Opinion ID: 1303724
Heading Depth: 2
Heading Rank: 1

Heading: Niagara's Recovery Costs

Text: Pursuant to its agreement with the DEC, NiMo incurred costs to investigate and remediate the Water Street Site. NiMo sought repayment of those costs from the defendants under a theory that the defendants were PRPs as a result of their status as owners of portions of the site and also as a result of certain actions each took on their respective properties  storing leaking drums, demolition of industrial facilities, disposal of hazardous substances on site  all of which allegedly resulted in the presence of hazardous substances on the Water Street property.
Before the district court, NiMo sought to recover the costs of its remediation efforts under § 107 or, alternatively, under § 113(f)(1). Following the first remand, NiMo conceded that it was not entitled to seek contribution under § 113(f)(1) because it had not been subject to a civil action under § 106 or § 107. Niagara II, 436 F.Supp.2d at 401. However, NiMo argued it was entitled to contribution under § 113(f)(3)(B) because the 2003 Consent Order qualified as an administrative settlement. Id. The court refused to consider the 2003 Consent Order. [11] Id. The parties argue quite vigorously over whether the 2003 Consent Order is before us. Chevron and Portec stress that the district court's decision to not consider the 2003 Consent Order was not an abuse of discretion and that our earlier refusal to add the Order to the record on appeal of Niagara I supports that view. Chevron and Portec are right about the standard of review, but wrong about the result. We review a district court's decision whether to reopen the record to admit new evidence for abuse of discretion. Matthew Bender & Co. v. W. Pub. Co., 158 F.3d 674, 679 (2d Cir.1998). A district court has abused its discretion if its ruling is based ... on an erroneous view of the law or on a clearly erroneous assessment of the evidence, or [if the district court] rendered a decision that cannot be located within the range of permissible decisions. In re Sims, 534 F.3d 117, 132 (2d Cir.2008) (internal quotation marks and citations omitted). In our view the district court abused its discretion by failing to admit the 2003 Consent Order. Upon our remand of Niagara I to the district court to reconsider its decision in light of Cooper Industries, NiMo attempted to admit the 2003 Consent Order by attaching the Order to an attorney's affidavit submitted to the district court with NiMo's brief on the effect of Cooper Industries on the case. The district court rejected the 2003 Consent Order as not part of the record and noted that no motion to supplement the record had been made. Niagara II, 436 F.Supp.2d at 401. The district court added the following comments in a footnote: The Amended Consent Order is an attachment to an attorney affidavit submitted in support of Niagara Mohawk's brief on remand, but was not included (or for that matter mentioned) in any prior proceedings, which have been ongoing since 1998. It is also noted that Niagara Mohawk sought permission in the Second Circuit to supplement the record on appeal with the Amended Consent Order. Permission was denied. Id. at 401 n. 3 (emphasis added). Our initial denial of NiMo's request to include the 2003 Consent Order in the record of the first appeal makes sense to us; the Consent Order was not before the district court in Niagara I. See Int'l Bus. Mach. Corp. v. Edelstein, 526 F.2d 37, 44 (2d Cir.1975) ([A]bsent extraordinary circumstances, federal appellate courts will not consider rulings or evidence which are not part of the trial record.). That ruling was not premised on NiMo's mistake but on impossibility; the 2003 Consent Order could not have been before the district court as it had not been fully executed until after the district court's first decision. See Niagara I, 291 F.Supp.2d at 105; see also Niagara II, 436 F.Supp.2d at 401. But, in these circumstances, our conclusion with regard to what was before our court should not have been dispositive or, frankly, even considered by the district court when faced with the decision to admit the document on remand. As soon as the district court regained jurisdiction following the remand, NiMo attempted to admit the document with its first submission. The district court's notation that the Order had not previously been included in the record is technically correct but overlooks the obvious  it could not have been a part of the record as it did not exist. Moreover, the district court's comment that the case had been on-going since 1998 was of no moment; NiMo presented the 2003 Consent Order at the first opportunity it had to do so. And, although NiMo did not make a formal motion to supplement the record, there is no evidence that any of the defendants made a formal motion to strike the document or even disputed its authenticity. [12] The district court penalized only NiMo for a trivial procedural shortcoming; this was error.
In our view, only § 113(f)(3)(B) provides the proper procedural mechanism for NiMo's claims. Under § 113(f)(3)(B), 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 who is not party to a settlement. 42 U.S.C. § 113(f)(3)(B). As noted, the district court determined that this provision did not apply to NiMo because NiMo settled with the DEC, and the EPA had not formally delegated power to settle CERCLA claims to the DEC. Niagara II, 436 F.Supp.2d at 402. In the district court's view, the settlement did not resolve NiMo's liability under CERCLA and thus, NiMo was not entitled to contribution. Id. at 404. Some of our earlier cases could be mistaken for supporting the district court's view. In Consolidated Edison, we held that a utility (ConEd) that entered into a Voluntary Cleanup Agreement with the DEC could not seek contribution from another PRP under § 113(f)(3)(B) because the Voluntary Cleanup Agreement by its terms only absolved ConEd of state liability and did not reference CERCLA. [13] Consol. Edison Co. v. U.G.I. Util., Inc., 423 F.3d 90, 97 (2d Cir.2005). The Voluntary Cleanup Agreement indicated that DEC would not take any enforcement action under. CERCLA, but DEC promised to refrain from doing so only to the extent that [the existing] contamination [at issue] is being addressed under the Agreement. Id. at 97. The state agency also reserved the right to take any investigatory or remedial action deemed necessary as a result of a significant threat resulting from the Existing Contamination or to exercise summary abatement powers. Id. at 96-97. We held that the rights reserved by the DEC [left] open the possibility that the [DEC] might still seek to hold ConEd liable under CERCLA and therefore, because ConEd could still be sued under CERCLA, it was not entitled to bring an action under § 113(f)(3)(B). [14] Id. at 97. In W.R. Grace & Co.-Conn. v. Zotos Int'l, Inc ., we held that a PRP could not bring an action for contribution against another PRP under § 113(f)(3)(B) based on its settlement with the DEC because the DEC settlement ma[de] no reference to CERCLA, [and] establishe[d] that the DEC settled only its state law claims against [the PRP], leaving open the possibility that the DEC or the EPA could, at some future point, assert CERCLA or other claims. 559 F.3d 85, 91 (2d Cir.2009). Specifically, the consent order at issue provided that, [i]f 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 [the PRP], 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 [New York Environmental Conservation Law] relative to or arising from the disposal of hazardous or industrial waste at the Site. Id. In each case, the consent order at issue did not purport to resolve CERCLA liability and hence, in the panel's view, did not qualify as an administrative settlement under § 113. But neither Consolidated Edison nor W.R. Grace held that the DEC was without authority to settle CERCLA claims nor did either case conclude that CERCLA settlement authority required explicit authorization from the EPA. See W.R. Grace, 559 F.3d at 90-91; Consol. Edison, 423 F.3d at 95-97. Moreover, unlike the consent agreements in Consolidated Edison and W.R. Grace, the 2003 Consent Order specifically released NiMo from CERCLA liability. The 2003 Consent Order released NiMo from liability under [f]ederal statutory ... law involving or relating to investigation or remedial activities relative to or arising from the disposal of hazardous wastes or hazardous substances... at the [Water Street Site] and resolved [NiMo's] liability to the State for purposes of contribution protection provided by CERCLA Section 113(f)(2)[, 42 U.S.C. § 9613(f)(2)]. Under the 2003 Consent Order, the remedial activities performed by NiMo were consideration for a release and covenant not to sue ... which [DEC] has or may have pursuant to ... State or Federal statutory or common law involving or relating to investigative or remedial activities relative to or arising from the disposal of hazardous wastes or hazardous substances. Once NiMo completed the Consent Order responsibilities, NiMo was deemed to have resolved its liability to the State for purposes of contribution protection provided by CERCLA Section 113(f)(2) and thus was entitled to seek contribution. The 2003 Consent Order qualifies as an administrative settlement of liability for purposes of CERCLA pursuant to the plain text of § 113(f)(3)(B). Our interpretation of the Consent Order fits squarely within the type of contribution claims contemplated by § 113. The provisions of the statute come into play once NiMo resolved its liability to the United States or a State. 42 U.S.C. § 9613(f)(3)(B) (emphasis added). The statute does not require that the United States acquiesce in the administrative settlement  it does not read the United States and a State. Nor does § 113(f)(3)(B) require that there be a federal delegation of settlement authority to a state  the statute does not say the United States or a State with the express authority of the United States.  But the district court's interpretation of the statute would compel such a result. If Congress wanted to constrict the authority of state environmental agencies in settling CERCLA claims, it could have easily done so. Instead, Congress chose the disjunctive and established a dual track for the resolution of CERCLA liability. As the EPA's amicus brief points out, [b]ecause of the number and variety of contaminated sites across the country, states play a critical role in effectuating the purposes of CERCLA. [15] Brief for United States as Amicus Curiae Supporting Appellant at 4, Niagara Mohawk v. Consol. Rail, Nos. 08-3843-cv; 08-4007-cv (2d Cir.2009) That role is not only critical, it is autonomous. For instance, the EPA must coordinate with an affected state before deciding on an appropriate remedial action, and, under § 128, the EPA may award a grant to a state that has a response program that conforms to the requirements of CERCLA. 42 U.S.C. §§ 9604(c), 9628(a). The EPA is expressly authorized to enter into contracts or agreements with states to carry out CERCLA response actions. 40 C.F.R. § 300.515(a)(1). Under CERCLA, states have causes of action independent from the federal government. For example, under § 107, a PRP is liable for clean up costs incurred by the United States Government or a state. 42 U.S.C. § 9607(a)(4)(A). We have previously held that a state does not need the approval of the United States before it can remediate hazardous substances and sue PRPs under § 107. See N.Y. v. Shore Realty Corp., 759 F.2d 1032, 1047-48 (2d Cir.1985). CERCLA views the states as independent entities that do not require the EPA's express authorization before they can act. New York is empowered to settle a PRP's CERCLA liability. The 2003 Consent Order between NiMo and the DEC qualifies as an administrative or judicially approved settlement under § 113(f)(3)(B); NiMo is entitled to seek contribution under CERCLA.
NiMo contends that it may also have a claim under § 107(a). [16] Section 107(a) claims are brought by federal or state agencies that have incurred response costs or PRPs who incur CERCLA clean up costs without judicial or administrative intervention. [17] See Atl. Research, 551 U.S. at 135, 127 S.Ct. 2331. Section 113(f)(3)(B) claims seek proportionate reimbursement from other PRPs of cleanup costs for a PRP that has resolved its CERCLA liability for some or all of the costs of a response action through a judicial or agency-approved settlement. See 42 U.S.C. § 9613(f)(3)(B). Clearly, the two sections have differing restrictions and different purposes. [18] Moreover, § 113(f) was enacted by Congress as part of SARA to amend CERCLA for the purpose of codifying the contribution remedy that most courts had already read into the statute. It was designed to clarif[y] and confirm ... the right of a person held jointly and severally liable under CERCLA to seek contribution from other potentially liable parties, when the [PRP] believes that it has assumed a share of the cleanup or cost that may be greater than its equitable share under the circumstances. H.R.Rep. No. 99-253(I), at 79 (1985), U.S.Code Cong. & Admin.News 1986, pp. 2835, 2861. NiMo's claim fits squarely within the more specific requirements of § 113(f)(3)(B). NiMo acknowledged responsibility and paid for response costs under the statute. NiMo settled its CERCLA liability with DEC by agreeing to identify and to remediate some of the hazardous substances present at the Water Street Site. NiMo presses a claim for a sharing of those costs with other PRPs consistent with § 113(f)(3)(B). The EPA in its amicus brief strongly argues that § 113(f)(3)(B) is the proper vessel for NiMo's contribution claims in light of its more specific requirements, the nature of NiMo's claims, and the amendment of the statute to provide the right of contribution. We agree. Congress recognized the need to add a contribution remedy for PRPs similarly situated to NiMo. To allow NiMo to proceed under § 107(a) would in effect nullify the SARA amendment and abrogate the requirements Congress placed on contribution claims under § 113. [19] When Congress acts to amend a statute, [courts] presume it intends its amendment to have real and substantial effect. Stone v. INS, 514 U.S. 386, 397, 115 S.Ct. 1537, 131 L.Ed.2d 465 (1995).