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Eighth Circuit Holds Neighboring Property Owners Lacked Constitutional Standing to Challenge Amended Consent Decree in Chemical Plant Remediation

Before neighboring property owners can intervene to challenge a consent decree in a remediation action, they must establish Article III standing. On August 5, 2022, The United States Court of Appeals for the Eighth Circuit affirmed the ruling of the United States District Court for the District of Minnesota and held that neighboring property owners of a chemical plant undergoing environmental remediation lacked constitutional standing to intervene to oppose an amended consent decree and remedial action plan. United States v. Reilly Tar & Chem. Corp., Slip Op. No. 20-2786 (8th Cir. Aug. 5, 2022). The court reasoned that the entry of the amended consent decree was not a causal link of the proposed intervenors’ harm because it did not require the chemical plant to clean-up chlorinated volatile organic compounds (CVOCs) and perchloroethylene (PCE) and therefore did not alter the chemical plant’s preexisting duties regarding PCE. Id.

A party seeking to intervene and pursue relief in federal court must establish it has Article III standing by demonstrating: (1) it suffered an injury in fact, (2) that injury is fairly traceable to the defendant's challenged action, and (3) there is a likelihood that the injury will be redressed by a favorable judicial decision. An injury is an invasion of a legally protected interest that is concrete and particularized. The injury is considered fairly traceable to the defendant’s conduct if the defendant will be compelled to cause the alleged injury to the intervenor if the plaintiff prevails. 

In United States v. Reilly Tar & Chem. Corp., Reilly Tar operated a coal distillation and wood treatment business at its site in St. Louis Park, Minnesota. The operations resulted in environmentally toxic chemicals seeping into aquifers below the site and contaminating the surrounding areas' drinking water.  In 1986, the United States, the State of Minnesota, Reilly Tar, and the City of St. Louis Park, among others, entered a consent decree (the 1986 Consent Decree) and integrated remedial action plan which required Reilly Tar to remediate certain identified chemical substances through a water treatment pump program and a groundwater monitoring plan. Under the program, Reilly Tar was required to treat 200 million gallons of water per year to remove and control the flow of contaminants including, solvents and degreasers, polynuclear aromatic hydrocarbons (PAHs), and phenolic compounds in aquifers beneath St. Louis Park.  Importantly, the 1986 Consent Decree was silent about PCE and other CVOCs.

In 2019, after Reilly Tar had merged to form another company which subsequently filed for bankruptcy, the parties to the 1986 Consent Decree decided to amend their agreement dismissing any claims they might have against Reilly Tar and removing Reilly Tar and its successors as parties to the 1986 Consent Decree. Additionally, the remaining parties to the 1986 Consent Decree sought to have the agreement amended to remove the “solvents and degreasers” language and limited the contaminants for remediation to PAH compounds, benzene, and other chemicals. The proposed 2019 Amended Consent Decree also removed the explicit 200-million-gallon pumping quota and gave the parties greater flexibility to change the specifics of the well pumping program, allowing the parties to determine where the well pumping process would take place and the rate of pumping, subject to EPA's approval.

Daikin Applied Americas, Inc., and Super Radiator Coils LP (Proposed Intervenors) owned property about 0.2 miles downgradient from the Reilly Tar Site. Between 1949 and 1998 that property was used for metal fabrication, and since 2015, the Proposed Intervenors had been remediating PCE contamination at their property.

After the proposed 2019 Amended Consent Decree was published in the Federal Register, the Proposed Intervenors submitted public comments. The EPA and Minnesota Pollution Control Agency responded to their comments and then submitted the proposed 2019 Amended Consent Decree to the district court for approval. Dissatisfied with the responses to their comments and the terms of the proposed 2019 Amended Consent Decree, they moved to intervene arguing that multi-aquifer wells were leaking contaminants despite the 1986 Consent Decree and that the proposed 2019 Amended Consent Decree would worsen the spread of contaminants.  Specifically, the Proposed Intervenors argued that the Reilly Tar Site was the source of PAHs, phenolics, volatile organic compounds (VOCs), CVOCs (including PCE), and other contamination, and further that the proposed 2019 Amended Consent Decree did nothing to remediate or reduce the migration of those contaminants, but that the proposed changes to the pump program and other remedies threatened to increase the migration of such contaminants from the Reilly Tar Site to the Proposed Intervenors’ Site and surrounding neighborhoods.

The Proposed Intervenors alleged they had already suffered harm as a result of the migration of contamination coming from the Reilly Tar Site. They felt they would be further injured by the entry of the 2019 Amended Consent Decree because it would delay the Proposed Intervenors’ remediation efforts until they had investigated the contaminants coming from the Reilly Tar Site. Additionally, the new decree would increase the influx of PCE and other contaminants from the upgradient site, significantly increasing their remediation costs.

The district court denied the motion and found that the Proposed Intervenors lacked Article III standing because they could not demonstrate their alleged harm was traceable to the 2019 Amended Consent Decree or otherwise redressable because neither the 1986 Consent Decree nor the proposed 2019 Amended Consent Decree required Reilly Tar to remediate for CVOCs, including PCE. In affirming the district court’s ruling, the Eighth Circuit reasoned that the Proposed Intervenors’ contention that the 2019 Amended Consent Decree would increase the migration of CVOC contaminants from the Reilly Tar Site to their own property was based on two unfounded assumptions: (1) it presumed that the CVOC contaminants were subject to remediation by the 1986 Consent Decree, and (2) the 2019 Amended Consent Decree significantly changes CVOC remediation at the Reilly Tar Site.  Indeed, the Proposed Intervenors acknowledged that the 1986 Consent was silent on CVOCs, including PCE, and it never defined “solvents and degreasers,” nor did it provide any meaningful contextual clues indicating the phrase was intended to encompass CVOCs. Because the 1986 Consent Decree never covered CVOCs, the 2019 Amended Consent Decree merely maintained the status quo regarding CVOC remediation.

Regarding the Proposed Intervenor’s contention that Reilly Tar was the source of massive CVOCs and the contamination migration and the 2019 Consent Decree’s revamping of the Pump Program would exacerbate that migration onto their property, the Court found that the harm of additional expenditures to remediate CVOCs was not traceable to the entry of the 2019 Amended Consent Decree because CVOCs were not part of either decree. Moreover, even if the allegation were true, the 2019 Amended Consent Decree did not infringe on the Proposed Intervenors’ right to seek contribution for the costs it has incurred to remediate its property.

Given that the 2019 Amended Consent Decree did not alter Reilly Tar’s CVOC and PCE remediation obligation nor did it infringe upon the Proposed Intervenors’ right to seek contribution, the Proposed Intervenors failed to establish a traceable redressable injury sufficient for Article III standing.