settling cercla cases: executing an effective...

Settling CERCLA Cases: Executing an Effective Strategy Resolving CERCLA Litigation and Minimizing the Threat of Future RCRA Citizen Suits and CERCLA 107 Claims

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TUESDAY, FEBRUARY 24, 2015

Presenting a live 90-minute webinar with interactive Q&A

Thomas A. Bloomfield, Senior Attorney, Gallagher Law Group, Boulder, Colo.

Albert M. Cohen, Partner, Loeb & Loeb, Los Angeles

Benjamin S. Lippard, Partner, Vinson & Elkins, Washington, D.C.

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©2015 Vinson & Elkins LLP Confidential & Proprietary

CERCLA Settlements – Overview/Case Law Developments

Benjamin S. Lippard, Vinson & Elkins LLP

February 24, 2015


• Section 104 – authorizes response actions by EPA

• Section 106 – authorizes unilateral administrative orders

• Section 107 – cost recovery

• Section 113(f) – contribution

• Section 113(g) – statute of limitations

• Section 113(h) – jurisdictional bar

• Section 122 – requirements for settlements

CERCLA – statutory overview

6


• “Congress sought . . . to encourage settlements that would

reduce the inefficient expenditure of public funds on

lengthy litigation.” Chubb Custom Ins. Co. v. Space

Sys./Loral, Inc., 710 F.3d 946, 971 (9th Cir. 2013).

• A party who has resolved its CERCLA liability is not liable

for claims for contribution regarding matters addressed in

the settlement. 42 U.S.C. § 9613(f)(2).

• Parties who do not settle may ultimately bear a

disproportionate share of the CERCLA liability.

– Potential difference between EPA settlements and private

party settlements.

CERCLA – importance of settlements

7


• Challenges to EPA remedy selection/unilateral

administrative orders have dubious prospects. See United

States v. P.H. Glatfelter Co., 768 F.3d 662 (7th Cir. 2014).

• Allocation litigation – protracted, expensive, and

unpredictable. See NCR Corp. v. George A. Whiting Paper

Co., 768 F.3d 682 (7th Cir. 2014).

CERCLA – litigation risks

8


• Divisibility defenses not as successful post-Burlington

Northern as many private parties had hoped.

– “Yet, despite this Court’s clarion guidance, in the more-than-forty

district court opinions issued since Burlington Northern, not a single

one has found liability from a CERCLA site to be capable of

apportionment . . . district courts have repeatedly denied

apportionment on the most hyper-technical grounds, from failing to

provide sufficiently precise records detailing manufacturing output, to

a lack of “percipient witnesses” to a particular industrial process””

Petition for Writ of Certiorari, Ashley II of Charleston.

• Recent Seventh Circuit opinion in United States v. P.H.

Glatfelter Co., 768 F.3d 662 (7th Cir. Sept. 25, 2014)

potentially favorable to defendants seeking apportionment.

– Remanded to district court for additional consideration of defendant’s

divisibility argument at complex sediment site.

CERCLA – litigation risks

9


• Benefits of settlement

– Covenant not to sue

– Contribution protection

– Avoidance of substantial transaction costs

• Risks

– Reopeners

– Stipulated penalties

– Potentially still vulnerable to Section 107 claims

– Potential risk of state law claims

– Potential risk of RCRA claims

CERCLA – risks and benefits of settlement

10


• Consensus view is that parties with a section 113 contribution claim

must use it rather than 107. See, e.g., Morrison Enters. v. Dravo Corp.,

638 F.3d 594 (8th Cir. 2011).

• Government settlements can extinguish contribution claims by other

parties. Solutia v. McWane, 672 F.3d 1230 (11th Cir. 2012).

• Work outside settlement agreement context might allow section 107

claims, potentially circumventing contribution protection.

– Section 106 unilateral administrative order may allow responding

parties assert 107 claim. See Pharmacia Corp. v. Clayton Chemical

Acquisition LLC, 382 F. Supp. 2d 1079 (S.D. Ill. 2005).

– Voluntarily performing cleanup and paying EPA oversight costs with

no order may also allow a 107 claim. See Ashland Inc. v. GAR

Electroforming, et al. 729 F. Supp. 2d 526 (D.R.I. 2010) order

vacated (Jan 18, 2013).

Timing and Impact of Settlement

11


• Potentially responsible parties who do not enter into such

agreements have standing to intervene in CERCLA actions

to oppose the entry of CERCLA consent decrees.

– A double-edged sword?

– Limited discovery and ability to challenge

– Harder to challenge due process later

• Courts review CERCLA settlements deferentially. United

States v. Cannons Eng’g Corp., 899 F.2d 79 (1st Cir. 1990).

• The Ninth Circuit held a state CERCLA settlement to higher

judicial scrutiny, compared to EPA settlements, and

rejected it for inadequate consideration of relative fault.

• Unpredictable implications for future contribution claims.

State of Arizona v. City of Tucson, 761 F.3d 1005 (9th Cir. 2014)

12


• Statute of limitations risks increasing for section 113

contribution claims.

• Statute of limitations ambiguous as to many settlements,

because section 113(g)(3) references only limited

categories of administrative settlements (122(g) and (h)).

• Some courts have held that contribution claims must be

brought within three years of a settlement. Hobart Corp v.

Waste Mgmt. of Ohio, Inc., 758 F.3d 757 (6th Cir. 2014).

CERCLA Settlements – statute of limitations

13


Benjamin S. Lippard

202.639.6640

[email protected]

14

Settling CERCLA Cases:

Executing an Effective Strategy

Thomas A. Bloomfield

The Gallagher Law Group

15

Private CERCLA Settlements

I.

How Are Private Settlements Different?

II.

Strategic and Tactical Considerations

III. 9 Best Practices for Settling Private CERCLA

Litigation

16


I.


II.



Litigation

17

Greater Flexibility on Settlement Terms and

Approach

Contribution Bar

Post Settlement Contribution Claims of Private

Party Settling Defendants

Procedures to Effectuate Settlement

Introduction:

How is a Private Party Settlement Different

than a 113(f)(2) Settlement ?

18

Not dealing with EPA model decree or need to

conform to national EPA goals

More flexibility on reopeners and scope of matters

addressed

Private Party can agree to defense and indemnity for

107 claims or otherwise – EPA will not

Private parties may have more control over

remedial decisions (depending on size and scope of

the remediation)

Can potentially avoid NCP compliance if all parties join

May be able to reach settlement more quickly in

some settings – fewer procedures

Private Settlements Typically Provide Greater

Flexibility than an EPA Settlement

19

CERCLA Settlement/Contribution Protection

Provisions

1980:

CERCLA was silent on protections for settling

defendants

1986 SARA Amendments:

Contribution bar for settlements with state or federal

government:

113(f)(2): “a person who resolves their 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.”

Silent on contribution bar for other settlements

20

Is Contribution Bar Available for Private Party

Settlements?

Arguments for:

Case Law: In the absence of statutory authority, courts look to common law to fill in the gaps

113(f)(1) gives a court very broad discretion to consider equitable factors in allocating among parties, and common law contribution bar should be such a factor

Court allocates pursuant to “Federal law” - which should include federal common law

Public policy:

Encouraging settlements minimizes litigation costs and directs funds towards remediation; conserves limited judicial resources

If no contribution bar, EPA/State would need to be involved in every site – not feasible or advisable.

All Writs Act, 28 U.S.C. section 1651(a): Court can “issue all writs necessary or appropriate in aid of their respective jurisdictions and agreeable to the usages and principle of law.”

21


Settlements? (cont’d)

Arguments against:

Courts look to the “clear meaning of the text” of

CERCLA and statute does not create a contribution bar

for private party settlements

CERCLA expressly states when a contribution bar is

available (e.g. 113(f)(2) settlements), so a settlement

that does not meet those requirements does not create

a contribution bar

Public Policy:

Without government oversight, higher concern over

sweetheart deals

Reduces pool of PRPs available to pay for cleanup so

reduces government ability to get “polluter to pay”

22



Examples of Cases Allowing Contribution Bars (note absence of any appellate decisions):

Clean Harbors v. CBS, 875 F.Supp. 2d 1311 (D. Kan. 2012)

City of Colton v. American Promotional Events, Inc. , No. CV-09-01864 (C.D. Cal. Dec. 22, 2011)

Evansville Greenway & Remediation Trust v. S. Ind. Gas and Elec. Co. Inc ., 2010 WL 3168653 (S. D. Ind. Aug. 10, 2010)

Tyco Thermal Controls LLC v. Redwood Indus ., 2010 WL 3211926 (N.D. Cal. Aug. 12, 2010)

Adobe Lumber, Inc. v. Hellman , 2009 WL 256553 (E.D. Cal. Feb. 3, 2009)

Ameripride Serv. Inc. v. Valley Indus. Serv., Inc ., 2007 WL 1946635 (E.D. Cal. 2007)

United States v. Mallinckrodt , 2006 WL 3331220 (E.D. Mo. Nov. 15, 2006)

Atlantic Richfield Co. v. Am. Airlines, Inc. , 836 F. Supp. 763 (N.D. Okla. 1993)

United States v. W. Processing , 765 F. Supp. 1424 (W.D. Wash. 1990)

Edward Hines Lumber Co. v. Vulcan Materials Co ., 1987 WL 27368 (N.D. Ill., Dec. 4, 1987)

23



United States originally opposed a contribution bar

in private party settlements

See briefs filed in United States v. Mallinckrodt , 2006

WL 3331220 (E.D. Mo. Nov. 15, 2006)

More recently, United States took the position that

such private party settlements can bar CERCLA

section 113 claims pursuant to common law.

See briefs filed in City of Colton v. American

Promotional Events, Inc., No. CV-09-01864 (E.D. Cal.

filed May 18, 2011 and Oct. 31, 2011)

24

Two Common Law Approaches for Contribution Bar

Among Joint Tortfeasors: UCFA vs. UCATA (cont’d)

UCATA – Plaintiff’s Preference:

Nonsettling defendants bear risk that settlement amount is insufficient: If settling plaintiff gets too little from early settlors, remaining defendants pay more.

Encourages early settlements since non-settling defendants responsible for shortfall

This is the approach applied in CERCLA section 113(f)(2) and in at least some states (e.g. California CCP 877.6).

UCATA Section 4: When a release or a covenant not to sue or not to enforce judgment is given in good faith to one of two or more persons l iable in tort for the same injury or the same wrongful death:

(a) It does not discharge any of the other tortfeasors from liability for the injury or wrongful death unless its terms so provide; but it reduces the claim against the others to the extent of any amount stipulated by the release or the covenant, or in the amount of the consideration paid for it, whichever is the greater; and, (b) It discharges the tortfeasor to whom it is given from all liability for contribution to any other tortfeasor

25

Two Common Law Approaches for Contribution

Bar Among Joint Tortfeasors: UCFA vs. UCATA

UCFA – Defendant’s Preference:

Plaintiff bears the risk that settlement amount is insufficient to settling defendants’ share

Reduces need for a fairness determination by court

UCFA Section 6:

A release, covenant not to sue, or similar agreement entered into by a claimant and a person liable discharges that person from all liability for contribution, but it does not discharge any other persons liable upon the same claim unless it so provides. However, the claim of the releasing person against other persons is reduced by the amount of the released person's equitable share of the obligation, determined in accordance with the provisions of Section 2.

26

Two Common Law Approaches for Contribution Bar

Among Joint Tortfeasors: UCFA vs. UCATA (cont’d)

Settling Parties May Be Able to Influence Which

Approach will Be Applied by the Courts

Majority of courts apply the UCFA, but the case law is

unsettled on what applies, so courts may look to the

method selected by the parties

Tyco Thermals Controls LLC v. Redwood Industrials ,

2010 WL 3211926 (N.D. Cal. Aug. 12, 2010) (discussion

of courts applying UCFA and UCATA)

Courts have rejected choice of settling parties

Settlors conditioned settlement on UCATA where settling

party had limited ability to pay – court rejected

settlement

27

CERCLA preserves claims of a Section 113(f)(2)

settling defendant so it can pursue contribution

claims against other defendants

Under UCFA and UCATA, there is a risk that that a

settling joint tortfeasor who secures a contribution

bar cannot pursue contribution claims against other

PRPs

If your client pays to settle a private claim, client may

not be able to pursue other PRPs for contribution for

that settlement

If client performs work under a settlement, client

might have a 107 cost recovery claim (and a shield

against 113 claims)

Settling Defendant May Lose Its Contribution

Claim in Private Party Settlement

28

Judicial Review and Approval of Settlement

No need to publish in federal register or hold public

comment period

Should provide notice to potentially affected parties

whose claims may be barred

Nature of Review Depends on Who Bears Risk:

UCATA: Court must evaluate fairness of settlement

Similar judicial review of 113(f)(2) settlement but lack of

EPA involvement may lead to more judicial scrutiny (see

Hobart)

Discovery of settlement basis may be allowed

UCFA: Generally a lower need for judicial scrutiny and

discovery since plaintiff at risk for bad deal

Procedures to Effectuate Private Party

CERCLA Settlement with Settlement Bar

29

Argument that Atlantic Research authorizes Court

to bar CERCLA 107 Claims Using section 113(f)(1):

113(f)(l) authorizes the court to "allocate response

costs among liable parties using such equitable factors

as the court determines are appropriate .”

Atlantic Research recognized that

Settling Defendants confronted with cost-recovery

actions could "trigger equitable apportionment by filing

a 113(f) counterclaim" in order to avoid being thrust

back into litigation.

A court, faced with such claims "applying traditional

rules of equity would undoubtedly consider any prior

settlement as part of the liability calculus." Id.

Can Argue Settlement Bars 107 Claims of non-

Settling Defendants

30

Can also argue (if applicable) that claims of non -

settling PRPs are in the nature of contribution

claims and should be barred

Several court orders expressly bar 107 claims using

113(f)(1):

San Gabriel Basin Water Quality Auth. v. Aerojet -Gen. Corp.,

No. 2:02 Civ. 4565, slip op. at 7 (C.D. Cal. Aug. 20, 2008)

(concluding that there was “little risk and great benefit to

imposing a cost recovery bar order" following a good faith

settlement)

County of San Bernardino Settlement in Colton litigation

Zambelli Settlement in Colton Litigation

Can Argue Settlement Bars 107 Claims of non-

Settling Defendants

31


I.


II.



Litigation

32

Evaluate whether settlement discussions will be

productive:

Where is site in response-action pipeline

Where is case in the litigation pipeline

Nature of the parties

What information is available on allocation issues

Anticipated future events

Considerations Before Starting Negotiations

33

Evaluate the motivations of your client and other

parties, and the incentive of each for a private party

settlement

Avoid litigation

Avoid EPA involvement

Reduce transaction costs

Control of response action (to reduce costs and risks)

Maximize finality

Considerations Before Starting Negotiations

(con’t)

34

Evaluate alternatives to negotiating a private party CERCLA settlement:

Litigate with private party to develop facts and defenses?

Bring in regulatory agency?

Wait until process more developed through tolling agreement or other tools

Is case too early in the remedial process?

Can alternatives to litigation discovery be explored to obtain enough information to permit a settlement

If your client is a major party or group of major parties, consider whether to take more control of process (either cost recovery approach or remedial process)

Evaluate Alternatives

35

Assess Claims, Defenses and the Position of

other PRPs

How good is the Plaintiff’s claim?

Is it worth settling?

What are the weak spots? Are parties being realistic about them?

Evaluate your defenses and arguments that could l imit l iabil ity:

Plaintiff’s costs not Necessary and Consistent with the NCP (can be more important in cases where plaintiff has proceeded without agency input)

Divisibility of Harm and Allocation

Successor Liability

Statute of Limitations

Insurance Payments– Appleton Papers, Inc. v. George A. Whiting Paper Co., 776 F. Supp. 2d 857(E.D. Wis. 2011) (insurance payments reduce a party’s contribution recovery from other liable parties)

Act or Omission of Third Party; Innocent Landowner and BFP Defenses

36

Is there an orphan share and who is going to pay it?

EPA – can often shift to private parties

Private Party with 107 Claim

Private Party with Contribution Claim

Is Plaintiff focusing on the right parties?

Are there other PRPs who are not the focus of plaintiff

that could reduce your client’s exposure?

Are there agency oversight costs that need to be

managed

Assessing the Claim (cont’d)

37

Realistically assess the strength and soft spots of your

claims, offer compromises as appropriate

Provide information about nature of protection that the

settlement can offer

Make an honest assessment of the motivation of each

player and look for win-win solutions

Evaluate whether the settlement should address only

some parts of the response action and defer a final

settlement for a later date

Structure negotiations to incentivize

settlements

38

How many parties are involved?

If lots of parties, settlement begins to look more like a typical EPA settlement.

If just a few parties, issues may be more easily resolved in a private party setting.

How is the private plaintiff managing other defendants?

Is plaintiff pursuing all PRPs?

Will those other defendants have 107 or other claims against your client after you settle?

Does plaintiff intend for your client to pursue these other PRPs?

Management of Parties

39

One-off Issues could hold up defense group process

Identify if some PRPs may hold up negotiation based

on unique circumstances (successor liability, other

unique issues)

Before seeking settlement with the Plaintiff,

determine whether want to settle with other PRPs

first

Does defendant group want to investigate other

PRPs?

PRP group can seek to fundraise internally to meet

demand of plaintiff (or some other negotiated

figure)

Management of Negotiations

40

Defendants may lay in the weeds hoping to avoid

liability

Need a credible threat that non-settlers will be

pursued vigorously.

Consider separate counsel to focus on affirmative

litigation

What to do with non settlers? What to do with

later-discovered PRPs?

41

At some point, it may be good to engage the

government in the process

At what point does it make sense to do this?

EPA or other regulatory involvement can help

provide a framework for cleanup

With unsophisticated plaintiffs, government

involvement may help

Reduces uncertainty of agency action in the future

Might be able to induce more PRPs to settle

Consider tradeoff regarding the additional time and

cost for bringing government into the negotiations

Engaging the Government

42

In private party settlements, have flexibility to modify scope of the matters addressed in the settlement from standard EPA CD language

Can include language in effort to bar CERCLA 107 claims of other PRPs

Might be able to structure settlement with few or no reopeners or reservations

Likely cannot bar regulatory claims or claims of other true plaintiffs who are not jointly and severally liable

If bar is too broad, there is a risk that settlement could be challenged

Negotiate Contribution Bar Scope Language

43

Will plaintiff agree to defend and indemnify settling defendants? Does plaintiff have resources to do so?

What are risks of 107 or RCRA claims from other private parties? Can you get settlement terms in a court order that accurately state that non-settling PRP claims are in the nature of contribution and subject to the contribution bar?

What are risks of US EPA or state claims? Claims by other plaintiffs who are not jointly and severally liable?

Can plaintiff implement remediation in a way that satisfies regulators, if necessary?

Will plaintiff agree to a UCFA bar to minimize challenges to settlement?

The Golden Ring: Finality

44

Does client care if it retains a claim against other

PRPs following the settlement?

If so

May consider having settlement extinguish those rights

in settling private plaintiff or

Consider a CERCLA section 113(f)(2) settlement.

Consider Whether Settling Defendant Retains

a Claim After Settling with Private Party

45


I.


II.



Litigation

46

Best Practices for CERCLA Settlements

1. Negotiating a CERCLA settlement is a team sport

a. Important to understand and manage the players (clients and lawyers)

b. People are key

2. Transparency is a valuable card – play it early and often (site costs, remedial plans, etc.)

a. While this is “free discovery,” usually worth the price to facilitate settlement discussion

b. Helps with the “people” component

3. Recycling is not just for plastics and papers –

a. Leverage prior settlement documents and adopt for your own situation

b. Be thoughtful in approach.

47


4. Past insurance policies can be critical elements in some settings – but not a game for novices

5. Consider how regulatory agencies can assist at key points

a. Understand value of good relations throughout the process

b. Agency can provide settlement protections

c. Help with PRP work (104e letters), incentivize parties to settle

6. Understand settlement release, bar issues and reopeners, and communicate these clearly to all parties

48


7. Try to predict potential reopener issues early in the process to avoid last-minute holdups in negotiations

a. Trigger

b. Caps

c. Agency interaction

d. Dispute resolution approach

e. Scope of defenses

8. Evaluate options for insurance to cover future risks of cost overruns and reopeners

9. Be realistic about the strengths and weaknesses of your client’s case

49

Thomas A. Bloomfield

The Gallagher Law Group

303-800-6901

[email protected]

50

© 2015 LOEB & LOEB LLP

Albert M. Cohen Partner, Litigation

February 24, 2015

**What About RCRA

Citizens Suits?

Is Your Settlement

Getting You All

The Protection

You Want?**

© 2015 LOEB & LOEB LLP 52

RCRA Citizens Suits

42 U.S.C § 6972 authorizes private parties to

bring an action against any party who

contributed to the handling of hazardous wastes

“which may present an imminent and

substantial endangerment to health or the

environment” and authorizes the court to “order

such person to take such . . . action as may be

necessary” to abate the conditions.


The Problem

• The contribution bar provisions in § 113 do not specifically address RCRA claims

• No statutory language elsewhere in CERCLA bars RCRA claims

• If a party settles under CERCLA, is it still at risk of a citizens suit under RCRA

• By other PRPs at the site?

• By third parties?

• By citizens groups?


RCRA Statutory Bars

42 U.S.C. §6972(a)(1)(B) provides that “no action may be commenced

under subsection (a)(1)(B) of this section if” EPA, in order to restrain or

abate acts or conditions which may have contributed or are contributing to

the activities which may present the alleged endangerment –

• “has commenced and is diligently prosecuting an action under RCRA or

section 106 of CERCLA”;

• “is actually engaging in a removal action under section 104 of CERCLA”;

• “has incurred costs to initiate a RI and FS under section 104 of CERCLA

and is diligently proceeding with the remedial action under CERCLA”; or

• “has obtained a court order (including a consent decree) or issued an

administrative order under section 106 of [CERCLA] or section 7003 of

[RCRA] pursuant to which a responsible party is diligently conducting a

removal action, Remedial Investigation and Feasibility Study, or

proceeding with a remedial action.”


RCRA Statutory Bars

RCRA also sets similar bars where the state

• “has commenced and is diligently prosecuting an action under subsection (a)(1)(B)”;

• “is actually engaging in a removal action under section 104 of [CERCLA]”; or

• “has incurred costs to initiate a RI and FS under section 104 of CERCLA and is diligently proceeding with the remedial action under CERCLA.”

See 42 U.S.C. § 6792(b)(2)(C)(i)-(b)(2)(C)(iii).


Many Courts Strictly Construe RCRA’s Statutory Bars

• Incorporated Village of Garden City v. Genesco,

Inc. et al., 2009 U.S. Dist. LEXIS 87354 (E.D.N.Y.

September 23, 2009)

• RCRA claim not barred because state administrative

order was not brought under §104 of CERCLA

• Orange Environment, Inc. et al. v. County of

Orange et al., 860 F. Supp. 1003 (S.D.N.Y. 1994)

• No bar where state removal action not performed under

§104


Many Courts Strictly Construe RCRA’s Statutory Bars

• Commander Oil Corp. v. Barlos Equipment Corp, et al., 1997 U.S. Dist. LEXIS 23920 (E.D.N.Y. June 10, 1997)

• EPA administrative order under §§104 and 122 did not bar RCRA claims

• Gilroy Canning Co. v. California Canners & Growers, 15 F. Supp. 2d 943 (N.D. Cal. 1998)

• State orders do not serve to bar RCRA claims that do not strictly meet statutory criteria

• Sisters of Notre Dame De Namur v. Garnett-Murray, 2012 U.S. Dist. LEXIS 78747 (N.D. Cal. June 6, 2012)

• Similar holding, citing Gilroy

• Green Valley Corp. v. Caldo Oil Co., 2010 U.S. Dist. LEXIS 62949 (N.D. Cal. June 8, 2010)

• Similar holding


EPA as Lead Agency

• Where EPA is the lead agency, RCRA claims

may be barred because EPA is more likely to

be actively involved in the case and often has

engaged in a removal action, incurred costs to

initiate RI/FS, or taken other action which

would fit within the RCRA statutory bar

provisions.

• If EPA files suit, includes a RCRA claim, and

enters a consent decree, that should bar

future RCRA claims.


Non-EPA Lead Sites

• Where the state is the lead agency, it is more

difficult to meet the statutory bar requirements.

• Most state actions are not taken pursuant to

CERCLA §104

• Some states are reluctant to bring RCRA claims

• Where there is no state or federal

involvement, there is no statutory bar.


When Is a State “Diligently Prosecuting”?

42 U.S.C. §6972(b)(2)(C)(i) bars claims where state files and is “diligently prosecuting" a RCRA claim

• If state files RCRA claim, future RCRA claims may be barred if it is “diligently prosecuting” the claim.

• Is a claim barred if the previous claim was settled?

• Unlike with EPA, no provision addressing situation where there is an order or consent decree

• What is “diligently prosecuting”?

• Chesapeake Bay Found., Inc. v. Severstal Sparrows Point, LLC, 794 F. Supp. 2d 602, 606 (D. Md. 2011)

• Held that where agencies sued and then settled under RCRA, CWA and other statutes “diligence is presumed.”

• Karr v. Hefner, 475 F.3d 1192, 1198 (10th Cir. 2007)

• Dismissed CWA claim that merely sought a different solution to a problem already accounted for in an EPA consent decree


“Diligently Prosecuting”

Various Clean Water Act cases have also held that prior settlements constitute “diligent prosecution”

• Connecticut Fund for Environment v. Contract Plating Co., 631 F. Supp. 1291, 1294 (D. Conn. 1986)

• Where state filed an action to enforce a CWA permit and then resolved the case, a citizens suit regarding the same alleged violations was barred.

• Piney Run Pres. Ass’n v. County Comm’rs, 523 F. 3d 453 (4th Cir. 2008)

• Where state filed a complaint for injunctive relief and then entered a consent decree to ensure compliance with a permit, a citizens suit under the CWA was barred because state was diligently prosecuting.


RCRA Claims May Be Barred If They Seek Contribution

• Meghrig v. KFC Western, 516 U.S. 479 (1996)

• Relief under RCRA is for mandatory injunction and

does not permit recovery of costs or contribution

• Court declined to consider “whether a private party

could seek to obtain an injunction requiring another

party to pay cleanup costs which arise after a RCRA

citizen suit has been properly commenced.”


Cases Holding No Right to Contribution Under RCRA

• Premier Associates, Inc. v. EXL Polymers, Inc., 2010 U.S. Dist. LEXIS 71982 (N.D. Georgia July 19, 2010)

• Where plaintiff sued defendant under CERCLA for cost recovery/contribution and defendant counterclaimed under RCRA, arguing that if it was liable, plaintiff was liable, court held that claim was really for contribution which was not permitted under RCRA, citing Meghrig

• FCA Associates et al. v. Texaco, Inc. et al., 2005 U.S. Dist. LEXIS 6348 (W.D.N.Y. March 31, 2005)

• Counterclaim under RCRA was barred because it was really claim for contribution and there was no standing to bring a claim because a favorable holding that plaintiff should share costs would not address the injury


Cases Holding No Right to Contribution Under RCRA

• Tyco Thermal Controls LLC v. Redwood Indus., 2010 U.S. Dist. LEXIS 91842 (N.D. Cal. Aug. 12, 2010)

• Holding no right to contribution under RCRA

• In The Waste Inc. Cost Recovery Group v. Allis Chalmers Corp., et al., 51 F. Supp. 2d 936 (N.D. Ind. 1999)

• Citing to cases saying no right of contribution under RCRA

• Aero-Motive Co. v. Becker, 2001 U.S. Dist. LEXIS 20621 (W.D. Mich., Dec. 6, 2001)

• Holding that contribution for past and present cleanup costs is not recoverable under RCRA

• Stratford Holdings LLC v. Foot Locker Retail, Inc., 2013 U.S. Dist. LEXIS 145120 (W.D. Okla. October 8, 2013)

• Dismissing RCRA claim which sought to force others to share remediation costs


Other Bases for Barring RCRA Claims

Many cases have held that RCRA claims are barred where issues are already being addressed

• 87th St. Owners Corp. v. Carnegie Hill-87th St. Corp., 251 F. Supp. 2d 1215, 1220 (S.D.N.Y. 2002)

• Plaintiff’s RCRA claim barred where state is working on, but has not yet determined remedy, because state may, in fact, fully address the issues

• N. Cal. River Watch v. Fluor Corp., 2014 U.S. Dist. LEXIS 93420 (N. D. Cal. July 9, 2014)

• Dismissing RCRA claim where state agencies were actively overseeing the case and evaluating a proposed remedy, because complainant “has failed to allege that the DTSC’s and the RWQCB’s investigation and remediation programs are inadequate and will not address the contamination that exists … such than an imminent and substantial endangerment now exists.”


Courts Barring Claims Where Issues Being

Addressed

• 3000 E. Imperial LLC v. Robertshaw Controls Co., 2010 U.S. Dist. LEXIS 138661 (C.D. Cal. Dec. 29, 2010)

• No right to relief where party agreed to undertake cleanup pursuant to settlement agreement amongst private parties. Mere possibility that party may abandon its remediation efforts is insufficient to entitle plaintiff to injunctive relief under RCRA.

• SPPI-Somersville, Inc. v. TRC Companies, Inc., 2009 U.S. Dist. LEXIS 74464 (N.D. Cal. August 21, 2009)

• No claim where problem already being addressed by the state

• Kara-Holdings Corp. v. Getty Petroleum Mktg. Inc., 2004 U.S. Dist. LEXIS 15864 (S.D.N.Y.Aug. 12, 2004)

• No right to relief under RCRA where plaintiff failed to show there was an imminent and substantial endangerment in light of remediation that was ongoing and approved by state


Courts Barring Claims Where Issues Being

Addressed

• Trinity Industries, Inc. v. Chicago Bridge & Iron Co., 735 F. 3d 131 (3rd Cir. 2013)

• Where party had already entered into consent decree in which it agreed to fund cleanup required by state, it could not sue another party for contribution under RCRA because that party’s participation will not minimize the threat.

• Ctr. for Biological Diversity Inc. v. BP Am Prod Co., 704 F. 3d 413, 431 (5th Cir. 2013)

• “[W]here remedial efforts have been ongoing and absent a clear reason .... to find them deficient, we see no error in the district court’s conclusion that it could grant no further relief to the plaintiff beyond what is already being done.”

• Clean Harbors, Inc. v. CBS Corp., 875 F. Supp. 2d 1311 (D. Kan. 2011)

• Refusing to grant relief under RCRA where the harm was already being addressed such that “the case is about the cost of cleaning up the facility, as opposed to preventing endangerment


Cases Allowing Claims Even Though Issues Being

Addressed

Nashua Corp. v. Norton Co., 116 F. Supp. 2d 330 (N.D.N.Y. 2000)

• Court held that it could issue an injunction requiring the defendant to pay response costs going forward

• Defendant recalcitrant

• Defendant 90 percent liable

City of Colton v. Am. Promotional Events, Inc., 824 F. Supp. 2d 1015 (C.D. Cal. 2011)

• Rejecting 87th Street Owners Corp. and holding that court can order party to participate in remediation even if another party has already started the effort

Express Car Wash Corp. v. Irinaga Bros. Inc., 967 F. Supp. 188 (D. Or. 1997)

• Plaintiff who had begun remediation could sue to force defendants to conduct additional or different remediation or to completely take over the effort


Courts Unlikely to Bar Claims If …

Courts unlikely to bar claims if the remedy is uncertain or the plaintiff is seeking totally different relief or addressing a different problem

• Stoll v. Kraft Foods Global, Inc., 2010 U.S. Dist. LEXIS 92926 (S.D. Ind., September 6, 2010)

• Refusing to dismiss RCRA claim where defendant not a party to EPA order, party to order moribund and final remedy not yet approved

• Karr v. Hefner, 475 F.3d 1192, 1198 (10th Cir. 2007)

• RCRA claims not barred where relief sought fell outside scope of existing consent decree

• Marcas, L.L.C. v. Bd. of County Comm’rs, 977 F. Supp. 2d 487 (D. Md. 2013)

• Allowing mandatory injunction to implement additional remediation measures beyond what is in place

• Keller Transp. Inc. v. Wagner Enters., LLC, 877 F. Supp. 2d 1342, 1351 (D. Mont. 2012)

• Allowing claim to require defendant to either undertake additional action or to perform remediation activities that original party had not yet undertaken


Abstention

• Stratford Holdings LLC v. Foot Locker Retail, Inc., 2013 U.S. Dist. LEXIS 145120 (W.D. Okla. October 8, 2013)

• Even if it had not dismissed RCRA claims because determining who was responsible is not the purpose of RCRA, it would have dismissed under the doctrine of primary jurisdiction because requested relief would result in conflicting orders

But See:

• SPS Limited Partnership, LLP v. Severstal Sparrows Point LLC, 808 F. Supp. 2d 794 (D. Md. 2011)

• Declining to abstain under the doctrine of primary jurisdiction because this would be an end run around the specific conditions identified by Congress for barring RCRA claims, citing numerous cases

• Incorporated Village of Garden City v. Versus Generco, Inc. et al., 2009 U.S. Dist. LEXIS 87354 (E.D.N.Y. Sept. 23, 2009)

• Similar holding


Summary

• Parties settling §107 and §113 claims may be at risk of RCRA citizens suits

• Some courts have construed the RCRA statutory bars strictly

• Where parties settle with EPA, claims may meet the statutory criteria

• Where parties settle with the state, claims may not meet the statutory bar criteria

• Where parties settle with private parties, unless EPA or the state is involved, there are no statutory bars


Non-Statutory Bars

• Some courts have held that RCRA claims

seeking contribution are barred

• Courts have also held that RCRA claims are

barred because a party merely seeking

contribution has no standing because a

favorable ruling will not address the injury

• While some courts have held that claims may

be barred if the issue is already being

addressed, others have not


Best Practices

• Advise client that there may be a risk of future RCRA claims

• Consider whether it would be advantageous to have EPA or the state include a RCRA claim in a complaint pursuant to which you are settling

• Consider including specific language in the contribution-bar provisions referring to RCRA claims

• Consider clarifying that the intent of the settlement is to provide the settling party with the maximum amount of protection allowed by law

• Consider including specific findings making it clear that the settlement is designed to resolve RCRA claims

• Consider asking the court to specifically include a RCRA bar in an order approving the settlement

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