New Mexico v. General Elec. Co.

335 F.Supp.2d 1185

State of NEW MEXICO, et al., Plaintiffs, v. GENERAL ELECTRIC COMPANY, et al., Defendants.

No. CIV 99-1118 BSJ/KBM.

No. CIV 99-1254 BSJ/ACT (Consolidated).

United States District Court, D. New Mexico.

April 6, 2004.

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Brian K. Branch, Law Offices of Brian K Branch, Albuquerque, NM, Turner W. Branch, Harry E. Stowers, Jr., Brian P. Brack, Steven J. Leibel Branch Law Firm, Albuquerque, NM, Andrew Sher, The Sher Law Firm, Houston, TX, R. Thomas Seymour, C. Robert Burton, Seymour Law Firm, Tulsa, OK, Bruce S. Garber, Garber & Hallmark, Santa Fe, NM, Thomas V. Girardi, David R. Lira, Girardi & Keese, Los Angeles, CA, Walter Lack, Stephen R. Terrell, Engstrom, Lipscomb & Lack, LLP, Los Angeles, CA, Craig Lewis, Michael T. Gallagher, Gallagher, Lewis & Kim, Houston, TX, William G. Rosch, III, Rosch & Ross, Houston, TX, Glenn R. Smith, NM Atty. General's Office, Santa Fe, NM, for Plaintiffs.

Bradford C. Berge, Holland & Hart, LLP, Santa Fe, NM, J.A. Tony Canales, Canales & Simonson, PC, Corpus Christi, TX, William J. Duffy, Robert W. Lawrence Davis Graham & Stubbs LLP, Denver, CO, Donald P. Fowler, Spriggs & Hollingsworth, Washington, DC, William V. Killoran, General Electric Co., Environmental Affairs Counsel, Cincinnati, OH, Paul B. Galvani, Ropes & Gray, Boston, MA, Peter A. Modlin, Farella, Braun & Martel, LLP, San Francisco, CA, Tami Lyn Azorsky, Traci M. Vanek, McKenna Long & Aldridge, LLP, Washington, DC, Maria O'Brien, Lynn Slade, Modrall, Sperling, Roehl, Harris & Sisk, Albuquerque, NM, Gregory D. Huffaker, Jr., Ann Maloney Conway, Michael J. Moffett, Huffaker & Conway PC, Alburquerque, NM, Gerald F. George, Andrew L. Strong, Campbell, George & Strong, LLP, Oakland, CA, Robert E. Meadows, King & Spalding, Houston, TX, Robert E. Meadows, Carol M. Wood, Reginald R. Smith, Charles C. Correll, Jr., King & Spalding, Houston, TX, Richard L. Alvidrez, Mary M. Behm, Keleher & McLeod, Alburquerque, NM, for Defendants.

MEMORANDUM OPINION & ORDER

JENKINS, Senior District Judge.

TABLE OF CONTENTS
I. FACTUAL BACKGROUND ........................................................ 1192
  II. BRIEF STATEMENT OF THE CLAIMS ............................................. 1195
 III. PROCEDURAL CONTEXT ........................................................ 1197
  IV. ISSUES ADDRESSED AT THE PRETRIAL CONFERENCE ............................... 1200
      A. The State's Interest in Groundwater .................................... 1200
      B. The State's Interest in the Middle Rio Grande Basin Aquifer ............ 1203
      C. The Alleged Injury to the State's Interest ............................. 1205
         1. The Loss of Drinking Water Services ................................. 1205
            a. The NMWQCC Regulations ........................................... 1205
            b. The NMWQCC Regulations and Use of Groundwater .................... 1207
            c. New Mexico Drinking Water Regulations ............................ 1208
            d. Reconciling the EIB & NMWQCC Regulations ......................... 1208
            e. NMAC § 20.7.10.1 & Loss of Drinking Water Services .......... 1210
         2. Plaintiffs' Theory of Injury Revisited .............................. 1210
   V. THE PLAINTIFFS' THEORY OF DAMAGES ......................................... 1212
      A. Loss of "Extractive Services" & Loss of Value of in situ
Groundwater .......................................................... 1213
         1. Alleged Loss of "Extractive Services" ............................... 1213
         2. Alleged Loss of Value of in situ Groundwater ........................ 1215
         3. Different Labels, Same Injury ....................................... 1216
      B. Loss of Drinking Water Services v. Total Loss of All Beneficial Uses ... 1217
      C. "Temporary" vs. "Permanent" Injury ..................................... 1218
      D. Summary ................................................................ 1222
  VI. THE SCOPE AND LIMITS OF PLAINTIFFS' STATE LAW CLAIMS ...................... 1222
      A. The State's Affected Interests ......................................... 1223
      B. Plaintiffs' Current Pleadings .......................................... 1223
      C. Extrinsic Limitations on the Available Remedies ........................ 1224
         1. CERCLA & Plaintiffs' State Law Claims ............................... 1224
            a. The CERCLA Savings Clauses ....................................... 1225
            b. Conflict Preemption .............................................. 1225
         2. The Hydrocarbon Remediation Agreements .............................. 1227
         3. Schwartzman, Settlement and Release of the State's Claims ........... 1229
         4. Avoidable Consequences & Plaintiffs' Duty to Mitigate Damages ....... 1230
      D. Intrinsic Limitations on the Available Remedies ........................ 1231

1. Common Law Trespass ................................................. 1231
            a. Schwartzman and Physical Invasion of a Possessory Interest ....... 1231
            b. Common-Law Trespass & the State's Interests in Public
Water .......................................................... 1232
            c. Trespass, Public Nuisance & Injury to Public Rights .............. 1235
            d. Plaintiffs' Claims re: Injury to the Aquifer ..................... 1235
         2. Common Law Public Nuisance .......................................... 1235
            a. Remedies for Common Law Public Nuisance .......................... 1237
            b. Nuisance Damages & the "Special Injury" Requirement .............. 1239
         3. Statutory Public Nuisance (N.M. Stat. Ann. § 30-8-2 (Repl
1994)) ............................................................ 1241
            a. Availability of Damages for Statutory Public Nuisance ............ 1242
            b. Statutory Public Nuisance, NMED & the Doctrine of
Primary Jurisdiction ........................................... 1244
         4. Common Law Negligence ............................................... 1244
            a. Essential Elements ............................................... 1245
            b. The Duty Issue ................................................... 1245
            c. Breach of the Duty of Care ....................................... 1247
            d. Causation in Fact & Proximate Cause .............................. 1247
            e. Injury in Fact & Damages ......................................... 1249
         5. Summary re: Intrinsic Limitations ................................... 1250
      E. The Measure of Damages Under New Mexico Law ............................ 1251
         1. Diminution of Value & Loss of Use ................................... 1251
         2. Cost of Restoration as a Measure of Damages ......................... 1252
         3. Plaintiffs'"Loss of Use" Damages Theory ............................. 1253
            a. Loss of Use Damages & Replacement Cost ........................... 1253
            b. Proof of "Loss of Use"/Replacement Cost Damages .................. 1254
            c. Alternative Measures & the "License to Pollute" .................. 1255
         4. Cost of Restoration v. Replacement Cost ............................. 1256
         5. Injury and Remedy in Hazardous Waste Cases .......................... 1256
         6. The State as Public Trustee/Parens Patriae .......................... 1257
         7. Cost of Restoration & the Constraints on Plaintiffs' Claims ......... 1258
      F. The Measure of Damages in This Case .................................... 1259
 VII. SCOPE OF THE TRIAL ON INJURY AND DAMAGES .................................. 1261
      A. Summary Judgment & Genuine Issues for Trial ............................ 1261
      B. Genuine Issues Remaining for Trial ..................................... 1262
VIII. RULINGS ON PENDING MOTIONS ................................................ 1263
  XI. FINAL PRETRIAL CONFERENCE ................................................. 1265

I. FACTUAL BACKGROUND

Albuquerque's South Valley is located about 2.5 miles south of downtown Albuquerque, west of the Albuquerque International Airport around the intersections of Woodward Avenue with Broadway Avenue and Edmunds Street. The South Valley area has been the site of manufacturing operations since at least 1948, when the Eidal Manufacturing Company operated a welding plant on Broadway Avenue. In 1951, the Atomic Energy Commission, through American Car and Foundry ("ACF Industries"), took over the property, constructed plant facilities and engaged in machining of metal parts, plating, welding and other activities related to the manufacture of nuclear weapons components. This continued until 1967, when the United States Air Force (USAF) assumed control over the property and converted the facility into an aircraft engine parts manufacturing plant, known as U.S. Air Force Plant 83 ("Plant 83."), operated by General Electric Company under a series of facilities contracts and leases. In 1984, Plant 83 was sold to General Electric Aircraft Engines (GEAE) and remains in operation today as an aircraft engine parts manufacturing facility. Other industrial facilities have been located in South Valley as well, including petroleum product pipeline and bulk distribution facilities operated by Chevron, Texaco and others, and an industrial chemical distribution facility on Edmunds Street owned and operated by Univar.

In 1979, chemical analysis of samples collected from one of the City of Albuquerque's municipal water supply wells, the San Jose 6 Well ("SJ-6"),¹ located near the intersection of Woodward and Broadway Avenues in the South Valley, detected the presence of hazardous substances consisting...