Source: https://www.lexology.com, December 4, 2018
By: Maria C. Salvemini, Manko Gold Katcher & Fox
In an unpublished opinion, the United States District Court for the District of New Jersey held that the Government was not liable under the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”) or Resource Conservation and Recovery Act (“RCRA”) for remediation costs incurred at a former defense site. PPG Indus., Inc. v. United States, No. 12-3526, 2018 WL 6168623 (D.N.J. Nov. 26, 2018). Last year we reported on TDY Holdings v. United States, in which the Ninth Circuit rejected a zero percent liability allocation to the government for remediation costs incurred at a former aeronautical manufacturing plant. In PPG Industries, the District of New Jersey found that the Government’s general wartime control over a New Jersey chromite facility was insufficient by itself to impose liability absent a direct connection between the Government and waste disposal activities. The District Court’s decision highlights a hurdle for private parties hoping to hold the government responsible for cleanup costs incurred at former defense sites.
PPG Industries, Inc. (“PPG”) was the owner and operator of property in Jersey City, New Jersey (the “Site”) from 1954 to 1962 where a chromite ore processing plant was located. PPG purchased the Site from Natural Products Refining Company (“NPR”), which had owned and operated the Site since 1910 and whose operations included converting chrome ore to chromium chemicals. The production process created “mud” or “sludge,” containing hazardous substances—some of which was stockpiled on the Site. During World Wars I and II, NPR produced chrome chemicals at the Site for the Government and civilian consumption. During these wars the Government designated chromium chemicals as a critical war material and implemented price and labor controls, and subsidies.
In 1982, the City of Jersey City notified PPG that its Site posed a danger to public health, safety, and welfare. After conducting sampling that confirmed the contamination, PPG engaged in remedial activities—incurring $361 million in remediation costs since December 2015. PPG filed its Complaint and Amended Complaint in 2012, seeking cost recovery and contribution under CERCLA, assistance in remediation under RCRA, and relief under the Declaratory Judgment Act. The parties cross moved for summary judgment on the issue of the Government’s liability for cleanup costs under CERCLA and RCRA.
PPG alleged that the Government was liable under CERCLA as both an operator and arranger. First, the District Court explained that under the Supreme Court’s decision in United States v. Bestfoods, 524 U.S. 51 (1998), that “the government’s general wartime control over an industry is insufficient to establish operator liability.” PPG, 2018 WL 6168623, at *12. Rather, a direct nexus must exist between the government’s involvement and the waste disposal activities at issue. Moreover, mere recommendations by the government are insufficient for imposing operator liability when such recommendations can be disregarded. The court explained that even though the Government had various interactions with the Site, it “never directly managed or conducted NPR’s operations regarding pollution—either the release and disposal of hazardous substances or the implementation of environmental remediation.” Id. at *13. Thus, the court concluded, that “[a]ll of the Government’s actions in relation to NPR’s plant are consistent with general wartime influence over an industry—not control over NPR’s pollution-specific activities.” Id. Accordingly, the court held that the Government was not liable as an operator under CERCLA.
Next, the District Court found that the Government was not liable as an arranger under CERCLA. In reaching its decision the court emphasized that the Government never took ownership or control over the hazardous waste at the Site. Further, the court found PPG’s failure to produce evidence that the Government took ownership over the hazardous waste in any capacity was, by itself, sufficient to defeat arranger liability. The Court also noted that the Government lacked control over the process that produced the hazardous waste at NPR’s facility. The court found the Government’s knowledge that certain processes would increase the amount of pollution insufficient by itself to impose arranger liability. Thus, the Court found that the Government was entitled to summary judgment on Plaintiffs’ arranger theory of liability.
The Court also found that the Government was entitled to summary judgment on PPG’s RCRA claim. As the Court explained, liability under RCRA can only be imposed on a party who actively manages or disposes solid or hazardous waste. Because the Court found that the Government was not an operator of the site and never managed or disposed of the hazardous waste at the Site, it found that the Government could not be held liable under RCRA. Accordingly, the court granted the Government’s motion for summary judgment and denied PPG’s motion.
The District of New Jersey’s decision in PPG highlights a significant challenge plaintiffs face who want to hold the Government responsible for environmental cleanup costs associated with wartime activities. Owners should heed warning from the District Court’s decision, but at the same time keep an eye on any appeals in the event of a reversal like the one in TDY. In the meantime, however, parties hoping to recover from the Government under CERCLA or RCRA must establish a direct connection between the Government and disposal activities at a contaminated site to impose liability under either statute.