10-2026-cv
State of New York v. Solvent Chemical Co. et al.
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
August Term, 2011
(Argued: September 19, 2011 Decided: December 19, 2011)
Docket Nos. 10-2026-cv(L), 10-2166(XAP), 10-2383-cv(XAP)
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STATE OF NEW YORK,
Plaintiff,
-v.-
SOLVENT CHEMICAL COMPANY, INC.,
Defendant-Third Party
Plaintiff-Appellant-Cross
Appellee,
ICC INDUSTRIES, INC.,
Defendant-Third Party
Plaintiff-Cross Appellee,
-v.-
OLIN CORPORATION,
Third Party Defendant-
Counterclaimant-Appellee-
Cross Appellant,
E.I. DU PONT DE NEMOURS & COMPANY,
Third Party Defendant-
Appellee-Cross Appellant.
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Before: JACOBS, Chief Judge, HALL and LYNCH,
Circuit Judges.
Plaintiff sought contribution under the Comprehensive
Environmental Response and Compensation Act (“CERCLA”), 42
U.S.C. §§ 9601-9675, for both past and future costs of
cleaning up industrial pollution. The United States
District Court for the Western District of New York (Curtin,
J.) awarded contribution for past cleanup costs but declined
to issue a declaratory judgment as to future contribution.
For the following reasons, we REVERSE the denial of a
declaratory judgment. Numerous other issues raised on
appeal are decided in a summary order issued simultaneously
with this opinion.
FOR APPELLANT: DENNIS P. HARKAWIK (Charles D.
Grieco, Brenda J. Joyce, on
brief), Jaeckle Fleischmann &
Mugel, LLP, Buffalo, New York,
for Appellant Solvent Chemical
Company, Inc.
FOR CROSS APPELLEE: ROBERT J. BASIL (Irwin F. Roth,
Law Office of Irwin Roth, New
York, New York, on brief),
Collier & Basil, P.C., New York,
New York, for Cross Appellee ICC
Industries, Inc.
FOR APPELLEES: DANIEL M. DARRAGH, Cohen &
Grigsby, P.C., Pittsburgh,
Pennsylvania, for Appellee E.I.
du Pont de Nemours & Company.
JOANN T. SANDIFER (Michael H.
Wetmore, Joel B. Samson, on
brief) Husch Blackwell LLP, St.
Louis, Missouri, for Appellee
Olin Corporation.
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DENNIS JACOBS, Chief Judge:
This appeal is taken from a judgment of the United
States District Court for the Western District of New York
(Curtin, J.) that (among other rulings) denied a declaratory
judgment of liability for future cleanup costs under the
Comprehensive Environmental Response and Compensation Act
(“CERCLA”), 42 U.S.C. §§ 9601-9675. Plaintiff Solvent
Chemical Company, Inc. (“Solvent”) sued two adjoining
property owners, E.I. du Pont de Nemours & Co. (“DuPont”)
and Olin Corporation (“Olin”), seeking contribution for
costs that Solvent had incurred and continues to incur
cleaning up hazardous waste pursuant to a consent decree
with the State of New York. The district court awarded
Solvent contribution for past costs, but declined to issue a
declaratory judgment. The court declined to declare
liability chiefly because the allocation of future costs
would be premature. New York v. Solvent Chemical Co., 685
F. Supp. 2d 357, 455-56 (W.D.N.Y. 2010).
The other issues raised on appeal are decided in a
summary order issued simultaneously with this opinion. In
this opinion, we conclude that a declaratory judgment should
be issued in favor of Solvent, and to that extent we reverse
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the judgment.
BACKGROUND
At varying times over the past century, Solvent,
DuPont, and Olin owned adjoining facilities in the City of
Niagara Falls, New York. DuPont’s plant on the banks of the
Niagara River manufactured various chlorinated aliphatic
compounds. Solvent and Olin owned and operated adjacent
sites immediately inland of DuPont’s. A portion of Olin’s
property (known as the Olin Hot Spot) is bounded by the
Solvent property on one side and on the other side by Gill
Creek, which thence continues across the DuPont site into
the Niagara River. Olin also owns property on the other
side of Gill Creek, at which it manufactured the pesticide
benzene hexachloride (“BHC”) and produced as byproducts
various chlorinated benzenes. Production of BHC ended in
1956 when Olin’s plant exploded. In the mid 1970s,
chlorinated benzenes and other chemicals were manufactured
at the Solvent Site.
In 1983, New York sued Solvent and others for
environmental contamination at the Solvent Site. In 1996,
the New York Department of Environmental Conservation
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(“DEC”) issued a Record of Decision (“ROD”) requiring
Solvent to undertake remedial action at both the Solvent
Site and the Olin Hot Spot as a result of chlorinated
benzene contamination. Solvent entered into a consent
decree obligating it to perform the remedies specified in
the ROD in settlement of New York’s CERCLA claims.
Solvent’s cleanup operations began in 1999 and continue to
this day.
In 1998, Solvent filed a fifth amended third-party
complaint adding Olin as a party and seeking contribution
for its response costs incurred under its consent decree
with New York on the basis of chlorinated benzenes
originating from Olin’s BHC plant. In 2001, Solvent
commenced a suit against DuPont for costs incurred under its
consent decree with New York that resulted from the
migration of chlorinated aliphatics from the adjoining
DuPont Facility onto the Solvent Site and Olin Hot Spot.
Solvent incurred additional cleanup costs as a result of the
aliphatic contamination.
Solvent’s claims against DuPont and Olin were
consolidated and tried without a jury over 19 days in late
2007. For administrative convenience, the parties agreed
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that all response costs incurred through June 30, 2007 would
be treated as past costs, and that all costs thereafter
would be the subject of Solvent’s prayer for a declaratory
judgment that DuPont and Olin were liable for future cleanup
costs. Expert testimony conflicted about the source of the
various chemicals that had to be cleaned up, and about the
groundwater flow that carried the pollutants among
properties. The court noted the “wide disparity in the
parties’ interpretation of the vast amounts of data
generated over the course of decades of remedial
investigations and clean-up activities” and deplored the
parties’ “inability to reach any workable consensus as to
the reasonable scientific conclusions to be drawn” from the
evidence collected. Solvent, 685 F. Supp. 2d at 435-36,
451, 452.
The judgment (entered May 14, 2010) awarded Solvent
contribution from DuPont in the amount of $2,050,371 and
from Olin in the amount of $462,288, for costs incurred
through June 30, 2007. It denied Solvent’s request that
DuPont and Olin be declared liable for future cleanup costs
(allocation to be determined after costs are incurred). The
separate summary order issued today affirms the ruling that
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Solvent is entitled to past response costs by DuPont and
Olin under CERCLA section 113(f)(3)(B), 42 U.S.C. §
9613(f)(3)(B), but vacates the allocation of response costs
in part, and remands for reallocation.
DISCUSSION
We review a district court’s refusal to grant a
declaratory judgment for abuse of discretion. Dow Jones &
Co., Inc. v. Harrods Ltd., 346 F.3d 357, 359 (2d Cir. 2003).
I
As to certain claims, CERCLA section 113(g)(2) requires
a district court to “enter a declaratory judgment on
liability for response costs or damages that will be binding
on any subsequent action or actions to recover further
response costs or damages.” 42 U.S.C. § 9613(g)(2). Oddly,
the wording of section 113(g)(2) limits its application to
“[a]n initial action for recovery of the costs referred to
in section 9607 [CERCLA § 107],” i.e., not section 113(f).
Id. Solvent contends nevertheless that section 113(g)(2)
also applies to contribution actions under section 113(f).
The First and Sixth Circuits agree. See GenCorp, Inc. v.
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Olin Corp., 390 F.3d 433, 450 (6th Cir. 2004); United States
v. Davis, 261 F.3d 1, 46-47 (1st Cir. 2001). Other circuits
have also issued declaratory judgments for future costs
under section 113(f), but have been less clear about the
source of that authority. See Boeing Co. v. Cascade Corp.,
207 F.3d 1177, 1191-92 (9th Cir. 2000) (upholding grant of
declaratory judgment in contribution case after recognizing
that section 113(g)(2) did not prohibit declaratory relief
for section 113(f) claims); Tosco Corp. v. Koch Indus., 216
F.3d 886, 897 (10th Cir. 2000) (finding that a declaratory
judgment in connection with a section 113(f) suit was an
appropriate remedy where future response costs were likely
to be incurred). And in one case under section 113(f), this
Circuit has recognized that the “proper remedy for future
response costs is not a present lump-sum payment of
anticipated expenses but instead a declaratory judgment
award dividing future response costs among responsible
parties.” Goodrich Corp. v. Town of Middlebury, 311 F.3d
154, 175 (2d Cir. 2002) (internal quotation marks omitted).
We need not decide whether section 113(g)(2)’s
mandatory wording (on entry of a declaratory judgment for
future liability) applies to § 113(f) contribution actions,
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because the factors considered by a district court under the
Declaratory Judgment Act, 28 U.S.C. § 2201(a), are
sufficient to require a declaratory judgment in this case.
Id. at 359.
II
The district court ruled that “final judgment regarding
the allocation of future costs to any party other than
Solvent would be premature.” Solvent, 685 F. Supp. 2d at
455-56. The district court listed its reasons for declining
to issue a declaratory judgment: (1) the “principal negative
environmental impact of the chlorinated benzene
contamination” from Solvent’s plant; (2) the failure of
testifying experts to provide the court with a basis for
interpreting the scientific data presented; (3) the DEC’s
pronouncement that its “future determinations with regard to
the effectiveness of the groundwater remedy at the Site will
be made based on data pertaining to hydraulic control of the
contaminants of concern identified in the Solvent ROD--
chlorinated benzenes--without regard to control of
chlorinated aliphatics”; (4) the “extent to which the
continued presence of chlorinated aliphatics in the pumped
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groundwater might be deemed responsible for any incidental
increase in treatment costs has already been taken into
consideration by the court in discounting DuPont’s allocable
share of past costs”; and (5) the DEC’s continued review of
other remedies to account for chlorinated aliphatics in the
groundwater. Id. at 455.
III
The reasons given by the district court might justify a
refusal to allocate cleanup responsibility; none of them,
however, supports a refusal to grant a declaratory judgment
as to liability itself. The district court has already
decided that Olin and DuPont were liable for contribution as
to historical losses. Save for the possibility that the DEC
might in the future impose different remedies to clean up
the chlorinated aliphatics, none of the factors identified
by the court distinguishes between past and future cleanup.
That is to say, the factors do not explain why DuPont and
Olin should pay for cleanup costs through June 30, 2007, but
not for those incurred on July 1, 2007 and thereafter. And
should the DEC take action in the future regarding
chlorinated aliphatics, the district court can consider that
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fact in allocating costs down the road. Even concern over
the future role of chlorinated aliphatics in the ongoing
cleanup would not affect Olin’s responsibility to contribute
to cleanup costs based on its discharge of chlorinated
benzenes.
When faced with a request for a declaratory judgment
pursuant to the Declaratory Judgment Act, 28 U.S.C.
§ 2201(a), a district court must inquire:
[1] whether the judgment will serve a useful purpose in
clarifying or settling the legal issues involved;
. . . [2] whether a judgment would finalize the
controversy and offer relief from uncertainty[;] . . .
[3] whether the proposed remedy is being used merely
for procedural fencing or a race to res judicata; [4]
whether the use of a declaratory judgment would
increase friction between sovereign legal systems or
improperly encroach on the domain of a state or foreign
court; and [5] whether there is a better or more
effective remedy.
Dow Jones & Co., 346 F.3d at 359-60 (internal quotation
marks omitted). These factors require a district court to
issue a declaratory judgment in this case. A declaratory
judgment would “serve a useful purpose” here for at least
two reasons.
First, there is a short statute of limitations for a
CERCLA contribution claim. See 42 U.S.C. § 9613(g)(3)
(three year statute of limitations from entry of judgment in
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cost recovery action, entry of administrative order, or
judicially approved settlement). Solvent entered into the
consent decree with New York on April 2, 1997, and could not
commence a new suit for contribution after April 2, 2000.1
Since the limitations period is triggered by approval of the
consent decree, which may signal only the beginning of
cleanup, declaratory judgments will often be necessary to
ensure an equitable apportionment of cleanup costs that (as
is common) are incurred over many years. That is the case
here: Though the consent decree between New York and Solvent
was completed in April 1997, construction of the cleanup
operation did not commence until 1999 and the statute of
limitations expired soon after, in April 2000.
Second, the “costs and time involved in relitigating
issues as complex as these where new costs are incurred
would be massive and wasteful.” Boeing, 207 F.3d at 1191.
As is typical, the CERCLA claims and defenses below were
complex, and entailed years of litigation, weeks of trial,
and thousands of pages of briefing. A declaratory judgment
with respect to liability saves litigants and courts
1
In the summary order issued in conjunction with this
opinion, we conclude that DuPont waived its statute of
limitations defense to Solvent’s contribution claim by
failing to raise it until five years into litigation.
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substantial time and money, leaving for the future only the
need to fix the amount of contribution and affording the
court flexibility with respect to the time and manner for
doing so. Once the uncertainties regarding ongoing response
costs have been resolved, a declaratory judgment allows the
parties to invoke the jurisdiction of the district court
pursuant to 28 U.S.C. § 2202 and obtain “further relief” in
the form of an order establishing the precise costs that
each party will bear.
Accordingly, we conclude that: the judgment would
“serve a useful purpose in . . . settling the legal issues
involved,” the judgment is not being used for procedural
gamesmanship or a race to res judicata, it will not increase
friction between sovereign legal systems, and there is no
“better or more effective remedy”--in fact there would be no
remedy for Solvent at all without declaratory relief. Dow
Jones & Co., 346 F.3d at 359-60. It does not matter that a
declaratory judgment of liability alone will not “finalize
the controversy and offer relief from [all] uncertainty.”
Id.
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CONCLUSION
For the foregoing reasons, we REVERSE the judgment of
the district court insofar as it declines to issue a
declaratory judgment in favor of Solvent against DuPont and
Olin.
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