Welcome

Guam Brings Long-Running Superfund Debate to Supreme Court

April 23, 2021, 10:01 AM

Guam will take its fight to get reimbursed for environmental cleanup near a former U.S. Navy dump to the U.S. Supreme Court during oral arguments April 26.

The U.S. struck a deal with Guam under the Clean Water Act in 2004 that required the territory to stop the Ordot Dump, a former Navy-owned facility that was Guam’s only municipal landfill, from leaching waste into adjacent rivers. Guam ended up with a $160 million bill for the dump’s cleanup, but the U.S. Court of Appeals for the District of Columbia Circuit said it waited too long to try to recover those costs from the federal government.

Guam argues that it’s unfair for the territory to be left footing the bill while the U.S. government “gets off scot-free.” The Justice Department says Guam is misinterpreting the federal Superfund law and its time limits for recouping costs, a position maintained across the Trump and Biden administrations.

The case highlights the protracted battles spawned by cleanup projects, and the proceedings are being closely watched by states and companies including Halliburton Affiliates LLC and Atlantic Richfield Co., which say the outcome could affect their own Superfund cases.

There are about 160 high priority cleanup sites across the U.S. where the federal government shares at least partial responsibility for contamination, mostly due to historic military activity.

If the Supreme Court were to side with the lower court, a group of nearly 30 states said in a brief, the decision would “chill responsible parties’ willingness to cooperate and settle with state regulators, thereby thwarting states’ interest in promoting quick and cost-effective cleanup.”

Starting the Clock

A central question in the Supreme Court case is whether the 2004 Clean Water Act consent decree between Guam and the U.S. triggered a Superfund statute of limitations that barred the territory’s later attempts to get compensation, even though the settlement didn’t mention the federal Superfund law.

But the fact that the consent decree fell under the Clean Water Act and not the Superfund law shouldn’t matter, Lewis & Clark law professor Craig Johnston said. “The real question is, was somebody forcing you to deal with a problem that was essentially a response to a hazardous substance concern?” he said.

If so, he said, it triggers a Superfund provision that sets a three-year deadline to pursue what’s called a contribution claim: a way to recoup costs after a party has “resolved its liability,” according to the statute, for a hazardous waste response action through a settlement.

Guam says the Clean Water Act settlement doesn’t trigger that provision, and the territory instead attempted to defray costs by raising a so-called cost recovery claim, which falls under a different Superfund provision with a six-year statute of limitations.

That’s a compelling position, given the Environmental Protection Agency’s “very explicit” and repeated refusal to address the Ordot Dump under Superfund law, said Carolyn McIntosh, partner at Squire Patton Boggs LLP in Denver.

Guam’s argument “is more straightforward and fact intensive” than the federal government’s position, she said.

Recovery vs. Contribution

Superfund law allows parties who are potentially responsible for cleanup to seek a contribution of funds from others who are also potentially responsible. On the other hand, a party who performs the cleanup work and then wants to seek reimbursement—often the EPA—can file a recovery claim under the law.

The question of when parties should assert contribution claims versus cost recovery claims had somewhat stabilized in case law over the past few years, with responsible parties mostly limited to filing contribution claims, said Benjamin S. Lippard, partner at Vinson & Elkins LLP’s Washington office.

“It’s a really, really complicated issue because the statute fundamentally is just ambiguous on some of these key points,” Lippard said, referring to the application of statutes of limitations.

The complexity of Superfund law and the financial toll involved in Guam’s case make it a “highly emotional battle,” Lewis & Clark’s Johnston said.

“The whole thing about statutes of limitation is they can bar meritorious claims because the meritorious claim is untimely,” he said. “From a fairness perspective, one wants to root for Guam here, but that’s true every time somebody makes a mistake with regard to a statute of limitation.”

Multimillion-Dollar Project

Multiple companies are facing related questions in their own Superfund cases. Halliburton Affiliates and more than a dozen other companies in March petitioned the Supreme Court to resolve their California Superfund site case in line with the eventual outcome in the Guam case.

Atlantic Richfield filed a similar petition in February in connection with a Superfund site in Montana. In both cases, parties disagree about whether previous settlements triggered the three-year statute of limitations for contribution claims.

Cleanup at the Ordot Dump, and its 2011 closure, was a “massive undertaking,” requiring more than $200 million in bonds to finance the work, the territory said in a brief.

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

The Environmental Protection Agency added the Ordot Dump to its list of Superfund sites in 1983.

Latham & Watkins LLP is representing Guam. Oral arguments are April 26 at 11 a.m.

The case is Guam v. United States, U.S., No. 20-382, oral arguments 4/26/21.

To contact the reporters on this story: Sylvia Carignan in Washington at scarignan@bloombergindustry.com; Ellen M. Gilmer in Washington at egilmer@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Seth Stern at sstern@bloomberglaw.com

To read more articles log in.

Learn more about a Bloomberg Law subscription.