By Jeffrey Karp, Senior Counsel, and Edward Mahaffey, Law Clerk
President Biden has made environmental justice a cornerstone of his administration. While all government departments and agencies have a role to play, the U.S. EPA has taken on the environmental justice mantle as reflected in the 1) new Administrator’s April 7th memo to agency staff setting forth the specifics of the EPA’s renewed commitment to environmental justice; and 2) substantial funding the President is seeking from Congress for EPA equity initiatives in his proposed 2022 budget. That budget proposal also identifies the Environment and Natural Resources Division within the Department of Justice (DOJ) to receive funds to engage in equity initiatives. To highlight this enhanced role, it even has been suggested that "Environmental Justice" be added to the DOJ Division’s name.
Thus, the positions of EPA and DOJ in Guam v. U.S. may seem incongruous; they seek to pin the entire $160 million landfill cleanup costs on the Territory of Guam, despite the U.S. Navy’s creation, operation and use of that dumpsite commencing in the 1940’s, including for the disposal of CERCLA hazardous substances. In this matter, it is not difficult to consider a narrative that EPA, in its regulatory role, pulled a "fast one" on Guam, and then used a legal technicality to let the Navy off of the hook from substantially contributing to the landfill cleanup costs.
After initially addressing the site under CERCLA, EPA switched gears and, instead, charged Guam with violating its NPDES permit issued under the Clean Water Act (CWA). In 2004, Guam entered into a CWA settlement agreement with EPA in which it agreed to pay a civil penalty, and close and cover the landfill.
Upon discovering that the landfill cleanup costs could exceed $160 million, Guam sued the Navy in 2017 seeking cost recovery under CERCLA Section 107(a) and, alternatively, contribution under CERCLA Section 113(f). The government countered that the 2004 CWA consent decree had resolved Guam’s liability for a CERCLA response action under Section 113(f)(3)(B), thus triggering the contribution claim as the sole remedy available to the Territory under CERCLA. Guam’s contribution claim, the government asserted, was time-barred by the three-year statute of limitations applicable to contribution actions. The government also moved to dismiss the CERCLA Section 107 cost recovery claim on the basis that the contribution claim, having been triggered, was Guam’s exclusive remedy under CERCLA.
The District Court disagreed with the government’s position, concluding that the 2004 CWA consent decree did not resolve Guam’s liability under CERCLA for the site cleanup, and did not qualify as a settlement within the meaning of CERCLA Section 113(f)(3)(B). Therefore, the court denied the government’s motion to dismiss, and ruled the Territory could pursue relief for its response costs under CERCLA Section 107 (with its six-year statute of limitations that had not yet expired).
On interlocutory appeal, the D.C. Circuit found that every federal court of appeals to have considered the question since the Supreme Court’s 2007 decision in U.S. v. Atlantic Research Corp. has said that a party who may bring a contribution action for certain expenses must use the contribution action, even if a cost recovery action would otherwise be available. Further, the court determined that the CWA settlement had "resolve[d] Guam’s liability for some . . . of a response action within the meaning of CERCLA section 113(f)(3)(B), triggering that section and precluding Guam from seeking cost recovery under section 107." Having determined that Guam’s cause of action for contribution expired in 2007, the D.C. Circuit reversed and remanded with instructions to dismiss Guam’s complaint.
This view is not uniformly shared by the circuit courts that have addressed the issue. Therefore, it is not surprising that the Supreme Court granted the Territory’s writ of certiorari to determine whether a settlement under a statute other than CERCLA can trigger a CERCLA 113(f)(3)(B) contribution claim, while precluding a cost recovery action under CERCLA Section 107.
In its brief submitted to the Court, DOJ maintained the same position as the prior administration, which if accepted by the Court would leave the Territory of Guam holding the bag on a $160 million landfill cleanup of hazardous substances disposed by the U.S. Navy. Twenty-six states and territories, worried about the consequences for cleanup efforts in their own jurisdictions, filed amicus briefs supporting Guam’s position. Guam’s counsel made similar points in yesterday’s oral argument, asserting that the government’s position would create an "unprecedented contribution right" that would harm states and territories.
The Court expressed varying views of the parties’ positions. Justice Sotomayor suggested that there was a "great inequity here" in the U.S. government’s retaining of the right to sue Guam while preventing Guam from suing it. Nevertheless, several of the justices expressed skepticism of Guam’s position as a matter of statutory interpretation. Justice Kagan asked whether Guam was "attempting to make lemonade out of lemons," and Justice Thomas and Justice Breyer both suggested that under Guam’s interpretation, the settlement did not seem to settle very much. There also were tough questions for the U.S., however, as when Justice Kavanaugh, echoing Guam’s counsel, asked whether the U.S.’s view turned CERCLA and EPA settlement agreements into "a trap for the unwary."
Nonetheless, the government’s continued pursuit of its position seems anomalous given the President’s environmental justice mandates placed on both EPA and DOJ.
Jeffrey Karp is the leader of the Environment, Energy and Natural Resources practice at Sullivan and Worcester LLP.
Edward Mahaffey is a law clerk at Sullivan, a Boston-based law firm.