M. CHRISTINA ARMIJO, United States District Court Judge.
THIS MATTER is before the Court on Defendant Environmental Restoration, LLC's Motion to Dismiss the Complaint [Doc. 1] and Motion to Strike [Doc. 32], pertaining to the Complaint filed by the State of New Mexico; and Defendant Environmental Restoration, LLC's Motion to Dismiss the Complaint [Doc. 1] and Motion to Strike [Doc. 101], pertaining to the Complaint filed by the Navajo Nation. The Court has considered the submissions, the relevant law, and is otherwise fully advised in the premises. The Court grants-in-part, denies-in-part, and, in-part, holds in abeyance ER's Motions.
This opinion addresses all arguments raised by Defendant Environmental Restoration (hereafter, ER) with the exception of its arguments based on the jurisdictional bar set forth at 42 U.S.C. § 6972(b)(2)(B)(ii) and 42 U.S.C. § 9613(h). The Court has requested additional briefing and evidence with respect to whether certain of Plaintiffs' claims are barred by the above provisions, and the briefing, which remains in progress. Nonetheless, the Court herein addresses the remaining issues raised by ER.
On May 23, 2016, New Mexico filed its Complaint stemming from the Gold King mine spill which occurred on August 5, 2015. [16-CV-465, Doc. 1]
Generally, both Plaintiffs allege that, while conducting environmental remediation of the Gold King Mine in Colorado, the Environmental Protection Agency (hereafter, EPA), ER (a contractor for the EPA), and others "breached a collapsed portal" of the mine, "releasing over three million gallons of acid mine drainage and 880,000 pounds of heavy metals into the Animas River watershed." [Doc. 1, ¶ 1; accord. 16-CV-931, Doc. 1, ¶ 1] The acid mine drainage traveled down-river, into the San Juan River, into New Mexico, and into the Navajo Nation, causing extensive environmental and economic damage. [Doc. 1, ¶¶ 1-3; 16-CV-931, Doc. 1, ¶¶ 4, 24]
New Mexico brings six causes of action against ER: cost recovery and declaratory judgment under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA); injunctive relief under the Resource Conservation and Recovery Act (RCRA); public nuisance; trespass; and "negligence and gross negligence." [Doc. 1, pp. 32-48; Doc. 86-1, pp. 41-61] Navajo Nation brings seven causes of action against ER: cost recovery and declaratory judgment under CERCLA; negligence; gross negligence; trespass; public nuisance; and private nuisance. [16-CV-931, Doc. 1, pp. 34-46; Doc. 141-1 pp. 46-58] ER challenges each cause of action by both Plaintiffs. [Doc. 32; Doc. 101]
While both Plaintiffs have moved for leave to amend their complaints [Doc. 86; Doc. 141], those motions are opposed and
Finally, on December 11, 2017, ER filed a Motion to Transfer for Coordinated or Consolidated Pretrial Proceedings Under 28 U.S.C. § 1407 with the United States Judicial Panel on Multidistrict Litigation. [Doc. 191-1] Thereafter, the United States filed a Motion to Temporarily Stay Proceedings Pending Decision by the Judicial Panel on Multidistrict Litigation. [Doc. 191] Some parties oppose the Motion to Stay, or oppose only a delay of the decision on their pending motions to dismiss. [Doc. 191, p. 2; Docs. 192, 195, 199] The Court does not address the Motion to Stay [Doc. 191] in this Memorandum Opinion and Order. The Court exercises its discretion to rule on the present motion only, concluding that no cause has been shown to stay the issuance of this decision, including the factors of judicial economy and avoiding hardships and inequities to the moving party. See Pace v. Merck & Co., Inc., CIV 04-1356 MCA/ACT, 2005 WL 6125457, *1 (D.N.M. 2005) (recognizing the district court has the discretion to stay a case when a motion to transfer proceedings is pending and listing the factors the district court should consider).
New Mexico alleges:
[Doc. 86-1, ¶ 4]
New Mexico alleges that mining operations at the Gold King Mine ceased in 1992 [Doc. 86-1, ¶ 30] and, in 2004, the Level 7 adit
In 2008 and 2009, in an attempt to address the acid mine drainage, the Colorado Division of Reclamation, Mining and Safety (DRMS) "secured" the Level 7 adit portal, installed a "grated closure ... to facilitate drainage," diverted the drainage, and then backfilled the Level 7 adit. [Doc. 86-1, ¶¶ 67-68] DRMS planned to install a drainage pipe at the floor of the adit, however, when they attempted to install an observation pipe, the timbers supporting the portal collapsed, and DRMS was never able to complete installation of its originally planned drainage pipe. [Doc. 86-1, ¶¶ 68-72]
"In 2014, DRMS asked EPA to re-open the Gold King Mine Level 7 adit and investigate the drainage situation." [Doc. 86-1, ¶ 78] "EPA requested a work plan for the Gold King Mine investigation from Environmental Restoration and issued a `Task Order Statement of Work' (`Statement of Work') on June 25, 2014." [Doc. 86-1, ¶ 79] ER submitted a RFP and EPA selected ER as a contractor, "task[ing] Environmental Restoration with `procur[ing] and manag[ing] the reopening and ground support construction at the Upper Gold King Mine — 7 level adit.'" [Doc. 86-1, ¶ 80] EPA's Request for Proposal (RFP) also states that ER would select a subcontractor and "`conduct operations in oversight management of surface and underground work activities.'" [Doc. 86-1, ¶ 80] EPA, along with one of the sub-contractors, began work in September, 2014, however, after two hours of excavation the crew "abruptly stopped work" and EPA, ER and others determined "that the drainage would require larger settling ponds and additional treatment." [Doc. 86-1, ¶ 83] "[B]efore EPA left the site [in 2014], the construction crew pushed large quantities of earthen material and debris in front of the DRMS-installed pipes, forming an earthen plug that prevented the mine from draining and caused a head of water to further build up behind the blockage." [Doc. 86-1, ¶ 88]
EPA asked employees of another contractor, Weston Solutions, to prepare a report, and EPA's on-scene coordinator
In May and June, 2015, ER submitted draft work plans to EPA to continue work on the Gold King Mine. [Doc. 86-1, ¶ 90] EPA, ER, and other contractors visited the site several times "to assess site conditions and drainage flows[;]" collect water samples, grade the surface of the waste dump, and begin construction on a water management and treatment system. Nonetheless, no Defendant tested the "hydrostatic pressure behind the blocked portal." [Doc. 86-1, ¶¶ 90-92] On July 23, 2015, Steven Way, EPA's on-scene coordinator, contacted a Bureau of Reclamation engineer to conduct an independent review of the excavation plans. Mr. Way arranged for the review to be conducted on August 14, 2015, after Mr. Way returned from vacation. [Doc. 86-1, ¶ 93] Mr. Way further arranged for another EPA employee, Mr. Griswold, to supervise the Gold King Mine site from August 3, 2015 until Mr. Way returned from vacation. [Doc. 86-1, ¶ 94]
[Doc. 86-1, ¶ 95] Before excavation of the earthen debris blocking the adit was to start, Mr. Way instructed ER to "provide `adit drainage control' and implement a `water management system[,]'" including setting up a pipe and filter bags; putting a sump and sump-pump in place to "handle adit discharge"; putting piping or a hose in place to direct discharge to a treatment pond; and ensuring that a "stinger pipe" was prepared and available. [Doc. 86-1, ¶ 95]
On August 4, 2015, after Mr. Griswold arrived, "the EPA crew" began excavating the adit and drug out all but a small portion of the drainage pipe that DRMS installed in 2009. [Doc. 86-1, ¶ 96] New Mexico alleges this work was done "[w]ith an incomplete safety plan, an inadequate evaluation of the fluid hazard, and lacking any equipment to prevent or mitigate an uncontrolled release of water from the mine." [Doc. 86-1, ¶ 96] The next day, August 5, 2015, the "EPA crew" resumed excavating the Level 7 adit, when a backhoe operator hit a "spring." [Doc. 86-1, ¶ 98-99] New Mexico alleges that because "the pipes were visibly well below the plug, the EPA crew knew or should have known they were removing material at least several feet below the roof of the adit." [Doc. 86-1, ¶ 98] No one present attempted to
In sum, New Mexico alleges:
[Doc. 86-1, ¶ 111]
The Navajo Nation's Complaint alleges similar allegations as a basis for relief. To the extent the allegations differ between the Navajo Nation and New Mexico, those differences are addressed below as pertinent to the analysis of the present motions.
ER brings its Motions to Dismiss under Federal Rule of Civil Procedure 12(b)(6). Fed. Civ. P. Rule 8(a)(2) requires a complaint to set out "a short and plain statement of the claim showing that the pleader is entitled to relief." In Bell Atlantic Corporation v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), the Supreme Court held that: "to withstand a motion to dismiss, a complaint must have enough allegations of fact, taken as true, `to state a claim to relief that is plausible on its face.'" Kansas Penn Gaming, LLC v. Collins, 656 F.3d 1210, 1214 (10th Cir. 2011) (quoting Twombly, 550 U.S. at 570, 127 S.Ct. 1955). In applying this test, a court accepts as true all "plausible, non-conclusory, and non-speculative" facts alleged in the plaintiff's complaint, Shrader v. Biddinger, 633 F.3d 1235, 1242 (10th Cir. 2011); provided, that "the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). In short, in ruling on a Rule 12(b)(6) motion, "a court should disregard all conclusory statements of law and consider whether the remaining specific factual allegations, if assumed to be true, plausibly suggest the defendant is liable." Collins, 656 F.3d at 1214.
Both New Mexico and the Navajo Nation bring claims pursuant to CERCLA against ER for cost recovery (42 U.S.C. § 9607(a)) and a declaratory judgment (42 U.S.C. § 9613(g)(2)). [Doc. 1, ¶¶ 96-115; 16-CV-931, Doc. 1, ¶¶ 117-141]
"Congress enacted CERCLA to facilitate the expeditious cleanup of environmental contamination caused by hazardous waste releases ... and to establish a financing mechanism to abate and control the vast problems associated with abandoned and inactive hazardous waste disposal sites." Young v. United States, 394 F.3d 858, 862 (10th Cir. 2005) (internal quotation marks and citations omitted). "Thus, the twin aims of CERCLA are to [clean up] hazardous waste sites and impose the costs of such cleanup on parties responsible for the contamination." Id.
Morrison Enters. v. McShares, Inc., 302 F.3d 1127, 1135-36 (10th Cir. 2002).
ER disputes that it is a covered person under Section 9607(a). [Doc. 33, p. 7; Doc. 102, p. 6] Section 9607(a) imposes liability for the cleanup of facilities on four categories of persons:
42 U.S.C. § 9607(a). Liability is imposed on such "covered persons" for:
Section 9607(a)(4). "The term `release' means any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, or disposing into the environment." 42 U.S.C. § 9601(22).
Section 9613(g)(2) provides that:
42 U.S.C. § 9613(g)(2).
Both Plaintiffs allege that ER is liable under CERCLA as an operator of a facility
CERCLA circuitously defines an "owner or operator" as "in the case of an onshore facility or an offshore facility, any person owning or operating such facility[.]" 42 U.S.C. § 9601(20)(A)(ii).
42 U.S.C. § 9601(9).
Given CERCLA's unhelpful definition of an operator, courts have come up with varying tests to determine operator liability. Having reviewed several cases, the Court finds the following summary particularly clear and succinct, including its discussion of United States v. Bestfoods, 524 U.S. 51, 118 S.Ct. 1876, 141 L.Ed.2d 43 (1998), the only Supreme Court case on the issue:
Exxon Mobil Corp. v. U.S., 108 F.Supp.3d 486, 520 (S.D. Tex. 2015). Before Bestfoods,
After Bestfoods, our Tenth Circuit decided the issue of whether a minority shareholder was liable as an operator under CERCLA, and, consistent with Bestfoods, did not apply either the "actual control" or "authority to control" test. Raytheon Constructors, Inc. v. Asarco Inc., 368 F.3d 1214, 1217 (10th Cir. 2003). The Court focused on the "necessary connection between the potential `operator' and the facility itself," stating that "operation is evidenced by participation in the activities of the facility." Id. (internal quotation marks and citation omitted).
Although the parties in this case spend some time briefing cases relying on both the actual control test and the authority to control test, in light of Bestfoods and Raytheon Constructors this Court is not persuaded that either test is appropriate. Instead, the Court must focus on the language of CERCLA itself and the principles set forth in Bestfoods. As set forth above, Bestfoods states: "an operator must manage, direct, or conduct operations specifically related to pollution, that is, operations having to do with the leakage or disposal of hazardous waste, or decisions about compliance with environmental regulations." Bestfoods, 524 U.S. at 66, 118 S.Ct. 1876 (emphasis added). Here, Plaintiffs allege that ER was directly involved in conducting operations at the facility. Plaintiffs allege that ER was responsible for providing drainage control, implementing a water management system, and constructing and maintaining the retention pond. [Doc. 86-1, ¶ 79, 95; Doc. 141-1, ¶ 89] EPA selected ER to "procur[e] and manag[e] the reopening and ground support construction" of the Gold King Mine portal. [Doc. 86-1, ¶¶ 80; Doc. 141, ¶ 73] New Mexico alleges that ER was involved in the decision making concerning operation of the facility, including deciding in 2014 that larger settling ponds and additional treatment were necessary. [Doc. 86-1, ¶ 83] Navajo Nation quotes a May 2015 Action/Work Plan submitted by ER which lists the following tasks for ER and its subcontractor:
[Doc. 141-1, ¶ 89] Further and not least, ER was one of the parties present on August 4 and 5, 2015 and excavating at the time of the spill, contrary to the directions of Mr. Way. [Doc. 86-1, ¶¶ 96-100; Doc. 141-1, ¶¶ 101-104] These facts state a claim that ER "conduct[ed] operations specifically related to [the] pollution." Bestfoods, 524 U.S. at 66, 118 S.Ct. 1876 (emphasis added). Contrary to ER's argument, these are not conclusory allegations. [Doc. 33, p. 8] Plaintiffs' allegations are sufficient to state a claim for operator liability.
ER points to other allegations in the Complaints which suggest EPA controlled the activities at the Gold King Mine. [Doc. 33, p. 8; Doc. 102, p. 8] ER argues that these allegations require dismissal based on the analysis employed in Interstate Power Co. v. Kansas City Power and Light Co., 909 F.Supp. 1284, 1289 (N.D. Iowa 1994) (applying the authority to control test) and Ryland Group, Inc. v. Payne Firm, Inc., 492 F.Supp.2d 790, 793-94 (S.D. Ohio 2005). [Doc. 33, p. 10] In Interstate Power, the Court held that a contractor which performed demolition services was not liable as an operator because "[i]t is undisputed that all of [the contractor's] actions were taken at the direction of other parties." Interstate Power, 909 F.Supp. at 1289. In Ryland Group, the Court held that a subcontracted company that was hired to "rototill the soil" of a contaminated area, thereby causing the contamination to spread, was not an operator. Ryland Group, Inc., 492 F.Supp.2d at 793-94. The Court reached this decision in part because it was the contractor, not the subcontractor, which investigated the contamination of the soil, developed a plan to remediate the contamination, performed sampling, and directly supervised the subcontractor, thereby "direct[ing] and control[ing] all activities that took place in the contaminated areas of the site." Id. As this Court stated above, however, the Tenth Circuit applies neither the authority to control nor the actual control test, which are the basis for the decisions in Interstate Power and Ryland Group.
Bestfoods, 524 U.S. at 66-67, 118 S.Ct. 1876. In Kaiser Aluminum, the Ninth Circuit relied on the rule that operator liability attaches "if the defendant had authority to control the cause of the contamination at the time the hazardous substances were released into the environment." Kaiser Aluminum & Chem. Corp., 976 F.2d at 1341. In Kaiser Aluminum, the complaint alleged that the contractor excavated tainted soil, moved it, and "spread it over uncontaminated portions of the property." Kaiser Aluminum & Chem. Corp., 976 F.2d at 1342. The Court held that these allegations were sufficient to state a claim of operator liability against the contractor because the "activity which produced the contamination... occurred during ... the construction process" performed by the contractor. Id. (emphasis in original). Further, the Fifth Circuit considered the operator provision in light of the definition of "disposal" in CERCLA, and concluded that a party that "moved, dispersed, or released [hazardous materials] during landfill excavations and fillings" could be liable as an operator. Tanglewood East Homeowners v. Charles-Thomas, Inc., 849 F.2d 1568, 1573 (5th Cir. 1988).
Finally, a number of district courts have followed the analysis set forth in Kaiser Aluminum. See KFD Enters., Inc. v. City of Eureka, 2010 WL 4703887, *2-3 (N.D. Cal. 2010) (denying contractor's motion to dismiss where the plaintiff alleged that, during the course of drilling wells, the contractor "pierced aquitard, which caused release of contaminants into previously uncontaminated ground" and stating that operator liability merely requires the party to have control over the activity that causes the pollution); City of North Miami, Fla. v. Berger, 828 F.Supp. 401, 413-14 (E.D. Va. 1993) (stating "operator liability is clearly appropriate" for ABC, a landfill operation company, which "exercised actual physical control over the wastes" even though another party directed and controlled the work, because ABC "actually performed the construction and waste disposal work"); Ganton Techs v. Quadion Corp., 834 F.Supp. 1018, 1021-22 (N.D. Ill. 1993) (applying Kaiser to hold that "pollution clean-up contractors" are operators under CERCLA where the contractors dealt with the hazardous material and "controlled the activities in which the additional contamination took place — the clean up operations"). The Court finds the reasoning of these cases persuasive and holds that ER, as a contractor, may be liable as an operator.
In sum, as pleaded by both New Mexico and the Navajo Nation, either Plaintiff may be able to establish a set of fact demonstrating that ER is liable as an operator, and thus a conclusion that ER was not an operator is not appropriate at this juncture.
Arranger liability is "intended to deter and, if necessary, to sanction parties seeking to evade liability by `contracting away' responsibility." United States v. Gen. Elec. Co., 670 F.3d 377, 382 (1st Cir. 2012). Thus, liability for removal and remediation attaches to:
42 U.S.C. § 9607(a)(3).
ER argues that it was not an arranger for three reasons. First, ER argues that the discharge was accidental, relying on Burlington Northern, 556 U.S. at 612, 129 S.Ct. 1870 and Amcast Indus. Corp. v. Detrex Corp., 2 F.3d 746, 751 (7th Cir. 1993), and thus ER argues that it cannot be liable for the spill. [Doc. 33, p. 10; Doc. 102, p. 9] Second, ER argues that it did not arrange for disposal "by any other party or entity," as required by Section 9607(a)(3). [Doc. 33, p. 10; Doc. 102, p. 9] Finally, ER argues that Plaintiffs failed to plead factual allegations that ER controlled the treatment or disposal process. [Doc. 33, p. 11; Doc. 102, p. 10]
First, the Court considers ER's argument that, based on the holding in Burlington Northern, it cannot be liable as an arranger because the spill was accidental. In Burlington Northern, the potentially responsible party, Shell, sold a pesticide, which the Court characterized as a new, useful product. Burlington Northern, 556 U.S. at 603, 612, 129 S.Ct. 1870. Shell was aware that minor, accidental spills occurred during the transfer of the pesticide from a common carrier to the purchaser's bulk storage tanks, but the Court held that this knowledge was insufficient to make Shell liable as an arranger. Id. at 612-13, 129 S.Ct. 1870. The Court stated:
Id. at 609-10, 129 S.Ct. 1870. The Court held that "Shell's mere knowledge that spills and leaks ... occur[ed] is insufficient grounds for concluding that Shell `arranged for' the disposal of [the pesticide] within the meaning of § 9607(a)(3)." Id. at 613, 129 S.Ct. 1870. The Court advised that the ordinary meaning of "arrang[e] for" applies, and that "the word `arrange' implies action directed to a specific purpose," and "`intentional action.'" Id. at 610-11, 129 S.Ct. 1870 (internal citations omitted). Accordingly, the Court rejected the argument that, where a company sells a new, useful product, knowledge of some disposal of hazardous substances through a spill is sufficient to create liability as an arranger. Id. at 612, 129 S.Ct. 1870. The Court acknowledged that the statute defines "dispose of" as including unintentional disposals such as spills and leaks, but, nonetheless the Court was not persuaded by the argument that Shell "entered into the sale of [the pesticide] with the intention that at least a portion of the product be disposed of during the transfer process by one or more of the methods described in § 6903(3)," and therefore the Court held that Shell was not liable. Id. at 612, 129 S.Ct. 1870.
[Doc. 141-1, ¶ 89] In sum, Plaintiffs' allegations allow a reasonable inference that the sole purpose of the agreement between the EPA and ER was for ER to participate in the disposal and treatment of a no-longer-useful, hazardous substance. This is the circumstance in which Burlington Northern concluded that CERCLA liability as an arranger was "plain." Burlington Northern, 556 U.S. at 609-10, 129 S.Ct. 1870.
Further, ER's reliance on Amcast Industrial for the proposition that arranger liability "excludes accidental spillage" is not persuasive because ER ignores the bulk of the analysis in Amcast Industrial. Amcast Indus. Corp., 2 F.3d at 751. [Doc. 33, p. 10; Doc. 102, p. 9] The full sentence ER cites states: "In the context of the operator of a hazardous-waste dump, `disposal' includes accidental spillage; in the context of the shipper who is arranging for the transportation of a product, `disposal' excludes accidental spillage." Id. (Emphasis added). Moreover, the Court went on to state:
Id. As detailed above, here, Plaintiffs allege that ER arranged for the disposal of a hazardous substance, not a new, useful product. Thus, the exception for liability for spills carved out by Burlington Northern and Amcast Industrial does not apply in this case.
The Court is further not persuaded by ER's second argument that Plaintiffs failed to allege that ER arranged for the disposal of the hazardous substance by "any other party or entity." [Doc. 33, pp. 10-11; Doc. 102, pp. 9-10] ER states Tenth Circuit law correctly, i.e., that the disposal or treatment must be performed by a party or entity other than ER. [Doc. 33, p. 11] Chevron Mining Inc. v. United States, 863 F.3d 1261, 1282-83 (10th Cir. 2017) (stating that "the clause `by any other party or entity' does not apply to ownership of the hazardous substances but, as most courts have held, refers back to the previous clause, `for disposal or treatment' (i.e., the phrase thus most naturally reads as the arrangement `for disposal or treatment ... by any other party or entity, at any facility or incineration vessel')"). The Court rejects Plaintiffs' argument to the contrary. [Doc. 58, p. 8; Doc. 115, pp. 10-11]
ER argues that Plaintiffs failed to allege that another party participated in or conducted the disposal or treatment. The Court does not agree. The treatment or disposal of the hazardous materials within the mine waste water was to occur at a settling pond. [Doc. 8601, ¶¶ 79, 129; Doc. 141-1 ¶ 91] Navajo Nation quotes from the Action/Work Plan, which identified tasks jointly for ER and ER's "`underground subcontractor (Harrison Western, HW).'" [Doc. 141-1, ¶ 89] One such task was the "`pumping of the impounded water to water management/treatment system (at Red and Bonita and described in TO62 Work Plan), to prevent the uncontrolled release of mine water.'" [Doc. 141-1, ¶ 89] Thus, ER contracted with Harrison Western to assist with the disposal of the hazardous waste, and therefore ER "arrang[ed] `for disposal or treatment ... by any other party or entity [Harrison Western].'" Chevron Mining Inc., 863 F.3d at 1282 (internal quotation marks omitted). Similarly, New Mexico alleges that ER "submitted a draft work plan for the Gold King Mine operation, which included sub-contracting with Harrison Western to complete the project." [Doc. 86-1, ¶ 90] New Mexico also alleges that in June and July of 2015, "EPA, Environmental Restoration, Weston Solutions, and Harrison Western ... discussed a plan to install a sump basin to treat water that would be pumped out of the mine during the adit excavation work." [Doc. 86-1, ¶ 91] Thus, New Mexico also alleges that ER arranged for at least one other party to aid in the disposal of the hazardous waste. While there could certainly be more detail to these allegations, at this early stage, Plaintiffs' allegations are sufficient to plead that ER arranged with at least one other party for that other party to participate in the disposal of the hazardous waste. See Twombly, 550 U.S. at 555, 127 S.Ct. 1955 (to state a claim, factual allegations, taken as true, need not be detailed but "must be enough to raise a right to relief above the speculative level").
Third and finally, ER argues that both New Mexico and Navajo Nation failed to plead "sufficient factual allegations that ER controlled the alleged treatment or disposal process," citing Interstate Power Co., 909 F.Supp. at 1288 [Doc. 33, p. 11]; see also [Doc. 102, pp. 9-10] and United States v. Shell Oil Co., 294 F.3d 1045, 1055 (9th Cir. 2002) [Doc. 102, p. 10]. ER argues
The Court is not persuaded that Plaintiffs must plead that ER controlled the alleged treatment or disposal process. The elements of arranger liability as set forth by the Court in Interstate Power Co. and Shell Oil Co. are not consistent with the elements set forth by our Tenth Circuit. In Interstate Power Co., the Court stated that the elements of arranger liability are: "(1) a `disposal' of a hazardous substance; (2) an `arrangement' contemplating disposal; and (3) a sufficient `nexus' between the party and the hazardous substance." Interstate Power Co., 909 F.Supp. at 1287. In Shell Oil Co., the Court held that "control is a crucial element of the determination of whether a party is an arranger under § 9607(a)(3)." Shell Oil Co., 294 F.3d at 1055. By comparison, in Chevron Mining, Inc., the Court held that the elements of arranger liability are: "(1) the party must be a `person' as defined in CERCLA; (2) the party must `own' or `possess' the hazardous substance prior to the disposal; and (3) the party must, `by contract, agreement or otherwise,' arrange for the transport or disposal of such hazardous substances." Chevron Mining, Inc., 863 F.3d at 1279. Thus, neither control nor the "authority to control" the hazardous substance are elements of arranger liability as set forth in this Circuit.
For the above reasons, the Court concludes that both Plaintiffs have sufficiently alleged that ER is liable as an arranger pursuant to Section 9607(a)(3), and the Court will not grant dismissal of their claims that ER is an arranger.
Section 9607(a)(4) holds liable as a transporter "any person who accepts or accepted any hazardous substances for transport to disposal or treatment facilities, incineration vessels or sites selected by such person, from which there is a release, or a threatened release which causes the incurrence of response costs, of a hazardous substance." "The terms `transport' or `transportation' means (sic) the movement of a hazardous substance by any mode, including a hazardous liquid pipeline facility." 42 U.S.C. § 9601(26). In United States v. Hardage, 985 F.2d 1427, 1435 (10th Cir. 1993), our Tenth Circuit held that, to be a transporter, the party must have selected the site of disposal or treatment. Other courts have reached the same conclusion. See, e.g., B.F. Goodrich v. Betkoski, 99 F.3d 505, 520-21 (2d Cir. 1996) (collecting cases), abrogated on other grounds by United States v. Bestfoods, 524 U.S. 51, 118 S.Ct. 1876, 141 L.Ed.2d 43 (1998); Tippins Inc. v. USX Corp., 37 F.3d 87, 93-94 (3d Cir. 1994); United States v. W. Processing Co., 756 F.Supp. 1416, 1419-20 (W.D. Wash. 1991). In so concluding, the Court in Western Processing first reviewed CERCLA's legislative history and EPA's commentary, and, based on this review, explained the rationale for the site selection provision in Section 9607(a)(4):
Id. at 1420.
Our Tenth Circuit has not yet "define[d] the outer limits of transporter liability" or determined whether, as some other courts have considered, transporter "liability may be imposed if the transporter at least actively participates in or assists in the site selection." See United States v. Hardage, 750 F.Supp. 1444, 1458-59 (W.D. Okla. 1990); see Tippins, Inc., 37 F.3d at 94-95 (holding that "a person is liable as a transporter not only if it ultimately selects the disposal facility, but also when it actively participates in the disposal decision to the extent of having had substantial input into which facility was ultimately chosen").
ER argues that it is not liable as a transporter because Plaintiffs' allegations are conclusory and because "`transporter liability is predicated on site selection by the transporter,'" quoting Hardage. [Doc. 33, p. 12; Doc. 102, p. 11] ER argues that the selection of the Gold King Mine as a reclamation site occurred prior to ER's contract
Neither New Mexico nor Navajo Nation dispute ER's reading of Hardage as requiring the transporter to have selected the site for disposal. [Doc. 58, pp. 11-12; Doc. 115, p. 11] Instead, New Mexico argues that its allegations are sufficient to plead transporter liability. Specifically, New Mexico refers to the following allegations (in the original complaint): 1) that "ER `accepted hazardous substances from the mines for transport and disposal, including to settling ponds and other facilities, and releases from those facilities occurred.' (Compl. § 103);" 2) "ER `dug a channel on the right side of the berm and positioned planks so that water flowing from the adit could be directed to the drainage channel that DRMS had previously installed.' (Compl. ¶ 86);" and 3) that "ER participated in operations involving the treatment and disposal process, which included transporting mine water from Gold King to settling ponds and other facilities. (Compl. ¶ 81)." [Doc. 58, pp. 11-12] Navajo Nation, on the other hand, argues that: "ER `knew that, in the event of a blowout, highly contaminated water... at the Gold King Mine would make its way from Cement Creek down to the Animas and San Juan Rivers, crossing through the Navajo Reservation.'" [Doc. 115, p. 11 (quoting its original Complaint)] These allegations do not identify the party or parties who selected the treatment site — the settlement pond — or who participated in the site selection.
However, Plaintiffs' Proposed Amended Complaints (submitted after briefing was completed on the Motion to Dismiss) contain additional allegations concerning whether ER selected the site of disposal or treatment of the waste water.
[Doc. 141-1, ¶¶ 67, 71] Navajo Nation also alleges that, after the failed attempt in 2014 to begin the excavation, EPA drafted a report acknowledging the need for larger settlement ponds and the preparation of additional water management and treatment mechanisms. [Doc. 141-1, ¶ 85] Thereafter, Harrison Western, a sub-contractor selected by ER, prepared a revised excavation plan, and, using this plan, ER submitted a new "Action/Work Plan," which was approved by the EPA. [Doc. 141-1, ¶ 88] The Navajo Nation alleges:
[Doc. 141-1, ¶ 89]
Among its new allegations, New Mexico pleads: "EPA OSC Steve Way, Colorado DRMS officials, and employees of Environmental Restoration, Weston Solutions, and Harrison Western inspected the Level 7 adit and determined that the drainage would require larger settling ponds and additional treatment." [Doc. 86-1, ¶ 83] Subsequently, in May of 2015, ER submitted a new draft work plan. [Doc. 86-1, ¶ 90] Then, in June or July of 2015, "EPA, Environmental Restoration, Weston Solutions and Harrison Western visited the Gold King Mine several times to assess site conditions and drainage flows [and]... discussed a plan to install a sump basin to treat water that would be pumped out of the mine during the adit excavation work." [Doc. 86-1, ¶ 91] Then the "EPA and its contractors ... started constructing a water management and treatment system." [Doc. 86-1, ¶ 92]
Given that the Court must construe the allegations in the light most favorable to Plaintiffs, the Court concludes that, in their Proposed Amended Complaints, both New Mexico and the Navajo Nation have met Twombly's notice pleading requirement to allege more than "a formulaic recitation of the elements" with regard to ER's selection of the site, or participation in the selection of the site, for the treatment of the waste water. It is a reasonable inference that, by ER's participation in the meetings concerning the need for additional treatment and by ER's role in preparing reports and draft work plans, ER participated in the selection of the site of either the temporary water treatment site or the Red and Bonita treatment basin.
For the foregoing reasons, the Court denies ER's motions to dismiss the claims of New Mexico and the Navajo Nation for
On July 28, 2017, this Court asked for additional briefing and evidence regarding "the scope of the EPA's removal action" in order for the Court to be able to determine whether the EPA's response action precludes some of Plaintiffs' claims or some of the relief requested by Plaintiffs. [Doc. 164, p. 3] Based on the Court's order, the parties voluntarily exchanged some discovery. [Doc. 177] However, recently a discovery dispute arose between the parties [Doc. 187], and thus, at this time, briefing on the jurisdictional issue remains incomplete.
Accordingly, the Court does not address at this time the following arguments by ER which are related to the jurisdictional issue: New Mexico's request for injunctive relief under RCRA is barred because the EPA has commenced a removal action under CERCLA § 104 [Doc. 33, pp. 12-14]; Navajo Nation's request for injunctive relief to "abate the nuisance and cure the trespass within the Nation" are barred because "the EPA has begun removal efforts at Gold King" [Doc. 102, pp. 11-13]; and New Mexico's "claim[ ] for an order requiring ER to `abate the nuisance and cure the trespass' would interfere with the EPA's ongoing removal action and, therefore, is barred under CERCLA." [Doc. 33, p. 14]
CERCLA contains two saving clauses. The first states: "Nothing in this chapter shall be construed or interpreted as preempting any State from imposing any additional liability or requirements with respect to the release of hazardous substances within such State." 42 U.S.C. § 9614(a). The second states:
42 U.S.C.A. § 9652(d).
In New Mexico v. General Electric Company, 467 F.3d 1223, 1247 (10th Cir. 2006), our Tenth Circuit held that:
Id. The Court went on:
Id. at 1247-48 (footnote omitted).
Based on General Electric Co., ER argues that Plaintiffs' state law claims for relief should be dismissed or the damages claims should be stricken. With regard to the Navajo Nation's state law tort causes of action:
[Doc. 102, pp. 13-14] Likewise, ER argues, with regard to New Mexico's state law tort causes of action:
[Doc. 33, p. 14] Pursuant to its tort claims, New Mexico seeks against ER (and other Defendants) compensatory, restitutionary, and punitive damages, as well as attorneys' fees. [Doc. 86-1, ¶¶ 9, 199, 209, 210] In addition, specifically regarding its public nuisance claim, New Mexico alleges: "New Mexico has suffered special injuries, which the public as a whole does not share. New Mexico has and will continue to suffer lost economic activity, tax revenues, and stigmatic damages arising from these releases." [Doc. 86-1, ¶ 179] Navajo Nation seeks to recover compensatory, consequential, and punitive damages, as well as attorneys' fees, costs, and expenses. [Doc. 141-1, pp. 58-59] Navajo Nation further refers to lost business revenues and stigma damages (pursuant to its public nuisance claim) [Doc. 141-1, ¶ 201], and damages based on the interference with Navajo Nation's use of the land for "water supply, irrigation needs, [and] recreational uses" (pursuant to its private nuisance claim) [Doc. 141-1, ¶ 207].
The Court in General Electric Co. refused to conclude that the State of New Mexico's "public nuisance and negligence theories of recovery are completely preempted." Id. at 1247-48. Based on this holding, the Court concludes that dismissal of Plaintiffs' state law tort claims is not appropriate, as there is no authority for concluding that the claims are preempted. Id. Further, the Court denies the motion to strike the damages at this early stage in the proceeding. See Butler v. Pollard, 482 F.Supp. 847, 852 (E.D. Okla. 1979) (overruling a motion to strike request for punitive damages; concluding that the defendant had "not convinced the Court that the material he wishes stricken is redundant, immaterial, impertinent or scandalous,"
ER argues that it is shielded from liability from the Plaintiffs' state law claims
New Mexico argues that the government contractor defense is an "affirmative defense that ER must assert and prove by a preponderance of the evidence." [Doc. 58, pp. 17-18] Navajo Nation argues that, because this is a motion to dismiss, grounds for dismissal based on the government contractor defense must appear plainly on the face of the complaint. [Doc. 115, p. 14] ER argues that "[a]s with any affirmative defense, the [government contractor defense] warrants dismissal if the factual prerequisites are set forth in the Complaint and matters subject to judicial notice, as they are in this case." [Doc. 120, p. 8]
The Court observes that the law is not particularly clear as to whether it is appropriate to grant dismissal, on a Rule 12(b)(6) motion, based on either the government contractor defense or the discretionary function exception to liability under the Federal Tort Claims Act (application of which is a predicate to application
Nonetheless, both the Navajo Nation and ER suggest that the Court apply the following standard:
Miller v. Shell Oil Co., 345 F.2d 891, 893 (10th Cir. 1965). The Court notes that, when Miller's "plainly on the face of the complaint" test is applied, it is generally applied to the defense of the statute of limitations.
The government contractor defense was defined by the United States Supreme Court in Boyle v. United Technologies Corp., 487 U.S. 500, 509-12, 108 S.Ct. 2510, 101 L.Ed.2d 442 (1988). The defense grew out of the holding in Yearsley v. W.A. Ross Constr. Co., 309 U.S. 18, 60 S.Ct. 413, 84 S.Ct. 554 (1940), in which the petitioners, who owned land along the Missouri River, sued contractors for building dikes and who, "using large boats with paddles and pumps to produce artificial erosion, had washed away a part of petitioners' land." Id. at 19, 60 S.Ct. 413. However, the contractors had done so "pursuant to a contract with the United States Government, and under the direction of the Secretary of War and the supervision of the Chief of Engineers of the United States." Id. Under those facts, the Supreme Court extended the immunity from suit which protects the United States Government to contractors performing work "authorized and directed by the Government of the United States." Id. However, Yearsley left the limits of the defense ill-defined. Forty-eight years later, in Boyle, the Court named the defense and added criteria for its application. Boyle, 487 U.S. at 504-513, 108 S.Ct. 2510.
In Boyle, the plaintiff asserted that a military contractor was liable for damages caused by an alleged design defect in a helicopter emergency escape system. Id. at 502-03, 108 S.Ct. 2510. The Court began its analysis by considering whether federal law preempted state law, and, while recognizing that there was not express preemption, the Court nonetheless determined that the case presented an issue which involved "uniquely federal interests." Id. at 504, 108 S.Ct. 2510. The uniquely federal interests presented by the case included contract obligations to the United States and "the civil liability of federal officials for actions taken in the course of their duty." Id. at 504-05, 108 S.Ct. 2510. The Court stated that "the reasons for considering these closely related areas to be of `uniquely federal' interest apply as well to the civil liabilities arising out of the performance of federal procurement contracts." Id. at 505-06, 108 S.Ct. 2510. The Court noted that it had, in Yearsley, recognized a federal interest in governing civil liability for performance contracts, and the Court concluded that there was no basis for distinction in the case of procurement contracts. Id. at 506, 108 S.Ct. 2510 (citing Yearsley, 309 U.S. 18, 60 S.Ct. 413).
After concluding that the case involved matters of uniquely federal interests, the Court held that this conclusion did not "end the inquiry," and stated that, before the Court could find the displacement of state law, it must find that either "a significant conflict exists between an identifiable federal policy or interest and the operation of state law, ... or the application of state law would frustrate specific objectives of federal legislation." Id. at 507, 108 S.Ct. 2510 (internal brackets, quotation marks, and citations omitted). The Court stated that, in the case before it, the "state-imposed duty of care that is the asserted basis of the contractor's liability ... is
The discretionary function exception to liability for tort claims applies to
28 U.S.C. § 2680(a). Applying the discretionary function test in Boyle, the Court set forth the analysis applicable to determining whether a contractor is liable for work done for the federal government — specific to the context of liability for a design defect in equipment built pursuant to a procurement contract for military equipment:
Id. at 512, 108 S.Ct. 2510.
Since Boyle, our Tenth Circuit has cited the case several times, but none of those cases address the applicability of the government contractor defense.
A few courts have considered whether the government contractor defense applies to contractors performing environmental clean-up activities for various governmental entities. For example, in Richland-Lexington Airport District, the Court applied Boyle in granting summary judgment to an EPA contractor that conducted clean-up activities which allegedly contaminated the plaintiff's adjacent property. Richland-Lexington Airport Dist., 854 F.Supp. at 419-24. The Court in In re World Trade Center Disaster Site Litigation, 456 F.Supp.2d 520, 563-66 (S.D.N.Y. 2006), denied summary judgment based on the government contractor defense to contractors involved in the clean-up of the 2001 World Trade Center site. Therein, the Court described the origin of the government contract defense as follows:
Id. at 560. Finally, in Gadsden I, the Court denied summary judgment to contractors employed by the EPA to remediate certain industrial property, where the contractors argued that they were entitled to the government contractor defense for allegedly burying and selling certain railroad track spur lines owned by the plaintiff. Gadsden I, 111 F.Supp.3d at 1221-22, 1231.
Gadsden I outlined Boyle's test in the context of an EPA response action, as follows:
Gadsden I, 111 F.Supp.3d at 1228. To determine whether a significant conflict exists between state law and the uniquely federal interests, the Court applies the discretionary function exception to the FTCA. Id. Thus, the Court first considers whether
Id. at 1229 (internal quotation marks omitted) (quoting Berkovitz by Berkovitz v. United States, 486 U.S. 531, 536-37, 108 S.Ct. 1954, 100 L.Ed.2d 531 (1988)). "The government actor, rather than ... the contractors, must have exercised the discretion." Id. Finally, to determine whether the action is within the scope of displaced action, the contractor "must show that (1) EPA approved reasonably precise clean-up procedures; (2) [the contractor] followed those procedures; and (3) [the contractor] revealed to EPA any dangers regarding the cleanup activity unknown to EPA." Id. at 1230.
In this case, both Plaintiffs argue that the government contractor defense does not apply to protect ER. Both Plaintiffs argue that EPA has no uniquely federal interest and that no significant conflict exists between the state tort claims and EPA's interests. [Doc. 58, pp. 19-20; Doc. 115, pp. 15-16] Both Plaintiffs further argue that the elements of the discretionary function exception test are not met, though they rely on somewhat varying rationales. [Doc. 58, pp. 21-22; Doc. 115, pp. 16-20] Finally, both Plaintiffs argue that ER did not comply with the specifications given to it by the EPA. [Doc. 58, p. 20; Doc. 115, pp. 20-21] The Court addresses these arguments in turn.
First, the Court must consider whether the EPA has a uniquely federal interest in "the civil liabilities arising out of the performance of [its response action] contracts" for environmental response actions authorized by CERCLA. Boyle, 487 U.S. at 505-06, 108 S.Ct. 2510. In Gadsden I, the Court concluded that "EPA's remediation of the ... property involves a unique[ly] federal interest in cleanup of a Superfund site on the national priority list." Gadsden I, 111 F.Supp.3d at 1228. The same conclusion is warranted here.
The Court must next consider whether a significant conflict exists between state law and the EPA's uniquely federal interest in response action contractor liability. As set forth in footnote 18, Section 6919 specifically addresses the "[l]iability of response action contractors." No party has analyzed whether this provision demonstrates that there is or is not a significant conflict between state tort law and the uniquely federal interest of the liability pursuant to the EPA's response action contracts.
It remains unclear whether the Supreme Court would conclude that Congress's express provisions governing response action contractor liability in Section 9619 obviates the need for application of the discretionary function test in order to decide whether or not a conflict exists between state law and a uniquely federal interest. Because it is unclear whether the test should be applied, and given that the parties focused on the discretionary function test, the Court will conduct the analysis.
The first step in applying the discretionary function test is to ask whether "a federal statute, regulation, or policy specifically prescribes a course of action for [the government] employee to follow," and, if not, whether the act is discretionary. Gadsden I, 111 F.Supp.3d at 1229 (internal quotation marks and citations omitted). "[T]he government actor, rather than ... the contractors, must have exercised discretion." Id. Discretionary acts are those "`susceptible to policy analysis.'" Daigle v. Shell Oil Co., 972 F.2d 1527, 1538 (10th Cir. 1992) (quoting United
First, the Court considers whether CERCLA prescribed a specific course of action for EPA employees to follow. Section 9604 gives the President
42 U.S.C. § 9604(a)(1). This section also gives the President the authority to determine whether a responsible party is qualified to conduct a remedial investigation and/or feasibility study, and if so, to allow such party to do so with government oversight. Id. The statute further provides that:
Section 9604(b). Congress specifically vested in the President the authority to take such action "as he may deem necessary or appropriate" in investigating, monitoring, and gathering information "[w]henever the President is authorized to act pursuant to subsection (a) of this section." Section 9604(b)(1). Further, although the President must "consult with the affected State or States before determining any appropriate remedial action," Congress declared that "[t]he President shall select remedial actions to carry out this section in accordance with section 9621 of this title (relating to cleanup standards)." Section 9604(c)(2), (4). Section 9621 identifies considerations the President shall take into account when selecting appropriate remedial actions, including, inter alia, "the persistence, toxicity, mobility, and propensity to bioaccumulate of such hazardous substances
In Daigle, Our Tenth Circuit considered whether actions taken by the Army while conducting a response action under § 9621 fell within the discretionary function exception to the FTCA. Daigle, 972 F.2d at 1540-41. The Court held that they did, reasoning:
Id. at 1541-42. Other Courts that have considered this issue have reached the same ruling. U.S. Fid. & Guar. Co. v. U.S., 837 F.2d 116, 123 (3d Cir. 1988); Gadsden Industrial Park, LLC v. United States, 2017 WL 4387217, *18 (N.D. Ala. 2017), appeal docketed No. 17-15325 (11th Cir. Nov. 30, 2017); United States v. Green, 33 F.Supp.2d 203, 222-23 (W.D.N.Y. 1998).
For the reasons set forth in Daigle, the Court concludes that CERCLA did not prescribe a specific course of action for government employees to follow in conducting the response action at the Gold King Mine.
Berkovitz, 486 U.S. at 536, 108 S.Ct. 1954. If such a regulation or policy mandates a specific course of action, then the discretionary function exception to liability does not apply, and, ergo, ER cannot demonstrate that the government contract defense plainly applies based on the face of the Proposed Amended Complaints. Both Plaintiffs cite to several regulations as well as instructions by Mr. Way as prescribing a course of action for the federal employee to follow.
The Court notes that whether or not these regulations subscribe a course of action for EPA employees to follow is also the subject of EPA's responses in opposition to New Mexico and
Next, the Court must determine whether the immunity from suit which the Court is assuming protects the EPA employees also extends to the EPA's contractor, ER. In other words, ER must show that the EPA "made [ER] do it" in order for ER to be protected from liability. Gadsden I, 111 F.Supp.3d at 1230 (internal quotation marks and citation omitted). Boyle enunciated a three-part test to consider this issue, however, that test was worded specifically regarding the product liability issue before the Court in Boyle. Boyle, 487 U.S. at 512, 108 S.Ct. 2510. Gadsden I reworded the test to apply to response action contractors performing under a contract with the EPA, restating the test as follows: the contractor "must show that (1) EPA approved reasonably precise clean-up procedures; (2) [the contractor] followed those procedures; and (3) [the contractor] revealed to EPA any dangers regarding the cleanup activity unknown to EPA." Gadsden I, 111 F.Supp.3d at 1230. Again, because the government contractor defense is an affirmative defense, and because the court is considering ER's Motions to Dismiss, ER must demonstrate that the defense plainly applies based on the facts alleged in the Proposed Amended Complaints.
As pleaded, the Court cannot conclude that the EPA approved reasonably precise clean-up procedures, the first requirement for establishing that the actions fit within the scope of displaced state law. Plaintiffs allege that in late July 2015, EPA's on-site coordinator, Mr. Way, planned an on-site review of the plans by a Bureau of Reclamation engineer, which was scheduled to occur on August 14, 2015. [Doc. 86-1, ¶ 93; Doc. 141-1, ¶ 95] In the interim, Mr. Way went on vacation, but he arranged for another EPA employee, Mr. Griswold, to supervise the site while he was away. [Doc. 86-1, ¶ 94; Doc. 141, ¶¶ 96-97] Mr. Way sent "specific instructions about the scope and timing of work at the Gold King Mine" to Mr. Griswold and employees of ER, Weston Solutions, and DRMS. [Doc. 86-1, ¶ 95; Doc. 141-1, ¶ 97]
Without alleging that they were instructed to do so by Mr. Griswold, Plaintiffs allege that the crew at the Gold King Mine did not follow the work plan or the instructions given by Mr. Way in his email. [Doc. 86-1, ¶ 97; accord. Doc. 141-1, ¶ 98] The Proposed Amended Complaints do not allege that Mr. Griswold gave any instructions, let alone the substance of the instructions. Thus, it is impossible to determine whether Mr. Griswold gave "reasonably precise" instructions to the crew.
[Doc. 86-1, ¶ 106] New Mexico further alleges:
[Doc. 86-1, ¶ 106; accord Doc. 141-1, ¶¶ 130-131]
The Proposed Amended Complaints contain no allegations as to whether Mr. Griswold gave any directions to the crew working at the Gold King Mine, let alone the substance of such direction (if any). Accordingly, the Court cannot determine that Mr. Griswold gave reasonably precise directions. Thus, at this stage in the proceedings, the Court cannot determine that the government contractor defense protects ER. However, the Proposed Amended Complaints allow an inference that Mr. Way gave reasonably precise instructions, and, arguably, that the work plan contained reasonably precise instructions. However, without either allegations that Mr. Griswold gave no instructions or allegations that Mr. Griswold gave instructions and the substance of those instructions, the Court cannot, on the face of the complaints, determine whether the EPA gave reasonably precise instructions to ER.
Further, for the government contractor defense to apply, the Court must be able to conclude that ER followed EPA's reasonably precise instructions. If, for the sake of analysis, the Court were to assume that Mr. Griswold gave no instructions to ER, the Court cannot conclude that ER followed EPA's instructions. Plaintiffs allege that the crew at the Gold King Mine site "substantially deviated from Mr. Way's written instructions, as well as the June 11 work plan." [Doc. 86-1, ¶ 97; accord. Doc. 141-1, ¶ 98] Such deviations included digging without a pump, hose, stinger, sump or sump pump to treat discharged water. [Doc. 86-1, ¶ 97; Doc. 141-1, ¶ 98] Alternatively, if the Court were to assume that the EPA, through Mr. Griswold, approved reasonably precise clean-up procedures, the Proposed Amended Complaints contain no allegations that ER followed Mr. Griswold's instructions. Thus, looking only at the Proposed Amended Complaints, the Court cannot determine that ER followed EPA's reasonably precise instructions.
Finally, for the Court to conclude that the government contractor defense applies, the Proposed Amended Complaints would have to plainly establish that ER revealed to EPA any dangers regarding the cleanup activity unknown to EPA. However, the Proposed Amended Complaints contain no allegations which would allow the Court to make such a determination. The Proposed Amended Complaints simply do not speak to this element of the government contractor defense.
In conclusion, ER has not established that its actions fall within the scope of action displaced by federal law, as enunciated by Boyle and reformulated to the context of environmental response actions in Gadsden I. The facts alleged in the proposed amended complaints to do not plainly demonstrate that "(1) EPA approved reasonably precise clean-up procedures," that "(2) [ER] followed those procedures," or that (3) ER "revealed to EPA any dangers regarding the cleanup activity unknown to EPA." Gadsden I, 111 F.Supp.3d at 1230. Thus, ER has not persuaded the Court that it is plainly entitled to application of the government contractor defense based on the allegations in the proposed amended complaints. However, this conclusion does not prejudice ER's ability to plead and prove the defense during the course of the proceedings in this case.
"[W]hen a court considers a state-law claim concerning interstate water pollution that is subject to the [Clean Water Act (CWA)] the court must apply the law of the State in which the point source is located." International Paper Co. v. Ouellette, 479 U.S. 481, 487, 107 S.Ct. 805, 93 L.Ed.2d 883 (1987). Citing Ouellette and similar authority, ER argues that "Supreme Court precedent establishes that Colorado state law applies to [Plaintiffs'] state tort causes of action as the law of the `source' state." [Doc. 33, pp. 23-24; accord. Doc. 102, p. 23] ER further argues that Colorado has abolished joint and several liability, and thus, Plaintiffs' "claims that ER is `jointly and severally liable' for damages under state tort law ... should be stricken as immaterial under Fed. R. Civ. P. 12(f) because they have `no possible bearing on the controversy.'" [Doc. 102, p. 23 (citations omitted); accord. Doc. 33, p. 24]
New Mexico responds to this argument by first challenging ER's procedural use of a motion to strike because such relief is drastic and disfavored and, because, in its Motion as to New Mexico, ER does not argue that New Mexico's allegations are "redundant, immaterial, impertinent, or scandalous." Fed. R. Civ. P. 12(f); Lane v. Page, 272 F.R.D. 581, 587 (D.N.M. 2011) ("Striking a pleading or part of a pleading is a drastic remedy and because a motion to strike may often be made as a dilatory tactic, motions to strike under Rule 12(f) generally are disfavored." (Internal quotation marks and citations omitted)). [Doc. 58, p. 23] The Court does not believe that ER's argument as to the grounds for striking the allegations was unclear — citing Rule 12(f), ER argued that it could not be held jointly or severally liable based on controlling law, and thus the allegation should be stricken. [Doc. 33, pp. 23-24] Further, while striking the allegation is drastic, if the law is clear that joint and several liability cannot apply regardless of how the facts develop, it is appropriate to strike the allegation. Cf. Norman's Heritage Real Estate Co. v. Aetna Cas. & Sur. Co., 727 F.2d 911, 915 (10th Cir. 1984) (favorably citing case which sustained
Next, New Mexico argues that the issue of law, whether the Court must apply Colorado law, is disputed and unclear, and that the court should not decide the issue, as the facts necessary to allow the court to decide the issue have not been established. [Doc. 58, pp. 23-24] New Mexico, however, does not identify any facts upon which this issue depends, and none are apparent to the Court.
Both Plaintiffs respond that the Court must apply traditional choice-of-law rules in determining whether to apply New Mexico or Colorado law. [Doc. 58, pp. 22-23; Doc. 115, p. 22] However, this argument is foreclosed by Ouellette, wherein the majority rejected the same argument, which was made by the Justices who concurred in part and dissented in part. See Ouellette, 479 U.S. at 501-02, 107 S.Ct. 805 (Brennan, J., concurring in part and dissenting in part) (stating that the Court should apply the usual two-part analysis of 1) applying the conflict-of-law rules of the state in which the court sits, and 2) under such rules, determining whether the law of the source state or the affected state applies); id. at 509, 107 S.Ct. 805 (Stevens, J., concurring in part and dissenting in part) (disagreeing with the majority's decision on preemption without first letting the district court conduct a choice-of-law determination). The majority stated:
Id. at 499 n.20, 107 S.Ct. 805.
New Mexico raises a few additional arguments which the Court concludes that Ouellette and similar cases address and foreclose. However, to address these arguments, the Court first finds it necessary to discuss the multi-faceted reasoning in Ouellette.
In Ouellette, International Paper Company (IPC), located in New York, discharged "a variety of effluents" into Lake Champlain, which forms part of the border between New York and Vermont. Id. at 483-84, 107 S.Ct. 805. The plaintiffs, who owned property in Vermont on the shore of Lake Champlain, sued IPC for common law nuisance under Vermont law. Id. at 484, 107 S.Ct. 805. The Court concluded that the CWA, which allows states to permit certain discharges into waters within their own borders, preempts tort claims under state law when the source of the alleged injury is located in another state. Id. at 497, 107 S.Ct. 805.
To reach its holding, the Ouellette Court stated that, from at least 1906 (when the Court decided Missouri v. Illinois, 200 U.S. 496, 26 S.Ct. 268, 50 S.Ct. 572 (1906)) until 1981 (when the Court decided Milwaukee v. Illinois (Milwaukee II), 451 U.S. 304, 101 S.Ct. 1784, 68 L.Ed.2d 114 (1981)), federal common law, rather than state law, governed issues of water pollution. Ouellette, 479 U.S. at 487-89, 107 S.Ct. 805. In Milwaukee II, the Court held that the 1972 amendments to the Federal Water Pollution Control Act (i.e., the Clean Water Act) were so far reaching and comprehensive that the federal legislation preempted the federal common law, however, the Court did not address whether state law was preempted. Ouellette, 479
Keeping in mind the regulatory permit framework, the Court turned to the issue at hand, whether the CWA preempted an affected state's ability to enforce its common law on an out-of-state point source. The Court first stated that "Congress intended the 1972 amendments to establish an all-encompassing program of water pollution regulation." Id. at 492, 107 S.Ct. 805 (internal quotation marks and citation omitted). The Court further observed that, in addition to the permitting system,
Id. The Court next considered the following saving clauses within the CWA:
Id. at 485, 492-93, 107 S.Ct. 805. The Court stated that the language at Section 1370 only preserves the authority of a state to regulate waters within its boundaries. Id. at 493, 107 S.Ct. 805. As to Section 1365(e), the Court noted that it applied only to "this section," namely, the section that allows citizen suits. Id. at 493, 107 S.Ct. 805. The Court stated that Section 1365(e), therefore, did "not purport to preclude pre-emption of state law by other provisions of the Act." Id. The Court then stated:
Id. at 493-94, 107 S.Ct. 805 (internal quotation marks and citation omitted). After Ouellette, the Court reiterated that federal law controls water pollution in Arkansas v. Oklahoma, 503 U.S. 91, 110, 112 S.Ct. 1046, 117 L.Ed.2d 239 (1992), repeating
Having set forth the controlling Supreme Court precedent, the Court turns to New Mexico's arguments. First, New Mexico argues that whether Ouellette applies "is questionable at best" because "ER's three million gallon release was certainly not permitted under the CWA." [Doc. 58, p. 24 n.18] However, regardless of whether there was a permit for a particular discharge, allowing affected state tort law to apply to non-permitted discharges in source states would conflict with the CWA's citizen suit provisions. Ouellette, 479 U.S. at 497-98 & n.18, 107 S.Ct. 805 (recognizing that plaintiffs alleged that IPC was violating the terms of its permit); cf. In re: Deep Water Horizon, 745 F.3d 157, 170-71 (5th Cir. 2014) (rejecting argument that affected state law does not conflict with the CWA regarding non-permitted discharges; concluding that "Ouellette forms a controlling backdrop for resolving claims caused by the blowout. Federal law, the law of the point source, exclusively applies to the claims generated by the oil spill in any affected state or locality"). Thus, the lack of a permit for the August 5, 2015 release does not alter the conclusion that the CWA preempts application of New Mexico law to a discharge with a point source in Colorado.
New Mexico also argues that it is "unclear if Ouellette's holding applies to sovereign entities such as New Mexico." [Doc. 58, p. 24 n.18] However, as discussed above, in both Ouellette and Arkansas the Court recounted the historical development of the rule that federal law (first federal common law and later federal statutes) preempts state common law with regard to interstate water-related disputes. Ouellette, 479 U.S. at 487-89, 107 S.Ct. 805; Arkansas, 503 U.S. at 98-100, 112 S.Ct. 1046. Many of the cases establishing that state law is preempted involved state plaintiffs. See, e.g., Milwaukee II, 451 U.S. at 317, 101 S.Ct. 1784 (holding that the CWA displaced federal common law in case originally brought by Illinois against the City of Milwaukee). Thus, it is well established that such preemption applies to states as well as individuals.
New Mexico next argues: "As the CWA's savings clause applies on its face only to `state actions,' it is unclear whether the limited holding in Ouellette extends to issues of apportionment of liability, as ER contends." [Doc. 58, p. 24 n.18] Finally, New Mexico argues that "given that liability under the CWA is joint and several, application of Colorado's comparative fault regime would arguably conflict with the Act's regulatory scheme, and thus thwart the objectives that the Court in Ouellette sought to avoid." [Doc. 58, p. 24 n.18] First, the Court notes that the actual language of the pertinent saving clause does not discuss "state actions," but rather, preserves source state law. 33 U.S.C. § 1365(e) ("Nothing in this section shall restrict any right which any person (or class of persons) may have under any statute or common law to seek enforcement of any effluent standard or limitation or to seek any other relief."). Second, New Mexico's arguments ignore the holdings of Arkansas and Ouellette, that the "Clean Water Act taken `as a whole, its purposes and its history' pre-empted an action based on the law of the affected State and that the only state law applicable to an interstate discharge is `the law of the State in which the point source is located.'" Arkansas, 503 U.S. at 100, 112 S.Ct. 1046 (quoting Ouellette, 479 U.S. at 487, 107 S.Ct. 805). Thus, the source state law is not preempted — and that law includes both the causes of action available and the remedies available. Finally, regardless of whether the CWA applies joint and several liability and Colorado tort law applies comparative
ER also moves to strike Navajo Nation's punitive damages claim for a reason distinct from the CWA. ER argues: "Plaintiff's punitive damages claim ... should also be stricken because Colorado
In sum, the Court grants ER's Motions to Strike [Doc. 32; Doc. 101] as to Plaintiffs' allegations of joint and several liability for their state tort law claims. The Court denies the ER's Motion to Strike [Doc. 101] as to Navajo Nation's punitive damages claims.
As noted above, both Plaintiffs have moved for leave to amend their complaints [Doc. 86; Doc. 141]. As to Plaintiffs' new allegations against ER, the Court does not find the allegations futile. And, as noted above, the Court already concluded that there is no prejudice to ER based on the date the motions for leave to amend were filed. [Doc. 118] The Court therefore concludes that the motions for leave to amend should be granted as to the new allegations relating to ER. The Court nonetheless continues to hold the Motions for Leave to Amend in abeyance pending decision on the remaining pending motions to dismiss. Nonetheless, all allegations as to joint and several liability for Plaintiffs' tort claims will be stricken.
The Court hereby
The Court
The Court
The Court
Gen. Elec. Co., 467 F.3d at 1251 n.24 (internal quotation marks and citation omitted).
5 Charles Alan Wright, Arthur R. Miller, Mary Kay Kane, A. Benjamin Spencer, Richard L. Marcus & Adam N. Steinman, Federal Practice & Procedure: Civil § 1277, at 643 (3d ed. 2016) (footnotes omitted). This Court beliefs that, as with the defense of laches, a Rule 12(b)(6) motion is generally not the most "useful vehicle" for addressing the government contractor defense given the factual issues the defense presents.
Section 9619 states that "a response action contractor with respect to any release or threatened release of a hazardous substance or pollutant or contaminant" is not liable under CERCLA "or under any other Federal law" for damages "which result[ ] from such release or threatened release," unless the release "is caused by conduct of the response action contractor which is negligent, grossly negligent, or which constitutes intentional misconduct." Section 9619(a)(1), (2). The provision also states:
Section 9619(c)(1). The law spells out specific circumstances under which the President may indemnify a response action contractor and the requirements of an indemnification agreement, including that the "response action contractor has made diligent efforts to obtain insurance coverage from non-Federal sources to cover such liability." Section 9619(c)(4)(b).
