In MPM Silicones v. Union Carbide Corporation, No. 17-3468(L), 2020 WL 4210916 (2d Cir. July 23, 2020), the Second Circuit narrowed the applicability of the single-remediation principle it previously adopted in New York State Electric and Gas Corporation v. First Energy Corporation, 766 F. 3d 212 (2d Cir. 2014) (NYSEG). The single-remediation principle dictates that for purposes of cost recovery claims under section 107 of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) there can be only one “remedial action” (as defined by the statute), and thus only one statute of limitations (SOL) period, at any contaminated site. MPM Silicones could have a significant impact on cost recovery litigation, including potentially providing new arguments to remediating parties seeking costs at certain sites.
CERCLA Liability and the Statute of Limitations
Under CERCLA, a party performing a remedial action to address the release of a hazardous substance can recover its costs from four broad categories of liable parties. Thanks in part to the largely unyielding nature of CERCLA liability, intense battles over the SOL—which provides one of the few escape hatches for defendants or prospective defendants—are commonplace. A claim for costs stemming from a remedial action “must be commenced. . .within 6 years after the initiation of physical on-site construction of the remedial action.” 42 U.S.C. § 9613(g)(2).
NYSEG and the Single-Remediation Principle
NYSEG presented the question of whether there can be multiple remedial actions, with separate and distinct six-year SOL periods, at a site. In NYSEG, plaintiff sought to recover the costs it incurred at two sites. With respect to the first site, it sought costs associated with the final phase of a three-phase cleanup; plaintiff did not seek costs for the first two phases, presumably because more than six years had elapsed since work on those phases had begun. With respect to the second site, plaintiff commenced remedial work well outside of the six-year SOL; years later, plaintiff performed additional remedial work to address the same contamination. Plaintiff sought costs for the later work only, which had commenced within the statutory period.
The court held that plaintiff’s claims for both sites were time-barred because the earlier remedial work triggered the six-year SOL, and the later remedial work could not reset the clock. In so ruling, the court adopted the single-remediation principal, stating that “there can only be one remedial action at any given site.” NYSEG, 766 F.3d at 235. The court did not elaborate or provide further explanation.
NYSEG’s single-remediation principle was widely viewed as applying universally to all sites. Predictably, it became a mainstay for defendants in CERCLA cost recovery actions: If a defendant was able to show that any remedial action had been performed outside of the SOL period, it had a very strong argument that cost recovery for all remedial work should be barred. This is precisely the argument advanced by defendant Union Carbide Corporation (UCC) and accepted by the district court in MPM Silicones.
MPM Silicones: Factual Background and the District Court’s Ruling
MPM Silicones involved a large chemical manufacturing facility in West Virginia. From the 1950s through the early 1970s, UCC used polychlorinated biphenyls (PCBs) extensively in its manufacturing processes at the facility. Its operations generated a large volume of PCB-laden waste, a significant portion of which, as it turns out, was disposed of on-site. UCC’s use of PCBs and the presence of PCB contamination did not come to light until decades later. In the meantime, UCC constructed a cap and installed a diversion ditch to address non-PCB contamination in 1992. After purchasing the facility in 2003, MPM Silicones conducted extensive sampling and discovered high levels of PCBs in soil and groundwater, and eventually learned about the PCB waste. MPM Silicones conducted limited work to address the PCBs in 2008 and intends to perform additional PCB remediation. MPM Silicones sued UCC to recover its past and future costs in 2011.
The district court issued numerous orders during the extensive litigation that ensued, including a ruling that the 1992 work constituted remedial action and thus triggered the six-year SOL, and accordingly, under NYSEG plaintiff could not recover its costs for the 2008 work (which the court also found to constitute remedial action) or any future remedial work.
MPM Silicones and the Narrowing of the One-Remedy-Per-Site Principle
On appeal, the Second Circuit vacated the district court’s ruling. The court confirmed that the single-remediation principle should apply under the “conventional circumstances” typified by NYSEG, but ruled that the principle should not necessarily be applied categorically to all situations. MPM Silicones, 2020 WL 4210916, *15.
The court limited NYSEG to mean that “when a remediation is undertaken under a remediation plan based on full disclosure of the known problem successive remedial steps undertaken in furtherance of the original objective are part of a single remediation for purpose of the statute of limitations, so that the remediator may not delay suit by classifying subsequent stages of remediation of the original problem as new remediations.” Id. at *19. However, “a subsequent remediation undertaken to address a different source of contamination outside the scope of the original remediation, may constitute a separate and distinct remediation for statute of limitations purposes.” Id. (emphasis added). In other words, in certain situations, there can be multiple remedial actions at a given site, each governed by its own SOL period.
The court illustrated its limitation on NYSEG by outlining three scenarios in which prior remedial actions would likely not bar cost recovery for a subsequent remedial action. First, where “the subsequent remediation undertakes to remediate a problem that did not exist at the time of the prior remedial act”; second, where “a site operator discovers a previously unsuspected contamination that was unrelated to, and perhaps far distant from, a previously remediated contamination”; and finally, in situations like that presented in MPG Silicones itself, where “the original polluter implemented an inadequate remediation pursuant to a regulatory approval that was procured by inadequate disclosure, and then held the site for six years after the misguided project began, [and] a later owner who discovers the contamination that the prior remediation failed to address. . . . ” Id. at *17.
The MPM Silicones test is heavily focused on questions related to the original remedial action: What was the remedial objective? What contaminants and sources of contamination were being targeted? What was the geographic focus of the remedial action? Thus, the MPM Silicones court suggested that when applying the test it established to future cases “a helpful inquiry would be to examine whether the recent action (sought by the remediator to be characterized as a new remediation) falls within the remedial scope of the previous remediation as revealed in the record before the regulatory agency.” Id. at *19.
Potential Impacts of MPM Silicones
MPM Silicones marks the first time that a circuit court expressly held that there can be multiple remedial actions at a site, and thus that multiple CERCLA SOL periods may apply. The primary impact of this decision is straightforward yet significant: It provides remediating parties at certain sites with a potential argument to counter the single-remediation principle. Although the court in MPM Silicones advised that the single-remediation principle should continue to apply in the “great majority of cases,” the Court’s watering down of that that principle is not insignificant.
Moreover, although the single-remediation principle (as recalibrated by MPM Silicones) applies only to remedial actions, not removal actions, the Court’s reasoning in MPM Silicones could conceivably support an argument that there can be multiple removal actions at a given site (which is currently an open question in the Second Circuit). MPM Silicones could also embolden remediating parties to seek cost recovery at certain sites where, because there had been prior remediation, they may not have done so before.
It also remains to be seen whether and how the emphasis that the court placed on the documentation of earlier remedial actions impacts the way in which remediating parties and their consultants plan remedial investigations and prepare preliminary remediation documents. Specifically, the court wrote that an earlier remediation “is necessarily limited in scope to those problems revealed during the remedial investigation,” and thus should not also encompass subsequent remediation that targets problems “that were non-existent, unknown, elsewhere, or undisclosed to the regulators and unrevealed in an earlier remediation plan.” Id. It would therefore not be surprising if parties conducting due diligence or planning remediation attempted to narrow the scope of their efforts to the greatest extent possible. Of course, doing so would likely create other problems.
In MPM Silicones, the Second Circuit went further than any other court to date in expounding upon the single-remediation principle and ruling that it doesn’t necessarily apply universally. It is certainly an opinion that other courts could find persuasive when confronted with these issues.