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Trial Court Reaffirms That Settlement with State Provides Contribution Protection Under CERCLA

In the continuing saga of the Combe Fill South Superfund Site in Chester, New Jersey, on January 15, 2019 the U.S. District Court for New Jersey in NJDEP v. Am. Thermoplastics Corp. denied a motion for reconsideration of its decision to grant summary judgment to former owners and operators of the landfill, Carter-Day Industries, Combe Fill Corporation, and Combustion Equipment Associates.

Combustion had filed for bankruptcy under Chapter 11 in 1983 and emerged from the court approved reorganization plan as Carter-Day. Carter-Day subsequently sued the USEPA and NJDEP for a declaration that any claims arising out of incidents at the site were discharged in bankruptcy. Although the Court granted the USEPA’s motion to dismiss, in 1990 Carter-Day filed another complaint against only the NJDEP. That matter was settled in 1991 with a court approved stipulation of settlement. Eight years later the USEPA and NJDEP filed suit against a subsequent owner/operator, Compaction Systems, as well as other entities, to recover past and future response costs at the Site. After Compaction settled with the EPA and DEP for $11 million, it filed a contribution action against Carter-Day and the related entites to recover a portion of the costs under CERCLA Sections 107(a) and 113(f), as well as under New Jersey statutes and common law. Carter-Day successfully argued that the 1991 settlement with the NJDEP provided it contribution protection under CERCLA Section 113(f). Compaction moved for reconsideration; the EPA joined in their arguments.

The Court denied the motion for reconsideration finding that Compaction had not identified any manifest errors in the initial decision. In the decision denying the motion for reconsideration the Court reiterated that Section 113(c)(2) provides contribution protection where “[a] person…has resolved its liability to the United States or a State in an administratively or judicially approved settlement…regarding matters addressed in the settlement.” 42 U.S.C. § 9613(c)(2). There was no dispute that the settlement was judicially approved. The question raised was whether the “matters addressed” in the settlement were the same as the issues in the matter before the Court. The Court maintained its prior conclusion that the settlement with the NJDEP triggered the contribution protection provisions of Section 113(f), which “extends contribution protection to those who settlement ‘with the United States or a State.’” Further, as the settled claims involved environmental clean-up costs to remediate the same damage at the same site, the Court concluded that there was continuity in the “matters addressed.” The Court rejected Compactions arguments that the settlement with the NJDEP was related exclusively to claims between the Carter-Day and the NJDEP, not to the claims of the USEPA. Compaction also argued, with support of the United States, that the decision creates a manifest injustice in that it disrupts the relationship between the federal government and the states created by CERCLA. The Court, however, determined that Compaction had not identified any clear error of the law warranting reconsideration as all the issues that were presented had been fully analyzed and considered by the Court in the initial ruling. The motion for reconsideration was, therefore, denied.

We anticipate that this matter will be appealed as it raises significant questions about the scope of the “matters addressed” language of Section 113(c)(2). As Section 113 involves contribution claims, the question is whether a contribution defendant that has settled only with the State for its share of the costs for remediation of a site extinguishes any claims that a contribution plaintiff may have for its settlement with the United States.

For additional information about the matters in this bulletin or in the firm’s Environmental Practice, please contact Steven A. Kunzman, Esq

DiFrancesco, Bateman, Kunzman, Davis, Lehrer & Flaum PC (http://www.dbnjlawblog.com) is a full service law firm in New Jersey which provides a broad range of legal services.

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