The Court of Appeals for the Second Circuit recently issued a decision in Niagara Mohawk Power Corp. v. Chevron U.S.A., Inc., — F.3d —-, 2010 WL 626064 (2d Cir. Feb. 24, 2010), another in a series of cases that attempt to chart the contours of liability of potentially responsible parties (“PRPs”) under CERCLA. Following its cleanup of a contaminated site along the Hudson River under an administrative consent order with the New York State Department of Environmental Conservation (“DEC”), Niagara Mohawk Power Corp. (“Niagara”), itself a PRP, commenced a cost recovery and contribution action against other PRPs.
The District Court ruled that Niagara could not seek contribution costs under Section 113(f)(3)(B) of CERCLA because DEC did not have the authority to resolve CERCLA liability without a specific agreement with the EPA and, thus, the administrative consent order did not resolve Niagara’s CERCLA liability. The Second Circuit reversed this ruling, holding that Niagara could maintain a contribution action against former owners and operators of the site pursuant to §113(f)(3)(B).
Section 113(f)(3)(B) allows a party to seek contribution from other PRPs when the party “has resolved its liability to the United States or a state for some or all of a response action in an administrative or judicially approved settlement.” Because Niagara had administratively settled its CERCLA claims with the DEC, the court concluded that §113(f)(3)(B) provided the proper mechanism for Niagara’s claims; settlement of claims with the federal government or express federal approval of the state administrative settlement was not required. In addition, the court held that because Niagara’s claims fit squarely within the requirements of §113(f)(3)(B), to allow Niagara to proceed with a cost recovery action under §107(a) would be inappropriate. This ruling should clarify that a DEC administrative consent order is sufficient to permit the settling party to bring a CERCLA contribution action.
The District Court granted summary judgment in favor of certain defendants on the grounds that Niagara had failed to raise a genuine issue of material fact as to whether hazardous substances had been released on defendants’ properties. Defendants had argued that Niagara’s failure to identify evidence that they had caused any release of hazardous substances entitled them to summary judgment. The Second Circuit reversed, holding that a party seeking contribution need not establish the precise amount of hazardous material discharged to demonstrate PRP liability and to move its CERCLA claims past the summary judgment stage; application of this standard will make it more difficult for PRPs to exit a litigation by moving for summary judgment. Whether the amount of hazardous waste deposited by a particular PRP is minimal does not erase liability, but presents an issue for appropriation of costs.
Former site owner Chevron, one of the defendants seeking summary judgment, argued that it could not be held liable for Niagara’s costs because it never engaged in any activities that could have produced manufactured gas production waste—the type of waste Niagara was required to remediate under the consent order. The Second Circuit held, however, that because Niagara was required to investigate and identify all hazardous waste, it could seek contribution for Chevron’s share of the investigation costs.
The Second Circuit also overruled the District Court’s finding that a genuine issue of material fact existed as to whether Niagara’s cleanup was consistent with the National Contingency Plan (“NCP”). Noting the presumption that actions undertaken by the government are consistent with the NCP, the court held that a PRP could establish consistence by conducting a response action under the monitoring and ultimate approval of a state environmental agency. Niagara’s adherence to the DEC consent order established the cleanup’s NCP consistency.