The Year Ahead in Energy and Environmental Law: Environmental Litigation

Of the many environmental cases decided in 2009,[1] two in particular are likely to have a broad impact in 2010. The first is the Supreme Court’s decision in Burlington Northern and Santa Fe Railway Company v. United States, 129 S. Ct. 1870 (2009), which narrowed the scope of arranger liability under CERCLA, and affirmed the right of CERCLA defendants to avoid joint and several liability where a “reasonable basis” to apportion liability exists. The second line of cases likely to generate more litigation in 2010 are the cases affirming the right of plaintiffs to bring federal common law damage claims against emitters of greenhouse gases. In 2009, both the Second and Fifth Circuit allowed such claims to proceed, rejecting arguments that they raised non-judiciable political questions. In 2010, the Ninth Circuit will have the opportunity to adopt this same approach or buck the trend established by its sister circuits.

Burlington Northern – Limiting Arranger Liability and Allowing Reasonable Apportionment of CERCLA Damages

In BNSF, the Supreme Court held: (1) that EPA cannot hold parties liable under CERCLA as “arrangers” for disposal unless they “intended” their wastes to be disposed of; and, (2) that liable parties at a multi-party Superfund site are not jointly and severally liable if a “reasonable basis” exists to apportion their liability. See U.S. Supreme Court Holds That Superfund Liability Is Not Joint and Several Where A Reasonable Basis for Apportionment Exists; Court Also Narrows Arranger Liability, Marten Law Environmental News (May 4, 2009). While a relatively small number of lower courts have applied the BNSF decision so far, there is a discernable trend on both of the issues addressed by the opinion.

Arranger Liability

The first district court to apply BNSF did so with respect to the arranger aspect of the holding. It denied a motion to dismiss brought by a railroad which had argued that it was not liable under CERCLA because it never “intended” to dispose of waste at a site. Frontier Communications Corp. v. Barrett Paving Materials, No. 07-00133, 2009 WL 1941920, *3 (D. Me. July 7, 2009) (quoting Burlington Northern, 129 S. Ct. at 1879). See District Court in Maine Applies Supreme Court’s BNSF Decision on “Arranger” Liability, Marten Law Environmental News (July 22, 2009).

A few weeks later, in a second case, this one in New Hampshire, a district court rejected a manufacturer’s motion for reversal of a finding of arranger liability made prior to issuance of the BNSF decision. The defense argued that “[t]he legal standard announced in [BNSF] precludes the imposition of ‘arranger liability’ on the basis of … ‘constructive intent,’ and instead requires proof of actual intent to dispose of hazardous substances.” The court, however, rejected the argument, finding sufficient evidence of intent to hold the manufacturer liable as an arranger. See Scope of Post-BNSF Arranger Liability at Issue in New Hampshire Case, Marten Law Environmental News (September 9, 2009).

In Halliburton Energy Services, Inc. v. NL Industries, 648 F. Supp.2d 840, 898 (S.D. Tex. 2009), a mining company brought a contribution claim against a former mining operator. The former operator sought to rely on BNSF to argue that it lacked sufficient intent to be found liable as an arranger. The court rejected this argument, finding that an admission that the former operator was liable under 107(a) precluded application of BNSF to avoid liability.

But defendants in a case arising in the Washington state fared somewhat better. In that case, the United States sued the Washington State Department of Transportation (“WSDOT”) to recover its cleanup costs at a Superfund site where a highway connector was being constructed. WSDOT counterclaimed, seeking contribution under CERCLA, and the United States moved for partial judgment on the pleadings. In denying the United States’ motion, the court cited BNSF as basis to allow continued discovery regarding whether the U.S. Army Corps of Engineers could be held liable as an arranger for disposing of contaminated dredged spoils at the site. See United States v. Wash. State Department of Transp., ___ F. Supp.2d ___, 2009 WL 2985474, *8 (September 15, 2009). In yet another case, the parties agreed that, based on BNSF’s limitation on arranger liability, arranger claims would be dropped altogether, a decision that justified, in part, the court’s dismissal of the case based on the lack of a federal question. Mathes v. Vulcan Materials Co., Slip Opinion, 2009 WL 2614710, ** 5-6 (August 21, 2009).

Apportionment

Parties that have litigated the second major holding of BNSF – to avoid imposition of joint and several liability – have generally had good success. In Evansville Greenway and Remediation Trust v. Southern IN Gas and Elec. Co., Inc., ___ F.Supp.2d ___, 2009 WL 3163180, ** 20-21 (S.D. Ind., September 29, 2009), a mining company brought a third-party case seeking contribution for clean-up costs after previously being named as a defendant in a contribution case. Citing BNSF, the court denied cross-motions for summary judgment specifically in order to allow development of a full record on which to base an apportionment decision. But see, Appleton Papers Inc. v. George A. Whiting Paper Co., ___ F. Supp.2d ___, 2009 WL 3931036, ** 1, 2 and 4 (refusing to revisit summary judgment decision based on the court’s ruling that the BNSF decision did change the law, but merely re-affirmed existing principles including those relating to apportionment).

One question not answered by BNSF is the quantum of proof necessary to establish a reasonable basis for apportionment. Judge Shira A. Scheindlin addressed that question in a non-CERCLA case involving environmental torts, holding that: (1) a fact finder may rely on the “available evidence” in apportioning liability among joint tortfeasors; and (2) the burden of production necessary to support a showing of divisibility is “low.” See In re MTBE, S.D.N.Y. Case No. 00 MDL 1898, Docket No. 352 (July 14, 2009). See Applying BNSF, District Court in New York Finds “Best Available Evidence” Is Sufficient to Apportion Liability, Marten Law Environmental News (July 22, 2009). It remains to be seen whether this approach will be extended in a CERCLA context.

The Growth of Common Law Nuisance Claims Based on Climate Change Impacts

The second environmental litigation issue to watch in 2010 is whether a couple of circuit court decisions allowing common law nuisance claims to proceed constitute a trend, and opens the door to more tort litigation.

Toward the end of 2009, both the Second Circuit and the Fifth Circuit allowed federal common law nuisance claims based on alleged climate change damages to proceed, over the objections that the cases raised non-judiciable political questions. In Connecticut et al v. American Electric Power Co., Inc.,[3] the district court dismissed the case, holding that it raised political questions which were so intertwined with national domestic and foreign policy on global warming that they were non-justiciable. Reversing that decision, the Second Circuit held that while the claims had political implications, they remained justiciable in the federal courts and that the plaintiffs all had standing to pursue those claims. While acknowledging that the EPA or Congress could still issue regulations or adopt legislation that pre-empted the field, neither had done so at the time of the decision. We reported on the American Electric Power decision shortly after it issued. See Second Circuit Allows Federal Nuisance Claims for Global Warming to Proceed, Marten Law Environmental News (September 23, 2009).

The Fifth Circuit joined the Second in the case of Comer v. Murphy Oil USA, Inc.[4] in which a putative class of Mississippi coastal residents sued a number of energy, oil and refining and chemical manufacturing companies, claiming that their activities contributed to climate change and increased the damage done by Hurricane Katrina. The plaintiffs in Comer based their claims on state common law and brought their federal action based on diversity, asserting public and private nuisance, trespass and negligence claims under Mississippi law. The Fifth Circuit held that, while disposition of the case might be “political … in the broad sense, i.e., that it has political implications or ramifications,” that fact alone was not enough to render the case non-justiciable, since federal courts routinely decide cases “that merely implicate[] a matter within the authority of a political branch,” including judicial review of federal statutes and resolution of disputes regarding the limits of authority of the political branches.[5]

In 2010, the Ninth Circuit will have an opportunity to either join the crowd or reject the trend established by its sister circuits. The Ninth Circuit will hear an appeal in the case of Native Village of Kivalina v. ExxonMobil Corp.[6] Kivalina was brought in 2008 by the Alaskan coastal village of Kivalina, which maintained that a loss of sea ice caused by climate change threatened the land where the village is located. Kivalina sued numerous oil and power companies, asserting federal common law claims of public nuisance, as well as private and public nuisance under California state law. The Northern District of California dismissed the suit on political question grounds. See Before the Deluge*: Fifth Circuit Joins Second Circuit in Allowing Climate Change Tort Suits, while District Court Dismisses Similar Claims , Marten Law Environmental News (November 4, 2009).

Of course all of these cases could be rendered moot if Congress adopts sweeping climate change legislation or if EPA issues regulations that preempt the field. The Second Circuit acknowledged this fact, but stated that, until either or both of those events occurred, the federal courts would provide a venue to address these issues: “It may happen that new federal laws and new federal regulations may in time pre-empt the field of federal common law of nuisance. But until that comes to pass, federal courts will be empowered to appraise the equities of the suits alleging creation of a public nuisance by greenhouse gases.”[7]

The EPA has begun that process by issuing its Endangerment Finding in December, 2009. The Finding is EPA’s determination that greenhouse gases pose a danger to human health and the environment, and it could pave the way for regulation of carbon dioxide and other greenhouse gas emissions from vehicles, power plants, factories, refineries and other major sources under the Clean Air Act. The Endangerment Finding may prove a catalyst for another trend to watch in the upcoming year, namely, whether the Finding creates a new tool for plaintiffs and environmental groups opposing projects and a new basis for damage claims. Irrespective of whether Congress acts and regardless of the scope of any pre-emptive legislation, it is possible that the Endangerment Finding will provide fodder for any project opponent wishing to challenge a project under NEPA and its state-law equivalents, or under the ESA or the Clean Air Act itself. For more on the EPA’s Endangerment Finding, see EPA’s Endangerment Finding Could Spur More NEPA, Nuisance Litigation, Marten Law Environmental News (December 10, 2009).