Ninth Circuit Dismisses Citizen Suit Seeking CERCLA PenaltiesBy Dustin Till
In a case of first impression, the Ninth Circuit has held that environmental groups, Indian tribes, and other non-EPA parties may not bring a citizen suit to enforce the penalty provisions of an EPA unilateral cleanup order issued under CERCLA. In Pakootas v. Teck Cominco (Pakootas II), the Court held that the penalty provision of a unilateral cleanup order is a “hammer” wielded exclusively by EPA to compel compliance with a cleanup, and accordingly that citizen claims for penalties for noncompliance with such an order are barred by the pre-enforcement review provisions of CERCLA.
Pakootas II is the latest decision in a long-running dispute concerning pollution in the Columbia River originating from mining operations in British Columbia. Teck Cominco Metals Limited is a Canadian mining company that owns a lead-zinc smelter located approximately ten miles north of the United States/Canadian border in Trail, British Columbia. For nearly ninety years, the smelter generated and disposed of slag in the Columbia River. The slag contained heavy metals, including arsenic, cadmium, copper, mercury, lead, and zinc, and was carried downstream by the river, eventually impacting surface water, ground water, and sediments in Washington state.
Following an assessment of the contamination on the U.S. side of the border, EPA identified the Upper Columbia River basin in Washington state as a Superfund site, Around the same time, an American subsidiary of Teck Cominco, Tech Cominco American, Inc. (TCAI), and EPA attempted to negotiate an agreement under which TCAI would perform a human health study. The negotiations were complicated by the Canadian government’s concerns about sovereignty and EPA’s assertion of jurisdiction over Teck Cominco.
EPA and TCAI failed to agree on the scope of the proposed investigation, so EPA issued a unilateral administrative order (the Order) that directed Teck Cominco to investigate the nature and extent of, and evaluate options for remediating, contamination in the Upper Columbia River basin. Teck Cominco did not comply with the Order, and EPA took no actions to enforce it or seek penalties for noncompliance.
Joseph Pakootas and Donald Michel (the Plaintiffs) subsequently sued Teck Cominco under CERCLA’s citizen suit provisions, seeking: (1) a declaration that Teck Cominco had violated the Order; (2) injunctive relief compelling Teck Cominco to comply with the Order; (3) penalties for non-compliance with the Order; and (4) attorneys fees and costs. Teck Cominco filed a motion to dismiss in the district court proceeding, arguing that the court lacked subject matter jurisdiction to enforce the Order because the activities giving rise to the contamination were carried out in Canada. The State of Washington later moved to intervene in the action, seeking the same relief sought by the original plaintiffs.
The district court denied Teck Cominco’s motion to dismiss, and certified the order for interlocutory appeal. While that appeal was pending, the Confederated Tribes of the Colville Reservation joined the lawsuit as plaintiffs, and Washington State amended its complaint to include claims for cost recovery and natural resource damages.
In Pakootas v. Teck Cominco, 452 F.3d 1066 (9th Cir. 2006) (Pakootas I), the Ninth Circuit affirmed the district court’s order denying Teck Cominco’s motion to dismiss, holding that EPA was not applying CERCLA extraterritorially because contamination originating in Canada had “come to be located” in the United States, providing grounds for application of the CERCLA statute to Teck Cominco. The Ninth Circuit declined the opportunity to resolve the issue of the extraterritorial application of CERCLA that had been presented to it. For more information on the Teck Cominco I decision, please see Canadian Smelter Can Be Held Liable for Cross-Border Contamination, Marten Law Environmental News(July 26, 2006).
While Teck Cominco’s interlocutory appeal was pending before the Ninth Circuit (but before the appeal was resolved) Teck Cominco, TCAI, and EPA entered into a “contractual agreement” (the Agreement) to address contamination at the site. Teck Cominco consented to personal jurisdiction in the district court for the limited purposes of enforcing designated provisions of the Agreement. In turn, EPA agreed to a covenant not to sue Teck Cominco for penalties or injunctive relief relating to non-compliance with the Order – subject to Teck Cominco’s satisfactory performance of its cleanup obligations under the Agreement. EPA subsequently withdrew the Order.
After EPA and Teck Cominco entered into the Agreement, the Plaintiffs amended their complaint – dismissing their claims for injunctive and declaratory relief, but maintaining their claims pertaining to penalties for non-compliance with the Order. Following a new motion by Teck Cominco, the district court again dismissed Plaintiffs’ claims for lack of jurisdiction and certified the issue for appeal.
II. The Teck Cominco II Decision
On appeal, the Ninth Circuit affirmed the district court, holding that the court lacked jurisdiction to hear Plaintiffs’ citizen suit claims for penalties resulting from Teck Cominco’s non-compliance with the Order. At issue was the meaning of the so-called “pre-enforcement review” provision of CERCLA, 42 U.S.C. § 9613(h), which provides in relevant part that: “[n]o Federal court shall have jurisdiction … to review any challenges to [a] removal or remedial action ….”
A. 42 U.S.C. § 9613(h) Is Jurisdictional
Plaintiffs argued that 42 U.S.C. § 9613(h) was not jurisdiction in nature, but rather, merely regulates timing. To resolve that issue, the Ninth Circuit relied on the bright-line test set out by the Supreme Court’s in Arbaugh v. Y & H Corp.:
If the Legislature clearly states that a threshold limitation on a statute’s scope shall count as jurisdictional, then courts and litigants will b duly instructed and will not be left to wrestle with the issue. 
Referring to the statute’s plain language, the Ninth Circuit rejected Plaintiffs’ argument: “[b]ecause the words are ‘[n]o Federal court shall have jurisdiction,’ the statute means that no federal court shall have jurisdiction.”
B. Plaintiffs’ Penalty Claims Were “Challenges to [a] Removal or Remedial Action”
The court next went on to determine whether Plaintiffs’ penalty claims were “challenges to [a] removal or remedial action” barred by 42 U.S.C. § 9613(h). Plaintiffs contended that they were not challenging a removal or remedial action or interfering with the investigation and cleanup of the site. Instead, Plaintiffs argued that they were merely seeking penalties for Teck Cominco’s non-compliance with the Order. The Ninth Circuit disagreed, holding that Plaintiffs’ demand for penalties was “still a challenge” for purposes of 42 U.S.C. § 9613(h).
EPA’s covenant not to sue in the Agreement was conditioned on Teck Cominco’s satisfactory performance of its cleanup obligations. Thus, if Teck Cominco failed to perform, EPA could initiate a penalty for Teck Cominco’s non-compliance with the Order. In light of those facts, the court observed that allowing Plaintiffs to seek penalties would disarm EPA:
The penalties [Plaintiffs] want to enforce are the hammer EPA retained to compel performance of the agreement. If [Plaintiffs] were to enforce the penalties, the EPA would be left bare-handed, without this weapon.
The court further observed that allowing Plaintiffs to pursue the penalty claim could have the perverse result of an “efficient breach”: “if Teck Cominco paid the [penalties] adjudicated before the cleanup was done, it might find if economically advantageous to walk away from further cleanup efforts ….”
The court also noted that adjudicating Plaintiffs’ $24 million penalty claim could also interfere with the cleanup by limiting the amount of money that might be available for the cleanup:
Sometimes the orange is squeezed dry. And if it is, whatever juice going to the government in penalties and to the lawyers in fees cannot go from the polluter to the contractors who perform the cleanup work … [s]ome polluters, facing a suit for past penalties while cleanup is ongoing, may simply go bankrupt and leave or use the threat of bankruptcy as their own hammer to hold over the EPA’s head.
Accordingly, the court held that “[a] citizen suit for penalties is indeed a ‘challenge [ ] to a removal or remedial action selected by EPA’” for purposes of 42 U.S.C. § 9613(h).
C. The Exceptions in 42 U.S.C. § 9613(h) Do Not Apply
Finally, the court then went on to evaluate whether one of the exceptions to 42 U.S.C. § 9613(h) applied. That section provides that: “[a]n action to enforce an order issued under section 9606(a) of this title or to recover a penalty for violation of such an order” is not subject to the jurisdictional bar and may proceed. 42 U.S.C. § 9613(h)(2) (emphasis supplied). Plaintiffs argued that under the statute’s plain language, their action for penalties qualified for the exception.
The court, however, disagreed, holding that “[s]ubsection (h)(2) does not apply to citizen suits” because citizens are not entitled to “recover” penalties for violations of UAOs issued under 42 U.S.C. § 9606(a). As the court held, “[t]he penalty money is Superfund money, payable to the government, not payable to citizens who bring lawsuits.” The court went on to explain that:
[W]hat [Plaintiffs] seek is not a penalty payable to themselves, but enforcement of a penalty payable to the Superfund. Such a lawsuit is not one to ‘recover’ money. It is one to compel the payment of money to the Superfund. If we had jurisdiction, there would be a serious question as to whether [Plaintiffs] could state a claim for the EPA to recover money it has chosen not to recover at this time, but we cannot even consider that question unless the exception applies, since without the exception, we lack jurisdiction.”
The court looked to the purpose Congress had when it enacted the jurisdictional bar. That purpose, the court explained, was “to prevent lawsuits that would interfere with the cleanup process.” Thus, it “does not make sense to read the statute as though it allowed a citizen suit to take way this compliance device [i.e. penalties for noncompliance] before the cleanup is complete.” The court also noted that there is a separate exception to the jurisdictional bar for a citizen suit relating to a cleanup that itself violates the statute:
Subsection (h)(2) is for the government, so that it can wield its own hammer during the cleanup if it deems that prudent, subsection (h)(4) is for citizen suits. The provisions for a citizen suit in subsection (h)(4) imply that citizen suits are not allowed under subsection (h)(2).
The court accordingly concluded that the subsection (h)(2) exception did not apply to Plaintiffs’ claims, and affirmed the district court’s dismissal of Plaintiffs’ lawsuit.
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