State of New York v. Next Millenium Realty

Citation: Not availableDocket: 12-2894-cv

Court: Court of Appeals for the Second Circuit; October 16, 2013; Federal Appellate Court

Original Court Document: View Document

SummaryOriginalCytator Case TreatmentBackward CitatorAnalysis

EnglishEspañolSimplified EnglishEspañol Fácil

The case titled "State of New York v. Next Millenium Realty" involves multiple parties, including the State of New York and Joseph Martens as plaintiffs, alongside several entities and individuals as defendants, including Next Millenium Realty, LLC, and various executors of estates. The appeal was argued on May 13, 2013, and decided on October 15, 2013. The docket number for the case is 12-2894-cv. The defendants comprise a wide range of corporations and individuals, including realty firms, manufacturing companies, and estate executors, indicating a complex legal dispute with multiple cross-defendants and cross-claims. The significance of the case lies in its involvement of environmental issues under the jurisdiction of the New York State Department of Environmental Conservation, as well as the extensive list of defendants suggesting potentially broad implications for liability and regulatory compliance.

The appeal involves a judgment from the United States District Court for the Eastern District of New York, which dismissed the State of New York's claims against various defendants under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA) for costs related to groundwater contamination in Hempstead, New York. The district court ruled in favor of the defendants, asserting that the claims were time-barred. The appellate court has vacated this ruling and remanded the case for further proceedings. The State of New York was represented by Solicitor General Barbara D. Underwood, while numerous law firms represented the defendants, which included various individuals and corporate entities linked to the contamination originating from the New Cassel Industrial Area.

The district court, led by Judge Feuerstein, granted the defendants' motion for summary judgment, dismissing the State's action as time-barred under the six-year statute of limitations for remedial actions specified in 42 U.S.C. § 9613(g)(2)(B). This statute is activated by the start of cleanup construction, which the court determined began over six years prior to the filing of the suit. The State argued that the actions in question were removal actions, governed by a three-year statute of limitations under 42 U.S.C. § 9613(g)(2)(A), which starts upon the completion of the removal action. The State asserted that since the removal measures were not finished at the time of filing, the limitations period had not commenced. The appellate court concurred that the State's action was timely, classifying the cleanup activities as removal measures throughout the relevant timeframe. Consequently, the appellate court found that the district court incorrectly applied the statute of limitations for remedial actions and vacated the decision, remanding the case for further proceedings.

The case involves the NCIA site in North Hempstead, New York, where groundwater contamination from volatile organic compounds (VOCs) was identified by the Nassau County Department of Health in the 1980s. Following the discovery, the New York State Department of Environmental Conservation listed the site as hazardous in 1988. In 1989, VOCs were detected in drinking water supply wells near the site, prompting the Town to engage engineering firm Dvirka and Bartilucci to investigate. They confirmed VOC contamination and recommended a granulated activated carbon (GAC) system to address the issue. The GAC was installed in 1990, approved for operation in 1993, and has remained operational since. However, from December 1990 to May 1995, the Town experienced rising VOC levels that significantly increased the operational costs of the GAC system, raising concerns about its effectiveness and feasibility.

Concerns regarding the efficiency and operation costs of the GAC Treatment System prompted the Town to seek a supplementary system. D&B recommended an air stripper tower in May 1995, designed to treat water before it enters the GAC system. Following exploratory soil borings to confirm the soil's capacity, the Town awarded the construction contract in July 1995, with completion in 1997. The air stripper tower has been operational since its completion.

The New York State Department of Environmental Conservation (DEC) initiated a remedial investigation of the NCIA in 1995, sampling groundwater monitoring wells and conducting further investigations through 2000. A public meeting in May 1995 raised concerns about groundwater contamination, leading the Town to request funding and a thorough investigation by the DEC. By 1999, engineers confirmed three volatile organic compound (VOC) plumes from the NCIA. The DEC published a remedial investigation report in September 2000, outlining a strategy in three parts for addressing various contamination levels.

In October 2003, the DEC issued a Record of Decision (ROD) which included the existing GAC and air stripper tower in a comprehensive remediation plan projected to cost $3.5 million and take seven years. The plan involved pilot testing, removal of contaminated soil, additional vapor stripping wells, and a long-term monitoring program.

The State entered tolling agreements with several potentially responsible parties to pause the statute of limitations, starting June 27, 2001. Subsequently, on March 13, 2006, the State filed a cost-recovery lawsuit under CERCLA section 107, seeking reimbursement for costs related to the investigation and remediation of hazardous substance releases from the NCIA.

On September 24, 2010, a magistrate judge recommended granting the defendants' motion for summary judgment, stating that the State's claims were barred by the statute of limitations. The district court adopted this recommendation on November 22, 2011, concluding that the actions involving the GAC and air stripper were "remedial" and attributable to the State, with claims subject to a six-year limitation period. The court determined that the statute of limitations began when the GAC was installed in 1990 or when foundational borings for the air stripper were drilled on June 12-13, 1995. Since the earliest tolling agreement was not effective until June 27, 2001—more than six years after the relevant construction commenced—the State's lawsuit, filed on March 13, 2006, was ruled time-barred. 

The excerpt also discusses the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), which empowers federal and state governments to address hazardous waste spills using public funds and subsequently seek cost recovery from polluters. CERCLA is designed to facilitate immediate cleanup efforts while deferring liability determinations. The statute categorizes removal actions as urgent responses to imminent threats, while remedial actions focus on long-term hazardous waste management. Courts emphasize the immediacy of threats in classifying cleanup actions, with CERCLA intended to be interpreted broadly to fulfill its objectives of efficient cleanup and accountability for polluters.

Removal and remedial actions under CERCLA have distinct statutes of limitations: three years for removal actions (triggered by completion) and six years for remedial actions (triggered by initiation of physical construction). The classification of actions as "removal" or "remedial" is a legal question subject to de novo review. The court determined that the cleanup measures involving the Granular Activated Carbon (GAC) system and air stripper tower constituted "removal actions" due to their response to an imminent public health threat. This threat was substantiated by reports indicating high levels of volatile organic compounds (VOCs) in the drinking water. Consequently, the installation of these systems was necessary to ensure the safety of the water supply. The court found that the statute of limitations had not expired when the action was commenced, as it was initiated within three years following the completion of the removal actions. The district court's dismissal based on timeliness was deemed erroneous. The GAC and air stripper were specifically designed to address contamination at the wells rather than to prevent the release of hazardous substances from their source.

Under 42 U.S.C. 9601(24), cleanup actions may be classified as "removal actions" when they do not fully eliminate public health threats or represent comprehensive remediation. The construction of a Granular Activated Carbon (GAC) system and an air stripper was initiated without knowledge of the source of volatile organic compounds (VOCs) in the drinking water, as the focus was on addressing an immediate water-supply issue rather than environmental cleanup. The GAC and air stripper were implemented to mitigate existing contamination from the NCIA, not to prevent future contamination, thus failing to qualify as "remedial actions" intended for permanent remedy. The source of VOC migration from the NCIA was only confirmed in 1999, long after the construction of these systems. 

In contrast to the Town’s actions, a precedent in Morrison Enterprises LLC v. Dravo Corp. established that actions can be considered "remedial" even without addressing the source of contamination if they provide alternative water supplies. However, the Town's measures did not provide alternative supplies but instead treated already contaminated water, making them distinct from the actions in Morrison. Although the GAC and air stripper became part of a long-term remediation strategy, they were classified as removal actions relevant to the statute of limitations at all times prior. The distinction is that removal actions can sometimes serve as permanent solutions, as noted in EPA guidance and other legal precedents.

Replacements for the wells, while essential for long-term site remediation, can initially be classified as removal actions. The GAC system and air stripper tower, despite performing certain remedial functions like preventing hazardous substance migration, are also categorized as removal activities due to their immediate response to health threats. Legal precedent supports the classification of excavation as a removal action, even when deemed remedial under CERCLA. In this case, the systems were implemented to address immediate drinking water safety without resolving the pollution source, thus qualifying as removal actions until the state adopted a remediation plan that included them.

The defendants argue that the duration and cost of the GAC and air stripper tower—operating since 1990 and 1997 respectively, with costs of $1.25 million and $1.2 million—indicate they are remedial actions. They reference CERCLA provisions stating that removal measures should not exceed $2 million in costs or last more than 12 months. However, exceptions exist for immediate public health risks or if continued actions are deemed necessary. It is noted that the removal status for the GAC and air stripper tower would have ended no earlier than the state’s adoption of its remedial plan, validating the timeliness of the state's cost recovery action. The defendants acknowledge that these cost limits do not apply since the state, rather than the federal government, performed the response measures.

The GAC and air stripper tower are deemed to fall within exceptions due to an "immediate risk to public health," necessitating "continued response actions" to address an emergency as per 42 U.S.C. 9604 (c)(1) and 40 C.F.R. 300.415 (b)(5)(i) and (ii). The Town implemented these measures in response to increasing VOC levels threatening drinking water safety, thus the limitations in 42 U.S.C. 9604 (c)(1) do not apply. The case W.R. Grace, 429 F.3d at 1226, 1249 supports that actions can be classified as removal despite high costs and lengthy duration when there is an immediate public health risk. EPA Guidance indicates that duration and cost do not solely determine whether a project is classified as removal or remedial; removal actions can be costly and prolonged. The GAC and air stripper tower were urgent responses addressing VOC levels, meaning their duration and expense do not categorize them as remedial actions.

The State's terminology, referring to the GAC system and air stripper as "interim remedial measures" and "remedial" alternatives, does not obligate a classification of these actions as remedial under statutory definitions. The term "remedial" is often used in a general sense in environmental discussions, which can lead to confusion with the statutory definition under CERCLA. Therefore, the mere use of the term does not establish the actions as "remedial" for statute of limitations purposes, as clarified in City of Moses Lake v. United States, 416 F. Supp. 2d 1015, 1024 (E.D. Wash. 2005).

The use of the term "remedial" in a general context over thirteen years does not imply an acknowledgment that the cleanup has transitioned from a 'removal' phase to a 'remedial' phase under CERCLA. "Remedy" in this context includes both temporary and permanent measures to tackle contamination threats. New York law recognizes "interim remedial measures" as activities addressing both emergency and non-emergency conditions, aligning with what may qualify as 'removal' actions under CERCLA. The Town's actions, such as deploying a GAC and an air stripper tower, were categorized as removal measures aimed at addressing immediate health risks from contaminated well water while investigating the contamination source and planning a more permanent solution. These actions began within three years of the State's implementation of a comprehensive remediation plan that included existing removal technologies. Therefore, the cleanup activities are classified as 'removal' measures, and the State's claims are subject to a three-year statute of limitations. Consequently, the State's lawsuit is not time-barred, leading to the vacating of the district court's judgment and remanding the case for further proceedings.