Per-Discharge Clean Water Act Penalties and “Necessary” CERCLA Costs: Fourth Circuit Guidance in Courtland Co. v. Union Carbide

Introduction

In a sprawling environmental dispute spanning multiple sites and statutes, the Fourth Circuit (in an unpublished, per curiam opinion) affirmed the Southern District of West Virginia’s extensive findings and remedies following two phased bench trials. The litigation—brought by The Courtland Company, Inc. (Courtland) against Union Carbide Corporation (UCC), with Dow Chemical also originally named—concerned releases, threatened releases, and alleged discharges tied to several adjacent and nearby industrial properties in South Charleston, West Virginia. The consolidated appeals covered four separate cases tried together:

Courtland I (Tech Park): CERCLA, RCRA, and state-law claims alleging groundwater contamination from UCC’s Technical Center (upgradient of Courtland).
Courtland II (Filmont/Massey): CERCLA, RCRA, and state-law claims alleging contamination migrating from UCC’s Filmont dump and Massey Railyard (northeast of Courtland).
Courtland III (CWA – North Ditches): Clean Water Act (CWA) claims tied to discharges into drainage ditches at the north end of the Filmont/Massey property (downstream from Courtland).
Courtland IV (CWA – South Boundary Ditch): CWA claims tied to discharges into a boundary ditch where the Filmont/Massey property meets Courtland’s parcel.

The district court conducted an 18-day Phase I bench trial on liability and a 3-day Phase II bench trial on remedies, issuing 495 pages of findings and conclusions in total. The Fourth Circuit affirmed across the board, emphasizing the district court’s careful fact-finding and management of the phased trials.

Although unpublished (and thus not binding precedent in the Fourth Circuit), the opinion meaningfully clarifies several practical points: (1) Clean Water Act civil penalties for unpermitted stormwater discharges run per discharge, not per day of being unpermitted absent a discharge event; (2) CERCLA “necessary” response costs must bear a close nexus to the threat or release at issue; and (3) defendants may successfully invoke CERCLA’s causation defense under § 107(b)(3) by demonstrating that the plaintiff’s contamination originated from other sources. The ruling also underscores rigorous standing requirements for Clean Water Act citizen suits and the need to prove irreparable injury for RCRA injunctive relief.

Summary of the Opinion

The Fourth Circuit affirmed the district court’s judgments “substantially for the reasons given by the district court,” emphasizing that none of the factual findings were clearly erroneous and that the challenged legal conclusions were sound.

Courtland I (Tech Park): Courtland met § 107(a)’s threshold for CERCLA response costs, but UCC prevailed on the § 107(b)(3) causation defense by showing Tech Park was not the source of contaminants found in Courtland’s groundwater. RCRA and parallel state claims also failed on the facts.
Courtland II (Filmont/Massey): Courtland obtained CERCLA recovery of $27,142.50 for a preliminary groundwater investigation, but its $7,802.50 “kayak inspection trip” costs were denied as unnecessary given their attenuation from the groundwater migration concern. RCRA injunctive relief was denied for lack of irreparable harm. Public nuisance claims failed. UCC’s contribution claim under § 113(f)(1) succeeded to the extent of a 25% equitable allocation against the costs Courtland recovered, reflecting Courtland’s own contribution to contamination on its parcel.
Courtland III (CWA – North Ditches): Dismissed for lack of standing. The alleged discharges were downstream from Courtland; Courtland showed no concrete environmental interest in the area of discharge.
Courtland IV (CWA – South Boundary Ditch): The court credited evidence of three unpermitted stormwater discharges and imposed the statutory maximum civil penalties for those events (totaling $200,136). It rejected Courtland’s argument for penalties accruing for every day UCC lacked a permit absent proof of discharges on those days. The court also declined to consider new liability evidence in the remedies phase, adhering to the established two-phase structure.

Analysis

Precedents Cited and Their Role

Westfarm Associates Ltd. Partnership v. Washington Suburban Sanitary Commission, 66 F.3d 669, 681–82 (4th Cir. 1995): Cited in support of the district court’s causation analysis under CERCLA and UCC’s § 107(b)(3) defense. Westfarm is a leading Fourth Circuit case discussing CERCLA liability, causation, and defenses, including the third-party defense and related causation concepts. Here, it undergirded the conclusion that UCC could avoid liability by proving that its Tech Park facility was not the source of the constituents detected in Courtland’s groundwater.
Friends of the Earth, Inc. v. Laidlaw Environmental Services, Inc., 528 U.S. 167, 183–84 (2000): Cited for Article III standing principles in environmental citizen suits, including the requirement that alleged discharges impact a concrete interest (e.g., aesthetic, recreational) of the plaintiff.
Friends of the Earth, Inc. v. Gaston Copper Recycling Corp., 204 F.3d 149, 156–61 (4th Cir. 2000): Applied to flesh out the “concrete interest” requirement in the Fourth Circuit, emphasizing the need for a specific nexus between the alleged discharge and the plaintiff’s use or concern with the affected area.

Legal Reasoning

1) CERCLA Cost Recovery, “Necessary” Costs, and the § 107(b)(3) Causation Defense

In Courtland I (Tech Park), the district court accepted that Courtland’s $36,916.25 in groundwater investigation costs could qualify as “necessary costs of response” consistent with the National Contingency Plan under 42 U.S.C. § 9607(a). That determination reflects the principle that preliminary investigation expenditures aimed at assessing potential contamination can be necessary if they are responsive to a plausible threat and consistent with the NCP.

But the inquiry did not end there. UCC invoked § 107(b)(3)’s causation defense, which allows a PRP to avoid liability by proving that “the release or threatened release of a hazardous substance and the damages resulting therefrom were caused solely by” the act or omission of a third party. The district court—crediting UCC’s hydrogeological evidence and expert testimony—found as a fact that Tech Park was not the source of the contaminants in Courtland’s groundwater. The Fourth Circuit affirmed, highlighting that on appeal Courtland focused narrowly on § 107(a) and failed to undermine the district court’s finding that UCC carried its § 107(b)(3) burden. The causation finding was central: if UCC’s facility was not the source, cost recovery from UCC necessarily fails.

In Courtland II (Filmont/Massey), the court reached a different result on liability, awarding Courtland $27,142.50 for a preliminary groundwater investigation, but it denied reimbursement of $7,802.50 spent on a kayak-based surface water and sediment sampling expedition “significantly downstream” and in non-adjacent waterways. The court reasoned that those downstream sampling activities were too attenuated from the groundwater migration risk that animated the claim, and therefore not “necessary” within the meaning of § 9607(a). The Fourth Circuit affirmed this tight nexus requirement: CERCLA “necessary” costs must be proximately tied to the release or threat at issue, not general reconnaissance far afield.

The district court also granted UCC contribution under § 113(f)(1) for 25% of Courtland’s recoverable costs, based on the court’s equitable allocation that Courtland’s “historic uses” and “ongoing industrial operations” materially contributed to contamination at its own site. The Fourth Circuit found no abuse of discretion in this allocation, emphasizing the broad equitable discretion district courts wield in contribution claims and the record support for Courtland’s share of responsibility.

2) RCRA Injunctive Relief: Irreparable Injury Still Matters

The district court found that UCC’s Filmont site was an “open dump” under RCRA but nevertheless denied Courtland injunctive relief because Courtland failed to show irreparable injury. The court’s factual determinations—undisputed on appeal—included that no groundwater wells existed within a mile, there was no evidence of residential exposure, a local ordinance prohibited use of untreated groundwater, and neither party was using (or planned to use) groundwater on-site. Given those findings, the Fourth Circuit held that the denial of injunctive relief was not an abuse of discretion.

This underscores that even when statutory violations are established, equitable relief remains subject to traditional standards—most prominently, a showing of irreparable harm tied to the threatened endangerment alleged.

3) Clean Water Act Standing: Concrete, Site-Specific Interests Required (Courtland III)

Courtland’s CWA claims concerning discharges to drainage ditches at the north end of UCC’s property (downstream from Courtland) were dismissed for lack of Article III standing. The district court found, and the Fourth Circuit agreed, that water does not flow uphill and thus those discharges could not impact Courtland’s property; moreover, Courtland failed to demonstrate a concrete environmental interest in the affected downstream area, as required by Laidlaw and Gaston Copper. The Fourth Circuit stressed that a plaintiff must demonstrate that discharges impair a specific, concrete interest—such as actual recreational, aesthetic, or economic use—within the affected area; generalized environmental concern is insufficient.

4) Clean Water Act Penalties and Phased Trial Management (Courtland IV)

On boundary-ditch discharges at the south edge of the Filmont/Massey property (contiguous to Courtland’s property), the district court found insufficient proof that UCC was the source of groundwater or surface water pollutants (given evidence that Courtland “very probably polluted” its own groundwater and was “at least as likely” a source of surface pollutants). But the court credited evidence of three unpermitted stormwater discharges and imposed the maximum civil penalty for each, totaling $200,136.

Importantly, the Fourth Circuit rejected Courtland’s argument that civil penalties should accrue “for every day” UCC lacked a permit regardless of whether a discharge occurred. The court read the CWA’s core prohibition and permitting provisions, 33 U.S.C. §§ 1311(a), 1342(a)(1), to authorize penalties per unpermitted discharge, not per day of mere non-permitted status absent a discharge. That reading aligns with the statute’s focus on “discharge of a pollutant” and avoids penalizing days without any discharge event. Practically, plaintiffs must prove discrete unpermitted discharge events to support civil penalties.

Finally, the Fourth Circuit upheld the district court’s management of the two-phase trial. Courtland attempted in Phase II (remedies) to broaden liability proof by introducing rain records to show additional unpermitted discharges beyond the three proven in Phase I. The court excluded that evidence as an improper attempt to reopen liability during the remedies phase. The Fourth Circuit found no abuse of discretion, noting that neither party objected to the two-phase structure and that the district court’s procedural rulings maintained order and fairness.

Impact and Practical Implications

CERCLA “necessary” costs must be closely tied to the identified release or threat. Investigations far downstream or in non-adjacent areas—if not probatively connected to the asserted pathway—may be deemed unnecessary and unrecoverable.
Defendants can avoid CERCLA cost recovery by carrying their burden under § 107(b)(3) to show that the contaminants at issue did not originate from their facility. Robust site hydrogeology and source-apportionment evidence can be outcome-determinative.
Equitable contribution under § 113(f)(1) remains a potent offset tool. Even when a plaintiff recovers CERCLA costs, a defendant can secure a percentage allocation back to the plaintiff if the plaintiff contributed to the contamination.
RCRA injunctive relief requires proof of irreparable injury. Evidence of limited exposure pathways (e.g., no wells, legal prohibitions on groundwater use) can defeat injunctive relief even if other RCRA violations are found.
CWA standing is not presumed from proximity. Plaintiffs must connect alleged discharges to a concrete, personal, and site-specific interest (recreational, aesthetic, economic). Proof that discharges are downstream from plaintiff’s property and no evidence of plaintiff’s use of the impacted area can defeat standing.
CWA penalties for stormwater are per unpermitted discharge, not per day of being unpermitted without a discharge event. Plaintiffs should marshal event-specific proof (e.g., flow observations, sampling tied to precipitation events) during the liability phase.
Phased trials have teeth. Liability must be proven in Phase I; attempts to expand liability in Phase II will likely be rejected in the court’s discretion.

Complex Concepts Simplified

CERCLA “necessary costs of response”: Costs must be incurred to address a release or threatened release of hazardous substances and be consistent with the National Contingency Plan. The expense must have a close, practical connection to investigating or remedying the specific threat or pathway alleged.
CERCLA § 107(b)(3) “third-party/causation” defense: A defendant can avoid liability by proving the contamination at issue was caused solely by someone else’s act or omission (not the defendant’s facility). In practice, strong source identification and hydrogeologic evidence can carry this defense.
§ 113(f)(1) contribution and equitable allocation: When multiple parties contributed to contamination, courts can apportion cleanup costs equitably, based on factors such as relative fault, contribution to the harm, and site history. The percentage chosen is reviewed for abuse of discretion.
RCRA “open dump” and injunctive relief: RCRA prohibits “open dumping” of solid waste. Even if a violation exists, injunctive relief is equitable and requires showing irreparable harm, among other factors. Limited exposure pathways can undercut the need for immediate injunctive measures.
CWA “discharge of a pollutant” and permits: The CWA forbids discharging pollutants from a point source to navigable waters without a permit (NPDES). For stormwater, a permit is typically required, but the core violation is discharging without a permit—no discharge, no violation for that day.
Standing in environmental suits: Plaintiffs must show an injury-in-fact to a concrete interest (e.g., recreation in a waterbody), causation (traceable to the defendant’s discharge), and redressability. Mere worry or generalized environmental interest is insufficient.
Appellate standards of review: Factual findings after a bench trial are reviewed for clear error; equitable allocations and case management are reviewed for abuse of discretion; legal conclusions are reviewed de novo. Deference to thorough trial-level fact-finding is substantial.

Conclusion

Courtland Company v. Union Carbide offers a detailed, fact-driven application of CERCLA, RCRA, and the CWA. The Fourth Circuit’s affirmance underscores several important guideposts for practitioners:

CERCLA plaintiffs must ensure response costs are tightly connected to the release or pathway at issue; generalized or remote investigations risk being disallowed as unnecessary.
Defendants with strong scientific proof regarding hydrogeology and contaminant sources can prevail on § 107(b)(3) and limit or avoid CERCLA liability.
Contribution and equitable allocation can materially offset a plaintiff’s CERCLA recovery when the plaintiff contributed to on-site contamination.
RCRA injunctive relief demands a persuasive showing of irreparable harm—exposure and pathway evidence matter.
CWA citizen suits require concrete, site- and use-specific injuries for standing; downstream discharges unconnected to the plaintiff’s interests will not suffice.
For stormwater claims, penalties attach per unpermitted discharge event, not per day of non-permitted status without a discharge; liability proof must be developed in the liability phase.

Although unpublished, the opinion is a valuable roadmap for environmental litigants in the Fourth Circuit. It highlights the primacy of rigorous factual development—especially hydrogeologic and pathway evidence—and the importance of aligning legal theories and remedies with the specific environmental realities on the ground.