ELR Citation: ELR 20848
No(s). s. 94-2005 et al (7th Cir. Apr 12, 1995)

The court holds that a potentially responsible party (PRP) insurance company may not recover from the Superfund response costs it incurred in attempting to comply with a U.S. Environmental Protection Agency (EPA) cleanup order. The company was ordered to clean up the contaminated land based on its involvement with the site after it agreed with its insured to have contaminants removed from the insured's premises. The company did not complete the ordered cleanup to EPA's satisfaction. The company filed two lawsuits: One suit under Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) §106(b)(2)(D) against the president seeking reimbursement for its cleanup by proving that EPA's order was arbitrary and capricious; and another suit against the EPA Administrator contending that the limitations CERCLA §113(h) imposes on a party that has been ordered to cleanup a toxic waste site and is attempting to challenge the order are constitutionally inadequate. The court first notes that completion of EPA's order is an express statutory condition for seeking reimbursement from the Superfund under §106. The court also notes that the dispute in this case is over the interpretation of the order. The company argued that it fully complied with the cleanup order, but that when it finished, EPA told it to do more, which it refused to do. EPA countered that the broader scope of the cleanup order was implicit in the original order. EPA's position is that a polluter who wants to take advantage of CERCLA's reimbursement provision may be required to clean up not only its own mess, but other contamination at the same site. The court determines that this position is not so unreasonable as to entitle the polluter to disregard the Agency's cleanup order embodying that position. After reviewing various scenarios under which a PRP ordered to clean up a site may seek reimbursement, the court holds that the company's suit against the EPA Administrator is meritless, because the remedies that CERCLA creates against invalid cleanup orders fully satisfy the requirements of due process. Finding that the company is left to argue that it did comply with the order and that the Agency has misinterpreted its own order, the court next notes that EPA has statutory authority to issue cleanup orders and that this authority carries with it the authority to interpret those orders. The court upholds as reasonable EPA's determination that the company failed to comply with the order by only cleaning up the contamination for which it was allegedly responsible. The order embraced all hazardous substances at the site, and was not limited to hazardous substances or whose presence the insurer was responsible.

[The district court decisions in this action are published at 24 ELR 21298 and 21419.]

Counsel for Plaintiff
William J. Anaya
Johnson & Bell
222 N. La Salle St., Chicago, IL 60601
(312) 372-0770

Counsel for Defendants
Nancy Gaines
Environment and Natural Resources Division
U.S. Department of Justice, Washington DC 20530
(202) 514-2000

Before POSNER, Chief Judge, CUDAHY, Circuit Judge, and GRANT, District Judge.^*