473 F.3d 824 (7th Cir. 2007), 05-3299, Metropolitan Water Reclamation Dist. of Greater Chicago v. North American Galvanizing & Coatings, Inc.

Docket Nº:05-3299.
Citation:473 F.3d 824
Case Date:January 17, 2007
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit

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473 F.3d 824 (7th Cir. 2007)




No. 05-3299.

United States Court of Appeals, Seventh Circuit.

January 17, 2007

Argued January 20, 2006

Appeal from the United States District Court for the Northern District of Illinois, Eastern Division, No. 03 C 754—James B. Zagel, Judge.

Stephen R. Swofford, Harvey M. Sheldon (argued), Hinshaw & Culbertson, Chicago, IL, for Plaintiff-Appellee.

Lewis B. Jones (argued), King & Spalding, Atlanta, GA, for Defendant-Appellant.

Ronald M. Spritzer, Department of Justice Environment & Natural Resources Division, Washington, DC, for Amicus Curiae.

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Before Bauer, Flaum and Ripple, Circuit Judges.

Ripple, Circuit Judge.

Section 107(a) of the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. § 9601 et seq., imposes liability on certain private parties for the cleanup costs associated with a hazardous waste contamination. In turn, CERCLA Section 113(f), added by the Superfund Amendments and Reauthorization Act of 1986 ("SARA"), Pub.L. No. 99-499, 100 Stat. 1613 (1986), allows those responsible for cleanup costs to bring actions for contribution against one another as a means of apportioning fault. Metropolitan Water Reclamation District of Chicago ("Metropolitan Water") has brought this action under both provisions, seeking to recover cleanup costs that it voluntarily incurred in remedying a parcel of property that it has leased for the past fifty years to Lake River Corporation ("Lake River"). Lake River's parent, North American Galvanizing & Coatings, Inc. ("North American"), moved to dismiss Metropolitan Water's complaint for failure to state a claim, see Fed.R.Civ.P. 12(b)(6). The district court granted the motion in part, dismissing Metropolitan Water's § 113(f) contribution claim, but allowed the § 107(a) claim to go forward. We have jurisdiction over North American's interlocutory appeal from this order, certified under 28 U.S.C. § 1292(b), and for the reasons set forth in the following opinion affirm the judgment of the district court.



A. Facts

In this appeal from the denial of a motion to dismiss, we accept as true all well-pleaded allegations in Metropolitan Water's complaint and draw all reasonable inferences in its favor. See Cler v. Illinois Educ. Ass'n, 423 F.3d 726, 729 (7th Cir. 2005). The facts of the present dispute concern a parcel of contaminated property located on South Harlem Avenue, about one quarter mile north of the Stevenson Expressway in Forest View, Illinois. Metropolitan Water owns this property, consisting of approximately fifty acres. In the late 1940s, it entered into a long-term lease with the Lake River Corporation, a wholly owned subsidiary of North American. Lake River developed the property, constructing a facility to store, mix and package industrial chemicals for its own use and for the use of its customers. Lake River's operations involved accepting, by truck, barge and rail, large amounts of chemicals that it then held in above-ground storage tanks located on the property.

These tanks, according to the complaint, were prone to leaks. Over the course of Lake River's tenancy, the tanks allegedly spilled close to 12,000 gallons of industrial chemicals into the soil and groundwater. These toxins, the complaint further alleged, were "hazardous substances," as that phrase is defined in CERCLA, see 42 U.S.C. § 9601(11), and posed an imminent danger to the environment. The complaint also stated that Metropolitan Water has "incurred substantial expenses" investigating, monitoring and remedying the contaminated portions of its property. R.9 at 6.

B. District Court Proceedings

In February 2003, Metropolitan Water filed this action against Lake River to recoup its costs in remedying the contamination. The original complaint asserted a claim under CERCLA § 107(a), see 42 U.S.C. § 9607(a), an alternative claim for contribution under CERCLA § 113(f), see

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id. § 9613(f), and state law claims for nuisance and breach of contract. Lake River failed to answer the complaint, resulting in a default judgment that ordered Lake River to pay approximately $1.8 million in damages to Metropolitan Water, in addition to future response costs. Metropolitan Water then amended the complaint to add Lake River's parent, North American, as a defendant; the amended complaint realleged the CERCLA counts and state law claims. North American then moved to dismiss under Federal Rule of Civil Procedure 12(b)(6).

In ruling on North American's motion, the district court began by distinguishing the two CERCLA claims being asserted. The court first described § 107(a)'s liability provisions as providing an implied cause of action for cost recovery in cases "where a party is seeking direct recovery of costs incurred in cleaning up a hazardous waste site." R.23 at 3. Section 113(f) claims for contribution, by contrast, are asserted by "potentially responsible parties," or "PRPs," seeking to apportion damages among themselves. The court recognized that Metropolitan Water, because it owned the property during the period of contamination, must be considered a PRP under CERCLA's strict liability framework. Normally, the court noted, PRPs are limited to claims for contribution under § 113(f) and cannot recoup the full cost of remediation under the joint and several recovery of § 107(a). The court then observed that the Supreme Court had held recently in Cooper Industries v. Aviall Services, Inc., 543 U.S. 157, 125 S.Ct. 577, 160 L.Ed.2d 548 (2004), that parties like Metropolitan Water who have commenced cleanup voluntarily, rather than being compelled to do so by a civil suit, have no right to contribution under the plain wording of § 113(f). See 42 U.S.C.§ 9613(f)(1) (allowing contribution only "during or following any civil action"). The district court held that, for this subset of PRPs who voluntarily undertake cleanup, an implied right to contribution under § 107(a) remains available, notwithstanding their status as strictly liable parties under the statute. A contrary outcome, the court reasoned, "would seem to lie contrary to the general purposes of CERCLA to promote prompt and proper cleanup of contaminated properties." R.23 at 7.

After hearing oral argument from the parties, we invited the Environmental Protection Agency ("EPA") to submit its views as amicus curiae. The EPA accepted our invitation, 1 and, with the permission of the court, Lockheed Martin Corporation also has submitted an amicus curiae brief. Both Metropolitan Water and North American now have filed supplemental briefs in response.





In the 1970s and 80s, a number of high-profile environmental disasters, including the "Love Canal" dumping at Niagara Falls, New York, drew the public's attention to the environmental risks and health hazards posed by improper hazardous waste disposal.2 In response to rising public concern and the view that "existing law [was] clearly inadequate to deal with

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this massive problem," H.R. Rep. No. 96-1016, pt. 1, at 22 (1980), as reprinted in 1980 U.S.C.C.A.N 6119, 6120, Congress enacted the CERCLA. The law's purpose was twofold. It was intended, for one, to "establish a comprehensive response and financing mechanism to abate and control the vast problems associated with abandoned and inactive hazardous waste disposal sites." H.R. Rep. No. 96-1016, at 1. Second, CERCLA was meant to shift the costs of cleanup to the parties responsible for the contamination. See Meghrig v. KFC Western, Inc., 516 U.S. 479, 483, 116 S.Ct. 1251, 134 L.Ed.2d 121 (1996).

Enforcement of CERCLA rests primarily with the EPA, and the statute gives the agency a broad range of enforcement options. To implement the statute's goals at a national level, the EPA is directed by CERCLA to formulate a National Contingency Plan outlining specific steps that parties must take in choosing a remedial action plan and in cleaning up hazardous waste. See 40 C.F.R. pt. 300. In addition, for specific sites that the EPA deems an imminent threat, the agency is authorized to issue an administrative compliance order or obtain a court injunction, directing any responsible party to respond to the contamination. See 42 U.S.C. § 9606(a). Additionally, if it chooses, the EPA may commence cleanup on its own using monies from the Hazardous Substances Superfund, see id. § 9604, a fund established by CERLCA and financed through a combination of appropriations, EPA fees and industry taxes. 42 U.S.C. § 9605; United States v. Hercules, Inc., 247 F.3d 706, 715 (8th Cir.2001).

After Superfund money has been spent by the EPA, CERCLA allows the agency to recover its costs from the responsible parties, who are divided by CERLCA § 107(a) into the following four statutory categories:

(1) the owner and operator of a vessel or a facility,

(2) any person who at the time of disposal of any hazardous substance owned or operated any facility at which such hazardous substances were disposed of,

(3) any person who by contract, agreement, or otherwise arranged for disposal or treatment, or arranged with a transporter for transport for disposal or treatment, of hazardous substances owned or possessed by such person, by any other party or entity, at any facility or incineration vessel owned or operated by another party or entity and containing such hazardous substances, and

(4) any person who accepts or accepted any hazardous substances for transport to disposal or treatment facilities, incineration vessels or sites selected by such person, from which there is a release, or a threatened release which causes the incurrence of response costs, of a hazardous substance ....

42 U.S.C. § 9607. For these statutorily defined...

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