CHAPTER 6 LIABILITY FOR GROUND WATER CONTAMINATION

• Jurisdiction: United States

Ground Water Contamination
(May 1991)
CHAPTER 6
LIABILITY FOR GROUND WATER CONTAMINATION
Kenneth J. Burke and Michael R. Hope
Baker & Hastetler
Denver, Colorado

TABLE OF CONTENTS

SYNOPSIS

I. Introduction

II. Owner/Operator Statutory Liability

Comprehensive Environmental Response, Compensation, and Liability Act

"CERCLA" (42 U.S.C. §§ 9601 et seq.)

Standing to Sue

United States Government, States and Indian tribes

Extent of Liability

In general

Classes of responsible parties

Lender/Investor liability

Defenses to Liability

RCRA (42 U.S.C. §§ 6901 et seq.)

Standing to Sue

Extent of Liability

Clean Water Act (33 U.S.C. §§ 1251 et seq.)

Standing to Sue

Extent of Liability

Safe Drinking Water Act (42 U.S.C. §§ 300f et seq)

III. Toxic Tort Liability

General Elements of a Common Law Claim

Negligence

Trespass

Ultrahazardous Activities

IV. Risks to Counsel

———————

[Page 6-1]

I. Introduction

As prior speakers have noted, ground water sources may become contaminated through a wide variety of activities. Such activities may range from the careless or reckless disposition of toxic substances, through the escape of such substances occurring in spite of adequate precautions, to the creation of a violation as the result of a change in applicable water quality standards. The financial impact upon clients of liabilities associated with the cleanup and remediation of ground water contamination can be truly staggering. This paper explores the major Federal and State legal bases upon which liability may be claimed, it establishes the identity of persons who may assert such claims, it depicts the scope of potential damages which may be claimed and it sets out the defenses which may be employed in attempting to overcome such liability claims. The paper concludes with a brief outline of the risks to counsel arising in the context of environmental representation.

II. Owner/Operator Statutory Liability

Comprehensive Environmental Response, Compensation, and Liability Act "CERCLA" (42 U.S.C. §§ 9601 et seq.)

Cleaning up contaminated ground water is usually the most expensive and difficult part of a CERCLA response action. Virtually every CERCLA remedial action plan includes a "pump and treat" system for the extracting of ground water and removal of the contaminants. Unfortunately, current technology still does not afford removal of all contaminants from the water. Even more serious limitations exist in our ability to remove contaminants from the affected ground.

Since 1980, the strict, retroactive, joint and several liability provided by CERCLA has caused a dramatic increase in efforts to clean up contaminated sites. In fact, CERCLA has been the driving force behind much of the experimentation using "pump and treat" technologies. Although relatively few sites have been fully remediated to date, billions of dollars have been spent by industry and government in remediation activities.

Standing to Sue

United States Government, States and Indian tribes. CERCLA §107(a)(4)(A) gives the United States Government, States and Indian tribes authority to recover their costs of removal or remedial action, unless the responsible party can prove that the claimants'

[Page 6-2]

actions were inconsistent with the National Contingency Plan ("NCP").¹ This statutory section is the primary authority used by the Environmental Protection Agency ("EPA") to plan and implement cleanup actions. In mounting their defense to actions brought by the EPA, States or Indian tribes, the defendants have the burden of proving that the plaintiff's actions were inconsistent with the NCP.²

CERCLA §107(a)(4)(C) and (f) give the federal United States Government, States and Indian tribes authority to recover damages for injuries to destruction of or loss of natural resources, including the reasonable costs of the assessment thereof.³ Once the government has proved that it incurred response costs, the defendants must prove that those costs were inconsistent with the NCP.⁴ Although the EPA has begun widespread cleanup investigations at over a thousand CERCLA sites,⁵ virtually no natural resource damage assessments have been conducted to date. In fact, most of the damage assessments which have been conducted by the federal government to date have been pursuant to provisions of the Clean Water Act, rather than CERCLA. A handful of western states have also been active in the natural resource damage area, including California, Idaho and Colorado.

In addition to the standing enjoyed by States, two municipalities have successfully argued that cities fall within the CERCLA definition of "states."⁶ In a recent case from the United States District Court for the District of Massachusetts, however, that court rejected the reasoning in these earlier cases and held that cities do not have authority under CERCLA to claim damages to natural resources.⁷

CERCLA §107(a)(4)(B) gives persons other than those identified in §107(a)(4)(A) the authority to recover any necessary response costs consistent with the NCP. Unlike CERCLA §107(a)(4)(A), §107(a)(4)(B) places the burden on the plaintiff in such cases to prove that his costs were consistent with the NCP. In Metropolitan Service District v.

[Page 6-3]

Oregon Metal Finishers,⁸ the court found that the plaintiff did not comply with the relevant portions of the NCP in effect at the time and denied the claim. On March 8, 1990, the EPA finalized its complete revision of the NCP. The relevant regulatory requirements for proving consistency by plaintiffs other than the United States Government, a State or an Indian tribe are found in §300.700.⁹

Extent of Liability

In general. Court interpretations have consistently held that CERCLA liability is strict; further, when the harm is indivisible¹⁰ all responsible parties are jointly and severally liable. Contribution actions between responsible parties are specifically authorized by §113(f)(1), and courts have been given broad discretion to allocate costs among responsible parties "using such equitable factors as the court determines are appropriate."¹¹

Normally, when a responsible party settles with the United States, it is shielded by §113(f)(2) from contribution actions by other responsible parties.¹² In a recent case involving overlapping claims lodged both by the United States and Pennsylvania, the conflicting federal and state provisions on contributions were drawn into sharp focus. The United States and Pennsylvania each filed claims arising under CERCLA and other authorities against the same defendant.¹³ The United States settled its claims with the defendant, but Pennsylvania did not. The defendant claimed that the state's claims were barred by the contribution shield provided in §113(f)(2). In resolving the claims of the state, the court left open the possibility that a responsible party who had settled with the EPA could still face liability for an action brought by a state seeking recovery on account of contamination occurring at the same site. Although the court indicated that Pennsylvania would not be allowed to recover for the same subject matter covered by the EPA settlement, the court indicated that Pennsylvania could recover for other matters or for "subsequent violations of CERCLA."¹⁴ In the ground water context, it is obvious that a contaminated site cannot be cleaned up instantaneously. Accordingly, responsible parties who wish to settle with the United States must seriously consider whether they face continuing exposure to state agencies or others for cleanup costs or penalties associated with a CERCLA site.

[Page 6-4]

Under CERCLA §107, liability is specifically imposed for releases of hazardous substances into the environment. The term "environment" is defined in §101(8)(B) to include ground water and subsurface strata.¹⁵ It should also be noted that CERCLA imposes retroactive liability for actions which occurred before its enactment (in 1980), except in instances where the damage and release both occurred wholly before December 11, 1980.¹⁶

CERCLA §106 provides the EPA with the authority to issue unilateral administrative orders to require cleanup of ground water under certain circumstances where an actual or threatened release of a hazardous substance may present an imminent and substantial endangerment to the public health or welfare or the environment. Such orders are increasingly common, particularly at sites with contaminated ground water, as the EPA seeks to avoid the delays inherent in federal court litigation. Failure to comply with such orders may result in penalties up to $25,000 per day, or a penalty of three times the cost that EPA incurs in carrying out the order itself.¹⁷

CERCLA §107(c) limits the a responsible party's liability for each release from a facility to $50 million plus all response costs.¹⁸ Because releases into ground water often occur repeatedly over a period of years, the $50 million "cap" for each release set by §107(c) may ultimately be shown to be of little solace to affected persons. This cap on liability does not apply where certain aggravating circumstances are present as identified in §107(c).

Classes of responsible parties. The four categories of responsible parties are specified in §107(a). Anyone within the four categories of responsible parties can be liable for ground water contamination. The most common situations involve current and former owners or operators of facilities and generators of hazardous substances. Businesses named as responsible parties have found that it is quite difficult to avoid liability entirely once they have been so designated. A business that releases even the most minute quantities of hazardous substances into the environment is potentially liable for all the cleanup costs required at a given site, even if its contribution is only an insignificant fraction of the total problem.

In a recent Court of Appeals decision involving ground water...