SEPTEMBER 2005
Environmental
Hurricane Katrina: Will Superfund be Used to Create a New
Litigation Storm Over Clean Up Costs?
By some accounts, Hurricane Katrina is the worst
“natural disaster” in our history. The focus is now on
clean up in Louisiana, Mississippi, Texas, and
Alabama. On September 14, 2005, it was reported that
the Louisiana Department of Environmental Quality
estimated that the costs of cleaning up hazardous
materials that were released into the environment as a
consequence of Katrina could well reach $25 billion.
On August 30, 2005 Greenpeace filed a Freedom of
Information Act request with EPA, specifically noting
how a number of federal laws may impose liability on
companies in the area. See http://
www.greenpeace.org/usa/news/hurricane-katrina/
freedom-of-information-act-req.
This Alert discusses how the Comprehensive
Environmental Response Compensation and Liability
Act (known as “Superfund” or “CERCLA”) and the
Oil Pollution Act (“OPA”) may be used to fund cleanup efforts, and to impose clean-up liability on
companies owning or operating facilities from which
releases of hazardous substances may have occurred
as a result of the hurricane.
CERCLA imposes strict joint and several liability for
cleaning up contamination caused by releases of
hazardous substances from facilities into the
environment. This liability extends to (1) current
owners or operators of a vessel or a facility from which
the release occurs; (2) owners or operators of a vessel
or facility at the time of release of any hazardous
substance; (3) generators of any hazardous substances
located on the site; and (4) transporters of hazardous
substances to a site the transporter selected. Thus,
under CERCLA it is possible that liability could be
imposed in the following scenarios in areas struck by
Hurricane Katrina:
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On those who own or operate facilities that stored
hazardous substances which were released into the
environment during or following the hurricane;
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On those who generated hazardous substances that
were sent to landfills or other third party sites, and
from which those wastes were released during or
following the hurricane, such as the Agriculture
Street Landfill located between the French Quarter
and Lake Pontchartrain. See http://csmonitor.com/
2005/0915/p02s01-sten.html.
If the EPA determines that these releases caused
imminent dangers to human health and the
environment, it could either use the federal Superfund
law to fund response actions to address the clean up
and/or seek to impose those obligations on companies
from which the hazardous substances might have
originated. If the EPA orders a private party to
undertake the clean up directly, there are very limited
opportunities to challenge such an order before
complying with it; most such challenges must be
brought after the fact in an administrative forum.
CERCLA is a strict liability statute, with very limited
defenses. One such defense is where the release is
caused by an “act of God.” An act of God is defined
as:
(1) …an unanticipated grave natural disaster or
other natural phenomenon of an exceptional,
inevitable, and irresistible character, the effects of
which could not have been prevented or avoided
by the exercise of due care or foresight.
CERCLA then provides:
There shall be no liability under subsection (a) of
this section for a person otherwise liable who can
establish by a preponderance of the evidence that
the release or threat of release of a hazardous
substance and the damages resulting there from
were caused solely by…an act of God.
The Oil Pollution Act contains identical language
with respect to oil spills.
While one would think that a Category 4 hurricane
that submerges 80% of a city, thus causing the
discharge of hazardous substances, would almost
certainly be an act of God for which CERCLA
liability does not exist, federal regulators may not
share this opinion, even if the source of the release is
otherwise in full compliance with all laws governing
the containment of such substances. The
Environmental Protection Agency (“EPA”) which
administers CERCLA, has sought to aggressively
limit the scope of this defense.
1. Is the natural disaster or phenomenon
unanticipated “exceptional, inevitable and
irresistible?”
The legislative history of this defense discusses its
application to hurricanes. For example, a major
hurricane may be an “act of God,” but in an area (and
at a time) where a hurricane should not be unexpected,
it may not qualify as a “phenomenon of exceptional
character.” H.R.Rep. 99-253(IV), 1986 U.S.C.C.A.N.
3068, 3100. Thus, it would seem that the concept of
“exceptional” is intended to encompass the notion
that the event must be unanticipated.
In United States v. Stringfellow, 661 F. Supp. 1053
(C.D. Calif. 1987), heavy California rains caused
releases at a waste disposal site. The defendants
claimed that the rainfall was an act of God thus
relieving them from liability under CERCLA. The
court rejected this claim, finding that heavy rainfall in
California was not “exceptional,” and that it could
have been forecast based on normal climatic
conditions. Id. at 1061.
Similarly, in a case involving Hurricane Gloria, the
16th largest hurricane in United States’ history, the act
of God defense also was rejected at the urging of the
United States. United States v. Alcan Aluminum
Corporation, 892 F.Supp. 648 (M.D. Pa. 1995), aff’d,
96 F.3d 1434 (3d Cir. 1996), cert. denied, 521 U.S.
1103 (1997). Alcan Aluminum operated a metal
smelting facility, and during the 1970’s shipped two
million gallons of hazardous wastes that were
2 SEPTEMBER 2005
ultimately illegally dumped down a bore hole leading
to an abandoned mine. Id. The hurricane led to
hazardous substances escaping from the mine into a
river. Alcan Aluminum claimed the hurricane was a
“grave natural disaster” and was “unanticipated” as far
north and inland as Pennsylvania. Id. at 658. With no
discussion the court concluded that “heavy rainfall”
from Hurricane Gloria was not considered an
“exceptional” phenomenon for purposes of CERCLA,
and thus did not qualify as an act of God.
In United States v. M/V Santa Clara I, 887 F.Supp.
825 (D.S.C. 1995), hazardous substances were lost
over the side of a ship in a storm that occurred off the
coast of New Jersey. EPA persuaded the Court to reject
the act of God defense because the storm itself was
“predicted and was avoidable.” Id. at 843. It is
unclear whether the court was concluding that the
storm was therefore not unanticipated, or even though
unanticipated, required something to be done to
prevent the releases of hazardous substances from
occurring.
In Apex Oil Co. v. United States, 208 F. Supp. 642, 657
(E.D. La. 2002), an oil barge collision occurred in the
lower Mississippi River, causing releases of oil into
the environment. The oil company claimed that
exceptionally strong and unpredictable currents in the
river (which occurred at the time of heavy rains), were
an act of God that caused the accident, thus relieving
the company from liability under OPA (which
contains identical language to CERCLA.) Id. at 654.
With little discussion, the court concluded that the
conditions of the current may have been known, and
though significant, were not exceptional even though
the agency charged with reviewing the accident found
that the conditions were unanticipated.
Another company argued that the release of naturally
occurring vermiculite and asbestos from a mine is an
act of God. United States v. W.R. Grace & Co., 280 F.
Supp.2d 1135 (D. Montana 2002). The court rejected
the argument on the grounds that the mine from which
the substances were released was not a natural
phenomenon of “exceptional, inevitable or
irresistible” character. Id. at 1148.
Finally, the act of God defense also was rejected where
unusually cold weather caused pipes to burst at a
hazardous waste site and chemicals were released into
the environment. United States v. Barrier Industries,
Inc., 991 F. Supp. 678 (S.D.N.Y. 1998).
KIRKPATRICK & LOCKHART NICHOLSON GRAHAM LLP
2. Could the threats of releases or releases caused
by the natural disaster been avoided by “due
care or foresight?”
The “due care or foresight” requirement has often
been commingled with the “solely caused by”
requirement, such that if certain conduct is not
undertaken in anticipation of the natural disaster, then
the disaster is not the sole cause of the releases of
hazardous substances. The application of this
requirement often involves exercising 20/20
hindsight, and may at times cause a court to ignore the
severity of the event.
For instance, in the case discussed above, Apex Oil
Co. v. United States, 208 F. Supp. at 657, most
important to the court’s decision imposing liability
was evidence that the tug boat that carried the vessels
containing the oil was not powerful enough given the
water current conditions, even though it appeared to
be the same equipment normally used, and the agency
charged with evaluating this issue concluded that the
incident was unforeseeable. Id. at 656-657. Similarly,
in United States v. Alcan Aluminum, supra, the court
found that the act of placing hazardous wastes in a
mine was not “due care.”
3. Was the release or threatened release of
hazardous substances caused solely by the act of
God?
Even where the disaster is extraordinary and not
realistically anticipated, and where no particular
conduct can be pointed to that would indicate due
care or foresight has not been used, there are cases
suggesting even further limits on this defense.
Two cases suggest that the EPA has used the language
in the statute imposing the “solely caused by”
requirement to eliminate the act of God defense in its
entirety. The agency essentially argues that if any
human activity contributes in any way to the release,
then the act of God is not the sole cause of the release,
even though but for the act of God, the release would
not have occurred.
For instance, in Courtaulds Aerospace, Inc. v.
Huffman, 1994 WL 508168 (E.D. Cal. 1994),
unintended fires broke out at a smelting facility on
two occasions, and contaminated ash and smoke were
carried by the wind and deposited on plaintiff’s land.
Id. The defendant claimed that the wind that
3 SEPTEMBER 2005
transported the contaminants was an act of God, and
that he was therefore entitled to the act of God
defense. The court found that the wind was not the
“sole” source of the contamination, the defendant was.
In another case, the act of God defense was rejected
where unusually cold weather caused pipes to burst at
a hazardous waste site and chemicals were released
into the environment. United States v. Barrier
Industries, Inc., 991 F. Supp. 678 (S.D.N.Y. 1998). The
court determined that the cold weather was not the
“sole cause” of the release and that “numerous other
factors antedating the cold weather…causally
contributed to the problems at the…site.” Id. at 679680.
While it could hardly be disputed that Hurricane
Katrina was an exceptional storm, just as
governmental agencies are being second guessed for
not acting with appropriate foresight, it is possible
that EPA may make the same arguments with respect
to those whose hazardous substances have been
released. Given the costs of clean-up associated with
Hurricane Katrina, and the budgetary limitations of
agencies, seeking financial contributions from ‘deep
pocket’ private companies by trying to eliminate the
act of God defense is not out of the question.
EPA’s views, however, are arguably inconsistent with
the act of God defense provided for in the statute.
CERCLA’s act of God defense necessarily assumes the
presence of hazardous substances, and specifically
allows the assertion of this defense when a release of
hazardous substances is “solely” caused by an
unanticipated “exceptional, inevitable and
irresistible” event. The “cause” of a release, however,
is not the same as the “source,” nor is the “source”
synonymous with the “cause,” as Courtaulds
Aerospace, Inc., suggests. Moreover, if the mere
presence of such substances is considered a cause of
the release that renders the disaster not the sole cause,
as was apparently the case in Alcan, then the defense
would effectively be unavailable.
Nevertheless, there are measures to take that may aid
in addressing these issues if they arise.
■
Were there releases from facilities they operated as
a result of Hurricane Katrina, and if so
■
Can the releases be quantified in size and
character?
KIRKPATRICK & LOCKHART NICHOLSON GRAHAM LLP
■
Was the facility from which the release occurred in
compliance with all relevant environmental laws at
the time of the release?
■
What actions were taken in anticipation of the
hurricane to account for potential problems,
beyond what the law requires? Did the facility
follow its SPCC or other response plan?
■
Can the arguments being made by other
governmental bodies that they did exercise due
care and foresight in planning to respond to the
hurricane, apply to companies as well?
■
Does the commingling of hazardous substances
from a number of facilities suggest that a group of
companies should combine their efforts to address
this issue sooner rather than later?
are ‘there.’ Similar issues should be considered by
property owners that find hazardous substances on
their property that originated elsewhere.
This Alert does not address the many other situations
in which CERCLA liability may or may not arise. E.g.,
it does not deal with the parameters of the exemption
from liability for lenders that take possession to
protect a security interest or with the “contractual
relationship” defense in CERCLA 107(b)(3).
Barry M. Hartman
bhartman@klng.com
202.778.9338
John P. Krill
jkrill@klng.com
It might be useful to identify, evaluate and preserve
facts relating to these issues. Otherwise companies
could face the prospect of liability, not because
contamination is theirs, but because the companies
717.231.4505
Linda L. Raclin
lraclin@klng.com
202.778.9896
If you have questions or would like more information about K&LNG’s EnvironmentalPractice, please contact one of
our lawyers listed below:
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Barry M. Hartman
617.951.9111
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717.231.4504
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