a necessary element of a CERCLA claim. Defendants assert that the State may only provide assistance to a municipality under the EQBA if the project is "consistent with [§ 97-b] of the state finance law." ECL § 52-0301. Section 97-b(4) requires that the State make a finding that "all reasonable efforts to secure voluntary agreement to pay the costs of necessary remedial actions from owners or operators of inactive hazardous waste sites or other responsible persons have been made . . . ." State Finance Law § 97-b(4). Defendants argue that here the State did not make and could not have made such a finding. According to defendants, the fact that the Town signed a Consent Order, by which it agreed to pay the remedial costs relative to the landfill belies any claim by the State that it made the requisite finding under § 97-b(4). Defendants, however, appear to misunderstand the law. ECL § 27-1313(5)(g) requires that a PRP-municipality enter an agreement before it can become eligible for EQBA funding.
3. Oversight Costs
In addition to its costs in reimbursing the Town pursuant to the EQBA, the State seeks the costs incurred in overseeing (1) the Town's work in preparation of the RI/FS, (2) the Town's compliance with the remedial action ordered to be undertaken by the Town, and (3) the remedy set forth in the ROD. In arguing that the State is not entitled to costs incurred in overseeing the remedial activities of the Town, defendants rely upon U.S. v. Rohm & Haas Company, 2 F.3d 1265 (3d Cir. 1993), and cases following it. In opposition, the State relies on New York v. Shore Realty, 759 F.2d 1032, 1043 (2d Cir. 1985), and several recent district court cases declining to follow Rohm & Haas. The United States, a third-party defendant, has also filed a brief in support of the recoverability of oversight costs under CERCLA.
Reasoning that, as a remedial statute, CERCLA should be construed liberally to effectuate its goals, prior to 1993 courts, including the Second Circuit, see Shore Realty, 759 F.2d at 1043, universally held that CERCLA permitted the EPA to recover its oversight costs. See United States v. Ekotek, Inc., 1995 U.S. Dist. LEXIS 14467, 1995 WL 580079 (D. Utah, Sept. 11, 1995, *3)(listing cases). In 1993, however, Rohm & Haas adopted a new standard of review, which it believed was compelled by the Supreme Court's decision in National Cable Television Ass'n v. United States, 415 U.S. 336, 39 L. Ed. 2d 370, 94 S. Ct. 1146 (1974).
Rohm & Haas noted that National Cable has been "interpreted by the Supreme Court as standing for the proposition that 'Congress must indicate clearly its intention to delegate to the Executive the discretionary authority to recover administrative costs not inuring directly to the benefit of regulated parties by imposing additional financial burdens, whether characterized as 'fees' or 'taxes,' on those parties.'" Rohm & Haas, 2 F.3d at 1273 (quoting Skinner v. Mid-America Pipeline Co., 490 U.S. 212, 224, 104 L. Ed. 2d 250, 109 S. Ct. 1726 (1989)).
Because the government's oversight of a private party's compliance in cleaning up a site is intended to protect the public interest rather than the interests of those being overseen, Rohm & Haas reasoned that its costs were 'administrative costs' of the kind discussed in National Cable. See Rohm & Haas, 2 F.3d at 1273-74. Thus, instead of attempting to determine whether CERCLA's language, when reasonably construed, contemplated the recovery of oversight costs and deferring to the administering agency's reasonable construction,
Rohm & Haas looked for a "clear congressional statement" permitting the imposition of "an agency's costs on a regulated private party." Rohm & Haas, 2 F.3d at 1274 n. 14. Rohm & Haas found no such statement in CERCLA.
Rohm & Haas has been followed in the Third Circuit, of course. See FMC Corp. v. United States Dept. of Commerce, 29 F.3d 833, 850 (3d Cir. 1994); United States v. Witco Corp., 853 F. Supp. 139, 142 (E.D. Pa. 1994); United States v. Atlas Minerals & Chemicals, 851 F. Supp. 639, 647-50 (E.D. Pa. 1994); United States v. Serafini, 898 F. Supp. 287, 290-92 (M.D. Pa. 1994). It also has been adopted by three districts courts outside the Third Circuit. See Bancamerica Commercial Corp. v. Trinity Industries, Inc., 900 F. Supp. 1427, 1466-67 (D. Kansas 1995); County of Santa Clara v. Meyers Industries, 1994 U.S. Dist. LEXIS 9847 (N.D.Cal. *4-*9); Central Maine Power Co. v. F.J. O'Connor Co., 838 F. Supp. 641 (D. Maine 1993).
Other district courts, however, have flatly rejected the Rohm & Haas rule. See, e.g., State of California v. Celtor Chemical Corp., 901 F. Supp. 1481, 1489 (N.D.Cal. 1995)(noting that Ninth Circuit had held that Supreme Court had not announced universal definitions of "tax" or "fee" in National Cable, but merely determined meaning of terms in statute at issue, and holding that CERCLA, reasonably construed, permitted recovery of oversight costs) (citing Union Pacific R.R. v. Public Utility Comm'n, 899 F.2d 854, 859-61 (9th Cir. 1990)); Ekotek, 1995 U.S. Dist. LEXIS 14467, 1995 WL 580079 at *4-*7; United States v. Lowe, 864 F. Supp. 628, 632 (S.D.Tex. 1994)(finding oversight costs were directly authorized by CERCLA, but also rejecting rule of Rohm & Haas because it would lead to "incongruous result that the EPA could recover the costs of overseeing its own contractors, but not the costs of overseeing those hired by the potentially responsible parties."); California Dep't of Toxic Subst. Control v. SnyderGeneral Corp., 876 F. Supp. 222, 224-25 (E.D.Cal. 1994)(finding that oversight costs fall easily within definitions of "removal" and "remedial").
Distinguishing National Cable, these courts have based their decisions on traditional standards of statutory construction, and held that oversight costs fall comfortably within the broad statutory definitions of "removal" and "remedial costs," see 42 U.S.C. §§ 9601(23), (24) and (25).
For example, Ekotek reasoned that the Rohm & Haas court's hypercritical analysis of CERCLA was not supported by the language of National Cable or its progeny. It rejected Rohm & Haas on the grounds that it "rests upon the unsupported assertion that the principle identified in National Cable is not confined to the narrow set of circumstances present in that case, an assertion which is contradicted by the case law." Ekotek, 1995 U.S. Dist. LEXIS 14467, 1995 WL 580079 at * 5 (internal quotation and citation omitted). Ekotek discussed decisions of the First, Fourth, Fifth, Ninth, Tenth and District of Columbia Circuits that have read the language in National Cable as limited to its specific statutory context, upheld agency authority to raise revenue through the imposition of fees for the provisions of services, or held that a general benefit to the public did not render invalid an agency's imposition of costs upon a particular applicant or licensee. Ekotek, 1995 U.S. Dist. LEXIS 14467, 1995 WL 580079 at *5-*6.
Ekotek further explained that although National Cable identified a potential separation of powers problem, arising when a regulatory agency is given unfettered authority to recoup its operating costs against an entire industry, the specter of a regulatory agency run amok is not present when the EPA is overseeing the remediation of a specific hazardous waste site.
[In this context, the EPA] is not an agency seeking to pass along its general administrative costs against the innocent members of a regulated industry through the imposition of general licensing fees, but is an agency assessing the damages caused or contributed to by specific persons. The evil which concerned the Supreme Court in National Cable poses no threat here, and the weapon of strict statutory construction may be laid aside.
Ekotek, 1995 U.S. Dist. LEXIS 14467, 1995 WL 580079 at *6.
Finally, Ekotek noted that recovery of oversight costs is consistent with the general policy of CERCLA, and that an approach that does not permit the recovery of EPA oversight costs directly conflicts with CERCLA's goal of compelling private parties to perform cleanup operations. Ekotek, 1995 U.S. Dist. LEXIS 14467, 1995 WL 580079 at *8.
This Court agrees with the majority of district courts rejecting the Rohm & Haas rule. No other court has read the National Cable doctrine as broadly as Rohm & Haas. In fact, the Supreme Court and other courts of appeals have narrowly construed National Cable. See, e.g., Federal Energy Admin. v. Algonquin SNG, Inc., 426 U.S. 548, 560-61, 49 L. Ed. 2d 49, 96 S. Ct. 2295 (1976); San Juan Cellular Tel. Co. v. Public Serv. Comm'n, 967 F.2d 683, 687 (1st Cir. 1992); Union Pac. R.R. v. Public Util. Comm'n, 899 F.2d 854, 859-61 (9th Cir. 1990); Phillips Petroleum Co. v. FERC, 786 F.2d 370, 375-76 (10th Cir.), cert. denied, 479 U.S. 823 (1986); South Carolina ex re. Tindal v. Block, 717 F.2d 874, 887 (4th Cir. 1983), cert. denied, 465 U.S. 1080 (1984); Mississippi Power & Light Co. v. NRC, 601 F.2d 223, 229 (5th Cir. 1979), cert. denied, 444 U.S. 1102, 62 L. Ed. 2d 787, 100 S. Ct. 1066 (1980).
Moreover, these cases construing National Cable have addressed whether a particular fee is a user fee or tax for purposes of the non-delegation doctrine. CERCLA response costs, however, constitute neither a fee nor a tax. They are payments by responsible parties, in restitution, for cleanup costs. See Continental Ins. Cos. v. Northeastern Pharmaceutical & Chemical Co., 842 F.2d 977, 987 (8th Cir.), cert. denied, 488 U.S. 821 (1988); United States v. Monsanto Co., 858 F.2d 160, 174-75 (4th Cir. 1988), cert. denied, 490 U.S. 1106, 104 L. Ed. 2d 1019, 109 S. Ct. 3156 (1989). CERCLA does not assess user charges on a regulated industry; rather, it is a remedial statute. See United States v. R.W. Meyer, 889 F.2d 1497, 1504 (6th Cir. 1989), cert. denied, 494 U.S. 1057, 108 L. Ed. 2d 767, 110 S. Ct. 1527 (1990).
Courts have recognized that, as a remedial statute, CERCLA should be construed broadly to achieve its objectives. For example, in Shore Realty, 759 F.2d at 1037, the district court directed responsible parties to conduct a site cleanup, "subject to monitoring" by the State, and the court awarded response costs under § 107(a)(4)(A). The Second Circuit affirmed holding that the "State's costs in assessing the conditions of the site and supervising the removal of the drums of hazardous waste squarely fall within CERCLA's definition of response costs, even though the State is not undertaking to do the removal." Shore Realty, 759 F.2d at 1042-43. See also United States v. Hardage, 982 F.2d 1436, 1441 (10th Cir. 1992)(CERCLA § 107 mandates that EPA recover "all costs of removal or remedial response actions, incurred not inconsistent with the NCP.")(emphasis in original), cert. denied, 114 S. Ct. 300 (1993). Because this Court finds that oversight costs fall squarely within the statutory definitions of "removal" and "remedial," see 42 U.S.C. §§ 9601(23), (24) & (25), defendants' motion for summary judgment dismissing the State's claims for oversight costs is denied.
In conclusion, defendants' motion for summary judgment is denied.
Dated: White Plains, N.Y.
July 31, 1996
Barrington D. Parker, Jr.