ELR Citation: ELR 20513
No(s). 87 Div. 7377 (DNE) (S.D.N.Y. Dec 1, 1992)

The court holds that contractual indemnification provisions shielding private parties from liability under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) are valid, but do not shield responsible parties from liability to the government. The court first examines three varied interpretations concerning the impact of CERCLA §107(e)(1) on indemnification agreements and adopts the Ninth Circuit's interpretation enunciated in Mardan Corp. v. C.G.C. Music, Inc., 17 ELR 20209, in which private parties may allocate environmental liability among themselves, but liability to the government is joint, several, and unaffected by indemnity agreements. The court rejects the district court's interpretations adopted in Versatile Metals, Inc. v. Union Corp., 19 ELR 20472, which states that §107(e)(1) allows parties unfettered discretion to bargain over CERCLA liability, and in AM International v. International Forging Equipment, 21 ELR 20332, which states that indemnification clauses between responsible parties under CERCLA are per se invalid. The court next holds that state law governs the interpretation of contractual agreements allocating CERCLA's liability. State contract law is sufficiently developed and even-handed in application to allow interpretation of indemnification agreements affecting private parties' CERCLA liability. In a footnote, the court observes that the sole interpretive guide in the legislative history is a statement by a single House member that CERCLA would further the development of a federal common law, and this statement is not dispositive, because the legislative history is barren of similar statements.

Counsel for Plaintiff
James J. Harrington, Stephen A. Dvorkin
Newman & Harrington
425 Lexington Ave., 11th Fl., New York NY 10017
(212) 916-3800

Counsel for Defendants
John M. Hessel, Joseph E. Martineau, John D. Husmann
Lewis, Rice & Fingersh
611 Olive St., Ste. 1400, St. Louis MO 63101
(314) 444-7600