March 03, 2010

Federal Court Dismisses RCRA Claims Against Firm Client Cargill

In one of the largest natural resource damage suits tried in the United States in the last several years, the U.S. District Court for the Northern District of Oklahoma dismissed on February 17, 2010, claims brought by the State of Oklahoma under the Resource Conservation and Recovery Act (RCRA). Faegre & Benson represented Cargill and Cargill Turkey Production throughout the litigation, which culminated in a five-month-long trial in Tulsa.

Alleging a variety of federal and state environmental theories, in 2005 Oklahoma hired contingency fee counsel to bring suit against numerous chicken and turkey producers. The state alleged that the structure of the poultry industry in a million-acre watershed resulted in the illegal disposal of solid waste as a nonpoint source of phosphorus pollution.

Poultry are grown to maturity by farmers who contract with companies that provide the chicks and feed. When poultry defecate, their waste mixes with bedding on the floor of poultry houses. That mixture—poultry litter—is owned by the farmers and is widely used as a fertilizer and soil amendment for growing forage grasses.

The states of Oklahoma and Arkansas regulate and permit the land application of litter. In the lawsuit, however, Oklahoma contends that the poultry companies are responsible for alleged harms caused by claimed overuse of land-applied poultry litter. In particular, the state has argued that increased phosphorus in a reservoir at the bottom of the watershed results from third parties' improper use of poultry litter.

The case has been marked by a series of rulings for the defendants. In September 2008, the district court denied Oklahoma's request for a preliminary injunction that would have suspended the states' regulatory schemes by temporarily banning all litter application within the Illinois River watershed. In July 2009, the court found that the Cherokee Nation's long-claimed interest in the waters at issue prevented Oklahoma from proceeding to trial on its money damage claims, including claims brought under the federal Comprehensive Environmental Response, Compensation and Liability Act (CERCLA). Oklahoma's claims for injunctive relief under RCRA, state and federal nuisance, state trespass, and state environmental statutes, plus a claim for state statutory civil penalties, were then tried to the court over the course of five months.

After the close of the plaintiff's evidence in December 2009, the defendants moved for judgment, arguing that Oklahoma's RCRA claim was meritless. In a detailed opinion, the court dismissed RCRA and nuisance per se claims.

The court found that poultry litter is an agricultural commodity for which there is a regional market and market value. A number of poultry growers testified that they run multiple agricultural activities on their farms, and use litter to increase grass yields on pastures for livestock. Litter is also often used to pay for services needed as part of growing poultry.

Despite arguments by plaintiff's attorneys that Oklahoma's poultry litter regulations amount to mere guidance documents, the court found that Oklahoma has permitted the use of litter as a fertilizer, subject to certain limitations. All litter applications must be made under the site-specific terms of an animal waste management plan (AWMP) drafted by contract employees for the state. The state instructs its contractors to create AWMPs with sufficient protections to prevent pollution to the waters of the state—and the state's training messages inform farmers that the AWMPs are indeed sufficient to prevent pollution.

To prevail on a RCRA claim, a plaintiff must prove, among other things, that the defendant contributed to the handling, storage, treatment, transportation or disposal of "solid waste." The term "solid waste" is a legal term of art that includes agricultural materials to the extent they are "garbage, refuse" or other "discarded materials." 42 U.S.C. § 6903(7). Prevailing D.C. Circuit case law holds that material is "discarded" when disposed of, thrown away, or abandoned.

Based on evidence that farmers and others value poultry litter as a fertilizer and soil amendment and pay a market value to obtain it, the district court concluded that the state failed to prove that people apply litter to the land in order to discard or dispose of it. In responding to the state's argument that litter is discarded when a forage crop does not need all of a given nutrient available in the litter, the court noted that "a substance does not necessarily become a solid waste … when it is applied to the normal beneficial usage for which the product was intended merely because some aspect of the product is not fully utilized." The court also rejected the state's reading of D.C. Circuit case law that litter must be part of a beneficial reuse or recycling in a continuous process by the generating industry itself in order to escape classification as a RCRA solid waste. Rather, the court found that material destined for reuse or recycling in another industry or agricultural operation may not be "discarded." Because litter is not a "solid waste" under the statute, the court dismissed all RCRA claims.

In addition, the court rejected as unsupported by the evidence the state's claim that bacteria from land-applied poultry litter have polluted watershed waters and that those bacteria pose a risk to human health or the environment. The court also held that the use of litter as a fertilizer does not result in a nuisance at all times and in all places, dismissing a claim for nuisance per se, because the state itself regulates the application of poultry litter in an attempt to allow its beneficial use.

The parties await a final judgment from the court as to the remaining claims.

The trial team included Faegre & Benson lawyers Del Ehrich, Krisann Kleibacker Lee, Bruce Jones, Todd Walker and Chris Dolan.

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