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The Second Circuit decides another CERCLA contribution case in Niagara Mohawk v. Chevron (Part III)

As seen in our prior posts on Niagara Mohawk v. Chevron, 596 F.3d 112, in the two appeals and remands prior to the Second Circuit’s February decision, the District Court failed to properly address Niagara Mohawk’s (NiMo’s) argument under § 113(f)(3)(B), asserting that it has a right to contribution for costs incurred in cleaning up the Water Street Site under two Orders on Consent with the New York State Department of Environmental Conservation (“NYSDEC”) because it failed (both times) to consider the second of those two Orders, issued one day after the first District Court decision. The Second Circuit’s decision on the latest appeal is discussed here.

At the outset, the Court states that it was an abuse of discretion for the District Court not to consider the 2003 Order on Consent. This declaration sets up what is a very logical opinion. Being able to now consider the Order on Consent, it easily follows from a plain reading of the statute that NiMo should be entitled to pursue its § 113(f)(3)(B) claims. The Court distinguishes its holdings in ConEd and W.R. Grace because in those cases, the Voluntary Cleanup Agreement and the Order on Consent, respectively, did not reference the State’s settlement of the PRP’s CERCLA liability.

As seen in our prior posts on Niagara Mohawk v. Chevron, 596 F.3d 112, in the two appeals and remands prior to the Second Circuit’s February decision, the District Court failed to properly address Niagara Mohawk’s (NiMo’s) argument under § 113(f)(3)(B), asserting that it has a right to contribution for costs incurred in cleaning up the Water Street Site under two Orders on Consent with the New York State Department of Environmental Conservation (“NYSDEC”) because it failed (both times) to consider the second of those two Orders, issued one day after the first District Court decision. The Second Circuit’s decision on the latest appeal is discussed here.

At the outset, the Court states that it was an abuse of discretion for the District Court not to consider the 2003 Order on Consent. This declaration sets up what is a very logical opinion. Being able to now consider the Order on Consent, it easily follows from a plain reading of the statute that NiMo should be entitled to pursue its § 113(f)(3)(B) claims. The Court distinguishes its holdings in ConEd and W.R. Grace because in those cases, the Voluntary Cleanup Agreement and the Order on Consent, respectively, did not reference the State’s settlement of the PRP’s CERCLA liability.

Further in addressing NiMo’s claim that it is entitled to use § 107(a) to seek recovery of its costs, the Court held that § 107(a) is not available because it incurred these costs as a result of its settlement of liability with the State (i.e., the costs were not incurred “voluntarily”).

The take-home lesson to practitioners is make sure your settlement with the State expressly settles your client’s CERCLA liability. (And to do this, the settlement must be with the “State of ___”, not just any one agency of the State: an agency settling a PRP’s liability administratively does not bar an aggressive State Attorney General’s office from suing judicially on behalf of “the State of ___.”)

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