SteveK August 17th, 2010

In NJDEP v. Essex Chemical Corporation, a trial court of the New Jersey Superior Court recently ruled that the NJDEP had failed to prove that contamination to ground water resulted in compensable harm or loss entitling the State to an award of natural resource damages (NRD.)  Essex Chemical had owned and operated a facility where chlorinated volatile organic compounds were handled and later found in ground water. Essex commenced remedial actions under New Jersey law in 1984 and has continued to meet their obligations to conduct site remediation to the present day.

The NJDEP commenced an action for NRD in 2007, contending that the contamination to the ground water has resulted in a compensable loss to the people of the State and entitles the State to damages under the NJ Spill Act. The evidence at trial demonstrated that the remedial work was approved by the NJDEP and complied with the regulations governing site remediation (Tech. Regs.). The State’s expert on resource economics utilized a resource equivalency approach (REA) to support his damage evaluation, positing that the value of the loss can be based upon the cost of land that would support the same recharge to the ground water of the area contaminated. The Court rejected the expert’s opinion holding that it was not convinced that the method of calculation of compensatory damages was proper for the resource in question. The Court acknowledged that the REA approach was appropriate for loss of wildlife (e.g. fish, birds), or where the contamination has an effect on human health. Where, however, no such harm was identified, the Court did not accept the expert’s method of assigning values “to things that are normally invaluable,” presented as “non-use” values.  Since there was no evidence that the land in question will be developed nor any evidence that there was an intention to use the ground water or what it’s “non-use” value would be, the court found in favor of Essex Chemical and dismissed the claims.

DiFrancesco, Bateman, Coley, Yospin, Kunzman, Davis & Lehrer, PC (www.dbnjlaw.com ) is a full service law firm in New Jersey which provides a broad range of legal services, including the representation of clients in environmental and defense of toxic exposure matters. For additional information about the matters in this bulletin or in the firm’s environmental practice, please contactSteven A. Kunzman, Esq. who heads our Environmental and Latent Injury Litigation Department.

Tags: CERCLA, Environmental Law, Ground water, Natural Resource Damages, NJ Spill Act, NRD, resource equivalence analysis, Spill Act

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SteveK August 17th, 2010

In U.S. v. Iron Mountain Mines, the U.S. District Court for the Eastern District of California granted summary judgment to the plaintiffs against Iron Mountain Mines and T.W. Arman for past costs which had not been resolved in a consent decree in which claims against other PRPs at the Iron Mountain Mines Superfund Site were settled.  The plaintiffs had previously settled with the other PRPs for approximately $154 million of insurance to cover future cleanup costs over 30 years, $10 million for natural resource damages, and an additional $7 million for future clean up not covered by the insurance. The defendants argued that the settlement amounts well exceeded the $26 million in past costs that had been incurred prior to February 29, 1996 which were being sought from them, therefore providing plaintiffs complete recovery.  Defendants argued, further, that it would not be known until after the 30 year period for payment of cleanup under the insurance policy whether the plaintiffs would not be made whole. The plaintiffs argued that no money had been received for the past costs.  The Court agreed with the plaintiffs, finding that the consent decree did not address past costs, but only future remedial costs and NRD. Since Section 113(f)(3) of CERCLA permits suit against non-settling responsible parties if the relief obtained in a settlement was not complete, the Court held for the plaintiffs.

This decision points to the essential need for a party to be informed in every step in the negotiation of a settlement, particularly if they are not a party to the settlement. As in the recent decisions of the 9^t Circuit,  U.S. v Aerojet, and the 10^th Circuit, U.S. v Albert Investment Co., it s important to take an active position, and where appropriate move to intervene,  on a motion or action to approve a CERCLA consent decree. Indeed, it has been acknowledged that CERCLA can impose harsh results on non-settling PRPs. See, United States v. Davis, 261 F. 3d. 1, 28 (1^st Cir. 2001).

DiFrancesco, Bateman, Coley, Yospin, Kunzman, Davis & Lehrer, PC (www.dbnjlaw.com ) is a full service law firm in New Jersey which provides a broad range of legal services, including the representation of clients in environmental and defense of toxic exposure matters. For additional information about the matters in this bulletin or in the firm’s environmental practice, please contactSteven A. Kunzman, Esq. who heads our Environmental and Latent Injury Litigation Department.

Tags: CERCLA, Contamination, Environmental Law, Natural Resource Damages

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SteveK August 17th, 2010

On July 22, 2010, in State of California v. Hearthside Residential Corp., the court addressed a question of first impression: “whether the ‘owner and operator status under [CERCLA] is determined at the time that cleanup costs are incurred or instead the time that a recovery lawsuit seeking reimbursement is filed.” The concluded that the owner is determined at the time cleanup costs are incurred.

Hearthside had purchased property known as Fieldstone Property in Huntington Beach, California with the knowledge that it was contaminated with PCBs. Hearthstone entered into a consent order with the State in which it agreed to remediate the property, then sold to the property to the California State Lands Commission. The State determined that the adjacent residential site was also contaminated with PCBs which it alleged had migrated from the Fieldstone Property. The State considered Hearthstone responsible; however, Hearthstone disagreed, contending that it was not the owner when the suit was filed. The State, therefore, contracted to remediate the property and subsequently filed a complaint against Hearthstone.

Since CERCLA does not provide a clear answer to the issue of when a party is considered an owner for purposes of liability, and no case dealt with the issue directly, the court considered other aspects of the statute. The court concluded that the issue best aligns with CERCLA’s statute of limitations. Since the limitations provisions are triggered either (1) at the completion of a removal action, or (2) at the initiation of the remedial action, the court concluded that it was the intent of Congress was to have the statute of limitations “run against (and protect) the owner of the property at the time the cleanup occurs.” The court reasoned that if Hearthstone’s argument were accepted, “an owner could sell a recently cleaned piece of property to an innocent owner one day before the statute of limitations runs, with the result that the new owner would bear full cleanup liability under CERCLA if a recovery action was later timely filed.” Accordingly, the court saw this as contextual evidence of Congressional intent that the owner at the time of cleanup was to be considered the owner for the purpose of CERCLA liability.  In addition, relying on the date of filing of the cost recovery action contradicts the intent to have early settlements. In essence, Hearthside’s approach would require the filing of a suit in order to determine the date of ownership.  In addition, since the owner at the time of cleanup can help determine the scope of cleanup, “it follows that the same owner should be responsible for the cost of the remediation program that it had the opportunity to influence.”

DiFrancesco, Bateman, Coley, Yospin, Kunzman, Davis & Lehrer, PC (www.dbnjlaw.com ) is a full service law firm in New Jersey which provides a broad range of legal services, including the representation of clients in environmental and defense of toxic exposure matters. For additional information about the matters in this bulletin or in the firm’s environmental practice, please contactSteven A. Kunzman, Esq. who heads our Environmental and Latent Injury Litigation Department.

Tags: CERCLA, Contamination, Environmental Law, Natural Resource Damages, NRD, Statute of Limitations

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SteveK July 17th, 2010

On July 13, 2010, in Commissioner of the Department of Planning and Natural Resources v. Century Alumina, LLC, et.al., the Federal District Court from the St. Croix division of the Virgin Islands, held that an action to recover natural resource damages (NRD) must be commenced within 3 years of the constructive knowledge of the injury by the trustee.

The plaintiff trustee brought the claim against a number of industrial entities for the release of contaminants onto a number of industrial tracts at various times which injured the land as well as groundwater and the Caribbean Sea.  The defendants moved for summary judgment seeking dismissal of the claims under CERCLA’s limitation of actions provision, which provides that an action for NRD must be commenced within 3 years following “the date of the discovery of the loss and its connection with the release in question.” Although the statute does not state what is meant by “discovery” the court relied upon numerous prior decisions as to other statutes and other aspects of CERCLA to conclude that it is based upon the constructive knowledge of the trustee. The court went on to clarify that the knowledge of the agency, including the knowledge of any prior trustee, would be imputed to the present trustee.  Accordingly, the determination of whether there was NRD related to the discharges would require an analysis of when the trustee knew or should have known that there was an injury to the natural resource related to the discharges, which would commence the running of the time for bringing an action. With this ruling in hand, the court analyzed the facts as to each site and each defendant, dismissing some claims and allowing others to continue.

This case demonstrates that there courts will take a rational approach in considering the relationship between knowledge of a discharge of contaminants and the commencement of NRD claims. The interests of the government to pursue recovery of NRD, while important, will not allow the government to be inattentive to their statutory obligation to act promptly to seek to enforce these rights.

DiFrancesco, Bateman, Coley, Yospin, Kunzman, Davis & Lehrer, PC ( www.dbnjlaw.com ) is a full service law firm in New Jersey which provides a broad range of legal services, including the representation of clients in environmental and defense of toxic exposure matters. For additional information about the matters in this bulletin or in the firm’s environmental practice, please contactSteven A. Kunzman, Esq. who heads our Environmental and Latent Injury Litigation Department.

Tags: CERCLA, Contamination, Environmental Law, Ground water, Groundwater, Natural Resource Damages, NRD, Pollution, Statute of Limitations

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SteveK July 9th, 2010

On June 2, 2010, in United States v. Aerojet, the Court of Appeals for the 9^th Circuit allowed non-settling PRPs to intervene, by right, to challenge a CERCLA settlement. By this decision, the 9^th circuit joined the 10^th circuit (See, the December 8^th post reporting on U.S. v. Albert Investment) and the 8^th circuit (U.S. v. Union Electric, a decision from 1995) in ruling that a non-settling PRP has a right to contribution under CERCLA that satisfies the requirements for intervention under the federal rules.

The case involved the U.S. reaching a settlement with a group of PRPs to contribute $8.1 million towards an $87 million cleanup. As usual, the consent decree provided contribution protection to the settling PRPs. As is required, the Department of Justice filed a suit filed to perfect the settlement by a consent decree. After posting the consent decree in the Federal Register, a group of non-settling PRPs filed objections to the settlement. As they were not satisfied that their interests were properly addressed, the non-settling group filed a motion to intervene. The trial court denied the motion which was appealed to the 9^th Circuit and reversed.

The focus of the 9^th Circuit’s decision was whether the settlement would extinguish the non-settling PRP’s contribution rights under Section 113(f)(2) of CERCLA. In evaluating the right to intervene under Federal Rules of Civil Procedure 24(a)(2) and Section 113(i) of CERCLA, the court identified the interest at issue as the PRP’s contribution rights and  ensuring that the consent decree “embodies a fair and reasonable allocation of liability.” The court determined that entering the consent decree would cut off the non-settling parties’ contribution rights against those that settled. This, the court held, provided the non-settling parties a protectable interest. In addition, the court noted that settlement may result in the non-settling PRPs becoming responsible for the remaining amount of the cleanup costs.  This would bring into question the defined interest of an appropriate allocation of liability.

This decision brings the majority view to one that favors intervention.  This approach will likely encourage the government to seek global settlements of CERCLA matters, provide encouragement for parties to develop settlements that include all the major parties or groups, and provide greater leverage to certain parties or groups of parties in CERCLA settlement negotiations.

DiFrancesco, Bateman, Coley, Yospin, Kunzman, Davis & Lehrer, PC ( www.dbnjlaw.com ) is a full service law firm in New Jersey which provides a broad range of legal services, including the representation of clients in environmental matters. For additional information about the matters in this bulletin or in the firm’s environmental practice, please contact Steven A. Kunzman, Esq. who heads our Environmental and Latent Injury Litigation Department.

Tags: CERCLA, Environmental Law

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SteveK April 26th, 2010

In the recent decision in Agere Systems, Inc, et. al. v. Advances Environmental Technologies, LLC, et. al., the 3^rd Circuit Court of Appeals continued the discussion of the complex interaction between sections 107(a) and 113(f) of CERCLA. Agere involved a case from the Eastern District of Pennsylvania related to the Boarhead Superfund Site. The EPA commenced a 107(a) action against Cytec, Ford and SPS on June 2, 2000 by filing a complaint along with a consent decree for OU-1. Cytec, Ford and SPS subsequently entered into a separate settlement agreement with Agere, TI and two other companies to collectively fund and perform work for OU-1. The EPA subsequently commenced another 107(a) suit against Cytec, Ford and TI by filing a complaint and a second consent decree related to OU-2.  A private settlement agreement was entered into by the three companies with Agere, which assigned its rights for cost recovery to the group. The parties that had settled subsequently brought an action against Carpenter Technology Corporation to recover costs. After trial, the District Court held Carpenter liable, and allocated a significant share to Carpenter, including an enhanced share based upon the court finding that Carpenter had significant culpability in creating the Superfund site and because of its lack of cooperation in cleaning up the site.

The 3^rd Circuit identified six essential challenges present by Carpenter: 1) the 113(f) claim was time-barred because Carpenter did not share a common liability with the plaintiffs since the EPA claim was filed after the expiration of the time for the filing of such actions, 2) Agere and TI cannot bring a 107(a) action for sums paid in a private settlement with other plaintiffs, as opposed to sums paid by the other parties to the EPA, based upon the provisions of 107(a), 3) the plaintiffs that signed the OU-1 and OU-2 Consent Decrees do not have rights to sue under 107(a); only section 113(f) claims may be pursued, 4) Cytec, Ford, SPS and TI failed to present competent evidence of the total waste they disposed of at the site, and therefore the allocation of liability by the District Court was flawed, 5) the allocation was flawed by a miscalculation of volumetric shares in that the court did not consider the culpability and lack of cooperation of the plaintiffs, and improperly relied upon volumetric shares rather than the dollar amounts collected from the settling defendants, and 6) the limitations of the plaintiffs claims under section 107(a) of  CERCLA should apply to the similar provision in related Pennsylvania law.

The 3^rd Circuit carefully explored each issue and remanded the case to the District Court for further findings. The district court was directed to make further findings on facts related to whether certain claims were time-barred. In addition, the district court was required to make determinations as to the waste volumes based upon appropriate evidence.

The most significant aspect of the decision is the Circuit Court’s exploration of the interaction between Section 107(a) and 113(f) as developed in United States v. Atlantic Research Corp. 551 U.S. 128 (2007). The Court noted that in Atlantic Research the Supreme Court held that 107(a) “permits a PRP to recover only the costs is has ‘incurred’ in cleaning up a site,” and that payment to settle a claim does not constitute the incurring of response costs. Since the money paid by TI and Agere to settle the case was placed in a trust to fund the actual work at OU-1 and OU-2, the requirement that the claim be for recovery of response costs was satisfied. The 3^rd Circuit concluded that the Supreme Court did not intend to exclude all settlement payments, particularly where the funds were not reimbursement of costs incurred by others, but were actually used to fund the remedial work.  The Court went on to distinguish the Supreme Court’s statement that the parties that could not make 107(a) claims could still maintain a claim under Section 113(f), noting that it was not intended to provide the opposite; that is, that a party that was precluded from a 113(f) claim would not have a 107(a) claim.  In this case neither Agere nor TI were able to maintain 113(f) claims for contribution because neither were sued by the EPA or the other PRPs. The Court concluded that Congress could not have intended to “penalize cooperative cleanup efforts by excluding from CERCLA’s broad recovery provisions all PRPs who, like Agere and TI, have come forward and assist[ed] in a cleanup even though they have not been subjected to cost recovery suit.” The Court found that such a result would be contrary to the goal of CERCLA “to encourage private parties to assume the financial responsibility of cleanup by allowing them to seek recovery from others.”

The 3^rd Circuit then went on to consider the 113(f)/107(a) issues regarding the defendants sued by the EPA: Cytec, Ford and SPS. Carpenter argued that those parties had only 113(f) claims since once a party settles the 107(a) claims, it is only entitled to assert 113(f) claims.  The Court noted that the issue of whether a party in the position of Cytec, Ford and SPS may bring a 107(a) claim in addition to a 113(f) claim was left open in Atlantic Research. The 3^rd Circuit noted that if the parties had rights under 107(a) as well as 113(f), the trial court, on remand, could impose 100% of the liability on Carpenter. Further, Carpenter would not be able to resolve this by a Section 113(f) counterclaim since the parties that had settled with the EPA would be shielded from liability under section 113(f)(2).  The Court agreed that this would be a perverse result since the primary goal of CERCLA is to have polluters pay.

The remand to the trial court, therefore, required the court to explore significant issues regarding whether certain aspects of the claim were time barred, and to conduct a fact intensive analysis to support an allocation among all parties.

DiFrancesco, Bateman, Coley, Yospin, Kunzman, Davis & Lehrer, PC ( www.dbnjlaw.com ) is a full service law firm in New Jersey which provides a broad range of legal services, including the representation of clients in environmental matters. For additional information about the matters in this bulletin or in the firm’s environmental practice, please contact Steven A. Kunzman, Esq. who heads our Environmental and Latent Injury Litigation Department.

Tags: CERCLA, Environmental Law

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SteveK April 12th, 2010

On March 12, 2010, in Hinds Investments v. Team Enterprises, the court for the Eastern District of California found the manufacturer of dry cleaning equipment designed to discharge wastewater containing PCE into open drains was not an “arranger” under CERCLA and dismissed the claims.

The plaintiffs were the former owners of properties that had been leased to dry cleaners. The dry cleaners used a machine that instructed the operators to have the wastewater, which contains PCE, to “flow into an open drain.” Plaintiffs argued that this evidenced a “conscious decision” to discharge and dispose of PCE-contaminated wastewater. The Court, however, focused upon the transaction; the sale of the machine, not how the machine functioned.  The court viewed the machine more in the line of a “useful product.”  As noted in the Supreme Court’s decision in Burlington Northern Santa Fe Railway v. United States (BNSF)(see blog post from August 14, 2009), the Courts have generally refused to hold manufacturers of a “useful product” liable even though the product contains a hazardous substance that was later disposed by the user. The court followed the Supreme Court decision in BNSF, and focused on the question of whether there were “intentional steps to dispose of a hazardous substance.” The court found that the machine itself was not a hazardous substance, and did not produce or directly involve hazardous substances. Since there were insufficient facts alleged in the complaint to support at the conclusion that the sale of the machine substantially involves the disposal of the PCE-contaminated wastewater the matter was dismissed.

DiFrancesco, Bateman, Coley, Yospin, Kunzman, Davis & Lehrer, PC ( www.dbnjlaw.com ) is a full service law firm in New Jersey which provides a broad range of legal services, including the representation of clients in environmental matters. For additional information about the matters in this bulletin or in the firm’s environmental practice, please contact Steven A. Kunzman, Esq. who heads our Environmental and Latent Injury Litigation Department.

Tags: CERCLA, Environmental Law

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