The Nickel Report

New chemicals of concern, new scientific and technical developments, newly discovered wastes, or natural disasters can add up to new CERCLA liabilities. When the Comprehensive Environmental Response Compensation and Liability Act (“CERCLA”) was passed in 1980, it did not address the finality of judgments and settlements for the cleanup of contaminated sites. Some early settlements with EPA provided a complete release from all future CERCLA liability, but that later changed when the United States Environmental Protection Agency (“EPA”) began to limit the scope of covenants not to sue to specified “matters covered” by the settlement. The 1986 CERCLA amendments in section 122(f)(6), 42 U.S.C. § 9622(f)(6)(1) permanently made the change to require “reopeners” in all but a few limited circumstances.

As a result of these “reopener” provisions, parties that have settled CERCLA claims with EPA had to live with the risk that new claims could be asserted to address new cleanup demands arising from previously unknown site conditions or new scientific information about the risks presented by residual wastes. That uncertainty might be more unsettling today because of a confluence of developments in the Superfund world:

• New chemicals of concern: In recent years, increasing attention has focused on the presence and risks associated with chemicals that were rarely investigated in the 1980s and 1990s, most notably perfluorooctanoic acid (“PFOA”), perfluorooctanesulfonate (“PFOS”), and related compounds, often used to make carpets; clothing; and food packaging; and 1,4-dioxane, a solvent used in the manufacture of chemicals; as a laboratory reagent; and in cosmetic products. PFOAs and PFOSs have been the subject of drinking water health advisories issued by EPA in 2016 and also were the subject of our post from March 2017. 1,4-Dioxane also has been identified as a groundwater contaminant that can enter drinking water systems. These substances are among the chemicals discussed the New York Times Sunday, October 22, 2017, front page feature story on toxic threats. They, and other chemicals in the spotlight of EPA’s legacy chemical initiative, have been detected at an increasing number of National Priority List (“NPL”) Superfund sites. Their newly detected presence raises questions about whether more cleanup measures are needed at NPL sites, other sites, and river systems.
• New and more accurate chemical testing and detection methods: In the world of CERCLA analytic chemistry, scientists with each passing year are able to detect and measure not only emerging chemicals of concern but also trace amounts of chemicals that were not identified in the initial sampling of a contaminated site. Samples in locations where contaminants previously were not detected now sometimes show the presence of substances that may be of regulatory concern. In CERCLA reopener terms, these findings may qualify as new site conditions or new information.
• New risk assessment standards: The risk assessment community is continually re-evaluating the human health and ecological risks associated with chemicals of concern. In some cases, the presumed “safe” levels of a substance have been lowered, but in others, the levels have been raised. The October 22, 2017, New York Times story describes the scrutiny given to a wide range of chemicals and the pressure for raising or lowering the scientifically accepted safe levels of risk. Because risk levels drive regulatory decisions about the appropriate levels of contaminants in soil, sediment, water, and air, an increase in the risks associated with a particular contaminant may lead regulators to reconsider the adequacy of past cleanup measures in light of new scientific information. Depending on the precise language used in a CERCLA reopener, lower risk thresholds for certain contaminants of concern may, or may not, constitute “new information.”
• Newly discovered waste: All NPL sites are extensively investigated before remedies are selected. But no investigation of a site involving contaminated soils, sediment, and groundwater can identify every location where contaminants might be present. As development encroaches upon the boundaries of these sites, or where new sampling activities are conducted in previously unsampled areas, new areas of contamination may be identified. If these areas are located outside the boundaries of a site, the claims may be treated as arising from an entirely new site, outside the scope of a previously negotiated settlement. Or, if located within the boundaries of the site, the claim may be treated as an instance of remedy failure or an inability to meet existing performance or cleanup standards. Either way, the affected parties may face increased, new liability.
• Natural disasters: Many Superfund sites are adjacent to waterways susceptible to flooding, and others are in coastal regions susceptible to hurricanes. Hurricane Irma recently impacted NPL sites in Texas and Louisiana, while Hurricane Maria impacted several on the island of Puerto Rico. In response, EPA must evaluate the existence of, and potential for, releases of contaminants. Wastes escaping from NPL sites may need to be captured and treated, fences may need to be repaired, and protective covers may need to be replaced. These tragic events could be classified as “acts of God” of the sort for which there could be a defense to CERCLA liability. 42 U.S.C. § 9607(b)(1). But, as my colleague Sarah Quiter has noted in her recent post, this defense is rarely successful. In CERCLA, that defense typically fails at sites where a cleanup program left some contamination in place, allowing EPA to argue that it was foreseeable that a later natural disaster could release previously contained contaminants.

Any of these developments may cause EPA and the parties that thought they had negotiated final settlements to consider the possibility that “reopener” liability will be triggered, unanticipated costs will be incurred, and the group (or what is left of the group) of settling parties may be brought back together to negotiate over new investigation and cleanup demands. When that happens, the affected private parties must work through a checklist of significant issues to frame an appropriate response:

• Review the terms of the reopener language: The “unknown conditions”/”new information” reopener language is not the same in every CERCLA settlement document. While EPA in recent years has insisted that parties accept the standard reopener language in model administrative orders and consent decrees, there was more discretion in the 1980s and 1990s to negotiate reopeners of more limited scope. There is always room for creative, yet reasonable, arguments to limit a party’s potential liability even if EPA alleges that a reopener has been triggered.
• Consider the “divisibility” defense: The Supreme Court’s decision in Burlington Northern and Santa Fe Railway v. United States, 556 U.S. 599 (2009), established that joint and several liability for conditions at an NPL site is not automatic. As applied to CERCLA reopener liability, the ruling means that a party has the right to argue that the substances and conditions that give rise to a reopened liability claim are attributable to others. For example, if the detection of PFOA or 1,4-dioxane is the only reason for a new site investigation or new cleanup measures, then a party that did not contribute those substances has the opportunity to prove its “innocence,” leaving others to bear the risk of new CERCLA liability.
• Get the band back together: Companies (through mergers, dissolution or bankruptcy) and counsel (through lateral moves or retirement) at a contaminated site may change over time. That is particularly true for sites that were the subject of settlements in the 1980s and 1990s. An effective response to reopened claims requires that counsel and company contact lists be maintained or quickly reconstructed and updated. Those still viable and active can use their historic knowledge to work together, forming an organized and efficient team for addressing reopened liability claims.
• Review bankruptcy releases: The 2008 financial crisis led many large, and small, corporations to declare bankruptcy, reorganize, and extinguish, or attempt to extinguish, their environmental liabilities. Other companies at other times have done the same. For those that were involved in sites that face reopened CERCLA liabilities, the terms of bankruptcy discharge orders for formerly identified, but subsequently bankrupt, parties must be evaluated. The surviving entity may well have extinguished its potential liability, but that is not a foregone conclusion. The discharge of environmental liabilities, while often accomplished through the bankruptcy process, should not be taken for granted, particularly if the size of a new claim is significant.
• Preserve insurance coverage: If an affected party has not already exhausted its insurance coverage at a particular site, then prompt notice to the carrier is an essential step in avoiding or limiting CERCLA liability. The process of securing coverage is often long and challenging, but a new claim triggered by a reopener event often will trigger new coverage.

It remains to be seen whether EPA, for cleanup claims, and the Department of the Interior, for natural resource damage claims, now will be on the lookout for events that could give rise to reopener liability. Nevertheless, with sites that typically require 30 or more years of monitoring, the prospect of reopened claims will remain a real threat and ongoing concern, regardless of today’s enforcement priorities.