A green economy: What lawyers need to know
February 2010 Update: Environmental Lender Liability

January 2010 Update: Environmental Lender Liability

By Gabrielle Sigel and Genevieve Essig

CERCLA Case Law Developments

  • District Court Finds Non-Settling PRP Can Intervene in CERCLA Consent Decree

    On January 15, 2010, the U.S. District Court for the Northern District of West Virginia held that a PRP’s right to contribution under CERCLA is a significantly protectable interest permitting a non-settling PRP to intervene as of right to challenge a consent decree between the federal government and a settling PRP. United States v. Exxon Mobil Corp., No. 08-124 (N.D. W. Va. Jan. 15, 2010).  In Exxon, U.S. EPA identified Vertellus Specialties, Inc. (“Vertellus”) and CBS Corporation (“CBS”) as PRPs for contamination at Big John’s Salvage Site (“BJS Site”), a former industrial site in Marion County, West Virginia, the remediation of which could cost more than $24 million.  Exxon, previously identified by EPA as a PRP due to its predecessor’s coke production activities nearby, had agreed to a consent decree under which it would pay the government $3 million in exchange for relief from liability for pollution at the BJS site and protection from contribution claims by other PRPs; Vertellus and CBS asserted that the decree unreasonably underestimates Exxon’s liability and sought intervention under Fed. R. Civ. P. 24(a)(2) and CERCLA § 113(i).  Overruling EPA’s objections, the court granted Vertellus’s and CBS’s motions to intervene “for the limited purpose of challenging the proposed consent decree.” Exxon, No. 08-124, slip op. at 20.
Finding the test for motions to intervene to be the same under CERCLA and the Federal Rules of Civil Procedure, the court began by examining the central issue of whether the potential contribution rights of Vertellus and CBS qualified as “significantly protectable interests in the outcome of the [consent decree action].”  Id. at 2.  Noting that the 4th Circuit had not previously decided this question, the district court reviewed the growing number of divergent rulings on the issue and, though acknowledging that some other district courts and the 3rd Circuit had found the contribution right to be too speculative and contingent, ultimately agreed with the 10th Circuit’s decision in United States v. Albert Inv. Co.., 585 F.3d 1386 (10th Cir. 2009), that the CERCLA contribution right is a legally sufficient interest to justify intervention as of right in a consent decree action. Referencing the 4th Circuit’s “policy of ‘liberal’ intervention,” the court concluded that “the right of contribution held by CBS and Vertellus, although not certain, is a valuable interest that each would lose should the Court enter the proposed consent decree without providing them an opportunity to be heard.” Id. at 12-13.

Finally, the court found that the other requirements for intervention as of right had been met.  Although EPA argued that CBS’s request was untimely, the court concluded that neither the government nor Exxon would be prejudiced if CBS were allowed to intervene, reasoning that allowing CBS to intervene would not create significant additional delay; the court has an interest in determining the fairness and reasonableness of a proposed decree and the arguments of CBS and Vertellus would assist in that determination; and the government intends to proceed with the remediation even if there is a delay in the expected flow of funds from Exxon pursuant to the consent decree.
  • District Court Allows PRP to Amend Claim 2 Years after Atlantic Research
    On January 20, 2010, the United States District Court for the Southern District of Illinois granted a CERCLA PRP’s motion for leave to file an amended pleading seeking cost recovery under CERCLA § 107(a), in light of the Supreme Court’s ruling in United States v. Atl. Research, 551 U.S. 128 (2007).  United States v. Pharmacia Corp., No. 99-63, 2010 U.S. Dist. LEXIS 4343 (S.D. Il. Jan. 20, 2010).  In Pharmacia, plaintiff Pharmacia Corporation argued that the holding in Atlantic Research was a “momentous change in law” enabling it to bring a CERCLA § 107(a) claim for direct and future costs, which it allegedly incurred pursuant to two administrative orders, against Rogers Cartage Company (“Rogers”), a non-settling PRP.  Id. at *21.  In previous rulings, Pharmacia’s § 113(f) contribution claim had been denied.  The district court observed that, while Atlantic Research ostensibly allows PRPs such as Pharmacia to bring claims under § 107 for costs directly incurred in remediating a site, the Supreme Court did not decide whether costs not “voluntarily” incurred, such as those incurred pursuant to a consent decree, are recoverable under § 107(a).  Nevertheless, the district court concluded that Pharmacia’s position was not “frivolous or implausible.” Id. at *22. The district court also rejected Rogers’ argument that Pharmacia had unduly delayed by filing an amended claim 2-1/2 years after the Supreme Court’s decision.  The court found that knowledge of the potential impact of the decision could not be “immediately attributable” to Pharmacia, and Rogers was not unduly prejudiced, particularly given that, even without any amended pleadings, the case had been proceeding for 11 years.

CERCLA/RCRA Regulatory Developments

  • EPA Requests Comments on Draft Recommended Interim PRGs for Dioxin in Soil

    On January 7, 2010, U.S. EPA initiated a 50-day public comment period, 75 Fed. Reg. 984, on recommended interim preliminary remediation goals (“PRGs”) for dioxin in soil at CERCLA and RCRA sites that it established in draft guidance released on December 30, 2009: “Guidance on Recommended Interim Preliminary Remediation Goals for Dioxin in Soil at Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) and Resource Conservation and Recovery Act (RCRA) Sites” (“Draft Guidance”).  EPA intends to finalize these recommended interim PRGs in June of 2010, after it has received and evaluated public comments.  The recommended interim PRGs will apply to CERCLA and RCRA sites until EPA issues updated recommended PRGs based on its final dioxin reassessment, which EPA intends to complete by the end of 2010.  Once the PRGs are updated based on the final dioxin reassessment, EPA will “re-evaluate cleanup decisions at [CERCLA] and [RCRA] that were based on the 2010 recommended PRGs to ensure that cleanups remain protective for human health.” Draft Guidance at 5.  In the meantime, the Draft Guidance will supersede the PRG guidance last issued in 1998. 

    PRGs are chemical- and media- specific concentration goals, set at levels believed to be protective of human health, which are used as a target in selecting and executing remedial activities at contaminated sites.  The currently recommended PRGs for soil at CERCLA and RCRA sites, per the 1998 guidance, are 1,000 ppt (parts per trillion) dioxin toxicity equivalents (“TEQs”) in residential soil and a range of 5,000 - 20,000 ppt for commercial/industrial soil.  The recommended interim PRGs proposed in December 2009 are more conservative: 72 ppt for residential soil and 950 - 2,000 ppt for commercial/industrial soil.  EPA considers these levels adequately protective against non-cancer effects from “human exposure by ingestion and dermal contact with surface soils.” Draft Guidance at 3.  While EPA believes  these levels are also protective against cancer effects at the 1 in 100,000 risk level, EPA also is seeking comment on PRGs protective against cancer effects at the 1 in a million risk level, at 3.7 ppt for residential soil and 37 - 17 ppt for commercial/industrial soil.  EPA notes that PRGs this low would be equivalent to or below background levels in rural soil and recognizes that it is not its policy to require clean-up below background levels. 75 Fed. Reg. at 986. 

RCRA Case Law Developments

  • RCRA Imminent and Substantial Endangerment Determination Based on Conditions at Time of Filing

    The United States District Court for the Northern District of Texas held January 19 that, for purposes of RCRA’s § 7002(a)(1)(B) citizen suit provision, a determination of whether a contaminant may present an imminent and substantial danger must be based on conditions at the time of filing. Am. Int’l Specialty Lines Ins. Co. v. 7-Eleven, Inc., No. 08-807, 2010 U.S. Dist. LEXIS 4088 (N.D. Tex. Jan. 19, 2010).  In American International, plaintiff American International Specialty Lines Insurance Company (“AISLIC”) alleged that leakage from underground storage tanks under a gas station operated by defendant 7-Eleven had harmed its insureds’ adjacent property (“the Property”) and sought, inter alia, an injunction under RCRA § 7002(a)(1)(B) compelling 7-Eleven to investigate and remediate the Property and reimbursement of AISLIC’s investigation and remediation costs under the Texas Solid Waste Disposal Act (“SWDA”).  AISLIC sought summary judgment on its RCRA and SWDA claims, and 7-Eleven sought summary judgment against AISLIC on the RCRA claim.  The court denied 7-Eleven’s motion, but granted in part and denied in part AISLIC’s motion, finding genuine issues of material fact for trial on AISLIC’s claims.  Id. at *21.

    With regard to the RCRA claim, the court began by noting that the cross-motions for summary judgment mainly disputed whether the contamination at the Property presented an imminent and substantial endangerment to human health or the environment, a critical element in bringing a citizen suit under RCRA.  In addressing this issue, the court stated that the appropriate inquiry was “whether conditions at [the Property] at the time of suit, May 12, 2008,” posed an imminent danger.  The timing issue is crucial here because in October 2008, there was evidence of contamination at levels above Texas Protective Contamination Levels.  Then in early January 2009, AISLIC’s consultant informed the state that the site would not pose a risk to human health or the environment and sought and obtained Texas approval for a limited remediation approach.  Id. at *10.  7-Eleven argued that AISLIC’s report to Texas regulators demonstrated that the site did not pose an imminent danger.  Finding that the evidence indicated elevated levels of potentially hazardous contaminants at the Property when the suit was filed, and that 7-Eleven’s motion cited almost exclusively to contaminant levels in 2009, the court denied 7-Eleven’s motion and found that the imminent danger issue was a matter for trial. 

    The court granted AISLIC’s motion for partial summary judgment as to the other two elements of § 7002(a)(1)(B), finding that 7-Eleven was an “owner or operator of a waste treatment, storage, or disposal facility”; and that 7-Eleven “contributed to the handling, storage, treatment, transportation, or disposal of solid or hazardous waste.” Id. at *12-13. 

    With regard to the SWDA cost recovery claim, the court rejected 7-Eleven’s argument that AISLIC must prove that its response costs were caused by contamination migrating from the 7-Eleven site, rather than pre-existing on the Property, because there was evidence that at least some of the contamination came from 7-Eleven. The court also found a genuine issue of fact with regard to 7-Eleven’s affirmative defense seeking an offset for higher or unnecessary costs caused by AISLIC’s alleged failure to take effective and timely response measures upon learning of the contamination, and denied 7-Eleven’s motion for summary judgment on that issue.

Toxic Tort Case Law Developments

  • Plaintiffs Must Show Defendant Targeted Specific Individuals For Emotional Distress Claim

    On January 26, 2010, the United States District Court for the Northern District of California found that, since plaintiffs allegedly injured as a result of improper disposal of hazardous waste had not submitted evidence that the defendants intended to harm them in particular, plaintiffs’ claim for intentional infliction of emotional distress could not proceed.  Whitlock v. Pepsi Americas, No. 08-2742, 2010 U.S. Dist. LEXIS 5837 (N.D. Cal. Jan. 26, 2010).  This case was one of several arising out of contamination at Pepsi Americas’ Remco facility in Willits, California. In the present case, defendants Pepsi Americas, et al. (“Pepsi”) moved for summary judgment on plaintiffs’ claim that defendants’ discharge of hazardous substances despite knowing it would cause contamination that might affect people in the area amounted to intentional infliction of emotional distress (“IIED”).  The court granted defendants’ motion.

    Pepsi argued that plaintiffs’ claim failed because plaintiffs could not establish either that Pepsi’s conduct was “directed at each individual plaintiff and intended to cause that plaintiff severe emotional distress” or “done with knowledge of each plaintiff’s presence and exposure [to the hazardous substances at issue], and with a realization that each plaintiff was substantially certain to suffer severe emotional distress.” Whitlock, No. 08-2742, at *11.  Plaintiffs responded by “[incorporating] by reference” an opposition brief filed in a previous – and unsuccessful – case, essentially arguing that they only need show that Pepsi intended more generally that “citizens of Willits” be harmed. Id. at *14.

    The court rejected plaintiffs’ argument, emphasizing that the case plaintiffs cited in support of their position “[did] not recognize an IIED claim based on general misconduct.” Id.  The court noted that, while a plaintiff need not show that Pepsi knew the particular names of any individual plaintiffs affected by its conduct, “it is not enough to show that the defendant knew or should have known that there may be people in the area who might be affected by defendants’ conduct.” Id. at *17.  Therefore, finding that plaintiffs had not satisfied this element, the court granted Pepsi’s motion for summary judgment.