By Lawrence Schnapf, Principal, Schnapf LLC
We have been periodically posting updates on the progress of the landmark Voggenthaler v Maryland Square, LLC vapor intrusion case from Las Vegas, Nevada. In the most recent ruling, the court granted the motion for summary judgment filed by the Nevada Department of Environmental Protection (NDEP) seeking cost recovery under CERCLA. 2012 U.S. Dist. LEXIS 69395 (D.Nev. 5/17/12).
By way of review, the shopping center has been owned by five different entities since 1968. Herman Kishner, doing business as Maryland Square Shopping Center, owned the shopping center in 1968. Title was transferred to the Herman Kishner Trust in 1969. The shopping center was later conveyed to Maryland Square Shopping Center Limited Liability Company, as the successor to the Herman Kishner Trust. In 2002, the Clark County School District purchased the Shopping Center and then sold the site to Maryland Square LLC in 2005. Meanwhile, an Al Philips the Cleaners dry cleaning facility operated at the shopping Center from 1968 to 2000. The Shapiro Bros. Investment Co. ("SBIC") operated the dry cleaner from 1968 to August 1984 and DCI USI operated the dry cleaning facility from 1984 to until approximately 2000.
PCE contamination was discovered in November 2000 during an environmental inspection done as part of a property transaction. An investigation in late 2002 determined that PCE had migrated off-site. Additional sampling in 2003 and 2004 revealed the plume had migrated beneath a major road and an adjacent shopping mall. In July 2005, groundwater sampling indicated that the PCE plume had extended further east towards a residential neighborhood. In 2006, groundwater wells were installed in the residential neighborhood and sampling confirmed the plume had reached the residential area.
Late in 2006, the NDEP directed DCI to collect soil gas from the residential area. Based on the soil gas data and a computer model, NDEP determined there was a potential for vapor intrusion from the shallow groundwater into the homes that exceeded 10-4 risk levels. NDEP subsequently advised both DCI and Maryland Square that it intended to install subslab depressurization systems in certain homes to address the vapor intrusion issue. From August 2007 through early 2008, NDEP notified residents, property owners, and local government officials of the PCE contamination and the possible long-term health effects. In 2008, NDEP notified Maryland Square that it had incurred over $160K to date and expected to spend additional funds that it would seek to recover.
A group of homeowners filed an action under RCRA 7002 seeking injunctive relief. The NDEP also filed a cost recovery action in 2009 under CERCLA and the state counterpart to CERCLA. In July 2010, the federal district court for the district of Nevada granted a motion for summary judgment filed by the plaintiff residents seeking injunctive relief under RCRA 7002. Voggenthaler v Maryland Square, LLC.,2010 U.S. Dist. LEXIS 74217 (D.Nv. 7/22/10). The defendants have appealed this ruling to the Ninth Circuit.
In response to NDEP's motion for summary judgment, the defendants argued that since the plume only impacted homes located in Nevada, there was no Commerce Clause jurisdiction. The court said that while it believed that this lawsuit exceeded the authority granted by the Commerce Clause to regulate a local contamination plume, the court also recognized that, based on existing case law, the Ninth Circuit would find that the Constitution permits enforcement of CERCLA in this case. Therefore, the court proceeded to the merits of the motion.
Maryland Square LLC filed a cross-motion that it was not liable under CERCLA because it qualified for the Bona Fide Prospective Purchaser (BFPP) defense but the court said that Maryland Square LLC provided no evidence of any kind supporting its argument that it was a BFPP, and granted the NDEP's motion for summary judgment. The only evidence supporting its BFPP defense was an affidavit. Interestingly, Maryland Square did not do a phase 1 when it acquired title. It claimed since the contamination was already of public record, there was no need for them to do a phase 1. Seems like Maryland Square may have been conflating providing required notices with the all appropriate inquiry rule. In any event, for the cost of a phase 1, Maryland Square blew the pre-acquisition part of the defense. The state also argued that Maryland Square failed to exercise appropriate care b/c it demolished the dry cleaner, thereby exposing contaminants to the elements (does it rain in Las Vegas?). Once again, hasty demolition has contributed to CERCLA liability.
The Kishner defendants argued that they were not liable under CERCLA because the Shapiro Defendants had been the operators of the dry cleaners when the releases occurred. The court agreed that the Kishner defendants were not CERCLA operators but because NDEP presented evidence that the Kishner Defendants were owners of the site when the PCE contamination was discovered, NDEP had established a prima facie case against the Kishner Defendants.
The Kishner Defendants also claimed that the costs incurred by the NDEP were not consistent with the National Contingency Plan. However, the court said it appeared that the Kishner Defendants were contesting the costs of specific response actions taken by NDEP but not the specific response actions. Therefore, the court granted summary judgment to NDEP.
The Shapiro Defendants argued that NDEP failed to present undisputed evidence that hazardous substances were released into the environment when SBIC operated the dry cleaning facility. However, the court said that it had concluded in its prior RCRA order that there was sufficient evidence that the PCE plume stemmed from the operation of the dry cleaning facility when SBIC was the owner and operator of that dry cleaning facility.
The Shapiro Defendants also alleged the NDEP costs were not consistent with the NCP for removal actions at 40 C.F.R. § 300.415(b)(2)(i)-(viii). However, the court said the Shapiro Defendants had failed to produce any evidence that the removal action was unnecessary to mitigate the potential human exposure to PCE vapor by the indoor air exposure pathway or that NDEP's chosen action was not rationally based upon groundwater data, soil gas sampling data, modeling of soil gas and groundwater data for homes likely to be impacted by PCE-contaminated soil gas, and actual indoor air sampling. The Shapiro Defendants do not allege or provide any evidence that NDEP failed to evaluate alternatives in the manner prescribed in the NCP. Looking at the situation as a whole, the court held that NDEP only failed to provide an opportunity for public comment. Because the Shapiro Defendants had not demonstrated that NDEP failed to comply with any other requirements in the NCP, the Court ruled that NDEP's action was not arbitrary and capricious because there was a high degree of consistency with the NCP's requirements. Accordingly, the court granted summary judgment in favor of the NDEP.
Lawrence P. Schnapf is an environmental attorney based in New York City and New Jersey with over 25 years of national environmental transactional experience and is the principal of Schnapf LLC. With this background and his geology training, Larry is uniquely qualified to handle the legal and technical issues commonly encountered with environmental issues. Larry is also a contributing author for several chapters of "Brownfields Law and Practice: The Cleanup and Redevelopment of Contaminated Properties" published by Matthew Bender and the Matthew Bender "Environmental Law Practice Guide".
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