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The Year in Review

Environment, Energy, and Resources Law: The Year in Review 2023

Superfund and Cost Recovery Committee Report

Amanda Neidert Kesler, Van Pursley Hilderbrand, and John M Barkett


  • The Superfund and Cost Recovery Committee Report for The Year in Review 2023.
  • Summarizes significant legal developments in 2023 in the area of superfund and cost recovery, including CERCLA, hazardous substances, natural resource damages, and more.
Superfund and Cost Recovery Committee Report
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I. Superfund: Administrative and Regulatory Developments

Congress did not amend the Comprehensive Environmental Response, Compensation and Liability Act ( CERCLA) in 2023.

The Environmental Protection Agency (EPA) added four sites to the National Priorities List (NPL), while deleting four sites and partially deleting ten sites. It also proposed to add five sites to the NPL.

On April 13, 2023, EPA issued an Advanced Notice of Proposed Rulemaking requesting public input on potential future designations of per- and polyfluoroalkyl substances as CERCLA hazardous substances. Comments were due on or before June 12, 2023, but EPA extended the comment period to August 11, 2023. According to EPA’s Fall 2023 Unified Agenda of Regulatory and Deregulatory Actions, EPA estimates publication of the final rule designating perfluorooctanoic acid (PFOA) and perflurooctanesulfonic acid (PFOS), including their salts and structural isomers, as CERCLA hazardous substances in 2024.

II. Superfund: Judicial Developments

A. Elements of Liability

1. Facility Definition

ELG Utica Alloys, Inc. v. Niagara Mohawk Power Corp. contains a useful discussion of case law on how to define the contours of a CERCLA “facility.” The court concluded that a 23-acre site that was administratively divided into two areas was a “single facility for CERCLA purposes.”

The Universal Waste and Utica Alloys Sites had shared common ownership, control, and management since at least 1984 and it was undisputed that the Companies ‘had the same voting stockholder, officers, and directors, used the same buildings and areas at the Site, and shared Site costs.’ Such common ownership and management weighed in favor of finding a single facility. Moreover, the PCB and TCE contamination at issue extended throughout the 23-acre Site resulted from the same sources. Finally, NYSDEC investigated the Site as a single site for approximately twenty years and listed it on the registry as such.

While the state environmental agency bifurcated the Site, it did so “‘to facilitate an independent remediation’ of the Utica Alloys portion. The Court conclud[ed] that the 1998 administrative bifurcation was more akin to the division of the Site into operable units and a division as convenience.”

B. Liability of Particular Parties

1. Owners and Operators

In MRP Properties Company, LLC v. United States, Valero Energy Corporation sought contribution from the United States for contamination at twelve of its refinery sites alleging that the government’s control over the refineries during Work War II made the United States an “operator” under CERLCA. On interlocutory appeal, the Sixth Circuit held that, although the government rationed oil and refinery equipment, set wages and prices, inspected facilities and directed facilities what to produce and for whom during World War II, these activities were not sufficient to make the United States an “operator” of the refineries under CERCLA because the refineries retained control over waste disposal activities and decisions “specifically related to pollution” as required for operator liability under Bestfoods.

In Barclay Lofts LLC v. PPG Industries, Inc., defendants sought leave to file a third-party complaint against Plaintiff Barclay’s parent company, Sherman Associates, for CERCLA 113 contribution alleging that Sherman was the real party in interest and may be independently liable as a direct operator. The court found defendant’s concern that Barclay would not be able to pay for any share of costs that may be allocated to it given that it was a “single purpose entity” with no apparent funds. The court also found that the third-party complaints sufficiently stated a claim for operator liability against Sherman by alleging that it directed the work of the consultant that caused the contamination, as well as controlled the maintenance of the building that caused further groundwater contamination. Accordingly, despite Barclay’s counter-argument that the failure to act does not show control over operations related to pollution, the court granted leave to file thirty party complaints against Sherman under Fed.R.Civ.P. 14.

In California Department of Toxic Substances Control v. Jim Dobbas, the Department of Toxic Substances Control and the Toxic Substances Control Account (collectively DTSC) sought recovery of costs and declaratory relief under CERCLA in connection with the cleanup of a wood preserving operation in Elmira, California. A group of insurer Intervenors filed an answer and counterclaims for cost recovery and contribution against DTSC, alleging that it was an “operator” at the time of “disposal.” DTSC moved to, among other things, (i) dismiss the counterclaims and (ii) strike Intervenors’ affirmative defense for contributory and comparative negligence. The court dismissed the counterclaims holding that: (1) “a vague allegation that DTSC ‘actively operated’ a groundwater system and DTSC’s alleged knowledge of its contractor’s failure to maintain a remedial structure on the site was insufficient to properly allege DTSC had an active role running the facility with daily participation in management as required for operator liability; and (2) that passive migration of hazardous substances does not represent a “disposal” so it was not alleged that DTSC operated the site at the time hazardous materials were disposed. Because comparative fault or contributory negligence by the government is not a defense to CERCLA, the court also struck Intervenors’ affirmative defense.

In California Department of Toxic Substances Control v. NL Industries, the DTSC brought a cost recovery action against owners and operators of a former lead battery recycling plant in Vernon, California. Defendants counterclaimed contending that DTSC had also “operated” the plant because DTSC caused pollution to occur when conducting remediation activities and because DTSC took over the plant after the bankruptcy of one of the defendants pursuant to the terms of an environmental trust created in the bankruptcy proceedings. After a bench trial, the court held that DTSC established a prima facie case against several defendants as either owner/operators or arrangers. Many of the court’s rulings dealt with the requirements and application of the Superfund Recycling Equity Act's (SREA) recycling defense to CERCLA arranger and transporter liability. The court held that: (1) “recycling” was encompassed in the term “treatment” within the meaning of the SREA recycling safe harbor; (2) that spent lead-acid batteries were not useful products, and therefore those entities that sent those batteries to the plant for recycling were not exempt from CERCLA arranger liability under the SREA safe harbor; (3) that lead-acid battery plates were useful products, and therefore entities’ shipments of battery plates to the plant fell within the SREA safe harbor; and (4) that plates from spent lead-acid batteries were “scrap metal” within the SREA safe harbor. As to the counterclaims, the court held that DTSC only acted in a regulatory capacity and did not have a day-to-day role in hazardous waste related activities before the bankruptcy and its control of the site in connection with the bankruptcy of the defendant owner was excluded from liability pursuant to the definition of the terms “owner or operator” in CERCLA section 101(20)(D).

2. Generators, Transporters, Arrangers

In Estes Express Lines v. U.S.A Lamp and Ballast Recycling, Inc., U.S.A Lamp and Ballast Recycling, Inc., d/b/a Cleanlites Recycling Inc., (Cleanlites) filed a motion to dismiss Estes Express Lines’ (Estes) amended complaint alleging strict liability under CERCLA. Cleanlites hired Estes to transport 18.6 gallons of mercury to a mercury recovery, recycling and retirement company for disposal. Cleanlites packaged the mercury for shipment and certified that the mercury was in a proper condition, properly packaged, marked and labeled according to appropriate Department of Transportation regulations. Enroute, 6.6 gallons of mercury was released and Estes hired a company specializing in hazardous material spill response management to address the release. The court found that mercury is a “hazardous substance” as defined under CERCLA, that Cleanlites “arranged for the disposal or treatment or arranged with a transporter for transport for disposal or treatment of a hazardous substance owned or possessed by Defendant”, and that Estes’ amended complaint pled a plausible claim for strict liability under CERCLA section 107(a).

In City of Lincoln v. County of Placer, among other claims, the County of Placer moved for summary judgment on the City’s claim under section 107 of CERCLA. The County argued that the City could not meet two elements of its claim under section 107(a): (1) that the City could not show its response costs were actually attributable to the release of any hazardous substances from the landfill, and (2) that the City could not show that the County was a current or former owner, operator, arranger or transporter. The court denied the County’s motion for summary judgment. With respect to the first element, the court found that a genuine dispute existed with regards to causation since at least some of the City’s response costs could be tied to the release of volatile organic compounds from the landfill, which are “hazardous substances” under CERCLA. With respect to arranger liability, the County argued that it did not own the garbage deposited in the landfill and therefore could not be an arranger, but the court found that argument unavailing. Further, the County argued that an “arranger” under section 107(a)(3) must intend to dispose of a substance it knows or has reason to know is “hazardous.” The court looked to case law, the plain wording of the text, Congress’ intent, and the broader structure of CERCLA to find that an arranger does not have to have a specific state of mind about whether a particular substance is hazardous or dangerous. In regard to transporter liability, the court found that the evidence in the record might suffice at trial to show that the County transported at least some waste to the landfill for disposal. Thus, summary judgment was inappropriate. Finally, the County sought summary judgment on its counterclaim and declaratory judgment claim under section 113 of CERCLA. The court granted summary judgment finding that if the City prevails in its section 107 claim, the County may seek contribution.

3. Parent/Shareholder and Successors

It is not often that “veil piercing” succeeds to create parent-corporation owner liability under CERCLA. But the plaintiff in Successor Agency to the Former Emeryville Redevelopment Agency v. Swagelok Co. presented sufficient facts to get to trial on the claim. Applying California common law to complicated facts relating to corporate transactions that occurred decades ago, the court determined that the following evidence was sufficient to maintain the veil piercing claim: (1) The parent corporation (HBML) “was in charge of and profited from these transactions”; (2) HBML knew “generally of its environmental liabilities, at least strongly suspected it,” inherited “specific and significant” liabilities of a company called “SCM,” and could have known about the liability at what was called the “Marchant” site; (3) HBML “undertook its corporate form—including the initial acquisition form, the fan companies, and the eventual transfer and sell off of [a company called] Millennium— in order to reap the profitable rewards while ‘kicking the can down the road’ on the environmental liabilities to avoid having to fund them.” This evidence was sufficient to create a fact question on the existence of bad faith (required to pierce the corporate veil under California law), or whether HBML's corporate form was “‘used to . . . circumvent a statute or accomplish some other wrongful or inequitable purpose.’” This evidence also was sufficient to show a connection between “the contamination and recovery of response costs and the alleged misuse of HBML’s corporate structure—chosen to avoid paying for ‘superfund’ responsibilities.” The court added that it would be inequitable to permit HBML “to profit from its acquisition and corporate structuring without being held responsible for its CERCLA liabilities.” After a lengthy analysis of a number of corporate transactions, the court next determined that the acquisition of SCM should be treated as an asset purchase for purposes of successor liability. The court then determined that plaintiff presented sufficient evidence that HBML assumed SCM’s Marchant liability when it acquired SCM.

A broad assumption-of-liability clause in a 1962 liquidation agreement was found by the court in Wisconsin Gas LLC v. American Natural Resources Company to cover CERCLA liability. Wisconsin Gas incurred response costs at a facility formerly owned by a company called Milwaukee Solvay. The 1962 agreement in question provided that defendant ANR “assume[d] and agree[d] to pay on behalf of [Milwaukee Solvay] any and all . . . liabilities of [Milwaukee Solvay] which may hereafter be established.” After concluding that 42 U.S.C. § 9607(e)(1) prohibits transfers of CERCLA liability but permits indemnification for that liability, the court determined that the assumption embraced future CERCLA claims.

The liquidation agreement in this case is silent on the matter of Milwaukee Solvay's CERCLA liabilities. Nevertheless, the language used is clear, unambiguous, and very broad. ANR assumed ‘any and all . . . liabilities of [Milwaukee Solvay] which may hereafter be established.’ The parties' use of the phrase ‘any and all’ signifies their intent not to limit the assumption to specific types of liabilities. Similarly, the use of ‘hereafter’ shows that the liabilities were not limited to those that existed at the time; in other words, the parties clearly contemplated—and the liquidation agreement encompassed—future, unknown liabilities.

The court also held that the agreement did not contain “limiting” language.

Here, the only specific liability the liquidation agreement mentions is workmen's compensation. The agreement, however, expressly indicates that the liabilities ANR assumed included but were not limited to worker's comp. The agreement also says that the aggregate amount of debts, obligations, and liabilities ANR assumed shall not exceed the value of the assets transferred by Milwaukee Solvay to ANR. However, that limitation does not suggest a clear intent to exclude environmental liabilities.

Finally, the court held that the agreement did not mention Wisconsin’s dissolution statute (that had a two-year limitations period on claims against dissolved companies) or “suggest a limited temporal period for when Milwaukee Solvay's liabilities could ‘hereafter be established.’” Thus, the two-year limitations period did not preclude the claim.

Metro Container Group v. AC&T Company Incorporated involved a defendant’s, Rahway Steel Drum Co., Inc.’s (Rahway), motion for partial summary judgment on the issue of its liability under a theory of successor liability. Metro Container Group (Metro) brought a contribution claim under CERCLA against numerous defendants that also stored hazardous materials at an industrial site in Trainer, Pennsylvania. After many years of litigation, the parties had only completed limited fact discovery and discovery had only recommenced a few months earlier. Because many outstanding questions remained that prevented the court from concluding that no genuine dispute of fact exists as to Rahway’s liability, the court denied the motion for summary judgment as premature. In doing so, the court stated that the limited discovery that had occurred raised more questions than answers about Rahway’s successor liability. Further, in addition to potential indirect liability, the court noted that fact discovery could also show that Rahway had potential direct liability as an owner and operator of the site and as an arranger for disposal of hazardous substances.

C. Private Cost Recovery

1. Contribution (113) v. Cost Recovery (107)

In ELG Utica Alloys, Inc. v. Niagara Mohawk Power Corp., the court dismissed a section 113(f)(1) contribution claim because plaintiff could not show that it had been sued under CERCLA section 106 or 107, a prerequisite to such a claim. Plaintiff argued that it was “subject to CERCLA liability under the 2015 [Consent Order]” but that fact did not satisfy section 113(f)(1)’s requirement of a prior civil action under sections 106 or 107(a) that gives rise to a contribution claim.

In Atlantic Richfield Company v. NL Industries Inc., the district court approved the recommendation of a magistrate judge to dismiss NL’s third-party complaint in contribution because ARCO’s claim against NL was a contribution claim. Thus, NL would only be allocated its several share and would not have a contribution claim for paying more than its share.

In Vincent v. Estate of Beard, the Ninth Circuit reversed a decision of the district court awarding summary judgment to defendants on res judicata grounds. An earlier lawsuit brought by the owner of “the Property” (Mayhew) resulted in a settlement of Superfund claims brought by a neighbor (Walnut Creek Manor) to the Property, that was owned originally by the Beards and later by Mayhew. Mayhew was supposed to conduct a remediation but defaulted on its obligation. Vincent stepped in, bought a promissory note signed by Mayhew, foreclosed on the property, remediated it, and then sued the Beards Estate and Mayhew in cost recovery under CERCLA. The district court decided that the claims in the Mayhew action that was settled were the same as the claim brought by Vincent (a required element to establish res judicata). The court of appeals held otherwise.

Although the Mayhew/Beard complaint purported to seek both section 113(f) contribution for the Walnut Creek Manor Action judgment and section 107 cost recovery for expenses related to PCE “under and emanating from [the] Mayhew Center property,” the Settlement Agreement and stipulated injunction order focused on the Walnut Creek Manor property. Specifically, the Escrow Agreement, which was incorporated by the Settlement Agreement and the injunction order, only allowed money from the settlement-created escrow account to be used for remediating the Walnut Creek Manor property and a portion of the Property adjacent to the Walnut Creek Manor property.

As a result, the court of appeals concluded that,

Mayhew's CERCLA claim—which sought apportionment of the liability stemming from the Walnut Creek Manor Action—is distinct from GP Vincent's CERCLA claim—which seeks reimbursement for costs incurred in connection with remediation of the Property's own contamination. In so concluding, we do not hold that the distinctions between section 107 and section 13 CERCLA claims are dispositive, only that the record and facts of this case lead to the conclusion that the prior litigation concerned different liability than the present litigation.”

Wardlow Funding, LLC v. Foasberg Laundry & Cleaners, Inc. resulted in dismissal of Foasberg’s section 107/113 third-party complaint because of the insufficiency of the pleadings with respect to the release of hazardous substances and the migration of chemicals from neighboring properties to the facility in issue. However, the court decided that Foasberg could allege both a section 113 claim in contribution for response costs being sought by the plaintiff in the main action and a section 107 claim for investigation and remediation costs that it independently incurred.

In Los Angeles County Metropolitan Transport Authority v. California Drop Forge, Inc., the district court denied a motion to dismiss a cost recovery action by a potentially liable party. The court succinctly explained:

[T]he liability structure outlined in CERCLA allows for a party, regardless of its status as a PRP, to file a section 107 claim to hold other PRPs jointly and severally liable. Those defendants can then file a section 113 counterclaim to ensure the equitable distribution of costs amongst the liable parties, including the plaintiff. The fact that a party might be a PRP that is attempting to hold other PRPs jointly and severally liable is therefore an insufficient basis to grant a motion to dismiss.

StarLink Logistics Inc. v. ACC, LLC required the court to decide whether a “Voluntary Oversight and Assistance Program” (VOAP) settlement between StarLink and the Tennessee Department of Environment and Conservation (TDEC) was an administrative settlement under section 113(g)(3), thereby limiting StarLink to a contribution action. The court held that it was. Since StarLink had only pursued a cost recovery action, the court granted summary judgment to defendant. The court looked to the “specific terms” of the agreement and applied state contract-construction law, while recognizing that Sixth Circuit case law on whether a settlement agreement resolves the liability of the party in question to the federal government or state government is not easily reconciled. Ultimately, the court looked to the Sixth Circuit’s decision in Hobart for its analytic framework: (1) Is there language in the agreement that states the intent that the agreement be an administrative settlement? (2) Is there contribution protection from actions or claims as provided by sections 113(f)(2) and 122(h)(4) of CERCLA? (3) Was the document titled “Administrative Settlement Agreement and Order on Consent,” thereby matching the statutory language in section 113(f)(3)(B)? And (4) is there a covenant not to sue or take administrative action pursuant to §106 and 107(a) of CERCLA for the work and future response costs? The court then explained that: (1) The language in the VOAP agreement states in section VIII that the VOAP agreement “constitutes an approved administrative settlement pursuant to 42 U.S.C. § 9613(f) and resolves [Plaintiff's] liability, if any whatsoever, to the State of Tennessee as of the date of [the VOAP agreement] under the Comprehensive Response, Compensation and Liability Act (CERCLA) and its amendments, 42 U.S.C. § 9601 et seq.” The VOAP agreement expressly used the term “administrative settlement,” and identified it as an administrative settlement specifically for purposes of CERCLA liability. (2) The VOAP agreement provided protection from contribution actions under CERCLA, which was not diminished by the proviso that it “applied to third parties who were given by Plaintiff actual or constructive notice of the VOAP agreement and given an ‘opportunity to comment upon’ (whatever that means) the VOAP agreement.” (3) The title of the VOAP agreement does not use the term “Administrative Settlement” as did the agreement in Hobart, but this “strikes the Court as rather unimportant, given the above-quoted content from the VOAP agreement that makes very clear in express terms that the parties intended it to be an administrative settlement.” (4) Unlike in Hobart, “the Court does not see where the VOAP agreement contains any express covenant by TDEC not to sue or take administrative action pursuant to CERCLA,” but the VOAP agreement “seem[s] meticulous in omitting any clear reference to the possibility that Plaintiff could be sued or subject to administrative action.” Saying that the first two factors were the most important and the latter two “do not go far in tilting the balance in the other direction,” the court held that the VOAP agreement was an administrative settlement limiting plaintiff to a contribution claim.

D. Allocation and Indemnification

In an unpublished decision, Columbia Falls Aluminum Company, LLC v. Atlantic Richfield Company, the Ninth Circuit affirmed the district court’s 65-35 percent allocation. The court of appeals agreed that indemnity provisions in an agreement between the parties were not sufficiently specific to affect a waiver of a right to sue under CERCLA but could be considered for purposes of equitable allocation. The court of appeals affirmed the application of the Gore factors by the district court.

[T]he district court considered the Gore Factors but found the first four to be neutral, taking into consideration the practical effect of the proposed remedial measure—a slurry wall that would encompass the West Landfill and the Wet Scrubber Sludge Pond (“WSSP”). Considering CFAC's contamination of the WSSP, along with the fact that a large portion of the slurry wall would contain the WSSP, the district court did not err in considering the proposed remedial measure alongside the Gore Factors.

While the district court might “have explained more fully each party's relative contribution to the need for this joint remedial measure,” the court of appeals determined that it could not say “that the district court clearly erred in finding that the slurry wall was occasioned by both ARCO's and CFAC's contamination.” The court of appeals also affirmed the district court’s economic benefits analysis.

Both parties realized hundreds of millions of dollars in profits during their respective operations. Although ARCO earned more profit than CFAC, ARCO expended over $1 billion dollars on the Site—including the facility's construction and upgrades to mitigate environmental contamination—while CFAC spent only $95 million on Site improvements. The district court also considered that CFAC received the facility and everything ARCO put into it for $1.00. Recognizing these other forms of economic benefit and the substantial profits earned by both parties, the district court did not err in concluding that the totality of the economic picture was neutral.

Tailored Chem. Prods., Inc. v. Kiser-Sawmills, Inc. represents the judgment of the district court in a CERCLA contribution action that resulted in an allocation to four parties. Plaintiff (TCPI) arranged for treatment of “glue wastewater,” contained in several thousand totes, by DAFCO, Inc., a defunct entity. DAFCO leased property from Anderson Family Properties (AFP) referred to as the “Disposal Site.” Elizabeth Keister was the President and Resident Agent for DAFCO. Neither she nor DAFCO appeared in the action. Perry Keister, Elizabeth Keister’s father, was having marital difficulties, and was a consultant for TCPI before becoming the “chief technical officer” at DAFCO. Perry suggested to TCPI that it use DAFCO to treat its glue wastewater and he arranged for DAFCO to sublease property from CARRE, a company he owned. The court found that,

Perry K benefited personally through his efforts on DAFCO's behalf related to the TCPI totes, including DAFCO obtaining over $1 million . . . which was spent in part on rent that would have otherwise had to have been paid by CARRE, a company owned by Perry K; the success of DAFCO providing an entity through which he could obtain work and avoid income in connection with his (former) wife's company; and supporting a company where his daughter could have the title of President.

DAFCO defaulted on its obligations to treat the glue wastewater, resulting in TCPI stepping in under an Administrative Order on Consent (AOC) with the EPA to remediate the AFP property. It spent over $7 million. AFP cooperated in providing access to TCPI and was liable as a current owner. Its third-party landowner liability defense was rejected because

[I]t failed to reasonably monitor DAFCO's activities, including failing to require DAFCO to provide evidence of appropriate government permits or even to regularly check on the number of totes on the premises, which could have significantly limited the scope of the problem. Further, even after AFP was aware of the number and condition of the totes at the site, it failed to take immediate action against DAFCO (although it ultimately filed a legal action against TCPI and cooperated with state and federal regulators in an effort to have the totes removed and avoid liability).

DAFCO was liable as the site operator. Because of his authority to control hazardous wastes that were the source of the contamination, Perry K was found to be an operator. Elizabeth K, as President of DAFCO, was found to be an operator. Another defendant (KSI) was found not liable as an arranger for disposal. KSI arranged with Perry K to transport about 8,000 totes of untreated wastewater from the “Virginia Street property” to the AFP property. The Virginia Street property was investigated by EPA, but no contamination was discovered. “In light of all the circumstances,” the court held that there was “insufficient evidence to prove that KSI had the specific intent to dispose that is required under the Burlington Northern standard. Indeed, there is no evidence that KSI even ‘should have known’ of contamination at the [AFP] Property.” A third-party defendant, Southern Resin, however, was found by the court to be an “‘arranger’ of transportation of hazardous waste” but received a zero allocation vis-à-vis third-party plaintiff, AFP. The court then rendered its allocation. DAFCO and one other party were not included in the allocation because these entities were no longer in existence. Applying the Gore and Torres factors, the court allocated 92% to TCPI given that most of the waste came from TCPI and it did not test the untreated waste, diligence DAFCO’s permits to treat the waste or monitor DAFCO in cleaning the totes, instead continuing to deliver totes to the Disposal Site after it should have known DAFCO was not timely or properly processing them. Perry K and Elizabeth K were each allocated 1%. While the court found them culpable for accepting the wastewater totes and large sums of money for treatment and cleaning despite their inability to process the totes, many of which were instead abandoned, the court recognized that their limited financial resources prevented the court from allocating an amount commensurate with their role and culpability. AFP was allocated 6% but received a credit against its 6% share of $82,083 for “expenses and damages” it incurred at the Disposal Site. The court allocated a “meaningful share” to AFP both for its role renting a portion of the site to DAFCO without exercising due care and diligence to monitor them, which contributed to the accumulation of totes, and because AFP benefited from TCPI’s cleanup of the property in terms of collected increased rent.” Saying that the degree of cooperation with federal and state officials was an “important factor in allocation, the court concluded that all of the parties either cooperated or there was no evidence of a failure to cooperate. The court considered ability to pay arguments and noted that “[m]athematical precision in the allocation process is not realistic and is not part of the plaintiff’s burden for establishing an equitable share.” Finally, the court noted that it “included consideration of pre-judgment interest under 42 U.S.C. § 9607(a)(4) in making the allocation” and, therefore, “TCPI is not entitled to receive additional pre-judgment interest from any of the defendants.”

In an earlier decision in Tailored Chem. Prods. v. Dafco Inc., the court denied a motion in limine in which the movant argued that the expert (Rabah) was offering legal opinions that invade the province of the court.

Plaintiff disavows any intent to present expert legal opinions on the ultimate legal issues, and the Court will hold Plaintiff to that representation (which certainly appears to be called into question by Mr. Rabah's ‘allocation’ opinions). However, in light of the discretion afforded the Court by a bench trial and the fact that some of his opinions relate to issues underlying the allocation decision (for example the reasonableness of the response costs) rather than the allocation itself, the Court declines to preclude all of Mr. Rabah's testimony.

“Instead,” the court said, “the Court will allow Mr. Rabah to testify and defer a final ruling on the admissibility and weight to give his testimony until it can be evaluated at trial.”

The decision in Pac. Res. Assocs. LLC v. Cleaners resulted in approval of a settlement of a private CERCLA and California Hazardous Substance Act cost recovery claims. The matter involved successive owners of a 50-year plus dry-cleaning operation that was the source of perchloroethylene releases. Certain co-defendants objected, unsuccessfully arguing that the contribution protection clause in the settlement agreement was overbroad because it barred them from seeking contribution for plaintiff’s future costs. Applying the factors set forth in Tech-Bilt, Inc. v. Woodward-Clyde & Assocs., the court determined that a rough approximation of plaintiffs’ total recovery was $185,000. Settling defendants collectively were paying about ten percent of these costs. Saying that “black letter law” provides “that a settlor should pay less in settlement than he would after trial and that the Court’s evaluation is to be made based on information available at the time of settlement (now),” the court reviewed the evidence with respect to each of the settling defendants in determining that this allocation was fair and equitable. Settling defendants Howard and Angela Cho operated the facility for only two years. Angela Cho was dead. Howard Cho was retired, had no insurance coverage, and lived on his social security income. Settling Defendant Long operated for two and one-half years. She earned $46,000 per year as a seamstress and hoped to retire within a year after which she would live on social security income of $2,400 per month. She had no insurance coverage. Settling defendant Hong acquired the business in 2002 and, in 2004, replaced the dry-cleaning system to one that did not use PCE. The Chos, Long, and Hong were found by the court to be de minimis sources of releases based on the evidence of the care they exercised in handling PCE. These same facts also supported a CERCLA equitable allocation. “Applying the Gore Factors, the Settling Defendants’ contribution and involvement in the generation, treatment, storage, or disposal of the hazardous waste is minimal, and it is therefore within the Court's discretion to approve the Settling Defendants' respective settlement figures.”

In a companion case, Pac. Res. Assocs. LLC v. Suzy Cleaners, the court also found that a payment of $25,000 by settling defendant “M&E,” or about 13.5 percent of plaintiff’s response costs ($185,000), was fair under both state law and CERCLA. M&E never operated a dry-cleaning business. It operated an adult daycare facility, but it was alleged by objectors to the settlement that historic discharges at its property was a continuing source of the contamination in issue. The court was not persuaded.

While the Court agrees that a current landowner can be held strictly liable for past pollution emanating from its property, the Court need not decide the merits of Plaintiff's CERCLA claims at this juncture. It is within the Court's discretion to allocate settlement costs as it sees fit. Here, M&E is contributing $25,000 for pollution that the parties agree it did not cause. Thus, the Court finds that the contemplated settlement is fair and reasonable under CERCLA.

In L.A Terminals, Inc. v. City of Los Angeles, the court denied motions in limine relating to expert testimony on allocation. As to one of the motions, the court decided that challenges to the expert’s “conclusions on how to choose and weigh allocation factors are better addressed through cross examination than the present motion.” As to a second such motion (where the movant argued that the same expert's allocation testimony “would not be helpful because his report merely assumes the Court's role of weighing the equitable factors and arriving at an allocation ‘recommendation’”), the court determined that it would benefit from the expert’s “technical and specialized knowledge, as well as his experience in equitable allocation, by considering his reasoned allocation suggestions,” and held that the expert “may distill his various scientific opinions based on his review of the evidence into a complete allocation proposal without usurping the role of the Court.” As to a second expert, the court determined that the expert’s owner class benchmark (20%), which he notes serves only as placeholder, is sufficiently based on the expert’s “experience as a CERCLA allocation expert on applicable CERCLA case law to survive an exclusion request.” The court also held that the expert’s “treatment of post-operational ownership is reliably based on the EPA's Non-Binding Preliminary Allocation of Responsibility Guidance.” Again, the court said that the movant could raise its challenges through cross examination. The court also allowed rebuttal experts to testify, saying that because the other experts “will be permitted to offer their opinions implicating the equitable factors pertinent to the Court's ultimate allocation of liability among the parties, the Court determines it is appropriate for the City's experts to be permitted to offer rebuttal opinions based on their own reliably based conclusions.” The final allocation aspect of this case related to an indemnity that was otherwise time barred. The court held it could still be considered for allocation purposes.

Like the indemnified parties in Cadillac Fairview and Beazer II, the City is not trying to enforce the indemnity provision of Permit No. 530, but is asking the Court to consider as an equitable factor the promises that LAT made to the City that it would be responsible for its own contamination. LAT's argument that the Court must exclude evidence of the time-barred indemnity claim must therefore fail. Equitable consideration of the indemnification provision does not implicate the legal determinations regarding enforceability of the same provisions.

Koczur v. Rock Island Res. Co. addressed allocation in the context of approval of a settlement agreement between plaintiff and three defendants. Three other defendants had yet to appear in the action. The agreement was substantively fair because (1) “Plaintiffs have shown that they diligently searched for potential successor entities or principals of the three non-settling entities, but were unsuccessful”; (2) “Given this diligent search, it appears that the settlements allocate liability among all potentially liable parties”; (3) “Settling Parties explain the settlements together correspond to roughly 25% of the cost of the investigation and remediation work at the site”; and (4) “Settling Parties indicate that they believe that this amount is fair given the uncertainty of the litigation and the fact that ‘there are no available records or witnesses clearly proving their liability.’”

Substantive fairness was also found by the court in Berendo Prop. v. Closed Loop Ref. Based on records of a cathode ray tube (CRT) recycling warehouse facility, the settling party (IMS) was,

[R]esponsible for 71.5 million out of the 195 million tons of CRT waste that reached the warehouse. This amounts to a little under 36.7% of the total CRT waste. The estimated cleanup cost is over $15 million. The $5,000,000.00 that IMS is agreeing to contribute to cleanup costs therefore represents a little over 33.3% of the total cleanup costs. Because the settlement amount is proportional to IMS' alleged share of responsibility and the funds will be put toward cleanup efforts, the settlement agreement is substantively fair and reasonable.

The court approved a consent decree agreed to by defendants in United States v. Atl. Richfield Co. The court had no difficulty finding substantive fairness since the ARCO defendants agreed to implement the remedies set forth in EPA's Record of Decision at their cost. “The Consent Decree puts the full burden of remediation on the party deemed responsible for the contamination.” The ARCO defendants also agreed to pay EPA’s past costs and put-up financial assurance.

E. Defenses

1. Necessary and Consistent with NCP

Lovejoy Amcox Oil and Gas LLC involved five motions in limine by Amcox Oil and Gas LLC (Amcox). The court previously dismissed all of Ms. Lovejoy’s negligence and private nuisance causes of action under which economic damages was recoverable. The only remining claim was for recovery of response costs and declaratory relief under section 107 of CERCLA. The court noted that under this claim, Ms. Lovejoy “may recover only the necessary costs of responding to a legitimate environmental threat.” Amcox’s four motions to exclude evidence regarding economic damages were therefore denied as moot. Its fifth motion to exclude certain opinion testimony by Ms. Lovejoy’s expert remained pending and would be addressed at trial.

2. Statutes of Limitation

ELG Utica Alloys, Inc. v. Niagara Mohawk Power Corp. involved a 2016 contribution claim for response costs incurred following a 2015 Consent Order associated with a metal recycling facility that had operated in Utica, New York from the 1950s until 2012. The court held that the claim was time-barred because physical onsite construction of the remedy was undertaken more than six years before a tolling agreement was executed in 2015. Specifically, the excavation in 2007 of 715 tons of PCB and TCE-contaminated soil and pumping 6,951 gallons of groundwater for offsite disposal represented remedial action because it was consistent with a permanent remedy, was aimed at eliminating the source of the PCB contamination, and was not conducted to address an imminent threat or emergency situation. Plaintiff attempted to take advantage of Second Circuit precedent that created an exception to the common law doctrine that there can be only one remediation at a Superfund site. However, the court concluded that application of the single-remediation principle,

[W]ould not be illogical or unfair because Plaintiff has not pointed to evidence from which a reasonable factfinder could conclude that the contamination being addressed pursuant to the 2015 Consent Order is a new problem that was non-existent, unknown, and/or not reasonably foreseen at the time of the 2007 soil excavation and disposal.

The PCB contamination addressed in 2007 was the same contamination discovered in 1977 and while the 2015 remedial work addressed contaminants other than PCBs, this was not “a new, different, or unforeseen problem.”

[A]pplication of the single-remediation principle in these circumstances is not unfair because nothing precluded Plaintiff from bringing a section 107 cost recovery action against Defendants prior to the expiration of the limitations period. Evidence in the record indicates that Plaintiff was aware well before it initiated the 2007 soil excavation and disposal that certain Defendants might be responsible for a share of response costs incurred in relation to the Site and that litigation might be necessary to recover those costs.”

In United States v. Boeing Company, Boeing moved to dismiss the government’s cost recovery and declaratory relief action arguing that the cause of action accrued, and the government had to file its complaint six years after the remedy was adopted because some of the remedial actions that had already been taken were consistent with the adopted remedy. The court disagreed holding that accrual starts after the remedy is adopted, when on-site construction consistent with the adopted remedy begins. Because the complaint did not indicate on its face when onsite construction consistent with the final remedy began, the court held the government may be able to show the complaint was timely so the statute of limitation defense was not appropriately resolved on a motion to dismiss. Boeing also moved to dismiss arguing that a contractual indemnity and hold harmless clause barred its CERCLA liability. The court, however, denied the motion holding that indemnity or hold harmless agreements do not bar CERLCA liability in an action by the government.

Atl. Richfield Co. v. NL Indus. involved the CERCLA statute of limitations on unusual facts. ARCO began remedial work at the site in issue in March 2011 following receipt of a Unilateral Administrative Order (UAO). ARCO sued NL in cost recovery in January 2020. NL moved for summary judgment in June 2021, arguing that the six-year statute of limitations for remedial actions had run. Before that motion was decided, in December 2021, ARCO entered into an Administrative Settlement Agreement and Order on Consent for Removal Action (AOC). ARCO then amended its complaint, arguing that, as a result of the AOC, it was limited to a contribution action and the three-year limitations period for contribution actions was applicable. NL refiled the motion for summary judgment in August 2022. NL argued that CERCLA section 113(g)(2) (six-year limitation period for a remedial action and a three-year limitations period following completion of a removal action) applies to ARCO's claim for contribution despite ARCO’s contention that its claims were now governed by section 113(g)(3) (three-year limitation period for contribution claims following an administrative settlement). Relying on Tenth Circuit’s decision in Sun Co., Inc. (R&M) v. Browning-Ferris, Inc., the court held that section 113(g)(2) was applicable. In Sun Co., the Tenth Circuit applied section 113(g)(2) to the plaintiffs’ contribution action for response costs that were incurred pursuant to a unilateral administrative order, as was the case here. The court of appeals in Sun Co. determined that the three-year limitations period in section 113(g)(3) was not applicable because costs incurred in response to a UAO is not a triggering event for the running of the limitations period under section 113(g)(3). In effect, the Tenth Circuit held that there were two different limitations periods for a contribution action depending upon the triggering event: (1) Where a civil action under sections 106 or 107 resulted in the costs incurred by a contribution plaintiff, the three-year limitations period set out in section 113(g)(3) will apply, and (2) a party that incurred cleanup costs pursuant to an EPA UAO will have its contribution claim governed by the limitations period in section 113(g)(2), which governs “initial actions” for recovery of such costs. The district court acknowledged that decisions from other circuits applied the three-year limitations period to all contribution actions, irrespective of the triggering event, but held that it was bound by Tenth Circuit precedent. Thus ARCO’s claims were governed by the limitations periods in section 113(g)(2). The court then held that ARCO’s claims were time barred because (1) if ARCO conducted a remedial action, its suit was filed more than six years after initiation of physical construction of the remedy and thus was time-barred under section 113(g)(2)(B); and (2) EPA completed a removal action in 2000 and since, again under Tenth Circuit precedent, there can only be one removal action at a site, suit brought in 2020 was time barred under section 113(g)(2)(A). The only claim that was allowed was one for $400,000 that was paid to EPA under the 2020 AOC. ARCO then moved the court to permit an interlocutory appeal on two questions: (1) whether Sun Co. should be revisited in light of recent Supreme Court CERCLA decisions, and (2) whether “the single-action principle applies to a geographically diverse site involving multiple temporally and substantively discrete response actions.” The court granted the motion. Stay tuned.

F. Recoverable Response Costs (Including Attorney’s Fees)

In Paddock Enterprises LLC v. United States, the U.S. moved to dismiss Plaintiff Paddock Enterprises LLC’s (Paddock) cause of action for incurred response costs under Section 107(a) of CERCLA and for declaratory judgment that the U.S. is liable. Paddock claimed it incurred four different categories of necessary response costs related to the cleanup at the Jaite Mill site. These included costs for its preparation of investigatory plans and securing access to the site, costs related to its investigation activities, costs for when it analyzed and reported on those activities to the U.S., and costs for its pursuit of liable parties, including the U.S., to benefit the overall cleanup effort at the site. The U.S. contends that some of these costs are unrecoverable under the terms of the governing permit granted by the National Park Service in November 2018 and the remaining costs are not adequately pled as necessary costs of response. With respect to the costs for its pursuit of liable parties, the court agreed and granted the U.S. motion to dismiss. The court found that to the extent that these costs were recoverable, Paddock failed to adequately plead any supportive factual allegations for them. The court further found that Paddock’s costs for securing access to the site, investigation activities, and associated analysis and reporting were incurred “pursuant to” the permit, and that these claims were not covered under the reservation of rights provision, thus these cost claims must be dismissed, and the court granted the U.S. motion to dismiss. Although Paddock's first cause of action under Section 107(a) was dismissed, the court found that its unchallenged cause of action for contribution under Section 113(f)(1) was sufficient on its own to maintain a cause of action for declaratory judgment under CERCLA Section 113(g)(2).

G. Miscellaneous

While for decades Superfund lawyers have been taught that there is no right to a jury trial in CERCLA cost recovery actions, the court in Cal. Dep't of Toxic Substances Control v. Jim Dobbas, Inc. refused to strike a jury demand. Why? The prior case law has been “called into question” by the Supreme Court in Great-West Life & Annuity Insurance Co. v. Knudson, where the Court cautioned that “not all relief falling under the rubric of restitution is equity.” The district court also noted the Second Circuit’s holding that in light of the decision in Great-West, “it is by no means clear that the restitution provided by section 9607(a) is equitable, rather than legal, in nature.”

In United States v. Boeing Co., the United States convinced the court to phase proceedings to address liability before considering damages. Doing so, the court held, would use court resources efficiently, was unlikely to prejudice Boeing or create confusion. The decision is perhaps best explained by this observation: “Phasing is especially appropriate here because resolution of a single issue—namely, Boeing’s liability—could dispose of the entire case.”

III. Natural Resource Damages

In Re: Gold King Mine Release in San Juan County, Colorado, on August 5, 2015, involved state law tort claims and claims under CERCLA by several states and the Navajo Nation for natural resources damages against EPA and its contractors. While EPA’s contractor, Weston Solutions Inc., was conducting remediation work, a spill from a gold mine occurred releasing acid mine drainage and heavy metals into a river and onto tribal lands. Two CERCLA-related issues were presented in Weston’s Motion for Summary Judgment: (1) whether the CERCLA “limitation on the use of natural resources damages applies to the Navajo Nation;” and (2) whether the Navajo Nation’s state law tort claims “for restorative damages are preempted by CERCLA’s natural resources damages scheme.” The court stated that the limitation on use does apply to the Navajo Nation finding that “CERCLA Section 107(f), as amended by SARA Section 207(c), authorizes Indian Tribes to recover natural resource damages and limits the use of those recovered sums to restore, rehabilitate, or acquire the equivalent of the damaged natural resources.” Regarding preemption, the court found that CERCLA, although a comprehensive mechanism to clean up hazardous waste sites, “does not completely preempt all remedies available under state law.” Further, Weston had not shown that the state law tort claims for restorative damages are the same natural resources damages preempted by CERCLA. The court noted that the Navajo Nation had not filed a claim for natural resources damages at that time, the evidence showed that “the restorative programs seek to restore confidence in the resources and that the Navajo Nation does not seek to restore, replace, or acquire the equivalent of the damaged resource,” and that “[t]he restorative damages claims, while arising from the contamination from the Spill, seek to remedy injuries that are distinct from the injury to the River.”

In Pakootas v. Teck Cominco Metals Ltd., the U.S. District Court for the Eastern District of Washington denied Teck Cominco Metals Ltd.’s (Teck Cominco) Motion for Summary Judgment on Ripeness. The Plaintiffs, Confederate Tribes of the Colville Reservation (the Colville Tribes), and the State of Washington as Plaintiff-Intervenor brought claims under the CERCLA for natural resource damages at the Upper Columbia Rivers Site. In its Motion for Summary Judgment, Teck Cominco argued that Plaintiffs’ claims were unripe because they had “failed to meet two pre-suit conditions of CERCLA” section 113(g) (1): that (1) Plaintiffs provide a 60-day notice of intent to sue; or that (2) the remedial action be selected. The court found that both Teck Cominco and EPA “had actual notice of Plaintiffs’ intent to sue for natural resource damages.” Plaintiff sent a letter to Teck Cominco regarding their natural resource damages claim and requesting that Teck Cominco agree to waive any defense to natural resource damages liability and execute an agreement ”to toll the statute of limitations for filing suit.” Teck Cominco replied to Plaintiffs a month later offering to toll the statute of limitations. A final tolling agreement was never executed, but the court found that Teck Cominco’s reply unequivocally acknowledged Plaintiffs’ intent to sue and found this to be adequate notice of Plaintiffs’ intent to sue for natural resource damages. The court did not reach a conclusion as to the second pre-suit condition since the conditions were disjunctive.

This chapter reviews significant 2023 CERCLA decisions and developments. The views expressed are the authors own and not necessarily those of their firms or clients.