Indiana District Courts Continue to Narrow Scope of Permissible ELA Claims

I.    ELA background.

Indiana’s Environmental Legal Action (“ELA”) statute creates potential liability for those who “caused or contributed” to the release “of a hazardous substance or petroleum into the surface or subsurface soil or groundwater that poses a risk to human health and the environment.” Ind. Code § 13-30-9-2. They can be sued by a person seeking “to recover reasonable costs of a removal or remedial action involving the hazardous substances or petroleum.” Id. Among the litigated issues under the ELA are (1) what are “reasonable costs of a removal or remedial action,” and (2) when must these “costs” be incurred to have a valid ELA claim? In Alvey v. General Electric Co., 2023 WL 8372044 (S.D. Ind. Oct. 30, 2023), the Southern District of Indiana answered both of these questions. 

II.    What are “reasonable costs of a removal or remedial action?”

    In Alvey, the court granted defendant’s motion for summary judgment on plaintiffs’ ELA claim because plaintiffs did not “designate[] any evidence from which a reasonable juror could find that Plaintiffs have incurred recoverable costs under the ELA.” Id. at *4. The court began by answering the question of what are “reasonable costs of a removal or remedial action.” It suggested that “some environmental consulting costs” might be “recoverable under the ELA.” Id. at *3. Critically, however, it then held that in general, “investigative costs incurred by a private party after the EPA has initiated a remedial investigation, unless authorized by the EPA are not considered necessary because they are ‘duplicative’ of the work performed by EPA.” Id. To support this holding, it quoted a Northern District of Indiana CERCLA case, Rolan v. Atl. Richfield Co., 2019 WL 5429075 (N.D. Ind. Oct. 22, 2019). Id.

    Despite Rolan being a CERCLA case, not an ELA case, the court applied this CERCLA rule to the ELA because “Indiana’s ELA statute echoes CERCLA,” and “Indiana courts have highlighted that ‘the State’s ELA statute closely resembles CERCLA in its language, statutory construction, and application.’” Id. at *3 n.2. Applying this rule to the facts, the Alvey court concluded that “there are simply no facts to support that Plaintiffs have incurred any cleanup costs.” Id. at *4. 

The court reached this conclusion despite plaintiffs’ hiring an environmental consultant who billed for its services. Id. at *3. It did so because “IDEM began investigating the Site many years before this lawsuit was initiated,” which resulted in “a plethora of investigative reports dating back as early as December 20, 2010.” Id. Further, there was a Corrective Action Agreed Order between IDEM and defendant, signed in 2019, which directed defendant “to take corrective action.” Id. It was not until two years later, in late 2021, that plaintiffs’ environmental consultant began billing for its services. Id. 
Moreover, the court said the environmental consultant’s services did not appear to “contribute[] to the ongoing cleanup efforts.” Id. In addition, the court highlighted that the environmental consultant “sent invoices directly to Plaintiffs’ counsel,” which made it appear that the consultant’s “services were secured for litigation purposes and were not ‘necessary’ to cleanup efforts.” Id. Finally, the court concluded that “[i]n the absence of evidence that IDEM authorized [environmental consultant’s] consulting services, [environmental consultant’s] services ‘are not considered necessary because they are “duplicative” of the work performed’ by IDEM and thus not recoverable under the ELA.” Id.

III.    When must these “costs” be incurred to have a valid ELA claim?

Next, the court had to answer the question of when “costs” must be incurred. It had to answer this question because plaintiffs argued “that their over ten-million-dollar proposal for expedited remediation of the contamination is recoverable under the ELA.” Id. The court, however, rejected plaintiffs’ arguments and concluded that their “proposal does not save their ELA claim.” Id. at *4. The court held that plaintiffs needed to incur some environmental cleanup costs for their ELA claim to survive summary judgment, quoting a Northern District of Indiana decision as support. Id. (quoting Hostetler v. Johnson Controls Inc., 2021 WL 4477463 at *10 (N.D. Ind. Sept. 30, 2021) (“Plaintiffs do not cite a single case where a court allowed an ELA claim to proceed before plaintiffs have incurred some removal or remediation costs.”)) Although not cited as support for this holding, this appears consistent with the Indiana Court of Appeals’ statement that “a cause of action for the recovery of cleanup costs does not accrue until a cleanup cost has been incurred.” Elkhart Foundry & Mach. Co. v. City of Elkhart Redevelopment Comm’n for City of Elkhart, 112 N.E.3d 1123, 1128 (2018).

To further support this holding, the Alvey court noted the purpose of the ELA, which is to “shift the financial burden of environmental remediation to the parties responsible for creating contaminations.” Id. (quoting Cooper Indus., LLC v. City of S. Bend, 899 N.E.2d 1274, 1284 (Ind. 2009).) Without plaintiffs incurring any environmental cleanup costs, there was “no financial burden to be shifted.” Id.

IV.    Takeaways.

The Alvey decision will likely be a case defendants cite to defend against ELA claims in the future. Although the ELA does not contain an express requirement that costs be “necessary” (the ELA allows the recovery of “reasonable costs”), the court required costs to be “necessary” to be recoverable. It is possible to infer from the court’s decision that costs are only “reasonable” if they are “necessary.” 

It is expected that defendants will cite Alvey to support arguments that plaintiffs’ costs were not necessary because the work done was duplicative of IDEM/EPA work or incurred for litigation, not remediation. Further, it is anticipated that Alvey will be cited, in conjunction with Hostetler and Elkhart Foundry, to support the argument that plaintiffs cannot use the ELA to recover future cleanup costs when there have been no costs incurred.  

Jackson Schroeder is an attorney at Bose McKinney & Evans who focuses his practice on environmental and insurance litigation. He can be contacted at jschroeder@boselaw.com or 317-684-5159.  

This publication is intended for general information purposes only and does not constitute legal advice. You should consult your own lawyer regarding your specific circumstances.