On October 22, 2012, in Richmond Center, LLC v. Deutz Corporation (No. 89A01-1109-PL-416), Indiana’s Court of Appeals clarified Indiana’s Environmental Legal Action statute (the “ELA”), Ind. Code § 13-30-9, holding that circumstantial evidence, specifically expert testimony, may be utilized to prove whether an entity “caused or contributed” to contamination.  The court also stated that a nexus between the alleged polluter’s conduct and the contamination must be shown before the alleged polluter can be held liable under the ELA. 

The ELA creates a cause of action to recover costs paid to remediate environmental contamination and provides that a party may bring suit against another party that “caused or contributed” to the release of hazardous substances or petroleum to recover reasonable costs of removal or remedial action.  The ELA itself, however, does not specify how or with what evidence a person must prove “caused or contributed.” 

In Richmond Center, Deutz Corporation (“Deutz”) owned land on which it manufactured and modified diesel engines from 1979 to 1989.  In 1981, Deutz’s operations resulted in two petroleum spills.  In the first spill, 55 gallons of engine oil were released from an air compressor engine.  In the second spill, 3,150 gallons of break-in oil were released from an overfilled tank.  The spills were each above ground and were fully remediated. 

Deutz sold the land to The Donesco Company in 1989 which, in turn, sold the land to Richmond Center, LLC (“Richmond Center”) in 1993.   In 2006, when Richmond Center sought to refinance the property, an environmental site assessment commissioned by the prospective lender found petroleum-contaminated soil and groundwater.  Richmond Center excavated 2,700 tons of soil from the site and incurred $305,059.28 in remediation costs.  Richmond Center then sued Deutz under the ELA to recover its remediation costs.  The appellate court affirmed the trial court’s holding that Richmond Center failed to prove that Deutz caused or contributed to the contamination it remediated.

In its analysis, the Court of Appeals evaluated the credibility of the expert testimony Richmond Center proffered and analyzed the ELA to determine what constitutes sufficient evidence to show “caused or contributed.”  Richmond Center argued that, in order to establish liability under the ELA, it only needed to show, by circumstantial evidence, that Deutz used petroleum on the property and that it is more likely than not that the petroleum leaked onto the property.  On the other hand, Deutz argued the ELA required more and that Richmond Center should have demonstrated a “nexus” between Deutz’s conduct and the contamination remediated by Richmond Center. 

The Court of Appeals agreed with Deutz and stated that this nexus may be shown by circumstantial evidence, including expert testimony.  However, the court confirmed that such expert testimony should be scrutinized to ensure that ELA liability is not wrongly attached.  In fact, the court evaluated Richmond Center’s expert testimony and agreed with the lower court’s finding that the expert had no scientific or realistic grounds upon which to base his speculation that the contamination remediated by Richmond Center occurred during the time Deutz operated at the property.  The court held that Richmond Center failed to provide any evidence connecting Deutz to the contamination it remediated and, consequently, failed to show that Deutz “caused or contributed” to such contamination.

Therefore, a party may meet its burden of proof under the ELA by using solely circumstantial evidence, including credible expert testimony; however, such evidence must reliably establish a nexus between an alleged polluter’s acts or omissions and the resulting contamination.