Second Circuit Addresses Issue of Future Costs in Superfund Litigation

In State of New York v Sovent Chemical Co., (2d Cir. Dec. 19, 2011), the Second Circuit Court of Appeals held that a party who is remediating a site pursunat to a consent order and has a claim for past costs against adjoining property owners is entitled to a declaratory judgment regarding future remediation costs.  New York State sued Solvent Chemical Co. and others regarding contamination at the Solvent Site.  Solvent Chemical entered into a consent order agreeing to perform certain remedial actions and instituted a third party action against Olin and DuPont, owners and operators of adjoining parcels, alleging that some of the remedial costs were caused by the migration of contaminants from the the Olin and DuPont sites.

The trial court awarded contribution for past costs, but did not issue a declaratory judgment regarding future costs, reasoning that future costs were too speculative.  The Second Circuit reveresed, reasoning that if it did not issue the declaratory judgment, the statute of limitations may prevent future attempts by Solvent Chemical to recover those costs.

The case raises a rather unique issue regarding the interplay between sections 107 and 113 of the Superfund Law.  Section 113(g)(3) provides that in an action under section 107, “the court shall enter a declaratory judgment ” regarding future response costs.  There is no corresponding provision for a declaratory judgment for future costs in a contribution action.  Thus, third party defendants argued that to apply the declaratory judgment provision to a contribution action amounted to a rewriting of the statute.  This issue has not been addressed by many courts, but the Supreme Court dealt with another issue related to the interplay of these two sections in Cooper Industries v Avial Services, 543 U.S 157 (2004). We will have to wait and see how this plays out in the courts.

From a practical perspective, the case illustrates the dangers of resolving liability to the State without resolving liability vis a vis other parties who contributed to the site.  The consent order entered into by Solvent Chemical did not resolve anything.  It merely changed Solvent Chemical’s posture in the litigation from defendant to plaintiff.

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