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Allen v. Environmental Restoration, LLC.

No. 19-2197. D.N.M. Judge Carson. Clean Water Act—Statute of Limitations—Federal Preemption—Choice of Law.

May 3, 2022

A blowout during excavation of an inactive gold mine in Southwestern Colorado released at least 3 million gallons of contaminated water into Cement Creek. The water from Cement Creek then flowed into the Animas and San Juan Rivers, which continue into New Mexico. The US Environmental Protection Agency (EPA) conceded responsibility for the spill and its impacts. The State of New Mexico, the Navajo Nation, and the State of Utah separately filed civil actions under the Clean Water Act (CWA) in New Mexico and Utah against the mine owners, the EPA, and the EPA’s contractors. Defendant Environmental Restoration, LLC (ER) moved to transfer the Utah case to the District of New Mexico for coordinated or consolidated pretrial proceedings. The US Judicial Panel on Multidistrict Litigation centralized proceedings in the District of New Mexico. Later, individuals who farm land or raise livestock along the Animas River or San Juan River (collectively, the Allen plaintiffs) filed a complaint that included state law negligence claims. This suit was consolidated into the multidistrict litigation.

Defendant ER moved to dismiss the Allen plaintiffs’ complaint pursuant to Fed. R. Civ. P. 12(b)(6), arguing that it was not filed within Colorado’s two-year statute of limitations. Plaintiffs responded that the claims were timely filed under New Mexico’s three-year statute of limitations. The district court denied the motion to dismiss, concluding that New Mexico’s statute of limitations applied to plaintiffs’ state law claims, and it certified the case for interlocutory appeal.

On appeal, defendant argued that Congress’s intent in passing the CWA, along with relevant Supreme Court precedent, mandates that Colorado’s two-year statute of limitations applies to the Allen plaintiffs’ state law claims. The CWA specifically preserves certain state actions, and the US Supreme Court’s interpretation of the CWA makes clear that point source state substantive law applies to state actions. The Allen plaintiffs’ argument that this holding does not extend to procedural law failed because Congress’s goals in passing the CWA—uniformity, efficiency, certainty, and predictability—suggest that a single statute of limitations should govern all state law claims emanating from a single water-polluting event, and application of the forum state’s statute of limitations is inconsistent with Congress’s full purposes and objectives in passing the CWA. And without a uniform statute of limitations, a defendant is exposed to lawsuits potentially indefinitely, which would frustrate the carefully prescribed CWA regulatory system.

The Allen plaintiffs alternatively argued that a five-year federal catch-all statute of limitations should apply. However, the CWA and the Supreme Court’s interpretation of the CWA compel a district court to apply the point source state’s statute of limitations to state law claims preserved under the CWA. Accordingly, the district court erred.

The decision was reversed and the matter was remanded.

Official US Court of Appeals for the Tenth Circuit proceedings can be found at the US Court of Appeals for the Tenth Circuit website.

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