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Delaware Environmental Case Law Update (Jan. 1, 2006)W. Harding (Hardy) Drane, Jr.I. COASTAL ZONE ACT
This effort by the State of New Jersey to reopen a case long-dormant in the United States Supreme Court arose out of a decision by the Secretary of DNREC to deny an application for a coastal zone permit. The permit applicant sought to construct a liquefied natural gas facility in New Jersey. The unloading pier for the facility would extend beyond the low water mark of the Delaware River at a point within the “12-mile circle,” and thus would be located in part within the State of Delaware. New Jersey is asking the United States Supreme Court for a decree declaring that the 1905 Compact between the two states grants New Jersey riparian jurisdiction to regulate construction of projects appurtenant to the New Jersey shore, free of regulation by Delaware. New Jersey also seeks to enjoin Delaware from requiring permits for the construction of any improvements appurtenant to the New Jersey shoreline, and from enforcing any conditions in such permits. Delaware filed its responsive brief on October 27, 2005. In its 1934 opinion and 1935 decree in this case, the Court ruled that the Delaware boundary within the 12-mile circle extends to the low water mark on the New Jersey side of the Delaware River, but made its ruling subject to the 1905 Compact between the two states. The 1905 Compact provides in part that each state “may, on its own side of the river, continue to exercise riparian jurisdiction of every kind and nature, and to make grants, leases, and conveyances of riparian lands and rights under the laws of the respective States.”
In this case, the Superior Court addressed several significant questions related to applications for Coastal Zone permits. First, it rejected an argument by a citizen opposing the project that the Coastal Zone Act is intended gradually to phase out heavy industry uses by forbidding any expansions or extensions of such uses. The Court found that the Act expressly grants discretion to the Secretary to determine on a case by case basis, by evaluating statutory criteria such as economic and environmental effects, whether to grant a permit for the proposed expansion or extension. In this respect the Act is unlike typical zoning ordinances that seek to eliminate non-conforming uses by prohibiting them from upgrading or expanding. Second, under the circumstances presented, the Court held that the Act did not require the applicant to obtain all county zoning permits before applying to DNREC for a Coastal Zone permit. In this case, the applicant obtained only a letter from the county stating that the proposed heavy industry use was allowable under the present zoning classification of the site. Nevertheless, the Court suggested that under different circumstances, it might be necessary for an applicant to obtain “a full zoning permit” before applying for a Coastal Zone permit. The Court found it significant that the proposed project in this case would replace “two properly zoned but pollution and accident prone … plants with one state-of-the-art facility,” thus demonstrating that county zoning ordinances allow this type of plant on the site. Also, the Coastal Zone permit required the applicant to obtain all zoning approvals before commencing construction. Third, the Court found that substantial evidence supported the Secretary’s finding that the proposed facility included offsets that “are clearly and demonstrably more beneficial than any harm from the project.” In this case, the Secretary found that the benefits of substantial decreases in levels of SO2 more than outweighed the detriment of much smaller increases in NOx that would result from the project. Finally, the court upheld the ruling that in a public hearing before the Secretary prior to issuance of a permit, the only “parties” are (1) the applicant and (2) anyone who seeks to protect a “meritorious property right.” Among the rights of a party are to be notified of all communications with the applicant, to seek discovery, and to have counsel. Members of the general public have a right to comment at the hearing, but should not be accorded party status, because according them party status “would bog down the permit process.” The Court did not reach the separate question of what the requirements for standing before the CZIAB may be. II. CERCLA
The Court held that the plaintiff, BP Amoco, failed to establish that the defendant, Sun, was a statutory “operator” and “arranger” under CERCLA and its state law analogue the Delaware Hazardous Substance Cleanup Act (HSCA). BP Amoco claimed that Sun was liable as an operator because a Sun employee directed, managed, and conducted activities at the New Castle Facility. The court noted that CERCLA operator liability requires that the operator’s control over the facility relate to pollution control or waste disposal—“operations having to do with the leakage or disposal of hazardous waste, or decisions about compliance with environmental regulations.” The court found that BP Amoco had failed to come forth with any evidence that the employee made environmental policy decisions or supervised waste disposal and management or that the Sun employee’s activities were “eccentric under accepted norms of parental oversight of a subsidiary’s facility.” As a result, the court granted Sun’s motion for summary judgment that Sun is not liable as an operator under CERCLA and HSCA due to its employee’s activities. BP Amoco also claimed that Sun was liable under CERCLA as one who arranged for the disposal of hazardous substances. The court found that to establish arranger liability, there must be “ownership or possession, and knowledge or control.” BP Amoco presented evidence of control alone, and as it failed to present evidence to prove that Sun owned or possessed the waste at issue, the court granted Sun’s motion for summary judgment that it is not liable as an arranger.
The District Court granted in part and denied in part the government’s motion for summary judgment in its action seeking under CERCLA to recover costs it alleges it incurred as a result of the release of hazardous substances at a former DuPont facility. EPA ordered DuPont to implement a remedy at the DuPont-Newport Superfund Site. The government subsequently sought to recover its costs associated with the DuPont clean-up. The costs were categorized into four groups: past costs, remedial design oversight costs, remedial action oversight costs, and litigation costs. The government sought interest on all four categories. The parties agreed to settle the past costs. The government acknowledged that under Third Circuit precedent, it could not recover remedial design oversight costs, and stated its intent to seek en banc review of this issue by the Third Circuit. Since the government’s claim for these costs is entirely within the Third Circuit precedent of U.S. v. Rohm and Haas Co., 2 F.3d 1265 (3d Cir. 1993), the District Court granted summary judgment to DuPont as to the claim for remedial design oversight costs. The government contended that Rohm and Haas, which involved a removal action, did not preclude recovery of remedial action oversight costs because remedial actions are broader in scope than removal actions. But the District court found that the Third Circuit’s reasoning in Rohm and Haas limits recoverable expenses under 42 U.S.C. § 9601(3) to actual monitoring done, not oversight of another party’s remedial activities. Accordingly, the District Court granted summary judgment to the defendants as to the claim for remedial action oversight costs. The government contended that it was entitled to full recovery of litigation costs, whether or not those costs were recoverable under CERCLA and regardless of whether the underlying costs sought in litigation were recoverable. The District Court determined that the government’s expenditures in pursuit of recovering non-recoverable costs could not themselves be recoverable costs. Particularly mindful of the government’s candid admission that its intent was to use this case as a vehicle for overruling Rohm and Haas, the District Court found that it would be fundamentally unfair to require a prevailing party to pay for the government’s efforts to reverse existing precedent. Thus, the court found that the government was permitted by statute to recover only its enforcement costs and granted the government 30.9% of its claimed litigation costs (which was that percentage of the past costs that had been recovered). With respect to the government’s claims for interest, the District Court found that under CERCLA the accrual of interest is triggered by the later of (1) the date that payment of a specified amount is demanded in writing or (2) the date of the expenditure concerned. The court found that a demand letter triggers interest only for those expenditures that the demand specifically asserts, not for unspecified future expenditures. Therefore the court found that, in the present case, the interest began to accrue from the date of the filing of the complaint. Finally, the court issued declaratory judgment for the government that DuPont and its successor CIBA are liable for future recoverable response costs. The Department of Justice appealed the district court’s ruling insofar as it denied recovery of EPA’s oversight costs at Superfund cleanups conducted by private parties. U.S. v E.I. DuPont de Nemours and Co., No. 04-4546 (3d Cir. appeal filed December 10, 2004). On appeal, the DOJ seeks reversal of Rohm and Haas. The case was argued before the full court on September 8, 2005, and is pending a decision. In the Third Circuit, DOJ argued that the 5th, 8th and 10th circuits have ruled in the government’s favor in subsequent cases dealing with the oversight costs issue, and that those decisions rejected the Third Circuit’s reasoning in Rohm and Haas. In response, DuPont argues that Congress clearly indicated in the original Superfund legislation, as well as in the 1986 amendments, that oversight costs may not be recovered when, as in this case, EPA issues a unilateral order to a PRP. DuPont also urged the court to find that the government’s position is inconsistent with controlling precedent, since DOJ is arguing for an expansive interpretation of the Superfund law in this case, but argued in the Aviall case in the Supreme Court that courts should interpret the Superfund law using a strict textual approach, which the Supreme Court adopted. The government has stated that if it loses before the Third Circuit, it will appeal to the Supreme Court.[2] III. AIR POLLUTION
The Superior Court rejected a challenge to the Delaware Clean Indoor Air Act, 16 Del. C. Chapter 29, which prohibits smoking in certain indoor establishments, including taverns, but not in others such as facilities of fraternal organizations. The court found that the General Assembly’s decision to exempt from the Act some but not all indoor establishments meets the “rational basis” test, and therefore does not deny equal protection of the laws. The court also found that the Act may be enforced not only against individuals who smoke in a prohibited location, but also against the proprietors and employees who permit violations to occur on the premises.
The Delaware Supreme Court issued an order affirming the Superior Court’s decision of February 26, 2004, which upheld Delaware Environmental Appeals Board’s decision to uphold a DNREC regulation which limited the amount of ozone-causing agents that could be included in paint and coating products.
The Delaware Supreme Court affirmed the Superior Court’s decision affirming a ruling by the Environmental Appeals Board, which upheld DNREC’s finding of a permit violation by Free-Flow due to its failure to pay the entire Title V permit fee assessed by DNREC. Title V permit fees were originally based solely on the source business’s level of emissions, but in 1999, the General Assembly changed the fee structure to provide both a user and a base fee. Before 1999, Free-Flow was required to pay a $7,000 per year permit fee. When DNREC billed Free-Flow for a $20,000 permit fee in December 1999 under the new fee structure, the company disputed the fee and paid only $9,500. When DNREC issued a notice of violation, Free-Flow appealed to the EAB, arguing that the fee should have been, but was not, codified in a duly enacted regulation, or, alternatively, that the assessment was an arbitrary and capricious case decision. The court rejected Free-Flow’s contention that DNREC improperly adopted an unwritten policy (as prohibited in Butler v. Ins. Com’r, 686 A.2d 1017 (Del. 1997)). Instead, DNREC followed the statutory directive that it place each polluting source into one of four categories, based on the time DNREC spent performing services related to that source, and DNREC published its results in the Delaware Register of Regulations. Hence, the type of whimsical policy-making involved in Butler was not present here. Free-Flow also argued that DNREC improperly failed to promulgate the source categories as a regulation in compliance with the Administrative Procedures Act. However, the court found that not every action of the agency has to culminate in a regulation, and in this case DNREC was implementing a specific statutory directive under 7 Del.C. § 6097, and was therefore not bound by the APA. IV. SOLID WASTE
The Superior Court reversed a decision by the EAB, which held that a citizen had standing to appeal a decision by the Secretary. The Secretary’s decision modified Eastern Shore’s transfer station permit, allowing Eastern Shore to process municipal solid waste, in addition to dry waste already processed there. The court found that the EAB erred as a procedural matter, because it decided the standing issue based upon only the statements contained in the citizen’s statement of appeal, which it accepted as true. The court noted that standing is a mixed issue of fact and law, and the EAB should have decided the standing issue only after considering affidavits and evidence presented by the parties, some of which contradicted allegations in the statement of appeal. Therefore, the court remanded the matter to the EAB for a proper hearing on the citizen’s standing to appeal. In this case, the Dover Air Force Base and the Delaware Solid Waste Authority filed motions to intervene in the appeal to the EAB, but their motions were filed after expiration of the 20-day appeal period. The court held that motions to intervene in an appeal do not need to be filed within the 20-day appeal period, so long as a valid appeal is pending. However, if the EAB determines on remand that the citizen lacks standing, then no valid appeal was pending at the time the would-be intervenors moved to intervene, and there could be no intervention. V. WETLANDS
Wien was convicted in Superior Court of three counts of violating the Wetlands Act by conducting activity on wetlands without obtaining a permit. This included two counts of constructing a barrier without a permit, and one count of filling the wetlands without a permit. The court rejected Wien’s arguments that the Wetlands Act is unconstitutional either because it is overbroad or unduly vague. The court found that the Act does not impermissibly regulate constitutionally-protected conduct. It merely requires that a person acquire a permit before conducting enumerated activities. The court similarly found that the Act is not unduly vague, both because a person in Wien’s position reasonably should have understood that he was required to obtain a permit in order to engage in the activities in question, and because the Act sets forth reasonable standards for the Secretary to consider in determining whether to issue a wetlands permit. The court also rejected Wien’s argument that a DNREC employee was not entitled to make a warrantless search of Wien’s property. In this case, the DNREC employee entered the property only after he saw evidence of a crime in plain view, and therefore the search fell within the “plain view” exception to the warrant requirement. Although 7 Del. C. § 6616 provides that a DNREC official must give written notice before entering a person’s property in order to determine whether a violation of the Act exists, the Court found that this section does not define the only circumstances where DNREC may enter onto property for enforcement purposes. Section 6616 allows “spot checks” to determine whether a violation exists, even though there is no reason to suspect that a violation has occurred. The court concluded that this section of the Act “does not displace the well-established body of Delaware law that defines the circumstances under which law enforcement officers may search property without first obtaining a warrant.” The court also ruled that the lower court properly excluded testimony by County officials who would have testified that no county construction permit was required for the activity in question, and therefore it could not constitute “construction” under the Act. The court found that the county official’s testimony was of no probative value, because the county does not enforce the Act, and the proffered testimony had no probative value. Finally, the court held that Wien was convicted properly of “intentionally and knowingly” violating the Act, regardless of whether he knew that he was violating the Act or intended to violate the Act, so long as he intentionally and knowingly engaged in prohibited conduct. VI. SEPTIC/ SEWER SYSTEMS
This case involves claims for damages arising out of the faulty installation of a residential septic tank. The plaintiffs moved to amend the complaint to add claims for breach of contract and breach of warranty. The defendants opposed the motion to amend on grounds that the amendment would be futile, because the statute of limitations for the claims had expired. The court granted the motion to amend, because, at a minimum, there was a dispute of fact as to whether the statute of limitations was tolled under the time of discovery rule if there was no way to for plaintiff to know of the defect until the system failed. This dispute of fact would be resolved upon a more fully developed factual record.
The Chancery Court granted the defendants’ motion for summary judgment based on defenses of laches and the statute of limitations and dismissed plaintiff’s action challenging the creation of a sewer district expansion project. Defendant Sussex County attempted to establish a new sewer system west of the Dewey Beach Sanitary Sewer District, but their attempt was defeated in referendums. To circumvent this opposition, they expanded an existing district rather than proceeding with the proposal for a new sewer district. Plaintiff landowners contended that the County Council’s actions actually created a new district since the land mass was significantly larger than the old sewer system district and was not contiguous, integrated, or connected to the old district, and they aver that the County violated their procedural and substantive due process rights by creating the expansion without proper notice and failing to hold a public election. Defendants raised defenses of the statute of limitations and laches. The court found that the plaintiff’s injury accrued in 1990 when the County Council passed the resolution expanding the sewer district, not in 1995 (as plaintiffs contended) when residents were assessed the cost of this expansion. Because the plaintiffs knew or had reason to know of their injury more than two years before they filed their complaint, their action was barred by the statute of limitations. The court found that the expansion project was not a continuing wrong, since the plaintiffs could have applied for injunctive relief before the damages had been assessed. The court also determined that the statute of limitations was not tolled, because plaintiffs had shown no self-dealing or fraudulent concealment. In addition, the court found that the plaintiff’s claims were barred by the doctrine of laches, because the County suffered prejudice by the expenditure of public funds on the expansion project. VII. WATER RESOURCE PROTECTION AREAS
Wawa brought this action for declaratory and injunctive relief, claiming that a New Castle County ordinance violated Wawa’s constitutional rights under the Equal Protection Clause of the United States Constitution. The ordinance and various amendments thereto restricted development within designated Water Resource Protection Areas (“WRPAs”). In particular, the ordinance prohibited the installation of new underground storage tanks (“USTs”) in WRPAs, but grandfathered existing USTs and even allowed them to be upgraded if required by DNREC. The County denied Wawa’s request for a variance to allow the installation of USTs at a Wawa store located within a WRPA, even though Wawa pledged to use leak containment and detection measures stricter than those required by DNREC regulations. The court found that Wawa failed to carry its burden to show that the ordinance is not rationally related to a legitimate governmental purpose, in this case protecting water resources. The court rejected Wawa’s argument that if the County bans one UST, it must ban them all. The court also considered Wawa’s arguments that the ordinance was irrational, because, Wawa argued, it contained perverse incentives for owners to allow leaks in order to spur DNREC to order the owner to upgrade the tank, thereby increasing its longevity. In rejecting this argument, the court was skeptical that an owner would deliberately risk the threat of an enforcement action and significant legal penalties, and found that in any event that “[t]he County is not required to make an ordinance foolproof in order to pass rational basis review.”
This case involved the same dispute as Wawa, Inc. v. Government of New Castle County, discussed above. In this case, the Superior Court affirmed the Board of Adjustment’s decision denying a variance application to Wawa, and held that the Board properly applied the “unnecessary hardship” test to Wawa’s application. Wawa sought permission from the Board to renovate its convenience store at Tybouts Corner to a larger one that would sell gasoline. The site is within 300 feet of a public water supply, and thus is in a location classified as a Water Resource Protection Area. As a result, Wawa had to apply for a variance to get permission to use the property in a manner otherwise forbidden by regulations or laws. There are two types of variances: (1) an area variance, which is the relaxation of incidental limitations to a permitted use and is considered under the less burdensome standard of “exceptional practical difficulty”, and (2) a use variance, which is permission to use a piece of property in a manner otherwise prohibited by law or zoning regulations and is considered under the stricter standard of “unnecessary hardship”. Wawa contended that its application should have been considered under either the standard for an area variance or a hybrid standard. The court acknowledged that this was the first decision of the Board concerning “an above ground permitted use with a prohibition based on sub-surface circumstances prohibiting such use,” and therefore Wawa’s application was not easily classified as either a use or an area variance. While it noted that increasing complexity in zoning and land use may “demand new tests,” nevertheless, the court held that the use variance test of unnecessary hardship was the appropriate standard, “even though not a neat fit.” VIII. FISH AND WILDLIFE
The Court of Common Pleas found that the State did not establish beyond a reasonable doubt that the defendant was guilty of collecting horseshoe crabs in a crab sanctuary, collecting more than 300 cubic feet of crabs in a 24-hour period, or collecting horseshoe crabs without a license. Defendant was subjected to two surveillances conducted by DNREC, and was seen collecting horseshoe crabs in a restricted area in violation of DNREC Shellfish Regulation S-56(c). However, the State did not produce evidence to refute defendant’s claim that the crabs had been harvested from another lawful location. The State also alleged that the defendant collected more than 300 cubic feet of horseshoe crabs on the same day, in violation of DNREC Regulation S-54(h), but the court found that the State merely estimated its measurements and did not provide evidence sufficient to establish that he had exceeded the 300 cubic foot limit beyond a reasonable doubt. Finally, the defendant was licensed only to assist a family member in harvesting horseshoe crabs, but since the State had not established that the defendant was actually harvesting the crabs in the crab sanctuary, it could not prove the offense of collecting horseshoe crabs without a permit, in violation of 7 Del. C. 2704(a).
The Court of Common Pleas found defendant not guilty, as State had not proved beyond a reasonable doubt that defendant had harvested horseshoe crabs from a crab sanctuary in violation of DNREC Shellfish Regulation S-56(c). Defendant stated that the crabs had been harvested earlier that day from a permitted locale, and that he and co-defendant Auman (supra) were merely picking up the crabs that had fallen or crawled out of the boxes. IX. MOLD
The Superior Court denied several summary judgment motions in a negligence action by a former tenant seeking to recover damages for health problems related to mold in the ceiling of his rented office. The court granted one summary judgment motion for a maintenance provider whose duties were minimal, and found that there was no basis for holding the landlord’s president personally liable. The court denied the landlord’s motion to dismiss, finding that the landlord did have a duty of care to maintain a reasonably safe unit and the duty to warn of the danger of mold arising incidentally from a breach of that duty of care. The court rejected the landlord’s argument that mold did not present a warning of health dangers under the scientific knowledge that existed in the early 1990s. The court declined to rule on the landlord’s motion for summary judgment, which argued that the plaintiff does not have sufficient evidence to prove a breach of the standard of care. Instead, the court granted the plaintiff 90 days to produce an expert opinion regarding the standard of care. Likewise, the court declined to enter summary judgment on one (Service) air and heating company’s motion to dismiss for lack of standard of care, requiring the plaintiff to provide expert opinion on the standard of care within 90 days. The court granted the other (Merit) heating and air company’s motion for summary judgment, finding that it had no duty to prevent injury due to its limited involvement with the building. The court also granted the president of Rokeby Realty Company’s motion for summary judgment, finding that he did not have “personal participation” in the tort. The court found that mere knowledge about the complaints was insufficient, and that the plaintiff failed to meet his burden of showing that the officer “directed, ordered, ratified, approved, or consented to the tortious act.” Finally, the court denied defendant Rokeby’s motion in limine regarding spoliation of the evidence after Brandt’s testers destroyed the ceiling tile that contained the mold. Because Rokeby had not asked that the ceiling tile be preserved, nor did it ask to test the tile itself until two years after the tile had been taken, the court found that “any prejudice suffered by Rokeby [was] self-inflicted.” X. EXPERTS
In a mold case, the court denied in part and granted in part motions in limine seeking the exclusion of expert testimony by an engineer and a zoologist. Applying the guidelines set forth by the United States Supreme Court in Daubert and by the Delaware Supreme Court in Eskin v. Cardin, the court ruled that the engineer would be permitted to testify regarding his home inspection and the likely sources of moisture that he discovered. The zoologist would be permitted to testify as to the toxicity of the microorganisms found in the house, and concerning the condition of the duct work and a sump and how they may have contributed to the spread of the microorganisms. The court declined to allow the zoologist to testify concerning whether the plaintiffs suffered health problems as a result of microorganisms in the house, because the zoologist did not have a medical degree, and he said that he would defer to the opinion a medical doctor on health issues.
Plaintiff provided two expert witnesses—a chemical engineer on the standard of care of a heating and air company and a civil engineer on the standard of care of a landlord—pursuant to the court’s earlier order in 2004 Del.Super. LEXIS 297 (supra). Defendants Service, a heating and air service company, and Rokeby, the realty company, filed motions to preclude the testimony of those experts. The court granted the motion as to the chemical engineer and denied the motion as to the civil engineer. Because the testimony of the chemical engineer was excluded, the court found that the plaintiff was unable to prove an essential element of his case against Service, and Service was granted summary judgment and dismissed from the case. The court found that the chemical engineer was unqualified to provide expert testimony concerning a heating, ventilating, and air conditioning (HVAC) contractor’s standard of care. Though he had supervised and observed employees of an HVAC contractor and had worked with HVAC contractors, he did not himself “have any personal knowledge of or experience with the standard of care for HVAC contractors in Delaware” during the relevant years. Though the chemical engineer had conducted an informal survey of HVAC contractors to try to determine the standard of care, the court found that “an ‘expert’ should not be permitted to simply repeat another’s opinion or data without bringing to bear on it his own expertise and judgment.” In addition, the chemical engineer had no training in conducting interviews or surveys, and the survey he conducted “fail[ed] to meet the criteria for reliability on almost every level,” as he administered the survey himself knowing the purpose of the survey, did not examine a representative sample, and did not consistently ask all of the questions to those he interviewed. The plaintiff presented the civil engineer as an expert on the standard of care in the area of commercial building management, in support of the plaintiff’s claim against Rokeby. Though the civil engineer did not have experience in Delaware, the court found that “there is no strict requirement that an expert must testify to the local standard for commercial landlords in Delaware,” and that, for the period of years in question, there were national standards sufficient to allow him to testify as an expert.
The Superior Court affirmed a decision of the Council of the DAPE revoking the Appellant’s engineering license, finding that the Council’s decision was supported by substantial evidence and was not arbitrary or capricious. After hearing testimony from numerous experts and managers at DNREC, the Council determined that the Appellant violated 24 Del.C. § 2823(a)(2) because he was “grossly negligent in designing on-site wastewater disposal systems outside of approved soils, using incorrect design criteria, and providing for improper placement of systems and components.” In addition, the Council determined that the appellant had submitted false or inaccurate documents, and that “his failure to adhere to the standard of conduct… could have harmed the public and the environment if the deficiencies had not been discovered by DNREC.” XI. SEARCH WARRANTS
The District Court denied Petitioner Christiana Town Center’s motion to quash the administrative warrant obtained by Respondent EPA in investigating possible Clean Water Act violations at Petitioner’s New Castle County Site. The EPA requested permission to inspect Christiana’s site, and Christiana allowed them only to inspect areas that were open to the public. Following this inspection, EPA obtained an administrative warrant to search the entire premises, using evidence from the public area inspection as probable cause. Christiana contended that the warrant should be quashed, because there was insufficient probable cause, the EPA did not have jurisdiction to inspect the site, and the EPA acted in bad faith by obtaining the warrant ex parte and conspiring with the County. The court found that once an inspection has occurred pursuant to a search warrant, the ability to quash ends. To grant adequate consideration to Christiana’s motion, the court instead viewed it as a motion to suppress, but concluded that because Christiana failed to fully exhaust its administrative remedies, the motion must be denied. For the sake of completeness, the court considered Christiana’s remaining arguments. The court found that a lesser showing of probable cause is required to grant an administrative warrant than to grant a criminal search warrant, and that the EPA’s photographs, affidavits, and outline of specific evidence concerning a particular stormwater basin that did not conform to requirements were adequate probable cause for the administrative warrant. The court also found that the ex parte proceeding for the issuance of the warrant was proper, and that Christiana was not entitled to a Franks hearing (allowing a defendant to challenge the veracity of a sworn statement used to procure a warrant), because such a hearing would be premature since the EPA has not yet used any of the materials or information obtained through the site investigation. The court also found that the EPA had jurisdiction to enter and inspect the site, because Section 308(a) of the CWA (33 U.S.C. § 1318(a)) authorizes the EPA to check whether a person “holding a permit to pollute is complying with the pollution limits set forth in the permit.” (at *14). Christiana had been granted a National Pollutant Discharge Elimination System permit by DNREC. Finally, the court found that Christiana had failed to assert any evidence of bad faith or conspiracy between the EPA and the County.
XII. ENVIRONMENTAL INDEMNITIES AND WARRANTIES
In 1994 plaintiff (Imo) agreed to sell certain of its assets to buyer corporation (Mannesmann), which in turn assigned its right to purchase and take title to its subsidiary (DDTC). The “Access and Support Agreement” entered into by Imo and Mannesman specified that Imo would indemnify Mannesman and its affiliates for liabilities related to asbestos litigation arising from assets acquired from Imo. In 2001, DDTC sold the assets it had acquired from Imo to Defendant Wesgen Inc. (now known as SDDTI). Upon learning this, Imo began to deny DDTC’s indemnification requests. Plaintiffs sought declaratory judgment that Mannesman and DDTC breached the Agreement by selling the assets to Wesgen and that Imo is no longer required to indemnify the defendants. Defendants sought a declaratory judgment that Imo must indemnify SDDTI and injunctive relief prohibiting Imo from denying defendants’ indemnification claims. The Court of Chancery found that DDTI had breached the A&S Agreement by transferring the assets to Wesgen since “permissible assignment by Mannesman [to an affiliate] could only occur before the closing of the transaction contemplated by that agreement,” but the court also found that this breach was not a material one. Since the breach was not material, it did not relieve Imo of its obligations under the Agreement to indemnify DDTC and Mannesmann with regard to claims against them (including claims by Wesgen). However, Imo was not required to indemnify Wesgen directly.
The Court of Chancery (1) granted defendant seller’s motion to dismiss plaintiff buyer’s claims for injuries incurred as a result of the fact that environmental conditions in the facilities were not as represented; (2) denied defendant seller’s motion to dismiss plaintiff buyer’s claims for injuries allegedly caused by seller’s breach of obligation to perform environmental remediation, but held that laches prohibited an award of specific performance; and (3) denied defendant seller’s motion to dismiss plaintiff’s product liability claims. Plaintiff CertainTeed bought certain assets from defendant Celotex under an Asset Purchase Agreement that provided a remedy to CertainTeed for environmental and other liabilities incurred by the purchase of the facilities. The court found that the applicable statute of limitations for each of the claims was three years. Viewing the facts in the light most favorable to the plaintiff, the court found that even had there been a tolling exception to the statute of limitations, the claims concerning the environmental conditions of the purchased facilities were time-barred, as they were not filed within the limitations period that began to run when CertainTeed was on inquiry notice. The court further held that although CertainTeed’s claims concerning Celotex’s failure to perform environmental remediation were timely filed, the doctrine of laches made specific performance an inappropriate remedy. The court determined that the adequate remedy would be a monetary award covering the costs of the remediation, taking into consideration the intervening period of time. The court concluded that CertainTeed’s product liability claims concerning defective roofing materials were timely. Notes:
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