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W.R. Grace & Co. -- Conn. v. Zotos International

March 4, 2009



Owner W.R. Grace & Co. brought suit under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) against Defendant Zotos International, Inc. for costs incurred in connection with Grace's investigation and remediation of contamination at the Brewer Road site. The United States District Court for the Western District of New York (Skretny, J.) held Grace was not entitled to contribution under CERCLA and granted judgment in favor of Zotos. Grace appealed. Affirmed in part, reversed in part, and remanded.

The opinion of the court was delivered by: Hall, Circuit Judge

Argued: January 27, 2006

BEFORE: RAGGI and HALL, Circuit Judges, and KORMAN, District Judge.*fn1

Plaintiff W.R. Grace & Co.-Conn. ("Grace") seeks to recover necessary response costs under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA") for costs Grace incurred in cleaning up a certain contaminated site in New York. The District Court (Skretny, J.) concluded Grace, which is itself a responsible party, is not entitled to recovery under CERCLA because Grace had not previously been a party to a CERCLA civil action, and entered judgment in favor of defendant Zotos International, Inc. ("Zotos"). W.R. Grace & Co.--Conn. v. Zotos Int'l, Inc., No. 98-CV-838S(F), 2005 WL 1076117, at *12 (W.D.N.Y. May 3, 2005). Grace asserts it is entitled to seek an equitable share of its response costs from Zotos under section 107(a) of CERCLA. 42 U.S.C. § 9607(a). While this Court was considering the appeal, the Supreme Court decided United States v. Atlantic Research Corp., 127 S.Ct. 2331 (2007), which holds that CERCLA provides a potentially responsible party ("PRP") who has incurred costs of response in cleaning a contaminated site with a cause of action to recover those costs from other PRPs. We conclude that Grace has incurred response costs within the meaning of section 107(a) and remand to the district court for further proceedings.

I. Background

In 1978, Grace acquired a facility known as the Brewer Road Site (the "Site") when it purchased the assets of a chemical manufacturer, Evans Chemetics, Inc. ("ECI"). ECI had used the Site as a landfill for wastes from a Waterloo, New York, manufacturing facility (the "Waterloo Plant") from 1950 through 1959. ECI manufactured organic compounds at the Waterloo Plant, and it formulated and packaged hair care products at the Waterloo Plant for sale to Zotos and other customers. Grace alleges that Zotos arranged for the disposal of certain of those wastes at the Site. Grace continues to own the Site today.

In 1983, the New York State Department of Environmental Conservation ("DEC") conducted a Phase I preliminary investigation of the Site, and in 1984 Grace entered into its first administrative order on consent to perform a Phase II investigation at the Site. After DEC placed the Site on the New York Registry of Inactive Hazardous Waste Disposal Sites, Grace cooperatively entered into a second administrative order on consent with DEC in 1988 (the "Consent Order").*fn2 Pursuant to that Consent Order, Grace agreed to reimburse DEC approximately $20,000 for response costs (including direct labor, analytical, and contractor costs) incurred investigating the environmental conditions. Grace also agreed to perform a remedial investigation and feasibility study ("RI/FS"), and to remediate the landfill. The Consent Order provided specifically that there had been no admission of guilt or finding of liability. Upon the successful completion of the remedy, DEC expressly agreed to release Grace from all claims arising under the New York Environmental Conservation Law ("ECL") relative to the landfill.

The Consent Order stated that Grace "voluntarily consents to the issuing and entering of this Order, and without admitting any facts or the applicability of any law, waives its right to a hearing herein as provided by law, and consents to be bound by the provisions, terms and conditions of this Order." The Consent Order provided that at the conclusion of the program, if DEC acknowledged that implementation was complete, such acknowledgment [sic] shall constitute a full and complete satisfaction and release of each and every claim, demand, remedy or action whatsoever against [Grace], its officers and directors, which [DEC] has or may have as of the date of such acknowledgment [sic] pursuant to Article 27, Title 13, of the ECL relative to or arising from the disposal of hazardous or industrial waste at the Site.

The Consent Order also provided that Grace would reimburse DEC $20,967.64 for costs incurred in investigating the conditions at the Site and in preparing the Consent Order, as well as other sums concerning the costs of implementation of the feasibility study and remedial design. The Consent Order set out that the "failure of [Grace] to comply with any provision of this Order shall constitute a default and a failure to perform an obligation under this Order and under the ECL," and that "[n]othing herein shall be construed to bind any entity not specifically bound by the terms of this Order." Pursuant to the Consent Order, Grace remediated the Site in 1993 and has thereafter maintained the Site. Through April 2004, Grace had expended approximately $1.7 million on remedial activities at the Site.

Grace commenced the instant action in December 1998, seeking contribution from Zotos pursuant to CERCLA section 113(f), 42 U.S.C. § 9613(f), and New York law for the costs incurred in connection with the investigation and remediation of contamination at the Site. Following a bench trial, the District Court rendered a final decision and order dated May 3, 2005, in which it concluded that Grace is not entitled to reimbursement pursuant to CERCLA section 113(f) because it was neither a party to a civil suit nor a party to a settlement. The court also denied Grace's claims under state law.

Grace urges on appeal that it should have been entitled to seek contribution under § 113(f)(3)(B) due to its Consent Order with DEC. In the alternative, Grace argues that it was entitled to recover a portion of its costs pursuant to § 107(a)(4)(B).

II. Discussion

Because this case turns on the interpretation of a federal statute, our review is de novo. Commander Oil Corp. v. Barlo Equip. Corp., 215 F.3d 321, 326 (2d Cir. 2000). We recognize that with respect to this review, our obligation is to look to the plain language of the statute to effectuate the intent of Congress. See Natural Res. Def. Counsel v. Abraham, 355 F.3d 179, 198-99 (2d Cir. 2004) ("In interpreting the plain language of the statute, we must look to the particular statutory language at issue, as well as the language and design of the statute as a whole, and, where appropriate, its legislative history." (internal quotation marks omitted)); see also Dole v. United Steelworkers of Am., 494 U.S. 26, 35 (1990) (noting that, when inquiring ...

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