Voggenthaler v. Maryland Square

Nevada statute does not provide exceptions or limitations to cost-of-cleanup obligations regardless of ownership status when environmental contaminants are released into the ground or, once discovered, not dealt with properly. Soil and groundwater are articles of commerce and are properly regulated by the federal government under the Commerce Clause.

Maryland Square LLC (“Maryland Square”) purchased a Las Vegas property (“the Site”) with contaminated ground and groundwater affecting a nearby neighborhood. Maryland Square demolished the Site without addressing the contamination. Homeowners filed suit, seeking an injunction under the Resource Conservation and Recovery Act (“RCRA”). Nevada Department of Environmental Protection (“NDEP”) also filed suit, seeking recovery of cleanup costs under the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”). The district court granted summary judgment for the plaintiffs in both cases. Maryland Square argued that applying CERCLA to soil and groundwater solely in Nevada violated the Commerce Clause. The Ninth Circuit held that application of CERCLA was proper because soil and groundwater are articles of commerce, and the government has a significant interest in groundwater. The district court rejected on procedural grounds Maryland Square’s argument that it was a bona fide prospective purchaser under CERCLA; the panel vacated the grant of summary judgment to allow Maryland Square to cure its deficiencies, but Maryland Square’s failure to remove contaminated soil during the Site’s demolition most likely disqualified it from the bona fide prospective purchaser designation. Maryland Square argued that it was not liable for cleanup costs under RCRA because it was not the Site’s owner when the contamination occurred, but the panel did not find any exceptions or reimbursement obligation limitations in Nev. Rev. Stat. § 459.537. Therefore, Maryland Square must be liable as the current owner. The district court dismissed a similar RCRA homeowner claim for lack of jurisdiction, but the panel held that this dismissal was improper. Remand was required to determine whether Maryland Square had RCRA liability to the homeowners. Judgment against Maryland Square on CERCLA claim REVERSED and REMANDED. Judgment against Maryland Square on Nevada state law claims AFFIRMED. RCRA judgment against Maryland Square REVERSED and REMANDED.