7th Circuit affirms CERCLA ruling in Beech Grove lead cleanup

The 7th Circuit Court of Appeals has affirmed a district court’s ruling against a Beech Grove manufacturing company over who should bear the costs of cleaning up a contaminated lead smelter site.

Since 1980, Refined Metal Corporation has owned a contaminated lead smelter site in Beech Grove, Indiana. Refined acquired the land from NL Industries Inc. Years of litigation with the federal Environmental Protection Agency and the Indiana Department of Environmental Management resulted in Refined entering into a settlement with both agencies in 1998. Under the 1998 Decree, Refined was ordered to close the site, pay $210,000 in fines and remedy the contamination.

Nearly 20 years later, refined sued NL to recoup some of the cleanup costs for which it was responsible. But the Southern District Court found that the 1998 Decree resolved enough of Refined’s liability to qualify as “an administrative or judicially approved settlement” under section 113(f)(3)(B). It therefore ruled that the statute of limitations ran out in 2001, and that Refined’s suit was time-barred based on the three-year clock for contribution that starts when the settlement is entered.

Refined appealed, first asserting that the decree did not actually “resolve[] its liability to the United States or a State for some or all of a response action,” as the statute requires. It then argued that only settlements that resolve liability for CERCLA-specific violations qualify as predicates for section 113(f)(3)(B) claims. Lastly, Refined argued that it could not have sought a “contribution” from NL because, in its view, NL and Refined are not joint tortfeasors.

The 7th Circuit Court of Appeals affirmed the district court in all respects, first finding Refined’s refusal to admit liability was not enough to exempt the 1998 Decree from the reach of 113(f)(3)(B).

“In (NCR Corp. v. George A. Whiting Paper Co., 768 F.3d 682, 689 (7th Cir. 2014)), the only factor that the court explicitly discussed as a reason for distinguishing the settlement from the one in (Bernstein v. Bankert, 733 F.3d 190, 206 (7th Cir. 2013)) was the immediate effectiveness (as opposed to conditional nature) of the covenant not to sue. Granted, the court noted that the settlement before it ‘diverge[d] in every meaningful way from the one in Bernstein that left section 107(a) liability available.’ Yet its reasoning leaves no doubt that the immediately effective covenant not to sue was the dispositive point,” Chief Judge Diane Wood wrote for the panel.

Next, the panel concluded that a settlement need not resolve CERCLA-specific liability in order to start the clock on a contribution action. In contrast, it noted that Refined’s reading of section 113(f)(3)(B) would allow settling parties to drag out the process of seeking those compensation until the six-year statute of limitations for a cost-recovery action under section 107(a) begins to run.

“We see no reason why the lack of such a mandatory provision in section 113(f) should be read to strip courts of their discretionary power to issue declaratory judgments in such cases, where appropriate,” the panel wrote. The 7th Circuit added that its holding was consistent with those of the majority of circuits that have considered the question.

Finally, the appellate panel found “puzzling” Refined’s third argument in Refined Metals Corporation v. NL Industries Inc., 18-3235.

“First, how is it that NL can somehow be, at the same time, not jointly liable for the actions required under the 1998 Decree and yet still liable to Refined once Refined ‘could show that its actions incurred more than its fair share of costs for which both parties are liable’? Either NL has some liability for these cleanup costs or it does not. It is beside the point that ‘the 1998 RCRA Consent Decree neither finds nor addresses any liability of NL … ,’” the panel wrote.

Upon finding Refined failed to establish NL’s liability under the statute, the panel continued to point out that Refined waived its “common liability argument” in the district court. The panel also found Refined had waived its challenge to the district court’s decision to relinquish its supplemental jurisdiction and that Refined had “dropped the ball” on its diversity jurisdiction argument.

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