By Elizabeth Knauer and Victoria Treanor.

The development of the jurisprudence distinguishing claims properly brought under Section 107 of the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”) from those that should be brought under Section 113 of the statute continues in small steps.  In a ruling from the bench on March 26, 2019, Judge Margo K. Brodie of the Eastern District of New York held that a New York State Department of Environmental Conservation (“DEC”) consent order for the cleanup of multiple former manufactured gas plants in New York state “resolved” the liability of the respondent, Brooklyn Union Gas Company (“BUG”) within the meaning of Section 113(f)(3)(B).  As a result, with respect to costs incurred pursuant to the consent order, BUG was confined to a CERCLA contribution action against other parties pursuant to § 113 of the statute, and could not pursue an action for cost recovery pursuant to CERCLA § 107.  Moreover, because the resolution of CERCLA liability occurred at the time of the consent order’s execution, triggering the three-year statute of limitations for a § 113 action, and because more than three years had elapsed since the execution of the order, the § 113 claim was time-barred. As for claims brought by BUG for costs that that were purportedly unrelated to compliance with the consent order, the Court held that these were not made with sufficient specificity and allowed BUG an opportunity to replead them.

Judge Brodie’s order upheld completely a Report and Recommendation of Magistrate Judge Steven Tiscione, to whom a motion to dismiss had been referred. Both Judge Brodie and Magistrate Judge Tiscione focused on the specific language of the consent order, which expressly stated that it resolved the respondent’s CERCLA liability. This language was found to be conclusive, despite other language in the consent order that conditioned a release and covenant not to sue on the completion of the respondent’s remedial obligations.

This decision is the latest in an ongoing attempt by the courts nationwide to elucidate the practical implications of CERCLA – a notoriously abstruse statute – with respect to the question of when a settlement with the government resolves liability for the purpose of § 113. BUG urged the court to follow Seventh and Sixth Circuit precedent holding that, where a consent order contained a conditional release and covenant not to sue, CERCLA liability could not be resolved until that release was actually granted. However, Judge Brodie held that, due to the clear language of the consent order that on its face stated an intention to resolve BUG’s CERCLA liability, it was unnecessary to focus on the prospective covenant not to sue, available at the completion of cleanup, or explore whether it deferred the resolution of CERCLA liability until the completion of remedial obligations.  This order is consistent with the Second Circuit’s 2010 decision in Niagara Mohawk Power Corp. v. Chevron USA, Inc., 596 F.3d 112 (2d Cir. 2010), which held that a similarly-worded DEC consent order resolved the respondent’s CERCLA liability on its face, notwithstanding that it also contained a conditional covenant not to sue.

The case, Brooklyn Union Gas Co. v. Exxon Mobil Corp., et al., no 1:17-cv-00045, is pending in the Eastern District of New York. SPR represents four defendants in this action, present or former owners of parcels that are part of a large swath of property in Williamsburg, Brooklyn, that BUG has alleged was partially contaminated by others.