January 01, 2013

In Brief

Theodore L. Garrett

CERCLA

Two real estate companies sued a church to recover the costs of responding to contaminated groundwater that migrated from the adjacent church property. A district court dismissed the church’s counterclaims alleging that the migration from the church’s property made plaintiffs’ property part of a single Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) “facility” and thus plaintiffs were responsible as a current owner. Alprof Realty LLC v. Corp. of the Presiding Bishop of the Church of Jesus Christ of Latter-Day Saints, 2012 WL 4049800 (E.D.N.Y. No. 09-5190, Sept. 13, 2012). The court stated: “The cases cited by the Church do not establish that a CERCLA facility must always be defined to include the entire area of contamination, and they particularly do not stand for the proposition that an unrelated neighboring property onto which contamination spreads becomes part of the CERCLA facility.” The court also noted that the Church did not allege that it incurred costs because contamination from plaintiff’s property threatened to damage Church property.

A district court denied a request for discovery to show that underlying CERCLA liability was transferred from a company that contributed to contamination at the site to another company that was an indemnitor. Cyprus Amax Minerals Co. v. CBS Operations, No. 11-CV-252-GKF-PJC, 2012 WL 4857924 (D. Okla. Oct. 12, 2012). Parties can contractually shift responsibility for their response costs among each other by means of an indemnity, the court held, but the parties may not thereby escape their underlying liability to the government or a third party. On that basis, the court found that discovery to establish the transfer of liability was not relevant.

New Jersey Spill Act

Affirming the dismissal of a Spill Act claim for costs to remediate groundwater that contaminated private wells, the New Jersey Supreme Court held that the proofs failed to establish a sufficient nexus between the groundwater contamination and defendant’s discharges during its operation. N.J. Dep’t of Envtl. Prot. v. Dimant, 51 A.3d 816 (N.J. Sept. 26, 2012). The New Jersey Department of Environmental Protection (NJDEP) found that a pipe emerging from defendant’s building was dripping perchloroethylene (PCE) on to the asphalt, but did not identify any cracks in the asphalt that might have been a pathway for the PCE to enter the environment. The court’s opinion states that “[i]t is not enough to prove that a defendant produced a hazardous substance and that the substance was found at the contaminated site.” The Court held that in order to obtain damages under the Spill Act, the NJDEP must demonstrate, by a preponderance of the evidence, a reasonable connection between the discharge, the discharger, and the contamination at the damaged site.

Air quality

The Ninth Circuit affirmed the dismissal of a lawsuit by the City of Kivalina, Alaska, seeking damages against oil, energy, and utility companies based on claims that greenhouse gas emissions have resulted in global warming that eroded the city’s land and threaten destruction. Native Vill. of Kivalina v. ExxonMobil Corp., No. 09-17490, 2012 WL 4215921 (9th Cir. Sept. 21, 2012). The court held that federal common law can apply to transboundary pollution suits, but Kivalina’s claims are displaced by the Clean Air Act (CAA) and EPA actions authorized by the CAA displaces Kivalina’s claims. The Supreme Court in AEP v. Connecticut, 131 S. Ct. 2527 (2011) held that Congress has addressed the issue of domestic greenhouse gas emissions and thus displaced any federal common law right to seek abatement of the alleged nuisance. Although Kivalina seeks damages rather than abatement, the Ninth Circuit found that distinction not relevant to the doctrine of displacement. The court concluded that the solution to Kivalina’s circumstances rest with the legislative and executive branches, not federal common law.

A district court found that a utility, undertaking a project to change from natural gas to coal, failed to obtain a MACT determination in violation of the CAA. Wildearth Guardians v. Lamar Utilities Board, No. 1:09-cv-02974-DME-BNB, 2012 WL 4476649 (D. Colo. Sept. 28, 2012). In 2005 EPA delisted small electric generating units (EGUs) from Section 112 of the CAA, but the delisting rule was overturned by the D.C. Circuit. In 2012 the utility obtained a permit from Colorado limiting emissions to qualify the project as minor. The court concluded that the project violated the CAA from time the D.C. Circuit vacated the delisting rule in 2008 until the synthetic minor permit was issued in 2012. The court also rejected the utility’s defense that the § 112(g) requirements apply to preconstruction and thus do not apply because construction was already underway when the D.C. Circuit vacated the delisting rule.

Water quality

The Third Circuit upheld the conviction of a pipe foundry company and four of its managers for illegally pumping contaminated water into storm drains leading to the Delaware River. United States v. Maury, No. 09-2305, 2012 WL 4343775 (3d Cir. Sept. 17, 2012). Rejecting defendants’ argument that the jury charge was erroneous, the court held that the culpable mental state for a misdemeanor violation of the Clean Water Act (CWA) is simple negligence rather than gross negligence. The court also ruled that the jury’s verdict that defendants had knowingly participated in a conspiracy to violate the CWA and also committed a negligent violation of the CAA are not mutually exclusive.

The Eleventh Circuit denied attorney fees to the Miccosukee Tribe in its efforts to compel the South Florida Water District to obtain a NPDES permit for its water transfers. Friends of the Everglades v. S. Fla. Mgmt. Dist., No. 11-150352012 WL 1468484 (11th Cir. 2012). Although the Tribe prevailed in district court, that ruling was later reversed on appeal and thus the Tribe was not a “prevailing party” entitled to fees.

NEPA/Federal Tort Claims Act

Overturning its earlier decision, the Fifth Circuit held that the U.S. Army Corps of Engineers (Corps) was not liable for damages caused by canal breaches that occurred in New Orleans during Hurricane Katrina. In re: Katrina Canal Breaches Litig., No. 10-30249, 2012 WL 4343775 (5th Cir. Sept. 24, 2012). The opinion states that “At most, the Corps has abused its discretion—an abuse explicitly immunized by” the discretionary-function exception. That exception under the Federal Tort Claims Act bars suit on any claim that is “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) (2012).

Environmental marketing

The U.S. Federal Trade Commission (FTC) issued revisions to its Green Guides for the Use of Environmental Marketing Claims describing environmental marketing claims that the FTC considers unfair or deceptive under section 5(a) of the Federal Trade Commission Act. The guides caution marketers not to make broad, unqualified claims that a product is “environmentally friendly” or “eco-friendly.” The FTC advises marketers not to make an unqualified degradable claim unless they can prove that the entire product or package will completely break down and return to nature within one year after customary disposal.

Theodore L. Garrett

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