On February 24, 2010, the Second Circuit issued an important CERCLA contribution decision in Niagara Mohawk Power Corp. v. Chevron USA, Inc., 2010 WL 626064. Over the last 100 years, the site at the heart of the decision, the Water Street Site in Troy, New York has, according to the Court, “played host to various industrial activities including a coke plant, a steel manufacturing facility, a manufactured gas plant and a petroleum distribution facility,” all of which uses “led to the release or disposal of toxic substances, many subject to liability under CERCLA.” In its holding, the Second Circuit ruled that a contribution plaintiff need not establish the precise amount of hazardous material discharged or prove with certainty that a PRP defendant discharged the hazardous material to get their CERCLA claims past the summary judgment stage. Has the Second Circuit significantly raised the bar for defendants seeking summary judgment in private cost recovery cases? That is the thesis of Steven G. Jones in an article titled, “Second Circuit Makes Summary Judgment More Difficult to Obtain for Defendants in CERCLA Contribution Actions,” dated March 5, 2010. Jones contends that some CERCLA defendants, faced with a long and complex trial, may be more inclined to resolve their cases in mediation if it is less likely that a CERCLA defendant will be able to obtain dismissal through summary judgment prior to trial. In reversing the federal district court in the North District of New York, the Second Circuit relied on its prior precedent in United States v. Alcan Aluminum Corp., 990 F.2d 711, 721 (2d. Cir. 1993), which decision represented what the court described as a purposeful lowering of the liability to be a PRP and a relaxed CERCLA liability standard. It also cited the Tenth Circuit’s holding in Tosco Corp. v. Koch Indus., Inc., 216 F.3d 886, 892 for the proposition that “CERCLA liability may be inferred from the totality of the circumstances as opposed to direct evidence.” Thus, in my view, Niagara Mohawk is less an expansion of existing CERCLA case law in the Second Circuit as much as it is a rebuke to the trial judge, who arguably did not apply the correct standard in the first instance.
On June 22, 2009, after an six-week bench trial in the U.S. District Court for the District of New Jersey, we achieved a resounding victory for our client, Reichhold Inc., in an environmental cost recovery litigation. Reichhold v. USMRC et al, 2009 U.S. Dist. LEXIS 52471. The case addressed claims relating to the cleanup of a contaminated chemical plant site formerly owned by Reichhold in Carteret, New Jersey along the Arthur Kill. The case was brought pursuant to the federal CERCLA and New Jersey Spill Act statutes, as well as a 1994 settlement agreement between the parties.
Defendant United States Metals Refining Co. ("USMRC"), which owned the site prior to Reichhold, had argued that the settlement agreement prohibited Reichhold from bringing the claims in the instant lawsuit. The Court rejected USMRC's argument and held that, because virtually all of Reichhold's claims constituted "New Environmental Obligations" under the settlement agreement, they were actionable. The Court also dismissed every defense to liability raised by the defendant, including the defense that Reichhold's claims were time-barred.
In its Final Judgment, the Court awarded Reichhold $1,209,719 for investigation and cleanup costs that Reichhold had incurred while addressing metals contamination caused by USMRC's industrial operations. The Court also entered a declaratory judgment requiring USMRC to pay certain of Reichhold's future cleanup costs.
Our success at trial was attributable, in part, to our being able to discredit the expert testimony of USMRC's experts. In conjunction with an aerial photogrammetrist, USMRC's environmental engineering expert used historical aerial photographs of the site taken over a 60-year period to develop computer-generated surface contour maps that purported to depict Reichhold's excavation and fill activities at the site over time. Because of these topographical maps, USMRC's experts argued that Reichhold had caused extensive metals contamination at the site in the 1960's and 1970's by using contaminated fill in low lying areas of the property. On the basis of the cross-examination of defendants' experts by me and my partner, Sheila A. Woolson, the Court rejected the experts' testimony and held that the conclusions based on the photogrammetry performed were unconvincing. Consequently, the Court placed no reliance on the cut and fill evidence presented. In contrast, the Court accepted the testimony of Reichhold's witnesses that Reichhold had not disposed of any metals containing contamination at the site.
Over the last several months, federal and state environmental regulatory agencies have devoted substantial regulatory attention to New Jersey waterways and rivers in the northwestern portion of the state that have been contaminated with metals, declaring some of them to be federal Superfund sites. In light of these events, the judicial determination that the metals contamination on the southern edge of the property was solely due to our adversaries’ prior disposal activity was timely. The Opinion is perhaps the first trial court decision to apply the apportionment principles articulated in the Supreme Court's May 2009 decision in Burlington Northern.
Larry Schnapf recently started a blog on CommonGround concerning developments in environmental law. Larry has been a thoughtful commentator on developments in this field for over 20 years. I look for Larry to continue providing wise counsel on thorny environmental issues. We recently discussed the potential reach of the Supreme Court's decision in Burlington Northern, which evaluated what is necessary to establish "arranger" liability under CERCLA. In my view, the discussion of "arranger" liability is relevant only to CERCLA 107(a)(3) claims; it has no bearing on a PRP's liability under CERCLA 107(a)(2). In other words, a product manufacturer cannot escape CERCLA liability for contamination to the manufacturer's former property by arguing that the relelases did not constitute "intentional steps" to dispose of a hazardous substance. The PRP's conduct in causing a release under (a)(1) or (a)(2)--whether intentional or merely negligent--is entirely irrelevant--always has been, always will be. In contrast, in cases involving the sale of a product to a customer's location, intent will now figure into any (a)(3) analysis. Has the Supreme Court carved out what is basically a "product exception" to CERCLA liability?