District Court In Alabama Dismisses CWA Citizen Suit Claims Where 60-Day Notice Letter Fails To Identify Correct Date Of Alleged Violation

Posted by in Clean Water Act, Environmental Litigation on January 22, 2018

In Black Warrior Riverkeeper, Inc. v. Metro Recycling, Inc., 2017 U.S. Dist. LEXIS 207011 (ND AL, December 18, 2017), the District Court granted defendant’s Motion to Dismiss plaintiffs’ claims brought under the citizen suit provisions of the Clean Water Act for failure to comply with the jurisdictional prerequisite to bringing such a suit:  a sufficient Notice of Intent To Sue pursuant to 33 U.S.C. § 1365(b)(1)(A) and 40 C.F.R. § 135.3 (“60-Day Notice Letter”).  In addition, the District Court dismissed plaintiffs’ claims seeking to enforce a Consent Decree between plaintiffs and the defendant for lack of subject matter jurisdiction.

In Metro Recycling, plaintiffs alleged they witnessed a discharge from the landfill formerly operated, and in the process of being closed, by defendant Metro Recycling.  Pursuant to a Consent Decree between the parties, defendants were to fulfill the requirements of a Modified Closure Plan as well as construct a retention basin that would capture run-off from the landfill in a manner that would prevent additional sediments and contamination from entering an adjacent waterway.  While the alleged discharge from the landfill’s retention basin occurred on January 28, 2016, sample results were returned on February 3, 2016 showing levels of Total Suspended Solids in excess of the limits allowed in the Consent Decree.  The parties agreed the plaintiffs’ 60-Day Notice Letter stated defendant’s alleged violation took place on February 3, 2016 when the actual date of the alleged violation was January 28, 2016.  On this basis, defendant sought to dismiss plaintiffs’ CWA claims for failure to provide a legally sufficient 60-Day Notice Letter in violation of 33 U.S.C. § 1365(b) and 40 C.F.R. § 135.3.

As an initial matter, the District Court affirmed that compliance with the 60-Day Notice Letter requirement was a jurisdictional prerequisite to the filing of a citizen suit under the Clean Water Act.  Citing Eleventh Circuit authority, the Court held, “‘the 60-day notice requirement of 33 U.S.C. § 1365(b) is a mandatory condition precedent to the filing of a citizen suit under the Clean Water Act.’  Nat’l Envtl. Found. v. ABC Rail Corp., 926 F.2d 1096, 1097 (11th Cir. 1991).  ‘If a plaintiff fails to comply with this notice requirement where it is applicable, the district court is required to dismiss the action.’  Id. at 1097-98.”  Metro Recycling, *8.

The District Court then addressed the appropriate standard of review, noting the somewhat contradictory nature of adhering to the Eleventh Circuit’s mandate to strictly construe compliance with the notice requirements of 40 C.F.R. § 135.3 which, in turn, require only that the 60-Day Notice Letter “‘include sufficient information to permit the recipient to identify…the date or dates of such violation.’”  Metro Recycling, *10.  While the District Court noted the specific issue of an erroneous date of violation had not been addressed by the Eleventh Circuit, it found, consistent with a strict construction, that the 60-Day Notice Letter did not provide “sufficient information” to the defendant as the stated date of violation was wrong.  On this basis, the Court granted the defendant’s motion to dismiss the Clean Water Act claims.  The District Court made this ruling despite the fact defendant was actually present during plaintiffs’ testing and had actual knowledge of the date of violation.

The District Court also dismissed plaintiffs’ claim to enforce the Consent Decree itself for lack of subject matter jurisdiction.  Plaintiffs argued that, while the Order affirming the Consent Decree expressly stated the District Court was to retain jurisdiction for one year (and that year had passed), the Order also provided the Court will enforce the settlement between the parties as reflected in the Consent Decree.  As the Consent Decree stated the Court was to retain jurisdiction to resolve disputes that might arise thereunder, plaintiffs argued the Order bestowed ancillary jurisdiction on the District Court.  The District Court disagreed, noting the Consent Decree language conflicted with the Order’s express limitation on the Court’s retention of jurisdiction.  Holding the specific jurisdictional language in the Order took precedence, the District Court granted the defendant’s motion to dismiss plaintiffs’ claim to enforce the Consent Decree for lack of subject matter jurisdiction.

Washington Supreme Court Holds Investigation Costs Qualify As Remedial Costs Even When No Cleanup Is Required, But Prevailing Party Status Determination Was Premature

Posted by in Cost Recovery, Environmental Litigation, Remediation on January 22, 2018

In Douglass v. Shamrock Paving, Inc., 2017 Wash. LEXIS 1149 (December 21, 2017), the Washington Supreme Court held that soil testing conducted by a landowner qualified as a “remedial action” under the state’s Model Toxics Control Act (“MTCA”) (Wash. Rev. Code § 70.105D.020(33)), giving rise to a contribution claim.  However, the Supreme Court affirmed the appellate court’s ruling that landowner was not entitled to recover his soil removal costs because the contaminant concentrations did not exceed State cleanup standards.  The Supreme Court also reversed the appellate court’s ruling that defendant was the prevailing party, entitled to attorney fees, because it was premature to make that determination until after the trial court, on remand, applies equitable factors to determine the underlying award to which plaintiff was entitled for his investigation costs, as compared with his non-compensable remedial costs.

In Douglass, defendant Shamrock Paving Inc. spilled unknown amounts of lube oil on the Douglass property.  Douglass hired an environmental consulting firm to perform an investigation, which showed lube oil, a hazardous substance under the MTCA, present at levels ranging from 400 mg/kg to 2,000 mg/kg.  The Washington Department of Ecology (“Ecology”) cleanup level for lube oil is 2,000 mg/kg.  Ecology defines “cleanup level” as the “concentration of a hazardous substance … that is determined to be protective of human health and the environment.”  (Emphasis added.)  Nonetheless, Douglass subsequently directed the consulting firm to remove 68 tons of soil from the property and filed suit for trespass, nuisance and a contribution action under the MTCA.

The trial court denied the MTCA claim, including Douglass’ claims for both investigation and remediation costs, finding Douglass failed to prove that the lube oil was a threat to human health or the environment since the lube oil concentration detected did not exceed the DOE cleanup level which was protective of human health and the environment.  The judge designated Shamrock as the prevailing party pursuant to the MTCA’s attorney fee provision and awarded it attorney fees.  On appeal, the Court of Appeals concluded that the soil testing performed at Douglass’s request was a remedial action under the MTCA, but ruled the soil removal was not because the soil did not pose a threat or potential threat to human health or the environment based on the trial judge’s ruling.  However, because Douglass established the elements of his MTCA claim for investigative costs, the Court of Appeals designated him the prevailing party and therefore entitled to recover his attorney fees.  The Court of Appeals remanded the case to the trial court to complete the assessment of equitable factors to determine the exact recovery amount.

The Washington Supreme Court affirmed the Court of Appeals in part and reversed in part.  First, like the Court of Appeals, the Washington Supreme Court held that investigation activities fall within the MTCA’s definition of “remedial action” which constitutes “any action . . . including any investigative and monitoring activities.”  That the investigation results revealed no cleanup activity was required was not relevant: “investigations of hazardous substances are remedial actions because their purpose is to ‘discern whether such a threat exists.'” Second, the Washington Supreme Court affirmed the Court of Appeals’ remand to the trial court to apply appropriate equitable factors to determine the amount of investigation costs Douglass was entitled to recover, noting that if Shamrock had only spilled a drop of oil, but Douglass investigated the entire property, the recovery may be little to none.  Third, the Washington Supreme Court upheld the Court of Appeals’ affirmation of the trial court’s determination that no cleanup of the lube oil was required because the concentrations detected did not exceed Ecology’s soil cleanup level of 2,000 mg/kg.  While the Washington Supreme Court acknowledged that Ecology could require a more stringent cleanup level based on a site-specific evaluation, Ecology never performed such an evaluation at the Douglass property.  Finally, the Washington Supreme Court reversed the Court of Appeals’ designation of Douglass as the prevailing party.  The Washington Supreme Court held that while the statute does not define “prevailing party,” its meaning is clear.  “[T]he ‘prevailing party’ is the party that either recovers remedial action costs or successfully defends against a claim for such costs.”  The appellate court improperly based its decision solely on whether plaintiff satisfied the elements of a contribution claim, rather than waiting for the trial court’s assessment of whether monetary relief for plaintiff was warranted based on the application of equitable factors.  Thus, the equitable assessment of any recovery must occur prior to the designation of the prevailing party.  Only if the trial court awards remedial action costs for at least some of Douglass’ costs would Douglass be the prevailing party, entitled to attorney fees.

District Court In California Denies Defendant’s Motion To Dismiss CWA Citizen Suit, Finding 60-Day Notice Letter Sufficient And Claims Adequately Alleged

Posted by in Clean Water Act, Environmental Litigation, Stormwater on January 22, 2018

In Coastal Envtl. Rights Found. v. Am. Recycling Int’l, Inc., 2017 U.S. Dist. LEXIS 202649 (SD CA, December 8, 2017), the District Court denied defendant’s Motion to Dismiss plaintiff’s claims brought under the citizen suit provision of the Clean Water Act.  Defendant argued that plaintiff failed to comply with the jurisdictional prerequisite to bringing such a suit:  a sufficient Notice of Intent To Sue pursuant to 33 U.S.C. § 1365(b)(1)(A) and 40 C.F.R. § 135.3 (“60-Day Notice Letter”).  In addition, defendant claimed that it had voluntarily stopped the conduct alleged to constitute certain of the Clean Water Act violations, rendering those claims moot.  Finally, defendant sought dismissal of several of plaintiff’s claims under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim.  The District Court denied defendant’s motion to dismiss on all grounds.

In Am. Recycling, both plaintiff, a California non-profit, and defendant, a fourteen-acre automobile salvage business, were located in North San Diego County.  Plaintiff alleged that defendant’s storm water discharges polluted the San Luis Rey River and impaired its members’ use and enjoyment of the river.  Specifically, plaintiff alleged that defendant’s operations, management practices and pollution control protocols resulted in contaminated storm water entering the storm water conveyance system or discharging directly to the San Luis Rey River.  In support, plaintiff alleged storm water sampling data from May 2016 showed levels of various parameters in excess of the relevant water quality criteria in violation of the Clean Water Act and requirements of California’s NPDES General Permit for Storm Water Discharges Associated with Industrial Activities (“Permit”).

The District Court first examined defendant’s motion to dismiss for lack of subject matter jurisdiction under FRCP 12(b)(1).  As its initial ground, defendant argued that plaintiff’s 60-Day Notice Letter was inadequate for two reasons:  failing to identify plaintiff’s contact information and failing to identify the industrial activities upon which plaintiff’s claims are based.  The District Court rejected the first argument as the 60-Day Notice Letter did identify plaintiff by name, assert that plaintiff was represented by counsel, provide contact information for that counsel and request all communications be handled through counsel.  Moreover, the District Court noted that, since plaintiff and its counsel shared the same contact information, the technical requirements of 40 C.F.R. § 135.3 were met.  Regarding defendant’s second argument, the District Court found that it ran contrary to the Notice itself which did, in fact, identify the nature of defendant’s facility and relevant SIC code.  Moreover, based on defendant’s knowledge of its own operations, it could not plausibly claim to be unaware of the relevant activities and responsible person or persons.  Finally, the Court looked to defendant’s post-60-Day Notice Letter storm water sampling as evidence that defendant understood “at least some” of plaintiff’s allegations regarding its inadequate monitoring and reporting program.

The defendant’s second ground for its motion to dismiss for lack of subject matter jurisdiction –mootness — was based on its claim that its voluntary cessation of conduct rendered a portion of plaintiff’s action moot as wholly past violations.  The District Court rejected this argument too, finding that plaintiff adequately pled these claims as “continuous or intermittent” Permit violations for this initial stage of proceedings.  Moreover, defendant failed to meet its heavy burden to show that the behavior in question could not reasonably be expected to recur based simply on two post-60-Day Notice Letter storm water sampling events.

Lastly, the District Court turned to defendant’s motion to dismiss several of plaintiff’s Permit violation claims under FRCP 12(b)(6) for failure to state a claim.  The District Court upheld each of plaintiff’s claims, finding plaintiff had adequately alleged the specific Permit violation at issue in each claim, including allegations of defendant’s failure to implement adequate Best Management Practices to comply with the Permit’s effluent limitations, failure to ensure its storm water discharges do not violate the Permit’s receiving water limitations, and failure to implement an adequate Storm Water Pollution Prevention Plan and Monitoring & Reporting Program.

Most notably, the District Court affirmed that plaintiff adequately alleged a violation of the Permit’s Level 1 Exceedance Response Action requirements for exceedances of copper and zinc despite the fact the Permit did not specifically require sampling for those constituents.  However, the Permit did require defendant to sample additional parameters to determine parameters on a “facility-specific basis that serve as indicators of the presence of all industrial pollutants identified in the pollutant source assessment” which must include “the pollutants likely to be present in industrial storm water discharges.”  Am. Recycling, *29.  As plaintiff alleged that copper and zinc had been “historically found at the Facility” and were “common pollutants” found at industrial facilities, the District Court held it was reasonable to interpret the Permit as requiring defendant to sample, analyze and address exceedances of common pollutants in its storm water that defendant should reasonably be aware of, including copper and zinc.  Am. Recycling, *30.  In addition, the District Court pointed to the fact that the defendant actually did analyze its storm water for copper and zinc.  Therefore, in light of the Permit terms and plaintiff’s allegations, plaintiff adequately pled that the defendant was required to compare its sampling results with the limitations set forth in the Permit and then take the required action to address the exceedances.  As defendant allegedly failed to do this, plaintiff adequately alleged a Permit violation.

Based on the foregoing, the District Court denied defendant’s Motion to Dismiss in its entirety.

Ninth Circuit Holds That Expert Opinion Regarding Source Of Perchlorate Passes Daubert Test, Reinstates Expert Testimony; Upholds Denial Of Defendant’s Summary Judgment Motion On Statute Of Limitations And “Economic Loss Rule” Issues

Posted by in Environmental Litigation on August 12, 2014

August 12, 2014

By Michael Einhorn

The Ninth Circuit issued an opinion on May 2, 2014 reversing the district court for the Central District of California regarding the admissibility of the opinion offered by the plaintiff’s expert regarding the source of perchlorate contamination in groundwater, but upholding the district court’s denial of defendant’s motion for summary judgment on statute of limitations and “economic loss rule” issues.

The appeal in City of Pomona v. SQM N. Am. Corp., Nos. 12-55147, 12-55193, 2014 U.S. App. LEXIS 8308 (9th Cir. Cal. May 2, 2014) primarily concerned the City of Pomona’s (“Pomona”) action against SQM North America Corporation (“SQMNA”), alleging SQMNA caused perchlorate contamination in the City’s groundwater. Pomona retained an expert witness who opined that that SQMNA’s imported sodium nitrate was the primary source of the perchlorate in the City’s groundwater. The district court held an evidentiary hearing to determine whether that expert opinion testimony was admissible under Federal Rule of Evidence (FRE) 702 and legal standards established in the seminal case of Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993)(Daubert) and subsequent cases. The district court excluded Pomona’s expert witness testimony on this issue as unreliable. The Ninth Circuit reversed, however, finding that the district court abused its discretion.

The Ninth Circuit, however, upheld the district court’s earlier denial of defendant SQMNA’s motion for summary judgment, claiming that Pomona’s suit was barred on two grounds: (1) California’s “economic loss rule,” and (2) the three-year statute of limitations for injury to real property. SQMNA subsequently brought an in limine motion to exclude testimony by Pomona’s expert witness, who used a “stable isotope analysis” methodology to conclude that the perchlorate contamination in Pomona’s groundwater was caused by SQMNA’s sodium nitrate. The parties stipulated to dismissal of the case to permit both parties to appeal the district court’s decisions.

Daubert analysis of Pomona’s proposed expert witness testimony.

The Ninth Circuit first addressed the district court’s exclusion of Pomona’s expert witness. The expert used a stable isotope analysis methodology based on the Guidance Manual for Forensic Analysis of Perchlorate in Groundwater using Chlorine and Oxygen Isotopic Analysis (“Guidance Manual”), a compilation of 12 peer-reviewed articles describing the methodology. The expert had samples collected from Pomona’s groundwater, analyzed the isotopic composition of the perchlorate, and compared his results to a reference database of known perchlorate sources. He concluded that the samples matched SQMNA’s imported sodium nitrate and concluded SQMNA was the source of the contamination on that basis.

Under FRE 702, expert evidence is admissible if (1) the witness is qualified, (2) the opinion will help the trier of fact, (3) the opinion is based on sufficient facts or data, (4) the opinion is based on reliable principles, and (5) the expert reliably applied the principles and methods to the facts of the case. Under Daubert, the trial court must act as a gatekeeper to assure that the expert testimony is both reliable and relevant. Relevancy is determined by whether the expert’s knowledge has a connection to the issues in the case. Reliability is determined by whether expert opinion is based on scientific methodology, the validity of which is analyzed by considering several non-exclusive factors, such as whether the methods used are testable, if they have been peer reviewed or published, if there is a known error rate, and if they are generally accepted.

The district court concluded that the Pomona’s expert opinions were unreliable on several grounds, but the Ninth Circuit disagreed as to each and explained why the district court had abused its discretion in excluding the expert. First, the district court found that the opinions were not generally accepted because the procedures used were subject to further testing and refinement, as the Quality Assurance/Quality Control (QA/QC) parameters were still being refined, and because the methods were not certified by the EPA. The Ninth Circuit found that methods subject to further testing and refinement still may be “generally accepted”, and that a “‘disagreement over, not an absence of, controlling standards’ is not a basis to exclude expert testimony. City of Pomona v. SQMNA, at *14-15, quoting United States v. Chischilly, 30 F.3d 1144, 1154 (9th Cir. 1994). In particular, the Court noted that the Guidance Manual represents the most up-to-date QA/QC parameters. The Court also found that the lack of EPA certification is not a precondition to admissibility, because the stable isotope analysis is a published, peer-reviewed method and the product of inter-laboratory collaboration that began before the litigation. The Ninth Circuit stated that a party may establish that evidence is scientifically valid by “‘pointing to some objective source to show that the conclusions are based on ‘scientific method, as it is practiced by (at least) a recognized minority of scientists in the [ ] field.’” City of Pomona v. SQMNA, at *17, quoting Southland Sod Farms v. Stover Seed Co., 108 F.3d 1134, 1141 (9th Cir. 1997).

Second, the district court held that the expert’s methods had not been tested by others and were not subject to retesting. The Ninth Circuit disagreed, holding that “[t]he test under Daubert is whether the method ‘can be or has been tested’” and that “under Daubert’s testability factor, the primary requirement is that ‘someone else using the same data and methods . . . be able to replicate the results.” City of Pomona v. SQMNA, at *21-22, quoting Cooper v. Brown, 510 F.3d 870, 880-81 (9th Cir. 2007) and Zenith Elecs. Corp. v. WH-TV Broad. Corp., 395 F.3d 416, 419 (7th Cir. 2005). The Ninth Circuit found that the district court erred because (1) several laboratories have tested the Guidance Manual methods used by the expert; and (2) another laboratory may retest the expert’s procedures. SQMNA argued that Pomona’s expert did not follow the procedures properly and did not independently verify his test results with a separate lab. The Ninth Circuit found that attacks on an expert’s alleged failure to strictly adhere to protocol and on the expert’s results do not bar their admission, but go to the weight of the evidence and are therefore questions for a jury. The court also noted that the alleged protocol defect was described as an “optional” step by the Guidance Manual. The Ninth Circuit stated that “expert evidence is inadmissible where the analysis ‘is the result of a faulty methodology or theory as opposed to imperfect execution of laboratory techniques whose theoretical foundation is sufficiently accepted in the scientific community to pass muster under Daubert.’” City of Pomona v. SQMNA, at *24-25, quoting Chischilly, 30 F.3d at 1154. Accordingly, the Ninth Circuit found that the district court’s misapplication of law was an abuse of discretion.

Third, the district court ruled that the expert’s opinion was unreliable because the reference database of known perchlorate sources on which he relied was too small to identify SQMNA as the source of contamination with an acceptable rate of error. SQMNA had proffered a rebuttal expert in support of its “reliability” argument. Pomona’s expert responded that: (1) the reference database was sufficient; (2) that the rebuttal expert’s opinion was based on outdated publications; and (3) the area from which SQMNA imported sodium nitrate is well known and characterized. The Ninth Circuit characterized this as a disagreement between two credible experts that would be best settled by a “battle of the experts before the fact finder, not by judicial fiat.” City of Pomona v. SQMNA, at *29. In addition, the Ninth Circuit stated that Daubert does not require absolute certainty, so the reference database does not need to include “every source of perchlorate in the world.” Id., at *28. Accordingly, the Court held that the district court abused its discretion by resolving a matter properly left to a jury, and reversed the exclusion of Pomona’s expert.

Economic loss rule

In its motion for summary judgment, defendant SQMNA argued that Pomona’s damages are barred by the economic loss rule. Under California’s economic loss rule, a party that suffers only economic harm, rather than injuries to person or property other than the allegedly defective product, may not recover under tort theories.   Economic losses include damages for inadequate value, cost of repair, cost of replacement of defective products, and lost profit. The Ninth Circuit affirmed the district court’s denial of SQMNA’s motion on these grounds, finding that Pomona properly alleged damage to its property, distinct from economic loss due to SQMNA’s sodium nitrate fertilizer as the allegedly defective product in the case. The Court noted that “California and federal courts have held that pollution of groundwater is damage to property” and that a Pomona’s right to use the groundwater confers it with standing to bring the lawsuit. City of Pomona v. SQMNA, at *31-32, 34.

Statute of limitations

The district court also denied SQMNA’s summary judgment motion on statute of limitations grounds. California Code of Civil Procedure (CCP) § 338(b) provides a three year limitations period for injury to real property, which starts to run when the last essential element of the cause of action occurs. On this point, the Ninth Circuit found that “[w]hen the last element to occur is damage, the limitations period starts upon the occurrence of ‘appreciable and actual harm, however uncertain in amount, that consists of more than nominal damages.’” City of Pomona v. SQMNA, at *35. The Court noted that the test for when this occurs in groundwater contamination cases is not well defined in California courts. Accordingly, the Ninth Circuit adopted an analysis formed by a federal district court in New York, which had applied California law and found that “appreciable harm occurs when the contamination ‘caused or should have caused’ the party to act in response to the contamination.” City of Pomona v. SQMNA, at *36, quoting In re MTBE Prods. Liab. Litig., 475 F. Supp. 2d 286, 293-95 (S.D.N.Y. 2006).

In response to Pomona’s claim, SQMNA argued that Pomona had discovered perchlorate in its groundwater many years before filing the lawsuit in 2010, at least as far back as 1999. However, the Ninth Circuit focused on the date when Pomona was required to remediate the perchlorate as the trigger date for the running of the limitations period. The California Department of Public Health (“CDPH”) is required to establish Notification Levels (previously known as “Action Levels”) and state Maximum Contaminant Levels (“MCLs”) for contaminants in drinking water. See, Cal. Health & Safety Code §§ 116275, 116455. In 1999, Pomona discovered that perchlorate in its groundwater exceeded Notification Levels, which require monitoring and reporting to CDPH, but not remediation. Cal. Health & Safety Code § 116455(c)(3). In 2007, CDPH established a lower MCL of six parts per billion (ppb). Since perchlorate was detected in Pomona’s groundwater in excess of 6 ppb, Pomona was required by law to take action to investigate and remediate the contamination, which it did.

SQMNA argued that Pomona should have acted to reduce perchlorate as soon as it knew of the contamination. Pomona argued that it relied on state MCLs as a trigger to determine whether action was required. The Ninth Circuit ruled that testing and reporting requirements, without more, do not constitute “appreciable harm” under California law. Accordingly, the Ninth Circuit found there was disputed factual evidence regarding the issue of whether Pomona was required to act prior to 2007, and therefore the district court was correct in denying summary judgment on the statute of limitations issue.

District Court Holds that Prior CERCLA § 107(a) Cost Recovery Action Against a Party Limits the Party to § 113(f)(1) Contribution Claim in Subsequent Action

Posted by in CERCLA, Cost Recovery, Environmental Litigation on March 12, 2014

The District Court for the Central District of California recently held in an unpublished opinion that a party cannot bring a CERCLA § 107(a) cost recovery action for response costs which relate to a common liability shared with an earlier § 107(a) action against that party.  Instead, the party can only pursue a § 113(f) contribution claim regardless of whether the specific costs for which it seeks recovery are the same as those sought from the party in the earlier cost recovery action.

In Whittaker Corp. v. United States, Case No. CV 13-1741 FMO, 2014 U.S. Dist. LEXIS 23918 (C.D. Cal. Feb. 10, 2014), plaintiff Whittaker Corporation (“Whittaker”) brought two § 107(a) cost recovery claims alleging owner and arranger liability against the defendant United States of America (the “Federal Government”) for response costs incurred to clean up contamination in the soil and groundwater at a former military munitions manufacturing site (the “Site”).  According to Whittaker’s first amended complaint (“FAC”), Whittaker voluntarily performed and incurred costs for interim remedial efforts at the Site under the oversight of the California Department of Toxic Substances Control (“DTSC”).  Whittaker alleged that it entered into a voluntary consent order (the “Consent Order”) with DTSC in 1994 related to such efforts.  In 2002, DTSC issued an Imminent and Substantial Endangerment Determination and Order and Remedial Action Order (“Endangerment Order”) for Whittaker to remediate the site, which provided, in part, that Whittaker remain subject to the Consent Order.  Whittaker alleged that neither Order was entered into subject to CERCLA or a court order.

In 2000, Whittaker itself was subject to § 107(a) cost recovery claims brought by a group of water agencies and companies in the area of the Site (collectively, the “Water Purveyors”) for reimbursement of costs expended by the Water Purveyors to respond to groundwater contamination in certain off-Site production wells (the “Water Purveyor Action”).  This action was eventually settled in 2007 (the “Water Purveyor Settlement”).  Whittaker alleged that its subsequent FAC against the Federal Government sought response costs outside the scope of the Water Purveyor Action.

The Supreme Court has interpreted CERCLA as providing complementary, but distinct, remedies under §§ 107(a) and 113(f) to parties in different procedural circumstances:

Section 113(f)(1) authorizes a contribution action to PRPs [potentially responsible parties] with common liability stemming from an action instituted under § 106 or § 107(a). And § 107(a) permits cost recovery (as distinct from contribution) by a private party that has itself incurred cleanup costs. Hence, a PRP that pays money to satisfy a settlement agreement or a court judgment may pursue § 113(f) contribution. But by reimbursing response costs paid by other parties, the PRP has not incurred its own costs of response and therefore cannot recover under § 107(a).

United States v. Atlantic Research Corp., 551 U.S. 128, 139 (U.S. 2007).

The Federal Government brought a motion to dismiss Whittaker’s FAC, arguing that Whittaker was limited to contribution actions as a PRP with common liability stemming from the § 107(a) claims in the Water Purveyor Action.  Whittaker countered that it still possessed § 107(a) claims because no § 113(f) claim was available for response costs outside the scope of the Water Purveyor Action.  According to Whittaker, the Water Purveyors’ complaint related only to the reimbursement of costs the Water Purveyors incurred addressing their contaminated off-Site wells, not on-Site remediation.  Whittaker argued that § 113(f)(1) permits a suit “only where the PRP is suing another party in contribution to force that party to share in the exact costs that were the subject of a §§ 106 or 107 settlement or judgment.”  Whittaker, at *14.  It further argued that some response costs incurred at the Site pre-date the Water Purveyors’ claims, and therefore such costs sought by Whittaker from the Federal Government could not possibly have resulted from the Water Purveyor Settlement.

The District Court disagreed with Whittaker, and held that nothing in the text of § 113(f)(1) limits recovery under a contribution action to the scope of the previous cost recovery action against the plaintiff.  Indeed, the Court held “[a] party’s procedural circumstances, not the nature of its alleged costs, will determine whether a party may pursue a contribution action under § 113(f)(1).”  Whittaker, at *21-22.  The District Court found that the allegations by the Water Purveyors in their complaint “implicated the entire cleanup of the Site,” as the Water Purveyors had alleged that Whittaker’s activities at the Site caused releases of hazardous substances on and off the Site, so that the Water Purveyors incurred response costs for which Whittaker was liable under § 107(a).  Relying on the Supreme Court’s decision in Atlantic Research that “§ 113(f)(1) permits suit before or after the establishment of common liability,” the District Court found that a § 113(f)(1) contribution action was available to Whittaker for all response costs to remediate the Site at the time that the Water Purveyor Action was filed, since the Federal Government and Whittaker shared a common liability for the claims in the Water Purveyor Action.  “Here, [Whittaker] meets the procedural circumstances of § 113(f)(1), and its remedy for the costs it seeks ‘during or following’ the [Water Purveyor Action] is a contribution claim under § 113(f)(1).”  Whittaker, at *22.  Accordingly, the District Court held that Whittaker’s § 107(a) cost recovery claims could not survive a Motion to Dismiss and dismissed its FAC, which did not seek relief under § 113(f)(1), with prejudice.

California Governor Signs Bill To Limit Certain Prop. 65 Lawsuits

Posted by in Emerging Issues, Environmental Litigation on October 10, 2013

By Michael Einhorn and Nancy Wilms

Governor Jerry Brown recently signed into law Assembly Bill 227 (Gatto) to provide a two-week grace period to address certain alleged violations of failure-to-warn requirements under Proposition 65.

In addition to the previously required “60-day” notice, AB 227 mandates that a potential Prop. 65 plaintiff first provide certain potential defendants a notice of special compliance procedure and “proof of compliance” form.  The potential defendant then has 14 days after receiving the notice to (1) correct the alleged violation, (2) pay a $500 civil penalty, and (3) notify the potential plaintiff that the violation has been corrected using the provided “proof of compliance” form.  This $500 civil penalty is substantially smaller than the potential $2,500 per day per violation civil penalty otherwise provided for in Section 25249.7 of Prop. 65.  The law limits application of this grace period to once for every violation arising from the same exposure at the same location.  This new compliance procedure is limited to alleged violations for exposure to four categories of substances:

  • alcohol legally consumed on an alleged violator’s premises;
  • chemicals that occur naturally in food prepared for consumption (which were not intentionally added);
  • second-hand smoke exposure on premises where smoking is permitted, if caused by non-employees; and
  • vehicle exhaust at primarily non-commercial parking garages.

The Governor had proposed his own legislation in May 2013 with broader changes to Prop. 65, including capping attorney fee awards, requiring stronger proof by plaintiffs prior to litigation, requiring greater disclosure by plaintiffs, limiting the amount of money in an enforcement case that can go into settlement funds in lieu of penalties, and providing for more useful warnings to the public.  No legislation has been passed under this proposal.  AB 227, while narrower, is nonetheless described in a press release by the bill’s sponsor, Assemblyman Mike Gatto (D-Los Angeles) as providing a “fix-it ticket” method to curb “meritless lawsuits.”

Prop. 65 was passed in 1986.  By its own terms, amendments to Prop. 65 require a two-thirds supermajority vote of the Legislature and it has therefore been difficult to reform.  AB 227, which amends Cal. Health and Safety Code Section 25249.7, was approved on September 11, 2013 on a 75-0 vote and signed into law on October 5, 2013, making it the first substantial amendment to Prop. 65 in 15 years.

Supreme Court Finds Federal Law Preempts Agreements Between Trucking Companies and the Port of Los Angeles

Posted by in Environmental Litigation on October 8, 2013

On June 13, 2013, in American Trucking Ass’n, Inc. v. City of Los Angeles, the United States Supreme Court held that the Federal Aviation Administration Authorization Act of 1994 (FAAAA) expressly preempts certain provisions of a  concession agreement (Agreement) that the Port of Los Angeles (Port) requires short-haul (drayage) trucking companies to enter.  The preempted provisions require truck companies to affix placards bearing a phone number for reporting concerns to each truck and to submit a plan for off-street truck parking when the trucks are not in service.  The Agreement also provides for penalties for any signatory trucking company that violates the Agreement.

The Port, a division of the City of Los Angeles, is the largest port in the country.  In late 1990, the City of Los Angeles, Board of Harbor Commissioners, proposed a port expansion.  Neighborhood and environmental groups opposed the expansion and filed suit to stop it, citing air pollution among their concerns.  In response, the Port created the Clean Truck Program.  Under the Clean Truck Program, the Port developed the Agreement and amended its tariff, a form of municipal ordinance, to prohibit terminal operators from permitting access into any Port terminals unless the trucking company has registered under the Agreement.  Terminal operators who violate the tariff are guilty of a misdemeanor and are subject to criminal penalties.

American Trucking Associations, Inc., (ATA) whose members include trucking companies servicing the Port, sued the Port and the City of Los Angeles seeking an injunction against the Agreement’s requirements.  The ATA contended that the Agreement requirements are expressly preempted by the FAAAA.

The Supreme Court found that the FAAAA expressly preempts the Agreement’s placards and parking requirements because section 14501(c)(1) of the FAAAA preempts a state “law, regulation, or other provision having the force and effect of law related to a price, route, or service of any motor carrier . . . with respect to the transportation of property. “  The parties agreed that the Agreement’s requirements related to a motor carrier’s route and service and therefore the only disputed question at issue was whether the Agreement’s requirements had the “force and effect of law.”

The Supreme Court reasoned that the FAAAA’s “force and effect of law” language excludes from its scope contractual arrangements made by a State when it acts as a market participant, not as a regulator.  However, here, the Port had exercised regulatory authority in imposing the placard and parking requirements therefore these requirements were preempted by the FAAAA.  Although the Port argued that the concession agreements are the same as private agreements, regulatory authority was imposed since terminal operators, and trucking companies through them, were forced to alter their conduct due to a criminal prohibition as set forth in the Port’s tariff.  The Supreme Court indicated this was clearly an action having the “force and effect of law.”  Further, the Agreements clearly functioned as “part and parcel of a governmental program wielding coercive power over private parties, backed by the threat of criminal punishment.”  Private parties entering into similar agreements could not impose such criminal penalties.

ATA also argued that the Supreme Court’s holding in Castle v. Hayes Freight Lines, Inc., limits the way the Port can enforce the two other provisions of the Agreement that are in effect, financial-capacity and truck maintenance requirements, by not allowing the Port to rely on the Agreement’s penalty provisions to suspend or revoke trucking companies rights to operate on the premises.  “Castle puts limits on how a State or locality can punish an interstate motor carrier for prior violations of trucking regulations.”  However, the Supreme Court did not decide the ATA’s Castle-based challenge.  Because ATA’s claim was attacking the Port’s enforcement scheme and given the pre-enforcement posture of American Trucking Ass’n, the Supreme Court could not tell what the Port’s enforcement scheme entailed.  Therefore, the Supreme Court reasoned that it would not take a guess now about what the Port will do later.

The American Trucking Ass’n decision may have important consequences for port agencies and other municipal bodies that fall within the FAAAA’s purview and are struggling to address environmental concerns.  While agreements with other parties may be useful tools in reducing environmental impacts, they must not rise to the level of having the force and effect of law.

Ninth Circuit Court Holds that Clean Water Act does not Bar Citizen Suit where State had not Commenced an Action “to Require Compliance” with a NPDES Permit

Posted by in Administrative Law, Clean Water Act, Environmental Litigation, Stormwater on August 12, 2013

By Michael Einhorn and Nancy Wilms

In California Sportfishing Protection Alliance v. Chico Scrap Metal, Inc., Case No. 11-16959 (9th Cir. July 22, 2013), plaintiff California Sportfishing Protection Alliance (“Plaintiff”) alleged that defendants Chico Scrap Metal and its owners (“Defendants”) violated California’s Industrial Activities Storm Water General Permit, a National Pollutant Discharge Elimination System (“NPDES”) general permit governing industrial storm water discharges from Defendants’ facilities (the “Permit”).  A three-judge Ninth Circuit panel reversed the lower court dismissal of the suit, holding that the action was not prohibited by the “diligent prosecution” bars found in the Clean Water Act (“CWA”).

The CWA permits citizens to sue to enforce the CWA’s prohibition against discharging pollutants without a NPDES permit.  33 U.S.C. § 1365(a)(1).  However, the CWA provides that such citizen suits are barred where an agency or a State is “diligently prosecuting a civil or criminal action in a court of the United States, or a State to require compliance” with a standard or limitation under the CWA, or related order issued by the governmental entity.  33 U.S.C. § 1365(b)(1)(B).  The CWA also provides that citizen suits are barred where a State “has commenced and is diligently prosecuting an action under a State law comparable to” the administrative penalty provisions of the CWA.  33 U.S.C. § 1319(g)(6)(A)(ii).

In this case, Defendants successfully argued to the district court that the CWA barred Plaintiff’s claims under 33 U.S.C. § 1365(b)(1)(B).  On appeal, Defendants argued that Plaintiff’s claims were barred as well under the 33 U.S.C. § 1319(g)(6)(A)(ii) bar.  The Ninth Circuit disagreed; it held that § 1365(b)(1)(B) does not apply because the state had not commenced an action in court “to require compliance” with the relevant NPDES permit, and that § 1319(g)(6)(A)(ii) does not apply because the state had commenced no administrative penalty action comparable to the one under the CWA.

The Defendants operate scrap metal recycling facilities in Butte County, California subject to the requirements of the Permit.   In 2007, the California Department of Toxic Substances Control (“DTSC”) began investigating Defendants’ facilities, and discovered hazardous contamination.  DTSC ordered Defendants to investigate and characterize the contamination.  After Defendants failed to comply with DTSC’s order, the Butte County district attorney filed civil and criminal actions in 2007 and 2008 against Defendants, alleging violations of state air quality, hazardous waste and occupational safety laws, among others.  Significantly, none of the criminal charges or civil causes of action related to the CWA or violations of the Permit.  These actions were resolved by a plea agreement in October 2008 which required, among other things, Defendants to clean up hazardous substances at their facilities and otherwise abide by consent orders issued by DTSC in 2008.

In January 2010, the United States Environmental Protection Agency (“EPA”) inspected Defendants’ facilities and determined they were not in compliance with the Permit.  Soon after, in March 2010, the Plaintiff sent notice to Defendants as well as state and federal agencies of its intent to sue Defendants under the CWA for violations of the Permit.  After receiving the notices, the agencies did not bring any enforcement proceedings under the CWA; consequently, in May 2010, Plaintiff filed its action.  Thereafter, in June 2010, the California Water Quality Control Board notified Defendants that they were in violation of the Permit, based on the EPA inspection.  Defendants then moved to dismiss the Plaintiff’s action, arguing that the CWA’s “diligent prosecution” bars applied.

First, Defendants argued that a government action “comparable” to one brought under the CWA is sufficient to trigger the § 1365(b)(1)(B) bar against private actions.   The Ninth Circuit disagreed, noting that while a different “diligent prosecution” bar found at § 1319(g)(6)(A)(ii) applies where state actions “comparable” to administrative penalty actions are being “diligently prosecuted,” there is no reference to “comparable” state actions found in the language of § 1365(b)(1)(B).  Accordingly, the court found that because the actions filed by the Butte County district attorney “aimed to enforce only laws other than the Clean Water Act, § 1365(b)(1)(B) does not bar this action.”

Defendants also argued that the 2008 consent orders were broad enough to require compliance with the Permit and CWA, triggering the section 1365(b)(1)(B) bar.  Again the Ninth Circuit disagreed, holding that § 1365(b)(1)(B) did not apply because only an action that is “in a court” triggers the § 1365(b)(1)(B) bar against citizen suits, while administrative proceedings do not.  The court found that the 2008 consent orders by DTSC were not the result of an action “in a court,” and that they therefore did not trigger the private action bar.

Seeking then to apply the statutory bar under § 1319(g)(6)(A) (ii), Defendants argued both that they had been prosecuted under California statutes that provide for penalties and that they are exposed to administrative penalties in the event they violate the 2008 consent orders.  However, the Ninth Circuit noted that § 1319(g)(6)(A)(ii) only applies when a state has pursued an action “comparable to this subsection,” and that the relevant subsection, § 1319(g), provides only for the assessment of administrative penalties.  Therefore, the court held that the state actions in court did not constitute administrative proceedings and thus did not trigger the statutory bar “even if the state laws under which the penalties were assessed were ‘comparable’ to the Clean Water Act in a general sense.”

With regard to the 2008 consent orders, the Ninth Circuit cited authority holding that for the § 1319(g)(6)(A)(ii) bar to apply, “the comparable state law must contain penalty provisions and a penalty must actually have been assessed under the state law.”  Quoting Knee Deep Cattle Co. v. Bindana Inv. Co., 94 F.3d 514 (9th Cir. 1996).    The court found that here, the 2008 consent orders notified Defendants that they may be liable for penalties for failure to comply, but did not actually assess administrative penalties in the orders themselves.  The court held that even if the state statute cited in the 2008 consent orders were “comparable” to § 1319(g) of the CWA, “Defendants’ potential liability under the consent orders does not trigger the bar of § 1319(g)(6)(A)(ii).”  (Emphasis in original.)  Since the state had not commenced an administrative penalty proceeding comparable to one by the EPA under § 1319(g), the Ninth Circuit concluded that Plaintiff’s claims were not barred.

Deferred EIR Mitigation Measure Satisfies CEQA

Posted by in CEQA, Environmental Litigation on June 26, 2013

The California Court of Appeals held that an environmental impact report (“EIR”) which identified landscaping as a mitigation measure to the project’s visual impact satisfied the California Environmental Quality Act (“CEQA”).  The Court found that the EIR did not need to set forth the specific landscaping plan that would mitigate the impact.  Instead, the details of the mitigation could be deferred pending completion of a future study.

In North Coast Rivers Alliance v. Marin Municipal Water District Board of Directors (May 21, 2013), the Marin Municipal Water District planned to build a seawater desalination plant in Marin County (“Project”).  The District certified an EIR for the project and North Coast Rivers Alliance challenged the EIR for failure to adequately analyze adverse environmental consequences of the Project.

The trial court, citing Endangered Habitats League, Inc. v. County of Orange (2005) 131 Cal.App.4th 777, 794, held that the EIR was deficient because the EIR failed to commit to specific measures to mitigate the visual impacts of proposed water storage tanks.  Although the EIR indicated that the landscape plan would identify the location and types of trees and shrubs that would best mitigate the visual impact, the trial court found that the mitigation measure was indefinite and did not satisfy CEQA because it simply required a report to be prepared and followed.  The trial court also indicated that the mitigation measure was deficient because it established no guidelines or criteria to evaluate the adequacy of the landscaping plan and the plan’s goal to soften the visual impact was a vague metric that was difficult to quantify.

However, in cases challenging an agency’s compliance with CEQA, a Court reviews the agency’s action for a prejudicial abuse of discretion, not the trial court’s decision.  Vineyard Area Citizens for Responsible Growth, Inc. v. City of Rancho Cordova, 40 Cal.4th 412, 426–427 (2007).  “Abuse of discretion is established if the agency has not proceeded in a manner required by law or if the determination or decision is not supported by substantial evidence.”  Id.  Here, in the CEQA context, substantial evidence means “enough relevant information and reasonable inferences from this information that a fair argument can be made to support a conclusion, even though other conclusions might also be reached.” Cal. Code Regs., tit. 14, § 15384, subd. (a) (CEQA Guidelines).

As part of the Project, three water tanks to store desalinated water needed to be constructed.  The EIR indicated that two of the tanks would have a significant visual impact on the proposed location.  The EIR then identified, and the District adopted, a mitigation measure that requires the District to develop and implement a landscaping plan to shield the tanks from view.  The EIR mitigation measure indicated that the district would work with a landscape architect and the cities of San Rafael and Larkspur to develop a landscaping plan that would identify the location and types of planting that would soften the visual intrusion of the tanks and identify success metrics such as survival and growth rate for the plantings.

The Appellate Court found that the mitigation measure requiring a landscaping plan complied with CEQA.  The Court looked to CNPS v. Rancho Cordova and Sacramento Old City Assn. V. City Council which concluded “when a public agency has evaluated the potentially significant impacts of a project and has identified measures that will mitigate those impacts, the agency does not have to commit to any particular mitigation measure in the EIR, as long as it commits to mitigation of the significant impacts of the project.”  California Native Plant Society v. City of Rancho Cordova (2009) 172 Cal.App.4th 603, 621 (2009) citing Sacramento Old City Assn. v. City Council 229 Cal.App.3d 1011 (1991).  “The details of exactly how the mitigation will be achieved under the identified measure can be deferred pending completion of a further study.”  Id.   The Appellate Court stated, “although the specific details of how mitigation will be achieved under the landscaping plan is deferred until the construction phase, the EIR gives adequate assurance that visual impacts will be mitigated by the selection and location of appropriate plantings.”

Since the EIR evaluated the potentially significant visual impacts of the tanks, identified a landscaping plan with the goal of creating a visual screen to minimize the contrast between the tanks and the ridge top, and the District committed itself to implement, monitor, and maintain the landscaping, the Appellate Court concluded that the mitigation measure satisfied CEQA and was not improperly deferred.

Fourth Circuit Holds Zero-Share Apportionment Unavailable to Current Owner or Operator PRPs but Affirms Zero-Share Allocation; Rejects Bona Fide Prospective Purchaser Defense Due to a Failure to Exercise Appropriate Care

Posted by in CERCLA, Environmental Litigation on May 6, 2013

By Michael Einhorn and Tiffany Hedgpeth

In PCS Nitrogen Inc. v. Ashley II of Charleston, the Fourth Circuit (“Court”) affirmed the U.S. District Court for the District of South Carolina’s rulings addressing CERCLA liability at a former fertilizer manufacturing site.  In doing so, the court outlined legal standards for multiple CERCLA issues.  Significantly, the Court held that CERCLA’s structure and purpose prohibits a zero share apportionment to a current owner or operator. Yet, it affirmed a zero share allocation to a current owner and operator.  Additionally, the Court held that CERCLA’s Bona Fide Prospective Purchaser defense (“BFPP”) was unavailable where the defendant delayed in filling sumps.

Background Facts

The current owner of the site at issue in this case, Ashley II of Charleston, Inc. (“Ashley”) brought a CERCLA § 107(a) cost recovery suit against PCS Nitrogen, Inc. (“PCS”), a potential successor to a former operator of the site.  PCS counterclaimed under CERCLA § 113(f), and brought third-party contribution actions against other PRPs who, in turn, filed CERCLA §113(f) contribution claims against one another.  The district court bifurcated the case, and found in the first bench trial that, through an acquisition agreement, PCS assumed CERCLA liabilities for the site and was therefore a PRP.  In the second bench trial, the district court found that some of the other parties, including Ashley, were liable as PRPs, and allocated shares of the response costs among them.  Certain parties appealed to dispute whether and to what amount each is liable for response costs at the site.

Zero Share Apportionment and Allocation

Robin Hood Container Express (“RHCE”), one of the third-party defendants subject to a CERCLA 113(f) contribution action, argued that the Supreme Court case of Burlington N. & Santa Fe Ry. Co. v. United States, 556 U.S. 599, 129 S. Ct. 1870 (2009) supported the award of a zero-share of liability to it.  In Burlington, the Supreme Court held that “[w]hen two or more persons acting independently cause[e] a distinct or single harm for which there is a reasonable basis for division according to the contribution of each, each is subject to liability only for the portion of the total harm that he has himself caused.”  Id., at 614.  RHCE was a former owner that had conducted excavation and was the current operator at the site.  RHCE argued that no disposal of hazardous substances occurred during its operation, and therefore a reasonable basis existed to apportion it a zero-share of the harm.

The Court assumed that apportionment arguments are available to a party sued for contribution under CERCLA § 113, without deciding the issue (the Court noted that some courts have limited apportionment arguments to parties subject to joint and several actions brought under CERCLA § 107).  The Court then held that as a current owner or operator, RCHE could not use individual share apportionment to apportion itself a zero-share harm.  The Court explained that such a rule would eliminate the express defenses and exemptions Congress created for innocent landowners, which all require more than a mere showing that no disposal occurred during a current owner or operator’s tenure at the site.  See, e.g., id. § 9601(20)(D), 35(A) (involuntary acquisition exemption); id. §§ 9601(35), 9607(b)(3) (defense for innocent landowners); id. §§ 9601(40), 9607(r) (bona fide prospective purchaser exemption); id. § 9607(q) (contiguous property owner exemption).

The Court then evaluated the district court’s allocation of liability to the various parties.  The Court noted that CERCLA § 113(f), which governs contribution actions among PRPs, provides that a court “may allocate response costs among liable parties using such equitable factors as the court determines are appropriate.”  42 U.S.C. 9613(f)(1).  The Court upheld the district court’s allocation, finding that the allocation “was among the reasonable conclusions supported by the evidence.” (Citations omitted).  Notably, the court confirmed a zero-share allocation to the City of Charleston, a current owner and operator of the site.  The Court did not discuss why its award of a zero-share allocation under CERCLA § 113(f) to a PRP that failed to qualify for CERCLA’s express defenses and exemptions did not run afoul of the structure and purpose of CERCLA.

Bona Fide Prospective Purchaser

The Court also upheld the district court’s holding that Ashley was a PRP due to its status as a current site owner.  Ashley argued that CERCLA’s bona fide prospective purchaser (“BFPP”) exemption (CERCLA §§ 101(40) and 107(r)) applied and protected Ashley from liability.  To qualify for the BFPP exemption, a party has the burden of demonstrating by a preponderance of the evidence that it has not impeded performance of a response action, and that it meets eight other criteria in CERCLA § 101(40)(A)-(H).

One of the eight BFPP criteria is that a party must demonstrate that it exercised “appropriate care with regard to hazardous substances” at the site. 42 U.S.C 9601(40)(D).  The court held that “appropriate care” under CERCLA’s BFPP provision is at least as stringent as “due care” under CERCLA’s innocent landowner defense (CERCLA § 107(b)(3)).  The Court borrowed from the  due care jurisprudence to inform it of what reasonable steps were necessary to demonstrate “appropriate care” and stated the inquiry is whether a party “took all precautions with respect to the particular waste that a similarly situated reasonable and prudent person would have taken in light of all relevant facts and circumstances.”  (Citations omitted).  The Court held that under the above inquiry, Ashley’s delay in filling in sumps when related aboveground structures were demolished showed that it failed to exercise appropriate care.  Thus, Ashley did not qualify for the BFFP exemption.