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NL Industries, Inc. v. Halliburton Co.

November 2, 2010


The opinion of the court was delivered by: Honorable Richard J. Arcara United States District Judge



Pending before the Court is a motion by defendants Halliburton Company and Halliburton Energy Services, Inc. ("Halliburton" collectively) to dismiss plaintiff's amended complaint under Rule 12(b)(6) of the Federal Rules of Civil Procedure ("FRCP"). Halliburton seeks dismissal of plaintiff's claims, made principally under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), 42 U.S.C. §§ 9601--9675, for two reasons. Halliburton contends that some or all of plaintiff's liability to the federal government has been resolved. Halliburton contends also that the applicable limitations period has expired for the only mechanism by which plaintiff could recover under CERCLA. Plaintiff has other claims in its amended complaint that Halliburton wants dismissed on various grounds including ripeness and preemption. In opposition to the pending motion, plaintiff contends that it is entitled to reimbursement of response costs under the plain language of CERCLA and that none of its claims is untimely, unripe, or preempted. The Court held oral argument on October 26, 2010. For the reasons below, the Court will dismiss Count Two of the amended complaint without prejudice but otherwise will deny the motion.


This case concerns efforts by the Environmental Protection Agency ("EPA") to clean up lead contamination in the soil of the Village of Depew, New York. Plaintiff is a New Jersey corporation that operated a 7.5-acre brass foundry at 3241 Walden Avenue in Depew from 1892 to 1972. Plaintiff sold the parcel in 1974. Around 2002, plaintiff arranged for soil sample testing at certain residential properties (the "Phase I Site") around plaintiff's former foundry, in response to allegations from the EPA that airborne emissions from plaintiff's historical operations contaminated the Phase I Site with hazardous concentrations of lead. The soil sample testing confirmed high concentrations of lead at the Phase I Site.

In response to the EPA's investigation of soil contamination, plaintiff and the EPA entered an Administrative Order on Consent ("AOC") in September 2004. (See Dkt. No. 37-2.) The AOC specified the terms of plaintiff's voluntary "performance of a removal action" in Phase I. (Dkt. No. 37-2 at 2 ¶ 1.). Among notable paragraphs, Paragraph 50 of the AOC stated that the EPA was the final arbiter of required activities and that it could require the performance of additional work unilaterally. Paragraph 87 stated that the EPA retained the right to seek any legal or equitable relief to enforce the terms of the AOC and the right to sue plaintiff under Section 107 of CERCLA*fn2 for recovery of any response costs that it incurred and that plaintiff did not reimburse. Paragraph 89 stated that nothing in the AOC constituted a satisfaction of or release from any liability that plaintiff or others had under CERCLA. Paragraphs and 98 and 99 together shielded plaintiff from contribution claims in connection with Phase I efforts but does not preclude the EPA from asserting contribution or other claims against anyone else.

The rights that the EPA reserved for itself under the AOC came into play a few years later when it expanded the scope of its cleanup efforts. Plaintiff completed the Phase I work specified in the AOC in 2007. Subsequently, however, the EPA investigated other residential neighborhoods in Depew (the "Phase II Site") and found high lead concentrations in the soil there as well. The EPA asked plaintiff to perform Phase II remedial activities. The EPA made the same request, among other parties, to Halliburton, which is a corporate successor to a historic operation in Depew that was unrelated to plaintiff's former foundry but that also allegedly released lead into the surrounding environment. When all of the parties contacted declined to engage in any Phase II efforts voluntarily, the EPA undertook the efforts itself. Pursuant to Section 107 of CERCLA, however, the EPA sent plaintiff a letter demanding reimbursement for response costs that it had incurred to that point and that it would incur in the future.

Plaintiff commenced this case against Halliburton and two other defendants*fn3 in response to the costs that it incurred under Phase I and that the EPA likely will pursue under Phase II. Plaintiff's amended complaint contains five claims labeled as counts. Count One is a claim for reimbursement under Section 107 of CERCLA. Count Two is a claim for contribution under Section 113 of CERCLA on the grounds that plaintiff has resolved its liability to the EPA for some or all of the costs associated with the two phases of cleanup. Count Three is a claim for a declaratory judgment that defendants are liable for response costs or damages including future response costs or damages. Count Four is a claim against defendants for common-law indemnification. Count Five is a claim against defendants for common-law contribution. The theme across all five counts of the amended complaint is that plaintiff does not want to be the sole company paying remedial costs given that the EPA identified Halliburton and others as contributors to the contamination of residential soil.

Through the pending motion, Halliburton seeks dismissal of each of the counts in the amended complaint for reasons related to timing and the nature of the AOC that plaintiff entered with the EPA. Halliburton seeks dismissal of Count One on the grounds that the AOC resolved some or all of plaintiff's liability to the EPA and thus precludes recovery under Section 107. Halliburton seeks dismissal of Count Two on the grounds that plaintiff commenced this case more than three years after it entered the AOC-a time interval that Halliburton considers the relevant limitations period-and thus has run out of time to maintain a Section 113 claim. Halliburton seeks dismissal of Count Three on the grounds that declaratory judgment for any Phase II costs would be premature, since plaintiff has not undertaken any Phase II activities and since the EPA is not currently attempting to hold plaintiff liable for any costs associated with Phase II activities. Halliburton seeks dismissal of Counts Four and Five as preempted by CERCLA and barred by Section 15-108 of New York's General Obligations Law. Generally, plaintiff opposes all of these arguments by noting that CERCLA Sections 107 and 113 work in tandem to allow for recovery of cleanup costs; that either a longer limitations period applies to Count Two or that no triggering event has occurred to start the clock on a shorter limitations period; that a declaratory judgment here is mandatory under the plain language of Section 113; and that neither preemption nor any state law operates against its common-law claims.


A. Motions to Dismiss Generally

Halliburton has made several arguments for dismissal. Each argument requires a different analysis. To the extent, however, that the arguments require an assessment of the allegations in plaintiffs' complaint, the Court will proceed through each argument by "accepting all factual allegations in the complaint as true, and drawing all reasonable inferences in the plaintiff's favor." Peter F. Gaito Architecture, LLC v. Simone Dev. Corp., 602 F.3d 57, 61 (2d Cir. 2010) (internal quotation marks and citation omitted). The accepted allegations and reasonable inferences will include plaintiff's assertions that the EPA has approached Halliburton regarding Phase II cleanup and that Halliburton qualifies as a potentially responsible party ("PRP") under one or more of the four definitions of a PRP set forth in Section 107(a).

B. Count One-Plaintiff's Section 107 Claim

A natural or corporate person who is a PRP under Section 107(a)(1-4) "shall be liable for . . . any other necessary costs of response incurred by any other person consistent with the national contingency plan . . . ." 42 U.S.C. § 9607(a)(4)(B) (emphasis added); see also U.S. v. Atl. Research Corp., 551 U.S. 128, 135--36 (2007) ("[I]t is natural to read the phrase 'any other person' by referring to the immediately preceding subparagraph (A), which permits suit only by the United States, a State, or an Indian tribe. The phrase 'any other person' therefore means any person other than those three. Consequently, the plain language of subparagraph (B) authorizes cost-recovery actions by any private party, including PRPs.") (citations omitted). Here, plaintiff entered an AOC that required reimbursing the EPA for some of that agency's costs but also required "the performance of a removal action" in Phase I. (Dkt. No. 37-2 at 2 ¶ 1.) The AOC does not prevent the EPA from "requiring [plaintiff] in the future to perform additional activities pursuant to CERCLA or any other applicable law." (Id. at 28 ¶ 87.) Under the plain language of the AOC, then, plaintiff not only has ...

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