In a matter of first impression, the Eighth Circuit Court of Appeals affirmed a District of Minnesota decision defining the scope of a private party’s right to recover environmental cleanup costs pursuant to the Minnesota Environmental Response and Liability Act (MERLA), Minn. Stat. § 115B.01 et seq.
In Northern Pacific Center, Inc. v. BNSF Railway Co., 686 F.3d 567 (8th Cir. 2012), Northern Pacific Center (NPC) sued BNSF Railway Company (BNSF) for cleanup costs incurred to redevelop land formerly owned by one of the railroad’s predecessors. The Eighth Circuit Court of Appeals agreed with BNSF’s argument, presented by Briggs attorneys Tim Gelinske and Matt Brodin, that MERLA does not allow private parties to recover long-term cleanup or property development costs.
The railroad sold the property at issue in the early 1980s. Thereafter, the Minnesota Pollution Control Agency (MPCA) investigated the property, designated it as a superfund site and determined that BNSF was a responsible party for elevated levels of lead.
The property exchanged hands several times before being purchased by NPC in 1992. BNSF continued to voluntarily work with the MPCA to investigate and clean up lead levels. In a 2001 Minnesota Decision Document the MPCA selected the specific remedial action level for lead at the site. Later that year, BNSF conducted remediation to satisfy the MPCA’s lead cleanup goal. In 2002, NPC began a series of redevelopment projects, such as, adding a street and utilities, constructing a rail spur for a tenant, and bringing areas of the land to grade. With MPCA involvement, NPC conducted environmental sampling and remediation in the immediate areas of redevelopment.
NPC initiated a lawsuit against BNSF asserting MERLA claims to recover cleanup costs associated with the property redevelopment activities. MERLA allows private parties and government entities to recover from a responsible party certain environmental cleanup costs. Minn. Stat. § 115B.01 et seq. Briggs argued on behalf of BNSF, however, that while MERLA allows a private party to recover costs incurred for short term “removal” actions necessary to abate an immediate threat to human health and the environment, the statute does not authorize a private party to recover expenses incurred for longer term “remedial” actions. The Eighth Circuit Court of Appeals agreed with BNSF’s interpretation of the statute and found NPC’s costs to be remedial in nature and, as a result, unrecoverable.
Northern Pacific Center clarifies the type of environmental cleanup costs for which a private party can seek recovery pursuant to MERLA. If hazardous substances pose an immediate threat to human health or the environment, a private party may recover reasonable and necessary costs incurred to alleviate that threat. Once the immediate danger has been addressed, private parties may not recover costs associated with long-term cleanup or development of the property.