New York's Oil Spill Act, Article 12 of the New York Navigation Law, assigns strict liability to any person who has discharged petroleum, for all cleanup and removal costs associated with the cleanup of the petroleum, as well as all direct and indirect damages, such as attorney's fees. N.Y. Navigation Law (1). A discharge of petroleum, sufficient to incur liability under the Oil Spill Act, includes any intentional or unintentional action or omission resulting in a release of petroleum into water, or into soil from which the petroleum could flow or drain to water. NL 172(8). New York generally interprets any and all spills of petroleum onto soil as falling within the jurisdiction of the Oil Spill Act, without any demonstration that the petroleum will actually find its way to the waters nominally protected by the Act.
Here's a pop quiz: after an eleven week trial in federal court, a jury hands down a verdict of nearly $105 million against ExxonMobil for contaminating New York City's drinking water. On appeal, the verdict is upheld. What environmental law enabled the jury to find, and the appellate court to affirm, such a large verdict? The Superfund Law? The Clean Water Act? The Resource Conservation and Recovery Act?
The health threats posed by physical contact with contaminated soil or groundwater are well known. But increasingly, state and federal regulators are recognizing that harmful vapors from such contamination can be drawn into nearby buildings and pose a threat to the occupants. Known as soil vapor intrusion, this threat can come from undiscovered contamination beneath a building, or even from the remnants of previously remediated soil or groundwater.
Many insurance policies contain a "pollution exclusion" which seeks to exclude coverage for losses arising from pollution, except in the case of a "sudden and accidental" release. "Sudden and accidental" may bring to mind a burst pipe or overturned tanker truck, but a recent decision in the United States District Court for the Southern District of New York suggests that the interpretation can be much more complicated.
EPA has just extended to tenants the Bona Fide Prospective Purchaser ("BFPP") protection, by which Congress previously exempted certain prospective owners from harsh Superfund liability. Even where the landlord loses its BFPP protection, the new EPA enforcement guidance memo allows tenants to hold onto it, assuming the tenant can meet certain requirements.
Congress enacted the Superfund Act, whose formal name is the Comprehensive Environmental Response, Compensation, and Liability Act, or CERCLA, in 1980 to promote the clean up (remediation) of properties, typically abandoned landfills or other sites, that had been contaminated by the disposal of hazardous materials. To further this goal, Congress cast a wide net and imposed strict liability for all "Potentially Responsible Parties" (PRPs) who contributed to the contamination at a site. See 42 USCS Sec. 9607(a).
Since the Second Circuit Court of Appeals decided Niagara Mohawk Power Corp v. Chevron U.S.A., Inc., 596 F.3d 112 (2d Cir. 2010), a number of other Circuits have followed the Second Circuit's holding that parties who enter into a consent decree with the U.S. Environmental Protection Agency ("EPA") following an EPA enforcement action and then seek recovery of cleanup costs from other potentially responsible parties ("PRPs") are limited to a contribution claim under § 113(f) of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA); they may not bring a cost recovery action under § 107(a) of CERCLA for those same costs. See, e.g., Morrison Enter., LLC v. Dravo Corp., 638 F.3d 594, 603 (8th Cir. 2011); Agere Sys., Inc. v. Advanced Envtl. Tech. Corp., 602 F.3d 204, 229 (3d Cir. 2010). See also Periconi, LLC Environmental Law Blog, here, here, and here for a summary of the Niagara Mohawk case. The most recent decision in line with the Second Circuit is the Eleventh Circuit's decision in Solutia, Inc. v. McWane, Inc., Case No. 10-15639 (11th Cir. Mar. 6, 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.
New York's Oil Spill Act, Article 12 of the New York Navigation Law, provides a natural and attractive starting point for people seeking to recover cleanup costs for petroleum spills. The Act's imposition of strict liability holds out the promise of avoiding litigation over events and states of mind for which little or contradictory evidence exists, or that may be vulnerable to highly subjective interpretation long after the fact. Under the Oil Spill Act, if someone's actions caused or contributed to a discharge of petroleum, he is liable for its cleanup, without regard to his state of mind or relationship to others at the time. However, the Oil Spill Act's powerful mechanism of strict liability is not available to everyone who may have been forced to pay for a cleanup of an oil spill. For instance, property owners who are unaware that a fuel oil tank on their property is leaking oil are nevertheless at fault for the spill under the Oil Spill Act, and therefore may not seek full recovery of their cleanup costs from others who may bear more responsibility for the leaky tank. For such a property owner, the only available recourse under the Oil Spill Act may be a contribution action, under which the property owner could only recover part of the total cleanup costs.