Second Circuit Holds That CERCLA’s “Act of War” Defense Shields Owners and Tenants from Cleanup Liability for Dust Created By Towers’ Destruction on 9/11
In the first decision of its kind, the Second Circuit on May 2, held that the September 11, 2001, attacks on the World Trade Center were “acts of war” for purposes of the affirmative defense for such acts contained in the onerous liability provision of the federal Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). Accepting the arguments raised by Gibbons and other firms representing the owners and tenants of the buildings (and the airlines whose planes were hijacked), the Court found that even though they were not committed by uniformed military forces of a nation-state, the attacks were nevertheless acts of war for CERCLA purposes (though not necessarily in other legal contexts) because they (1) were “indistinguishable from military attack in purpose, scale, means, and effect,” (2) were recognized as acts of war by both the President and Congress, and (3) “wrested from the defendants all control over the planes and the buildings, obviated any precautions or prudent measures defendants might have taken to prevent contamination, and located sole responsibility for the event and the environmental consequences on fanatics whose acts the defendants were not bound by CERCLA to anticipate or prevent.”
The Second Circuit found that the September 11, attacks “wrested from the defendants all control over the planes and the buildings, obviated any precautions or prudent measures defendants might have taken to prevent contamination, and located sole responsibility for the event and the environmental consequences on fanatics whose acts the defendants were not bound by CERCLA to anticipate or prevent.”
The unusual litigation began in the Southern District of New York in 2008, when the owner of a hotel located near the World Trade Center site sued the buildings’ owners and tenants, and the airlines whose planes were hijacked, for cleanup costs it had incurred when it transformed a 12-story office building into a 19-story hotel. According to the complaint, during the course of the project federal and state authorities required the developer to remove from the building’s interstitial spaces so-called “WTC Dust,” consisting of fine particles containing several hazardous substances that were dispersed through the neighborhood when the buildings collapsed. Seeking to recover its costs, the developer invoked Section 107 of CERCLA, which imposes strict liability for cleanup costs on (among other parties) the owners and operators of facilities from which hazardous substances are released. Gibbons and fellow defense counsel successfully moved to dismiss the complaint on the grounds that the plaintiff had failed to plead essential elements of a CERCLA claim and had filed its complaint after CERCLA’s limitations period had expired. On the plaintiff’s appeal, the Second Circuit remanded the case to the district court for consideration of the “act of war” defense. When the district court again ruled in the defendants’ favor, the case returned to the Second Circuit.
For Circuit Judge Dennis Jacobs, writing the for the Court, CERCLA’s broad remedial purposes would not be served by attaching liability to the owners and operators of facilities that were demolished by massive and overwhelming forces that were utterly beyond their control. Those purposes include encouraging timely cleanups and placing the cost of the cleanups on “those responsible for creating or maintaining the hazardous condition.” It would be absurd, Judge Jacobs suggested, to count the defendants among “those responsible” for contaminating the plaintiff’s building. The attacks easily met the statute’s requirement that the release was “solely caused” by the act of war in question because the attacks overwhelmed and swamped any small contribution the defendants might have made.
The Court was careful to limit its holding to the unique facts of September 11, and to the CERCLA context. There was no need to decide whether other terrorist attacks might be “acts of war” under CERCLA. And different considerations apply, and different results might be reached, in litigation involving the scope of “act of war” exclusions in insurance contracts or the meaning of an “act of war” under the federal Anti-Terrorism Act, which, unlike CERCLA, distinguishes acts of war from acts of terrorism.
This is the first time that CERCLA’s “act of war” defense has been found applicable. In the only other reported case to address the issue, the Ninth Circuit held that the defense did not apply to fuel manufacturing activities conducted under government contracts during World War II. The Second Circuit’s explicit limitations of its holding to the facts before it makes it difficult to predict the long-term ramifications of its opinion. In a region, and a nation, still mindful of the devastating effects of September 11, it is reasonable to hope that factual circumstances that fit within the parameters of the Second Circuit’s decision never happen again.