In Voggenthaler v. Maryland Square LLC, 724 F.3d 1050 (9th Cir. 2013), the defendants argued that contamination that happened in Vegas, stayed in Vegas, and therefore the Commerce Clause barred the application of CERCLA. The district court disagreed. The Ninth Circuit affirmed the district court’s decision, joining the Second Circuit and the Eleventh Circuit in upholding the applicability of CERCLA as constitutional even when contamination and/or its direct impacts are local. See United States v. Olin Corporation, 107 F.3d 1506 (11th Cir. 1997); Freier Westinghouse Electric Corporation, 303 F.3d 176 (2d Cir. 2002).
Contamination from a former dry cleaning operation located at a Las Vegas shopping center prompted the Nevada Division of Environmental Protection (“NDEP”) to remediate the site. During this remediation, NDEP learned of potential vapor intrusion stemming from the contamination and notified nearby homeowners. Two district court actions and several appeals followed. A group of homeowners filed a RCRA citizen suit seeking an injunction ordering the owners of the shopping center and the operators of the former dry cleaning facility to clean up the contamination. NDEP filed an action seeking recovery of incurred and future costs under CERCLA and state law. The district court awarded plaintiffs summary judgment in both cases.
With regard to the RCRA citizen suit, the Ninth Circuit reversed the district court on procedural grounds because the defendants did not have an adequate opportunity to respond to plaintiffs’ claims. With regard to the CERCLA claim, the Ninth Circuit ruled that the district court properly rejected the defendants’ argument that, because the contamination occurred and remained in Nevada, application of CERCLA violated the Commerce Clause. The Ninth Circuit distinguished United States v. Lopez, 514 U.S. 549 (1995), and United States v. Morrison, 529 U.S. 598 (2000), as cases involving non-economic activity. The panel held that soil and groundwater are articles of commerce and the regulation of these media through CERCLA is appropriate under the Commerce Clause, regardless of whether the contamination stayed in Nevada. While challengers to the applicability of CERCLA in localized contamination cases will want what happened in this Vegas case to stay in Vegas, they should not hold their localized breath.
But potentially responsible parties and developers and lenders for Brownfields development projects should be thinking about breath – or more specifically, vapor intrusion. Voggenthaler highlights the types of claims, including RCRA citizen suits, that may arise from vapor intrusion issues.
EPA issued two draft guidance documents on vapor intrusion earlier this year – one that provides general guidance for all compounds and one that addresses petroleum hydrocarbons released from underground storage tanks. EPA should be releasing the final vapor intrusion guidance in the coming weeks. On its vapor intrusion website, EPA notes that it “is working toward a proposed rulemaking to add a new screening component to OSWER’s [Office of Solid Waste and Emergency Response] Hazard Ranking System (HRS), which would allow sites impacted by vapor intrusion or intrusion of other subsurface contamination to be evaluated for placement on the Superfund National Priorities List.” Many states have already reopened previously closed sites to evaluate vapor intrusion issues. In addition, EPA had published a direct final rule allowing for a revised version of ASTM E1527-13 that would have been effective November 13, 2013 absent adverse comment. The revised version provides that vapor intrusion must be considered during Phase I environmental site assessments; however, just this week, on October 29, the direct final rule was withdrawn due to negative feedback. Nonetheless, the fact that the final rule was at least in part designed to address vapor intrusion demonstrates the increased attention this topic is receiving from EPA.
Thus, while Voggenthaler raised some eyebrows regarding the constitutionality of CERCLA, the real eyebrow-raising issue Voggenthaler brings to the table is the potential for more vapor intrusion issues to require action at sites across the country. Will investors and developers be willing to take on Brownsfields development projects in light of unpredictable vapor intrusion issues that may arise even after sites have received regulatory closure? Without carefully crafted indemnities and adequate insurance, such parties will be gambling with their investments – Vegas style!