ELR Citation: ELR 21257
No(s). 2:92-0389-18 (D.S.C. Mar 9, 1993)

The court holds that it lacks jurisdiction over counterclaims by the owners and operators of a ship for reimbursement of the costs of complying with a coast guard administrative cleanup order under §106 of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) that required the counterclaimants to locate, recover, and dispose of toxic chemical drums lost during a storm. After the United States and the counterclaimants located the drums, the United States sued under CERCLA §107 to recover its costs and the Coast Guard issued its order. The court first holds that it lacks jurisdiction over the counterclaim because CERCLA §106(b)(2) requires those seeking reimbursement for §106 cleanup actions to petition the U.S. Environmental Protection Agency (EPA) before filing an action in district court. Section 113(h) allows judicial review of a §106 order only after the exhaustion of the §106 administrative remedies. Thus counterclaimants may only seek relief in court after asking EPA for reimbursement. The court next holds that where, as here, the requirement of exhaustion is imposed by statute, it may not be waived based on allegations of futility alone. Although the United States has already filed suit against them to recover U.S. response costs incurred in the cleanup, it may be that the government's litigation position will not control the outcome of administrative proceedings. Moreover, to excuse exhaustion based on a mere allegation of futility would allow the futility exception to swallow the exhaustion rule. The court next holds that the counterclaim is not compulsory. Federal Rules of Civil Procedure 13(a) only renders compulsory those claims that could have been asserted at the time the counterclaim was filed. Since counterclaimants had not exhausted their administrative remedies, their claim is not mature and cannot be compulsory. Last, the court holds that counterclaimants are not entitled to reimbursement under the doctrine of recoupment, because they failed to meet the requirement that the counterclaim be purely defensive by not limiting their counterclaim to an offset against any amount that the government might recover.

Counsel for Plaintiff
Eileen T. McDonough
Environment and Natural Resources Division
U.S. Department of Justice, Washington DC 20530
(202) 514-2000

Counsel for Defendants
Gordon Schreck
Buist, Moore, Smythe & McGee
Five Exchange St., P.O. Box 999, Charleston SC 29402
(803) 722-3400