Consent orders can be a useful tool to resolve liability under the federal Superfund Law (a/k/a CERCLA) (read our recent blog post on this very point). In a recent case filed in the Northern District of New York, plaintiffs, Cooper Crouse-Hinds (“CCH”) and Cooper Industries (“CI”), sought reimbursement of cleanup costs against the City of Syracuse and Onondaga County for those municipalities’ involvement in dumping hazardous substances at two local landfills. Cooper Crouse-Hinds, LLC v. City of Syracuse, No. 16-CV-1201, 2018 U.S. Dist. LEXIS 22100 (N.D.N.Y. Feb. 12, 2018). Both the City of Syracuse and Onondaga County moved to dismiss the lawsuit claiming that prior consent orders entered between CCH and CI with the New York State Department of Environmental Conservation (“DEC”) resolved plaintiffs CERCLA liability years ago and, thus, they were time-barred from seeking reimbursement from the municipalities; the court disagreed.
First a bit of background on the case: from the 1960s through the 1970s, the City of Syracuse Department of Public Works was allowed to dump municipal, commercial, and industrial waste in the landfills owned by CCH and CI. Syracuse DPW often dumped hazardous materials, like PCBs dredged from the local stream and other contaminated materials, which resulted in the DEC classifying the landfills as a Class 2 Inactive Hazardous Waste Disposal Site under the State Superfund Program in 1985.
In 2004 and 2011, CI and CCH respectively entered into Consent Orders with DEC requiring them to ultimately cleanup the Site. The 2011 Consent Order provided that CCH would be released from liability to the state for any remedial or response activities undertaken by plaintiffs “[u]pon the Department’s issuance of a Certificate of Completion.” As a result, CI and CCH undertook extensive remediation measures, spending upwards of $11.9 million to clean up the Site and establish long-term monitoring over 30 years estimated to cost an additional $1.14 million. CI and CCH’s main argument was that the municipal defendants should reimburse them for some or all of those costs because those municipalities disposed contaminated sediments at the landfills and were actually identified as “potentially responsible parties” (“PRP”) under CERCLA by the United States Environmental Protection Agency.
Understanding CERCLA Claims (Contribution vs. Recovery Claims)
Under CERCLA, a plaintiff may seek reimbursement of site cleanup costs under either Section 107(a) or Section 113(f), but not both. Each CERCLA right of action has its own statutory trigger and has distinct remedies available to parties in different situations. If a PRP has been sued (by the government or a private party) under Sections 106 or 107, it may recover contributions from other PRPs pursuant to Section 113(f)(1). On the other hand, if a PRP has “resolved” its liability to the federal or state government in an administrative or judicially approved settlement, it may only recover contributions pursuant to Section 113(f)(3)(B). If neither of those two conditions are present, a PRP may only bring a cost recovery action under Section 107.
The difference is important because each CERCLA cost reimbursement action carries different statute of limitations periods: a contribution claim under Section 113 must be made within 3 years (of an administrative settlement or law suit under Section 106 or 107), while the limitations period for cost recovery claims under Section 107 is six years (from commencement of response activities).
Outcome of the Case
In this case, CI and CCH claimed that relief under Section 107 was applicable because they had not been sued under Sections 106 or 107, nor had they resolved their CERCLA liability in an administrative settlement with the government, and thus, the six-year statute of limitations applied. The municipal defendants, on the other hand, argued that CI and CCH could not sue them under Section 107 because the 2004 Consent Order “resolved CI’s liability for the costs incurred in complying with that order, which constitutes a statutory trigger requiring CI to proceed under §113(f)(3)(B), not §107,” and thus, the three-year statute of limitations was appropriate. Defendants gave the same reasoning to dismiss CCH’s claim under Section 107.
The court, however, disagreed with the City of Syracuse and Onondaga County, noting that “a consent order with the federal or state government does not necessarily qualify as an ‘administrative or judicially approved settlement’ that would require a PRP to proceed under § 113(f)(3)(B)” if it does not clearly resolve CERCLA liability. According to the court, the 2004 Consent Order did not necessarily resolve CI’s liability, because no language existed in the 2004 Consent Order specifying that CI’s liability would be resolved. The court highlighted language from the 2004 Consent Order indicating that CI’s liability would not be resolved, specifically “[n]othing contained in this Order shall be construed as barring, diminishing, adjudicating, or in any way affecting the Department’s rights.” As a result, the court determined that CI was allowed to seek contribution costs from Syracuse and Onondaga County under Section 107.
The court also reasoned that the 2011 Consent Order did not resolve CCH’s liability because the release of liability was conditioned upon the DEC’s issuance of a Certificate of Completion, which had not been issued. Siding again with plaintiffs, the court held that relief under Section 113(f)(1) was not triggered and, therefore, CCH could proceed with a recovery claim against defendants under Section 107, which as noted above prescribes a six-year limitations period.
What is the takeaway from this case? Consent orders with the government can be useful in resolving liability under CERCLA. However, parties must be careful in how they draft such consent orders because the resolution of all CERCLA claims could trigger the availability (or unavailability) of future CERCLA relief under Sections 107 or 113(f), each carrying their own statute of limitations periods and consequences. In this case, the plaintiffs’ attorneys were careful (or lucky!) in negotiating the consent orders in such a way that CERCLA Section 107 cost-recovery relief, with the six-year limitations period, was available to them.
Click here to read the decision in Cooper Crouse-Hinds, LLC v. City of Syracuse, 16-CV-1201 (N.D.N.Y. Feb. 12, 2018).
Call the attorneys of Periconi, LLC at (212) 213-5500 if you need counsel to negotiate and draft administrative consent orders, if you need to commence a CERCLA cost recovery or contribution action, or if you have been threatened with a lawsuit under CERCLA.