Tribal Nations, CERCLA Litigation, and Sovereign Immunity

May 26, 2016
By Brian K. Nichols

Introduction:

In Atlantic Richfield Co. v. Pueblo of Laguna, The Federal Court in New Mexico recently ruled that a tribal entity had partially waived sovereign immunity, allowing a limited claim against it under the Comprehensive Environmental, Response, Compensation, and Liability Act (“CERCLA”).1 (D. N.M. March 1, 2016).] Although the Pueblo has requested reconsideration, the case adds to a small body of case law regarding tribal nations and CERCLA.

Tribal liability under CERCLA:

Under CERCLA, the costs of remediating past deposits of hazardous waste are allocated. Unlike other statutes, it does not regulate the issuance of waste or pollution. Litigation is usually contentious because the cost of cleanup is allocated under CERCLA.2 It is settled that a tribe may state a claim under CERCLA to be compensated, so long as it does so consistent with statutory scheme.3 What is not settled is whether tribes may be sued for liability under CERCLA. Both the statute and sovereign immunity are barriers.

Certain “persons” may be liable under CERCLA,4 and the statutory definition of person does not expressly include a tribal nation.5 The Federal Court for the Eastern District of Washington, in Pakootas v. Teck Cominco Metals, Ltd., determined that tribal nations were not a “person” for purposes of CERCLA liability.6 (E.D. Wash. June 19, 2009).] In Pakootas, the Confederated Tribes of the Colville Reservation (among others) are suing a Canadian company for cleanup costs. The Court relied, in part, on statutory construction and familiar canons of construction. The Court noted that tribes are separately defined in CERCLA, are expressly allowed to be compensated, but are not expressly exposed to potential liability.7 Moreover, regulatory statutes, such as the Resource Conservation and Recovery Act, expressly apply to tribal nations. The exclusion of tribes from the definition of “persons” who may be liable under CERCLA was, therefore, a purposeful exclusion of tribes.8 The Court also relied in part on principles of sovereign immunity, noting that a Congressional waiver of a tribe’s immunity must be express.9

Interestingly, it appears the Pakootas Court has not had to address whether the tribe’s suit has waived immunity for “recoupment claims” in common law. The Tenth Circuit Court of Appeals, in Berrey v. ASARCO Inc., has determined that when a tribe files suit, it waives immunity for common law counterclaims of contribution and indemnity.10 In Berrey, the Quapaw Tribe sued under CERCLA. Defendants counterclaimed under CERCLA, and stated the common law claims. Counterclaims are styled as recoupment if three elements are met: the claims arise from the same transaction or occurrence, the relief is of the same type sought by the tribe, and the amount sought does not exceed the amount sought by the tribe.11 Counterclaims for contribution and indemnity meet these criteria,12 and are therefore not barred by a tribe’s immunity from suit. Other courts have reached the same conclusion.13 In Berrey, the Tenth Circuit did not determine whether the counterclaim under CERCLA was viable.

The Pueblo of Laguna Remediation:

The Federal District Court in New Mexico recently addressed sovereign immunity in a case brought by Atlantic Richfield against the Pueblo of Laguna and Laguna Construction Company (“LCC”). LCC is now a federally-chartered entity under Section 17 of the Indian Reorganization Act.14 However, a previous entity was formed under New Mexico law, and it merged into the Section 17 entity. A tribal nation drafts a charter through its governing body which is then approved by the Department of the Interior and ratified again by the tribe’s governing body. Section 17 entities are wholly owned by the tribal nation. There is considerable ambiguity and disagreement about the nature of these entities, and how separate they are from the tribal nations which own them.

In Atlantic Richfield, the parties appeared to agree that the Section 17 LCC enjoyed the Pueblo’s immunity. However, as the Court explained, that is not always the case, and the Court flagged this issue for later consideration.15 The Court rejected two arguments by Atlantic Richfield, that LCC waived immunity in a 1986 Agreement,16 and the claim may proceed under a New Mexico statute regarding the survivorship of corporations.17 The first was rejected because the Agreement did not expressly waive immunity, and the second because the state statute was inapplicable as LCC merged, it did not dissolve.

This left Atlantic Richfield’s argument that LCC’s Articles of Merger, filed with the State of New Mexico, waived immunity for claims the Section 17 entity was assuming from the New Mexico entity. The Court first found that the New Mexico LCC did not enjoy the Pueblo’s immunity. In the Articles, LCC promised to “preserve unimpaired” the claims of creditors to the New Mexico LCC, and that any “action” would proceed “as if the merger had not taken place.”18 While not an express waiver, or even mention, of 
sovereign immunity, the promise that creditor’s rights would not be impaired is meaningful only if the Section 17 LCC promised to waive the sovereign immunity defense for debts is assumed from the New Mexico LCC.19 Thus, Atlantic Richfield’s claim, to the extent based on debts owed by the New Mexico LCC, could proceed. The Court did not address whether the Pueblo and the Section 17 LCC were “persons” for purposes of CERCLA liability.20

Take-Away:

Taken together, Atlantic Richfield, Berrey, and Pakootas indicate that sovereign immunity and CERCLA are barriers to CERCLA claims against tribal nations, and likely Section 17 entities. However, if a tribal nation prosecutes CERCLA claims, common law counterclaims sounding in recoupment may be stated.

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  1. 1. No. 15-cv-0056, Memorandum Opinion and Order [Doc. 75
  2. 2. See generally Pakootas v. Teck Cominco Metals, Ltd., 452 F.3d 1066, 1072-74 (9th Cir. 2006).
  3. 3. See 42 U.S.C. §§ 9607(a)(4)(A), 9607(f).
  4. 4. 42 U.S.C. § 9607.
  5. 5. 42 U.S.C. § 9601(21).
  6. 6. No. 04-cv-0256, Order [Doc. 357
  7. 7. Id. at 3-4.
  8. 8. Id. at 5-8.
  9. 9. Id. at 7, 10.
  10. 10. 439 F.3d 636 (10th Cir. 2006).
  11. 11. Id. at 643.
  12. 12. Id. at 644-45.
  13. 13. See, e.g., Rosebud Sioux Tribe v. Val-U Constr. Co., 50 F.3d 560 (8th Cir. 1995).
  14. 14. 25 U.S.C. § 477.
  15. 15. No. 15-cv-0056, Memorandum Opinion and Order at 6, n1.
  16. 16. Id. at 7-8.
  17. 17. Id. at 17-18.
  18. 18. Id. at 9.
  19. 19. Id. at 10.
  20. 20. Id. at 19.

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