Niagara Mohawk Power Corp. v. Chevron U.S.A., Inc., 08-3843-cv (L).

Citation596 F.3d 112
Decision Date24 February 2010
Docket NumberNo. 08-4007-cv (XAP).,No. 08-3843-cv (L).,08-3843-cv (L).,08-4007-cv (XAP).
PartiesNIAGARA MOHAWK POWER CORPORATION, Plaintiff-Appellant-Cross-Appellee, v. CHEVRON U.S.A., INC., Defendant-Appellee-Cross-Appellant, United States Steel Company, Richard B. Slote, in his capacity as personal representative of the estate of Edwin D. King, and Portec, Inc., Defendants-Appellees-Cross-Appellees, King Services, Inc., Richard B. Slote, and Lawrence King, Defendant-Cross-Appellees, County of Rensselaer and The County of Rensselaer Sewer District No. 1, Third-Party-Defendants-Cross-Appellees, Consolidated Rail Corporation, American Premier Underwriters, Inc., The Foundation Company and Pittsburgh Business, Defendants.
CourtUnited States Courts of Appeals. United States Court of Appeals (2nd Circuit)

John T. Parkinson, Syracuse, N.Y. (Thomas R. Lotterman, Robert V. Zener, Milissa A. Murray, Sandra P. Franco, Bingham McCutchen LLP, Washington, DC, on the brief), for Plaintiff-Appellant-Cross-Appellee Niagara Mohawk Power Corporation.

Patrick J. Higgins, Powers & Santola, LLP, Albany, NY, for Defendant-Appellee-Cross-Appellant Chevron U.S.A., Inc.

Kevin C. Murphy, The Wladis Law Firm, Syracuse, N.Y. (David L. Smiga, on the brief, Pittsburgh, PA), for Defendant-Appellee-Cross-Appellee United States Steel Corporation.

Kimberlee S. Parker, Bond, Schoeneck & King, PLLC, Albany, NY, for Defendant-Appellee-Cross-Appellee Portec, Inc.

Before: CALABRESI, WESLEY, Circuit Judges, and VITALIANO,* District Judge.

WESLEY, Circuit Judge:

This case is yet another in a series of cases that attempt to chart the contours of liability of a potentially responsible party ("PRP") under §§ 107(a)(4)(B) and 113(f)(3)(B) for contribution towards, and payment of, costs resulting from the identification and cleanup of hazardous substances under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA"), Pub.L. No. 96-510, 94 Stat. 2767, and the Superfund Amendments and Reauthorization Act of 1986 ("SARA"), Pub.L. No. 99-499, 100 Stat. 1613, codified together at 42 U.S.C. §§ 9601-75. We hold that the PRP seeking contribution in this case, Niagara Mohawk Power Corporation ("NiMo"), may seek contribution under § 113(f)(3)(B) from certain of the PRPs—Chevron U.S.A., Inc. ("Chevron"), United States Steel Corporation ("U.S. Steel"), Portec, Inc. ("Portec"), and Edwin D. King ("King")—because New York's Department of Environmental Conservation ("DEC") could agree to settle NiMo's CERCLA liability without express authorization by the Environmental Protection Agency ("EPA"). However, because NiMo incurred response costs as a result of a resolution of its CERCLA liability with the DEC, NiMo cannot seek recovery costs under § 107(a)(4)(B).

We also hold that the district court erred in granting summary judgment to U.S. Steel, Chevron, Portec, and King because there are genuine issues of material fact as to Page 4 of 67 their liability. The district court erred in finding that NiMo did not comply with the National Contingency Plan. We reverse in part the district court's dismissal of NiMo's Navigation Law contribution claim. We affirm the district court's dismissal of NiMo's state contribution, indemnification, and unjust enrichment claims as preempted under CERCLA. Finally, we reverse the district court's dismissal of Chevron's third-party action against the County of Rensselaer and others.

I. BACKGROUND

At the center of this dispute is a contaminated site in Troy, New York—known as the Water Street Site—that over the last 100 years has played host to various industrial activities including a coke1 plant, a steel manufacturing facility, a manufactured gas plant, and a petroleum distribution facility. Each use led to the release or disposal of toxic substances, many subject to liability under CERCLA.

NiMo owned portions of the Water Street Site either directly or through a predecessor from 1922 until 1951. During this period, NiMo continued to operate a pre-existing manufactured gas plant on the Site. Coal tar, which contains hazardous substances covered by CERCLA, is a typical waste that results from the production of manufactured gas and has been found on the Site. By 1951, NiMo had conveyed most of its interest at the Site to Republic Steel, and today owns only a small parcel used as a natural gas regulator station.

In December of 1992, NiMo entered into an Order on Consent with the DEC that required NiMo to investigate twenty-one sites in New York that once had hosted manufactured gas plants to determine the nature and extent of the hazardous materials present. The purpose of the Order was to "control and/or remove residual [manufactured gas plant] waste sources." NiMo agreed to develop and implement plans for remediation of the pollution under the direction of the DEC. For each site, NiMo developed and implemented a Preliminary Site Assessment that provided data necessary for the DEC to determine whether the hazardous substances present on the site posed a threat to the public or the environment, and thus required remediation. Any site identified by the Preliminary Site Assessment as requiring comprehensive evaluation was then subject to a Remedial Investigation conducted by NiMo, which consequently prepared a Feasibility Study. NiMo agreed to remediate sites the DEC deemed in need. In 2003, NiMo and the DEC executed an amended Order on Consent under which NiMo incurred additional costs while obtaining a specific release of CERCLA liability upon meeting certain conditions.

Both Orders included the Water Street Site. As NiMo learned, the hazardous byproducts of the commercial activities conducted on the Site lasted far longer than the industries themselves. For purposes of the assessments, reports, and remediation, the DEC divided the property into four parts, corresponding to historical ownership and property lines.2

In its Preliminary Site Assessment for Area 1, NiMo concluded that no remedial investigation or feasibility study need be done based on the few hazardous materials found. NiMo did take some action in Area 1, however; it removed some tar and continued to monitor Area 1 for any new tar leaks.

Investigation of Area 2 revealed significant contamination. In addition to hazardous materials in the soil and groundwater, NiMo discovered evidence of hazardous materials in the sediment of the Wynantskill Creek, which runs through Area 2. NiMo prepared a Final Feasibility Study Report evaluating remedial options for the area; the Report and its recommendations await a final DEC decision.

After its review of Area 3, NiMo requested that Area 3 be deleted from the remediation plan because the only manufactured gas plant activity on Area 3 would not have produced hazardous materials. The DEC agreed only to postpone any investigation of Area 3, fearing that Area 3 may have some contamination from nearby Hudson River deposits.

Area 4 had substantial contamination in its soil and sediments. The DEC approved a remediation plan that included excavation, placement of an impermeable cap over the area, certain use restrictions for the property, and future monitoring.

NiMo began this action on July 1, 1998,3 seeking to recoup its CERCLA costs and seeking to recover under a number of state law claims. Defendants counterclaimed and cross-claimed for contribution; the parties ultimately moved for summary judgment. In its first opinion in November of 2003, the district court thoroughly recounted the complicated facts of the case and disposed of a number of matters. Niagara Mohawk Power Corp. v. Consol. Rail Corp. ("Niagara I"), 291 F.Supp.2d 105 (N.D.N.Y.2003). On November 7, 2003, the day after the district court's opinion in Niagara I, the 2003 Order of Consent was executed. That Order was "intended to supercede and replace" the 1992 Consent Order. NiMo agreed to continue the remediation of the sites. Under the terms of the agreement, NiMo "resolved its liability to the State for purposes of contribution protection provided by CERCLA Section 113(f)(2)."

Over the next five years, the case came to our Court twice. Prior to our decisions in each appeal, the United States Supreme Court issued a major decision involving CERCLA issues that directly affected the appeal then before us and required us to remand the matter to the district court for reconsideration. This decision is the culmination of the case's third visit to 500 Pearl Street.4

II. CERCLA

Enacted in response to New York's Love Canal disaster,5 CERCLA was designed, in part, to "assur[e] that those responsible for any damage, environmental harm, or injury from chemical poisons bear the costs of their actions." S.Rep. No. 96-848, at 13 (1980). CERCLA, remedial in nature, is designed to encourage prompt and effective cleanup of hazardous waste sites. See B.F. Goodrich Co. v. Murtha, 958 F.2d 1192, 1197-98 (2d Cir.1992). CERCLA empowers the federal government and the states to initiate comprehensive cleanups and to seek recovery of expenses associated with those cleanups. Somewhat like the common law of ultra-hazardous activities, property owners are strictly liable for the hazardous materials on their property, regardless of whether or not they deposited them there. See New York v. Lashins Arcade Co., 91 F.3d 353, 359 (2d Cir.1996); see also Integrated Waste Servs., Inc. v. Akzo Nobel Salt, Inc., 113 F.3d 296, 301-02 (2d Cir. 1996). Owners can escape liability only if the pollution results from an act of God or an act of war, or if the owners establish they are "innocent owners" under the statute. 42 U.S.C. § 9607(b); see also Michael B. Gerrard & Joel M. Gross, Amending CERCLA: The Post-SARA Amendments to the Comprehensive Environmental Response, Compensation, and Liability Act 54 (2006).

CERCLA does provide property owners an avenue of reprieve; it allows them to seek reimbursement of their cleanup costs from others in the chain of title or from certain...

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