U.S. Bank National Ass'n v. U.S. Environmental Protection Agency

563 F.3d 199, 39 Envtl. L. Rep. (Envtl. Law Inst.) 20088, 68 ERC (BNA) 1801, 2009 U.S. App. LEXIS 8175, 51 Bankr. Ct. Dec. (CRR) 144
CourtCourt of Appeals for the Sixth Circuit
DecidedApril 20, 2009
Docket08-3083
StatusPublished
Cited by10 cases

This text of 563 F.3d 199 (U.S. Bank National Ass'n v. U.S. Environmental Protection Agency) is published on Counsel Stack Legal Research, covering Court of Appeals for the Sixth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
U.S. Bank National Ass'n v. U.S. Environmental Protection Agency, 563 F.3d 199, 39 Envtl. L. Rep. (Envtl. Law Inst.) 20088, 68 ERC (BNA) 1801, 2009 U.S. App. LEXIS 8175, 51 Bankr. Ct. Dec. (CRR) 144 (6th Cir. 2009).

Opinion

OPINION

BOYCE F. MARTIN, JR., Circuit Judge.

Eagle-Picher Technologies, LLC 1 (“EP Tech”), an electronics manufacturer, filed for Chapter 11 bankruptcy in 2005. The United States, on behalf of the Environmental Protection Agency and the Department of Interior, filed a claim in the bankruptcy proceeding against EP Tech under “CERCLA” — the Comprehensive Environmental Response, Compensation and Liability Act of 1980. Under CERCLA, the federal government may recover the cost of cleaning up hazardous waste from the parties responsible for its release.

*203 Over the objections of U.S. Bank, the bankruptcy trustee, the bankruptcy court found EP Tech liable for $357,246 of already-incurred costs and $8,735,434 in estimated future costs for the clean-up of groundwater and soil contamination near a now-vacant manufacturing plant in Socorro, New Mexico. U.S. Bank appealed to the district court, which affirmed.

U.S. Bank appeals to this Court, arguing: (i) EP Tech is not liable under CERCLA for hazardous waste releases that occurred before EP Tech acquired an interest in the Socorro plant in 1998; (ii) even if EP Tech is liable for the clean-up costs at the plant, genuine issues of material fact precluded the bankruptcy court from concluding that EP Tech was responsible for contamination detected at a well located a mile and a half south of the plant; and (iii) the bankruptcy court improperly excluded evidence at the hearing on estimating the future cost of cleaning up the hazardous substances. The bankruptcy court’s decision was legally correct, and it did not abuse its discretion by excluding evidence of future costs. We AFFIRM.

I.

A. EP Tech and the Socorro manufacturing plant

EP Tech was incorporated in 1998. That year it acquired one of EP Industries, Inc.’s (“EP Inc.’s”) internal divisions 2 —the Technologies Division — via an Assignment and Assumption Agreement. Per this 1998 Agreement, EP Tech acquired: “[a]ll real property and all leasehold interests in real property used in connection with the Business” along with “[a]ll written or oral contracts, agreements or other arrangements relating to the Business.” Among these thirty-seven real property interests was a leasehold interest in “Highway 1-25, Exit 152 Socorro, NM 87801 (Vacant Plant).”

As it turned out, the Socorro manufacturing plant had a checkered past when it came to waste disposal. In 1963, EP Inc. began manufacturing water-activated batteries, printed circuit boards, and cable connectors at the plant, located on about 170 acres due north of Socorro. The manufacturing process involved trichlorethylene or “TCE” — a cleaner that was discharged into floor drains connected to an onsite sewage lagoon. TCE, according to the World Health Organization, is “probably carcinogenic to humans,” and has been designated a hazardous substance for purposes of CERCLA liability. 40 C.F.R. § 302.4.

In 1976 the company stopped its manufacturing operation and deeded the property surrounding the plant back to the city which, from 1977 to 1980, used a portion of the property as a municipal landfill. But in 1979, the company leased part of the property back from the city and started to manufacture lead-acid batteries at the Socorro plant, a process that generated liquid and solid waste but, according to EP Tech, not TCE waste. The lease ended in 2000, by which time the plant was no longer in use.

B. Hazardous substances in the area

In 1987 a well at the manufacturing plant, the Eagle Picher Municipal Well, tested positive for TCE, and the nearby soil tested positive for lead. By 1990 TCE was detected in the Olson Well, 3 a muniei *204 pal well located 08-3083south of the Socorro plant. In response, the EPA and the New Mexico Environment Department began investigating the contamination source. A 1989 investigation of the landfill concluded that it was not the contamination source.

Despite the TCE detected in both the Olson Well and at the plant, investigations in the 1990s and early 2000s did not find a link between the TCE contamination at the Olson Well and the plant’s waste disposal practices. Notably, in 1996, the New Mexico Environment Department conducted an “Expanded Site Inspection” that involved sampling well-water. Wells at the plant and the Olson Well tested positive for TCE, but the residential wells in between the two did not. The investigators reasoned:

Whether the release to the Olsen Well can be attributed to the Eagle Picher facility is questionable because the Olsen Well is located 1.5 miles from the Eagle Picher facility and because TCE was not detected in the residential wells (Gonzalez and Cotton) located between the Eagle Picher facility and the Olsen Well. Therefore, the release of TCE and DCE in the Olsen Well is not attributed to the sources on-site at this time. If more information regarding the sources associated with the release in the Olsen Well is available in the future, attribution of the release shall be reevaluated.

But by the time the United States moved for partial summary judgment in late 2006, a third party, under contract with the U.S. Army Corps, had completed two years of investigating contaminants around Socorro. The study included drilling new monitoring wells and taking surface water and sediment samples from 2004 through 2006. Unlike the earlier investigations, this more recent round of tests detected TCE in several private residential wells between the Eagle Picher Municipal Well and the Olson Well. It led to an April 2007 expanded site inspection and remedial investigation report concluding that TCE “in the Socorro area can be attributable to the former EaglePicher facility____” This report stated that “[ejxisting monitoring wells in the project area indicate that the groundwater gradient is to the south ... and that a groundwater plume containing chlorinated organic contaminants extends from the former Eagle Pitcher [sic] property to the Olsen well,” and “[t]he TCE and other chlorinated organic compound contamination of groundwater in the Socorro area can be attributable to the former Eagle Picher facility based on the historic use and disposal of TCE at the former Eagle Picher facility, the absence of TCE up gradient of the facility, the hydrogeology of the Socorro area, the lack of evidence for other TCE sources, and the characteristics of chlorinated solvents.”

In September 2007, the EPA issued a final rule placing the Socorro site on its Superfund National Priorities List — the list of hazardous waste sites designated for priority cleanup. The report describes a large “plume” of TCE-contaminated groundwater approximately two miles long and a quarter-mile wide that extends from the manufacturing plant to an area including the Olson Well.

C. EP Inc. ’s 1991 bankruptcy and settlement agreement

The bankruptcy at issue here is not the first for the EP businesses. And the Socorro plant is not the only location where an EP entity released hazardous waste. Thus, when EP Inc.

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563 F.3d 199, 39 Envtl. L. Rep. (Envtl. Law Inst.) 20088, 68 ERC (BNA) 1801, 2009 U.S. App. LEXIS 8175, 51 Bankr. Ct. Dec. (CRR) 144, Counsel Stack Legal Research, https://law.counselstack.com/opinion/us-bank-national-assn-v-us-environmental-protection-agency-ca6-2009.