Consolidated Edison, N.Y. v. Ugi Utilities

• Decision Date: 09 September 2005
• Docket Number: Docket No. 04-2409-CV.
• Citation: 423 F.3d 90
• Parties: CONSOLIDATED EDISON COMPANY OF NEW YORK, INC., Plaintiff-Appellant, v. UGI UTILITIES, INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Second Circuit

423 F.3d 90

CONSOLIDATED EDISON COMPANY OF NEW YORK, INC., Plaintiff-Appellant, v. UGI UTILITIES, INC., Defendant-Appellee.

Docket No. 04-2409-CV.

United States Court of Appeals, Second Circuit.

Argued: May 20, 2005.

Decided: September 9, 2005.

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Woody N. Peterson, Esq., Dickstein Shapiro Morin & Oshinsky LLP, New York, NY, Appearing for Plaintiff-Appellant.

Jay N. Varon, Esq. (James M. Caragher, Esq., Gary D. Rovner, Esq., Max Welsh, Esq., Peter N. Wang, Esq., on the brief), Foley & Lardner LLP, Washington, DC and New York, NY, Appearing for Defendant-Appellee.

Before: KATZMANN, HALL, Circuit Judges, and MURTHA, District Judge.¹

KATZMANN, Circuit Judge.

In this action under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA"), Con Edison ("Con Ed") seeks to be reimbursed by UGI Utilities, Inc. ("UGI") for costs it has incurred cleaning up certain contaminated sites in Westchester County, New York. The district court (Chin, J.) granted summary judgment to UGI on all claims. Consol. Edison Co. of N.Y., Inc. v. UGI Utils., Inc., 310 F.Supp.2d 592, 610 (S.D.N.Y.2004). In this opinion, we address whether, in light of a recent Supreme Court decision, Cooper Industries, Inc. v. Aviall Services, Inc., ___ U.S. ___, 125 S.Ct. 577, 160 L.Ed.2d 548 (2004), subject matter jurisdiction exists in this case. We conclude that it does because Con Ed's claims arise under CERCLA. In a summary order issued simultaneously with this opinion, we analyze the merits of the district court's summary judgment grant. We affirm in part and reverse in part and remand for further proceedings.

BACKGROUND

This litigation concerns the cleanup of sites in Westchester County that allegedly were contaminated by operations at Manufactured Gas Plants, industrial facilities at which gas was produced from coal, oil, or other energy sources.² In October 1999, the New York State Department of Environmental Conservation (the "Department") asked Con Ed for information about locations at which the company or its predecessors formerly operated Manufactured Gas Plants. Con Ed owns or operates many such plants, including ten in Westchester County, New York (the "Westchester Plants").³ On August 15, 2002, Con Ed entered into a "Voluntary Cleanup Agreement" to clean up more than 100 sites at which Con Edison or its predecessors might have formerly owned or operated Manufactured Gas Plants. These sites apparently included the sites of seven of the ten Westchester Plants.⁴

Prior to entering into this Voluntary Cleanup Agreement, Con Ed sued UGI seeking to recoup costs Con Ed had incurred and would incur in cleaning up sites allegedly contaminated by the ten Westchester Plants. Con Ed represents that it has already expended in excess of $4 million to investigate and clean up the sites of the Westchester Plants, and that the total amount to complete investigation and cleanup may exceed $100 million. Con Ed alleges that UGI or its predecessors operated the Westchester Plants, and that UGI is thus liable for remedial costs under CERCLA, as well as under New York State Navigation Law and negligence law.

On July 2, 2003, UGI moved for summary judgment on Con Ed's claims against it. On November 25, 2003, the district court heard oral argument, at the conclusion of which the court dismissed Con Ed's veil-piercing claims and state law claims, as well as all claims relating to the three Westchester Plants located in Yonkers, based on a release granted to UGI. After initially reserving judgment on the operator claims concerning the remaining Westchester Plants, the district court, on March 29, 2004, granted UGI's motion for summary judgment in its entirety, finding that no reasonable juror could conclude that UGI is subject to operator liability under CERCLA with respect to the Westchester Plants not located in Yonkers.

Con Ed appealed on May 4, 2004, arguing that the district court erred in granting UGI summary judgment on 1) Con Ed's CERCLA operator liability claims as to the Westchester Plants not located in Yonkers, and 2) UGI's claim that it was released from liability as to the Westchester Plants located in Yonkers.

After the parties had completed briefing these issues, but before oral argument, the Supreme Court issued its decision in Cooper Industries, Inc. v. Aviall Services, Inc., ___ U.S. ___, 125 S.Ct. 577, 160 L.Ed.2d 548 (2004). In that decision, which we discuss below, the Court held that a party may only pursue a contribution claim under CERCLA section 113(f)(1) during or following a civil action as specified in that section. Id. at 583. Because no civil action has been filed against Con Ed concerning the sites of the Westchester Plants, and the First Amended Complaint states that this action is brought pursuant to section 113(f)(1), we requested additional briefing on whether subject matter jurisdiction exists in this action, in light of Cooper Industries. This court held oral argument on May 20, 2005.

DISCUSSION

A. The CERCLA Cost Recovery and Contribution Framework

CERCLA is a comprehensive federal law governing the remediation of sites contaminated with pollutants. Two of its primary goals include "encourag[ing] the timely cleanup of hazardous waste sites," and "plac[ing] the cost of that [cleanup] on those responsible for creating or maintaining the hazardous condition." Control Data Corp. v. S.C.S.C. Corp., 53 F.3d 930, 935-36 (8th Cir.1995) (internal quotations marks and citations omitted); see also Key Tronic Corp. v. United States, 511 U.S. 809, 819 n. 13, 114 S.Ct. 1960, 128 L.Ed.2d 797 (1994) ("`CERCLA is designed to encourage private parties to assume the financial responsibility of cleanup by allowing them to seek recovery from others.'") (quoting FMC Corp. v. Aero Industries, Inc., 998 F.2d 842, 847 (1993)); H.R.Rep. No. 96-1016(I), at 17 (1980), reprinted in 1980 U.S.C.C.A.N. 6119, 6120 (stating that CERCLA's purposes include furthering the recovery of costs for cleanup of hazardous waste sites "from persons liable therefor" and inducing those persons "voluntarily to pursue appropriate environmental response actions").

In order to achieve these goals, CERCLA, in three separate and different provisions, authorizes parties to recoup money spent to clean up and prevent future pollution at contaminated sites or to reimburse others for cleanup and prevention at contaminated sites: (1) section 107(a), which permits the general recovery of cleanup and prevention costs; (2) section 113(f)(1), which creates a contribution right for parties liable or potentially liable under CERCLA; and (3) section 113(f)(3)(B), which creates a contribution right for parties that have resolved their liability by settlement.

Section 107(a) states that various persons, including the owner or operator of a facility, may be held liable for, among other things, "all costs of removal or remedial action incurred by the United States Government or a State ... not inconsistent with the national contingency plan." 42 U.S.C. § 9607(a)(4)(A). Pursuant to this provision, the government routinely brings suits to obtain reimbursement for the costs—also known as response costs—of cleaning up and preventing future contamination at a site. See, e.g., United States v. LTV Corp., 944 F.2d 997, 999 (2d Cir.1991). In addition to permitting these suits by the federal government and the states, section 107(a) also permits private parties to pursue such "cost recovery" actions, as it makes specified entities liable for "any other necessary costs of response incurred by any other person consistent with the national contingency plan." § 9607(a)(4)(B) (emphasis added); see also Key Tronic Corp., 511 U.S. at 818, 114 S.Ct. 1960 (noting that section 107(a) "unquestionably provides a cause of action for private parties to seek recovery of cleanup costs"); Prisco v. A & D Carting Corp., 168 F.3d 593, 602 (2d Cir.1999) (stating that section 107(a) "provides a private right of action for the recovery of [response] costs in certain circumstances").

Section 113(f)(1) expressly creates a contribution right for parties liable or potentially liable under CERCLA. It states that "[a]ny person may seek contribution from any other person who is liable or potentially liable under [section 107(a)], during or following any civil action under [section 106] or under [section 107(a)]."⁵ 42 U.S.C. § 9613(f)(1). In Cooper Industries, the Supreme Court considered whether a private party who has not been sued under section 106 or section 107(a) may nevertheless obtain contribution under section 113(f)(1) from other liable parties. See Cooper Industries, Inc. v. Aviall Services, Inc., ___ U.S. ___, ___, 125 S.Ct. 577, 580, 160 L.Ed.2d 548 (2004). The Court concluded, as we will discuss further below, that the "natural meaning" of section 113(f)(1) "is that contribution may only be sought subject to the specified conditions, namely, `during or following' a specified civil action." Cooper Industries, 125 S.Ct. at 583 (quoting 42 U.S.C. § 9613(f)(1)). Consequently, the Court held that section 113(f)(1) does not support the suit of a party that has not been the subject of judicial or administrative measures to compel cleanup. Id. at 582, 586.

Finally, section 113(f)(3)(B) creates contribution rights for settling parties. It provides that "[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 may seek contribution from any person" that has not itself settled with the United States. 42 U.S.C. § 9613(f)(3)(B).

For subject matter jurisdiction to exist in this case, Con Ed's claims must have arisen under one of the above provisions. See 28 U.S.C. § 1331 (granting the federal district courts jurisdiction of "civil actions arising under the ... laws ... of the United States"); see also ...