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New York, City of v. Exxon Corp.

ELR Citation: 16 ELR 20850
Nos. No. 85 Civ. 1939 (EW), 633 F. Supp. 609/24 ERC 1361/(S.D.N.Y., 04/24/1986) Motion to dismiss denied

The court holds that neither prior approval nor expenditure of funds by the Environmental Protection Agency (EPA) or the state is a prerequisite to a cost recovery action brought by New York City under §107 of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) against generators and transporters of hazardous waste dumped at five city landfills, and the city may sue for natural resource damages under CERCLA §107(f). The court first holds that although the city alleged in its complaint that its response costs are "not inconsistent with" the national contingency plan (NCP), it must demonstrate that its response costs are necessary and "consistent with" the NCP to prevail in its cost recovery claim under §107(a)(4)(B). The city's argument that it is held to the standard of §107(a)(4)(A) applicable to the federal and state governments is inapposite since its allegations are premised on §107(a)(4)(B). Whether the city's costs are necessary and consistent with the NCP is a question of fact that cannot be resolved on a motion to dismiss.

The court rules that a private party need not obtain approval from EPA or the state prior to commencing a cost recovery action under §107(a)(4)(B). CERCLA's statutory scheme and the NCP both indicate that prior EPA approval is required only when private parties seek reimbursement of their response costs from the Hazardous Substance Response Trust Fund under §111, but not when private parties seek recovery directly from other parites. This distinction comports with CERCLA's remedial purposes, since requiring private parties to await government approval would unduly limit the overall national cleanup effort. This conclusion is further supported by the Second Circuit's opinion in New York v. Shore Realty Corp. holding that prior EPA approval is not required before a state may bring a cost recovery action under §107(a)(4)(A). The court rules that the incurrence of response costs by EPA or the state is also not a prerequisite to the city's cost recovery suit. The location of §107(a)(4)(B), which authorizes private parties to recover any "other" necessary response costs, immediately following the provision establishing liability for all response costs incurred by EPA or a state does not imply that "other" costs may arise only after the EPA or a state has incurred response costs. A more reasonable interpretation is that the word "other" simply differentiates between government and private party response costs. A contrary holding would conflict with CERCLA's purpose of encouraging private party cleanups by limiting cleanups to those funded by the federal or state governments. The court holds that the city's allegations of analyzing and monitoring expenses are sufficient to establish that it has incurred response costs.

After noting that the waters of several bays and an underground aquifer are natural resources within the meaning of CERCLA §107(a)(4)(C), the court rules that the city may bring suit for natural resource damages under §107(f). Although §107(f) specifies that liability is "to the United States or any State," the court notes that the definition of natural resources specifically includes resources controlled by local governments. To require states to sue to recover for damages to natural resources on behalf of the local governments actually responsible for their management would not further CERCLA's remedial purpose.

The court next holds that whether the water produced by a generator defendant included hazardous substances under CERCLA is a question of fact that cannot be resolved on a motion to dismiss. Finally, the court holds that plaintiff has made a prima facie showing of jurisdiction over a foreign corporation, the parent of the defunct companies that transported the waste. Plaintiff has established that the activites of a subsidiary in transporting the waste should be imputed to the foreign corporation, which operated the subsidiary as a mere department.

Counsel for Plaintiff
Frederick A.O. Schwarz Jr., Corporation Counsel
The City of New York
100 Church St., New York NY 10007
(718) 566-3929

Counsel for Defendants
James W. Moorman
Cadwalader, Wickersham & Taft
100 Maiden Lane, New York NY 10038
(212) 504-6000

David J. Mahoney, Mark L. Manewitz
Exxon Corporation
P.O. Box 222, Linden NJ 07036
(201) 474-3325