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Bancamerica Commercial Corp. v. Mosher Steel of Kansas, Inc.

ELR Citation: 27 ELR 20397
Nos. Nos. 95-3385, -3396, 100 F.3d 792/(10th Cir., 11/13/1996) aff'd in part, rev'd in part

The court affirms a district court decision that a bank and a lead smelting company that conducted site remediation pursuant to U.S. Environmental Protection Agency (EPA) orders issued under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) are entitled to contribution from a steel manufacturer for response costs they incurred, but the court reverses the lower court's decision that they are not entitled to prejudgment interest. The court first holds that EPA orders did not require the bank and the lead smelting company to comply with the public comment requirements of the national contingency plan (NCP). The steel company's argument that language in the orders requiring compliance with applicable laws mandates compliance with the public comment requirements would render meaningless EPA's regulation that actions complying with such orders are deemed to be consistent with the NCP. In addition, the steel company's position would render meaningless a provision in one of the orders stating that work properly performed pursuant to the order is consistent with the NCP. EPA comments on its own regulations, which are entitled to substantial deference, support this conclusion.

The court then holds that it was unnecessary for the district court to decide whether the cleanup was a removal or a remedial action. Because of the regulation presuming consistency with the NCP for response actions performed according to the terms of an EPA order, this characterization is irrelevant. Also, the steel manufacturer's argument that the 1990 NCP's consistency presumption does not apply to the bank's 1988 and 1989 response actions is untimely. The court affirms the district court's refusal to allow the steel manufacturer to offset against its tax liability to the bank a greater sum of money that the bank allegedly owed the steel manufacturer. The steel manufacturer never provided the bank with written notice of the bank's alleged contractual default in paying this amount, and the district court found that the steel manufacturer failed to establish that the bank had not fully paid this debt.

The court next holds that the bank and the lead smelting company are entitled to prejudgment interest. Although cost apportionment actions between potentially responsible parties must be brought under CERCLA §113(f), that section does not create any new liabilities. It incorporates the liabilities set forth in §107(a), as those are the costs to be equitably apportioned. Thus, §113(f) incorporates §107(a)'s prejudgment interest provision. Refusal to grant prejudgment interest would be a disincentive for private parties to undertake voluntary cleanup actions. The district court abused its discretion in finding that the bank and the lead smelting company failed to meet §107(a)'s demand requirement for prejudgment interest, and in refusing to grant prejudgment interest because the bank and the lead smelting company had not provided the court with interest rates or a method with which to compute the appropriate interest. The court remands the case to the district court for a determination of the appropriate amount of such interest. Finally, the court holds that the district court did not abuse its discretion in considering only toxicity and volume in allocating liability, and it did not err in failing to award the bank damages on its breach of contract claim regarding the steel manufacturer's operation of leaking underground storage tanks.

[The district court's decision is published at 26 ELR 20757. A related decision is published at 22 ELR 21352.]

Counsel for Plaintiffs
Elizabeth D. Nay
Lewis, Rice & Fingersh
1010 Walnut, Ste. 500, Kansas City MO 64106
(816) 421-2500

Counsel for Defendants
Frederick W. Addison III
Locke, Purnell, Rain & Harrell
2200 Ross Ave., Ste. 2200, Dallas TX 75201
(214) 740-8000

Before PORFILIO, TACHA and BRORBY, Circuit Judges.