05-2798-cv
W .R. Grace & Co.– Conn. v. Zotos International, Inc.
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
_____________________
August Term, 2005
(Argued: January 27, 2006 Decided: March 4, 2009)
Docket No. 05-2798-cv
_____________________
W.R. GRACE & CO. – CONN.,
Plaintiff-Appellant,
– v. –
ZOTOS INTERNATIONAL, INC.,
Defendant-Appellee.
_______________________
BEFORE: RAGGI and HALL, Circuit Judges, and KORMAN, District Judge.*
_______________________
Owner W.R. Grace & Co. brought suit under the Comprehensive Environmental
Response, Compensation, and Liability Act (CERCLA) against Defendant Zotos International,
Inc. for costs incurred in connection with Grace’s investigation and remediation of contamination
at the Brewer Road site. The United States District Court for the Western District of New York
(Skretny, J.) held Grace was not entitled to contribution under CERCLA and granted judgment in
favor of Zotos. Grace appealed. Affirmed in part, reversed in part, and remanded.
*
The Honorable Edward R. Korman, United States District Court for the Eastern District of
New York, sitting by designation.
________________________
KEVIN M. HOGAN, Phillips Lytle LLP, Buffalo, New York, for Plaintiff-
Appellant.
THOMAS R. SMITH, (Robert R. Tyson, Lillian Abbott Pfohl, on the brief) Bond,
Schoeneck & King, PLLC, Syracuse, New York, for Defendant-Appellee.
Robert Emmet Hernan, Michelle Aronowitz, Eugene J. Leff, and Gordon J.
Johnson, for Eliot Spitzer, Attorney General for the State of New York, New
York, New York, submitted a brief for Amicus Curiae the State of New York, in
support of Plaintiff-Appellant.
Kevin A. Szanyi, Nelson Perel, A. Timothy Webster, Webster Szanyi LLP,
Buffalo, New York; Jeffrey N. Martin, Eric J. Murdock, Hunton & Williams LLP,
Washington, D.C., submitted a brief for Amici Curiae Allied Waste Systems, Inc.
and Browning-Ferris Industries of New York, Inc., in support of Defendant-
Appellee.
________________________
HALL, Circuit Judge:
Plaintiff W.R. Grace & Co.-Conn. (“Grace”) seeks to recover necessary response costs
under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980
(“CERCLA”) for costs Grace incurred in cleaning up a certain contaminated site in New York.
The District Court (Skretny, J.) concluded Grace, which is itself a responsible party, is not
entitled to recovery under CERCLA because Grace had not previously been a party to a
CERCLA civil action, and entered judgment in favor of defendant Zotos International, Inc.
(“Zotos”). W.R. Grace & Co.–Conn. v. Zotos Int'l, Inc., No. 98-CV-838S(F), 2005 WL 1076117,
at *12 (W.D.N.Y. May 3, 2005). Grace asserts it is entitled to seek an equitable share of its
response costs from Zotos under section 107(a) of CERCLA. 42 U.S.C. § 9607(a). While this
Court was considering the appeal, the Supreme Court decided United States v. Atlantic Research
2
Corp., 127 S. Ct. 2331 (2007), which holds that CERCLA provides a potentially responsible
party (“PRP”) who has incurred costs of response in cleaning a contaminated site with a cause of
action to recover those costs from other PRPs. We conclude that Grace has incurred response
costs within the meaning of section 107(a) and remand to the district court for further
proceedings.
I. Background
In 1978, Grace acquired a facility known as the Brewer Road Site (the “Site”) when it
purchased the assets of a chemical manufacturer, Evans Chemetics, Inc. (“ECI”). ECI had used
the Site as a landfill for wastes from a Waterloo, New York, manufacturing facility (the
“Waterloo Plant”) from 1950 through 1959. ECI manufactured organic compounds at the
Waterloo Plant, and it formulated and packaged hair care products at the Waterloo Plant for sale
to Zotos and other customers. Grace alleges that Zotos arranged for the disposal of certain of
those wastes at the Site. Grace continues to own the Site today.
In 1983, the New York State Department of Environmental Conservation (“DEC”)
conducted a Phase I preliminary investigation of the Site, and in 1984 Grace entered into its first
administrative order on consent to perform a Phase II investigation at the Site. After DEC placed
the Site on the New York Registry of Inactive Hazardous Waste Disposal Sites, Grace
cooperatively entered into a second administrative order on consent with DEC in 1988 (the
“Consent Order”).1 Pursuant to that Consent Order, Grace agreed to reimburse DEC
approximately $20,000 for response costs (including direct labor, analytical, and contractor costs)
1
Because Grace does not seek response costs incurred pursuant to the 1984 order, only
the response costs incurred pursuant to the 1988 consent order are the subject of the lawsuit.
3
incurred investigating the environmental conditions. Grace also agreed to perform a remedial
investigation and feasibility study (“RI/FS”), and to remediate the landfill. The Consent Order
provided specifically that there had been no admission of guilt or finding of liability. Upon the
successful completion of the remedy, DEC expressly agreed to release Grace from all claims
arising under the New York Environmental Conservation Law (“ECL”) relative to the landfill.
The Consent Order stated that Grace “voluntarily consents to the issuing and entering of
this Order, and without admitting any facts or the applicability of any law, waives its right to a
hearing herein as provided by law, and consents to be bound by the provisions, terms and
conditions of this Order.” The Consent Order provided that at the conclusion of the program, if
DEC acknowledged that implementation was complete,
such acknowledgment [sic] shall constitute a full and complete satisfaction and
release of each and every claim, demand, remedy or action whatsoever against
[Grace], its officers and directors, which [DEC] has or may have as of the date of
such acknowledgment [sic] pursuant to Article 27, Title 13, of the ECL relative to or
arising from the disposal of hazardous or industrial waste at the Site.
The Consent Order also provided that Grace would reimburse DEC $20,967.64 for costs incurred
in investigating the conditions at the Site and in preparing the Consent Order, as well as other
sums concerning the costs of implementation of the feasibility study and remedial design. The
Consent Order set out that the “failure of [Grace] to comply with any provision of this Order
shall constitute a default and a failure to perform an obligation under this Order and under the
ECL,” and that “[n]othing herein shall be construed to bind any entity not specifically bound by
the terms of this Order.” Pursuant to the Consent Order, Grace remediated the Site in 1993 and
has thereafter maintained the Site. Through April 2004, Grace had expended approximately $1.7
million on remedial activities at the Site.
4
Grace commenced the instant action in December 1998, seeking contribution from Zotos
pursuant to CERCLA section 113(f), 42 U.S.C. § 9613(f), and New York law for the costs
incurred in connection with the investigation and remediation of contamination at the Site.
Following a bench trial, the District Court rendered a final decision and order dated May 3, 2005,
in which it concluded that Grace is not entitled to reimbursement pursuant to CERCLA section
113(f) because it was neither a party to a civil suit nor a party to a settlement. The court also
denied Grace’s claims under state law.
Grace urges on appeal that it should have been entitled to seek contribution under
§ 113(f)(3)(B) due to its Consent Order with DEC. In the alternative, Grace argues that it was
entitled to recover a portion of its costs pursuant to § 107(a)(4)(B).
II. Discussion
Because this case turns on the interpretation of a federal statute, our review is de novo.
Commander Oil Corp. v. Barlo Equip. Corp., 215 F.3d 321, 326 (2d Cir. 2000). We recognize
that with respect to this review, our obligation is to look to the plain language of the statute to
effectuate the intent of Congress. See Natural Res. Def. Counsel v. Abraham, 355 F.3d 179, 198-
99 (2d Cir. 2004) (“In interpreting the plain language of the statute, we must look to the
particular statutory language at issue, as well as the language and design of the statute as a whole,
and, where appropriate, its legislative history.” (internal quotation marks omitted)); see also Dole
v. United Steelworkers of Am., 494 U.S. 26, 35 (1990) (noting that, when inquiring into
congressional intent through means of traditional statutory construction, courts “look to the
provisions of the whole law, and to its object and policy” (internal quotation marks omitted)).
5
A. CERCLA
CERCLA is a comprehensive federal law governing the remediation of hazardous waste
sites. Unfortunately, CERCLA, which was hastily enacted on the eve of the lame-duck session
of the 96th Congressional term, is known neither for its concinnity nor its brevity. See, e.g.,
Exxon Corp. v. Hunt, 475 U.S. 355, 363 (1986) (noting CERCLA provisions are “not . . .
model[s] of legislative draftsmanship,” and its statutory language is “at best inartful and at worst
redundant”); Artesian Water Co. v. New Castle County, 851 F.2d 643, 648 (3d Cir. 1988)
(“CERCLA is not a paradigm of clarity or precision. It has been criticized frequently for inartful
drafting and numerous ambiguities attributable to its precipitous passage.”). Nonetheless, it has
now been over twenty-five years since CERCLA’s enactment, and although many of the
provisions remain perplexing, the statute’s primary purposes are axiomatic: (1) to encourage the
“timely cleanup of hazardous waste sites;” and (2) to “plac[e] the cost of that [cleanup] on those
responsible for creating or maintaining the hazardous condition.” Consol. Edison v. UGI Utils.,
Inc., 423 F.3d 90, 94 (2d Cir. 2005) (second alteration in original) (internal quotation marks
omitted); see also Key Tronic Corp. v. United States, 511 U.S. 809, 819 n.13 (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 Indus., Inc., 998 F.2d
842, 847 (10th Cir. 1993))). Thus, on review, this Court must “construe the statute liberally in
order to effect these congressional concerns.” Schiavone v. Pearce, 79 F.3d 248, 253 (2d Cir.
1996).
In order to achieve these dual purposes, the statute creates several distinct provisions that
authorize parties in different procedural positions to recover costs incurred in cleaning up
6
contamination: “(1) section 107(a), which permits the general recovery of cleanup and prevention
costs;2 (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.” Consol. Edison, 423 F.3d at 94. While courts
have previously struggled with interpreting which of these subsections provides a cause of action
for parties in differing procedural and factual circumstances, two Supreme Court decisions have
shed light on these two sections of CERCLA. See Atl. Research Corp., 127 S. Ct. 2331 (holding
CERCLA section 107(a) provides potentially responsible parties with cause of action to recover
necessary costs of response from other PRPs); Cooper Indus., Inc. v. Aviall Servs., Inc., 543 U.S.
157 (2004) (holding private parties who have not been sued in a CERCLA administrative or cost
recovery action may not bring a contribution suit under section 113).
In Cooper Industries, the Supreme Court held that a party may pursue a contribution
claim under section 113(f)(1) only if that party has been subject to a civil action as specified in
that section, id. at 583, a limitation most courts had not previously imposed, see, e.g., Bedford
Affiliates v. Sills, 156 F.3d 416, 423-24 (2d Cir. 1998) (assuming that a liable party that was not
the subject of a civil action could bring a contribution claim under section 113(f)(1)). Before
Cooper Industries, most courts, including ours, held that in connection with application for
reimbursement from other potentially liable parties, only section 113(f) provided a cause of
action to parties who would be liable, and section 107(a) was reserved for innocent parties. See,
e.g., Bedford Affiliates, 156 F.3d at 423; see also Metro. Water Reclamation Dist. of Greater
2
“We assume without deciding that § 107(a) provides for joint and several liability.” Atl.
Research Corp., 127 S. Ct. at 2339 n.7.
7
Chicago v. N. Am. Galvanizing & Coatings, Inc., 473 F.3d 824, 828 & n.4 (7th Cir. 2007).
Bedford Affiliates held that the plaintiff “could not pursue a § 107(a) cost recovery claim against
[the defendants] due to its status as a potentially responsible person.” 156 F.3d at 423-24.
Following Cooper Industries, this Court indicated that Bedford Affiliates may no longer be good
law because the assumption that a potentially liable party seeking reimbursement had a cause of
action under section 113(f)(1), even if the party had not been subject to a prior CERCLA suit,
was invalidated by Cooper Industries. Consol. Edison, 423 F.3d at 101 n.12. Consolidated
Edison thereby suggested that Cooper Industries had implicitly overruled Bedford Affiliates.
However, it did not reach the ultimate decision of whether Bedford Affiliates had been overruled
because the Court concluded that factual discrepancies distinguished the case before it from
Bedford Affiliates such that it did not need to consider directly the issue. Consol. Edison, 423
F.3d at 100-02.
Subsequent to our decision in Consolidated Edison, the Supreme Court in Atlantic
Research held that “the plain terms of § 107(a)(4)(B) allow a PRP to recover costs from other
PRPs.” 127 S. Ct. at 2339. In light of Atlantic Research, we now confirm that Bedford
Affiliates’s holding limiting recoveries by PRPs to actions brought under section 113(f) is no
longer valid. See New York v. Nat’l Serv. Indus., Inc., 460 F.3d 201, 207 (2d Cir. 2006);
BankBoston, N.A. v. Sokolowski (In re Sokolowski), 205 F.3d 532, 534-35 (2d Cir. 2000) (This
Court is “bound by a decision of a prior panel unless and until its rationale is overruled,
implicitly or expressly, by the Supreme Court or this court en banc” (quotation marks and
citation omitted)).
8
That a PRP may assert a claim under section 107 as provided in Atlantic Research,
however, does not put an end to the question of whether a party such as Grace may maintain a
cause of action for recovery of response costs. As the Court stated in Atlantic Research, Ҥ
107(a) permits a PRP to recover only costs it has ‘incurred’ in cleaning up a site.” 127 S. Ct. at
2338 (citing 42 U.S.C. § 9607(a)(4)(B)). Accordingly, the question before us is whether a
potentially responsible party who has remediated a contaminated site pursuant to an
administrative consent order has a cause of action to pursue necessary associated costs under
section 107. We conclude that it does.
B. Section 113(f)(3)(B)
On appeal, Grace first asserts that it should be able to bring a cause of action for
contribution under section 113(f)(3)(B). In the alternative, Grace asserts it has a cause of action
under section 107(a). We will first consider Grace’s arguments with respect to section
113(f)(3)(B).3
Grace acknowledges that, after Cooper Industries, it may not bring a cause of action
against Zotos under section 113(f)(1) because Grace has not already been subject to a civil suit
under either section 106 or 107. Grace asserts that since its Consent Order with the DEC
3
Initially, Grace asserted its cause of action under section 113(f) generally, and also
specifically referred to section 113(f)(1). Grace, 2005 WL 1076117, at *3 n.6. Cooper Industries
was decided while the case was pending decision after trial, and Grace and Zotos were granted
leave to brief the significance of that case to the District Court. Grace raised its section
113(f)(3)(B) claim at that stage, which was addressed and denied by the District Court. Id. at *3.
The district court’s decision in this case was rendered prior to our holding in Consolidated
Edison, and neither the parties nor the court discussed whether Grace had a viable cause of action
under section 107(a).
9
qualifies as an administrative settlement under section 113(f)(3)(B), it should be able to pursue a
cause of action against Zotos pursuant to this section.
Under the principles enunciated in Consolidated Edison, we conclude Grace may not seek
contribution under section 113(f)(3)(B). 423 F.3d at 95-96. Consolidated Edison made clear
that “only when liability for CERCLA claims, rather than some broader category of legal claims,
is resolved” does section 113(f)(3)(b) create a right to contribution. Id. at 95. Accordingly, the
“operative question in deciding whether [Grace’s] claims arise under section 113(f)(3)(B) . . . is
whether [Grace] resolved its CERCLA liability before bringing suit.” Id. at 96. We conclude it
has not.
The 1988 Order on Consent provides:
If the [DEC] acknowledges that the implementation is complete . . . such
acknowledgment shall constitute a full and complete satisfaction and release of each
and every claim, demand, remedy or action whatsoever against [Grace], its officers
and directors, which the [DEC] has or may have as of the date of such
acknowledgment pursuant to Article 27, Title 13, of the ECL relative to or arising
from the disposal of hazardous or industrial waste at the Site.
(emphasis added). The Consent Order further states: “Nothing contained in this Order shall be
construed as barring, diminishing, adjudicating or in any way affecting . . . (3) the [DEC’s] right
to bring any action, at law or in equity against [Grace] . . . with respect to areas or resources that
may have been damaged as a result of the release or migration of hazardous or industrial wastes
from the Site.” This text, which makes no reference to CERCLA, establishes that the DEC
settled only its state law claims against Grace, leaving open the possibility that the DEC or the
EPA could, at some future point, assert CERCLA or other claims. In the same way that the
voluntary consent agreement in Consolidated Edison did not resolve Consolidated Edison’s
liability under CERCLA, neither did this Consent Order resolve Grace’s liability under
10
CERCLA. See City of Waukesha v. Viacom Int’l Inc., 404 F. Supp. 2d 1112 (E.D. Wis. 2005)
(citing Consolidated Edison and the district court’s decision in that case, and holding that the
cost share pilot program contract the City entered with State’s Department of Natural Resources
was not an administrative or judicially approved settlement that resolved the City’s CERCLA
liability).
The Consent Order at issue here did not resolve CERCLA claims that could be brought
by the federal government. As the district court correctly observed, “[w]here a state proceeds on
its own authority to identify a remedy and settle with a PRP, there is a risk the EPA will take
later actions or select different remedies that could expose the PRP to additional liabilities.”
Grace, 2005 WL 1076117 at *5. We conclude that the Consent Order with the DEC was not an
administrative settlement cognizable under section 113(f)(3)(B), and we affirm the District
Court’s decision that Grace may not bring an action for contribution against Zotos under that
section.
C. Section 107(a)(4)(B)
Acknowledging that Atlantic Research holds that a potentially responsible party may
assert a claim under section 107(a)(4)(B) to recover incurred cleanup costs, Zotos maintains that
Grace may not pursue a claim for cost recovery because Grace has not incurred response costs
within the meaning of section 107(a).4 Specifically, Zotos contends that because Grace “was
compelled to incur costs pursuant to an administrative order,” it has not incurred response costs
within the meaning of section 107(a), and therefore has no cause of action against Zotos. To
4
Atlantic Research, 127 S. Ct. 2331, was issued after oral argument had been heard in
this case and while the matter was pending with this Court. Grace and Zotos were given leave to
file supplemental briefing on the effect of Atlantic Research on this case.
11
support its claim that Grace’s cleanup costs were not incurred costs within the meaning of the
statute, Zotos cites Consolidated Edison, 423 F.3d 90, 101-02. Zotos’s rationale, however, is
misguided. We hold that Grace may pursue necessary response costs pursuant to section 107(a)
even though its expenditures were made in compliance with a consent order.
Generally, response costs are liberally construed under CERCLA, see, e.g., Amoco Oil
Co. v. Borden Inc., 889 F.2d 664 (5th Cir. 1989) (“Response costs are generally and specifically
defined to include a variety of actions designed to protect the public health or the environment.
To justifiably incur response costs, one necessarily must have acted to contain a release
threatening the public health or the environment.”). This liberal construction is in conformity
with the plain language of the statute. As defined by CERCLA, the terms “respond” or
“response” mean “remove, removal, remedy, and remedial action; all such terms (including the
terms ‘removal’ and ‘remedial action’) include enforcement activities related thereto.” 42 U.S.C.
§ 9601(25). A “remedial action” is defined in section 101(24) as “those actions consistent with
permanent remedy,” generally referring to the final remedy selected to address the contamination
at the hazardous waste site. 42 U.S.C. § 9601(24).5 Under the statute, therefore, Grace
undertook remedial action as that term is defined in section 101(24), 42 U.S.C. § 9601(24), and
thus performed a “response” action as that term is defined in section 101(25), 42 U.S.C. §
5
A “removal action” refers generally to temporary actions taken to address immediate
threats to the environment. 42 U.S.C. § 9601(23). The clean-up action taken here was remedial
in nature.
12
9601(25).6 See also Syms v. Olin Corp., 408 F.3d 95, 101 (2d Cir. 2005) (“CERCLA defines the
term ‘response’ as encompassing both ‘removal’ efforts and ‘remedial actions.’”).
Under the plain language of the statute, the fact that a party enters into a consent order
before beginning remediation is of no legal significance with respect to whether or not the party
has incurred response costs as required under section 107(a). Our reliance on the statutory
language conforms with the Supreme Court’s emphasis on the text of CERCLA in interpreting
section 107(a). See e.g. Atl. Research, 127 S. Ct. at 2336 (stating that the structural relationship
of the text must “be read as a whole,” and that the “plain language of subparagraph (B)
authorizes cost-recovery actions by any private party, including PRPs” (emphasis added)).
Indeed, the Court concluded that “[b]ecause the plain terms of § 107(a)(4)(B) allow a PRP to
recover costs from other PRPs, the statute provides Atlantic Research with a cause of action.”
Id. at 2339. In the same manner that section 107(a) is not limited solely to “innocent” parties, see
id., section 107(a) does not specify that only parties who “voluntarily” remediate a site have a
cause of action.
Section 107 “permits a PRP to recover only the costs it has ‘incurred’ in cleaning up a
site.” Id. at 2338 (citing 42 U.S.C. § 9607(a)(4)(B)). Section 107(a) “permits cost recovery (as
distinct from contribution) by a private party that has itself incurred cleanup costs.” Id. A party
who “pays to satisfy a settlement agreement or a court judgment,” however, “does not incur its
6
The plain language of section 107(a) allows any person to seek recovery for “necessary
costs of response” in removal or remediation action. 42 U.S.C. § 9607(a)(4)(B). There is no
dispute that Grace is a “person” under the statute. 42 U.S.C. § 9601(21) (“The term ‘person’
means an individual, firm, corporation, association, partnership, consortium, joint venture,
commercial entity, United States Government, State, municipality, commission, political
subdivision of a State, or any interstate body.”).
13
own costs of response. Rather, it reimburses other parties for costs that those parties incurred.”
Id; see also Kotrous v. Goss-Jewett Co. of N. Cal., 523 F.3d 924, 934 (9th Cir. 2008) (“[A] PRP
who has not been subject to a § 106 or a § 107 action . . . is not entitled to seek contribution
under § 113. Instead, he should proceed under § 107 for cost recovery.”). Here, Grace seeks to
recover costs for remediation it performed itself; it does not seek to recoup expenses incurred in
satisfying a settlement agreement or a court judgment. We conclude that Grace may seek
recovery for incurred response costs under section 107(a).7
Our holding that Grace incurred response costs even though it conducted the remediation
pursuant to a consent order is consistent with prior decisions that have allowed potentially
responsible parties to seek cost recovery under section 107(a) despite government involvement
and oversight. In Schaefer v. Town of Victor, the plaintiff underwent eight years of enforcement
proceedings from New York’s DEC with respect to a contaminated landfill and had entered into
two consent orders with the DEC regarding the landfill’s closure and remediation. 457 F.3d 188,
191-92 (2d Cir. 2006). The first consent order required investigation of the possible
environmental threat posed by the landfill; two years later, the second consent order required
closure. The Schaefer Court held the plaintiff could bring a cause of action under section 107
because the plaintiff had begun to incur some response costs before the final consent order
requiring closure of the site. Id. at 201-02 (concluding that even “under the holding of this Court
in Consolidated Edison, Schaefer may bring this action under § 107"). Despite the fact that
7
As the Supreme Court suggested, it may well be that a party who sustains expenses
pursuant to a consent decree following a suit under section 106 or section 107(a) may have a
cause of action under either section 113(f), section 107(a), or both. Atl. Research, 127 S. Ct. at
2338 n.6. We need not address this issue here as Grace did not enter into the consent decree
following suit. See id.
14
Schaefer acted pursuant to extensive agency oversight, the Schaefer Court concluded that
Schaefer had incurred costs of response during the closure process and thus could seek to recover
those necessary costs under section 107(a).
Similarly, in Consolidated Edison, the plaintiff entered into a “voluntary cleanup
agreement” with New York’s DEC after the agency had required the plaintiff to submit
information concerning possible contamination at over 100 of its properties. 423 F.3d at 93. The
plaintiff had remediated the sites at issue only pursuant to the agreement, which plaintiff
completed in return for the DEC’s waiving some of its liability. Id. at 96. As the Court found,
Consolidated Edison was a potentially responsible party, not an innocent party, seeking recovery.
Id. at 100. New York in fact expressly contemplated that such “Potentially Responsible
Part[ies]” would enter into agreements with the DEC through the “voluntary cleanup program” to
avoid liability with the state. The state’s volunteer cleanup program guide differentiates between
PRPs and “innocent” owners, and it places different substantive and procedural compliance
requirements upon these two types of parties.
Consolidated Edison was no more an “innocent” volunteer than Grace. Both parties
would have been vulnerable to suit by the state absent proper remediation conducted under the
respective agreements with the state. More importantly, there is no doubt the DEC would not
have precluded Grace from entering into a voluntary consent agreement merely because Grace is
15
a PRP.8 Indeed, the DEC states in the Voluntary Cleanup Program Guide that a voluntary
cleanup “agreement” may be characterized as an “order” upon the request of a party.
For the purposes of CERCLA, therefore, the voluntary agreement in Consolidated Edison
differs from the Consent Order in Grace in title only—both were agreements made with the DEC
to remediate voluntarily contaminated sites and to avoid liability. We note that the State of New
York’s position, articulated in its amicus brief in this case, further supports this contention. New
York asserts “there is no practical difference between an agreement under the Voluntary Cleanup
Program and a settlement in the form of an administrative consent order under the State Inactive
Hazardous Waste Disposal Site program, such as Grace signed.” Because the determination of
whether a party has a cause of action under section 107(a) cannot turn on the semantics of the
state program’s title, which will undoubtedly vary from state to state and be subject to internal
state modifications, we find no reason to distinguish the case at bar from other cases in which we
allowed PRPs who acted pursuant to administrative agreements to seek to recover expenses
under section 107(a).
The relevant inquiry with respect to section 107(a) is whether the party undertook the
remedial actions without the need for the type of administrative or judicial action that would give
rise to a contribution claim under section 113(f). See Atl. Research, 127 S. Ct. at 2338. Grace,
like the Consolidated Edison plaintiff who was found to have a cause of action for recovery of
response costs, chose to enter into an agreement with the state to investigate and remediate a
8
Grace adds that New York’s Voluntary Cleanup Program was not adopted until 1994.
Prior to that date, the only way a party could “voluntarily” undertake a cleanup, obtain DEC’s
approval and oversight of a remedial plan, and receive release of some liability was to enter a
consent order with the DEC.
16
contaminated site. Grace saved the parties and the government litigation costs, and presumably
also limited ongoing contamination by promptly remediating the site. Although Grace entered
into a consent order with the state, that fact alone and the title of its agreement with DEC do not
preclude it from bringing an action pursuant to section 107(a).
While it is “‘ultimately the provisions of our laws rather than the principal concerns of
our legislators by which we are governed,’” Cohen v. JP Morgan Chase & Co., 498 F.3d 111,
122 (2d Cir. 2007) (quoting Oncale v. Sundowner Offshore Servs., Inc., 523 U.S. 75, 79 (1998)),
in this instance the text of the law mandates a statutory interpretation that also supports the
principal congressional concerns of ensuring that those responsible promptly clean up and pay for
removal of hazardous waste. See, e.g., Rep. Volkmer 96 Cong. House Debates 1980, 26351
(“Creation of a superfund will lead to the prompt cleanup of hazardous dumps once discovered
and thus will lessen the risk of harm to human beings.”). One of CERCLA’s main purposes is to
“‘encourage private parties to assume the financial responsibility of cleanup by allowing them to
seek recovery from others.’” Key Tronic Corp., 511 U.S. at 819 n.13 (quoting FMC Corp. v.
Aero Indus., Inc., 998 F.2d 842, 847 (1993)). As Sen. Culver stated in the Senate debates
regarding the bill, “[The statutory] purposes are to provide a way for the Government to rapidly
clean up and mitigate chemical disasters, to assure injured victims prompt and adequate
compensation, and to create an incentive for both a high standard of care and for a responsible
party to clean up its own releases.” 96 Cong. Senate Debates 1980, 30952.
We are also mindful that CERCLA was established with the intent that the federal and
state governments would cooperate in order to remediate environmental hazards expeditiously
and appropriately. See United States v. Colorado, 990 F.2d 1565, 1575 (10th Cir. 1993); Manor
17
Care, Inc. v. Yaskin, 950 F.2d 122, 125-26 (3d Cir. 1991) (Alito, J.). We find no basis for
interpreting CERCLA in a way that would discourage parties from entering agreements with the
states to ensure a proper cleanup. To disallow a party who has entered into a consent order with
an administrative agency to seek recovery of expenditures from other PRPs would discourage
cooperation with state agencies. While potentially liable parties might still attempt to clean up a
contaminated site, we see no practical or statutory purpose in discouraging parties from
remediating contaminated sites in a manner that provides agency oversight of the remediation.
Moreover, interpreting the statute such that a potentially liable party, like Zotos, bears no
financial responsibility for remediation costs, while the party that actually consented without
litigation to remediate a contaminated site bears the total financial burden of the remediation,
does not comport with the intended purposes of the statute. See Consol. Edison, 423 F.3d at 94
(noting the primary purposes of CERCLA include “encouraging the timely cleanup of hazardous
waste sites” and “placing the cost of that [cleanup] on those responsible for creating or
maintaining the hazardous condition” (alteration in original) (internal quotation marks omitted)).
If a potentially liable party believed it could avoid liability altogether by doing nothing while
another liable party negotiates with a state agency, it will have less incentive to cooperate in
remediation. See, e.g., Rep. Florio, 96 Cong. House Debates 1980, 26338 (reiterating the
objectives of CERCLA, which include that “[i]t creates a strong incentive both for prevention of
releases and voluntary cleanup of releases by responsible parties”).
Faced with environmental hazardous waste contamination on its land, Grace did not wait
for a lawsuit before attempting to remediate. Instead, it promptly entered into a consent order
with a state agency and cleaned up the site. By doing so it avoided additional contamination
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caused by delay, as well as saved itself, other potentially liable parties, and the state and federal
governments cleanup costs. We cannot conclude that Congress intended to bar such a plaintiff
from seeking recovery of costs from other responsible parties, and to allow those potentially
liable parties to avoid financial responsibility, particularly where nothing in the statute speaks to
such a limitation. See 42 U.S.C. § 9607(a)(4)(B). Moreover, had Grace not acted responsibly by
entering into the consent order with the DEC, and instead waited for suit, it would have had a
cause of action for contribution under section 113(f)(1), but that course of action would arguably
have occasioned both further contamination and greater expenses associated with the delay in
instituting litigation.
D. Necessary Costs of Response
The statute allows for recovery of only “necessary costs of response . . . consistent with
the national contingency plan.” § 107(a)(4)(B), 42 U.S.C. § 9607(a)(4)(B). We note that Zotos
stipulated at an earlier stage in the proceedings that “[a]t least some” of the costs Grace incurred
were “necessary,” and “consistent with the National Contingency Plan,” and within the meaning
of 42 U.S.C. § 9607(a)(4)(B). Because the district court concluded that Grace had no cause of
action, it made no determination with respect to the nature of the costs incurred. We make no
judgment about that issue, which is a matter to be decided by the district court in the first
instance.
III. Conclusion
We hold that parties who have not been subject to a civil action under section 106 or
section 107 but who have remediated a contaminated site pursuant to a consent order entered
with a state agency may bring a cause of action to recover necessary costs of response under
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CERCLA section 107(a). We affirm the judgment of the District Court with respect to its
dismissal of Grace’s section 113(f)(3)(B) claim. With regard to Grace’s claim under section
107(a), we reverse and we remand for further proceedings consistent with this opinion.
Affirmed in part, reversed in part, and remanded.
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