United States v. Occidental Chemical Corp.

No. 4:CV-98-0686 (M.D. Pa. October 23, 1998)

The court holds that the federal government's Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) § 106(b)(1) action against a nonsettling party to enforce a unilateral administrative order (UAO) is barred by the complete relief the government obtained in a prior settlement. In 1997, the U.S. Environmental Protection Agency (EPA) and a settling party entered into a consent decree in which the settling party agreed to perform remedial action at the site in question and to pay all past, interim, and future costs incurred by the United States as a result of response actions taken at the site. Shortly thereafter, EPA issued a UAO that subjected the nonsettling party to the same terms and conditions set forth in the consent decree. The court first holds that the federal government, in the consent decree with the settling party, has already received complete relief with respect to the site at issue, and, therefore, its action against the nonsettling party is barred. Where the United States has obtained complete relief in a settlement, it does not have authority to seek a duplicative recovery or the same relief from a person who has not so resolved its liability. CERCLA's prohibition against the government's ability to seek recovery from a nonsettlor where it has obtained complete relief in a prior settlement embodies the traditional common-law prohibition against double recovery and unjust enrichment of a plaintiff who sues joint tortfeasors. In addition, the prohibition against seeking recovery from a nonsettlor where complete recovery was provided for in a settlement agreement with a responsible party is consistent with Congress' intent to ensure rapid and thorough cleanup of toxic waste sites and to conserve governmental resources. Thus, the court holds that the UAO issued by EPA is invalid because it was not necessary to protect public health and welfare and the environment as required by CERCLA § 106.

Counsel for Plaintiff
Anne K. Fiorenza, Ass't U.S. Attorney
U.S. Attorney's Office
1162 Federal Bldg.
228 Walnut St., Harrisburg PA 17108
(717) 782-4482

Counsel for Defendant
Larry D. Silver
Duane, Morris & Heckscher
One Liberty Pl., Ste. 4200, Philadelphia PA 19103
(215) 979-1000

[29 ELR 20276]

Muir, J.:

Order

On April 28, 1998, the United States filed this civil action against Occidental Chemical Corporation ("Occidental") pursuant to § 106(b)(1) of the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. § 9606(b)(1). In the complaint the United States alleges that Occidental failed to comply with a Unilateral Administrative Order issued by the Environmental Protection Agency [("EPA")] on March 10, 1997, which required Occidental to perform response actions at the Centre County Kepone Superfund Site ("Site"). The Unilateral Administrative Order was issued pursuant to § 9606(a) which provides in relevant part that "the President may . . . issue such orders as may be necessary to protect public health and welfare and the environment."

The United States seeks penalties of $ 27,500.00 per day for each day since April 29, 1997, when Occidental informed the [EPA] that it would not comply with the Unilateral Administrative Order, punitive damages in an amount at least equal to and not more than three times the amount of any costs incurred by the government as a result of Occidental's failure to comply with the Unilateral Administrative Order, an injunction requiring Occidental to comply with the Unilateral Administrative Order, and a declaratory judgment against Occidental holding it liable for response costs or damages that will be binding in any subsequent actions to recover costs associated with the cleanup of the Site. The United States also seeks recovery of more than $ 300.000 in response costs incurred in responding to the release or threatened release of hazardoous substances at the Site.

On June 26, 1998, Occidental filed a motion to dismiss the complaint for lack of jurisdiction and for failure to state a claim upon which relief may be granted. Occidental argues that this action should be dismissed because the United States has already obtained "complete relief" from Ruetgers-Nease Corporation ("Ruetgers") as a result of a judicially approved settlement. Occidental contends that the United States is precluded from bringing an action against it for the same relief. Occidental's motion to dismiss is fully briefed and ripe for disposition.

[29 ELR 20277]

The United States alleges in the complaint that the Site¹ which consists of 32.3 acres and on which Ruetgers operates a chemical manufacturing facility is contaminated with numerous hazardous substances. It is alleged that from 1958 to the present Ruetgers and its predecessor, Nease Chemical Company, Inc. ("Nease") have manufactured at the Site a variety of organic chemicals, including intermediates and final products used in the soap and detergent industry, in pharmaceutical products, in the agricultural chemical industry, in metal plating and in the production of plastics. The United States contends that Hooker Chemical Corporation ("Hooker"), the predecessor of Occidental, in 1973 entered into an agreement with Nease to manufacture Mirex, an insecticide and fire retardant. Nease allegedly manufactured 556,000 pounds of Mirex for Hooker between April 1973 and March 1974. The government claims that waste streams from the process of manufacturing Mirex were disposed of at the Site and that Mirex breaks down, in part, into Kepone.

The Site was divided by the EPA into two operable units for purposes of cleanup. Operable Unit One addresses groundwater contamination and contaminated soils and sediments in the areas around the chemical manufacturing facility. Operable Unit Two will address soil contamination in a spray field² and also in an area near Spring Creek.³ On April 21, 1995, the EPA issued a Record of Decision which dealt only with Operable Unit One and noted that Operable Unit Two would be dealt with in a future Record of Decision after additional data had been collected and analyzed. The present action against Occidental only deals with Operable Unit One.

The EPA filed a civil action against Ruetgers on December 6, 1996.⁴ On the same day a Consent Decree requiring Ruetgers to perform the remedial action required in the Record of Decision for Operable Unit One was lodged with the court. After the statutory period for public comment had expired, the court signed the Consent Decree on April 16, 1997.

In addition to agreeing to perform the remedial action required by the Record of Decision for Operable Unit One, Ruetgers also agreed in the Consent Decree to pay all past, interim and future costs incurred by the United Staes as a result of response actions taken at the Site. "Past Response Costs" are defined in relevant part in the Consent Decree as follows:

All costs, including, but not limited to, direct and indirect costs, that the United States paid at or in connection with the Site through August 26, 1994, plus interest on such costs which has accrued pursuant to 42 U.S.C. § 9607(a) through such date.

"Interim Response Costs" are defined in relevant part as follows:

All costs, including direct and indirect costs, (a) paid by the United States in connection with the Site between August 26, 1994, and the effective date of this Consent Decree, or (b) incurred prior to the Effective Date of this Consent Decree but paid after that date.

"Future Response Costs" are defined in pertinent part as follows:

All costs, including, but not limited to, direct and indirect costs, that the United States . . . incurs in reviewing or developing plans, reports and other items pursuant to this Consent Decree, verifying the Work, or otherwise implementing, overseeing, or enforcing this Consent Decree, including but not limited to, payroll costs, contractor costs, travel costs, laboratory costs, the costs incurred pursuant to Section VII (Remedy Review), Section X (Access) . . ., Section XVI (Emergency Response), and Paragraph 88 Section XXI [relating to work takeover] . . . Future Response Costs shall also include all Interim Response Costs . . . .

The Consent Decree specifically provides that Ruetgers will "finance and perform the Work in accordance with . . . the [Record of Decision], the Performance Standards, and all Work Plans and other plans, standards, specificiations, and schedules set forth herein or developed pursuant to the Consent Decree" and "reimburse the United States . . . for Past Response Costs and Future Response Costs . . . ." "Work" is defined in the Consent Decree as "all activities [Ruetgers] is required to perform under [the] Consent Decree . . . ."

Under the Consent Decree Ruetgers is obliged to remediate Operable Unit One in accordance with the April 21, 1995, Record of Decision. That Record of Decision estimates the costs of the selected remedy for Operable Unit One to be $ 15,863,000.00. The selected remedy is outlined at page 53 of the Record of Decision and on pages 32 and 33 of the Consent Decree. That remedy includes extraction and treatment of contaminated groundwater, long-term groundwater monitoring, excavation and offsite disposal of contaminated soils, soil sampling of the 15-acre Former Spray Field Area, fish tissue monitoring, and calculation of environmental risks. We conclude from our review of the Consent Decree that Ruetgers is responsible for all costs — past, interim and future — associated with the selected remedy for Operable Unit One as set forth in the Record of Decision dated April 21, 1995. The definitions of past, interim and future costs set forth in the Consent Decree are all-inclusive and result in complete relief to the government with respect to Operable Unit One.

The Unilateral Administrative Order issued by the EPA on March 10, 1997, "subjected [Occidental] to the same terms and conditions set forth in the . . . Consent Decree for financing and implementing the response actions at [the] Kepone Site" and "determined that [Occidental] is jointly and severally liable . . . for all response actions at Site." We must now consider whether the government can proceed against Occidental for the exact same relief which it obtained under the Consent Decree.

Section 113(f), 42 U.S.C. § 9613(f), entitled "Contribution," added by the Superfund Amendments and Reauthorization Act of 1986, "codifies the federal common law right of contribution" and clarifies that parties who enter into Superfund settlements with the United States which resolve their liability have a right to seek contribution from nonsettlors. OHM Remediation Services v. Evans Cooperage Co., 116 F.3d 1574, 1581 [27 ELR 21318] (5th Cir. 1997); United States v. Browning-Ferris Indus., 33 F.3d 96, 100-01 (1st Cir. 1994), cert. denied, 513 U.S. 1183 (1995). 42 U.S.C. § 9613(f)(3)(A), entitled "Persons not party to settlement," states:

If the United States or a State has obtained less than complete relief from a person who has resolved its liability to the United States or the State in an administrative or judicially approved settlement, the United States or the State may bring an action against any person who has not so resolved its liability.

Under this provision the United States may "bring an action" against persons who have unresolved liability to the United States only when the United States "has obtained less than complete relief from a person who has resolved its liability to the United States . . . in an administrative or judicially approved settlement." In other words, where the United States has obtained "complete relief" in a settlement, the United States does not have authority to seek a "duplicate recovery" or the same relief from a "person who has not so resolved its liability." Section 9613(f)(3)(B) which preserves the right of settling parties to seek contribution from nonsettlors, makes it clear that where § 9613(f)(3)(A) uses the term "complete relief" in a settlement, it refers [29 ELR 20278] to liability for the "response action" itself as well as the "costs of such action," where either is resolved in the settlment.

The government's lack of authority to bring an action against a nonsettlor where it has previously obtained "complete relief" in a judicially approved settlement is further demonstrated by § 9613(f)(2) which states as follows:

A person who has resolved its liability to the United States or a State in an administrative or judicially approved settlement shall not be liable for claims for contribution regarding matters addressed in the settlement. Such settlement does not discharge any of the other potentially liable persons unless its terms so provide, but it reduces the potential liability of the others by the amount of the settlement.

The Court of Appeals for the Second Circuit has stated that "when . . . a settlement addresses past and future costs, the nonsettling defendants' liability to the government for those costs is reduced by the amount of the settlement. B.F. Goodrich v. Betkoski, 99 F.3d 505, 527 [27 ELR 20329] (2d Cir. 1996).

The Superfund law's prohibition against the government's ability to seek recovery from a nonsettlor where it has obtained complete relief in a prior settlement embodies the traditional common-law prohibition against double recovery and unjust enrichment of a plaintiff who sues joint tortfeasors. As stated by the Pennsylvania Supreme Court:

It has long been the law that for the same injury, an injured party may have but one satisfaction, and the receipt of such satisfaction, either as payment of a judgment recovered or consideration for a release executed by him, from a perso liable for such injury necessarily works a release of all others liable for the same injury.

Brown v. Pittsburgh, 409 Pa. 357, 363, 186 A.2d 399, 402-03 (1962).

Finally, the prohibition against seeking recovery from a non-settlor where complete recovery was provided for in a settlement agreement with a responsible party is consistent with Congress' intent in passing the Superfund Amendments and Reauthorization Act, i.e., to ensure rapid and thorough cleanup of toxic waste sites and to conserve governmental resources. See United States v. Alcan Aluminum, 25 F.3d 1174, 1180-81 [24 ELR 20980] (3d Cir. 1994); H.R. Rep. No. 253, 99th Cong. 2d Sess. 59, reprinted in 1986 U.S.C.A.A.N. 2835, 2841. Congress did not intend that the EPA expend its scarce resources where the government's liability claim is already satisfied and a financially-assured remedy is underway. Rather, § 9613(f)(3) specifically provides that a settling party will be left to its own devices to be made whole, i.e., a civilaction for contribution.

The United States, in the settlement agreement with Ruetgers, has already received "complete relief" with respect to Operable Unit One. Consequently, the present action is barred and the Unilateral Administrative Order issued by the EPA is invalid because it was not "necessary to protect public health and welfare and the environment" as § 9606 of the Superfund law requires. We will, therefore, grant Occidental's motion to dismiss the government's complaint.

NOW, THEREFORE, IT IS ORDERED THAT:

1. Occidental's motion to dismiss the complaint is granted in accordance with P2 of this order.

2. The complaint of the United States is dismissed without prejudice.⁵

2. [sic] The Clerk of the Court shall close this case.

1. The Site is located in College Township, Centre County and situated on Struble Road off of Pennsylvania State Highway 26 approximately 2 1/2 miles northeast of the Borough of State College and 800 feet south of the intersection of Pennsylvania States Highways 26 and 150. The Record of Decision issued on April 21, 1998, reveals that there is also a Centre County Kepone Study Area ("the Study Area") which includes Thorton Spring located in the Village of Lemont and that portion of Spring Creek from the Village of Lemont to the Pennsylvania Fish Commission Benner Spring Research Station. Spring Creek flows generally northward through the Study Area and Nittany Valley. The Site apparently impacts Spring Creek because "[a] freshwater drainage ditch, which receives limited storm water runoff and treated water from the groundwater treatment facility runs along the western boundary of the Site, crosses under PA 26, and enters Spring Creek immediately downstream from PA 26."

2. In the early 1960s, Nease sprayed treated wastewater "on an open grassy area at the southern end of the Site identified as the Former Spray Field." See Record of Decision issued April 21, 1995, p. 3.

3. The Record of Decision reveals that "levels of mirex and kepone in soil of the former spray field area, and sediments of the drainage ditch, Thorton Spring, and Spring Creek exceed the criteria that EPA has determined are protective of ecological receptors. However, these areas were not fully characterized during the [Remedial Investigation and Feasibility Study] process and will require further investigation to determine the extent of contamination and potential risks to ecological receptors." Part of the remedial plan for Operable Unit One set forth in the April 21, 1995, Record of Decision was to conduct surface soil sampling of the spray field area and "riparian-area sampling, including the drainage channel of Thornton Spring. Section B of the freshwater drainage ditch, and downstream of Benner Fish Hatchery, and calculation of environmental risks."

4. United States v. Ruetgers-Nease Corporation, 4:CV-96-2128 (M.D. Pa., filed Dec. 6, 1996) (Muir. J.).

5. We take no position as to whether the government can proceed against Occidental if Ruetgers becomes financially insolvent and is unable to perform fully under the Consent Decree.