Properly interpreting CERCLA’s statute of limitations often presents vexing problems, and never more so than when claims for natural resource damages (NRD) are filed. As explained several years ago by the Ninth Circuit Court of Appeals in United States v. Asarco, Inc., ordinarily a claim for NRD must be filed within three years of the discovery of the loss and its connection with the release in question. However, a special provision creates an exception to this timeframe when the site is placed on EPA’s National Priority List (NPL). Such NRD claims must then be filed within three years of the completion of a remedial action for the site, a process that can take years if not decades. A case in point is the recently decided case of State of New York, et al., v. Next Millennium Realty, LLC, focusing on whether NRD claims that are otherwise time-barred can be revived if the site is later placed on EPA’s NPL.

On February 9, 2016, the U.S. Court for the Eastern District of New York issued a significant ruling in a long-running Superfund cost recovery controversy involving an industrial site in North Hempstead, New York. Among the rulings made by Judge Feurstein was her interpretation of Section 9613(g)(1), CERCLA’s statute of limitations specifically for NRD claims. An NRD claim must be asserted “within 3 years after the later of the following: (A) [t]he date of the discovery of the loss and its connection with the release in question[; or] (B) [t]he date on which regulations are promulgated under [S]ection 9651(c) of [Title 42 of the United States Code].” Except that Section 9613(g)(1) further provides that “[w]ith respect to any facility listed on the [NPL], any Federal facility identified under [S]ection 9620…, an action for damages under [Chapter 103 of Title 42 of the U.S. Code] must be commenced within 3 years after the completion of the remedial action (excluding operation and maintenance activities) in lieu of the dates referred to in subparagraph (A) or (B) [of Section 9613(g)(1)].”

The defendants argued that the state’s NRD claims were time-barred because of the following timeline:

  • groundwater contamination was discovered by local government in 1986, and confirmed by the New York Department of Conservation (NYDEC) in 1995;
  • the NRD rules were promulgated in 1987;
  • a Record of Decision was released by the NYDEC in 2003, and
  • the cost recovery lawsuit was filed in 2006.

The defendants argued that the listing of the site on EPA’s NPL in 2011, approximately five years after the state commenced this action and 16 years after the state discovered the contamination, did not serve to revive the state’s otherwise time-barred NRD claim.

Rejecting the defendant’s argument, the Court of Appeals quoted the Idaho Northern District Court’s decision in U.S. v. Asarco Inc.:

“In applying a plain reading of the statute, the Court finds that there is an openended statute of limitations for any facility listed on the NPL. The Court can determine no statutory or regulatory time limit on how long (after the discovery of the loss to the natural resource and its connection to a release) the EPA has to determine that a site should be listed on the NPL. If the trustee fails to file a NRD action within 3 years of the date of the discovery of the loss and its connection with the release in question under 42 U.S.C. § 9613(g)(A) [sic], then the trustee can still timely file a NRD action for the loss if the facility is listed by the EPA on the NPL…”

Finding Judge Lodge’s reasoning persuasive, the Court of Appeals “held that upon a plain reading of Section 113(g)(1) of CERCLA, with respect to, any facility listed on the NPL, a [NRD] claim is timely so long as it is commenced within three (3) years after the completion of the remedial action, notwithstanding that such claim would have been untimely under Sections 113(g)(1)(A) and (B) of CERCLA at the time the facility was listed on the NPL.” Judge Feurstein observed that the listing of the site on the NPL did serve to revive the NRD claim, wiping clean the slate with respect to the earlier running of the statute of limitations. Accordingly, under this ruling, the statute of limitations in 42 U.S.C. § 9613(g) will not begin to run until three years after the remedial action has been completed, which may take several years to conclude.

It is interesting to note that, in 2013, the U.S. Court of Appeals for the Second Circuit, in New York v. Next Millennium Realty, LLC, issued an opinion in which it reversed the lower court’s dismissal of New York’s claims to recover its initial costs to investigate ground water contamination at the site as being time-barred. The state argued that the cleanup activities in question were measures taken to address immediate threats to public health and suits to recover costs for removal actions are governed by the three-year statute of limitations set forth in Section 9613(g)(2)(A), which is triggered by completion of the removal action. The Court of Appeals agreed, finding that the state’s action was timely. The Court of Appeals held that “the cleanup activities here were implemented as removal measures and continued to be removal measures at all relevant times. Accordingly, the district court erred in applying the statute of limitations for remedial rather than removal actions, and we vacate and remand for further proceedings consistent with this opinion.”

For now, it appears that a district court in the Second Circuit and another district court in the Ninth Circuit are in agreement on this statute of limitations issue.