State Law Claims by Private PRP Are Not Preempted by CERCLA § 107 Claim, at Least Initially

Posted by in CERCLA, Cost Recovery, Environmental Litigation on April 2, 2013

On March 18, a New York federal district court held that a company seeking to recoup the response costs it incurred cleaning up contamination at a former chemical plant initially may maintain state law claims as well as a cost recovery claim under CERCLA § 107 MPM Silicones LLC v. Union Carbide Corp., N.D.N.Y., No. 1:11-cv-1542 (March 18, 2013).  However, the court also held that it may consider a renewed motion on this issue at a later, more factually developed point in the litigation.

However, the court also held that the plaintiff may not pursue contribution or indemnification claims under federal or state law, including CERCLA Section 113(f), because it voluntarily cleaned up the contamination.

Union Carbide Corp. operated a chemical manufacturing facility on a 50 acre site near Sistersville, W.V., from 1953 through the 1970s. Union Carbide used hundreds of thousands of pounds of polychlorinated biphenyls (“PCBs”) in the manufacture of various chemical products, mainly silanes and silicones. It disposed of the PCBs and other hazardous wastes at several locations on the Sistersville site, including in unlined lagoons. No other entity deposited hazardous waste at the site.

Union Carbide discovered PCB contamination at the site in the late 1970s and early 1980s, but failed to disclose it to federal regulators.   It sold the Sistersville site in 1993, and MPM Silicones LLC (“MPM”) acquired it in 2006. MPM incurred various response costs associated with Union Carbide’s release of PCBs at the site, but Union Carbide refused to reimburse MPM, which then sued Union Carbide, under both CERCLA and state law, to recover the costs it incurred and expects to incur cleaning up the site.

Union Carbide filed a 12(b)(6) motion to dismiss, arguing that MPM’s state law claims were preempted by CERCLA.

After reviewing cases from the U.S. Court of Appeals for the Second Circuit and other federal courts in New York that have addressed the preemptive effect of CERCLA on state law causes of action, the court determined that CERCLA § 107(a) does not preempt the plaintiff’s state law claims.

CERCLA § 114(b) precludes anyone who receives compensation for removal costs or damages under CERCLA from recovering compensation for the same removal costs or damages under any state or other federal law. This “double recovery bar” led the Second Circuit to hold that Section 113(f) contribution preempts state law recovery, in Bedford Affiliates v. Sills, 156 F.3d 416 (2d. Cir. 1998), and Niagara Mohawk Power Corp. v. Chevron USA Inc., 596 F.3d 112 (2d Cir. 2010).

District courts considering whether state law claims were preempted by Section 107(a) claims, on the other hand, have decided they were not. Double recovery is less of a concern when the PRP has incurred response costs voluntarily and has not incurred liability to a third party, the U.S. District Court for the Eastern District of New York held in New York v. Hickey’s Carting, 380 F. Supp. 2d 108 (E.D.N.Y. 2005) and New York v. West Side, 790 F. Supp. 2d 13 (E.D.N.Y. 2011).  Union Carbide argued that Hickey’s Carting and West Side were distinguishable because MPM was a private plaintiff, not a state.

To determine whether concurrent state law claims are preempted where a private plaintiff brings an action against another party under Section 107(a), the court first considered whether allowing the state law claims to proceed would conflict with CERCLA’s settlement scheme.

“A PRP has just as much incentive to settle its CERCLA liability with the government when faced with simultaneous Section 107(a) and state-law claims as when faced with a Section 107(a) claim alone,” the court said.  The court then considered whether the double recovery bar in Section 114(b) preempts a plaintiff’s state law claims.  The court said it would be “acting prematurely if it were to dismiss Plaintiff’s state-law claims merely because it is possible for Plaintiff to recover the same costs, and only the same costs, under those claims as it could under CERCLA. Because the circumstances under which double recovery would not result are numerous, dismissing the state-law claims at this stage would be imprudent.”

Ultimately, the court found the distinction between state and private plaintiffs irrelevant, and concluded that even when the plaintiff is a private party, CERCLA § 107(a) does not preempt state law claims.   The court left the door open for the defendant to make a “renewed attack at a later, more informed and factually developed point in the litigation” when it might be appropriate for the court to dismiss the plaintiff’s state law claims.

The court also dismissed the plaintiff’s claim for contribution under Section 113(f) because MPM has never been the subject of a Section 106 or 107(a) suit, and has not settled its CERCLA liability with the government. Although the plaintiff might be subject to such a suit in the future, the claim is too speculative now, the court said.   Likewise, MPM may not seek contribution or indemnification under state law for claims it was not obligated to pay in the first place, the court said.

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