COA allows environmental cleanup claims filed after 10 years

In a decision about the cleanup and redevelopment of an old industrial site, the Indiana Court of Appeals has provided a definitive answer to a long-simmering debate among Indiana environmental lawyers.

The appellate court ruled in favor of the city of Elkhart on Wednesday and, in turn, answered the question over how long someone has to file an environmental legal action to recoup the cleanup costs against the party responsible for the contamination.

Looking at Indiana Code section 34-11-2-11.5, the unanimous panel ruled state law does not bar an environmental legal action (ELA) after 10 years, but rather limits the recovery of previous cleanup costs to the past 10 years.

“… (T)he legislature did not intend for the ten-year limitation period to start running, once and for all, when the plaintiff incurs its ‘first’ cleanup cost,” Chief Judge Nancy Vaidik wrote for the court. “Rather, a new ten-year period starts to run with the incurrence of each additional cleanup cost. Of course, if the plaintiff waits more than ten years from the incurrence of certain cleanup costs to file its ELA, those costs will not be recoverable.”

Elkhart sued Elkhart Foundry & Machine Co. for contaminating a seven-acre site along the Elkhart River with arsenic, lead, chromium and other toxins. Three years after the Foundry closed in 2004, the city discovered the contamination, but it did not purchase the land and begin remediation until 2010.

In 2016, Elkhart filed a lawsuit against the foundry, alleging the business caused the contamination and should pay the cleanup costs. The foundry filed for summary judgment, arguing the city’s ELA claim was untimely under Indiana Code section 34-11-2-7(3), which provides a six-year statute of limitation period. Since the city first knew of the contamination in 2007, it only had until 2013 to take legal action.

Elkhart Superior Judge Stephen Bowers denied the motion for summary judgment and the Court of Appeals affirmed in Elkhart Foundry & Machine Co., Inc., v. City of Elkhart Redevelopment Commission for the City of Elkhart, 20A03-1709-CT-2136. The appellate court described Bowers’ decision as an “excellent, 23-page order.”

At issue in the appeal was the meaning of Indiana Code section 34-11-2-11.5. The statute took effect in 2011 and provides that a plaintiff in an ELA can seek to recover costs incurred not more than 10 years before the date the action is brought.

Elkhart asserted the law is a statute of limitations requiring an ELA to be filed within 10 years to recover the full costs. The foundry countered the statute is a cap on the damages that are recoverable in an ELA.

The Court of Appeals held that even though Section 34-11-2-11.5 does not include typical statute of limitation language, it has the same effect. Moreover, the General Assembly gave chapter 34-11-2 the heading “Specific Statutes of Limitations,” which the appellate court took to indicate the Statehouse intended Section 34-11-2-11.5 to be read as a statute of limitation. 

Completing its argument, the foundry told the Court of Appeals that even if the law is treated as a statute of limitation, a plaintiff could stretch the 10-year limitation indefinitely by just spending another dollar on the cleanup.

The Court of Appeals acknowledged that was true. However, the panel maintained by creating the 10-year cutoff, the General Assembly gave plaintiffs an incentive to expedite cleanups and file a lawsuit within 10 years of the first incurrence of cost.

“This scheme is also consistent with the purpose of allowing ELA’s in the first place: to encourage cleanup (which leads to redevelopment and economic renewal) by shifting the financial burden to the parties responsible for creating contamination,” Vaidik wrote, citing Cooper Indus., LLC v. City of South Bend, 899 N.E. 2d 1284 (Ind. 2009). “The longer a contaminated site sits vacant, the more important it becomes to allow a suit for the recovery of cleanup costs.”