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High Court’s Superfund Case Poised for Wide-Ranging Consequences

Feb. 23, 2021, 7:14 PM

The U.S. Supreme Court’s upcoming decision in a Superfund cost recovery case is likely to influence a range of environmental settlements beyond typical cleanup consent decrees, attorneys said.

The U.S. struck a deal with Guam under the Clean Water Act in 2004 requiring the territory to stop waste in the formerly Navy-owned Ordot Dump from leaching into adjacent rivers.

Guam ended up with a $160 million bill for the dump’s cleanup but waited too long to try to recover those costs from the federal government, the U.S. Court of Appeals for the D.C. Circuit said. That ruling is the crux of the appeal.

The Supreme Court’s decision could provide clarity on whether non-Superfund settlements, like the Clean Water Act deal here, can start the clock on Superfund contribution claims, said Noah Perch-Ahern, partner at Greenburg Glusker Fields Claman & Machtinger LLP in Los Angeles.

“The case highlights the potential pitfalls when settling major environmental cases,” he said in an email. “Practitioners need to be hypercautious when settling cleanup actions to avoid unforeseen outcomes.”

Millions in Bonds

The cleanup and closure of the Ordot Dump, the only municipal landfill on the island, was a “massive undertaking.” The territory took out $202 million in bonds to finance the work, it said in its Monday brief.

The case is a momentous one for Guam because of the amount of money involved, said John M. Barkett, partner at Shook Hardy & Bacon LLP in Miami. He expects the Supreme Court to be “a bit more forgiving” toward the territory than the lower court was.

“I think they’ll feel some empathy here for Guam, and they’ll be able to use the statutory language to turn that empathy into a reversal,” he said.

The territory’s 2017 complaint against the government, seeking cleanup cost recovery, was time-barred by a statute of limitations in Superfund law triggered by the 2004 agreement, the federal appeals court decided last year.

The Superfund statute of limitations appears to apply only to agreements under that law, but because of the appeals court’s ruling, it could affect agreements under other statutes as well, said Allison B. Rumsey, partner at Arnold & Porter Kaye Scholer LLP in Washington.

“This suggests, in fact, under any environmental settlement, you may need to go and see who else you can seek contribution from,” Rumsey said.

Guam said the appeals court erred in deciding the Superfund statute of limitations applies to non-Superfund settlements. Extending its application “would disrupt the remedial frameworks contained in other comprehensive environmental programs, both at the federal and state level,” Guam said in its brief.

Guam acquired the Ordot Dump from the Navy when its newly established civilian government took over in 1950. The territory continued to operate the landfill for the next 60 years, according to the Justice Department’s brief.

In its brief, the government said the consent decree resolved Guam’s liability for cleanup at the dump by ordering the territory to take responsibility.

Similar Petition Pending

Atlantic Richfield Co. brought its own petition before the court Monday in a dispute with Asarco LLC, hoping its similarities to the Guam case would warrant granting certiorari.

Asarco signed a consent decree with the EPA in 1998 to resolve the agency’s claims that the company violated the Clean Water Act and the Resource Conservation and Recovery Act at the East Helena Superfund site in Montana.

The company agreed to fund and carry out cleanup work at the site, where a lead smelter had operated for more than a century. In return, the agency agreed to forego further enforcement and drop its claims for injunctive relief and civil penalties, the petition said.

Asarco failed to follow through and filed for bankruptcy several years later. The company settled the agency’s claims by paying about $100 million into a trust.

In 2012, Asarco sought contributions from Atlantic Richfield under Superfund law, but Atlantic Richfield said the statute of limitations began on Asarco’s claim in 1998, when the consent decree was signed.

Atlantic Richfield asked the Supreme Court to hold its petition until it decides the Guam case, then grant certiorari and ask the lower court to reconsider its ruling.

The cases are Guam vs. U.S., U.S., No. 20-382, brief filed 2/22/21 and Atl. Richfield Co. v. Asarco LLC, U.S., No. 20-1142, 2/22/21.

To contact the reporter on this story: Sylvia Carignan in Washington at scarignan@bloombergindustry.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Patrick L. Gregory at pgregory@bloomberglaw.com

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