Congress did not amend the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) in 2024.
The Environmental Protection Agency (EPA) added seven sites to the National Priorities List (NPL), while deleting two sites and partially deleting six sites EPA also proposed adding seven sites to the NPL.
On May 8, 2024, EPA published its Final Rule designating perfluorooctanoic acid (PFOA) and perfluorooctanesulfonic acid (PFOS), including their salts and structural isomers, as hazardous substances under CERCLA, effective July 8, 2024. On June 10, 2024, the Chamber of Commerce of the United States of America, Associated General Contractors of America, Inc. and National Waste & Recycling Association filed a Petition for Review in the Court of Appeals for the District of Columbia challenging the final rule. EPA also issued a PFAS Enforcement Discretion and Settlement Policy Under CERCLA, clarifying that it will exercise enforcement discretion and focus on entities that significantly contributed to the release of PFAS into the environment, such as entities that manufacture PFAS or use PFAS in the manufacturing process, other industrial parties, and federal facilities, when deciding whether to pursue a party for response actions or costs under CERCLA to address PFAS.
In Attorney General v. The Dow Chemical Company, the court granted plaintiffs’ motion for remand. The court determined that federal question removal jurisdiction did not apply to claims based on New Jersey’s Spill Act despite the Act’s reference and reliance on NCP standards because (1) the state claim did not require preliminary adjudication of any federal law claim and the federal issues raised by reference to the NCP were not central or substantial, and (2) natural resource damages resulting from the use and disposal of 1,4-dioxane stabilized products did not implicate a co-trusteeship of natural resources between federal and state NRD trustees requiring removal of the state environmental action to federal court.
In Premcor Refining Group, Inc. v. Apex Oil Company, Inc., after an initial phase of discovery on whether owner-operators of pipelines that transported petroleum products through a refinery qualified as “covered persons,” plaintiff moved for summary judgment. Defendants responded by invoking the petroleum exclusion and sought discovery on whether the substances that allegedly leaked from the pipelines were hazardous. The court denied without prejudice plaintiff’s motion and amended the scheduling order allowing the second phase of discovery regarding the amount of response costs to include issues related to the petroleum exclusion.
In Barclay Lofts LLC v. PPG Industries, Inc., PPG argued that Barclay had “adduced no evidence that PPG caused the release of hazardous substances driving its remediation costs.” But CERCLA is a strict liability statute, the court explained, and the soils, “soil vapor,” and groundwater at the properties that PPG formerly owned and operated were contaminated. That was enough for the court to conclude that a release occurred.
In Lanfri v. Goodwill of Silicon Valley, the court held that plaintiff’s allegation that hazardous substances used in drycleaning “migrated through the subsurface, including along sanitary sewer lines and through groundwater and soil vapor” to plaintiff’s property plausibly pled a release or threatened release. Whether the chemicals actually came from defendant’s property given that plaintiff was also a dry cleaner was held to be an evidentiary issue.
In Pacific Resources Associates LLC v. Suzy Cleaners, the court denied third-party defendant’s motion to dismiss a CERCLA contribution claim related to releases at a dry cleaner facility. The district court found that based on the allegations in the complaint, the plaintiff plausibly alleged that Ms. Hong had owned and operated the drycleaning business in question since 2001. Hong also argued she was not a past owner or operator at the time of disposal. The court did not reach this issue, but, in a footnote, said it was not persuaded that perchloroethylene (PCE) vapor leaks were not “disposals” under CERCLA.
In Racer Properties LLC v. National Grid USA, the district court denied several defendants’ motions to dismiss claims by an administrative trustee of an environmental-response trust (Racer) for cost recovery or contribution under CERCLA and various New York state laws for cleanup of environmental contamination along Ley Creek in the Onondaga Lake region of Syracuse, New York. Without analysis as to each defendant’s motion, the district court simply held Racer’s complaint had plausibly alleged causes of action that would give rise to relief under the governing law.
In U.S. v. City of San Diego, the court dismissed the defendant, City of San Diego’s (the City) counterclaim of cost recovery under CERCLA. The City failed to plausibly establish it had incurred response costs related to an actual containment or cleanup that was necessary and consistent with the National Contingency Plan (NCP). The court did allow the City leave to amend.
In Eagle Star Rock Products LLC v. PCC Structurals, Inc., PCC argued that the court should not grant Eagle Star leave to amend its complaint to add a CERCLA claim because the argument would be futile, Eagle Star unduly delayed in asserting the claim, and the addition would be prejudicial to PCC. The court rejected PCC’s arguments. Eagle Star pleaded sufficient facts to establish that it had incurred eligible response costs for which PCC may be liable. In doing so, the court held that to establish arranger liability, Eagle Star need not show that PCC knew the material it disposed of was hazardous. The case was still in the early stages, so that the court could not agree that plaintiff’s delay was undue or that PCC would be unduly prejudiced since discovery had not begun and the factual allegations were largely the same as an existing claim under the Resource Conservation and Recovery Act.
Where the plaintiff alleged that (1) that hazardous substances attributable to plaintiff’s predecessor for whom plaintiff held historic operational liabilities “were disposed of, discharged and released” on a portion of the site and in the groundwater under the site; (2) water from plaintiff’s settling ponds ran to the site contaminating surface and groundwater; and (3) groundwater sampling “identified cyanide and other hazardous substances” attributed to plaintiff, the court in Stepan Company v. Pfizer held that sufficient facts were pled linking plaintiff to the groundwater contamination to trigger CERCLA liability.
In Barclay Lofts LLC v. PPG Industries, Inc., PPG argued that it was not liable because there was no proof that there was a “disposal” during its former ownership and operation of a facility. It acknowledged that hazardous substances were generated within a building but argued that unless there was disposal outside of buildings, there was no liability. Citing the CERCLA definition of “disposal” that relies on the RCRA definition of “disposal” at 42 U.S.C. § 6903, the court rejected the argument. “The plain language of the statute . . . states that the disposal must be such that hazardous waste may enter the environment, not that it did enter the environment.”
In City of Aurora v. Get Green Recycling, Inc., the court held that the third element of owner-operator liability – that there has been a release or threatened release of a hazardous substance – does not require pleading off-site migration or migration of hazardous substances toward a claimant’s site. Further, while pleading that response costs were incurred does not require a showing of causation, standing in federal court requires that the response costs “be fairly traceable to the challenged action of the defendant.” Accordingly, Get Green Recycling’s counterclaim that the City released hazardous substances into the environment by depositing and exposing to wind and rain “excavated soil and construction debris” at City-owned properties adjacent to defendant’s scrap metal recycling operation was sufficient to allege the release or threatened release of hazardous substances such that some portion of Get Green Recycling’s response costs would be fairly traceable to the City’s release. Thus, the City’s motion to dismiss was denied.
In 2023, a Norfolk Southern freight train was traveling through East Palestine, Ohio when an overheated bearing failed on a railcar causing the derailment of thirty-eight railcars, resulting in fires and the venting of vinyl chloride carried by five of the derailed railcars. EPA issued a unilateral administrative order to Norfolk Southern to conduct a response action and the government and Ohio subsequently sued Norfolk Southern for response costs. Norfolk Southern filed a third-party complaint against the railcar owners and shippers alleging that they were liable as owners and operators of a facility where hazardous substances were disposed of. The court in State of Ohio v. Norfolk Southern Railway Company, however, dismissed the contribution claim based on the definition of owner or operator which, regarding the transportation of hazardous substances, defines owner or operator as the common carrier during transport and absolves the shipper of liability unless the release was caused by circumstances or conditions within the shipper’s control, which was not the case here.
In 68th Street Site Work Group v. Alban Tractor Company, Inc., the Fourth Circuit held that arranger liability does not require knowledge by the arranger that the disposed of waste is hazardous. CERCLA’s text does not explicitly impose a knowledge requirement and requiring knowledge of hazardousness would conflict with CERCLA’s broad remedial goals. Thus, a defendant is liable as an arranger when it intentionally arranges for disposal of a substance and the substance is hazardous.
In City of Aurora v. Get Green Recycling, Inc., where the site in question was a scrap metal recycling facility rather than a dump or landfill, Get Green Recycling’s counterclaim alleging the City of Aurora arranged for the “disposal” of waste with defendant was, without more, a legal conclusion insufficient to allege intent to dispose under arranger liability since the City’s intent to recycle was an equally plausible explanation.
In Successor Agency to the Former Emeryville Redevelopment Agency v. Swagelok Co., the district court made findings after a trial that even if defendant Hanson Industries was an asset purchaser, the agreement in issue demonstrated that there was not an express assumption of the seller’s CERCLA liability and there was no evidence of implied assumption. Hence, Hanson Industries did not have successor liability.
In United States v. ISP Environmental Services Inc., the court denied defendant’s motion to dismiss the United States’ cost recovery action. It held that the United States had sufficiently pled CERCLA successor liability (1) by alleging the express assumption of liabilities through entry into an “Assumption of Liabilities and Continuing Obligations” agreement that also included a Plan of Complete Liquidation under which defendant assumed liabilities related to the site and became successor in interest, and (2) by alleging defendant previously represented itself as the successor when making a good faith offer to EPA, entering an Administrative Order on Consent (AOC) with EPA and then performing the RI/FS at the site. The court subsequently denied defendant’s motion to reconsider the court’s opinion. The court held that it had not “misinterpreted and erroneously relied upon” U.S. v. General Battery by applying the assumption of liability exception to corporate successor “liability even in the absence of a transaction to purchase.” The court also held that § 107(e) of CERCLA does not void any alleged transfer of CERCLA liability between contracting parties, but rather prohibits liable parties from divesting CERCLA liability.
In City of Las Cruces v. Alameda, LLC, the district court granted defendant American Linen Supply of New Mexico Inc.’s motion for summary judgment on a Section 107(a) cost recovery claim because CERCLA plaintiffs had settled their CERCLA liability with the government and were thus limited to bringing only a contribution claim, and because both parties had previously agreed that plaintiffs’ CERCLA Section 107(a) claim could not go forward.
In Barclay Lofts LLC v. PPG Industries, Inc., the district court rejected an expedited motion to approve a pro rata settlement—with a contribution bar—in a contribution action. The moving parties were plaintiff, a defendant (Hydrite), and a third-party defendant (Barclay). A separate defendant, PPG, opposed the motion and had filed a crossclaim against Hydrite. Because the trial was imminent and because the settlement called for a contribution bar, the court explained that it did not have time to consider PPG’s opposition and to evaluate the fairness of the settlement. Hence, the motion was denied.
After a trial, the court approved Hydrite’s settlement with Barclay and issued a contribution bar. In Barclay Lofts LLC v. PPG Industries, Inc., the court found Hydrite 20% responsible for future costs. But in the settlement, Hydrite agreed to pay Barclay $550,000 in past costs and up to $3 million for future costs. At trial, the future remediation costs were estimated to be between $8.36 and $18.89 million. Twenty percent of about $18 million, or $3.6 million, at the high end of this range, the court concluded, compared to the $3 million being paid, meant that the settlement was adequate and fair.
In City of Torrance v. Hi-Shear Corp., the court entered a consent decree that settled Hi-Shear’s third-party contribution claim against the United States for $250,000. There apparently was not a challenge to the entry of the decree. The decree is a useful reference document on terms of a CERCLA contribution settlement with the United States.
A carve out recognizing a potential contractual indemnity claim was approved in Hicksville Water Dist. v. Alsy Manufacturing, Inc. Competing orders documenting the settlement of CERCLA claims were submitted to the court for approval—one with a carve out and one without. The magistrate judge recommended approval of the former.
In Emhart Industries, Inc. v. New England Container Company, Inc., plaintiffs sought approval of a settlement with Eli Lilly & Co. (Lilly) under the Uniform Comparative Fault Act. A group of defendants opposed the settlement because the terms were not disclosed. Under UCFA, Emhart bears the risk of “an under-valued settlement.” Because plaintiffs absorbed Lilly’s share (as opposed to a dollar-for-dollar reduction), the court held there was no need to disclose the terms.
In approving a multi-party $150 million settlement in United States v. Alden Leeds, Inc., the court held that how much each settling party was paying the United States did not have to be disclosed. Citing the government’s memorandum in the matter, the court said it was not unusual for a consent decree to reflect only the aggregate amount being paid by a class of settling parties.
Lusher Site Remediation Group v. Sturgis Iron & Metal of Indiana is an unusual case. Plaintiff reached a settlement with non-party insurers to Sturgis. The insurers disputed coverage but paid $500,000 to resolve the matter. Plaintiff then moved for an order barring contribution claim against the non-party insurers. Unsurprisingly, the court held it lacked jurisdiction and thus denied the motion.
In Starlink Logistics Inc. v. ACC, LLC, the court denied a motion for reconsideration and affirmed its ruling that plaintiff’s “Voluntary Oversight and Assistance Program” (VOAP) settlement with the Tennessee Department of Environment and Conservation (TDEC) was an administrative settlement under Section 113(g)(3) limiting plaintiff to a contribution action. In so holding, the court rejected plaintiff’s arguments that the VOAP agreement was not a settlement of its liability because it had no liability. Plaintiff had argued that it was an innocent property owner for pollution caused by third parties, invoking 42 U.S.C. § 9607(b)(3). The court explained that Section 9607(b)(3) is a defense to liability not an exemption from liability. The court added that the VOAP agreement expressly used the term “administrative settlement” and stated that it constituted an approved administrative settlement pursuant to 42 U.S.C. § 9613(f) and resolved plaintiff’s liability, if any, to the state under CERCLA. Further, the court rejected plaintiff’s argument that it was entitled to bring a cost recovery claim because it was only seeking voluntary remediation costs, not costs incurred under the VOAP agreement. The court held that there was no binding authority on the issue of whether a plaintiff incurring both voluntary remediation costs and costs under an administrative settlement could bring a cost recovery action for the voluntary costs even though it was required to bring a contribution action for the costs under an administrative settlement.
In Barclay Lofts LLC v. PPG Industries, Inc., the court allocated past and future response costs related to two parcels of contaminated property (East Oregon Parcel and South Barclay Parcel) owned by Barclay. PPG was a former owner and operator of both parcels for industrial purposes from about 1900 until 1975. In 1975, PPG sold the East Oregon Parcel to Valley Industrial Park, which, six weeks later, sold the parcel to Hydrite. Wayne Chemical (WCC) acquired the South Barclay Parcel in 1975 and continued PPG’s “dry color operation business” from 1975 to 1984. Wayne Pigment acquired the South Barclay Parcel in 1984 and the East Oregon Parcel in 1985. Lumimove, another defendant, leased and operated both parcels from 2012 to2015. An affiliate of third-party defendant, Sherman Associates, paid $500,000 for the properties in 2017 and sold them to Barclay, a related entity, in the same year at a reduced purchase price due to the discovery of contamination (including VOCs, PAHs, and hexavalent chromium, arsenic, and lead) during pre-closing environmental assessments by Sherman. Barclay brought a cost recovery action against PPG, Hydrite, Lumimove, and WCC. PPG counterclaimed against Barclay for contribution and brought a third-party claim against Sherman. After determining that PPG was a liable party, and there was no basis for apportionment, the court then addressed PPG’s contribution claims against Barclay, Sherman, Hydrite, and Lumimove, using equitable factors to allocate past and future response costs.
The court first decided to treat Barclay and Sherman as one party for purposes of allocation given that Barclay was a limited liability company of which Sherman was a member. The court then addressed the allocation of Barclay’s allowable past cost claim of $1,167,755.35. Because Hydrite had paid Barclay $550,000 for past costs in a settlement, the court subtracted this amount. After subtracting Hydrite’s $500,000 settlement paid to Barclay for past costs, the court then viewed the $1.5 million reduction in the purchase price as a result of the contamination as adequate compensation of Barclay’s past costs and allocated the remainder of Barclay’s past costs to Barclay. The court explained that to do otherwise would give Barclay a double recovery, noting that the evidence established that Sherman was aware of the risks associated with the properties as George Sherman “had experience converting historic properties with environmental issues” and Sherman was aware of the scope of the contamination at the time of purchase.
After cautioning that future costs had to be “necessary” costs of response, the court allocated future costs. PPG received a 50% share because: (1) it owned and operated the properties for seventy years mostly during a period devoid of environmental regulation; (2) contaminants associated with its operations were present in soil, soil vapor, and groundwater and observations of the facility at the time of sale in 1975 supported a conclusion that there were releases at the facility; (3) iso-concentration maps of chemicals corresponded to the location of tanks containing those chemicals on Sanborn maps; (4) PPG stipulated that arsenic tanks were removed in 1964 following observations of corrosion; and (5) Trichloroethylene (TCE) was detected in soil and soil vapor and while PPG had no information that TCE was used, cleaning solutions were used at the facility historically and expert testimony supported the conclusion that TCE was a common degreaser. In addition, PPG was also a producer of TCE, supporting its likely use. The court also penalized PPG for its “failure to take responsibility for the environmental harm it caused.” The court regarded it as significant that all defendants except for PPG had settled with Barclay, and there was no dispute that groundwater, soil, and soil vapor “are contaminated with hazardous substances that PPG admits it used.” The court also noted that PPG’s Form 10-K filed with the Securities and Exchange Commission for fiscal year 2022 provided that PPG had reserved $217 million for environmental remediation costs. That prompted the court to say: “Given PPG admits it polluted the Properties and the fact the company has funds specifically earmarked for addressing such remediation, it is entirely unclear why PPG was not more willing to settle and expedite the Properties' cleanup.” The court allocated 20% of future costs to Hydrite because (1) Hydrite’s tenure on the properties was limited in duration and in type of contamination caused; (2) Hydrite was a source of TCE but not all of the TCE; and (3) Hydrite never owned or operated the South Barclay parcel. Wayne Chemical was allocated zero percent of future costs because of the “lack of evidence that Wayne Chemical contributed to the contamination of the South Barclay parcel during its brief ownership and given the evidence Wayne Chemical improved the conditions on the property to reduce the possibility of contamination. . .” Wayne Pigment owned and operated both Properties from 1985 until 2017. Witnesses for Wayne Pigment (Denesha and Checker) testified there were no major spills during operations, and there was no awareness of contamination until testing was conducted in connection with an assessment required by a lender. However, “the trial evidence shows that in the early 1990s, Wayne Pigment was cited for various violations by the WDNR. . .” After reciting the violations (none of which represented a major spill), the court decided to allocate twenty percent liability for future response costs to Wayne Pigment. The court credited WDNR inspection findings over witness recollections finding that the reports showed poor hazardous waste storage habits and soil contamination over the thirty-two years Wayne Pigment owned and operated the Properties. Further, Wayne Pigments did not dispute its use of contaminants of concern. However, Wayne Pigment was an orphan share. As a matter of equity, the court said, because Barclay settled with Wayne Pigment's insurer and agreed to release its claims against Wayne Pigment, the court reallocated Wayne Pigment’s 20% share to Barclay. Lumimove was assigned zero percent of future costs because it leased the property for three years and there was a “lack of evidence that [it] contributed to any of the pollution.” Barclay was allocated 10%. It did not use contaminants in its business operations so there was no evidence that it caused pollution on the properties. But it was “aware of the extent of the contamination” because it had conducted extensive testing prior to Barclay's purchase of the properties and negotiated a $1.5 million reduction in the purchase price, purchased the properties “with its eyes open to the extent of environmental contamination” and allowed the properties “to remain in their polluted state without a remediation plan in place.”
In Courtland Company v. Union Carbide Corp., the court rejected an argument that plaintiff should bear 95% of the costs it incurred at a dump site. The court had already determined the work was NCP-compliant so the work was not “subpar.” However, the court held that the Gore factors “generally counsel” for an even split of plaintiff’s costs with a “tilt” in favor of plaintiff (without explaining the basis for the “tilt”). The court also found that some costs were incurred in an area where defendant UCC alone had formerly operated. As a result, the court allocated 75% of the costs to UCC. The court also denied UCC’s contribution claim against Courtland holding that UCC could only recover costs for which it had been found disproportionately liable under Section 107(a). Finally, the court held that if future response costs were incurred, they would be subject to equitable allocation between the parties, without determining that allocation.
In Georgia Pacific Consumer Products. LP v. NCR Corp., the court abrogated an earlier allocation (among Georgia Pacific, International Paper, NCR Corp., and Weyerhaeuser) of response costs incurred by Georgia Pacific following an appellate order reversing the district court’s decision to reject International Paper’s statute of limitations argument. The court explained that its prior allocation was “inextricably intertwined” with the way the court handled the limitations issue. Because NCR had paid the contribution judgment already, it was not included in the court’s final order. The court then entered a final judgment (1) applying the mandate from the court of appeals and dismissing Georgia Pacific’s claim for past costs incurred before August 31, 2014, (2) determining that Georgia Pacific, International Paper, and Weyerhaeuser are liable parties under CERCLA, and (3) declaring that all three parties are liable for future response costs incurred by any party at the Kalamazoo River Site under Section 107 of CERCLA. In effect, a new allocation trial would have to be held to allocate any such future costs if the parties do not resolve the allocation privately.
United States v. Alden Leeds, Inc. considered allocation in the context of a $150 million settlement at the Lower Passaic River Study Area (LPRSA) of the Passaic River Superfund Site in New Jersey. The monies were to be paid by a number of parties who participated in an allocation process conducted by a consultant (AlterEcho) to EPA. Occidental Chemical (OxyChem) objected to the settlement. AlterEcho’s allocation had five tiers. In Tier 1, it assigned OxyChem a 99.9396% share. In Tier 2, it had two parties (Nokia and Pharmacia). They were assigned 0.0438%. Parties in Tiers 3-5 were assigned 0.0166%. After receiving OxyChem’s objections, EPA made an initial adjustment to the allocation that reduced OxyChem’s share to 92.394% and increased the Tier 2 share to 5.112% and the share of the parties in Tiers 3-5 to 1.9494%. EPA then made further adjustments to the allocation that reduced OxyChem’s share to 87.07% and increased the Tier 2 parties’ share to 11.01%. The share for parties in Tiers 3-5 increased to 3.88%. With each adjustment, the settlement amount of $150 million did not change. The court made no mention of this fact. It did note that EPA removed certain parties from the Consent Decree. However, again, the shares assigned to Tiers 2 or 3-5 did not change and neither did the settlement amount. Citing to Government declarations, the court said that $150 million represents about 8% of the estimated past and future costs of OU2 and OU4. The court also explained that, in response to OxyChem’s comments, EPA added a cost-reopener provision that “that permits the United States to pursue additional enforcement action against Settling Defendants if costs for OU2 and OU4 remedial action exceed a predetermined amount.” OxyChem elected not to participate in the allocation process and was penalized by the court as a result. Rather than evaluating the allocation for substantive fairness, the court considered and rejected OxyChem’s arguments about the allocation. It highlighted five of them:
(1) the allocation underestimated several PRPs' contributions to the contamination of the LPRSA; (2) AlterEcho's choice to allocate responsibility based, in part, on each COC's risk to human health and the environment is irrational; (3) AlterEcho's relative risk calculations "ignore the sizable, independent risk posed by dioxin-like PCBs"; (4) the allocation suffered from various "mathematical and scientific errors," including a unit conversion mistake that impacted the quantity of dioxin attributable to OxyChem and the utilization of an "attenuation factor" that impermissibly decreased other PRPs' liability; and (5) AlterEcho "drew inconsistent inferences" from the data to the detriment of OxyChem.
Without describing the Government’s responses, the court held that the “Government has adequately and coherently addressed these arguments in its Responsiveness Summary, briefing, and declarations.” The court added that it was “‘poorly suited to evaluate the merits of conflicting [scientific] positions’” and instead, deferred “‘to the Governments' expertise in weighing ambiguous and conflicting evidence of substantive fairness.’" The court added that even if “the Government's adjustments . . . did not remedy all of the allocation's alleged flaws,” all that the Government needed to show was a “rational (if necessarily imprecise)” estimate “of how much harm each PRP has done," noting further that “‘[w]hatever formula or scheme EPA advances for measuring comparative fault and allocating liability should be upheld so long as the agency supplies a plausible explanation for it, welding some reasonable linkage between the factors it includes in its formula or scheme and the proportionate shares of the settling PRPs.’" Without saying what they were, the court held that the Government provided plausible explanations “for the strategic and highly complex choices AlterEcho made during the allocation.” OxyChem’s comments represented 777 pages of comments and 24,000 pages of supporting exhibits. Hence, the Third Circuit will have the last word on OxyChem’s objections. As for Nokia and Pharmacia, the court said that the allocation results were not binding on EPA or the “Allocation Parties” (which included Nokia and Pharmacia) and, in any event, the court said it would not withhold approval of a settlement because the Government decided to exclude a party from the settlement.
In City of Torrance v. Hi-Shear Corporation, the court approved a $2.5 million settlement between plaintiff and a defendant (Esterline) that was opposed primarily by one defendant (Middletown). Esterline was a parent company to the “Esterline Subsidiary,” a dissolved corporation that was an operator under CERCLA. Esterline agreed to the settlement despite its position that, as a parent corporation, it was not liable for the acts of a dissolved subsidiary and had not expressly or impliedly assumed Esterline Subsidiary’s CERCLA liability. The court applied the traditional CERCLA standard (procedural and substantive fairness, reasonable, and consistent with CERCLA’s objectives) as well as California’s similar standard for a good faith settlement articulated in Tech-Bilt, Inc. v. Woodward-Clyde & Assoc., 38 Cal. 3d, 488 (1985):
(1) [A]n approximation of plaintiff['s] total recovery and the settler's proportionate liability; (2) the amount paid in settlement; (3) a recognition that a settler should pay less in settlement than [they] would if [they] were found liable after trial; (4) the allocation of settlement proceeds; (5) the financial conditions and insurance policy limits of settling defendants; and (6) evidence of collusion, fraud or tortious conduct aimed to injure the interests of non[-]settling defendants.
As to CERCLA, the court did not discuss substantive fairness in allocation terms, but instead treated procedural and substantive fairness together and then relied on a declaration of Esterline’s counsel that stated that settlement was
[N]egotiated by counsel with extensive experience in CERCLA and HSAA {California’s equivalent to CERCLA] litigation; (2) reached through arms-length negotiation with the assistance of a mediator who has worked with the parties to this suit for several years; and (3) completed following investigation and written discovery wherein Esterline produced over 6,000 pages of documents.
The court also noted that Esterline had no insurance coverage and settlement would avoid “the costs imposed by additional expert discovery, the impending trial, and attorney's fees.” With respect to the Tech-Bilt factor of proportionality, the court explained that the estimated remediation costs were $28,960,800 based on expert testimony that was not rebutted by Middletown. Esterline’s payment of $2.5 million represented 8.6% of these estimated costs. The court relied on an affidavit from an expert who stated that Esterline Subsidiary did not contribute to the contamination at one parcel and did not materially contribute to the contamination at a second parcel given the chemicals handled by Esterline Subsidiary, the size and location of its operations, and the results of environmental investigations. Middletown showed that Esterline Subsidiary was liable for “some” amount of contamination but provided no alternative approximation of its responsibility or evidence that 8.6% was an unreasonable approximation. Hence, the court approved the settlement. It also approved a contribution bar, holding that the settlement was made in good faith and the settlement would be approved under the Uniform Comparative Fault Act which only reduces plaintiff’s claim by Esterline’s proportionate share as determined at a trial, as opposed to the dollars paid in settlement. Thus, Middletown would still be able to show that Esterline’s liability was greater than 8.6% and was not prejudiced by the bar order. Hi-Shear had a Section 107 cost recovery claim against Esterline and argued that this claim was independent of a contribution claim and should not be included within the scope of the order barring contribution claims. The court disagreed “[b]ecause Hi-Shear's Section 107 and Section 113 claims implicate the same damages and damage calculations, i.e., the appropriate apportionment of fault amongst the PRPs, the court concludes that Hi-Shear's cost-recovery claim against Esterline is not an independent claim but rather a ‘disguised’ claim for contribution.” Middletown also was unsuccessful in challenging the scope of the bar order based on an alleged express contractual indemnity claim in its favor because it was unable to show that the various contracts it cited contained such an indemnity.
In Premor Refining Group Inc. v. Apex Oil Co., the court approved a CERCLA settlement agreement between Plaintiff and a defendant (Koch). A State environmental agency had evaluated Koch’s relationship to the site in issue. It was also a party to the agreement and, the court explained, found it “fair and reasonable.” The court held: “Given the limited time and portion of the Refinery property occupied and operated by Koch and deferring to the State’s expertise regarding their contribution to the contamination, the Court finds that the agreement's terms align with rational estimates of liability attributable to Koch and is substantively fair.”
In Courtland Company v. Union Carbide Corp., Union Carbide Corp. (UCC) filed a contribution counterclaim under CERCLA seeking to reallocate $27,142.50 incurred by plaintiff and to recover $199,942.52 that UCC incurred. UCC argued that Courtland’s costs were not “necessary” because its consultant charged a higher hourly rate than was necessary for the type of work being performed. However, UCC’s own consultant’s costs when viewed as a whole, or based on “block billing,” were roughly comparable to what Courtland was charged. Hence, the court rejected an argument that Courtland’s costs were “excessive.”
Interpreting under New York law a 2011 Settlement Agreement that arose out of the General Motors bankruptcy and embodied the settlement of GM’s environmental liabilities nationwide, the Second Circuit, in Revitalizing Auto Communities Environmental Response Trust [RACER] v. National Grid USA, reversed the district court’s decision that a CERCLA contribution claim was entirely time barred. The court of appeals held that the 2011 agreement only resolved RACER’s liability as to contamination from was called the “GM-IFG Syracuse Property” that migrated to what was referred to as OU-2 or the “Expanded Territory.” Costs associated with that contamination were time-barred. However, whether and to what extent hazardous substances migrated from the GM-IFG Plant to OU-2 and the Expanded Territory was a question of fact not subject to resolution on a motion to dismiss. Hence, the matter was remanded for what the court recognized was going to be a “fact-intensive, time-intensive” exercise to evaluate what contaminants had migrated from the GM-IFG Syracuse property and ended up in OU-2 or the Expanded Territory.
In Gallagher & Kennedy, P.A. v. City of Phoenix, a law firm unsuccessfully sought to recover costs incurred by contractors and subcontractors that conducted response actions and that were paid out of “Project Funds” that did not come from the law firm.
All payments to the subcontractors for work performed was contingent on the existence of sufficient Project Funds to pay the invoices. G&K does not dispute that it did not contribute firm money to the Project Funds. To the extent that G&K now seeks to be reimbursed for payments from the Project Funds already made to the subcontractors, those are not costs that G&K incurred but, rather, are costs G&K reimbursed to others who undertook and incurred costs for the cleanup activity.
The court of appeals remanded the matter on the law firm’s claim that it had incurred “non-litigation related costs in the form of its own time and effort” that it claimed were reimbursable consistent with Key Tronic Corporation v. United States. In that case, the Supreme Court held that an entity that conducts non-litigation activity that is "closely tied to the actual cleanup," can be entitled to reimbursement for that entity's "commitment of resources" to the cleanup effort. Whether the law firm paid such costs will be determined on remand.
In Casa Nido Partnership v. Kwon, the district court granted defendants’ summary judgment motion because Casa Nida failed to satisfy NCP requirements for a removal action. The court found no evidence that: (1) the California Department of Toxic Substances Control (DTSC) reviewed the site assessment report or an equivalent removal site evaluation prior to Casa Nido initiating its removal actions; (2) DTSC determined there was “a threat to public health or welfare” before Casa Nido began its removal actions; (3) Casa Nido conducted an engineering evaluation/cost analysis (EE/CA) of removal alternatives; and (4) Casa Nida complied with the public participation requirements.
In Santa Clarita Valley Water Agency v. Whittaker Corporation, the Ninth Circuit held that “substantial and extensive” government involvement in the “limited circumstances” present satisfied the public participation requirements of the NCP. Specifically, the court held that in a private cost recovery action, the Santa Clarita Valley Water Agency’s (SCVWA) costs to blend water with treated water to meet contaminant criteria levels satisfied public participation requirements for removal actions and were consistent with the NCP where: 1) the water treatment was part of a remedial action plan required by the DTSC and chosen after analysis of other alternatives; and 2) blending the treated water with contaminant free water was performed to settle an enforcement action by the RWQCB for a NPDES discharge permit violation where the RWQCB was required to publish the settlement to the public, allow thirty days for public comment, and respond to significant comments. The district court had allocated 90% of allowable costs to Whittaker and the court of appeals applied that percentage to the blended water costs. Conversely, the court reached a different result on SCVWA’s replacement water costs holding that SCVWA did not comply with the NCP’s public participation requirements for those costs. Because the water replacement action was a time critical removal action extending beyond 120 days, 40 C.F.R. §300.415(n)(3) required interviews of local interested parties, preparation of a community action plan and establishment of a local information repository in addition to providing a public comment period. The SCVWA did not satisfy these requirements instead relying on agency involvement in the cleanup as a whole to argue that government involvement in the decision to purchase replacement water satisfied the NCP. However, unlike the blended water removal action, the replacement water costs were not incurred to comply with a permit, did not “share a nexus with DTSC’s goal of removing the migrating perchlorate plume” and the agencies did not require a public comment period on the decision.
In Short Creek Development, LLC v. MFA, Inc., the court surveyed the limitations case law because the Eighth Circuit had not yet weighed in on the interpretation of CERCLA’s limitations period for a remedial action. Plaintiff argued that the construction of a cap over a gypsum stack was the triggering event for the statute of limitations. The court rejected that theory because there was uncertainty whether or when the cap would be constructed. Instead, the court held that physical onsite construction of a leachate collection system was the triggering event because that system was consistent with a permanent remedy for the site. Since construction of this system began in 2012, suit brought more than six years later (in 2022) was untimely.
In Sunset Commercial LLC v. Montrose Chemical Corporation of California, the district court denied defendant’s motion to dismiss CERCLA claims as time barred. The court agreed with Sunset that the statute of limitations did not begin to run until after submission of its 2018 corrective action plan with the Nevada Department of Environmental Protection. The court also determined that the statute of limitations did not begin to run when construction started on a previous cleanup that did not include the present site.
In California Department of Toxic Substances Control v. Jim Dobbas, the district court denied insurance company intervenors’ motion for summary judgment based on the argument that the DTSC did not designate an expert to provide testimony to support those its CERCLA and state law claims. The district court held that neither CERCLA nor its applicable case law required that a plaintiff produce expert testimony to prove any of the elements of a claim.
In Santa Clarita Valley Water Agency v. Whittaker Corporation, the Ninth Circuit held that CERCLA’s bar on double recovery, 42 U.S.C. § 9614(b), does not prevent a finding of liability for response costs under CERCLA where a jury returned a verdict for damages under state law, as long as the relief does not result in the plaintiff receiving double compensation. The court noted that a finding of liability under CERCLA differs from a damages award given that a finding of liability for past response costs enables a party to recover the costs if the damage award goes unsatisfied and entitles the party to future response costs. Accordingly, the court also held that the plaintiff was entitled to a declaratory judgment under 42 U.S.C. § 9613(g)(2) as to the response costs for which it established CERCLA liability.
In United States v. Norfolk Southern Co., the court granted the United States’ motion to strike Norfolk Southern’s affirmative defense asserting nonliability for response costs that were not cost-effective, noting that the NCP requires remedial actions to be cost-effective, but there is no such requirement for removal actions. The court also struck Norfolk Southern’s affirmative defense that the United States failed to mitigate damages holding that because the response must be consistent with the NCP, there is no need for an independent affirmative defense on mitigation.
In Barclay Lofts LLC v. PPG Industries, Inc., the court rejected the following response costs as compensable under CERCLA (1) $17,504 for development of a health and safety plan for employees because employee exposure is not the type of threat redressable under CERCLA; (2) $8,007 to remove graffiti because there was no proof that the lack of graffiti limited access and kept the public safe from hazards; (3) $237,473.30 in legal fees because recovery of attorneys’ fees is the exception, not the rule, under CERCLA, and Barclay’s 200 pages of invoices were too vague to establish that the work of its lawyers could have been performed “‘by engineers, chemists, private investigators, or other professional who are not lawyers.’” The court did approve $1,167,755.35 as necessary costs of response—not as NCP-compliant, but as initial investigation costs, site assessment, or monitoring costs allowable under Section 104 of CERCLA irrespective of NCP compliance.
In Courtland Company v. Union Carbide Corp. Union Carbide Corp. (UCC) filed a contribution counterclaim under CERCLA seeking to reallocate $27,142.50 incurred by plaintiff and to recover $199,942.52 that UCC incurred. UCC argued that Courtland’s costs were not “necessary” because its consultant charged a higher hourly rate than was necessary for the type of work being performed. However, UCC’s own consultant’s costs, when viewed as a whole or based on “block billing,” were roughly comparable to what Courtland was charged. Hence, the court rejected an argument that Courtland’s costs were “excessive.”
Interpreting under New York law a 2011 Settlement Agreement that arose out of the General Motors bankruptcy and embodied the settlement of GM’s environmental liabilities nationwide, the Second Circuit, in Revitalizing Auto Cmtys. Envtl. Response Trust [RACER] v. Nat’l Grid USA, reversed the district court’s decision that a CERCLA contribution claim was entirely time barred. The court of appeals held that the 2011 agreement only resolved RACER’s liability as to contamination from was called the “GM-IFG Syracuse Property” that migrated to what was referred to as OU-2 or the “Expanded Territory.” Costs associated with that contamination were time-barred. However, whether and to what extend hazardous substances migrated from the GM-IFT Plant to OU-2 and the Expanded Territory was a question of fact not subjection to resolution on a motion to dismiss. Hence, the matter was remanded for what the court recognized was going to be a “fact-intensive, time-intensive” exercise.
In City of Las Cruces v. Alameda, LLC, the district court granted defendant American Linen’s motion for attorney’s fees and costs because plaintiffs: (1) refused to dismiss their CERCLA Section 107(a) cost recovery claim despite acknowledging that the claim was not viable; (2) acted recklessly and with indifference to the law as they intentionally acted without a plausible basis; and (3) retained the CERCLA Section 107(a) claim in bad faith and for an improper purpose, using it as a club to seek concessions from American Linen.
In Pacific Resources Associates LLC v. Suzy Cleaners, the district court considered a motion to bifurcate, or in the alternative to sever, third-party state law tort claims of trespass and nuisance from the claims under CERCLA and California’s Hazardous Substances Account Act. The court found that a combined jury and bench trial, similar to approaches taken by other district courts, was the most prudent course of action. According to the court, the combined jury and bench trial would preserve the right to a jury trial on state common law tort claims and promote judicial economy and efficiency by limiting the amount of duplicative evidence and expert testimony and avoiding the jury confusion.
In City of Las Cruces v. Lofts at Alameda, LLC, the district court held that defendant American Linen may not assert a CERCLA contribution claim against co-defendant Chisholm’s-Village because American Linen was no longer facing a cost recovery claim. Thus, the court granted Chisholm’s-Village motion for summary judgment. The court also adopted the Uniform Comparative Fault Act, or pro rata approach as the most equitable one to determine how to credit settlements. The court reasoned that under this approach, each party would pay only its equitable share and would not be forced to pay a disproportionately greater share of response costs relative to its actual contribution.
In U.S. v. Pappas, the district court granted the U.S.’s motion for partial summary judgment and assessed a civil penalty of $131,000. Pappas owned a defunct laundromat with a dry-cleaning machine that EPA identified as emitting a dangerous chemical. There were nearby residences and businesses. EPA sought removal of the machine, but defendant refused, so this action for a judicial access order and civil penalties under 42 U.S.C. § 9604(e)(5)(B) was brought. The court found that the EPA requests were reasonable, the defendant unreasonably failed to comply with EPA orders for access, and defendant removed the contaminated dry-cleaning machine without EPA supervision in defiance of orders. The court balanced the following factors to determine that a civil penalty of $1,000 a day was appropriate: ”(1) the good or bad faith of the [non-compliant party], (2) the injury to the public, (3) the [non-compliant party’s] ability to pay, (4) the desire to eliminate the benefits derived by a violation, and (5) the necessity of vindicating the authority of the enforcing agency.”
In Pakootas v. Teck Cominco Metals, Ltd, the court held that the Confederated Tribes of the Colville Reservation’s (CCT) cultural resource damage claims for loss or damage to the tribe’s relationship with the Columbia River caused by the discharge of slag and effluents from the Defendant’s smelter were not recoverable as natural resource damages (NRD) under CERCLA. The matter was certified under 28 U.S.C. § 1292(b) and is now pending review by the Ninth Circuit. The district court’s order stated that immediate review on whether cultural resource damages were recoverable under CERCLA would materially advance the litigation by allowing the parties to assess their risk as to over $1 billion in potential damages of which cultural resource damages were a significant portion and help keep the litigation to a single trial.
Separately, the court denied Tech Cominco Metals’ motion for summary judgment holding that CERCLA does not require a specific procedure to assess NRD and the U.S. Department of the Interior’s NRD assessment regulations are not mandatory, NRD claims were ripe where brought within three years of discovery when remedial action is not planned, and the uncertainty of damage calculations raised questions of fact requiring a trial to resolve.
In United States v. Cleveland-Cliffs Burns Harbor LLC, the court granted the government’s unopposed motion to enter a consent decree resolving its complaint for natural resource damages resulting from the failure of a large steel mill’s water recycling system. The consent decree requiring defendants to “donate two parcels of land for conservation, pay to have the impacted areas fully remedied, and reimburse the government for the costs incurred in assessing the damage” was approved despite public comment that a higher penalty should have been assessed against defendants.
