News & Insights

Fifth Circuit Affirms The Dismissal Of Residential Association’s Lawsuit Against City For Selling Allegedly Contaminated Land To Residents

The Residents of Gordon Plaza, Inc. (“Gordon Plaza”) filed suit under the Resource Conservation and Recovery Act (RCRA), 42 U.S.C. § 6972(a)(1)(B), against the Mayor of New Orleans LaToya Cantrell and the City of New Orleans (the “City”) for the City’s alleged targeting of African American residents for the sale of residential units without disclosing that the location had been previously used as a landfill.  The lawsuit was dismissed due to an ongoing “removal” actions being taken by the Court, which created a RCRA statutory bar to Gordon Plaza’s Complaint.

The Agriculture Street Landfill (“Site”) was used to store hazardous chemicals and solid waste approximately twenty years before being developed for residential use.  The Environmental Protection Agency (“EPA”) listed the Site as a “superfund” site on the National Priorities List (“NPL”) due to high arsenic, lead, and polynuclear aromatic hydrocarbon levels in the soil.  The EPA fenced off part of the Site from 1994 to 2001, during which time it removed two feet of soil, placed a permeable mat over the contaminated soil, and covered the mat with approximately one foot of soil.  In 2002, the EPA concluded that it had completed all required actions under the NPL. 

In 2005, Hurricane Katrina devastated the area, leading the U.S. Agency for Toxic Substances and Disease Registry to determine the site posed an indeterminate public health hazard.  In 2008, the EPA reached a Consent Decree which required the City to excavate two feet of soil, replace the permeable mat, refill with new soil, cover the new soil with grass sod and landscaping, and replace the driveway and sidewalk.  Throughout the process, the City was required by the decree to maintain the soil over the mat.  This included a requirement that the City require mowing and maintenance of private land owners in an effort to prevent damage to the subsurface permeable mat.  The City was also required to provide a Technical Abstract for utility providers to implement to ensure the soil and mat remained protected.

In 2018, the City received a five-year review report from the EPA which found that the City was in compliance with the Consent Decree and specifically found that the soil barrier was in place and expected to remain in place over time.  In 2018, the EPA determined that the soil in many parts contained contaminant levels that were unsuitable for non-industrial use.

In 2018, Gordon Plaza brought suit against the Mayor and the City demanding relocation of its residents. (“2018 Litigation”)  Gordon Plaza was held to have violated the local rules for the Eastern District of Louisiana as it failed to inform the Court in the 2018 Litigation that a Consent Decree between the EPA and the City had been reached. That suit was dismissed without prejudice for lack of standing. 

On May 15, 2020, Gordon Plaza brought another lawsuit against the City under the RCRA alleging that the hazardous chemicals thought to have remained subsurface caused residents to suffer from cancer and other health conditions.  Gordon Plaza sought an order requiring the City to perform an environmental quality analysis and risk assessment.  Gordon Plaza’s Complaint again did not mention the 2008 Consent Decree.

The City filed a Motion to Dismiss Gordon Plaza’s Complaint attaching the Decree.  The City argued the application of the RCRA’s statutory bar on citizen suits where a “responsible party is diligently conducting a removal action” pursuant to a consent decree with the EPA.  The District Court granted the dismissal with prejudice finding that Gordon Plaza failed to allege that the City’s ongoing efforts were not “removal actions” under the RCRA.

Gordon Plaza appealed to the Fifth Circuit Court of Appeals.  Gordon Plaza argued (1) that the City’s diligent removal action defense should not have been considered by the Court as it was improperly asserted in the reply brief, (2) the district court erred in finding that the City’s efforts constituted a “removal action,” (3) the City was not “diligently” conducting a removal action, and (4) the district court erred when it failed to grant leave to file an amended complaint.

The Fifth Circuit noted that a district court abuses its discretion when it considers new arguments raised for the first time in a reply brief without first providing the non-movant an opportunity to respond.  However, the Fifth Circuit noted that the City raised the argument two years prior in its Motion to Dismiss in the 2018 Litigation and the City indicated in its 2020 Motion to Dismiss that it was asserting the same grounds for dismissal as the 2018 Motion to Dismiss. 

Gordon Plaza argued that the EPA’s preamble to a proposed rule interpreted the term “removal” as excluding “operation and maintenance” activities.  Gordon Plaza argued that the City’s activities do not fall within the statutory definition of “removal.”

To determine whether the EPA’s interpretation of “removal” as excluding “operation and maintenance” activities was authoritative, the Fifth Circuit noted that it would be required to perform the two-step Chevron deference analysis.  However, the Fifth Circuit noted that there was a threshold inquiry (referred to as “Chevron step zero”) which asks whether “the agency interpretation claiming deference was promulgated in the exercise of that authority.”

The Fifth Circuit noted  that the 2002 proposed rule was to delete another Superfund site from the NPL.  The Fifth Circuit found that the interpretation was not intended to clarify rights and obligations with the force of law but instead to set out a fact-bound inquiry into the application of a regulation to a particular party. 

Gordon Plaza next argued the EPA implicitly implemented an interpretation of removal.  Gordon Plaza argued, this was due to the fact that the NCP only allows Superfund sites to be deleted once no further response is appropriate, and “response” includes “removal”.  The Fifth Circuit held that an agency’s merely proposed regulation does not constitute a considered interpretation of a statute and the EPA’s proposed rule was entitled to no deference under the Chevron analysis.

Gordon Plaza next argued that the term “removal” under Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (“CERCLA”) does not include maintenance.  The Fifth Circuit noted that the definition of “removal” includes the “monitor[ing], assess[ing], and evaluat[ion of] the … threat of release of hazardous substances” and the catchall “taking of such other actions … to prevent, minimize, or mitigate damage …, which may otherwise result from a … threat of release” of hazardous substances.”

Gordon Plaza argued that the City was not “diligently” conducting a removal action.  The Fifth Circuit agreed with the District Court that Gordon Plaza failed to allege that the City failed to comply with the Consent Decree, the EPA found in 2018 that the City was in compliance with the Consent Decree and Gordon Plaza’s allegations did not raise a right to relief above a speculative level.

Gordon Plaza finally argued that the lower court erred when it denied Gordon Plaza leave to amend its complaint to plead the Consent Decree.  The lower court denied the motion for leave to amend based on its findings of undue delay, bad faith, dilatory motive, repeated failures to cure deficiencies, and undue prejudice to the City.  The Fifth Circuit agreed, and held that the 2018 Litigation put Gordon Plaza on notice of the materiality of the Consent Decree.  The Fifth Circuit affirmed the dismissal with prejudice of Gordon Plaza’s Complaint.