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Quote of the Day - I believe in looking reality straight in the eye and denying it. - Garrison Keillor

Property Owner Denied Right To Recover Environmental Cleanup Costs

If you own a piece of contaminated real estate and you intend to seek recovery from the prior owners and operators and other potentially responsible parties (PRPs) for money you spent cleaning it up, then you might want to take a look at yesterday's Ninth Circuit decision in Carson Harbor Village Mobile Home Park v. Unocal Corp. (Carlson II).  If you're a litigation attorney (any kind of litigation attorney), then you will definitely want to read Footnote 3 where the Court damns the plaintiff's attorney for late-filed briefs and declarations, but I'm getting off-track from the Court's main holding.

The case is called Carson Harbor II because - yes, you guessed it - there's a Carson Harbor I.  In the first case, the Court saw Carlson Harbor II coming, and sent the case back to Judge Margaret Morrow in the Central District Court to make a determination whether the Plaintiff complied with the National Contingency Plan.  There's this little statute that governs all CERCLA actions that requires Plaintiffs to jump through a number of hoops before they can sue other parties and recover money they spent on cleanup.  Of particular interest here are two hoops:  public participation and consideration of alternative remedies.

One of the hallmarks of the National Contingency Plan is something some people refer to as the "mastermind principle," otherwise known by the cliche, "two heads are better than one."  In other words, if you're going to undertake a cleanup of contamination, you need to provide the opportunity to those who might be affected by your cleanup efforts - here people who live in the mobilehome park and the other PRPs - the opportunity to help you consider your plan.  This public participation opportunity is designed to help make the plan better, and the ultimate remedy better for the environment and the affected people.

There's another requirement in the National Contingency Plan that mandates consideration of a range of alternatives, from the "no project alternative" to a full-on, complete cleanup to background levels.  This range starts at doing nothing, and consequently incurring no cost, all the way to a practically impossible cleanup to background levels, which is the highest cost of all, and usually consequently unjustified.

The point of the NCP, however, is that you go through these exercises and give people the opportunity to participate and make recommendations.  The concept is supposed to translate directly into a more efficient and sometimes less expensive result that has been duly considered by all affected parties.  The consequences for the failure to do so, however, are draconian.  If you fail to allow public participation and you fail to consider alternative remedies, then you don't have the right to sue PRPs to recover the money you spent cleaning up the contamination.

That's exactly what happened to Carson Harbor.  The property owner spent money cleaning up contamination and then sued Unocal to recover the cost of doing do.  Unocal, however, claimed that it didn't have the opportunity to participate in the evaluation phase or make recommendations about alternative cleanup methods.  Unocal brought a motion for summary judgment against Carson Harbor based on these complaints, and because Carson Harbor made its own decision about the remedy and didn't allow public participation and didn't consider more than one alternative, the Court was left with only one choice.

It denied Carson Harbor the right to recover the money it spent on cleanup from Unocal.  The Court does not mention the dollar amount at issue, but you can be sure this cleanup was expensive.

Posted by J. Craig Williams on 1/13/2006 at 13:51 Comments (0)


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