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July 22, 1996


The opinion of the court was delivered by: PARKER



 This action under the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. § 9601, et seq., as amended by the Superfund Amendments and Reauthorization Act of 1986 ("SARA"), P.L. 99-499 (October 17, 1986), and state law is before this Court on certain defendants' motions for summary judgment dismissing the plaintiff State of New York's claims. *fn1"

 The plaintiff Town of New Windsor ("the Town") is the owner of the New Windsor landfill ("the landfill"), which it operated from 1962 until 1976. In the 1980s, the New York State Department of Environmental Conservation ("the State") deemed the landfill a significant environmental threat, and listed it on its registry as an Inactive Hazardous Waste Site. The landfill is not a federal Superfund site and the United States Environmental Protection Agency ("EPA") has declined to list the landfill on CERCLA's National Priorities List ("NPL").

 In 1989, the Town and the State executed an Administrative Order on Consent ("Consent Order") requiring the Town to conduct a detailed investigation of the landfill and to develop and implement a remedial plan. The Town agreed to indemnify the State for any claims arising from the Town's remedial actions at the landfill. After executing the Consent Order, the Town became eligible for 75% reimbursement by the State of part of its clean up costs pursuant to the New York Environmental Quality Bond Act of 1986 ("EQBA"). Under the EQBA, the State may assist financially strapped towns to meet their obligations under the New York State Environmental Conservation Law ("ECL") in responding to the threats posed by inactive hazardous waste sites owned and/or operated by towns.

 In February 1990, the State entered a State Assistance Contract with the Town to reimburse the Town for 75% of the eligible clean-up costs incurred in remediating the landfill. Pursuant to the State Assistance Contract, reimbursement was conditioned on the Town's pursuit of this cost recovery action against those who contributed to the landfill, 75% of the recovery from which would be shared with the State.

 Following a Remedial Investigation Feasibility Study ("RI/FS") by the Town's consultant and the issuance of a Record of Decision ("ROD") by the State, remedial action was undertaken in 1992-93. The Town has spent approximately $ 5 million, $ 3.5 million of which has been reimbursed by the State pursuant to the EQBA grant. The plaintiffs seek these costs, plus approximately $ 3 million in future monitoring costs, and oversight costs, as costs of response under CERCLA. Specifically, the State seeks the approximately $ 3.5 million that it spent reimbursing the Town for the cleanup, future monitoring costs, and costs in overseeing the Town's remediation.

 Defendants tesa tuck, inc., Lightron Corporation, Inc. and Kollmorgen Instruments Corporation now move for summary judgment dismissing the State's CERCLA claims on the grounds that (1) the State has not "incurred" response costs within the meaning of CERCLA; (2) as a potentially responsible party ("PRP"), the State is limited to a claim for contribution under § 113(f); (3) reimbursement by the State under the EQBA was improper and unlawful; and (4) CERCLA does not authorize the State to recover its costs in overseeing the Town's remediation. *fn2" This Court holds that, by reimbursing the Town with EQBA funds, the State has "incurred" CERCLA response costs and denies the motion for summary judgment.


 1. Legal Standard

 Rule 56 of the Federal Rules of Civil Procedure authorizes summary judgment if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). The Court's responsibility is to perform "the threshold inquiry of determining whether there is the need for a trial -- whether, in other words, there are any genuine issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." McNeil v. Aguilos, 831 F. Supp. 1079, 1082 (S.D.N.Y. 1993) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986)); Western World Ins. Co. v. Stack Oil, Inc., 922 F.2d 118, 121 (2d Cir. 1990). In determining whether a genuine issue of material fact exists, a court must resolve all ambiguities and draw all reasonable inferences against the moving party. See McNeil, 831 F. Supp. at 1082 (citing United States v. Diebold, Inc., 369 U.S. 654, 655, 8 L. Ed. 2d 176, 82 S. Ct. 993 (1962)(per curiam)(other citations omitted)). See also Coach Leatherware Co., Inc. v. AnnTaylor, Inc. 933 F.2d 162, 167 (2d Cir. 1991)(citations omitted).

 2. Whether, by reimbursing the Town pursuant to the EQBA, the State "incurred" response costs within the meaning of CERCLA

 To recover under § 107(a)(4)(A), the State must have "incurred" costs of removal or remedial action at the landfill. See, e.g., United States v. Alcan Aluminum Corp., 990 F.2d 711, 719-20 (2d Cir. 1993)(citing B.F. Goodrich Co. v. Murtha, 958 F.2d 1192, 1198 (2d Cir. 1992)). CERCLA does not define the term "incurred," but defendants argue that its meaning is plain, and inconsistent with the State's claim here. An obligation imposed by law, they argue, is a predicate to "incurred" costs, *fn3" and here, the Town, and only the Town, was legally obligated to take action at the landfill. Because the State itself took no remedial action at the landfill and was not obligated to provide assistance under the EQBA, defendants argue, it did not "incur" any costs. *fn4"

  Defendants are correct in their premise -- that "incur" refers to liability -- but incorrect in their conclusion -- that because the State reimbursed the Town with EQBA funds, it did not "incur" response costs. Under the New York State Constitution (Article 14) and statute (ECL § 27-1301 et seq.; State Finance Law § 97-b(3)), the State has a mandate to protect the environment and to ensure that those responsible for despoiling the environment, such as the Town and defendants, pay for cleaning it up. As a public entity charged with the responsibility of ensuring that hazardous waste sites are cleaned up and of expending state funds, including the EQBA, in that effort, see ECL §§ 27-1313, 52-0303; State Finance Law § 97-b(3), the State does not have the discretion presupposed by defendants. The State's position here is not that of a private lending institution that can pick and choose among the projects it finances.

 Moreover, in accordance with its statutory and regulatory obligations, the State here was actively involved in the cleanup of the landfill. In the early 1980s, it conducted Phase I and Phase II studies, including field work, to determine whether hazardous substances were present at the landfill and to assess the impact of the landfill on the neighboring environment. After entering the Consent Order and executing the State Assistance Contract, the State reviewed and approved each of the steps in the investigation, design and remediation of the landfill. Finally, upon reviewing the Town's RI/FS, the State issued an ROD, in which it selected the remedy to be implemented at the landfill.

 CERCLA expressly contemplates similar cooperative agreements between the Government and a state or political subdivision. Under § 104, a state or political subdivision may enter into a contract or cooperative agreement with the Government, whereby both may take action on a cost-sharing basis. See 42 U.S.C. § 9604(c), (d). CERCLA specifically refers to the Government's costs under such an agreement as "governmental response costs incurred," see § 42 U.S.C. § 9611(a)(1)(emphasis added), and courts have held that in these circumstances both the Government and the state or political subdivision "incur" response costs. See, e.g., United States v. Ottati & Goss, 694 F. Supp. 977, 995 (D.N.H. 1988), aff'd in part, rev'd in part on other grounds, 900 F.2d 429 (1st Cir. 1990); United States v. Ward, 618 F. Supp. 884, 896 (E.D.N.C. 1985).

 CERCLA also suggests that the Government "incurs" costs when it reimburses a private PRP. Under § 122(a), a private PRP may enter into an agreement with the Government to perform any response action, whereby the Government agrees to reimburse the private PRP for certain of its costs. See 42 U.S.C. § 9622(a), (b). CERCLA expressly provides that where the Government provides such reimbursement, it may seek to recover that amount under § 107. See 42 U.S.C. § 9622(b). Thus, CERCLA clearly envisions the Government to have "incurred" such costs within the meaning of § 107. In light of the State's statutory mandate and CERCLA's own interpretation of the term "incurred," this Court concludes that the State "incurred" the $ 3.5 million it spent reimbursing certain response actions of the Town.

 Finally, asserting that the ECL differs from CERCLA because it does not specifically provide a mechanism for the recovery of costs expended to reimburse a private party, *fn5" defendants argue that the State has no authority under state law to seek recovery of its EQBA funds from third parties. Rather, defendants argue, under the EQBA, municipalities are obligated to pursue third-party cost recovery, and the municipalities are then obligated to pay to the State the State's share of any responsible party payments that become available. See ECL 52-0303(4). Defendants therefore argue that because the Attorney General may only act within his authority under state law, and because the New York state legislature has assigned the authority to bring cost recovery actions to the Town, and not the State, the State's cost recovery claims are ultra vires.

 Although the New York state legislature may have assigned authority to bring a cost recovery action to the municipality, and may not have specifically authorized the State to seek recovery, I cannot conclude that, by negative implication, the State is prohibited from proceeding under CERCLA. The ECL specifically reserves the State's right to seek appropriate relief pursuant to statutory and common law authority. See ECL § 27-1313(6). Regardless of which pocket the money came from, see Rohm & Haas, 2 F.3d 1265, 1274-75, as long as the State incurred response costs that were not inconsistent with the NCP at a facility from which there was a release or threatened release of hazardous substances, it may seek recovery under CERCLA.

 b. Whether the State, as a PRP, is limited to a claim for contribution under § 113

 Defendants argue that even if this Court declines to dismiss the State's CERCLA claims in their entirety, the State should be limited to a claim for contribution under § 113 of CERCLA because its agency, third-party defendant Department of Transportation ("DOT"), is a PRP. Since this motion was filed, however, the Court has granted DOT's motion for summary judgment. Because the State is no longer a PRP, the Court finds it unnecessary to decide whether the State's potential liability for contribution affects its ability to bring an action for joint and several liability under § 107(a).

 c. Whether alleged improprieties in the EQBA funding preclude the State's CERCLA claim

 Defendants also argue that even if this Court finds that the monies used to reimburse the Town are response costs, defendants should not be required to reimburse the State for such monies because the State granted them pursuant to EQBA regulations that were void ab initio. New York State Environmental Conservation Law § 52-0303 provides that the State may provide assistance under the EQBA only after it has made an eligibility determination under Article 27 of the ECL. Under Article 27, eligibility depends upon the State finding "that hazardous wastes at an inactive hazardous waste disposal site constitute a significant threat to the environment." ECL § 27-1313(3)(a).

 Defendants argue that the State could not have made such a finding in 1989 when it entered into the Consent Order with the Town, because from December 2, 1987 through May 20, 1992, (when new regulations were adopted), the DEC regulations implementing the EQBA and defining "significant threat" were nonexistent, having been declared null and void for vagueness under the New York Constitution. In re N.Y. State Superfund Coalition, Inc., 75 N.Y.2d 88, 550 N.Y.S.2d 879, 881, 550 N.E.2d 155 (1989), held that because the DEC's regulation equated the statute's definition of "hazardous waste" with "significant threat" in such a way that the mere presence of hazardous waste automatically supported a "significant threat" determination, the regulation was invalid and the entire regulatory framework annulled.

 The State does not dispute defendants' argument that its regulation was null and void, but argues that the EQBA funding mechanism is irrelevant to the State's CERCLA claims, because the liability provisions of CERCLA § 107(a), apply "notwithstanding any other provision or rule of law."

 CERCLA is a strict liability statute, with only a limited number of statutorily-defined defenses available. The defenses are that the release was caused solely by an act of God or war, or that the release was caused solely by a third party whose actions were not foreseeable by the defendant, who was exercising due care with respect to the hazardous substance. See General Electric Co. v. Litton Industrial Automation Systems, Inc., 920 F.2d 1415, 1418 (8th Cir. 1990)(citing 42 U.S.C. § 9607(b))(other citations omitted), cert. denied, 499 U.S. 937, 113 L. Ed. 2d 446, 111 S. Ct. 1390 (1991). A plaintiff's compliance with state law is not a predicate to CERCLA liability. Cf. United States v. Rohm & Haas Co., 2 F.3d 1265, 1274 (3d Cir. 1993)("The opening clause -- 'notwithstanding any other provision or rule of law' -- decrees that where another statute, as well as § 107(a), is applicable, the liability provisions of § 107(a) will prevail even where the commands of the two statutes are in conflict."); General Electric Co., 920 F.2d at 1418 ("CERCLA does not provide for an 'unclean hands' defense. . . . Thus, the motives of the private party attempting to recoup response costs . . . are irrelevant."); Town of Wallkill v. Tesa Tape, Inc., 891 F. Supp. 955, 960 (S.D.N.Y. 1995)("noncompliance with state regulations does not preclude CERCLA liability."). *fn6"

 Moreover, relying on United States v. Fairchild Industries, Inc., 766 F. Supp. 405 (D.Md. 1991), the State argues that a "significant threat" is not an element of liability under CERCLA. Indeed, § 107 does not contain a reference to any requisite quantum of risk. In Fairchild, the court struck an affirmative defense that the United States had not alleged imminent and substantial endangerment at the subject site. The court held that the elements of a claim under § 107(a) did not require proof of an imminent and substantial endangerment, and the attack on the government's right to recover its costs was through proof of an inconsistency with the NCP. See Fairchild, 766 F. Supp. at 409-410.

 Defendants also argue that because the State failed to comply with State Finance Law in providing EQBA funds, it is entitled to a full refund from the Town, and therefore, has not suffered any damages, which is 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). *fn7" 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, *fn8" 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"). *fn9"

 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). *fn10" 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.


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