Eleventh Circuit Holds that EPA Superfund Remedial Actions are Usually Entitled to the FTCA “Discretionary Function” Exemption

An unusual Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA, known also as Superfund) remedial action has resulted in a broad ruling that Environmental Protection Agency (EPA) remedial actions and their implementation by EPA contractors may be entitled to broad protection from liability insofar as the Federal Tort Claims Act (FTCA) is involved. The case is Gadsden Industrial Park LLC v. United States of America, CMC Inc., and Harsco Corporation, an unpublished opinion released by the court on November 30, 2018.

After the Gulf States Steel Corporation, the owner and operator of a former steel manufacturing facility located in Gadsden, AL, declared bankruptcy, in 2002, Gadsden Industrial Park LLC (Gadsden) purchased 434 acres of the 761 acre site, as well as assets located in what is described as the “Excluded Real Property”—recyclable materials generated in the steel making process known as “kish” and “slag,” and a track of a railroad line located in this area. However, in the 2007 or 2008, the Eleventh Circuit observes, EPA began a CERCLA remedial cleanup action on the Excluded Real Property and barred Gadsden from entering the Excluded Real Property to make use of its new assets.

Harsco Corporation, a subcontractor, mined segments of the Property including kish and slag allegedly owned by Gadsden and sold portions to unrelated third parties to raise funds to cover EPA’s contractual costs. This caused Gadsden to file several unsuccessful complaints against EPA and its CERCLA contractors alleging an unconstitutional taking of its property, illegal conversion and negligence in handling the kish and slag. The last complaint was dismissed by the lower court for res judicata reasons and the fact that EPA’s decision permitting these actions were entitled to the defense of sovereign immunity because of the FTCA discretionary function exclusion.

The Eleventh Circuit agreed with the lower court, holding that circuit precedent supported the invocation of res judicata. With respect the FTCA discretionary exclusion exemption, the Eleventh Circuit held that EPA has broad discretion under the statute to determine the appropriate means to address the release or threatened release of hazardous substances from the Excluded Real Property; that EPA’s discretion is “grounded in public policy,” especially the need to protect public health and welfare.

Similarly, EPA’s contractor’s removal of kish and slag could be construed as being relevant to the remediation work EPA was detected by law to perform. Moreover, that the contractor then sold to third parties some of the kish and slag it had removed served to defray some of EPAs costs and could also be construed as being consistent with EPA’s statutory duty to “prioritize clean-ups that are cost-effective.”