By: Sean Sullivan, Kathryn Doi and Pam Nehring

Following a three-week bench trial, MGS lawyers Sean Sullivan, Kathryn Doi and Pam Nehring secured a defense judgment for client BNSF in an environmental property damage case arising from the release of up to 7,000 gallons of diesel fuel.  Plaintiff, an adjacent property owner, sought $6.2 million in damages and extensive cleanup of its property.  On April 25, 2018, the court issued a 28-page judgment order fully accepting BNSF’s forensic evidence and arguments, and finding that plaintiff failed to carry the burden of proof as to breach of duty, proximate cause or damages.  Indian Creek Development Company v. BNSF Railway Company, No. 07 L 604, Circuit Court of Kane County, Illinois.

Key Takeaways

• A thorough investigation led by good consultants is the most effective way to deal with environmental regulators and any third-party damage claims.
• A company must not allow third-party litigation to undermine its cooperative work with regulators.
• Where trial of a third-party claim becomes necessary, close focus on the science, supported by well-qualified experts, is the key to success.
• Forensic chemistry and petroleum fingerprinting have come a long way.

Plaintiff’s Scorched Earth Litigation Strategy

The case arose from a train collision on the BNSF tracks adjacent to plaintiff Indian Creek’s industrial property, which resulted in the release of locomotive diesel fuel onto the BNSF right-of-way.  The issue for trial was whether that diesel fuel migrated to and was present on the Indian Creek property and, if so, whether it had caused any damage to Indian Creek.  The parties agreed there was petroleum contamination on the Indian Creek property, but disagreed as to where it came from and whether it constituted an environmental risk or required significant remediation.  Indian Creek asserted claims for trespass, nuisance, negligence and willful and wanton conduct.

The trial was the culmination of decades-long efforts by Indian Creek to obtain a windfall from the unfortunate train accident.  Along the way, BNSF defeated Indian Creek’s three motions for leave to add a claim for punitive damages and two motions for discovery sanctions.  Indian Creek was also “dissuaded” from following through on a RCRA Notice of Intent to Sue, but Indian Creek did file a parallel complaint with the Illinois Pollution Control Board (PCB) for violation of the Illinois Environmental Protection Act.  BNSF, in turn, filed a counter-complaint with the PCB for contribution and allocation of its response costs to Indian Creek.  The PCB actions are pending, having been stayed until the conclusion of the state court case.

Resolution of Issues with Regulatory Agency

Throughout the Indian Creek litigation, BNSF worked with the Illinois Environmental Protection Agency and Illinois Attorney General’s Office to complete environmental activities required under a separate and prior Consent Order with the State, which included investigation of possible migration of diesel fuel to the Indian Creek property.  Indian Creek’s petition to intervene in the State’s action, and unilaterally change the terms of the Consent Order, was denied as untimely.  Indian Creek nevertheless relentlessly pressed its claims to the IEPA through reports, responses, letters, proposed findings and all other manner of efforts to influence the agency’s decisions.  Shortly before the state court case went to trial, IEPA indicated that it would not hold BNSF responsible for certain minor contamination on the Indian Creek property and whatever remediation might be necessary for it, and ultimately approved BNSF’s Remedial Action Plan, which did not call for any remediation on the Indian Creek property.  BNSF is in the process of closing the site pursuant to the Consent Order.

The Trial

Much of the trial focused on expert testimony concerning:  (i) geology, hydrogeology and groundwater migration; (ii) forensic geochemistry and petroleum “fingerprinting;” (iii) environmental investigation techniques and standards; and (iv)  the reasonable remediation (if any) necessary for petroleum contamination discovered on the Indian Creek property.  In almost every regard, the court found BNSF’s expert testimony more compelling and persuasive than Indian Creek’s.  Two areas of testimony worth brief discussion are forensic chemistry and reasonable remediation techniques.

Court Accepts BNSF’s Forensic Evidence

A central issue at trial was whether the petroleum contamination on Indian Creek’s property was diesel fuel or some other petroleum product associated with the property’s long history of industrial use.  BNSF’s forensic chemistry expert testified that the Indian Creek contamination was almost entirely heavy fuel oil and gasoil unrelated to the train accident.  His testimony combined standard gas chromatography with a sophisticated analysis of the samples for genetic biomarkers and other molecular indicators.  The court found BNSF’s forensic testimony “more reliable, compelling and persuasive” than Indian Creek’s evidence based in part on:

(i)         BNSF’s use of more modern and comprehensive techniques and technologies;

(ii)       the Court’s assessment of the comparative scope, thoroughness and scientific bases for BNSF’s forensic expert reports and Indian Creek’s forensic expert reports.

The court found that the petroleum contamination on the Indian Creek property was heavy fuel oil and gasoil, not diesel fuel, and that the contamination did not come from the train accident.

Court Rejects Plaintiffs’ “Dig and Haul” Remedy

The court also rejected Indian Creek’s proposed remediation plan and associated damage theory.  Indian Creek’s theory was based entirely on total petroleum hydrocarbon (TPH) levels, and not on specific contaminants of concern (which were all below residential levels).  Indian Creek’s damage theory was based on the cost to excavate and remove all soil with TPH levels above the regulatory default levels, while ignoring the higher and more appropriate site specific TPH level the IEPA had approved for the Indian Creek property.  Indian Creek’s expert testified that the likely cost of the proposed remediation plan was $6.2 million.

The court found Indian Creek’s proposed “dig and haul” remediation plan to be unnecessary and unwarranted, and the proposed cost to be unreasonable.  Indian Creek presented no evidence that the proposed remediation was required under any regulatory standard, or was necessary to protect human health.  The court accepted BNSF’s expert testimony that the proposed remediation was environmentally irresponsible.  Among other things, Indian Creek’s proposed remediation would require 3,000 to 4,000 truckloads of various materials to come onto and leave the property, with resultant excessive dust and carbon emissions.  The remediation plan thus did not comply with IEPA’s directives for “green” remediation.

Based on all the evidence, the court found Indian Creek failed to carry its burden of proof on the claim that diesel fuel from the train accident contaminated its property, and on the separate issue of damages.  The court therefore entered judgment for BNSF on all claims and issues.  Indian Creek has filed a notice of appeal.

Read the entire ruling HERE.