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Colorado Department of Public Health and Environment v. United States

United States District Court, D. Colorado

March 5, 2018



          Michael E. Hegarty, United States Magistrate Judge.

         In separate motions, Defendant Shell Oil Company (“Shell”) and Defendants United States of America, United States Department of the Army (“Army”) and United States Fish and Wildlife Service (“FWS”) (collectively “Federal Defendants”), seek to dismiss Plaintiff Colorado Department of Public Health and Environment's (“CDPHE”) Complaint pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). The Honorable Raymond P. Moore referred the motions to this Court for report and recommendation.

         The Court first addresses CDPHE's state law claim, which alleges Defendants violated the Colorado Hazardous Waste Act (“CHWA”) by failing to obtain a post-closure permit. The Court recommends finding that CDPHE states a claim as to all Defendants except the United States of America, which is entitled to sovereign immunity.

         The Court then analyzes CDPHE's second claim, which alleges Defendants violated the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) and various agreements between the parties when they transferred land at the Rocky Mountain Arsenal (“Arsenal”) without receiving approval from Colorado. The Court first recommends holding that CDPHE fails to assert a claim against Shell. Then, the Court finds that the United States of America is entitled to sovereign immunity. The Court also finds that the Army and FWS are entitled to sovereign immunity to the extent CDPHE seeks an injunction requiring that they comply with the specific provisions of the Colorado Executive Order D-013-98 (“Executive Order”) and the CDPHE Joint Policy (“State Policy”). However, CDPHE's claims against the Army and FWS are not subject to dismissal in their entirety, because CDPHE also seeks an injunction mandating that the Army and FWS comply with provisions of CERCLA.

         Accordingly, the Court grants in part and denies in part Shell's and Federal Defendants' Motions to Dismiss.


         I. Facts

         The following are factual allegations (as opposed to legal conclusions, bare assertions, or merely conclusory allegations) made by CDPHE in its Complaint, which are taken as true for analysis under Fed.R.Civ.P. 12(b)(1) pursuant to Holt v. United States, 46 F.3d 1000, 1002 (10th Cir. 1995) and under Fed.R.Civ.P. 12(b)(6) pursuant to Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

         The relevant factual background for the Arsenal spans numerous years, many of which have been spent in litigation. In 1942, the Army began using the Arsenal to manufacture and dispose of chemical warfare agents and other hazardous substances. Compl. ¶ 11, ECF No. 1. From 1946 until 1987, the Army leased portions of the Arsenal to private companies, such as Shell. Id. ¶ 12. Shell manufactured pesticides at the Arsenal from 1952 to 1982. Id. ¶ 13. Until 1981, the Army and Shell disposed of their hazardous waste in a service impoundment called Basin F. Id. ¶¶ 14-15. Although the Army and Shell stopped using Basin F in 1981, hazardous waste remained in the unit, and the unit continued to discharge waste into the environment. Id. ¶ 15.

         In 1980, the Army submitted a permit application for the treatment, storage, and disposal of hazardous waste at Basin F pursuant to the Resource Conservation and Recovery Act (“RCRA”). Id. ¶ 17. The Army continued through the permitting process until May 1984, when the Environmental Protection Agency (“EPA”) issued a notice of deficiency on the Army's application. Id. ¶¶ 17-19.

         Then, in October 1984, EPA granted the State of Colorado final authorization to implement the CHWA in lieu of EPA enforcing the RCRA. Id. ¶ 20. This would have required the Army to seek an operating permit from CDPHE instead of EPA. However, rather than issue an operating permit for Basin F, CDPHE promulgated a final modified closure plan for Basin F on November 14, 1986. Id. ¶ 21. CDPHE subsequently issued various CHWA compliance orders to the Army. Id. ¶¶ 21, 26.

         In 1987, EPA listed the Arsenal on a list of the nation's most contaminated sites to be remediated pursuant to CERCLA. Id. ¶ 22. Accordingly, a CERCLA interim response action was initiated in 1988. Id. ¶ 23. On February 17, 1989, EPA, the Army, Shell, the Agency for Toxic Substance Disease Registry, and the Department of the Interior entered into a Federal Facility Agreement (“FFA”). Id. ¶ 25. The FFA established a cooperative procedure to address the release of hazardous substances from the Arsenal. Id.

         In 1992, Congress created the Rocky Mountain Arsenal National Wildlife Refuge (“Refuge”) on portions of the Arsenal. Id. ¶ 27. Congress provided a process for transferring control of the Refuge from the Army to FWS. Id. FWS now manages the Refuge, which requires it to make a variety of environmental compliance decisions, such as ensuring that the Refuge is not used for agricultural or residential purposes. Id. ¶ 40.

         On June 11, 1996, EPA issued its On-post Record of Decision (“ROD”) as part of the CERCLA remedy. Id. ¶ 30. The ROD, which the Army, EPA, and CDPHE signed, formally established a remedy and cleanup approach for the Arsenal. Id. Pursuant to the ROD, the parties were to remove fixed volumes of contaminated soil from various solid waste management units (“SWMUs”), including Basin F. Id. Because the success of the ROD relied on the United States retaining ownership of the Arsenal, it placed restrictions on land use and access. Id. ¶ 31.

         On October 22, 1998, EPA promulgated the RCRA Closure/Post-Closure Rule, which allows parties to establish the post-closure permit requirement through a variety of alternative documents. Id. ¶ 32. Post-closure permits detail operating requirements, groundwater monitoring requirements, and facility-wide corrective action requirements. Id. Colorado subsequently adopted the rule, which gave CDPHE authority to allow alternative documents for hazardous waste units that certified closure after January 26, 1983. Id. ¶¶ 33-34. On August 24, 2010, CDPHE certified Basin F closed with hazardous materials left in place. Id. ¶ 33. CDPHE finalized a post-closure plan for Basin F on October 6, 2011. Id. ¶ 35.

         Therefore, Defendants have worked cooperatively with CDPHE to develop a variety of documents, including the ROD, the long-term monitoring plan, and post-closure plans for various hazardous waste units at the Arsenal. Id. ¶ 35. The Army, Shell, and FWS continue to make decisions regarding whether specific SWMUs comply with environmental regulations. Id. ¶¶ 38-43.

         In 2016 CDPHE conducted an investigation and records review of the Arsenal. Id. ¶¶ 43-44. The inspection revealed that Defendants have not submitted post-closure permit applications or alternative document requests for multiple waste landfills and SWMUs. Id. Additionally, CDPHE discovered that the Federal Government transferred ownership of a portion of the Arsenal to Commerce City, Colorado on August 20, 2007. Id. ¶¶ 45, 52.

         II. Procedural History

         Based on these factual allegations, CDPHE filed the Complaint on September 14, 2017. Compl., ECF No. 1. CDPHE pleads two claims for relief. Id. ¶¶ 46-54. First, CDPHE asserts Defendants violated 6 Colo. Code Regs. § 1007-3:100.10 by failing to submit a post-closure permit application or a request to obtain an alternative agreement. Id. ¶ 47. CDPHE's second claim contends Defendants violated CERCLA §120(h), the ROD, the FFA, the Executive Order, and the State Policy when they transferred ownership of a portion of the Arsenal to Commerce City without receiving authorization from CDPHE. Id. ¶¶ 48-54.

         On October 6, 2017, Shell responded to the Complaint by filing the present Motion to Dismiss, ECF No. 12-1. Although Shell contends this Court lacks original subject matter jurisdiction over CDPHE's state law claim as to it, Shell does not dispute this Court's supplemental jurisdiction to decide these claims. Id. at 5-9. Turning to the merits, Shell argues the Court should dismiss the CERCLA claim, because CDPHE's allegations make clear that Shell did not own any of the allegedly transferred property. Id. at 7. Regarding CDPHE's first claim for relief, Shell contends the CHWA does not require it to obtain a post-closure permit, because it is not an operator of Basin F. Id. at 8-16. Regardless, Shell argues that CERCLA waives state permit requirements when a CERCLA remedial action is ongoing at the facility. Id. at 17-18.

         CDPHE filed a response brief on October 27, 2017. Resp. to Shell's Mot. to Dismiss, ECF No. 19. CDPHE argues it sufficiently pleads its CERCLA claim, because it alleges Shell allowed Arsenal property to be transferred out of federal ownership. Id. at 7. Regarding its state law claim, CDPHE contends Shell is an operator of the Arsenal, because Shell regularly makes environmental compliance decisions and funds the CERCLA remedy. Id. at 8-16. Finally, CDPHE contends the CERCLA permit waiver does not apply to the Arsenal. Id. at 17-19. On November 13, 2017, Shell filed a Reply in Support of its Motion to Dismiss, ECF No. 24.

         On November 27, 2017, the Court permitted Shell and CDPHE to file supplemental briefs addressing Shell's argument that CERCLA waives CHWA's post-closure permit requirement. Minute Order, ECF No. 25. Shell and CDPHE filed their supplemental briefs on December 5, 2017. ECF Nos. 26-27. The Court held oral argument on Shell's motion on December 15, 2017. ECF No. 35.

         On December 18, 2017, Federal Defendants filed the present Motion to Dismiss, ECF No. 37. Federal Defendants first contend that two applicable statutes of limitations bar CDPHE's CHWA claim. Id. at 7-8. Similar to Shell, Federal Defendants next argue that CERCLA's permit waiver precludes any requirement that they obtain a post-closure permit. Id. at 8-13. Federal Defendants then assert that the United States of America, as a whole, is entitled to sovereign immunity, and FWS is not an operator of any landfill or service impoundment at which a post closure permit is required. Id. at 13-16.

         Moving to CDPHE's CERCLA claim, Federal Defendants contend the six-year statute of limitations applicable to all civil actions against the United States bars this claim. Id. at 17-19. Alternatively, Federal Defendants assert that the section of CERCLA on which CDPHE relies does not allow injunctive relief. Id. at 19. Lastly, Federal Defendants argue they are entitled to sovereign immunity to the extent CDPHE seeks that they comply with the Executive Order and State Policy. Id. at 19-20.

         CDPHE filed a response on January 18, 2018. Resp. to Federal Defs.' Mot. to Dismiss, ECF No. 40. CDPHE first contends the statute of limitations does not bar its state law claim, because the two- and five-year limitations periods contemplate continuing violations. Id. at 4-7. Additionally, CDPHE contends the CERCLA permit waiver does not preclude this claim, the United States of America has waived sovereign immunity, and it sufficiently alleges FWS is an operator of the Arsenal. Id. at 8-13. With regard to the federal claim, CDPHE first argues that disputed issues of fact exist as to when the claim accrued. Id. at 14-17. Then, CDPHE contends CERCLA contemplates injunctive relief, and the Federal Government has waived its sovereign immunity for CERCLA violations. Id. at 18-20. On February 8, 2018, Federal Defendants filed a Reply in Support of Their Motion, ECF No. 41.


         I. Dismissal under Fed.R.Civ.P. 12(b)(1)

         Rule 12(b)(1) empowers a court to dismiss a complaint for “lack of subject matter jurisdiction.” Fed.R.Civ.P. 12(b)(1). Dismissal under Rule 12(b)(1) is not a judgment on the merits of a plaintiff's case, but only a determination that the court lacks authority to adjudicate the matter. See Pueblo of Jemez v. United States, 790 F.3d 1143, 1151 (10th Cir. 2015) (recognizing that federal courts are courts of limited jurisdiction and may only exercise jurisdiction when specifically authorized to do so). A court lacking jurisdiction “must dismiss the cause at any stage of the proceeding in which it becomes apparent that jurisdiction is lacking.” Id. (citing Full Life Hospice, LLC v. Sebelius, 709 F.3d 1012, 1016 (10th Cir. 2013)). A Rule 12(b)(1) motion to dismiss “must be determined from the allegations of fact in the complaint, without regard to mere [conclusory] allegations of jurisdiction.” Groundhog v. Keeler, 442 F.2d 674, 677 (10th Cir. 1971). The burden of establishing subject matter jurisdiction is on the party asserting jurisdiction. Pueblo of Jemez, 790 F.3d at 1151. Accordingly, CDPHE bears the burden of establishing that this Court has jurisdiction to hear its claims.

         II. Dismissal Pursuant to Fed.R.Civ.P. 12(b)(6)

         “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Plausibility, in the context of a motion to dismiss, means that the plaintiff pleaded facts which allow “the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. Twombly requires a two prong analysis. First, a court must identify “the allegations in the complaint that are not entitled to the assumption of truth, ” that is, those allegations which are legal conclusions, bare assertions, or merely conclusory. Id. at 679-80. Second, the court must consider the factual allegations “to determine if they plausibly suggest an entitlement to relief.” Id. at 681. If the allegations state a plausible claim for relief, such claim survives the motion to dismiss. Id. at 680.

         Plausibility refers “to the scope of the allegations in a complaint: if they are so general that they encompass a wide swath of conduct, much of it innocent, then the plaintiffs ‘have not nudged their claims across the line from conceivable to plausible.'” Khalik v. United Air Lines, 671 F.3d 1188, 1191 (10th Cir. 2012) (quoting Robbins v. Oklahoma, 519 F.3d 1242, 1247 (10th Cir. 2008)). “The nature and specificity of the allegations required to state a plausible claim will vary based on context.” Kan. Penn Gaming, LLC v. Collins, 656 F.3d 1210, 1215 (10th Cir. 2011). Thus, while the Rule 12(b)(6) standard does not require that a plaintiff establish a prima facie case in a complaint, the elements of each alleged cause of action may help to determine whether the plaintiff has set forth a plausible claim. Khalik, 671 F.3d at 1191.


         The Court first recommends holding that CDPHE's state law claim plausibly asserts a cause of action against Shell, the Army, and FWS. However, the Court recommends finding that the United States of America is entitled to sovereign immunity over this claim. Next, the Court recommends holding that Shell and the United States of America are entitled to dismissal of CDPHE's second claim for relief, but CDPHE states a claim as to the Army and FWS.

         I. CDPHE's First Claim for Relief: Violation of a CHWA Regulation

         CDPHE's first cause of action alleges Defendants violated 6 Colo. Code Regs. § 1007-3:100.10 by failing to obtain a post-closure permit. Compl. ¶¶ 46-47, ECF No. 1. That regulation provides in relevant part:

RCRA requires a permit for the “treatment”, “storage”, and “disposal” of any “hazardous waste” as identified or listed in Part 261 of these regulations. . . . Owners and operators of surface impoundments, landfills, land treatment units, and waste pile units that received waste after July 26, 1982, or that certified closure (according to § 265.115 of these regulations) after January 26, 1983, must have post-closure permits, unless they demonstrate closure by removal or decontamination as provided under § 100.10(b) and (c), or obtain an enforceable document in lieu of a post-closure permit, as provided under paragraph (d) of this section.

6 Colo. Code Regs. § 1007-3:100.10. CDPHE alleges Defendants did not obtain a post closure permit for the following impoundments and units at the Arsenal: Basin F, the Hazardous Waste Landfill, the Enhanced Hazardous Waste Landfill, and several SWMUs. Compl. ¶¶ 43-44. The Court will separately address liability as to Shell and the Federal Defendants.

         A. Claim as to Shell

         The Court recommends holding that CDPHE states a violation of 6 Colo. Code Regs. § 1007-3:100.10 against Shell. CDPHE alleges Shell is an operator of Basin F, and CERCLA § 121(e)(1) does not ...

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