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District Court Remands Lawsuit Involving Contaminated Water Supply Despite Federal Involvement in Cleanup

In City of St. Charles v. Union Electric Company, the City of St. Charles (the “City”) brought common law claims sounding in negligence against Defendant Union Electric Company dba Ameren Missouri (“Ameren”), alleging that Ameren contaminated the City’s water supply, causing the City to incur millions in cleanup costs. No. 4:23-cv-00846-MTS (E.D. Mo. 2023). Ameren removed the case to federal court because it had been subject to an administrative settlement with EPA to perform the cleanup pursuant to CERCLA, but on November 2, 2023, the U.S. District Court for the Eastern District of Missouri remanded the case back to state court for want of subject matter jurisdiction.

Ameren owns and operates an electric substation adjacent to a City-owned well field and supporting infrastructure. Contaminants were found in the water supply, and sampling confirmed that Ameren was a source, having used chlorinated solvents in its operations. Ameren agreed to conduct remedial activities and entered into Administrative Settlement Agreements and Orders on Consent (“ASAOCs”) under CERCLA with the Missouri Department of Natural Resources and EPA. But Ameren’s efforts to remove all of the contaminants were not successful, and the City brought a lawsuit in state court against Ameren to recover millions of dollars in cleanup costs of its own. The City asserted nine common law claims, including negligence, nuisance, and trespass, but not a federal CERCLA claim.

Ameren removed the case to the U.S. District Court for the District of Missouri, and the City sought to remand the case to state court. Ameren argued the federal court had subject-matter jurisdiction on two separate bases: federal question jurisdiction, and the federal officer removal statute. The Court rejected both arguments.

Federal question jurisdiction most often applies when a federal law creates the cause of action asserted by a plaintiff, but it can also apply when a federal issue is (1) necessarily raised, (2) actually disputed, (3) substantial, and (4) capable of resolution in federal court without disrupting the federal-state balance approved by Congress. Ameren acknowledged there was no federal cause of action here and so relied on this four-part standard.

Ameren argued that EPA’s involvement in the cleanup vis-à-vis the ASAOCs necessarily raised a federal issue because the City was effectively claiming EPA’s remedy was not sufficient. The Court, however, determined that the federal cleanup was simply in the background and had little relevance to the City’s common law claims, which related to Ameren’s historic operations. The Court explained that CERCLA was never meant to displace state property law; Ameren could have perfectly complied with the government’s cleanup requirements but could nonetheless be liable to the City under the common law. Because no federal issue was raised, there was no federal question jurisdiction.

The federal officer removal statute, 28 U.S.C. § 1442, creates federal subject-matter jurisdiction where a federal officer is sued in an official capacity for actions performed under the color of federal law. It extends to a suit against a private defendant when the defendant is acting under the direction of the federal officer and there is a connection between the defendant’s action and the federal officer’s authority. Here, Ameren argued that during its attempted cleanup, it was acting under the direction of EPA, and therefore acting under a “federal officer” for purposes of the Court’s jurisdiction.   

The Court rejected this argument, holding that under Supreme Court precedent, “[t]he fact that a federal agency directs, supervises, and monitors a company's activities in detail does not amount to ‘acting under’ for purposes of the federal officer removal statute.” In this case, EPA required Ameren to comply with the law; it did not direct Ameren to act on EPA’s behalf. Moreover, there was no connection between the action for which Ameren was sued—contaminating the water supply—and EPA’s authority. Although Ameren eventually conducted remediation under EPA’s supervision, EPA had no connection to Ameren’s underlying acts leading to the contamination.

This case is a reminder that EPA’s involvement in a site cleanup does not necessarily mean that lawsuits related to that cleanup belong in federal court. The nature of the lawsuit matters. If it is rooted in common law, federal subject matter jurisdiction may be lacking.