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Third Circuit Holds That A Party Who Has Resolved Its Liability To The State Under State Law May Seek Contribution Under CERCLA

The Third Circuit keeps rolling out environmental decisions this month, and while Bell v. Cheswick Generating Station, No. 12-4216 (3d Cir. Aug. 20, 2013), received the lion’s share of press this week (including here), another decision issued the same day, Trinity Industries, Inc. v. Chicago Bridge & Iron Co., No. 12-2059 (3rd Cir. Aug. 20, 2013), is also worth reading.  In it, the Third Circuit holds that a party who has resolved its liability to the state for remediation under state law may pursue contribution under CERCLA, which puts the Third Circuit in conflict with the Second Circuit on this issue.

The Plaintiff in this case, Trinity, owned an industrial parcel on which it operated a manufacturing facility through 2000.  In 2006, Pennsylvania initiated an enforcement action against Trinity pursuant to two state statutes, the Hazardous Sites Cleanup Act (“HSCA”), 35 Pa. Stat. § 6020.101, et seq., and the Land Recycling and Environmental Remediation Standards Act (“LRA”), 35 Pa. Stat. § 6026.101, et seq.  As a result, Trinity entered into a Consent Decree with the Pennsylvania Department of Environmental Protection agreeing to fund and conduct response actions at the site.  The Consent Decree also expressly reserved Trinity’s right to pursue cost recovery, contribution and other actions against Chicago Bridge & Iron Co. (“CB&I”), a former owner and operator.  Thereafter, Trinity did, in fact, bring such an action pursuant to, among other counts, Section 113(f)(3)(B) of the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”).*

Section 113(f)(3)(B), 42 U.S.C. § 9613(f)(3)(B), permits “[a] person who has resolved its liability to the United States or a State for some or all of a response action or for some or all of the costs of such action in an administrative or judicially approved settlement [to] seek contribution from any person who is not party to [the] settlement.”  In Consol. Edison Co. of N.Y., Inc. v. UGI Utils., Inc., 423 F.2d 90 (2nd Cir. 2005), the Second Circuit held that Section 113(f)(3)(B) applies only if the party seeking contribution has resolved its CERCLA liability to the federal government or a state, and did not apply if the settlement only resolved liabilities under state law.  Based on this holding, CB&I filed a Motion for Summary Judgment which the United States District Court for the Western District of Pennsylvania granted.

Not so fast, the Third Circuit held.  Departing from Consol. Edison, Judge Chagares, writing for the entire panel, held that “Section 113(f)(3)(B) does not require resolution of CERCLA liability in particular.”  Noting that limiting the provision only to CERCLA settlements “might easily have been written into the provision” but was not, the Third Circuit instead held that a response action taken pursuant to a state statute that “bear[s] a strong resemblance to CERCLA” or incorporates CERCLA standards, as the LRA does, is sufficient to invoke the contribution provision.  This decision thus opens the door to parties who have settled their state liability to invoke CERCLA and federal jurisdiction when seeking contribution from other potentially responsible parties.

*Trinity also brought suit under several state theories as well as RCRA, which was also a focus of the decision.  In a subsequent post, we’ll discuss the Court’s RCRA holding.