Under CERCLA, Responsible Parties Liable for Future Clean-Up ...

Posted By Abigail M. Jones, Esq. on February 22, 2012

In State v. Solvent Chemical Co., 10-2026-cv (2nd Cir. Dec. 19, 2011), the Second Circuit Court of Appeals held that Solvent Chemical Company (?Solvent?) could obtain a declaratory judgment that two adjacent property owners were responsible for future costs incurred by Solvent under the Comprehensive Environmental Response, Compensation, and Liability Act (?CERCLA?), 42 U.S.C. ?? 9601-9675.

Over the past century, Solvent, E.I. du Pont de Nemours & Co. (?DuPont?) and Olin Corporation (?Olin?), owned adjacent properties in Niagara Falls, New York at which various hazardous substances were manufactured.? In 1983, the State of New York sued Solvent and others for environmental contamination at the Solvent Site. In 1996, the New York Department of Environmental Conservation (?DEC?) issued a Record of Decision (?ROD?) requiring Solvent to undertake remedial action to cleanup the contamination on the property.? Solvent subsequently entered into a consent decree obligating it to perform the remedies specified in the ROD in settlement of New York?s CERCLA claims. Solvent?s cleanup operations began in 1999 and are ongoing.

Solvent sued both Olin and DuPont under CERCLA seeking, in part, contribution for its response costs incurred under its consent decree with New York on the basis of the hazardous substances originating from their respective facilities. Solvent?s claims against DuPont and Olin were consolidated in a trial that lasted 19 days in late 2007. The parties stipulated that all response costs incurred through June 30, 2007 would be treated as ?past costs,? and that all costs thereafter would be the subject of Solvent?s corresponding suit for a declaratory judgment that DuPont and Olin were liable for future cleanup costs.

The District Court for the Western District of New York awarded Solvent contribution for past costs, but declined to issue a declaratory judgment on the issue of future costs; the district court declined to declare liability mainly because the allocation of future costs would be premature. Solvent appealed the District Court?s denial of a declaratory judgment of liability for future cleanup costs under CERCLA.? The Second Circuit Court of Appeals reversed.

In reversing the lower court, the Second Circuit relied not on CERCLA, but on the federal Declaratory Judgment Act, 28 U.S.C. ? 2201(a), which lists five factors that a court must consider when determining whether a declaratory judgment may be issued:

1. Whether the judgment will serve a useful purpose in clarifying or settling the legal?issues?involved;
2. Whether a judgment would finalize the controversy and offer relief from uncertainty;
3. Whether the proposed remedy is being used merely for procedural fencing or a race to res judicata;?
4. Whether the use of a declaratory judgment would increase friction between sovereign legal systems or improperly encroach on the domain of a state or foreign court; and?
5. Whether there is a better or more effective remedy.

In this case, the Second Circuit held that the factors considered by the district court ? but determined by it to be insufficient ? were, in fact, sufficient to require a declaratory judgment in favor of Solvent.

In reviewing these factors under the Declaratory Judgment Act, the Court concluded:

the judgment would ?serve a useful purpose in . . . settling the legal issues involved,? the judgment is not being used for procedural gamesmanship or a race to res judicata, it will not increase friction between sovereign legal systems, and there is no ?better or more effective remedy? ? in fact there would be no remedy for Solvent at all without declaratory relief.? It does not matter that a declaratory judgment of liability alone will not ?finalize the controversy and offer relief from [all] uncertainty.? (internal citations omitted)

The Second Circuit stated that:

[t]he reasons given by the district court might justify a refusal to allocate cleanup responsibility; none of them, however, supports a refusal to grant a declaratory judgment as to liability itself. The district court has already decided that Olin and DuPont were liable for contribution as to historical losses. Save for the possibility that the DEC might in the future impose different remedies to clean up the [contaminants], none of the factors identified by the court distinguishes between past and future cleanup. (emphases in original)

Conclusion

A declaratory judgment is used by parties to declare the rights, duties, or obligations of one or more of those parties in a dispute. When a court issues a declaratory judgment, it is not necessarily the end of the litigation, but it is particularly useful in saving the parties (and the courts) substantial time and money.

Here, when the Second Circuit held that DuPont and Olin were responsible under CERCLA for the contamination on the property ? and therefore also contribution to the remediation costs ? it only left one (smaller) issue to be determined in the future, namely what amount of the contribution for future clean up costs would DuPont and Olin would be responsible.? Thus, the parties never again have to litigate these facts as to whether? DuPont and Olin are potentially responsible parties under CERCLA (or worry about the short 3-year statute of limitations for contribution claim under CERCLA); Solvent merely needs to seek ?further relief? to establish the precise costs that each party will be required to pay.

This case is a perfect example of when potentially responsible parties under CERCLA can and should use a declaratory judgment action to break through the mire which can be CERCLA litigation (e.g., complex claims and defenses, weeks of trial, thousands of pages of documents and briefing, years of litigation, etc.), namely, when the potentially responsible parties are known and have already been allocated responsibility for past costs, even though there are still future costs that will need to be apportioned.

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Categories: Federal Environmental Law, Superfund (CERCLA & State Superfund)
Tags: CERCLA, CERClA liability, cost recovery action, potentially responsible party

Source: http://www.periconiblog.com/under-cercla-responsible-parties-liable-for-future-clean-up-costs/

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