Union Pacific RR Co. v. Reilly Industries ( 2000 )

FOR THE EIGHTH CIRCUIT
United States Court of Appeals
___________
Nos. 99-1456/1871
___________
Union Pacific Railroad Company, *
*
Appellant, *
* Appeal from the United States
v. * District Court for the
* District of Minnesota
Reilly Industries, Inc., *
*
Appellee. *
___________
Submitted: October 18, 1999
Filed: June 14, 2000
___________
Before McMILLIAN, HANSEN, and MORRIS SHEPPARD ARNOLD,
Circuit Judges.
___________
McMILLIAN, Circuit Judge.
Union Pacific Railroad Company (UP) appeals from a final judgment entered in
the United States District Court1 for the District of Minnesota in favor of Reilly
Industries, Inc. (Reilly), on UP's claims for recovery of environmental cleanup costs or
contribution under the Comprehensive Environmental Response, Compensation, and
Liability Act (CERCLA), 42 U.S.C. § 9601(a) et seq., the Minnesota Environmental
1
The Honorable David S. Doty, United States District Judge for the District of
Minnesota.
Response and Liability Act (MERLA), Minn. Stat. § 115B.01 et seq., and Minnesota
common law. See Union Pacific R.R. Co. v. Reilly Indus., Inc., No. 4-96-660
(D. Minn. Dec. 28, 1998) (UP v. Reilly). UP also appeals from a denial of a motion
for post-judgment relief filed pursuant to Fed. R. Civ. P. 60(b). See id. (Feb. 12, 1999).
For reversal, UP argues that the district court erred in: (1) dismissing its CERCLA
claims for failure to substantially comply with the National Contingency Plan (NCP);
(2) dismissing its MERLA claims on statute of limitations grounds; (3) concluding that
UP failed to prove its common law indemnity and contribution claims; (4) denying its
Fed. R. Civ. P. 60(b) motion for relief from the judgment, and (5) determining the
amount of UP's reasonable and necessary response costs and Reilly's portion of the
responsibility. For the reasons discussed below, we affirm.
Jurisdiction was proper in the district court based upon 28 U.S.C. §§ 1331, 1332.
Jurisdiction is proper in this court based upon 28 U.S.C. § 1291. The notices of appeal
were timely filed pursuant to Fed. R. App. P. 4(a).
Background
The following is a brief summary of the undisputed facts as set forth in greater
detail in the district court's summary judgment order dated November 3, 1997. See id.,
slip op. at 1-12 (Nov. 3, 1997). From 1903 until approximately 1919, a corporate
predecessor of Reilly, Republic Creosoting Company, operated a creosoting plant on
a five-acre parcel of land in Minneapolis, Minnesota, which was located within a 23.8-
acre tract of land owned and operated as a railroad switching yard by a corporate
predecessor of UP, Chicago Great Western Railway Company. (Hereinafter, "Reilly"
will be used to refer to Republic Creosoting Company and "UP" will be used to refer
to Chicago Great Western Railway Company and other corporate predecessors.) Reilly
leased the five-acre parcel from UP. Reilly's on-site operations included treating wood
products such as paving blocks and railroad ties with creosote, which contains
polynuclear aromatic hydrocarbons (PAHs).
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In 1987, the Minneapolis Community Development Agency (MCDA) entered
into an agreement with UP to conduct tests on the 23.8-acre tract to assess possible
environmental concerns which might arise if UP were to sell the property. Barr
Engineering was hired to conduct a preliminary environmental investigation, and it
produced a document referred to as the "Barr Report."
In 1990, UP engaged in negotiations to sell the 23.8-acre tract to the University
of Minnesota (the University). At issue in the negotiations was the anticipated need to
clean up the soil and groundwater contamination. UP hired Dahl & Associates, Inc.,
(Dahl), to investigate the contamination further. Dahl researched the historical
ownership and uses of the property, conducted limited subsurface sampling and
analyses, and issued a "Phase I and Phase II Property Evaluation," dated June 18,
1990. According to Dahl, the soil and groundwater were contaminated with PAHs at
or near the five-acre parcel formerly leased by Reilly (hereinafter "the UP site"). Dahl
conducted additional sampling and analyses and issued a "Phase II Property
Evaluation," dated August 1, 1990, which purported to document the contamination
and recommended enrollment of the UP site in the Minnesota Pollution Control Agency
(the MPCA)'s Voluntary Investigation and Cleanup (VIC) Program.
In a letter dated August 17, 1990, UP informed Reilly's general counsel of the
results of Dahl's investigations.
Meanwhile, in July 1990, the University agreed to purchase the 23.8-acre tract
from UP. The sale of the property occurred in October 1990, and, as part of the sale,
UP agreed to undertake the environmental remediation.
UP directed Dahl to consider the known remediation options (which included
bioremediation, thermal desorption, incineration, and landfilling) and to recommend a
course of action. Dahl initially recommended using bioremediation, but changed its
recommendation after the MPCA, in February 1993, informed UP and Dahl that the
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PAH cleanup goal would be in the range of 10 to 100 parts per million (ppm). That
range was lower than Dahl's original expectation. UP and Dahl then decided to focus
on thermal desorption (also referred to as "high temperature thermal desorption" or
"HTTD"), which was believed to be more effective than bioremediation. UP selected
Advanced Soil Technologies, Inc. (AST), to conduct the thermal desorption cleanup
process. In May 1994, the MPCA formally established a cleanup goal for the UP site
of 10 ppm PAH.
On August 1, 1994, a public meeting was held at which MPCA informed local
residents of clean up projects at several locations, including the UP site. The notice for
the meeting stated that a fact sheet would be distributed. A fact sheet was distributed
at the meeting, and it stated that the UP site was required to meet the cleanup standards
for residential property. It further stated that several options for remediating the UP
site had been considered, and that "[t]he only remedy that results in complete
destruction of PAHs in a reasonable amount of time is high-temperature thermal
desorption." Slip op. at 9 (Nov. 3, 1997) (quoting fact sheet). A spokesperson for the
MPCA described the thermal desorption process and stated that it had been selected
from among several alternatives.
Following MPCA's verbal approval of Dahl's proposed thermal desorption plan,
soil excavation at the UP site began in November 1994. On November 30, 1994, a
second public meeting was held. The notice of that meeting stated:
The purpose of this follow-up meeting is to discuss and receive
comments on the specifics of the cleanup action proposed for the former
CN&W property. A member of the [MPCA] and the consultant who will
conduct the cleanup will be available at the meeting to answers questions.
A Remedial Action Workplan (Workplan) has been submitted to
the [MPCA]. The full administrative record on this site and the Workplan
is available for review at the Minnesota Pollution Control Agency . . . .
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Please provide any written comments on the Workplan . . . by
December 1, 1994.
Id. at 10 (quoting public notice).
The public was informed at the November 30 meeting that MPCA had verbally
approved the thermal desorption plan, that most of the soil had been excavated, and
that the comment period regarding the cleanup action would end at 10 a.m. on
December 1, 1994 (the following day).
The soil excavation was completed on December 16, 1994, and thermal
treatment of the soil began on December 28, 1994. On January 13, 1995, MPCA gave
formal written approval of the thermal desorption treatment, which was concluded on
January 27, 1995. On February 7, 1995, MPCA approved the backfilling of the treated
soil.
On March 30, 1994, Dahl submitted a Remedial Action Implementation Report,
documenting the remedial action, to the MPCA. MPCA thereafter confirmed that the
cleanup goal had been achieved and approved Dahl's Remedial Action Implementation
Report on September 18, 1995.
In February 1995, UP notified Reilly that its remediation costs had totaled
$1,025,518, excluding attorneys' fees and interest.
UP filed this action on December 22, 1995, alleging that Reilly is liable for some
or all of UP's response costs under CERCLA, 42 U.S.C. §§ 9607(a), 9613(f). In
addition, UP brought a MERLA claim and claims of waste, nuisance, trespass, strict
liability, indemnity, and contribution under Minnesota common law. The parties filed
cross-motions for summary judgment. The district court granted partial summary
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judgment for Reilly and dismissed UP's CERCLA claims upon determining that UP had
failed to substantially comply with NCP requirements that apply to remedial actions.2
See UP v. Reilly, slip op. at 14-24, 25 (Nov. 3, 1997).3 In a later order, the district
court denied the parties' cross-motions for summary judgment on the state law claims,
but held that UP’s MERLA claim and certain state common law claims would be
subject to a six-year statutory limitations period commencing on the date that UP knew
or should have known the property had been damaged. See id. (Feb. 9, 1998).
The case went to trial. The district court submitted all of the remaining claims
to the jury, except for the MERLA claim and the indemnity and contribution claims
which were equitable in nature. The district court used a special verdict form which
required the jury to decide liability on the appropriate state law claims and to resolve
factual disputes underlying the statute of limitations issue. The jury's responses on the
special verdict form rendered UP's state law claims, except for the indemnity and
contribution claims, barred by the statute of limitations. See id. at 5-6 (Dec. 28, 1998)
(post-trial order). On the indemnity claim, the district court held that UP had failed to
meet its burden of proof because it had not established an express or implied legal
relationship which rendered Reilly entirely responsible for UP's expenditures. See id.
at 11. On the contribution claim, the district court held that equitable principles and
2
The district court noted that it is undisputed in the present case that the response
action at the UP site was a "remedial," as opposed to a "removal action," which entails
less stringent regulatory oversight. See Union Pacific R.R. Co. v. Reilly Indus., Inc.,
No. 4-96-660, slip op. at 15 n.1 (D. Minn. Nov. 3, 1997) (UP v. Reilly; accord County
Line Inv. Co. v. Tinney, 933 F.2d 1508, 1512 n.6 (10th Cir. 1991) (per curiam)
(discussing distinction between remedial actions and removal actions).
3
In the same order, the district court dismissed without prejudice UP's state law
claims, see UP v. Reilly, slip op. at 24, 25 (Nov. 3, 1997), but subsequently the district
court reinstated those claims upon determining that it could exercise jurisdiction based
on diversity of citizenship. See id. (Jan. 12, 1998) (order granting motion for
reconsideration).
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public policy mandated judgment for Reilly, especially in light of UP's unexcused delay
in bringing its claim. See id. at 13-15. Judgment was entered for Reilly, and UP
appealed.
UP subsequently sought relief from the judgment in the district court pursuant
to Fed. R. Civ. P. 60(b) on the ground that the Eighth Circuit's then-recent decision in
Minnesota v. Kahlman W. Abrams Metals, Inc., 155 F.3d 1019 (8th Cir. 1998)
(Abrams Metals), clarified applicable CERCLA standards and warranted reinstatement
of UP's CERCLA claims. The district court denied UP's post-judgment motion,
explaining that it no longer had jurisdiction over the case and, in any event, that Abrams
Metals would not apply to the factual circumstances of the present case. See UP v.
Reilly, slip op. at 2 (Feb. 12, 1999). UP filed a second appeal (from the denial of post-
judgment relief), and the two appeals were consolidated in this court.
Discussion
CERCLA claims
UP first argues on appeal that the district court erred in granting summary
judgment for Reilly on its CERCLA claims. The district court held that UP failed as
a matter of law to substantially comply with the NCP because, under the undisputed
facts of the present case, (1) UP did not provide a meaningful opportunity for public
participation and comment in the selection of the response action in accordance with
40 C.F.R. § 300.430(f)(2),(3), and (6), as set forth in 40 C.F.R. § 300.700(c)(6), and
(2) UP failed to conduct a remedial investigation and feasibility study (RI/FS) before
selecting a remedy in accordance with 40 C.F.R. § 300.430(d), (e), as set forth in 40
C.F.R. § 300.700(c)(5)(viii). See UP v. Reilly, slip op. at 16-23 (Nov. 3, 1997).
We review a grant of summary judgment de novo. The question before the
district court, and this court on appeal, is whether the record, when viewed in the light
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most favorable to the non-moving party, shows that there is no genuine issue as to any
material fact and that the moving party is entitled to judgment as a matter of law. See
Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 249-50 (1986). Where the unresolved issues are
primarily legal rather than factual, summary judgment is particularly appropriate. Crain
v. Board of Police Comm'rs, 920 F.2d 1402, 1405-06 (8th Cir. 1990).
The NCP, more fully known as the National Oil and Hazardous Substances
Pollution Contingency Plan, see 40 C.F.R., Part 300, is comprised of EPA regulations
setting forth procedures and standards for responding to releases of hazardous
substances. See, e.g., Abrams Metals, 155 F.3d at 1024. The NCP is designed to
promote cost-effective measures to protect public health and the environment. See id.
Under CERCLA, a private party cannot recover its reasonable and necessary response
costs from a responsible party unless it has complied with the NCP. See 42 U.S.C.
§ 9607(a)(4)(B) (responsible parties shall be liable for any necessary costs of response
incurred by any other person consistent with the NCP); Farmland Indus., Inc. v.
Morrison-Quirk Grain Corp., 54 F.3d 478, 481 (8th Cir. 1995) ("NCP compliance is
a prerequisite for recovery of response costs under CERCLA."). In a 1990 revision of
the NCP regulations, the EPA made clear that "substantial" compliance with the NCP
is the applicable standard. See Bedford Affiliates v. Sills, 156 F.3d 416, 427 (2d Cir.
1998) (Bedford Affiliates); 55 Fed. Reg. 8666, 8792-94 (Mar. 8, 1990). Under this
standard, "an 'immaterial or insubstantial' deviation from the [NCP] will no longer cause
the cleanup to be deemed inconsistent." Bedford Affiliates, 156 F.3d at 427 (citing 40
C.F.R. § 300.700(c)(4)). Whether there has been substantial compliance is a mixed
question law and fact, subject to de novo review. See id.
Failure to provide a meaningful opportunity for public participation and comment
in the selection of a remedial action at a particular cleanup site is inconsistent with the
NCP. See 40 C.F.R. § 300.700(c)(6) ("private parties undertaking response actions
should provide an opportunity for public comment concerning the selection of the
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response action"); accord County Line Inv. Co. v. Tinney, 933 F.2d 1508, 1514 (10th
Cir. 1991) (Tinney) (the NCP requires "at a minimum, that a private party attempting
to act 'consistent with the national contingency plan' provide an opportunity for public
comment on its selection of the response action for the site"). The federal regulations
require, among other things, that the lead agency, after properly providing public notice
of a proposed remedial plan and making the plan publicly available for review,
"[p]rovide a reasonable opportunity not less than 30 calendar days, for submission of
written and oral comments on the proposed plan and the supporting analysis and
information located in the information repository, including the RI/FS." 40 C.F.R.
§ 300.430(f)(3)(i)(C). Before that can occur, the agency must "[m]ake the proposed
plan and supporting analysis and information available in the administrative record."
Id. § 300.430(f)(3)(i)(B). Moreover, the 30-day comment period is among the
prerequisites for the creation of a record of decision (ROD), which the lead agency
must make "available for public inspection and copying at or near the facility at issue
prior to the commencement of any remedial action." Id. § 300.430(f)(6)(ii).
In challenging the district court's determination that UP failed as a matter of law
to substantially comply with the NCP's public participation and comment provisions,
UP first emphasizes that, under the applicable 1990 version of the NCP, "immaterial
or insubstantial deviations" are permitted. UP also emphasizes that the public comment
provision of the NCP does not use mandatory language; it states that "[private parties
undertaking response actions should provide an opportunity for public comment
concerning the selection of the response." 40 C.F.R. § 300.700(c)(6) (emphasis
added). These provisions, UP argues, have been interpreted to invoke a "case-by-case
balancing approach that evaluates clean-up efforts as a whole." Brief for Appellant at
21 (quoting Bedford Affiliates, 156 F.3d at 428). In the present case, UP contends, the
undisputed facts show that the steps it took to provide an opportunity for public
participation and comment were substantially consistent with the NCP.
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UP highlights the undisputed facts that two public meetings were held, that
notice of the meetings was given in advance through widely distributed local
newspapers and by mail to local residents and public officials, that the remedial
alternatives including thermal desorption were specifically discussed at the meetings,
that transcripts of both meetings were created and made publicly available, that an
opportunity for written comments was provided, and that no objections to the proposed
remedy were ever received at the meetings or in writing. As to the district court's
conclusion that thermal desorption was a forgone conclusion by the time the first
meeting was held, UP argues that the contract it had with Dahl specifically allowed UP
to unilaterally cancel pending approval of the thermal desorption remedy by the MPCA
and that MPCA was not even aware of the Dahl contract before it approved UP's
remedial plan. UP admits that soil excavation had already began by the time the second
meeting occurred, but discounts the significance of that fact. UP notes that the first
meeting had already occurred some three months earlier. Moreover, UP argues,
because soil excavation was consistent with landfilling and bioremediation as well as
thermal desorption, thermal desorption was not necessarily the final remedial selection
at the time soil excavation occurred.
UP alternatively argues that the MPCA's involvement at every stage of the
remedy selection process satisfied the NCP's public participation and comment
requirements because state agency involvement in the selection of a remedy may
"substitute" for public participation and comment. See Brief for Appellant at 28-
31(citing, e.g., Public Serv. Co. v. Gates Rubber Co., 175 F.3d 1177 (10th Cir. 1999);
Bedford Affiliates, 156 F.3d at 428; General Elec. Co. v. Litton Bus. Sys., Inc., 715 F.
Supp. 949 (W.D. Mo. 1989), aff'd, 920 F.2d 1415 (8th Cir. 1990) (Litton), cert. denied,
499 U.S. 937 (1991)). UP argues that this court's recent decision in Abrams Metals
mandates such a conclusion as a matter of law. UP also suggests that Reilly cannot
show prejudice resulting from UP's alleged lack of substantial compliance with the
public participation and comment requirements because UP informed Reilly before the
August 1, 1994, meeting that it considered Reilly a responsible party and Reilly was,
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at all relevant times, aware of and able to participate in the remedy selection process.
In sum, UP argues that it substantially complied with the public participation and
comment provisions of the NCP as a matter of law. We disagree.
While UP's noncompliance with the NCP's public participation and comment
provisions was not as blatant as that of the plaintiff in Tinney,4 cited by Reilly, we
nevertheless agree with the district court's determination that UP failed to substantially
comply, as a matter of law. To begin, the selection of the thermal desorption remedy
was – for purposes of allowing meaningful public participation and comment – a
foregone conclusion prior to the meeting on August 1, 1994. We agree with the district
court's conclusion that there is no genuine dispute as to that fact.
The public was informed at the August 1 meeting that bioremediation had been
considered and rejected, recycling had been considered and rejected, landfilling had
been considered and rejected, but – in contrast – thermal desorption had not been
rejected and, in fact, plans were already in place to use thermal desorption to address
the PAH contamination at the UP site. See Appellant's Appendix (Vol. 4) at 1126-33
(transcript of public meeting on August 1, 1994).5 Although the public was given
4
See County Line Inv. Co. v. Tinney, 933 F.2d at 1514-15 ("It is undisputed that
the New Owners provided no . . . opportunity for public comment on their response
action at the Landfill. Accordingly, under . . . the substantial compliance standard
stated in the 1990 NCP, the costs incurred by [the] New Owners in closing the Landfill
were not consistent with the NCP and hence are not recoverable.") (footnote omitted).
5
Lynn Grigor, a representative of the VIC program, discussed the remediation
options that had been considered. With respect to bioremediation, she said:
We looked at using the local microorganisms to complete the
cleanup, but . . . we found that it would just take too long a period of
time. . . . We couldn't use bioremediation.
With respect to recycling, she said:
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an opportunity to ask questions about the nature and effects of the thermal desorption
We also looked at re-using the material in the creosote soils in the
asphalt, in building materials; say for a parking lot. . . . [W]e decided it
just wasn't reasonable to use it in asphalt.
With respect to landfilling, she said:
The third option, which we really didn't like, was to take this
material to a landfill. . . . [But,] [w]hat we wanted here was a permanent
remedy where the railroad would do a cleanup and then walk away from
the property and have the property ready for development and not have
to worry about future cleanup of a landfill.
With respect to thermal desorption, she said:
We heard about a system called, "Thermal desorption with an
afterburner" and we actually do have a unit, which as of mid-August, we
hope to have a permit for use in Minnesota.
....
We hope to have the desorption unit here sometime in September
and we hope to do a quick run-through of the soil. It should take about
two weeks, we figure, to get the soil all cleaned up and once this soil is
cleaned up; the unit, which is mobile, will go to another site.
So we're only going to be cleaning up the soils from this particular
piece of property, at this location, and then [the thermal desorption unit]
it will go on to another location.
Appellant's Appendix (Vol. 4) at 1126-33 (transcript of Aug. 1, 1994, public meeting);
see also id. at 1259-60, 1270-71 (transcript of Nov. 30, 1994, public meeting)
(similarly stating that bioremediation was considered and rejected and that "[w]e were
quite happy when AST came along with a technology that would work, and we've [the
MPCA] kind of been working with them [AST] quite a bit to see them through the
process") (statement of Jerry Stahnke, representing the MPCA).
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process, there was no indication that the selection of the response action was open to
discussion or change. On October 25, 1994, Dahl submitted to the MPCA its written
remedial action work plan for conducting the thermal desorption cleanup at the site
("the work plan"). The MPCA verbally approved the work plan on November 14,
1994. Soil excavation also began in November 1994. At the second meeting on
November 30, 1994, the public was informed that the work plan was publicly available.
However, the period for submitting written or oral comments lasted only until the next
day, December 1, 1994. See id. at 1280-81 (statement at the meeting that the comment
period was open "until tomorrow"). It is therefore beyond genuine factual dispute that
the public was not given "a reasonable opportunity, not less than 30 calendar days, for
submission of written and oral comments on the proposed plan and the supporting
analysis and information located in the information repository." 40 C.F.R.
§ 300.430(f)(3).6 Furthermore, it is undisputed that soil excavation began in November
1994. Soil excavation is an early and essential step in the thermal desorption process.
See Appellant's Appendix (Vol. 4) at 1261 (statement of Bob Wills, representative of
AST, at November 30, 1994, public meeting, describing thermal desorption process).
Therefore, notwithstanding UP's argument that soil excavation was also consistent with
landfilling and bioremediation and thus not indicative that thermal desorption was at
6
The notice announcing the meeting on November 30, 1994, stated:
A Remedial Action Workplan (Workplan) has been submitted to
the [MPCA]. The full administrative record on this site and the Workplan
is available for review at the Minnesota Pollution Control Agency . . .
Please provide any written comments on the Workplan . . . . by
December 1, 1994.
UP v. Reilly, slip op. at 10 (Nov. 3, 1997) (quoting public notice (contained in
Appellant's Appendix (Vol. 4) at 1252)). The record does not clearly reveal the date
on which that notice was publicized; however, UP makes no allegation, and we discern
no factual dispute, that this notice was publicized at least 30 days before the December
1, 1994, deadline for submission of written and oral comments.
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that time the final remedial selection, the soil excavation was part of the thermal
desorption remedial action. Given the facts that the November 30 meeting had not
even occurred and the period for public comment had not even been completed at that
time, it is beyond factual dispute that UP commenced the remedial action before the
MPCA had the opportunity to make the record of decision, as defined under the NCP,
available for public inspection and copying at or near the UP site, in violation of the
NCP. See 40 C.F.R. § 300.430(f)(6)(ii). In sum, we agree with the district court that
UP failed as a matter of law to substantially comply with the NCP's public participation
and comment requirements in the selection of the remedial action.
We now turn to UP's argument that MPCA's involvement in the remediation
selection process effectively fulfilled UP's responsibility to provide an opportunity for
meaningful public participation and comment. To begin, we do not quarrel with the
Second Circuit's observation that, "[w]here a state agency responsible for overseeing
remediation of hazardous wastes gives comprehensive input, and the private parties
involved act pursuant to those instructions, the state participation may fulfill the public
participation requirement." Bedford Affiliates, 156 F.3d at 428 (emphasis added).
However, critical factual differences between Bedford Affiliates and the case at bar
warrant different outcomes. Particularly, in Bedford Affiliates, id. at 429, "none of the
parties to the action dispute[d] the quality or cost of [the plaintiff's] cleanup efforts."
Thus, because the defendant's primary interest in demanding enforcement of the public
participation and comment requirements would presumably have been to allow its own
participation and input in the quality-versus-cost analysis, the Second Circuit reasoned
that "to preclude [the plaintiff's] recovery solely because of the lack of public comment
would ignore the equitable component that Congress and the EPA built into the cleanup
costs decisions." Id. In other words, the Second Circuit recognized that it would be
inconsistent with the equitable underpinnings of CERCLA § 113(f)(1), 42 U.S.C.
§ 9613(f)(1), to hold as a matter of law that a plaintiff cannot seek contribution from
another potentially responsible person (PRP) based on noncompliance with the public
participation and comment provisions of the NCP where the responsible state agency
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has been "extensive[ly] involv[ed]" in the formulation and execution of the response
action and the PRP does not dispute the quality or cost of the remedy. In the present
case, by contrast, Reilly has consistently asserted in the litigation that UP incurred
unnecessary response costs under CERCLA, 42 U.S.C. § 9607(a)(4). That fact,
combined with UP's lack of substantial compliance with the NCP's public participation
and comment requirements, precludes us from holding that MPCA's involvement in the
selection and execution of the remedy excuses UP's noncompliance. Cf. Litton, 920
F.2d 1415 (in removal action entailing extensive state and federal agency involvement,
holding that private party could recover response costs from responsible party because
the plaintiff's conduct was consistent with the applicable NCP guidelines governing
removal actions).
Moreover, contrary to UP's argument, our holding today comports with Abrams
Metals. In Abrams Metals, the cost recovery action was brought by the state, not a
private party as in the present case. In Abrams Metals, this court observed:
If the State establishes that it incurred response costs to remedy a
release or threatened release of hazardous substances from a facility, and
that defendants are responsible persons, then defendants have the burden
of proving that the costs incurred were inconsistent with the NCP, an
issue that is judicially reviewed under the arbitrary and capricious
standard of review for agency action.
155 F.3d at 1023; see 42 U.S.C. § 9607(a)(4) (to recover response costs from a
responsible party, a private party must show that it incurred "necessary costs of
response . . . consistent with the [NCP]", whereas a state may recover "all costs of
removal or remedial action . . . not inconsistent with the [NCP]"). In Abrams Metals,
155 F.3d at 1025, this court held that – although the state was not precluded from
recovering all costs under CERCLA – the state was precluded from recovering those
costs which the defendants had proven were the result of arbitrary and capricious
noncompliance with the NCP. Accord Washington State Dep't of Transp. v.
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Washington Natural Gas Co., 59 F.3d 793, 800-05 (9th Cir. 1995) (state department
of transportation seeking response costs under CERCLA from private parties is
considered the state for purposes of affording it the presumption of consistency with
the NCP, but could not recover response costs because its "high degree of
inconsistency with the requirements set forth in the NCP" was "arbitrary and
capricious"). Thus, although "state participation may fulfill the public participation
requirement," Bedford Affiliates, 156 F.3d at 428 (emphasis added), Abrams Metals
clarifies that extensive state involvement is not a per se substitute for substantial
compliance with the public participation and comment requirements of the NCP.
In sum, we hold that the district court did not err in dismissing UP's CERCLA
claims on summary judgment because UP failed as a matter of law to substantially
comply with the NCP's public participation and comments requirements.7
MERLA claim
UP next argues, with respect to its MERLA claim, that the district court
erroneously held that the applicable six-year statute of limitations period began to run
on the date UP knew or should have known about the creosote contamination, rather
than the date upon which UP first incurred response costs. UP argues that, because
MERLA specifically states that a claim for personal injury accrues according to the
discovery rule (i.e., when the plaintiff knew or should have known of the injury) but is
silent as to when a claim for property damage accrues, the state legislature must have
intended not to apply the discovery rule to claims for property damage. UP relies on
statutory construction and policy arguments to urge us to hold that its claim accrued
7
Because we dispose of the CERCLA claims on the basis of UP's failure as a
matter of law to substantially comply with the NCP's public participation and comment
requirements, we decline to address the district court's additional holding that UP failed
as a matter of law to substantially comply with the NCP's RI/FS requirements.
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once response costs were incurred. Reilly, on the other hand, maintains that a MERLA
claim for property damage accrues "when the act occurs and some damage results."
Brief for Appellee at 42. While in some instances the injurious act may precede the
plaintiff’s actual or constructive knowledge of the resulting damage, Reilly contends
that, in the present case, it is undisputed that the contamination and UP’s knowledge
thereof were "concurrent." See id. at 41 n.20.
In its order dated February 9, 1998, the district court held that UP’s state
common law claims and its MERLA claim were governed by the six-year statute of
limitations set forth in Minn. Stat. § 541.05 subd. 1, and that, "[b]ecause [§ 541.05
subd. 1] does not provide for an accrual date for the recovery of response costs, . . . the
same accrual date applies under MERLA as provided for under Minnesota common
law for damages to real property." UP v. Reilly, slip op. at 10 (Feb. 9, 1998). The
district court noted that under the common law, accrual occurs when the plaintiff
knows or reasonably should know of the damage to property. See id. In a later order,
dated May 26, 1998, the district court considered for the first time the relevance of 42
U.S.C. § 9658,8 in the context of denying a motion by Reilly for reconsideration of its
earlier decision regarding the applicable accrual date. The district court reasoned:
8
Section 9658 provides in relevant part:
In the case of any action brought under State law for personal
injury, or property damages, which are caused or contributed to by
exposure to any hazardous substance, or pollutant or contaminant,
released into the environment from a facility, if the applicable limitations
period for such action (as specified in the State statute of limitations or
under common law) provides a commencement date which is earlier than
the federally required commencement date, such period shall commence
at the federally required commencement date in lieu of the date specified
in such State statute.
42 U.S.C. § 9658(a)(1).
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"CERCLA preempts Minnesota's statute of limitations for hazardous substance cases
and imposes the federally required commencement date: the date that [UP] knew or
reasonably should have known of the contamination." See id. at 16-20 (May 26, 1998).
We essentially agree.
The “federally required commencement date” is “the date the
plaintiff knew (or reasonably should have known)” that the hazardous
substance caused or contributed to the personal injury or property
damages. 42 U.S.C. § 9658(b)(4)(A). Practically speaking, CERCLA
essentially preempts state statutes of limitations if those state law claims
are based upon exposure to hazardous substances released into the
environment and the applicable limitations period provides for an earlier
commencement date than federal law.
Tower Asphalt, Inc. v. Determan Welding & Tank Serv., 530 N.W.2d 872, 875 (Minn.
Ct. App. 1995) (citing cases).
However, under § 9658, the federally required commencement date arguably
yields to state law if the commencement date under the applicable state statute of
limitations is later than that federally required commencement date. In other words,
if MERLA’s limitations period commences when response costs are first incurred, as
UP now contends, then that commencement date arguably should govern in the present
case according to the terms of § 9658. We must therefore determine when the MERLA
limitations period commences under Minnesota law.
We decide questions of state law de novo. See Salve Regina College v. Russell,
499 U.S. 225, 231 (1991). Our interpretation of state law must comport with pertinent
decisions of the Minnesota Supreme Court, but, if none are available, we look to
related state court precedents, analogous decisions, considered dicta, and other reliable
sources in an effort to determine what the Minnesota Supreme Court's decision would
be. See Lindsay Mfg. Co. v. Hartford Accid. & Indem. Co., 118 F.3d 1263, 1276-68
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(8th Cir. 1997). In the present case, we conclude, as did the district court, that the
Minnesota Supreme Court would apply the common law discovery rule for determining
when to commence the six-year statutory limitations period for a MERLA claim. See
UP v. Reilly, slip op. at 9-10 (Feb. 9, 1998) (citing Minnesota Mining & Mfg. Co. v.
Travelers Indem. Co., 457 N.W.2d 175, 183-84 (Minn. 1990) (“The advent of MERLA
and other environmental statutes have merely changed the form of the liability . . . not
the nature of that liability. . . . The MERLA remedies merely update the old statutory
and common law liabilities . . . . The MERLA clean up requirement did not expand the
common law remedy for pollution of property . . .”)). Therefore, because the state law
commencement date is the same as the federally required commencement date, the six-
year limitations period for UP's MERLA claim commenced when UP knew or
reasonably should have known of the creosote contamination at the UP site. See id. at
18-19. In accordance with the well-supported factual finding that UP knew or
reasonably should have known about the creosote contamination more than six years
before it commenced this litigation,9 we hold that the district court did not err in
dismissing UP's MERLA claim as barred by the statute of limitations.
9
The jury was required to make an advisory finding as to when UP knew or
should have known the property was damaged by creosote. In response to an
interrogatory, the jury found that UP knew or should have known about the creosote
contamination prior to December 22, 1988, more than six years prior to the
commencement of this action.
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Indemnity and contribution claims
Finally, UP argues that the district court erred in entering judgment for Reilly on
its common law claims seeking indemnification or contribution. See UP v. Reilly, slip
op. at 9-15 (Dec. 28, 1998). UP maintains that the district court's disposition of these
equitable claims is inconsistent with Minnesota law and contrary to principles of equity,
justice, and sound public policy. We disagree, and affirm the district court on the
indemnity and contribution claims for the reasons set forth in the district court's
opinion. See id.
As the district court explained, UP's indemnity claim fails because "[a] party
seeking indemnity must show an express contractual relationship or implied legal duty
that requires one party to reimburse the other entirely." Id. at 10 (citing Hendrickson
v. Minnesota Power & Light Co., 104 N.W.2d 843, 847 (Minn. 1960), overruled in
part by Tolbert v. Gerber Indus., Inc., 255 N.W.2d 362, 367-68 & n.11 (Minn.
1977)10; Blomgren v. Marshall Management Servs., Inc., 483 N.W.2d 504, 506 (Minn.
Ct. App. 1992)). In the present case,
[UP] has not proven any express or implied legal relationship that
would require Reilly to be wholly responsible for [UP's] expenditures. In
fact, the court has specifically found that both Reilly and [UP] are
responsible for the reasonable response costs incurred by [UP].
Id. at 11.
10
Hendrickson v. Minnesota Power & Light Co., 104 N.W.2d 843, 847 (Minn.
1960) (Hendrickson), was overruled in part by Tolbert v. Gerber Indus., Inc., 255
N.W.2d 362, 367-68 & n.11 (Minn. 1977) (Tolbert). However, Tolbert did not affect
the above-quoted general statement regarding indemnity liability for which the district
court cited Hendrickson as authority. See Blomgren v. Marshall Management Servs.,
Inc., 483 N.W.2d 504, 506& n.3 (Minn. Ct. App. 1992).
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As to the contribution claim, the district court correctly noted that UP has failed
to establish that it and Reilly share a common liability as joint tortfeasors to an injured
third party, with that common liability existing at the time the tort was committed, as
generally required under Minnesota law. See id. at 9-13 (citing, e.g., Vesely, Otto,
Miller & Keefe v. Blake, 311 N.W.2d 3, 4-5 (Minn. 1981)). The district court
observed, however, that Minnesota courts "will sometimes allow contribution actions
despite the absence of common liability," because contribution is governed by equity.
Id. at 13 (citing Lambertson v. Cincinnati Corp., 257 N.W.2d 679, 688 (Minn. 1977)
("Contribution is a flexible, equitable remedy designed to accomplish a fair allocation
of loss among parties. Such a remedy should be utilized to achieve fairness on
particular facts, unfettered by outworn technical concepts like common liability.");
United States v. J&D Enters., 955 F. Supp. 1153, 1157 (D. Minn. 1997) (noting that
indemnity is governed by equity and, consequently, "does not lend itself to hard-and-
fast rules"; indemnity will not, however, be permitted "where its application would
contravene public policy")).
We assume for the sake of argument that the Minnesota Supreme Court would
allow UP's common law contribution action to proceed, absent common liability, if
equitable and public policy considerations warranted the action. Accordingly, we now
assess those considerations in the present case.
To begin, as the district court noted, UP was not without a legal remedy under
Minnesota law. UP had a MERLA claim that was barred only because of UP's own
failure to bring its claim within the applicable statutory limitations period. Therefore,
as the district court reasoned, while the Minnesota courts might permit a claim for
contribution where an otherwise available legal remedy was foreclosed by
circumstances beyond the plaintiff's control, that could not be said about UP in the
present case. UP's untimeliness was a matter of its own doing. In our opinion,
therefore, equitable considerations disfavor UP's position.
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Moreover, we agree with the district court that public policy weighs against
allowing UP's contribution claim. As the district court reasoned,
[T]o grant a party the option of resting on its MERLA rights would
be to grant it the option of sitting quietly on its polluted property. And
this, of course, would be contrary to a "primary goal of [CERCLA['s] and
MERLA's] private cost recovery framework[s]," namely, "to 'encourage
timely cleanup of hazardous waste sites.'"
Id. at 14 (quoting Control Data Corp. v. S.C.S.C. Corp., 53 F.3d 930, 935 (8th Cir.
1995) (quoting Litton, 920 F.2d at 1417)).
In sum, we hold that the district court did not err in granting judgment for Reilly
on UP's common law claims for indemnity and contribution.11
Each of UP's remaining arguments on appeal is either meritless or moot in light
of this opinion.
Conclusion
For the reasons we have stated, the judgment of the district court is affirmed.
11
Because UP's common law indemnity and contribution claims are not viable
under Minnesota state law, the district court declined to reach the question of whether
those claims are otherwise preempted by CERCLA. See UP v. Reilly, slip op. at 15
n.3 (Dec. 28, 1998). We similarly decline to address the preemption issue at this time.
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A true copy.
Attest:
U..S. COURT OF APPEALS, EIGHTH CIRCUIT.
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