State of New Mexico v. General Electric

F IL E D
United States Court of Appeals
Tenth Circuit
PUBLISH
October 31, 2006
UNITED STATES COURT OF APPEALS
Elisabeth A. Shumaker
Clerk of Court
TENTH CIRCUIT
STATE OF NEW MEXICO; STATE
OF NEW MEXICO ex rel. PATRICIA A.
MADRID, ATTORNEY GENERAL
OF THE STATE OF NEW MEXICO,
Plaintiffs-Appellants,
v. No. 04-2191
GENERAL ELECTRIC COMPANY, a
New York corporation; ACF
INDUSTRIES, INC., a New York
corporation,
Defendants-Appellees.
STATES OF COLORADO,
KENTUCKY, MAINE, MONTANA,
NEVADA, NEW JERSEY, OHIO,
OKLAHOMA, OREGON, SOUTH
CAROLINA, UTAH, WISCONSIN,
AND WYOMING,
Amici Curiae in support
of Plaintiffs-Appellants,
and
AMERICAN CHEMISTRY
COUNCIL; AMERICAN PETROLEUM
INSTITUTE; NATIONAL MINING
ASSOCIATION; CHAMBER OF
COMMERCE OF THE UNITED
STATES OF AMERICA;
NATIONAL ASSOCIATION
OF MANUFACTURERS;
UNITED STATES COUNCIL
FOR INTERNATIONAL BUSINESS;
INDEPENDENT PETROLEUM
ASSOCIATION OF AMERICA;
NATIONAL PETROCHEMICAL
& REFINERS ASSOCIATION;
RUBBER MANUFACTURERS
ASSOCIATION; AMERICAN
GAS ASSOCIATION,
Amici Curiae in support
of Defendants-Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW MEXICO
(D.C. Nos. CIV-99-1118 BSJ/KBM; CIV-99-1254 BSJ/ACT)
James D. Oliver, Special Assistant Attorney General (Caleb Stegall, with him on the
briefs), of Foulston Siefkin, LLP, Overland Park, Kansas, for Plaintiffs-Appellants.
Donald W. Fowler, Spriggs & Hollingsworth, Washington, D.C. (Tami Lyn Azorsky of
McKenna, Long & Aldridge, Washington, D.C., Eric G. Lasker of Spriggs &
Hollingsworth, Washington, D.C.; Maria O’Brien of Modrall, Sperling, Roehl, Harris &
Sisk, P.A., Albuquerque, New Mexico; James A. Bruen and Peter S. Modlin of Farella,
Braun & Martell, LLP, San Francisco, California; Michael B. Campbell and Bradford C.
Berge, Holland & Hart, LLP, Santa Fe, New Mexico; Brackett B. Denniston, III, Vice
President and General Counsel, Stephen D. Ramsey, Vice President, General Electric
Company, Fairfield, Connecticut; Williams V. Killoran, Jr., Senior Counsel,
Environmental Affairs, G.E. Transportation, Cincinnati, Ohio, with him on the briefs), for
Defendants-Appellees.
John W. Suthers, Interim Attorney General of Colorado, and Victoria L. Peters, Senior
Assistant Attorney General, Natural Resources & Environment Section, State of
2
Colorado, Denver, Colorado, filed an Amicus Curiae Brief in Support of Plaintiffs-
Appellants.
Michael R. Thorp of Heller Ehrman LLP, Seattle, Washington, filed an Amicus Curiae
Brief in Support of Defendants-Appellees.
Before, McCONNELL, ANDERSON, and BALDOCK, Circuit Judges.
BALDOCK, Circuit Judge.
This is a case in which the Attorney General for the State of New Mexico (AG)
seeks unrestricted money damages exclusively under state law for groundwater
contamination in Albuquerque’s South Valley. The district court granted summary
judgment to Defendants General Electric (GE) and ACF Industries (ACF) because the
AG “failed to raise genuine issues of material fact on the essential elements of injury and
damages.” New Mexico v. General Elec. Co., 322 F. Supp. 2d 1237, 1271 (D.N.M.
2004). We exercise jurisdiction under 28 U.S.C. § 1291, and affirm in part and dismiss in
part.
I.
Because federal law, namely CERCLA, impacts the AG’s damage claim in a
myriad of ways, we first trace the course of federally-mandated remedial efforts over the
3
past two decades to clean up the contamination.1 The South Valley is located in a largely
industrial area east of the Rio Grande River and west of the Albuquerque International
Sunport, near the intersection of Broadway and Woodward Avenues.2 The contaminated
site encompasses approximately one square mile. A residential area with around 600
residents lies just north of the site. The contamination affects the city’s San Jose well
field, one of twenty-five well fields serving the city. The property from which the
chemical contamination involved in this case originated is located on the western portion
of the site. In 1951, the Atomic Energy Commission procured the property, and, through
Defendant ACF, engaged in production activities related to the manufacture of nuclear
weapons components. In 1967, the United States Air Force (USAF) converted the facility
into an aircraft engine parts manufacturing plant. For the next sixteen years, Defendant
GE operated Plant 83, as it is commonly known, under a series of contracts with the
USAF. In 1983, GE purchased Plant 83 and operates it still today.
1
The official title of CERCLA, also known as Superfund, is the Comprehensive
Environmental Response, Compensation, and Liability Act, Pub. L. No. 96-510, 94 Stat.
2767 (1980), as amended by the Superfund Amendments and Reauthorization Act of
1986, Pub. L. No. 99-499, 100 Stat. 1613 (1986) (codified at 42 U.S.C. §§ 9601-9675).
The core of the CERCLA cleanup program is the National Contingency Plan, 40 C.F.R.
Part 300, which establishes response procedures. See United States v. City and County of
Denver, 100 F.3d 1509, 1511 (10th Cir. 1996). The Environmental Protection Agency is
the delegatee of the Presidents’ authority under CERCLA. See 42 U.S.C. § 9615.
2
The South Valley sits atop the Middle Rio Grande Underground Water Basin.
The basin, which contains a series of interconnected aquifers, underlies New Mexico’s
Rio Grande River Valley, extending approximately 100 miles south from near Los
Alamos to Elephant Butte Reservoir. The basin contains approximately 1.2 billion acre
feet of groundwater and underlies a surface area of about 1.5 million acres.
4
A.
The city first suspected groundwater contamination in the South Valley in 1978
when irregular tastes and odors appeared in water from private wells near the area’s
industrial facilities. Subsequent sampling revealed certain volatile organic compounds
(VOCs) harmful to health and the environment in the area’s municipal wells, including
the San Jose No. 6 (SJ-6). In 1981, after further sampling, the Environmental
Improvement Division of the New Mexico Health and Environment Department
(NMEID) decommissioned SJ-6. Shutting down SJ-6 significantly impacted the San Jose
well field’s production. SJ-6 had been a productive and economical source of potable
water for thousands of Albuquerque residents and played a key role in providing
sufficient fire protection to the South Valley. As a result of SJ-6’s pivotal role in
providing water to the city, NMEID named the South Valley site as the State’s top
priority for environmental cleanup.3
The State, pursuant to CERCLA, requested the United States Environmental
Protection Agency (EPA) to place the site on the “National Priorities List” (NPL). See 42
U.S.C. § 9605(a)(8)(B). The EPA placed the South Valley site on the NPL in 1983 and,
3
Today, petroleum fuels and various other organic chemicals are handled and
stored within the South Valley site. In addition to Plant 83, industrial facilities located in
the South Valley include petroleum product pipeline and bulk distribution facilities
owned by, among others, Chevron USA Inc. and Texaco Inc., and an industrial chemical
distribution facility owned by Univar USA Inc. Chevron and Texaco were named
defendants in this lawsuit, but settled with the State just prior to appellate argument.
Univar was not a named Defendant.
5
at the State’s request, began the remedial investigation and feasibility study the same
year.4 The EPA’s first task was to determine if initial remedial measures were necessary
to mitigate potential threats to human health and/or the environment connected with the
shutdown of SJ-6. In its March 1985 Record of Decision (ROD), the EPA noted certain
contaminants detected during 1984 well sampling were suspected carcinogens with
recommended maximum contaminant levels of zero in drinking water.5 Consequently,
the EPA concluded the water quality of SJ-6 was unfit for human consumption. The EPA
further concluded the lack of available water at the tap from SJ-6 adversely impacted
available fire protection in the South Valley. Initial remedial measures, also termed
4
The NPL is the list of hazardous waste sites eligible for long-term remedial
action financed under the federal Superfund program. CERCLA and accompanying EPA
regulations outline a formal process for assessing hazardous waste sites and placing them
on the NPL. See 42 U.S.C. § 9605; 40 C.F.R. § 300.425. The State of New Mexico had
the South Valley site placed on the NPL pursuant to § 9605(a)(8)(B), which provides the
NPL “to the extent practicable, shall include among the one hundred highest priority
facilities one such facility from each State which shall be the facility designated by the
State as presenting the greatest danger to public health or welfare or the environment
among the known facilities in such State.” See also 40 C.F.R. § 300.425(c)(2). All sites
placed on the NPL must undergo a remedial investigation and feasibility study. See 42
U.S.C. § 9620(e)(1). The purpose of such study is to determine the nature and extent of
contamination and identify the possible remedial measures necessary to protect human
health and the environment. See 40 C.F.R. § 300.430.
5
“To support the selection of a remedial action, all facts, analyses of facts, and
site-specific policy determinations considered in the course of carrying out activities . . .
shall be documented . . . in a record of decision . . . for inclusion in the administrative
record . . . .” 40 C.F.R. § 300.430(f)(5)(i). Among other things, the ROD must describe
“[h]ow the selected remedy is protective of human health and the environment, explaining
how the remedy eliminates, reduces, or controls exposures to human and environmental
receptors;” and “[t]he federal and state requirements that are applicable or relevant and
appropriate to the site that the remedy will attain[.]” Id. § 300.430(f)(5)(ii)(A), (B).
6
“removal” measures, were therefore necessary to limit exposure to both health and
environmental hazards in the South Valley.6
The EPA selected as an initial remedy the installation of a new well, the Burton
No. 4 (B-4), to replace the capacity of the contaminated SJ-6. Specifically, the EPA–
determined that the installation of a new water supply well as an initial
remedial measure at the South Valley Superfund Site is a cost effective,
environmentally sound remedy and is necessary and feasible for protection of
public health, welfare, and the environment from exposure or threat of
exposure to a significant health or environmental hazard.
See 40 C.F.R. Pt. 300, App. D (listing the installation of “[n]ew wells in a new location or
deeper wells” as an acceptable remedial response to groundwater contamination). The
EPA labeled the work surrounding the replacement of SJ-6 with B-4 as Operable Unit
(OU) 1.7 In its 1985 ROD on OU1, the EPA reported: “The State of New Mexico
6
CERCLA technically defines “cleanup” in two ways. “Removal” refers to
actions designed to address immediate environmental hazards. “The term includes . . .
provision of alternative water supplies” and other emergency measures which “may be
necessary to prevent, minimize, or mitigate damage to the public health or welfare or to
the environment, which may otherwise result from a release or threat of release” of any
hazardous substance. 42 U.S.C. § 9601(23). “‘[R]emedial action’ means those actions
consistent with permanent remedy taken . . . in addition to removal actions . . . to prevent
or minimize the release of hazardous substances so that they do not migrate to cause
substantial danger to present or future public health or welfare or the environment.” The
term similarly includes “provision of alternative water supplies[.]” Id. § 9601(24); see
generally United States v. W.R. Grace & Co., 429 F.3d 1224, 1232-47 (9th Cir. 2005).
7
EPA regulations define an operable unit as–
a discrete action that comprises an incremental step toward comprehensively
addressing site problems. This discrete portion of a remedial response
manages migration, or eliminates or mitigates a release, threat of a release, or
(continued...)
7
requested this measure and has been consulted and agrees with the approved remedy.”
B.
The city placed B-4 into service in July 1988. Meanwhile, work continued on the
remedial investigation and feasibility study at the South Valley site. The investigation
surrounding SJ-6, i.e., OU2, first sought to identify the source and extent of contaminants
in the groundwater that supplied the well. In September 1988, the EPA delivered an
ROD which identified six industrial facilities in the South Valley as the likely sources of
SJ-6’s contamination. Potentially responsible parties (PRPs) included the USAF, GE,
Chevron, Texaco, Whitfield Tank Lines, Univar Corporation, and Duke City Distributing.
The ROD on OU2 identified Plant 83 and the Univar facility as the likely sources of
chlorinated solvents found in the well. The ROD identified the remaining four facilities
as the likely sources of petroleum contamination.8
7
(...continued)
pathway of exposure. The cleanup of a site can be divided into a number of
operable units, depending on the complexity of the problems associated with
the site. Operable units may address geographical portions of a site, specific
site problems, or initial phases of an action, or may consist of any set of
actions performed over time or any actions that are concurrent but located in
different parts of a site.
40 C.F.R. § 300.5 (emphasis added). The EPA divided the South Valley into six operable
units, four of which are relevant to this action.
8
CERCLA imposes liability on PRPs for cleanup costs and specified damages.
See 42 U.S.C. § 9607(a). For our purposes, PRPs in this case include the present owner
or operator of a facility and the owner or operator of the facility at the time of waste
disposal. See id. Notably, CERCLA contains a petroleum exclusion which excludes
(continued...)
8
Based on extended testing post 1984, the ROD noted “chlorinated solvents
detected in SJ-6 most likely do not represent groundwater contamination, but
contamination of sediments at the base of the well.” Because of source control and
remediation of contaminated plumes through other operable units in the South Valley, the
EPA concluded “these [SJ-6] contaminants do not appear to pose a significant health
threat.” Because B-4 had replaced SJ-6’s water supply, the EPA chose to clean and seal
SJ-6 (along with at least one other municipal well and numerous private wells in the
area), monitor the groundwater in the vicinity of SJ-6 for at least thirty years, and place
access restrictions on new well construction in the vicinity of SJ-6. According to the
ROD, the selected remedy would prevent SJ-6 from serving as a conduit for contaminant
migration into the deep aquifers responsible for supplying municipal water.
To assure the permanence and effectiveness of the selected remedy, the EPA
provided for a review of environmental conditions surrounding SJ-6 after five years. See
42 U.S.C. § 9621(c) (requiring review of remedial action “no less often than each 5 years
8
(...continued)
petroleum-derived contamination from its reach and limits its ability to fully address
hazardous waste contamination. See id. § 9601(14), (33). EPA studies found significant
levels of petroleum contamination in shallow and intermediate hydrogeologic zones
underneath the South Valley, the cleanup of which falls within the State’s jurisdiction.
Accordingly, the State has regulated the remediation of petroleum contamination in the
South Valley through hydrocarbon agreements with responsible parties. See N.M. Stat.
Ann. § 74-1-6.D. (empowering the New Mexico Department of Environment, formerly
NMEID, to “enter into investigation and remediation agreements with persons potentially
liable for sites within New Mexico subject to [CERCLA]”).
9
after the initiation of such remedial action to assure that human health and the
environment are being protected”); 40 C.F.R. § 300.430(f)(4)(ii) (same). The EPA also
created a “Design Review Committee” consisting of representatives from the EPA,
NMEID, the City of Albuquerque, and PRPs. Still today, the committee’s responsibility
is to coordinate the various remedial actions implemented at the South Valley Superfund
site to ensure site cleanup. In a letter to the EPA, NMEID concurred in the proposed
remedy for SJ-6 “conditional on the timely implementation of the remedy selected in the
GE/USAF [Plant 83] Record of Decision.” NMEID explained: “As with other individual
remedies selected for operable units at the San Jose site, the San Jose 6 remedy alone does
not address all potential threats to public health. However, this remedy will play a part in
the overall strategy to do so.”
Together with its ROD on OU2, the EPA delivered its ROD on GE’s Plant 83, i.e.,
OU5 and OU6, in September 1988.9 OU5 and OU6 respectively address remediation of
the shallow and deeper zone groundwater aquifers underlying Plant 83. PRPs identified
in the Plant 83 ROD included, among others, Defendants ACF and GE, the USAF, and
the United States Department of Energy (USDOE). The USAF conducted a first round of
9
OU3 and OU4 address contamination at the Univar facility. Also referred to as
the Edmunds Street property, the Univar facility is located on the southeast portion of the
site. A plume extraction and treatment system has been operational at the facility since
the early 1990s. Because Univar is not a party to this action, remedial efforts to clean up
contamination at that facility are only tangentially relevant. Suffice it to say those efforts
are similar to and consistent with the overall remedial effort in the South Valley.
10
investigation at Plant 83 in 1984 and 1985 and a second round of investigation in 1987
and 1988, each under a Memorandum of Understanding with the EPA. Based on the
USAF’s investigation, the EPA concluded VOCs present in the groundwater posed an
unacceptable health risk, “requiring remediation to depths of up to 160 feet.” This
included remediation of the shallow groundwater zone (surface to 30 feet), the
intermediate zone (30 to 110 feet) and the upper portion of the deep zone (110 to several
thousand feet). The EPA reached its conclusion based on “Applicable or Relevant and
Appropriate Requirements” (ARARs) as set forth in the Federal Safe Drinking Water Act,
42 U.S.C. §§ 300f thru 300j-26, the New Mexico Water Quality Act, N.M. Stat. Ann §
74-6-1 thru 74-6-17, and accompanying regulations. See 40 C.F.R. Part 141 (setting
national drinking water standards); N.M. Admin Code § 20.6.2.3103 (setting state
groundwater purity standards); id. § 20.6.2.4103 (setting state contamination abatement
standards). At the same time, the EPA noted the contamination underlying Plant 83 did
not pose a significant risk to the city’s drinking water supply because “[t]he municipal
water system draws from the lower portion of the deep groundwater zone.”
To rectify the groundwater contamination emanating from Plant 83, the EPA
elected to extract the contaminated groundwater through extraction wells and treat it with
carbon adsorption, and in the case of the deeper zone, air stripping before reinjecting it
11
into the aquifer.10 The ROD explained that “[t]he level of treatment in the selected
remedy . . . [meets] the [ARARs] for water set by maximum contaminant limits . . . for
discharge to the ground under NMWQCC [New Mexico Water Quality Control
Commission] regulations.” See 42 U.S.C. § 9621(d)(2)(A) (discussing application of
ARARs). The selected remedy also included groundwater monitoring both during and
after completion of remediation to ensure the remedy’s effectiveness. Finally, the EPA
scheduled five-year reviews as required by CERCLA to assure the remedy remained
protective of human health and the environment. NMEID agreed with the selected
remedy in a letter to the EPA:
EID concurs with the remedy outlined in the draft Record of Decision for the
GE/USAF Operable Unit of the San Jose Superfund site. While this remedy
alone does not address all potential threats to public health at the San Jose site,
it is an important part of the overall strategy to do so. The Design Review
Committee, to include representatives of affected agencies and PRPs at the
site, will ensure that this and other remedies are coordinated to achieve site
cleanup.
C.
The remedial design and action phase of the cleanup followed. See 40 C.F.R.
10
According to the ROD, air stripping “operates by mixing water contaminated
with volatile compounds with air allowing the volatile chemicals to evaporate into the air.
The air is collected as it leaves the treatment unit and passed through a filter where the
contaminants are collected.” Carbon adsorption “passes contaminated water through
activated carbon where the contaminants are adsorbed onto the carbon. The contaminated
carbon is then taken to an offsite regeneration facility.” The EPA recognizes “packed
tower aeration” and “granular activated carbon” as the “best available technologies” for
treating water contaminated with specific VOCs. See 40 C.F.R. § 142.62.
12
§ 300.435.11 In June 1989, the EPA issued a Unilateral Administrative Order (UAO) to
GE to perform the necessary work on OU2.12 In September 1994, GE completed work on
OU2 pursuant to that order. SJ-6, as well as one other less significant municipal well, SJ-
3, and several private wells, were successfully plugged and abandoned. GE also
established a groundwater monitoring program as required by the ROD. Both the EPA’s
2000 and 2005 memoranda approving the five-year reviews for OU2 concluded “the
analysis of the data shows that the plugging and abandonment program was effective. . . .
[T]he remedy for OU2 has been, and is expected to continue to be, protective of human
health and the environment.”
At the same time, the EPA issued a second UAO to GE to cleanup the
contamination associated with Plant 83 in a manner consistent with the ROD on OU5 and
OU6.13 GE agreed and, following additional investigation at the site, began design of
11
The remedial design and action phase includes developing the actual design of
the selected remedy and implementing that remedy through construction. A period of
operation and maintenance follows. During the course of this phase, the EPA is
responsible for ensuring that ARARs are met. 40 C.F.R. § 300.435 (a), (b)(1), (b)(2).
12
The EPA implements its RODs in one of three ways. The EPA may hire a
contractor to cleanup the site and then sue PRPs to recover CERCLA costs and damages,
provided the cleanup methods are consistent with CERCLA regulations. See 42 U.S.C.
§§ 9604(a)(1), 9607(a)(4)(A). The EPA may enter into a settlement with a PRP, directing
the PRP to remediate the site through procedures specified in a consent decree. See id.§ 9622(a), (d). Or the EPA may issue a UAO to a PRP, requiring the PRP to clean up the
site using methods specified in the ROD, or face fines of $25,000 per day and treble
damages. See id. §§ 9606(a), (b)(1), 9607(c)(3).
13
The district court reported that GE, the USAF, and the USDOE have shared the
(continued...)
13
shallow and deeper zone remediation systems in 1991. The shallow and deeper zone
systems became operable in May 1994 and April 1996, respectively. Today, the shallow
zone system includes thirty monitoring wells, eight extraction wells, an injection well,
and a groundwater treatment system.14 The extracted groundwater is conveyed through a
dual-contained pipe to the treatment system where it is treated using liquid-phase
granulated activated carbon to adsorb the VOCs. Following treatment, the water is
reinjected into the shallow aquifer. The EPA, the New Mexico Department of
Environment (NMED, formerly NMEID), and GE evaluate the effectiveness of the
system by collecting groundwater from extraction and monitoring wells and comparing
the data to historical data previously collected. As reported in the 2000 and 2005 five-
year review reports, approved by both EPA and NMED, VOC concentrations in the
groundwater from the shallow extraction and monitoring wells have been steadily
decreasing. The extent of the contaminant plume is decreasing as well. Both reports
concluded: “[T]he Shallow Zone Groundwater Remediation System is working as
13
(...continued)
cost of remedial activities surrounding Plant 83. Based on the three PRPs relative
duration of ownership, 9% of the cost was allocated to GE, 43.2% was allocated to the
USDOE, and 47.8% was allocated to the USAF. See New Mexico v. General Elec. Co.,
335 F. Supp. 2d 1185, 1194 n.5 (D.N.M. 2004).
14
Until early 2000, the shallow zone remediation system consisted of seven
extraction wells. To improve the efficiency of the system, GE installed with EPA
approval an additional extraction well which became operational in February 2000. To
further improve efficiency, GE also installed an injection well which became operational
in May 2000.
14
designed and reducing the VOC concentrations in the Shallow Zone groundwater.” 15
GE initially installed numerous wells to identify the boundaries of Plant 83’s
deeper zone plume. The design objectives of the deeper zone remediation system
(addressing the intermediate and deep zones as described in the ROD) included hydraulic
control of the deeper zone plume and flushing the VOCs from the aquifer to meet
ARARs. The design established a hydraulic barrier between the contaminant plume and
the nearest city water supply well three-quarters mile to the east. Today, the system
consists of seventy-nine monitoring wells, four high volume extraction wells, twelve
injection wells, and a groundwater treatment system.16 The system operates by extracting
groundwater and conveying it via dual-contained pipe to the treatment center. The water
is then pumped through two air-stripping towers on its way to two granulated active
carbon vessels. Once in a holding tank, the water is piped through a filter system to
remove particles. Finally, the water travels to twelve injection wells where it is returned
15
Prior to remediation, the following six VOCs were detected above ARARs in
the shallow zone aquifer: (1) 1,1-dichloroethane (1,1-DCA), (2) 1,1-dichloroethene (1,1-
DCE), (3) 1,2-dichloroethane (1,2-DCA), (4) trichloroethylene (TCE), (5)
tetrachloroethylene (perchloroethylene, PCE), and (6) vinyl chloride (VC). The 2005
five-year review report states that as of June 2005, the only VOCs detected above ARARs
in the shallow zone aquifer are 1,1-DCA and 1,1-DCE: “All other VOCs in the Shallow
Zone Aquifer groundwater have been remediated to levels below their respective ARARs,
or are not detected at all in any of the monitoring wells and extraction wells.”
16
In reviewing 2001 data, GE noticed an increase in VOC concentration levels in
two monitoring wells. With prior approval from the EPA and NMED, GE installed two
new monitoring wells, two new injection wells, and one new extraction well. GE also
upgraded the deeper zone treatment plant to accommodate the new extraction and
injection wells.
15
to the deeper zone aquifer. Monitoring wells monitor the progress of the remediation
both horizontally and vertically inside and outside the plume boundaries. According to
the 2005 five-year review report: “[T]he Deep Zone Ground Water Remediation System
is an effective hydraulic control, and operates as designed to maintain capture of impacted
groundwater in the Deep Zone plume.”
Since startup, the deeper zone treatment system has operated 24 hours a day except
for routine maintenance and unplanned stoppages due to, among other things, ice
formation, lightning, and high winds. As stated in the 2000 five-year review report and
reiterated in the 2005 report: “[T]he VOC plume has been captured by the Deep Zone
Remediation System.” “The aerial extent of the Deep Zone Plume is shrinking, and
concentrations of VOCs have reduced significantly since the Deep Zone Plant became
operational[.]” “The treatment system has been effective in removing constituents to
concentrations below the ARARs, and water injected back into the Deep Zone Aquifer is
in compliance with the applicable discharge requirements.” “VOCs above ARARs have
not been detected in any monitoring or water supply wells downgradient of the
remediation system.” 17 Both reports concluded the shallow and deeper zone remediation
17
Prior to remediation, the following seven VOCs were detected above ARARs in
the deeper zone aquifer: (1) 1,1-DCA, (2) 1,1-DCE, (3) 1,2-DCA, (4) TCE, (5) PCE, (6)
VC, and (7) methyl-tert butyl ether (MTBE). As of June 2005, the following four VOCs
were detected above ARARs in the deeper zone aquifer: (1) 1,1 DCE, (2) 1,1-DCA, (3)
TCE, and (4) PCE. The remaining three VOCs have been remediated to levels below
their respective ARARs or not detected at all.
16
systems “are protective of human health and the environment.”
D.
Recently, the EPA and NMED approved the 2005 five-year review report for the
South Valley site. Although remediation continues at OU5 and OU6 due to hazardous
wastes in the subsurface above contaminant levels allowing for unlimited use and
unrestricted exposure, the overall remedy remains protective of human health and the
environment. The EPA’s approval memorandum, dated September 2005, indicates that
“[f]rom system startup through July 2005, approximately 900,000 gallons of groundwater
have been extracted and treated from the shallow zone aquifer [OU5].” “The shallow
zone groundwater remediation system has mitigated the migration of VOCs in the
saturated portion of the shallow zone aquifer and the size of the contaminant plume is
decreasing.” To ensure the systems continuing effectiveness, the memo indicated “[t]he
EPA and NMED will periodically split influent and effluent samples with [GE] at the
treatment plant.”
The 2005 memo’s comment on the deeper zone remediation system was similarly
favorable. From system startup through July 2005, “over 3.7 billion gallons of
groundwater were extracted, treated, and returned to the subsurface at an average flow
rate of over 900 gallons per minute. . . . Approximately 1,400 pounds of VOC mass have
been removed.” Regarding the deep plume, the EPA’s memo reported: “The deep
groundwater remediation system has been effective in capturing the groundwater
17
contaminant plume associated with OU #6.” “Flushing continues to reduce the
concentrations of VOCs within the deep zone plume, as is evidenced by the decreasing
constituent concentrations.” The EPA concluded with a comment on the overall success
of the ongoing cleanup at the South Valley site:
It should be noted that the groundwater remedial systems at the South Valley
Superfund Site have been very effective in recovering and treating
approximately 4.5 billion gallons of water since the remedial systems went
on-line. Almost the entire amount of this large volume of water has been
returned to the aquifer from which it was extracted, allowing the groundwater
to be returned back to its beneficial use.
As the foregoing history illustrates, the State of New Mexico, through NMED and
its predecessor NMEID, from the outset has played a meaningful role in the CERCLA-
mandated removal and response plan for the South Valley Superfund site – a plan which
to date appears to be achieving its aim of restoring the groundwater in the South Valley to
below ARARs. See 40 C.F.R. § 300.180 (stating “state officials . . . will participate as
part of the response structure”).18 Notably, we find nothing in the record which indicates
NMED currently opposes any aspect of the ongoing cleanup which is scheduled to
conclude around 2016. Rather, the EPA has worked with and addressed the concerns of
NMED at every stage of the cleanup. The State’s role has been and continues to be
18
NMEID undertook its own investigation of groundwater contamination due to
hydrocarbons discharged from various petroleum facilities in the South Valley. See supra
n.8. NMEID then negotiated “Hydrocarbon Remediation Agreements” with PRPs in
1994, requiring them to treat the groundwater underlying their facilities. See General
Elec., 335 F. Supp. 2d at 1195. Thus, in a real sense, cleanup at the South Valley site has
been a joint operation among federal and state authorities.
18
consistent with CERCLA regulations which require the EPA to ensure “meaningful and
substantial state involvement” in hazardous substance response: “EPA shall provide an
opportunity for state participation in removal, pre-remedial, remedial, and enforcement
response activities.” Id. § 300.500(a); see also 42 U.S.C. § 9621(f) (addressing state
involvement in hazardous waste cleanup).19
II.
In addition to affording the State of New Mexico an opportunity to avail itself of a
federally-mandated cleanup response in the South Valley, a form of mandatory injunctive
relief, CERCLA empowered the State to bring an action against GE, ACF, and other
PRPs for natural resource damages (NRDs) to the public’s groundwater. CERCLA’s
“natural resources” definition includes “water, ground water, drinking water supplies, and
other such resources belonging to, managed by, held in trust by, appertaining to, or
otherwise controlled by . . . any State[.]” 42 U.S.C. § 9601(16). CERCLA makes PRPs
jointly and severally liable not only for all costs of removal and/or remedial action, but
also for “damages for injury to, destruction of, or loss of natural resources, including the
reasonable costs of assessing such injury, destruction, or loss . . . .” Id. § 9607(a)(4)(C);
see, e.g., Kalamazoo River Study Group v. Menasha Corp., 228 F.3d 648, 652-53 (6th
19
CERCLA also provides for community input throughout the cleanup process.
See 42 U.S.C. § 9617 (addressing public participation in cleanup). 40 C.F.R. §§ 300.155,
300.415(n), 300.430(c), and 300.435(c) address community relations at the various stages
of cleanup.
19
Cir. 2000) (subject to the right of contribution contained in § 9613(f)(1), liability under §
9607(a) is generally joint and several regardless of fault); California v. Montrose Chem.
Corp., 104 F.3d 1507, 1518 n.9 (9th Cir. 1997) (subject to the defenses set forth in §
9607(b), liability under § 9607(a) is joint and several). Section 9607(f)(1) authorized the
State, through its “Natural Resources Trustee”(NRT), to sue GE, ACF, and other PRPs
for NRDs:
In the case of an injury to, destruction of, or loss of natural resources under
subparagraph (C) of subsection (a) of this section[,] liability shall be . . . to any
State for natural resources within the State . . . . [T]he authorized
representative of any State, shall act on behalf of the public as trustee of such
natural resources to recover such damages. . . . Sums recovered by a State as
trustee under this subsection shall be available for use only to restore, replace,
or acquire the equivalent of such natural resources by the State. The measure
of damages in any action under subparagraph (C) of subsection (a) of this
section shall not be limited by the sums which can be used to restore or replace
such resources.
42 U.S.C. § 9607(f)(1).
CERCLA directs New Mexico’s Governor to appoint a NRT to act on behalf of
the public. Id. § 9607(f)(2)(B). Consistent with CERCLA, the New Mexico Legislature
enacted the “Natural Resources Trustee Act” (NRTA) in 1993. See N.M. Stat. Ann.
§§ 75-7-1 thru 75-7-5. The NRTA created the “Office of Natural Resources Trustee”
(ONRT) within NMED. Id. § 75-7-2.B. The NRT serves at the pleasure of the Governor.
Id. §§ 75-7-2.A. Among the NRT’s express duties are the assessment and collection of
“damages for injury to, destruction of, or loss of natural resources, including bringing
legal actions[.]” Id. § 75-7-3.A.(5). An award of NRDs in New Mexico “shall consist of
20
those amounts calculated in accordance with federal law, including . . . the cost of
restoration, replacement or acquisition of equivalent resources, plus compensation for the
loss of use or enjoyment of the natural resources . . . .” Id. § 75-7-4.A.
Consistent with his duties under CERCLA and the NRTA, in 1999 New Mexico’s
NRT entered into tolling agreements with several PRPs, including GE, the USAF, and
USDOE, to delay a CERCLA-based NRD lawsuit while he attempted to negotiate a
settlement of the State’s NRD claims. See generally William H. Hyatt, Jr., Jennifer L.
Allaire, & Karyllan Dodson Mack, Natural Resource Damages: New Developments at the
State Level, SK057 ALI-ABA 281, 290-960 (2005). The NRT believed tolling
agreements were necessary due to CERCLA’s three-year statute of limitations on NRD
claims. See 42 U.S.C. § 9613(g).20 At the same time, the NRT was seeking funding from
the New Mexico Legislature for a NRD assessment. See 43 C.F.R. Part 11 (containing
regulations relating to an NRD assessment); N.M. Stat. Ann. § 75-7-5 (establishing a
NRT fund to carry out the provisions of the NRTA). The NRT apparently believed a
NRD assessment pursuant to federal regulations was necessary to the success of the
State’s NRD claims because such assessments “have the force and effect of a rebuttable
presumption on behalf of the trustee in any administrative or judicial proceeding” under
20
Section 9613(g)(1) reads in relevant part: “With respect to any facility listed on
the National Priorities List (NPL), . . . an action for damages under this chapter must be
commenced within 3 years after the completion of the remedial action (excluding
operation and maintenance activities) . . . .”
21
CERCLA. See 42 U.S.C. § 9607(f)(2)(C).
The regulations, promulgated by the Department of Interior, “provide[] a
procedure by which a [NRT] can determine compensation for injuries to natural resources
that have not been nor are expected to be addressed by response actions conducted
pursuant to [CERCLA regulations].” 43 C.F.R. § 11.10. While the assessment
procedures set out in Part 11 are not mandatory, a State NRT must use them to obtain the
rebuttable presumption contained in § 9607(f)(2)(C). Id. Apparently, neither the New
Mexico legislature nor the newly-elected AG saw need for such an assessment. Asserting
her role as the State of New Mexico’s chief law enforcement officer, the AG filed suit
against the PRPs on October 1, 1999, absent any NRD assessment.
A.
The AG retained independent counsel to file two separate NRD lawsuits relating
to the South Valley Superfund site. The first, filed in federal district court, alleged
claims for money damages under CERCLA § 9607(f)(1). See 42 U.S.C. § 9613(b)
(granting federal district courts “exclusive original jurisdiction” of CERCLA actions).
Among a host of other business and government entities, the complaint named GE, ACF,
the USAF, and USDOE as defendants. The complaint alleged harm arising “from the
presence, migration, and threat of further migration of hazardous chemical wastes and
other substances from the operable units which comprise the South Valley Superfund
Site[.]” The suit named New Mexico’s NRT as an “involuntary plaintiff pursuant to Fed.
22
R. Civ. P. 19.” The complaint indicated the AG would “provide legal counsel and
representation to the ONRT pursuant to the provisions of [the NRTA].” See N.M. Stat.
Ann. § 75-7-3.C.
The second suit, filed in state district court, alleged various state statutory and
common law claims for NRDs, including trespass, public nuisance, and negligence. The
complaint omitted the federal entities, but otherwise named the same defendants,
including GE and ACF, as the federal suit.21 The state court complaint summarized the
harm giving rise to the AG’s case against the PRPs in the exact manner as the federal
court complaint. GE and ACF promptly removed the AG’s state action to federal court,
where the district court, on its own motion, consolidated it with the AG’s federal action.
The district court explained:
It has become plainly apparent to the court that the reach of plaintiffs’ state
law claims . . . necessarily depend upon the breadth of the plaintiffs’ CERCLA
claims . . . and of the ongoing CERCLA remediation program at the South
Valley site. The two actions . . . are more than “related,” more than “actions
involving a common question of law or fact” – the scope of one action
inescapably defines the scope of the other.
21
Our independent research reveals that on November 5, 1999, the AG sought a
writ of mandamus from the New Mexico Supreme Court declaring the NRT’s tolling
agreements with the PRPs invalid and enjoining the NRT from interfering in the NRD
lawsuits. See New Mexico ex rel. Madrid v. Turner, No. 26035 (N.M., filed November 5,
1999). The court issued the writ on December 14, 1999. When defendants in the federal
lawsuit moved to dismiss based on the AG’s lack of standing to pursue NRD claims
under CERCLA, the AG was back before the state supreme court on April 17, 2000,
seeking an order directing the NRT to voluntarily join her federal lawsuit. The state court
granted the AG’s request on June 27, 2000, effectively rendering defendants’ standing
argument moot.
23
New Mexico v. General Elec. Co., 335 F. Supp. 2d 1157, 1162 (D.N.M. 2003).
Despite filing an initial motion to remand for want of subject matter jurisdiction,
the AG withdrew that motion and in June 2000 filed a first amended complaint alleging
federal jurisdiction. Following a year of procedural wrangling which we need not detail
here, the AG in July 2001 filed the “State of New Mexico’s Complaint in the
Consolidated Case.” See id. at 1160-69 (providing a detailed procedural history of the
case).22 The complaint alleged both CERCLA and state law claims.23 Over the next year,
the case “moved steadily forward through extensive discovery, voluminous document
production, numerous depositions, intense expert witness and pretrial preparation – all at
the instance of the State of New Mexico[.]” Id. at 1180-81.
During the course of an extended pretrial conference beginning in September
2002, the district court began to question the AG’s theory of the case in view of the
ongoing remediation in the South Valley. The court told the State “to rethink its theory of
damages.” Id. at 1168. Commenting on what the court described as the AG’s “expansive
22
At one point, the district court described the AG’s incessant pleading as
“making a mockery of the pleading requirements” of Fed. R. Civ. P. 8(a). General Elec.,
335 F. Supp. 2d at 1180.
23
Once the AG alleged federal subject matter jurisdiction based on CERCLA’s
NRD provisions in her first amended and subsequent consolidated complaint, any initial
jurisdictional defects in removal were cured because a party “‘cannot voluntarily invoke,
and then disavow federal jurisdiction.’” Albert v. Smith’s Food & Drug Centers, Inc., 356
F.3d 1242, 1247-49 (10th Cir. 2004) (quoting Akin v. Ashland Chem. Co., 156 F.3d 1030(10th Cir. 1998)); accord Bernstein v. Lind-Waldock & Co., 738 F.2d 179, 185-86 (7th
Cir. 1984) (Posner, J.).
24
damage theories,” the court opined: “I need to be up front with you on your computations
on damages. I, frankly, would find it difficult to send those computations to a jury.” Id.
at 1168-69. The AG responded to the court’s concerns by filing two motions: (1) a
motion to dismiss all CERCLA claims and federal defendants from the NRD lawsuit, and
(2) a motion to remand the remaining state law claims to state court. The court granted
the AG’s motion to dismiss with prejudice, effectively ending any entitlement the State
may have had to NRDs under CERCLA.
The court, however, denied the motion to remand the state law claims based “at
minimum” on its exercise of supplemental jurisdiction under 28 U.S.C. § 1367. See id. at
1183-84. The court’s reasoning was two-fold. See id. at 1169-1181. First, the court
explained the prevalence of CERCLA-related questions in defining the scope and content
of the remaining state law claims weighed in favor of retaining jurisdiction: “[T]he
remaining claims inescapably must be defined in terms of the CERCLA remedy and the
scope and extent of the ongoing CERCLA remediation.” Id. at 1177. Second, the court
reasoned “[c]onsiderations of economy and convenience” in a case over three years old
weighed in favor of retaining jurisdiction over the state law claims:
It would be burdensome indeed to shift a case with dozens of witnesses –
mostly experts – and 8,000 listed exhibits, as well as a record containing nearly
1,000 docketed pleadings, motions, memoranda and other papers and nearly
3,000 pages of hearing transcripts, to a state trial judge having no background
or familiarity with the case.
Id. at 1181. At the AG’s request, the district court subsequently certified its decision to
25
continue exercising jurisdiction over the case for interlocutory appeal pursuant to 28
U.S.C. § 1292(b). In May 2003, we denied the AG’s “Petition for Permission to Appeal”
under § 1292(b) without comment. See New Mexico v. General Elec. Co., No. 03-500,
Order at 1 (10th Cir., May 13, 2003).
B.
Over the remaining course of the litigation, the district court issued a trilogy of
opinions before ultimately granting summary judgment to GE and ACF. The first
opinion, issued in April 2004 and comprising 145 pages, sought to define the scope of
triable issues arising from the AG’s remaining state law claims, namely, (1) common law
trespass, (2) common law public nuisance, (3) statutory public nuisance, and (4) common
law negligence. See General Elec., 335 F. Supp. 2d at 1222. By this time, the AG’s NRD
demand had fallen from over $4 billion to over $1.2 billion – cash compensation
earmarked for the State’s general treasury fund. See id. at 1231 & n.95.24
Distinguishing between private property rights and public trust interests, the court
first held the AG could not maintain a trespass action under New Mexico law against
24
More particularly, the district court described the AG’s demand as follows:
As of January 2004, the Plaintiffs demand over $1.2 billion dollars in cash
compensation, including $609,000,000 as the cost of water rights to nearly a
quarter-million acre-feet of potable water that likely will never be purchased,
and up to $609,000,000 for the construction of a 289,500 acre-foot
“replacement” surface storage reservoir that likely will never be built.
General Elec., 335 F. Supp. 2d at 1231 n.95.
26
GE or ACF. Id. at 1231-35. The court noted the AG had brought suit not to protect
private property rights, but to protect “the State’s broader sovereign and public
trust/parens patriae interests” in the public’s right to beneficial use of groundwater “the
stewardship of which is entrusted to the State.” Id. at 1234-35. These interests, the court
reasoned, fell outside the scope of protection which the law of trespass traditionally
afforded private landowners. Next, the court held the AG could pursue claims of
common law and statutory public nuisance “to remedy the alleged injury to the public’s
groundwater and to vindicate the State’s interest in making that groundwater available for
public use.” Id. at 1235.25 The AG’s right to pursue public nuisance claims against GE
and ACF, however, was largely illusory (at least as far as the AG was concerned)
because, according to the court, New Mexico law limited the available remedy to
injunctive relief in the form of nuisance abatement and/or recovery of restoration costs.
See id. at 1237-1244, 1251. Finally, the court held New Mexico law entitled the AG to
maintain a negligence action against GE and ACF for money damages “limited to
reasonable compensation for the actual and unavoidable consequences of an injury-in-fact
to the State’s interests, further limited by the degree of fault, if any, properly attributable
to the wrongful conduct [of non-parties].” Id. at 1251.
25
New Mexico’s statutory prohibition against water pollution appears in the
State’s criminal code at N.M. Stat. Ann. § 30-8-2: “Polluting water consists of knowingly
and unlawfully introducing any object or substance into any body of public water causing
it to be offensive or dangerous for human or animal consumption or use. Polluting water
constitutes a public nuisance.”
27
The remainder of the district court’s April 2004 opinion addressed the AG’s injury
and damage claims. The opinion well describes the AG’s numerous theories of relief and
we need not detail them here. Importantly, the court rejected the AG’s “market value
replacement cost” and “loss of use” damage theories in favor of a “cost of restoration”
theory. First, according to the court, “the Middle Rio Grande Underground Water Basin
was and is already fully appropriated, leaving the State unable to make additional water
available for appropriation.” Id. at 1213. In other words, the change in the point of
diversion from SJ-6 to B-4 did not constitute a loss of use because the same amount of
groundwater from the same aquifer remained available for use, as illustrated by the
absence of any claim by water rights holders or users in the South Valley:
Plaintiffs are not here as appropriators or users of water; nor are they here on
behalf of other water rights holders or water users. The entity that once
diverted groundwater from the South Valley wells to beneficial use – the City
of Albuquerque – is not here. The city’s right to appropriate groundwater has
been satisfied by changing the point of diversion to another well (the Burton
#4 Well) that pumps groundwater from the same aquifer, and the city asserts
no claim for damages in this action.
Id. at 1202-03. Second, the court ruled market value replacement cost was an
inappropriate measure of damages because the AG failed to present “significant probative
evidence” establishing the permanent and total loss of the South Valley’s contaminated
groundwater: “Damage analysis based on ‘market value’ replacement cost necessarily
assumes . . . a complete loss of the resource that has been injured, and proves to be
irrelevant to the measure of damages . . . where a valuable use may be restored through
28
remediation.” Id. at 1217-18.
Instead, the court held the cost of restoration was the appropriate measure of
damages because, among other reasons, such measure was consistent with CERCLA’s
remedial objectives to repair and restore contaminated natural resources:
Plaintiffs may seek an award of damages in an amount sufficient to reimburse
the State of New Mexico for site investigation and other “response costs”
incurred by the State in connection with a proven injury to the State’s interests
at the South Valley Site, and any costs of restoration of the groundwater at
South Valley already incurred by the State with respect to that injury.
Plaintiffs, on behalf of the State of New Mexico in its capacity as public
trustee, may also recover damages in the amount of future costs of restoration
as established by substantial evidence, said damages to be held in trust for the
benefit of the public, for the express purpose of paying for the actual
remediation and restoration of the affected groundwater beneath the South
Valley Site.
Id. at 1263.
C.
The district court delivered its second opinion in May 2004. See New Mexico v.
General Elec. Co., 335 F. Supp. 2d 1266 (D.N.M. 2004). That opinion addressed the
proposed testimony of numerous expert witnesses, including the testimony of the AG’s
three principal experts, David Brookshire, Stephen Johnson, and Dennis Williams.
Pursuant to GE and ACF’s motion, the court excluded large portions of the experts’
testimony as irrelevant to the issues of injury and damage. Consistent with its preceding
opinion, the court first held Dr. Brookshire’s “analysis and opinions concerning the
market value replacement cost of a volume of groundwater totally and permanently lost to
29
use has no bearing upon damages to be measured by the cost of restoration of the affected
groundwater to use as drinking water.” Id. at 1276. The court next excluded the
testimony of Mr. Johnson regarding the cost of replacing the storage capacity of the
contaminated portion of the aquifer with a large surface storage reservoir. Id. The court
excluded Mr. Johnson’s testimony based on its prior ruling that the State had no legally
cognizable interest in the South Valley aquifer apart from the groundwater. The court
had concluded the State did not own the aquifer as a “natural resource” in the same sense
it owned the public waters: “Absent proof of some possessory ownership interest in land
at the South Valley – title to the surface or subsurface estate, a reservation of minerals, or
the like – the State has no legally cognizable interest in the aquifer beneath the South
Valley site.” General Elec., 335 F. Supp. 2d at 1205.
Dr. Williams proposed testimony fared no better than his predecessors’. Dr.
Williams relied on selected data to construct a model of a contaminant plume in the South
Valley “circa 1992.” See General Elec., 335 F. Supp. 2d at 1278.26 He then combined the
26
Interestingly, one of GE’s engineering experts, John Connor, questioned Dr.
Williams use of a model to quantify the State’s damages. According to Mr. Connor:
[T]here’s so much data at [the South Valley] site we don’t need to model it.
We use models to predict things we don’t know. We know where the plume
is here. There are over 615 wells, 6,520 groundwater samples, 217,000
laboratory analysis, over 1,100 soil borings have been drilled. This is one of
the most intensely investigated sites in this country, in the world. It’s very well
understood. You don’t need a model when you know what’s going on.
(continued...)
30
estimated volume of his model plume with the estimated volume of a “buffer zone”
needed to immobilize the plume to calculate (1) the total volume of in situ groundwater
which the contamination impacted and (2) the lost “safe yield” of potable groundwater
from the South Valley aquifer. Id. at 1279. The court found numerous problems with Dr.
Williams’ approach. First, Dr. Williams acknowledged his projected plume volume
included significant non-party contamination emanating outside Plant 83. Second, Dr.
Williams made no projection as to what portion of his projected plume fell within the
scope of the ongoing remediation. Third, Dr. Williams projected “buffer zone” volume
was inconsistent with the EPA’s ongoing remediation. In other words, any volume of
water needed to immobilize the plume would be relevant “only if the contaminated plume
volume is treated as totally and permanently lost and the remedy chosen to address the
resulting public health risks is the passive containment of the chemical contaminant
plume.” Id. at 1286.
Finally, Dr. Williams failed to account for restrictions the New Mexico State
Engineer had placed on further extraction of groundwater from the Middle Rio Grande
Underground Water Basin. See id. at 1294-95. The court concluded Dr. Williams’
estimates of lost safe yield – hydrologically accurate or not – did not address the seminal
issue of whether the groundwater beneath the South Valley could be made available for
26
(...continued)
General Elec., 335 F. Supp. at 1302 n.69.
31
appropriation and thus was lost to further appropriation because of the contamination.
The availability of water from underneath the South Valley, the court explained, turned
on “the groundwater volume of the entire aquifer treated as a unit, and could not be
localized to a portion of the aquifer having no ascertainable geohydrological boundary
distinguishing it from the rest of the Middle Rio Grande Basin.” Id. at 1295.
D.
With the State’s case significantly diminished, the district court delivered its third
and final opinion in June 2004. By this time, the AG had narrowed her claim for damages
to those “not recoverable under CERCLA for groundwater contamination ‘outside’ the
‘box that GE and the EPA are willing to remediate’ – that is, the ‘box’ defined by the
intended scope of the existing EPA-ordered remediation.” New Mexico v. General Elec.
Co., 322 F. Supp. 2d 1237, 1243 (D.N.M. 2004). Thus the “core of the controversy”
between the parties became the intended scope of CERCLA-mandated remedial efforts in
the South Valley, efforts the AG after a decade described as “woefully inadequate.” See
id. at 1248. The AG rested her latest theory of recovery on the presence of a “deep, deep”
contaminant plume beneath the South Valley Site, “hundreds of feet below the reach of
the existing remediation system,” and outside the scope of the ongoing remediation. Id. at
1253. Once again, the court found the AG’s proof “woefully inadequate.”
To support her theory, the AG pointed to a recent expansion of the Plant 83
remedial system spawned by sample data from the system’s monitoring wells detecting
32
additional contamination outside the prior scope of remediation.27 The court, however,
viewed such evidence as proof of the ongoing remediation’s effectiveness:
In effect, then, Plaintiffs rely upon specific facts showing that the existing
EPA remedial system is detecting further contamination and is addressing it
by adding additional extraction and monitoring wells as support for an
inference that the system is not detecting and not treating contamination, an
inference that there yet exists undetected “deep, deep” contamination that the
system does not and will not treat. Viewed through Plaintiffs’ eyes, direct
evidence of the system’s remedial efficacy becomes inferential proof of its
deficiency.
***
Much like Scotland’s famed Loch Ness monster, the Plaintiffs’ “deep, deep
contaminant plume” is believed to be “down there somewhere,” and has not
been conclusively proven not to exist, but its proponents have yet to come
forward with significant probative admissible evidence of specific facts
affirmatively demonstrating that it does exist.
Id. at 1255-56 (footnote omitted). Recognizing the State of New Mexico, through
NMED, remains an active participant in the oversight of the EPA’s operable units at the
27
In this respect, the district court observed:
Uncontroverted facts in this record reflect that the Plant83/General Electric
system has already been expanded to take into account additional
contamination evidenced by sample data from more recently installed
monitoring wells. In early 2000, the groundwater monitoring program
detected contamination in a newly installed well. . . . This demonstrated to
EPA that “the monitoring system is effective in showing that if there are any
concentrations, they are picked up and detected. And once we have the
detections, we take the appropriate steps to deal with them.” Accordingly, in
2003, GE expanded its existing remedial system by installing a new extraction
well, two new injection wells, and an additional monitoring well, all approved
by EPA and NMED.
General Elec., 322 F. Supp. 2d at 1250 (internal citations omitted); see supra n.16.
33
South Valley Site, the district court questioned the State’s failure to drill its own wells to
verify the existence of contamination beyond the scope of the existing system. In the end,
the court found the AG’s “deep, deep” plume theory just that – a theory unsupported by
facts, or, in the court’s own words, “a concept built largely upon conjecture masquerading
as inference.” Id. at 1256.
The district court also concluded the AG failed to raise any genuine issue of
material fact regarding her “narrower, static view” of the intended scope of the CERCLA-
mandated remediation. The court reasoned that defining the scope of remediation solely
in terms of the current operation ignored the language of the ROD for OU5 and OU6, as
well as the “Plant 83/General Electric system’s demonstrated ability to monitor for
contamination over an extended area and to expand and adjust in light of credible sample
data evidencing the presence of additional contamination in need of treatment.” Id. at
1257. The record, according to the court, “indicates that the EPA’s selected remedy . . . is
intended to address all contamination at or emanating from the Plant 83 site.” Id. 1248.
More importantly, the AG had failed to establish the presence of any
contamination in the South Valley beyond the reach of CERCLA and the EPA’s remedial
plan, thus leaving the AG without a case:
The array of existing remedial actions at South Valley – actions that the State
has initiated, approved of, acquiesced in and agreed to – have largely occupied
the field, leaving little or no room for the operation of the judicial damages
remedy that Plaintiffs seek. The intended scope of the EPA-ordered remedy
embraces all of the contamination attributable to the Plant 83 facility. . . . All
of these remedial systems undertake to clean up groundwater sufficiently to
34
satisfy both the federal drinking water standards and the NMWQCC abatement
regulations – the end result that Plaintiffs insist they desire to achieve.
Id. at 1271. Whereupon, the court granted summary judgment to Defendants GE and
ACF on the AG’s state law claims. See Fed. R. Civ. P. 56. Our review of that grant is de
novo. See Adamson v. UNUM Life Ins. Co., 455 F.3d 1209, 1212 (10th Cir. 2006).
III.
Throughout the course of this chronicle, the State of New Mexico has availed itself
of federal legislative and executive authority to compel the PRPs, including Defendants
GE and ACF, to clean up their mess in the South Valley. During such course, New
Mexico’s NRT, backed by and consistent with his duties under both federal and state law,
began his pursuit of NRDs against the PRPs. See supra, at 18-21. In mid course, the
State AG decided she had a better plan to benefit the public treasury, and, at least in the
opinion of some, usurped the authority of the State’s NRT and jumped ship. See Ben
Neary, Judge Dismisses Water Pollution Lawsuit, Santa Fe New Mexican, May 13, 2004,
at B-1. Without any CERCLA-based NRD assessment to rely on, see 43 C.F.R. Part 11,28
28
We are well aware that NRD assessment is a costly proposition. According to
two commentators, after its 1986 amendments, CERCLA “cast trustees adrift to finance
their own damage assessment before filing claims against polluters – a costly proposition,
given that damage assessments typically cost millions of dollars. This lack of funding has
created a virtually insurmountable obstacle considering that agency budgets have
historically authorized little or no funding for NRD assessments.” Gina M. Lambert &
Anthony R. Chase, Remedying CERCLA’s Natural Resource Damages Provision:
Incorporation of the Public Trust Doctrine Into Natural Resource Damage Actions, 11 Va.
Envtl. L. J. 353, 371-72 (1992) (footnotes omitted). Still, given the AG’s original multi-
(continued...)
35
the State undertook the arduous task of proving as an initial matter natural resources
injury outside the intended scope of a comprehensive, CERCLA-mandated remediation.
The State also confronted the problem of restrictions which both CERCLA and the
NRTA impose upon the measure of damages even supposing some redressable injury
remains. These are the overlying concerns which lead us, like the district court, to
conclude the State, at least for now, is entitled to no relief on its NRD claim arising out of
groundwater contamination in the South Valley. We begin by defining the scope of the
State’s NRD claim.29
28
(...continued)
billion dollar claim against GE and ACF, a few million dollars seems not so significant a
cost to take advantage of CERCLA’s rebuttable presumption of NRDs, especially where
the reasonable costs of assessment are recoverable from PRPs. See 42 U.S.C. §
9607(a)(4)(C), (f)(2)(C).
29
We need not address in any detail the State’s argument that, once the State
dismissed its federal claims with prejudice, the district court abused its discretion in
choosing to exercise supplemental jurisdiction over its remaining state law claims. See
28 U.S.C. § 1367(a). For the reasons stated in its opinion, the district court most
assuredly did not abuse its discretion in retaining jurisdiction. At the time of dismissal,
principles of economy and fairness far outweighed the interest in comity which the State
raised to justify a remand to state court. See General Elec., 335 F. Supp. 2d at 1180-81.
Furthermore, we view the State’s belated dismissal of its federal claims, only after the
district court expressed skepticism over the validity of its damage calculation, as in all
likelihood a manipulative tactic designed to achieve a remand to state court. See
Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343, 357 (1988) (“A district court can
consider whether the plaintiff has engaged in any manipulative tactics when it decides
whether to remand a case.”). Lastly, the effect which federal law, namely CERCLA,
might have upon the scope of the State’s NRD claim also weighed in favor of retaining
jurisdiction. Because the district court properly exercised supplemental jurisdiction under
§ 1367(a), we need not decide whether CERCLA’s involvement with the state law claims
was sufficient to warrant the district court’s independent exercise of federal jurisdiction.
(continued...)
36
A.
No one doubts the State of New Mexico manages the public waters within its
borders as trustee for the people and is authorized to institute suit to protect those waters
on the latter’s behalf. See, e.g., State ex rel. Reynolds v. Mears, 525 P.2d 870, 875 (N.M.
1974); State ex rel. Bliss v. Dority, 225 P.2d 1007, 1010 (N.M. 1950). In State ex rel.
Reynolds v. Mendenhall, 362 P.2d 998, 1000 (N.M. 1961), the New Mexico Supreme
Court declared all underground waters within the State to be public waters subject to
appropriation for beneficial use. See N.M. Stat. Ann. § 72-12-18 (codification of the
public trust doctrine as to groundwaters). Similarly, no one doubts the duty of the State
AG generally to prosecute a state law civil action in which the State is a party. See id. §
8-5-2.B. In view of the foregoing, neither GE nor ACF challenges the State’s Article III
standing to pursue this state law action for harm to the public interest in its capacity as
trustee of the State’s groundwaters.30
29
(...continued)
See Grable & Sons Metal Prod., Inc. v. Darue Eng’g & Mfg., 125 S. Ct. 2363, 2366-67
(2005) (recognizing that “in certain cases federal question jurisdiction will lie over state-
law claims that implicate significant federal issues”).
30
The State makes much ado over its supposed ability to pursue this action not
only in its capacity as public trustee of the State’s groundwaters, but also as parens
patriae to repair harm to its “quasi-sovereign” interest in those groundwaters. See Satsky
v. Paramount Commc’ns, Inc., 7 F.3d 1464, 1469 (10th Cir. 1993). The doctrine of
parens patriae is a standing concept rather than one of substantive recovery. See Alfred
L. Snapp & Son, Inc. v. Puerto Rico ex rel Barez, 458 U.S. 592, 600-08 (1982); 13
Charles A. Wright, Arthur R. Miller, & Edward H. Cooper, Federal Practice and
Procedure § 3531.11 (1984 & Supp. 2006). The doctrine does not create any cause of
(continued...)
37
Armed with standing, the State throughout this litigation has asserted an
unrestricted right to pursue against GE and ACF any and all claims, remedies, and
damage theories available under state law. The State supports its assertion by referencing
two of CERCLA’s saving clauses. The first, 42 U.S.C. § 9614(a), provides: “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.” The second, 42 U.S.C. § 9652(d), provides: “Nothing in this chapter
shall affect or modify in any way the obligations or liabilities of any person under other
30
(...continued)
action. Rather, the doctrine may provide a state with standing to sue for damages to a
broader range of natural resources because it does not require state ownership of such
resources. See Allan Kanner, The Public Trust Doctrine, Parens Patriae, and the Attorney
General as the Guardian of the State’s Natural Resources, 16 Duke Envtl. L. & Pol’y F.
57, 111 (2005). We have found no judicial authority, however, which suggests the
doctrine of parens patriae provides a state substantive rights beyond those provided by
the public trust doctrine in a case involving the contamination of a publicly-held natural
resource. See Note, The Scope of Authority of Natural Resource Trustees, 20 Colum. J.
Envtl. L. 301, 318-19 (1995) (suggesting courts should “look skeptically” at a NRT’s
assertion of authority under the parens patriae doctrine given its procedural character);
but see Note, Theories of State Recovery Under CERCLA for Injuries to the
Environment, 24 Nat. Resources J. 1101, 1110-1111 (1984) (suggesting the parens
patriae doctrine may support a cause of action “analytically distinct” from a state’s action
as public trustee, thus providing remedies outside the scope of CERCLA). In any event,
the point is largely academic given our conclusion that CERCLA does indeed limit the
remedies available to the State under the circumstances of this case. See infra at 44-47.
In other words, a suit in the State’s capacity as parens patriae and a suit in its capacity as
public trustee of the State’s groundwaters afford the State identical remedies . Cf. New
Jersey Dept. of Envtl. Prot. v. Jersey Cent. Power and Light Co., 336 A.2d 750, 759 (N.J.
App. 1975) (rejecting “artificial differences between the State’s role as public trustee and
its role under the fiction of parens patriae”), rev’d on other grounds, 351 A.2d 337 (N.J.
1976).
38
Federal or State law, including common law, with respect to releases of hazardous
substances or other pollutants or contaminants.” Given these saving clauses, as well as
the spirit of cooperative federalism running throughout CERCLA and its regulations, we
may safely say Congress did not intend CERCLA to completely preempt state laws
related to hazardous waste contamination. See, e.g., Fireman’s Fund Ins. v. City of Lodi,
302 F.3d 928, 941-43 (9th Cir. 2002). “Congress clearly expressed its intent that
CERCLA should work in conjunction with other federal and state hazardous waste laws
in order to solve this country’s hazardous waste cleanup problem.” United States v.
Colorado, 990 F.2d 1565, 1575 (10th Cir. 1993); accord Manor Care, Inc. v. Yaskin, 950
F.2d 122, 125-26 (3d Cir. 1991) (Alito, J.).
At most then, this is a case of conflict preemption – an affirmative defense
available to GE and ACF notwithstanding the presence of the saving clauses. See e.g.,
Buckman Co. v. Plaintiff’s Legal Comm., 531 U.S. 341, 348 (2001) (recognizing a saving
clause does not bar application of conflict preemption principles); Wuebker v. Wilbur-
Ellis Co., 418 F.3d 883, 886 (8th Cir. 2005) (recognizing conflict preemption as an
affirmative defense). To ascertain CERCLA’s preemptive effect in this case and thus
define the scope of the State’s NRD claim, we ask whether that claim, or any portion
thereof, stands as an obstacle to the accomplishment of congressional objectives as
encompassed in CERCLA. See United States v. City and County of Denver, 100 F.3d
1509, 1512 (10th Cir. 1996); see also Rose v. Arkansas State Police, 479 U.S. 1, 3 (1986)
39
(acknowledging Article IV’s Supremacy Clause “invalidates all state laws that conflict or
interfere with an Act of Congress”); Wyoming v. United States, 279 F.3d 1214, 1234
(10th Cir. 2002) (recognizing “[t]he Supreme Court has repeatedly declined to give broad
effect to saving clauses where doing so would upset the careful regulatory scheme
established by federal law”) (citing Geier v. American Honda Motor Co., 529 U.S. 861,
871-72 (2000)).
1.
CERCLA is best known as setting forth a comprehensive mechanism to cleanup
hazardous waste sites under a restoration-based approach. See United States v.
Bestfoods, 524 U.S. 51, 55 (1998). CERCLA’s principle aims are to effectuate the
cleanup of hazardous waste sites and impose cleanup costs on responsible parties. See
Meghrig v. KFC Western, Inc., 516 U.S. 479, 483 (1996). Less well known but
increasingly important is CERCLA’s comprehensive damage scheme which addresses
damage assessment for natural resource injury, damage recovery for such injury, and use
of such recovery. See generally Kevin R. Murray, Steven J. McCardell, & Jonathan R.
Schofield, Natural Resource Damage Trustees: Whose Side Are They Really On?, 5
Envtl. Law. 407 (1999). As we have seen, CERCLA, at the behest of federal and state
NRTs, imposes liability upon PRPs not only for cleanup costs, but also for “damages for
injury to, destruction of, or loss of natural resources,” including the reasonable costs of
assessing such damages. 42 U.S.C. § 9607(a)(4)(c). While damages recovered under
40
CERCLA are “available for use only to restore, replace, or acquire the equivalent of such
natural resources by the State,” damages are not limited, “by the sums which can be used
to restore or replace such resource.” Id. § 9607(f)(1).
The legislative history of CERCLA’s 1986 amendments makes the meaning of
§ 9607(f)(1) abundantly clear. See supra n.1. The measure and use of damages arising
from the release of hazardous waste is restricted to accomplishing CERCLA’s essential
goals of restoration or replacement, while also allowing for damages due to interim loss
of use:31
The Committee notes that the last sentence of this amendment, which is
essentially a restatement of the language of the existing statute, has been the
source of some confusion. Both the amendment and the present language of
CERCLA state that sums recovered through a natural resource damage suit
shall be used for natural resource restoration and replacement, but that the
amounts recovered shall not be limited to those that can be used for that
purpose. It is clear from this language that the primary purpose of the resource
damage provisions of CERCLA is the restoration or replacement of natural
resources damaged by unlawful releases of hazardous substances. However,
the final clause is necessary because a situation could arise in which the
31
Notably, NRDs allowable under New Mexico’s NRTA appear identical to
damages allowable under CERCLA:
Awards of damages to natural resources in the state shall consist of
those amounts calculated in accordance with federal law, including:
A. the cost of restoration, replacement or acquisition of equivalent
resources, plus compensation for the loss of use or enjoyment of the natural
resources; and
B. compensation for the state’s expenses in investigating, assessing
and collecting damages and enforcing the state’s rights.
N.M. Stat. Ann. § 75-7-4 (emphasis added).
41
amount of damages caused by a release of hazardous substances is in excess
of the amount that could realistically or productively be used to restore or
replace those resources. That is, the total amount of damages includes the
costs of restoration and the value of all the lost uses of the damaged resources
. . . from the time of the release up to the time of restoration. Since the
damages contemplated by CERCLA include both, the total amount of damages
recoverable would exceed the restoration costs alone.
The Committee therefore intends that any excess funds recovered [i.e. funds
in excess of restoration costs] shall be used, in such an instance, for the third
purpose spelled out in the language of the amendment, which is to “acquire
the equivalent of the damaged resource.” . . . The Committee expects that any
such acquisition would provide resources of an equivalent nature at a location
as near as reasonably possible to the site at which the damages occurred.
H.R. Rep. No. 99-253(IV), at 50 (1985) (emphasis added), reprinted in 1986
U.S.C.C.A.N. 3068, 3080; accord Ohio v. United States Dept. of Interior, 880 F.2d 432,
454 & n.34 (D.C. Cir. 1989).32
32
The statement of Representative Jones of North Carolina during the House
Debate on the 1986 CERCLA amendments reinforces § 9607(f)(1)’s meaning:
[T]he amendment to [§ 9607(f)] clarifies that sums recovered by trustees are
to be used only to restore the natural resources . . . . The amendment reflects
the restitutionary nature of the natural resources regime of CERCLA. The
natural resource regime is not intended to compensate public treasuries. Nor
are recovered damages to be diverted for general purposes. The purpose of
the regime, rather, is to make whole the natural resources that suffer injury
from releases of hazardous substances. Of course, the trustees may use such
sums to reimburse them for the costs associated with recovering such damages,
including the costs of damage assessments. . . .
The basic measure of damages under CERCLA, as it is under the Clean Water
Act, is the costs of restoration, replacement or acquisition of the equivalent of
natural resources injured by unlawful releases. . . .
(continued...)
42
CERCLA’s saving clauses (as well as other CERCLA provisions) undoubtedly
preserve a quantum of state legislative and common law actions and remedies related to
the release and cleanup of hazardous waste.33 See, e.g., New York v. Shore Realty Corp.,
759 F.2d 1032, 1049-52 (2d Cir. 1985) (upholding a state’s public nuisance suit for
injunctive relief where CERCLA failed to provide the state a right to such relief ). The
saving clause found at 42 U.S.C. § 9614(a) ensures that states may enact laws “to
supplement federal measures related to the cleanup of hazardous wastes.” Manor Care,
950 F.2d at 126 (Alito, J.). CERCLA sets a floor, not a ceiling. Section 9614(a)
preserves state environmental regulations which in some instances set more stringent
cleanup standards. See United States v. Akzo Coatings of America, Inc., 949 F.2d 1409,
1454-58 (6th Cir. 1991). Section 9614(a) reinforces a state’s right to demand hazardous
waste cleanup apart from CERCLA: “CERCLA [§ 9614(a)] preserves the right of a state
or other party to proceed under applicable state law to conduct a cleanup of a site affected
32
(...continued)
The value of lost uses between the release and completion of the restoration
should also be accounted for; hence the proviso that the measures need not be
limited by the costs of restoration.
132 Cong. Rec. H9561-03, 29767 (daily ed. October 8, 1986) (statement of Rep. Jones)
(emphasis added).
33
Congress recognized the role of state law in hazardous waste cleanup when it
directly addressed the potential overlap of CERCLA and state law in 42 U.S.C. § 9614(b).
Subsection (b) provides in relevant part: “Any person who receives compensation for
removal costs or damages or claims pursuant to any other Federal or State law shall be
precluded from receiving compensation for the same removal costs or damages or claims
as provided in this chapter.”
43
by hazardous substances.” Colorado v. Idarado Mining Co., 916 F.2d 1486, 1488 (10th
Cir. 1990); accord Shore Realty, 759 F.2d at 1047-48; see, e.g., N.M. Stat. Ann. §§ 74-4-
1 thru 7-4-14 (“Hazardous Waste Act”).
Meanwhile, the principle purpose of the saving clause located at 42 U.S.C. §
9652(d) “is to preserve to victims of toxic waste the other remedies they may have under
federal or state law.” PMC, Inc. v. Sherwin-Williams Co., 151 F.3d 610, 617 (7th Cir.
1998) (Posner, J.).34 “Congress, in enacting CERCLA, intended to provide a vehicle for
cleaning up and preserving the environment from the evils of improperly disposed of
hazardous substances rather than a new font of law on which private parties could base
claims for personal and property injuries.” Artesian Water Co. v. Government of New
Castle County, 659 F. Supp. 1269, 1286 (D. Del. 1987) (internal quotations omitted),
aff’d, 851 F. 2d 643 (3d Cir. 1988).35 In PMC, 151 F.3d at 618, the Seventh Circuit
explained that while “federal environmental laws [were] not intended to wipe out the
34
Although some unsuccessful bills proposed to do so, CERCLA as enacted
provides no private right of action for personal or economic injury caused by the release
of hazardous substances. See United States v. Reilly Tar & Chem. Corp., 546 F. Supp.
1100, 1111 (D. Minn. 1982); Theories of State Recovery, supra n.30, at 1102 n.9 (citing
bills).
35
Examples of state law toxic tort suits stemming from hazardous waste cleaned
up under CERCLA include suits for personal and economic harm by (1) 280 residents in
the “Three Mile Island” nuclear disaster, (2) 1,300 residents in the “Love Canal” landfill
disaster, and (3) 78 families in the Fullerton, California, Chevron McColl dumping
disaster. See Note, Shovels First and Lawyers Later: A Collision Course for CERCLA
Cleanups and Environmental Tort Claims, 21 Wm. & Mary Envtl. L. & Pol’y Rev. 421,
428 (1997).
44
common law of nuisance[,]” § 9652(d) “must not be used to gut provisions of
CERCLA[:]”
The purpose of a saving clause is merely to nix an inference that the statute in
which it appears is intended to be the exclusive remedy for harms caused by
the violation of the statute. The legislature doesn’t want to wipe out people’s
rights inadvertently, with the possible consequence of making the intended
beneficiaries of the legislation worse off than before it was enacted.
2.
Sound public policy, as reflected in CERCLA (and New Mexico’s NRTA),
demands that “environmental protection and preservation be the primary, if not the sole,
objective of natural resource damage valuation.” Frank B. Cross, Natural Resource
Damage Valuation, 42 Vand. L. Rev. 269, 327 (1989). The notion that NRDs should be
used to restore or replace the injured natural resource predates CERCLA. Perhaps the
best example is the First Circuit’s decision in Puerto Rico v. SS Zoe Colocotroni, 628
F.2d 652 (1st Cir. 1980). In that case, an oil spill contaminated beaches and mangrove
forests. The district court awarded NRDs based on the replacement value of over ninety-
two million affected “invertebrate animals.” On appeal, the First Circuit vacated the
award because Puerto Rico had no intention of purchasing such “animals” to restore the
area. Nor would the area, contaminated with oil, support them. In an oft-quoted
statement, the court opined: “The ultimate purpose of any such remedy should be to
protect the public interest in a healthy functioning environment, and not to provide a
windfall to the public treasury.” Id. at 676 (emphasis added). The court remanded the
45
case for a damage determination based on a reasonable plan to restore the injured area or
acquire an alternative site. Id. at 678.
As the First Circuit recognized, an unrestricted award of money damages does not
restore or replace contaminated natural resources. When trust resources, in this case
groundwater, are contaminated, however, the trustee as fiduciary should restore or replace
the corpus of the trust. See Cross, supra at 331 (recognizing the use of restoration costs
as the primary measure of damages is “consistent with the state’s role as trustee for
resources”). Such was the obvious objective of Congress in enacting 42 U.S.C. §
9607(f)(1). Consistent with this objective, we hold CERCLA’s comprehensive NRD
scheme preempts any state remedy designed to achieve something other than the
restoration, replacement, or acquisition of the equivalent of a contaminated natural
resource. We reach this conclusion notwithstanding CERCLA’s saving clauses because
we do not believe Congress intended to undermine CERCLA’s carefully crafted NRD
scheme through these saving clauses. See International Paper Co. v. Ouellette, 479 U.S.
481, 494, 498-99 n.19 (1987) (acknowledging that preemption of state law remedies may
occur where such remedies conflict with congressional objectives). The restrictions on
the use of NRDs in § 9607(f)(1) represent Congress’ considered judgment as to the best
method of serving the public interest in addressing the cleanup of hazardous waste. We
cannot endorse any state law suit that seeks to undermine that judgment. See id. at 497.
This is not to say the State’s public nuisance and negligence theories of recovery
46
are completely preempted in view of the ongoing remediation in the South Valley. We
need not go that far.36 Rather the remedy the State seeks to obtain through such causes of
action – an unrestricted award of money damages – cannot withstand CERCLA’s
comprehensive NRD scheme. See Bedford Affiliates v. Sills, 156 F.3d 416, 426-27 (2d
Cir. 1998) (holding CERCLA’s contribution scheme preempted state law remedies of
restitution and indemnification); In re Reading Co., 115 F.3d 1111,1117-21 (3d Cir.
1997) (same).37 An interpretation of the saving clauses that preserved the State’s NRD
claim for money damages in its original form would seriously disrupt CERCLA’s
principle aim of cleaning up hazardous waste.
Under the logic of the State’s approach, hazardous waste sites need never be
cleaned up as long as PRPs are willing or required to tender money damages to a state as
trustee. Similarly, PRPs conceivably might be liable for double recovery where a state’s
36
We agree with the district court that the State has no cause of action against GE
or ACF for trespass to the South Valley aquifer separate and apart from injury to the
groundwater. See supra at 26. While we can envision a case where irreparable damage
to groundwater might require the acquisition of some sort of “reservoir” as part of a
natural resource replacement plan, this is not that case. As the district court ably
recognized, the State as guardian of the public trust has no possessory interest in the sand,
gravel, and other minerals that make up the aquifer – a necessary requisite to maintaining
a trespass action. See Schwartzman, Inc. v. Atchison, Topeka & Santa Fe Ry, 857 F.
Supp. 838, 844 (D.N.M. 1994).
37
We leave for another day the question of whether state law NRD claims such as
New Mexico’s may interfere with CERCLA’s obvious preference for claim settlement.
See Bedford Affiliates, 156 F.3d at 427 (CERCLA’s statutory settlement scheme “was
put in place to aid the expeditious resolution of environmental claims”) (referencing 42
U.S.C. § 9613(f)); see also 42 U.S.C. § 9622.
47
successful state law claim for money damages precedes an EPA-ordered cleanup.
Finally, in a case where an NRD claim is premised upon both CERCLA and state law, a
portion of the recovery if earmarked for the state law claims could be used for something
other (for example, attorney fees) than to restore or replace the injured resource. The
remainder of the NRD recovery, earmarked for the CERCLA claim, would then be
insufficient to restore or replace such resource. Clearly, permitting the State to use an
NRD recovery, which it would hold in trust, for some purpose other than to “restore,
replace, or acquire the equivalent of” the injured groundwater would undercut Congress’s
policy objectives in enacting 42 U.S.C. § 9607(f)(1). See Ouellette, 479 U.S. at 494 (“A
state law is also preempted if it interferes with the methods by which the federal statute
was designed to reach [its] goals.”).
B.
Having thus defined and narrowed the scope of the State’s NRD claim against
Defendants GE and ACF, we turn to the underlying merits of the State’s arguments in
support of NRDs as a result of groundwater contamination in the South Valley. The State
essentially seeks to hold GE and ACF liable for both replacement and loss of use costs.
According to the State, the CERCLA-mandated remediation process is both
underinclusive and inadequate in that (1) a portion of the contaminated groundwater lies
outside the parameters of the remediation and (2) the remainder of the contaminated
groundwater cannot be restored to below the State’s maximum contaminant levels, i.e.,
48
appropriate water quality standards. The State further argues it has lost the interim right
to appropriate the South Valley’s contaminated groundwater for beneficial use. We
address these arguments in turn, dismissing the former and rejecting the latter.
1.
Despite the State’s contrary assertion, its expert-intense argument that the remedial
phase of the cleanup does not address the entirety of the contamination and will not
restore the groundwater to beneficial use as drinking water is, in all respects, a challenge
to an EPA-ordered remediation. In its opening brief, the State repeatedly takes aim at the
ongoing remediation. The State argues the EPA is not applying the “proper remediation
standard[s].” The State complains the EPA “abandon[ed] the ROD and require[d]
remediation of only the shallowest portion of the total plume.” The State attacks the
remediation as “limited in scope” and argues the remediation “leaves a substantial portion
of contaminated water untreated.” The State’s assertions are contrary to both the EPA’s
and NMED’s view that the remediation system, which we have described extensively, (a)
has fully captured the contaminant plume in the South Valley, (b) is successfully restoring
the groundwater to drinking water standards, and (c) will continue to operate until
restoration is complete. See supra12-18; 31-34.
Of course, any challenge to the remediation in the South Valley must wait because
CERCLA “protects the execution of a CERCLA plan during its pendency from lawsuits
that might interfere with the expeditious cleanup effort.” McClellan Ecological Seepage
49
Situation v. Perry, 47 F.3d 325, 329 (9th Cir. 1995). Absent certain exceptions
inapplicable to this case (including most notably an NRT’s NRD lawsuit under § 9607),
CERCLA § 9613(h), entitled “Timing of review,” provides: “No Federal Court shall
have jurisdiction . . . under State law . . . to review any challenges to removal or remedial
action selected . . . .” 42 U.S.C. § 9613(h). Commenting on said section, we have
explained: “To the extent a state seeks to challenge a CERCLA response action, the plain
language of § 9613(h) would limit a federal court’s jurisdiction to review such a
challenge.” Colorado, 990 F.2d at 1576.38 In other words, “[t]he obvious meaning of [§
9613(h)] is that when a remedy has been selected, no challenge to the cleanup may occur
prior to completion of the remedy.” Schalk v. Reilly, 900 F.2d 1091, 1095 (7th Cir.
1990); see also Perry, 47 F.3d at 338-331; Alabama v. United States Envtl. Prot. Agency,
871 F.2d 1548, 1557-59 (11th Cir. 1989); H.R. Rep. No. 99-253(I), at 81, reprinted in
1986 U.S.C.C.A.N. 2835, 2863 (“[T]here is no right to judicial review of the [EPA’s] . . .
implementation of response actions until after the response actions have been completed .
. . .”). Because the State’s lawsuit calls into question the EPA’s remedial response plan, it
is related to the goals of the cleanup, and thus constitutes a “challenge” to the cleanup
38
Consistent with our interpretation of § 9613(h), we further noted in Colorado
that “while the ARAR’s provision [42 U.S.C. § 9621] requires the [EPA] to allow a state
to participate in remedial planning and to review and comment on remedial plans, it only
allows states to ensure compliance with state law at the completion of the remedial
action.” 990 F.2d at 1581 (emphasis added).
50
under § 9613(h). See Broward Gardens Tenants Ass’n v. United States Envtl. Prot.
Agency, 311 F.3d 1066, 1072-73 (11th Cir. 2002).
The State’s argument that it is not seeking to alter or expand the EPA’s response
plan but rather only to acquire money damages falls on deaf ears. Any relief provided the
State would substitute a federal court’s judgment for the authorized judgment of both the
EPA and NMED (lest we forget an arm of the State) that the cleanup is not only
comprehensive but flexible and dynamic, readily adjusting as new data is received. See
supra nn. 14 & 16. Accepting the State’s argument might place GE and ACF in the
unenviable position of being held liable for monetary damages because they are
complying with an EPA-ordered remedy which GE and ACF have no power to alter
without prior EPA approval. No one doubts that § 9613(h) would prohibit us from
entertaining a state law action requesting mandatory injunctive relief to alter or expand
the ongoing response plan in the South Valley. See City and County of Denver, 100 F.3d
at 1512 (recognizing preemption occurs where a party cannot comply with both federal
and state directives). We will not permit the State to achieve indirectly through the threat
of monetary damages, which would be available only to restore or replace the injured
natural resource, what it cannot obtain directly through mandatory injunctive relief
incompatible with the ongoing CERCLA-mandated remediation. See Feikema v. Texaco,
Inc. 16 F.3d 1408, 14-18-19 (4th Cir. 1994) (Murnaghan, J., concurring); see also
Ouellette, 479 U.S. at 498 n. 19 (recognizing that compensatory damages may have the
51
same effect on a polluter as direct regulation imposed through injunctive relief); Ohio,
880 F.2d at 481 (“[A]ll sums recovered” for injury to the public’s natural resources “must
be devoted to restoration of damaged resources or acquisition of equivalents.”) (emphasis
added).
The State’s argument that remediation in the South Valley is not working as the
EPA and NMED claim constitutes a dispute over environmental cleanup methods and
standards. See ARCO Envtl. Remediation, L.L.C. v. Department of Health and Envtl.
Quality, 213 F.3d 1108, 1115 (9th Cir. 2000). So viewed, § 9613(h) reflects Congress’s
judgment that residual injury, if any, to the South Valley’s groundwater be addressed at
the conclusion of the EPA-ordered remediation. Cf. Proposed Rulemaking Notice, 61
Fed. Reg. 37031-01 (July 16, 1996) (“Trustees may recover damages for those natural
resource injuries that are not fully remedied by response actions[.]”). Only then will we
know the effectiveness of the cleanup and the precise extent of residual damage. See City
of Santa Fe v. Komis, 845 P.2d 753, 756 (N.M. 1992) (“Damages which are speculative,
conjectural, or remote are not to be considered for compensation.”) (internal quotations
omitted). Our view is entirely consistent with the State’s most recent characterization of
its NRD claim in its reply brief as “residual to a CERCLA remedy.” Accordingly, we
will dismiss for want of jurisdiction under § 9613(h) the State’s claim for monetary
damages arising from the alleged inadequacy of the EPA’s selected remedy in the South
Valley. Because under the common law the State is not subject to a statute of limitations,
52
it may renew its common law claims for residual damages under state law if and when
necessary. See In re Bogert’s Will, 329 P.2d 1023, 1025 (N.M. 1958) (recognizing the
statute of limitations does not run against the sovereign unless expressly or by necessary
implication provided).
2.
Lastly, we address the State’s loss-of-use damage theory, namely, the State’s
argument the contamination in the South Valley has deprived it of the right to appropriate
groundwater for beneficial use in that area.39 As we have seen, the State’s groundwaters
are public waters subject to appropriation for beneficial use. See N.M. Stat. Ann. § 72-
12-1. State law vests the State Engineer with oversight of those groundwaters. See id. §
72-2-1. In a declared underground basin such as that underlying the South Valley, would-
be appropriators must apply to the State Engineer for a water rights permit. See id. § 72-
12-3.A. The State Engineer may issue a permit only if he or she finds unappropriated
39
As our analysis demonstrates, we have no quarrel with the general proposition
that the State, in its capacity as trustee of the State’s groundwaters, is entitled to recover
for all interim loss-of-use damages on behalf of the public from the time of any
hazardous waste release until restoration: “[L]ost use damages incurred by the public
prior to cleanup are damages that, in a layman’s terms, remain on the debit side of the
ledger after cleanup, and are, in fact, unredressed damages for which the trustee[] may
recover.” Alaska Sports Fishing Ass’n v. Exxon Corp., 34 F.3d 769, 772 (9th Cir. 1994).
Any such remedy, however, must be tailored to redress specific injury to the State’s role
as trustee, i.e., its role of making water available for appropriation and beneficial use by
water rights holders. Claims of impairment of beneficial use are better left to water rights
holders whose uses are impaired. See Michael L. Rodburg & Timothy L. Borkoski, New
Mexico v. General Electric: A Cautionary Tale, 176 N.J. Law J. 720, at 2 (May 31, 2004).
53
waters are available and existing water rights would remain unimpaired. See id. § 72-12-
3.E. The State’s position, accepted by neither the State Engineer nor NMED, is that
absent the contamination, additional groundwater would be available for appropriation in
the South Valley notwithstanding the replacement of SJ-6 with B-4. See supra, at 4-10.
We conclude, however, the district court was quite correct in concluding the State failed
to present any evidence on which a reasonable jury could find such availability and thus
loss-of-use damages.
The Rio Grande Compact equitably apportions waters of the Rio Grande River
among New Mexico, Texas, and Colorado. See 53 Stat. 785 (1939), reprinted at N.M.
Stat. Ann. § 72-15-23; see generally City of El Paso v. Reynolds, 563 F. Supp 379, 383-
84 (D.N.M. 1983) (discussing the history of the Compact). The surface waters of the Rio
Grande have long been fully appropriated. See City of Albuquerque v. Reynolds, 379
P.2d 73, 77 (N.M. 1962). As part of the Middle Rio Grande Underground Water Basin,
the groundwaters underneath the South Valley are located less than a mile from the river
and “contribute substantially to the flow of the Rio Grande, thus constituting a part of the
source of the stream flow.” Id. Because appropriation of groundwaters from the basin
affect the surface flow of the Rio Grande, the State Engineer has the authority to require
that previously appropriated water rights affecting such flow be retired as a condition to
54
new appropriations of underground water from the basin. Id. at 80-81;40 see generally A.
Dan Tarlock, Law of Water Rights and Resources § 6:20 (2006) (discussing the
integration of surface and groundwater rights in New Mexico).
According to the State Engineer’s “Guidelines for Review of Water Rights
Applications” in the “Middle Rio Grande Administrative Area” (MRGAA), a region
which includes the South Valley: “Since the declaration of the Rio Grande Underground
Water Basin, . . . groundwater permittees have been required to obtain valid water rights
in an amount sufficient to offset the effects of their diversions on the surface flows of the
Rio Grande stream system.” “The public welfare is best served by limiting actual
groundwater diversions within the MRGAA to the amount of valid surface water rights
transferred or otherwise held by the permittees, plus the amount of water the permittee
returns directly to the river.” In other words, new appropriations of groundwater in the
South Valley are unavailable absent an offset of existing water rights. Thus, additional
groundwater in the South Valley, for reasons unrelated to the contamination, is not as
readily available for appropriation as the State would have us believe.
Because B-4 provided a point of groundwater diversion outside the parameters of
the contamination surrounding SJ-6, we presume all existing water rights in the South
40
In Reynolds, the court upheld the State Engineer’s decision to deny the City of
Albuquerque the right to place wells in the underground basin unless the city retired its
existing surface rights to offset the effect of new groundwater pumping on the flow of the
river. See Reynolds, 379 P.2d at 81.
55
Valley are being and have been satisfied. The State has proffered little except bald
assertions to suggest otherwise. At oral argument, the court asked the State whether since
the startup of B-4 any water rights holders in the South Valley had complained about
impairment of those rights or the lack of available water. The court further inquired
whether any potential appropriators had been denied permits due to the contamination. In
neither instance could the State point to an example. Notably, the groundwater
contamination in the South Valley apparently has not prevented the City of Albuquerque,
the principle holder of appropriated water rights in the South Valley from extracting and
using the water to which it is entitled. That’s because B-4 “replaced” SJ-6. Viewed
alternatively, when B-4 was placed in operation, the State “acquired the equivalent” of
the resources it lost when SJ-6 was decommissioned. See 42 U.S.C. § 9607(f)(1). As we
have seen, this is precisely the principle measure of damages to which the State is
entitled. If a contaminated natural resource such as groundwater can be replaced in a
timely manner pending restoration, we have difficulty envisioning any significant loss-of-
use damage. Thus, the district court properly entered summary judgment in favor of GE
and ACF on the State’s loss-of-use damage theory.
IV.
Consistent with the foregoing, the State’s NRD claim for injury residual to the
outcome of the EPA-ordered remediation in the South Valley, based on state law theories
of nuisance and negligence, is dismissed for want of jurisdiction. 42 U.S.C. § 9613(h).
56
Although our analysis is largely but not entirely in accord with the district courts’, the
court’s entry of summary judgment in favor of Defendants GE and ACF is nonetheless in
all other respects affirmed.
AFFIRMED IN PART and DISMISSED IN PART.
57