NRD Claim for “Lost Use” Ruled Premature Before Remedy Selected

A recent Natural Resource Damages (NRD) decision from a court in Oklahoma, Quapaw Tribe v. Blue Tee Corp,[1] holds that Trustee plaintiffs cannot recover damages for loss of services from injured resources at a Superfund site until EPA selects the remedy for the site. The decision, involving the long-running Tar Creek Superfund Site, is based on the court’s plain reading of the CERCLA statute. Judge Eagan concluded that the statute barred the Trustees’ claim for loss of interim services, because “interim and lost use damages, can not be fully measured until the EPA’s remedial work is completed.”[2] The case stands in contrast to a decision we reported on last year involving recovery of Trustee assessment costs. In that case, Confederated Tribes and Bands of the Yakama Nation v. United States,[3] Judge Suko of the Eastern District of Washington distinguished recovery of NRD “costs” from NRD “damages.” Because assessment costs were not “damages,” Judge Suko in Yakama Nation held that they were recoverable as incurred. Because loss of interim “services” from injured resources are “damages” and not costs, Judge Eagan in Quapaw Tribe held they could not be recovered as incurred, but could only be recovered (if at all) after a Record of Decision (ROD) is issued. Judge Eagan also held that the Trustees could not recover “future” assessment costs, because assessment costs are only recoverable after they are incurred.

Statutory Background

CERCLA authorizes natural resource Trustees (including federal, state, or tribal land management and resource agencies) to bring NRD claims against PRPs “in case of an injury to, destruction of, or loss of natural resources.…”[4] Courts have interpreted NRD claims to include damages due to interim loss of use, which is the “value of lost use of the damaged resources from the time a hazardous substance is released to the time of restoration.”[5]

CERCLA Section 113 imposes two timing limitations on NRD claims brought under CERCLA at sites on the National Priorities List (NPL).[6] First, so long as EPA is diligently proceeding toward selecting a remedy, Trustees cannot bring an NRD claim before EPA selects a remedial action.[7] Second, Trustees must bring their claims within three years after completion of the remedial action (excluding operation and maintenance activities). Thus, Section 113 effectively creates a window for bringing NRD claims at NPL sites, which exists between the time the remedy is selected and three years after it is completed. Given the significant variability of the time it takes to develop and execute remedial actions, the size of this window depends on the site.

Factual and Procedural Background to Quapaw Tribe

The Tar Creek Superfund Site (Site) spans the land of the Quapaw Tribe (Tribe) in northeastern Oklahoma. The Site became impacted by heavy metals from millions of tons of contaminated chat piles and tailings ponds left behind after seventy years of mining in the area. EPA placed the Site on the NPL in 1983, and, since that time, has continued to investigate contamination sources and perform cleanup activities in several operable units (OUs). EPA’s initial investigations did not identify risks associated with the chat piles and tailings ponds. By 1994, however, after completing the work initially proposed to remediate the Site, EPA discovered that 34% of the children in the vicinity of the Site had elevated blood levels of lead. In response, EPA performed additional removal actions and remedial investigations associated with contaminated soil and other contaminant sources. In 2003, EPA, the Department of Interior, and two PRPs agreed to conduct a remedial investigation and feasibility study (RI/FS) on the risks associated with chat piles and mining waste, which became OU4. EPA issued a ROD for OU4 in February 2008, in which it estimated it will take about thirty years to complete removal of the chat piles.[8] EPA also said that it was conducting RI/FS activities for an OU5 to “address remaining metals in sediments” in river basins, but the investigation was still in its early stages and no final remedy had yet been selected.[9]

The Tribe initially raised common law claims against seven mining companies. Through a series of amended complaints, the Tribe subsequently filed a CERCLA NRD claim for lost use, restoration or replacement damages against private and federal defendants.[10] After the Tenth Circuit issued its decision in New Mexico v. General Electric[11]in 2006, the Tribe amended its complaint a second time to limit its CERCLA NRD claim to damages for “past and interim loss-of-use natural resource damages … from the time of release of any hazardous substances until restoration and reasonable cost of assessing injury to the natural resources.”[12] New Mexico involved CERCLA’s preemptive effect on state law claims for damage to natural resources at an NPL site. The Tenth Circuit held that, under conflict preemption, “CERCLA’s comprehensive NRD scheme preempts any state remedy designed to achieve something other than the restoration, replacement, or acquisition of the equivalent of a contaminated natural resource.”[13] After narrowing the available state law claims to loss of use under state law, the New Mexico court found that the claim before it, although not preempted, was not supported by evidence that the plaintiff had suffered any damages.

In the second amended complaint, the Tribe specifically preserved its claim for “restoration or replacement of natural resources … that will remain contaminated with hazardous substances.”[14] Finally, in a fourth amended complaint, the Tribe argued that EPA was not diligently proceeding with selection of a final remedy at the Site.[15] The federal defendants filed a motion for judgment on the pleadings, arguing that the CERCLA claim was premature because it was filed before selection of a final remedy, and also asserted that allowing the Tribe to proceed “would undermine the EPA’s efforts” at the Site.[16] The federal defendants and the Tribe also filed cross-motions for summary judgment regarding the issue of statutory diligence.

Loss of Use Damages Are Not Exempt from CERCLA’s Timing Requirements

Relying heavily on portions of the Tenth Circuit’s decision in New Mexico, the Tribe argued that NRD claims for interim and lost use damages were not subject to the timing limitation in Section 113(g)(1), because these claims would not “interfere with the EPA’s work at a Superfund Site.”[17] The Quapaw Tribe court, though, agreed with the EPA that New Mexico discussed “remedies available under common law natural resource damages claims in light of CERCLA’s remedial scheme, but [did] not exempt claims for interim and lost use from CERCLA’s timing provision for natural resource damages claims.”[18] Because “the Tenth Circuit was not asked to decide whether a plaintiff could divide a CERCLA claim into two separate lawsuits,” the court opined that the “Tribe’s interpretation of New Mexico stretche[d] far beyond the issues addressed by the Tenth Circuit. …”[19] Accordingly, the court rejected the argument that the New Mexico decision provided an exemption for the Tribe’s CERCLA claim for interim and lost use damages. The court further noted that all natural resource damages, including interim and lost use damages, “can not be fully measured until the EPA’s remedial work is completed.”[20]

EPA’s Diligence Measured at the Time of the Lawsuit

After finding that interim and loss of use damages are subject to Section 113’s timing requirements, the court addressed the Tribe’s remaining argument that the timing requirements did not apply in this instance because EPA was not diligently proceeding with an RI/FS. The Tribe recognized that there was no final remedy for the Site, but “lament[ed] the EPA’s uncoordinated, ineffective and piecemeal efforts to address contamination at Tar Creek,” and argued that, because EPA’s cleanup efforts were “intermittent, delayed, stalled, [and] ill-defined,” they “could not be described as diligent under any definition of the word ‘diligent.’”[21] EPA responded that it had “actively and consistently” developed and implemented actions to respond to environmental hazards at a complex Site with multiple operable units.[22] The court focused its argument on the applicable time period that it should review to determine EPA’s diligence. While the Tribe requested the court to review EPA’s historical activities at the Site, the federal defendants argued that the court should only consider EPA’s activities between when the case was filed and the present day.[23]

Because CERCLA does not define the term diligently proceeding, the court considered the term’s dictionary definition, as well as its meaning within the context of NRD claims in CERCLA. The court noted that, “[a]s a starting point,” the present tense of Section 113(g)(1)—“is diligently proceeding”—“strongly emphasizes the importance of the EPA’s ongoing activities as a factor in the Court’s decision.”[24] After considering the legislative history to the provision, the use of similar terms in other environmental statutes, relevant case law, and the “residual nature of NRD claims … that may be limited or eliminated through the EPA’s remedial action,” the court determined that “Congress intended something in between the extremes suggested by both parties.”[25] While the federal defendants attempted to “read the word ‘diligently’ out of the statute” and requested the court to “bar any NRD claim if the EPA is conducting any activity that might be part of an RI/FS,” the court found the “Tribe’s position that Congress intended a court to conduct a de novo review of the EPA’s entire history at a Superfund site … equally unconvincing.”[26] Instead, while remaining cognizant of the statutory scheme’s preference for deferring NRD claims until the full measure of damages is clear, the court held that a proper review of EPA’s diligence involves EPA’s activities at the time the lawsuit is filed and when the case is in front of the court, with limited review of pre-suit activities.[27] Based on this interpretation, the court held that “EPA was actively conducting at least one RI/FS when the lawsuit was filed” and had “actively worked to select a remedy for the hazard posed by chat piles and mining waste.”[28] Despite recognizing that “chat piles and mining waste may seem like an obvious health hazard from the Tribe’s perspective,” the court stated that it was “not in a position to second-guess” EPA’s “conscious decision to prioritize cleanup of other hazards.”[29]

Only Past, Not Future Assessment Costs Available

In addition to interim and lost use damages, the Tribe asserted its right to a declaratory judgment for future assessment costs. In support of its argument, the Tribe relied on Yakama Nation, arguing that, “because assessment costs are not treated as damages” under CERCLA Section 113, they are available “even if an NRD claim is premature.”[30] The Quapaw Tribe court rejected the Tribe’s claim, holding that the Tribe failed to allege that it had actually incurred any assessment costs. Even if it had decided to follow Yakama Nation, the court stated, “Yakama Nation does not allow” claims for “future, rather than past, assessment costs. …”[31]

For more information on Natural Resource Damage claims or any other claims under CERCLA, please contact Meline MacCurdy or any other member of Marten Law Group’s Environmental Litigation practice group.