You Say “Removal”, I Say “Remedial”

In 1990, a municipality in Long Island installed a granulated activated carbon (“GAC”) adsorption system at a cost of $1.25MM to remove volatile organic compounds (“VOCs”) that had been detected in two public drinking water wells. When the GAC proved ineffective in reducing the VOCs to the maximum contaminant levels (MCLs), the municipality commenced construction of an air stripper tower in 1995 at a cost of $1.2MM. The air stripper became operational in 1997 and three years later, the New York State Department of Environmental Conservation (“NYSDEC”) entered into an agreement with the municipality where the New York agreed to reimburse the town for the cost of constructing and installing the tower.

In 2003, the NYSDEC issued a Record of Decision (“ROD”) that selected a remedy consisting of removal of contaminated soil, the construction of additional in-well vapor stripping wells, installation of new monitoring wells and a long-term groundwater monitoring program. The ROD also incorporated the existing GAC and air stripper tower. The remedy was initially estimated to cost $3MM but it is now believed it will cost more than $20MM. EPA subsequently placed the Bowling Green wellfield site on the National Priorities List (“NPL”). In 2006, 11 years after construction of the air tower, New York State filed a cost recovery action against alleged responsible parties.

Do you think that the state waited too long to file its lawsuit? Putting aside notions of fairness, the answer depends on if the GAC and air stripper are considered to be a CERCLA “removal” action or a “remedial” action. Under CERCLA, claims for reimbursement of remedial action costs must be filed within six years after the start of construction. In contrast, claims for removal actions that suits to recover costs for removal actions are governed by the three-year statute of limitations, which is triggered by the completion of the removal action.

After New York filed its cost recovery action, the defendants filed a motion for summary judgment arguing that New York’s claims were barred by the statute of limitations (SOL) for remedial actions. A district court concluded that the GAC and  the air stripper were  remedial actions as defined under CERCLA, and that the SOL had begun to run either when the GAC was installed in 1990, or when three foundational borings for the air stripper were drilled on June 1995. Since more than six years had elapsed since the commencement of construction of the remedial action even after taking into account a tolling agreement, the district court held that New York’s claim was time-barred.

The state appealed, arguing the cleanup activities were removal actions and that because the removal measures had not been completed when this action was brought, the SOL had not yet begun to run. In State of New York v. Next Millennium Realty, LLC, 2013 U.S. App. LEXIS 20781(2nd Cir. 10/13/13), the federal Court of Appeals for the Second Circuit vacated the district court ruling, holding that the GAC and air stripper tower were removal measures and therefore the lawsuit was timely filed.

The appeals panel court based its conclusion on the premise that remedial actions are designed to permanently remediate hazardous waste and that because the GAC and air stripper were more characteristic of a removal action because the systems were simply designed to remove sufficient amounts of contamination from the groundwater water to make it safe for drinking water purposes and not to permanently eliminate the underlying groundwater contamination the actions. In so holding, the court found unpersuasive cases cited by the defendants where wellhead treatment systems that did not address the underlying source of contamination were found to qualify as “remedial” actions. The appellate panel said in the wells in those cases had been permanently retired and alternative water supply had been established.

Defendants also argued that the duration and cost of these measures indicate they are remedial actions, pointing to the section of CERLCA that provides that a removal measure shall not continue after $2MM has been obligated for response actions or 12 months has elapsed from the date of initial response. The court found that the GAC and air stripper tower fall within both exceptions for “immediate risk to public health” and for continued response actions that were required to “prevent, limit, or mitigate an emergency. The court also relied on EPA Guidance that states that neither the cost nor the duration of a project is dispositive in determining whether the project is removal or remedial.

The court also ignored comments from a commissioner of the local water authority who stated that the GAC “was not intended to be a temporary system” and that the intent was “to construct a system that would permanently address the contamination found in the Bowling Green wells.” Likewise, the court discounted the fact that the state referred to these systems as “interim remedial measures” and as “remedial” alternatives and that a DEC engineer described the air stripper tower as part of the “remediation” of the groundwater in a conversation with the aforementioned commissioner. The court rationalized that these statements simply reflected generic uses of the word “remedial” and did not constitute a formal finding that the GAC and air stripper were remedial actions. The court opined that the word “remedial” is often used in environmental discussions in its common every day sense, namely, “intended as a remedy.

We think the appeals court erred. It is hard to imagine a more permanent remedy than a stripping tower and GAC system that has operated for 20 years. Moreover, the supposed removal action was identified as a critical component of the final remedy. New York could have filed a lawsuit in 2001 when the tolling agreement expired or even after the ROD was issued in 2003. This opinion rewards the state for sitting on its rights which flies in the face of the purpose of a statute of limitations.

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