fact in issue.” FED. R. EVID. 702.

Overview testimony is fraught with inherent danger: 1 “such testimony raises the

very real specter that the jury verdict could be influenced by statements of fact or

credibility assessments in the overview but not in evidence.” Casas, 356 F.3d at 119. The

evidence presented after the overview may not be as predicted therein, and “juries may

1 Many Circuits employ a cautionary or critical approach to overview testimony because of its inherent dangers. See United States v. Ransfer, 749 F.3d 914, 927 n.14 (11th Cir. 2014); United States v. Rodriguez-Adorno, 695 F.3d 32, 37-38 (1st Cir. 2012); United States v. Moore, 651 F.3d 30, 60 (D.C. Cir. 2011); United States v. Garcia, 413 F.3d 201, 208-19 (2d Cir. 2005); United States v. Figaro, 126 Fed. App’x 75, at 78 (3d Cir. 2005); United States v. Griffin, 324 F.3d 330, 348-51 (5th Cir. 2003). See also ROBERT E. LARSEN, NAVIGATING

THE FEDERAL TRIAL 1459-60, 1466-68 (Thomson Reuters 2013).

Case 6:13-cr-10185-JTM Document 45 Filed 12/29/14 Page 3 of 8

4

place greater weight on evidence perceived to have the imprimatur of the government.”

Id. at 120; accord United States v. Garcia-Morales, 382 F.3d 12, 16-18 (1st Cir. 2004).

The Tenth Circuit has accordingly expressed caution with overview testimony,

acknowledging that it is susceptible to abuse because “[i]t can stray into matters that are

reserved for the jury, such as opinions about a defendant’s guilt.” Brooks, 736 F.3d at

930. As the Brooks court noted:

Other potential problems [with overview testimony] include the government’s ability (1) to spin the evidence in its favor before it is admitted (assuming it is ever admitted), (2) to give its official imprimatur to certain evidence, and (3) to allow its witnesses (usually law enforcement) to testify on matters about which they have no personal knowledge or that are based on hearsay.

Id. at 930. Its use is therefore limited; permissible uses include describing “how an

investigation began, the law enforcement agencies involved, or the investigative

techniques used.” Id. Overview testimony is also admissible to describe the roles played

by participants within the alleged illegal activity. United States v. Fletcher, 497 F. App’x

795, 805 (10th Cir. 2012).

The government proposes that McGlasson’s testimony will outline (1) how the

investigation began, (2) the law enforcement agencies involved, (3) the investigative

techniques used, and (4) why the investigation focused on these defendants. Points (1)-

(3) of McGlasson’s proposed testimony are acceptable under Brooks. Point (4) raises

concern that the testimony may imply guilt before any evidence is admitted and should

be approached with caution. Consequently, the court defers ruling on McGlasson’s

testimony until trial, where context can better inform the court as to its admissibility.

Case 6:13-cr-10185-JTM Document 45 Filed 12/29/14 Page 4 of 8

5

The government proposes that Newsome’s testimony will (1) provide the jury

with an explanation of the federal-state enforcement scheme, (2) define and explain the

meaning of hazardous waste, (3) define solid waste and describe the characteristics that

make it hazardous, (4) describe when a facility is subject to the RCRA, and (5) identify

actions a facility must undertake before it can store or dispose of hazardous waste.

Newsome’s proposed testimony is not admissible.

Witness testimony must not “invade[] the judge’s province to define the law.”

United States v. Messner, 107 F.3d 1448, 1454 (10th Cir. 1997). A witness may “refer to the

law in expressing an opinion” if the testimony does “not invade the court’s authority by

discoursing broadly over the entire range of the applicable law.” Specht v. Jansen, 853

F.2d 805, 809 (10th Cir. 1988). “When the purpose of the testimony is to direct the jury’s

understanding of the legal standards upon which their verdict must be based, the

testimony cannot be allowed. In no instance can a witness be permitted to define the

law of the case.” Messner, 107 F.3d at 1454 (quoting Specht, 853 F.2d at 810).

Newsome’s proposed testimony is an overview of the law to be applied in this

case. It will not express an opinion about the facts of this case and will not help the jury

understand facts of consequence. Rather, it will attempt to define the elements by which

defendants are to be judged. Newsome’s testimony ventures beyond proper opinion

testimony and into jury instruction, which is reserved for the court. Accordingly, the

government’s motion to admit overview testimony (Dkt. 35) is DENIED.

Case 6:13-cr-10185-JTM Document 45 Filed 12/29/14 Page 5 of 8

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B. Motion in Limine to Limit Defendants’ Introduction of Evidence Not Produced

During Discovery (Dkt. 36) is Granted in Part

The government argues that defendants fail to comply with the reciprocal

production requirements of the Federal Rules of Criminal Procedure. Pursuant to Rule

16(a), the government must disclose documents and objects, reports of examinations

and tests, and expert witness testimony. FED. R. CRIM. P. 16(a)(1)(E)-(G). Such materials

within the government’s possession, custody, or control must be disclosed upon

defendants’ request. Id. Defendants must then reciprocate production by disclosing the

same discovery upon the government’s request. FED. R. CRIM. P. 16(b)(1). Parties must

continue to promptly disclose additional Rule 16 material as it is discovered before or

during trial. FED. R. CRIM P. 16(c).

Pursuant to Rule 16(d)(1), the court’s scheduling order (Dkt. 23) supplements

Rule 16 in this case. The scheduling order specifies, in relevant part, that (1) parties to

this case need not request reciprocal discovery to trigger the opponent’s obligation to

reciprocate, and (2) defendants must produce reciprocal discovery within fourteen days

of the government’s production of Rule 16 materials. (Dkt. 23, at 1).

The court may address defendants’ failure to comply with Rule 16 by (1)

ordering discovery, (2) granting a continuance, (3) prohibiting defendants from

introducing undisclosed evidence, or (4) entering “any other order that is just under the

circumstances.” FED. R. CRIM. P. 16(d)(2).

Here, the government produced its final round of discovery on April 17, 2014.

Any materials subject to Rule 16(b)(1) in defendants’ possession, custody, or control on

Case 6:13-cr-10185-JTM Document 45 Filed 12/29/14 Page 6 of 8

7

April 17, 2014, but not disclosed on or before May 1, 2014, are withheld in violation of

the scheduling order. The government claims defendants have produced no reciprocal

discovery. The government moves that defendants be prohibited from introducing any

document, photograph, or other item of reciprocal discovery, including expert

testimony, unless such items have been provided to the government before 5:00 p.m. on

September 10, 2014. The motion is unopposed.

The court notes that defense counsel has been involved in a multi-defendant

murder trial in State court. (Dkt. 38). That trial, expected to last two weeks, was

scheduled to begin three days after the parties filed the most recent Motion to Continue

in this case. (Dkt. 38). The court accordingly found a continuance of trial necessary.

(Dkt. 38, at 1). Nevertheless, defendants’ reciprocal discovery obligations are now

nearly six months overdue. Defendants had months to produce reciprocal discovery,

and the aforementioned trial is no longer an impediment thereto. Therefore, the court

grants the government’s Motion in Limine (Dkt. 36) in part. Defendants must disclose

all Rule 16 materials now in their possession, custody, or control within seven days of

the entry of this order. Defendants are prohibited from introducing at trial any material

withheld in violation of this order. This order does not foreclose the introduction of

evidence or material subsequently discovered by defendants and disclosed in

compliance with Rule 16 and the scheduling order (Dkt. 23).

IT IS ACCORDINGLY ORDERED this 29th day of December, 2014, that the

government’s Motion in Limine (Dkt. 35) is DENIED.

Case 6:13-cr-10185-JTM Document 45 Filed 12/29/14 Page 7 of 8

8

IT IS FURTHER ORDERED that the government’s Motion in Limine (Dkt. 36) is

GRANTED in part and DENIED in part and that defendants must disclose Rule 16

materials within seven days of the entry of this order.

s/ J. Thomas Marten J. THOMAS MARTEN, JUDGE

Case 6:13-cr-10185-JTM Document 45 Filed 12/29/14 Page 8 of 8

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81,7('67$7(6',675,&7&2857

($67(51',675,&72)&$/,)251,$

This is an environmental law case that arises from the chemical contamination of property

surrounding a dry cleaning business in Visalia, California. Plaintiffs (collectively “Coppola”)

have brought suit against inter alia Martin and Martin Properties, LLC (“M&M”). The Court

previously dismissed the Third and Fourth Amended Complaints under Rule 12(b)(6) following

motions filed by various defendants. The active complaint is the Fifth Amended Complaint

(“FAC”), and there are numerous counterclaims and cross-complaints that have been filed by

various defendants. Now before the Court is M&M’s motion for summary judgment. For the

reasons that follow, the Court will grant summary adjudication on certain issues but otherwise

deny M&M’s motion.

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)$&78$/%$&.*5281'

Since 1987, Coppola has owned and operated a dry cleaning facility located at 717 W.

Main St., Visalia, California (“717 W. Main”). See DUMF’s 1, 2. Coppola has used

tetrachloroethylene (PCE) in their dry cleaning business since at least 1994. DUMF 2. The

California Department of Toxic Substances Control (“DTSC”) and the United States

Environmental Protection Agency (“EPA”) have investigated 717 W. Main. See DUMF 3. As a

result of the investigation, it was concluded that there was a “release” or a “threatened release” of

PCE from 717 W. Main into the soil and groundwater. See FAC Ex. A §§ 2.4, 3.3. In June 2011,

DTSC issued an order (“2011 Order”) for Coppola to investigate and remediate the contamination

caused by their dry cleaning business. See DUMF 4; FAC Ex. A.

M&M is a local real estate investment company operated by its managing member,

William Martin, and by Joshua Martin, the past Vice President of Martin Enterprises, Inc. (the

management company of M&M). DUMF 5. In March 2006, Martin and Martin Properties, LP

(“Martin LP”) filed a Certificate of Conversion with the Delaware Secretary of State in order to

convert from an LP to an LLC. See Hsu Dec. ¶ 3 & Ex. A. Following the filing of the Certificate

of Conversion, Martin LP became M&M in March 2006. See id.

From 1959 to possibly 1971, a dry cleaning business known as Miller’s Dry Cleaners

operated at 110 N. Willis St., Visalia, California (“110 N. Willis”). See FAC ¶ 34, Ex. C § 6.0.

However, in the early 1970’s, a commercial office building was built at 520 W. Main St., Visalia,

California. See Wm. Martin Dec. ¶ 13; FAC Ex. C § 6.0. The land parcel for 520 W. Main

included 110 N. Willis, and in the construction process, the area that had been known as 110 N.

Willis became part of the northern portion of 520 W. Main St. See FAC Ex. C § 6.0.

In March 1995, Martin LP purchased 520 W. Main (“the Property”) for $1.425 million

from Benart-Main Street Investors (“Benart”). See Wm. Martin Depo. 19:19-25; Wm. Martin

Dec. ¶ 4; DUMF 6. Prior to purchasing the Property, Martin LP reviewed an October 1991

Preliminary Site Assessment (“PSA”) by The Twining Laboratories, Inc. (a geotechnical and

1 “DUMF” refers to “Defendant’s Undisputed Material Fact,” and “PRDUMF” refers to “Plaintiff’s Response to Defendant’s Undisputed Material Fact.”

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environmental consulting company), a November 1991 Subsurface Investigation Report (“SIR”)

prepared by Environmental Science and Engineering, Inc., and a September 1991 Preliminary

Structural Evaluation (“PSE”) prepared by Teter Consultants.2 See Wm. Martin Dec. ¶ 6. The

PSA, the SIR, and the PSE had been obtained by and prepared for Benart.3 See id. & Exs. B, C.

Martin LP also made physical inspections of 520 W. Main and “walked the streets” in the area,

had discussions and interviews with Benart, local business owners, and consulted with a financial

consultant regarding the past use and history of the Property.4 See id. at ¶ 5; Wm. Martin Depo.

77:24-78:4. Martin LP did not retain an engineer, a geologist, or any type of environmental

professional to inspect the Property. See Wm. Martin Depo. 75:14-25. Martin LP’s pre-purchase

investigation did not identify any PCE contamination or any past operation of a dry cleaning

business at the Property. See id.

The PSA states that it reports the results of a preliminary site assessment of the

environmental condition of the Property. See DUMF 16; Wm. Martin Dec. Ex. B. The purpose of

the PSA was to evaluate the environmental condition of the Property and adjacent properties based

on past and current activities, identify reported soil and groundwater contamination sites and

incidents up to 1 mile from the Property, and recommend additional studies as deemed

appropriate. See id. at p.2. The PSA states that it was prepared in accordance with current

standards of professional practice and in accordance with the duties of environmental engineers in

1991. See Wm. Martin Dec. Ex. B at 27; DUMF 17. The PSA considered regional geologic and

2 Coppola objects that these reports are “clearly hearsay” and moves to strike them. M&M responds that the reports are not hearsay, rather they are offered to show the effect they had on William Martin. M&M is correct. Hearsay is an out of court statement that a “party offers in evidence to prove the truth of the matter asserted in the statement.” Fed. R. Evid. 801(c). Statements that are offered to show a person’s knowledge, notice or awareness, or to show the impact or effect that they had on a listener, or to show that information was received, are not offered for the truth of the matter asserted, and thus, are not hearsay. See United States v. Rogers, 321 F.3d 1226, 1229 (9th Cir. 2003); United States v. Kirk, 844 F.2d 660, 663 (9th Cir. 1988); United States v. Giese, 597 F.2d 1170, 1194 (9th Cir. 1979); Gibbs v. State Farm Mut. Ins. Co., 544 F.2d 423, 428 (9th Cir. 1976). Coppola’s objections are overruled, and the Court will consider the reports to demonstrate awareness, effect, and impact on William Martin/M&M. See id. 3 Martin LP did not discuss the PSA with Twining, and did not know the specific agreement between Twining and Benart regarding the PSA. See Wm. Martin Depo. 88:13-90:19. 4 Coppola objects that evidence about conversations William Martin had with other “old timers” regarding 520 W. Main is hearsay. Coppola’s objection is overruled. For the same reasons that the three reports are not hearsay, the conversations that William Martin had with other business owners is not hearsay.

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hydrological factors including soil type and groundwater characteristics. See Wm. Martin Dec.

Ex. B at pp. 2-12; DUMF 18. The PSA reviewed a preliminary title report for existing

environmental liens, conducted a visual reconnaissance of the Property, conducted a

reconnaissance of the area within a quarter mile radius, reviewed aerial photographs to evaluate

past history and use, searched and reviewed regulatory agency records to identify environmental

issues, and interviewed governmental agency personnel and others who may have knowledge of

the Property’s condition and past use. See id. The PSA indicated that from the 1930’s to the

1950’s, the Property was used as a service station, and after 1973 as a commercial office building.

See Wm. Martin Dec. Ex. B at p.13; DUMF 19. The PSA indicated that from 1958 to 1972, no

listing for 520 W. Main St. was recorded. See id. The PSA contained no finding of any usage

relating to dry cleaning or similar operations. See Wm. Martin Dec. Ex. B; DUMF 20. The PSA

stated that the presence of water wells, surface impoundments, soil staining, or evidence of

underground or aboveground storage tanks were neither discovered nor observed on the Property,

and that a review of the area surrounding the Property indicates that no known or suspected

hazardous waste properties are located within 2,000 feet. See Wm. Martin Dec. Ex. B at pp.14,

23-24; DUMF 21. The PSA noted that two wells, Well 06-02 and Well 06-03, contained 0.8 parts

per billion and 1.8 parts per billion, respectively, of PCE but that both numbers did not exceed

Maximum Concentration Levels (“MCL”). See Wm. Martin Dec. Ex. B at p.21. The PSA

concluded that there were some asbestos issues with the building, but mitigation of the asbestos

was made a condition of the purchase, and the asbestos was removed prior to closing the purchase.

See Wm. Martin Dec. Ex. B at pp.14-16, 23-24; DUMF 22. However, the PSA also stated that

based on information from three sources, “environmental concerns to soil and groundwater at the

Property from on-site sources cannot be evaluated with information made available to Twining . . .

.” Wm. Martin Dec. Ex. B at 23. Further, environmental concerns to soil and groundwater from 3

of 14 off-site sources within one-half mile of the Property could not be evaluated. See id. at p.26.

The PSA limited its findings to the conditions that existed at the time, noted that soil and

groundwater samples at the Property for chemical analysis were not included, and explained that

changes in existing conditions at the subject property due to time lapse, natural causes, or

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operations adjacent to the Property may render the PSA’s conclusions invalid unless the changes

are reviewed and the conclusions approved. See id. The PSA stated that the applicable standard

of care is time sensitive. See id. at p. 27. The PSA warned that the work was performed for the

sole use of Benart, and others who may rely on the findings have a duty to determine the adequacy

of the report for their intended use. See id.

The PSA was the first report of its kind that M&M had ever reviewed. See Wm. Martin

Depo. 96:22-97:1. Although Martin LP owned other real estate, those properties were all

farmland. See id. at 41:20-42:11. Martin LP’s financial consultant advised Martin LP that if a

property has a structure on it, a Phase I environmental report was necessary. See id. at 42:12-24.

The SIR was designed to investigate the past existence of a fuel service station and

possible underground storage tanks, and to identify any contamination of the soil or subsurface.

See Wm. Martin Dec. Ex. D at pp.172-173. The SIR indicated that two soil borings on the

Property were taken for analysis.5 See id. No stressed vegetation or petroleum staining was

purportedly observed. See id. Based on the soil samples, the SIR purportedly concluded that the

boring contained no detectable petroleum hydrocarbons. See id.

Following the purchase of the Property, and in connection with obtaining a real-estate loan,

an appraisal was prepared for Martin LP in December 1995. See DUMF 9. The appraisal report

valued the Property at $1.425 million, and did not identify any PCE contamination, any prior use

of the Property as a dry-cleaner, or any reason to suspect PCE contamination. See id.; Wm.

Martin Dec. Ex. D. The $1.425 million evaluation matched Martin L.P.’s purchase price. See

DUMF 22. The appraisal included various assessments, inspections, and reviews, including

reviewing the PSA and the SIR. See Wm. Martin Dec. Ex. D; see also DUMF 25. The appraisal

indicated that there were no signs of possible or known toxic or hazardous waste problems, except

for the asbestos which had been removed. See id.

In August 2006, DTSC issued a Site Screening Assessment (“2006 Assessment”) for the

EPA. See Boon Dec. Ex. G. This Assessment identified the site at issue as “Former Miller Dry

Cleaners,” located at “110 N. Willis Street, Visalia, Tulare, CA.” Id. The 2006 Assessment states 5 The SIR has been lost but, the Appraisal (Exhibit D to the William Martin Declaration) quoted from the SIR.

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in part, “No site visit was performed as part of this site screening. A site visit previously was

conducted as part of the Visalia Dry Cleaner Discovery Project.” Id. at p. 21. The 2006

Assessment does not elaborate in any way on the site visit that was part of the Visalia Dry Cleaner

Discovery Project. See id. In essence, the Assessment found that further investigation for PCE

contamination and migration was appropriate. See id. at 2.

Sometime following the 2006 Assessment, an entry relating to the Property was made in

the Comprehensive Environmental Response, Compensation, and Liability Information System

(“CERCLIS”).6 See Boon Dec. Ex. F; FAC Ex. C § 6.0. The entry identifies the site as “Former

Millers Dry Cleaners,” and identifies the address as “110 North Willis Street, Visalia, CA.” Boon

Dec. Ex. F. The address 520 W. Main does not appear on the CERCLIS listing. See id.

From 1995 to 2007, Martin LP/M&M operated the Property without incident and leased

space in the commercial office building that had been on the Property since the 1970’s. See

DUMF 11. M&M had no knowledge of PCE contamination at the Property, and William Martin

declares that M&M had no any reason to suspect contamination. See id.7; Wm. Martin Dec. ¶ 13.

In late 2008, M&M received a series of correspondences from EPA and DTSC which

indicated that a dry cleaning operation called Millers Dry Cleaning had operated on the Property

6 Coppola argues that Millers Dry Cleaners was added to CERCLIS in 2005 and cites to Exhibit F of the Boon declaration. Exhibit F indicates that “Discovery” and “Pre-CERCLIS Screening” occurred on November 7, 2005, and that a preliminary assessment was completed on September 12, 2008. However, Exhibit F does not expressly state when Millers Dry Cleaners was actually added to CERCLIS. Importantly, the 2006 Assessment has a box to be checked “yes” or “no” for the question: “Does this site already appear in CERCLIS?” See Boon Dec. Ex. G. The “no” box is checked. See id. Further, the 2006 Assessment expressly states that the CERCLIS database does not show any information on the site. See id. Given the silence of Exhibit F, and the directly contrary information in Exhibit G, there is insufficient evidence to support a conclusion that Millers Dry Cleaners/110 N. Willis was placed on the CERCLIS list in 2005. 7 Coppola objects to DUMF 11 and argues in part that M&M had contact with regulatory agencies in either 2006 through a site investigation as reflected by the 2006 Assessment, or in 2005 when the Property was added to the CERCLIS list. First, as discussed in the prior footnote, there is insufficient evidence that the Property or 110 N. Willis was added to CERCLIS in 2005. Second, the 2006 Assessment does not state that any contact was made with M&M, but does state that a site investigation is necessary in order to determine whether PCE was released from the Property. See Boon Dec. Ex. G. Although there is an indication that sampling occurred, Attachment E (the Sampling Event Summary Table) shows that the sampling was actually water samples taken by Cal Water of two wells. See id. That is, no sampling at or on the Property occurred as part of the 2006 Assessment. See id. The 2006 Assessment also states that there was no site visit conducted, but a site visit had previously occurred as part of the Visalia Dry Cleaners Project. However, there is no elaboration about that visit, including when it occurred, what it entailed, whether M&M had been contacted, or what M&M was told. There is nothing that meaningfully describes any site visits either in 2006 or before. Thus, there is insufficient evidence that M&M had been contacted by EPA or DTSC regarding PCE contamination in either 2005 or 2006.

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in the late 1950’s or early 1960’s, prior to M&M’s purchase of the Property. See DUMF 12. In

response to the correspondences and inquiries by EPA and DTSC, M&M provided its full

cooperation with the agencies, including providing written responses to inquiries and copies of its

files pertaining to the prior environmental investigations conducted for the Property. See DUMF

13.8 M&M gave EPA and DTSC access to the Property for further investigation. See DUMF 14.

When M&M was first contacted in 2008 by EPA and DTSC about possible contamination

former Millers Dry Cleaners, M&M believed that the agencies had the wrong property because

Millers Dry Cleaners bore the street address 110 N. Willis St. and the Property had always been

known as 520 W. Main St. See DUMF 26.9 Through further discussions with EPA and DTSC,

M&M discovered that the property once known by the street address 110 N. Willis consisted of a

small parcel of land located in the northwest corner of the Property; the entirety of the Property

was and is known by the street address 520 W. Main St. See DUMF 27.

In 2009, DTSC and EPA investigated the Property. See DUMF 15. In June 2009, EPA

considered a Site Inspection Report (“Site Report”) for “Former Millers Dry Cleaners.” See FAC

Ex. C. The Site Report was prepared by Weston Solutions, Inc. for the EPA. See id. The Site

Report found that, based on 2009 sampling, a release from the Property to groundwater had not

been established. See id. at p.27. PCE was detected at concentrations below background in soil

samples collected from borings drilled at the former dry cleaning facility. See id. “Groundwater

samples collected from the onsite down-gradient well contained PCE concentrations significantly

above background and below the MCL for drinking water.” Id. Following the Site Report, EPA

released its Remedial Site Assessment Decision (“Remedial Decision”) on June 22, 2009. See

FAC Ex. C at p.6. The EPA determined that “no further remedial action by the Federal Superfund

program is warranted at [the Property] at this time.” FAC Ex. C at p.6. The Remedial Decision

reiterated the Site Report’s findings about PCE being detected at concentrations below background

8 Coppola disputes DUMF 13 by reference to Boon Declaration Exhibits F and G. However, Exhibit F is the CERCLIS listing and Exhibit G is the 2006 Assessment. Neither document relates to M&M’s interactions with EPA and DTSC in 2008. DUMF 13 is undisputed. 9 Coppola disputes DUMF 26 by referencing Boon Declaration Exhibits F and G. As explained above, Exhibits F and G do not show that M&M was made aware of PCE contamination by EPA or DTSC in 2005 or 2006, and it does not refute the assertion that the Property had always been known as 520 W. Main St. DUMF 26 is undisputed.

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in soil samples and PCE being found in concentrations below MCL in water samples taken in the

down-gradient well. See id. The Remedial Decision concluded that there was “no evidence of a

release of PCE from the site to surface water,” and unless new information is obtained, no

additional remedial steps would be taken under the Federal Superfund program. Id.

On October 14, 2009, EPA sent a correspondence to M&M. See Wm. Martin Dec. Ex. F.

In relevant part, the EPA letter states: “Based on currently available information contained in the

enclosed report, EPA has determined that no further assessment is warranted. Although EPA has

determined that this site does not qualify for Superfund listing, the State of California may require

further assessment or cleanup of this site under State law. You may wish to contact [DTSC

personnel] for information pertaining to State assessment and cleanup requirements.” Id. M&M

understood this letter to mean that EPA was not going to be contacting it any further regarding

additional work, but that EPA was turning things over to DTSC. See J. Martin Depo. 73:5-15.

6800$5<-8'*0(17)5$0(:25.

Summary judgment is proper when it is demonstrated that there exists no genuine issue as

to any material fact, and that the moving party is entitled to judgment as a matter of law. Fed. R.

Civ. P. 56; Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970). The party seeking summary

judgment bears the initial burden of informing the court of the basis for its motion and of

identifying the portions of the declarations (if any), pleadings, and discovery that demonstrate an

absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986);

Soremekun v. Thrifty Payless, Inc., 509 F.3d 978, 984 (9th Cir. 2007). A fact is “material” if it

might affect the outcome of the suit under the governing law. See Anderson v. Liberty Lobby,

Inc., 477 U.S. 242, 248-49 (1986); United States v. Kapp, 564 F.3d 1103, 1114 (9th Cir. 2009). A

dispute is “genuine” as to a material fact if there is sufficient evidence for a reasonable jury to

return a verdict for the non-moving party. Anderson, 477 U.S. at 248; Freecycle Sunnyvale v.

Freecycle Network, 626 F.3d 509, 514 (9th Cir. 2010).

Where the moving party will have the burden of proof on an issue at trial, the movant must

affirmatively demonstrate that no reasonable trier of fact could find other than for the movant.

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Soremekun, 509 F.3d at 984. Where the non-moving party will have the burden of proof on an

issue at trial, the movant may prevail by presenting evidence that negates an essential element of

the non-moving party’s claim or by merely pointing out that there is an absence of evidence to

support an essential element of the non-moving party’s claim. See James River Ins. Co. v. Herbert

Schenk, P.C., 523 F.3d 915, 923 (9th Cir. 2008); Soremekun, 509 F.3d at 984. If a moving party

fails to carry its burden of production, then “the non-moving party has no obligation to produce

anything, even if the non-moving party would have the ultimate burden of persuasion.” Nissan

Fire & Marine Ins. Co. v. Fritz Cos., 210 F.3d 1099, 1105-06 (9th Cir. 2000). If the moving party

meets its initial burden, the burden then shifts to the opposing party to establish that a genuine

issue as to any material fact actually exists. See Matsushita Elec. Indus. Co. v. Zenith Radio

Corp., 475 U.S. 574, 586 (1986); Nissan Fire, 210 F.3d at 1103. The opposing party cannot “‘rest

upon the mere allegations or denials of [its] pleading’ but must instead produce evidence that ‘sets

forth specific facts showing that there is a genuine issue for trial.’” Estate of Tucker v. Interscope

Records, 515 F.3d 1019, 1030 (9th Cir. 2008).

The opposing party’s evidence is to be believed, and all justifiable inferences that may be

drawn from the facts placed before the court must be drawn in favor of the opposing party. See

Anderson, 477 U.S. at 255; Narayan v. EGL, Inc., 616 F.3d 895, 899 (9th Cir. 2010). While a

“justifiable inference” need not be the most likely or the most persuasive inference, a “justifiable

inference” must still be rational or reasonable. See Narayan, 616 F.3d at 899. “If conflicting

inferences may be drawn from the facts, the case must go to the jury.” Holly D. v. Cal. Inst. of

Tech., 339 F.3d 1158, 1175 (9th Cir. 2003). Inferences are not drawn out of the air, and it is the

opposing party’s obligation to produce a factual predicate from which the inference may be drawn.

Sanders v. City of Fresno, 551 F.Supp.2d 1149, 1163 (E.D. Cal. 2008); UMG Recordings, Inc. v.

Sinnott, 300 F.Supp.2d 993, 997 (E.D. Cal. 2004). “A genuine issue of material fact does not

spring into being simply because a litigant claims that one exists or promises to produce

admissible evidence at trial.” Del Carmen Guadalupe v. Agosto, 299 F.3d 15, 23 (1st Cir. 2002);

see Bryant v. Adventist Health System/West, 289 F.3d 1162, 1167 (9th Cir. 2002). Further, a

“motion for summary judgment may not be defeated . . . by evidence that is ‘merely colorable’ or

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‘is not significantly probative.’” Anderson, 477 U.S. at 249-50; Hardage v. CBS Broad. Inc., 427

F.3d 1177, 1183 (9th Cir. 2006). If the nonmoving does not produce evidence that is sufficient to

creates a genuine issue of material fact, the moving party is entitled to summary judgment. Nissan

Fire, 210 F.3d at 1103.

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Defendant’s Arguments

M&M argues that summary judgment on the CERCLA claim is proper because M&M is

an “innocent landowner.” Prior to its purchase of 110 N. Willis in 1995, M&M reviewed

environmental investigative reports (the PSA and SIR), made physical site inspections, and had

interviews with the seller, local business owners, and financial consultants regarding the past use

and history of 110 N. Willis. PCE was not detected, Miller’s Dry Cleaners’ prior operation at 110

N. Willis was not found, and no potential for PCE contamination was discovered. M&M

purchased 110 N. Willis for the appraised value, and operated the property for the next 13 years

without knowledge or indication of PCE contamination. In late 2008, M&M received

correspondences from EPA and DTSC regarding Millers Dry Cleaning. It was not until 2008 that

M&M learned of the dry cleaning operation and the potential for PCE contamination. M&M fully

cooperated with EPA and DTSC, and provided reports, written responses to inquiries, and consent

for EPA and DTSC to enter 110 N. Willis. In 2009, EPA determined that there was no evidence

of release of PCE from 110 N. Willis, and that no further assessment was needed. Thus, M&M

did not cause a release, it exercised due care before purchasing the Property, fully cooperated with

EPA and DTSC, and had neither knowledge nor reason to know of any PCE contamination. This

is sufficient to establish the innocent landowner defense and defeat Coppola’s CERCLA claims.

In reply, M&M argues in part that it is the continuation of Martin LP. In 2006, Martin LP

converted to an LLC pursuant to Delaware law. Under Delaware law, when an entity converts to

an LLC, it is not a new entity. Martin LP and M&M are not separate entities, and the acts of

Martin LP are those of M&M, including the pre-purchase investigation of the Property.

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Plaintiff’s Opposition

Coppola argues that M&M is not an “innocent landowner.” M&M conducted no

investigation prior to acquiring the Property in 2006 from its predecessor in interest, Martin LP,

which was a distinct and separate entity that purchased the Property in 1995. Moreover, Martin

LP’s investigation was insufficient. The PSA stated that it could not offer conclusions about the

environmental conditions of the soil and groundwater at the Property. The PSA stated that it was

for conditions then existing and that changed conditions could render the report invalid. Further,

the PSA stated that PCE had been found less than a half mile from the Property, and that a gap

between 1958 and 1972 existed for which the historical use of the Property could not be

determined. The PSA also was not conducted in conformity with the standards set in 1993 by the

American Society for Testing and Materials. The SIR has not been produced, and its contents

cannot be fully explored. Martin LP simply relied on reports done in 1991 from Benart, and did

not retain an engineer, a geologist, a real estate professional, or an environmental professional.

Further, Martin LP did not conduct a professional investigation into neighboring properties, a

physical inspection of the Property prior to purchase, or an appraisal prior to purchase.10

Additionally, although M&M appears to be borrowing aspects of the “third party” defense

in asserting its “innocent landowner” defense, M&M is not entitled to the “third party” defense.

First, that defense only applies when a third party is the “sole cause” of contamination. Here,

there are multiple parties that allegedly contributed to the contamination. M&M must show that

only one of these parties caused the PCE contamination, and M&M has not done so. Second,

M&M has a contractual relationship with a responsible party (Millers Dry Cleaning) and thus,

cannot assert the defense. Finally, as argued above, M&M did not exercise due care based on the

pre-purchase investigation of the Property.

Legal Standard

As a potentially responsible party (“PRP”), the current owner of any “facility” at the time

10 Coppola also argues that it is reasonably inferred that M&M had knowledge of potential PCE contamination in 2005 or 2006, based on a CERCLIS listing and on the 2006 Assessment. These arguments have been addressed in prior footnotes. See Footnotes 6, 7 & 8 supra. The evidence presented suggests that neither the Property nor 110 N. Willis was added to CERCLIS in 2005, and the 2006 Assessment does not indicate or reflect that any interaction with M&M and the EPA or DTSC occurred. See id.

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of cleanup is strictly liable for any “release” of hazardous substances from the “facility,” unless

the owner of the “facility” can satisfy one of CERCLA’s “narrowly applicable” defenses.

Anderson Bros., Inc. v. St. Paul Fire & Marine Ins. Co., 729 F.3d 923, 929 (9th Cir. 2013).

CERCLA provides for inter alia the “‘third party’ and ‘innocent landowner’ defenses, by which a

PRP may show that the release of hazardous substances was caused solely by ‘an act or omission

of a third party,’ 42 U.S.C. § 9607(b)(3), or that ‘the disposal or placement of the hazardous

substance’ occurred before the PRP acquired the property. 42 U.S.C. § 9601(35)(A).” Carson

Harbor Vill., Ltd. v. Unocal Corp., 270 F.3d 863, 871 (9th Cir. 2001).

Under the “third party” affirmative defense of § 9607(b)(3),11 a PRP must show: (1) the

release or threat of release of a hazardous substance and the resulting damages were caused solely

by an act or omission of a third party;; (2) the third party’s act or omission did not occur in

connection with a contractual relationship (either direct or indirect), employment relationship, or

agency relationship with the PRP; (3) the PRP exercised due care with respect to the hazardous

substance;; and (4) the PRP took precautions against the third party’s foreseeable acts or omissions

and the foreseeable consequences resulting therefrom. See 42 U.S.C. § 9607(b)(3); United States

v. Iron Mt. Mines, 987 F. Supp. 1263, 1273 (E.D. Cal. 1997); United States v. Pacific Hide & Fur

Depot, Inc., 716 F. Supp. 1341, 1346-47 (D. Idaho 1989). A “contractual relationship” is defined

to include “land contracts, deeds, easements, leases, or other instruments transferring title or

possession . . . .” 42 U.S.C. § 9601(35)(A);; Iron Mt. Mines, 987 F.Supp. at 1275. Because of the

definition of “contractual relationship,” a person who purchases contaminated real property cannot

meet the plain requirements of § 9607(b)(3). See Carson Harbor, 270 F.3d at 887 (“. . . one who

purchases land from a polluting owner or operator cannot present a third-party defense . . . .”);

11 42 U.S.C. § 9607(b)(3) reads: “(b) Defenses. There shall be no liability under subsection (a) of this section for a person otherwise liable who can establish by a preponderance of the evidence that the release or threat of release of a hazardous substance and the damages resulting therefrom were caused solely by -- . . . (3) an act or omission of a third party other than an employee or agent of the defendant, or than one whose act or omission occurs in connection with a contractual relationship, existing directly or indirectly, with the defendant (except where the sole contractual arrangement arises from a published tariff and acceptance for carriage by a common carrier by rail), if the defendant establishes by a preponderance of the evidence that (a) he exercised due care with respect to the hazardous substance concerned, taking into consideration the characteristics of such hazardous substance, in light of all relevant facts and circumstances, and (b) he took precautions against foreseeable acts or omissions of any such third party and the consequences that could foreseeably result from such acts or omissions.”

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United States v. CDMG Realty Co., 96 F.3d 706, 716 (3d Cir. 1996) (“The defense is generally

not available if the third party causing the release is in the chain of title with the defendant.”).

Despite § 9601(35)(A) creating a “contractual relationship” bar within § 9607(b)(3),

§ 9601(35)(A) also establishes the “innocent land owner” defense for those who purchase

contaminated real property. See 42 U.S.C. § 9601(35)(A); Carson Harbor, 270 F.3d at 887;

Pacific Hide, 716 F.Supp at 1347. If a PRP purchased property after a disposal or placement of a

hazardous substance occurred, but the PRP did not know or have reason to know of the disposal or

placement, then the PRP may be able to avoid liability if he otherwise meets the requirements of

§ 9607(b)(3)(a) and (b). See 42 U.S.C. § 9601(35)(A);12 Carson Harbor, 270 F.3d at 887;

Kaufman & Broad-South Bay v. Unisys Corp., 868 F.Supp. 1212, 1216 (N.D. Cal. 1994).

CERCLA provides standards for determining whether a PRP “had reason to know” of

contamination. See 42 U.S.C. § 9601(35)(B). A PRP “had no reason to know” of contamination

if: (1) on or before the date on which the PRP acquired the real property, he carried out all

“appropriate inquiries” into the previous ownership and uses of the property in accordance with

generally accepted good commercial and customary standards and practices; and (2) the PRP took

reasonable steps to stop any continuing “release” of hazardous substances, prevent any threatened

future release of hazardous substances, and prevent or limit any human, environmental, or natural

resource exposure to any previously released hazardous substance. 42 U.S.C. § 9601(35)(B)(i);

see Walnut Creek Manor, LLC v. Mayhew Ctr., LLC, 622 F.Supp.2d 918, 931 (N.D. Cal. 2009).

In determining whether an “appropriate inquiry” was made in accordance with “customary

12 42 U.S.C. § 9601(35)(A) reads in pertinent part: “(A) The term ‘contractual relationship’, for the purpose of section 107(b)(3) [42 USCS § 9607(b)(3)], includes, but is not limited to, land contracts, deeds, easements, leases, or other instruments transferring title or possession, unless the real property on which the facility concerned is located was acquired by the defendant after the disposal or placement of the hazardous substance on, in, or at the facility, and one or more of the circumstances described in clause (i) . . . is also established by the defendant by a preponderance of the evidence: (i) At the time the defendant acquired the facility the defendant did not know and had no reason to know that any hazardous substance which is the subject of the release or threatened release was disposed of on, in, or at the facility. . . . In addition to establishing the foregoing, the defendant must establish that the defendant has satisfied the requirements of [42 USCS § 9607(b)(3)(a) and (b)], provides full cooperation, assistance, and facility access to the persons that are authorized to conduct response actions at the facility (including the cooperation and access necessary for the installation, integrity, operation, and maintenance of any complete or partial response action at the facility), is in compliance with any land use restrictions established or relied on in connection with the response action at a facility, and does not impede the effectiveness or integrity of any institutional control employed at the facility in connection with a response action.”

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standards and practices,” five factors are considered if the property was purchased prior to May

31, 1997. See 42 U.S.C. § 9601(35)(B)(iv)(I). Those factors are: (1) any specialized knowledge

or experience on the part of the purchaser; (2) the relationship of the purchase price to the value of

the property, if the property was not contaminated; (3) commonly known or reasonably

ascertainable information about the property; (4) the obviousness of the presence or likely

presence of contamination at the property; and (5) the ability of the defendant to detect the

contamination by appropriate inspection. Id. The “innocent landowner” defense applies only to

“wholly innocent” landowners, i.e. landowners who did not contribute, actively or passively, to

the “release” of the hazardous substance. See Carson, 270 F.3d at 887; United States v.

Honeywell Int’l, Inc., 542 F. Supp.2d 1188, 1201 (E.D. Cal. 2008).

In order to establish the “innocent landowner” defense in § 9601(35)(A), a PRP must show

that: (1) he acquired the property after the disposal or placement of the hazardous substances

occurred; (2) at the time of acquisition, he did not know and “had no reason to know,” i.e. made

all “appropriate inquiries” in accordance with customary “standards and practices,” that any

hazardous substance was disposed of or placed at the facility; (3) he did not actively or passively

contribute to the “release” of the hazardous substance;; and (4) once contamination was found, he

exercised due care with respect to the hazardous substance concerned, took precautions against

foreseeable acts or omissions of third parties and the foreseeable corresponding consequences, and

acted in compliance with land use regulations and governmental responders. See 42 U.S.C. §§

9601(35)(A) and (B), 9607(b)(3); CDMG Realty, 96 F.3d at 716; United States v. Domenic

Lombardi Realty, Inc., 290 F.Supp.2d 198, 208-09 (D. R.I. 2003); Kaufman, 868 F.Supp. at 1216.

Discussion

There are numerous issues raised by the parties in connection with the first cause of action.

The Court will address these issues separately.

a. Reliance By M&M On Investigation By Martin LP

Coppola argues that Martin LP is a separate and distinct entity from M&M, and that

Martin LP ceased to exist and was wound down in 2006. As Martin LP and M&M were separate,

M&M cannot rely on any investigations performed by Martin LP. The Court disagrees.

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Martin LP was converted from a Limited Partnership to a Limited Liability Company in

2006. See Hsu Dec. ¶ 3 & Ex. A. The conversion was accomplished pursuant to Delaware law.

See id. Under Delaware law, when a business converts to a limited liability company, the

converting business and the resulting limited liability company are deemed to be the same entity.

See 6 Del. Code § 18-214(g); Hoch v. Eli Lilly & Co., 736 F.Supp.2d 219, 222 (D. D.C. 2010);

Premium Allied Tool, Inc. v. Zenith Elecs. Corp., 2009 U.S. Dist. LEXIS 12199, *10 (N.D. Ill.

Feb. 17, 2009); Purina Mills, LLC v. Less, 295 F.Supp.2d 1017, 1028 (N.D. Iowa 2003). There is

no winding up, and there is no dissolution of the converting entity. See 6 Del. Code § 18-214(g).

There is no transfer of assets or liabilities from the converting entity to the resulting limited

liability company, rather all assets and obligations of the converting entity remain the assets and

liabilities of the limited liability company. See 6 Del. Code § 18-214(f).13 Therefore, as applied

here, by operation of Delaware law Martin LP never dissolved, never wound up, and never

transferred any assets to M&M because Martin LP and M&M are the same entity. See 6 Del.

Code § 18-214(f), (g). As the same entity, the acts of Martin LP were the acts of M&M. Cf. id.

Coppola relies on Seven Springs L.P. v. Fox Capital Mgmt. Corp., 2007 U.S. Dist. LEXIS

95670 (E.D. Cal. Apr. 26, 2007) to argue that each entity must separately satisfy the elements of

the innocent landowner defense. In Seven Springs, a general partner transferred real property from

herself to a limited partnership. See Seven Springs, 2007 U.S. Dist. LEXIS 95670 at *5. The

limited partnership attempted to utilize the general partner’s actions when she originally obtained

the property in order to establish an innocent landowner defense. See id. That theory was rejected

because the partner and the partnership were separate legal entities with separate rights and

responsibilities. See id.

Seven Springs is distinguishable from this case. First, unlike Seven Springs, this case does

not involve dealings between separate entities. As discussed above, by operation of Delaware law,

Martin LP and M&M were the same entity. See 6 Del. Code § 18-214 (g); cf. also Cal. Corp.

13 California law is to the same effect. “An entity that converts into another entity pursuant to this article is . . . the same entity that existed before the conversion and the conversion shall not be deemed a transfer of property.” Cal Corp Code § 17710.09(a). Upon a conversion taking effect, the rights and property, and all debts and obligations, of the converting entity vested in the converted limited liability company. Cal . Corp Code § 17710.09(b).

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Code § 17710.09. Second, unlike Seven Springs, this case does not involve a transfer of real

property (excluding of course the transfer between Benart and Martin LP). Upon conversion of

Martin LP to M&M, the Property vested with M&M and was expressly not transferred. See 6 Del.

Code § 18-214 (f); cf. also Cal. Corp. Code § 17710.09. Therefore, Seven Springs is inapposite

and has no application to this case.

Because Martin LP and M&M are the same entity, M&M may rely on the actions of

Martin LP in connection with Martin LP’s purchase of the Property. Summary adjudication on

this issue in favor of M&M is appropriate.

b. Sole Cause

The evidence does not show that M&M placed or disposed of PCE after it obtained the

Property, and no evidence has been presented that M&M contributed in any way to the release of

PCE from the Property. William Martin’s declaration shows that M&M had no actual knowledge

of PCE contamination from the time the Property was purchased until 2008, when M&M was

contacted by EPA and DTSC. The evidence suggests that Millers Dry Cleaners, or another former

owner of the Property, was responsible for releases, placements and disposals of PCE at the

Property. Thus, the releases and threatened releases appear to have been caused by the acts of

other third parties, and not the result of M&M’s conduct.

Coppola contends that M&M cannot utilize the “third party” defense of § 9607(b)(3)

because that defense applies to damage caused solely by the acts of a single third party.

Technically, M&M is not asserting the “third party” defense of § 9607(b)(3), rather it is asserting

the “innocent landowner” defense of § 9601(35)(A). Under the innocent landowner defense, the

hazardous substance must have been placed or disposed of on the property before M&M

purchased the property and M&M must not have contributed to the release of PCE. See Carson

Harbor, 270 F.3d at 887. These requirements mirror the “sole cause” requirement of the third

party defense.

To the extent that Coppola is arguing that M&M cannot utilize the innocent landowner

defense because multiple parties allegedly caused the release of PCE, such an argument is

unavailing. Although § 9706(b)(3) is written in the singular, i.e. the release was caused solely by

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a third party, the key is that the particular defendant did not cause the release or threatened release

of hazardous substances. Cases in which “a number of acts by several third parties” results in the

release or threatened release of hazardous substances still fall within the purview of § 9607(b)(3).

New York v. Lashins Arcade Co., 91 F.3d 353, 360 (2d Cir. 1996); see also Dedham Water Co. v.

Cumberland Farms Dairy, Inc., 805 F.2d 1074, 1079 n.10 (1st Cir. 1986) (noting that release or

threatened release must be caused by acts or omissions of “third parties”);; PC Int’l, Inc. v.

Aerojet-General Corp., 777 F. Supp. 549, 581 (W.D. Mich. 1991) (holding that hazardous

substance contamination must be caused solely by “other parties”);;14 New York v. Exxon Corp.,

766 F. Supp. 177, 195 (S.D. N.Y. 1991) (holding that defendant needed to show that the release of

hazardous substances was caused “solely by others”); United States v. Allied Corp., 1990 U.S.

Dist. LEXIS 20061, *15 & n.8 (N.D. Cal. Apr. 24, 1990) (holding that “other parties” were

responsible for contamination). Therefore, that multiple third parties allegedly caused a release of

PCE from the Property will not prevent M&M from utilizing the innocent landowner defense.

The evidence presented shows that M&M purchased the Property after a placement or

disposal of PCE occurred, and that M&M did not contribute to the release of PCE from the

Property. Summary adjudication on this issue in favor of M&M is appropriate.

c. Due Care

The due care requirement of the innocent landowner defense is taken from the § 9607(b)

third party defense. See 42 U.S.C. § 9601(35)(A) (in part incorporating the requirements of

§ 9706(b)(3)(a) and (b)). The “due care” requirement of § 9607(b)(3) applies after an owner

becomes aware of the presence of a hazardous substance on the property. See Lashins Arcade, 91

F.3d at 361; Interfaith Cmty. Org. v. Honeywell Int'l, Inc., 263 F. Supp. 2d 796, 864 (D. N.J.

2003); HRW Systems, Inc. v. Washington Gas Light, Co., 823 F.Supp. 318, 349 (D. Md. 1993).

Generally, where an owner has cooperated with state or federal environmental authorities, “it has

satisfied the ‘due care’ and ‘reasonable precautions’ requirements of [§ 9607(b)(3)].” Interfaith,

263 F.Supp. at 864; see also 1325 “G” St. Assocs. v. Rockwood Pigments NA, Inc., 2004 U.S.

Dist. LEXIS 19178, *30 (D. Md. Sept. 7, 2004); Town of New Windsor v. Tesa Tuck, Inc., 935 14 Reversed on other grounds sub nom. United States v. Bestfoods, 524 U.S. 51 (1998).

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F.Supp. 310, 314 (S.D.N.Y. 1996).

Here, the evidence indicates that once M&M was contacted by EPA and DTSC in 2008,

M&M fully cooperated. See DUMF 13, 14. There is no evidence that M&M was evasive or

obstructive with respect to any requests from or efforts by EPA or DTSC, nor is there evidence

that M&M failed to follow any directives from EPA or DTSC. Further, after EPA concluded its

investigation, it determined that there was no evidence of a release of PCE from the Property to

the surface water, that no further assessment was needed, and that no remedial action from the

Superfund was necessary. See FAC Ex. C at p.6; Wm. Martin Dec. Ex. F. Although EPA stated

that DTSC may continue to investigate, there is no evidence that DTSC has conducted any further

investigation of the Property or requested that M&M perform any testing or remediation.

Moreover, Coppola has not explained what additional steps M&M should have taken or explained

how M&M did not exercise due care once it was made aware of possible PCE contamination.

Coppola argues that M&M did not exercise due care because it did not conduct an

adequate pre-acquisition investigation, did nothing after the Property was placed on the CERCLIS

list in 2005/2006, and did nothing when DTSC conducted a screening of the Property in 2006.

Coppola’s arguments are not persuasive.

With respect to Martin LP’s pre-acquisition investigation of the Property, this argument

actually relates to a separate requirement of the innocent landowner defense. For a party to invoke

the innocent landowner defense, he must both conduct an appropriate pre-acquisition inquiry and

exercise due care under § 9607(b)(3) once contamination is found. See 42 U.S.C. § 9601(35)(A).

The appropriate pre-acquisition inquiry is a requirement that is separate and different from the

§ 9607(b)(3) due care requirement. See id.; 1325 “G” St., 2004 U.S. Dist. LEXIS 19178 at *31.

Pre-acquisition inquiries are not relevant to the § 9607(b)(3) due care requirement. 1325 “G” St.,

2004 U.S. Dist. LEXIS 19178 at *31; see also HRW Sys., 823 F. Supp. at 349.

As for the Property being placed on the CERCLIS list, as discussed previously, the

evidence does not indicate that Millers Dry Cleaners or the Property was placed on the CERCLIS

list in 2005 or pre-August 2006. In any event, the facility that was eventually placed on the

CERCLIS list was “Millers Dry Cleaners” at “110 N. Willis.” The Property’s address is 520 W.

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Main. There has been no evidence to contradict Joshua Martin’s declaration that the Property has

always been known by the address of 520 W. Main, and that 110 N. Willis is not an address that

M&M had ever seen with respect to the Property. See DUMF 26; J. Martin Dec. ¶ 5 & Ex. J.

There is no evidence that M&M knew about the 110 N. Willis address, or that M&M should have

been aware of any CERCLIS listing for 110 N. Willis.

Finally, as for DTSC conducting a preliminary investigation in 2006, i.e. the 2006

Assessment, the Court has previously addressed this issue. There is no evidence that M&M was

actually contacted by DTSC as part of any preliminary study, or that there was any explanation by

DTSC to M&M that DTSC was investigating PCE contamination at the Property. The 2006

Assessment does not state that any contact was made with M&M, states that there was no site visit

made in connection with the Assessment, and the “sampling” that is referenced in the Assessment

is sampling of wells, not the Property. See Footnote 7 supra. While the 2006 Assessment

indicates that there was a site visit as part of the Visalia Dry Cleaners Project, there is no

elaboration about when the visit occurred, what actions were performed during the visit, or what

was said to M&M. See id.

The evidence shows that M&M exercised due care once it was made aware of the potential

of PCE contamination at the Property by fully cooperating with governmental agencies. Summary

judgment in favor of M&M on the issue of due care under § 9607(b)(3) is appropriate.

d. Appropriate Inquiries In Accordance With Customary Standards & Practices

The innocent landowner defense requires a defendant to show that he had no reason to

know of contamination on the property at the time of purchase. See Carson Harbor, 270 F.3d at

887. As relevant here, M&M had “no reason to know” of PCE contamination if it can

demonstrate that before purchasing the Property, it carried out all “appropriate inquiries,” in

accordance with generally accepted good commercial and customary standards and practices, into

the previous ownership and uses of the property. See 42 U.S.C. § 9601(35)(A)(iv); Walnut Creek,

622 F.Supp.2d at 931. The “good commercial and customary standards and practices” are

generally those prevailing commercial standards for the relevant locale. See S.S. & G, LLC v.

California, 2005 WL 2016843, *2 (E.D. Cal. Aug. 19, 2005) (finding genuine dispute where an

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expert opined that a report complied “with generally accepted and local standards of professional

practice in effect at the time”);; United States v. Serafini, 791 F. Supp. 107, 108 (M.D. Pa. 1990)

(holding that the issue was “whether the customary or good commercial practice in the Scranton,

Pennsylvania area in 1969 included . . . that a prospective purchaser . . . actually view land before

purchasing it.”);; see also Domenic Lombardi, 290 F. Supp. 2d 198, 211 (D.R.I. 2003) (noting that

the defendant “presented no evidence as to what constituted ‘good commercial or customary

practices’ for purchasing property in Rhode Island in 1986 . . . .”). Further, if property was

purchased prior to May 31, 1997, the Court is to consider five factors: (1) any specialized

knowledge or experience on the part of the purchaser; (2) the relationship of the purchase price to

the value of the property, if the property was not contaminated; (3) commonly known or

reasonably ascertainable information about the property; (4) the obviousness of the presence or

likely presence of contamination at the property; and (5) the ability of the defendant to detect the

contamination by appropriate inspection. See 42 U.S.C. § 9601(35)(B)(iv)(I).

Here, the key is whether M&M made appropriate inquiries that were in accordance with

the generally accepted commercial practices in the Visalia area around March 1995, including

consideration of the five § 9601(B)(iv)(I) factors. See 42 U.S.C. § 9601(35)(B); S.S. & G, 2005

WL 2016843 at *2; Serafini, 791 F.Supp. at 108.

In terms of the § 9601(35)(B)(iv)(I) factors, first, M&M was in the business of purchasing

real estate, but their experience up until March 1995 was limited to farmland. See Wm. Martin

Depo. 41:20-42:24. The March 1995 purchase of the Property appears to have been M&M’s first

foray into purchasing commercial real estate and reviewing environmental site assessments. See

id. & 96:23-97:1. Given the nature of M&M’s prior experience, it is not appropriate to consider

M&M to have been an expert in the purchase of commercial property in March 1995. Second, the

Property was sold for about $1.4 million. An appraisal report (which made no reference to

contaminants other than asbestos) found that the fair market value of the Property was the same as

the purchase price.15 See Wm. Martin Dec. Ex. D. Thus, the purchase price was not so

15 The Court realizes that the appraisal report post-dates the purchase. Nevertheless, the appraisal confirms that fair market value was paid for the Property and thus, the report has relevance.

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disproportionate from the assessed value as to suggest undetected problems with the Property.

Third, William Martin spoke with local business owners, spoke with Benart, inspected the site,

and reviewed investigative reports. See Wm. Martin Dec. 5. None of these efforts revealed the

presence of a dry cleaning business. See id. Coppola’s expert indicates that a review of Sanborn

maps would have revealed the presence of Millers Dry Cleaners. See Krasnoff Dec. ¶ 13.

However, there is no evidence that Sanborn maps were generally well known or accessible to the

public or to an entity like M&M around March 1995. That is, there is no evidence that Sanborn

maps were reasonably known and available. Fourth, the PCE at issue is subterranean. There is no

evidence that PCE was obviously present either above or below the Property. Fifth, the Property

was visually inspected by William Martin, and had been inspected earlier by Twining. See Wm.

Martin Dec. ¶ 5 & Ex. B. No evidence of PCE contamination was apparent, and it appears that the

only way to detect PCE on the Property would have been through soil sampling. There is no

evidence that the physical inspection of the Property by Martin was inappropriate. Without more,

the indication is that M&M did not have the ability to detect PCE. Rather, the indication is that a

specific type of inspection that was designed to detect PCE would have been necessary.

Accordingly, the five § 9601(35)(B)(iv)(I) factors weigh in M&M’s favor.

Next, the Court is required to consider the generally accepted commercial practices for the

Visalia area around March 1995. M&M understood in 1995 (though its financial consultant) that

it was necessary to review an environmental assessment for commercial/non-farmland property.

See Wm. Martin Depo. 42:12-24. M&M focuses largely on the PSA prepared by Twining.

However, as Coppola points out, there are concerns with this report. By its own terms, the PSA

states that it is prepared pursuant to a standard of care that is time sensitive. See Wm. Martin Dec.

Ex. B. By the time M&M reviewed the PSA, the PSA was already between three and four years

old. M&M has offered no evidence that reliance on the PSA after this passage of time was

reasonable. Second, the PSA stated that it was prepared for Benart and that others who may rely

on its findings have a duty to determine the adequacy of the report for their own intended use. See

id. There is no evidence regarding M&M’s determination that the PSA was adequate for their

purchase of the Property. Third, the PSA noted that PCE was detected in nearby wells. It is true

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that the PCE was within the applicable MCL, which may mean that no further investigation was

warranted. However, because PCE is the hazardous substances at issue in this case, additional

testimony regarding the significance of the amount of PCE detected would be helpful. Fourth, the

PSA stated that “environmental concerns to soil and groundwater at the Property from on-site

sources cannot be evaluated with information made available to Twining,” and no soil and

groundwater samples appear to have been taken by Twining from the Property. See id. at 23, 26.

It is the results of soil and groundwater sampling which would have yielded the most useful

information regarding the environmental condition of the Property in terms of underground

contaminants such as PCE. It is true that the SIR included the results of soil samples, but the

content of the SIR or the nature of the sampling is not entirely clear at this time.

Coppola has offered the expert opinion of Peter Krasnoff, and that opinion indicates that

reliance on the PSA was unreasonable because the PSA did not meet the applicable American

Society for Testing and Materials (“ATSM”) standard, Designation E 1527-93. See Krasnoff Dec.

¶¶ 9-12. Krasnoff is an environmental engineer who has extensive experience in preparing

environmental reports. However, the Court does not find Kransoff’s opinions to be dispositive at

this point. First, Kransoff does not purport to be familiar with the generally accepted commercial

standards in the Visalia area around March 1995. Second, Kransoff’s opinion is based almost

entirely on compliance with ATSM Designation E 1527-93. As indicated above, for property

purchased prior to May 31, 1997, the Court is to consider five factors, as well as the relevant

accepted commercial practices. See 42 U.S.C. § 9601(35)(B)(iv)(I). No mention is made of the

ATSM or their standards and designations. This is significant because § 9601(35)(B)(iv)(II) deals

with property purchased after May 1997. For property purchase after May 31, 1997, but before

EPA establishes criteria for determining whether an appropriate inquiry has been made, Congress

determined that compliance with the applicable ATSM standards would constitute an appropriate

inquiry. See id. This shows that Congress chose not to express an opinion on ATSM standards

for property purchased prior to May 31, 1997. While there is no doubt that compliance with the

ATSM would go far to showing that an appropriate inquiry was made for pre-May 1997

purchases, given § 9601(35)(B)(iv)(I)’s failure to mention the ATSM and § 9601(35)(B)(iv)(II)’s

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adoption of the ATSM, the Court cannot hold that a failure to comply with an applicable ATSM

standard for pre-May 1997 purchases is fatal. See R.E. Goodson Constr. Co. v. Int'l Paper Co.,

2006 U.S. Dist. LEXIS 39850, *19-*20 (D. S.C. June 14, 2006) (finding that compliance with

ATSM Designation E 1527-93 is not the exclusive method for making “all appropriate inquiries”).

An appropriate inquiry is one that complies with the accepted commercial standards

around March 1995 in the Visalia area, considering the five factors of § 9601(35)(B)(iv)(I). It

may be that reliance on the PSA, the SIR, and the inquiries and inspections made by William

Martin were within the accepted standards. However, M&M has offered no evidence from

someone who purports to be familiar with this standard. Viewed in the light most favorable to

Coppola as the non-moving party, the PSA’s content raises significant concerns and prevents the

Court from determining as a matter of law that M&M made all appropriate inquiries. Summary

judgment in favor of M&M on the issue of whether an “appropriate inquiry” was made is

improper at this time.

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Defendant’s Argument

M&M argues inter alia that nuisance liability under Restatement (Second) of Torts § 839

is not possible. Under Restatement (Second) § 839, a possessor of land may be liable if it knows

or has reason to know of the nuisance but does not take steps to abate the condition. The Court

previously noted that Coppola needed to allege that M&M was in possession of the property at the

time the nuisance was created. M&M argues that it was not in possession of 110 N. Willis until

1995, when the conditions that allegedly caused the nuisance were no longer in existence.

With respect to continuing trespass, M&M argues that summary judgment is appropriate

for the same reasons as the private nuisance claim. M&M did not create the nuisance, assist in the

nuisance’s creation, or have any involvement in the contamination of Coppola’s property, or have

knowledge of the PCE until it was contacted by EPA and DTSC.

16 The parties make no material distinctions between the fifth and sixth causes of action. The Court will follow the parties’ lead and assume that the issues associated with the nuisance claim parallel those associated with the trespass claim.

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Plaintiff’s Opposition

Coppola argues that summary judgment on the Restatement (Second) § 839 theory is not

appropriate. M&M does not address the elements of a Restatement (Second) § 839 claim.

Instead, M&M merely states that it was not in possession of the Property while the dry cleaner

was in operation. There is a question whether M&M had knowledge of the PCE contamination in

2005 or 2006, yet did nothing about it.

With respect to continuing trespass, M&M failed to conduct an adequate pre-acquisition

investigation into the Property, and without an adequate investigation, there is no basis for arguing

against constructive knowledge of the PCE.

Legal Standard

A defendant who unreasonably fails to abate a nuisance when he is in possession of land

may be liable for the nuisance. See Redevelopment Agency v. BNSF, 643 F.3d 668 675-77 (9th

Cir. 2011); City of Los Angeles v. San Pedro Boat Works, 635 F.3d 440, 452-53 (9th Cir. 2009);

Coppola v. Smith, 935 F.Supp.2d 993, 1018 (E.D. Cal. 2013); Restatement (Second) of Torts §

839 (hereinafter “Restatement § 839”). Under the Restatement § 839:

A possessor of land is subject to liability for a nuisance caused while he is in possession by an abatable artificial condition on the land, if the nuisance is otherwise actionable, and (a) the possessor knows or should know of the condition and the nuisance or unreasonable risk of nuisance involved, and (b) he knows or should know that it exists without the consent of those affected by it, and (c) he has failed after a reasonable opportunity to take reasonable steps to abate the condition or to protect the affected persons against it.

Restatement § 839; BNSF, 643 F.3d at 675; San Pedro, 635 F.3d at 453; Coppola, 935 F.Supp.2d

at 1019; Leslie Salt Co. v. San Francisco, 153 Cal.App.3d 605, 619-20 (1984). To be in violation

of Restatement § 839, a defendant must: (1) be in possession of the land; (2) know or should know

of an artificial condition and the nuisance (or an unreasonable risk of nuisance); (3) know or

should know that the nuisance exists without the consent of the afflicted persons; and (4) after a

reasonable opportunity, fail to take reasonable steps to abate the condition or protect those

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afflicted against the nuisance. See BNSF, 643 F.3d at 675-77; San Pedro, 635 F.3d at 452-53;

Coppola, 935 F.Supp.2d at1019; Restatement § 839.

Discussion17

Too much has been read into the Court’s prior order. It is true that the Court stated that

Coppola needed to allege that M&M “was actually in possession of 110 N. Willis while the

nuisance was created.” Coppola, 935 F.Supp.2d at 1019-20. However, the Court was reacting to

Coppola’s argument that M&M had created a nuisance and to the indication that M&M was not in

possession of the Property. See id. at 1017, 1019-20. The Court did not mean to imply that if a

defendant was not in possession of land at the time a nuisance was created, then there could be no

liability. To the contrary, liability can attach under Restatement § 839 if there exists an abatable

nuisance on the possessor’s land, irrespective of whether the possessor created the nuisance. See

BNSF, 643 F.3d at 675; Coppola, 935 F.Supp.2d at 1019; Restatement § 839. Therefore, that

M&M may not have been in possession of 110 N. Willis or the Property when PCE was allegedly

released by Millers Dry Cleaners does not alone justify granting summary judgment.

To recover under Restatement § 839, Coppola basically must show that M&M possessed

the Property at a time in which an abatable nuisance on the Property existed, that M&M knew or

should have known of the nuisance, there was no consent to the nuisance, and M&M failed to take

reasonable steps to abate or protect after a reasonable opportunity to do so. See BNSF, 643 F.3d

at 675-77; San Pedro, 635 F.3d at 452-53; Coppola, 935 F.Supp.2d at1019; Restatement § 839.

Comment l to Restatement § 839 indicates that the duty to take reasonable steps to abate or protect

is triggered either at the time of actual knowledge or at the time the possessor should have known

of the nuisance, whichever is earlier. See Restatement § 839 cmt. l; cf. BNSF, 643 F.3d at 675-76

(citing with approval Restatement § 839 cmt. i).

Here, the evidence and arguments presented are not sufficient to resolve Coppola’s claims.

Instead, the evidence and arguments touch on critical issues that the parties do not adequately

address. First, it is not clear whether a nuisance exists or existed on the Property at a time when

17 M&M’s motion addressed three theories of nuisance, but Coppola only defended the Restatement § 839 nuisance theory. The Court construes Coppola’s opposition as an acknowledgement that the only nuisance theory being pursued against M&M by Coppola is the Restatement § 839 theory

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M&M was in possession of the Property. The indication is that Millers Dry Cleaners caused the

release of PCE, but Millers Dry Cleaners ceased operations 40 years ago, and M&M did not

purchase the Property until approximately 25 years after Millers Dry Cleaners closed. Depending

on migration patterns and the quantities of PCE released by Millers, it is unclear what condition

the Property was in at any time when M&M possessed it. This is especially true in light of the

EPA’s 2009 Site Report which found that a release of PCE from the Property to the groundwater

had not been shown, and EPA’s 2009 Remedial Decision that there was no evidence of a release

of PCE from the Property to the surface water and that no further assessment or action was

planned.18 See FAC Ex. C at pp.6, 27. Second, there has been no evidence concerning whether

any nuisance on the Property (assuming one exists) is abatable. See BNSF, 643 F.3d at 675;

Mangini v. Aeroject-Gen. Corp., 12 Cal.4th 108, 1099-1100 (1996). Third, the state of M&M’s

knowledge of the PCE is unclear. In terms of actual knowledge, the evidence shows that M&M

did not actually know of possible migrating PCE until 2008 when it was contacted by EPA and

DTSC. What is less clear is whether there was a time prior to 2008 in which M&M should have

known of migrating PCE.19 Whether M&M should have known of migrating PCE in turn

depends on inter alia whether M&M was under a duty to check for subsurface contamination,

whether M&M met such a duty (for example through its pre-purchase investigation of the

Property), or when M&M actually should have known of possible migrating PCE (if different

from the time of actual knowledge). Cf. BNSF, 643 F.3d at 675-76; Restatement § 839 cmt. i.

Because these issues have not been adequately addressed, the Court cannot grant summary

judgment.20

18 The Court notes that the FAC alleges that high levels of PCE were detected in 2012 in downgradient water samples near the Property. See FAC ¶ 42. Such evidence is relevant to whether a nuisance exists on the Property, but it is not necessarily dispositive. Additional evidence and argument is needed on this issue. 19 For purposes of nuisance, there must be an indication that the PCE interfered with Coppola’s property rights/use and enjoyment of its property. Cf. Martin Marietta Corp. v. Insurance Co. of N.A., 40 Cal.App.4t h 1113, 1132 (1995); Judicial Council of Cal., Civil Jury Instructions § 2021 (2014). The parties have not addressed the issue, but it is unclear at this time how such interference could occur without migration of the PCE from the Property. 20 The Court is merely identifying several outstanding issues, it is not holding that that these are the only issues that remain. In future motions or proceedings, the parties shall address any issues that they believe are germane the fifth and sixth causes of action, whether identified in this order or not.

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In sum, M&M’s argument is highly dependent upon a reading of the Court’s prior order

that was not intended. While it is apparent that M&M did not create a nuisance, that is not a

sufficient reason to grant summary judgment. Because there are critical unresolved issues,

summary judgment on the fifth and sixth causes of action is inappropriate.

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Parties’ Arguments

M&M argues that these causes of action are dependent on Coppola’s other causes of

action. Because the other causes of action fail, the declaratory relief and contribution claims fail

as well. Coppola argues that because summary judgment is improper with respect to each of the

claims challenged by M&M, summary judgment on the declaratory relief and contribution causes

of action is also improper.

Discussion

The Court has granted summary adjudication on various issues, but it has not granted full

summary judgment on the causes of action against M&M. Because causes of action remain

against M&M, summary judgment on the tenth and eleventh causes of action is not appropriate.

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A review of the docket shows that although discovery is proceeding, a scheduling order

has not been entered. Scheduling orders include deadlines for discovery and filing dispositive

motions. Given the resolution of this motion, the Court will not preclude M&M from filing an

additional summary judgment motion after entry of a scheduling order and in accordance with any

requirements that may be set forth therein. See Hoffman v. Tonnemacher, 593 F.3d 908, 911-12

(9th Cir. 2010).

&21&/86,21

With respect to the CERCLA cause of action, the evidence demonstrates that M&M and

Martin LP are the same entity and that M&M may rely on Martin LP’s pre-purchase investigation,

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that M&M did not dispose of, place, or contribute to the release of PCE at the Property (i.e. other

parties are the sole cause of the PCE release at the Property), and that M&M exercised “due care”

for purposes of § 9607(b)(3). Summary adjudication of these issues in favor of M&M will be

granted. However, there is a genuine issue of disputed material fact with respect to whether M&M

made all appropriate inquiries before purchasing the Property. In particular, it is unclear whether

M&M’s reliance on the PSA and the SIR was in accord with the good and accepted commercial

practices. Therefore, summary judgment on the CERCLA cause of action as a whole is denied.

With respect to the nuisance and trespass causes of action, M&M relies on a reading of the

Court’s prior order that was not intended, and there remain critical issues that have not been

adequately addressed by the parties. Summary judgment on these causes of action is denied.

Finally, Coppola’s claim for declaratory relief and contribution are dependent upon the

viability of other causes of action. Because the Court is denying summary judgment on the other

causes of action, summary judgment on these causes of action is also denied.

25'(5

Accordingly, IT IS HEREBY ORDERED that:

1. Defendant’s motion for summary judgment is GRANTED in part in that summary

adjudication is GRANTED on the issues of: (a) M&M may rely on the pre-purchase

investigation of Martin LP, (b) other parties are the sole cause of any release of PCE from

the Property, and (c) M&M exercised due care for purposes of 42 U.S.C. § 9607(b)(3);

2. Defendant’s motion for summary judgment is otherwise DENIED; and

3. Defendant is not precluded from filing a successive summary judgment motion.

IT IS SO ORDERED. Dated: January 15, 2015 SENIOR DISTRICT JUDGE