Colo. Dep't of Pub. Health v. United States, U.S. Dep't of the Army, U.S. Fish & Wildlife Serv., & Shell Oil Co., Civil Action No. 17-cv-02223-RM-MEH

CourtUnited States District Courts. 10th Circuit. United States District Court of Colorado
Writing for the CourtMichael E. Hegarty, United States Magistrate Judge.
PartiesCOLORADO DEPARTMENT OF PUBLIC HEALTH AND ENVIRONMENT, HAZARDOUS MATERIALS AND WASTE MANAGEMENT DIVISION, Plaintiff, v. UNITED STATES OF AMERICA, UNITED STATES DEPARTMENT OF THE ARMY, UNITED STATES FISH AND WILDLIFE SERVICE, and SHELL OIL COMPANY, Defendants.
Decision Date05 March 2018
Docket NumberCivil Action No. 17-cv-02223-RM-MEH

COLORADO DEPARTMENT OF PUBLIC HEALTH AND ENVIRONMENT,
HAZARDOUS MATERIALS AND WASTE MANAGEMENT DIVISION, Plaintiff,
v.
UNITED STATES OF AMERICA,
UNITED STATES DEPARTMENT OF THE ARMY,
UNITED STATES FISH AND WILDLIFE SERVICE,
and SHELL OIL COMPANY, Defendants.

Civil Action No. 17-cv-02223-RM-MEH

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO

March 5, 2018


RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE

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

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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.

BACKGROUND

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

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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.

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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

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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

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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...

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