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EPA Settlement with One Party Does Not Preclude Suit Against a Second Party

January 1, 2000

The U.S. Court of Appeals for the Third Circuit, reversing a lower court decision, has ruled that the Environmental Protection Agency (EPA) may order a polluter to pay clean up costs and remediate a contaminated site even when another polluter has already agreed to do so.

Facts

The case involves the cleanup of the Centre County Kepone Superfund site in State College, Pennsylvania (the Site), a chemical manufacturing facility that was owned and operated by Ruetgers-Nease Chemical Company (Ruetgers) since 1958. Operations at the facility resulted in the generation and disposal of hazardous substances at the Site. In the 1970's, Occidental Chemical Corporation (Occidental) contracted with Ruetgers for the manufacture of a pesticide at the Site using raw materials provided by Occidental.

EPA added the Site to the National Priorities List in 1983, and named both Ruetgers and Occidental as potentially responsible parties (PRPs). EPA then entered into a judicial consent decree with Ruetgers in 1996, requiring Ruetgers to perform the remedial work at the Site and to pay EPA approximately $300,000 in past response costs. EPA also attempted to negotiate a settlement with Occidental, but negotiations failed. As a result, EPA issued an administrative order to Occidental, ordering it to participate in the cleanup of the Site. Occidental refused, arguing that EPA's consent decree with Ruetgers had already given EPA "complete relief," and that enforcement of the order against Occidental would give EPA double recovery. For this argument Occidental relied on section 113 of the Comprehensive Environmental Response Compensation and Liability Act (CERCLA), which allows EPA to recover from anyone who has not resolved his or her liability if EPA has "obtained less than complete relief from a person who has resolved its liability" through an administrative settlement or a consent decree. The lower court agreed with Occidental, and dismissed EPA's complaint.

Appellate Court's Decision

On appeal, EPA claimed that the commitment by Ruetgers to perform cleanup work in the future, did not constitute total satisfaction of its claim because it would take several years for Ruetgers to complete the cleanup, and therefore EPA had not received "complete relief."

The appellate court agreed with EPA, finding that section 122 of CERCLA provides authority for EPA's actions, by specifying "if an agreement has been entered into under section 122, [EPA] may take action under section 106 of this title against any person who is not a party to the agreement." Additionally, the appellate court found it "highly unlikely" that section 113 (the section relied upon by Occidental) was intended to limit the authority of EPA to bring suit against non-settling PRPs, and believed it more likely that section 113 was intended to clarify that EPA was entitled to no further relief only if the clean-up of a site had been completed and paid for. Therefore, the judgment of the district court was reversed, and the case remanded.

U.S. v. Occidental Chemical Corp., 1999 W.L. 1268110 (3rd Cir. 1999)

This article was prepared by Christopher J. Dunsky, a partner in our Environmental Department, and previously appeared in the January, 2000 edition of the Michigan Environmental Compliance Update, a monthly newsletter prepared by the Environmental Department and published by M. Lee Smith Publishers.