March 01, 2012

In Brief

Theodore L. Garrett


A district court dismissed a bank’s strict liability and negligent misrepresentation claims against companies that prepared and implemented an environmental remediation plan for property in which the bank holds an interest. Bankcorpsouth Bank v. Environmental Operations, Inc., No. 4:11CV9, 2011 WL 4815389 (E.D. Mo. Oct. 11, 2011). The companies cannot be held strictly liable as sellers of a product, namely an engineered containment cell, because the cell was incident to the services provided by defendants, the court held. However the court denied the companies’ motion to dismiss the bank’s Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) claims, holding that the complaint alleges that defendants engaged in unearthing, spilling, and releasing of contaminants and sufficiently alleges control to state an operator, generator, or arranger claim.

A district court rejected a mining company’s claims that a state was a liable under CERCLA as an arranger because it leased state lands for the purpose of mining and removing ore containing copper, silver, lead, gold, or other minerals. Pakootas v. Teck Cominco Metals, Ltd., No. CV- 04-256-LRS, 2011 WL 5975266 (E.D. Wash. Nov. 29, 2011). Citing the Supreme Court’s decision in Burlington Northern, the court ruled that the state’s mere knowledge that waste would be generated did not prove that the state planned for disposal. The state did not perform the extraction and treatment of ore and did not control disposal of mine wastes, the opinion concludes, and thus was not the source of pollution.

A developer may be liable under CERCLA for response costs that a former owner of contaminated property incurred at the site to comply with an EPA order. Saline River Properties, LLC v. Johnson Controls, Inc., Nos. 10-10507, 10-13406, 2011 WL 4916681 (E.D. Mich. Oct. 17, 2011). The court denied the developer’s motion for summary judgment on its citizen suit claims that the former owner failed to comply with the terms of the EPA’s cleanup order. The court also denied a motion to dismiss the former owner’s counterclaim that the developer contributed to the release of hazardous substances. The former owner alleged that the developer broke up a concrete slab on the property that caused hazardous substances to migrate into soils and groundwater and, the court ruled, such actions constitute disposal and not passive migration of hazardous substances.

Air quality

The D.C. Circuit remanded EPA’s national emission standards for hazardous air pollutants (NESHAP) for portland cement facilities. Portland Cement Ass’n v. EPA, No. 10-1358, 2011 WL 6118574 (D.C. Cir. Dec. 9, 2011). The court held that EPA arbitrarily failed to consider how data from a related commercial and industrial waste incinerator rule could alter the emission limits in the cement rule because some cement kilns combust secondary materials: “It is not absurd to require that an agency’s right hand take account of what its left hand is doing.” But, the court rejected industry’s argument that EPA failed to consider variations in input quality, citing the earlier decision in Sierra Club v. EPA, 479 F.3d 875, 883 (D.C. Cir. 2007). However, in a concurring opinion, Circuit Judge Brown expressed puzzlement as to how the court arrived at its conclusion in the Sierra Club case, stating that “the text and structure of the statute seem to me to compel the opposite result.” Finally, the court rejected arguments by environmental petitioners that EPA failed to set greenhouse gas limits as part of the cement rule, holding that EPA’s conclusion that it did not yet have adequate information to set a standard was not final agency action subject to judicial review.

Water quality

A district court held that EPA’s Multi-Criteria Integrated Resource (MCIR) Assessment and Enhanced Coordination (EC) Process, adopted to screen mountaintop mining water permits, violates the Clean Water Act and the Administrative Procedure Act (APA). National Mining Ass’n v. Jackson, Nos. 10-1220, 2011 WL 4600718 (D.D.C. Oct. 6, 2011). Pursuant to the MCIR Assessment, EPA gives the Army Corps of Engineers direction on which permit applications must go through the EC Process for further review and coordination. The court concluded, however, that the Clean Water Act (CWA) establishes the Secretary of the Army acting through the Corps as the permitting authority, and in adopting the MCIR Assessment and the EC Process, EPA unlawfully expanded its role in the issuance of CWA § 404 permits. The court also held that MCIR Assessment and the EC Process were unlawfully established without following the notice and comment process required by the APA.


A party that caused contamination cannot be sued by a landowner to recover contractual damages paid by the landowner to the buyer of the property. Wilder Corp. of Delaware v. Thompson Drainage & Levee Dist. 658 F.3d 802 (7th Cir. 2011). A landowner sold property to a conservation group and expressly warranted, in the contract of sale, that there was no petroleum contamination. Petroleum contamination was later discovered, and the landowner paid damages to the conservation group for breach of warranty. In the instant case, the landowner sought indemnification from a local drainage district that allegedly caused the petroleum contamination. Judge Posner’s opinion holds that a “blameless” contract breaker “cannot invoke non-contractual indemnity to shift the risk that he assumed in the contract.” The economic loss doctrine protects defendants, who would know little about plaintiff’s contractual relations with third parties, from liability for unforeseeable consequences. The landowner could have protected himself by a subrogation clause in its contract with the conservation group, but failed to do so.


The Tenth Circuit reversed a district court’s decision enjoining the U.S. Forest Service’s 2001 Roadless Area Conservation Rule, which prohibits road construction and the cutting of timber from inventoried roadless areas, subject to limited exceptions. Wyoming v. U.S. Forest Service, 661 F.3d 1209 (10th Cir. 2011). The Forest Service had broad authority under the Organic Act to regulate commercial logging and road construction on National Forest System lands. The court rejected Wyoming’s argument that the roadless rule was a de facto designation of “wilderness” contrary to the process established in the Wilderness Act of 1964, noting that the Wilderness Act is more restrictive. The court was also not persuaded by Wyoming’s National Environmental Policy Act (NEPA) claims that the Forest Service failed to consider a reasonable range of alternatives, that agency’s bias prevented it from taking a hard look at environmental impacts of the roadless rule, and that the Forest Service refused to grant Wyoming “cooperating agency” status in the NEPA process.

The 9th Circuit upheld U.S. Fish and Wildlife Service (FWS) biological opinions concluding that a proposed copper and silver mine in northwestern Montana would result in “no adverse modification” to critical bull trout habitat and “no jeopardy” to the local grizzly bear population. Rock Creek Alliance v. U.S. Fish & Wildlife Service, No. 10-35596, 2011 WL 5557426 (9th Cir. Nov. 16, 2011). The court rejected an environmental group’s allegations that the FWS violated the Endangered Species Act by conducting large-scale analysis. The court found no evidence that the FWS attempted to hide localized risks, noting that the FWS also considered the duration and level of habitat function diminution. The court was also not persuaded by plaintiff’s allegation that the FWS failed to account for the effect of existing development on proposed mitigation habitat for the grizzly bear, concluding that the mitigation plan was multi-faceted and the FWS concluded it would improve conditions in the long run.

Theodore L. Garrett

Theodore L. Garrett is a partner at Covington & Burling in Washington, D.C. He is a former chair of the Section and is a contributing editor of Trends.